The transactions pursuant to the joint share transfer described in this document involve securities of a Japanese company. The joint share transfer issubject to disclosure requirements of Japan that are different from those of the United States. Financial information included in this document, if any, wasexcerpted from financial statements prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of
United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuer is located inJapan and some or all of its officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers ordirectors in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject
themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the joint share transfer, such as in the open market or through privately
negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only. In the event of any conflict or discrepancy between
this document and the Japanese-language original, the Japanese-language original shall prevail in all respects.

Internet Disclosure Items for the Notice of the 116th Annual General
Meeting of Shareholders[Business Report]
Matters Regarding Rights to Subscribe for New Shares, etc. of the Bank
Systems to Ensure Proper Business Activities[Financial Statements]
Statement of Changes in Equity
Notes to the Non-Consolidated Financial Statements[Consolidated Financial Statements]
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements[Reference Documents for the General Meeting of Shareholders(regarding Proposal 2)]
The following matters from Proposal 2 “Approval of Share Transfer Plan
With The Aichi Bank, Ltd.”・ Matters regarding The Aichi Bank, Ltd. Rights to Subscribe for New
Shares・ Systems to Ensure Proper Business Activities by The Aichi Bank, Ltd.
・ Statement of Changes in Equity of The Aichi Bank, Ltd.
・ Notes to the Non-Consolidated Financial Statements of The Aichi
Bank, Ltd.
・ Consolidated Statement of Changes in Equity of The Aichi Bank, Ltd.
・ Notes to the Consolidated Financial Statements of The Aichi Bank,
Ltd.
(from April 1, 2021 to March 31, 2022)

The Chukyo Bank, Limited
The above matters are available to shareholders online at the Bank’s
website (https://www.chukyo-bank.co.jp/ir/meeting/) pursuant to laws
and regulations, as well as Article 15 of the Bank’s Articles ofIncorporation.
On pages 1 through 49, “the Bank” refers to The Chukyo Bank. On
pages 51 through 122, “the Bank” refers to The Aichi Bank.

Matters Regarding Rights to Subscribe for New Shares, etc. of the Bank
(1) Rights to Subscribe for New Shares of the Bank held by officers of the Bank as of the last day of the fiscal year
Summary of the content of Rights to Subscribe for New Shares, etc.

Directors(excluding outside directors)(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 1 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 31, 2013(iii) Number of rights to subscribe for new shares
38 rights(iv) Class and number of shares underlying the rights to subscribe for new shares (Note)
3,800 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From August 1, 2013 to July 31, 2043
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of theBank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 2 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 30, 2014(iii) Number of rights to subscribe for new shares
37 rights(iv) Class and number of shares underlying the rights to subscribe for new shares (Note)
3,700 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 31, 2014 to July 30, 2044(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of theBank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 3 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 30, 2015(iii) Number of rights to subscribe for new shares
51 rights(iv) Class and number of shares underlying the rights to subscribe for new shares (Note)
5,100 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 31, 2015 to July 30, 2045(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of the
Bank.

- 1 -

Number of persons withrights to subscribe for
new shares, etc.

2

2

3

Summary of the content of Rights to Subscribe for New Shares, etc.

Directors(excluding outside directors)(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 4 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 27, 2016(iii) Number of rights to subscribe for new shares
61 rights(iv) Class and number of shares underlying the rights to subscribe for new shares (Note)
6,100 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 28, 2016 to July 27, 2046
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new
shares within 10 days (or the next business day if the 10th day falls on a holiday) from the
day following the day on which they lose their position as director or executive officer ofthe Bank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 5 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 26, 2017(iii) Number of rights to subscribe for new shares
70 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
7,000 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 27, 2017 to July 26, 2047
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new
shares within 10 days (or the next business day if the 10th day falls on a holiday) from the
day following the day on which they lose their position as director or executive officer ofthe Bank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 6 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
August 1, 2018(iii) Number of rights to subscribe for new shares
78 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
7,800 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From August 2, 2018 to August 1, 2048
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new
shares within 10 days (or the next business day if the 10th day falls on a holiday) from the
day following the day on which they lose their position as director or executive officer ofthe Bank.

- 2 -Number of persons withrights to subscribe for
new shares, etc.

4

4

4

Summary of the content of Rights to Subscribe for New Shares, etc.

Directors(excluding outside directors)

Audit & Supervisory
Board Members(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 7 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 31, 2019(iii) Number of rights to subscribe for new shares
104 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
10,400 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From August 1, 2019 to July 31, 2049
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of theBank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 8 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 29, 2020(iii) Number of rights to subscribe for new shares
161 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
16,100 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 30, 2020 to July 29, 2050
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of theBank.
(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 9 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 28, 2021(iii) Number of rights to subscribe for new shares
283 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
28,300 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 29, 2021 to July 28, 2051
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new shareswithin 10 days (or the next business day if the 10th day falls on a holiday) from the day
following the day on which they lose their position as director or executive officer of the
Bank.

－

- 3 -

Number of persons
with rights to
subscribe for new
shares, etc.

5

6

6

－

(Note)Disclosed as equivalent number of shares after consolidation through the reverse stock split as of October 1, 2016 (ratio of 1 share of stock for
10 shares of stock).

- 4 -(2) Rights to subscribe for new shares, etc. of the Bank delivered to employees, etc. during the fiscal year
Summary of the content of Rights to Subscribe for New Shares, etc.

Number of persons
delivered rights to
subscribe for new
shares, etc.

Employees
Executive Officers of theBank(i) Name of rights to subscribe for new shares
The Chukyo Bank, Limited Series 9 Rights to Subscribe for New Shares(ii) Allocation date for rights to subscribe for new shares
July 28, 2021(iii) Number of rights to subscribe for new shares
127 rights(iv) Class and number of shares underlying the rights to subscribe for new shares
12,700 shares of Bank common stock(v) Exercise period for rights to subscribe for new shares
From July 29, 2021 to July 28, 2051
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise rights to subscribe for new
shares within 10 days (or the next business day if the 10th day falls on a holiday) from the
day following the day on which they lose their position as director or executive officer ofthe Bank.

5Company officers andemployeesofsubsidiaries
andsubsidiary corporations,
etc.

－

－

- 5 -

Systems to Ensure Proper Business Activities<Summary of Systems to Ensure Proper Business Activities>
Pursuant to the Companies Act and the Regulations for Enforcement of the Companies Act, the Bank has set forth a “Basic
Policy for the Establishment of an Internal Control System” through a resolution of the Board of Directors, and has put in placesystems to ensure proper business activities.
(1) Systems to ensure that the execution of duties of directors complies with laws and regulations and the Articles ofIncorporationa. The Bank sets forth its corporate values in its management vision, holds compliance with laws and regulations, etc. to be
the most fundamental stance for its business activities, sets the code of conduct as the guiding principles of the activities
of officers and employees, indicates that there must be strict compliance with laws, regulations, and rules, and ensuresthorough awareness such that all officers and employees act in accordance with the management vision and code of
conduct.
b. In addition to our management vision and code of conduct, the Board of Directors prepares a Compliance Manual:
Officer and Employee Code of Conduct, as a model for conduct requiring compliance by officers and employees, and aCompliance Manual: Banking Operations Edition, covering matters requiring compliance in business operations, set
forth various types of basic rules regarding business operations, and endeavor to establish compliance with laws andregulations, etc. through their practical operation.
c. Each term, the Board of Directors formulates a specific plan for the execution of various measures relating tocompliance as a compliance program, follows up on it by receiving progress and achievement status reports, andendeavors to put it into practice and make it take root through a thorough understanding of compliance.
d. In order to fulfill their duty of care of a prudent manager and duty of loyalty in the course of the execution of theirduties, each director is responsible for decision-making at the Board of Directors and for supervising the execution ofbusiness, and by setting these as rules at meetings of the Board of Directors, each director has an awareness thereof.
(2) Customer protection, etc. management systems
a. The Bank always takes a customer-based approach, and conducts customer protection, etc. management in order toobtain the satisfaction and support of customers.
b. Based on its management vision and code of conduct, the Bank formulates a customer protection, etc. management
policy as a basic policy to protect customers and improve customer convenience.
c. Customer protection, etc. management basically comes under the following items, and the Bank conducts customer
protection, etc. management by formulating and promulgating various rules, etc.
(a) Customer explanation management(b) Customer support, etc. management(c) Customer information management(d) Conflict of interest management(e) Outsourcing management(3) Systems regarding retention and management of information related to the execution of directors’ duties
a. The retention and management of the following documents regarding the execution of directors’ duties and other- 6 -material information is strictly implemented as stipulated in the Articles of Incorporation, the rules of the Board of
Directors, various rules regarding the operation of key boards and committees, and various rules regarding document
management, etc.
(a) Minutes of general meetings of shareholders and related materials(b) Minutes of meetings of the Board of Directors and related materials(c) Minutes of meetings of the Executive Committee and related materials(d) Records of the proceedings of other important meetings and related materials(e) Other management approval documents containing decision-making by directors and related materials
b. The Internal Audit Department verifies that the retention and management of material information is conducted inaccordance with the provisions of various rules and reports the results to the Board of Directors.
(4) Rules and other systems related to management of the risk of lossa. In order to manage the risk of loss, the Board of Directors has responsibility and authority regarding the implementationof risk management systems, sets the fundamental approach for the various types of risk arising from bank operations
and the responsible departments, management systems, and specific management methods, etc. for each risk type, andthese are set forth in rules.
b. In order to have an understanding and appropriate control of the risks arising from their respective operations, the Boardof Director sets the departments responsible for each type of risk and implements a system where it receives reports on
the status of risks and the status of risk management.
c. The Board of Directors formulates risk management policies and specific measures as an implementation plan semiannually, and along with promotion of the plan, endeavors to enhance risk control and management and upgrade systems
by periodically evaluating their implementation status.
d. In order to gain a comprehensive understanding of and manage each type of risk, the Bank has established dedicateddepartments to comprehensively manage risk, and established the Comprehensive Risk Management Committee and the
ALM Committee to implement a system whereby the risk management activities of each department are discussed crosssectionally across all departments.
e. The Internal Audit Department verifies whether risk controls are functioning effectively, such as whether all risk
management operations are operating in accordance with various rules and the annual risk management implementation
plan, and reports the results to the Board of Directors.
f. The Bank defines the following as a crisis: if operations are significantly delayed or suspended for a long time due tofactors such as a natural disaster, system failure, administrative accidents, data leaks, or rumors, or in cases where there
is a significant loss of confidence and the possibility of the Bank’s ongoing existence as a company being endangered
increases. During ordinary times, the Bank keeps a crisis management system where it prepares in advance a basic
response framework, assessment criteria, and emergency response authority and set alternative measures and proceduresfor business continuity for each factor as necessary.
(5) Systems to ensure that the execution of duties of directors is performed efficiently
a. In order to ensure that the execution of duties of directors is performed efficiently, the Board of Directors delegates its
responsibilities and authority pursuant to the rules of the Board of Directors and other rules. Of these, the Executive
Committee has responsibility and authority with respect to prior deliberation of important matters to be determined by- 7 -the Board of Directors and the execution of duties pursuant to basic policies determined by the Board of Directors, andensures swift decision-making and execution of duties by means such as meeting once a week in principle.
b. The Board of Directors sets delegation of responsibility and authority in accordance with the division of duties andadministrative assignment of directors, and the content of their respective duties, clearly defining responsibilities andensuring a system supervising the execution of duties, and strives to ensure duties are performed efficiently.
c. The Board of Directors selects executive officers and delegates the Representative Director’s authority for the executionof duties to executive officers, thereby establishing a system under which the execution of duties is in accordance withmanagement policies and management strategies.
d. The Bank determines the division of duties in its organizational structure, as well as the content of duties, andresponsibility and authority in the division of duties, in order for directors, executive officers, and employees to execute
duties efficiently, and endeavors to clearly define responsibilities for the execution of duties.
(6) Systems to ensure that the execution of duties of employees complies with laws and regulations and the Articles ofIncorporationa. The Bank sets compliance with laws and regulations, etc. in its management vision, code of conduct, and compliancemanuals, and implements a system that conforms to laws, regulations, and the Articles of Incorporation by carrying out
management of operations pursuant to various rules that are stipulated.
b. In addition to putting in place an organizational structure in order to carry out integrated management of compliance, theBank appoints compliance officers as the personnel responsible for performing compliance duties and compliancemanagers in charge of promoting specific measures in each department and each branch.
c. Management and each department hold meetings cross-sectionally across all departments to discuss responses, etc.
regarding compliance, evaluate promotion management and progress of measures raised in the compliance program,promote initiatives for the implementation and establishment of compliance, and report the status thereof tomanagement.
d. Each and every officer and employee participates in group training and workplace training in order to foster a sense of
ethics, gain knowledge of operations, and cause compliance to take root, and the Bank enhances the education andtraining framework, such as by incorporating compliance education (external tests and distance learning) into promotion
requirements.
e. In order to prevent incidents such as violations of laws, ordinances, or the Articles of Incorporation before they happen,
the Bank establishes checks and balances at each department and branch, has verification conducted by the Internal
Audit Department, and thoroughly manages personnel through personnel rotation, as well as preventing misconduct by
creating a whistle-blower system, and creating systems aimed at self-remediation and reform within the organization.
(7) Systems to ensure proper business activities in the business group comprising the Bank and group companies
a. Each company making up the Chukyo Bank group has a Board of Directors and Auditor to ensure that mutual
supervision of operational decision-making and the execution of duties is carried out properly.
b. In order to ensure that the management of business conforms with laws, regulations, and the Articles of Incorporation ateach company making up the Chukyo Bank group, each group company has rules setting forth the basic matters of theircommon compliance system, and to ensure that management is carried out at each company based on the group’scommon principles and management policy, the fundamental approach to management and administration and- 8 -management methods are set, important business decisions for each company are managed by the Bank, and the Bank
has established a system whereby it receives timely reports on the status of operations from each company.
c. The Bank has formulated rules so that it is aware of the risks inherent in the operations of each company making up the
Chukyo Bank group and in order to perform appropriate risk control, the responsible department of the Bank is clearly
defined for each type of risk, reports are received on the status of risk management, and the Bank has established asystem to provide appropriate directions, advice, and supervision so that the operations of group companies are carriedout appropriately and efficiently.
d. The Bank’s Internal Audit Department enters into agreements regarding auditing with each company making up the
Chukyo Bank group, carries out audits to the extent that they do not breach laws or regulations, etc., and reports theresults of audits to the Bank’s Board of Directors. The Internal Audit Department strives to implement audit methods
and accumulate knowhow in order to appropriately audit and inspect the operations of each company.
(8) Systems for the exclusion of antisocial forces
a. The Bank sets forth its “Basic Policy on Antisocial Forces” based on its unwavering, resolute stance against antisocial
forces that threaten the order and safety of civil society.
b. The Bank strives to collect information on antisocial forces, and in close cooperation with sales branches anddepartments, and based on the creation of a liaison system with outside expert agencies, the Bank strives to prevent
transactions with antisocial forces and puts in place a system that prevents such relationships.
(a) The Bank has established a response supervision department, and this department conducts centralized control andmanagement of matters relating to antisocial forces, directs and support the responses of each department and branch,and provides appropriate reports to management when it becomes aware of material issues relating to management.
The Bank also appoints an “Improper Claims Prevention Officer” at each branch.
(b) In terms of coordinating with outside expert agencies, the Bank is registered with the Aichi Prefecture Business
Protection Strategy Council (aichiken kigyo boei taisaku kyogikai) and collects and exchange necessary information.
(c) The response supervision department collectively manages information obtained by the Bank in an antisocial force
database.
(d) The Bank includes the basic policy on antisocial forces in the Compliance Manual, and ensures thorough awareness of
it in the management of operations.
(e) The Bank incorporates antisocial forces responses into the compliance curriculum, conducts training, etc., and strives
to promulgate it.
(f) The Bank includes Reponses to financial crimes in the Compliance Manual and strives to prevent financial crimes
such as money laundering and the financing of terrorist activities.
c. The Bank ensures the safety of officers and employees responding to improper claims from antisocial forces.
(9) Matters relating to employees assisting the duties of Audit & Supervisory Board Members at the request of Audit &Supervisory Board Members
a. If Audit & Supervisory Board Members request the appointment of employees to assist their duties, such employees will
be appointed. When making such appointment, the Bank will obtain the opinion of the Auditor regarding the specificdetails (number of employees, work experience, work knowledge, skills, affiliation) and take such opinion into fullconsideration.

- 9 -(10) Matters regarding the independence from Directors of the employees in the preceding subparagrapha. When appointing or transferring employees assisting the duties of Audit & Supervisory Board Members, the Bank willobtain the opinion of the Auditor and take such opinion into full consideration.
b. Such employees shall execute their duties pursuant to the directions of Audit & Supervisory Board Members, and the
Bank will obtain and respect the opinion of the Auditor board when evaluating employee performance.
(11) Systems for Directors and employees to report to Audit & Supervisory Board Members and other systems relating toreports to Audit & Supervisory Board Members
a. The Board of Directors sets forth rules stipulating matters to be reported to Audit & Supervisory Board Members, andthe Bank implements a system for appropriate reporting to Audit & Supervisory Board Members of Director decisionmaking and the status of the execution of duties.
b. If an audit is necessary, Audit & Supervisory Board Members may require any department or sales branch to directly
report the status of business operations of such department, etc., and all Directors, Executive Officers, General
Managers, and sales branch managers appropriately report to Audit & Supervisory Board Members when requested byAudit & Supervisory Board Members.
c. The Board of Directors implements a system where matters resolved or reported at the Board of Directors and important
meetings, etc. (including matters consultation or reported from subsidiaries) are appropriately reported to Audit &Supervisory Board Members.
d. The Bank sets a report recipient, etc. for the whistle-blower system, and the status of reports and the details of reported
matters (including matters reported by officers or employees of the Bank’s subsidiaries) are reported to Audit &Supervisory Board Members by the report recipient, etc.
e. Employees, etc. are prohibited from being treated disadvantageously due to making a report to Audit & Supervisory
Board Members, including reports using the whistle-blower system.
(12) Policy regarding expenses or obligations incurred with respect to the execution of duties of Audit & Supervisory Board
Membersa. Expenses or obligations necessary for the execution of duties of Audit & Supervisory Board Members are paid andotherwise processed in accordance with the requests of Audit & Supervisory Board Members.
(13) Other systems to ensure that auditing by Audit & Supervisory Board Members will be conducted effectively
a. Discussions are held in advance with the Auditor board when determining the appointment of Audit & Supervisory
Board Members proposed at the general meeting of shareholders.
b. The Board of Directors implements a system whereby Audit & Supervisory Board Members attend meetings of theBoard of Directors as well as important meetings, etc. such as the Executive Committee and the Comprehensive Risk
Management Committee and can obtain an understanding of the status of the execution of duties of Directors, Executive
Officers, and General Managers and the like. Therefore, the Board of Directors sets forth provisions regarding
attendance by Audit & Supervisory Board Members in various rules stipulating the operation of important meetings, etc.
c. The Representative Director has regular meetings with Audit & Supervisory Board Members and exchanges opinions
regarding issues to be addressed by the Bank, the implementation status of an audit environment for Audit &Supervisory Board Members, and important audit issues, etc.

- 10 -

d. When requested by Audit & Supervisory Board Members, the Internal Audit Department cooperates in audits, and also
provides information to Audit & Supervisory Board Members on the implementation status of internal audits and theexecution of duties and management status at each operating department, and cooperates to improve the effectiveness ofaudits by Audit & Supervisory Board Members.
<Summary of Operation of Systems to Ensure Proper Business Activities>
The summary operating status of systems to ensure proper business activities is as follows.
(1) Systems to ensure that the execution of duties of directors complies with laws and regulations and the Articles ofIncorporation and are performed efficiently
Meetings of the Board of Directors are held once a month, and as necessary. In the current fiscal year, the company has
held 12 ordinary Board of Directors meetings. Additionally, the Executive Committee, the decision-making body under therules of the Board of Directors, has held 63 meetings, and the Compliance Executive Committee has held 12 meetings.
Duties of directors are clearly defined in the rules of the Board of Directors, and regular reports are made to the Board of
Directors on the status of Directors’ execution of duties.
(2) Risk management system
The Bank has established a Comprehensive Risk Management Committee for the purpose of deliberating material mattersregarding policy and system-implementation for the promotion of comprehensive risk management. The committee has held
12 meetings.
Additionally, in order to comprehensively manage various risks, the Bank has established dedicated departments, defined
the responsible department managing each type of risk, and conducts management corresponding to the characteristics ofrespective risks.
The status of all risks is also regularly reported to the Board of Directors and Executive Committee so that management
can grasp the risk status and make quick decisions.
(3) Compliance systems
The Bank formulates its management vision and code of conduct and promulgates a thorough understanding thereof sothat all officers and employees act in accordance with such management vision and code of conduct.
The Bank has established a department to collectively manage compliance, is engaged in initiatives to promotecompliance, such as creating a compliance program and conducting training, and the Board of Directors receives reports on
the status of compliance with laws and regulations, etc. Additionally, the Bank has established the Compliance Executive
Committee under the umbrella of the Compliance Promotion Committee for the purpose of deliberating material mattersregarding policy and system-system implementation for the promotion of compliance, and has established a system todeliberate material matters regarding compliance. The Compliance Executive Committee and the Compliance Promotion
Committee have both held 12 meetings.
In addition, the Bank has also established a whistle-blower system, including an external hotline, in order to gain an early
understanding of compliance issues and drive remedial measures through the exercise of self-remediation capabilities.
(4) Other systems for ensuring proper business activities in the Bank’s group
The Bank has set forth various rules stipulating basic matters regarding the common compliance position of all group- 11 -

companies in order to ensure that each company making up the Chukyo Bank group conduct business operations inaccordance with laws, regulations, and the Articles of Incorporation.
Additionally, the Bank manages material business decisions at each company, and has implemented a system to receive
timely reports regarding the status of operations from each company. The Chukyo Bank group’s Management-Labor
Committee has held two meetings.
(5) Ensuring, etc. that audits by Audit & Supervisory Board Members are performed effectively
Audit & Supervisory Board Members stated their opinions at 16 out of 16 meetings of the Board of Directors, held 4
meetings with the Representative Director, and have exchanged opinions regarding management policies and issues facing
the Bank, etc. Additionally, the Standing Audit & Supervisory Board Member attended key meetings including of the
Executive Committee, endeavored to gain an understanding of circumstances within the Bank, stated opinions as necessary,and received advance or after the fact explanations or reports regarding the details of agenda proposals or the content ofdeliberations.
Audit & Supervisory Board Members coordinated with the Financial Auditor and Internal Audit Department, including byholding 26 liaison meetings with the Internal Audit Department, holding 13 meetings with the Financial Auditor, andholding 2 tri-party liaison meetings with the Financial Auditor and Internal Audit Department, and endeavored to ensure theeffectiveness of audits.

- 12 -

116th(fiscal year

From April 1, 2021
to March 31, 2022)

Statements of Changes in
Equity(Millions of Yen)
Shareholders’ Equity

Capital Surplus

Retained Earnings
Other retained earnings

Capitalreserves

Total capitalsurplusRetainedearnings
reserves

31,84423,18423,184

3,509

35

35

35

Stated capital

Balance at beginning of period

Treasury
SharesShareholders’ Equity
Total

(78)

88,486

Reserve fortax purpose
reduction
entry ofnon-current
assetsGeneralreserve

Retainedearnings
brought
forward

Total retained
earnings

107

11,00018,91933,535(1,043)

(869)

(869)

Change of items during period
Issuance of new shares

70

Dividends of surplus

173

Net income
Provision to reserve for advanced depreciationof non-current assets
Reversal of reserve for advanced depreciationof non-current assets

4,246

4,246

4,246

277

(277)

－

－

(44)

44

－

Purchase of treasury shares－(2)

Disposal of treasury shares

(13)

(13)

Reversal of revaluation reserve for land

542

542

68

(2)
54
542

Net changes in items other than shareholders’equityTotal changes during period
Balance at end of period

35

35

35

173

233

－

3,499

3,906

66

4,042

31,87923,21923,2193,683

340

11,00022,41837,441(11)

92,528Valuation and translation adjustments
Rights to
Net unrealized
Total valuation subscribe for Total equitys
gain
on Deferred gains or Revaluationand translation new sharesavailable-for- losses on hedges reserve for land
adjustments
sale securities
Balance at beginning of period

14,392

(650)

5,407

19,148299

107,934

Change of items during period
Issuance of new shares

70

Dividends of surplus(869)

Net income

4,246

Provision to reserve for advanced depreciationof non-current assets
Reversal of reserve for advanced depreciationof non-current assets－

Purchase of treasury shares(2)－

Disposal of treasury shares

54

Reversal of revaluation reserve for land542

Net changes in items other than shareholders’equity(6,283)

1,123

(542)

(5,702)(68)

Total changes during period(6,283)

1,123

(542)

(5,702)(68)(1,727)

Balance at end of period

8,109

472

4,864

13,446230

106,206- 13 -(5,770)Notes to the Non-Consolidated Financial Statements*Stated monetary amounts are rounded down to the nearest million yen.
Significant accounting policies
1.

Valuation basis and valuation method for securities
The valuation of securities is carried out using the cost method on a rolling average basis in the case of shares of subsidiaries or subsidiary companies, and thefair value method (COGS is calculated on a rolling average.) in the case of available-for-sale securities. However, in the case of shares, etc. that do not have amarket price it is carried out using the cost method on a rolling average basis.

2.
3.

Valuation differences on available-for-sale securities are included inequity.
Valuation standards and valuation methods for derivatives
Valuation of derivative transactions is carried out using the fair value method.
Depreciation method for non-current assets(1) Tangible fixed assets (excluding leased assets)
Tangible fixed assets are depreciated using the declining balance method (straight-line method for buildings (excluding ancillary equipment) acquired on orafter April 1, 1998, and for ancillary equipment and structures acquired on or after April 1, 2016).
The principal useful life is as follows:
Buildings: 7–50 years
Other: 3-20 years(2) Intangible non-current assets (excluding leased assets)
Intangible non-current assets are depreciated using the straight-line method. Software used by the company is depreciated based on the usable period in thebank (up to eight years).
(3) Leased assets
Leased assets in “tangible fixed assets” and “intangible fixed assets” pertaining to finance lease transactions not involving ownership transfer are amortizedusing the straight-line method, with the lease term as the useful life of the assets. For the residual value, the residual value guarantee is used for leasing

4.

agreements with residual value guarantees, and zero is used for all others.
Standards for translating foreign currency assets and liabilities into Japanese currency

5.

Foreign currency-denominated assets and liabilities are predominantly converted into yen using the exchange rate on the closing date.
Allowance recording standards(1) Allowance for loan losses
The Bank records reserves for possible loan losses based on predetermined write-off and allowance standards, as shown below.
(i)Claims pertaining to borrowers (failed borrowers) whose business is legally or formally failing, such as bankruptcy or special liquidation, and debtors
substantially under the same circumstances (substantially failed borrowers) are recorded by recording the balance after deducting the anticipated disposal

amount of security and the anticipated amount recoverable from guarantees from the amount of the claim.
(ii) With respect to claims pertaining to borrowers where there is not currently business failure, but it is recognized that there is a strong possibility that theirbusiness will fail going forward (borrowers at risk of failure), for claims against major borrowers with a credit amount in excess of a certain amount for which
the cash flow for collection of the principle and receipt of interest can be reasonably estimated, the allowance for loan losses is recorded as the difference
between the amount calculated by discounting such cash flow by the original agreed interest rate and the book value of the claim (cash flow estimation
method). Claims against other borrowers are predominantly recorded by deducting the anticipated disposal amount of security and the anticipated amountrecoverable from guarantees from the amount of the claim and recording the expected amount of loss on the balance thereof for the following three year
period. The amount of loss is calculated based on the average loan loss rate based on loan losses for three years, for a certain period in the past, and theallowance for loan losses is recorded using an anticipated loan loss rate calculated by making revisions based on forecasts to such amount.
(iii) Of borrowers where issues arise regarding the loan conditions or repayment performance and business is weak or unstable and future management needs tobe monitored (borrowers requiring monitoring), borrowers for whom all or part of the claims are claims requiring management (restructured loans and claims
in arrears for three months or more) (borrowers requiring management) that are major borrowers with a credit amount exceeding a certain amount for which
the cash flow for collection of the principle and receipt of interest can be reasonably estimated, the allowance for loan losses is recorded using the cash flow
estimation method.
(iv) Claims against borrowers requiring management other than in (iii) above are recorded using the anticipated amount of loss for the following three year

- 14 -

period, and claims against borrowers requiring monitoring and borrowers recognized to have well performing business and no particular financial issues(ordinary borrowers) are recorded using the anticipated loss for the next one year period. The anticipated loan loss amount is calculated by finding the averageloan loss rate based on loan losses for three years or one year, for a certain period in the past, and the allowance for loan losses is recorded using an anticipatedloan loss rate calculated by making revisions based on forecasts to such amount.
(v) For all claims, sales-related departments perform asset assessments based on the self-assessment standards for the asset, and, after verification of theassessment results by an asset assessment department independent from the sales-related department, an asset audit department audits the assessment results.
Changes to accounting estimates
The Bank records the general allowance for loan losses regarding claims against ordinary borrowers and other borrowers requiring monitoring by estimating
the anticipated loss amount for the following one year period. The loan loss rate is calculated based on the average loan loss rate based on loan losses for the
anticipated amount of losses for one year, for a certain period in the past, and the allowance for loan losses is recorded using an anticipated loan loss rate
calculated by making revisions based on forecasts to such amount.
With respect to the method of revising the anticipated loan loss rate based on forecasts, because it has become possible to reflect anticipated macroeconomic
indices in the current fiscal year, we have adopted such method.
Specifically, we forecast macroeconomic indices that have a high correlation with the probability of loan losses occurring, and use the mathematical function
calculated from the correlation between macroeconomic indices and loan losses to find the anticipated loss rate from the macroecono mic indices forecast value.
We then compare such anticipated loss rate with the loan loss rate during a certain period in the past, and if necessary, we reflect in the anticipated loss amountthe difference between the amounts calculated on each of these respectively.
As explained in “Significant accounting estimates,” this fiscal year we made revisions based on future forecasts of macroeconomic indices due to a change incertain assumptions, the allowance for loan losses increased by 2,097 million yen as of the end of this fiscal year and this fiscal year’s ordinary profit and profit
before income taxes decreased by 2,097 million yen.
(2) Provision for bonuses
In order to provide for the payment of bonuses to employees, the provision for bonuses is recorded based on the estimated amount of bonus payment toemployees that is attributable to the current fiscal year.
(3) Allowance for retirement benefits
In order to provide for the payment of retirement benefits, an allowance for retirement benefits is recorded based on the estimated amount of retirement benefit
obligations and pension assets at the end of the current fiscal year. When calculating the retirement benefit obligations, the estimated benefit obligation is
attributed to periods up until the end of the fiscal year on a benefit formula basis. Below is the gain or loss treatment method actuarial calculation variances.
Actuarial differences : the amount allocated using the straight-line method for a predetermined number of years (11 years) within the average remaining termof employment of the employee at the time of generation each fiscal year is treated as gain or loss beginning the next fiscal year aftergeneration(4) Provision for reimbursement of deposits
In order to prepare for refund losses based on reimbursement claims from depositors for inactive accounts removed from liabilities and recorded as profit, wehave recorded the projected future refund loss based on past refund records as an allowance for redemption losses on inactive accounts.
(5) Provision for contingent loss
In order to prepare for payment of the amount to be paid to credit guarantee corporations pursuant to the liability sharing system with credit guarantee
6.

corporations, the provision for contingent loss records the anticipated future payment burden.
Hedge accounting method(1) Interest rate risk hedging
The method of hedge accounting for interest rate risk arising from financial assets and liabilities is based on deferred hedges prescribed in “Treatment of
Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public
Accountants Industry Committee Practical Guidelines No. 24, March 17, 2022; “Industry Audit Committee Practical Guidelines No. 24”). With regard to thehedging effectiveness assessment method, for hedging that offsets market fluctuations, we identify and evaluate the deposits and loans, etc. to be hedged andinterest rate swap transactions, which are hedging instruments individually or grouped for a certain period. In addition, with regard to hedging that fixes cash
flows, effectiveness is evaluated by verifying the correlation between interest rate fluctuation factors of the hedged items and the hedging instruments.
(2) Foreign exchange fluctuation risk hedges
The method of hedge accounting for foreign exchange risk arising from financial assets and liabilities denominated in foreign currencies is based on deferredhedges prescribed in “Accounting and Auditing Treatments for Foreign Currency Denominated Transactions in the Banking Industry” (Japanese Institute ofCertified Public Accountants Industry Committee Practical Guidelines No. 25, October 8, 2020; “Industry Audit Committee Practical Guidelines No. 25”). For- 15 -

the method of evaluating hedge effectiveness when foreign-exchange swaps, hedging instruments and similar instruments are used as the hedged asset to mitigate
the foreign exchange fluctuation risks of foreign currency receivables and payables, etc., the bank confirms the existence of an amount equivalent to the hedged
position in the foreign currency commensurate to the foreign currency receivables and payables, etc. that are hedged, and evaluates the effectiveness of the7.

hedge.
Accounting treatment of retirement benefits
The accounting treatment method for unrecognized actuarial calculation difference pertaining to retirement benefits differs from the accounting treatment in
the consolidated financial statements.

8.

Treatment of consumption tax, etc.
The Bank records consumption tax, etc. on tangible fixed assets excluded from deduction to expenses for the fiscal year under review.

Changes to accounting policies(Application of Accounting Standards for Recognition of Revenue)“Accounting Standard for Revenue Recognition” (Corporate Accounting Standard No. 29, March 31, 2020; “Accounting Standard for Revenue Recognition”
hereinafter), etc. is applied from the beginning of the fiscal year under review, and at the time control of the promised good or service is transferred to the customer,
the amount expected to be received in exchange for the good or service is recognized as income.
The application of revenue recognition accounting standards, etc., is in accordance with the transitional treatment set forth in the proviso to Paragraph 84 of theaccounting standards for revenue recognition. The cumulative effect amount for the first applicable fiscal year in the case that a new accounting policy was
retroactively applied prior to the beginning of the current fiscal year has been added or reduced to retained earnings at the beginning of the current fiscal year, andthe new accounting policy is applied from that beginning balance.
Consequently, there is no impact on the financial statements for the current fiscal year.
(Application of Accounting Standards for Fair Value Measurement, etc.)
The Accounting Standards for Fair Value Measurement, etc. (Corporate Accounting Standards No. 30, July 4, 2019; “Fair Value Measurement AccountingStandards”) have been applied from the beginning of the current fiscal year, and in accordance with the transitional treatment set forth in Section 19 of the Fair
Value Measurement Accounting Standards and Section 44-2 of the Accounting Standards for Financial Instruments (Corporate Accounting Standards No. 10, July4, 2019), the new accounting policies established by the Fair Value Measurement Accounting Standards will be applied in the future. Furthermore, it has no effecton the financial statements for the current fiscal year.
Significant accounting estimates
Items for which the amount was recorded in the financial statements for the current fiscal year based on accounting estimates and that could have a material
impact on the financial statements for the next fiscal year is the allowance for loan losses.
1.

Amount recorded in the financial statements for the current fiscal year
Allowance for loan losses: 10,467 million yen (of which, 4,417 million yen is a general allowance for loan losses)
2. Information that contributes to an understanding of the content of a significant accounting estimate pertaining to the identified item
The Bank determines the borrower classification for each borrower (ordinary borrowers, borrowers requiring monitoring (borrowers requiring management andother borrowers requiring monitoring), borrowers at risk of failure, substantially failed borrowers, failed borrowers) based on the borrower’s financial informationand obtainable outside information, etc., and records it to the allowance for loan losses using the calculation method stated in “Significant accounting policies,” “5.
Allowance recording standards,” “(1) Allowance for loan losses.”
Of the determination of borrower classifications, borrowers judged to be performing badly or facing financial difficulties and have implemented changes to loan
conditions, etc., but have a reasonable business reform plan, etc. formulated on the assumption of support from a financial institution, etc. and that has a strong
possibility of being achieved (“Reasonable and Feasible Plan”) or if the borrower has a plan that is judged to be a drastic plan business reform plan, etc. with astrong possibility of being achieved (“Feasible Drastic Plan”), it will be determined to not fall under the definition of a restructured loan, and will be recorded as anallowance for loan losses classified as other borrower requiring monitoring. As of March 31, 2022 there are 2,483 million yen in claims classified as other borrower
requiring monitoring due to having a Reasonable and Feasible Plan or a Feasible Drastic Plan on the financial statements. The allowance for loan losses may
increase or decrease in the following fiscal year due to changes to the operating environment, etc. of the borrower that constitutes the assumptions for determining
whether a business reform plan is reasonable or achievable.

- 16 -

With respect to the economic impact of the spread of COVID-19, at the end of the previous fiscal year it was expected that the spread of the disease would gently
slow during the next fiscal year and it was assumed that, overall, economic measures by national and local governments would avoid a situation where large loan
losses were incurred due to borrowers’ inability to make repayments. However, during the current fiscal year, when we analyzed the most recent self-assessment
data, borrowers’ financial circumstances had deteriorated more than expected, and considering facts such as that, going forward, repayments of pandemic support
loans will begin, the possibility of further waves due to new variants, and the possibility that national and local governments will wind back their economic support
packages, there is no change to our assumption that the economic impact of COVID-19 will continue to have a certain effect on the financial circumstances of theBank’s borrowers.
Based on this assumption, in order to prepare for anticipated losses from such impact, the borrower classification of borrowers whose performance deteriorates
due to the effect of COVID-19 will be determined based on the immediate deterioration of performance and individually recorded to the allowance for loan losses.
Additionally, the anticipated loss rate when calculating the general allowance for loan losses has been revised based on macroeconomic indices forecasts using suchassumptions. Specifically, we forecast macroeconomic indices that have a high correlation with the probability of loan losses occurring, and use the mathematical
function calculated from the correlation between macroeconomic indices and loan losses to find the anticipated loss rate from the macroeconomic indices forecast
value. We then compare such anticipated loss rate with the loan loss rate during a certain period in the past, and we reflect in the anticipated loss amount thedifference between the amounts calculated on each of these respectively. As a result, the allowance for loan losses at the end of the current fiscal year increased by
2,097 million yen.
Although the amount recorded to the allowance for loan losses as of the end of the current fiscal year is our best current estimate, the various assumptions
pertaining to the estimates allowance for loan losses, including the impact of COVID-19, are highly uncertain, and if the economic environment surrounding
borrowers or borrowers’ business circumstances, etc. change the allowance for loan losses in next fiscal year’s financial statements may increase or decrease.

Notes(Balance Sheet)
1.
2.

Total amount of Shares of Affiliates
1,006 million yen
The claims under the Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions are as follows. Under “securities” on thebalance sheet, credits are posted to the accounts for corporate bonds (limited to those for which the redemption of principal or payment of interest is guaranteed inwhole or in part and the issuance of corporate bonds is in the form of privately-offered securities (Article 2(3) of the Financial Instruments and Exchange Act)),loans, and foreign exchange; under “other assets” to the accounts for accrued interest, suspense payments, and liabilities for acceptances. When loans of securities
are made, as described in the notes, the credits also include the securities (limited to loans for use and leasing agreements).
Amount of claims subject to bankruptcy or
8,119 million yen
reorganization proceedings and equivalent claims
Amount of claims with risks
15,263 million yen
Amount of claims in arrears for three months or
32 million yen
more
Amount of restructured loans
5,326 million yen
Total amount
28,742 million yen“Claims subject to bankruptcy or reorganization proceedings and equivalent claims” means claims held against debtors with failed business status due to grounds
such as filing for the commencement of bankruptcy proceedings, commencement of corporate reorganization proceedings, or commencement of rehabilitation
proceedings, and any other type of claims equivalent thereto.
“Claims with risks” means claims that do not fall under the category of claims subject to bankruptcy or reorganization proceedings and equivalent claims and forwhich, although the debtor has not entered a state of business failure, there is a high possibility that loan principal cannot be recovered or interest cannot be received
according to the contract because of deterioration in the financial condition and business performance of the debtor.
“Claims in arrears for three months or more” are loans for which the payment of principal or interest has been in arrears for three months or more from the day
following the agreed payment date, and do not fall under the category of claims subject to bankruptcy or reorganization proceedings and equivalent claims or claims
with risks.
“Restructured loans” are loans that, for the purpose of the rehabilitation or support of the debtor, have reduced or exempted interest rates, deferred payment ofinterest, deferred repayment of principal, loan forgiveness, or other arrangements that are advantageous to the debtor, and do not fall under the category of claims
subject to bankruptcy or reorganization proceedings and equivalent claims, claims with risks, or claims in arrears for three months or more
The aforementioned amount of claims is before deducting the allowance for loan losses.

- 17 -

(Change in presentation)
Following the implementation from March 31, 2022 of the Cabinet Office Ordinance Partially Revising the Ordinance for Enforcement of the Banking Act, etc.
(Cabinet Office Ordinance No. 3 of January 24, 2020), the categories, etc. of risk-monitored claims under the Banking Act are presented in accordance with theclassification, etc. of disclosed claims under the Act on Emergency Measures for the Revitalization of Financial Functions.
3.

Discounts on negotiable instruments are treated as financial transactions pursuant to the Industry Audit Committee Practical Guidelines No. 24. As a result,
accepted commercial bills and purchased foreign exchange have rights enabling disposition at will by means of sale or (re-) collateralization. The face value ofthese instruments is 5,344 million yen.

4.

In loan participation, the amount recorded on the balance sheet is 4,002 million yen out of the participation principal amount accounted for as loans to original
debtors based on Accounting and Presentation of Loan Participation (Japanese Institute of Certified Public Accountants Accounting System Committee No. 3,
November 28, 2014).

5.

Assets offered as collateral are as follows.
Assets offered as collateral
Securities
203,193 million yen
Loans and bills discounted
98,752 million yen
Obligations corresponding to the collateral assets
Deposits
8,065 million yen
Cash collateral received for bonds lent
9,001 million yen
Borrowed money
291,500 million yen
In addition to the above, 10,190 million yen of cash, 45,227 million yen of securities, and 22,383 million yen of loans and bills discounted have been provided ascollateral for transactions such as foreign exchange settlements or in lieu of margin for futures transactions, etc.
Additionally, other assets includes 320 million yen in guarantee deposits.

6.

Overdraft agreements and commitment line agreements pertaining to loans are agreements agreeing to lend funds up to a certain limit provided there is no breachof the terms and conditions set forth in the agreement if a request is received from a customer to execute a loan. The undrawn loan balance of these agreements is353,425 million yen. Of these agreements, those with a remaining term of one year or less total 317,227 million yen.
As many of these agreements end without being drawn down, the undrawn loan balance itself does not necessarily affect the Bank’s future cash flow. Many ofthese agreements contain provisions to the effect that the Bank may reject the loan or reduce the maximum amount of the contract due to a change in the financial
situation, preservation of claims, and other reasonable grounds. In addition to requiring collateral such as real estate, securities, etc. as necessary at the time ofcontract, the customer’s business conditions are regularly ascertained based on predetermined internal procedures after entering into the contract, and the contract isreviewed and measures taken for credit protection as necessary.
7. A revaluation of land for business use was conducted in conformance with the Act on Revaluation of Land (Act No. 34 of March 31, 1998), and the amountcorresponding to tax on the resulting valuation difference is posted to the liabilities section as a “Deferred tax liabilities for land revaluation,” and the amount after
this deduction is posted to the portion forequity as the “revaluation reserve for land.”Date of revaluation: March 31, 1998
The method of revaluation stipulated in Article 3(3) of the same Act.
In order to calculate the value of land that constitutes the basis of the taxation amount of land value tax stipulated in Article 16 of the Land Value Tax Act
stipulated in Article 2(iv) of the Enforcement Order of the Act on Revaluation of Land (Cabinet Order No. 119 promulgated as of March 31, 1998),
calculations are made after making reasonable adjustments based on the value calculated using the method stipulated and announced by the Commissioner of
National Tax Agency.
8. Amount of cumulative depreciation of tangible fixed assets
15,801 million yen
9. Amount of reduction entries for tangible fixed assets
1,083 million yen
10. The 5,000 million yen of corporate bonds are subordinated corporate bonds.
11. Of the corporate bonds under “securities,” the Bank’s guarantee obligation for corporate bonds through private placement of securities (Article 2(3) of the
Financial Instruments and Exchange Act) is 17,756 million yen.
12. Total amount of monetary claims with respect to affiliates
2,140 million yen
13. Total amount of monetary obligations with respect to affiliates
5,428 million yen
14. The Bank is subject to restrictions on dividends of surplus pursuant to the provisions of Article 18 of the Banking Act.
Notwithstanding the provisions of Article 445(4) (Amount of Stated Capital and Amount of Reserves) of the Companies Act, if dividends are paid from surplus,
an amount corresponding to one-fifth of the deduction from surplus as a result of the payment of those dividends of surplus must be recorded as capital reserves orretained earnings reserves.

- 18 -

The amount recorded to retained earnings reserves with respect to such dividends of surplus in the current fiscal year is 173 million yen.
(Statements of Income)
1. Revenue from transactions with affiliates
Total amount of revenue fund management
Total amount of fees and commissions
Total amount of income pertaining to other operations and ordinarytransactions
Expenses for transactions with affiliates
Total amount of expenses for financing transactions
Total amount of fee and commission payments
Total amount of expenses pertaining to other transactions

670 million yen
103 million yen
4 million yen(0 million yen)
418 million yen
23 million yen

2. During the current fiscal year, the book value of the following assets has been reduced to the recoverable value due to decisions, etc. to change the use of the asset,
and the amounts of such decreases (1,250 million yen) are recorded to extraordinary losses as impairment losses.
Main applications
17 business branches and otherlocations

Impairment loss
(Millions of yen)Type
Land, buildings, and other tangible fixed assets

1,250

Location:Tsu-shi, Mie Prefecture, andother locations

Grouping is carried out in the smallest possible units: Business branches are grouped by each location because the Bank continuously monitors income andexpenditure for each branch, and idle assets are grouped by each asset; the head office and dormitories, etc. are treated as shared assets because they do not generate
independent cash flows. The Bank formerly continuously monitored income and expenditure of business branches by area, but decided to carry out revision of its
loss and profit classifications and conduct continuous monitoring of income and expenditure for each branch, and therefore, beginning in the current fiscal year, thegrouping method for assets relating to business branches changed from grouping by area to grouping by branch. The impact of this change is minor.
The recoverable value used to measure the impairment loss in the current fiscal year is the net sale price. The net sale price is calculated from the real property
appraisal value, etc.
3. “Other extraordinary loss” under “Extraordinary loss” includes premium retirement benefits of 814 million yen and expenses pertaining to re-employment support
services of 62 million yen.

- 19 -

4. Transactions with related parties
Name ofcompany, etc.

Type

Subsidiary(Notes)

ChukyoCo., Ltd.

Location

Stated capital(Millions ofyen)

Proportion of
Description of voting rights, Relationship to related Details of thebusiness:
etc. held (heldpartytransactions
thereby)
Creditbusiness

20-5 Daikancho,
Card Higashi-ku,
Nagoya-shi

card
Ownership
Directlywhollyowned

60 Credit
guarantee
business

Officer(s) Serving
Concurrently
Obligation
guarantees for all
types of loan

Transaction
amount(Millions ofyen)

Guaranteed
obligations(Notes)143,061

Account
title

End of periodbalance(Millions of
yen)

―

―

The Bank receives guarantees from Chukyo Card Co., Ltd. for all types of loans.
Loan terms and conditions are determined for each loan product, taking into consideration the credit risk for the loan user.

(Statements of Changes in Equity)
Matters regarding class and number of treasury shares(Unit: thousands of yen)
Number of shares at the
beginning of the current
fiscal year

Increase in number ofshares in current fiscal
year

Decrease in number ofshares in the current
fiscal year

Number of shares at theend of the current fiscal
year

Summary

Treasury shares
Common shares
Total(Notes)30

126

5 (Notes)

30

1

26

5

The increase in treasury shares of common shares of 1,000 shares is due to purchases of fractional units of shares. Additionally, the decrease intreasury shares of 26,000 shares is due to the exercise of stock options.
(Securities)
Includes “Japanese government bonds,” “Local government bonds,” “Corporate bonds,” “Shares,” and “Available-for-sale securities” in the balance sheets.
1. Shares in subsidiaries, subsidiary corporations, etc. and affiliated corporations, etc. (as of March 31, 2022)
Not applicable.
Amount of shares, etc. without market price reported on the balance sheet is as follows.
Value on the balance sheet(Millions of yen)
Shares of subsidiaries
corporations, etc.

andsubsidiary

1,006- 20 -

2. Available-for-sale securities (as of March 31, 2022)
Type

Items for which balance sheet
figures exceed acquisition cost

Value on the balance sheet(Millions of yen)Amount of difference(Millions of yen)

Shares

21,712

10,304

11,407

Bonds
Japanesegovernment
bonds
Local government bonds

133,454

132,790664

54,80454,535268

27,30027,128171

51,34951,126

223

38,29435,682

2,611

193,461

178,778

14,682

1,990

2,198

(207)

149,126

150,352(1,226)

51,68552,137(451)

58,28458,764(479)

39,15539,450(294)

56,80459,019(2,214)

207,921211,569(3,648)401,382

390,348

11,034

Corporate bonds
Other
Sub Total
Shares

Items for which balance sheet
figures do not exceed acquisition
cost

Acquisition cost
(Millions of yen)

Bonds
Japanesegovernment
bonds
Local government bonds
Corporate bonds
Other
Sub Total

Total(Notes) Amount posted to the balance sheet of shares, etc. without market prices and partnership investments not included in the table above
Value on the balance sheet(Millions of yen)
Unlisted shares

3,415

Partnership investments

252

Total

3,667

Partnership investments are not subject to disclosure of fair values under Paragraph 27 of “Application Guidelines for Accounting Standard for Fair Value
Measurement” (Corporate Accounting Standard Application Guideline No. 31, July 4, 2019).
3. Available-for-sale securities sold during the current fiscal year (from April 1, 2021 to March 31, 2022)
Sale proceeds (million yen)

Total gains on sale (million yen)

Total losses on sale (million yen)

Shares

8,483

4,023

304

Bonds

10,591

0

252

Japanese government bonds

10,111－

252

Local government bonds

－

－

－

Corporate bonds

479

0

－

23,269

1,519

1,138

42,344

5,543

1,696

Other
Total

4. Securities subject to impairment
For securities other than trading securities (excluding stocks, etc. without market prices and partnership investments), securities for which the fair value ishas fallen 50% or more, the amount posted to the balance sheet is the fair value, and the valuation difference is treated as a loss for the current fiscal year(“Impairment Treatment” hereinafter). For securities that have fallen 30% or more and for which the fair value has significantly fallen due to factors such as
credit risk changes, Impairment Treatment is carried out except for in cases where it is recognized that generally the fair value will recover to the acquisition
price within one year.
The amount of Impairment Treatment in the current fiscal year is 0.

- 21 -(Tax effect accounting)
The breakdown by major cause of deferred tax assets and deferred tax liabilities is as follows.
Deferred tax assets
Excess of maximum amount of allowance for loan losses deductible for tax purposes
Securities impairment
Excess of maximum amount of depreciation for tax purposes
Impairment loss
Provision for bonuses
Other
Deferred tax assets subtotal
Valuation allowance for total temporary differences on future deductions
Valuation allowance subtotal
Deferred tax assets total
Deferred tax liabilities
Net unrealized gain on available-for-sale securities
Reserve for tax purpose reduction entry of non-current assets
Allowance for retirement benefits
Deferred gains or losses on hedges
Other
Deferred tax liabilities total
Net deferred tax liabilities

2,959 million yen
910
562
1,014
158
692
6,297
(3,854)(3,854)2,443(2,925)
(150)
(197)
(208)
(43)
(3,524)(1,081) million yen(Revenue Recognition)
Breakdown of revenue arising from contracts with customers(Unit: million yen)
Category
Fees and commissions

Current Fiscal Year
5,470

Deposits and lending services

2,439

Exchange services

1,281

Securities-related services

1,074

Agency services

545

Other

130
－

Other operating income－

Other ordinary income
Ordinary income from contracts with customers

5,470

Ordinary income other than the above

25,989Ordinary income with respect to external customers

31,459(Per-share information)
Equity per share: 4,866.85 yen
The number of common shares at the end of the current fiscal year used to calculate the amount of equity per share is calculated minus shares held in the Bank’s
name.
Earnings per share for the period: 195.13 yen
The average number of common shares during the fiscal year used to calculate the amount of earnings per share for the period is calculated minus shares held in the
Bank’s name.
Diluted amount of earnings per share for the period: 194.00 yen
The average number of common shares during the fiscal year used to calculate the diluted amount of earnings per share for the period is calculated minus shares heldin the Bank’s name.

- 22 -

(Significant post-balance sheet events)
Notes have been omitted due to sharing the same content stated in the consolidated balance sheets.

- 23 -

116thApril 1, 2021
Accounting ( From
to March 31, 2022 )Year

Consolidated Statement of
Changes in Equity(Unit: millions of yen)

Shareholders’ Equity

Stated capital

Balance at beginning of period
Cumulative effects of changes in accounting
policies
Balance at beginning of period after changes inaccounting policy

31,844

Capitalsurplus23,994

Accumulated Other Comprehensive Income

Retained
Earnings

Treasuryshares35,211(78)(48)
31,84423,99435

35

35,163

Other
Valuation
Total
difference
shareholders’onequityavailablefor-salesecurities
90,973

Deferred
gains orlosses onhedges

Revaluation
reserve forland

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensive
income14,393

(650)

5,407

269

19,41914,393

(650)

5,407

269

19,419(48)(78)

90,924

Changes during period
Issuance of new shares

70

Dividends of surplus(869)

Profit for period attributable to owners ofparent

3,728

(869)
3,728

Purchase of treasury shares(2)

Disposal of treasury shares(13)

Reversal of revaluation reserve for land

542

68

(2)
54
542

Net changes in items other than shareholders’equity for period
Total changes during period
Balance at end of period(6,282)

1,123

(542)

(250)

(5,952)

35

35

3,387

66

3,523

(6,282)

1,123

(542)

(250)

(5,952)

31,87924,02938,551(11)

94,448

8,110

472

4,864

18

13,466

Rights to
subscribe for Total equity
new shares
Balance at beginning of period
Cumulative effects of changes in accounting
policies
Balance at beginning of period after changes inaccounting policy

299

110,691299

110,643(48)

Changes during period
Issuance of new shares

70

Dividends of surplus(869)

Profit for period attributable to owners ofparent

3,728

Purchase of treasury shares(2)

Disposal of treasury shares

54

Reversal of revaluation reserve for land542

Net changes in items other than shareholders’equity for period(68)(6,021)

Total changes during period(68)(2,497)

Balance at end of period

230

108,146- 24 -

Notes to the Consolidated Financial Statements
The definitions of “subsidiary,” “subsidiary corporation, etc.,” and “affiliated corporation, etc.” are based on Article 2(8)of the Banking Act and Article 4-2 of the
Enforcement Order of the Banking Act.
*Stated monetary amounts are rounded down to the nearest million yen.
Consolidated financial statements preparation policies
1. Matters on the scope of consolidation
Consolidated subsidiaries and subsidiary corporations, etc.
Name of company

2 companies

Chukyo Card Co., Ltd.
Chukyo Finance Co., Ltd.
2. Matters on application of the equity method
Equity-method affiliated corporations, etc.

None

3. Matters concerning the fiscal years, etc. of consolidated subsidiaries and subsidiary corporations, etc.
Below are the closing dates of fiscal years of consolidated subsidiaries and subsidiary corporations, etc.
Last day of March

2 companies

Matters regarding accounting policies
1. Valuation basis and valuation method for securities
The valuation of securities is in principle carried out using the fair value method (COGS is calculated on a rolling average) based on the market price, etc.
on the consolidated closing date in the case of available-for-sale securities. However, in the case of shares, etc. that do not have a market price it is carried out
using the cost method on a rolling average basis.
Valuation differences on available-for-sale securities are included in equity.
2. Valuation standards and valuation methods for derivatives
Valuation of derivative transactions is carried out using the fair value method.
3. Depreciation method for non-current assets(1) Tangible fixed assets (excluding leased assets)
The Bank’s tangible fixed assets are depreciated using the declining balance method (straight-line method for buildings (excluding ancillary equipment)
acquired on or after April 1, 1998, and for ancillary equipment and structures acquired on or after April 1, 2016).
The principal useful life is as follows:
Buildings: 7–50 years
Other: 3-20 years
The tangible fixed assets of consolidated subsidiaries and subsidiary corporations, etc. are primarily amortized using the straight line method.
(2) Intangible non-current assets (excluding leased assets)
Intangible non-current assets are depreciated using the straight-line method. Furthermore, software used by the company is depreciated based on the usefullife determined by our bank and consolidated subsidiaries and subsidiary companies, etc. (up to 8 years).
(3) Leased assets
Leased assets in “tangible fixed assets” and “intangible fixed assets” pertaining to finance lease transactions not involving ownership transfer are amortizedusing the straight-line method, with the lease term as the useful life of the assets. For the residual value, the residual value guarantee is used for leasing
agreements with residual value guarantees, and zero is used for all others.

- 25 -

4. Standards for accounting of allowance for loan losses
The Bank records allowances for possible loan losses based on predetermined write-off and allowance standards, as shown below.
(1) Claims pertaining to borrowers (failed borrowers) whose business is legally or formally failing, such as bankruptcy or special liquidation, and debtors
substantially under the same circumstances (substantially failed borrowers) are recorded by recording the balance after deducting the anticipated disposal
amount of security and the anticipated amount recoverable from guarantees from the amount of the claim.
(2) With respect to claims pertaining to borrowers where there is not currently business failure, but it is recognized that there is a strong possibility that theirbusiness will fail going forward (borrowers at risk of failure), for claims against major borrowers with a credit amount in excess of a certain amount for
which the cash flow for collection of the principle and receipt of interest can be reasonably estimated, the allowance for loan losses is recorded as thedifference between the amount calculated by discounting such cash flow by the original agreed interest rate and the book value of the claim (cash flow
estimation method). Claims against other borrowers are predominantly recorded by deducting the anticipated disposal amount of security and the anticipatedamount recoverable from guarantees from the amount of the claim and recording the expected amount of loss on the balance thereof for the following threeyear period. The amount of loss is calculated based on the average loan loss rate based on loan losses for three years, for a certain period in the past, and theallowance for loan losses is recorded using an anticipated loan loss rate calculated by making revisions based on forecasts to such amount.
(3) Of borrowers where issues arise regarding the loan conditions or repayment performance and business is weak or unstable and future management needs tobe monitored (borrowers requiring monitoring), borrowers for whom all or part of the claims are claims requiring management (restructured loans and claims
in arrears for three months or more) (borrowers requiring management) that are major borrowers with a credit amount exceeding a certain amount for which
the cash flow for collection of the principle and receipt of interest can be reasonably estimated, the allowance for loan losses is recorded using the cash flow
estimation method.
(4) Claims against borrowers requiring management other than in (3) above are recorded using the anticipated amount of loss for the following three year
period, and claims against borrowers requiring monitoring and borrowers recognized to have well performing business and no particular financial issues(ordinary borrowers) are recorded using the anticipated loss for the next one year period. The anticipated loan loss amount is calculated by finding the
average loan loss rate based on loan losses for three years or one year, for a certain period in the past, and the allowance for loan losses is recorded using ananticipated loan loss rate calculated by making revisions based on forecasts to such amount.
(5) For all claims, sales-related departments perform asset assessments based on the self-assessment standards for the asset, and, after verification of theassessment results by an asset assessment department independent from the sales-related department, an asset audit department audits the assessment results.
The amount of allowances for bad debts for consolidated subsidiaries and subsidiaries, etc. is the amount believed necessary in light of the past bad debt
ratio, etc., and for certain receivables such as potential bad debts, an estimated unrecoverable amount is recorded, taking into account the possibility ofcollection.
(Changes to accounting estimates)
The Bank records the general allowance for loan losses regarding claims against ordinary borrowers and other borrowers requiring monitoring by estimating
the anticipated loss amount for the following one year period. The loan loss rate is calculated based on the average loan loss rate based on loan losses for the
anticipated amount of losses for one year, for a certain period in the past, and the allowance for loan losses is recorded using an anticipated loan loss rate
calculated by making revisions based on forecasts to such amount.
With respect to the method of revising the anticipated loan loss rate based on forecasts, because it has become possible to reflect anticipated macroeconomic
indices in the current consolidated accounting year, we have adopted such method.
Specifically, we forecast macroeconomic indices that have a high correlation with the probability of loan losses occurring, and use the mathematical
function calculated from the correlation between macroeconomic indices and loan losses to find the anticipated loss rate from the macroeconomic indicesforecast value. We then compare such anticipated loss rate with the loan loss rate during a certain period in the past, and if necessary, we reflect in the
anticipated loss amount the difference between the amounts calculated on each of these respectively.
As explained in “Significant accounting estimates,” this consolidated accounting year we made revisions based on future forecasts of macroeconomic
indices due to a change in certain assumptions, the allowance for loan losses increased by 2,097 million yen as of the end of this consolidated accounting year
and this consolidated accounting year’s ordinary profit and profit before income taxes decreased by 2,097 million yen.
5. Standards for accounting of provision for bonuses
The provision for bonuses is the amount attributable to the current consolidated accounting year out of the projected amount of bonuses payable toemployees, set aside to prepare for the payment of bonuses to employees.
6. Standards for accounting of provision for reimbursement of deposits
In order to prepare for refund losses based on reimbursement claims from depositors for inactive accounts removed from liabilities and recorded as profit,
we have recorded the projected future refund loss based on past refund records as an allowance for redemption losses on inactive accounts.

- 26 -

7. Standards for accounting of provision for contingent loss
In order to prepare for payment of the amount to be paid to credit guarantee corporations pursuant to the liability sharing system with credit guarantee
corporations, the provision for contingent loss records the anticipated future payment burden.
8. Accounting method for retirement benefits
When calculating the retirement benefit obligations, the estimated benefit obligation is attributed to periods up until the end of the consolidated accounting
year on a benefit formula basis. Below is the gain or loss treatment method actuarial calculation variances.
Actuarial
Variances are treated as profit or loss in the next consolidated accounting year following the consolidated accounting year in which theydifferences:are generated, and are allocated using a straight-line method based on a predetermined number of years (11 years) within the averageremaining term of employment of employees during the individual consolidated accounting years in which variances are generated

Consolidated subsidiaries and subsidiary corporations, etc., apply simplified accounting that uses the amount that would be paid if all eligible employees
voluntarily retired at the end of period as an approximation of the retirement benefit liabilities when calculating liabilities and expenses.
9. Standards for translating foreign currency assets and liabilities into Japanese currency
The Bank’s foreign currency-denominated assets and liabilities are predominantly converted into yen using the exchange rate on the consolidated closingdate.
10. Significant hedge accounting methods(1) Interest rate risk hedging
The Bank’s method of hedge accounting for interest rate risk arising from financial assets and liabilities is based on deferred hedges prescribed in“Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry” (Japanese Institute ofCertified Public Accountants Industry Committee Practical Guidelines No. 24, March 17, 2022; “Industry Audit Committee Practical Guidelines No. 24”).
With regard to the hedging effectiveness assessment method, for hedging that offsets market fluctuations, we identify and evaluate the deposits and loans, etc.
to be hedged and interest rate swap transactions, which are hedging instruments individually or grouped for a certain period. In addition, with regard to
hedging that fixes cash flows, effectiveness is evaluated by verifying the correlation between interest rate fluctuation factors of the hedged items and thehedging instruments.
(2) Foreign exchange fluctuation risk hedging
Hedge accounting for foreign exchange fluctuation risks generated by the Bank's foreign currency-denominated financial assets and liabilities follow thedeferred hedging set forth in “Accounting and Auditing Treatments of Accounting Processing for Foreign Currency-Denominated Transactions, etc. in
Banking” (Japanese Institute of Certified Public Accountants Industry-Specific Committee Practical Guidelines No. 25, October 8, 2020). For the method of
evaluating hedge effectiveness when foreign-exchange swaps, hedging instruments and similar instruments are used as the hedged asset to mitigate the foreignexchange fluctuation risks of foreign currency receivables and payables, etc., the bank confirms the existence of an amount equivalent to the hedged positionin the foreign currency commensurate to the foreign currency receivables and payables, etc. that are hedged, and evaluates the effectiveness of the hedge.
11. Accounting treatment for consumption tax, etc.
The Bank posts consumption tax, etc. on tangible fixed assets excluded from deduction to expenses for the current consolidated accounting year.
Changes to accounting policies(Application of Accounting Standards for Recognition of Revenue)“Accounting Standard for Revenue Recognition” (Corporate Accounting Standard No. 29, March 31, 2020; “Accounting Standard for Revenue
Recognition” hereinafter), etc. is applied from the beginning of the consolidated accounting year under review, and at the time control of the promised good orservice is transferred to the customer, the amount expected to be received in exchange for the good or service is recognized as income.
The application of revenue recognition accounting standards, etc., is in accordance with the transitional treatment set forth in the proviso to Paragraph 84 of
the accounting standards for revenue recognition. The cumulative effect amount for the first applicable fiscal year in the case that a new accounting policy was
retroactively applied prior to the beginning of the current consolidated accounting year has been added or reduced to retained earnings at the beginning of thecurrent consolidated accounting year, and the new accounting policy is applied from that beginning balance.
Consequently, the impact on the consolidated financial statements for the current consolidated accounting year is minor.
(Application of Accounting Standards for Fair Value Measurement, etc.)
The Accounting Standards for Fair Value Measurement, etc. (Corporate Accounting Standards No. 30, July 4, 2019; “Fair Value Measurement AccountingStandards”) have been applied from the beginning of the current consolidated accounting year, and in accordance with the transitional treatment set forth in
Section 19 of the Fair Value Measurement Accounting Standards and Section 44-2 of the Accounting Standards for Financial Instruments (Corporate- 27 -

Accounting Standards No. 10, July 4, 2019), the new accounting policies established by the Fair Value Measurement Accounting Standards will be applied in
the future. Furthermore, it has no effect on the consolidated financial statements for the current consolidated accounting year.
Significant accounting estimates
The following items for which the amount was recorded in the consolidated financial statements for the current consolidated accounting year based on an
accounting estimate, which could have a material influence on the consolidated financial statements for the following consolidated accounting year are theallowance for loan losses.
1. Amount posted to the consolidated financial statements for the current consolidated accounting year.
Allowance for loan losses: 11,093 million yen (of which, 4,487 million yen is a general allowance for loan losses)
2. Information that contributes to an understanding of the content of a significant accounting estimate pertaining to the identified item
The Bank determines the borrower classification for each borrower (ordinary borrowers, borrowers requiring monitoring (borrowers requiring management andother borrowers requiring monitoring), borrowers at risk of failure, substantially failed borrowers, failed borrowers) based on the borrower’s financial informationand obtainable outside information, etc., and records it to the allowance for loan losses using the calculation method stated in “Matters regarding accounting
policies,” “4. Standards for accounting of allowance for loan losses.”
Of the determination of borrower classifications, borrowers judged to be performing badly or facing financial difficulties and have implemented changes to loan
conditions, etc., but have a reasonable business reform plan, etc. formulated on the assumption of support from a financial institution, etc. and that has a strong
possibility of being achieved (“Reasonable and Feasible Plan”) or if the borrower has a plan that is judged to be a drastic plan business reform plan, etc. with astrong possibility of being achieved (“Feasible Drastic Plan”), it will be determined to not fall under the definition of a loan with relaxed terms, and will be recorded
as an allowance for loan losses classified as other borrower requiring monitoring. As of March 31, 2022 there are 2,483 million yen in claims classified as otherborrower requiring monitoring due to having a Reasonable and Feasible Plan or a Feasible Drastic Plan on the consolidated financial statements. The allowance forloan losses on the consolidated financial statements may increase or decrease in the following consolidated accounting year due to changes to the operating
environment, etc. of the borrower that constitutes the assumptions for determining whether a business reform plan is reasonable or achievable.
With respect to the economic impact of the spread of COVID-19, at the end of the previous consolidated accounting year it was expected that the spread of thedisease would gently slow during the next consolidated accounting year and it was assumed that, overall, economic measures by national and local governments
would avoid a situation where large loan losses were incurred due to borrowers’ inability to make repayments. However, during the current consolidated accounting
year, when we analyzed the most recent self-assessment data, borrowers’ financial circumstances had deteriorated more than expected, and considering facts suchas that, going forward, repayments of pandemic support loans will begin, the possibility of further waves due to new variants, and the possibility that national andlocal governments will wind back their economic support packages, there is no change to our assumption that the economic impact of COVID-19 will continue tohave a certain effect on the financial circumstances of the Bank’s borrowers.
Based on this assumption, in order to prepare for anticipated losses from such impact, the borrower classification of borrowers whose performance deteriorates
due to the effect of COVID-19 will be determined based on the immediate deterioration of performance and individually recorded to the allowance for loan losses.
Additionally, the anticipated loss rate when calculating the general allowance for loan losses has been revised based on macroeconomic indices forecasts using suchassumptions. Specifically, we forecast macroeconomic indices that have a high correlation with the probability of loan losses occurring, and use the mathematical
function calculated from the correlation between macroeconomic indices and loan losses to find the anticipated loss rate from the macroeconomic indices forecast
value. We then compare such anticipated loss rate with the loan loss rate during a certain period in the past, and we reflect in the anticipated loss amount thedifference between the amounts calculated on each of these respectively. As a result, the allowance for loan losses at the end of the current consolidated accounting
year increased by 2,097 million yen.
Although the amount recorded to the allowance for loan losses as of the end of the current consolidated accounting year is our best current estimate, the various
assumptions pertaining to the estimates allowance for loan losses, including the impact of COVID-19, are highly uncertain, and if the economic environment
surrounding borrowers or borrowers’ business circumstances, etc. change the allowance for loan losses in next consolidated accounting year’s consolidated
financial statements may increase or decrease.

- 28 -

Matters to Be Set Down in Notes(Consolidated balance sheet-related)
1.

The claims under the Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions are as follows. Under “securities” on the
consolidated balance sheet, credits are posted to the accounts for corporate bonds (limited to those for which the redemption of principal or payment of interest is
guaranteed in whole or in part and the issuance of corporate bonds is in the form of privately-offered securities (Article 2(3) of the Financial Instruments andExchange Act)), loans, and foreign exchange; under “other assets” to the accounts for accrued interest, suspense payments, and liabilities for acceptances. Credits
may also include the securities (limited to loans for use and leasing agreements) when loans of securities are made, as described in the notes.
Amount of claims subject to bankruptcy or reorganization proceedings and equivalent claims
8,549 million yen
Amount of claims with risks
Amount of claims in arrears for three months or moreAmount of restructured loans

15,426 million yen
32 million yen
5,410 million yen

Total amount

29,420 million yen“Claims subject to bankruptcy or reorganization proceedings and equivalent claims” means claims held against debtors with failed business status due to grounds
such as filing for the commencement of bankruptcy proceedings, commencement of corporate reorganization proceedings, or commencement of rehabilitation
proceedings, and any other type of claims equivalent thereto.
“Claims with risks” means claims that do not fall under the category of claims subject to bankruptcy or reorganization proceedings and equivalent claims and forwhich, although the debtor has not entered a state of business failure, there is a high possibility that loan principal cannot be recovered or interest cannot be received
according to the contract because of difficulties in the financial condition and business performance of the debtor.
“Claims in arrears for three months or more” are loans for which the payment of principal or interest has been not paid for three months or more from the day
following the agreed payment date, and do not fall under the category of claims subject to bankruptcy or reorganization proceedings and equivalent claims or claims
with risks.
“Restructured loans” are loans that, for the purpose of the rehabilitation or support of the debtor, have reduced or exempted interest rates, deferred payment ofinterest, deferred repayment of principal, loan forgiveness, or other arrangements that are advantageous to the debtor, and do not fall under the category of claims
subject to bankruptcy or reorganization proceedings and equivalent claims, claims with risks, or claims in arrears for three months or more
(Change in presentation)
Following the implementation from March 31, 2022 of the Cabinet Office Ordinance Partially Revising the Ordinance for Enforcement of the Banking Act, etc.
(Cabinet Office Ordinance No. 3 of January 24, 2020), the categories, etc. of risk-monitored claims under the Banking Act are presented in accordance with theclassification, etc. of disclosed claims under the Act on Emergency Measures for the Revitalization of Financial Functions.
2. Discounts on negotiable instruments are treated as financial transactions pursuant to the Industry Audit Committee Practical Guidelines No. 24. As a result,
accepted commercial bills and purchased foreign exchange have rights enabling disposition at will by means of sale or (re-) collateralization. The face value ofthese instruments is 5,344 million yen.
3. In loan participation, the amount recorded on the consolidated balance sheet is 4,002 million yen out of the participation principal amount accounted for as loans
to original debtors based on Accounting and Presentation of Loan Participation (Japanese Institute of Certified Public Accountants Accounting System Committee
No. 3, November 28, 2014).
4. Assets offered as collateral are as follows.
Assets offered as collateral
Securities
203,193 million yen
Loans and bills discounted
98,752 million yen
Obligations corresponding to the collateral assets
Deposits
8,065 million yen
Cash collateral received for bonds lent
9,001 million yen
Borrowed money
291,500 million yen
In addition to the above, 10,190 million yen of cash, 45,227 million yen of securities, and 22,383 million yen of loans and bills discounted have been provided ascollateral for transactions such as foreign exchange settlements and futures trading margins, etc.
Additionally, other assets includes 320 million yen in guarantee deposits.
5. Overdraft agreements and commitment line agreements pertaining to loans are agreements agreeing to lend funds up to a certain limit provided there is no breach of
the terms and conditions set forth in the agreement if a request is received from a customer to execute a loan. The undrawn loan balance of these agreements is- 29 -

362,849 million yen. Of these agreements, those with a remaining term of one year or less total 317,227 million yen.
As many of these agreements end without being drawn down, the undrawn loan balance itself does not necessarily affect future cash flows of our bank or
consolidated subsidiaries and subsidiary companies, etc. Many of these agreements contain provisions to the effect that if there is a change in the financial situation,
the preservation of claims, or there are other reasonable grounds, our bank and its consolidated subsidiaries and subsidiary companies, etc. may refuse the loan or
reduce the maximum amount of the contract. In addition to collecting collateral for real estate and securities, etc. as necessary at the time of the execution of thecontract, we have ascertained the customer's business conditions based on the internal bank (internal company) procedures set in advance after entering into thecontract, and revise the contract and take measures to preserve credit as necessary.
6.

A revaluation of land for business use was conducted in conformance with the Act on Revaluation of Land (Act No. 34 of March 31, 1998), and the amountcorresponding to tax on the resulting revaluation difference is posted to the portion for liabilities as a “deferred tax liability for revaluation,” and the amount after
this deduction is posted to the portion for equity as the “land revaluation difference amount.”
Date of revaluation:
March 31, 1998
The method of revaluation stipulated in Article 3(3) of the same Act.
In order to calculate the value of land that constitutes the basis of the taxation amount of land value tax stipulated in Article 16 of the Land Value Tax Act
stipulated in Article 2(iv) of the Enforcement Order of the Act on Revaluation of Land (Cabinet Order No. 119 promulgated as of March 31, 1998),
calculations are made after making reasonable adjustments based on the value calculated using the method stipulated and announced by the Commissioner of
National Tax Agency.

7.

Amount of depreciation of tangible fixed assets

15,973 million yen

8.

Amount of reduction entries for tangible fixed assets

1,083 million yen

9.

The 5,000 million yen of corporate bonds are subordinated corporate bonds.

10. Of the corporate bonds in “Securities,” the guarantee obligation for corporate bonds through private placement of securities (Article 2, Paragraph 3 of the
Financial Instruments and Exchange Act) is 17,756 million yen.
(Consolidated statement of income)1.
2.

“Other ordinary expenses” includes 4 million yen in write-offs of stock, etc.
During the current consolidated accounting year, the book value of the following assets has been reduced to the recoverable value due to decisions, etc. to change

the use of the asset, and the amounts of such decreases are recorded to extraordinary losses as impairment losses of 1,250 million yen.

Main applications

Type

17 business branches and other locations

Land, buildings, and other tangible fixed assets

Impairment loss
(Millions of yen)
1,250

Location:Tsu-shi, Mie Prefecture, andother locations

Grouping is carried out in the smallest possible units. Business branches are grouped by each location because the Bank continuously monitors income andexpenditure for each branch, and idle assets are grouped by each asset. Head office and dormitories, etc. are treated as shared assets because they do not generate
independent cash flows. The Bank formerly continuously monitored income and expenditure of business branches by area, but decided to carry out revision of its
loss and profit classifications and conduct continuous monitoring of income and expenditure for each branch, and therefore, beginning in the current consolidated
accounting year, the grouping method for assets relating to business branches changed from grouping by area to grouping by branch. The impact of this change isminor.
The recoverable price used to measure the impairment loss for the current consolidated accounting year is the net sales price. The net sale price is calculated fromthe real property appraisal value, etc.
There are no assets subject to impairment loss at consolidated subsidiaries.
3. “Other extraordinary loss” under “Extraordinary loss” includes premium retirement benefits of 814 million yen and expenses pertaining to re-employment
support services of 62 million yen.
(Consolidated Statement of Changes in Shareholder Equity)
1. Items concerning classes and total numbers of issued shares and classes and number of shares of treasury shares(Unit: thousands of yen)

- 30 -

Number of shares at
beginning of
consolidated
accounting year

Increase in number ofshares duringconsolidated
accounting year

Decrease in numberof shares duringconsolidated
accounting year

Number of shares at
end of consolidated
accounting year

Summary

Issued Shares
Common shares
Total

21,74534－

21,780 (Note 1)

21,74534－

21,78030

126

5 (Note 2)

30

1

26

5

Treasury Shares
Common shares
Total(Note 1) The increase by 34,000 shares of the total number of issued shares of the common shares is due to the issuance of new shares upon the exercise ofrights to subscribe for new shares.
(Note 2) The increase in treasury shares of ordinary shares of 1,000 shares is due to purchases of fractional units of shares. Additionally, the decrease in treasury
shares of 26,000 shares is due to the exercise of stock options.

- 31 -

2.

Notes on rights to subscribe for new shares and rights to acquire treasury shares
The classes of
Total number of rights shares subject toCategory to subscribe for new rights
tosharessubscribe for new
sharesRights to subscribe
Chukyofor new shares as
Bankstock options
Total

3.

Number of shares subject to rights to subscribe for new shares
Beginning ofCurrent Consolidated
End of Current
Current
Accounting Year
Consolidated
Consolidated
Accounting Year
Increase
Decrease
Accounting Year

Balance at End of
Current
Consolidated
Accounting Year
(Millions of yen)

―

230

―

230

SummaryMatters Regarding Dividends
Dividends paid during the current consolidated accounting year
(Resolutions)
June 25, 2021
Annual General
Meeting of
Shareholders
November 11, 2021
Board of directors
Total

Total dividend
amountShare class

Dividend per share

Record date

Effective dateCommon shares

434 million yen

20.00 yenMarch 31, 2021

June 28, 2021

Common shares

435 million yen

20.00 yen

September 30, 2021

December 6, 2021

869 million yen

The following proposals with respect to the dividends to common shares have been placed on the agenda for the Annual General Meeting of Shareholders to beheld on June 24, 2022.
(i) Total dividend amount

762 million yen(ii) Dividend per share(iii) Record date

35 yenMarch 31, 2022(iv) Effective date:June 27, 2022
The funds for the dividend will come from retained earnings.

- 32 -

(Financial instruments)
1.

Matters related to the status of financial instruments(1) The policy for dealing with financial instruments
The Group is engaged in financial services business with its main focus being deposits, lending, securities investment, and other banking business. As such, itmainly holds financial assets and liabilities that carry interest rate risk, and therefore it conducts market risk management and general asset and liability
management (ALM) to prevent the negative effects of interest rate changes. It conducts derivatives transactions as part of those measures.
One of the Bank’s consolidated subsidiaries is also engaged in credit card business.
(2) Details and risks of financial instruments
The Bank’s financial assets are mainly loans to businesses and individuals in Japan, which exposes it to credit risk. Loans and bills discounted carry thepossibility that debts will not be performed in accordance with the agreements due to deterioration of the debtors’ financial circumstances or the like.
The investment securities mainly consist of shares, bonds, and investment trusts, and all are held as available-for-sale securities. These are exposed to issuer
credit risk, interest rate fluctuation risk, and market price fluctuation risk.
In addition to deposits business, the Group issues corporate bonds for financing purposes, but there is a liquidity risk that the Group will be unable torefinance the bonds on the payment date if the Group becomes unable to use the markets under certain circumstances.
Derivative transactions include interest rate swaps performed as part of ALM. These are held as hedging instruments, and hedge accounting is applied withrespect to the interest rate risk on the hedged deposits, loans and bonds. Hedge effectiveness is judged by comparing the hedge items with the aggregate of the
cash flow fluctuations of the hedging instruments and based on the changes, etc. of both during the period from the start of hedging to the time of theeffectiveness evaluation.
(3) Risk management for financial instruments(a) Credit Risk Management
The Group has established and operates a system for credit management including individual credit checks, credit authorization, portfolio management,
credit information management, credit rating, setting of guarantees and collateral, and handling of problem debts, pursuant to the credit policy and credit
risk rules that were established as standards for the Bank’s lending.
This individualized credit management is conducted by sales branches and also by the Loan Management Department, with portfolio management
including credit authority management being handled by the Risk Management Department. The Group also periodically holds meetings of the Executive
Committee and the board of directors to discuss management methods and the current status of management.
In addition, the Internal Audit Department checks the current status of credit management.
The Funds Department periodically checks credit information with respect to credit risk, derivative risk, and counterparty risk associated with securities
issuers.
(b) Market Risk Management
The Bank maintains its overall market risk including interest risk within the limit set semiannually by the board of directors.
Market risk volume is measured daily using value at risk (VaR), and the General Risk Management Committee meets once per month to monitor riskvolume versus the market risk limit and discuss risk-reduction measures as necessary. The content is reported to the Executive Committee and the board of
directors.
(i) Interest Risk Management
The ALM Committee meets every three months to comprehensively review the status of assets and liabilities and discuss measures against inherent
credit risk, which it reports to the Executive Committee and the Board of Directors. The General Risk Management Committee meets every month tomonitor interest risk volume by reviewing the status of risk volume versus market risk limit and calculating the interest rate risk in the banking book,which it compares to the bank’s equity (materiality test). Based on the results of that monitoring and changes in the market environment, etc., interest
swap transactions are conducted to hedge interest rate risk as necessary.
(ii) Exchange Rate Risk Management
The Funds Department conducts a unified review of the Bank’s overall exchange position and controls the position through a full hedging policy
using direct exchange transactions and forward exchange transactions. The Risk Management Department monitors the daily market risk volume basedon hedged exchange positions.

- 33 -

(iii) Price Fluctuation Risk Management
Securities investment is conducted based on the biannual securities investment plan, in accordance with the investment management regulations. The
biannual market risk management policy is used to control price fluctuation risk, including setting the market risk limit and holding limits for various
risk categories and alarm points for rates of decrease.
Many of the shares are issued by the Bank’s clients, and the shareholdings as a whole promote the Bank’s business. The Bank periodically reviews
its shareholdings based on its business relationships with those clients and their financial condition.
(iv) Derivative Transactions
Derivative transactions are conducted for hedging purposes as stated above, and the Risk Management Department monitors market risk volume
including derivative transactions.
(v) Quantitative information on market risk
For “Loans and bills discounted,” “Securities,” “Corporate bonds,” “Deposits,” and other market risk volume (VaR) calculations, historicalsimulation is used (with a holding period of 125 days, a confidence interval of 99%, and an observation period of 1,250 business days).
As of March 31, 2022 (consolidated closing date for the current period), overall market risk (estimated amount of loss) is 13,282 million yen.
The bank group conducts backtesting that compares the actual profit and loss to the VaR calculated by the model to confirm its appropriateness every
six months.
However, VaR measures the market risk volume at a certain probability of occurrence calculated statistically based on past market fluctuations, andit may not be possible to calculate the risk in circumstances where the market environment has changed significantly and expectedly.
(c) Liquidity risk management
The Bank formulates a funds plan with reference to management and procurement in its semiannual liquidity risk management policy, and monitors daily
cash flow and discusses the market environment, measures to maintain the balance of management and procurement, and other matters at the cash-flow
management meetings held every ten days and the General Risk Management Committee meetings held every month.
(4) Supplementary explanation for fair value, etc. of financial instruments
Since the fair value of financial instruments uses certain assumptions, etc., such values may differ if different assumptions, etc. are applied.

- 34 -

2.

The matters related to the fair value, etc. of Financial Instruments.
The book value on the consolidated balance sheet and fair value of financial instruments as of March 31, 2022 as well as the differences between these values aredescribed below. Note that stocks, etc. without market prices and partnership investments are not included in the following table (see Note 1). Notes are omitted
because cash deposits entrusted, foreign exchange (assets and liabilities), call money, and security accepted in bond lending are settled in short periods of time andhave fair values that approximate book values.
(Unit: millions of yen)Amount included on consolidatedbalance sheets

Fair value

Amount of difference(1) Securities
401,385－

1,538,998

1,546,547

7,548

Assets total

1,940,383

1,947,932

7,548(1) Deposits

1,854,796

1,854,868

72

5,310

5,314

4

291,500

291,500

Available-for-sale securities

401,385(2) Loans and bills discounted

1,549,464

Allowance for loan losses (*1)

(10,465)(2) Negotiable certificates of deposit(3) Borrowed money

5,000

5,031

－
31

2,156,606

2,156,714

107

(586)

(586)

－

681

681

－

95

95

－

(4) Corporate bonds
Liabilities total
Derivative transactions (*2)
Transactions to which hedge accounting has notbeen appliedThose to which hedge accounting applies (*3)
Total derivative transactions(*1) General allowances for doubtful accounts and individual allowances for doubtful accounts corresponding to loans and bills discounted are deducted.
(*2) Other derivative transactions recorded in assets and liabilities are presented collectively.
Derivative transactions are presented after netting off claims and obligations. A figure in parentheses denotes an item that is a net liability.
(*3) These are interest rates, etc. are designated as hedging instruments to fix the cash flows from the loans, etc. that are the hedged assets. Deferred hedges areprimarily applied. Furthermore, “Handling of hedge accounting for financial instruments to refer to LIBOR”(Practice Report No. 40 March 17, 2022) has
been applied to these hedging relationships.
(Note 1) Below are the amounts posted to the consolidated balance sheet for stocks, etc. without market prices and partnership investments. These values are notincluded under “available-for-sale securities” for financial instrument fair value information.
(Unit: millions of yen)
Category
Unlisted shares (*1)(*2)
Partnership investments (*3)(*1)

Amount included on consolidatedbalance sheets
3,625
252

Non-listed shares are not subject to fair value disclosure under Paragraph 5 of the “Guidelines for Disclosure of Fair value, etc. of Financial
Instruments.”(Guidelines on Application of Corporate Accounting Standards No. 19 March 31, 2020)

(*2)
(*3)

In the current consolidated accounting year, the company recorded an impairment loss of 4 million yen with respect to unlisted shares.
Partnership investments are not subject to disclosure of fair values under Paragraph 27 of “Application Guidelines for Accounting Standard for
Fair Value Measurement” (Corporate Accounting Standard Application Guideline No. 31, June 17, 2021).

- 35 -

(Note 2) Monetary claims and expected redemption amount after consolidated closing date for securities with maturities(Unit: millions of yen)
Within one year
Deposits
Securities
Instruments among available-for-salesecurities
that
have

More than one year More than three
and within three
years and within
years
five years

More than fiveMore than sevenyears and within years and within 10 More than 10 years
seven years
years

336,205
36,582－
56,388－59,839－95,511－
74,542－
22,77036,582

56,38859,83995,511

74,542

22,770372,788

56,38859,83995,511

74,542

22,770maturities
Total

Loans and bills discounted (*)

More than one year More than three
and within three
years and within
years
five years
395,155
318,448247,930

Total

395,155

Within one year(*)

318,448247,930

More than fiveMore than sevenyears and within years and within 10 More than 10 years
seven years
years
155,233
169,068
263,627
155,233

169,068

263,627

Of the loans and bills discounted, not included is 23,369 million yen with no prospect of planned redemption, including loans to failed borrowers,
substantially failed borrowers and borrowers at risk of failure, and 213,830 million yen that does not have a set term.

(Note 3) The planned repayment amount of corporate bonds, debt and other interest-bearing liabilities after the consolidated closing date
(Unit: millions of yen)
Within one year
Deposits (*)
Negotiable certificates of deposit

More than one year More than three
and within three
years and within
years
five years

－
－

－
－

－
－

－
－

－
－

－
－

－

－
－

－
－

－
－

10,435－－－

1,745,939
5,310

102,720

6,135

－

－

Call money and bills soldCash collateral received for bonds lent

45,0009,001

Borrowed money
Corporate bonds

274,700

－
－
4,300

－

－
－
12,5005,000

2,079,951

120,220

Total

More than fiveMore than sevenyears and within years and within 10 More than 10 years
seven years
years(*) For deposits we have included disclosure of deposits required to be paid “within one year.”3.

The particulars of the breakdown of the fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels depending on the observability and importance of inputs used in the calculationof fair value.
Level 1 fair value:

Among inputs pertaining to the calculation of observable fair values, the fair value calculated using the market

Level 2 fair value:

price of the assets or liabilities for which the fair value is to be calculated in an active market
Among inputs pertaining to observable fair values, the fair value calculated using inputs pertaining to theLevel 3 fair value:calculation of fair values other than Level 1
The fair value calculated using inputs for calculation of unobservable fair values

If multiple inputs that have a significant impact on the calculation of fair value are used, the fair value is classified as the lowest priority in the calculation of fairvalues from among the levels to which those inputs belong.

- 36 -

(1)The financial instruments reported on the consolidated balance sheet at the fair value(Unit: millions of yen)
Fair value

Category

Level 1

Level 2

Level 3

Total

Securities
Available-for-sale securities
Government bonds, municipal bonds, etc.
Corporate bonds

106,489－

85,58572,693－
17,812

192,074
90,505

SharesOther (*1)

20,1338,636

3,572
35,309－－23,70543,945

135,258

197,160

17,812350,231

Assets total
Derivative transactions (*2)
Interest-related derivatives

－

194

－

194

Currency related

－

(99)

－

(99)

Total derivative transactions

－

95

－

95

(*1)

Transitional measures are applied in accordance with Paragraph 26 of the Policy on Application of Fair value Appraisals, and the amount in the(*2)

consolidated balance sheet of investment funds not included in the table is 51,153 million yen.
Other derivative transactions recorded in assets and liabilities are presented collectively.
Derivative transactions are presented after netting off claims and obligations. A figure in parentheses denotes an item that is a net liability.

(2)

Financial instruments other than those recorded in the consolidated balance sheet at the fair value(Unit: millions of yen)

Category

Fair value
Level 1

Level 2

Level 3

Total

Loans and bills discounted－

641,593904,9541,546,547

Assets total－

641,593904,9541,546,547

Deposits
Negotiable certificates of deposit－－

1,854,868
5,314

－
－

1,854,868
5,314

Borrowed money
Corporate bonds－－

291,500－－
5,031

291,500
5,031

Liabilities total－

2,151,682

5,031

2,156,714(Note 1) The valuation technique used to calculate the fair value, and explanation of inputs pertaining to the calculation of fair value
AssetsSecurities
Securities that can use unadjusted market prices in active markets are classified as Level 1 fair values. These are mainly listed stocks and government bonds.
If the market is not active, even if a published market price is used, these are classified as a Level 2 fair values. These include local government bonds,
corporate bonds and mortgage-backed securities.
If market prices cannot be obtained, the fair value is calculated using valuation techniques such as the present value method for future cash flows. We makemaximum use of observable inputs in the valuation, including TIBOR, government bond yields, swap interest rates, prepayment rates, credit spreads, insolvency
rates, and loss rates in the event of bankruptcy. If an input that cannot be observed is used calculation, these are classified as Level 3 fair values.

- 37 -

Loans and bills discounted
To the extent that loans with floating interest reflect short-term market interest rates and do not significantly change the credit status of the lender after
execution, and therefore have fair values that approximate book values, book values are therefore used as fair values. The fair value of fixed interest loans is
calculated by discounting from the interest rate that could be obtained by issuing a new loan with the same total principal and interest, for each loan type,internal rating, and period. For those with short contract terms (less than 1 year), fair values approximate book values and book values are therefore used as fairvalues.
Claims, etc. against failed borrowers, substantially failed borrowers and borrowers at risk of failure are calculated based on the present value of future cash
flows or estimated amounts to be collected from guarantees, etc., so the fair values are close to the amount recorded in the receivables, etc. on the consolidatedbalance sheet on the consolidated closing date after deducting the amount of allowance for doubtful receivables, and these amounts are recorded as the fairvalues.
For loans that have no repayment date due to having special characteristics, such as being limited to the amount of collateral assets, the book value isanticipated to be similar to the fair value given the expected repayment period and the interest rate and other terms, and therefore the book value is used as thefair value.
If unobservable inputs have a material impact on fair values, fair values are categorized as Level 3; otherwise, fair values are categorized as Level 2.
Liabilities
Deposits and negotiable deposits
With regard to required deposits, the amount to be paid (book value) when requested on the consolidated closing date is deemed to be the fair value. In
addition, the fair values of term deposits and negotiable deposits are classified into separate periods, and present value is calculated by discounting future cash
flows. The discount rate is the interest rate used when accepting new deposits. For short-term deposits (less than 1 year), fair values approximate book values
and book values are therefore used as fair values. This fair value is categorized as a Level 2 fair value.
Borrowed money
The current value of borrowed money is calculated by discounting the total future interest and principal for certain categories. The discount rate is theinterest rate anticipated if new similar borrowings were to be made at the market rate. For those with short contract terms (less than 1 year), fair values
approximate book values and book values are therefore used as fair values. This fair value is categorized as a Level 2 fair value.
Corporate bonds
The fair value of the corporate bonds issued by the Bank is calculated using the market price or valuation techniques such as the present value method for
future cash flows. This fair value is categorized as a Level 3 fair value.
Derivative Transactions
Derivatives transactions are over-the-counter and do not have published market prices. Fair values are therefore calculated using the present value approachor Black-Scholes model, etc. according to the type of transaction and term to maturity. The primary inputs used in these valuation approaches are interest rates,
foreign exchange rates, and volatility. If an unobservable input is not used or its effects are not significant, these are classified as Level 2 fair values, such asplain vanilla interest rate swap transactions, currency swap transactions, and foreign exchange forward transactions.
(Note 2) Information on Level 3 fair values among the financial instruments recorded in the consolidated balance sheet at the fair value(1) Quantitative information on inputs that cannot be observed(March 31, 2022)
Category

Valuation technique

Important inputs thatcannot be observed

Scope of inputs

Weighted average of
inputsSecurities
Available-for-sale securities
Private bonds

Discount present value
methodInsolvency rate

- 38 -

0.0% to 5.6%

0.1%

(2) A reconciliation from the beginning balance to the balance at the end of the period, and valuation gain or loss recognized as profit or loss for the current
period(March 31, 2022)
Balance at
beginning of
periodCurrent profit/loss or othercomprehensive income

Bookingof Profitand Loss(*1)

Recorded as
OtherComprehensive
Income
(*2)

－

(12)

Net purchase,sale, issuanceand settlement

Transfer
to Level 3
fair value

TransferfromLevel 3fairvalue

Balanceat endofperiod

1,604

－

－

17,812(Unit: millions of yen)
From among theamounts reported on
profit or loss for thecurrent period, thevaluation gain or lossof financial assets andfinancial liabilities
held on the
consolidated balance
sheet date (*1)

Securities
Available-forsale securities
Private bonds
(*1)
(*2)

16,220－Included in “other operating income” on the consolidated statements of income.
Included in “Net unrealized gain on available-for-sale securities” under “Other comprehensive income” in the consolidated comprehensive income
statement.

(3)

Explanation of the fair value appraisal process
The Group’s General Planning Department designates policies and procedures for the calculation of fair values, which each department follows. The
Risk Management Department assesses the appropriateness of the valuation methods and inputs used in the calculation of fair values. The results of thatassessment are reported to the Internal Audit Department every financial year, and the appropriateness of the policy and processes for calculating fairvalue is ensured.
When calculating fair values, we use a valuation model that enables the most appropriate reflection of the nature, characteristics and risks ofindividual assets. In addition, even when using market prices obtained from third parties, the appropriateness of these prices is verified using appropriate
methods such as confirmation of the valuation techniques used and inputs and comparison of similar financial instruments to fair values.

(4)

Explanation of the impact on the fair value in the case of changes in important inputs that cannot be observed
The insolvency rate is a material unobservable input used to calculate the fair value of private bonds, loans, negotiable certificate of deposits, andborrowed money. A significant increase or decrease in an input may be solely responsible for a significant increase or decrease in fair value. Generally,changes in the assumptions used in the insolvency rate lead to corresponding changes in the assumptions used in the rate of loss in the event of
insolvency.

- 39 -

(Securities)
1. Available-for-sale securities (as of March 31, 2022)
Amount included on
consolidated balance sheets(Millions of yen)
21,715

Type
Shares

Items for which consolidated balance
sheet figures exceed acquisition cost

Bonds
Japanesegovernment
bonds
Local government bonds
Corporate bonds
Other
Sub Total

Items for which consolidated balance
sheet figures do not exceed
acquisition cost

Corporate bonds
Other
Sub Total

Total

Amount of difference(Millions of yen)

10,305

11,409133,454

132,790664

54,80454,535268

27,30027,128171

51,34951,126

223

38,29435,682

2,611

193,463

178,779

14,684

1,990

2,198

(207)

149,126

150,352(1,226)

51,68552,137(451)

58,28458,764(479)

39,15539,450(294)

56,80459,019(2,214)

207,921211,569(3,648)401,385

390,349

11,036

Shares
Bonds
Japanesegovernment
bonds
Local government bonds

Acquisition cost
(Millions of yen)

2. Available-for-sale securities sold during the current consolidated accounting year(From April 1, 2021 to March 31, 2022)
Sale proceeds(Millions of yen)

Total gain on sale(Millions of yen)

Total loss on sale(Millions of yen)

Shares

8,483

4,023

304

Bonds

10,591

0

252

10,111

－

252

479

0

－

23,269

1,519

1,138

42,344

5,543

1,696

Japanese government bonds
Corporate bonds
Other
Total
3. Securities subject to impairment

For securities other than trading securities (excluding stocks, etc. without market prices and partnership investments), securities for which the fair value is has
fallen 50% or more, the amount posted to the consolidated balance sheet is the fair value, and the valuation difference is treated as a loss for the consolidated
accounting year (“Impairment Treatment” hereinafter). Securities that have fallen 30% or more and the fair value has significantly fallen due to factors such as
credit risk changes, Impairment Treatment is carried out except for in cases where it is recognized that generally the fair value will recover to the acquisition
price within one year.
The amount of Impairment Treatment in the current consolidated accounting year is 0.

- 40 -

(Revenue Recognition)
Breakdown of revenue arising from contracts with customers(Unit: millions of yen)
Current Consolidated
Accounting Year

Category
Fees and commissions

5,985

Deposits and lending services

2,971

Exchange services

1,264

Securities-related services

1,074

Agency services

545

Other

130
－

Other operating income－

Other ordinary income
Ordinary income from contracts with customers

5,985

Ordinary income other than the above

25,543

Ordinary income
customers

withrespecttoexternal

31,528(Stock Options, etc.)
1.

The amount reported as expenses and the account title for the current consolidated accounting year pertaining to stock options
Operating expenses

2.

56 million yen

Stock option details, scope, and state of changes(1) Stock option details

Classification and number ofpeople subject to grant
Number of stock options
granted by class of shares(Note)
Grant date2013 stock options

2014 stock options

2015 stock options

7 directors of the Bank (excluding outside
directors)
7 executive officers of the Bank

7 directors of the Bank (excluding outside
directors)
7 executive officers of the Bank

8 directors of the Bank (excluding outside
directors)
6 executive officers of the Bank

35,100 shares of Bank common stock

32,100 shares of Bank common stock

29,100 shares of Bank common stock

July 31, 2013

July 30, 2014

July 30, 2015

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

No requisite service period has been set.

Exercise period

August 1, 2013 to July 31, 2043

July 31, 2014 to July 30, 2044

July 31, 2015 to July 30, 2045

2016 stock options

2017 stock options

2018 stock options

Classification and number ofpeople subject to grant

8 directors of the Bank (excluding outside
directors)
7 executive officers of the Bank

8 directors of the Bank (excluding outside
directors)
9 executive officers of the Bank

7 directors of the Bank (excluding outside
directors)
10 executive officers of the Bank

28,300 shares of Bank common stock

33,900 shares of Bank common stock

32,800 shares of Bank common stock

July 27, 2016

July 26, 2017

August 1, 2018

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 28, 2016 to July 27, 2046

July 27, 2017 to July 26, 2047

August 2, 2018 to August 1, 2048

Number of stock options grantedby class of shares (Note)
Grant date

- 41 -

2019 stock options

2020 stock options

2021 stock options

8 directors of the Bank (excluding outside
directors)
10 executive officers of the Bank

8 directors of the Bank (excluding outside
directors)
10 executive officers of the Bank

6 directors of the Bank (excluding outside
directors)
5 executive officers of the Bank

37,600 shares of Bank common stock

39,600 shares of Bank common stock

41,000 shares of Bank common stock

July 31, 2019

July 29, 2020

July 28, 2021

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

No requisite service period has been set.

Exercise period

August 1, 2019 to July 31, 2049

July 30, 2020 to July 29, 2050

July 29, 2021 to July 28, 2051

Classification and number ofpeople subject to grant
Number of stock options grantedby class of shares (Note)
Grant date

(Note) Disclosed as equivalent number of shares after consolidation through the reverse stock split as of October 1, 2016 (ratio of 1 share of stock for 10
shares of stock).
(2) Stock option scope and state of changes
These disclosures concern the stock options in existence at the end of the current consolidated accounting year (ending March 2022), and present the numberof stock options as the equivalent number of shares. Disclosed as equivalent number of shares after consolidation through the reverse stock split as of October 1,
2016 (ratio of 1 share of stock for 10 shares of stock).
(a) Number of stock options
2013 stock options
Before vesting
End of previous consolidated
accounting year
Granted

－

－

－
－

－
－

－
－

－
－

－
－

－
－

7,600 shares

9,200 shares

10,200 shares－
1,900 shares－
3,700 shares－
3,700 shares－
5,700 shares－
5,500 shares－
6,500 shares

VestedUnvested

CanceledUnexercised rights

2016 stock options
Before vesting
End of previous consolidated
accounting year
GrantedCanceled
VestedUnvested
After vesting
End of previous consolidated
accounting year
VestedExercised rights
CanceledUnexercised rights

2015 stock options－

Canceled

After vesting
End of previous consolidated
accounting year
VestedExercised rights

2014 stock options

2017 stock options

2018 stock options

－

－

－

－
－

－
－

－
－

－
－

－
－

－
－

12,300 shares

20,300 shares

24,000 shares－
3,500 shares－
9,000 shares－
10,800 shares－
8,800 shares－
11,300 shares－
13,200 shares- 42 -

2019 stock options
Before vesting
End of previous consolidated
accounting year
Granted2021 stock options

－

－

－

－

－

41,000 shares

－
－

－
－

－
41,000 shares

－

－

－

32,600 shares

38,400 shares－

Canceled
VestedUnvested
After vesting
End of previous consolidated
accounting year
Vested2020 stock options－－

41,000 shares

Exercised rights
Canceled

14,300 shares

13,900 shares

－

－

－
－

Unexercised rights

18,300 shares

24,500 shares

41,000 shares(b) Unit price information2013 stock options
Strike price (Note 1)
Average share price upon
exercise
Measured fair unit price on the
grant date (Note 2)2014 stock options
1 yen

1 yen

1,759 yen

1,588 yen

1,588 yen

1,650 yen

1,710 yen

2,180 yen2016 stock options
Strike price (Note 1)
Average share price upon
exercise
Measured fair unit price on the
grant date (Note 2)2017 stock options(Note) 1.
2.

2018 stock options

1 yen

1 yen

1 yen

1,588 yen

1,588 yen

1,588 yen

2,190 yen

2,174 yen

2,178 yen

2019 stock options
Strike price (Note 1)
Average share price upon
exercise
Measured fair unit price on the
grant date (Note 2)2015 stock options

1 yen2020 stock options

2021 stock options

1 yen

1 yen

1 yen

1,588 yen

1,588 yen－

2,079 yen

1,932 yen

1,300 yenTranslated to per share numbers for presentation.
Disclosed as on a per share basis with consideration for the reverse stock split as of October 1, 2016 (ratio of 1 share of stock for 10 shares ofstock).

- 43 -

3.

Method of estimating fair assessed unit price of the stock options
The fair valuation unit price for the 2021 stock options granted in the current consolidated accounting year is as follows.
(1) Valuation technique used
Black-Scholes model(2) Main basis figures and estimation method2021 stock options
Share price volatility (Note 1)

26.873%

Expected remaining period (Note 2)

3.0 years

Forecasted dividend (Note 3)

40 yen/share

Risk-free interest rate (Note 4)-0.139%(Note)

4.

1.

The calculation is based on the stock price performance for the period corresponding to the expected remaining period (from July 29, 2018 to2.

July 28, 2021).
The timing of stepping down is estimated based on the term of appointment and the age at the time of stepping down of every officer in the last3.

10 years, by weighted average based on the number of shares granted to each officer.
This is the dividend performance for the fiscal year ending March 2021.

4.

This is the yield of government bonds corresponding to the expected remaining term.

Method of estimating the number of vesting stock options
Given the difficulty of forming reasonable estimates for the number of options to expire in the future, the estimate basically reflects only the number of options
that have actually expired in the past.

(Per-share information)
Equity per share: 4,955.94 yen
The number of common shares at the end of the current consolidated accounting year used to calculate the amount of equity per share is calculated minus shares
held in the Bank’s name.
Net profit per share attributable to shareholders of the parent company for the period: 171.30 yen
The average number of common shares during the period used to calculate the amount of earnings per share attributable to shareholders of the parent company iscalculated minus shares held in the Bank’s name.
Diluted net profit per share attributable to owners of parent: 170.30 yen
The average number of common shares during the period used to calculate the amount of earnings per share attributable to shareholders of the parent company after
adjustment for potential shares is calculated minus shares held in the Bank’s name.

(Significant post-balance sheet events)(Notice Regarding Execution of Definitive Agreement on Establishment of a Joint Holding Company (Joint Share Transfer) for The Aichi Bank, Ltd. and The
Chukyo Bank, Limited and Preparation of Share Transfer Plan and Distribution of a Dividend of Surplus (Special Dividend))
Chukyo Bank and The Aichi Bank, Ltd. (President: Yukinori Ito, hereinafter “Aichi Bank”; Chukyo Bank and Aichi Bank jointly referred to as the “Banks”), in
accordance with a basic agreement (hereinafter the “Basic Agreement”) dated December 10, 2021, as a result of the Board of Directors meetings held at each Bank
as of May 11, 2022, and assuming the approval of the Banks’ general meetings of shareholders, the acquisition of permission from relevant authorities, and MUFG
Bank, Ltd. (hereinafter “MUFG Bank”) tendering all of its 8,534,385 Chukyo Bank Shares to the tender offer for treasury stock conducted by Chukyo Bank (the“Treasury Stock Tender Offer”); see “(Notice Regarding Acquisition of Treasury Stock and Commencement of Treasury Stock Tender Offer)” in “(Significant
post-balance sheet events)”), thereby legally completing the settlement of the Treasury Stock Tender Offer, the Banks have both resolved to form the “Aichi
Financial Group, Inc.” (hereinafter the “Joint Holding Company”), which would function as the parent company to which the Banks will become wholly owned
subsidiaries, via the joint share transfer method on October 3, 2022 (hereinafter the “Share Transfer”), on the overview of the Joint Holding Company, as well as on
the terms and conditions of the Share Transfer. As of May 11, 2022, both Banks have executed a business integration agreement (hereinafter the “Business
Integration Agreement”) and jointly created a share transfer plan. The content thereof is as follows.

- 44 -

1.

Background of and Reasons for the Business Integration
With the support of the local community, the Banks have fulfilled their social mandate and established firm business bases as regional financial institutions
headquartered in Aichi Prefecture, which is home to many diverse industries.
With recent changes in industrial structures and social environments nationwide such as environmental problems and the post-COVID-19 environment, in the
Aichi Prefecture and the surrounding Tokai area in which the Banks operate (the “Region”), customer needs are becoming more sophisticated and diversified as aresult of changes to the management issues of business customers and the lifestyles of individual customers, etc., and the Banks believe they are at a turning pointin terms of expanding their business opportunities with increased missions and roles as local financial institutions. While the environment is becoming
increasingly competitive with new entrants in the field of finance from different industries such as fintech companies, the Banks are being called upon to develop
new financial businesses that can be the primary source of revenue, not just as competitors of those new entrants, but by establishing business alliances thatutilize their respective technologies and operating bases and by effectively taking advantage of deregulation under the Banking Act, thereby building asustainable profit base and contributing to the local community as local financial institutions.
Being aware of such management environment and issues and continuing to respond to the expectations of local residents while the competition with otherfinancial institutions including those in adjacent prefectures intensifies in the fertile market of the Region, which is expected to expand, the Banks decided thatthe best option to contribute to the development of their stakeholders is to utilize the management resources and strengths of the Banks that have built theiroperation bases in the Region over many years and achieve a business integration between the urban financial institutions to enhance their competitive edge by
displaying a prominent presence and continuing to provide advanced financial services.
Based on the Basic Agreement, the Banks have been proceeding with deliberations and considerations in anticipation of a business integration (hereinafter the“Business Integration”) under a basic policy of forming a joint holding company, targeted for October 3, 2022, via the Share Transfer, and a future merger ofboth Banks under the Joint Holding Company, and on May 11, 2022 the Banks reached a final agreement regarding this Business Integration.

2.

Overview of the Share Transfer(1)

Schedule of the Share Transfer
Friday, December 10, 2021

Execution of the Basic Agreement (Both Banks)

Wednesday, March 2, 2022
Thursday, March 31, 2022

Receipt of notice by the FTC that no cease and desist order will be issued
Record date of the annual general meeting of shareholders (Both Banks)

Wednesday, May 11, 2022

Board of directors meetings resolutions regarding the execution of the Business
Integration Agreement, and the execution of the Business Integration Agreement (BothBanks)
Board of directors meetings resolutions regarding the development of the Share Transfer
plan, and the creation of the Share Transfer plan (Both Banks)
Board of directors meeting resolution regarding the execution of the Treasury Stock
Tender Offer Application Agreement, and execution of the Treasury Stock Tender Offer
Application Agreement (The Bank)

Friday, June 24, 2022 (Planned)

Convening of the annual general meeting of shareholders (adoption of resolution
approving the Share Transfer Plan) (Both Banks)

Thursday, September 29, 2022 (Planned)
Monday, October 3, 2022 (Planned)

Tokyo Stock Exchange and Nagoya Stock Exchange de-listing date (Both Banks)
Date of formation of the Joint Holding Company (i.e., effective date of the Share
Transfer)
Share listing date of the Joint Holding Company

1.

The above schedule may be changed upon consultation between the Banks where necessary in the course of moving towards the Share Transfer or forother reasons.

2.

For details regarding the Special Dividend by Chukyo Bank, see “6. Dividend of Surplus (Special Dividend)” below.

(2)

Method of the Share Transfer
The Share Transfer will take the form of a joint share transfer, under which the Banks will become wholly-owned subsidiaries of the Joint Holding Company
to be incorporated following the share transfer, and the Joint Holding Company will become the wholly-owning parent company of the Banks.

(3)

Details of allotment in the Share Transfer (Share Transfer Ratio)
Company Name

Aichi Bank

Chukyo Bank

Share Transfer Ratio

3.33

1

(Note 1) Share allocation ratio
For every 1 common share of Aichi Bank, 3.33 common shares of the Joint Holding Company shall be allocated, and for every 1 common share of- 45 -

Chukyo Bank, 1 common share of the Joint Holding Company shall be allocated. One unit of shares of common stock of the Joint Holding Company isplanned to comprise 100 shares. The share transfer ratio above was based on the calculations and analytical results of a third party valuation institution, theadvice of legal advisors, and the results of due diligence performed by each Bank on the other, and was comprehensively decided upon using various
factors, such as the market share price of the Banks, their respective financial situations, future outlooks, the Treasury Stock Tender Offer to be performed
ahead of the Share Transfer, and the allocation of 141 yen in surplus (prior to deducting the amount of taxes withheld, the same applying hereinafter) per
Chukyo Bank share, as per the shareholder return policy for general shareholders of Chukyo Bank described in “6. Dividend of Surplus (Special Dividend)”
below.
If, as a result of the Share Transfer, shareholders of either of the Banks must be granted fractions of a share that do not amount to one common share of
the Joint Holding Company, in accordance with Article 234 of the Companies Act and other related laws and regulations, shareholders shall be paid anamount equivalent to the value of such fractional shares amounting to less than one share.
Changes to the above Share Transfer Ratio may be made during the period after the execution of the Business Integration Agreement and until theeffective date of the Share Transfer upon consultation between the Banks in the event that matters that cause a material adverse effect to the Share Transfer
Ratio are newly found to exist or have occurred.
(Note 2) Number of newly issued Joint Holding Company shares to be delivered through the Share Transfer (scheduled)
Common shares: 49,094,859 shares
The above values were calculated based on the total number of common shares issued by Aichi Bank as of March 31, 2022 (10,943,240 shares), and thetotal number of common shares issued by Chukyo Bank as of March 31, 2022 (21,780,058 shares). However, taking into consideration the fact that Chukyo
Bank is planning to acquire as treasury stock the 8,534,385 common shares owned by MUFG Bank via the Treasury Stock Tender Offer, and that the Joint
Holding Company is to cancel all treasury stock owned by either Bank just before the Joint Holding Company is to acquire all of the issued shares for both
Banks (hereinafter the “Basis Period”), the amount of treasury stock for Aichi Bank as of March 31, 2022 (176,712 shares), the amount of treasury stock for
Chukyo Bank as of March 31, 2022 (5,150 shares), and the 8,534,385 common shares of Chukyo Bank owned by MUFG Bank that Chukyo Bank plans toacquire via the Treasury Stock Tender Offer, have been excluded as targets for the new share grant described in the calculation above. Note that, if as aresult of the Treasury Stock Tender Offer, shareholders of either Aichi Bank or Chukyo Bank exercise their rights to request purchases of shares, or someother event arises before the Basis Period that changes the amount of treasury stock applicable to either Bank as of March 31, 2022, this may change thenumber of new shares granted by the Joint Holding Company.
(Note 3) Handling of fractional units of shares
Shareholders of either Bank who are to receive allocations through the Share Transfer amounting to less than one unit (100 shares) of the common sharesof the Joint Holding Company (hereinafter “Fractional Units of Shares”) may not sell their Fractional Units of Shares on the Tokyo Stock Exchange, theNagoya Stock Exchange, or any other financial instruments exchange. Shareholders who hold such Fractional Units of Shares may, in accordance with theprovisions of Article 192(1) of the Companies Act, demand that the Joint Holding Company purchase such Fractional Units of Shares. Furthermore, in
accordance with the provisions of Article 194(1) of the Companies Act, and the articles of incorporation of the Joint Holding Company, the Banks plan toenable shareholders to demand that the Joint Holding Company shares of a number sufficient to constitute a share unit when combined with the fractional
units of shares held by that shareholder.
(4)

Treatment of rights to subscribe for new shares and bonds with rights to subscribe for new shares in relation to the Share Transfer
With respect to any rights to subscribe for new shares issued by Aichi Bank and Chukyo Bank, at the time of the Share Transfer, parties with rights to
subscribe for new shares for either Bank will be allocated rights to subscribe for new shares applicable to the Joint Holding Company in accordance with thedetails of such rights and the share transfer ratio, and in accordance with the rights to subscribe for new shares applicable at the Basis Period. Neither of the
Banks has issued bonds with rights to subscribe for new shares.

3.

Profile of the Banks (as of the Last Day of March 2022)
Name

The Aichi Bank, Ltd.

The Chukyo Bank, Limited

Location

3 chome-14-12 Sakae, Naka-ku, Nagoya

3 chome-33-13 Sakae, Naka-ku, Nagoya

Job title and name of

Yukinori Ito, President

Hideo Kobayashi, President

Description of business:

Banking businessBanking business

Share capital

18 billion yen

31.8 billion yen

Date of establishment

May 15, 1944

February 10, 1943

Total number of issued shares

Common shares: 10,943,240 shares

Common shares: 21,780,058 shares

Settlement Term

March 31

March 31representative- 46 -

4.

Profile of the Company (Joint Holding Company) to be Established through the Share Transfer(1)

Trade Name

Aichi Financial Group, Inc.
(English: Aichi Financial Group, Inc.)
As a bank holding company, the purpose of the Company is to carry out the following business.

(2)

Description of business:(3)

Location of headquarters

(1)
(2)

Business management of a bank and companies able to be subsidiaries under the Banking Act
All operations that are incidental or related to the operations set forth in the preceding

subparagraph(3)
In addition to the duties described in the previous two items, any business duties that a bankholding company is permitted to engage in under the Banking Act(4)

Functional location ofprincipal headquarters

14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi
14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi
President and Representative Director Yukinori Ito(Current President of Aichi Bank)

Vice-President and Representative Director Hideo Kobayashi (Current President of Chukyo Bank)
Director
Nobuhiko Kuratomi (Currently Senior Management Director of Aichi Bank)(5)

Representatives and officers'
planned appointment

Director
Director

Hiroyasu Matsuno (Currently Management Director of Aichi Bank)
Hiroaki Yoshikawa (Currently Director of Aichi Bank)

Director
Director

Makoto Hayakawa (Currently Managing Executive Officer of Chukyo Bank)
Norimasa Suzuki (Currently Director of Aichi Bank)

Director

Kenji Ito (Currently Executive Officer and General Manager of General Planning

Department of Aichi Bank)
Director

Hisashi Sebayashi (Currently Executive Officer and General Manager of General Planningand Administration Department of Chukyo Bank)
Director
Director(Audit Committee) Masahiro Kato (Currently Director of Aichi Bank (Audit Committee)(Audit Committee) Yasutoshi Emoto (Currently External Director of Aichi Bank (Audit

Committee Member))Director(Audit Committee) Yuki Shibata (Currently External Director of Chukyo Bank)

5.

Director
Office)(Audit Committee) Chieko Murata (Currently Head of Chieko Murata Tax Accountant

Director
Director(Audit Committee) Yoshiko Kurimoto (Currently External Auditor of Chukyo Bank)(Audit Committee) Takumi Azuma(Currently Full-time Auditor of INTEC Inc.)(6)

Capital20 billion yen(7)Equity (on a consolidated
basis)

Undetermined(8)

Total assets (on aconsolidated basis)

Undetermined(9)

Settlement Term

March 31

Overview of Accounting Processing Associated with the Share Transfer
The accounting processing associated with the Share Transfer corresponds to an acquisition under accounting standards for business combinations, and theapplication of the purchase method is anticipated. Furthermore, the amount of goodwill (or negative goodwill) that may arise from the Share Transfer isundetermined at this stage.

6.
(1)

Dividend of Surplus (Special Dividend)
Details of Dividend

Through the Business Integration Agreement, both Banks have agreed to the following: that Chukyo Bank has acquired permissions necessary for the Share
Transfer Plan and Special Dividend at the General Shareholders Meeting, and that a Special Dividend of 141 yen per common share shall be paid to every
shareholder or registered pledgee of shares of Chukyo Bank registered or recorded as owning Chukyo Bank common shares in the final shareholders' list dated
September 30, 2022, based on the condition precedent that the Share Transfer has not been canceled, and is rationally expected to definitively come into effect on
October 3, 2022.
Chukyo Bank resolved at the Board of Directors meeting held on May 11, 2022 that it would bring a proposal to conduct the Special Dividend before theGeneral Shareholders Meeting, on the condition that a proposal to approve the Share Transfer Plan has been approved and passed before such shareholders
meeting. The details of the Special Dividend are as laid out below, and will be implemented on the following conditions: that the permissions necessary for the
Share Transfer Plan and Special Dividend were acquired at the General Shareholders Meeting, and that the Share Transfer has not been canceled, and is- 47 -

rationally expected to definitively come into effect on October 3, 2022.
(a)

Record date: September 30, 2022 (Note 1)

(b)
(c)

Dividend per share: 141 yen
Total dividend amount: 1,867 million yen (Note 2)

(d)
(e)

Effective date: To be determined (Note 3)
Resources for dividends: Retained earnings

1.

The announcement date pertaining to the setting of the record date for the Special Dividend will be determined during a future Chukyo Bank Board of2.

Directors meeting.
The total amount of dividend was obtained by taking the total number of common shares issued by Chukyo Bank as of March 31, 2022 (21,780,058
shares), subtracting the quantity of current treasury stock (5,150 shares) and the number of common shares to be acquired fro m MUFG Bank by Chukyo
Bank via the Treasury Stock Tender Offer (8,534,385 shares), and multiplying the result (13,240,523 shares) by the dividend amount per share. The total
dividend amount may change in the event there is a change in the quantity of treasury stock as of March 31, 2022 by the Basis Period due, for example, tothe results of the Treasury Stock Tender Offer or exercises of rights to request purchases of shares by Chukyo Bank shareholders. Therefore, the actual
total dividend amount will be the amount obtained when the dividend amount per share is multiplied against the amount obtained when the quantity oftreasury stock available as of the above record date is subtracted from the total number of shares issued.

3.
(2)

The effective date of the Special Dividend will be determined during a future Chukyo Bank Board of Directors meeting.
Reason for the Dividend
Chukyo Bank's Board of Directors resolved to conduct the Special Dividend after careful consideration, while engaging in consultations with Aichi Bank

regarding the Business Integration, and will be implemented as a means of providing certain returns to the general shareholders of Chukyo Bank.

(Notice Regarding the Acquisition of Treasury Shares and the Commencement of a Tender Offer for Treasury Shares)
On May 11, 2022, Chukyo Bank entered into a tendering agreement (the “Treasury Shares Purchase Agreement”) with its largest shareholder, MUFG Bank
regarding a transaction (the “Acquisition of Treasury Shares”) in which Chukyo Bank will acquire all of the common shares of Chukyo Bank (the “Chukyo Bank
Shares”) held by MUFG Bank as part of the Business Integration.
Promptly after the satisfaction of the conditions precedent to Chukyo Bank’s tender offer for treasury shares (the “Tender Offer”) including the obtainment ofapproval for the share transfer in connection with the Business Integration at the shareholder meetings of the Banks to be held on June 24, 2022, Chukyo Bank
will pass resolutions to conduct the Acquisition of Treasury Shares under Article 156(1) of the Companies Act (as read according to the provisions of Article
165(3) of the Companies Act) and the provisions of Chukyo Bank’s articles of incorporation, by the specific method of the Tender Offer, and to set the numberof shares to be purchased in the Tender Offer at 8,534,385 shares (ownership ratio: 38.89％) and to set the purchase, etc. price in the Tender Offer at 1,195 yen
per share.
1.

Background and reasons for arriving at the decision to conduct the Tender Offer
On May 13, 2021, Chukyo Bank and Aichi Bank executed a non-disclosure agreement and began to exchange information with respect to the Business
Integration. At the same time, Chukyo Bank, considering that it would be necessary to obtain the approval of Chukyo Bank’s shareholder meeting in order tocomplete the Business Integration, and that it would be necessary to obtain the consent of Chukyo Bank’s largest shareholder, MUFG Bank, in order to obtain theapproval of the shareholder meeting, executed a non-disclosure agreement with MUFG Bank, on May 14, 2021, and began discussions regarding prior consent
for the Business Integration and MUFG Bank future relationship with the Banks as an integrated group following the Business Integration. As the discussions
became more serious, MUFG Bank became directly involved in the discussions, and Aichi Bank entered into a non-disclosure agreement with MUFG Bank on
September 6, 2021 based on the belief that it should discuss the consent for the Business Integration and the future relationship between MUFG Bank and thepost-Business Integration group with the Joint Holding Company as its largest shareholder.
While discussing the future vision for the financial group after the Business Integration, the Banks concluded that, having fulfilled their social mandate andestablished firm business bases as regional financial institutions headquartered in Aichi Prefecture, which is home to many diverse industries, with the support ofthe local community, going forward they will aim to create a regional financial group with a presence in Aichi Prefecture by establishing a sustainable businessmodel with a business base and consulting functions in Aichi Prefecture, leveraging the Banks’ strengths including their management resources, a business baseof corporate and individual customers, and consulting functions to continue to meet the expectations of the local community, resulting in greater competitivenessby leveraging their presence in the Tokai Region and Aichi Prefecture in particular, and contributing to the prosperity of the Banks’ stakeholders by continuing toprovide advanced financial services.
Over the past roughly two decades, Chukyo Bank has leveraged its capital relationship with MUFG Bank to receive various support, including specialist
knowledge and know-how, from MUFG Bank; however, Chukyo Bank determined that it had developed and internalized its sales and administration functions
and established operational collaboration with MUFG Bank such that even without a capital relationship, MUFG Bank and Chukyo Bank would be able tomaintain their positive relationship and operational collaboration, and in early July 2021 Chukyo Bank arrived at the belief that it should aim to establish, through- 48 -

the Business Integration, an independent financial group based in the Tokai Region with a focus on the Aichi Prefecture market as a financial institution firmly
rooted in the local community, without the global financial institution MUFG Bank as its largest shareholder, and in early July 2021 Chukyo Bank began
discussing the sale by MUFG Bank of all of the Chukyo Bank Shares that it holds (the “Sale”). Chukyo Bank considered many different structures, but
concluded that for Chukyo Bank to acquire the Chukyo Bank Shares held by MUFG Bank as treasury shares would contribute to Chukyo Bank’s capitalefficiency including earnings per share (EPS), book-value per share (BPS), and return on equity (ROE) and return value to shareholders, and that Chukyo Bank’s
capital ratio (Japan standard) of 8.33% on a non-consolidated basis as of March 31, 2021 left sufficient a capital surplus, and therefore determined in early July
2021 that the best basic policy would be for Chukyo Bank to complete the Sale by acquiring treasury shares. Then, in late July 2021, Chukyo Bank relayed thisbasic policy and reasoning to MUFG Bank and Aichi Bank, and in late November 2021, MUFG Bank and Aichi Bank agreed to the basic policy and thereasoning, and the parties entered into a memorandum of understanding on December 10, 2021, confirming their mutual intention to conduct the Acquisition ofTreasury Shares.
The discussions regarding the Treasury Shares Purchase Agreement continued, and Chukyo Bank entered into the Treasury Shares Purchase Agreement with
MUFG Bank on May 11, 2022, under which Chukyo Bank agreed to conduct the Tender Offer on the following terms and MUFG Bank agreed to tender its
shares in the Tender Offer, pursuant to the provisions of the Treasury Shares Purchase Agreement.
2.

Outline of Tender Offer for Treasury Shares
1

Tender Offeror

The Chukyo Bank, Limited

2

Target share certificates, etc.

Chukyo Bank Shares

3

Tender offer price

1,195 yen per Chukyo Bank common share4

Tender offer period

The 21 business day period from July 1, 2022 to August 1, 2022 (or the applicable period ofextension in the event Chukyo Bank extends the period in accordance with applicable laws and5

Minimum number to be purchased

Not applicable

6

Maximum number to be purchased

8,534,385 shares

regulations)7

Withdrawal event

As set forth in the Tender Offer Report by Chukyo Bank pertaining to the Tender Offer, within thescope set forth in Article 27-11(1) of the Financial Instruments and Exchange Act (Act No. 25 ofApril 13, 1948, including subsequent amendments; hereinafter the “Act”), as applied throughArticle 27-22-2(2) of the same Act.

The treasury shares acquired through the Tender Offer will be retired following the completion of the Tender Offer. The specific timing of that retirement has
not been determined as of May 11, 2022, but all of the treasury shares held by Chukyo Bank, including the treasury shares acquired through the Tender Offer,
will be retired prior to the Business Integration to be conducted on October 3, 2022.

- 49 -

[Reference Documents for the General Meeting of Shareholders (regarding Proposal 2)]
The following matters from Proposal 2 “Approval of Share Transfer Plan With The
Aichi Bank, Ltd.”•

Matters regarding The Aichi Bank, Ltd. Rights to Subscribe for New Shares•

Systems to Ensure Proper Business Activities by The Aichi Bank, Ltd.

•Statement of Changes in Equity of The Aichi Bank, Ltd.

•

Notes to the Non-Consolidated Financial Statements of The Aichi Bank, Ltd.

•

Consolidated Statement of Changes in Equity of The Aichi Bank, Ltd.

•

Notes to the Consolidated Financial Statements of The Aichi Bank, Ltd.
(from April 1, 2021 to March 31, 2022)(Note) From p. 51 to p. 122, “the Bank” refers to Aichi Bank.

- 50 -

Matters Regarding Rights to Subscribe for New Shares, etc. of the Bank
(1) Rights to subscribe for new shares, etc. of the Bank held by officers of the Bank as of the last day of the
fiscal year

Summary of the content of the rights to subscribe for
new shares, etc.

Number of
persons withrights to subscribe
for new shares,etc.

Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 2 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 19, 2013(iii) Total number of rights to subscribe for new shares
7 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
700 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 20, 2013 to July 19, 2043
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as either director or company auditorof the Bank.

One

(i)

Directors(excluding those who are
Audit
Committee
Members and Outside
Directors)(i)Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 3 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 25, 2014(iii) Total number of rights to subscribe for new shares
5 rights(iv) Class and number of shares underlying the rights to subscribe
for new shares
500 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 26, 2014 to July 25, 2044(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as either director or company auditorof the Bank.

One

Summary of the content of the rights to subscribe for
new shares, etc.

Number of
persons withrights to subscribe
for new shares,etc.

- 51 -

(i)Directors(excluding those who are
Audit Committee
Members and Outside
Directors)

Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 4 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 24, 2015(iii) Total number of rights to subscribe for new shares
8 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
800 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 25, 2015 to July 24, 2045(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as either director or company auditorof the Bank.
Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 5 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 22, 2016(iii) Total number of rights to subscribe for new shares
18 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
1,800 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 23, 2016 to July 22, 2046
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

Two

(i)

- 52 -ThreeSummary of the content of the rights to subscribe for
new shares, etc.

Number of
persons withrights to subscribe
for new shares,etc.

Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 6 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 21, 2017(iii) Total number of rights to subscribe for new shares
16 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
1,600 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 22, 2017 to July 21, 2047
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

Three

(i)

Directors(excluding those who are
Audit Committee
Members and Outside
Directors)(i)Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 7 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 20, 2018(iii) Total number of rights to subscribe for new shares
18 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
1,800 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 21, 2018 to July 20, 2048
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

- 53 -ThreeSummary of the content of the rights to subscribe for
new shares, etc.

Number of
persons withrights to subscribe
for new shares,etc.

Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 8 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 19, 2019(iii) Total number of rights to subscribe for new shares
39 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
3,900 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 20, 2019 to July 19, 2049
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

Three

(i)

Directors(excluding those who are
Audit Committee
Members and Outside
Directors)(i)Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 9 Rights to Subscribe for New Shares(ii) Allocation date for the rights to subscribe for new shares
July 22, 2020(iii) Total number of rights to subscribe for new shares
78 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
7,800 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 23, 2020 to July 22, 2050
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

- 54 -Five

Summary of the content of the rights to subscribe for
new shares, etc.

Number of
persons withrights to subscribe
for new shares,etc.

Name of rights to subscribe for new shares
The Aichi Bank, Ltd. Series 10 Rights to Subscribe for New
Shares(ii) Allocation date for the rights to subscribe for new shares
June 25, 2021(iii) Total number of rights to subscribe for new shares
108 rights(iv) Class and number of shares underlying the rights to subscribe for
new shares
10,800 shares of the Bank’s common stock(v) Exercise period for rights to subscribe for new shares
From July 22, 2021 to July 21, 2051
(vi) Exercise price
One yen per share(vii) Conditions for exercise of rights to subscribe for new shares
Holders of rights to subscribe for new shares may exercise theirrights to subscribe for new shares from the day after the day on
which they lose their position as director (including directors who
are Audit Committee Members) of the Bank.

Seven(excluding directors who
are Audit Committee
Members)－－

Directors who are Audit
Committee Members

－

－

(i)

Directors(excluding those who are
Audit Committee
Members and Outside
Directors)

Outside Directors(2) Rights to subscribe for new shares, etc. of the Bank delivered to employees, etc. during the fiscal year
No applicable matters.

- 55 -

Systems to Ensure Proper Business Activities<Summary of the Content of Systems for Ensuring Proper Business Activities>
As set forth below, the Bank has established the Basic Policy on the Establishment of Internal Control
Systems by resolution of the Board of Directors as systems for ensuring proper business activities.
(1) Systems for ensuring that the execution of duties of directors and employees complies with laws andregulations and the articles of incorporation
Officers and employees shall carry out conscientious and fair corporate activities that are in accordancewith the Aichi Bank Code of Ethics and Code of Conduct established based on the Bank’s management
philosophy, bank credo, and bank motto, that comply with laws and regulations, etc., and that do not
violate social norms.
The Bank seeks to establish and strengthen the compliance system by establishing the Compliance
Committee as the organization overseeing compliance, and the Compliance Risk Management Department
as the department responsible for supervising and managing legal compliance.
A Compliance Manual is distributed to officers and employees to ensure that compliance is fully
understood. In addition, as a concrete implementation plan for realizing compliance, each fiscal year acompliance program is formulated, and directors receive and evaluate reports on the progress thereof andreports by committees, etc.
A compliance hotline is established as a system to report on and consult about violations of laws andregulations, etc., and efforts are made to quickly detect and resolve fraudulent practices, etc. and takecorrective action.
Under the Basic Policy Against Anti-Social Forces, efforts are made to block all relationships, includingtransactions, with anti-social forces that threaten the order and safety of civil society, and unreasonable
demands are firmly rejected.
(2) Systems regarding preservation and management of information related to the execution of directors’
duties
Efforts are made to appropriately manage information assets based on the Security Policy, etc.
Board of Directors meeting minutes and other minutes and reports of important committees, etc. areprepared and retained by the responsible department in accordance with laws and regulations and internal
rules. These documents are organized and preserved in accordance with the internal rules so that thedirectors can always view them.

- 56 -

(3) Rules and other systems related to management of the risk of loss
Under the Basic Rules for Risk Management and the Crisis Management Rules, basic rules and manuals
are established for each type of risk and risk management is implemented.
A Risk Management Committee is established as the risk management supervising organization, anddiscusses and examines reports on the status of various risks, comprehensive risk management, etc.
The status of credit risk, market-related risk, liquidity risk, operational risk, etc. is regularly reported to
the Board of Directors.
The Audit Department is established as an organization directly controlled by the Board of Directors,
and it conducts internal audits of each department at headquarters, branch offices, and group companies.
(4) System to ensure that the execution of duties by directors is performed efficiently
Meetings of the Board of Directors are held once a month, and otherwise as necessary. Various
committees are established and cross-sectional discussions are held on important matters. In addition,
duties of directors are clarified based on managerial posts, rules on division of duties, etc., and efforts are
made to ensure that duties are executed efficiently.
Directors regularly report to the Board of Directors on the status of their execution of business.
(5) System to ensure proper business activities in the business group comprised of the Bank and groupcompanies
In accordance with the Affiliate Company Management Rules, a department in charge of operations for
managing group companies, such as risk management and compliance, is established, and importantmatters for Bank approval and to be reported to the Bank are stipulated.
The General Planning Department is responsible for managing group companies, and a system isestablished to receive reports on the details of business from group companies in accordance with the
Affiliate Company Management Rules and provide guidance and management for group companies.
In addition, the Bank’s Audit Department has a system to conduct audits with regard to theappropriateness and effectiveness of the internal control systems, etc. of group companies.
A system is established to enable the Bank and group companies to operate and respond to thecompliance hotline in a unified manner.
(6) Information related to employees who assist the duties of the Audit Committee
The Audit Committee Administrative Office is established to assist the duties of the Audit Committee,
and full-time, dedicated employees are assigned thereto. The opinion of the Audit Committee regarding thenumber of Audit Committee Administrative Office employees and the appointment thereof is heard inadvance and respected.

- 57 -

(7) Matters related to independence from other directors (excluding directors who are Audit Committee
Members) of employees who are to assist in the duties of the Audit Committee, and matters related toensuring the effectiveness of the instructions given by the Audit Committee to the employees
The opinion of the Audit Committee is respected with regard to the appointment, transfer, andperformance review of employees assigned to the Audit Committee Administrative Office.
Employees who belong to the Audit Committee Administrative Office are not to receive instructions ororders from persons other than the Audit Committee.
(8) System for directors (excluding directors who are Audit Committee Members) and employees to reportto the Audit Committee and other systems related to reporting to the Audit Committee, and system toensure that a person who reports to the Audit Committee is not treated disadvantageously due to making
the report
A system is established to circulate important internal approval documents and reports to full-time Audit
Committee Members, and to report any material risks that arise.
A system is established to enable the Audit Committee to seek explanations from directors (excluding
directors who are Audit Committee Members) or employees regarding reported matters, etc. as necessary.
A system is established such that a full-time Audit Committee Member is one of the Bank’s and groupcompanies’ compliance hotline reporting and consultation contacts, and can receive reports and be
consulted. In addition, the person reporting or consulting is kept confidential and treated so as not to suffer
any disadvantage, etc. in the course of employment.
(9) Matters related to policies concerning procedures for advanced payment or reimbursement of expenses
that arise with regard to execution of duties of Audit Committee Members (limited to the execution of
Audit Committee duties) or other processing of expenses or obligations that arise with regard the executionof those duties
If an Audit Committee Member finds it necessary in order to execute their duties, they may ask the Bankfor the expenses therefor.
(10) Other systems to ensure that audits by the Audit Committee are performed effectively
The Audit Committee conducts regular interviews, etc. with the Representative Director. In addition, asystem is established to ensure that audits are conducted effectively, such as by cooperating and holding
regular meetings with attorneys, accounting auditors, corporate auditors at group companies, and the Audit
Department, which is the internal audit division.

- 58 -

<Outline of Operating Status of Systems to Ensure Proper Business Activities>
The operating status of systems to ensure proper business activities is as follows.
(1) Compliance systems-

The Bank distributes to its officers and employees the Compliance Manual that puts together the Aichi
Bank Code of Ethics and Code of Conduct, compliance guidance, basic laws and regulations, Q&A, etc.,
and strives to raise awareness and ensure compliance with laws and regulations.

-

The Compliance Committee meets every other month in principle to improve and strengthen thecompliance system.

-

Based on the Compliance Regulations, a compliance program is formulated for the fiscal year, andreports are made to the Compliance Committee and the Board of Directors every six months on thestatus of implementation of the compliance program, the details of material compliance violations andcountermeasures, and other material matters.

-

With regard to the system for reporting and consulting on violations of laws and regulations, etc., acompliance hotline has been established with the Bank’s full-time Audit Committee Members, General
Manager of Audit Department, and a third-party organization (attorney) as points of contact, and thestatus of reporting, etc. is regularly reported to the Compliance Committee and the Board of Directors.

-

The status of responses to anti-social forces is reported to the Compliance Committee and the Board of
Directors.

(2) Risk management system-

The Bank holds a meeting of the Risk Management Committee every other month in principle to reporton the status of various risks, discuss and examine the status of comprehensive risk management, etc.,
and develop provisions and manuals concerning risk management and crisis management.

-

In addition to the status of comprehensive risk management, an overview of each type of risk is reported
to the Board of Directors every six months.

-

The Audit Department conducts internal audits of each department at headquarters, branch offices, andgroup companies, and reports the audit results and progress of improvement, etc. to the Board of
Directors every six months.

(3) System for ensuring the efficient execution of duties by directors-

Meetings of the Board of Directors are held regularly once a month and at any time as necessary. In thecurrent fiscal year, the company has held 12 regular Board of Directors meetings and nine extraordinary
Board of Directors meetings.

- 59 -

-In addition, in order to discuss important matters, meetings are held of the Management Committee (18times), the Risk Management Committee (10 times), and the Compliance Committee (9 times).

-

Duties of directors are clarified based on managerial posts, rules on division of duties, etc., and regular
reports are made to the Board of Directors on the status of directors’ execution of business.

-

Minutes and reports of the minutes of meetings of the Board of Directors and other important
committees, etc. are prepared and are stored and managed by the responsible department in accordancewith laws and regulations and internal rules.

(4) Systems for ensuring proper business activities in the Bank’s group-

The management system of group companies and important matters, etc. that require an application for
approval and reporting to the Bank are stipulated in the Affiliate Company Management Rules. In
addition, the General Planning Department, as the department responsible for managing groupcompanies, has established a system for receiving reports on the details of operations and conducting
guidance for and management of group companies.

-

The Auditing Department conducts audits on the appropriateness and effectiveness of the internal control
posture, etc. of group companies.

-

A system has been established that allows the Bank and group companies to operate and respond tocompliance hotlines in a unified manner.

(5) Ensuring, etc. that audits by the Audit Committee are performed effectively-

The Audit Committee holds regular interviews with the representative director, and regularly exchanges
information and cooperates with the accounting auditor, corporate auditors of group companies, and the
Audit Department, which is the internal audit division, etc.

-

The Bank’s and group companies’ important internal approval documents and reports are circulated tofull-time Audit Committee Members as necessary, and full-time Audit Committee Members attend
important meetings of various committees, etc.

-

In order to assist in the Audit Committee’s duties, there are full-time staff members who are unable toreceive instructions from outside the Audit Committee.

- 60 -

Statement of Changes in Equity for the 113th Period(From April 1, 2021 to March 31, 2022)(Unit: millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Amount ofstatedcapitalCapitalreserve

Other
capitalsurplusTotal
capitalsurplus13,834－

13,834Retained Reserveforearnings
reserve reduction
entry ofreplacedassetsTotal
retainedearnings

Generalreserve

Retainedearnings
brought
forward127,280

4,376

137,484

Dividends of surplus−1,721−1,721

Net income for period

10,801

10,801140

140−2,000－−9−9Balance at the beginning of period

18,0005,392

434

Change of items during period

Acquisition of treasury shares−9

Disposition of treasury shares−9

Reversal of revaluation difference on
land
2,000

Provision of general reserve
Transfer to capital surplus from retained
earnings

99Changes in the amount for the period(net amount) for items other thanshareholders’ equity
Total change during period
Balance at end of period

－

－

－

－

－

－

2,000

7,211

9,211

18,00013,834－

13,834

5,392

434

129,280

11,587

146,695- 61 -

(Unit: millions of yen)
Shareholders’ equity

Valuation and translation adjustments

Valuationdifference
Totalon
Treasuryshareholder
sharesavailables’ equity
for-salesecurities
Balance at the beginning of period−1,055

168,263

59,255Rights to
Totalvaluation subscribe
Deferred
Revaluation
for new
gains orandreserve forshareslosses ontranslation
landhedgesadjustments
100

8,413

67,768302

Total equity

236,334

Change of items during period
Dividends of surplus−1,721−1,721

Net income for period

10,801

10,801

Acquisition of treasury shares

−3

−3

−3

Disposition of treasury shares

78

69

69

Reversal of revaluation difference on
land

140

140

Provision of general reserve－－

Transfer to capital surplus from retained
earnings－－

Changes in the amount for the period(net amount) for items other thanshareholders’ equity−16,638535−140−16,243−43−16,286

Total change during period

75

9,286

−16,638535−140−16,243−43−6,999Balance at end of period−979

177,549

42,616635

8,272

51,525259

229,334- 62 -

Notes to the Non-Consolidated Financial Statements
Stated monetary amounts are rounded down to the nearest million yen.
Significant accounting policies
1.

2.

Valuation basis and valuation method for marketable securities
The valuation of marketable securities is carried out in accordance with the market value method (selling costs arecalculated using the moving average method).
Valuation basis and valuation method for securities
The valuation of securities is carried out using the amortized cost method using the moving average method for bonds
held to maturity (straight-line method), the cost method using the moving average method for shares in subsidiaries andsubsidiary corporations, etc., and the market value method for other securities (selling costs are calculated using themoving average method), but the cost method using the moving average method is used for shares, etc. without market
price.
Valuation differences on available-for-sale securities are included in equity.

3.
4.

Valuation criteria and valuation method for derivative transactions
Derivative transactions are evaluated based on the market value method.
Depreciation method for fixed assets(1) Tangible fixed assets (excluding leased assets)
Tangible fixed assets are depreciated using the declining balance method (however, the straight-line method forbuildings excluding ancillary equipment acquired on or after April 1, 1998, and for ancillary equipment andstructures acquired on or after April 1, 2016).
The principal useful life is as follows:
Buildings
Other

8–50 years
3–20 years(2) Intangible fixed assets (excluding leased assets)
Intangible fixed assets are depreciated using the straight-line method. Software for own use is depreciated based on
the usable period within the Bank (five years).
(3) Leased assets
Leased assets in “tangible fixed assets” or “intangible fixed assets” under finance leases that do not involve transferof ownership are depreciated using the straight-line method, with the lease term as the useful life of the lease period.
5.

The residual value is zero.
The basis for the translation of foreign currency dominated assets and liabilities into Japanese currency
Foreign currency-denominated assets and liabilities are converted into yen using the exchange rate on the closing date.

- 63 -

6.

Allowance recording standards(1) Allowance for doubtful accounts
Allowances for doubtful accounts are recorded as follows in accordance with the pre-prescribed amortization andallowance rules.
For claims equivalent to claims against normal obligors and claims requiring attention stipulated in the “Guidelines
on Self-Assessment of Assets of Banks and Other Financial Institutions and Audit of Bad Debt Amortization andAllowance for Doubtful Accounts” (Japan Institute of Certified Public Accountants Special Committee on Audits ofBanks, etc. Report No. 4, April 14, 2022), the expected loss amount for the next year or the expected loss amount for
the next three years is estimated and recorded, with the expected loss amount calculated by calculating the loss rate
based on the average value of the bad debt record rate over a certain period in the past based on the bad debt record
for one year or three years, and adding necessary adjustments such as future prospects to this. For claims
corresponding to claims against obligors with a concern of bankruptcy, the estimated amount of collateral that can bedisposed of and the estimated recoverable amount from the guarantee are deducted from the amount of the claim, andthe remaining amount that is deemed necessary is recorded. For claims corresponding to claims against legally or
substantially bankrupt obligors, the estimated amount of collateral that can be disposed of and the estimatedrecoverable amount from the guarantee are deducted from the amount of the claim, and the remaining amount isrecorded.
All claims are assessed by the asset valuation department in cooperation with the sales-related department based on
the asset self-assessment standards.
(2) Allowance for investment loss
In order to provide for losses on investment, the reserve for investment losses is recorded in the amount deemednecessary in consideration of the financial position, etc. of securities issuers.
(3) Allowance for bonuses payable
In order to provide for the payment of bonuses to employees, the reserve for bonuses is recorded in the estimatedamount of bonus payments to employees that are attributable to the current fiscal year.
(4) Allowance for officers’ bonuses payable
In order to provide for the payment of bonuses to officers, the reserve for officer bonuses is recorded in the estimatedamount of bonus payments to officers that are attributable to the current fiscal year.
(5) Allowance for retirement benefits
In order to provide for the payment of employee retirement benefits, a reserve for retirement benefits is recorded
based on the estimated amount of retirement benefit obligations and pension assets at the end of the current fiscal
year. The method of attributing the estimated amount of retirement benefits to the period lasting until the end of thecurrent fiscal year when calculating the retirement benefit obligations is based on the benefit calculation formula
standard. Actuarial differences are expensed over a period (13–14 years) that is no longer than the average remaining
service period for employees as of the year in which they arise, starting from the first year following that in which
they arise.
(6) Allowance for officers’ retirement benefits
In order to provide for the payment of retirement benefits to executive officers, a reserve for officer retirement
benefits is recorded in the amount of estimated payment of retirement benefits to executive officers that can berecognized as having occurred by the end of the current fiscal year.

- 64 -

(7) Allowance for reimbursement losses for inactive deposits
In order to provide for reimbursement losses based on reimbursement claims from depositors for inactive deposits
that were recognized as profit, a reserve for reimbursement of inactive deposits is recorded in the expected amount of
future reimbursement losses based on past reimbursements.
(8) Allowance for contingent loss
In order to provide for future payments of obligations through liability sharing systems, etc. for guarantees of credit
guarantee associations pertaining to loans, etc., a reserve for contingent losses (reserve for guarantee losses) is
7.

recorded in the amount deemed necessary in consideration of past bad debts, etc.
Method of recording revenue and expenses
The main performance obligation in key businesses concerning revenue generated from contracts with customers is theprovision of financial services, etc., and revenue is recognized in the amount that is expected to be received in

8.

exchange for promised goods or services when control of such goods or services transfers to the customer.
Hedge accounting method
Interest rate risk hedging
The method of hedge accounting for interest rate risk arising from financial assets and liabilities is based on deferredhedges prescribed in “Accounting and Audit Treatment regarding Application of Financial Instruments AccountingStandards in the Banking Industry” (Japanese Institute of Certified Public Accountants Industry Committee Practical
Guidelines No. 24, March 17, 2022; “Industry Audit Committee Practical Guidelines No. 24”). With regard to thehedging effectiveness assessment method, for hedging that offsets market fluctuations, we group into each certain(remaining) period and then identify and evaluate the deposits and loans, etc. to be hedged and interest rate swap
transactions, which are hedging instruments. In addition, with regard to hedging that fixes cash flows, effectiveness isevaluated by verifying the correlation between interest rate fluctuation factors of the hedged items and the hedging
instruments.
For some assets, deferred hedges are used by individual hedges that directly correspond with hedged items and hedging
instruments.
The hedging effectiveness assessment has been omitted because the terms of the hedging instruments and hedged items
are essentially the same, so market fluctuations are offset at the start of hedging and continuously thereafter.
Among the above hedging relationships, the special treatment set out in “Treatment of Hedge Accounting for Financial
Instruments that Reference LIBOR” (Practical Issues Task Force Report No. 40, March 17, 2022; AccountingStandards Board of Japan) is applied to all hedging relationships within the scope of the report. The details of hedge
accounting to which this practical response report is applied are as follows.
Hedge accounting method
Deferred hedging
Type of financial instrument that is the hedging instrument Interest rate swap
Type of financial instruments that are hedged
Types of hedge transaction

Japanese government bond
Offsetting market fluctuations- 65 -

9.

Accounting treatment for consumption tax, etc.
Non-deductible consumption tax, etc. on tangible fixed assets is recorded in expenses for the current fiscal year.

Changes to accounting policies(Application of Accounting Standards for Recognition of Revenue, etc.)
The Accounting Standards for Revenue Recognition (Corporate Accounting Standards No. 29, March 31, 2020;“Revenue Recognition Accounting Standards”), etc. have been applied from the beginning of the current fiscal year, andrevenue is recognized in the amount expected to be received in exchange for promised goods or services when control ofsuch goods or services transfers to the customer.
As a result, part of the consideration paid to customers such as cash-backs has changed from the method of being
treated as “operating expenses” or “other ordinary expenses” in “ordinary expenses” to the method of making a reduction
from the transaction price.
This effect that this change has on the financial statements is minor.
(Application of Accounting Standards for Fair Value Measurement, etc.)
The Accounting Standards for Fair Value Measurement (Corporate Accounting Standards No. 30, July 4, 2019; “Fair
Value Measurement Accounting Standards”), etc. have been applied from the beginning of the current fiscal year, and inaccordance with the transitional treatment set forth in Section 19 of the Fair Value Measurement Accounting Standards
and Section 44-2 of the Accounting Standards for Financial Instruments (Corporate Accounting Standards No. 10, July 4,2019), the new accounting policies established by the Fair Value Measurement Accounting Standards will be applied in
the future. The effect that this change has on the financial statements is minor.
Significant accounting estimates
Items for which the amount was recorded in the financial statements for the current fiscal year based on accounting
estimates and that could have a material impact on the financial statements for the next fiscal year are as follows.
Allowance for doubtful accounts(1) Amount recorded in the financial statements for the current fiscal year
Allowance for doubtful accounts
13,223 million yen(2) Information that contributes to an understanding of the content of an important accounting estimate pertaining to theidentified item(i) Calculation method
As stated in “(1) Allowance for doubtful accounts” under 6. Allowance recording standards” of “Significant
accounting policies,” assets are valued based on asset self-assessment standards, and allowances for doubtful
accounts are recorded in accordance with the amortization and allowance rules according to the determined debtor
category.
(ii) Key assumptions
Debtor category is determined based on quantitative information such as the debtor’s financial information in
addition to making a judgment taking qualitative factors, etc. into consideration, and there is a high degree of
uncertainty about the estimate mainly in the following areas.

- 66 -

-

Ascertaining the credit status of the debtor, including the future prospects for performance of the debtor(including financial analysis, industry trends, use of funds, repayment plan, etc.)-

Estimating expected losses based on the recent economic environment and future outlook based on risk
factors and past bad debt results
Regarding the estimates for allowance for doubtful accounts due to the COVID-19 pandemic, it is expected that
escalation of the pandemic and the resulting stagnation of economic activity will continue to have an impact in thenext fiscal year, but it is expected that economic activity will gradually recover with the support of economic
measures by the government.
Against this backdrop, it is assumed that some industries will continue to see an impact on earnings such as lower
sales, and that there will be some degree of impact on credit risk for loans, etc. Based on these assumptions, in orderto provide for the expected losses due to such impact, the allowance for doubtful accounts is recorded by reflecting
the deterioration of debtors’ recent performance, which is expected to be impacted, in the debtor categorization.
(iii) Impact on financial statements for the next fiscal year
The above assumptions involve a high degree of uncertainty, and changes in the assumptions used in the initial
estimates due to escalation of the pandemic or changes in economic environment and changes in borrowers’ financial
situations, etc. may have a material impact on the allowance for doubtful accounts in the financial statements for the
next fiscal year.

- 67 -

Matters to Be Set Down in Notes(Balance Sheet-Related)
1. Total amount of shares of affiliates: 1,888 million yen
2.

The claims under the Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions
are as follows. Claims are recorded in the accounts for corporate bonds (limited to contracts under which theredemption of the principal and payment of the interest in whole or in part are guaranteed, and such corporate bond isissued through the private placement of securities (Article 2, Paragraph 3 of the Financial Instruments and ExchangeAct)), loans, and foreign exchange under “securities,” and accrued interest, suspense payments, and customers’
liabilities for acceptances and guarantees under “other assets” in the balance sheet.
Amount of claims subject to bankruptcy or reorganization proceedings andequivalent claims

7,478 million yen

Amount of claims with risks
Amount of claims requiring monitoring

40,489 million yen
5,005 million yen

Amount of claims in arrears for three months or moreAmount of restructured loans
Subtotal
Amount of normal claims

302 million yen
4,703 million yen
52,974 million yen
2,756,813 million yen

Total amount
2,809,787 million yen“Claims subject to bankruptcy or reorganization proceedings and equivalent claims” means claims held against debtors
with failed business status due to grounds such as a petition for commencement of bankruptcy proceedings,
commencement of reorganization proceedings, or commencement of rehabilitation proceedings, and any other type ofclaims equivalent thereto.
“Claims with risks” means claims that do not fall under the category of claims subject to bankruptcy or reorganization
proceedings and equivalent claims and for which, although the debtor has not entered bankruptcy, there is a highpossibility that loan principal cannot be recovered or interest cannot be received according to the contract because ofdifficulties in the financial condition and business performance of the debtor.
“Claims in arrears for three months or more” are loans for which the payment of principal or interest has been not paid
for three months or more from the day following the agreed payment date, and which do not fall under the category ofclaims subject to bankruptcy or reorganization proceedings and equivalent claims or claims with risks.
“Restructured loans” are loans that, for the purpose of the rehabilitation or support of the debtor, have reduced or
exempted interest rates, deferred payment of interest, deferred repayment of principal, loan forgiveness, or otherarrangements that are advantageous to the debtor, and do not fall under the category of claims subject to bankruptcy orreorganization proceedings and equivalent claims, claims with risks, or claims in arrears for three months or more
“Normal claims” are claims classified as those other than claims subject to bankruptcy or reorganization proceedings
and equivalent claims, claims with risks, claims in arrears for three months or more, and restructured loans, and forwhich the debtor has no particular financial condition or business performance problems.
The aforementioned amount of claims is before deducting the allowance for doubtful claims.
Change in presentation
Following the implementation from March 31, 2022 of the Cabinet Office Ordinance Partially Revising the Ordinancefor Enforcement of the Banking Act, etc. (Cabinet Office Ordinance No. 3 of January 24, 2020), the categories, etc. of
risk-monitored claims under the Banking Act are presented in accordance with the classification, etc. of disclosed
3.

claims under the Act on Emergency Measures for the Revitalization of Financial Functions.
Discounts on negotiable instruments are treated as financial transactions pursuant to the Industry Audit Committee- 68 -

Practical Guidelines No. 24. The bank acceptances, commercial bills, documentary bills, and foreign exchange
purchases, etc. that have been accepted pursuant thereto have rights enabling disposition at will by way of sale or (re-)
collateral. The face value of this amount is 14,346 million yen.
4.

5.

In loan participation, the amount recorded on the balance sheet is 3,248 million yen out of the participation principal
amount accounted for as loans to original debtors based on Accounting and Presentation of Loan Participation(Japanese Institute of Certified Public Accountants Accounting System Committee No. 3, November 28, 2014)
Assets offered as collateral are as follows.
Assets offered as collateral
Securities

463,045 million yen

Loans
Obligations corresponding to the security assets

111,268 million yen

Call money
Security accepted for bond lending transactions

6,119 million yen
49,241 million yen

Borrowed money
447,070 million yen
In addition to the above, 704 million yen of securities has been provided as collateral for transactions such as foreignexchange settlements and substitutes for futures trading margins, etc.
Other assets include 10,000 million yen of deposited margin from central clearing houses and 334 million yen of
6.

guarantee money.
Overdraft agreements and commitment line agreements pertaining to loans are agreements that promise to lend funds
up to a certain limit provided there is no breach of the terms and conditions set forth in the agreement if a request is
received from a customer to execute a loan. The unused loan balance pertaining to such agreements is 619,394 million
yen, and all have an original agreement term of one year or less (or are unconditionally revocable at any time).
As many of these agreements end without drawdown, the undrawn loan balance itself does not necessarily affect theBank’s future cash flow. Many of these agreements contain provisions to the effect that the Bank may reject a loan
drawdown request or reduce the maximum amount of the contract due to a change in the financial situation,
preservation of claims, and other reasonable grounds. In addition to requiring collateral such as real estate, securities,
etc. as necessary at the time of contract, the customer’s business conditions are regularly ascertained based on
predetermined internal procedures after entering into the agreement, and the agreement is reviewed and measures for
credit protection, etc. are taken as necessary.

7.

A revaluation of land for business use was conducted in conformance with the Act on Revaluation of Land (Act No. 34
of March 31, 1998), and the amount corresponding to tax on the resulting revaluation difference is recorded to thecategory for liabilities as a “deferred tax liability for revaluation,” and the amount after this deduction is recorded to thecategory for equity as the “land revaluation difference.”
Date of revaluation:
March 31, 1998
The method of reevaluation stipulated in Article 3, Paragraph 3 of said Act.

Calculationbymakingareasonable adjustment based on the taxable value of the land
value tax prescribed in Article 2, item (iv) of the Order for
Enforcement of the Act on Revaluation of Land (Cabinet
Order No. 119 of March 31, 1998).
The difference between the total amount of the market value at the end of the current fiscal year of the land forbusiness use for which revaluation has been carried out as prescribed in Article 10 of said Act and the total
amount of the book value after the revaluation of the said land for business use
The difference is not stated because the market value of the land for which revaluation was carried out exceeds- 69 -

the book value after the revaluation.
8.

Amount of accumulated amortization for tangible fixed assets

24,207 million yen

9. Amount of reduction entries for tangible fixed assets
1,892 million yen
10. Of the corporate bonds under “securities,” the Bank’s guarantee obligation for corporate bonds through private
placement of securities (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act) is 36,078 million yen.
11. Total amount of monetary claims against directors arising from transactions with directors
3 million yen
12. Total amount of monetary claims with respect to affiliates
13. Total amount of monetary obligations with respect to affiliates- 70 -

7,200 million yen
5,123 million yen

(Profit and Loss Statement-Related)
1. Revenue from transactions with affiliates
Total amount of revenue pertaining to money management transactions

35 million yen

Total amount of revenue pertaining to service transactions, etc.
Total amount of revenue pertaining to other operations and other current transactions
Expenses due to transactions with affiliates
Total amount of expenses pertaining to fund-raising transactions

50 million yen

Total amount of expenses pertaining to service transactions, etc.
Total amount of expenses pertaining to other operations and other current transactions2.

14 million yen
72 million yen

47 million yen
246 million yen

Total expenses pertaining to other transactions
0 million yen
The book value of the following assets has been reduced to the recoverable value due to a change in the use of the asset
or a continuous decline in land prices, etc., and the amount of such decrease and removal expenses, etc. are recorded to
extraordinary losses as impairment losses (186 million yen).
Category
OperatingRegionAichi

assetsPrefecture

Main use
3 sales branches, etc.

Type
Land and building, movable

Impairment loss (millions of yen)186

assets, etc.
(Of which, land71)

(Of which, buildings, etc.
(Of which, movable assets,

77)

－)
etc.
(Of which, removal expenses 37)
Total(Of which, land

186
71)

(Of which, buildings, etc.
77)
(Of which, movable assets, －)etc.
(Of which, removal expenses 37)
Operating assets are grouped by branch office, which is the smallest division of management accounting (however, abranch office group that conducts business in a coordinated manner is that group unit).
In addition, idle assets are treated as one unit.
The recoverable value used to measure the impairment loss in the current fiscal year is the net sale price. The net saleprice is calculated by deducting the estimated amount of disposition expenses from the real estate appraisal amount,etc.

- 71 -

3.

Transactions with related parties
Officers and major shareholders (limited to individuals), etc.

Type

StatedcapitalLi n e o for
Co mp an ybusiness
Locatio capitaldesignationorncontribu
or nameprofessiotionn(millions of yen)Close
relative YasumichiofI n u k a i
officer(Note)－－

Certifiedt a x
accountantHolding(held)
ratio ofvotingrights, etc.
( % )

－

RelatioE n d o f
Details of Transactionshipp e r i o dthen amount Accounttobalancetransactio (millions
title
related(millions of
nsof yen)
party
yen)

－

(Averagebalance)Lending
30
of funds
Loans(Lending
interest rate)
0

Transaction terms and policies for deciding transaction terms, etc.
Lending of funds is decided in the same manner as general transaction terms and conditions.

- 72 -

29

(Statement of Changes in Equity-Related)
Matters regarding class and number of treasury shares(Unit: thousands of shares)
Number ofshares at the end
Summaryof the current
fiscal year

Number of sharesat the beginning of
the current fiscal
year

Increase in
number of sharesin current fiscal
year

Decrease in
number of sharesin the current
fiscal year

Common stock

189

0

14

176

T o

189

0

14

176

Treasury sharesta l(Note)(Note) 1. The increase in the number of common stock treasury shares of 0 thousand shares is due to anincrease of 0 thousand shares from purchases of fractional units of shares.
2. The decrease in the number of common stock treasury shares of 14,000 shares is a decrease of 0
thousand shares due to request(s) for additional purchase of fractional shares and a decrease of
14,000 shares due to treasury share dispositions in conjunction with the exercise of stock options.
(Securities-Related)
In addition to government bonds, local government bonds, corporate bonds, stocks, and other securities, trust beneficial
interests in trading account securities and monetary claims purchased are included in the balance sheet.
1.
Trading securities (as of March 31, 2022)
Valuation difference included in profit and loss for thecurrent fiscal year (millions of yen)
Trading securities

2.

0

Bonds held to maturity (as of March 31, 2022)
No applicable matters.

3.

Shares in subsidiaries, subsidiary corporations, etc. and affiliated corporations, etc. (as of March 31, 2022)
No applicable matters.
(Note)

Amount of shares, etc. without market price recorded on the balance sheet
Amount recorded on the balance sheet (millions of yen)

Shares of subsidiaries
corporations, etc.

andsubsidiary

1,888
－

Shares of affiliated corporations, etc.

- 73 -

4.

Available-for-sale securities (as of March 31, 2022)
Amount recordedon the balance
sheet(millions of yen)

Acquisition cost
(millions of yen)Amount ofdifference(millions of yen)

Shares115,790

53,21362,577

Bond certificates

189,453

188,243

1,210

999

998

0

66,897

66,687

210

121,557

120,557

1,000

Overseas bonds

17,78817,673115

Other

93,09682,657

10,439Sub total

416,130

341,787

74,343

Shares12,12913,686−1,557

Bond certificates

389,434

394,612−5,177

126,798

129,791−2,992

97,54898,805−1,257

165,087

166,015−927

Overseas bonds

56,13058,453−2,322

Other

123,481

128,057−4,576

Sub Total

581,176594,810−13,634

997,306

936,597

60,709

Type

Japanesegovernment
bonds
Local
government
bonds

Items for whichamount recorded onbalance sheet
exceeds acquisition
cost

Corporate bonds

Japanesegovernment
bonds
Local
government
bonds

Items for whichamount recorded onbalance sheet does
not exceed
acquisition cost

Corporate bonds

Total(Note)

Amount recorded on the balance sheet for shares without market price and partnershipcontributions, etc., which are not included in the table above
Amount recorded on the balance sheet(millions of yen)

Unlisted shares

1,403

Partnershipcontributions, etc.

1,003

Partnership contributions, etc. are not subject to market value disclosure pursuant to Paragraph 27 of the
Guidelines for Application of Accounting Standards for Fair Value Measurement (Guidelines on
Application of Corporate Accounting Standards No. 31, July 4, 2019).

- 74 -

5.

Available-for-sale securities sold during the current fiscal year (from April 1, 2021 to March 31, 2022)
Sale proceeds(millions of yen)

Total gain on sale(millions of yen)

Total loss on sale(millions of yen)

Shares13,085

5,353

532

Bond certificates

28,29945

79

14,501

43

32

－

－

－

13,7982

47

Overseas bonds

9,790

4

12

Other

19,218

489

960

Total

70,393

5,891

1,584

Japanesegovernment bonds
Local government
bonds
Corporate bonds

6.

Securities subject to impairment
Among securities other than trading securities (excluding shares, etc. without market prices and partnershipcontributions, etc.), if the market value of the securities has fallen significantly compared to the acquisition cost and themarket price is not expected to recover to the acquisition cost, the relevant market value is treated as the amountrecorded on the balance sheet and the valuation difference is treated as a loss in the current fiscal year (“impairment
loss”).
The amount of impairment loss in the current fiscal year is 72 million yen (of which, 64 million yen is for shares and 8
million is for corporate bonds).
In addition, the criteria used to determine that the market value has “fallen significantly” is that the market value has
fallen by 30 percent or more compared to the acquisition cost.
Of these, all stocks with a decline rate of 50 percent or more are collectively booked as impairment losses, and for
those with a decline rate of 30 percent or more but less than 50 percent, all impairment losses are recognized except for
those that are deemed to have a possibility of recovery in the market price.

- 75 -(Tax Effect Accounting-Related)
The breakdown by major cause of deferred tax assets and deferred tax liabilities is respectively as follows.
Deferred tax assets
Allowance for doubtful accounts
Allowance for contingent loss

3,692 million yen
478

Depreciation expense
Depreciation of securities

348
1,390

Land impairment, etc.
Other

336
1,599

Deferred tax assets subtotal

7,846

Valuation allowance−1,985

Deferred tax assets total

5,861

Deferred tax liabilities
Valuation difference on available-for-sale securities−18,092

Allowance for employee retirement benefits
Gain on establishment of retirement benefit trust

−14
−337

Deferred gains or losses on hedges
Reserve for reduction entry of replaced assets

−280
−191

Other

−11

Deferred tax liabilities total−18,928

Net deferred tax liabilities−13,066 million yen(Revenue Recognition)
Notes have been omitted due to sharing the same content stated in the consolidated balance sheets- 76 -

(Stock Options, etc.-Related)
1.
2.

Amount reported as expenses and account title for the current fiscal year pertaining to stock options
General and administrative expenses: 25,000,000 yen
Stock option details, scope, and changes(1) Stock option details
Series 1 rights to subscribe for new shares

Series 2 rights to subscribe for new sharesClassification and number ofpeople subject to grant

13 directors of the Bank (excluding outside
directors)

13 directors of the Bank (excluding outside
directors)

Number of stock options byclass of share (Note)

13,000 shares of common stock of theBank

12,200 shares of common stock of theBank

Grant dateJuly 20, 2012

July 19, 2013

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 21, 2012 – July 20, 2042

July 20, 2013 – July 19, 2043

Series 3 rights to subscribe for new shares

Series 4 rights to subscribe for new sharesClassification and number ofpeople subject to grant

13 directors of the Bank (excluding outside
directors)

13 directors of the Bank (excluding outside
directors)

Number of stock options byclass of share (Note)

9,100 shares of common stock of the Bank

7,100 shares of common stock of the Bank

Grant dateJuly 25, 2014

July 24, 2015

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 26, 2014 – July 25, 2044

July 25, 2015 – July 24, 2045
Series 6 rights to subscribe for new shares
11 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Number of stock options byclass of share (Note)

Series 5 rights to subscribe for new shares
13 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)
10,600 shares of common stock of theBank

Grant dateJuly 22, 2016

July 21, 2017

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 23, 2016 – July 22, 2046

July 22, 2017 – July 21, 2047

Classification and number ofpeople subject to grant- 77 -

7,400 shares of common stock of the Bank

Series 7 rights to subscribe for new shares
9 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Series 8 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Number of stock options byclass of share (Note)

7,700 shares of common stock of the Bank

9,500 shares of common stock of the Bank

Grant dateJuly 20, 2018

July 19, 2019

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 21, 2018 – July 20, 2048

July 20, 2019 – July 19, 2049

Series 9 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Series 10 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Number of stock options byclass of share (Note)

10,600 shares of common stock of theBank

10,800 shares of common stock of theBank

Grant dateJuly 22, 2020

July 21, 2021

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 23, 2020 – July 22, 2050

July 22, 2021 – July 21, 2051

Classification and number ofpeople subject to grantClassification and number ofpeople subject to grant(Note)

Disclosed as equivalent number of shares- 78 -

(2) Scope of and changes in stock options
These disclosures cover the stock options that existed in the current fiscal year (ending March 2022), and state thenumber of stock options as the equivalent number of shares.
(i)

Number of stock options
Series 1
Series 2
Series 3
Series 4
Series 5
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares

Before vesting
End of preceding
fiscal year
Granted

－

－

－

－

－

－

－

－

－

－

Canceled

－

－

－

－

－

Vested

－

－

－

－

－

Unvested

－

－

－

－

－

4,000 shares

6,900 shares

5,800 shares

6,100 shares

10,600 shares

－

－

－

－

－

2,600 shares

2,900 shares

1,900 shares

2,300 shares

2,900 shares

－

－

－

－

－

1,400 shares

4,000 shares

3,900 shares

3,800 shares

7,700 shares

After vesting
End of preceding
fiscal year
VestedExercised rights
CanceledUnexercised rights

Series 6
Series 7
Series 8
Series 9
Series 10
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
Before vesting
End of preceding
fiscal year
Granted

－

－

－

－

－

－

－

－

－

10,800 shares

Canceled

－

－

－

－

－

Vested－－－－10,800 shares

Unvested

－

－

－

－

－

7,400 shares

7,700 shares

9,500 shares

10,600 shares

－

－

－

－

1,300 shares

100 shares－

After vesting
End of preceding
fiscal year
VestedExercised rights
CanceledUnexercised rights

10,800 shares
－

－

－

－

－

－

－

6,100 shares

7,600 shares

9,500 shares

10,600 shares

10,800 shares- 79 -

(ii) Unit price information

Exercise Price
Average share priceupon exercise
Fair unit value as of the
grant date

Exercise Price
Average share priceupon exercise
Fair unit value as of the
grant date

Series 1
Series 2
Series 3
Series 4
Series 5
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
1 yen
1 yen
1 yen
1 yen
1 yen
2,848 yen

3,375 yen

3,831 yen

4,363 yen

4,566 yen

3,645 yen

4,556 yen

4,959 yen

6,811 yen

4,466 yen

Series 6
Series 7
Series 8
Series 9
Series 10
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
1 yen
1 yen
1 yen
1 yen
1 yen
4,700 yen

4,700 yen－－－

6,004 yen

4,673 yen

3,523 yen

2,358 yen

2,367 yen

- 80 -

3.

Method of estimating fair unit value of stock options
The fair unit value for the series 10 rights to subscribe for new shares granted in the current fiscal year is as follows.
(1) Valuation method used: Black-Scholes model(2) Main basis figures and estimation method
Series 10 rights to subscribe for new shares
Share price volatility (Note 1)

30.666%

Expected remaining period (Note 2)

4.1 years

Forecasted dividend (Note 3)

120 yen/share

Risk-free interest rate (Note 4)−0.152％(Notes)1. The calculation is based on the stock price performance for the period corresponding to the expected
remaining period (from June 2017 to July 2021).
2. The expected remaining period is estimated as the difference between the average term of office of
directors who have retired in the past 10 years and the average term of office of current incumbent
directors.
3. This is the dividend performance for the fiscal year ending March 2021.

4.

4. This is the yield of government bonds corresponding to the expected remaining term.
Method of estimating the number of vesting stock options
Given the difficulty of forming reasonable estimates for the number of options to expire in the future, the estimate
basically adopts the method of reflecting only the number of options that have expired in the past.

(Per-share information)
Amount of equity per share
Current net profit amount per share

21,275.57 yen
1,003.85 yen

Diluted net income per share

998.15 yen- 81 -

(Significant post-balance sheet events)
Business Integration between the Bank and The Chukyo Bank, Limited.
The Aichi Bank, Ltd. (President: Yukinori Ito, hereinafter “Aichi Bank”) and The Chukyo Bank, Limited (President:
Hideo Kobayashi, hereinafter “Chukyo Bank”, with both Aichi Bank and Chukyo Bank jointly referred to as the“Banks”), in accordance with a basic agreement (hereinafter the “Basic Agreement”) dated December 10, 2021, as aresult of the Board of Directors meetings held at each Bank as of May 11, 2022, and assuming the approval of the
Banks’ general meetings of shareholders, the acquisition of permission from relevant authorities, and MUFG Bank,
Ltd. (hereinafter “MUFG Bank”) tendering all of its 8,534,385 Chukyo Bank Shares to the Treasury Stock Tender
Offer (defined in 2. below), thereby legally completing the settlement of the Treasury Stock Tender Offer, the Banks
have both resolved to form the “Aichi Financial Group, Inc.” (hereinafter the “Joint Holding Company”), which would
function as the parent company to which the Banks will become wholly owned subsidiaries, via a joint share transfer
method on October 3, 2022 (hereinafter the “Share Transfer”), on the overview of the Joint Holding Company, as wellas on the terms and conditions of the Share Transfer. Both Banks have executed a business integration agreement(hereinafter the “Business Integration Agreement”), and jointly developed a share transfer plan as of the same day.
1. Purpose of the Business Integration through the Share Transfer(1)Background and Purpose of the Business Integration
Aichi Bank and Chukyo Bank, as local financial institutions with their main branches located in Aichi Prefecture,
which is a center for a variety of industries, have fulfilled their social missions and built solid operation bases with thesupport from local residents.
With recent changes in industrial structures and social environments nationwide such as environmental problems andthe post-COVID-19 environment, in the Aichi Prefecture and the surrounding Tokai area in which the Banks operate(the “Region”), customer needs are becoming more sophisticated and diversified as the management issues of businesscustomers and the lifestyles of individual customers change and the Banks believe they are at a turning point in termsof expanding their business opportunities with increased missions and roles as local financial institutions.
While the market is becoming increasingly competitive with new entrants in the financial area from different
industries such as fintech companies, the Banks are required to develop new financial businesses that can be theprimary source of revenue, not just as competitors of those new entrants, but by establishing business alliances thatutilize their respective technologies and operating bases and by effectively taking advantage of deregulation under the
Banking Act, thereby building a sustainable profit base and contributing to the local community as local financial
institutions.

- 82 -

Being aware of such management environment and issues and continuing to respond to the expectations of local
residents while the competition with other financial institutions including those in adjacent prefectures intensifies in thefertile market of the Region, which is expected to expand, the Banks decided that the best option to contribute to thedevelopment of their stakeholders is to utilize the management resources and strengths of the Banks that have built
their operation bases in the Region over many years, achieve business integration between urban financial institutions,enhance their competitive edge by displaying an outstanding presence, and continue providing advanced financial
services.
As they have already announced through the December 10, 2021 press release entitled “Notice Regarding Basic
Agreement on Business Integration between The Aichi Bank, Ltd. and The Chukyo Bank, Limited,” both Banks havebeen advancing deliberations and considerations in anticipation of a business integration (hereinafter the "Business
Integration"), which will proceed under a basic policy of the formation of a joint holding company, targeted for October
3, 2022, via the Share Transfer, and a future merger of both Banks under the Joint Holding Company, and as of May
11, 2022 the Banks have reached a definitive agreement regarding this Business Integration.
(2)Method of the Share Transfer and Details of Allotment in the Share Transfer(i) Method of the Share Transfer
The Share Transfer will be a joint share transfer, under which the Banks will become wholly-owned subsidiaries of
the Joint Holding Company to be incorporated following the share transfer, and the Joint Holding Company will
become the wholly-owning parent company of the Banks.
(ii)

Details of Allocation Pertaining to the Share Transfer (“Share Transfer Ratio”)

Company Name

Aichi Bank

Chukyo Bank

Share transfer ratio

3.33

1

(Note 1)
Share allocation ratio
For every common share of Aichi Bank, 3.33 common shares of the Joint Holding Company shall be allocated, andfor every common share of Chukyo Bank, 1 common share of the Joint Holding Company shall be allocated. The shareunit of the Joint Holding Company is planned to be 100 shares.
If, as a result of the Share Transfer, shareholders of either Bank must be granted fractions of a share that do not
amount to one common share of the Joint Holding Company, in accordance with Article 234 of the Companies Act andother related laws and regulations, shareholders shall be paid an amount equivalent to the value of such fractional
shares amounting to less than one share.
The above share transfer ratio may change by mutual agreement of the Banks following the execution of theBusiness Integration Agreement, but before the effective date of the Share Transfer, if an event is newly discovered oroccurs that may have a significant impact on the share transfer ratio.

- 83 -

(Note 2)

Number of new shares to be delivered by the Joint Holding Company (planned)

Common stock: 49,094,859 shares
The above values were calculated based on the total number of common shares issued by Aichi Bank as of March 31,
2022 (10,943,240 shares), as well as the total number of common shares issued by Chukyo Bank as of March 31, 2022
(21,780,058 shares). However, taking into consideration the fact that Chukyo Bank is planning to acquire as treasury
stock the 8,534,385 common shares owned by MUFG Bank via the Treasury Stock Tender Offer, and that the Joint
Holding Company is to cancel all treasury stock owned by either Bank just before the Joint Holding Company is toacquire all of the issued shares for both Banks (hereinafter the “Basis Period”), the amount of treasury stock for Aichi
Bank as of March 31, 2022 (176,172 shares), the amount of treasury stock for Chukyo Bank as of March 31, 2022
(5,150 shares), as well as the 8,534,385 common shares of Chukyo Bank owned by MUFG Bank that Chukyo Bank
plans to acquire via the Treasury Stock Tender Offer, have been excluded from being subject to the new share delivery
in the calculation above. Note that, if as a result of the Treasury Stock Tender Offer, shareholders of either Aichi Bankor Chukyo Bank exercise their rights to request purchases of shares, or some other event arises before the Basis Periodthat changes the amount of treasury stock applicable to either Bank as of March 31, 2022, this may change the numberof new shares delivered by the Joint Holding Company.
(Note 3)

Handling of shares constituting less than one unit

Shareholders of either Bank who are to receive allocations through the Share Transfer amounting to less than one
unit (100 shares) of the common shares of the Joint Holding Company (hereinafter "Fractional Shares") may not sell
their Fractional Shares on the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”), the Nagoya Stock
Exchange, Inc. (the “Nagoya Stock Exchange”), or any other financial instruments exchange. Shareholders who holdsuch Fractional Shares may, in accordance with the provisions of Article 192(1) of the Companies Act, demand that the
Joint Holding Company purchase such Fractional Shares. Furthermore, in accordance with the provisions of Article
194(1) of the Companies Act, and the articles of incorporation of the Joint Holding Company, the Banks plan to enable
shareholders to demand that the Joint Holding Company sell to them fractional shares of the Joint Holding Company
equivalent to those fractional shares said shareholders already possess.
(3)Handling of rights to subscribe for new shares and bonds with rights to subscribe for new shares in conjunction with
the Share Transfer
With respect to any rights to subscribe for new shares issued by Aichi Bank and Chukyo Bank, at the time of the
Share Transfer, parties with rights to subscribe for new shares for either Bank will be allocated rights to subscribe for
new shares applicable to the Joint Holding Company in accordance with the details of such rights and the share transfer
ratio, and in accordance with the rights to subscribe for new shares applicable at the Basis Period. Neither of the Banks
has issued bonds with rights to subscribe for new shares.

- 84 -

2. Schedule of the Share Transfer
Friday, December 10, 2021

Execution of the Basic Agreement (Both Banks)

Wednesday, March 2, 2022

Receipt of notice by the FTC that no cease and desist order will be
issuedThursday, March 31, 2022

Record date of the annual shareholders’ meetings (Both Banks)

Wednesday, May 11, 2022

Board of directors meetings resolutions regarding the execution of theBusiness Integration Agreement, and the execution of the Business
Integration Agreement (Both Banks)
Board of directors meetings resolutions regarding the development of
the Share Transfer plan, and the development of the Share Transfer plan
(Both Banks)
Board of directors meeting resolution regarding the execution of theTreasury Stock Tender Offer Application Agreement, and execution of
the Treasury Stock Tender Offer Application Agreement (Chukyo
Bank)

Friday, June 24, 2022 (Planned)

Holding of annual general meetings of shareholders (adoption ofresolution approving the Share Transfer Plan) (Both Banks)

Thursday, September 29, 2022 (Planned)

Tokyo Stock Exchange and Nagoya Stock Exchange de-listing date
(Both Banks)

Before Friday, September 30, 2022

Start date of Treasury Stock Tender Offer settlement(Planned)
Friday, September 30, 2022 (Planned)

Record date of interim dividend for both Banks (including Special
Dividend by Chukyo Bank)

Monday, October 3, 2022 (Planned)

Formation date of the Joint Holding Company (effective date of the
Share Transfer)
Share listing date of the Joint Holding Company(Note)

The above schedule may be changed upon consultation between the Banks where necessary in thecourse of moving towards the Share Transfer or for other reasons.

3. 5. Overview of the Companies Involved in the Share Transfer (as of the end of March 2022)
Name

The Aichi Bank, Ltd.

The Chukyo Bank, Limited

Location

14-12 Sakae 3-chome, Naka-ku, Nagoya

33-13 Sakae
NagoyaYukinori Ito, President

Hideo Kobayashi, President

Description of businessBanking businessBanking businessAmount of stated capital

18 billion yen

31.8 billion yen

Date of establishment

May 15, 1944

February 10, 1943

Total number of issued shares

Common stock: 10,943,240 shares

Common stock: 21,780,058 shares

Settlement Term

March 31

March 31

Job

title

and

name

of

representative- 85 -

3-chome,Naka-ku,4. Company to be newly founded through the Share Transfer
Aichi Financial Group, Inc.

Trade Name(English: Aichi Financial Group, Inc.)

Location of headquarters
Functional
locationprincipal headquarters

14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi
of

14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi

Amount of stated capital

20,000 million yen

Settlement Term

March 31

5. Overview of Accounting Processing Associated with the Share Transfer
The accounting processing associated with the Share Transfer corresponds to an acquisition under accounting
standards for business combinations, and the application of the purchase method is anticipated. Furthermore, theamount of goodwill (or negative goodwill) that may arise from the Share Transfer is undetermined at this stage.

- 86 -

Consolidated Statement of Changes in Equity for the 113th Period(From April 1, 2021 to March 31, 2022)(Unit: millions of yen)
Shareholders’ equity

Balance at the beginning of the current
periodAmount of statedcapitalCapital surplus

Retained earnings

Treasury shares

Total shareholders’equity18,00013,883142,074−1,055

172,903

Cumulative effects of changes inaccounting policies
Balance at the beginning of the current
period after changes in accounting policy-38
18,00013,883142,036-38−1,055

172,865

Change of items during period
Dividends of surplus−1,721−1,721

Net income for period attributable toshareholders of the parent company

10,945

10,945Acquisition of treasury shares−9

Disposition of treasury shares
Reversal of revaluation difference on
land

−3

−3

78

69

140

140

9

−9

－

－

－

9,355

75

9,430

18,00013,883

151,391−979

182,295

Transfer to capital surplus from retained
earnings
Changes in the amount for the period(net amount) for items other thanshareholders’ equity
Total change during period
Balance at end of period- 87 -

(Unit: millions of yen)
Accumulated Other Comprehensive Income

Balance at the beginning of the period

Valuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosses onhedges59,345

100

Total
Cumulative
accumulat
Revaluatio adjustments
ed othern reserveofcomprehefor land retirement
nsive
benefits
income8,413

991

68,850

Rights to
subscribe
for new
shares302

Cumulative effects of changes inaccounting policies
Balance at the beginning of the current
period after changes in accounting policy

59,345

100

8,413

991

68,850302

Noncontrolling Total equity
interests

4,335

246,391

-20

-58

4,315

246,333

Change of items during period
Dividends of surplus−1,721

Net income for period attributable toshareholders of the parent company

10,945Acquisition of treasury shares−3

Disposition of treasury shares

69

Reversal of revaluation difference on
land

140

Transfer to capital surplus from retained
earnings－

Changes in the amount for the current
period (net amount) for items other thanshareholders’ equity-16,627

535

−140

-65

-16,297−43

90-16,250

Total change during period-16,627

535

−140

-65

-16,297−43

90-6,820

Balance at end of period

42,718

635

8,272

925

52,552

259

4,405

239,512- 88 -

Notes to the Consolidated Financial Statements
Stated monetary amounts are rounded down to the nearest million yen.
Matters regarding accounting policies
1.

2.

Valuation basis and valuation method for trading account securities
The valuation of trading account securities is carried out in accordance with the market value method (selling costs arecalculated using the moving average method).
Valuation basis and valuation method for securities
The valuation of securities is carried out using the amortized cost method using the moving average method for bonds
held to maturity (straight-line method), and the and the market value method for other securities (selling costs arecalculated using the moving average method), but the cost method using the moving average method is used for shares,
etc. without market price.

3.

Valuation differences on available-for-sale securities are included in equity.
Valuation criteria and valuation method for derivative transactions

4.

Derivative transactions are evaluated based on the market value method.
Depreciation method for fixed assets(1) Tangible fixed assets (excluding leased assets)
The Bank’s tangible fixed assets are depreciated using the declining balance method (however, the straight-line
method for buildings excluding ancillary equipment acquired on or after April 1, 1998, and for ancillary equipment
and structures acquired on or after April 1, 2016).
The principal useful life is as follows:
Buildings
8–50 years
Other
3–20 years
Tangible fixed assets of consolidated subsidiaries and subsidiary corporations, etc. are amortized mainly using thestraight-line method based on the estimated useful life of the assets.
(2) Intangible fixed assets (excluding leased assets)
Intangible fixed assets are depreciated using the straight-line method. Furthermore, software for own use isdepreciated based on the useful life determined by the Bank and consolidated subsidiaries and subsidiarycorporations, etc. (5 years).
(3) Leased assets
Leased assets in "tangible fixed assets" and "intangible fixed assets" under finance leases that do not involve transferof ownership are depreciated using the straight-line method, with the lease term as the useful life of the lease period.
The residual value is zero.

- 89 -

5.

Recording standards for allowances for doubtful accounts
The Bank's allowances for doubtful accounts are recorded as follows in accordance with the pre-prescribedamortization and allowance rules.
For claims equivalent to claims against normal obligors and claims requiring attention stipulated in the “Guidelines on
Self-Assessment of Assets of Banks and Other Financial Institutions and Audit of Bad Debt Amortization andAllowance for Doubtful Accounts” (Japan Institute of Certified Public Accountants Special Committee on Audits ofBanks, etc. Report No. 4, April 14, 2022), the expected loss amount for the next year or the expected loss amount for
the next three years is estimated and recorded, with the expected loss amount calculated by calculating the loss rate
based on the average value of the bad debt record rate over a certain period in the past based on the bad debt record for
one year or three years, and adding necessary adjustments such as future prospects to this. For claims corresponding toclaims against obligors with a concern of bankruptcy, the estimated amount of collateral that can be disposed of and theestimated recoverable amount from the guarantee are deducted from the amount of the claim, and the remaining
amount that is deemed necessary is recorded. For claims corresponding to claims against legally or substantiallybankrupt obligors, the estimated amount of collateral that can be disposed of and the estimated recoverable amountfrom the guarantee are deducted from the amount of the claim, and the remaining amount is recorded.
All claims are assessed by the asset valuation department in cooperation with the sales-related department based on theasset self-assessment standards.
Allowances for doubtful accounts for consolidated subsidiaries and subsidiary corporations, etc. are recorded
respectively in the amount believed necessary in light of the past bad debt ratio, etc. for ordinary claims, and in an
estimated unrecoverable amount for specific claims such as claims with a possibility of default, individually taking into
account the possibility of collection.

6.

7.

Recording standards for allowance for investment loss
In order to provide for losses on investment, the reserve for investment losses is recorded in the amount deemednecessary in consideration of the financial position, etc. of securities issuers.
Recording standards for allowance for bonuses payable
In order to provide for the payment of bonuses to employees, the reserve for bonuses is recorded in the estimatedamount of bonus payments to employees that are attributable to the current consolidated fiscal year.

8.

9.

Recording standards for allowance for officers' bonuses payable
In order to provide for the payment of bonuses to officers, the reserve for officer bonuses is recorded in the estimatedamount of bonus payments to officers that are attributable to the current consolidated fiscal year.
Recording standards for allowance for officers' retirement benefits
In order to provide for the payment of retirement benefits to the Bank’s executive officers and the officers ofconsolidated subsidiaries and subsidiary corporations, etc., a reserve for officer retirement benefits is recorded in theamount of estimated payment of retirement benefits to the Bank’s executive officers and the officers of consolidated
subsidiaries and subsidiary corporations, etc. that can be recognized as having occurred by the end of the current

consolidated fiscal year.
10. Recording standards for allowance for reimbursement losses for inactive deposits
In order to provide for reimbursement losses based on reimbursement claims from depositors for inactive deposits thatwere recognized as profit, the Bank’s reserve for reimbursement of inactive deposits is recorded in the expected amountof future reimbursement losses based on past reimbursements.

- 90 -

11. Recording standards for allowances for contingent loss
In order to provide for future payments of obligations through liability sharing systems, etc. for guarantees of credit
guarantee associations pertaining to loans, etc., a reserve for contingent losses (reserve for guarantee losses) is recordedin the amount deemed necessary in consideration of past bad debts, etc.
12. Accounting for retirement benefits
The method of attributing the estimated amount of retirement benefits to the period lasting until the end of the current
consolidated fiscal year when calculating the retirement benefit obligations is based on the benefit calculation formula
standard. Furthermore, actuarial differences are expensed over a period (13–14 years) that is no longer than the averageremaining service period for employees as of the consolidated fiscal year in which they arise, starting from the first
consolidated fiscal year following that in which they arise.
13. The basis for the translation of foreign currency dominated assets and liabilities into Japanese currency
The foreign currency-denominated assets and liabilities of the Bank and consolidated subsidiaries and subsidiarycorporations, etc. are added using the converted yen amount based on the exchange rate on the consolidated closingdate.
14. Recording standards for material revenue and expenses(1) Recording standards for revenue and expenses in finance lease transactions
The recording standards for revenue and expenses pertaining to finance lease transactions are based on the method ofrecording ordinary income and ordinary expenses when lease fees are received.
(2) Recording standards for revenue arising from contracts with customers
The principal performance duty in the principal business related to revenue arising from contracts with customers of
the Bank and its consolidated subsidiaries and subsidiary corporations, etc. is the provision of financial services, etc.,
and revenue is recognized at the time of the transfer of control of the promised goods or services to the customer in
the amount that is expected to be received in exchange for such goods or services.
15. Material hedge accounting methods
Interest rate risk hedging
The method of hedge accounting for interest rate risk arising from the Bank’s financial assets and liabilities is based ondeferred hedges prescribed in "Accounting and Audit Treatment regarding Application of Financial Instruments
Accounting Standards in the Banking Industry" (Japanese Institute of Certified Public Accountants Industry Committee
Practical Guidelines No. 24, March 17, 2022; “Industry Audit Committee Practical Guidelines No. 24”). With regard to
the hedging effectiveness assessment method, for hedging that offsets market fluctuations, we group into each certain(remaining) period and then identify and evaluate the deposits and loans, etc. to be hedged and interest rate swap
transactions, which are hedging instruments. In addition, with regard to hedging that fixes cash flows, effectiveness isevaluated by verifying the correlation between interest rate fluctuation factors of the hedged items and the hedging
instruments.
For some assets, deferred hedges are used by individual hedges that directly correspond with hedged items and hedging
instruments.
The assessment of the effectiveness of hedges has been omitted because the terms of the hedging instruments andhedged items are essentially the same, so market fluctuations are offset at the start of hedging and continuously
thereafter.

- 91 -

Among the above hedging relationships, the special treatment set out in “Treatment of Hedge Accounting for Financial
Instruments that Reference LIBOR” (Practical Issues Task Force Report No. 40, March 17, 2022; AccountingStandards Board of Japan) is applied to all hedging relationships within the scope of the report. The details of hedge
accounting to which this practical response report is applied are as follows.
Hedge accounting method
Deferred hedging
Type of financial instrument that is the hedging instrument Interest rate swap
Type of financial instruments that are hedged
Japanese government bondTypes of hedge transaction

Offsetting market fluctuations

16. Accounting treatment for consumption tax, etc.
Non-deductible consumption tax, etc. on tangible fixed assets is recorded in expenses for the current consolidated fiscalyear.

- 92 -

Changes to accounting policies(Application of Accounting Standards for Recognition of Revenue, etc.)
The Accounting Standards for Revenue Recognition, (Corporate Accounting Standard No. 29 March 31, 2020;
hereinafter, "Income Revenue Recognition Accounting Standard"), etc. were applied from the beginning of the current
consolidated fiscal year, and at the time that control of the promised goods or services transfers to customers, we havedecided to recognize revenue at the amount expected to be received in exchange for such goods or services.
As a result, part of the consideration paid to customers such as cash-backs has changed from the method of being
treated as “operating expenses” or “other ordinary expenses” in “ordinary expenses” to the method of making a reduction
from the transaction price. In addition, although the revenue recognition standard for credit card annual membership feesat our consolidated subsidiary corporations, etc. had been recognized as a lump sum at the time of receipt, they are
performance duties that are satisfied over a certain period of time, so from the current consolidated fiscal year we now
recognize revenue depending on the period elapsed.
The application of the Income Revenue Recognition Accounting Standard, etc. is in accordance with the transitional
treatment set forth in the proviso to Paragraph 84 of the Income Revenue Recognition Accounting Standard, and thecumulative effect amount in the case that the new accounting policy was retroactively applied prior to the beginning of thecurrent consolidated fiscal year is added to or subtracted from retained earnings at the beginning of the current
consolidated fiscal year, and the new accounting policy is applied from that beginning balance.
As a result, the impact on the consolidated balance sheet, consolidated profit and loss statement, net asset amount per
share, and the amount of net income attributable to parent company shareholders for the current consolidated fiscal year islimited.
Due to the cumulative impact amount having been reflected in the equity at the beginning of the current consolidated
fiscal year, the beginning balance of retained earnings in the consolidated statement of changes in equity has decreased by
38 million yen, and the beginning balance of non-controlling interests has decreased by 20 million yen.
(Application of Accounting Standards for Fair Value Measurement, etc.)
The Accounting Standards for Fair Value Measurement (Corporate Accounting Standards No. 30, July 4, 2019; hereinafter,"Fair Value Measurement Accounting Standards"), etc. have been applied from the beginning of the current consolidated
fiscal year, and in accordance with the transitional treatment set forth in Section 19 of the Fair Value Measurement
Accounting Standards and Section 44-2 of the Accounting Standards for Financial Instruments (Corporate AccountingStandards No. 10, July 4, 2019), the new accounting policies established by the Fair Value Measurement AccountingStandards, etc. will be applied in the future. The effect that this change has on the consolidated financial statements isminor.
In addition, in the "Financial Instruments-Related" notes, we have made notes on matters such as the breakdown of themarket value of financial instruments by level.

- 93 -

Significant accounting estimates
Items for which the amount was recorded in the consolidated financial statements for the current consolidated fiscal year
based on an accounting estimate and that could have a material influence on the consolidated financial statements for the
next consolidated fiscal year are as follows.
Allowance for doubtful accounts(1) The amount recorded in the consolidated financial statements for the current consolidated fiscal year
Allowance for doubtful accounts
14,059 million yen(2) Information that contributes to an understanding of the content of an important accounting estimate pertaining to theidentified item(i) Calculation method
As stated in "5. Recording standards for allowances for doubtful accounts " under "Matters regarding Accounting
Policies," assets are valued based on the asset self-assessment standards, and allowances for doubtful accounts arerecorded in accordance with the amortization and allowance rules according to the determined debtor category.
(ii) Key assumptions
Debtor category is determined based on quantitative information such as the debtor’s financial information in
addition to making a judgment taking qualitative factors, etc. into consideration, and there is a high degree of
uncertainty about the estimate mainly in the following areas.
-

Ascertaining the credit status of the debtor, including the future prospects for performance of the borrower(including financial analysis, industry trends, use of funds, repayment plan, etc.)-

Estimating expected losses based on the recent economic environment and future outlook based on risk factors
and past bad debt results

Regarding the estimates for allowance for doubtful accounts due to the COVID-19 pandemic, it is expected that
escalation of the pandemic and the resulting stagnation of economic activity will continue to have an impact in thenext consolidated fiscal year, but it is expected that economic activity will gradually recover with the support ofeconomic measures by the government.
Against this backdrop, it is assumed that some industries will continue to see an impact on earnings such as lower
sales, and that there will be some degree of impact on credit risk for loans, etc. Based on these assumptions, in orderto provide for the expected losses due to such impact, the allowance for doubtful accounts is recorded by reflecting
the deterioration of debtors’ recent performance, which is expected to be impacted, in the debtor categorization.
(iii) Impact on consolidated financial statements for the next consolidated fiscal year
The above assumptions involve a high degree of uncertainty, and changes in the assumptions used in the initial
estimates due to escalation of the pandemic or changes in economic environment and changes in borrowers’ financial
situations, etc. may have a material impact on the allowance for doubtful accounts in the consolidated financial
statements for the next consolidated fiscal year.

- 94 -

Matters to Be Set Down in Notes(Consolidated Balance Sheet-Related)
1. The claims under the Banking Act and the Act on Emergency Measures for the Revitalization of Financial Functions
are as follows. Claims are recorded in the accounts for corporate bonds (limited to contracts under which theredemption of the principal and payment of the interest in whole or in part are guaranteed, and such corporate bond isissued through the private placement of securities (Article 2, Paragraph 3 of the Financial Instruments and ExchangeAct)), loans, and foreign exchange under “securities,” and accrued interest, suspense payments, and customers’
liabilities for acceptances and guarantees under “other assets” in the consolidated balance sheet.
Amount of claims subject to bankruptcy or reorganization proceedings and7,504 million yen
equivalent claims
Amount of claims with risks

40,489 million yen

Amount of claims requiring monitoring
Amount of claims in arrears for three months or more

5,005 million yen
302 million yen

Amount of restructured loans
Subtotal

4,703 million yen
53,000 million yen

Amount of normal claims
Total amount

2,756,925 million yen
2,809,926 million yen“Claims subject to bankruptcy or reorganization proceedings and equivalent claims” means claims held against debtors
with failed business status due to grounds such as a petition for commencement of bankruptcy proceedings,
commencement of reorganization proceedings, or commencement of rehabilitation proceedings, and any other type ofclaims equivalent thereto.
“Claims with risks” means claims that do not fall under the category of claims subject to bankruptcy or reorganization
proceedings and equivalent claims and for which, although the debtor has not entered bankruptcy, there is a highpossibility that loan principal cannot be recovered or interest cannot be received according to the contract because ofdifficulties in the financial condition and business performance of the debtor.
“Claims in arrears for three months or more” are loans for which the payment of principal or interest has been not paid
for three months or more from the day following the agreed payment date, and which do not fall under the category ofclaims subject to bankruptcy or reorganization proceedings and equivalent claims or claims with risks.
“Restructured loans” are loans that, for the purpose of the rehabilitation or support of the debtor, have reduced or
exempted interest rates, deferred payment of interest, deferred repayment of principal, loan forgiveness, or otherarrangements that are advantageous to the debtor, and do not fall under the category of claims subject to bankruptcy orreorganization proceedings and equivalent claims, claims with risks, or claims in arrears for three months or more
“Normal claims” are claims classified as those other than claims subject to bankruptcy or reorganization proceedings
and equivalent claims, claims with risks, claims in arrears for three months or more, and restructured loans, and forwhich the debtor has no particular financial condition or business performance problems.
The aforementioned amount of claims is before deducting the allowance for doubtful claims.
(Change in presentation)
Following the implementation from March 31, 2022 of the Cabinet Office Ordinance Partially Revising the Ordinancefor Enforcement of the Banking Act, etc. (Cabinet Office Ordinance No. 3 of January 24, 2020), the categories, etc. of
risk-monitored claims under the Banking Act are presented in accordance with the classification, etc. of disclosed
claims under the Act on Emergency Measures for the Revitalization of Financial Functions.
2.

Discounts on negotiable instruments are treated as financial transactions pursuant to the Industry Audit Committee
Practical Guidelines No. 24. The bank acceptances, commercial bills, documentary bills, and foreign exchange- 95 -

purchases, etc. that have been accepted pursuant thereto have rights enabling disposition at will by way of sale or (re-)
3.

collateral. The face value of this amount is 14,346 million yen.
In loan participation, the amount recorded on the consolidated balance sheet is 3,248 million yen out of theparticipation principal amount accounted for as loans to original debtors based on Accounting and Presentation of Loan
Participation (Japanese Institute of Certified Public Accountants Accounting System Committee No. 3, November 28,

4.

2014)
Assets offered as collateral are as follows.
Assets offered as collateral
Securities
Loans
Obligations

463,045 million yen
111,268 million yen

corresponding

to

the

security assets
Call Money and bills sold
Security accepted
lending transactions

for

6,119 million yen
bond

49,241 million yen

Borrowed money
447,070 million yen
In addition to the above, 704 million yen of securities has been provided as collateral for transactions such as foreignexchange settlements and substitutes for futures trading margins, etc.
Other assets include 10 billion yen of deposited margin from central clearing organization and 355 million yen insecurity deposits.
5.

Overdraft agreements and commitment line agreements pertaining to loans are agreements that promise to lend funds
up to a certain limit provided there is no breach of the terms and conditions set forth in the agreement if a request is
received from a customer to execute a loan. The unused loan balance pertaining to these agreements is 619,411 million
yen, and all have an original agreement term of one year or less (or unconditionally revocable at any time).
As many of these agreements end without drawdown, the undrawn loan balance itself does not necessarily affect future
cash flows of the Bank and consolidated subsidiaries and subsidiary corporations, etc. Many of these agreements
contain provisions to the effect that the Bank and consolidated subsidiaries and subsidiary corporations, etc. may rejecta loan drawdown request or reduce the maximum amount of the contract due to a change in the financial situation,
preservation of claims, and other reasonable grounds. In addition to collecting collateral such as real estate andsecurities, etc. as necessary at the time of contract, the customer’s business conditions are regularly ascertained basedon predetermined internal procedures after entering into the agreement, and the agreement is reviewed and measures for
credit protection, etc. are taken as necessary.

6.

A revaluation of the Bank’s land for business use was conducted in conformance with the Act on Revaluation of Land
(Act No. 34 of March 31, 1998), and the amount corresponding to tax on the resulting revaluation difference isrecorded to the category for liabilities as a “deferred tax liability for revaluation,” and the amount after this deduction isrecorded to the category for equity as the “land revaluation difference.”
Date of revaluation:
March 31, 1998
The method of reevaluation stipulated in Article 3, Paragraph 3 of said Act.

Calculationbymakingareasonable adjustment based on the taxable value of the land
value tax prescribed in Article 2, item (iv) of the Order for
Enforcement of the Act on Revaluation of Land (Cabinet
Order No. 119 of March 31, 1998).
The difference between the total amount of the market value at the end of the current consolidated fiscal year of- 96 -

the land for business use for which revaluation has been carried out as prescribed in Article 10 of said Act andthe total amount of the book value after the revaluation of the said land for business use
The difference is not stated because the market value of the land for which revaluation was carried out exceeds
7.

the book value after the revaluation.
Amount of accumulated amortization for tangible fixed assets

8.
9.

Amount of reduction entries for tangible fixed assets
1,892 million yen
Of the corporate bonds in "Securities", the guarantee obligation for corporate bonds through private placement of

24,730 million yen

securities (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act) is 36,078 million yen.
10. Total monetary claims against directors arising from transactions with our bank's directors- 97 -

3 million yen

(Consolidated Profit and Loss Statement-Related)
1.
2.

"Other ordinary income" includes 5,431 million yen on the sale of shares, etc.
"Other ordinary expenses" includes 532 million yen in losses on the sale of shares, etc. and 67 million yen in retirement

3.

of shares, etc.
The book value of the following assets has been reduced to the recoverable value due to a change in the use of the asset
or a continuous decline in land prices, etc., and the amount of such decrease and removal expenses, etc. are recorded to
extraordinary losses as impairment losses (186 million yen).
Category
RegionMain use
Type
Impairment loss (million yen)
OperatingAichi
3 sales branches, Land and building,186
assetsPrefectureetc.
movable assets, etc.
(Of which, land71)
(Of which, buildings, etc.
77)
(Of which, movable assets, etc.
－)
(Of which, removal expenses
37)
Total
186
(Of which, land71)
(Of which, buildings, etc.
77)
(Of which, movable assets, etc.
－)
(Of which, removal expenses
37)
Operating assets are grouped by branch office, which is the smallest division of management accounting (however,a branch office group that conducts business in a coordinated manner is that group unit).
In addition, idle assets are treated as one unit.
The recoverable price used to measure the impairment loss for the current consolidated fiscal year is the net saleprice. The net sale price is calculated by deducting the estimated amount of disposition expenses from the realestate appraisal amount, etc.

- 98 -

(Consolidated Statement of Changes in Equity-Related)
1.

Matters regarding class and number of shares issued and class and number of treasury shares(Unit: thousands of shares)
Number of shares
Number of shares
Increase in number Decrease in number
at beginning of theat end of theof shares during the of shares during theSummcurrent
current
current consolidated current consolidatedary
consolidated fiscal
consolidated fiscal
fiscal year
fiscal year
year
year
Issued shares
Common stockTotal

10,943－－

10,943

10,943－－

10,943

189

0

14

176

189

0

14

176

Treasury shares
Common stock
Total(Note)(Note)

1. The increase in the number of common stock treasury shares of 0 thousand shares is due to anincrease of 0 thousand shares from purchases of fractional units of shares.
2. The decrease in the number of common stock treasury shares of 14,000 shares is a decrease of 0
thousand shares due to request(s) for additional purchase of fractional shares and a decrease of
14,000 shares due to treasury share dispositions in conjunction with the exercise of stock options.

2.

Matters regarding rights to subscribe for new shares and own rights to subscribe for new sharesClass ofsharesunderlying
rights to
subscribe
for new
sharesNumber of shares underlying rights to subscribe for
new shares

Balance ate n d o fcurrent
consolidate Summd f i s c a l ary
y e a r(millions ofyen)

Category

Breakdown ofrights to
subscribe for
new shares

Our
bank

Share warrants
asstock
options

－

259

Total

－

259

Beginningof current
consolidate
d fiscalyear

Increase incurrent
consolidate
d fiscalyear- 99 -

Decrease incurrent
consolidate
d fiscalyear

End ofcurrent
consolidate
d fiscalyear

3.

Matters Regarding Dividends(1) Dividend amounts paid during the current consolidated fiscal year
(Resolutions)Share class

Total dividend
amountDividend
amount per
share

June 25, 2021
Annual General Meetingof Shareholders

Commonstock

752 million
yen

November 12, 2021
Board of Directors

Common
stock

Total

－

968 million
yen
1,721 million
yen(Note)

Record date

Effective date

70 yenMarch 31, 2021

June 28, 2021

90 yenSeptember 30,
2021

December 6,
2021

－

－

－

The dividend amount per share decided by the Annual General Meeting of Shareholders on June 25,
2021 includes a special dividend of ¥20.

(2) Dividends for which the record date falls in this consolidated fiscal year, but the effective date of the dividend will
be after the last day of the current consolidated fiscal year.
(Resolutions)Share class

Total dividend
amountDividendsourceDividend
amount per
share

Record date

Effective dateJune 24, 2022
Annual General
Meeting of
Shareholders

Commonstock

2,368 millionyen

O t h e r
Retained
Earnings

220 yenMarch 31,
2022

July 27, 2022

- 100 -

(Financial Instruments-Related)
1. Matters related to the status of financial instruments(1) The policy for dealing with financial instruments
The Bank’s group raises funds by accepting "deposits" from its customers. Also, the Bank conducts lending services
by loaning the “deposits” that are raised funds to private companies and individuals and also carries out market
investments by investing them in bonds and other securities.
We use derivative transactions for the purpose of avoiding customer exchange rate fluctuation risks and to avoid theBank's own risks in foreign currency financing transactions and rising interest rates. In addition, in order to avoid
financial assets and financial liabilities from being exposed to market risk, we use derivatives as a hedging
instrument from the perspective of comprehensive risk management.
With respect to certain interest rate swap transactions that are derivative transactions, we apply deferred hedges
through individual hedges that directly match the hedged items and the hedging instruments. The assessment ofhedge effectiveness has been omitted because market fluctuations continue to be offset at and after the start of thehedge since the terms of the hedge instrument and the hedged items are nearly the same.
(2) Details of financial instruments and their risks
The financial assets held by the Bank’s group are mainly loans to private companies and individuals, and they are
exposed to credit risk brought about by interest rate risk and a deterioration of the financial condition of borrowers,
etc.
Securities are primarily bond certificates and shares, and bond certificates are held for buying and selling, othersecurities and being held to maturity, and shares are held for the purpose of pure investment and policy-based
investment. These are exposed to issuer credit risk, interest rate fluctuation risk, market price fluctuation risk, andexchange rate risk. With regard to deposits, there are liquid deposits and term-deposits, with the maximum term ofterm deposits being five years.
As we hold financial assets and financial liabilities that entail interest rate fluctuations, we have implemented
comprehensive asset-liability management (ALM) so that no adverse effects due to interest rate fluctuations are
generated.
(3) Risk management system for financial instruments(i) Credit Risk Management
The Bank manages the credit risk of individual obligors through strict credit screening and management of individual
obligors, and by doing a time series analysis of credit risks by rating and industry, etc., strives to disperse the credit
risk of the Bank's overall portfolio.
With regard to management of credit risk of individual obligors, the Bank’s group conducts an evaluation by thecredit investigation division verifying each individual obligor's financial analysis, industry trends, use of funds, andrepayment plan, etc. We strive to keep track of the credit status of individual obligors at all times by conducting
evaluations at the time of new screenings and periodically or as needed due to the occurrence of events, etc. during
interim credit management and self-assessments after closing. Self-assessments means the categorization of assets inaccordance with the degree of claim risk based on the obligor classification and the status of collateral andguarantees, etc. The self-assessment verification division verifies and reports to management the aggregate results,
etc. of self-assessments.

- 101 -

With regard to the overall bank credit portfolio, the credit management department regularly monitors theconcentration of industries and large volume concentrations, etc. in order to seek to build a portfolio that eliminatesconcentration risk. The credit management department regularly reports the monitoring results to management.
The Bank has introduced an internal rating system. The internal rating system makes classifications by giving credit
ratings to individual obligors based on creditworthiness, so the internal ratings are used at the Bank when conducting
deal screening, credit management, and monitoring of credit portfolios.
In addition, the Bank quantifies credit risk and uses it for credit risk management.
(ii) Market Risk Management
In order to appropriately control the amount of market risk, the Compliance Risk Management Department monitors
the status of market risk at the Bank. Specifically, with regard to measurable market risks, we measure the market
risk volume, and by conducting stress testing and simulation analyses, we obtain a grasp of the market risk volume
facing the Bank and how the bank's profits and losses will change if interest rates, shares, and exchange markets
fluctuate significantly.
The Compliance Risk Management department regularly reports the status of market risks to the Board of Directors
and Risk Management Committee, etc. The Risk Management Committee, etc. confirms that the market risk is held
in a situation that is acceptable for the bank's capital status, and studies policies for controlling market risks.
○ Quantitative information on market risk
In the Bank’s group, the major risk variables are interest rate risk and share price risk. The principal financial
instruments affected by interest rate risk are “loans,” bonds classified as available-for-sale securities under“securities and investment securities,” and “deposits,” and the principal financial instruments affected by share pricefluctuation risk are shares classified as available-for-sale securities under “securities and investment securities.” At
the Bank’s group, by dividing these financial assets and financial liabilities into "market integration risks," "bonds,”“investment trusts, and other securities," "pure investment shares," and "policy investment shares" and calculating
VaR, it is used in quantitative analyses when managing interest rate fluctuation risk and share price fluctuation risk.
The historical simulation method (125-day holding period, 99% confidence interval, 10-year observation period) isused to calculate VaR.
As of March 31, 2022 (the consolidated closing date for the current period), the Bank group's overall market risk
amount (estimated amount of loss) is 31,709 million yen. When calculating VaR, we take the VaR value covering
the interest rate risk of the banking account, price fluctuation risk for investment trusts and other securities, and pricefluctuation risk of pure investment shares, and add it together with the VaR value covering price fluctuation risk ofpolicy investment shares.
The Bank’s group conducts back testing that compares the actual profit and loss to the VaR calculated by the model,
and we believe that the measurement model used captures market risk with sufficient accuracy. However, VaR
measures the market risk amount at a certain probability of occurrence calculated statistically based on past market
fluctuations, and it may not be possible to comprehend risk in circumstances where the market environment haschanged significantly to an extent that is not normally conceivable.
(4) Supplementary explanation for matters concerning market value of financial instruments, etc.
Since the market value of financial instruments uses certain assumptions, etc., such values may differ if different
assumptions, etc. are applied.

- 102 -

2.

The matters related to the market value, etc. of financial instruments
The amount recorded on the consolidated balance sheet and market value as of March 31, 2022 as well as thedifferences between these values are described below. Shares, etc. without a market price and partnership contributions,etc. are not included in the following table (see Note 1). In addition, cash deposits, call loans and purchased notes, callmoney and bills sold, and security accepted for bond lending transactions have been omitted because they are settled ina short period of time and the market value is close to book value.
(Unit: millions of yen)Amount recorded on
consolidated balanceMarket value
Amount of difference
sheet
7,238

7,238

－

49

49

－

990,476

990,476－

2,746,171

2,784,442

38,271

3,743,936

3,782,207

38,271

3,389,658

3,389,673

14

4,100

4,100

－

(3) Borrowed money

455,615455,282-332

Liabilities total

3,849,374

3,849,056-317(1) Monetary claims purchased(2) Trading account securities
Securities for trading purposes(3) Securities
Available-for-sale securities(4) Loans

2,759,402

Allowance for doubtful accounts(*1)

Assets total(1) Deposits(2) Negotiable certificates of deposit-13,231

Derivative transactions (*2)
Those to which hedge accounting has
not been applied(1,860)(1,860)－Those to which hedge accounting
applies (*3)

916

916

－

Total derivative transactions

(944)

(944)

－

(＊1)

General allowances for doubtful accounts and individual allowances for doubtful accounts corresponding toloans are deducted.

(＊2)

Derivative transactions recorded in other assets and liabilities are presented collectively.
Net claims and obligations that arise from derivative transactions are presented in net amount. A figure inparentheses denotes an item that in total is a net obligation.

- 103 -

(＊3)

Interest rate swaps, etc. designated as hedging instruments to offset fluctuations in market prices ofgovernment bonds that are hedged, and mainly deferred hedging is applied. “Treatment of Hedge Accounting
for Financial Instruments that Reference LIBOR” (Practical Issues Task Force Report No. 40, March 17,2022; Accounting Standards Board of Japan) has been applied to these hedging relationships.

(Note 1)

The amounts recorded on the consolidated balance sheet for shares, etc. without a market price andpartnership contributions, etc. are as follows, and are not included in "available-for-sale securities" undermarket value information of financial instruments.
(Unit: millions of yen)
Category

Amount recorded on consolidated balance sheets

Unlisted shares (*1) (*2)

1,519

Partnership contributions (*3)

1,003

(＊1)

Non-listed shares are not subject to market value disclosure under Paragraph 5 of the "Guidelines forDisclosure of Market Value, etc. of Financial Instruments."(Guidelines on Application of Corporate(＊2)

Accounting Standards No. 19, March 31, 2020)
In the current consolidated fiscal year, the company recorded an impairment loss of 3,000,000 yen with(＊3)

respect to unlisted shares.
Partnership contributions, etc. are not subject to market value disclosure pursuant to Paragraph 27 of the
Guidelines for Application of Accounting Standards for Fair Value Measurement (Guidelines on Applicationof Corporate Accounting Standards No. 31, July 4, 2019).

(Note 2)

Expected redemption amount after consolidated closing of accounts for Monetary claims and securities withmaturities(Unit: millions of yen)

Deposits
Call loans and purchased
notes
Monetaryclaimspurchased

Within one
year

More than one
year andwithin threeyears

More than
three years andwithin fiveyears

More than five
years andwithin sevenyears

More thanseven years
and within 10
years

More than 10
years

459,363

－

－

－

－

－

2,888

－

－

－

－

－

－

－

－

－

－

7,319

79,051

146,572

153,051

119,040

128,178

152,793311,254

493,483

384,734

253,250

321,079

741,698

852,557

640,055

537,786

372,291449,258

901,811

Securities
Within Available-forsale securitiesThose with a set term
Loans (*)
Total
(＊)

Of the loans, not included is 47,488 million yen with no prospect of the planned redemption amount ,including claims against bankrupt borrowers, effectively bankrupt borrowers, and borrowers at risk ofbankruptcy, and 206,414 million yen that does not have a set term.

- 104 -

(Note 3)

The planned repayment amount of corporate bonds, borrowed money, and other interest-bearing liabilities
after the consolidated closing date

Deposits (*)
Negotiable certificatesof deposit
Call money and bills
sold
Security accepted forbondlendingtransactions
Borrowed money
Total

(＊)

(Unit: millions of yen)More thanseven years More than 10
and within
years
10 yearsWithin one
year

More than
one year andwithin threeyears

More than
three years
and within
five years

More than
five years
and withinseven years

3,195,761

187,030

6,866

－

－

－

4,100

－

－

－

－

－

131,119

－

－

－

－

－

49,241

－

－

－

－

－

252,885

142,197

60,49537－－

3,633,108

329,228

67,36137－－

Within deposits, disclosure of demand deposits is included in "within one year."- 105 -

3.

Matters concerning the breakdown, etc. by market value level of financial instruments
The market value of financial instruments is classified into the following three levels depending on the observability
and importance of inputs used in the calculation of market value.
Level 1 market value:

Among observable inputs pertaining to the calculation of market value, the market
value calculated using the market values concerning assets or liabilities that are thesubject of calculation of the relevant market value formed in an active market

Level 2 market value:

Level 3 market value:

Among observable inputs pertaining to market value, the market value calculatedusing inputs pertaining to the calculation of market values other than the inputs set
forth in Level 1
The market value calculated using unobservable inputs for calculation of market
valuesIf multiple inputs that have a significant impact on the calculation of market value are used, the market value isclassified in the level with the lowest priority in the calculation of market prices from among the levels to which those
inputs respectively belong.
(1) Financial instruments reported on the consolidated balance sheet at market value
Current Consolidated Fiscal Year (March 31, 2022)(Unit: millions of yen)
Market value
Category
Level 1
Level 2
Level 3
Total
Monetary claims
7,238
7,238
－
－
purchased
Securities
256,037
488,654
36,356
781,047
Securities for trading
49
49
－
－
purposes
Government bonds,
49
49
－
－
municipal bonds, etc.
Available-for-sale
255,987
488,654
36,356780,998
securities
Government bonds,
127,797
164,445
292,243－municipal bonds, etc.
Corporate bonds
250,288
36,356286,645－
Shares128,180
128,180－－Other
873,91973,928－Derivative Transactions
1,068
1,068
－
－
Interest-related
916
916
－
－
Currency-related
152
152
－
－
Assets total
256,037
489,722
43,594
789,354
Derivative Transactions
2,012
2,012
－
－
Interest-related－－－－
Currency-related
2,012
2,012
－
－
Liabilities total
2,012
2,012
－
－
(＊) Investment trusts, etc. to which the transitional measures set forth in Paragraph 26 of the Guidelines for Applicationof Accounting Standards for Fair Value Measurement (Guidelines on Application of Corporate AccountingStandards No. 31, July 4, 2019) have been applied are not included in the table above. The amount of relevant
investment trusts, etc. on the consolidated balance sheet is 209,478 million yen.

- 106 -

(2) Financial instruments other than those recorded in the consolidated balance sheet at the market value
Current Consolidated Fiscal Year (March 31, 2022)(Unit: millions of yen)
Market value
Category
Level 1
Level 2
Level 3
Total
Loans
2,784,442
2,784,442－－
Assets total
2,784,442
2,784,442－－
Deposits
3,389,673
3,389,673－－
Negotiable certificates
4,100
4,100
－
－
of deposit
Borrowed money
455,282455,282－－
Liabilities total
3,849,056
3,849,056－－(Note 1)The valuation technique used to calculate the market value, and explanation of inputs pertaining to thecalculation of market value

AssetsMonetary claims purchased
Monetary claims purchased depend on the price at which they were acquired from the transacting financial institution,and based on the inputs used in the price at which they were acquired, are classified as Level 3 if using important
unobservable inputs, and at the Level 2 market value in other cases.
Securities
Securities that can use unadjusted market prices in active markets are classified as Level 1 market values. These aremainly listed stocks and government bonds.
Even if the published quotation price is used, if the market is not active, these are classified as a Level 2 market
values. These are mainly local government bonds, corporate bonds and mortgage-backed securities.
If market prices cannot be obtained, the market value is calculated using valuation techniques such as the discounted
present value method for future cash flows. We make maximum use of observable inputs in the valuation, including
inputs such as TIBOR, government bond yields, credit spreads, and loss rates in the event of bankruptcy. If an important
unobservable input is used in the calculation, these are classified as Level 3 market values.
Investment trusts are based on published standard prices, etc., and by applying transitional measures in accordancewith Paragraph 26 of the Guidelines for Application of Accounting Standards for Fair Value Measurement (Guidelines
on Application of Corporate Accounting Standards No. 31, July 4, 2019), are not classified at a level.
Loans
The market value of loans is calculated by discounting the total amount of principal and interest, by discounting thetotal amount of principal and interest at a discount rate that incorporates risk factors such as credit risk for each type ofloan, internal ratings and term, and these are therefore classified as Level 3 market values because the discount rate isunobservable.
Since claims, etc. against bankrupt borrowers, effectively bankrupt borrowers and borrowers at risk of bankruptcy arecalculated based on the present value of future cash flows or estimated amounts to be collected from guarantees, etc.,
market value is approximately the amount found by subtracting the recorded amount of allowances for doubtful accounts
from the recorded amount of claims, etc. on the consolidated balance sheet on the consolidated closing date, so thatvalue is made the market value, and these are classified as a Level 3 market value.

- 107 -

Liabilities
Deposits and negotiable deposits
With regard to demand deposits, the amount to be paid (book value) if a demand is made on the consolidated closing
date is deemed to be the market value. In addition, the market values of term deposits and negotiable deposits areclassified into certain periods, and present value is calculated by discounting future cash flows. The discount rate is therate used for new deposits of the same type that are accepted until the end of the remaining period (over-the-counterinterest rate). For transactions where the remaining period until the deposit maturity on the consolidated closing date iswithin one year, it is confirmed that the market value is close to the book value, and the book value is used as the market
value. These are classified as Level 2 market values.
Borrowed money
With regard to borrowed money, the current value is calculated by discounting the estimated future cash flows
generated from the transaction at the risk-free rate. For transactions where the remaining period up to the maturity dateon the consolidated closing date is within one year, it is confirmed that the market value is close to the book value, andthe book value is used as the market value. These are classified as Level 2 market values.
Derivative Transactions
With regard to derivative transactions, most are over-the-counter transactions, and since there is no published market
price, the market value is calculated using the discounted present value method and other valuation methods according to
the type of transaction and the period until maturity. The inputs used in these valuation techniques include interest rates
and exchange rates. If an unobservable input is not used or its effects are not significant, these are classified as Level 2
market values, and they include plain vanilla type interest rate swap transactions, foreign exchange forward transactions,and the like.
(Note 2)

Information on Level 3 market values among the financial instruments recorded in the consolidatedbalance sheet at the market value(1) Quantitative information on important unobservable inputs (March 31, 2022)
ImportantCategory
Valuation technique
Scope of inputs
unobservable inputs
Securities
Available-forsale securities
Discount rate
0.0% to 12.5%
Self-Guaranteed
Discount
present
Rate of loss upon
private bonds
value method
0.0% to 7.0%
insolvency- 108 -

Weighted average of
inputs0.3%
1.1%

(2) Reconciliation from the beginning balance to the ending balance of the period, and valuation gain or loss recognizedas profit or loss for the current period (March 31, 2022)
Current period’s profit/loss
or other comprehensive
incomeBalanceatbeginnin
g ofperiodRecordingofprofit or
loss(＊)

Recording as
othercomprehensiv
e income

Netpurchase,sale,issuanceandsettlementTransfer toLevel 3marketvalue

Transfer fromLevel 3marketvalue(Unit: millions of yen)Thisperiod’srecordedprofit orloss
amounts
that arevaluation
Balancgains ore atlosses ofend offinancialperiodassets andfinancialliabilities
held on the
consolidated balance
sheet date(＊)

Monetaryclaimspurchased
Trust
beneficiary
3,090
-107
4,255
7,238
－
－
－
－
interests
Securities
Availablefor-salesecurities
SelfGuarantee
32,476
-5
-80
3,966
－
－ 36,356－
d private
bonds(＊)
These are included in "Other operating income" and "Other operating expenses" in the consolidated profit andloss statement.
(3) Explanation of the market value appraisal process
The Bank’s group has established policies and procedures for calculating the market price at the management meeting,and each transaction division and the Compliance Risk Management Department calculate the market value inaccordance therewith.
When calculating market values, we use the valuation model that enables the most appropriate reflection of the nature,
characteristics and risks of individual assets. In addition, even when using quoted prices obtained from third parties, theappropriateness of these prices is verified using appropriate methods such as confirmation of the valuation techniques
and inputs used and comparison with the market values of similar financial instruments.
(4) Explanation of the impact on the market price in the case of changes in important unobservable inputs
Important unobservable inputs used in calculating the market value of self-guaranteed private bonds are the discountrate and the loss rate in the event of bankruptcy. A significant increase (decrease) in these inputs will result in asignificant decline (increase) in the market price.

- 109 -

(Securities-Related)
In addition to securities on the consolidated balance sheet, trading account securities and trust beneficial interests inmonetary claims purchased are included.
1.

Securities for trading purposes (as of March 31, 2022)
The valuation difference included in the profit or loss for the current consolidated
fiscal year (millions of yen)

Securities for trading purposes

02.

Bonds held to maturity (as of March 31, 2022)
No applicable matters.

3.

Available-for-sale securities (as of March 31, 2022)
Type

Amount recordedon consolidatedbalance sheet(millions of yen)

Acquisition cost
(millions of yen)Amount ofdifference(millions of yen)

116,051

53,26962,782

189,453

188,243

1,210

999

998

0

66,897

66,687

210

121,557

120,557

1,000

17,78817,673

115

93,14982,706

10,442

416,443

341,892

74,551

12,12913,686−1,557

389,434

394,612−5,177

126,798

129,791−2,992

97,54898,805−1,257

165,087

166,015−927

56,13058,453−2,322

123,576

128,158-4,581

581,271594,911-13,639997,715

936,803

60,911

Shares

Items for which amount recordedon consolidated balance sheet
exceeds acquisition costBondcertificatesJapanesegovernment
bonds
Local
government
bonds
Corporatebonds
Overseas
bonds
Other
Sub total
Shares

Items for which amount recordedon consolidated balance sheet
does not exceed acquisition costBondcertificatesJapanesegovernment
bonds
Local
government
bonds
Corporatebonds
Overseas
bonds
Other
Sub total

Total- 110 -

4.

Available-for-sale securities sold during the current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
Sale proceeds(millions of yen)

Total gain on sale(millions of yen)

Total loss on sale(millions of yen)

Shares13,085

5,353

532

Bond certificates

28,29945

79

14,501

43

32

－

－

－

13,7982

47

Overseas bonds

9,790

4

12

Other

19,261489

967

70,436

5,891

1,590

Japanese government
bonds
Local government
bonds
Corporate bonds

Total
5.

Securities subject to impairment
Among securities other than securities for sale (excluding shares, etc. without market prices and partnershipcontributions, etc.), if the market price of the relevant securities has fallen significantly compared to the acquisition cost
and the market price is not expected to recover to the acquisition cost, the relevant market value is treated as the amountreported on the consolidated balance sheet and a valuation difference is treated as a loss for the current consolidated
fiscal year ("impairment loss").
The amount of impairment loss for the current consolidated fiscal year is 72 million yen (of which, 64 million yen isfor shares and 8 million is for corporate bonds).
In addition, the criteria used to determine that the market value has “fallen significantly” is that the market value has
fallen by 30 percent or more compared to the acquisition cost.
Of these, all stocks with a decline rate of 50 percent or more are collectively booked as impairment losses, and for
those with a decline rate of 30 percent or more but less than 50 percent, all impairment losses are recognized except for
those that are deemed to have a possibility of recovery in the market price.

- 111 -

(Revenue Recognition-Related)
1. Breakdown of revenue arising from contracts with customers (March 31, 2022)(Unit: millions of yen)
Reporting segment
Banking business Leasing Business
Revenue from Service
Transactions
Deposit and lending
services

Other

Total

Total

6,809

425

7,235

874

8,109

273

－

273

－

273

Exchange services

2,135

－

2,135

－

2,135

Agency services

4,297

－

4,297

－

4,297

103

425

528

874

1,403

74

－

74

0

74

6,884

425

7,309

874

8,184

40,457

7,352

47,809118

47,92847,341

7,778

55,119992

56,112Other
Other ordinary income
Ordinary income fromcontractswithcustomers
Ordinary income otherthan the above
Ordinary income inrelation to externalcustomers(Note)

1. The respective ordinary income is listed instead of sales as for general companies.
2. The "other" category is a business segment that is not included in a reporting segment, namely the credit
card business, administrative agency business, computer-based business processing, etc., and thebusiness of forming and operating investment limited partnerships, etc.

2. Information that serves as the basis for understanding the revenue arising from contracts with customers
Of the revenues from service transactions, etc. in the banking business described in the above breakdown information,
the main revenues are loan-related fees from deposit and lending services, domestic and foreign exchange fees fromexchange services, and account transfer fees and deposited asset fees from agency services, and revenue is recognizedon the basis of performance completion at the time of provision of the services.

- 112 -

(Stock Options, etc.-Related)
1.
2.

The amount reported as expenses and account title for the current consolidated fiscal year pertaining to stock options
General and administrative expenses: 25,000,000 yen
Stock option details, scope, and changes(1) Stock option details

Classification and number ofpeople subject to grant
Number of stock options byclass of share (Note)

Series 1 rights to subscribe for new shares
13 directors of the Bank (excluding outside
directors)
13,000 shares of common stock of the
Bank

Series 2 rights to subscribe for new shares
13 directors of the Bank (excluding outside
directors)
12,200 shares of common stock of theBank

Grant dateJuly 20, 2012

July 19, 2013

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 21, 2012 – July 20, 2042

July 20, 2013 – July 19, 2043

Series 3 rights to subscribe for new shares
13 directors of the Bank (excluding outside
directors)

Series 4 rights to subscribe for new shares
13 directors of the Bank (excluding outside
directors)

9,100 shares of common stock of the Bank

7,100 shares of common stock of the Bank

Grant dateJuly 25, 2014

July 24, 2015

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 26, 2014 – July 25, 2044

July 25, 2015 – July 24, 2045
Series 6 rights to subscribe for new shares
11 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Number of stock options byclass of share (Note)

Series 5 rights to subscribe for new shares
13 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)
10,600 shares of common stock of theBank

Grant dateJuly 22, 2016

July 21, 2017

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 23, 2016 – July 22, 2046

July 22, 2017 – July 21, 2047

Classification and number ofpeople subject to grant
Number of stock options byclass of share (Note)

Classification and number ofpeople subject to grant- 113 -

7,400 shares of common stock of the Bank

Series 7 rights to subscribe for new shares
9 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Series 8 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)

Number of stock options byclass of share (Note)

7,700 shares of common stock of the Bank

9,500 shares of common stock of the Bank

Grant dateJuly 20, 2018

July 19, 2019

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 21, 2018 – July 20, 2048

July 20, 2019 – July 19, 2049

Number of stock options byclass of share (Note)

Series 9 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)
10,600 shares of common stock of the
Bank

Series 10 rights to subscribe for new shares
7 directors of the Bank (excluding
directors who are Audit Committee
members and outside directors)
10,800 shares of common stock of theBank

Grant dateJuly 22, 2020

July 21, 2021

Vesting conditions

No vesting conditions have been set.

No vesting conditions have been set.

Requisite service period

No requisite service period has been set.

No requisite service period has been set.

Exercise period

July 23, 2020 – July 22, 2050

July 22, 2021 – July 21, 2051

Classification and number ofpeople subject to grantClassification and number ofpeople subject to grant(Note)

Disclosed as equivalent number of shares- 114 -

(2) Scope of and changes in stock options
These disclosures cover the stock options that existed in the current consolidated fiscal year (ending March 2022),
and state the number of stock options as the equivalent number of shares.
(i) Number of stock options
Series 1
Series 2
Series 3
Series 4
Series 5
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
Before vesting
End of preceding
consolidated
fiscalyear
Granted

－

－

－

－

－

－

－

－

－

－

Canceled

－

－

－

－

－

Vested

－

－

－

－

－

Unvested

－

－

－

－

－

4,000 shares

6,900 shares

5,800 shares

6,100 shares

10,600 shares

After vesting
End of preceding
consolidated
fiscalyear
VestedExercised rights
CanceledUnexercised rights

－

－

－

－

－

2,600 shares

2,900 shares

1,900 shares

2,300 shares

2,900 shares

－

－

－

－

－

1,400 shares

4,000 shares

3,900 shares

3,800 shares

7,700 shares

Series 6
Series 7
Series 8
Series 9
Series 10
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
Before vesting
End of preceding
consolidated
fiscalyear
Granted

－

－

－

－

－

－

－

－

－

10,800 shares

Canceled

－

－

－

－

－

Vested－－－－10,800 shares

Unvested

－

－

－

－

－

7,400 shares

7,700 shares

9,500 shares

10,600 shares

－

－

－

－

－

10,800 shares

1,300 shares

100 shares

－

－

－

－

－

－

－

－

6,100 shares

7,600 shares

9,500 shares

10,600 shares

10,800 shares

After vesting
End of preceding
consolidated
fiscalyear
VestedExercised rights
CanceledUnexercised rights- 115 -

(ii) Unit price information

Exercise Price
Average share priceupon exercise
Fair unit value as of the
grant date

Exercise Price
Average share priceupon exercise
Fair unit value as of the
grant date

Series 1
Series 2
Series 3
Series 4
Series 5
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
1 yen
1 yen
1 yen
1 yen
1 yen
2,848 yen

3,375 yen

3,831 yen

4,363 yen

4,566 yen

3,645 yen

4,556 yen

4,959 yen

6,811 yen

4,466 yen

Series 6
Series 7
Series 8
Series 9
Series 10
rights to subscribe rights to subscribe rights to subscribe rights to subscribe rights to subscribe
for new sharesfor new sharesfor new sharesfor new sharesfor new shares
1 yen
1 yen
1 yen
1 yen
1 yen
4,700 yen

4,700 yen－－－

6,004 yen

4,673 yen

3,523 yen

2,358 yen

2,367 yen

- 116 -

3.

Method of estimating fair unit value of stock options
The fair unit value for the Series 10 rights to subscribe for new shares granted in the current consolidated fiscal year is
as follows.
(1) Valuation method used: Black-Scholes model(2) Main basis figures and estimation method
Series 10 rights to subscribe for new shares
Share price volatility (Note 1)

30.666%

Expected remaining period (Note 2)

4.1 years

Forecasted dividend (Note 3)

120 yen/share

Risk-free interest rate (Note 4)−0.152％(Notes)1. The calculation is based on the stock price performance for the period corresponding to the expected
remaining period (from June 2017 to July 2021).
2. The expected remaining period is estimated as the difference between the average term of office of
directors who have retired in the past 10 years and the average term of office of current incumbent
directors.
3. This is the dividend performance for the fiscal year ending March 2021.
4. This is the yield of government bonds corresponding to the expected remaining term.

4.

Method of estimating the number of vesting stock options
Given the difficulty of forming reasonable estimates for the number of options to expire in the future, the estimate
basically adopts the method of reflecting only the number of options that have expired in the past.

(Per-share information)
Amount of equity per share
Net profit amount per share attributable to shareholders of the parent

21,811.72 yen
1,017.22 yencompany
Diluted net profit per share attributable to shareholders of the parent

1,011.45 yen

company- 117 -

(Significant post-balance sheet events)
Business Integration between the Bank and The Chukyo Bank, Limited.
The Aichi Bank, Ltd. (President: Yukinori Ito, hereinafter “Aichi Bank”) and The Chukyo Bank, Limited (President:
Hideo Kobayashi, hereinafter “Chukyo Bank”, with both Aichi Bank and Chukyo Bank jointly referred to as the“Banks”), in accordance with a basic agreement (hereinafter the “Basic Agreement”) dated December 10, 2021, as aresult of the Board of Directors meetings held at each Bank as of May 11, 2022, and assuming the approval of the
Banks’ general meetings of shareholders, the acquisition of permission from relevant authorities, and MUFG Bank,
Ltd. (hereinafter “MUFG Bank”) tendering all of its 8,534,385 Chukyo Bank Shares to the Treasury Stock Tender
Offer (defined in 2. below), thereby legally completing the settlement of the Treasury Stock Tender Offer, the Banks
have both resolved to form the “Aichi Financial Group, Inc.” (hereinafter the “Joint Holding Company”), which would
function as the parent company to which the Banks will become wholly owned subsidiaries, via a joint share transfer
method on October 3, 2022 (hereinafter the “Share Transfer”), on the overview of the Joint Holding Company, as wellas on the terms and conditions of the Share Transfer. Both Banks have executed a business integration agreement(hereinafter the “Business Integration Agreement”), and jointly developed a share transfer plan as of the same day.
1. Purpose of the Business Integration through the Share Transfer(1) Background and Purpose of the Business Integration
Aichi Bank and Chukyo Bank, as local financial institutions with their main branches located in Aichi Prefecture,
which is a center for a variety of industries, have fulfilled their social missions and built solid operation bases with thesupport from local residents.
With recent changes in industrial structures and social environments nationwide such as environmental problems andthe post-COVID-19 environment, in the Aichi Prefecture and the surrounding Tokai area in which the Banks operate(the “Region”), customer needs are becoming more sophisticated and diversified as the management issues of businesscustomers and the lifestyles of individual customers change and the Banks believe they are at a turning point in termsof expanding their business opportunities with increased missions and roles as local financial institutions.
While the market is becoming increasingly competitive with new entrants in the financial area from different
industries such as fintech companies, the Banks are required to develop new financial businesses that can be theprimary source of revenue, not just as competitors of those new entrants, but by establishing business alliances thatutilize their respective technologies and operating bases and by effectively taking advantage of deregulation under the
Banking Act, thereby building a sustainable profit base and contributing to the local community as local financial
institutions.

- 118 -

Being aware of such management environment and issues and continuing to respond to the expectations of local
residents while the competition with other financial institutions including those in adjacent prefectures intensifies in thefertile market of the Region, which is expected to expand, the Banks decided that the best option to contribute to thedevelopment of their stakeholders is to utilize the management resources and strengths of the Banks that have built
their operation bases in the Region over many years, achieve business integration between urban financial institutions,enhance their competitive edge by displaying an outstanding presence, and continue providing advanced financial
services.
As they have already announced through the December 10, 2021 press release entitled “Notice Regarding Basic
Agreement on Business Integration between The Aichi Bank, Ltd. and The Chukyo Bank, Limited,” both Banks havebeen advancing deliberations and considerations in anticipation of a business integration (hereinafter the "Business
Integration"), which will proceed under a basic policy of the formation of a joint holding company, targeted for October
3, 2022, via the Share Transfer, and a future merger of both Banks under the Joint Holding Company, and as of May
11, 2022 the Banks have reached a definitive agreement regarding this Business Integration.
(2)

Method of the Share Transfer and Details of Allotment in the Share Transfer(i) Method of the Share Transfer
The Share Transfer be a joint share transfer, under which the Banks will become wholly-owned subsidiaries of the
Joint Holding Company to be incorporated following the share transfer, and the Joint Holding Company will become
the wholly-owning parent company of the Banks.
(ii)

Details of Allocation Pertaining to the Share Transfer (“Share Transfer Ratio”)

Company Name

Aichi Bank

Chukyo Bank

Share transfer ratio

3.33

1

(Note 1) Share allocation ratio
For every common share of Aichi Bank, 3.33 common shares of the Joint Holding Company shall be allocated, andfor every common share of Chukyo Bank, 1 common share of the Joint Holding Company shall be allocated. The shareunit of the Joint Holding Company is planned to be 100 shares.
If, as a result of the Share Transfer, shareholders of either Bank must be granted fractions of a share that do not
amount to one common share of the Joint Holding Company, in accordance with Article 234 of the Companies Act andother related laws and regulations, shareholders shall be paid an amount equivalent to the value of such fractional
shares amounting to less than one share.
The above share transfer ratio may change by mutual agreement of the Banks following the execution of theBusiness Integration Agreement, but before the effective date of the Share Transfer, if an event is newly discovered oroccurs that may have a significant impact on the share transfer ratio.

- 119 -

(Note 2)

Number of new shares to be delivered by the Joint Holding Company (planned)

Common stock: 49,094,859 shares
The above values were calculated based on the total number of common shares issued by Aichi Bank as of March 31,
2022 (10,943,240 shares), as well as the total number of common shares issued by Chukyo Bank as of March 31, 2022
(21,780,058 shares). However, taking into consideration the fact that Chukyo Bank is planning to acquire as treasury
stock the 8,534,385 common shares owned by MUFG Bank via the Treasury Stock Tender Offer, and that the Joint
Holding Company is to cancel all treasury stock owned by either Bank just before the Joint Holding Company is toacquire all of the issued shares for both Banks (hereinafter the “Basis Period”), the amount of treasury stock for Aichi
Bank as of March 31, 2022 (176,172 shares), the amount of treasury stock for Chukyo Bank as of March 31, 2022
(5,150 shares), as well as the 8,534,385 common shares of Chukyo Bank owned by MUFG Bank that Chukyo Bank
plans to acquire via the Treasury Stock Tender Offer, have been excluded from being subject to the new share delivery
in the calculation above. Note that, if as a result of the Treasury Stock Tender Offer, shareholders of either Aichi Bankor Chukyo Bank exercise their rights to request purchases of shares, or some other event arises before the Basis Periodthat changes the amount of treasury stock applicable to either Bank as of March 31, 2022, this may change the numberof new shares delivered by the Joint Holding Company.
(Note 3)

Handling of shares constituting less than one unit

Shareholders of either Bank who are to receive allocations through the Share Transfer amounting to less than one
unit (100 shares) of the common shares of the Joint Holding Company (hereinafter "Fractional Shares") may not sell
their Fractional Shares on the Tokyo Stock Exchange, Inc. (the “Tokyo Stock Exchange”), the Nagoya Stock
Exchange, Inc. (the “Nagoya Stock Exchange”), or any other financial instruments exchange. Shareholders who holdsuch Fractional Shares may, in accordance with the provisions of Article 192(1) of the Companies Act, demand that the
Joint Holding Company purchase such Fractional Shares. Furthermore, in accordance with the provisions of Article
194(1) of the Companies Act, and the articles of incorporation of the Joint Holding Company, the Banks plan to enable
shareholders to demand that the Joint Holding Company sell to them fractional shares of the Joint Holding Company
equivalent to those fractional shares said shareholders already possess.
(3)Handling of rights to subscribe for new shares and bonds with rights to subscribe for new shares in conjunction with
the Share Transfer
With respect to any rights to subscribe for new shares issued by Aichi Bank and Chukyo Bank, at the time of the
Share Transfer, parties with rights to subscribe for new shares for either Bank will be allocated rights to subscribe for
new shares applicable to the Joint Holding Company in accordance with the details of such rights and the share transfer
ratio, and in accordance with the rights to subscribe for new shares applicable at the Basis Period. Neither of the Banks
has issued bonds with rights to subscribe for new shares.

- 120 -

2. Schedule of the Share Transfer
Friday, December 10, 2021

Execution of the Basic Agreement (Both Banks)

Wednesday, March 2, 2022

Receipt of notice by the FTC that no cease and desist order will be
issuedThursday, March 31, 2022

Record date of the annual shareholders’ meetings (Both Banks)

Wednesday, May 11, 2022

Board of directors meetings resolutions regarding the execution of theBusiness Integration Agreement, and the execution of the Business
Integration Agreement (Both Banks)
Board of directors meetings resolutions regarding the development of
the Share Transfer plan, and the development of the Share Transfer plan
(Both Banks)
Board of directors meeting resolution regarding the execution of theTreasury Stock Tender Offer Application Agreement, and execution of
the Treasury Stock Tender Offer Application Agreement (Chukyo
Bank)

Friday, June 24, 2022 (Planned)

Holding of annual general meetings of shareholders (adoption ofresolution approving the Share Transfer Plan) (Both Banks)

Thursday, September 29, 2022 (Planned)

Tokyo Stock Exchange and Nagoya Stock Exchange de-listing date
(Both Banks)

Before Friday, September 30, 2022

Start date of Treasury Stock Tender Offer settlement(Planned)
Friday, September 30, 2022 (Planned)

Record date of interim dividend for both Banks (including Special
Dividend by Chukyo Bank)

Monday, October 3, 2022 (Planned)

Formation date of the Joint Holding Company (effective date of the
Share Transfer)
Share listing date of the Joint Holding Company(Note)

The above schedule may be changed upon consultation between the Banks where necessary in the course ofmoving towards the Share Transfer or for other reasons.

3. 5. Overview of the Companies Involved in the Share Transfer (as of the end of March 2022)
Name

The Aichi Bank, Ltd.

The Chukyo Bank, Limited

Location

14-12 Sakae 3-chome, Naka-ku, Nagoya

33-13 Sakae
NagoyaYukinori Ito, President

Hideo Kobayashi, President

Description of businessBanking businessBanking businessAmount of stated capital

18 billion yen

31.8 billion yen

Date of establishment

May 15, 1944

February 10, 1943

Total number of issued shares

Common stock: 10,943,240 shares

Common stock: 21,780,058 shares

Settlement Term

March 31

March 31

Job

title

and

name

of

representative- 121 -

3-chome,Naka-ku,4. Company to be newly founded through the Share Transfer
Aichi Financial Group, Inc.

Trade Name(English: Aichi Financial Group, Inc.)

Location of headquarters
Functional
locationprincipal headquarters

14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi
of

14-12 Sakae 3-chome, Naka-ku, Nagoya, Aichi

Amount of stated capital

20,000 million yen

Settlement Term

March 31

5. Overview of Accounting Processing Associated with the Share Transfer
The accounting processing associated with the Share Transfer corresponds to an acquisition under accounting
standards for business combinations, and the application of the purchase method is anticipated. Furthermore, theamount of goodwill (or negative goodwill) that may arise from the Share Transfer is undetermined at this stage.

- 122 -