Annual Securities Report“Yukashoken Hokokusho”(Excerpt)
For the fiscal years ended March 31, 2021 and 2020

FIDEA Holdings Co. Ltd.
and Subsidiaries

Message from the President and CEO———————————————————————————————————————
Dear Shareholders and Investors,
On behalf of the FIDEA Group, I would like to express my sincere gratitude for your continued interest andsupport for all of us, including The Shonai Bank, Ltd. and The Hokuto Bank, Ltd.
I would also like to extend my sincere sympathy to those affected by the Novel Coronavirus (COVID-19), andmy cordial thanks to the healthcare professionals who are on the frontline of this pandemic.
It has been more than ten years since we, the FIDEA Group, started the merger between the Shonai Bank andthe Hokuto Bank across the prefectural border between Akita and Yamagata. During this period, there wereconstant and abrupt changes in the social environment, such as a declining population, aging society, recovery
from the Great East Japan Earthquake, and the new normal that has spread in view of the post-COVID-19 era. In
addition, regional banks face an increasingly difficult environment due to the declining number of offices in theiroperating areas, prolonged negative interest rates, and a changing competitive landscape owing to new companies
entering the market from different industries.
Amidst these circumstances, the Shonai Bank and the Hokuto Bank have established a shared new management
philosophy as the FIDEA Group.
Group Management Philosophy
We will make the Tohoku region a center for producing happiness and hope throughthe passion, wisdom, and challenging spirit of all employees.
Through the ideas and actions of all employees, we will build and expand the future of the
Tohoku region where people feel pride and desire to live.
Based in the Tohoku region, we create new value together with people in the area and offer
this value to them and the world.
We cannot reach the future that we wish to create today simply by dreaming about it.
It is important to take action.
As the greatest fan and supporter of the region, we will always take the same viewpoint as
local people. We will also take bold actions that go beyond people’s expectations of a financial
institution.
All employees think about and take action for the future of the Tohoku region where people
can be happier and more hopeful than at any other place in the world.
Since last year, a project team comprised of our young and mid-level employees has discussed the mission,value, and vision for the FIDEA Group over the next ten years in Japan’s new Reiwa era. Based on these
discussions, we have established a management philosophy that expresses the ideal state that we should aspire
toward as the FIDEA Group.
The Tohoku region faces many different issues, but we will strive to revitalize this beloved area by bringing
together the best minds we have and working with a shared sense of passion and a challenging spirit as we think
and act to make a better future for the customers in front of us.
Thank you for your continuous support.
August 2021
Yuichi Tao
President and CEO
FIDEA Holdings Co. Ltd.

1

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2021 and 2020

Millions of yen
2021
2020
Assets:Cash and due from banks (Notes 11, 19 and 23)¥
612,331
Monetary claims bought (Note 23)
3,775
Trading account securities (Notes 5 and 23)
553
Money held in trust (Notes 6 and 23)
47,358
Securities (Notes 5, 6, 11, 13 and 23)
729,245
Loans and bills discounted (Notes 7, 11, 22 and 23)
1,731,224
Foreign exchange assets (Note 23)
1,604
Lease receivables and investments in leases
4,249
Tangible fixed assets (Note 8):
Buildings
13,502
Land
8,558
Lease assets
41
Construction in progress
237
Other tangible fixed assets
1,827
Intangible fixed assets:
Software
2,288
Goodwill
74
Other intangible fixed assets
153
Defined benefit asset (Note 12)734
Deferred tax assets (Note 20)
1,293
Customers’ liabilities for acceptances and guarantees (Note 22)
19,401Other assets (Note 11)56,553
Allowance for loan losses (Notes 7 and 23)(13,549)
Total assets¥ 3,221,460¥

148,358
4,145
230
20,996739,251
1,697,947
1,838
3,781

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

5,530,446
34,095
4,994
427,727
6,586,389
15,636,054
14,48638,376

14,565
9,694
90
253
2,065

121,947
77,294370
2,140
16,501

2,223
104
163
388
2,558
21,57557,215(12,461)

20,664
668
1,381
6,629
11,678
175,225
510,774(122,371)¥ 2,714,985$ 29,095,556(Continued)
2

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2021 and 2020

Millions of yen
2021
2020
Liabilities:
Deposits (Note 23)
Negotiable certificates of deposit (Note 23)
Call money and bills sold (Notes 11 and 23)
Payables under securities lending transactions(Notes 11 and 23)
Borrowed money (Notes 10, 11 and 23)
Foreign exchange liabilities (Note 23)
Provision for bonuses for directors and other officers
Defined benefit liability (Note 12)
Provision for reimbursement of deposits
Provision for contingent loss
Other provisions
Deferred tax liabilities (Notes 6 and 20)
Deferred tax liabilities for land revaluation (Note 9)
Acceptances and guarantees
Other liabilities (Note 10)

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

¥ 2,593,356
57,152-¥ 2,390,297
74,03911,427$ 23,422,651
516,184-

75,99966,106

686,407323,700
16
30
614
239
443
3,424
454
19,401
26,554

13,900
9
1,944
394
409
14
1,979
480
21,57520,6062,923,591
144
270
5,545
2,158
4,001
30,924
4,100
175,225
239,830

3,101,387

2,603,185

28,011,082

18,00029,19753,564(6)
100,756

18,00029,19751,398(5)
98,590

162,572
263,701
483,778(54)
910,007

18,255
(387)
1,000
154
19,023
293

11,865
173
1,054
(167)
12,926283

164,875(3,495)9,031
1,390
171,811
2,646

Total net assets

120,073

111,800

1,084,474

Total liabilities and net assets¥ 3,221,460¥ 2,714,985$ 29,095,556

Total liabilities
Net assets (Note 14):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities (Note 6)
Deferred gain (loss) on hedges
Revaluation reserve for land (Note 9)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests

See notes to consolidated financial statements.

(Concluded)
3

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2021
2020
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income¥

Total income

19,477
12,961
136
8,328
7,737
4,691

¥

19,998
9,727
29
8,287
10,105
2,838$

175,912
117,061
1,228
75,21669,87842,36853,33250,988481,683

366
52
0
78
3,615
11,222
26,781
1,755
4,144

460
309
0
4
3,695
10,78027,775
1,168
4,329

3,305
469
0
704
32,649101,354
241,880
15,85037,427

Total expenses

48,017

48,523433,679

Income before income taxes

5,314

2,464

47,994

Income taxes (Note 20):
Current
Deferred

1,913
84

460
682

17,277
758

1,998

1,142

18,045

3,315

1,321

29,940

1(25)

9

Expenses:
Interest expenses:
Interest on deposits
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses (Note 15)
Provision of allowance for loan losses
Other expenses (Notes 16 and 17)

Total income taxes
Net income
Net income (loss) attributable to non-controlling interests
Net income attributable to owners of parent

¥

3,314

¥

1,346

Yen
Per share of common stock (Note 25):
Basic net income
Diluted net income
Cash dividends applicable to the year¥

See notes to consolidated financial statements.
4

17.64
13.28
6.00

$

29,931

U.S. dollars
¥

6.79
4.58
6.00

$

0.15930.11990.0541

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2021 and 2020

Millions of yen
2021
2020
Net income¥

Other comprehensive income (loss) (Note 18):
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on hedges
Remeasurements of defined benefit plans
Total other comprehensive income (loss)

3,315

¥

6,399
(561)
321
6,159

1,321

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

(8,391 )(98 )662(7,826 )29,94057,794(5,066)2,899
55,626Comprehensive income (loss)

¥

9,475

¥

(6,505)$85,576

Total comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests

¥

9,465
9

¥

(6,474)(31 )$

85,48581

See notes to consolidated financial statements.

5

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
Years Ended March 31, 2021 and 2020
Shareholders’ equity

Commonstock
Balance as of April 1, 2019¥18,000Capitalsurplus¥Treasury
stock

¥

¥

51,248(1,201)
1,346

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Change in scope of consolidation
Reversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity(63)

Balance as of March 31, 2020

18,000

(5)

(0)

4

29,19751,398(5)(1,202)
3,314

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stockReversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2021

29,261Retainedearnings

(0)

(0)
0

54

Total
shareholders’equity¥98,504

20,252

Revaluation
reserve for
land

¥

¥

¥

18,000¥29,197¥53,564¥(6)

Commonstock$ 162,572

Capitalsurplus$ 263,701

Retainedearnings$ 464,216

98,590

(0)

(0)
0

487

$ 263,701$ 483,778

$

(54)

¥

(829)

¥

20,754¥Total
net assets

250¥ 100,756

(98)

(4 )

662

(7,827)33(7,793)

11,865

173

1,054

(167)

12,926283

111,800(1,202)
3,314
(0)
0
54

¥

18,255

(561)
¥

(387)

(54 )
¥

1,000

321
¥

154

6,096
¥

19,023Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Total
Unrealized
accumulated
gain onDeferred gain
Revaluation
Remeasureotheravailable-for(loss) on
reserve forments of defined comprehensive
salehedgeslandbenefit plansincomesecurities$
1,562 $
$ 107,162
9,519$ (1,508)$ 116,744

9

6,106

293

¥ 120,073

Noncontrollinginterests
$
2,555

Total
net assets$1,009,754¥(10,856)
29,931(0)0487$ 910,007¥ 119,508(8,386)(10,856)
29,931(0)0487
57,713$ 162,572

1,059

Noncontrollinginterests(1,202)
3,314
(0)
0
54

Total
shareholders’
Treasury
equitystock$(45)$ 890,444(10,856)
29,931272

Remeasurements of defined
benefit plans(1,201)
1,346
(0)
(63)
4

6,390

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stockReversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2021¥

Deferred gain
(loss) on
hedgesTotal
accumulated
othercomprehensive
income(1,201)
1,346
(0)
(63)
4

Shareholders’ equity

Balance as of March 31, 2020

Unrealized
gain onavailable-forsale
securities

Millions of yen
Accumulated other comprehensive income$ 164,875

See notes to consolidated financial statements.

6(5,066)$(3,495)

(487)
$

9,031

$

2,899

55,0571,390$ 171,811$

8155,1482,646$1,084,474

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2021 and 2020

Millions of yen
2021
2020
Operating activities:¥ 5,314
Income before income taxes
Adjustments for:
Income taxes—paid(1,087)
Depreciation and amortization
1,953
891
Loss on impairment—fixed assets
Amortization of goodwill
29
Change in allowance for loan losses
1,087
Change in provision for bonuses for directors and other officers
30(72)
Change in defined benefit asset
Change in defined benefit liability(1,219)Change in provision for reimbursement of deposits(154)
Change in provision for contingent loss
34
Change in other provisions(14)
Interest income(32,574)
Interest expenses
498
1,301
Loss on securities―net(41)(Gain) loss on money held in trust—net(3)
Foreign exchange (gain) loss—net
688
Loss on sale and disposal of fixed assets—net
5
Loss on reduction of fixed assets
Subsidy income(5)
Net change in loans and bills discounted(33,277)
Net change in deposits
203,059
Net change in negotiable certificates of deposit(16,886)
Net change in trading account securities(322)
Net change in borrowed money, excluding subordinatedborrowings
309,800
Net change in due from banks, excluding due from Bank of Japan
1,257
Net change in call loans and bills bought
369
Net change in call money and bills sold(11,427)
Net change in payables under securities lending transactions
9,893
Net change in foreign exchange assets
234
Net change in foreign exchange liabilities
7
Net change in lease receivables and investments in leases(467)Interest received
32,825Interest paid
(621)
(1,474)
Other—net
Total adjustments
464,315¥ 469,629
Net cash provided by operating activities —(Forward)

¥

2,464

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

47,994

(379)
2,007
309
29
(1,848)
(30)
(52)
218
(229)
61
(1)
(29,756)
773
501
498
3
30
67
19,051(4,414)
1,222
364(9,817)
17,639
8,047
261
9,817
270
(650)
(11,009)(1,390)307(126)(294,201)
4,497
11,750
(370)
(27)
6,213
45
(45)
(300,550)
1,833,986(152,510)(2,908)2,000(1,083)
87
11,427
1,934
(102)
(6)
(363)
30,451(1,041)
11,33743,072¥ 45,536

2,798,049
11,352
3,332(103,206)
89,351
2,113
63(4,217)
296,468(5,608)(13,312)4,193,596$ 4,241,591(Continued)

7

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2021
2020
Net cash provided by operating activities —(Forward)¥ 469,629¥

45,536$ 4,241,591

Investing activities:
Purchase of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchase of intangible fixed assets
Subsidy income
Net cash used in investing activities(499,093)
396,288
126,831(31,568)
5,344
(786)
607
(771)
5
(3,141)(512,637)
378,271
106,698(11,738)
3,245(1,057)205(1,317)(38,329)(4,507,704)
3,579,190
1,145,511(285,115)
48,265(7,098)
5,482(6,963)45(28,368)

Financing activities:
Repayment of subordinated borrowings
Repayment of lease obligations
Dividends paid
Purchase of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities(60)(1,200)(0)0(1,260)(5,000)(65)(1,200)(0)(6,266)(541)(10,838)(0)0(11,380)3
465,230
144,070¥ 609,301(3)
937
143,132¥ 144,070

27
4,201,860
1,301,210$ 5,503,079

Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year (Note 19)
See notes to consolidated financial statements.

(Concluded)

8

FIDEA Holdings Co. Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended March 31, 2021 and 2020
1. Basis of Presentation
FIDEA Holdings Co. Ltd. (the “Company”) is a holding company and conducts its operations through its
subsidiaries and affiliates. The Company was established as a joint holding company between The Shonai Bank,
Ltd. (“Shonai”) and The Hokuto Bank, Ltd. (“Hokuto”) on October 1, 2009 by way of a transfer of shares.
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, the Ordinancefor the Enforcement of the Banking Act of Japan (the “Banking Act”) and the Companies Act of Japan (the“Companies Act”), and in conformity with accounting principles generally accepted in Japan, which are different
in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is morefamiliar to readers outside Japan.
In preparing the accompanying consolidated financial statements, Japanese yen amounts are presented in millionsof yen by rounding down figures to the nearest million. As a result, the totals in yen in the accompanying
consolidated financial statements do not necessarily agree with the sums of the individual amounts.
The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan and has been made at ¥110.72 = U.S.$1.00, the exchange rate prevailing on March 31, 2021. This translation
should not be construed as a representation that yen can be converted into U.S. dollars at the above or any otherrate.
2. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its 6 subsidiaries (collectively the“Group”) as of March 31, 2021 and 2020.
Under the control of influence concept, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated. The Company has 4 unconsolidated subsidiaries as ofMarch 31, 2021 and 2020.
All significant intercompany accounts and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is eliminated.
The excess of the acquisition cost over the underlying equity in the net assets of the consolidated subsidiaries
measured at fair value at their respective dates of acquisition is presented as “goodwill” and is amortized by thestraight-line method over a period of five years. Insignificant amounts of goodwill are fully charged to income in
the fiscal year when it is incurred.
The balance sheet dates of all 6 subsidiaries are March 31.
Those companies over which the Company has the ability to exercise significant influence, but does not control
are accounted for using the equity method. However, the Company has no affiliates to be accounted for using theequity method.

9

3. Significant Accounting Policies(1) Trading account securities
Trading account securities are stated at fair value as of the balance sheet date, and cost of trading accountsecurities sold is determined principally using the moving-average method.
(2) Securities
Non-trading securities are classified into two categories: held-to-maturity debt securities and available-forsale securities. Held-to-maturity debt securities are carried at amortized cost being determined by the movingaverage method. Available-for-sale securities are generally stated at fair value determined based on the quoted
market price as of the balance sheet date, except for equity securities which are stated at fair value determinedbased on the average market price during one month before the balance sheet date. Cost of sales of theses
available-for-sale securities is principally determined using the moving-average method. Available-for-salesecurities, for which it is extremely difficult to determine the fair value, are stated at cost determined by themoving-average method.
Unrealized gain or loss on available-for-sale securities is recorded under net assets, net of income taxes.
(3) Securities held in money trusts
Securities that are part of trust assets in independently managed money trusts with the primary purpose to
manage securities are stated at fair value as of the balance sheet date.
(4) Derivatives
Derivatives are stated at fair value.
(5) Tangible fixed assets
Depreciation of tangible fixed assets of the Group, except for lease assets, is calculated by the straight-line
method. The principal useful lives are as follows:
Buildings
Others5 to 50 years
4 to 20 years

The Group leases automated teller machines, etc. under finance lease arrangements as a lessee.
Lease assets under finance lease arrangements which do not transfer ownership of the lease assets to the lessee
are depreciated over the respective lease contract periods using the straight-line method with salvage values
defined in the lease contracts, otherwise with no residual value.
(6) Intangible fixed assets
Intangible fixed assets, except for lease assets, are amortized by the straight-line method. Amortization of thecost of software intended for internal use is calculated by the straight-line method based on a useful life
(principally five years) determined by the Group.
(7) Allowance for loan losses
Allowance for loan losses is provided by the consolidated banking subsidiaries and other major consolidated
subsidiaries in accordance with the prescribed standards.
(i) For claims on borrowers who have declared bankruptcy or have commenced special liquidation
proceedings or similar legal proceedings (the “bankrupt borrowers”), or borrowers who are not legally orformally insolvent but are regarded as substantially in the same situation (the “virtually bankrupt
borrowers”), an allowance is generally provided based on the carrying amount of the claims, after thewrite-off stated below, net of the expected amount recoverable from collateral and guarantees.
For collateralized and guaranteed claims on the bankrupt borrowers or virtually bankrupt borrowers of
Hokuto and its certain consolidated subsidiaries, the amount of claims exceeding the estimated value ofcollateral and guarantees is deemed to be uncollectible and is charged off against the total amount ofoutstanding claims. These write-offs amounted to ¥12,621 million ($113,990 thousand) and ¥12,501
million for the years ended March 31, 2021 and 2020, respectively.
(ii) For claims on borrowers who are not currently bankrupt but are likely to become bankrupt (the “potentiallybankrupt borrowers”), an allowance is provided at the amount deemed necessary based on the overall
solvency assessment of the borrowers and the amount of the claims, net of the expected amountrecoverable from collateral and guarantees (hereinafter the “unsecured amount”). In particular,
10

a. For the unsecured amount, an allowance is provided based on the expected loan loss over the next three
years. The expected loan loss amount is determined based on the loan loss ratio, which is estimated bytaking the average of historical loan loss ratio over a certain period of time based on their past loan loss
experience over three years, with necessary adjustments such as future projections.
b. Of claims on above borrowers, as to claims on borrowers with certain amounts or more of the unsecured
amount, the allowance estimated based on the expected loan loss as described in the preceding paragraphis individually reviewed if the allowance is sufficient. Then as necessary, a collectible amount reasonably
estimated based on the borrower’s financial status is deducted from the unsecured amount to provide theamount of the allowance.
(iii) For claims on borrowers with restructured loans, etc., an allowance is provided based on the expectedloan loss over the next three years. The expected loan loss amount is determined based on the loan loss
ratio, which is estimated by taking the average of historical loan loss ratio over a certain period of time
based on their past loan loss experience over three years, with necessary adjustments such as future
projections.
(iv) For other claims, an allowance is provided based on the expected loan loss over the next one year. The
expected loan loss amount is determined based on the loan loss ratio, which is estimated by taking the
average of historical loan loss ratio over a certain period of time based on their past loan loss experience
over one year, with necessary adjustments such as future projections.
(v) Allowances for loan losses of other consolidated subsidiaries are provided based on the historical loan
loss ratio.
All claims are assessed for the quality by the Asset Assessment Department with the cooperation by operating
offices in accordance with the Standards for Asset Self-Assessment, and then the assessment results areaudited by the Asset Audit Department which is independent from the Asset Assessment Department.
(8) Provision for bonuses for directors and other officers
Provision for bonuses for directors and other officers is provided for the payment of bonuses to directors andother officers at an estimated amount attributed to the current fiscal year.
(9) Provision for reimbursement of deposits
Provision for reimbursement of deposits is provided at an estimated amount of the future payments to be madefor reimbursement claims on deposits which were derecognized and credited from liability to income.
(10) Provision for contingent loss
Provision for contingent loss is provided at an estimated amount of the future payments to be made for a(11) Retirement benefits
The benefit formula method is used as a method of attributing expected retirement benefits to each period in
calculating retirement benefit obligation.
Past service costs are amortized by the straight-line method over a certain period (five years) within the
average remaining years of service of the eligible employees when such past service costs occur.
Actuarial gains and losses are amortized from the year following the year in which the gains and losses occur
by the straight-line method over a certain period of 10 to 15 years within the average remaining years ofservice of the eligible employees when such actuarial gains and losses occur.
Certain consolidated subsidiaries adopt the simplified method in calculating defined benefit liability andretirement benefit expenses. Under this method, the severance payment amount required at the fiscal yearend for voluntary termination is deemed as retirement benefit obligations.
(12) Foreign currency translation
The assets and liabilities denominated in foreign currencies of the consolidated subsidiaries are translated into
Japanese yen at the exchange rates in effect at the balance sheet date.
11

For the translation difference of debt securities out of available-for-sale securities denominated in foreign
currencies, the translation difference related to changes in fair value is recognized as unrealized gain or loss
and other differences are recognized as foreign exchange gain or loss under other operating income or
expenses.
(13) Hedge accounting
Interest rate risk hedging
With respect to the hedge accounting for the interest rate risk arising from financial assets and liabilities of
the consolidated banking subsidiaries, the Group applies deferral hedge accounting, under which gains orlosses on derivatives are deferred until maturity of the hedged transactions, as stipulated in the JapaneseInstitute of Certified Public Accountants (“JICPA”) Industry Committee Practical Guideline No. 24 (October
8, 2020). With respect to hedging transactions to offset fluctuations of the market price, the effectiveness ofhedging transactions is assessed by specifying the hedged items such as deposits and loans and bills discounted
and hedging instruments such as interest rate swaps after grouping these items by definite remaining maturity.
With respect to hedging transactions to fix cash flows, the effectiveness of hedging is assessed by verifying
the correlation of interest floating factors of hedged items and hedging instruments.
Foreign exchange risk hedging
With respect to the hedge accounting for the foreign exchange risk arising from financial assets and liabilities
denominated in foreign currencies of the consolidated banking subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives are deferred until maturity of the hedged transactions,as stipulated in the JICPA Industry Committee Practical Guideline No. 25 (October 8, 2020). Hedge
effectiveness is assessed by comparing the amount of monetary assets and liabilities denominated in foreign
currencies as underlying hedged items with the corresponding foreign-currency amount of the respective
hedging instruments such as currency swaps and foreign exchange swaps entered into in order to hedge foreignexchange risk associated with monetary assets and liabilities denominated in foreign currencies.
In addition, in order to hedge foreign exchange risk of available-for-sale securities denominated in foreign
currencies except for debt securities, the fair value hedge is applied as portfolio hedging on the condition thatliabilities of spot and forward foreign exchange contracts exceeding the acquisition costs of the foreign
currency denominated securities on a basis of foreign currency exist, designating the issues of foreign currency
denominated securities to be hedged in advance.
Equity price fluctuation risk hedging
With respect to hedge accounting for the equity price fluctuation risk arising from equity securities out ofavailable-for-sale securities held by the consolidated banking subsidiaries, the Group applies deferral hedge
accounting for equity forward contracts and others as hedging instruments.
Hedge effectiveness is assessed by periodically comparing the aggregate amounts of price fluctuations orchanges in cash flows of underlying hedged items with those of corresponding hedging instruments, inprinciple, for the period from the beginning of the hedge and the point in time of evaluating hedge
effectiveness. However, if the material conditions of the hedged item and the hedging instrument are consistentand it is obvious that the hedge is highly effective, the assessment for the effectiveness is omitted.
(14) Cash and cash equivalents
In preparing the consolidated statements of cash flows, of cash and due from banks in the consolidated balance
sheets, cash and due from Bank of Japan (“BoJ”) are considered to be cash and cash equivalents.
(15) Consumption taxes
Transactions are principally stated exclusive of national and local consumption taxes.
(16) Accounting treatments and procedures applied in cases where relevant accounting standards areunclear
Regarding gain or loss on cancellation or redemption of investment trusts, when an aggregate amount on
investment trusts as a whole including interim distributions is a gain, the gain is recognized as interest anddividends on securities under interest income, and when it is a loss, the loss is recognized as loss on redemptionof bonds under other operating expenses.
(17) Accounting standards and guidance issued but not yet applied(Accounting standard and guidance for revenue recognition)“Accounting Standard for Revenue Recognition” (the Accounting Standards Board of Japan (“ASBJ”)
12

Statement No. 29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
March 26, 2021)(i) Overview
Conducting a joint project to clarify the comprehensive principles for recognizing revenues, theInternational Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board(“FASB”) in the US issued “Revenues from Contracts with Customers” (IFRS 15 by the IASB and Topic
606 by the FASB) in May 2014. IFRS 15 shall be effective from a fiscal period beginning on or afterJanuary 1, 2018 and Topic 606 shall be effective from a fiscal period beginning after December 15, 2017.
Under these circumstances, the ASBJ also developed a comprehensive accounting standard for revenue
recognition and issued a new standard together with its implementation guidance.
As a basic policy for the development of the new standard, the ASBJ determined to adopt the core
principles of IFRS 15 in order to enhance comparability of financial statements, which is one of thebenefits aligning with IFRS 15. In addition, for any practical issue to be considered in Japan, alternative
treatment shall be added to the extent that comparability is not impaired.
(ii) Scheduled date of application
The Company and its consolidated subsidiaries will apply the new accounting standard andimplementation guidance effective from the fiscal year beginning on April 1, 2021.
(iii) Effect from the application of the new accounting standard and implementation guidance
The effect from the application of the new accounting standard and implementation guidance is currently
under evaluation.
(Accounting standards and guidance for fair value measurement)“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)
“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)
“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19, March 31, 2020)(i) Overview
The IASB and the FASB provide detailed guidance on fair value measurement that is almost identical(IFRS 13 “Fair Value Measurement” by the IASB and Topic 820 of Accounting Standards Codification“Fair Value Measurement” by the FASB).
Under these circumstances, the ASBJ issued accounting standards such as “Accounting Standard for Fair
Value Measurement” to harmonize Japanese GAAP with international accounting standards, mainly for
guidance and disclosure of the fair value of financial instruments.
As a basic policy for the development of the new standard, the ASBJ incorporated all the provisions of
IFRS 13 to improve the comparability of financial statements between domestic and foreign companies
by using a uniform method of the measurement. Further, in consideration of the practices that have beentaken in Japan, other treatments for individual items are to be prescribed to the extent that they do notsignificantly impair comparability between financial statements.
(ii) Scheduled date of application
The Company and its consolidated subsidiaries will apply the new accounting standards andimplementation guidance effective from the fiscal year beginning on April 1, 2021.
(iii) Effect from the application of the new accounting standards and implementation guidance
The effect from the application of the new accounting standards and implementation guidance on the
Company’s consolidated financial statements has not yet clarified.
(18) Changes in presentation
The Company has applied “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement
No. 31, March 31, 2020) effective from the consolidate financial statements as of March 31, 2021, and13

disclosed notes on significant accounting estimates to the consolidated financial statements.
(19) Additional information
The Company has applied “Accounting Standard for Accounting Policy Disclosures, Accounting Changes
and Error Corrections” (ASBJ Statement No. 24, March 31, 2020) effective from the consolidate financial
statements as of March 31, 2021, and newly described accounting treatments and procedures applied in cases
where relevant accounting standards are unclear.
4. Significant Accounting Estimates
The following summarizes items that are recognized in the current fiscal year’s consolidated financial
statements based on the accounting estimates and such estimates may give significant impacts on the
consolidated financial statements in the following fiscal year.
(1) Allowance for loan losses(i) Amount recognized in the consolidated financial statements in the current fiscal year
Allowance for loan losses: ¥13,549 million ($122,371 thousand)(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
It is described in Note “3. Significant Accounting Policies, (7) Allowance for loan losses.”b. Major assumptions
For estimating the allowance, it is particularly important to determine the borrower classification.
Major assumptions used for determining the borrower classification are “outlook for future
performance of borrowers,” which the Company assesses by each individual borrower based on theevaluation of each borrower’s ability to earn income, after comprehensively evaluating the qualitativeand quantitative information collected, including each borrower’s management performance, financial
status, lending terms, repayment status, and formulation and progress of a management improvement
plan.
In addition, the COVID-19 pandemic may have a certain impact, mainly on the credit risk of loans andbills discounted. While assuming the economic impact of the COVID-19 pandemic would continue
over the next year or so, the Company determines the allowance for loan losses based on assumptions
that the risk would be controlled to some extent by economic stimulus measures taken by thegovernment and local governments and supports from financial institutions.
c. Impact on the consolidated financial statements in the following fiscal year
Since the major assumptions: “outlook for future performance of borrowers” involve uncertainty, there
is a risk to have a significant impact on determining the borrower classification if any changes occur inthe status of borrowers or the future economic environment including the impact of the COVID-19
pandemic. When the borrower classification changes, there is a possibility that the allowance for loan
losses in the consolidated financial statements in the following fiscal year may increase or decrease.
Although the Company estimates the impact of the COVID-19 pandemic by taking all possible events
into account based on information available as of March 31, 2021, there is a high degree of uncertainty
in the assumptions used in the estimate under the current economic environment. If the status of thepandemic, its duration, and the impact on the economy and other factors would change, the amounts ofallowance for loan losses in the consolidated financial statements of the following year may increaseor decrease.
(2) Deferred tax assets(i). Amount recognized in the consolidated financial statements in the current fiscal year
Deferred tax assets:¥1,293 million ($11,678 thousand)Deferred tax liabilities:¥3,424 million ($30,924 thousand)(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
A deferred tax asset is an asset allowed to recognize to the extent that the taxable income will be reduced,
thereby the tax burden will be reduced, for the fiscal period when the tax loss carryforward and the14temporary differences, which are the differences between the carrying amount of an asset or liability inthe consolidated balance sheet and its tax base, are reversed. Accordingly, deferred tax assets arerecognized at the amount expected to be recovered based on the assessment of recoverability of theassets to reduce future tax burden. In addition, the Company reviews the future recoverability of theassets every fiscal year.
In particular, the Company estimates deferred tax assets using the scheduling of temporary differences
for the future reasonable estimable period of five years based on the estimates of taxable income before
deductible or taxable temporary differences for the estimable period. For the preparation of thescheduling, it is especially important to project a future deductible temporary difference for anindividual allowance for loan losses; thus, the Company prepares the scheduling after a detailed
analysis of timing and compliance with requirements for the use of tax loss carryforward for anindividual allowance for loan losses over certain amounts.
b. Major assumptions
For determining the recoverability of deferred tax assets, it is particularly important to estimate futuretaxable income.
Future taxable income is estimated based on the Group’s profit plan, which is established by taking
into account past performance, prevailing market yields and the future economic environment including
the impact of the COVID-19 pandemic. The major assumptions used for the establishment of the plan
are: “outlook for income from assets under management and corporate-related fees and commissions”
and “outlook of general and administrative expenses such as personnel expenses,” which are projectedbased on the Group’s management policy of “strengthening of top-line profitability including income
from assets under management and corporate-related fees and commissions, and further reduction ofgeneral and administrative expenses.” Considering the uncertainty of achieving the profit plan, theCompany determines the recoverability of deferred tax assets with a certain stress scenario to the plan.
c. Impact on the consolidated financial statements in the following fiscal year
Although the Company determines the recoverability of deferred tax assets at every fiscal year-end, themajor assumptions: “outlook for income from assets under management and corporate-related fees andcommissions” and “outlook of general and administrative expenses such as personnel expenses”
involve high uncertainty. When the future economic environment including the impact of the COVID19 pandemic changes, the estimates of future taxable income based on the profit plan may change, andit may result in a risk of having a significant impact on the recoverability of deferred tax assets. When
the Company determines that a part or all of the deferred tax assets recognized in the last fiscal year
cannot be recovered since estimated future taxable income may be insufficient to offset the future
deductible temporary differences, the deferred tax assets will be reversed and the same amount will berecognized as income tax-deferred.
(3) Impairment of fixed assets(i). Amount recognized in the consolidated financial statements in the current fiscal year
Impairment loss: ¥891 million ($8,047 thousand)(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
It is described in Note “17. Impairment Loss.”b. Major assumptions
It is necessary to estimate the future cash flows, used for the purposes of measuring the value in use
and determining the recognition of impairment loss, based on reasonable and explainable assumptions
and predictions reflecting unique circumstances of an entity. These future cash flows are estimatedbased on the profit plan with a certain stress scenario, for determining the recoverability of deferred
tax assets as stated in aforementioned “(2) Deferred tax assets.”
c. Impact on the consolidated financial statements in the following fiscal year
The major assumptions used to establish the profit plan as stated in aforementioned “(2) Deferred tax
assets” involve high uncertainty. When the future economic environment including the impact of the
COVID-19 pandemic changes, the estimates of future cash flows based on the profit plan may change,
and it may result in a risk of having significant impact on determining the recognition of impairment
15

loss and measuring the value in use. When the estimates of future cash flows decrease, it may become
necessary to recognize additional impairment loss.
5. Securities
Gain and loss from revaluation of trading account securities included in the consolidated statements of income was¥0 million ($0 thousand) and ¥(2) million for the years ended March 31, 2021 and 2020, respectively.
Securities at March 31, 2021 and 2020 consisted of the following:
Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2021
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

¥

-

¥

16,642286,270
49,016
163,568
73,685
164,296¥ 467,209

¥

¥

-

¥

8,878
279,40247,775
159,534
72,093
145,623¥ 433,904

¥

7,763
6,868
1,241
4,034
1,592
18,673¥ 33,305

-

¥

-

¥

2,356
173,383
68,06360,691
44,62982,446¥ 258,186¥ 725,396¥

2,533
175,123
68,912
61,24044,97087,586¥ 265,243¥ 699,147

¥

¥

¥

16

Unrealized
gain (loss)
-

-

(176)
(1,739)
(849)
(549)
(341)
(5,139)¥ (7,056)¥ 26,249

Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2020
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

¥

-

¥
¥

Unrealized
gain (loss)

-

¥

8,985
384,490109,051
198,561
76,876
146,880¥ 540,356

4,246
375,620
107,098
193,583
74,938133,485¥ 513,352

¥

4,738
8,869
1,953
4,978
1,937
13,395¥ 27,003

¥

-

¥

-

¥

2,522
98,535
12,531
61,854
24,14993,762¥ 194,820¥ 735,177¥

3,087
99,551
12,73462,41524,401102,117¥ 204,756¥ 718,109

¥

¥

¥

-

-

(565)
(1,015)
(202)
(560)
(252)
(8,354)¥ (9,936)¥ 17,067

As of March 31, 2021 and 2020, ¥383 million ($3,459 thousand) and ¥400 million of capital investment inunconsolidated subsidiaries were included in the balance of securities, respectively.
Thousands of U.S. dollars
Acquisition
cost

Carrying
amountMarch 31, 2021
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

$

-

$

150,3072,585,531
442,702
1,477,312
665,507
1,483,887$ 4,219,734$

80,184
2,523,500
431,493
1,440,877
651,128
1,315,236$ 3,918,930$ 70,113
62,030
11,20836,434
14,378
168,650$ 300,803

$

-

$

-

$

21,2781,565,959
614,730
548,148
403,079
744,635$ 2,331,882$ 6,551,625$

22,877
1,581,674
622,398
553,106
406,159
791,058$ 2,395,619$ 6,314,550

$

$

$

17

Unrealized
gain (loss)

-

$

-

-

(1,589)(15,706)(7,667)(4,958)(3,079)(46,414)$ (63,728)$ 237,075

Available-for-sale securities sold for the years ended March 31, 2021 and 2020 were as follows:
Millions of yen
March 31, 2021
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

¥

¥

¥

March 31, 2020
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

¥

¥

¥

March 31, 2021
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

$

$

$

¥

13,809132,12287,732
44,322
66
250,352
396,284

¥

2,997
672
201
469
0
3,895
7,564

¥

471
569
560
8
7,714
8,754

Millions of yen¥

16,892
124,785
68,89353,3802,511
237,193378,870

¥

1,772
1,153
1,020
131
1
5,430
8,355

¥

1,411
165
135
29
7,415
8,991

Thousands of U.S. dollars
124,720
1,193,298
792,377
400,307596
2,261,127$ 3,579,154$

27,068
6,069
1,815
4,235
0
35,17868,316

$

4,253
5,139
5,057
72
69,671
79,064

Write-down of securities
Non-trading securities, with the exception of those whose fair value is extremely difficult to determine, whose fairvalue significantly declined compared with their acquisition cost and is not considered to be able to recover theiracquisition cost, are written down to their respective fair value which is recorded as the carrying amount on the
consolidation balance sheet. The related loss on revaluation is charged to income for the year.
For the year ended March 31, 2021, no available-for sale securities were written down. For the year ended March
31, 2020, ¥62 million of available-for sale securities were written down. Of which, equity securities were ¥62
million.
The criteria for determining whether the fair value is “significantly declined” are as follows:(1) If the fair value as of the balance sheet date declines 50% or more compared to the acquisition cost, thedifference is recognized as write-down of securities.
(2) If the fair value as of the balance sheet date declines by 30% or more but less than 50% compared to theacquisition cost, write-down of securities is recognized for the securities which meets criteria of the Group after
considering the financial condition of the issuer and past trend of the market value for a certain period.

18

6. Unrealized Gain on Available-for-Sale Securities
Unrealized gain on available-for-sale securities at March 31, 2021 and 2020 consisted of the following:
Millions of yen
2021
2020
¥
26,249¥17,067
26,24917,067(7,974)(5,192)

Unrealized gain:
Available-for-sale securities
Money held in trust
Deferred tax liabilities
Unrealized gain on available-for-sale securities before
adjustments by equity interest:
Non-controlling interests
Unrealized gain on available-for-sale securities¥

Thousands of
U.S. dollars
2021$ 237,075
237,075(72,019)

18,274

11,875

165,046(18)
18,255(10)
11,865(162)$ 164,875¥

7. Loans and Bills Discounted and Risk Monitored Loans
Loans and bills discounted
Bills discounted are accounted for as financial transactions rather than as purchased bills in accordance with JICPA
Industry Committee Practical Guideline No. 24 (October 8, 2020). The Group has the right to sell or pledge(repledge) such bills without any restrictions. These include commercial bills discounted, etc. The total face valueof such financial transactions at March 31, 2021 and 2020 amounted to ¥2,912 million ($26,300 thousand) and¥4,067 million, respectively.
Contracts for overdraft facilities and loan commitments are contracts under which the Group lends money tocustomers up to their prescribed limits at the customers’ request as long as there are no violations of any of theconditions in the contracts. The aggregate unutilized balances within the limits of these contracts totaled ¥287,946($2,600,668 thousand) and ¥281,284 million at March 31, 2021 and 2020, respectively, including the contracts
whose contractual periods were either less than one year or revocable at any time, in the amount of ¥280,808
million ($2,536,199 thousand) and ¥266,690 million, respectively.
Since many of these commitments expire without being fully utilized, the unutilized amounts do not necessarily
represent future cash commitments of the consolidated subsidiaries. Most of these contracts include provisions
which stipulate that the consolidated subsidiaries can reject customers’ requests or decrease the contract limits foran appropriate reason, such as a change in financial situation and preservation of claims. At the inception of thecontracts, they obtain collateral in the form of real estate, securities, and so forth, if deemed necessary. Subsequently,
they, based on its internal rules, perform periodic reviews of the customers’ business results and may take necessary
measures such as reconsidering the terms and conditions of the contracts and/or requiring additional collateral or
guarantees.

19

Risk monitored loans
Risk monitored loans which were included in loans and bills discounted at March 31, 2021 and 2020 consisted of
the following:Thousands of
U.S. dollars
2021

Millions of yen
2021
2020
Loans to bankrupt borrowers
Delinquent loans
Loans past due for 3 months or more
Restructured loans
Total¥ 1,241
26,101
1,024¥ 28,366¥

1,175
24,065
2,726¥ 27,966$ 11,208
235,738
9,248$ 256,195

Loans to bankrupt borrowers represent non-accrual loans to borrowers who are legally bankrupt as defined in
Articles 96-1-3 and 96-1-4 of the Order for Enforcement of the Corporation Tax Act (Cabinet Order No. 97 of
1965).
Delinquent loans represent non-accrual loans other than (i) loans to bankrupt borrowers and (ii) loans on whichinterest payments have been suspended in order to facilitate or support the reconstruction of borrowers who areexperiencing financial difficulties.
Loans past due for 3 months or more represent loans on which the payment of principal and/or interest has not been
received for three months or more from the day after the due date, and which are not classified as “loans to bankrupt
borrowers” or “delinquent loans.”
Restructured loans are loans which have been restructured to facilitate or support the reconstruction of borrowers
who are experiencing financial difficulties, with the intention of ensuring the recovery of the loans by providing
more flexible repayment terms for the borrowers (such as reducing the rate of interest, suspending the payment ofprincipal/interest, forgiving debt, etc.) and loans which are not classified in any of the above categories.
The amounts presented in the table above are stated before deducting the amount of allowance for loan losses.
8. Tangible Fixed Assets
At March 31, 2021 and 2020, accumulated depreciation of tangible fixed assets was ¥30,183 million ($272,606
thousand) and ¥32,508 million, respectively.
The amounts of advanced depreciation by reduction of carrying amount of assets as of and for the years ended
March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars
2021

Millions of yen
2021
2020
Balance as of the fiscal year-end
Amount applicable for the year

¥ 1,010
-

¥

1,206
67

$

9,122
-

9. Revaluation of Land
In accordance with the “Act on Revaluation of Land” (Act No. 34 of March 31, 1998), land used for business
operations of Shonai was revalued as of the date indicated below. The excess of revaluation to carrying amount at
the time of revaluation, net of income taxes corresponding to the excess which are recognized as “Deferred tax
liabilities for land revaluation,” is stated as “Revaluation reserve for land” under net assets.
20

Date of revaluation: September 30, 1999
The method of revaluation of asset set forth in Article 3, Paragraph 3 of the “Act on Revaluation of Land”:
Fair values are determined based on the land price registered in the book of taxation on land stipulated in Article
2-3 of the “Order for Enforcement of Act on Revaluation of Land” (the “Ordinance”) (Cabinet Order No. 119 ofMarch 31, 1998), with price adjustments by shape and time and the appraisal value by an independent real estateappraiser as provided by Article 2-5 of the Ordinance.
The difference between the total fair values of land used for business operations revalued pursuant to Article 10 of
the “Act on Revaluation of Land” and carrying amount after revaluation of the relevant land at March 31, 2021
and 2020 was ¥1,230 million ($11,109 thousand) and ¥1,377 million, respectively.
10. Borrowed Money and Lease Obligations
Borrowed money and lease obligations at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen

Averageinterest rate
(%)

2021

2020

2021

¥ 323,700¥ 13,900$2,923,591

0.00

Current portion of lease obligations

44

53

397

1.00

Lease obligations, less current
portion

35

77

316

1.34

Borrowed money

Maturity
Apr. 2021
throughMar. 2024
Apr. 2022
throughFeb. 2026

Note: Average interest rate is calculated based on the interests and the balances as of the balance sheet date by the weighted averagemethod.

Annual maturities of borrowed money and lease obligations within five years at March 31, 2021 are as follows:
Millions of yen

Due in one year
or less

Borrowed money
Lease obligations¥ 312,800
44

Due after one
year through twoyears

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

¥

¥

¥

¥

4,800
20

6,100
10

2

1

Thousands of U.S. dollars

Due in one year
or less

Borrowed money
Lease obligations$2,825,144397

Due after one
year through two
years

$

43,352180

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

$

$

$

55,0939018

Note: Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheet.

11. Assets Pledged
Assets pledged as collateral at March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

¥ 145,927¥ 82,560$ 1,317,982

Loans and bills discounted

256,845-2,319,770

Total¥ 402,773¥ 82,560$ 3,637,761

Securities

21

9

The liabilities secured by the above pledged assets at March 31, 2021 and 2020 consisted of the following:Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
Payables under securities lending transactions
Borrowed money¥ 75,999¥ 66,106323,700

13,900$686,4072,923,591

In addition to the pledged assets listed above, the following assets are pledged as collateral of domestic exchangetransactions or as margins on futures contracts at March 31, 2021 and 2020:
Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
Securities¥ 175,186¥ 221,255$ 1,582,243

8

8

72

43,71142,966

394,788

Cash and due from banks
Other assets

Note: Other assets include guarantee deposits in the amount of ¥470 million ($4,244 thousand) and ¥515 million at March 31, 2021
and 2020, respectively.

12. Retirement Benefit Plans
The Company and its consolidated banking subsidiaries have a defined contribution plan as well as a corporate
pension plan and a lump-sum payment plan, as defined benefit plans. In addition, additional retirement allowance
may be paid to employees when they retire. Further, a retirement benefit trust is established for the lump-sum
payment plan of consolidated banking subsidiaries of the Company.
On April 1, 2020, the Company and its consolidated banking subsidiaries unified the comprehensive retirement
plan and adopted the point system under which certain points are given based on the functional classes and titles
and employees are entitled to lump-sum payments based on the accumulated points at the time of the termination
multiplied by unit price by point.
Certain consolidated subsidiaries other than the consolidated banking subsidiaries have lump-sum payment plans
as defined benefit pension plans, and adopt the simplified method in calculating defined benefit liability andretirement benefit expenses.
Defined benefit pension plans(1) Reconciliation between retirement benefit obligations at beginning of year and end of year
Thousands ofMillions of yen
U.S. dollars
2021
Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial gains and losses arising during year
Retirement benefits paid
Past service costs arising during year¥

Retirement benefit obligations at end of year¥22

11,902
387
16
295
(814)
11,7882020¥¥

13,497
463
1
(27)
(944)
(1,087)
11,9022021$ 107,496
3,495
144
2,664
(7,351)$ 106,466

(2) Reconciliation between plan assets at beginning of year and end of year
Thousands of
U.S. dollars

Millions of yen
2021
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses
Contribution from employer
Retirement benefits paid¥

Plan assets at end of year¥

10,346
155
709
1,396
(699)
11,9082020¥¥

11,175
144
(258)
106
(821)
10,3462021$

93,442
1,399
6,403
12,608(6,313)$ 107,550

Note: Retirement benefit trust is included in plan assets.

(3) Reconciliation between retirement benefit obligations and plan assets at end of year and defined benefit
liability and defined benefit asset on the consolidated balance sheets
Thousands ofMillions of yen
U.S. dollars
2021
Funded retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Net balance of liability and asset recorded on the
consolidated balance sheets

2020

¥

11,572(11,908)
(335)
215

¥

10,353(10,346)
6
1,549

¥

(119)

¥

1,556

$ 104,515(107,550)(3,025)
1,941$(1,074)

Thousands of
U.S. dollars

Millions of yen
Defined benefit liability
Defined benefit asset
Net balance of liability and asset recorded on the
consolidated balance sheets

2021

¥

614
(734)

¥

1,944
(388)

$

5,545
(6,629)

¥

(119)

¥

1,556

$

(1,074)

Note: Retirement benefit trust is included in plan assets.

(4) Retirement benefit expenses and components thereofService costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Other
Retirement benefit expenses on defined benefit
plans

Millions of yen
2021
2020
¥
387
¥
463
16
1
(155)
(144)
187
113
(217)
8
1

Thousands of
U.S. dollars
2021
$
3,495
144
(1,399)1,688(1,959)
72

¥

$

226

¥

434

2,041

Note: Retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are collectively included in“Service costs.”23

(5) Components of items recorded in remeasurements of defined benefit plans in other comprehensive income,before tax, are as follows:
Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
Past service costs
¥
(217)
¥
1,087
$ (1,959)
(117)
5,428
Actuarial gains and losses
601
¥
383
¥
970
$
3,459
Total
(6) Components of items recorded in remeasurements of defined benefit plans in accumulated othercomprehensive income, before tax, are as follows:
Thousands ofMillions of yen
U.S. dollars
2021
2020
2021
Unrecognized past service costs¥(870)¥ (1,087)$ (7,857)
1,196
5,373
Unrecognized actuarial gains and losses
595
¥
109
$ (2,474)
¥
(274)
Total
(7) Components of plan assets(i) Percentages to total plan by major category are as follows:
2021
32.2%
27.0
20.4
0.1
6.3
14.0
100.0%

Debt securities
Equity securities
Cash and deposits
Call loans
General account
Other
Total

2020
46.0%
19.9
8.4
0.1
7.2
18.4
100.0%

Note: 38.0% and 30.9% of the total plan assets consisted of the retirement benefit trust established for the lump-sum
payment plan as of March 31, 2021 and 2020, respectively.

(ii) Determination of expected long-term rate of plan assets
The expected long-term rate of return on plan assets is determined considering current and expecteddistribution of plan assets and current and expected long-term rate of return derived from various
components of plan assets.
(8) Actuarial assumptions at end of year
2021
0.05% - 0.25%
1.50%
2.20% - 2.30%

Discount rate
Expected long-term rate of return on plan assets
Expected rate of salary increase (Note)2020
0.02% - 0.31%
1.00% - 1.50%
3.64%

Note: The Company and its consolidated banking subsidiaries unified the comprehensive retirement plan and adopted the point
system on April 1, 2020. For Hokuto, the expected rate of salary increase is not included in the basis for calculation ofretirement benefit obligations and others for the year ended March 31, 2020.

Defined contribution pension plans
The amounts to be contributed to the defined contribution pension plans of the Company and its consolidated
subsidiaries were ¥171 million ($1,544 thousand) and ¥150 million as of March 31, 2021 and 2020, respectively.
13. Contingent Liabilities
Guarantee liabilities for corporate bonds acquired through private offering (as defined in Article 2-3 of the Financial
Instruments and Exchange Act) among those classified as corporate bonds in “Securities” amounted to ¥20,445
million ($184,654 thousand) and ¥17,206 million at March 31, 2021 and 2020, respectively.
2414. Shareholders’ Equity
Japanese banks are required to comply with the Banking Act and the Companies Act. The Companies Act stipulates
that neither additional paid-in capital nor the legal reserve is available for dividends, but that both may be used toreduce or eliminate a deficit. Under the Banking Act, an amount which is at least equal to 20% of the aggregate
amount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicableto each fiscal period is to be appropriated to the legal reserve until the aggregate amount of the legal reserve andthe capital surplus account equals 100% of the amount of share capital. The Companies Act also provides that if
the aggregate amount of additional paid-in capital and the legal reserve exceeds 100% of the amount of sharecapital, the excess may be distributed to the shareholders either as a return of capital or as dividends subject to theapproval of the shareholders.
The maximum amount which the bank can distribute as dividends is calculated based on the non-consolidated
financial statements of the bank and in accordance with the Companies Act.
Movements in common stock, preferred stock and treasury stock during the years ended March 31, 2021 and 2020are summarized as follows:
Number of shares (in thousands)
April 1, 2020
Increase
Decrease March 31, 2021
Ref.
Issued shares:
181,421
181,421
Common stock
Preferred stock class B
25,00025,000Total
206,421
206,421
Treasury stock:
Common stock
30
1
0
31
Note
Total
30
1
0
31
Note: Increase in number of shares is due to request for purchase of less than one unit. Decrease in number of shares is due to request
for sale of less than one unit

Number of shares (in thousands)
April 1, 2019
Increase
Decrease March 31, 2020
Issued shares:
Common stock
Preferred stock class B
Total
Treasury stock:
Common stockTotal

181,42125,000206,421--

181,42125,000206,421

28
28

2
2

-

30
30

Ref.

Note

Note: Increase in number of shares is due to request for purchase of less than one unit.

15. General and Administrative Expenses
General and administrative expenses for the years ended March 31, 2021 and 2020 included the following:

Salaries and allowances
Retirement benefit expenses
Outsourcing expenses

Millions of yen
2021
2020
¥ 11,678¥ 12,290
398
584
2,801
2,576

25

Thousands of
U.S. dollars
2021$ 105,473
3,594
25,298

16. Other Expenses
Other expenses for the years ended March 31, 2021 and 2020 included the following:
Millions of yen
2020
2021
¥
595
¥ 1,978

Loss on sales of equity securities, etc.

Thousands of
U.S. dollars
2021$ 5,373

17. Impairment Loss
For the years ended March 31, 2021 and 2020, with regard to assets from which cash flows declined due todecrease in income from operating activities, idle properties and assets which were determined to be sold, theCompany recognized the impairment loss by writing off the carrying amount of each asset to its respective
recoverable amount.
March 31, 2021
Category

Area

Business assets

Within Akita
Prefecture

Banking office –10 locations

Main use

Land andbuildings

Business assets

Within Miyagi
Prefecture

Banking office –three locations

Buildings

Business assets

Within Yamagata
Prefecture

Banking office –six locations

Land andbuildings

Business assets

Within Tokyo
Banking office –Metropolitan Area
one location

Buildings

Idle assets

Within Akita
Prefecture

Land andbuildings

Idle assets –four locations

Description

Impairment loss
Thousands ofMillions of yen
U.S. dollars
¥

444

1,815

199

1,797

14

126

30

270

¥

March 31, 2020

Impairment loss
Area

Business assets

Within Akita
Prefecture

Banking office –13 locations

Land andbuildings

Business assets

Within Yamagata
Prefecture

Banking office –six locations

Land andbuildings

Business assets

Within Miyagi
Prefecture

Banking office –two locations

Buildings

Idle assets

Within Yamagata
Prefecture

Idle assets –two locations

Land andbuildings

Idle assets

Within Akita
Prefecture

Idle assets –three locations

Land

Idle assets –one location

Land andbuildings

Within Yamagata
Assets held for sale
Prefecture

Main use

Description

Total

4,010

201

Total

Category

$

891

$

8,047

Millions of yen
¥

147
96
31
19
5
9

¥

309

Banking offices of consolidated subsidiaries in the banking business are grouped by office which is the minimum
unit for management accounting purposes. Certain banking office group which operates in cooperation isconsidered as one unit, and banking offices located in the same building are also considered as one unit. For idle
assets and assets held for sale, each asset is considered as the minimum unit. Head office, administrative centersand others are considered as corporate assets since they contribute to generate future cash flows of multiple assets
or asset groups.
The Company and consolidated subsidiaries in other than the banking business are grouped by entity as a generalrule.
The recoverable amount of relevant asset group is measured at net selling price and calculated by deducting
estimated costs to sell from the amount which properly reflects the fair market value such as real estate appraisal
value or roadside land prices.
26

18. Other Comprehensive Income (Loss)
Reclassification adjustments and income tax effect for each component of other comprehensive income (loss) for
the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars
Millions of yen
2020
2021
2021
Unrealized gain (loss) on available-for-salesecurities:
Gain (loss) arising during the year¥
7,989
¥ (12,767)$
72,154
Reclassification adjustments
1,191
702
10,756
Before income tax effect
9,181(12,065)
82,920
Income tax effect
3,674(25,126)(2,782)
Unrealized gain (loss) on available-forsale securities
6,399(8,391)
57,794
Deferred gain (loss) on hedges:
Adjustments arising during the year(807)
58
(7,288)
Reclassification adjustments(200)
Before income tax effect
(807)
(141)
(7,288)
Income tax effect
43
2,212
245
Deferred gain (loss) on hedges(98)(5,066)(561)
Remeasurements of defined benefit plans:
Adjustments arising during the year
413
856
3,730
Reclassification adjustments
113
(270)
(30)
Before income tax effect
383
970
3,459
Income tax effect
(62)
(307)
(559)
Remeasurements of defined benefit plans
662
2,899
321
Total other comprehensive income (loss)
¥
6,159
¥
(7,826)$55,626
19. Cash and Cash Equivalents
A reconciliation of cash and due from banks in the accompanying consolidated balance sheets to cash and cash
equivalents in the accompanying consolidated statements of cash flows at March 31, 2021 and 2020 is summarized
as follows:

Millions of yen
2021
Cash and due from banks
Due from banks (excluding due from BoJ)
Cash and cash equivalents¥¥

612,331(3,029)609,30127

2020¥ 148,358(4,287)¥ 144,070

Thousands of
U.S. dollars
2021$5,530,446(27,357)$5,503,079

20. Income Taxes
The tax effect of temporary differences which gave rise to significant portions of the deferred tax assets andliabilities at March 31, 2021 and 2020 consisted of the following:

Millions of yen
2020

2021
Deferred tax assets:
Allowance for loan losses
Defined benefit liability
Tax loss carryforwards
Depreciation
Write-down of securities
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets¥

Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Thousands of
U.S. dollars

7,374
1,727
1,078
663
138
1,452
12,435(5,945)¥ 6,490

6,875
1,726
1,499
669
107
1,257
12,136(5,726)¥ 6,409

$

¥

¥

$

¥

(7,974)(646)(8,621)(2,130)

¥

2021

¥

(5,192)(638)(5,830)579$$

66,60015,597
9,736
5,988
1,246
13,114112,310(53,694)
58,616(72,019)(5,834)(77,863)(19,237)

Reconciliation of the statutory tax rate to the effective tax rate for the years ended March 31, 2021 and 2020 isshown as below.
2021
2020
Normal effective statutory tax rate
30.58%
30.57%
Non-deductible expenses such as entertainment expenses
0.36
1.08
Non-taxable income such as dividend income(7.26)(26.90)Per capita inhabitant tax
0.95
2.11
Valuation allowance
4.59
20.16
Consolidation adjustments
6.36
17.20
2.03
2.15
Other
37.61%
46.37%
Actual effective tax rate28

21. Segment Information(1) Segment information
The Group has a single segment of banking business. Accordingly, segment information by reportable segment
is omitted.
(2) Related information
Information by service

March 31, 2021
Ordinary income from external customers

March 31, 2020
Ordinary income from external customers

March 31, 2021
Ordinary income from external customers

Lending¥ 19,534

Millions of yen
Securities
investment
Other¥ 20,526¥ 13,130¥

Lending¥ 20,069

Millions of yen
Securities
investment
Other¥ 18,462¥ 12,331

Total¥ 50,864

Lending$ 176,427

Thousands of U.S. dollars
Securities
investment
Other$ 185,386$ 118,587

Total$ 480,410

Total
53,191

Note: “Ordinary income” is defined as income less certain special income included in the accompanying consolidated statements
of income.

Geographic information(i) Ordinary income
Information about ordinary income by geographic area for the years ended March 31, 2021 and 2020
is omitted as ordinary income from external customers in Japan was more than 90% of ordinary incomein the consolidated statements of income.
(ii) Tangible fixed assets
Information about tangible fixed assets by geographic area as of March 31, 2021 and 2020 is omitted
as tangible fixed assets in Japan was more than 90% of “Tangible fixed assets” in the consolidatedbalance sheets.
Information by major customer
Information by major customer for the years ended March 31, 2021 and 2020 is omitted since there was no
single external customer accounting for 10% or more of the consolidated ordinary income.

29

22. Related Party Transactions
Transactions between the Company’s consolidated subsidiaries and their directors and major shareholders as ofMarch 31, 2021 and 2020 and for the years then ended are as follows:
2021
Type

Name

Address

Capital(Millions ofyen)

Relative ofthe director

Yuki
Fukuoka
Note (1)--Doctor-Lending¥88 million($794
thousand)

Loans andbills
discounted

Balance at
March 31,2021
¥121 million($1,092
thousand)Akita Kubota
Co., Ltd.
Note (2)

Akita city,
Akita Pref.

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥223 million($2,014thousand)

Loans andbills
discounted¥196 million($1,770
thousand)Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥950 million($8,580thousand)

Loans andbills
discounted¥1,080
million($9,754thousand)Akita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥526 million($4,750thousand)

Loans andbills
discounted¥540 million($4,877
thousand)Lending¥1,164
million($10,513
thousand)

Loans andbills
discounted¥1,139million($10,287
thousand)Guarantee forliabilities¥225 million($2,032
thousand)Customers’
liabilities for
acceptancesandguarantees¥259 million($2,339thousand)Companies,
etc. whose
voting rights
are owned by
the director(including thedirector oftheconsolidated
subsidiaries)
or his/her
relatives

Netz Toyota
Akita Co.,
Ltd.
Note (3)Toyota Renta
Lease Akita
Co., Ltd.
Note (3)OkuyamaBoring Co.,
Ltd.
Note (4)

Yokote city,
Akita Pref.

¥40

Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Construction

-

2020
Type

Companies,
etc. whose
voting rights
are owned by
the director(including thedirector oftheconsolidated
subsidiaries)
or his/her
relatives

Notes:

Name

Address

Capital(Millions ofyen)

Akita Kubota
Co., Ltd.
Note (2)

Akita city,
Akita Pref.

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥123 million

Loans andbills
discounted¥236 million

Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥935 million

Loans andbills
discounted¥961 million

Akita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥500 million

Loans andbills
discounted¥500 million

Lending¥1,040
millionLoans andbills
discounted¥1,198million¥139 million

Customers’
liabilities for
acceptancesandguarantees¥169 million

Netz Toyota
Akita Co.,
Ltd.
Note (3)Toyota Renta
Lease Akita
Co., Ltd.
Note (3)OkuyamaBoring Co.,
Ltd.
Note (4)

Yokote city,
Akita Pref.

¥40

Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Balance at
March 31,2020

Construction

Guarantee forliabilities(1) Yuki Fukuoka is a relative of Eikichi Saito who is a director of Hokuto which is a significant consolidated subsidiary of the Company.
(2) Akita Kubota Co., Ltd. is a subsidiary of Ishii Shoji Co., Ltd. Tadanari Ishii, who is a director of Hokuto which is a significant consolidated subsidiary of theCompany, and his relatives own the majority of voting rights of Ishii Shoji Co., Ltd.
(3) Tadanari Ishii, who is a director of Hokuto which is a significant consolidated subsidiary of the Company, his relatives and Ishii Shoji Co., Ltd. own the majorityof voting rights of Netz Toyota Akita Co., Ltd. Toyota Renta Lease Akita Co., Ltd. is a subsidiary of Netz Toyota Akita Co., Ltd.
(4) Kazuhiko Okuyama, a director and audit & supervisory board member of Hokuto which is a significant consolidated subsidiary of the Company, and his relatives
own the majority of voting rights of Okuyama Boring Co., Ltd.
(5) The transactions are with Hokuto, which is a significant consolidated subsidiary of the Company, and the trading conditions and policies are the same as those of
the transactions with general parties.
(6) The transaction amount is shown by the average balance.

There is no other related party transaction to be disclosed for the years ended March 31, 2021 and 2020.

30

23. Financial Instruments and Related Disclosures(1) Status of Financial Instruments(i) Policy on financial instruments
The Group is engaged in financial information services centering on banking business such as deposit-taking andlending services for domestic corporate and individual customers and management of securities such as debt andequity securities and investment trusts. The Group accepts risk as long as it remains financially healthy and intends
to improve its earning power in order to continue to conduct these services.
The Group holds financial assets and liabilities exposed to the fluctuation risk of interest rates. Accordingly, theGroup conducts asset and liability management (ALM) and enters into derivative transactions if necessary in order
to avoid adverse effect by the interest-rate fluctuation.
(ii) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans and bills discounted to domestic corporate and individual
customers, which are exposed to credit risk arising from customers’ nonperformance of contractual obligations. In
addition, securities, principally consisting of equity securities, debt securities, investment trusts and investment in
partnerships, are held for the purposes of net investment and strategic investment. These financial assets are
exposed to credit risk of issuers and fluctuation risk of interest rates and market prices.
Major financial liabilities, consisting of deposits and negotiable certificates of deposit, are principally deposits
accepted from domestic corporate and individual customers. They require attentions to liquidity risk arising fromconcentrated cancellation of deposits, but most of those deposits are from individual customers and accordingly,
the risk is dispersed to small accounts. The liquidity risk is also controlled by limiting the ratio of large deposit
accounts to a certain level.
Derivative contracts which the Group enters into consist of interest rate swaps employed as part of ALM and futuresof debt securities held as available-for-sale securities, options, etc. These derivatives are not entered into for
speculative purpose but mainly for hedging purposes.
(iii) Risk management system for financial instruments
The Group has established the “Basic Policy on Risk Management” and various risk control rules and a system toconduct the risk management as follows:a. Credit risk management:
In accordance with the “Credit Policy” and “Credit Risk Management Rule,” for loans and bills discounted,
a credit control system has been established and maintained, including credit review by individual contract,credit limit control, credit information control, internal ratings, retrospective control including selfassessment, establishment of guaranty and security, countermeasures for problem accounts, credit
concentration risk management, etc. These credit controls are performed by the loan departments in addition
to each operating office, being reported to and discussed at the management meetings on a regular basis.
Furthermore, the status of credit control is examined by the internal audit department.
b. Market risk management:
For market transactions, front office, middle office and back office, each of which is independent of others,
are mutually controlled.
Interest rate risk management:
The Group manages the fluctuation risk of interest rates by ALM. In accordance with the “Market Risk
Management Rule,” the Group measures the exposure of interest rate risk, monitoring by gap analysis andsensitivity analysis on a regular basis, and the monitoring results are reported to the management meetings
on a regular basis. In addition, the future countermeasures based on the analysis of current status are
discussed.
Foreign exchange risk management:
The Group manages foreign exchange risk, in accordance with the “Market Risk Management Rule,” byestablishing total positions and loss limits or entering into hedging activities.
Price fluctuation risk management:
The Group manages price fluctuation risk in accordance with “Market Risk Management Rule.” Risk
31

exposures to securities are monitored for usage against the pre-set limit by the Risk Control Department ona daily basis based on Value at Risk (VaR) and other risk indexes such as 10BVP and reported to the
management meetings.
Derivative transactions:With respect to derivative transactions, the Group segregates the duties of the departments responsible for
execution of transactions, verification of hedge effectiveness, and operation administration and conducts
transactions under the management and control based on the handling rules.
Quantitative information about market risk:
Financial instruments not for trading purposes
The Group identifies and manages the market risk volume using VaR on a daily basis (monthly basis withregard to interest rate risk volume of deposits, loans and bills discounted, etc.), since the Group holds manyfinancial instruments whose fair values fluctuate on a daily basis and such fluctuation amount is greater thanother risk categories. The market risk volume of the Group is controlled as the total amounts of market riskvolume of Shonai and Hokuto which are the subsidiaries.
Market risk volume of the banking business of the Group at March 31, 2021 and 2020 and for the years thenended was as follows:
Billions of yen
2021
As of theAverage
Maximum
Minimum
fiscal year-end
Due from banks, loans and bills
discounted and others
¥
0.0
¥
0.0
¥ 0.0
¥ 0.0
Securities:
51.6
60.3
31.5
31.5
Debt securities
12.4
16.6
6.1
6.1
Equity securities
6.6
7.8
5.0
5.6
Other
39.4
47.2
24.3
24.3
Billions of yen
2020

Due from banks, loans and bills
discounted and others
Securities:
Debt securities
Equity securities
Other

Average

Maximum

Minimum

As of thefiscal year-end

¥

¥

¥

¥

0.0
34.6
7.2
7.1
20.3

0.0
64.6
12.1
7.1
45.5

0.0
29.2
5.0
6.1
18.1

0.0
59.9
12.2
5.6
42.0

Millions of U.S. dollars
2021

Due from banks, loans and bills
discounted and others
Securities:
Debt securities
Equity securities
Other

Average

Maximum

Minimum

$

$

$

0.0
466.0
111.9
59.6
355.8

0.0
544.6
149.9
70.4
426.3

0.0
284.5
55.0
45.1
219.4

As of thefiscal year-end
$ 0.0
284.5
55.0
50.5
219.4

(*1) VaR is measured in principle using the variance/co-variance method.
(*2) Holding period is assumed to be 60 business days for higher market liquidity financial instruments such as Japanese32government bonds, municipal bonds, listed equity securities (excluding strategic investments), etc., 250 business days forcross-holding shares of listed equity securities, and 125 or 250 business days for less market liquidity financial instruments,
due from banks, loans and bills discounted, etc.
(*3) 99 % is used for confidence interval, and 250 business days are used as extraction period of market data to measure
volatility.
(*4) The total amount does not agree with the sum of the individual amounts since correlation between the risk factors of debt
securities and equity securities is taken into account.
(*5) The current interest rate risk volume of deposits, loans and bills discounted, etc., represents decreasing interest rate risk,
not increasing interest rate risk. The increasing interest rate risk is managed as internal control. Therefore, the interest raterisk volume of due from banks, loans and bills discounted and others is considered to be zero.

Within the Group, each banking subsidiary implements backtests comparing the VaR of one day holding
period measured by the model and actual change in losses, in order to verify the accuracy of the measurement
model of the market risk volume concerning the VaR of securities.
The measurement model currently in use is deemed to capture the market risk on the reasonably accurate basis.
However, the Group will take conservative actions as necessary when VaR is expected to increase due to anincrease in volatility.
In implementing the risk management using the VaR, the following particular points are paid attention to:(a) Quantitative information such as VaR of market risk is determined based on the statistical assumptions
and may result in a different value depending on the different assumptions and calculation methods.
(b) Quantitative information such as VaR of market risk is a statistical value calculated based on theassumptions and not intended to estimate the amount of maximum losses. Profit or loss is assumed to
exceed VaR on the frequency corresponding to the confidence interval.
(c) Future market conditions may differ significantly from the past.
Financial instruments for trading purposes are excluded from the scope of disclosure, since the outstandingbalance at any banking subsidiary is very insignificant and the materiality of effect on the management isquite limited.
c. Liquidity risk management:
The Group sets limits on liquidity risk management and reports to the management meetings, monitoring theresults on a daily basis in accordance with the “Liquidity Risk Management Rule.”(iv) Supplementary explanation about fair value of financial instruments
The fair value of financial instruments includes, in addition to the value determined based on the market price, avaluation calculated on a reasonable basis, such as theoretical price if no market price is available. Since certain
assumptions are used in calculating the value, the result of such calculation may vary if different assumptions are
used.

33

(2) Fair value of financial instruments
The carrying amount, the fair value and their difference as of March 31, 2021 and 2020 were as follows. Note thatunlisted equity securities for which fair value is extremely difficult to determine are not included in the following
table (See Note 2 below).
Carrying amountMillions of yen
Fair value¥ 612,331
3,761¥ 612,331
3,761

553
47,358553
47,358-725,396-

Foreign exchange assets (*1)
Total assets

725,396
1,731,224(13,130)
1,718,094
1,603¥ 3,109,099

1,747,376
1,603¥ 3,138,380

29,281
29,281

Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities¥ 2,593,356
57,15275,999323,700
16¥ 3,050,225¥ 2,593,387
57,15275,999323,700
16¥ 3,050,256

¥

¥

¥

¥

March 31, 2021
Cash and due from banks
Monetary claims bought (*1)
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Total derivative transactions¥

34(2,726)(208)(2,934)¥(2,726)(208)(2,934)

Difference

¥

¥
¥

¥

-

30
30
-

Carrying amountMillions of yen
Fair value¥ 148,358
4,126¥ 148,358
4,126

230
20,996230
20,996-735,177-

Foreign exchange assets (*1)
Total assets

735,177
1,697,947(12,244)
1,685,702
1,837¥ 2,596,428

1,716,212
1,837¥ 2,626,937

30,50930,509Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities¥ 2,390,297
74,03911,427
66,106
13,9009¥ 2,555,779¥ 2,390,331
74,04011,427
66,106
13,9009¥ 2,555,814

¥

¥

¥

¥

March 31, 2020
Cash and due from banks
Monetary claims bought (*1)
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Total derivative transactions

¥

35

(260)
290
29

¥

(260)
290
29

Difference

¥

¥
¥

¥

-

33
0
34
-

March 31, 2021
Cash and due from banks
Monetary claims bought (*1)
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)

Thousands of U.S. dollars
Carrying amount
Fair value
Difference$ 5,530,446
33,968$ 5,530,446
33,968

4,994
427,727

4,994
427,727-

6,551,625-

Foreign exchange assets (*1)
Total assets

6,551,625
15,636,054(118,587)
15,517,467
14,477$28,080,735

15,781,936
14,477$28,345,195

264,459
264,459

Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities$23,422,651
516,184
686,4072,923,591
144$27,548,997$23,422,931
516,184
686,4072,923,591
144$27,549,277

$

$

$

$

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Total derivative transactions$(24,620)(1,878)(26,499)$(24,620)(1,878)(26,499)

$

$
$

$

-

270
270
-

(*1) General and specific allowances for loan losses corresponding to loans and bills discounted are deducted. With respect toallowance for loan losses related to monetary claims bought and foreign exchange assets, carrying amount is shown, net ofallowance, since the amount is insignificant.
(*2) Assets and liabilities arising from derivative transactions are presented in net amounts, and net liabilities are shown in parenthesis.

(Note 1) Calculation method for the fair value of financial instruments
Assets:Cash and due from banks
For due from banks without maturity, the carrying amount is presented as the fair value since the fair value
approximates the carrying amount. For due from banks with maturity, the carrying amount is presented as the fairvalue since the fair value approximates the carrying amount because the remaining maturity is mostly short (within
one year).
Monetary claims bought
The carrying amount is presented as the fair value since the fair value approximates the carrying amount because
the remaining term is short (within one year).
Trading account securities
For securities such as debt securities held for dealing purpose, the fair value is determined using the price at theexchange or the price presented by the financial institutions with which they are transacted.
Money held in trust
For securities that are invested as part of trust assets in an independently managed money trust with the primary
purpose of managing securities, the fair value of equity securities is determined using the price at the exchange andthe fair value of debt securities is determined using the price at the exchange or the price presented by the financial
36

institutions with which they are transacted.
Securities
The fair value of equity securities is determined using the price at the exchange (average market price during one
month before the fiscal year-end) and the fair value of debt securities is determined using the price at the exchangeor the price presented by the financial institutions with which they are transacted. The fair value of investment trust
is determined based on the published standard quotation price.
For privately placed bonds, the fair value is determined by discounting the future cash flows of bonds categorizedbased on the internal ratings and terms using credit risk spread by credit rating and market interest rate.
Loans and bills discounted
For the loans and bills discounted with short remaining terms (within one year), the carrying amount is presented
as the fair value since the fair value approximates the carrying amount. For the loans and bills discounted without
predetermined maturity because of characteristics such as the loans and bills discounted being limited within theamount of the pledged assets, the carrying amount is presented as the fair value since the fair value is considered
to approximate the carrying amount considering the expected repayment term and interest rate conditions.
The fair value of the loans and bills discounted with fixed interest rates categorized by type of loans and bills
discounted, internal rating and term is calculated by discounting the total of principal and interest using credit risk
spread by credit rating and market interest rate. The fair value of the loans and bills discounted with floating interest
rates, categorized by internal rating and term, is calculated by discounting the total of principal and interest,
basically until the interest maturity date, using credit risk spread by credit rating and market interest rate. Credit
risk spread is calculated by remaining term based on accumulated default rate by credit rating and loss rate byborrower classification.
For loans and bills discounted due from bankrupt, virtually bankrupt or potentially bankrupt borrowers, loan losses
are estimated based on factors such as the expected amount to be collected from collaterals and guarantees. Since
the fair value of these items approximates the carrying amount net of the recoded amount of allowance for loan
losses, such carrying amount is presented as the fair value.
Foreign exchange assets
Foreign exchange assets consist of foreign currency deposits with other banks (due from other foreign banks) andexport bills and traveler’s checks, etc. (foreign bills bought). For these items, the carrying amount is presented as
the fair value, since the fair value approximates the carrying amount because they are deposit without maturity or
have short-term remaining terms (within one year).
Liabilities:
Deposits and Negotiable certificates of deposit
For demand deposits, the amount payable on demand as of the balance sheet date (i.e., the carrying amount) is
considered to be the fair value. The fair value of time deposit is determined using the discounted present value of
future cash flows, grouping by certain maturity length. The discount rate used is the interest rate that would beapplied to newly accepted deposits. For deposits whose remaining term is short (within one year), the carrying
amount is presented as the fair value since the fair value approximates the carrying amount.
Call money and bills sold and Payables under securities lending transactions
The carrying amount is presented as the fair value since the fair value approximates the carrying amount because
the remaining term is short (within one year).
Borrowed money
For borrowed money whose remaining term is short (within one year), the carrying amount is presented as the fairvalue since the fair value approximates the carrying amount.
For subordinated borrowed money whose remaining term is more than one year and which is subject to call option
giving a right to redeem before maturity and step-up clause, the fair value is calculated by discounting the estimated37

cash flows after taking into consideration the possibility of redemption before maturity by the interest rate
corresponding to the estimated period after taking into consideration credit risk of the consolidated subsidiaries.
Foreign exchange liabilities
The carrying amount is presented as the fair value, since the fair value of these liabilities approximates the carrying
amount because they are settled within a short period of time.
Derivative transactions:
Please see Note “24. Financial Instruments and Related Disclosures.”(Note 2) Financial instruments whose fair value is extremely difficult to determine are as follows. These financial
instruments are not included in “Securities” under “Assets” of the fair value information of financial instruments.
Thousands ofMillions of yen
U.S. dollars
2021
2020
2021
Unlisted equity securities (*1) (*2)
¥ 1,580¥ 1,691$ 14,270
Investment in partnerships (*3)
2,268
2,382
20,484Total¥ 4,074$ 34,763¥ 3,849(*1) The fair value of unlisted equity securities is not disclosed since no market price is available and it is extremely difficult todetermine the fair value.
(*2) The Company recognized write-down of unlisted equity securities in an amount of ¥110 million ($993 thousand) and ¥3 million
for the years ended March 31, 2021 and 2020, respectively.
(*3) The fair value of investment in partnerships whose assets consist of securities such as unlisted equity securities whose fair value
is extremely difficult to determine is not disclosed.

(Note 3) Repayment schedule of monetary receivables and securities with contractual maturities subsequent toMarch 31, 2021
Millions of yen

March 31, 2021

Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due from banks (*1)

¥ 579,914

¥

¥

¥

3,775

-

61,63697,451

Japanese government bonds

13,00022,500

Municipal bonds

19,81130,940

Monetary claims bought
Securities:
Available-for-sale securities withmaturity:-

77,160-Due after sevenyears throughten years¥-

Due after ten
years
¥

-

88,745145,201

177,665

6,000

1,000

33,00040,00039,94533,84944,35251,058

Corporate bonds

5,191

12,551

16,617

8,034

3,200

71,338

Other

23,63331,45914,59845,86264,64915,269Loans and bills discounted (*2)
Total

312,789

305,067

271,560

178,057

208,261

372,476¥ 958,116¥ 402,519¥ 348,720¥ 266,803¥ 353,462¥ 550,14238

Thousands of U.S. dollars

March 31, 2021

Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due from banks (*1)

$ 5,237,662

$

$

$

Monetary claims bought--

Due after sevenyears throughten years-$-

Due after ten
years
$

-

34,095

-

-

-

-

-

556,683

880,157

696,893

801,526

1,311,425

1,604,633

Securities:
Available-for-sale securities withmaturity:
Japanese government bonds

117,413203,215

54,1909,031

298,049

361,271

Municipal bonds

178,928

279,443

360,774

305,717400,578

461,145

Corporate bonds

46,884

113,358

150,081

72,561

28,901

644,309

Other

213,448

284,131

131,846414,216

583,896

137,906

Loans and bills discounted (*2)

2,825,045

2,755,301

2,452,673

1,608,173

1,880,970

3,364,125

Total$ 8,653,504$ 3,635,467$ 3,149,566$ 2,409,709$ 3,192,395$ 4,968,768(*1) Due from banks without maturity is shown under “Due in one year or less.”(*2) Loans and bills discounted as of March 31, 2021 do not include ¥27,335 million ($246,884 thousand) of receivables such as those due frombankrupt, virtually bankrupt or potentially bankrupt borrowers since these are not certain when they can be collected or redeemed, and ¥55,675
million ($502,845 thousand) of receivables without maturity.

(Note 4) Repayment schedule of bonds payable, borrowed money and other interest bearing liabilities subsequent
to March 31, 2021
Millions of yen

March 31, 2021

Due in one
year or lessDue after one
year throughthree years

Deposits (*)¥ 2,294,130¥

Negotiable certificates of deposit
Payables under securities lendingtransactions
Borrowed money
Total

95,905Due after
three years
through fiveyears¥

Due after
seven years
through ten
years

Due after five
years throughseven years

11,876¥-¥-

Due after ten
years
¥

-

57,152

-

-

-

-

-

75,999

-

-

-

-

-

312,800¥ 2,740,081

10,900¥106,805¥

11,876

¥

-

¥

-

¥

-

Thousands of U.S. dollars

March 31, 2021

Due in one
year or lessDue after one
year throughthree years

Deposits (*)$20,720,104$

Negotiable certificates of deposit
Payables under securities lendingtransactions
Borrowed money
Total

Due after
three years
through fiveyears

Due after five
years throughseven years

Due after
seven years
through ten
years

Due after ten
years

$

$

$

866,194$ 107,261

516,184

-

-

-

-

-

686,407

-

-

-

-

-

2,825,144

98,446----964,640$ 107,261$24,747,841$(*) Demand deposits are shown under “Due in one year or less” of deposits.

39

$

-

-

$

-

-

$

-

-

24. Derivatives
Derivative transactions to which hedge accounting is not appliedWith respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fairvalue and related valuation gain or loss by transaction type at the balance sheet date and calculation method of thefair value were as follows. Note that contract amounts do not represent the market risk exposure associated withthe derivative transactions.
Interest rate related derivatives
Interest rate related derivatives at March 31, 2021 were as follows:
Millions of yen
Contract amount
Total

March 31, 2021

Over one year

Fair value

Valuation gain
(loss)¥¥¥¥OTC transactions:Interest rate swaps:
Receive floating / Pay fix

¥

3,000

¥ 3,000

Total

14
14

14
14

Thousands of U.S. dollars
Contract amountMarch 31, 2021

Total

Over one year

$ 27,095$ 27,095

Fair value

Valuation gain
(loss)$$$$OTC transactions:Interest rate swaps:
Receive floating / Pay fix
Total

126
126

126
126

Notes: (1) Above transactions are stated at the fair value, and the related valuation gain (loss) are reported in the consolidated
statements of income.
(2) The fair value is calculated using the discounted present value.

There was no interest rate related derivative at March 31, 2020.
Currency related derivatives
Currency related derivatives at March 31, 2021 and 2020 were as follows:
Millions of yen
Contract amountMarch 31, 2021
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Total

Over one year

¥ 84,456
3,773

¥

-

Fair value

Valuation gain
(loss)¥ (2,754)14¥ (2,740)¥ (2,754)14¥ (2,740)

Millions of yen
Contract amountMarch 31, 2020
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Total

Over one year

¥ 53,423
10,905¥-

Fair value

¥
¥

40

(239)
(20)
(260)

Valuation gain
(loss)

¥
¥

(239)
(20)
(260)

Thousands of U.S. dollars
Contract amount
Total

March 31, 2021
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Over one year

$ 762,789
34,076$-

Fair value

Valuation gain
(loss)$ (24,873)
126$ (24,747)$ (24,873)
126$ (24,747)

Notes: (1) Above transactions are stated at the fair value, and the related valuation gain (loss) are reported in the consolidated
statements of income.
(2) The fair value is calculated using the discounted present value.

Debt securities related derivatives
There was no debt securities related derivative at March 31, 2021. Debt securities related derivatives at March 31,
2020 were as follows:
Millions of yen
Contract amount
Total

March 31, 2020
Exchange-traded transactions:
Bond futures contracts:
Sold
Bought
Total¥

Over one year

457
-

¥

Fair value-¥

Valuation gain
(loss)

-

¥

¥

-

¥

Notes: (1) Above transactions are stated at the fair value, and the related valuation gain (loss) are reported in the consolidated
statements of income.
(2) The fair value is the closing price on Osaka Exchange and other exchanges.

Derivative transactions to which hedge accounting is appliedWith respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fairvalue at the balance sheet date by transaction type and hedge accounting method and calculation method of the fairvalue were as follows. Note that contract amounts do not represent the market risk exposure associated with thederivative transactions.
Equity securities related derivatives
Equity securities related derivatives at March 31, 2021 and 2020 were as follows:
March 31, 2021

Millions of yen
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

¥

Total

Over one year

1,507
-

¥

-

Fair value

¥
¥

Total

41

(208)
(208)

March 31, 2020

Millions of yen
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

¥

Total

Over one year

1,228
-

¥

Fair value

-

¥

290
290

¥

Total
March 31, 2021

Thousands of U.S. dollars
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

$

Total

Over one year

13,610-$Fair value

-

$
$

Total

(1,878)(1,878)Notes: (1) In principle, the deferred hedge accounting is applied in accordance with the JICPA Industry Committee Practical
Guideline No. 24 (October 8, 2020).
(2) The fair value is the closing price on Osaka Exchange and other exchanges for exchange-traded transactions. For OTC
transactions, the fair value is measured by the discounted present value, prices calculated by option pricing models or othermethod, or prices provided by counterparty financial institutions.

25. Amounts per Share
Amounts per share at March 31, 2021 and 2020 and for the years then ended are summarized as follows:Yen
Net assets
Net income:
Basic
Diluted¥2021
604.90¥2020
559.34

17.64
13.28

$

6.79
4.58

U.S. dollars
2021
5.46330.15930.1199Net income per share—basic and net income per share—diluted for the years ended March 31, 2021 and 2020 were
calculated based on the following information:
Thousands of
U.S. dollars

Millions of yen
2021
Net income attributable to owners of parent —basic:
Amounts not attributed to common stock shareholders
O/W, dividends for preferred stock based on the resolution at theBoard of Directors’ meeting
O/W, interim dividends for preferred stock
Net income attributable to common stock owners of parent
Average outstanding number of shares of common stock(Unit: thousand shares)
Net income attributable to owners of parent —diluted:
Adjustments to net income attributable to owners of parent
O/W, dividends for preferred stock class B
Increase in number of shares of common stock (Unit: thousand shares)
O/W, preferred stock class B

42

¥

¥

3,314
114

2020
¥
1,346
113

2021
$
29,931
1,029

57
57
3,200

56
56
1,233

514
514
28,901¥

181,390¥

114
114
68,02768,027$

181,391¥

113
113
112,359
112,359

$

1,029
1,029

Net assets per share at March 31, 2021 and 2020 were calculated based on the following information:
Millions of yen
Total net assets
Amounts deducted from total net assets:
O/W, payment for preferred stock
O/W, dividends for preferred stock
O/W, non-controlling interests
Net assets attributable to common stock as of March 31, 2021 and2020
Number of shares of common stock as of March 31, 2021 and 2020
used to calculate net assets per share (Unit: thousand shares)

Thousands of
U.S. dollars

2021¥ 120,073
10,35010,00057
293

2020¥ 111,800
10,34010,00056
283

2021$1,084,474
93,47990,317514
2,646¥ 109,722¥ 101,460$ 990,986

181,389

181,390

26. Subsequent Events
Stock consolidation
At the Board of Directors’ meeting held on May 14, 2021, it was resolved to propose the stock consolidation(hereinafter the “Stock Consolidation”) to the 12th General Shareholders’ meeting (hereinafter the “General
Shareholders’ Meeting), the class meeting of common stock shareholders and the class meeting of class-B preferredstock shareholders (hereinafter, collectively with the General Shareholders’ Meeting, the “Meetings ofShareholders”) to be held on June 24, 2021, and the proposal was approved at the Meetings of Shareholders.
(1) Purpose of the Stock Consolidation
The current share price level of the Company’s common stock is far below the range of “between ¥50,000 and¥500,000,” which is the desirable investment unit level under the securities listing regulations of the Tokyo
Stock Exchange. In addition, the stock price volatility per yen, which is the minimum unit of stock pricevolatility, is also relatively large. And it may make it easy to cause drastic changes in the stock price as a
speculative target. In order to improve the situation, the Company will implement the Stock Consolidation,
whereby 10 shares will be consolidated to one share.
(2) Outline of the Stock Consolidation(i) Class of stock to be consolidated
Common stock
Preferred stock class B(ii) Ratio of consolidation
One share per 10 shares(Based on the number of shares held by shareholders listed or recorded in the final shareholder registry as
of September 30, 2021)(iii) Effective date
October 1, 2021(iv) Number of shares to be decreased due to the consolidationa. Common stock
Total number of common stock issued and outstanding before the consolidation
181,421,226 shares(as of March 31, 2021)
Number of shares to be decreased due to the consolidation
163,279,104 shares
Total number of common stock issued and outstanding after the consolidation
18,142,122 shares(Note) “Number of shares to be decreased due to the consolidation” and “Total number of common stock
issued and outstanding after the consolidation” above are the theoretical figures calculated by multiplying
the total number of common stock issued and outstanding before the consolidation by the ration of theStock Consolidation.
b. Preferred stock class B
Total number of class-B preferred stock issued and outstanding before the
25,000,000 sharesconsolidation (as of March 31, 2021)
Number of shares to be decreased due to the consolidation
22,500,000 shares
Total number of class-B preferred stock issued and outstanding after the
2,500,000 sharesconsolidation(Note) “Number of shares to be decreased due to the consolidation” and “Total number of class-B preferredstock issued and outstanding after the consolidation” above are the theoretical figures calculated bymultiplying the total number of class-B preferred stock issued and outstanding before the consolidation by43

the ration of the Stock Consolidation.
(3) Impact on the information on amounts per share
Information on amounts per share if the Stock Consolidation was implemented at April 1, 2019 is as follows:
Yen
U.S. dollars
2021
2020
2021
Net assets¥
6,049.00¥
5,593.46$
54.6333
Net income:Basic
176.4167.98
1.5932132.8945.84
1.2002
Diluted44

27. Non-Consolidated Financial Statements of Shonai Bank and Hokuto Bank as of March 31, 2021 and 2020and for the Years Then Ended
The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2021 and 2020
Millions of yen
2021
2020
Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Prepaid pension cost
Customers’ liabilities for acceptances and guarantees
Other assets
Allowance for loan losses¥

Total assets

348,693
1,583
417
21,253397,258
870,494
1,050¥

62,406
1,783
169
14,987400,924859,252
1,221

Thousands of
U.S. dollars
2021$

3,149,322
14,297
3,766
191,952
3,587,951
7,862,120
9,483

8,304
5,058
16
237
992

9,195
5,840
21
243
1,230

75,00045,682
144
2,140
8,959

932
65
33
5,926
17,363(6,889)

1,083
67
7,609
15,788(5,823)

8,417
587
298
53,522
156,819(62,220)¥ 1,672,793¥ 1,376,002$ 15,108,318(Continued)

45

The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2021 and 2020
Millions of yen
2021
2020
Liabilities:
Deposits
Negotiable certificates of deposit
Call money
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Provision for bonuses for directors and other officers
Provision for retirement benefits
Provision for reimbursement of deposits
Provision for contingent loss
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Other liabilities

Thousands of
U.S. dollars
2021¥ 1,262,562
45,84568,658209,000
7
10
146
60
302
3,289
454
5,926
8,805

¥ 1,163,328
58,75911,427
46,235
13,900
2
1,459
97
278
1,912
480
7,609
7,185

$ 11,403,197
414,062
620,104
1,887,644
63
90
1,318
541
2,727
29,705
4,100
53,522
79,524

1,605,068

1,312,675

14,496,640

8,500
20,30825,424
54,232
12,492
1,000
13,4928,500
20,30824,34753,156
9,116
1,054
10,17076,770183,417229,624
489,812
112,825
9,031
121,856

Total net assets

67,72563,327

611,678

Total liabilities and net assets¥ 1,672,793¥ 1,376,002$ 15,108,318

Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments(Concluded)
46

The Shonai Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2021 and 2020
Millions of yen
2021
2020
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income

Thousands of
U.S. dollars
2021¥ 10,098
8,795
93
3,886
1,944
2,393

¥ 10,614
5,375
19
3,749
2,759
1,472

27,211

23,990245,764

249
6
40
0
48
2,419
4,957
12,993
3,673

287
12
232
0
(1)
2,410
3,580
13,657
2,861

2,248
54
361
0
433
21,84744,770117,350
33,173

Total expenses

24,38823,042

220,267

Income before income taxes

2,822

947

25,487

Income taxes:
Current
Deferred

1,363
(107)

153
392

12,310
(966)

1,256

546

11,343

Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses

Total income taxes
Net income

¥

47

1,566

¥

401

$

$

91,20379,434839
35,097
17,557
21,61314,143

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2021 and 2020

Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Other assets
Allowance for loan losses

Millions of yen
2021
2020

Thousands of
U.S. dollars
2021

262,658
973
135
26,105331,887
874,866553

85,437
1,015
61
6,008
338,251
852,163616$ 2,372,272
8,787
1,219
235,774
2,997,534
7,901,607
4,994

4,842
6,394
23
697

4,992
7,024
29
9
693

43,731
57,749
207
6,295

1,125
62
428
882
13,49235,893(4,840)

959
62
418
2,162
13,98338,200(4,727)

10,160
559
3,865
7,966
121,856
324,178(43,713)¥ 1,556,182¥ 1,347,364$ 14,055,111¥

Total assets¥(Continued)
48

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2021 and 2020
Millions of yen
2021
2020
Liabilities:
Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Provision for bonuses for directors and other officers
Provision for retirement benefits
Provision for reimbursement of deposits
Provision for contingent loss
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Other liabilities

Thousands of
U.S. dollars
2021¥ 1,336,786
11,307
7,340
114,700
9
10
236
179
141
914
13,492
12,273¥ 1,231,065
16,28019,871
6
190
297
131
980
13,983
8,712$12,073,572
102,122
66,293
1,035,946
81
90
2,131
1,616
1,273
8,255
121,856
110,847

1,497,391

1,291,517

13,524,123

12,50019,99919,01951,519
5,745
(387)
1,915
7,272

12,50019,99918,38050,880
2,738
173
2,054
4,966

112,897
180,626
171,775
465,308
51,887(3,495)
17,29565,679Total net assets

58,791

55,847

530,988

Total liabilities and net assets¥ 1,556,182¥ 1,347,364$14,055,111

Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Unrealized gain on available-for-sale securities
Deferred gain (loss) on hedges
Revaluation reserve for land
Total valuation and translation adjustments(Concluded)
49

The Hokuto Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2021 and 2020

Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income

Millions of yen
2021
2020

Thousands of
U.S. dollars
2021

¥

$

Total income

9,444
4,163
42
3,890
1,801
2,350

¥

9,591
4,350
8
3,961
3,875
1,270

85,296
37,599379
35,133
16,266
21,224

21,692

23,058

195,917

108
2
11
0
28
1,630
3,466
12,463
2,269

153
6
77
0
1
1,742
4,821
12,938
2,465

975
18
99
0
252
14,721
31,304
112,563
20,493

Total expenses

19,98022,206

180,455

Income before income taxes

1,711

852

15,453

408
144

175
269

3,684
1,300

553

444

4,994

Expenses:
Interest expenses:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses

Income taxes:
Current
Deferred
Total income taxes
Net income

¥

50

1,158

¥

407

$

10,458