2020
ANNUAL REPORTThe Aichi Bank, Ltd.

PROFILE
Aichi Bank is a regional bank whose business base is Aichi Prefecture, the central prefecture of theTokai region, one of the country’s three main industrial areas. Since its establishment in 1910, theBank has worked to meet the diverse needs of customers in the region, based on its corporate missionof contributing to the prosperity of the community via a thorough commitment to sound management
and business growth.
Aichi Bank has a domestic service network comprising 106 branches, and also engages ininternational operations. The Bank’s head office is located in Nagoya, Aichi Prefecture, Japan’s fourthlargest prefecture by population, and an area that combines a beautiful natural environment with a richhistorical and cultural heritage.
As of March 31, 2020, the Bank had total assets of ¥3,246,230 million (US$29,828 million) on aconsolidated basis, and deposits amounting to ¥2,808,769 million (US$25,808 million). Its capital ratio,
calculated according to standards for banks operating only in Japan, stood at 10.38%.

FINANCIAL HIGHLIGHTS

Years ended March 31, 2020 and 2019
Millions of Yen

Consolidated

Thousands of U.S. Dollars

2020

2019

2020

2019

¥53,172¥49,897$488,578$458,485

Total expenses

48,84943,069448,856

395,745

Profit before income taxes

4,322

6,828

39,71362,740

Profit attributable to owners of parent

2,930

4,682

26,92243,021¥2,808,769¥2,783,678$25,808,775$25,578,222

2,063,699

1,804,367

18,962,593

16,579,683

Securities

964,260

1,067,949

8,860,240

9,813,001

Total assets

3,246,230

3,142,287

29,828,448

28,873,352

209,350

229,790

1,923,642

2,111,458

For the year:

Total income

At year-end:
Deposits
Loans and bills discounted

Total net assets

Note: The U.S. dollar amounts represent translation of Japanese yen at the rate of ¥108.83 = US$1.00 on March 31, 2020.

-1-

MESSAGE FROM THE MANAGEMENTBusiness and Financial Conditions

Looking back at Japan’s economy during the year ended March 31, 2020, in thefirst half of the year, while weaknesses were seen in exports and production due tosuch factors as the increasingly severe trade friction between the U.S. and China,
capital investment and personal consumption continued on the increasing trend
and domestic demand stood strong. However, as the novel coronavirus disease(COVID-19) then began to spread globally, the economy quickly cooled overincreasing concerns about stagnating economic activities.
The local economy of our business base, which is centered in Aichi Prefecture,continues to be under strong downward pressure for the time being as restrictions
on the movement of people and goods, a sudden drop in the number of foreign
visitors to Japan and other factors have led to a weakness in exports and personal
Yukinori Ito, President
consumption, and large automobile manufacturers and other manufacturers have
reduced production one after another.
Looking forward, in regard to the economic outlook, there is a large amount of uncertainty over the impact
of COVID-19 on the global economy as we cannot predict when the spread of infections will be brought undercontrol, and there is concern that the continuing spread of infections will cause the economy to fall further despitestatements from the seven major developed countries that they are taking all measures to manage the risks.
In the financial sector, the Bank of Japan has held its March monetary policy meeting ahead of scheduleand decided to continue the current “quantitative and qualitative monetary easing with yield curve control” andincrease its buying of exchange-traded funds, and if necessary, it will carry out addi-tional monetary easing
measures without hesitation.
Although the Nikkei Stock Average reached the ¥24,000 level in January for the first time in about one year andthree months, it temporarily fell below ¥17,000 as the COVID-19 pandemic was showing no signs of being brought
under control in addition to a decline in crude oil prices. Due to rising expectations regarding the subsequent largescale economic measures in the U.S., the year-end closing price was ¥18,917, a year-on-year decrease of ¥2,288.
The Bank has started the three-year “Eleventh Medium-Term Management Plan” from April 2019, underwhich we have set four basic policies of “reinforce sales capabilities & profitability,” “increase produc-tivity,”“reinforce human resources” and “reinforce governance,” and implemented various initiatives toward our goalof being a “bank that contributes to the local community as our customers’ partner.”

Earnings

Our business results on a consolidated basis for the year ended March 31, 2020 are as follows.
Total income increased ¥3,275 million year on year to ¥53,172 million (US$488 million) mainly due toincreases in fees and commissions and gains on sales of bonds and others, despite decreases in interest on
and dividends from securities and others. Total expenses increased ¥5,780 million year on year to ¥48,849
million (US$448 million) mainly due to increases in losses on sales of bonds and others and losses on salesof equity securities despite decreases in interest expense and others. As a result, profit attributable to ownersof parent decreased ¥1,752 million year on year to ¥2,930 million (US$26 million).
By segment, ordinary income of the banking segment increased ¥2,280 million year on year to ¥44,339
million (US$407 million) and its segment profit decreased ¥2,803 million to ¥3,871 million (US$35 million).
Ordinary income of the leasing segment increased ¥672 million year on year to ¥7,842 million (US$72
million), and its segment profit decreased ¥152 million to ¥91 million (US$0 million).

Cash FlowsNet cash used in operating activities increased ¥129,527 million year on year to ¥128,698 million (US$1,182
million). This was mainly attributable to an increase in loans and bills discounted. Net cash provided by investing
activities increased ¥53,266 million to ¥79,123 million (US$727 million). This was mainly attributable to sales
and maturities of securities. Net cash used in financing activities amounted to ¥1,504 million (US$13 million), an
increase in cash used of ¥545 million. This was mainly due to treasury stock acquired and dividends paid.
As a result, cash and cash equivalents at the end of the year amounted to ¥134,849 million (US$1,239
million), a decrease of ¥51,081 million from the previous year-end.

Medium-term Strategy

The Eleventh Medium-Term Management Plan sets our vision as being a “bank that contributes to the local
community as our customers’ partner,” and we will set forth to fully “procure and operate locally” by continuing
to follow “community-based finance,” and have developed the following three points as our major roles andmissions as a regional financial institution:1) Support the growth of local companies
2) Support asset building for our individual customers3) Contribution activities for the local community
We have set four basic policies in the Eleventh Medium-Term Management Plan, “reinforce sales
capabilities & profitability,” “increase productivity,” “reinforce human resources” and “reinforce governance.”
We will demonstrate our consulting functions, which we have built up thus far, to fully support our local
customers, and contribute toward the development of the local community.

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Yukinori Ito
President

BOARD OF DIRECTORS AND CORPORATE AUDITORS
President
Yukinori Ito

Directors
Audit and Supervisory Committee Members
Masahiro Kato*1
Akira Katsuragawa*2
Toshiyasu Hayashi*2
Yasutoshi Emoto*2
Yasuo Hasegawa*2

Senior Managing Director
Masato Kobayashi
Managing Directors
Hiroyasu Matsuno
Nobuhiko Kuratomi
Directors
Shigeru Murabayashi
Tokuyasu Iida
Hiroaki Yoshikawa*1‌Standing Audit and Supervisory Committee Member*2‌Outside Audit and Supervisory Committee Member

CORPORATE DIRECTORY
Service Network
Head Office(Securities & Foreign Business Department)
14-12, Sakae 3-chome, Naka-ku, Nagoya 460-8678
Telephone: 81-52-251-3211
SWIFT: AICHJPJN
Facsimile: 81-52-262-5793

Domestic Branches

Gifu (3)Tokyo (1)Head Office
Shizuoka (1)Aichi (98)
Mie (2)
Osaka (1)Total 106 Domestic Branches
Consolidated Companies
Aigin Business Service Co., Ltd.
Aigin DC Card Co., Ltd.
Aigin Lease Co., Ltd.
Aigin Computer Service Co., Ltd.
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The Aichi Bank, Ltd.
Consolidated Financial Statements
March 31, 2020 and 2019-4-

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2020 and 2019
Millions of yen
2020
2019
Assets:Cash and due from banks¥ 137,615
Call loans and bills purchased
1,116
Trading securities
1
Securities
964,260
Reserve for possible losses oninvestments(2)
Loans and bills discounted
2,063,699
Foreign exchange
2,590
Other assets
40,971
Tangible fixed assets
34,463
Intangible fixed assets
1,030
Employee retirement benefit asset
2,644
Deferred tax assets
263
Customers’ liabilities for acceptancesand guarantees
6,299
Allowance for possible loan losses(8,724)
Total assets¥ 3,246,230-5-¥

188,738
1,899
1,067,949

Thousands of U.S. dollars
2020
2019

$

1,264,495
10,25498,860,240$

1,734,246
17,4499,813,001(7)
1,804,367
1,924
38,141
34,491
1,004
3,922
226

(18)
18,962,593
23,798376,467
316,668
9,464
24,2942,416(64)
16,579,683
17,678350,464
316,925
9,225
36,0372,076

7,108(7,479)57,879(80,161)

65,312(68,721)¥ 3,142,287$ 29,828,448$ 28,873,352

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets (Continued)
March 31, 2020 and 2019
Millions of yen
2020
2019
Liabilities:
Deposits¥ 2,808,769
Negotiable certificates of deposit
4,100
Call money and bills sold
5,441
Security deposits received related tosecurities lending transactions
80,109Borrowings
95,596
Foreign exchange
1,382
Other liabilities
19,708Reserve for employee bonuses
600
Reserve for bonuses to directors
43
Employee retirement benefit
985
liability
Reserve for executive retirement
benefits
40
Reserve for reimbursement ofdeposits
253
Reserve for contingencies
1,314
Deferred tax liabilities
7,564
Deferred tax liabilities forrevaluation
4,670
6,299
Acceptances and guarantees
Total liabilities
3,036,879
Net assets:
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive
incomeStock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Thousands of U.S. dollars
2020
2019

¥ 2,783,678
4,100
15,53825,808,775
37,67349,995$ 25,578,222
37,673
142,773

25,67140,011
1,297
9,750
612
39

736,092
878,397
12,698181,089
5,513
395

235,881
367,646
11,91789,589
5,623
358

996

9,050

9,151

25

367

229

339
1,274
17,323

2,324
12,07369,502

3,114
11,706
159,174

4,727
7,108
2,912,497

42,91057,87927,904,796

43,43465,312
26,761,894

18,00013,883
138,933(1,071)
169,746

18,00013,883
137,146(724)
168,305

165,395
127,565
1,276,605(9,841)
1,559,735

165,395
127,565
1,260,185(6,652)
1,546,494

35,131
295
4,177
209,350¥ 3,246,230

57,077274
4,132
229,790¥ 3,142,287

322,806
2,710
38,3801,923,642$ 29,828,448

524,460
2,517
37,9672,111,458$ 28,873,352-6-$

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2020 and 2019
Millions of yen
2020
2019

Thousands of U.S. dollars
2020
2019

Income:Interest and dividend income:Interest on loans and bills discounted
and purchased¥
Interest on and dividends from securities
Other interest and dividend income
Total interest and dividend income
Fees and commissions
Other operating income
Other income
Total income

16,505
11,17497
27,77916,246
4,042
5,104
53,172

16,712
12,262
103
29,078
14,6762,196
3,945
49,897$ 151,658
102,673891
255,251
149,278
37,14046,898488,578

Expenses:
Interest expense:
Interest on deposits
Interest on call money and bills soldInterest on borrowings
Other interest expense
Total interest expense
Fees and commissions
Other operating expenses
General and administrative expenses
Impairment loss on fixed assets
Other expenses
Total expenses
Profit before income taxes

448
223
110
16
800
10,031
4,935
26,17638
6,868
48,849
4,322

658
401
90
10
1,160
9,469
2,445
25,829227
3,936
43,069
6,828

4,116
2,049
1,010
147
7,350
92,17145,345240,521
349
63,107448,856
39,713

6,046
3,684
826
91
10,65887,007
22,466237,333
2,085
36,166
395,745
62,740

1,330
2,991

2,031
4,796

12,22027,483

18,66244,068

61

113

560

1,038

Income taxes
ProfitProfit attributable tonon-controlling interests
Profit attributable to owners ofparent

¥

2,930

¥

¥

4,682

$

Yen
Per share:
Basic earnings
Diluted earnings
Cash dividends¥

272.08270.64100.00-7-¥

26,922$

153,560
112,671946
267,187
134,852
20,17836,249458,485$

43,021

U.S. dollars
431.85429.80100.00

$

2.50
2.48
0.91

$

3.96
3.94
0.91

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2020 and 2019
Millions of yen
2020
2019
Profit¥2,991

Other comprehensive income:Unrealized losses on available-for-salesecurities
Land revaluation increment
Retirement benefit adjustment
Total other comprehensive income
Comprehensive income(21,154)(867)(22,022)¥ (19,030)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Total comprehensive income¥ (19,077)47¥ (19,030)-8-

Thousands of U.S. dollars
2020
2019

¥

4,796

¥

(9,280)(0)(824)(10,104)(5,308)(194,376)(7,966)(202,352)$ (174,859)(85,270)(0)(7,571)(92,842)$ (48,773)(5,402)93(5,308)$ (175,291)
431$ (174,859)$ (49,637)854$ (48,773)¥¥$

27,483$44,068

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2020 and 2019
Millions of yen
Accumulated other comprehensive income
Net unrealized
Total accumulated
gains onLand
Retirement
other
available-for-salerevaluation
benefitcomprehensive
securities
increment
adjustment
incomeShareholders’ equity
Number ofshares ofcommon stock
issuedBalance at April 1, 2018
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2019
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity

10,943,240-

Balance at March 31, 2020

10,943,240

Commonstock¥

18,000-Capitalsurplus¥Retainedearnings

13,883¥(18)

133,439
4,682
(975)
18
-

-

Total
shareholders’equityTreasury
stock
¥

(765)
41

¥

164,557
4,682
(975)
18
22

¥

59,990
-

¥

8,323
-

¥

(1,131)-¥

67,181-Stockacquisitionrights¥265-

Noncontrollinginterests
¥

4,040
-

Total
net assets¥

236,045
4,682
(975)
18
22

-

-

18

(18)

-

-

-

-

-

-

-

-

-

10,943,240-

18,000-13,883(5)

137,146
2,930(1,134)
(3)
-

(724)
(348)

168,305
2,930(1,134)(3)(353)(9,260)50,729
-

(18)
8,304
-

(824)
(1,956)-(10,103)
57,077
-

9
274
-

91
4,132
-

(10,003)229,790
2,930(1,134)
(3)
(353)

-

-

5

(5)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(21,140)

62

(867)

(21,945)20

45(21,880)¥

18,000¥13,883¥

138,933¥(1,071)¥

169,746¥

29,589

¥

8,366

¥

(2,823)¥35,131

¥

295

¥

4,177

¥

209,350$(10,392)-$

617,302
-

$

2,434
-

$

37,122-$2,168,933
43,021(8,958)165
202

Thousands of U.S. dollars
Balance at April 1, 2018
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2019
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity$ 165,395-

Balance at March 31, 2020

$ 165,395$

127,565 $(165)

1,226,123
43,021(8,958)165-$(7,029)376$

1,512,055
43,021(8,958)165
202$

551,226-$

76,477
-

-

165

(165)

-

-

-

-

-

-

-

-

-

165,395-

127,565(45)

1,260,185
26,922(10,419)(27)-(6,652)(3,197)

1,546,494
26,922(10,419)(27)(3,243)(85,086)
466,130-(165)
76,302-(7,571)(17,972)-(92,832)
524,460
-

82
2,517
-

836
37,967-(91,913)
2,111,458
26,922(10,419)(27)(3,243)

-

45

(45)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(194,247)

569(7,966)(201,644)

183

413

(201,047)$

127,565$

1,276,605$(9,841)$

1,559,735-9-$

271,882$

76,872$(25,939)$

322,806

$

2,710

$

38,380$1,923,642

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2020 and 2019
Millions of yen
2019
2020
Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation
Impairment loss on fixed assets
Increase in allowance for possible loan losses
Interest and dividend income
Interest expense
Increase in trading securities
Increase in loans and bills discounted
Decrease in call loans and bills purchased(Decrease) increase in call money and bills soldIncrease in deposits
Increase (decrease) in security deposits received
related to securities lending transactions
Increase in borrowings(excluding subordinated borrowings)
Gain on securities transactions
Loss (gain) on foreign currency transactions
Increase in reserve for contingencies
Interest and dividend income received
Interest expense paid
Other, net
Subtotal
Income taxes paid
Net cash (used in) provided by operating
activities

¥

4,322

¥

6,828

Thousands of U.S. dollars
2020
2019
$

39,713$62,740

1,566
38
1,245
(27,779)800(1)(259,332)
782(10,097)
25,091

1,492
227
1,262
(29,078)
1,160
(400)
394
4,914
32,305

14,389349
11,439(255,251)7,350(9)(2,382,909)
7,185(92,777)
230,552

13,7092,085
11,596(267,187)
10,658(3,675)
3,620
45,152296,839

54,437(40,152)

500,202(368,942)

55,584(866)
944
39
28,870(938)(1,064)(126,355)(2,343)2,269(2,653)(1,835)103
29,759(1,689)(1,992)
2,914(2,085)

510,741(7,957)
8,674
358
265,276(8,618)(9,776)(1,161,030)(21,528)

20,849(24,377)(16,861)946
273,444(15,519)(18,303)
26,775(19,158)(128,698)

828(1,182,559)

7,608(377,294)
457,520(1,426)
575
(242)
(9)
79,123(384,541)
411,300
(771)
180
(286)
(23)
25,857(3,466,819)
4,203,987(13,103)
5,283(2,223)(82)
727,032(3,533,409)
3,779,288(7,084)
1,653(2,627)(211)
237,590

Cash flows from financing activities:
Dividends paid
Other, net
Net cash used in financing activities(1,134)(371)(1,504)

(975)
16
(959)

(10,419)(3,408)(13,819)(8,958)147(8,811)

Net (decrease) increase in cash and cash equivalents(51,080)

25,727(469,355)

236,396

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

185,930
134,849

160,202
185,930

1,708,444$ 1,239,079

1,472,038$ 1,708,444

Cash flows from investing activities:
Purchases of securities
Proceeds from sales and maturities of securities
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for asset retirement obligations
Net cash provided by investing activities¥- 10 -¥

Basis of Presenting Consolidated Financial Statements
The consolidated financial statements of The Aichi Bank, Ltd. (the “Bank”) and its subsidiaries(collectively the “Group”) have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act of Japan and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to the application and disclosure requirements from International
Financial Reporting Standards. The accompanying consolidated financial statements have beenreformatted and translated into English with some expanded descriptions from the consolidated
financial statements of the Bank prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments
and Exchange Act. Certain supplementary information included in the statutory Japanese language
consolidated financial statements is not presented in the accompanying consolidated financial
statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2020, which was¥108.83 to U.S. $1.00. This translation should not be construed as a representation that the Japanese
yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or
any other rate of exchange.
The Japanese yen amounts in the accompanying consolidated financial statements are expressed inmillions of Japanese yen and have been rounded down. U.S. dollar amounts in the accompanying
consolidated financial statements are expressed in thousands of U.S. dollars and also have been rounded
down. As a result, total amounts expressed in both Japanese yen and U.S. dollars appearing in the
consolidated financial statements thereto may not be equal to the sum of the individual amounts.
Certain comparative figures have been reclassified with conform to the current year’s presentation.

- 11 -