Annual Securities Report“Yukashoken Hokokusho”(Excerpt)
For the fiscal years ended March 31, 2019 and 2018

FIDEA Holdings Co. Ltd.
and Subsidiaries

Message from the President and CEO———————————————————————————————————————
Dear Shareholders and Investors,
We, the FIDEA Group, are pleased to announce that we are celebrating the 10-year anniversary of ourestablishment in October 2009, through the business integration between the Shonai Bank, Ltd. and the Hokuto
Bank, Ltd. as the first region-wide banking group in Tohoku.
On behalf of the group, I deeply appreciate the tremendous support of our business partners, shareholders andvalued customers.
Over the last ten years, the business environment has been constantly challenging us with persistent ultra-low
interest rates, stricter capital adequacy rules, emergence of new competitors from such fields as Fin-tech andshrinking working-age population in the regions, to name a few.
As a banking group committed to the region, our mission is to show outstanding contribution to fulfill customers’
expectations diversified by longevity society and lifestyle changes, as well as to revitalize the regional economies.
In line with our third Medium-term Management Plan, “Consulting and Innovation,” our business model has beenshifting further to facilitate sustainable growth of regional economies with timely and appropriate consultation
which satisfies customers’ both explicit and implicit needs.
Followings are some of our achievements in fiscal 2018, the second year of our medium-term plan mentioned
above: providing solution or support for customers and partners; to move forward CCRC (Continuing Care
Retirement Community) projects around Akita Station, to introduce financial solutions including investment
partnership in launching new businesses, to help sake and other local products expand their foreign markets andto establish Yamagata-Kingdom of Thailand Friendship Association through the same course of Akita.
In addition, we focused on developing structures to support business successions and M&As based on customers’
feedback that revealed considerable worries and concerns about those issues. We also acquired ownership of anaffiliated leasing company, which is now called and operates as FIDEA Lease Co. Ltd., in order to enhancesolution line-ups. The other approach was from the perspective of operational efficiency that we have introduced
a semi-self teller terminal system, “Quick counter,” on a trial basis.
Under the slogan “Reaching out to the community and stepping into the next generation – Trust FIDEA,” theFIDEA Group aims to become a banking group that is trusted and consulted by regional customers. To establish
a robust business base, we will continue to advance the shift to a consolidated sales structure for corporate andretail customer sales and the transformation to a lean management structure. I appreciate your continued support
and guidance.

July 2019
Yuichi Tao
President and CEO
FIDEA Holdings Co. Ltd.

1

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2019 and 2018

Millions of yen
2019
2018
Assets:Cash and due from banks (Notes 11, 19 and 23)
Monetary claims bought (Note 23)
Trading account securities (Notes 5 and 23)
Money held in trust (Notes 6 and 23)
Securities (Notes 5, 6, 11, 13 and 23)
Loans and bills discounted (Notes 7, 22 and 23)
Foreign exchange assets (Note 23)
Lease receivables and investments in leases
Tangible fixed assets (Note 8):
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Goodwill
Other intangible fixed assets
Defined benefit asset (Note 12)
Deferred tax assets (Note 20)
Customers’ liabilities for acceptances andguarantees (Note 22)
Other assets (Note 11)
Allowance for loan losses (Notes 7 and 23)¥

Total assets

146,336
4,233
595
13,081
749,874
1,716,998
1,736
3,418

¥

156,177
4,121
303
14,002744,685
1,738,367
2,145-

Thousands of
U.S. dollars(Note 1)2019$

1,318,223
38,131
5,359
117,836
6,755,013
15,467,057
15,63830,79014,894
10,212
136
98
2,238

15,753
10,741
187
41
2,385

134,168
91,991
1,225
882
20,160

1,544
134
171
112
1,156

1,856
136
348
1,720

13,908
1,207
1,540
1,008
10,41323,62622,015

212,827

55,005(14,310)

61,391(14,410)495,495(128,907)¥ 2,731,298¥ 2,761,970$ 24,604,071(Continued)
2

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2019 and 2018

Millions of yen
2019
2018
Liabilities:
Deposits (Note 23)
Negotiable certificates of deposit (Note 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)2019

¥ 2,394,711
72,817¥ 2,429,106
99,843$ 21,572,029
655,949

64,171

60,778578,065

16,900
16
30
2,434
623
348
15
3,297
488
23,62632,30915,100
52
2,266
762
419
17
3,888
502
22,015
11,460152,238
144
270
21,925
5,612
3,134
135
29,7004,396
212,827
291,045

2,611,789

2,646,213

23,527,511

18,00029,261
51,248(5)
98,50418,00029,261
48,634(5)
95,890162,147
263,588461,652(45)
887,343

20,252
272
1,059
(829)
20,754250

19,1681,090(644)
19,614250

182,4342,450
9,539(7,467)
186,956
2,252

Total net assets

119,508

115,756

1,076,551

Total liabilities and net assets¥ 2,731,298¥ 2,761,970$ 24,604,071

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 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, 2019 and 2018
Thousands of
U.S. dollars(Note 1)
2019

Millions of yen
2019
2018
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income¥

Total income

20,97810,355
26
8,680
6,113
2,781

¥

21,996
12,785
36
8,555
3,830
3,970

$

188,973
93,279234
78,19155,06725,051

48,93551,175440,816

748
555
73
5
3,632
6,805
28,709
488
3,616

1,518
602
73
44
5
3,634
6,258
29,854
763
2,158

6,738
4,999
657
45
32,71761,300258,616
4,396
32,573

Total expenses

44,63544,913402,080

Income before income taxes

4,300

6,261

38,735

Income taxes (Note 20):
Current
Deferred

1,014
(517)

1,710
236

9,134
(4,657)

497

1,947

4,477

3,802

4,314

34,249

17

32

153

Expenses:
Interest expenses:
Interest on deposits
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Interest on bonds payable
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 attributable to non-controlling interests
Net income attributable to owners of parent

¥

3,785

¥

4,281

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

20.23
14.71
6.00

$

34,096

U.S. dollars
¥

22.98
18.38
6.00

$

0.18220.13250.0540FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)
2019

Millions of yen
2019
2018
Net income¥

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

3,802

¥

1,068
272
(185)
1,154

4,314

$

388
301
689

34,2499,620
2,450(1,666)
10,395Comprehensive income

¥

4,957

¥

5,004

$

44,653

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

¥

4,954
2

¥

4,949
54

$

44,62618

See notes to consolidated financial statements.

5

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
Years Ended March 31, 2019 and 2018
Shareholders’ equity

Commonstock
Balance as of April 1, 2017¥

18,000Capitalsurplus¥Treasury
stock

¥

¥

45,519(1,203)
4,281

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stock
Purchase of shares of consolidated
subsidiaries
Reversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity

Total
shareholders’equity

(9)

¥

(0)
5

(0)
(9)
36

92,781

18,00029,261

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

48,634(5)(1,201)
3,785
(0)

¥

-

¥

¥

18,000¥29,261¥

51,248¥(5)Commonstock$ 162,147

Capitalsurplus$ 263,588

Retainedearnings$ 438,104

(0)

(0)
0

270

19,168-$ 263,588$ 461,652

$

(45)

¥

18,990¥165¥¥ 111,937

(36 )

301

624

85

709

1,090

(644)

19,614

250

115,756(1,201)
3,785
(0)
0
30

(1,201)
3,785
(0)
0
30

98,504¥272

20,252

¥

(30 )

272

¥

1,059

(185)
¥

(829)

1,139
¥

20,754

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Unrealized
Totalgain onaccumulated
available-forRevaluation
Remeasureothersale
Deferred gain
reserve forments of defined comprehensive
securities
on hedges
landbenefit plansincome$- $$ 172,669
9,818$ (5,801)$ 176,686

(0)

1,138

250

¥ 119,508

Noncontrollinginterests
$
2,252

Total
net assets$1,042,752¥(10,818)
34,096(0)
0
270(10,818)
34,096
(0)
0
270
9,755

$ 162,147

(945)

Total
net assets

(9)
36

Total
shareholders’
Treasury
equitystock$(45)$ 863,796(10,818)
34,096¥

Noncontrollinginterests(9)36

95,890

(0)
0

30

1,127

Remeasurements of defined
benefit plans(1,203)
4,281
(0)
4

1,083

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, 201918,808

Revaluation
reserve for
land

Total
accumulated
othercomprehensive
income(1,203)
4,281
(0)
4

Shareholders’ equity

Balance as of March 31, 2018¥

Deferred gain
on hedges

359

Balance as of March 31, 2018

Balance as of March 31, 201929,272Retainedearnings

Unrealized
gain onavailable-forsale
securities

Millions of yen
Accumulated other comprehensive income$ 887,343$ 182,434

See notes to consolidated financial statements.

6

2,450
$

2,450

(270)
$

9,539

$

(1,666)

10,260(7,467)$ 186,956$(0)

10,251

2,252$1,076,551

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2019 and 2018

Millions of yen
2019
2018
Operating activities:¥ 4,300
Income before income taxes
Adjustments for:
Income taxes—paid(1,805)
Depreciation and amortization
2,568
692
Loss on impairment—fixed assets
Amortization of goodwill
14
Gain on step acquisitions(31)
Change in allowance for loan losses(100)
Change in provision for bonuses for directors and other officers
30
227
Change in defined benefit asset
Change in defined benefit liability
10
Change in provision for reimbursement of deposits(139)
Change in provision for contingent loss
(71)
Change in other provisions(2)
Interest income(31,360)
Interest expenses
1,384
(751)
(Gain) loss on securities―net
487
Loss (gain) on money held in trust—net(3)
Foreign exchange (gain) loss—net
120
Loss on sale and disposal of fixed assets—net
Loss on reduction of non-current assets
Subsidy income
Net change in loans and bills discounted
21,368Net change in deposits(34,394)
Net change in negotiable certificates of deposit(27,025)
Net change in trading account securities(292)
Net change in borrowed money, excluding subordinatedborrowings
1,800
Net change in due from banks, excluding due from Bank of Japan(1,171)
Net change in call loans and bills bought(112)
Net change in payables under securities lending transactions
3,392
Net change in foreign exchange assets
409
Net change in foreign exchange liabilities(36)
Net change in lease receivables and investments in leases(3,418)Interest received
32,036
Interest paid
(1,853)(1,630)
Other—net
Total adjustments(39,657)¥ (35,357)
Net cash used in operating activities —(Forward)

¥

6,261

Thousands of
U.S. dollars(Note 1)
2019$

38,735(1,341)
2,663
255(1,905)
273
131
115
75
(13)
(34,818)
2,244
102(1,050)
5
71
100
(100)
20,95836,785(41,752)401(16,259)
23,133
6,233
126
(279)
(900)
270
2,044
90
(1,252)(639)(18)(282,497)
12,467(6,765)
4,386
(27)
1,080
192,487(309,827)(243,446)(2,630)(1,300)2,858(279)(69,011)(89)
1535,785(2,701)(42,612)(94,133 )¥ (87,872)

16,214(10,548)(1,008)30,555
3,684(324)(30,790)
288,586(16,692)(14,683)(357,238)$ (318,502)(Continued)

7

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2019 and 2018

Millions of yen
2019
2018

Thousands of
U.S. dollars(Note 1)
2019(35,357)(87,872)$ (318,502)(433,930)
358,021103,648(8,000)
8,424
(837)
199
(742)
-

(330,522)
398,526
114,332(5,000)1,483(2,702)
189
(341)
39

(3,908,927)
3,225,123933,681(72,065)
75,885(7,539)1,792(6,684)-(1,175)25,607

176,006(10,584)
230,672(66)(1,197)(0)0(1,265)(5,000)(76)(1,201)(0)
3(6,274)(594)(10,782)(0)0(11,395)

3(11,011)
154,143¥ 143,132(5)
81,85472,289¥ 154,143

27(99,189)
1,388,550$ 1,289,361

Net cash used in operating activities —(Forward)¥
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
Proceeds from subsidy income
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Net cash provided by investing activities
Financing activities:
Redemption of subordinated bonds
Repayment of lease obligations
Dividends paid
Purchase of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net (decrease) 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, 2019 and 2018
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 ¥111.01 = U.S.$1.00, the exchange rate prevailing on March 31, 2019. 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 7 subsidiaries (collectively the“Group”) as of March 31, 2019 (6 subsidiaries as of March 31, 2018).
As stated in Note 4, the Company acquired all shares of FIDEA Lease Co. Ltd. (former Grand Yamagata Leasing
Co., Ltd.) and included it in the scope of consolidation from the year ended March 31, 2019.
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, 2019 and 2018.
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 7 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. For claims on borrowers who have declaredbankruptcy or have commenced special liquidation proceedings or similar legal proceedings (the “bankrupt
borrowers”), or borrowers who are not legally or formally insolvent but are regarded as substantially in thesame situation (the “virtually bankrupt borrowers”), an allowance is generally provided based on the carrying
amount of the claims, after the write-off stated below, net of the expected amount recoverable from collateraland guarantees.
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 amount recoverable fromcollateral and guarantees.
For other claims, an allowance is provided based on the historical loan-loss ratio calculated from pastexperiences during a certain period after categorizing into definite types.
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.
10For collateralized or guaranteed claims on the bankrupt borrowers and virtually bankrupt borrowers of Hokuto
and certain consolidated subsidiaries, the amount of the claims exceeding the estimated value of collateral andguarantees is deemed to be uncollectible and is charged off against the total amount of the outstanding claims.
These write-offs amounted to ¥12,157 million ($109,512 thousand) and ¥12,073 million for the years ended
March 31, 2019 and 2018, respectively.
Allowances for loan losses of other consolidated subsidiaries are provided based on the historical loan loss
ratio.
(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 aburden charge to the Credit Guarantee Corporations in connection with the responsibility-sharing system.
(11) Other provisions
Other provisions include provision for point service program of the consolidated subsidiaries.
Provision for point service program relating to credit business engaged by consolidated subsidiaries isprovided for the future burdens when the service will be used at the necessary amount based on the reasonably
estimated amount to be used in future.
(12) 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 at Shonai, aconsolidated subsidiary of the Company.
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.
(13) 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.
(14) 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 Audit Committee Report No. 24 (February 13,2002). 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.

11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 Audit Committee Report No. 25 (July 29, 2002). 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.
(15) 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.
(16) Consumption taxes
Transactions are principally stated exclusive of national and local consumption taxes.
(17) Accounting standard and guidance issued but not yet applied“Accounting Standard for Revenue Recognition” (the Accounting Standards Board of Japan (“ASBJ”)
Statement No. 29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
March 30, 2018)(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 IASB and Topic
606 by FASB) in May 2014. IFRS 15 shall be effective from a fiscal period beginning on or after January
1, 2018 and Topic 606 shall be effective from a fiscal period beginning after December 15, 2017. Under
these circumstances, 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, ASBJ determined to adopt the core principles
of IFRS 15 in order to enhance comparability of financial statements, which is one of the benefits aligningwith IFRS 15. In addition, for any practical issue to be considered in Japan, alternative treatment shallbe 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 guideline effective from the fiscal year beginning on April 1, 2021.

12

(iii) Effect from the application of the new accounting standard and implementation guideline
The effect from the application of the new accounting standard and implementation guideline is currently
under evaluation.
4. Business Combination
Business combination through acquisition(1) Overview of the business combination(i) Name of the company and description of the business
Name of the company:
Grand Yamagata Leasing Co., Ltd.
Description of the business: General leasing business(ii) Reason for the business combination
The Company conducted the business combination with the aim of expanding solution service line-up
and strengthening the consulting service operation.
(iii) Date of business combination
October 1, 2018(iv) Legal form of the business combination
Share acquisition(v) Name of the company after the business combination
FIDEA Lease Co. Ltd.
(vi) Voting rights acquired
Voting rights held before the business combination (including indirect holdings):
Voting rights additionally acquired at the date of the business combination:
Voting rights after the business combination

5%
95%
100%

(vii) Grounds for determining acquiring company
The Company acquired all voting rights of Grand Yamagata Leasing Co., Ltd. through share acquisition
in exchange for cash as consideration.
(2) Period of operating results of acquired company, which is included in the consolidated financial statements
From October 1, 2018 to March 31, 2019(3) Breakdown of acquisition cost of acquired company and type of consideration
Millions of yen

Thousands of
U.S. dollars

Fair value of common stock held before the businesscombination as of the date of the business combination
Consideration for acquisition (cash)¥$

Acquisition cost

¥

81
1,577
1,658

$

729
14,205
14,935(4) Difference between the acquisition cost and total amount of transactions to acquire the acquired company
Gain on step acquisitions:¥31 million ($279 thousand)(5) Description of major acquisition-related costs and the amounts
Advisory fee and other fee:

¥3 million($27 thousand)(6) Goodwill arising from the business combination, reason for the goodwill and method and period ofamortization(i) Goodwill arising from the business combination:¥149 million ($1,342 thousand)

13

(ii) Reason for the goodwill
The excess of the acquisition cost over the net amount of assets acquired and liabilities assumed isrecognized as goodwill.
(iii) Method and period of amortization
Straight-line amortization over five years(7) Breakdown of assets acquired and liabilities assumed on the date of the business combination(i) Assets
Total assets:¥4,980 million($44,860 thousand)Out of which, lease receivables and investments in leases:¥3,370 million($30,357 thousand)(ii) Liabilities
Total liabilities:
Out of which, borrowed money:¥3,471 million¥3,100 million($31,267 thousand)($27,925 thousand)(8) Approximate amount and calculation method of the impact of business combination on the consolidated
statement of income for the year ended March 31, 2019 assuming the acquisition was completed on April 1,
2018
The disclosure is omitted since the approximate amount of the impact is immaterial.
5. Securities
Gain and loss from revaluation of trading account securities included in the consolidated statements of income was¥2 million ($18 thousand) for the years ended March 31, 2019 and 2018.
Securities at March 31, 2019 and 2018 consisted of the following:
Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2019
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

¥

-

¥

14,113492,236
165,584
244,219
82,431
166,619¥ 672,968

¥

¥

-

¥

7,078
480,276
162,319
237,977
79,979151,797¥ 639,152

¥

-

¥

-

¥

4,054
12,404
7,392
5,012
56,550¥ 73,009¥ 745,978¥

4,509
12,508
7,435
5,073
60,674¥ 77,693¥ 716,845

¥

¥

¥

14

Unrealized
gain (loss)-

7,035
11,959
3,264
6,242
2,452
14,821¥ 33,816
-

(455)
(103)
(43)
(60)
(4,124)¥ (4,683)¥ 29,133

Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2018
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

¥

-

¥

19,250438,922
194,051
167,893
76,97785,019¥ 543,192¥¥

Unrealized
gain (loss)

-

¥

9,966
427,252
189,407
163,11174,734
72,583¥ 509,803¥

9,284
11,669
4,644
4,782
2,242
12,435¥ 33,389

-

¥

-

¥

4,026
63,977
5,947
42,772
15,257
129,979¥ 197,983¥ 741,175¥

4,383
64,538
6,011
43,152
15,374
134,851¥ 203,773¥ 713,577

¥

¥

¥

-

-

(356)
(561)
(63)
(380)
(117)
(4,872)¥ (5,790)¥ 27,598

As of March 31, 2019 and 2018, ¥330 million ($2,972 thousand) and ¥276 million of capital investment inunconsolidated subsidiaries were included in the balance of securities, respectively.
Thousands of U.S. dollars
Acquisition
cost

Carrying
amountMarch 31, 2019
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

$

-

$

127,132
4,434,159
1,491,613
2,199,972
742,554
1,500,936$ 6,062,228$

63,7604,326,421
1,462,201
2,143,743
720,466
1,367,417$ 5,757,607$ 63,372
107,729
29,40256,22922,088
133,510$ 304,621

$

-

$

-

$

36,519111,737
66,58845,149509,413$ 657,679$ 6,719,917$

40,617
112,674
66,97545,698546,563$ 699,873$ 6,457,481

$

$

$

15

Unrealized
gain (loss)

-

$

-

-

(4,098)
(927)
(387)
(540)
(37,149)$ (42,185)$ 262,435

Available-for-sale securities sold for the years ended March 31, 2019 and 2018 were as follows:
Millions of yen
March 31, 2019
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

March 31, 2018
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

March 31, 2019
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

$ 111,395
903,233
565,723
337,510
2,154,481$3,169,128$ 15,097
14,034
12,5841,450
20,953$ 50,094¥

12,366100,268
62,801
37,467239,169¥ 351,805

Realized gain

¥

¥

1,676
1,558
1,397
161
2,326
5,561

Realized loss

¥

¥

824
57
56
1
3,926
4,809

Millions of yen¥

7,938
110,216
59,85344,9285,434
287,083¥ 405,238

Realized gain

¥

¥

1,733
1,245
772
471
1
1,518
4,497

Realized loss

¥

¥

164
57
20
31
5
4,347
4,568

Thousands of U.S. dollars
Realized loss

$

$

7,422
513
504
9
35,36643,320

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, 2019, no available-for-sale securities were written down. For the year ended March
31, 2018, ¥27 million of available-for-sale securities were written down. Of which, equity securities were ¥27
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.

16

6. Unrealized Gain on Available-for-Sale Securities
Unrealized gain on available-for-sale securities at March 31, 2019 and 2018 consisted of the following:
Millions of yen
2019
2018
¥ 29,133¥ 27,598
29,133
27,598(8,400)(8,866)

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
2019$ 262,435
262,435(79,866)

20,26619,198

182,560(14)¥ 20,252(29)¥ 19,168(126)$ 182,434

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 Audit Committee Report No. 24 “Treatment of Accounting and Auditing concerning Application of
Accounting Standard for Financial Instruments in Banking Industry” (February 13, 2002). The Group has the rightto sell or pledge (repledge) such bills without any restrictions. These include commercial bills discounted andforeign exchange bills purchased, etc. The total face value of such financial transactions at March 31, 2019 and2018 amounted to ¥5,739 million ($51,698 thousand) and ¥4,919 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 ¥301,245
million ($2,713,674 thousand) and ¥307,257 million at March 31, 2019 and 2018, respectively, including thecontracts whose contractual periods were either less than one year or revocable at any time, in the amount of¥284,395 million ($2,561,886 thousand) and ¥278,438 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.

17

Risk monitored loans
Risk monitored loans which were included in loans and bills discounted at March 31, 2019 and 2018 consisted of
the following:
Millions of yen
2019
2018
Loans to bankrupt borrowers
Delinquent loans
Loans past due for 3 months or more
Restructured loans
Total¥ 1,366
25,812
3,149¥ 30,328¥

1,192
29,7203,059¥ 33,971

Thousands of
U.S. dollars
2019$ 12,305
232,519
28,366$ 273,200

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, 2019 and 2018, accumulated depreciation of tangible fixed assets was ¥33,508 million ($301,846
thousand) and ¥32,076 million, respectively.
The amounts of advanced depreciation by reduction of carrying amount of assets as of and for the years ended
March 31, 2019 and 2018 were as follows:

Millions of yen
2019
2018
Balance as of the fiscal year-end
Amount applicable for the year

¥ 1,147
-

18

¥

1,237
100

Thousands of
U.S. dollars
2019$ 10,332-

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.
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, 2019and 2018 was ¥1,397 million ($12,584 thousand) and ¥1,494 million, respectively.
10. Borrowed Money and Lease Obligations
Borrowed money and lease obligations at March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

Averageinterest rate
(%)

2019

2018

2019

¥ 16,900¥ 15,100$ 152,238

0.43

Current portion of lease obligations

63

63

567

1.00

Lease obligations, less current
portion

115

129

1,035

0.93

Borrowed money

Maturity
Apr. 2019
throughMar. 2023
Apr. 2020
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, 2019 are as follows:
Millions of yen

Borrowed money
Lease obligations

Due in one year
or less

Due after one
year through twoyears

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

¥

¥

¥

¥

¥

8,500
63

1,100
49

2,400
41

4,900
16

6

Thousands of U.S. dollars

Due in one year
or less

Borrowed money
Lease obligations$

76,569567

Due after one
year through two
years

$

9,909
441

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

$

$

$

21,619369

44,140144

54

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

Subordinated borrowings of ¥5,000 million ($45,040 thousand) and ¥5,000 million were included in borrowed
money at March 31, 2019 and 2018, respectively.

1911. Assets Pledged
Assets pledged as collateral at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars
2019

Millions of yen
2018
2019
Securities¥ 77,316¥ 72,843$

696,477

The liabilities secured by the above pledged assets at March 31, 2019 and 2018 consisted of the following:Thousands ofMillions of yen
U.S. dollars
Payables under securities lending transactions

2019

2018

¥ 64,171¥ 60,778

11,90010,100Borrowed money

2019$

578,065
107,197

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, 2019 and 2018:
Thousands ofMillions of yen
U.S. dollars
Securities

2019

2018

2019

¥ 123,782¥ 126,323$ 1,115,052

8

8

72

42,00041,063378,344

Cash and due from banks
Other assets

Note: Other assets include guarantee deposits in the amount of ¥552 million ($4,972 thousand) and ¥551 million at March 31, 2019and 2018, respectively.

12. Retirement Benefit Plans
Shonai, a consolidated banking subsidiary of the Company, has a funded defined benefit corporate pension plan
and an unfunded lump-sum payment plan as defined benefit plans to provide for employees’ retirement benefits.
Under the defined benefit corporate pension plan, a lump-sum payment or pension is provided based on the basesalary used for retirement benefits calculation and service years. In addition, this plan is a type of quasi cash balanceplan. Under the lump-sum payment plan, a lump-sum payment is provided as a retirement benefit based on thebase salary used for retirement benefits calculation and service years.
Hokuto, a consolidated banking subsidiary of the Company, has a funded defined benefit corporate pension plan
and a funded lump-sum payment plan as defined benefit plans to provide for employees’ retirement benefits. Under
the defined benefit corporate pension plan, pension or a lump-sum payment is provided based on service years.
Hokuto maintains a cash balance plan for defined benefit corporate pension plan and a virtual individual accountbalance which is corresponding to each participant’s funded amount and the source of pension amount isestablished under this plan. In this virtual individual account balance, mainly interest credits based on the trend of
market interest rate and contributed credits based on the interest granted each month are accumulated.
Under the lump-sum payment plan, points are accumulated during the service based on the service years and thefunctional classes. Employees who terminate their employment are entitled to lump-sum payments based on theaccumulated points at the time of the termination multiplied by unit price by point and additional benefits basedon the functional class at the time of the termination. A retirement benefit trust is established for the lump-sum
payment plan.
Each of Shonai and Hokuto has a defined contribution corporate pension plan as the defined contribution plan.
Certain consolidated subsidiaries other than consolidated banking subsidiaries have unfunded defined benefit
pension plans (lump-sum payment plans only). These consolidated subsidiaries adopt the simplified method in
calculating defined benefit liability and retirement benefit expenses under lump-sum payment plans.
20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
2019
Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial gains and losses arising during year
Retirement benefits paid¥

Retirement benefit obligations at end of year¥

13,683
481
11
88
(768)
13,497

2018¥¥

13,819
491
16
86
(730)
13,6832019$ 123,259
4,332
99
792
(6,918)$ 121,583(2) Reconciliation between plan assets at beginning of year and end of year
Thousands of
U.S. dollars

Millions of yen
2019Plan 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¥

11,766
151
(205)
112
(649)
11,1752018¥

11,748
151
326
113
(574)
11,766¥2019$ 105,990
1,360(1,846)
1,008(5,846)$ 100,666

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
2019
Funded retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Net balance of liability and asset recorded on the
consolidated balance sheets

2018

¥

11,583(11,175)
407
1,913

¥

11,814(11,766)
48
1,868

¥

2,321

¥

1,917

Note: Retirement benefit trust is included in plan assets.

21$ 104,341(100,666)
3,666
17,232$

20,908

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

2019

¥

2,434
(112)

¥

2,266
(348)

$

21,925(1,008)

¥

2,321

¥

1,917

$

20,908

(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
2019
2018
¥
481
¥
491
11
16
(151)
(151)
79
234
(31)
(42)
1
1

Thousands of
U.S. dollars
2019
$
4,332
99
(1,360)
711
(279)
9

¥

$

390

¥

549

3,513

Note: Retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are collectively included in“Service costs.”(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
2018
2019
2019
Past service costs
¥
(31)
¥
(42)
$
(279)
474
(1,927)
Actuarial gains and losses
(214)
¥
432
$ (2,216)
¥
(246)
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
2019
2018
2019
Unrecognized past service costs
¥
¥
(31)
$
864
9,719
Unrecognized actuarial gains and losses
1,079
¥
833
$
9,719
¥
1,079
Total
(7) Components of plan assets(a) Percentages to total plan by major category are as follows:
2019
45.0%
28.9
3.4
0.1
6.6
16.0
100.0%

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

2018
36.3%
36.6
11.8
0.2
6.2
8.9
100.0%

Note: 31.1% and 30.3% of the total plan assets consisted of the retirement benefit trust established for the lump-sum
payment plan as of March 31, 2019 and 2018, respectively.

(b) 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.

22

(8) Actuarial assumptions at end of year
2019
0.00% - 0.04%
1.00% - 1.50%
3.64%

Discount rate
Expected long-term rate of return on plan assets
Expected rate of salary increase (Note)2018
0.00% - 0.18%
1.00% - 1.50%
3.61%

Note: Hokuto maintains a cash balance plan for the defined benefit corporate pension plan, and a point system is adopted forthe lump-sum payment plan. Accordingly, the expected rate of salary increase is not included in the basis for calculationof retirement benefit obligations and others for the years ended March 31, 2019 and 2018.

Defined contribution pension plans
The amounts to be contributed to the defined contribution pension plans of the Company and its consolidated
subsidiaries were ¥160 million ($1,441 thousand) and ¥163 million as of March 31, 2019 and 2018, 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 ¥11,461
million ($103,242 thousand) and ¥8,070 million at March 31, 2019 and 2018, respectively.
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, 2019 and 2018
are summarized as follows:
Number of shares (in thousands)
April 1, 2018
Increase
Decrease March 31, 2019
Ref.
Issued shares:
181,421
181,421
Common stock
Preferred stock class B
25,00025,000Total
206,421
206,421
Treasury stock:
Common stock
25
2
0
28
Note
Total
25
2
0
28
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.

23

Number of shares (in thousands)
April 1, 2017
Increase
Decrease March 31, 2018
Issued shares:
Common stock
Preferred stock class B
Total
Treasury stock:
Common stockTotal

181,42125,000206,421--

181,42125,000206,421

42
42

2
2

19
19

25
25

Ref.

Note

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 and sale of the shares held by consolidated subsidiaries.

15. General and Administrative Expenses
General and administrative expenses for the years ended March 31, 2019 and 2018 included the following:

Salaries and allowances
Retirement benefit expenses

Millions of yen
2019
2018
¥ 12,765¥ 13,221
550
712

Thousands of
U.S. dollars
2019$ 114,989
4,954

16. Other Expenses
Other expenses for the years ended March 31, 2019 and 2018 consisted of the following:

Loss on sales of equity securities, etc.
Loss on disposal of fixed assets
Impairment loss
Loss on reduction of non-current assets
Other
Total

Millions of yen
2019
2018
¥ 1,342
¥
272
141
121
692
255
100
1,410
1,441
¥ 3,616¥ 2,158

24

Thousands of
U.S. dollars
2019$ 12,089
1,270
6,233
12,980$ 32,573

17. Impairment Loss
For the years ended March 31, 2019 and 2018, 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, 2019
Category

Area

Main use

Description

Impairment loss
Thousands ofMillions of yen
U.S. dollars

Business assets

Within Yamagata
Prefecture

Banking office –six locations

Business assets

Within Akita
Prefecture

Banking office – 17 Land andlocationsbuildings

94

846

Business assets

Within Miyagi
Prefecture

Banking office –eight locations

Land andbuildings

185

1,666

Business assets

Within Fukushima
Prefecture

Banking office –two locations

Land andbuildings

164

1,477

Business assets

Within Tokyo
Metropolitan area

Banking office –two locations

Buildings

54

486

Idle assets

Within Yamagata
Prefecture

Idle assets –one location

Land

80

720

Idle assets

Within Akita
Prefecture

Idle assets –four locations

Land andbuildings

7

63Within Yamagata
Assets held for sale
Prefecture

Employee housing – Land andone locationbuildings

34

306

Within Akita
Assets held for sale
Prefecture

Banking office –one location

15

135

Buildings

¥

Land

54

Total

¥

March 31, 2018

Impairment loss

Category

Area

Main use

Description

Business assets

Within Yamagata
Prefecture

Banking office –three locations

Land andbuildings

Business assets

Within Akita
Prefecture

Banking office –one location

Buildings

Business assets

Within Miyagi
Prefecture

Banking office –one location

Land

Idle assets

Within Yamagata
Prefecture

Idle assets –two locations

Land

Idle assets

Within Akita
Prefecture

Idle assets –21 locations

Land andbuildings

Banking office –one location

Land

Within Akita
Assets held for sale
Prefecture
Total

692

$

$

486

6,233

Millions of yen
¥

116
0
52
25
14
47

¥

255

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.
25

18. Other Comprehensive Income
Reclassification adjustments and income tax effect for each component of other comprehensive income for theyears ended March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars
Millions of yen
2019
2018
2019
Unrealized gain on available-for-sale securities:
Gain arising during the year
¥
2,287
¥
461
$
20,601
Reclassification adjustments
102(6,774)(752)
Before income tax effect
1,534
563
13,818
Income tax effect(175)(4,197)(466)
Unrealized gain on available-for-salesecurities
1,068
388
9,620
Deferred gain on hedges:
Adjustments arising during the year
391
3,522
Reclassification adjustments
Before income tax effect
391
3,522
Income tax effect(1,071)(119)
Deferred gain on hedges
2,450
272
Remeasurements of defined benefit plans:
Adjustments arising during the year
(293)
240
(2,639)Reclassification adjustments
192
423
47
Before income tax effect
(246)
432
(2,216)
Income tax effect
60
(131)
540
Remeasurements of defined benefit plans
301(1,666)(185)
Total other comprehensive income¥
689$
10,395¥1,154

26

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, 2019 and 2018 is summarized
as follows:

Millions of yen
2018
2019
Cash and due from banks
Due from banks (excluding due from BoJ)
Cash and cash equivalents¥¥

146,336(3,204)
143,132¥ 156,177(2,033)¥ 154,143

Thousands of
U.S. dollars
2019$1,318,223(28,862)$1,289,361

Major breakdown of assets and liabilities, acquisition cost and net payment for acquisition of FIDEA Lease Co.
Ltd. (hereinafter referred to as “FIDEALCL”) due to share acquisition at the beginning of consolidation is asfollows:
Thousands ofMillions of yen
U.S. dollars
Assets¥4,980$ 44,860
Liabilities(3,471)(31,267)
Goodwill
1,342
149
Cost to acquire FIDEALCL’s shares
1,658
14,935
Shares held before acquisition
(50)
(450)
Gain on step acquisitions
(31)
(279)
Cash and cash equivalents of FIDEALCL(402)(3,621)
Net: Payment for acquisition$ 10,584
¥
1,175

27

20. Income Taxes
The tax effect of temporary differences which gave rise to significant portions of the deferred tax assets andliabilities at March 31, 2019 and 2018 consisted of the following:

Millions of yen
2018

2019
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

7,234
2,026
1,402
778
93
1,199
12,735(5,308)¥ 7,426

7,171
1,913
1,659
695
98
1,214
12,751(5,918)¥ 6,833

$

¥

¥

$

¥

(8,866)(700)(9,566)(2,140)

¥

2019

¥

(8,400)(601)(9,001)(2,168)$$65,165
18,25012,6297,008
837
10,800114,719(47,815)
66,894(79,866)(6,305)(86,172)(19,277)

Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31, 2019 is shown as below.
Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31, 2018 is omitted since
the difference is less than 5% of the effective statutory tax rate.

Normal effective statutory tax rate
Non-deductible expenses such as entertainment expenses
Non-taxable income such as dividend income
Per capita inhabitant tax
Valuation allowance
Consolidation adjustments
Other
Actual effective tax rate

28

2019
30.57%
0.68(21.09)1.36(17.82)18.92(1.06)
11.56%

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, 2019
Ordinary income from externalcustomers

March 31, 2018
Ordinary income from external customers

March 31, 2019
Ordinary income from external customers

Lending¥ 21,206

Millions of yen
Securities
investment
Other¥ 15,918¥ 11,758

Total¥ 48,883

Lending¥ 22,104

Millions of yen
Securities
investment
Other¥ 17,283¥ 11,638

Total¥ 51,026

Lending$ 191,027

Thousands of U.S. dollars
Securities
investment
Other$ 143,392$ 105,918

Total$ 440,347

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

Geographic informationa. Ordinary income
Information about ordinary income by geographic area for the years ended March 31, 2019 and 2018is omitted as ordinary income from external customers in Japan was more than 90% of ordinary incomein the consolidated statements of income.
b. Tangible fixed assets
Information about tangible fixed assets by geographic area as of March 31, 2019 and 2018 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, 2019 and 2018 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, 2019 and 2018 and for the years then ended are as follows:
2019
Type

Name

Address

Capital(Millions ofyen)

Director

Hiroyuki
Sato

-

¥-

Director of
the Company-

Lending¥25 million($225
thousand)

Loans andbills
discounted¥74 million($666
thousand)Akita Kubota
Co., Ltd.
Note (1)

Akita city,
Akita Pref.

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥108 million($972
thousand)

Loans andbills
discounted¥63 million($567
thousand)Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥952 million($8,575
thousand)

Loans andbills
discounted¥900 million($8,107
thousand)Akita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥305 million($2,747thousand)

Loans andbills
discounted¥500 million($4,504
thousand)Lending¥7 million($63
thousand)--Guarantee forliabilities¥3 million($27
thousand)Customers’
liabilities for
acceptancesandguarantees¥1 million($9 thousand)Lending¥20 million($180
thousand)--Guarantee forliabilities¥98 million($882
thousand)Customers’
liabilities for
acceptancesandguarantees¥71 million($639
thousand)Companies,
etc. whose
voting rights
are owned by
the director(including thedirector oftheconsolidated
subsidiaries)
or his/her
relatives

Netz Toyota
Akita Co.,
Ltd.
Note (2)Toyota Renta
Lease Akita
Co., Ltd.
Note (2)Ugo Setsubi
Co., Ltd.
Note (3)

Akita city,
Akita Pref.

¥20

Ugo
Densetsu
Kogyo Co.,
Ltd.
Note (4)

Akita city,
Akita Pref.

¥30

Ugo
Hatsuhenden
Koji Co., Ltd.
Note (4)

Akita city,
Akita Pref.

¥20

Name

Address

Capital(Millions ofyen)

Akita Kubota
Co., Ltd.
Note (1)

Akita city,
Akita Pref.

Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Balance at
March 31,2019

0.0% directly
heldPipe works

Electric
works

0.0% directly
heldElectric
works-

Lending¥9 million($81
thousand)--Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Balance at
March 31,
2018

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥123 million

Loans andbills
discounted¥69 million

Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥931 million

Loans andbills
discounted¥900 million

Akita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥300 million

Loans andbills
discounted¥300 million

Lending¥27 million--

Guarantee forliabilities¥7 million

Customers’
liabilities for
acceptancesandguarantees¥4 million

Lending¥51 million

-

-

2018
Type

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

Netz Toyota
Akita Co.,
Ltd.
Note (2)Toyota Renta
Lease Akita
Co., Ltd.
Note (2)Ugo Setsubi
Co., Ltd.
Note (3)

Akita city,
Akita Pref.

¥20

Ugo
Densetsu
Kogyo Co.,
Ltd.
Note (4)

Akita city,
Akita Pref.

¥30

Ugo
Hatsuhenden
Koji Co., Ltd.
Note (4)

Akita city,
Akita Pref.

¥200.0% directly
heldPipe works

Electric
works

0.0% directly
heldElectric
works

-

30

Guarantee forliabilities¥81 million

Lending¥22 million

Guarantee forliabilities¥0 million

Customers’
liabilities for
acceptancesandguarantees
Loans andbills
discounted-¥103 million¥10 million-

Notes: (1) 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.
(2) 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.
(3) As of March 2019 and 2018, Hiroyuki Sato, who is a director of the Company, his relatives and Shin-ichi Nanayama, a director and audit & supervisory board
member of Hokuto, which is a significant consolidated subsidiary of the Company, own the majority of voting rights of Ugo Setsubi Co., Ltd.
(4) Shin-ichi Nanayama, 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 Ugo Densetsu Kogyo Co., Ltd. Ugo Hatsuhenden Koji Co., Ltd. is a subsidiary of Ugo Densetsu Kogyo 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, 2019 and 2018.
23. Financial Instruments and Related Disclosures
1. Status of Financial Instruments(1) 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.
(2) 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.
(3) 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.

31

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
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, 2019 and 2018 and for the years thenended was as follows:
Billions of yen
2019

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
28.8
3.7
7.7
17.4

32

0.0
33.9
4.7
9.8
19.4

0.0
24.9
3.2
6.2
15.5

0.0
31.4
4.8
9.0
17.6

Billions of yen
2018

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
27.3
5.8
5.6
19.9

0.0
35.2
8.8
7.7
25.5

0.0
21.7
3.4
4.2
15.5

0.0
23.3
3.4
6.4
15.6

Millions of U.S. dollars
2019

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

Average

Maximum

Minimum

$

$

$

0.0
259.4
33.3
69.3
156.7

0.0
305.3
42.3
88.2
174.7

0.0
224.3
28.8
55.8
139.6

As of thefiscal year-end
$ 0.0
282.8
43.2
81.0
158.5

(*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 Japanese
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:(i) 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.
(ii) 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.
(iii) Future market conditions may differ significantly from the past.

33

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.”(4) 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 areused.
2. Fair value of financial instruments
The carrying amount, the fair value and their difference as of March 31, 2019 and 2018 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).
March 31, 2019

Carrying
amountCash 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)

Millions of yen
Fair value

Difference¥ 146,336
4,214¥ 146,336
4,214

595
13,081595
13,081-

745,978-

Foreign exchange assets (*1)
Total assets

745,978
1,716,998(14,172)
1,702,826
1,735¥ 2,614,769

1,738,554
1,735¥ 2,650,496

35,72735,727

Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities¥ 2,394,711
72,81764,171
16,90016¥ 2,548,616¥ 2,394,760
72,81964,171
16,90016¥ 2,548,667

¥

¥

¥

¥

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

¥

34

322
391
713

¥

322
391
713

¥

¥
¥

¥

-

48
2
0
51
-

March 31, 2018

Carrying
amountCash 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)

Millions of yen
Fair value

Difference¥ 156,177
4,100¥ 156,177
4,100

303
14,002303
14,002-

741,175-

Foreign exchange assets (*1)
Total assets

741,175
1,738,367(14,304)
1,724,062
2,144¥ 2,641,966

1,758,436
2,144¥ 2,676,340

34,37434,374

Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities¥ 2,429,106
99,84360,778
15,10052¥ 2,604,880¥ 2,429,243
99,84360,77815,16252¥ 2,605,080

¥

136
62
199

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

¥
¥

¥
¥

¥
¥

-

334
334

334
334

¥

¥
¥

-

Thousands of U.S. dollars
Carrying amount
Fair value
Difference

March 31, 2019
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)

$ 1,318,223
37,960$ 1,318,223
37,9605,359
117,836

5,359
117,836-

6,719,917-

Foreign exchange assets (*1)
Total assets

6,719,917
15,467,057(127,664)
15,339,392
15,629$23,554,355

15,661,237
15,629$23,876,191

321,835
321,835

Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities$21,572,029
655,949
578,065
152,238
144$22,958,436$21,572,470
655,967
578,065
152,238
144$22,958,895

$

$

$

$

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

$
35

2,900
3,522
6,422

$

2,900
3,522
6,422

$

$
$

$

-

432
18
0
459
-

(*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
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 by
debtor 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 present value of estimated future cash flows or the expected amount to36

be collected from collaterals and guarantees. Since the fair value of these items approximates the carrying amountnet 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.
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 estimatedcash 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.
(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
2019
2018
2019
Unlisted equity securities (*1) (*2)
¥ 1,697¥ 1,547$ 15,286
Investment in partnerships (*3)
1,962
19,800
2,198
Total¥ 3,510$ 35,095¥ 3,896(*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 ¥0 million ($0 thousand) and ¥0 million forthe years ended March 31, 2019 and 2018, 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.

37

(Note 3) Repayment schedule of monetary receivables and securities with contractual maturities subsequent toMarch 31, 2019
Millions of yen

March 31, 2019

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)

¥ 114,026

¥

¥

¥

-

78,832

153,797

96,51650,029147,945

128,799

Japanese government bonds

51,00065,90022,500

4,000

3,000

15,500

Municipal bonds

14,64947,29940,03830,77465,22546,714

Corporate bonds

8,218

9,513

11,563

6,127

5,803

43,752

Securities:
Available-for-sale securities withmaturity:

Other

-

¥

-

Due after ten
years

4,233

Monetary claims bought-

Due after sevenyears throughten years

¥

-

4,964

31,084

22,414

9,128

73,917

22,832

310,774

300,263

247,943

185,368

171,271409,562¥ 507,865¥ 454,060¥ 344,459¥ 235,398¥ 319,216¥ 538,362

March 31, 2019

Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

Due after ten
years

Due from banks (*1)

$ 1,027,168

$

$

$

Loans and bills discounted (*2)
Total

Thousands of U.S. dollars

Monetary claims bought

-

-

-

$

-

$

-

38,131

-

-

-

-

-

710,134

1,385,433

869,435

450,671

1,332,717

1,160,246

Japanese government bonds

459,418

593,640

202,684

36,032

27,024

139,627

Municipal bonds

131,961

426,078

360,670

277,218

587,559

420,808

Securities:
Available-for-sale securities withmaturity:

Corporate bonds

74,02985,694104,161

55,19352,274394,126

Other

44,716

280,010

201,90982,226

665,858

205,675

Loans and bills discounted (*2)

2,799,513

2,704,828

2,233,519

1,669,831

1,542,842

3,689,415

Total$ 4,574,948$ 4,090,262$ 3,102,954$ 2,120,511$ 2,875,560$ 4,849,671(*1) Due from banks without maturity is shown under “Due in one year or less.”(*2) Loans and bills discounted as of March 31, 2019 do not include ¥27,170 million ($244,752 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 ¥64,644
million ($582,325 thousand) of receivables without maturity.

38

(Note 4) Repayment schedule of bonds payable, borrowed money and other interest bearing liabilities subsequent
to March 31, 2019
Millions of yen

March 31, 2019

Due in one
year or lessDue after one
year throughthree years

Deposits (*)¥ 2,127,594¥

Negotiable certificates of deposit
Payables under securities lendingtransactions
Borrowed money
Total

92,999Due after
three years
through fiveyears¥

Due after
seven years
through ten
years

Due after five
years throughseven years

15,646¥-¥-

Due after ten
years
¥

-

68,317

4,500

-

-

-

-

64,171

-

-

-

-

-

8,500

3,500

4,900

-

-

-

¥ 2,268,583¥

100,999¥

20,546

¥

-

¥

-

¥

-

Thousands of U.S. dollars

March 31, 2019

Due in one
year or lessDue after one
year throughthree years

Deposits (*)$19,165,786$

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

$

$

$

837,753$ 140,942

615,413

40,536----

578,065

-

-

-

-

-

76,56931,52844,140---909,818$ 185,082$20,435,843$(*) 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.
Currency related derivatives
Currency related derivatives at March 31, 2019 and 2018 were as follows:
Millions of yen
Contract amount
Total

March 31, 2019
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Over one year

¥ 77,579
6,206

¥

100
99

Fair value

¥
¥

318
6
325

Valuation gain
(loss)

¥
¥

318
6
325

Millions of yen
Contract amount
Total

March 31, 2018
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Over one year

¥ 84,733
965

¥

42
42

Fair value

¥
¥

376
(41)
334

Valuation gain
(loss)

¥
¥

376
(41)
334

Thousands of U.S. dollars
Contract amount
Total

March 31, 2019
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Over one year

$ 698,846
55,904$

900
891

Fair value

Valuation gain
(loss)$ 2,86454$ 2,927$ 2,86454$ 2,927

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.

Equity securities related derivatives
Equity securities related derivatives at March 31, 2019 were as shown below. There was no equity securities related
derivative at March 31, 2018.
Millions of yen
Contract amount
Total

March 31, 2019
Exchange-traded transactions:
Stock index futures contracts:
Sold
Bought
Total¥

Over one year

632
-

¥

-

Fair value

¥
¥

40

(3)
(3)

Valuation gain
(loss)

¥
¥

(3)
(3)

Thousands of U.S. dollars
Contract amount
Total

March 31, 2019
Exchange-traded transactions:
Stock index futures contracts:
Sold
Bought
Total$

Over one year

5,693
-

$

Fair value-$$

Valuation gain
(loss)

(27)
(27)

$
$

(27)
(27)

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.

Debt securities related derivatives
Debt securities related derivatives at March 31, 2019 were as shown below. There was no debt securities related
derivative at March 31, 2018.
Millions of yen
Contract amount
Total

March 31, 2019
Exchange-traded transactions:
Bond futures contracts:
Sold
Bought
Total¥

Over one year

4,598
-

¥

Fair value-¥

Valuation gain
(loss)

-

¥

¥

-

¥

Thousands of U.S. dollars
Contract amount
Total

March 31, 2019
Exchange-traded transactions:
Stock index futures contracts:
Sold
Bought
Total

Over one year

$ 41,419-$

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, 2019 were as shown below. There was no derivative transaction
to which hedge accounting is applied at March 31, 2018.
March 31, 2019

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

41

Total

Over one year

1,361
-

¥

-

Fair value

¥

391
-

¥

391

March 31, 2019

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

12,260-$Fair value

-

$
$

Total

3,522
3,522

Notes: (1) In principle, the deferred hedge accounting is applied in accordance with the JICPA Industry Audit Committee Report No.
24 “Treatment of Accounting and Auditing concerning Application of Accounting Standard for Financial Instruments in
Banking Industry” (February 13, 2002.)(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, 2019 and 2018 and for the years then ended are summarized as follows:Yen
Net assets
Net income:
Basic
Diluted¥2019
602.01

¥

20.23
14.71

2018
581.32

U.S. dollars
20195.4230

$

22.98
18.38

0.18220.1325

Net income per share—basic and net income per share—diluted for the years ended March 31, 2019 and 2018 were
calculated based on the following information:
Thousands of
U.S. dollars

Millions of yen
2019
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

¥

¥

3,785
113
56
56
3,671

¥

2018
4,281
112

2019
$ 34,096
1,017

56
56
4,169

504
504
33,069¥181,394¥

113
113
75,75775,757$

181,381¥

112
112
51,546
51,546

$

1,017
1,017

Net assets per share at March 31, 2019 and 2018 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, 2019 and2018
Number of shares of common stock as of March 31, 2019 and 2018used to calculate net assets per share (Unit: thousand shares)

42

Thousands of
U.S. dollars

2019¥ 119,508
10,306
10,00056
250

2018¥ 115,756
10,307
10,00056
250

2019$1,076,551
92,83890,081504
2,252¥ 109,201¥ 105,449$ 983,704

181,393

181,39626. Subsequent Events
Transaction under common control
At the Board of Directors’ meeting held on May 15, 2019, the Company resolved to merge its consolidated
subsidiaries, FIDEA Information Systems INC. and The FIDEA Research Institute Corporation. It was also
resolved that FIDEA Information Systems INC., the surviving company, would change its company name.
(1) Overview of the business combination(i) Name of the company and description of the business
Name of the owing company:
FIDEA Information Systems INC.
Description of the business:
IT solution business, marketing of computer equipment and others
Name of the owned company: The FIDEA Research Institute Corporation
Description of the business:
Regional policy consulting, corporate management consulting andothers(ii) Date of business combination
October 1, 2019 (Planned)(iii) Legal form of the business combination
Absorption-type merger with FIDEA Information Systems INC. as the surviving company and The
FIDEA Research Institute Corporation as the dissolving company(iv) Company name after the business combination
FIDEA Information and Research Institute, Inc.
(v) Other matters
The Company conducted the business combination with the aim of expanding solution service line-up,
promoting efficient use of management resources and strengthening comprehensive consulting functionof the Group as a whole.
(2) Overview of the accounting treatment
For the accounting purposes, the transaction will be treated as a transaction under common control inaccordance with the “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21,
January 16, 2019) and the “Revised Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

43

27. Non-Consolidated Financial Statements of Shonai and Hokuto as of March 31, 2019 and 2018 and for
the Years Then Ended
The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2019 and 2018
Millions of yen
2019
2018
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
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Customers’ liabilities for acceptances and guarantees
Other assets
Allowance for loan losses¥

Total assets

52,188
1,933
564
10,905384,352
901,782
987¥

58,652
1,923
284
10,500381,800
940,744
1,455

Thousands of
U.S. dollars
2019$

470,119
17,412
5,080
98,234
3,462,318
8,123,430
8,891

9,481
6,182
96
1,434

10,066
6,466
41
1,609

85,406
55,688864
12,917

530
68
8,103
16,394(7,183)

654
68
6,543
23,495(7,075)

4,774
612
72,993
147,680(64,705)¥ 1,387,823¥ 1,437,236$ 12,501,783(Continued)

44

The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2019 and 2018
Millions of yen
2019
2018
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
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Other liabilities

Thousands of
U.S. dollars
2019¥ 1,177,210
56,497
51,116
16,900
16
10
1,395
152
246
3,533
488
8,103
4,066

¥ 1,224,322
67,796
47,118
15,100
0
1,396
254
277
4,048
502
6,543
3,281

$ 10,604,540
508,936
460,463
152,238
144
90
12,5661,369
2,216
31,825
4,396
72,99336,627

1,319,736

1,370,642

11,888,442

8,500
20,30824,48553,293
13,733
1,059
14,7938,500
20,30823,33952,14813,3551,090
14,44576,569
182,938
220,565
480,073
123,709
9,539
133,258

Total net assets

68,087

66,594

613,341

Total liabilities and net assets¥ 1,387,823¥ 1,437,236$ 12,501,783

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)

45

The Shonai Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2019 and 2018
Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income¥ 11,315
5,711
24
3,913
900
1,602

¥ 11,884
7,329
21
4,015
833
2,101

Total income

23,46826,186211,404

439
16
286
73
2
2,327
2,875
14,062
2,005

926
33
194
73
2
2,370
3,052
14,953
1,981

3,954
144
2,576
657
18
20,96225,898
126,673
18,061

Total expenses

22,08923,633

198,982

Income before income taxes

1,378

2,552

12,413

Income taxes:
Current
Deferred

413
(694)

1,119
53

3,720
(6,251)

(281)

1,172

(2,531)

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

¥

46

1,659

¥

1,379

$

$

101,927
51,445216
35,2498,107
14,431

14,944

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2019 and 2018
Millions of yen
2019
2018
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¥

Total assets

93,785
1,001
30
2,175
365,437
832,774748¥

97,506964
18
3,502
362,754
811,973
689

Thousands of
U.S. dollars
2019$844,833
9,017
270
19,592
3,291,928
7,501,792
6,738

5,058
7,320
11
1
651

5,329
7,802
1
681

45,56365,940
99
9
5,864

350
62
345
775
15,54035,928(5,159)

812
62
561
1,345
15,49036,727(5,303)

3,152
558
3,107
6,981
139,987
323,646(46,473)¥ 1,356,840¥ 1,340,922$ 12,222,682(Continued)
47

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2019 and 2018
Millions of yen
2019
2018
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
2019¥ 1,221,350
19,32013,054
2,500
10
11
471
102
1,013
15,54023,508¥ 1,209,429
36,347
13,659
2,500
51
508
142
1,060
15,4903,624$11,002,161
174,038
117,593
22,520
90
99
4,242
918
9,125
139,987
211,764

1,296,882

1,282,813

11,682,569

12,50019,99918,57551,075
6,501
272
2,109
8,882

12,50019,99917,66150,161
5,779
2,168
7,947

112,602180,154
167,327
460,093
58,5622,450
18,99880,010Total net assets

59,958

58,108

540,113

Total liabilities and net assets¥ 1,356,840¥ 1,340,922$12,222,682

Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Unrealized gain on available-for-sale securities
Deferred gain on hedges
Revaluation reserve for land
Total valuation and translation adjustments(Concluded)
48

The Hokuto Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2019 and 2018

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
2019
2018

Thousands of
U.S. dollars
2019

¥

$

9,895
4,641
1
4,142
2,820
1,188

¥ 10,345
5,420
13
3,870
1,552
1,807

22,69023,009204,396

283
9
269
36
0
1,728
2,485
13,824
2,023

543
15
407
58
0
1,675
2,722
14,131
1,326

2,549
81
2,423
324
0
15,56622,385124,529
18,223

Total expenses

20,65920,881

186,100

Income before income taxes

2,031

2,127

18,295

430
88

348
(35)

3,873
792

519

312

4,675

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

Income taxes:
Current
Deferred
Total income taxes
Net income

¥

49

1,512

¥

1,815

$

89,13641,807
937,311
25,403
10,701

13,620