FINANCIAL REPORT 2019

Contents

Message from the Management

2

Operating Results

3

Cash Flows

4

Consolidated Financial Statements

5

Directors and Corporate Auditors

11

Status of Principal Shareholders

11Bank Data

11

Bank Network

111

Message from the Management
We would like to thank you for your ongoing support of the Chukyo Bank.
This disclosure report presents the settlement of accounts for the fiscal year ended March 31,
2019. We hope that reading this report will help you gain a deeper understanding of the Bank.
Japan’s economy has been continuing along a course of moderate recovery against abackground of improvement in corporate earnings and increased capital investment, despite signs of
weakness in some areas of exports and production towards the end of the fiscal year. In the Tokai
region, despite the impact of the slowdown in the Chinese economy in some areas, the positive
stance of companies toward capital investment was maintained as exports and production remainedin a growth trend. Also, consumer spending moderately increased following improvements in theemployment and income environment.
Amid such economic conditions, the role of a regional financial institution that supports
customers in the region and contributes to the region’s economic growth is becoming increasingly
important. To that end, the Chukyo Bank aspires to realizing its management vision of being “Thefirst bank to ask for advice.” By working to further improve the quality of our service, we want tocontribute to greater business growth and lifestyle enrichment for our customers.
Based on these ideas, we have been carrying out various measures driven by the three basic
strategies of “strengthening sales capabilities,” “enhancing productivity,” and “developing
personnel,” which are in accordance with the theme of “achieving further growth as an urban-style
regional bank” under the 17th Medium-Term Management Plan “Chukyo Action Plan 17” launchedin April 2018. The business model of an urban-style regional bank is one where there is a networkof branches in a major city, but where those individual branches don’t possess full banking
functions on a stand-alone basis and instead provide full banking functions by working together insmall-area networks. The advantage of this model is that sustainable growth can be delivered eveninside existing markets. We will answer the diversifying needs of our customers, thereby
contributing to the development and invigoration of the regional economy through financial
services.
All of us at the Bank, employees and directors alike, would appreciate your continued support
and patronage as we implement a range of initiatives.
October 2019
Ryo Nagai, President

2Operating Results
Looking back on the domestic economy last year, conditions have been continuing along acourse of moderate recovery against a background of improvement in corporate earnings andincreased capital investment, despite signs of weakness in some areas of exports and production
towards the end of the fiscal year.
In the Tokai region, despite the impact of the slowdown in the Chinese economy in some areas,
the positive stance of companies toward capital investment was maintained as exports andproduction remained in a growth trend. Also, consumer spending moderately increased following
improvements in the employment and income environment.
Amid such economic conditions, the monetary situation in Japan continued to be under the
influence of quantitative and qualitative monetary easing with long- and short-term interest rate
control by the Bank of Japan, which resulted in a range of movement of long-term interest rate ofminus 0.10% to plus 0.16%. In addition, the range of movement for the overnight interest rate wasminus 0.08% to minus 0.02%. In the stock market, the Nikkei Stock Average showed an upward
trend in the first half of the fiscal year, but it began falling on account of concerns over uncertainty
in the overseas economy. The index closed at ¥21,205 as of the end of March 2019, down ¥248
from a year earlier.
Under these financial and economic conditions, the Bank implemented a range of measures
under its 17th Medium-Term Management Plan launched in April 2018 and strove to increase its
corporate value to achieve further growth as an urban-style regional bank.
In services for individual customers, the Bank enhanced the features of its smartphone
application and started trialing stampless transactions at two branches. In addition to such efforts toprovide greater convenience to our customers, the Bank ran various marketing campaigns for time
deposits and foreign currency time deposits supporting their stable asset formation, and added moreinvestment trusts and insurance products to its lineup. Through these initiatives, the Bank worked torespond to diversifying needs of customers.
In services for business customers, the Bank worked to respond to broad ranging needs throughoffering finance properly evaluated on the strength of the business as a proactive measure to meetdemand for sound financing, and strengthening initiatives for providing support to businesses
starting up and new businesses, overseas expansion support, proposals for business succession andbusiness matching.
As part of its initiatives for regional revitalization, the Bank strengthened its cooperation withlocal government organizations, economic organizations and universities in the regions where it
operates, aiming to encourage and develop regional industry and economy. Furthermore, the Bankhas been working to stimulate the local economy through its CSR activities (activities of social
contribution), such as through starting to handle the “Chukyo CSR privately placed bond ‘Mirai
Yell,’” which donates items to educational institutions, etc. designated by the customers, throughpart of the fee commissions received from the customers for the Bank’s issuance of privately placedbonds.
With respect to branches, the Bank newly constructed the Imaike Branch in December 2018,
and regarding ATMs installed at non-branch locations, the Bank worked on ATM mutual
collaboration with other financial institutions, enhanced cashless settlement services and otherservices. Through these actions, the Bank has made progress in revising its provision of services
with our customers’ convenience in mind.

3

The number of branches including the Head Office and the Internet branch as of March 31,
2019 stood at 87. ATMs installed at non-branch locations stood at 20 locations.
Moreover, in line with the policy of its environmental declaration “We make a contribution to
the regional community through our environmentally friendly activities,” the Bank continued tooffer “Eco Time Deposits” in the fiscal year under review, a part of the balance of which was
donated to a greening organization. Part of the trust income from the “Eco Investment Trust” wasdonated to an environmental preservation fund.
The Bank will continue to make an active contribution to society through its environmentallyfriendly activities.
As a result of these initiatives, the operating results for the Bank and its consolidated
subsidiaries were as follows.
The balance of deposits (including negotiable certificates of deposit) as of the end of the fiscal
year stood at 1,771.4 billion yen as a result of an increase in deposits of 1.4 billion yen from the endof the previous fiscal year, mainly as a result of corporate customer deposits.
Loans and bills discounted totaled 1,311.5 billion yen as of the end of the fiscal year, an increaseof 8.2 billion yen from the end of the previous fiscal year. This increase mainly reflects thepromotion of financing for medium- and small-sized businesses that bases evaluation mainly on
business attributes.
The balance of securities at the end of the fiscal year stood at 515.4 billion yen, a decrease of
40.1 billion yen year on year mainly due to redemption of domestic bonds.
In terms of income, total income increased by 679 million yen year on year to 30,531 million
yen, mainly reflecting increases in gains on sales of bonds and miscellaneous gains such as dividend
income of group life insurance.
Total expenses stood at 26,334 million yen, an increase of 653 million yen year on year, mainly
due to an increase in foreign currency procurement costs and an increase in loss on sales of bonds,
partially offset by a decline in personnel expenses.
As a result, profit attributable to owners of the parent increased 401 million yen year on year to
3,481 million yen.

Cash Flows
Cash flows for the fiscal year ended March 31, 2019 were as follows. Net cash used in operating
activities totaled 34,533 million yen, mainly due to an increase in loans and bills discounted. Net
cash provided by investing activities totaled 56,226 million yen, mainly due to proceeds frommaturities of securities. Net cash used in financing activities totaled 1,834 million yen, mainlyreflecting repayments of lease obligations.
As a result of the above, cash and cash equivalents at the fiscal year-end totaled 86,644 million
yen, an increase of 19,813 million yen from the previous fiscal year-end.

4

Consolidated Financial Statements
THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMARCH 31, 2019 AND 2018ASSETS:Cash and due from banks
Securities
Loans and bills discounted
Foreign exchange
Other assets
Premises and equipment
Intangible assets
Retirement benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

87,355515,428
1,311,543
6,760
16,282
19,249
2,329
797
384
4,005
(7,327)
1,956,809

67,330555,578
1,303,315
7,988
11,887
19,359
2,722
32
564
4,145
(8,455)
1,964,467$ 787,052
4,643,913
11,816,767
60,906146,697
173,430
20,9837,180
3,459
36,084(66,014)
17,630,498

1,771,435
35,1166
5,000
18,152
232
478
494
6,019
2,552
4,005
1,843,493

1,770,002
18,30330,51928
5,000
18,915
151
355
554
4,824
2,562
4,145
1,855,363

15,960,311
316,38854
45,049163,546
2,090
4,306
4,450
54,23022,99336,084
16,609,541

31,84423,99432,366

31,84423,99429,751

286,908
216,181291,611

(139)

(205)

(1,252)

20,211
(323)
5,367
(248)
113,073242
113,316¥ 1,956,809

18,728
(318)
5,391
(304)
108,883
220
109,103¥ 1,964,467

182,097(2,910)48,355(2,234)
1,018,767
2,180
1,020,956$ 17,630,498¥

LIABILITIES:
Deposits
Payables under securities lending transactions
Borrowed money
Foreign exchange
Subordinated bonds
Other liabilities
Retirement benefit liability
Reserve for reimbursement of dormant deposits
Reserve for contingencies
Deferred tax liabilities
Deferred tax liabilities for land revaluation surplus
Acceptances and guarantees
Total liabilities

EQUITY:
Capital stock:
Common stock –authorized, 50,000 thousand shares;
issued, 21,745 thousand shares in 2019 and 2018
Capital surplus
Retained earnings
Treasury stock, at cost –48 thousand shares in 2019 and
71 thousand shares in 2018
Accumulated other comprehensive income:Net unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Land revaluation surplus
Remeasurements of defined benefit plans
Total
Share acquisition rights
Total equity
Total liabilities and equity

5¥THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEYEARS ENDED MARCH 31, 2019 AND 2018
Millions of Yen
2019
2018
INCOME:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other ordinary income
Reversal of reserve for possible loan losses
Gain on sales and disposal of premises and equipment
Recoveries of written-off claims
Other income¥

13,544
7,258
142
5,424
1,751
7
117
4
1,600

$ 116,839
65,357
1,883
47,202
22,975693
920,10030,531

29,852275,078

468
56
963
2,080
2,998
18,267
310
55
45
1,087

459
0
86
789
2,003
1,908
18,807
26
493
1,105

4,216
504
8,676
18,74027,011
164,582
2,793
495
405
9,793

Total expenses

26,33425,680237,264

PROFIT BEFORE INCOME TAXES

4,197

4,171

37,814

271
444
716

787
304
1,091

2,441
4,000
6,451

3,481

3,080

31,363

Total income
EXPENSES:Interest expenses:
Interest on deposits
Interest on borrowings
Interest on bonds
Other interest expenses
Fees and commissions
Other ordinary expenses
General and administrative expenses
Provision of reserve for possible loan losses
Loss on sales and disposal of premises and equipment
Impairment loss on long-lived assets
Other expenses

INCOME TAXES:
Current
Deferred
Total income taxes
PROFIT

12,968
7,254
209
5,239
2,550
77
1
2,231

PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT

¥

3,481

PER SHARE OF COMMON STOCK:
Basic earnings
Cash dividends applicable to the year¥

160.5040.00¥

Thousands of
U.S. Dollars
2019

¥

3,080

$

¥

142.0840.00

U.S. Dollars
$
1.44
0.36

Yen

6

31,363

THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEYEARS ENDED MARCH 31, 2019 AND 2018
Thousands of
U.S. Dollars
2019

Millions of Yen
2019
2018
PROFIT
OTHER COMPREHENSIVE INCOME:
Net unrealized gain (loss) on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Land revaluation surplus
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income¥

COMPREHENSIVE INCOME

¥

5,015

¥

2,086

$

45,184COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent

¥

5,015

¥

2,086

$

45,184

7

3,481

¥

3,080

$

31,363

1,485
(5)
56

(1,744)
(32)
(11)
795

13,379
(45)
504

(3)
1,533

(0)
(993)

(27)
13,812

THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITYYEARS ENDED MARCH 31, 2019 AND 2018

Thousands

BALANCE AT APRIL 1, 2017
Profit attributable to owners of theparentCash dividends, ¥40.00 per share
Purchases of treasury stock
Disposal of treasury stockReversal of land revaluation surplus
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
BALANCE AT MARCH 31, 2018
Profit attributable to owners of theparentCash dividends, ¥40.00 per share
Purchases of treasury stock
Disposal of treasury stockReversal of land revaluation surplus
Net changes of items other thanshareholders’ equity
BALANCE AT MARCH 31, 2019

BALANCE AT MARCH 31, 2018
Profit attributable to owners of theparentCash dividends, $0.36 per share
Purchases of treasury stock
Disposal of treasury stockReversal of land revaluation surplus
Net changes of items other thanshareholders’ equity
BALANCE AT MARCH 31, 2019

Millions of Yen
Accumulated Other Comprehensive Income

Outstanding
Number of
Shares ofCommonStockCommonStockCapitalSurplusRetained
Earnings

Treasury
Stock21,668¥ 31,844¥ 23,856¥ 27,551

¥

(9)
15
-

-

-

-

-

21,674

Net Unrealized
Gain onAvailable-for-sale
Securities

Deferred Losson Derivatives
under Hedge
Accounting(229)¥ 20,473

3,080
(867)
(15)
2

(22)
46
-

-

-

138

-

-

-

31,84423,99429,751

(205)

(3)
25
-

-

-

3,481
(867)
(23)
24

21,697¥ 31,844¥ 23,994¥ 32,366

¥

¥

-

-

-

-

(1,744)
18,728

(32)
(318)

(7)
73
-

-

-

(139)

1,482
¥ 20,211

CapitalSurplusRetained
Earnings

TreasuryStock$ 286,908$ 216,181$ 268,051$--

31,363(7,811)(207)
216$ 286,908$ 216,181$ 291,611(1,847)(1,252)

(5)
(323)

¥

5,406

$

$

3,080
(867)
(22)
30
2

-

3,080
(867)
(22)
30
2

-

138

-

138

(14)
5,391

795
(304)

(996)
108,883

39
220

(956)
109,103

-

-

3,481
(867)
(7)
50
24

-

3,481
(867)
(7)
50
24

56
(248)

1,509
¥ 113,073

21
242

1,531
¥ 113,316

Share
Acquisition
Rights

Total
Equity(24)
5,367$ (2,865)$ 48,571---

13,352
182,097(45)$ (2,910)(216)$ 48,355¥

Remeasurements ofDefinedBenefit Plans
$

$

Total

¥

Total
Equity¥ 107,697

168,735

8

Share
Acquisition
Rights180

Thousands of U.S. Dollars
Accumulated Other Comprehensive Income
Net Unrealized
Deferred Loss
Gain onon Derivatives
Land
Available-for-sale
under Hedge
Revaluation
Securities
Accounting
Surplus

(63)
657
$

¥

Total
¥ 107,516

¥

(285)

Remeasurements ofDefinedBenefit Plans(1,099)Common
Stock

¥

Land
Revaluation
Surplus¥(2,738)$ 981,016$ 1,982$ 982,998-

31,363(7,811)
(63)
450
216

-

31,363(7,811)
(63)
450
216

504
(2,234)

13,595$1,018,767

189$ 2,180

13,794$1,020,956

THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED MARCH 31, 2019 AND 2018
Thousands of
U.S. Dollars
2019

Millions of Yen
2019
2018
OPERATING ACTIVITIES:Profit before income taxes
Adjustments for:
Income tax paid
Depreciation and amortization
Impairment loss on long-lived assets
Share of profit of entities accounted for using equity method
Net gain on sales and redemption of securities
Net foreign exchange (gain) loss
Net gain on sales and disposal of premises and equipment
Changes in assets and liabilities:
Net increase in loans and bills discounted
Net increase in deposits
Net increase in borrowed money (excluding subordinated borrowings ofthe Bank)
Net (increase) decrease in due from banks (excluding due from the Bankof Japan)Net decrease in call money and bills soldNet (decrease) increase in payables under securities lending transactions
Net decrease (increase) in foreign exchange, assets
Net (decrease) increase in foreign exchange, liabilities
Net decrease in reserve for possible loan losses
Net increase in asset for retirement benefit asset
Net increase (decrease) in liability for retirement benefit liability
Net increase in interest receivable
Net increase (decrease) in interest payable
Net increase in other assets
Net decrease in other liabilities
Total adjustments¥

Net cash (used in) provided by operating activities¥

FORWARD

4,197

¥

4,171

$

37,814

(785)
1,755
45
(35)
(1,072)(2,635)(21)(1,081)
1,862
493
(37)
(1,136)
3,567(90)(7,072)
15,812405(315)(9,658)(23,740)(189)(8,228)
1,432(5,780)20,947(74,132)
12,902

4,597

414

41,418(211)(18,303)
1,227(22)(1,128)(840)
238(7,222)
19(4,097)(3,439)(38,730)93(15,000)
18,303(1,818)26(1,450)(32)(465)(7,476)(239)(2,995)(3,424)
4,676(1,901)(164,906)
11,055(198)(10,163)(7,568)2,144(65,068)
171(36,913)(30,984)(348,950)(34,533)

8,848(311,136)(34,533)

¥

8,848

$

(311,136)(Continued)

9

THE CHUKYO BANK, LIMITED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED MARCH 31, 2019 AND 2018
Millions of Yen
2019
2018
FORWARD¥INVESTING ACTIVITIES:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Dividends and interest received from investing activities
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Purchases of intangible assets
Net cash provided by investing activities(34,533)¥

8,848

Thousands of
U.S. Dollars
2019$(311,136)(101,727)
68,576
83,313
7,021
(371)
130
(716)
56,226(85,250)
35,50068,507
6,558
(676)
282
(549)
24,373(916,542)
617,857
750,635
63,257(3,342)
1,171(6,451)
506,586

FINANCING ACTIVITIES:Redemption of subordinated bonds
Payments as financing activities
Dividends paid
Purchases of treasury stock
Proceeds from sales of treasury stock
Repayments of lease obligations
Net cash used in financing activities

(56)
(867)
(7)
50
(953)
(1,834)(10,000)
(123)
(867)
(22)
30
(1,257)(12,239)(504)(7,811)(63)
450(8,586)(16,524)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH
AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

(45)
19,813
66,83186,644(43)
20,93845,893
66,831(405)
178,511602,135
780,646¥¥$

Basis of presentation
These financial statements without footnotes have been compiled from the consolidated financial statements prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations and the Ordinance for Enforcement of the Banking Act, and in conformity withaccounting principles generally accepted in Japan. Certain reclassifications and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a form which is more familiar to readers outside Japan.
U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥110.99 to $1, the approximate rate of exchange at
March 31, 2019. Amounts less than one million yen and amounts less than one thousand dollars are omitted. As a result, totals shown in the accompanying financial
statements without footnotes do not necessarily agree with the sum of the individual amounts.

10Directors and Corporate Auditors
Masakazu Fukamachi
Ryo Nagai(as of June 30, 2019)

ChairmanPresident
Director and Senior Managing Executive
Officer
Director and Managing Executive Officer
Director and Managing Executive Officer
Director and Managing Executive Officer
Director
Director and Executive Officer
Director (Outside)
Director (Outside)
Audit & Supervisory Board Member
Audit & Supervisory Board Member (Outside)
Audit & Supervisory Board Member (Outside)
Audit & Supervisory Board Member (Outside)

Noriaki Kojima
Toshiyuki Wakao
Akira Hotta
Hideo Kobayashi
Hiroshi Kawai
Junko Hiratsuka
Mikiyasu Hiroi
Yuki Shibata
Junji Miyazaki
Hiroko Murata
Kazuhiko Kimura
Shunichi Samura

Status of Principal Shareholders(as of March 31, 2019)

Name

Address

Number ofshares held
(thousand)

Percentageof shareownership(%) (Note)MUFG Bank, Ltd.

7-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo

8,534

39.33

Japan Trustee Services Bank, Ltd. (trust a/c)

8-11, Harumi 1-Chome, Chuo-ku, Tokyo

1,021

4.70

Japan Trustee Services Bank, Ltd. (trust a/c 4)8-11, Harumi 1-Chome, Chuo-ku, Tokyo

992

4.57

753

3.47

538

2.48

505

2.32

470

2.16

392

1.81

Misono Service Co., Ltd.
Tamazen Co., Ltd.
The Chukyo Bank Employees Shareholding
Association
Daido Life Insurance Company(Standing proxy: Japan Trustee Services Bank, Ltd.)
Aioi Nissay Dowa Insurance Co., Ltd.
(Standing proxy: The Master Trust Bank of Japan,
Ltd.)

15-56, Heian 2-Chome, Kita-ku, Nagoya-City,
Aichi
17-2, Marunouchi 1-Chome, Naka-ku,
Nagoya-City, Aichi
33-13, Sakae 3-Chome, Naka-ku, Nagoya-City,
Aichi
2-1, Edobori 1-Chome, Nishi-ku, Osaka-City, Osaka(8-11, Harumi 1-Chome, Chuo-ku, Tokyo)
28-1, Ebisu 1-Chome, Shibuya-ku, Tokyo(11-3, Hamamatsu-cho 2-Chome, Minato-ku,
Tokyo)The Master Trust Bank of Japan, Ltd. (trust a/c)

11-3, Hamamatsu-cho 2-Chome, Minato-ku,
Tokyo

346

1.59

Nippon Life Insurance Company(Standing proxy: The Master Trust Bank of Japan,
Ltd.)

6-6, Marunouchi 1-Chome, Chiyoda-ku, Tokyo(11-3, Hamamatsu-cho 2-Chome, Minato-ku,
Tokyo)

341

1.57

13,894

64.03

Total
Note

The figures presented for percentage of share ownership show the percentage of the total number of shares issued (excluding treasury stock).

Bank Data

Bank Network(as of March 31, 2019, non-consolidated)(as of June 30, 2019)
Head Office andbranches and sub-branches

Name:

The Chukyo Bank, Limited

Location of Head Office:33-13, Sakae 3-Chome, Naka-ku,
Nagoya-City, Aichi

Nagoya-shi

38

Date of Establishment:

February 10, 1943

Aichi

28

Mie

15

Shizuoka

1

Nara

2

Osaka

1

Tokyo

1

Internet branch

1

Total

87

Number of ATMs

206

Capital Stock:
Deposits:

31.844 billion yen
1,779.2 billion yen*Including negotiable certificates of deposit

Loans and Bills Discounted:

1,312.6 billion yen

Number of Employees:

1,17311