A N N U A L

R E P O R T

2 0 1 5

HOKKOKU BANKANNUAL REPORT

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THE HOKKOKU BANK, LTD.
2-12-6 Hirooka, Kanazawa, Ishikawa 920-8670 Japan
Tel: +81(76) 263-1111
http://www.hokkokubank.co.jp
Printed in Japan

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REPORT OF INDEPENDENT AUDITORSCONTENTS
Message from the President 
About Ishikawa Prefecture Bank Profile 
Board of Directors and Auditors 
Offices and Subsidiaries Corporate Philosophy and New Medium-term
Business Plan 

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3
3
4
4

Financial Highlights 
Corporate Governance Structure 
Basic Policy and Operating Structure for
Risk Management 
Consolidated Financial Statements Report of Independent Auditors 

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7
8
9
28

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FORWARD-LOOKING STATEMENTS
This annual report contains certain forward-looking statements about Hokkoku Bank's future, including outlooks,
plans, forecasts, results, etc. All such forward-looking statements are the result of judgments predicated upon
information available to the Bank at the time of the Annual Report's publication. Unknown risks and uncertainties in
the future may cause actual results to differ significantly from any projections presented in the Bank's Annual Report.
Such risks and uncertainties include, but are not limited to, economic conditions in which the Bank must do
business, pressures from competitive activities, changes in laws and/or regulations, development of new products
and elimination of old ones, and fluctuation of exchange rates.

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28

MESSAGE FROM THE PRESIDENT
I would like to express my sincere gratitude for yourvalued patronage of Hokkoku Bank.
We have prepared this “Annual Report 2015” which
presents our business results for the fiscal year ended
on March 31, 2015, as well as the Bank’s recent
undertakings. It will be greatly appreciated if you would
read through it.
There is growing expectation of an economic recovery
in the domestic economy amid growth in corporate
results mainly for large companies and less impact
from the consumption tax rate hike, thanks to thefurther monetary easing by the Bank of Japan and thecheaper oil price.
The regional economy is continuing on a mild recovery
track as improvement is seen in personal consumption,p r o d u c t i o n a c t i v i t i e s , ex p o r t t r e n d s a n d t h eemployment environment.
Under these circumstances, the Bank has started a
new medium-term business plan “NEXT QCS’S,” whichseeks to contribute to the improvement of productivity
in the entire region, by accelerating and penetrating
the previous medium-term business plan “QCS’S” we
had been committed to with awareness on speed andquality.
We will be under taking measures of the plan,transforming ourselves and actively facing challenges
to solve the regional issues.
The Bank has completed it’s relocation of the head
office after the completion of “Hokkoku Head Office
Building”, on Kanazawa Port exit side of Kanazawa
Station in November 2014, and large projects such as
updates of its core IT system in January this year,
which set up the framework for us to provide highquality services to our customers in the region. For theregion, the expectation to the region has been growing
due to the opening of the Hokuriku Shinkansen in
Kanazawa. All officers and employees of the Bank will
be even more strongly connected to our customers in
the region and strive toward the further development of
the regional communities while continuing to maintainsound business operations.

Tateki Ataka
President

We would be grateful for your continuing support andguidance for the Bank.
August 2015
2

ABOUT ISHIKAWA PREFECTURE
Noto Satoyama Airport
Nanao Port

Toyama Pref.
Kanazawa Port
Komatsu Airport

Fukui Pref.
Luxembourg (Freight)

Sapporo (New Chitose)
Chicago/New York (Freight)

Hokuriku area

Seoul

SendaiShanghaiFukuoka

NaritaTokyo (Haneda)
Tokyo

Osaka
Nagoya[Legend]
International Route
Domestic Route

Taipei(As of April 1, 2015)

Naha(Summary)
Located in the middle of the Japanese Islands, Ishikawa Prefecture is a narrow territory extending from south-west to north-east along thecoast and protruding towards the Sea of Japan. Ishikawa Prefecture contains altogether 19 municipalities (11 cities and 8 towns) and her prefectural office locates at “Kanazawa City.”
Due to the high accessibility to the urban areas through the well-developed transportation networks such as railways, airports and expressways, Ishikawa Prefecture is located in almost the same distance from each of the three major metropolitan areas of Japan. On top of that, theopening of the railway “Hokuriku Shinkansen” in March 2015 has greatly improved the accessibility from Ishikawa Prefecture to the Tokyo metropolitan area.
(Industrial advantage)
Ishikawa Prefecture embraces manufacturing industries such as machinery and textile industries as well as the tourist industry.
Ishikawa Prefecture accumulates various internationally competitive machinery manufacturers such as construction machinery, textile machinery and machining tools manufacturers, etc. Also, there are a lot of co-operative enterprises which provide support to the abovementioned
manufacturers from various fields ranging from machine processing, welding, casting to forging. As the manufacturers possess unique techniques, there is a considerable number of “niche top enterprises” which account for the greatest market shares throughout Japan in specificfields (niche markets).
With regard to the textile industry, Ishikawa Prefecture is renowned as one of the largest synthetic textile manufacturing centers in the world
which performs yarn processing such as twisted yarn, dyeing processing, sewing and manufactures woven fabrics and knitted products, etc.
In addition, the well-known “Kanazawa castle town” attracts a substantial number of international and domestic visitors.
Historical streets and buildings remain and the town is filled with elegant, traditional culture.
(Logistics hub for export)
Ishikawa Prefecture allows transport of container freights to all over the world including Asia, North America and Europe. Further, the fluent
logistics is ensured by the regular shipment of international freight to Europe and America. Having a consolidated logistics foundation whichconnects herself with various countries from Asia to worldwide, Ishikawa Prefecture continues to develop as the center of exchange of “People/
Things” in the Hokuriku Region.
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BANK PROFILE
Hokkoku Bank is a regional financial institution centered in Ishikawa prefecture, on the Sea of Japan coast in central Honshu, Japan's
main island. The Bank’s headquarters is in Kanazawa, the region's largest city. Its business is concentrated in the prefectures of
Ishikawa, Toyama, and Fukui, known collectively as Hokuriku. Hokkoku Bank branches cover this entire region, complemented by officesin the major Japanese cities of Tokyo, Osaka, and Nagoya.
Hokkoku Bank was created by the merger of three Ishikawa prefecture banks in 1943, and has grown steadily ever since. Today it is
widely regarded as one of the most financially sound of Japan's 64 regional banks, with the closest ties to local communities andresidents.
Hokkoku Bank began handling foreign exchange business in 1961; in the ensuing 53 years, it hascontinued to expand its correspondent bank network and formed tie-ups with banks around the world.
The Bank’s overseas offices help our clients track international financial trends and support theiroverseas activities.
As of March 31, 2015, the Bank had 103 branches (including 1 sub-branch) , 1,780 employees, and on
a consolidated basis, total assets of ¥4,179,790 million (US$34,782 million) and total shareholders’equity of ¥182,882 million (US$1,521 million).
(*The number of branches is as of July 31, 2015)

Branches
Ishikawa . . . . . . . .88
Toyama . . . . . . . . .10
Fukui . . . . . . . . . . .2
Tokyo . . . . . . . . . . .1
Osaka . . . . . . . . . . .1
Nagoya . . . . . . . . . .1
Total . . . . . . . . . .103
(As of July 31, 2015)

BOARD OF DIRECTORS AND AUDITORS (As of June 30, 2015)
President (Representative Director)
Tateki Ataka
Senior Managing Director (Representative Director)
Shuji Tsuemura
Junichi Maeda
Senior Managing Director and Executive Officer
Ryoichi Nakayama
Managing Director and Executive Officer
Hideaki Hamasaki
Akira Nakanishi
Director and Executive Officer
Hidehiro Yamamoto
Kazuya Nakamura
Koichi Nakada
Kenichi Sakai

Director and Audit Committee Member
Tomohiro Ida
Muneto Yamada
Director (Outside) and Audit Committee Member
Hideo Nakashima
Masahiro Kijima
Ichiro Sasaki
Masako Ohsuna
Executive Officer
Toshiyuki Konishi
Akira Nishita
Hiroshi Iwamuro
Nobuhiro Torigoe
Yuji Kakuchi
Nobuhide Akazawa
Takayasu Tada

OFFICES AND SUBSIDIARIES (As of July 31, 2015)
Head Office
2-12-6 Hirooka,
Kanazawa, Ishikawa
920-8670 Japan
Tel: +81(76) 263-1111
International Department
Head Office
2-12-6 Hirooka,
Kanazawa, Ishikawa
920-8670 Japan
Tel: +81(76) 263-1111
Swift: HKOKJPJTOverseas Offices
Shanghai Representative Office
Suite 350, Shanghai Centre
1376 Nanjing West Road,
Jingan District, Shanghai, 200040,
People's Republic of China
Tel: +86(21)6279-8717
Fax: +86(21)6279-8721
Singapore Representative Office
65 Chulia Street #49-08
OCBC Centre, Singapore 049513
Tel: +65-6538-4770
Fax: +65-6538-2726

Major Subsidiaries
The Hokkoku General Lease Co., Ltd.
2-2-15, Katamachi, Kanazawa,
Ishikawa 920-0981
The Hokkoku Credit Service Co., Ltd.
2-2-15, Katamachi, Kanazawa,
Ishikawa 920-0981
The Hokkoku Credit Guarantee Co., Ltd.
1-16 Musashi-machi, Kanazawa,
Ishikawa 920-0855
The Hokkoku Management, Ltd.
1-16 Musashi-machi, Kanazawa,
Ishikawa 920-0855
The Hokkoku Servicer, Ltd.
2-2-15, Katamachi, Kanazawa,
Ishikawa 920-0981
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CORPORATE PHILOSOPHY AND NEW MEDIUM-TERM BUSINESS PLAN

Trust — a bridge to a fruitful regional future
Enrich interactions and build up growth in the region

We shall:•	Deeply understand the regional society, economy, culture, and life.
•	Provide comprehensive information and financial services.
• Lead regional activities in various aspects.
•	Achieve trust and become a guide towards a fruitful future for the region.
Hokkoku Bank’s regional communities:
We offer services tailored to the unique characteristics and needs of all areas in which our business infrastructure is located. The three Hokuriku
prefectures of Toyama, Fukui, and especially Ishikawa, where our headquarters is located, are our most important regional communities.

New Medium-Term Business Plan
With the medium-term business plan “QCS’S,” which we had been working on since April 2012, various measures have been
implemented with intensive awareness of speed and quality at the base.
Though the circumstances surrounding the Bank is vigorous due to the effect from the opening of the Hokuriku Shinkansen, it isassumed that difficult situations will still continue as falling and aging of populations are steadily escalating in the medium- to long-termalong with increasing competition with the companies in the same industry as well as other industries.
At the same time of accelerating and penetrating various measures which have been carried out, the Bank considered “Challenging all
the time for a reform” would help us to contribute to the regional revitalization which is directly linked to the main business of local banks,and prepared the new medium-term business plan.

New Medium-Term Business Plan

“NEXT QCS’S” [Duration] April 2015 to March 2018

QCS’S
Q ...Quality
Establish the Hokkoku brand based on humanpower, CS and high level of skills

Basic policy
We will actively take on challenges to solve regional issues with a focus on realconsulting function as we transform ourselves for new challenges toward the next
decade.
Six Missions

Seek overwhelming speed(1) Towards real professional banking(2) Improving organizational capability — an organization strong for change —(3) Boosting shares in Hokuriku region(4) Enhancing profitability and productivity(5) Setting up the environment where women could play an active role(6) Reducing NPL ratio

S ...Smile

Target management benchmarks

C ...Cost
Make continuous efforts against cost reduction

S ...Speed

March 2015 (Actual)

Bring shines to the region through smiles!
Net profits from core business¥16.8 billion¥17.5 billion or more

Ordinary profit¥17.1 billion¥16.0 billion or more

11.18%

12% — 13%—

14% — 15%

3.68%

2% — 3%

Capital adequacy ratio(National standard)
Capital adequacy ratio(International standard)
NPL ratio(Before partial direct write-off)5

March 2018 (Target)

FINANCIAL HIGHLIGHTS
Thousands of
U.S. dollars

Millions of yen

2015

Total Income ........................................................

¥

2014

74,114¥2013

66,576¥

2012

69,315¥

2011

70,165¥

2015

71,505$

616,744

Income before Income Taxes and Minority
Interests ..............................................................

16,177

15,486

11,458

14,524

13,897

134,618

Net Income ...........................................................

7,989

7,855

6,994

6,314

7,435

66,484

Total Assets ..........................................................

4,179,790

3,513,777

3,487,404

3,405,627

3,294,745

34,782,315

Loans and Bills Discounted .................................

2,355,374

2,350,504

2,322,999

2,265,382

2,202,152

19,600,353

Securities and Trading Securities .........................

1,191,361

893,444886,455

902,655

893,071

9,913,966

Deposits ................................................................

3,142,315

3,161,969

3,151,712

3,096,758

2,953,792

26,148,918

Total Net Assets ...................................................

247,730

223,438

218,492

209,777

202,878

2,061,496<Consolidated>
Capital adequacy ratio (%) ..................................

11.27

13.06

13.69

13.62

14.68

<Non-consolidated>
Capital adequacy ratio (%) ..................................

11.18

12.46

13.11

13.20

14.32

U.S. dollar amounts are translated at the rate of ¥120.17 = $1.00

Total Net Assets

Loans and Bills Discounted

Total Income(Billions of yen)(Billions of yen)(Billions of yen)

247.7

250

200

202.8

209.7

218.4

2,500

223.4

2,202.1

2,265.3

2,322.9

2,350.5

2,355.3

2,000

150

1,500

100

1,000

50

500

80
71.5

74.1

70.1

69.3

2012

2013

66.5

60

40

0

16

2011

2012

2013

2014

0

2012

2013

2014

2015

0

2011

Deposits

Net Income(%)(Billions of yen)(Billions of yen)

13.69

Global Standard

Domestic Standard

2012

2013

2014

7.4

2014

2015

7.8

7.9

2014

2015

6.9

13.06
11.27

2011

8

4,000

14.68

12

4

2011

Capital adequacy ratio (Consolidated)

13.62

8

0

2015

20

2015

3,000

2,953.7

3,096.7

3,151.7

3,161.9

3,142.3

6.3
6

2,000

4

1,000

2

0

2011

2012

2013

2014

2015

0

2011

2012

2013

6

CORPORATE GOVERNANCE STRUCTURE
Basic Approach to the Corporate Governance Structure
In order to realize our corporate philosophy and to achieve the ideas and action goals in the medium-term management plan, the Bankis working to build a corporate governance structure in the belief that it is important to maintain a harmonious relationship withstakeholders, including shareholders, further improve management transparency and reinforce management that strictly observescompliance.
Outline of the Corporate Governance Structure• The model of the corporate governance system is as follows.
Audit Committee

Board of Directors

audit/supervision

Audit Department

Business Advisory Committee

consultation/guidanceManagement Meeting/various committees(Committees in charge)

Internal report system

ALM Committee

Internal audit system

Risk Management Committee
Management Meeting Rules/various committee regulations

Credit Risk Management Committee
Management Administration Division

Comprehensive Risk Management Rules/Compliance Management Rules

ComplianceComprehensive Risk Management
Operational risk

Management Administration Division

Operational Risk Management Regulations

Legal risk, customer protection, etc.

Credit risk

Market risk

Liquidity risk

Clerical risk

System risk

Other risks(Legal risk, Human risk, Tangible asset risk, Management risk, Reputational risk)

Management Administration Division

Loan-Screening Department

Market Finance DivisionInternational Division
General Planning Department

Market Finance Division

General Clerical Department

System Department

Management Administration Division

Credit Risk
Market Risk
Liquidity Risk
Management Regulations Management Regulations Management Regulations

Clerical Risk
System Risk
Management Regulations Management Regulations

Operating offices, each division of the headquarters

Controlling regulations for subsidiaries,“Comprehensive Crisis Management Manual”

Consolidated Subsidiaries• The Board of Directors, which is the supervisory body responsible for the execution of management decision-making and the duties
of directors, is comprised of 10 directors who are not audit committee members, and 6 directors who are audit committee members (ofwhom 4 are outside directors) for a total of 16 members, as of the filing date for the Bank’s securities report (June 30, 2015). The
Board of Directors holds a regular Board of Directors Meeting once a month and, in addition, holds extraordinary meetings as
required for the purpose of making decisions on important matters relating to the Bank’s management policy and other generalmanagement issues.
• The Bank transitioned to a board with audit committee structure upon the approval of partial changes to the Articles of Incorporation
at the 107th Ordinary General Meeting of Shareholders held on June 26, 2015. This transition to an audit committee structure will
enable the Bank to reinforce the audit and oversight functions of the Board of Directors and executive officers, as well as to improve
the transparency and efficacy of the business execution process as a result of the participation in management by outside directors,
with the aim of further enhancing corporate governance and improving our corporate value to meet the expectations of our
stakeholders. Furthermore, we are strengthening our business auditing system by establishing a Business Advisory Committee
consisting of third-party committee members from outside the bank and accepting their proposals and advice. Additionally, the system
also enables us to seek individual advice and guidance from individual committee members.

7•T he Bank has introduced an executive officer system, and in principle holds management meetings, attended by representative
directors, officers in charge and audit committee members, once a week to implement the sharing of overall management information,
improve management efficiency, and expedite decision-making. In addition, we are verifying the effectiveness of our policies andconfirming the progress of business execution through the establishment of weekly morning meetings (attendees: managing directors
and above, and Divisional General Manager) and Loan Liaison Committee (attendees: managing directors and above, and officers incharge) to reinforce communication among departments. Furthermore, we have established a committee organization consisting of
ALM, Management Efficiency Improvement, Risk Management, Compliance, Credit Risk Management, CS, CSR, and Business
Planning Promotion committees and are implementing cross-functional discussions while increasing the involvement of management.
• We believe that this structure will enable the Bank to establish an objective and neutral oversight position.

BASIC POLICY AND OPERATING STRUCTURE FOR RISK MANAGEMENT
As business opportunities for financial institutions grow as a result of advances with financial deregulation, internationalization and therelaxation of regulations, the risks associated with the banking business become more diverse and complex. For banking management
henceforth, it is important to accurately manage risk based on the principle of self-responsibility, while securing adequate incomecommensurate with that risk.
The Bank has laid out the basic matters relating to risk management under its comprehensive risk management rules, whereby eachmanagement department undertakes adequate risk management based on detailed risk management rules, while the Management
Administration Division comprehensively manages overall risk in its role as the supervisory body. Comprehensive risk management
matters are periodically reported to the Board of Directors subsequent to the discussion of quantitative risk by the ALM Committee, nonquantitative risk by the Risk Management Committee, and credit risk by the Credit Risk Management Committee.
Transition to a board with audit committee structure
The Bank transitioned to a board with audit committee structure upon the approval of partial changes to the Articles of Incorporation
at the 107th Ordinary General Meeting of Shareholders held on June 26, 2015. This transition to an audit committee structure will
enable the Bank to reinforce the audit and oversight functions of directors and executive officers, as well as improve thetransparency and efficacy of the business execution process as a result of the participation in management by outside directors, withthe aim of further enhancing corporate governance and improving our corporate value to meet the expectations of our stakeholders.
Furthermore, we are strengthening our business auditing system by establishing a Business Advisory Committee consisting of thirdparty committee members from outside the bank and accepting their proposals and advice.

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CONSOLIDATED BALANCE SHEETSThe Hokkoku Bank, Ltd. and Consolidated Subsidiaries

As of March 31
2015
Assets:Cash and due from banks (Notes 7 and 11)
Call loans and bills bought (Note 7)
Monetary receivables bought
Trading securities (Note 8)
Money held in trusts (Note 9)
Securities (Notes 7, 8 and 13)
Loans and bills discounted (Notes 6 and 7)
Foreign exchanges
Lease receivables and investment in leased assets (Note 17)
Other assets (Note 13)
Tangible fixed assets (Notes 10 and 12)
Intangible fixed assets
Deferred tax assets (Note 20)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets
Liabilities:
Deposits (Notes 7 and 13)
Negotiable certificates of deposit (Note 7)
Call money and bills sold (Note 7)
Guarantee deposit received under securities lendingtransactions (Notes 7 and 13)
Borrowed money (Notes 13 and 14)
Foreign exchanges
Other liabilities
Reserve for bonuses
Net defined benefit liability (Note 21)
Reserve for directors’ retirement benefits
Deferred tax liabilities (Note20)
Deferred tax liabilities arising fromrevaluation of land (Note 10)
Acceptances and guarantees
Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity (Note 15)
Net unrealized gains on available-for-sale securities (Note 8)
Net deferred losses on hedging instruments
Land revaluation surplus (Note 10)
Remeasurements of defined benefit plans (Note 21)
Total accumulated other comprehensive income
Subscription rights to shares (Note 16)
Minority interests
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.
9

¥

¥

2015

2014
(Millions of Yen)

544,907—
3,708
833
15,025
1,190,527
2,355,374
3,553
21,672
14,43838,301
8,970—
17,071(34,594)
4,179,790¥¥(Thousands of U.S. Dollars)(Note 2)

160,303
15,3084,682
437
15,077893,006
2,350,504
2,743
22,812
12,03337,368
7,589
3,198
17,544(28,835)
3,513,777$

4,534,473—
30,856
6,935
125,039
9,907,031
19,600,353
29,573
180,348
120,154318,727
74,647—142,058(287,882)$ 34,782,315

3,079,447
62,867
324,605

3,049,886
112,083
12,65925,625,762
523,156
2,701,215

374,027
7,585
118
39,950801
13,48050
9,816

49,517
7,665
82
24,277787
12,83053—

3,112,486
63,118989
332,450
6,670
112,177
421
81,689¥2,237
17,071
3,932,060¥

2,952
17,5443,290,339

18,623142,058$ 32,720,819¥

26,673
11,289148,850(3,931)
182,882
55,742(388)
2,879(2,915)55,317232
9,297
247,730
4,179,790¥

26,673
11,289142,871(215)
180,620
34,030(277)
3,514(3,197)34,068215
8,534
223,438
3,513,777

221,968
93,9451,238,667(32,714)
1,521,867
463,863(3,236)23,958(24,259)
460,325
1,934
77,3692,061,496$ 34,782,315

CONSOLIDATED STATEMENTS OF INCOME
The Hokkoku Bank, Ltd. and Consolidated Subsidiaries

Year ended March 31
2015
IncomeInterest income on:
Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Other income
Total income¥

Expenses
Interest expense on:
Deposits
Borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses (Note 18)
Total expenses
Income before income taxes andminority interests
Income taxes (Note 20):
Current
Deferred

Net income before minority interests
Minority interests in earnings ofconsolidated subsidiaries
Net income

¥

2015

2014
(Millions of Yen)

42,55530,564
11,851140
10,262
16,035
5,261
74,114¥(Thousands of U.S. Dollars)(Note 2)$

41,522
31,7109,781
30
10,5209,878
4,655
66,576

1,535
824
254
456
2,805
9,476
32,281
11,83657,937

1,368
986
65
315
2,683
9,034
31,782
6,220
51,08912,781
6,861
2,121
3,798
23,34878,861
268,633
98,501
482,125

16,177

15,486

134,618

2,749
4,780
7,530

4,154
2,831
6,986

22,88239,781
62,664

8,646

8,499

71,954

657
7,989

¥

2015

644
7,855

$

¥

782.94
25.54
25.48

5,469
66,484

2015

2014
(Yen)

Amounts per share (Note 23)
Net assets
Net income-basic
Net income-diluted

354,128
254,340
98,6201,167
85,396
133,438
43,780616,744(U.S. Dollars)(Note 2)¥$683.54
24.98
24.92

6.51
0.21
0.21

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
The Hokkoku Bank, Ltd. and Consolidated Subsidiaries

Year ended March 31
2015

Net income before minority interests¥

Other comprehensive income (Note 19)
Net unrealized gains on available-for-sale securities
Net deferred gains on hedging instruments
Land revaluation surplus
Remeasurements of defined benefit plans (Note 21)
Total other comprehensive income

2015

2014
(Millions of Yen)

8,646

¥

21,832
(110)
231
282
22,234(Thousands of U.S. Dollars)(Note 2)

8,499$

71,954

181,676
(923)
1,922
2,350
185,026

2,744
121
—
—
2,866

Comprehensive income¥

30,881¥

11,366$

256,980

Total comprehensive income attributable to:
Owners of the parent
Minority interests¥

30,104777¥

10,224
1,141$

250,514
6,465

See accompanying notes to consolidated financial statements.
10

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSThe Hokkoku Bank, Ltd. and Consolidated Subsidiaries
Millions of Yen
Shareholder’s equity
Commonstock
Balance at April 1, 2013¥

26,673

Capitalsurplus¥Treasurystock

Retainedearnings

11,289¥137,510¥

Total shareholders’equity(197) ¥

175,276

Cash dividends——(2,049)—(2,049)Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock

—

—

7,855

—

7,855

—

1,175

(1,175)

—

—

—

—

—

(1,224)(1,224)

Disposal of treasury stock

—

(13)

—

45

32

Cancellation of treasury stock—(1,161)

—

1,161

—

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

729

—

729

—

—

—

—

—

—

—

5,360

(17)

5,343

Balance at March 31, 2014

26,673

11,289142,871(215)

180,620

—

—

(813)

—

(813)

26,673

11,289142,058(215)

179,806

Cumulative effect of accountingchanges
Balance at April 1, 2014, as
restated
Cash dividends——(2,042)—(2,042)

Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock

—

—

7,989

—

7,989

—

20

(20)

—

—

—

—

—

(3,786)(3,786)

Disposal of treasury stock

—

(20)

—

70

49

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

866

—

866

—

—

—

—

—

—

Balance at March 31, 2015 ¥

26,673—¥

11,2896,792¥

148,850(3,716)¥

3,076(3,931) ¥182,882

Millions of Yen
Accumulated other comprehensive incomeNet
unrealized
gains onavailable-forsale
securities
Balance at April 1, 2013¥

31,783Net deferredlosses on
hedging
instruments
¥

(399)

Remeasurementsof defined
benefit plansLandrevaluation
surplus
¥

4,243

¥

—

¥

35,627

Subscription
rights toshares¥185

Minority
interests¥

7,403

Total net
assets¥

218,492

Cash dividends

—

—

—

—

—

—

—

(2,049)Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock

—

—

—

—

—

—

—

7,855

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(1,224)

Disposal of treasury stock

—

—

—

—

—

—

—

32

Cancellation of treasury stock

—

—

—

—

—

—

—

—

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

—

—

—

—

—

729

2,246

121

(729)

(3,197)(1,559)

29

1,130

(398)

2,246

121

(729)

(3,197)(1,559)

29

1,130

4,945

Balance at March 31, 2014

34,030

(277)

3,514

(3,197)34,068215

8,534

223,438

—

—

—

—

—

—

—

(813)

34,030

(277)

3,514

(3,197)34,068215

8,534

222,624

—

—

—

—

—

—

—

(2,042)

Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock

—

—

—

—

—

—

—

7,989

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(3,786)

Disposal of treasury stock

—

—

—

—

—

—

—

49

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

—

—

—

—

—

866

21,712

(110)

(635)

282

21,24817763

22,029Balance at March 31, 2015 ¥

55,742

Cumulative effect of accountingchanges
Balance at April 1, 2014, as
restated
Cash dividends

21,712
¥

(110)

(635)

(388) ¥

2,879¥

See accompanying notes to consolidated financial statements.
11

Total
accumulated
othercomprehensive
income282

21,248(2,915) ¥55,317

17
¥

232

763
¥

9,297

25,105¥

247,730

Thousands of U.S. Dollars (Note 2)
Shareholder’s equity
Commonstock
Balance at March 31, 2014$

Cumulative effect of accountingchanges
Balance at April 1, 2014, as
restated
Cash dividends

221,968

Capitalsurplus$Treasurystock

Retainedearnings

93,945$ 1,188,914$(1,790)Total shareholders’equity$ 1,503,038(6,771)(6,771)

221,968

93,945

1,182,142(1,790)1,496,266——(16,992)—(16,992)

Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock——

66,484—

66,484

—

173

(173)

—

—

—

—

—

(31,512)(31,512)

Disposal of treasury stock

—

(173)

—

588

414

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

7,207

—

7,207

—

—

—

—

—

(30,924)

25,600—

Balance at March 31, 2015 $

221,968$—

56,524

93,945$ 1,238,667$(32,714) $ 1,521,867

Thousands of U.S. Dollars (Note 2)
Accumulated other comprehensive incomeNet
unrealized
gains onavailable-forsale
securities
Balance at March 31, 2014$

Cumulative effect of accountingchanges
Balance at April 1, 2014, as
restated
Cash dividends

283,182

Net deferredlosses on
hedging
instruments$(2,313)Landrevaluation
surplus$29,242

Total
accumulated
othercomprehensive
incomeRemeasurementsof defined
benefit plans$(26,610)$283,501

Subscription
rights toshares$

1,791

Minority
interests$

71,018

Total net
assets$ 1,859,349(6,771)
283,182(2,313)29,242(26,610)283,501

1,791

71,0181,852,578

—

—

—

—

—

—

—

(16,992)

Net income
Transfer from retained earnings tocapital surplus
Purchase of treasury stock

—

—

—

—

—

—

—

66,484

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(31,512)

Disposal of treasury stock

—

—

—

—

—

—

—

414

Reversal of land revaluation surplus
Net changes in items other thanshareholders’ equity
Total changes during the year

—

—

—

—

—

—

—

7,207

180,681(923)(5,284)2,350

176,823

143

6,351

183,317

180,681(923)(5,284)2,350

176,823

143

6,351

208,918

Balance at March 31, 2015 $463,863(3,236) $23,958(24,259) $460,325

77,369$ 2,061,496

$

$

$

1,934

$

See accompanying notes to consolidated financial statements.
12

CONSOLIDATED STATEMENTS OF CASH FLOWSThe Hokkoku Bank, Ltd. and Consolidated Subsidiaries

Year ended March 31
2015
Cash flows from operating activities
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization
Losses on impairment
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in reserve for bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in directors’ retirement benefits
Increase (decrease) in reserve for reimbursement of deposits
Increase (decrease) in reserve for losses on refund of interest
Increase (decrease) in reserve for customer service points
Accrued interest and dividend income
Accrued interest expenses
Losses (gains) on investment securities, net
Losses (gains) on money trusts
Foreign exchange losses (gains), net
Losses (gains) on disposal of fixed assets
Decrease (increase) in loans and bills discounted
Increase (decrease) in deposits
Decrease (increase) in due from banks(exclusive of the Bank of Japan)
Decrease (increase) in call loans and others
Increase (decrease) in call money and others
Increase (decrease) in guarantee deposit received
under securities lending transactions
Decrease (increase) in trading account assets
Decrease (increase) in foreign exchange assets
Increase (decrease) in foreign exchange liabilities
Decrease (increase) in lease receivables and investment in leased assets
Interest and dividends received
Interest paid
Other, net
Subtotal
Income taxes paid, net of refund
Net cash provided by (used in) operating activities¥

Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from redemption of investment securities
Decrease in money held in trusts
Interests and dividends received on investments
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Payment on discharge of asset retirement obligation
Net cash provided by (used in) investing activities
Cash flows from financing activities
Cash dividends paid
Dividends paid to minority interests
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 11)

See accompanying notes to consolidated financial statements.
13

¥

2015

2014
(Millions of Yen)

16,177¥(Thousands of U.S. Dollars)(Note 2)

15,486$

134,618

2,666
1,881
5,759
13
(608)
(2)
18
(15)
19
(42,555)
1,535(8,093)(171)(8,244)839(4,879)(19,654)

2,321
1,261
(630)
(19)
5,336
(2)
19
(14)
8
(41,522)
1,368
(339)
(127)
(4,939)(171)(27,514)
10,25622,187
15,65447,927115(5,066)
(21)
149
(129)
163
(354,128)
12,781(67,351)(1,426)(68,608)
6,982(40,604)(163,551)

216
16,283311,865(408)
86,456(7,426)

1,802
135,504
2,595,206

324,510
(395)
(810)
35
786
31,070(1,655)
15,255641,848(4,146)
637,701

14,101
(254)
(274)
29
(1,757)32,612(2,441)(3,342)
78,073(4,816)73,2572,700,424(3,294)(6,743)
299
6,547
258,557(13,777)
126,950
5,341,169(34,509)5,306,660(1,229,524)
825,796
150,373
52
13,785(4,929)(3,053)419(37)(247,118)(305,399)
95,016
210,779
9,949
12,240(6,496)(4,067)449(51)
12,420(10,231,541)
6,871,900
1,251,340
433
114,713(41,022)(25,406)
3,490
(312)
(2,056,405)(2,040)(13)(3,786)49(5,791)
28
384,820
159,409544,230(2,046)(10)(1,224)32(3,249)22
82,44976,959159,409(16,978)(114)(31,512)414(48,191)
241
3,202,304
1,326,535
4,528,839¥$

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Hokkoku Bank, Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2015 and 2014
1. Basis of Presentation
The accompanying consolidated financial statements of The Hokkoku
Bank, Ltd. (the “Bank”) and consolidated subsidiaries are prepared on
the basis of accounting principles generally accepted in Japan, which
are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and arecompiled from the consolidated financial statements prepared by the
Bank as required by the Financial Instruments and Exchange Law ofJapan.
In addition, the notes to the consolidated financial statements include
information which is not required under accounting principles
generally accepted in Japan, but is presented herein as additional
information.
As permitted by the Financial Instruments and Exchange Law, amountsof less than one million yen have been rounded down. As a result, thetotals shown in the accompanying consolidated financial statements(both in yen and U.S. dollars) do not necessarily agree with the sumsof the individual amounts.
2. U.S. Dollar Amounts
The Bank maintains its records and prepares its financial statements inyen. Amounts in U.S. dollars are presented solely for the convenienceof readers outside Japan. The rate of ¥120.17 = U.S. $1.00, the rateof exchange in effect on March 31, 2015 has been used inconversion. The conversion should not be construed as a meaning thatyen could be converted into U.S. dollars at the above or any otherrate.
3. Summary of Significant Accounting Policies
a. Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Bank and its 5 subsidiaries at March 31, 2015 and2014. All significant inter-company accounts and transactions havebeen eliminated in consolidation.
Ishikawa Small Business Revitalization Fund Investment Limited
Liability Partnership is not consolidated, nor accounted for underthe equity method, since the materiality in terms of assets, ordinary
profit, share of its income and its retained earnings is lessimportant and its non-consolidation will not prevent reasonable
judgments regarding the Group’s financial position and operating
results.
b. Trading account securities
Trading account securities are stated at fair value at the end of theyear, and the related cost of sales is determined by the moving
average method.
c. Securities
Held-to-maturity securities are stated at amortized cost (straight-line
method) using the moving average method. Stocks inunconsolidated subsidiaries which are not accounted for by theequity method are stated at cost using the moving average method.
Available-for-sale securities are stated in principle at fair value
based on the market value as of year-end (cost of securities sold is
calculated using the moving average method). However, thosesecurities whose fair value is extremely difficult to be determined
are stated at cost using the moving average method.
The net unrealized gains or losses on available-for-sale securities
are included directly in net assets.
Securities invested as assets in trust in separately managed money
trusts for the principal purpose of securities investment are stated atfair value.
d. Derivative financial instruments
Derivatives are stated at fair value.

e. Tangible fixed assets
Tangible fixed assets are carried at cost less accumulated
depreciation.
Depreciation of tangible fixed assets of the Bank is computed by the
declining-balance method. The useful lives of buildings andequipment are summarized as follows.
Buildings
10 to 50 years
Others3 to 20 years
Depreciation of tangible fixed assets of the consolidated
subsidiaries is computed primarily by the declining-balance method
over the estimated useful lives of the respective assets.
Depreciation of assets held under finance leases which do nottransfer ownership of the leased assets to the lessee is computed by
the straight-line method over the lease terms of the respective
assets. The salvage value for depreciation purpose is determinedbased on the lease contracts.
f. Intangible fixed assets
Amortization of intangible fixed assets of the Bank is computed by
the straight-line method. Acquisition costs of software to be usedinternally are capitalized and amortized by the straight-line method
primarily over a useful life of five years.
g. Reserve for possible loan losses
The reserve for possible loan losses of the Bank is provided as
detailed below in accordance with the internal rules for providing
reserves for possible loan losses:
For claims to debtors who are legally bankrupt (as a result ofbankruptcy special liquidation, etc.) or who are substantiallybankrupt, a reserve is provided based on the amount of the claims,on the net amount expected to be collected by the disposal ofcollateral, or as a result of the execution of a guarantee.
For claims to debtors who are not currently bankrupt, but are likely
to become bankrupt, a reserve is provided according to the amountconsidered necessary based on an overall solvency assessment of
the amount of the claim, on the net amount expected to be collectedby the disposal of collateral, or as a result of the execution ofguarantee. In addition, for claims to such significant debtors anddebtors who have restructured loans exceeding a certain credit
amount that are possible to estimate reasonably cash flows fromcollection of principals and receipt of interest, a reserve is provided
according to the difference between the amount of related cash
flows discounted by the original contract interest rate before
restructuring the loans and its carrying book value.
For other claims, a reserve is provided based on the Bank’s pastloan-loss experience. All claims are assessed by the Business
Section (at the branches and the related head office divisions)based on the Bank’s internal rules for the self-assessment of asset
quality. The Corporate Audit Department, which is independent of
the Business Section, subsequently conducts audits of suchassessments.
The reserves of the consolidated subsidiaries are provided forgeneral claims at an amount based on the actual historical rate ofloan losses and for specific claims (from potentially bankrupt
customers, etc.) at an estimate of the amounts deemed uncollectible
based on the respective assessments.
For collateralized or guaranteed claims from debtors who arelegally or substantially bankrupt, the amounts of the claims deemed
uncollectible in excess of the estimated value of the collateral or
guarantees have been written off in aggregate amounts at ¥44,179
million ($367,645 thousand) and ¥50,929 million as of March 31,
2015 and 2014, respectively.
h. Bonuses to employees
The reserve for bonuses to employees is provided at the estimatedamount to be attributed to the current fiscal year.

14

i. Directors’ retirement benefits
The reserve for directors’ retirement benefits is recorded at an
estimated amount to be required to be paid if all directors retired at
the balance sheet date.
j. Reserve for reimbursement of deposits
The reserve for reimbursement of deposits is recorded at an
estimated amount to be required to reimburse the customers’ claimson the derecognized sleeping deposit accounts.
k. Reserve for loss on refund of interest
The reserve for loss on refund of interest is recorded by a certain
consolidated subsidiary to provide for the customers’ claims torefund the interest exceeding the maximum limit of interest rate
stipulated by the Maximum Interest Rate Law based on the pastexperience of refund.
l. Reserve for customer service points
The reserve for customer service points is recorded at an estimatedamount based on the future expected payment resulting from thecustomers’ use of points granted to contractors of “Hokkoku Point
Service” and credit card members based on the point system
incorporated to promote the use of such services and credit cards.
m. Retirement benefit plans
In calculating retirement benefit obligations, the benefit formulabasis (straight-line basis in 2014) is used as a method of attributing
expected retirement benefits to the period up to the end of this fiscal
year. Treatments of prior service cost and actuarial gains or losses
are as follows:
Prior service cost is amortized by the straight-line method over acertain period (10 years) which falls within the average remaining
years of service of the employees when incurred.
Actuarial gains or losses are amortized in the following years after
incurred by the straight-line method over a certain period (10years) that falls within the average remaining years of service ofthe employees.
n. Foreign currency translations
Foreign currency assets and liabilities are translated into Japanese
yen equivalents primarily using the applicable rate of exchange
effective at the balance sheet date.
o. Leases
As lessor, all finance leases which transfer ownership of the leased
assets to the lessee are recognized as lease receivables, and all
finance leases which do not transfer ownership of the leased assets
to the lessee are recognized as investment in leased assets.
Investment in leased assets recorded at April 1, 2008, when therevised accounting standard for lease transactions was adopted,
was stated at the reasonable cost less accumulated depreciation atMarch 31, 2008 pursuant to the paragraph 81 of Implementation
Guidance No.16, “Implementation Guidance on AccountingStandard for Lease Transactions” issued on March 30, 2007. If
these lease transactions had been retroactively accounted for as
ordinary sale transactions pursuant to paragraph 80 of the
Guidance, income before income taxes and minority interests
would have increased by ¥29 million ($247 thousand) and ¥76
million for the years ended March 31, 2015 and 2014,
respectively.
Finance lease revenue and related cost of revenue are recorded
when the lease payment is received.
p. Hedge accounting
Hedging interest rate risk
The Bank applied the deferral method to account for financial
instruments that hedge the interest rate risk on financial assets andliabilities of the Bank, as provided in the “Accounting and Auditing
with Regard to Foreign Currency Transactions in the Banking
Industry” (The Japanese Institute of Certified Public Accounts
Industry Audit Committee Report No. 24, hereinafter “JICPA
Industry Audit Committee Report No. 24”). The hedge effectivenessis assessed by grouping and specifying hedged items including
deposits and loans and hedging instruments including interest rate
swaps by certain period. The interest rate swaps of certain
consolidated subsidiaries which qualify for hedge accounting and15

meet specific matching criteria are not remeasured at market value
but the differential paid or received under the swap agreements arerecognized and included in interest expenses or income.
Hedging foreign exchange risk
The Bank applies the deferral method to account for derivative
instruments that hedge the foreign exchange risk on various
foreign-currency financial assets and liabilities, as provided in the“Accounting and Auditing with Regard to Foreign Currency
Transactions in the Banking Industry” (The Japanese Institute ofCertified Public Accounts Industry Audit Committee Report No. 25,
hereinafter “JICPA Industry Audit Committee Report No. 25”). The
hedge effectiveness of these currency-swap transactions, exchangeswap transactions and similar instruments to hedge the foreignexchange risks of foreign-currency financial assets or liabilities isassessed by comparing the foreign currency position of the hedged
assets or liabilities with that of the hedging instruments.
q. Consumption taxes
Transactions subject to national and local consumption taxes arerecorded at amounts exclusive of consumption taxes.
Nondeductible consumption taxes levied on the purchase ofpremises and equipment are charged to income when incurred.
r. Cash and cash equivalents
For the purpose of reporting cash flows, cash and cash equivalents
consist of cash and due from the Bank of Japan.
4. Changes in Accounting Policies
Accounting Standard for Retirement Benefits and related guidance
The Bank has adopted Paragraph 35 of “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26 issued on May 17,
2012, “Accounting Standard”) and Paragraph 67 of “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No.
25 issued on May 17, 2012, “Guidance”) from the beginning of
the year ended March 31, 2015. Accordingly, the Bank hasreviewed its calculation methods for the projected benefit obligationand service cost, and changed the method for attributing the
expected benefit to periods from a straight-line basis to a benefit
formula basis.
The Accounting Standard and Guidance are applied in accordancewith the transitional treatment stipulated in Paragraph 37 of the
Accounting Standard. The effect, arising from the change incalculation method for the projected benefit obligation and service
cost, is reflected in retained earnings as of the beginning of theyear ended March 31, 2015.
As a result, net defined benefit liability decreased by ¥1,259
million ($10,477 thousand) and retained earnings decreased by¥813 million ($6,771 thousand) as of the beginning of the year
ended March 31, 2015. In addition, income before income taxes
and minority interests increased by ¥236 million ($1,968
thousand). The effect of these changes on profit and loss for theyear ended March 31, 2015 is considered to be immaterial.
The effect of this change on net assets per share is disclosed in
Note 23.
5. New Accounting Standards Not Yet Adopted
The revision of Accounting Standard for Business Combinations(issued on September 13, 2013) and related guidance(a) Outline
The accounting standard has been revised mainly on (i) thetreatment of a change in the parent company’s ownershipinterest in a subsidiary in the case where the parent company
continues to control the subsidiary upon additionally acquiring
the shares of the subsidiary or other cases, (ii) the treatment ofacquisition cost, (iii) the treatment of the transitional
accounting, and (iv) the presentation of net income and thechange in presentation from minority interests to noncontrolling interests.
(b) Scheduled Date of Application
The Bank is scheduled to apply this accounting standard afterrevision from the beginning of the fiscal year starting on April
1, 2015.
(c) Effect of Application of this accounting standard
The effect of the application of this accounting standard isunder consideration.

6. Loans and Bills Discounted
Loans to borrowers under bankruptcy procedures and delinquentloans totaled ¥5,180 million ($43,107 thousand) and ¥73,259
million ($609,634 thousand), respectively, at March 31, 2015, and¥5,829 million and ¥70,968 million, respectively, at March 31,
2014. A loan is placed on non-accrual status when substantial doubt
as to the collectability of its principal and interest is judged to exist, if
payment is post due for a certain period of time, or for other reasons.
Loans to borrowers in bankruptcy represent non-accrual loans, after
the charge-offs of loans deemed uncollectible, to borrowers who arelegally bankrupt as defined in Article 96, Paragraph 1,
Subparagraph 3 and 4 of Enforcement Ordinance of the Corporation
Income Tax Law.
Delinquent loans are non-accrual loans other than loans to borrowers
in bankruptcy or loans on which interest payments have been deferredin order to assist the restructuring of the borrowers.
Loans past due for 3 months or more totaled ¥98 million ($820
thousand) and ¥348 million at March 31, 2015 and 2014,
respectively. Loans past due for 3 months or more are those whose
principal or interest payments are 3 months or more past due but are
not included in loans to borrower under bankruptcy procedures ordelinquent loans. Restructured loans totaled ¥1,036 million ($8,624
thousand) and ¥1,054 million at March 31, 2015 and 2014,
respectively.
Restructured loans are those who on which the Bank has granted
certain concessions, such as a reduction at the contractual interest rateor principal amount or a deferral of interest/principal payments, inorder to assist the restructuring of the borrowers. Excluded fromrestructured loans are loans to borrowers under bankruptcy
procedures, other non-accrual loans, and loans past due for 3 months
or more.
The total of loans to borrowers under bankruptcy procedures, othernon-accrual loans, loans past due for 3 months or more andrestructured loans amounted to ¥79,574 million ($662,186 thousand)and ¥78,200 million at March 31, 2015 and 2014, respectively.
Bills discounted are accounted for as financial transactions inaccordance with “Treatment of Accounting and Auditing in Applying
Accounting Standards for Financial Instruments in the Banking
Industry” issued by the JICPA. The Bank has the right to sell or
re-pledge the banker’s acceptance bills, commercial bills discounted,
documentary bills and foreign exchange bought without restrictions.
The face value of banker’s acceptance bills, commercial bills,
documentary bills and foreign exchange bought at a discount was¥14,817 million ($123,308 thousand) and ¥16,222 million as ofMarch 31, 2015 and 2014, respectively.
Overdraft agreements and loan commitments are agreements underwhich the Bank and its consolidated subsidiaries are obliged to extend
loans up to a prearranged limit unless the customer is in breach ofcontract. The loan commitments not yet drawn down at March 31,
2015 and 2014 totaled ¥460,028 million ($3,828,145 thousand)and ¥472,397 million, respectively; ¥449,690 million ($3,742,122
thousand) of which, at March 31, 2015 (2014: ¥461,483 million),
was related to agreements whose contractual terms were for one year
or less or which were unconditionally cancelable at any time.
As the majority of these agreements expire without the right to extend
the loans being exercised, the undrawn commitment balance does notaffect the future cash flows of the Bank or of its consolidated
subsidiaries. These agreements usually include provisions which
stipulate that the Bank and its consolidated subsidiaries have the righteither to refuse the execution of the loans or to reduce the contractual
commitments when there is a change in the borrower’s financial
condition, or when additional assurance of the financial soundness
and creditworthiness of a borrower is necessary, or when other
unforeseen circumstances arise.
The Bank and its consolidated subsidiaries take various measures toprotect their credit. Such measures include obtaining real estate or
securities as collateral at the time of entering into the agreements,
monitoring a customer’s business on a regular basis in accordancewith established internal procedures, and amending the loan
commitment agreements when necessary.

7. Financial Instruments and Related Disclosures
1. Policy on financial instruments
The Group provides financial services such as banking business andleasing business. Major banking business includes lending services,
bills discounting and fund management through dealing andunderwriting Japanese government bonds, municipal bonds andavailable-for-sale securities. On the other hand, the fund is raised
mainly by taking deposits and negotiable certificates of deposit andalso by issuance of bonds, call money and others according tonecessities.
The Group conducts asset and liability management (ALM) andmanages the risks identifying various types of risk exposuresassociated with the banking business, since the Group holds financial
assets and liabilities exposed to the market risk of fluctuation ofinterest rates. As part of the risk management, the Group utilizes
derivative transactions.
2. Contents and risk of financial instruments
Financial assets held by the Group mainly consist of loans tocorporate and individual customers which are exposed to credit risk
arising from nonperformance of the customers. In addition, the loanbalances are concentrated to Ishikawa prefecture where the head
office of the Bank is located and accordingly, the changes in theeconomic circumstances of the region may have a great impact on thecredit risk. Securities mainly consist of Japanese government bonds,
municipal bonds, corporate bonds and equity securities that areclassified as available-for-sale securities. These securities are exposedto credit risk of issuers and market risks of fluctuation in interest rates,
market prices and foreign exchange rates for bonds denominated inforeign currencies.
On the other hand, financial liabilities consist of mainly deposits andnegotiable certificates of deposit, bonds, call money and others.
With respect to bonds and call money, the Bank may be forced toraise fund under unfavorable conditions and accordingly, significantly
increase funding costs in case that fund raising capacity of the Bank
significantly declined under certain circumstances such as significant
deterioration of financial positions of the Bank.
Derivative transactions consist of hedging activities performed as partof ALM against market risks (interest rate risk and foreign exchangerisk) associated with assets and liabilities held by the Group andtransactions to respond to customers’ diversified needs for hedging
against the risks of customers. The Bank applies hedge accounting forinterest rate swaps and currency swaps employed by the Bank forhedging purposes and periodically verifies the effectiveness ofhedging activities assessing if the correlation between hedging
instruments and hedged items of assets and liabilities is appropriate,
and also if the market risks of interest rates and foreign exchange
rates are offset by hedging instruments.
3. Risk management system for financial instruments
Credit risk management:
The Group has established and operates a credit control system
consisting of credit review by individual transaction, internal credit
rating, self-assessment, major account credit control, measurement ofrisk volume and measures on problem loans in accordance with credit
risk control policies, credit policies, lending operation rules andcontrol policies and procedures on credit risks. These credit controls
are performed by the Loan-Screening Department, the Loan Control
Department and the credit investigation sections of the consolidated
subsidiaries as well as the operating offices and periodically subject toauthorization by and reported to the Board of Directors, whereappropriate. In addition, the Audit Department audits the status ofcredit risk controls. Credit risk associated with the issuers of securities
and counterparty risk associated with cash transactions and derivativetransactions are controlled by periodically identifying credit
information and fair values by the Market Finance Division and theInternational Division.

16Market risk management:(1) Interest rate risk
The Bank funds loans and securities mainly with deposits taken, butholds long-term and short-term interest rate gaps arising from thetiming difference in the maturities repricing deposits and loans.
Accordingly, the Management Administration Division monitors therisk exposures by establishing risk limits based on the integrated
risk control policy and integrated risk control rule and reports to
the ALM Committee and the Board of Directors. In addition, thegeneral planning department and Management Administration
Division monitor the interest rate risk based on the interest ratesensitivity analysis, gap analysis, ladder analysis and outlier
approach and report to the ALM Committee on a regular basis.
The Bank also enters into interest rate swap contracts to hedge theinterest rate fluctuation risk.
(2) Foreign exchange risk
The Bank holds, in part, foreign currency denominated assets andliabilities. These foreign currency denominated assets and liabilities
are appropriately hedged using currency swaps and other,whereby their exposures to the foreign exchange risk arecontrolled.
(3) Price fluctuation risk
The Group controls the price fluctuation risk associated with equity
securities and investment trusts in accordance with the integrated
risk management policies and procedures to control the exposures
within the Bank’s risk tolerance while securing appropriate
earnings. Among these, the Bank established limits for transactions
which require risk controls. Moreover, the middle office of theMarket Finance Division, in cooperation with the Management
Administration Division, is monitoring the volume of risk exposuresand verifying compliance with the operating limit. In addition, theManagement Administration Division specifies risks andimplements measurement and analysis of those risks and stresstests. Such information is reported to the ALM Committee and
Board of Directors on a regular basis and where appropriate.
(4) Derivative transactions
With respect to derivative transactions, the Bank establishedinternal rules defining the authority and hedge policies and credit
lines by counterparty. Front offices that enter into the contacts,back offices that conduct reconciliation procedures and controls
the credit lines and the divisions that assess the effectiveness ofhedges are separated so that the internal control functions
effectively.
(5) Quantitative information related to market risk
Main financial instruments which are exposed to interest rate riskor stock price fluctuation risk are “Loans and bills discounted,”“Securities,” “Deposits,” “Bonds,” “Derivatives” and etc.
The Bank adopts the variance-covariance method (holding period:
half a year, confidence interval: 99.9%, observation period:720
business days in computing the VaR with respect to interest rate,
stock price and investment trust related instruments. Interest rate
related VaR, stock price related VaR and investment trust pricerelated VaR of the Group amounted to ¥23,575 million ($196,182
thousand), ¥50,531 million ($420,495 thousand) and ¥12,056
million ($100,324 thousand) as of March 31, 2015, and interest
rate related VaR and stock price related VaR of the Group as ofMarch 31, 2014 amounted to ¥15,918 million and ¥33,913
million, respectively. With respect to the measurement of interest
rate risk exposure of liquid deposits, the Bank adopts depositinternal models.
The Bank implements back-testing to compare the VaR computedby the model with actual profit and loss in the securities andconfirms that the measurement model in use captures the market
risk with sufficient precision, since the frequency that actual losses
exceeded VaR was nil in the interest rate risk, stock pricefluctuation risk and investment trust price fluctuation risk during
250 business days as a result of back-testing implemented at theend of March 2015 and it was one time in the interest rate risk
and three times in the stock price fluctuation risk during 250
business days as a result of back-testing implemented at the end of
March 2014.
However, the risk under certain abnormal market fluctuations may
not be captured, since the VaR is measured under a definite
probability of incidence statistically computed based on historicalmarket fluctuations. In addition, VaR is a statistical value computed

17

based on the assumptions and it is not intended to estimate
maximum amount of losses.
4.	S upplementar y explanation on the fair value of financial
instruments
The fair value of financial instruments comprises the value determinedbased on the quoted market price and the valuation calculated on areasonable basis where no market price is available.
Fair value of financial instruments
The following table summarizes the carrying amount, fair value anddifference of financial instruments as of March 31, 2015 and 2014;
Note that equity securities whose fair value is difficult to determine are
not included in the table (see Note 2 below).
March 31, 2015
Millions of yen

Carrying amount Fair value
Difference
Cash and due from banks ¥544,907 ¥544,907 ¥—Call loans and bills bought———
Securities:
Held-to-maturity securities———
Available-for-sale securities 1,186,213 1,186,213—
Loans
2,355,374
Reserve for possible loan
(25,073)
losses (*1)
2,330,301 2,349,715
19,414
Total assets
4,061,422 4,080,836
19,414
Deposits
3,079,447 3,079,472
24
Negotiable certificates of deposit
62,86762,8670Call money and bills sold
324,605
324,605—
Guarantee deposit received under
374,027
374,027—securities lending transactions
Total liabilities
3,840,948 3,840,973
24
Derivative transactions (*2)
To which hedge accounting
(3)
(3)
—
is not applied
To which hedge accounting
518
518
—
is applied
Total derivative transactions
515
515
—
March 31, 2015

Thousands of U.S. dollars

Carrying amount Fair value
Difference
Cash and due from banks $4,534,473 $4,534,473 $—Call loans and bills bought———
Securities:
Held-to-maturity securities———
Available-for-sale securities 9,871,127
9,871,127—
Loans
19,600,353
Reserve for possible loan
(208,648)
losses (*1)
19,391,704 19,553,262
161,557
Total assets
33,797,305 33,958,863
161,557
Deposits
25,625,762 25,625,969
207
Negotiable certificates of deposit
523,156
523,1560Call money and bills sold2,701,215
2,701,215—
Guarantee deposit received under
3,112,486
3,112,486—
securities lending transactions
31,962,620 31,962,828
207
Total liabilities
Derivative transactions (*2)
To which hedge accounting
(26)
(26)
—
is not applied
To which hedge accounting
4,315
4,315
—
is applied
4,289
4,289
—
Total derivative transactions

March 31, 2014
Millions of yen

Carrying amount Fair value
Cash and due from banks ¥160,303 ¥160,303
15,30815,308Call loans and bills bought
Securities:
Held-to-maturity securities
380
382
Available-for-sale securities
888,527
888,527Loans
2,350,504
Reserve for possible loan
(27,306)
losses (*1)
2,323,197
2,345,686
Total assets
3,387,717
3,410,208
Deposits
3,049,886
3,049,933
Negotiable certificates of deposit
112,083
112,085
Guarantee deposit received under
securities lending transactions
Total liabilities
Derivative transactions (*2)
To which hedge accounting
is not applied
To which hedge accounting
is applied
Total derivative transactions

Difference
¥
—
—
1
—

22,48822,49047
149,51749,517—3,211,487

3,211,535

48

3

3

—

(799)

(799)

—

(796)

(796)

—

(*1) A general reserve for possible loan losses and a specific reserve for possible
loan losses corresponding to loans are deducted.
(*2) Derivative transactions recorded under other assets and other liabilities arepresented on a net basis.

(Note 1) Computation method for fair value of financial instruments
AssetsCash and due from banks:
With respect to due from banks without maturities, the carrying
amount is presented as the fair value approximates the carrying
amount. With respect to due from banks with maturities, the carrying
amount is presented as the fair value as the fair value approximatesthe carrying amount.
Call loans and bills bought:
The carrying amount is presented as the fair value as the residual
maturity is less than one year and the fair value approximates the
carrying amount, since the remaining maturity is short (less than oneyear).
Securities:
The fair value of equity securities is determined using the market priceat the exchanges and the fair value of debt securities is determinedusing the price presented by Japan Securities Dealers Association(“JSDA”) or the price obtained from the financial institutions. The fairvalue of investment trusts is determined using the published standard
quotation. The fair value of private bonds guaranteed by the Bank iscalculated adding the credit risk to the market interest rate
corresponding to the residual maturities.
Loans:
The fair value of loans with variable interest rates is presented using
the carrying amount as the fair value approximates the carrying
amount, as long as the credit situation of the borrowers does not varysignificantly after executing the loans, since they reflect the market
interest rates due to their short-term nature. The fair value of loans
with fixed rates is computed, by discounting the aggregate value ofprincipal and interest at the interest rate assumed if the same loans
were newly executed, for each category of type of loans, internalratings and maturities. As for the loans whose maturity is less than
one year, the carrying amount is presented as the fair value as the fairvalue approximates the carrying amount.
With respect to receivables from “legally bankrupt” borrowers,“substantially bankrupt” borrowers and “likely to become bankrupt”
borrowers, the fair value approximates the carrying amount, net of areserve for possible loan losses and such amount is presented as thefair value.
With respect to loans whose repayment term is not determinedbecause of the characteristics that the loans are limited within theamount of pledged assets, the carrying amount is presented as the fairvalue as the fair value is expected to approximate the carrying
amount considering the expected repayment term and pricing
conditions.

Liabilities
Deposits and negotiable certificates of deposits:
With respect to on-demand deposits, the payment obligation when
demanded at the balance sheet date, which is the carrying amount, isdeemed to be the fair value. The fair value of time deposits iscomputed using the present value by discounting future cash flows foreach category of certain period. The interest rate to be applied whena new deposit is taken is used as the discount rate. Regarding
deposits whose residual maturity is less than one year, the carrying
amount is presented as the fair value as the fair value approximatesthe carrying amount.
Call money and bills sold and guarantee deposit received under
securities lending transactions:
The carrying amount is presented as the fair value as the residual
maturity is less than one year and the fair value approximates the
carrying amount, since the remaining maturity is short (less than oneyear).
Derivative transactions
Derivative transactions comprise interest rate related transactions(interest rate swaps, etc.) and currency related transactions (currency
options, currency swaps, etc.) and the fair value of derivatives isdetermined using the value computed using the discounted present
value or option pricing models.
(Note 2)	The following table summarizes financial instruments whose
fair value is extremely difficult to estimate: Note that these
instruments are not included in the table above regarding
the fair value of financial instruments.
2015

Carrying amount
2014
2015

(Millions of yen)

Unlisted equity securities (*1) (*2)
Investment in partnershipTotal¥3,861453¥4,314¥3,866232¥4,099(Thousands of
U.S. dollars)$32,129
3,774$35,904(*1) The fair value of unlisted equity securities is not disclosed, since there is nomarket price and it is extremely difficult to estimate the fair value.
(*2) The Bank recognized loss on impairment of ¥15 million on unlisted equity
securities for the years ended March 31, 2014.

(Note 3)	Maturity of financial assets and securities with contractual
maturities at March 31, 2015

March 31, 2015

Millions of yen
Due after one Due after three Due after five Due after sevenDue in one year through years through years through years throughyear or less three years
five years
seven years
ten years

Due after ten
years

Due from banks¥507,007 ¥ — ¥ — ¥ — ¥ — ¥  —Call loans and bills bought
—
—
—
—
—
—
Securities:
Held-to-maturity debt
—
—
—
—
—
—
securities
Bonds
—
—
—
—
—
—
Available-for-sale securities
111,031 250,685 291,184 136,902 168,454—
with contractual maturities:
Japanese government
48,500 113,000 160,500
28,50031,000—bonds
Municipal bonds
24,162
39,64354,076
41,54232,753—
Corporate bonds
33,562
77,461
23,69329,224
17,620
—
Other
4,806
20,581
52,914
37,63587,081—
639,258 485,008 368,719 216,991 227,359 387,853
Loans (*)
Total
¥1,257,297 ¥735,694 ¥659,904 ¥353,893 ¥395,814 ¥387,853

18

March 31, 2015

Thousands of U.S. dollars
Due after one Due after three Due after five Due after sevenDue in one year through years through years through years throughfive years
seven years
ten years
year or less three years

Due after ten
years

Due from banks$4,219,088 $
— $
— $
— $
— $
—
Call loans and bills bought
—
—
—
—
—
Securities:
Held-to-maturity debt
—
—
—
—
—
securities
Bonds
—
—
—
—
—
Available-for-sale securities
923,955 2,086,093 2,423,104 1,139,237 1,401,805—
with contractual maturities:
Japanese government
403,594
940,334 1,335,607
237,164
257,967—
bonds
Municipal bonds
201,065
329,896
450,003345,697
272,559—
Corporate bonds
279,294
644,595
197,166
243,190
146,625—
Other
40,000171,266
440,327
313,185
724,652—
5,319,615 4,036,023 3,068,319 1,805,702 1,891,982 3,227,543
Loans (*)
Total
$10,462,659 $6,122,116 $5,491,423 $2,944,939 $3,293,787 $3,227,543(*)	L oans from “legally bankrupt,” “substantially bankrupt” and “likely to
become bankrupt” borrowers which are not expected to be repaid
amounting to ¥12,380 million ($103,026 thousand) are not included.
	Loans whose payment term is not determined amounting to ¥17,802 million($148,141 thousand) are not included.

(3)	Available-for-sale securities which have a readily determinable
fair value
The acquisition cost and carrying value of available-for-salesecurities which have a readily determinable fair value and therelated unrealized gain or loss at March 31, 2015 and 2014 aresummarized as follows:
March 31, 2015
Carrying
value

Stock
Debt securities
Others
Total(Note 4)	Maturity of bonds and interest bearing liabilities at March
31, 2015

March 31, 2015

Millions of yen
Due after one Due after three Due after five Due after sevenDue in one year through years through years through years throughyear or less three years
five years
seven years
ten years

Deposits (*)¥2,386,102 ¥243,027 ¥32,635 ¥
Negotiable certificates of
62,663204—
deposits
Call money and bills sold 324,605——
Guarantee deposit received——
under securities lending 374,027
transactions
Total¥3,147,398 ¥243,231 ¥32,635 ¥

March 31, 2015

— ¥

— ¥

—

—

—

—

—

—

—

—

—

—

— ¥

— ¥

—

Thousands of U.S. dollars
Due after one Due after three Due after five Due after sevenDue in one year through years through years through years throughfive years
seven years
ten years
year or less three years

Deposits (*)$19,856,061 $2,022,361 $271,575 $
Negotiable certificates of521,453
1,702—
deposits
Call money and bills sold 2,701,215——
Guarantee deposit received——
under securities lending 3,112,486transactions$26,191,216 $2,024,064 $271,575 $
Total

Due after ten
years

Due after ten
years

— $

— $

—

—

—

—

—

—

—

—

—

—

— $

— $

—

(*) On-demand deposits are included under “Due in one year or less.”

8. Securities(1) Trading securities
Net holding gain or loss resulting from revaluation of trading
securities to fair value included in earnings for the years ended
March 31, 2015 and 2014 were ¥0 million ($(7) thousand) and¥0 million, respectively.
(2)	Held-to-maturity securities which have a readily determinable fair
value
There were no held-to-maturity securities to be reported at March
31, 2015.
The carrying value and fair value of held-to-maturity securities
which have a readily determinable fair value and the related
unrealized gain or loss at March 31, 2014 are summarized asfollows:
March 31, 2014
Carrying
value

Corporate bonds
Total

19

Fair
value

Difference
Gain(Millions of yen)¥380 ¥382 ¥1 ¥1 ¥
¥380 ¥382 ¥1 ¥1 ¥

Loss

—
—

March 31, 2015

Acquisition
cost
Difference
Gain(Thousands of U.S. dollars)Loss$1,111,183 $617,918 $493,265 $496,160 $2,894
6,453,289 6,342,291
110,998
111,952954
2,306,653 2,232,970
73,68377,9294,245$9,871,127 $9,193,179 $677,947 $686,042 $8,094
Carrying
value

Stock
Debt securities
Others
Total

Loss¥133,530 ¥74,255 ¥59,275 ¥59,623 ¥347
775,491
762,153
13,33813,453
114
277,190
268,336
8,854
9,364
510
¥1,186,213 ¥1,104,744 ¥81,469 ¥82,441 ¥972
Carrying
value

Stock
Debt securities
Others
Total

Acquisition
cost
Difference
Gain(Millions of yen)March 31, 2014

Acquisition
cost
Difference
Gain(Millions of yen)Loss¥77,588 ¥41,142 ¥36,446 ¥36,830 ¥384
709,792 695,355
14,437
14,572134
102,025 101,133
892
1,388
496
¥889,407 ¥837,631 ¥51,775 ¥52,791 ¥1,015

Japanese government bonds, equities and others loaned under the
securities lending agreement in the amount of ¥85,766 million($713,712 thousand) are included in above securities as of March
31, 2015.
Securities excluding trade account securities, whose fair value isavailable, are written down to the fair value if the fair value hassignificantly declined compared with the acquisition cost and suchdecline is not considered to be recoverable. The difference
between the acquisition cost and the fair value is recognized as aloss on impairment. The related loss on impairment amounted to¥44 million ($372 thousand), consisting of ¥44 million ($372
thousand) of stock for the year ended March 31, 2015. No loss on
impairment was recognized for the year ended March 31, 2014.
The criteria for determining if such decline is significant are as
follows:
Securities whose fair value is 50% or less than the acquisition cost
are necessarily written down and securities whose fair value isbetween 50% and 70% of the acquisition cost are written downwhen the market price is considered to be non-recoverable within
one year, taking into consideration the trend of the market priceand operating performances of the issuing entities.
The components of unrealized gain on available-for-sale securities
recorded under net assets at March 31, 2015 and 2014 are as
follows:
2015
2014
2015
(Millions of yen)

Unrealized gain on
available-for-sale securities ¥ 81,469
Deferred tax liabilities(24,766)¥ 56,702
Attributable to minority interests(959)
Unrealized gain on available-for-sale¥ 55,742
securities, net of tax(Thousands of
U.S. dollars)¥51,775 $677,947(16,905)(206,097)¥34,870 $471,850(840)(7,986)¥34,030$463,863

Available-for-sale securities sold during the years ended March
31, 2015 and 2014 are summarized as follows:
2015
2014
2015
(Millions of yen)

Proceeds from sales
Gain on sales
Loss on sales¥ 825,781
9,497
1,242

¥94,823
1,628
690(Thousands of
U.S. dollars)$6,871,774
79,037
10,337

9. Money Held in Trusts
Money held in trusts for investment purposes
2015

2014

(Millions of yen)Amount recorded in
the consolidatedbalance sheets¥15,025
Unrealized gain (loss)
included in profit andloss for the fiscal year
(25)

2015

(Thousands of
U.S. dollars)¥15,077$125,039

(22)

(216)

10. Revaluation of Land
Pursuant to the “Law Concerning the Revaluation of Land” (the “Law”),
land used for the Bank’s business operations was revalued on March
31, 1999. The excess of the revalued aggregate market value over the
total book value (carrying amount) before revaluation was included inshareholders’ equity at the net amount of the related tax effect at
March 31, 1999. The corresponding income taxes were included inliabilities at March 31, 1999 as deferred taxes arising fromrevaluation of land. The revaluation of the land was determined basedon the official prices published by the Commissioner of the National
Tax Authority in accordance with Article 2, Paragraph 4 of the“Enforcement Ordinance Concerning Land Revaluation,” with certain
necessary adjustments.
The difference between the total fair value of land for business
operation purposes, which was revalued in accordance with Article
10 of the Law, and the total book value of the land after therevaluation was ¥11,302 million ($94,050 thousand) and ¥8,301
million at March 31, 2015 and 2014, respectively.
11. Cash Flows
A reconciliation between cash and due from banks in the consolidatedbalance sheets at March 31, 2015 and 2014 and cash and cash
equivalents in the consolidated statements of cash flows for the years
then ended is as follows:
2015
2014
2015
(Millions of yen)

Cash and due from banks
Due from banks otherthan the Bank of Japan
Cash andcash equivalents(Thousands of
U.S. dollars)¥544,907 ¥160,303 $4,534,473
(677)

(893)

(5,633)¥544,230 ¥159,409 $4,528,839

12. Accumulated Depreciation and Deferred Gains on
Tangible Fixed Assets
Accumulated depreciation totaled ¥33,710 million ($280,521
thousand) and ¥34,276 million at March 31, 2015 and 2014,
respectively.
Deferred gains on tangible fixed assets deducted for tax purposes at
March 31, 2015 and 2014 were ¥3,074 million ($25,581 thousand)and ¥3,118 million, respectively.
13. Assets Pledged
Assets pledged as collateral at March 31, 2015 and 2014 were as
follows:
2015
2014
2015
(Millions of yen)

Pledged assets:
Securities¥470,707
Other assets
743
Liabilities secured by the above assets:
Deposits¥51,517
Guarantee deposit received under
374,027securities lending transactions
Borrowed money—(Thousands of
U.S. dollars)¥153,773
743$3,917,009
6,183¥66,235$428,707

49,517

3,112,486——

In addition, securities of ¥27,439 million ($228,339 thousand) and¥32,014 million at March 31, 2015 and 2014 were pledged ascollateral for settlement of exchange and Futures transactions.
Included in other assets were guarantee deposits of ¥170 million($1,419 thousand) and ¥153 million at March 31, 2015 and 2014,
respectively.

14. Borrowed Money
The details of borrowed money at March 31, 2015 and 2014 were as
follows:
2015
2014
2015
(Millions of yen)

Borrowed money
Due from April 2015
through February 2020
Average interest rate:
0.58% p.a.

¥7,585¥7,665(Thousands of
U.S. dollars)$ 63,118

Annual maturities of borrowed money are as follows:Year ending March 31(Millions of yen)(Thousands of U.S. dollars)
2016¥4,500$37,446
2017
1,185
9,861
2018
905
7,530
2019
625
5,200
370
3,078
2020
Total
¥7,585$63,118
15. Shareholders’ Equity
Japanese banks are subject to the Banking Law and the Corporate
Law. The Corporate Law requires that all shares of common stock be
issued with no par value and at least 50% of the amount paid of newshares is required to be recorded as common stock and the remaining
net proceeds as additional paid-in capital, which is included in capitalsurplus. The Corporate Law permits Japanese companies, upon
approval of the Board of Directors, to issue shares to existing
stockholders without consideration by way of a stock split. Suchissuance generally does not give rise to changes within thestockholders’ accounts.
The Banking Law provides that an amount at least 20% of theaggregate amount of cash dividends and certain other appropriationsof retained earnings associated with cash outlays applicable to eachperiod shall be appropriated as a legal reserve (a component ofretained earnings) until such reserve and additional paid-in capitalequals 100% of common stock. The amount of total additional paid-in
capital and legal reserve that exceeds 100% of common stock may beavailable for dividends by resolution of the stockholders after
transferring such excess in accordance with the Corporate Law. In
addition, the Corporate Law permits the transfer of a portion of
additional paid-in capital and legal reserve to the common stock byresolution of the Board of Directors.
The Corporate Law allows Japanese companies to purchase treasury
stock and dispose of such treasury stock upon resolution of the Boardof Directors. The aggregate purchased amount of treasury stockcannot exceed the amount available for future dividends plus theamount of common stock, additional paid-in capital or legal reservethat could be transferred to retained earnings or other capital surplus
other than additional paid-in capital upon approval of such transfer at
the annual general meeting of shareholders.
Dividends are approved by the stockholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Interim dividends may also be paid upon resolution of the Board of
Directors, subject to certain limitations imposed by the Corporate Law.
The movements of outstanding shares and cash dividends during theyears ended March 31, 2015 and 2014 are as follows:(a) Number of outstanding shares and treasury stock
For the year ended March 31, 2015
Balance atIncrease during Decrease during Balance at end
beginning of year
the yearthe yearof yearType of shares
Issued stock:——314,601,974
Common stock 314,601,974
Treasury stock:
Common stock
518,694
10,018,419
170,468
10,366,645
For the year ended March 31, 2014
Balance atIncrease during Decrease during Balance at end
beginning of year
the yearthe yearof yearType of shares
Issued stock:—
2,800,000 314,601,974
Common stock 317,401,974
Treasury stock:
Common stock
610,467
2,818,525
2,910,298
518,69420

(b) Dividends paid to the shareholders during the year:
For the year ended March 31, 2015
Date of Resolution Type of
Total
resolutionbysharesdividends
Jun. 27, General
Common ¥1,099
2014
meeting of stock
millions
shareholders($9,147thousand)Nov. 5, Board of
Common ¥942
2014
Directors
stock
millions($7,845thousand)Dividends Date ofEffective
per share
recorddate¥3.50
Mar. 31, Jun. 30,($0.02)
2014
2014
¥3.00
($0.02)

Sep. 30, Dec. 5,
2014
2014

For the year ended March 31, 2014
Date of Resolution Type of
Total
Dividends Date ofEffective
resolutionbysharesdividends per share
recorddateJun. 27, General
Common ¥950
¥3.00
Mar. 31, Jun. 27,
2013meeting of stock
millions
2013
2013
shareholders
Nov. 8,2013

Board ofDirectors

Common ¥1,099
stock
millions¥3.50

Sep. 30, Dec. 5,
2013
2013

Dividends applicable to the year ended March 31, 2015, but notrecorded in the accompanying consolidated financial statements,
since the effective date is subsequent to the current fiscal year:
Date of Resolution Type of
Total
resolutionbysharesdividends
Jun. 26, General
Common ¥1,216
2015
meeting of stock
millions
shareholders($10,126
thousand)Dividends Date ofEffective
per share
recorddate¥4.00
Mar. 31, Jun. 29,($0.03)
2015
2015(Above cash dividends are distributed from retained earnings.)
16. Stock Options
On July 22, 2014, the Bank granted stock options to its directors andexecutive officers.
1.	The related cost of ¥66 million ($554 thousand) and ¥61 million
was charged to income for the years ended March 31, 2015 and2014, respectively.
2.	T he stock options outstanding as of March 31, 2015 are as
follows:
Number ofoptions(common Date of grantshares)grantedExercise
price

Stock Option

Persons
granted2009 Stock
Option9 directors
and
6 officers

183,800

Aug. 24,2009¥12010 Stock
Option9 directors
and
6 officers

190,300

Jul. 26,2010¥12011 Stock
Option9 directors
and
8 officers

207,700

Aug. 1,2011¥12012 Stock
Option9 directors
and
7 officers

200,800

Jul. 23,2012¥12013 Stock
Option11 directors
and
6 officers

210,500

Jul. 29,2013¥12014 Stock
Option11 directors
and
6 officers

206,600

Jul. 22,2014¥1

ExerciseperiodFrom Aug.
25, 2009
to Aug.
24, 2034
From Jul.
27, 2010
to Jul.
26, 2035
From Aug.
2, 2011
to Aug.
1, 2036
From Jul.
24, 2012
to Jul.
23, 2037
From Jul.
30, 2013
to Jul.
29, 2038
From Jul.
23, 2014
to Jul.
22, 2039

Vesting conditions and eligible ser vice period have not been
determined.

21

The stock option activity is as follows:
2014
2013
2012
2011
2010
2009
Stock
Stock
Stock
Stock
Stock
Stock
Option Option Option Option Option Option
Shares Shares Shares Shares Shares Shares
Non-vested:
April 1,———
— 210,500—
2014-Outstanding
Granted————— 206,600
Forfeited
—
—
—
—
—
—
Vested———— 210,500 155,400
March 31,————
— 51,200
2015-Outstanding
Vested:April 1,
113,400 132,900 167,900 175,200——
2014-Outstanding
Vested———— 210,500 155,400
Exercised
31,600 34,100 34,300 34,700 35,100—
Forfeited
—
—
—
—
—
—
March 31,81,800 98,800 133,600 140,500 175,400 155,400
2015-Outstanding
Price information of 2009, 2010, 2011, 2012, 2013 and 2014 Stock
Option is as follows:
2014
2013
2012
2011
2010
2009
Stock
Stock
Stock
Stock
Stock
Stock
Option Option Option Option Option Option(Yen)

Exercise price
Average share price atthe time of exercise
Fair appraisal price atthe date of grant

¥1

¥1

¥1

¥1

¥1

¥1

346

346

346

346

346

—

321

311

252

268

306

326

2009
Stock
Option2010
Stock
Option2011
Stock
Option2012
Stock
Option2013
Stock
Option2014
Stock
OptionExercise price$0.00
Average share price at
2.87
the time of exercise
Fair appraisal price at
2.67
the date of grant$0.00$0.00$0.00$0.00$0.00

2.87

2.87

2.87

2.87

—

2.58

2.09

2.23

2.54

2.71

(U.S. dollar)

3. Estimation method of fair appraisal value of stock options
Black-Scholes option pricing model is used to measure fair value.
The assumptions and estimation methods used to measure fair value of2014 Stock Option are as follows:2014 Stock Option
Volatility of stock price (Note 1)
26.848%Estimated remaining
3.2 years
outstanding period (Note 2)
Estimated dividend (Note 3)¥6 per share
Interest rate with risk free (Note 4)
0.0854%
Notes:
1.	Volatility of stock price is computed based on the actual stock
prices during the period corresponding to estimated remaining
outstanding period of 3.2 years.
2.	R emaining outstanding period is estimated by assuming thedifference between the average retirement age of the retired
directors and executive officers who retired in the past and current
average age of the present directors and executive officers.
3. Actual dividend for the year ended March 31, 2014
4.	Y ield of Japanese government bonds corresponding to theestimated remaining outstanding period.
4. Estimation method of vested number of stock options
The Bank adopted the method to reflect only actual forfeited number,since it is difficult to estimate the number to be forfeited in future on areasonable basis.

17. Leases
As lessee:a. Finance leases
The Bank and consolidated subsidiaries have tangible fixed assets,
mainly consisting of vehicles, under finance lease arrangements which
do not transfer ownership of the leased assets to the lessee. The leased
assets are depreciated on a straight-line method over respective lease
periods with the salvage value determined in the agreements orotherwise nil.
b. Operating leases
The following table presents the schedule of future minimum lease
payments under non-cancellable operating leases at March 31, 2015
and 2014:
2015

2014

¥83
116
¥200

¥77
114
¥191

(Millions of yen)

Due within one year
Due after one year
Total

2015

(Thousands of
U.S. dollars)

$

695
971
$ 1,666

As lessor:
a. Finance leases
Investment in leased assets consists of the following:

Lease receivables
Residual value
Unearned interest
income
Total

2014

2015

¥19,701
2,422¥21,222
2,246$163,943
20,157(2,091)(2,356)(17,407)¥20,031¥21,112$166,693(Thousands of
U.S. dollars)

Maturities of lease receivables and investment in leased assets at
March 31, 2015 are as follows:Year ending March 31
2015
2016
2017
2018
2019
2020 and thereafter
Total(Millions of yen)(Thousands of U.S. dollars)
Investment
Investment
Lease
in leased
Lease
in leasedreceivables
assetsreceivables
assets¥450 ¥6,755
458
5,238
388
3,721
255
2,297
80
1,067
29
620
¥1,663 ¥19,701$ 3,747 $ 56,214
3,817
43,5943,235
30,9692,122
19,120
673
8,880
249
5,164
$ 13,845 $163,943

b. Operating leases
The following table presents the schedule of future minimum lease
payments under non-cancellable operating leases at March 31, 2015:(Millions of yen)

Due within one year
Due after one year
Total

¥
¥

116
387
503

Location
Ishikawa Pref.

Year ended March 31, 2015
(Millions of (Thousands ofMain use
Asset typeyen)
U.S. dollars)
3 operating
Land
¥232
$1,937
branches
3 operating
Buildings
100
833
branches
9 idle assets Land
1,338
11,1404 idle assets Buildings
184
1,535

OutsideIshikawa Pref. 1 idle asset
Total

Land

24
¥1,881205$15,654

In the assessment of loss on impairment, the recoverable amount iscomputed using the net selling value or the value in use. The net
selling value is determined mainly based on the real estate appraisal
value and in case of using the value in use, any discount rate is notconsidered as the estimated use period is short.
Year ended March 31, 2014

2015

(Millions of yen)

For the following operating branches and idle assets among above
tangible fixed assets, their carrying amounts are reduced to therespective recoverable amounts and the reduced amounts arerecorded under “Other expenses” in the consolidated statements ofincome.

(Thousands of
U.S. dollars)

$965
3,220
$4,186

18. Loss on Impairment
The Bank recognized loss on impairment of ¥1,881 million ($15,654
thousand) and ¥1,261 million on the following asset group for theyears ended March 31, 2015 and 2014, respectively: The loss on
impairment of the Bank is recognized by grouping the areas undercontrol of the area management (or branches if not under control of
the area management) for operating branches and by grouping assets
for idle assets. Headquarters, office centers, dormitories, welfare
facilities, etc. are treated as common use assets because they do not
generate independent cash flows. The consolidated subsidiaries aretreated as a group for one company in principle.

Location
Ishikawa Pref.

OutsideIshikawa Pref.
Total

Main use
3 operating
branches
3 operating
branches
9 idle assets
3 idle assets
1 idle asset

Asset type(Millions of
yen)

Land

¥1,078

Buildings

48

Land
Buildings
Land

24
53
35

1 idle asset

Buildings

19¥1,261

In the assessment of loss on impairment, the recoverable amount iscomputed using the net selling value or the value in use. The net
selling value is determined mainly based on the real estate appraisal
value. In case of using the value in use, the discount rate is not taken
into account in the computation as the estimated use period is short.
19. Other Comprehensive Income
The components of other comprehensive income for the years ended
March 31, 2015 and 2014 were as follows:
2015

2015

2014

(Millions of yen)

Reclassification adjustments to net income:Net unrealized gains onavailable-for-sale securities:
Gain incurred during the year ¥37,786
Reclassification adjustment to(8,093)
net income
Amount before tax effect
29,693Net deferred gains (losses) on
hedging instruments:
Gain (loss) incurred during(137)
the year
Reclassification adjustment to(4)
net income
Amount before tax effect(142)
Land revaluation surplus
Gain (loss) incurred during—
the year
Reclassification adjustment to—
net income
Amount before tax effect—Remeasurements of defined
benefit plans
Gain (loss) incurred(230)
during the year
Reclassification adjustment to878
net income
Amount before tax effect648
Total amount before tax effect30,199Tax effect(7,964)
Total other comprehensive income ¥22,234(Thousands of
U.S. dollars)¥4,150$314,442(375)(67,349)

3,775

247,093189(1,142)

0

(41)

190

(1,183)

—

—

—

—

—

—

—

(1,917)

—

7,313

—
3,965
(1,098)¥2,866

5,395
251,305(66,279)$185,026

22

2015

2014

¥29,693(7,861)
21,832¥3,775(1,030)2,744$247,093(65,416)
181,676

(142)
31
(110)

190
(68)
121

(1,183)
259
(923)

—
231
231

—
—
—

—
1,922
1,922

648
(365)
282

—
—
—

5,395
(3,045)2,350(Millions of yen)Tax effect on other comprehensive income:Net unrealized gains onavailable-for-sale securities:
Amount before tax effectTax effectAmount after tax effect
Net deferred gains (losses) on
hedging instruments:
Amount before tax effectTax effectAmount after tax effectLand revaluation surplus
Amount before tax effectTax effectAmount after tax effectRemeasurements of defined
benefit plans
Amount before tax effectTax effectAmount after tax effect2015(Thousands of
U.S. dollars)

20. Income Taxes
The major components of deferred tax assets and liabilities at March
31, 2015 and 2014 are summarized as follows:
2015

2014

¥13,985¥18,647$116,377

4,360
900

4,564
976

36,289
7,492

1,960

2,378

16,312

3,718
24,924(9,756)15,1683,689
30,257(9,903)
20,35430,941
207,414(81,186)
126,227(24,766)(16,905)(206,097)(218)(24,985)(250)(17,156)(1,818)(207,916)¥(9,816)¥3,198$(81,689)(Millions of yen)

Deferred tax assets:
Reserve forpossible loan losses
Net defined benefit liability
Depreciation of real estate
Unrealized loss on writedown of equity securities
Other
Subtotal
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)

2015(Thousands of
U.S. dollars)

A reconciliation of the statutory tax rate applicable to the Bank and its
consolidated subsidiaries to the effective tax rate for the years ended
March 31, 2015 and 2014 is presented as follows:
Statutory tax rate
Reconciliation:
Nondeductible permanent differences,such as entertainment expenses
Non taxable permanent differences,such as dividend income
Per capita residents’ taxes
Valuation allowance
Reduction of deferred tax assets due
to tax rates change
Other
Effective tax rate

2015
35.4%

2014
37.8%

0.5

0.5

(2.7)

(2.5)

0.2
5.2

0.2
4.3

7.6

4.0

0.4
46.6%

0.8
45.1%

Adjustments of deferred tax assets and liabilities due toa change in the corporate income tax rate:“Act for Partial Revision of Income Tax Act, etc.” (Act No. 9, 2015)
proclaimed on March 31, 2015 has reduced the income tax rates
from the year beginning on or after April 1, 2015. As a result, theeffective statutory tax rate used in computing deferred tax assets andliabilities has been reduced from 35.37% to 32.82% for the
temporary differences expected to be eliminated in the year beginningon April 1, 2015 and 32.06% for those expected to be eliminated in
the years beginning on and after April 1, 2016. As a result, deferred
tax liabilities and remeasurements of defined benefit plans decreasedby ¥1,256 million ($10,459 thousand) and ¥136 million ($1,136
thousand), respectively, and net unrealized gains on available-for-salesecurities and income taxes – deferred increased by ¥2,499 million($20,796 thousand) and ¥1,232 million ($10,253 thousand),
respectively. Deferred tax liabilities arising from revaluation of landdecreased by ¥231 million ($1,922 thousand) and land revaluation
surplus increased by the same amount.
21. Retirement Benefit Plans
The Bank has defined retirement benefit plans, i.e., welfare pension
fund plans, defined contribution pension plans and lump-sum
payment plans, covering substantially all employees who are entitledto lump-sum or annuity payments, the amounts of which are
determined by reference to their basic rates of pay, length of service,and the conditions under which termination occurs. The consolidated
subsidiaries have lump-sum payment plans.
The Bank transferred a portion related to future services to defined
contribution pension plans in February 2013.
1.	The changes in defined benefit obligation for the years ended
March 31, 2015 and 2014 are as follows:
2015

2014

(Millions of yen)

Balance at beginning of year ¥29,420
Cumulative effect of
1,259
accounting changes
Restated balance
30,679Service cost
457
Interest cost
241
Actuarial gains or losses
1,277(1,597)
Benefits paid
¥31,057
Balance at end of year¥29,786$244,819—

10,47729,786473
492
314(1,647)¥29,420

255,296
3,806
2,007
10,629(13,290)$258,449

2.	The changes in plan assets for the years ended March 31, 2015
and 2014 are as follows:
2015

2014

(Millions of yen)

Balance at beginning of year ¥16,589
Expected return on plan331
assetsActuarial gains or losses
1,047
Contributions from the557
employer(948)
Benefits paid
Balance at end of year¥17,577

2015(Thousands of
U.S. dollars)¥ 15,994$138,052

319

2,761

660

8,712

555

4,638

(940)
¥ 16,589(7,892)$146,272

3.	Reconciliation between the net defined benefit liability recorded in
the consolidated balance sheet and the balances at end of year ofdefined benefit obligation and plan assets
2015

2014

¥21,305¥20,473$177,297(17,577)
3,728(16,589)
3,883(146,272)
31,025

9,752

8,946

81,152

13,48012,830112,177

2015

2014

(Millions of yen)

Funded defined benefit
obligation
Plan assets
Unfunded defined benefit
obligation
Net liability recorded in the
consolidated balance sheet(Millions of yen)

Net defined benefit liability ¥13,480
Net liability recorded in the¥13,480
consolidated balance sheet

23

2015

(Thousands of
U.S. dollars)

2015(Thousands of
U.S. dollars)

2015(Thousands of
U.S. dollars)¥ 12,830$112,177¥ 12,830$112,177

4.	The components of retirement benefit expenses for the years ended
March 31, 2015 and 2014 are as follows:
2015

2014

(Millions of yen)

Service cost
¥457
Interest cost
241
Expected return on plan(331)
assetsAmortization of actuarial
970
gains or losses
Amortization of prior(91)
service cost
Retirement benefit expenses ¥1,245

473
492

$3,806
2,007

(319)

(2,761)

1,096

8,072

¥

¥

2015

(Thousands of
U.S. dollars)

(91)

(759)

1,651

$10,365

5.	T he components of remeasurements of defined benefit plans(before deducting tax effect) on other comprehensive income as ofMarch 31, 2015 and 2014 are as follows:
2015

2014

(Millions of yen)

Prior service cost
Net actuarial gain or loss
Total

¥(91)
739
¥648

¥

—
—
—

¥

2015

(Thousands of
U.S. dollars)$(759)6,155$5,395

6.	T he components of remeasurements of defined benefit plans(before deducting tax effect) on accumulated other comprehensive
income as of March 31, 2015 and 2014 are as follows:
2015

2014

(Millions of yen)

Unrecognized prior service¥1,430
cost
Unrecognized net actuarial(5,729)gain or loss
Total
¥(4,299)

¥

1,521

2015

(Thousands of
U.S. dollars)$11,901(6,469)(47,678)¥ (4,947)$(35,776)

7. Plan assets(1) The components of plan assets are as follows:
2015
2014
General account
51%
50%
Stock
28%
22%
Debt securities
16%
17%
5%
11%
Other
Total
100%
100%
Note:
Total plan assets include 3% and 9% of retirement benefit trust
established on corporate pension plans as of March 31, 2015 and2014, respectively.
(2) Method of determining the long-term expected rate of return onplan assets
The long-term expected rate of return on plan assets is determinedconsidering the long-term rates of return which are expectedcurrently and in the future from the various components of the plan
assets.
8.	Assumptions used for the years ended March 31, 2015 and 2014,
were set forth as follows:
Discount rate

2015
Multiple rates(Note)

2014
1.7%

Long-term expected rate of return on
2.0%
2.0%
plan assets
4.9%
5.2%
Expected salary increase rate
Note:
Effective from the year ended March 31, 2015, the Bank changed
the determination method of the discount rate from the method ofusing the discount rate based on the bond yields of a single
number of years corresponding to the employees’ averageremaining service years to the method of using multiple bondyields established for each estimated period of benefit payments.

9. Defined contribution plans
The amount of the required contribution to the defined contribution
plan of the Bank was ¥286 million ($2,380 thousand) and ¥293
million for the years ended March 31, 2015 and 2014.
22. Derivatives
The Bank enters into interest rate swaps to hedge interest rate risk
associated with deposits, loans and holding debt securities andcurrency swaps and foreign exchange forward contracts to hedge
foreign exchange risk associated with certain assets and liabilities
denominated in foreign currencies. In addition, to respond to thecustomers’ hedging needs related with their interest rate risk andforeign exchange risk, the Bank enters into derivative contracts
including interest rate swaps, currency swaps, foreign exchange
forward contracts and currency options. These transactions arecovered by the reversing trades to avoid market risk. The effectivenessof these hedging activities is assessed and verified on a regular basis.
Derivative contracts to which hedge accounting is notapplied:With respect to derivatives to which hedge accounting is not applied,contract amount or notional principal amount defined in the contract,fair value, revaluation gain or loss and calculation method of fairvalue by transaction type as of March 31, 2015 and 2014 are as
follows:
Note that contract amount does not represent the market risk exposureof the derivative transactions.
(1) Interest rate derivatives
Millions of Yen

2015
Contract amount
Valuation
Over oneFair value gain (loss)
Total
year

March 31
OTC transactions:Interest rate swaps Receivable floating rate/
Payable fixed rate
¥221 ¥110 ¥(3) ¥(3)¥(3) ¥(3)Total
Thousands of U.S. dollars

2015
Contract amount
Valuation
Over oneFair value gain (loss)
Total
year

March 31
OTC transactions:Interest rate swaps Receivable floating rate/
Payable fixed rate$1,844 $918 $(26) $(26)$(26) $(26)
Total
Millions of Yen

2014
Contract amount
Valuation
Over oneFair value gain (loss)
Total
year

March 31
OTC transactions:Interest rate swaps Receivable fixed rate/
Payable floating rate¥38 ¥
Receivable floating rate/
Payable fixed rate
370
Total

— ¥0 ¥0
221

(6)
(6)
¥(6) ¥(6)Notes:
1. Above transactions are stated at fair value and unrealized gain/(loss) is recorded in the consolidated statements of income.
2. Fair value is determined using the discounted present value.

24

(2) Currency derivatives

March 31
Hedge accounting
methodMillions of Yen

2015

March 31
OTC transactions:
Currency swaps
Forward contracts on
foreign exchange
Currency options
Total

Contract amountOver one
Total
year
Sold
BoughtSold
BoughtFair value

Valuation
gain (loss)¥461 ¥461 ¥(111) ¥(111)52,409
—
23
23
2,225
—
(23)
(23)
23,737 23,367 (1,124)(76)
23,737 23,367
1,236
285
(0) ¥97¥
March 31
Hedge accounting
methodThousands of U.S. dollars

March 31
OTC transactions:
Currency swaps
Forward contracts on
foreign exchange
Currency options
Total

2015
Contract amountOver oneFair value
Total
year
Sold
BoughtSold
BoughtValuation
gain (loss)$3,843 $3,843 $(929) $(929)436,126—
196
196
18,520
—
(196)
(196)
197,529 194,456(9,358)(636)
197,529 194,456
10,2882,378$(0) $ 812
Millions of Yen

March 31
OTC transactions:
Currency swaps
Forward contracts on
foreign exchange
Currency options
Total

2014
Contract amountOver oneFair value
Total
year
Sold
BoughtSold
BoughtValuation
gain (loss)¥692 ¥692 ¥(43) ¥(43)
2,862
—
(14)
(14)
1,850
—
25
25
14,535
13,853(823)(20)
14,535
13,853866
132
9 ¥79¥Notes:
1.	Above transactions are stated at fair value and unrealized gain/(loss) is recorded in the consolidated statements of income.
2. Fair value is determined using the discounted present value.
Derivative contracts to which hedge accounting isapplied:With respect to derivatives to which hedge accounting is applied,contract amount or notional principal amount defined in the contract,fair value and calculation method of fair value by transaction typeand by hedge accounting method as of March 31, 2015 and 2014
are as follows:
Note that contract amount does not represent the market risk exposureof the derivative transactions.
(1) Interest rate related derivatives
March 31
Hedge accounting
methodNormal method

25

Normal method

Millions of Yen

2015
Contract
Major
Contract amount due
hedged item amount after one year Fair value

Transaction typeInterest rate swaps:
Receivable fixed rate/
Loans and
Payable floating rate
¥
— ¥
— ¥
—
deposits.
Receivable floating rate/
Payable fixed rate
8,757
7,943
(333)
—
—
— ¥ (333)
Total

Normal method

Thousands of U.S. dollars

2015
Contract
Major
Contract amount due
hedged item amount after one year Fair value

Transaction typeInterest rate swaps:
Receivable fixed rate/
Loans and
Payable floating rate
$
— $
— $
—
deposits.
Receivable floating rate/
Payable fixed rate
72,872 66,102(2,776)——— $ (2,776)
Total
Millions of Yen

2014
Contract
Major
Contract amount due
hedged item amount after one year Fair value

Transaction typeInterest rate swaps:
Receivable fixed rate/
Loans and
Payable floating rate
deposits. ¥700 ¥700 ¥0Receivable floating rate/
Payable fixed rate
10,796
8,757
(481)
—
—
— ¥ (480)
Total

Notes:
1. Gain/loss on above contacts is deferred until maturity of thehedged items as the normal method in accordance with the“Accounting and Auditing with Regard to Adoption of AccountingStandard for Financial Instruments in the Banking Industry” (JICPA
Industry Audit Committee Report No.24)
2. Fair value is determined using the discounted present value.
(2) Currency related derivatives
March 31
Hedge accounting
Transaction type
methodNormal method Currency swaps:

Total

March 31
Hedge accounting
Transaction type
methodNormal method Currency swaps:

Total

March 31
Hedge accounting
Transaction type
methodNormal method Currency swaps:

Total

Millions of Yen

2015
Contact amountMajor
hedged item Total Over one year Fair value
Foreigncurrency¥68,692 ¥44,597 ¥ 852
denominatedsecurities.
——— ¥ 852
Thousands of U.S. dollars

2015
Contract amountMajor
hedged item Total Over one year Fair value
Foreigncurrency$571,628 $371,115 $ 7,092
denominatedsecurities.
——— $ 7,092
Millions of Yen

2014
Contract amountMajor
hedged item Total Over one year Fair value
Foreigncurrency¥4,450 ¥105 ¥ (319)
denominatedsecurities.
——— ¥ (319)

Notes:
1.	G ain/loss on above contacts is deferred until maturity of thehedged items as the normal method in accordance with the“Accounting and Auditing with Regard to Foreign Currency
Transactions in the Banking Industry” (JICPA Industry Audit
Committee Report No.25)
2. Fair value is determined using the discounted present value.

23. Per Share Information
Net assets per share at March 31, 2015 and 2014 and net income
per share for the years then ended is as follows:2015
Net assets per share¥782.94
Net income per share-basic
25.54
Net income per share-diluted
25.48

2014

(Yen)

¥ 683.54
24.98
24.92

2015

( U.S. dollars)

$

6.51
0.21
0.21

Basic information in computing above per share data is as follows:
2015

2014

(Millions of yen)

(Net assets per share)¥247,730
Net assets per balance sheets
Amounts to be attributed to sub(232)scription rights to shares
Amounts to be attributed to(9,297)
minority interests
Net assets attributed to common
238,200
stock
Outstanding number of common
stocks at end of year
304,235(unit: thousand shares)(Net income per share)
Net income per income¥7,989
statements
Net income to be attributed to
7,989
common stock
Average outstanding number ofshares during the year
312,698(unit: thousands shares)(Net income per share-diluted)
Increase in common stock
781(unit: thousand shares)
Of which, subscription rights to781
shares (unit: thousand shares)

2015(Thousands of
U.S. dollars)¥223,438$2,061,496(215)(1,934)(8,534)(77,369)

214,688

1,982,192

314,083
¥

7,855
7,855

$

66,484
66,484

2. Calculation method of gross operating income and net operating
incomeAccounting policies adopted by the reportable segments are the sameas those described in Note 3 “Summary of Significant Accounting
Policies,” except for the scope of consolidation. Segment profit of thereportable segments is measured based on the figures of ordinary
profit and intersegment income is based on the market transaction
price in the same manner as income from external customers.
3. Reportable segment information concerning income, profit or loss,
assets, liabilities and other items
Year ended March 31, 2015
Reportable segments
Banking
Leasing
Total
Adjustments Consolidated(Millions of yen)

Total income:External customers
Intersegments
Total
Segment profit
Segment assets
Other information
Depreciation
Interest income
Interest expenses
Increase in tangible andintangible fixed assets

726(Changes in accounting policies)
As noted in Note 4 “Changes in Accounting Policies,” effective fromthe year ended March 31, 2015, the Bank applied the main clausestipulated in Paragraph 35 of “Accounting Standard for Retirement
Benefits” (ASBJ Statement No. 26, revised on May 17, 2012) andParagraph 67 of “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, revised on March 26, 2015) andfollowed the transitional treatment stipulated in Paragraph 37 of ASBJ
Statement No. 26.
As a result, net assets per share at April 1, 2014 decreased by ¥2.59($0.02) and basic net income and diluted net income per share forthe year ended March 31, 2015 increased by ¥0.51 ($0.00),
respectively.
24. Segment Information
1. Reportable segments
The reportable segments of the Bank are subject to the periodical
review by the Board of Directors which is the chief operating decision
maker to determine the allocation of management resources andassess performances.
The Group consists of the Bank and its 5 consolidated subsidiaries.
The Group designs comprehensive strategies concerning financial
services including banking and leasing businesses and is engaged inoperating activities. Accordingly, the Bank is composed of operating
segments by financial services based on the group companies and“Banking” and “Leasing” segments are identified as the reportablesegments.
“Banking” segment provides customers with banking operations,credit card business, credit guarantee business, business revitalization
fund management business and etc.
“Leasing” segment provides customers with leasing business.

¥2,449 ¥216 ¥2,666 ¥ — ¥2,666
42,502
212
42,715(159)
42,555
1,485
194
1,679
(144)
1,535
7,468

4

7,472

—

7,472

Year ended March 31, 2015
Reportable segments
Banking
Leasing
Total
Adjustments Consolidated

314,409726¥64,719 ¥9,390 ¥74,109 ¥— ¥74,109
162
30
193
(193)
—
64,881
9,420
74,302(193)
74,109¥18,176 ¥777 ¥18,953 ¥(12) ¥18,941¥4,165,670 ¥34,768 ¥4,200,438 ¥ (20,647) ¥4,179,790(Thousands of U.S. dollars)

Total income:External customers
Intersegments
Total
Segment profit
Segment assets
Other information
Depreciation
Interest income
Interest expenses
Increase in tangible andintangible fixed assets$538,562 $78,141 $616,703 $
— $616,703
1,355
251
1,606
(1,606)—539,91778,392 618,310(1,606) 616,703$151,259 $6,466 $157,725 $(103) $157,622$34,664,810 $289,324 $34,954,135 $(171,820) $34,782,315$20,381 $1,805 $22,187 $ — $22,187
353,689
1,768 355,458(1,329) 354,128
12,362
1,617
13,980(1,198)12,781
62,15035

62,186—62,186

Notes:
1.	“ Total income” corresponds to “Net Sales” of non-banking
industries.
2. Adjustments refer to the elimination of intersegment transactions
3. Segment profit is reconciled with ordinary profit.
Year ended March 31, 2014
Reportable segments
Banking
Leasing
Total
Adjustments Consolidated(Millions of yen)

Total income:External customers
Intersegments
Total
Segment profit
Segment assets
Other information
Depreciation
Interest income
Interest expenses
Increase in tangible andintangible fixed assets¥57,143 ¥9,430 ¥66,573 ¥— ¥66,573
169
32
201
(201)
—
57,312
9,463
66,775(201)
66,573¥16,160 ¥646 ¥16,807 ¥(8) ¥16,798¥3,498,577 ¥34,294 ¥3,532,872 ¥ (19,094) ¥3,513,777¥2,071 ¥250 ¥2,321 ¥
41,475208
41,684
1,315
203
1,518
11,141

4

11,146— ¥2,321(161)
41,522
(150)
1,368
(75)

11,07026

Other information:
Information by service line:
Year ended March 31, 2015
Securities
Loan
investment
Lease
Other
Total
(Millions of yen)

Income from externalcustomers¥30,476 ¥21,347 ¥9,390 ¥12,895 ¥74,109
Year ended March 31, 2015
Securities
Loan
investment
Lease
Other
Total
(Thousands of U.S. dollars)

Income from externalcustomers$253,608 $177,641 $78,141 $107,313 $616,703
Year ended March 31, 2014
Securities
Loan
investment
Lease
Other
(Millions of yen)

Income from externalcustomers

Total¥31,656 ¥11,407 ¥9,430 ¥14,079 ¥66,573

Information about loss on impairment of long-lived assets byreportable segment:
Year ended March 31, 2015
Reportable segments
Banking
Leasing(Millions of yen)

Loss on impairment¥1,881

¥—

Total

¥1,881Year ended March 31, 2015

Reportable segments
Total
Banking
Leasing(Thousands of U.S. dollars)

Loss on impairment$15,654$—$15,654

25. Related Party Transactions
The related party transactions for the years ended March 31, 2015
and 2014 and related account balances outstanding at March 31,
2015 and 2014 were as follows:
Transactions between the Bank and related parties
Year ended March 31, 2015
Name

Business Ownership Transaction Transaction Account Balance atsummary /(%)
amountend of year
(Millions of yen)
(Millions of yen)
Title/(Thousands of/(Thousands of
U.S. dollars)
U.S. dollars)

Directors and its relatives
Hideo
Corporate
Nakashima auditor

0.30¥(10)/$(89)Loan
Guarantee ¥855/$7,117

Loan—¥209/$1,742

KazuyoWife of Hideo
Nakashima Nakashima—

Guarantee ¥129/$1,080——

KumikoSakai

Wife of
Kenichi Sakai—

Guarantee¥64/$540——

DaisukeSakai

Son ofKenichi Sakai—

Guarantee¥64/$540———

Companies whose majority is owned by directors and /or its relatives
Nakashima Wholesale of
Co. Ltd.
paper products

0.36

Loan

¥(18)/$(151)Loan¥457/$4,625

PatoHouse renting
Planning, Inc.

—

Loan

¥(7)/$(63)Loan¥64/$540

Year ended March 31, 2014
Name

Business Ownership Transaction Transaction Account Balance atsummary /(%)
amountend of year
Title
(Millions of yen)
(Millions of yen)

Directors and its relatives
Hideo
Corporate
Nakashima auditor

0.30

Loan
Guarantee

¥(11)
¥919

Loan
—

¥220
—

KazuyoWife of Hideo
Nakashima Nakashima—

Guarantee

¥137

—

—

Loan

¥476

Companies whose majority is owned by directors and /or its relatives

Year ended March 31, 2014

Reportable segments
Banking
Leasing(Millions of yen)

Loss on impairment¥1,261

¥—

Total

¥1,261

Nakashima Wholesale of
Co. Ltd.
paper products

0.36

Loan

¥2

Transaction terms and policies:
Related party transactions are executed under the same transaction
terms as third parties.
Transactions between the subsidiary of the Bank and related parties
Year ended March 31, 2015
There was no applicable transaction to be reported for the year ended
March 31, 2015.
Year ended March 31, 2014
Name

Business Ownership Transaction Transaction Account Balance atsummary /(%)
amountend of year
(Millions of yen)
(Millions of yen)
Title

Companies whose majority is owned by directors and /or its relatives
Nakashima Wholesale of
Co. Ltd.
paper products

0.36

Lease

Lease
receivables
and¥3
investment
in leased
assets¥10

Transaction terms and policies:
Related party transactions are executed under the same transaction
terms as third parties.

27

REPORT OF INDEPENDENT AUDITORSCONTENTS
Message from the President 
About Ishikawa Prefecture Bank Profile 
Board of Directors and Auditors 
Offices and Subsidiaries Corporate Philosophy and New Medium-term
Business Plan 

2
3
3
4
4

Financial Highlights 
Corporate Governance Structure 
Basic Policy and Operating Structure for
Risk Management 
Consolidated Financial Statements Report of Independent Auditors 

6
7
8
9
28

5

FORWARD-LOOKING STATEMENTS
This annual report contains certain forward-looking statements about Hokkoku Bank's future, including outlooks,
plans, forecasts, results, etc. All such forward-looking statements are the result of judgments predicated upon
information available to the Bank at the time of the Annual Report's publication. Unknown risks and uncertainties in
the future may cause actual results to differ significantly from any projections presented in the Bank's Annual Report.
Such risks and uncertainties include, but are not limited to, economic conditions in which the Bank must do
business, pressures from competitive activities, changes in laws and/or regulations, development of new products
and elimination of old ones, and fluctuation of exchange rates.

128

A N N U A L

R E P O R T

2 0 1 5

HOKKOKU BANKANNUAL REPORT

2
THE HOKKOKU BANK, LTD.
2-12-6 Hirooka, Kanazawa, Ishikawa 920-8670 Japan
Tel: +81(76) 263-1111
http://www.hokkokubank.co.jp
Printed in Japan0

15