2011
Financial Statements

THE TOWA BANK, LTD.

A Message from the President
We take great pride in ourof our bank continues to provide funds by working tocustomer satisfaction andbetter understand the state of damage to customers asappreciate your continued

well as financing requirements.
We are committed to supporting our small andpatronage with The Towa
Bank, Ltd. We wish to express

medium-sized enterprises in each region in spite ofour deepest sympathies toeconomic uncertainty.
First of all, The Towa Bank will provide essential

all affected by the East Japan
Earthquake. It is our sincere

funds for reconstruction from disaster in a timely

wish that afflicted areas

manner and the necessary finance for new businesses aswill experience a swift andwell as businesses in growth fields actively in order tocomplete recovery. The Towa Bank has completed our

support the growth and development of customers andfinancial statements for fiscal 2010, ended March 31,

regional areas.
Second, The Towa Bank will make effort to further

2011. We will help your better understanding of us.

enhance management consulting in collaboration with

In 2010, the Japanese economy experienced a mild

external specialists.

recovery last summer. This was largely from the growthof personal consumption, manufacturing activity and

Third, The Towa Bank will arrange and reinforce thefiscal stimulus by the government. Thereafter, economic

customer’s business structures and systems. For instance,

conditions stalled from autumn reflecting completion

we established International department in April 2011.
This earthquake wreaked unprecedented havoc andof a round of the government’s stimulus measuresand the impact of a slowdown in overseas economies.

enormous damage. We are dedicated to alleviating the

Despite growing signs that the Japanese economy had

impacts of this disaster and to supporting regional areas

broken free from its temporary lull due to the export

and our customers to the best of its abilities. As a bankand production activity improvement, entering the New

that local communities can depend on, we will do ourYear, this earthquake that struck the nation on Marchutmost to resolve any and all issues in partnerships

11, 2011 again plunged Japan into a difficult periodwith customers. Harnessing its financial intermediaryplacing considerable downward pressure particularly on

function, we will make effort to play a vital role inthe manufacturing sector.

supporting our customers. Cognizant of the importance

Under these circumstances, The Towa Bank concen-of compliance, we will also upgrade, expand andtrated to grasp customer needs, provide relevant high-reinforce our Group-wide compliance framework andquality information and facilitate the provision of funds.

work diligently to further increase our earning capacity

As a result, we witnessed a steady increase in deposits aswhile actively enhancing management efficiency. As

well as loans and bills discounted while recording net

we work toward achieving these established goals, we

income of ¥6.4 billion in its 106th business term.

look forward to serving you with the best products and

The present business conditions in Japan haveservices for many years to come.

suffered the devastation caused by this disaster. Not somany our customers incurred both direct and indirect

August 2011

damage. Reacting swiftly to the earthquake disaster,
we worked quickly to field requests and inquiries forfinance from customers impacted by this disaster after
undertaking steps to assess the extent to which our customers were affected and ascertaining actual conditions
on individuals. Moving forward, we provided funds on

Kunimitsu Yoshinaga

an emergency basis in March. From April, every member

President and CEO

2

Consolidated Balance Sheets
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
March 31,

2011

Assets:Cash and due from banks ................................................................................... ¥ 34,216
Call loans and bills purchased ............................................................................
8,609
Commercial paper and other debt purchased ....................................................
239
Trading account securities ..................................................................................
27
Securities .............................................................................................................
470,044
Loans and bills discounted ................................................................................. 1,225,693
Foreign exchange ................................................................................................
2,819
Lease receivables and lease investment assets ....................................................
6,425
Other assets .........................................................................................................
7,643
Tangible fixed assets ...........................................................................................
25,647
Intangible fixed assets .........................................................................................
880
Deferred tax assets...............................................................................................
5,218
Customers’ liabilities for acceptances and guarantees .......................................
4,501
Reserve for possible loan losses...........................................................................
(16,719)
Total assets ................................................................................................. ¥1,775,249

Thousands of U.S.
dollars (Note 2)

2010

¥

28,53819,474190
31454,603
1,197,415
2,040
6,820
7,202
26,467
1,073
3,628
6,710
(19,357)¥1,734,840

2011

$

411,502103,5462,879
331
5,652,973
14,740,757
33,90977,27991,928308,444
10,58962,764
54,134(201,075)$21,349,966

Notes: 1. Yen figures have been rounded omitting numbers below the million mark, in accordance with the Financial Instruments and Exchange Act ofJapan and generally accepted accounting principles and practices in Japan.
2. The United States dollar amounts represent translations of Japanese yen, for convenience only, at the exchange rate of ¥83.15 to US$1.00, the rate
prevailing on March 31, 2011.

3

Millions of yen (Note 1)
March 31,2011

Liabilities:
Deposits ............................................................................................................... ¥1,625,094
Call money and bills sold ...................................................................................
—
Borrowed money .................................................................................................
34,350Foreign exchange ................................................................................................
35
Other liabilities ...................................................................................................
9,389
Accrued employee bonuses .................................................................................
264
Reserve for employee retirement benefits ..........................................................
12,328Reserve for director retirement benefits .............................................................
52
Reserve for reimbursement of dormant deposits................................................
261
Reserve for contingent loss .................................................................................
535
Deferred tax liabilities .........................................................................................
20
Deferred tax liability for land revaluation ..........................................................
3,567
Acceptances and guarantees ...............................................................................
4,501
Total liabilities ............................................................................................ 1,690,400
Net assets:
Shareholders’ equity:
Capital stock .......................................................................................................
38,653
Capital surplus ....................................................................................................
31,205Retained earnings................................................................................................
9,432
Treasury stock, at cost .........................................................................................
(109)
Total shareholders’ equity..........................................................................
79,181
Accumulated other comprehensive income:Net unrealized gains (losses) on available-for-sale securities .............................
3,188
Land revaluation account ...................................................................................
2,359
Total accumulated other comprehensive income .....................................
5,547
Stock acquisition rights.......................................................................................
28
Minority interests................................................................................................
91
Total net assets ...........................................................................................
84,848
Total liabilities and net assets .................................................................... ¥1,775,249

4Thousands of
U.S. dollars (Note 2)

2010

2011

¥1,594,085
30,000
4,316
34
8,105
233
11,977
248
241
676
32
3,573
6,710
1,660,234$19,544,133—
413,109423
112,920
3,184
148,264
636
3,141
6,438
247
42,90054,134
20,329,535

38,65331,2053,612(108)
73,362464,867
375,292
113,438(1,320)952,278(1,183)
2,368
1,184
—
58
74,606¥1,734,840

38,34028,371
66,711337
1,103
1,020,431$21,349,966

Consolidated Statements of Income
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
For the years ended March 31,

Thousands of
U.S. dollars (Note 2)

2011

2010

2011

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

¥23,896
6,825
151
4,704
343
6,592
42,514¥23,917
5,098
142
4,475
596
9,173
43,403$287,387
82,091
1,825
56,5784,134
79,278511,295

Expenses:
Interest on deposits .............................................................................................
Interest on borrowings and rediscounts .............................................................
Interest on corporate bonds................................................................................
Other interest expenses ......................................................................................
Fees and commissions.........................................................................................
Other operating expenses ...................................................................................
General and administrative expenses .................................................................
Other expenses....................................................................................................
Total expenses ............................................................................................
Income before income taxes and minority interests ..........................................

1,676
214
—
14
2,528
3,400
22,328
8,099
38,262
4,252

2,634
260
311
17
2,558
756
22,496
10,94539,9803,422

20,162
2,579—
177
30,40840,895
268,529
97,405
460,157
51,137

Income taxes:
Current ...........................................................................................................
Deferred ..........................................................................................................
Total income taxes .....................................................................................
Income before minority interests .......................................................................
Minority interests in income ..............................................................................
Net income .................................................................................................

189(2,431)(2,241)
6,493
40¥ 6,453

304
(163)
141
—
494
¥ 2,786

2,284(29,241)(26,956)
78,094485$ 77,608

Net income per share (in yen and dollar):
Basic ................................................................................................................
Diluted ............................................................................................................

¥18.71
6.89

¥8.08
5.33

$0.22
0.08

5

Consolidated Statements of Comprehensive Income
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
For the years ended March 31,

2011

Income before minority interests .......................................................................
Other comprehensive income:Net unrealized gains on available-for-sale securities......................................
Total other comprehensive income ...............................................................
Total comprehensive income.....................................................................
Total comprehensive income attributable to:Shareholders of the parent .............................................................................
Minority interests ...........................................................................................

6

2010

Thousands of
U.S. dollars (Note 2)2011¥ 6,493¥—$ 78,094

4,363
4,363
¥10,857——¥—

52,48252,482$130,576¥10,824
32¥——$130,182394

Consolidated Statements of Changes in Net Assets
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
For the years ended March 31,

Shareholders’ equity:
Capital stock
Balance at end of previous year......................................................................
Changes during year:
Reduction of capital ...................................................................................
Issuance of shares .......................................................................................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Capital surplus
Balance at end of previous year......................................................................
Changes during year:
Reduction of capital ...................................................................................
Reversal of capital surplus ..........................................................................
Issuance of shares .......................................................................................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Retained earnings (accumulated deficit)
Balance at end of previous year......................................................................
Changes during year:
Reversal of capital surplus ..........................................................................
Decrease of retained earnings due to acquisition of the stock ofconsolidated subsidiaries .........................................................................
Cash dividends ...........................................................................................
Net income .................................................................................................
Reversal of land revaluation account.........................................................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Treasury stock
Balance at end of previous year......................................................................
Changes during year:
Purchase of treasury stock ..........................................................................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Total shareholders’ equity
Balance at end of previous year......................................................................
Changes during year:
Issuance of shares .......................................................................................
Decrease of retained earnings due to acquisition of the stock ofconsolidated subsidiaries .........................................................................
Cash dividends ...........................................................................................
Net income .................................................................................................
Purchase of treasury stock ..........................................................................
Reversal of land revaluation account.........................................................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................

7

Thousands of
U.S. dollars (Note 2)

2011

2010

2011

¥38,653¥ 41,153$464,867———¥38,653(20,000)
17,500(2,500)¥ 38,653———$464,867¥31,205¥ 5,587$375,292————¥31,205

20,000(11,882)
17,50025,617¥ 31,205————$375,292¥ 3,612¥(10,927)$ 43,441—

11,882

—

—
(641)
6,453
8
5,820
¥ 9,432

(157)
—
2,786
27
14,539¥ 3,612—(7,719)77,608107
69,996$113,438¥ (108)¥(106)$ (1,305)(1)(1)¥ (109)

¥

(1)
(1)
(108)

(15)
(15)
$ (1,320)¥73,362¥ 35,707$882,297—

35,000

—

—
(641)
6,453
(1)
8
5,818
¥79,181

(157)
—
2,786
(1)
27
37,655¥ 73,362—(7,719)77,608(15)
107
69,981$952,278

Thousands of
U.S. dollars (Note 2)

Millions of yen (Note 1)
For the years ended March 31,

Accumulated other comprehensive income:Net unrealized gains (losses) on available-for-sale securities
Balance at end of previous year......................................................................
Changes during year:
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Land revaluation accountBalance at end of previous year......................................................................
Changes during year:
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Total accumulated other comprehensive income
Balance at end of previous year......................................................................
Changes during year:
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Stock acquisition rights
Balance at end of previous year......................................................................
Changes during year:
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Minority interests
Balance at end of previous year......................................................................
Changes during year:
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................
Total net assets
Balance at end of previous year......................................................................
Changes during year:
Issuance of shares .......................................................................................
Decrease of retained earnings due to acquisition of the stock ofconsolidated subsidiaries .........................................................................
Cash dividends ...........................................................................................
Net income .................................................................................................
Purchase of treasury stock ..........................................................................
Reversal of land revaluation account.........................................................
Net changes in items other than shareholders’ equity..............................
Total changes during year ..........................................................................
Balance at end of year ....................................................................................

8

2011

2010

2011

¥ (1,183)¥ (4,337)

4,371
4,371
¥ 3,188$(14,233)

3,153
3,153
¥ (1,183)$

52,57452,57438,340¥ 2,368¥ 2,395$

28,479(8)(8)¥ 2,359(27)(27)¥ 2,368

$

(107)
(107)
28,371¥ 1,184¥ (1,941)$

14,2454,362
4,362¥ 5,547

3,126
3,126
¥ 1,184$

52,46652,466
66,711

¥

—

¥

—

$

—

¥

28
28
28

¥

—
—
—

$

337
337
337

¥

58

¥ 4,439

$

708

¥

32
32
91

(4,380)(4,380)
¥
58

$

394
394
1,103

¥74,606¥38,204$ 897,251—

35,000

—

—
(641)
6,453
(1)
8
4,423
10,242¥84,848

(157)
—
2,786
(1)
27
(1,254)36,401¥74,606—(7,719)77,608(15)
10753,198123,179$1,020,431

Consolidated Statements of Cash Flows
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
For the years ended March 31,

2011

Cash flows from operating activities:
Income before income taxes and minority interests ..........................................
Depreciation and amortization ..........................................................................
Loss on impairment of fixed assets.....................................................................
Decrease in reserve for possible loan losses ........................................................
Increase in reserve for employee bonuses ..........................................................
Increase (decrease) in reserve for reimbursement of dormant deposits .............
Increase in reserve for employee retirement benefits.........................................
(Decrease) increase in reserve for director retirement benefits ..........................
(Decrease) increase in reserve for contingent loss ..............................................
Interest income ...................................................................................................
Interest expenses .................................................................................................
Loss on securities - net ........................................................................................
Foreign exchange gain - net................................................................................
Loss on disposal of tangible fixed assets.............................................................
Net decrease (increase) in trading account securities .........................................
Net increase in loans ...........................................................................................
Net increase in deposits ......................................................................................
Net decrease (increase) in borrowings excluding subordinated debt.................
Net increase in due from banks other than the Bank of Japan ..........................
Net decrease (increase) in call loans and others .................................................
Net decrease in call money and others...............................................................
Net increase in foreign exchanges - assets ..........................................................
Net increase in foreign exchange - liabilities .....................................................
Interest received ..................................................................................................
Interest paid ........................................................................................................
Other ...................................................................................................................
Subtotal ......................................................................................................
Income taxes paid ...............................................................................................
Net cash provided by (used in) operating activities ..................................

2010

2011

4,252
1,296
122
(2,638)
31
20
350
(195)
(140)
(30,873)
1,905
4,621
71
23
3
(28,278)
31,00930,033(19)
10,815(30,000)(778)
0
31,067(2,269)301
20,734(382)
20,352

¥

3,422
1,428
55
(6,080)
1
(10)
305
70
158
(29,157)
3,224
1,693
20
45
(0)
(8,247)18,323(185)(96)(16,186)(11,300)(1,145)
11
29,578(3,670)362(17,378)(128)(17,507)$

Cash flows from investing activities:
Purchases of securities.........................................................................................
Proceeds from sale of securities ..........................................................................
Proceeds from redemption of securities .............................................................
Purchases of tangible fixed assets .......................................................................
Proceeds from sale of tangible fixed assets .........................................................
Purchases of subsidiary shares ............................................................................
Payments for asset retirement obligations .........................................................
Net cash used in investing activities ..........................................................

(175,740)
123,858
37,947
(223)
71
—
(1)
(14,088)(179,481)
113,871
43,236(195)
54(4,600)—(27,115)(2,113,534)
1,489,573
456,379(2,688)859—(23)(169,433)

Cash flows from financing activities:
Proceeds from issuance of shares ........................................................................
Repayment of subordinated debt .......................................................................
Retirement by purchase of subordinated debt ...................................................
Dividends paid ....................................................................................................
Cash dividends paid to minority interests .........................................................
Purchases of treasury stock .................................................................................
Net cash (used in) provided by financing activities ..................................

—
—
—
(641)
—
(1)
(643)

34,933(13,600)
(826)
—
(427)
(1)
20,079———(7,719)—(15)(7,734)

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 ..........................................................

38
5,659
27,069¥ 32,728

27(24,516)
51,585¥ 27,069

459
68,060325,546$ 393,607

9¥

Thousands of
U.S. dollars (Note 2)

51,137
15,594
1,468(31,729)
381
242
4,220
(2,348)(1,691)(371,304)
22,91855,583855
287
43(340,094)
372,934
361,200(230)
130,074(360,793)(9,363)
5373,634(27,292)
3,628
249,364(4,594)
244,769

Supplementary Information
Consolidated Capital Ratio (Domestic Standard)
Millions of yen (Note 1)
March 31,

Thousands of
U.S. dollars (Note 2)

2011

2010

Tier I capital ........................................................................................................
Tier II capital .......................................................................................................
Deduction ...........................................................................................................
Total qualifying capital .......................................................................................

¥ 78,212
12,233—¥ 90,446¥ 72,780
12,466—¥ 85,246$

Risk-adjusted assets:
On-balance sheet assets ..................................................................................
Off-balance sheet assets ..................................................................................
Risk-weighted credit equivalent amount ......................................................
Amount related to operational risk-equivalent assets....................................
Total ...........................................................................................................
Capital ratio ........................................................................................................

¥889,907
18,510908,41754,371¥962,789
9.39%¥858,060
15,406873,466
53,351¥926,817
9.19%$10,702,434
222,616
10,925,050
653,900$11,578,951

10

2011

940,622
147,125—$ 1,087,747

Board of Directors and Corporate Auditors(As of June 29, 2011)

President & Chief
Executive Officer
Representative Director

Senior Managing
Executive Officer
Director

Managing Executive
Officers

Kunimitsu Yoshinaga

Hideo Kabe

Noboru Kogure
Shinobu Fukuda

Deputy President &Executive Officer
Director

Directors

Executive Officers

Sakae Morishige
Masayuki Kon

Masanori Tsunoyama
Naoshi Sando
Kiyomi Osawa
Hitoshi Ito

Hitoshi Fukuda

Hideaki Minami
Hiroshi Ebara
Hiroyuki Sakurai
Auditors
Kiyoshi Takei
Seiji Tamura
Toru Ikehara
Yoshikazu Kato

The Towa Bank Network(As of April 1, 2011)

Head Office:International Department:

12-6, Honmachi 2-chome, Maebashi, Gunma 371-8560, Japan
Phone: +81-27-234-1111
URL: http://www.towabank.co.jp

12-6, Honmachi 2-chome, Maebashi, Gunma 371-8560, Japan
Phone: +81-27-234-1959
Fax:+81-27-230-1735
SWIFT: TOWA JPJT

Service Network:
TohokuShinkansen
JoetsuShinkansen

Gunma
Prefecture:
41 branches

Tochigi
Prefecture:
3 branches

Maebashi
NaganoShinkansen
Takasaki

Omiya

Tokyo :
8 branches

SaitamaPrefecture:
42 branchesTokyo11