Financial Statements

2021

THE TOWA BANK, LTD.

A Message from the President

The Towa Bank will continue“Supporting our customers
when and where needed by meetingwith them to collect information
and accurately ascertain their situation.”
We greatly appreciate your continued patronage ofHiroshi Ebara
Representative Director,
President & Chief Executive Officer

customers and the Bank’s earning capabilities.

The Towa Bank, Ltd. Although the Japanese economy

Under Plan Phoenix VI, our new business rein-continued to suffer serious damage due to COVID-19

forcement plan running from April 1, 2021 to Marchin fiscal 2020, ended March 31, 2021, we are just31, 2024, and looking ahead to the post-COVID-19

about to enter a new stage going forward. It isera, we will promote essential cash flow support,

expected that economic activity will be invigorated

which shares managerial issues and demands,

with the progress of vaccinations and rapid advances

through the creation of annual cash flow charts in

toward DX (digital transformation) in society overall

cooperation with regional small and medium-sized

as well as in business fields.

enterprise customers affected by management andWe have prepared the disclosure magazine, Finan-

cash flow problems. By supporting customers fromcial Statement 2021, to enable further understanding

finance and core business aspects, we will increaseof the Bank’s current situation, and hope this will

the sustainability of their business and strengthen

serve as a reference.

the Bank’s earning capabilities. The Bank’s entire

Based on Plan Phoenix Ⅴ (started on April 1, 2019

management and employees will work in unity on

and ended on March 31, 2021), our business rein-essential cash flow support to make sure that cus-

forcement plan, the Bank has implemented TOWA

tomers do not discontinue their businesses on which

Customer Support Activities in which we work on

they work so earnestly. We will ask for your contin-

essential cash flow support that creates an environ-ued support.

ment in which customers can commit themselves toNovember 2021

main business operations without worrying aboutcash flow, support of customers’ core business operations, management improvement and business rehabilitation, and asset formation. Thus, we have made

Hiroshi Ebara

efforts in line with our business model for shared

Representative Director,
President & Chief Executive Officer

value creation aiming to improve corporate value for2

Profile
Bases of Operation
Since the Bank’s foundation in 1917, we have progressed as a regional bank alongside the development of local
communities. Gunma Prefecture and Saitama Prefecture, which serve as the Bank’s bases of operation, are successfully developing as bedroom towns of the Tokyo metropolitan area, and as industrial and tourist areas thanks
to good public transport infrastructure.
Gunma Prefecture lies roughly in the middle of the Japanese islands, and is a popular “manufacturing prefecture” with an industry centered on transportation equipment. Gunma also has plentiful tourism resources suchas beautiful nature and a great number of hot springs, and is visited by many vacationers and tourists throughout the year.
In Saitama Prefecture, commercial business is growing, backed by the fifth largest population in Japan. In
industry, it is one of Japan’s prime inland industrial prefectures, as the shipments of manufactured goods in thethree industries of transportation equipment, food ingredients, and chemical engineering exceed ¥1 trillion.
We will continue to support active economic communications in the regional communities of each prefecture
while building trust by helping to create affluent lives.

Service Network:
TohokuShinkansen
JoetsuShinkansen

Gunma
Prefecture:
38 branches

Tochigi
Prefecture:
3 branches

Head Office:

Maebashi
Hokuriku
Shinkansen

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

Takasaki

Omiya

Tokyo:
8 branches

Corporate Data
Established:
Head Office:Phone:
URL:
Capital:
Total assets:
Deposits:
Loans:

SaitamaPrefecture:
42 branches

International Department:
12-6, Honmachi 2-chome, Maebashi, Gunma
371-8560, Japan
Phone: +81-27-234-1959
Fax:+81-27-230-1735
SWIFT: TOWA JPJTTokyo(As of March 31, 2021)

June 11, 1917
12-6, Honmachi 2-chome, Maebashi, Gunma 371-8560, Japan+81-27-234-1111
https://www.towabank.co.jp¥38.6 billion¥2,543.8 billion
Number of branches: 94¥2,105.3 billion
Standalone ATMs:
84¥1,505.4 billion
Number of employees: 1,392

3

Business Model
The Towa Bank’s entire management and employees work in unity with a business model of “shared value creation”
to create an environment in which customers can commit themselves to core business operations without worrying
about cash flow, to revitalize regional economies and strengthen the Bank’s earning capabilities by supporting
customers’ core business operations, management improvement and business rehabilitation, and asset formation
with the following mottos in mind: “Supporting our customers when and where needed by meeting with themto collect information and accurately ascertain their situation” and “Never forgetting our modest origins.”
Beginning in October 2020, to create an environment in which customers can commit themselves to their corebusiness operations without worrying about cash flow during the COVID-19 pandemic, we started essential cash
flow support as accompanying support in which we create an annual cash flow chart in cooperation with ourcustomers, and offer cash flow support on an annual basis. We also support core business operations to resolve
the problems or address needs that are picked out during that process.
This support consists of business feasibility assessments through the creation of annual cash flow charts incooperation with our customers, assessing cash flow and business contents, and sharing management problems
and needs with customers. This helps to solve customers’ problems from the aspects of finance and core business. With this support, we aim to increase the sustainability of the customer’s business, and tie this to improvements in corporate value, while strengthening the Bank’s earning capabilities and consequently allowing us toreduce credit costs. We also work to ensure that main and next-tier customers do not discontinue the businesseson which they work so earnestly.

The Towa Bank’s Mottos— Practicing and Reinforcing Relationship Banking —We visit our customers
thoroughly so that we canunderstand their business andfinancial needs exactly.

Essential
Cash Flow Support* Creating an environment in which ourcustomers can commit themselves to corebusiness without worrying about cash flow

We support our customers
suffering from financial
difficulties on a best effort basis.

We aim to be the best bankwith a modest attitude andsupport our customers.

“TOWA Customer Support Activities“
Support ofcustomers’ corebusiness activities

Support ofcustomers’ management improvement

Support ofcustomers’ financial
asset formation

Shared Value Creation

Promotion of Sustainable Development Goals (SDGs) for Customers and the Towa Bank
Increase customers’ sales
and form customers’
financial assets

Revitalize regional
economies

4

Strengthen the Bank’s
earning capabilities

Initiatives for Customer Support Activities
After assessing and accumulating customers’ problems through our daily activities, the Bank offers various kindsof support with the cooperation of the head office and branches and the collaboration with external specialized
agencies. This includes increasing net sales through business matching; improving productivity through subsidy
applications; supporting dispatches of specialized employees through Management Mentor Exchange Meetings;
supporting joint research development with regional universities; supporting overseas advance; supporting business launches through measures such as operating business launch schools; supporting improvements of management for customers in difficult situations such as changes to lending conditions; and supporting asset
formation through the Bank’s promoters.

Customer problems
and needs

Business matching· Matching between the Bank’s business partners· Matching listed companies and major buyers· Business conferences through collaboration with threebanks in the northern Kanto region (Japan), etc.

Expanding sales
channels

Subsidy application
support· Manufacturing subsidies· Subsidies related to employment, etc.

Improvingproductivity
Technologicaldevelopment

Staffing service· Launch staffing service business· Collaboration with businesses promoting strategic
staffing services· Initiatives for leading staff matching businesses· Holding Management Mentor Exchange Meetings, etc.

Support for joint researchdevelopment with regional
universities· Collaboration with Gunma University· Collaboration with Maebashi Institute of Technology· Collaboration with Saitama University

Support for overseas
advance· Support from the International Department’s overseas
advance support team· Collaboration with partnered overseas banks andpublic institutions· Collaboration with various consultants, etc.

Support for businesslaunches
Support for new businesses· Operating a business launch school· Utilization of the Towa Agriculture, Forestry and Fishery
Sixth Industrialization Support Fund· Collaboration with Japan Finance Corporation, etc.

Personnel shortages

Overseas advanceNew businesses

Business succession
Management
improvement
Handling inheritancePreparing for long
lifespans

Support for businesssuccession· Collaboration with lawyers, external consultants
and others· M&A, etc.

Support for intellectual
property, etc.

· Collaboration with patent offices· Valuation of intellectual property businessSupport for management
improvement· Support from our corporate support office staff forevaluation and licensing divisions· Support to formulate management improvement plans incollaboration with external specialized agencies

Support for businessrehabilitation· Drastic business rehabilitation involving DDS and debt
forgiveness, etc.

Support for asset formation· Customer-oriented business operations involving
elimination of investment trust sales targets· Consultation support through asset formation promoters· Pension counseling

Assess and accumulate customer problems and needs
through our daily activities

5■ Business Communication Meetings
The Bank has so far held 16 occasions of the Towa ShinseikaiBusiness Communication Meeting, sponsored by Towa Shinseikai,
which is composed of customers from its business partners. Backed
by various municipal bodies including Gunma Prefecture and various organizations, it is even attended by business partners of
Tsukuba Bank and Tochigi Bank, which signed a regional collaborative agreement. The meetings have provided openings to
expand business opportunities.
In February 2021, the Bank held the first online Business Communication Meeting from the perspective of preventing the spreadof COVID-19, and conducted individual business meetings withmajor corporations and consultations for joint research with universities online, with participation by a total of 92 companies.

16th Towa Shinseikai Business Communication Meeting■ Management Mentor Exchange Meetings
We were the first regional bank to hold a Management Mentor
Exchange Meeting, when we did so in July 2014 in collaboration
with the Kanto Bureau of Economy, Trade and Industry, intermediate retired employees of major corporations who have specialist
knowledge or expertise between customers who are struggling
with shortages of specialist human resources. We have held theevent every year since then, alternating between Gunma
Prefecture and Saitama Prefecture.
The August 2020 Management Mentor Exchange Meeting washeld online from the perspective of preventing the spread of
COVID-19, and was attended by 20 companies.

7th Management Mentor Exchange Meeting (held online)

A lecture at the Business launch school■ Business Launch School
At the 4th Business Launch School held in January 2021 with cosponsorship by Gunma University, Maebashi Institute ofTechnology, and Kyoai Gakuen University, 33 people (including
16 university students) interested in entrepreneurship participatedin lectures featuring practical content. So far, it has led five people
to start businesses, while another five are currently preparing tolaunch a business.

■ Towa Bank SBI Money PlazaThe Bank operates Towa Bank SBI Money Plaza as an intermediary
operation for financial products in cooperation with the SBIGroup to address customers’ diverse asset management needs. The
plaza was opened within the sales department of the head office inApril 2019 and within the Iwatsuki branch in April 2021. The
money plazas are fully supplied with a wide array of products suchas foreign and domestic stocks not handled by the Bank, bonds(structured bonds), and stocks of newly listed companies.

6

Grand opening of the Towa Bank SBI Money
Plaza Saitama in April 2021

Initiatives for SDGs/ESG
The Bank works to support customers’ core business operations, management improvement and business rehabilitation, and asset formation through TOWA Customer Support Activities, thereby striving toward the sustainable development of regional economies and local communities. We view these efforts toward customer support
activities themselves as initiatives aimed at achieving the SDGs (Sustainable Development Goals). In particular,when supporting customers’ core business operations, we offer support from financial and main business aspects
with a focus on ESG (Environment, Social, and Governance).
We ourselves are continually implementing initiatives aligned with an SDGs perspective, such as initiating
lectures at regional universities and promoting active roles for women.
In April 2019, the Bank formulated the Towa Bank SDGs Declaration, which laid out our view and the segments in which to work proactively. We will continue to implement various measures aimed at achieving theSDGs based on this declaration.
Furthermore, to help achieve carbon neutrality by 2050, we will assist business partners in their transition to a decarbonized society and proactively support the creation of new business opportunities.

Towa Bank SDGs Declaration
Segments in which the Towa Bank works proactively
1. Promotion of
TOWA Customer Support Activities
6. Ensure availability and sustainable management ofwater and sanitation for all· Supporting joint research development with regional universities (Gunma University and Maebashi Institute of Technology)· Conducting activities in Oze National Park to make suretrash is not left behind
7. Ensure access to affordable, reliable, sustainable andmodern energy for all· Certified as a supported regional financial institution for the
ESG Regional Finance Promotion Program by the Ministry of
the Environment (MOE) (fiscal 2019 and fiscal 2020)· Certified by the MOE as a designated institution involved withdecarbonization project subsidies (fiscal 2019 and fiscal 2020)

2. Contributions to Regional Communities
4. Ensure inclusive and equitable quality education andpromote lifelong learning opportunities for all· Holding lectures at local universities (Gunma University and
Takasaki City University of Economics)· Opening business launch schools· Co-sponsoring the Sakutaro Hagiwara Award for poetry

8. Promote sustained, inclusive and sustainable economic growth,
full and productive employment and decent work for all· Supporting expanding sales channels (upstream/downstream
matching businesses, etc.)· Supporting subsidy applications (manufacturing subsidies)· Supporting dispatch of specialized employees (Management Mentor
Exchange Meetings, fee-based career introduction businesses, etc.)· Supporting business succession (establishing a consulting office)· Supporting overseas advance· Donating to schools, child welfare facilities and environmental organizations, etc. through SDGs private placement bonds· Asset formation support based on our customer-oriented
business operation policy

15. Protect, restore and promote sustainable use ofterrestrial ecosystems, sustainably manage forests,
combat desertification, and halt the reverse landdegradation and halt biodiversity loss
· Reducing paper usage through BPR (business process reengineering)· Reducing paper usage for items like bank books and application forms by using FinTech

9. B uild resilient infrastructure, promote inclusive andsustainable industrialization and foster innovation· Utilization of the Towa Regional Vitalization Fund· Utilization of the Towa Agriculture, Forestry and Fishery
Sixth Industrialization Support Fund

3. Expansion of Fields for Employees
to Play Active Roles
5. Achieve gender equality and empower
all women and girls· Promoting active roles for women and support for balancing
work and childcare (active promotion of women to executives, branch managers, and key roles)· Promoting balancing work and childcare

11. Make cities and human settlements inclusive, safe,
resilient and sustainable· Investment in a fund for wide-area reconstruction of regions
affected by typhoons or other disasters in 201917. Strengthen the means of implementation and revitalize the global partnership for sustainable development· Three-way collaboration with Tochigi Bank and Tsukuba
Bank (Business Communication Meetings, etc.)· Collaboration with municipalities, etc.

10. Reduce inequalities within and among countries· Promoting diversity· Strengthening corporate governance7

■ Towa SDGs Private Placement Bonds
We handle Towa SDGs Private Placement Bonds asa means of fluid financing to companies that aid
the sustainable development of regional economies
and society. With this bond, the companies canselect either a donation or endowment equivalent
to 0.2% of the issued amount to places such as
schools, child welfare facilities, or environmentalorganizations. So far, 40 bonds have been issued fora total of ¥5,165 million.
Endowment ceremony at an intensive care nursing home in Gunma Prefecture■ ESG Regional
Finance Promotion Projects
In June 2020, the Bank was selected as an institute tosupport the fiscal 2020 ESG regional finance promotion projects (11 institutions selected).
In fiscal 2020, the Bank supported a model projectto supply electricity to medical and welfare facilities
through solar-powered generators and storage batteries in response to disasters. This project involves placing solar-powered generators and storage batteries fordisasters and electric cars, etc. at welfare facilities, andaims to reduce CO2 by using clean energy during
general operating times, while enabling a self-contained supply of electricity during disasters. In thisway, the project aims to improve the resilience (disaster response capabilities) of local communities bysheltering neighbors fleeing from disasters while
guaranteeing the safety and security of the facility’s
residents. Based on this model project, industry, academia, government and finance collaborate andsurvey the target facilities to calculate electricity andheat demand at different times of the day. They calculate the size of solar-powered generators and storage batteries needed for installation to meet demand,and make proposals to facilities on how to utilize
renewable energy to contribute to local communities.
Additionally, based on the preliminary calculations inthis project, it aims to horizontally expand the modelcases to the Bank’s operating areas.

Towa Bank
Horizontal expansion of
the model cases to the
Bank’s operating areas

Consulting
companies
Universities

Electricity

Power from solarpowered generators

Emergency power
supplied from electricalstorage equipment

Electricity

Electric car

Power companies

Welfare facility

Municipalities· Self-consumption for heating and cooling, etc. during generaltimes, used for transportation during home care visits· Reductions in CO2 and expenses
During disasters· Business support· Business feasibility assessment· Calculations of business model· Guarantee the safety and security of the facility’s residents· Strengthen regional resilience(such as providing shelter and baths for residents)

Aim to reduce CO2 by using electric cars during home care visits■ Educational Activities
through Collaboration with
Regional Universities
As part of social contribution activities, we conduct
lectures at Gunma University and Takasaki City
University of Economics, at which the Bank’s executives and employees, including the president, serve as
instructors. Furthermore, due to the impact of
COVID-19, all lectures that began in fiscal 2020 were
held online through a remote learning format fromthe perspective of preventing the spread of infection
among students and securing opportunities to learn.

Model case(overview)

Total number of lectureattendees at Gunma
University

2013

Total number of lectureattendees at Takasaki
City University of
Economics
A lecture at Takasaki City
University of Economics

8

2015

1,380
2021

23,4302021

Promoting Active Roles and Creating Environments for Human Resources
For sophistication of human capital, the source of value creation
The Towa Bank views bank employees as one key form of capital (human capital) that serves as a source of value
creation, and works on making this human capital more sophisticated. To be concrete, we view strengthening
the capabilities of human resources and development of workplace environments as inseparable, and are working on developing human resources who can play active roles in our business models of TOWA Customer
Support Activities and essential cash flow support. We will continue to work on creating shared values between
customers and the Towa Bank by cultivating human resources with high ambitions and abilities.
Strengthening the capabilities of human resources
Seminars/Off-the-job training
Enhancing leadership
Initiatives to promote active roles for womenDevelopment of workplace environments

Making humancapital moresophisticatedInitiatives to support balancing work and childcare
Work culture that cultivates job satisfaction
Promoting shortened hours, health declarations

Promoting active roles through diverse work styles

Expansion of fields for employees to play active roles/Diversity
Creation of shared values (between customers and the Towa Bank)

Creation of shared social value

Creation of shared economic value

1. Strengthening the Capabilities of Human Resources■ Enhancing off-the-job training including seminars

Based on our human resource development program, we hold seminars such as a practical training seminar for public
relations and a seminar to strengthen relationship banking skills, and work on the rapid development of young employees. Additionally, we broadcast training videos related to cash flow support for public relations officers through our credit
administration department, incorporate topics such as cash flow support into various seminars for young employees, andaim to develop employees who can practically implement TOWA Customer Support Activities and essential cash flow
support, which are the Bank’s business models.

■ Enhancing leadership

In each year we select around 15 employees to acquire advanced practical lending abilities, and hold a seminar to develop
leaders to practice lending over a total of 18 days. During that time, we strive to improve abilities to assess business feasibility and support business rehabilitation, which are necessary for cash flow support and core business operation support,
and work on developing leading employees with leadership skills, which will become the admiration of young employees.

■ Initiatives to promote active roles for women

We assign women with ambition and abilities to core business operations such as screening and corporate planningdepartments, while actively promoting them to public relations positions and asset formation promoters.
Results of Action Plan (Phase Two) based on the Act on the Promotion of
Female Participation and Career Advancement in the Workplace

Strengthening
the capabilitiesof human
resources

Target 1: Increase the percentage of women in positions of deputy branch manager or higher by
50% compared to the fiscal 2017 year-end
Result:

50 % increase (4 → 6 people)

Target 2: Actively appoint women toasset formation promoters

300

Result:% increase		(6 → 24 people)

Ratio of women in executive roles 24.2% (Number of women in executive roles: 180 out of 743)
Ratio of women in key roles 18.1% (Number of women in key roles: 101 out of 559)
Fiscal 2020 results

92. Development of Workplace Environments■ Initiatives to support balancing work and childcare

As a means to support balancing work and childcare, we work on creating an environment in which it is easy to use various systems such as childcare holiday (a maximum period of 7 days starting from the first day of childcare holiday given
as paid holiday), shortened work hours for childcare, and paid half-day holidays.

■ Creating a work culture that cultivates job satisfaction

We work on developing human resources, developing environments, and providing opportunities so that all employees,
regardless of age, sex, academic background, or place of origin can play active roles and be satisfied with their jobs.

■ Initiative to promote shortened work hours

We work to promote shortened work hours by, for example, setting targets for leaving times and improving awareness ofworking hours at branch manager meetings and seminars for managerial staff, etc.

Rate of paid
holiday taken

Development of
workplaceenvironments(average number ofdays taken)

66.8 %(Average: 12.1 days)

Average overtime
work hours
All employees:

6:28
4:04

hours per month

General employees:
hours per month

Support for balancing work and childcare
Rate of childcare holiday Rate of childcare holiday
taken by womentaken by men(number of people)(number of people)

100
%
(36)

100
%
(36)

Health Declaration
The Towa Bank implements TOWA Customer Support Activities with the following three mottos inmind: “Supporting our customers when and where needed by meeting with them to collect information and accurately ascertain their situation” and “Never forgetting our modest origins.” We believethat maintaining and improving the health of employees is indispensable to continuing these initiatives, and are carrying out the initiatives listed below. In addition, we have been certified as a Healthand Productivity Management Organization.
· Conduct health check-ups for all employees· Assess employees’ health issues and evaluate necessary measures· Work on improving eating habits· Work on increasing opportunities for exercise

Certified as a Healthand Productivity
Management
Organization· Work on measures against passive smoking· Work on infectious disease prevention· Work on measures against long working hours· Work on measures to support mental health

3. Targets of Action Plan (Phase Three) based on the Act on the Promotionof Female Participation and Career Advancement in the Workplace
Target 1

Increase the percentage of women in positions of branch manager or higher
by 50% compared to the fiscal 2020 year-end.

Target 2

Achieve an average period of employment for female employees of 12 years or higher.

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

Millions of yen (Note 1)
2021

March 31,

Assets:Cash and due from banks ���������������������������������������������������������������������������������� ¥  383,664
Call loans and bills purchased ���������������������������������������������������������������������������
3,708
Trading account securities ���������������������������������������������������������������������������������
0
Money held in trust �������������������������������������������������������������������������������������������
9,990
Securities ������������������������������������������������������������������������������������������������������������
596,874
Loans and bills discounted �������������������������������������������������������������������������������� 1,502,820
Foreign exchange �����������������������������������������������������������������������������������������������
1,928
Other assets ��������������������������������������������������������������������������������������������������������
28,990
Tangible fixed assets ������������������������������������������������������������������������������������������
22,864
Buildings ��������������������������������������������������������������������������������������������������������
4,574
Land ���������������������������������������������������������������������������������������������������������������
16,386
Lease assets (tangible) ������������������������������������������������������������������������������������
53
Construction in progress �������������������������������������������������������������������������������
4
Other tangible assets �������������������������������������������������������������������������������������
1,844
Intangible fixed assets ����������������������������������������������������������������������������������������
2,881
Software ���������������������������������������������������������������������������������������������������������
1,072
Other intangible assets ����������������������������������������������������������������������������������
1,809
Retirement benefit asset �������������������������������������������������������������������������������������
345
Deferred tax assets ���������������������������������������������������������������������������������������������
2,265
Customers’ liabilities for acceptances and guarantees ��������������������������������������
3,853
Reserve for possible loan losses ��������������������������������������������������������������������������
(8,707)
Total assets ������������������������������������������������������������������������������������������������ ¥2,551,480

Thousands of
U.S. dollars (Note 2)

2020

2021

¥  240,661
4,647
14
9,998
561,280
1,456,130
551
29,844
22,666
4,418
16,482
55
3
1,706
1,657
1,156
500
—
3,731
4,156
(5,872)¥2,329,468$ 3,465,494
33,5004
90,237
5,391,329
13,574,389
17,419261,855
206,522
41,323148,013483
43
16,65826,027
9,685
16,341
3,121
20,461
34,810(78,656)$23,046,518

Notes: 1. Y
 en 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. T he United States dollar amounts represent conversions of Japanese yen, for convenience only, at the exchange rate of ¥110.71 to US$1.00, the rate
prevailing on March 31, 2021.

11

Millions of yen (Note 1)
2021

March 31,

Liabilities:
Deposits �������������������������������������������������������������������������������������������������������������� ¥2,104,845
Call money and bills sold ����������������������������������������������������������������������������������
—Borrowed money ������������������������������������������������������������������������������������������������
298,715
Foreign exchange �����������������������������������������������������������������������������������������������
33
Other liabilities ��������������������������������������������������������������������������������������������������
5,724
Accrued employee bonuses ��������������������������������������������������������������������������������
432
Net defined benefit liability �������������������������������������������������������������������������������
38
Reserve for director retirement benefits ������������������������������������������������������������
1
Reserve for reimbursement of dormant deposits ����������������������������������������������
287
Reserve for contingent loss ��������������������������������������������������������������������������������
364
Deferred tax liabilities ����������������������������������������������������������������������������������������
12
Deferred tax liability for land revaluation ���������������������������������������������������������
2,066
Acceptances and guarantees ������������������������������������������������������������������������������
3,853
Total liabilities ������������������������������������������������������������������������������������������� 2,416,376
Net assets:
Shareholders’ equity:
Capital stock ������������������������������������������������������������������������������������������������������
38,653
Capital surplus ���������������������������������������������������������������������������������������������������
17,500Retained earnings �����������������������������������������������������������������������������������������������
66,576
Treasury stock, at cost ����������������������������������������������������������������������������������������
(304)
Total shareholders’ equity �������������������������������������������������������������������������
122,425
Accumulated other comprehensive income:Net unrealized gains on available-for-sale securities �����������������������������������������
8,033
Land revaluation account ����������������������������������������������������������������������������������
2,276
Remeasurements of defined benefit plans ���������������������������������������������������������
1,612
Total accumulated other comprehensive income ������������������������������������
11,922
Stock acquisition rights �������������������������������������������������������������������������������������
265
Non-controlling interests ����������������������������������������������������������������������������������
490
Total net assets ������������������������������������������������������������������������������������������
135,103
Total liabilities and net assets ������������������������������������������������������������������� ¥2,551,480

12

Thousands of
U.S. dollars (Note 2)

2020

2021

¥1,981,811
27,000172,613
19
7,238
441
2,951
1
368
493
8
2,091
4,156
2,199,195$19,012,243—
2,698,175
299
51,703
3,909
344
17
2,601
3,290
114
18,66534,81021,826,177

38,653
17,50165,703(235)
121,623

349,144
158,070
601,362(2,754)
1,105,824

5,765
2,334
(191)
7,908
311
429
130,273¥2,329,468

72,561
20,563
14,563
107,6882,400
4,427
1,220,340$23,046,518

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

Millions of yen (Note 1)

Thousands of
U.S. dollars (Note 2)

2021

2020

2021

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

¥19,065
3,835
148
6,003
1,368
6,016
36,437¥19,239
5,239
102
6,468
2,723
4,956
38,729$172,215
34,642
1,338
54,226
12,362
54,345329,129

Expenses:
Interest on deposits ��������������������������������������������������������������������������������������������
Interest on call money and bills sold ����������������������������������������������������������������
Interest on payables under securities lending transactions ������������������������������
Interest on borrowings and rediscounts ������������������������������������������������������������
Other interest expenses �������������������������������������������������������������������������������������
Fees and commissions ����������������������������������������������������������������������������������������
Other operating expenses ����������������������������������������������������������������������������������
General and administrative expenses ����������������������������������������������������������������
Other expenses ���������������������������������������������������������������������������������������������������
Total expenses �������������������������������������������������������������������������������������������
Income before income taxes ������������������������������������������������������������������������������

235
(10)
—
35
0
3,448
1,003
20,2107,568
32,491
3,946

287
(27)
0
34
0
3,929
190
20,245
8,993
33,654
5,075

2,130
(93)
—
316
1
31,1489,067
182,551
68,361
293,485
35,643

Income taxes:
Current ����������������������������������������������������������������������������������������������������������
Deferred ���������������������������������������������������������������������������������������������������������
Total income taxes ������������������������������������������������������������������������������������
Profit �������������������������������������������������������������������������������������������������������������������
Profit attributable to non-controlling interests �������������������������������������������������
Profit attributable to owners of parent �����������������������������������������������������

1,463
(68)
1,394
2,551
56
¥ 2,495

2,431
(266)
2,164
2,910
14
¥ 2,896

13,216(622)
12,59423,049510$ 22,538

Profit attributable to owners of parent per share (in yen and U.S. dollars):
Basic ���������������������������������������������������������������������������������������������������������������
Diluted �����������������������������������������������������������������������������������������������������������

¥ 62.3642.04¥ 73.1950.97$   0.56
0.37

For the years ended March 31,

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

Millions of yen (Note 1)

Thousands of
U.S. dollars (Note 2)

For the years ended March 31,

2021

2020

2021

Profit �������������������������������������������������������������������������������������������������������������������
Other comprehensive income:Net unrealized gains (losses) on available-for-sale securities ������������������������
Remeasurements of defined benefit plans ����������������������������������������������������
Total other comprehensive income ����������������������������������������������������������
Comprehensive income (loss) �������������������������������������������������������������������

¥2,551¥ 2,910$23,049

2,271
1,803
4,075
¥6,626(5,927)(1,055)(6,982)¥(4,072)

20,516
16,29236,809$59,858¥6,56660¥(4,083)11$59,312545

Comprehensive income (loss) attributable to:
Owners of parent �������������������������������������������������������������������������������������������
Non-controlling interests ������������������������������������������������������������������������������

14

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

Millions of yen (Note 1)
Shareholders’ equity
Capitalstock

Balance at April 1, 2020 ������������������������������� ¥38,653
Changes in items during the period:
Profit attributable to owners of parent �����
Dividends from surplus �����������������������������
Purchase of treasury stock �������������������������
Disposal of treasury stock ��������������������������
Increase/Decrease for other reasons ����������
Changes in items other than shareholders’equity during the period (net amount) ��
Total changes in items during the period �����
—Balance at March 31, 2021 �������������������������� ¥38,653

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity¥17,501¥65,703¥(235)¥121,623

2,495(1,670)2,495(1,670)
(177)
97
57

(177)
108

(10)
9

48

(1)
¥17,500

872¥66,576(69)¥(304)

802¥122,425

Millions of yen (Note 1)
Accumulated other comprehensive income

Balance at April 1, 2020 �������������������������������
Changes in items during the period:
Profit attributable to owners of parent �����
Dividends from surplus �����������������������������
Purchase of treasury stock �������������������������
Disposal of treasury stock ��������������������������
Increase/Decrease for other reasons ����������
Changes in items other than shareholders’equity during the period (net amount) ��
Total changes in items during the period �����
Balance at March 31, 2021 ��������������������������

Net unrealized
gains (losses) on
available-for-salesecurities

Land
revaluationaccount¥5,765¥2,334

Total
accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincome¥     (191)¥ 7,908

Stockacquisitionrights

Noncontrollinginterests

Total
net assets

¥311

¥429

¥130,273
2,495(1,670)
(177)
97
57

2,267
2,267
¥8,033(57)(57)¥2,276

15

1,803
1,803
¥1,612

4,013
4,013¥11,922

(46)
(46)
¥265

60
60
¥490

4,027
4,830
¥135,103

Thousands of U.S. dollars (Note 2)
Shareholders’ equity
Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityBalance at April 1, 2020 ������������������������������� $349,144 $158,082 $593,478 $(2,131) $1,098,575
Changes in items during the period:
Profit attributable to owners of parent �����
22,53822,538Dividends from surplus �����������������������������
(15,090)(15,090)
Purchase of treasury stock �������������������������
(1,606)(1,606)
Disposal of treasury stock ��������������������������
(100)
981
882
Increase/Decrease for other reasons ����������
86
434
521
Changes in items other than shareholders’equity during the period (net amount) ��
Total changes in items during the period �����
—
(13)
7,884
(624)
7,248
Balance at March 31, 2021 �������������������������� $349,144 $158,070 $601,362 $(2,754) $1,105,824
Thousands of U.S. dollars (Note 2)
Accumulated other comprehensive income
Net unrealized
gains (losses) on
available-for-salesecurities

Balance at April 1, 2020 ������������������������������� $52,080
Changes in items during the period:
Profit attributable to owners of parent �����
Dividends from surplus �����������������������������
Purchase of treasury stock �������������������������
Disposal of treasury stock ��������������������������
Increase/Decrease for other reasons ����������
Changes in items other than shareholders’equity during the period (net amount) �� 20,481
Total changes in items during the period ����� 20,481
Balance at March 31, 2021 �������������������������� $72,561

Land
revaluationaccount

Total
accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincomeStockacquisitionrights

Noncontrollinginterests$21,085$  (1,729) $ 71,436$2,816$3,881 $1,176,710

Total
net assets

22,538(15,090)(1,606)882521(522) 16,292(522) 16,292$20,563 $14,563

16

36,25236,252$107,688

(416)
(416)
$2,400545
36,382545
43,630$4,427 $1,220,340

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

Millions of yen (Note 1)
2021

For the years ended March 31,

Cash flows from operating activities:
Income before income taxes ������������������������������������������������������������������������������ ¥   3,946
Depreciation and amortization �������������������������������������������������������������������������
1,355
Loss on impairment of fixed assets ��������������������������������������������������������������������
118
Increase (decrease) in reserve for possible loan losses ���������������������������������������
2,835
Increase (decrease) in reserve for employee bonuses ����������������������������������������
(8)
Increase (decrease) in reserve for reimbursement of dormant deposits ������������
(80)
Increase (decrease) in reserve for contingent loss ���������������������������������������������
(129)
Increase (decrease) in net defined benefit liabilities �����������������������������������������
(665)
Increase (decrease) in provision for directors’ retirement benefits �������������������
0Interest income ��������������������������������������������������������������������������������������������������
(23,049)
Interest expenses ������������������������������������������������������������������������������������������������
260
Loss (gain) on disposal of tangible fixed assets �������������������������������������������������
26(Increase) decrease in trading account securities ����������������������������������������������
14
Loss (gain) on securities — net ��������������������������������������������������������������������������
(1,653)
Loss on sales of shares of subsidiaries ����������������������������������������������������������������
—Loss (gain) on money held in trust �������������������������������������������������������������������
5
Foreign exchange loss (gain) — net �������������������������������������������������������������������
(166)
Net (increase) decrease in loans �������������������������������������������������������������������������
(46,689)
Net increase (decrease) in deposits ��������������������������������������������������������������������
123,034
Net increase (decrease) in borrowings excluding subordinated debt ����������������
126,102
Net (increase) decrease in due from banks other than the Bank of Japan ��������
(32)
Net (increase) decrease in call loans and others ������������������������������������������������
938
Net increase (decrease) in call money and others ���������������������������������������������
(27,000)
Net (increase) decrease in foreign exchange — assets ���������������������������������������
(1,376)
Net increase (decrease) in foreign exchange — liabilities ���������������������������������
13
Interest received �������������������������������������������������������������������������������������������������
23,144
Interest paid �������������������������������������������������������������������������������������������������������
(303)
Other ������������������������������������������������������������������������������������������������������������������
136
Subtotal �����������������������������������������������������������������������������������������������������
180,778
Income taxes paid ����������������������������������������������������������������������������������������������
(2,560)Net cash provided by (used in) operating activities ���������������������������������
178,218
Cash flows from investing activities:
Purchases of tangible fixed assets ����������������������������������������������������������������������
(1,248)Purchases of securities ���������������������������������������������������������������������������������������� (147,536)
Proceeds from sale of tangible fixed assets ��������������������������������������������������������
53
Proceeds from sale of securities �������������������������������������������������������������������������
47,524Purchases of intangible fixed assets �������������������������������������������������������������������
(1,704)
Proceeds from redemption of securities ������������������������������������������������������������
69,591
Payments for asset retirement obligations ��������������������������������������������������������
(81)
Increase in money held in trust �������������������������������������������������������������������������
—Proceeds from decrease of money held in trust ������������������������������������������������
1
Payments for sales of shares of subsidiaries resulting in change inscope of consolidation �������������������������������������������������������������������������������������
—Net cash provided by (used in) investing activities ����������������������������������
(33,398)
Cash flows from financing activities:
Proceeds from exercise of stock options ������������������������������������������������������������
0
Purchases of treasury stock ��������������������������������������������������������������������������������
(177)
Dividends paid ���������������������������������������������������������������������������������������������������
(1,670)Net cash provided by (used in) financing activities ���������������������������������
(1,848)
Effect of exchange rate changes on cash and cash equivalents ������������������
—Net increase (decrease) in cash and cash equivalents ����������������������������������
142,971
Cash and cash equivalents at beginning of year ������������������������������������������
239,916
Cash and cash equivalents at end of year ������������������������������������������������������ ¥ 382,887
17

Thousands of
U.S. dollars (Note 2)

2020

2021

¥   5,075
1,360
605
1,316
12
(187)
(97)
(951)
(1)
(24,581)294
21
20(1,683)233(2)
228(22,152)
24,313
9,094(2,664)(2,560)
—
(109)
(12)
25,996(308)(512)
12,746(741)
12,004$     35,643
12,2401,067
25,608(75)(730)(1,171)(6,013)8(208,197)
2,356
242
126
(14,933)—52(1,505)(421,732)
1,111,322
1,139,029
(294)
8,474
(243,881)(12,437)
122
209,054(2,745)
1,233
1,632,898(23,124)
1,609,774(738)(120,436)—
53,413(718)
131,401(5)—
2(11,279)(1,332,639)
484
429,273(15,396)628,594
(737)
—
17

1,360
64,279—(301,680)

0(2)(1,669)(1,671)074,613
165,303¥ 239,916

0(1,606)(15,090)(16,694)—
1,291,401
2,167,075$ 3,458,476

Supplementary Information
Consolidated Capital Ratio (Domestic Standard)[Basel III]
Millions of yen (Note 1)

Thousands of
U.S. dollars (Note 2)

2021

2021

Core capital: instruments and reserves �������������������������������������������������������������������
Core capital: adjustment amount of instruments and reserves �����������������������������
Total qualifying capital �������������������������������������������������������������������������������������������

¥  128,076
3,192¥  124,884$ 1,156,866
28,837$ 1,128,029

Risk-adjusted assets:
On-balance-sheet assets ��������������������������������������������������������������������������������������
Off-balance-sheet assets ��������������������������������������������������������������������������������������
Credit value adjustment amount �����������������������������������������������������������������������
Risk-weighted credit equivalent amount �����������������������������������������������������������
Amount related to operational risk-equivalent ��������������������������������������������������
Total ���������������������������������������������������������������������������������������������������������������
Capital ratio ������������������������������������������������������������������������������������������������������������

¥1,116,949
8,133
182
1,125,265
50,222¥1,175,488
10.62%$10,088,970
73,465
1,647
10,164,083
453,642$10,617,725

March 31,18

Business Organization Chart(As of April 1, 2021)

Integrated Planning Department

In charge of business management
In charge of planning
In charge of public relations
In charge of relevant business
SDGs Promotion Office

Towa Bank Economic Research Center
Integrated Risk Management Department
Relationship Banking Promotion Department

In charge of overall relationship banking promotion
In charge of relationship banking support
In charge of asset support
Customer Support Office
Regional Vitalization Promotion Office

General Shareholders’Meeting
Audit & Supervisory
Board Members

Relationship Banking Strategy Department

Audit & Supervisory Board
Board of Directors

In charge of business operation strategy
In charge of deposit and loan product strategy
In charge of finance planning and financing facilitation
Information Systems OfficeConsulting Department
Audit & Supervisory Board
Members’ OfficePrivate Banking Department
Credit Administration Department

Board of Executive Officers

Business Rehabilitation Office
Credit Management Department

Board of Managing Directors

In charge of credit administration
Real Estate Research CenterIn charge of credit administration
In charge of credit assessment evaluation
In charge of credit management

Securities Investment Department
Finance and Accounting Department
Business Administration and Systems Department

In charge of planning
In charge of systems development
In charge of administrative advice

Operations Department

Head Office Administrative Center
Direct Service CenterTokyo Administrative Center
Loan Administrative Center

International Department

In charge of promoting international businessIn charge of foreign exchange operation

Human Resources and General Affairs Department

In charge of planning
In charge of personnel
In charge of welfare programs
In charge of general affairs and property management
Employee Training Center
Office to Promote Social Equality
Secretarial Office
Tokyo Branch Offices

Compliance Management Department

Internal Audit Department

In charge of compliance
Customer Call Center
Office to Monitor Business Transactions with Antisocial Forces
Secretariat of External Evaluation Committee
In charge of auditing assets
In charge of internal audits and internal control planning
In charge of auditing business operations
In charge of auditing internal control
Office to Screen Credit

Directors, Executive Officers, and Audit & Supervisory Board Members(As of June 24, 2021)

Representative Director
President & Chief Executive Officer
Hiroshi Ebara

Director
Managing Executive Officer
Shinichiro Suzuki

Representative Director
Vice President & Executive Officer
Hiroyuki Sakurai

Directors (Outside)
Takeshi Mizuguchi
Rikako Onishi
Hideto Tago

Director
Senior Managing Executive Officer
Isao Kitazume

Managing Executive Officers
Kazuyoshi Shiraishi
Toru Kobayashi
Takahisa Wasada

Executive Officers
Ichiro Takenouchi
Hiroshi Nagasawa
Susumu Okabe
Yukihiko Tsukagoshi
Tatsuya Ishizeki
Hiroshi Iijima
Audit & Supervisory Board Members
Kiyomi Osawa*
Masami Hashimoto*
Shintaro Ando**
Shinichi Kato*** Full-Time Audit & Supervisory Board Member** Outside Audit & Supervisory Board Member

19