Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Financial Statements
Years Ended March 31, 2016 and 2015
Contents:
Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Independent Auditor’s Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
The Tokyo Tomin Bank, Limited
Non-consolidated Balance Sheets (Unaudited)
Non-consolidated Statements of Income (Unaudited)
The Yachiyo Bank, Limited
Non-consolidated Balance Sheets (Unaudited)
Non-consolidated Statements of Income (Unaudited)Tokyo TY Financial Group Inc. and Consolidated Subsidiaries
Consolidated Balance Sheets
As of March 31, 2016 and 2015
Millions of Yen
2015
2016
AssetsCash and due from banks (Notes 24 and 27)
Call loans and bills bought
Monetary claims bought
Trading account securities (Note 27)
Securities (Notes 3, 7 and 27)
Loans and bills discounted (Notes 4 and 27)
Foreign exchanges (Note 5)
Other assets (Note 7)
Tangible fixed assets (Note 6)
Intangible fixed assets
Deferred assets
Net defined benefit asset (Note 13)
Deferred tax assets (Note 18)
Customers’ liabilities for acceptances and guarantees
Reserve for loan losses
Total assets¥¥

Liabilities
Deposits (Notes 7, 8 and 27)
Negotiable certificates of deposit
Payables under securities lending transactions (Notes 7 and 27)
Borrowed money (Notes 7 and 9)
Foreign exchanges (Note 5)
Bonds payable (Note 10)
Bonds with stock acquisition rights (Notes 10 and 11)
Other liabilities (Note 12)
Reserve for employees’ bonuses
Net defined benefit liability (Note 13)
Reserve for officers and directors’ retirement benefits
Reserve for point card program
Reserve for losses on interest repayments
Reserve for losses from reimbursement of inactive accounts
Reserve for contingent losses
Deferred tax liabilities (Note 18)
Deferred tax liabilities on land revaluation (Notes 6 and 18)
Acceptances and guarantees (Note 14)
Total liabilities¥

Net assets (Notes 15, 16 and 19)
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities (Note 17)
Deferred gains or losses on hedges
Revaluation reserve for land (Notes 6 and 18)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets¥

See notes to consolidated financial statements.

1

405,539
43,6004,202
658
1,210,097
3,359,919
6,531
29,25853,217
2,039
56
8,647
7,035
5,860
(24,122)
5,112,540

4,502,192
34,206
293,327
7,425
68
16,0005,000
35,803
2,038
5,530
85
53
14
988
659
55
14
5,860
4,909,324¥¥¥

Thousands of
U.S. Dollars(Note 2)
2016

298,834
28,9383,012
607
1,236,834
3,294,802
7,731
21,01853,613
3,295
74
10,777
6,570
6,630(28,913)
4,943,828$

3,599,036
386,944
37,294
5,843
10,739,238
29,818,240
57,962259,657
472,286
18,103497
76,73962,43352,010(214,079)$ 45,372,209

4,491,306
27,038140,876
7,409
139
25,6005,000
30,012
2,074
3,326
137
51
14
844
740
30
15
6,630
4,741,248$

39,955,559
303,567
2,603,191
65,897607
141,995
44,373
317,744
18,08849,083
760
473
126
8,775
5,851
493
128
52,01043,568,727

20,00099,58580,913(594)
199,905

20,00099,60773,245(544)
192,308

177,493883,794
718,082(5,276)
1,774,095

8,390
6
(209)
11
(5,221)
2,977
46
286
203,216
5,112,540

9,784
2
(210)
17
432
10,026
245
202,580
4,943,828

74,46161(1,858)104(46,341)
26,427413
2,545
1,803,481
45,372,209¥$

Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2016 and 2015
Thousands of
U.S. Dollars(Note 2)
2016

Millions of Yen
2015
2016
IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Interest on call loans and bills boughtInterest on receivables under securities borrowing transactions
Interest on due from banks
Other interest income
Fees and commissions
Other operating income
Other income (Note 20)
Total income¥

45,740
9,060
204
311
523
15,832
4,899
3,402
79,975¥37,879
6,409
145
9
163
395
13,4103,946
53,159115,519$

405,930
80,411
1,816
2,767
4,642
140,506
43,48030,198
709,753

Expenses
Interest expense:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money and bills soldInterest on payables under securities lending transactions
Interest on borrowed money
Interest on bonds payable
Interest on bonds with stock acquisition rights
Other interest expense
Fees and commissions payments
Other operating expenses
General and administrative expenses (Note 21)
Other expenses (Note 22)
Total expenses

2,147
27
0
664
131
488
107
56
3,424
363
54,2693,742
65,423

1,812
38
0
117
212
698
53
42
2,895
209
43,7493,483
53,314

19,055
242
6
5,901
1,165
4,334
954
500
30,391
3,228
481,622
33,214
580,617

Income before income taxes

14,551

62,205

129,136

Income taxes (Note 18):
Current
Deferred
Total income taxes

2,475
2,638
5,113

2,054
2,815
4,870

21,96823,41645,384

Net income

9,437

57,33583,751

24

44

220

Net income belonging to non-controlling shareholders¥

Net income belonging to parent company’s shareholders
See notes to consolidated financial statements.

2

9,412

¥

57,290$83,530Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2016 and 2015
Millions of Yen
2015
2016
¥

Net Income
Other comprehensive income (Note 23):
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliate accounted for by
the equity method
Total other comprehensive (loss) income

9,437

¥

57,335

Thousands of
U.S. Dollars(Note 2)
2016$

83,751(1,284)4
0(5)(5,654)

7,966
2
1
6
5,087

(11,396)40
7(51)(50,179)(108)(7,046)100
13,164(959)(62,539)

Comprehensive income

¥

2,390

¥

70,500$21,212

Total comprehensive income attributable to:Parent company’s shareholders
Non-controlling shareholders

¥

2,363
26

¥

70,46534$

20,977235

See notes to consolidated financial statements.

3

Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2016 and 2015
Millions of Yen
Shareholders’ Equity

Thousands
Issued number ofshares ofcommon stock
Balance, April 1, 2014
Cumulative effect ofchanges in accounting
policies
Restated balance, April 1,
2014
Increase (decrease) due toshare transfer
Acquisition of shares ofsubsidiaries due to sharetransfer
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during theyear

40,050CapitalSurplus

CommonStock¥48,120¥Retained
Earnings

18,379¥

Total
Shareholders’EquityTreasury
Stock

19,031¥(1,636)¥

260
40,05048,12018,379(10,822)(28,120)

81,089260

19,291(1,636)

84,15552,969153

153(1,758)(1,758)57,2900(6)(1,571)
1,571

(548)

57,290
(548)

68

62

1,571

-

(1,571)-(15)(28,120)(10,822)

Balance, March 31, 2015
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during theyear

29,227

Balance, March 31, 2016

29,227¥20,000(15)

81,227¥

99,607

53,953¥73,245(1,744)

1,092
¥

(544)

108,152
¥

9,412
0

¥

20,000

9,412
(52)

2

2
(21)

(21)
¥

99,585

See notes to consolidated financial statements.

4

192,308(1,744)

(52)

(21)

-

83,894

7,668¥

80,913

(50)
¥

(594)

7,596
¥

199,905

Millions of Yen
Accumulated Other
Comprehensive Income
Valuationdifference on
available-forsale securities

Deferred
gains andlosses onhedgesBalance, April 1, 2014
Cumulative effect ofchanges in accounting
policies
Restated balance, April 1,
2014
Increase (decrease) due toshare transfer
Acquisition of shares ofsubsidiaries due to sharetransfer
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during the
year

¥

¥

Balance, March 31, 2015
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during theyear¥

Balance, March 31, 2016

¥

1,707

Revaluation
reserve for
land
- ¥

(211)

Foreign
Currency
Translation
Adjustments¥

10

Remeasurementsof defined benefit
plans

Total
Accumulated
Other
Comprehensive
IncomeStock
Acquisition
Rights

Noncontrolling
Interests

Total Net
Assets

¥

¥

¥

¥

¥

(4,655)(3,148)79

248

81,073
260

1,707

-

(211)

10

(4,655)(3,148)79

248

81,33452,969153(1,758)57,290
(548)
62
(15)

8,076

2

1

6

5,087

13,174(79)(2)

13,092

8,076

2

1

6

5,087

13,174(79)(2)

121,245

2 ¥

(210)

245

¥ 202,580(1,744)

9,784

¥

¥

17

¥

432

¥

10,026

¥

-

¥

9,412
(52)
2
(21)
(1,393)(1,393)
8,390

¥

4

0

4
6 ¥

0
(209)

(5)
(5)
11

¥

See notes to consolidated financial statements.

5(5,654)¥(5,654)(5,221)(7,048)¥(7,048)
2,977

46

¥

46
46

¥

41

(6,960)

41
286

636
¥ 203,216

Thousands of U.S. Dollars (Note 2)
Shareholders’ Equity
CapitalRetained
Treasury
Surplus
Earnings
Stock

CommonStock
Balance, April 1, 2015
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during theyear$

Balance, March 31, 2016$

177,493$883,984$

650,030(15,478)$

Total Shareholders’Equity(4,831)$

83,5301(463)

83,530
(463)

18

19

(190)

Valuationdifference on
available-forsale securities

Deferred
gains andlosses onhedgesBalance, April 1, 2015
Cash dividends
Net income belonging toparent company’s
shareholders
Purchase of treasury stock
Disposition of treasury
stock
Change in interest in
subsidiaries
Net change in items otherthan those inshareholders’ equity
Total changes during the
year

$

$

Balance, March 31, 2016$

86,831(444)(5,276)

Thousands of U.S. Dollars (Note 2)
Accumulated Other
Comprehensive Income
Total
Foreign
Accumulated
Revaluation
Remeasurements
Currency
Other
reserve forTranslation of defined benefit Comprehensive
land
plans
Adjustments
IncomeStock
Acquisition
Rights20 $(189)
883,794(190)$

177,493$(1,866)$156$

1,706,676(15,478)$

3,838

68,052
718,082$

88,981$$

Noncontrolling
Interests
-

$

2,177

67,418
1,774,095

Total Net
Assets$ 1,797,835(15,478)
83,530
(463)
19
(190)

40

(12,369)(12,369)
74,461

$

40
61 $

7
7
(1,858)

(51)

$

(51)
104

See notes to consolidated financial statements.

6(50,179)$(50,179)(46,341)(62,553)$(62,553)
26,427

413

$

413
413

$

367

(61,772)

367
2,545

5,646
$ 1,803,481

Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2016 and 2015
Thousands of
U.S. Dollars(Note 2)
2016

Millions of Yen
2015

2016
Operating activities:
Income before income taxes
Depreciation and amortization
Retirement benefit expenses
Gain on negative goodwill
Loss on step acquisitions
Equity in earnings of investment in affiliate
Net decrease in reserve for loan losses
Net decrease in reserve for employees’ bonuses
Net decrease ( increase) in retirement benefit asset
Net increase (decrease) in retirement benefit liability
Net (decrease) increase in reserve for officers and directors’
retirement benefits
Net increase in reserve for point card program
Net (decrease) increase in reserve for losses on interest repayments
Net increase in reserve for losses from reimbursement of inactive
accounts
Net decrease in reserve for contingent losses
Interest income
Interest expense
Net gains related to securities transactions
Net exchange losses (gains)
Net (gains) losses on disposition of fixed assets
Net increase in provision for special account for advanced
depreciation of fixed assets
Gain on state subsidy and other grants
Net increase in trading securities
Net increase in loans and bills discounted
Net increase in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money (excluding
subordinated borrowed money)
Net (increase) decrease in due from banks (excluding due from the
Bank of Japan)
Net (increase) decrease in call loans and bills bought
Net increase in payables under securities lending transactions
Net decrease in money held in trust
Net decrease in foreign exchange-assets
Net (decrease) increase in foreign exchange-liabilities
Interest received
Interest paid
Other-net
Subtotal
Income taxes paid
Income taxes refunded¥

14,551
3,485
(216)
(189)
(4,791)
(36)
2,130
2,204

¥

62,2052,508
1,263(50,476)3(202)(4,104)(50)(8,207)(1,768)$129,136
30,929(1,923)(1,686)(42,522)(319)
18,90819,564

(51)
2
(0)

9
4
3

(459)
20
(6)

144
(80)
(55,840)
3,623(2,984)
19,144
(87)

113
(68)
(45,003)
2,975(2,389)(9,010)
76

1,278
(718)
(495,568)
32,160(26,482)
169,897
(776)

122
(132)
(51)
(65,117)
10,886
7,168(213)(18,788)7,587(5,127)

1,087(1,173)(454)(577,893)
96,611
63,613

15

(119)

138

(33)
(15,852)
152,450
1,200(70)
57,631(3,845)(16,436)
108,940(3,544)312

7,878
27,026140,87620496
1745,518(3,130)8,185
158,109(1,208)-(297)(140,689)
1,352,953
10,653(629)
511,460(34,128)(145,872)
966,810(31,457)
2,775

Net cash provided by operating activities

105,708

156,901

938,129

Investing activities:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Purchases of tangible fixed assets
Payments for disposition of tangible fixed assets
Proceeds from sales of tangible assets
Purchases of intangible assets
Proceeds from state subsidy and other grants(657,580)
577,21494,063(1,408)
(41)
534
(260)
234

(588,928)
500,403
13,998(18,332)
(46)
0
(393)
-

(5,835,821)
5,122,603
834,788(12,501)
(364)
4,744
(2,310)2,077¥

Net cash provided by (used in) investing activities

7

12,757¥(93,299)$

113,215

Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2016 and 2015
Thousands of
U.S. Dollars(Note 2)
2016

Millions of Yen
2015

2016
Financing activities:
Repayments of subordinated borrowings
Payments for redemption of subordinated bonds
Cash dividends paid
Cash dividends paid to non-controlling interests
Payments for purchase of treasury stock
Proceeds from sales of treasury stock
Payments of lease obligations¥(9,600)(1,747)
(6)
(52)
2
(390)

¥

(5,000)(5,000)(1,755)
(0)
(55)
37
(290)

$

(85,197)(15,508)
(57)
(463)
19
(3,469)(11,794)(12,066)(104,675)

0

11

8

Net increase in cash and cash equivalents

106,671

51,546946,678

Cash and cash equivalents at beginning of year

286,385

122,9822,541,578-

111,855-

Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents

Increase in cash and cash equivalents resulting from sharetransfer (Note 25)¥

Cash and cash equivalents at end of year (Note 24)

393,056¥

286,385$

3,488,256(Concluded)

See notes to consolidated financial statements.

8

Tokyo TY Financial Group, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2016 and 2015
1. Summary of Significant Accounting Policies
a. Basis of presentation
Tokyo TY Financial Group Inc. (the “Company”) was established as a joint holding company through a sharetransfer between The Tokyo Tomin Bank, Limited (“Tokyo Tomin”) and The Yachiyo Bank, Limited (“Yachiyo”)
on October 1, 2014. The share transfer was accounted for applying the purchase method stipulated in accounting
standards relating to business combinations with Tokyo Tomin as the acquiring company and Yachiyo as theacquired company.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries have been
prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act andits related accounting regulations, the Enforcement Regulation for the Banking Act and in conformity withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards.
As permitted by the Financial Instruments and Exchange Law of Japan, amounts of less than one million yen havebeen omitted. As a result, the totals shown in the accompanying consolidated financial statements (both in yen and
U.S. dollars) do not necessarily agree with the sums of the individual amounts.
b. Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and all of its 11 (12 in2015) subsidiaries (collectively, the “Group”).
From the year ended March 31, 2016, Tomingin Office Support Center Co., Ltd. has been excluded from thescope of consolidation, with the completion of its liquidation on September 28, 2015, but its results of operations
until the liquidation are consolidated.
Under the control and influence concept, those companies which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, and those companies over which the Group has the ability
to exercise significant influence in terms of its operating and financial policies is accounted for by the equity
method in the consolidated financial statements.
An investment in one affiliated company is accounted for by the equity method.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.
The fiscal year end of one consolidated subsidiary of the Company is different from that of the Company. For
consolidation purposes, the financial statements of the subsidiary as of the Company's fiscal year end wereadditionally prepared and used for consolidation.
c. Trading account securities
Trading account securities are stated at fair value as of the balance sheet date. Cost of sales of trading accountsecurities is determined using the moving average method.
d. Securities
Held-to-maturity debt securities are carried at amortized cost (straight-line method) determined by themoving-average method.
Available-for-sale securities for which fair value is available are stated at the fair value at the fiscal year-end. Costof sales of these available-for-sale securities is determined using the moving-average method. Available-for-salesecurities for which fair value is not readily determinable are stated at cost determined by the moving averagemethod.
9

Valuation difference on available-for-sale securities, net of applicable taxes, is reported in a separate component of
net assets.
e. Derivative transactions
Derivatives are stated at fair value.
f. Depreciation and amortization of fixed assets
Depreciation of tangible fixed assets (other than lease assets) of consolidated subsidiaries conducting banking
business (“banking subsidiaries”) is computed using the declining-balance method based on the estimated useful
lives of the assets, while the straight-line method is mainly applied to buildings.
The following is the ranges of useful lives of principal tangible fixed assets.
Buildings:
6 to 50 years
Other:
2 to 20 years
Depreciation of tangible fixed assets of other consolidated subsidiaries (“non-banking subsidiaries”) is principally
computed using the declining-balance method based on the estimated useful lives of the assets.
Intangible fixed assets (other than lease assets) are amortized using the straight-line method. Costs of computer
software developed or obtained for internal use are amortized using the straight-line method over the estimateduseful life of 5 years.
Lease assets under finance leases which do not transfer ownership of assets to lessees are depreciated using thestraight-line method over the lease terms of the respective assets. Residual value of these lease assets isguaranteed residual value per the respective lease contracts or zero value.
g. Treatment of deferred assets
Organization costs and stock issuance costs are amortized using the straight-line method over 5 years and 3 years,
respectively.
h. Reserve for loan losses
A reserve for loan losses is provided by consolidated banking subsidiaries in accordance with internallyestablished standards for write-offs and provisions:• For claims on borrowers who have entered into bankruptcy, special liquidation proceedings or similar legal
proceedings under the Bankruptcy Law, Special Liquidation in the Commercial Law or other similar laws(“bankrupt borrowers”), and borrowers who are not legally or formally bankrupt but effectively in similar
conditions (“effectively bankrupt borrowers”), a reserve is fully provided based on the amount of claims, netof the expected amount of recoveries from collateral and guarantees.
• For claims on borrowers who are not currently bankrupt but are perceived to have a high risk of falling into
bankruptcy (“potentially bankrupt borrowers”), a reserve is provided in the amount deemed necessary basedon an overall solvency assessment of the claims, net of the expected amount of recoveries from collateral andguarantees.
• For other claims, a reserve is provided based on the rates derived from default experiences for a certain
period in the past and other factors.
For claims on borrowers who are effectively bankrupt borrowers or borrowers whose credit terms are rescheduledor reconditioned and exceed certain thresholds, if cash flows from collection of principal and interest can bereasonably estimated, the difference between the cash flows discounted by the original interest rate and thecarrying value of the loan is provided as a reserve for loan losses (discounted cash flows method).
All claims are assessed by the Asset Assessment Department under the cooperation by credit origination
department in accordance with the Group’s policies and guidelines for the self-assessment of asset quality.

10

For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers of part of theconsolidated subsidiaries engaged in banking, the amount of the claims exceeding the estimated value of collateraland guarantees was deemed to be uncollectible and was written off against the total amount of the outstanding
claims until the prior year; however, from the year ended March 31, 2016, in line with the management integration,such amount is no longer written off directly but provided as a reserve. As of March 31, 2016 and 2015, theoutstanding write-offs made before April 1, 2015 amounted to ¥1,992 million ($17,683 thousand) and ¥3,854
million, respectively.
For part of the consolidated non-banking subsidiaries, a general reserve is provided based on the historical credit
loss experience for normal claims and a specific reserve is provided at the amount deemed uncollectible based onan evaluation of potential losses for each claim other than normal claims.
i. Reserve for employees’ bonuses
A reserve for employees’ bonuses is recorded at the estimated amount attributed to the current fiscal year, toprovide for the future bonus payments to employees.
j. Reserve for officers’ and directors’ retirement benefits
A reserve for officers’ retirement benefits is recorded to provide future pension payments by certain consolidatedbanking subsidiaries and that for directors’ by certain consolidated non-banking subsidiaries in the amountdeemed accrued at the current fiscal year-end based on the estimated amount of benefits.
k. Reserve for point card program
A reserve for point card program is provided by certain consolidated subsidiaries at the amount considerednecessary to cover the estimated future costs of credit points.
l. Reserve for losses on interest repayments
Certain consolidated subsidiaries account for the necessary amount to provide for possible losses on claims for
repayments of interest on loans that exceed the maximum interest rate set by the Interest Limitation Law.
Estimated interest repayments to be applied to principals of loans amounted to ¥1 million ($9 thousand) andincluded in reserve for loan losses as of March 31, 2016 and 2015.
m. Reserve for losses from reimbursement of inactive accounts
A reserve for losses from reimbursement of inactive accounts is provided by consolidated banking subsidiaries at
the amount considered necessary for future payments of deposits which were derecognized from liabilities, owing
to depositors request for reimbursements.
n. Reserve for contingent losses
A reserve for contingent losses is provided by consolidated banking subsidiaries at the amount considerednecessary to cover possible contingent losses in accordance with the Joint Responsibility System of Credit
Guarantee Corporations.
o. Retirement benefits
To provide for payments of retirement benefits to employees, an asset or liability is established at an amount ofprojected benefit obligation net of the fair value of plan assets based on the estimated amounts at the end of the
fiscal year.
In determining the retirement benefit liability for consolidated banking subsidiaries, the benefit formula basis isadopted as the attribution method of the projected retirement benefit.
Prior service costs are charged to income using the straight-line method based on the average remaining service
period of the employees (3 years or 12 years).
Actuarial differences are charged to income from the period following the period in which they arise using thestraight-line method based on the average remaining service period of the employees (11 to 15 years).
11

Simplified methods are applied by certain consolidated non-banking subsidiaries in calculating the retirement
benefit obligation and expenses which allow them to determine based on the amount considered necessary upon
voluntary resignation at the end of fiscal year.
p. Stock options
In December 2005, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Statement No. 8,“Accounting Standard for Stock Options,” and related guidance. This standard requires companies to recognize
compensation expense for employee stock options based on the fair value of the stock options at the date of grantand over the vesting period as consideration for receiving goods or services. The standard also requires companies
to account for stock options granted to non-employees based on the fair value of either the stock option or the
goods or services received. In the consolidated balance sheet, the stock options are presented as subscription tights
to shares, a separate component of equity until exercised.
q. Translation of assets and liabilities denominated in foreign currencies
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates
prevailing at the balance sheet date.
r. Hedge accounting
For derivatives to hedge the interest rate risk associated with various financial assets and liabilities of theconsolidated banking subsidiaries, the Group applies the deferred method which is stipulated in “Accounting and
Auditing Treatment of Accounting Standards for Financial Instruments in Banking Industry” (Japanese Institute ofCertified Public Accountants (the “JICPA”) Industry Audit Committee Report No. 24, February 13, 2002). The
Group assesses the effectiveness of such hedge for offsetting changes in interest rate, by classifying the hedge
items (such as deposits and loans) and the hedging instruments (such as interest rate swaps) by their maturity. The
Group had not entered into new derivative transactions for the purpose of hedging against changes in interest rates
related to deposits and loans during the fiscal years ended March 31, 2016 and 2015.
Exceptional treatment is applied to interest rate swaps for certain financial assets.
Consolidated non-banking subsidiaries have no transactions to which hedge accounting is applied.
s. Income taxes
Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax
bases of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse.
t. Appropriation of retained earnings
Under the Corporation Law, the appropriation of retained earnings with respect to a given financial period is madeby resolution of the stockholders at a general meeting held subsequent to the close of such financial period.
Therefore, the accounts for that period do not, reflect such appropriations. See Note 30.
u. Cash and cash equivalents
For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and deposits
with the Bank of Japan which are included in “Cash and due from banks” in the consolidated balance sheets.
v. Consumption taxes
The Company and its domestic consolidated subsidiaries account for consumption taxes and local consumption
taxes by the tax-exclusion method whereby receipts and payments of consumption taxes are not included in thetransaction amounts and, accordingly, consumption tax amounts do not affect the measurement of profit or losstransactions. However, consumption taxes etc. relating to tangible fixed assets that are not tax-deductible areaccounted for as an expense in the fiscal year in which they are incurred.

12

w. Unapplied accounting standards
Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No.26, March 28,
2016)(1) Summary
The ASBJ Guidance basically follows the guidance on recoverability of deferred tax assets in the JICPA
Audit Committee Report No.66, “Treatment of Auditing for Judgment of Recoverability of Deferred
Tax Assets,” with partial revision.
(2) Scheduled date of adoption
The Group expects to adopt the implementation guidance from the beginning of the year starting April 1,
2016.
(3) Impact of adopting the implementation guidance
The Group is currently evaluating the effects of adopting the implementation guidance on its
consolidated financial statements.
x. Changes in presentation
Following the application of the provision set forth in Article 39 of the “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, September 13, 2013), changes in presentation have been madeconcerning the net income as well as from “Minority interests” to “Non-controlling interests.” Consolidated
financial statements for the year ended March 31, 2015 have been restated in order to reflect these changes inpresentation.
2. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥112.68 =$1, the approximate rate of exchange on March 31, 2016, has been used in translation. The inclusion of suchamounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled in
U.S. dollars at that rate or any other rate.
3. Securities
Securities as of March 31, 2016 and 2015 were as follows:

Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Equity securities
Foreign securities
Other securities
Total

¥

¥

Millions of Yen
2016
2015
518,714¥602,991
116,365
115,391
365,056
350,272
37,90545,803
118,901
99,645
53,152
22,730¥ 1,236,834
1,210,097

Thousands of
U.S. Dollars
2016$ 4,603,432
1,032,709
3,239,767
336,400
1,055,212
471,716$ 10,739,238

As of March 31, 2016 and 2015, securities included equity investments in an affiliated company that amounted to¥998 million ($8,864 thousand) and ¥1,173 million, respectively.
As of March 31, 2016 and 2015, Japanese government bonds included bonds of ¥2,999 million ($26,616
thousand) and zero, respectively. These bonds were being loaned to third parties without collateral under lending
contracts (securities lending transactions).
13

Japanese corporate bonds included bonds offered through private placement. The Group’s guarantee obligation forsuch private-placement bonds as of March 31, 2016 and 2015 were ¥27,889 million ($247,508 thousand) and¥24,020 million, respectively.
In the following description, in addition to “Securities”, also presented are negotiable certificates of deposit which
are classified as “Trading account securities” and “Cash and due from banks” in the consolidated balance sheets
and beneficiary claims on loan trusts which are classified as “Monetary claims bought” in the consolidatedbalance sheets.
As of March 31, 2016 and 2015, valuation gain or loss on trading securities included in income before income
taxes was ¥6 million ($58 thousand) and ¥2 million, respectively.
 Held-to-maturity securities
The following tables summarize carrying values, fair values and differences of securities with available fair values
as of March 31, 2016 and 2015:
Millions of Yen
2016
Carrying value
Securities with fair value exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Securities with fair value not exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Total

¥

¥

340,371
63,637
90,237
15,133509,380
40
4,017
6,308
3,000
13,365
522,745

Fair value¥¥

Net unrealized
gains (losses)

359,354 ¥
64,07291,40815,674
530,509

18,982
435
1,170
541
21,129

40
4,016
6,306
2,931
13,294
543,804 ¥

(0)
(0)
(1)
(68)
(70)
21,059Millions of Yen
2015
Carrying value
Securities with fair value exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Securities with fair value not exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Total

¥

¥

14

361,096
69,846
94,573
12,997538,514
3,519
2,008
5,187
5,056
15,771
554,286

Fair value¥¥

Net unrealized
gains (losses)

371,236 ¥
70,182
95,133
13,194
549,747

10,139336
560
196
11,232

3,518
2,008
5,183
4,927
15,638565,385 ¥

(1)
(0)
(3)
(128)
(133)
11,099

Thousands of U.S. Dollars
2016
Net unrealized
Carrying value
Fair value
gains (losses)
Securities with fair value exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Securities with fair value not exceeding carrying value:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Foreign securities
Subtotal
Total

$

$

3,020,693
564,762
800,832
134,301
4,520,590
355
35,651
55,983
26,624
118,613
4,639,203$$

3,189,155 $568,625
811,222
139,106
4,708,110

168,462
3,863
10,3894,805
187,519355
35,64455,96826,017
117,986
4,826,096 $

(0)
(6)
(14)
(606)
(627)
186,892

 Available-for-sale securities
The following tables summarize carrying values, acquisition costs and differences of securities with available fairvalues as of March 31, 2016 and 2015:
Millions of Yen
2016

Securities with carrying value exceeding acquisition cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Securities with carrying value not exceeding acquisition
cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese short-term corporate bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Total

15

Carrying value

Acquisition cost

¥

¥

¥

22,329Net unrealized
gains (losses)

15,163 ¥

7,166

176,318
47,711
231,717455,747
122,218
600,295

173,763
46,957229,548450,268
118,917584,349

2,555
754
2,169
5,478
3,301
15,946

10,428

12,975(2,546)

1,984
999
9,999
26,79339,77743,53993,746
694,041

1,998
1,000
9,999
27,04240,04044,52997,546
681,895 ¥

(13)
(0)
(248)
(262)
(990)
(3,800)12,146¥

Millions of Yen
2015

Securities with carrying value exceeding acquisition cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Securities with carrying value not exceeding acquisition
cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Total

Carrying value

Acquisition cost

¥

¥

¥

38,988Net unrealized
gains (losses)

27,884 ¥11,104

179,188
37,415
199,312415,916
91,478546,383

178,422
37,228
198,681414,332
89,509531,727

765
186
631
1,583
1,968
14,655

1,947

2,172

(224)

59,186
6,120
51,198
116,506
19,534
137,988684,371

59,427
6,186
51,452
117,066
19,580138,819
670,546 ¥

(241)
(65)
(253)
(560)
(45)
(830)
13,825¥

Thousands of U.S. Dollars
2016
Net unrealized
Carrying value Acquisition cost gains (losses)
Securities with carrying value exceeding acquisition cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Securities with carrying value not exceeding acquisition
cost:
Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese short-term corporate bonds
Japanese corporate bonds
Total bonds
Other securities
Subtotal
Total

16

$

$

198,170$

134,569 $

63,6001,564,769
423,424
2,056,421
4,044,615
1,084,652
5,327,437

1,542,094
416,729
2,037,169
3,995,993
1,055,353
5,185,917

22,674
6,694
19,251
48,62129,298
141,520

92,553

115,156(22,602)

17,614
8,871
88,746
237,783
353,015
386,397
831,966
6,159,404 $

17,736
8,874
88,746
239,990355,348
395,185865,690
6,051,608 $

(122)
(3)
(2,207)(2,333)(8,788)(33,723)
107,796

Securities with fair values (excluding securities held for trading purpose) that have substantially declined from theacquisition cost are valued at fair value and losses on devaluation of those securities are recognized in the
consolidated statements of income unless the value is considered recoverable.
For the years ended March 31, 2016 and 2015, no impairment loss was recognized.
Determining whether the fair value has “significantly declined” is based on the fair value declining by more than
50% or the criteria considering the trend of the fair value during a certain past period and credit risks of the issuers
when the fair value declined between 30% and 50% of the acquisition cost.
The following table summarizes total available-for-sale securities sold and amounts of the related gains and losses
for the years ended March 31, 2016 and 2015:

Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Total

Sales proceeds¥
6,692

Millions of Yen
2016
Realized gains¥
844

Realized losses¥
241

315,467
60,42985,625461,522
101,347

771
318
344
1,434
904

10
2
12
213

¥

569,563

Sales proceeds¥
2,444

Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Total

¥

490,266¥

467

Millions of Yen
2015
Realized gains¥
232

Realized losses
¥
27

1,238
37
136
1,412
608
2,253

76
1
77
29
134

358,465
13,16554,822426,453
61,368
¥

3,183

¥

¥

Thousands of U.S. Dollars
2016
Sales proceeds
Realized gains Realized losses$
59,395
$
7,493
$
2,142

Corporate stocks
Bonds:
Japanese government bonds
Japanese local government bonds
Japanese corporate bonds
Total bonds
Other securities
Total

2,799,672
536,295
759,901
4,095,870
899,432$17

5,054,698

$

6,844
2,825
3,057
12,727
8,030
28,251

$

92
18
111
1,898
4,151

4. Loans and Bills Discounted
Loans and bills discounted as of March 31, 2016 and 2015 included the following loans:

Commercial bills discounted
Loans on bills
Loans on deeds
Overdrafts
Total

¥

Millions of Yen
2016
2015
41,917 ¥46,038104,276
95,8493,014,588
2,957,071
199,136
195,842

Thousands of
U.S. Dollars
2016$
372,004
925,425
26,753,538
1,767,271¥

3,359,919¥$ 29,818,240

3,294,802

Loans and bills discounted include loans to borrowers in bankruptcy, delinquent loans, loans past due for threemonths or more, and restructured loans. The amounts of these loans as of March 31, 2016 and 2015were as
follows:

Loans to borrowers in bankruptcy
Delinquent loans
Loans past due for three months or more
Restructured loans
Total

¥

¥

Millions of Yen
2016
2015
3,693
¥
4,032
83,414104,109
291
588
3,138
4,063
¥
112,793
90,536

Thousands of
U.S. Dollars
2016$
32,776740,274
2,584
27,849$803,485

Loans are generally placed on non-accrual status when the ultimate collectability of either the principal or interest
becomes doubtful because payments have been in arrears for a certain period of time or due to other reasons.
Loans to borrowers in bankruptcy represent non-accrual loans to borrowers in legal bankruptcy as defined in the
Corporation Tax Law. Delinquent loans represent non-accrual loans other than loans to borrowers in bankruptcy
and restructured loans.
Loans past due for three months or more represent loans on which payments of principal or interest have been inarrears for three months or more, but do not meet the criteria for loans to borrowers in bankruptcy and delinquentloans.
Restructured loans are loans that have been restructured to support the rehabilitation of certain borrowers who areencountering financial difficulties, with the intention of ensuring recovery of the loans by providing easier
repayment terms for the borrowers (such as by reducing the rate of interest or by providing a grace period for thepayment of principal/interest, etc.), and are not classified in any of the above categories.
These amounts represent the gross amounts before deduction of the reserve for loan losses.
Notes discounted are recorded as cash lending/borrowing transactions in accordance with “Accounting and
Auditing Treatments of the Application of Accounting Standards for Financial Instruments in the Banking
Industry” (JICPA Industry Audit Committee Report No. 24). The Group has a right to sell or collateralize suchbills at its discretion. As of March 31, 2016 and 2015, total face value of commercial bills and bills of exchangeacquired through discounting amounted to ¥42,124 million ($373,840 thousand) and ¥46,683 million,
respectively.
As of March 31, 2016 and 2015, loans and bills discounted included the portion of extended to original borrowers
based on loan participation agreements, as permitted by the JICPA Accounting Committee Report No. 3, in theamount of ¥1,500 million ($13,320 thousand) and ¥5,002 million, respectively.
18

Line-of-credit agreements relating to overdrafts and loans are agreements which oblige the Group to lend funds up
to a certain limit agreed to in advance. The Group makes the loan upon the request of an obligor to draw down
funds under such a loan agreement as long as there is no breach of the various terms and conditions stipulated in
the relevant loan agreement. The unused line-of-credit balance relating to these overdrafts and loan agreements asof March 31, 2016 and 2015 amounted to ¥878,776 million ($7,798,867 thousand) and ¥873,529 million,
respectively. The amount related to overdrafts and loans with a term of one year or less or overdrafts and loans
which permit unconditional cancellation at any time were ¥855,417 million ($7,591,568 thousand) and ¥850,299
million, as of March 31, 2016 and 2015, respectively.
As many of these contracts expire undrawn, the aggregate total of the undrawn amount does not necessarily affectthe future cash flows of the Group. Many of these contracts have clauses that allow the Group to turn down a loan
request or reduce the amounts of the credit line if there is a change in financial conditions, a need to establish
increased securities, or other similar reasons. In addition to obtaining necessary collateral (real estate, securities,etc.) at the time the commitment contract is entered into, the Group assesses the condition of the customer’sbusiness operations, and analyzes other information, based on internal procedures and standards. If necessary, thecontract is reviewed and revised, or additional steps are taken to secure the credit extended to the customer.
5. Foreign Exchanges
Foreign exchanges as of March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Assets:Due from foreign banks
Foreign exchange bills bought
Foreign exchange bills receivable
Total
Liabilities:
Due to foreign banks
Foreign exchange bills sold
Foreign exchange bills payable
Total

¥

4,951
226
1,353

¥

¥

6,531

¥

¥

1 ¥
2
63

¥

68 ¥

4,431
769
2,530
7,731

$

$

43,9402,008
12,01357,962

1 $
52
85
139 $

15
25
566
607

6. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2016 and 2015 were as follows:Land
Buildings
Lease assets
Construction in progress
Other
Subtotal
Accumulated depreciation
Total

¥

¥

19

Millions of Yen
2016
2015
34,547¥
34,62533,81233,909
2,260
1,914
2,226
2,223
18,195
18,39391,042
91,066(37,825)(37,452)¥
53,61353,217

Thousands of
U.S. Dollars
2016$306,600
300,071
20,064
19,761
161,476
807,973(335,687)$
472,286

Land used for Tokyo Tomin’s business activities has been revalued on the basis prescribed by the Law Concerning
Land Revaluation (Proclamation No. 34 dated March 31, 1998). As for the revaluation difference, the income tax
account corresponding to the revaluation difference amount is included in liabilities as “Deferred tax liabilities onland revaluation,” and the revaluation difference, net of this deferred tax liability, is included in net assets as“Revaluation reserve for land.”Date of revaluation:
March 31, 1998
Revaluation method as stated in Article 3-3 Law Concerning Land Revaluation:
The value of land is based on the official notice prices calculated as directed by public notification of theCommissioner of the National Tax Administration and as provided in the Law Concerning Public Notification ofLand Prices, as stipulated in Article 2-4 of the Ordinance Implementing the Law Concerning Land Revaluation(Government Ordinance No. 119 dated March 31, 1998), after making reasonable adjustments. Difference
between the revalued carrying amount and fair value of lands being revalued pursuant to the Article 10 of the law
as of March 31, 2016 and 2015 were ¥149 million ($1,325 thousand) and ¥184 million, respectively.
The advanced depreciation entry for tangible fixed assets amounted to ¥216 million ($1,925 thousand) and ¥216
million for the years ended March 31, 2016 and 2015, respectively.
7. Pledged Assets
Assets pledged as collateral as of March 31, 2016 and 2015 consisted of the following:

Millions of Yen
2016
2015
Assets pledged as collateral:
Securities¥
Other assets
Liabilities corresponding to assets pledged as collateral:
Deposits¥
Payable under securities lending transactions
Borrowed money

Thousands of
U.S. Dollars
2016

330,445 ¥36

188,29718$

2,932,603
323

55,382 ¥293,3272

10,714140,8765$

491,505
2,603,191
24

In addition to the assets presented above, securities totaling ¥89,194 million ($791,569 thousand) and ¥95,540
million were pledged as collateral relating to transactions on exchange settlements, foreign exchange
administration services, cooperative system settlements and derivative transactions or as substitutes for futuretransaction margins as of March 31, 2016 and 2015, respectively.
Other assets as of March 31, 2016 and 2015 included following:

Millions of Yen
2016
2015
Deposits
Cash collateral paid for financial instruments¥

20

5,513 ¥
129

5,544
-

Thousands of
U.S. Dollars
2016$

48,9261,152

8. Deposits
Deposits as of March 31, 2016 and 2015 consisted of the following:

Current deposits
Ordinary deposits
Savings deposits
Deposits at noticeTime deposits
Other deposits
Total

¥

Millions of Yen
2016
2015
213,024 ¥
220,855
2,135,844
2,042,268
38,05839,74016,70422,225
1,963,709
2,021,308
134,849
144,907

Thousands of
U.S. Dollars
2016$ 1,890,529
18,954,959
337,760
148,248
17,427,310
1,196,751¥ 4,491,306$ 39,955,559¥ 4,502,192

9. Borrowed Money
Borrowed money as of March 31, 2016 and 2015 included subordinated borrowings amounting to ¥7,000 million($62,122 thousand) and ¥7,000 million, respectively.
Annual maturities of borrowed money as of March 31, 2016 and 2015 were as follows:Year ending March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total

¥

¥

Thousands ofMillions of Yen
U.S. Dollars
2015
2016
2016
277 ¥
272 $
2,459
63
57
560
45
43
404
28
25
256
10
8
93
7,000
62,122
7,000
7,409 $
65,897
7,425 ¥

10. Bonds Payable
Bonds payable and bonds with stock acquisition rights as of March 31, 2016 and 2015 consisted of the following:

Millions of Yen
2016
2015
Issued by the Company:
Unsecured subordinated bonds with stock acquisitionrights, due September 2016, 2.15% interest
Issued by Tokyo Tomin:
Unsecured fixed and floating callable (subordinated)debenture bonds, due July 2020, 2.15% interest
Unsecured fixed and floating callable (subordinated)debenture bonds, due February 2021, 2.21% interest
Unsecured fixed and floating callable (subordinated)debenture bonds, due November 2021, 2.38% interest
Unsecured fixed and floating callable (subordinated)debenture bonds, due November 2021, 2.38% interest
Total
21

¥

¥

5,000 ¥

Thousands of
U.S. Dollars
2016

5,000 $

44,373

-

6,000

-

-

3,600

-

12,50012,500110,933

3,500
21,000 ¥3,500
30,600 $31,061
186,368

Annual maturities of bonds payable and bonds with stock acquisition rights of March 31, 2016 were as follows:Year ending March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total

Bonds withstock acquisition rights
Thousands ofMillions of Yen
U.S. Dollars
¥
5,000
$
44,373$44,373¥5,000

Bonds payable
Thousands ofMillions of Yen
U.S. Dollars¥$
16,000141,995¥
16,000$141,995

11. Issuance of Convertible Bonds
On October 1, 2014, the Company issued ¥5,000 million unsecured subordinated bonds due September 30, 2016.
The bonds include stock acquisition rights which entitle bondholders to acquire common stock under certain
circumstances, and exercisable on and after October 1, 2014 up to September 29, 2016. Conversion price of thebond as of March 31, 2016 is ¥3,741.4 ($33.20), subject to adjustment for certain events such as a stock split,
consolidation of stock or issuance of stock at a consideration per share which is less than the current market price.
Conversion ratio of the bond is 100%.
The bonds were not converted into shares of common stock during the years ended March 31, 2016 and 2015.
12. Other Liabilities
Other liabilities as of March 31, 2016 and 2015 consisted of the following:

Millions of Yen
2016
2015
¥
2,736 ¥
3,227
33,067
26,78430,012¥35,803 ¥Accrued expenses
Unearned revenue and other liabilities
Total

Thousands of
U.S. Dollars
2016$
24,282
293,461$
317,744

Lease obligations of ¥1,352 million ($12,003 thousand) were included in “Unearned revenue and other liabilities”
in the table above. The average interest rates on lease obligations as of March 31, 2016 with maturities dates
subsequent to March 31, 2017 was 3.66%.
The aggregate annual maturities of lease obligations subsequent to March 31, 2016 were summarized as follows:

Millions of Yen
¥
334
296
282
230
112
95
¥
1,352

Year ending March 31
2017
2018
2019
2020
2021
2022 and thereafter
Total

22

Thousands of
U.S. Dollars
$
2,970
2,630
2,503
2,046
1,001
850
$
12,003

13. Retirement Benefit Plans(1) Outline of retirement benefit plans adopted
Tokyo Tomin maintains a corporate pension fund plan and a lump-sum payment plan. As of October 1, 2013, theretirement benefit system was revised and a switch was made from a defined benefit corporate pension plan to acash balance-type pension plan using a point system. In some cases, premium severance may be paid whenemployees retire.
In 1987, for participants with the participating period of 20 years or more, approximately 20% of the retirement
benefits were transferred from a lump-sum payment plan to a welfare pension fund plan.
Concerning the substitutional portion of the welfare pension fund plan, approval by the Minister of Health, Laborand Welfare on the exemption from the obligation to pay the future portion of funds was received on April 1, 2004
and approval on the return of the past portion was received on April 1, 2005.
Yachiyo maintains a corporate pension plan and a lump-sum payment plan. Concerning the corporate pension plan,a corporate pension fund was established as of March 1, 2004 as a result of an approved transfer from a welfare
pension fund and, as of April 1, 2005, the corporate pension plan was transferred from a fund-type to acontract-type.
On March 31, 2004, a portion of retirement benefits was shifted to a defined contribution pension plan established
as of March 1, 2004. The defined contribution pension plan adopted matching contributions as of January 1, 2013.
Certain domestic consolidated subsidiaries, other than the above mentioned two banks, maintain lump-sum
payment plans and defined contribution pension plans.
Tokyo Tomin and Yachiyo have established retirement benefit trusts.
(2) Defined benefit plans
The changes in the benefit obligation during the years ended March 31, 2016 and 2015 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

Retirement benefit obligation at beginning of year
Cumulative effect of accounting change
Retirement benefit obligation at beginning of year after
cumulative effect of accounting change
Increase due to share transfer
Service cost
Interest cost
Actuarial difference
Retirement benefits paid
Other
Retirement benefit obligation at end of year23¥

57,004-2015¥

57,004
1,425
357
3,491
(3,552)(7)¥

58,71732,526
(405)

2016
$

32,121
23,934
1,013
356
2,339
(2,762)¥57,004505,896
505,896
12,6503,169
30,984(31,531)(69)$

521,100

The changes in plan assets during the years ended March 31, 2016 and 2015 were as follows:

Plan assets at beginning of year
Increase due to share transfer
Expected return on plan assets
Actuarial difference
Contributions by employers
Retirement benefits paid
Plan assets at end of year¥¥

Millions of Yen
2016
2015
64,455¥35,08918,847
1,263
877(4,345)
9,046
2,903
2,663
(2,068)(2,443)
61,833¥64,455

Thousands of
U.S. Dollars
2016$
572,024
11,215(38,566)
25,765(21,683)$
548,756

The following table sets forth the funded status of the plans and the amounts recognized in the consolidatedbalance sheets as of March 31, 2016 and 2015.

Funded retirement benefit obligation
Plan assets¥

Unfunded retirement benefit obligation
Net defined benefit asset in the consolidatedbalance sheets¥

Net defined benefit liability
Net defined benefit asset
Net defined benefit asset in the consolidatedbalance sheets¥¥

Millions of Yen
2016
2015
58,651¥56,932(64,455)(61,833)(3,181)(7,523)72
65(3,116)¥(7,451)Millions of Yen
2016
2015
5,530
¥
3,326
(10,777)(8,647)(3,116) ¥(7,451)Thousands of
U.S. Dollars
2016$
520,518(548,756)(28,238)582$(27,656)

Thousands of
U.S. Dollars
2016$
49,083(76,739)$(27,656)

The components of retirement benefit expenses for the years ended March 31, 2016 and 2015 were as follows:

Millions of Yen
2016
2015
¥
1,425
¥
1,013
357
356
(1,263)
(877)
241
1,830
(564)
(1,147)
536
(80)
¥
115
¥
1,712

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial difference
Amortization of prior service cost
Other
Retirement benefit expenses for defined benefit plans

24

Thousands of
U.S. Dollars
2016$
12,6503,169(11,215)
2,147(5,009)
(712)
$
1,029

The components of remeasurements of defined benefit plans included in other comprehensive income (before tax
effect) for the years ended March 31, 2016 and 2015 were as follows:

Prior service cost
Actuarial difference
Other
Total

¥

¥

Millions of Yen
2016
2015
(564) ¥
(1,147)(7,595)
8,537
(77)
537
(8,237) ¥7,927

Thousands of
U.S. Dollars
2016$(5,009)(67,403)(688)$(73,102)

The components of remeasurements of defined benefit plans included in accumulated other comprehensive
income (before tax effect) as of March 31, 2016 and 2015 were as follows:

Unrecognized prior service cost
Unrecognized actuarial difference
Total

¥
¥

Thousands ofMillions of Yen
U.S. Dollars
2016
2015
2016
(427) ¥
(1,495) $(3,797)
2,032
70,738
7,970
7,542
¥
537 $
66,941The plan assets, by major category, as a percentage of total plan assets as of March 31, 2016 and 2015 were as
follows:

Debt securities
Equity securities
Cash and due from banks
Life insurance general accounts
Other
Total

2016
32.2%
51.3%

2015
30.0%
55.5%

9.5%
4.3%
2.7%
100.0%

5.7%
5.6%
3.2%
100.0%

Total plan assets included retirement benefit trusts of 30.0% and 31.8% as of March 31, 2016 and 2015,
respectively, which were set for corporate pension plans.
From the year ended March 31, 2016, “Life insurance general accounts” previously included in “Other” has been
separately presented for clear classification and figures for the year ended March 31, 2015 have been reclassified
accordingly.
The long-term expected rate of return on plan assets has been estimated based on the current and anticipatedallocation of plan assets and the current and long-term expected return on plan assets composed of various assets.
The main assumptions used in accounting for the above plans for the years ended March 31, 2016 and 2015 wereas follows:
2016
0.57% or 0.64%
1.90% or 2.00%
3.70% or 5.00%

Discount rateLong-term expected rate of return on plan assets
Expected rate of salary increase

25

2015
0.82% or 1.00%
1.90% or 2.00%
4.5% or 5.00%

(3) Defined contribution plans
The amount to be paid to defined contribution plans by consolidated subsidiaries was ¥95 million ($845 thousand)and ¥51 million for the years ended March 31, 2016 and 2015, respectively.
14. Acceptances and Guarantees
All contingent liabilities arising from acceptances and guarantees are included in this account. As a contra account,“Customers’ liabilities for acceptances and guarantees” are shown on the assets side, which represents the Group’s
right of indemnity from the applicants.
In addition, the Group’s guarantees total ¥27,889 million ($247,508 thousand) and ¥24,020 million as of March 31,
2016 and 2015, respectively, for private placement Japanese corporate bonds held by the Group and included in
Securities. Relevant acceptances and guarantees and customers’ liabilities for acceptances and guarantees havebeen recorded in the net amount.
15. Shareholders’ Equity
Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions
in the Companies Act that affect financial and accounting matters are summarized below:(1) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, such as(1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and(4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles
of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during
the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above
criteria.
The Companies Act permits companies to distribute dividends in kind (noncash assets) to shareholders subject to acertain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at noless than ¥3 million.
(2) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid in capital (a component of capital surplus), depending on theequity account charged upon the payment of such dividends until the aggregate amount of legal reserve andadditional paid in capital equals 25% of the common stock. Under the Companies Act, the total amount ofadditional paid in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
(3) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stockacquisition rights are presented as a separate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or deducted directly from stock acquisition rights.

26

16. Stock Options
The stock option outstanding as of March 31, 2016 was as follows:
Stock option

Grantees

1st Stock
Option8 directors
10 directors ofsubsidiaries

Number of options
granted (*)

Vesting
periodGrant dateAugust 3,
2015

12,000 sharesNot defined

Exercise period
From August 3, 2015
to August 2, 2045(*) Number of options granted is expressed in number of shares of common stock granted.
Conditions for the exercise of stock options are not defined.
The stock option activity for the 1st Stock Option for the year ended March 31, 2016 was as follows:
Non-vested (Shares) (*1)
March 31, 2015 – Outstanding
GrantedForfeited
VestedMarch 31, 2016 – Outstanding

12,00012,000-

Vested (Shares) (*1)
March 31, 2015 – Outstanding
VestedExercised
Forfeited
March 31, 2016 – Outstanding
Exercise price (Yen)Fair value price on grant date (Yen)¥¥

12,00012,000
1
3,881

Exercise price (U.S. Dollar)
Fair value price on grant date (U.S. Dollar)

$
$

0.00
34.44

(*1) Numbers of options granted are expressed in number of shares of common stock granted.
Fair value price of the 1st Stock Option is estimated using the Black-Scholes model based on the following
assumptions:
Stock price volatility (*1)
28.5%
Expected remaining period (*2)
2.0 years
Expected dividend (*3)
¥60 ($0.53) per share
Risk free rate (*4)0.01%(*1) Calculated based on actual stock prices for 2.0 years, i.e., the expected remaining period.
(*2) Estimated by subtracting average term of office of current directors from that of past directors.
(*3) Actual dividend for the six-month period ended March 31, 2015 is annualized.
(*4) Interest rate of government bonds corresponding to the expected remaining period.

27

Actual numbers of forfeited options are used to measure the number of vested options, considering the difficulty
to reasonably estimate future forfeitures.
Stock option expenses recognized in general and administrative expenses were ¥46 million ($413 thousand) and¥8 million for the years ended March 31, 2016 and 2015, respectively.
17. Valuation Difference on Available-for-sale Securities
Valuation difference on available-for-sale securities as of March 31, 2016 and 2015 consisted of the following:

Valuation difference on available-for-securities
Deferred tax liabilities applicable to valuation difference
Valuation difference on available-for-sale securities,
net of the applicable income taxes before adjustment for
non-controlling interests
Amount attributable to non-controlling interests
Share of valuation difference on available-for-sale securities
held by affiliate accounted for by the equity method
Valuation difference on available-for-sale securities¥¥

Thousands ofMillions of Yen
U.S. Dollars
2016
2015
2016
13,193 ¥14,984 $117,086(5,392)(43,362)(4,886)
8,307
(12)

9,591
(11)

73,724
(111)

95

203
9,784 $

848
74,4618,390 ¥

18. Income Taxes
The significant components of the deferred tax assets and liabilities as of March 31, 2016 and 2015 were as
follows:

Millions of Yen
2015
2016
Deferred tax assets:
Net losses carried forward
Items related to retirement benefits
Reserve for loan losses
Depreciation of securities
Depreciation expense
Other
Subtotal
Valuation allowance
Total
Deferred tax liabilities:
Items related to securities
Valuation difference on available-for-sale securities
Items related to asset retirement obligations
Valuation of assets
Other
Total
Net deferred tax assets

¥

¥

28

2,033
7,316
7,156
1,023
844
2,343
20,717(4,728)15,989(931)(4,526)(35)(3,516)(0)(9,009)
6,979

¥

¥

2,316
6,216
9,196
1,003
1,032
2,348
22,113(4,951)
17,162(1,017)(5,292)(34)(4,277)(0)(10,622)
6,540

Thousands of
U.S. Dollars
2016
$

$

18,04764,931
63,512
9,079
7,491
20,800183,863(41,964)
141,899(8,267)(40,167)(313)(31,208)(1)(79,959)
61,940Net deferred tax assets as of March 31, 2016 and 2015 are included in the following accounts in the consolidatedbalance sheets.

Deferred tax assets
Deferred tax liabilities¥

Millions of Yen
2016
2015
7,035
¥
6,570
55
30

Thousands of
U.S. Dollars
2016$
62,433493

The Group is subject to Japanese national and local income taxes which, in the aggregate, resulted in normal
effective statutory tax rates of approximately 33.06% and 35.64% for the years ended March 31, 2016 and 2015,
respectively.
The following table summarizes the significant differences between the statutory tax rate and the effective tax rate
for consolidated financial statement purposes for the years ended March 31, 2016 and 2015.
2016

Statutory tax rate
Entertainment expenses and other items permanently excluded fromdeductible expenses
Dividend income and other items permanently excluded from reportablerevenue
Per capita inhabitants’ tax
Decrease in deferred tax assets due to tax rate changes
Change in valuation allowance
Refund of income taxes
Gains on negative goodwill
Other
Effective tax rate

2015

33.06%
0.78

35.64%
0.18(0.71)(0.39)

0.68
3.13(0.80)(0.40)(0.60)
35.14%

0.12
2.37(0.34)(28.92)(0.83)
7.83%

Adjustments to deferred tax assets and liabilities due to income tax rate change
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 15 of 2016) and the “Act for Partial
Amendment, etc. of the Local Tax Act, etc.” (Act No. 13 of 2016) were enacted in the Diet session on March 29,
2016 and, as a result, the corporate tax rate, among others, will be reduced from the fiscal year beginning on orafter April 1, 2016. As a result, the effective statutory tax rate used to measure the Group’s deferred tax assets andliabilities was changed from the previous 32.26% to 30.86% for the temporary differences expected to be realized
or settled for the years beginning on April 1, 2016 and 2017, and to 30.62% for the temporary differences
expected to be realized or settled for the year beginning on April 1, 2018 and thereafter. The effect of theannounced reduction of the effective statutory tax rate was to decrease deferred tax assets by ¥317 million ($2,820
thousand), decrease deferred tax liabilities by ¥2 million ($20 thousand), increase valuation difference on
available-for-sale securities by ¥241 million ($2,142 thousand), decrease remeasurements of defined benefit plansby ¥125 million ($1,115 thousand), increase income taxes-deferred by ¥403 million ($3,576 thousand), and to
decrease deferred tax liabilities on land revaluation by ¥0 million ($6 thousand) and increase revaluation reserve
for land by the same amount, as of and for the year ended March 31, 2016.
Furthermore, the system of deduction for losses carried forward has been revised. The limit of deduction fromtaxable income applicable to losses carried forward will be an amount equivalent to 60% of the income before loss
carried forward effective from the fiscal year beginning on and after April 1, 2016, 55% effective from the fiscal
year beginning on and after April 1, 2017, and 50% effective from the fiscal year beginning on and after April 1,
2018. The effect of this revision was immaterial for the year ended March 31, 2016.

29

19. Amounts per Share
Amounts per share as of and for the years ended March 31, 2016 and 2015 were as follows:
U.S. Dollars
2016

Yen
2016
Net income per share:
Basic
DilutedNet assets per share

¥

2015

323.84 ¥311.896,982.00

2,638.39
2,561.38
6,959.92

$

2.87
2.76
61.96

Basic net income per share is computed based on the weighted average number of shares of common stock
outstanding during the year. Diluted net income per share is computed based on the weighted average number ofshares of common stock outstanding during the year after giving effect to the dilutive potential of shares ofcommon stock to be issued upon the exercise of stock acquisition rights.
Net assets per share are computed based on the net assets excluding stock acquisition rights and non-controllinginterests and the number of shares of common stock outstanding at the year end.
The bases for calculation are as follows:
Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Basic net income per share:
Net income belonging to parent company’s shareholders¥
Amount not belonging to shareholders of common stock
Net income belonging to parent company’s shareholders in
relation to common stock
Weighted average number of shares of common stockduring the period (thousands of shares)
Diluted net income per share:
Adjustment to net income belonging to parent company’s
shareholders―Interest on bonds with stock acquisition rights (net of
applicable taxes)
Effect of dilutive securities (thousands of shares)
Including, bonds with stock acquisition rights
Including, stock acquisition rights
Summary of residual securities not included in calculationof dilutive net income per share because they have no
dilutive effects
Net assets per share:
Total of net assets
Amount deducted from total of net assets
Including, stock acquisition rights
Including, non-controlling interests
Net asset amount for common stock at year end
Number of shares of common stock outstanding at year
end for calculating net assets per share (thousands ofshares)
30

¥

9,412
-

¥

9,412

57,29029,064

21,714

71
1,344
1,336
7

¥

-

¥

57,290-203,216333
46
286
202,882
29,057

34
666
666
-

$

83,53083,530

$

638

-

¥

202,580245
245
202,334
29,071$ 1,803,481
2,958
413
2,545
1,800,523

As the Company was established on October 1, 2014 through a joint share transfer, the weighted average numberof shares of common stock outstanding during the year ended March 31, 2015 was calculated based on theweighted average number of shares of Tokyo Tomin multiplied by its share transfer ratio for the period from April
1, 2014 to September 30, 2014 prior to the establishment of the Company, and the weighted average number ofshares of common stock of the Company for the period from October 1, 2014 to March 31, 2015.
20. Other Income
Other income for the years ended March 31, 2016 and 2015 is as follows:

Gain on sales of securities
Gain on sales of monetary claims
Equity in earnings of investment in affiliate
Gain on negative goodwill
Gain on recovery of write-offs of monetary claims
Gain on disposition of fixed assets
Gain on state subsidy and other grants
Other
Total

¥

¥

Millions of Yen
2016
2015
969
¥
367
0
556
189
202
50,476
528
210
258
0
132
1,323
1,345
¥
53,1593,402

Thousands of
U.S. Dollars
2016
$
8,604
0
1,686
4,693
2,298
1,173
11,742$30,198

21. General and Administrative Expenses
General and administrative expenses include following items for the years ended March 31, 2016 and 2015:

Salaries and allowances
Retirement benefit expenses

Millions of Yen
2016
2015
24,982¥
18,739
213
1,764

¥

Thousands of
U.S. Dollars
2016$
221,709
1,897

22. Other Expenses
Other expenses for the years ended March 31, 2016 and 2015 are as follows:

Write-offs of loans
Loss on sales of securities
Write-down of securities
Loss on sales of monetary claims
Loss on disposition of fixed assets
Provision for special account for advanced
depreciation of fixed assets
Provision for loan losses
Other
Total

¥

Millions of Yen
2015
2016
190
¥
774
299
76
0
48
117
141
171
76
122
1,103
1,737

¥

31

3,742

¥

721
1,643
3,483

Thousands of
U.S. Dollars
2016
$
1,690
2,654
2
1,046
1,521

$

1,087
9,790
15,42033,214

23. Comprehensive Income
Each component of other comprehensive (loss) income for the years ended March 31, 2016 and 2015 was thefollowing:Thousands of
U.S. Dollars
2016

Millions of Yen
2016
2015
Valuation difference on available-for-sale securities:
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gains or losses on hedges
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Revaluation reserve for land
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Remeasurements of defined benefit plans
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income of affiliate
accounted for by the equity method
Amount arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive (loss) income

¥

¥

32

1,188
(3,165)(1,976)692(1,284)¥

13,716(2,446)
11,270(3,303)
7,966$

10,550(28,090)(17,540)
6,144(11,396)

(2)
9
6
(2)
4

(0)
4
4
(2)
2

(24)
83
58
(17)
40

0
0

1
1

7
7

(5)
(5)
(5)

6
6
6

(51)
(51)
(51)

(7,837)(400)(8,237)
2,582(5,654)

6,663
1,263
7,927
(2,839)5,087(69,551)(3,551)(73,102)22,922(50,179)

(102)
(5)
(108)
(108)
(7,046)

100
100
100
13,164

(912)
(47)
(959)
(959)
(62,539)¥$

24. Supplementary Cash Flow Information
The reconciliation of cash and due from banks in the consolidated balance sheets to cash and cash equivalents inthe consolidated statements of cash flows as of March 31, 2016 and 2015 was as follows:

Cash and due from banks
Time deposits
Negotiable certificates of deposit
Other deposits
Cash and cash equivalents¥¥

Millions of Yen
2016
2015
405,539¥
298,834(2,043)(2,039)(10,000)(10,000)
(409)
(439)
393,056¥
286,385

Thousands of
U.S. Dollars
2016$ 3,599,036(18,131)(88,746)(3,901)$ 3,488,256

25. Assets and Liabilities Held by Subsidiary Newly Consolidated through Share Transfer
For the year ended March 31, 2015, breakdown of assets and liabilities held by Yachiyo newly consolidated
through share transfer at the time of the consolidation was as follows.
Millions of Yen¥ 2,260,320
1,444,364
622,404(12,460)

Total assets
Including, loans and bills discounted
Including, securities
Including, reserve for loan losses
Total liabilities
Including, deposits

2,156,770
2,122,129

26. Leases
Finance leases
As lessee of finance leases which do not transfer ownership of leased assets to lessees:
The leased assets primarily consist of computers, office machinery and equipment and software. See Note 1.f. forthe depreciation method of the leased assets.
Operating leases
Total future lease payments under non-cancelable operating leases as of March 31, 2016 and 2015 were as
follows:
As lessee

Within one year
Over one year
Total

¥
¥

33

Millions of Yen
2016
2015
103
¥
47
177
230
333
¥
225

Thousands of
U.S. Dollars
2016
$
920
2,041
$
2,961

As lessor

Within one year
Over one year
Total

¥
¥

Millions of Yen
2016
2015
60
¥
26
87
¥

27
20
48

Thousands of
U.S. Dollars
2016
$
538
237
$
775

27. Financial Instruments
Overview(1) Policy for financial instruments
The Group’s operations center on the banking business such as deposits business and lending business, withfinancial services including credit card services and credit guarantee services. The Group raises funds mainly
through local customer deposits and invests them in loans and bills discounted and securities. In this way, theGroup principally holds financial assets and financial liabilities that are subject to interest rate fluctuations, and
the Group conducts asset-liability management (ALM) to minimize the negative impact of interest rate
fluctuations. ALM includes the use of derivative transactions.
(2) Primary details of financial instruments and their risk
The Group’s financial assets mainly consists of loans and bills discounted extended to domestic corporate andprivate customers, and securities. Loans and bills discounted are subject to credit risk stemming from a borrower’s
failure to meet a contractual obligation.
Securities mainly consists of domestic debt and equity securities and investment funds. Debt securities areclassified into held-to-maturity securities and available-for-sale securities. In addition, trading account securities
are held for trading purposes. These securities are subject to issuers’ credit risk and market fluctuation risk ininterest rates and prices, respectively.
The Group’s financial liabilities mainly consists of deposits raised from domestic corporate and private customers.
Such deposits are subject to liquidity risk, which is the risk that the Group is unable to secure the funds required tohonor these deposits because of certain conditions in the operating environment.
The Group is also engaged in derivative transactions with domestic corporate customers and financial institutions.
Such derivative transactions are subject to credit risk stemming from a counterparty’s failure to meet a contractual
obligation and market fluctuation risk in interest rates and exchange rates.
(3) Risk management system for financial instruments(a) Integrated risk management
The Group establishes an integrated risk management system that captures overall risks evaluated by risk category,compares them with the Group’s strength and checks its management soundness.
(b) Management of credit risk
The Group manages credit risk appropriately, in accordance with rules and standards for credit risk management,
mainly through credit screening of each proposal, credit rating of each borrower, self-assessment of loan assets,
assistance efforts for business reconstruction and problem loan management. Credit portfolio is monitored forconcentration level by industry and customer and is aimed to be developed eliminating concentration risk.
Credit risk management is handled by each branch office and the Credit Management Department and reported
regularly to the Company’s Risk Management Committee. The audit function audits the status of credit risk
management.
34

(c) Management of market risk
The Group manages market risk appropriately, in accordance with rules and standards for market risk
management, through evaluating, monitoring and controlling market risk under the mutual checking structure ofthree departments, the Market Transaction Department (front office), the Market Operations Management
Department (back office) and the Market Risk Management Department (middle office).
The Market Risk Management Department measures the volume of market risk for measurable market risk and, inorder to control the market risk volume appropriately, sets limits to holdings and losses, monitors the status ofcompliance and reports to the Group Risk Management Committee on a monthly basis.
The Group’s main financial instruments affected by market risk are “Due from banks,” “Securities,” “Loans andbills discounted,” “Deposits,” “Borrowed money,” “Bonds payable” and “Derivative transactions.”
The Group calculates VaR on these financial assets and financial liabilities (observation period of five years,
holding period of six months for listed stocks other than those held for political reasons, Japanese government
bonds, Japanese local government bonds, Japanese corporate bonds, investment funds, foreign securities, deposits,loans and bills discounted, interest rate swaps and other assets and liabilities that have interest rate sensitivity, andone year for listed stocks held for political reasons, confidence interval of 99%, variance-covariance method) and
use it to capture and control the volume of market risk.
The Group’s volume of market risk is managed as the sum of that of the consolidated subsidiaries, Tokyo Tominand Yachiyo, and, as of March 31, 2016 and 2015, the volume of market risk were ¥40,634 million ($360,614
thousand) and ¥32,458 million, respectively.
However, such volume is calculated using certain statistical probabilities based on historical market fluctuations.
Consequently, this process may not capture risk in the event that market condition changes drastically in a mannerthat is unthinkable under normal circumstances.
The Group conducts back-testing with respect to each banking subsidiary to check the accuracy of market risk
measurement model by comparing the VaR calculated by the model with actual gains or losses. As a result of suchback-testing for the year ended March 31, 2016, the Group believes that the model being used captures market
risk to an adequate degree of precision.
(d) Management of liquidity risk
In the Group, in accordance with rules and standards for liquidity risk management, the Liquidity Risk
Management Department appropriately handles daily stable cash flow management, mainly through watchingmarket environment and analyzing the status of financing and investments.
The status of cash flow management and status of financing and investments are monitored daily, including
holding certain level or more of assets as liquidity reserve that are readily convertible into cash in a short time,and is reported regularly to the Company’s Risk Management Committee.
(4) Supplementary explanations of the estimated fair value of financial instruments
The fair value of financial instruments is based on the market price or the reasonably calculated values withcertain assumptions in case no market prices exist. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result in different fair value.
Fair values of financial instruments
Carrying values and fair values of the financial instruments on the consolidated balance sheets as of March 31,
2016 and 2015 were as follows. The following table does not include financial instruments for which it isextremely difficult to determine the fair value (See Note 2 below). Immaterial items are omitted.

35

Assets:(1) Cash and due from banks(2) Trading account securities:
Trading securities(3) Securities:
Held-to-maturity bonds
Available-for-sale securities(4) Loans and bills discounted
Reserve for loan losses (*1)
TotalCarrying value

Millions of Yen
2016
Fair value

Difference

¥

¥

¥

¥

Liabilities:(1) Deposits(2) Payables under securities lending transactions
Total

¥
¥

Derivatives (*2):
Hedge accounting not applied
Hedge accounting applied
Total

¥
¥

Assets:(1) Cash and due from banks(2) Trading account securities:
Trading securities(3) Securities:
Held-to-maturity bonds
Available-for-sale securities(4) Loans and bills discounted
Reserve for loan losses (*1)
Total

-

522,745679,839
3,359,919(23,479)
3,336,440
4,945,223

543,804
679,839

21,059-3,371,825

35,384¥5,001,661¥

56,438¥¥¥4,502,306
293,327
4,795,634

114
114

1,514 ¥
(10)
1,503 ¥

1,514
(10)
1,503

¥

4,502,192
293,327
4,795,520

¥

¥
¥
36

658

¥

¥

(5)

658

Carrying value¥

Derivatives (*2):
Hedge accounting not applied
Hedge accounting applied
Total

405,533

Millions of Yen
2015
Fair value¥

Liabilities:(1) Deposits(2) Payables under securities lending transactions
Total

405,539

298,834

298,820¥-¥

Difference
¥

(13)

607

607

-

554,286
671,359
3,294,802(27,937)
3,266,864
4,791,952

565,385
671,359

11,099-3,296,364
4,832,537

29,49940,585¥

4,491,306
140,876
4,632,182

¥

788
(17)
770

¥

¥

¥

¥

4,491,127
140,876
4,632,004

¥

788
(17)
770

¥

¥

¥

(178)
(178)
-

Thousands of U.S. Dollars
2016
Carrying value
Fair value
Difference
Assets:(1) Cash and due from banks(2) Trading account securities:
Trading securities(3) Securities:
Held-to-maturity bonds
Available-for-sale securities(4) Loans and bills discounted
Reserve for loan losses (*1)

$

Total

$

Liabilities:(1) Deposits(2) Payables under securities lending transactions
Total

$
$

Derivatives (*2):
Hedge accounting not applied
Hedge accounting applied
Total

$
$

3,599,036$

3,598,986

$

(49)

5,843

5,843

-

4,639,203
6,033,364
29,818,240(208,368)
29,609,871
43,887,319

4,826,096
6,033,364

186,892-

29,923,900

314,029$ 44,388,191$

500,872

39,955,559
2,603,191
42,558,750$ 39,956,573
2,603,191$ 42,559,765

$

1,014
1,014

$

$

13,443(96)
13,347$

13,443(96)
13,347$$-(*1) General and specific reserve for loan losses on “Loans and bills discounted” are deducted.
(*2) Derivatives are included within the amounts indicated for “Other assets” and “Other liabilities.” Net amountsof receivables and payables arising from derivative transactions are indicated. Parentheses indicate totals thatare net payable amounts.
Notes:
1. Primary method of calculating the fair value of financial instruments
Assets(1) Cash and due from banks
With regard to cash and due from banks without maturities or with maturities within one year, the fair values andbook values are similar, so the book values are assumed as the fair values. For due from banks with maturities
over one year, the fair values are determined by the prices indicated by the financial institutions handling thesetransactions for the Group.
(2) Trading account securities
The fair values of bonds and other securities held for dealing operations are determined by the statistical reference
prices released by the Japan Securities Dealers Association or the prices indicated by the financial institutions
handling these transactions for the Group.
(3) Securities
The fair values of equity securities are determined by their prices on stock exchanges. The fair values of bonds are
determined by the reference statistical prices released by the Japan Securities Dealers Association or the prices
indicated by the financial institutions handling these transactions for the Group. For investment trusts, the fairvalues are determined by the publicly released base prices or base prices indicated by securities investment trust
management companies. For private placement bonds guaranteed by the Group, the present values calculated by
the discounted cash flow method are assumed as the fair values.
37With regard to private placement bonds guaranteed by the Group issued by bankrupt borrowers, effectively
bankrupt borrowers and potentially bankrupt borrowers, the fair values are similar to the expected amounts ofrecoveries calculated based on guarantees, etc. at the consolidated balance sheet date, so those expected amounts
are assumed as the fair values.
See Note 3 for the description of securities by classification.
(4) Loans and bills discounted
With regard to loans with floating interest rates, as they reflect market interest rates in the short term, the fairvalues of them are similar to the book values unless the credit status of the borrowers change significantly after
execution, so the book values are assumed as the fair values. With regard to those with fixed interest rates, thepresent values are assumed as the fair values, being calculated by discounting the future cash flows by theappropriate index interest rates such as interest rate swap rates plus credit spread, etc., or by the assumed rates
which would be applied if a similar new loan were entered into. For those with maturities within one year, the fairvalues and book values are similar, so the book values are assumed as the fair values.
With regard to loans to bankrupt borrowers, effectively bankrupt borrowers and potentially bankrupt borrowers,
the reserve for loan losses is provided based on the expected amounts of recoveries from collateral and guarantees,
and the fair values are similar to the amounts of claims less the reserve for loan losses on the consolidated balance
sheet at the consolidated balance sheet date, so the net amounts are taken as the fair value.
For loans that have no specific repayment period because loan amounts are limited within the value of the assets
securing them, the fair values are assumed to be similar to the book values based on their expected payment dates
and interest rates, so the book values are taken as the fair value.
Interest rate swaps that qualify for hedge accounting and meet specific matching criteria for an exceptional
treatment are accounted for as part of hedged loans. Their fair values are determined using discounted present
values and included in the fair values of the hedged loans.
Liabilities(1) Deposits
The fair values of demand deposits are determined as if the payment amounts (book values) were demanded on
the consolidated balance sheet date. The fair values of time deposits and installment savings are calculated bycategorizing these deposits and savings by term, estimating their future cash flows and discounting them to theirpresent values at the rate applied to new deposits (the actual rate for the last month of the fiscal year). For thosewith maturities within one year, the fair values and book values are similar, so the book values are assumed as thefair values.
(2) Payables under securities lending transactions
With regard to payables under securities lending transactions, the maturities are within one year and the fair values
and book values are similar, so the book values are assumed as the fair values.
Derivatives
Fair value information for derivatives is included in Note 28.

38

2. Financial instruments for which it is extremely difficult to determine the fair value
Carrying values of financial instruments for which it is extremely difficult to determine the fair value as ofMarch 31, 2016 and 2015 were as follows. These amounts are not included in “Assets, (3) Available-for-salesecurities” in the above table.
Thousands of
U.S. Dollars
Millions of Yen
2016
2015
2016
Carrying value
Unlisted stocks (*1) (*4)
¥
5,146
¥
4,867
$
45,677
Unlisted REITs (*2)
4,019Investments in limited partnerships (*3) (*4)
2,301
20,992
2,365
Total
¥
7,512
¥
11,188$66,669(*1) Unlisted stocks are not subject to disclosures of fair values because there are no quoted market price and it isextremely difficult to determine the fair value.
(*2) All of unlisted REITs are subject to disclosure of fair values from the year ended March 31, 2016.
(*3) Investments in limited partnerships are not subject to disclosures of fair values because their assets comprisethose extremely difficult to determine fair values, such as unlisted stocks,.
(*4) For the year ended March 31, 2016, impairment losses were ¥0 million ($2 thousand) on unlisted stocks.
For the year ended March 31, 2015, impairment losses were ¥9 million on unlisted stocks and ¥39 million on
investments in limited partnership.
3. Redemption schedule for receivables and securities with maturities
The redemption schedule for receivables and securities with maturities as of March 31, 2016 and 2015 aresummarized as follows:

Due from banks
Securities:
Held-to-maturity bonds:
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Foreign securities
Available-for-sale securities
with maturities:
Japanese government bonds
Japanese local government
bonds
Japanese short-term
corporate bonds
Japanese corporate bonds
Other
Loans and bills discounted (*)
Total

Millions of Yen
2016
Due after
Due after
Due after
three years
five years seven years
throughthroughthrough ten
five years seven years
years¥ 2,000¥¥-

Due inone yearor less¥ 365,182

Due after
one yearthroughthree years¥-

44,1408,070

68,600133,000

48,00034,00033,01013,140-14,51022,028-5,000
16,932
11,26812,12434,998
-

1,550
6,990
3,000

400
4,000

-

141,399

11,600-10,00013,000

4,264

5,041

7,209

318

29,961984

10,00038,671
3,625
721,324

67,394
18,660656,701

107,698
76,934
408,077

11,155
6,776
298,205

24,58331,335
328,051

6,705
661,379¥ 1,233,358¥ 933,986¥ 715,319¥ 496,577¥ 483,471¥ 720,469

39

Due after
ten years¥-

Due from banks
Securities:
Held-to-maturity bonds:
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Foreign securities
Available-for-sale securities
with maturities:
Japanese government bonds
Japanese local government
bonds
Japanese short-term
corporate bonds
Japanese corporate bonds
Other
Loans and bills discounted (*)
Total

Due from banks
Securities:
Held-to-maturity bonds:
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Foreign securities
Available-for-sale securities
with maturities:
Japanese government bonds
Japanese local government
bonds
Japanese short-term
corporate bonds
Japanese corporate bonds
Other
Loans and bills discounted (*)
Total

Millions of Yen
2015
Due after
Due after
Due after
three years
five years seven years
throughthroughthrough ten
five years seven years
years¥ 2,000¥¥-

Due inone yearor less¥ 251,557

Due after
one yearthroughthree years¥-

23,64046,61011,00097,000147,000

34,0003,818
5,300
12,01743,99029,705
1,000

5,780
8,493
-

13,824
37,6121,000

2,550
15,758
2,000

450
2,000

33,304

23,132

152,242-

22,978

6,000

3,038

6,171

9,540

3,000

21,366-

15,477
1,478
685,871

73,383
8,674
672,180

110,378
70,267
411,452

28,617
5,731
267,249

18,503
5,895
334,908

2,855
710
621,047¥ 1,035,503¥ 904,847¥ 781,153¥ 454,034¥ 570,960¥ 667,063

Due inone yearor less$ 3,240,880

Thousands of U.S. Dollars
2016
Due after
Due after
Due after
one year
three years
five years
throughthroughthroughthree years five years seven years$- $ 17,749 $-Due after
seven years
through ten
years
$
-

Due after
ten years$-

Due after
ten years¥-

391,728

71,618608,8031,180,333

425,985

301,739

292,953
116,613-

128,771
197,089-

44,373150,266
100,000

107,596
310,596-

13,75562,034
26,6243,549
35,498-1,254,872

102,946-

88,746

115,370

37,84944,74563,985

2,825

265,901

8,736

88,746343,197
32,1706,401,532

598,107
165,6075,828,024

955,788682,771
3,621,557

99,00060,1362,646,478

218,168
278,0902,911,356

59,5095,869,537$ 10,945,673$8,288,836$6,348,241$4,406,967$4,290,662$6,393,94240

(*) As of March 31, 2016 and 2015, loans do not include an estimated ¥87,883 million ($779,941 thousand) and¥107,846 million, respectively, in uncollectible loans such as those to bankrupt borrowers, effectively bankrupt
borrowers and potentially bankrupt borrowers, and ¥198,295 million ($1,759,810 thousand) and ¥194,245 million,
respectively, in loans that have no set term.
4. Repayment schedule for other interest-bearing liabilities
The repayment schedule for other interest-bearing liabilities as of March 31, 2016 and 2015 are summarized asfollows:
Millions of Yen
2016

Deposits (*)
Payables under securities
lending transactions
Total

Deposits (*)
Payables under securities
lending transactions
Total

Deposits (*)
Payables under securities
lending transactions
Total

Due inone yearor less¥ 4,312,538

Due after
one yearthroughthree years¥ 170,939

Due after
three years
throughfive years¥ 18,630

Due after
five years
throughseven years¥
33

Due after
seven years
through ten
years
¥
29

Due after
ten years¥
20

293,327

-

-

-

-

-

¥ 4,605,865¥ 170,939¥

Due inone yearor less¥ 4,233,462

Due after
one yearthroughthree years¥ 237,605

Millions of Yen
2015
Due after
Due after
Due after
three years
five years seven years
throughthroughthrough ten
five years seven years
years¥ 20,139¥40¥
33

140,876-¥ 4,374,339¥ 237,605

Due inone yearor less$38,272,436

Thousands of U.S. Dollars
2016
Due after
Due after
Due after
one year
three years
five years
throughthroughthroughthree years five years seven years$1,517,038$ 165,342$
297

18,630¥¥20,1392,603,191--$40,875,628$1,517,038$ 165,342

33

¥

¥

40

297

¥

¥

33

20

Due after
ten years
¥
25

-

¥

25

Due after
seven years
through ten
years
$
258

Due after
ten years
$
185

-

-

$

29

$

258

$

185

(*) Within deposits, demand deposits are included in the column of “Due in one year or less.”
28. Derivative Transactions
The Group has entered into various derivative transactions in order to manage certain risks arising from adverse
fluctuations in interest rates and foreign currency exchange rates.
The fair value and unrealized gain or loss on derivative transactions are estimates considered appropriate based on
the market at the balance sheet date and, thus, fair value is not necessarily indicative of the actual amounts that
may be realized or settled in the future. The contract or notional amount is not a direct measure of the Group’s risk
exposure in connection with the derivative transactions.
41

Summarized below are the contract or notional amounts and the estimated fair value of the derivative instruments
outstanding at March 31, 2016 and 2015, for which hedge accounting has not been applied.
(1) Interest-related transactions

Contract
or notionalamountOTC interest rate swaps:
Receive/fixed and pay/floating
Receive/floating and pay/fixed
OTC interest rate swaptions:
Sell
Buy
OTC interest rate caps:
Sell
Buy

¥

Millions of Yen
2016
Contract ornotional
amount due
Fair Valueafter one year

132,367 ¥
130,967

115,163
113,718

2,970
2,970

1,070
1,070

(0)
0

17
0

2,883
2,937

2,825
2,825

1,059

77
(19)
1,135

Total

¥

Contract
or notionalamountOTC interest rate swaps:
Receive/fixed and pay/floating
Receive/floating and pay/fixed
OTC interest rate swaptions:
Sell
Buy
OTC interest rate caps:
Sell
Buy

¥

¥

2,013
(954)

Unrealized
gains (losses)

Millions of Yen
2015
Contract ornotional
amount due
Fair value
after one year

Unrealized
gains (losses)

111,375
109,890

8,300
6,800

1,190
1,190

(2)
2

39
2

2,711
2,711

2,465
2,465

(3)
3

69
(13)
1,066

¥

42

1,265
(296)

¥

2,013
(954)

126,990 ¥
125,525

Total

¥

¥

968

¥

¥

1,265
(296)

OTC interest rate swaps:
Receive/fixed and pay/floating
Receive/floating and pay/fixed
OTC interest rate swaptions:
Sell
Buy
OTC interest rate caps:
Sell
Buy

Contact ornotional
amountThousands of U.S. Dollars
2016
Contract ornotional
amount due
Fair value
after one year

$ 1,174,716
1,162,291$ 1,022,039
1,009,215

26,357
26,357

9,495
9,495

(0)
0

157
0

25,59325,07826,07225,078

9,398

691
(171)
10,076

Total

$

$

17,873(8,475)

Unrealized
gains (losses)$$

17,873(8,475)

Notes:
1. The above derivative transactions are stated at fair value with the valuation difference being included in the
consolidated statements of income.
2. The fair values of the OTC transactions are determined using the discounted present values or option pricing
model.
(2) Currency-related transactions

OTC currency swaps
OTC foreign exchange contracts:
Sell
Buy
OTC currency options:
Sell
Buy

Contract ornotional
amount¥ 14,807

Millions of Yen
2016
Contract ornotional
amount due
Fair value
after one year
¥
4,380
¥
30

Unrealized
gains (losses)¥
30

28,334
14,449

411
140

549
(126)

549
(126)

8,822

896

8,901

896

(119)
120
455

72
(15)
511

Total

¥

43

¥

OTC currency swaps
OTC foreign exchange contracts:
Sell
Buy
OTC currency options:
Sell
Buy

Contract ornotional
amount¥ 38,623

Millions of Yen
2015
Contract ornotional
amount due
Fair value
after one year
¥ 15,301¥
63

21,39010,780

398
316

(565)
320

(565)
320

28,34491

28,344

91

(464)
464
(180)

56
52
(70)

Total

OTC currency swaps
OTC foreign exchange contracts:
Sell
Buy
OTC currency options:
Sell
Buy

Unrealized
gains (losses)¥
63¥

Contract ornotional
amount$ 131,408

Thousands of U.S. Dollars
2016
Contract ornotional
amount due
Fair value
after one year$
38,876 $274¥

Unrealized
gains (losses)$
274

251,459
128,233

3,653
1,246

4,877
(1,118)

4,877(1,118)78,294

7,959

78,994

7,959(1,060)
1,073
4,045

641
(136)

Total

$

$

4,537

Notes:
1. The above derivative transactions are stated at fair value with the valuation difference being included in the
consolidated statements of income.
2. The fair values of the OTC transactions are determined using the discounted present values or option pricing
model.
Summarized below are the contract or notional amounts and the estimated fair value of the derivative instruments
outstanding at March 31, 2016 and 2015, for which hedge accounting has been applied.

44

(1) Interest-related transactions

Method ofaccounting

Hedged item

Millions of Yen
2016
Contract ornotional
Contact oramount due
notional
after one year
amountFair value¥¥

Interest rate swaps:
Receive/floating and pay/fixedBasicmethodLoans andbills
discounted

Exceptional
treatment

Loans andbills
discounted

550

¥

-

(10)

Interest rate swaps:
Receive/fixed and pay/floating

39,77833,271

Total

Method ofaccounting

Hedged item

(Note 3)¥
(10)

Millions of Yen
2015
Contract orContract ornotional
notional
amount due
amountafter one year

Fair value

¥

¥

(17)

¥

(Note 3)(17)

Interest rate swaps:
Receive/floating and pay/fixedBasicmethodLoans andbills
discounted

Exceptional
treatment

Loans andbills
discounted

550

¥

550

Interest rate swaps:
Receive/fixed and pay/floating

46,731

39,503

Total

Method ofaccounting

Hedged item

Thousands of U.S. Dollars
2016
Contract ornotional
Contract oramount due
notional
after one year Fair value
amountInterest rate swaps:
Receive/floating and pay/fixedBasicmethodLoans andbills
discounted

Exceptional
treatment

Loans andbills
discounted

$

4,881

$

-

$

(96)

Interest rate swaps:
Receive/fixed and pay/floating
Total
45

353,022295,272(Note 3)$ (96)

Notes:1. The Group basically applies the deferred method which is stipulated in “Accounting and Auditing Treatment of
Accounting Standards for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee
Report No. 24).
2. The fair values of the exchange-traded transactions are based on the closing/final price at Tokyo Financial
Exchange. The fair values of the OTC transactions are determined using the discounted present values or
option pricing model.
3. Interest rate swaps that qualify for hedge accounting and meet specific matching criteria for an exceptional
treatment are accounted for as part of hedged loans and their fair values are included in the fair values of thehedged loans.
29. Segment Information
The Group’s only reporting segment is the banking business. Note that the Group conducts businesses other thanthe banking business, including a computer-related service business, an information provision service business,and credit card services. This information has been omitted because the ratio of these businesses to all segments is
not material.
(1) Information by service

Ordinary income from external customers

Millions of Yen
2016
Securities
Service
Other
Total
Lending investment transactions¥ 46,269 ¥ 12,250 ¥ 15,832 ¥ 5,232 ¥ 79,583

Ordinary income from external customers

Millions of Yen
2015
Securities
Service
Other
Total
Lending investment transactions¥ 38,646 ¥ 8,665 ¥ 13,410 ¥ 4,320 ¥ 65,043

Ordinary income from external customers

Thousands of U.S. Dollars
2016
Securities
Service
Other
Total
Lending investment transactions$ 410,624 $ 108,718 $ 140,506 $ 46,432 $ 706,282

Note: Ordinary income is presented as counterparts of sales of companies in other industries.
(2) Information by geographical area(a) Ordinary income
Ordinary income from external customers by geographical area has been omitted as ordinary income from thedomestic operations accounted for more than 90% of the consolidated ordinary income.
(b) Tangible fixed assets
Information about tangible fixed assets by geographical area has been omitted as tangible fixed assets in Japanaccounted for more than 90% of the consolidated tangible fixed assets.
(3) Information by major customers
Information by major customers has been omitted as no single customer accounts for more than 10% of theconsolidated ordinary income.

46

30. Subsequent Events
1. Dividends
The following distribution of retained earnings of the Group, which has not been reflected in theaccompanying consolidated financial statements for the year ended March 31, 2016, was approved at theboard of directors’ meeting held on May 13, 2016 and became effective on June 13, 2016:

Dividends on common stock (¥ 30 ($0.26) per share)

Millions of Yen¥
871

Thousands of
U.S. Dollars$
7,736

2. Management integration with ShinGinko Tokyo, Limited
The Company and ShinGinko Tokyo, Limited (hereinafter, “ShinGinko Tokyo”) resolved at the respective
board of directors’ meetings held on September 25, 2015, to implement management integration through shareexchange with effective date of April 1, 2016, in which the Company shall become a wholly-owning parent
and ShinGinko Tokyo shall become a wholly-owned subsidiary, subject to approval at the shareholders’meetings and the class shareholders’ meetings of both companies as well as permission by the relevant
authorities, and then, entered into a “Share exchange agreement” and a “Management integration agreement.”
As of April 1, 2016, the Company and ShinGinko Tokyo executed the share exchange based on the agreement
and ShinGinko Tokyo became a wholly-owned subsidiary of the Company.
The share exchange agreement was approved at the extraordinary shareholders’ meetings and the classshareholders’ meetings of both companies held on November 27, 2015.
(1) Overview of the business combination(a) Name, business content and size of the acquired company
Name of company:
ShinGinko Tokyo
Description of business:
Banking business
Capital:¥20,000 million ($177,493 thousand)(b) Main reasons for the business combination
While both of the Company and ShinGinko Tokyo have contributed to facilitating regional finance andregional economic development as regional finance providers in the capital of Tokyo, taking advantage ofrespective strength, the management integration has been implemented because both companies have thecommon business objective of supporting small and medium-sized enterprises in Tokyo and it is expected
to give full scope to their ability as regional finance providers in the Tokyo metropolitan area throughachieving synergy by the integration.
(c) Date of the business combination
April 1, 2016(d) Legal form of the business combination
Share exchange(e) Company name after the business combination
No change to the company name after the business combination.
(f) The acquired ratio of voting rights
100%(g) Main basis for deciding on the acquiring company
The Company was designated as the acquiring company as a result of comprehensive consideration offactors including acquisition-deciding factors in the applicable accounting standards for businesscombinations and various other factors.

47

(2) The acquisition costs for the acquired company and breakdown

Consideration for the acquisition:
The Company’s common stock delivered at the business combination date
The Company’s preferred stock delivered at the business combination date
Acquisition cost

Millions of Yen

Thousands of
U.S. Dollars

¥

$

¥

3,719
40,00043,719$33,007354,987
387,995(3) Exchange ratio by type of stock, the calculation method, and number of shares delivered(a) Exchange ratio by type of stock(i) 0.24 share of the Company common stock for every 1 share of ShinGinko Tokyo common stock(ii) 1 share of the Company preferred stock for every 1 share of ShinGinko Tokyo preferred stock(b) Calculation method for the share exchange ratio
The calculation of the share exchange ratio was first commissioned to multiple financial advisors as
third-party calculation institutions, and then, determined through consultation among the relevant parties
based on the reports submitted by the advisors.
(c) Number of shares delivered
Common stock
Preferred stock

1,422,289 shares
2,000,000 shares(4) Effect of the acquisition on the consolidated statement of income
Gain on negative goodwill of ¥19,443 million ($172,557 thousand) (provisional value) is expected as aresult of the stock acquisition(5) Major content and amount of acquisition related cost
Advisory fees and commissions: ¥144 million ($1,279 thousand)
3. Issuance of preferred stock
The Company resolved at the board of directors’ meeting held on June 3, 2016, to issue shares of 1st tranche
class 1 preferred stock by means of third-party allotment to Sumitomo Mitsui Trust Bank, Limited, as anallottee, and the issuance was made on June 24, 2016.
Tokyo TY Financial Group, Inc.
1st tranche class 1 preferred stock
750,000 shares¥20,000 ($177) per share¥15,000,000,000 ($133,120 thousand)Each ¥7,500,000,000 ($66,560 thousand) or ¥10,000($88) per share
June 24, 2016 (Friday)
To be applied to the capital injection to The Tokyo
Tomin Bank, Limited

1. Type of shares issued
2. Number of new shares issued
3. Amount paid
4. Aggregate amount paid
5. Amount of increase in capital and capital surplus
6. Payment date
7. Use of proceeds

48The Tokyo Tomin Bank, Limited
Non-consolidated Balance Sheets (Unaudited)
As of March 31, 2016 and 2015
Millions of Yen
2015
2016
AssetsCash and due from banks
Call loans
Monetary claims bought
Trading account securities
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for loan losses
Total assets¥¥

Liabilities
Deposits
Negotiable certificates of deposit
Call money
Payables under securities lending transactions
Borrowed money
Foreign exchanges
Bonds payable
Other liabilities
Reserve for employees’ bonuses
Reserve for officers’ retirement benefits
Reserve for point card program
Reserve for losses from reimbursement of inactive accounts
Reserve for contingent losses
Deferred tax liabilities on land revaluation
Acceptances and guarantees
Total liabilities¥

Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets¥

See notes to consolidated financial statements.

49

295,2354,497
0
31
586,946
1,842,130
3,406
17,051
32,574
1,116
14,316
4,194
2,926(12,466)
2,791,960¥

2,390,437
32,706474
236,597
7,225
65
16,00013,212
1,079
60
2
374
291
14
2,926
2,701,469¥¥

Thousands of
U.S. Dollars(Note 2)
2016

213,293
3,442
65
177
586,219
1,828,147
5,544
12,48332,2591,850
11,607
5,597
3,133(16,508)
2,687,314$

2,379,799
25,838140,876
7,209
138
25,60013,757
1,076
101
2
236
302
15
3,133
2,598,089$$

2,620,123
39,9131276
5,208,968
16,348,333
30,231
151,327
289,089
9,908
127,052
37,22025,969(110,634)
24,777,780

21,214,388
290,255
4,209
2,099,729
64,122585
141,995
117,260
9,582
534
25
3,322
2,589
128
25,96923,974,699

48,12018,08318,65584,85948,12018,08315,36981,573427,054
160,483
165,564
753,103

5,840
(209)
5,631
90,491
2,791,960

7,862
(210)
7,651
89,2252,687,314

51,836(1,858)49,977803,081
24,777,780¥$

The Tokyo Tomin Bank, Limited
Non-consolidated Statements of Income (Unaudited)
For the Years Ended March 31, 2016 and 2015
Millions of Yen
2015
2016
IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Interest on call loans
Interest on receivables under securities borrowing transactions
Interest on due from banks
Other interest income
Fees and commissions
Other operating income
Other income
Total income¥

24,503
5,677
54
233
149
8,204
2,209
1,684
42,717¥

26,720
4,398
86
9
121
190
9,221
2,177
1,552
44,477

Thousands of
U.S. Dollars(Note 2)
2016$

217,462
50,387
486
2,070
1,328
72,815
19,607
14,947379,105

Expenses
Interest expense:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money
Interest on payables under securities lending transactions
Interest on borrowed money
Interest on bonds payable
Other interest expense
Fees and commissions payments
Other operating expenses
General and administrative expenses
Other expenses
Total expenses

1,047
26
7
649
126
488
31
2,689
142
28,3172,310
35,837

1,163
38
0
109
207
698
27
2,834
16
30,016
2,606
37,717

9,295
236
62
5,761
1,125
4,334
276
23,872
1,266
251,307
20,506
318,045

Income before income taxes

6,880

6,759

61,060

Income taxes:
Current
Deferred
Total income taxes

84
2,564
2,649

255
3,021
3,277

751
22,75823,510¥Net income
See notes to consolidated financial statements.

50

4,231

¥

3,482

$

37,549

The Yachiyo Bank, Limited
Non-consolidated Balance Sheets (Unaudited)
As of March 31, 2016 and 2015
Millions of Yen
2015
2016
AssetsCash and due from banks
Call loans
Monetary claims bought
Trading account securities
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for loan losses
Total assets¥¥

Liabilities
Deposits
Negotiable certificates of deposit
Payable under securities lending transactions
Borrowed money
Foreign exchanges
Other liabilities
Reserve for employees’ bonuses
Reserve for officers’ retirement benefits
Reserve for losses from reimbursement of inactive accounts
Reserve for contingent losses
Deferred tax liabilities on land revaluation
Acceptances and guarantees
Total liabilities¥

Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets¥

See notes to consolidated financial statements.

51

110,233
39,5774,202
627
613,955
1,517,513
3,124
8,302
29,368
786
3,359
2,934
(9,736)2,324,249¥

2,124,520
5,630
56,7305,000
212,687
844
2,810
614
367
2,481
2,934
2,214,623¥¥

85,46725,4952,946
429
637,916
1,466,028
2,186
4,690
30,176
1,265
4,551
3,497
(10,139)2,254,512

2,122,761
3,930
5,000
0
6,447
869
3,546
608
438
2,687
3,497
2,149,786

Thousands of
U.S. Dollars(Note 2)
2016
$

$

$

978,290351,241
37,293
5,567
5,448,660
13,467,459
27,73173,680260,638
6,983
29,81026,041(86,406)
20,626,992

18,854,461
49,964503,461
44,373
22
112,595
7,490
24,9395,452
3,261
22,026
26,041
19,654,091

43,73432,922
27,540104,197

43,73432,922
23,574
100,232

388,133
292,179
244,410924,723

4,819
(7)
616
5,428
109,626
2,324,249

3,891
(12)
615
4,494
104,726
2,254,512

42,772(70)
5,475
48,177
972,900$ 20,626,992¥

The Yachiyo Bank, Limited
Non-consolidated Statements of Income (Unaudited)
For the Years Ended March 31, 2016 and 2015
Millions of Yen
2015
2016
IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Interest on call loans
Interest on due from banks
Other interest income
Fees and commissions
Other operating income
Other income
Total income¥

21,195
5,551
156
77
380
5,986
2,316
1,934
37,599¥22,356
5,861
116
75
435
5,537
2,980
3,649
41,012Thousands of
U.S. Dollars(Note 2)
2016$

188,100
49,271
1,386
691
3,377
53,12920,55817,166
333,682

Expenses
Interest expense:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money
Interest on payables under securities lending transactions
Interest on borrowed money
Interest on bonds with stock acquisition rights
Interest on interest swaps
Other interest expense
Fees and commissions payments
Other operating expenses
General and administrative expenses
Other expenses
Total expenses

1,104
1
0
15
107
9
14
1,780
25
25,3091,980
30,348

1,304
1
0
12
55
53
9
15
2,196
74
26,077
1,857
31,658

9,799
11
0
139
954
83
124
15,801
225
224,615
17,579269,334

Income before income taxes

7,250

9,354

64,347

Income taxes:
Current
Deferred
Total income taxes

1,817
661
2,478

2,142
1,144
3,286

16,1295,867
21,997¥

Net income
See notes to consolidated financial statements.

52

4,772

¥

6,067

$

42,350