Annual Report

2019Year ended March 31,2019

The Hyakujushi Bank, Ltd.

Message from the President

I am deeply grateful to all the stakeholders

greater sophistication in risk management.

In addition, in response to the increase in foreign tourists

for their continued wholehearted support

Two years have passed since the plan kicked off and thesevisiting Kagawa Prefecture, we are strengthening our support

and patronage. This year Japan ushered in a

initiatives are progressing as planned and have achieved certain

for tourism-related businesses. At the Inbound Tourism Semi-

results.

nar, which we hosted last year, the number of applicants

new era called “Reiwa.” At the Bank wewish to grow with you all during the Reiwa era, by taking on various challenges to

exceeded the capacity of the venue, showing the high level of
Medium-term management plan “Challenge ValuePlus” conceptual diagram

environment, including the measures set
out in the medium-term management plan
“Challenge Value Plus.”
July, 2019

Sales capabilities

3of above initiatives and other efforts, the Bank’s balance offacility financing provided to accommodation businesses has

Co-create new value

adapt to customers’ needs and changing

interest in tourism industry among our customers. As a result

doubled over the last two years.
Challenges

Communities

Corporate customers

Retail customers

Challenge to enhance business value

Challenge to create
local value

Challenge to enhancebusiness value

Challenge to enhance
lifetime value

We are stepping up an initiative to increase business value for

Business foundation
Channelreform5

Productivity
improvement

Sophistication ofrisk management

Yujiro Ayada, President

PlusesStrengtheningof organization

corporate customers by disclosing the feasibility assessment*1
Strengthening
marketoperations
capabilities

Alliances

Enhancement of management Foundation

conducted by the Bank.
This initiative not only conveys the bank’s assessment of thecustomer’s business environment and growth potential, butalso shares management issues revealed in the process andworks together to solve them.
As of March 31, 2019, the number of corporate customers
to whom we have disclosed evaluation of their business feasi-

Foreword

whole-hearted support for the region’s aspirations”.

I sincerely thank you for your continued patronage and support

sustainability by addressing the challenges of local communitiesof the Hyakujushi Bank.
This year, we will help you to deepen your understanding of
the Bank by presenting you with this Annual Report. In addition

Based on this plan, we will strive to improve our own
and creating added value.

Medium-term management plan

Challenge to create local value
The Bank is working to create local value, with the aim ofcreating an independent and sustainable regional society thatto the Bank’s management policy and business performance,
this report summarizes the measures we are taking under the

At the core of the medium-term management plan “Challenge

utilizes local resources. Revitalizing the local economy is thestrategies set out in the medium-term management plan.

Value Plus” are “three challenges” to strengthen sales capabili-

mission of a regional bank, and is vital to our future survival.

ties and “five pluses” to reinforce the business foundation.

In addition to providing loans to customers for business

The business environment of regional financial institutions

The “three challenges” are to support the creation of local

establishment, the Bank is providing a range of support for the

population, population decline, and large-scale monetary

value, to enhance business value for corporate customers, andcreation of new industries, including assistance with formulat-

easing, represented by negative interest rates. We also face new

to enhance lifetime value for retail customers. By doing so, we

ing business plans and applying for subsidies, and introduction

challenges such as economic downturn risks and responses towill be able to perform further financial intermediary func-

to purchasers. The number of entities we have helped todigital technologies.

tions and customer-oriented business operations.

establish a business or second business (each year) has increased

has become more severe due to declining birth rate and aging

01

Toward a virtuous cycle in which
the region, customers and the
Bank grow together

To address these issues, the Bank is working on the strategies

With the “five pluses,” the Bank will carry out channel

by about 25% in the last two years. We are also strengtheningof the medium-term management plan “Challenge Value Plus”

reform and productivity improvement measures to adapt toour efforts to attract business and are steadily accumulating(April 2017 to March 2020). This plan demonstrates ourenvironmental changes, and will pursue a stronger framework

results.

determination that the Bank aims to “Grow together with thefor supporting the “three challenges” through the enhancement

region by going beyond the financial sphere in providingof organizational capabilities, utilization of alliances, andbility has surpassed 2,000, which resulted in new fundingneeds and the acquisition of fees through provision of solutions.
*1 Evaluation of business feasibility by gaining an understanding of the business throughdialogue with the customer, and by analyzing from financial and industrial perspectives.

Challenge to enhance lifetime value
For retail customers, we strive to provide products and services tailored to their life stages and future plans, in order toincrease their lifetime value.
Japan is entering an era of “100-year life,” in which 25% of
the male population will live for 90 years and 25% of thefemale population will live for 95. In the lead-up to such asociety of longevity, our efforts include, for example, offering
proposals focused on safe and sustainable, long-term, distributed, and installment products to customers with little investment experience.
We are also committed to provide products that meetcustomers’ needs. The balance of assets under custody as of theend of the fiscal year ended March 31, 2019 showed a year-onyear increase thanks to our provision of single-premium
insurance in response to the recent inheritance-related needs.
02

Message from the President

Responding to changes in customers’ behavior
As society and economy mature, values and lifestyles are diversifying, and the services and needs customers demand from banks
are changing dramatically. While the number of customers at
branch offices has decreased, the number of Internet banking
transactions has increased rapidly. In response to such changes inthe environment, we are promoting channel reform.

regional characteristics. In the past two years, five branches
have been integrated, mainly in branches where the number ofvisiting customers has declined significantly. In the future,
based on the needs of customers, we are planning to change
our existing branch into formats such as highly functional
branches that provide more specialized services and lightweight
branches that can be operated by a small number of staff.
We will provide high-quality consulting services to morecustomers by allocating the personnel created through thereorganization of branches to consulting services that meet
diverse needs.

Enhancing non-face-to-face channels
For non-face-to-face channels, we are working to enhance ourservices with smartphones.
In January 2019, we launched services including: “114 SmartStrengthening of our governanceand compliance structures

Conclusion

It is essential for the Bank to strengthen its governance andMarch 2019 with the goal of fulfilling our mission as a regional

compliance structures in order to achieve continuous growth
as a regional financial institution and enhance its corporate
value.
In addition to reflecting outside opinions in the Bank’s
management, we have enhanced the capabilities of the Nomination and Remuneration Governance Committee, a voluntarycommittee, in order to ensure objectivity and transparency ofour decision making.

Financial results for the fiscal
year ended March 31, 2019

Furthermore, with the addition of one Outside Director atthe 150th Annual General Meeting of Shareholders held in June
2019, Outside Directors now account for one-third of thePassbook,” which enables customers to easily view accountbalances and transaction records from anywhere; “Household

The above mentioned efforts led to an increase in fee income

members of the Board of Directors. At the same time, we are

Accounts Function”; and “Life Planning Coach,” which allows

and cost reductions, which compensated for a decline in loan

striving to improve diversity of the Board of Directors, including

customers to simulate the money they will need over theirinterest income in the context of negative interest rate policies.

the appointment of two female Directors. We have also estab-

lifetime by merely answering a few simple questions. In re-

However, market-related revenues declined significantly as alished a policy to foster successors, abolished the Advisor Sys-

sponse to the increasing number of customers who do not

result of efforts to improve the quality of the securities portfo-

need a passbook, we have also started handling non-passbook

lio, including the sale of securities with valuation losses, andMoreover, along with reorganizing the system for informa-(no passbook) accounts that do not issue paper passbooks.

the increase in non-performing loan disposal costs due totion collection and reporting related to compliance, we havelarge-scale bankruptcies outside Kagawa Prefecture. As astrengthened the compliance structure through such initiatives

Reorganizing the network of bank branches

result, “Profit attributable to owners of parent ” has decreased

as appointing a CCO*2 in April 2019 and setting up a Compli-

While enhancing non-face-to-face channels, we are reorganiz-from the previous fiscal year.

ance Management Division.

ing the branch network in line with customer trends andWe established The Hyakujushi Bank’s Code of Conduct infinancial institution, which is to provide thorough support toour customers at all times and thereby contribute to theregional development.
In addition, supporting the Sustainable Development Goals(SDGs)*3 advocated by the UN, we released The Hyakujushi
Bank’s SDGs Declaration. Hoping that the Declaration will
help us reconfirm the Bank’s role, we will make our utmost
efforts to increase the value of the region and of the Bank inorder to create a sustainable society.
I sincerely thank you and humbly request your continued
support and patronage of the Bank.
*3 The Sustainable Development Goals were adopted at the UN summit held in September
2015. They consist of 17 goals and the 169 associated targets to be achieved by 2030.

tem, and clarified procedures for dismissal of Directors.

*2 Chief Compliance Officer

Medium-term management plan: Progress of management targets
Profitability

Soundness

Consolidated capital ratio

Profit attributable to owners of parent(Billions of yen)

12.0
10.0

9.6

10.2

Loan balance (Average balance during the period)

Consolidated ROE

(%)

(%)

12.00

6.00

2,835.4

8.0

Target 9.5%

9.53
5.5

9.42

8.00

4.00

3.56

3.58

9.04

4.0

2,754.8(Billions of yen)

4,108.5

2,788.9

4,074.8

4,097.5

Target 3.0%

1.92

2.00

6.00

Total deposits (Average balance during the period)(Billions of yen)

Target 9.5
10.00

6.0

Efficiency

2.0
0

03

FY 2016

FY 2017

FY 2018

4.00

FY 2016

FY 2017

FY 2018

0.00

FY 2016

FY 2017

FY 2018

FY 2016

FY 2017

FY 2018

FY 2016

FY 2017

FY 2018

04

The Hyakujushi Bank’s
SDGs Declaration
We selected four SDGs that haveespecially high affinity with theBank’s Corporate Vision andbusiness activities, and are working
on such goals as our priority
themes as shown on the right.

The Hyakujushi Bank aims to realize its Corporate Vision to “prosper together with customers and communities” through initiatives
to accomplish the SDGs advocated by the UN.

Major themes

Activities aimed ataccomplishing SDGs

Creating local
value

Creating local value by unearthing local attractions and disseminating information on them

Developing the
local economy

Creating a virtuous cycle of mutual growth by providing full
support to our customers and the region beyond financial
frameworks

Supporting thehappiness of local
residents

Supporting people’s happy lives by assisting their asset formation
and revitalizing the region through social contribution

Creating opportunities for everyone
to participate

Providing opportunities for our officers and employees, andlocal residents, that encourage them to achieve their fullpotential by embracing diverse ways of thinking

Local society

SDGs
SDGs (Sustainable Development Goals) were adopted at the UN summit held in

Corporate
customers

September 2015.They consist of 17 goals—including the eradication of poverty
and hunger, environmental conservation, diversity in the workforce, andtechnology innovation— and the associated 169 targets to be achieved by 2030.

Environment

E

Retailcustomers

Forest matching—collaboration of forest creation
Promotion of paperless operations● Energy-saving branches, introduction of eco-friendly vehicles● “Cool Biz” casual business attire campaign in summer●●

Environmental business
Environmentally friendly loans/issuance of private
placement bonds● Bank accounts without passbooks●

Please refer to page 18 for details

05

G

Officers &employees

We are working to create an environmentally friendly
society through such measures as provision of financial products and services, local forest conservation
activities, and energy-saving branches.

Environmental conservation

Creating asustainable society

S

Social
We support the growth of customers and theregion through the “three challenges” set
forth in the medium-term management planand interaction with local communities. We
are also actively working to create an environment where employees can work for many
years with fulfillment through workstyleinnovation.
Creating local value
Support for startups
Support for tourism
promotion● Cooperation agreementswith local public entities● Industrial development●●

Enhancing business value
Evaluation of businessfeasibility● Business matching● M&A and businesssuccession● Support for businessconducted overseas● Support for management
improvement andbusiness revitalization● Support in the field ofagriculture● Support in the medical
and nursing care field●

Enhancing lifetime value●

Support for asset
formation

Social responsibility●●

Smartphone apps●●

Internet banking

●

●

●

Governance
We are making efforts to strengthen governance structure based on the recognition thatdoing so is indispensable for the Bank’s sustainable growth and enhancement of mediumto long-term corporate value.

Promotion of culture,art, and sports
Financial education
Training of humanresources
Promotion of women’s
participation
Workstyle innovation

Please refer to pages 11-17 of this report and to pages 13-18of the reference material for details

Enhancing the management foundation●

Corporate governance●Compliance structure●

Risk management structure
Please refer to page 19 for details

06

Business Model Pursued by the Hyakujushi Bank(Our Medium-Term Management Plan)
Against the backdrop of a business environment that remains challenging for regional financial institutions, the Bank is doing its utmost to create regional value and enhance customers’ value by utilizing its organizations, human resources, and sales network to the
maximum. The Bank pursues a business model designed to achieve a “virtuous cycle of the regional economy” by contributing to
growth of customers and the region, leading to stronger competitiveness and stable performance of the Bank.

Challenge Value Plus

Medium-Term Management Plan

(From April 2017 to March 2020)

Strengthening market
operations capabilities

Strengthen sales capabilities

3 Challenges

1

2

3

Realizing a virtuous cycle in which the region, customers and the Bank grow together

Communities

Challenge
to create local value

Corporate customers

Challenge
to enhance business value

Retail customers

Improve theinvestment system
Enhance investment

Challenge
to enhance lifetime value

Strengthen the business foundation

5 Pluses

Channel reform

Productivity improvement

Strengthening of organization

Create local value – Initiatives for communities –Sophistication of risk management

Alliances

Metropolitan areas

Secure profitability of individual branches

Protect and develop local communities

Pursue return on assets

In the greater Setouchi region covering
Shikoku excluding Kagawa Prefecture, and theterritory from Hyogo to Fukuoka, we areworking to strengthen the earnings basethrough resolution of issues of customers
whose main bank is the Bank.

In Kagawa Prefecture, where we emphasize
protection and development of communities,
we are striving to resolve issues in the region
through our initiatives toward regional revitalization. We will also proactively invest management resources while aiming to become themain bank of customers for every transaction.

In the metropolitan areas, namely, Tokyo,
Nagoya, and Osaka as strategic operation bases,
we put the highest priority on efficiency oftransactions (rate of increase in yield on loans).
We are also working on business matchingwith customers in other regions.

■ Change in average loan balance andearnings in the greater Setouchi region■ Profit from provision of solutions in
Kagawa Prefecture■ Yield on loans in metropolitan areas(Billions of yen)
872.1

(Millions of yen)

966.9

926.7

274

99
23

10.6

FY 2017

0.89%
0.87%

150

11.1

FY 2018

Average total loan balance

Extensive support from the Head OfficeFemale advancement

KagawaKagawa Prefecture

FY 2016Growth potential of the Setouchi region and Shikoku
Extensive, well-established network of offices
Overwhelming share in Kagawa Prefecture where the Bank is based

48

76

78

FY 2016

FY 2017

Business matching

Gross operating profits

126
0.83%

124

FY 2018

FY 20163

Deposit balance (per household)16.498 million yen: rd in Japan ■ Overview of the economy
of Kagawa Prefecture
Jobs-to-applicants ratio 1.75: th in Japan

9

Industrial structure
A balanced industrial structure centering on
small and medium-sized enterprises without
being overly dependent on any particular sectors.
While the Kagawa Prefecture lacks a coreindustry or a group of companies that can serve
as a powerful engine for the regional economy,
the prefecture has the advantage of being resistant
to changes in the economic environment.

07

The trend of gradual economic
recovery in Kagawa Prefecture iscontinuing, against a background of apick-up in consumer spending and ahigh-level of capital investment. (July2019)

FY 2017

FY 2018

Business succession / M&A

Regional revitalization
Centering on the Regional Vitalization Division established in April 2017, we are providing support that goes beyond the boundaries of finance forregional revitalization in collaboration with Kagawa Prefecture, local municipalities, external expert institutions, etc.
Support for startups

Current state of the regional economy (Kagawa Prefecture)

NagoyaGreater Setouchi region

11.0

The Hyakujushi Bank’s strengths

Osaka

The Bank classifies its sales territories into three zones consisting of
Kagawa Prefecture, the greater Setouchi region, and metropolitan
areas. We are supporting invigoration of the areas by formulating
and implementing strategies corresponding to each region.

Enhance the management foundation◆ICT strategy ◆Business continuity plan (master plan) ◆Governance ◆Compliance ◆Strategic CSR

Tokyo
Shikoku other than
Kagawa Prefecture,
Okayama, Hiroshima,
Hyogo, and Fukuoka

Regional strategy

Grow together with the region by going beyond the financial sphere in providing whole-hearted
support for the region’s aspirations.

Vi sionGrowth Strategy (Three Challenges)

TOPICS
Number of tourists visiting
Kagawa Prefecture was thethird-highest ever
The number of tourists visiting
Kagawa Prefecture was 9.41
million in 2018, the third-highest
level ever, exceeding 9 million forthe sixth consecutive year. The
number of people using domestic
and international airlines from/toTakamatsu Airport was 2,062,920,
exceeding 2 million for the firsttime.

Support for tourism promotion

The Bank holds startup seminars for people who wish to launch

The Bank provides financial support to deal with the increase inbusinesses in the region, and provides support for formulation of

inbound tourists, hold seminars on inbound tourism, and assists withmanagement plans and market cultivation.

making websites multilingual, among other types of support.

■ Number of recipients of support for startups or second startups■ Equipment loans to accommodation businesses 204%
(Millions of yen)

(Number of recipients)

123%

22

45

4

100%
2,200

249

274

273
300

FY 2016
Support for startups

FY 2017
Support for second startups

FY 2018

FY 2016
Amount of newly loaned funds

600
FY 2017

FY 2018

Rate of increase08Growth Strategy (Three Challenges)
Enhance lifetime value – Initiatives for retail customers –Enhance business value – Initiatives for corporate customers –We offer strong support for our customers’ growth by actively taking part in their overall business flows and stages.

We provide meticulous comprehensive support for customers’ asset accumulation by offering customer-centric proposals emphasizing long-term,
installment, and distributed investment. We also focus on fostering bank staff with expert knowledge and establishing sales structure.

Growth support through evaluation of business feasibility

Basic policy for operations that support customers’ asset management and accumulation

The Bank provides support for corporate customers’ growth by offering solutions for their management challenges and needs, based on evaluations of
their business feasibility*.
Process ofgrowth support

Provide honest, impartial support for asset
management and accumulation* Evaluation of business feasibility by gaining an understanding of the business through dialogue
with the customer, and by analyzing from financial and industrial perspectives.

Number of customers for which business feasibility (Number of companies)
evaluation was performed and disclosed■ Recipients of evaluation■ Recipients of disclosure

Enhance quality of services

3,167
2,349

1,874

2,040
1,108

Organization of information
Analysis• Basic information• Financial analysis• Products and services• Analysis of the external• Financial information
environment• Analysis of the internal
environment

Proposal• Explanation of theevaluation results• Proposal of solutions for
issues etc.

Deploy customer-centric sales systems

157
FY 2016

FY 2017

Thoroughly implement a customer-centric
approach and foster experts

FY 2018

Promotion of long-term, distributed, and installment products
iDeCo (individual-type defined
contribution pension plans) (Billions of yen)

Customers’ growthBalance
Number of contracts

Offering solutions

4,191

Results of solutions offered(Number of cases)■ Number of cases of solution implementation▲ Fees for corporate consulting

Dialogue with customers

830 mil. yen

5.5

FY 2017*Number of main recipients of proposals

1,043

FY 201609(Number of companies)

1,983

231

1,281

FY 2017

FY 2018

Number of qualified financial planners

FY 2018

Initiatives for loans utilizing
current assets(Note)
Number of transactions (cumulative)

2nd grade Certified Skilled Professional of Financial Planning (Number of persons)
1st grade Certified Skilled Professional of Financial Planning(Number of cases)

276

1,172

1,239

FY 2016

FY 2016

27,64830,2491,777

32,592
3,016

210

27,64828,472

29,576

FY 2018

FY 2016

FY 2017

FY 2018

138
FY 2017

Seminars held for customers
Number of participants
Number of seminars

FY 2018Note) Focusing on the value of assets held by customers, such as accounts receivable and other claims, merchandize
inventories, and machinery and equipment, the Bank is strengthening initiatives for loans utilizing current assets
based on the commercial distribution.

33

21
1,091

Number of consultations on life planning provided
Post-retirement life
Mortgage loans
Asset formation

116

1,156

81

83

78

FY 2016

FY 2017

FY 201835(Number of consultations)

125

134
23

44

16

1,168
3,341

FY 2017

Number of Installment-Type NISA accounts
Number of NISA accounts

7,424

1,246

133
FY 2018

14,221NISA and Installment-Type NISA

Training for bank staff/Establishment of sales systems

92

Number of recipients of proposals on
management improvement(Millions of yen)

1,200 mil. yen
1,589

FY 2017

6,270
101

686
FY 2016

6.2

5FY 2016

1,010 mil. yen

Monthly payment amount
Number of accounts

10,350Disclosure of evaluation andsharing of management issues
Business feasibility evaluation

13,306

Installment investment trusts

64
4,312

3,160

81

81
47

FY 2016

FY 2017

FY 2018

FY 2016

FY 2017

FY 201810

Growth Strategy (Five Pluses)

Activities for Social Contribution
The Bank supports growth of customers and the region through active participation in local events, financial education, and otherinitiatives.

Strengthen the business foundation
Channel reform
The Bank is enhancing its smartphone services so that customers can use bank services anywhere at any time.

■ Enhancing functions of the Providing counter and consulting services via
smartphones
Hyakujushi Bank App
114 Smart Passbook•Passbook-free account •Check account balance■ Promotion of 114 Smart Passbook(passbook-free account)
This is a convenient service that allows you to check thedeposit/withdrawal details of your deposit account anytime andanywhere, and it does not require any procedures related to the
passbook (updating, carry-forward, lost re-issuance).

114 Direct •Payments & transfers / reference•Open an account / various notifications •Investment trust transactions

The Bank offers donation-type private placement bonds. We use a portion

As is has done in previous years, the Group as a whole is supportingof the issuing fees received from customers issuing private placement

Setouchi Triennale 2019, which is being held from April 26, 2019. Inbonds to donate goods to their chosen schools or local public institutions.

addition to cleaning activities carried out before the opening of this event,(Framework)

we are participating by sending volunteer reception staff to exhibition sites.

Issuing company(1)
Issue/undertake private
placement bonds(2) Designate donation recipient(3)
Donate educational
goods

Account managementwith a smartphone

Application for personal loans＋

Robot advisor
Apply for insurance■ Supporting Setouchi Triennale 2019

The Hyakujushi Bank

Application for account opening

Life planning coach■ CSR private placement bonds

No paper passbook required(Paperless Account)

Kindergartens, elementary and juniorhigh schools, and local governments■ Financial education
As part of the Bank’s support for financial education activities, we hostworkplace tours and work experience events for elementary, junior high,Household accounts function •Asset management

and high school students as well as holding the Summer Holiday Parent-Childbonding workshops for elementary school students. We also give special

Productivity improvement

lectures at high schools and universities in Kagawa Prefecture for the
purpose of deepening understanding of finance and banking.

The Bank is promoting operational efficiency without compromising service quality.

■ Operational efficiency
Optimization of branch operations

Concentration of business

Paperless operations

Optimization of branch operations
through introduction of“Express Counters*”

Centralize miscellaneousback-office operations of each branchat the headquarters

Limit the use of paper
for all types of transactions
by utilizing tablets

Optimized operations at branches• Reduced administrative workload• Elimination of cash handling• Paperless operations• Shorter processing time
• Improved service quality

Efforts to Improve Employee Satisfaction
We are making efforts to establish a working environment where employees can maintain a healthy work-life balance.
■ Fostering human resources (Introduction of the Company Qualification)■ Supporting women’s participation and advancement

In June 2017 the Bank introduced the Company Qualification with the goal of

We are actively promoting female employees to managerial positions. The

nurturing personnel with comprehensive capabilities that combine knowledge

ratio of female managers at the Bank was 23.4% in April 2019, whichwith practical abilities. Under this system, we divide the branch operations into

exceeded the national average ratio of 14.9%*.

six categories and establish three levels of qualifications for each category: Officer• Shorter waiting times• No need to fill in forms*Dedicated ATM is a contact point where customers and the Bank staff can confirm and perform simple and speedy processing.

Strengthening organizational capabilities
The Bank is actively working on work style reforms (personnel system reform, strengthening of human resources and organizational capabilities, and personnel
management) to create our own value. We are also working to strengthen the profitability of the entire Hyakujushi Group by providing comprehensive
services in conjunction with the strength of the Banks and Group companies.

Sophistication of risk management
We are striving to implement integrated management of risk and profit to ensure soundness while creating corporate value.

Alliances11(beginner), Leader (intermediate), and Meister (top level). The system enables*Source: White Paper on Gender Equality 2019 edition

employees to challenge themselves to acquire qualifications focusing on areas they
have voluntarily selected.

■ Promoting work-life balance
Improving the workplace environment

Establishment of in-house nursery school

The Bank announced “Health and Productivity Management Declaration” in

We opened in-house nursery school Hyakujushi Momokko Land in April

August 2018, in order to drive initiatives for maintaining and improving the2018 as part of our efforts to create a stress-free work environment for

health of employees and their families. In February 2019, we were recognized as aemployees raising children.

“Certified Health & Productivity Management Outstanding Organization” under
the large enterprise category in a program, which is led by the Ministry of
Economy, Trade and Industry and Nippon
Kenko Kaigi to recognize outstanding

Through Shikoku Alliance, a comprehensive partnership of four regional banks in Shikoku, the partners are tackling revitalization of Shikoku byenterprises engaging in efforts for healthcombining their strengths and expertise while maintaining sound competitive relationships.

and productivity management.

12

Environmental Conservation Initiatives

Governance

We are working to create an environmentally friendly society through measures such as provision of environmentally

We are striving to improve our governance and compliance structures based on the recognition that such efforts arefriendly financial products and services, local forest conservation activities, and energy-saving branches.

indispensable for the Bank’s sustainable growth and medium- to long-term enhancement of corporate value.

Promotion of
paperless processes

Forest matching

We are working to minimize the use of paper documents
and reduce environmental load through digitalization of
meeting materials and other documents.

We have concluded Hyakujushi Forest forest matching agreements with Kagawa Prefecture andother government entities and engage in forest conservation activities. Since 2017 the four
partner banks in the Shikoku Alliance have been participating in one another’s forest conservation activities.

Designation as a tsunami evacuation building
Our Kochi Branch, opened in April 2019, has anexternal staircase leading to the rooftop, and has
been designated as a tsunami evacuation building*for local residents to use as an evacuation shelter. In
addition, the branch is environmentally friendly,with solar panels on the rooftop.

Energy-saving branches
As part of our measures to save energy, the Head Officebuilding applies the double-skin construction method,which involves using double-layered glass screens withexcellent insulation properties.

Initiatives to strengthen governance and compliance structures
In February 2019, the Bank expanded the roles and capabilities of the Governance Council, which is an advisory body to the Board of
Directors comprised of a majority of Outside Directors, in order to strengthen the governance structure, and renamed it the “Nomination and Remuneration Governance Committee.” This committee deliberates on the following: nomination of candidate Directors anddismissal of Directors; nomination and dismissal of Representative Directors; remuneration and other matters concerning Directors
not serving as Audit and Supervisory Committee Members; matters concerning assessment of the effectiveness of the Board of Directors; and other important matters in terms of governance and management. The Board of Directors is to respect the findings of thecommittee.
Furthermore, in April 2019, the Bank appointed a Chief Compliance Officer (CCO), who has the highest responsibility to centrally
manage the overall compliance, in an aim to bolster the compliance structure. In addition to conducting investigations as necessary andreporting the results to the Board of Directors, the CCO gives instructions for prompt improvement and response in case of finding
any compliance-related problem in measures and responses taken by each division.
We have also established the Compliance Management Division as a division to oversee and control compliance issues, and areworking to prevent compliance violation, enhance the early response system to prepare for such breach, and to enhance our internalreporting system.

Results of initiatives to strengthen governance
Before 2013

2014
Appointment of one
Outside Director*A building that satisfies certain conditions, including those onheight and quake resistance, and can be used by local residents
for emergency evacuation.

2015

2016

Increase to two

2017

Increase to four

2018

2019
Increase to five(One-third of Directors
now Outside Directors)

Transition to a Company with Audit and Supervisory Committee

Reinforcement ofoversight aswell as audit
and supervision

Creation and revision of Corporate Governance Guidelines
Establishment of the Nomination and Remuneration
Governance Committee

Establishment of the Governance Council

Appointment of CCO
Establishment of policy
to foster successors

Appointment of three
Outside Audit & Supervisory
Board Members

Revision ofIntroduction of stock option program
the executive
remuneration Abolishment of the
Retirement Benefit
System for Officers
systemAbolishment of theAdvisor System

Revision of proportions of fixed remunerationand variable remuneration

Introduction of a performance-linked stock compensation system

Eco-friendly financial products
Introduction of theexecutive officer system

We offer various products that correspond to the values of environmentally conscious individuals and companies.

Environmentally friendly
private placement bonds(Nickname: 114 Olive Bond)

We offer preferential interest rates to companies
that have obtained third-party certification orwhose practice of environmentally conscious
management is confirmed.

13

Hyakujushi environment
support loans(Nickname: 114 Olive Fund)We evaluate customers’ environmental initiatives
using a three-level rating scale and reflect theevaluation results in loan interest rates.

Hyakujushi renewableenergy project support loans(abbreviation: 114 Energy Support)

We meet the facilities funding needs of operatorsthat utilize the feed-in tariff scheme for renewableenergy to enter the solar power generation or otherrenewable energy businesses.

Other

Delegation of part of the decision-making authority of the Board of Directors for execution of business to the Executive
Committee and other committees
Delegation of part of the decision-making authority for execution ofimportant operations to the President and Representative Director
Expedited distribution of Board of Directors’ meeting agenda in advanceSelf-assessment of the Board of Directors and resolving of issues

Introduction of
third-party evaluations

14

■ Board of Directors and Audit and Supervisory Committee Members (as of July 1, 2019)

Corporate Governance Framework (as of July 1, 2019)
SystemInstitutional Design

Number of Directors Number of (Independent) Outside Directors Term of Office of Directors Adoption of an Executive Officer System Accounting Auditors

Company with Audit 15 (including 7 Audit andand Supervisory
Supervisory Committee
Members)
Committee

5

1 year (2 years for Audit andYesSupervisory Committee
Members)

Ernst & Young
ShinNihon LLC

General Meeting of Shareholders
Appointment/Dismissal

Directors not serving as Audit andSupervisory Committee Members

Appointment/Dismissal

Board of Directors

Audit/Supervision
Appointment/
Supervision/
Dismissal

Revenue Management
Committee

Head Office and Branches

Akihiko Fujimura

Hiroyuki Kurokawa

Kazuhisa Anada

Risk Management
Committee

Tadahiko Tamura

Toshiya Yoritomi

Hideki Kuwashiro

Michiyo Ihara

Junichi Itoh

Yasuko Yamada

Nobuyuki Souda

Director andManaging Executive Officer

Director andManaging Executive Officer

Director andManaging Executive Officer

Director andManaging Executive Officer

Compliance
Committee

Internal audit

Instruction

Auditing Division

Accounts
audit

Accounting
Auditors

Board of Directors

The Board of Directors consists of 15 directors (including 5 outside directors), in principle, meets once a month, and also meet as
necessary. In addition to matters stipulated by laws and regulations or the articles of incorporation, the Board passes resolutions onimportant matters concerning management and oversees the execution of duties by directors and executive officers.

Audit andSupervisory
Committee

The Audit and Supervisory Committee consists of 7 Directors (including 5 outside directors) serving as Audit and Supervisory
Committee Members. In principle, the committee meets once a month, and occasionally as necessary to audit and supervise theexecution of duties by directors.

Director(Audit and Supervisory Committee
Member)

The Executive Committee consists of persons whose positions are Managing Executive Officer or higher, and holds periodic or occasional
meetings as a decision-making body for important matters related to business execution. In addition, the Bank has established a “Revenue
Executive Committee
Management Committee”, “Compliance Committee” and “Risk Management Committee”, and set up a system to make consultation anddecisions on more specialized matters.
The Nomination and Remuneration Governance Committee is chaired by an Outside Director appointed by mutual election. It iscomprised of the President of the Bank, the Chairman of the Audit and Supervisory Committee, and Outside Directors, and meets twice
Nomination andper year as a general rule. As an advisory body to the Board of Directors, the committee deliberates on the following: nomination of
Remuneration
Governance Committee candidate Directors and dismissal of Directors; nomination and dismissal of Representative Directors; remuneration and other matters(Voluntary committee) concerning Directors not serving as Audit and Supervisory Committee Members; and other important matters in terms of governanceand management. The Board of Directors is to respect the findings of the committee.
In order to speed up management decision-making and strengthen business execution functions, the Bank has introduced an Executive
Officer System, and 23 executive officers (of whom seven serve concurrently as Directors) appointed by the Board of Directors, areexecuting their business with flexible decision-making and speedy corporate management.

Director(Audit and Supervisory Committee Member)(outside)

Director(Audit and Supervisory Committee
Member)Director(Audit and Supervisory Committee Member)(outside)

Director(Audit and Supervisory Committee Member)(outside)

Director(Audit and Supervisory Committee Member)(outside)

Director(Audit and Supervisory Committee Member)(outside)■ Composition of the Board of Directors (as of July 1, 2019) ■ Composition of the Nomination and Remuneration Governance Committee
Audit and Supervisory Committee Members Ratio of Outside Directors

5 / 15

From the perspective of maintaining and improving the soundness and appropriateness of operations, the Auditing Division, which is anindependent organization, also fulfills an internal audit role and conducts inspections of assets and risks and internal audits of the Head
Office and branches as well as subsidiaries etc. to determine whether their operations are conducted appropriately in accordance withlaws and regulations and administrative procedures. The results of audits are reported to The Board of Directors.

The Bank’s Accounting Auditors are Ernst & Young ShinNihon LLC As Accounting Auditors, they conduct appropriate audits from an
Accounting Auditors
independent standpoint.

15

Masakazu Toyoshima

Director andManaging Executive Officer

ReportOverview

Auditing Division

Kiichiro Oyama

Director and Senior Managing
Executive Officer (Representative
Director)

Collaboration/
Reporting

Audit/Supervision

Executive Directors

Executive Officer
SystemRyuji Nishikawa

Director and Senior Managing Executive
Officer and CCO (Representative
Director)

Audit and Supervisory Committee

Representative Directors

Executive
Committee

Ryohei Kagawa

Directors serving as Audit andSupervisory Committee Members

Advisory body

Nomination and Remuneration Governance Committee

Yujiro Ayada

President(Representative Director)

Appointment/Dismissal

Audit and Supervisory Committee Members

Outside Outside Outside

Outside Outside
Internal(female) (female)Internal

Ratio of female Directors

OutsideOutsideOutsideOutside(female)Outside(female)2 / 15Chairman

Chairman of the Audit andSupervisory Committee

Chairman of the Board of Directors(President of the Bank)

16

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights■ Interview with an Outside Director

Thousands of
U.S. dollars(Note 1)Millions of yen
For the years ended or as of March 31

Hideki Kuwashiro

Two years have passed since The Hyakujushi

continue its efforts to improve management in order to further increase

Bank transitioned to a Company with Audit

effectiveness.

and Supervisory Committee. Please tell us

centrally managed by the Compliance Management Division underrole in the previous Board of Auditors.

the supervision of the CCO (Chief Compliance Officer), who was
appointed in April 2019 with the highest responsibility to centrally

I now need to monitor management even more thoroughly as an

manage the overall compliance. I acknowledge such initiatives towardOutside Director compared to my previous role as an Auditor. Working

stronger compliance structure.

However, in order to appropriately monitor management, it is essential

Going forward, I believe that I must thoroughly and carefully
monitor the operation status of the Bank’s corporate governance.

to gain a thorough understanding of plans and strategies by having themanagement team explain them in detail. I now need to work harder“ESG.” Regarding risk/return, it is necessary to have lively discussion

Q3

at the Board of Directors on what strategies to take to obtain how

The environment surrounding regional financial institutions isthan before.
As an Outside Director, I pay most attention to “risk/return” andmuch return, while tolerating what level of risk. With respect to ESG,I think we should further strengthen regional financial institutions
going forward and also share with external parties the Bank’s initiatives
including environmental conservation efforts.

What do you think are the key points inincreasing the Bank’s corporate value?

undergoing a significant change. I believe it is necessary to take risks
with a completely different way of thinking in order for the Bank tobuild a sustainable business model.
It is also necessary for the Bank to distinguish itself from others so
as to be selected by customers from among many financial institutions.

Q2

To this end, human resources are essential. Fostering human resources
How do you evaluate The Hyakujushi Bank’s

while respecting the autonomy of individuals and improving workplace

corporate governance?

environment are also keys to strengthening the Bank’s capabilities
to propose its retail customers options suited to their lifestyles as

As the Board of Directors has free and open discussion under thewell as solutions for corporate customers through business feasibility

leadership of the Chairman, I think that the board is operating

evaluations.

appropriately and that its effectiveness is ensured. Also, various

2017

2016

2015

2019

¥77,292
68,477
8,814
3,565
(450)

¥80,890
65,775
15,114
3,720
807¥90,552
71,65518,897
5,145
3,050¥81,416
61,927
19,4893,878
2,879¥77,671
60,33917,332
3,562
3,841$696,387
616,965
79,41232,120(4,054)

115
5,584

359
10,227

1,054
9,645

1,099
11,632

970
8,957

1,036
50,310AT YEAR-END:
Loans and bills discounted
Securities and trading account securities
Foreign exchange assets
Other assets
Total assets

2,825,869
1,046,956
5,750
1,017,044
4,895,624

2,833,526
1,031,025
6,997
905,507
4,777,061

2,776,554
1,444,834
3,684
701,461
4,926,538

2,747,341
1,415,126
8,649
548,540
4,719,661

2,696,444
1,454,691
13,507450,4614,615,105

25,460,573
9,432,885
51,806
9,163,384
44,108,694

Deposits and negotiable certificates ofdeposit
Foreign exchange liabilities
Other liabilities
Total liabilities

4,044,109
352
564,580
4,609,048

4,053,820
241
419,385
4,473,454

4,160,361
145
472,896
4,633,409

4,113,555
206
323,862
4,437,631

3,971,363
354
347,911
4,319,629

36,436,696
3,171
5,086,764
41,526,696

37,32230,486167,615(2,041)
233,382

37,32230,486
164,359(2,096)230,072

37,322
26,332160,985(6,220)218,420

37,322
24,920
153,335(6,179)209,398

37,322
24,920143,886(4,730)201,398336,264
274,673
1,510,181(18,389)
2,102,729

47,822

49,72249,012

54,256

68,952430,867(1,121)
8,540(2,109)

(39)
8,741
4,984

(1,231)
8,557
2,139

(7,806)
8,961(1,171)(3,010)
8,722
1,631

(10,100)
76,943(19,001)

53,131
61—
286,576¥4,895,624

63,408124
10,000303,606¥4,777,061

58,478142
16,087
293,129¥4,926,538

54,239201
18,190282,030¥4,719,661

Regarding compliance, for example, compliance issues are

how your role has changed compared to youras a lawyer, it is easy for me to understand assessment of legality.

2018

FOR THE YEAR:
Total income
Total expenses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Profit attributable to non-controllinginterests
Profit attributable to owners of parent

Outside Director

Q1

2019

The Bank established The Hyakujushi Bank’s Code of Conduct on

measures are taken at the Bank to improve the quality of discussion

March 26, 2019 to realize the Corporate Vision. I hope that the code

including sharing key themes with the Executive Committee before

truly permeates among all officers and employees.

Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Net unrealized gains on other securities,
net of taxes
Net deferred losses on hedging
instruments, net of taxes
Revaluation reserve for landRemeasurements of defined benefit plans
Total accumulated other comprehensive
incomeShare subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets

76,297478,700
196
549
17,583—
295,476
2,581,998¥4,615,105 $44,108,694

Notes: 1. Yen figures have been rounded, omitting numbers below the million mark, in accordance with the Japanese Commercial Code and the common accounting practice inJapan.
2. U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥110.99 to US$1.00 on March 31, 2019.

Attention regarding forward-looking statements
The reader is advised that this report contains forward-looking statements, which are not statements of historical fact but constituteestimates or projections based on facts known to the Bank’s management as of the time of writing. Actual results may therefore differ
substantially from such statements.

they are brought up at the Board of Directors. I would like the board to17

18

Risk Management
While the growing globalization of economic and financial affairs, together with the increasing sophisticationof financial technology, are creating new business opportunities for financial institutions, the risks faced byfinancial institutions are also becoming more varied and complex. We regard sophisticated risk management
techniques as being of primary importance for maintaining the soundness of a bank’s business, and we also recognize the importance of appropriate responses to changing customer needs. To achieve these goals, we makeevery effort to properly recognize, assess and manage risks.

Efforts toward Comprehensive Risk Management

Basic concepts of risk management

Risk Management Framework

Banking operations are facing a variety of risks, including
credit risk, market risk, liquidity risk, and operational risk.
We apply proper management to each risk depending on thecharacteristics of the operation and the risk. By ascertaining
risks in a comprehensive manner and comparing them to ourlevel of capital adequacy, we strive to achieve soundness andstability in our overall management and also to improve theefficiency of our operations: in other words, to practice integrated risk management.
Moreover, our basic policies on overall and specific risk
management are determined by the Board of Directors foreach financial year, and through implementation of measuresfor each category of risk in accordance with these policies, we
strive to achieve sophisticated risk management on an ongoingbasis.

We have defined the types of risks to manage in our risk
management rules, drawn up by the Board of Directors. We
then determine the category to which each risk belongs, anddecide the divisions responsible for managing each category,along with management rules. We have also established an
independent Risk Control Division to integrate risk management and carry out comprehensive management.
Additionally, through the establishment of the Risk Management Committee and subcommittees for each risk category as organizations under the Committee, andcross-sectional consultations on matters regarding risk management on a regular basis, we have put in place a highlysophisticated framework for the maintenance and management of risk.

Risk Management Framework
General Meeting of Shareholders

Audit and Supervisory Committee

Board of Directors
Risk Management Committee

Overall Risk
Control Divisions

Risks Subject to Management
Risk Classification

Outline of Risks

Division in Charge

Credit Risk

Risk of reduction in the value of assets or their loss altogether due to deteriorating financial
position at customers to which the Bank has granted credit

Market Risk

Risk of suffering loss due to volatility of financial assets and liabilities resulting from financial
market fluctuation

Risk Control DivisionInterest Rate Risk

Risk of reduced profits or total losses due to changes in interest rates arising because of discrepancies in interest rates on assets and liabilities, and in instrument maturities

Foreign Exchange Risk

Risk of suffering loss due to a decrease in the yen-converted amount of foreign currency denominated assets and liabilities due to exchange market fluctuations

Price Volatility Risk

Risk of a fall in asset values due to changes in the value of securities

Risk Control Division

Liquidity Risk

Risk of suffering loss from difficulty in procuring necessary funds or abnormally high interest raterequirements in securing funds, due to causes such as unforeseen outflows of funding or turmoil
in financial markets

Treasury and International
Division

Operational Risk

Risk of suffering loss due to inappropriate or malfunctioning internal processes, personnel conduct or IT systems, or external factors

Risk Control Division

Process Risk

Risk of suffering loss due to or by executives’ or employees’ failure to perform duties, or to
improper outside intervention

System Risk

Risk of suffering loss due to partial or complete system breakdown, malfunction, system deficiency, or improper use of the computer system

Legal Risk

Risk of losses due to the violation of laws and ordinances and contracts and signing of inappropriate contractual commitments

Compliance Management
Division

Human Resources Risk

Risk of losses caused by labor malpractice, workplace safety and environmental hygiene deficiencies and risk of employer liability in the event of illegal behavior by Bank employees

Personnel Division

Tangible Asset Risk

Risk of suffering loss due to damage to assets resulting from disaster or defective asset
management

General Administration
Division

Operations Supervision
Division

Practice of comprehensive risk management
We have introduced a framework for risk-adjusted capital
allocation in which the credit and market risks inherent inbanking operations are quantified; capital corresponding torisk amount (risk-adjusted capital) is allocated for each risk
category, and risks are controlled within risk-adjusted capital,
to earn revenues that correspond to the risks while keeping
overall risks within our management capacity. Under thisframework, based on the amount of equity capital (core capital) less the operational risk equivalent amount, risk-adjusted
capital to cover credit and market risk is allocated each halfyear and the changes in risk trends and the risk-return balance
are monitored, enabling ascertainment and management ofrisk-adjusted profitability and efficiency.

In addition, stress tests are conducted on a regular basis andthe impact that major changes in the economic and market
environments have on Bank profits and management stability
is monitored, and the management soundness is also assessed.

Definitions
Core capital:
Equity capital established under Basel III (domestic standard)
Operational risk equivalent amount:
Calculated using the Basic Indicator Approach
Return on risk-adjusted capital (RORAC):
Profit and loss indicator, arrived at by deducting expenses, deemed allowancecosts and capital costs from gross operating profits

Risk Control Division

Risk Audit and Inspection Readiness
Credit Risk Management
Subcommittee

Risk Management
DivisionsMarket Risk Management
Subcommittee

Operational Risk
Management Subcommittee

Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Risk Control Division

Risk Control Division

Treasury andInternational Division

Risk Control Division

Each division, office, branch

Auditing
Division

To strengthen the risk management system, it is necessary to
conduct regular inspections of the effectiveness of system
functioning. At the Bank, the Auditing Division carries out
periodic inspections of operations of the Bank’s Head Office
departments, subsidiaries and individual branches to verify
appropriateness of the risk management system. The Head

Office departments, subsidiaries and individual branches arealso required to conduct self-inspections to confirm that procedures are being followed as laid down. These inspections
improve the level of risk management and minimize the probability of human or system error.

Subsidiaries

19

20

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Compliance System

2019

2018

Thousands of U.S. dollars(Note 1)2019

¥ 829,933
38,993153
4,748
1,046,803
2,825,869
5,750
20,89764,86138,645
6,665
4,526
883
23,684(16,791)¥4,895,624¥ 706,534
32,84455
4,795
1,030,970
2,833,526
6,997
18,831
76,41940,503
6,157
12,099845
22,661(16,181)¥4,777,061$ 7,477,547
351,319
1,378
42,7789,431,507
25,460,573
51,806
188,278
584,385
348,184
60,05040,778
7,955
213,388(151,283)$44,108,694

Basic Policy

Millions of yen
As of March 31

Regional financial institutions have highly public and social nature and bear the social mission of contributing to the development of asound regional economy. The Bank strives to practice thorough compliance as one of the top priorities in its management in order to
win trust from customers, local residents, and shareholders. Specifically, we ensure that each officer and employee execute their duties
in compliance with laws, regulations, and other rules, while they take actions based on high level of ethics.

Compliance System

Compliance System

In April 2019, the Bank appointed a CCO (Chief Compliance
Officer), who has the highest responsibility to centrally manage
the overall compliance, in an aim to further bolster the compliance structure. In addition, the Bank established the Compliance Management Division as a division to oversee and control
compliance issues. The division is working on upgrading theanti-money laundering structure and managing all compliancerelated issues. Furthermore, the Compliance Committee,
chaired by the CCO, holds cross-organizational discussions todevelop and sophisticate the Bank’s compliance structure.

Audit and Supervisory
Committee

Board of Directors

Compliance Committee(Chairman: CCO)

Executive Committee

Compliance Management Division
Instructions

Education

21

2018

¥3,953,878
90,231
43,374
142,634
269,620352
65,293
25
824
48
445
90
63
13,1205,360
23,6844,609,048¥3,957,552
96,268
11,66952,003
246,615
241
62,353
39
185
39
395
98
41
17,644
5,643
22,661
4,473,454$35,623,731
812,965
390,791
1,285,106
2,429,227
3,171
588,278
225
7,424
432
4,009
810
567
118,208
48,292
213,388
41,526,696

37,32230,486167,615(2,041)
233,382

37,32230,486
164,359(2,096)230,072

336,264
274,673
1,510,181(18,389)
2,102,729

47,822(1,121)
8,540(2,109)53,131
61—
286,576¥4,895,624

49,722
(39)
8,741
4,984
63,408124
10,000303,606¥4,777,061

430,867(10,100)
76,943(19,001)
478,700
549—
2,581,998$44,108,694
U.S. dollars(Note 1)
2019

Millions of yen
As of March 31

The operating methods of money laundering and criminal
circumstances are constantly changing and in recent years
have become elaborately complex. Because of strong calls forinternational cooperation to prevent money laundering, theBank has instituted a money laundering prevention policy thathas been made public on its website as an expression of its
resolve to prevent money laundering so that the Bank is neverused as a channel for criminal funds.

The Hyakujushi Bank, Ltd. (hereinafter, “the Bank”) strongly
recognizes the importance of measures to prevent money
laundering and terrorism financing (hereinafter, “money
laundering”). In response to stern demands from the international community, the Bank will build an internal control
system as described below for the Anti- Money Laundering,and conduct the Bank’s business on that basis.
Money laundering is “the act of trying to hide the source
and attribution of criminal profits” and terrorism financing is“the act of providing funds to terrorists for terrorist activities.”
The operating methods and criminal circumstances ofmoney laundering are constantly changing and in recent
years have become elaborately complex. Because of strong
calls for international cooperation to prevent money laundering, the Bank stipulates this policy to reiterate its resolve
to prevent money laundering so that the Bank is never used
as a channel for criminal funds.

• With respect to customer due diligence, the Bank will
instruct and train officers and employees and disseminate
information on Anti- Money Laundering.

Customer due diligence• With respect to customer due diligence, the Bank will
establish an internal system capable of taking appropriate
measures in a timely manner.

2019

Thousands of U.S. dollars(Note 1)
2019

Head Office, Branches

Anti-Money Laundering Policy

Operational policy• The Bank will clarify its role internally concerning theAnti- Money Laundering and will create a system capableof taking appropriate measures in a timely manner.

Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Money held in trust (Note 7)
Securities (Notes 6, 10 and 11)
Loans and bills discounted (Notes 9 and 12)
Foreign exchange assets (Note 9)
Lease receivables and lease investment assets
Other assets (Note 11)
Tangible fixed assets (Notes 14 and 15)
Intangible fixed assets
Net defined benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Confirmation of measures to freeze assets• With respect to the confirmation of measures to freeze theassets of terrorists, the Bank will establish an internal systemcapable of taking appropriate measures in a timely manner.
• With respect to the confirmation of measures to freeze theassets of terrorists, the Bank will instruct and train officers
and employees and disseminate information on AntiMoney Laundering.
Notification of suspicious transactions• With respect to suspicious transactions, the Bank will
establish an internal system capable of taking appropriate
measures in a timely manner.
• The Bank will, under law, promptly notify authorities of
suspicious transactions.
• The Bank will promptly take appropriate measures concerning suspicious transactions.
• With respect to suspicious transactions, the Bank will
instruct and train officers and employees and disseminate
information on Anti- Money Laundering.
Verification of compliance• The Bank will review compliance concerning the AntiMoney Laundering and work to continuously improve its
system based on the results of the review.

Liabilities and net assets
Liabilities:
Deposits (Note 11)
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions (Note 11)
Borrowed money (Notes 11 and 30)
Foreign exchange liabilities
Other liabilities
Reserve for bonuses for directors and corporate auditors
Net defined benefit liability
Reserve for retirement benefits for directors and corporate auditors
Reserve for claims on dormant accounts
Reserve for contingent liabilities
Reserve for stock-based compensation plan
Deferred tax liabilities
Deferred tax liability for land revaluation (Note 15)
Acceptance and guarantees
Total liabilities
Net assets :Stockholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities, net of taxes
Net deferred losses on hedging instruments, net of taxes
Revaluation reserve for land (Note 15)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Yen
As of March 31

2019

2018

Per share
Net assets¥9,708.42¥9,948.53$87.471

See accompanying notes to consolidated financial statements.

22

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets
Millions of yen

For the years ended March 31

Income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Other income (Note 18)
Total income
Expenses:
Interest on deposits and negotiable certificates of deposit
Interest on call money and bills soldInterest on borrowed money
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses (Note 19)
Other expenses (Note 6 and 20)
Total expenses
Profit before income taxes
Income taxes :Current
Deferred
Subtotal
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

2018

2019

Millions of yen
Stockholders’ equity

Thousands of U.S. dollars(Note 1)
2019

¥31,153
12,757553
11,505
5,832
15,48577,292¥31,481
15,744846
11,644
7,565
13,60580,890$280,682
114,938
4,982
103,657
52,545
139,517696,387

2,521
780
94
3,928
3,328
5,674
37,625
14,521
68,477
8,814

2,150
566
126
3,012
3,492
8,285
39,2998,842
65,775
15,11422,7137,027
846
35,39029,984
51,121
338,994130,831616,965
79,412

3,565
(450)
3,114
5,700
115
¥ 5,584

3,720
807
4,528
10,586359¥10,227

32,120(4,054)28,05651,355
1,036$ 50,310

For the years ended March 31
Balance as of March 31, 20172018

Per share
Basic earnings¥189.25¥346.40

Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownership interest of parent due totransactions with non-controlling interests
Provision for revaluation reserve for land
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2018
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownership interest of parent due totransactions with non-controlling interests
Provision for revaluation reserve for land
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period

Totalshareholders’equity¥37,322¥26,332¥160,985¥(6,220)¥218,420

—
—
—
—
—

—
—
—
—
—

(2,364)
10,227—(10)(4,293)

—
—
(232)
63
4,293

(2,364)
10,227
(232)
52
—

—

4,153

—

—

4,153

—
—

—
—

(184)
—

—
—

(184)
—

—

—

—

—

—

—
¥37,322

4,153¥30,486

3,374¥164,359

4,124¥(2,096)

11,652¥230,072

—
—
—
—
—

—
—
—
—
—

(2,512)
5,584
—
(16)
—

—
—
(8)
63
—

(2,512)
5,584
(8)
46
—

—

—

—

—

—

—
—

—
—

—
200

—
—

—
200

—

—

—

—

—

—
¥37,322—¥30,486

3,256¥167,615

54¥(2,041)

3,310¥233,382$1.705For the years ended March 31
Balance as of March 31, 2017

Net unrealized
gains on othersecurities,
net of taxes

Millions of yen
Accumulated other comprehensive income
Total
Net deferred
accumulated
losses on
Remeasurements
otherhedging
Revaluationof defined benefit comprehensive
instruments,
reserve forplans
incomenet of taxes
land

Share
subscription
rights

Noncontrollinginterests

Total net
assets¥49,012¥(1,231)¥8,557¥ 2,139¥58,478¥142¥ 16,087¥293,129

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,364)
10,227
(232)
52
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

4,153
(184)
—

709
709
¥49,722

1,191
1,191
¥ (39)

184
184¥8,741

2,844
2,844¥ 4,984

4,930
4,930
¥63,408

(18)
(18)
¥124

(6,087)(6,087)¥ 10,000(1,175)
10,476¥303,606

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,512)
5,584
(8)
46
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
200

(1,899)(1,899)¥47,822(1,082)(1,082)¥(1,121)

(200)
(200)
¥8,540(7,094)(7,094)¥(2,109)(10,277)(10,277)¥53,131

(62)
(62)
¥ 61

(10,000)(10,000)¥—(20,339)(17,029)¥286,576

Changes in items during the period

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Dividends from surplus

Consolidated Statements of Comprehensive Income

Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock

Millions of yen
For the years ended March 31

2019

2018

ProfitOther comprehensive income (loss) (Note 21)
Net unrealized gains (losses) on other securities, net of taxes
Net deferred gains (losses) on hedging instruments, net of taxes
Remeasurements of defined benefit plans
Total comprehensive income (loss)
Total comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests¥ 5,700(10,076)(1,899)(1,082)(7,094)(4,376)¥10,586
4,562
525
1,191
2,844
15,148¥ (4,492)
115¥14,973
175

Thousands of U.S. dollars(Note 1)
2019

$ 51,355(90,782)(17,109)(9,748)(63,915)(39,426)$(40,472)
1,036

Retirement of treasury stock
Change in ownership interest of parent due totransactions with non-controlling interests
Provision for revaluation reserve for land
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2018
Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownership interest of parent due totransactions with non-controlling interests
Provision for revaluation reserve for land
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 201923

Treasury stock

Changes in items during the period

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

Retainedearnings

U.S. dollars(Note 1)
2019

Yen
2019

Capitalsurplus

Changes in items during the period

Balance as of March 31, 2019

For the years ended March 31

Commonstock

24

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash FlowsThe Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets

Thousands of U.S. dollars (Note 1)

Millions of yen

Stockholders’ equity
For the years ended March 31

CapitalsurplusRetainedearnings

Balance as of March 31, 2018

$336,264$274,673$1,480,845

Retirement of treasury stock

—
—
—
—
—

—
—
—
—
—

(22,632)
50,310
—
(144)
—

—
—
(72)
567
—

(22,632)
50,310(72)
414—

Change in ownership interest of parent due totransactions with non-controlling interests

—

—

—

—

—

Provision for revaluation reserve for land
Transfer from revaluation reserve for land

—
—

—
—

—
1,801

—
—

—
1,801

Net changes in items other than stockholders’equity

—

—

—

—

—

—
$336,264—$274,673

29,335$1,510,181

Treasury stock

For the years ended March 31

Total
shareholders’equityCommonstock$(18,884) $2,072,907

Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock

Total changes in items during the period
Balance as of March 31, 2019486
29,822$(18,389) $2,102,729

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Net deferredlosses on
hedging
instruments,
net of taxes

Revaluation
reserve forland

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
income(351)$78,754$ 44,904$571,294$1,117$ 90,098$2,735,435

Retirement of treasury stock

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(22,632)
50,310(72)
414—

Change in ownership interest of parent due totransactions with non-controlling interests

—

—

—

—

—

—

—

—

Provision for revaluation reserve for land

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
1,801

(17,109)(9,748)(1,801)(63,915)(92,593)(558)(90,098)(183,250)(17,109)$430,867(9,748)$(10,100)(1,801)$76,943(63,915)$(19,001)(92,593)$478,700

(558)
$ 549

For the years ended March 31

Net unrealized
gains on othersecurities,
net of taxes

Balance as of March 31, 2018

$447,986$

Share
subscription
rights

Noncontrollinginterests

Total net
assetsChanges in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock

Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2019

See accompanying notes to consolidated financial statements.

(90,098)(153,428)$— $2,581,998

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Net change in reserve for possible loan losses
Net change in reserve for bonuses for directors and corporate auditors
Net change in net defined benefit asset
Net change in net defined benefit liability
Net change in reserve for retirement benefits for directors and corporate auditors
Net change in reserve for claims on dormant accounts
Net change in reserve for contingent liabilities
Net change in reserve for stock-based compensation planInterest income
Interest expenses
Net gain related to securities transactions
Net loss on money held in trust
Net loss (gain) related to foreign exchange
Net loss (gain) on disposal of fixed assets
Net change in trading account securities
Net change in loans and bills discounted
Net change in deposits
Net change in negotiable certificates of deposit
Net change in borrowed money excluding subordinated borrowings
Net change in due from banks other than Bank of Japan
Net change in call loans and others
Net change in call money and others
Net change in payables under securities lending transactions
Net change in foreign exchange assets
Net change in foreign exchange liabilities
Net change in lease assets and lease investment assets
Proceeds from fund operations
Payments on fund procurement
Other
Subtotal
Payment of income taxes
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities
Purchase of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Repayments to non-controlling interests
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)

2018

2019

8,814
3,274
1,450
609
(13)
(1,989)
7
8
49
(7)
22
(44,466)
7,325(3,033)
46(6,117)
79
(97)
7,656
(3,673)(6,037)23,004
9,497(6,149)31,70590,6301,247
110(2,065)44,341(7,312)
6,721
155,640(2,620)153,020¥(941,512)
640,530
296,789(1,341)(2,208)250(7,491)(1,106,238)
1,189,836
318,510(920)(2,353)
279
399,114(8,482,854)
5,771,060
2,674,015(12,082)(19,893)
2,252(67,492)(8)
2(2,512)(115)(1,568)24(2,364)
(380)

(72)
18
(22,632)(1,036)¥15,114
2,857
151
(308)
6
(906)
13
(6)
(21)
(18)
41
(48,073)
5,855
(674)
—
7,583
(40)
(14)
(56,971)(55,579)(50,961)
40,503
6,161(3,364)(40,012)(66,775)(3,313)95(1,790)47,823(6,061)(18,682)(227,368)(5,678)(233,047)

Thousands of U.S. dollars(Note 1)
2019$

79,41229,49813,064
5,486(117)(17,920)
63
72
441
(63)
198
(400,630)
65,996(27,326)414(55,113)711(873)
68,979(33,093)(54,392)
207,261
85,566(55,401)
285,656
816,560
11,235991(18,605)
399,504(65,879)
60,555
1,402,288(23,605)
1,378,682

—

(393)

—

(10,000)(12,635)—(4,681)(90,098)(113,839)1
132,895
667,185¥ 800,081(3)
161,382
505,802667,185

9
1,197,360
6,011,217$ 7,208,586¥

See accompanying notes to consolidated financial statements.

25

26

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial
statements

The accompanying consolidated financial statements of The Hyakujushi Bank,
Ltd. (hereinafter the “Bank”) and its consolidated subsidiaries (hereinaftercollectively the “Group”) are prepared on the basis of accounting principles
generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial ReportingStandards, and are compiled from the consolidated financial statements
prepared by the Bank as required by the Financial Instruments and Exchange Act
of Japan.
The Japanese yen figures in the consolidated financial statements are in
millions, with fractions omitted.
The translation of the Japanese yen amounts into U.S. dollars is included
solely for the convenience of the reader, using the prevailing exchange rate at
March 31, 2019, which was ¥110.99 to U.S.$1.00. The conveniencetranslations should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.

2. Fiscal year ends

The account closing date of the Bank and its consolidated subsidiaries is thesame.

3. Significant accounting policies(1) Consolidation
The consolidated financial statements include the accounts of the Bank and its 9
subsidiaries. Hyakujushi Preferred Capital Cayman Limited has been excluded
from the scope of consolidation from the fiscal year ended March 31, 2019because its liquidation has been completed. However, this company’s statementof income was consolidated for the period until liquidation was completed.
There are no non-consolidated subsidiaries or affiliates accounted for by theequity method as of March 31, 2019.
Shikoku Alliance Capital Co., Ltd. is an affiliate not accounted for by theequity method. Affiliated companies not accounted for by the equity method are
excluded from the scope of the equity method because the Bank’s interests intheir respective amounts of net profits or losses, retained earnings or otheraccumulated comprehensive income do not have a material impact on the
consolidated financial statements.
(2) Trading account securities
Under the Accounting Standards for Financial Instruments, trading accountsecurities are stated at fair value (cost of sales is calculated by the movingaverage cost method).
(3) Securities
Marketable debt securities held to maturity are stated at amortized cost using
the moving-average cost method. Investments in non-consolidated subsidiaries
not accounted for by the equity method are stated at cost by the moving-average
cost method. Available-for-sale securities of which market prices are available
are stated at fair value based principally on their market prices at the balancesheet date (cost of sales is calculated by the moving-average cost method),whereas those for which the market value is not readily determinable are statedat cost by the moving-average cost method.
Unrealized gain or loss on available-for-sale securities (net of the related tax
effect) has been reported as a component of net assets.
(4) Derivatives
Under the Accounting Standards for Financial Instruments, derivatives arestated at fair value.
(5) Depreciation(a) Tangible fixed assets (excluding lease assets)
Depreciation of tangible fixed assets is calculated principally using the decliningbalance method (However, the straight-line method is used for facilities attached
to buildings and structures acquired on or after April 1, 2016). Useful lives oftangible fixed assets are as follows:
Buildings: 10 to 50 years
Equipment: 5 to 15 years
Tangible fixed assets held by the consolidated subsidiaries are depreciated, inprinciple, by the declining-balance method, based on the respective estimateduseful lives of the assets.

27(b) Intangible fixed assets (excluding lease assets)
Intangible fixed assets are amortized by the straight-line method. Depreciationof software for internal use is calculated using the straight-line method over theuseful lives (principally 5 years).
(c) Lease assets
Lease assets held by the Bank are depreciated over the leasing contract periodsby the straight-line method with residual value at zero.
(6) Reserve for possible loan losses
Reserve for possible loan losses is provided as follows, based on the defined rules
for write-offs and provisioning.
Reserve for possible loan losses for bankrupt or substantially bankrupt
borrowers is provided based on the amount after deducting the collectible
portion, based on the fair value of any underlying collateral or guarantees,
except for a portion written-off, as explained below.
Reserve for possible loan losses for borrowers not currently bankrupt but
likely to go bankrupt is provided considering the overall solvency assessment
after deducting the collectible portion, based on the fair value of any underlying
collateral or guarantees.
Reserve for possible loan losses on loans other than the above is provided
based on loan loss experience as calculated using historical default rates.
In accordance with the Bank’s asset self-assessment standards, loans areassessed by branch staff and head office staff in charge of inspection, the resultsof which are audited by independent staff in charge of audits. Provision is madeto reflect these assessment procedures.
In the case of loans to borrowers who are bankrupt or substantiallybankrupt, the amount remaining after deduction of the amount of collateralconsidered to be disposable and the amount recoverable under guarantees is set
off from the original outstanding loan balance. The amount of such write-offs
totaled ¥13,964 million ($125,813 thousand) and ¥10,931 million for the fiscal
years ended March 31, 2019 and 2018, respectively.
A reserve for possible losses on ordinary loans held by the Bank’s
consolidated subsidiaries is provided based on loan loss experience as calculatedusing the historical default rates. A reserve for possible losses on specific loans
held by the Bank’s consolidated subsidiaries is provided based on the amountdeemed irrecoverable after careful examination of the recoverability of the loans
in question on an individual basis.
(7) Reserve for bonuses for directors and corporate auditors
A provision is made for the payments of bonuses to directors and corporate
auditors of the Bank based on an estimated amount deemed necessary.
(8) Reserve for retirement benefits for directors and corporate
auditors
In order to provide for the payment of retirement benefits to directors andcorporate auditors of consolidated subsidiaries, a provision is made for thepayments of retirement benefits to directors and corporate auditors based on
the estimated amount incurred at the end of the consolidated reporting period.
(9) Reserve for claims on dormant accounts
A provision is made for losses on claims on dormant accounts in the future in an
amount deemed necessary, taking into account the Bank’s historical refund
record.
(10) Reserve for contingent liabilities
A provision is made for an estimated amount considered necessary for losses
which may occur in the future due to contingencies other than those covered forin other reserves.
(11) Reserve for stock-based compensation plan
In order to provide for the delivery of the Bank’s shares from the BIP Trust, aprovision is made for an estimated amount of benefits corresponding to thenumber of points allotted to directors in accordance with BIP Trust’s sharedelivery rules.

(12) Accounting method for retirement benefits
To calculate retirement benefit obligations, the Bank used the benefit formula asa method for attributing estimated retirement benefits over the period until
March 31, 2019. The amortization method for prior service costs and actuarial
differences is as follows:
Prior Service Costs:
Prior service costs are charged fully to income at the time of occurrence.
Actuarial Differences:
Actuarial differences of the plans are to be amortized from the fiscal year
following their occurrence by the straight-line method over a fixed period of 10
years, which is within the average remaining service period of the employees at
the time of occurrence in each fiscal year.
In calculating net defined benefit liability and retirement benefit costs, someconsolidated subsidiaries apply a simplified method that provides theirretirement benefit obligation at an amount to be paid for voluntary termination
at the balance sheet date.
(13) Foreign currency translation
Receivables and payables in foreign currencies are translated into Japanese yen
primarily at the year-end rates.
(14) Accounting standards for posting of earnings and expenses
Consolidated subsidiaries engaged in the leasing business post income andexpenses relating to lease transactions as “Other income” and “Other expenses,”
respectively, at the time of receipt of lease charges.
(15) Hedge accounting(a) Hedges against interest rate fluctuations
The Bank applies the deferred hedge accounting method to interest rate swaps
used to hedge interest rate risk on certain financial assets when the critical termsof the underlying hedged items and hedging instruments match.
Evaluation of hedge effectiveness is omitted as material terms related to thehedged items and hedging instruments are substantially identical and the market
fluctuations or cash flow fluctuations are offset at the time of commencement
and continuously thereafter.

4. Additional information(Board Incentive Plan (BIP) Trust)
The Bank has introduced a BIP Trust for directors (excluding directors serving
as audit and supervisory committee members, outside directors and nonresidents of Japan; hereinafter collectively referred to as the “Bank’s directors”).
1. Transaction overview
The BIP Trust is a stock incentive plan for directors, aimed at further raising
motivation to contribute to the medium- to long-term improvement of businessperformance and enhance the Bank’s corporate value. Under the plan, a certain
number of points are granted to the Bank’s directors based on their ranks andthe level of achievement of performance targets, and the Bank’s sharescorresponding to the aggregate number of points or money equivalent to thevalue of the Bank’s shares are granted or delivered to the Bank’s directors upon
their retirement.
2. Accounting treatment for transactions delivering the Company’s own stock
through the trust
The Bank applies the “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees, etc., through Trusts” (ASBJ PITF No. 30,
March 26, 2015).
3. Matters relating to the Bank’s shares held by the trust(1) The book values of the shares held by the trust were ¥221 million ($1,991
thousand) and ¥226 million as of March 31, 2019 and 2018, respectively.
(2) The Bank’s shares held by the trust have been recorded as treasury stock instockholders’ equity.
(3) The numbers of shares at year-end were 59 thousand and 611 thousand forthe fiscal years ended March 31, 2019 and 2018, respectively. The average
numbers of shares during the year were 60 thousand and 356 thousand forthe fiscal years ended March 31, 2019 and 2018, respectively.
(4) The number of shares at year-end and the average number of shares during
the year in (3) above are included in the number of treasury stock to be
deducted in the calculation of per share information.

(b) Hedging against currency fluctuations
The Bank applies the deferred hedge accounting stipulated in the basic
provisions of JICPA Industry Audit Committee Report No. 25 issued on July29, 2002 to currency swap and foreign exchange swap transactions executed forthe purpose of lending or borrowing funds in different currencies.
Pursuant to JICPA Industry Audit Committee Report No. 25, the Bank
assesses the effectiveness of currency swap and foreign exchange swap
transactions executed for the purpose of offsetting the risk of changes incurrency exchange rates by verifying that there are foreign currency monetaryclaims and debts corresponding to the foreign-currency positions.
(16) Statements of cash flows
The reconciliations between cash and due from banks in the consolidatedbalance sheets and cash and cash equivalents in the consolidated statements ofcash flows are as follows:

March 31
Cash and due from banks............
Time deposits with banks otherthan Bank of Japan .................
Deposits with banks other thanBank of Japan .......................
Other ...................................
Cash and cash equivalents .....

Thousandsof U.S.
Millions of yen
dollars
2018
2019
2019
¥829,933 ¥706,534 $7,477,547(29,542)(39,042)(266,168)

(228)

(239)

(2,054)

(67)
(80)
(720)
¥800,081 ¥667,185 $7,208,586(17) Consumption taxes
In the accounting treatment of the Bank and its domestic consolidated
subsidiaries, the National Consumption Tax and the Local Consumption Tax are
excluded from the transaction amounts.

28

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
5. Changes in net assets

2019(1) Type and number of shares issued and treasury shares are as follows:
Thousands of shares
Increase
Decrease

March 31, 20182019
Shares issued
Common stock (Note 1) ..............................................................
300,000
Total ......................................................................................
300,000
Treasury stock
Common stock (Notes 2, 3 and 4) ..................................................
5,000
Total ......................................................................................
5,000

March 31, 2019——

270,000
270,000

30,00030,000

9
9

4,521
4,521

488
488

Notes: 1. Based on the resolution made at the 149th Regular Annual General Meeting of Shareholders held on June 28, 2018, the Bank has implemented a 1-for 10 reverse stock split as of
October 1, 2018. As a result, total number of shares outstanding has decreased by 270,000 thousand to 30,000 thousand.
2. The number of shares of common stock at the end of the fiscal years ended March 31, 2019 and 2018 includes 59 thousand and 611 thousand shares, respectively, of the Bank’s shares
held by the Board Incentive Plan (BIP) Trust.
3. The 9 thousand share increase is due to a purchase demand for fractional shares from shareholders.
4. The 4,521 thousand share decrease in the number of common shares of treasury stock consists of decreases of 4,480 thousand shares due to the reverse stock split, 13 thousand shares
due to the delivery of shares to the beneficiaries from the BIP Trust, and 26 thousand shares due to the exercise of share subscription rights.

Thousands of shares
Increase
Decrease

2018
March 31, 2017
Shares issued
Common stock (Note 1) ..............................................................
310,076
Total ......................................................................................
310,076
Treasury stock
Common stock (Notes 2, 3, 4 and 5) ...............................................
14,608
Total ......................................................................................
14,608Resolution
June 28, 2018 (Regular Annual General Meeting of Shareholders)(Note 1) ..............................................................................
November 9, 2018 (Meeting of the Board of Directors)(Notes 1, 2 and 3) ..................................................................

Type of share
Commonstock
Commonstock

Total dividend
amount(Thousands of
U.S. dollars)

Dividend
per share(U.S. dollars)$10,649$0.036

11,9830.040

Record date
Effective date
March 31,
June 29,20182018
September 30, December 10,
2018
2018

Notes: 1. In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on June 28, 2018 and June 29, 2017, the total amount of dividends paid
includes the ¥2 million ($18 thousand) dividend payment to the Board Incentive Plan (BIP) Trust and the ¥0 million dividend payment to the Employee Stock Ownership Plan (ESOP)
Trust, respectively.
Moreover, the total amount of dividends paid includes the ¥2 million ($18 thousand) and ¥2 million dividend payment to the Board Incentive Plan (BIP) Trust pursuant to theresolutions approved by the Board of Directors at meetings held on November 9, 2018 and November 10, 2017, respectively.
These exclusions reflect the Bank’s classification of the shares held by the Trust as treasury stock.
2. In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on November 9, 2018, dividend per share includes a commemorative
dividend of ¥0.5 ($0.004) to celebrate the Bank’s 140th Anniversary.
3. In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on November 9, 2018, the reverse stock split as of October 1, 2018 is nottaken into account for dividend per share since the record date is September 30, 2018.

(b) Dividends paid after the balance-sheet date
March 31, 2018——

10,076
10,076300,000
300,000

625
625

10,233
10,233

5,000
5,000

Notes: 1. The 10,076 thousand share decrease in the number of shares issued is due to the retirement of treasury stock.
2. The number of shares of common stock at the beginning of the fiscal year ended March 31, 2018 includes 65 thousand shares of the Bank’s shares held by the Employee Stock Ownership
Plan (ESOP) Trust.
3. The number of shares of common stock at the end of the fiscal year ended March 31, 2018 includes 611 thousand shares of the Bank’s shares held by the Board Incentive Plan (BIP) Trust.
4. The 625 thousand share increase in the number of common shares of treasury stock consists of increases of 611 thousand shares due to a share acquisition by the BIP Trust and 14
thousand shares due to a purchase demand for fractional shares from shareholders.
5. The 10,233 thousand share decrease in the number of common shares of treasury stock consists of decreases of 10,076 thousand shares due to retirement of treasury stock, 65 thousand
shares due to the termination of ESOP Trust and 92 thousand shares due to the exercise of share subscription rights.

2019
Total dividend
amountSource of
Resolution
Type of share (Millions of yen) dividends
CommonRetained
June 27, 2019 (Regular Annual General Meeting of Shareholders) ...........
stock¥1,330earnings

Dividend
per share
(Yen)
¥45.0

Record date Effective date
March 31,
June 28,
2019
2019

2018
Total dividend
amountResolution
Type of share (Millions of yen)
CommonJune 28, 2018 (Regular Annual General Meeting of Shareholders) ...........
stock¥1,182

Source ofdividends
Retainedearnings

Dividend
per share
(Yen)
¥4.0

Record date Effective date
March 31,
June 29,
2018
2018

2019
(2) Matters concerning share subscription rights and own share options
The balance of share subscription rights (for stock options) at the end of March 31, 2019 and 2018 stood at ¥61 million ($549 thousand) and ¥124 million, respectively.
At end of the previous and current fiscal years, no shares had been earmarked for share subscription rights.
(3) Information on dividends(a) Dividends paid

Notes: 1. The total dividend amount includes the ¥2 million ($18 thousand) dividends for the Board Incentive Plan (BIP) Trust.
2. The Bank conducted a 1-for-10 reverse stock split as of October 1, 2018.

2019
Resolution
Type of share
June 28, 2018 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
November 9, 2018 (Meeting of the Board of Directors)
Common(Notes 1, 2 and 3) .....................................................................
stock

Total dividend
amount(Millions of yen)

Dividend
per share(Yen)¥1,182

¥4.0

1,330

4.5

Record date
Effective date
March 31,
June 29,20182018
September 30, December 10,
2018
2018

2018
Resolution
Type of share
June 29, 2017 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
CommonNovember 10, 2017 (Meeting of the Board of Directors) (Note 1) ......
stock

29

Total dividend
amount(Millions of yen)

Dividend
per share(Yen)¥1,182

¥4.0

1,182

4.0

Total dividend
amountDividend(Thousands of Source ofper share
Resolution
Type of share U.S. dollars) dividends (U.S. dollars) Record date Effective dateCommonRetained
March 31,
June 28,
June 27, 2019 (Regular Annual General Meeting of Shareholders) ...........
stock$11,983
earnings$0.4052019
2019

Record date
March 31,2017
September 30,
2017

Effective dateJune 30,
2017
December 8,
2017

6. Securities and trading account securities(1) Investments in affiliates
Investments in affiliates as of March 31, 2019 and 2018 totaled ¥25 million($225 thousand) and ¥25 million, respectively.
(2) Trading account securities
Valuation losses of ¥(0) million ($(0) thousand) and ¥(0) million wererecognized for the fiscal years ended March 31, 2019 and 2018, respectively.
(3) Held-to-maturity debt securities
Not applicable.
(4) Other securities(a) Consolidated balance sheet amount and acquisition cost of other securities
and their difference as of March 31, 2019 and 2018 were as follows:

Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference

2019
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... ¥ 117,132
Bonds:
National .......................
279,920
Local ...........................
145,997
Corporate.....................
143,716
569,634
Other ..........................
158,536
Subtotal .......................
845,302
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
17,619Bonds:
Local ...........................
—
Corporate.....................
4,843
4,843
Other ..........................
174,887
Subtotal .......................
197,350
Total .................................... ¥1,042,653¥ 52,958¥64,173275,219
144,080
142,861
562,160
154,714
769,834

4,700
1,916
855
7,473
3,821
75,46821,350(3,731)

—
4,847
4,847
178,120
204,319¥974,153—(3)(3)(3,233)(6,968)¥68,499

30

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference

2018
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... ¥ 135,228 ¥Bonds:
National .......................
244,572
Local ...........................
54,411
Corporate.....................
157,764
456,748
Other ..........................
111,401
Subtotal .......................
703,378
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
14,708
Bonds:
Local ...........................
9,907
Corporate.....................
38,171
48,078Other ..........................
260,972
Subtotal .......................
323,759
Total .................................... ¥1,027,137 ¥

58,236¥ 76,991

241,290
53,290156,968
451,549
109,403619,189

3,282
1,120
796
5,199
1,998
84,18918,682(3,973)

9,975
38,41048,385
269,658
336,726
955,915

(68)
(239)
(307)
(8,685)(12,966)¥ 71,222

Thousands of U.S. dollars
Consolidatedbalance sheet Acquisition
amountcost
Difference

2019
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... $1,055,338 $ 477,142
Bonds:
National ....................... 2,522,029 2,479,673
Local ........................... 1,315,406 1,298,134
Corporate..................... 1,294,855 1,287,151
5,132,300 5,064,960
Other .......................... 1,428,380 1,393,945
Subtotal ....................... 7,616,019 6,936,066
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
158,744
192,359
Bonds:
Local ...........................
——
Corporate.....................
43,634
43,67043,634
43,670
Other .......................... 1,575,700 1,604,829
Subtotal ....................... 1,778,088 1,840,877
Total .................................... $9,394,116 $8,776,943$578,187
42,346
17,262
7,703
67,33034,426
679,953(33,615)
—
(27)
(27)
(29,128)(62,780)$617,163(b) Gains and losses on sale of securities available for sale for the fiscal years
ended March 31, 2019 and 2018 are as follows:2019
Equity stock ...........................
Bonds:
National ..........................
Local ..............................
Corporate........................
Other ...................................
Total ....................................

31

Millions of yen
Proceeds
Gains onLosses on
from salesale
sale¥ 8,325¥6,001¥ —268,120
97,182
39,160404,463
220,226¥633,015

698
610
213
1,522
1,478
¥9,001

802
—
—
802
4,840
¥5,643

Proceeds
2018
from sale
Equity stock ........................... ¥5,776
Bonds:
National ..........................
555,619
Local ..............................
322,933
Corporate........................
126,013
1,004,567
Other ...................................
183,579
Total .................................... ¥1,193,922

Millions of yen
Gains onLosses on
sale
sale¥4,129
¥ —
2,440
1,143
367
3,951
879
¥8,959

2,425
173
88
2,687
5,504
¥8,191Thousands of U.S. dollars
Proceeds
Gains onLosses on
from sale
sale
sale
2019
Equity stock ........................... $ 75,006$54,067$—
Bonds:
National .......................... 2,415,713
6,288
7,225
Local ..............................
875,592
5,495—
Corporate........................
352,824
1,919—
3,644,139
13,712
7,225
Other ................................... 1,984,196
13,316
43,607
Total .................................... $5,703,351$81,097$50,842(5) Impairment losses on securities
Securities with fair values that have fallen significantly below their acquisition
cost and whose fair values are not expected to recover are recorded at fair valueon the consolidated balance sheet with the valuation differences expensed on the
consolidated statements of income (“impairment loss”).
Impairment losses of ¥293 million ($2,639 thousand) and ¥nil wererecorded in the fiscal years ended March 31, 2019 and 2018, respectively.
The Bank has standards for determining whether fair value has decreased
significantly, based on “Practical Guidelines on Accounting Standards for
Financial Instruments” (JICPA Accounting Practice Committee Report No. 14,
February 16, 2018). The following are the details of this policy.
If, as of the end of the fiscal year, fair value has decreased by 50 percent or
greater than acquisition cost, the entire holding is deemed to have decreasedmaterially. If the decrease is between 30 percent and 50 percent, thedetermination shall be made in light of the issuing entity’s credit risk and otherfactors (classification of creditor according to self-assessment; and external
credit rating).

7. Matters relating to money held in trust

Money held in trust classified as held for trading purposes
The amounts on the consolidated balance sheet as of March 31, 2019 and 2018
were ¥4,748 million ($42,778 thousand) and ¥4,795 million, respectively.

8. Net unrealized gains on securities available for sale

9. Loans and bills discounted

Loans and bills discounted as of March 31, 2019 and 2018 included thefollowing non-performing amounts:

Loans under bankruptcy.............
Non-accrual loans ...................
Loans past due over 3 months ......
Restructured loans ...................
Total ....................................

Bills discounted are treated as financial transactions in accordance with
“Accounting and Auditing Treatment Relating to Adoption of AccountingStandards for Financial Instruments for Banks (JICPA Industry Audit Committee
Report No. 24, February 13, 2002).” Commercial bills and foreign bills bought
are permitted to be sold or pledged and their total face value was as follows:

Bills discounted .............................

Valuation difference ..................
Other securities.................
Money held in trust ............
Deferred tax liabilities. ..............
Net unrealized gains on securities
available for sale (before equity
equivalent) ..........................
Net unrealized gains attributable tonon-controlling interests .........
Parent’s ownership interest ofaffiliates’ unrealized gains on
securities available for sale .......
Net unrealized gains on securities
available for sale ...................

47,822

49,722430,867

—

—

—

—

—

—

¥ 47,822¥ 49,722$ 430,867

Millions of yen
2018
2019
¥23,246¥21,173

Thousands of
U.S. dollars
2019$190,764

10. Guarantee obligations

Guarantee obligations for bonds in private placement (defined in Article 2,
Paragraph 3 of the Financial Instruments and Exchange Act of Japan) included incorporate bonds under “Securities” in the consolidated balance sheets were¥18,935 million ($170,600 thousand) and ¥15,558 million as of March 31,
2019 and 2018, respectively.

Commitment line agreements on overdrafts and loans are agreements to lendfunds to customers upon application up to a prescribed amount as long as there
is no violation of any condition established in the contract. The balance of unusedloans under these agreements as of March 31, 2019 and 2018 was as follows:
Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
Unused commitments ............... ¥1,015,611 ¥1,037,364 $9,150,473
Contracts with less than a yearof contract period orcontacts that are cancellable
unconditionally any time ...
977,212 8,579,529
952,242
Since many of these commitments are expected to expire without being drawn
upon, the total amount of unused commitments does not necessarily have effecton the future cash flow of the Group. Many of these commitments have clausesthat allow the Group to refuse an application from customers or reduce the limit
amount with proper reasons (e.g. changes in financial situation, to secure claims,etc.). In addition, the Group may request the customers to pledge collateralsuch as real estate and securities at the time of the contracts if necessary and takenecessary measures periodically based on a prescribed internal procedure after
conclusion of contracts such as monitoring customers’ business status, revising
contracts and securing claims.

13. Income taxes(1) Deferred tax assets
Major components of deferred tax assets as of March 31, 2019 and 2018 wereas follows:

11. Assets pledged as collateral

Assets pledged as collateral as of March 31, 2019 and 2018 consisted of thefollowing:
Millions of yen
2018
2019
Assets pledged as collateral:
Securities.........................
Liabilities corresponding to assets
pledged as collateral:
Deposits ..........................
Payables under securities
lending transactions .........
Borrowed money ...............

¥433,613

Thousands of
U.S. dollars
2019¥317,995 $3,906,775

34,90915,545314,523

142,634
244,367

52,003
219,613

1,285,106
2,201,702

In addition to the assets presented above, the following assets were pledged ascollateral for exchange clearance transactions and futures contracts at March
31, 2019 and 2018:

The following is a breakdown of net unrealized gains on securities available forsale recorded in the consolidated balance sheet:

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥ 68,499 ¥ 71,222 $ 617,163
71,222
68,499617,163———(21,499) (186,296)(20,677)

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥ 1,134 $ 8,478¥ 941
23,86427,224245,283
567
324
2,919
23,85423,874215,100¥49,420 $471,808¥52,366

12. Commitment line agreements on overdrafts andloans

Securities...............................
Other assets ...........................

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥ 6,457 $ 3,685¥ 409
29,00030,000270,294

Millions of yen
2018
2019
Excess reserve for possible loan
losses.................................
Net defined benefit liability.........
Valuation loss on securities
available for sale ...................
Excess depreciation ..................
Net deferred losses on hedging
instruments, net of taxes .........
Reserve for bonuses..................
Other ...................................
Subtotal ................................
Valuation reserve .....................
Deferred tax assets ...................
Deferred tax liabilities:
Net unrealized gains on
securities, net of taxes .........
Reserve for advanced
depreciation of non-current
assets..............................
Net deferred gains on hedging
instruments, net of taxes ......
Other ................................
Net deferred tax assets (liabilities)

Thousands of
U.S. dollars
2019¥ 7,876
2,866¥ 6,918212$ 70,961
25,822

2,118
1,012

3,941
940

19,082
9,117

506
429
2,715
17,525(6,787)
10,737

131
480
2,433
15,058(6,160)
8,898

4,558
3,865
24,461
157,897(61,149)
96,738(22,795)(25,441)(205,378)

(140)

(141)

(1,261)(16)(23)¥(12,237)

(113)
(144)
—
(207)
¥(16,798) $(110,253)

As of March 31, 2019 and 2018, in addition to the items presented above, otherassets included cash collateral paid for financial instruments of ¥4,658 million($41,967 thousand) and ¥5,660 million, and guarantees and household depositsof ¥1,177 million ($10,604 thousand) and ¥1,186 million, respectively.

32

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(2) Income taxes
The following table shows the major items responsible for the difference
between the statutory tax rate and the effective tax rate after application oftax-effect accounting for the fiscal years ended March 31, 2019 and 2018.
Statutory income tax rate .............................
Reconciliation:
Non-deductible expenses, including
entertainment expenses .........................
Non-taxable income, including dividend
income .............................................
Per-capita resident tax ..............................
Increase of valuation reserve ......................
Other ..................................................
Effective income tax rate under tax-effectaccounting ............................................

2019
30.4%

2018
30.6%

0.8

0.5

(4.9)
0.7
7.1
1.2

(1.7)
0.4
0.8
(0.7)

35.3%

29.9%

14. Accumulated depreciation and reduction entry

Accumulated depreciation of tangible fixed assets as of March 31, 2019 and2018 amounted to ¥37,644 million ($339,165 thousand) and ¥36,616 million,
respectively.
Reduction entry, which is deferred gain on tangible fixed assets deductible
for tax purposes, amounted to ¥2,458 million ($22,146 thousand) and ¥2,401
million as of March 31, 2019 and 2018, respectively. Reduction entry for the
fiscal year ended March 31, 2019 amounted to ¥57 million ($513 thousand).

15. Revaluation reserve for land

Based on the Law on the Revaluation of Land, the Bank’s land was revalued on
March 31, 1999.
The amounts equivalent to deferred tax on the land revaluation wererecorded as deferred tax liability for land revaluation in liabilities, and net
unrealized gains on the land revaluation were recorded as revaluation reserve forland in stockholders’ equity.
As of March 31, 2019 and 2018, the difference between the carrying
amount and the fair value of the revalued land was ¥13,869 million ($124,957
thousand) and ¥15,334 million, respectively.

16. Asset retirement obligations

Notes on asset retirement obligations have been omitted due to immateriality.

17. Investment and rental property

Notes on investment and rental property have been omitted due toimmateriality.

18. Other income

Other income consists of the following.

Lease revenue .........................
Gain on sale of equity securities ...

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥6,524¥6,970$62,798
4,129
6,001
54,067

19. General and administrative expenses

Salaries and allowances were included in general and administrative expenses,
which amounted to ¥15,478 million ($139,454 thousand) and ¥15,742 million
for the fiscal years ended March 31, 2019 and 2018, respectively.

20. Other expenses(1) Other expenses consist of the following.

Cost of lease ...........................
Loan write-offs .......................

33(2) Impairment losses
During the fiscal years ended March 31, 2019 and 2018, the Bank recorded
impairment losses on fixed assets as described below:

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥5,380¥5,727$51,599
2,450
4,360
39,282

Kagawa Pref ... Idle assetsLand,
and/or assets buildings
for business use and(2019: 16 items movables
2018: 17 items)
Other ........... Idle assetsLand,
and/or assets buildings
for business use and/or(2019: 11 items movables,
2018: 7 items) etc.
Total ............

Millions of yen
Impairment losses
2018
2019
¥ 53
¥ 852
land: 38
land: 793
buildings: 12
buildings: 56
movables: 1
movables: 2
¥ 596

¥ 97

land: 560

land: 86

buildings: 36

buildings: 10

movables: —¥1,450land: 1,354
buildings: 93
movables: 2

movables: 0¥151
land: 125
buildings: 23
movables: 1

Thousands of
U.S. dollars
Impairment
losses2019
Kagawa Pref ... Idle assets
Land,$ 7,676
and/or assets buildings
land: 7,144
for business use and(2019: 16 items) movables buildings: 504
movables: 18
Other ........... Idle assets
Land,$ 5,369
and/or assets buildings
land: 5,045
for business use and/or(2019: 11 items) movables, buildings: 324
etc.
movables: —Total ............
$13,064
land: 12,199
buildings: 837
movables: 18
The Bank posted impairment losses of ¥1,450 million ($13,064 thousand) and¥151 million, respectively, during the fiscal years ended March 31, 2019 and2018 on land, buildings and/or movables, etc. due to a fall in operating cash
flows and continuous declines in land prices. The Bank reduced the carrying
amounts of the corresponding assets to the recoverable amounts, and recorded
the difference between the carrying amount and recoverable amount of each
asset as impairment losses under other expenses.
In general, the Bank treats each of its branches as a single asset group unit forrecognition and measurement of impairment losses; however, jointly managed
branches are treated as a single cash generating unit. Values of idle assets andassets for disposal are measured on an individual basis.
Regarding head office buildings, operation and training centers,
dormitories, and housing and welfare facilities, these facilities are classified as
the Bank’s common property, as it is deemed difficult to specify each asset as asource of identifiable cash flows in the future. At the Bank’s consolidated
subsidiaries, each business base of subsidiaries is usually considered as thesmallest grouping unit. Idle assets and assets for disposal, however, are valued on
an individual basis.
For the fiscal year ended March 31, 2019, the recoverable amounts aremeasured using the higher of either the net selling prices or value in use. Net
selling prices are calculated on the basis of appraisal values of land or theamounts computed using the method laid down by the National Tax Agency ofJapan for calculation of land prices (used as the basis for computing taxable
amounts as set forth in Article 16 of the Land Tax Law) after deducting
estimated costs of disposal, and value in use is calculated by discounting thefuture cash flow at a discount rate of 0.3% for the fiscal year ended March 31,
2019.

For the fiscal year ended March 31, 2018, the recoverable amounts aremeasured using net selling prices, which are calculated on the basis of appraisal
values of land or the amounts computed using the method laid down by the
National Tax Agency of Japan for calculation of land prices (used as the basis forcomputing taxable amounts as set forth in Article 16 of the Land Tax Law) after
deducting estimated costs of disposal.

21. Matters relating to consolidated statements ofcomprehensive income

The amount of recycling and amount of income tax effects associated with othercomprehensive income (loss):
Thousands of
U.S. dollars
2019

Millions of yen
2018
2019
Net unrealized gains (losses) onother securities, net of taxes:
Amount recognized during theyear ............................... ¥ 1,457
Amount of recycling ..............
(4,186)
Prior to income tax effect.....
(2,729)
Income tax effect ...............
829
Net unrealized gains (losses)
on other securities, net oftaxes ...........................
(1,899)Net deferred gains (losses) on
hedging instruments, net oftaxes:
Amount recognized during theyear ...............................
(3,835)
Amount of recycling ..............
2,280
Prior to income tax effect.....
(1,554)
Income tax effect ...............
472
Net deferred gains (losses) on
hedging instruments ........
(1,082)
Revaluation reserve for land:
Amount recognized during theyear ...............................
—
Amount of recycling ..............
—
Prior to income tax effect.....
—
Income tax effect ...............
—
Revaluation reserve for land ..
—Remeasurements of defined benefit
plans:
Amount recognized during theyear ...............................
(9,884)
Amount of recycling ..............
(308)
Prior to income tax effect.....
(10,192)
Income tax effect ...............
3,098
Remeasurements of defined
benefit plans ..................
(7,094)
Total other comprehensive income(loss) ................................. ¥(10,076)

2. As lessor(1) Breakdown of lease investment assets

Lease receivables .....................
Estimated residual value.............
Interest received ......................
Lease investment assets ..............

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥17,703 $175,556¥19,485
2,218
2,689
24,227(2,059)(2,276)(20,506)¥17,862 $179,268¥19,897(2) Schedule for collection of lease receivables and receivables onlease investment assets by leasing contract maturity¥ 2,978(2,222)755(229)$ 13,127(37,715)(24,587)
7,469

525

(17,109)

(161)
1,873
1,712
(520)

(34,552)
20,542(14,001)
4,252

1,191

(9,748)

—
—
—
—
—

—
—
—
—
—

3,303
784
4,087
(1,242)(89,053)(2,775)(91,828)
27,912

2,844(63,915)¥ 4,562$(90,782)

22. Finance leases

Information on finance leases for the fiscal years ended March 31, 2019 and2018 are as follows:
1. As lessee
Finance lease transactions that do not transfer ownership(1) Components of lease assets(a) Tangible fixed assets
Primarily consisting of ATMs(b) Intangible fixed assets
Not applicable.

(2) Depreciation and amortization methods for lease assets
Depreciation and amortization methods for lease assets are described in “3.
Significant accounting policies (5) Depreciation”.

2019
Up to 1 year ...........................
Over 1 year, up to 2 years ..........
Over 2 years, up to 3 years .........
Over 3 years, up to 4 years .........
Over 4 years, up to 5 years .........
Over 5 years...........................

Millions of yen
Receivables on lease
Lease receivables investment assets¥288¥5,802
249
4,813
227
3,770
164
2,645
45
1,412
30
1,040

2018
Up to 1 year ...........................
Over 1 year, up to 2 years ..........
Over 2 years, up to 3 years .........
Over 3 years, up to 4 years .........
Over 4 years, up to 5 years .........
Over 5 years...........................

Millions of yen
Receivables on lease
Lease receivables investment assets¥256¥5,470
221
4,384
182
3,410
165
2,353
105
1,265
37
818

2019
Up to 1 year ...........................
Over 1 year, up to 2 years ..........
Over 2 years, up to 3 years .........
Over 3 years, up to 4 years .........
Over 4 years, up to 5 years .........
Over 5 years...........................

Thousands of U.S. dollars
Receivables on lease
Lease receivables investment assets$2,594$52,274
2,243
43,364
2,045
33,967
1,477
23,830405
12,721270
9,370(3) Regarding finance lease transactions that do not transfer ownership of theleased assets to the lessee and whose date of commencement of leasing was prior
to the start of application of the new accounting standards, the book value (after
deduction of accumulated depreciation expenses) of the tangible fixed assets andintangible fixed assets at the end of the last business term prior to the start ofapplication of the new accounting standards is taken as the beginning balance ofthe lease assets.
Regarding the lease investment assets in question, amounts equivalent tointerest receivable under the new accounting standards will be allocated by thestraight-line method to the remaining interest period.
In contrast to applying the new accounting standards for leasing transactions
at the beginning of the leasing transactions in question, there is no effect on thefiscal profit before income taxes in the fiscal years ended March 31, 2019 and
2018.

34

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
23. Financial instruments

1. Disclosures related to financial instruments(1) Financial instrument policies
The Group provides banking services, including leasing and other financial
services. The Group limits risk within the scope of its business capacity, while
realizing profits commensurate with the risk of the financial instruments held.
To accomplish this goal, the Group quantifies, to the greatest extent possible,
various risks related to financial instruments using statistical methods. It
categorizes capital (risk capital) according to the size of the risk, engaging in“integrated risk management,” incorporating a capital allocation system thatmonitors risk versus return. The Group continues to improve efficiency in risk
management, ensuring greater stability and soundness for the business as awhole.
(2) Nature and extent of risks arising from financial instruments
The major types of financial assets held by the Group are loans and bills
discounted and securities. Loans and bills discounted are mainly for domestic
corporations and individuals, and are exposed to credit risk, interest rate risk,
and foreign exchange risk. If loans and bills discounted are concentrated
excessively on a particular corporate group or industry type, the Group’s
stockholders’ equity may suffer significant adverse effects. Therefore, the Group
has set maximum loan balances for each corporate group or industry type, andhas in place a system for monitoring compliance with these thresholds toprevent such an excessive concentration of risk.
Securities mainly consist of stocks, bonds, investment trusts and direct
investments. These investments are used as a pure investment vehicle or as partof a Group investment policy. In addition, certain bonds are held for resale.
These investments are exposed to the credit risk of the issuing body, interest raterisk, price volatility risk and/or foreign exchange risk. Securities include
financial instruments with limited market liquidity, including private placement
bonds underwritten by the Group, private equity shares, and direct investments.
Financial liabilities mainly consist of deposits received from domestic
corporations and individuals. These financial liabilities are exposed to interest
rate risk, exchange rate risk, and liquidity risk.
Derivative transactions entered into by the Group include interest rate andcurrency swaps, options, futures/forward contracts, and cap transactions. Thesetransactions are generally entered into with a client to cover the underlying
financial instrument. Such transactions are variously exposed to interest raterisk, foreign exchange risk, price volatility risk, and the credit risk of thecounter party.
For certain interest rate swaps, individual deferred hedge accounting isapplied so that the hedged items and hedging instruments directly match.
Evaluation of hedge effectiveness is omitted as material terms related to thehedged items and hedging instruments are substantially identical and the market
fluctuations or cash flow fluctuations are offset at the time of commencement
and continuously thereafter. In addition, the Bank applies the deferred hedge
accounting stipulated in the basic provisions of JICPA Industry Audit Committee
Report No. 25 for currency swap and foreign exchange swap transactions thatare concluded for the purpose of hedging foreign exchange rate risk associatedwith foreign currency denominated financial assets. Hedge effectiveness of thesehedge transactions is evaluated by confirming the correspondence of theposition to the amount of foreign currency denominated financial assets hedged.
(3) Risk management for financial instruments(a) Credit risk management
The Group has compiled Credit Risk Management Rules and related
documents, and the Risk Management Committee (Credit Risk Management
Subcommittee) monitors and manages credit risk exposures.
In addition, the Risk Management Division acts as the credit risk managing
department for granting and verifying internal credit ratings, measures theamount of credit risk and sets and manages credit limits.
(b) Market risk management
The Group has established Market Risk Management Rules along with relevant
documentation, and the Risk Management Committee (Market Risk
Management Subcommittee) monitors market risk and maintains management
systems. The Revenue Management Committee (Budget ALM Subcommittee)
deliberates on the stability of medium and long-term profit in light of risk
circumstances.

35

Departments involved in the execution of market transactions (Treasury
and International Division) have been divided into front office (transaction
execution), back office (clerical), and middle office (market risk management)roles. This creates a system of internal checks and balances, with the Risk
Management Division in charge of managing overall market risk.
(i) Interest rate risk management
The Group manages interest rate risk using statistical methods to quantify thesize of the interest rate risk. When deemed necessary, the Group establishes andmanages limits on positions and/or profits and losses for securities, derivatives,and other market transactions.
The Group also enters into derivative transactions for interest rate swaps tohedge interest rate risk as part of ALM.
(ii) Foreign exchange risk management
The Group uses statistical methods to quantify and manage foreign exchangerisk. The Group also establishes and manages limits on positions and profits andlosses.
(iii) Price volatility risk management
The Group uses statistical methods to quantify and manage price volatility risk.
The Group establishes and manages limits on positions and profits and losses.
(iv) Quantitative information regarding market risks
a. Financial instruments held for trading purposes
In measuring the VaR of interest rate risks associated with trading securities,
interest rate futures and related transactions as well as the VaR of foreign
currency exchange risks associated with foreign exchange trading andrelated transactions, the Group applies the historical simulation methodwith a holding period of 10 days, a confidence interval of 99% and an
observation period of 1,200 business days. As of March 31, 2019 (theconsolidated balance sheet date), the volume of the aforementioned risks offinancial instruments held for trading purposes (estimated amount of loss)
amounted to ¥17 million ($153 thousand) (compared with ¥6 million at
the end of the previous fiscal year).
b. Financial instruments not held for trading purposes
In measuring the VaR of interest rate risks associated with loans and bills
discounted, investment securities, deposits, and interbank, interest rate
swap and related transactions, as well as the VaR for volatility risks associatedwith the prices of publicly listed company shares and investment trusts, etc.
the Group applies the historical simulation method with a holding period of
120 days, a confidence interval of 99% and an observation period of 1,200
business days.
In addition, in measuring the VaR of risks involving interest rates ofmoney held in trust, price volatility or exchange rates, the Group applies thehistorical simulation method with a holding period of 20 days, a confidence
interval of 99% and an observation period of 1,200 business days. The VaR
of financial instruments not held for trading purposes amounted to ¥43,402
million ($391,044 thousand) and ¥43,336 million as of March 31, 2019and 2018, respectively.
c. VaRThe Group uses back testing to compare the VaR computed by the models
and the hypothesized gain/loss (gain or loss assumed generated when theportfolio is fixed at the time of measuring the VaR) to verify the reliability ofthese measured models.
However, VaR determined using the historical simulation method is ameasure of the volume of market risk at a certain event probability
statistically computed utilizing changes in historical market data. In thiscontext, there are cases in which VaR cannot capture risk under sudden anddramatic changes in the market beyond normal circumstances. To
supplement the limitations of VaR, the Group conducts stress testing
periodically in addition to the management using VaR.

(c) Liquidity risk management
The Group has established Liquidity Risk Management Rules and other related
guidelines as a basis for managing liquidity risk. The Group has also established
Liquidity Crisis Response Rules to ensure a prompt response to unexpected
situations that may affect cash management. These rules assume that unexpected
situations will arise and classify them into the categories of “caution” and “crisis”,
thereby enabling the Group to respond in a timely and appropriate manner.
The Liquidity Risk Management Department (Treasury and International
Division) performs daily and monthly cash projections to ensure proper andstable cash management based on the Group’s investment/acquisition structure,ensuring sufficient liquidity reserves. The Liquidity Risk Management
Department is also responsible for identifying, analyzing, assessing andmonitoring liquidity risk in consideration of internal and external factors that
may have an impact on said risk.
(4) Supplementary information regarding fair value of financial
instruments
The fair value of financial instruments includes their respective market prices,and rationally calculated values if the fair value of the financial instrument is notavailable. Certain assumptions are used to calculate said values, and said values
may vary when differing assumptions are used.
2. Fair value of financial instruments
The consolidated balance sheet amount, fair values and the differences as ofMarch 31, 2019 and 2018 are as follows. Private equity shares or other shares
whose fair values are not readily determinable are not included in the following
table.
Millions of yen
Consolidatedbalance sheet
amountFair value Difference
2019(1) Cash and due from banks ....... ¥ 829,933 ¥ 829,933¥—(2) Monetary claims bought ........
38,99338,993—(3) Trading account securities ......
153
153
—
(4) Money held in trust ..............
4,748
4,748
—
(5) Securities
Other securities .................. 1,042,653 1,042,653—(6) Loans and bills discounted ...... 2,825,869
Reserve for possible loan
losses*1 ............................
(14,957)
2,810,911 2,838,583
27,672
Total assets ............................ 4,727,392 4,755,065
27,672(1) Deposits ........................... 3,953,878 3,954,181
302(2) Negotiable certificates ofdeposit .............................
90,231
90,2332(3) Call money and bills sold .......
43,37443,374—(4) Payables under securities
lending transactions..............
142,634
142,634—(5) Borrowed money.................
269,620
269,817
197
Total liabilities ........................ 4,499,739 4,500,241502
Derivative Transactions*2
Not subject to hedge accounting
492
492
—
Subject to hedge accounting .....
(2,117)(2,117)—
Total Derivative Transactions ...... ¥ (1,624) ¥ (1,624) ¥—Millions of yen
Consolidatedbalance sheet
2018
amountFair value Difference(1) Cash and due from banks ....... ¥ 706,534 ¥ 706,534¥—(2) Monetary claims bought ........
32,84432,844—(3) Trading account securities ......
55
55—(4) Money held in trust ..............
4,795
4,795
—
(5) Securities
Other securities .................. 1,027,137 1,027,137—(6) Loans and bills discounted ...... 2,833,526
Reserve for possible loan
losses*1 ............................
(14,380)2,819,145 2,842,239
23,094
Total assets ............................ 4,590,513 4,613,607
23,094(1) Deposits ........................... 3,957,552 3,957,868
316(2) Negotiable certificates ofdeposit .............................
96,26896,271
2(3) Call money and bills sold .......
11,66911,669—(4) Payables under securities
lending transactions..............
52,00352,003—(5) Borrowed money.................
246,615
246,732
116
Total liabilities ........................ 4,364,109 4,364,545
435
Derivative Transactions*2
Not subject to hedge accounting
539
539
—
Subject to hedge accounting .....
3,308
3,308
—
Total Derivative Transactions ...... ¥3,847 ¥
3,847¥—
Thousands of U.S. dollars
Consolidatedbalance sheet
amountFair value Difference
2019(1) Cash and due from banks ....... $ 7,477,547 $ 7,477,547 $—(2) Monetary claims bought ........
351,319
351,319—(3) Trading account securities ......
1,378
1,378
—
(4) Money held in trust ..............
42,77842,778—(5) Securities
Other securities .................. 9,394,116 9,394,116—(6) Loans and bills discounted ...... 25,460,573
Reserve for possible loan
losses*1 ............................ (134,759)
25,325,804 25,575,123
249,319
Total assets ............................ 42,592,954 42,842,283
249,319(1) Deposits ........................... 35,623,731 35,626,461
2,720(2) Negotiable certificates ofdeposit .............................
812,965
812,983
18(3) Call money and bills sold .......
390,791
390,791—(4) Payables under securities
lending transactions.............. 1,285,106 1,285,106—(5) Borrowed money................. 2,429,227 2,431,002
1,774
Total liabilities ........................ 40,541,841 40,546,364
4,522
Derivative Transactions*2
Not subject to hedge accounting
4,432
4,432
—
Subject to hedge accounting .....
(19,073)(19,073)—
Total Derivative Transactions ...... $ (14,631) $ (14,631) $—*1 General reserve for possible loans losses and specific reserve for possible loan losses forloans and bills discounted are deducted from above.
*2 Derivative transactions in the above table are recorded on a net basis with liabilities
presented in parentheses.
*3 Items with no material impact have not been listed.

36

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Calculation method for fair value of financial instruments
Assets(1) Cash and due from banks
The fair value of due from banks with no maturity date is valued at book value,
since the book value approximates the fair value. Due from banks with amaturity date is valued at present value in each category by deposit term,
discounting by an assumed applicable interest rate when new deposit are
accepted.
Items with a short contract period are valued at book value, since book value
approximates their fair value.
(2) Monetary claims bought
Items with a short contract period are valued at book value, since the book value
approximates their fair value.
(3) Trading account securities
Corporate bonds and other available-for-sale securities are valued at market
prices and using an internal model.
(4) Money held in trust
With respect to securities that are managed as trust assets in individually
managed money held in trust accounts whose main purpose is securities
investment, stocks are valued at the stock market price, while debt-securities
are valued at the stock market price or the price stated by the correspondent
financial institution.
Notes concerning money held in trust by purpose held are presented in “7.
Matters relating to money held in trust.”(5) Securities
Stocks and corporate bonds are valued at market prices. Investment trusts arevalued at their published base price. Private placement bonds guaranteed by theGroup are categorized according to internal credit rating and maturity, andvalued at fair value, discounting by a projected interest rate applicable when abond in the same total amount of principal and interest is issued.
See “6. Securities and trading account securities” for further information
about the securities by intent of holding.
(6) Loans and bills discounted
Loans and bills discounted are valued at present value in each category byinternal rating and maturity, discounting the total amount of principal andinterest by an assumed applicable interest rate when similar loans are made.
Loans to borrowers who are bankrupt, substantially bankrupt, or likely to
go bankrupt are valued net of the estimated uncollectible amount based on thecurrent value of estimated future cash flows, or the estimated collectible portion
based on the collateral or guarantee underlying the loan. As such, the balance ofthe loan on the consolidated balance sheet as of the last day of the fiscal period
less the current estimated uncollectible amount approximates the fair value.
For loans and bills discounted with no repayment deadline, due to theirnature, such as the limited range of pledged assets for said loans, their fair values
are valued at book value, because they are assumed to approximate the fairvalues due to expected repayment deadlines and interest rate conditions.

Liabilities(1) Deposits and (2) Negotiable certificates of deposit
The Group considers the fair value of demand deposits to be the payment (bookvalue) of the instrument as if demanded on the last day of the fiscal year. The fairvalue of time deposits is valued at present value in each category by specificdeposit term, discounting future cash flow by the interest rate used when
accepting new deposits. Since book value approximates fair value for items witha short deposit term, the book value shall be the fair value for these instruments.
(3) Call money and bills sold
Due to the short contract period of these instruments, the Group considers
their book value to approximate the fair value.
(4) Payables under securities lending transactions
Due to the short contract period, the Group considers their book value toapproximate the fair value.
(5) Borrowed money
Borrowed money subject to variable interest rates reflects market interest rates
over a short-term. As the credit status of the Group has not significantly changed
since these transactions were executed, the Group believes that the book value
approximates the fair value of these instruments. The fair value for borrowed
money subject to fixed interest rates is valued at present value, discounting thetotal amount of principal and interest categorized by specific term by anassumed applicable interest rate when similar borrowings are entered into.
Derivative Transactions
See “26. Derivative transactions” for further information about derivatives.
The following are financial instruments whose fair values are not readily
determinable as of March 31, 2019 and 2018. These are not included in the“Assets (5) Securities” section under fair value information for financial
instruments.
Thousands of
U.S. dollars
Consolidated
Consolidated balance balance sheet
sheet amountamount
2018
2019
2019
¥2,723¥2,714$24,452
1,108
1,435
12,929¥3,832¥4,150$37,3902018
Deposits ...........................................................
Monetary claims bought ........................................
Securities:
Other securities with maturities ..............................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted* ....................................
Total ...............................................................

2019
Deposits ...........................................................
Monetary claims bought........................................
Securities:
Other securities with maturities ..............................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted*....................................
Total ...............................................................

Up to 1 year
¥ 667,226
32,844

Over 1 year,
up to 3 years¥——

146,246
42,60011,96373,144
18,5381,103,336¥1,949,654

281,789
133,300
19,282
59,17870,029507,637¥789,427

Up to 1 year
$ 7,072,583
351,319

Over 1 year,
up to 3 years$——

1,599,927
900,982
143,940
349,959
205,045
9,790,972$18,814,812

1,373,691
408,144
34,291
266,204
665,041
4,459,645$5,833,336*1 As private equity shares have no market price, and their fair values are not readily
determinable, their fair values are not stated.
*2 The Group did not recognize any impairment loss for unlisted equity stock for the fiscal
years ended March 31, 2019 and 2018, respectively.
*3 For investments in partnership for which the fair value is not readily determinable, thefair value has not been disclosed because the underlying partnership assets are comprisedof unlisted equity stock.

Over 7 years,
up to 10 years¥——

Over 10 years¥——

65,767—
13,0003,976
48,791
191,911¥257,679

138,131
10,00013,50050,10464,527
214,693¥352,825

26,455
—
4,500
2,196
19,758447,670¥474,125

Thousands of U.S. dollars
Over 3 years, Over 5 years,
up to 5 years
up to 7 years
$
—
$
—
—
—

Over 7 years,
up to 10 years$——

Over 10 years$——

2,050,049
90,098897,288
518,064544,598
1,937,507$3,987,566

656,788486,530
36,03941,22892,9904,179,736$4,836,534

158,21355,0001,000
6,388
95,825
310,329¥468,543

1,135,660
225,245
65,771
113,767
730,867
2,633,714$3,769,375

790,999
360,392
120,281
38,607
271,718
1,974,610$2,765,618*Loans and bills discounted do not include ¥28,181 million ($253,905 thousand) and ¥25,021 million in loans to bankrupt, substantially bankrupt and likely to go bankrupt borrowers or otherloans of which repayment is not expected, or ¥25,577 million ($230,444 thousand) and ¥32,924 million in loans with no established maturity as of March 31, 2019 and 2018, respectively.

The redemption schedule of corporate bonds, borrowed money and other interest-bearing debt scheduled to be repaid subsequent to March 31, 2019 and 2018 is asfollows:

Up to 1 year
¥3,741,698
89,54943,374
142,634
9,852¥4,027,109

Over 1 year,
up to 3 years¥205,158590——
226,152¥431,900

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥ 6,530
¥ 298
92
—
—
—
—
—
31,821
875¥38,443¥1,173

Over 7 years,
up to 10 years
¥192
—
—
—
793
¥985

Over 10 years
¥ —
—
—
—
125
¥125

Up to 1 year
¥3,750,627
96,086
11,66952,003
13,723¥3,924,110

Over 1 year,
up to 3 years¥198,980———
150,939¥349,919

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥ 7,432
¥303
142
40
—
—
—
—
80,401
594¥87,975¥938

Over 7 years,
up to 10 years
¥208
—
—
—
693
¥902

Over 10 years
¥ —
—
—
—
262
¥262

Up to 1 year
$33,712,028
806,820
390,791
1,285,106
88,764$36,283,530

Over 1 year,
up to 3 years$1,848,436
5,315
—
—
2,037,588$3,891,341

Thousands of U.S. dollars
Over 3 years, Over 5 years,
up to 5 years
up to 7 years$ 58,834$ 2,684
828
—
—
—
—
—
286,701
7,883$346,364$10,568

Over 7 years,
up to 10 years$1,729———7,144$8,874

Over 10 years
$ —
—
—
—
1,126
$1,126

Millions of yen

Category
1. Private equity shares*1*2 ........
2. Investments in partnership*3 ....
Total ....................................

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years
¥
—
¥
—
—
—

2019
Deposits* .........................................................
Negotiable certificates of deposit .............................
Call money and bills sold.......................................
Payables under securities lending transactions..............
Borrowed money ................................................
Total ...............................................................

2018
Deposits* .........................................................
Negotiable certificates of deposit .............................
Call money and bills sold.......................................
Payables under securities lending transactions..............
Borrowed money ................................................
Total ...............................................................

The redemption schedule and the corresponding estimated amounts of monetary claims and securities with maturities subsequent to March 31, 2019 and 2018 are as follows:2019
Deposits ...........................................................
Monetary claims bought ........................................
Securities:
Other securities with maturities ..............................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted* ....................................
Total ...............................................................

37

Up to 1 year
¥ 784,986
38,993

Over 1 year,
up to 3 years¥——

177,576
100,000
15,976
38,84222,7581,086,700¥2,088,256

152,466
45,3003,806
29,54673,813494,976¥647,442

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years
¥
—
¥
—
—
—
126,047
25,0007,300
12,627
81,119292,316¥418,363

87,79340,00013,3504,285
30,158219,162¥306,956

Over 7 years,
up to 10 years¥——

Over 10 years¥——

227,535
10,00099,59057,50060,445215,044¥442,580

72,89754,0004,000
4,576
10,321
463,909¥536,807

2019
Deposits* .........................................................
Negotiable certificates of deposit .............................
Call money and bills sold.......................................
Payables under securities lending transactions..............
Borrowed money ................................................
Total ...............................................................
*Among deposits, demand deposits are included in “Up to 1 year.”

38

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
24. Accrued retirement benefits

Thousands of
U.S. dollars
2019

Millions of yen
2018
2019
¥52,638
1,483
482
6,614
(2,393)—¥52,614
1,484
482
409
(2,352)—$474,258
13,361
4,342
59,590(21,560)—¥58,824¥52,638$529,993*Retirement benefit costs of domestic consolidated subsidiaries that apply the simplified
method are all recorded within “Service costs.”(b) Reconciliation of pension assets at beginning and end of period

For the fiscal years ended March 31,
Pension assets at beginning of
period ...............................
Expected return on pension
assets...........................
Actuarial differences ...........
Contribution from employer...
Retirement benefits paid ......
Pension assets at end of period .....

Thousands of
U.S. dollars
2019

Millions of yen
2018
2019
¥64,551¥59,547$581,592

718(3,270)2,038(1,511)¥62,527

673
3,712
2,081
(1,463)¥64,551

6,469(29,462)
18,362(13,613)$563,357(c) Reconciliation of retirement benefit obligations and pension assets at end of period andnet defined benefit liability and net defined benefit asset recorded in the consolidatedbalance sheet

As of March 31,
Retirement benefit obligations offunded plan .........................
Pension assets .........................
Retirement benefit obligations of
unfunded plan ......................
Net amount of liabilities and assets
recorded in consolidated balance
sheet .................................

As of March 31,
Net defined benefit liability.........
Net defined benefit asset ............
Net amount of liabilities and assets
recorded in consolidated balance
sheet .................................

39

Thousands of
U.S. dollars
2019

Millions of yen
2018
2019
¥ 58,824(62,527)(3,702)—¥ (3,702)¥ 52,638 $ 529,993(64,551) (563,357)(11,913)(33,354)
—

—

(308)
—

784
—

(2,775)—¥ 938¥2,078$ 8,451(e) Remeasurements of defined benefit plans in other comprehensive income
The breakdown of items (before adjusting for tax effects) recorded inremeasurements of defined benefit plans.

For the fiscal years ended March 31,
Actuarial differences .................
Total ....................................

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥4,087¥(10,192)$(91,828)¥4,087¥(10,192)$(91,828)(f) Remeasurements of retirement benefit plans in accumulated other comprehensive
income
The following is a breakdown of items (before adjusting for tax effects) recorded
in remeasurements of retirement benefit plans:

As of March 31,
Unrecognized actuarial differences
Total ....................................

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥7,161¥(3,031)$(27,308)¥7,161¥(3,031)$(27,308)(g) Items related to pension assets(i) The following is the percentage of total pension assets by main category:
As of March 31,
Bonds ....................................................
Stocks ....................................................
Life insurers’ general account .......................
Other ....................................................
Total .....................................................

¥(11,913)$(33,354)

2019
15%
45
26
14
100%

2018
13%
54
24
9
100%

Note: Total pension assets include retirement benefit trusts established for the
corporate pension plan (20.16% and 21.70 % as of March 31, 2019 and 2018,
respectively) and retirement benefit trusts established for the retirement
lump-sum payment plan (20.71% and 22.62% as of March 31, 2019 and 2018,
respectively).

(ii) Method for determining expected long-term rate of return on pension assets:
To determine expected long-term rate of return on pension assets, the Bank
considers the current and projected pension asset allocations, as well as
long-term rate of current returns and expected returns from each category
consisting pension assets.
(h) Assumptions for making actuarial calculation
Major assumptions for actuarial calculations at the end of the fiscal year¥(11,913) $ (33,354)

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
185
¥ 824 ¥
$ 7,424(12,099)(4,526)(40,778)¥(3,702)

For the fiscal years ended March 31,
Service costs* .........................
Interest costs ..........................
Expected return on pension assets
Amortization of actuarial
differences ..........................
Amortization of past service costs ...
Retirement benefit costs fordefined benefit plans ..............

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥1,484¥1,483$13,361
482
482
4,342
(673)
(718)
(6,469)

1. Stock option expenses and accounts for the fiscal years ended
March 31, 2019 and 2018

Operating expense ...................

1) Discount rate .......................................
2) Expected long-term rate of return ..............
3) Assumed salary increase rate .....................

2019
0.23%
2.00%
3.10%

2018
0.92%
2.00%
3.10%

(3) Defined contribution pension plan
The required contribution to the defined contribution plans of consolidated
subsidiaries was ¥7 million ($63 thousand) and ¥7 million for the years ended
March 31, 2019 and 2018, respectively.

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥9
¥—
$—

2. Gain recognized as a result of stock options not being exercised
before expiration for the fiscal years ended March 31, 2019 and2018*Retirement benefit costs of domestic consolidated subsidiaries that use the simplified
method are recorded in a lump-sum in “Service costs.”(2) Defined benefit plan(a) Reconciliation of retirement benefit obligations at beginning and end of period

For the years ended March 31,
Retirement benefit obligations at
beginning of period ...............
Service costs* ...................
Interest costs ....................
Actuarial differences ...........
Retirement benefits paid ......
Prior service costs ..............
Retirement benefit obligations at
end of period .......................

25. Stock options(d) Breakdown of retirement benefit costs(1) Overview of retirement benefit scheme adopted by the Bank
As defined-benefit type plans, the Bank has established a contract-type defined
benefit corporate pension plan and a retirement lump-sum payment plan. In
some cases, an extra severance package is provided to employees on theirretirement and so on. In addition, the Bank has set up a retirement benefit trust.
The Bank’s domestic consolidated subsidiaries have established a retirement
lump-sum payment plan as defined-benefit type plans, and a defined
contribution pension plan as defined-contribution type plan. Further, for theretirement lump-sum payment plan of domestic consolidated subsidiaries, net
defined benefit liability and retirement benefit costs are calculated by thesimplified method.

Other income .........................

Thousands ofMillions of yen
U.S. dollars
2018
2019
2019
¥—
¥20
$180

3. Stock option details, size, and changes(1) Stock option details
2009 stock options 2010 stock options 2011 stock options 2012 stock options 2013 stock options 2014 stock options
Category and number of grantrecipients ................................ The bank’s twelve The bank’s ten
The bank’s ten
The bank’s ten
The bank’s ten
The bank’s ten
directors
directors
directors
directors
directors
directors (excluding
outside directors)
Type and number of stock options
granted (Note) .......................... Common stock:
Common stock:
Common stock:
Common stock:
Common stock:
Common stock:
12,850 shares
15,900 shares
18,730 shares
17,500 shares
17,250 shares
13,660 shares
Grant date .................................. July 24, 2009
July 26, 2010
July 26, 2011
July 24, 2012
July 23, 2013
July 25, 2014
Vesting terms .............................. No vesting terms No vesting terms No vesting terms No vesting terms No vesting terms No vesting terms
Service period .............................. No service period No service period No service period No service period No service period No service period
specified
specified
specified
specified
specified
specifiedExercise period ............................ July 25, 2009 to
July 27, 2010 toJuly 27, 2011 toJuly 25, 2012 toJuly 24, 2013 toJuly 26, 2014 to
July 24, 2039
July 26, 2040
July 26, 2041
July 24, 2042
July 23, 2043
July 25, 2044
2015 stock options 2016 stock options
Category and number of grantrecipients ............................... The bank’s nine
The bank’s eight
directors
directors(excluding(excluding
outside directors) outside directors)
Type and number of stock options
granted (Note) ........................ Common stock: Common stock:9,430 shares
13,770 shares
Grant date ................................ July 24, 2015
July 26, 2016
Vesting terms ............................. No vesting terms No vesting terms
Service period............................ No service period No service period
specified
specifiedExercise period .......................... July 25, 2015 to July 27, 2016 toJuly 24, 2045
July 26, 2046
Note: Converted to the number of shares equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

(2) Stock option size and changes(a) Number of stock options
2009 stock options 2010 stock options 2011 stock options 2012 stock options 2013 stock options 2014 stock options
Prior to vesting (shares):
Prior fiscal year end .................
Granted ................................
Expired ................................
Vested shares ..........................
Unvested shares ......................
After vesting (shares):
Prior fiscal year end .................
Vested shares ..........................
Exercised ..............................
Expired ................................
Unexercised...........................

1,670
—
—
1,670
—

2,390
—
—
2,390
—

2,830
—
—
2,830
—

4,110
—
—
2,650
1,460

5,490
—
—
2,610
2,880

5,490
—
—
2,070
3,420

—
1,670
1,670
—
—

—
2,390
2,390
—
—

—
2,830
2,830
—
—

—
2,650
2,650
—
—

—
2,610
2,610
—
—

—
2,070
—
2,070
—

40

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Market prices of currency-related transactions as of March 31, 2019 and 2018
were as follows:

2015 stock options 2016 stock options
Prior to vesting (shares):
Prior fiscal year end ...................
Granted ..................................
Expired ..................................
Vested shares............................
Unvested shares ........................
After vesting (shares):
Prior fiscal year end ...................
Vested shares............................
Exercised ................................
Expired ..................................
Unexercised ............................

5,000
—
—
1,560
3,440

12,290
—
—
4,170
8,120

—
1,560
—
1,560
—

—
4,170
1,480
2,690
—

Note: Converted to the number of shares equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

(b) Unit price information (in year)
2009 stock options 2010 stock options 2011 stock options 2012 stock options 2013 stock options 2014 stock options
Exercise price .............................. Per share: ¥1 Per share: ¥1 Per share: ¥1 Per share: ¥1 Per share: ¥1 Per share: ¥1
Average price at exercise ................. Per share: ¥3,000 Per share: ¥3,000 Per share: ¥3,000 Per share: ¥3,000 Per share: ¥3,000 Per share: ¥ —Fair value on grant date................... Per share: ¥4,180 Per share: ¥3,150 Per share: ¥2,790 Per share: ¥2,560 Per share: ¥3,210 Per share: ¥3,350
2015 stock options 2016 stock options
Exercise price .............................. Per share: ¥1 Per share: ¥1
Average price at exercise ................. Per share: ¥ — Per share: ¥3,570
Fair value on grant date
Per share: ¥4,090 Per share: ¥2,850
Note: Converted to the price equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

4. Method for estimating number of vested stock options
In general, as it is difficult to rationally estimate the future number of expired
stock options only the actual number of expired stock options is reflected.

26. Derivative transactions(1) Type of transactions
The Group undertakes the following derivative transactions: interest-rate swaps
and others for interest-rate related transactions; currency swaps, forward
exchange contracts and currency options for currency-related transactions; andbond futures for bond-related transactions.
(2) Aims and policy
The Bank offers derivative products to meet customer needs, and to minimize
risk from exchange rate and interest rate fluctuations regarding the Bank’s assets
and liabilities.
Market prices of interest-rate related transactions as of March 31, 2019 and2018 were as follows:

2019
Over the Counter
Interest-rate swaps:
Fixed ratereceivable/variable rate
payable ..........
Variable ratereceivable/fixed
rate payable.....
Others:Sell ..................
Buy ..................
Total ...................

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥21,740¥20,405

¥ 681

¥ 681

21,74020,405

(390)

(390)

5,120
5,120

5,110
5,110

(5)
5
¥ 290

88
(19)
¥ 360

2018
Over the Counter
Interest-rate swaps:
Fixed ratereceivable/variable rate
payable ..........
Variable ratereceivable/fixed
rate payable.....
Others:Sell ..................
Buy ..................
Total ...................

2019
Over the Counter
Interest-rate swaps:
Fixed ratereceivable/variable rate
payable ..........
Variable ratereceivable/fixed
rate payable.....
Others:Sell ..................
Buy ..................
Total ...................

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥20,465¥15,969

¥ 528

¥ 528

20,465

15,969

(350)

(350)

728
728

713
713

(0)
0
¥ 177

37
(9)
¥ 205

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

2019
Over the Counter
Currency swaps ......
Forward exchange
contracts:
Sell ...............
Buy ...............
Currency options:Sell ...............
Buy ...............
Others:Sell ...............
Buy ...............
Total ...................

2018
Over the Counter
Currency swaps ......
Forward exchange
contracts:
Sell ...............
Buy ...............
Currency options:Sell ...............
Buy ...............
Total ...................

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥246,303¥66,554¥

38,70445,169

7,431
5,150

(135)
312

(135)
312

326,412326,412

227,707
227,707(10,142)
10,1425,377(2,363)

5,172
5,172

5,172
5,172

75
(75)
201

75
2
¥ 3,293

¥

25

¥

25

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

2019
Over the Counter
Currency swaps ...... $2,219,145 $ 599,639
Forward exchange
contracts:
Sell ...............
348,716
66,951
Buy ...............
406,964
46,400Currency options:Sell ............... 2,940,913 2,051,599
Buy ............... 2,940,913 2,051,599
Others:Sell ...............
46,59846,598
Buy ...............
46,59846,598
Total ...................

$

225

$

225

(1,216)
2,811(1,216)
2,811(91,377)
91,37748,445(21,290)

675(675)$ 1,810675
18$ 29,669

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥309,233¥242,540

¥

48

¥

48

57,90538,022

4,133
4,015

566
(252)

566
(252)

275,481
275,481

196,027
196,027(11,447)
11,447
¥
362

1,677
848
¥2,887(3) Derivative transactions subject to hedge accounting
The following are the contracted value, the equivalent principal and the fair value for each type of derivative transaction subject to hedge accounting as of the end of the
fiscal year, as well as the market price calculation method. The contracted value, other price or value below does not indicate by itself the market risk of the derivativetransaction.
(a) Interest rate related transactions
As of March 31, 2019

Hedge accounting method

Type
Main hedged item
Interest-rate swaps
Available-for-salesecurities
General accounting rules Variable rate receivable/fixed(bonds)rate payable
Total

Contracted value

Millions of yen
Contracted value over
1 year¥119,000¥50,000

Fair value¥(1,450)¥(1,450)

As of March 31, 2018

$195,873$183,845$ 6,135$ 6,135

195,873

183,845(3,513)(3,513)

46,13046,13046,04046,040(45)
45$ 2,612792(171)$ 3,243

Hedge accounting method

Type
Main hedged item
Interest-rate swaps
securities
General accounting rules Variable rate receivable/fixed Available-for-sale(bonds)rate payable
Total

Contracted value

Millions of yen
Contracted value over
1 year¥80,000¥69,000

Fair value
¥309
¥309

As of March 31, 2019

Hedge accounting method

TypeInterest-rate swaps
General accounting rules Variable rate receivable/fixed
rate payable
Total

Main hedged item
Available-for-sale securities(bonds)Thousands of U.S. dollars
Contracted value
Contracted value
over 1 year
$1,072,168$450,491

Fair value$(13,064)$(13,064)

Notes: 1. In general, deferred hedge accounting method is applied to hedging transactions for interest rate risk arising from financial assets.
2. Calculation of fair value
Fair value is calculated based on the discounted cash flow method, etc.

41

42

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(b) Currency related transactions
As of March 31, 2019

Hedge accounting method
General accounting rules

Type
Currency swaps
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Contracted value¥79,387
27,804

Millions of yen
Contracted value over
1 year¥30,551—

Contracted value¥111,909
36,593

Millions of yen
Contracted value over
1 year¥44,977—

Fair value¥(605)(61)¥(666)

As of March 31, 2018

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Fair value¥2,757241¥2,998

As of March 31, 2019

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Thousands of U.S. dollars
Contracted value overContracted value
1 year$715,262$275,259—
250,509

Fair value$(5,450)(549)$(6,000)

Notes: 1. In general, deferred hedge accounting is applied according to “Accounting and Auditing for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee
Report No. 25).
2. Calculation of fair value
Fair value is calculated based on discounted cash flow method, etc.

27. Segment information(1) Overview of reportable segments
Reportable segments are the Group’s constituent business units for which separate financial data can be obtained and that are examined periodically by the Board of
Directors for the purposes of determining the allocation of management resources and evaluating operating results.
The Group is engaged mainly in banking activities. Consolidated subsidiaries provide financial services primarily engaging in leasing activities. The Bank and its
individual consolidated subsidiaries, which comprise a corporate group, each prepare business and other plans while developing business activities.
As a result, the Group has identified the two reportable segments of banking and leasing, which comprise the basic segments of the Bank and its individual consolidated
subsidiaries by operation. Operations under the banking segment include the provision of services relating deposits, loans, marketable securities and related investment aswell as foreign currency exchange. Operations under the leasing segment include leasing and other operations conducted by Hyakujushi Lease Co., Ltd.
(2) Calculation methods for ordinary income, profit and loss, assets and liabilities and other items by reportable segment
The method of accounting treatment applied to reportable segments is the same as that described in “Notes to Consolidated Financial Statements.”
Moreover, reportable segment profit is based on ordinary profit.
Intersegment ordinary income is based on transaction prices between third parties.
(3) Information regarding ordinary income, profit and loss, assets and liabilities and other items by reportable segment
Information about industry segments of the Bank and its consolidated subsidiaries for the years ended March 31, 2019 and 2018 is as follows:2019
Ordinary income:Outside customers ...........................
Inter-segment transactions ..................
Total ..................................................
Segment profit ......................................
Segment assets ......................................
Segment liabilities ..................................
Other items: ........................................
Depreciation ..................................
Interest income ...............................
Interest expenses .............................
Gain from disposal of tangible assets ......
State subsidy ...................................
Other extraordinary income ...............
Loss from disposal of tangible assets ......
Impairment losses ............................
Loss on tax purpose reduction entry oftangible assets ..............................
Other extraordinary loss ....................
Tax expenses ..................................
Increases in property, plant andequipment and intangible assets ........

43

Leasing¥

68,038791¥ 68,830¥
9,155¥4,876,689¥4,603,241¥ 7,118587¥ 7,705¥226¥29,893¥25,630¥

75,157
1,378¥ 76,535¥
9,382¥4,906,582¥4,628,871¥ 2,039
3,819¥ 5,858¥ 1,592¥21,672¥ 9,943¥

77,196
5,198¥ 82,394¥ 10,974¥4,928,255¥4,638,815¥—(5,198)¥ (5,198)¥ (544)¥(32,630)¥(29,767)

¥

¥

¥

¥

¥

¥

¥

¥

97
319
79
0
—
6
0
—

2,877
45,042
7,507
34
57
6
90
1,450

303
242
54
—
—
—
13
—

Total

3,180
45,284
7,562
34
57
6
104
1,450

Adjustment

Consolidated
total

Banking

2,780
44,723
7,427
34
57
—
89
1,450

Total

Millions of yen
Otherbusinesses

93
(818)
(236)
(1)
—
—
—
—

77,196—¥ 77,196¥ 10,430¥4,895,624¥4,609,048
3,274
44,466
7,325
32
57
6
104
1,450

57
—
2,599

—
100
(5)

57
100
2,593

—
—
501

57
100
3,095

—
—
19

57
100
3,114

3,213

5

3,218

209

3,427

92

3,520

2018
Ordinary income:Outside customers ...........................
Inter-segment transactions ..................
Total ..................................................
Segment profit ......................................
Segment assets ......................................
Segment liabilities ..................................
Other items: ........................................
Depreciation ..................................
Interest income ...............................
Interest expenses .............................
Gain from disposal of tangible assets ......
Loss from disposal of tangible assets ......
Impairment losses ............................
Tax expenses ..................................
Increases in property, plant andequipment and intangible assets ........

Leasing

72,023394¥ 72,417¥ 13,018¥4,756,322¥4,475,457¥ 6,683380¥ 7,064¥ 247¥27,814¥23,396¥

78,706774¥ 79,481¥ 13,265¥4,784,137¥4,498,853¥ 2,1073,978¥ 6,085¥ 2,051¥31,569¥10,010¥80,813
4,752¥ 85,566¥ 15,317¥4,815,706¥4,508,864¥—(4,752)¥ (4,752)¥(37)¥(38,645)¥(35,409)

¥

¥

¥

¥

¥

¥

¥

¥

2,367
48,049
6,206
12
76
151
3,835

95
150
76
65
0
—
99

2,963

Banking2019
Ordinary income:Outside customers ........................... $ 613,010
Inter-segment transactions ..................
7,126
Total .................................................. $ 620,145
Segment profit ...................................... $82,484
Segment assets ...................................... $43,938,093
Segment liabilities .................................. $41,474,376
Other items: ........................................
Depreciation .................................. $25,047
Interest income ...............................
402,946
Interest expenses .............................
66,915Gain from disposal of tangible assets ......
306
513
State subsidy ...................................
—
Other extraordinary income ...............
Loss from disposal of tangible assets ......
801
Impairment losses ............................
13,064
Loss on tax purpose reduction entry of513
tangible assets ..............................
—
Other extraordinary loss ....................
Tax expenses ..................................
23,416
Increases in property, plant andequipment and intangible assets ........
28,94810

2,462
48,199
6,283
77
76
151
3,935
2,974

306
436
61
—
14
—
575

Total

200

Adjustment

Consolidated
total

Banking¥

Total

Millions of yen
Otherbusinesses

2,769
48,635
6,345
77
91
151
4,510
3,174

Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

87
(561)
(489)
(0)
—
—
17

80,813—¥ 80,813¥ 15,279¥4,777,061¥4,473,454
2,857
48,073
5,855
77
91
151
4,528

128

3,303

Adjustment

Consolidated
total

$

$ 64,131
5,288$ 69,420$ 2,036$269,330$230,921$

677,151
12,415$ 689,566$
84,530$44,207,424$41,705,297$ 18,371
34,408$ 52,779$ 14,343$195,260$ 89,584$

695,52246,833$ 742,355$
98,873$44,402,693$41,794,891—(46,833)$ (46,833)$ (4,901)$(293,990)$(268,195)

$

$

$

25,921
405,820
67,636306$ 2,729
2,180
486
—

$

$

$

—
54

513
54

—
—

513
54

—
—

513
54

0
—

810
13,064117—

937
13,064——937
13,064

—
900

513
900

—
—

513
900

—
—

513
900

(45)

23,362

4,513

27,885

171

28,05645

28,993

1,883

30,876828

31,714

873
2,874
711
0

28,651
408,000
68,132306

837(7,370)(2,126)(9)695,522—$ 695,522$
93,972$44,108,694$41,526,696
29,498400,630
65,996288

Notes: 1. In place of sales which are usually posted by companies other than banks, the Bank and its consolidated subsidiaries report ordinary income. In addition, adjusted differences are recorded
as the difference between ordinary income and ordinary income recorded on consolidated statements of income.
2. The Other businesses segment is comprised of business segments not included in reportable segments and mainly consists of credit card and credit guarantee operations.
3. The adjusted amounts of segment profit, segment assets, segment liabilities, depreciation, interest income, interest expenses, gain from disposal of tangible assets, tax expenses andincreases in property, plant and equipment and intangible assets are recorded as eliminations.
4. Segment profit is adjusted with ordinary profit recorded on consolidated statements of income.

(Associated information)
1. Information on each service
Millions of yen
2019
Income from external customers ..........................

Securities investment
Lending services
services¥31,881¥23,255

2018
Income from external customers ..........................

Securities investment
Lending services
services¥32,193¥26,661

2019
Income from external customers ..........................

Thousands of U.S. dollars
Securities investment
Lending services
services
Leasing services$287,242$209,523$64,131

Leasing services¥7,118Other¥14,941

Total¥77,196

Other¥15,274

Total¥80,813

Other$134,615

Total$695,522

Millions of yen
Leasing services¥6,68344

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
30. Borrowed money

2. Information on each area
(1) Ordinary income
Information is omitted since the amount attributed to income from external customers in Japan accounts for more than 90% of the ordinary income in the
consolidated statements of income.
(2) Tangible fixed assets
Information is omitted since the amount attributed to tangible fixed assets located in Japan accounts for more than 90% of the tangible fixed assets in the
consolidated balance sheets.

The weighted average interest rate applicable to the total balance of borrowed
money as of March 31, 2019 is 0.02%.
Annual maturities of borrowed money as of March 31, 2019 are as follows:

3. Information on each major customer
Information is omitted since there are no specific customers from whom ordinary income accounts for 10% or more of ordinary income in the consolidated statements
of income.
(Information on impairment losses on fixed assets by reportable segment)
Information regarding impairment losses on fixed assets by reportable segment for the years ended March 31, 2019 and 2018 was as follows:

Up to 1 year
Over 1 year, up to 2 years
Over 2 years, up to 3 years
Over 3 years, up to 4 years
Over 4 years, up to 5 years
Over 5 years

Millions of yen¥ 9,852
145,917
80,23430,576
1,245
1,796

Thousands of
U.S. dollars$ 88,764
1,314,686
722,893
275,484
11,217
16,181Millions of yen
2019
Impairment losses on fixed assets ..........................

Securities investment
Lending services
services¥1,450¥—2018
Impairment losses on fixed assets ..........................

Securities investment
Lending services
services
¥151
¥—

2019
Impairment losses on fixed assets ..........................

Thousands of U.S. dollars
Securities investment
Lending services
services
Total$13,064$—$13,064

Total¥1,450

Other
¥—

Total
¥1,450

¥—

Total
¥151

$—

Total
$13,064

Millions of yen

28. Related-party transactions

Total
¥151

29. Per share data

Amounts per share as of March 31, 2019 and 2018 and for the fiscal years thenended were summarized as follows:
Yen
U.S. dollars
2018
2019
2019
Net assets per share .................... ¥9,708.42 ¥9,948.53$87.471
Basic earnings per share ...............
346.40189.25
1.705
Diluted earnings per share ............
345.92189.05
1.703
Notes: 1. The net assets per share figures are calculated on the basis of the following.

45

Other

2. Basic earnings per share figures are calculated on the basis of the following.

Not applicable to the fiscal years ended March 31, 2019 and 2018.

Net assets ..............................
Amount excluded from net assets .
(of which share subscription
rights) ...............................
(of which, non-controllinginterests)............................
Net assets attributable tocommon stock at the fiscal
year-end ............................
Number of common stock sharesat fiscal-year end for calculationof net assets per share (inthousands) ..........................

Other

Millions of yen,Thousands of
except number of shares
U.S. dollars
2018
2019
2019
¥303,606 $2,581,998¥286,576
10,124
61
549
61

124

549

—

10,000—286,514

293,481

2,581,439

29,511

29,499Basic earnings per share
Profit attributable to owners ofparent ............................
Amount not attributable tocommon equity holders ofparent ............................
Profit attributable to common
equity holders of parent ......
Average number of shares ofcommon stock during theyear (in thousands) ............
Diluted earnings per share
Increase in number of common
stock shares (in thousands) ..
(of which, sharesubscription rights) ........

Millions of yen,
except number of shares
2018
2019

Thousands of
U.S. dollars
2019¥5,584¥10,227$50,310

—

—

—

5,584

10,22750,31029,50529,523

30

41

30

41

3. The Bank’s own stock remaining in the ESOP Trust and BIP Trust and recorded
as treasury stock in stockholders’ equity is included in treasury stock to be
deducted in the calculation of net assets per share, basic earnings per share, anddiluted earnings per share.
The number of shares of said treasury stock to be deducted at year- end in thecalculation of net assets per share was 59 thousand shares and 61 thousand shares
as of March 31, 2019 and 2018, respectively. Moreover, the average number ofshares of said treasury stock to be deducted in the calculation of basic earnings
per share and diluted earnings per share during the year was 60 thousand sharesand 36 thousand shares for the fiscal years ended March 31, 2019 and 2018,
respectively.
Although the Bank implemented a 1-for 10 reverse stock split as of October
1, 2018, per share data is calculated based on the assumption that the reverse
stock split was implemented at the beginning of the fiscal year ended March 31,
2018.

46

47

Corporate Information

Corporate Information

Profile (as of March 31, 2019)

Overseas Support Organizations

Head Office
Established
Total assets
Deposits and negotiable certificates of deposit
Loans and bills discounted
Paid-in capital
Total shares issued
Employees
OfficesNon-branch ATMs and CDs

5-1 Kamei-cho, Takamatsu, Kagawa
November 1, 1878
¥4,877.5 billion¥4,056.9 billion¥2,832.8 billion¥37.3 billion
30,000 thousand shares
2,199
124 (Head Office, 103 branches, 21 sub-branches)
Overseas Representative Offices: 2 (Shanghai, Singapore)
166 locations

VietnamBusiness cooperation
VIETCOMBANK
Foreign Investment Agency
Business collaboration
HDBank(Bank staff deployment)

China
Representative Office

India
Business collaboration
State Bank of India
TaiwanBusiness collaboration
CTBC Holding Co., Ltd.

ThailandBusiness collaboration
KASIKORNBANK Public Company Limited(Bank staff deployment)

Organization (as of July 1, 2019)

the Philippines
Business collaboration
Metropolitan Bank and Trust Company

The Hyakujushi Bank

General Meeting of Shareholders
Board of Directors
ChairmanPresident
Vice President
Directors
Nomination and Remuneration GovernanceCommittee
Audit and Supervisory Committee
Audit and Supervisory
Committee Members

VariousCommittees
Executive
Committee[Corporate Administration Sector]
Corporate Strategy Office
Corporate Planning Group
Corporate Planning
Financial Affairs Group
Division
Public Relations and CSR GroupTokyo Liaison Office
Risk Control Division

Risk Control Group
Credit Risk Control Group

Compliance Management
Division

Legal Compliance Group
Money Laundering Countermeasures Group

General Administration
Division

Compliance and Legal Affairs Office
General Administration Group
General Affairs Administration Group

Personnel Division

Personnel Planning Group
Salary and Welfare Group
Personnel Development GroupOperations Supervision
Division

Operations System Supervision GroupOperations Management GroupOperations Guidance Group
Systems Planning Group
Systems Management Group

Central Operations
DivisionCentral Operations Center
Operations Center
Business Support Center
Central Receivables Documents Center

Executive Secretariat
Office[Market Sector]

Treasury andInternational Division

Business and Planning Group
Market Business Group
Securities Operation Group
Market Management Group
Fund Securities Management Group
Foreign Exchange Business Support Group
Overseas Representative Offices

Business Strategy
Division

List of Major Shareholders (as of March 31, 2019)
Name

Subsidiaries
Nihonbashi FudosanCo., Ltd.
Central Business
Division
Branches

Hyakujushi Business
Service Co., Ltd.

Sub-branches

Hyakujushi Jinzai
Center Corporation

Deposit andExchange
Operations Area
liaison & Loan
Operations Area

Hyakujushi Saita
Agency Co., Ltd.

Central Foreign
Exchange Branch

The Hyakujushi System
Service Co., Ltd.
The Hyakujushi JCB
Card Co., Ltd.

Business Strategy Group
Channel Strategy Group
Branch Management Group
Customer Service Center

Regional Vitalization
Division

Regional Vitalization Group

Solution Promotion
Division

Consulting Group
Asset Accumulation GroupThe Hyakujushi DC
Card Co., Ltd.
Hyakujushi Sogo
Hosho Co., Ltd.

Loan Business Center
Asset Business Center
DB Center

Credit Supervision
Division

Credit Planning Group
Screening 1 Group
Screening 2 GroupManagement Support Group
Credit Management Group
Real Estate Valuation and Financial Registration Center

Auditing DivisionInspection Group
Risk Audit Group

Audit and Supervisory Committee Members’ Office

Hyakujushi Lease
Co., Ltd.

of shares held to the total
No. of shares held Ratio
number of shares outstanding(thousand shares) (excluding
treasury shares) (%)

Address

Japan Trustee Services Bank, Ltd. (Trust Account)
Nippon Life Insurance Company
The Master Trust Bank of Japan, Ltd. (Trust Account)
NH Foods Ltd. (Note) 2
Japan Trustee Services Bank, Ltd. (Trust Account 9)
TAIHEIYO CEMENT CORPORATION (Note) 3
Meiji Yasuda Life Insurance Company
Hyakujushi Bank Employee Shareholding Association
SUMITOMO LIFE INSURANCE COMPANYDFA INTL SMALL CAP VALUE PORTFOLIO(Standing proxy: Citibank, N.A., Tokyo Branch)
Total

8-11, Harumi 1-Chome, Chuo-ku, Tokyo
6-6, Marunouchi 1-Chome, Chiyoda-ku, Tokyo
11-3, Hamamatsu-cho 2-Chome, Minato-ku, Tokyo
4-9, Umeda 2-Chome, Kita-ku, Osaka
8-11, Harumi 1-Chome, Chuo-ku, Tokyo
3-5, Daiba 2-Chome, Minato-ku, Tokyo
1-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo
5-1 Kamei-cho, Takamatsu-shi, Kagawa Prefecture
7-18-24, Tsukiji, Chuo-ku, TokyoPALISADES WEST 6300,BEE CAVE ROAD BUILDING ONE
AUSTIN TX 78746 US (6-27-30 Shinjuku, Shinjuku-ku)
–

1,730
900
709
632
628
595
569
556
500

5.85
3.04
2.40
2.13
2.12
2.01
1.92
1.88
1.69

473

1.60

7,296

24.67

(Notes)1. The 428 thousand treasury shares held by the Bank are excluded from the number of shares outstanding.
2. The number of shares held by NH Foods Ltd. includes 500 thousand shares that have been contributed to the retirement benefit trust; however, the right to provide instructions for the voting rights to those shares has
been retained by NH Foods Ltd.
3. The number of shares held by TAIHEIYO CEMENT CORPORATION includes 595 thousand shares that have been contributed to the retirement benefit trust; however, the right to provide instructions for the voting
rights to those shares has been retained by TAIHEIYO CEMENT CORPORATION.

Active Shareholder Return
In order to realize the Bank’s Corporate Vision of “ensuring sound business management and enhancing corporate value,” while
endeavoring to improve our equity capital by increasing retained earnings, the Bank is also working to improve the satisfaction of
our shareholders by continuing to pay stable dividends.
(Billions of yen)Consulting Plaza BranchBusiness Support
Division

Indonesia
Business collaboration
PT. Bank Negara Indonesia (Persero) Tbk.
(Bank staff deployment)

Singapore
Representative Office
Registered in Singapore[Marketing Related Sector]

48

MexicoBusiness cooperation
Mexico State Government
Estado de Aguascalientes
JaliscoGuanajuato
Nuevo LeónEl Banco Nacional deMéxico (Banamex)

Corporate Headquarters

Total dividend amount

10.0

Dividend payout ratio Status of dividends

47.6%
24.5%

23.1%

5.0

Number of shareholders

Individuals

FY20162.3

FY2017

2.6

FY2018

6,000
4,000

Trends of Number of
Share Unit Holders
10,762

10,000
8,000

2.3
0

(Persons)

12,000

8,368

8,293

7,317

7,273

March 31,2016

March 31,
2017

7,109

8,850

9,777

7,869

6,053
March 31,2015

March 31,2018

March 31,2019

*Liquidation procedures for
Hyakujushi Preferred Capital
Cayman Limited were completed
on December 13, 2018.

49

THE HYAKUJUSHI BANK, LTD.
5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
Phone: (087) 831-0114
http://www.114bank.co.jp