The Hachijuni Bank, LTD.

2019
178 - 8, Okada, Nagano-city 380 - 8682, Japan
Phone:(026)227-1182
https://www.82bank.co.jp/

Ye a r e n d e d M a r c h 3 1 , 2 0 1 9This brochure was printed
using vegetable oil ink.

7765
65

3,216

10,45119.82%
19.8
82 (BIS standards)

55,261,261

151 DoDomestic Branches (Japan)
1 Overseas
Ove
Ove
Branch (Hong Kong)
4 Representative
Reep
Oﬃces
(Da
(Dalian,ali Shanghai, Bangkok & Singapore)

Total C
Capital Ratio

6
6,734*Figures less than 1 billion yen are rounded off

Credit R
Rating (Long-Term)
S&P GloGlobal Ratings

A(Rating and Investment Information, Inc.)
R&I (RaA+(Jap Credit Rating Agency, Ltd.)JCR (JapanAA

as of March 31, 2019

The Hachijuni Bank, Ltd. is one of the leading regional banks in Japan.
We are mainly based in Nagano Prefecture, which is geographicallylocated in the center of Japan and is well-known for its coexistence withbeautiful nature and advanced industries.
Since its establishment in 1931 in Nagano City, Hachijuni Bank has
consistently maintained sound management policies, and is now playing
a significant role as one of the largest regional banks in Japan.
Branches of Hachijuni Bank can be found in Nagano, Gunma, Saitama, Niigata and Gifu Prefectures, as wellas in Tokyo, Osaka and Nagoya metropolitan areas. We also have an overseas branch in Hong Kong, as wellas, the Dalian Representative Office, the Shanghai Representative Office, the Bangkok Representative Office,and the Singapore Representative Office.

CONTENTS
10 Major Affiliated Companies

2

Message from the Management

3

Management Policies

10 Major Shareholders

4

Business Performance and Financial Standings

11

5

Corporate Governance

12 Financial Section

6

Risk Management

12 Consolidated Balance Sheet

7

International Operations

13 Consolidated Statement of Income

8

Corporate Social Responsibility (CSR)

13 Consolidated Statement of Comprehensive Income

10

Board of Directors

14 Consolidated Statement of Changes in Equity

10

Audit & Supervisory Board Members

15 Consolidated Statement of Cash Flows10

Organization

16 Notes to Consolidated Financial Statements

Independent Auditor’s ReportManagement Philosophy“Stick firmly to the sound banking principles, thereby contributing to the development of the regional community”

Corporate Vision: Shining at the center of Japan -8 shines
Yoshiyuki Yamaura
Chairman

Shoichi Yumoto
President

Strong trustworthiness from thepeople and the region of Nagano

Entirely sound,constant & steady earning power

Agreeable correspondence tothe request of our customers

Business promotion fromour customers’ viewpoint

High awareness ofcompliance

Every staff’s speedy,
lively & responsible action

Trustworthy, efficient & assured
operational system and condition

Advanced and confident
computer system

Long-Term Management Guideline

August 2019
We would like to begin by expressing our sincere gratitude for your patronage.
Since its establishment in 1931, and in tandem with the development of the regional economy, Hachijuni
Bank (“the Bank”) has continued to grow and has established itself as a key financial institution within its
community. This is in large part due to the long-lasting support and patronage of our shareholders, ourcustomers, and the community, for which we are very grateful.

ROE：5% or higher

The 31st Long-Term Management Plan (April 1, 2018 ~ March 31, 2021)“Dare to Change ; Create the Next Generation”
Strengthening and expansion of “face-to-face sales” in order to realize
customer profits
Expansion of investment in developing “human resources” and more opportunities
for their active participation
Reform of sales promotion structure and operational processes

We have designed our “Annual Report 2019” to present, in an easy-to-understand format, our earnings
results and the details of our businesses for the fiscal year ended March 31, 2019. We sincerely hope that thisNumerical Targets

report will help give you a better understanding of the Bank.

Net income attributable to owners of the parent ( for March 2021)

The Japanese economy continued a moderate recovery in FY2018, but the pace of recovery slowed in theManagement
Targets

second half of the year due to frequent natural disasters in Japan and slowing foreign economies. Regarding

by production of semiconductor-related products and electrical machinery continued in the first half of thesome months at large-scale stores primarily due to a slump in sales of clothing.

Ratio of consolidated profits to parent company’s profits (for March 2021)
Dividend payout ratio (consolidated; annual)

the economy of Nagano Prefecture, the Bank’s main business area, although the increasing trend mainly led

year, the trend was subdued in the second half. As for personal consumption, sales decreased year on year in¥25 billion

Regional
Vitality Targets

Under such conditions, the Bank promoted its 31st Long-Term Management Plan entitled “Dare to Change;

Over 30%

Number of new business launches (over three years)

1,000

Number of cases through business matching (sales channel development, etc.)(over three years)

6,000

Number of cases utilizing private placement bonds, funds, etc. (over three years)

500

Number of business successions, M&As, and change/discontinuation ofbusinesses (over three years)

1,000

Create the Next Generation” targeting three years from FY2018 to FY2020. Looking back on the first year of

made steady progress in operating expenses such as non-personnel expenses through the reorganization ofEnvironmental
Targets

operational sections. The Hachijuni Bank Group will work as one to provide customers comprehensive
financial services of even higher quality and will continue to pursue strong profitability.
We kindly ask for your continued support and patronage in the years to come; in exchange, we will commit
ourselves to doing our utmost to live up to your expectations.

Number of new contracts for electronic delivery servies (over three years)

3,000

Number of new contracts for and renewals to e-livret (over three years)

100,000

Number of environmental investments and loans (over three years)

3,000

Challenge Targets
As of March 31,
2019

Target amount

Target achievement
periodBalance of loans to SMEs

¥1,446.7 billion¥2,000 billion

March 2028

Number of SME borrowers

26,25030,000March 2028

¥5.4 billion¥10.0 billion

March 2023

OHR (gross business profit basis)

63.1%

Under 60%

March 2023

Amount of greenhouse gas emissions
reduced (compared to fiscal 2013)

14.4%

30%

By fiscal 2030

Target item
Sincerely yours,

Revenue from investment type products(bank + securities)

Yoshiyuki Yamaura
Chairman

Shoichi Yumoto
President

15% reduced(compared to fiscal 2013)

Amount of greenhouse gas emissions reduced ( for March 2021)

the Plan, outstanding loans and outstanding deposits marked record highs and our cost reduction efforts

1.25

Corporate Governance Principle

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The Bank defines the Corporate Governance Principle as the basic policy which regulates all of the Bank’s business activities,
keeps the group’s sustainability, enhances corporate value and carries out its social responsibility to realize the Bank’s
philosophy.
The Corporate Governance Principle defines our basic stance toward the “customers,” “shareholders,” “employees,” and the“regional community,” as well as basic policies related to corporate governance, observation of laws, corporate ethics anddisclosure of information.

Organizational Structure
The Bank appoints audit & supervisory board members (to form an Audit & Supervisory Board) based on the recognition thatbusiness oversight function should be separated from business execution function. While the Board of Directors decides andimplements business operations, the Audit & Supervisory Board oversees business operations.
Furthermore, the Bank appoints both outside directors and outside audit & supervisory board members who are not prone tohaving conflicts of interest with shareholders.

Decision / Supervision of Business Execution

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Summary of Business Performance
Consolidated Business Results
Ordinary profit decreased ¥7,153 million from the previous year to¥34,354 million and net income attributable to owners of the parent
decreased ¥3,348 million to ¥22,492 million.

Non-Consolidated Business Results

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  Under the Board of Directors, the Management Committee is established with three special conferences: ALM andComprehensive Risk Conference, Compliance and Operational Risk Conference and Loan Management Conference.
The Board of Directors is held at least once a month in principle. In this meeting, directors engage in substantial discussions
and supervise the status of business operations with one another.
The Board of Directors consists of eight ( 8) internal directors and two ( 2) outside directors and the Management Committee
consists of senior executives.
The Bank has established the “Nominating and Compensation Committee” as an advisory body in an aim to strengthen the
independence, objectivity, and accountability of the Board of Directors.

Oversight of Directors’ Business Execution

The Audit & Supervisory Board is held every month in principle. It consists of five ( 5 ) members including three ( 3 ) outside
audit & supervisory board members. By attending the Board of Directors and providing appropriate advice, each member
strictly oversees the execution of duties of directors. Two full-time audit & supervisory board members may attend theManagement Committee and oversee the execution of business operations through inspecting each kind of matter, such as thestatus of internal controls and branches’ audit results. They regularly discuss with Representative Directors in order to provide
their views about management policy or issues, and also discuss with the Account Auditing Company.

Ordinary income decreased ¥19,673 million from a year earlier to¥121,046 million due mainly to decreases in gains on sales of bonds
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the first time in 11 years.
Ordinary expenses decreased ¥13,799 million from a year earlier to ¥92,022 million due to decreases in loss on sales ofbonds and operating expenses despite increases in loss on money held in trust and funding cost of foreign currencies.
As a result, ordinary profit decreased ¥5,874 million to ¥29,024 million.
Net income decreased ¥895 million to ¥21,830 million.

Shareholders’Meeting

Account Auditing Company(Business execution)
Business Branches

Nominating and Compensation Committee＊(Head Office)(Decision / Supervision of business execution)

Summary of Financial Standings

Board of Directors
Directors (10) (including 2 outside directors)

Results of Consolidated Main Accounts
Outstanding balance of deposits increased ¥147.8 billion to ¥6,734.8 billion from a year earlier owing to increases indeposits from general corporations and from individuals.
Outstanding balance of loans and bills discounted increased ¥221.8 billion to ¥5,261.9 billion due to increases primarily inloans for general corporations and individuals.
Outstanding balance of securities increased ¥255.8 billion to ¥2,766.0 billion due mainly to increases in municipal bonds
and corporate bonds.

Results of Non-Consolidated Main Accounts
Outstanding balance of deposits increased ¥148.5 billion froma year earlier to ¥6,746.8 billion.
Outstanding balance of loans and bills discounted increased¥222.9 billion to ¥5,310.5 billion.
Outstanding balance of securities increased ¥257.1 billion to¥2,771.5 billion.

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Management Committee
ALM and Comprehensive
Risk Conference
Compliance and Operational
Risk Conference

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Audit & Supervisory Board Members (5)( Including 3 outside audit & supervisory board members )Total Capital Ratio ( Basel 3 standards )Total capital ratio was 19.82% on a consolidated basis and 19.10% on
a non-consolidated basis.

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Profit Sharing
The Bank changed the dividend policy in FY2015 as follows.
Setting the lower limit of dividend per share to ¥5.0 a year, the Bank will positively
provide returns to shareholders by stable dividend and purchase of own stocks.
With respect to year-end dividends, the Bank decided to pay ¥8.0 per
share. As a result, annual dividends, together with the interim dividend,
were ¥14.0 in total.

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Financial Market Department
Loan Control Department
Loan Supervision Department
Loan Operations Center
Operations Administration Department
Computer Systems Department
Planning and Coordination Department
Personnel Department
General Secretariat
General Affairs Department— Environment Office
Risk Management Department
Tokyo Liaison Office(Internal audit section)
Internal Audit Department＊ It is not a committee pursuant to the Companies Act but established voluntarily by the Bank.

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Branch Support Department
Corporate Banking Department
Personal Banking Department
International and Treasury Department

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（as of June 21, 2019）

Remuneration
As for directors’ remuneration, the Bank introduces three types of remuneration: fixed-amount compensation, performancelinked compensation and stock-based compensation.
The monthly amount of fixed-amount compensation is limited to be within ¥25 million. Performance-linked compensation isbased on the Bank’s net income. The form of stock-based compensation is stock options (share options). The total amount ofstock options is limited to be within ¥100 million in a year, to be decided at the shareholders’ meeting. The payment amountto each director is decided by a consultation of the Board of Directors.
Audit & supervisory board members’ remuneration is fixed-amount compensation. The monthly amount of such
remuneration is limited to be within ¥8 million by the resolutions of the shareholders’ meeting and the payment amount toeach member is decided by a consultation among audit & supervisory board members.
With respect to the proposals for submission to the shareholders’ meeting regarding remuneration of directors and audit &supervisory members and other remuneration-related matters, the Board of Directors receives advice and proposal from theNominating and Compensation Committee.

Comprehensive Risk Management
The Bank’s Board of Directors defines the basic policy regarding comprehensive risk management to ensure soundness ofmanagement and adequacy of its business operations. Targeted main risks are market risk, liquidity risk, operational risk andcredit risk as described in the Risk Management Organization Chart (see below). By managing these risks comprehensively andreflecting them in the decision-making process of executives, the Bank restrains risk amount to the appropriate level relative tothe Bank’s capacity. The Bank makes a profit plan and allocates management resources suited to each form of risk.
ALM and Comprehensive Risk Conference manages market risk, credit risk and liquidity risk. Compliance and Operational Risk
Conference manages operation risk, computer system risk, and other operational risk. Loan Management Conference manages
more diversified credit risks.
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Hong Kong
Since its opening in May 1991, the Hong Kong Branch has been expanding with offering
the financial services to the customers. As a result, the Bank now handles the large
foreign exchange volume due to the Hong Kong Branch. Furthermore, the Hong Kong
Branch offers a wide range of services such as providing various information, supporting
business expansion for customers who seek to extend business in China and other Asian
countries. In September 2010, the Hong Kong Branch started the renminbi-denominatedtransactions such as deposit, transfer and loan amid a surge of our customers’ needs.

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 Southeast Asia, together with China, has always attracted the attention of our customers as a region with strong growth potential.
Currently, there are over about 1,000 customer bases in ASEAN countries.
Singapore is the distribution, financial and economic center in Southeast Asia. The Bank established its Singapore Representative Officein 1997. And in 2007, it established the Bangkok Representative Office, which is the first in
Thailand among all regional banks in Japan. Both offices collect and analyze information on
the rapidly changing social, financial and economic conditions in the region, and offer thelatest information to local customers. In cooperation with the Bank’s head office and domestic
branches, both offices help customers to expand their businesses in Southeast Asia.

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Regarding Terminologies:
Loans to Customers in Bankruptcy
Of loans for which substantial doubt is judged to exist as to ultimate collectibility ofeither principal or interest because they are past due for a certain period or for otherreasons, the loans to customers who are alleged to commence legal corporate
rearrangement procedures under Company Rehabilitation Law, Bankruptcy Law, Civil
Rehabilitation Law, Commercial Code of Japan and other related laws, and/or tocustomers whose transactions with banks are suspended by the rules of clearing house.
Past Due Loans
Of loans for which substantial doubt is judged to exist as to ultimate collectibility ofeither principal or interest because they are past due for a certain period or for otherreasons, the loans to customers other than customers in bankruptcy and customers on

Nagano Prefecture, which is the major business base for the Bank, hasInternational anddeveloped as an advanced region in Japan in terms of foreign trade andTreasury Department
international business operations. Now there are about 2,800 bases of ourcustomers in other countries, primarily in Asia.
◆ Nagano Main OfficeSince the launch of its foreign exchange business in January 1962, the Bank has
178-8, Okada, Nagano-City 380-8682, Japan
expanded its international operations to meet the growing needs of customers
Phone: (026)227-1182 Facsimile: (026)226-2982
who operate worldwide.
◆ Tokyo Office
The Bank maintains a network of overseas bases covering five major Asian
1-22, Nihonbashi Muromachi 4-chome, Chuo-ku,
cities. In addition to the Hong Kong Branch, which functions as the Asian control
Tokyo 103-0022, Japan
center and offers full banking services, we have four representative offices –Phone: (03)3242-0082 Facsimile: (03)3277-0146
Dalian, Shanghai, Bangkok and Singapore.
SWIFT Address: HABK JPJT
Leveraging this network – one of the most powerful of any Japanese regionalbank – our staff of international banking specialists at headquarters and overseas Financial Market Department
offices stand ready to offer customers a wide range of support services to meet
◆ Tokyo Office
their needs in overseas transactions, overseas business expansion and business
1-22, Nihonbashi Muromachi 4-chome, Chuo-ku,
development. The Bank continues to be one of Japan’s leading regional banks inTokyo 103-0022, Japanterms of the amount of foreign exchange transactions handled. The Bank offers
Phone: (03)3277-0082 Facsimile: (03)3246-4675
to parent companies in Japan the funds they need to expand overseas and thefunds they need to finance their overseas subsidiaries (“parent-subsidiaryloans”). And we are also promoting initiatives to expand cross-border loans whereby our domestic offices offer direct loans to customers
operating overseas. We have extended cross-border loans to customers operating in China, Thailand, Indonesia, Vietnam and Philippines(as of the end of March 2019). We also handle loans denominated in Thai baht.
Our Hong Kong Branch offers loans to customers planning to operate in Hong Kong/South China as well as cross-border loans tocustomers’ subsidiaries in Southeast Asia and mainland China. The Hong Kong Branch also offers loans denominated in RMB(renminbi).
In addition, the Bank can meet the fund-raising needs of customers’ overseas subsidiaries by making the most of our partnership withleading overseas banks.

which the Bank granted concessions such as deferral of interest payments in order tosupport for their management reconstruction.
Loans Contractually Past Due 3 months or more
Loans, either principal or interest payment of which is contractually past due for 3
months or more; excludes loans to customers in bankruptcy and past due loans.
Restructured Loans
Loans to customers on which the Bank granted concessions such as reduction of thestated interest rate, deferral of interest payments, extension of maturity date, debt
forgiveness and other arrangements favoring customers to support for their
management reconstruction; excludes loans to customers in bankruptcy, past due loans
and loans contractually past due 3 months or more.

◆ Hong Kong Branch1602-05, 16F The Gateway Tower 2 25 Canton Road, Tsimshatsui, Kowloon, Hong Kong
Phone: 852-2845-4188 Facsimile: 852-2537-1757 SWIFT Address: HABKHKHH◆ Representative Office Registered in Singapore

16 Raffles Quay, #15- 05 Hong Leong Building, Singapore 048581
Phone: 65-6221-1182 Facsimile: 65-6221-0556◆ Bangkok Representative Office

Bhiraj Tower at EmQuartier 18th floor, Unit1804 689 Sukhumvit Road, North Klongton,
Vadhana, Bangkok 10110 Thailand Phone: 66-2261-8226 Facsimile: 66-2261-8227

Shanghai / Dalian
China is an important huge market for Japan and Nagano Prefecture. Our customers have established over 800 manufacturing andsales facilities in mainland China, and their making inroads to coastal regions areespecially remarkable. Since its opening in May 2002, the Shanghai Representative Officesupports its customers in their making inroads to China from various aspects and tries toprovide them with every kind of information from the city of Shanghai, which is the largest
business city as well as a center of the economy and finance in China. In January 2008, theBank established the Dalian Representative Office to offer careful support to customers.
◆ Shanghai Representative Office

8F, Hang Seng Bank Tower, 1000 Lujiazui Ring Road, Pudong New Area, Shanghai, China
Phone: 86-21-6841-1882 Facsimile: 86-21-6841-2118◆ Dalian Representative Office

6F, Senmao Building, 147 Zhongshan Road, Xigang District, Dalian, Liaoning, China
Phone: 86-411-3960-8266 Facsimile: 86-411-3960-8182

Environmental Conservation Activities

Reduction Targets for Greenhouse Gas
Emissions

Environmental Policy

During FY2018, the Bank has reduced
GHG emissions by 14.4% from the baseyear of FY2013. The Bank set as a target
for FY2020 a 15% reduction in GHG
emissions from the base year of FY2013.

Environmental Philosophy
The Hachijuni Bank Group positions environmental conservation activities as elements vital to corporate social responsibility and willcontribute to the creation of a sustainable regional community through positive and continual improvements in the environment.

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Action Program

1. The Group will try to prevent pollution, mitigate the effects of climate change and adapt to climate change by accurately
determining the impact of its activities on the environment as well as the impact from the external environment, and will set,achieve, and review its environmental objectives.
2. The Group will comply with all laws, regulations, and agreements concerning the environment.
3. The Group will make efforts to conserve resources and energy toward reducing environmental burden.
4. By providing financial products, services, and information, the Group aims to support its clients who are directly involved withenvironmental preservation, thereby contributing to improving the local environment.
5. Recognizing the importance of biodiversity which is a blessing of nature, the Group will work to preserve biodiversity.
6. All officers and employees of the Group, and their families, will engage in activities for environmental conservation, as wellas enhance their awareness of environmental issues.

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Results of Environmental Accounting for Fiscal Year 2018
Environmental conservation cost
Classification(millions of yen)

FY2017FY2018

172

69

Resource circulation cost30

30

Pollution prevention cost

00Global environmental
conservation cost (*1)

142

39

Administrative activity cost

63

66

Personnel cost42

42

Disclosure of environment
information and advertisement

1211

Maintenance of environmental
management system

53

Monitoring of environmental burden

410Social activity cost (*2 )

19

17

Total

254

152

Business area cost

Economic benefit associated with environmental
conservation activities(millions of yen)

Item

FY2017FY2018

1,711

1,591

1,688

1,554

Income from EB contracts

17

25

Income from ISO14001 consultations

6

12

Cost saved (*3 )

△ 23

20

Total

1,688

1,611

IncomeThree Pillars
1 Environmental conservation
activities by the Bank’s corebusiness(Target of FY2019) Contribution tocustomers’ activities in environmental
improvements by providing
environment-friendly financial products

2 Reduction of internal
environmental burden(Target of FY2019) Achievement of
the reduction in both environmental
burden and the Bank’s costs throughenergy saving and resource
conservation

3 Contribution to the regional
economy and reinforcement ofenvironmental education(Target of FY2019) Contribution to
the regional community throughenvironmental volunteer activities

TopicsOur replies to CDP rewarded with No. 1 rank in the banking sector
The Bank responded to the CDP 2018 (Climate Change) questionnaire and gained the comprehensive rating “B (management)”
that falls under the first rank group in the Japanese banking sector and the fifth rank group in the overall financial sector. CDP
rated our business management particularly highly for being conscious of climate change, and its steady reduction of greenhousegas emissions by setting medium-and long-term goals.

Income from environment-relatedloans*1 Installation cost of LED, introduction cost of energy-saving
window glass*2 Support funds for “Hachijuni-no-Mori,” donations to
Nagano Environment Conservation Associations*3 The amount reduced in utilities expenses, supplies
expenses and expenses for disposing of wastes throughenergy and resource saving efforts (stated by straightcomparison with the previous fiscal year)
A negative figure means an increase from the previous fiscal
year.

Environmental Management Survey Ranking
The Bank ranked first in the Japanese banking sector (the first rank for the fifth year in a row in the Japanese regional banks) in
the 22nd Environmental Management Survey Ranking (FY2018) by the Nihon Keizai Shimbun.
This survey evaluates Japanese companies to see how their environmental initiatives harmonize with management efficiency in
4 categories: systems for environmental management promotion, measures for pollution control and biodiversity promotion,
resource circulation, and measures against global warming. As such, this survey is considered to be one of the most important
rankings in Japan in terms of corporate environmental management.

Environmental conservation benefit (Reduction of carbon dioxide emission)
Classification(t- CO 2)

FY2017FY2018410317

CO 2 emission reduced by customers through the help of the Bank’s core businesses

403,678

481,745

Total

404,088

482,062

CO 2 emission reduced by the Bank’s internal efforts (by straight comparison with the previous fiscal year)

Our Initiatives to Address Global Warming
Current State of Greenhouse Gas Emissions
Beginning in FY2014, the Bank has calculated GHG emissions up to Scope 3, including emissions in its supply chains.
(Unit : t-CO 2)
Items

FY2017FY2018

Scope 1

Direct emissions

Heavy oil, kerosene, city gas, gasoline, propane gas

2,727

2,755

Scope 2

Energy-derived indirect emissions

Electricity

9,478

9,162

13,134

10,307

1 Purchased goods & services

Stationery, copying paper, water and sewage, etc.

3,284

2,872

2 Capital goods

All buildings belonging to the Bank, construction-in-progress
accounts and other tangible fixed assets

4,948

3,413

3 Fuel and energy-related activities notincluded in Scope 1 or 2

Heavy oil, kerosene, city gas, gasoline, propane gas,
electricity

1,064

1,040

4 Transportation and delivery (upstream)

Postage, transportation

1,803

744

5 Waste generated in operations

All forms of waste

34

52

6 Business travel

Business trips

521

570

Scope 37 Employee commuting

Commuting

1,480

1,616

Total

25,33922,223Note1 : Categories 8, 9, 10, 11, 12, 13 and 14 of scope 3 were zero. Category 15 of scope 3 was not calculated.
Note 2 : The above figures were authorized by Lloyd’s Register Quality Assurance Limited ( LRQA) as the third party guarantee.

ISO14001 Certification
The Bank received the ISO14001 certification for its head office in March 1999, which was a first for a regional bank in Japan.
It expanded the scope of this certification to all domestic branches in March 2002. A total of 167 offices (as of March 31, 2019)and nearly 5,700 employees are involved in this effort.

Contribution to the Region and Society
As members of the “Hachijuni Volunteer Club,” our employees are encouraged to participate in various social activities which
include community cleaning campaigns, forest management programs, collaborations in events, and others. Our offices are also
working actively in their own unique ways by cooperating in major events such as the “Nagano Prefecture Judan Ekiden (ekiden
relay race through Nagano Prefecture),” welfare-related activities and collection volunteers, along with environmental volunteer
activities. During FY2018, a total of around 6,100 of our employees worked as volunteers.
To further support volunteers and motivate them, the Bank introduced the “Special Holiday System to Encourage Volunteer
Activities.”
The Bank established the “Nagano Economic Research Institute” in March 1984 as a think tank to contribute to the advancementand development of the regional community in response to its highly sophisticated needs.
The Bank also established the “Hachijuni Culture Foundation” in 1985 to contribute to the development of the regional
community, specifically in arts and culture.

Yoshiyuki Yamaura
Chairman

Shoichi Yumoto
President

Koichi Sakai
Audit & Supervisory Board Member

Muneo Yoshie
Managing Director

Yuichi SatoManaging Director

Kiyohito Yamasawa
Outside Audit & Supervisory Board Member

Hideo Funami
Managing Director

Masaki Matsushita
Deputy President

Hiroyuki Miyahara
Managing Director

Kayo Tashita
Director (Outside Director)

Takeshi Kadota
Outside Audit & Supervisory Board Member

Takahiko AsaiManaging Director

Yoshimi Kitazawa
Audit & Supervisory Board Member

Yasuyoshi Wada
Outside Audit & Supervisory Board Member（as of June 21, 2019）

The ratio of outside directors : 20%
The ratio of female directors : 10%

Sokichi Kurosawa
Director (Outside Director)

Shareholders’ Meeting

Audit & Supervisory Board Members, Audit & Supervisory Board

Board of Directors
ChairmanManagement
Committee

President

Deputy PresidentManaging Directors

Branches and Sub-Branches
Operation Centers

Branch Support Department
Corporate Banking Department
Personal Banking Department
International and Treasury Department
Financial Market Department
Loan Control Department
Loan Supervision Department

Loan Operations Center
Operations Administration Department
Computer Systems Department
Nominating and Compensation
Committee*

Planning and Coordination Department
Personnel Department
General Secretariat
General Affairs Department—Environment Office
Risk Management Department
Tokyo Liaison OfficeInternal Audit Department＊ It is not a committee pursuant to the Companies Act but established voluntarily by the Bank.

（as of June 21, 2019）

Date ofestablishment

The Hachijuni Bank, Ltd.

Hachijuni Staff Service Co., Ltd.
Hachijuni Securities Co., Ltd.
Hachijuni Credit Guarantee Co., Ltd.
Yamabiko Services Co., Ltd.
Hachijuni Lease Co., Ltd.
Hachijuni Card Co., Ltd.
Hachijuni System Development Co., Ltd.
Hachijuni Capital Co., Ltd.
Hachijuni Auto Lease Co., Ltd.

Numberof sharesin thousands
Japan Trustee Services Bank, Ltd. (Trust Account)
17,985
Meiji Yasuda Life Insurance Company
17,867The Master Trust Bank of Japan, Ltd. (Trust Account)
17,325
State Street Bank and Trust Company 505223
17,071
Nippon Life Insurance Company
17,000
Name

%
3.62
3.60
3.49
3.44
3.42

Line of business

September 1986

Placement of temporary working staff

May 1949

Securities business

December 1983

Guarantee to consumer loan

June 2000

Credit collection and management

June 1974

Leasing

August 1982

Credit card business

December 1983

Development of computer systems

September 1984

Venture capital for high-tech companies

October 2005

Leasing（as of June 21, 2019）

Numberof sharesin thousands
Japan Trustee Services Bank, Ltd. (Trust Account 9)13,740MUFG Bank, Ltd.
12,364Shin-Etsu Chemical Co., Ltd.
11,830Showa Shoji Co., Ltd.
11,820
Aioi Nissay Dowa Insurance Co., Ltd.
11,441
Name

%
2.77
2.49
2.38
2.38
2.30

（as of March 31, 2019）

Consolidated Balance Sheet

Consolidated Statement of Income

March 31, 2019Year Ended March 31, 2019
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Notes to Consolidated Financial Statements
Year Ended March 31, 2019
1. BASIS OF PRESENTATION OF CONSOLIDATEDFINANCIAL STATEMENTS

The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its
related accounting regulations and the Enforcement Regulation
for the Banking Law, and in accordance with accounting
principles generally accepted in Japan (Japanese GAAP), which
are different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards ( IFRS).
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in orderto present them in a form that is more familiar to readers
outside Japan. In addition, certain reclassifications have been
made in the 2018 consolidated financial statements to conformto the classifications used in 2019.
All Japanese yen figures in the consolidated financial
statements have been rounded down to the nearest million yen.
Accordingly, the total of each account may not be equal to the
combined total of the individual items.
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which The Hachijuni Bank,
Ltd. (the "Bank") is incorporated and operates. The translationsof Japanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥110.95 to $1, the rate of exchange at
March 31, 2019. Such translations should not be construed as
representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a. Consolidation _ The consolidated financial statements as ofMarch 31, 2019, include the accounts of the Bank and its
nine significant subsidiaries (together, the "Group").
Under the control and influence concepts, those companies
in which the Bank, directly or indirectly, is able to exercise
control over their operations are fully consolidated.
Investments in six (seven in 2018) unconsolidated
subsidiaries and in one associated company are stated atcost, and are included in securities in the consolidated
financial statements. If the equity method of accounting had
been applied to the investments in these companies, theeffect on the accompanying consolidated financial
statements would not be material.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within
the Group is eliminated.
b. Cash Equivalents _ For the purpose of reporting of cash
flows, "Cash and cash equivalents" consists of "Cash" and"Due from the Bank of Japan."c. Trading Assets and Liabilities _ Transactions for trading
purposes (for purposes of seeking to capture gains arisingfrom short-term changes in interest rates, currency exchange
rates, or market prices of securities and other market-related
indices or from gaps among markets) are included in"Trading assets" and "Trading liabilities" on a trade-datebasis.

Trading securities and monetary claims bought for trading
purposes are stated at fair value at the consolidated balance
sheet date. Trading-related financial derivatives, such as
swaps, futures, and options are stated at amounts that would
be received or paid for settlement if such transactions were
terminated at the consolidated balance sheet date.
Trading income includes interest received and paid during
the fiscal year and unrealized gains and losses resulting
from the change in the value of securities, monetary claimsbought, and derivatives between the consolidated balance
sheet dates.
d. Securities _ Securities other than investments inunconsolidated subsidiaries and associated company areclassified into three categories, based principally on theGroup's intent, as follows: (a) trading securities are
securities held in anticipation of gains arising fromshort-term changes in market value and/or held for resale tocustomers and are carried at fair value with corresponding
unrealized gains and losses recorded in income;(b) held-to-maturity debt securities, which are expected tobe held to maturity with the positive intent and ability tohold to maturity, are stated at amortized cost computed
using straight-line method; and (c) available-for-salesecurities, which are not classified as either of theaforementioned securities. Marketable available-for-salesecurities are stated at fair value with unrealized gains andlosses, net of applicable taxes, reported in a separate
component of equity. Available-for-sale securities for whicha fair value is not reliably determined are stated at costcomputed using the moving-average method.
In addition, investments in unconsolidated subsidiaries andassociated company that are not accounted for by the equity
method are carried at cost determined by themoving-average method.
Individual securities are written down when a decline in fairvalue below the cost of such securities is deemed to be otherthan temporary.
e. Securities in Money Held in Trust _ Securities included in"Money held in trust" are stated at fair value.
f. Property, Plant, and Equipment _ Property, plant, andequipment are stated at cost less accumulated depreciation.
Depreciation for buildings and equipment of the Group iscomputed under the declining-balance method at rates basedon the estimated useful lives, which are principally from 1
to 50 years for buildings and from 3 to 20 years forequipment.
g. Software _ Capitalized software for internal use isdepreciated using the straight-line method over its estimateduseful life (principally 5 years).
h. Long-Lived Assets _ The Group reviews its long-lived assets
for impairment whenever events or changes in circumstancesindicate the carrying amount of an asset or asset group may
not be recoverable. An impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds thesum of the undiscounted future cash flows expected to result
from the continued use and eventual disposition of the asset
or asset group. The impairment loss would be measured as
the amount by which the carrying amount of the asset
exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
i. Allowance for Credit Losses _ An allowance for credit

losses is determined based on a credit assessment made bymanagement at each consolidated balance sheet date. A keyelement relating to policies and discipline used indetermining the allowance for credit losses is the credit
classification and the related borrower categorization
process. The categorization is based on conditions that may
affect the ability of borrowers to service their debt, taking
into consideration current financial information, historical
payment experience, credit documentation, public
information, analyses of relevant industry segments, andcurrent trends. In determining the appropriate level of theallowance, the Group evaluates the probable loss by
category of loan based on its type and characteristics.
The Bank performs a credit assessment of its loan asset
quality. The quality of all loans is assessed by branches andthe credit supervisory division with a subsequent audit by
the asset review and the credit inspection division inaccordance with the Bank's policies and discipline.
Under the policies and discipline, all loans are classified
into five categories, which are: "normal"; "caution,
including substandard"; "possible bankrupt"; "virtual
bankrupt"; and "legal bankrupt."
The allowance for credit losses is calculated based on thepast loss ratio for normal and caution categories, and on thefair value of the collateral and other factors of solvency,
including value of future cash flows for possible bankrupt,
virtual bankrupt, and legal bankrupt categories.
The Bank applied the "discounted cash flow method" (the"DCF method") in calculating the loan loss reserve amounts
for most of the claims against obligors categorized as
possible bankrupt or substandard under the self-assessment
guidelines, when total loan amounts exceed a certain
amount. Under the DCF method, the loan loss allowance isdetermined as the difference between (a) relevant estimatedcash flows discounted by the original contractual interest
rate and (b) the book value of the claim.
The consolidated subsidiaries provide an "Allowance for
credit losses" at the amount deemed necessary to cover suchlosses, principally based on past experience andmanagement's assessment of the loan portfolio.
j. Asset and Liability for Employees' Retirement Benefits _The Bank and its consolidated subsidiaries have acontributory funded pension plan and noncontributory
unfunded retirement benefit plans, together covering
substantially all of their employees.
The Bank accounts for the liability for retirement benefits
based on the projected benefit obligations and plan assets atthe balance sheet date. The projected benefit obligations are
attributed to periods on a benefit formula basis. Actuarial
gains and losses that are yet to be recognized in profit orloss are recognized within equity (accumulated othercomprehensive income), after adjusting for tax effects andare recognized in profit or loss over 10 years no longer thanthe expected average remaining service period of theemployees.
k. Provision for Reimbursement of Deposits _ A provision
for reimbursement of deposits, which were derecognized asliabilities under certain conditions, is provided for possible
losses on future claims of withdrawal based on historicalreimbursement experience.
l. Provision for Contingent Losses _ A provision forcontingent losses is provided for the contribution to the
National Federation of Credit Guarantee Corporations'liability sharing program and is recorded in the amount of

estimated future contributions based on subrogate
performance, etc.
m. Reserve under Special Laws _ A reserve under special
laws is provided for contingent liabilities from brokering of
securities or derivative transactions in accordance with
Article 46-5 of the Financial Instruments and ExchangeAct.
n. Stock Options _ In December 2005, the AccountingStandards Board of Japan ("ASBJ") issued ASBJ Statement
No. 8, "Accounting Standard for Stock Options," and related
guidance that require companies to recognize compensation
expense for employee stock options based on the fair value
at the date of grant and over the vesting period as
consideration for receiving goods or services. The standard
also requires companies to account for stock options
granted to nonemployees based on the fair value of either
the stock option or the goods or services received. In the
consolidated balance sheet, the stock option is presented asa stock acquisition right as a separate component of equity
until exercised. The standard covers equity-settled,share-based payment transactions, but does not cover
cash-settled, share-based payment transactions.
o. Leases _ Finance leases that are deemed to transfer
ownership of the leased property to the lessee arerecognized as lease receivables, and finance leases that are
not deemed to transfer ownership of the leased property to
the lessee are recognized as investments in lease.
p. Income Taxes _ The provision for income taxes iscomputed based on the pretax income included in the
consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of
temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes aremeasured by applying currently enacted income tax rates tothe temporary differences.
q. Foreign Currency Transactions _ Assets and liabilities
denominated in foreign currencies held domestically andthe accounts of the Bank's overseas branch are translated
into Japanese yen generally at the exchange rates prevailingon the consolidated balance sheet date.
r. Derivatives and Hedging Activities _ Derivatives arestated at fair value. Derivative transactions that meet hedge
accounting criteria are primarily accounted for under thedeferral method whereby unrealized gains and losses aredeferred until maturity as deferred gain ( loss) under hedge
accounting in a separate component of equity.
The hedging derivative instruments must be highly effectivein achieving offsetting changes in fair values or variable
cash flows from the hedged items attributable to the risk
being hedged.
The Bank adopted portfolio hedging in accordance with
Industry Audit Committee Report No. 24 issued by theJapanese Institute of Certified Public Accountants("JICPA"). Under portfolio hedging, a portfolio of hedged
items, such as deposits or loans with common maturities, ismatched with a group of hedging instruments, such as
interest rate swaps, which offset the effect of fair value
fluctuations of the hedged items by identified maturities.
The effectiveness of the portfolio hedge is accessed by eachgroup.

Currency swap and foreign exchange swap transactions areaccounted for using deferral hedge accounting by fully
applying Industry Audit Committee Report No. 25 issued
by the JICPA. Under deferral hedge accounting, hedged
items are identified by grouping the foreign
currency-denominated financial assets and liabilities by
currencies and designating derivative transactions, such as
currency swap transactions and forward exchange contracts
as hedging instruments. Hedge effectiveness is reviewed bycomparing the total foreign currency position of the hedged
items and hedging instruments by currency.
With respect to derivative transactions between
consolidated subsidiaries or internal transactions between
trading accounts and other accounts, the Bank manages
interest rate swap and currency swap transactions
designated as hedging instruments in accordance with thestrict hedging criteria for external mirror transactions
stipulated in the Industry Audit Committee Reports No. 24
and No. 25. Therefore, the Bank accounts for the gains andlosses on these swap transactions in its earnings or defers
until maturity as deferred gain ( loss) under hedge
accounting in a separate component of equity.
The interest rate swaps that qualify for hedge accounting
and meet specific matching criteria are not measured at fairvalue but the net payments or receipts under the swap
agreements are recognized and included in interest expense
or income.
s. Per Share Information _ Basic net income per share("EPS") is computed by dividing net income available tocommon shareholders by the weighted-average number ofcommon shares outstanding for the period, retroactively
adjusted for stock splits.
Diluted EPS reflects the potential dilution that could occur
if securities were exercised or converted into common
stock. Diluted EPS of common stock assumes fullconversion of the outstanding convertible notes and bonds
at the beginning of the year (or at the time of issuance) with
an applicable adjustment for related interest expense, net oftax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying
consolidated statement of income are dividends applicableto the respective years including dividends to be paid after
the end of the fiscal year.

3. CASH AND CASH EQUIVALENTS
The reconciliation of "Cash and cash equivalents" in the
consolidated statement of cash flows and "Cash and due frombanks" in the consolidated balance sheet as of March 31, 2019 and2018, was as follows:
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'XHIURPEDQNVH[FOXGLQJDPRXQWVGXH

IURPWKH%DQNRI-DSDQ
&DVKDQGFDVKHTXLYDOHQWV 

4. TRADING ASSETS AND LIABILITIES
Trading assets and liabilities as of March 31, 2019 and 2018,consisted of the following:
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2WKHUWUDGLQJDVVHWV 




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


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  

    

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  5. MONEY HELD IN TRUSTThe aggregate fair value of money held in trust that is listed on
stock exchanges or over-the-counter markets as of March 31, 2019and 2018, is as follows:)DLU9DOXH
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Securities as of March 31, 2019 and 2018, consisted of thefollowing:
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/RFDOJRYHUQPHQWERQGV
&RUSRUDWHERQGV
(TXLW\VHFXULWLHV
2WKHUVHFXULWLHV

  









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


  6HFXULWLHVFODVVLILHGDV$YDLODEOHIRUVDOH
(TXLW\VHFXULWLHV'HEWVHFXULWLHV
2WKHUVHFXULWLHV+HOGWRPDWXULW\        

 
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
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Proceeds from sales of available-for-sale securities for the years
ended March 31, 2019 and 2018, were ¥808,800 million($7,289,775 thousand) and ¥849,373 million, respectively. Grossrealized gains and losses on these sales, computed on themoving-average cost basis, were ¥15,915 million($143,444 thousand) and ¥3,944 million ($35,553 thousand),
respectively, for the year ended March 31, 2019, and¥34,980 million and ¥7,062 million, respectively, for the year
ended March 31, 2018.

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted as of March 31, 2019 and 2018,consisted of the following:

The securities placed under unsecured lending agreements areincluded in the above national government bonds in the amount of¥173,166 million ($1,560,766 thousand) and ¥194,788 million as ofMarch 31,2019 and 2018, respectively.

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(TXLW\VHFXULWLHV'HEWVHFXULWLHV
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(TXLW\VHFXULWLHV'HEWVHFXULWLHV
2WKHUVHFXULWLHV+HOGWRPDWXULW\    

 




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)DLU
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   


 








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 

As of March 31, 2019 and 2018, deferred gains for tax purposes of¥8,207 million ($73,978 thousand) and ¥8,209 million,
respectively, on property, plant, and equipment sold and replacedwith similar assets have been deducted from the cost of newly
acquired property, plant, and equipment.

   


 



Impairment losses on the tangible fixed assets, consisted of thefollowing:

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$UHD

Of total loans, loans to customers in bankruptcy, which represent
nonaccrual loans and which were included in loans and bills
discounted, amounted to ¥5,556 million ($50,081 thousand) and¥4,957 million as of March 31, 2019 and 2018, respectively; past
due loans, which represent nonaccrual loans other than loans tocustomers in bankruptcy, amounted to ¥53,711 million($484,107 thousand) and ¥61,045 million as of March 31, 2019 and2018, respectively.
Of total loans, accruing loans contractually past due three months
or more amounted to ¥203 million ($1,834 thousand) and¥366 million as of March 31, 2019 and 2018, respectively.

8. FOREIGN EXCHANGES&RVW

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

The carrying amounts and aggregate fair value of the securities asof March 31, 2019 and 2018, are as follows:

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2WKHUWDQJLEOHIL[HGDVVHWV
6RIWZDUH
2WKHULQWDQJLEOHIL[HGDVVHWV 



In the following description, in addition to "Securities" in the
consolidated balance sheet, also presented are beneficial interests
in trust investments within the item "Monetary claims bought."

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Property, plant, and equipment as of March 31, 2019 and 2018, netof accumulated depreciation of ¥71,552 million($644,905 thousand) and ¥70,743 million, respectively, consistedof the following:
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2YHUGUDIWVOf total loans, restructured loans amounted to ¥16,525 million($148,941 thousand) and ¥20,368 million as of March 31, 2019 and2018, respectively. Restructured loans, designed to assist in therecovery of the financial health of debtors, were loans on which
the Bank granted concessions (e.g., reduction of the stated interest
rate, deferral of interest payment, extension of maturity date,
reduction of the face amount). Loans classified as nonaccrualloans or accruing loans contractually past due three months ormore were excluded from restructured loans.

Guarantee obligations for bonds in private placement (defined in
Article 2 (3) of Financial Instruments and Exchange Act) included
in securities were ¥37,357 million ($336,708 thousand) and¥25,156 million as of March 31,2019 and 2018, respectively.

9. PROPERTY, PLANT, AND EQUIPMENT AND
INTANGIBLE ASSETS

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6. SECURITIES 





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*DLQV
/RVVHV
9DOXH&RVW

Foreign exchanges as of March 31, 2019 and 2018, consisted of thefollowing:
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



86'ROODUV$VVHWV
'XHIURPIRUHLJQEDQNV)RUHLJQH[FKDQJHELOOVERXJKW)RUHLJQH[FKDQJHELOOVUHFHLYDEOH

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
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
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/LDELOLWLHV
2YHUGUDIWVIURPIRUHLJQEDQNV)RUHLJQH[FKDQJHELOOVVROG)RUHLJQH[FKDQJHELOOVSD\DEOH

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
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 



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10. LONG-LIVED ASSETS<HDU(QGHG0DUFK
8VH

&DWHJRU\

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1DJDQR3UHIHFWXUH 2SHUDWLQJDVVHWV %XLOGLQJV
1DJDQR3UHIHFWXUH ,GOHDVVHWV/DQGDQG
EXLOGLQJV
2WKHUV2SHUDWLQJDVVHWV /DQG
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2WKHUV,GOHDVVHWV/DQGDQG
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$UHD

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1DJDQR3UHIHFWXUH 2SHUDWLQJDVVHWV /DQG
1DJDQR3UHIHFWXUH 2SHUDWLQJDVVHWV %XLOGLQJV
1DJDQR3UHIHFWXUH ,GOHDVVHWV/DQGDQG
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2WKHUV2SHUDWLQJDVVHWV /DQG
2SHUDWLQJDVVHWV %XLOGLQJV
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EXLOGLQJV8VH

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In the case of the above asset groups, book values were written
down to the recoverable levels due to falling land prices and lower
net cash from operating activities, and decision made to abolish thebranch, and differences have been recorded as impairment losses.
In this method of asset grouping, operating assets as a rule aretreated as business premises units, and idle assets are treated as
individual asset units. For the consolidated subsidiaries, eachcompany is treated as one asset units, and idle assets are treated as
individual asset units. The recoverable values of such assets aremeasured as their net selling prices determined by the appraisal
value based on Japanese real estate appraisal standard.

11. ACCEPTANCES AND GUARANTEES
Acceptances and guarantees include all contingent liabilities
associated with the issuance of letters of credit, acceptances ofbills, and issuances of guarantees. The contra account included in
the assets side of the consolidated balance sheet represents the
Bank's potential claim against applicants.

12. ASSETS PLEDGED<HDU(QGLQJ0DUFK

Assets pledged as collateral as of March 31, 2019 and 2018,consisted of the following:
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



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

 

5HODWHGOLDELOLWLHV'HSRVLWV
3D\DEOHVXQGHUVHFXULWLHV 
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

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In addition to the above, assets pledged as collateral fortransactions, such as exchange settlement transactions, or as
substitute securities for initial margin on futures transactions andothers were as follows:
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6HFXULWLHV
&DVK RWKHUDVVHWV&DVKFROODWHUDOUHFHLYHGIRUILQDQFLDOLQVWUXPHQWOLDELOLWLHV RWKHUDVVHWV'HSRVLWVWRFHQWUDOFRXQWHUSDUW\ RWKHUDVVHWV

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




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13. DEPOSITS
Deposits as of March 31, 2019 and 2018, consisted of thefollowing:

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7LPHGHSRVLWV
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
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
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 

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 



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14. BORROWED MONEY
As of March 31, 2019 and 2018, the weighted-average annualinterest rates applicable to borrowed money were 0.28% and0.24%, respectively.
Borrowed money includes borrowings from the Bank of Japan andother financial institutions. Annual maturities of borrowed money
as of March 31, 2019, were as follows:

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  15. RETIREMENT AND PENSION PLANS

In the contributory funded pension plan, the Group adopted a cash
balance plan that each employee has a "hypothetical accountbalance," which accumulates pay credits based on each salarylevel, interest credits based on the trend of market interest rate,
and pay retirement lump-sum grants or pension, based on theirsalary and length of service. Some funded pension plan
contributed to employee pension trust.
In the noncontributory unfunded plan, the Group pays retirement
lump-sum grants based on salary and length of service.
Employees whose service with the Bank or its domestic
consolidated subsidiaries is terminated are, under mostcircumstances, entitled to retirement and pension benefits
determined by reference to basic rates of pay at the time oftermination, length of service, and conditions under which thetermination occurs. If the termination is involuntary, caused byretirement at the mandatory retirement age or death, the employee
is typically entitled to a larger payment than in the case ofvoluntary termination.
In addition, some consolidated subsidiaries adopt the simplified
method to calculate their liability for employees' retirement benefit
and retirement benefit costs.
(1) The changes in defined benefit obligation, excluding the ones
calculated by the simplified method, (3) below, for the years
ended March 31, 2019 and 2018, were as follows:
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(4) Reconciliation between the asset and liability recorded in the
consolidated balance sheet and the balances of defined benefit
obligation and plan assets, including that calculated by thesimplified method (3) above is as follows:
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 
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ended March 31, 2019 and 2018, were as follows:
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a. Components of plan assets
Plan assets as of March 31, 2019 and 2018, consisted of thefollowing:
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Employee pension trusts for the years ended March 31, 2019and 2018, are 34.78% and 37.81%, respectively, and areincluded in the total above.
b. Method of determining the expected rate of return on plan
assets
The expected rate of return on plan assets is determinedconsidering the long-term rates of return which that are
expected currently and in the future from the various
components of the plan assets.
(9) Assumptions used for the years ended March 31, 2019 and2018, were set forth as follows:
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(2) The changes in plan assets, excluding the ones calculated by thesimplified method, (3) below, for the years ended March 31,
2019 and 2018, were as follows:
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UHVXOWRIPHUJHUThe Bank and its domestic consolidated subsidiaries have acontributory funded pension plan and noncontributory unfunded
retirement benefit plans.

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calculated by the simplified method for the years ended March 31,
2019 and 2018, were as follows:
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(7) Amounts recognized in accumulated other comprehensive
income (before income tax effect) in respect of defined
retirement benefit plans, before adjusting for tax effects, as ofMarch 31, 2019 and 2018, were as follows:
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16. EQUITY
The significant provisions in the Banking Law and the Companies
Act of Japan (the "Companies Act") that affect financial andaccounting matters are summarized below:
a Dividends
Under the Companies Act, companies can pay dividends at any
time during the fiscal year in addition to the year-end dividend
upon resolution at the shareholders' meeting. Additionally, forcompanies that meet certain criteria including (1) having a
Board of Directors, (2) having independent auditors, (3) having
an Audit & Supervisory Board, and (4) the term of service ofthe directors being prescribed as one year rather than thenormal two-year term by its articles of incorporation, the Boardof Directors may declare dividends (except for dividends inkind) at any time during the fiscal year if the company hasprescribed so in its articles of incorporation. The Bank meets
all the above criteria.
Semiannual interim dividends may also be paid once a year
upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must
be maintained at no less than ¥3 million.
b Increases / Decreases and Transfer of Common Stock,
Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of
dividends must be appropriated as a legal reserve (a componentof retained earnings) or as additional paid-in capital (acomponent of capital surplus) depending on the equity accountcharged upon the payment of such dividends until the aggregate
amount of the legal reserve and additional paid-in capitalequals 25% of common stock. Under the Companies Act, thetotal amount of additional paid-in capital and legal reserve may

be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in
capital, other capital surplus, and retained earnings can betransferred among the accounts within equity under certain
conditions upon resolution by the shareholders.
c Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchasetreasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock
purchased cannot exceed the amount available for distribution
to the shareholders, which is determined by a specific formula.
Under the Companies Act, stock acquisition rights arepresented as a separate component of equity.
The Companies Act also provides that companies can purchaseboth treasury stock acquisition rights and treasury stock. Suchtreasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stockacquisition rights.
The Banking Law provides that an amount at least equal to
20% of the aggregate amount of cash dividends and certain
other appropriations of retained earnings associated with cash
outlays applicable to each period shall be appropriated as alegal reserve (a component of retained earnings) until the totalof such reserve and additional paid-in capital equals 100% ofcommon stock. The amount of total additional paid-in capitaland legal reserve that exceeds 100% of common stock may beavailable for dividends upon resolution by the shareholders. In
addition, the Companies Act permits the transfer of a portion of
additional paid-in capital and legal reserves to common stock
upon resolution by the Board of Directors.

17. STOCK ACQUISITION RIGHTS
The Bank's stock option plans grant options to directors topurchase certain shares of the Bank's common stock in therespective periods. Stock-based compensation expenses were
¥68 million ($619 thousand) and ¥73 million for the years
ended March 31, 2019 and 2018, respectively.
The stock options outstanding as of March 31, 2019, are as
follows:
Stock
Persons
Number of
Option Granted Options Granted
2008
9 directors 105,700 shares
Stock Option
2009
8 directors 135,900 shares
Stock Option
2010
8 directors 150,000 shares
Stock Option
2011
8 directors 150,000 shares
Stock Option
2012
8 directors 150,000 shares
Stock Option
2013
7 directors 129,300 shares
Stock Option
2014
8 directors 133,800 shares
Stock Option
2015
8 directors 78,900 shares
Stock Option
2016
8 directors 150,000 shares
Stock Option
2017
7 directors 109,600 shares
Stock Option
2018
8 directors 150,000 shares
Stock Option

Date of Exercise
Grant
Price Exercise Period
July 28,¥ 1 From July 29, 2008,($0.01) to July 28, 2033
2008
July 27,¥ 1 From July 28, 2009,($0.01) to July 27, 2034
2009
August 2,¥ 1 From August 3, 2010,($0.01) to August 2, 2035
2010
August 8,¥ 1 From August 9, 2011,($0.01) to August 8, 2036
2011
August 6,¥ 1 From August 7, 2012,($0.01) to August 6, 2037
2012
August 5,¥ 1 From August 6, 2013,($0.01) to August 5, 2038
2013
July 22,¥ 1 From July 23, 2014,($0.01) to July 22, 2039
2014
July 27,¥ 1 From July 28, 2015,($0.01) to July 27, 2040
2015
July 25,¥ 1 From July 26, 2016,($0.01) to July 25, 2041
2016
July 24,¥ 1 From July 25, 2017,($0.01) to July 24, 2042
2017
July 23,¥ 1 From July 24, 2018,($0.01) to July 23, 2043
2018

The stock option activity is as follows:
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21. GENERAL AND ADMINISTRATIVE EXPENSES
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31, 2019 and 2018, consisted of the following:
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22. OTHER EXPENSES

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Estimate method:Black-Scholes option pricing model
Volatility of stock price:
26.48%
Estimated remaining outstanding period: 24 months
Estimated dividend:¥13 per share(0.125)%
Risk-free interest rate:
18. OTHER OPERATING INCOME 
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23. INCOME TAXESThe Bank and its domestic consolidated subsidiaries are subject toJapanese national and local income taxes that, in the aggregate,
resulted in a normal effective statutory tax rate of 30.34% for theyears ended March 31, 2019 and 2018.
The tax effects of significant temporary differences that resulted
in deferred tax assets and liabilities as of March 31, 2019 and2018, are as follows:
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Reconciliation is not presented for the years ended March 31, 2019and 2018, because the difference was immaterial (less than 5% of
the normal statutory tax rate).

24. LEASES

26. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

Lessor(1) Group Policy for Financial Instruments

The net investments in leases are summarized as follows:
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Maturities of lease receivables for finance leases that are deemed
to transfer ownership of the leased property to the lessee are as
follows:
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Maturities of investments in leases for finance leases that are
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The minimum rental commitments under noncancelable operatingleases as of March 31, 2019 and 2018, are as follows:
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25. RELATED-PARTY TRANSACTIONS

Related-party transactions for the fiscal years ended March 31,
2019 and 2018, are as follows:$PRXQWVRI
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The Group offers financial services such as providing loans
and sales of investment products to customers. In performing
these operations, the Bank uses funds received as deposits
from customers or by borrowing money from the market inconsideration of market conditions and the balance in funding
periods between the short term and the long term.
As the Bank holds financial assets and liabilities affected byinterest rate movements, it carries out Asset Liability
Management ("ALM") to avoid negative effects of interest
movements. In managing interest rate movements, the Bankutilizes derivatives.
The Bank and certain consolidated subsidiaries also holdsecurities for sale to customers.
(2) Nature and Extent of Risks Arising from Financial
Instruments(a) Loans
The Bank provides loans mainly to domestic customers, butdoes not focus on specific groups of companies. These loans
are exposed to credit risk in the case of the customers'
breach of the contract. In all domestic loans, the percentage
of loans in Nagano Prefecture, the Bank's main businessarea, is approximately 50%. As such, the Bank's credit risk
is likely to deteriorate if there are negative changes in theeconomy in Nagano Prefecture.
(b) Securities
Securities are mainly bonds, stocks, investment trusts,
and corporate investment funds. These securities areclassified into categories, such as (1) securities held tomaturity, (2) securities available for sale, and(3) securities for trading purposes to sell to customers.
All securities are exposed to the credit risk of the
securities' issuers or interest rate risk, market price risk,
foreign exchange risk, and liquidity risk.
(c) Deposits
The Bank receives deposits from customers. These
deposits are exposed to interest rate risk, foreignexchange risk, and liquidity risk.
(d) Derivatives
The purpose of using derivatives is to provide customers
various hedging instruments to hedge the Bank's
portfolio under ALM and to enhance the Bank's profit.
Derivatives include interest rate swaps, interest cap
transactions, and currency exchange swaps. Using thesederivatives as hedging instruments for loans andsecurities, the Bank applies hedge accounting toderivative transactions and assesses the effectivenessbetween the hedged items and hedging instruments fromthe start of hedging. These derivative transactions are
exposed to market risk and credit risk.
Derivative transactions used for hedging purposes arecarried out in accordance with the Bank's annual
hedging policy.
(3) Risk Management for Financial Instruments(a) Credit risk management
In accordance with internal rules of credit risk
management, the Bank examines every loan, manages
loans according to credit lines for each debtor, addresses
troubled loans, reviews each debtor's credit rating, andmanages the Bank's loan portfolio. Regarding the loan
examination structure, the loan promotion section isseparated from the loan examination section in the head
office. These two sections monitor and check each other.
Every loan from the business branches is examined inmany stages from loan application to the Bank's final
decision. The Bank reviews each debtor's credit rating ona regular basis to identify troubled loans in a timely
manner. In addition, the Bank uses examination resultsin order to reduce credit risk and to manage the Bank's
loan portfolio.
To address the credit risk of securities' issuers, the Bank
carries out its business under credit line limits for eachdebtor. Such limits are defined by the Risk Management
Department on a semiannual basis.
(b) Market risk management (interest rate risk, foreignexchange risk, and market price risk)
The Group stipulates internal rules of market risk
management and controls market risk so as to maintainmanagement soundness and profitability.
Considering the market and the Bank's conditions, theBank updates its Market Risk Management Policy on asemiannual basis to maintain an appropriate balance
between risk and return and to adjust the volume of risk.
Furthermore, the management committee confirms therisk limit and loss limit by each transaction type for eachcustomer according to the Market Risk Management
Policy. The Bank defines the limit of investment, limit ofholding, and limit of valuation losses, as necessary. It
also defines the threshold that should limit market risk
and losses to certain amounts. Each section should carryout its business within risk limits, as well as report therisk status to an executive officer on a daily basis.
Regarding management of business operations, the front
office is separated from the back office. The middle
office which controls and manages risk is also separated
from these two offices. These three offices monitor andcheck each other.
Management of Interest Rate Risk
To manage risk caused by interest rate fluctuations, theBank uses Value at Risk ("VaR") for the change of
economic value and uses ALM for the change of interest
rate in gap analysis. The "ALM and Integrated Risk
Conference" monitors the Group's risk status anddiscusses various measures corresponding to risks. As
stated above, the Bank uses some derivative transactions
under ALM.

To manage risk arising from derivative transactions, themiddle office, which checks and controls risk, isseparated from the front office so as to monitor the front
office's transactions.
Quantitative Information on Market Risk
The Bank principally uses VaR for quantitative analysisof the market risk of all financial instruments, and VaR
is multiplied by a certain stress (1 to 1.35 times) to
calculate market risk amount. For calculating VaR, thehistorical simulation method (confidence interval of
99.9%; observation period of 1,250 days; and holding
period of 10 days for Bank's trading business, 240 daysfor Bank's banking business, and 120 days for others)
has been adopted.
The VaRs in the Bank's trading business are¥908 million ($8,187 thousand) and ¥673 million and the
VaRs in the Bank's banking business are¥268,152 million ($2,416,872 thousand) and¥331,656 million as of March 31, 2019 and 2018,
respectively.
The Bank conducts backtesting to compare the VaR
calculated using the model with actual loss amounts.
According to the bank testing results, it is believed thatthe measurement model that the Bank uses is adequate tocapture market risk. It should be noted that VaR
measures the amount of market risk at certain
probability levels statistically calculated based on
historical market fluctuations, and therefore, there may
be cases where market risk cannot be captured insituations when market conditions change dramaticallybeyond what has been experienced historically.
(c) Liquidity risk management
The Bank manages liquidity risk through diversificationof funding and adjustment of funding periods between
long term and short term under ALM.
(4) Fair Value of Financial Instruments
Fair values of financial instruments are based on quoted
prices in active markets. If quoted prices are not available,
other rational valuation techniques are used instead. Please
see Note 27 for the details of the fair value of derivatives.
(a) Fair value of financial instruments

Management of Foreign Exchange Risk
The Bank manages the change of economic value arisingfrom fluctuations in foreign exchange rates by VaR. To
avoid excessive foreign exchange risk, the Bank defines
the upper holding limit in its Market Risk Management
Policy.
Management of Market Price Risk
The Bank manages the change of economic value arisingfrom fluctuations in market prices by VaR. The Board of
Directors define the upper limit of risk on a semiannual
basis by taking into account the Bank's capital status andmarket conditions. Certain consolidated subsidiaries
report market values of holding securities to the Bank's
Board of Directors on a regular basis.
The Principles of Derivative Transactions
The Bank establishes internal rules for derivativetransactions and manages the Group's risk in an
integrated fashion, including derivative transactions
made by consolidated subsidiaries. Regarding
derivatives, the Risk Management Department reports
the total positions, market values, and market risk
amounts to both executive officers and the "ALM andIntegrated Risk Conference" on a regular basis.

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Carrying values of cash and due from banks that have nomaturity dates are approximately equivalent to fair values.
Regarding due from banks with maturity dates, the carrying
values of products with short maturities (less than one year)
are equivalent to the fair values.
Securities
Fair values of stocks are measured at the quoted market
prices in stock markets. Fair values of bonds are measured
at the quoted market prices in bond markets or the quoted
prices obtained from financial institutions.
Fair values of investment trusts are measured at thestandard prices disclosed in public.
Fair values of private placement bonds with guarantees aremeasured at the total amounts of the principal and interest
discounted at market rates, plus spreads. The spreads aredefined in internal guidelines.
Information relating to securities for holding purpose isincluded in Note 6.

Loans(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities

Because floating-rate loans are immediately affected by the
movement of interest rates, the carrying values of these loans
are equivalent to fair values in cases where the credit risk of
debtors has not totally changed from the execution of the loans.

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For fixed-rate loans used to fund business, fair values are
determined by discounting the total amounts of the principal
and interest at market rates plus spreads. The spreads aredefined in internal guidelines.
For fixed-rate loans other than business funds, fair values
are determined by discounting the total amounts of theprincipal and interest at expected rates if the Bank newly
executes similar loans to customers. Such expected rates are
determined according to the loans' type and period. The
carrying values of fixed-rate loans other than business fundswith short maturity ( less than one year) are equivalent to thefair values.
For loans to debtors who are legally bankrupt, virtuallybankrupt, and possibly bankrupt, a reserve for possible loan
losses calculated from the current value of expected future
cash flows or from the amount expected to be collected
through disposal of collateral or execution of guarantees isprovided. Therefore, the book values at the consolidatedbalance sheet date, net of reserve amounts, are regarded as
the fair values.
Specific loans in which the loan amount can be increased or
decreased within the collateral amount have no maturity dates.
The carrying values of such loans are assumed to be equivalent
to the fair values because of the loans' period and conditions.
Deposits and Negotiable Certificates of Deposit
Fair values of demand deposits are measured at the expectedamount to be paid to depositors from the Bank at theconsolidated balance sheet date (book values). For time
deposits, according to each period, fair values are measured
at the total amount of the principal and interest discounted at
the rate that the Bank applies to new deposits.
Call Money and Bills Sold and Payables under Securities
Lending Transactions
Carrying value of these whose terms are short (within oneyear) approximates the fair value and is therefore deemed
equal to the fair value.
Borrowed Money
Because floating-rate borrowed money is immediately
affected by the movement of interest rates, the carrying
value of this borrowed money is equivalent to fair value
in cases where the credit risk of consolidated subsidiaries
has not totally changed from when the money wasborrowed.
The fair value of fixed-rate borrowed money, which isclassified in accordance with its period, is estimated bydiscounting future cash flows, using rates that would beoffered to similar borrowings. The carrying value of borrowed
money whose term is short (within one year) approximates thefair value and is therefore deemed equal to the fair value.

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Derivatives
Information on the fair value of derivatives is included in
Note 27.
(b) Financial instruments whose fair value cannot be reliably
determined
Thousands ofMillions of
U.S. Dollars
Yen
March 31
2019
2018
2019
Investments in equity instrumentsthat do not have a quoted market
price in an active market

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<HDUV27. DERIVATIVES

and conditions of the contract.

Derivatives that the Bank and certain consolidated subsidiaries use
are as follows:

The Bank comprehensively controls derivative risks of the Bankand certain consolidated subsidiaries in accordance with its Risk
Management Regulations and Market Risk Management
Regulations. The position amounts, market values, and market
risks are reported periodically to the responsible executive officers
and the ALM Committee, where evaluations and analyses ofderivatives are made.

Interest rate-related transactions: Interest rate swaps and interest
rate options
Currency-related transactions: Currency swaps, currency
options, and forward foreignexchange contracts
Stock-related transactions:
Stock index futures and stockindex future options
Bond futures and bond future options
Bond-related transactions:
Other Transactions:
Earthquake derivatives
The Bank and certain subsidiaries use derivatives primarily tohedge risks for customers to maximize the profit of their own
trading account and to manage the potential risks in their own
portfolio as a part of ALM.
Derivatives are subject to market risk and credit risk. Market risk
is the exposure created by potential fluctuations in market
conditions, including interest rates, foreign exchange rates, or
prices of bonds. Credit risk is the possibility that a loss may result
from a counterparty's failure to perform according to the terms

Risk control of derivatives is the responsibility of the Risk
Management Department independent from the front office. The
Risk Management Department is in charge of controlling market
risks in order to make the risk control system work effectively.

The contract or notional amounts of derivatives that are shown in the above table do not represent the amounts exchanged by the parties anddo not measure the Group's exposure to credit or market risk.

Derivative Transactions to Which Hedge Accounting Is Applied at March 31, 2019

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principal amount is used in determining the value of receipts or
payments of interest and as an indicator representative of thevolume of transactions, but those values do not necessarily reflect
such things as market risk or credit risk.

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The below interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but
the differential paid or received under the swap agreements is recognized and included in interest expense or income.
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On the other hand, concerning credit risk management, the Bank
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standings and manages it strictly not to exceed each credit ceilingof customers.

Derivative Transactions to Which Hedge Accounting Is Not Applied at March 31, 2019

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30. PER SHARE DATA

31. SUBSEQUENT EVENT(1) Basic EPS for the years ended March 31, 2019 and 2018, is asfollows:

The following appropriations of retained earnings at March 31,
2019, were approved at the Bank's shareholders' meeting held on
June 21, 2019:

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Derivative Transactions to Which Hedge Accounting Is
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The Bank and its consolidated subsidiaries issue commitments toextend credit and establish credit lines for overdrafts to meet thefinancing needs of their customers. Unfunded amounts relating tothese contracts totaled ¥1,701,511 million ($15,335,839 thousand)and ¥1,671,486 million as of March 31, 2019 and 2018,
respectively.
As a large majority of these commitments expire without being
drawn down upon, the unfunded amounts do not necessarily
represent future cash requirements. Many of these agreements
include conditions granting the Bank the right to reject the
drawdown or to reduce the amount on the basis of changes in thefinancial circumstances of the borrower or other reasonablegrounds.
In addition, the Bank obtains collateral when necessary to reduce
credit risk related to these commitments.

The components of other comprehensive income (loss) for theyears ended March 31, 2019 and 2018, were as follows:   

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(2) Net assets per share for the years ended March 31, 2019 and 2018,
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32. SEGMENT INFORMATION%DVLF(36³QHWLQFRPHDYDLODEOH
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29. OTHER COMPREHENSIVE INCOME (LOSS)

The contract or notional amounts of derivatives that are shown in theabove table do not represent the amounts exchanged by the partiesand do not measure the Group's exposure to credit or market risk.

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The below interest rate swaps that qualify for hedge accounting
and meet specific matching criteria are not remeasured at market
value, but the differential paid or received under the swap
agreements is recognized and included in interest expense or
income.

28. LOAN COMMITMENTS

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The contract or notional amounts of derivatives that are shown in
the above table do not represent the amounts exchanged by theparties and do not measure the Group's exposure to credit ormarket risk.

Under ASBJ Statement No. 17, "Accounting Standard for
Segment Information Disclosures," and ASBJ Guidance No. 20,"Guidance on Accounting Standard for Segment Information
Disclosures," an entity is required to report financial anddescriptive information about its reportable segments.
Reportable segments are operating segments or aggregations ofoperating segments that meet specified criteria. Operating
segments are components of an entity about which separate
financial information is available and such information isevaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing
performance. Generally, segment information is required to bereported on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate
resources to operating segments.
(1) Description of Reportable Segments

The Group's reportable segments are those for which financial
information is available separately and regular evaluation by
the Bank's management is performed in order to decide how
resources are allocated among the Group. The Group consistsof the banking and leasing segments. Banking consists of thebanking and credit card businesses. Leasing consists of theleasing business.
(2) Methods of Measurement for Sales, Profit (Loss), Assets,
Liabilities, and Other Items

The accounting policies of each reportable segment areconsistent with those disclosed in Note 2, "Summary of
Significant Accounting Policies."(3) Information about Ordinary Income, Profit, Assets, Liabilities,
and Other Items
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(5) Information about Geographical Areasa. Ordinary income
This information is not disclosed as the domestic share ofordinary income from external customers exceeds 90% of
ordinary income in the consolidated statement of income.

b. Tangible fixed assets
This information is not disclosed as the domestic share oftangible fixed assets exceeds 90% of tangible fixed assets inthe consolidated balance sheet.
(6) Information about Major Customers
This information is not disclosed as ordinary income from a
specific customer does not exceed 10% of ordinary income inthe consolidated statement of income.