I N T E G R A T E D

R E P O R T

2021
Year ended March 31,2021

The Hyakujushi Bank, Ltd.

Overview of The Hyakujushi Bank

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights

The Bank’s Operational Foundation
Whereas the Bank’s home location of Kagawa Prefecture may be Japan’s smallest prefecture in terms of size, withinthat compact area the region boasts comfortable living conditions offering urban conveniences in harmony with anabundance of natural scenery, in addition to its warm climate exemplified by the Seto Inland Sea and a natural environment that experiences few natural disasters.

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

2021

2020

2019

2018

2017

2021

¥68,989
63,877
5,111
3,402
(855)

¥76,895
65,928
10,9663,518(266)¥77,292
68,477
8,814
3,565
(450)

¥80,890
65,775
15,114
3,720
807¥90,552
71,65518,8975,145
3,050$623,150
576,975
46,16530,728(7,722)

—
2,565

—
7,715

115
5,584

359
10,227

1,054
9,645

—
23,168AT YEAR-END:
Loans and bills discounted
Securities and trading account securities
Foreign exchange assets
Other assets
Total assets

3,035,782
1,272,956
9,429
1,057,396
5,375,569

2,847,316
1,259,734
9,793
837,097
4,953,946

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

27,421,027
11,498,112
85,1689,551,043
48,555,406

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

4,525,292
1,341
557,229
5,083,870

4,155,267
296
548,5444,704,115

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

40,875,187
12,112
5,033,230
45,920,603

37,32230,486
173,620(2,071)
239,357

37,32230,486173,374(1,999)239,184

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

337,114275,368
1,568,241(18,706)
2,162,017

42,59515,04847,822

49,72249,012384,743

2,720
7,928
(945)

(7,447)
7,976(4,971)(1,121)
8,540(2,109)

(39)
8,741
4,984

(1,231)
8,557
2,139

24,56871,610(8,535)52,29941—
291,699¥5,375,569

10,60541—249,831¥4,953,946

53,131
61—
286,576¥4,895,624

63,408124
10,000303,606¥4,777,061

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

Fundamental data on Kagawa Prefecture
Japan

KagawaRanking

Area (km²)

377,975

1,876

47th

Population (thousand)

126,160

956

39th

Per capita GDP (thousand yen)

4,432

3,975

22nd

Average bank balance per household (thousand yen)

12,93916,575

3rd

Active job openings-to-applicants ratio

1.55

1.78

9th

* Source: “Kagawa from the Perspective of 100 Indicators 2021” Kagawa Prefecture

Kagawa Prefecture

Tokushima Prefecture
Ehime
Prefecture

Feature1

Industrial structure adapts well to changeHome to factories of Japan’s top-ranking corporations engaged in fields that
include construction machinery, automotive components, and electricalmachinery, Kagawa Prefecture attracts a large number of such companies’
partner enterprises equipped with sophisticated core manufacturing technologies mainly in those fields. The prefecture also hosts large factories that
handle basic materials such as chemicals, coal, and non-ferrous metals,
mainly located in industrials zones situated in the prefecture’s coastal

region. In addition, many food-related companies handling frozen foods,
seasonings and other such products have operations there.
As such, Kagawa Prefecture tends to be resilient to economic shocks due
to its well-balanced industrial structure not skewed toward any particularindustry. Another distinctive feature of Kagawa is its many niche leadersthat are active in numerous specialized market segments.

Feature2

Temperate environment and an abundance of natural scenery with few natural disasters

Kagawa Prefecture features an environment conducive to achieving business continuity plans, given its temperate climate throughout the year andinfrequency of earthquakes, tsunamis and other such natural disasters.

Damage caused by natural disasters:

101

Approx.¥million(Millions of yen)

7,908

3rd
lowestin Japan

101

1,368

Kagawa Prefecture Tokushima Prefecture

2,259
Ehime Prefecture

Kochi Prefecture* Source: “2021 Kagawa Illustrated by 100 Indicators,” Kagawa Prefecture

Feature3

Damage caused by natural disasters

Transportation and logistics hub

Kagawa Prefecture plays an important role as a hub for transportation and logistics serving as a gateway to Japan’s Shikoku region. It is accordingly equipped with anextensive regional transportation network that includes Seto Ohashi Bridge, Shikoku Odan Expressway,Takamatsu Airport, and Takamatsu Port.The prefecture serves asa key logistics point within the Shikoku Region given that it enables convenient access to the Tokyo metropolitan area and the Kansai region. In addition,Takamatsu Airport has been striving to serve as an international airport by developing routes connecting with respective Asian countries.

01

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Net unrealized gains on other securities,
net of taxes
Net deferred gains (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

58,478472,396
142
370
16,087—
293,1292,634,802¥4,926,538 $48,555,406

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 ¥110.71 to US$1.00 on March 31, 2021.

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.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

02

Strategy for value co-creation

Hyakujushi Group’s Value Creation Process
New value to be provided

Business model envisioned by the Bank

Credit card

Human capital

Securities operations

participation of• Activediverse human resourcesof profes• Appointment
sional personnel
human resources• Extensive
development system

Leasing
Guarantee services

Hyakujushi Group(the Bank)Real estate business

and well-estab• Historic
lished network of branches
transaction share in• AlocalhighKagawa
Prefecture
Strongallianceswith other• banks• Revitalization of local economy• Enhancement of local attractions• Development of local industry
to a lowcarbon,• Contribution
recycling society
Corporate customers• Growth of customers (enhancement of
ICT

Issues of customers andcommunities

Consulting businessSocial capitalfinance to solve

Finance

We will serve as a “local platformer” that goes beyond the realm ofvarious issues faced by our customers and communities.

financial and• Soundearnings bases
solid deposit base
• Acenteredon individuals
Advancedrisk management•

Local communities

Recruiting business
Regional trading company

corporate value)Non-finance

Financial capital• Business continuity and revitalization• Solid relationship of trust
Retail customers• Highly convenient life
• Stable asset formation• Safe and fulfilling life plans

Medium-Term Management Plan (April 2020 to March 2023)

Intellectual capital

Officers and employees

feasibility evalua• Businesstion with accumulated

•
•

Try

expertise
A variety of solution methods
Comprehensive financial
functions provided as agroup

Mirai (Future)!

General consulting group that co-creates
future of customers and communities

VisiontheCreating opportunities for• everyone• Rewarding workplace
Improvement of employee• satisfaction
Shareholders

Natural capitalenvironment• Regionalwith few natural disasters
and rich natural• Warmenvironment• Abundant tourism resources
Transportation and• logistics
hub

Code of Ethics, Environmental Policy, Human
Corporate Vision

Code

Rights Policyof Conduct• Stable return of profits• Medium- to long-term enhancement of corporate
value• Information disclosure and enhancement ofcommunication

Corporate governanceRealization o f a sustainabl e so c i e ty

Business model(Sustainable future where all stakeholders can live their lives with a smile)

The Bank’s strengths

Risk and earnings opportunities

Enhancement of corporate value and sustainability
External
environment
Social issues
03

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Shrinking population, declining birthrate and aging population
Prolonged low interest rate environment

Impact of COVID-19

Advancement of ICT

Global warming, climate change Work-life balance

Changes in consumer awareness and behaviors

Regional revitalization

Reinforcement of corporate governanceDiversity

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

04Strategy for value co-creation

Message from the President
Forward
I sincerely thank you for your continued patronage of the
Hyakujushi Bank.
Since its establishment, the Bank has grown together with its

customers and communities as a local leading bank, building
up its foundation of today. I am deeply grateful to all of you as
this would not have been possible without your warm support.

External environment and understanding of the current situation
The business environment surrounding the Bank is becoming
harsher due to the continued low interest rate environment,
intensifying competition with neighboring banks, and entry ofcompanies from other industries. In addition, factors that
include a shrinking population in conjunction with a declining
birthrate and aging population over the medium- to long-term
are likely to substantially affect local economic growth in Kagawa
Prefecture, which serves as the primary base of the Bank’s
operations. As such, we must increase the Bank’s sustainability
by agilely addressing these changes in the business environment.
In particular, the local economy has been greatly affected by
restrictions imposed on domestic and international production
and consumption activities amid proliferation of COVID-19
since the outset of 2020. Meanwhile, whereas gradual recovery

seems likely as more people get vaccinated, the return of
economic and social stability is bound to take a while, which
gives rise to the need for us to confront prevailing realities
assuming that uncertainty will persist until that time. Moreover, we need to adopt work arrangements that are compatible
with new lifestyles under the so-called “new normal” premisedon the assumption that society will co-exist with coronavirus
rather than fully returning to the pre-pandemic status quo.
Whereas the Bank has been placing emphasis on businessresources thus far under the notion that its top priority is thatof facilitating customer liquidity and providing business support, going forward we seek to focus on furnishing assistancethat involves revamping business models in a manner that
renders them more suited to these new social realities.

Looking toward transformation to a general consulting group

By providing new value in our unique way, we aim to become a general
consulting group that co-creates the future of customers andcommunities.

Yujiro Ayada, President[memo]
This photo was taken in the executive meeting room located in the Bank’s head office. The calligraphy displayed on the wall behind President Yujiro
Ayada was created by the late Masayoshi Ohira, who was from Kagawa Prefecture and served as Prime Minister of Japan at the time. The writing depicts
the words of Lao Tzu who, according to the Shiji (Records of the Grand Historian), said that “a good merchant secretly hides his goods and appears topossess nothing,” conveying the notion that a wise man does not unnecessarily show off his abilities.

05

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

The “Try Mirai (Future)!” medium-term management plan
We strive to achieve the Corporate Vision of “prosper together
with customers and communities” amid the substantiallychanging business environment. To such ends, we will adhere
to our unwavering mission serving as a regional financial
institution of developing extensive familiarity with issues
encountered by our customers and local communities, andthen becoming thoroughly involved in resolving such challenges. However, we must also contend with realities in terms ofdifficulties inherent in flexibly and accurately addressing thevarious challenges associated with increasing diversification,complexity and sophistication relying solely on a traditionalbanking framework.
Underpinned by this realization, we embarked on themedium-term management plan “Try Mirai (Future)!” in
FY 2020 with the aim of taking on the challenge of creating aprosperous future for our local communities by taking action
as a local platformer in addressing various issues encounteredby our customers and local communities, extending beyond

the realm of finance. With our sights set on achieving objectives of “Try Mirai (Future)!,” we formulated three key
strategies: transformation to a general consulting group,development of human resources with high market value, andstructural reforms leading to the future.

Co-create a future where stakeholders can live their lives with a smile

Shareholders

Issues faced bycustomers andcommunities
Solve

Hyakujushi Group
Customers

Localcommunities

Officers &employees

Exter
nal cooperation

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

06

Strategy for value co-creation

Message from the President
Key strategy 1

Transformation to a general
consulting group

We will take on the goal of “transformation to a general consulting group” that offers one-stop services encompassing theentire process from identifying issues to providing solutions
with the aim of increasing value for our corporate and retailcustomers as well as our local communities.
Corporate customers
When it comes to corporate customers, our efforts will
involve engaging in more extensive dialogue starting from
evaluation of business feasibility, fully understanding actual
state of management and the business outlook, and thoroughly
carrying out business and financial support.
Having assigned Corporate Solution Advisors (SAs) of the
Head Office with substantial problem-solving skills to major
locations in Kagawa Prefecture in FY 2020, we have embarked
on initiatives to swiftly and accurately resolve customer concerns and operational issues in conjunction with relationshipmanagers at our branches.
We have also been taking steps to upgrade our menu of solution options. In the field of ICT, we have formed a business alliance with freee K.K. with the aim of promoting digitaltransformation (DX) initiatives of our customers who operate
SMEs and sole proprietorships. We have also started offering
fee-based consulting services in the realms of the medical andlong-term care business as well as overseas expansion support
leveraging the Bank’s strengths, and have made full-scale entry
into core human resources recruitment in collaboration with
our group company Hyakujushi Jinzai Center Corporation. We
aim to extend beyond merely offering solutions in the future,
and will accordingly consider possibilities involving fullfledged entry into the field of management consulting,07

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

particularly in terms of providing support for corporate
business diagnosis and planning.
Retail customers
With regard to retail customers, our efforts will involve
comprehensively providing financial infrastructure and services
that align with needs of different stages of life and lifestyles.
In FY 2020, we have assigned Life Plan Advisors (LPAs) to
our respective branches so that they can help make customer
life plans a reality. We have also assigned Life Plan Consultants(LPCs) of the Head Office equipped with highly specialized
knowledge to support LPAs at our major locations.
We have also been expanding non-face-to-face channels inorder to improve customer service and streamline branchadministrative work, and have released the “114 Digital Procedure App” with capabilities that include ATM card reissuanceand change of address. In the near future, we aim to provide
services that enable users to complete most of their banking
transactions online through their smartphone banking app.
Community involvement
We strive to contribute to the sustainable growth of ourcommunities, which involves extending beyond serving ourcustomers to fulfilling needs for development of local economies and addressing risks of climate change.
From August to December 2020, the Bank engaged in its“114 Tenohira Project” which has involved simultaneously
adopting digital customer service and contributing to ourcommunities. Through the project, we enabled our customers
to gain experience making digital transactions that helped
them avoid the three Cs (crowded places, close contact settings, and closed spaces) during the COVID-19 pandemic,
enlisting online banking, smartphone applications and othersuch services, and we furthermore contributed proceeds calculated based on the number of such banking transactions. The
number of banking transactions exceeded our initial target
given the project’s popularity with many customers, thereby
enabling us to contribute proceeds to Kagawa Prefecture forthe sake of helping to prevent the spread of COVID-19.
Under the Shikoku Alliance*1, the regional trading company
SHIKOKU BRAND inc. embarked on branding and promotionof Shikoku resources, as well as development of sales channels
for those resources, upon its establishment through joint investment of the four Shikoku Alliance banks in April 2020. Although COVID-19 made for a difficult start, the entity received
more than 250 inquiries over the one-year period and has
encountered steady increases in its number of new contracts.
We also continue to work on activities implemented fromthe perspective of the Sustainable Development Goals (SDGs)
proposed by the United Nations. This has involved establishingthe “Hyakujushi Bank’s Environmental Policy” and the “Hyakujushi Bank’s Human Rights Policy” to serve as basic policies in
April 2020, and establishing the “Environmental and Social
Management Policy for Financing and Investment Activity” inDecember. Going forward, we plan to gradually expand ourscope of SDGs in conjunction with our local communities andcustomers by supporting business and other endeavors withthe aim of helping to achieve a decarbonized society with oursights set on addressing climate change risk.
*1 The Shikoku Alliance is based on a comprehensive partnership agreement signed by four
first-tier regional banks in Shikoku in November 2016 with the aim of revitalizing Shikoku,
while maintaining management independence.

Key strategy 2

Development of human resources
with high market value

We recognize that human resource development and provisionof opportunities to play an active role are important themeswith respect to the Bank transforming to a general consulting
group and achieving sustainable growth. As such, we have been
taking steps to achieve “development of human resources withhigh market value” by actively promoting diverse humanresources, striving to balance childcare and long-term carewith work, and creating comfortable working environments.
In FY 2020, we embarked on efforts to facilitate customer-oriented sales activities from a medium- to long-term
perspective, which involved significantly overhauling ourbranch awarding system and accordingly shifting to evaluations

that place emphasis on activities and processes such as customer relationship building, from evaluations that focused onachievements previously.
In addition, we initiated a new personnel system in April
2021. This involved adopting a reorganized course system torealize diverse work styles and diversity, and also creating ascheme that enables early promotion to higher positions.
Key strategy 3

Structural reforms leading to the future

We have been adapting to the rapidly changing business environment by engaging in “structural reforms leading to the future,”
which has involved boldly revamping our revenue and cost structure and accordingly shifting to a more robust earnings structurethat is not readily susceptible to the market environment.
To augment our top line, we have been redoubling efforts
involving structured finance, seeking to maximize total profit/
loss from marketable securities investment*2, and revamping
our fee structure.
In addition, we have also been taking steps to reduce credit
costs by adopting a credit screening model enlisting artificial
intelligence, and also to implement low-cost practices, which
involves reorganizing the network of bank branches, reducing
administrative workloads, and curbing costs.
*2 Total profit/loss from marketable securities investment is calculated as the sum of realized
profit/loss from marketable securities investment (profitability) plus valuation profit/loss(soundness).

FY 2021 Forecasts
As detailed thus far, initiatives we have been implementing underthe medium-term management plan “Try Mirai (Future)!”have been proceeding largely as planned. Moreover, the three
indicators listed as management targets also indicate favorable
results for FY 2021, unlike FY 2020 when the Bank recorded
substantial marketable securities impairment, in that the consolidated capital ratio and non-consolidated OHR are poised to
exceed their respective final year targets ahead of schedule,
albeit consolidated profit is likely to end up slightly below target.

Management indicators

FY 2020(actual)FY 2021(forecast)

FY 2022(final target)

Profitability

Consolidated profit¥2.5 billion¥5.5 billion¥6.0 billion
or higherSoundness

Consolidated capital ratio

9.35%

9.0%

9.0%
or higher

76.76%

74%

75%
or less

Type

Efficiency

Non-consolidated OHR(gross operating profit basis)

Conclusion
We will prudently and boldly proceed with business operations
in a manner that involves demonstrating our resilience inadapting to the changing business environment amid a prevailing mix of risks and growth opportunities. We aspire for the
Bank to create a virtuous cycle whereby it achieves growth byrobustly meeting the expectations of its customers, employees,

local communities, and shareholders, and returns generated
profits and value to communities. In so doing, we strive torealize a future where all stakeholders can live their lives witha smile.
I sincerely thank you and humbly request your continued
support and patronage of the Bank.
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

08

Strategy for value co-creation

Overview of the Medium-Term Management Plan
Plan title(FY 2020 to FY 2022)
Try

Mirai (Future)!

Co-create a future where stakeholders can live their lives with a smile
Basic policy The Hyakujushi Group has become a “local platformer” that extends beyond the realm of finance toward achieving a

Visionsustainable society amid increasingly severe social circumstances locally. As such, the Bank will take on challenges ofco-creating a future where various stakeholders are able to live their lives with a smile by resolving issues faced by its
customers and local communities.

By providing new value in our unique way, we aim
to become a general consulting group that co-creates the future of customers and communities.

Creation of common value with customers and communities
We will engage in customer-centered consulting practices that involve extensive dialogue in order to ensure that ourefforts to create value for our customers and communities lead to increased trust and growth of the Bank.
Establishment of a competitive advantage

Key strategy 1

Transformation to a general consulting group

Roadmap of key strategies

Achieving the Vision

Period of the medium-term management plan

Securing human resources necessary for execution of strategies
Key strategy 3

Structural reforms leading to the future
Ensuring sustainable profitability

E

G

Strengthening of thegovernance structure

Environmentally-soundbusiness activities

Management foundation
underpinning strategy

09

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Compliance

Alliances

Business Continuity Plan (BCP)

ICT strategy

Group strategy

Advanced risk management

Transformation to a general
consulting group

Ensuring customer-oriented business operations

Development of human resources
with high market value

Development of human resources with high market value

Structural reforms leading to the future

FY 2019

Key strategy 1

Key strategy 2

Key strategy 2

Resolving issues forcustomers and communities

Key strategy 3

SWe will strategically invest our business resources in key strategic areas, thereby improving operational efficiency while
also developing and securing human resources.

FY 2020

FY 2021

FY 2022

Assignment

FY 2024
Realizationof the Vision(long-term strategy)

Building systems to strengthen solutions
Assignment

FY 2023

Entry into the management consulting businessContributing to the development of local industry
Mid-career recruitment

Development of資産運用・承継
professional human resources
Development

Creation of rewarding workplaces and providing diverse career paths
Assignment

Reinforcement of earning power at branches

Ensuring
sustainable profits(short- to medium-term
strategy)

Reinforcement of earning power at the Head Office
Channel reform to support sales strategies
Human resources
creation through operational process reforms
配置
Execution of thorough low-cost management

Cost reduction

Profitenhancement
Cost reduction & greater
operational efficiency

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

10

Strategy for value co-creation

Key strategy 2

Key strategy 1

Development of humanresources with highmarket value

Transformation to a general
consulting group
We will engage in efforts seeking transformation to a general consulting group that co-creates the future of customers and communi-

We will strive to develop and secure human resources with high market value necessary to become a general consulting group, whileties by actively taking on challenges in new fields that transcend beyond the realm of finance, which will involve breaking away fromalso building a highly sustainable organization equipped for creating rewarding workplaces and providing diverse career paths.

traditional banking business centered on deposits and loans.

Development of professional human resources

Entry into the management consulting business

Upgrading the solutions menu

Oct. 2020
Dec. 2020
Apr. 2021(April 2020 onward)•• Highly-skilled professional recruitment• Overseas fee-based consulting

Business feasibility evaluation

Trust

Business partners

Hyakujushi Bank Group

Branding and sales channel development support

Management consulting business(Enterprise consultancy, business strategy & management, financial affairs,
personnel affairs, manufacturing & sales, etc.)

Expansion

Apr. 2020

Information

We will gradually upgrade our menu of options for providing high-value-added solutions to meet customer needs with the aim of entering themanagement consulting business of resolving issues affecting customers. This will involve providing optimal solutions upon having properly
assessed operational issues and needs of customers particularly by engaging in dialogue starting from evaluation of business feasibility.

• ICT consulting services
and long-term care fee-based• Medical
consulting services

Overseas expansion

Branding & sales channel development

Personnel affairs & HR development

Business continuity and M&A

Business revitalization

Medical & long-term careFinancePrimary ICT tools provided through partnership with freee K.K.

Central control ofmultiple accounts

Improving operational
efficiency enlisting BPR

Cloud-based accounting software with
DX support at the core

Adoption

114 Bank

Available to everyone
free of charge

Accounting freee with

114 Bank
Achieving digital transformation (DX)

Automated Streamlining ofVisualizedaccounting overall operations management

Consulting

Providing various ICT tools aligned with issues affecting customers

Fees+
Hyakujushi Bank

Issues related to operational
efficiency, etc.

Resolving issues affecting customers
Generate consulting fees

1) Approaching the target market
Bank branch employees
Approach focused on business partners within
Kagawa Prefecture

Approx.
Approx.

6,000 corporate customers in the prefecture (borrowers)
3,000 sole proprietorships in the prefecture (borrowers)

Assign a consulting teamOperations of most SMEs havenot been digitized

Tapping potential demand for DX

11

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

We have introduced our 114 Meister system for certifying knowledge and business proficiency of employees in each of seven fields
related to banking services. We strive to develop professionals
equipped both with knowledge and practical skills by encouraging
them to take initiative with respect to self-improvement.
Meister (top level)

Corporate business

Foreign exchange

Head Office operations

Loans

ICT consulting teams
Advantages of adopting tools maximized byrevamping workflows

Identification ofbusiness challenges

Adoption of
ICT tools

Workflow breakdown
and reconstruction

Application ofsolutions to workflows

BPR implementation

Qualification
coursesLong-term placement involving acquisition of professional qualifications such as SME consultant andmanagement consultant qualifications

7 employees

Cross-industry
Training

Placement of mid-career employees with local business partners for one year
Improve ability of employees to make sound judgements by having themamass experience in different industries

1 employee

Review of the branch awarding system
Having overhauled our award systems that involve evaluation of branches with an emphasis on medium- to long-term activities that help
resolve issues affecting customers in April 2020, we have been working to cultivate a customer-oriented sales mindset indispensable when it
comes to consulting through integrated efforts of branches and the Head Office.

Branchawarding
systemPrevious evaluation framework

Evaluation framework subsequent to overhaul

Mainly entailed evaluation of short-term
performance in respective financial periods

Evaluation with a focus on customer-oriented
medium- to long-term initiatives and processes

Review of human resources system (career course system)In April 2021, we established area-based career-track positions along with a framework for evaluating specialists in respective fields, upon
having revised the human resources system. We are accordingly working to revitalize the organization of the entire Bank by providing rewarding opportunities for diverse human resources to take on active roles.

Better conditions for female staff members who are
active in the retail field in specific geographic locations

ICT consulting teams

9 employees

We are working to develop rewarding workplace environments by reviewing the branch awarding system, human resources system and othersuch frameworks in order to create a highly sustainable organization.

2) Consulting on adoption of ICT tools

Support for adoption of ICT tools optimized for
addressing issues affecting customers

Long-term placement in overseas financial institutions, IT
and specialized consulting firms, and other such entities
for the purpose of developing business proficiency

Creating rewarding workplace environments

Establishment of new area-based career-track positions3) Consulting on BPR implementation

Administrative
trainees

Financing management Deposit & remittanceLife planning

Officer (beginner)

We strive to develop highly-skilled professionals who will take on
responsibility for future consulting work through efforts thatinvolve seconding our employees to enterprises that include IT andconsulting companies, as well as placing them in training coursesthat help them gain professional qualifications.
Placement of trainees with outside entities (FY 2020)[Qualifications]

The Bank’s ICT consulting teams manage the overall implementation projects

Proper assessment ofprevailing workflows

Placement of trainees with outside entities

etc.

Implementation of accompanied ICT consulting services

Deposit and withdrawal management with

114 Meister system in-house certification

Leader (intermediate)

Menu of solution options
Improving operational efficiency (ICT)In December 2020, the Bank launched consulting services in partnership with freee K.K., such that entail providing support to customers contending with operational streamlining and other such challenges, helping them improve operational efficiency upon adopting ICT tools. Accordingly, the Bank’s ICT consulting teams
will spearhead efforts to facilitate digital transformation (DX) initiatives of companies and communities, by providing seamless support encompassing everythingfrom enabling customers to adopt ICT tools to helping them implement business process reengineering (BPR) subsequent to their adoption of such tools.
Impetus to adopt cloud-based
accounting software

We promote human resources development through initiatives that include utilizing our 114 Meister system and actively placing trainees withoutside entities.

Establishment of evaluation framework for specialists
Specialists in respective fields dealt with adequately
enlisting an atypical evaluation framework

Providingopportunities fordiverse humanresources to takeon active roles

Achievement of a human resources
system that supports a variety ofwork styles and diversity

Plans for providing consulting services to more than 1,000 customers over the long-term
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

12

Strategy for value co-creation

Efforts to resolve environmental
challenges and social issues
through our core business

Key strategy 3

Structural reforms
leading to the future
We will promote reforms that include channel reform, operational efficiency improvement, and thorough low-cost management withIn April 2020, the Bank drew up the “Hyakujushi Bank’s Environmental Policy” and the “Hyakujushi Bank’s Human Rights Policy” to serve as basic policy with the aim of seeing that the Bank prospers

the aim of building a robust earnings structure resilient to changes in the business environment.

in conjunction with customers, communities, officers and employees toward resolving challenges involving the environment, human rights and other such issues. In December 2020, we drew up the“Environmental and Social Management Policy for Financing and Investment Activity” as a basic policy for engaging in responsible lending and investment serving as a financial institution.

Channel reform to support sales strategies
We will actively promote channel reform that entails reorganizing branch networks in alignment with changes involving increasingly diverse customer behaviors and needs, and upgrading non-face-to-face channels.

Reorganization of branch networks
We have been eliminating and consolidating branches enlisting the branch within a branch approach of relocating branches, whereby one integrated branch is placed within another integrated branch. Meanwhile, we have also been working to make effective use of our businessresources by reducing branch operating costs and reassigning personnel, which has involved shifting to a three-tiered branch framework (full-,standard- and reduced-format branches), drawing on regional market analysis for branch locations in Kagawa Prefecture. In FY 2020, we
accordingly eliminated and consolidated 11 branches located within Kagawa Prefecture.
Plan for branch reorganizationin Kagawa Prefecture(as of March 31, 2017)

Restructured
Partial eliminationand consolidation

Strategic branches equippedwith enhanced consulting
services

Fullformat* Includes banking agents.

80 locations in
Kagawa Prefecture*

Branch elimination and consolidation results and plans (cumulative totals)* (No. of branches)

March 31, 2021 Upon conclusion of(actual)reorganization (tentative)

Standardformat

Traditional branch format

Reducedformat

Low-cost branches
specializing in over-thecounter business transactions

1 branch

20
1

7 branches

19

8
5 branches 18 branches

0March 31, 2020
■ Branches within Kagawa Prefecture

The Hyakujushi Bank, Ltd. supports endeavors set on resolving environmental and social issues, and furthermore strives toreduce and avoid transactions with highly detrimental endeavors and business providers.
1. We will actively support the following endeavors and other such initiatives that help reduce risks of climate change and help resolve
social issues.
Endeavors that help bring about a carbon-free society such as renewable energy projects
Endeavors that help conserve biodiversity such as those that involve protecting water and forest resources
Endeavors that involve disaster prevention and mitigation, as well as those that involve preventing outbreaks and proliferation of infectious diseases•••

2. We will not engage in investment or lending with respect to the following types of endeavors or business providers deemed highly
detrimental to the environment and society.
Projects involving new construction of coal-fired power plants- However, we will take prudent action upon having considered attributes of respective projects that are in alignment with national energy policy andaccordingly meet stringent standards taking into account environmental loads.
Logging business operators who illegally harvest timber and business operators involved in human rights violations such as human trafficking, servitudeand child labor- We will take prudent action when it comes to palm oil plantation developers in terms of sufficiently taking into account acquisitions of international
certifications, etc., disputes involving indigenous people and local communities, and other such factors.
Business operators engaged in development and manufacture of inhumane weapons such as nuclear weapons, cluster munitions, and biochemical weapons

•
•

9
1

60 branches 30 branches

Investment and lending policy

March 31, 2021•

■ Branches outside of Kagawa Prefecture

Measures* Numbers of eliminated and consolidated branches include those associated with establishment of reduced-format branches

Expansion of non-face-to-face channels
We have been enhancing customer convenience and shifting to non-face-to-face channels through efforts to improve our smartphone application services and functions. In August 2020, we introduced our 114 Digital Procedure App, which is the first smartphone application of aregional bank capable of handling various banking services. The application enables our customers to readily perform various banking tasks
that had previously been performed at branch locations, via their smartphones.

Private placement bonds for support of SDGs (Nickname: 114 SDGs Loan)

114 Digital Procedure App service options
Reissuance of replacement ATM
cards

Procedures for dealing with lostor stolen ATM cards, etc.

Change of address and phone
numberFund transfer service for tuition
payments

We offer private placement bonds geared to supporting achievement of SDGs (nickname: 114 SDGs Loan) structured such that a portion of theissuance fees can be contributed to schools, public organizations or other such entities at the discretion of our customers, with the aims of
supporting customer SDG initiatives and contributing to communities.
In addition, we also began newly offering SDGs Medical Institution Bonds* in February 2020. In January and March 2021, we contributed a
portion of the fees for issuing those bonds to public organizations and other such entities for the first time in Okayama and Kagawa Prefectures.
* Medical institution bonds are evidentiary securities (borrowings) that can be issued
by healthcare corporations of favorable financial standing that meet standards
pursuant to guidelines set by Japan’s Ministry of Health, Labour and Welfare.

Promoting use of the 114 Passbook App

We have encountered steady increases in the number ofsmartphone app downloads and the number of non-passbook
accounts, which are even more practical as a result of us
extending user access to account statements spanning backten years rather than two years previously.
No. of app downloads(No. of accounts)

100,000

50,000(as of March 31, 2021)

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

0

Environmental conservation and social
contribution through investment
We have invested in Sustainability Bonds and Social Bonds that areallocated to endeavors undertaken with the aims of benefiting theenvironment and resolving social issues.

Cumulative underwriting amount of 114 SDGs Loans(As of March 31, 2021)

Investment amount(As of March 31, 2021)

4.0 billion

Cumulative total of 41 cases /¥30.0 billion

Cumulative total of 3 cases /¥Financing of biomass projects

No. of non-passbook accounts

Approx. 91,000 downloads Approx. 71,000 accounts
13

Use of passbook apps and non-passbook accounts

Support for dealing with SDGs of our customers
We have been using a simplified diagnostic tool for assessing SDG achievement since February 2021,
engaging in more extensive dialogue with our customers regarding the SDGs, and providing support for
reducing customer risk and creating business opportunities.

March 31, 2019 March 31, 2020 March 31, 2021
Passbook app
Non-passbook accounts

In September 2020, the four Shikoku Alliance banks jointly engaged in a new initiative in the renewable energy field which involved taking part inproject financing of a biomass power generation project in Ichihara City, Chiba Prefecture, and accordingly arranged financing.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

14

Management foundation underpinning growth

Corporate Governance
We are striving to improve our governance and compliance structures based on the recognition that such efforts are indispensable when it comes to the Bank’s sustainable growth and medium- to long-term enhancement of corporate value.

Corporate Governance Framework (as of July 1, 2021)
SystemInstitutional Design

Initiatives to strengthen governance and compliance systems
To strengthen its governance structure, the Bank established the“Nomination and Remuneration Governance Committee” as anadvisory body to the Board of Directors, chaired by Outside Directors who constitute a majority of its membership. The committee
deliberates on the following: nomination of candidate Directors anddismissal of Directors; nomination and dismissal of Representative
Directors; remuneration and other matters concerning Directors notserving as Audit and Supervisory Committee Members; mattersconcerning assessment of the effectiveness of the Board of Directors;
and other important matters in terms of governance andmanagement. The Board of Directors is to respect the findings of thecommittee.
Furthermore, the Bank appointed a Chief Compliance Officer(CCO), who has the highest responsibility to centrally manage theoverall compliance, in an aim to bolster the compliance systems. In
addition to conducting investigations on compliance and reporting
the results to the Board of Directors, the CCO gives instructions forprompt improvement and response in case of finding any compliance-related problem in measures and responses taken by eachdivision.

2014

2015

Appointment of
one Outside
Director

Increase to two

2016

2017

2018

Increase to four

2019

2020

Directors not serving as Audit and Supervisory Committee Members

15

Appointment/Dismissal

Directors serving as Audit and Supervisory Committee Members

Board of Directors(including 7 Audit and Supervisory Committee Members)

Audit/Supervision

Advisory body

Number of (Independent) Outside Directors

Appointment/
Supervision/
Dismissal

Nomination and Remuneration Governance Committee

5

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

Appointment/Dismissal

Audit and Supervisory Committee
Collaboration/
Reporting

Audit/Supervision
ReportTerm of Office of Directors

Representative Directors

1 yearExecutive Directors(2 years for Audit and Supervisory Committee Members)

Adoption of an Executive Officer System

Revenue Management
Committee

Executive Committee

Yes

Risk Management
Committee

Compliance Committee

Internal audit

Head Office and Branches

Accounts
audit

Instruction

Auditing Division

Accounting Auditors

2021 onward

Appointment of
three in 2021

Transition to a Company with Audit and Supervisory Committee

Board of Directors
There were 15 Directors appointed at the Bank’s Annual General
Meeting of Shareholders held in June 2021, at least one-third ofwhom are Independent Outside Directors and three Directors are
women.

Nomination and Remuneration Governance Committee
A female Outside Director was appointed to chair the Nomination
and Remuneration Governance Committee subsequent to theAnnual General Meeting of Shareholders held in June 2021.

Creation and revision of Corporate Governance Guidelines
Male Directors
Establishment of the Governance Council (Outside Directors constitute a majorityof the council’s members)

Establishment of policy to foster successors
Appointment of three Outside Audit& Supervisory Board Members

Directors serving
as Audit andSupervisory
Committee
Members(7 Directors)

Male Directors

Female Directors

Introduction of stock option program
Introduction of a performance-linked stock compensation system

Abolishment of the
Retirement Benefit
System for Officers

Revision of proportions of fixed
remuneration and variable remuneration

Introduction of
the Executive
Officer System

Delegation of part of the decision-making authority of the Board of Directors for execution of business to the Executive Committee and other committees[ Independent Outside Director]

Independent Outside Directors

Directors notserving as Audit
and Supervisory
Committee
Members(8 Directors)[

Composition of the Board of Directors

Delegation of part of the decision-making authority for execution of important operations to the President
and Representative Director

Chairperson

Audit and Supervisory
Committee

Abolishment of the Advisor System

Other

Female Directors

Establishment of the Nomination and Remuneration GovernanceCommittee (Outside Director appointed as Chairperson)
Appointment of CCO

Revision of
the executive
remuneration
systemNumber of Directors

Ernst & Young ShinNihon LLC

Appointment of one female Outside Director

Reinforcementof oversight aswell as audit
andsupervision

Appointment/Dismissal

Accounting Auditors⃝Results of initiatives to strengthen governance
Before 2013

General Meeting of Shareholders

Company with Audit andSupervisory Committee

Proportion of Independent Outside Directors

No. of female Directors

At least 1/3

3 Directors

MemberIndependent Outside
Director][

MemberIndependent Outside
Director][

MemberIndependent Outside
Director][

MemberIndependent Outside
Director

Member] [Member] [ President ]Internal
Director

Nomination and Remuneration Governance Committee
Independent Outside Directors

Majority

Chairperson

Expedited distribution of Board of Directors’ meeting agenda in advanceSelf-assessment of the Board of Directors and resolving of issues

Introduction of third-party
evaluations⃝Overview
Board of Directors

15

The Board of Directors consists of 15 Directors (including 5 Outside Directors). In principle, it meets once a month, and also meets as necessary. In addition tomatters stipulated by laws and regulations or the Articles of Incorporation, the Board passes resolutions on important matters concerning management andoversees the business execution by Directors.

Audit and Supervisory
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 the execution of duties by Directors.

Executive Committee

The Executive Committee which consists of Managing Executive Officers and above, holds periodic or occasional meetings as a decision-making body for importantmatters related to business execution.
In addition, the Bank has established a “Revenue Management Committee,” “Compliance Committee” and “Risk Management Committee,” and set up a system tomake consultation and decisions on more specialized matters.

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Nomination andRemuneration GovernanceCommittee (Voluntarycommittee)

The Nomination and Remuneration Governance Committee is chaired by an Outside Director appointed by mutual election. It is comprised of the President of
the Bank, the Chairperson of the Audit and Supervisory Committee, and Outside Directors, and meets at least twice per year as a general rule (10 meetings held
in FY 2020). As an advisory body to the Board of Directors, the committee deliberates on the following: nomination of candidate Directors and dismissal of
Directors; nomination and dismissal of Representative Directors; remuneration and other matters concerning Directors not serving as Audit and Supervisory
Committee Members; and other important matters in terms of governance and management. The Board of Directors is to respect the findings of the committee.

Executive Officer System

In order to expedite management decision-making and strengthen business execution functions, the Bank has introduced an Executive Officer System, and 20
Executive Officers (of whom six serve concurrently as Directors) appointed by the Board of Directors, are responsible for business execution, with the aim ofachieving agile decision-making and speedy corporate management.

Auditing Division

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

Accounting Auditors

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

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

16▪ Board of Directors and Audit and Supervisory Committee Members (as of July 1, 2021)▪ Interview with an Outside Director

Yujiro Ayada

Ryohei Kagawa

Kiichiro Oyama

Masakazu Toyoshima

Akihiko Fujimura

Hiroyuki Kurokawa

Kazuhisa Anada

Hideaki Kanamoto

President(Representative Director)

Director, Deputy President
and CCO(Representative Director)

Director and Managing Executive
Officer

Director and Managing Executive
Officer

Director and Managing Executive
Officer

Director and Senior Managing
Executive Officer(Representative Director)

Director and Managing Executive
Officer

Director and Managing Executive
Officer

Outside Director Junichi Itoh

Q1

Toshiya Yoritomi

Kazuhiro Kumihashi

Michiyo Ihara

Yasuko Yamada

Nobuyuki Souda

Tomoko Fujimoto

Director (Audit and Supervisory
Committee Member)

Director (Audit and Supervisory
Committee Member) (Outside)

Director (Audit and Supervisory
Committee Member)

Director (Audit and Supervisory
Committee Member) (Outside)▪ Outside Director skills matrix
Name

Corporate
management

FinanceFinancialaccounting

Michiyo Ihara
Junichi ItohLegalaffairs

Regional
revitalization

Junichi ItohDirector (Audit and Supervisory
Committee Member) (Outside)

Director (Audit and Supervisory
Committee Member) (Outside)

Director (Audit and Supervisory
Committee Member) (Outside)

Reduction of cross-shareholdings
We have been reducing our cross-shareholdings with the aims ofenhancing effectiveness of corporate governance and improving
capital efficiency.
Cross-shareholdings (listed shares: book value basis)
75.8

73.2

71.4

65.1

(Billions of yen)Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

of its initial fiscal year.

We appear to have made steady progress over the plan’s initial fiscal yearwith respect to our “transformation to a general consulting group” objective in seeking to achieve our ideals. That said, it is necessary to grasp how
customers evaluate us. The reason being is that we must invariably view the
Bank with humility from the point of view of our customers, given the notion that we seek “creation of common value with customers and communities,” which is cited as one of our basic policies.
In seeking “establishment of a competitive advantage,” another of ourbasic policies, it is extremely difficult to secure a distinctive edge in banking due to the nature of the industry, unlike manufacturing with which I
am affiliated. As such, everyone from our executives to our on-site employees needs to continually remain alongside our customers without being complacent about the Bank’s credibility backed by its track record.
That is an approach that will enable us to see where we need to be headed.
Moreover, whereas one of our strategies is that of developing professionals
equipped with substantial market value, I give high marks to the start wehave made in implementing our new human resources scheme, which is
cognizant of the need for women’s empowerment. Meanwhile, we need toactively hire professionals from outside the Bank for efforts involving digital transformation (DX) and fields of investment. I feel that would positively serve to stimulate the Bank’s employees.

Q2

Please provide your assessment of the Bank’s
corporate governance framework.

46.9

Nobuyuki Souda

17

term management plan now at the conclusion

61.8

Yasuko Yamada
Tomoko Fujimoto

Please give us your assessment of the medium-

March 31,2016

March 31,2017

March 31,2018

March 31,2019

March 31,2020

March 31,2021

five years serving in this position through changes that include: 1) ensuringthat more than one-third of those serving on the Board of Directors are
Outside Directors (of whom, three are female Directors); 2) having an
Outside Director serve as the Chairperson of the Nomination and Remuneration Governance Committee, drawing up succession plans, and engaging in more extensive discussions on matters such as the executive
remuneration system, and; 3) periodically exchanging information with
the CCO. Also, 4) when it comes to the Board of Directors’ meeting administration, we have made progress in better arranging meeting agenda
content in that we now place more weight on resolutions involving business strategy. I give the Board high marks for its substantive discussions on
drawing up the medium-term management plan, which encompassed efforts to furnish prior explanations to outside executives.
Meanwhile, both our internal and outside executives have been exchanging candid views particularly when it comes to the questionnaires regarding effectiveness of the Board of Directors administered to all of our
Directors. As such, I feel that it has become possible for our outside executives to develop a common awareness of problems of our internal officers
to share in their concerns.
In order for us to achieve our growth potential and bring about structural reform, we will need to develop a shared awareness among our internal and external Directors from the perspective of whether or not we aretaking on risk appropriately. Moreover, we must not forget the importanceof engaging in mutual supervision of Directors as well as timely and appropriate disclosure in order for us to maintain sound management.

We have been making steady progress in strengthening the Bank’s governance framework ever since having implemented drastic reforms during
fiscal 2018. We have strengthened the governance framework during my

Q3

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

The Bank’s corporate value is embodied by its “creation of common value
with customers and communities” basic policy, which in other words
prompts us to advance in a manner whereby our customers, local communities, and the Bank work together as one. More specifically, this calls for
us to engage in efforts that involve: 1) gaining the trust of our customers
through our daily business activities underpinned by our ethical standards;
2) earning a solid reputation from the investor market in terms of bothsoundness and growth potential; and, 3) ensuring that our management
and employees maintain a sense of shared values. As such, I ask that all of
our employees strive to hone their consulting expertise. In the retail field,
I would like our employees to focus on making life planning proposals thatfacilitate asset formation. In the corporate field, I ask that our employees
focus on international business. For instance, we should explore options
for getting more involved with SMEs above and beyond providing themwith information, particularly given the roles that many such enterprises
play across international supply chains.
Finally, our medium-term management plan calls for us to address social challenges through our environmental, social and corporate governance (ESG) initiatives. In addition, the trend toward decarbonization inparticular is poised to affect SMEs given that it has become a key aspect of
medium-term plans of large corporations. As such, I have high hopes for
the Shikoku Alliance in that regard. I would like to see the alliance consider
options regarding decarbonization serving as a common theme to be addressed over the long-term from this point forward, particularly now that
we have drawn up business plans that place focus on regional trading companies, revitalization and rehabilitation funds, securities brokerage, business matching and other such areas.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

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 System
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

In order to enhance and strengthen risk management, it isnecessary to verify whether the risk management system isfunctioning effectively. The Audit Department periodically
audits the operations of the Bank’s head office, subsidiaries
and branches to verify the adequacy of the risk management
system.

In this way, the Bank is committed to the development of arisk management system that will enable us to manage a variety of risks appropriately and to identify and address issues at
an early stage in order to gain the trust of our customers.

Subsidiaries

19

Th e Hyakujushi Bank, Ltd . Integrated Rep ort 2021

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

20

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Compliance System

2021

2020

Thousands of U.S. dollars(Note 1)2021

¥ 893,016
23,59813
1,272,943
3,035,782
9,429
22,866
63,24337,368
5,041
7,721
777
21,938(18,172)¥5,375,569¥ 652,010
29,264
5
1,259,729
2,847,316
9,793
24,48675,17537,319
5,897
3,351
5,995
20,996(17,396)¥4,953,946$ 8,066,263
213,151
117
11,497,994
27,421,027
85,168
206,539571,249
337,530
45,53369,740
7,018
198,157(164,140)$48,555,406

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

At the Bank, under the oversight of CCO (Chief Compliance
Officer), who has the highest responsibility for compliance, theCompliance Management Division centrally manages all compliance-related issues. We also appoint a manager or a person in
charge at each department, office, and branch to put into practice and instill compliance, while aiming to spread complianceculture by checking the compliance status with a checklist andconducting study sessions. Furthermore, the Compliance Committee, chaired by the CCO, holds cross-organizational discussions to improve and upgrade the system.

Audit and Supervisory
Committee

Board of Directors

Compliance Committee(Chairman: CCO)

Executive Committee

Compliance Management Division
Instructions

Head Office, Branches

In response to stern demands from the international community, the Bank regards the prevention of money laundering as
one of the important issues in its management strategy andother relevant policies, and strives to enhance its anti-money
laundering system. Furthermore, we have in place an antimoney laundering policy and disclose it on our website.

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 regards the prevention ofmoney laundering as one of the important issues in its management strategy and other relevant policies, and will build
an internal control system as described below to conduct
the Bank’s business on that basis.

Customer management policy• To protect our customers from money laundering, theBank will determine and implement risk reduction measures to be taken and appropriately manage customers, bycreating a customer acceptance policy, as well as investigating and analyzing customer information and transaction
details.

Organizational structure• The Bank will build a centralized management system bydesignating a person and a department responsible foranti-money laundering measures. In addition, we will
advance our measures across the organization through theactive involvement of management.
Risk-based approach• The Bank will identify and assess its own risks pertaining tomoney laundering, and take measures commensurate withthe risks in order to effectively reduce them.

21

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

2021

2020

Thousands of U.S. dollars(Note 1)2021

¥4,440,571
84,721
12,08956,643393,331
1,341
55,302
20
204
49
247
127
123
12,074
5,082
21,9385,083,870¥4,065,082
90,18534,782
112,699
305,608296
66,883
29
1,836
37
364
127
80
—
5,103
20,996
4,704,115$40,109,935
765,251
109,195
511,633
3,552,804
12,112499,521
180
1,842
442
2,231
1,147
1,111
109,059
45,903
198,157
45,920,603

37,32230,486
173,620(2,071)
239,357

37,32230,486173,374(1,999)239,184

337,114275,368
1,568,241(18,706)
2,162,017

42,595
2,720
7,928
(945)
52,29941
291,699¥5,375,569

15,048(7,447)
7,976(4,971)
10,60541249,831¥4,953,946

384,743
24,56871,610(8,535)472,396370
2,634,802$48,555,406
U.S. dollars(Note 1)
2021

Education

Anti-Money Laundering Policy

Operation policy• The Bank will comply with anti-money laundering laws
and regulations.

Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Securities (Notes 6, 9 and 10)
Loans and bills discounted (Notes 8, 10 and 11)
Foreign exchange assets (Note 8)
Lease receivables and investments in leases
Other assets (Note 10)
Tangible fixed assets (Notes 13 and 14)
Intangible fixed assets
Net defined benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Notification of suspicious transactions• The Bank will build a system utilizing IT systems and othertools to accurately detect, monitor, and analyze suspicious
customers and transactions, while notifying authorities
without delay in case of suspected money laundering.
Management of correspondent banks• The Bank will collect information on correspondent banks,
evaluate it properly, and take appropriate measures according to risks. In addition, we will cut off relationships withfictitious banks that have no actual status.
Training for officers and employees• The Bank will provide appropriate and continuous training
to all officers and employees to deepen their professional
understanding of anti-money laundering as a wholeorganization.
Internal audit• The Bank’s internal audit department with an independent
standpoint, conducts regular audits on the status of the Bank’s
anti-money laundering and other preventive measures, andwill improve the Bank’s system based on the audits results.

Millions of yen
As of March 31

Liabilities and net assets
Liabilities:
Deposits (Note 10)
Negotiable certificates of deposit
Call money and bills sold (Note 10)
Payables under securities lending transactions (Note 10)
Borrowed money (Notes 10 and 29)
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 14)
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 available-for-sale securities, net of taxes
Net deferred gains (losses) on hedging instruments, net of taxes
Revaluation reserve for land (Note 14)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets

Yen
As of March 31

2021

2020

Per share
Net assets¥9,892.54¥8,461.18$89.355

See accompanying notes to consolidated financial statements.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

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 17)
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 18)
Other expenses (Notes 6 and 19)
Total expenses
Profit before income taxes
Income taxes :Current
Deferred
Subtotal
ProfitProfit attributable to owners of parent

2020

2021

¥26,792
13,208652
11,647
3,959
12,72868,989¥29,210
12,772604
11,374
8,965
13,96676,895$242,001
119,302
5,889
105,20235,760114,967
623,150

682
112
379
1,110
3,249
3,905
37,046
17,39063,877
5,111

2,173
407
458
2,142
3,380
4,476
36,972
15,91665,928
10,966

6,160
1,011
3,423
10,02629,34635,272
334,621
157,077
576,975
46,165

3,402
(855)
2,546
2,565
¥ 2,565

3,518
(266)
3,251
7,715
¥ 7,715

30,728(7,722)
22,997
23,168$ 23,168
U.S. dollars(Note 1)
2021

Yen
For the years ended March 31

Per share
Basic earnings

2020

2021

Millions of yen
Stockholders’ equity

Thousands of U.S. dollars(Note 1)2021
For the years ended March 31
Balance as of March 31, 2019

Commonstock

CapitalsurplusRetainedearnings

Treasury stock

Total
stockholders’equity¥37,322¥30,486¥167,615¥(2,041)¥233,382

—
—
—
—
—

—
—
—
—
—

(2,513)
7,715
—
(6)
564

—
—
(3)
45
—

(2,513)
7,715
(3)
38
564

—

—

—

—

—

—
¥37,322—¥30,486

5,758¥173,374

42¥(1,999)

5,801¥239,184

—
—
—
—
—

—
—
—
—
—

(2,366)
2,565
—
—
47

—
—
(72)
—
—

(2,366)
2,565
(72)
—
47

—

—

—

—

—

—
¥37,322—¥30,486

246¥173,620(72)¥(2,071)

173¥239,357

Changes 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, 2020
Changes 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, 2021

For the years ended March 31
Balance as of March 31, 2019

Net unrealized
gains onavailable-forsale securities,
net of taxes

Millions of yen
Accumulated other comprehensive income
Total
Net deferred
accumulated
gains (losses)
Remeasurements
otheron hedging
Revaluationof defined benefit comprehensive
instruments,
reserve forplans
incomenet of taxes
land

Share
subscription
rightsTotal net
assets¥47,822¥ (1,121)¥8,540¥ (2,109)¥53,131¥61¥286,576

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,513)
7,715
(3)
38
564

(32,774)(32,774)¥15,048(6,325)(6,325)¥ (7,447)

(564)
(564)
¥7,976(2,861)(2,861)¥ (4,971)(42,526)(42,526)¥10,605

(20)
(20)
¥41

(42,546)(36,744)¥249,831

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,366)
2,565
(72)
—
47

27,54727,547¥42,595

10,167
10,167¥ 2,720(47)(47)¥7,9284,026
4,026¥ (945)

41,694
41,694¥52,299——¥41

41,694
41,867¥291,699

Changes in items during the period¥ 86.95¥261.35$0.785

Dividends from surplus
Profit attributable to owners of parent

See accompanying notes to consolidated financial statements.

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

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
Millions of yen

Balance as of March 31, 2020
Changes in items during the period

Thousands of U.S. dollars(Note 1)2021

For the years ended March 31

2021

2020

ProfitOther comprehensive income (Note 20)
Net unrealized gains (losses) on available-for-sale 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¥ 2,565
41,741
27,547
10,167
4,026¥44,306¥ 7,715(41,961)(32,774)(6,325)(2,861)¥(34,246)$ 23,168
377,030
248,82191,83436,365$400,198¥44,306¥(34,246)$400,198

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, 2021

See accompanying notes to consolidated financial statements.

23

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

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, 2020

$337,114$275,368$1,566,019

Transfer from revaluation reserve for land

—
—
—
—
—

—
—
—
—
—

(21,371)
23,168
—
—
424

—
—
(650)
—
—

(21,371)
23,168(650)—
424

Net changes in items other than stockholders’equity

—

—

—

—

—

—
$337,114—$275,368

2,222$1,568,241

Treasury stock

For the years ended March 31

Total
stockholders’equityCommonstock$(18,056) $2,160,455

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, 2021

(650)
1,562
$(18,706) $2,162,017

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income

For the years ended March 31

Net unrealized
gains onavailable-forsale securities,
net of taxes

Net deferredgains (losses)on hedging
instruments,
net of taxes

Revaluation
reserve forland

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
incomeSharesubscription
rightsTotal net
assetsBalance as of March 31, 2020

$135,922$(67,265)$72,044$(44,901)$ 95,790$370$2,256,625

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(21,371)
23,168(650)—424

248,82191,834(424)

36,365

376,605—

376,605

248,821$384,743

91,834$ 24,568(424)$71,61036,365$ (8,535)

376,605$472,396—$370

378,168$2,634,802

Changes 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, 2021

See accompanying notes to consolidated financial statements.

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 loss (gain) related to securities transactions
Net gain 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 receivables and investments in leases
Proceeds from fund operations
Payments on fund procurement
Other
Subtotal
Payment of income taxes
Net cash provided by operating activities
Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Decrease in money held in trust
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Proceeds from sales of intangible 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
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)

2020

2021

10,966
3,380
1,090
604
3
(1,929)
4
(10)
(80)
37
17
(42,587)
5,183(3,615)
(119)
1,436
19
148
(21,447)
111,203(45)
35,988240
9,729(8,592)(29,934)(4,043)(56)(3,589)43,826(4,952)(24,237)
78,639(4,059)74,580Thousands of U.S. dollars(Note 1)
2021

¥

5,111
3,331
161
775
(8)
(223)
6
11
(117)
0
42
(40,653)
2,286
6,094
—
(9,313)(454)(8)(188,465)
375,488(5,464)87,723
267
5,665(22,692)(56,056)
364
1,045
1,619
40,267(2,836)
15,971
219,938(3,585)
216,353¥(543,029)
408,491
164,212—(1,780)(1,046)507—
27,355(1,175,010)
673,893248,795
4,867(1,433)(1,116)253
0(249,748)(4,904,967)
3,689,738
1,483,262—(16,078)(9,448)4,579—
247,086(72)—(2,366)(2,438)(3)
5(2,513)(2,511)(650)—(21,371)(22,021)2
241,272
622,399¥ 863,671(1)(177,681)
800,081¥ 622,399

18
2,179,315
5,621,886$ 7,801,201$

46,16530,087
1,454
7,000
(72)
(2,014)54
99(1,056)0379(367,202)
20,64855,044—(84,120)(4,100)(72)(1,702,330)
3,391,635(49,354)792,367
2,411
51,169(204,967)(506,331)
3,287
9,439
14,623363,716(25,616)
144,259
1,986,613(32,381)
1,954,231

See accompanying notes to consolidated financial statements.

25

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

26

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

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

2. Fiscal year ends

(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
principally at the amounts of expected losses over the next 1 year or 3 years,
which are determined by making necessary adjustments considering forecasts ofloss rates calculated based on the average historical default rates corresponding
to a certain period consistent with those for 1 year or 3 years.
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 ¥11,141 million ($100,632 thousand) and ¥13,419 million as of March
31, 2021 and 2020, 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.

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, 2021, which was ¥110.71 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.

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 all 9
subsidiaries.
There are no affiliates accounted for by the equity method as of March 31,
2021.
Shikoku Alliance Capital Co., Ltd. and SHIKOKU BRAND inc. are affiliates
not accounted for by the equity method. Affiliated companies not accounted forby the equity method are excluded from the scope of the equity method because
the Bank’s interests in their respective amounts of net profits or losses, retained
earnings or other accumulated 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
Held-to-maturity debt securities are stated at amortized cost using the movingaverage cost method. Investments in affiliates not accounted for by the equity
method are stated at cost by the moving-average cost method. Available-for-salesecurities of which market prices are available are stated at fair value based
principally on their market prices at the balance-sheet date (cost of sales iscalculated by the moving-average cost method), whereas those for which themarket value is not readily determinable are stated at cost by the movingaverage 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.
(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).

27

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

(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 based on theestimated 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, 2020. 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. Translation differences arising from availablefor-sale securities (bonds), including the effect of changes in exchange rates, areaccounted for as net unrealized gains/losses on available-for-sale securities.
(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 (Japanese Government Bonds and U.S. Treasury
Bonds) and hedging instruments (interest rate swap transactions) 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.
(b) Hedging against currency fluctuations
The Bank applies the deferred hedge accounting stipulated in the basic
provisions of JICPA Industry Committee Practical Guideline No. 25 issued on
October 8, 2020 to currency swap and foreign exchange swap transactions
executed for the purpose of lending or borrowing funds in different currencies.
Pursuant to JICPA Industry Committee Practical Guideline No. 25, theBank 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 (foreign securities and foreign currency loans) 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
2020
2021
2021
¥893,016 ¥652,010 $8,066,263(27,540)(27,542)(248,758)

(601)

(413)

(5,428)(1,655)(1,203)(10,866)¥863,671 ¥622,399 $7,801,201(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.

(18) Other significant accounting policies adopted
Net gains and losses from the cancellation and redemption of investment trusts(excluding ETF) are included in “Interest and dividends on securities” in the caseof gains for the investment trusts as a whole, and included in “Loss onredemption of bonds” under “Other operating expenses” in the case of losses.
Gains on cancellation and redemption of investment trusts of ¥3,196
million ($28,868 thousand) and ¥2,163 million were recorded in “Interest anddividends on securities” for the fiscal years ended March 31, 2021 and 2020,
respectively.
(19) Significant accounting estimates
Reserve for possible loan losses(i) Amount recognized in the consolidated financial statements for the current
fiscal year
Reserve for possible loan losses: ¥18,172 million ($164,140 thousand)(ii) Information on the nature of significant accounting estimates for identified
items(1) Method used in making the accounting estimates
The collectability of loans and other receivables fluctuates depending on
factors such as domestic and international economic trends, the businessconditions of the borrowers operating in areas where the Bank’s wide-area
network exists, mainly in its home prefecture of Kagawa, the decline in thevalue of real estate used as collateral, and the status of the novel coronavirus
disease (COVID-19) outbreak. For this reason, the Bank calculates theamount of expected losses from future bad debts for each borrower category
and records it as reserve for possible loan losses.
The method of calculating the reserve for possible loan losses is
described in “3. Significant accounting policies (6) Reserve for possible loan
losses.”(2) Key assumptions used in making accounting estimates
The main assumptions used in the calculation of the reserve for possible loan
losses are “the future business prospects of each borrower in determining theborrower classification” and “when the COVID-19 pandemic will end.”
The “future business prospects of each borrower in determining theborrower classification” consist of the assessment of changes in the local
economy and the individual evaluation of debt repayment capacity of eachborrower based on the progress of each borrower’s management
improvement plan and other factors.
Meanwhile, “when the COVID-19 pandemic will end” takes into
consideration the impact on each borrower, based on the assumption that the
pandemic will end in the next year or so with the start of vaccinations andthat economic activities will gradually normalize against the backdrop of
aggressive fiscal policies by the national and local governments.
(3) Impact on the consolidated financial statements for the next fiscal year
The above “2) Key assumptions used in making accounting estimates” issubject to uncertainty as it will be affected by changes in the businessenvironment surrounding the borrowers and the success or failure of theirbusiness strategies. Therefore, in the event of an unexpected deterioration in
the business conditions of major borrowers or a worsening of the COVID19 outbreak that affects the assumptions used for the initial estimate, there
may be a significant impact on the reserve for possible loan losses in the
consolidated financial statements for the next fiscal year.
(20) Accounting Standards Issued but Not Effective(a) “Accounting Standard for Revenue Recognition” (the Accounting Standards Board ofJapan (“ASBJ”) Statement No. 29, March 31, 2020) and “Implementation Guidanceon Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26,2021)(i) Overview
This is a comprehensive accounting standard for revenue recognition. Under
the standard and guidance, revenue is recognized by applying following five
steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in thecontract
Step 5: Recognize revenue when (or as) the entity satisfies a performanceobligation

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

28

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(ii) Scheduled date of adoption
The Group expects to adopt the accounting standard and implementation
guidance from the beginning of the fiscal year ending March 31, 2022.
(iii)Impact of adopting the accounting standard and implementation guidance
The impact of the adoption of the “Accounting Standard for Revenue
Recognition” and other on the consolidated financial statements isimmaterial.
(b) “Accounting Standard for FairValue Measurement” (ASBJ Statement No. 30, March
31, 2020),“Implementation Guidance on Accounting Standard for FairValue
Measurement” (ASBJ Guidance No. 31, July 4, 2019),“Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019) and “Implementation
Guidance on Disclosures about FairValue of Financial Instruments” (ASBJ GuidanceNo. 19, March 31, 2020)(i) Overview
In order to enhance comparability with rules prescribed in international
accounting standards, “Accounting Standard for Fair Value Measurement”
and “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (collectively, the “Accounting Standard for Fair Value
Measurement, etc.”) have been developed. Thereby, guidance, etc. on themeasurement methods for fair value have been prescribed. The AccountingStandard for Fair Value Measurement, etc. will be applied to fair value offinancial instruments in “Accounting Standard for Financial Instruments.”
In addition, “Implementation Guidance on Disclosures about Fair Valueof Financial Instruments” has been revised, and related notes such as thebreakdown of fair value of financial instruments by level have beenprescribed.
(ii) Scheduled date of adoption
The Group expects to adopt the accounting standards and implementation
guidances from the beginning of the fiscal year ending March 31, 2022.
(iii)Impact of adopting the accounting standards and implementation guidances
The impact of the adoption of the “Accounting Standard for Fair Value
Measurement” and other standards on the consolidated financial statements
is immaterial.
(21) Changes in presentation
Adoption of “Accounting Standard for Disclosure of Accounting Estimates”“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement
No. 31, March 31, 2020) has been adopted in preparing the consolidated
financial statements from the current fiscal year, and therefore significant
accounting estimates are disclosed in the notes to the consolidated financial
statements.
Comparative information for the previous fiscal year is not presented inaccordance with the transitional provision set out in the proviso of paragraph 11of the Accounting Standard.

4. Additional information(a) Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections“Accounting Standard for Accounting Policy Disclosures, Accounting Changes
and Error Corrections” (ASBJ Statement No. 24, March 31, 2020) has been
adopted from the end of the current consolidated fiscal year, and notes on theaccounting principles and procedures adopted when the relevant accounting
standards are not clearly defined are provided in “3. Significant accounting
policies (18) Other significant accounting policies adopted.”value of the Bank’s shares are granted or delivered to the Bank’s directors upon
their retirement.
(ii) 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).
(iii)Matters relating to the Bank’s shares held by the trust(1) The book values of the shares held by the trust were ¥273 million ($2,465
thousand) and ¥203 million as of March 31, 2021 and 2020, 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 92 thousand and 54 thousand as ofMarch 31, 2021 and 2020, respectively. The average numbers of shares
during the year were 76 thousand and 56 thousand for the fiscal years ended
March 31, 2021 and 2020, 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.

5. Changes in net assets(1) Type and number of shares issued and treasury shares are as follows:
Thousands of shares
Increase
Decrease

March 31, 2020
2021
Shares issued
Common stock .........................................................................
30,000Total ......................................................................................
30,000Treasury stock
Common stock (Notes 1 and 2) .....................................................
478
Total ......................................................................................
478

March 31, 2021

—
—

—
—

300,000
300,000

39
39

—
—

517
517

Notes: 1. The number of shares of common stock at the end of the fiscal years ended March 31, 2021 and 2020 includes 92 thousand and 54 thousand shares, respectively, of the Bank’s shares
held by the BIP Trust.
2. The 39 thousand share increase in the number of common shares of treasury stock consists of increases of 38 thousand shares due to an acquisition by the BIP Trust and 1 thousand shares
due to a purchase demand for fractional shares from shareholders.

Thousands of shares
Increase
Decrease

2020
March 31, 2019
Shares issued
Common stock .........................................................................
30,000Total ......................................................................................
30,000Treasury stock
Common stock (Notes 1, 2 and 3) ..................................................
488
Total ......................................................................................
488

March 31, 2020

—
—

—
—

300,000
300,000

1
1

11
11

478
478

Notes::1.The number of shares of common stock at the end of the fiscal years ended March 31, 2020 and 2019 includes 54 thousand and 59 thousand shares, respectively, of the Bank’s shares heldby the BIP Trust.
2. The 1 thousand share increase in the number of common shares of treasury stock is due to a purchase demand for fractional shares from shareholders.
3. The 11 thousand share decrease in the number of common shares of treasury stock consists of decreases of 6 thousand shares due to the exercise of share subscription rights, 4 thousand
shares due to the delivery of shares to the beneficiaries from the BIP Trust, and 0 thousand shares due to an additional purchase demand for fractional shares from shareholders.

(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, 2021 and 2020 stood at ¥41 million ($370 thousand) and ¥41 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
2021
Resolution
Type of share
June 26, 2020 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
November 10, 2020 (Meeting of the Board of Directors)
Common(Note 1) .................................................................................
stock

Total dividend
amount(Millions of yen)

Dividend
per share(Yen)¥1,183

¥40.0

1,183

40.0

Total dividend
amount(Millions of yen)

Dividend
per share(Yen)¥1,330

¥45.0

1,183

40.0

Record date
Effective date
March 31,
June 29,2020
2020
September 30, December 10,
2020
2020

2020
Resolution
Type of share
June 27, 2019 (Regular Annual General Meeting of Shareholders)Common(Notes 1 and 2) ........................................................................
stock
November 11, 2019 (Meeting of the Board of Directors)
Common(Note 1) .................................................................................
stock

Record date
March 31,2019
September 30,
2019

Effective dateJune 28,2019
December 10,2019(b) 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”).
(i) 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 the29

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

30

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2021

Resolution
June 26, 2020 (Regular Annual General Meeting of Shareholders)(Note 1) ..............................................................................
November 10, 2020 (Meeting of the Board of Directors)(Note 1) ..............................................................................

Type of share
Commonstock
Commonstock

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

Dividend
per share(U.S. dollars)$10,685$0.361

10,6850.361

Record date
Effective date
March 31,
June 29,2020
2020
September 30, December 10,
2020
2020

Notes: 1. In accordance with the resolutions approved at the Bank’s Regular Annual General Meetings of Shareholders held on June 26, 2020 and June 27, 2019, total amount of dividends paid
includes the dividend payment to the BIP Trust of ¥2 million ($18 thousand) and ¥2 million, respectively.
Moreover, in accordance with the resolutions approved at the Meetings of the Board of Directors held on November 10, 2020 and November 11, 2019, total amount of dividends paid
includes the dividend payment to the BIP Trust of ¥3 million ($27 thousand) and ¥2 million, respectively.
These exclusions reflect the Bank’s classification of the shares held by the Trust as treasury stock.
2. In accordance with the resolutions approved at the Bank’s Regular Annual General Meeting of Shareholders held on June 27, 2019, dividend per share includes a commemorative
dividend of ¥5.0 to celebrate the Bank’s 140th Anniversary.

(b) Dividends paid after the balance-sheet date2021
Total dividend
amountResolution
Type of share (Millions of yen)
June 29, 2021 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
¥887

Source ofdividends
Retainedearnings

Dividend
per share
(Yen)
¥30.0

Record date Effective date
March 31,
June 30,
2021
2021

2020
Total dividend
amountResolution
Type of share (Millions of yen)
June 26, 2020 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock¥1,183

Source ofdividends
Retainedearnings

Dividend
per share
(Yen)
¥40.0

Total dividend
amountDividend(Thousands of Source ofper share
Resolution
Type of share U.S. dollars) dividends (U.S. dollars) Record date Effective dateJune 29, 2021 (Regular Annual General Meeting of Shareholders)CommonRetained
March 31,
June 30,(Note 1) .................................................................................
stock$8,011earnings$0.2702021
2021
Note: The total dividend amount includes the ¥2 million ($18 thousand) dividends for the BIP Trust.

(1) Investments in affiliates
Investments in affiliates as of March 31, 2021 and 2020 totaled ¥50 million($451 thousand) and ¥25 million, respectively.
(2) Securities lending transactions
National government bonds as of March 31, 2021 and 2020 included bonds of¥37,000 million ($334,206 thousand) and ¥28,000 million, respectively, whichwere lent to third parties without collateral under lending contracts.
(3) Trading account securities
Valuation profit (losses) of ¥0 million ($0 thousand) and nil were recognized forthe fiscal years ended March 31, 2021 and 2020, respectively.
(4) Held-to-maturity debt securities
Not applicable.
(5) Available-for-sale securities(a) Consolidated balance sheet amount and acquisition cost of available-for-salesecurities and their difference as of March 31, 2021 and 2020 were as
follows:

31

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

2020
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... ¥ 79,613 ¥ 37,303
Bonds:
National .......................
153,641
151,051
Local ...........................
122,871
121,556
Corporate.....................
80,63880,236357,151
352,843
Other ..........................
199,732
189,926
Subtotal .......................
636,497580,073
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
21,835
33,108
Bonds:
National .......................
176,282
178,987
Local ...........................
150,137
150,923
Corporate.....................
69,28669,745395,707399,656
Other ..........................
201,292
220,979
Subtotal .......................
618,835
653,744
Total .................................... ¥1,255,333 ¥1,233,818

Record date Effective date
March 31,
June 29,
2020
2020

2021

6. Securities and trading account securities

Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference

Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference

2021
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... ¥ 110,915 ¥ 43,304
Bonds:
National .......................
119,032
117,655
Local ...........................
119,968
118,919
Corporate.....................
60,33560,056299,336
296,632
Other ..........................
173,410
166,094
Subtotal .......................
583,662
506,031
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
17,435
19,075
Bonds:
National .......................
128,583
132,911
Local ...........................
215,525
216,444
Corporate.....................
116,459
117,135
460,568
466,491
Other ..........................
206,272
215,351
Subtotal .......................
684,277
700,918
Total .................................... ¥1,267,939 ¥1,206,950¥ 67,610
1,377
1,048
278
2,704
7,315
77,630(1,639)(4,328)(918)(675)(5,922)(9,078)(16,640)¥ 60,989¥ 42,310
2,590
1,314
402
4,308
9,805
56,423(11,273)(2,704)(785)(459)(3,949)(19,686)(34,909)¥ 21,514

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

2021
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock ..................... $ 1,001,851 $ 391,148
Bonds:
National ....................... 1,075,169 1,062,731
Local ........................... 1,083,623 1,074,148
Corporate.....................
544,982
542,462
2,703,784 2,679,360
Other .......................... 1,566,344 1,500,261
Subtotal ....................... 5,271,989 4,570,779
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock .....................
157,483
172,296
Bonds:
National ....................... 1,161,439 1,200,532
Local ........................... 1,946,752 1,955,053
Corporate..................... 1,051,928 1,058,034
4,160,130 4,213,630
Other .......................... 1,863,174 1,945,181
Subtotal ....................... 6,180,805 6,331,117
Total .................................... $11,452,795 $10,901,905$610,694
12,437
9,466
2,511
24,424
66,073
701,201(14,804)(39,093)(8,291)(6,097)(53,491)(81,998)(150,302)$550,889(b) Gains and losses on sale of available-for-sale securities for the fiscal years
ended March 31, 2021 and 2020 are as follows:

2021
Equity stock ...........................
Bonds:
National ..........................
Local ..............................
Corporate........................
Other ...................................
Total ....................................

Millions of yen
Proceeds
Gains onLosses on
from salesale
sale¥ 3,768¥ 2,850¥ 55
163,087
87,286
18,960269,334
135,690¥408,793

197
286
40
525
1,555
¥ 4,9312020
Equity stock ...........................
Bonds:
National ..........................
Local ..............................
Corporate........................
Other ...................................
Total ....................................

Proceeds
from sale¥ 5,733
342,250
51,261
36,236
429,748
237,078¥672,559

Millions of yen
Gains onLosses onsalesale¥ 3,786
¥ —
1,033
232
81
1,347
4,907
¥10,041

1,512
—
—
1,512
2,934
¥4,446

Thousands of U.S. dollars
Proceeds
Gains onLosses on
from sale
sale
sale
2021
Equity stock ........................... $ 34,034$25,742$ 496
Bonds:
National .......................... 1,473,100
1,779
5,844
Local ..............................
788,420
2,583—
Corporate........................
171,258361—
2,432,788
4,742
5,844
Other ................................... 1,225,634
14,04529,419Total .................................... $3,692,466$44,539$35,760(6) 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 ¥7,065 million ($63,815 thousand) and ¥1,948
million were recorded in the fiscal years ended March 31, 2021 and 2020,
respectively.
The Bank determines whether fair value has decreased significantly based on
the degree of such decrease. If the fair value as of the end of the fiscal year has
decreased by 50 percent or greater than acquisition cost, all securities are
deemed to have decreased materially. And if the fair value has decreased by 30
percent or more but less than 50 percent, the determination shall be made bytaking into account changes in fair value over a certain period in the past and theperformance of the issuing company concerned.

7. Net unrealized gains on available-for-salesecurities

The following is a breakdown of net unrealized gains on available-for-salesecurities recorded in the consolidated balance sheet:

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

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥21,514 $ 550,889¥60,989
21,51460,989550,889———(6,466) (166,145)(18,394)
42,59515,048384,743

—

—

—

—

—

—

¥42,595¥15,048$ 384,743

647
—
—
647
3,257
¥3,959T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

32

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
8. Loans and bills discounted

Loans and bills discounted as of March 31, 2021 and 2020 included thefollowing non-performing amounts:

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

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥ 1,126 $ 7,614¥ 843
27,57430,654
276,885
193
116
1,047
26,78328,806260,193¥55,677 $545,759¥60,421

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 Committee
Practical Guideline No. 24, October 8, 2020).” Commercial bills and foreign
bills bought are permitted to be sold or pledged and their total face value was asfollows:

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

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥16,580¥12,689$114,614

9. 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¥23,339 million ($210,812 thousand) and ¥22,006 million as of March 31,
2021 and 2020, respectively.

11. Commitment line agreements on overdrafts andloans

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, 2021 and 2020 was as follows:
Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
Unused commitments ............... ¥1,017,138 ¥923,414 $9,187,408
Contracts with less than a yearof contract period orcontacts that are cancellable
unconditionally at any time
857,679 8,522,057
943,477
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.

12. Income taxes(1) Deferred tax assets
Major components of deferred tax assets as of March 31, 2021 and 2020 wereas follows:
Millions of yen
2020
2021

10. Assets pledged as collateral

Assets pledged as collateral as of March 31, 2021 and 2020 consisted of thefollowing:
Millions of yen
2020
2021
Assets pledged as collateral:
Securities ........................
Loans and bills discounted
Total
Liabilities corresponding to assets
pledged as collateral:
Deposits ..........................
Payables under securities
lending transactions .........
Borrowed money ...............
Call money ......................

¥463,257
97,207560,464

Thousands of
U.S. dollars
2021¥462,322 $4,184,418—
878,032
462,322 5,062,451

15,52659,995140,240

56,643
370,133—

112,699
280,8135,767

511,633
3,343,266—

In addition to the assets presented above, the following assets were pledged ascollateral for exchange clearance transactions and futures contracts at March
31, 2021 and 2020:

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

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥ 405 $ 3,613¥ 400
30,00030,000270,978

As of March 31, 2021 and 2020, in addition to the items presented above, otherassets included cash collateral paid for financial instruments of ¥7,389 million($66,741 thousand) and ¥22,414 million, and guarantees and household
deposits of ¥1,140 million ($10,297 thousand) and ¥1,175 million,
respectively.

Deferred tax assets:
Excess reserve for possible loan
losses ................................ ¥ 7,513
Net unrealized losses on availablefor-sale securities ..................
5,058
Loss on devaluation of equity
securities ............................
2,438
Net defined benefit liability.........
2,046
Excess depreciation ..................
1,098
Reserve for bonuses..................
466
Net deferred losses on hedging
instruments.........................
389
Other ...................................
2,257
Subtotal ................................
21,269Valuation reserve .....................
(7,386)
Deferred tax assets ...................
13,882
Deferred tax liabilities:
Net unrealized gains on availablefor-sale securities ...............
(23,453)
Net deferred gains on hedging
instruments ......................
(1,578)Reserve for advanced depreciation of non-current assets .....
(119)
Other ................................
(29)
Deferred tax liabilities...........
(25,180)

Net deferred tax assets(liabilities) ........................

¥(11,297)

Thousands of
U.S. dollars
2021(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, 2021 and 2020.
Statutory income tax rate .............................
Reconciliation:
Non-deductible expenses, including
entertainment expenses .........................
Non-taxable income, including dividend
income .............................................
Per-capita resident tax ..............................
Increase (decrease) of valuation reserve .........
Other ..................................................
Effective income tax rate under tax-effectaccounting ............................................

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Millions of yen
Impairment losses
2020
2021

2020
30.4%

2021
30.4%
1.0

0.6

(6.5)
1.1
15.1
8.7

(3.0)
0.6
(1.6)
2.6

49.8%

29.6%

13. Accumulated depreciation and reduction entry

Accumulated depreciation of tangible fixed assets as of March 31, 2021 and2020 amounted to ¥37,763 million ($341,098 thousand) and ¥38,647 million,
respectively.
Reduction entry, which is deferred gain on tangible fixed assets deductible
for tax purposes, amounted to ¥2,452 million ($22,147 thousand) and ¥2,452
million as of March 31, 2021 and 2020, respectively. Reduction entry for the
fiscal years ended March 31, 2021 and 2020 amounted to nil and ¥(5) million,
respectively.

Kagawa Pref ... Assets forbusiness use
and idle assets(2021: 13
locations2020: 16
locations)Land,
buildings
andmovablesOther ........... Assets forbusiness use
and idle assets(2021: 7
locations2020: 12locations)Land andbuildings

Total ............

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, 2021 and 2020, the difference between the carrying
amount and the fair value of the revalued land was ¥12,324 million ($111,317
thousand) and ¥12,685 million, respectively.

¥8,078$ 67,861

10,61145,686

353
3,713
1,091
459

22,021
18,4809,917
4,209

15. Asset retirement obligations

3,363
2,289
29,961(6,613)
23,3483,513
20,386
192,114(66,714)125,390

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

(17,078)(211,841)(110)(14,253)

(139)
(25)
(17,353)(1,074)(261)(227,441)¥5,995$(102,041)

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

16. Investment and rental property

Kagawa Pref ... Assets forbusiness use
and idle assets(2021: 13
locations)Land,
buildings
andmovablesOther ........... Assets forbusiness use
and idle assets(2021: 7
locations)Land andbuildings

Total ............

17. Other income

¥118

¥ 178

land: 71

land: 125

buildings: 44

buildings: 48

movables: 1

movables: 2

¥ 41

¥ 911

land: 26

land: 878

buildings: 13
movables: 1¥161
land: 97
buildings: 59
movables: 3buildings: 33
movables: —¥1,090land: 1,004
buildings: 82
movables: 3

Thousands of
U.S. dollars
Impairment
losses2021

14. Revaluation reserve for land

$1,065
land: 641
buildings: 397
movables: 9$ 370
land: 234
buildings: 117
movables: 9$1,454
land: 876
buildings: 532
movables: 27

Other income includes the following:

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

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥7,586¥7,754$70,038
3,786
2,850
25,742

18. General and administrative expenses

Salaries and allowances were included in general and administrative expenses,
which amounted to ¥14,797 million ($133,655 thousand) and ¥14,954 million
for the fiscal years ended March 31, 2021 and 2020, respectively.

19. Other expenses(1) Other expenses include the following:
Millions of yen
2020
2021
Loss on devaluation of equity
securities ............................
Cost of lease ...........................
Loan write-offs .......................

33(2) Impairment losses
During the fiscal years ended March 31, 2021 and 2020, the Bank recorded
impairment losses on fixed assets as described below:¥7,065
6,442
1,362¥1,9486,267
4,063

Thousands of
U.S. dollars
2021$63,815
58,18812,302The Bank posted impairment losses of ¥161 million ($1,454 thousand) and¥1,090 million, respectively, during the fiscal years ended March 31, 2021 and2020 on land, buildings and movables due to a fall in operating cash flows andcontinuous declines in land prices. The Bank reduced the carrying amounts ofthe corresponding assets to the recoverable amounts, and recorded thedifference 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 isusually considered as the smallest grouping unit. Idle assets and assets for
disposal, however, are valued on an individual basis.
The recoverable amounts are measured using the higher of either the net
selling prices or value in use. Net selling prices are calculated on the basis ofappraisal values of land or the amounts computed using the method laid downby the National Tax Agency of Japan for calculation of land prices (used as the

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

34

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
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 bydiscounting the future cash flow at discount rates of 0.1% and 0.1% for the
fiscal years ended March 31, 2021 and 2020, respectively.

20. Matters relating to consolidated statements ofcomprehensive income

The amount of recycling and amount of income tax effects associated with othercomprehensive income:Millions of yen
2020
2021
Net unrealized gains (losses) on
available-for-sale securities, netof taxes:
Amount recognized during theyear
Amount of recycling
Prior to income tax effect
Income tax effectNet unrealized gains (losses)
on available-for-salesecurities, net of taxes
Net deferred gains (losses) on
hedging instruments, net oftaxes:
Amount recognized during theyear
Amount of recycling
Prior to income tax effect
Income tax effect
Net deferred gains (losses) on
hedging instruments
Remeasurements of defined benefit
plans:
Amount recognized during theyear
Amount of recycling
Prior to income tax effect
Income tax effectRemeasurements of defined
benefit plans
Total other comprehensive income

Thousands of
U.S. dollars
2021¥36,576
2,898
39,474(11,927)¥(41,176)(5,808)(46,984)
14,210$330,376
26,176
356,553(107,731)

27,547(32,774)

248,821

13,857751
14,609(4,441)(10,645)
1,557(9,088)2,762

125,164
6,783
131,957(40,113)

10,167(6,325)91,834

5,076
708
5,785
(1,758)(3,865)(246)(4,111)
1,249

45,8496,395
52,253(15,879)

4,026¥41,741(2,861)¥(41,961)

36,365$377,030

21. Finance leases

Information on finance leases for the fiscal years ended March 31, 2021 and2020 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”.
2. As lessor(1) Breakdown of investment in leases

Lease receivables......................
Estimated residual value .............
Interest received ......................
Investments in leases .................

35

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥23,402 $196,423¥21,746
3,149
3,152
28,470(2,881)(2,578)(23,286)¥23,669 $201,607¥22,320

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

(2) Schedule for collection of lease receivables and receivables oninvestments in leases by leasing contract maturity

2021
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 receivables investments in leases¥251¥6,504
186
5,429
67
4,151
28
2,883
11
1,616
0
1,161

2020
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 receivables investments in leases¥284¥6,616
250
5,550
184
4,441
64
3,149
27
1,896
11
1,747

2021
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 receivables investments in leases$2,267$58,748
1,680
49,038605
37,494
252
26,041
99
14,5960
10,486

3. Operating leases
As lessor
Future minimum lease payments related to non-cancellable operating leasetransactions

Up to 1 year
Over 1 year
Total

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥—
¥1
$ 9
—
0
0
¥—
¥2
$18

22. 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 Committee
Practical Guideline No. 25 for currency swap and foreign exchange swap
transactions that are concluded for the purpose of hedging foreign exchange raterisk associated with foreign currency denominated financial assets. Hedge
effectiveness of these hedge transactions is evaluated by confirming thecorrespondence of the position to the amount of foreign currency denominatedfinancial 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.

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 derivativetransactions for interest rate swaps to hedge 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, 2021 (theconsolidated balance sheet date), the volume of the aforementioned risks offinancial instruments held for trading purposes (estimated amount of loss)
amounted to ¥6 million ($54 thousand) (compared with ¥7 million at theend 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.
The VaR of financial instruments not held for trading purposes
amounted to ¥60,786 million ($549,056 thousand) and ¥50,852 million asof March 31, 2021 and 2020, 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.

(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.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

36

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(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 the 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 the said values, and the saidvalues 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, 2021 and 2020 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
2021(1) Cash and due from banks ....... ¥ 893,016 ¥ 893,016¥—(2) Monetary claims bought ........
23,59823,598—(3) Trading account securities ......
13
13—(4) Securities
Available-for-sale securities .... 1,267,939 1,267,939—(5) Loans and bills discounted ...... 3,035,782
Reserve for possible loan
losses*1 ............................
(16,503)3,019,279 3,032,939
13,660Total assets ............................. 5,203,847 5,217,507
13,660(1) Deposits ........................... 4,440,571 4,440,65987(2) Negotiable certificates ofdeposit .............................
84,721
84,7243(3) Call money and bills sold .......
12,08912,089—(4) Payables under securities
lending transactions..............
56,64356,643—(5) Borrowed money.................
393,331
393,458
126
Total liabilities......................... 4,987,357 4,987,575
217
Derivative Transactions*2
Not subject to hedge accounting
(52)
(52)
—
Subject to hedge accounting .....
2,383
2,383
—
Total Derivative Transactions ....... ¥2,331 ¥
2,331¥—

Millions of yen
Consolidatedbalance sheet
2020
amountFair value Difference(1) Cash and due from banks ....... ¥ 652,010 ¥ 652,010¥—(2) Monetary claims bought ........
29,26429,264—(3) Trading account securities ......
55—(4) Securities
Available-for-sale securities .... 1,255,333 1,255,333—(5) Loans and bills discounted ...... 2,847,316
Reserve for possible loan
losses*1 ............................
(15,646)
2,831,669 2,855,278
23,608
Total assets ............................ 4,768,283 4,791,892
23,608(1) Deposits ........................... 4,065,082 4,065,202
120(2) Negotiable certificates ofdeposit .............................
90,18590,1883(3) Call money and bills sold .......
34,782
34,782—(4) Payables under securities
lending transactions..............
112,699
112,699—(5) Borrowed money ................
305,608
305,785
177
Total liabilities ........................ 4,608,358 4,608,659
300
Derivative Transactions*2
Not subject to hedge accounting
551
551
Subject to hedge accounting .....
(10,857)(10,857)
Total Derivative Transactions ...... ¥ (10,305) ¥ (10,305)

¥

—
—
—

Thousands of U.S. dollars
Consolidatedbalance sheet
amountFair value Difference
2021(1) Cash and due from banks ....... $ 8,066,263 $ 8,066,263 $—(2) Monetary claims bought ........
213,151
213,151—(3) Trading account securities ......
117
117
—
(4) Securities
Available-for-sale securities .... 11,452,795 11,452,795—(5) Loans and bills discounted ...... 27,421,027
Reserve for possible loan
losses*1 ............................ (149,065)
27,271,962 27,395,348
123,385
Total assets ............................ 47,004,308 47,127,693
123,385(1) Deposits ........................... 40,109,935 40,110,730
785(2) Negotiable certificates ofdeposit .............................
765,251765,278
27(3) Call money and bills sold .......
109,195
109,195—(4) Payables under securities
lending transactions..............
511,633
511,633—(5) Borrowed money................. 3,552,804 3,553,951
1,138
Total liabilities......................... 45,048,839 45,050,808
1,960
Derivative Transactions*2
Not subject to hedge accounting
(469)
(469)
—
Subject to hedge accounting .....
21,524
21,524—
Total Derivative Transactions ...... $ 21,055 $ 21,055 $—*1 General reserve for possible loan 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.

37

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

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 deposits 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) 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 the total amount of principal and interest by anassumed applicable interest rate when similar bonds are issued.
See “6. Securities and trading account securities” for further information
about the securities by intent of holding.
(5) 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.
For loans to borrowers who are bankrupt, substantially bankrupt, or likely
to go bankrupt, the estimated uncollectible amount is based on the present valueof estimated future cash flows, or the estimated collectible portion based on thecollateral or guarantee securing the loan. As such, the balance of the loan on the
consolidated balance sheet as of the last day of the fiscal period less the estimateduncollectible amount approximates the fair value.
For loans with no repayment deadline because loan amounts are less thanthe value of the assets securing them, their fair values are valued at book value,
because they are assumed to approximate the fair values 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 with variable interest rates reflects market interest rates overa 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 with fixed interest rates is valued at present value, discounting the total
amount of principal and interest categorized by specific term by an assumed
applicable interest rate when similar borrowings are entered into.
Derivative Transactions
See “25. Derivative transactions” for further information about derivatives.
The following are financial instruments whose fair values are not readily
determinable as of March 31, 2021 and 2020. 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
2020
2021
2021
¥2,712¥2,731$24,668
1,683
2,272
20,522¥4,395¥5,003$45,190
Millions of yen

Category
1. Private equity shares*1*2 ........
2. Investments in partnership*3*4 ..
Total ....................................

*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, 2021 and 2020, 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.
4* The Group recognized impairment loss on investments in partnership of ¥0 million ($0thousand) and ¥29 million for the fiscal years ended March 31, 2021 and 2020,
respectively.

The redemption schedule and the corresponding estimated amounts of monetary claims and securities with maturities subsequent to March 31, 2021 and 2020 are as follows:2021
Due from banks ..................................................
Monetary claims bought ........................................
Securities:
Available-for-sale securities with maturities ................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted* ....................................
Total ...............................................................

Up to 1 year
¥ 850,878
23,598Over 1 year,
up to 3 years¥——

44,743
12,000901
8,994
22,8481,059,157¥1,978,378

105,102
25,0008,455
19,51852,129477,477¥582,580

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years
¥
—
¥
—
—
—
110,466
40,00014,716
17,68438,065
421,689¥532,156

44,310—15,3163,238
25,756258,143¥302,454

Over 7 years,
up to 10 years¥——

Over 10 years¥——

513,604
31,000284,191
105,150
93,263
289,482¥803,087

239,965
138,000
11,71022,487
67,766
485,712¥725,677

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

38

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2020
Due from banks ..................................................
Monetary claims bought ........................................
Securities:
Available-for-sale securities with maturities ................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted* ....................................
Total ...............................................................

2021
Due from banks ..................................................
Monetary claims bought........................................
Securities:
Available-for-sale securities with maturities ................
National government bonds .............................
Local government bonds .................................
Corporate bonds...........................................
Other ........................................................
Loans and bills discounted*....................................
Total ...............................................................

Up to 1 year
¥ 605,116
29,264

Over 1 year,
up to 3 years¥——

81,73233,3003,492
24,11020,8301,090,280¥1,806,393

100,783
37,0001,472
16,29946,011
464,786¥565,570

Up to 1 year
$ 7,685,647
213,151

Over 1 year,
up to 3 years$——

404,145
108,391
8,138
81,239206,377
9,566,949$17,869,912

949,345
225,815
76,370176,298
470,860
4,312,862$5,262,216

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

23. Accrued retirement benefits
Over 7 years,
up to 10 years¥——

Over 10 years¥——

75,29340,00013,772
1,063
20,457214,313¥289,606

449,01870,000226,501
79,40073,117
218,882¥667,900

253,324
144,000
8,771
14,981
85,572459,094¥712,419

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$——

4,639,183
280,0102,566,985
949,778
842,4082,614,777$7,253,969

2,167,509
1,246,499
105,771203,116
612,103
4,387,245$6,554,755

96,244—
18,372
13,94663,925332,254¥428,499

997,796361,304
132,923
159,732
343,826
3,808,951$4,806,756

400,234—
138,343
29,247
232,6432,331,704$2,731,948*Loans and bills discounted do not include ¥31,512 million ($284,635 thousand) and ¥28,727 million in loans to bankrupt, substantially bankrupt and likely to go bankrupt borrowers or otherloans of which repayment is not expected, or ¥12,606 million ($113,865 thousand) and ¥38,977 million in loans with no established maturity as of March 31, 2021 and 2020, respectively.

The redemption schedule of corporate bonds, borrowed money and other interest-bearing debt scheduled to be repaid subsequent to March 31, 2021 and 2020 is asfollows:

2021
Deposits* .........................................................
Negotiable certificates of deposit .............................
Call money and bills sold.......................................
Payables under securities lending transactions .............
Borrowed money ................................................
Total ...............................................................

2020
Deposits* .........................................................
Negotiable certificates of deposit .............................
Call money and bills sold.......................................
Payables under securities lending transactions .............
Borrowed money ................................................
Total ...............................................................

2021
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.”39

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Up to 1 year
¥4,257,165
84,62912,08956,643
266,241¥4,676,770

Up to 1 year
¥3,853,385
90,00334,782
112,699
187,409¥4,278,280

Up to 1 year
$38,453,301
764,420
109,195
511,633
2,404,850$42,243,428

Over 1 year,
up to 3 years¥177,12392——
35,506¥212,721

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥ 5,880
¥147
—
—
—
—
—
—
90,438763¥96,319¥910

Over 1 year,
up to 3 years¥205,226142——
113,014¥318,383

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥6,108
¥ 146
40
—
—
—
—
—
3,720
902
¥9,868¥1,049Over 1 year,
up to 3 years$1,599,882
830——
320,711$1,921,425

Thousands of U.S. dollars
Over 3 years, Over 5 years,
up to 5 years
up to 7 years$ 53,111$1,327——————
816,890
6,891$870,011$8,219Over 7 years,
up to 10 years
¥253
—
—
—
382
¥635

Over 7 years,
up to 10 years
¥215
—
—
—
561
¥777

Over 7 years,
up to 10 years$2,285———3,450$5,735

Over 10 years
¥ —
—
—
—
—
¥ —

Over 10 years
¥ —
—
—
—
—
¥ —

Over 10 years
$ —
—
—
—
—
$ —

(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.

Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
¥57,403
1,573
136
1,798
(2,093)—¥58,824
1,730
139
(918)
(2,373)—$518,498
14,208
1,228
16,240(18,905)—¥58,818¥57,403$531,279*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
2021

Millions of yen
2020
2021
¥58,919¥62,527$532,192

726
6,875
1,328
(1,514)¥66,335

739(4,783)2,001(1,565)¥58,919

6,557
62,09911,995(13,675)$599,178(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 .................................

Thousands of
U.S. dollars
2021

Millions of yen
2020
2021
¥ 58,818(66,335)(7,516)—¥ (7,516)¥ 57,403 $ 531,279(58,919) (599,178)(1,515)(67,889)
—

—

(246)
—

6,395
—

¥1,691¥ 884$15,274(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
2020
2021
2021
¥(4,111)¥5,785$52,253¥(4,111)¥5,785$52,253(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
2020
2021
2021
¥(7,143) $(12,257)¥(1,357)¥(7,143) $(12,257)¥(1,357)(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 .....................................................

¥(1,515)$(67,889)

2021
15%
45
25
15
100%

2020
19%
39
28
14
100%

Note: Total pension assets include retirement benefit trusts established for the
corporate pension plan (19.48% and 18.71% as of March 31, 2021 and 2020,
respectively) and retirement benefit trusts established for the retirement
lump-sum payment plan (20.34% and 19.61% as of March 31, 2021 and 2020,
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

¥ (1,515) $ (67,889)

Thousands ofMillions of yen
U.S. dollars
2020
2021
2021
¥ 1,836¥ 204$ 1,842(3,351)(7,721)(69,740)¥(7,516)708—*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 .......................

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
2020
2021
2021
¥1,730¥1,573$14,208
139
136
1,228
(739)
(726)
(6,557)1) Discount rate .......................................
2) Expected long-term rate of return ..............
3) Assumed salary increase rate .....................

2021
0.23%
2.00%
3.20%

2020
0.23%
2.00%
3.20%

(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, 2021 and 2020, respectively.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

40

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
24. Stock options

25. Derivative transactions

1. Amount and title of expense recognized for stock options(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.

Not applicable.

2. Stock option details, size, and changes(1) Stock option details
2012 stock options 2013 stock options 2014 stock options 2015 stock options 2016 stock options
Category and number of grantrecipients ................................

The Bank’s ten
directors

The Bank’s ten
directors

The Bank’s ten
directors(excluding
outside directors)

The Bank’s nine
directors(excluding
outside directors)

The Bank’s eight
directors(excluding
outside directors)

Type and number of stock options
granted (Note) .......................... Common stock:
17,500 shares
Grant date .................................. July 24, 2012
Vesting terms .............................. No vesting terms
Service period .............................. No service period
specifiedExercise period ............................ July 25, 2012 toJuly 24, 2042

Common stock:
17,250 shares
July 23, 2013
No vesting terms
No service period
specified
July 24, 2013 toJuly 23, 2043

Common stock:
13,660 shares
July 25, 2014
No vesting terms
No service period
specified
July 26, 2014 to
July 25, 2044

Common stock:9,430 shares
July 24, 2015
No vesting terms
No service period
specified
July 25, 2015 toJuly 24, 2045

Common stock:
13,770 shares
July 26, 2016
No vesting terms
No service period
specified
July 27, 2016 toJuly 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
2012 stock options 2013 stock options 2014 stock options 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...........................

1,460
—
—
—
1,460

1,440
—
—
—
1,440

2,280
—
—
—
2,280

2,580
—
—
—
2,580

5,160
—
—
—
5,160

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

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)
2012 stock options 2013 stock options 2014 stock options 2015 stock options 2016 stock options
Exercise price .............................. Per share: ¥1 Per share: ¥1 Per share: ¥1 Per share: ¥1 Per share: ¥1
Average price at exercise................. Per share: ¥ — Per share: ¥ — Per share: ¥ — Per share: ¥ — Per share: ¥ —Fair value on grant date .................. Per share: ¥2,560 Per share: ¥3,210 Per share: ¥3,350 Per share: ¥4,090 Per share: ¥2,850(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.
Fair value of interest rate-related transactions as of March 31,
2021 and 2020 were as follows:

2021
Over the Counter
Interest rate swaps:
Fixed ratereceivable/variable rate
payable ..........
Variable ratereceivable/fixed
rate payable.....
Others:Sell ..................
Buy ..................
Total ...................

2020
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)¥28,051¥27,199¥ 633

41

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

2021
Over the Counter
Interest rate swaps:
Fixed ratereceivable/variable rate
payable ..........
Variable ratereceivable/fixed
rate payable.....
Others:Sell ..................
Buy ..................
Total ...................

2021
Over the Counter
Currency swaps ......
Forward exchange
contracts:
Sell ...............
Buy ...............
Currency options:Sell ...............
Buy ...............
Others:Sell ...............
Buy ...............
Total ...................

¥ 633

28,051

27,199

(292)

(292)

6,911
6,911

6,788
6,788

(4)
4
¥ 341

100
(18)
¥ 423

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥21,920¥20,186

¥ 634

¥ 634

21,92020,186

(360)

(360)

6,699
6,699

6,699
6,699

(9)
9
¥ 273

100
(17)
¥ 357

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

3. 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.

Fair value of currency-related transactions as of March 31, 2021 and 2020 wereas follows:

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)$253,373$245,677$ 5,717$ 5,717

253,373245,677(2,637)(2,637)62,42462,42461,31361,313(36)
36$ 3,080903(162)$ 3,820

2020
Over the Counter
Currency swaps ......
Forward exchange
contracts:
Sell ...............
Buy ...............
Currency options:Sell ...............
Buy ...............
Others:Sell .....................
Buy .....................
Total ...................

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥ 36,582¥ 6,397

¥

5

¥

5

94,01743,640

6,302
3,798

(1,810)1,411(1,810)1,411

286,218
286,218

202,296202,296(7,555)
7,555

6,042
(3,084)24,18924,18924,18924,18923(23)¥ (393)29296¥ 2,891

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥ 71,942¥ 35,296¥

86,83243,306

636
1,099

57
207

57
207

315,412315,412226,181
226,181(9,524)
9,524

5,833
(2,688)

14,462
14,462

14,462
14,462

96
(96)
278

96
133
¥ 3,652

¥

13

¥

13

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

2021
Over the Counter
Currency swaps ...... $ 330,430 $ 57,781
Forward exchange
contracts:
Sell ...............
849,218
56,923
Buy ...............
394,183
34,305Currency options:Sell ............... 2,585,294 1,827,260
Buy ............... 2,585,294 1,827,260
Others:Sell ...............
218,489
218,489
Buy ...............
218,489
218,489
Total ...................

$

45

$

45

(16,349)
12,745(16,349)
12,745(68,241)
68,241

54,575(27,856)207(207)$ (3,549)

261
2,673
$ 26,113

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

42

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Derivative transactions subject to hedge accounting
The following are the contracted value or the amount equivalent to the principal and the fair value for each type of derivative transaction subject to hedge accounting asof the end of the fiscal year, as well as the fair value calculation method. The contracted value, other price or value below does not indicate by itself the market risk of thederivative transaction.
(a) Interest rate-related transactions
As of March 31, 2021

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¥247,695¥235,695

Fair value¥3,797¥3,797

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¥301,252¥301,252

Fair value¥(10,681)¥(10,681)

As of March 31, 2021

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
$2,237,331$2,128,940

Fair value$34,296$34,296

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.

(b) Currency-related transactions
As of March 31, 2021

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Contracted value¥26,853
42,506

Millions of yen
Contracted value over
1 year¥24,639—

Fair value¥(1,289)(124)¥(1,413)

As of March 31, 2020

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Contracted value¥29,784
32,589Millions of yen
Contracted value over
1 year¥24,343—

Fair value
¥ 66
(242)
¥(176)

As of March 31, 2021

Hedge accounting method
General accounting rules

Type
Currency swaps
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Thousands of U.S. dollars
Contracted value overContracted value
1 year$242,552$222,554—
383,940

Fair value$(11,643)(1,120)$(12,763)

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

43

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

(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 “3. Significant accounting policies.”
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 reportable segments of the Bank and its consolidated subsidiaries for the years ended March 31, 2021 and 2020 is as follows:

As of March 31, 2020
Millions of yen
Contracted value over
1 year

26. Segment information

2021
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 ......
Other extraordinary income ...............
Loss from disposal of tangible assets ......
Impairment losses ............................
Other extraordinary loss ....................
Tax expenses ..................................
Increases in tangible fixed assets andintangible fixed assets .....................

2020
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 ......
Other extraordinary income ...............
Loss from disposal of tangible assets ......
Impairment losses ............................
Other extraordinary loss ....................
Tax expenses ..................................
Increases in tangible fixed assets andintangible fixed assets .....................

Leasing¥

58,985572¥ 59,557¥
3,837¥5,355,513¥5,078,673¥ 7,899563¥ 8,463¥ 316¥30,613¥25,932

66,884
1,136¥ 68,021¥
4,154¥5,386,126¥5,104,605¥ 2,066
3,489¥ 5,555¥ 1,555¥22,158¥ 9,266¥

68,9504,625¥ 73,576¥
5,710¥5,408,285¥5,113,872—(4,625)¥ (4,625)¥ (402)¥(32,716)¥(30,002)

¥

¥

¥

¥

¥

¥

¥

¥

118
234
83
40
—
0
—
—
69

2,829

¥

3

2,972
41,040
2,363
41
—
54
161
—
2,025
2,833

353

3,265
41,139
2,400
41
—
74
258
—
2,531

Adjustment
¥

3,187

Millions of yen
Otherbusinesses

2,826

Adjustment

Consolidated
total

66,871644¥ 67,515¥ 10,687¥4,931,606¥4,695,651¥ 7,749531¥ 8,281¥ 204¥32,923¥28,508¥

74,6201,175¥ 75,796¥ 10,892¥4,964,529¥4,724,160¥ 2,107
3,670¥ 5,778¥ 1,303¥22,080¥ 9,818¥

76,728
4,846¥ 81,575¥ 12,195¥4,986,610¥4,733,978¥—(4,846)¥ (4,846)¥ (212)¥(32,663)¥(29,863)

¥

¥

¥

¥

¥

¥

¥

¥

2,057

104
225
87
51
112
0
—
5
94
7

3,006
42,914
5,264
55
112
79
1,090
5
2,713
2,064

282
74
49
—
—
7
—
—
510
416

3,288
42,989
5,313
55
112
87
1,090
5
3,224
2,481

3,331
40,653
2,286
39
—
74
161
—
2,546

(360)

Leasing

2,901
42,689
5,177
4
—
79
1,090
—
2,618

Total

66
(485)
(114)
(1)
—
—
(97)
—
15

68,950—¥ 68,950¥
5,308¥5,375,569¥5,083,870

Banking
¥

Total

292
98
37
—
—
20
97
—
506

Total

Consolidated
total

Banking

2,853
40,805
2,279
0
—
54
161
—
1,955

Total

Millions of yen
Otherbusinesses

91
(401)
(130)
(0)
—
—
—
—
27
68

76,728—¥ 76,728¥ 11,982¥4,953,946¥4,704,115
3,380
42,587
5,183
54
112
87
1,090
5
3,251
2,549

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

44

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Banking2021
Ordinary income:Outside customers ........................... $ 532,788
Inter-segment transactions ..................
5,166
Total .................................................. $ 537,955
Segment profit ...................................... $34,658Segment assets ...................................... $48,374,248
Segment liabilities .................................. $45,873,660
Other items: ........................................
Depreciation .................................. $25,770Interest income ...............................
368,575
Interest expenses .............................
20,585Gain from disposal of tangible assets ......
0
Other extraordinary income ...............
—
Loss from disposal of tangible assets ......
487
Impairment losses ............................
1,454
Other extraordinary loss ....................
—Tax expenses ..................................
17,658
Increases in tangible fixed assets andintangible fixed assets .....................
25,553Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

Adjustment

Consolidated
total

$

$ 71,348
5,085$ 76,442$ 2,854$276,515$234,233$

604,136
10,261$ 614,407$
37,521$48,650,763$46,107,894$ 18,661
31,514$ 50,176$ 14,045$200,144$ 83,696$

622,798
41,775$ 664,583$
51,576$48,850,916$46,191,599—(41,775)$ (41,775)$ (3,631)$(295,510)$(270,996)$$ 1,065
2,113
749
361
—
0
—
—
623

$

26,844
370,698
21,344
370
—
487
1,454
—
18,291$ 2,637
885
334
—
—
180
876
—
4,570

$

$

$

25,5893,188

27

29,491
371,592
21,678
370
—
668
2,330
—
22,861
28,786596(4,380)(1,029)
(9)
—
—
(876)
—
135
(3,251)

622,798—$ 622,798$
47,945$48,555,406$45,920,603
30,087367,202
20,648
352
—
668
1,454
—
22,99725,526

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 arerecorded 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, impairment losses,
tax expenses and increases in tangible fixed assets and intangible fixed assets are recorded mainly 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
2021
Income from external customers ..........................

Lending services¥27,647

Securities investment
services¥19,633

Leasing services¥7,899Other¥13,770

Total¥68,950

Millions of yen
Securities investment
services¥24,360

2020
Income from external customers ..........................

Lending services¥29,812

Leasing services¥7,7492021
Income from external customers ..........................

Thousands of U.S. dollars
Securities investment
Lending services
services
Leasing services$249,724$177,337$71,348

Other¥14,805

Other$124,379

Total¥76,728

Total$622,798

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.
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.

45

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

(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, 2021 and 2020 was as follows:
Millions of yen
2021
Impairment losses on fixed assets .........................

Banking¥161

Leasing
¥—

Total
¥161

Other
¥97

Corporate/
Elimination
¥(97)

Total
¥161

Corporate/
Elimination
¥—

Total
¥1,090

Corporate/
Elimination$(876)

Total$1,454

Millions of yen
2020
Impairment losses on fixed assets .........................

Banking¥1,090

Leasing¥—

Total¥1,090

Other¥—

Thousands of U.S. dollars
2021
Impairment losses on fixed assets .........................

Banking$1,454

Leasing$—

27. Related-party transactions

Not applicable to the fiscal years ended March 31, 2021 and 2020.

28. Per share data

Amounts per share as of March 31, 2021 and 2020 and for the fiscal years thenended were summarized as follows:
Yen
U.S. dollars
2020
2021
2021
Net assets per share .................... ¥9,892.54 ¥8,461.18$89.355
Basic earnings per share ...............
261.3586.95
0.785
Diluted earnings per share ............
261.22
86.91
0.785

Total
$1,454Other$876

3. The Bank’s own stock remaining in the BIP Trust recorded as treasury stock instockholders’ equity is included in treasury stock to be deducted in thecalculation of net assets per share, basic earnings per share, and diluted earnings
per share.
The number of the said treasury stock deducted at year-end in the calculationof net assets per share was 92 thousand shares and 54 thousand shares as of March
31, 2021 and 2020, respectively. Moreover, the average number of the said
treasury stock deducted in the calculation of basic earnings per share and diluted
earnings per share during the year was 76 thousand shares and 56 thousand
shares for the fiscal years ended March 31, 2021 and 2020, respectively.

29. Borrowed money

The weighted average interest rate applicable to the total balance of borrowed
money as of March 31, 2021 is 0.03%..
Annual maturities of borrowed money as of March 31, 2021 are as follows:

Notes: 1. Net assets per share figures are calculated on the basis of the following.

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

Millions of yen,Thousands of
except number of shares
U.S. dollars
2020
2021
2021
¥249,831 $2,634,802¥291,699
41
41
370
41

41

370

291,657

249,7902,634,423

29,482

29,521Up 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¥266,241
32,4183,087
89,3081,130
1,147

Thousands of
U.S. dollars$2,404,850
292,819
27,883806,684
10,206
10,3602. Basic and diluted earnings per share figures are calculated on the basis of thefollowing.

Basic earnings per share
Profit attributable to owners ofparent ............................
Amount not attributable tocommon stockholders ........
Profit attributable to common
stockholders ....................
Average number of common
stock during the year (inthousands) ......................
Diluted earnings per share ..........
Increase in number of common
stock (in thousands) ...........
(of which, sharesubscription rights) ........

Millions of yen,
except number of shares
2020
2021

Thousands of
U.S. dollars
2021¥2,565¥7,715$23,168

—

—

—

2,565

7,715

23,16829,49929,519

12

14

12

14

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

46

Independent Auditor’s Report

The Board of Directors
The Hyakujushi Bank, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of The Hyakujushi
Bank, Ltd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
sheet as at March 31, 2021, and the consolidated statements of income, comprehensive
income, changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
Determination of debtor classification with respect to entities for which an assessment ofbusiness evaluation is necessary, entities for which a business improvement plan has beenformulated and entities for which a downgrade in the debtor classification has a certain degreeof impact on profit or loss
Description of Key Audit Matter

Auditor’s response

The Group has a wide-area retail network in In considering the appropriateness of theJapan in 11 prefectures surrounding the Seto debtor classification, our audit procedures
Inland Sea and urban areas, mainly in Kagawa consisted primarily of the following:
Prefecture, with its lending operations

47

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

representing a core business activity. As of ・ We evaluated the Group internal controls
March 31, 2021, loans and bills discounted
for determining the debtor classification.
and advances of 3,035,782 million yen were
The controls tested included, but were notrecorded in the consolidated balance
limited to, controls to evaluate thesheet, accounting for 56% of consolidated
accuracy and completeness of schedules
assets in the amount of 5,375,569 million yen.
used in determining the debtor
classification and controls over the
The collectability of loans to customers by theunderlying credit rating data concerning
Group is subject to uncertainties mainly due tothe debtor.
economic
trends
in
Japan
and

overseas, fluctuations in the business ・ Regarding when the novel coronavirus
conditions of debtors who operate in Kagawa
willbecontained,
management’s
Prefecture and the surrounding region, andassumptions were evaluated by comparing
them with the latest developments
fluctuations in the economic environment suchas a decline in the value of secured real estate
considering corporate bankruptcies andand also the impact of the spread of the novel
economic forecasts published by external
coronavirus disease. As a result, provision fororganizations.
additional losses arising from new non・ We selected samples taking into accountperforming loans may affect the Group’s
the type of business, the location of thefinancial position and cash flow conditions.
borrower, the industry, the financial
As such, the Group calculates the amounts ofposition and repayment capacity, theexpected loans that cannot be collected andgroup’s lending policy and potential credit
records them as reserve for possible loanrisk
estimatedfromexternal
losses.
information, including the impact of the
spread of the novel coronavirus disease.
The reserve for possible loan losses included
We also considered the quantitative impact
in the consolidated balance sheet as of Marchof changes in the debtor classification on
31, 2021 was 18,172 million yen. Details suchthe amount recorded in the reserve for
as calculation methodology is described inpossible loan losses.
Section 6 “Reserve for possible loan losses,”in Note 3 “Significant Accounting Policies” to ・ We evaluated data on the recent repayment
the consolidated financial statements.
status of sampled debtors, their financial
position, business performance, and future
The reserve for possible loan losses iscash flows, and other business prospects
calculated in accordance with the Group’s preby inspecting information related to theestablished self-assessment provision policy.
Group’s
self-assessment,suchas
The calculation process includes the
explanatory
materials
includingadeterminationofthedebtordescriptionofthebusiness,borrowingandclassification, which is determined by
repayment status, research materials
assessing the relevant debtor’s ability to repay
providing an understanding of the actualloans based on the repayment status, financial
financial
position,
financial
position, business performance, and futurestatements,
and
the
trial
balances,and, inprospects, including the impact of the spread
addition,we
madeinquiries
to
the
loan
of the novel coronavirus disease.
department as necessary to supplement our
In determining the debtor classification, it isunderstanding.
necessary to evaluate the ability of debtors to
repay their debts based on estimated future ・ We examined the reasonableness andfeasibility of business improvement plans
cash flows and the rationality and feasibility ofby analyzing the trends from past results

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

48

management improvement plans, especiallyfor debtors who have obtained loans following
an examination of their future businessoutlook and growth potential based on theGroup’s business evaluation and debtors who
have developed management improvement
plans. It is also important to evaluate theperformance outlook, etc. considering theimpact of the spread of the novel coronavirus
disease, for debtors who may have a certain
degree of impact profit or loss if theirclassification is revised downward.
The abovementioned performance forecasts
for debtors, including debt repayment capacityand business improvement plans, are based on
key assumptions such as forecasts ofsales, cost of sales and expenses in the future.
These assumptions will be affected by changes
in the business environment surrounding the
debtors, including the effects of the spread of
the novel coronavirus disease and the successor failure of business strategies. Therefore, thejudgment of the debtor classification, which
has a certain degree of impact on profit or loss
when a downgrade in the debtor classification
occurs, is highly dependent on the judgment ofmanagement.

of the major profit or loss items such as
sales, cost of sales, expenses, etc. of
debtors, evaluating the accuracy of
estimates based on the historical degree ofachievement of business improvement
plans in previous years. We also evaluatedthe implementation status of the measurestaken by the debtor, which are necessary
for the achievement of the objectives of theplan, by inspecting available external
information as well as inquiring to the loan
department as necessary to supplement our
understanding.

Accordingly, we have determined that thedetermination of the debtor classification withrespect to entities for which an assessment ofbusiness evaluation is necessary, entities forwhich a business improvement plan has beenformulated and entities for which a downgradein the debtor classification has a certain degreeof impact on profit or loss to be a key audit
matter.
Responsibilities of Management, the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.

49

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Group’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

50

We communicate with the Audit and Supervisory Committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial
statements in Japan, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit and Supervisory Committee, we determine thosematters that were of most significance in the audit of the consolidated financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, in extremelyrare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2021 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 to the consolidated financial statements.

Ernst & Young ShinNihon LLC
Tokyo, Japan
June 29, 2021

/s/ Motoki Nagao
Motoki Nagao
Designated Engagement Partner
Certified Public Accountant/s/ Teruaki Kawaguchi
Teruaki Kawaguchi
Designated Engagement Partner
Certified Public Accountant

51

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2021

Corporate Information

Corporate Information

Profile (as of March 31, 2021)

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
¥5,355.9 billion¥4,539.4 billion¥3,042.9 billion¥37.3 billion
30,000 thousand shares
2,105
129 (Head Office, 99 branches, 21 sub-branches, 5 Quick Square, 4 Consulting Plaza)
Overseas Representative Offices: 2 (Shanghai, Singapore)
164 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, 2021)

the Philippines
Business collaboration
Metropolitan Bank and Trust Company

The Hyakujushi Bank

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

VariousCommittees
Executive
Committee

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

Corporate Headquarters[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
Branch 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

Singapore
Representative Office
Registered in Singapore

List of Major Shareholders (as of March 31, 2021)
Name

Subsidiaries
Nihonbashi FudosanCo., Ltd.
Central Business
Division
Branches
Sub-branches

Hyakujushi Jinzai
Center Corporation

Deposit andExchange
Operations Area
liaison & Loan
Operations Area

Hyakujushi Saita
Agency Co., Ltd.

Central Foreign
Exchange Branch[Marketing Related Sector]
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 System
Service Co., Ltd.

The Hyakujushi DC
Card Co., Ltd.

Loan Business Center
Asset Business Center
DB Center

Credit Supervision
Division

Credit Planning Group
Credit Department
Ship Financing Office
Management Support Group
Credit Management Group
Real Estate Valuation and Financial Registration Center

Auditing DivisionInspection Group
Risk Audit Group

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

Custody Bank of Japan, Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Nippon Life Insurance Company
NH Foods Ltd. (Note) 2
Hyakujushi Bank Employee Shareholding Association
TAIHEIYO CEMENT CORPORATION (Note) 3
Meiji Yasuda Life Insurance Company
SUMITOMO LIFE INSURANCE COMPANY
SMBC Nikko Securities Inc.
Tadano Ltd.
Total

8-12, Harumi 1-Chome, Chuo-ku, Tokyo
11-3, Hamamatsu-cho 2-Chome, Minato-ku, Tokyo
6-6, Marunouchi 1-Chome, Chiyoda-ku, Tokyo
4-9, Umeda 2-Chome, Kita-ku, Osaka
5-1 Kamei-cho, Takamatsu-shi, Kagawa Prefecture
1-1, Koishikawa 1-chome, Bunkyo-ku, Tokyo
1-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo
18-24, Tsukiji 7-Chome, Chuo-ku, Tokyo
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
34, Shindenchoko, Takamatsu-shi, Kagawa Prefecture
–

1,495
1,123
900
632
600
595
569
500
484
438
7,340

5.05
3.79
3.04
2.13
2.02
2.01
1.92
1.69
1.63
1.48
24.81

(Notes)1. The 424 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
The Bank’s dividends are to be paid upon having comprehensively taken into consideration factors that include adequacy of retained
earnings, status of profits and the business environment, while also remaining mindful of the need to ensure stable dividends.
(Billions of yen)

Total dividend amount

47.6%
2.5

Dividend payout ratio Status of dividends

80.5%

5.0

Hyakujushi Sogo
Hosho Co., Ltd.
Consulting Plaza BranchBusiness Support
Division

Hyakujushi Business
Service Co., Ltd.

The Hyakujushi JCB
Card Co., Ltd.

Business Strategy
Division

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

2.6

30.6%
2.3

(Persons)

FY2018FY2019Individuals

Trends of Number of
Share Unit Holders
13,846

13,00010,7622.0

10,0007,000

0Number of shareholders

16,000

FY2020

4,000

8,293
7,273
March 31,
2017

8,850

12,878

14,67913,719

9,777

7,869
March 31,2018

March 31,2019

March 31,2020

March 31,
2021

Audit and Supervisory Committee Members’ Office52

Th e Hyak ujushi Bank , Ltd . Integrated R ep ort 2021

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2021

53

THE HYAKUJUSHI BANK, LTD.
5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
https://www.114bank.co.jp