JOYO BANK
Annual Report

2012

PROFILE

The Joyo Bank, Ltd., was established in 1935 out of the merger of the Tokiwa Bankand Goju Bank (both founded in 1878), and celebrated its 130th year in business.
As a leading financial institution in Ibaraki Prefecture and surrounding regions,
the Bank, with the philosophy of “Practicing sound management, creation ofvalues, and partnership with the home region,” is contributing to the growth of its
home region by providing stable and comprehensive financial services.

Management Philosophy“Sound management, creation of value, and partnership with the home region”(1) Focusing on retail banking as our core business, Joyo Bank will pursue sound management and steady banking activities.
(2) Joyo Bank will create high-value business together with our customers, regional communities, and shareholders.
(3) By providing financial services in our base territory of Ibaraki Prefecture and adjacent areas, Joyo Bank will contribute to social andeconomic progress in the home region.

Action Guidelines
We will—P rovide the most appropriate products and services based on a keen understanding of our customers.
—U ndertake steady banking activities and grow together with our customers.
— Seek to further improve our financial skills.

CONTENTS
1 Financial Highlights

30 Consolidated Statements of Changes in Net Assets

2 Message from the President

32 Consolidated Statements of Cash Flows

5 Management Policy

33 Notes to the Consolidated Financial Statements

7 Relationship Banking

90 Report of Independent Auditors

10 Business Highlights (Non-consolidated basis)

91 Organization

14 Corporate Social Responsibility (CSR)
19 Corporate Governance and Internal Control System

92	Board of Directors and Corporate Auditors/
Market Business Group and Overseas Office

28 Consolidated Balance Sheets

93 Service Network/Affiliated Companies

29	Consolidated Statements of Income

94 Corporate Data

29	Consolidated Statements of Comprehensive Income

FINANCIAL HIGHLIGHTS
Consolidated
THE JOYO BANK, LTD. and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen

Years Ended March 31
For the Year Ended
Total Income
Total Expenses
Income before Income Taxes and Minority Interests
Net Income
At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets
Capital Ratio
For the Year Ended
Net Cash Provided by (Used in) Operating Activities
Net Cash (Used in) Provided by Investing Activities
Net Cash Used in Financing Activities
Net Decrease (Increase) in Cash and Cash Equivalents
Cash and Cash Equivalents at End of Year

2012

2011

2012

¥  153,691
121,105
32,585
18,134¥  156,955
135,119
21,835
13,990$ 1,869,951
1,473,481
369,469
220,644¥8,005,275
7,277,708
4,952,771
2,187,773
446,615¥7,438,307
6,816,825
4,769,896
2,187,773
424,997
12.77%$97,399,634
88,547,375
60,260,021
26,311,169
5,433,941¥  415,419(269,118)(12,884)
133,411
373,098¥  211,708(93,459)(18,342)
109,885239,686$ 5,054,377(3,274,342)(156,765)
1,623,212
4,539,459

Notes: 1 . Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥82.19 to US$1.00 on March 31, 2012.

Non-Consolidated
THE JOYO BANK, LTD.
Thousands of
U.S. dollars

Millions of yen

Years Ended March 31
For the Year Ended
Total Income
Total Expenses
Income before Income Taxes and Minority Interests
Net Income

2012

2011

2012

¥  134,938
105,694
29,243
16,795¥  137,412
117,650
19,761
12,912$ 1,641,781
1,285,971
355,797
204,343

At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets¥7,982,027
7,287,588
4,982,564
2,452,292
437,596¥7,421,342
6,830,476
4,800,612
2,185,635
417,816$97,116,766
88,667,575
60,622,508
29,836,865
5,324,200

Notes: 1 . Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥82.19 to US$1.00 on March 31, 2012.

1

MESSAGE FROM THE PRESIDENT
We will Contribute to the Reconstruction and Growth of our Customers andthe Region by Giving our Full Support to the Joyo Regional Reconstruction Project “Bording”• Looking Back on Fiscal 2011

needs of its customers by creating the Joyo Regional

The Japanese economy showed signs of recovery mainly in

Reconstruction Project “Bonding” (targeted at businessproduction activities in fiscal 2011 due to the restoration ofowners and retail customers), a financing product originallythe supply chain, which had been disrupted by the Greatdeveloped by the Bank.

East Japan Earthquake, and other factors. Nevertheless,

In addition, together with the Development Bank of

the recovery was modest owing to such factors as electricJapan, Inc., the Bank formed the “Ibaraki Bonding Fund,”power supply restrictions and the financial crisis in Europe.

thereby diversifying its methods of financing corporate

The economy in Ibaraki Prefecture, in addition to abanking customers. The Bank also opened the Iwaki Loan

modest recovery in exports, production, and personal con-

Plaza in Iwaki City in Fukushima Prefecture, an area sub-sumption, recovery was well underway for post-disasterstantially affected by the earthquake disaster. With thereconstruction and damage repair in the second half of

new Iwaki Loan Plaza, the Bank has strengthened its ability

fiscal 2011. However, amid the effects of the overseas eco-to handle various inquiries including those about homenomic slowdown and the appreciating yen, the recovery

rebuilding from retail banking customers.

lacked momentum due to a partial easing of exports andFurther, the Bank offered “Power of Bonding,” a joint

production.

management specified money trust, which is a subordi-

In this difficult business environment, beginning in April

nated loan, into which mainly invested assets are placed.

2011, the Bank began its 11th Medium-Term Business Plan

It is the first such initiative of its kind in Japan for customer(running from fiscal 2011 through fiscal 2013), which seeksmoney management. With the issuance of prepaid unse-

to create “The best partner bank that grows with its cus-

cured callable subordinated bonds (subordinated bonds)

tomers in the home region.” In fiscal 2011, the first year ofand other financial products, we have met the diverse

the plan, to contribute to the reconstruction and growth ofmoney management needs of our customers.

our customers and the region, we gave our full support toAs for the second pillar, “To reconstruct and revitalize

the Joyo Regional Reconstruction Project “Bonding,” which

the region’s economy,” with the cooperation of major auto-

is founded on three pillars, 1) To provide easily-accessible

makers, the Bank sponsored a proposal-based technology

financial functions, 2) To reconstruct and revitalize theforum for local manufacturing companies, and also spon-

region’s economy, and 3) To contribute regionally.

sored food fairs in Utsunomiya and Mito, thereby helping
food-related businesses expand their distribution chan-• Implementation of Joyo Regional Reconstruction

nels. Moreover, in Tokyo’s Nihonbashi, as well as Kairakuen

Project “Bonding”

Park in Mito, the Bank sponsored “GANBA-PPE! IBARAKI/

With respect to the first pillar, “To provide easily-accessible

FUKUSHIMA ¥100 Food Tasting Store,” a food tasting andfinancial functions,” in addition to taking aggressive advan-

marketing event to introduce popular local foods to general

tage of the earthquake disaster recovery funds of each pre-consumers and to dispel harmful rumors about foods fromfecture, the Bank constructively responded to the financing

this region that was devastated by the earthquake disaster.

2

To help local companies strengthen their management

credit costs, and expense reductions, despite lower inter-capabilities, the Bank held “The Joyo Manufacturing Forum”

est income due to falling interest rates and other factors.

as a venue for business matching. Students from local uni-

Further, the capital ratio, a key indicator of the Bank’s finan-versities attended, providing an opportunity for academic

cial soundness, was maintained at a high level of 12.78%

and industry interaction. The Bank also took stronger steps(on a consolidated basis).

to respond to customer needs for solutions to problems
by holding various seminars including the “Energy Saving• Issues for the Bank to Address

and Environmental Management Seminar” and “RiskWith a dwindling population, an aging society, and theManagement and BCP Planning Seminar.” In addition,

spread and globalization of economic activities, Japan’s

the Bank held the “Joyo Overseas Market Entry Supportsocial and economic structural changes are fully under-

Seminar” focused on China and Thailand, and formed busi-

way. In addition, the Great East Japan Earthquake has had

ness partnerships with the Bangkok Bank and Kasikorn Banka major impact on a number of fronts including companyof Thailand, thereby enabling it to better meet the overseas

production and distribution, as well as on personal con-market entry needs of its customers.

sumption and home investment. Above all, the impact on

To further enhance these efforts, in December 2011, thethe region’s economy, especially disaster-stricken areas, hasBank concluded a comprehensive partnership agreement

been substantial, and a full-scale recovery will likely require

for regional economic revitalization with Ibaraki Prefecture,

time.
Therefore, the Bank will continue to promote the Joyolaying the framework to further advance efforts to reconstruct and revitalize the local economy.

Regional Reconstruction Project “Bonding,” which will go

And for the third pillar, “To contribute regionally,” thea long way to helping customers and the region to grow

Bank has helped to disseminate information about the sta-again. The Bank will give its full support to helping people

tus of the regions valuable cultural assets and reconstruc-

get their lives back in order and to the reconstruction andtion efforts in the wake of the earthquake disaster. The Bank

growth of business by providing comprehensive financial

also contributed to developing human resources who will

services.

bear responsibility for the regions future by subsidizing a

At the same time, we launched J-Cube, our 11th

scholarship system administered by Ibaraki Prefecture from

Medium-Term Business Plan, which started in fiscal 2011,

a portion of the profits earned through sales efforts relatedwith the goal of being the best partner bank that grows

to the clients’ assets product of the Bank.

with its customers. Based on its three basic strategies for

Against this backdrop, in fiscal 2011, the Bank achievedachieving this goal, namely, 1) Contribute to regional

ordinary income of ¥29.9 billion, up ¥11.0 billion year onreconstruction and growth with a focus on expanding ouryear, and net income of ¥16.7 billion, up ¥3.8 billion. This

customer base, 2) Build a strong management base withwas mainly attributable to active efforts to provide financial

a focus on improving employee on-the-job capabilities,

support for earthquake disaster reconstruction, improved

and 3) Build a stronger organization with a focus on raising3

human resource capabilities, the Bank will make greater
efforts to achieve its management goals under its mediumterm business plan.
We will expand the customer base by providing appropriate financial products and services based on cooperation
with Group companies, while strengthening investment
capabilities and providing easily-accessible financial functions. Moreover, we will enhance our efforts in growth fields
and growth businesses including customer reconstruction
support and work on regional economic revitalization.
To vigorously support these efforts, we will implement
reforms throughout our entire operation by streamlining all
branch operations and raise employee on-the-job capabiliKazuyoshi Terakado

ties by improving the quality of customer care.

President

We will further optimize sales channels in response tochanges in the social and economic structure, and improve
our risk-taking ability based on our enhanced risk management system.
We will also raise human resource capabilities so thateach and every employee can achieve self-sustainablegrowth by developing human resources who are best
suited for delivering comprehensive financial services andby increasing the opportunities for them to succeed. We
will increase human resources who are capable of responding to the expectations of customers and the region.
Kazuyoshi Terakado

Everyone in the Joyo Bank group is committed to meeting the expectations of our customers, our shareholders,President

and the region. I hope you will all continue to support us in

July 2012

the future.

4

MANAGEMENT POLICY• 11th Medium-Term Business Plan to Build a Sound Management Base (FY2011 – FY 2013)
Social and economic structural changes, such as declining population, the decrease of the working-age population,and the spreading of economic activities, are well underway. Moreover, the Great East Japan Earthquake caused tremendous devastation to our customers and to the region and completely transformed the business environment inwhich the Bank operates.
Against this backdrop, in J-Cube, our 11th Medium-Term Business Plan for building a sound management base,which covers the three-year period from fiscal 2011 through fiscal 2013, we set the goal of “becoming the best partnerbank that grows with its customers in the home region” in order to vigorously promote efforts to rebuild the lives ofcustomers and the region and to support business reconstruction and improvement.

Our Goal

To be the best partner bank that grows with its customers
Contribute to the development and the growth of customers and the region by providing comprehensive financial services.

◆ Contribute to regional reconstruction and growth by expanding the customer base
Seek sustained growth that is capable of responding flexibly and with precision to the changing social and economic structure by focusing efforts oncustomer and regional recovery and expanding the customer base in the Ibaraki area.

◆ Build a stable and sound management base by focusing on strong employee
on-the-job performance
Enhance the ability of branches, which have the closest relationship with customers, to solidly execute their business in terms of both operations andadministration, in order to contribute to regional reconstruction and growth and increase the Bank’s earnings capacity.

◆ Strengthen the organization as a whole by improving human resource capabilities
Strengthen the organization by improving employees’ ability to achieve self-sustaining growth through their contributions to customer and regional
growth and revitalization and by developing each and every employees’ knowledge and their job performance capabilities as financial professionals.

Bu s in es s t ar g et s :Strengthen earning capacity (on consolidated basis)

Fiscal 2013 Targets• Core gross business profit• Core business profit• Net income• Consolidated net income• OHR *1
• ROE *2
• Tier I ratio including common stock *3¥120.0 billion or more
¥ 50.0 billion or more
¥ 25.0 billion or more
¥ 27.0 billion or more
mid 50% range
mid 5% range
approx. 12%*1. OHR is a leading indicator of management efficiency and indicates the amount of expenses incurred to obtain one unit of gross business profit.
*2. ROE is a leading indicator of capital efficiency and indicates how much profit was obtained using shareholders’ equity.
*3. Tier I ratio including common stock is an indicator of financial soundness and indicates how much core capital is comprised of common stock andretained earnings versus risk assets such as loans and securities.

5

Customers,
region, employees,
shareholders

Building a Strong Management Base:
The six sides of a cube represent key strategies for achieving our goal of becoming the best partner bank that grows with its
customers in the home region.
Through the execution of these strategies, we will share our growth with stakeholders including customers, the community, employees and shareholders. Because we express this growth as the three dimensions of a cube, we established J-Cube,
our 11th Medium-Term Business Plan to build a sound management base.

Optimize sa
les channelsExpand thstren eecustomer base ann su ort
customgethfor dr developppm
ent

en
th nt
g
n e
re m es
Stvestiliti
in pabca

Improv
on-the e employee-job capabilit
ies

g

kin

-ta
isk
r
e ty
rovabilipImresouRaise hum
rce capabialnities

The Six Key Strategies of
1. Expand the customer base and strengthen
support for customer development

4. Optimize sales channels
Meet the diverse needs of customers by optimizing the sales
network, building stronger collaboration between channels
and strengthening online banking.

Expand the customer base by expanding the Bank’s presence
and promoting a wider range of transactions with each customer. Help customers rebuild their lives and businesses andgrow based on the strong customer base.

5. Improve risk-taking ability
Improve risk-taking ability based on enhanced risk management system to build a strong management base.

2. Strengthen investment capabilities
Increase earnings by strengthening investment capabilities
of funds procured through expanded customer base andstronger portfolio management capabilities for more stableprofitability.

6. Raise human resource capabilities
Support employee growth and increase opportunities for success by getting the right person for the right job.

3. Improve employee on-the-job capabilities
Raise business efficiency and streamline headquarters throughdrastic business reforms. Improve employee on-the-job capabilities through more efficient use of the workforce and time.

6

RELATIONSHIP BANKING• Relationship Banking Policies
The local economy is the bedrock of the operations of a regional bank. Our mission is to contribute to the development oflocal society and economy by providing communities with reliable financial services.
To fulfill this mission, the Bank has adopted the following three priority policies:
Priorities• Strengthen support for customer companies tailored to their stage of corporate growth• Develop new financing options for SMEs
• Contribute to a sustainable growth of local economy

Main Initiatives and Fiscal 2011 Business PerformanceStrengthen support for customer companies tailored to their stage of corporate growth• Support for start-ups and launch of new businesses
	The Business Promotion Division’s Integrated Finance Service Office is taking a leadership role in collaborating with
Joyo Bank Group companies and outside institutions and assisting in company formation and capital policies.
		 In fiscal 2011, the Bank assisted in the formation of new companies and business of 26 customer companies andhelped companies develop sales channels and go public.
• Support for business succession
	With the aging of management, the number of companies facing business succession issues is increasing; therefore, the Bank is assisting companies with business succession to help customers solve management problems.
		 In fiscal 2011, the Bank collaborated with outside experts including tax accountants and CPAs to consult with 70
companies to help them achieve a smooth business succession.
• Management improvement and business revitalization support
	Sales branches and the head office (the Business Promotion Division’s Corporate Management Group and theCredit Examination Division’s Company Management Support Office) are integrated and their activities go beyond
financial restructuring to supporting management improvement and business restructuring throughout the entire
business extending into sales and systems.
		 The sales branches and head office support the drafting of business improvement plans for companies andhave already drafted business improvement plans for 1,132 customers. In addition, leveraging the Small andMedium Size Business Rehabilitation Support Co-operative, assistance was provided to 19 customers, while two
customers were assisted through the use of the Reconstruction Fund, and four customers were helped through
DDS. Of those customers who received management improvement support, 253 of them had their debtor classification ratings upgraded. In addition, there were 532 business matching contracts signed through support provided to agribusiness and manufacturing companies, which led to customer sales channel expansion.

7

Develop new financing options for SMEs
• Financing methods that are not overly dependent on real estate collateral or personal guarantees andcomplete financing using diverse methods
	In order to aggressively meet the funding needs for earthquake disaster reconstruction, the Bank developed the
Joyo Earthquake Disaster Reconstruction Support Loan “Bonding.” The Bank also created the Ibaraki Bonding Fundwith the Development Bank of Japan Inc.
		 Since it began handling the Joyo Earthquake Disaster Reconstruction Support Loan “Bonding” in July of 2011,
2,366 loans totaling ¥49.4 billion have been extended, while two Ibaraki Bonding Fund loans totaling ¥0.2 billion
were extended.
		 Moreover, as a facilitator, the Bank has met the diverse needs of its customers by arranging three syndicate
loans, 35 private placements, and seven loans using an environmental rating assessment system.
• Improving the ability to recognize business value in client companies
	By constantly improving its internal loan-related training, strengthening its information gathering capabilities
to understand industry trends, and sharing information across the organization, the Bank improves its ability torecognize business value in client companies in order to facilitate financing to SMEs and to revitalize businesses.
Moreover, we have taken steps to improve the screening skills through the use of a certification program for loan
officers, which we introduced in 2008.

Contributing to a sustainable growth of local economy• Initiatives to revitalize the region and simultaneously integrate to rejuvenate the region withan eye on sustained growth	As the region’s potential is attracting attention due to the upgrading of the transportation infrastructure, the Bank
has teamed up with Ibaraki Prefecture to promote an organized campaign for industrial siting. Through a range ofactivities including the co-sponsorship of an industrial siting study tour and the dispatching of representatives to
Ibaraki Prefecture’s headquarters’ for industrial siting promotion in Tokyo, the Bank has provided financing to six
companies that have entered Ibaraki Prefecture.
		 The Bank co-sponsored the Commercial Food Fair, the Regional Bank Food Selection and other events for agricultural businesses, which resulted in the signing of 328 business contracts. We also helped one company obtaincertification for business involved in programs for utilizing regional resources, and contributed to agricultural produce branding and increased value-added.
			 In addition, we organized manufacturing companies and continued to provide Manufacturing Company
Support, whose main pillar is business matching for technology-user companies, including major corporations,and local manufacturing companies. Through its sponsorship of the 4th Joyo Manufacturing Forum in Tsukuba(attended by 210 companies), the Bank was able to achieve 71 matchings.
		 With the incentive to enter overseas markets growing, the sales branches and head office (Markets
Administration and International Division’s International Business Office and the Business Promotion Division’s
Integrated Finance Service Office) are collaborating and have assisted 139 customers entering foreign markets byproviding them with relevant information and helping them with foreign exchange transactions. We also moved
aggressively to set up a market entry support system by collaborating with overseas financial institutions including
Kasikorn Bank and Bangkok Bank of Thailand.
8• Efforts to Facilitate Financing
Amid continuing difficult economic conditions, the Great East Japan Earthquake that struck in March 2011 caused tremendous damage to the regional economy. Consequently, efforts to facilitate financing, including the smooth flowof funds to the regions, are increasingly growing in importance. To quickly advise and properly respond to changes inborrowing conditions, the Bank established the Financial Facilitation Engagement Policy. At the same time, it set up asystem for verifying the status of efforts to facilitate financing, thereby clearly demonstrating its financial intermediaryfunctions.
In addition, the Bank established an inquiry counter open on holidays for facilitating the flow of funds at year-end
and fiscal year-end, as well as an emergency inquiry counter for the repayment of mortgage loans for mortgage loancustomers. In this way, we are aggressively dealing with financing and repayment inquiries from customers.

9

BUSINESS HIGHLIGHTS (NON-CONSOLIDATED BASIS)
Revenues and Earnings

Clients’ Assets, and Housing Loans

Core Business Profit/Business Profit
Business profit came to ¥41.9 billion, largely unchanged
from the previous fiscal year. This was mainly due to aggressive marketing of the Earthquake Disaster Reconstruction
Support Loan and flexible portfolio management, as well
as a decrease in the general provision for possible loan
losses and expense reductions, despite a decline in interest
income caused by a drop in interest rates. Core businessprofit came to ¥39.4 billion, a year-on-year decrease of ¥2.2
billion.

Clients’ assets remained unchanged at the ¥1,000.0 billion
mark due to steady increases in pension insurance andwhole life insurance.
Housing mortgage loans remained firm, with housing
loans rising ¥28.7 billion, to ¥1,037.2 billion. Loans for thebuilding of apartments increased ¥32.4 billion, to ¥368.3
billion.

Capital Ratio
The capital ratio is one of the key indicators of a bank’s
financial soundness.
The Bank’s capital ratio remained at a high level. On the
consolidated basis, at the reporting term-end, it stood at
12.78% (Tier I ratio*: 12.11%), while the ratio on a nonconsolidated basis stood at 12.43% (Tier I ratio*: 11.89%).
The minimum level required for banks complying withdomestic standards is 4%.
Regarding the method of calculation of the capital ratioat the Joyo Bank, to more accurately calculate risk-weighted
assets, since the end of March 2008, we have been applying
the Basic Internal Credit Rating Method, a method of calculating credit risk that more accurately reflects the risk posedby borrowers and raises the overall level of the Bank’s credit
risk management. For operational risk calculations, we consistently apply the standardized approach (TSA).

Ordinary Income
Ordinary income was ¥29.9 billion, up ¥11.0 billion, due to adecrease in non-performing loans.
Net Income
Net income increased ¥3.8 billion, to ¥16.7 billion, despitea ¥2.4 billion reversal of deferred tax assets following achange in the corporate tax rate.
*Core business profit = Business profit + General provisions for possible
loan losses – gains and losses on bond trading

Deposits, Loans and Securities
Deposits (excluding CDs) increased ¥449.1 billion year on
year, to ¥7,266.6 billion. The deposit balance for retail, corporate, and public sector increased due to an increase in
cash reserves and earthquake insurance payments received
as a result of the earthquake disaster.
Loans increased ¥181.9 billion, to ¥4,982.5 billion. Loans
to individuals, especially mortgage loans, increased ¥22.7
billion, while loans to corporations increased ¥95.3 billion asa result of our constructive response to earthquake disasterreconstruction.
Securities holdings increased ¥266.6 billion, to ¥2,452.2
billion. Due to continuing efforts to manage our portfoliowith an eye to ensuring stable earnings, the outstandingbalance of Japanese government bonds rose ¥283.3 billion,to ¥1,388.9 billion.

*Tier I capital: T his is a bank’s core equity capital and mainly consists ofcapital, legal reserve, and retained earnings.

Consolidated Accounts
The Bank currently has nine consolidated subsidiaries
On a consolidated basis, ordinary revenues decreased ¥0.7
billion, to ¥153.6 billion, mainly due to a decrease in interest income from lower interest on loans and discounts.
Ordinary expenses declined ¥13.7 billion, to ¥119.8 billion,
primarily due to a decrease in interest expenses caused bya decline in interest on deposits, a reduction in ordinary
expenses, and improved credit costs. As a result, ordinary
income increased ¥13.0 billion, to ¥33.8 billion. Net income
climbed ¥4.1 billion, to ¥18.1 billion, owing mainly to anincrease in ordinary income, despite the reversal of deferred
tax assets following a change in the corporate tax rate.

10Asset Soundness

Reserve for Possible Loan Losses
For debtors in a state of legally or substantially bankrupt
based on self-assessment, we reserved for possible loan
losses for an amount of 100% of the amount of the claims
thought to be uncollectible after we deducted the valueof collateral amounts from the loan amounts. Furthermore,
for a state of substantially bankrupt, we provided reserves
for 59.60% of uncollectible loans based on the Bank’s historical rate of loan-loss. As a result, compared to the ¥39.2
billion total of uncollectible loans, our specific reserves forpossible loan losses amount to ¥23.4 billion, a reserve forpossible loan losses ratio of 59.64%. The Claims we deemed
to be uncollectible or valueless (¥26.7 billion) based on
self-assessment have been conducted on a “partial direct
write-off” basis, and have been deducted in the balance
sheet asset amounts. For the general reserve for possible
loan losses, we have conducted an appropriate reserve provision following the guidelines of the Financial Inspection
Manual prepared by the Financial Services Agency. For borrowers requiring caution, we have divided them into three
categories to include debtors requiring management, andhave provided reserves for possible loan losses based on
the Bank’s historical loan-loss ratio.
In the future, we will continue to improve our credit risk
management system, conduct appropriate write-offs, provide reserves for possible loan losses in a sufficient amount,
and work toward improving the soundness of our asset
portfolio.

Strengthened support for customers’ restructuring andmanagement improvement
The Bank plays a vital role in the revitalization of theregional economy and in supporting the development of
the regional community through its support of corporate
restructuring and management improvement services.
We therefore take an active approach to these services asa pillar of our community-based banking activities. In particular, the entire Bank is doing everything it can to support
customers who were devastated by the Great East Japan
Earthquake.
Specifically, our Business Promotion Division’s Corporate
Management Group and Credit Examination Division’sCompany Management Support Office are working with
our sales branches to provide corporate customers withadvice on management analysis and related improvement
measures and support for the making of full scale management improvement plans. When necessary, we alsocollaborate with external organizations such as the SME
Restructuring Support Council operated by the government’s Small and Medium Enterprise Agency.
In these ways, we offer consultation and guidance onmanagement improvement for our SME customers. As aresult of our activities in this field in fiscal 2011, we realized
an improvement in the borrower categorization (which
depends on the financial position of the borrower) of 253
enterprises. We will continue to exert every possible effort
toward supporting our customers’ management, so as tocontribute to the revitalization of the regional economy.

Reserve Based on Self-Assessment
Billions of Yen

Results of Processing Non-performing Loans in Fiscal 2011
We have calculated write-off and reserve amounts for possible loan losses based on results of asset self assessment
in line with established internal rules. Credit costs for nonperforming loans processed in fiscal 2011 totaled ¥10.4 billion as shown below;
March 31
Write-off of claims
Net provision for specific reserves
Losses on bulk sale of loans
Provision for contingent losses
Other
Total

2012
¥ 4,689
4,471
331
98
855
¥10,446

March 31, 2012
Claims of balance (i)Claims secured
by collateral (ii)Claims with uncertain
collectibility (A)=(i)-(ii)Specific reserve (B)Reserve ratio (B)/(A)Millions of Yen
2011
Change¥ 5,067 ¥  (378)12,551(8,079)
108
223
387
(288)
606
249
¥18,720 ¥(8,274)

Potentially Substantially
Legallybankrupt
bankrupt
bankrupt
borrowers borrowers borrowers

Total¥101.4¥9.5¥2.0¥113.0

62.1

9.5

2.0

73.7

39.2

0
0
100.00%00100.00%39.2

23.3
59.60%

23.4

59.64%

Reserve for Possible Loan Losses
March 312012
General loan loss reserve¥20.5
Specific reserve
23.4
Reserve for possible loan losses total
43.9
Reserve for assistance to specific borrowers—
Reserve for possible losses on sale of loans—
Reserve for other contingent losses
1.7

11

Billions of Yen
2011 Change
¥18.7
¥1.7
25.2
(1.8)
44.0
(0)
—
—
—
—
¥ 1.8
(0.1)

Disclosure of the Bank’s Assets
We continue to view the improvement of asset quality as
apriority management issue, work toward the disposal ofbad debt and ensure the soundness of our assets, with full
disclosure of all pertinent information.

Claims Subject to Mandatory Disclosure under the
Financial Revitalization Law
Disclosure of the results of an asset assessment is required
under the Financial Revitalization Law. Under the law, theBank regards non-performing loans determined throughself-assessment to be loans to legally or substantially bankrupt companies as “bankrupt and quasi-bankrupt assets.”
Loans to potentially bankrupt companies are “doubtful
assets.” Loans past due (three months or more) and restructured loans are “substandard loans.”
Claims subject to disclosure under the Financial
Revitalization Law during fiscal 2011 increased by ¥7.8 billion year-on-year, to ¥159.7 billion, accounting for 3.18%of all claims. Furthermore, the ¥0.4 billion differential
between the ¥159.7 billion in claims for disclosure under
the Financial Revitalization Law, which excludes normal
claims, and the ¥159.3 billion in claims (loans and bills discounted only) for mandatory disclosure in accordance with
the Banking Law represents non-loan claims including customers’ liabilities for acceptances and guarantees, accrued
interest and suspense payments.

Risk-Monitored Claims under the Banking Law
For loans subject to risk management under the Banking
Law, we have adopted four classifications for disclosure
purposes. Loans to debtors in legally bankrupt based on
self-assessment are “loans in bankruptcy and dishonored
bills.” Loans to debtors who are substantially or potentiallyin bankruptcy are “delinquent loans.” Loans to companies
requiring caution (those which have been delinquent forthree months or more) are “loans past due with respect tointerest payments for more than three months.” Loans to
debtors whom we support through interest reduction or
waiver of loan repayment are “restructured loans.”
Risk-monitored loans increased ¥7.8 billion, to ¥159.3
billion. The Bank maintained a coverage ratio of 73.05%.
Risk-Monitored Assets under the Banking Law(Non-consolidated)
March 31
Loans in bankruptcy
and dishonored bills
Delinquent loans
Loans past due with respect
to interest payments for morethan three months
Restructured loans
Total (a)Loans and bills discounted (b)Ratio of risk-monitored assets toloans outstanding (a)/(b)Portion covered by collateraland guarantees (c)Coverage ratio (c)/(a)(Consolidated)
March 31
Loans in bankruptcy anddishonored bills
Delinquent loans
Loans past due with respect tointerest payments for more than
three months
Restructured loans
Total

2012

Billions of Yen
2011
Change¥     1.9
110.6¥     4.5
113.7¥   (2.6)
(3.0)

0.7
45.9
¥  159.3¥4,982.5

1.5
31.5¥  151.4¥4,800.6

(0.7)
14.3
¥   7.8¥181.9

3.19%

3.15%

0.04%

¥  116.3
73.05%¥ 115.9
76.56%¥   0.4(3.51)%

2012

Problem Assets under the Financial Revitalization Law
March 31
Bankrupt andquasi-bankrupt assets (a)Doubtful assets (b)Substandard loans (c)Problem assets (A)=(a)+(b)+(c)Normal assets (d)Total (B)=(A)+(d)Ratio of problem assets (A)/(B)¥    4.6
114.3¥ (2.6)
(3.1)

0.7
45.9
¥159.91.5
31.5¥152.1

(0.7)
14.3
¥ 7.8

¥    11.6
101.4
46.7
159.7
4,860.5¥5,020.2
3.18%

Billions of Yen
2011
Change¥    16.2
102.6
33.1
151.9
4,690.6¥4,842.5
3.13%¥  (4.6)
(1.2)
13.6
7.8
169.9
¥177.70.04%

Coverage Status at Fiscal 2011 Year-End

Billions of Yen
2011
Change¥   2.0
111.1

2012

March 31, 2012
Problem assets (a)Assets secured bycollateral andguarantees (b)Reserve for possible
loan losses (c)Coverage ratio{(b)+(c)}/(a)12Billions of Yen
Bankrupt andquasi-bankrupt Doubtful Substandard
assetsassetsloans¥11.6¥101.4¥46.7

Total¥159.7

11.6

62.2

12.0

85.7

0

23.4

7.6

31.1

100.00%84.37%

41.93%

73.09%

The disclosure-based assets for each borrower classification of self-assessment are summarized below.

Self-Assessment: Classification of Borrowers and Disclosure-Based Assets (Billions of Yen)
Self-Assessment
Classificationof Borrowers
Legally Bankrupt
Substantially Bankrupt
Potentially Bankrupt

Borrowers Requiring Caution

Normal Borrowers

Problem Assets
under Financial
Revitalization Law
Legally
Bankrupt 2.0

Bankrupt andQuasi-Bankrupt
Assets 11.6

Substantially
Bankrupt 9.6

Doubtful Assets
101.4

Risk-Monitored
Assets underthe Banking Law
Loans in Bankruptcy andDishonored Bills 1.9
Delinquent Loans
110.6

Substandard Loans
46.7

Loans Past Due with Respect
to Interest Payments forMore than Three Months 0.7
Restructured Loans 45.9

Subtotal 159.7

Subtotal 159.3

Normal Loans
4,860.5

Note: Assets Covered by Disclosure Standards

Note: Categorization of Disclosure Standards

Financial Revitalization Law:
Loans, securities lending, foreign exchange, interest receivable,suspense payments, and customers’ liabilities for acceptance andguarantees

Financial Revitalization Law:
Categorized by borrower basis, in accordance with selfassessment results. (As an exception, Substandard Loans are categorized on individual loan basis.)

Banking Law:
Loans and bills discounted

Banking Law:
Loans to Legally Bankrupt Borrowers, Substantially Bankrupt
Borrowers, and Potentially Bankrupt Borrowers are categorized on
an individual borrower basis, in accordance with selfassessment results. Loans to Borrowers Requiring Caution are disclosed on an individual loan basis.

13

CORPORATE SOCIAL RESPONSIBILITY (CSR)
Contributions to the Regional Community

Loans to Regional Customers

Under the management philosophy, “sound management,
creation of value, and partnership with the home region,”
we will continue to contribute to the development of theregional community and economy by providing regionalcustomers with comprehensive high-quality financial services, based on a robust business performance under asound management.
We regard supply of financial services for the region
as our mission. We will continue to ensure due disclosureof diverse information relating to our contribution to theregional economy.

Regional and SME Loans
Loans to customers in our region totaled ¥3,785.6 billion,
and accounted for 75.9% of all loans made by the Bank.
Loans to SMEs totaled ¥1,831.8 billion, and accounted for
36.7% of all loans. Of all regional loans, 43.4% went to SMEs.
The total number of SMEs is 32,994 of which 98.6% arelocal.

“Region” refers to Ibaraki Prefecture and neighboring areas forming
the main catchment area (by location of main branches) of the Bank:
Fukushima, Tochigi, Saitama, Chiba and Miyagi prefectures.
Loans to customers outside the local region are mainly limited toloans to corporate customers in Tokyo or Osaka who have factories oroffices in the areas mentioned above and who have a deep relationshipwith regional business.

¥4,982.5

Balance of Loans, Balance of Loans andPercentage of Loans to Regional Customers(Billions of yen)

5,000
4,000

(%)

¥4,839.0
76.9%¥3,724.8

Market share within Ibaraki Prefecture (as of Sept. 30, 2011)
The Bank maintained a high market share for total deposits
and loans within Ibaraki Prefecture, at over 40% each.

¥4,800.6
77.0%¥3,696.8

75.9%

100
80

¥3,785.6

Loan balance

3,000

60

2,000

40

Balance of loans toregional customers

1,000

20

Percentage of loans
to regional customers

0

As of March 31, As of March 31, As of March 31,
2010
2011
2012

0

Balance of Loans and Percentage of Loans to SMEs, andBalance of Loans and Percentage of Loans to Regional SMEs
(Billions of yen)

Deposits
15.94%

18.07%(%)

100
2,000 ¥1,881.6¥1,831.8¥1,801.1¥1,717.1¥1,645.0¥1,631.880
1,500

Joyo Bank

1,000

City banks/Trust banks

42.86%

Joyo Bank

Other regional banks

500

46.1%

44.1%

43.4%

38.8%

37.5%

36.7%

Shinkin banks (credit unions)Other

16.26%

0

As of March 31, As of March 31, As of March 31,
2010
2011
2012

Balance of loans to
SMEs

60

Balance of loans toregional SMEs

40

Percentage of loans to
SMEs

20

Loans to regional SMEs
as percentage of loans
to regional customers

0

6.87%

Number of SME Customers and Number of Regional SME Customers

Loans
13.00%(Unit: Customers)

40,000

Joyo Bank

16.56%

43.04%

Joyo Bank

30,000City banks/Trust banks

(%)

98.7%

98.6%

33,42233,33332,99432,97932,90232,552100
80
60

Other regional banks

20,000Shinkin banks (credit unions)Other

22.28%

98.6%

10,0005.12%

0Note: F igures for share exclude public sector.

14

As of March 31, As of March 31, As of March 31,
2010
2011
2012

Number of SMEs

40

Number of regional
SMEs

20

XXXXXXX

0Initiatives for Stimulating the Local Economy

Loans to Individuals
Loans to individuals have increased to ¥1,138.3 billion, withmortgage loans performing well. Of these, ¥1,137.2 billion
or 99.9% are loans to individuals in the region.
Loans to individuals are 22.8% of all loans, and loans to
individuals in the region are 30.0% of all regional loans.

Working with Agri-Business
We operate in a predominantly agricultural area, and are
actively engaged in agri-business. We aim to contribute toregional industrial and economic revitalization by fosteringand supporting ambitious farmers and agribusinesses.
To meet diverse needs for business financing support,
we offer three series of “Daichi” multi-purpose loans, allguaranteed by Ibaraki Agriculture Credit Guarantee Fund
Association. For firms specializing in cattle breeders, wehave developed financing support that utilizes the AssetBased Lending (ABL) system as a new method for providing finance using fattening cattle as collateral. By backing
ambitious farmers and food producer companies we also
aim to support the development of new products andservices in our region. To that end, we are proactively promoting alliances between farmers, commerce and industry.
This means not only support for compilation of planningapproval documents for applications for various kinds ofsubsidy, but also support using affiliate companies’ consulting, leasing and IT services, leveraging the Bank’s networks.
To support development of marketing channels needed byfood producers and processors, we continuously hold foodthemed business forum and organize the Regional Bank
Food Selection events in partnership with regional banks allover Japan, as well as offering support for business contract
signings through business matching and follow-up activities connected with these events.

Optimal Financial Services for Local Customers
98.6% of deposits, in an amount of ¥7,165.5 billion, are fromregional customers, and 99.6% of assets in custody are fromregional customers.
Balance of Loans and Percentage of Loans to Individuals,
Percentage of Regional Loans used for Loans to Local Individuals(Billions of yen)

1,200

(%)

¥1,100.0 ¥1,098.6 ¥1,115.5 ¥1,114.2
29.5%

900
600

22.7%

30.1%

23.2%

¥1,138.3 ¥1,137.2
30.0%

22.8%

300
0

40
30

XXXX

20

Percentage ofloans to individuals

10

As of March 31, As of March 31, As of March 31,
2010
2011
2012

Balance of loans
to individuals

0

Percentage ofregional loans used
for loans to local
individuals

Deposit Balance, Local Deposit(Billions of yen)

(%)

100

7,000
6,000
5,000
4,000

98.3%
¥6,681.1¥6,573.5

98.5%¥6,817.5¥6,716.5

98.6%¥7,266.6¥7,165.5

3,000

80
60
40

2,000
20

1,000
0

As of March 31, As of March 31, As of March 31,
2010
2011
2012

Support for Manufacturers of Excellence
Our business area comprises Ibaraki, Tochigi and Fukushima
prefectures. Due to their proximity to Tokyo and their goodtransportation infrastructure, many major companies have
set up plants in these prefectures, and a need has arisen to
secure high-quality SMEs to act as suppliers. As a key player
in regional revitalization, we support highly capable manufacturing businesses in meeting these needs.
We create effective platforms for business talks by holding events such as the “Joyo Manufacturing Forum” and a
proposal-based technology business forum through which
we support development of marketing channels by bringing major manufacturers and local manufacturing SMEs
together through business-matching.

Deposit balance
Local deposit
balance
Local deposit
balancepercentage

015Joyo Area Research Center
This foundation cooperates with various economic
associations and research institutions, performing various tasks that contribute to the regional community andeconomy. The Center researches into and publishes dataon economic industry trends and regional development,
holding lectures and sending speakers to regional organizations and events.

We also proactively provide financial support to meet awide range of business funding needs. These include support for upgrading of technological capabilities, where wehelp through technology workshops arranged in partnership with major manufacturing companies, and for raisingquality management standards under the ISO certification
program..
Tie-ups with External Institutions
Including tie-ups with University of Tsukuba and Universityof Ibaraki, we foster and support new ventures and established companies beginning new businesses with entities
such as National Institute of Advanced Industrial Scienceand Technology (AIST), the Organization for Small & Medium
Enterprises and Regional Innovation, Ibaraki Corporation for
Small and Medium Enterprise Promotion, the Development
Bank of Japan, Joyo Industrial Research Institute Ltd.,and other partners in industry, academia and regional
government.
Invitation of Companies to the Area
The business environment in Ibaraki Prefecture has been
upgraded through creation of infrastructure for wide-areatransportation networks typified by the now-completed
Kita-Kanto Expressway. Leveraging these strengths, we
are working to attract companies that can invigorate theregional economy.
We provide companies that are interested in initiating
business in our operational areas with advice on the ideal
location and conditions. For companies that have already
decided to newly move into our business area, we provide
needed funding support and business-related information
gathered through our branch networks.
The Bank has been working to attract companies incooperation with Ibaraki Prefecture and its municipalities
down to the village level. In addition to cooperating in
Ibaraki-Prefecture-organized tours and seminars for attracting companies, the Bank is also a member of a Council for
Regional Industrial Development established to attract
businesses and boost industry by eight areas of the Ibaraki
prefecture.

Joyo Industrial Research Institute
Joyo Industrial Research Institute was established as partof activities to commemorate the 60th anniversary of thefounding of the Bank, in April 1995 as a regional think tank.
The Institute consists of three departments: 1) the Industrial
Research Department, which provides consulting services,
mainly to private-sector enterprises, that include support
for management structural reforms and acquisition of ISO
certification; 2) the Regional Research Department, which
conducts surveys and analysis of the regional community
to assist local governments in drawing up regional plans
and community development projects; and 3) the Training

16

Environmental Policies— Building a regional community that contributes to theglobal environment —1. R
 educe the environmental load of the Bank’s business
operations through resource conservation, energy conservation, and recycling
2. S upport customers’ environmental preservation activities
by providing eco-friendly financial products and services
3. E nsure that all executives and employees of the Group

Department, which holds lectures, practical seminars andother training events.
The Institute also publishes the JIR News, a newsletter,and has created the Joyo Village website on which it posts
information for members to read to and provides forums
for members to exchange information and communicate
with each other.
The Institute’s staff includes a large number of experts
in various fields to meet the diverse needs of its corporate
customers. These experts include certified SMEs management consultants, ISO auditors, first-class registered architects, and engineers that offer effective solutions to thewide range of issues faced by our customers in the region.

are fully aware of these policies and actively participate intheir implementation
Forest Preservation Activities
The Bank is a member of Save The Forest In Japan, an organization established by regional banks all over the country
dedicated to ensuring healthily-growing forest, central to thenext generation.
We have also signed a “forestry partnership agreement”
with Ibaraki Prefecture and Ibaraki forestry support center. In
Naka City, we established the Joyo Furusato Forest. Throughactivities such as thinning and tree planting, we are establishing mixed forests based on local species.
In March 2012, as a memorial to local reconstruction andthe region’s growth, we planted seedlings of cherry trees in
Miharu Town in Fukushima Prefecture and plum trees, thetree of Ibaraki Prefecture.

Environmental Preservation Activities
Through its environmental preservation activities, the Bank
seeks to reduce the environmental impact of its business
operations and provide support for customers tackling
the task of environmental preservation. These activities arepart of the Bank’s efforts undertaken in collaboration withnumerous partners in the region to realize a sustainablecommunity in Ibaraki Prefecture and neighboring areas.
Environmental Principles and Policies
Environmental Principles
The main operational base of the Joyo Bank Group is Ibaraki
Prefecture, an area blessed with beautiful natural scenery,
including abundant greenery and water resources. We
believe it is the Bank’s social mission to help protect andnurture this rich and varied natural environment while realizing a sustainable society in our local region. To this end,
we work hand in hand with a diverse range of partners inpreserving the natural environment of our home –Ibaraki
on a continuous basis.

Expanding lineup of environment-related financial
products and services
New eco-friendly products
We are contributing to the preservation of the region’senvironment with the aim of achieving a sustainable society and we are actively assisting companies working on
environmental preservation.
Environmental Rating and Evaluation System
The Bank evaluates companies’ environmental measuresusing a wide range of yardsticks. Ratings and details of initiatives are made public, and preferential interest rates areoffered for companies with high ratings.

17

Joyo Eco Select Loan
The Bank gives preferential loan interest rates for capital
investments related to the environmental preservation
efforts of companies. Moreover, having been designatedby the Ministry of the Environment as a financial institutionthat provides “interest subsidies for environment-friendly
business promotion projects,” the Bank is preparing the
Joyo Eco Select Loan Ministry of the Environment Interest
Subsidy Plan (environmental rating loan), an interest subsidy that can be obtained by companies that are working topreserve the environment.

Registration under the Ibaraki Eco-Business Plan
The Bank applied for the Ibaraki Eco-Friendly BusinessPremises Registration System, operated by the Ibaraki
Prefectural Government, in which business premises thatengage in environment-friendly operations are listed. As aresult, we received certification for the listing of all 110 Bank
offices in Ibaraki Prefecture, as well as for all companies in
the Joyo Bank Group.
In addition, our 10 offices in Fukushima Prefecture
have signed the “Fukushima Protocol for the Prevention of
Global Warming.”

The “Daichi” Series of Loans for Farmers
This loan has been approved by each prefecture and offers
preferential interest rates to eco-friendly farmers registrants who run eco-friendly farms and registered farmers
approved by municipalities.

Addressing Revised Energy Conservation Act
Under the Revised Energy Conservation Act, companies
with a total energy consumption equivalent to 1,500 kiloliters of crude oil or more must report this to the relevant
authorities and be designated as a Specified BusinessCorporation.
In 2010, the Bank was designated a Specified BusinessCorporation, and has been selected as an Energy
Coordinator and Energy Management Planning Promoter
that reports its total energy consumption to the relevant
authorities, together with medium- and long-term energy
consumption and conservation plans.
The Bank has a system in place to monitor the energy
consumption awareness and attitude across the organizations in the Bank in line with the “@ Energy-Minded
Services” guidelines introduced in February 2009.

Eco-Related Loans
These loans offer preferential interest rates and are forenvironmental preservation such as for the purchase of allelectric equipment for houses and apartments, solar power
generation systems, and hybrid cars.
Support for acquisition of ISO certification
Our affiliated company, the Joyo Industrial ResearchInstitute, Ltd., holds explanatory seminars on how toacquire ISO 14001 internationally recognized certificationfor environmental management systems, and also provides
consulting on an individual-company basis to help corporate customers acquire this important certification.

18

CORPORATE GOVERNANCE AND INTERNAL CONTROL SYSTEM
To ensure a greater trust from customers, the regional community and our shareholders, we believe it is essential that
our management be efficient, sound and transparent, andfirmly rooted in compliance. Constantly to be mindful ofthe importance of corporate ethics, we have establishedeight basic principles under which we are strengthening
and expanding our corporate governance.

In order to audit performance of duties by directors,
the auditors attend important meetings such as the Boardof Directors and Executive Officer Committee meetings,
peruse relevant documents, and carry out business andasset status inspections, all of which are based on theauditing policies and plans outlined at Board of Corporate
Auditors meetings (held once a month in principle).
With regard to internal auditing, the Corporate Audit
Division (the auditing office) monitors internal management in terms of appropriateness and effectiveness of conduct, and suggests improvements when problem areas are
identified. Results of the audits are regularly submitted in areport to the Board of Directors.
In addition to strengthening internal auditing, we havecreated a Compliance Audit Committee comprising four
outside experts including lawyers and Certified Public
Accountants (CPAs) to ensure greater expert input andobjectivity.

Corporate Governance at Joyo Bank
The Board of Directors meets twice a month in principle
to exercise decision-making and supervisory functions.
The Bank has a total of 12 directors, of whom two external
directors appointed to strengthen supervisory functions
by providing an outside perspective. Nine of them are
executive directors, and the others a managing director(in charge of internal auditing) and two external directors.
Major items relating to conduct of operations excluding
those decided by the Board of Directors are handled by an
Executive Officer Committee created as an assessment anddecision-making body. Executive Officer Committee meetings are held twice a month to discuss and implement specific policies and proposals in the conduct of business.
Special committees (Compliance Committee, General
Budget Committee, ALM Committee, Risk Management
Committee and Sound Asset Committee) have been established to determine the major themes for management
audits. Reports are compiled regarding the discussions anddecisions of these committees for perusal of the Board of
Directors.

The Joyo Bank Corporate Philosophy
Corporate Social Responsibly (CSR) and Public Mission
Always keep in mind the Bank’s CSR and public mission, and deepen trust
through sound and open business management.
Compliance
Comply with the legal and social code and execute honest and open business activities.
Fight Against Crime
Ensure that the Bank has no relationship with organized crime.
Provide Valuable Financial Services
We will contribute to the development of the region in which we operateby responding to our customers’ needs and providing valuable financial
services, considering the security of customers’ information.

(Internal audit)(Decision-making/
Management supervision)

Corporate Auditors
Board of Corporate
Auditors
General Meetingof Shareholders

Board of Directors

Corporate Audit Division(Operating execution)

Business Section

Executive Officer
Committee

Business Planning Div.
Customer Services Div.
Business Promortion Div.
Government and Municipal Business Div.
Treasury and Securities Div.
Markets Administration and International Div.
Credit Examination Div.
Operation Planning Div.
Computer System Div.
Corporate Risk Management Div.
Corporate Planning Div.
Personnel Div. • General Affairs Div.

Auditing Company

19

Risk Management Standards and other Controls
In addition to establishing risk management standards
for appropriate management of all categories of risk, it is
our mission to build a comprehensive internal risk management structure to ensure a sound financial positionand stable earnings in the future by creating frameworks
for comprehensive understanding and control of risk.
Moreover, we also have business contingency plans inplace should any event disrupt our core systems, such as
natural disasters or a systems failure.
The management of risk is the responsibility of various
risk management departments, as set down in the in-house
regulations. Comprehensive risk management is carried out
by one department that oversees risk management for theentire Bank. The Board of Directors has appointed the director to oversee the risk management program.
We have established a Risk Management Committee tomeasure the extent of various risks and make decisions onrisk management policies. This committee will meet regularly to ensure an accurate grasp of the situation regarding
risk management issues across the Bank. The officer incharge of risk management will make regular reports to theBoard of Directors on the current state of risk management
and the countermeasures that the Bank is taking against
risks.

Relationship with the Regional Community
We will communicate openly and freely with the community where we doour business, raising our transparency through active disclosure of corporate information.
Respecting the Human Rights of our Employees
We will provide a work environment that respects individuality and protects the rights of all employees.
Environmental Initiatives
We will reduce environmental load, and help the environment throughcore banking activities.
Community Contribution Activities
We are committed to contributing to the community we serve, as a good
corporate citizen that marches in step with regional society.

Internal Controls and Risk Management
Compliance
Based upon our philosophy of soundness, cooperation andpartnership with the home region, we attach great importance to compliance in our management. We have established a corporate ethics guideline and a code of conduct.
Moreover, we have established a new set of guidelines toensure that every director and employee complies withthe law and with the Bank’s Articles of Incorporation. Everycompany within Joyo Bank Group follows the same strict
guidelines. We have put standards into place to establish acompliance system across the Group as a whole.
To ensure the best standards in compliance, we haveestablished a Compliance Office that oversees the compliance program as defined by the Board of Directors.
The Office makes regular reports to the Board.
Moreover, we have established a whistleblower hotline forthe entire Group, called the Compliance Hotline.
In addition to the Compliance Committee, we haveappointed outside experts to form a Compliance Audit
Committee, which monitors compliance issues on a regularbasis.
To ensure that our internal controls perform theirintended functions, our various auditing functions, which
are independent from business execution departments,
carry out internal audits across the Group. We will resolutely
take action to prevent transactions with criminal bodies
that threaten public order and security or disrupt economic
development.

System to Ensure the Effective Execution of theirDuties by the Directors of Joyo Bank
We have put in place business plans to clarify our operational targets, as well as an overall budget every year, todefine specific policies.
We have determined the scope of decision-making
responsibilities for each director, to achieve efficient
operations.
We have established an Executive Officer Committeethat consists of executive directors and executive officers
to discuss important matters affecting the daily conductof operations. We have also set up a range of committees,grouping executive directors, executive officers and division heads, who meet as and when needed.

20Compliance System

Supporting Corporate Auditors
To support internal auditing, a staff who has enough knowledge and ability as an auditor is assigned to assist the corporate auditor is assigned to assist the corporate auditors.
To ensure the independence of this assistant from theinfluence of the business execution departments, in case oftransfer of the staff, the executive director in charge of all
personnel transfers should inform the corporate auditors
in advance. The corporate auditors are entitled to express
their opinions and advice regarding the personnel transferof the staff.
The corporate auditors attend meetings of the
Executive Officer Committee and offer their opinions on
the audit process and all related matters. The directors andemployees report any and all information the corporate
auditors deem necessary to complete the audit.
In order to enhance the efficiency of the audit system,
the corporate auditors maintain close coordination withall headquarters departments other than the internal audit
sections.
The representative directors and accounting auditors
each meet regularly with corporate auditors and exchange
opinions on the issues related to the audits.

Internal auditing function

We place high priority on strengthening our compliancesystem to ensure sound banking operations, fulfill our social
responsibility and public mission, and maintain the trust ofcustomers, shareholders and other stakeholders.
We establish a compliance program each year andensure that each executive and employee are fulfilling theirroles in compliance.
We build a compliance system whose ultimate supervisory organ is the Board of Directors and place dedicatedcompliance officers in each major division to undertakewide-ranging inspections of legal issues in each division.
To supplement internal compliance activities by outside
audits to inject the required professional knowledge andobjectivity, the Bank set up a Compliance Audit Committee,
consisting of outside professionals including lawyers and
CPAs. The Committee evaluates and audits the Bank’s
compliance activities. We strive to further strengthen andimprove compliance activities.

[Oversight of decision-making]Board of Directors[Auditing organizations]Board of Corporate Auditors(Auditors)[Policy establishing and performance evaluation]
Compliance Committee[Auditing department]
Corporate Audit Division
Branch audit group
Operations and asset auditing group
Main office[Management]
Compliance and Risk Management Division[Supervision]
Compliance and supervisory officer

Head office departments and branches, etc.
[Senior Manager] Supervisor [Administrator] Compliance officer
External auditing functions[Group company management]
Corporate Planning Division
Group business officeGroup company[Senior Manager] Representative [Manager] Compliance officer
Evaluation and audit[External audit]
Compliance Audit Committee

21[Compliance report]
Executive Officer Committee

Code of Conduct
We will• get to know our customers and offer optimal products and services• expand business scale and grow with our customers• increase our financial expertise

Policy Regarding Solicitations for Financial Products
In accordance with the Law Concerning the Sale of Financial Products, our solicitations for products are based on
the following policies.
1. Financial product solicitation is based on tailoring products to the level of understanding, experience and financial
status of the customer.
2. To ensure that our customers make choices based on their own judgment and at their own liability, we will provide
easy-to-understand explanations so that the customer has sufficient understanding of financial products and the risks
attached.
3. We assure that sales are never based on the provision of misleading or false statements or information, nor do we act
in a manner leading to any misunderstanding by our customers.
4. Our solicitations will not be conducted at times or in locations that cause inconvenience.
5. We are setting up a training system within the Bank to ensure proper solicitation to our customers.

Risk Management

results of transactions (business administration departments) are separated, thus creating an organizational structure that allows for mutual checks and balances.
The various risks that are incurred during banking operations are managed by specific risk management departments depending on the type of risk.
We also have established a risk management supervision department, which supervises the management systems for all risks and is responsible for holding meetings of
the Risk Management Committee, an organ for the examination of Bank-wide solutions to risks. The department also
provides regular reports on the overall status of risks to theBoard of Directors.
Additionally, internal auditing staff verify that risk
management is functioning appropriately and effectively
through the integrated risk management department
and each risk management related department, thereby
increasing the effectiveness of the system.

While the financial industry has grown due to deregulationand the advancement of financial technology, the risks carried by banks continue to diversify and become ever more
complicated. In this environment, we are working to meetthe highly advanced and various needs of our customers,
and we also have placed emphasis on the subject of “riskmanagement” to ensure the maintenance and improvement of sound operations which is one of the most vital
issues facing management.
The Risk Management System
In our fundamental rules regarding risk management, wehave outlined our fundamental thinking and management
procedures including policies regarding risk management,
organizational structure, and responsibilities.
In business management, the departments that carryrisks when conducting transactions (marketing departments) and the departments that internally manage the22Risk Management System
Risk Management
Committee

Board of Directors

Internal Auditing Dept.

Integrated Risk Management Dept.

Verification of suitability
and validity of the risk
management system

Risk Management Departments
Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Business Promotion Departments, Administrative Control Departments, Group Companies

Risk Management through the PDCA Cycle
At the Joyo Bank we use the PDCA cycle described below
in our risk management process. This allows continuous
improvement of risk management, and conforms to ourbelief in the need to consistently refine the Bank’s risk management methods.
Plan: Identify and evaluate the various risks to which
the Bank’s operations are exposed, and draw up
a plan for risk avoidance and mitigationDo:
Put the plan into practice
Check:	Evaluate the results of the plan’s
implementation
Act:	Take improvement measures in the event thatthe avoidance and mitigation plan process isinsufficient, or in the event that new problems
emergeIntegrated Risk Management
We have adopted integrated risk management for quantitative understanding of risk using statistical methods for eachcategory of risk, in order not only to manage individual risk
categories but also to enable systematic risk management
as the business of banking grows more diversified andcomplex.
This integrated approach enables us to manage what
extent of risk amount can be permitted relative to allocatedeconomic capital, the indicator of financial soundness, andwhether or not management resources are being deployed
efficiently.
Allocation of Risk CapitalIn our Comprehensive Risk Management rules, in accordance with the amount of risk tolerance, we allocate a reasonable amount of risk capital, depending on risk category
and banking department, and control risk within the thoseparameters. With regard to risk capital allocation, we allocate suitable amounts from core Tier I capital, not counting“risk buffer” capital (reserves for risk which is difficult toquantify and for extra capital for allocation should risk exposure increase).
We carry out periodic stress-testing and assess theimpact on Bank capital and earnings of losses that could
arise from risk due to significant fluctuations that cannot be
predicted based historical data analysis or which is difficult
to quantify using statistical methods. In this way, we monitor their impact on capital and revenue to ensure capitallevels are adequate.

Continuous Improvement of Risk Management
Action

Check
Check
Check

Action

Do
Do

Plan
Plan
Plan

Do

23

Credit Risk Management

Asset Self-Assessment

Creditrisk is the risk of not receiving principal or loan payments as promised on loans due to a deterioration in credibility of the debtor. This is recognized as one of the mostserious risks make within banking operations.
In order to prevent the occurrence of nonperforming
loans and improve the soundness of our assets, we makeevery effort to ensure good credit risk management.

In asset self-assessments to evaluate the soundness ofassets, the branch carry out a primary evaluation by making
a decision on credit category based on a credit rating. Thenthe head office department in charge of credit screening
checks these (secondary assessment), and the Corporate
Audit Division audits the results of the asset self-assessment
and verifies the appropriateness of procedures. Based onthese results, the Bank provides appropriate reserves andwrites down problem loans based on the assessments.

 verview of Basic Policy and Procedures with Regard toO
Credit Risk Management
 e have compiled management guidelines for credit risk,
Wwhich serve as a basic policy for appropriate managementof credit risk on individual loans and management of thecredit portfolio, focusing on spreading risk as its basic tool.

Internal credit ratings and categories of borrowers
under asset self-assessment

Credit Risk Management for Individual Loans
We have separated credit-screening departments from loan
departments, and constantly work toward screening stricter
while also focusing on credit management before due dateto prevent the status of a claim from deteriorating.
We have created a set of basic parameters for loans,designed to speed up decision-making on loans and toensure more rigorous risk management. We also have a system for accurately reflecting in the asset self-assessments
the business performance achieved by the borrower andchanges in the value of collateral.
We have also adopted an automated scoring system forsmall-amount loans to unify credit screening standards andimprove efficiency.

1
2
3
4
5
6
7
8
9
10
11
12

Borrower
ratings
1
2
3
4
5
6
8-1
8-2
8-3
9
10-1
10-2

Borrower category
under asset
self-assessment

Normal borrowers

Borrowers requiring caution(Substandard loans)
Potentially bankrupt
Substantially bankrupt
Legally bankrupt

Quantification of Credit Risk ManagementT he quantification of credit risk management refers to thestatistical forecasting of future losses (amount of credit risk)that can be expected from the bankruptcy or deteriorationof business at borrowers. Based on credit ratings, we calculate credit risk for each customer in view of the security andother factors.

Internal Credit Ratings
We classify our customers into a 12-grade rating class basedon quantitative appraisal of financial condition and cash
flows, and qualitative appraisal. In addition to serving as
the basis for asset self-assessments, ratings for customers,
credit worthiness are used across the full range of credit risk
management, including monitoring of credit risk exposure,setting of lending rate and allocation of lending authority.

Loan Portfolio Management
We treat loan assets in their entirety as a single portfolio andconduct credit risk management from a macro-perspective.
Based on the quantification of credit risk, we carry out periodic monitoring to determine whether or not credit risk isconcentrated in specific rating groups, sectors or corporategroups, and analyze and evaluate credit situations by rating,region and sector.

24Market Risk Management
Market risk refers to fluctuation primarily in earnings caused
by interest rate changes, foreign exchange rate fluctuations,and changes in the demand for money within the financial
market. Assets like loans and securities and liabilities likedeposits are constantly influenced by such changes.
We manage all assets and liabilities (deposits, loans,securities, and others) comprehensively based on ALM(asset and liability management) to manage market risks.

Administrative Risk
Administrative risk is the risk of damages due to improper
administration resulting in accidents or improprieties. We
have taken steps to uphold and improve the quality of ouradministrative operations, to ensure that customers are notinconvenienced by inappropriate administrative management and that administrative management is as error-freeand prompt as possible.
In addition to analyzing and evaluating the circumstances, causes and processes surrounding administrative
mistakes, we verify the effectiveness of countermeasures
after their introduction and repeat them as often as necessary to ensure that the problem is resolved. We are drawing
up regulations for administrative processes, and ensuring
their strict application by all staff from executives downMarket Risk Management System
The front and back office departments are separated. We
have also established middle-office risk management sections to build a mutual checks and balances system.
Market Risk Control
The scale of risks involved in assets and liabilities (deposits,loans, securities) go through a broad ranging analysis —gap analysis, basis point value (BPV), simulation of interest
fluctuation, and Value at Risk (VaR) — in order to clarify thestate of risks and conduct asset allocation effectively andimplement risk control measures.
We engage in financial derivative transactions to meetthrough guidance and training. We are also verifying theeffectiveness of internal audits and taking steps to preempt
accidents.
System Risk
System risk is the risk of losses due to the breakdown ofcomputer systems, erroneous computer operation, andinappropriate computer use. Measures to ensure appropriate management of such risk is based on protection of
information data and ensuring stable operation of computer systems.

the diverse needs of our customers and hedge our own
risks arising from interest fluctuations. For the risks associated with financial derivatives, in addition to conducting
daily mark-to-market valuation and BPV analyses to accurately grasp the size and nature of the risk, we also manage risk appropriately by establishing limits according to
objectives.

Tangible Assets Risk, Human Resources Risk andCompliance (Legal) Risk
Risk to tangible assets (inadequate precautions to prevent
damage from earthquakes and neglect of building management), personnel management risk relating to safety
and hygiene at the workplace, and compliance risk (legalityof business, illegal behavior by any executives and employees) are addressed through appropriate measures after
identification and evaluation using methods to gauge risk
scale and features, and the effect of risk reduction measuresis later assessed.

Operational Risk Management
Operational risk refers to the risk of losses arising from
irregular procedures or employee conduct in banking operations, or inappropriate system operation or detrimental
external events. The Bank divides such risk into five categories: administrative risk, system risk, risk to tangible assets,
personnel management risk, and compliance (legal) risk.
We have also established a management office for eachrisk category, as well as supervision of overall operationalrisk measures.

25

Crisis Management

Ensuring strict confidentiality in the management of e have established a set of general emergency guidelines
W
providing specific measures for dealing with situations suchas major disasters, system failures and reputational damage,and for minimizing disruption of relations with business
partners. We aim to strengthen our crisis management
through continuous training and upgrading of procedures.

customer information
We ensure strict confidentiality in our management of customers’ personal data. We have drawn up detailed in-houserules for the handling of customer information, practicing
strict control of data access and office access as well as theencryption of confidential information. In these ways, we
protect our customers from the leakage of their personal
information to outside parties as a result of misconduct
or human error. Providers of outsourced services are also
required to conform to the Bank’s strict customer information protection policy, and we closely monitor their performance in this area.

Customer Protection
To ensure peace of mind for our customers, the Bank established the Customer Protection Management Policy, and isdeveloping a management system that includes the establishment of a controlling division.
In line with this management approach, we havelaid down the Customer Protection Management Policy
and are working to ensure that all Bank employees, fromexecutives down, are completely familiar with the policy.
From the organizational standpoint, we have established
the Customer Protection Group within the Corporate Risk
Management Division as a central unit for the supervisionof all customer management measures.

Protection of Confidential Private Information
We have drawn up and made public a privacy policy as a
response to the Law Concerning the Protection of Private
Information, and have put in place safeguards for the protection and appropriate handling of personal data.

Privacy Policy

Adequate explanations of products and services

We work to build on the mutual trust we have with our customers, the region, and our shareholders, stress the importance of our social responsibility, and offer high-quality
financial services. For the protection of personal data, wehave established the following policy based on our respect
for all individuals, and will put all our efforts into the protection of private information.

We always provide explanations of our financial products
and services to ensure that customers understand the
products or services adequately. Officers in charge of eachparticular facet of the Bank’s operations instruct and teachdetails and methods for how to best explain these products
to customers, and the Corporate Risk Management Division
works to further improve the quality of these explanations.
Listening attentively to customer feedback
Management of customer queries, consultation, requests,
complaints and disputes is undertaken on an integrated
basis by the Customer Counseling Office in the customer
services department. We have in place a system for discussing measures for improvement and for prevention of issues
arising within the operational departments. We have also
signed agreements with designated dispute settlement
organizations and also work through external entities toreach settlements.

26

Policy for Protection of Personal Confidential Information• Strict compliance with laws and regulations

entrusted to an outside organization under an outsourcing arrangement, we require that protection of
personal information be contractually assured, andcarries out checks.

	We comply with all laws, ordinances and otherregulations regarding confidentiality of personal
information.
• Appropriate access• Security management measures	We acquire personal information only by appropriate and legal methods, and only when necessary forbusiness operations. Personal information is nevergathered in an inappropriate way.

	We have in place appropriate security management
mechanisms to ensure prevention of leakage, loss ordestruction of personal data, and other measures.
• Appropriate response to complaints• Ban on unapproved use of personal information	When customers have questions or complaints
regarding our protection of personal information,
we investigate these questions or complaints anddeal with them appropriately and promptly, within areasonable period of time.

	We only use personal information inasmuch as itis necessary for achievement of business objectives, and do not use such information for any otherpurpose.
		 In addition, information that is registered withcredit-data organizations of which we are a member is used where appropriate for credit-related
purposes.

• Continuous improvement
	The Bank has compiled regulations for ensuring
strict legal compliance and protection of personal
information.
		 In addition to ensuring that these measures arefamiliar to all employees and other affected parties,
the Bank continually upgrades them. Regular audits
into acquisition, use and handling of personal information are part of our broad and thorough commitment to confidentiality.

• Ban on provision of personal information to third
parties	Except when prescribed by laws and ordinances, wenever provide personal information to third parties
without first obtaining the affected person’s agreement. In addition, when personal information isPrivacy Mark
Based on the “Privacy Mark” certification, administered by Japan Information Processing
Development Corporation (JIPDEC), the Bank meets the “requirements for management of personal information protection” (JISQ15001) laid down by Japanese Industrial Standards Committee
and now has in place mechanisms for appropriate protection of personal information. The JoyoBank is the first regional financial institution in the North Kanto area to obtain this certification.
Financial Crime Prevention
We are fully committed to preventing crimes involving accounts held at our banks, and to protecting the financial assets of ourcustomers. We require identification when a new account is set up or for a large-amount transaction. In addition to working toprevent inappropriate transactions, when an account is used, we will cancel transactions when considered necessary and will
work hard toward crime prevention. We also have implemented measures to prevent the crimes of use of forged ATM cards
and online hacking.

27

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Consolidated Balance Sheets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2012

2011

Thousands of
U.S. dollars (Note 2)
2012

Assets:Cash and due from banks (Note 26)
Call loans and bills purchased
Commercial paper and other debt purchased
Trading assets (Notes 5 and 27)
Securities (Notes 6, 8, 26 and 27)
Loans and bills discounted (Notes 7, 9, 11 and 26)
Foreign exchanges
Lease receivables and lease investment assets (Notes 8 and 25)
Other assets (Note 8)
Tangible fixed assets (Note 22)
Intangible fixed assets
Deferred tax assets (Note 14)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for devaluation of investment securities
Total assets¥  385,528
3,385
33,714
3,776
2,458,416
4,952,771
1,757
28,49455,05892,957
8,247
13,892
18,293(50,706)(311)¥8,005,275¥  251,437—
37,755
7,675
2,187,773
4,769,896
7,816
28,52048,64894,455
8,237
25,857
21,373(50,838)(303)¥7,438,307$ 4,690,698
41,186410,206
45,95029,911,376
60,260,021
21,388346,686
669,894
1,131,008
100,349
169,027
222,573(616,947)(3,786)$97,399,634

Liabilities and net assets
Liabilities:
Deposits (Notes 8, 15 and 26)
Call money and bills sold (Notes 8 and 19)
Payables under securities lending transactions (Note 8)
Trading liabilities (Note 16)
Borrowed money (Notes 8, 10 and 26)
Foreign exchanges
Bonds (Note 12)
Due to trust account
Other liabilities
Reserve for directors’ bonuses
Reserve for employees’ retirement benefits (Note 13)
Reserve for directors’ retirement benefits
Reserve for reimbursement of dormant deposits
Reserve for frequent users services
Reserve for losses on interest refunded
Reserve for other contingent losses
Reserves under the special laws
Deferred tax liabilities for land revaluation (Note 14)
Negative goodwill
Acceptances and guarantees
Total liabilities¥7,277,708
17,561
38,888192
99,309238
15,00016
68,211
46
5,224
26
1,711
137
10
1,740
1
12,0502,291
18,2937,558,660¥6,816,825
13,636
13,332282
53,188415
5,000
1964,035
—
5,165
25
1,582
129
9
1,883
1
13,9552,449
21,373
7,013,309$88,547,375
213,671473,155
2,336
1,208,285
2,896
182,503
200
829,918
569
63,568316
20,826
1,675
131
21,173
15
146,617
27,879222,573
91,965,692

Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on hedging instruments, net of taxes
Land revaluation excess, net of taxes (Note 14)
Total accumulated other comprehensive income
Equity warrants
Minority interests
Total net assets
Total liabilities and net assets

85,11358,574
275,598(24,913)394,371
40,214(2,705)
12,452
49,961812,201
446,615¥8,005,275

85,11358,574266,435(25,858)
384,264
30,129(2,304)
10,97838,803
69
1,859
424,997¥7,438,307

1,035,564
712,665
3,353,187(303,126)
4,798,291
489,285(32,916)
151,507607,877
990
26,781
5,433,941$97,399,634

Millions of yen
March 31,

See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Income
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2012

2011

Thousands of
U.S. dollars (Note 2)2012¥ 76,781
23,927
1,104
22,175594
6,713
22,394
153,691¥ 82,451
23,294931
22,274621
6,763
20,618
156,955$  934,194
291,121
13,435
269,804
7,232
81,685
272,476
1,869,951

Millions of yen
Years ended March 31,

Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Trading income (Note 18)
Other operating income
Other income (Note 20)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts (Note 19)
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses (Note 21)
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred (Note 14)
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

4,309
487
1,406
7,089
1,215
72,08034,515
121,105
32,585

5,953
687
1,299
6,984
1,574
72,74045,879135,119
21,83552,436
5,937
17,11086,263
14,785877,000
419,947
1,473,481
396,469

5,276
8,832
18,476341¥ 18,134

5,817
1,786
14,230240¥ 13,990

64,203
107,462
224,804
4,159$  220,644

Net income per share (in yen and dollars)¥   23.65¥   18.14$      0.29

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2012

2011

Thousands of
U.S. dollars (Note 2)
2012¥18,476
11,414
10,084(401)
1,730
29,891¥14,230(9,040)(8,674)
(366)
—
5,190

$224,804
138,879
122,702(4,879)21,056363,683

29,549
341

4,947
242

359,526
4,157

Millions of yen
Years ended March 31,

Income before minority interests
Other comprehensive income (loss) (Note 23)
Unrealized (losses) gains on available-for-sale securities
Deferred losses on hedging instruments, net of taxes
Land revaluation excess, net of taxes
Comprehensive income(Attributable to)Shareholders of parent
Minority interest
See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Changes in Net Assets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2012

2011

Thousands of
U.S. dollars (Note 2)
2012

Shareholders’ equity
Common stock
Balance at end of the previous year
Changes during the year
Total changes during the year
Balance at end of the current year

¥ 85,113——¥ 85,113¥ 85,113——¥ 85,113$1,035,564——$1,035,564

Capital surplus
Balance at end of the previous year
Changes during the year
Total changes during the year
Balance at end of the current year

¥ 58,574——¥ 58,574¥ 58,574——¥ 58,574$  712,665——$  712,665¥266,435¥261,752$3,241,700(6,134)
18,134(20)(3,073)256
9,163¥275,598(6,182)
13,990(6)(3,140)22
4,682¥266,435(74,642)
220,644(243)(37,395)
3,124
111,486$3,353,187¥ (25,858)¥ (26,845)$  (314,613)(2,191)
61
3,073
944
¥ (24,913)(2,174)
21
3,140
987
¥ (25,858)(26,661)753
37,395
11,487$  (303,126)¥384,264¥378,594$4,675,317(6,134)
18,134(2,191)41—
256
10,107¥394,371(6,182)
13,990(2,174)
14
—
22
5,669
¥384,264(74,642)
220,644(26,661)
509
—
3,124
122,973$4,798,291

Millions of yen
Years ended March 31,

Retained earnings
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Disposal of treasury stock
Retirement of treasury stock
Transfer from land revaluation excess
Total changes during the year
Balance at end of the current year
Treasury stock
Balance at end of the previous year
Changes during the year
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the current year
Total shareholders’ equity
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Transfer from land revaluation excess
Total changes during the year
Balance at end of the current year

30

2012

2011

Thousands of
U.S. dollars (Note 2)2012¥ 30,129¥ 38,805$  366,580

10,085
10,085¥ 40,214(8,676)(8,676)¥ 30,129

122,705
122,705$  489,285¥  (2,304)¥  (1,938)$   (28,036)

(401)
(401)
¥  (2,705)

(366)
(366)
¥  (2,304)(4,879)(4,879)$   (32,916)¥ 10,978¥ 11,000$  133,575

1,473
1,473
¥ 12,452(22)(22)¥ 10,97817,932
17,932$  151,507¥ 38,803¥ 47,868$  472,119

11,157
11,157¥ 49,961(9,064)(9,064)¥ 38,803

135,758
135,758$  607,877¥      69¥     21$      8491111¥      814848
¥     69141141$      990¥   1,859¥   1,617$    22,627341
341¥   2,201242
242¥   1,859

4,154
4,154
$    26,781¥424,997¥428,101$5,170,914(6,134)
18,134(2,191)41
256
11,51021,618¥446,615(6,182)
13,990(2,174)14
22(8,773)(3,104)¥424,997(74,642)
220,644(26,661)509
3,124
140,053
263,027$5,433,941

Millions of yen
Years ended March 31,

Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Deferred losses on hedging instruments, net of taxes
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Land revaluation excess, net of taxes
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Total accumulated other comprehensive income
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Equity warrants
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Minority interests
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Total net assets
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer from land revaluation excess
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Cash Flows
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Millions of yen
2012
2011

Years ended March 31,

Thousands of
U.S. dollars (Note 2)
2012

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment losses
Amortization of negative goodwill
Net increase (decrease) in reserve for possible loan losses
Net increase in reserve for devaluation of investment securities
Net increase in reserve for directors' retirement benefits
Net increase in reserve for reimbursement of dormant deposits
Net increase in reserve for frequent users services
Net decrease in reserve for other contingent losses
Net increase in reserve for losses on interest refunded
Net increase (decrease) in reserve for bonuses to directors and corporate auditors
Net increase in reserve for employees' retirement benefits
Interest and dividend income
Interest expenses
Net losses related to securities transactions
Foreign exchange losses, net
Losses on disposal of tangible fixed assets
Net decrease (increase) in trading assets
Net (decrease) in trading liabilities
Net decrease in lease investment assets
Net decrease (increase) in loans and bills discounted
Net increase in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money excluding subordinated borrowings
Net decrease in bonds
Net decrease (increase) in due from banks excluding cash equivalents
Net decrease in call loans and others
Net increase in call money and bills soldNet decrease (increase) in payables under securities lending transactions
Net decrease (increase) in foreign exchange (assets)
Net decrease in foreign exchange (liabilities)
Net decrease (increase) in due to trust accountInterest and dividends received
Interest paid
Others, net
Subtotal
Income taxes paid
Net cash provided by operating activities¥ 32,585
6,290
860
(158)
(131)
8
0
129
8
(143)
1
46
59
(107,432)
6,204
4,915
2,135
391
3,898
(90)
26
(182,874)
452,900
7,982
60,721
—
(679)
655
3,925
25,556
6,058
(177)
(2)
107,002(8,040)155422,788(7,369)415,419¥ 21,835
6,566
68
(158)
11,636
267
2
123
26
(107)
2
(37)
324
(111,396)
7,940
3,791
8,003
257
(3,909)(89)
485
38,237140,249(9,030)(56,302)(10,000)
31,68931,16913,636(12,701)(5,108)(209)
0111,709(9,190)13,500223,283(1,574)
221,708$  396,469
76,536
10,465(1,922)(1,595)
98
8
1,571
105
(1,748)13569
724(1,307,129)
75,48459,80625,983
4,762
47,434(1,096)318(2,225,018)
5,510,411
97,117738,788—(8,266)
7,971
47,760310,942
73,717(2,158)(32)
1,301,890(97,826)
1,886
5,144,043(89,666)
5,054,377

Cash flows from investing activities:
Purchases of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash used in provided by investing activities(878,412)
334,599
280,759(3,814)81(2,330)(269,118)(614,718)
314,379
213,661(3,687)97(3,191)(93,459)(10,687,585)
4,071,050
3,415,978(46,414)986(28,358)(3,274,342)

Cash flows from financing activities:
Proceeds from issuance of subordinated bonds
Proceeds from issuance of subordinated borrowings
Repayments of subordinated borrowings
Cash dividends paid
Cash dividends paid to minority interests
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities
Translation adjustment for cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)

10,000
5,400(20,000)(6,134)(0)(2,191)
41(12,884)(4)
133,411
239,686¥373,098—
5,000(15,000)(6,182)(0)(2,174)
14(18,342)(20)
109,885
129,800¥239,686

121,669
65,701(243,338)(74,642)(2)(26,661)509(156,765)(56)
1,623,212
2,916,247$4,539,459

See accompanying notes to the consolidated financial statements.

32

F

I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

Notes to the Consolidated Financial Statements
THE JOYO BANK, LTD. and Consolidated Subsidiaries

1. Basis of Preparation
The accompanying consolidated financial statements of The Joyo Bank, Ltd. (the “Bank”) and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards, and are compiled from the consolidated financial statements prepared by the Bank as
required by the Financial Instruments and Exchange Act of Japan.
For the convenience of readers outside Japan, certain items presented in the original consolidated
financial statements have been reclassified and rearranged.
In addition, the notes to the consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.

2. Japanese Yen and U.S. Dollar Amounts
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen
have been rounded off. As a result, the totals shown in the accompanying consolidated financial statements(both in yen and U.S. dollars) do not necessarily agree with the sums of the individual amounts. Solely forthe convenience of the reader, the U.S. dollar amounts represent a translation of the Japanese yenamounts at ¥82.19 = US$1.00, the exchange rate prevailing on March 31, 2012.

3. Significant Accounting Policies(a) Consolidation
The accompanying consolidated financial statements include the accounts of the Bank and nine major
subsidiaries.
All significant intercompany transactions have been eliminated in consolidation. Assets and liabilities heldby consolidated subsidiaries are stated at fair value at a time of acquisition.

(b) Transactions for trading purposes
Transactions for “trading purposes” (seeking to capture gains arising from short-term changes in interest
rates, currency exchange rates or market prices of securities and other market-related indices or fromarbitrage between markets) are valued at market or fair value, and have been included in trading assets
and trading liabilities on a trade date basis. Gain or loss on such trading transactions are reflected as
trading income or trading expenses in the consolidated statements of income.

33

S

Among the trading assets and liabilities, securities and monetary claims are carried at market value as of
the balance sheet date. Derivatives including swaps, futures, and options are valued assuming settlementon the balance sheet date.
Trading income or trading expenses include interest received or paid during the fiscal year. The
year-on-year valuation differences of securities and monetary claims are also recorded in theabove-mentioned accounts. As for the derivatives, assuming that the settlement will be made in cash, theyear-on-year valuation differences are also recorded in the above-mentioned accounts.

(c) Securities
Securities other than trading securities have been accounted for by the following methods:
Marketable debt securities held to maturity are stated at amortized cost by the moving-average cost
method. Equity shares and investment trusts listed on Japanese markets are stated at fair value based on
their average market prices over the month prior to the balance sheet date. (Acquisition cost is basicallycalculated by the moving-average cost method.) Other listed securities are stated at fair value based on themarket prices prevailing on the balance sheet date. (Acquisition cost is basically calculated by themoving-average cost method.) Other available-for-sale securities which are extremely difficult to determine
the fair value are stated at cost or amortized cost by the moving-average cost method.
Unrealized gain or loss on available-for-sale securities (net of the related tax effect) has been reported as
a component of net assets.

(d) Derivatives
Derivatives positions held by the Bank (not including transactions for trading purposes) are stated at fairvalue.

(e) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets held by the Bank is calculated by the declining-balance method,
except for buildings acquired on or after April 1, 1998 of which depreciation is calculated by the straight-line
method. The estimated useful lives are as follows:
Buildings: 6~50 years
Other: 3~20 years
Depreciation of tangible fixed assets held by the consolidated subsidiaries is calculated principally by the
declining-balance method, based on the respective estimated useful lives of the assets.
Depreciation of intangible fixed assets is calculated using the straight-line method. Software for internal
use is depreciated using the straight-line method over its estimated useful life (mainly 5 years).

34

(f) Reserve for possible loan losses
The reserve for possible loan losses of the Bank is provided as detailed below, in accordance with theinternal rules for providing reserves for possible loan losses:
For claims to debtors who are legally bankrupt (as a result of bankruptcy, special liquidation, etc.) or who
are substantially bankrupt, a reserve is provided based on the amount of the claims, net of the amounts
expected to be collected by the disposal of collateral or as a result of the execution of guarantees.
For claims to debtors who are not currently bankrupt, but are likely to become bankrupt, a reserve isprovided based on the amount considered necessary based on an overall solvency assessment of theamount of claims net of the amounts expected to be collected by the disposal of collateral or as a result of
the execution of guarantees.
For other claims, a reserve is provided based on the Bank’s historical loan-loss experience.
All claims are assessed by the Business Section (at the branches and the related head office divisions)based on the Bank’s internal rules for the self-assessment of asset quality.
The Corporate Audit Department, which is independent of the Business Section, subsequently conducts
audits of such assessments, and a reserve is provided based on the audit results.
The reserves of the consolidated subsidiaries are provided for general claims at an amount based on theactual historical rate of loan losses and for specific claims (from potentially bankrupt customers, etc.) at an
estimate of the amounts deemed uncollectible based on the respective assessments.
For collateralized or guaranteed claims from debtors who are legally or substantially bankrupt, theamounts of the claims deemed uncollectible in excess of the estimated value of the collateral or guarantees
have been written off in aggregate amounts of ¥28,660 million and ¥42,933 million as of March 31, 2012
and 2011, respectively.

(g) Reserve for devaluation of investment securities
A reserve for the devaluation of investment securities is provided at the amount deemed necessary to coverestimated possible losses on investments which the Bank and its consolidated subsidiaries may incur in the
future.

(h) Reserve for employees’ retirement benefits
Reserve for retirement benefits of the Bank and its subsidiaries is provided for the amount deemednecessary, based on estimated pension benefits obligations and pension plan assets at the fiscal year end,
to cover required retirement benefits for eligible employees.
Prior service cost is deferred and amortized using the straight-line method over certain years (10 years)
within the average remaining service period of the eligible employees.
Unrealized actuarial losses are deferred and amortized using the straight-line method over a ten-year
period commencing with the following year, which is shorter than the average remaining service period of35

the eligible employees.

(i) Reserve for directors’ retirement benefits
Reserve is made for the payments of retirement allowances to directors and corporate auditors of theconsolidated subsidiaries based on an estimate of the amount attributable to the fiscal year.

(j) Reserve for reimbursement of dormant deposits
Reserve for reimbursement of dormant deposits which were derecognized as liabilities under certain
conditions is provided for possible losses on the future claims.

(k) Reserve for frequent users services
Reserve for frequent users services, which is provided to meet future use of credits granted to credit cardcustomers, is recorded in the amount deemed necessary based on the estimated future use of unused
credits. This program applies to cards issued by the Bank and one of its subsidiaries.

(l) Reserve for losses on interest refunded
One consolidated subsidiary provides a provision for losses on interest refunded in an amount deemednecessary based on estimated amounts to be refunded, taking into account historical records of interest
refunded on the portion of loans whose interest rates exceeded the maximum interest rate stipulated by theInterest Limitation Law.

(m) Reserve for contingent losses
The Bank makes reserve for possible losses on loans guaranteed by the credit guarantee corporations in
an amount deemed necessary based on estimated losses in the future, calculated using historical default
rates after exclusion of contingent losses covered by other reserves.

(n) Reserves under special laws
The reserve under the special laws is a reserve for contingent liabilities and provided for compensation forlosses from securities-related transactions or derivative transactions, pursuant to Article 46-5-1 of the
Financial Instruments and Exchange Act and Article 175 of the related cabinet order.

(o) Negative goodwill
Negative goodwill is amortized using the straight-line method over 20 years.

(p) Translation of foreign currencies
Foreign currency-denominated assets and liabilities of the Bank are translated into Japanese yen at the36rates prevailing at the balance sheet date. Foreign currency-denominated assets and liabilities held byconsolidated subsidiaries are translated into Japanese yen principally at the rates prevailing at therespective balance sheet dates.
All consolidated subsidiaries have a fiscal year end of March 31.

(q) Leases
As for finance lease transactions that do not transfer ownership of the leased property and which
commenced prior to April 1, 2008, their treatment was as follows.
As lessee
Using the same method applied to operating lease transactions.
As lessor
In line with the stipulations of Article 81 of the Guidance on Accounting Standard for Lease Transactions(ASBJ Guidance No. 16, issued on March 30, 2007), book value (after deduction of accumulated
depreciation) of lease assets included in tangible fixed assets and intangible assets as of the previous
balance sheet date (March 31, 2008) was recorded as the initial balance of “Lease receivables and lease
investment assets.” Income before income taxes and minority interests would have increased by ¥280
million for the fiscal year ended March 31, 2012 and would have increased by ¥283 million for the fiscal year
ended March 31, 2011, upon application of Article 80 of the Guidance.

(r) Hedging
Hedging against interest rate changes
The deferred method of hedge accounting is applied to transactions to hedge against the interest rate risks
associated with monetary claims and debt in accordance with the regulations set out in the “Accounting and
Auditing Treatment of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA
Industry Audit Committee Report No. 24).
The Bank assesses the effectiveness of such hedges in offsetting movement of the fair value with thechanges in interest rates, by classifying the hedged items (deposits or loans) and the hedging instruments(interest swaps) by their maturity. As to cash flow hedges, the Bank assesses the effectiveness of suchhedges in fixing cash flows by verifying the correlation between the hedged items and the hedging
instruments.

Hedging against foreign exchange fluctuation risk
The deferred method of hedge accounting is applied to transactions to hedge against the foreign exchange
fluctuation risks associated with monetary assets and liabilities denominated in foreign currencies, inaccordance with the regulations set out in the “Accounting and Auditing Treatment of Accounting Standards
for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No. 25).

37

To minimize foreign exchange fluctuation risk on monetary assets and liabilities, the Bank engages incurrency swaps, foreign exchange swaps, and similar transactions. The effectiveness of these transactionsin the hedging of the foreign exchange risks of monetary assets and liabilities denominated in foreign
currencies is assessed through comparison of the foreign currency position of the hedged monetary assets
and liabilities, with that of the hedging instruments.
When certain criteria are met, exceptional accrual method for interest rate swap is applied to some assets
and liabilities held by the Bank and its consolidated subsidiaries.

(s) Consumption tax
Consumption tax is excluded from transactions reported by the Bank and its consolidated subsidiaries.
However, non-deductible consumption tax on tangible fixed assets is charged to income as incurred.

(t) Land revaluation excess
In accordance with the Law concerning the Revaluation of Land, the Bank revalued the land held for its
operations on March 31, 1998. The net unrealized gain is presented in net assets net of the applicable
income taxes as land revaluation excess, net of taxes.
The difference between the carrying amount and the fair value of premises revalued pursuant to Article
10 of the Law was ¥28,436 million and ¥27,878 million as of March 31, 2012 and 2011, respectively.

(u) Earnings per share
The computation of earnings per share of common stock is based on the weighted average number ofshares outstanding during each year.

(v) Statements of cash flows
Cash and cash equivalents in the statements of cash flows represent cash and due from banks in the
consolidated balance sheets, excluding deposits with banks other than the Bank of Japan as well as thetime deposits of certain consolidated subsidiaries.
Millions of yen
March 31,

2012

2011

Cash and due from banks¥385,528¥251,437

Deposits with banks other than the Bank of Japan

(12,430)(11,750)

Cash and cash equivalents¥373,098¥239,686

38

4. Application of New Accounting Standards
Accounting Standard for Earnings per Share
The Bank adopted the "Accounting Standard for Earnings per Share" (Accounting Standards Board ofJapan (ASBJ) Statement No. 2 issued on June 30, 2010) and "Guidance on Accounting Standard for
Earnings per Share" ("ASBJ" Guidance No. 4 issued on June 30, 2010) at the end of the fiscal year ended
March 31, 2012.
The Bank also changed the method by which it calculates diluted earnings per share with respect to stock
options. Under the new method, the Bank now includes the portion of stock options’ fair value attributable tofuture service when calculating the amount of payment assumed to be receivable upon exercise of thestock options.
In the event the aforementioned Accounting Standard is not applied, there is no impact on diluted
earnings per share for the previous fiscal year.

Application of the Accounting Standard for Accounting Change and Error Corrections
Effective April 1, 2011, the Bank adopted the "Accounting Standard for Accounting Changes and Error
Corrections" (ASBJ Statement No. 24 issued on December 4, 2009) and "Guidance on AccountingStandard for Accounting Changes and Error Corrections" (ASBJ Guidance No. 24, issued on December 4,2009) for changes in accounting policies and corrections of figures.
In the fiscal year ended March 31, 2012, based on Practical Guidelines for Accounting for Financial
Instruments (JICPA Accounting Committee Report No. 14), “Gains on collection of loan assets” wasrecorded in “Other ordinary income,” but in previous consolidated fiscal years it was not treatedretroactively.

5. Trading Assets
Millions of yen
March 31,

2011

2012

Trading securities¥3,361¥2,1730―

Trading-related financial derivatives

413

502

Other trading assets

－

4,999

¥3,776¥7,675

Trading securities-related financial derivatives

Total

39

6. Securities
Millions of yen
March 31,

2011

2012

Japanese government bonds¥1,400,947¥1,113,612

Japanese local government bonds

298,469

335,015

Corporate bonds

387,344

382,499

Corporate stocks

166,353

169,569

Other securities

205,300

187,076¥2,458,416¥2,187,773

Total

Notes: 1. Corporate bonds include ¥14,636 million and ¥15,590 million of guarantee obligations for privately placed bonds (under
Article 2-3 of the Financial Instruments and Exchange Act) as of March 31, 2012 and 2011, respectively.

7. Bills Discounted
Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit
Committee Report No. 24. The Bank has the rights to sell or pledge bank acceptances bought, commercial
bills discounted, documentary bills and foreign exchanges bought without restrictions. The face value atMarch 31, 2012 and 2011 totaled ¥27,085 million and ¥25,407 million, respectively.

8. Pledged Assets
Assets pledged as collateral at March 31, 2012 and 2011 were as follows:
Millions of yen
March 31,

2011

2012

Pledged assets:
Securities¥232,879¥359,872

Deposits

23,30823,185

Payables under securities lending transactions

38,88813,332

Borrowed money

76,61014,880Liabilities covered by pledged assets:

In addition to the above, securities amounting to ¥99,072 million and ¥97,559 million at book value were
pledged as collateral in connection with bank transfer settlements and futures transactions as of March 31,
2012 and 2011, respectively.
One consolidated subsidiary had pledged its lease receivables amounting to ¥1,323 million and ¥2,385
million as of March 31, 2012 and 2011, respectively.

40

“Other assets” included lease deposits of ¥1,410 million and ¥1,390 million, at March 31, 2012 and 2011,
respectively.“Other assets”also included Initial margins on futures transactions of ¥160 million at both March 31,
2012 and 2011.

9. Commitments and Contingent Liabilities
Overdraft facilities and line-of-credit contracts are agreements under which, subject to compliance with thecontractual conditions, the Bank or consolidated subsidiaries pledge to provide clients with funds up to a
fixed limit upon submission of a loan application to the Bank. The unused amount related to such
facilities/contracts stood at ¥1,509,314 million and ¥1,451,218 million at March 31, 2012 and 2011,
respectively. Of this amount, facilities/contracts which expire within one year or which are unconditionallycancelable at any time, totaled ¥929,457 and ¥906,626 million at March 31, 2012 and 2011, respectively.
Most of these agreements will expire without the clients’ having utilized the financial resources available
to them, and the amount of the non-executed financing will not necessarily impact on the Bank or its
consolidated subsidiaries’ future cash flows. Most of these facilities/contracts contain a clause which allows
the Bank or its consolidated subsidiaries to reject a loan application or to reduce the upper limit requested inview of changing financial conditions, credit maintenance and other reasonable concerns.
When necessary, the Bank will demand collateral such as real estate or marketable securities at the dateon which an agreement is entered into. In addition, after facilities/contracts are set forth the Bank will
regularly assess the business status of the clients, based on predetermined internal procedures and, when
prudent, will revise the agreements or reformulate their policies to maintain creditworthiness.

10. Borrowed Money
Borrowed money included subordinated debt of ¥10,400 and ¥25,000 million, at March 31, 2012 and 2011.
Borrowed money at March 31, 2012 and 2011 consisted of the following:%

Millions of yen

Description

Due

Average interest

2011

2012

rate

Bills rediscounted

¥—

¥—

—

Other borrowings

99,30953,1880.39—

April 2012 September 2019

Notes:

1. Average interest rate represents the weight average interest rate based on the balances and rates at respective fiscal
year-end.
2. The repayment schedule within five years on borrowed money at March 31, 2012 was as follows:41

Millions of yen¥79,534

Within 1 year
After 1 year through 2 years

5,255

After 2 years through 3 years

5,430

After 3 years through 4 years

5,030

After 4 years through 5 years

2,030

11. Non-Performing Loans
In accordance with the disclosure requirements under the Rules for Bank Accounting in Japan, the balanceof loans and bills discounted at March 31, 2012 and 2011 included the following non-performing loans:

Millions of yen
March 31,

2011

2012

Loans in bankruptcy and dishonored bills¥2,079¥4,680Delinquent loans

111,103

114,303

789

1,572

45,93831,551¥159,910¥152,107

Loans past due with respect to interest payments for morethan 3 months
Restructured loans
Total

Notes: 1. Loans in bankruptcy and dishonored bills refers to loans (excluding charged-off amounts) stipulated in Article 96, Paragraph 1,
Item 3 (a) to (e) or Item 4 of the Enforcement Regulation to Corporation Tax Act (1965 Enforcement Regulation No. 97) towhich accrued interest receivables are not recognized as accruals for accounting purposes since no repayment of principal or
payment of interest has been made for a considerable period. Delinquent loans refers to loans with respect to which accrued
interest receivables are not recognized as accruals for accounting purposes, excluding loans falling into the category of
restructured loans. Loans past due with respect to interest payments for more than 3 months refers to loans with respect towhich repayment of principal or payment of interest are past due three months or more, excluding loans falling into thecategories of loans in bankruptcy and dishonored bills or delinquent loans. Restructured loans refers to loans to borrowers towhom financial support is given in the form of reduction in interest, waiver of repayment of the principal or payment of interest,
or debt forgiveness with the aim of corporate rehabilitation, excluding loans falling into loan categories mentioned above.
2. The above amounts are stated before the deduction of the reserve for possible loan losses.

4212. Bonds
Bonds at March 31, 2012 and 2011 consisted of the following:

Millions of yen
IssuerDescription

Date of issue

2012

%

2011

Interest

CollateralDue—

May 22,rate

The Joyo

2nd Unsecured Straight

May 24, 2000

Bank, Ltd.

Bonds

The Joyo

1st Unsecured

January 31,

Bank, Ltd.

Subordinated Bonds with

2012

5,000

5,000

2.64

2020
—

10,0001.22—

January 31,2022

early redemption clause
Total¥15,000¥5,000Note: After the consolidated closing date, the Company had no amortization schedule for a period of five years or less.

13. Employees’ Retirement Benefits(a) Outline of current retirement benefit system
The Bank and its consolidated subsidiaries have adopted defined employees’ retirement benefit plans, i.e.,
the employees’ welfare pension fund supplemented by the employees’ public pension system andlump-sum retirement benefits. In addition, extra benefits may be paid on a case-by-case basis. The Bank
has established an employees’ retirement benefit trust. As of the end of March 31, 2012, the Bank and nine
consolidated subsidiaries have lump-sum retirement benefits for employees. The Bank and its consolidated
subsidiaries have jointly established a fund under a defined benefit pension plan.

(b) The following table sets forth the changes in the retirement benefit obligation, the plan assets and thefunded status of the Bank and its consolidated subsidiaries at March 31, 2012 and 2011:
Millions of yen
March 31,

2011

2012

Retirement benefit obligation¥(63,279)¥(63,011)

Fair value of plan assets

51,20348,027

Funded status(12,076)(14,983)

Unrecognized actuarial loss

11,112

14,308270

368

Net retirement benefit obligation

(693)

(306)

Prepaid pension cost

4,531

4,859

¥(5,224)¥(5,165)

Unrecognized prior service costReserve for employees’ retirement benefits

43Notes:1. The above amounts do not include any extra benefits.
2. The consolidated subsidiaries have adopted a simplified method for the calculation of their retirement benefit obligation.

(c) Cost for retirement benefits of the Bank and its consolidated subsidiaries included the following
components for the fiscal years ended March 31, 2012 and 2011:
Millions of yen
Years ended March 31,

2011

2012

Service cost

¥1,815¥1,827

Interest cost

1,099

1,076

Expected return on plan assets

(718)

(710)

98

98

2,124

2,168

¥4,419¥4,459Amortization:
Amortization of prior service cost
Amortization of unrecognized actuarial loss
Total retirement benefit cost

Note: Retirement benefit cost of consolidated subsidiaries which is calculated by a simplified method has been included in “service
cost” referred to above.

(d) The assumptions used in accounting for the defined benefit plans for the fiscal years ended March 31,
2012 and 2011 were as follows:
Years ended March 31,

2011

2012

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

3.0%

3.0%

Straight-line method

Straight-line method

Amortization period of prior service cost

10 years

10 years

Amortization period of actuarial gain/loss

10 years

10 years

Periodic allocation of estimated retirement benefits4414. Deferred Tax Assets
Millions of yen
March 31,

2011

2012

Deferred tax assets:
Reserve for possible loan losses¥23,082¥28,111

Reserve for retirement benefits

8,776

9,545

Depreciation

2,290

3,301

Devaluation of securities

2,389

3,014

Reserve for employee bonuses

957

1,008

Reserve for reimbursement of dormant deposits

603

638

8,555

14,098(5,235)(6,719)¥41,421¥52,997¥(20,606)¥(17,743)(5,186)(8,922)

(20)

(30)

Others(1,715)

(443)

Total

(27,529)(27,139)¥13,892¥25,857

OthersValuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Retirement benefit trust
Reversal of reserve for possible loan losses after
elimination of intercompany balances

Net deferred tax assets

The effective tax rate reflected in the consolidated statements of income for the fiscal years ended March
31, 2012 and 2011 differs from the statutory tax rate for the following reasons:

2011

2012

Statutory tax rate

40.32%

40.32%

Effect of changes in statutory tax rate

7.89%

－

Valuation allowance(4.55)%(2.97)%

Permanent differences including dividends received deduction(2.38)%(3.06)%

Permanent differences including entertainment expenses

0.30%

－

Other

1.71%

0.54%

Effective tax rate

43.29%

34.83%“Act on Partial Amendment to the Income Tax Act, etc. in order to Create a Tax System Responding to Structural
Changes of Economy and Society” (Act No. 114, 2011) and “Act on Special Measures Concerning Securing
Financial Resources Necessary for the Implementation of Measures to recover from the Great East Japan45

Earthquake” (Act No. 117, 2011) were promulgated on December 2, 2011, and accordingly, the corporate income
tax rate has been lowered and the special corporation tax for restoration has been imposed from the fiscal year
beginning on or after April 1, 2012.
Due to these changes, the effective statutory tax rate used by the Group for the calculation of deferred tax assets
and deferred tax liabilities has been revised from the previous rate of 40.32%. The rate of 37.66% has been applied
to the temporary differences, expected to be either deductible, taxable or expired from the fiscal year beginning on
April 1, 2012 through the fiscal year beginning on April 1, 2014, while the rate of 35.28% has been applied to thetemporary differences, expected to be either deductible, taxable or expired on or after the fiscal year beginning April
1, 2015.
The effect of the changes in statutory tax rate increased deferred tax assets by ¥163 million, unrealized gains onavailable-for-sale securities by ¥2,946 million, deferred income taxes by ¥2,572 million and land revaluation excess,net of taxes by ¥1,730 million and decreased deferred losses on hedging instruments, net of taxes by ¥210 million
and deferred tax liabilities for land revaluation by ¥1,730 million.

15. Deposits
Millions of yen
March 31,

2011

2012

Current deposits¥4,317,343¥3,888,148

Time deposits

2,828,842

2,799,648

Negotiable certificates of deposit

19,852

11,870

Others111,669

117,159

Total¥7,277,708¥6,816,825

16. Trading Liabilities
Millions of yen
March 31,

2011

2012

Trading-related financial derivatives

¥192

¥282

Total

¥192

¥282

17. Shareholders’ Equity
In accordance with the Banking Act of Japan, the Bank has provided a legal reserve by appropriation ofretained earnings, which is included in retained earnings. The Banking Act of Japan provides that an
amount equivalent to at least 20% of the amount to be disbursed as distributions of earnings be46

appropriated to the legal reserve until the total of such reserve and the capital surplus equals 100% of thecommon stock.
The Companies Act of Japan (the “Act”), provides that an amount equal to 10% of the amount to be
disbursed as distributions of capital surplus (other than the capital reserve) and retained earnings (otherthan the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sumof the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions canbe made at any time by resolution of the shareholders or by the Board of Directors if certain conditions aremet.
Under the Act, upon the issuance and sale of new shares of common stock, the entire amount of theproceeds is required to be accounted for as common stock, although a company may, by resolution of theBoard of Directors, account for an amount not exceeding one-half of the proceeds as capital surplus.

18. Trading Income
Millions of yen
Years ended March 31,

2011

2012

Revenue from trading securities

¥475

¥521

Revenue from trading-related financial derivatives

117

98

1

0

¥594

¥621

Other trading revenue
Total

19. Interest on Borrowings and Rediscounts
Millions of yen
Years ended March 31,

2011

2012

Call money and bills sold

¥35

¥91

Securities lending transactions

51

13

Borrowings

400

581

Total

¥487

¥687

47

20. Other Income
Millions of yen
Years ended March 31,

2011

2012

Other ordinary income¥22,377¥18,065

Gain on disposal of tangible fixed assets－

50

Gains on collection of loan assets

－

2,502

Others

17

－

Total

¥22,394¥20,618

21. Other Expenses
Millions of yen
Years ended March 31,

2011

2012

Losses on disposal of tangible fixed assets

¥391

¥307

Losses on impairment

860

68

Write-offs of claims

5,582

6,442

Write down of equity shares

1,622

1,734

Losses on sale of claims

347

313

Losses from the disaster－

978

Others

25,71336,037

Total¥34,515¥45,879

Impairment losses were recorded in an aggregate amount deemed irrecoverable on idle assets, primarily
located in Ibaraki Prefecture.
Impairment losses recognized on a consolidated basis for the fiscal years ended March 31, 2012 and2011 can be broken down into the two categories of losses on land holdings in the amount of ¥858 millionand ¥68 million, respectively, and losses on buildings in the amount of ¥2 million and nill, respectively.
The recoverable amounts used for the measurement of such impairment losses are net sales prices, which
are calculated on the basis of appraisal values after deduction of the estimated cost of disposal.

22. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation on tangible fixed assets amounted to ¥95,814 million and ¥98,940 million, as ofMarch 31, 2012 and 2011, respectively.

48

23. Supplementary Information to Consolidated Statements of Comprehensive Income
Millions of yen

Years ended March 31,

2012

Unrealized gains on available-for-sale securities:
The amount arising during the period¥15,797

Reclassification adjustments(2,835)

Before adjustments of tax effect

12,962

Tax effect(2,877)

Unrealized gains on available-for-sale securities

10,084

Deferred losses on hedging instruments, net of taxes:
The amount arising during the period

859

Reclassification adjustments(1,179)Before adjustments of tax effect(319)

Tax effect(81)

Deferred losses on hedging instruments, net of taxes(401)

Land revaluation excess, net of taxes:
The amount arising during the period―

Reclassification adjustments―

Before adjustments of tax effect―Tax effect

1,730

Land revaluation excess, net of taxes

1,730

Total

¥11,414

24. Segment Informationa. Outline of the reportable segments
The reportable segments of the Company are those units for which discrete financial information can beobtained and which are regularly examined by the management meeting, which is the highest
decision-making body for decisions on the allocation of management resources and for assessing businessperformance.
Comprised of the Bank and its nine subsidiaries, the Group’s main business is banking. Other operations include
leasing, credit guarantee services, banking administrative agency services, securities trading and other financial
business. “Banking” and “leasing” are its reportable segments, while credit guarantee services are included in“Other.”49

b. Calculation method of the amount of ordinary income, segment profit, assets and other items by
the reportable segment
Accounting method of the reportable segment is as described in “Significant Accounting Policies.” Ordinary
income is regarded as the segment profit. Ordinary income from internal transactions is calculated basedon actual market price.
In addition, ordinary profit is operating income plus non-operating revenue (including interest income,dividend income and gain/loss on sale of securities), after deduction of non-operating expenses (includinginterest expenses, gain/loss on sale of securities, and securities valuation gains/losses).

c. Information related to ordinary income, segment profit, assets and other items by the reportablesegment
Millions of yen
The reportable segment
Banking
Year ended March 31, 2012

operations

Leasing

Other

Total

Total

Adjustments

Consolidated

Ordinary income:From external customers¥133,669¥15,270¥148,940¥4,733¥153,673¥—¥153,673

From internal transactions

1,269

1,035

2,304

4,755

7,059

(7,059)—Total

134,938

16,305

151,244

9,489

160,733(7,059)*1

153,673

Segment profit

29,9791,870

31,8491,928

33,77844

33,822

Assets7,984,854

41,612

8,026,467

37,782

8,064,249(58,973)

8,005,275

Liabilities

7,545,571

35,1327,580,703

25,4397,606,142(47,482)7,558,660

Depreciation

5,939

55

5,995

263

6,259

31

6,290

Interest income

101,940

57

101,998

227

102,225(412)

101,813Interest expenses

6,146

297

6,443

173

6,617

(413)

6,204

Other extraordinary gain

―

—

―

17

17

—

17

Losses on disposal of tangible

345

—

345

45

391

—

391

Losses on impairment

389

—

389

732

1,122

(262)

860

Provision for reserves under

—

—

—

0

0

—

0

―

—

―

2

2

—

2

Tax expenses

12,448761

13,210908

14,119(10)

14,109

Increase in tangible and

5,694

0

5,694

451

6,145

—

6,145

fixed assets

special law
Other extraordinary loss*

intangible fixed assets* Other extraordinary loss refers to loss on disposal of noncurrent assets and impairment loss.

50

Notes: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.
2. Adjustments are as follows:a) *1 Include intersegment transactions of ¥7,217 million.
b) Adjustments in assets of ¥58,973 million include elimination of intersegment transactions of ¥49,568 million.
c) Adjustments in liabilities of ¥47,482 million include elimination of intersegment transactions of ¥46,575 million.
d) Adjustments in depreciation of ¥31 million include depreciation of lease assets presented as tangible fixed assets on
the consolidated financial statements of ¥32 million.
e) Adjustments in Interest income of ¥412 million include intersegment interests of ¥364 million.
f) Adjustments in interest expenses of ¥413 million include intersegment interest of ¥364 million.
g) Adjustments in losses on impairment of ¥262 million are those between consolidated balance sheet amount andnon-consolidated balance sheet amount.
h) Adjustments in tax expenses of ¥10 million include deferred income taxes of ¥10 million due to eliminations ofintersegment reserve for possible loan losses.

51Millions of yen
The reportable segment
Banking
Year ended March 31, 2011

operations

Leasing

Other

Total

Total

Adjustments

Consolidated

Ordinary income:From external customers¥133,988¥15,459¥149,447¥4,954¥154,402¥—¥154,402

From internal transactions

1,207

1,267

2,474

4,656

7,130

(7,130)—

Total

135,196

16,726

151,922

9,610

161,532(7,130)*1

154,402

Segment profit

18,926

1,209

20,135894

21,030(238)

20,791

Assets7,424,168

40,876

7,465,044

36,706

7,501,751(63,444)7,438,307

Liabilities

7,004,665

35,5117,040,176

24,526

7,064,703(51,393)

7,013,309

Depreciation

5,857

50

5,907

293

6.201

365

6,566

Interest income

106,833

63

106,897273

107,170(492)

106,677

Interest expenses

7,871

370

8,241

191

8,433

(492)

7,940

50

—

50

—

50

—

50

2,165

23

2,189

313

2,502

—

2,502

278

0

278

29

307

—

307

Losses on impairment

68

—

68

—

68

—

68

Provision for reserves under

—

—

—

0

0

—

0

Losses from the disaster

879

—

879

99

978

—

978

Other extraordinary loss*

154

—

154

—

154

—

154

Tax expenses

6,849

507

7,356

249

7,606

(2)

7,604

Increase in tangible and

6,589

54

6,643

236

6,879

—

6,879

Gain on disposal of tangible
fixed assets
Gains on collection of loan
assets
Losses on disposal of tangible
fixed assets

special law

intangible fixed assets* Other extraordinary loss refers to loss on disposal of noncurrent assets and impairment loss.
Notes: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.
2. Adjustments are as follows:a) *1 Include intersegment transactions of ¥7,288 million.
b) Adjustments in assets of ¥63,444 million include elimination of intersegment transactions of ¥53,867 million.
c) Adjustments in liabilities of ¥51,393 million include elimination of intersegment transactions of ¥50,848 million.

52d) Adjustments in depreciation of ¥365 million include depreciation of lease assets presented as tangible fixed assets on
the consolidated financial statements of ¥365 million.
e) Adjustments in Interest income of ¥492 million include intersegment interests of ¥444 million.
f) Adjustments in interest expenses of ¥492 million include intersegment interest of ¥444 million.
g) Adjustments in tax expenses of ¥2 million include deferred income taxes of ¥2 million due to eliminations ofintersegment reserve for possible loan losses.

Related Informationa. Information by service
Millions of yen
Investment inYear ended March 31, 2012

Lendingsecurities

Leasing

Other

Total

Ordinary income from¥76,624

external customers:¥31,365¥15,270¥30,413¥153,673

Note: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.

Millions of yen
Investment inYear ended March 31, 2011

Lendingsecurities

Leasing

Other

Total

Ordinary income fromexternal customers:¥82,418¥29,620¥15,459¥26,904¥154,402

Note: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.

b. Information by geographic area
Segment information by geographic area is not disclosed since over 90% of the total consolidated ordinary
income and tangible fixed assets of the Bank and its consolidated subsidiaries resides in Japan.

c. Information by customer
Segment information by customer has not been disclosed since no single customer represented 10% ormore of total ordinary income.

53

Impairment loss information by the reportable segments
Millions of yen
The reportable segment

Banking operations

Impairment loss:

¥389

Other

Total

Leasing

Year ended March 31, 2012

¥—

¥389

Total

¥470

¥860

Millions of yen
The reportable segment

Banking operations

Impairment loss:

¥68

Other

Total

Leasing

Year ended March 31, 2011

¥—

¥68

Total

¥—

¥68

Amortization and unamortized balance of goodwill
Millions of yen
The reportable segment

Banking operations

Other

Total

Leasing

Year ended March 31, 2012

Total

Negative goodwill:
Amortization

¥158

—

¥158

—

¥158

Unamortized balance

2,291

—

2,291

—

2,291

Millions of yen
The reportable segment

Banking operations

Other

Total

Leasing

Year ended March 31, 2011

Total

Negative goodwill:
Amortization

¥158

—

¥158

—

¥158

Unamortized balance

2,449

—

2,449

—

2,449

54

25. Leases(a) Finance leases
Finance lease transactions in which ownership of leased property is not transferred to the lessee areaccounted for as operating leases (please see 3(q) “In line with the stipulations of Article 81 of the Guidanceon Accounting Standard for Lease Transactions (ASBJ Guidance No. 16, issued on March 30, 2007), bookvalue (after deduction of accumulated depreciation) of lease assets included in tangible fixed assets andintangible assets as of the previous balance sheet date (March 31, 2008) was recorded as the initialbalance of “Lease receivables and lease investment assets.”), as follows:
As lessee
Acquisition cost, aggregate depreciation expenses, and book value at March 31, 2012
Acquisition cost
Tangible fixed assets:¥5 million

Total:¥5 million

Accumulated Depreciation expenses
Tangible fixed assets:¥2 million

Total:¥2 million

Book value at term-end
Tangible fixed assets:¥2 million

Total:¥2 million

Note: The acquisition cost presented above is inclusive of interest amounts, as the balance of acquisition cost and minimum lease
payment is small as a percentage of the total book value of tangible fixed assets.

Lease payments that would have been required for finance leases:
Within one year:¥0 million

Over one year:¥2 million

Total:¥2 million

Note: Lease payments presented above is inclusive of interest amounts, as the balance of acquisition cost and minimum lease
payment is small as a percentage of the total book value of tangible fixed assets.

Lease fees paid and depreciation expenses that would have been incurred under finance leases:
Lease fees:¥0 million

Depreciation expenses:¥0 million

Note: Method of calculation of depreciation expenses
The lease assets are depreciated by the straight-line method on the assumption that the lease term is the useful life and theresidual value is zero.

55

(b) Operating leases
As lessee
Future lease payments under non-cancellable operating lease transactions were as follows:
Within one year:¥41 million

Over one year:¥313 million

Total:¥355 million

As lessor
Future lease payments under non-cancellable operating lease transactions were as follows:
Within one year:¥18 million

Over one year:¥22 million

Total:¥40 million

No losses are recognized for the impairment of lease assets.

26. Financial Instruments(1) Status of Financial Instrumentsa. Policy on Financial Instruments
The Bank and its nine consolidated subsidiaries (the “Group”) provide financial services such as leasing,agent of banking administrative work and securities business, and centering on banking service.
The Group raises funds by acceptance of the deposits, and invests the funds in loans and securities. We
have financial assets and liabilities of which the values fluctuate with changes in interest rates, foreignexchange rates and market prices. To avoid adverse effects from such fluctuations, the Group performs
integrated assets and liabilities management (the “ALM”) in each company.
Moreover, we are engaged in derivatives transactions, such as those related to interest rates, currencies
and bonds, for hedging and non-hedging purposes. Some consolidated subsidiaries are also engaged ininterest rate related derivatives in connection with investments in securities and for hedging purposes.
b. Financial Instruments and Risks
The financial assets held by the Group consist primarily of securities and loans. Loans are subject to credit
risk which could cause financial losses to the Group from non-performance of obligations by borrowers.
With regard to securities, the Group is exposed to credit risk of issuers, interest-rate risk, and market pricevolatility risk.
The deposits include current deposits and savings deposits without maturities, and time deposits withmaturities. These deposits expose the Group to liquidity risk that could be caused by concentrated
withdrawals by customers.

56

The Group has liquidity risk with the borrowed money and bonds that it would become impossible toexecute payments at the due dates when the Group lost access to the financial markets. Although thefloating-rate borrowings expose us to the interest rate risk, we mitigate this risk using interest rate swaps
partially.
We are engaged in derivatives transactions to meet customers’ demands to hedge exchange-rate andinterest-rate risks and to appropriately manage the Bank’s market risks. Moreover, we utilize derivatives
transactions for efficient ALM and hedging of individual transactions.
Derivatives transactions have market risk that losses could arise from market changes including those ininterest rates and exchange rates. Additionally, derivatives transactions have credit risk that transactions
are not fulfilled as provided by the contracts due to an event such as a failure of the counterparty.
Regarding hedging transactions to offset fluctuations in interest rates, the hedged items (e.g., loans) andthe hedging instruments (e.g., interest rate swaps) are grouped by maturity to assess the effectiveness. As
for cash flow hedges, we examine interest-rate correlation between the hedged items and the hedging
instruments. Moreover, to assess the effectiveness of hedging transactions for foreign exchange risk, we
designate transactions such as currency swaps and foreign exchange swaps as the hedging instruments
and verify that we hold foreign currency positions of those hedging instruments that match the hedged items
including monetary claims and obligations denominated in foreign currencies. We also perform“after-the-fact test” to confirm certain interest rate swaps continuously meet the requirements for
exceptional accrual method.
We have set position limits and loss limits for trading transactions involving short-term purchases andsales of financial instruments.
c. Risk Management for Financial Instruments(a) Integrated Risk Management
The Bank holistically controls risks from various financial assets and liabilities and risks related to banking
business through integrated risk management. The Bank calculates apportionable risk capital using Tier I
capital and allocates by risk category and by department. The Bank periodically quantities risks it takes andcontrols such risks within the allocated capital. The Bank assesses unquantifiable risks using stress test
and other measures.
(b) Credit Risk Management
The Group has enacted “Guidelines for Credit Risk Management,” which provides for basic policies
comprising appropriate credit exposure management on individual and portfolio bases. The portfolio-based
credit exposure management involves diversification of risk. Credit Risk Management Group has been
segregated from the divisions under Business Headquarters to achieve rigorous credit review, andconducts thorough monitoring borrower’s financial condition to prevent deterioration of loans.
In the self-assessments that evaluate the quality of assets, the business offices categorize the borrowers
based on the credit ratings, which is then reviewed by Credit Examination Division in the Headquarters.

57

Furthermore, Corporate Audit Division examines results and processes of the self-assessments for
accuracy and adequacy. As for credit risk of the issuers of securities, Treasury and Securities Divisionmonitors credit information and market prices and gives the issuers credit ratings as well as carries out
self-assessments of the issuers like for general borrowers.
(c) Market Risk Management(i) Interest-rate Risk Management
The Group has set risk limits corresponding to the Group’s financial strength to interest-rate risk in thebanking account, and applies and monitors the limits rigorously through the ALM. In order to control theinterest-rate risk appropriately:
The Group has established “Risk Management Basic Rules,” “Integrated Risk Management Rules,”ïand “ALM Guidance.”ï

The Board of Directors (the “Board”) establishes risk tolerance limits for interest-rate risk within the
allocable capital range after discussions at the General Budget Committee every half year.
The ALM Committee discusses and reports to the Board detail plans to address interest-rate risk every

month.
Interest-rate risk is measured using value at risk (“VaR”). The ALM Committee sets alarm points
somewhat below the risk limits and monitors the points as well as the limits on a monthly basis.
Moreover, the Group analyzes interest-rate risk from various aspects using tools such as basis-pointvalue (“BPV”), the scenario analysis (simulation method) and the interest rate sensitivity analysis in addition
to VaR, and controls the risk within a tolerable range reflective of the Group’s financial strength.
(ii) Foreign Exchange Risk Management
The Group controls foreign exchange risk by using hedging instruments such as currency swaps andforeign exchange swaps. In addition, the Group also enters into offsetting transactions in financial markets
on an individual or aggregate basis, in order to reverse out foreign exchange risk arising from foreignexchange transactions offered by customers. Additionally, the Group converts into yen an amountequivalent to monthly interest income denominated in foreign currencies every month, in order to mitigate
foreign exchange risk arising from foreign-currency denominated revenues.
(iii) Price Fluctuation Risk Management
The Group has set risk limits corresponding to the Group’s financial strength to price-fluctuation risk arisingfrom financial instruments such as stocks and investment trusts, and applies and monitors the limits
rigorously through the ALM.
The Board establishes risk tolerance limits for price-fluctuation risk within the allocable capital range after
discussions at the General Budget Committee every half year.
Price-fluctuation risk is measured using VaR. The ALM Committee sets alarm points somewhat below therisk limits and monitors the points as well as the limits on a monthly basis. To prevent unrealized losses
from being accumulated, the Group monitors and manages unrealized gains and losses under certain58

policies on a daily basis.
(iv) Derivatives Transactions
The Group utilizes derivatives transactions chiefly as hedging instruments for interest-rate and foreignexchange risks. The Group controls counterparty credit risk in derivatives transactions by setting credit
limits.
For derivatives transactions with financial institutions, the Group sets an individual credit line andmanages credit exposures on a daily basis in accordance with “Credit Line Management Rule for Banking
and Security Companies.”
For derivatives transactions with customers, the Group also sets an individual credit line to reflect factors
such as the creditworthiness and outstanding transactions, just like for financing transactions, and manages
the credit exposures together with those arising from other transactions on an individual basis.
(v) Trading Transactions
The Group primarily trades bonds, foreign exchanges and derivatives transactions for trading purposes. We
set utilize certain measures such as position limits, risk tolerance limits and loss limits in accordance with
“Trading and Risk Management Rules.”(vi) Quantitative Information related to Market Risk
1. Banking Account(1) Interest rate risk
The Bank adopts the variance-covariance method as measurement method (a holding period of 6 months,
a confidence interval 99%, and observation period of 5 years) for calculating VaR related to interest rate riskof interest rate swaps in loans and bills discounted, domestic bonds, deposits, borrowed money, corporate
bonds and derivatives. The bank adopts the historical simulation method (a holding period of 6 months, aconfidence interval 99%, and observation period of 5 years) for calculating VaR related to interest rate riskof interest rate swaps and currency swaps in foreign bonds, trust beneficiary right, market fund transactions
and derivatives. As of March 31, 2012 VaR related to interest rate risk was ¥ 32,136 million.
(2) Price fluctuation risk
The Bank adopts the historical simulation method (a holding period of 6 months, a confidence interval 99%,
and observation period of 5 years) for calculating VaR related to price fluctuation risk of listed equities andmutual funds. As of March 31, 2012 VaR related to price fluctuation risk was ¥ 72,750 million. Correlation
between interest rate risk and price fluctuation risk has not been considered.
2. Trading Account
The Bank adopts the historical simulation method (a holding period of 1 day, a confidence interval 99%, andobservation period of 5 years) for calculating VaR related trading securities, trading purpose foreignexchange transactions and derivatives such as forward transactions and option transactions. As of March
31, 2012, VaR related to trading account was ¥ 3million.
3. Validity of VaR

59

The Bank performs back testing to compare VaR calculated by its internal model against actual profit andloss to confirm the measurement model used captures market risk with sufficient accuracy. However, VaR
statistically quantifies market risk calculated based on past market movements. Therefore, there could becases in which VaR cannot capture risk under sudden and dramatic changes in market conditions beyond
normal circumstances.
(d) Management of Liquidity Risk in Funding
To manage liquidity risk under “Market and Liquidity Risk Management Rules,” the Bank:ï

Conducts financing activities after fully analyzing its cash flows.
ïPays continuous attention to the balance sheet structure, lines of credit provided to the Group,
collateral management and costs to maintain the liquidity.
ïStrives to maintain the diversity and stability of funding sources.
In addition, the liquidity risk borne by the Group is reported to the Board and the ALM Committee on amonthly basis.

d. Supplementary Explanation Concerning Matters Related to Fair Value of Financial Instruments
Fair value of financial instruments includes a value based on market prices as well as a reasonably
calculated value when no market price is available. Because certain assumptions are used in the fair value
calculation, such value may vary when different assumptions are used.

60

(2) Disclosures Regarding Fair Value of Financial Instruments and Other Items
The table below sets forth fair values of financial instruments at March 31, 2012 and 2011 except for those
whose fair values are extremely difficult to determine (see (Note2)). In addition, those financial instruments
which are immaterial are not below listed.
Millions of yen
Consolidated balance
March 31, 2012sheet amount(1) Cash and due from banks

Fair value

Difference¥385,528¥385,528¥―

30,937

31,115178

Available-for-sale securities

2,417,781

2,417,781―(3) Loans and bills discounted

4,952,771(2) Securities
Held-to-maturity debt securities

Reserve for possible loan losses (*1)

(43,917)

Sub-total

4,908,854

4,982,409

73,555

Total assets

7,743,100

7,816,834

73,733(1) Deposits

7,257,856

7,259,521(1,664)19,852

19,852―99,30999,693(384)

7,377,017

7,379,066(2,048)

675

675

―

(4,916)(4,916)―(4,241)(4,241)―

Negotiable certificates of deposit(2) Borrowed money
Total liabilities
Derivatives transactions (*2)
Transactions not accounted for as hedging
instruments
Transactions accounted for as hedging instruments
Total derivatives transactions(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in other assets and other liabilities are presented in a lump sum. Net claims and debts that arosefrom derivatives transactions are presented on a net basis.

61

Millions of yen
Consolidated balance
March 31, 2011

sheet amount(1) Cash and due from banks

Fair value

Difference¥251,437¥251,437¥―

28,06428,200135

Available-for-sale securities

2,150,656

2,150,656―(3) Loans and bills discounted

4,769,896(2) Securities
Held-to-maturity debt securities

Reserve for possible loan losses (*1)

(43,863)

Sub-total

4,726,033

4,795,725

69,691

Total assets

7,156,192

7,226,019

69,827(1) Deposits

6,804,955

6,808,161(3.205)

11,87011,870―53,18853,641(453)

6,870,013

6,873,673(3,659)

752

752

―

(4,760)(4,760)―(4,007)(4,007)―

Negotiable certificates of deposit(2) Borrowed money
Total liabilities
Derivatives transactions (*2)
Transactions not accounted for as hedging
instruments
Transactions accounted for as hedging instruments
Total derivatives transactions(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in other assets and other liabilities are presented in a lump sum. Net claims and debts that arosefrom derivatives transactions are presented on a net basis.

(Note 1) Calculation Methods for Fair Value of Financial Instruments
Assets(1) Cash and Due from Banks
Since fair value of these items approximates the book value, we deem the carrying value to be the fairvalue.
(2) Securities
Fair value of shares is determined by reference to quoted market prices on stock exchanges. Fair value ofbonds is determined by reference to quoted market prices or prices offered by financial institutions, orbased on the price best estimated. Fair value of investment trusts is determined by reference to their
publicly available net asset value per unit. Fair value of privately placed bonds guaranteed by the Bank is62determined by the discounted cash flow method. The discount rates used in the calculation were calculated
based on the bankruptcy probability by credit rating and the coverage ratio of an individual claim.
In the reporting term, the reasonably estimated value of Japanese Government Bonds (JGBs) withvariable interest rates that have widely fluctuating differences between market price and theoretical price
was set as the fair value. The reasonably estimated value is calculated based on the discounted cash flow
method or other pricing methods using JGB yields and the volatility of swaptions as primary pricing
variables. In the previous term, the reasonably estimated value of JGBs with variable interest rates was set
as the fair value. The reasonably estimated value is calculated based on the discounted cash flow method
or other pricing methods using JGB yields and the volatility of swaptions as primary pricing variables.
We used a reasonably estimated value as the fair value of securitized products (e.g., collateralized loan
obligations), except those subject to impairment, of which external credit rating is not downgraded, of whichcollateral asset pools are not deteriorated, and which the Group intends to continue to hold. The reasonably
estimated price was calculated by the discounted cash flow method or other pricing methods using thedefault rate, recovery rate, pre-payment rate and discount rate as primary pricing variables.
Please see “27. Securities Information” for details of securities in each purpose of holding.
(3) Loans and bills discounted
Since floating-rate loans and bills discounted reflect market interest rates in a short period, the fair value
approximates the carrying value unless the credit standing of the borrower is not significantly different after
the loan was made or the bill was drawn. The fair value is therefore deemed equal to the carrying value.
Fair value of fixed-rate loans and bills discounted are determined as the total of principal and interest
discounted by the type, internal credit rating and maturities. Discount rates used in the calculation wereinterest rates which would be applied when similar loans were newly extended. Fair value of fixed-rateloans and bills discounted whose terms are short (i.e., within one year) approximates their carrying value
and is therefore deemed equal to the carrying value.
Possible losses on legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans arecomputed based on recoverable amounts estimated as the present value of future cash flows or thecollectible amounts from collaterals and guarantees. Then the fair value of those loans approximates theconsolidated balance sheet amount at the closing date minus the currently estimated losses, and istherefore deemed equal to the amounts.
Fair value of loans and bills discounted for which repayment terms are not set because of their attributes(e.g., loans are limited to the amounts of assets pledged as collateral) is assumed to approximate theircarrying value, considering the expected repayment periods and interest rate conditions, and are deemed
equal to the carrying value.
Liabilities(1) Deposits and (2) Negotiable certificates of deposit
For demand deposits, we deem the amount that the Group would require to pay on the consolidated

63

Millions of yenbalance sheet date (i.e., carrying value) to be the fair value.
With respect to time deposits with long deposit terms (i.e., one year or longer), we used the present valueof future cash flows calculated by time band as the fair value. The discount rates used in the calculation
were the interest rates that would apply to newly accepted deposits.
(3) Borrowed money
We used as the fair value the present value of future cash flows calculated by borrowing period. The
discount rates used in the calculation were interest rate that would applied to new borrowings. Fair value ofborrowings for a short term (i.e., within one year) approximates the carrying value and is deemed equal tothe carrying value.
Derivatives Instruments
See “28. Derivatives.”(Note 2) The following table summarizes financial instruments, of which fair value is extremely
difficult to determine:
Fair value of available-for-sale securities in the above table excludes the following items at March 31, 2012
and 2011.
Millions of yen
March 31, 2012

Consolidated balance sheet amounts

Unlisted stocks (*1) (*2)

¥5,374

Investments in partnerships and others (*3)

4,323

Total

¥9,697(*1) Unlisted stocks are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other Items” sinceno market price is available and their fair value is extremely difficult to determine.
(*2) Impairment losses on unlisted stocks were ¥21 million.
(*3) Out of investments in partnerships and others, certain partnerships holding assets whose fair value was extremely
difficult to determine are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other
Items.”

64

March 31, 2011

Consolidated balance sheet amounts

Unlisted stocks (*1)(*2)¥5,397

Investments in partnerships and others (*3)

3,655

Total

¥9,053(*1) Unlisted stocks are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other Items”
since no market price is available and their fair value is extremely difficult to determine.
(*2) Impairment losses on unlisted stocks were ¥89 million.
(*3) Out of investments in partnerships and others, certain partnerships holding assets whose fair value was extremely
difficult to determine are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other
Items.”(Note 3) Redemption schedule of money claims and securities with stated maturities after the
consolidated balance sheet date is as follows:
Millions of yen
1 year or

1-3 years

3-5 years

5-7 years

7-10 years

Over 10

March 31, 2012

less

years

Cash and due from banks¥385,528

¥―

¥―

¥―

¥―

¥―

17,375

6,344

7,417

―

―

―

12,000

―

―

―

―

―

Municipal bonds

―

―

―

―

―

―

Corporate bonds

5,375

6,344

7,417

―

―

―

239,135

491,107534,752

392,395

424,546

79,204bonds

129,000

241,700

346,100

332,200

300,000―

Municipal bonds

67,392

107,888

93,906355

23,258―

Corporate bonds

31,362

105,027

45,68038,137

96,62941,865

Foreign bonds

11,26533,46946,02721,0232,360

36,027

114

3,022

3,038

680

2,298

1,311

Loans and bills discounted (*)

1,415,532

1,057,362

695,606

399,234

386,278815,797

Total¥2,057,571¥1,554,813¥1,237,776¥791,630¥810,825¥895,001

Securities
Held-to-maturity debt
securities
Japanese government
bonds

Available-for-salesecurities with maturities
Japanese government

Other(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥113,183 million, andloans and bills discounted without maturities amounting to ¥69,776million were excluded from the table above.

65

Millions of yen
1 year or

1-3 years

3-5 years

5-7 years

7-10 years

Over 10

March 31, 2011

less

years

Cash and due from banks¥251,437

¥―

¥―

¥―

¥―

¥―

10,315

10,281

7,337

158

―

―

7,000

1,000

―

―

―

―

Municipal bonds

1

―

―

―

―

―

Corporate bonds

3,314

9,281

7,337

158

―

―

235,386

475,731465,089273,547

387,91282,700bonds

89,000230,000

206,100

235,900

312,000―

Municipal bonds

29,805109,280

160,159

10,594

19,509―Corporate bonds

75,721

99,22164,75815,89551,90948,908Foreign bonds

40,85734,24528,891

8,481

3,540

33,791

1

2,983

5,180

2,677

953

―

Loans and bills discounted (*)

2,809,919

710,141

432,612

181,090

270,214

171,573

Total¥3,307,059¥1,196,153¥905,039¥454,795¥658,127¥254,274

Securities
Held-to-maturity debt
securities
Japanese government
bonds

Available-for-salesecurities with maturities
Japanese government

Other(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥118,983 million, andloans and bills discounted without maturities amounting to ¥75,361million were excluded from the table above.

66

(Note 4) Redemption schedule of borrowed money and other interest-bearing liabilities after the
consolidated balance sheet date at March 31, 2012 and 2011 is as follows:
Millions of yen
1 year or
March 31, 2012
Deposits (*)

1-3 years

3-5 years

5-7 years

7-10 years

lessOver 10years¥6,571,224¥592,393¥88,440¥1,760¥4,037¥―

deposit

19,852

―

―

―

―

―

Borrowed money

79,534

10,685

7,060

2,030

―

―

¥6,670,610¥603,078¥95,500¥3,790¥4,037¥―5-7 years

7-10 years

Negotiable certificates of

Total(*) Demand deposits were included in “1 year or less.”

Millions of yen
1 year or
March 31, 2011
Deposits (*)

1-3 years

3-5 years

less

Over 10years¥6,104,138¥621,476¥74,090¥1,389¥3,861¥―

deposit

11,870

―

―

―

―

―

Borrowed money

38,289

5,779

5,060

4,060

―

―

¥6,154,297¥627,255¥79,150¥5,449¥3,861¥―

Negotiable certificates of

Total(*) Demand deposits were included in “1 year or less.”

27. Securities Information
Year ended March 31, 2012(a) Trading Securities
Millions of yen
March 31, 2012

Unrealized gain recognized as income

Trading securities¥767

(b) Held-to-maturity debt securities
Millions of yen
Consolidated
Type
March 31, 2012
Securities with fairbalance sheet

Fair value

Difference

amountBonds:¥26,238¥26,445¥207

value exceeding

Japanese

consolidated balance

government bond

11,501

11,5032

sheet amount

Municipal bonds

―

―

―

Corporate bonds

14,737

14,941

204

―

―

―

Foreign bonds

―

―

―

Other

―

―

―

Sub-total

26,23826,445

207

Bonds

4,699

4,670

(29)

Other:

Securities with fair
value

not

Japanese

exceedinggovernment bond

500

500

(0)

consolidated balance

Municipal bonds

―

―

―

sheet amountCorporate bond

4,199

4,169

(29)

Other:

2,235

2,229

(5)

―

―

―

Other

2,235

2,229

(5)

Sub-total

6,934

6,899

(34)

¥33,172¥33,345¥172

Foreign bonds

Total

68

(c) Available-for-sale securities
Millions of yen
Consolidated
Type
March 31, 2012balance sheet
amountAcquisition
cost

Difference

Securities with

Stocks¥110,902¥74,191¥36,710

consolidated balance

Bonds

1,926,122

1,898,828

27,293sheet amountJapanese

exceeding acquisition

government bonds

1,287,289

1,271,590

15,698cost

Municipal bonds

289,880

284,359

5,520

Corporate bonds

348,951

342,877

6,073

119,178

113,323

5,855

Foreign bonds

86,16683,455

2,711

Other

33,012

29,867

3,144

Sub-total

2,156,203

2,086,343

69,859Securities with

Stocks50,07757,853(7,776)consolidated balance

Bonds

129,702

129,929

(226)

Other

sheet amount not

Japanese

exceeding acquisition

government bonds

101,656

101,777

(121)

cost

Municipal bonds

8,588

8,592

(3)

Corporate bonds

19,457

19,559(102)

95,62597,276(1,650)Foreign bonds

69,83870,488

(650)

Other

25,787

26,788(1,000)Sub-total

275,405

285,058(9,653)¥2,431,609¥2,371,402¥60,206

Other

Total

(d) Held-to-maturity debt securities sold during the fiscal year
No held-to-maturity debt securities were sold during the fiscal year ended March 31, 2012.

69

(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2012

Sales proceeds

Gains on sales

Losses on sales

Stocks¥13,168¥1,943¥2,022

Bonds

294,244

4,922

1

bonds

265,774

4,464―

Municipal bonds

10,110110―

Corporate bonds

18,360348

119,549495

989

Foreign bonds

11,288

209

―

Other

8,260

285

989

¥326,963¥7,361¥3,013

Japanese government

Other

Total

(f) Securities Recognized for Impairment Loss
For available-for-sale securities with market values, in cases where the market value has fallen
substantially from the acquisition price and it is considered there is little likelihood of recovery to theacquisition price level, the securities are stated at market value on the consolidated balance sheets and thedifference between the market value and the acquisition price is posted as a loss (“impairment loss”).
Impairment losses for the fiscal year amounted to ¥1,824 million, comprising ¥1,600 million from stocks
and ¥223 million from bonds.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting
Committee Report No. 14), the Bank recognized the impairment losses on listed equity shares whose
average market price over the one-month period immediately prior to the balance sheet date declined by
30% or more compared with acquisition cost, and other securities whose market price at the balance-sheet
date also declined by 30% or more compared with acquisition cost.

(g) Money held in trust classified as available-for-sale securities
Not applicable as of March 31, 2012.

70

(h) Unrealized gain on available-for-sale securities
March 31, 2012

Millions of yen

Unrealized (losses) gains:
Available-for-sale securities¥60,835

Other money held in trust—

Deferred tax assets (liabilities)(20,620)

Net unrealized gains on available-for-sale securities

40,214

Less minority interests(0)

Unrealized gains on available-for-sale securities¥40,214

Note: The total unrealized losses include an unrealized gain of ¥628 million on available-for-sale securities, whichconstitute the property of related associations.

Year ended March 31, 2011(a) Trading Securities
Millions of yen
March 31, 2011

Unrealized gain recognized as income

Trading securities¥171

(b) Held-to-maturity debt securities
Millions of yen
Consolidated
Type
March 31, 2011
Securities with fairbalance sheet

Fair value

Difference

amountBonds:¥18,560¥18,816¥256

value exceeding

Japanese

consolidated balance

government bond

500

500

0

sheet amount

Municipal bonds

―

―

―

Corporate bonds

18,06018,316

256

299

299

0

Foreign bonds

―

―

―

Other

299

299

0

Sub-total

18,85919,115

256

Bonds

9,504

9,383

(120)

Other:

Securities with fair
value

not

Japanese

exceedinggovernment bond

7,496

7,494

(1)

consolidated balance

Municipal bonds

1

1

0

sheet amountCorporate bond

2,006

1,887

(118)

Other:

3,843

3,831

(12)

―

―

―

Other

3,843

3,831

(12)

Sub-total

13,34813,215(132)¥32,207¥32,330¥123

Foreign bonds

Total

72

(c) Available-for-sale securities
Millions of yen
Consolidated
Type
March 31, 2011balance sheet
amountAcquisition
cost

Difference

Securities with

Stocks¥124,110¥84,503¥39,606

consolidated balance

Bonds

1,539,119

1,515,589

23,529sheet amountJapanese

exceeding acquisition

government bonds

914,457

900,730

13,726cost

Municipal bonds

314,894309,3705,523

Corporate bonds

309,768

305,489

4,278

72,01070,312

1,697

Foreign bonds

57,91856,795

1,122

Other

14,091

13,516574

Sub-total

1,735,239

1,670,405

64,834

Securities with

Stocks40,06149,471(9,409)consolidated balance

Bonds

263,944

265,924(1,980)Other

sheet amount not

Japanese

exceeding acquisition

government bonds

191,158

192,510(1,352)

cost

Municipal bonds

20,11920,238(118)

Corporate bonds

52,66553,175(509)

129,638

135,680(6,042)Foreign bonds

92,943

95,300(2,356)

Other

36,69440,380(3,685)Sub-total

433,643

451,076(17,432)¥2,168,883¥2,121,482¥47,401

Other

Total

(d) Held-to-maturity debt securities sold during the fiscal year
No held-to-maturity debt securities were sold during the fiscal year ended March 31, 2011.

73

(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2011

Sales proceeds

Gains on sales

Losses on sales

Stocks¥6,451¥356¥1,756

Bonds

282,795

5,569

234

bonds

157,192

2,020

234

Municipal bonds

106,9422,789―

Corporate bonds

18,660759―

16,731400

624

Foreign bonds

14,168

38

624

Other

2,562

361

―

¥305,978¥6,325¥2,615

Japanese government

Other

Total

(f) Securities Recognized for Impairment Loss
For available-for-sale securities with market values, in cases where the market value has fallen
substantially from the acquisition price and it is considered there is little likelihood of recovery to theacquisition price level, the securities are stated at market value on the consolidated balance sheets and thedifference between the market value and the acquisition price is posted as a loss (“impairment loss”).
Impairment losses for the fiscal year amounted to ¥2,290 million, comprising ¥1,644 million from stocks
and ¥645 million from bonds.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting
Committee Report No. 14), the Bank recognized the impairment losses on listed equity shares whose
average market price over the one-month period immediately prior to the balance sheet date declined by
30% or more compared with acquisition cost, and other securities whose market price at the balance-sheet
date also declined by 30% or more compared with acquisition cost.

(g) Money held in trust classified as available-for-sale securities
Not applicable as of March 31, 2011.

74

(h) Unrealized gain on available-for-sale securities
March 31, 2011

Millions of yen

Unrealized (losses) gains:
Available-for-sale securities¥47,872

Other money held in trust—

Deferred tax assets (liabilities)(17,743)

Net unrealized gains on available-for-sale securities

30,129Less minority interests(0)

Unrealized gains on available-for-sale securities¥30,129

Note: The total unrealized losses include an unrealized gain of ¥471 million on available-for-sale securities, whichconstitute the property of related associations.

28. Derivatives
Year ended March 31, 2012
1. Derivative instruments not accounted for as hedges
Regarding the derivative instruments to which hedge accounting is not applied, the following tables
summarize contract amount, market value and unrealized gain or loss for each type of derivativetransactions, respectively, at the end of the consolidated balance sheet date, as well as determination offair value.
Contract amount does not represent itself market risk of derivative instruments.

75(1) Interest-rate Derivatives
Millions of yen

March 31, 2012

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Interest-rate futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――120,314

26,421

301

301

120,314

26,421

(79)

(79)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

997

547

(0)

53

Bought

997

547

0

(23)

Sold

45,125

3,230

(119)

28

Bought45,125

3,230

119

119

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥221

¥399

Interest-rate options:Over-the-counter transactions:
Forward rate agreements:

Interest-rate swaps:
Receivable fixed / payable
floating
Receivable floating / payable
fixed
Receivable floating / payable
floating
Interest-rate options:

Caps:

Swaption:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and76

unrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on theTokyo International Financial Exchange, etc. The fair value of over-the-counter transactions has been calculated
at their discounted future cash flows or by utilizing option pricing models.

(2) Currency Derivatives
Millions of yen

March 31, 2012

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――723,880

499,982

386

386

Sold

4,843

215

(21)

(21)

Bought

3,106

―

84

84

Sold

15,461

3,787

(453)

(59)

Bought15,681

3,787

457

182

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥453

¥573

Currency options:Over-the-counter transactions:
Currency swaps
Forward foreign exchange
contracts:

Currency options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, andunrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
Fair value is calculated at discounted future cash flows, etc.

77

(3) Stock Derivatives
Not applicable as of March 31, 2012.

(4) Bond Derivatives
Millions of yen

March 31, 2012

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Bond futures:
Sold

¥426

¥―

¥0

¥0

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥0

¥0

Bond future options:Over-the-counter transactions:
Bond options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, andunrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on theTokyo International Financial Exchange, etc. The fair value of over-the-counter transactions has been
calculated at their discounted future cash flows or by option pricing models.

(5) Commodity Derivatives
Not applicable as of March 31, 2012.

(6) Credit Derivatives
Not applicable as of March 31, 2012.

78

2. Derivative Instruments accounted for as hedges
Regarding the derivative instruments to which hedge accounting is applied, the following tables summarize
contract amount, market value and unrealized gain or loss for each type of derivative transactions,
respectively, at the end of the consolidated balance sheet date, as well as determination of fair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives
March 31, 2012
Millions of yen
Method of hedge

Type

Hedged items

Contract

Over 1 year

Fair value

amounts
Deferred method

Interest rate swap

Interest bearing

Receivablefinancial assets

fixed / payable

and liabilities

floating

including loans,

Receivableavailable-for-salefloating /securities,

payable fixeddeposits andInterest rate futures

negotiable

Interest ratecertificates of

options

deposit, etc.

¥

―

―

¥

―

60,00060,000(4,335)

―

―

―

―

―

―

―

―

―

9,000

9,000

597

42,48937,307(2,818)

Other
Exceptional¥

Interest rate swap

accrual method

Receivable

Loans, borrowed

for interest rate

fixed / payable

money

swap

floating
Receivable
floating /payable fixed

Total

―――

―――

―――

¥ (6,556)

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and
Auditing Treatment relating to the Adoption of ‘Accounting for Financial Instruments’ for Banks,” issued by theJapanese Institute of Certified Public Accountants (“JICPA”), (JICPA Industry Audit Committee Report No. 24).
2. Determination of fair value:
The fair value of exchange-traded derivative instruments is based on closing prices at the Tokyo Financial
Exchange or other relevant exchanges. The fair value of over-the-counter traded derivative instruments is79

determined based on a discounted cash flows model, an option pricing model or other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps,
is valued with the hedged items as a whole, so that the fair value is included in the fair value of Loans and Bills
Discounted and other items (See: 31. Financial Instruments (2) Disclosures Regarding the Fair Value of
Financial Instruments and Other Items).

(2) Currency Derivatives
March 31, 2012
Millions of yen
Method ofType

Hedged items

hedgeContract

Over 1 year

Fair value

amounts

Deferred

Currency swaps

ForeignmethodForward foreign

currency-denominatedexchangeloans, securities,

contracts

deposits and foreign

Foreignexchanges, etc.

¥17,953¥―(¥394)

―

―

―

swaps

4,936

―

(186)

Other

―

―

―

Treatment for

Currency swap

―

―

―

forward foreign

Forward foreignexchangeexchange

contracts, etc.

contracts

―

―

―

¥―

¥―

¥(580)

exchange

Total―

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and
Auditing Treatment relating to Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA
Industry Audit Committee Report No. 25).
2. Determination of fair value:
Fair value is determined based on the discounted cash flows model.

(3) Stock Derivatives
Not applicable as of March 31, 2012.

(4) Bond Derivatives
Not applicable as of March 31, 2012.

80

Year ended March 31, 2011
1. Derivative instruments not accounted for as hedges
Regarding the derivative instruments to which hedge accounting is not applied, the following tables
summarize contract amount, market value and unrealized gain or loss for each type of derivativetransactions, respectively, at the end of the consolidated balance sheet date, as well as determination offair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives
Millions of yen

March 31, 2011

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Interest-rate futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――102,386

25,832

433

433

102,386

25,832

(211)

(211)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

1,137

707

(0)

64

Bought

1,137

707

0

(27)

Interest-rate options:Over-the-counter transactions:
Forward rate agreements:

Interest-rate swaps:
Receivable fixed / payable
floating
Receivable floating / payable
fixed
Receivable floating / payable
floating
Interest-rate options:

Caps:

81

Swaption:
Sold35,410

1,450

(103)

33

Bought35,410

1,450

103

103

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥221

¥395

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, andunrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on theTokyo International Financial Exchange, etc. The fair value of over-the-counter transactions has been
calculated at their discounted future cash flows or by utilizing option pricing models.

(2) Currency Derivatives
Millions of yen

March 31, 2011

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――920,449

742,353

461

461

Sold

4,374

2,776

(71)

(71)

Bought

3,653

1,411

141

141

Sold

10,239

2,107

(427)

(173)

Bought10,239

2,107

428

261

―

―

―

―

Currency options:Over-the-counter transactions:
Currency swaps
Forward foreign exchange
contracts:

Currency options:

Others:Sold82

Bought
Total

―

―

―

―

¥―

¥―

¥531

¥618

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, andunrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
Fair value is calculated at discounted future cash flows, etc.

(3) Stock Derivatives
Not applicable as of March 31, 2011.

(4) Bond Derivatives
Millions of yen

March 31, 2011

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Bond futures:
Sold

¥277

¥―

¥(1)

¥(1)

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥(1)

¥(1)

Bond future options:Over-the-counter transactions:
Bond options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, andunrealized gain (loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on theTokyo International Financial Exchange, etc. The fair value of over-the-counter transactions has been
calculated at their discounted future cash flows or by option pricing models.

83

(5) Commodity Derivatives
Not applicable as of March 31, 2011.

(6) Credit Derivatives
Not applicable as of March 31, 2011.

2. Derivative Instruments accounted for as hedges
Regarding the derivative instruments to which hedge accounting is applied, the following tables summarize
contract amount, market value and unrealized gain or loss for each type of derivative transactions,
respectively, at the end of the consolidated balance sheet date, as well as determination of fair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives
March 31, 2011
Millions of yen
Method of hedge

Type

Hedged items

Contract

Over 1 year

Fair value

amounts
Deferred method

Interest rate swap

Interest bearing

Receivablefinancial assets

fixed / payable

and liabilities

floating

including loans,

Receivableavailable-for-salefloating /securities,

payable fixeddeposits andInterest rate futures

¥

―

―

¥

―

60,00060,000(3,958)negotiable

―

―

―

Interest ratecertificates of

―

―

―

options

deposit, etc.
―

―

―

9,000

9,000

623

48,021

42,489(2,931)Other
Exceptional¥

Interest rate swap

accrual method

Receivable

Loans, borrowed

for interest rate

fixed / payable

money

swap

floating
Receivable
floating /payable fixed

Total

―――

―――

84

―――

¥ (6,266)

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and
Auditing Treatment relating to the Adoption of ‘Accounting for Financial Instruments’ for Banks,” issued by theJapanese Institute of Certified Public Accountants (“JICPA”), (JICPA Industry Audit Committee Report No. 24).
2. Determination of fair value:
The fair value of exchange-traded derivative instruments is based on closing prices at the Tokyo Financial
Exchange or other relevant exchanges. The fair value of over-the-counter traded derivative instruments isdetermined based on a discounted cash flows model, an option pricing model or other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps,
is valued with the hedged items as a whole, so that the fair value is included in the fair value of Loans and Bills
Discounted and other items (See: 31. Financial Instruments (2) Disclosures Regarding the Fair Value of
Financial Instruments and Other Items).

(2) Currency Derivatives
March 31, 2011
Millions of yen
Method ofType

Hedged items

hedgeContract

Over 1 year

Fair value

amounts

Deferred

Currency swaps

Foreign¥30,373¥10,393(¥659)

methodForward foreign

currency-denominatedexchangeloans, securities,

contracts

deposits and foreign

―

―

―

Foreignexchanges, etc.

swaps

15,989

―

(142)

Other

―

―

―

for

Currency swap

―

―

―

forward foreign

Forward foreignexchangeexchange

contracts, etc.

contracts

―

―

―

¥―

¥―

¥(802)

exchange

Treatment

Total

―

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and
Auditing Treatment relating to Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA
Industry Audit Committee Report No. 25).
2. Determination of fair value:
Fair value is determined based on the discounted cash flows model.

85

(3) Stock Derivatives
Not applicable as of March 31, 2011.

(4) Bond Derivatives
Not applicable as of March 31, 2011.

29. Stock Options(a) The Bank recorded stock option expenses in “General and administrative expenses” of ¥46 million and¥49 million for the fiscal years ended March 31, 2012 and 2011.

(b) Outline of stock options, size and changes(1) Outline of stock options
March 31, 2012

1st equity warrant

2nd equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 12

Type and number of shares (*)

Common shares: 56,698

Common shares: 41,546

Grant dateAugust 24, 2009

August 24, 2009

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From August 25, 2009 to August

From August 25, 2009 to August24, 2039

24, 2039

March 31, 2012

3rd equity warrant

4th equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 13

Type and number of shares (*)

Common shares: 79,606

Common shares: 61,881

Grant dateJuly 21, 2010

July 21, 2010

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 22, 2010 to July 21,

From July 22, 2010 to July 21,

2040

2040

86

March 31, 2012

5th equity warrant

6th equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 13

Type and number of shares (*)

Common shares: 78,720

Common shares: 60,999

Grant dateJuly 20, 2011

July 20, 2011

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 21, 2011 to July 20,

From July 21, 2011 to July 20,

2041

2041

(*) The table above presents the number of common shares converted from the number of stock options.

(2) Size and changes of stock options
a. Number of stock options in the fiscal years ended March 31, 2012 and 2011
March 31, 2012

1st equity

2nd equity

3rd equity

4th equity

5th equity

6th equity

warrant

warrant

warrant

warrant

warrant

warrant

Non-vested:
Previous fiscal

56,69838,266

79,606

61,881――

Granted

―

―

―

―

78,72060,999Forfeited

―

―

―

―

―

―

19,29021,21027,08529,280――37,40817,05652,521

32,60178,72060,999

―

―

―

―

―

―

Vested19,29021,21027,08529,280――Exercised

19,29021,21027,08529,280――Forfeited

―

―

―

―

―

―

Exercisable

―

―

―

―

―

―

year-end outstanding

VestedOutstanding on
March 31, 2012
Vested:Previous fiscal
year-end outstanding87

b. Price information
Yen
March 31, 2012

Exercise price
Average share price

1st equity

2nd equity

3rd equity

4th equity

5th equity

6th equity

warrant

warrant

warrant

warrant

warrant

warrant

1

1

1

1

1

1

340

340

340

340

―

―

417

439

297

318

300

321

at exercise

Fair value at thegrate date(c) Valuation technique for fair value of stock options
Stock options granted during the fiscal year ended March 31, 2012 were valued using theBlack-Scholes option pricing model and the following principal parameters:
5th equity warrant

6th equity warrant

Expected volatility (*1)

34.16%

35.28%

Average expected life (*2)

6 years

3 years¥8 per share¥8 per share

0.48%

0.20%

Expected dividends (*3)
Risk-free interest rate (*4)(*1) Expected volatility is calculated based on the actual stock prices at the following period corresponding to theaverage expected life.
5th equity warrant: From July 20, 2005 to July 19, 2011
6th equity warrant: From July 22, 2008 to July 19, 2011(*2) The average tenure of the directors and the executive officers who retired in the past is used as the average
expected life in the above table.
(*3) Actual dividends on common stock for the fiscal year ended March 31, 2011.
(*4) Japanese government bond yield corresponding to the average expected life.

(d) Method of estimating number of stock options vested
Only the actual number of forfeited stock options is reflected because it is difficult to reasonably
estimate the number of stock options that will be forfeited in the future.

8830. Related-Party Transactions
Transactions occurred with related-party for the fiscal years ended March 31, 2012 are as
follows:
Category

CompanyName

Ito dentist

majority held byLocation

Oarai town, Ibaraki

Description ofTransaction

transactions

amountLoan lending―

prefecture

Account

Balance

Loans and bills¥10 million

discounted

relatives of
director

No material transactions occurred with related-party for the fiscal years ended March 31, 2011.

31. Per-share Data
Yen
March 31,

2011

2012

Net assets per share¥583.98¥551.72

Earnings per share-basic

23.66

18.14

Earnings per share-diluted

23.65

18.14

Note: Bases for calculation of earnings per share (basic and diluted) are as follows:
Millions of yen
March 31,

2011

2012

Earnings per share
Net income¥18,134¥13,990——

18,134

13,990766,344

770,891

Adjustment to net income——

Increase in common shares (in thousands)

228

194

Attributable to equity warrants

228

194

—

—

Earnings not available to common shareholders
Net income after deduction of the portion describedabove
Weighted average number of common shares for the
fiscal year (in thousands)
Diluted earnings per share

Equity warrants that have no dilutive effects on
earnings per share

89

90

Organization
As of June 27, 2012

The JOYO BANK, LTD.

Internal Administration Group
Corporate Audit Division

General Meeting of
Shareholders
Board of Corporate Auditors

Corporate Management Group
Corporate Risk Management Division
Credit Risk Management Office
Legal and Compliance Office
Corporate Planning DivisionCorporate Auditors
Board of Directors

Group Management OfficePublicity Office
IT Strategy Office
Tokyo Sub-Headquarters
Personnel Division

Executive Officer Committee

Staff Counseling Office
Executive Secretariat
General Affairs Division

Credit Risk Management Group
Credit Examination Division
Loan Supervision Office
Company Management Support Office

Operation Systems GroupOperation Planning Division
Data Processing Center
Area Data Processing Center
Computer System Division

Business Headquarters
Area Management OfficeBusiness Planning Division
Customer Services Division
Customer Counceling OfficeBusiness Promotion Division
Asset Management Promotion OfficeIntegrated Finance Service OfficeDirect Banking Center
Living and Business Consulting Center
Pension Business Promotion Center
Government and Municipal Business DivisionInternational Market Business Group
Treasury and Securities DivisionMarkets Administration and International Division
Securities Business OfficeInternational Business OfficeInternational Operations Office
Overseas Representative Office91

Head Office
Tokyo Business Division (Tokyo Main Office)146 Branches, 28 Sub-branches

Board of Directors and Corporate Auditors
As of June 27, 2012

Chairman
Kunio Onizawa
President
Kazuyoshi Terakado
Senior Managing Directors
Mikio Kawamata
Toru Hakata

Managing Directors
Toshihisa Suzuki
Katsumi Tomita
Shigeru Ichimura
Hideo Sakamoto
Katsuhiko Ito
Yoshiyuki Suzuki

Corporate Auditors
Yoshiaki Terakado (standing)
Hideo Torihata (standing)
Akira Yasu
Sanenori Hitomi
Toshio Mizushima

Directors
Toshihiko Kawamura (outside)
Ryuzaburo Kikuchi (outside)

Market Business Group and Overseas Offices
As of June 27, 2012

■ Head Office5-5, Minami-machi 2-chome, Mito,
Ibaraki 310-0021, Japan
Phone: 029-231-2151■ Market Operations■	International Business Office
5-5 Minami-machi 2-chome, Mito,
Ibaraki 310-0021, Japan
Phone: 029-300-2727
Deputy General Manager

Senior Managing Director
Toru Hakata

Hideto Kashimura■	Markets Administration andInternational Division

Masayuki Ogawa

7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-1741
General Manager
Shigeru Hirose
Deputy General Manager
Osamu Midorikawa
Advisory Officer
Osato Aizawa

Chief Officer■ International Operations Office3-3, Shinhara 1-chome, Mito,
Ibaraki 310-0045, Japan
Phone: 029-255-6671
Telex: J23278 JOYOBANK3632105 JOYOBKSwift: JOYOJPJTGeneral Manager
Akihiko Hashimoto• Operations Group (Tokyo)
Senior Manager
Hiroki Otaka■	Treasury and Securities Division
7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-5245
General Manager
Fuminori Nakajima
Deputy General Manager
Masahide Takauchi• Investment Group
Senior Manager
Shuichi Kodama• Business Promotion GroupManager
Hiroshi Iijima■	Shanghai Representative Office(Business Planning Division)
Room 1901, Shanghai International
Trade Centre, 2201 Yan An Road(West), Shanghai 200336 P.R. of China
Phone: 86-21-6209-0258
Chief Representative
Hitoshi Gotou
Deputy Chief Representative
Tomonori Nakamura
Hiroshi Kodaira92

Service Network
As of June 27, 2012

Miyagi Pref. (1 Branch)
Mito (Head Office, International Business Office,International Operations Office)Ibaraki Pref. (Head Office, 119 Branches,
26 Sub-Branches)
Fukushima Pref. (10 Branches)
Tochigi Pref. (Tochigi wholesale office
6 Branches, 1 Sub-Branch)

Overseas:
Shanghai Representative Office
Chiba Pref.
(Tokatsu Wholesale office, 6 Branches)
Tokyo (Tokyo Business Div.
(Tokyo Main Office), 3 Branches)
Treasury and Securities Div.
Markets Administration and International Div.
Saitama Pref. (2 Branches)
Osaka Pref. (1 Branch)

Affiliated Companies
As of March 31, 2012

■ The Joyo Computer Service Co., Ltd.
16-25, Nishihara 2-chome, Mito, Ibaraki
Established:
1973
Capital Stock:¥47.5 million
Share of Voting Rights:
5%Sale of software and contract of calculation
businesses■ The Joyo Lease Co., Ltd.

■ The Joyo Credit Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1982
Capital Stock:¥100 million
Share of Voting Rights:
5%
Credit card services■ The Joyo Business Service Co., Ltd.

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1974
Capital Stock:¥100 million
Share of Voting Rights:
5%
Leasing of machinery and equipment, claim
acquisition

8-1, Sasano-machi 1-chome, Hitachinaka,IbarakiEstablished:
1984
Capital Stock:¥100 million
Share of Voting Rights: 100%
Agent in charge of administrative work for the
Bank■ The Joyo Credit Guarantee Co., Ltd.

■ The Joyo Industrial Research Institute, Ltd.

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1978
Capital Stock:¥30 million
Share of Voting Rights:
5%
Credit guarantee of housing loans from theBank

5-18, Sannomaru 1-chome, Mito, Ibaraki
Established:
1995
Capital Stock:¥100 million
Share of Voting Rights:
5%Consulting, investigation and research93■	The Joyo Equipment Management Co., Ltd.
5-5, Minami-machi 2-chome, Mito, Ibaraki
Established:
1999
Capital Stock:¥100 million
Share of Voting Rights: 100%
Maintenance and management of operational
properties and equipment of the Bank

■ The Joyo Cash Service Co., Ltd.
3-3, Jonan 1-chome, Mito, Ibaraki
Established:
1999
Capital Stock:¥50 million
Share of Voting Rights: 100%
Management and maintenance of ATMs and
CDs■ The Joyo Securities Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
2007
Capital Stock: ¥3,000 million
Share of Voting Rights: 100%
Dealing of securities, mediation, commission
and substitution of trading of securities

Corporate Data
As of March 31, 2012

■ Date of Establishment

July 30, 1935

■ Head Office5-5, Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
Phone: 029-231-2151
URL: http://www.joyobank.co.jp/
http://www.joyobank.co.jp/joyobank/eng/ (English Page)■ Domestic Network

Head Office, Tokyo Business Division (Tokyo Main Office), and 146 Branches, 28 Sub-branches■ Overseas Network

1 Representative Office: Shanghai■ Number of Employees

3,745■ Stock Exchange Listing

Tokyo Stock Exchange■ Paid-in Capital¥85,113 million■N umber of Shares(as of March 31, 2012)

Authorized
Issued and Outstanding■ Number of Shareholders(1 trading unit = 1,000 shares)

29,7362,167,515 thousand
810,231 thousand■ Principal Shareholders
The 10 largest shareholders of the Bank and their respective shareholdings at March 31, 2012 were as follows:

Northern Trust Company (AVFC) Sub Account American Client .........................
The Bank of Tokyo-Mitsubishi UFJ, Ltd. ................................................................................
NIPPONKOA Insurance Company, Ltd. .................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account) ........................................................
Nippon Life Insurance Company .............................................................................................
The Dai-ichi Mutual Life Insurance Company ..................................................................
Sumitomo Life Insurance Company ......................................................................................
The Master Trust Bank of Japan, Ltd. (Trust Account) .................................................
Northern Trust Company (AVFC) US Tax Exempted Pension Funds .................
Meiji Yasuda Life Insurance Company ..................................................................................
Total......................................................................................................................................................

Number of Shares Held(Thousands)

Percentage of Total Shares
Outstanding (%)

40,06928,992
28,97328,26628,003
17,04916,44816,18016,073
9,722
229,777

4.94%
3.57
3.57
3.48
3.45
2.10
2.03
1.99
1.98
1.20
28.35%For further information,please contact to:Markets Administration and International Division, The Joyo Bank, Ltd.
7-2, Yaesu 2-chome, Chuo-ku, Tokyo 104-0028, Japan94