Online Disclosure Matters Related to
the Notice of Convocation of an
Extraordinary General Meeting of
Shareholders
Proposal No. 1 Approval of the Share Transfer Plan with The Michinoku
Bank, Ltd.
Matters to be Disclosed Online(The following matters among the “Content of financial statements, etc. for themost recent business year (ended March 2021)” under “4. Matters Concerning
The Michinoku Bank” on p. 56 of the Convocation Notice)Notes to Non-consolidated Financial Statements ...................... 1
Notes to Consolidated Financial Statements ........................... 17(April 1, 2020 to March 31, 2021)

The above matters are provided to shareholders by posting on the Aomori Bank, Ltd.’sInternet website (https://www.a-bank.jp/) in accordance with laws and regulations andArticle 16 of its Articles of Incorporation.

The Aomori Bank, Ltd.

Notes to Non-consolidated Financial Statements for the 49th Term(April 1, 2020 through March 31, 2021)
All amounts shown are rounded down to the nearest million yen.
Material accounting policies
1.

Standards and methods of valuation of trading account securities
Trading account securities are valued by the market value method (the cost of securities sold isdetermined by the moving average method).

2.

Standards and methods of valuation of securities(1) In terms of securities, bonds that are intended to be held to maturity are valued by the amortizedcost method (straight line method) based on the moving average method, shares of subsidiaries
and subsidiary corporations, etc. are valued by the cost method based on the moving average
cost method, and other securities are valued by the market value method based on the market
price, etc. on the closing date, in principle (the cost of securities sold is predominately
determined by the moving average method). However, the cost method based on the moving
average method is used when the market value is recognized as being extremely difficult todetermine. Valuation differences for other securities are reported directly as a separate
component of shareholders’ equity.
(2) Securities managed as the trust assets of an independently managed monetary trust whose main
purpose is the management of securities are valued by the market value method.

3.

Standards and methods of valuation of derivatives transactions
Derivatives transactions are valued by the market value method.

4.

Method of depreciation of non-current assets(1) Tangible fixed assets (excluding lease assets)
Tangible fixed assets are valued by the straight line method. The usable life of principal assets
is as follows.
Buildings

2-50 years

Other

2-20 years(2) Intangible fixed assets (excluding lease assets)
Depreciation of intangible fixed assets is calculated by the straight line method. Depreciationof software for internal use is calculated based on the usable life of the software at the Bank
(three to five years).
(3) Leasing assets
Depreciation of leasing assets included under “tangible fixed assets” and “intangible fixed
assets” with regard to finance leases not subject to ownership transfer is calculated by the-1-straight line method where the lease period is the usable life. The residual value is the amount
guaranteed based on the residual amount guarantee in the lease agreement, if any. If a residual
value guarantee is not provided, the residual value is zero.
5.

Treatment of deferred assets
The cost of issuance of bonds and the cost of delivery of shares are handled as expenses whenincurred.

6.

Standard for converting foreign currency-denominated assets and liabilities into Japanese currency
Foreign currency-denominated assets and liabilities are converted into Japanese yen at theexchange rate as of the closing date.

7.

Standards for recording allowances and provisions(1) Allowance for loan losses
The allowance for loan losses is recorded as follows in accordance with standards fordepreciation and allowances determined in advance.
With respect to claims against normal debtors and claims against debtors requiring caution
stipulated in the “Practical Guidelines for Self-Assessment of Assets of Banks and Other
Financial Institutions and Audit of Depreciation of and Reserve for Possible Loan Losses”(Japanese Institute of Certified Public Accountants Association Special Committee on Audit
of Banks and Other Financial Institutions Report No. 4 dated October 8, 2020), allowances
have predominantly been recorded based on the projected future loss for the next year or the
projected future loss for the next three years. The projected future losses are calculated basedon the loss ratios, which are based on the average of actual past loss ratios for the past year or
three years and revised as necessary for future projections, etc. For those of the claims against
debtors requiring caution where the debtor has certain claims, etc. with restructured loan
conditions and is a major debtor with at least a certain credit amount, etc. for the debtor alone
or its group, and where the cash flow regarding collection of principle and receipt of interestfor the claims can be reasonably estimated, allowances for loan losses are recorded by making
the allowance for loan losses the difference between such cash flow discounted by thecontractual interest rate before restructuring of the loan and the carrying value of the claims(cash flow estimation method).
For claims against potential bankrupt debtors, the estimated amount of collateral that can bedisposed of and the estimated amount that can be recovered by guarantee are deducted fromthe claim amount, and out of the remaining amount, the amount that is deemed necessary basedon a comprehensive assessment of the debtor’s payment capacity is recorded. For claims
against bankrupt debtors and substantive bankrupt debtors, the estimated amount of collateralthat can be disposed of and the estimated amount that can be recovered by guarantee arededucted from the claim amount, and the remaining amount is recorded.

-2-

For all claims, business-related departments carry out asset appraisals pursuant to the
Guidelines for Self-Assessment, and the Auditing Division, which is independent from suchdepartments, audits the results of those appraisals. Until business year 2010, for secured or
guaranteed claims, etc. against a bankrupt debtor or substantive bankrupt debtor, the differenceof the claim amount less the assessed value of the security and the recoverable amount of theguarantee was directly written off from the claim amount, but from business year 2011 direct
write-off has not been carried out. As of the end of this business year, the balance of suchdirect write-offs until business year 2010 was ¥764 million.
(2) Provision for bonuses
In preparation for employee bonus payments, the provision for bonuses is recorded as the
portion of the expected amount to be paid to employees as bonuses that is attributable to thisbusiness year.
(3) Provision for retirement benefits
The necessary amount of the provision for retirement benefits is recorded based on theestimated amount of retirement benefit obligations and pension assets at the end of thisbusiness year, in preparation for the payment of retirement benefits to employees. In
calculating retirement benefit obligations, the estimated amount of retirement benefits to be
paid is attributed to the period ending at the end of this business year by the method given in
the benefit calculation standards. Profit and loss for prior service cost and actuarial calculationdifferences are accounted for as follows.
Prior service cost:

Profit and loss are accounted for using the straight line
method over a certain number of years (five years) not
exceeding the average period of employment remaining
for employees when incurred.

Actuarial calculation differences: Prorated by the straight line method over a certain numberof years (five years) not exceeding the average period of
employment remaining for employees in the business year
in which the expense arises, and recorded as profit or loss
from the next business year.
(4) Provision for benefit trust
In preparation for the delivery of shares of the Bank to directors, etc. based on the rules for
granting shares, the provision for benefit trust is recorded based on the expected amount ofbenefit trust obligations at the end of this business year.
(5) Provision for reimbursement of deposits
In preparation for reimbursement requests from depositors for deposits no longer recorded asliabilities, the provision for reimbursement of deposits is recorded as the necessary amount-3-based on the estimated loss from future reimbursement requests.
(6) Provision for contingent loss
In preparation for the payment of amounts under the Responsibility-Sharing System with credit
guarantee corporations, the provision for contingent loss is recorded as the necessary estimatedfuture payment amount based on standards for depreciation and allowances determined inadvance.
(7) Allowance for investment loss
In preparation for losses on investments, the allowance for investment loss is recorded as thenecessary amount taking into account the financial status, etc. of investment targets.
8.

Standards for recording share dividends
Share dividends are recorded as revenue in the business year in which the date of receipt of payment
falls.

9.

Hedge accounting method
Among other securities, the Bank applies deferred hedging using credit transactions, etc. as themeasure of hedging in its hedge accounting method for share price fluctuation risk arising fromshares that it holds. With respect to the method for assessing the effectiveness of the hedge, in
principle, from the period from when the hedge commences until the time of the assessment ofeffectiveness, the cumulative total of the hedged item’s market fluctuation or cash flow fluctuationis periodically compared to the cumulative total of the hedging instrument’s market fluctuation or
cash flow fluctuation, and a judgment is made based on the amount of fluctuations of both.
However, hedge effectiveness assessment is omitted in the case where the conditions relating toboth the hedged item and the hedging instrument are the same and it is clear that the hedge is highly
effective.

10. Accounting treatment for consumption tax, etc.
The accounting treatment for consumption tax and local consumption tax (“Consumption Tax,etc.”) is the tax exclusion method. However, non-deductible Consumption Tax, etc. with respect totangible fixed assets is recorded as an expense in this business year.
11. Application of consolidated taxation system
The Bank and some of its consolidated subsidiaries apply the consolidated taxation system with
the Bank as the consolidated taxation system parent company.
12. Principles and procedures of accounting treatment adopted when the relevant accounting standards
are unclear
The Bank predominantly carries out accounting treatment based on the principles and proceduresof accounting treatment used as customary practice by the banking industry for the following items.
・ Investment trust termination profit and loss recording standards
Profit or loss in connection with the termination or reimbursement of an investment trust-4-(excluding ETFs) is recorded as “Interest and dividends on securities” in the case of profit oneach transaction and is recorded as “Loss on redemption of national government bonds” in thecase of loss.
This business year, the Bank recorded ¥4,144 million in “Interest and dividends on securities”
and ¥3,794 million in “Loss on redemption of national government bonds.”(Additional information)
The Bank is applying the “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections” (ASBJ Statement No. 24 of March 31, 2020)
starting with the financial statements for the end of this business year, and has disclosed“Principles and procedures of accounting treatment adopted when the relevant accounting
standards are unclear.”
Change in indication method(Adoption of Accounting Standard for Disclosure of Accounting Estimates)
The Bank is applying the “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ
Statement No. 31 of March 31, 2020) starting with the financial statements for the end of this business
year, and has included a note regarding material accounting estimates in the non-consolidated notes.
Accounting estimates
The items for which an amount is recorded in the financial statements based on accounting estimates forthis business year and which may have a material effect on the financial statements for the next businessyear are as follows.
1.

Allowance for loan losses(1) Amount recorded in financial statements for this business year
Allowance for loan losses: ¥12,160 million(2) Information for understanding the content of material accounting estimates concerning theidentified matters(i) Calculation method
The method of calculating the allowance for loan losses is stated in “7. Standards forrecording allowances and provisions” “(1) Allowance for loan losses” in “Material
accounting policies.”(ii) Major assumptions
The major assumptions are the “expected future performance of borrowers in determining
debtor category.” The “expected future performance of borrowers in determining debtor
category” is set based on separate evaluation of each debtor’s earning capacity.
(iii) Effect on financial statements for the next business year-5-

If assumptions used in initial estimates change due to a change, etc. in the financial resultsof an individual borrower, it may have a material effect on the allowance for loan losses
in the financial statements for the next business year.
(iv) Matters relating to COVID-19
It is assumed that the coronavirus pandemic will end around the end of March 2022. The
impact of COVID-19 on credit risk has been judged to be limited currently due to theeffect of government, etc. support measures. The impact on business partners if the impact
expands or becomes prolonged will be reflected in the determination of debtor category
based on the unique business circumstances of each company and the future outlook, andwe are examining support policies and support measures appropriate for thecircumstances.
Please note that there are uncertainties in the above assumptions, and if there is a change
in the timing of the end of the coronavirus pandemic and the impact on economic activities,
it may have a material effect on the allowance for loan losses in the financial statements
for the next business year.
2.

Deferred tax assets(1) Amount of deferred tax assets recorded in financial statements for this business year: ¥2,900
million.
(2) Information for understanding the content of material accounting estimates concerning theidentified matters(i) Calculation method
Based on the estimated amount of taxable income before adjustment for temporary
differences during the future period which can be reasonably estimated (five years)(“Future Taxable Income”), as a result of the scheduling of the temporary differences andloss carried forward for such period that can be estimated (“Temporary Differences, etc.”),the possibility of recovery is determined and it is recorded as a deferred tax asset.
(ii) Major assumptions
The estimate of Future Taxable Income is based on the Bank’s Medium-Term Business
Plan and is estimated based on considerations such as the impact of trends in the financial
and economic environment and the local economy and comparing the feasibility of theBank’s business plan compared to the results from the past business year.
(iii) Effect on financial statements for the next business year
If assumptions used in initial estimates change due to a change, etc. in Future Taxable
Income or the scheduling of Temporary Differences, etc. it may have a material effect ondeferred tax assets in the financial statements for the next business year.

-6-

(iv) Matters relating to COVID-19
When estimating Future Taxable Income, the assumptions used to estimate the allowance
for loan losses are as stated in “1. Allowance for loan losses” “(2) Information forunderstanding the content of material accounting estimates concerning the identified
matters” “(iv) Matters relating to COVID-19”
Please note that there are uncertainties in the above assumptions, and if there is a change
in the timing of the end of the coronavirus pandemic and the effect on economic activities
it may have a material effect on deferred tax assets in the financial statements for the next
business year.
Additional information(Transactions pertaining to board benefit trust (BBT) to directors and executive officers)
In order to make the connection between the remuneration of directors other than outside directors(excluding directors who are audit & supervisory committee members) and executive officers(collectively, “Directors, etc.”) and the Bank’s performance and share price more explicit, the Bank has
introduced a performance-linked stock compensation system for Directors, etc. (Board Benefit Trust(BBT)) (the “System”) with the goal of increasing the awareness of Directors, etc. of the role they play
in increasing the Bank’s medium- to long-term performance and corporate value.
1.

Outline of the transaction
The System is a performance-linked stock compensation system where money contributed by the
Bank is used to acquire shares of the Bank through a trust, and Directors, etc. are provided withshares of the Bank and money in amounts equivalent to the amount calculated by converting theBank’s shares at their market value (“Bank Shares, etc.”) through the trust, based on their positionand level of achievement of results, etc., in accordance with the Benefit Trust Rules. In principle,
Directors, etc. receive Bank Shares, etc. when they retire.

2.

Shares of the Bank remaining in the trust
Shares of the Bank remaining in trust are recorded under net assets as treasury shares at the bookvalue in the trust (excluding the amount of ancillary costs). The book value of such treasury sharesat the end of this business year was ¥703 million yen and the number of shares was 347 thousand
shares of stock.

(Treatment regarding application of tax-effect accounting pertaining to the transition from theconsolidated taxation system to the group tax sharing system)
With respect to the transition to the group tax sharing system created in the Act for Partial Revision of
the Income Tax Act, etc. (Act No. 8 of 2020) and the items revised in the non-consolidated taxation
system in conjunction with the transition to the group tax sharing system, the Bank does not apply-7-

Paragraph 44 of the “Implementation Guidance on Tax Effect Accounting” (ASBJ Statement No. 28
dated February 16, 2018) due to the treatment of Paragraph 3 of “Practical Solution on the Treatment of
Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax
Sharing System” (PITF No. 39 dated March 31, 2020), and the amount of deferred tax assets anddeferred tax liabilities is based on tax laws before revision.
Notes(Notes on the balance sheet)1.

Total shares and equity of associated companies¥6,468 million

2.

Loans includes loans to bankrupt debtors of ¥2,975 million and overdue loans of ¥17,400 million.
Loans to bankrupt debtors are loans that were not recorded as accrued interest because there wasno prospect of the interest or principal being collected or repaid for reasons such as principal andinterest payments having been in arrears for a significant period (excluding loans amortized as
doubtful; “Loans Exclusive of Accrued Interest”) and with respect to which an event under Article
96, paragraph 1, item (iii)(a) through (e) or (iv) of the Order for the Enforcement of the Corporation
Tax Act (Cabinet Ordinance No. 97 of 1965) has occurred. Overdue loans are Loans Exclusive of
Accrued Interest, excluding loans to bankrupt debtors and loans on which interest is being waived
for management restructuring or support of the borrower.

3.

There are no loans and bills discounted that are overdue by three months or more. Loans overdueby three months or more are loans for which the principal and interest payments are in arrears by
three months or more since the day following the due date of payment, and do not fall under loans
to bankrupt debtors or overdue loans.

4.

The amount of restructured loans out of loans and bills discounted is ¥4,675 million. Restructuredloans are loans in which a reduction or exemption of interest, extension of interest payments,
extension of principal repayments, abandonment of claim, or other terms favorable to the debtor
have been granted for management restructuring or business support of the debtor, and that do notconstitute loans to bankrupt debtors, overdue loans, or loans overdue by three months or more.

5.

The loans to bankrupt debtors, overdue loans, loans overdue by three months or more, andrestructured loans is ¥25,051 million. The amounts in Paragraphs 2 through 5 above are before
deduction of the allowance for loan losses.

6.

Bill discounting is treated as a financial transaction pursuant to Industry Committee Practical
Guidelines No. 24. The Bank is entitled to freely dispose of commercial bills and foreign bills
bought so accepted by sale or collateral, but the face value of those bills is ¥1,146 million.

7.

The assets provided as security are as follows.
Assets provided as security
Securities¥15,686 million-8-Loans and bills discounted ¥136,722 million
Other assets¥31 million

Liabilities corresponding to secured assets
Deposits¥8,784 million

Borrowings¥107,300 million

In addition to the foregoing, other assets worth ¥9,169 million have also been provided as transaction
security for exchange settlement and credit transactions, etc. or as a substitute for futures margins, etc.
Other assets also includes ¥624 million in guarantee deposits.
8.

Overdraft agreements and commitment line agreements are agreements under which the Bank
promises to lend funds up to a certain limit upon a drawdown request by the customer, unless thecustomer has not breached the terms of the agreement. The undrawn loan amount of these contracts
is ¥367,202 million. The amount of those contracts with the original period ending within one year
(or that can be terminated unconditionally at will) is ¥360,514 million. Because many of thoseagreements end without the loan amount being drawn down, the undrawn loan amount does notnecessarily affect the Bank’s future cash flows. Many of those agreements include clauses to theeffect that, if a change in financial conditions, preservation of claims, or other reasonable grounds
occur, the Bank may refuse to loan the requested funds or reduce the maximum contracted amount.
In addition, the Bank demands real estate, securities, or other collateral as necessary when entering
into the agreements, and after entering into the agreements the Bank periodically tracks customers’
business conditions based on internal procedures established in advance and reviews theagreements, takes measures to preserve its credit, and the like as necessary.

9.

The Bank revalues land for business purposes in accordance with the Act on Land Revaluation (ActNo. 34 of March 31, 1998) and records the amount equivalent to tax payable on the revaluationdifference as a liability under “Deferred tax liabilities for land revaluation,” and records the amountless that liability as a net asset under “Land revaluation surplus.”
Date of revaluation:

March 31, 2002

Method of revaluation specified in Article 3, paragraph (3) of the Act on Revaluation of Land
Calculations are made based on the value calculated using the method for calculating land value
determined and published by the Commissioner of the National Tax Agency provided for in Article
2, item (iv) of the Order for Enforcement of the Act on Revaluation of Land (Cabinet Order No.
119 of March 31, 1998), which is the basis of the calculation of taxable value for the purpose ofland tax provided for in Article 16 of the Land Value Tax Act (Act No. 69 of 1991), with reasonableadjustments for land shape, corner lots, narrow frontage, and the like.
Difference between the total market value as of the end of this business year of land for businesspurposes revalued by the method specified in Article 10 of the Land Value Tax Act and the total
book value of that land after revaluation:¥1,722 million-9-10. Cumulative depreciation of tangible fixed assets¥18,631 million

11. Reduction entry of tangible fixed assets¥2,339 million

12. Of the bonds recorded under “Securities,” the value of the Bank’s guarantee obligations withrespect to bonds arising from the private placement of securities (Article 2(3) of the Financial
Instruments and Exchange Act) is ¥22,638 million.
13. Total monetary claims against associated companies¥19,498 million

14. Total monetary obligations to associated companies¥8,120 million(Notes on the statement of income)
1.

Profit and loss from transactions with associated companies
Total profit from funds management transactions¥62 million

Total profit from service transactions, etc.

¥17 million

Total profit from other business/other current transactions¥23 million

Cost of transactions with associated companies
Total cost of financing transactions¥2 million

Total cost of service transactions, etc.

¥7 million

Total cost of other business/other current transactions¥0 million

Total cost of other transactions
2.

¥308 million

This business year, a reduction in, and change of method of use of, operating cash flows, and an
ongoing fall in land prices, etc. resulted in the total cash flows before discounting being less thanthe book value, and therefore, the book value was reduced to the recoverable amount, and such
reduction of ¥106 million was recorded as an extraordinary loss under impairment loss.
RegionIn Aomoriprefecture

Outside Aomori
prefecture

Main purpose

Type

Commercial
branches, etc.

Land, buildings, andmovables, etc.
Land, buildings, andmovables, etc.
Buildings and movables,
etc.
Land, buildings, andmovables, etc.

Idle assets
Commercial
branches, etc.
Idle assets

Impairment loss (millions of yen)

Total

8
53
19
25
106

In principle, commercial branches are grouped in units of area branches comprising branches, etc.
strongly linked to or strongly supplementing business with the parent branch acting as thecontrolling branch in the area business framework, and headquarters, etc. are shared assets because
they do not generate independent cash flow. Additionally, idle assets are grouped by asset unit.
Please note that this business year, the recoverable amount used to measure impairment loss is the
net realizable value. The net realizable value is calculated by deducting the projected disposal costfrom the appraised value provided by a real property appraiser, etc.

- 10 -

(Notes on the statement of changes in shareholders’ equity)
Matters Related to the Class and Number of Treasury Shares
Number ofshares as of thestart of thisbusiness year
(thousandshares)Increase inshares during
this business
year(thousandshares)Decrease inshares during
this business
year(thousandshares)Number ofshares as of theend of thisbusiness year
(thousandshares)Remarks

Treasury shares
Common stock
Class A Preferred Stock

524
-

0
-

36
-

488
-

Total

524

0

36

488

(Notes) 1.

(Notes) 1, 2

Common stock treasury shares as of the end of this business year include 347 thousand
shares of stock held by the BBT.

2.

The breakdown of the increase of common stock treasury shares is as follows.
Increase due to purchase of fractional shares

0 thousand shares

The breakdown of the decrease of common stock treasury shares is as follows.
Decrease due to grant by BBT

36 thousand shares(Notes on securities)
Includes “National government bonds,” “Local government bonds,” “Corporate bonds,” “Shares,” and“Other securities” in the balance sheet.
1.

Available for sale securities (as at March 31, 2021)
Valuation difference included in profit and loss for thisbusiness year (millions of yen)
Available for sale securities

2.

-

Bonds held to maturity (as at March 31, 2021)
Type

Amount recordedin the balance sheet(millions of yen)

Market value(millions of yen)

Corporatebonds

12,744

12,849105

Items with market
Corporate
value not greater thanbonds
balance sheet value

9,694

9,641

(53)

Total

22,43822,49051

Items with market
value greater thanbalance sheet value- 11 -

Difference(millions of yen)

3.

Shares of subsidiaries and subsidiary corporations, etc. (as at March 31, 2021)
Amount recorded in balance sheet (millions of yen)
Shares of subsidiaries andsubsidiary corporations, etc.

6,406

(Notes) (*1) Because shares of subsidiaries and subsidiary corporations, etc. are unlisted shares,
do not have a market price, and the market value is extremely difficult to determine, themarket value and difference are not stated.
4.

Other securities (as at March 31, 2021)
Type
Shares
Bonds
Local
Items with balance
governme
sheet value greaternt bonds
than the acquisition
Corporate
cost
bonds
Other
Subtotal
Shares
Bonds
Local
Items with balance
governme
sheet value not greaternt bonds
than the acquisition
Corporate
cost
bonds
Other
Subtotal
Total(Notes)Acquisition cost
(millions of yen)

Difference(millions of yen)

5,434
8,158

2,083
17

6,181

6,168

12

1,994

1,990

4

54,78870,481
1,425
13,41653,482
67,075
1,805
13,468

1,305
3,406
(379)
(51)

6,170

6,208

(38)

7,246

7,259

(13)

67,42082,262
152,744

68,792
84,066
151,141(1,372)(1,803)
1,602

Other securities for which the market value is extremely difficult to determine

SharesSubtotal
Other (*1)
Allowance for investment loss
Subtotal
Total

(*1)

Amount recordedin the balance
sheet(millions of yen)
7,517
8,175

Amount recorded in
the balance sheet(millions of yen)
2,478
2,478
1,442
(23)
1,419
3,898

Other comprises investments in associations and has an allowance for investment loss
deducted.
Because no market price exists and the market value is extremely difficult to determine, these
items are not included in “Other securities” in the table above.

- 12 -

5.

Bonds held to maturity sold in this business year (April 1, 2020 to March 31, 2021)
Type
Corporate bonds

Cost of sale(millions of yen)
220

Sale amount(millions of yen)
220

Loss (gain) on sale(millions of yen)0

Retirement by purchase of bonds sold through private placement.
6.

Other securities sold in this business year (April 1, 2020 to March 31, 2021)
Sale amount(millions of yen)
Shares
Bonds
Local government
bonds
Corporate bonds
Other
Total

7.

256
34,430Total gain on sale(millions of yen)(millions of yen)
017

Total losses on sale(millions of yen)(millions of yen)94
276

18,642-229

15,788
8,086
42,773

17
69
87

46
371

Securities for which the holding purpose has been changed (from April 1, 2020 to March 31, 2021)
Not applicable.

8.

Impaired securities
Securities other than securities available for sale (excluding securities for which the market value
is extremely difficult to determine) for which the market value is significantly lower than theacquisition cost, and there is no prospect of the market value recovering to the acquisition cost, arerecorded on the balance sheet at the market value and the difference on valuation is treated as aloss in this business year (“Impairment”).
The amount of Impairment for this business year is ¥283 million (of which, ¥83 million is sharesand ¥200 million is corporate bonds).
Additionally, the standards for determining the market value to be “significantly lower” have beenset, and the overview thereof is in principle as follows.
•

Securities for which the market value has declined by 50% or more of the acquisition cost.

•

Securities for which the market value has declined by at least 30% but less than 50% of theacquisition cost and which remain below a certain level.

(Notes on money held in trusts)
1.

Money held in trusts for investment (as at March 31, 2021)
Amount recorded in thebalance sheet(millions of yen)
Money held in trusts forinvestment

2.

Valuation difference included
in profit and loss for thisbusiness year
(millions of yen)

20,243

Money held in trusts to be held to maturity (as of March 31, 2021)- 13 -

243

Not applicable.
3.

Other money held in trusts (other than for management or holding to maturity) (as of March 31,
2021)
Not applicable.

(Notes on tax effect accounting）
The following is an itemization of the main causes of deferred tax assets and deferred tax liabilities.
Deferred tax assets
Tax losses carried forward (Note 2)
4,118
millions of yen
Allowance for loan losses
3,263
Provision for retirement benefits
1,092
Amortization of securities
662
Other difference on valuation of securities
546
Non-current asset impairment loss
382
Depreciation expenses
317
Provision for bonuses
239
Provision for reimbursement of dormant deposits
96
Asset retirement obligations
55
Unpaid enterprise tax
53
Other
490
Deferred tax assets subtotal
11,320
Valuation allowance for tax losses carried forward (Note 2)(3,845)
Valuation allowance for total future deductible Temporary(2,588)Differences, etc.
Valuation allowance subtotal (Note 1)(6,434)
Total deferred tax assets
4,886
Deferred tax liabilities
Other difference on valuation of securities(966)
Valuation gain on return of retirement benefit trust assets(768)
Gain on establishment of retirement benefit trust(222)
Net deferred losses on hedging instruments
(2)
Other
(26)
Total deferred tax liabilities(1,985)Net deferred tax assets
2,900
millions of yen(Note 1)This business year, the reduction in deferred tax assets relating to “Other difference on
valuation of securities” and the expiration of the time limit for losses carried forward, etc.
resulted in the amount deducted from deferred tax assets (valuation allowance)
decreasing by ¥2,444 million.

(Note 2)

Tax losses carried forward and the amounts of deferred tax assets by carryover time limit- 14 -

This business year (March 31, 2021)
Two toWithin One One to Two
Three toFour toOver Five
Three
Total
year
Years
Four Years Five Years
Years
Years
(millions of(millions of (millions of(millions of (millions of (millions of(millions of
yen)
yen)
yen)
yen)
yen)
yen)
yen)
Tax losses
carriedforward (Note1)
Valuation
allowance
Deferred tax
assets

-

2,407

224

-

-

1,486

4,118

-

(2,399)

(156)

-

-

(1,289)(3,845)

-

8

68

-

-

196

(*2) 273(*1)

Tax losses carried forward is the amount calculated by multiplying by the statutory tax rate.

(*2)

The deferred tax assets relating to these tax losses carried forward have been determined to be
recoverable based on the outlook for future taxable income, etc.

(per share)
Net assets per share¥3,716.56

Earnings per share¥96.98

Diluted earnings per share¥54.38(Note)The shares of the Bank held by the BBT recorded as treasury shares under shareholders'equity are included in the treasury shares deducted from the calculation of the number ofissued shares as of the end of the term for the purpose of calculating the net assets per
share. The number of deducted treasury shares as of the end of the term is 347 thousand
shares.
Additionally, these shareholdings include treasury shares deducted in average sharecalculations during the term for the purpose of calculating the earnings per share and the
diluted earnings per share. The average number of deducted treasury shares during theterm is 354 thousand shares.

(Transactions with Affiliated Parties)
1.

Parent company and major corporate shareholders, etc.
Not applicable.

- 15 -

2.

Subsidiaries, subsidiary corporations, etc. and affiliated companies, etc.
Percentage
Relationshi
of votingDescriptio
p withCompany, etc.
Transactio
rights held
n of
Affiliation
affiliatednamen amount
directly (ortransaction
party
indirectly)
Michinoku
Stake
Guarantee
Creditof homeSubsidiary(Notes)100%
Guarantee,
loans, etc.
(direct)
Ltd.

Item

-

Balance at
end of term
(millionsof yen)-(Notes) Michinoku Credit Guarantee, Ltd. underwrites the Bank’s home loans, etc., and thebalance of guarantees as of March 31, 2021 was ¥173,938 million. The amount paid by
the Bank in guarantee fees to this subsidiary during the term is ¥7 million, and the amountof subrogated repayment is ¥246 million.
3.

Companies with a shared parent company, etc.
Not applicable.

4.

Officers and major individual shareholders, etc.
Not applicable.

- 16 -

Notes to Consolidated Financial Statements for the 49th Term(April 1, 2020 through March 31, 2021)
All amounts shown are rounded down to the nearest million yen.
Policy for preparation of consolidated financial statements
The definitions of “subsidiary corporation, etc.” and “affiliated corporation, etc.” are as provided for in
Article 2(8) of the Banking Act and Article 4-2 of the Order for the Enforcement of the Banking Act.
1.

Matters Related to the Scope of Consolidated Accounting(1) Consolidated subsidiaries and subsidiary corporations, etc.

4 companies

Name of company
Michinoku Lease, Ltd.
Michinoku Credit Guarantee, Ltd.
Michinoku Card., Ltd.
Michinoku Servicer Co., Ltd.
(2) Non-consolidated subsidiaries and subsidiary corporations, etc.

1 company

Name of company
Michinoku Regional Vitalization Investment Limited Partnership
Non-consolidated subsidiaries and subsidiary corporations, etc. are excluded from the scopeof consolidation because, from the perspective of their assets, ordinary income, net profit(amount commensurate to equity stake), retained earnings (amount commensurate to equity
stake), and accumulated other comprehensive income, etc. they are of negligible importanceand exclusion thereof from the scope of consolidation does not prevent reasonable judgment
regarding the finances and performance of the corporate group.
2.

Matters Related to the Application of the Equity Method(1) Equity method non-consolidated subsidiaries and subsidiary corporations, etc.
Not applicable.
(2) Equity method affiliated corporations, etc.
Not applicable.
(3) Non-consolidated subsidiaries and subsidiary corporations, etc. to which the equity method is
not applied

1 company

Name of company
Michinoku Regional Vitalization Investment Limited Partnership
Non-consolidated subsidiaries and subsidiary corporations, etc. to which the equity method
is not applied are excluded from application of equity method accounting because, from theperspective of their net profit (amount commensurate to equity stake), retained earnings(amount commensurate to equity stake), and accumulated other comprehensive income, etc.

- 17 -

it will not have a material effect on the consolidated financial statements if they are
excluded from the scope of equity method accounting.
(4) Affiliated corporations, etc. to which the equity method is not applied
Not applicable.
Matters Related to Accounting Policy
1.

Standards and methods of valuation of trading account securities
Trading account securities are valued by the market value method (the cost of securities sold isdetermined by the moving average method).

2.

Standards and methods of valuation of securities(1) In terms of securities, bonds that are intended to be held to maturity are valued by the amortizedcost method (straight line method) based on the moving average method, and other securities
are valued by the market value method based on the market price, etc. on the consolidated
closing date, in principle (the cost of securities sold is predominately determined by themoving average method). However, the cost method based on the moving average method isused when the market value is recognized as being extremely difficult to determine. Valuationdifferences for other securities are reported directly as a separate component of shareholders’equity.
(2) Securities managed as the trust assets of an independently managed monetary trust whose main
purpose is the management of securities are valued by the market value method.

3.

Standards and methods of valuation of derivatives transactions
Derivatives transactions are valued by the market value method.

4.

Method of depreciation of non-current assets(1) Tangible fixed assets (excluding lease assets)
The Bank’s tangible fixed assets are valued by the straight line method. The usable life ofprincipal assets is as follows.
Buildings

2-50 years

Other

2-20 years

The tangible fixed assets of consolidated subsidiaries and subsidiary corporations, etc. aredepreciated by the straight line method based on the expected usable life of the asset.
(2) Intangible fixed assets (excluding lease assets)
Depreciation of intangible fixed assets is calculated by the straight line method. Depreciationof software for internal use is calculated based on the usable life of the software as determinedby the Bank and its consolidated subsidiaries and subsidiary corporations, etc. (three to ten
years)(3) Lease assets- 18 -

“Tangible fixed assets” and “intangible assets” subject to a non-ownership-transfer financelease are calculated by the straight line method using the lease period as the usable life. The
residual value is the residual value guarantee amount provided for in the lease agreement, if
any. If a residual value guarantee is not provided for, the residual value is zero.
5.

Standards for recording allowance for loan losses
The allowance for loan losses is recorded as follows in accordance with standards for depreciation
and allowances determined in advance.
With respect to claims against normal debtors and claims against debtors requiring caution
stipulated in the “Practical Guidelines for Self-Assessment of Assets of Banks and Other Financial
Institutions and Audit of Depreciation of and Reserve for Possible Loan Losses” (Japanese Instituteof Certified Public Accountants Association Special Committee on Audit of Banks and Other
Financial Institutions Report No. 4 dated October 8, 2020), allowances have predominantly beenrecorded based on the projected future loss for the next year or the projected future loss for the next
three years. The projected future losses are calculated based on the loss ratios, which are based on
the average of actual past loss ratios for the past year or three years and revised as necessary for
future projections, etc. For those of the claims against debtors requiring caution where the debtor
has certain claims, etc. with restructured loan conditions and is a major debtor with at least a certain
credit amount, etc. for the debtor alone or its group, and where the cash flow regarding collectionof principle and receipt of interest for the claims can be reasonably estimated, allowances for loan
losses are recorded by making the allowance for loan losses the difference between such cash flow
discounted by the contractual interest rate before restructuring of the loan and the carrying valueof the claims (cash flow estimation method).
For claims against potential bankrupt debtors, the estimated amount of collateral that can bedisposed of and the estimated amount that can be recovered by guarantee are deducted from theclaim amount, and out of the remaining amount, the amount that is deemed necessary based on acomprehensive assessment of the debtor’s payment capacity is recorded. For claims against
bankrupt debtors and substantive bankrupt debtors, the estimated amount of collateral that can bedisposed of and the estimated amount that can be recovered by guarantee are deducted from theclaim amount, and the remaining amount is recorded.
For all claims, business-related departments carry out asset appraisals pursuant to the Guidelines
for Self-Assessment, and the Auditing Division, which is independent from such departments,
audits the results of those appraisals. Until consolidated accounting year 2010, for secured or
guaranteed claims, etc. against a bankrupt debtor or substantive bankrupt debtor, the difference ofthe claim amount less the assessed value of the security and the recoverable amount of the guarantee
was directly written off from the claim amount, but from consolidated accounting year 2011 direct
write-off has not been carried out. As of the end of this consolidated accounting year, the balance- 19 -

of such direct write-offs until consolidated accounting year 2010 was ¥764 million.
The reserves for possible loan losses of consolidated subsidiaries and subsidiary corporations, etc.
are recorded as the necessary amount with consideration for the past actual loan loss rate, etc. forgeneral claims, and as the expected unrecoverable amount with consideration for the recoverabilityof the individual claim for doubtful debts and other specific claims.
6.

Standards for recording provision for bonuses
In preparation for employee bonus payments, the provision for bonuses is recorded as the portionof the expected amount to be paid to employees as bonuses that is attributable to this consolidated
accounting year.

7.

Standards for recording provision for benefit trust
In preparation for the delivery of shares of the Bank to directors, etc. based on the rules for granting
shares, the provision for board benefit trust is recorded based on the expected amount of benefit
trust obligations at the end of this consolidated accounting year.

8.

Standards for recording provision for losses on reimbursement of dormant deposits
In preparation for reimbursement requests from depositors for deposits no longer recorded asliabilities, the provision for losses on reimbursement of deposits is recorded as the necessaryamount based on the estimated loss from future reimbursement requests.

9.

Standards for recording provision for contingent loss
In preparation for the payment of amounts under the Responsibility-Sharing System with credit
guarantee corporations, the provision for contingent loss is recorded as the necessary estimatedfuture payment amount based on standards for depreciation and allowances determined in advance.

10. Standards for recording allowance for investment loss
In preparation for losses on investments, the allowance for investment loss is recorded as thenecessary amount taking into account the financial status, etc. of investment targets.
11. Standards for recording provision for loss on interest repayment
In preparation for claims for the repayment of loan interest in excess of the Interest Rate Restriction
Act with respect to the credit card business of consolidated subsidiaries, the provision for loss oninterest repayment is recorded as the necessary amount for the estimate of future repayment claims
based on past repayment rates, etc.
12. Accounting treatment for retirement benefits
In calculating retirement benefit obligations, the estimated amount of retirement benefits to be paid
is attributed to the period ending at the end of this consolidated accounting year by the method
given in the benefit calculation standards. Profit and loss for prior service cost and actuarial
calculation differences are accounted for as follows.
Prior service cost:

Profit and loss are accounted for using the straight line
method over a certain number of years (five years) not- 20 -

exceeding the average period of employment remaining
for employees when incurred.
Actuarial calculation differences: Profit and loss are accounted for by proration using thestraight line method over a certain number of years (fiveyears) not exceeding the average period of employment of
employment remaining in the consolidated accounting
year in which the expense arises, and recorded in the next
consolidated accounting year.
13. Standard for converting foreign currency-denominated assets and liabilities into Japanese currency
The Bank’s foreign-denominated assets and liabilities are converted into Japanese currency at theexchange rate as at the consolidated closing date. The foreign-denominated assets and liabilities of
consolidated subsidiaries and subsidiary corporations, etc. are converted at the exchange rate as attheir respective business year-ends.
14. Standards for recording lease transaction income and costs
Income and costs with respect to finance lease transactions are recorded by recording the net sales
and cost of sales at the time when lease fees are to be received.
15. Standards for recording share dividends
Share dividends are recorded as revenue in the consolidated accounting year in which the date thatreceipt of payment falls.
16. Material hedge accounting methods
Among other securities, the Bank applies deferred hedging using credit transactions, etc. as themeasure of hedging in its hedge accounting method for share price fluctuation risk arising fromshares that it holds. With respect to the method for assessing the effectiveness of the hedge, in
principle, from the period from when the hedge commences until the time of the assessment ofeffectiveness, the cumulative total of the hedged item’s market fluctuation or cash flow fluctuationis periodically compared to the cumulative total of the hedging instrument’s market fluctuation or
cash flow fluctuation, and a judgment is made based on the amount of fluctuations of both.
However, hedge effectiveness assessment is omitted in the case where the conditions relating toboth the hedged item and the hedging instrument are the same and it is clear that the hedge is highly
effective.
17. Method and period for amortization of goodwill
Amortization of goodwill is carried out by annuity amortization over a period of five years.
However, in the event that the amount of goodwill is of negligible importance, it is amortized oncein the consolidated accounting year in which it arises.
18. Accounting treatment for consumption tax, etc.
The accounting treatment for consumption tax and local consumption tax by the Bank and its- 21 -

domestic consolidated subsidiaries and subsidiary corporations, etc. is the tax exclusion method.
19. Application of consolidated taxation system
The Bank and some of its consolidated subsidiaries apply the consolidated taxation system with
the Bank as the consolidated taxation system parent company.
20. Principles and procedures of accounting treatment adopted when the relevant accounting standards
are unclear
The Bank predominantly carries out accounting treatment based on the principles and proceduresof accounting treatment used as customary practice by the banking industry for the following items.


Investment trust termination profit and loss recording standards
Profit or loss in connection with the termination or reimbursement of an investment trust(excluding ETFs) is recorded as “Interest and dividends on securities” in the case of profit oneach transaction and is recorded as “Other operating expenses” in the case of loss.
This consolidated accounting year, the Bank recorded ¥4,144 million in “Interest anddividends on securities” and ¥3,794 million in “Other operating expenses.”(Additional information)
The Bank is applying the “Revised Accounting Standard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections” (ASBJ Statement No. 24 of March 31, 2020) starting with theconsolidated financial statements for the end of this consolidated accounting year, and has disclosed“Principles and procedures of accounting treatment adopted when the relevant accounting standards areunclear.”
Change in indication method(Adoption of Accounting Standard for Disclosure of Accounting Estimates)
The Bank is applying “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement
No. 31 of March 31, 2020) starting with the financial statements for the end of this consolidated
accounting year, and has included a note regarding material accounting estimates in the consolidated
notes.
Accounting estimates
The items for which an amount is recorded in the financial statements based on accounting estimates forthis consolidated accounting year and which may have a material effect on the consolidated financial
statements for the next consolidated accounting year are as follows.
1.

Allowance for loan losses(1) Amount recorded in consolidated financial statements pertaining to this consolidated
accounting year

- 22 -

Allowance for loan losses¥13,645 million(2) Information for understanding the content of material accounting estimates concerning theidentified matters(i) Calculation method
The method of calculating the reserve for possible loan losses is stated in “5. Standards
for recording allowance for loan losses” in “Matters Related to Accounting Policy.”(ii) Major assumptions
The major assumptions are the “expected future performance of borrowers in determining
debtor category.” The “expected future performance of borrowers in determining debtor
category” is set based on separate evaluation of each debtor’s earning capacity.
(iii) Effect on the consolidated financial statements for the next consolidated accounting year
If assumptions used in initial estimates change due to a change, etc. in the financial resultsof an individual borrower it may have a material effect on the allowance for loan losses
in the consolidated financial statements for the next consolidated accounting year.
(iv) Matters relating to COVID-19
It is assumed that the coronavirus pandemic will end around the end of March 2022. The
impact of COVID-19 on credit risk has been judged to be limited currently due to theeffect of government, etc. measures. The impact on business partners if the effectincreases or goes for longer will be reflected in the determination of debtor category basedon the unique business circumstances of each company and the future outlook, and we are
examining support policies and support measures appropriate for the circumstances.
Please note that there are uncertainties in the above assumptions, and if there is a change
in the timing of the end of the coronavirus pandemic and the effect on economic activities
it may have a material effect on the allowance for loan losses in the consolidated financial
statements for the next consolidated accounting year.
2.

Deferred tax assets(1) Amount recorded in consolidated financial statements pertaining to this consolidated
accounting year
Deferred tax assets¥3,277 million(2) Information for understanding the content of material accounting estimates concerning theidentified matters(i) Calculation method
Based on the estimated amount of taxable income before adjustment for temporary
differences during the future period which can be reasonably estimated (five years)(“Future Taxable Income”), as a result of the scheduling of the temporary differences andloss carried forward for such period that can be estimated (“Temporary Differences, etc.”),- 23 -

the possibility of recovery is determined and it is recorded as a deferred tax asset.
(ii) Major assumptions
The estimate of Future Taxable Income is based on the Bank’s Medium-Term Business
Plan and is estimated based on considerations such as the impact of trends in the financial
and economic environment and the local economy and comparing the feasibility of theBank’s business plan compared to the results from the past business year.
(iii) Effect on the consolidated financial statements for the next consolidated accounting year
If assumptions used in initial estimates change due to a change, etc. in Future Taxable
Income or the scheduling of Temporary Differences, etc. it may have a material effect ondeferred tax assets in the consolidated financial statements for the next consolidated
accounting year.
(iv) Matters relating to COVID-19
When estimating Future Taxable Income, the assumptions used to estimate the allowance
for loan losses are as stated in “1. Allowance for loan losses” “(2) Information forunderstanding the content of material accounting estimates concerning the identified
matters” “(iv) Matters relating to COVID-19”
Please note that there are uncertainties in the above assumptions, and if there is a change
in the timing of the end of the coronavirus pandemic and the effect on economic activities
it may have a material effect on deferred tax assets in the consolidated financial statements
for the next consolidated accounting year.
Additional information(Transactions pertaining to board benefit trust (BBT) to directors and executive officers)
In order to make the connection between the remuneration of directors other than outside directors(excluding directors who are audit & supervisory committee members) and executive officers(collectively, “Directors, etc.”) and the Bank’s performance and share price more explicit, the Bank has
introduced a performance-linked stock compensation system for Directors, etc. (Board Benefit Trust(BBT)) (the “System”) with the goal of increasing the awareness of Directors, etc. of the role they play
in increasing the Bank’s medium- to long-term performance and corporate value.
1.

Outline of the transaction
The System is a performance-linked stock compensation system where money contributed by the
Bank is used to acquire shares of the Bank through a trust, and Directors, etc. are provided withshares of the Bank and money in amounts equivalent to the amount calculated by converting theBank’s shares at their market value (“Bank Shares, etc.”) through the trust, based on their positionand level of achievement of results, etc., in accordance with the Benefit Trust Rules. In principle,
Directors, etc. receive Bank Shares, etc. when they retire.

- 24 -

2.

Shares of the Bank remaining in the trust
Shares of the Bank remaining in trust are recorded under net assets as treasury shares at the bookvalue in the trust (excluding the amount of ancillary costs). The book value of such treasury sharesat the end of this consolidated accounting year was ¥703 million yen and the number of shares was
347 thousand shares of stock.

(Treatment regarding application of tax-effect accounting pertaining to the transition from theconsolidated taxation system to the group tax sharing system)
With respect to the transition to the group tax sharing system created in the Act for Partial Revision of
the Income Tax Act, etc. (Act No. 8 of 2020) and the items revised in the non-consolidated taxation
system in conjunction with the transition to the group tax sharing system, the Bank and some of its
consolidated subsidiaries do not apply Paragraph 44 of the “Implementation Guidance on Tax EffectAccounting” (ASBJ Statement No. 28 dated February 16, 2018) due to the treatment of Paragraph 3 of“Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (PITF No.39 dated March 31, 2020), and theamount of deferred tax assets and deferred tax liabilities is based on tax laws before revision.
Notes(Notes on the consolidated balance sheet)
1.

Loans and bills discounted includes loans to bankrupt debtors of ¥3,135 million and overdue loansof ¥17,860 million. Loans to bankrupt debtors are loans that were not recorded as accrued interest
because there was no prospect of the interest or principal being collected or repaid for reasons suchas principal and interest payments having been in arrears for a significant period (excluding bad
debt written off; “Loans Exclusive of Accrued Interest”) and with respect to which an event under
Article 96, paragraph 1, item (iii)(a) through (e) or (iv) of the Order for the Enforcement of the
Corporation Tax Act (Cabinet Ordinance No. 97 of 1965) has occurred. Overdue loans are Loans
Exclusive of Accrued Interest, excluding loans to bankrupt debtors and loans on which interest is
being waived for management restructuring or support of the borrower.

2.

There are no loans past due for three months or more. Loans past due for three months or more areloans for which the principal and interest payments are in arrears by three months or more since theday following the due date of payment, and do not fall under loans to bankrupt debtors or overdueloans.

3.

Restructured loans: ¥4,675 million. Restructured loans are loans in which a reduction or exemptionof interest, extension of interest payments, extension of principal repayments, abandonment ofclaim, or other terms favorable to the debtor have been granted for management restructuring or
business support of the debtor, and that do not constitute loans to bankrupt debtors, overdue loans,- 25 -

or loans past due for three months or more.
4.

The total of loans to bankrupt debtors, overdue loans, loans past due for three months or more, andrestructured loans is ¥25,671 million. The amounts in 1. through 4. above are before deduction of
the allowance for loan losses.

5.

Bill discounting is treated as a financial transaction pursuant to Industry Committee Practical
Guidelines No. 24. The Bank is entitled to freely dispose of commercial bills and foreign bills
bought so accepted by sale or collateral, but the face value of those bills is ¥1,146 million.

6.

The assets provided as security are as follows.
Assets provided as security
Securities¥15,686 million

Loans¥136,722 million

Other assets¥31 million

Liabilities corresponding to secured assets
Deposits
Borrowed money¥8,784 million¥107,300 million

In addition to the foregoing, other assets worth ¥9,169 million have also been provided astransaction security for exchange settlement and credit transactions, etc. or as a substitute for
futures margins, etc.
Other assets also includes ¥638 million in guarantee deposits.
7.

Overdraft agreements and commitment line agreements are agreements under which the Bank
promises to loan funds up to a certain limit upon a drawdown request by the customer, provided
that the customer has not breached the terms of the agreement. The undrawn loan amount of these
agreements is ¥371,687 million. The amount of those agreements with the original period ending
within one year (or that can be terminated unconditionally at will) is ¥364,999 million. Because
many of these agreements end without being drawn down, the undrawn loan amount does notnecessarily affect the future cash flows of the Bank and its consolidated subsidiaries and subsidiarycorporations, etc. Many of these agreements include clauses to the effect that, if a change infinancial conditions, preservation of claims, or other reasonable grounds occur, the Bank and its
consolidated subsidiaries and subsidiary corporations, etc. can refuse to loan the requested funds
or reduce the maximum contracted amount. In addition, the Bank and its consolidated subsidiaries
demand real estate, securities, or other collateral as necessary when entering into the agreements,
and after entering into the agreements the Bank and its consolidated subsidiaries periodically trackcustomers’ business conditions based on internal procedures established in advance and review theagreements, take measures to preserve their credit, and the like as necessary.

8.

The Bank revalues land for business purposes under the Land Revaluation Act (Act No. 34 ofMarch 31, 1998) and records the equivalent of tax payable on the revaluation difference as a

- 26 -

liability under “Deferred tax liabilities for land revaluation,” and records the amount net of thatliability as a net asset under “Land revaluation surplus.”
Date of revaluation:

March 31, 2002

Method of revaluation specified in Article 3(3) of that Act
Calculations are made based on the price calculated using the method for calculating land value
determined and published by the Commissioner of the National Tax Agency provided for in Article2(iv) of the Order for Enforcement of the Act on Revaluation of Land (Cabinet Ordinance No. 119
of March 31, 1998), which is the basis of the calculation of taxable value for the purpose of land
tax provided for in Article 16 of the Land Value Tax Act (Act No. 69 of 1991), with reasonableadjustments for land shape, corner lots, narrow frontages, and the like.
Difference between the total market value as of the end of this consolidated accounting year of landfor business purposes revalued by the method specified in Article 10 of that Act and the total book9.

value of that land after revaluation:¥1,722 million

Accumulated depreciation of tangible fixed assets¥19,018 million

10. Reduction entry of tangible fixed assets¥2,339 million

11. Of the bonds recorded under “Securities,” the value of guarantee obligations with respect to bonds
arising from the private placement of securities (Article 2(3) of the Financial Instruments andExchange Act) is ¥22,638 million.

- 27 -

(Notes on the consolidated statement of income)1.

“Other ordinary income” includes gain on sale of equity of ¥32 million.

2.

“Other ordinary expenses” includes amortization of loans of ¥112 million and loss on sales ofreceivables of ¥1 million.

3.

This consolidated accounting year, a reduction in, and change of method of use of, operating cash
flows, and an ongoing fall in land prices, etc. resulted in the total cash flows before discounting
being less than the book value, and therefore, the book value was reduced to the recoverable amount,and such reduction of ¥106 million was recorded as an extraordinary loss under impairment loss.
RegionImpairment loss
(millions of yen)

Main purpose

Type

Commercial
branches, etc.

Land, buildings, andmovables, etc.
Land, buildings, andmovables, etc.
Buildings and movables,
etc.
Land, buildings, andmovables, etc.

In Aomoriprefecture
OutsideAomoriprefecture

Idle assets
Commercial
branches, etc.
Idle assets

8
53
19
25

Total

106

In principle, commercial branches are grouped in units of area branches comprising branches, etc.
strongly linked to or strongly supplementing business with the parent branch acting as thecontrolling branch in the area business framework, and headquarters, etc. are shared assets because
they do not generate independent cash flow. Additionally, idle assets are grouped by asset unit.
Please note that this consolidated accounting year, the recoverable amount used to measure
impairment loss is the net realizable value. The net realizable value is calculated by deducting the
projected disposal cost from the appraised value provided by a real property appraiser, etc.
(Notes on the consolidated statement of changes in shareholder equity)
1.

Matters Related to the Class and Number of Issued Shares and the Class and Number of Treasury
SharesNumber of
Increase in
Decrease in
Number ofshares as of theshares during
shares during
shares as of thestart of this
this consolidated this consolidated
end of thisconsolidated
accounting year accounting year
consolidated
accounting year
accounting year
(thousand(thousand(thousandshares)shares)(thousandshares)shares)Issued shares
Common stock
Class A
Preferred Stock
Total

18,135--

18,135

4,000

-

-

4,000

22,135--

22,135- 28 -

Remarks

Treasury shares
Common stock
Class A
Preferred Stock
Total(Note) 1.

524

0

36

488

-

-

-

-

524

0

36

488

(Notes) 1, 2

Common stock treasury shares as of the end of this consolidated accounting year include
347 thousand shares of stock held by the BBT.

2.

The breakdown of the increase of common stock treasury shares is as follows.
Increase due to purchase of fractional shares

0 thousand shares

The breakdown of the decrease of common stock treasury shares is as follows.
Decrease due to provision by BBT
2.

36 thousand shares

Matters Related to Stock Acquisition Rights
Not applicable.

3.

Matters Related to Dividends(1) Dividends paid during this consolidated accounting year
Dividends
per share

Record date

Effective date¥359 million¥20.00March 31, 2020

June 25, 2020¥108 million¥27.15

March 31, 2020

June 25, 2020¥109 million¥27.40

September 30,
2020

December 9, 2020

(Resolution)

Share class Total dividends

June 24, 2020
Annual General
Meeting of
Shareholders

Commonstock
Class A
Preferred
Stock

November 13,
2020 Board of
Directors
meeting

Class A
Preferred
Stock

Total
(Note)¥578 million

Pursuant to a resolution of the June 24, 2020 annual general meeting of shareholders, “Total
dividends” includes ¥7 million of dividends with respect to the Bank’s shares held by the BBT(record date: March 31, 2020; 384,000 shares of stock).

(2) Dividends whose record date falls within this consolidated accounting year but whose effective
date is after the end of this consolidated accounting year
The following matters related to dividends to common stock and preferred stock will be put
before the annual general meeting of shareholders to be held on June 23, 2021.
(i) Common stock
Total dividends
Dividends per share¥359 million¥20.00Record date

March 31, 2021

Effective dateJune 24, 2021

The dividends are to be made from retained earnings.

- 29 -

(Note) “Total dividends” includes ¥6 million of dividends with respect to the Bank’s shares
held by the BBT (record date: March 31, 2021; 347 thousand shares of stock).
(ii) Class A Preferred Stock
Total dividends¥109 million

Dividends per share¥27.40Record date

March 31, 2021

Effective dateJune 24, 2021

The dividends are to be made from retained earnings.
(Notes on financial instruments)
1.

Matters Related to the Status of Financial Instruments(1) Policy for handling financial instruments
The Bank group provides financial services, with a focus on banking business, including leasebusiness, credit guarantee business, credit card business, and credit management and collection
operations.
The Bank engages in deposit business and loan business, as well as securities investment
business, etc., and holds financial assets and financial liabilities affected by fluctuations inmarket value due to changes in market conditions. The Bank conducts asset and liability
management (“ALM”) to avoid incurring any disadvantage due to interest rate fluctuations, etc.
due to changes to the business environment or economic conditions or timing mismatches, etc.
As part of this ALM, the Bank also engages in derivatives transactions.
None of the Bank’s consolidated subsidiaries conduct securities or derivatives transactions
trading, or banking business.
(2) Description of financial instruments and related risks
The financial assets held by the Bank group mainly consist of general loans to local public
entities and corporations and personal loans. Loans are exposed to interest rate fluctuation risks
as well as credit risk due to contractual default by customers.
Following our loan business, our fund management business conducts securities investment inbonds and shares, etc., and these are held for the purpose of trading, net investment, and strategic
investment. These securities are respectively exposed to credit risk regarding the issuers and therisk of interest rate changes and market price risk.
There is also a liquidity risk from loss due to difficulty trading securities under certain conditionsin the event of market disruption.
The financial liabilities held by the Bank group predominantly comprise deposits of domestic
corporations and individuals. Deposits are exposed to interest rate fluctuation risks (market risk).
Corporate bonds, borrowed money, and call money are exposed to the risk of fluctuations in- 30 -

interest rates and market prices (market risk), and are also exposed to liquidity risk in the eventthat the Bank’s credit standing deteriorates and the necessary funds cannot be secured or the
Bank is forced to obtain financing at significantly high interest rates when securing funds.
The Bank engages in forward exchange transactions, bond futures transactions and optionstransactions, share price index futures transactions and options transactions, share forward
transactions, credit transactions, interest swap derivatives transactions, etc. predominantly forthe purpose of securities, etc. risk control and hedging against exchange risks, etc. with respect
to foreign currency denominated assets and liabilities, and for derivatives transactions for the
purpose of obtaining short-term gain on sales, the Bank requires the advance approval ofmanagement and carries them out in a limited manner by establishing a position limit and losscut rules, etc.
Transactions that do not satisfy the requirements for hedge accounting are exposed to the risk offluctuations in interest rates, exchange rates, or market prices (market risk) and well as credit
risk, etc.
(3) Risk management system for financial instruments(i) Management of credit risk
In accordance with the Bank’s “Credit Policy” and “Credit Risk Management Rules,” the bankformulates a “Credit Risk Management Policy” and “Credit Risk Management Program” eachbusiness year, aims to achieve sophisticated credit risk management, and sets an investment
cap in the “Credit Portfolio Management Policy.” If this cap is exceeded or expected to be
exceeded, the Bank carries out strict operations such as setting a trading policy and reportingto the Board of Directors. In addition, in terms of management practices for major borrowers,
in accordance with the “Credit Risk Management Rules,” “Loan Authority Rules,” and“Company Investigation Procedures,” individual companies or groups with loan amounts
above a certain level are selected, credit rating revision, including interim business statuschecks, is carried out for major borrowers, and a practice is put in place to annually formulatea policy for future business with the individual company or group and reports provided to theBoard of Directors. Credit management is conducted by the individual sales branch offices andthe Assessment Department, and is periodically reported to the Board of Directors. The
Auditing Division audits the status of credit management.
The Auditing Division manages counterparty risk with respect to derivatives transactions, etc.
by periodically confirming the credit information and market value.
(ii) Management of market risk(i)Management of market risk (risk of fluctuations in interest rates, exchange rates, andmarket prices)
Market risk is managed using value at risk (“VaR”) and increases/decreases in gain

- 31 -

(loss) on valuation or realized gain (loss), etc. indices, in accordance with the “Market
Risk Management Rules,” and the Bank has in place a management framework thatexercises a check function, such as formulating a “Market Risk Management Policy”
and “Market Risk Management Program” each consolidated accounting year.
Specifically, with respect to the organization relating to market transactions (including
derivatives transactions), the Bank has a system of mutual checks, by having adepartment that executes transactions (front office) and a department that processes
accounts and verifies transactions, etc. (back office) in the Treasury and Securities
Division, and the Risk Management Division as a monitoring and risk management
department (middle office) independent from the organization relating to market
transactions.
The Risk Management Division conducts daily monitoring of the risk limit and loss
limit, etc. set every half-term, and the corresponding alarm points, and periodicallyreports the status of the quantity of risk to the Board of Directors.
Investment policies for securities investment are formulated quarterly based on the“Basic Market Portfolio Rules,” etc.
(ii)

Quantitative information regarding market risk
The main financial instruments affected by market risk in the Bank group are securities,
loans, and deposits. When calculating the VaR for these financial assets and financial
liabilities, the Bank group uses the variance-covariance method (holding period: 10days to 6 months; confidence interval: 99%; measurement period: 1 year), andcalculations are performed giving full consideration to the characteristics of risk.
The Bank group’s quantity of market risk as at the end of this consolidated accounting
year (estimated amount of loss) is ¥9,103 million overall.
The Bank group conducts backtesting to compare the VaR calculated in with the actual
gain (loss), and a mechanism is in place to supplement the measurement model used,
depending on the test results However, VaR expresses market risk with a certain
likelihood of occurrence calculated statistically based on past market movements, andmay not capture risk in situations where the market environment changes drastically ina way that could not ordinarily be expected.

(iii)

Management of liquidity risk
The Bank’s overall fund management, implementation of smooth financing, and market
environment monitoring, etc. are carried out in accordance with the “Liquidity Risk
Management Rules” and the “Financing Management Rules” in an effort to prevent
liquidity risk surfacing.
The Bank also conducts day-to-day monitoring and makes periodic reports to the Board- 32 -

of Directors.
(4)

Supplementary Information on Matters Related to Market Value, etc. of Financial
Instruments
The market value of financial instruments includes the price based on the market priceor a price calculated on a reasonable basis if no market price exists. This price iscalculated based on certain assumptions that would result in a different price if thoseassumptions were changed.

2.

Matters Related to Market Value, etc. of Financial Instruments
The amount recorded in the consolidated balance sheet and the market value as at March 31, 2021,
and the difference between those two amounts, are as follows. Unlisted shares, etc. for which themarket value is extremely difficult to determine are not included in the following table (see Note2). Items of low importance are also omitted from the “Amount recorded in the consolidatedbalance sheet.”(Unit: millions of yen)

(1)
(2)
(3)
(4)

Cash and due from banks
Monetary claims bought (*1)
Money held in trusts
Securities
Bonds held to maturity
Other securities(5) Loans
Allowance for loan losses (*1)
Total assets(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money(4) Other liabilities
Securities borrowed
Total liabilities
Derivatives transactions (*2)
Hedge accounting applied
Hedge accounting not applied
Total derivatives transactions(*1)

Amount recorded in
the consolidated
Market valuebalance sheet
392,795
392,795
2,492
2,492
20,243
20,243Difference-

22,438
152,748
1,702,734(13,555)
1,689,178
2,279,897
2,105,968
32,442
109,630

22,490152,74851-

1,711,557
2,302,328
2,105,975
32,442
109,629

22,37822,4306(0)1,362
2,249,403

1,362
2,249,409

6

-

-

-

The general allowance for loan losses and individual allowances for loan losses
corresponding to loans have been deducted. The allowance for loan losses for monetaryclaims bought are of low importance and have therefore been directly written-off from theamount recorded in the consolidated balance sheet.

- 33 -

(*2)

Derivatives transactions recorded as other assets/liabilities are displayed together.
The net claims and liabilities arising from derivatives transactions are displayed as the net
total, and if the net total is a liability, the amount is displayed in parentheses.

(Note 1) Method of calculating the market value of financial instruments
Assets(1) Cash and due from banks
For obligations due from banks with no maturity date, the market value is similar to the bookvalue, so the book value is used in place of the market value.
For obligations due from banks with a maturity date, because the remaining period is short (oneyear or less) and the market value is similar to the book value, the book value is used in place ofthe market value.
(2) Monetary claims bought
For monetary claims bought, because the remaining period is short (one year or less) and themarket value is similar to the book value, the book value is used in place of the market value.
(3) Money held in trusts
For securities managed as the trust assets of an independently managed monetary trust whose
main purpose is the management of securities, the exchange price is used for share, and exchange
price, the price announced by the Japan Securities Dealers Association (Reference StatisticalPrices [Yields] for OTC Bond Transactions), or the price offered by a trading financial institution
is used for bonds.
Notes regarding monetary trusts by holding purpose are stated in “(Notes on money held in
trusts)”(4) Securities
The exchange price is used for shares, and the exchange price, the price announced by the Japan
Securities Dealers Association (Reference Statistical Prices [Yields] for OTC Bond
Transactions), or the price offered by a trading financial institution is used for bonds. For
investment trusts, the published standard price is used.
For privately placed bonds with no market price (including those guaranteed by the Bank), themarket value is calculated by discounting the total principal and interest for each classification
based on the privately placed bond’s type, internal rating, and term (in principle until the interest
maturity date) by an interest rate obtained by incorporating the credit cost rate into market
interest. If the remaining period is short (one year or less), the market value is similar to the bookvalue, so the book value is used in place of the market value.
Notes regarding securities are stated in “(Notes on securities)”(5) Loans- 34 -

For loans, the market value is calculated by discounting the total principal and interest for eachclassification based on the loan’s type, internal rating, and term (in principle until the interest
maturity date) by an interest rate obtained by incorporating the credit cost rate into market
interest. If the remaining period is short (one year or less), the market value is similar to the bookvalue, so the book value is used in place of the market value.
Claims against bankrupt debtors, substantive bankrupt debtors and potential bankrupt debtors
are recorded with the amount of the claims recorded in the consolidated balance sheet as of theconsolidated closing date less the recorded amount of allowance for loan losses as the market
value because, due to the expected amount of loan losses being calculated based on therecoverable amount of the current value of estimated future cash flows collateral and guarantees,that amount is similar to the market value.
Loans that are limited to the amount of collateral assets or have other special characteristics due
to which a repayment date is not set are recorded with the book value as the market value because
the market value is expected to be similar to the book value due to the expected repayment period,
interest rate conditions, and other factors.
Liabilities(1) Deposits, and (2) Negotiable certificates of deposit
For demand deposits, the amount payable in the event that a demand is made at the consolidated
closing date (book value) is deemed to be the market value. For term deposits and negotiablecertificates of deposit, the market value is calculated by discounting the total principal andinterest for each classification based on the loan’s term (in principle until the interest maturitydate) by the interest rate use when accepting new deposits. If the deposit period is short (oneyear or less), the market value is similar to the book value, so the book value is used in place ofthe market value.
(3) Borrowed money
For borrowed money, the market value is calculated by discounting the total principal andinterest for each classification based on the term (in principle until interest maturity) by theinterest rate used when taking out new loans. If the remaining period is short (one year or less),the market value is similar to the book value, so the book value is used in place of the market
value. For overdrafts without a repayment deadline, the market value is similar to the book value,so the book value is used in place of the market value.
(4) Other liabilities
For securities borrowed, the exchange price is used. Hedge accounting is applied to the full valueof securities borrowed, and for transactions to which hedge accounting is applied, the contract
price or the principal amount stipulated in the contract and the market value, as of theconsolidated closing date, are as follows for each hedge accounting method.

- 35 -

Hedgeaccounting
methodType ofderivatives
transaction, etc.

Principle
methodShare margintransactions

Main hedge
targetContract value,etc.
(millions ofyen)Contract value,etc. exceeding
one year(millions ofyen)Market value(millions of
yen)

Other
securities(Listed shares)

1,369

-

1,362

(*1)

The contract value, etc. states the aggregate initial sale price.

(*2)

The difference calculated by deducting the market value from the contract value, etc. is ¥7
million.

(Note 2) Financial instruments whose market value is extremely difficult to determine are recorded on
the consolidated balance sheet as follows, and are not included in “Assets (4) Other securities”
in the market value data for financial instruments.
Amount recorded in the consolidated balance sheet
Category(millions of yen)(i) Unlisted shares (*1) (*2)
2,479Subtotal
2,479(ii) Investments in associations (*2) (*3)
1,443
Allowance for investment loss (*4)(23)
Subtotal
1,420
Total
3,899
(*1)

Because unlisted shares do not have a market price and the market value is extremely
difficult to determine, the market value is not recorded.

(*2)

Impairment loss on unlisted shares in this consolidated accounting year is ¥0 million.

(*3)

For investments in associations where the assets of the association consist of unlisted sharesor other assets for which the market value is extremely difficult to determine, the market
value is not recorded.

(*4)

Investments in associations has an allowance for investment loss deducted.

(Note 3) Amount of monetary claims and securities with a maturity date expected to be repaid after the
consolidated closing date.

Within One
One toThree toYear
Three Years Five Years
Due from banks
Securities (*1)
Bonds held to maturity
Corporate bonds

364,234
3,209
3,151
3,151

24,424
10,40010,400- 36 -

32,776
8,622
8,622(Unit: millions of yen)
Five toOver Seven
Seven
Years
Years
4,006
81,772265
265-

Within One
One toThree toYear
Three Years Five Years
Other securities with amaturity date
Local government
bonds
Corporate bonds
Other
Loans (*2)
Total
(*1)

Five to
Seven
Years

Over Seven
Years

57

14,02424,154

3,741

81,772----

12,22043
14334,851
702,296

133
13,891
97,015
121,440

114
24,040105,564
138,341

3,741
105,594
109,601

8,960
60,591
1,036,407
1,118,180

The principal amount is used for the anticipated redemption amount of securities, butinvestment trusts included in “Other” use the market value.

(*2)

Loans and bills discounted does not include ¥20,370 million in claims against bankrupt
debtors, substantive bankrupt debtors, and potential bankrupt debtors and other claims withno expectation of repayment, or ¥2,961 million in claims with no fixed term.

(Note 4) The amount of corporate bonds, borrowed money, and other interest-bearing liabilities
expected to be repaid after the consolidated closing date.

Within One
One toThree toYear
Three Years Five Years
Deposits (*1)
Negotiable certificates ofdepositCall money
Borrowed money (*2)
Total

(Unit: millions of yen)
Five toOver Seven
Seven
Years
Years
0
-

2,061,948

40,417

3,602

32,442

-

-

-

-

575
57,376
2,152,342

50,43890,855

216
3,818

0

-

(*1)

Demand deposits under deposits are included under “Within one year.”(*2)

Borrowed money includes ¥1,600 million with no set deadline.

(Notes on securities)
1.

Available for sale securities (as at March 31, 2021)
Valuation difference included in profit and loss for thisconsolidated accounting year (millions of yen)
Available for sale securities

2.

-

Bonds held to maturity (as at March 31, 2021)- 37 -

Type

Amount recorded in
the consolidatedbalance sheet(millions of yen)

Items with market
Corporate
value greater thanthe consolidated
bonds
balance sheet value
Items with market
value not greater
Corporate
than the consolidated bonds
balance sheet value
Total
3.

Difference(millions of yen)

12,744

12,849

105

9,694

9,641

(53)

22,43822,49051

Other securities (as at March 31, 2021)
Type

Items withconsolidatedbalance sheet value
greater than theacquisition cost

Items withconsolidatedbalance sheet value
not greater than theacquisition cost

Shares
Bonds
Local
government
bonds
Corporate
bonds
Other
Subtotal
Shares
Bonds
Local
government
bonds
Corporate
bonds
Other
Subtotal

Amount recorded in
the consolidated
Acquisition cost
Difference
balance sheet(millions of yen) (millions of yen)(millions of yen)
7,521
5,435
2,086
8,175
8,158
17

Total
4.

Market value(millions of yen)

6,181

6,168

12

1,994

1,990

4

54,78870,486
1,425
13,41653,482
67,076
1,805
13,468

1,305
3,409
(379)
(51)

6,170

6,208

(38)

7,246

7,259

(13)

67,42082,262
152,748

68,792
84,066
151,142(1,372)(1,803)
1,605

Bonds held to maturity sold in this consolidated accounting year (April 1, 2020 to March 31, 2021)
Type
Corporate bonds

Cost of sale(millions of yen)
220

Sale amount(millions of yen)
220

Loss (gain) on sale(millions of yen)0

Retirement by purchase of bonds sold through private placement.
5.

Other securities sold in this consolidated accounting year (April 1, 2020 to March 31, 2021)- 38 -

Shares
Bonds
Local government
bonds
Corporate bonds
Other
Total
6.

Sale amount(millions of yen)256
34,430Total gain on sale(millions of yen)
017

Total losses on sale(millions of yen)94
276

18,642-229

15,788
8,086
42,773

17
69
87

46
371

Securities for which the holding purpose has been changed (from April 1, 2020 to March 31, 2021)
Not applicable.

7.

Impaired securities
Securities other than securities available for sale (excluding securities for which the market priceis extremely difficult to determine) for which the market value is significantly lower than theacquisition cost, and there is no prospect of the market value recovering to the acquisition cost, arerecorded on the consolidated balance sheet at the market value and the difference on valuation istreated as a loss in this consolidated accounting year (“Impairment”).
The amount of Impairment for this consolidated accounting year is ¥283 million (of which, ¥83
million is shares and ¥200 million is corporate bonds).
Additionally, the standards for determining the market value to be “significantly lower” have beenset, and the overview thereof is in principle as follows.
•

Securities for which the market value has declined by 50% or more of the acquisition cost.

•

Securities for which the market value has declined by at least 30% but less than 50% of theacquisition cost and which remain below a certain level.

(Notes on money held in trusts)
1.

Money held in trusts for investment (as at March 31, 2021)
Amount recorded in the
consolidated balance sheet(millions of yen)
Money held in trusts forinvestment

2.

20,243

Valuation difference included
in profit and loss for thisconsolidated accounting year
(millions of yen)
243

Money held in trusts to be held to maturity (as of March 31, 2021)
Not applicable.

3.

Other money held in trusts (other than for management or holding to maturity) (as of March 31,
2021)
Not applicable.

- 39 -(per share)
Net assets per share¥3,853.72

Current net income per share attributable to owners of parent¥97.67

Diluted earnings per share attributable to owners of parent¥54.72(Note)The shares of the Bank held by the BBT recorded as treasury shares under shareholders'equity are included in the treasury shares deducted from the calculation of the number ofissued shares as of the end of the term for the purpose of calculating the net assets per share.
The number of deducted treasury shares as of the end of the term is 347 thousand shares.
Additionally, these shareholdings include treasury shares deducted in average sharecalculations during the term for the purpose of calculating the earnings per share attributableto owners of parent and the diluted earnings per share attributable to owners of parent. The
average number of deducted treasury shares during the term is 354,000 shares.

- 40 -