Annual Report 2010
THE JUROKU BANK,LTD.

PROFILE
The Juroku Bank, Ltd., has its business base in Gifu and Aichi prefectures, theindustrial center of the Chubu region of Japan. During the over 130 years since its
founding in 1877, it has played a pivotal role as a leading financial institution in its
area.
We will continue to follow our philosophy of “serving our community by fulfilling
our social mission as a financial institution.” We will also pursue reforms by staying
open-minded, managing our operations rationally and steadily, creating a strong
management style through stronger earnings power, and improving our personnel
and organization.
The head office of the Bank is located in Gifu prefecture. The Bank has 147 domestic
branch offices, mainly in Gifu and Aichi prefectures, as well as representative offices
in Hong Kong and Shanghai. On a consolidated basis, as of the end of March 2010,
the Bank had total deposits of ¥3,889.4 billion (US$41,804 million), total assets of¥4,365.4 billion (US$46,920 million), and a capital ratio of 11.10% according todomestic standards.

Head Office

CONTENTS
1 Financial Highlights (Consolidated)

16 Consolidated Statements of Cash Flows

2 Message from the President

17 Notes to Consolidated Financial Statements

3 Management Strategy

30 Non-Consolidated Six-Year Summary (Unaudit)

9 Non-Performing Loans

31 Non-Consolidated Balance Sheets

10 Contribution to the Regional Economy and Community

32 Non-Consolidated Statements of Operations

11 Board of Directors and Corporate Auditors

33 Non-Consolidated Statements of Changes in Equity

11 Organization Chart

34 Independent Auditors’ Report

12 Financial Review

35 Corporate Data

13 Consolidated Balance Sheets

35 Affiliates

14 Consolidated Statements of Operations

36 Directory

15 Consolidated Statements of Changes in Equity

Forward-Looking Statement
This annual report contains certain forward-looking statements. Those forward-looking statements are subject to risks and uncertainties, and Juroku
Bank’s actual results may differ from those described in the forward-looking statements. We are under no obligation, and expressly disclaim any
obligation, to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise.

Financial Highlights (Consolidated)
The Juroku Bank, Ltd. and Subsidiaries

Years Ended March 31, 2010 and 2009

Thousands of
U.S.Dollars

Millions of Yen
2010

2009

2010

Total income¥ 112,490¥ 115,791$ 1,209,050

Total expenses

96,428130,519

1,036,414

Net income (loss)

9,008(9,386)

96,819Cash dividends

2,550

2,552

27,408

Total assets¥4,365,437¥4,176,116$46,920,002

Loans and bills discounted

3,008,805

3,040,399

32,338,832

Securities

972,046

845,989

10,447,614

Deposits

3,889,449

3,733,204

41,804,054

Total equity

226,673

201,888

2,436,296¥ 129,280¥ (28,308)$ 1,389,510(105,217)(61,743)(1,130,879)

7,325(2,602)78,729132,570

101,190

1,424,871

For the Fiscal YearAt Year-End

Cash FlowsNet cash provided by (used in) operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents, end of year

Note: Amounts stated in United States dollars have been computed, solely for convenience, at the rate of ¥93.04 = US$1, the approximate rate of exchange at March 31, 2010.

1

Message from the President

Working to become:“The No. 1 bank in the Tokai
region”“A bank that bridges Gifu prefecture and Aichi prefecture”“A bank that contributes tothe regional economy andcommunity”
Hakumi Horie President

Looking at the operating environment for financial institu-

facilitate financing, and earn the trust of our customers, we aretions, although some sectors of the economy are showing signs

striving to strengthen and enhance our internal control sys-of recovery, ongoing deflation and anticipation of the hightems for the protection of our customers and for compliance.

exchange rate for the yen have caused continuing weak de-Through such initiatives, we are working toward sustain-

mand for cash, and we expect the harsh business conditions toable and steady growth going forward with an awareness ofcontinue.

further improving our enterprise value.

Under these conditions, the Juroku Bank believes that
there is a need to improve its financial soundness and raise
profitability by returning to its basic role in financial services
to thereby meet the diverse needs of its customers.
To meet these challenges, we have launched our 11th
Medium-Term Management Plan under the slogans: “TheNo. 1 bank in the Tokai region,” “A bank that bridges Gifu
prefecture and Aichi prefecture,” and “A bank that contributes
to the regional economy and community.” In this manner,
we hope to further improve profitability while assisting ourcustomers to realize their dreams. For the purpose of fulfilling
our responsibilities as a regional financial institution by appropriately and actively acting as a financial intermediary, and to2

I look forward to receiving the continued support andencouragement of all our stakeholders.
July 2010
Hakumi Horie
PresidentManagement Strategy

Second Year of 11th Medium-Term
Management Plan
In April 2009 the Bank has launched its 11th Medium-Term
Management Plan, which covers next three years, under theslogan “Working to become our customers’ best partner bank,and helping realize their dreams.” We aim to become “The No.
1 bank in the Tokai region,” “A bank that bridges Gifu prefecture and Aichi prefecture,” and “A bank that contributes to theregional economy and community.” In this manner, the Bank
hopes to further improve profitability and financial soundness
while assisting its customers to realize their dreams.

Numerical Targets
Ratio of credit cost to total loans
Tier I capital ratio:

FY 2011 Year-End Targets
Lowerthan0.3%
7%ormore

OHR (Overhead Ratio;
expenses as a percentage of grossbusiness profit):

Lowerthan67%

Loans to SMEs (Small andMedium-sized Enterprises) as apercentage of total loans:

80%ormore

Based on this plan, we will be able to respond more effectively
to problems that the Bank faces. Details are outlined below.

BasicStrategies•StrengtheningEarningsCapabilitybyBuildingLifelong
Partnerships
We will shift our focus from product features to customer needs
by providing detailed services and know-how tailored to the lifestage of each customer. By doing this, we will create life-longpartnerships that extend to the next generation, and will strive toenhance our earnings capability.
•RaisingtheLevelofCustomerTrust
The Bank must win the complete trust of customers to become
their lifelong, best partner. Therefore, while maintaining thesoundness of the Bank’s financial position, we must meet customer needs and provide products and services that are highly
competitive in terms of price and other factors at the same time
we fully ascertain risks.
To do this, we are working to reduce credit costs and improve the Bank’s financial soundness through such initiatives as
eliminating the risk of overconcentration of credits by making
a number of loans to a wider range of customers, and by implementing borrower support programs. At the same time, we aremaking efforts to further strengthen ties with customers by precisely identifying their needs through daily marketing activities,
and providing optimal solutions.
•StrengtheningBusinessCapabilitiesatFront-LineBranch
Offices
Since our branch offices are not only the starting point for theprovision of our financial services, but also the places where wehave the greatest opportunities for contact with customers, it isimportant to provide impressive services of the highest quality.
To maximize our capabilities in front-line operations, we areworking to develop human resources, and focus on improving thequality of operations and raising compliance standards.
•MarketStrategyandOfficeStrategy
In our home market territory of Gifu Prefecture, we will createeasy-to-use channels while developing activities such as information-based marketing that fully leverage the Bank’s strengths anddeepen business relationships with existing customers.
Since Aichi Prefecture has become a crucial market for the
Bank’s growth in the foreseeable future, we will continue toposition it as a marketing base on the same level of importanceas Gifu Prefecture, and will conduct proactive marketing whilestrengthening our brand.
•PursuitofSynergiesthroughaBusinessTie-UpwithThe
GifuBank,Ltd.
In January 2009, we concluded a business and capital tie-up
agreement with The Gifu Bank, Ltd. to make regional financing more stable and smooth, expand our earnings base, improvebusiness efficiency, and contribute to the development of local
communities and the economy of the Tokai region, particularly
in Gifu prefecture.
To achieve these goals, the banks will create a Business Tieup Study Committee to move forward with the examination ofvarious business possibilities and actively leverage each other’s
strengths.
•StrategicUseofComplaintsandRequests
Customer complaints and requests can be used as valuable opportunities when customers contact the Bank. We do our best to
resolve problems as a matter of course, but we also view problems
as an important tool to uncover customer needs. We will work tostrengthen relationships based on our relationship of trust withour customers, by actively responding these needs.

3CorporateGovernance
Basic Policy
At Juroku Bank, we believe that retaining the trust of our stakeholders by conducting all of our activities in a sound manner isvital to our role as a financial institution. Therefore, we place thehighest priority on building a solid organizational structure andestablishing systems that continually reinforce corporate governance.
In association with the entry into effect of the Companies
Act, we established a Basic Policy related to the Establishment of an Internal Control System at a meeting of the Boardof Directors held on May 24, 2006. Board meetings held on
September 20, 2007 and February 26, 2009 adopted resolutions
to partially amend this policy. In this way, we have developed asystem to ensure the appropriate execution of our business andhave refined our system. Under this basic policy, we will pursue
initiatives to enhance corporate governance.

With respect to the risk control system, we have establishedthe ALM Committee and Compliance Committee. These committees discuss risk management issues both on a regular basis
and when necessary. At these meetings, the appropriatenessof operations is reviewed and risk management is applied tominimize loss due to unforeseen circumstances. During the term
under review, the ALM and Compliance committees both met
at least once a month. We have also signed consultation agreements with three lawyers, who provide advice on legal mattersand perform a variety of legal checks when necessary.
The Bank’s accounts are audited by the independent auditing firm Deloitte Touche Tohmatsu LLC (as of June 30, 2010).
This firm provides accurate audits on the basis of appropriate
information disclosure.
Going forward, we will work to further enhance our corporate governance standards and ensure the soundness of our
ethical conduct and financial position.

Basic Policy on Strengthening Internal Control System
Progress Thus Far
The Board of Directors comprises 11 members who deliberate and decide matters stipulated in laws and regulations andimportant management issues, and monitor the conduct of business operations by each director.
Under the Managing Directors Committee structure, authorized by the Board of Directors, the president, senior managing
directors and managing directors are able to quickly decide on
important matters affecting the daily conduct of business operations.
The Board of Corporate Auditors comprises four statutory
auditors, including two outside auditors and two standing auditors. To support the statutory auditors, we have established the
Corporate Auditors’ Office, which monitors the execution ofbusiness operations objectively and ensures appropriate auditing
functions.
With regard to internal controls, the Audit & Inspection Division conducts internal audits, and at least once per year seeks
outside opinions regarding the development and management of
the internal control system. Based on these objective opinions,
we work to further improve the internal control system. Moreover, to reinforce the compliance system, we have established awhistle-blower system and have improved the effectiveness ofthe system by using an external lawyer as the point of contact.

4

We are currently making efforts to build an internal control
system based on the policies described below.
1. System to ensure that, in the execution of their duties,
directorscomplywithallrelevantlaws,ordinances,
regulations,andtheBank’sArticlesofIncorporation
Our Basic Policy establishes the Bank’s commitment to serve
local communities by fulfilling its mission as a financial institution, and to seek business growth through sound practices
founded on a broad and rational perspective.
To implement this policy, directors of the Bank are responsible for the establishment of ethical standards and a compliancepolicy, and for ensuring that business is conducted in accordancewith these standards and that laws, ordinances, and the Articles of Incorporation are adhered to. In addition, directors are
responsible for preventing damage caused by anti-social forces.
2. System for storage and management of information
relatedtothedirectors’executionoftheirduties
To ensure efficient verification of proper business practices, regulations will be created and followed on the handling and control
of information and documents related to business operations (including electronic records); adherence to these regulations will
be monitored, and regulations will be revised when necessary.
In addition, a system will be established to enable directors
and statutory auditors to view this information and the relevant
documents when necessary.

3.Riskmanagementregulations(1) Risk management is positioned as an important duty toensure the soundness and safety of business, and regulations related to each type of risk, including a Comprehensive Risk Management Policy, will be established, and efforts will be made toappropriately improve the measurement, evaluation, and management of risk by following these regulations. An independent
third party will regularly evaluate the Bank’s management ofmajor risks, and the Bank will continually work to improve risk
management level evaluations.
(2) In addition to designating one department to comprehensively manage risk, individual departments will be made specifically responsible for each category of risk, ensuring effective risk
management. In addition, an organizational structure will beestablished, including an ALM Committee, chaired by the director in charge of the department responsible for comprehensive
risk management. Risk management reports will be made to theBoard of Directors on a regular basis, or as necessary.
(3) The following are risks to be managed. When new risksarise, a department to handle them will be promptly establishedby the Board of Directors.
1) credit risk, 2) market risk, 3) liquidity risk, 4) operationalrisk, and 5) other risks that could have a serious impact on the
Bank’s business.
4.Systemtoensuretheefficientexecutionofdirectors’duties(1) A Medium-Term Management Plan and guidelines based on
this plan will be created for each six-month period, and duties
will be executed in accordance with the Basic Policy and an Action Plan.
(2) Progress made in implementing these plans will be reported
to the Board of Directors in a timely manner, and steps will betaken in response as needed.
(3) Items that should be taken up by the Board of Directors will
be clearly stated in regulations such as the Board of Directors
Regulations, and important items will be discussed by the Managing Directors Committee, which comprises managing directors or above, to ensure that issues are sufficiently examined. In
addition, Regulations on Decision-Making Authority Related toOperations will stipulate the appropriate delegation of authority to subordinates based on such factors as the importance ofthe operation, making the directors’ execution of duties more
efficient.
5.Systemtoensurethattheexecutionofemployees’dutiescomplieswithlaws,ordinances,andtheArticlesof
Incorporation(1) In addition to positioning compliance with laws and ordinances as one of our most important business responsibilities
and establishing regulations such as the Code of Ethics andCompliance Policy, the Bank will establish a department toprovide overall control. In addition, a Compliance Committee,
chaired by the director responsible for the department undertaking overall control, will be created, and this committee will betasked with handling compliance-related issues.
(2) An in-house system will be created for reporting violationsof laws and ordinances and other compliance-related issues, anda whistle-blower system that employs an independent lawyer
to receive reports. Efforts will be made to prevent or promptly
detect problems such as violations of laws.
6. System to ensure appropriate operations of the corporategroup,whichiscomposedofrelatedcompanies,including affiliates(1) An internal auditing agreement has been concluded withaffiliates, and operations are audited by the Internal Audit
Department of the Bank to ensure proper business operations by
the corporate group, which is centered on the Bank. Operations
at affiliates will be audited through various activities, including
appointing officers of the Bank as statutory auditor serving on a
non-regular basis of affiliates and having them attend Board of
Directors meetings of affiliates.
(2) The directors of the Bank and presidents of affiliates will
exchange opinions at least once every six months to prevent
problems such as inappropriate transactions between the Bankand its affiliates.
(3) When engaging in transactions with affiliates and other entities, steps will be taken to verify that the terms of the transaction conform to the arms-length principle.
(4) A whistle-blower system will be established at the Bankand all affiliates, making it possible for parties such as affiliate
employees to make reports or seek advice.
(5) A system will be created to ensure the reliability of thefinancial reporting of the Group, especially for the Bank.
7.Itemsrelatedtoemployeeswhoseassignmenttoassist
themintheirdutiesisrequestedbythestatutoryauditorsoftheBank
A Corporate Auditors’ Office will be created to assist the statutory auditors (Corporate Auditors) in the performance of theirduties, and at least one full-time employee will be assigned towork in that office. Upon obtaining the opinions of the Board ofAuditors, decisions will be made on the positions and qualifications of employees to be assigned to engage in this work, and aroster of such employees will be created.

5

8.Ensuringtheindependenceoftheaboveemployeesfrom
directors
The appointment, transfer, and evaluation of employees who assist the Corporate Auditors in their duties will be subject to theapproval of the Board of Auditors.
9. System for directors and employees to report to Corporate Auditors and a system for other reports to Corporate Auditors
Officers shall submit reports and provide information in response to requests from the Board of Auditors or individual
Corporate Auditors. The following are the main topics of thereports and information to be provided.
(1) Department activities related to creating the Bank’s internal
control system(2) Activities of the Bank’s affiliates(3) Significant accounting policies and standards and changes tothem(4) Content of disclosed earnings, projections, and other important disclosure materials(5) Operation of the whistle-blower system and notifications(6) Circulation of documents such as draft proposals and theminutes of important conference/committee meetings(7) Other items deemed necessary by the Corporate Auditors
10.SystemtoensureeffectiveauditsbyCorporateAuditors
The representative director will regularly meet and cooperate with the Corporate Auditors to ensure the effectiveness ofaudits, and will regularly exchange opinions on management
problems and progress in auditing to ensure high accuracy.

to foster knowledge of legal issues and increase compliancerelated awareness. We have also prepared curriculums related tocompliance for individual training programs in order to boost
the knowledge and awareness of compliance among our employees. In addition, each department conducts periodic self-checks
according to its specific responsibilities. This is part of ourinitiative to ingrain a compliance-oriented corporate culture.

Organizational Structure
Compliance Committee
Chaired by the managing director in charge of the ComplianceManagement Division and consisting of general managers fromrelevant divisions, the Compliance Committee examines, discusses, and issues directives concerning matters of compliance.

ComplianceManagementDivision
As the entity responsible for overseeing compliance, the Compliance Management Division promotes compliance programs
and serves as the secretariat for the Compliance Committee.

InspectionSection
(AuditandInspectionDivision)
The section conducts audits and other investigations related tothe compliance conditions in each division.

ComplianceatEachDivision

Compliance System
Recognizing that the survival of financial institutions depends
on trust, we put top priority on earning the firm trust of thegeneral public. To this end, we embrace high corporate ethicalstandards and promote extensive awareness of the importance oflegal compliance.
We are further strengthening our compliance system underour 11th Medium-Term Management Plan through policies
which are designed to:1) earn the firm trust of the general public through themaintenance of high corporate ethical standards andawareness of the importance of legal compliance;2) promote awareness of the crucial importance of compliance among our staff; and3) raise standards of compliance rigor still higher.
To further enhance the compliance system that we have built
to date, we formulate and implement a compliance programeach fiscal year. All departments hold monthly study meetings

6

Compliance officers are appointed in each of the divisions tocheck the day-to-day compliance of those divisions.

Customer Protection Management System
The Bank set up a Customer Protection Management Policyin September 2007 to develop and establish a system to ensure
customer protection. Under the Customer Protection Management Policy, we have clearly stated protection measures that we
had taken as part of compliance and risk management. We arefocusing more heavily on customer-oriented management. The
purpose of the policy is to improve the protection and convenience of customers through the following initiatives:(i) Providing appropriate information and explanations on
products and services for customers(ii) Responding properly to requests, consultation, inquiries
and complaints from customers

(iii) Appropriately managing customer information(iv) Properly managing outsourced operations(v) Properly managing of conflicts of interest so avoid unfair
detriment to the interests of our customers

1

Information Security, Management of Customer
Information

Implement appropriate risk management to ensure thatrisk taking is handled in line with the Bank’s financial
strength.

2

Enhance the ability of risk analysis to support appropriate risk-taking.

3

Bring risk management into conformity with Basel II.

4

Strengthen credit risk management.

In line with the top priority that we assign to ensuring the confidentiality of our customers’ personal data, information security
risk is addressed by the Bank’s Information Security Management Rules. We have publicly announced our Declaration of
Personal Information Protection (Privacy Policy).
As stipulated in the aforementioned Security Management
Rules, we have also appointed a chief information officer at theBank’s headquarters and an information officer in each department and branch. We are making every effort to educate employees to bolster their awareness of security issues so that we
can ensure the maximum degree of protection for customer data
in daily operations.

RiskManagement
The importance of risk management has grown as the risks confronting financial institutions have become more complex anddiverse. Recognizing risk management as crucial for safe andsound operations, we have implemented compliance measures in
the Risk Management Policies contained in our 11th MediumTerm Management Plan. In addition, we have establishedComprehensive Risk Management Policies and other policies
and rules relating to risk management that enable an appropriate and prompt response to various types of risk.
We have established the Risk Management Division to stepup our commitment in this area. We aim to further strengthen
our risk management system through use of the PDCA cycle,
by laying down policy (planning), creating internal rules andorganizations (doing), assessing results of these measures (checking) and making improvements where needed (acting).
In addition, to ensure that our risk management mechanisms function effectively with regard to sections within theGroup subject to auditing (the Bank’s head office divisions,branches and consolidated affiliates), regular, planned, on-site
audits of such departments are carried out by staff of the Audit
and Inspection Division, which is independent from business
operation departments. In this way the Bank verifies the effectiveness of its risk management systems.

Risk Management Policies(11th Medium-Term Management Plan)

Comprehensive Risk Management
The Bank has formulated a comprehensive risk management
framework by determining a Comprehensive Risk Management
Policy and Rules.
The Bank carries out comprehensive risk management tosecure sound operations. Each risk is managed by related divisions individually, and, taken one step further, by quantifying
risk statistically to limit exposure to a certain level of regulatory
capital (within Tier I thresholds).
We adopt a flexible approach to required responses by getting the current state of such comprehensive risks checked by
the ALM Committee, which has monthly meetings and reports
directly to the Board of Directors.

Credit Risk
To appropriately adapt to changes in the credit risk in relation
to assets held by the Bank, and to ensure stable profitability andmaintain sound operations, we conduct management appropriately with reference to our Credit Risk Management Policies
and Credit Risk Management Rules.
In order to objectively determine a borrower company’s
credit state and its capacity to repay loans, we perform a credit
rating system in a timely manner and reflect the result of thecredit rating in our credit risk management. More specifically,
we endeavor to maintain a sound asset base by implementing
our own assessment of loan assets and by making appropriate
provision for possible loan losses and write-offs based on thecredit rating system.
The credit rating system enables a quantification of the credit risk, eliminates concentration of risk with particular borrow-7

ers or industries, and further ensures profits that are balanced bycredit costs, and thereby enables the Bank to improve its credit
portfolio.
Regarding examination of loan applications, we have clearly
separated the sales promotion and credit screening functions
and undertake strict reviews and management under a policyof screening by borrower business sector. Individual cases arescreened by verifying various aspects including the use of funds,
income and expenditure plans, and investment outcomes, and by
carefully examining a borrower’s resources and plans for repayment.

Market Risk
We manage market risk through the Bank’s Market Risk Management Policies and, as specific rules, Market Risk Management Rules.
The Risk Management Division manages interest rate risk
related to deposits and loans, as well as the risk associated withsecurities, derivatives and other markets. Our current positions,
unrealized gains/losses and risk indicators such as BPV and VaR
are measured and evaluated on a daily or monthly basis andreported to management. From the perspective of managing assets and liabilities together, we hold monthly ALM Committee
meetings, forecast interest rates, stock prices and exchange rates,
as a set of measures to enable an appropriate response to risk.

Liquidity Risk
We manage liquidity risk through our Liquidity Risk Management Policies and Liquidity Risk Management Rules and regard
stable cash flows as the primary objective. Moreover, we havein place a system (Liquidity Risk Contingency Plan) that can
respond to a wide variety of circumstances promptly and appropriately.

Operational Risk
We have drawn up an Operational Risk Management Policies
and Operational Risk Management Rules, with separate provisions for administrative risk, system risk, legal risk, personnel
risk, fixed asset risk and reputational risk. For the important
categories of administrative and system risk, we have drawn up
the following sub-policies and procedures.

【AdministrativeRisk】

We manage administrative risk through our own Administrative Risk Management Policies and Administrative Risk Man-8

agement Rules. While adapting to the growing diversificationand complexity of banking operations, our administration has
become more rigorous in an effort to retain and strengthen thetrust of our customers.

【SystemRisk】

System risk is managed through the Bank’s System Risk Management Policies and System Risk Management Rules. We haveestablished a framework that swiftly responds to system failure
through our Computer System Failure Action Rules and Center
Failure Rules.
To prepare for contingencies that cannot be dealt with using our conventional risk management mechanisms, we havecompiled a Business Continuity Plan, and have taken measuresthat would enable us to continue major business operations evenunder emergency conditions.
At Juroku Bank, we recognize the importance of integrated
risk management, and we will continue working to enhance thesophistication of our risk management system.

Non-PerformingLoans

The Bank provides information about the status of its assets inthree different ways. First, we conduct self assessment to calculate appropriate write-offs and reserves by classifying borrowers
according to their financial soundness. Second, disclosure basedon “The Financial Reconstruction Law” is used to classify prob-

lem assets. Third, we disclose the value of Risk-Monitored Loans
based on the Banking Law, which excludes non-loan assets suchas foreign exchange, accrued interest and advance payments.

AssetSelf-Assessment/AssetsDisclosedundertheFinancialReconstructionLaw/
Risk-MonitoredLoansundertheBankingLaw(asofMarch31,2010)(Non-consolidated)
Asset Self-Assessment
For all assets
Borrower category
Balances of credits
Legallybankrupt borrowers

5.8
[1.5]

Virtuallybankrupt borrowers

17.6
[8.8]

Potentiallybankrupt borrowers

83.4

I

Classification
II
III

IV

4.8

1.0

—
(0.2)

—
(4.3)

—
(1.5)

—
(8.8)

13.3

4.3

13.4

Others*1

763.4

45.3

20.7

17.4
(15.6)

83.4

8.9

8.6

14.8

Classification

Loan balances

Bankrupt loans

5.5
[1.4]

Non-accrual loans

100.7[91.9]

Past due loans(3 months or more)

0.8

Restructured loans

8.0

Total

115.2
[102.3]100.0%

50.4

15.6

79.0%

2.4

1.4

42.3%

61.3

31.8

80.4%

Sub-total

1.6

11.8

247.0

516.3

115.7
[102.6]

Normal assets

2,986.8
2,219.0

Total

3,102.5[3,089.4]

23.4[10.3]

Substandard loans*3

Normal borrowers

2,219.0

Bankrupt andquasi-bankrupt assets

Billions of Yen
Risk-monitored loans
Loans only
(no other type of credit included)

Doubtful assets

Borrowers requiringcautionSubstandard
borrowers

Assets disclosed under the Financial Reconstruction Law
and coverage of the claims
For all claims
Classification
Portion of claims
Reserves
Coverage ratio
Balances of claims
secured*2

2,531.0 554.1—
17.4(17.3) (13.1)*1 Borrowers requiring caution, excluding substandard borrowers*2 Portion of claims secured by collateral or guarantees

RatioofdisclosedclaimsundertheFinancialReconstructionLaw(subtotal)tototalcredits
Figures in brackets are those after application of partial charge-offs(direct deduction).
3.7%[3.3%]

Ratioofrisk-monitoredloanstototalloans
Figures in brackets are those after application of partial charge-offs (direct
deduction).
3.8%[3.4%]

Total

3,102.5[3,089.4]*3 Substandard claims consist of loans only.

Notes:
1. Amounts in asset self-assessment and claims disclosed under
the Financial Reconstruction Law and the coverage of claims arerounded to the nearest 100 million yen. Amounts in risk-monitored loans are rounded down to the nearest 100 million yen.
Figures for ratios are rounded down to the first decimal place.

3. Amounts in asset self-assessment are those after deduction of
specific reserves for possible loan losses, and the amounts inparentheses are specific reserves for each classification.
4. The Bank does not implement partial charge-offs (direct deduction). If partial charge-offs were implemented, relevant figures
would decline to the figures shown in brackets.

2. All credit items = Loans + Customers’ liabilities for acceptancesand guarantees + Bonds issued through private placements covered by guarantees of the Bank + Foreign exchanges + Suspense
payments with a similar nature to loans + Accrued interest.

9

ContributiontotheRegionalEconomyandCommunity

ActivitiestoRevitalizetheRegional
EconomyInitiatives to Facilitate Financing
The Bank views the facilitation of regional financing as its mostimportant duty and this is expressed in its basic philosophy of“serving our community by fulfilling our social mission as a financial institution.” Therefore, the Bank has actively responded
to its customers’ demands in relation to their needs for funds orreview of the conditions for borrowing.
The Bank has enhanced its management system through theprovision of a Financing Facilitation Meeting that was established in the headquarters during December 2009 to respondattentively to the increasing variety of requests we receive from
customers in small- and medium-sized businesses and customers
who have mortgage loans.
Going forward, we will strive to provide a prompt, accurate
and suitable response based on our Basic Policy related to the
Facilitation of Financing which was established in January 2010
and thereby enable the Bank to function as a proactive financial
intermediary in its role as a regional financial institution.

Holding Regional Banks’ Joint Business Talks
Forum in Shanghai – Support for Business in China
On December 10, 2009, the Bank organized with 7 regionalbanks (in addition to our bank, Hyakugo Bank, Shiga Bank,
Nanto Bank, Nishi-Nippon City Bank, Hiroshima Bank, Hokkoku Bank, and Minato Bank) and two regional governmental
bodies (Kobe city, and Miyagi International Business Promotion
Association), the “Monozukuri Business Talks Forum @ Shanghai (2009 Winter)” in Shanghai, China. The first round of China
Business Discussions was held by regional banks in 2005 for the
purpose of supporting “Ensure Availability of Components
Suppliers and Outsourcing Partners” and “Developing Sales
Partners” for client companies operating in China. The current
discussions marked the fifth round, and business meetings wereconducted actively.

10

Starting Overseas Business Support Desk
In February 2010, we established Overseas Business Support
Desk in the International and Securities Division to improve
support for the overseas business activities of our customers.
We are actively pursuing support for such activities in a similarmanner to the way we support domestic business.

Handling Eco-Friendly Financial Products
The Bank believes that a commitment to dealing with environmental issues is a public responsibility. Accordingly, we provide
proactive support to customers, addressing environmental issues
by offering eco-friendly financial products, including the Every
Support 21 and Juroku Eco Loan products. In addition, since
September 2009, the Bank has started an Emission Trust Beneficiary Rights Introduction Business, and from December 2009 to
January 2010, the Bank held the Juroku Eco-Challenge Campaign.

BoardofDirectorsandCorporateAuditors
The Juroku Bank, Ltd. (as of June 30, 2010)

President

Hakumi Horie
Senior Managing Director

Yukio Murase
Managing Directors

TomioKawamura
Yoji Matsuura
Toshiro Hori
Directors

Yutaka Sugiyama
EijiYamada
NaokiIkeda
Kiyoshi Mabuchi
Fumihiko Miura
Hiroyuki Ota

Hakumi Horie
President

Standing Corporate Auditors

Kunitaka Okamoto
Yasuaki Kono
Corporate Auditors

Hisashi Yura
KatsuhikoKumazaki
Yukio Murase
Senior Managing Director

TomioKawamura
Managing Director

Yoji Matsuura
Managing Director

Toshiro HoriManaging Director

OrganizationChart
The Juroku Bank, Ltd. (as of June 30, 2010)

General Meeting of
Shareholders

Corporate Auditors
Board of Corporate
Auditors

Board of Directors

Executive
Committee

Corporate Auditors’ Office
Audit and Inspection Division
Secretariat
Personnel Division
General Affairs DivisionCorporate Planning DivisionMarketing Supervision Division
Retail Marketing DivisionCorporate Marketing DivisionInternational and Securities Division
Hong Kong Representative Office
Shanghai Representative Office
Credit Supervision Division
Enterprise Support Division
Operations Administration Division
Risk Management Division
Compliance Management Division
Head Office
Domestic Branches (146)11

FinancialReview

12

Performance

Financial Position

During the fiscal year under review, the Japanese economy
showed slight signs of recovery as a result of recovery in manufacture driven by policies to stimulate demand for automobilesand electrical products, ongoing progression of inventory adjustments and an increase in exports to rising countries, particularly
in Asia. However, the employment market remains sluggish,and capital expenditures have become bearish.
Although there was a recovery in manufacture centering on
auto-related and heavy equipment industries at our businessbase in Gifu and Aichi prefectures, there has been no improvement in the employment condition or any increase in capital
expenditures. Therefore, business conditions remained harsh.
Under these conditions, the Bank’s consolidated results forthe fiscal year under review were as follows:
Ordinary income from banking operations decreased by¥3,271 million to ¥87,109 million (US$936 million) due toa decrease in interest income resulting from the fall in interest from loans notwithstanding an improvement in the balanceof loans. Ordinary expenses decreased by ¥34,808 million to¥72,085 million (US$775 million) as a result of a large decreasein credit costs and losses on valuation of securities against abackground of an improving domestic economy. As a result,ordinary profit increased by ¥31,537 million to ¥15,024 million(US$161 million).
In the leasing business, strong initiatives were made torespond to the diverse needs of customers at a time of majorchanges in the operating environment. As a result, ordinary
income increased by ¥111 million to ¥21,680 million (US$233
million), ordinary expenses decreased by ¥48 million to ¥20,661
million (US$222 million), and ordinary profit increased by ¥159
million from the previous term to ¥1,019 million (US$11 million).
In other businesses, including the credit card business andcredit guarantee business, ordinary income decreased by ¥111
million to ¥5,444 million (US$59 million), ordinary expenses
decreased by ¥36 million to ¥4,540 million (US$49 million)
and ordinary profit decreased by ¥75 million to ¥904 million(US$10 million).
As a result, ordinary income on a consolidated basis decreased by ¥3,207 million to ¥112,478 million (US$1,209
million), ordinary expenses decreased by ¥34,831 million to¥95,540 million (US$1,027 million), ordinary profit increasedby ¥31,624 million to ¥16,938 million (US$182 million), andnet income increased by ¥18,394 million to ¥9,008 million(US$97 million).

In relation to balance of deposits, the Bank strived to procure
stable, long-term funds at low cost through various sales activities such as special campaigns. The Bank also worked tostrengthen its lineup of investment products, particularly for
individuals. These included investment trusts, government
bonds, pension insurance, and whole life insurance as a positive
response to diversified asset management needs. As a result, ourbalance of deposits as of March 31, 2010 increased by ¥156.2
billion to ¥3,889.4 billion (US$41,804 million).
In lending activities, the Bank responded actively to demand
for funds from local enterprises. Along with this, we worked
actively to provide mortgage loans and other financing to individuals and funds to local government entities. As a result,although loans to individual customers increased mainly centering on mortgage loans, corporate loans decreased due to sluggish demand for funds. Consequently, our balance of loans as ofMarch 31, 2010 decreased by ¥31.6 billion to ¥3,008.8 billion(US$32,339 million).
With regard to securities, in addition to underwriting andpurchasing central and local government bonds, while closely
watching market conditions, the Bank engaged in bond andother securities transactions in order to efficiently manage
funds. As a result, our balance of securities as of March 31,
2010 increased by ¥126.1 billion to ¥972.0 billion (US$10,448
million). Unrealized gains on valuations of other available-forsale securities came to ¥21,234 million (US$228 million), an
increase of ¥17,345 million from the previous term.
Net cash provided by operating activities amounted to¥129,280 million (US$1,390 million), an increase of ¥157,588
million from the previous term for various reasons, including
an increase in deposits. Net cash used in investing activities
increased as a result of a decrease in proceeds from sales of securities by ¥43,474 million to ¥105,217 million (US$1,131
million). Net cash provided by financing activities amounted
to ¥7,325 million (US$79 million), an increase of ¥9,927 million from the previous term as a result of borrowings on subordinated loans. As a result, the closing balance of cash and cash
equivalents increased by ¥31,380 million during the term underreview, to ¥132,570 million (US$1,425 million).

Consolidated Balance Sheets
The Juroku Bank, Ltd. and Consolidated Subsidiaries

March 31, 2010 and 2009

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

ASSETS:Cash and due from banks (Notes 3 and 21)
Call loans and bills bought (Note 21)
Trading securities (Notes 4 and 21)
Money held in trust (Notes 5 and 21)
Securities (Notes 4, 11 and 21)
Loans and bills discounted (Notes 6 and 21)
Foreign exchanges (Note 7)
Lease receivables and investments in leases (Note 20)
Other assets (Notes 8 and 11)
Premises and equipment (Note 9)
Intangible assets
Deferred tax assets (Note 19)
Customers’ liabilities for acceptances and guarantees (Note 10)
Reserve for possible loan losses
Total Assets

2010

2009

2010

¥ 133,952
75,0001,686
6,000
972,046
3,008,805
3,058
43,75955,944
66,856
8,012
16,447
25,614(51,742)¥4,365,437¥ 101,806—
1,666—
845,9893,040,399
3,909
46,027
60,12867,5508,389
33,28727,443(60,477)¥4,176,116$ 1,439,725
806,105
18,12164,48810,447,614
32,338,832
32,868470,325
601,290
718,573
86,113
176,773
275,301(556,126)$46,920,002¥3,889,449
7,800
6,513
47,49954,532651
30,00058,5907,989
11
10,116
25,614
4,138,764¥3,733,204
18,22825,982
15,04849,350575
30,00056,2417,747
810,40327,442
3,974,228$41,804,054
83,83570,002
510,522586,113
6,997
322,442629,72985,866
118
108,727
275,301
44,483,706

36,83936,839395,948

25,358112,138
21,234
12,48325,358105,472
3,889
12,699272,549
1,205,267
228,224
134,168(1,381)
206,671
20,002
226,673¥4,365,437(1,276)
182,981
18,907
201,888¥ 4,176,116(14,843)
2,221,313
214,983
2,436,296$46,920,002

LIABILITIES AND EQUITY:
Liabilities:
Deposits (Notes 11, 12 and 21)
Negotiable certificates of deposit (Note 21)
Call money and bills sold (Note 11)
Payables under securities lending transactions (Notes 11 and 21)
Borrowed money (Notes 11, 13 and 21)
Foreign exchanges (Note 7)
Bonds (Note 14)
Other liabilities (Notes 15 and 21)
Liability for retirement benefits (Note 16)
Deferred tax liabilities (Note 19)
Deferred tax liabilities for land revaluation surplus (Note 2.g)
Acceptances and guarantees (Note 10)
Total Liabilities
Commitments and Contingent Liabilities (Notes 20, 21, 22 and 23)
Equity (Notes 17 and 24):
Common stock:authorized, 460,000,000 shares;
issued, 366,855,449 shares in 2010 and 2009
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Land revaluation surplus (Note 2.g)Treasury stock—at cost:
2,838,627 shares in 2010 and 2,511,127 shares in 2009
Total
Minority interests
Total Equity
Total Liabilities and Equity
See notes to consolidated financial statements.

13

Consolidated Statements of Operations
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Years Ended March 31, 2010 and 2009

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
Income:Interest on:
Loans and discounts

2010

2010

2009

¥ 56,587¥ 61,334$608,202

11,632

13,328125,021

Securities

180

257

1,935

Fees and commissions

14,713

14,935

158,136

Other operating income (Note 4)

24,24723,516

260,608

Gain on sale of securities

3,147

326

33,824

Other

1,984

2,095

21,324112,490

115,791

1,209,050

Deposits

7,986

10,466

85,834

Borrowings and re-discounts

1,390

1,825

14,940

101

165

1,086

Other income
Total Income
Expenses:
Interest on:

Other
Fees and commissions

4,636

4,639

49,828Other operating expenses (Note 4)

19,38325,381

208,330

General and administrative expenses

53,16952,547

571,463

Provision for possible loan losses

4,452

16,23047,850

503

27

5,406

Impairment loss on long-lived assets
Other expenses (Note 18)

4,808

19,23951,677

Total Expenses

96,428130,519

1,036,414

16,062(14,728)

172,636

Income (Loss) before Income Taxes and Minority Interests
Income Taxes (Note 19):
Current

919

1,156

9,877

Deferred

5,113(7,582)

54,955

6,032(6,426)

64,832

1,022

1,084

10,985¥ 9,008¥ (9,386)$ 96,819

Total Income Taxes
Minority Interests in Net Income
Net Income (Loss)Yen
Per Share of Common Stock (Note 2.p):
Basic net income (loss)
Cash dividends applicable to the year
See notes to consolidated financial statements.

14

2010

U.S.Dollars
2010

2009
¥24.73¥(25.75)

$0.27

7.00

7.00

0.08

Consolidated Statements of Changes in Equity
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Years Ended March 31, 2010 and 2009

Thousands

Millions of Yen

Outstanding
Number of
Shares ofCommon Stock

CommonStockCapitalSurplusRetained
Earnings

UnrealizedLand
Gain onAvailable-for-sale Revaluation
SurplusSecurities

364,432¥36,839¥25,362¥117,388¥32,732¥12,729

Net loss———(9,386)———

Cash dividends, ¥7.00 per share

—

—

—

(2,552)———

Transfer of land revaluation surplus

—

—

—

30

—

—

Purchase of treasury stock

(155)

—

—

—

—

—

Balance at April 1, 2008

Treasury
Stock

Minority
Interests

Total
Equity¥17,909¥241,709(9,386)—(9,386)(2,552)—(2,552)

—

30

—

30

(67)

(67)

—

(67)

Total

¥(1,250) ¥223,800

Disposal of treasury stock

67

—

(4)

(8)

—

—

41

29

—

29

Net change in the year

—

—

—

—

(28,843)(30)—(28,873)998(27,875)

Balance at March 31, 2009

364,344

36,83925,358105,472

3,889

12,699(1,276)

182,981

18,907

201,888

Net income

—

—

—

9,008

—

—

—

9,008

—

9,008

Cash dividends, ¥7.00 per share

—

—

—

(2,550)———(2,550)—(2,550)Transfer of land revaluation surplus

—

—

—

216

—

—

—

216

—

216

Purchase of treasury stock

(360)

—

—

—

—

—

(125)

(125)

—

(125)

Disposal of treasury stock

33

—

—

(8)

—

—

20

12

—

12

Net change in the year

—

—

—

—

17,345(216)—

17,1291,095

18,224364,017¥36,839¥25,358¥112,138¥21,234¥12,483¥(1,381) ¥206,671¥20,002¥226,673

Minority
Interests

Total
EquityBalance at March 31, 2010

Thousands of U.S. Dollars (Note 1)

Balance at March 31, 2009

CommonStockCapitalSurplusRetained
Earnings$395,948$272,549 $1,133,620

UnrealizedLand
Gain on
Revaluation
Available-for-sale Surplus
Securities$ 41,799$136,490

Treasury
Stock

Total

$(13,715) $1,966,691$203,214 $2,169,905

Net income——

96,819———96,819—96,819Cash dividends, $0.08 per share——(27,408)———(27,408)—(27,408)

Transfer of land revaluation surplus

—

—

2,322

—

—

—

2,322

—

2,322

Purchase of treasury stock

—

—

—

—

—

(1,344)(1,344)—(1,344)

Disposal of treasury stock

—

—

(86)

—

—

216

130

—

130

Net change in the year

—

—

—

186,425(2,322)—

184,103

11,769

195,872$272,549 $1,205,267$228,224$134,168

Balance at March 31, 2010

$395,948$(14,843) $2,221,313$214,983 $2,436,296

See notes to consolidated financial statements.

15

Consolidated Statements of Cash Flows
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Years Ended March 31, 2010 and 2009

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
Operating Activities:
Income (Loss) before income taxes and minority interests
Adjustments for:
Income taxes - paid
Income taxes - refund
Depreciation and amortization
Impairment loss on long-lived assets
Interest income recognized on statements of operations
Interest expense recognized on statements of operations
Net (gain) loss on securities
Unrealized loss (gain) on derivatives
Net (decrease) increase in reserve for possible loan losses
Net increase in liability for retirement benefits
Net decrease (increase) in loans
Net increase in deposits
Net decrease in negotiable certificates of deposit
Net increase in due from banks (excluding cash equivalents)
Net (increase) decrease in call loans and others
Net decrease in call money and others
Net increase in payables under securities lending transactions
Net decrease (increase) in lease receivables and investments in leases
Interest income - cash basis
Interest expense - cash basis
Other - net
Total adjustments
Net cash provided by (used in) operating activities

2010

2009

2010

¥ 16,062¥ (14,728)$ 172,636(1,714)
5,667
5,364
503
(68,399)
9,477(2,336)81(8,735)
243
31,593
156,243(10,428)(765)(75,000)(19,470)
32,451
2,268
68,717(8,219)(4,323)
113,218
129,280(12,836)—5,472
27(74,918)
12,456
19,292(1,269)6,193
288(147,662)
103,048(5,009)(271)
158(7,080)15,048(128)
74,351(10,513)
9,773(13,580)(28,308)(18,422)60,90957,653
5,406(735,158)
101,860(25,107)871(93,884)
2,612
339,564
1,679,308(112,081)(8,222)(806,105)(209,265)
348,785
24,377738,575(88,338)(46,464)
1,216,874
1,389,510(345,421)
156,81488,670(2,816)(2,513)105
1(57)(105,217)(330,978)180,882
90,070(1,699)
(215)
200
31
(34)
(61,743)(3,712,607)
1,685,447
953,031(30,267)(27,010)
1,129
11
(613)
(1,130,879)

10,00011(125)(2,561)7,325(8)31,380101,190¥132,570

028(67)(2,563)(2,602)(10)(92,663)
193,853¥101,190

107,481118(1,344)(27,526)
78,729(86)
337,274
1,087,597$1,424,871

Investing Activities:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Purchases of premises and equipment
Purchases of intangible assets
Proceeds from sales of premises and equipment
Proceeds from sales of intangible assets
Other
Net cash used in investing activities
Financing Activities:
Proceeds from subordinated loans
Proceeds from sales of treasury stock
Acquisition of treasury stock
Dividends paid
Net cash provided by (used in) financing activities
Foreign Currency Translation Adjustments on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 3)
See notes to consolidated financial statements.

16

Notes to Consolidated Financial Statements
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Years Ended March 31, 2010 and 2009

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations andthe Enforcement Regulation for the Banking Law, and in conformity
with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirementsof International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which the Juroku Bank, Ltd. (the “Bank”) is
incorporated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥93.04 to $1, the approximate rate of exchange at March 31, 2010. Such translations should
not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.

2. Summary of Significant Accounting Policies
a. Consolidation
The consolidated financial statements as of March 31, 2010 and 2009
include the accounts of the Bank and its seven significant subsidiaries,
including Juroku Business Service Co., Ltd., Juroku DC Card Co., Ltd.,
Juroku JCB Co., Ltd., Juroku Lease Co., Ltd., Juroku Computer Service
Co., Ltd., Juroku Credit Guarantee Co., Ltd. and Juroku Capital Co.,
Ltd. (together, the “Group”).
Under the control concept, those companies in which the Bank,
directly or indirectly, is able to exercise control over operations are fully
consolidated.
Investments in three (three in 2009) unconsolidated subsidiaries
are stated at cost. If the equity method of accounting had been applied
to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profits included in
assets resulting from transactions within the Group are eliminated inconsolidation.

b. Cash and cash equivalents
For the purpose of the consolidated statements of cash flows, cash andcash equivalents represent cash and amounts due from the Bank ofJapan.

c. Trading securities
Trading securities are stated at fair value and the related unrealized gains
and losses are included in earnings. The cost of trading securities sold isdetermined based on the moving-average method.

d. Securities
Securities other than trading securities are classified and accounted for,depending on management’s intent, as follows: 1) held-to-maturity debt
securities, which are expected to be held to maturity with the positive
intent and ability to hold to maturity, are reported at amortized costand 2) available-for-sale securities, which are not classified as held-tomaturity, are reported at fair value with unrealized gains and losses, netof applicable taxes, reported in a separate component of equity. Nonmarketable available-for-sale securities are stated at cost determined by
the moving-average method.
On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued ASBJ Guidance

No.19 “Guidance on Accounting Standard for Financial Instruments
and Related Disclosures”. This accounting standard and the guidance
are applicable to financial instruments and related disclosures at the endof the fiscal years ending on or after March 31, 2010 with early adoption
permitted from the beginning of the fiscal years ending before March
31, 2010. The Group applied the revised accounting standard and the
new guidance effective March 31, 2010. The effect of this change wasto increase operating income by ¥254 million ($2,740 thousand) andincome before income taxes and minority interests by ¥254 million($2,740 thousand), respectively, for the year ended March 31, 2010.
For other than temporary declines in fair value, securities are reduced to net realizable value by a charge to income.
Securities included in money held in trust for trading purposes
are stated at fair value, and the related unrealized gains and losses areincluded in earnings.

e. Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation of premises and equipment of the Bank except for leased
assets is computed by the declining-balance method over the estimateduseful lives of the assets. Depreciation of premises and equipment of theconsolidated subsidiaries except for leased assets is computed principallyby the same method as the Bank.
The range of useful lives is principally from 15 to 50 years forbuildings and from 4 to 20 years for other premises and equipment.
Under certain conditions such as exchanges of premises and equipment for similar kinds and sales and purchases resulting from expropriation, Japanese tax laws permit companies to defer the profit arisingfrom such transactions by reducing the cost of the assets acquired orby providing a special reserve in the equity section. The deferred gainon premises and equipment taxable for tax purposes in the future was¥1,108 million ($11,911 thousand) as of March 31, 2010.

f. Long-lived assets
The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstances indicate the carrying amount of an asset
or asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds thesum of the undiscounted future cash flows expected to result from thecontinued use and eventual disposition of the asset or asset group. The
impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is thehigher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

g. Land revaluation
Under the “Law of Land Revaluation”, the Bank elected a one-timerevaluation of its own-use land to a value based on real estate appraisal
information as of March 31, 1998.
The resulting land revaluation surplus represents unrealized appreciation of land and is stated, net of income taxes, as a component ofequity. There is no effect on the consolidated statements of operations.
Continuous readjustment is not permitted unless the land value subsequently declines significantly such that the amount of the decline invalue should be removed from the land revaluation surplus account andrelated deferred tax liabilities.
The carrying amount of the land after the above one-time revaluation exceeded the market value by ¥20,524 million ($220,598 thousand) as of March 31, 2010.

h. Intangible assets
Amortization of intangible assets is calculated by the straight-line
method.
Amortization cost for software for internal use is calculated by the17straight-line method over the estimated useful life, principally, five years.

i. Reserve for possible loan losses
The Bank implemented a self-assessment system for its asset quality.
The quality of all loans is assessed by the related lending division witha subsequent audit by the asset audit division in accordance with theBank’s policies and rules for self-assessment of asset quality.
The Bank has established a credit rating system under which thecustomers are classified into five categories such as “normal,” “caution,”“possible bankruptcy,” “virtual bankruptcy” and “legal bankruptcy.” Thecredit rating system is used for the self-assessment of asset quality.
For normal and caution loans, the reserve for possible loan losses isprovided for based on actual past loss ratios. For loans such as possible
bankruptcy, the reserve for possible loan losses is provided for in an
amount deemed necessary to cover possible losses on loans considering
the customer’s solvency and other factors, after the estimated fair valueof the collateral real estate or guaranteed amount has been deducted.
For loans such as virtual bankruptcy or legal bankruptcy, the reserve forpossible loan losses is provided based upon the loan amount after theestimated fair value of the collateral real estate or guaranteed amount
has been deducted.
For loans to possible bankruptcy customers, if the exposure to a customer after deducting the estimated value of the collateral or guaranteedamount exceeds a certain amount, the discounted cash flow method isapplied for reserve provision, under which the reserve is determined as
the difference between the book value of the loan and its present valueof future cash flows discounted using the contractual interest rate in thecase that future cash flows of the principal and interest can be reasonably
estimated.
Reserve for possible loan losses of consolidated subsidiaries isprovided based on historical loan loss experience and estimated collectability of specific claims.

j. Liability for retirement benefits
The Bank has a contributory funded defined benefit pension plan andlump-sum payment severance plan for employees and certain subsidiaries have lump-sum payment severance plans for employees. Also, theBank and certain subsidiaries have lump-sum severance payment plansfor directors and corporate auditors.
Retirement benefits to directors and corporate auditors of the Groupare provided at the amount that would be required if all directors andcorporate auditors retired at the balance sheet date.

k. Leases
In March 2007, the ASBJ issued ASBJ Statement No.13, “AccountingStandard for Lease Transactions,” which revised the previous accounting
standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions is effective for fiscal years beginningon or after April 1, 2008 with early adoption permitted for fiscal years
beginning on or after April 1, 2007.
(As lessee)
Under the previous accounting standard, finance leases that were deemed
to transfer ownership of the leased property to the lessee were to be capitalized. However, other finance leases were permitted to be accounted for
as operating lease transactions if certain “as if capitalized” information
is disclosed in the notes to the lessee’s financial statements. The revised
accounting standard requires that all finance lease transactions should becapitalized to recognize lease assets and lease obligations in the balance
sheet. In addition, the accounting standard permits leases which existed
at the transition date and did not transfer ownership of the leased property to the lessee to be accounted for as operating lease transactions.
(As lessor)
Under the previous accounting standard, finance leases that were18

deemed to transfer ownership of the leased property to the lessee were
to be treated as sales. However, other finance leases were permitted tobe accounted for as operating lease transactions if certain “as if sold”
information is disclosed in the notes to the lessor’s financial statements.
The revised accounting standard requires that all finance leases that are
deemed to transfer ownership of the leased property to the lessee to berecognized as lease receivables and all finance leases that are deemed not
to transfer ownership of the leased property to the lessee to be recognized as investments in leases. The Group applied the revised accounting
standard effective April 1, 2008. For the finance lease contracts which
existed on adoption and did not transfer ownership of the leased property to the lessee, the appropriate carrying amount of the leased assets(after deducting accumulated depreciation) at adoption is used as the
beginning value of the investments in leases. Interest revenues of thesefinance lease contracts are calculated by the straight-line method over
the remaining lease period. As a result of this treatment, income before
income taxes and minority interests is ¥271 million ($2,909 thousand)larger than the amount calculated by interest method.
All other leases are accounted for as operating leases.

l. Bonuses to directors and corporate auditors
Bonuses to directors and corporate auditors are accrued at the year end
to which such bonuses are attributable.

m. Income taxes
The provision for current income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to
the temporary differences.

n. Foreign currency transactions
Foreign currency assets and liabilities of the Group are translated into
yen equivalents at the exchange rates prevailing at the fiscal year end.

o. Derivatives
The Bank uses a variety of derivative financial instruments. All derivatives are recognized as either assets or liabilities and measured at fairvalue and gains or losses on derivative transactions are recognized in thestatements of operations.

p. Per share information
Basic net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted for stock splits.
The weighted average numbers of common shares used in thecomputation for the years ended March 31, 2010 and 2009 were364,238,491 shares and 364,394,170 shares, respectively.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for
related interest expense, net of tax, and full exercise of outstanding warrants. Diluted net income per share is not disclosed because there are no
dilutive shares.
Cash dividends per share presented in the accompanying consolidated statements of operations are dividends applicable to the respective
years including dividends to be paid after the end of the year.

3. Cash and Due from Banks
Cash and due from banks as of March 31, 2010 and 2009 consisted of
the following:

2010

2009

Thousands of
U.S. Dollars
2010¥ 73,653
60,299¥133,952¥57,344
44,462¥101,806$ 791,627
648,198$1,439,725

Millions of Yen

Cash
Due from banks
Total

A reconciliation between the cash and due from banks on the consolidated balance sheets and the cash and cash equivalents on the consolidated
statements of cash flows for the years ended March 31, 2010 and 2009
was as follows:

2010

2009

Thousands of
U.S. Dollars
2010¥133,952¥101,806$1,439,725(1,382)(616)(14,854)¥132,570¥101,190$1,424,871

Millions of Yen

Cash and due from banks
Due from banksother than the Bank of Japan
Cash and cash equivalents

4. Trading Securities and Securities
Trading securities as of March 31, 2010 and 2009 consisted of the following:
Millions of Yen

National government bonds
Local government bonds

2010

2009

¥1,64046¥1,686¥1,63432¥1,666

Thousands of
U.S. Dollars
2010$17,627494$18,121

Valuation gains, which were included in other operating income for theyears ended March 31, 2010 and 2009, were ¥9 million ($97 thousand)and ¥6 million, respectively.
Valuation losses, which were included in other operating expenses
for the years ended March 31, 2010 and 2009, were ¥1 million ($11thousand) and ¥2 million, respectively.
Securities as of March 31, 2010 and 2009 consisted of the following:

2010

2009

Thousands of
U.S. Dollars
2010¥129,176
398,243
141,174
190,623
112,830¥972,046¥122,859
385,764
125,908
144,375
67,083¥845,989$1,388,392
4,280,342
1,517,347
2,048,828
1,212,705$10,447,614

Millions of Yen

Stock shares
National government bonds
Local government bonds
Corporate bonds
Other securities
Total

Information regarding available-for-sale and held-to-maturity securities
as of March 31, 2010 and 2009 was as follows:
2010
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity:
Debt securities

50,816445

424

Millions of Yen
Unrealized Unrealized
Gains
LossesCost

50,837

Fair
Value¥ 97,615 ¥ 22,457 ¥ 10,782 ¥109,290
598,734
4,806
400 603,140
72,154584
11,77560,963
1,439

2010
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity:
Debt securities

Fair
Value

¥ 85,584 ¥ 35,793 ¥ 5,501 ¥115,876
670,067
9,892
735 679,224
112,645750
6,358 107,037

2009
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity:
Debt securities

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

Cost

22

0

1,461

Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue$ 919,862 $ 384,706 $ 59,125 $1,245,447
7,201,924
106,320
7,900 7,300,344
1,210,716
8,061
68,336 1,150,441
546,174

4,783

4,546

546,399

Available-for-sale securities and held-to-maturity securities whose fairvalue was not reliably determined as of March 31, 2009 were as follows:
Carrying AmountMillions of Yen
2009
Available-for-sale:
Equity securities
Investment vehicles and others
Held-to-maturity:
Debt securities
Total¥13,569
4,558
51,468¥69,595

The information as of March 31, 2010 is included in Note 21 “Financial
Instruments”.
Proceeds from sales of available-for-sale securities for the year ended
March 31, 2010 consisted of the following:
March 31, 2010
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

Millions of Yen
Proceeds
Realized gains Realized losses¥ 15,025¥3,144¥ 930
90,045
41,1501,761
7,424¥155,405

1,124
160
11
149
¥4,5887——428¥1,36519

March 31, 2010
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

Thousands of U.S. Dollars
Proceeds
Realized gains Realized losses$ 161,490$33,792$ 9,996
967,810442,283
18,927
79,793$1,670,303

12,081
1,720
118
1,601
$49,312

75
—
—
4,600
$14,671

Proceeds from sales of available-for-sale securities for the year ended
March 31, 2009 were ¥153,327 million. Gross realized gains and losseson these sales, computed on the moving average cost basis, were ¥1,234
million and ¥9,674 million, respectively, for the year ended March 31,
2009.
In addition, held-to-maturity securities amounting to ¥150 million
were reclassified as available-for-sale securities due to declining of issuer’s credit worthiness.

5. Money Held in Trust
Information regarding money held in trust for trading purposes as ofMarch 31, 2010 and 2009 was as follows:
Carrying AmountThousands of
U.S. Dollars
2010

Millions of Yen
2010
Money held in trust classified
as trading purpose

2009¥6,000$64,488—

7. Foreign Exchanges

6. Loans and Bills Discounted
Loans and bills discounted as of March 31, 2010 and 2009 consisted of
the following:
Millions of Yen
2010
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Others
Total

¥

2009

28,590 ¥ 39,906
187,529
213,852
433,707 2,317,972
6,259
463,019
2,352,720
5,650¥3,008,805 ¥3,040,399

Thousands of
U.S. Dollars
2010$

307,287
2,015,574
4,661,511
67,27225,287,188$32,338,832

Nonaccrual loans, which include loans to borrowers in bankruptcy andpast due loans, are defined as loans upon which the Bank has discontinued the accrual of interest income. Borrowers are generally placedon nonaccrual status when substantial doubt is deemed to exist as toultimate collectability of either the principal or interest and if the loans
are past due for a certain period of time or for other reasons.
“Loans to borrowers in bankruptcy” represent nonaccrual loans to
debtors who are legally bankrupt, which are defined in Article 96, Paragraph 1, Subparagraphs 3 and 4 of Enforcement Ordinance for the Corporate Tax Law. Loans to borrowers in legal bankruptcy as of March 31,
2010 and 2009 were ¥7,044 million ($75,709 thousand) and ¥14,744
million, respectively.
“Past due loans” are nonaccrual loans other than loans to borrowers in bankruptcy and loans of which interest payments are deferred inorder to assist the financial recovery of a debtor in financial difficult.
Past due loans as of March 31, 2010 and 2009 were ¥102,928 million($1,106,277 thousand) and ¥92,197 million, respectively.

20“Accruing loans past due three months or more” are defined as loans
on which principal or interest is past due more than three months. Loansclassified as loans to borrowers in bankruptcy and past due loans are
excluded from accruing loans past due three months or more. Accruingloans past due three months or more as of March 31, 2010 and 2009were ¥993 million ($10,673 thousand) and ¥415 million, respectively.
“Restructured loans” are defined as loans in which the Group is providing financial support to a borrower by a reduction of the interest rate,
deferral of interest payment, extension of maturity date, or reduction of
the face or maturity amount of the debt or accrued interest. Loans classified as loans to borrowers in bankruptcy, past due loans and accruingloans past due three months or more are excluded from restructuredloans. Restructured loans as of March 31, 2010 and 2009 were ¥8,070
million ($86,737 thousand) and ¥11,478 million, respectively.
The total amount of loans to borrowers in bankruptcy, past dueloans, accruing loans past due three months or more and restructuredloans as of March 31, 2010 and 2009 was ¥119,035 million ($1,279,396
thousand) and ¥118,834 million, respectively.
Bills discounted are accounted for as financing transactions in accordance with “Treatment of Accounting and Auditing in Applying
Accounting Standard for Financial Instruments in the Banking Industry” issued by the Japanese Institute of Certified Public Accountant. The
Bank has rights to sell or pledge accepted commercial bills discounted
and foreign bills of exchange bought without restrictions. The total
face value of commercial bills discounted and foreign bills of exchangebought included in foreign exchanges as of March 31, 2010 and 2009was ¥29,192 million ($313,758 thousand) and ¥41,436 million, respectively.

Foreign exchanges as of March 31, 2010 and 2009 consisted of the following:
Millions of Yen
Assets:Due from foreign correspondent accountForeign bills of exchange bought
Foreign bills of exchange receivable
Total
Liabilities:
Due to foreign correspondent accountForeign bills of exchange payable
Total

Thousands of
U.S. Dollars
2010

2010

2009

¥1,855603
600¥3,058¥1,621
1,531
757¥3,909$19,9386,481
6,449$32,868

¥ 537
114
¥ 651

¥ 427
148
¥ 575

$ 5,772
1,225$ 6,997

8. Other Assets
Other assets as of March 31, 2010 and 2009 consisted of the following:
Millions of Yen

Accrued income
Accounts receivable
Installment receivables
Derivative assets
Other
Total

2010

2009

¥ 6,591
10,487
6,952
20,246
11,668¥55,944¥ 6,170
13,302
7,164
18,56014,932¥60,128

Thousands of
U.S. Dollars
2010$ 70,840
112,715
74,721
217,605
125,409$601,290

9. Premises and Equipment

12. Deposits

Premises and equipment as of March 31, 2010 and 2009 consisted of
the following:

Deposits as of March 31, 2010 and 2009 consisted of the following:

Millions of Yen

Land
Building
Construction in progress
Other
Total

2010

2009

¥46,880
14,249308
5,419¥66,856¥47,358
14,527300
5,365¥67,550

Millions of Yen

Thousands of
U.S. Dollars
2010$503,869
153,149
3,310
58,245$718,573

The accumulated depreciation of premises and equipment as of March
31, 2010 and 2009 amounted to ¥65,585 million ($704,912 thousand)and ¥78,569 million, respectively.

2010
Current deposits
Ordinary deposits
Deposits at noticeTime deposits
Other deposits
Total

11. Assets Pledged
Assets pledged as collateral and their relevant liabilities as of March 31,
2010 and 2009 were as follows:

2010

2009

Thousands of
U.S. Dollars
2010¥154,796
9,305¥164,101¥138,723
9,636¥148,359$1,663,758
100,010$1,763,768¥105,460—¥ 77,588
20,000$1,133,491—

47,49815,048510,512

8,397¥161,355

12,640¥125,276

90,251$1,734,254

Millions of Yen
Assets pledged as collateral:
Securities
Other assets
Total
Relevant liabilities to above assets:
Deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money
Total

In addition, the following assets were pledged or deposited with respect
to foreign exchange settlements and derivatives as of March 31, 2010
and 2009:
Millions of Yen

Securities
Other assets
Total

2010

2009

¥75,6247¥75,631¥76,100
8¥76,108

Thousands of
U.S. Dollars
2010$812,812
75$812,887¥ 222,349 ¥ 208,422
1,499,332 1,465,628
28,501
30,662
1,927,524 1,824,524
211,743
203,968¥3,889,449 ¥3,733,204$ 2,389,822
16,114,919
306,331
20,717,154
2,275,828$41,804,054

13. Borrowed Money
Borrowed money as of March 31, 2010 and 2009 consisted of the following:
Millions of Yen

10. Customers’ Liabilities for Acceptances and Guarantees
All contingent liabilities arising from acceptances and guarantees arereflected in acceptances and guarantees. As a contra account, the customers’ liabilities for acceptances and guarantees are presented as assets,
representing the Bank’s right of indemnity from applicants.
The Enforcement Ordinance of the Banking Law was revised on
April 17, 2007 and effective from the fiscal years beginning on andafter April 1, 2006. The Bank offset customer’s liabilities for acceptanceand guarantees with acceptance and guarantees of ¥50,080 million($538,263 thousand) and ¥50,920 million arising from guarantees ofprivate placement securities as of March 31, 2010 and 2009, respectively.

2009

Thousands of
U.S. Dollars
2010

Borrowings due serially to
October 2019 with weighted
average interest rates of 1.53%
in 2010 and 1.65% in 2009

2010

2009

¥54,532¥49,350

Thousands of
U.S. Dollars
2010$586,113

Annual maturities of borrowings as of March 31, 2010 were as follows:Year Ending March 31

Millions of Yen

2011
2012
2013
2014
2015
2016 and thereafter
Total¥15,028
4,689
4,110
2,005
700
28,000¥54,532

Thousands of
U.S. Dollars$161,522
50,39844,174
21,5507,523
300,946$586,113

Borrowings include subordinated borrowings of the Bank, whichamounted to ¥28,000 million ($300,946 thousand) and ¥18,000 million as of March 31, 2010 and 2009.

14. Bonds
Bonds as of March 31, 2010 and 2009 consisted of the following:
Millions of Yen

Unsecured Yen subordinatedbonds due March 2017 (a)Unsecured Yen subordinatedbonds due September 2017 (b)
Total

2010

2009

¥15,000¥15,000

Thousands of
U.S. Dollars
2010$161,221

15,00015,000161,221¥30,000¥30,000$322,442(a) The interest rates of the bonds are 1.75% for the period from March
23, 2007 to March 22, 2012 and six-month Euroyen Libor plus
1.92% for the period from March 23, 2012 to March 22, 2017.
(b) The interest rates of the bonds are 1.92% for the period from September 19, 2007 to September 18, 2012 and six-month Euroyen
Libor plus 2.03% for the period from September 19, 2012 to September 15, 2017.

Deposits included in other assets as of March 31, 2010 an 2009 were
¥1,946 million ($20,915 thousand) and ¥1,930 million, respectively.

2115. Other Liabilities
Other liabilities as of March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. Dollars
2010

Millions of Yen
2010
Domestic exchange settlement
account, credit*
Income taxes payable
Accrued expenses
Deferred income
Employees’ deposits
Derivative liabilities
Accounts payable
Other
Total

¥

2009
54

618
9,760
9,645
2,309
19,654
6,423
10,127¥58,590

¥

36

915
8,563
9,645
2,200
17,900
6,828
10,154¥56,241

$

580

6,642
104,901
103,665
24,817211,242
69,035
108,847$629,729* The domestic exchange settlement account consisted of outstanding
remittance bills from other banks and/or collection bills for which the
Bank has received notices for payment from other banks which have notbeen settled.

16. Retirement and Pension Plans
The Bank and certain subsidiaries have severance payment plans for
employees, directors and corporate auditors. Under most circumstances,
employees terminating their employment are entitled to retirement
benefits determined based on the rate of pay at the time of termination,
years of service and certain other factors. If the termination is involuntary, caused by retirement at the mandatory retirement age or death, or
certain other causes, the employee is entitled to greater payments thanin the case of voluntary termination.
The liability for retirement benefits for directors and corporate
auditors as of March 31, 2010 and 2009 was ¥335 million ($3,600
thousand) and ¥462 million, respectively. The retirement benefits for
directors and corporate auditors are paid subject to the approval of theshareholders.
The liability for retirement benefits for employees as of March 31,
2010 and 2009 consisted of the following:
Millions of Yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Prepaid pension cost
Net liability

2010

2009

¥46,754(31,522)(7,598)20¥ 7,654¥46,021(26,782)(13,431)1,477¥ 7,285

Thousands of
U.S. Dollars
2010$502,515(338,800)(81,664)215$ 82,266

The components of net periodic retirement benefit costs for the years
ended March 31, 2010 and 2009 were as follows:
Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Net periodic retirement costs

22

2010

2009

¥1,339
919
(697)
2,214
¥3,775¥1,248
899
(927)
1,365
¥2,585

Thousands of
U.S. Dollars
2010$14,392
9,877(7,491)
23,796$40,574

Assumptions used for the years ended March 31, 2010 and 2009 wereset forth as follows:

Periodic recognition ofprojected benefit obligation
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss

2010

2009

Straight-line
method
2.0%
3.0%
10 years

Straight-line
method
2.0%
3.5%
10 years

17. Equity
Japanese banks are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act that affectfinancial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain
criteria such as: (1) having a Board of Directors, (2) having independent
auditors, (3) having a Board of Corporate Auditors, and (4) the term ofservice of the directors is prescribed as one year rather than two years ofnormal term by its articles of incorporation, the Board of Directors may
declare dividends (except for dividends in kind) at any time during the
fiscal year if the company has prescribed so in its articles of incorporation. However, the Bank cannot do so because it does not meet all theabove criteria. Semiannual interim dividends may also be paid once a
year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain
limitations on the amounts available for dividends or the purchase oftreasury stock. The limitation is defined as the amount available for
distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥ 3 million.
(b) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders which is determined by specific formula. Under the Companies Act, stock acquisitionrights are presented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights
are presented as a separate component of equity or deducted directlyfrom stock acquisition rights.
Other than above, the Japanese Banking Law provided that an
amount at least equal to 20% of the aggregate amount of cash dividends
and certain other cash payments which are made as an appropriation ofretained earnings applicable to each fiscal period shall be set aside as alegal reserve until the total additional paid-in capital and legal reserve
equals 100% of stated capital. The amount of total additional paid-in
capital and legal reserve which exceeds 100% of stated capital can betransferred to retained earnings by resolution of the shareholders, which
may be available for dividends. The Bank’s legal reserve amount, whichis included in retained earnings, totals ¥20,155 million ($216,627 thousand) and ¥20,115 as of March 31, 2010 and 2009, respectively.

18. Other Expenses

20. Leases

Other expenses for the years ended March 31, 2010 and 2009 consistedof the following:

Finance leases(Lessee)A subsidiary leases certain equipment.
Total rental expense including lease payments under the financeleases for the years ended March 31, 2010 and 2009 was ¥1 million ($11thousand) and ¥1 million, respectively.

Millions of Yen

Thousands of
U.S. Dollars
2010

2010

2009

¥ 328

¥ 9,213$ 3,525

1,309

5,082

14,069

288
1,101

583
2,027

3,096
11,834

Write-down of stocks andother securities
Loss on sales ofstocks and other securities
Write-down of loans
Loss on sales of loans
Loss on dispositions ofpremises and equipment
Other
Total

385

120

4,138

1,397
¥4,8082,214¥19,239

15,015$51,677

19. Income Taxes
The Bank and its subsidiaries are subject to Japanese national and local
income taxes which, in the aggregate, resulted in normal effective statutory tax rate of approximately 40% for the years ended March 31, 2010
and 2009.
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2010 and 2009 were as follows:
Millions of Yen
Deferred tax assets:
Reserve for possible loan losses
Tax loss carryforwards
Liability for retirement benefits
Write-down of securities
Depreciation
Other
Less: Valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on availablefor-sale securities
Gain on contribution of availablefor-sale securities to employees’
retirement benefit trusts
Other
Total
Net deferred tax assets

Thousands of
U.S. Dollars
2010

2010

2009

¥18,136
6,207
5,439
2,955
1,869
2,410
(6,064)30,952¥20,521
9,596
4,695
3,634
1,976
2,019
(6,119)36,322$194,927
66,71358,45931,761
20,08825,903(65,177)
332,674(13,065)(1,663)(140,423)(1,353)(1,353)(14,542)(98)(14,516)¥16,436(27)(3,043)¥33,279(1,054)(156,019)$176,655

Reconciliations between the normal effective statutory tax rate and theactual effective tax rate reflected in the accompanying consolidated statement of operations for the years ended March 31, 2010 and 2009 wereas follows:

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Income not taxable for income tax purposes
Per capita tax
Net change in valuation allowance
Other – net
Actual effective tax rate

2010

2009

39.76%
0.56(2.43)
0.46(0.34)(0.46)
37.55%

39.76%(0.61)
4.38(0.48)
0.78(0.20)
43.63%

Pro forma information of leased assets whose lease inception was
before March 31, 2008
ASBJ Statement No.13, “Accounting Standard for Lease Transactions” requires that all finance lease transactions should be capitalized torecognize lease assets and lease obligations in the balance sheet. However, ASBJ Statement No. 13 permits leases without ownership transferof the leased assets to the lessee whose lease inception was before March
31, 2008 to be accounted for as operating lease transactions if certain“as if capitalized” information is disclosed in the notes to the financial
statements. The Company applied the ASBJ Statement No. 13 effective
April 1, 2008 and accounted for such leases as operating lease transactions. Pro forma information of leased assets whose lease inception was
before March 31, 2008 such as acquisition cost, accumulated depreciation, obligations under finance leases, depreciation expense, interest
expense and other information of finance leases that do not transfer
ownership of the leased assets to the lessee on an “as if capitalized” basis
was as follows:
Thousands of
U.S. Dollars
2010

Millions of Yen
2010

2009
¥3
(2)
¥1

Acquisition cost
Accumulated depreciation
Net leased assets

¥3
(1)
¥2

$32
(21)
$11

Obligations under finance leases as of March 31, 2010 and 2009 were as
follows:
Thousands of
U.S. Dollars
2010

Millions of Yen
2010
Due within one year
Due after one year
Total

2009
¥0
1
¥1

¥1
1
¥2

$ 0
11
$11

*The amounts of obligations under finance leases include the imputed
interest expense portion.
Depreciation expense, which was not reflected in the accompanying consolidated statements of operations, was computed by the straight-line
method with useful lives being equal to the lease period and all residual
values at zero. Depreciation expense for the years ended March 31, 2010
and 2009 were ¥1 million ($11 thousand) and ¥1 million, respectively.

2321. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(Lessor)A subsidiary leases certain equipment and other assets.
The net investments in leases are summarized as follows:
Millions of Yen
2010¥47,630
566(6,210)¥41,986

Gross lease receivables
Unguaranteed residual values
Deferred interest income
Total

Thousands of
U.S. Dollars
2010$511,930
6,083(66,745)$451,268

Maturities of lease receivables for finance leases that were deemed totransfer ownership of the leased assets to the lessee are as follows:Year Ending March 31

Millions of Yen

2011
2012
2013
2014
2015
2016 and thereafter
Total

¥ 397
351
305
234
192
456
¥1,935

Thousands of
U.S. Dollars$ 4,267
3,773
3,278
2,515
2,064
4,901
$20,798

Maturities of investment in leases for finance leases that were deemed
not to transfer ownership of the leased assets to the lessee are as follows:Year Ending March 31

Millions of Yen

2011
2012
2013
2014
2015
2016 and thereafter
Total¥14,819
11,804
8,512
5,701
3,002
3,792
¥47,630

Thousands of
U.S. Dollars$159,275
126,870
91,487
61,27532,26640,757$511,930

Operating leases(Lessee)
The minimum rental commitments under noncancellable operatingleases as of March 31, 2010 and 2009 were as follows:
Millions of Yen
2010
Due within one year
Due after one year
Total

2009

¥ 44
727
¥771

¥ 44
771
¥815

Thousands of
U.S. Dollars
2010
$ 473
7,814
$8,287(Lessor)
Expected future rental revenues under operating leases as of March 31,
2010 and 2009 were as follows:
Millions of Yen
2010
Due within one year
Due after one year
Total

24

¥111
234
¥345

2009
¥46
40
¥86

Thousands of
U.S. Dollars
2010$1,1932,515$3,708On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued ASBJ Guidance
No.19 “Guidance on Accounting Standard for Financial Instruments
and Related Disclosures”. This accounting standard and the guidance
are applicable to financial instruments and related disclosures at the endof the fiscal years ending on or after March 31, 2010 with early adoption
permitted from the beginning of the fiscal years ending before March
31, 2010. The Group applied the revised accounting standard and the
new guidance effective March 31, 2010.
(1) Group policy for financial instruments
The Group provides banking services-based comprehensive financial
services and also leasing business. Banking services are comprised ofdeposit-taking and lending services, securities investment and other financial services such as derivatives business. The Group provides various
services such as local-based operations and low cost, stable, and lasting
financing by deposits and borrowed money.
As for loans and bills discounted in money management system,
the Group finances positively on capital demand of local companies andagainst home mortgage loan-based individual financing. Under acknowledgement that its main resources are bank deposits from customers, theGroup tries to ensure the soundness of the assets through appropriate
credit granting and credit rating by understanding current credit status
and managing credit granting portfolio to prevent concentrations in specific customers or industries. In marketable securities, considering thenature that it is an excess fund management relating to lending service
and its responsibility as a bank providing settlement services, the Groupfocuses on running a fund based on public bonds superior in security
and liquidity. To build up a portfolio that is less subject to rising interest rates, the Group invests in risk assets such as securities whose values
are expected to be less correlated with bonds.
In derivative transactions, the Group meets the various needs of its
customers and also focuses on performing the derivative transactions
to funding and investment aspects for its own needs as well. In tradingtransactions, the Group avoids taking excessive risk by preliminarily
restricting the type of transactions and limiting the volume. Also, theGroup will not perform a particular transaction if the variation of suchtransaction’s fair value is high against the change in the price of theunderlying assets (i.e. high leverage-effect transaction).
(2) Nature and extent of risks arising from financial instruments
The loaned money out of financial instruments that the Group holds
are related to general business enterprises, individuals, and local publicbodies and has the risk (credit risk) that the value of loaned money is
reduced by financial deterioration and the risk (interest risk) of losses
due to changes in interest rates. In marketable securities, the Groupholds domestic bonds which are comprised mainly of public bonds suchas government bonds and local government bonds, and foreign securities
which are comprised of mainly US Treasury or foreign stocks, investment trusts, and investment partnerships and so forth for investment
purposes. Also, the Group holds certain domestic bonds for held-to-maturity purposes. These items have interest risk, risk of changes in price,
credit risk, and market liquidity risk. Market liquidity risk means therisks that market trades cannot be performed due to market turmoil andsuffers losses due to significantly unfavorable financing conditions. Deposits and borrowed money hold interest risk and cash flow risk (liquidity risk). Cash flow risk means the risk that securing necessary financing
becomes difficult due to a mismatch of periods between operations andfinancing and unexpected outflow of money and due to significantly
unfavorable financing conditions. Derivative transactions related tointerest are comprised of interest-rate swap agreements, cap agreements,

floor agreements, and interest option contracts. Derivative transactions
related to currency are comprised of exchange contracts, non-delivery
forwards, currency swap agreements, and currency option contracts. Derivative transactions related to securities are comprised of bond futures,
options on bond futures, OTC bond options, stock future transactions,expiration, individual stock options, and credit derivative transactions
built in compound financial instruments. The Group utilizes derivativetransactions to meet customer needs and to control risk so that interest
risk, risk of changes in prices, and foreign currency exchange risk are notexcessive. In trading transactions, the Group performs derivative transactions to earn profit and to accumulate know-how of the transactions
and understand market trends. The derivative transactions the Grouputilizes have interest risk, currency exchange risk and risk of change inprices. In derivative transactions, the Group performs effective coveringtransactions to meet customers’ needs and also in trading transactions,
the Group preliminarily sets up maximum amount of risk to avoid too
much market risk. Transactions in the market such as options have no
credit risk and OTC transactions like interest swaps are assumed tohave low risk since the counterparties are comprised of highly credible
financial institutions and companies.
(3) Risk management for financial instruments
Integrated Risk
The Group defines integrated risk management policies and regulations,and builds up integrated risk management to ensure soundness of management. The Group revises various risks holistically with measurement
by statistical methods and tries to control the risk within the range ofmanagement vitality. To be more precise, the Group allocates risk capital to credit risk, market risk, and operational risk based on value at risk
according to assumptions about the rate of market variance and its halfyear business plan. In each operation, the Group tries to control risk andobtain return within the range of risk capital. Integrated risk is managed by risk management and is reported at monthly ALM committee
and Board of Directors meetings. Necessary actions like risk control aretaken promptly.
Credit Risk Management
The Group defines credit risk management policy, credit risk management regulation, credit granting portfolio regulation and a code of conduct for credit granting to seize, manage and take actions on credit risk
appropriately. First of all, in screening loans, the Group separates thecredit department from the operating department clearly and the Group
performs strict examination by type of business. Also, the Group considers if repayment resources are ensured and repayment plans are reasonably secured on individual loans based on the purpose of loan, businessplan and investment effect. From the point of view of the portfolio, theGroup tries to improve credit granting preventing concentrations inparticular customers and industries on credit granting and by ensuring
profits to meet credit costs. In addition, in order to improve credit risk,
the Group supports improved management and revitalization of business for customers whose business conditions are worsening. Regarding
credit risk management, the Group defines credit rating system where
the Group evaluates the degree of credit risk by an integrated scale
objectively and make arrangements to reevaluate credit rating in caseof fiscal year end approaching or any change in credit status. The credit
rating is integrated with self assessment and is the basis of measuring credit risk or estimating depreciation and allowance appropriately.
Also, regarding measurement of risk, the Group utilizes co-developed
credit risk integrated information system in Regional Banks Association of Japan and calculates the credit risk by a Monte Carlo simulationand sensitivity analysis (holding period: 1 year, confidence level: 99%).
Regarding concentration of credit risk, according to credit granting

portfolio management regulations, the Group defines a credit rating foreach company and the maximum amount of credit granting by industry
and controls the risk within the range of the maximum amount to prevent concentrations on credit granting. In addition, to keep particularindustries from being concentrated, the Group sets up guidelines on theindustry with material balances and with certain risk and monitors thebalance monthly. As for level of credit risk and degree of concentrationof credit granting, the risk controlling department reports to the ALM
committee and management and discusses necessary actions.
Market risk management (foreign exchange risk and interest rate risk)
The Group considers interest risk, currency risk and the risk of change
in prices as the main market risks and institutes a market risk management policy to manage market risk properly to avoid reducing thevalue of assets and losing credit. The Group also institutes market risk
management regulations according to the market risk management
policy to clarify how the Group specifies market risk, what role of thedepartment in charge is and how to evaluate and also to control andreduce market risk. Under integrated risk management, the Group
allocates risk capital to each business (deposit, loan, yen bonds, foreign
bonds, investment securities, investment trust and other securities) and
set up the cap of investment amount and maximum amount for loss
and matters to be discussed (level of loss to be re-examined). The Grouphandles market transactions within these risk limits expeditiously andeffectively. With regard to these risks, the risk controlling department
reports to the ALM committee and management and discuss necessary
actions. Regarding derivative transactions, the Group performs underinternal regulations and policies. Middle or back of the market security
department manages and monitors the balance, evaluates fair value,
profit and loss, measurement of risk and reports to top-management andrisk controlling department regularly and ensures mutual supervision ofrisks. Especially in trading transactions, the middle of market security
department manages the positions, measurement of risk and application
for loss cut rule closely.
Liquidity risk management
As to liquidity risk, the Group defines liquidity risk management policies and liquidity risk management regulations, and tries to manage
stable cash flow. Also, to be prepared for unforeseeable circumstances,
the Group defines a contingency plan for liquidity risks and addresses
them in a timely manner.
(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active
markets. If quoted prices are not available, other rational valuation techniques are used instead. Please see Note 23 for the detail of the fair valueof derivatives. Fair values are calculated based on certain assumptions,
therefore fair values may vary according to the assumptions used.

25

(a) Fair value of financial instruments
Millions of Yen
March 31, 2010
Cash and due from banks
Call loans and bills bought
Trading securities
Money held in trust
Securities
Held-to-maturity securities
Available-for-sale securities
Loans and bills discounted
Less : Reserve for possible loan losses
Loans and bills discounted - net
Total
Deposits
Negotiable certificates of deposit
Payables under securities
lending transactions
Borrowed money
Total
Derivatives applied hedge accounting
Derivatives not applied hedge accounting

March 31, 2010

Carrying
amount¥ 133,952
75,0001,686
6,000

Fair value¥ 133,952
75,0001,686
6,000

Unrealized
gain/loss————

50,816902,138
3,008,805(47,651)
2,961,154¥4,130,746¥3,889,449
7,800

50,837902,138¥21—

2,989,608¥4,159,221¥3,894,960
7,800

28,454¥28,475¥ 5,511—47,49947,499—54,532¥3,999,280—¥593

54,374¥4,004,633
—
¥593

(158)
¥ 5,353——

Millions of U.S. Dollars
Carrying
Unrealized
Fair value
amountgain/loss$ 1,439,725 $ 1,439,725—
806,105
806,105—
18,121
18,121—64,48864,488—Cash and due from banks
Call loans and bills bought
Trading securities
Money held in trust
Securities
Held-to-maturity securities
546,174
546,404
Available-for-sale securities
9,696,238
9,696,238
Loans and bills discounted
32,338,832
Less : Reserve for possible loan losses(512,156)
Loans and bills discounted - net 31,826,676 32,132,500
Total$44,397,527 $44,703,581
Deposits$41,804,054 $41,863,284
Negotiable certificates of deposit
83,83583,835
Payables under securities
510,522510,522
lending transactions
Borrowed money
586,113584,415
Total$42,984,524 $43,042,056
Derivatives applied hedge accounting——
Derivatives not applied hedge accounting $6,374 $
6,374

$

230
—

305,824$306,054$ 59,230——(1,698)$ 57,532——

Cash and due from banks
Cash and due from banks have no maturity. Therefore, the carrying
amount represents the fair value because the fair value approximatessuch carrying amount.
Call loans and bills boughtContract terms of call loans and bills bought are short (within 1 year).
Therefore, the carrying amount represents the fair value because the fairvalue approximates such carrying amount.
Trading securities
For securities such as bonds that are held for trading, the fair value isdetermined based on the prices quoted by the exchange or the financial
institutions from which these securities are purchased.

26

Money held in trust
For securities that are part of trust property in an independently managed monetary trust with the primary purpose to manage securities, thefair value of equity securities is determined based on the prices quoted
by the exchange and the fair value of bonds is determined based on theprices quoted by the exchange or the financial institutions from which
they are purchased. The information of the money held in trust by classification is included in Note 5, “Money Held in Trust”.
Securities
The fair value of equity securities is determined based on the prices
quoted by the exchange and the fair value of bonds is determined basedon the prices quoted by the exchange or the financial institutions fromwhich they are purchased. The fair value of investment trusts is determined based on the publicly available price.
For privately placed guaranteed bonds held by our bank or trust
subsidiaries, the fair value is determined based on the present valueof expected future cash flows, which is adjusted to reflect default risk,
amounts to be collected from collateral and guarantees and guarantee
fees, and discounted at an interest rate based on the market interest rate
as of the date of evaluation with certain adjustments.
The information of the securities by classification is included in
Note 4, “Trading securities and Securities”.
Loans and bills discounted
For loans with variable interest rates, the carrying amount represents thefair value as the fair value approximates such carrying value as it reflects
the market interest rate in a short term as long as the creditworthinessof the borrower has not been changed significantly. For loans with fixedinterest rates, the fair value is evaluated by the expected future cash
flows from these borrowings classified by type of loan and the internal rating. Future cash flows are discounted by the risk free rate andcertain management costs. As for certain consumer loans such as homemortgages, fair value is calculated by discounting the total loan principal with the same rate as a similar loan. Also, for consumer loans thatmature within one year, the carrying amount represents the fair value
as the fair value approximates such carrying value. In addition, as forloans to legally bankrupt borrowers, virtually bankrupt borrowers, andpotentially bankrupt borrowers, the fair value is calculated by deducting
the allowance from the balance in the consolidated balance sheet as ofMarch 31, 2010 since its allowance is estimated by collectability basedon discounted future cash flows and collateral. Regarding loans which do
not have repayment terms because the outstanding amount of the loan islimited to the value of collateral assets, the carrying amount represents
the fair value as the fair value approximates such carrying amount according to estimated repayment periods and conditions of interest.
Liabilities
Deposits and negotiable certificates of deposit
For demand deposits, the amounts payable on demand as of the consolidated balance sheet date (i.e., the carrying amount) is considered tobe the fair value. For variable rate time deposits, the carrying amountrepresents the fair value as the fair value approximates such carrying
amount because the market interest rate is reflected in such deposits
within a short time period. Fixed rate time deposits are grouped bycertain maturity lengths. Their fair value is calculated by discounting
future cash flows with the same interest rate as that of accepted new
deposits.

Payable under securities of deposit
For payables under securities of deposit, the contract term is short(within 1 year). Therefore, the carrying amount represents the fair value
because the fair value approximates such carrying amount.
Borrowed money
For borrowed money with variable interest rates, the carrying amountrepresents the fair value as the fair value approximates such carrying
value as it reflects the market interest rate in a short term as long as
the creditworthiness of the borrowers has not changed significantly. For
borrowed money with fixed interest rates, the fair value is evaluatedby discounting the total of the principal by the rate which reflects thecredit risks of the Group. In addition, for short term borrowed money(within 1 year), the carrying amount represents the fair value as the fairvalue approximates such carrying value.
Derivatives
Information on the fair value of derivatives is included in Note 23.
(b) Financial instruments whose fair value cannot be reliably determined
March 31, 2010
Unlisted equity securities
Investment vehicles and others
Total

Carrying amountThousands ofMillions of Yen
U.S. Dollars¥13,299$142,938
5,792
62,264¥19,092$205,202(5) Maturity analysis for financial assets, securities and financial liabilities with contractual maturities as of March 31, 2010 is as follows:

March 31, 2010

Millions of Yen
Due after one Due after fiveDue in one
year through years throughyear or lessfive years
ten years¥ 60,299——
75,000——Cash and due from banks
Call loans and bills bought
Securities
Held-to-maturity securities
Debt securities
13,020 ¥ 33,446
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
6,506
198,233
National government bonds
Local government bonds
20,17160,485
Corporate bonds
10,15877,620Other
6,427
41,436Loans and bills discounted
876,095
924,513
Total¥1,067,676 ¥1,335,733

Due after
ten years——¥ 4,350—

143,008
57,39045,10734,761
440,748¥725,364¥ 42,400—
3,740
22,747
608,836¥677,723

Millions of Yen
Due after one Due after fiveDue in one
March 31, 2010
year through years throughyear or lessfive years
ten years
Deposits¥3,381,800¥507,596¥ 52
Negotiable certificates of deposit
7,800
—
—
Payables under securities
47,499——lending transactions
Borrowed money
15,028
11,50428,000Total¥3,452,127¥519,100¥28,052

Due after
ten years
¥1
—
—
—
¥1

March 31, 2010

Thousands of U.S. Dollars
Due after one Due after fiveDue in one
Due after
year through years throughyear or lessten years
five years
ten years$ 648,098———
806,105———

Cash and due from banks
Call loans and bills bought
Securities
Held-to-maturity securities
Debt securities
139,940 $ 359,480 $ 46,754—
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
69,927 2,130,621 1,537,059 $ 455,718
National government bonds
Local government bonds
216,799
650,097
616,831—
Corporate bonds
109,179
834,265484,813
40,198
Other
69,077445,357
373,613244,486
Loans and bills discounted
9,416,326 9,936,726 4,737,188 6,543,809
Total$11,475,453 $14,356,546 $7,796,260 $7,284,211
Thousands of U.S. Dollars
Due after one Due after fiveDue in one
Due after
March 31, 2010
year through years throughyear or lessten years
five years
ten years
Deposits$36,347,803 $5,455,682 $563$6
Negotiable certificates of deposit
83,835———
Payables under securities
510,522———
lending transactions
Borrowed money
161,522
123,645
300,946—
Total$37,103,682 $5,579,327$301,509$6

22. Commitments and Contingent Liabilities
Commitment line contracts on overdrafts and loans are agreements tomake loans to customers when they apply for borrowing up to a prescribed amount, as long as there is no violation of any condition of thecontracts.
The total amounts of unused open commitments as of March 31,
2010 and 2009 were ¥1,239,279 million ($13,319,848 thousand) and¥1,226,455 million, respectively. Multi-purpose accounts includedin the unused open commitments as of March 31, 2010 and 2009 are¥571,530 million ($6,142,845 thousand) and ¥544,675 million, respectively. The amounts of unused commitments whose original contract
terms were within one year or unconditionally cancellable at any time
as of March 31, 2010 and 2009 were ¥1,230,987 million ($13,230,732
thousand) and ¥1,216,873 million, respectively.
Since many of these commitments are expected to expire without
being drawn upon, the total amount of unused commitments does notnecessarily represent actual future cash flow requirements. Many of thesecommitments have clauses enabling the Bank and certain subsidiaries toreject the loans to customers or reduce the contract amounts of commitment, in the event monetary conditions have changed and the Bank andcertain subsidiaries need to secure claims, or other considerable events
have occurred.
In addition, if necessary, the Bank and certain subsidiaries can request the customers to pledge collateral such as premises and securities
at the execution of the contracts. After execution, the Bank and certain
subsidiaries periodically evaluate the customers’ financial position based
upon the Bank’s internal policy, and take necessary measures to manage
the credit exposures, such as revising the terms of contracts or securing
the claims.

2723. Derivative Information
The Bank enters into swap, future, cap and floor agreements related
to interest rates, foreign exchange forward contracts, swap and option
contracts related to currencies, bond futures, bond futures options, overthe-counter bond options, stock futures, stock futures options and stock
option contracts related to securities. In addition, the Bank has credit
derivatives embedded in compound instruments.
As noted in Note 21, the Group applied ASBJ Statement No. 10“Accounting Standard for Financial Instruments” and ASBJ GuidanceNo. 19 “Guidance on Accounting Standard for Financial Instruments
and Related Disclosures”. The accounting standard and the guidance
are applicable to financial instruments and related disclosures at theend of the fiscal years ending on or after March 31, 2010; therefore, therequired information is disclosed only for 2010.
Derivative transactions to which hedge accounting is not applied at
March 31, 2010

At March 31, 2010
Over-the-counterinterest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-countercurrency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:Sell
Buy

At March 31, 2010
Over-the-counterinterest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-countercurrency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:
Sell
Buy

28

Contract
AmountMillions of Yen
Contract
Fair
Amount due
Value
after One Year¥

Unrealized
Gain / (Loss)¥ 4,450¥ 3,710

80

¥

80

4,450

3,710

(47)

(47)

259,697

195,531

439

439

7,145
11,236

372
189

(174)
224

(174)
224

213,033
206,601

157,540
153,352(18,344)
18,344

(729)
3,176

1,607
1,475

1,243
1,140

(76)
146

(76)
146

Thousands of U.S. Dollars
Contract
Contract
Fair
Unrealized
Amount due
AmountValue
Gain / (Loss)after One Year$ 47,830 $ 39,876

$

864

$

864

47,83039,876

(510)

(510)

2,791,239

2,101,584

4,716

4,716

76,794
120,768

4,000
2,028

(1,869)2,412(1,869)2,412

2,289,692
2,220,558

1,693,246
1,648,242(197,163)
197,163(7,838)34,146

17,27415,857

13,355
12,253

(816)
1,573

(816)
1,573

The following is the fair value information for interest-related contracts and currency-related contracts to which hedge accounting is notapplied at March 31, 2009.

At March 31, 2009
Over-the-counterinterest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-countercurrency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:Sell
Buy

Millions of Yen
Contract
Contract
Fair
or Notional Amount due
ValueAmount after One Year¥

Unrealized
Gain / (Loss)¥ 4,541¥ 4,127

54

¥

54

4,541

4,127

(38)

(38)

347,548

246,404

537

537

9,476
13,691

—
—

(164)
208

(164)
208

219,666
215,122

173,674
170,076(16,591)
16,591

(298)
2,104

1,357
1,191

1,111
975

(43)
105

(43)
105

Notes:
1. Derivative transactions are valued at market and the gains/(losses) arerecognized in the consolidated statements of operations.
2. Market values of exchange-traded transactions are based on closing
prices on the exchange markets such as Tokyo International Financial Future Exchange. Market values of over-the-counter contracts
are based on the valuation techniques such as discounted cash flow
method and the option pricing calculation models.

24. Subsequent Event
On June 25, 2010, the Bank’s shareholders authorized the appropriationof retained earnings as follows:
Millions of Yen
Year-end cash dividends,¥3.50 ($0.04) per share¥1,274

Thousands of
U.S. Dollars$13,69425. Segment Information
Information about operations in business segments for the years ended March 31, 2010 and 2009 was as follows:
Millions of Yen
Other*Total

2010(a) Income
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Ordinary expenses
Ordinary profit
Other income and expenses - net
Income before income taxes and minority interests(b) Assets, depreciation and capital expenditures:
AssetsDepreciation
Impairment loss on long-lived assets
Capital expenditures

Banking

2009(a) Income
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Ordinary expenses
Ordinary (loss) profit
Other income and expenses - net
Loss before income taxes and minority interests(b) Assets, depreciation and capital expenditures:
AssetsDepreciation
Impairment loss on long-lived assets
Capital expenditures

Banking

2010(a) Income
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Ordinary expenses
Ordinary profit
Other income and expenses – net
Income before income taxes and minority interests(b) Assets, depreciation and capital expenditures:
AssetsDepreciation
Impairment loss on long-lived assets
Capital expenditures

BankingLease$930,289
5,967
936,256
774,774
161,482$229,972
3,044
233,016
222,063$ 10,953$ 48,655
9,859
58,514
48,799$ 9,715$46,379,557
53,264
5,406
50,147$640,526
2,387
—
4,159

$328,595
576
—
758

¥

Lease

Elimination/Corporate

Consolidated

86,554555
87,10972,08515,024¥21,397283
21,68020,661¥ 1,019¥ 4,527
917
5,444
4,540
¥ 904

¥ 112,478
1,755
114,233
97,286¥ 16,947—¥ (1,755)(1,755)(1,746)¥(9)¥ 112,478—
112,478
95,54016,938(876)¥ 16,062¥4,315,154
4,955
503
4,666

¥59,595
222—
387¥30,57254—
70¥4,405,321
5,231
503
5,123

¥(39,884)
¥133
—
¥125

¥4,365,437
5,364
503
5,248

Elimination/Corporate

Consolidated

¥

Lease

Millions of Yen
Other*
Total¥

89,783597
90,380106,893¥ (16,513)¥21,283286
21,56920,709¥ 860¥ 4,619
936
5,555
4,576
¥ 979

¥ 115,685
1,819
117,504
132,178¥ (14,674)—¥ (1,819)(1,819)(1,807)¥(12)¥ 115,685—
115,685
130,371(14,686)(42)¥ (14,728)¥4,125,662
5,111
27
1,533

¥60,527178—
131¥30,383
46—
56¥4,216,572
5,335
27
1,720

¥ (40,456)
137
—
114

¥4,176,116
5,472
27
1,834

Elimination/Corporate

Consolidated$ 1,208,916
18,8701,227,786
1,045,636$ 182,150—$ (18,870)(18,870)(18,766)$(104)$ 1,208,916—
1,208,916
1,026,870
182,046(9,410)$ 172,636$47,348,678
56,227
5,406
55,064$(428,676)
1,426
—
1,343

$46,920,002
57,653
5,406
56,407$

Thousands of U.S. Dollars
Other*Total* Other includes business segments of credit cards, computer services and credit guarantees.

Ordinary income represents total income less certain special income
included in other income in the accompanying consolidated statementsof operations.
Ordinary expenses represent total expenses less certain special
expenses included in other expenses in the accompanying consolidated
statements of operations.
The Group operates only in Japan for the years ended March 31,
2010 and 2009.
Accordingly, the figures for ordinary income and assets by geographical segment for the Group were not presented.
Ordinary income from overseas operations was not presented herein
as it was less than 10% of consolidated ordinary income for the years
ended March 31, 2010 and 2009.

Note:1) As discussed in Note 2.d, effective April 1, 2009, the Company
applied ASBJ statement No.10, “Accounting Standard for Financial
Instruments”.
The effect of this change was to decrease ordinary expenses by ¥254
million ($ 2,740 thousand) and increase ordinary profit by ¥254 million ($ 2,740 thousand) in the Banking segment for the year ended
March 31, 2010.

29

Non-Consolidated Six-Year Summary (Unaudit)
The Juroku Bank, Ltd.

Years Ended March 31 (Supplemental Information)

2010

For the Year
Total income¥

Millions of Yen
2008
2007

2009

87,11590,414¥ 116,391

72,973

107,131

98,81972,52265,60062,513

Income (loss) before income taxes

14,142(16,717)

17,572

22,76623,891

21,0295,240

Total income taxes(7,171)¥

7,214

95,288¥2005

Total expenses

Net income (loss)

¥

2006

9,089

89,491¥

8,439

83,542

9,467

¥

8,902

¥

(9,546)¥

10,358¥13,677¥15,452¥

11,562

¥

1,686

¥

1,666

¥

1,514

¥

3,042

¥

2,898

¥

2,031

At Year-End
Assets:Trading securities
Securities
Loans and bills discounted
Foreign exchanges
Other
Total assets

970,684

844,836852,504

1,008,292

1,075,252

966,978

3,022,906

3,056,008

2,909,033

2,822,570

2,724,546

2,640,424

3,058

3,909

4,613

3,361

11,305

3,829

316,680

219,115

322,892

298,191

261,179

332,309¥4,315,014¥4,125,534¥4,090,556¥4,135,456¥4,075,180¥3,945,571¥3,902,366¥3,745,652¥3,639,608¥3,624,885¥3,497,563¥3,534,395

Liabilities:
Deposits
Foreign exchanges
Other
Total liabilities

651

575

737

738

560

948

207,673

198,559

228,491

242,111

325,796

212,087

4,110,690

3,944,786

3,868,836

3,867,734

3,823,919

3,747,430

Equity:Common stock

36,83936,83936,83936,83936,83936,839

Capital surplus and earnings

167,485

143,909

184,881

230,883

214,422

161,302

Total equity
Total liabilities and equity

30

204,324

180,748

221,720

267,722251,261

198,141¥4,315,014¥4,125,534¥4,090,556¥4,135,456¥4,075,180¥3,945,571

Non-Consolidated Balance Sheets
The Juroku Bank, Ltd.

March 31, 2010 and 2009 (Supplemental Information)

Thousands of
U.S.Dollars

Millions of Yen
2010

2009

2010

¥ 132,715
75,0001,686
6,000
970,684
3,022,906
63,285
7,734
14,37642,56924,438(46,379)¥4,315,014¥ 101,448—
1,666—
844,836
3,056,008
64,2198,066
31,18747,391
26,020(55,307)¥4,125,534$ 1,426,429
806,105
18,12164,48810,432,975
32,490,393
680,191
83,126
154,514457,534
262,661(498,485)$46,378,052¥3,902,366
12,8006,513
47,49928,00030,000
1,440
46
7,934
10,11639,53824,4384,110,690¥3,745,652
23,22825,982
15,04821,92930,000
1,375
—
7,699
10,40337,44926,021
3,944,786$41,942,887
137,575
70,002
510,522300,946
322,442
15,477494
85,275
108,727424,957
262,661
44,181,965

Common stock

36,83936,839395,948

Capital surplus:
Additional paid-in capital

25,36725,367

272,646

20,15589,884
21,217
12,483(1,621)
204,324¥4,315,014

20,15583,324
3,880
12,699(1,516)
180,748¥4,125,534

216,627
966,079
228,042
134,168(17,423)
2,196,087$46,378,052

ASSETS:Cash and due from banks
Call loans
Trading securities
Money held in trust
Securities
Loans and bills discounted
Premises and equipment
Intangible assets
Deferred tax assets
Other assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total Assets

LIABILITIES AND EQUITY:
Liabilities:
Deposits
Negotiable certificates of deposit
Call money
Payables under securities lending transactions
Borrowed money
Bonds
Accrued bonuses
Director's accrued bonuses
Liability for retirement benefits
Deferred tax liabilities for land revaluation surplus
Other liabilities
Acceptances and guarantees
Total Liabilities
Commitments and Contingent Liabilities
Equity:Retained earnings:
Legal reserve
UnappropriatedUnrealized gain on available-for-sale securities
Land revaluation surplus
Treasury stock—at cost
Total Equity
Total Liabilities and Equity31Non-Consolidated Statements of Operations
The Juroku Bank, Ltd.

Years Ended March 31, 2010 and 2009 (Supplemental Information)

Thousands of
U.S.Dollars

Millions of Yen
Income:Interest on:
Loans and discounts

2010

2010

2009

¥ 56,156¥ 60,870$ 603,569

11,61813,309124,871

Securities

144

228

1,548

Fees and commissions

11,327

11,527

121,743

Other operating income

2,751

2,122

29,568Gain on sales of securities

3,118

318

33,512

Other

2,001

2,040

21,507

87,11590,414

936,318

Deposits

7,999

10,49585,974

Borrowings and re-discounts

1,047

1,455

11,253

90

152

967

Fees and commissions

4,411

4,422

47,410

Other operating expenses

629

7,393

6,761

General and administrative expenses

50,29849,641

540,606

Impairment loss on long-lived assets

503

27

5,406

7,996

33,54685,942

72,973

107,131784,319

14,142(16,717)

151,999

70

67

752

Other income
Total Income
Expenses:
Interest on:

Other

Other expenses
Total Expenses
Income (Loss) before Income Taxes
Income Taxes:
Current
Deferred
Total Income Taxes
Net Income (Loss)

32

¥

5,170

(7,238)55,5685,240(7,171)

56,3208,902¥ (9,546)$

95,679Non-Consolidated Statements of Changes in Equity
The Juroku Bank, Ltd.

Years Ended March 31, 2010 and 2009 (Supplemental Information)

Thousands

Balance at April 1, 2008

Millions of Yen
Capital Surplus

Outstanding
Number of
Shares ofCommon Stock

CommonStock

Additional
Paid-in
CapitalRetained Earnings

Other
CapitalSurplus

Legal
Reserve

UnrealizedLand
Gain on
Revaluation
Unappropriated Available-for-sale Surplus
Securities

364,432¥36,839¥25,367¥ 5¥20,155¥95,398¥32,716¥12,729

Net loss

—

—

—

—

—

(9,546)——

Cash dividends, ¥7.00 per share

—

—

—

—

—

(2,550)—Transfer of land revaluation surplus

—

—

—

—

—

30

—

Purchase of treasury stock

(155)

—

—

—

—

—

—

Disposal of treasury stock

67

—

—

¥ (5)

—

(8)

—

Net change in the year

—

—

—

—

—

—

(28,836)

Balance at March 31, 2009

Treasury
Stock

Total
Equity¥(1,489) ¥221,720—(9,546)——(2,550)

—

—

30

—

(68)

(68)

—

41

28

(30)

—

(28,866)

364,344

36,83925,367—

20,15583,324

3,880

12,699(1,516)

180,748

Net income

—

—

—

—

—

8,902

—

—

—

8,902

Cash dividends, $0.08 per share

—

—

—

—

—

(2,550)———(2,550)Transfer of land revaluation surplus

—

—

—

—

—

216

—

—

—

216

Purchase of treasury stock

(360)

—

—

—

—

—

—

—

(125)

(125)

Disposal of treasury stock

33

—

—

—

—

(8)

—

—

20

12

—

17,337(216)—

17,121¥89,884 ¥ 21,217¥12,483

Net change in the year
Balance at March 31, 2010

—

—

—

—

—

364,017¥36,839¥25,367—¥20,155¥(1,621) ¥204,324

Thousands of U.S. Dollars
Capital Surplus
CommonStock

Balance at March 31, 2009

Additional
Paid-in
CapitalRetained Earnings

Other
CapitalSurplus

Legal
Reserve$395,948$272,646—$216,627

Net income

—

—

—

Cash dividends, $0.08 per share

—

—

—

Transfer of land revaluation surplus——

Purchase of treasury stock——

Disposal of treasury stock—

Net change in the year—
$395,948

Balance at March 31, 2010

UnrealizedLand
Gain on
Revaluation
Available-for-sale
UnappropriatedSurplusSecurities

Treasury
Stock

Total
Equity$895,572$ 41,702$136,490$(16,294) $1,942,691—

95,679———95,679—(27,408)———(27,408)

—

—

2,322

—

—

—

2,322

—

—

—

—

—

(1,344)(1,344)

—

—

—

(86)

—

—

215

129

—

—

—

—

186,340(2,322)—

184,018$272,646—$216,627$966,079$228,042$134,168$(17,423) $2,196,087

33

Independent Auditors’ Report

34Corporate Data(as of March 31, 2010)

Date of Establishment:

10 Principal Shareholders:

October 10, 1877

Japan Trustee Services Bank, Ltd. (Trust account)

Authorized Shares:

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

460,000 thousand shares

NIPPONKOA Insurance Co., Ltd.

Shares of Common Stock Issued and Outstanding:Meiji Yasuda Life Insurance Company

366,855 thousand shares

Tokio Marine and Nichido Fire Insurance Co., Ltd.

Stock Listed:

Fuji Baking Group Co., Ltd.

First Sections of the Tokyo and Nagoya Stock Exchanges

The Juroku Bank Employee Shareholders’ Association

Paid-in Capital:

Mitsubishi UFJ Trust and Banking Corporation¥36,839 million

Nippon Life Insurance Company

Number of Shareholders:

The Master Trust Bank of Japan, Ltd. (Trust Account)

11,771
Number of Employees:
2,972

Affiliates(as of March 31, 2010)

Name

Business Lines

Established

Capital(¥ Millions)

EquityStake*

Juroku Business Service Co., Ltd.

Clerical work service

Jan. 197910

100

Juroku DC Card Co., Ltd.

Credit card flotation service

Aug. 1982

50

5

Juroku JCB Co., Ltd.

Credit card flotation service

Nov. 1994

50

5

Juroku Lease Co., Ltd.

Leasing service

Mar. 1975

102

5

Juroku Computer Service Co., Ltd.

Computer system development service

Aug. 1985

245

5

Juroku Credit Guarantee Co., Ltd.

Credit guaranty service

May 1979

50

3

Juroku Capital Co., Ltd.

Investment and finance service

Apr. 1984

108

5* Voting rights held by the Bank as a percentage of total voting rights

35

Directory(as of July 12, 2010)

Head Office8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan
Telephone: +81-58-265-2111

Branches Handling
Foreign Exchange
Business

International and Securities Division
8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan P.O. Box 40
Telephone: +81-58-265-2111
Facsimile: +81-58-266-1698
SWIFT Address: JUROJPJ T
General Manager
Kiyotaka Ikami

Head Office8-26, Kandamachi, Gifu-shi, Gifu
Telephone: +81-58-265-2111

Takayama Branch136, Shimosannomachi,
Takayama-shi, Gifu
Telephone: +81-577-32-1600(18 Offices)

Ichinomiya Branch
1-2-5, Sakae,
Ichinomiya-shi, Aichi
Telephone: +81-586-73-5116

Nagara Branch
1643-5, Nagarafukumitsu,
Gifu-shi, Gifu
Telephone: +81-58-232-1611

Nagoya Ekimae Branch
3-28-12, Meieki,
Nakamura-ku, Nagoya-shi, Aichi
Telephone: +81-52-561-5431

Yanagase Branch
3-10-2, Kandamachi,
Gifu-shi, Gifu
Telephone: +81-58-265-2521

Overseas Network
Hong Kong Representative Office
Suite 3307, Two Exchange Square,
8 Connaught Place, Central,
Hong Kong
Telephone: +852-2526-5716
Facsimile: +852-2810-6261
Chief Representative
Yoshitaka Masuda

Nagoya Branch
3-1-1, Nishiki, Naka-ku,
Nagoya-shi, Aichi
Telephone: +81-52-961-8111

Toiyamachi Branch
5-8, Nagazumicho, Gifu-shi, Gifu
Telephone: +81-58-262-2111

Shanghai Representative Office
18th Floor, HSBC Tower, 1000 Lujiazui
Ring Road, Pudong New Area, Shanghai,
People’s Republic of China
Telephone: +86-21-6841-1600
Facsimile: +86-21-6841-1881
Chief Representative
Masahiro Furuike

Ozone Branch
3-5-23, Ozone, Kita-ku,
Nagoya-shi, Aichi
Telephone: +81-52-911-6116

Kakamigahara Branch
1, Higashinakacho,Naka, Kakamigahara-shi, Gifu
Telephone: +81-58-383-1600

Atsuta Branch
3-1-1, Shin-Otou, Atsuta-ku,
Nagoya-shi, Aichi
Telephone: +81-52-671-4116

Ogaki Branch
1-26, Takayacho, Ogaki-shi, Gifu
Telephone: +81-584-78-2161

Kariya Branch
3-20, Toyocho, Kariya-shi, Aichi
Telephone: +81-566-21-1611

Seki Branch
51-1, Higashikashiage, Seki-shi, Gifu
Telephone: +81-575-22-2016

Osaka Branch
2-3-8, Honmachi, Chuo-ku,
Osaka-shi, Osaka
Telephone: +81-6-6264-1600

Tajimi Branch
1-24, Sakaemachi, Tajimi-shi, Gifu
Telephone: +81-572-22-1301
Nakatsugawa Branch
2-5-1, Ootamachi, Nakatsugawa-shi, Gifu
Telephone: +81-573-65-3116

ShanghaiHong Kong

Tokyo Branch
4-1-10, Nihombashi Honcho,
Chuo-ku, Tokyo
Telephone: +81-3-3242-1661

Gifu Prefecture (106)Tokyo Branch
Aichi Prefecture (39)
Osaka Branch

36

Total 147Domestic Offices

THE JUROKU BANK, LTD.
http://www.juroku.co.jp/