2012
A n n u a l

THE JUROKU BANK,LTD.

R e p o r t

F inancial Highlights (Consolidated)
PROFILEThe Juroku Bank, Ltd. and Subsidiaries

Year Ended March 31, 2012

The Juroku Bank, Ltd., has its business base in Gifu and Aichi prefectures, theThousands of
U.S.Dollars

Millions of Yen

industrial 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

2012

2011

2012

Total income¥ 129,319¥ 114,681$ 1,573,415

Total expenses

105,947

98,145

1,289,050

Net income

11,941

9,293

145,285

Cash dividends

2,616

2,548

31,829Total assets¥5,488,038¥5,309,912$66,772,576

Loans and bills discounted

3,722,144

3,564,245

45,287,066

Securities

1,458,761

1,300,543

17,748,643

Deposits

4,881,023

4,749,587

59,387,067

Total equity

282,843

259,579

3,441,331¥ 106,235¥ 159,893$ 1,292,554

Net cash used in investing activities(142,721)(105,427)(1,736,476)

Net cash used in financing activities(21,725)(3,070)(264,327)

Cash and cash equivalents, end of year

125,735

183,949

1,529,809

For the Fiscal Yeararea.
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 148 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 2012,

At Year-End

the Bank had total deposits of ¥4,881 billion (US$59,387 million), total assets of¥5,488 billion (US$66,773 million), and a capital ratio of 10.76% according todomestic standards.

Head Office

CONTENTS
1 Financial Highlights (Consolidated)

16 Consolidated Statement of Changes in Equity

2 Message from the President

17 Consolidated Statement of Cash Flows

3 Management Strategy

18 Notes to Consolidated Financial Statements

9 Non-Performing Loans

35 Non-Consolidated Six-Year Summary (Unaudit)

10 Contribution to the Regional Economy and Community

36 Non-Consolidated Balance Sheet

12 Board of Directors and Corporate Auditors

37 Non-Consolidated Statement of Income

12 Organization Chart

38 Non-Consolidated Statement of Changes in Equity

13 Financial Review

39 Independent Auditors’ Report

14 Consolidated Balance Sheet

41 Corporate Data

15 Consolidated Statement of Income

41 Affiliates

15 Consolidated Statement of Comprehensive Income

42 Directory

Cash FlowsNet cash provided by operating activities

Note: Amounts stated in United States dollars have been computed, solely for convenience, at the rate of ¥82.19 = US$1, the approximate rate of exchange at March 31, 2012.

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.

1

F inancial Highlights (Consolidated)
PROFILEThe Juroku Bank, Ltd. and Subsidiaries

Year Ended March 31, 2012

The Juroku Bank, Ltd., has its business base in Gifu and Aichi prefectures, theThousands of
U.S.Dollars

Millions of Yen

industrial 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

2012

2011

2012

Total income¥ 129,319¥ 114,681$ 1,573,415

Total expenses

105,947

98,145

1,289,050

Net income

11,941

9,293

145,285

Cash dividends

2,616

2,548

31,829Total assets¥5,488,038¥5,309,912$66,772,576

Loans and bills discounted

3,722,144

3,564,245

45,287,066

Securities

1,458,761

1,300,543

17,748,643

Deposits

4,881,023

4,749,587

59,387,067

Total equity

282,843

259,579

3,441,331¥ 106,235¥ 159,893$ 1,292,554

Net cash used in investing activities(142,721)(105,427)(1,736,476)

Net cash used in financing activities(21,725)(3,070)(264,327)

Cash and cash equivalents, end of year

125,735

183,949

1,529,809

For the Fiscal Yeararea.
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 148 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 2012,

At Year-End

the Bank had total deposits of ¥4,881 billion (US$59,387 million), total assets of¥5,488 billion (US$66,773 million), and a capital ratio of 10.76% according todomestic standards.

Head Office

CONTENTS
1 Financial Highlights (Consolidated)

16 Consolidated Statement of Changes in Equity

2 Message from the President

17 Consolidated Statement of Cash Flows

3 Management Strategy

18 Notes to Consolidated Financial Statements

9 Non-Performing Loans

35 Non-Consolidated Six-Year Summary (Unaudit)

10 Contribution to the Regional Economy and Community

36 Non-Consolidated Balance Sheet

12 Board of Directors and Corporate Auditors

37 Non-Consolidated Statement of Income

12 Organization Chart

38 Non-Consolidated Statement of Changes in Equity

13 Financial Review

39 Independent Auditors’ Report

14 Consolidated Balance Sheet

41 Corporate Data

15 Consolidated Statement of Income

41 Affiliates

15 Consolidated Statement of Comprehensive Income

42 Directory

Cash FlowsNet cash provided by operating activities

Note: Amounts stated in United States dollars have been computed, solely for convenience, at the rate of ¥82.19 = US$1, the approximate rate of exchange at March 31, 2012.

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.

1

M essage from the President

M anagement Strategy
The12thMedium-termManagementPlan
In view of the imminent radical change in management environment associated with the merger with The Gifu Bank scheduled
in September 2012, the Bank launched from April 2011 the12th Medium-Term Management Plan ~Take-off towards the
Glorious Tomorrow, covering three fiscal years.
Under this management plan, we are setting up a long-term
vision for the Bank as “The No.1 bank in the Tokai Region,”“The bank that bridges Gifu prefecture and Aichi prefecture,”and “The bank that contributes to the regional economy andcommunity,” which shall be fulfilled along with enhancement ofour corporate value through accelerating the implementation of
our growth strategies and early materialization of the maximum
effect of management integration with The Gifu Bank, Ltd.

The “New Juroku Bank”
strives to maximize
corporate value

Hakumi Horie President

Looking at the operating environment for financial institu-

the Glorious Tomorrow.” And the Bank is pressing on with

tions, although the Japanese economy is on track to recovery

the steady process of the merger with the Gifu Bank, Ltd.,on the back of steady demand for reconstruction of the areascheduled on September 18, 2012, and is stepping up efforts

devastated by the Great East Japan Earthquake, a corrective

to increase profitability and financial soundness as well asphase in the historically strong yen, a recovery of the foreign

strengthen its compliance function.

economic situation and other factors, there is a lingering sense

By addressing these challenges, we will press ahead with anof uncertainty about the economic outlook that reflects weakenhancement of our corporate value as the “New Juroku Bank”

demand for capital investment, coupled with persistently harshthrough promoting the implementation of our growth strate-business competition driving down the Bank’s earnings.

gies along with early materialization of the maximum effect ofUnder such circumstances, the Juroku Bank, as regional
financial institution aiming at sustainable growth, must
endeavor to raise profitability and improve its financial sound-management integration.
I look forward to receiving the continued support andencouragement of all our stakeholders.

ness through responding to the diverse needs of community
customers.
To meet these challenges the Bank aims to become “TheNo.1 bank in the Tokai Region,” “The bank that bridges Gifu
prefecture and Aichi prefecture” and “The bank that contributes to the regional economy and community,” under its “TheJuly 2012
Hakumi Horie
President

Numerical Targets

FY2013 Year-end Targets

Sustainability andexpandability ofcustomer base

Deposit balance¥5,000 billion

Strengthening of
earnings capability

Core banking
profit¥25 billion

Streamlining ofmanagement

OHR (Overhead
Ratio; expenses
as a percentage
of gross businessprofit)Lower than 67%

Tier I capital
ratio

7.5%ormore

Improvement offinancial soundness

Ratio of credit
cost to total
loans

Lowerthan0.25%

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

Wewillbecommittedtoimplementingthefollowingbasicstrategiesunderthemanagementplan,inanefforttoeffectivelyovercomethechallengesthatsurroundtheGroup.

BasicStrategies•ReinforcementofManagementBase
In view of the growth strategies to be pursued after the merger
with The Gifu Bank, Ltd., we will be committed to improving
the quality of capital while enhancing the soundness of assets,through the reinforcement of core tier I capital based on thestrengthening of earnings capability while ensuring security andprovision commensurate with the risks concerned.
•PursuitoftheRegionalStrategiesforAichiandGifuPrefecturesEnvisagingthePost-mergerSituation
We will further deepen the relationship with customers by the
deployment of distribution channels that suit each market, alongwith the reinforcement of products and services that meet thecustomer needs, whereby we will promote ourselves to be chosen
by customers as their main bank.
In Aichi prefecture, we will conduct proactive marketing
activities including further focus on retail business and establishment of new distribution channels, while expanding business
transactions with new customers, in an effort to be the “community-oriented” Bank.
In Gifu prefecture on the other hand, we will focus on deepening business relationship with existing customers to establishrock-solid basis of business transactions, while creating easy-touse channels.
•EarlyMaterializationofCostSynergyandItsMaximization
In merging with The Gifu Bank, we will be committed to earlymaterialization of cost synergy and its maximization throughthe elimination and consolidation of existing branch offices fully
paying attention not to compromise customer convenience, alongwith integration of system and administration while minimizing
the impact to customers.
•EnhancementofManagementControlStructure
We will be committed to enhancing management control
structure including the strengthening of various risk management systems to flexibly deal with changes in financial businessenvironment, along with further reinforcement of compliancewith laws and regulations and customer protection that serve as
the basis of customer trust.
•ConsolidationofCorporateCultureandHumanResources
between the Two Banks
We will endeavor to amalgamate corporate culture and humanresources between the Bank and The Gifu Bank while developing
human resources with high level expertise that can respond to thecustomer needs, under the constructive competitive environment
between the employees of the two banks.
•PromotionofCommunity-basedFinancialServicesand
FlexibleFacilitationofFinance
We will be committed to adequately and actively providing
financial intermediation functions based on the substance of the
SME Financing Facilitation Act, while engaged in communitybased operation with community-based financial services definedas one of the Bank’s core management strategies, in an effort tofulfill our responsibility as a regional financial institution.

12th Medium-Term Management Plan ~Take-off towards

23

M essage from the President

M anagement Strategy
The12thMedium-termManagementPlan
In view of the imminent radical change in management environment associated with the merger with The Gifu Bank scheduled
in September 2012, the Bank launched from April 2011 the12th Medium-Term Management Plan ~Take-off towards the
Glorious Tomorrow, covering three fiscal years.
Under this management plan, we are setting up a long-term
vision for the Bank as “The No.1 bank in the Tokai Region,”“The bank that bridges Gifu prefecture and Aichi prefecture,”and “The bank that contributes to the regional economy andcommunity,” which shall be fulfilled along with enhancement ofour corporate value through accelerating the implementation of
our growth strategies and early materialization of the maximum
effect of management integration with The Gifu Bank, Ltd.

The “New Juroku Bank”
strives to maximize
corporate value

Hakumi Horie President

Looking at the operating environment for financial institu-

the Glorious Tomorrow.” And the Bank is pressing on with

tions, although the Japanese economy is on track to recovery

the steady process of the merger with the Gifu Bank, Ltd.,on the back of steady demand for reconstruction of the areascheduled on September 18, 2012, and is stepping up efforts

devastated by the Great East Japan Earthquake, a corrective

to increase profitability and financial soundness as well asphase in the historically strong yen, a recovery of the foreign

strengthen its compliance function.

economic situation and other factors, there is a lingering sense

By addressing these challenges, we will press ahead with anof uncertainty about the economic outlook that reflects weakenhancement of our corporate value as the “New Juroku Bank”

demand for capital investment, coupled with persistently harshthrough promoting the implementation of our growth strate-business competition driving down the Bank’s earnings.

gies along with early materialization of the maximum effect ofUnder such circumstances, the Juroku Bank, as regional
financial institution aiming at sustainable growth, must
endeavor to raise profitability and improve its financial sound-management integration.
I look forward to receiving the continued support andencouragement of all our stakeholders.

ness through responding to the diverse needs of community
customers.
To meet these challenges the Bank aims to become “TheNo.1 bank in the Tokai Region,” “The bank that bridges Gifu
prefecture and Aichi prefecture” and “The bank that contributes to the regional economy and community,” under its “TheJuly 2012
Hakumi Horie
President

Numerical Targets

FY2013 Year-end Targets

Sustainability andexpandability ofcustomer base

Deposit balance¥5,000 billion

Strengthening of
earnings capability

Core banking
profit¥25 billion

Streamlining ofmanagement

OHR (Overhead
Ratio; expenses
as a percentage
of gross businessprofit)Lower than 67%

Tier I capital
ratio

7.5%ormore

Improvement offinancial soundness

Ratio of credit
cost to total
loans

Lowerthan0.25%

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

Wewillbecommittedtoimplementingthefollowingbasicstrategiesunderthemanagementplan,inanefforttoeffectivelyovercomethechallengesthatsurroundtheGroup.

BasicStrategies•ReinforcementofManagementBase
In view of the growth strategies to be pursued after the merger
with The Gifu Bank, Ltd., we will be committed to improving
the quality of capital while enhancing the soundness of assets,through the reinforcement of core tier I capital based on thestrengthening of earnings capability while ensuring security andprovision commensurate with the risks concerned.
•PursuitoftheRegionalStrategiesforAichiandGifuPrefecturesEnvisagingthePost-mergerSituation
We will further deepen the relationship with customers by the
deployment of distribution channels that suit each market, alongwith the reinforcement of products and services that meet thecustomer needs, whereby we will promote ourselves to be chosen
by customers as their main bank.
In Aichi prefecture, we will conduct proactive marketing
activities including further focus on retail business and establishment of new distribution channels, while expanding business
transactions with new customers, in an effort to be the “community-oriented” Bank.
In Gifu prefecture on the other hand, we will focus on deepening business relationship with existing customers to establishrock-solid basis of business transactions, while creating easy-touse channels.
•EarlyMaterializationofCostSynergyandItsMaximization
In merging with The Gifu Bank, we will be committed to earlymaterialization of cost synergy and its maximization throughthe elimination and consolidation of existing branch offices fully
paying attention not to compromise customer convenience, alongwith integration of system and administration while minimizing
the impact to customers.
•EnhancementofManagementControlStructure
We will be committed to enhancing management control
structure including the strengthening of various risk management systems to flexibly deal with changes in financial businessenvironment, along with further reinforcement of compliancewith laws and regulations and customer protection that serve as
the basis of customer trust.
•ConsolidationofCorporateCultureandHumanResources
between the Two Banks
We will endeavor to amalgamate corporate culture and humanresources between the Bank and The Gifu Bank while developing
human resources with high level expertise that can respond to thecustomer needs, under the constructive competitive environment
between the employees of the two banks.
•PromotionofCommunity-basedFinancialServicesand
FlexibleFacilitationofFinance
We will be committed to adequately and actively providing
financial intermediation functions based on the substance of the
SME Financing Facilitation Act, while engaged in communitybased operation with community-based financial services definedas one of the Bank’s core management strategies, in an effort tofulfill our responsibility as a regional financial institution.

12th Medium-Term Management Plan ~Take-off towards

2

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 Establishmentof an Internal Control System at a meeting of the Board of
Directors held on May 24, 2006. Board meetings held on September 20, 2007, February 26, 2009, and September 21, 2011
adopted resolutions to partially amend this policy. In this way,
we have developed a system to ensure the appropriate executionof our business and have refined our system. Under this basic
policy, we will pursue initiatives to enhance corporate governance.

Progress Thus Far
The Board of Directors comprises 10 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

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, 2012).
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
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 steadfastly confronting any anti-social forces thatpose a threat to social order and safety; thereby directors consolidate a system to sever all ties to these 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) Duties will be executed centered on the Basic Policy and an
Action Plan. A Medium-Term Management Plan will be created, and guidelines based on this plan will be established foreach six-month period.
(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 will be maintained. Efforts will be made toprevent or promptly detect problems such as violations of laws.
6.Systemtoensureappropriateoperationsofthecorporate
group,whichiscomposedofrelatedcompanies,includingaffiliates(1) An internal auditing agreement will be concluded with affiliates, 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, centered on 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

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 Establishmentof an Internal Control System at a meeting of the Board of
Directors held on May 24, 2006. Board meetings held on September 20, 2007, February 26, 2009, and September 21, 2011
adopted resolutions to partially amend this policy. In this way,
we have developed a system to ensure the appropriate executionof our business and have refined our system. Under this basic
policy, we will pursue initiatives to enhance corporate governance.

Progress Thus Far
The Board of Directors comprises 10 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

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, 2012).
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
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 steadfastly confronting any anti-social forces thatpose a threat to social order and safety; thereby directors consolidate a system to sever all ties to these 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) Duties will be executed centered on the Basic Policy and an
Action Plan. A Medium-Term Management Plan will be created, and guidelines based on this plan will be established foreach six-month period.
(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 will be maintained. Efforts will be made toprevent or promptly detect problems such as violations of laws.
6.Systemtoensureappropriateoperationsofthecorporate
group,whichiscomposedofrelatedcompanies,includingaffiliates(1) An internal auditing agreement will be concluded with affiliates, 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, centered on 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) Matters that may inflict a significant loss on the Bank and its
affiliates(4) Significant accounting policies and standards and changes tothem(5) Content of disclosed earnings, projections, and other important disclosure materials(6) Serious violations of the laws and ordinances(7) Operation of the whistle-blower system and notifications(8) Circulation of documents such as draft proposals and theminutes of important conference/committee meetings(9) 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.

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. Accordingly, in April 2012, we newly set up
a legal office within the Compliance Management Division inorder to enhance our compliance system. With the support of
the new section, we are equipped with an appropriate structure
to comply, more than ever, with social requirements.
We are further strengthening our compliance system underour 12th Medium-Term Management Plan through policies
which are designed to:61) 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
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 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

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.

Basic Policy of Risk Management(12th Medium-Term Management Plan)•RiskManagement

Information Security, Management of Customer
Information
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
and diverse. Recognizing risk management as crucial for safe
and sound operations, we have established “Basic Policy of Risk
Management” contained in our 12th Medium-Term Management Plan. In addition, we have established Comprehensive
Risk Management Policy 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).

1

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

Development of risk management system in compliancewith capital adequacy regulation.

4

Strengthen credit risk management.

Comprehensive Risk Management
The Bank has formulated a comprehensive risk management
framework by determining a Comprehensive Risk Management
Policy and Rules.
The Bank’s risk management does not stop at managing
various risks individually, but extends a step ahead to control
the total amount of risks to keep it within the range of TierI-based distributable capital, through the risk quantification using statistical methods, thereby enforcing a comprehensive risk
management aiming at ensuring soundness of management.
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 appropri-

7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) Matters that may inflict a significant loss on the Bank and its
affiliates(4) Significant accounting policies and standards and changes tothem(5) Content of disclosed earnings, projections, and other important disclosure materials(6) Serious violations of the laws and ordinances(7) Operation of the whistle-blower system and notifications(8) Circulation of documents such as draft proposals and theminutes of important conference/committee meetings(9) 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.

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. Accordingly, in April 2012, we newly set up
a legal office within the Compliance Management Division inorder to enhance our compliance system. With the support of
the new section, we are equipped with an appropriate structure
to comply, more than ever, with social requirements.
We are further strengthening our compliance system underour 12th Medium-Term Management Plan through policies
which are designed to:61) 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
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 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

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.

Basic Policy of Risk Management(12th Medium-Term Management Plan)•RiskManagement

Information Security, Management of Customer
Information
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
and diverse. Recognizing risk management as crucial for safe
and sound operations, we have established “Basic Policy of Risk
Management” contained in our 12th Medium-Term Management Plan. In addition, we have established Comprehensive
Risk Management Policy 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).

1

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

Development of risk management system in compliancewith capital adequacy regulation.

4

Strengthen credit risk management.

Comprehensive Risk Management
The Bank has formulated a comprehensive risk management
framework by determining a Comprehensive Risk Management
Policy and Rules.
The Bank’s risk management does not stop at managing
various risks individually, but extends a step ahead to control
the total amount of risks to keep it within the range of TierI-based distributable capital, through the risk quantification using statistical methods, thereby enforcing a comprehensive risk
management aiming at ensuring soundness of management.
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 appropri-7

N on-Performing Loansately 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 borrowers 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.

8

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 Management 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.

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,2012)(Non-consolidated)
Asset Self-Assessment
For all assets
Borrower category
Balances of credits
Legallybankrupt borrowers

4.4
[1.2]

Virtuallybankrupt borrowers

12.3
[6.1]

Potentiallybankrupt borrowers

86.4

I

Classification
II
III

IV

3.6

0.8

—
(0.3)

—
(3.2)

—
(1.1)

—
(6.3)

9.1

3.2

20.7

Others*1

682.9

Normal borrowers

2,568.8

43.3

20.1

22.9
(14.2)

16.8
[7.3]

5.9

10.8

Classification

Loan balances

Bankrupt loans

4.3
[1.2]

Non-accrual loans

97.8[91.5]

Past due loans(3 months or more)

0.2

Restructured loans

15.9

Total

118.3
[108.9]100.0%

86.4

49.2

14.2

73.4%

Substandard loans*3

16.2

5.6

1.3

42.5%

60.8

26.3

72.9%

Sub-total

5.8

14.9

235.8

447.1

119.3
[109.9]

Normal assets

3,256.2
2,568.8

Total

3,375.6[3,366.1]

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

2,866.4 486.2

22.9(15.6)—(9.5)*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).
3.5%[3.2%]

Ratioofrisk-monitoredloanstototalloans
Figures in brackets are those after application of partial charge-offs (direct
deduction).
3.5%[3.3%]

Total

3,375.6[3,366.1]*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

N on-Performing Loansately 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 borrowers 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.

8

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 Management 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.

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,2012)(Non-consolidated)
Asset Self-Assessment
For all assets
Borrower category
Balances of credits
Legallybankrupt borrowers

4.4
[1.2]

Virtuallybankrupt borrowers

12.3
[6.1]

Potentiallybankrupt borrowers

86.4

I

Classification
II
III

IV

3.6

0.8

—
(0.3)

—
(3.2)

—
(1.1)

—
(6.3)

9.1

3.2

20.7

Others*1

682.9

Normal borrowers

2,568.8

43.3

20.1

22.9
(14.2)

16.8
[7.3]

5.9

10.8

Classification

Loan balances

Bankrupt loans

4.3
[1.2]

Non-accrual loans

97.8[91.5]

Past due loans(3 months or more)

0.2

Restructured loans

15.9

Total

118.3
[108.9]100.0%

86.4

49.2

14.2

73.4%

Substandard loans*3

16.2

5.6

1.3

42.5%

60.8

26.3

72.9%

Sub-total

5.8

14.9

235.8

447.1

119.3
[109.9]

Normal assets

3,256.2
2,568.8

Total

3,375.6[3,366.1]

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

2,866.4 486.2

22.9(15.6)—(9.5)*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).
3.5%[3.2%]

Ratioofrisk-monitoredloanstototalloans
Figures in brackets are those after application of partial charge-offs (direct
deduction).
3.5%[3.3%]

Total

3,375.6[3,366.1]*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

C ontribution 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.

Juroku Bank’s Support for Overseas Business
Development
 “Interregional Collaboration for Overseas BusinessSupport”
In May 2011, four banks including the Bank, San-In Godo
Bank, Hiroshima Bank, and Hokkoku Bank signed “Memorandum regarding Overseas Business Support,” to form a mutuallycollaborative arrangement at overseas (representative offices:Hong Kong (the Bank), Dalian (San-In Godo Bank), Bangkok(Hiroshima Bank), Singapore (Hokkoku Bank)).
 Business Cooperation with Major Overseas Financial
Institutions
With the aim of enhancing its support in India, a country thathas potential as an investment target, in May 2011 the Bank
started a business cooperation with the State Bank of India.
This made the total numbers of countries and financial institutions with which the Bank is involved in a business cooperation
5 and 7, respectively.
 Hosting the “Thai Regional Summit in GIFU”
We invited the Thai Ambassador to Japan, CEO of the KASIKORNBANK, Director of the Office of Thai Economic & In-

10vestment Affairs and our business partners operating businesses
in Thailand to the summit, with the purpose of deepening theinterrelationship between the Tokai region and Thailand. There
were active exchanges of both parties’ opinions on various fronts
ranging from policies of industrial and commercial developments, to assistance measures for companies afflicted by thesevere flooding in Thailand, to attracting Thai tourists to Gifu.

 “Japan-China Monozukuri Business Talks Forum @Shanghai 2011” (Held on 6 and 7 September 2011)
The Bank, jointly with a number of Japanese regional banks andmunicipal governments, held a inverse trade fair, designed tosupport Japanese companies operating in China in their creationof excellent products and services. (The Talks Forum originatedin 1998, under the co-sponsors of the Bank, the Bank of Nagoya
and Hyakugo Bank) Overseas Business Support Forum – Activities ofForeign Students
The Bank invited companies that support foreign students in Japan to a forum, with the aim of facilitating interactions between
these companies and foreign students. We provided an opportunity for the companies seeking overseas expansion, including market development with the help of foreign students andforeign employees, to understand and study actual employment
cases and recruitment know-how.

Assistance for Post-Great East Japan
Earthquake Reconstruction
 Project to assist post-Great East Japan Earthquake reconstruction activities
The Juroku Bank and The Gifu Bank fervently wish for theearliest possible relief and reconstruction in the area devastatedby the Earthquake. With the hope of providing the strickenarea and people with “what we can do to help now” in collaboration with local communities, in the summer of 2011, we
decided to embark on the “Project to assist the post-Great East
Japan Earthquake reconstruction activities.” Under the project,
the Bank and The Gifu Bank asked their customers to sign an“aid card” and the both banks donate ¥50 for each one to theJapan Red Cross Society, and subsequent donations totaled¥1,020,700. Additionally, a portion of the heartwarming messages from customers caring about the people affected by thedisaster was delivered via two local banks, the Bank of Iwate andToho Bank.

 Hosting Vietnam Business-related Programs - Investment
Climate Seminar and Study TourWith regard to the Vietnam business, the Bank held a seminarconcerning the latest investment climate and trends of Japanesecompanies in the country, coupled with hosting an economics
study tour to the country for businesspersons in charge of overseas operations. By planning this combination of a seminar andeconomics study tour, the Bank successfully created practicalprograms to better meet the needs of its customers.
 Activities of Juroku Regional Development Foundation
In FY2011, the scholarship system supported 67 students
through a total of ¥25.6 million in scholarships. Also, theFoundation assisted friendship gatherings held in a number oflocations for children from the stricken area and children of Gifu
prefecture.

Handling Eco-Friendly Financial Products
The Bank promotes financial assistance for environmentallyconscious companies. As part of its commitment, the Bank deals
with the Juroku Eco-Rating Loan Scheme (commenced in December 2010) and Juroku Eco Private Placement Bonds (fromMarch 2011). In addition to the above eco-friendly products,
the Bank extends the loan, Every Support 21, with the aim ofsupporting customers to address environmental issues.

11

C ontribution 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.

Juroku Bank’s Support for Overseas Business
Development
 “Interregional Collaboration for Overseas BusinessSupport”
In May 2011, four banks including the Bank, San-In Godo
Bank, Hiroshima Bank, and Hokkoku Bank signed “Memorandum regarding Overseas Business Support,” to form a mutuallycollaborative arrangement at overseas (representative offices:Hong Kong (the Bank), Dalian (San-In Godo Bank), Bangkok(Hiroshima Bank), Singapore (Hokkoku Bank)).
 Business Cooperation with Major Overseas Financial
Institutions
With the aim of enhancing its support in India, a country thathas potential as an investment target, in May 2011 the Bank
started a business cooperation with the State Bank of India.
This made the total numbers of countries and financial institutions with which the Bank is involved in a business cooperation
5 and 7, respectively.
 Hosting the “Thai Regional Summit in GIFU”
We invited the Thai Ambassador to Japan, CEO of the KASIKORNBANK, Director of the Office of Thai Economic & In-

10vestment Affairs and our business partners operating businesses
in Thailand to the summit, with the purpose of deepening theinterrelationship between the Tokai region and Thailand. There
were active exchanges of both parties’ opinions on various fronts
ranging from policies of industrial and commercial developments, to assistance measures for companies afflicted by thesevere flooding in Thailand, to attracting Thai tourists to Gifu.

 “Japan-China Monozukuri Business Talks Forum @Shanghai 2011” (Held on 6 and 7 September 2011)
The Bank, jointly with a number of Japanese regional banks andmunicipal governments, held a inverse trade fair, designed tosupport Japanese companies operating in China in their creationof excellent products and services. (The Talks Forum originatedin 1998, under the co-sponsors of the Bank, the Bank of Nagoya
and Hyakugo Bank) Overseas Business Support Forum – Activities ofForeign Students
The Bank invited companies that support foreign students in Japan to a forum, with the aim of facilitating interactions between
these companies and foreign students. We provided an opportunity for the companies seeking overseas expansion, including market development with the help of foreign students andforeign employees, to understand and study actual employment
cases and recruitment know-how.

Assistance for Post-Great East Japan
Earthquake Reconstruction
 Project to assist post-Great East Japan Earthquake reconstruction activities
The Juroku Bank and The Gifu Bank fervently wish for theearliest possible relief and reconstruction in the area devastatedby the Earthquake. With the hope of providing the strickenarea and people with “what we can do to help now” in collaboration with local communities, in the summer of 2011, we
decided to embark on the “Project to assist the post-Great East
Japan Earthquake reconstruction activities.” Under the project,
the Bank and The Gifu Bank asked their customers to sign an“aid card” and the both banks donate ¥50 for each one to theJapan Red Cross Society, and subsequent donations totaled¥1,020,700. Additionally, a portion of the heartwarming messages from customers caring about the people affected by thedisaster was delivered via two local banks, the Bank of Iwate andToho Bank.

 Hosting Vietnam Business-related Programs - Investment
Climate Seminar and Study TourWith regard to the Vietnam business, the Bank held a seminarconcerning the latest investment climate and trends of Japanesecompanies in the country, coupled with hosting an economics
study tour to the country for businesspersons in charge of overseas operations. By planning this combination of a seminar andeconomics study tour, the Bank successfully created practicalprograms to better meet the needs of its customers.
 Activities of Juroku Regional Development Foundation
In FY2011, the scholarship system supported 67 students
through a total of ¥25.6 million in scholarships. Also, theFoundation assisted friendship gatherings held in a number oflocations for children from the stricken area and children of Gifu
prefecture.

Handling Eco-Friendly Financial Products
The Bank promotes financial assistance for environmentallyconscious companies. As part of its commitment, the Bank deals
with the Juroku Eco-Rating Loan Scheme (commenced in December 2010) and Juroku Eco Private Placement Bonds (fromMarch 2011). In addition to the above eco-friendly products,
the Bank extends the loan, Every Support 21, with the aim ofsupporting customers to address environmental issues.

11B oard of Directors and Corporate Auditors

F inancial Review

The Juroku Bank, Ltd. (as of June 30, 2012)

BusinessEnvironment

President

FinancialPosition

Hakumi Horie
During the fiscal year under review, the Japanese economy stagnated in the first half, as the disturbance in component supply
chains and electricity supply, coupled with concerns about radioactive contamination in the aftermath of the Great East Japan
Earthquake placed substantial downward pressure on production activities. In the latter half of the year, however, production
activities were on track for a revival, despite negative factors
including the European debt crisis, sharp appreciation of the yen
and severe flooding in Thailand.
Likewise, in Gifu and Aichi prefectures, the Bank’s businessbases, overall business conditions returned to a recovery path
during the second half of the year, although the level of automobile production, the area's primary industry, plummeted.

Senior Managing Director

YukioMurase
Managing Directors

YojiMatsuura
Toshiro Hori
Directors

YutakaSugiyama
NaokiIkeda
FumihikoMiura
HiroyukiOta
KunisakuMuto
KenjiMori

Hakumi Horie
President

Standing Corporate Auditors

Performance

Yasuaki Kono
TakashiOkada
Corporate Auditors

ToshihiroNakaya
MasahiroHori

YukioMurase
Senior Managing Director

YojiMatsuura
Managing Director

Toshiro HoriManaging Director

O rganization Chart
The Juroku Bank, Ltd. (as of June 30, 2012)

General Meeting of
Shareholders

Corporate Auditors
Board of Corporate
Auditors

Board of Directors

Executive
Committee

12Corporate Auditors’ Office
Audit and Inspection Division
Secretariat
Personnel 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
General Affairs Division
Operations Administration Division
Risk Management Division
Compliance Management Division
Head Office
Nagoya Main Office
Domestic Branches (146)

On December 22, 2010, the Bank made The Gifu Bank, Ltd. its
wholly owned subsidiary through a share exchange, including
The Gifu Bank and its three subsidiaries in the Bank’s scope of
consolidation. Under these conditions, the Bank’s consolidated
results for the fiscal year under review were as follows:
Ordinary income from banking operations increased by¥13,925 million to ¥103,121 million (US$1,255 million),
mainly due to an increase in gains on sales of securities andthe contribution from the Gifu Bank’s ordinary income. Ordinary expenses increased by ¥8,529 million to ¥82,820 million (US$1,008 million), reflecting the impact of the inclusionof The Gifu Bank in the Bank’s consolidation, part of which
was offset by a decrease in credit costs. Ordinary profit rose by¥5,396 million to ¥20,301 million (US$247 million).
In the leasing business, ordinary income decreased by ¥157
million to ¥21,542 million (US$262 million), while ordinary expenses decreased by ¥691 million to ¥19,798 million(US$241 million) and ordinary profit increased by ¥534 million
to ¥1,744 million (US$21 million).
In other businesses, including the credit card business andcredit guarantee business, ordinary income decreased by ¥151
million to ¥5,219 million (US$63 million), while ordinary
expenses decreased by ¥433 million to ¥3,613 million (US$44
million) and ordinary profit increased by ¥282 million to¥1,606 million (US$20 million).
As a result, ordinary income on a consolidated basis increased by ¥13,628 million to ¥128,254 million (US$1,560
million) and ordinary expenses increased by ¥7,445 million to¥104,634 million (US$1,273 million), while ordinary profit
increased by ¥6,183 million to ¥23,620 million (US$287 million), and net income increased by ¥2,648 million to ¥11,941
million (US$145 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, 2012 increased by ¥131.4
billion to ¥4,881.0 billion (US$59,387 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, both loans to individual customers and corporate loans increased. Consequently, our balance of loans as of March 31, 2012
increased by ¥157.9 billion to ¥3,722.1 billion (US$45,287
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, 2012 increased by ¥158.2 billion to ¥1,458.8 billion (US$17,749 million).
Year-end unrealized gain on available-for-sale securities cameto ¥25,378 million (US$309 million), an increase of ¥11,934
million from the previous term.
Net cash provided by operating activities amounted to¥106,235 million (US$1,293 million), a decrease of ¥53,658
million from the previous term, as a result of an increasein loans. Net cash used in investing activities amounted to¥142,721 million (US$1,736 million), an increase of ¥37,294
million from the previous term, as a result of a decrease in income from the acquisition of shares in a subsidiary accompaniedby the change of the scope of consolidation, which was recordedin the previous term. Net cash used in financing activities
amounted to ¥21,725 million (US$264 million), an increase of¥18,655 million from the previous term, as a result of an increase in payments for the redemption of subordinated bonds.
As a result, the closing balance of cash and cash equivalents
decreased by ¥58,214 million during the term under review, to¥125,735 million (US$1,530 million).

13

B oard of Directors and Corporate Auditors

F inancial Review

The Juroku Bank, Ltd. (as of June 30, 2012)

BusinessEnvironment

President

FinancialPosition

Hakumi Horie
During the fiscal year under review, the Japanese economy stagnated in the first half, as the disturbance in component supply
chains and electricity supply, coupled with concerns about radioactive contamination in the aftermath of the Great East Japan
Earthquake placed substantial downward pressure on production activities. In the latter half of the year, however, production
activities were on track for a revival, despite negative factors
including the European debt crisis, sharp appreciation of the yen
and severe flooding in Thailand.
Likewise, in Gifu and Aichi prefectures, the Bank’s businessbases, overall business conditions returned to a recovery path
during the second half of the year, although the level of automobile production, the area's primary industry, plummeted.

Senior Managing Director

YukioMurase
Managing Directors

YojiMatsuura
Toshiro Hori
Directors

YutakaSugiyama
NaokiIkeda
FumihikoMiura
HiroyukiOta
KunisakuMuto
KenjiMori

Hakumi Horie
President

Standing Corporate Auditors

Performance

Yasuaki Kono
TakashiOkada
Corporate Auditors

ToshihiroNakaya
MasahiroHori

YukioMurase
Senior Managing Director

YojiMatsuura
Managing Director

Toshiro HoriManaging Director

O rganization Chart
The Juroku Bank, Ltd. (as of June 30, 2012)

General Meeting of
Shareholders

Corporate Auditors
Board of Corporate
Auditors

Board of Directors

Executive
Committee

12Corporate Auditors’ Office
Audit and Inspection Division
Secretariat
Personnel 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
General Affairs Division
Operations Administration Division
Risk Management Division
Compliance Management Division
Head Office
Nagoya Main Office
Domestic Branches (146)

On December 22, 2010, the Bank made The Gifu Bank, Ltd. its
wholly owned subsidiary through a share exchange, including
The Gifu Bank and its three subsidiaries in the Bank’s scope of
consolidation. Under these conditions, the Bank’s consolidated
results for the fiscal year under review were as follows:
Ordinary income from banking operations increased by¥13,925 million to ¥103,121 million (US$1,255 million),
mainly due to an increase in gains on sales of securities andthe contribution from the Gifu Bank’s ordinary income. Ordinary expenses increased by ¥8,529 million to ¥82,820 million (US$1,008 million), reflecting the impact of the inclusionof The Gifu Bank in the Bank’s consolidation, part of which
was offset by a decrease in credit costs. Ordinary profit rose by¥5,396 million to ¥20,301 million (US$247 million).
In the leasing business, ordinary income decreased by ¥157
million to ¥21,542 million (US$262 million), while ordinary expenses decreased by ¥691 million to ¥19,798 million(US$241 million) and ordinary profit increased by ¥534 million
to ¥1,744 million (US$21 million).
In other businesses, including the credit card business andcredit guarantee business, ordinary income decreased by ¥151
million to ¥5,219 million (US$63 million), while ordinary
expenses decreased by ¥433 million to ¥3,613 million (US$44
million) and ordinary profit increased by ¥282 million to¥1,606 million (US$20 million).
As a result, ordinary income on a consolidated basis increased by ¥13,628 million to ¥128,254 million (US$1,560
million) and ordinary expenses increased by ¥7,445 million to¥104,634 million (US$1,273 million), while ordinary profit
increased by ¥6,183 million to ¥23,620 million (US$287 million), and net income increased by ¥2,648 million to ¥11,941
million (US$145 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, 2012 increased by ¥131.4
billion to ¥4,881.0 billion (US$59,387 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, both loans to individual customers and corporate loans increased. Consequently, our balance of loans as of March 31, 2012
increased by ¥157.9 billion to ¥3,722.1 billion (US$45,287
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, 2012 increased by ¥158.2 billion to ¥1,458.8 billion (US$17,749 million).
Year-end unrealized gain on available-for-sale securities cameto ¥25,378 million (US$309 million), an increase of ¥11,934
million from the previous term.
Net cash provided by operating activities amounted to¥106,235 million (US$1,293 million), a decrease of ¥53,658
million from the previous term, as a result of an increasein loans. Net cash used in investing activities amounted to¥142,721 million (US$1,736 million), an increase of ¥37,294
million from the previous term, as a result of a decrease in income from the acquisition of shares in a subsidiary accompaniedby the change of the scope of consolidation, which was recordedin the previous term. Net cash used in financing activities
amounted to ¥21,725 million (US$264 million), an increase of¥18,655 million from the previous term, as a result of an increase in payments for the redemption of subordinated bonds.
As a result, the closing balance of cash and cash equivalents
decreased by ¥58,214 million during the term under review, to¥125,735 million (US$1,530 million).

13

C onsolidated Balance SheetThe Juroku Bank, Ltd. and Consolidated Subsidiaries

C onsolidated Statement of Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

ASSETS:Cash and due from banks (Notes 4, 12 and 23)
Call loans and bills bought (Note 23)
Trading securities (Notes 5 and 23)
Money held in trust (Notes 6 and 23)
Securities (Notes 5, 12 and 23)
Loans and bills discounted (Notes 7, 12 and 23)
Foreign exchanges (Notes 7 and 8)
Lease receivables and investments in leases (Notes 12 and 22)
Other assets (Notes 9 and 12)
Premises and equipment (Note 10)
Goodwill (Note 3)
Intangible assets
Deferred tax assets (Note 21)
Customers’ liabilities for acceptances and guarantees (Note 11)
Reserve for possible loan losses (Note 23)
Total Assets

2012

2011

2012

¥ 129,096—
1,718
10,6201,458,761
3,722,144
4,814
40,83951,61867,569
4,587
6,788
4,982
27,437(42,935)¥5,488,038¥ 187,949
56,663
1,973
10,6201,300,543
3,564,245
7,180
41,30462,50869,0564,832
6,566
15,62632,419(51,572)¥5,309,912$ 1,570,702—
20,903
129,213
17,748,643
45,287,066
58,572496,885
628,033
822,10755,81082,58960,616
333,824(522,387)$66,772,576¥4,881,023
8,400
50,00063,92682,988842
15,00053,462
12,1371,228
8,752
27,437
5,205,195¥4,749,587
6,347—
70,89071,718486
30,00068,772
10,062
910,04332,4195,050,333$59,387,067
102,202608,347
777,783
1,009,709
10,245
182,504
650,468
147,670
14,941
106,485
333,824
63,331,245

36,83936,839448,218

27,817
128,186

27,824
118,816

338,448
1,559,630(1,509)(1,529)(18,360)

25,37813,732
230,443
52,400282,843¥5,488,038

13,444
12,550207,944
51,635259,579¥5,309,912

308,772
167,076
2,803,784
637,547
3,441,331$66,772,576

LIABILITIES AND EQUITY:
Liabilities:
Deposits (Notes 12, 13 and 23)
Negotiable certificates of deposit (Note 23)
Call money and bills sold (Note 12)
Payables under securities lending transactions (Notes 12 and 23)
Borrowed money (Notes 12, 14 and 23)
Foreign exchanges (Note 8)
Bonds (Note 15)
Other liabilities (Notes 16 and 18)
Liability for retirement benefits (Note 17)
Deferred tax liabilities (Note 21)
Deferred tax liabilities for land revaluation surplus (Note 2.h)
Acceptances and guarantees (Note 11)
Total Liabilities

Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions
Other operating income (Note 5)
Gain on sale of securities
Gain on negative goodwill (Note 3)
Other income
Total Income
Expenses:
Interest on:
Deposits
Borrowings and re-discounts
Other
Fees and commissions
Other operating expenses (Note 5)
General and administrative expenses
Provision for possible loan losses
Impairment loss on long-lived assets
Loss on abolishment of retirement benefit plan and the others (Note 17)
Other expenses (Note 20)
Total Expenses
Income before Income Taxes and Minority Interests
Income Taxes (Note 21):
Current
Deferred
Total Income Taxes
Net Income before Minority Interests
Minority Interests in Net Income
Net Income

2012

2012

2011

¥ 59,217
16,001274
15,56625,410
8,706
1,061
3,084
129,319¥ 55,860
13,553
185
15,26625,147
1,813
0
2,857
114,681$ 720,489
194,683
3,334
189,390309,162
105,925
12,90937,523
1,573,415

6,124
1,429
141
5,848
21,12464,369
—
309
957
5,646
105,947
23,372

6,492
1,409
160
5,069
20,96256,519
1,982
617
0
4,935
98,145
16,53674,51017,387
1,716
71,152257,014783,173—
3,760
11,644
68,694
1,289,050
284,365

2,150
7,354
9,504
13,868
1,927¥ 11,941

904
4,908
5,812
10,724
1,431¥ 9,293

26,15989,476
115,635
168,730
23,445$ 145,285

Yen
Per Share of Common Stock (Notes 2.r and 27):

2012

Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

U.S.Dollars
2012

2011
¥31.94
25.88
7.00

$0.39
0.31
0.09

¥25.3625.17
7.00

Commitments and Contingent Liabilities (Notes 22, 24 and 25)
Equity (Notes 19 and 28):
Common stock:authorized, 460,000,000 shares;
issued, 379,241,348 shares in 2012 and 2011
Capital surplus
Retained earnings
Treasury stock - at cost:

5,490,087 shares in 2012 and 5,465,476 shares in 2011
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities
Land revaluation surplus (Note 2.h)
Total
Minority interests
Total Equity
Total Liabilities and Equity
See notes to consolidated financial statements.

14

C onsolidated Statement of Comprehensive Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
2012
Net income before minority interests
Other comprehensive income (Note 26):
Unrealized gain (loss) on available-for-sale securities
Land revaluation surplus
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

2012

2011

¥ 13,868¥ 10,724$168,730

11,9801,247
13,227¥ 27,095(7,800)—(7,800)¥ 2,924

145,761
15,172160,933$329,663¥ 25,122
1,973¥$305,658
24,005

1,503
1,421

15

C onsolidated Balance SheetThe Juroku Bank, Ltd. and Consolidated Subsidiaries

C onsolidated Statement of Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

ASSETS:Cash and due from banks (Notes 4, 12 and 23)
Call loans and bills bought (Note 23)
Trading securities (Notes 5 and 23)
Money held in trust (Notes 6 and 23)
Securities (Notes 5, 12 and 23)
Loans and bills discounted (Notes 7, 12 and 23)
Foreign exchanges (Notes 7 and 8)
Lease receivables and investments in leases (Notes 12 and 22)
Other assets (Notes 9 and 12)
Premises and equipment (Note 10)
Goodwill (Note 3)
Intangible assets
Deferred tax assets (Note 21)
Customers’ liabilities for acceptances and guarantees (Note 11)
Reserve for possible loan losses (Note 23)
Total Assets

2012

2011

2012

¥ 129,096—
1,718
10,6201,458,761
3,722,144
4,814
40,83951,61867,569
4,587
6,788
4,982
27,437(42,935)¥5,488,038¥ 187,949
56,663
1,973
10,6201,300,543
3,564,245
7,180
41,30462,50869,0564,832
6,566
15,62632,419(51,572)¥5,309,912$ 1,570,702—
20,903
129,213
17,748,643
45,287,066
58,572496,885
628,033
822,10755,81082,58960,616
333,824(522,387)$66,772,576¥4,881,023
8,400
50,00063,92682,988842
15,00053,462
12,1371,228
8,752
27,437
5,205,195¥4,749,587
6,347—
70,89071,718486
30,00068,772
10,062
910,04332,4195,050,333$59,387,067
102,202608,347
777,783
1,009,709
10,245
182,504
650,468
147,670
14,941
106,485
333,824
63,331,245

36,83936,839448,218

27,817
128,186

27,824
118,816

338,448
1,559,630(1,509)(1,529)(18,360)

25,37813,732
230,443
52,400282,843¥5,488,038

13,444
12,550207,944
51,635259,579¥5,309,912

308,772
167,076
2,803,784
637,547
3,441,331$66,772,576

LIABILITIES AND EQUITY:
Liabilities:
Deposits (Notes 12, 13 and 23)
Negotiable certificates of deposit (Note 23)
Call money and bills sold (Note 12)
Payables under securities lending transactions (Notes 12 and 23)
Borrowed money (Notes 12, 14 and 23)
Foreign exchanges (Note 8)
Bonds (Note 15)
Other liabilities (Notes 16 and 18)
Liability for retirement benefits (Note 17)
Deferred tax liabilities (Note 21)
Deferred tax liabilities for land revaluation surplus (Note 2.h)
Acceptances and guarantees (Note 11)
Total Liabilities

Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions
Other operating income (Note 5)
Gain on sale of securities
Gain on negative goodwill (Note 3)
Other income
Total Income
Expenses:
Interest on:
Deposits
Borrowings and re-discounts
Other
Fees and commissions
Other operating expenses (Note 5)
General and administrative expenses
Provision for possible loan losses
Impairment loss on long-lived assets
Loss on abolishment of retirement benefit plan and the others (Note 17)
Other expenses (Note 20)
Total Expenses
Income before Income Taxes and Minority Interests
Income Taxes (Note 21):
Current
Deferred
Total Income Taxes
Net Income before Minority Interests
Minority Interests in Net Income
Net Income

2012

2012

2011

¥ 59,217
16,001274
15,56625,410
8,706
1,061
3,084
129,319¥ 55,860
13,553
185
15,26625,147
1,813
0
2,857
114,681$ 720,489
194,683
3,334
189,390309,162
105,925
12,90937,523
1,573,415

6,124
1,429
141
5,848
21,12464,369
—
309
957
5,646
105,947
23,372

6,492
1,409
160
5,069
20,96256,519
1,982
617
0
4,935
98,145
16,53674,51017,387
1,716
71,152257,014783,173—
3,760
11,644
68,694
1,289,050
284,365

2,150
7,354
9,504
13,868
1,927¥ 11,941

904
4,908
5,812
10,724
1,431¥ 9,293

26,15989,476
115,635
168,730
23,445$ 145,285

Yen
Per Share of Common Stock (Notes 2.r and 27):

2012

Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

U.S.Dollars
2012

2011
¥31.94
25.88
7.00

$0.39
0.31
0.09

¥25.3625.17
7.00

Commitments and Contingent Liabilities (Notes 22, 24 and 25)
Equity (Notes 19 and 28):
Common stock:authorized, 460,000,000 shares;
issued, 379,241,348 shares in 2012 and 2011
Capital surplus
Retained earnings
Treasury stock - at cost:

5,490,087 shares in 2012 and 5,465,476 shares in 2011
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities
Land revaluation surplus (Note 2.h)
Total
Minority interests
Total Equity
Total Liabilities and Equity
See notes to consolidated financial statements.

14

C onsolidated Statement of Comprehensive Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen
2012
Net income before minority interests
Other comprehensive income (Note 26):
Unrealized gain (loss) on available-for-sale securities
Land revaluation surplus
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

2012

2011

¥ 13,868¥ 10,724$168,730

11,9801,247
13,227¥ 27,095(7,800)—(7,800)¥ 2,924

145,761
15,172160,933$329,663¥ 25,122
1,973¥$305,658
24,005

1,503
1,421

15

C onsolidated Statement of Changes in Equity
The Juroku Bank, Ltd. and Consolidated Subsidiaries

C onsolidated Statement of Cash Flows
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2012

Thousands

Millions of Yen

CommonStockCapitalSurplusRetained
Earnings

364,017¥36,839¥25,358¥112,138¥(1,381)¥21,234

Net income

—

—

—

9,293

—

Cash dividends, ¥7.00 per share

—

—

—

(2,548)Transfer of land revaluation surplus

—

—

—

(67)

Purchase of treasury stock

(56)

—

—

—

(16)

Disposal of treasury stock

22

—

(6)

—

12

Changes in equity due to share exchange

14,886

—

2,472

—

1,181

Stock of the parent company owned
by newly consolidated subsidiaries(5,093)———(1,325)

Net change in the year

Treasury
Stock

Total

Minority
Interests

Total
Equity¥12,483¥206,671¥20,002¥226,673

—

—

9,293

—

9,293

—

—

—

(2,548)—(2,548)

—

—

—

(67)

—

(67)

—

—

(16)

—

(16)

—

—

6

—

6

—

—

3,653

217

3,870

—

—

(1,325)—(1,325)

UnrealizedLand
Gain (Loss) on Revaluation
Available-for-sale Surplus
Securities

—

—

—

—

—

(7,790)67(7,723)31,416

23,693

373,776

36,83927,824

118,816(1,529)13,444

12,550207,944

51,635259,579

Net income

—

—

—

11,941———

11,941—

11,941

Cash dividends, ¥7.00 per share

—

—

—

(2,616)———(2,616)—(2,616)

Transfer of land revaluation surplus

—

—

—

65

—

—

—

65

—

65

Purchase of treasury stock

(135)

—

—

—

(34)

—

—

(34)

—

(34)

Disposal of treasury stock

110

—

(7)

(20)

54

—

—

27

—

27

Changes in equity due to share exchange

—

—

—

—

—

—

—

—

—

—

Net change in the year

—

—

—

—

—

11,934

1,182

13,116765

13,881

373,751¥36,839¥27,817¥128,186¥(1,509)¥25,378¥13,732¥230,443¥52,400¥282,843

Balance at March 31, 2011

Balance at March 31, 2012

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive income

Balance at March 31, 2011

CapitalSurplusRetained
Earnings$448,218$338,533 $1,445,626

Treasury
Stock

UnrealizedLand
Gain on
Revaluation
Available-for-sale Surplus
Securities$(18,603) $163,572

Net income——

145,285

Cash dividends, $0.09 per share——(31,829)—

Transfer of land revaluation surplus

—

—

791

—

Purchase of treasury stock

—

—

—

(414)

—

Disposal of treasury stock

—

(85)

(243)

657

Changes in equity due to share exchange

—

—

—

—

—

—

—

145,200

Net change in the year
Balance at March 31, 2012
See notes to consolidated financial statements.

16

CommonStock—$448,218$338,448 $1,559,630——

Minority
Interests

Total$152,695 $2,530,041—

145,285

—

—

—

—

Total
Equity$628,239 $3,158,280—

145,285(31,829)—(31,829)

791

—

791

—

(414)

—

(414)

—

—

329

—

329

—

—

—

—

—

14,381

159,581

9,308

168,889$(18,360) $308,772

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

Accumulated othercomprehensive income

Outstanding
Number of
Shares ofCommon Stock

Balance at April 1, 2010

Year Ended March 31, 2012

$167,076 $2,803,784$637,547 $3,441,331

Operating Activities:

2012

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

¥

2012

2011
23,372¥

16,536$ 284,365(1,242)
260
5,832
309
(75,492)
7,694(5,270)71(8,637)2,075(157,899)
131,436
2,053
638
56,66350,000(6,965)465
76,608(13,380)
17,644
82,863106,235(1,079)
273
5,590
617
(69,598)
8,061
1,160
124
(3,932)
1,000(72,491)
158,178(1,453)
1,825
18,429(6,513)
20,657
2,451
71,376(6,535)
15,217
143,357
159,893(15,111)3,163
70,9583,760(918,506)
93,613(64,120)864(105,086)
25,246(1,921,146)
1,599,173
24,9797,763
689,415
608,347(84,743)5,658
932,084(162,794)
214,672
1,008,189
1,292,554(371,677)
173,850
60,141(1,842)(3,384)252—(393,724)
153,447
64,889(2,694)(1,316)57
0(4,522,168)
2,115,221
731,731(22,411)(41,173)
3,066—

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
Proceeds for acquisition of newly consolidated subsidiaries, net of cash
acquired (Note 3)
Other
Net cash used in investing activities—

73,948—(61)(142,721)(34)(105,427)(742)(1,736,476)

Financing Activities:
Proceeds from subordinated loans
Repayment of subordinated loans
Redemption of subordinated bonds
Proceeds from sales of treasury stock
Acquisition of treasury stock
Dividends paid
Net cash used in financing activities
Foreign Currency Translation Adjustments on Cash and Cash Equivalents
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 4)—(4,000)(15,000)27(34)(2,718)(21,725)(3)(58,214)
183,949¥ 125,735

3,000
(500)
(3,000)6(16)(2,560)(3,070)(17)
34,843
132,570¥ 183,949—(48,668)(182,504)329(414)(33,070)(264,327)(37)(708,286)
2,238,095$1,529,809—¥ 764,361

—

—
—
—
—

(730,156)(30,005)
4,893
9,093

—
—
—
—

—

(5,064)———(3,870)(74,107)——

73,948—

Noncash Investing and Financing Activities:
Increase in assets and liabilities due to consolidation of newly
consolidated subsidiaries:
Assets (primarily cash and due from banks, trading securities
and loans and bills discounted)
Liabilities (primarily deposits)
Minority interests
Goodwill
Acquisition cost
Acquisition cost of common stock and preferred stock owned by
the Bank
Common stock allotted by share exchange
Cash and cash equivalents
Proceeds for acquisition of newly consolidated subsidiaries,
net of cash acquired
See notes to consolidated financial statements.

—

¥

17

C onsolidated Statement of Changes in Equity
The Juroku Bank, Ltd. and Consolidated Subsidiaries

C onsolidated Statement of Cash Flows
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2012

Thousands

Millions of Yen

CommonStockCapitalSurplusRetained
Earnings

364,017¥36,839¥25,358¥112,138¥(1,381)¥21,234

Net income

—

—

—

9,293

—

Cash dividends, ¥7.00 per share

—

—

—

(2,548)Transfer of land revaluation surplus

—

—

—

(67)

Purchase of treasury stock

(56)

—

—

—

(16)

Disposal of treasury stock

22

—

(6)

—

12

Changes in equity due to share exchange

14,886

—

2,472

—

1,181

Stock of the parent company owned
by newly consolidated subsidiaries(5,093)———(1,325)

Net change in the year

Treasury
Stock

Total

Minority
Interests

Total
Equity¥12,483¥206,671¥20,002¥226,673

—

—

9,293

—

9,293

—

—

—

(2,548)—(2,548)

—

—

—

(67)

—

(67)

—

—

(16)

—

(16)

—

—

6

—

6

—

—

3,653

217

3,870

—

—

(1,325)—(1,325)

UnrealizedLand
Gain (Loss) on Revaluation
Available-for-sale Surplus
Securities

—

—

—

—

—

(7,790)67(7,723)31,416

23,693

373,776

36,83927,824

118,816(1,529)13,444

12,550207,944

51,635259,579

Net income

—

—

—

11,941———

11,941—

11,941

Cash dividends, ¥7.00 per share

—

—

—

(2,616)———(2,616)—(2,616)

Transfer of land revaluation surplus

—

—

—

65

—

—

—

65

—

65

Purchase of treasury stock

(135)

—

—

—

(34)

—

—

(34)

—

(34)

Disposal of treasury stock

110

—

(7)

(20)

54

—

—

27

—

27

Changes in equity due to share exchange

—

—

—

—

—

—

—

—

—

—

Net change in the year

—

—

—

—

—

11,934

1,182

13,116765

13,881

373,751¥36,839¥27,817¥128,186¥(1,509)¥25,378¥13,732¥230,443¥52,400¥282,843

Balance at March 31, 2011

Balance at March 31, 2012

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive income

Balance at March 31, 2011

CapitalSurplusRetained
Earnings$448,218$338,533 $1,445,626

Treasury
Stock

UnrealizedLand
Gain on
Revaluation
Available-for-sale Surplus
Securities$(18,603) $163,572

Net income——

145,285

Cash dividends, $0.09 per share——(31,829)—

Transfer of land revaluation surplus

—

—

791

—

Purchase of treasury stock

—

—

—

(414)

—

Disposal of treasury stock

—

(85)

(243)

657

Changes in equity due to share exchange

—

—

—

—

—

—

—

145,200

Net change in the year
Balance at March 31, 2012
See notes to consolidated financial statements.

16

CommonStock—$448,218$338,448 $1,559,630——

Minority
Interests

Total$152,695 $2,530,041—

145,285

—

—

—

—

Total
Equity$628,239 $3,158,280—

145,285(31,829)—(31,829)

791

—

791

—

(414)

—

(414)

—

—

329

—

329

—

—

—

—

—

14,381

159,581

9,308

168,889$(18,360) $308,772

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

Accumulated othercomprehensive income

Outstanding
Number of
Shares ofCommon Stock

Balance at April 1, 2010

Year Ended March 31, 2012

$167,076 $2,803,784$637,547 $3,441,331

Operating Activities:

2012

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

¥

2012

2011
23,372¥

16,536$ 284,365(1,242)
260
5,832
309
(75,492)
7,694(5,270)71(8,637)2,075(157,899)
131,436
2,053
638
56,66350,000(6,965)465
76,608(13,380)
17,644
82,863106,235(1,079)
273
5,590
617
(69,598)
8,061
1,160
124
(3,932)
1,000(72,491)
158,178(1,453)
1,825
18,429(6,513)
20,657
2,451
71,376(6,535)
15,217
143,357
159,893(15,111)3,163
70,9583,760(918,506)
93,613(64,120)864(105,086)
25,246(1,921,146)
1,599,173
24,9797,763
689,415
608,347(84,743)5,658
932,084(162,794)
214,672
1,008,189
1,292,554(371,677)
173,850
60,141(1,842)(3,384)252—(393,724)
153,447
64,889(2,694)(1,316)57
0(4,522,168)
2,115,221
731,731(22,411)(41,173)
3,066—

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
Proceeds for acquisition of newly consolidated subsidiaries, net of cash
acquired (Note 3)
Other
Net cash used in investing activities—

73,948—(61)(142,721)(34)(105,427)(742)(1,736,476)

Financing Activities:
Proceeds from subordinated loans
Repayment of subordinated loans
Redemption of subordinated bonds
Proceeds from sales of treasury stock
Acquisition of treasury stock
Dividends paid
Net cash used in financing activities
Foreign Currency Translation Adjustments on Cash and Cash Equivalents
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 4)—(4,000)(15,000)27(34)(2,718)(21,725)(3)(58,214)
183,949¥ 125,735

3,000
(500)
(3,000)6(16)(2,560)(3,070)(17)
34,843
132,570¥ 183,949—(48,668)(182,504)329(414)(33,070)(264,327)(37)(708,286)
2,238,095$1,529,809—¥ 764,361

—

—
—
—
—

(730,156)(30,005)
4,893
9,093

—
—
—
—

—

(5,064)———(3,870)(74,107)——

73,948—

Noncash Investing and Financing Activities:
Increase in assets and liabilities due to consolidation of newly
consolidated subsidiaries:
Assets (primarily cash and due from banks, trading securities
and loans and bills discounted)
Liabilities (primarily deposits)
Minority interests
Goodwill
Acquisition cost
Acquisition cost of common stock and preferred stock owned by
the Bank
Common stock allotted by share exchange
Cash and cash equivalents
Proceeds for acquisition of newly consolidated subsidiaries,
net of cash acquired
See notes to consolidated financial statements.

—

¥

17

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

Year Ended March 31, 2012

1. Basis of Presentation of 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
and the Enforcement Regulation for the Banking Law, and in conformity with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application anddisclosure requirements of 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. In addition, certain
reclassifications have been made in the 2011 consolidated financial statements to conform to the classifications used in 2012.
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 ¥82.19 to $1, the approximate rate of exchange at March 31, 2012. 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, 2012 and 2011
include the accounts of the Bank and its eleven 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., Juroku CapitalCo., Ltd., The Gifu Bank, Ltd., The Gifugin Hosho Services Co., Ltd.,The Gifugin Card Co., Ltd., and The Gifugin Business Service 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 two unconsolidated subsidiaries are stated at cost asof March 31, 2012 and 2011. If the equity method of accounting had
been applied to the investments in these companies, the effect on theaccompanying 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 have been eliminated in consolidation.

b. Business Combination

In October 2003, the Business Accounting Council issued a Statementof Opinion, “Accounting for Business Combinations”, and in December
2005, the ASBJ issued ASBJ Statement No.7, “Accounting Standard
for Business Divestitures” and ASBJ Guidance No.10, “Guidance for
Accounting Standard for Business Combinations and Business Divestitures.” The accounting standard for business combinations allows companies to apply the pooling of interests method of accounting only whencertain specific criteria are met such that the business combination isessentially regarded as a uniting-of-interests. For business combinations
that do not meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of
accounting is required. This standard also prescribes the accounting for
combinations of entities under common control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No.21, “AccountingStandard for Business Combinations.” Major accounting changes under
the revised accounting standard are as follows: (1) The revised standard
requires accounting for business combinations only by the purchasemethod. As a result, the pooling of interests method of accounting is nolonger allowed. (2) The previous accounting standard required researchand development costs to be charged to income as incurred. Under therevised standard, in-process research and development (IPR&D) acquiredin the business combination is capitalized as an intangible asset. (3)18The previous accounting standard provided for a bargain purchase gain
(negative goodwill) to be systematically amortized over a period notexceeding 20 years. Under the revised standard, the acquirer recognizes
the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired
and all of the liabilities assumed have been identified after a review ofthe procedures used in the purchase allocation. The revised standard
was applicable to business combinations undertaken on or after April 1,
2010.

c. Cash and cash equivalents

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

d. 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.

e. 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.
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.

f. 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 principally by 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.
Depreciation of leased assets under finance leases is computed by thestraight-line method over the lease period.
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 or byproviding a special reserve in the equity section. The deferred gain on
premises and equipment by reducing the cost of the assets acquired,
which is taxable for tax purposes in the future, was ¥3,073 million($37,389 thousand) and ¥3,073 million as of March 31, 2012 and 2011,
respectively.

g. 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.

h. 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 was no effect on the consolidated statement of income.
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 ¥21,225 million ($258,243 thousand) as of March 31, 2012.

i. Intangible assets

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

j. Reserve for possible loan losses

The Bank and the Gifu Bank, Ltd. (“Gifu Bank”) implemented a selfassessment system for their asset quality. The quality of all loans is
assessed by the related lending division with a subsequent audit by theasset audit division in accordance with the Bank’s policies and rules for
self-assessment of asset quality.
The Bank and Gifu Bank have established a credit rating system
under which the customers are classified into five categories such as “normal,” “caution,” “possible bankruptcy,” “virtual bankruptcy” and “legal
bankruptcy.” The credit rating system is used for the self-assessment ofasset 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 excepting Gifu Bank is provided based on historical loan loss experience andestimated collectability of specific claims.

k. 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.
The liability for retirement benefits is provided based on projected
benefit obligations and plan assets at the end of the fiscal year. Any
actuarial differences are amortized by the straight-line method mainly
over ten years within the average of employees’ remaining service period,
starting in the fiscal year following the occurrence of such differences.
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.

l. 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 was effective for fiscal years
beginning on or after April 1, 2008.

(As lessee)
Under the previous accounting standard, finance leases that were deemed
to transfer ownership of the leased property to the lessee were required
to be capitalized. However, other finance leases, which will not transfer
ownership of the leased property, were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information wasdisclosed in the notes to the lessee’s financial statements. The revised accounting standard requires all finance lease transactions to be capitalized
to recognize lease assets and lease obligations in the balance sheet. In
addition, the revised accounting standard permits leases which existed at
the transition date and do not transfer ownership of the leased property
to the lessee to continue to be accounted for as operating lease transactions with certain “as if capitalized” information disclosed in the notes
to the lessee’s financial statements.
The Group applied the revised accounting standard effective April
1, 2008. In addition, the Bank continues to account for leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee as operating lease transactions.
(As lessor)
Under the previous accounting standard, finance leases that weredeemed 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 was 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 be recognized as lease receivables and all finance leases that are notdeemed to transfer ownership of the leased property to the lessee to berecognized 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 usedas the beginning value of the investments in leases. Interest revenuesof these finance lease contracts existed at the adoption are calculated by
the straight-line method over the remaining lease period as accepted by
ASBJ Guidance No. 16, “Guidance on Accounting Standard for Lease
Transactions,”. As a result of this treatment, income before income taxes
and minority interests is ¥432 million ($5,256 thousand) larger than thesame calculated using the new standards for the contracts existed at the
adoption.
All other leases are accounted for as operating leases.

m. Bonuses to directors and corporate auditors

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

n. Income taxes

The provision for current income taxes is computed based on the pretax
income included in the consolidated statement of income. The asset andliability 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.

o. 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.

p. Derivatives and hedging activities

The Bank uses a variety of derivative financial instruments.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on the derivative transactions are recognized in the income
statement and (2) for derivatives used for hedging purposes, if thederivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on the derivatives are deferred until maturity of thehedged transactions.

19

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

Year Ended March 31, 2012

1. Basis of Presentation of 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
and the Enforcement Regulation for the Banking Law, and in conformity with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application anddisclosure requirements of 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. In addition, certain
reclassifications have been made in the 2011 consolidated financial statements to conform to the classifications used in 2012.
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 ¥82.19 to $1, the approximate rate of exchange at March 31, 2012. 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, 2012 and 2011
include the accounts of the Bank and its eleven 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., Juroku CapitalCo., Ltd., The Gifu Bank, Ltd., The Gifugin Hosho Services Co., Ltd.,The Gifugin Card Co., Ltd., and The Gifugin Business Service 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 two unconsolidated subsidiaries are stated at cost asof March 31, 2012 and 2011. If the equity method of accounting had
been applied to the investments in these companies, the effect on theaccompanying 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 have been eliminated in consolidation.

b. Business Combination

In October 2003, the Business Accounting Council issued a Statementof Opinion, “Accounting for Business Combinations”, and in December
2005, the ASBJ issued ASBJ Statement No.7, “Accounting Standard
for Business Divestitures” and ASBJ Guidance No.10, “Guidance for
Accounting Standard for Business Combinations and Business Divestitures.” The accounting standard for business combinations allows companies to apply the pooling of interests method of accounting only whencertain specific criteria are met such that the business combination isessentially regarded as a uniting-of-interests. For business combinations
that do not meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of
accounting is required. This standard also prescribes the accounting for
combinations of entities under common control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No.21, “AccountingStandard for Business Combinations.” Major accounting changes under
the revised accounting standard are as follows: (1) The revised standard
requires accounting for business combinations only by the purchasemethod. As a result, the pooling of interests method of accounting is nolonger allowed. (2) The previous accounting standard required researchand development costs to be charged to income as incurred. Under therevised standard, in-process research and development (IPR&D) acquiredin the business combination is capitalized as an intangible asset. (3)18The previous accounting standard provided for a bargain purchase gain
(negative goodwill) to be systematically amortized over a period notexceeding 20 years. Under the revised standard, the acquirer recognizes
the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired
and all of the liabilities assumed have been identified after a review ofthe procedures used in the purchase allocation. The revised standard
was applicable to business combinations undertaken on or after April 1,
2010.

c. Cash and cash equivalents

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

d. 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.

e. 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.
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.

f. 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 principally by 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.
Depreciation of leased assets under finance leases is computed by thestraight-line method over the lease period.
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 or byproviding a special reserve in the equity section. The deferred gain on
premises and equipment by reducing the cost of the assets acquired,
which is taxable for tax purposes in the future, was ¥3,073 million($37,389 thousand) and ¥3,073 million as of March 31, 2012 and 2011,
respectively.

g. 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.

h. 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 was no effect on the consolidated statement of income.
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 ¥21,225 million ($258,243 thousand) as of March 31, 2012.

i. Intangible assets

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

j. Reserve for possible loan losses

The Bank and the Gifu Bank, Ltd. (“Gifu Bank”) implemented a selfassessment system for their asset quality. The quality of all loans is
assessed by the related lending division with a subsequent audit by theasset audit division in accordance with the Bank’s policies and rules for
self-assessment of asset quality.
The Bank and Gifu Bank have established a credit rating system
under which the customers are classified into five categories such as “normal,” “caution,” “possible bankruptcy,” “virtual bankruptcy” and “legal
bankruptcy.” The credit rating system is used for the self-assessment ofasset 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 excepting Gifu Bank is provided based on historical loan loss experience andestimated collectability of specific claims.

k. 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.
The liability for retirement benefits is provided based on projected
benefit obligations and plan assets at the end of the fiscal year. Any
actuarial differences are amortized by the straight-line method mainly
over ten years within the average of employees’ remaining service period,
starting in the fiscal year following the occurrence of such differences.
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.

l. 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 was effective for fiscal years
beginning on or after April 1, 2008.

(As lessee)
Under the previous accounting standard, finance leases that were deemed
to transfer ownership of the leased property to the lessee were required
to be capitalized. However, other finance leases, which will not transfer
ownership of the leased property, were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information wasdisclosed in the notes to the lessee’s financial statements. The revised accounting standard requires all finance lease transactions to be capitalized
to recognize lease assets and lease obligations in the balance sheet. In
addition, the revised accounting standard permits leases which existed at
the transition date and do not transfer ownership of the leased property
to the lessee to continue to be accounted for as operating lease transactions with certain “as if capitalized” information disclosed in the notes
to the lessee’s financial statements.
The Group applied the revised accounting standard effective April
1, 2008. In addition, the Bank continues to account for leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee as operating lease transactions.
(As lessor)
Under the previous accounting standard, finance leases that weredeemed 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 was 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 be recognized as lease receivables and all finance leases that are notdeemed to transfer ownership of the leased property to the lessee to berecognized 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 usedas the beginning value of the investments in leases. Interest revenuesof these finance lease contracts existed at the adoption are calculated by
the straight-line method over the remaining lease period as accepted by
ASBJ Guidance No. 16, “Guidance on Accounting Standard for Lease
Transactions,”. As a result of this treatment, income before income taxes
and minority interests is ¥432 million ($5,256 thousand) larger than thesame calculated using the new standards for the contracts existed at the
adoption.
All other leases are accounted for as operating leases.

m. Bonuses to directors and corporate auditors

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

n. Income taxes

The provision for current income taxes is computed based on the pretax
income included in the consolidated statement of income. The asset andliability 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.

o. 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.

p. Derivatives and hedging activities

The Bank uses a variety of derivative financial instruments.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on the derivative transactions are recognized in the income
statement and (2) for derivatives used for hedging purposes, if thederivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on the derivatives are deferred until maturity of thehedged transactions.

19

The interest rate swaps which qualify for hedge accounting andmeet specific matching criteria are not remeasured at market value but
the differential paid or received under the swap agreements is recognized
and included in interest expense or income. All other derivatives are recognized as either assets or liabilities and measured at fair value and gains
or losses on derivative transactions are recognized in the consolidated
statement of income.

q. 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, 2012 and 2011 were373,767,740 shares and 366,440,516 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.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years
including dividends declared but not paid by the end of the year.

r. Accounting Changes and Error Corrections

On December 4, 2009, ASBJ issued ASBJ Statement No. 24 “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ
Guidance No. 24 “Guidance on Accounting Standard for Accounting
Changes and Error Corrections” for accounting changes and correctionsof prior period errors which are made from the beginning of fiscal years
that begin on or after April 1, 2011. Effective April 1, 2011, the Bank
has adopted the standards.

3. Business Combination
For the year ended March 31, 2012

On April 26 and 28, 2011, the Bank acquired additional shares ofJuroku Capital Co., Ltd., which is a consolidated subsidiary, owned byminority shareholders in exchange for cash in the amount of ¥39 million($475 thousand) to strengthen the governance through the change ofcapital structure of the company.
The Bank accounted for this transaction as a transaction withminority shareholders pursuant to ASBJ Statement No. 21, “Accounting Standard for Business Combinations” and ASBJ Guidance No. 10,“Guidance on Accounting Standard for Business Combinations andBusiness Divestitures” issued on December 26, 2008.
The Bank recognized a gain from negative goodwill of ¥1,061 million ($12,909 thousand) arising from the transaction, since the acquisition cost of the subsidiary’s shares from minority shareholders was lower
than the decreased amount of minority interests.

For the year ended March 31, 2011

On December 22, 2010, the Bank acquired 98.38% shares of Gifu Bankby share exchange and Gifu Bank became a wholly owned subsidiary of
the Bank. Under the terms of the share exchange, as of the date of theshare exchange, the Bank allotted 14,885,889 shares of common stock tothe shareholders of Gifu Bank. Gifu Bank has been a banking company
and this acquisition was conducted in accordance with the Business Integration Agreement dated September 28, 2010 between the Bank, The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (“MUFJ”) and Gifu Bank. According to this agreement, the Bank is conducting this business combination, MUFJ is helping Gifu Bank re-capitalize and the Bank and MUFJ
will work together and support management of Gifu Bank. The purposeof this agreement is to increase business efficiency and secure sustainable growth of the business valuation of Gifu Bank, contribute to thestabilization of the regional finance system and stimulate the regional
economy. The Bank will merge with Gifu Bank by around September
2012.
The results of operations for Gifu Bank are included in the Bank’s
consolidated financial statements from January 1, 2011, since date of20

acquisition is regarded as December 31, 2010 in accounting for thistransaction.
The Bank accounted for this business combination by the purchasemethod of accounting. The acquisition cost determined by the Bank and
Gifu Bank based on a third parties’ valuation was ¥ 8,934 million. The
total cost of acquisition has been allocated to the assets acquired andthe liabilities assumed based on their respective fair values. Goodwill
recorded in connection with the acquisition totaled ¥ 4,893 million andis recognized as expense by the straight-line method for 20 years.
The estimated fair values of the assets acquired and the liabilities assumed at the acquisition date are as follows:
Millions of Yen¥ 78,910
182,119484,549
18,783¥764,361¥702,327
27,829¥730,156

Cash and due from banks
Securities
Loans and bills discounted
Other assets
Total assets
Deposits
Other liabilities
Total liabilities¥126,120(3,380)Cash and due from banks as of March 31, 2012 and 2011 consisted of
the following:

2012

2011

Thousands of
U.S. Dollars
2012¥ 64,795
64,301¥129,096¥ 65,543
122,406¥187,949$ 788,356
782,346$1,570,702

Millions of Yen

A reconciliation between the cash and due from banks on the consolidated balance sheet and the cash and cash equivalents on the consolidated
statement of cash flows for the years ended March 31, 2012 and 2011
was as follows:

2012

2011

Thousands of
U.S. Dollars
2012¥129,096¥187,949$1,570,702(3,361)(4,000)(40,893)

Millions of Yen¥125,735

2012

2011

¥1,712
6¥1,718¥1,968
5¥1,973National government bonds
Local government bonds¥183,949$20,83073$20,903

Valuation gains, which were included in other operating income for theyears ended March 31, 2012 and 2011, were ¥5 million ($61 thousand)and ¥7 million, respectively.
Valuation losses, which were included in other operating expenses
for the years ended March 31, 2012 and 2011, were ¥5 million ($61
thousand) and ¥5 million, respectively.
Securities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

2011

¥

95,874 ¥ 103,114
627,612557,868
307,599
225,904
306,116
271,445
121,560
142,212¥1,458,761 ¥1,300,543

Equity securities
National government bonds
Local government bonds
Corporate bonds
Other securities
Total$ 1,166,492
7,636,111
3,742,536
3,724,492
1,479,012$17,748,643

Information regarding available-for-sale and held-to-maturity securities
as of March 31, 2012 and 2011 was as follows:

4. Cash and Due from Banks

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

Thousands of
U.S. Dollars
2012

Millions of Yen

2012

Millions of Yen

Cash
Due from banks
Total

Trading securities as of March 31, 2012 and 2011 consisted of the following:

Millions of Yen

If this business combination had been completed as of April 1, 2010, thebeginning of the current fiscal year, the unaudited condensed pro forma
consolidated statement of income for the year ended March 31, 2011
would be as follows:

Total income
Net loss

5. Trading Securities and Securities

2012
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity:
Debt securities¥ 67,813
1,175,074
117,501¥24,141
20,2502,425

46,416368

2011¥ 77,105
995,400
141,659¥23,692
11,626
1,205

49,868392$1,529,809
2012

Cost

$

Fair
Value

¥4,570 ¥ 87,384
413 1,194,911
3,561 116,365
227

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

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

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

Millions of Yen
Unrealized Unrealized
Gains
LossesCost

46,557

Fair
Value¥6,496 ¥ 94,301
1,676 1,005,350
6,302
136,562330

49,930Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue

825,076
14,297,044
1,429,626$293,722
246,380
29,505564,740

4,477

Proceeds from sales of available-for-sale securities for the year ended
March 31, 2012 consisted of the following:
March 31, 2012
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

March 31, 2011
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

March 31, 2012
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

Millions of Yen
Proceeds
Realized Gains Realized Losses¥ 15,458¥ 8,027¥2,58385,7491,226
15,59844,445¥162,476

1,498
27
239
2,035
¥11,826

26
—
223
1,825
¥4,657

Millions of Yen
Proceeds
Realized Gains Realized Losses¥ 10,395¥1,743¥1,58987,84016,0082,442
37,144¥153,829

1,694
134
43
630
¥4,24419——692¥2,300Thousands of U.S. Dollars
Proceeds
Realized Gains Realized Losses$ 188,076$ 97,664$31,427
1,043,302
14,917
189,780
540,759$1,976,834

18,226329
2,908
24,759$143,886

316
—
2,713
22,205$56,661

In addition, held-to-maturity securities amounting to ¥500 million($6,083 thousand) were reclassified as available-for-sale securities due toa decline of the issuer’s credit worthiness as of March 31, 2012.
The impairment losses on available-for-sale equity securities for theyears ended March 31, 2012 and 2011 were ¥32 million ($389 thousand) (consisting of corporate bonds) and ¥ 2,406 million (consisting ofequity securities, corporate bonds and other), respectively.
Unrealized gain on available-for-sale securities as of March 31, 2012
and 2011 consisted of the following:
Millions of Yen

Unrealized gain before deferred
tax on:Available-for-sale securities
Deferred tax liabilities
Unrealized gain on availablefor-sale securities before
interest adjustments
Minority interest
Unrealized gain on
available-for-sale securities

Thousands of
U.S. Dollars
2012

2012

2011

¥38,992(13,419)¥22,546(8,952)$474,413(163,268)

25,573

13,594

311,145

(195)

(150)

(2,373)¥25,378¥13,444$308,772

Unrealized gain on available-for-sale securities includes ¥ 719 million($8,748 thousand) and ¥497 thousand of revaluation gain on availablefor-sale securities as of March 31, 2012 and 2011, which are held by
investment limited partnership and similar groups.

$55,603 $ 1,063,195
5,025 14,538,399
43,326 1,415,805
2,762

566,455

21

The interest rate swaps which qualify for hedge accounting andmeet specific matching criteria are not remeasured at market value but
the differential paid or received under the swap agreements is recognized
and included in interest expense or income. All other derivatives are recognized as either assets or liabilities and measured at fair value and gains
or losses on derivative transactions are recognized in the consolidated
statement of income.

q. 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, 2012 and 2011 were373,767,740 shares and 366,440,516 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.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years
including dividends declared but not paid by the end of the year.

r. Accounting Changes and Error Corrections

On December 4, 2009, ASBJ issued ASBJ Statement No. 24 “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ
Guidance No. 24 “Guidance on Accounting Standard for Accounting
Changes and Error Corrections” for accounting changes and correctionsof prior period errors which are made from the beginning of fiscal years
that begin on or after April 1, 2011. Effective April 1, 2011, the Bank
has adopted the standards.

3. Business Combination
For the year ended March 31, 2012

On April 26 and 28, 2011, the Bank acquired additional shares ofJuroku Capital Co., Ltd., which is a consolidated subsidiary, owned byminority shareholders in exchange for cash in the amount of ¥39 million($475 thousand) to strengthen the governance through the change ofcapital structure of the company.
The Bank accounted for this transaction as a transaction withminority shareholders pursuant to ASBJ Statement No. 21, “Accounting Standard for Business Combinations” and ASBJ Guidance No. 10,“Guidance on Accounting Standard for Business Combinations andBusiness Divestitures” issued on December 26, 2008.
The Bank recognized a gain from negative goodwill of ¥1,061 million ($12,909 thousand) arising from the transaction, since the acquisition cost of the subsidiary’s shares from minority shareholders was lower
than the decreased amount of minority interests.

For the year ended March 31, 2011

On December 22, 2010, the Bank acquired 98.38% shares of Gifu Bankby share exchange and Gifu Bank became a wholly owned subsidiary of
the Bank. Under the terms of the share exchange, as of the date of theshare exchange, the Bank allotted 14,885,889 shares of common stock tothe shareholders of Gifu Bank. Gifu Bank has been a banking company
and this acquisition was conducted in accordance with the Business Integration Agreement dated September 28, 2010 between the Bank, The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (“MUFJ”) and Gifu Bank. According to this agreement, the Bank is conducting this business combination, MUFJ is helping Gifu Bank re-capitalize and the Bank and MUFJ
will work together and support management of Gifu Bank. The purposeof this agreement is to increase business efficiency and secure sustainable growth of the business valuation of Gifu Bank, contribute to thestabilization of the regional finance system and stimulate the regional
economy. The Bank will merge with Gifu Bank by around September
2012.
The results of operations for Gifu Bank are included in the Bank’s
consolidated financial statements from January 1, 2011, since date of20

acquisition is regarded as December 31, 2010 in accounting for thistransaction.
The Bank accounted for this business combination by the purchasemethod of accounting. The acquisition cost determined by the Bank and
Gifu Bank based on a third parties’ valuation was ¥ 8,934 million. The
total cost of acquisition has been allocated to the assets acquired andthe liabilities assumed based on their respective fair values. Goodwill
recorded in connection with the acquisition totaled ¥ 4,893 million andis recognized as expense by the straight-line method for 20 years.
The estimated fair values of the assets acquired and the liabilities assumed at the acquisition date are as follows:
Millions of Yen¥ 78,910
182,119484,549
18,783¥764,361¥702,327
27,829¥730,156

Cash and due from banks
Securities
Loans and bills discounted
Other assets
Total assets
Deposits
Other liabilities
Total liabilities¥126,120(3,380)Cash and due from banks as of March 31, 2012 and 2011 consisted of
the following:

2012

2011

Thousands of
U.S. Dollars
2012¥ 64,795
64,301¥129,096¥ 65,543
122,406¥187,949$ 788,356
782,346$1,570,702

Millions of Yen

A reconciliation between the cash and due from banks on the consolidated balance sheet and the cash and cash equivalents on the consolidated
statement of cash flows for the years ended March 31, 2012 and 2011
was as follows:

2012

2011

Thousands of
U.S. Dollars
2012¥129,096¥187,949$1,570,702(3,361)(4,000)(40,893)

Millions of Yen¥125,735

2012

2011

¥1,712
6¥1,718¥1,968
5¥1,973National government bonds
Local government bonds¥183,949$20,83073$20,903

Valuation gains, which were included in other operating income for theyears ended March 31, 2012 and 2011, were ¥5 million ($61 thousand)and ¥7 million, respectively.
Valuation losses, which were included in other operating expenses
for the years ended March 31, 2012 and 2011, were ¥5 million ($61
thousand) and ¥5 million, respectively.
Securities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

2011

¥

95,874 ¥ 103,114
627,612557,868
307,599
225,904
306,116
271,445
121,560
142,212¥1,458,761 ¥1,300,543

Equity securities
National government bonds
Local government bonds
Corporate bonds
Other securities
Total$ 1,166,492
7,636,111
3,742,536
3,724,492
1,479,012$17,748,643

Information regarding available-for-sale and held-to-maturity securities
as of March 31, 2012 and 2011 was as follows:

4. Cash and Due from Banks

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

Thousands of
U.S. Dollars
2012

Millions of Yen

2012

Millions of Yen

Cash
Due from banks
Total

Trading securities as of March 31, 2012 and 2011 consisted of the following:

Millions of Yen

If this business combination had been completed as of April 1, 2010, thebeginning of the current fiscal year, the unaudited condensed pro forma
consolidated statement of income for the year ended March 31, 2011
would be as follows:

Total income
Net loss

5. Trading Securities and Securities

2012
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity:
Debt securities¥ 67,813
1,175,074
117,501¥24,141
20,2502,425

46,416368

2011¥ 77,105
995,400
141,659¥23,692
11,626
1,205

49,868392$1,529,809
2012

Cost

$

Fair
Value

¥4,570 ¥ 87,384
413 1,194,911
3,561 116,365
227

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

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

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

Millions of Yen
Unrealized Unrealized
Gains
LossesCost

46,557

Fair
Value¥6,496 ¥ 94,301
1,676 1,005,350
6,302
136,562330

49,930Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue

825,076
14,297,044
1,429,626$293,722
246,380
29,505564,740

4,477

Proceeds from sales of available-for-sale securities for the year ended
March 31, 2012 consisted of the following:
March 31, 2012
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

March 31, 2011
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

March 31, 2012
Equity securities
Debt securities
National government bonds
Local government bonds
Corporate bonds
Other
Total

Millions of Yen
Proceeds
Realized Gains Realized Losses¥ 15,458¥ 8,027¥2,58385,7491,226
15,59844,445¥162,476

1,498
27
239
2,035
¥11,826

26
—
223
1,825
¥4,657

Millions of Yen
Proceeds
Realized Gains Realized Losses¥ 10,395¥1,743¥1,58987,84016,0082,442
37,144¥153,829

1,694
134
43
630
¥4,24419——692¥2,300Thousands of U.S. Dollars
Proceeds
Realized Gains Realized Losses$ 188,076$ 97,664$31,427
1,043,302
14,917
189,780
540,759$1,976,834

18,226329
2,908
24,759$143,886

316
—
2,713
22,205$56,661

In addition, held-to-maturity securities amounting to ¥500 million($6,083 thousand) were reclassified as available-for-sale securities due toa decline of the issuer’s credit worthiness as of March 31, 2012.
The impairment losses on available-for-sale equity securities for theyears ended March 31, 2012 and 2011 were ¥32 million ($389 thousand) (consisting of corporate bonds) and ¥ 2,406 million (consisting ofequity securities, corporate bonds and other), respectively.
Unrealized gain on available-for-sale securities as of March 31, 2012
and 2011 consisted of the following:
Millions of Yen

Unrealized gain before deferred
tax on:Available-for-sale securities
Deferred tax liabilities
Unrealized gain on availablefor-sale securities before
interest adjustments
Minority interest
Unrealized gain on
available-for-sale securities

Thousands of
U.S. Dollars
2012

2012

2011

¥38,992(13,419)¥22,546(8,952)$474,413(163,268)

25,573

13,594

311,145

(195)

(150)

(2,373)¥25,378¥13,444$308,772

Unrealized gain on available-for-sale securities includes ¥ 719 million($8,748 thousand) and ¥497 thousand of revaluation gain on availablefor-sale securities as of March 31, 2012 and 2011, which are held by
investment limited partnership and similar groups.

$55,603 $ 1,063,195
5,025 14,538,399
43,326 1,415,805
2,762

566,455

21

6. Money Held in Trust

Information regarding money held in trust for trading purposes as ofMarch 31, 2012 and 2011 was as follows:
Carrying AmountMillions of Yen
2012
Money held in trust classified
as trading purpose
Money held in trust-otherTotal¥ 6,000
4,620¥10,620

2011

Thousands of
U.S. Dollars
2012$ 73,002¥ 6,000

7. Loans and Bills Discounted

Loans and bills discounted as of March 31, 2012 and 2011 consisted of
the following:

2012
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Others
Total

¥

2011

39,008 ¥ 34,185
199,742
208,998
486,239452,9455,110
5,864
2,992,045 2,862,253¥3,722,144 ¥3,564,245

Thousands of
U.S. Dollars
2012$

474,6082,430,247
5,916,036
62,17336,404,002$45,287,066“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 placed on
nonaccrual status when substantial doubt is deemed to exist as to theultimate 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 is 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,
2012 and 2011 were ¥ 6,283 million ($76,445 thousand) and ¥10,237
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 difficulty.
Past due loans as of March 31, 2012 and 2011 were ¥113,545 million($1,381,494 thousand) and ¥114,820 million, respectively.
“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, 2012 and 2011were ¥255 million ($3,103 thousand) and ¥604 million, respectively.
“Restructured loans” are defined as loans in which the Group is providing financial support to a borrower by a reduction of interest rates,
deferral of interest payments, extension of maturity dates, or reductionof the face or maturity amount of the debt or accrued interest. Loansclassified as loans to borrowers in bankruptcy, past due loans and accruing loans past due three months or more are excluded from restructuredloans. Restructured loans as of March 31, 2012 and 2011 were ¥17,540
million ($213,408 thousand) and ¥13,573 million, respectively.
The total amount of loans to borrowers in bankruptcy, past dueloans, accruing loans past due three months or more and restructured loans as of March 31, 2012 and 2011 were ¥137,623 million($1,674,450 thousand) and ¥139,234 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 Accountants. The

22

Foreign exchanges as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012
Assets:Due from foreign correspondentaccount
Foreign bills of exchangeboughtForeign bills of exchange
receivable
Total
Liabilities:
Due to foreign correspondentaccount
Foreign bills of exchange payable
Total

2011

¥2,356¥4,391$28,665

945

1,554

11,498

1,513

1,235

18,409¥4,814¥7,180$58,572

¥ 639

¥ 421

$ 7,775

203

65

2,470

¥ 842

¥ 486

$10,245

9. Other Assets

Other assets as of March 31, 2012 and 2011 consisted of the following:
Millions of Yen
2012
Accrued income
Accounts receivable
Installment receivables
Derivative assets
Other
Total

after April 1, 2006. The Bank offset customer’s liabilities for acceptanceand guarantees with acceptance and guarantees of ¥47,195 million($574,218 thousand) and ¥50,382 million arising from guarantees ofprivate placement securities as of March 31, 2012 and 2011, respectively.

¥ 7,541
8,605
8,215
13,835
13,422¥51,6182011¥ 7,833
11,537
6,838
21,941
14,359¥62,508

Thousands of
U.S. Dollars
2012$ 91,751
104,696
99,951
168,329
163,306$628,033

Assets pledged as collateral and their relevant liabilities as of March 31,
2012 and 2011 were as follows:

2012

2011

Thousands of
U.S. Dollars
2012¥240,952—¥192,237
4,500$2,931,646
—

3,129

5,484

38,07048¥244,12930¥202,251

585$2,970,301¥117,085
50,000¥106,873—$1,424,565
608,347

63,92670,890777,783

30,362¥261,373

20,893¥198,656

369,412$3,180,107

Millions of Yen
Assets pledged as collateral:
Securities
Loans and bills discounted
Lease receivables andinvestments in leases
Other assets
Total
Relevant liabilities to above assets:
Deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money
Total

Borrowed money as of March 31, 2012 and 2011 consisted of the following:

In addition, the following assets were pledged or deposited with respect
to foreign exchange settlements and derivatives as of March 31, 2012
and 2011:
Millions of Yen

Cash and due from banks
Securities
Other assets
Total

Premises and equipment as of March 31, 2012 and 2011 consisted of
the following:
Millions of Yen
2012

2011

Thousands of
U.S. Dollars
2012

2012

2011

—
¥109,328
11¥109,339¥¥48,517
14,134478
5,927¥69,056$587,651
163,037
3,030
68,389$822,107

3,000
101,247
11¥104,258—$1,330,186
134$1,330,320

Deposits as of March 31, 2012 and 2011 consisted of the following:
Millions of Yen

The accumulated depreciation of premises and equipment as of March
31, 2012 and 2011 amounted to ¥70,108 million ($852,999 thousand)and ¥71,039 million, respectively.

11. 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 andCurrent deposits
Ordinary deposits
Deposits at notice
Savings deposits
Time deposits
Other deposits
Total

Borrowings due serially to
April 2021 with weighted
average interest rates of 0.97%
in 2012 and 1.31% in 20112011

¥82,988¥71,718$1,009,709

2011¥ 308,458 ¥ 253,457
1,888,110 1,771,901
39,02333,795103,025
106,735
2,471,047 2,491,424
71,36092,275¥4,881,023 ¥4,749,587

Year Ending March 31

Millions of Yen

2013
2014
2015
2016
2017
2018 and thereafter
Total¥37,510
5,375
4,295
2,945
1,565
31,298¥82,988

Thousands of
U.S. Dollars
2012$ 3,752,987
22,972,503
474,790
1,253,498
30,065,057
868,232$59,387,067

Thousands of
U.S. Dollars$ 456,382
65,39752,25735,832
19,041
380,800$1,009,709

Borrowings include subordinated borrowings of the Bank, whichamounted to ¥31,000 million ($377,175 thousand) and ¥35,000 million as of March 31, 2012 and 2011.

15. Bonds

Bonds as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen

Thousands of
U.S. Dollars
2012

13. Deposits

2012¥48,299
13,400249
5,621¥67,569

2012

Thousands of
U.S. Dollars
2012

Millions of Yen

Annual maturities of borrowings as of March 31, 2012 were as follows:

Deposits included in other assets as of March 31, 2012 and 2011 were
¥2,581 million ($31,403 thousand) and ¥2,347 million, respectively.

10. Premises and Equipment

Land
Building
Construction in progress
Other
Total

14. Borrowed Money

12. Assets Pledged

8. Foreign Exchanges

56,211$129,213

4,620¥10,620

Millions of Yen

Bank has rights to sell or pledge accepted commercial bills discounted
and foreign bills of exchange bought without restrictions. The total
fair value of commercial bills discounted and foreign bills of exchangebought included in foreign exchanges as of March 31, 2012 and 2011were ¥39,956 million ($486,142 thousand) and ¥35,841 million,
respectively.

2012
Unsecured Yen subordinatedbonds due March 2017
Unsecured Yen subordinatedbonds due September 2017 (*)
Total

2011
—

¥15,000—¥15,000

15,000$182,504¥15,000¥30,000$182,504(*) 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.

16. Other Liabilities

Other liabilities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012
Domestic exchange settlement
account, credit (*)
Income taxes payable
Accrued expenses
Deferred income
Employees’ deposits
Derivative liabilities
Accounts payable
Other
Total

¥

2011
16

1,573
8,053
9,912
2,495
13,885
6,233
11,295¥53,462¥47

689
13,690
11,221
2,431
21,732
6,682
12,280¥68,772$

195

19,13997,980120,599
30,356
168,938
75,836
137,425$650,468(*) The domestic exchange settlement account consisted of outstanding
remittance bills from other banks and/or collection bills for which the23

6. Money Held in Trust

Information regarding money held in trust for trading purposes as ofMarch 31, 2012 and 2011 was as follows:
Carrying AmountMillions of Yen
2012
Money held in trust classified
as trading purpose
Money held in trust-otherTotal¥ 6,000
4,620¥10,620

2011

Thousands of
U.S. Dollars
2012$ 73,002¥ 6,000

7. Loans and Bills Discounted

Loans and bills discounted as of March 31, 2012 and 2011 consisted of
the following:

2012
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Others
Total

¥

2011

39,008 ¥ 34,185
199,742
208,998
486,239452,9455,110
5,864
2,992,045 2,862,253¥3,722,144 ¥3,564,245

Thousands of
U.S. Dollars
2012$

474,6082,430,247
5,916,036
62,17336,404,002$45,287,066“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 placed on
nonaccrual status when substantial doubt is deemed to exist as to theultimate 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 is 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,
2012 and 2011 were ¥ 6,283 million ($76,445 thousand) and ¥10,237
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 difficulty.
Past due loans as of March 31, 2012 and 2011 were ¥113,545 million($1,381,494 thousand) and ¥114,820 million, respectively.
“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, 2012 and 2011were ¥255 million ($3,103 thousand) and ¥604 million, respectively.
“Restructured loans” are defined as loans in which the Group is providing financial support to a borrower by a reduction of interest rates,
deferral of interest payments, extension of maturity dates, or reductionof the face or maturity amount of the debt or accrued interest. Loansclassified as loans to borrowers in bankruptcy, past due loans and accruing loans past due three months or more are excluded from restructuredloans. Restructured loans as of March 31, 2012 and 2011 were ¥17,540
million ($213,408 thousand) and ¥13,573 million, respectively.
The total amount of loans to borrowers in bankruptcy, past dueloans, accruing loans past due three months or more and restructured loans as of March 31, 2012 and 2011 were ¥137,623 million($1,674,450 thousand) and ¥139,234 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 Accountants. The

22

Foreign exchanges as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012
Assets:Due from foreign correspondentaccount
Foreign bills of exchangeboughtForeign bills of exchange
receivable
Total
Liabilities:
Due to foreign correspondentaccount
Foreign bills of exchange payable
Total

2011

¥2,356¥4,391$28,665

945

1,554

11,498

1,513

1,235

18,409¥4,814¥7,180$58,572

¥ 639

¥ 421

$ 7,775

203

65

2,470

¥ 842

¥ 486

$10,245

9. Other Assets

Other assets as of March 31, 2012 and 2011 consisted of the following:
Millions of Yen
2012
Accrued income
Accounts receivable
Installment receivables
Derivative assets
Other
Total

after April 1, 2006. The Bank offset customer’s liabilities for acceptanceand guarantees with acceptance and guarantees of ¥47,195 million($574,218 thousand) and ¥50,382 million arising from guarantees ofprivate placement securities as of March 31, 2012 and 2011, respectively.

¥ 7,541
8,605
8,215
13,835
13,422¥51,6182011¥ 7,833
11,537
6,838
21,941
14,359¥62,508

Thousands of
U.S. Dollars
2012$ 91,751
104,696
99,951
168,329
163,306$628,033

Assets pledged as collateral and their relevant liabilities as of March 31,
2012 and 2011 were as follows:

2012

2011

Thousands of
U.S. Dollars
2012¥240,952—¥192,237
4,500$2,931,646
—

3,129

5,484

38,07048¥244,12930¥202,251

585$2,970,301¥117,085
50,000¥106,873—$1,424,565
608,347

63,92670,890777,783

30,362¥261,373

20,893¥198,656

369,412$3,180,107

Millions of Yen
Assets pledged as collateral:
Securities
Loans and bills discounted
Lease receivables andinvestments in leases
Other assets
Total
Relevant liabilities to above assets:
Deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money
Total

Borrowed money as of March 31, 2012 and 2011 consisted of the following:

In addition, the following assets were pledged or deposited with respect
to foreign exchange settlements and derivatives as of March 31, 2012
and 2011:
Millions of Yen

Cash and due from banks
Securities
Other assets
Total

Premises and equipment as of March 31, 2012 and 2011 consisted of
the following:
Millions of Yen
2012

2011

Thousands of
U.S. Dollars
2012

2012

2011

—
¥109,328
11¥109,339¥¥48,517
14,134478
5,927¥69,056$587,651
163,037
3,030
68,389$822,107

3,000
101,247
11¥104,258—$1,330,186
134$1,330,320

Deposits as of March 31, 2012 and 2011 consisted of the following:
Millions of Yen

The accumulated depreciation of premises and equipment as of March
31, 2012 and 2011 amounted to ¥70,108 million ($852,999 thousand)and ¥71,039 million, respectively.

11. 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 andCurrent deposits
Ordinary deposits
Deposits at notice
Savings deposits
Time deposits
Other deposits
Total

Borrowings due serially to
April 2021 with weighted
average interest rates of 0.97%
in 2012 and 1.31% in 20112011

¥82,988¥71,718$1,009,709

2011¥ 308,458 ¥ 253,457
1,888,110 1,771,901
39,02333,795103,025
106,735
2,471,047 2,491,424
71,36092,275¥4,881,023 ¥4,749,587

Year Ending March 31

Millions of Yen

2013
2014
2015
2016
2017
2018 and thereafter
Total¥37,510
5,375
4,295
2,945
1,565
31,298¥82,988

Thousands of
U.S. Dollars
2012$ 3,752,987
22,972,503
474,790
1,253,498
30,065,057
868,232$59,387,067

Thousands of
U.S. Dollars$ 456,382
65,39752,25735,832
19,041
380,800$1,009,709

Borrowings include subordinated borrowings of the Bank, whichamounted to ¥31,000 million ($377,175 thousand) and ¥35,000 million as of March 31, 2012 and 2011.

15. Bonds

Bonds as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen

Thousands of
U.S. Dollars
2012

13. Deposits

2012¥48,299
13,400249
5,621¥67,569

2012

Thousands of
U.S. Dollars
2012

Millions of Yen

Annual maturities of borrowings as of March 31, 2012 were as follows:

Deposits included in other assets as of March 31, 2012 and 2011 were
¥2,581 million ($31,403 thousand) and ¥2,347 million, respectively.

10. Premises and Equipment

Land
Building
Construction in progress
Other
Total

14. Borrowed Money

12. Assets Pledged

8. Foreign Exchanges

56,211$129,213

4,620¥10,620

Millions of Yen

Bank has rights to sell or pledge accepted commercial bills discounted
and foreign bills of exchange bought without restrictions. The total
fair value of commercial bills discounted and foreign bills of exchangebought included in foreign exchanges as of March 31, 2012 and 2011were ¥39,956 million ($486,142 thousand) and ¥35,841 million,
respectively.

2012
Unsecured Yen subordinatedbonds due March 2017
Unsecured Yen subordinatedbonds due September 2017 (*)
Total

2011
—

¥15,000—¥15,000

15,000$182,504¥15,000¥30,000$182,504(*) 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.

16. Other Liabilities

Other liabilities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012
Domestic exchange settlement
account, credit (*)
Income taxes payable
Accrued expenses
Deferred income
Employees’ deposits
Derivative liabilities
Accounts payable
Other
Total

¥

2011
16

1,573
8,053
9,912
2,495
13,885
6,233
11,295¥53,462¥47

689
13,690
11,221
2,431
21,732
6,682
12,280¥68,772$

195

19,13997,980120,599
30,356
168,938
75,836
137,425$650,468(*) The domestic exchange settlement account consisted of outstanding
remittance bills from other banks and/or collection bills for which the

23

Bank has received notices for payment from other banks which have notbeen settled.

18. Asset Retirement Obligations

The changes in asset retirement obligations, which are included in otherliabilities, for the year ended March 31, 2012 and 2011 were as follows:

17. 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, 2012 and 2011 was ¥430 million ($5,232
thousand) and ¥352 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,
2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen

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

2012

2011

¥50,394(32,131)(6,556)¥11,707¥48,494(31,776)(7,008)¥ 9,710$613,140(390,936)(79,766)$142,438

The components of net periodic retirement benefit costs for the years
ended March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars
2012

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Loss on abolishment of retirement
benefit plan and the others
Net periodic retirement costs

2012

2011

¥1,463
968
(797)
1,679

¥1,391
941
(796)
1,852

$17,800
11,778(9,697)
20,428957—

11,644¥4,270¥3,388$51,953

The Bank recorded the loss on abolishment of retirement benefit planfor terminating the retirement plan in September 2012 for one of thesubsidiaries. The loss consists of ¥617 million ($7,507 thousand) of
estimated termination expense and ¥340 million ($4,137 thousand) of
estimated premium severance pay.
Assumptions used for the years ended March 31, 2012 and 2011were set forth as follows:

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

24

2012

2011

Straight-line
method
2.0%
3.0%
10 years

Straight-line
method2.0 %3.0 %10 years

Balance at beginning of year
Additional provisions associatedwith the acquisition of premises
and equipment
Reconciliation associated withpassage of time
Decrease due to fulfillment ofasset retirement obligations
Balance at end of year

19. Equity

Other expenses for the years ended March 31, 2012 and 2011 consistedof the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012

20. Other Expenses

2011

¥281

¥117

$3,419

—

157

—

18

7

219

(15)

—

(183)

¥284

¥281

$3,455

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, the Board of Directors may declare dividends (except for dividendsin-kind) at any time during the fiscal year if the company has prescribedso in its articles of incorporation. However, the Bank cannot do so
because it does not meet the criteria. Semiannual interim dividends may
also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies
Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as theamount 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 ($245,224 thousand) and ¥20,155 as of March 31, 2012 and 2011, respectively.

Millions of Yen

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

Thousands of
U.S. Dollars
2012

2012

2011

¥ 143

¥1,134$ 1,740

3,726

1,998

45,334

28
735

158
280

341
8,943

47

142

572

967
¥5,646

1,223¥4,935

11,764$68,694

21. 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, 2012
and 2011.
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2012 and 2011 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
available-for-sale securities
Gain on contribution ofavailable-for-sale securities to
employees’ retirement benefit trusts
Other
Total
Net deferred tax assets

2012

2011

¥12,284
10,516
6,601
3,388
2,512
3,766
(20,054)
19,013¥16,535
14,542
6,586
6,163
2,986
4,012
(23,916)
26,908

Thousands of
U.S. Dollars
2012$149,459
127,947
80,314
41,22230,56345,821(243,996)
231,330(13,419)(8,952)(163,268)(1,184)(1,352)(14,406)(656)(15,259)¥ 3,754(987)(11,291)¥15,617(7,981)(185,655)$ 45,675

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, 2012 and 2011 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
Reduction in year-end deferred tax
assets (liabilities) due to tax-rate
Other – net
Actual effective tax rate

2012

2011

39.76%
0.45(1.78)
0.40(4.97)

39.76%
0.69(2.30)
0.47(3.21)

7.43—(0.63)
40.66%(0.27)
35.14%On December 2, 2011, new tax reform laws were enacted in Japan,
which changed the normal effective statutory tax rate from approximately 39.76% to 37.18% effective for the fiscal years beginning on
or after April 1, 2012 through March 31, 2015, and to 34.80% afterwards. The effect of this change was to decrease deferred tax assets in the
consolidated balance sheet as of March 31, 2012 by ¥9 million ($110
thousand), to increase deferred tax liabilities by ¥156 million ($1,898
thousand), unrealized gain on available-for-sale securities by ¥1,902
million (¥23,142 thousand) and income taxes—deferred in the consolidated statement of income for the year then ended by ¥1,737 million($21,134 thousand). In detail, it has decreased deferred tax liabilities
for land revaluation surplus by ¥1,247 million (¥15,172 thousand) andincreased land revaluation surplus by the same amount.

22. Leases

Finance leases(Lessee)A subsidiary leases certain premises.
Total rental expense including lease payments under the financeleases for the years ended March 31, 2012 and 2011 was ¥44 million($535 thousand) and ¥22 million, respectively.

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 be capitalized torecognize lease assets and lease obligations in the balance sheet. However, the ASBJ Statement No. 13 permits leases that do not ownershiptransfer of the leased assets to the lessee and whose lease inception was
before March 31, 2008 to continue to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in thenotes to the financial statements. The Group applied ASBJ Statement
No. 13 effective April 1, 2008 and continued to account for such leases
as operating lease transactions. Pro forma information of leased assets
whose lease inception was before March 31, 2008 was as follows:
Millions of Yen
2012
Acquisition cost
Accumulated depreciation
Net leased assets

2011

¥229
(149)
¥ 80

¥441
(317)
¥124

Thousands of
U.S. Dollars
2012$2,786(1,813)$ 973

Obligations under finance leases as of March 31, 2012 and 2011 wereas follows:
Millions of Yen
2012
Due within one year
Due after one year
Total

¥32
48
¥80

2011
¥ 44
80
¥124

Thousands of
U.S. Dollars
2012
$389
584
$973

*The amounts of obligations under finance leases include the imputed
interest expense portion.
Depreciation expense, which was not reflected in the accompanying
consolidated statement of income, 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, 2012
and 2011 was ¥44 million ($535 thousand) and ¥22 million, respectively.

25

Bank has received notices for payment from other banks which have notbeen settled.

18. Asset Retirement Obligations

The changes in asset retirement obligations, which are included in otherliabilities, for the year ended March 31, 2012 and 2011 were as follows:

17. 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, 2012 and 2011 was ¥430 million ($5,232
thousand) and ¥352 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,
2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen

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

2012

2011

¥50,394(32,131)(6,556)¥11,707¥48,494(31,776)(7,008)¥ 9,710$613,140(390,936)(79,766)$142,438

The components of net periodic retirement benefit costs for the years
ended March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars
2012

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Loss on abolishment of retirement
benefit plan and the others
Net periodic retirement costs

2012

2011

¥1,463
968
(797)
1,679

¥1,391
941
(796)
1,852

$17,800
11,778(9,697)
20,428957—

11,644¥4,270¥3,388$51,953

The Bank recorded the loss on abolishment of retirement benefit planfor terminating the retirement plan in September 2012 for one of thesubsidiaries. The loss consists of ¥617 million ($7,507 thousand) of
estimated termination expense and ¥340 million ($4,137 thousand) of
estimated premium severance pay.
Assumptions used for the years ended March 31, 2012 and 2011were set forth as follows:

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

24

2012

2011

Straight-line
method
2.0%
3.0%
10 years

Straight-line
method2.0 %3.0 %10 years

Balance at beginning of year
Additional provisions associatedwith the acquisition of premises
and equipment
Reconciliation associated withpassage of time
Decrease due to fulfillment ofasset retirement obligations
Balance at end of year

19. Equity

Other expenses for the years ended March 31, 2012 and 2011 consistedof the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2012

20. Other Expenses

2011

¥281

¥117

$3,419

—

157

—

18

7

219

(15)

—

(183)

¥284

¥281

$3,455

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, the Board of Directors may declare dividends (except for dividendsin-kind) at any time during the fiscal year if the company has prescribedso in its articles of incorporation. However, the Bank cannot do so
because it does not meet the criteria. Semiannual interim dividends may
also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies
Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as theamount 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 ($245,224 thousand) and ¥20,155 as of March 31, 2012 and 2011, respectively.

Millions of Yen

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

Thousands of
U.S. Dollars
2012

2012

2011

¥ 143

¥1,134$ 1,740

3,726

1,998

45,334

28
735

158
280

341
8,943

47

142

572

967
¥5,646

1,223¥4,935

11,764$68,694

21. 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, 2012
and 2011.
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2012 and 2011 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
available-for-sale securities
Gain on contribution ofavailable-for-sale securities to
employees’ retirement benefit trusts
Other
Total
Net deferred tax assets

2012

2011

¥12,284
10,516
6,601
3,388
2,512
3,766
(20,054)
19,013¥16,535
14,542
6,586
6,163
2,986
4,012
(23,916)
26,908

Thousands of
U.S. Dollars
2012$149,459
127,947
80,314
41,22230,56345,821(243,996)
231,330(13,419)(8,952)(163,268)(1,184)(1,352)(14,406)(656)(15,259)¥ 3,754(987)(11,291)¥15,617(7,981)(185,655)$ 45,675

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, 2012 and 2011 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
Reduction in year-end deferred tax
assets (liabilities) due to tax-rate
Other – net
Actual effective tax rate

2012

2011

39.76%
0.45(1.78)
0.40(4.97)

39.76%
0.69(2.30)
0.47(3.21)

7.43—(0.63)
40.66%(0.27)
35.14%On December 2, 2011, new tax reform laws were enacted in Japan,
which changed the normal effective statutory tax rate from approximately 39.76% to 37.18% effective for the fiscal years beginning on
or after April 1, 2012 through March 31, 2015, and to 34.80% afterwards. The effect of this change was to decrease deferred tax assets in the
consolidated balance sheet as of March 31, 2012 by ¥9 million ($110
thousand), to increase deferred tax liabilities by ¥156 million ($1,898
thousand), unrealized gain on available-for-sale securities by ¥1,902
million (¥23,142 thousand) and income taxes—deferred in the consolidated statement of income for the year then ended by ¥1,737 million($21,134 thousand). In detail, it has decreased deferred tax liabilities
for land revaluation surplus by ¥1,247 million (¥15,172 thousand) andincreased land revaluation surplus by the same amount.

22. Leases

Finance leases(Lessee)A subsidiary leases certain premises.
Total rental expense including lease payments under the financeleases for the years ended March 31, 2012 and 2011 was ¥44 million($535 thousand) and ¥22 million, respectively.

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 be capitalized torecognize lease assets and lease obligations in the balance sheet. However, the ASBJ Statement No. 13 permits leases that do not ownershiptransfer of the leased assets to the lessee and whose lease inception was
before March 31, 2008 to continue to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in thenotes to the financial statements. The Group applied ASBJ Statement
No. 13 effective April 1, 2008 and continued to account for such leases
as operating lease transactions. Pro forma information of leased assets
whose lease inception was before March 31, 2008 was as follows:
Millions of Yen
2012
Acquisition cost
Accumulated depreciation
Net leased assets

2011

¥229
(149)
¥ 80

¥441
(317)
¥124

Thousands of
U.S. Dollars
2012$2,786(1,813)$ 973

Obligations under finance leases as of March 31, 2012 and 2011 wereas follows:
Millions of Yen
2012
Due within one year
Due after one year
Total

¥32
48
¥80

2011
¥ 44
80
¥124

Thousands of
U.S. Dollars
2012
$389
584
$973

*The amounts of obligations under finance leases include the imputed
interest expense portion.
Depreciation expense, which was not reflected in the accompanying
consolidated statement of income, 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, 2012
and 2011 was ¥44 million ($535 thousand) and ¥22 million, respectively.

25

(Lessor)
A subsidiary leases certain equipment and other assets.
The net investments in leases as of March 31, 2012 and 2011 wereas follows:
Thousands of
U.S. Dollars
2012

Millions of Yen

Gross lease receivables
Unguaranteed residual values
Deferred interest income
Total

2012

2011

¥42,351746(4,663)¥38,434¥44,158656(5,465)¥39,349$515,282
9,076(56,734)$467,624

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

Thousands of U.S.
Dollars$ 8,103
6,777
5,828
4,441
3,808
5,755
$34,712

Millions of Yen

2013
2014
2015
2016
2017
2018 and thereafter
Total

¥ 666
557
479
365
313
473
¥2,853Maturities 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

2013
2014
2015
2016
2017
2018 and thereafter
Total¥12,968
10,140
7,324
5,052
3,007
3,860
¥42,351

Thousands of U.S.
Dollars$157,781
123,373
89,111
61,46736,586
46,964$515,282

Operating leases(Lessee)
The minimum rental commitments under noncancellable operatingleases as of March 31, 2012 and 2011 were as follows:
Millions of Yen

Due within one year
Due after one year
Total

2012

2011

¥ 238
2,980
¥3,218¥ 156
2,060¥2,216

Thousands of
U.S. Dollars
2012$ 2,896
36,257$39,153(Lessor)
Expected future rental revenues under operating leases as of March 31,
2012 and 2011 were as follows:
Millions of Yen
2012
Due within one year
Due after one year
Total

26

¥159
250
¥409

2011
¥162
341
¥503

Thousands of
U.S. Dollars
2012$1,935
3,041$4,976

23. Financial Instruments and Related Disclosures

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.
(1) Group policy for financial instruments
The Group provides banking services and comprehensive financial
services including leasing business. The Group meets the needs of local
business through providing various products and services in the banking
services, lending services, securities investments and other financial services such as derivatives business. The Group has aligned its operation
into local personnel and businesses and fund from deposits from customers, which are low cost and stable. The Group also funds by borrowing.
As for loans and bills discounted in the money management system,
the Group finances local companies based on their capital demands andindividuals mainly for home mortgage. As its main resources are bankdeposits from customers, the Group tries to ensure the soundness of theassets through appropriate credit decisions and credit rating by understanding the current credit status and managing the credit portfolio toprevent concentrations in specific customers or industries. In marketablesecurities, considering the nature that it is an excess fund management
relating to lending services and its responsibility as a bank to provide
settlement services, the Group focuses on running a fund based on
public bonds, which is superior in security and liquidity. To build up a
portfolio that is less subject to rising interest rates, the Group invests inrisk assets such as securities whose values are expected to be less correlated with bonds.
The Group performs the derivative transactions to fund and invest
capitals to meet the various needs of its customers as well as to meet its
own needs. In trading transactions, the Group avoids taking excessive
risk by restricting the type of transactions and limiting the volume.
Also, the Group will not trade a particular investment if its fair value isvolatile compared to the same of the underlying assets (i.e. high leverage-effect transaction).
(2) Nature and extent of risks arising from financial instruments
The loans and bills discounted are to general business enterprises,
individuals, and local public bodies, and there are a risk (credit risk)that the value of loaned money is reduced by financial deterioration of
the borrower and a risk (interest risk) of losses due to changes in interest
rates. In marketable securities, the Group holds domestic bonds which
are comprised mainly of public bonds such as government bonds andlocal government bonds, foreign securities, which are comprised ofmainly US Treasury, 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 haveinterest risk, risk of changes in price, credit risk, and market liquidity
risk. Market liquidity risk represents the risk that market trades cannot
be performed due to market turmoil and that the Group may suffer
losses due to significantly unfavorable financing conditions. Deposits
and borrowed money hold interest risk and cash flow risk (liquidityrisk). Cash flow risk means the risk that securing necessary financing
becomes difficult or significant unfavorable financing conditions result
in recording of loss due to a mismatch of periods between operations
and financing and unexpected outflows of money. Derivative transactions
related to interest are comprised of interest-rate swap agreements, cap
agreements, floor agreements, and interest option contracts. Derivativetransactions related to currency are comprised of exchange contracts,
non-deliverable forwards (NDF), currency swap agreements, and currency option contracts. Derivative transactions related to securities arecomprised of bond futures, options on bond futures, OTC bond options,stock future transactions and individual security options. The Grouputilizes derivative transactions to meet customer needs and to control
risk so that interest risk, risk of changes in prices, and foreign currency
exchange risk are not excessive. In trading transactions, the Group performs derivative transactions to earn a profit and to accumulate knowhow of the transactions and understand market trends. The derivativetransactions the Group utilizes have interest risk, currency exchange risk
and the risk of change in prices. In derivative transactions, the Group
performs effective covering transactions to meet customers’ needs and in
trading transactions, the Group preliminarily establishes a risk limit to
avoid exposing the Group to too much market risk. Transactions in themarket such as options have limited credit risk and OTC transactions
like interest swaps are assumed to have low risk since the counterpartiesare comprised of highly credible financial institutions and companies.
The interest rate swaps on deposits which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market values
but the differential paid or received under the swap agreements is recognized and included in interest expense or income.
(3) Risk management for financial instruments
Integrated Risk
The Group defines integrated risk management policies and regulations,and strengthens integrated risk management to ensure the soundness ofmanagement. The Group monitors various risks holistically including
measurement by statistical methods and tries to control risks within
the range of management vitality. Specifically, the Group allocates risk
capital to credit risk, market risk, and operational risk based on Valueat Risk (“VaR”) calculations according to assumptions about the market
fluctuation rate and its half year business plan. In each operation division, the Group tries to control risk and obtain returns within the rangeof risk capital. Integrated risk is managed by the risk management
department and is reported at the monthly ALM committee and Boardof Directors meetings. Necessary actions like risk control are taken
promptly.
Credit Risk Management
The Group defines credit risk management policy and rules such as credit risk management regulation to understand, manage and take actions
on credit risk appropriately. First of all, in screening requests for loans,the Group clearly separates the credit department from the operating
department and the Group performs strict examination by the type ofbusiness. Also, the Group analyzes if repayment resources are ensured
and reasonably secured on individual loans based on the purpose of theloan, business plans and investment effects. For portfolio management,
the Group tries to improve credit portfolio by preventing concentrations
in particular customers or industries and by ensuring profits to meetcredit costs. In addition, in order to improve credit risk, the Group supports to improve management and business restructuring for customers experiencing difficult business conditions. Regarding credit risk
management, the Group defines a credit rating system where the Groupevaluates the degree of credit risk by an integrated scale objectively andmakes arrangements to reevaluate credit ratings close to fiscal year end
or when there are any changes in credit status. As for the level of credit
risk and degree of concentration of credit granting, the risk controlling department manages, reports monthly to the ALM committee andmanagement 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 the risks properly to avoid a reduction in thevalue of assets and losing credit. The Group also institutes market risk
management regulations according to the market risk management
policy to clarify the identification of market risk, the role of the department in charge the method of evaluation and monitoring and themethods for controlling and reducing market risk. Under integrated risk
management, the Group allocates risk capital to each business (deposit,
loan, investment securities and other securities) and establishes a cap on
the investment amount and a maximum loss amount and matters to be
discussed (level of loss to be re-examined). The Group handles market
transactions within these risk limits expeditiously and effectively. With
regard to these risks, the risk controlling department manages andreports monthly to the ALM committee and management and discusses
necessary actions. Regarding derivative transactions, the Group follows
internal regulations and policies. The market-risk-management department (middle office) and office-work department (back office) manage
and monitor the balance, fair value, profit and loss and measurement ofrisk of the transactions and report to top-management and risk controlling department regularly to ensures mutual supervision of risks.
Especially in trading transactions, the market-risk-management department (middle office) manages the positions, measurement of risk andapplication for loss cut rule closely.
The Group holds financial instruments which are exposed to market
risks (e.g. interest-rate risk, price-volatility risk and exchange risk) suchas loans and bills discounted, securities, deposits, borrowed money andcorporate bonds. To manage these market risks, the Group calculates
VaR, which is used for quantitative analysis. The Group calculates VaRof private placement bonds, borrowed money and corporate bonds which
are exposed to interest-rate risk by the variance-covariance method (sixmonths holding period with confidence interval of 99%, observation
period one year). The VaR of these financial instruments amounted to¥7,707 million ($93,771 thousand) and ¥10,072 million in aggregate
as of March 31, 2012 and 2011 respectively. The Group calculates VaR
of investment securities which are exposed to price-volatility risk by thevariance-covariance method (six months holding period with confidence
interval of 99%, observation period one year). The VaR of these financial
instruments amounted to ¥23,906 million ($290,863 thousand) and¥32,940 million in aggregate as of March 31, 2012 and 2011, respectively. In addition, the Group calculates VaR of securities, excluding
investment securities, which are exposed to interest-rate risk or the pricevolatility risk by the variance-covariance method (six months holding period for 2012 and three months holding period for 2011 withconfidence interval of 99%, observation period one year). The VaR ofthese financial instruments amounted to ¥21,588 million ($262,660
thousand) and ¥19,622 million in aggregate as of March 31, 2012 and2011, respectively. The Group compares VaR calculated by the formulawith the actual fluctuation of realized gains and losses to verify thatthe calculated VaR reflects market risks with a high degree of accuracy.
However, VaR might not reflect market risks in circumstances such as
unimaginable wide fluctuations in market circumstances because VaRreflects a certain amount of market risks calculated statistically based on
historical fluctuation.
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 25 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.

27

(Lessor)
A subsidiary leases certain equipment and other assets.
The net investments in leases as of March 31, 2012 and 2011 wereas follows:
Thousands of
U.S. Dollars
2012

Millions of Yen

Gross lease receivables
Unguaranteed residual values
Deferred interest income
Total

2012

2011

¥42,351746(4,663)¥38,434¥44,158656(5,465)¥39,349$515,282
9,076(56,734)$467,624

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

Thousands of U.S.
Dollars$ 8,103
6,777
5,828
4,441
3,808
5,755
$34,712

Millions of Yen

2013
2014
2015
2016
2017
2018 and thereafter
Total

¥ 666
557
479
365
313
473
¥2,853Maturities 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

2013
2014
2015
2016
2017
2018 and thereafter
Total¥12,968
10,140
7,324
5,052
3,007
3,860
¥42,351

Thousands of U.S.
Dollars$157,781
123,373
89,111
61,46736,586
46,964$515,282

Operating leases(Lessee)
The minimum rental commitments under noncancellable operatingleases as of March 31, 2012 and 2011 were as follows:
Millions of Yen

Due within one year
Due after one year
Total

2012

2011

¥ 238
2,980
¥3,218¥ 156
2,060¥2,216

Thousands of
U.S. Dollars
2012$ 2,896
36,257$39,153(Lessor)
Expected future rental revenues under operating leases as of March 31,
2012 and 2011 were as follows:
Millions of Yen
2012
Due within one year
Due after one year
Total

26

¥159
250
¥409

2011
¥162
341
¥503

Thousands of
U.S. Dollars
2012$1,935
3,041$4,976

23. Financial Instruments and Related Disclosures

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.
(1) Group policy for financial instruments
The Group provides banking services and comprehensive financial
services including leasing business. The Group meets the needs of local
business through providing various products and services in the banking
services, lending services, securities investments and other financial services such as derivatives business. The Group has aligned its operation
into local personnel and businesses and fund from deposits from customers, which are low cost and stable. The Group also funds by borrowing.
As for loans and bills discounted in the money management system,
the Group finances local companies based on their capital demands andindividuals mainly for home mortgage. As its main resources are bankdeposits from customers, the Group tries to ensure the soundness of theassets through appropriate credit decisions and credit rating by understanding the current credit status and managing the credit portfolio toprevent concentrations in specific customers or industries. In marketablesecurities, considering the nature that it is an excess fund management
relating to lending services and its responsibility as a bank to provide
settlement services, the Group focuses on running a fund based on
public bonds, which is superior in security and liquidity. To build up a
portfolio that is less subject to rising interest rates, the Group invests inrisk assets such as securities whose values are expected to be less correlated with bonds.
The Group performs the derivative transactions to fund and invest
capitals to meet the various needs of its customers as well as to meet its
own needs. In trading transactions, the Group avoids taking excessive
risk by restricting the type of transactions and limiting the volume.
Also, the Group will not trade a particular investment if its fair value isvolatile compared to the same of the underlying assets (i.e. high leverage-effect transaction).
(2) Nature and extent of risks arising from financial instruments
The loans and bills discounted are to general business enterprises,
individuals, and local public bodies, and there are a risk (credit risk)that the value of loaned money is reduced by financial deterioration of
the borrower and a risk (interest risk) of losses due to changes in interest
rates. In marketable securities, the Group holds domestic bonds which
are comprised mainly of public bonds such as government bonds andlocal government bonds, foreign securities, which are comprised ofmainly US Treasury, 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 haveinterest risk, risk of changes in price, credit risk, and market liquidity
risk. Market liquidity risk represents the risk that market trades cannot
be performed due to market turmoil and that the Group may suffer
losses due to significantly unfavorable financing conditions. Deposits
and borrowed money hold interest risk and cash flow risk (liquidityrisk). Cash flow risk means the risk that securing necessary financing
becomes difficult or significant unfavorable financing conditions result
in recording of loss due to a mismatch of periods between operations
and financing and unexpected outflows of money. Derivative transactions
related to interest are comprised of interest-rate swap agreements, cap
agreements, floor agreements, and interest option contracts. Derivativetransactions related to currency are comprised of exchange contracts,
non-deliverable forwards (NDF), currency swap agreements, and currency option contracts. Derivative transactions related to securities arecomprised of bond futures, options on bond futures, OTC bond options,stock future transactions and individual security options. The Grouputilizes derivative transactions to meet customer needs and to control
risk so that interest risk, risk of changes in prices, and foreign currency
exchange risk are not excessive. In trading transactions, the Group performs derivative transactions to earn a profit and to accumulate knowhow of the transactions and understand market trends. The derivativetransactions the Group utilizes have interest risk, currency exchange risk
and the risk of change in prices. In derivative transactions, the Group
performs effective covering transactions to meet customers’ needs and in
trading transactions, the Group preliminarily establishes a risk limit to
avoid exposing the Group to too much market risk. Transactions in themarket such as options have limited credit risk and OTC transactions
like interest swaps are assumed to have low risk since the counterpartiesare comprised of highly credible financial institutions and companies.
The interest rate swaps on deposits which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market values
but the differential paid or received under the swap agreements is recognized and included in interest expense or income.
(3) Risk management for financial instruments
Integrated Risk
The Group defines integrated risk management policies and regulations,and strengthens integrated risk management to ensure the soundness ofmanagement. The Group monitors various risks holistically including
measurement by statistical methods and tries to control risks within
the range of management vitality. Specifically, the Group allocates risk
capital to credit risk, market risk, and operational risk based on Valueat Risk (“VaR”) calculations according to assumptions about the market
fluctuation rate and its half year business plan. In each operation division, the Group tries to control risk and obtain returns within the rangeof risk capital. Integrated risk is managed by the risk management
department and is reported at the monthly ALM committee and Boardof Directors meetings. Necessary actions like risk control are taken
promptly.
Credit Risk Management
The Group defines credit risk management policy and rules such as credit risk management regulation to understand, manage and take actions
on credit risk appropriately. First of all, in screening requests for loans,the Group clearly separates the credit department from the operating
department and the Group performs strict examination by the type ofbusiness. Also, the Group analyzes if repayment resources are ensured
and reasonably secured on individual loans based on the purpose of theloan, business plans and investment effects. For portfolio management,
the Group tries to improve credit portfolio by preventing concentrations
in particular customers or industries and by ensuring profits to meetcredit costs. In addition, in order to improve credit risk, the Group supports to improve management and business restructuring for customers experiencing difficult business conditions. Regarding credit risk
management, the Group defines a credit rating system where the Groupevaluates the degree of credit risk by an integrated scale objectively andmakes arrangements to reevaluate credit ratings close to fiscal year end
or when there are any changes in credit status. As for the level of credit
risk and degree of concentration of credit granting, the risk controlling department manages, reports monthly to the ALM committee andmanagement 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 the risks properly to avoid a reduction in thevalue of assets and losing credit. The Group also institutes market risk
management regulations according to the market risk management
policy to clarify the identification of market risk, the role of the department in charge the method of evaluation and monitoring and themethods for controlling and reducing market risk. Under integrated risk
management, the Group allocates risk capital to each business (deposit,
loan, investment securities and other securities) and establishes a cap on
the investment amount and a maximum loss amount and matters to be
discussed (level of loss to be re-examined). The Group handles market
transactions within these risk limits expeditiously and effectively. With
regard to these risks, the risk controlling department manages andreports monthly to the ALM committee and management and discusses
necessary actions. Regarding derivative transactions, the Group follows
internal regulations and policies. The market-risk-management department (middle office) and office-work department (back office) manage
and monitor the balance, fair value, profit and loss and measurement ofrisk of the transactions and report to top-management and risk controlling department regularly to ensures mutual supervision of risks.
Especially in trading transactions, the market-risk-management department (middle office) manages the positions, measurement of risk andapplication for loss cut rule closely.
The Group holds financial instruments which are exposed to market
risks (e.g. interest-rate risk, price-volatility risk and exchange risk) suchas loans and bills discounted, securities, deposits, borrowed money andcorporate bonds. To manage these market risks, the Group calculates
VaR, which is used for quantitative analysis. The Group calculates VaRof private placement bonds, borrowed money and corporate bonds which
are exposed to interest-rate risk by the variance-covariance method (sixmonths holding period with confidence interval of 99%, observation
period one year). The VaR of these financial instruments amounted to¥7,707 million ($93,771 thousand) and ¥10,072 million in aggregate
as of March 31, 2012 and 2011 respectively. The Group calculates VaR
of investment securities which are exposed to price-volatility risk by thevariance-covariance method (six months holding period with confidence
interval of 99%, observation period one year). The VaR of these financial
instruments amounted to ¥23,906 million ($290,863 thousand) and¥32,940 million in aggregate as of March 31, 2012 and 2011, respectively. In addition, the Group calculates VaR of securities, excluding
investment securities, which are exposed to interest-rate risk or the pricevolatility risk by the variance-covariance method (six months holding period for 2012 and three months holding period for 2011 withconfidence interval of 99%, observation period one year). The VaR ofthese financial instruments amounted to ¥21,588 million ($262,660
thousand) and ¥19,622 million in aggregate as of March 31, 2012 and2011, respectively. The Group compares VaR calculated by the formulawith the actual fluctuation of realized gains and losses to verify thatthe calculated VaR reflects market risks with a high degree of accuracy.
However, VaR might not reflect market risks in circumstances such as
unimaginable wide fluctuations in market circumstances because VaRreflects a certain amount of market risks calculated statistically based on
historical fluctuation.
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 25 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.

27

(a) Fair value of financial instruments
Millions of Yen
March 31, 2012
Cash and due from banks
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 not applied hedge
accounting

Carrying
Amount¥ 129,096
1,718
10,620

Unrealized
Gains/(Losses)¥ 129,154
¥
58
1,718
—
10,620—46,416
1,398,660
3,722,144

46,557
1,398,660

Fair Value

141—(38,633)
3,683,511¥5,270,021¥4,881,023
8,400

3,711,493¥5,298,202¥4,885,528
8,400

27,982¥ 28,181¥ (4,505)—

63,92663,926—82,988¥5,036,337

82,783¥5,040,637

205¥ (4,300)

¥

¥

(50)

(50)

—

Millions of Yen
March 31, 2011
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 not applied hedge
accounting

Carrying
Amount¥ 187,949
56,663
1,973
10,620¥ 188,039
56,663
1,973
10,620

Unrealized
Gains/(Losses)
¥
90
—
—
—

49,9301,236,213

62—

Fair Value

49,8681,236,213
3,564,245(46,620)
3,517,625¥5,060,911¥4,749,587
6,347

3,549,739¥5,093,177¥4,754,986
6,347

32,114¥32,266¥ (5,399)—

70,89070,890—71,718¥4,898,542

71,475¥4,903,698

243¥ (5,156)

¥

¥

209

209

—

March 31, 2012
Cash and due from banks
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 not applied hedge
accounting

Thousands of U.S. Dollars
Carrying
Unrealized
Fair Value
AmountGains/(Losses)$ 1,570,702 $ 1,571,408$
706
20,903
20,903—
129,213
129,213—564,740
17,017,399
45,287,066

566,456
17,017,399

1,716
—

(470,045)
44,817,021 45,157,476$64,119,978 64,462,855$59,387,067 $59,441,879
102,202102,202
777,783

340,455$342,877$ (54,812)—

777,783—

1,009,709
1,007,215$61,276,761 $61,329,079

2,494$ (52,318)$(608) $

(608)—

Cash and due from banks
The carrying amount of cash and due from banks with no maturities
represents the fair value because the fair value approximates such carrying amount. The carrying amount of cash and due from banks withmaturities represents the fair value because the interest rates are floatingor they have short-term maturities and the fair value approximates suchcarrying amount.
For due from banks in which derivatives are embedded, the fairvalue is determined based on the prices quoted by the financial institutions from which they are purchased.
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.
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. For money held in trust due to the securitization of
credited loans, the carrying amount represents the fair value because thetrust assets consist of ordinary deposits. Information on money held in
trust by classification is included in Note 6, “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 the 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.

28

Information on securities by classification is included in Note 5,“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 the short term as long as the credit status of
the borrower has not changed significantly. For loans with fixed interest
rates, the fair value is calculated by bundling the type of loans and theinternal credit rating using the expected future cash flows, which arediscounted by the risk free rate and certain management costs. As forcertain consumer loans such as home mortgages, fair value is calculatedby discounting the total loan principal with the same rate as a similarloan. Also, for consumer loans that mature within one year, the carrying amount represents the fair value as the fair value approximates suchcarrying value. In addition, as for loans to legally bankrupt borrowers,
virtually bankrupt borrowers, and potentially bankrupt borrowers, thefair value is calculated by deducting the allowance, which is calculated
based on the present value of the estimated future cash flow or the estimated collection of cash from collateral and guarantee, from the balancein the consolidated balance sheet date. Therefore, the book value approximates the fair value. Regarding loans which do not have repayment
terms because the outstanding amount of the loan is limited to the valueof collateral assets, the carrying amount represents the fair value as thefair value approximates such carrying amount according to estimatedrepayment periods and conditions of interest.
Liabilities
Deposits and negotiable certificates of deposit
For demand deposits, the amount 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. For the deposits and negotiable certificates of deposits with therepayment period within 2 year, the carrying amount represents the fairvalue because the fair value approximates the carrying amount.
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 the short term as longas the credit rating of the Bank and its subsidiaries has not changed
significantly. For borrowed money with fixed interest rates, the fair value
is calculated by discounting the total of the principal by the rate whichreflects the credit risks of the Group. In addition, for short term borrowed money (within 1 year), the carrying amount represents the fairvalue as the fair value approximates such carrying value.

Derivatives
Information regarding the fair value for derivatives is included in Note 25.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying amountThousands of
U.S. Dollars
2012

Millions of Yen

Unlisted equity securities
Investments in unconsolidated
subsidiaries
Others
Total

2012

2011

¥ 8,490¥ 8,813$103,297

1,003

1,041

12,203

4,192¥13,685

4,608¥14,462

51,004$166,504(5) Maturity analysis for financial assets, securities and financial liabilities with contractual maturities

March 31, 2012

Millions of Yen
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years¥ 61,300 ¥ 3,000——

Cash and due from banks
Securities
Held-to-maturity securities
Debt securities
10,69833,657 ¥ 2,061
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
National government bonds
120,300
191,958
298,800
Local government bonds
11,768137,891
147,535
Corporate bonds
32,252
134,40950,770Other
15,49952,693
20,272Loans and bills discounted
1,078,841 1,134,972
557,837
Total¥1,330,658 ¥1,688,580 ¥1,077,275

March 31, 2012
Deposits
Negotiable certificates of deposit
Payables under securities
lending transactions
Borrowed money
Total

March 31, 2012—

¥ 2,400—
37,023
21,142782,658¥843,223

Millions of Yen
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years¥4,147,646¥707,909¥25,467
¥1
8,400
—
—
—
63,926———37,510¥4,257,482

14,180¥722,089

31,298¥56,765—¥1

Thousands of U.S. Dollars
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years$ 745,833 $ 36,501——

Cash and due from banks
Securities
Held-to-maturity securities
Debt securities
130,162
409,502 $ 25,076—
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
National government bonds 1,463,682 2,335,540 3,635,479 $ 29,201
Local government bonds
143,180 1,677,710 1,795,048—
Corporate bonds
392,408 1,635,345
617,715450,456
Other
188,575
641,112
246,648257,233
Loans and bills discounted
13,126,183 13,809,125 6,787,164 9,522,545
Total$16,190,023 $20,544,835 $13,107,130 $10,259,435

29

(a) Fair value of financial instruments
Millions of Yen
March 31, 2012
Cash and due from banks
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 not applied hedge
accounting

Carrying
Amount¥ 129,096
1,718
10,620

Unrealized
Gains/(Losses)¥ 129,154
¥
58
1,718
—
10,620—46,416
1,398,660
3,722,144

46,557
1,398,660

Fair Value

141—(38,633)
3,683,511¥5,270,021¥4,881,023
8,400

3,711,493¥5,298,202¥4,885,528
8,400

27,982¥ 28,181¥ (4,505)—

63,92663,926—82,988¥5,036,337

82,783¥5,040,637

205¥ (4,300)

¥

¥

(50)

(50)

—

Millions of Yen
March 31, 2011
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 not applied hedge
accounting

Carrying
Amount¥ 187,949
56,663
1,973
10,620¥ 188,039
56,663
1,973
10,620

Unrealized
Gains/(Losses)
¥
90
—
—
—

49,9301,236,213

62—

Fair Value

49,8681,236,213
3,564,245(46,620)
3,517,625¥5,060,911¥4,749,587
6,347

3,549,739¥5,093,177¥4,754,986
6,347

32,114¥32,266¥ (5,399)—

70,89070,890—71,718¥4,898,542

71,475¥4,903,698

243¥ (5,156)

¥

¥

209

209

—

March 31, 2012
Cash and due from banks
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 not applied hedge
accounting

Thousands of U.S. Dollars
Carrying
Unrealized
Fair Value
AmountGains/(Losses)$ 1,570,702 $ 1,571,408$
706
20,903
20,903—
129,213
129,213—564,740
17,017,399
45,287,066

566,456
17,017,399

1,716
—

(470,045)
44,817,021 45,157,476$64,119,978 64,462,855$59,387,067 $59,441,879
102,202102,202
777,783

340,455$342,877$ (54,812)—

777,783—

1,009,709
1,007,215$61,276,761 $61,329,079

2,494$ (52,318)$(608) $

(608)—

Cash and due from banks
The carrying amount of cash and due from banks with no maturities
represents the fair value because the fair value approximates such carrying amount. The carrying amount of cash and due from banks withmaturities represents the fair value because the interest rates are floatingor they have short-term maturities and the fair value approximates suchcarrying amount.
For due from banks in which derivatives are embedded, the fairvalue is determined based on the prices quoted by the financial institutions from which they are purchased.
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.
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. For money held in trust due to the securitization of
credited loans, the carrying amount represents the fair value because thetrust assets consist of ordinary deposits. Information on money held in
trust by classification is included in Note 6, “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 the 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.

28

Information on securities by classification is included in Note 5,“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 the short term as long as the credit status of
the borrower has not changed significantly. For loans with fixed interest
rates, the fair value is calculated by bundling the type of loans and theinternal credit rating using the expected future cash flows, which arediscounted by the risk free rate and certain management costs. As forcertain consumer loans such as home mortgages, fair value is calculatedby discounting the total loan principal with the same rate as a similarloan. Also, for consumer loans that mature within one year, the carrying amount represents the fair value as the fair value approximates suchcarrying value. In addition, as for loans to legally bankrupt borrowers,
virtually bankrupt borrowers, and potentially bankrupt borrowers, thefair value is calculated by deducting the allowance, which is calculated
based on the present value of the estimated future cash flow or the estimated collection of cash from collateral and guarantee, from the balancein the consolidated balance sheet date. Therefore, the book value approximates the fair value. Regarding loans which do not have repayment
terms because the outstanding amount of the loan is limited to the valueof collateral assets, the carrying amount represents the fair value as thefair value approximates such carrying amount according to estimatedrepayment periods and conditions of interest.
Liabilities
Deposits and negotiable certificates of deposit
For demand deposits, the amount 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. For the deposits and negotiable certificates of deposits with therepayment period within 2 year, the carrying amount represents the fairvalue because the fair value approximates the carrying amount.
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 the short term as longas the credit rating of the Bank and its subsidiaries has not changed
significantly. For borrowed money with fixed interest rates, the fair value
is calculated by discounting the total of the principal by the rate whichreflects the credit risks of the Group. In addition, for short term borrowed money (within 1 year), the carrying amount represents the fairvalue as the fair value approximates such carrying value.

Derivatives
Information regarding the fair value for derivatives is included in Note 25.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying amountThousands of
U.S. Dollars
2012

Millions of Yen

Unlisted equity securities
Investments in unconsolidated
subsidiaries
Others
Total

2012

2011

¥ 8,490¥ 8,813$103,297

1,003

1,041

12,203

4,192¥13,685

4,608¥14,462

51,004$166,504(5) Maturity analysis for financial assets, securities and financial liabilities with contractual maturities

March 31, 2012

Millions of Yen
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years¥ 61,300 ¥ 3,000——

Cash and due from banks
Securities
Held-to-maturity securities
Debt securities
10,69833,657 ¥ 2,061
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
National government bonds
120,300
191,958
298,800
Local government bonds
11,768137,891
147,535
Corporate bonds
32,252
134,40950,770Other
15,49952,693
20,272Loans and bills discounted
1,078,841 1,134,972
557,837
Total¥1,330,658 ¥1,688,580 ¥1,077,275

March 31, 2012
Deposits
Negotiable certificates of deposit
Payables under securities
lending transactions
Borrowed money
Total

March 31, 2012—

¥ 2,400—
37,023
21,142782,658¥843,223

Millions of Yen
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years¥4,147,646¥707,909¥25,467
¥1
8,400
—
—
—
63,926———37,510¥4,257,482

14,180¥722,089

31,298¥56,765—¥1

Thousands of U.S. Dollars
Due after One Due after Five
Due in One
Due after
Year through Years throughYear or LessTen Years
Five Years
Ten Years$ 745,833 $ 36,501——

Cash and due from banks
Securities
Held-to-maturity securities
Debt securities
130,162
409,502 $ 25,076—
Corporate bonds
Available-for-sale securities
with contractual maturities
Debt securities
National government bonds 1,463,682 2,335,540 3,635,479 $ 29,201
Local government bonds
143,180 1,677,710 1,795,048—
Corporate bonds
392,408 1,635,345
617,715450,456
Other
188,575
641,112
246,648257,233
Loans and bills discounted
13,126,183 13,809,125 6,787,164 9,522,545
Total$16,190,023 $20,544,835 $13,107,130 $10,259,435

29

Thousands of U.S. Dollars
Due after One Due after Five
Due in One
Due after
March 31, 2012
Year through Years throughYear or LessTen Years
Five Years
Ten Years
Deposits$50,464,120 $8,613,080$309,855$12
Negotiable certificates of deposit
102,202———
Payables under securities
777,783———
lending transactions
Borrowed money
456,382
172,527
380,800—
Total$51,800,487 $8,785,607$690,655$12

24. 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 in thecontracts.
The total amounts of unused open commitments as of March 31,
2012 and 2011 were ¥1,347,714 million ($16,397,542 thousand) and¥1,399,015 million, respectively. Multi-purpose accounts includedin the unused open commitments as of March 31, 2012 and 2011 are¥678,315 million ($8,253,011 thousand) and ¥679,034 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, 2012 and 2011 were ¥1,337,309 million ($16,270,945
thousand) and ¥1,391,102 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.

25. 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 23, 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”.

Derivative transactions to which hedge accounting is not applied at
March 31, 2012 and 2011.

At March 31, 2012
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, 2011
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

Contract
AmountMillions of Yen
Contract
Unrealized
Amount due Fair Value
Gains/(Losses)
after One Year¥ 2,195¥ 2,195

2,195

2,195

¥

60

¥ 60

(38)

(38)

127,694

77,787247

247

20,14010,043

247
—

(572)
172

(572)
172

139,342
129,792

85,962
82,568(12,428)
12,457

(264)
1,651

944
912

608
584

42
11

42
11

Contract
AmountMillions of Yen
Contract
Unrealized
Amount due Fair Value
Gains/(Losses)
after One Year¥ 3,786¥ 2,786

¥

74

¥

74

3,786

2,786

(43)

(43)

182,178

131,977

309

309

28,001
14,832

230
—

(192)
(13)

(192)
(13)

183,060
175,401

126,738
121,192(19,750)
19,751(3,665)
5,818

1,291
1,260

938
912

48
25

48
25

At March 31, 2012
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

Thousands of U.S. Dollars
Contract
Contract
Unrealized
Amount due Fair Value
AmountGains/(Losses)
after One Year

$ 26,706$ 26,706

26,706

1,553,644

$

730

$ 730

26,706

(462)

(462)

946,429

3,005

3,005

245,042
122,192

3,005—(6,959)2,093(6,959)2,093

1,695,364
1,579,170

1,045,894
1,004,599(151,211)
151,563(3,212)
20,088

11,486
11,096

7,397
7,105

511
134

511
134

Notes:
1. Derivative transactions are valued at market and the gains/(losses) arerecognized in the consolidated statement of income.
2. Market values of exchange-traded transactions are based on closing
prices on the exchange markets, such as the Tokyo International Financial Future Exchange. Market values of over-the-counter contracts
are based on the valuation techniques, such as the discounted cash
flow method and the option pricing calculation models.
Derivative transactions to which hedge accounting is applied at March
31, 2012 and 2011.

At March 31, 2012
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

At March 31, 2011
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

At March 31, 2012
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

Hedged Item

Deposits

Hedged Item

Deposits

Millions of Yen
Contract
Contract
Amount due Fair Value
Amountafter One Year¥36,743¥36,743(*)¥37,514¥37,468(*)$447,050$447,050(*)(*) The above interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market value,
but the differential paid or received under the swap agreements is recognized and included in interest expense or income. In addition, the fairvalue of such interest rate swaps in Note 23 is included in that of thehedged items (i.e. deposits).

30

The components of other comprehensive income for the year ended
March 31, 2012 were as follows:
Millions of Yen

Thousands of
U.S. Dollars¥13,675
2,771
16,446(4,466)¥11,980$166,383
33,715200,098(54,338)$145,761

—

—

—

—

—
¥ 1,247¥ 1,247¥13,227—$ 15,172$ 15,172$160,933

Unrealized gain on available-for-salesecurities:
Gains arising during the year
Reclassification adjustments to loss
Amount before income tax effect
Income tax effectTotal
Land revaluation surplus:
Gains arising during the year
Reclassification adjustments toprofit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income

The corresponding information for the year ended March 31, 2011 was
not required under the accounting standard for presentation of comprehensive income as an exemption for the first year of adopting thatstandard and not disclosed herein.

27. Net Income per Share

Reconciliation of the differences between basic and diluted net income
per share ("EPS") for the years ended March 31, 2012 and 2011 is as follows:
Millions of Thousands ofYenshares
Weighted
Net income
average shares
For the year ended March 31, 2012:
Basic EPS
Net income available to¥11,941 373,768
common shareholders
Effect of Dilutive Securities
Preferred stock(2,151)
4,574
Diluted EPS
Net income for computation ¥ 9,790 378,342
Millions of Thousands ofYenshares
Weighted
Net income
average shares

Millions of Yen
Contract
Contract
Amount due Fair Value
Amountafter One Year

Thousands of U.S. Dollars
Contract
Contract
Hedged Item
Amount due Fair Value
Amountafter One Year
Deposits

26. Comprehensive Income

For the year ended March 31, 2011:
Basic EPS
Net income available tocommon shareholders
Effect of Dilutive Securities
Preferred stock
Diluted EPS
Net income for computation¥9,293

366,441

(41)

1,140

¥9,252367,581

Yen

Dollars
EPS¥31.94$0.39¥25.88

$0.31

Yen
EPS

¥25.36¥25.17

28. Subsequent Eventa. Business Combination

On April 27, 2012, the Bank entered into an agreement on a merger
condition (hereinafter “the Agreement”) with Gifu Bank, who is a consolidated subsidiary of the Bank, and MUFJ, who is a holder of Class 5
preferred stock issued by Gifu Bank, upon the approval by the Board of
Directors of the Bank for the purpose of merging Gifu Bank (hereinafter“the Merger”) effective September 18, 2012 under the condition that31

Thousands of U.S. Dollars
Due after One Due after Five
Due in One
Due after
March 31, 2012
Year through Years throughYear or LessTen Years
Five Years
Ten Years
Deposits$50,464,120 $8,613,080$309,855$12
Negotiable certificates of deposit
102,202———
Payables under securities
777,783———
lending transactions
Borrowed money
456,382
172,527
380,800—
Total$51,800,487 $8,785,607$690,655$12

24. 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 in thecontracts.
The total amounts of unused open commitments as of March 31,
2012 and 2011 were ¥1,347,714 million ($16,397,542 thousand) and¥1,399,015 million, respectively. Multi-purpose accounts includedin the unused open commitments as of March 31, 2012 and 2011 are¥678,315 million ($8,253,011 thousand) and ¥679,034 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, 2012 and 2011 were ¥1,337,309 million ($16,270,945
thousand) and ¥1,391,102 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.

25. 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 23, 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”.

Derivative transactions to which hedge accounting is not applied at
March 31, 2012 and 2011.

At March 31, 2012
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, 2011
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

Contract
AmountMillions of Yen
Contract
Unrealized
Amount due Fair Value
Gains/(Losses)
after One Year¥ 2,195¥ 2,195

2,195

2,195

¥

60

¥ 60

(38)

(38)

127,694

77,787247

247

20,14010,043

247
—

(572)
172

(572)
172

139,342
129,792

85,962
82,568(12,428)
12,457

(264)
1,651

944
912

608
584

42
11

42
11

Contract
AmountMillions of Yen
Contract
Unrealized
Amount due Fair Value
Gains/(Losses)
after One Year¥ 3,786¥ 2,786

¥

74

¥

74

3,786

2,786

(43)

(43)

182,178

131,977

309

309

28,001
14,832

230
—

(192)
(13)

(192)
(13)

183,060
175,401

126,738
121,192(19,750)
19,751(3,665)
5,818

1,291
1,260

938
912

48
25

48
25

At March 31, 2012
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

Thousands of U.S. Dollars
Contract
Contract
Unrealized
Amount due Fair Value
AmountGains/(Losses)
after One Year

$ 26,706$ 26,706

26,706

1,553,644

$

730

$ 730

26,706

(462)

(462)

946,429

3,005

3,005

245,042
122,192

3,005—(6,959)2,093(6,959)2,093

1,695,364
1,579,170

1,045,894
1,004,599(151,211)
151,563(3,212)
20,088

11,486
11,096

7,397
7,105

511
134

511
134

Notes:
1. Derivative transactions are valued at market and the gains/(losses) arerecognized in the consolidated statement of income.
2. Market values of exchange-traded transactions are based on closing
prices on the exchange markets, such as the Tokyo International Financial Future Exchange. Market values of over-the-counter contracts
are based on the valuation techniques, such as the discounted cash
flow method and the option pricing calculation models.
Derivative transactions to which hedge accounting is applied at March
31, 2012 and 2011.

At March 31, 2012
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

At March 31, 2011
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

At March 31, 2012
Interest rate swaps:(Fixed rate receipt,
variable rate payment)

Hedged Item

Deposits

Hedged Item

Deposits

Millions of Yen
Contract
Contract
Amount due Fair Value
Amountafter One Year¥36,743¥36,743(*)¥37,514¥37,468(*)$447,050$447,050(*)(*) The above interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market value,
but the differential paid or received under the swap agreements is recognized and included in interest expense or income. In addition, the fairvalue of such interest rate swaps in Note 23 is included in that of thehedged items (i.e. deposits).

30

The components of other comprehensive income for the year ended
March 31, 2012 were as follows:
Millions of Yen

Thousands of
U.S. Dollars¥13,675
2,771
16,446(4,466)¥11,980$166,383
33,715200,098(54,338)$145,761

—

—

—

—

—
¥ 1,247¥ 1,247¥13,227—$ 15,172$ 15,172$160,933

Unrealized gain on available-for-salesecurities:
Gains arising during the year
Reclassification adjustments to loss
Amount before income tax effect
Income tax effectTotal
Land revaluation surplus:
Gains arising during the year
Reclassification adjustments toprofit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income

The corresponding information for the year ended March 31, 2011 was
not required under the accounting standard for presentation of comprehensive income as an exemption for the first year of adopting thatstandard and not disclosed herein.

27. Net Income per Share

Reconciliation of the differences between basic and diluted net income
per share ("EPS") for the years ended March 31, 2012 and 2011 is as follows:
Millions of Thousands ofYenshares
Weighted
Net income
average shares
For the year ended March 31, 2012:
Basic EPS
Net income available to¥11,941 373,768
common shareholders
Effect of Dilutive Securities
Preferred stock(2,151)
4,574
Diluted EPS
Net income for computation ¥ 9,790 378,342
Millions of Thousands ofYenshares
Weighted
Net income
average shares

Millions of Yen
Contract
Contract
Amount due Fair Value
Amountafter One Year

Thousands of U.S. Dollars
Contract
Contract
Hedged Item
Amount due Fair Value
Amountafter One Year
Deposits

26. Comprehensive Income

For the year ended March 31, 2011:
Basic EPS
Net income available tocommon shareholders
Effect of Dilutive Securities
Preferred stock
Diluted EPS
Net income for computation¥9,293

366,441

(41)

1,140

¥9,252367,581

Yen

Dollars
EPS¥31.94$0.39¥25.88

$0.31

Yen
EPS

¥25.36¥25.17

28. Subsequent Eventa. Business Combination

On April 27, 2012, the Bank entered into an agreement on a merger
condition (hereinafter “the Agreement”) with Gifu Bank, who is a consolidated subsidiary of the Bank, and MUFJ, who is a holder of Class 5
preferred stock issued by Gifu Bank, upon the approval by the Board of
Directors of the Bank for the purpose of merging Gifu Bank (hereinafter“the Merger”) effective September 18, 2012 under the condition that31

this proposal were approved by the general shareholders’ meeting andclass shareholders’ meeting of the Bank and relevant authorities stipulated by the applicable laws and regulations.
On May 14, 2012, the Bank entered into a merger contract (hereinafter “the Merger Contract”) with Gifu Bank with the approval by the
Board of Directors’ meeting held on that date.
The Merger Contract was approved by the general shareholders’meeting and class shareholders’ meeting attended by the common shareholders held on June 22, 2012.
1. Summary of the Transaction(1) Name of the entities and description of their business
Name of the entity
Business Description

Acquirer(Surviving Entity)
Juroku Bank, Ltd.
Banking

Acquiree(Absorbed Entity)
Gifu Bank, Ltd.
Banking(2) Acquisition Date
September 18, 2012 (Plan)(3) Legal Form of Acquisition
Absorption-type merger; the Bank as a surviving entity and Gifu
Bank as an absorbed entity(4) Name of the Entity after Business Combination
Juroku Bank, Ltd.
(5) Others
 Purpose of the business combination
On September 28, 2010, Gifu Bank and MUFJ entered into theBusiness Integration Agreement and the Bank and Gifu Bank entered into the Share Exchange Agreement, under which Gifu Bank
became a wholly-owned subsidiary of the Bank. On December 22,
2010, Gifu Bank became a consolidated subsidiary after acquisition and cancellation of the first series of Class 1 preferred stock ofGifu Bank. Thereafter, Gifu Bank issued Class 5 preferred stock to
MUFJ. Since then, the Bank and Gifu Bank has promoted various
initiatives to secure sustainable growth of the corporate value of
the Group, contribute to the stabilization of the regional financesystem and stimulate the regional economy.
The Bank announced upon the conclusion of the above
Business Integration Agreement that the Bank will merge Gifu
Bank in middle to late September 2012 after improving businessefficiency of Gifu Bank. Since the progress of Gifu Bank’s businessefficiency is being made, the Bank is going to merge Gifu Bankon September 18, 2012 as initially scheduled.
 Schedule of the business combination
Public notice on the effective date of class shareholders’ meeting
Friday, March 16, 2012
Effective date of general shareholders’ meeting and classshareholders’ meeting by common shareholders
Saturday, March 31, 2012
Board of Directors’ meeting to approve the Agreement
Friday, April 27, 2012Conclusion of the Agreement
Friday, April 27, 2012
Board of Directors’ meeting to approve the Merger Contract
Monday, May 14, 2012Conclusion of the Merger Contract
Monday, May 14, 2012
General shareholders’ meeting and class shareholders’ meetingby common shareholders
Friday, June 22, 2012
Effective date of the Merger
Tuesday, September 18, 2012 (Plan)(Note) The management of the Bank requested its shareholders toapprove the Merger because there is a possibility that the Bank willrecord loss on merger depending on the operating results of Gifu
Bank for the period ending the effective date of the Merger. In addition, the Bank is going to issue class 1 preferred stock in exchange
for class 5 preferred stock of Gifu Bank in conjunction with the32

Merger and will become an entity with class shares. Since the Bankis required to make amendments to the Articles of Incorporation toissue preferred shares, the Bank decided to hold the class shareholders’ meeting to be attended by common shareholders regarding theapproval of the Merger Contract.
Gifu Bank is not required to obtain an approval by the shareholders’ meeting pursuant to the provision stipulated by the firstsection of the article No. 784 of the Companies Act; however, Gifu
Bank held a class shareholders’ meeting by the common shareholders, a class shareholders’ meeting by the class 4 preferred shareholders
and a class shareholders’ meeting by the class 5 preferred shareholders concerning the approval of the Merger Contract.
2. Summary of the Accounting Treatment
The Bank will account for this transaction as a combination of entities
under common control in accordance with ASBJ Statement No. 21,“Accounting Standard for Business Combinations” and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations
and Business Divestitures”.
3. Distribution of shares by class of shares related to the Merger andcalculation methods(1) Distribution of shares by class of shares
 Common stock:
The Bank holds 100% of the common stock issued by Gifu Bankand will not issue new shares, nor pay any amount of money due tothe merger.
 Preferred stock:(a) Class 4 preferred shares
The Bank holds 100% of the class 4 preferred shares issued by
Gifu Bank and will not issue new shares, nor pay any amount ofmoney due to the merger.
(b) Class 5 preferred shares
The Bank will issue 0.9 share of the class 1 preferred sharesfor one class 5 preferred shares issued by Gifu Bank due to theMerger. The terms and conditions of the class 1 preferred shares of
the Bank are identical with those of the class 5 preferred shares ofGifu Bank.
(2) Calculation method of distribution of shares
Pursuant to the contents of the Business Integration Agreement on
September 28, 2010, the Bank, Gifu Bank and MUFJ discussed about
the distribution ratio of the preferred shares of Gifu Bank, taking into
consideration that the shareholders of Gifu Bank consist of only twoshareholders, the Bank and MUFJ, and that the Bank holds 100% of
voting rights of Gifu Bank. As a result of the discussion, the Bank, Gifu
Bank and MUFJ have agreed that 1) the identical terms and conditionsof the class 5 preferred stock issued by Gifu Bank will be used for theclass 1 preferred stock to be newly issued by the Bank, and 2) the Bank
will issue 0.9 shares of the class 1 preferred stock of the Bank for one
class 5 preferred stock issued by Gifu Bank, taking into account that nomarket price exists for the class 5 preferred stock, and the stock value ofGifu Bank.

b. Appropriations of Retained Earnings

On June 22, 2012, the Bank’s shareholders authorized an appropriationof retained earnings as follows:
Millions of Yen
Year-end cash dividends,¥3.50 ($0.04) per share¥1,326

Thousands of
U.S. Dollars$16,133

29. Segment Information

In March 2008, the ASBJ revised ASBJ Statement No. 17 “Accounting Standard for Segment Information Disclosures” and issued ASBJ Guidance
No.20 “Guidance on Accounting Standard for Segment Information Disclosures”. Under the standard and guidance, an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segmentsthat meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
This accounting standard and the guidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1,
2010.
1. Description of reportable segments
The Group’s reportable segments are those for which separately financial information is available and regular evaluation by the Group’s management isbeing performed in order to decide how resources are allocated among the Group.
The Group consists of the Bank and eleven consolidated subsidiaries. The Group provides banking services-based comprehensive financial services
and also leasing business. The Group operates its business by units which consists of some branches located in a certain range. But the Group discloses
these units as a segment of the Banking business because their economic nature is similar to each other.
For the year ended March 31, 2011, the Bank includes Gifu Bank and its three subsidiaries (the “Gifu Bank Group”) as consolidated subsidiaries
due to the share exchange executed at December 22, 2010. The Gifu Bank Group consists of a single segment of banking business because it provides
mainly banking services.
Therefore, the Group consists of two reportable segments of banking business and lease business.
Banking business is operated by the Bank, Juroku Business Services Co., Ltd. and the Gifu Bank Group. They provide various services such as
deposit-taking and lending services, trading securities, securities investment, domestic exchange, foreign exchange, managing bonds, derivatives business and other related businesses at headquarters and branches of the Bank and Gifu Bank.
Lease business is operated by Juroku Lease Co., Ltd.. It provides leasing business to meet local customers’ needs.
2. Methods of measurement for the amounts of income, profit, assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies”.
3. Information about sales, profit, assets, liabilities and other items is as follows.
Millions of Yen
2012
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision (reversal) of allowance for doubtful
accounts
Increase in premises and equipment and intangible
assetsReportable Segment
Banking
Lease
Total

Other*

Total

Reconciliations Consolidated¥ 102,635
486¥ 103,121
20,301
5,443,547¥21,260
282¥21,542
1,744
59,239¥ 123,895
768¥ 124,663
22,0455,502,786¥ 4,359860¥ 5,219
1,606
34,807¥ 128,254
1,628¥ 129,882
23,651
5,537,593—¥ (1,628)¥ (1,628)(31)(49,555)¥ 128,254—¥ 128,254
23,6205,488,038

¥

¥

¥

¥

¥

¥

¥

5,397
245
75,149
7,481

249
—
56
424

5,646
245
75,205
7,905

57
—
613
103

5,703
245
75,818
8,008

129
—
(326)
(314)

5,832
245
75,492
7,694

(753)

533

(220)

49

(171)

—

(171)

4,729

92

4,821

99

4,920

227

5,147

Reconciliations

Consolidated

Millions of Yen
2011
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision of allowance for doubtful accounts
Increase in premises and equipment andintangible assets

Reportable Segment
Banking
Lease
Total
¥

Other*

Total

88,677519¥ 89,196
14,9055,265,486¥21,425274¥21,699
1,210
54,863¥ 110,102793¥ 110,895
16,1155,320,349¥ 4,524846¥ 5,370
1,324
32,330¥ 114,626
1,639¥ 116,265
17,4395,352,679—¥ (1,639)¥ (1,639)(2)(42,767)¥ 114,626—¥ 114,626
17,437
5,309,912

¥

¥

¥

¥

¥

¥

¥

5,113
61
69,183
7,786
1,366
3,301

294
—
54
525
373
417

5,407
61
69,237
8,311
1,739
3,718

55
—
740
116
243
27

5,462
61
69,977
8,427
1,982
3,745

128
—
(379)
(366)
—
183

5,590
61
69,598
8,061
1,982
3,928

33

this proposal were approved by the general shareholders’ meeting andclass shareholders’ meeting of the Bank and relevant authorities stipulated by the applicable laws and regulations.
On May 14, 2012, the Bank entered into a merger contract (hereinafter “the Merger Contract”) with Gifu Bank with the approval by the
Board of Directors’ meeting held on that date.
The Merger Contract was approved by the general shareholders’meeting and class shareholders’ meeting attended by the common shareholders held on June 22, 2012.
1. Summary of the Transaction(1) Name of the entities and description of their business
Name of the entity
Business Description

Acquirer(Surviving Entity)
Juroku Bank, Ltd.
Banking

Acquiree(Absorbed Entity)
Gifu Bank, Ltd.
Banking(2) Acquisition Date
September 18, 2012 (Plan)(3) Legal Form of Acquisition
Absorption-type merger; the Bank as a surviving entity and Gifu
Bank as an absorbed entity(4) Name of the Entity after Business Combination
Juroku Bank, Ltd.
(5) Others
 Purpose of the business combination
On September 28, 2010, Gifu Bank and MUFJ entered into theBusiness Integration Agreement and the Bank and Gifu Bank entered into the Share Exchange Agreement, under which Gifu Bank
became a wholly-owned subsidiary of the Bank. On December 22,
2010, Gifu Bank became a consolidated subsidiary after acquisition and cancellation of the first series of Class 1 preferred stock ofGifu Bank. Thereafter, Gifu Bank issued Class 5 preferred stock to
MUFJ. Since then, the Bank and Gifu Bank has promoted various
initiatives to secure sustainable growth of the corporate value of
the Group, contribute to the stabilization of the regional financesystem and stimulate the regional economy.
The Bank announced upon the conclusion of the above
Business Integration Agreement that the Bank will merge Gifu
Bank in middle to late September 2012 after improving businessefficiency of Gifu Bank. Since the progress of Gifu Bank’s businessefficiency is being made, the Bank is going to merge Gifu Bankon September 18, 2012 as initially scheduled.
 Schedule of the business combination
Public notice on the effective date of class shareholders’ meeting
Friday, March 16, 2012
Effective date of general shareholders’ meeting and classshareholders’ meeting by common shareholders
Saturday, March 31, 2012
Board of Directors’ meeting to approve the Agreement
Friday, April 27, 2012Conclusion of the Agreement
Friday, April 27, 2012
Board of Directors’ meeting to approve the Merger Contract
Monday, May 14, 2012Conclusion of the Merger Contract
Monday, May 14, 2012
General shareholders’ meeting and class shareholders’ meetingby common shareholders
Friday, June 22, 2012
Effective date of the Merger
Tuesday, September 18, 2012 (Plan)(Note) The management of the Bank requested its shareholders toapprove the Merger because there is a possibility that the Bank willrecord loss on merger depending on the operating results of Gifu
Bank for the period ending the effective date of the Merger. In addition, the Bank is going to issue class 1 preferred stock in exchange
for class 5 preferred stock of Gifu Bank in conjunction with the32

Merger and will become an entity with class shares. Since the Bankis required to make amendments to the Articles of Incorporation toissue preferred shares, the Bank decided to hold the class shareholders’ meeting to be attended by common shareholders regarding theapproval of the Merger Contract.
Gifu Bank is not required to obtain an approval by the shareholders’ meeting pursuant to the provision stipulated by the firstsection of the article No. 784 of the Companies Act; however, Gifu
Bank held a class shareholders’ meeting by the common shareholders, a class shareholders’ meeting by the class 4 preferred shareholders
and a class shareholders’ meeting by the class 5 preferred shareholders concerning the approval of the Merger Contract.
2. Summary of the Accounting Treatment
The Bank will account for this transaction as a combination of entities
under common control in accordance with ASBJ Statement No. 21,“Accounting Standard for Business Combinations” and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations
and Business Divestitures”.
3. Distribution of shares by class of shares related to the Merger andcalculation methods(1) Distribution of shares by class of shares
 Common stock:
The Bank holds 100% of the common stock issued by Gifu Bankand will not issue new shares, nor pay any amount of money due tothe merger.
 Preferred stock:(a) Class 4 preferred shares
The Bank holds 100% of the class 4 preferred shares issued by
Gifu Bank and will not issue new shares, nor pay any amount ofmoney due to the merger.
(b) Class 5 preferred shares
The Bank will issue 0.9 share of the class 1 preferred sharesfor one class 5 preferred shares issued by Gifu Bank due to theMerger. The terms and conditions of the class 1 preferred shares of
the Bank are identical with those of the class 5 preferred shares ofGifu Bank.
(2) Calculation method of distribution of shares
Pursuant to the contents of the Business Integration Agreement on
September 28, 2010, the Bank, Gifu Bank and MUFJ discussed about
the distribution ratio of the preferred shares of Gifu Bank, taking into
consideration that the shareholders of Gifu Bank consist of only twoshareholders, the Bank and MUFJ, and that the Bank holds 100% of
voting rights of Gifu Bank. As a result of the discussion, the Bank, Gifu
Bank and MUFJ have agreed that 1) the identical terms and conditionsof the class 5 preferred stock issued by Gifu Bank will be used for theclass 1 preferred stock to be newly issued by the Bank, and 2) the Bank
will issue 0.9 shares of the class 1 preferred stock of the Bank for one
class 5 preferred stock issued by Gifu Bank, taking into account that nomarket price exists for the class 5 preferred stock, and the stock value ofGifu Bank.

b. Appropriations of Retained Earnings

On June 22, 2012, the Bank’s shareholders authorized an appropriationof retained earnings as follows:
Millions of Yen
Year-end cash dividends,¥3.50 ($0.04) per share¥1,326

Thousands of
U.S. Dollars$16,133

29. Segment Information

In March 2008, the ASBJ revised ASBJ Statement No. 17 “Accounting Standard for Segment Information Disclosures” and issued ASBJ Guidance
No.20 “Guidance on Accounting Standard for Segment Information Disclosures”. Under the standard and guidance, an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segmentsthat meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
This accounting standard and the guidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1,
2010.
1. Description of reportable segments
The Group’s reportable segments are those for which separately financial information is available and regular evaluation by the Group’s management isbeing performed in order to decide how resources are allocated among the Group.
The Group consists of the Bank and eleven consolidated subsidiaries. The Group provides banking services-based comprehensive financial services
and also leasing business. The Group operates its business by units which consists of some branches located in a certain range. But the Group discloses
these units as a segment of the Banking business because their economic nature is similar to each other.
For the year ended March 31, 2011, the Bank includes Gifu Bank and its three subsidiaries (the “Gifu Bank Group”) as consolidated subsidiaries
due to the share exchange executed at December 22, 2010. The Gifu Bank Group consists of a single segment of banking business because it provides
mainly banking services.
Therefore, the Group consists of two reportable segments of banking business and lease business.
Banking business is operated by the Bank, Juroku Business Services Co., Ltd. and the Gifu Bank Group. They provide various services such as
deposit-taking and lending services, trading securities, securities investment, domestic exchange, foreign exchange, managing bonds, derivatives business and other related businesses at headquarters and branches of the Bank and Gifu Bank.
Lease business is operated by Juroku Lease Co., Ltd.. It provides leasing business to meet local customers’ needs.
2. Methods of measurement for the amounts of income, profit, assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies”.
3. Information about sales, profit, assets, liabilities and other items is as follows.
Millions of Yen
2012
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision (reversal) of allowance for doubtful
accounts
Increase in premises and equipment and intangible
assetsReportable Segment
Banking
Lease
Total

Other*

Total

Reconciliations Consolidated¥ 102,635
486¥ 103,121
20,301
5,443,547¥21,260
282¥21,542
1,744
59,239¥ 123,895
768¥ 124,663
22,0455,502,786¥ 4,359860¥ 5,219
1,606
34,807¥ 128,254
1,628¥ 129,882
23,651
5,537,593—¥ (1,628)¥ (1,628)(31)(49,555)¥ 128,254—¥ 128,254
23,6205,488,038

¥

¥

¥

¥

¥

¥

¥

5,397
245
75,149
7,481

249
—
56
424

5,646
245
75,205
7,905

57
—
613
103

5,703
245
75,818
8,008

129
—
(326)
(314)

5,832
245
75,492
7,694

(753)

533

(220)

49

(171)

—

(171)

4,729

92

4,821

99

4,920

227

5,147

Reconciliations

Consolidated

Millions of Yen
2011
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision of allowance for doubtful accounts
Increase in premises and equipment andintangible assets

Reportable Segment
Banking
Lease
Total
¥

Other*

Total

88,677519¥ 89,196
14,9055,265,486¥21,425274¥21,699
1,210
54,863¥ 110,102793¥ 110,895
16,1155,320,349¥ 4,524846¥ 5,370
1,324
32,330¥ 114,626
1,639¥ 116,265
17,4395,352,679—¥ (1,639)¥ (1,639)(2)(42,767)¥ 114,626—¥ 114,626
17,437
5,309,912

¥

¥

¥

¥

¥

¥

¥

5,113
61
69,183
7,786
1,366
3,301

294
—
54
525
373
417

5,407
61
69,237
8,311
1,739
3,718

55
—
740
116
243
27

5,462
61
69,977
8,427
1,982
3,745

128
—
(379)
(366)
—
183

5,590
61
69,598
8,061
1,982
3,928

33

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

Years Ended March 31 (Supplemental Information)

Thousands of U.S. Dollars
2012
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision (reversal) of allowance for doubtful
accounts
Increase in premises and equipment andintangible assets

Reportable Segment
Banking
Lease
Total

Other*

Total

Reconciliations Consolidated$ 1,248,753
5,913$ 1,254,666
247,001
66,231,257$258,669 $ 1,507,422
3,431
9,344
$262,100 $ 1,516,766
21,219268,220
720,757 66,952,014$ 53,035 $ 1,560,457
10,46419,808$ 63,499 $ 1,580,265
19,540287,760
423,494 67,375,508— $ 1,560,457$ (19,808)—$ (19,808) $ 1,560,457(377)
287,383(602,932) 66,772,576$

65,664
2,981
914,333
91,021$ 3,030 $
—
681
5,159

68,6942,981
915,014
96,180$$(9,162)

6,485

57,537

1,119

2012

For the Year
Total income¥

69,3882,981
922,472
97,433

1,570 $—
(3,966)(3,820)70,9582,981
918,506
93,613(2,677)596(2,081)—(2,081)

58,656

1,205

59,861

2,762

62,623* 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 statement of income.
Ordinary expenses represent total expenses less certain special expenses included in other expenses in the accompanying consolidated statement ofincome.

90,414¥ 116,391

71,23572,973

107,131

98,81972,522

Income (loss) before income taxes

16,127

14,00014,142(16,717)

17,572

22,766

7,633

Lending Service

2012
Ordinary income:Outside customers

Lending Service¥59,627$725,478

Securities Services¥27,864

Millions of Yen
Leasing¥

4,738

87,115¥

5,240(7,171)¥

7,214

95,288

9,089

¥

8,494

¥

9,262

¥

8,902

¥

(9,546)¥

10,358¥13,677

¥

1,646

¥

1,947

¥

1,686

¥

1,666

¥

1,514

¥

3,042

At Year-End
Assets:Trading securities
Securities

1,264,497

1,118,419

970,684

844,836852,504

1,008,292

Loans and bills discounted

3,304,083

3,096,245

3,022,906

3,056,008

2,909,033

2,822,570

Foreign exchanges
Other¥21,190

Thousands of U.S. Dollars
Securities Services
Leasing$339,019$257,817

Total¥19,573¥128,254

Other

Other

Total

Equity:Banking¥309

Banking$3,760Thousands of U.S. Dollars
Reportable Segment
Lease
Total
—
$3,760Banking
¥ 245
4,587

Reportable Segment
Lease
—
—

Banking$ 2,981
55,810Thousands of U.S. Dollars
Reportable Segment
Lease
Total
—
$ 2,981—
55,810

Total¥309

Foreign exchanges
Total liabilities$238,143$1,560,457

3,828

6,085

3,058

3,909

4,613

3,361

190,629294,671

316,680

219,115

322,892

298,191¥4,764,683¥4,517,367¥4,315,014¥4,125,534¥4,090,556¥4,135,456¥4,281,150¥4,069,448¥3,902,366¥3,745,652¥3,639,608¥3,624,885

Other
—

Total
¥309

—

Total
$3,760

—
—

Total
¥ 245
4,587

—
—

Total
$ 2,981
55,810

Other

835

477

651

575

737

738

257,916

239,744

207,673

198,559

228,491

242,1114,539,901

4,309,669

4,110,690

3,944,786

3,868,836

3,867,734

Common stock

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

Capital surplus and earnings

187,943

170,859

167,485

143,909

184,881

230,883

Total equity

Millions of Yen
Reportable Segment
Lease—

Deposits

Other(2) Information about impairment loss by reportable segments

2012
Impairment loss

85,235

Liabilities:

2012
Ordinary income:Outside customers

2012
Impairment loss

Net income (loss)

¥

2007

69,831

Total assets

4. Associated Information(1) Information about services

85,9582008

Total expenses
Total income taxes

694 $
—
7,458
1,253

Millions of Yen
2010
2009

2011

Total liabilities and equity

224,782

207,698

204,324

180,748

221,720

267,722¥ 4,764,683¥4,517,367¥4,315,014¥4,125,534¥4,090,556¥4,135,456(3) Information about goodwill by reportable segments
Millions of Yen
2012
Amortization of goodwill
Goodwill at March 31, 20122012
Amortization of goodwill
Goodwill at March 31, 2012

34

Total
¥ 245
4,587

Other

Other

35

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

Years Ended March 31 (Supplemental Information)

Thousands of U.S. Dollars
2012
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Provision (reversal) of allowance for doubtful
accounts
Increase in premises and equipment andintangible assets

Reportable Segment
Banking
Lease
Total

Other*

Total

Reconciliations Consolidated$ 1,248,753
5,913$ 1,254,666
247,001
66,231,257$258,669 $ 1,507,422
3,431
9,344
$262,100 $ 1,516,766
21,219268,220
720,757 66,952,014$ 53,035 $ 1,560,457
10,46419,808$ 63,499 $ 1,580,265
19,540287,760
423,494 67,375,508— $ 1,560,457$ (19,808)—$ (19,808) $ 1,560,457(377)
287,383(602,932) 66,772,576$

65,664
2,981
914,333
91,021$ 3,030 $
—
681
5,159

68,6942,981
915,014
96,180$$(9,162)

6,485

57,537

1,119

2012

For the Year
Total income¥

69,3882,981
922,472
97,433

1,570 $—
(3,966)(3,820)70,9582,981
918,506
93,613(2,677)596(2,081)—(2,081)

58,656

1,205

59,861

2,762

62,623* 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 statement of income.
Ordinary expenses represent total expenses less certain special expenses included in other expenses in the accompanying consolidated statement ofincome.

90,414¥ 116,391

71,23572,973

107,131

98,81972,522

Income (loss) before income taxes

16,127

14,00014,142(16,717)

17,572

22,766

7,633

Lending Service

2012
Ordinary income:Outside customers

Lending Service¥59,627$725,478

Securities Services¥27,864

Millions of Yen
Leasing¥

4,738

87,115¥

5,240(7,171)¥

7,214

95,288

9,089

¥

8,494

¥

9,262

¥

8,902

¥

(9,546)¥

10,358¥13,677

¥

1,646

¥

1,947

¥

1,686

¥

1,666

¥

1,514

¥

3,042

At Year-End
Assets:Trading securities
Securities

1,264,497

1,118,419

970,684

844,836852,504

1,008,292

Loans and bills discounted

3,304,083

3,096,245

3,022,906

3,056,008

2,909,033

2,822,570

Foreign exchanges
Other¥21,190

Thousands of U.S. Dollars
Securities Services
Leasing$339,019$257,817

Total¥19,573¥128,254

Other

Other

Total

Equity:Banking¥309

Banking$3,760Thousands of U.S. Dollars
Reportable Segment
Lease
Total
—
$3,760Banking
¥ 245
4,587

Reportable Segment
Lease
—
—

Banking$ 2,981
55,810Thousands of U.S. Dollars
Reportable Segment
Lease
Total
—
$ 2,981—
55,810

Total¥309

Foreign exchanges
Total liabilities$238,143$1,560,457

3,828

6,085

3,058

3,909

4,613

3,361

190,629294,671

316,680

219,115

322,892

298,191¥4,764,683¥4,517,367¥4,315,014¥4,125,534¥4,090,556¥4,135,456¥4,281,150¥4,069,448¥3,902,366¥3,745,652¥3,639,608¥3,624,885

Other
—

Total
¥309

—

Total
$3,760

—
—

Total
¥ 245
4,587

—
—

Total
$ 2,981
55,810

Other

835

477

651

575

737

738

257,916

239,744

207,673

198,559

228,491

242,1114,539,901

4,309,669

4,110,690

3,944,786

3,868,836

3,867,734

Common stock

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

Capital surplus and earnings

187,943

170,859

167,485

143,909

184,881

230,883

Total equity

Millions of Yen
Reportable Segment
Lease—

Deposits

Other(2) Information about impairment loss by reportable segments

2012
Impairment loss

85,235

Liabilities:

2012
Ordinary income:Outside customers

2012
Impairment loss

Net income (loss)

¥

2007

69,831

Total assets

4. Associated Information(1) Information about services

85,9582008

Total expenses
Total income taxes

694 $
—
7,458
1,253

Millions of Yen
2010
2009

2011

Total liabilities and equity

224,782

207,698

204,324

180,748

221,720

267,722¥ 4,764,683¥4,517,367¥4,315,014¥4,125,534¥4,090,556¥4,135,456(3) Information about goodwill by reportable segments
Millions of Yen
2012
Amortization of goodwill
Goodwill at March 31, 20122012
Amortization of goodwill
Goodwill at March 31, 2012

34

Total
¥ 245
4,587

Other

Other

35

N on-Consolidated Balance SheetThe Juroku Bank, Ltd.

N on-Consolidated Statement of Income
The Juroku Bank, Ltd.

March 31, 2012 (Supplemental Information)

Thousands of
U.S.Dollars

Millions of Yen

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

2012

2011

¥

¥ 130,457
56,6631,947
6,000
1,118,419
3,096,245
45,08862,352
6,075
13,771
22,575(42,225)¥4,517,367

96,152
—
1,646
6,000
1,264,497
3,304,083
35,98361,0236,510
3,508
20,302(35,021)¥4,764,683

2012$

1,169,875—
20,02773,002
15,385,046
40,200,547
437,803
742,462
79,207
42,682
247,013(426,098)$57,971,566

LIABILITIES AND EQUITY:
Liabilities:
Deposits
Negotiable certificates of deposit
Call money
Payables under securities lending transactions
Borrowed money
Bonds
Other liabilities
Accrued bonuses
Director’s accrued bonuses
Liability for retirement benefits
Deferred tax liabilities for land revaluation surplus
Acceptances and guarantees
Total Liabilities

Year Ended March 31, 2012 (Supplemental Information)

Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions¥4,069,448
11,346—70,89042,70030,00042,198
1,469
39
8,961
10,043
22,575
4,309,669$52,088,453
163,037
608,347
777,783
566,857
182,504
355,153
18,287487
122,253
106,485
247,013
55,236,659

2012

2012

2011

¥ 51,089¥ 53,374$ 621,596

13,782

12,831

167,685

166

138

2,020

10,685

11,386130,004

Other operating income

3,469

3,570

42,207

Gain on sales of securities

4,569

1,796

55,591

2,198

2,140

26,742

85,95885,235

1,045,845

Deposits

4,893

6,100

59,533

Borrowings and re-discounts

1,081

1,081

13,152

132

151

1,606

Other income
Total Income
Expenses:
Interest on:

Other¥4,281,150
13,40050,00063,926
46,59015,00029,1901,503
40
10,048
8,752
20,3024,539,901

Thousands of
U.S.Dollars

Millions of Yen

Fees and commissions

4,661

4,564

56,710

Other operating expenses

1,986

2,074

24,164General and administrative expenses

52,21551,351

635,296

Impairment loss on long-lived assets

238

615

2,896

4,625

5,299

56,272Other expenses
Total Expenses
Income before Income Taxes

69,831

71,235

849,629

16,127

14,000196,216932

69

11,340

Income Taxes:
Current
Deferred
Total Income Taxes
Net Income

6,701

4,669

81,530

7,633

4,738

92,870¥ 8,494¥ 9,262$ 103,346

Commitments and Contingent Liabilities
Equity:Common stock
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
UnappropriatedUnrealized gain on available-for-sale securities
Land revaluation surplus
Treasury stock - at cost
Total Equity
Total Liabilities and Equity

36

36,83936,839448,218

27,817

27,817

338,447

20,155
102,405
24,01913,732(185)
224,782¥4,764,683

20,15596,52514,017
12,550(205)
207,698¥4,517,367

245,224
1,245,954
292,238
167,076(2,250)2,734,907$57,971,566

37

N on-Consolidated Balance SheetThe Juroku Bank, Ltd.

N on-Consolidated Statement of Income
The Juroku Bank, Ltd.

March 31, 2012 (Supplemental Information)

Thousands of
U.S.Dollars

Millions of Yen

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

2012

2011

¥

¥ 130,457
56,6631,947
6,000
1,118,419
3,096,245
45,08862,352
6,075
13,771
22,575(42,225)¥4,517,367

96,152
—
1,646
6,000
1,264,497
3,304,083
35,98361,0236,510
3,508
20,302(35,021)¥4,764,683

2012$

1,169,875—
20,02773,002
15,385,046
40,200,547
437,803
742,462
79,207
42,682
247,013(426,098)$57,971,566

LIABILITIES AND EQUITY:
Liabilities:
Deposits
Negotiable certificates of deposit
Call money
Payables under securities lending transactions
Borrowed money
Bonds
Other liabilities
Accrued bonuses
Director’s accrued bonuses
Liability for retirement benefits
Deferred tax liabilities for land revaluation surplus
Acceptances and guarantees
Total Liabilities

Year Ended March 31, 2012 (Supplemental Information)

Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions¥4,069,448
11,346—70,89042,70030,00042,198
1,469
39
8,961
10,043
22,575
4,309,669$52,088,453
163,037
608,347
777,783
566,857
182,504
355,153
18,287487
122,253
106,485
247,013
55,236,659

2012

2012

2011

¥ 51,089¥ 53,374$ 621,596

13,782

12,831

167,685

166

138

2,020

10,685

11,386130,004

Other operating income

3,469

3,570

42,207

Gain on sales of securities

4,569

1,796

55,591

2,198

2,140

26,742

85,95885,235

1,045,845

Deposits

4,893

6,100

59,533

Borrowings and re-discounts

1,081

1,081

13,152

132

151

1,606

Other income
Total Income
Expenses:
Interest on:

Other¥4,281,150
13,40050,00063,926
46,59015,00029,1901,503
40
10,048
8,752
20,3024,539,901

Thousands of
U.S.Dollars

Millions of Yen

Fees and commissions

4,661

4,564

56,710

Other operating expenses

1,986

2,074

24,164General and administrative expenses

52,21551,351

635,296

Impairment loss on long-lived assets

238

615

2,896

4,625

5,299

56,272Other expenses
Total Expenses
Income before Income Taxes

69,831

71,235

849,629

16,127

14,000196,216932

69

11,340

Income Taxes:
Current
Deferred
Total Income Taxes
Net Income

6,701

4,669

81,530

7,633

4,738

92,870¥ 8,494¥ 9,262$ 103,346

Commitments and Contingent Liabilities
Equity:Common stock
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
UnappropriatedUnrealized gain on available-for-sale securities
Land revaluation surplus
Treasury stock - at cost
Total Equity
Total Liabilities and Equity

36

36,83936,839448,218

27,817

27,817

338,447

20,155
102,405
24,01913,732(185)
224,782¥4,764,683

20,15596,52514,017
12,550(205)
207,698¥4,517,367

245,224
1,245,954
292,238
167,076(2,250)2,734,907$57,971,566

37

N on-Consolidated Statement of Changes in Equity
The Juroku Bank, Ltd.

I ndependent Auditors’ Report

Year Ended March 31, 2012 (Supplemental Information)

Thousands
Outstanding
Number of
Shares ofCommon Stock

Balance at April 1, 2010

Millions of Yen
Capital Surplus
CommonStock

Additional
Paid-in
CapitalRetained Earnings
Legal
Reserve

UnrealizedGain(Loss) on
Unappropriated Available-for-sale
Securities

Land
Revaluation
SurplusTreasury
Stock

Total
Equity364,017¥36,839¥25,367¥20,155¥ 89,884¥21,217¥12,483¥ (1,621)¥ 204,324

Net income

—

—

—

—

9,262

—

—

—

9,262

Cash dividends, ¥7.00 per share

—

—

—

—

(2,548)———(2,548)Transfer of land revaluation surplus

—

—

—

—

(67)

—

—

—

(67)

Purchase of treasury stock

(56)

—

—

—

—

—

—

(16)

(16)

Disposal of treasury stock

22

—

—

—

(6)

—

—

12

6

14,886

—

2,450

—

—

—

—

1,420

3,870

Changes in equity due to share exchange
Net change in the year

—

—

—

—

—

(7,200)67

378,869

36,83927,817

20,15596,52514,017

12,550(205)

207,698

Net income

—

—

—

—

8,494

—

—

—

8,494

Cash dividends, ¥7.00 per share

—

—

—

—

(2,652)———(2,652)

Transfer of land revaluation surplus

—

—

—

—

65

—

—

—

65

Purchase of treasury stock

(135)

—

—

—

—

—

—

(34)

(34)

Disposal of treasury stock

110

—

—

—

(27)

—

—

54

27

Net change in the year

—

—

—

—

—

10,002

1,182—

11,184

378,844¥36,839¥27,817¥20,155¥102,405¥24,019¥13,732¥ (185)¥ 224,782

Balance at March 31, 2011

Balance at March 31, 2012

(7,133)

Capital Surplus

Balance at March 31, 2011

Additional
Paid-in
CapitalRetained Earnings
Legal
Reserve$448,218$338,447

Net income

—

—

—

Cash dividends, $0.09 per share——

Transfer of land revaluation surplus——

Purchase of treasury stock——

Disposal of treasury stock——

Net change in the year
Balance at March 31, 2012——

$448,218$338,447

Unrealized
Gain onAvailable-for-sale
Unappropriated
Securities$245,224 $1,174,413

To the Board of Directors of The Juroku Bank, Ltd.:We have audited the accompanying consolidated balance sheet of The Juroku Bank, Ltd. and consolidated
subsidiaries (the “Bank”) as of March 31, 2012, and the related consolidated statements of income,comprehensive income, changes in equity, and cash flows for the year then ended, and a summary ofsignificant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in conformity with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in conformity with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.

Thousands of U.S. Dollars
CommonStock

INDEPENDENT AUDITOR’S REPORT

Land
Revaluation
SurplusTreasury
Stock

Total
Equity$170,544$152,695$(2,494) $2,527,047

103,346———

103,346—(32,267)———(32,267)

—

791

—

—

—

791

—

—

—

—

(414)

(414)

—

(329)

—

—

658

329

—

—

121,694

14,381—

136,075$245,224 $1,245,954$292,238$167,076$(2,250) $2,734,907

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Bank’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Juroku Bank, Ltd. and consolidated subsidiaries
as of March 31, 2012, and the consolidated results of their operations and their cash flows for theyear then ended in conformity with accounting principles generally accepted in Japan.

38

39

N on-Consolidated Statement of Changes in Equity
The Juroku Bank, Ltd.

I ndependent Auditors’ Report

Year Ended March 31, 2012 (Supplemental Information)

Thousands
Outstanding
Number of
Shares ofCommon Stock

Balance at April 1, 2010

Millions of Yen
Capital Surplus
CommonStock

Additional
Paid-in
CapitalRetained Earnings
Legal
Reserve

UnrealizedGain(Loss) on
Unappropriated Available-for-sale
Securities

Land
Revaluation
SurplusTreasury
Stock

Total
Equity364,017¥36,839¥25,367¥20,155¥ 89,884¥21,217¥12,483¥ (1,621)¥ 204,324

Net income

—

—

—

—

9,262

—

—

—

9,262

Cash dividends, ¥7.00 per share

—

—

—

—

(2,548)———(2,548)Transfer of land revaluation surplus

—

—

—

—

(67)

—

—

—

(67)

Purchase of treasury stock

(56)

—

—

—

—

—

—

(16)

(16)

Disposal of treasury stock

22

—

—

—

(6)

—

—

12

6

14,886

—

2,450

—

—

—

—

1,420

3,870

Changes in equity due to share exchange
Net change in the year

—

—

—

—

—

(7,200)67

378,869

36,83927,817

20,15596,52514,017

12,550(205)

207,698

Net income

—

—

—

—

8,494

—

—

—

8,494

Cash dividends, ¥7.00 per share

—

—

—

—

(2,652)———(2,652)

Transfer of land revaluation surplus

—

—

—

—

65

—

—

—

65

Purchase of treasury stock

(135)

—

—

—

—

—

—

(34)

(34)

Disposal of treasury stock

110

—

—

—

(27)

—

—

54

27

Net change in the year

—

—

—

—

—

10,002

1,182—

11,184

378,844¥36,839¥27,817¥20,155¥102,405¥24,019¥13,732¥ (185)¥ 224,782

Balance at March 31, 2011

Balance at March 31, 2012

(7,133)

Capital Surplus

Balance at March 31, 2011

Additional
Paid-in
CapitalRetained Earnings
Legal
Reserve$448,218$338,447

Net income

—

—

—

Cash dividends, $0.09 per share——

Transfer of land revaluation surplus——

Purchase of treasury stock——

Disposal of treasury stock——

Net change in the year
Balance at March 31, 2012——

$448,218$338,447

Unrealized
Gain onAvailable-for-sale
Unappropriated
Securities$245,224 $1,174,413

To the Board of Directors of The Juroku Bank, Ltd.:We have audited the accompanying consolidated balance sheet of The Juroku Bank, Ltd. and consolidated
subsidiaries (the “Bank”) as of March 31, 2012, and the related consolidated statements of income,comprehensive income, changes in equity, and cash flows for the year then ended, and a summary ofsignificant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in conformity with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in conformity with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.

Thousands of U.S. Dollars
CommonStock

INDEPENDENT AUDITOR’S REPORT

Land
Revaluation
SurplusTreasury
Stock

Total
Equity$170,544$152,695$(2,494) $2,527,047

103,346———

103,346—(32,267)———(32,267)

—

791

—

—

—

791

—

—

—

—

(414)

(414)

—

(329)

—

—

658

329

—

—

121,694

14,381—

136,075$245,224 $1,245,954$292,238$167,076$(2,250) $2,734,907

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Bank’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Juroku Bank, Ltd. and consolidated subsidiaries
as of March 31, 2012, and the consolidated results of their operations and their cash flows for theyear then ended in conformity with accounting principles generally accepted in Japan.

38

39

C orporate Data(as of March 31, 2012)

Emphasis of Matter

Date of Establishment:

10 Principal Shareholders:

As discussed in Note 28 to the consolidated financial statements, the merger contract between the
Juroku Bank, Ltd. and Gifu Bank, Ltd., its subsidiary, has been approved by shareholders at the Generalshareholders’ meeting and class shareholders’ meeting by common shareholders on June 22, 2012. Our
opinion is not qualified in respect of this matter.

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

Other Matter

379,241 thousand shares

Tokio Marine and Nichido Fire Insurance Co., Ltd.

Stock Listed:

The Juroku Bank Employee Shareholders’ Association

First Sections of the Tokyo and Nagoya Stock Exchanges

Fuji Baking Group Co., Ltd.

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)

Our audit was conducted for the purpose of forming an opinion on the basic 2012 consolidated financial
statements taken as a whole. The supplemental non-consolidated financial information which includes
the balance sheet as of March 31, 2012 and statements of income and changes in equity for the year
then ended is presented for the purpose of additional analysis and is not a required part of the basic
consolidated financial statements. The non-consolidated financial information is the responsibility of
the Bank’s management. Such non-consolidated financial information has been subjected to our audit
as a part of the basic consolidated financial statements. No separate proceduers were performed on the
non-consolidated financial information by itself.
Convenience Translation

13,644
Number of Employees:
2,971

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made in conformity with the basis stated in Note 1.
Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

A ffiliates
June 22, 2012(as of June 30, 2012)

Name

Business Lines

Established

Capital(¥ Millions)

EquityStake*

EquityStake ofsubsidiaries*

The Gifu Bank, Ltd.

Banking service

May. 1942

15,000100.0—

Juroku Business Service Co., Ltd.

Clerical work service

Jan. 1979

10

100.0

—

Juroku DC Card Co., Ltd.

Credit card flotation service

Aug. 1982

50

5.0

65.0

Juroku JCB Co., Ltd.

Credit card flotation service

Nov. 1994

50

5.0

65.0

Juroku Lease Co., Ltd.

Leasing service

Mar. 1975

102

12.8

43.9

Juroku Computer Service Co., Ltd.

Computer system development service

Aug. 1985

245

5.0

71.0

Juroku Credit Guarantee Co., Ltd.

Credit guaranty service

May 1979

50

3.0

40.0

Juroku Capital Co., Ltd.

Venture capital service

Apr. 1984

108

25.0

60.0

The Gifugin Business Service Co., Ltd.

Clerical work service

Jun. 1986

10

—

100.0

The Gifugin Hosho Service Co., Ltd.

Credit guaranty service

Oct. 1987

90

—

100.0

The Gifugin Card Co., Ltd.

Credit card flotation service

Jun. 1995

30

—

100.0

*Voting rights held by the Bank, or subsidiaries excluding the Bank, as a percentage of total voting rights.

40

41

C orporate Data(as of March 31, 2012)

Emphasis of Matter

Date of Establishment:

10 Principal Shareholders:

As discussed in Note 28 to the consolidated financial statements, the merger contract between the
Juroku Bank, Ltd. and Gifu Bank, Ltd., its subsidiary, has been approved by shareholders at the Generalshareholders’ meeting and class shareholders’ meeting by common shareholders on June 22, 2012. Our
opinion is not qualified in respect of this matter.

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

Other Matter

379,241 thousand shares

Tokio Marine and Nichido Fire Insurance Co., Ltd.

Stock Listed:

The Juroku Bank Employee Shareholders’ Association

First Sections of the Tokyo and Nagoya Stock Exchanges

Fuji Baking Group Co., Ltd.

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)

Our audit was conducted for the purpose of forming an opinion on the basic 2012 consolidated financial
statements taken as a whole. The supplemental non-consolidated financial information which includes
the balance sheet as of March 31, 2012 and statements of income and changes in equity for the year
then ended is presented for the purpose of additional analysis and is not a required part of the basic
consolidated financial statements. The non-consolidated financial information is the responsibility of
the Bank’s management. Such non-consolidated financial information has been subjected to our audit
as a part of the basic consolidated financial statements. No separate proceduers were performed on the
non-consolidated financial information by itself.
Convenience Translation

13,644
Number of Employees:
2,971

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made in conformity with the basis stated in Note 1.
Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

A ffiliates
June 22, 2012(as of June 30, 2012)

Name

Business Lines

Established

Capital(¥ Millions)

EquityStake*

EquityStake ofsubsidiaries*

The Gifu Bank, Ltd.

Banking service

May. 1942

15,000100.0—

Juroku Business Service Co., Ltd.

Clerical work service

Jan. 1979

10

100.0

—

Juroku DC Card Co., Ltd.

Credit card flotation service

Aug. 1982

50

5.0

65.0

Juroku JCB Co., Ltd.

Credit card flotation service

Nov. 1994

50

5.0

65.0

Juroku Lease Co., Ltd.

Leasing service

Mar. 1975

102

12.8

43.9

Juroku Computer Service Co., Ltd.

Computer system development service

Aug. 1985

245

5.0

71.0

Juroku Credit Guarantee Co., Ltd.

Credit guaranty service

May 1979

50

3.0

40.0

Juroku Capital Co., Ltd.

Venture capital service

Apr. 1984

108

25.0

60.0

The Gifugin Business Service Co., Ltd.

Clerical work service

Jun. 1986

10

—

100.0

The Gifugin Hosho Service Co., Ltd.

Credit guaranty service

Oct. 1987

90

—

100.0

The Gifugin Card Co., Ltd.

Credit card flotation service

Jun. 1995

30

—

100.0

*Voting rights held by the Bank, or subsidiaries excluding the Bank, as a percentage of total voting rights.

40

41

D irectory(as of June 30, 2012)

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(17 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

Overseas Network
Hong Kong Representative Office
Suite 1606, 16th Floor, Tower 2,
The Gateway,Harbour City,
Tsim Sha Tsui, Kowloon, Hong Kong
Telephone: +852-2526-5716
Facsimile: +852-2810-6261
Chief Representative
Tadashi Murase
Shanghai Representative Office
18th Floor, Hang Seng Bank 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
Hitoshi Iwamura

Nagoya Ekimae Branch
4-2-28, 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

Nagoya Main Office3-1-1, Nishiki, Naka-ku,
Nagoya-shi, Aichi
Telephone: +81-52-961-8111

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

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

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

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

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

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

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

Osaka Branch
2-3-8, Honmachi, Chuo-ku,
Osaka-shi, Osaka
Telephone: +81-6-6264-1600
Tokyo Branch
4-1-10, Nihombashi Honcho,
Chuo-ku, Tokyo
Telephone: +81-3-3242-1661

Gifu Prefecture (105)Tokyo Branch
Aichi Prefecture (41)
Osaka Branch42

Total 148Domestic Offices

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