2020.3

2020.3

Contents

Profile............................................................................................................... 1
Consolidated Financial Statements................................................................. 5
Corporate Information.................................................................................... 61

Profile
Innovative Action
Our Mission as a Regional Bank
Since its establishment in 1899, the Fukui Bank has remained firmly committed to sound management and growth in partnershipwith the regional community. The Bank owes its position today to the loyal support of its customers, shareholders, and otherstakeholders.
In October 2015, we established the Bank’s corporate philosophy of striving to cultivate and promote regional industry andachieving prosperous living conditions for the region’s population, and have been working together as the Fukui Bank Group forthe advancement of the region.
The period covered by our medium-term management plan “Toward Realizing Our Corporate Philosophy (Chapter 1),” from
April 2018 to March 2021, is defined as a period for growth together with the region and customers and in step with the changing
times. During the period we will be working to reform ourselves and looking to achieve the goals of our corporate philosophy,
basing our efforts around two concepts (namely, “Faster, deeper, wider” and “Change, transform, modify)” and four topical areasof activity (winning new customers by helping increase the number of workplaces and workers; strengthening consulting
functions, selecting and concentrating on fields of business activity; and, revolutionizing personnel development).
Together, all employees and executive officers of the Fukui Bank Group will keep striving to fulfill the expectations of ourshareholders, customers, and members of the regional community. To this end, we would like to request your continued support
and patronage.

Corporate Governance
In June 2007, the Fukui Bank transitioned to a committee-based governance structure (nominating and other committees are
now in place). Characteristics of this organizational structure include strengthened governance structures through the separationof executive and supervisory functions, accelerated executive functions by delegating decision-making authority, and improved
management transparency by establishing three committees on which the majority of members are outside directors. As well as
having outside directors chair even those three committees, we are working to put in place comprehensive corporate
governance in line with the following fundamental principles.
(1) T he Fukui Bank will respect the rights held by all of its shareholders and will work to guarantee all shareholders are treatedequally.
(2) The Fukui Bank will pay consideration to how to benefit all of its stakeholders, including its shareholders, and, where
relevant, will strive to cooperate with said stakeholders.
(3) T he Fukui Bank will disclose all relevant information, including non-financial data, and will endeavor to guarantee corporate
information is transparent.
(4) The Fukui Bank will construct a system in which independent outside directors play a central role and, by utilizing thatsystem, will commit ourselves to improving the efficacy of our auditing capabilities in regards to overseeing the executionof duties by the board of directors.
(5) T he Fukui Bank, in order to increase corporate value in the medium to long term, and to achieve sustainable growth, will
undertake to carry out constructive dialogue with all of its shareholders.

1Consolidated Financial Highlights
The Fukui Bank, Ltd. and its consolidated subsidiaries

Thousands of
U.S. dollars

Millions of yen

For the Year:
Total income...................................................................
Total expenses...............................................................
Income (loss) before income taxes.......................................
Net income attributable to owners of parent..................
Net income (loss) per share of common stock................
At Year-end:
Deposits.........................................................................
Loans and bills discounted.............................................
Trading account securities..............................................
Securities.......................................................................
Total assets....................................................................

2019

2020

Years ended March 31,

2018

2020

¥

40,87237,705
3,166
2,140
89.83

¥

41,651
37,2174,433
3,158
132.69¥44,15537,952
6,202
3,927
165.57¥2,488,546
1,719,190
591
660,304
2,951,019¥

2,400,198
1,661,228
570
613,594
2,802,693¥

2,324,100
1,617,855
504
609,185
2,673,165$ 22,866,361
15,797,028
5,432
6,067,306
27,115,868

128,310

1,137,186

Total net assets..............................................................

123,759

131,522$375,559
346,465
29,094
19,6660.83

Notes:
1. The U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥108.83 per US$1.00 on March 31, 2020.
The inclusion of such dollar amounts is solely for convenience and is not intended to imply that Japanese yen have been or could be readily converted, realized, or settled
in U.S. dollars at this or any other exchange rate.
2: On October 1, 2017, the Bank implemented a consolidation of shares at the ratio of one share per 10 shares.
For the purposes of calculating the amount of net income per share of common stock for the period under review, the share consolidation is taken as having been implemented at the beginning of fiscal year ended March 31, 2017.

Financial & Economic Environments

increase in allowances for loan losses based on theassumption that the effects of the novel coronavirus spread on
economic activity will continue for around one year from now.
As a result, ordinary profit decreased by ¥1,077 million fromthe previous year to ¥3,413 million. Net income attributable toowners of the parent decreased by ¥1,018 million from theprevious year to ¥2,140 million.
In terms of reportable segments, ordinary income frombanking operations decreased by ¥463 million from theprevious year to ¥33,947 million. Segment profit decreased by¥1,139 million from the previous year to ¥3,051 million. Ordinary
income from leasing operations increased by ¥590 million fromthe previous year to ¥7,799 million, while segment profit
increased by ¥1,084 million to ¥1,305 million. Ordinary income
from “Others” outside of the reportable segments increased by¥235 million to ¥833 million, and segment profit increased by¥182 million from the previous year to ¥248 million. Eachamount above included intersegment transactions.

The Japanese economy in the period under review proceededon a moderately-paced expansion course in the first half of the
fiscal year thanks to continuing improvements in theenvironments for employment and household incomes.
However, the pace of expansion slowed in the second half
under the impact of the consumption tax rate increase and thenovel coronavirus spread. In the time ahead, the rapid
deceleration of the global economy caused by the novel
coronavirus pandemic will require close attention.
As for the regional economy of Fukui Prefecture, thewidening of public works related to the extension of the
Hokuriku Shinkansen into Fukui Prefecture has led to arevitalization of the prefectural economy. In addition, theenvironments for employment and household income continue
to improve, and personal consumption remains on a moderate
up-trend. However, as the novel coronavirus spread’s
significant impact on the prefecture becomes apparent, theresulting rapid economic deceleration with its effects on
corporate activities and personal consumption requires close
attention.

Cash Flows
Consolidated net cash flows rose by ¥99,866 million provided
by operating activities, ¥57,545 million was used in investing
activities, and ¥3,214 million used in financing activities. As aresult, cash and cash equivalents at the end of the year were¥474,154 million, which increased by ¥39,110 million comparedwith the previous year.
Net cash provided by operating activities
Net cash provided by operating activities was ¥99,866 million.
Main factors behind the increase were income from an increasein deposits, call money, etc., and borrowed money that

Consolidated Performance Review
The consolidated results of the Bank and its six consolidated
subsidiaries in the period under review developed as follows.
Consolidated ordinary income decreased by ¥869 million
from the previous year to ¥40,729 million mainly due to theabsence of gains from sales of government bonds and stocks,
etc. Ordinary expenses rose by ¥207 million from the previous
year to ¥37,316 million, reflecting the cost of a precautionary2

exceeded expenditure, reflecting factors such as increased
lending. Net cash provided by operating activities was ¥12,741
million higher than in the previous fiscal year.
Net cash used in investing activities
Net cash used in investing activities was ¥57,545 million. The
main factor behind the increase was expenditure for theacquisition of securities, which exceeded income from sales andredemptions of securities. Net cash used in investing activitieswas ¥52,215 million higher than in the previous fiscal year.
Net cash used in financing activities
Net cash used in financing activities was ¥3,214 million,
reflecting expenditure for shares in subsidiaries and thepayment of dividends among others. Net cash used infinancing activities was ¥2,212 million higher than in theprevious fiscal year.

consulting services for individual customers were reinforced inareas such as inheritance and asset management. Furthermore,in order to establish a framework enabling the group-based
provision of comprehensive financial services of yet higher quality,
the Bank reviewed the capital structures of its five consolidated
subsidiaries and integrated the entities as wholly owned
subsidiaries.
With regard to selecting and concentrating its fields ofbusiness activity, the Bank continued with the reorganization of its
branch offices and the consolidation of branch functions in orderto strengthen its consulting functions and took steps to increase
the number of sales personnel to facilitate an increase in contact
with customers. Moreover, to reduce the burden of paperwork
required of customers for transactions, shorten transaction times,
and promote paperless operations, the Bank expanded the rangeof banking transactions where biometric IC cash cards can beused instead of customers’ personal seals, and started letting
customers use tablet terminals for purchases of products such as
investment trusts and insurance products.
The Bank’s initiative for revolutionizing personnel development
has been aiming at creating an organization where each staff
member grows and grows together, through their work byachieving the corporate philosophy. To this end, the Bank started
operating medium-term individual training plans for its employees.
Moreover, aiming to create a rewarding workplace where
employees can thrive individually to the best of their capabilities,
the Bank has been working on management reform directed atbranch managers and other administrative or supervisory
positions. As part of efforts to increase the Bank’s appeal as asatisfying and rewarding workplace, an office-appropriate casual
dress code was introduced for head office personnel, which
promoted flexible thinking and planning capabilities among
employees and led to improved efficiency.
In other developments, the Bank started a comprehensive
partnership (“F Project”) with The Fukuho Bank, Ltd. for thesustainable development of the local economy. As for thebusiness alliance under the partnership, the Bank has set up
project teams respectively focusing on the four spheres ofcustomers, local communities, enhancement of effectiveness andefficiency of business operations, and integration of humanresources/preparations for the future. It is also continuing withproactive discussions and deliberations surrounding partnerships
and cooperative alliances. Regarding an equity-based allianceunder the partnership, discussions will continue regarding theoptional choices with a view to grouping the two banks together
to enhance the effectiveness of the business alliance.
In fiscal 2020, the final year of the Bank’s medium-term
management plan, while taking into account changes in thebusiness environment, the Bank will continue to contribute to thesustainable development of Fukui Prefecture by steadily andcontinuously implementing the plan’s four-point agenda. At thesame time, the Bank will solidify its management base and build arobust management structure.
For corporate customers, the Bank will provide appropriate
and proactive funding support and main business support
through business viability assessments, while placing yet greater

Issues to Be Addressed
The Bank and other regional financial institutions have been facing
increasingly uncertain prospects arising in the main from thecontinuing long-term low interest environment, banking market
entries by other industries, shrinking population in our regionalbase and the advancement of demographic aging. In addition,
under the widening impact of the novel coronavirus spread on theregional economy, dislocation is seen to continue in the near term,
affecting the business operations and performance of the Group.
However, Fukui Prefecture will benefit from an improved traffic
network after the opening of the Chubu-Jukan Expressway andthe extension of the Hokuriku Shinkansen into the prefecture,
which are expected to greatly change the business environment.
Clearly, this will also bring a diversity of risks and opportunities for
the Bank.
In fiscal 2019, which was also the second year of the mediumterm management plan “Toward Realizing Our Corporate
Philosophy (Chapter 1): Faster, deeper, wider,” we implemented
the following measures.
With regard to winning new customers by helping increase
the number of workplaces and workers, the Bank continued with
the implementation of proactive funding support and main
business support based on thorough understanding ofcustomers’ circumstances and business viability assessments.
This led to an increase in the number of borrowers qualified forloans based on viability assessments, with an expanded loanbalance to small and medium-sized borrows. In addition, theBank has been working on realizing sustainable local
communities through activities geared at increasing customers byinitiating the distribution of Fukugin SDGs Private Placement
Bonds, aiding corporate customers' activities to contribute toSDGs, and providing financing support.
With regard to the strengthening of the consulting function, inorder to meet the diversifying needs of customers, the Bank took
steps to increase the number of consulting personnel at head
office while strengthening cooperation between the head officeand branches. Specifically, for corporate customers, the Bank
strengthened its support services relating to business succession,
M&A, recruitment, and expanding overseas sales channels, while3emphasis on life-stage specific asset formation support forindividual customers based on a thorough understanding ofcustomers’ circumstances in accordance with the Bank’s concept
of “Faster, deeper, wider.” To this end, the Bank will continue toincrease sales personnel and consulting personnel at head office,expand opportunities to reach customers, and provide consulting
services that meet customers’ needs. In particular, for customers
affected by the novel coronavirus, the Bank will make swift andsincere efforts centering on support for the continuity ofbusinesses and livelihoods.
In addition, through participation in redevelopment projects invarious parts of the prefecture, including the redevelopment of the
Fukui Station area, the Bank will make visible progress in theongoing efforts to create attractive urban ambiences. With thecompletion and opening of the new head office expected in fiscal
2020, which is also part of the town development, more than everbefore our banking group's head office and sales branches will
become one and we will work toward improving our organization
by strengthening our head office's support functions for the
branches and energizing internal communication. In so doing, theBank will help connect the regions and shape the future.
In addition, the Bank will promote the comprehensive alliance(“F Project”) with The Fukuho Bank, Ltd., and strive for thesustainable development of the regional economy.
Going forward, to work toward achieving the goals of thecorporate philosophy, its reason for being, the Fukui Bank Groupwill continue to concentrate its collective strengths, coordinate
and collaborate with relevant local organizations, and fulfill the
Bank’s central role in revitalizing Fukui Prefecture.

4

Consolidated Financial Statements
The Fukui Bank, Ltd. and its consolidated subsidiaries

Consolidated Balance Sheets
Thousands of
U.S. dollars

Millions of yen

2019

2020

March 31

Assets:Cash and due from banks (Notes 10 and 23)..........................................
Monetary claims bought (Note 23)...........................................................
Trading account securities (Note 23).......................................................
Money held in trust (Note 25)...................................................................
Securities (Notes 3, 4, 10, 15, 23 and 24)................................................
Loans and bills discounted (Notes 5, 6, 7, 8, 9, 10, 11 and 23)................
Foreign exchange (Note 9).......................................................................
Other assets (Notes 10, 27, 32 and 33)....................................................
Tangible fixed assets (Notes 12, 13 and 14).............................................
Intangible fixed assets ............................................................................
Deferred tax assets (Note 30)..................................................................
Customers’ liabilities for acceptances and guarantees (Note 15).............
Allowance for loan losses (Note 23).........................................................
Total assets..........................................................................................
Liabilities:
Deposits (Notes 10 and 23).....................................................................
Call money and bills sold.........................................................................
Payables under repurchase agreements (Notes 10 and 23)....................
Payables under securities lending transactions (Notes 10 and 23)..........
Borrowed money (Notes 10 and 23)........................................................
Foreign exchange....................................................................................
Other liabilities (Note 27)..........................................................................
Provision for bonuses..............................................................................
Provision for directors’ bonuses..............................................................
Liability for retirement benefits (Note 28)..................................................
Provision for share-based compensation for executive officers...............
Provision for reimbursement of deposits.................................................
Provision for contingent losses................................................................
Provision for losses on earthquake-proofing measures...........................
Provision for point loyalty programs
Deferred tax liabilities (Note 30)...............................................................
Deferred tax liabilities for land revaluation (Note 12).................................
Acceptances and guarantees (Note 15)...................................................
Total liabilities.......................................................................................
Net assets (Note 20):
Capital stock...........................................................................................
Capital surplus.........................................................................................
Retained earnings...................................................................................
Treasury shares.......................................................................................
Total shareholders’ equity....................................................................
Valuation difference on available-for-sale securities (Note 26)..................
Deferred gains (losses) on hedges..........................................................
Revaluation reserve for land (Note 12).....................................................
Remeasurements of defined benefit plans...............................................
Total accumulated other comprehensive income.................................
Subscription rights to shares...................................................................
Non-controlling interests.........................................................................
Total net assets................................................................................
Total liabilities and net assets...........................................................

5

2020

¥

474,536
951
591
6,504
660,304
1,719,190
8,538
54,31627,758
310
2,772
8,953
(13,707)¥435,326
818
570
6,500
613,594
1,661,228
9,369
51,72525,950
412
876
9,414
(13,095)$

4,360,345
8,742
5,432
59,764
6,067,306
15,797,028
78,453
499,093
255,059
2,854
25,47682,270(125,954)¥

2,951,019¥

2,802,693$

27,115,868¥

2,488,546
3,809
61,1588,090
217,183
195
30,109
228
8
5,405
144
272
212
452
54
0
2,435
8,953

¥

2,400,198—
16,661
41,112
177,431190
15,444
228
8
5,293
—
343
198
452
44
1,600
2,549
9,414

$

22,866,361
35,000561,960
74,341
1,995,624
1,797
276,661
2,101
75
49,671
1,328
2,502
1,949
4,155
498
7
22,38382,270¥2,827,260¥

2,671,170$

25,978,683¥

17,965
5,972
87,758(844)
110,852
7,412
(1)
5,494
1
12,907——
123,759¥

17,965
2,725
86,563(655)
106,598
14,174(39)
5,753
7
19,896
228
4,798
131,522$

165,078
54,878806,384(7,758)1,018,582
68,114(14)
50,48617
118,603——
1,137,185¥

2,951,019¥

2,802,693$

27,115,868

Consolidated Statements of Operations
Thousands of
U.S. dollars

Millions of yen

2019

2020

For the years ended March 31

Income:Interest on loans and discounts...............................................................

¥

16,256¥2020

16,388$149,371

Interest and dividends on securities........................................................

6,827

6,297

62,734

Other interest income..............................................................................

664

670

6,110

Fees and commissions............................................................................

7,995

7,425

73,463

Other operating income...........................................................................

7,332

8,562

67,372Other income (Note 16)...........................................................................

1,796

2,306

16,509Total income........................................................................................

40,872

41,651

375,559

Expenses:
Interest on deposits.................................................................................

475

529

4,369

Interest on borrowings.............................................................................

712

749

6,545

Other interest expenses..........................................................................

290

118

2,669

Fees and commissions payments...........................................................

2,980

2,830

27,388Other operating expenses.......................................................................

6,491

8,051

59,649General and administrative expenses (Note 17).......................................

22,48622,338

206,616

Other expenses (Note 18)........................................................................

4,269

2,600

39,229Total expenses.....................................................................................

37,70537,217

346,465

Income before income taxes

3,166

4,433

29,094

Income taxes—current (Note 30)

1,535

1,005

14,107

Income taxes—deferred (Note 30)

(781)

36

(7,182)

Net income

2,412

3,391

22,169Net income attributable to non-controlling interests

232

272

Net income attributable to owners of parent

¥

2,140

¥

3,158

2,503
$

Yen

Net income per share of common stock (Note 36)

¥

89.83

¥

19,666
U.S. dollars

132.690.83$

Consolidated Statements of Comprehensive Income
Thousands of
U.S. dollars

Millions of yen

2019

2020

For the years ended March 31

Net income (loss).....................................................................................

¥

2,412

¥

2020

3,391

$

22,169Other comprehensive income (Note 19)...................................................
Valuation difference on available-for-sale securities.............................
Deferred gains (losses) on hedges.......................................................
Adjustments for retirement benefits.....................................................
Comprehensive income...........................................................................
Comprehensive income attributable to owners of parent.....................

(6,731)(6,763)37(5)(4,318)(4,589)

781
817
(37)
1
4,172
3,946

(61,851)(62,146)346(51)(39,682)(42,170)

Comprehensive income attributable to non-controlling interests.........

270

226

2,488

6

Consolidated Statements of Changes in Net Assets
Previous fiscal year (From April 1, 2018, to March 31, 2019)(Millions of yen)

Accumulated othercomprehensive income

Shareholders’ equity

Balance at the start of the period

Capitalstock

SubValuation Deferred
Total ac- scription Non- Total net
RemeasureRecontrolling
Total difference on
gains valuation ments of de- cumulated rights to interests assets
Capital Retained Treasury
other com- sharessharehold- availablereserve
for
fined
benefit(losses)onsurplus earnings sharesers’ equity for-salelandplans prehensive
securities hedges
income17,9652,725 84,578(862) 104,406(1,205)(1,205)(1,205)

32

32

32

3,158

3,158

3,158

(2)
209

(2)
209

—

—

13,350

(1)

5,785

5

19,140187

4,575 128,310

Changes of items during theperiodDividends from surplus
Reversal of revaluation reserve
for land
Net income attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items otherthan shareholders’ equity

(2)
210

(0)

Total changes of items during theperiod—Balance at the end of the period

17,965(0)

1,985

2,725 86,563

—

824

(37)

(32)

1

755

40

222

1,019

2,192

824

(37)

(32)

1

755

40

222

3,211

(655) 106,598

14,174

(39)

5,753

7 19,896

228

4,798 131,522

207

Current fiscal year (From April 1, 2019, to March 31, 2020)(Millions of yen)

Accumulated othercomprehensive income

Shareholders’ equity

Balance at the start of the period

Capitalstock

SubValuation Deferred
Total ac- scription Non- Total net
RemeasureRecontrolling
Total difference on
gains valuation ments of de- cumulated rights to interests assets
Capital Retained Treasury
other com- sharessharehold- availablereserve
for
fined
benefit(losses)onsurplus earnings sharesers’ equity for-salelandplans prehensive
securities hedges
income17,9652,725 86,563(655) 106,598(1,204)(1,204)(1,204)

259

259

259

2,140

2,140

2,140

(539)
364

(539)
364

3,232

3,232

14,174

(39)

5,753

7 19,896

228

4,798 131,522

Changes of items during theperiodDividends from surplus
Reversal of revaluation reserve
for land
Net income attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes of items otherthan shareholders’ equity

(539)
350

14
3,232

—

(6,761)37(259)(5) (6,988)(228) (4,798) (12,015)(228) (4,798)

Total changes of items during theperiod

—

3,246

1,195

(188)

4,253

(6,761)37(259)(5) (6,988)

Balance at the end of the period

17,965

5,972

87,758(844) 110,852

7,412

(1)

5,494

1 12,907

7—(7,762)— 123,759

Current fiscal year (From April 1, 2019, to March 31, 2020)(Thousands of U.S. dollars)

Accumulated othercomprehensive income

Shareholders’ equity
Capitalstock

SubValuation Deferred
Total ac- scription Non- Total net
Re- Remeasure- cumulated
controlling
Total difference onrights toassetsgains valuation ments of deCapital Retained Treasury
interests
othercomsharehold- availableshares
reservefor
finedbenefit(losses)onsurplus earnings sharesers’ equity for-salelandplans prehensive
securities hedges
incomeBalance at the start of the period 165,078 25,044 795,402(6,026) 979,498 130,245(360) 52,868

69 182,822

2,101 44,089 1,208,510

Changes of items during theperiodDividends from surplus(11,066)(11,066)(11,066)

Reversal of revaluation reserve
for land

2,382

2,382

2,382

19,666

19,666

19,666130(4,953) (4,953)
3,221 3,351(4,953)
3,351

29,70429,70429,704

Net income attributable toowners of parent
Purchase of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent to transactions with noncontrolling interests
Net changes of items otherthan shareholders’ equity
Total changes of items during theperiod— 29,834

Balance at the end of the period

165,078 54,878 806,384

10,982— (62,131)

346(2,382)(52) (64,219)(2,101) (44,089) (110,409)(1,732) 39,084 (62,131)

346(2,382)(52) (64,219)(2,101) (44,089) (71,325)(7,758) 1,018,582(14) 50,486

17 118,603

868,114—— 1,137,185

Consolidated Statements of Cash Flows
Thousands of
U.S. dollars

Millions of yen

2019

2020

For the years ended March 31

Cash flows from operating activities
Income before income taxes.....................................................................
Depreciation..............................................................................................
Impairment loss.........................................................................................
Increase (decrease) in allowance for loan losses.......................................
Increase (decrease) in provision for bonuses.............................................
Increase (decrease) in provision for directors’ bonuses.............................
Increase (decrease) in liability for retirement benefits.................................
Increase (decrease) in provision for share-based compensation for executive officers....
Increase (decrease) in provision for reimbursement of deposits................
Increase (decrease) in provision for contingent losses...............................
Increase (decrease) in provision for losses on earthquake-proofing measures....
Increase (decrease) in provision for point card certificates.........................
Gain on fund management........................................................................
Financing expenses...................................................................................
Loss (Gain) related to securities.................................................................
Loss (Gain) on money held in trust.............................................................
Foreign exchange losses (gains)................................................................
Loss (Gain) on disposal of non-current assets...........................................
Net decrease (increase) in loans and bills discounted................................
Net increase (decrease) in deposits...........................................................
Net increase (decrease) in borrowed money (excluding subordinated borrowings)...
Net decrease (increase) in due from banks (excluding deposit paid to Bank of Japan)....
Net decrease (increase) in call loans..........................................................
Net increase (decrease) in call money........................................................
Net increase (decrease) in payables under securities lending transactions...
Net decrease (increase) in trading account securities................................
Net decrease (increase) in foreign exchanges - assets..............................
Net increase (decrease) in foreign exchanges - liabilities...........................
Net decrease (increase) in lease receivables and investment assets.........
Proceeds from fund management.............................................................
Payments for finance.................................................................................
Other.........................................................................................................
Subtotal.................................................................................................
Income taxes paid.....................................................................................
Net cash provided by operating activities..............................................

¥

3,166
1,048
97
612
0
0
112
144
(70)
13
—
10
(23,748)
1,478
(130)
(70)
2,992
165
(57,962)
88,34739,752(99)(132)
48,305(33,021)
(21)
831
5
(359)
24,364(1,475)6,501
100,858(991)
99,866

¥

4,433
1,112
37
(281)
0
(8)
75
—
1
(20)
(333)
16
(23,356)
1,397
(402)
(71)
(1,537)
27(43,372)
76,09867,722
191(144)(11,740)(6,345)
(65)
1,405
121
(583)
23,749(1,415)
1,736
88,447(1,322)
87,125

2020$

29,094
9,636
896
5,626
6
(4)
1,034
1,328
(651)
125
—
93
(218,215)
13,583(1,195)(649)
27,501
1,518(532,597)
811,797
365,267(914)(1,219)443,862(303,426)
(193)
7,643
48
(3,304)
223,878(13,556)
59,740926,752(9,113)
917,639

Cash ﬂows from investing activities:
Purchase of securities...............................................................................
Proceeds from sale of securities................................................................
Proceeds from redemption of securities....................................................
Investment in money held in trust..............................................................
Purchase of tangible ﬁxed assets..............................................................
Purchase of intangible ﬁxed assets............................................................
Proceeds from sales of tangible ﬁxed assets.............................................
Net cash provided by (used in) investing activities..................................

(214,826)
40,981
119,329—(3,346)(7)
323(57,545)(253,994)
173,098
79,377(100)(3,577)(286)
151(5,330)(1,973,966)
376,567
1,096,477—(30,748)(67)
2,969(528,768)

Cash ﬂows from ﬁnancing activities:
Cash dividends paid..................................................................................
Cash dividends paid to non-controlling interests.......................................
Purchase of treasury shares......................................................................
Sale of treasury shares..............................................................................
Payments for purchase of stocks of subsidiaries (not affecting scope of consolidation)...
Net cash provided by (used in) financing activities.................................

(1,204)
(3)
(539)
364
(1,832)(3,214)(1,205)
(3)
(2)
209
—
(1,002)(11,066)(35)(4,953)
3,351(16,838)(29,541)

Effect of exchange rate changes on cash and cash equivalents...........
Net increase (decrease) in cash and cash equivalents...........................
Cash and cash equivalents at beginning of year.....................................
Cash and cash equivalents at end of year (Note 21)................................

4
39,110435,044474,15410
80,803354,241
435,04438
359,368
3,997,472
4,356,840

9

¥

¥

$

Notes to the Consolidated Financial Statements
Years ended March 31, 2020 and 2019
1. Basis of presentation
The accompanying consolidated financial statements of The Fukui Bank, Ltd. (“the Bank”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law, its related accounting
regulation and the Banking Act of Japan, and in conformity with accounting principles and practices generally accepted in Japan(“Japanese GAAP”). Japanese GAAP are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards.
The accompanying consolidated financial statements are a translation of the audited consolidated financial statements of the Bank
which were prepared in accordance with Japanese GAAP and were filed with the applicable Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange Law. In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made in the consolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen. The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers, using the prevailing exchange rate at March 31, 2020, which was ¥108.83 to U.S.
$1.00. Such translations should not be construed as representations that the Japanese yen amounts have been, could have been, or
could in the future be, converted into U.S. dollars at this or any other rate of exchange.
2. Significant accounting policies and practices(1) Scope of consolidation
The consolidated financial statements as of March 31, 2020 include the accounts of the Bank and its six subsidiaries (“the Group”).
Under the control and influence concepts, those companies in which the Bank, directly or indirectly, is able to exercise control over
operations are fully consolidated.
( i ) Consolidated subsidiaries: Six companies
The Fukugin Lease Co., Ltd.
The Fukui Credit Guarantee Service Co., Ltd.
Fukui Card Co., Ltd.
The Fukui Net Co., Ltd.
The Fukugin Business Service Co., Ltd.
The Fukui Capital & Consulting Co., Ltd.
( ii ) Unconsolidated subsidiaries: One company
Fukui Regional Revitalization Investment Limited Partnership
The accounts of the subsidiary have not been consolidated since its total assets, ordinary income, net income (loss), retained
earnings and accumulated other comprehensive income did not have a significant impact on the consolidated financial statements.
(2) Application of the equity method
Those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
( i ) Unconsolidated subsidiaries accounted for by the equity methodNone( ii ) Affiliates accounted for by the equity methodNone(iii) Unconsolidated subsidiaries not accounted for by the equity method: One company
Fukui Regional Revitalization Investment Limited Partnership(iv) Affiliates not accounted for by the equity method: Two companies
Fukui Tourism Promotion Fund Investment Business Limited Partnership
Fukui Future Business Support Investment Limited Partnership
Investments in the affiliates are not accounted for by the equity method since their net income (loss), retained earnings attributable to
the Company did not have a significant impact on the consolidated financial statements.
(3) The Balance sheet date of consolidated subsidiaries( i ) The balance sheet dates of the consolidated subsidiaries are as follows:
March 31: Six companies

10(4) Significant accounting policies( i ) Trading account securities
Trading account securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses frommarket value fluctuations are recognized as gains or losses in the period.
( ii ) Securities
A. Available-for-sale securities are in general stated at fair value (cost of sale calculated according to the moving-average method)
indicated according to market price at the consolidated balance sheet date.
Available-for-sale securities having no readily available market value are valued at cost using the moving-average method.
Unrealized gains (losses) on available-for-sale securities are reported as a component of net assets.
B. Securities constituting trust assets within money held in trust are valued using the same methods as those for the abovementioned A.
(iii) Derivatives
Derivatives are stated at fair value.
(iv) Depreciation and amortization methods
A. Tangible fixed assets (excluding lease assets)
Tangible fixed assets of the Bank are depreciated using the straight-line method.
Useful lives of major asset categories:
Buildings: 3–50 years
Others: 2–20 years
Tangible fixed assets of consolidated subsidiaries are depreciated mainly using the declining-balance method based on assets’estimated useful lives.
B. Intangible fixed assets (excluding lease assets)
Intangible fixed assets are amortized using the straight-line method. Software for internal use is amortized over the useful life
specified by the Bank and consolidated subsidiaries, generally 5 years.
C. Lease assets
Lease assets included within tangible fixed assets related to finance lease transactions that do not transfer ownership are
depreciated over the lease term using the straight-line method. For lease assets with a guaranteed residual value stated in theirlease agreements, the residual value is set at the guaranteed amount. Otherwise, the residual value is assumed to be zero.
( v ) Allowance for loan losses
The Bank records allowance for loan losses in accordance with internally established criteria for write-offs and allowance.
For claims against borrowers that have initiated special liquidation proceedings or other bankruptcy proceedings (“legal
bankruptcy”) and against borrowers that are in substantially similar adverse condition (“substantial bankruptcy”), the allowance isprovided based on the amount of claims, net of the write-off stated below, deducted by the expected amount of recoveries fromcollateral and guarantees.
For claims against borrowers that have not yet initiated bankruptcy proceedings, but are very likely to become bankrupt in the
future (“possible bankruptcy”), the allowance is provided for the amount deemed necessary based on the overall assessment of
the borrowers’ solvency, and reduced by the amount expected to be collected through the disposal of collateral or execution ofguarantees from the claims.
For claims against large borrowers with certain outstanding balances that are classified as possible bankruptcy borrowers,
restructured loan borrowers, or close-observation borrowers, the allowance is provided for the difference between the present valueof expected future cash flows discounted at the contractual interest rate prior to the loan restructuring and the carrying amount of theclaim, if future cash flows from collection of the principal and interest can be reasonably estimated (the “estimated cash flow method”).
For claims other than those stated above, the allowance is provided for expected loss amounts. These are calculated based on
the average actual loss ratios for the historical one-year or three-year loan loss records, using the lower limit of the average actual
loss ratios for the entire measurable period in order to reflect long-term economic fluctuations.
All claims are assessed at branches and credit supervision departments based on the criteria for self-assessment of asset quality.
The Risk Management Department, which is independent from the operating sections, monitors the results of such assessments.
For claims against borrowers who are legally bankrupt or substantially bankrupt with collateral or guarantees, the write-off
amount is determined as the unrecoverable portion, the claims due from borrowers deducted by the amounts expected to becollected through the disposal of collateral or through the execution of guarantees, and is directly deducted from the originalbalance of claims. The write-off amount was ¥10,385 million (U.S. $95,427 thousand) and ¥10,686 million for the fiscal year ended
March 31, 2020 and 2019, respectively.
As for the consolidated subsidiaries, the allowance for loan losses for general claims is provided based on the historical loanloss ratios, and the allowance for loan losses for specific claims, such as possible uncollectible claims, is provided based on theestimate of unrecoverable amount for each claim.

11

(vi) Provision for bonuses
Provision for bonuses is provided for payment of bonuses to employees, in the amount of estimated bonuses that are attributable
to the current fiscal year.
(vii) Provision for directors’ bonuses
Provision for directors’ bonuses is provided for payment of bonuses to directors, in the amount of estimated bonuses that are
attributable to the current fiscal year.
(viii) Provision for share-based compensation for executive officers
Provision for share-based compensation for executive officers is provided for issuance of shares to executive officers inaccordance with the performance-linked stock compensation plan.
(ix) Provision for reimbursement of deposits
Provision for reimbursement of deposits is provided for in order to meet depositor requests for reimbursement on deposits
already derecognized as liabilities, in the amount deemed necessary by estimating the losses corresponding to the expected
requests for reimbursements in the future.
(x ) Provision for contingent losses
Provision for contingent losses is provided for contingent losses associated with claims due to the implementation of a
responsibility-sharing system in the amount deemed necessary based on the estimated possible future losses.
( xi) Provision for losses on earthquake-proofing measures
Provision for losses on earthquake-proofing measures is provided for losses that arise associated with the earthquake proofing
of business premises in the amounts on reasonable estimates of their future incidence.
(xii) Provision for point loyalty programs
Provision for point loyalty programs, which is provided for the future use of points granted to customers under credit card points
programs, is calculated by converting outstanding points into a monetary amount and rationally estimating the amount that will
be redeemed in the future.
(xiii) Liability for retirement benefits
In determining the retirement benefit obligations, the Bank adopts the benefit formula basis to attribute projected benefit
obligations to the period of the year-end. Past service cost and actuarial gains or losses are expensed using the following methods:
Past service cost: Past service cost is recognized using the straight-line method, over 5 years within the employees’ averageremaining service period at incurrence.
Actuarial differences: Actuarial differences are expensed using the straight-line method, over 5 years within the employees’
average remaining service period, commencing from the next fiscal year of incurrence.
(xiv) Foreign currency translation
Foreign currency assets and liabilities are translated into yen at the rates prevailing at the consolidated balance sheet date.
(xv) Accounting for lease transactions
Lessor side
Income arising from transactions of finance leases is recognized as sales and costs of goods sold when lease payments are collected.
(xvi) Hedge accounting
The method of hedge accounting related to managing foreign exchange risk is the deferral hedge method as specified in“Treatment for Accounting and Auditing of Application of Accounting Standard for Foreign Currency Transactions in Banking
Industry” (JICPA Industry Auditing Committee Report No. 25, July 29, 2002, “Report No. 25”).
In evaluating the hedge effectiveness, hedging instruments such as currency swaps are used as a means of mitigating theforeign exchange risk arising from monetary claims and debts denominated in foreign currencies, which are the hedged items, inorder to verify that the foreign currency positions of such hedging instruments are in amounts equivalent to the corresponding
monetary claims and debts denominated in foreign currencies.
(xvii) Scope of cash and cash equivalents in the consolidated statement of cash flows
The balance of cash and cash equivalents in the consolidated statements of cash flows consist of cash and due from the Bankof Japan.
(xviii) Income taxes
Income taxes comprise corporate, enterprise and inhabitant taxes. The Group recognizes tax effects of temporary differences
between the financial statement basis and the tax basis of assets and liabilities. The asset and liability approach is used torecognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences.
(xix) Accounting for consumption taxes
The Bank and its consolidated subsidiaries in Japan employ the tax exclusion method for consumption tax and local consumption
taxes, meaning that transaction amounts and consumption tax amounts are treated separately for accounting purposes.
However, non-deductible consumption taxes for purchase of property, plant and equipment are recognized as expenses for theyear of the purchase.

12

Standards and guidance not yet adopted
The following standard and guidance were issued but not yet adopted.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 31, 2020)(1) Overview
 The standard and guidance above provide comprehensive principles for revenue recognition. Under the standard andguidance, revenue is recognized by applying the following five steps:
Step 1: Identify contract(s) with.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies.
(2) Effective date
 Effective from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
 The effect of the application of these accounting standards is under consideration.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020)(1) Overview
 In order to enhance comparability with internationally recognized accounting standards, “Accounting Standard for Fair Value
Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (together, hereinafterreferred to as “Fair Value Accounting Standards”) were developed and guidance on methods measuring fair value was issued.
Fair Value Accounting Standards are applicable to the fair value measurement of the following item: Financial instruments in “Accounting Standard for Financial Instruments”
 Moreover, the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” was revised and notes
were established that included a breakdown of the content of each level of financial instruments’ fair value.
(2) Effective date
 Effective from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
 The effect of the application of these accounting standards is under consideration.
“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Correction” (ASBJ Statement No. 24,
March 31, 2020)(1) Overview
 The purpose of this standard is to provide an overview of the principles and procedures of the adopted accounting
treatment in cases where the stipulations of the relevant accounting standards, etc., are not clear.
(2) Effective date
 Effective from the end of the fiscal year ending March 31, 2022.
“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020)(1) Overview
 In order to ensure comparability of financial statements, “Accounting Standard for Disclosure of Accounting Estimates” wasdeveloped and published by ASBJ.
 The accounting standard requires disclosure of information about sources of estimation uncertainty at the end of thereporting period that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities
within the next fiscal year.
(2) Effective date
 Effective from the end of the fiscal year ending March 31, 2022.

13

Additional information
Transactions of delivering of the company’s own stock to employees, etc. through trusts(1) Trust-type Employee Share Ownership Incentive Plan The Bank introduced the “Trust-type Employee Share Ownership Incentive Plan” (the “Incentive Plan”) in order to provide theBank’s employees with incentives to increase the Bank’s corporate value over the mid-to-long term, and to improve the benefits
and welfare of the employees of the Bank by promoting asset formation of employees who buy and own shares of the Bank
through the Employee Stock Holdings.
 The Incentive Plan for all employees participating in the “Fukui Bank Employee Stock Holdings” (the “Employee Stock
Holdings”). For the implementation of the Incentive Plan, the Bank has established the “Fukui Bank Stock Holding Partnership
Exclusive Trust Account” (the “Trust”) at the trust bank.
( i ) Overview of the transaction process
 The “Trust” buys a considerable number of the Bank shares that are expected to be acquired by the Employee Stock
Holdings during approximately five years. Subsequently, the Trust is to continuously transfer the Bank shares to the Employee
Stock Holdings, and if any gains on sales of shares remain in the Trust account at the Trust’s termination, such residual assets
are to be distributed to those who meet the requirements of eligible beneficiaries.
 The Bank is required to guarantee the Trust’s debts to acquire the Bank shares. When a decline in the Bank’s share priceincreases losses on sales of shares in the Trust account, and there are any outstanding debts remaining in the Trust accountat the Trust’s termination, the Bank will repay remaining debts in accordance with the guarantee contract.
(ii) Shares held by the Trust Shares held by the Trust are recorded as treasury stock in the net assets at their stated book value of the Trust account(excluding incidental cost amounts). The book value and the number of shares of treasury stock are ¥317 million (U.S. $2,921
thousand) and 138 thousand shares, respectively.
(iii) Book value of borrowings stated in accordance with the gross method ¥330 million (U.S. $3,037 thousand)(2) Board benefit trust Based on a resolution of the Compensation Committee on June 14, 2019, the Bank reviewed the compensation regulations
for executive officers, abolished the stock compensation-type stock option plan, and introduced a performance-linked stockcompensation plan using a trust (the “Plan”).
( i ) Transaction outline
 The Plan consists of a stock compensation scheme under which a trust established with cash paid by the Bank (the“Trust”) acquires shares of the Bank. Shares corresponding to the points awarded to executive officers by the Bank will betransferred to executive officers through the Trust.
 Under the Plan, shares will be awarded to executive officers who have held office during the five fiscal years ending March
31, 2020, through March 31, 2024. As a rule, shares will be transferred to the executive officers at the time of their retirement.
(ii) Shares held by the Trust Shares held by the Trust are recorded as treasury stock in the net assets at their stated book value of the Trust account(excluding incidental cost amounts). The book value and the number of shares of treasury stock are ¥383 million (U.S. $3,528
thousand) and 210 thousand shares, respectively.
Loan loss estimates associated with the widespread impact of the COVID-19
 The bank assumes that the spread of the COVID-19 and its impact on the economy will continue for the time being and that the
impact will be more severe on credit risks associated with loans to specific industries. With this assumption, the allowance for loan
losses for borrowers with unsecured balance over certain amounts from such industries is recorded in accordance with theestimated cash flow method, based on the best estimates on the reporting date. However, the assumptions underlying the estimates
are highly uncertain and significant additional allowance may be recognized for the fiscal year ending March 31, 2021 due todevelopments in the spread of COVID-19 and its impact on the economy.

14

Notes to the Consolidated Balance Sheets
3. Total amount of capital held in non-consolidated subsidiaries and affiliates
Thousands of
U.S. dollars

Millions of yen

2019

2020

Investments in capital

¥

291

¥

2020

167

$

2,676

4. Securities lent under unsecured loan agreements (i.e. bond-lending transactions) are included as other securities under
the heading of securities. Amounts are as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

¥

2,051

¥

2020

2,115

$

18,847

5. Loans and bills discounted include loans to borrowers in bankruptcy and other delinquent loans as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Loans to borrowers in bankruptcy
Other delinquent loans¥

770
26,486

¥

2020

693
25,285$

7,083
243,376

Loans to borrowers in bankruptcy are loans whose interest receivable, excluding loans that have been written off (“nonaccrualloans”), is not recorded for the reasons as prescribed in Paragraph 1, Items 3 and 4 of Article 96 of “Enforcement Ordinance for the
Corporation Tax Act” (Cabinet Order No. 97 of 1965). Such loans’ collection or repayment of principals or interests is not expected due
to delinquency in payment of principals or interests for a substantial period or other causes.
Other delinquent loans are nonaccrual loans other than (i) loans in bankruptcy proceedings and (ii) loans of which payments ofinterest are deferred in order to assist or facilitate the restructuring of borrowers’ businesses.
6. Loans and bills discounted include delinquent loans past due three months or over as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Delinquent loans past due three months or more

¥

153

¥

2020

137

$

1,411

Delinquent loans past due three months or more are those loans for which principal or interest payments are more than three months
past due (calculated from the day following the contractual payment date), excluding loans classified as loans to borrowers in bankruptcy
or other delinquent loans.
7. Loans and bills discounted include restructured loans as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Restructured loans

¥

518

¥

2020

—

$

4,762

Restructured loans are those loans whose terms have been modified by reducing or waiving interest, granting interest payment
extensions, granting principal repayment extensions, forgiving debt, or otherwise providing some arrangements favorable to theborrower in order to assist or facilitate the restructuring of borrowers’ businesses, excluding those loans classified as loans to borrowers
in bankruptcy, other delinquent loans, or delinquent loans past due three months or more.
8. Loans to bankrupt borrowers, delinquent loans, delinquent loans past due three months or over, and restructured loans
amount to the following total.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Total

¥

27,929¥26,116

The amounts of loans above in Notes 5 through 8 are stated before deduction of allowance for loan losses.

15

2020

$

256,632

9. Bills discounted
Bills discounted are accounted for as financial transactions in accordance with the Industry Audit Committee Report No. 24 of the
JICPA February 13, 2002. The Bank has the right to sell or pledge bills discounted and foreign exchange bills purchased without
restrictions. Their total face value is as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

¥

8,530

¥

2020

10,133$78,381

10. Assets pledged
Thousands of
U.S. dollars

Millions of yen

2019

2020

2020

Assets pledged as collateral
Securities¥

Loans and bills discounted
Total
Corresponding liabilities to assets pledged as collateral
Deposits
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money

268,250¥

264,040$

2,464,854

81,892—752,481

350,142

264,040

3,217,335

17,733
3,809
61,1588,090
216,853

14,020—16,661
41,112
176,919

162,949
35,000561,960
74,341
1,992,587

In addition to the foregoing, the following assets have been pledged as collateral for operating transactions, such as foreign exchange
contracts.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Securities
Other assets¥

100
25,343

¥

2020

6,240
25,058$922
232,870

Other assets include security deposits in the amount stated below.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Security deposits
Cash collateral for financial instruments etc.

¥

213
1,437

¥

2020

201
468

$

1,964
13,21011. Overdraft facility agreements and commitment lines of credit
Overdraft facility agreements and commitment lines of credit are agreements to extend credit up to a prearranged amount at thecustomer’s request as long as the terms of the agreement have not been violated. The amounts of unutilized commitment balances
under such agreements are as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Unutilized loan commitment lines
Loans for which the term of the agreement is one year or less¥

469,706
460,541¥446,232
439,295

2020$

4,315,963
4,231,752

The balance of unutilized credit will not necessarily affect the future cash flows of the Bank and the consolidated subsidiaries
because most of these agreements expire without being exercised. Most of these agreements contain clauses allowing the Bank andthe consolidated subsidiaries to reject requests for credit outright or reduce the credit limits due to changed financial circumstances,
the need to secure claims, or other reasonable causes. Besides requesting collateral, such as real estate or securities, as necessary
at the time of entering into the agreement, the Bank has also adopted other measures to keep its credit sound, such as periodicallyassessing the condition of customers’ businesses following the internal procedures and, if necessary, revising agreements.

1612. Revaluation reserve for land
Pursuant to the Law concerning Revaluation of Land (Law No. 34, promulgated March 31, 1998, the “Law”), land used for banking
operations was revalued. The tax-equivalent portion of this revaluation amount was recorded as “Deferred tax liabilities for land
revaluation” in liabilities and remainder as “Revaluation reserve for land” in net assets.
Revaluation date
March 31, 1998
Item 3, Article 3, of the Law establishes the evaluation method as that prescribed by Article 2, Paragraph 4 of the Enforcement
Ordinance of Law on Revaluation of Land (Enforcement Ordinance No. 119, promulgated March 31, 1998), and the amount of land
tax is calculated on the basis of the land tax amount specified under Article 16 of the Land-holding Tax Act, adjusted rationally inaccordance with the basis of calculation announced officially by the National Tax Agency.
Total difference between market value of land for banking operations revalued in accordance with Article 10 of the Law and thetotal book value of the land after such revaluation are as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

¥

8,251

¥

2020

8,431

$

75,819

13. Accumulated depreciation on tangible fixed assets
Thousands of
U.S. dollars

Millions of yen

2019

2020

Accumulated depreciation¥

20,895¥2020

20,612$

192,001

14. Fixed assets reduction entry
Thousands of
U.S. dollars

Millions of yen

2019

2020

Reduction entry(Consolidated reduction entry)

¥

3,453
(—)

¥

2020

3,453
(—)

$

31,731(—)

15. Acceptances and guarantees
The amounts of the bonds presented under “Securities” included guarantee obligations on corporate bonds that were placed
through private securities offerings (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act) are as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

¥

17

1,237

¥

2020

560

$

11,366

Notes to the Consolidated Statements of Operations
16. Other income includes the following.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Gains on sales of shares

¥

255

¥

2020

637

$

2,345

17. General and administrative expenses include the following.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Salaries and allowances

¥

9,847

¥

2020

9,947

$

90,487

18. Other expenses include the following.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Losses on devaluation of shares
Losses on sales of shares

¥
¥

18

92
675

¥
¥

2020

—
580

$
$

849
6,206

Notes to the Consolidated Statements of Comprehensive Income
19. Reclassification adjustments and tax effects related to other comprehensive income
Thousands of
U.S. dollars

Millions of yen

2019

2020

Unrealized gains (losses) on available-for-sale securities
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effect
Total
Deferred gains (losses) on hedges
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effectTotal
Remeasurement of defined benefit plans
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effectTotal
Total other comprehensive income¥

19(9,123)(482)(9,605)
2,841(6,763)

¥

2020

1,654
(365)
1,288
(471)
817

$

(83,830)(4,429)(88,259)
26,113(62,146)

54
−
54
(16)
37

(54)
−
(54)
16
(37)

498
−
498
(152)
346

(3)
(4)
(8)
2
(5)
(6,731)

13
(11)
2
(0)
1
781

(36)
(38)
(74)
23
(51)
(61,851)

Notes to the Consolidated Statements of Changes in Net Assets
20. Changes in Net Assets
Under the Companies Law and the Banking Law of Japan, the following is provided: the entire amount of the issue price of sharesis required to be accounted for as capital, although a company may, by a resolution of its board of directors, account for an amountnot exceeding one-half of the issue price of the new shares as additional paid-in capital, which is included in capital surplus.
The Companies Law and the Banking Law provide that an amount equal to at least 20% of cash dividends shall be appropriated andset aside as a legal reserve until the total amount of legal reserve and additional paid-in capital equals 100% of common stock. The
legal reserve and additional paid-in capital may be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting or
may be capitalized by a resolution of the board of directors. On condition that the total amount of legal reserve and additional paid-in
capital remains equal to or exceeds 100% of common stock, they are available for distribution by a resolution of the shareholders’meeting. Legal reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the non-consolidated financial statementsof the Bank in accordance with the Companies Law.
Previous fiscal year (From April 1, 2018, to March 31, 2019)(Thousands of shares)(1) Classes and total number of shares issued including treasury shares
Number of shares
outstanding at the
beginning of the
fiscal year
Number of shares issued and outstanding
Common shares
24,144
Total
24,144
Treasury shares
Common shares
373
Total
373

Increase

Number of shares
outstanding at theend of the fiscal year

Decrease−−−−

24,144
24,144

1
1

91
91

283
283

Remarks(Notes 1, 2, 3)

Notes:
1. The number of treasury shares includes shares of the Bank held by the employee stock ownership trust (340 thousand shares at the beginning of the fiscal year and 249
thousand shares at the end of the fiscal year).
2. The number of treasury shares increased by one thousand shares due to the acquisition of fractional share units.
3. The number of treasury shares decreased by 90 thousand shares due to a transfer of the shares of the Bank held by the employee stock ownership trust to the Stockholding
Association, and 0 thousand shares due to requests for share purchases to supplement fractional share units.

(2) Subscription rights to shares

Category

Description ofsubscription rights
to shares

Number of shares underlying
Type of share
Balance at
subscription rights to shares (Shares)
underlying
the end of
subscription
the fiscal
At the end
At therights toyear
Increase
Decreaseof the fiscal (Millions
beginning ofof yen)sharesyear
the fiscal year

Subscription rights
The Fukui
to shares as stockBank
options

—

228

Total

—

228

20

Remarks

(3) Dividends( i ) Dividends paid in the fiscal year
(Resolution)

Type of share

Aggregate
amount ofdividends(Millions of yen)

Dividends
per share(Yen)

Record date

Effective date

May 11, 2018
Board of Directors

Commonshares602

25

March 31, 2018

June 1, 2018

November 8, 2018
Board of Directors

Commonshares602

25

September 30, 2018

November 29, 2018

Note: Total dividend amounts pursuant to the resolutions of the Board of Directors of May 11, 2018, and November 8, 2018, respectively include dividend amounts of ¥8 millionand ¥7 million paid to the employee stock ownership trust.

( ii ) Dividends with a record date during the fiscal year ended March 31, 2019, but whose effective date is after March 31, 2019, are as
follows:(Resolution)
May 10, 2019
Board of Directors

Type of share

Aggregate
amount ofdividends(Millions of yen)

Dividend
resources

Dividends
per share(Yen)

Record date

Effective date

602

Retainedearnings

25

March 31, 2019

May 31, 2019

CommonsharesNote: The total dividend amount includes ¥6 million in dividends to the employee stock ownership trust.

Current fiscal year (From April 1, 2019, to March 31, 2020)(Thousands of shares)(1) Classes and total number of shares issued including treasury shares
Number of shares
outstanding at the
beginning of the
fiscal year
Number of shares issued and outstanding
Common shares
24,144
Total
24,144
Treasury shares
Common shares
283
Total
283

Increase

Number of shares
outstanding at theend of the fiscal year

Decrease−−−−

24,144
24,144

310
310

165
165

429
429

Remarks(Notes 1, 2, 3)

Notes:
1. The number of treasury shares includes shares of the Bank held by the employee stock ownership trust (249 thousand shares at the beginning of the fiscal year and 138
thousand shares at the end of the fiscal year) and shares held by the board benefit trust (zero shares at the beginning of the fiscal year and 210 thousand shares at theend of the fiscal year).
2. The number of treasury shares increased due to the acquisition of 210 thousand shares of the Bank by the board benefit trust, the acquisition of 100 thousand shares oftreasury shares, and the purchase of 0 thousand fractional share units.
3. The number of treasury shares decreased by 111 thousand shares due to a transfer of the shares of the Bank held by the employee stock ownership trust to the
Stockholding Association, 53 thousand shares due to the exercise of stock options and 0 thousand shares due to requests for share purchases to supplement fractional
share units.

21

(2) Subscription rights to shares

Category

Number of shares underlying
Type ofsubscription rights to shares (Shares)
share
Description ofunderlying
At thesubscription rights
At thesubscription beginningto shares
rights to of the fiscal Increase Decrease end of the
fiscal year
sharesyear

Balance at the end of the
fiscal year
(Millions ofyen)(Thousandsof U.S.
dollars)

Subscription rights
The Fukui
to shares as stockBank
options

—

−

−

Total

—

−

−

Remarks(3) Dividends( i ) Dividends paid in the fiscal year
Aggregate amount of dividends(Resolution)

Type of share(Millions of yen)(Thousands of
U.S. dollars)

Dividends
per share(Yen)

Record date

Effective date

May 10, 2019
Board of Directors

Commonshares

602

5,538

25

March 31, 2019

May 31, 2019

November 8, 2019
Board of Directors

Commonshares

601

5,528

25

September 30, 2019

December 4, 2019

Note: Total dividend amounts pursuant to the resolutions of the Board of Directors of May 10, 2019, and November 8, 2019, respectively include dividend amounts of ¥6 million($57 thousand) and ¥4 million ($43 thousand) paid to the employee stock ownership trust.

( ii ) Dividends with a record date during the fiscal year ended March 31, 2020, but whose effective date is after March 31, 2020, areas follows:(Resolution)

May 8, 2020
Board of Directors

Type of share

CommonsharesAggregate amount ofdividends(Millions ofyen)(Thousands of
U.S. dollars)

601

5,528

Dividend
resources

Dividends
per share(Yen)

Retainedearnings

25

Record date

Effective date

March 31, 2020

May 29, 2020

Note: Total dividend amounts include ¥3 million ($32 thousand) in dividends paid to shares of the employee stock ownership trust and ¥5 million ($48 thousand) in dividends
paid to shares of the board benefit trust.

22Notes to the Consolidated Statement of Cash Flows
21. Reconciliation of cash and cash equivalents
The following table shows reconciliation between “Cash and cash equivalents” in the consolidated statements of cash flows and“Cash and due from banks” in the consolidated balance sheets as of March 31, 2020 and 2019.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Cash and due from banks
Time deposits in other banks
Other deposits
Cash and cash equivalents¥

474,536(241)(139)
474,154¥2020

435,326(241)(40)
435,044$4,360,345(2,221)(1,284)4,356,840

22. Lease Transactions(1) Finance lease transactions
Finance leases that do not transfer ownership( i ) As a lessee
A. Description of lease assets
a. Tangible fixed assets
Vehiclesb. Intangible fixed assets
None
B. Depreciation method for lease assets
Refer to “(iv) Depreciation and amortization methods” of “(4). Significant accounting policies” in 2. Significant accounting
policies and practices.
( ii ) As a lessor
This note is omitted, as the total amount is insignificant.
(2) Operating lease transactions
Total lease payments or receivables under non-cancelable operating lease transactions( i ) As a lessee
Thousand of
U.S. dollars

Millions of yen

2019

2020

Within one year
Over one year
Total

¥

1
4
5

¥

2020

0
2
2

$

13
39
52

( ii ) As a lessor
This note is omitted, as the total amount is insignificant.
(3) Sublease transactions
Amounts corresponding to sublease transactions stated on the consolidated sheet before deduction of interest were omitted due
to insignificant.

2323. Financial Instruments(1) Circumstances of financial instruments( i ) Policies for engagement with financial instruments
The Group is engaged in a variety of financial services centered on the banking businesses, such as deposit operations, lending
operations, and foreign exchange operations. Moreover, in order to acquire stable returns, the Group utilizes the funds of securities
on the investment side.
Furthermore, the Group engages in derivative transactions in order to comply with customers’ requests on risk hedging related
to foreign currency exchange as well as for use in asset liability management (ALM) for the appropriate management of theGroup’s own market risks, and as a measure for investing with partially mitigated risk. And the Group has determined not toengage in derivative transactions of a complex structure and speculative nature.
The operations of a number of consolidated subsidiaries of the Group include lease operations.
( ii ) Content and risks of financial instruments
Financial assets held by the Group, principally loans and bills discounted extended to domestic customers are exposed tocredit risk and market risk. Securities, principally debt securities, shares, and investment trusts, held by the Group are exposedto credit risk and market risk. Moreover, call loans are exposed to credit risk.
Financial liabilities held by the Group, principally deposits, are exposed to market risk. Call money and borrowed money heldby the Group are subject to market risk and liquidity risk of becoming unable to execute payment on due date, such as that theGroup cannot use the market under certain circumstances.
With regard to derivative transactions, the Group employs interest rate swaps in interest-related transactions, currency swaps,
currency options, and currency forwards in currency-related transactions. The Group is exposed to credit risk and market risk.
The hedge accounting is applied for certain currency swap transactions when they are employed in order to convert the currencyof financing (Japanese yen denominated) into the currency of fund management (foreign currency denominated). The Group
performs its hedge effective test through defining the financial claims and obligation as a hedged item and foreign currency swaps
as a hedging instrument, and checking that the hedging instruments of foreign currency position equivalent to the hedged items
exist.
( iii ) Risk management structure related to financial instruments
A. Credit risk management
Credit risk means the risk of suffering loss from a decrease or extermination of the value of assets (including off-balance items)of the Group by the deterioration in the creditworthiness of the obligor.
For the Group, credit risk is an unavoidable risk for the purposes of its business operations. The Group aims to create its
structure capable of controlling credit risk because the Group is fully aware of the necessity of rapid responsive action to suchrisk. Specifically, the Group has established the Credit concentration risk management standards and is working to identify andimprove upon such risk in order to avoid credit concentration risks and create balanced credit portfolios.
With regard to credit risk measurement, the Group assesses and analyzes its credit risk status according to credit rating,industry and region, and exercises risk-based quantitative management and control in accordance with the Risk capitalsystem.
B. Market risk management
Market risk means the risk of financial loss to the Group through changes in income and value of assets and liabilities held,
including off-balance items, due to fluctuations in various market risk factors, such as interest rates, exchange rates, equity
prices.
a. Risk management
Market risk mainly consists of interest risk, foreign exchange risk and price fluctuation.
The Group considers market risk as a constituent part of ALM. The Group intends to maintain an appropriate balance of risk
and return based on capital adequacy, profitability, trends of loan and deposit, the status of securities holdings.
Specifically, the management committee makes discussions concerning the status of comprehensive risk values, risk valuesof the market investment division, and quantitative interest rate risk of loans and deposits, as well as discussions of the
securities investment plan, which enables the Group to manage integrally the Group’s overall risk and market risk. The market
investment division establishes its position limits for entire securities and by type of security, and carries out market transaction
flexibly within them.
Additionally, the market risk management unit (middle office) is organizationally segregated from the front office operations
to maintain the segregation of duties, and conducts daily monitoring of the risk status.
The market risk management unit identifies quantitative market risk using Value at risk (VaR) for the securities, loans anddeposits accounts of banking operation, and conduct risk management and analysis.

24

b. Quantitative information concerning market risk
The Group uses the variance-covariance method for the calculation of market risk (VaR): Holding period: 1 year; Confidence
level: 99.0%; Observation period: 5 years.
In the calculation the amount of market risk (VaR) of loans and deposits accounts, the Group considers core deposits anduses an internal model approach to measure core deposits.
At the end of this fiscal year, the total amount of market risk (VaR) of the Group amounted to ¥47,295 million/$434,585
thousand (¥29,508 million at the previous fiscal year-end) and loans and deposit accounts totaled ¥20,392 million/$187,376
thousand (¥17,635 million at the previous fiscal year-end).
In order to verify the reliability of its methods for measuring market risk, the Group performs back testing by comparing VaR
calculated for securities accounts for a one-day holding period with the day-to-day declines in market value.
The back testing conducted for the year ended March 31, 2020, displayed four instances where actual losses exceeded VaR(similarly no instances were displayed in the previous fiscal year). The Group therefore believes that the market risk is being
captured by its market risk measurement methods with a sufficient level of accuracy.
However, VaR measures the market risk under a certain probability statistically calculated based on historical market
fluctuations, and capturing risks may not be possible in the event of extraordinarily rapid changes in market conditions.
C. Liquidity risk management relevant to fundraising
Liquidity risk comprises “cash management risk”, the risk of suffering loss when necessary funds cannot be secured or thefunds are forced to be raised only at an abnormally high interest rate, due to a period mismatch between investments andfunding, or due to unforeseeable fund outflows; “market liquidity risk”, the risk of suffering loss when transactions cannot takeplace due to market turmoil or can only be conducted at an abnormally inferior price; and “settlement risk”, the risk of suffering
loss when funds or assets cannot be received as planned through settlements with counterparties.
Liquidity risk refers to those 3 comprehensive risks, cash management risk, market liquidity risk, and settlement risk. The
Group considers controlling of cash management risk the important management issue since market liquidity risk andsettlement risk belong ultimately to cash management risk.
The Group conducts appropriate cash management and reporting to the executive officer in charge of the comprehensive
risk management division through management of the fund procurement structure, funding gaps between investments andprocurement, and liquidity reserves for Japanese yen and foreign denominated funds.
Specifically, the Group has defined categories rated as “normal,” “alert,” and “crisis” according to the status of cash
management and has determined subsets of management methods, reporting frameworks, and approval modes for eachcategory, managed by the organizationally independent front office, back office, and middle office with monitoring mutually.
(iv) Supplementary explanation concerning fair value of financial instruments
Fair Value of financial instruments is based on quoted prices in markets. If a quoted price is not available, a reasonably calculated
amount is used as fair value. Calculation of such amounts involves certain assumptions and may vary when different assumptions
are employed. Moreover, the notional amount of the derivative transactions referred to in the notes on “Derivative transactions”
does not reflect the market risks associated with the noted derivative transactions.

25

(2) Fair values of financial instruments
The carrying amounts on the consolidated balance sheets and fair values of financial instruments as of March 31, 2020 and 2019,as well as the differences between these values are presented below. The financial instruments deemed immaterial, and unlisted
stocks whose fair values are extremely difficult to determine are excluded from the table (See Note 2).
Previous fiscal year (March 31, 2019)(Millions of yen)

(1) Cash and due from banks(2) Trading account securities
Securities for trading purposes(3) Securities
Available-for-sale securities(4) Loans and bills discounted
Allowance for loan losses*1

Carrying amount
435,326

Fair value435,326

570

570

−

611,646
1,661,228(12,789)
1,648,438
2,695,982
2,400,198
41,112
177,4312,618,742

611,646−

1,681,536
2,729,080
2,400,286
41,112
177,4312,618,831

33,09733,097
88
−
−
88

(4)
123
119

(4)
123
119

−
−
−

Total assets(1) Deposits(2) Payables under repurchase agreements(3) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Difference*1: A general allowance for loan losses and specific allowances for loan losses are deducted from loans and bills discounted.
*2: Derivative transactions recorded in other assets and other liabilities are presented collectively.
Receivables and payables arising from derivative transactions are presented on a net basis, with items qualified as payables shown with brackets: ( )26−Current fiscal year (March 31, 2020)(Millions of yen)

(1) Cash and due from banks(2) Trading account securities
Securities for trading purposes(3) Securities
Available-for-sale securities(4) Loans and bills discounted
Allowance for loan losses*1

Carrying amount
474,536

Fair value
474,536

591

591

−

657,356
1,719,190(13,429)
1,705,761
2,838,245
2,488,546
61,158217,183
2,766,887

657,356−

1,754,001
2,886,485
2,488,623
61,158217,183
2,766,965

48,24048,240
77
−
−
77

(113)
421
307

(113)
421
307

−
−
−

Total assets(1) Deposits(2) Payables under repurchase agreements(3) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Difference−*1: A general allowance for loan losses and specific allowances for loan losses are deducted from loans and bills discounted.
*2: Derivative transactions recorded in other assets and other liabilities are presented collectively.
Receivables and payables arising from derivative transactions are presented on a net basis, with items qualified as payables shown with brackets: ( )(Thousands of U.S. dollars)(1) Cash and due from banks(2) Trading account securities
Securities for trading purposes(3) Securities
Available-for-sale securities(4) Loans and bills discounted
Allowance for loan losses*1

Carrying amount
4,360,345

Fair value
4,360,345

5,432

5,432

−

6,040,219
15,797,028(123,399)
15,673,629
26,079,625
22,866,361
561,960
1,995,624
25,423,945

6,040,219−

16,116,891
26,522,887
22,867,074
561,960
1,995,624
25,424,658

443,262443,262
713
−
−
713

(1,045)
3,869
2,824

(1,045)
3,869
2,824

−
−
−

Total assets(1) Deposits(2) Payables under repurchase agreements(3) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Difference*1: A general allowance for loan losses and specific allowances for loan losses are deducted from loans and bills discounted.
*2: Derivative transactions recorded in other assets and other liabilities are presented collectively.
Receivables and payables arising from derivative transactions are presented on a net basis, with items qualified as payables shown with brackets: ( )27−Note 1: Calculation method of fair values of financial instruments
Assets(1) Cash and due from banks
The fair values of cash and due to banks without maturities are stated at their carrying amounts, because the carrying amountsof those instruments approximate the fair values. The fair values of cash and due to banks with maturities are stated at theircarrying amounts, because most of such transactions have short contractual terms (one year or less) and the carrying amountsof those instruments approximate the fair values.
The fair values of derivative-embedded instruments are determined based on prices quoted by the financial institutions.
(2) Trading account securities
The fair values of bonds and other securities held for dealing purposes are stated at quoted market prices or dealer/broker
quoted prices.
(3) Securities
The fair values of stocks are stated at quoted market prices or dealer/broker quoted prices. The fair values of investment trusts
are stated at published reference prices. The fair values of private placement bonds guaranteed by the Bank are calculated basedon the present value of expected future cash flows of principal redemptions and interest repayments discounted at the market
interest rate.
The notes regarding securities by their holding purpose are presented under the “Securities” section.
(4) Loans and bills discounted
The fair values of loans to legally bankrupt obligors, substantially bankrupt obligors or obligors who are likely to becomebankrupt are essentially equivalent to the book value deducted by the allowance for possible loan losses as of the consolidatedbalance sheet date because their estimated collectible amount is based on either the present value of estimated future cash flows
or the expected amounts recoverable from the disposal of collateral and/or under guarantees.
The fair values of loans without maturities (as the amount of credit is limited to the value of the collateral or due to some otherspecial characteristics) are stated at their carrying amounts because their fair values are deemed to approximate the carrying
amounts in consideration of the expected repayment periods and the interest terms.
The fair values of loans other than mentioned above are stated at present values of expected future cash flows of principals andinterests discounted at the market interest rate.
Liabilities(1) Deposits
The fair values of demand deposits are determined at the amount that would have to be paid on demand at the consolidatedbalance sheet date (book value). The fair values of time deposits are determined based on the present value of future cash flows
by certain time periods discounted at the interest rate required for newly originated deposits.
(2) Payables under repurchase agreements
The fair values of payables under securities lending transactions with short contractual terms (no more than one year) are statedat their carrying amounts, because the carrying amounts of those instruments approximate the fair values.
(3) Borrowed money
The fair values of borrowed money with short contractual terms (one year or less) are stated at their carrying amounts, because
the carrying amounts of those instruments approximate the fair values.
The fair values of borrowed money with fixed interest rates are determined based on the present value of the total amount ofprincipal and interest by certain time periods discounted at the interest rate that would be presumably applied for similarborrowings.

28

Derivative transactions
The notes regarding fair values of derivatives are presented under the “Derivatives” section.
Note 2: The amounts of financial instruments on the consolidated balance sheets for which fair values are not reliably
determinable are as stated below, and such amounts are not included in the fair value information for financial
instruments presented in “Assets, (4) Available-for-sale Securities”.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Unlisted stocks*1, *2
Investments in partnerships*3
Total

¥

1,463
1,484
2,947

¥

2020

1,460
487
1,948

$

13,445
13,64327,088*1: Unlisted stocks are excluded from fair value disclosure because there are no quoted market prices, and therefore, there is no reliable measurement of fair value.
*2: During the previous fiscal year, no impairment loss was recognized against unlisted stocks.
During the current fiscal year, no impairment loss was recognized against unlisted stocks.
*3: Investments in certain partnerships whose assets consist of unlisted stocks and other financial instruments that are deemed extremely difficult to determine fair values
for are out of the scope of fair value disclosure.

Note 3: Redemption schedule of monetary claims and securities with maturities after March 31, 2020 and 2019
Previous fiscal year (March 31, 2019)(Millions of yen)

Within one
year
Due from banks
Securities

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years

Over tenyears

404,474
117,671−
168,657−
98,230−43,774−54,760−63,383Available-for-sale securities withmaturities

117,671

168,657

98,23043,77454,76063,383Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
Loans and bills discounted*
Total

50,50014,884−34,311
466,220
988,367

38,40031,554−30,889333,188
501,846

6,000
7,943
−
36,593
224,230
322,460−
4,259−
18,300131,916
175,691−
17,764−
1,800
126,743
181,504

15,0002,405−
44,109332,989
396,373* The balances exclude loans and bills discounted for debtors who are legally bankrupt, substantially bankrupt or likely to become bankrupt that are not expected to be collected,
amounting to ¥25,096 million and those without maturity, amounting to ¥20,841 million.

29

Current fiscal year (March 31, 2020)(Millions of yen)

Within one
year
Due from banks
Securities

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years

Over tenyears

444,252
102,788−
126,604−
117,907−45,495−96,550−92,272Available-for-sale securities withmaturities

102,788

126,604

117,90745,49596,55092,272Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
Loans and bills discounted*
Total

27,40022,634−
16,399486,785
1,033,826

17,00018,274−36,715348,911475,515−
5,573−
47,557
217,688335,595−
1,751−
22,800129,090
174,585−
41,427−5,900
130,220
226,770

24,0008,046−
60,226
358,700
450,972* The balances exclude loans and bills discounted for debtors who are legally bankrupt, substantially bankrupt or likely to become bankrupt that are not expected to be collected,
amounting to ¥26,529 million and those without maturity, amounting to ¥21,265 million.

Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)Within one
year
Due from banks
Securities

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years

Over tenyears

4,082,077
944,487−
1,163,323−
1,083,405−
418,044−887,166−
847,856

Available-for-sale securtities withmaturities

944,487

1,163,323

1,083,405

418,044887,166

847,856

Government bonds
Local government bonds
Short-term corporate bonds
Coroporate bonds

251,769
207,984−
150,685

156,207
167,919−
337,361−
51,211−
436,985−
16,093−
209,501−
380,659−
54,213

220,527
73,932−
553,396Loans and bills discounted
Total

4,472,894
9,499,458

3,206,022
4,369,345

2,000,259
3,083,664

1,186,163
1,604,207

1,196,549
2,083,715

3,295,972
4,143,828* The balances exclude loans and bills discounted for debtors who are legally bankrupt, substantially bankrupt or likely to become bankrupt that are not expected to becollected, amounting to $243,772 thousand and those without maturity, amounting to $195,399 thousand.

30

Note 4: Repayment schedule of interest-bearing liabilities after March 31, 2020 and 2019
Previous fiscal year (March 31, 2019)(Millions of yen)

Within one
year(1) Deposits*(2) Payables under repurchase agreements(3) Borrowed money
Total

2,285,055
16,661
177,1472,478,864

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
103,622−284
103,907

8,560
−
−
8,560

1,717
−
−
1,717

Over ten
years

1,241
−
−
1,241

−
−
−
−

* The balance of demand deposits is included in “Within one year.”

Current fiscal year (March 31, 2020)(Millions of yen)

Within one
year(1) Deposits*(2) Payables under repurchase agreements(3) Borrowed money
Total

2,384,875
61,158
115,517
2,561,551

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
92,323−60,466
152,789

8,137−
41,20049,337

1,739
−
−
1,739

Over ten
years

1,469
−
−
1,469

−
−
−
−

* The balance of demand deposits is included in “Within one year.”

Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)Within one
year(1) Deposits*(2) Payables under repurchase agreements(3) Borrowed money
Total

21,913,773
561,960
1,061,450
23,537,183

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
848,329−555,601
1,403,930* The balance of demand deposits is included in “Within one year.”

31

74,774−
378,572
453,346

15,986−−
15,986

13,500−−13,500Over ten
years
−
−
−
−

24. Securities*1 In addition to the “Securities” presented in the consolidated balance sheets, the following information includes
securities classified as “Trading account securities.”*2 Information on “Shares in subsidiaries and affiliates” is stated in the notes to the financial statements.
(1) Securities for trading purposes
Thousands of
U.S. dollars

Millions of yen

2019

2020

Valuation difference reflected on the statements of operations

¥

(11)

2020

¥

(8)

$

(105)

(2) Securities-held-to-maturity
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(3) Available-for-sale securities
Previous fiscal year (March 31, 2019)(Millions of yen)

Type

Securities for which carrying amountexceeds acquisition cost

Securities for which carrying amount
does not exceed acquisition cost

Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal
Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal

Total

32

Carrying amount21,205354,926
113,153

Acquisition cost
7,781
349,689
110,313Difference
13,424
5,237
2,839

80,32978,924

1,405

−

−

−

161,442
139,246
92,174515,379
8,988
6,696
−

160,451
135,564
90,722493,035
9,915
6,725
−

991
3,682
1,452
22,343
(927)
(29)
−

−

−

−

−

−

−

6,696
80,58257,526
96,267
611,646

6,725
81,92657,851
98,567
591,603(29)(1,343)(324)(2,300)20,043Current fiscal year (March 31, 2020)(Millions of yen)

Securities for which carrying amountexceeds acquisition cost

Securities for which carrying amount
does not exceed acquisition cost

Type
Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal
Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal

Carrying amount
22,276220,033
63,601

Acquisition cost
9,638
217,008
61,808Difference
12,6373,025
1,792

73,397

72,611

785

−

−

−

83,034
127,673
90,730369,983
7,747
139,655
6,986

82,588122,393
88,608349,040
9,680
140,477
7,058

446
5,280
2,122
20,943(1,933)(821)(71)

25,08425,182

(97)

−

−

−

107,584
139,969
81,025287,372
657,356

108,236
147,719
82,886
297,878
646,918(652)(7,750)(1,861)(10,505)
10,438Type

Carrying amount
204,6932,021,810
584,410

Acquisition cost
88,5691,994,014
567,937

Difference
116,124
27,796
16,473

674,421667,205

7,216

−

−

−

762,979
1,173,148
833,691
3,399,651
71,187
1,283,248
64,199758,872
1,124,629
814,188
3,207,212
88,954
1,290,796
64,854

4,107
48,51919,503
192,439(17,767)(7,548)(655)

230,496

231,393

(897)

−

−

−

988,553
1,286,133
744,516
2,640,568
6,040,219

994,549
1,357,345
761,618
2,737,095
5,944,307(5,996)(71,212)(17,102)(96,527)
95,912

Total
Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)

Securities for which carrying amountexceeds acquisition cost

Securities for which carrying amount
does not exceed acquisition cost

Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal
Stocks
Bonds
Government bonds
Local government
bonds
Short-term
corporate bonds
Corporate bonds
OthersForeign securities
Subtotal

Total

33

(4) Securities-held-to-maturity sold in the current fiscal year
Previous fiscal year (From April 1, 2018, to March 31, 2019)
None
Current fiscal year (From April 1, 2019, to March 31, 2020)
None(5) Available-for-sale securities sold in the current fiscal year
Previous fiscal year (From April 1, 2018, to March 31, 2019)(Millions of yen)Type

Amount sold

Stocks
Bonds
Government bonds
Local government bonds
Short-term corporate bonds

2,515
11,238
3,919
5,715
−
1,604
157,095
130,167
170,850

Corporate bonds
OthersForeign securities
Total

Total gain on sales
438
20
15
1
−
4
2,010
1,154
2,469

Total loss on sales
173
1
1
−
−
−
1,893
882
2,067

Total gain on sales
140
114
114
−
−
−
952
287
1,207

Total loss on sales
238
−
−
−
−
−
746
18
985

Current fiscal year (From April 1, 2019, to March 31, 2020)(Millions of yen)Type

Amount sold

Stocks
Bonds
Government bonds
Local government bonds
Short-term corporate bonds

1,274
3,175
3,175
−
−
−
24,394
15,777
28,845

Corporate bonds
OthersForeign securities
Total
Current fiscal year (From April 1, 2019, to March 31, 2020)(Thousands of U.S. dollars)

Type
Stocks
Bonds
Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
OthersForeign securities
Total

Amount sold
11,71429,18329,183−−−
224,156
144,972
265,053

34

Total gain on sales
1,289
1,054
1,054
−
−
−
8,755
2,641
11,098

Total loss on sales
2,195
−
−
−
−
−
6,859
167
9,054

(6) Securities that changed their holding purpose
None(7) Impairment of securities
Securities other than trading securities, excluding securities whose fair values are not reliably determined, are treated as impaired
when their fair values have declined significantly from the acquisition cost, unless it is deemed that there is a possibility of a recovery
in the fair value. Such securities are recorded at their fair values in the consolidated balance sheets. The difference between theacquisition cost and the fair values is recognized as an impairment loss.
No impairment losses were recognized in the previous fiscal year.
Impairment losses recognized were ¥92 million ($849 thousand; all related to “Stocks”) in the current fiscal year.
The impairment of securities is recognized for all securities when the market value of the securities has fallen by 50% or morecompared with the acquisition cost, and for other securities when the market value of the securities has fallen by 30% or morecompared with the acquisition cost, unless it is deemed that there is a possibility of a recovery in the fair value in consideration of
past reduction rates over a specific period of time and financial conditions of issuing companies.

35

25. Money held in trust(1) Money held in trust for trading purposes
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(2) Money held in trust held to maturity
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(3) Other money held in trust (other than those for trading purposes or held to maturity)
Previous fiscal year (March 31, 2019)(Millions of yen)

Carrying
amountOther money held in trust

6,500

Acquisition
cost

Positivedifference

Difference

6,500

−

Negativedifference−−

Note: The amount of “Difference” is the net of “Positive Difference” and “Negative Difference.”

Current fiscal year (March 31, 2020)(Millions of yen)

Carrying
amountOther money held in trust

6,504

Acquisition
cost

Positivedifference

Difference

6,504

−

Negativedifference−−

Note: The amount of “Difference” is the net of “Positive Difference” and “Negative Difference.”

Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)

Carrying
amountOther money held in trust

59,764

Acquisition
cost

Positivedifference

Difference

59,764−

Negativedifference−−

Note: The amount of “Difference” is the net of “Positive Difference” and “Negative Difference.”

26. Valuation differences on available-for-sale securities
The following table shows components of Valuation differences on available-for-sale securities in the consolidated balance sheets.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Valuation differences
Securities
Deferred tax liability¥

Valuation differences on available-for-sale securities (before adjustment for
non-controlling interests)
Non-controlling interests
Valuation differences on available-for-sale securities

36

10,43810,438(3,013)¥2020

20,04320,043(5,855)$

95,912
95,912(27,689)

7,424

14,18868,223

(11)

(13)

(109)

7,412

14,174

68,114

27. Derivatives(1) Derivative transactions not qualifying for hedge accounting
Derivative transactions not qualifying for hedge accounting are grouped by the type of underlying transactions. The notionalamounts (or the amount equivalent to the principal specified in the contracts), the fair values, and the valuation differences as of theconsolidated balance sheet date, as well as the methods for determining such fair values are presented below. The notional amounts
do not reflect the market risk associated with the derivatives.
( i ) Interest-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None( ii ) Currency-related transactions
Previous fiscal year (March 31, 2019)(Millions of yen)

Category

ListedOTC

Type
Currency futures
Sold
Purchased
Currency options
Sold
Purchased
Currency swaps
Forward exchange contracts
Sold
Purchased
Currency options
Sold
Purchased
OthersSold
Purchased
Total

Notional amounts(total)Notional amounts(over one year)

−
−

−
−

−
−

−
−

−
−
−

−
−
−

−
−
−

−
−
−

15,744
6,094

−
−

(120)
114

(120)
114

58,75758,75738,02838,028(1,829)
1,830

1,277
(744)

−
−
−

−
−
−

−
−
(4)

−
−
527

Notes:
1. The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.
2. The fair values are calculated using the net present value method, etc.

37

Valuationdifference

Fair valueCurrent fiscal year (March 31, 2020)(Millions of yen)

Category

ListedOTC

Type
Currency futures
Sold
Purchased
Currency options
Sold
Purchased
Currency swaps
Forward exchange contracts
Sold
Purchased
Currency options
Sold
Purchased
OthersSold
Purchased
Total

Notional amounts(total)Notional amounts(over one year)

−
−

−
−

−
−

−
−

−
−
−

−
−
−

−
−
−

−
−
−

20,640
8,460

−
−

(33)
(80)

(33)
(80)

47,39447,394

32,77032,770(1,447)
1,447

1,291
(829)

−
−

−
−

−
−
(113)

−
−
348

−

−

Valuationdifference

Fair value

Notes:
1. The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.
2. The fair values are calculated using the net present value method, etc.

Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)

Category

ListedOTC

Type
Currency futures
Sold
Purchased
Currency options
Sold
Purchased
Currency swaps
Forward exchange contracts
Sold
Purchased
Currency options
Sold
Purchased
OthersSold
Purchased
Total

Notional amounts(total)Notional amounts(over one year)

−
−

−
−

−
−

−
−

−
−
−

−
−
−

−
−
−

−
−
−

189,660
77,736

−
−

(304)
(743)

(304)
(743)

435,495
435,495

301,115
301,115(13,296)
13,298

11,871(7,622)

−
−

−
−

−
−
(1,045)

−
−
3,202

−

−

Notes:
1. The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.
2. The fair values are calculated using the net present value method, etc.

38

Valuationdifference

Fair value

(iii) Stock-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(iv) Bond-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(v) Commodity-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(vi) Credit derivative transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None

39

(2) Derivative transactions qualifying for hedge accounting
Derivative transactions qualifying for hedge accounting are grouped by the type of underlying transactions. The notional amounts(or the amount equivalent to the principal specified in the contracts) and the fair values as of the consolidated balance sheet date, as
well as the methods for determining such fair values are presented below. The notional amounts do not reflect the market risk
associated with the derivatives.
( i ) Interest-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None( ii) Currency-related transactions
Previous fiscal year (March 31, 2019)(Millions of yen)Hedge
accountingTypemethodDeferralCurrency swaps
methodTotal

Major hedged item
Foreign-currency
denominated securities−

Notional amounts(total)Notional amounts(over one year)

11,099

11,099−Fair value
123

−

123

Notes:
1. Deferred hedge accounting stipulated in Report No. 25 is applied, in principle.
2. The fair values are calculated using the net present value method, etc.

Current fiscal year (March 31, 2020)(Millions of yen)Hedge
accountingTypemethodDeferralCurrency swaps
methodTotal

Major hedged item
Foreign-currency
denominated securities−

Notional amounts(total)Notional amounts(over one year)

10,883

10,883−

Fair value
421

−

421

Notes:
1. Deferred hedge accounting stipulated in Report No. 25 is applied, in principle.
2. The fair values are calculated using the net present value method, etc.

Current fiscal year (March 31, 2020)(Thousands of U.S. dollars)Hedge
accountingTypemethodDeferralCurrency swaps
methodTotal

Major hedged item
Foreign-currency
denominated securities−

Notional amounts(total)Notional amounts(over one year)

100,000

100,000−

Notes:
1. Deferred hedge accounting stipulated in Report No. 25 is applied, in principle.
2. The fair values are calculated using the net present value method, etc.

40−

Fair value
3,869
3,869

(iii) Stock-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None(iv) Bond-related transactions
Previous fiscal year (March 31, 2019)
None
Current fiscal year (March 31, 2020)
None

41

28. Retirement and pension plans(1) Outline of the retirement benefit plans
Dated April 1, 2005, the Bank obtained the permission to dissolve the corporate pension plan of the Bank from the Minister of
Health, Labour and Welfare and received approval for the terms and conditions of a corporate defined contribution pension plan, andtransferred a part of the lump-sum benefit program of the Bank and the corporate pension plan to a defined contribution pension
plan. As a result, the retirement benefits plan of the Bank has a dual structure consisting of a lump-sum benefit program and adefined contribution pension plan.
Notably, the Bank may pay additional retirement benefit payments with premium at the retirement, etc., of employees.
Additionally, a number of consolidated subsidiaries are members to the Smaller Enterprise Retirement Allowance Mutual Aid
Program.
(2) Defined benefit plans( i ) Reconciliation of retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

2019

2020

Retirement benefit obligations (opening balance)
Service cost-benefits earned during the fiscal year
Interest cost on projected benefit obligations
Actuarial differences
Retirement benefits paid
Past service cost
Other
Retirement benefit obligations (closing balance)

¥

¥

5,293
308
26
3
(226)
−
−
5,405

¥

2020

5,217
312
26
(13)
(249)
−
−
5,293

¥

$

$

48,6372,834
243
37(2,080)−−49,671( ii ) Reconciliation between closing balances of retirement benefit obligations and liabilities and assets for retirement benefits recordedin the consolidated balance sheet
Thousands of
U.S. dollars

Millions of yen

2019

2020

2020

Net defined benefit liability
Net defined benefit asset

¥

5,405
−

¥

5,293
−

$

49,671−

Net of liabilities and assets recorded in the consolidated balance sheet

¥

5,405

¥

5,293

$

49,671(iii) Breakdown of retirement benefit expenses
Thousands of
U.S. dollars

Millions of yen

2019

2020

Service cost-benefits earned during the fiscal year
Interest cost on projected benefit obligations
Expected return on plan assets
Amortization of actuarial differences
Amortization of past service cost
Other
Retirement benefit expenses for defined benefit obligations

¥

¥

42

308
26
−
(4)
−
−
330

¥

¥

2020

312
26
−
(11)
−
−
327

$

$

2,835
243
−
(38)
−
−
3,040

(iv) Adjustments for retirement benefits
Details of adjustments for retirement benefits (before tax effects) are as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

2020

Past service cost
Actuarial differences
Other

¥

−
(8)
−

¥

−
2
−

$

−
(74)
−

Total

¥

(8)

¥

2

$

(74)

(v) Accumulated adjustments for retirement benefits
The breakdown of accumulated adjustments for retirement benefits (before tax effects) is as follows.
Thousands of
U.S. dollars

Millions of yen

2019

2020

Unrecognized past service cost
Unrecognized actuarial differences
Other
Total

¥

¥

¥

−
(2)
−
(2)

2020

−
(10)
−
(10)

¥

$

−
(25)
−
(25)

$

(vi) Actuarial assumptions
The major assumptions used for calculating the actuarial gains and losses are as follows.
2019

2020

Discount rate
Expected rate of retirement benefits basis increase

0.5%
4.5%

0.5%
4.5%

Note: S ince the Bank has adopted the benefit formula basis for calculating retirement benefit obligation, the expected rate of salary increase is not taken into consideration.

(3) Defined-contribution pension plans
The required contribution amount for the defined contribution plans of the Bank and its consolidated subsidiaries was ¥65 million
in the previous fiscal year, and ¥65 million ($598 thousand) in the current fiscal year.

4329. Stock option plans(1) Expenses recorded in connection with stock options during the fiscal years ended March 31, 2020 and 2019
Thousands of
U.S. dollars

Millions of yen

2019

2020

General and administrative expenses

¥

10

¥

2020

40

$

94

Note: As stated in the additional information, based on a resolution of the Compensation Committee on June 14, 2019, the Bank has abolished the stock compensation-type
stock option plan for executive officers and has introduced a performance-linked stock compensation plan.

(2) Description of stock options( i ) Description of stock options
2011
Number of eligible persons
and their position
Number of stock options granted byclass of share (Note)

2012

2013

Executive officers of the Bank, Executive officers of the Bank, Executive officers of the Bank,
7 persons
7 persons
7 personsCommon stock:
22,120 shares

Common stock:
29,020 shares

Common stock:
25,490 shares

Grant date
Vesting conditions
Eligible service period

July 11, 2011
Indeterminate
Indeterminate

July 10, 2012
Indeterminate
Indeterminate

July 9, 2013
Indeterminate
Indeterminate

Exercise period

July 12, 2011 −July 11, 2041

July 11, 2012 −July 10, 2042

July 10, 2013 −July 9, 2043

2014

2015

2016

Number of eligible persons
and their position

Executive officers of the Bank, Executive officers of the Bank, Executive officers of the Bank,
7 persons
7 persons
7 personsCommon stock:
23,230 shares

Common stock:
18,490 shares

Common stock:
24,120 shares

Grant date
Vesting conditions
Eligible service period

July 8, 2014
Indeterminate
Indeterminate

July 7, 2015
Indeterminate
Indeterminate

July 12, 2016
Indeterminate
Indeterminate

Exercise period

July 9, 2014 −July 8, 2044

July 8, 2015 −July 7, 2045

July 13, 2016 −July 12, 2046

2017

2018

Number of stock options granted byclass of share (Note)

Number of eligible persons
and their position

Executive officers of the Bank, Executive officers of the Bank,
7 persons
7 personsCommon stock:
17,190 shares

Common stock:
20,600 shares

Grant date
Vesting conditions
Eligible service period

July 11, 2017
Indeterminate
Indeterminate

July 10, 2018
Indeterminate
Indeterminate

Exercise period

July 12, 2017−
July 11, 2047

July 11, 2018−
July 10, 2048

Number of stock options granted byclass of share (Note)

Note: T he number of shares stated in the table above is calculated considering the effect of the share consolidation implemented on October 1, 2017, at a ratio of one shareper 10 shares.

44

( ii ) Volume and changes in stock options
Concerning stock options in issuance in the current fiscal year (fiscal year ended March 2020); the number of stock options istranslated into the number of shares.
A. Number of stock options
2011
Unvested stock options (shares)
At the beginning of the fiscal year
GrantedForfeited
VestedUnvested
Vested stock options (shares)
At the beginning of the fiscal year
VestedExercised
Forfeited
Unexercised

2012

2014

2015

−
−
−
−
−

−
−
−
−
−

−
−
−
−
−

−
−
−
−
−

−
−
−
−
−

11,890
−
8,320
3,570
−

9,360
−
7,020
2,340
−

15,130−11,2903,840−

14,350−10,3603,990−

11,610
−
3,900
7,710
−

2016
Unvested stock options (shares)
At the beginning of the fiscal year
GrantedForfeited
VestedUnvested
Vested stock options (shares)
At the beginning of the fiscal year
VestedExercised
Forfeited
Unexercised

2013

2017

2018

−
−
−
−
−

−
−
−
−
−

20,600−−20,600−

16,480−5,090
11,390−17,190−3,630
13,560−−20,6004,340
16,260−Notes:
1. The number of shares stated in the table above is calculated considering the effect of the share consolidation implemented on October 1, 2017, at a ratio of one share per
10 shares.
2. The “Forfeited” category of “Vested stock options” refer to vested stock options for which rights have been waived on the condition that appropriate performance points
are granted in accordance with the performance-linked stock compensation plan with regard to subscription rights to shares granted but not yet exercised due to theabolition of the stock compensation-type stock option system and the introduction of the performance-linked stock compensation plan.

B. Unit price information
2011
Exercise price (yen)

2012

2013

2014

2015

1

1

1

1

1

Average stock price when exercised
(yen)

1,461

1,461

1,461

1,461

1,461

Fair unit value on the grant date (yen)

2,120

1,580

1,960

2,130

2,210

2016
Exercise price (yen)

2017

2018

1

1

1

Average stock price when exercised
(yen)

1,461

1,461

1,461

Fair unit value on the grant date (yen)

1,920

2,350

1,991

Note: A
 verage share price when exercised, and share fair unit value on the grant date, are calculated considering the effect of the share consolidation implemented on
October 1, 2017, at a ratio of one share per 10 shares.

4530. Income Taxes(1) Deferred tax assets and liabilities
Millions of yen

Deferred tax assets
Allowance for loan losses
Liability for retirement benefits
Depreciation
Impairment loss on land
Devaluation of securities
OthersSubtotal
Valuation allowance*
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
OthersTotal deferred tax liabilities
Net deferred tax assets (liabilities)

¥

6,574
1,646
926
813
659
1,038
11,658(5,684)
5,974(3,013)(176)(12)(3,202)
2,771¥

Thousands of U.S. dollars

2019

2020

¥

2020

5,988
1,612
994
809
748
1,093
11,246(5,986)5,260(5,855)(119)(9)(5,984)
(724)

¥

$

60,411
15,130
8,514
7,474
6,057
9,539
107,125(52,231)54,894(27,689)(1,626)(110)(29,425)
25,469$* The valuation allowance amount decreased by ¥302 million (U.S. $2,775 thousand). This decrease is mainly due to a ¥154 million (U.S. $1,424 thousand) reduction of thevaluation allowance amount due to an excess over the loan loss allowance deduction limit amount at the Bank and its consolidated subsidiaries.

(2) Effective income tax rate
2019

2020

Statutory effective tax rate
(Adjustments)
Permanent differences such as entertainment expenses
Permanent differences such as dividend income
Change in the valuation allowance amount
Inhabitant tax on per capita basis
Others
Effective tax rate after adoption of tax effect accounting

46

30.46%

30.46%

1.31(1.3)(9.54)
1.29
1.58
23.80%

1.01(0.74)(8.89)
0.93
0.74
23.51%

31. Business combinations
Transactions under common control
Additional acquisition of shares in subsidiaries by the Bank
(1) Transaction outline( i ) Names and business lines of the companies subject to the business combination
Names

Business lines

The Fukui Credit Guarantee Service Co., Ltd.

Guarantee services, etc.

The Fukui Capital & Consulting Co., Ltd.

Asset administration, asset operation,and consulting services for investment partnerships

Fukui Card Co., Ltd.

Credit card services

The Fukui Net Co., Ltd.

Computer-related services

The Fukugin Lease Co., Ltd.

Leasing services( i i ) Dates of the business combination
Names

Dates

The Fukui Credit Guarantee Service Co., Ltd.

March 12, 2020

The Fukui Capital & Consulting Co., Ltd.

March 26, 2020

Fukui Card Co., Ltd.

March 17, 2020

The Fukui Net Co., Ltd.

March 23, 2020

The Fukugin Lease Co., Ltd.

March 24, 2020(iii) Legal form of the business combination
 Acquisition of shares from non-controlling interests(iv) Company names after the business combination
 Unchanged(v) Other matters concerning the business combination
 Amid the drastic changes in the environment of the financial industry, it is necessary for the Group to be a provider of integrated
financial services. Based on this judgment, the Bank decided to raise the ownership interest in the above subsidiaries to 100% tofurther build up and enhance its financial offerings.
(2) Outline of implemented accounting treatment
The transaction was accounted for as a transaction with non-controlling interests under common control in accordance with the“Accounting Standard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019) and the “Implementation Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, January
16, 2019).
(3) Acquisition of additional shares in subsidiaries
Acquisition cost and its breakdown

Consideration for acquisition

Cash and due from banks

Total acquisition cost

47

Millions of yen

Thousands of U.S.dollars

1,832

16,838

1,832

16,838

(4) Changes in ownership interest of the Bank( i ) Major reason for change in capital surplus
 Acquisition of additional shares in subsidiaries( i i ) Increase in capital surplus due to transactions with non-controlling interests ¥3,232 million ($29,704 thousand)
32. Asset retirement obligations
Previous fiscal year (From April 1, 2018 to March 31, 2019)
This note is not provided due to its low materiality.
Current fiscal year (From April 1, 2019, to March 31, 2020)
This note is not provided due to its low materiality.
33. Investment and rental property
Previous fiscal year (From April 1, 2018 to March 31, 2019)
This note is not provided due to its low materiality.
Current fiscal year (From April 1, 2019, to March 31, 2020)
This note is not provided due to its low materiality.
34. Segment information(1) Reportable segment information
The reportable segments of the Group are defined as operation segments for which discrete financial information is available andwhose operating results are regularly reviewed by executive corporate officers at management committee meetings to determine
resource allocation and to assess their performance.
The Group focuses on banking operations (including operations that supplement and strengthen banking operations such as credit
guarantee operations related to loans and credit card operations), also engages in lease operations and other operations related to
management of the Group. In order to strengthen these business areas at the core of banking operations, the Bank devises businessplans for and implements business activities in the individual banking operations conducted respectively at each group within head
office or in each area at banking offices, as well as at individual consolidated subsidiaries.
Operations of the Group are segmented into Banking and Leasing based on the operations of the Bank and its consolidated
subsidiaries.
Banking is comprised of banking operations such as deposit operations, lending operations, and domestic and foreign exchange
operations, as well as operations serving to supplement and strengthen banking operations such as credit guarantee operations andcredit card operations. Leasing consists of lease operations for industrial machinery, computers, and office equipment.
(2) Method for calculating income, profits or losses, assets, liabilities, and other items by reportable segment
The accounting policies for the reportable segments are the same as those presented under “Significant Accounting Policies andPractices.”48

(3) Income, profits or losses, assets, liabilities, and other items by reportable segment
Previous fiscal year (From April 1, 2018 to March 31, 2019)(Millions of yen)

Reportable segment
Leasing

Banking
Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

Total

OthersTotal

34,219190
34,4104,191
2,796,748
2,670,035

7,076
132
7,208
220
19,56813,89841,296322
41,6194,411
2,816,316
2,683,933

303
294
597
66
1,837
1,315

41,599617
42,216
4,477
2,818,154
2,685,249

1,123
22,938
1,397
−
757
889

5
492
66
−
30
−

1,128
23,430
1,463
−
788
889

2
1
−
0
−
−

1,131
23,432
1,463
0
788
889

3,874

2

3,876

−

3,876

Adjustment

Consolidated
financialstatement(Millions of yen)

Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

(0)
(617)
(617)
13
(15,461)(14,078)

41,599−41,5994,490
2,802,693
2,671,170

(19)
(75)
(65)
(0)
1
−

1,112
23,356
1,397
−
789
889

−

3,876

Notes:
1. Ordinary income has been stated in place of net sales stated by non-financial firms. Adjustments for differences are stated with respect to the difference between
operating income and operating income stated on the consolidated statement of income.
2. “Others” is a segment other than reportable segment, including computer related services.
3. Adjustment amounts reflect elimination of inter-segment transactions, etc.
4. Segment income is adjusted to ordinary income stated in the consolidated statement of income.

49

Current fiscal year (From April 1, 2019, to March 31, 2020)(Millions of yen)

Reportable segment
Leasing

Banking
Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

Total

OthersTotal

33,756
191
33,9473,051
2,944,952
2,826,095

6,670
1,128
7,799
1,305
20,127
14,65240,426
1,319
41,746
4,356
2,965,079
2,840,748

302
530
833
248
1,731
1,240

40,7291,849
42,5794,605
2,966,811
2,841,989

1,068
23,330
1,477
−
2,436
502

3
480
56
−
18
0

1,071
23,810
1,534
−
2,454
502

3
1
−
0
−
−

1,075
23,812
1,534
0
2,454
502

3,348

0

3,349

10

3,359

Adjustment

Consolidated
financialstatement(Millions of yen)

Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

0(1,849)(1,849)(1,192)(15,791)(14,729)

40,729−40,7293,413
2,951,019
2,827,260

(26)
(63)
(55)
(0)
(0)
−

1,048
23,748
1,478
−
2,454
502

−

3,359

Notes:
1. Ordinary income has been stated in place of net sales stated by non-financial firms. Adjustments for differences are stated with respect to the difference between
operating income and operating income stated on the consolidated statement of income.
2. “Others” is a segment other than reportable segment, including computer related services.
3. Adjustment amounts reflect elimination of inter-segment transactions.
4. Segment income is adjusted to ordinary income stated in the consolidated statement of income.

50Current fiscal year (From April 1, 2019, to March 31, 2020)(Thousands of U.S. dollars)

Reportable segment
Leasing

Banking
Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

Total

OthersTotal

310,172
1,756
311,928
28,036
27,060,118
25,967,987

61,296
10,367
71,663
11,995
184,940
134,640

371,468
12,123
383,591
40,031
27,245,058
26,102,627

2,784
4,871
7,655
2,286
15,911
11,397374,252
16,994391,246
42,31727,260,969
26,114,024

9,816
214,375
13,577−22,385
4,614

31
4,413
520
−
173
1

9,847
218,788
14,097−22,558
4,615

34
12
−
1
−
−

9,881
218,800
14,0971
22,558
4,615

30,770730,77793

30,870(Thousands of U.S. dollars)

Adjustment
Ordinary income
Unaffiliated customers
Intersegment
Total
Segment profits
Segment assets
Segment liabilities
OthersDepreciation
Interest income
Interest expenses
Reversal of allowance for loan losses
Provision of allowance for doubtful accounts
Written-off of loans
Increase in tangible fixed assets andintangible fixed assets

Consolidated
financialstatement

0(16,994)(16,994)(10,955)(145,101)(135,341)
−
(245)
(585)
(514)
(1)
(6)
−

374,252−
374,252
31,362
27,115,868
25,978,683−

30,8709,636
218,215
13,583−22,552
4,615

Notes:
1. Ordinary income has been stated in place of net sales stated by non-financial firms. Adjustments for differences are stated with respect to the difference between
operating income and operating income stated on the consolidated statement of income.
2. “Others” is a segment other than reportable segment, including computer related services.
3. Adjustment amounts reflect elimination of inter-segment transactions.
4. Segment income is adjusted to ordinary income stated in the consolidated statement of income.

51

Related information
Previous fiscal year (From April 1, 2018 to March 31, 2019)(1) Information by service(Millions of yen)

Lendingbusiness
Ordinary income from unaffiliatedcustomers

Securities trading
Leasing businessbusiness

17,877

8,761

7,076

Others

Total

7,883

41,599Notes:
1. The figures represent “Income” in substitution for net sales to be presented by companies in other industries.
2. Lending operations and securities trading operations are constituents of the reportable segment “Banking.” Other constituents of “Banking” are stated combined withordinary income of “Others” in this tabulation under “Others” stated in “Segment Information, (3). Amount of ordinary income, operating result, assets, liabilities, and otheritems.”(2) Geographic information( i ) Ordinary income
More than 90% of the Group’s income on the consolidated statement of operations for the fiscal years ended March 31, 2019 is
attributable to income from unaffiliated customers in Japan; accordingly, income by geographical area is not presented.
(ii) Tangible fixed assets
More than 90% of the Group’s tangible fixed assets on the consolidated balance sheets as of March 31, 2019 are located in Japan;
accordingly, tangible fixed assets by geographical area are not presented.
(3) Information about major customers
This information is not provided since no outside customers accounted for more than 10% of ordinary income of the Group.

Current fiscal year (From April 1, 2019, to March 31, 2020)(1) Information by services(Millions of yen)

Lendingbusiness
Ordinary income from unaffiliatedcustomers

18,360

Securities trading
Leasing businessbusiness
8,029

6,670

Others

Total

7,669

40,729Notes:
1. The figures represent “Income” in substitution for net sales to be presented by companies in other industries.
2. Lending operations and securities trading operations are constituents of the reportable segment “Banking.” Other constituents of “Banking” are stated combined withordinary income of “Others” in this tabulation under “Others” stated in “Segment Information, (3). Amount of ordinary income, operating result, assets, liabilities, and otheritems.”
3. Due to increased materiality, “Commission for new mortgage,” etc., which were classified in “Others” in the fiscal year ended March 31, 2019, have been classified in “Lending
business” from the fiscal year ended March 31, 2020. Following the change, the table was reorganized for the year ended March 31, 2019.

(Thousands of U.S. dollars)

Lendingbusiness
Ordinary income from unaffiliatedcustomers

168,706

Securities trading
Leasing businessbusiness
73,776

61,296

Others70,473

Total
374,251

Notes:
1. The figures represent “Income” in substitution for net sales to be presented by companies in other industries.
2. Lending operations and securities trading operations are constituents of the reportable segment “Banking.” Other constituents of “Banking” are stated combined withordinary income of “Others” in this tabulation under “Others” stated in “Segment Information, (3). Amount of ordinary income, operating result, assets, liabilities, and otheritems.”
3. Due to increased materiality, “Commission for new mortgage,” etc., which were classified in “Others” in the fiscal year ended March 31, 2019, have been classified in “Lending
business” from the fiscal year ended March 31, 2020. Following the change, the table was reorganized for the year ended March 31, 2019.

52

(2) Geographic information( i ) Ordinary income
More than 90% of the Group’s income on the consolidated statements of operations for the fiscal years ended March 31, 2020 is
attributable to income from unaffiliated customers in Japan; accordingly, income by geographical area is not presented.
(ii) Tangible fixed assets
More than 90% of the Group’s tangible fixed assets on the consolidated balance sheets as of March 31, 2020 are located in Japan;
accordingly, tangible fixed assets by geographical area are not presented.
(3) Information about major customers
This information is not provided since no outside customers accounted for more than 10% of ordinary income of the Group.
Information related to losses on impairment of fixed assets by reportable segment
This note is not provided due to its low materiality.
Information related to amortization of goodwill and unamortized balance of goodwill by reportable segment
Previous fiscal year (From April 1, 2018 to March 31, 2019)
None
Current fiscal year (From April 1, 2019, to March 31, 2020)
None
Information related to gain on negative goodwill by reportable segment
Previous fiscal year (From April 1, 2018 to March 31, 2019)
None
Current fiscal year (From April 1, 2019, to March 31, 2020)
None

53

35. Related party transactions(1) Transactions with related parties( i ) Transactions between the Group and related parties
A. Transactions between the Group and the parent company or major corporate shareholders
Previous fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable.
Current fiscal year (From April 1, 2019, to March 31, 2020)
Not applicable.
B. Transactions between the Group and unconsolidated subsidiaries or affiliates
Previous fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable.
Current fiscal year (From April 1, 2019, to March 31, 2020)
Not applicable.
C. Transactions between the Group and companies with the same parent or subsidiaries of the Group’s affiliates
Previous fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable.
Current fiscal year (From April 1, 2019, to March 31, 2020)
Not applicable.
D. Transactions between the Group and directors and/or executive officers, or major individual shareholders
Previous fiscal year (From April 1, 2018 to March 31, 2019)

Type

Name
(company orindividual)

Immediate family
member ofcorporate officer

Kazuyuki Yuasa

Transaction
content

Transaction
amountLending of funds−

Percentage ofvoting rights, etc.,
held (held by the
related party)
DirectReal estateshareholdings−
leasing operations of the related party
0.00

Capital stock orequity(Millions of yen)

Location−

Account

Balance at theend of the period(Millions of yen)

Loans

143

Transaction terms and method of determination of transaction terms, etc.
Identical to terms used with general transaction counterparties.

54

Business line or
occupation

Relationshipwith therelated party−

Current fiscal year (From April 1, 2019, to March 31, 2020)

Type

Name
(company orindividual)

Immediate family
member ofcorporate officer

Kazuyuki Yuasa

Transaction
content

Transaction
amountLending of funds

Percentage ofvoting rights, etc.,
held (held by the
related party)
DirectReal estateshareholdings−
leasing operations of the related party
0.00

Capital stock orequity(Millions of yen)

Location−

Business line or
occupation

Balance at the end of the period
Account−(Millions of yen)(Thousand of U.S.
dollars)

131

1,206

Loans

Transaction terms and method of determination of transaction terms, etc.
Identical to terms used with general transaction counterparties.
(ii) Transactions between the Group’s consolidated subsidiaries and related parties.
Previous fiscal year (From April 1, 2018 to March 31, 2019)
There were no material transactions.
Current fiscal year (From April 1, 2019, to March 31, 2020)
There were no material transactions.
(2) Notes concerning the parent company or important affiliates
Previous fiscal year (From April 1, 2018 to March 31, 2019)
None
Current fiscal year (From April 1, 2019, to March 31, 2020)
None

55

Relationshipwith therelated party−

36. Per-share information
Yen

Net assets per share of common stock
Net income per share of common stock
Diluted net income per share of common stock¥

U.S. dollars

2020

2019

5,218.59
89.83−

5,301.39
132.69132.10

¥

2020

47.95
0.83
−

$

Notes 1: Diluted net income per share of common stock in the current fiscal year is not stated as there are no dilutive shares.
2: The basis for calculation of net assets per share, net income per share, and diluted net income per share is as follows:(1) Net assets per share
Thousands of
U.S. dollars

Millions of yen

2019

2020

Net assets as reported
Less:
Subscription rights to shares
Non-controlling interests
Net assets attributable to common shares at the end of the period¥¥

123,759−−−
123,7592020

131,522
5,026
228
4,798
126,495¥¥

1,137,186−−−
1,137,186$$(Thousands of shares)
2019

2020
The number of shares of common stock outstanding

23,86023,715(2) Net income per share of common stock and diluted net income per share of common stockThousands of
U.S. dollars

Millions of yen

2019

2020

Net income per share of common stock
Net income attributable to owners of parent
Net income not attributable to common shareholders
Net income attributable to owners of parent related to common stock

¥
¥

2,140
−
2,140

¥
¥

2020

3,158
−
3,158

$

19,666−
19,666$(Thousands of shares)
2019

2020
Average number of shares of common stock outstanding

23,80323,824

Thousands of
U.S. dollars

Millions of yen

2019

2020

Diluted net income per share of common stock
Adjustments to net income attributable to owners of parent

¥

56

−

¥

2020

−

$

−

(Thousands of shares)
2019

2020
Effect of dilutive securities:
Subscription rights to shares
Summary of the potential shares that were excluded from calculationof fully-diluted net income per share of common stock because they
have no dilutive effect

−

106

−

106

−

−

Note: Diluted net income per share for the period is not stated given that a net loss was reported in the previous fiscal year.

Notes 3: The Bank’s shares remaining in the employee stock ownership trust and the board benefit trust are recorded as treasury
shares, which are deducted from the number of shares outstanding at the end of the year when calculating the net assets per
share. They are also deducted from the average number of shares outstanding during the year when calculating the net
income per share.
(Thousands of shares)
2019
Employee
Employee
Board benefit
Board benefit
stock ownerstock ownertrust
trust
ship trust
ship trust
2020

Number of treasury shares outstanding at the end of the year,
deducted when calculating net assets per share

138

210

249

−

Average number of treasury shares outstanding during the year,
deducted when calculating net income per share

202

44

306

−

Significant subsequent events
None

57

Independent auditor’s report
To the Board of Directors of The Fukui Bank, Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of The Fukui Bank, Ltd. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group"), which comprisethe consolidated balance sheets as at March 31, 2020 and 2019, the consolidated statements ofoperations, comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2020 and 2019, and its
consolidated financial performance and cash flows for the years then ended in accordance withaccounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Responsibilities of Management and the Audit Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance 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 misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit committee is responsible for overseeing the executive directors’ and directors’ performanceof their duties including the design, implementation and maintenance of the Group’s financial reporting
process.

58

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with the audit committee regarding, among other matters, the planned scope andtiming of the audit, significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.

59

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2020 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Kashiwagi, Katsuhiro
Designated Engagement Partner
Certified Public Accountant
Kutsuwada, Rumiko
Designated Engagement Partner
Certified Public Accountant
Ishibashi, Yuichi
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
August 31, 2020
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

60

Corporate Information

Directors and Executive Officers (as of June 30, 2020)
Director, President andRepresentative Statutory Executive Officer: Masahiro Hayashi

Directors:

Director and Representative Managing Executive Officer:

Toru Yuasa＊

Director and Representative Managing Executive Officer:

Eiichi Hasegawa

Director and Managing Executive Officer:

Osamu Watanabe

Director and Statutory Executive Officer:

Noriyuki Satake

Number of Shares Issued and Outstanding:Paid-in Capital:
Number of Employees:

Masatake Yoshida

Statutory Executive Officer:

Shin Okada

December 19, 1899
24,144 thousand shares
JPY17,965 million
1,403

Service Network (as of May 31, 2020)
Head Office:1-1, Junka 1-chome, Fukui 910-8660, Japan
Telephone: +81-776-24-2030

International Division:

66, Imaichi-cho, Fukui 918-8152, Japan
Telephone: +81-776-50-7515
Facsimile: +81-776-38-0294
SWIFT: FKUIJPJT

Number of Domestic Offices:

Fukui ...................................76
Ishikawa ..............................10
Toyama .................................4
Shiga ....................................2
Tokyo.....................................1
Aichi.......................................1
Kyoto .....................................2
Osaka ....................................1
Other .....................................1
Total....................................98

Correspondent Banking Network:

34 countries
82 cities
147 banks

Consolidated Subsidiaries (as of June 30, 2020)
The Fukugin Lease Co., Ltd.
The Fukui Credit Guarantee Service Co., Ltd.
Fukui Card Co., Ltd.
The Fukui Capital & Consulting Co., Ltd.

The Fukui Net Co., Ltd.
The Fukugin Business Service Co., Ltd.

61

Outside Directors

Statutory Executive Officer:

Corporate Data (as of March 31, 2020)
Date of Establishment:

Hideyuki Maeda
Kazuhiro Uchikami＊
Masaru Nanbo＊
Yuko Mitsuya＊THE FUKUI BANK, LTD.
1-1, Junka 1-chome, Fukui 910-8660, Japan
Telephone: +81-776-24-2030