2023.3

2023.3

Contents

Profile............................................................................................................... 1
Consolidated Financial Statements................................................................. 4
Corporate Information.................................................................................... 64

Profile
Innovative Action
Our Mission as a Regional Bank
Since its establishment in 1899, we at the Fukui Bank, Ltd. (“the Bank”) have worked to develop society and people’s lives in
Fukui Prefecture, believing that our mission is to “support regional industry.”
In 2015, we established our corporate philosophy of striving to cultivate and promote regional industry and achieving
prosperous living conditions for our region’s population. In 2021, with the aim of sustainable development for our region, weformed the F Project, a united financial group, with THE FUKUHO BANK, LTD. (“the Fukuho Bank”) which is also based here in
Fukui Prefecture. We have outlined our long-term vision for where we want to be in ten years’ time—The F Project Vision for2032—which states that we will be there for our employees and customers and their diverse challenges through a model thatbrings about a value loop for our region. There are always threats and opportunities present in our business environment so to
overcome the former, and seize the latter, we must make full use of the strengths we have built up thus far, and be there for thevaried challenges to come. We will also help to create a future where value generated within the region can be funneled back into
the region in a value loop.

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.
The Bank will continue to further strengthen its corporate governance structure and provide a wide range of products andservices. This will allow it to fulfill its role as both an incorporated company and a regional financial institution. Going forward, theBank will continue to strive to be a financial institution that truly deserves your trust.

Sustainability Initiatives
In order to promote initiatives for sustainability including responses to climate change across the entire group, we haveestablished the F Project Basic Policy for Sustainability. Under the leadership of the Sustainability Committee, which consists ofall executive officers, we are working to identify priority issues (“materiality”), formulate financial services and consulting services
that contribute to the realization of a sustainable regional communities, and establish business models that take into account theSDGs and ESG perspectives.

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

2022

2023

Years ended March 31

2021

2023

¥

54,941
54,349
591
1,803
77.14

¥

50,51447,416
3,097
4,440
188.96¥42,03837,7754,262
2,553
107.48¥3,370,055
2,214,487
370
570,478
4,001,760¥

3,319,738
2,138,111
399
748,305
4,191,354¥

2,774,895
1,790,164482
725,306
3,513,315$ 25,238,190
16,584,197
2,771
4,272,289
29,969,001

136,607963,906

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

128,710140,620$

411,458
407,024
4,434
13,506
0.58

Notes:The U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥133.53 per U.S. $1.00 on March 31, 2023.
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.

The Management Environment and Issues to Be
Addressed

To assist individual customers with asset formation, we
have started offering financial instrument brokering through acomprehensive business partnership with Nomura Securities
Co., Ltd. By making full use of our respective strengths—
our strong customer base in Fukui Prefecture and Nomura
Securities’ wealth of expertise in financial instrument dealings
and its extensive product lineup—we will provide high-quality
consulting services to customers in the region.
The extension of the Hokuriku Shinkansen to Tsuruga offers
us big opportunities that only comes along once in a century.
To seize it, and to revitalize the region, we have been continuing
to offer companion support to companies in the region andto take part in redevelopment projects around Fukui Station.
Further to this, we have been selling items via a regional tourism
company, The Fukui Hito Mono Design Co., Ltd., and will work
to develop a full-fledged tourism business.
As sustainability initiatives, we are committed to expanding
the range of support measures we offer and establishingsupport systems based on analysis that takes into account thecharacteristics of the regional economy in Fukui Prefecture,
which is our foundation. This will enable us to provide services
tailored to the needs of our customers in response to societal
demands such as decarbonization.
As mentioned above, we will continue to unite the fullstrength of the Group and collaborate with prefectural andmunicipal governments and other relevant institutions torealize the F Project Vision 2032 and take on a central role inrevitalizing the region.

With trends such as a shrinking population in our regionalbase and the direction of the economy, the cost of living, andfinancial measures both in Japan and abroad, the future of theBank’s management environment is increasingly uncertain. On
the other hand, economic activity is returning to levels seen
before the spread of COVID-19, and in Fukui Prefecture thelocal economy is expected to be boosted by the developmentof transportation networks such as the extension of the
Hokuriku Shinkansen to Tsuruga.
In fiscal 2023, taking into account the changes in thebusiness environment, we will accelerate our efforts in various
initiatives as the second year of part one of our mediumterm management plan. In particular, by further strengthening
customer support, we will contribute to making Fukui a moresustainable, livelier place.
To strengthen this customer support, we will promote worktask reforms through digital technologies, review our sales
channels, strategically shift more personnel over from theusability domain to the consulting domain, and carry out thefollowing initiatives.
In order to support the business growth of our corporate
customers, we will expand and strengthen our consulting
staff and deepen cooperation with our customers. By taking
advantage of the strengths of the Fukui Bank Group, we willpromptly respond to the management issues of as manycustomers as possible.

2

Consolidated Performance Review

Cash FlowsThe consolidated results of the Bank and its ten consolidated
subsidiaries in the current fiscal year developed as follows.
Total income increased by ¥4,427 million from the previous
fiscal year to ¥54,941 million. This was due mainly to an increase
in interest on loans and discounts and in income from service
transactions, etc., as a result of total income being recorded
on a full-year basis with the making of the Fukuho Bank into a
consolidated subsidiary on October 1, 2021. Total expenses
increased by ¥6,933 million from the previous fiscal year to¥54,349 million. This was due mainly to an increase in sales
expenses resulting from total expenses being recorded ona full-year basis with the making of the Fukuho Bank into a
consolidated subsidiary, as well as an increase in losses on salesof government bonds.
As a result, we recorded income before income taxes of¥591 million, a decrease of ¥2,506 million from the previous fiscal
year. Net income attributable to owners of parent decreased by¥2,636 million from the previous fiscal year to ¥1,803 million, asa consequence of the recording of a gain on negative goodwillof ¥4,658 million that came with making the Fukuho Bank aconsolidated subsidiary.
Moreover, as the Fukui Bank Group’s comprehensive financial
services business is in a single business segment, segment
performance data is not provided.

In terms of consolidated net cash flows, ¥258,764 million wasused in operating activities, ¥168,906 million was provided byinvesting activities, and ¥2,533 million was used in financing
activities. As a result, cash and cash equivalents at the endof the year were ¥1,106,819 million, which was a decrease of¥92,391 million compared with the previous year.
Net cash used in operating activities
Net cash used in operating activities was ¥258,764 million.
The main factors behind this were an increase in expenses anda decrease in borrowed money. Net cash used in operating
activities was ¥445,302 million higher than in the previous fiscal
year, as borrowed money moved from a net increase to a net
decrease, and increases in deposits slowed.
Net cash provided by investing activities
Net cash provided by investing activities was ¥168,906 million.
This was due to income from sales and redemptions of
securities exceeding expenses used to purchase securities.
Net cash from investing activities was ¥57,706 million higher
than in the previous fiscal year. Despite the high figure in theprevious fiscal year due to an increase in cash from making the
Fukuho Bank a consolidated subsidiary in the previous year,
this increase was achieved due to increased income from sales
and redemptions of securities, and decreased expenses used
to purchase securities.
Net cash used in financing activities
Net cash used in financing activities was ¥2,533 million,
reflecting the payment of dividends, purchase of treasury
shares, and additional purchase of shares in our subsidiaries.
Net cash used in financing activities was ¥769 million higher
than in the previous fiscal year, due mainly to increased
expenses to purchase additional shares in our subsidiaries.

3

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

Consolidated Balance Sheets
Thousands of
U.S. dollars

Millions of yen
March 31

Assets:Cash and due from banks.......................................................................
Monetary claims bought..........................................................................
Trading account securities (Note 23).......................................................
Money held in trust (Note 25)...................................................................
Securities (Notes 3, 4, 5, 7, 12, 23 and 24)...............................................
Loans and bills discounted (Notes 5, 6, 7, 8 and 23)................................
Foreign exchange (Note 5 and 6).............................................................
Other assets (Notes 5, 7 and 27).............................................................
Tangible fixed assets (Notes 9, 10, 11, 30 and 31)....................................
Intangible fixed assets ............................................................................
Deferred tax assets (Note 29)..................................................................
Customers’ liabilities for acceptances and guarantees (Note 5)...............
Allowance for doubtful receivables (Note 23)...........................................
Total assets..........................................................................................
Liabilities:
Deposits (Notes 7 and 23).......................................................................
Payables under repurchase agreements (Notes 7)..................................
Payables under securities lending transactions (Notes 7 and 23)............
Borrowed money (Notes 7 and 23)..........................................................
Foreign exchange....................................................................................
Other liabilities (Note 27 and 30)..............................................................
Provision for bonuses..............................................................................
Provision for directors’ bonuses..............................................................
Liability for retirement benefits (Note 28)..................................................
Provision for retirement benefits for executive officers.............................
Provision for share-based compensation for executive officers...............
Provision for reimbursement of deposits.................................................
Provision for contingent losses................................................................
Provision for point loyalty programs.........................................................
Provision for demolition costs for fixed assets.........................................
Provision for losses on share transfers....................................................
Deferred tax liabilities (Note 29)...............................................................
Deferred tax liabilities for land revaluation (Note 9)...................................
Acceptances and guarantees (Note 12)...................................................
Total liabilities.......................................................................................
Net assets (Note 19):
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 9).......................................................
Remeasurements of defined benefit plans...............................................
Total accumulated other comprehensive income.................................
Non-controlling interests..................................................................
Total net assets................................................................................
Total liabilities and net assets...........................................................

4

¥

¥
¥

¥
¥

¥

2023

2022

1,108,538
—
370
6,802
570,478
2,214,487
8,858
62,682
31,167
1,199
6,338
9,254
(18,417)4,001,760

1,200,220
941
399
6,802
748,305
2,138,111
9,757
63,30931,462
1,222
1,466
8,747
(19,394)
4,191,354

3,370,055—
6,526
448,318
109
29,111
436
5
5,868
39
198
218
227
68
23
61
137
2,388
9,254
3,873,050
17,965
6,299
93,051(1,793)
115,522
2,257
—
5,423
(83)
7,597
5,590
128,7104,001,760

¥
¥

¥
¥

¥

3,319,738
27,507
9,525
647,870
88
27,542
443
10
6,039
110
192
236
204
67
—
—
—
2,407
8,747
4,050,733
17,965
5,972
92,386(1,156)
115,167
12,446
(4)
5,465
(78)
17,8297,622
140,620
4,191,354

2023

$

$
$

$
$

$

8,301,791—
2,771
50,943
4,272,289
16,584,197
66,343
469,426
233,415
8,980
47,46869,304(137,926)
29,969,001
25,238,190—
48,8793,357,435
823
218,016
3,268
38
43,947
294
1,486
1,634
1,707
515
175
464
1,032
17,88869,30429,005,095
134,543
47,173696,858(13,429)865,145
16,904—
40,617(624)
56,89741,864
963,906
29,969,001

Consolidated Statements of Operations
Thousands of
U.S. dollars

Millions of yen

2022

2023

For the years ended March 31

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

¥

20,898¥2023

18,022$

156,509

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

7,984

7,687

59,795

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

1,371

1,316

10,269Fees and commissions............................................................................

9,079

8,212

67,996

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

9,139

8,730

68,445

Other income (Note 13)............................................................................

6,468

6,545

48,444

Total income........................................................................................

54,94150,514411,458

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

461

187

3,457

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

384

(174)

2,880

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

275

69

2,061

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

3,346

2,802

25,062Other operating expenses.......................................................................

18,77812,033

140,628

General and administrative expenses (Note 14).......................................

27,66025,791

207,150

Other expenses (Note 15)........................................................................

3,443

6,706

25,786

Total expenses.....................................................................................

54,34947,416

407,024

Income before income taxes

591

3,097

4,434

Income taxes—current (Note 29)

392

672

2,943

Income taxes—deferred (Note 29)

(372)

(875)

(2,790)Net income

571

3,300

4,281

Net income attributable to non-controlling interests(1,140)(1,231)

Net income attributable to owners of parent

¥

1,803

¥

4,440

(9,225)$Yen

Net income per share of common stock (Note 35)

¥

77.14

¥

13,506
U.S. dollars

188.96$

0.58

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

Millions of yen

2022

2023

For the years ended March 31

Net income................................................................................................

¥

571

¥

3,300

2023

$

4,281

Other comprehensive income (loss) (Note 18).........................................
Valuation difference on available-for-sale securities.............................
Deferred gains (losses) on hedges.......................................................
Adjustments for retirement benefits.....................................................
Comprehensive income (loss)..................................................................
Comprehensive income (loss) attributable to owners of parent............

(10,052)(10,042)4(13)(9,480)(8,386)(6,472)(6,426)23(69)(3,171)(1,879)(75,281)(75,207)30(104)(71,000)(62,807)

Comprehensive income (loss) attributable to non-controlling interests...........

(1,093)(1,292)(8,193)

5

Consolidated Statements of Changes in Net Assets
Previous fiscal year (From April 1, 2021 to March 31, 2022)(Millions of yen)

Accumulated othercomprehensive income

Shareholders’ equity

Balance at the start of the period

Capitalstock

NonValuation Deferred
Re- Remeasure- Total ac- controlling Total net
Total difference on
gains valuation ments of de- cumulated interests assets
Capital Retained Treasury
other comsharehold- available(losses) on reserve for fined benefit prehensive
surplus earnings sharesers’ equity for-sale
land
pl
a
ns
hedgessecurities
income17,965

5,972

89,132(617) 112,452

18,709

(27)

5,471

1

24,155— 136,607(1,191)(1,191)(1,191)

5

5

5

4,440

4,440

4,440

Changes of items during the period
Dividends from surplus
Reversal of revaluation reserve for land
Net income attributable to owners ofparentPurchase of treasury shares

(654)

(654)

(654)

Disposal of treasury shares

115

115

115

Change in non-controlling interests due toincrease in consolidated subsidiaries

8,915

Change in ownership interest of parent due totransactions with non-controlling interests

(0)

(0)

Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of the period

8,915
(0)

(6,262)

23

(5)

(80)

(6,325)(1,292)(7,618)(80)(6,325)

7,622

4,012

—

(0)

3,254

(538)

2,715

(6,262)23(5)17,965

5,972

92,386(1,156) 115,167

12,446(4)5,465(78) 17,829

7,622 140,620

Current fiscal year (From April 1, 2022 to March 31, 2023)(Millions of yen)

Accumulated othercomprehensive income

Shareholders’ equity
Capitalstock

NonValuation Deferred
Total acTotal net
Re- Remeasure- cumulated
controlling
Total difference on
assetsgains valuation ments of deCapital Retained Treasury
other com- interests
sharehold- available(losses) on reserve for fined benefit prehensive
surplus earnings sharesfor-saleers’ equity
land
plans
securities hedges
income17,9655,972 92,386(1,156) 115,167(1,180)(1,180)(1,180)

Reversal of revaluation reserve for land

42

42

42

Net income attributable to owners ofparent

1,803

1,803

1,803

(683)

(683)

(683)

46

46

46

Balance at the start of the period

12,446

(4)

5,465

(78)

17,8297,622 140,620

Changes of items during the period
Dividends from surplus

Purchase of treasury shares
Disposal of treasury shares(0)Change in non-controlling interests due toincrease in consolidated subsidiaries

50

Change in ownership interest of parent due totransactions with non-controlling interests

326

326

Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of the period—
17,965326

665

6,299 93,051

(636)

326
(10,189)4(42)(4) (10,232) (2,082) (12,315)

354 (10,189)

4

(42)

(4) (10,232) (2,032) (11,910)

—

5,423

(1,793) 115,522

6

50

2,257

(83)

7,597

5,590 128,710

Current fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of U.S. dollars)

Accumulated othercomprehensive income

Shareholders’ equity
Capitalstock
Balance at the start of the period

NonValuation Deferred
Re- Remeasure- Total ac- controlling Total net
Total difference on
gains valuation ments of de- cumulated interests assets
Capital Retained Treasury
other comsharehold- available(losses) on reserve for fined benefit prehensive
surplus earnings sharesers’ equity for-sale
land
pl
a
ns
hedgessecurities
income134,543 44,725 691,877(8,658) 862,487

93,212(30) 40,934(590) 133,526

57,087 1,053,100(8,842)(8,842)(8,842)

Reversal of revaluation reserve for land

317

317

317

Net income attributable to owners ofparent13,506

13,506

13,506(5,115)(5,115)(5,115)

344

344

344

Changes of items during the period
Dividends from surplus

Purchase of treasury shares
Disposal of treasury shares(0)Change in non-controlling interests due toincrease in consolidated subsidiaries

375

Change in ownership interest of parent due totransactions with non-controlling interests

2,448

2,448

Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of the period—
134,543

2,448

4,981

(4,771)

2,448(76,308)

30

(317)

(34) (76,629) (15,598) (92,227)

2,658 (76,308)

30

(317)

(34) (76,629) (15,223) (89,194)

47,173 696,858 (13,429) 865,145

7375

16,904— 40,617(624) 56,897

41,864

963,906

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

Millions of yen

2022

2023

For the years ended March 31

Cash flows from operating activities
Income before income taxes.....................................................................
Depreciation..............................................................................................
Impairment loss.........................................................................................
Gain on negative goodwill..........................................................................
Increase (decrease) in allowance for doubtful receivables.........................
Increase (decrease) in provision for bonuses.............................................
Increase (decrease) in provision for directors’ bonuses.............................
Increase (decrease) in provision for retirement benefits for executive officers....
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 loyalty programs........................
Increase (decrease) in provision for demolition costs for fixed assets........
Increase (decrease) in provision for losses on share transfers...................
Increase (decrease) in provision for losses on guarantees.........................
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 (used in) operating activities................................
Cash flows from investing activities
Purchase of securities...............................................................................
Proceeds from sale of securities................................................................
Proceeds from redemption of securities....................................................
Increase in money held in trust..................................................................
Purchase of tangible ﬁxed assets..............................................................
Purchase of intangible ﬁxed assets............................................................
Proceeds from sales of tangible ﬁxed assets.............................................
Proceeds from sales of intangible fixed assets..........................................
Payments for asset retirement obligations.................................................
Proceeds from purchase of shares of subsidiaries affecting scope of consolidation....
Net cash provided by investing activities................................................
Cash flows from financing activates
Cash dividends paid..................................................................................
Cash dividends paid to non-controlling interests.......................................
Purchase of treasury shares......................................................................
Sale of treasury shares..............................................................................
Repayments on lease liabilities..................................................................
Payments for purchase of shares of subsidiaries not affecting scope of consolidation....
Net cash used in financing activities......................................................
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 20)................................

8

¥

¥

591
1,456
138
—
(976)
(7)
(5)
(70)
(171)
6
(18)
22
—
1
23
61
—
(30,254)
1,121
5,041
(48)
(4,896)
34(76,376)
50,317(199,552)(709)—(27,507)(2,998)
28
898
21
(675)
30,738(991)(3,364)(258,120)(643)(258,764)

¥

3,097
1,538
799
(4,658)
2,066
(4)
2
5
35
25
(40)
(15)
(312)
0
—
—
(70)
(27,026)
82
3,843
(46)
(7,857)
37(22,700)
105,223
149,975254(35)(44,439)851
83(2,037)(10)(968)
27,630(83)
2,767
188,012(1,474)
186,537

2023

$

4,434
10,9071,034—(7,316)
(54)
(42)
(531)
(1,282)
45
(140)
172
—
13
175
464
—
(226,574)
8,399
37,759(363)(36,672)260(571,977)
376,822(1,494,438)(5,311)—(206,002)(22,457)
217
6,730
157
(5,058)230,199(7,423)(25,200)(1,933,053)(4,821)(1,937,874)(132,603)
223,256
79,471—(1,226)
(257)
226
—
(10)
50
168,906(156,411)
133,501
63,783
(300)
(621)
(220)
197
1
(14)
71,283111,200(993,064)
1,671,957
595,160—(9,182)(1,928)
1,693
—
(76)
374
1,264,934(1,180)
(93)
(683)
46
(54)
(568)
(2,533)(1,191)
—
(654)
115
(33)
(0)
(1,764)(8,842)(697)(5,115)345(408)(4,260)(18,977)—(92,391)
1,199,210
1,106,819(9)295,963
903,247
1,199,210—(691,917)
8,980,834
8,288,917¥$

Notes to the Consolidated Financial Statements
Years ended March 31, 2023 and 2022
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, 2023, which was ¥133.53 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, 2023 include the accounts of the Bank and its ten 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: Ten companies
The Fukugin Lease Co., Ltd.
The Fukui Credit Guarantee Service Co., Ltd.
Fukui Card Co., Ltd.
The Fukui Net Co., Ltd.
The Fukui Capital & Consulting Co., Ltd.
THE FUKUHO BANK, LTD.
Fukui Career Management Co., Ltd.
THE FUKUHO CARD CO., LTD.
The Fukui Hito Mono Design Co., Ltd.
Digital for Fukui Co., Ltd.
With the new establishment of The Fukui Hito Mono Design Co., Ltd. and Digital for Fukui Co., Ltd., these companies have been
added to the scope of consolidation for the current consolidated fiscal year.
( 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 revenue, 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: One company
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 Group did not have a significant impact on the consolidated financial statements.

9(3) The Balance sheet date of consolidated subsidiaries( i ) The balance sheet dates of the consolidated subsidiaries are as follows:
March 31: 10 companies(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. However, shares, etc., without market prices are valued at cost using the moving-averagemethod.
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 and its consolidated subsidiaries involved in banking operations are depreciated using thestraight-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 its consolidated subsidiaries, generally 5–11 years.
C. Lease assets
Lease assets included within tangible fixed assets and intangible fixed assets related to finance lease transactions that do nottransfer ownership are depreciated over the lease term using the straight-line method. For lease assets with a guaranteed
residual value stated in their lease agreements, the residual value is set at the guaranteed amount. Otherwise, the residual
value is assumed to be zero.
( v ) Allowance for doubtful receivables
The Bank and its consolidated subsidiaries involved in banking operations record allowance for doubtful receivables inaccordance with internally established criteria for write-offs and allowance.
For claims against borrowers that have initiated special liquidation proceedings or other bankruptcy proceedings (“bankrupt
borrowers”) and against borrowers that are in substantially similar adverse condition (“substantially bankrupt borrowers”), theallowance is provided based on the amount of claims, net of the write-off stated below, deducted by the expected amount ofrecoveries from collateral and guarantees.
For claims against borrowers that have not yet initiated bankruptcy proceedings, but are very likely to become bankrupt in the
future (“potentially bankrupt borrowers”), 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 collateralor execution of guarantees from the claims.
For claims against large potentially bankrupt borrowers with certain outstanding balances or restructured loans or other borrowers
who will require management in the future, the allowance is provided for the difference between the present value of expected future
cash flows discounted at the contractual interest rate prior to the loan restructuring and the carrying amount of the claim, if future cash
flows from collection of the principal and interest can be reasonably estimated (the “cash flow estimation 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 by sales-related departments, based on the criteria for self-assessment of asset quality. The results areverified by examination management departments and monitored by the auditing department, which is independent of the relevant
department.
For claims against bankrupt borrowers or substantially bankrupt borrowers with collateral or guarantees, the write-off amount10

is determined as the unrecoverable portion, the claims due from borrowers deducted by the amounts expected to be collected
through the disposal of collateral or through the execution of guarantees, and is directly deducted from the original balance ofclaims. The write-off amount was ¥8,713 million (U.S. $65,258 thousand) and ¥8,695 million for the fiscal year ended March 31,
2023 and 2022, respectively.
For other consolidated subsidiaries, the allowance for doubtful receivables for general claims is provided based on the historicalloan-loss ratios, and the allowance for doubtful receivables for specific claims, such as possible uncollectible claims, is provided
based on the estimate of unrecoverable amount for each claim.
(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 retirement benefits for executive officers
Provision for retirement benefits for executive officers is provided for payment of retirement benefits to executive officers at
certain consolidated subsidiaries, an allowance is provided based on the amount recognized for the consolidated fiscal year forthe amount to be supplied to executive officers as retirement benefits.
(ix) 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.
(x) 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.
(xi) Provision for contingent losses
Provision for contingent losses is provided to cover payments to credit guarantee corporations under a responsibility-sharing
system with the corporations, in the amount deemed necessary based on estimated possible future payments.
( 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) Provision for demolition costs for fixed assets
Provision for demolition costs for fixed assets is provided to anticipate future expenses related to the demolition of buildings incertain consolidated subsidiaries.
(xiv) Provision for losses on share transfers
Provision for losses on share transfer is recorded in certain consolidated subsidiaries to account for anticipated amounts oflosses arising from the transfer of shares in the future.
(xv) 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. Moreover, for certain consolidated subsidiaries, the straight-line method is used. 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. (For certain consolidated subsidiaries, this is processed as expenses for the full amount in
the fiscal year in which it occurred)
Actuarial differences: Actuarial differences are expensed using the straight-line method, over 5 or 10 years within the employees’
average remaining service period, commencing from the next fiscal year of incurrence.
(xvi) Foreign currency translation
Foreign currency assets and liabilities are translated into yen at the rates prevailing at the consolidated balance sheet date.
(xvii) Accounting standards for recognition of significant revenues and expenses
Revenue from contracts with customers mainly takes the form of deposits and lending operations and foreign exchange
operations. The Bank recognizes revenue to the amount expected to be received in exchange for the promised goods or services
at the point that control of such goods or services are transferred to customers.
The accounting standard for income related to financial lease transactions is calculated using a method that accounts for sales
and sales prices at the time at which the leasing fee is received.

11

(xviii) 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 Specific Committee Practical Guidance No. 25, October 8, 2020) (hereafter, the “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.
(xix) 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.
(xx) Accounting policies and procedures adopted in the absence of requirements in relevant accounting standards, etc., thatspecifically apply to events or transactions that are accounted for
Gains resulting from the cancellation or redemption of investment trusts (excluding exchange-traded funds) are recorded as“Interest and dividends on securities.” Losses, meanwhile, are recorded as “Other operating expenses.”Significant accounting estimates
Items recorded in the consolidated financial statements for the fiscal year under based on accounting estimates that may have asignificant impact on the consolidated financial statements for the next fiscal year are as follows.
Allowance for doubtful receivables(1) Carrying amounts in consolidated financial statements for the current fiscal year
Thousands of
U.S. dollars

Millions of yen

2022

2023

Allowance for doubtful receivables¥

18,417¥2023

19,394$

137,926

The amount of the allowance for doubtful receivables recorded at the Bank and its consolidated subsidiaries involved in banking
operations was ¥17,049 million (U.S. $127,685 thousand) and ¥17,931 million for the fiscal years ended March 31, 2023 and 2022,
respectively.
The following calculation method for the allowance for doubtful receivables has been set forth with respect mainly to the Bankand its consolidated subsidiaries involved in banking operations.
(2) Information on the nature of significant accounting estimates for identified items( i ) Method of calculation
The calculation method of the allowance for doubtful receivables is described “(v) Allowance for doubtful receivables” in “(4)Significant accounting policies.”
For calculating the allowance for doubtful receivables, the borrowers are classified into categories based on self-assessment
criteria: “normal borrowers,” “borrowers requiring caution,” “potentially bankrupt borrowers,” “substantially bankrupt borrowers,”and “bankrupt borrowers.” Allowance for doubtful receivables is provided for each category of claims according to theirassigned credit risk rating.
In the self-assessment, the borrower categories of loans are determined by assessing borrowers’ repayment ability based on
various factors such as the outlook for business continuity and profitability, the appropriateness of the business improvement
plan, the financial support provided by other financial institutions, and the impact of COVID-19, taking into considerationindustry specific factors.
Notably, if business restructuring is initiated by implementing financial support in line with a reasonable and feasible business
improvement plan or similar, the borrower will be classified as borrowers requiring caution and claims will not constituterestructured loans.
( ii ) Key assumptions
Key assumptions are “the business continuity and profitability outlook based on the characteristics of the specific industry
with respect to determining borrower categories, the viability of business improvement plans, and the financial support provided
by other financial institutions,” especially “prospects for future business recovery and business continuity resulting from areasonable and feasible business improvement plan.” These assumptions are assessed and individually set for each borrower.
As of the end of the current fiscal year, to provide for losses resulting from the impacts of COVID-19, in the case of potentiallybankrupt borrowers, or similar, whose unsecured amount of borrowing exceeds a certain amount and for whom we haveparticular concerns about repayment capacity, we have put in place an allowance for doubtful receivables according to a cash

12

flow estimation method. However, considering the government and local authorities’ policies in response to the ongoing
COVID-19 pandemic and the infection situation in Fukui Prefecture, which is the main operating base of the Group, we believethat the future impact on credit risk will be limited.
If the economic environment suddenly worsens, such as due to the continuing rising cost of living resulting from drastic rises
in energy and other prices as well as the weakness of the Japanese yen, credit risks could rise. For loans to those borrowers
who require caution (excluding borrowers who require management) and are deemed to require support, the Bank and its
consolidated subsidiaries involved in banking operations assume that the effects of a worsening of the economic environment
will be significant, and as such calculate a provision for expected losses equal to that borrowed by borrowers who require
management.
( iii ) Impact on consolidated financial statements for the next fiscal year
A change in the assumptions used in the initial estimates due to changes such as those in the economic environment detailed
above could have a significant impact, such as requiring an increase in the allowance for doubtful receivables on consolidated
accounts in the next fiscal year.
Changes in accounting policies due to application of new or revised accounting standards
Implementation Guidance on Accounting Standard for Fair Value Measurement
The Bank and its subsidiaries applied “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021) from the beginning of the current fiscal year, and prospectively apply the new accounting policies
under ASBJ Guidance No. 31 in accordance with the transitional provision set out in paragraph 27-2 of ASBJ Guidance No. 31. This
has no effect on the consolidated financial statements.
Within the notes of “Financial Instruments,” where disclosure is made by level of fair values of financial instruments, information
on investment trusts relevant to the previous consolidated fiscal year is not provided in accordance with paragraph 27-3 of the ASBJ
Guidance No. 31.
Additional information
Transactions of delivering of the Bank’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. The accounting treatment of the trust agreement conforms to theprovisions of “Practical Solution on Transactions of Delivering the Bank’s Own Stock to Employees etc., through Trusts” (ASBJ
PITF No. 30 of March 26, 2015).
( 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 price increases losses on sales of shares in
the Trust account, and there are any outstanding debts remaining in the Trust account at 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 ¥670 million (U.S. $5,018
thousand) and 389 thousand shares, respectively.

13

(iii) Book value of borrowings stated in accordance with the gross method ¥672 million (U.S. $5,038 thousand)(2) Board benefit trust
The Bank has introduced a performance-linked stock compensation plan using a trust (the “Plan”) as a means of compensating
executive officers. The accounting treatment of the trust agreement adopt to the provisions of “Practical Solution on Transactionsof Delivering the Bank’s Own Stock to Employees etc., through Trusts” (ASBJ PITF No. 30 of March 26, 2015).
( 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 be transferred
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 ¥324 million (U.S. $2,431
thousand) and 177 thousand shares, respectively.

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

2022

2023

Investments in capital

¥

338

¥

2023

380

$

2,533

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

Millions of yen

2022

2023

¥

1,799

¥

2023

990

$

13,476

5. Claims based on the Banking Act and the Act on Emergency Measures for the Revitalization of the Financial Functions
The claims consist of bonds (this is limited to those for which redemption of the principal and payment of interest are guaranteed inwhole or in part, and the issuance of bonds is based on private placement of securities (Article 2, Paragraph 3 of the Financial
Instruments and Exchange Act)), loans, foreign exchange, accrued interest, and customers’ liabilities for acceptances and guarantees,
which are included in “Securities” in the consolidated balance sheets, and securities (limited to those under loan for use or lease
contracts), which are included in the notes to the balance sheets.
Thousands of
U.S. dollars

Millions of yen

2022

2023

Bankruptcy reorganization loans and corresponding amounts
Bankruptcy risk loans
Delinquent loans past due three months or more
Restructured loans
Total

¥

¥

5,600
27,53378
2,824
36,037¥¥

5,254
29,463216
2,570
37,5042023$$

41,939206,200
588
21,154
269,881

Bankruptcy reorganization loans and corresponding loans are loans to borrowers who have fallen into bankruptcy and filed a petition
to commence bankruptcy proceedings, reorganization proceedings, or rehabilitation proceedings, or corresponding loans.
Bankruptcy risk loans are those to borrowers who have not yet become bankrupt, but whose economic situation or businessperformance has worsened, where the likelihood of not being able to recover the original amount or interest is high, and which are notbankruptcy reorganization loans or corresponding loans.
Delinquent loans past due three months or more are those where the original amount and interest has not been paid for three months
or more from the day following the contracted repayment date. These cases are not bankruptcy reorganization loans and correspondingloans, and nor are they bankruptcy risk loans.
Restructured loans are lent with the goal of helping borrowers to support or reorganize their businesses. This type of lending might
include a lowering or elimination of interest, a postponement for the repayment of interest or the original amount, an abandonment of
the loan, or other measure deemed beneficial to the borrower. These cases are not bankruptcy reorganization loans and correspondingloans, and nor are they bankruptcy risk loans or delinquent loans past due three months or more.
Amounts for the loans detailed above are the amounts before the allowance for doubtful receivable is deducted.

15

6. Bills discounted
Bills discounted are accounted for as financial transactions in accordance with the JICPA Industry Specific Committee Practical
Guidance No. 24, March 17, 2022. 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

2022

2023

¥

8,918

¥

2023

8,015

$

66,793

7. Assets pledged
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Assets pledged as collateral
Securities¥

Loans and bills discounted

199,470

392,103$

1,493,828

451,547

3,045,985

31

31

238

606,232

843,683

4,540,051

21,156—6,526
447,270

23,34227,507
9,525
647,395

158,440—
48,8793,349,589

Other assets
Total
Corresponding liabilities to assets pledged as collateral
Deposits
Payables under repurchase agreements
Payables under securities lending transactions
Borrowed money¥

406,730

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

2022

2023

Securities
Other assets¥

20
25,308¥—25,299

2023

$

150
189,537

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

Millions of yen

2022

2023

Security deposits
Cash collateral for financial instruments etc.

¥

285
3,467

¥

291
3,385

2023

$

2,137
25,9648. 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

2022

2023

Unutilized loan commitment lines
Loans for which the term of the agreement is one year or less¥603,139
578,499¥598,761
576,1132023$

4,516,887
4,332,357

The balance of loan commitment lines will not necessarily affect the future cash flows of the Bank and its consolidated subsidiaries
because most of these agreements expire without being exercised. Most of these agreements contain clauses allowing the Bank andits 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

9. 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

2022

2023

¥

8,084

¥

8,092

2023

$

60,545

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

Millions of yen

2022

2023

Accumulated depreciation¥

24,645¥24,461

2023$

184,572

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

Millions of yen

2022

2023

Reduction entry

¥

3,408

¥

3,495

2023

$

25,529

12. Acceptances and guarantees
The amounts of guarantee obligations on corporate bonds under “Securities” that were placed through private securities offerings
are as follows.
Thousands of
U.S. dollars

Millions of yen

2022

2023

¥

17

5,235

¥

3,247

2023

$

39,208

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

Millions of yen

2022

2023

Gains on sales of shares

¥

5,764

¥

1,235

2023

$

43,167

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

Millions of yen

2022

2023

Salaries and allowances¥

11,841¥

10,7282023$

88,684

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

Millions of yen

2022

2023

Losses on devaluation of shares
Losses on sales of shares
Provision for losses on share transfers

¥

18

265
549
61

¥

1,097
496
—

2023

$

1,988
4,115
464

16. Impairment loss on fixed assets
2022

2023
Area

Principal use

Fukui
Prefecture

Other
Prefecture

Category

Impairment loss amount(Thousands of(Millions of yen)
U.S. dollars)

Branches, etc.
Land and buildings(20 locations)

34

260

Shared assets(2 locations)

Land

16

123

Idle assets(11 locations)Land, buildings, andothers43

323

Branches(1 location)

Buildings

2

19

Idle assets(2 locations)Land and buildings

41

309

138
100
35
1

1,034
753)
268)
13)

Total
(Land
(Buildings(Others

Area

Category

Impairment
loss amount(Millions of yen)

Branches, etc.
Land and buildings(36 locations)624

Shared assets
Land and buildings(1 location)

102

Principal use

Fukui
Prefecture

Other
Prefecture

Idle assets(5 locations)

Land

3

Branches(4 locations)Land and buildings

68

Idle assets(1 location)

Buildings

0

Total
(Land
(Buildings

799
230)
568)

The book values of the assets listed above have been written down to the recoverable values, and the write-down amounts havebeen recognized as impairment loss in other expenses since the recovery of the invested amounts is not expected due to the decision
to replace certain branches, decreased cash flows caused by the continuing decline in operating income, and lower land prices.
The Bank defines grouping units into the categories used in management accounting, which are based on business premise units
for business offices (in cases where multiple business premises jointly conduct business in a region, the region forms the unit), and into
individual units for idle assets. The head office, the operation center, and dormitories and company housing, etc., which form assetsthat contribute to the future cash flow generation of multiple asset groups, are treated as corporate assets.
Each consolidated subsidiary is grouped by business premise unit or company unit.
Notably, the recoverable values of the subject asset groups are measured on the basis of net disposal prices, which are mainly
calculated according to methods consistent with real estate appraisal standards.

17. Income from contracts with customers
For ordinary revenue from sales, income from contracts with customers is not listed separately from other income. The amount ofincome from contracts with customers is detailed in Note 32 of the Notes to Consolidated Financial Statements related to revenue
recognition: “Breakdown of revenue from contracts with customers.”

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

Millions of yen

2022

2023

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¥

20(17,403)
2,985(14,417)
4,375(10,042)¥2023(12,056)
2,760(9,296)2,870(6,426)$(130,332)
22,357(107,975)
32,768(75,207)

5
—
5
(1)
4

33
—
33
(10)
23

44
—
44
(14)
30

(50)
30
(20)
6
(13)
(10,052)

(104)
4
(99)
30
(69)
(6,472)

(380)
230
(150)
46
(104)
(75,281)Notes to the Consolidated Statements of Changes in Net Assets
19. 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, 2021 to March 31, 2022)(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
329
Total
329

Increase

Number of shares
outstanding at theend of the fiscal year

Decrease————

24,144
24,144

450
450

51
51

728
728

Remarks(Notes 1, 2, 3)

Notes:
1. The number of treasury shares includes shares of the Bank held by the employee stock ownership trust (46 thousand shares at the beginning of the fiscal year and noshares at the end of the fiscal year) and shares held by the board benefit trust (200 thousand shares at the beginning of the fiscal year and 196 thousand shares at the endof the fiscal year).
2. The number of treasury shares increased due to the purchase of 450 thousand treasury shares and by 0 thousand fractional share units.
3. The number of treasury shares decreased, due to the disposal of 46 thousand treasury shares with the end of the employee stock ownership trust and an award of 4
thousand shares associated with the retirement of one director from the board benefit trust.

(2) Subscription rights to shares
Not applicable.

21

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

(Resolution)

Type of share

Aggregate amount ofdividends

Dividends
per share(Yen)(Millions of yen)

Record date

Effective date

May 14, 2021
Board of Directors

Commonshares601

25

March 31, 2021

June 4, 2021

November 12, 2021
Board of Directors

Commonshares590

25September 30, 2021

December 2, 2021

Note: Total dividend amounts pursuant to the resolutions of the Board of Directors of May 14, 2021, include dividend amounts of ¥1 million to the employee stock ownershiptrust and ¥5 million to the board benefit trust. Those of the Board of Directors of November 12, 2021, include dividend amounts of ¥4 million to the board benefit trust.

( ii ) Dividends with a record date during the fiscal year ended March 31, 2022, but whose effective date is after March 31, 2022, are as
follows:(Resolution)

Type of share

Aggregate amount ofdividends(Millions of yen)

May 12, 2022
Board of Directors

Commonshares590

Dividend
resources

Dividends
per share(Yen)

Retainedearnings

25

Record date

Effective date

March 31, 2022

June 3, 2022

Note: Total dividend amounts include ¥4 million paid to shares of the board benefit trust.

Current fiscal year (From April 1, 2022 to March 31, 2023)(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
728
Total
728

Increase

Number of shares
outstanding at theend of the fiscal year

Decrease————

24,144
24,144

396
396

25
25

1,100
1,100

Remarks(Notes 1, 2, 3)

Notes:
1. The number of treasury shares includes shares of the Bank held by the employee stock ownership trust (no shares at the beginning of the fiscal year and 389 thousand
shares at the end of the fiscal year) and shares held by the board benefit trust (196 thousand shares at the beginning of the fiscal year and 177 thousand shares at the endof the fiscal year).
2. The number of treasury shares increased due to the acquisition of 396 thousand shares of the Bank due to the start of the employee stock ownership trust, and the purchaseof 0 thousand fractional share units.
3. The number of treasury shares decreased due to a transfer of 6 thousand shares of the Bank held by the employee stock ownership trust to the Employee Stock Holdings,
an award of 18 thousand shares associated with the retirement of one executive officer based on the board benefit trust, and 0 thousand shares due to requests for sharepurchases to supplement fractional share units.

22

(2) Subscription rights to shares
Not applicable.

(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 13, 2022
Board of Directors

Commonshares

590

4,421

25

March 31, 2022

June 3, 2022

November 11, 2022
Board of Directors

Commonshares

590

4,421

25

September 30, 2022

December 2, 2022

Note: Total dividend amounts include dividends paid to shares of the board benefit trust of ¥4 million (U.S. $37 thousand) and ¥4 million (U.S. $33 thousand) pursuant to theresolutions of the Board of Directors on May 13 and November 11, 2022, respectively).

( ii ) Dividends with a record date during the fiscal year ended March 31, 2023, but whose effective date is after March 31, 2023, areas follows:(Resolution)

May 12, 2023
Board of Directors

Type of share

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

590

4,421

Dividend
resources

Dividends
per share(Yen)

Retainedearnings

25

Record date

Effective date

March 31, 2023

June 2, 2023

Note: Total dividend amounts include ¥9 million (U.S. $73 thousand) paid to shares of the employee stock ownership trust and ¥4 million (U.S. $33 thousand) paid to sharesof the board benefit trust.

23

Notes to the Consolidated Statement of Cash Flows
20. 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, 2023 and 2022.
Thousands of
U.S. dollars

Millions of yen

2022

2023

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

1,108,538—(1,719)1,106,819¥

2023

1,200,220
(213)
(796)
1,199,210$

8,301,791—(12,874)
8,288,917

21. B reakdown of assets and liabilities for companies made into new consolidated subsidiaries through the acquisition ofshares
The following provides a breakdown of the assets and liabilities gained at the commencement of consolidation with making the
Fukuho Bank a new consolidated subsidiary through the acquisition of shares. It also describes the relationship between the acquisition
cost of the Fukuho Bank’s shares and the net expenditure used to acquire them.
Millions of yen

2022

Assets¥Cash and due from banks

485,595
77,131

Securities

73,400Loans and bills discounted

325,246

Liabilities(467,021)

Deposits(439,619)

Non-controlling interests(8,915)Gain on negative goodwill(4,658)Acquisition cost of shares

5,000

Cash and cash equivalents belonging to the new consolidated subsidiary(76,283)

Proceeds from purchase of shares of subsidiaries affecting scope of consolidation(71,283)

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
Predominantly vehicles, equipment, and fixturesb. Intangible fixed assets
Software
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.

24

(2) Operating lease transactions
Total lease payments or receivables under non-cancelable operating lease transactions( i ) As a lessee
This note is omitted, as the total amount is insignificant.
( 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. 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 respond to 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.
Certain consolidated subsidiaries of the Group operate banking and leasing businesses.
( 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.
Financial liabilities held by the Group, principally deposits, are exposed to market risk. Borrowed money is subject to market risk
and liquidity risk of becoming unable to execute payment on due date, such as that the Group cannot use the market undercertain 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.
( 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 capital system.
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 operations25

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.
b. Quantitative information concerning market risk
The variance-covariance method is used to calculate the Group’s market risk (VaR).
Investment held in securities accounts
Holding period: 6 months; confidence level: 99.0%; observation period: 5 years
Policy investments held in securities accounts
Holding period: 1 year; confidence level: 99.0%; observation period: 5 years
Loans and deposits accounts
Holding period: 1 year; confidence level: 99.0%; observation period: 5 years
In the calculation of 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 ¥33,852 million (U.S. $253,522
thousand)—¥35,446 million at the previous fiscal year-end—and loans and deposit accounts totaled ¥26,420 million (U.S.
$197,860 thousand)—¥20,208 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 and checks its
validity.
However, VaR measures the market risk under a certain probability statistically calculated based on historical market
fluctuations, and risks may not be captured 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 three 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
The measurement of fair value of financial instruments is based on certain assumptions and may vary when different assumptions
are employed.

26

(2) Fair values of financial instruments
The carrying amounts on the consolidated balance sheets and fair values of financial instruments as of March 31, 2023 and 2022,
as well as the differences between these values are presented below. Shares and investments in partnerships without market prices
are not included in the following table (See Note 1). Also, as cash and due from banks are repaid in a short time frame, their fair values
are essentially equivalent to their book values, so these are also omitted. Notes for instruments deemed immaterial are also excluded.
Previous fiscal year (March 31, 2022)(Millions of yen)

Carrying amount(1) Trading account securities
Securities for trading purposes(2) Securities
Available-for-sale securities(3) Loans and bills discounted
Allowance for doubtful receivables*1
Total assets(1) Deposits(2) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Fair value

Difference

399

399

—

738,142
2,138,111(19,104)
2,119,006
2,857,548
3,319,738
647,870
3,967,609

738,142—

2,167,844
2,906,385
3,319,778
647,870
3,967,648

48,837
48,837
39
—
39

(917)
(925)
(1,843)

(917)
(925)
(1,843)———*1: A general allowance for doubtful receivables and specific allowance for doubtful receivables 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 parentheses: ( )27Current fiscal year (March 31, 2023)(Millions of yen)

Carrying amount(1) Trading account securities
Securities for trading purposes(2) Securities
Available-for-sale securities(3) Loans and bills discounted
Allowance for doubtful receivables*1
Total assets(1) Deposits(2) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Fair value

Difference

370

370

—

556,8822,214,487(18,121)
2,196,366
2,753,619
3,370,055
448,318
3,818,373

556,882—

2,208,165
2,765,418
3,370,128
448,318
3,818,447

11,798
11,798
73
—
73

53
—
53

53
—
53

—
—
—

*1: A general allowance for doubtful receivables and specific allowance for doubtful receivables 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.

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)

Carrying amount(1) Trading account securities
Securities for trading purposes(2) Securities
Available-for-sale securities(3) Loans and bills discounted
Allowance for doubtful receivables*1
Total assets(1) Deposits(2) Borrowed money
Total liabilities
Derivative transactions*2
Not qualifying for hedge accounting
Qualifying for hedge accounting
Total derivative transactions

Fair value

Difference

2,771

2,771

—

4,170,470
16,584,197(135,711)
16,448,486
20,621,727
25,238,190
3,357,435
28,595,625

4,170,470—

16,536,847
20,710,088
25,238,739
3,357,435
28,596,174

88,361
88,361
549
—
549

400
—
400

400
—
400

—
—
—

*1: A general allowance for doubtful receivables and specific allowance for doubtful receivables 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.

28

Note 1: The amounts for shares and investments in partnerships without market prices on the consolidated balance sheets
are as stated below. The fair value of financial instruments is not included in “Available-for-sale securities.”
Thousands of
U.S. dollars

Millions of yen

2022

2023

Unlisted stocks*1, *2¥

Investments in partnerships*3

2,318
11,277

¥

2023

2,307
7,855

$

17,36084,459*1: Unlisted stocks are excluded from fair value disclosure in line with Paragraph 5 of “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).
*2: During the previous fiscal year, an impairment loss of ¥0 million was recognized against unlisted stocks.
During the current fiscal year, an impairment loss of ¥0 million (U.S. $5 thousand) was recognized against unlisted stocks.
*3: Investments in partnerships are excluded from fair value disclosure in line with Paragraph 24-16 of “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021).

Note 2: Redemption schedule of monetary claims and securities with maturities after March 31, 2023 and 2022
Previous fiscal year (March 31, 2022)(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

1,158,677
64,091—
123,555—
146,811—53,745—
149,012—110,868

Available-for-sale securities withmaturities

64,091

123,555

146,81153,745

149,012110,868

Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
OthersLoans and bills discounted*
Total

6,400
8,723
—
24,912
24,055622,553
1,845,323

200
6,573
—
53,94362,839423,349
546,905

26,0003,151—
40,141
77,519261,726
408,538—
22,551—
8,673
22,520
153,971
207,716

34,50050,627—
17,721
46,164
172,548
321,561

41,90010,555—55,427
2,986
429,822
540,691* 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 ¥33,901 million and those without maturity, amounting to ¥40,237 million.

29

Current fiscal year (March 31, 2023)(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

1,072,391
43,563—
102,432—
126,641—
59,685—87,175—69,201

Available-for-sale securities withmaturities

43,563

102,432

126,641

59,68587,17569,201Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
OthersLoans and bills discounted*
Total

200
1,432
—
19,954
21,976
653,834
1,769,788

—
6,501
—
56,77839,153434,061
536,493

32,5003,551—
37,871
52,718268,890395,531—
41,951—
6,030
11,704
163,650
223,336—
36,127—
3,033
48,014
167,585
254,761

3,000
9,194
—
53,9993,007
448,922
518,123* 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 ¥32,366 million and those without maturity, amounting to ¥45,177 million.

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)Within one
year
Due from banks
Securities
Available-for-sale securtities withmaturities
Government bonds
Local government bonds
Short-term corporate bonds
Coroporate bonds
OthersLoans and bills discounted*
Total

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

8,031,088
326,245—
767,112—
948,410—
446,984—
652,854—518,244326,245

767,112

948,410

446,984

652,854518,244

1,498
10,725—
149,440
164,582
4,896,533
13,253,866—
48,689—425,208
293,215
3,250,665
4,017,777

243,391
26,597—
283,617394,805
2,013,705
2,962,115—
314,173—
45,15887,6531,225,571
1,672,555—
270,555—
22,721
359,578
1,255,042
1,907,896

22,467
68,860—404,396
22,521
3,361,958
3,880,202* 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 U.S. $242,392 thousand and those without maturity, amounting to U.S. $338,330 thousand.

30

Note 3: Repayment schedule of interest-bearing liabilities after March 31, 2023 and 2022
Previous fiscal year (March 31, 2022)(Millions of yen)

Within one
year(1) Deposits*(2) Borrowed money
Total

3,193,606
316,095
3,509,702

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
105,294
262,199
367,494

18,831
69,57588,406

744
—
744

1,262
—
1,262

Over ten
years
0
—
0

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

Current fiscal year (March 31, 2023)(Millions of yen)

Within one
year(1) Deposits*(2) Borrowed money
Total

3,259,924
135,696
3,395,621

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
91,725
242,077
333,802

16,60170,54487,145

903
—
903

900
—
900

Over ten
years
—
—
—

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

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)Within one
year(1) Deposits*(2) Borrowed money
Total

24,413,427
1,016,227
25,429,654

Over three
Over five
Over seven
Over one year
years to five years to seven years to ten
to three years
years
years
years
686,929
1,812,906
2,499,835* The balance of demand deposits is included in “Within one year.”31

124,327
528,302652,629

6,764
—
6,764

6,743
—
6,743

Over ten
years
—
—
—

(3) Breakdown for the fair value of financial instruments
The fair value of financial instruments by level of inputs
Based on the observability and the significance of the inputs used to determine fair value, the fair value of financial instruments ispresented by categorizing the measurements into the following three levels:
Level 1 fair value: fair value measured by quoted prices of identical assets or liabilities in active markets.
Level 2 fair value: fair value measured using observable inputs other than Level 1.
Level 3 fair value: fair value measured using unobservable inputs.
When multiple inputs of different categories are used in measuring fair value, the Bank and its subsidiaries classify the fair value
into the category to which the lowest priority is assigned.
(1) Financial instruments measured at fair value in the consolidated balance sheet
Previous fiscal year (March 31, 2022)(Millions of yen)

Fair value

Level

Level 1

Securities
Trading securities
Government and local government bonds
Corporate bonds
StocksOthersAvailable-for-sale securities
Government and local government bonds
Corporate bonds
StocksOthersTotal assets
Derivative transactions
Currency-related transactions
Total derivative transactions

Level 2

Level 3

Total

369
—
—
—

29
—
—
—

—
—
—
—

399
—
—
—

108,973—
38,07052,321
199,734

116,435
181,744—
70,044368,254

—
3,327
—
608
3,935

225,409
185,071
38,070122,974
571,924—(1,843)—(1,843)—(1,843)—(1,843)*1 Investment trusts, etc., to which transitional measures have been applied as defined in Paragraph 26 of “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, July 4, 2019) are not included in the table above. On the consolidated balance sheet, these investment trusts, etc., totaled ¥166,616
million.
*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 parentheses: ( ).

Current fiscal year (March 31, 2023)(Millions of yen)

Fair value

Level

Level 1

Securities
Trading securities
Government and local government bonds
Corporate bonds
StocksOthersAvailable-for-sale securities
Government and local government bonds
Corporate bonds
StocksOthersTotal assets
Derivative transactions
Currency-related transactions
Total derivative transactions

Level 2

Level 3

Total

333
—
—
—

36
—
—
—

—
—
—
—

370
—
—
—

35,900—38,19733,769108,201

97,151
170,599—
174,870442,657

—
5,347
—
602
5,949

133,051
175,946
38,197
209,241
556,808

—

53

—

53

—

53

—

53

*1 Securities does not include investment trust for which reference prices are used as fair values, in line with Paragraph 24-9 of the Implementation Guidance on AccountingStandard for Fair Value Measurement (ASBJ Guidance No. 31, June 17, 2021). The amount recorded on the consolidated balance sheet for investment trusts where the usage
defined in Paragraph 24-9 is applied totaled ¥444 million.

32

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)

Fair value

Level

Level 1

Securities
Trading securities
Government and local government bonds
Corporate bonds
StocksOthersAvailable-for-sale securities
Government and local government bonds
Corporate bonds
StocksOthersTotal assets

Level 2

Level 3

Total

2,499
—
—
—

272
—
—
—

—
—
—
—

2,771
—
—
—

268,858—
286,062
252,895
810,314727,560
1,277,610—
1,309,598
3,315,040—
40,045—4,510
44,555996,418
1,317,655
286,062
1,567,003
4,169,909

—

400

—

400

—

400

—

400

Derivative transactions
Currency-related transactions
Total derivative transactions*1 Securities does not include investment trust for which reference prices are used as fair values, in line with Paragraph 24-9 of the Implementation Guidance on AccountingStandard for Fair Value Measurement (ASBJ Guidance No. 31, June 17, 2021). The amount recorded on the consolidated balance sheet for investment trusts where the usage
defined in Paragraph 24-9 is applied totaled (U.S. $3,332 thousand).

Reconciliation between the balance for investment trusts where the usage defined in Paragraph 24-9 has been applied at the start andend of the period(Millions of yen)

Gains/losses during
the period and othercomprehensive income

Balanceat the startof the period

7,248

Amountwhere thereference
Net amountprice forfrom purchase,
Recorded
investment
sale, andas other
Recorded astrusts isgains/losses comprehensive redemption
deemed toincome(Note 1)
represent fair
(Note 2)
value
140

8

(6,952)—

Amountwhere thereference
price forinvestment
trusts is notdeemed torepresent
fair value—

Gains/losses fromvaluation for investment
trusts held on the date
Balanceof the consolidated
at the end
balance sheet whereof the periodamounts of gains/losses have beenrecorded for the current
fiscal year444—
(Thousands of U.S. dollars)

Gains/losses during
the period and othercomprehensive income
Balanceat the startof the period

54,280Recordedas other
Recorded asgains/losses comprehensive(Note 1)income(Note 2)
1,053

64

Net amountfrompurchase,sale, andredemption

Amountwhere thereference
price forinvestment
trusts isdeemed torepresent fairvalue

Amountwhere thereference
price forinvestment
trusts is notdeemed torepresent
fair value(52,065)——

Gains/losses fromvaluation for investment
trusts held on the dateof the consolidated
Balancebalance sheet whereat the endof the periodamounts of gains/losses have beenrecorded for the current
fiscal year
3,332

—

Note 1: Included in “Other operating income” in the consolidated statements of operation
Note 2: Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the consolidated statement of comprehensive income*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.

33

(2) Financial instruments not recorded at fair value on the consolidated balance sheet
Previous fiscal year (March 31, 2022)(Millions of yen)

Fair value

Level

Level 1Loans and bills discounted

Level 2

Level 3

Total—

2,167,844

2,167,844——

2,167,844

2,167,844—

3,319,778—

3,319,778—

Total assets
Deposits
Borrowed money
Total liabilities—

647,870—

647,870—

3,967,648—

3,967,648

Current fiscal year (March 31, 2023)(Millions of yen)

Fair value

Level

Level 1Loans and bills discounted

Level 2

Level 3

Total—

2,208,165

2,208,165——

2,208,165

2,208,165—

3,370,128—

3,370,128—

Total assets
Deposits
Borrowed money
Total liabilities—

448,318—

448,318—

3,818,447—

3,818,447

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)

Fair value

Level

Level 1Loans and bills discounted

Level 2—

Total assets

Level 3

Total—

16,536,847

16,536,847——

16,536,847

16,536,847

Deposits—

25,238,739—

25,238,739

Borrowed money—

3,357,435—

3,357,435—

28,596,174—

28,596,174

Total liabilities

34

Note 1: Explanation of evaluation methods used to calculate fair value and inputs related to the calculation of fair value
AssetsSecurities
As market fair values for listed stocks in active markets can be used without adjustment, these are classified as Level 1 fair values.
The fair values of private placement bonds guaranteed by the Bank are calculated based on the value of expected future cash
flows, after deductions for credit risk for the total amount of principal and interest by the issuer’s internal rating and certain time
period has been applied, discounted at the market interest rate. As credit risk is an input with unobservable significant effect (a“significant unobservable input”), these are classified as Level 3 fair values. For investment trusts for which there is no market fairvalue, reference prices are used as fair value provided that there are no significant restrictions that would warrant demands frommarket participants for an amount equivalent to the risk of cancellation or repurchase. These are classified as Level 2 fair values.
Securities not detailed above use fair values based on evaluation amounts provided by third parties. Of those, securities for which
there are fair values for equivalent assets or liabilities in active markets and that are not adjusted are classified as Level 1. Those thatuse significant unobservable inputs are classified as Level 3, while others are classified as Level 2 fair values.
Loans and bills discounted
Loans and bills with fluctuating interest rates can be reflected by market interest rates in the short term, and provided the credit
risk of the borrower does not change dramatically, fair values are essentially equivalent to their book values and so fair value is taken
to be the relevant book value. The fair values of loans and bills with fixed interest rates are calculated based on the value of expected
future cash flows, after deductions for credit risk for the total amount of principal and interest principally by the type of loan, issuer’s
internal rating and certain time period has been applied, discounted at the market interest rate.
Fair values for loans and bills with short contract periods (a year or less) are essentially equivalent to their book values and so fairvalue is taken to be the relevant book value. For loans to bankrupt, substantially bankrupt, and potentially bankrupt borrowers, fairvalue is an amount where the individual allowance for doubtful receivables is deducted from book value. As credit risk is a significant
unobservable input, these are classified as Level 3 fair values.
Liabilities
Deposits
For demand deposits paid immediately after a demand on the consolidated balance sheet date, that amount is taken as the fairvalue. The fair values of time deposits are determined based on the present discounted value of future cash flows by certain time
periods discounted by expected future cash flows. The discount rate uses the interest rate required for newly originated deposits.
These are classified as Level 2 fair values.
Borrowed money
The fair values of borrowed money are determined based on the present value of the total amount of principal and interest bycertain time periods discounted at the interest rate that would be presumably applied for similar borrowings. Fair values for borrowed
money with short contract periods (a year or less) are essentially equivalent to their book values and so fair value is taken to be therelevant book value. These are classified as Level 2 fair values.
Derivative transactions
The fair values of derivative transactions are calculated using present value evaluation method, the Black-Scholes model, or otherevaluation method depending on the type of transaction or time until completion. Major inputs for these used in these evaluation
methods include interest, exchange rates, and volatility. For those where unobservable inputs are not used, or where the influenceof such is deemed insignificant, these are classified as Level 2 fair values. These include exchange contract transactions, currency
option transactions, and currency swap transactions.

35

Note 2: Information on Level 3 fair values of financial instruments recorded at fair value on the consolidated balance sheet(1) Quantitative information related to significant unobservable inputs
Previous fiscal year (March 31, 2022)

Category

Evaluation method

Significant
unobservable inputs

Scope of inputs

Present value
evaluation method

Default probability

0.0–0.5%

Evaluation method

Significant
unobservable inputs

Scope of inputs

Present value
evaluation method

Default probability

0.0–0.4%

Input-weighted
average

Available-for-sale securities
Corporate bonds (private
placement bonds
guaranteed by the Bank)

0.1%

Current fiscal year (March 31, 2023)

Category

Input-weighted
average

Available-for-sale securities
Corporate bonds (private
placement bonds
guaranteed by the Bank)

0.1%(2) Reconciliation between the balances at the start and end of the current fiscal year and gains/losses from valuation recognized asgains/losses during the period
Previous fiscal year (March 31, 2022)(Millions of yen)

Gains/losses during the period
and other comprehensive
Net amounts
incomeBalance at thefor purchase,start of thesales,
Recorded asperiodissuance, andRecorded asothergains/losses comprehensive settlements
income*Transfer toLevel 3

Gains/losses from valuation
for financial assets andfinancial liabilities held on
Balance at thethe date of theTransfer fromend of theconsolidated balance sheet
Level 3
periodwhere amounts of gains/losses have been recorded
for the current fiscal year

Securities
Availablefor-salesecurities
Corporate
bonds

1,665

—

30

1,631

—

—

3,327

—

Others

5,939

—

(37)

(5,294)

—

—

608

—

*Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the consolidated statement of comprehensive income36Current fiscal year (March 31, 2023)(Millions of yen)

Gains/losses during the period
and other comprehensive
Net amounts
incomeBalance at thefor purchase,start of thesales,
Recorded asperiodissuance, andRecorded asothergains/losses*1 comprehensive settlements
income*2

Transfer toLevel 3

Gains/losses from valuation
for financial assets andfinancial liabilities held on
Balance at thethe date of theTransfer fromend of theconsolidated balance sheet
Level 3
periodwhere amounts of gains/losses have been recorded
for the current fiscal year

Securities
Availablefor-salesecurities
Corporate
bonds
Others

3,327

0

31

1,987

—

—

5,347

—

608

—

(6)

—

—

—

602

—

*1 Included in “Other operating income” in the consolidated statements of operation*2 Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the consolidated statement of comprehensive income

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)

Gains/losses during the period
and other comprehensive
Net amounts
incomeBalance at thefor purchase,start of thesales,
Recorded asperiodissuance, andRecorded asother1
gains/losses* comprehensive settlements
income*2

Transfer toLevel 3

Gains/losses from valuation
for financial assets andfinancial liabilities held on
Balance at thethe date of theTransfer fromend of theconsolidated balance sheet
Level 3
periodwhere amounts of gains/losses have been recorded
for the current fiscal year

Securities
Availablefor-salesecurities
Corporatebonds

24,9165238

14,886——40,045—

Others

4,555

—

(45)

—

—

—

4,510

—

*1 Included in “Other operating income” in the consolidated statements of operation*2 Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the consolidated statement of comprehensive income(3) Explanation of the fair value evaluation process
Within the Bank accounting departments set policies and procedures for calculating fair value, and the market departments calculate
fair value in accordance with these policies and procedures. For the fair values so calculated, the accounting departments assess
the evaluation method used, the validity of the inputs, and the appropriateness of the level into which the value has been categorized.
In calculating fair value, the most appropriate evaluation model, which can reflect the nature, special characteristics, and risks ofeach individual asset, are used. Even for instances when a market value provided by a third party is used, the evaluation method andthe validity of the value are assessed through appropriate methods.
(4) Explanation of effect on fair value when significant unobservable inputs are changed
A significant unobservable input that is used to calculate fair value on private placement bonds guaranteed by the Bank is thedefault probability. A significant rise (or drop) in the default probability rate will cause a significant drop (or rise) in the fair value.

3724. Securities
Securities in this section include “trading securities” in addition to “securities” in the consolidated balance sheets.
(1) Securities for trading purposes
Thousands of
U.S. dollars

Millions of yen

2022

2023

Valuation difference reflected on the statements of operations

¥

(8)

¥

2023

(9)

$

(64)

(2) Securities-held-to-maturity
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(3) Available-for-sale securities
Previous fiscal year (March 31, 2022)(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

Carrying amount
32,942142,065
48,484

Acquisition cost
12,537
140,632
47,455Difference
20,404
1,433
1,028

30,59630,464

132

—

—

—

62,984
139,497
70,842
314,506
5,127
268,415
60,48962,711
133,779
70,293286,9495,824
271,722
61,999

273
5,718
549
27,556(696)(3,307)(1,509)70,90571,775

(869)

—

—

—

137,019150,09352,086423,636
738,142

137,947
156,423
53,936433,970
720,919(927)(6,330)(1,850)(10,334)
17,222Total

38

Current fiscal year (March 31, 2023)(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
35,086
99,481
34,195Acquisition cost
18,63099,101
34,137

Difference
16,455379
57

15,624

15,592

32

—

—

—

49,661
52,264
21,461
186,832
3,111
209,516
1,705

49,37250,373
21,266
168,106
3,397
213,208
1,705

289
1,891
194
18,726(286)(3,691)(0)81,526

83,335(1,808)———126,285
157,422
41,668370,050
556,882

128,167
169,304
42,402385,910554,016(1,882)(11,882)(733)(15,860)
2,865

Type

Carrying amount
262,759745,012
256,087

Acquisition cost
139,525
742,170
255,655

Difference
123,234
2,842
432

117,013116,770

243

—

—

—

371,912391,407
160,721
1,399,178
23,303
1,569,061
12,771

369,745377,245
159,263
1,258,940
25,446
1,596,706
12,774

2,167
14,162
1,458
140,238(2,143)(27,645)(3)

610,547

624,094(13,547)———

945,743
1,178,928
312,057
2,771,292
4,170,470

959,838
1,267,916
317,550
2,890,068
4,149,008(14,095)(88,988)(5,493)(118,776)
21,462

Total
Current fiscal year (March 31, 2023)(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

39

(4) Securities-held-to-maturity sold in the current fiscal year
Previous fiscal year (From April 1, 2021 to March 31, 2022)
None
Current fiscal year (From April 1, 2022 to March 31, 2023)
None(5) Available-for-sale securities sold in the current fiscal year
Previous fiscal year (From April 1, 2021 to March 31, 2022)(Millions of yen)Type
Stocks
Bonds
Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
OthersForeign securities
Total

Amount sold
2,391
3,508
3,082
—
—
425
103,70280,881
109,602

Total gain on sales
705
—
—
—
—
—
1,642
498
2,347

Total loss on sales
425
23
21
—
—
1
2,211
1,957
2,659

Total gain on sales
5,604
224
223
—
—
0
653
38
6,482

Total loss on sales
406
5,813
4,889
43
—
880
3,018
2,680
9,238

Current fiscal year (From April 1, 2022 to March 31, 2023)(Millions of yen)Type
Stocks
Bonds
Government bonds
Local government bonds
Short-term corporate bonds
Corporate bonds
OthersForeign securities
Total

Amount sold10,93596,196
72,485
1,155—
22,55561,31439,910168,445

Current fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of U.S. dollars)

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

Amount sold81,892
720,408
542,840
8,651—
168,917459,180
298,890
1,261,480

40

Total gain on sales
41,972
1,678
1,676
—
—
2
4,895
285
48,545

Total loss on sales
3,043
43,53436,618326—
6,590
22,60920,072
69,186

(6) Securities that changed their holding purpose
None(7) Impairment of securities
Securities other than trading securities, (excluding shares and investments in partnerships without market prices) are treated as
impaired when their fair values have declined significantly from the acquisition cost, unless it is deemed that there is a possibility ofa recovery in the fair value. Such securities are recorded at their fair values in the consolidated balance sheets. The difference
between the acquisition cost and the fair values is recognized as an impairment loss.
In the previous fiscal year, impairment loss was recognized in the amount of ¥1,546 million, of which ¥1,097 million related to“Stocks,” ¥184 million to “Corporate bonds,” and ¥264 million to “Others.”
In the current fiscal year, impairment loss was ¥264 million (U.S. $1,984 thousand) all related to “Stocks.”
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.

41

25. Money held in trust(1) Money held in trust for trading purposes
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(2) Money held in trust held to maturity
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(3) Other money held in trust (other than those for trading purposes or held to maturity)
Previous fiscal year (March 31, 2022)(Millions of yen)

Carrying
amountOther money held in trust

6,802

Acquisition
cost

Positivedifference

Difference

6,802

—

Negativedifference——

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

Current fiscal year (March 31, 2023)(Millions of yen)

Carrying
amountOther money held in trust

6,802

Acquisition
cost

Positivedifference

Difference

6,802

—

Negativedifference——

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

Current fiscal year (March 31, 2023)(Thousands of U.S. dollars)

Carrying
amountOther money held in trust

50,943Acquisition
cost

Positivedifference

Difference

50,943—

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

2022

2023

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

42

2,865
2,865
(559)

¥

2023

17,222
17,222(4,935)$

21,462
21,462(4,190)2,306

12,287

17,272

49

158

368

2,257

12,446

16,904

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, 2022)
None
Current fiscal year (March 31, 2023)
None( ii ) Currency-related transactions
Previous fiscal year (March 31, 2022)(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)

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
—

—
—
—

35,954
18,20922—(1,513)595(1,513)595

16,401
16,401

10,188
10,188

(528)
528

384
(243)

—
—
−

—
—
−

—
—
(917)

—
—
(776)

Valuationdifference

Fair value

Note: The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.

43Current fiscal year (March 31, 2023)(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)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

19,437
9,676

151
—

(42)
95

(42)
95

33,32233,322

24,937
24,937(1,467)
1,467

(332)
499

—
—
−

—
—
−

—
—
53

—
—
220

Valuationdifference

Fair value

Note: The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.

Current fiscal year (March 31, 2023)(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)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

145,568
72,466

1,136
—

(318)
718

(318)
718

249,552
249,552

186,755
186,755(10,987)
10,987(2,488)
3,738

—
—
−

—
—
−

—
—
400

—
—
1,650

Valuationdifference

Fair value

Note: The transactions above are stated at their fair values and valuation differences are recorded in the consolidated statement of operations.

44

(iii) Stock-related transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(iv) Bond-related transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(v) Commodity-related transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(vi) Credit derivative transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None

45

(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, 2022)
None
Current fiscal year (March 31, 2023)
None( ii) Currency-related transactions
Previous fiscal year (March 31, 2022)(Millions of yen)Hedge
accountingTypemethodDeferralCurrency swaps
methodTotal

Major hedged item
Foreign-currency
denominated securities−

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

12,239—−Note: Deferred hedge accounting stipulated in the Report No. 25 is applied, in principle.

Current fiscal year (March 31, 2023)
None(iii) Stock-related transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None(iv) Bond-related transactions
Previous fiscal year (March 31, 2022)
None
Current fiscal year (March 31, 2023)
None

46

−

Fair value
(925)
(925)

28. Retirement and pension plans(1) Outline of the retirement benefit plans
The retirement benefits plan of the Bank has a dual structure consisting of a lump-sum benefit program and a defined 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 use a defined benefit corporate pension contract system and a lump-sum
benefit program, and are entered into 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

2022

2023

2023

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
Increase resulting from new consolidations
Other

¥

7,270
386
27
23
(643)
—
—
—

¥

5,373
338
26
(35)
(444)
111
1,899
—

$

54,449
2,897
205
177
(4,816)———Retirement benefit obligations (closing balance)

¥

7,065

¥

7,270

$

52,912(ii) Reconciliation of pension assets
Thousands of
U.S. dollars

Millions of yen

2022

2023

Pension assets (opening balance)
Expected return on plan assets
Actuarial differences
Retirement benefits paid
Contribution from business owners
Increase resulting from new consolidations
Pension assets (closing balance)

¥

¥

47

1,231
36
(27)
(103)
59
—
1,197

¥

¥

—
18
(28)
(58)
30
1,269
1,231

2023

$

$

9,220
277
(203)
(776)
447
—
8,965

(iii) Reconciliation between closing balances of retirement benefit obligations and pension assets, and liabilities and assets for
retirement benefits recorded on the consolidated balance sheet
Thousands of
U.S. dollars

Millions of yen

2022

2023

Funded system retirement benefit obligations
Pension assets

¥

7,065
(1,197)¥

Net amounts of liabilities and assets recorded on the consolidatedbalance sheet

¥

5,868

7,270
(1,231)

$

6,039
—

5,868
—

Non-funded system retirement benefit obligations

2023

¥

6,039

43,947—$

Net defined benefit liability
Net defined benefit asset
Net of liabilities and assets recorded in the consolidated balance sheet

¥

2022

5,868
—
5,868

¥

¥
¥

43,947
Thousands of
U.S. dollars

Millions of yen

2023

52,912(8,965)

2023

6,039
—
6,039

$
$

43,947—43,947(iv) Breakdown of retirement benefit expenses
Thousands of
U.S. dollars

Millions of yen

2022

2023

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

¥

386
27
(36)
8
22
—
407

¥

¥

2023

338
26
(18)
4
—
—
351

¥

$

$

2,897
205
(277)
63
167
—
3,055

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

Millions of yen

2022

2023

Past service cost
Actuarial differences
Other
Total

¥

¥

48

22
(42)
—
(20)

¥

¥

2023

(111)
11
—
(99)

$

$

167
(317)
—
(150)

(vi) 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

2022

2023

Unrecognized past service cost
Unrecognized actuarial differences
Other
Total

2023

¥

89
30
—

¥

111
1
—

$

668
229
—

¥

119

¥

113

$

897

(vii) Matters relating to pension assets(1) The ratio of each major category from total pension assets is as follows.
2022

2023

Bonds
StocksCash and deposits
OthersTotal

28.73%
40.43%
1.95%
28.89%
100%

28.40%
41.09%
2.22%
28.29%
100%(2) Method for setting the expected rate of return on assets
The expected long-term rate of return on pension assets is based on the current and projected allocation of pension assets
and the expected long-term rate of return on the various assets comprising pension assets.

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

Discount rate
Expected rate of return on assets
Expected rate of retirement benefits basis increase

2023

2022

Mainly 0.5%
3.0%
Mainly 4.0%

Mainly 0.5%
3.0%
Mainly 4.3%

Note: S ince the Bank and certain consolidated subsidiaries take expected rates for retirement benefit basis increases as a basis for calculating retirement benefits, these
expected rates are used in place of expected rates for salary increases.

(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 ¥64 million (U.S. $480 thousand) in the current fiscal year.

4929. Income Taxes(1) Deferred tax assets and liabilities
Millions of yen

Deferred tax assets
Allowance for doubtful receivables
Liability for retirement benefits
Devaluation of securities
Impairment loss on land
Depreciation
Losses carried forward for tax purposes (Note 2)
OthersSubtotal
Valuation allowance for net loss carried forward (Note 2)
Valuation allowance for total deductible temporary differences, etc.
Valuation allowance subtotal (Note 1)
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
Revised book values from fair value evaluation
OthersTotal deferred tax liabilities
Net deferred tax assets (liabilities)

¥

7,773
1,715
639
1,123
828
2,112
1,456
15,648(1,768)¥

Thousands of U.S. dollars

2022

2023

¥

2023

8,092
1,839
1,371
1,125
877
1,075
1,451
15,833(1,075)$58,214
12,848
4,787
8,412
6,205
15,81910,908117,193(13,242)(6,543)(7,635)(49,003)(8,311)
7,337(8,710)7,122(62,245)
54,948

(559)
(164)
(393)
(18)
(1,136)
6,200(4,935)
(169)
(524)
(26)
(5,655)
1,466(4,190)(1,231)(2,949)(142)(8,512)
46,436¥$(Note 1) V aluation allowances decreased by ¥399 million (U.S. $2,990 thousand). This was mainly due to decreases in the valuation
allowances for doubtful receivables and devaluation of securities more than offsetting an increase in the valuation allowancefor net loss carried forward.
(Note 2) Net loss carried forward and amounts for each deferred tax asset by deferral period50Previous fiscal year (March 31, 2022)(Millions of yen)

Within one
year

Over one year Over two years
to two years
to three years

Over three
years to four
years

Over four
years to five
years

Over five years

Total

Net loss
carriedforward*

16

307

12

0

62

675

1,075

Valuation
allowance

(16)

(307)

(12)

(0)

(62)

(675)

(1,075)

Deferred tax
assets

—

—

—

—

—

—

—

*Net loss carried forward is multiplied by the statutory effective tax rate.

Current fiscal year (March 31, 2023)(Millions of yen)

Within one
year

Over one year Over two years
to two years
to three years

Over three
years to four
years

Over four
years to five
years

Over five years

Total

Net loss
carriedforward*

307

12

0

62

—

1,728

2,112

Valuation
allowance

(307)

(12)

(0)

(62)

—

(1,384)(1,768)Deferred tax
assets

—

—

—

—

—

344

344

Over one year Over two years
to two years
to three years

Over three
years to four
years

Over four
years to five
years

Over five years*Net loss carried forward is multiplied by the statutory effective tax rate.
(Thousands of U.S. dollars)Within one
year

Total

Net loss
carriedforward*

2,304

92

7

471

—

12,945

15,819Valuation
allowance(2,304)

(92)

(7)

(471)

—

(10,368)(13,242)

Deferred tax
assets

—

—

—

—

—

2,577

2,577

*Net loss carried forward is multiplied by the statutory effective tax rate.

51

(2) Effective income tax rate
2022

2023

Statutory effective tax rate
(Adjustments)
Permanent differences such as entertainment expenses
Permanent differences such as dividend income
Gain on negative goodwill
Expenses related to the acquisition of shares in subsidiaries
Tax rate difference from parent
Consolidated adjustments related to fair value evaluation assets
Consolidated elimination of dividend income
Change in the valuation allowance amountAmount of tax credit due to increase in salary payments, etc.
Inhabitant tax on per capita basis
Reversal of revaluation reserve for land
Difference between tax paid and unpaid corporation tax
Others
Effective tax rate after adoption of tax effect accounting
30. Asset retirement obligations
Previous fiscal year (From April 1, 2021 to March 31, 2022)
This note is not provided due to its low materiality.
Current fiscal year (From April 1, 2022 to March 31, 2023)
This note is not provided due to its low materiality.
31. Investment and rental property
Previous fiscal year (From April 1, 2021 to March 31, 2022)
This note is not provided due to its low materiality.
Current fiscal year (From April 1, 2022 to March 31, 2023)
This note is not provided due to its low materiality.

52

30.46%

30.46%

10.58(22.69)——6.91(4.25)
14.15(37.41)(0.48)
9.06—(1.68)(1.21)
3.44%

1.45(1.64)(45.81)0.65
1.11(7.86)
—
15.72
—
1.56
(1.83)(0.22)(0.15)-6.56%

32. Revenue recognition(1) Breakdown of revenue from contracts with customers
Millions of yen

2022

2023

Fees and commissions
Deposits and lending operations
Foreign exchange operations
Securities-related operations
Agency operations
Insurance sales operations
Other operations

¥

7,595
2,297
2,174
671
228
490
1,733

Ordinary revenue from contracts with customers
Ordinary revenue other than that detailed above
Ordinary revenue from external customers¥

47,301
54,897

2023

6,824
2,044
2,176
685
219
312
1,385

$

6,824

7,595

¥

Thousands of U.S. dollars¥

38,96645,79056,883
17,202
16,288
5,030
1,710
3,671
12,982
56,883$354,238
411,121(2) Information that founds the basis for understanding of revenue from contracts with customers
This information can be found in Accounting Policies: (xvii) Accounting standards for recognition of significant revenues and expenses.
As such, it is omitted here.
(3) Information for the understanding of income amounts for the current fiscal year and future fiscal years
This information is omitted due to its low materiality.

33. Segment information
Reportable segment information
As the Fukui Bank Group’s comprehensive financial services business is in a single business segment, segment information is notprovided.

53

Related information
Previous fiscal year (From April 1, 2021 to March 31, 2022)(1) Information by service(Millions of yen)

Lendingbusiness
Ordinary revenue from externalcustomers

Securities trading
Leasing businessbusiness

19,187

10,381

7,353

Others8,868

Total
45,790Note: The figures represent “revenue” in substitution for net sales to be presented by companies in other industries.

(2) Geographic information( i ) Ordinary revenue
More than 90% of the Group’s revenue on the consolidated statement of operations for the fiscal years ended March 31, 2022 is
attributable to revenue from external customers in Japan; accordingly, revenue 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, 2022 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 revenue of the Group.

Current fiscal year (From April 1, 2022 to March 31, 2023)(1) Information by services(Millions of yen)

Lendingbusiness
Ordinary revenue from externalcustomers

22,160

Securities trading
Leasing businessbusiness
14,729

8,047

Others9,959

Total
54,897

Note: The figures represent “revenue” in substitution for net sales to be presented by companies in other industries.

(Thousands of U.S. dollars)

Lendingbusiness
Ordinary revenue from externalcustomers

165,961

Securities trading
Leasing businessbusiness
110,30760,264

Note: The figures represent “revenue” in substitution for net sales to be presented by companies in other industries.

54

Others74,589

Total
411,121

(2) Geographic information( i ) Ordinary revenue
More than 90% of the Group’s revenue on the consolidated statements of operations for the fiscal years ended March 31, 2023 is
attributable to revenue from external customers in Japan; accordingly, revenue 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, 2023 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 revenue of the Group.
Information related to losses on impairment of fixed assets by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
As the Group only has a single reportable segment—Comprehensive Financial Services—this is omitted.
Current fiscal year (From April 1, 2022 to March 31, 2023)
As the Group only has a single reportable segment—Comprehensive Financial Services—this is omitted.
Information related to amortization of goodwill and unamortized balance of goodwill by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
None
Current fiscal year (From April 1, 2022 to March 31, 2023)
None
Information related to gain on negative goodwill by reportable segment
Previous fiscal year (From April 1, 2021 to March 31, 2022)
As the Group only has a single reportable segment—Comprehensive Financial Services—this is omitted.
Current fiscal year (From April 1, 2022 to March 31, 2023)
None

34. 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, 2021 to March 31, 2022)
Not applicable.
Current fiscal year (From April 1, 2022 to March 31, 2023)
Not applicable.
B. Transactions between the Group and unconsolidated subsidiaries or affiliates
Previous fiscal year (From April 1, 2021 to March 31, 2022)
Not applicable.
Current fiscal year (From April 1, 2022 to March 31, 2023)
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, 2021 to March 31, 2022)
Not applicable.
Current fiscal year (From April 1, 2022 to March 31, 2023)
Not applicable.

55

D. Transactions between the Group and directors and/or executive officers, or major individual shareholders
Previous fiscal year (From April 1, 2021 to March 31, 2022)

Type

Name
(company orindividual)

Location

Immediate family
member ofcorporate officer

Kazuyuki
Yuasa—

Company in whichmore than half of
those with voting Kaneichi Co.,
rights are immediate Ltd. (Note 1)
family members ofcorporate officers
Immediate family
member ofcorporate officer

Transaction
content

Capital stock or equity(Millions of yen)

Percentage ofBusiness line
voting rights, etc.,orheld (held by theoccupation
related party)

Relationshipwith therelated party—

Real estateleasing
operations——

Sabae, Fukui

80

Real estatetransactions

Directshareholdings
by the related
party 0.00

Bankingtransactions——

Corporate
officer——ShinzoNakanishi

Transaction amount(Millions of yen)Account

Balance at the end of the period(Millions of yen)

Lending of funds

—

Loans

109

Lending of funds

100

Loans

100

Debt guarantee(Note 2)

100

—

—

Transaction terms and method of determination of transaction terms, etc.
Identical to terms used with general transaction counterparties.
Note 1: 100% of voting rights in Kaneichi Co., Ltd. are held by an immediate family member of an executive officer of the Bank.
Note 2: Guarantee for debts owed to the Bank by Kaneichi Co., Ltd.

56

Current fiscal year (From April 1, 2022 to March 31, 2023)

Type

Name
(company orindividual)

Company in whichmore than half of
those with voting Kaneichi Co.,
rights are immediate Ltd. (Note 1)
family members ofcorporate officers
Immediate family
member ofcorporate officer

Transaction
content

ShinzoNakanishi

Capital stock or equity
Location(Millions of yen)(Thousand of
U.S. dollars)

Percentage ofBusiness line
voting rights, etc.,orheld (held by theoccupation
related party)

Relationshipwith therelated party

Directshareholdings
by the related
party 0.00

Bankingtransactions——

Sabae, Fukui

80

599

Real estatetransactions

—

—

—

Corporate
officer

Transaction amount

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

Account

Lending of funds

100

749

Debt guarantee(Note 2)

100

749

(Millions of yen)(Thousand of U.S.
dollars)

Loans

100

749

—

—

—

Transaction terms and method of determination of transaction terms, etc.
Identical to terms used with general transaction counterparties.
Note 1: 100% of voting rights in Kaneichi Co., Ltd. are held by an immediate family member of an executive officer of the Bank.
Note 2: Guarantee for debts owed to the Bank by Kaneichi Co., Ltd.
(ii) Transactions between the Group’s consolidated subsidiaries and related parties.
Previous fiscal year (From April 1, 2021 to March 31, 2022)
There were no material transactions.
Current fiscal year (From April 1, 2022 to March 31, 2023)
There were no material transactions.
(2) Notes concerning the parent company or important affiliates
Previous fiscal year (From April 1, 2021 to March 31, 2022)
None
Current fiscal year (From April 1, 2022 to March 31, 2023)
None

57

35. Per-share information
Yen

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

U.S. dollars

2023

2022

5,342.70
77.14

5,679.84
188.96

¥

2023

40.01
0.58

$

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 and net income per share is as follows.
(1) Net assets per share
Thousands of
U.S. dollars

Millions of yen

2022

2023

Net assets as reported
Less
Thereof, non-controlling interests
Net assets attributable to common shares at the end of the period¥¥

128,710
5,590
5,590
123,120¥¥

140,6207,622
7,622
132,9972023

963,906
41,864
41,864922,042$$(Thousands of shares)

2022

2023
The number of shares of common stock outstanding

23,41523,044(2) Net income per share of common stockThousands of
U.S. dollars

Millions of yen

2022

2023

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

¥

1,803
—
1,803

¥

¥
¥

4,440
—
4,440

2023

$
$

13,506—
13,506(Thousands of shares)

2022

2023
Average number of shares of common stock outstanding

23,49823,376

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)

2023
2022
Employee
Employee
Board benefit
Board benefit
stock ownerstock ownertrust
trust
ship trust
ship trust
Number of treasury shares outstanding at the end of the year,
deducted when calculating net assets per share

389

177

—

196

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

47

186

8

198

Subsequent events
None

58

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. (“theBank”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprise theconsolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements of operations,comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and 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, 2023 and 2022, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of classification of borrowers in estimating the allowance for doubtfulreceivables for loans
The key audit matter

How the matter was addressed in our audit

The consolidated financial statements of theGroup reported loans and bills discounted of¥2,214,487million (55% of consolidated total
assets) and allowance for doubtfulreceivables of ¥18,417 million in the
consolidated balance sheet. Of this, the total
amount of allowance for doubtful receivables
reported by the Bank, the consolidated parent

The primary procedures we performed to assess
whether classification of borrowers in estimating theallowance for doubtful receivable for loans of theBank, the consolidated parent company, and the
Fukuho Bank, a consolidated subsidiary, wasappropriate, included the following:

59

company, and the Fukuho Bank, aconsolidated subsidiary, was ¥17,049
million.
As described in Note 2, “Significant
accounting policies and practices (4)Significant accounting policies (ⅴ)
Allowance for doubtful receivables” and“Significant accounting estimates Allowance for doubtful receivables" to theconsolidated financial statements, the Bankand the Fukuho Bank classify borrowers into
five categories based on its internal selfassessment criteria: “normal borrowers,”“borrowers requiring caution,” “potentiallybankrupt borrowers,” “substantially bankrupt
borrowers,” and “bankrupt borrowers.”
Allowance for doubtful receivables isprovided for each category of claims
according to their assigned credit risk rating
determined in accordance with the write-off
and provisions policy.
In the self-assessment, classification of aborrower into a category is determined byassessing the borrowers’ repayment ability
based on various factors such as the outlook
for business continuity and profitability, theappropriateness of the business improvement
plan, the financial support provided by otherfinancial institutions, and the impact of
COVID-19, taking into considerationindustry specific factors. In particular, whenassessing the credit risk of borrowers, taking
into consideration the prospects for futurebusiness recovery and business continuity
resulting from a reasonable and feasible
business improvement plan, the assessment
involves management's subjective judgment
and may have a significant impact on theallowance for doubtful receivables.
We, therefore, determined that ourassessment of the appropriateness ofclassification of borrowers in estimating theallowance for doubtful receivables for loans
was the most significant matters in our auditof the consolidated financial statements forthe current fiscal year, and accordingly, a key
audit matter.

(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Bank’s internal controls relevant toclassification of borrowers in the self-assessment,
which is the basis for calculating the allowance for
doubtful receivables. In this assessment, we focused
our testing on the following:

controls to ensure that the internal self-assessment
criteria and the write-off and provisions policy
were established in compliance with theapplicable accounting standards;



controls to ensure the reliability of the financial
information of borrowers that were entered into
the self-assessment rating management systems;and

controls over classification of borrowers based on
the internal self-assessment criteria reflecting
qualitative factors.

(2) Assessment of the appropriateness of theborrower category of loans
In order to assess whether borrowers wereappropriately classified based on the self-assessment
criteria, we selected borrowers for which business
improvement plans were designed based on certain
criteria. In addition, we:inspected the documents reviewed by theexamination management departments andinquired of the responsible personnel to assess thereasonableness and feasibility of the business
improvement plan;for borrowers for which business improvement
plans were designed in and before the previous
fiscal year, evaluated the precision of theirestimates based on the achievement of thebusiness improvement plans by comparing theplanned sales and profits of the business
improvement plans in past years with actual
results; andexamined, comprehensively, the feasibility of thebusiness improvement plan based on nonfinancial information obtained from the salesrelated departments, such as the orders received
and sales volumes of the borrower, the financial
support provided by other financial institutions,and the impact of COVID-19, taking into accountthe business environment surrounding theborrower.

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Other Information
The other information comprises the information included in the Annual Report, but does not include
the consolidated financial statements and our auditor’s reports thereon. Management is responsible forthe preparation and presentation of the other information. The audit committee is responsible foroverseeing the executive officers’ and directorts’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
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, 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 officers’and directorts’ performance of
their duties with regard to the design, implementation and maintenance of the Group’s financial
reporting process.
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.

61

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.
From the matters communicated with the audit committee, we determine those matters that were ofmost significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2023 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.

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Akimune, Katsuhiko
Designated Engagement Partner
Certified Public Accountant
Ishibashi, Yuichi
Designated Engagement Partner
Certified Public Accountant
Nomura, Minoru
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Hokuriku Office, Japan
August 31, 2023
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 the
Bank and KPMG AZSA LLC.

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Corporate Information

Directors and Executive Officers (as of June 30, 2023)
Chairperson and
Representative Statutory Executive Officer:

Masahiro Hayashi

Director, President andRepresentative Statutory Executive Officer:

Eiichi Hasegawa

Director and Managing Executive Officer:

Shin Okada

Director and Managing Executive Officer:

Keisuke Yoshida

Directors:

Masatake Yoshida
Kazuhiro Uchikami＊
Masaru Nanbo＊
Hiromi Tagawa＊
Keiko Umeda＊＊

Statutory Executive Officers:

Corporate Data (as of March 31, 2023)
Date of Establishment:
Number of Shares Issued and Outstanding:Paid-in Capital:
Number of Employees:

December 19, 1899
24,144 thousand shares
JPY17,965 million
1,276

Service Network (as of May 31, 2023)
Head Office:1-1, Junka 1-chome, Fukui 910-8660, Japan
Telephone: +81-776-24-2030

International Division:

1-1, Junka 1-chome, Fukui 910-8660, Japan
Telephone: +81-776-26-9841
Facsimile: +81-776-26-7605
SWIFT: FKUIJPJT

Number of Domestic Offices:

Fukui .................................. 78
Ishikawa ............................. 10
Toyama ................................ 4
Shiga .................................... 2
Tokyo .................................... 1
Aichi ...................................... 1
Kyoto .................................... 1
Osaka ................................... 1
Total ................................... 98

Correspondent Banking Network:

29 countries
68 cities
12 banks

Consolidated Subsidiaries (as of June 30, 2023)
The Fukugin Lease Co., Ltd.
The Fukui Credit Guarantee Service Co., Ltd.
Fukui Card Co., Ltd.
The Fukui Net Co., Ltd.
The Fukui Capital & Consulting Co., Ltd.

Fukui Career Management Co., Ltd.
The Fukui Hito Mono Design Co., Ltd.
Digital for Fukui Co., Ltd.
THE FUKUHO BANK, LTD.
THE FUKUHO CARD CO., LTD.

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Outside Directors

Yoshihito Kobayashi
Kenichi Araki
Yoshito Sawada
Shigeki Maeba
Masatsugu Fujihara
Yukinori TaniguchiTHE FUKUI BANK, LTD.
1-1, Junka 1-chome, Fukui 910-8660, Japan
Telephone: +81-776-24-2030