The Hyakujushi Bank, Ltd.

Corporate Vision
Prosper together with customers and communities
Create a vigorous corporate culture
Ensure sound business management and enhance corporate value

The Hyakujushi Bank, Ltd., whose name indicates 114th in Japanese, was establishedin 1878 as Japan’s 114th national bank in the city of Takamatsu, the capital of Kagawa
Prefecture, centered on Shikoku, one of the major islands of Japan.
Based on our Corporate Vision, The Hyakujushi Bank, Ltd. continues to play a central
role as a leading financial institution in its area and surrounding regions, and aims to be
the region’s best partner for each customer, so as to contribute to creating a prosperous
future for the local economies.

Profile (Non-consolidated)(As of March 31, 2015)

Head Office:5-1, Kamei-cho, Takamatsu, Kagawa

Established:

November 1, 1878

Total assets:¥4,594.3 billion

Deposits and negotiable certificates of deposit:¥3,982.6 billion

Loans and bills discounted:¥2,702.1 billion

Paid-in capital:¥37.3 billion

Total shares issued:

310,076 thousand shares

Capital ratio:

9.85%

Employees:

2,260

Offices:124 (Head office, 102 branches, 21 sub-branches)

Non-branch ATMs and CDs:

223 machines in 177 locations

Contents
Consolidated Financial Highlights.............................................. 1
Message from the President........................................................ 2
Medium-Term Management Plan............................................... 4
Corporate Governance................................................................ 5
Risk Management....................................................................... 6
Compliance System..................................................................... 11
Board of Directors and Audit & Supervisory Board Members..... 14
Consolidated Balance Sheets....................................................... 15
Consolidated Statements of Income/Consolidated Statements Comprehensive Income..................... 17
Consolidated Statements of Changes in Net Assets...................... 18
Consolidated Statements of Cash Flows...................................... 20
Notes to Consolidated Financial Statements................................ 21
Report of Independent Auditors................................................. 41
Non-Consolidated Balance Sheets............................................... 42
Non-Consolidated Statements of Income.................................... 44
Non-Consolidated Statements of Changes in Net Assets............. 45
Organization/Directory.............................................................. 48

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights

Thousands of
U.S. dollars

Millions of yen
2015

For the years ended or as of March 31

FOR THE YEAR:
Total income.......................................................................................
Total expenses.....................................................................................
Income before income taxes and minority interests..............................
Income taxes - current.........................................................................
Income taxes - deferred.......................................................................
Minority interests................................................................................
Net income.........................................................................................

¥   77,671
60,33917,332
3,562
3,841
970
8,957

AT YEAR-END:
Loans and bills discounted...................................................................
Securities and trading account securities..............................................
Foreign exchange assets.......................................................................
Other assets.........................................................................................
Total assets..........................................................................................

2014

2015

80,59258,92821,663
5,769
3,700
963
11,230$   646,349
502,118
144,230
29,64431,963
8,079
74,543

2,696,444
1,454,691
13,507450,4614,615,105

2,614,215
1,335,649
17,446525,899
4,493,211

22,438,586
12,105,278
112,4033,748,537
38,404,806

Deposits and negotiable certificates of deposit.....................................
Foreign exchange liabilities..................................................................
Other liabilities....................................................................................
Total liabilities.....................................................................................

3,971,363
354
347,911
4,319,629

3,953,427
140
282,729
4,236,360

33,047,876
2,948
2,895,163
35,945,988

Common stock....................................................................................
Capital surplus.....................................................................................
Retained earnings................................................................................
Treasury stock.....................................................................................
Total stockholders’ equity...................................................................
Net unrealized gains on securities net of taxes......................................
Net deferred losses on hedging instruments, net of taxes......................
Revaluation reserve for land.................................................................
Remeasurements of defined benefit plans.............................................
Total accumulated other comprehensive income..................................
Share warrants.....................................................................................
Minority interests................................................................................
Total net assets....................................................................................
Total liabilities and net assets...............................................................

37,322
24,920143,886(4,730)201,398
68,952(3,010)8,722
1,631
76,297
196
17,583
295,476¥4,615,105

37,322
24,920138,689(4,181)
196,751
37,722(24)
8,044(2,719)43,022
156
16,920256,851¥4,493,211

310,582
207,376
1,197,354(39,363)
1,675,949
573,795(25,049)
72,587
13,577
634,910
1,633
146,323
2,458,817$38,404,806¥

Notes: 1. Yen figures have been rounded, omitting numbers below the million mark, in accordance with the Japanese Commercial Code and the generally accepted
accounting practice in Japan.
2. U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥120.17 to US$1.00 on March 31, 2015.

Attention regarding forward-looking statements
The reader is advised that this report contains forward-looking statements, which are not statements of historical fact but constituteestimates or projections based on facts known to the Bank’s management as of the time of writing. Actual results may therefore differ
substantially from such statements.

1

Message from the President

I would like to extend our sincere appreciation for your continued support and patronage of the Hyakujushi
Bank, Ltd.
Since our foundation in 1878, we have continued in step with the development of the local communities
over more than 135 years.
As a leading regional bank, we will constantly strive to commit to fulfilling our mission to serve
customers, as well as contributing to local society by proactively providing the best products and services
for many years to come.
Under the most recent Medium-Term Management Plan for the three years from fiscal 2014 to 2016,
which was announced in February 2014, we are on track to achieving all the financial targets of the plan.
Following the announcement in August 2015 that we have revised upwardly our consolidated net income
fiscal 2015 forecast by 2.9 billion to 11.9 billion, we will increase annual dividends fiscal 2015 by ¥1.00 to¥8.00 per share in recognition of our shareholders’ support over the years.
All the officers and employees of our Bank group will make the utmost effort to practice the customer
centric principle and to exceed expectations of all our stakeholders.
We ask for your continued understanding and support in our endeavors.

Tomoki Watanabe, President2Corporate Vision• Prosper together with customers and communities• Create a vigorous corporate culture• Ensure sound business management and enhance corporate value
These are the foundation for management decisions, which serves as theguidelines for business activities of all the officers and employees.
Under the corporate vision, the Bank is determined to continue toprovide valuable services to its shareholders, customers, local communities,
employees and other stakeholders.

Prosper together
with customers
and communities

Ensure soundbusiness management and enhance
corporate value

Corporate
VisionCreate a vigorous
corporate culture

Our Medium-Term Management Plan: The “Best Partners Plan”
We are working on several measures under the “Best Partners Plan,” currently in its second year. Based on an approach of
becoming “a financial services group that contributes to the future of the region and its customers,” we will steadily take steps tocontribute to the development of the local economies. All employees will work to provide high-quality service as the customer’s best
partner so as to enhance added-value for our customers and maximize our profitability.

Customer-Centric Principle
In order to actively provide value that deeply satisfies customers, and continue to be a bank that the region’s customers can truly rely
on for advice, we will put our customers in the center and take action in position of our customers. All employees will build stronger
relationships of trust by working together to exceed the expectations of our customers and moving their hearts and minds.

Initiatives for Revitalization of the Local Economies
We believe that our mission is to actively work to revitalize the local economy by sufficiently demonstrating the basic roles of afinancial institution, such as providing financial intermediary functions that facilitate the supply of funds and consulting capabilities
that provide optimal financial services for customer needs.
We actively participate in regional revitalization and will work to create a dynamic, bustling region through the development ofindustry, the creation of new industries, and the promotion of tourism. And we contribute to the sustainable development of thelocal economies and the customer’s future.

Strengthening Internal Controls
To build and sustain trust with shareholders, customers, and the local community as a whole, we believe that it is essential for all
the officers and employees, to maintain high ethical standards in the performance of their duties. In other words, we position the
rigorous observance of legal and ethical compliance as a high-priority management issue. We conduct continuous training to ensurethat all of our officers and employees increase their awareness of the importance of legal and ethical compliance, and the entire Bankis working to build an effective framework of mutual checks as part of our overall program of strengthening internal controls.

3Medium-Term Management Plan

Medium-Term Management PlanBest Partners Plan
Plan Period: April 1, 2014 – March 31, 2017 (3 years)
In our Medium-Term Management Plan “Best Partners Plan” (plan period: April 1, 2014 – March 31, 2017 (3years), we are working on the following two fundamental strategies – “rigorously promote retail business opportunities” and “enhance investment capabilities” with the aim of achieving our ideal of becoming a “financial group thatcan contribute to the future for our region and customers.”
Over the medium to long-term future, we will remain a locally based financial institution providing reliable support
to our customers. To that end, we are actively contributing to the revitalization of the regional economies and providing value-added services.

Basic Policy in DetailA financial group that can contribute to
the future of our region and customers

Our Vision:

I. Rigorously promote retail business opportunities

II. Enhance investment capabilities

Partnering with each customer

Managing portfolio withdiversified investments

Corporate banking strategy

Personal banking strategy•Enhancing consulting sales•Defining a regional strategy

Active asset allocation•Expanding relations•Enhancing life planning capabilities

Improving risk return ratios

Increasing contact points with customers/Improving quality of business services

Channel/process innovation

Risk monitoring

More flexible market operations

Development of human resources

III. Strengthening of organization and personnel
Strengthening of human resources force

Innovation in administrative processes

IT strategy

Compliance

Risk management

Behavioral guideline: Thorough practice of customer-centric principle
Numerical Targets for Fiscal 2016
IndicesTargets by the end of fiscal 2016

Profitability

Net operating profit

Over ¥18.0 billion

Efficiency

ROE

3.5% (approx.)

Soundness

Capital ratio (consolidated)

9.0% (approx.)

Loan balance¥3.0 trillion (approx.)

Deposit balanceOver ¥4.0 trillion

Scale

4

* Net operating profit = gross operating profit – expenses* ROE based on net income = net income ÷ (capital at beginningof year + capital at end of year) ÷ 2* Capital ratio (consolidated) is core capital ratio based on Basel
III taking into account transitional arrangements.

Corporate Governance

Basic Approach to Corporate GovernanceWith the aim to realize its Corporate Vision, the Bank has enhanced
its corporate governance framework, which is centered on the Boardof Directors, so that it operates a fair, speedy and decisive decisionmaking process.
In addition, the Bank is a company with an Audit & Supervisory
Board that ensures the effectiveness of management oversight by having the Board of Directors and Audit & Supervisory Board members
supervise and audit the directors’ execution of their duties.

The Bank will continue to strengthen corporate governance while
improving sustainable growth and corporate value over the medium
to long term by enhancing communication with shareholders,customers and the local community and through the appropriate
disclosure of information.

[Corporate Governance Framework]
General Meeting of Stockholders
Appointment/Dismissal

Appointment/Dismissal

Board of Directors

Audit & Supervisory Board

Appointment/Dismissal/Supervision

Directors

Executive
Committee

RevenueManagement
Committee

Head Office and Branches

Compliance
Committee

Internal audit

Opinion,Comment, etc.

Risk
Management
Committee

Auditing Division

Appointment/Dismissal

Operations audit
Accounts audit

Accounting Auditors

ReportOverview of Corporate Governance Structure
Board of Directors
The Board of Directors consists of 11 directors including outside
directors and meets once a month as a general rule and also as
needed. In addition to specific matters stipulated by laws andregulations and in the Articles of Incorporation, the Board passes
resolutions on important matters related to management and oversees
the execution of directors’ and executive officers’ duties. In addition,
the Bank has appointed two outside directors to ensure that externalmonitoring system of the company is working properly.

Executive Officer System
To speed up management decision-making and strengthen businessexecution functions, the Bank has introduced an executive officer
framework. Executive officers (as of July 1, 2015 there were 24, ofwhom seven concurrently serve as directors) appointed by the Boardof Directors strive for corporate management with flexible decisionmaking and speed of action.
Auditing Division
From the perspective of maintaining and improving the soundness
and appropriateness of operations, the Auditing Division (anindependent division) also fulfills an internal audit role and conducts
inspections of assets and risks and internal audits of the operationsof the head office as well as branches and subsidiaries. The results ofaudits are reported to the management.

Audit & Supervisory Board
The Audit & Supervisory Board consists of five members including
three outside members who are fair and have a high degree of professionalism to ensure the independence and neutrality of the audit
framework. Audit & Supervisory Board Members, based on auditing
policies, appropriately audit and oversee management by attending
important company meetings including Board of Director meetingsand stating their opinions.

Accounting Auditors
The Bank’s accounting auditors are Ernst & Young ShinNihon.
As accounting auditors, they conduct appropriate audits from an
independent standpoint.

Executive Committee
The Executive Committee consists of the chairman of the company,
the President, senior managing executive officers and managing
executive officers and, as a body that deliberates and decides
important matters pertaining to the execution of management duties,
it meets on a regular or as needed basis. In addition, the Bank has
established the Revenue Management Committee, the Compliance
Committee and the Risk Management Committee which provide a
structure to discuss and decide more specialized matters.

5

Risk Management

While the growing globalization of economic and financial affairs, together with the increasing sophistication of financial technology,
are creating new business opportunities for financial institutions, the risks faced by financial institutions are also becoming morevaried and complex. We regard sophisticated risk management techniques as being of primary importance for maintaining the soundness of a bank’s business, and we also recognize the importance of appropriate responses to changing customer needs. To achievethese goals, we make every effort to properly recognize, assess and manage risks.

Efforts toward Comprehensive Risk Management
Basic concepts of risk management
Banking operations are facing a variety of risks, including credit risk,
market risk, liquidity risk, and operational risk. We apply proper
management to each risk depending on the characteristics of theoperation and the risk. By ascertaining risks in a comprehensive manner and comparing them to our level of capital adequacy, we strive toachieve soundness and stability in our overall management and also to
improve the efficiency of our operations: in other words, to practiceintegrated risk management.
Moreover, our basic policies on overall and specific risk management are determined by the Board of Directors for each year, andthrough implementation of measures for each category of risk inaccordance with these policies, we strive to achieve sophisticated risk
management on an ongoing basis.

Risk Management Framework
We have defined the types of risks in our risk management rules,
drawn up by the Board of Directors. We then determine the category
to which each risk belongs, and decide the divisions responsible formanaging each category, along with management rules. We have alsoestablished an independent Risk Management Division to integraterisk management and carry out comprehensive management.
Additionally, through the establishment of the Risk Management
Committee and sub-committees for each risk category as organizations under the Committee, and cross-sectional consultations on
matters regarding risk management on a regular basis, we have put
in place a highly sophisticated framework for the maintenance andmanagement of risk.

[Risk Management Framework]
Audit & Supervisory Board
Members
Audit & Supervisory Board

General Meeting of Stockholders
Board of Directors
Risk Management Committee
Risk Management Division

Overall Risk Management
DivisionsCredit Risk Management
Subcommittee
Risk Control Divisions

Credit risk
Risk Management
Division

Market Risk Management
Subcommittee
Market risk
Risk Management
Division

Operational Risk
Management Subcommittee

Liquidity risk
Treasury andInternational Division

Auditing
Division

Operational risk
Risk Management
Division

Each division, office, branch
Subsidiaries[Risks Subject to Management]
Risk Classification

Outline of Risks

Credit Risk

Risk of reduction in the value of assets or their loss altogether due to deteriorating financial positionat customers to which the Bank has granted credit

Market Risk

Risk of suffering loss due to volatility of financial assets and liabilities resulting from financial market fluctuation

Interest Rate Risk

Risk of reduced profits or total losses due to changes in interest rates arising because of discrepancies
in interest rates on assets and liabilities, and in instrument maturities

Foreign Exchange Risk

Risk of suffering loss due to a decrease in the yen-converted amount of foreign currency denominated assets
and liabilities due to exchange market fluctuations

Price Volatility Risk

Risk of a fall in asset values due to changes in the value of securities

Division in Charge

Risk Management Division

Risk Management Division

Liquidity Risk

Risk of suffering loss from difficulty in procuring necessary funds or abnormally high interest raterequirements in securing funds, due to causes such as unforeseen outflows of funding or turmoil
in financial markets

Treasury and International
Division

Operational Risk

Risk of suffering loss due to inappropriate or malfunctioning internal processes, personnel conduct
or IT systems, or external factors

Risk Management Division

Process Risk

Risk of suffering loss due to or by executives’ or employees’ failure to perform duties,
or to improper outside intervention

System Risk

Risk of suffering loss due to partial or complete system breakdown, malfunction, system deficiency,
or improper use of the computer system

Legal Risk

Risk of losses due to the violation of laws and ordinances and contracts and signing of
inappropriate contractual commitments

Compliance and Legal Affairs
OfficeHuman Resources Risk

Risk of losses caused by labor malpractice, workplace safety and environmental hygiene deficiencies
and risk of employer liability in the event of illegal behavior by Bank employees

Personnel Division

Tangible Asset Risk

Risk of suffering loss due to damage to assets resulting from disaster or defective asset management

General Administration Division

6

Operations Supervision Divisionimpact that major changes in the economic and market environments
have on Bank profits and management stability is monitored, and the
management soundness is also assessed.

Practice of comprehensive risk management
We have introduced a framework for risk-adjusted capital allocationin which the credit and market risks inherent in banking operations
are quantified; capital corresponding to risk amount (risk-adjusted
capital) is allocated for each risk category, and risks are controlled
within risk-adjusted capital, to earn revenues that correspond to therisks while keeping overall risks within our management capacity.
Under this framework, based on the amount of equity capital (corecapital) less the operational risk equivalent amount, risk-adjusted
capital to cover credit and market risk is allocated each half-year andthe changes in risk trends and the risk-return balance is monitored,
enabling ascertainment and management of risk-adjusted profitability
and efficiency.
In addition, stress tests are conducted on a regular basis and theDefinitions
Core capital: Equity capital established under Basel III (domestic standard)
Operational risk equivalent amount: Calculated using the Basic
Indicator Approach
Return on risk-adjusted capital (RORAC): Profit and loss indicator,
arrived at by deducting expenses, deemed allowance costs and capitalcosts from gross operating profits[Framework for Risk-Adjusted Capital Allocation]
Risk-adjusted capital allocation

Equity capital(core capital)

Risk-adjusted
capitalReturnRisk

Amount corresponding
to credit risk
Amount corresponding
to market risk

Soundness

Credit risk amounts
Market risk amounts

Profitability
andefficiency

Return on
risk-adjusted capital(RORAC)

BufferOperational risk
equivalent amountCredit Risk Management Readinessdiscussed therein regularly, with the results of discussions being
reported to the management as necessary.
For individual credit management, we make efforts to ascertain
the situation of parties to which credit is offered by assigning borrower ratings and through implementing self-assessment of loans. In
particular, we carry out credit risk management by treating borrower
ratings as important benchmarks for predicting the future probabilityof default.
Meanwhile, for credit management on a total asset basis, we measure the credit risk amount based on the internal rating on a regularbasis, set the credit limit amount for each industry and borrower
category, and control credit risk.
For the reserve for possible loan losses, we post it appropriately
by methods based on loan-loss experience calculated using historicaldefault rates over a certain period upon classification of receivables
into certain types depending on the degree of risk, or by the methodof reducing the projected amount for which collateral can be disposed
and the amount judged to be collectible through guarantee from theamount of receivables.

Basic policy
Credit risk is a category of risk that has a significant impact on thesoundness of a bank. In accordance with credit risk management rules
approved by the Board of Directors, we identify, evaluate, measureand monitor and carry out stress-testing regarding credit risk on bothan individual credit basis and a portfolio basis (total assets managed
under the bank account), and control credit risk within the scope ofallocated risk-adjusted capital.
Framework
We have structured our organization and systems for mutual checking
among three divisions: the Risk Management Division, which carries
out overall credit risk management, including internal credit ratingsand self-assessment systems; the Credit Supervision Division, which
examines loan assets on an individual basis and determines internalratings and borrower categories by making self-assessments; andthe Auditing Division, which audits and verifies the appropriatenessof overall administration of the credit risk management system.
Additionally, the results of credit risk amount measurements arereported to the Credit Risk Management Subcommittee and[Credit Risk Management Framework]
Board ofDirectors
Executive
Committee

Determine/Directions
Proposal for deliberation

Credit Supervision Division

ReportProposals for credit ratings
Proposals for deliberation
Centralized management
Credit management
Corporate rehabilitation support

Portfolio
management

Risk
Management
Committee
Credit Risk
Management
Subcommittee

Self-assessment

Monitoring

Policies and instructions

Self-assessment
Policies and instructions

Risk Management Division
ReportDiscussion and report

7

Head Officeand Branches

Risk Managementof each particular borrower. For derivative product transactions withfinancial institutions, we have established credit lines for management
purposes.
With regard to collateral provided against risk with regard tobank transaction derivative product transactions, our preparations
assume the possible need to furnish additional collateral should ourcreditworthiness deteriorate. Should it become necessary to take thisstep, the impact would be limited, since we own sufficient assets thatcan be provided. We do not engage in long-term settlement periodtransactions of securities.

Credit risk reduction methods
Under our internal management, we regard collateral and guarantees
that can be set up against a bona fide third person as eligible.
Collateral categories that we handle include our own bankdeposit collateral, securities collateral, bill (including electronicallyrecorded monetary claims) collateral, real estate collateral, andmovables collateral. We carry out proper management of collateralby performing status surveys of real estate and movables collateralrelating to business credit on a regular basis, and implementation ofrevaluation of listed stock collateral by daily market value. Moreover,for the appraisal of collateral for internal management purposes, we
use market value amounts (for securities without market quotations,face value amounts) multiplied by certain ratio after taking into
consideration price volatility and liquidity.
Regarding guarantees on the other hand, only for guarantors thatsatisfy a certain standard and about whose creditworthiness there
is judged to be no concern is the effect of the guarantee taken into
consideration.

Risk management relating to securitization
When considering providing a loan that is classified as a securitizationtransaction or investing in securitization products from the investor
viewpoint, the Bank determines whether or not to provide the loan
after verifying the propriety of the reimbursement plan based on the
future cash flows of the underlying assets, and other matters. For
securitization products we analyze the risks and make careful investment judgments, while taking as the limit amount that amount determined for each six-month period, with reference to market trends andrating information assigned by eligible rating agencies. Note that as
the originator we do not conduct securitization transactions with theassets of the Bank with the objective of credit risk reduction.
In addition to credit risk, securitization transactions also entail
price volatility risk arising from declines in the value of the underlying
assets and other factors, interest-rate risk, risks derived from thescheme, and other risks. Therefore, even after investing or lending,we establish structures for regularly monitoring the various kinds ofrisk information inherent in these risks, and continuously monitor the
status of these risks in order to manage them appropriately.

Risk management relating to derivative transactions
We engage in derivative transactions to hedge risks on transactions
with customers and as a means of Asset-Liability Management(ALM). Additionally, to expand our profit opportunities, we engage
in derivative transactions after setting transaction limits and loss-cut
rules, centering on foreign exchange transactions.
We also have a system by which the credit equivalent amountrelating to a derivative instrument is calculated on the basis of
the current exposure method (market break cost with margin of
possibility of price volatility in remaining period of agreement), and,after totaling this with on-balance transactions, we are positioned to
manage limit amounts of credit corresponding to the creditworthiness

Market Risk Management Readiness
Under our market risk rules, approved by the Board of Directors,
we hold market risk to refer to our exposure to fluctuations in thevalue of assets and liabilities due to fluctuations in interest rates, stock
prices, foreign exchange rates and other factors, and the possibility ofsubsequent losses. We further categorize market risk as interest-rate
risk, price volatility risk or foreign-exchange risk, depending on where

Basic policy
Market risk management is extremely important for responding
accurately to our customers’ transaction needs, and at the same time
for securing stable profits by controlling our assets and liabilities amid
daily changes in interest rates, foreign exchange rates, stock prices,and other factors.
[Market Risk Management and ALM System]
Risk Management Committee

Board of Directors
Revenue Management Committee

Market Risk Management Subcommittee
Discussions
and reports

Risk Management Division
Discussions
and reports

Measurement

Budget ALM Subcommittee

Policies andinstructions

Discussions
and reports

Policies andinstructions

Corporate Planning Division

Discussions

Discussions

Monitoring

Treasury and International Division

Systems
Data
Data
Branches
Deposit Operations
Loan Operations

Instructions

General Manager
Proposals fordeliberation/
Reports

ReportReportInstructions
Determination/
Back officeInstructions
Notification of trading contracts

Front officeTransactions

Market Trade

MarketCustomers

8

Middle office
ReportMonitoring

ReportManagement

Monitoringthe loss arose, and take appropriate management countermeasures.
We use an ALM System for cross-organizational discussions
regarding measures for stabilization of medium- to long-term profits,based on our assessment of market risks.

• Bank account transactions
We apply the historical method to loans and bills discounted,
securities, deposits, interest-rate swaps and other interest-rate risk
exposures, for price volatility risk on equity shares held for policy
purposes, as well as for interest-rate risk, price volatility risk, andforeign exchange risk on money held in trust. We quantify and manage price volatility risk on investment trusts by measuring Value at
Risk under the Delta method. Furthermore, we conduct stress tests of
scenarios such as a rapid rise in interest rates or a significant drop in
stock prices, and sensitivity analyses of interest rates and stock prices(stock price indices).

System
We have a system in which the section in charge of market transaction
execution (front office), clerical management (back office) and market
risk management (middle office) are separated from each other in the
Treasury and International Division so that market transactions will
be implemented under the mutual check. Then, through comprehensive management of overall market risk by the Risk Management
Division, independent from the division that implements market
transactions, we are making efforts toward centralized management ofmarket risk, including interest rate risk for the whole bank.
Moreover, for continuous and appropriate management of market
risk inherent in overall bank assets and liabilities, we have establishedthe Market Risk Management Subcommittee as an organization
under the Risk Management Committee, and this performs monitoring of risk status or the effectiveness of risk management on a regularbasis.
In the ALM System, the Corporate Planning Division works
as a secretariat, with the Budget ALM Subcommittee, which is a
sub-organization, under the Revenue Management Committee.
Based on market risk appraisal by the Risk Management Division andthe Treasury and International Division, consultation is undertaken
regarding measures for stable generation of medium- to long-term
profits, and the results are translated into actual measures.

• Trading account transactions
To measure and manage Value at Risk, we apply the historicalmethod for interest-rate risk on trading account securities andinterest-rate futures transactions, and for foreign-exchange rate risk
for foreign-exchange trading.

Definitions
Banking account transactions: Deposit transactions, loan transactions, investment in securities, etc., and derivative transactions for the
purposes of hedging the aforementioned.
Trading account transactions: Foreign-exchange, interest-rate dealing
and other trading, underwriting and bidding for trading account securities (government bonds).
Value at Risk (VaR) : Based on historical data, a statistical estimate of
exposure to risk of losses in current values.

Management method
For management of market risk, we measure risk amounts statisticallyby methods that correspond to type of transaction, such as bankaccount transactions and trading account transactions, and risk factors
including interest rate, market price, and foreign exchange rate, andmanage risk within the scope of the risk-adjusted capital allocated tomarket risk. For trading on markets, such as securities transactions,fund transactions, and derivatives transactions, we set limit amounts
as to long or short positions and the loss-cut rules, and carry out
monitoring of the status of observance of the limits on a regular basis.
The following shows our management of the principal risk factors.

Historical method: A method for measuring VaR that takes interestrate, stock-price, foreign-exchange and other fluctuations over a fixed
period of time and applies them to current positions.
Delta method: A method for measuring VaR assuming a normal
distribution of fluctuation in interest rates, stock prices and foreignexchange rates.
Sensitivity: This indicator shows the extent of the change in the value(present value) of a portfolio when interest rates and stock prices (stock
price indices) fluctuate by a fixed percentage.

Liquidity Risk Management Readiness
Basic policy
Liquidity risk is a very serious risk category that carries thepotential to bring about the bankruptcy of a financial institution.
Consequently, to minimize the likelihood of actualization of liquidity
risk, the Board of Directors has drawn up a set of liquidity risk
management rules to guide employees in the day-to-day conduct ofbusiness operations with adequate countermeasures for liquidity risk.

Management method
In addition to taking account of daily and monthly cash flow
forecasts, we ensure appropriate and stable day-to-day managementof cash flow in line with operational and procurement procedures
through maintenance of adequate liquidity reserves and other measures. In addition, we have created mechanisms to deal promptly andappropriately with actual contingencies that may develop, classified
as “normal,” “caution,” and “liquidity crisis,” enabling us to respond
immediately to unpredictable events that adversely affect cash flow.

SystemThe Bank entrusts the Treasury and International Division withliquidity risk management. Appropriate controls are exercised overliquidity risk through regular monitoring of risk status and the effectiveness of management measures by the Market Risk Management
Subcommittee under the Risk Management Committee.

9Risk Management

Operational Risk Management Readiness
Basic policy
Operational risk refers to risk relating to losses arising from inadequacies or failures of internal processes, on the part of personnel or ofsystems, or from occurrence of external factors. Operational risk
covers a wide scope, such as improper paperwork, human error,
system failure, damage due to criminal acts (internal or external), anddamage to assets due to disaster, or other causes.
We conduct continuous management to prevent such operationalrisks from arising, to minimize the impact of the risk in case of its arising, and to prevent its recurrence, in accordance with our operationalrisk management rules, drawn up by the Board of Directors, in order tomaintain and strengthen the trust of our customers.

SystemFor process risk, system risk, legal risk, human risk, and tangible asset
risk, we assign a certain division in charge of each risk, and stipulate
management rules for each risk, and carry out necessary risk control
measures based on an evaluation of risk control status. At the sametime, through the establishment of an operational risk controlling
division to identify and manage operational risk as a whole, various
risks are managed comprehensively.
Additionally, for cross-sectional monitoring of various risks, wehave established the Operational Risk Management Subcommittee asan organization under the Risk Management Committee. Throughregular analysis of risk actualization events, monitoring the status ofrisk reduction measures, and ordering countermeasures as necessary,
we improve the efficiency of our operational risk management.

[Operational Risk Management System]

Board of Directors
Risk Management Committee
Operational Risk Management Subcommittee
Discussions
and reports

Policies andinstructions

OverallManagement

Reporting andloss information

Sectional
Management

Discussions
and reports

Risk Management Division

Process risk

System risk

Operations Supervision
Division

Policies andinstructions

Overall control

Legal risk

Human risk

Tangible asset risk

Compliance and Legal
Affairs Office

Personnel
Division

General Administration
Division

Guidance

Reporting andloss information

Each division, office, branch, subsidiary

immediately contacts the appropriate department supervising risk
management and takes due measures in line with instructions
received. In addition, by closely investigating all details of the event
and analyzing causes and trends, we can establish processes forreviewing and implementing countermeasures and assessing theireffectiveness.

Management method• Potential operational risk
We have introduced Risk & Control Self-Assessment methods.
These cover detection of all potential operational risk existing invarious forms in the operations, transactions, systems and all asset
categories of the Bank. We also undertake regular inspections tocheck whether advance detection mechanisms for risk and prevention
policies are functioning effectively, and if not take remedial measures.
This approach ensures consistent and ever-improving standards ofoperational risk management.

Explanation of Terms
Risk & Control Self-Assessment: A method for identifying, assessing,and monitoring risk with the goal of identifying potential risk, preventing exposure to risk, and reducing the amount of loss from risk.

• When operational risk is detected
When operational risk is detected, the department involved

Risk Audit and Inspection ReadinessTo strengthen our risk management system, it is necessary to conduct
regular inspections of the effectiveness of system functioning. To thisend, we have set up a dedicated section within the Auditing Division.
The section (Risk Audit Group) is tasked with verifying that risk isbeing properly managed, both in the Bank’s Head Office departments
and branches, and in our subsidiaries. The Group carries out inspections of the status of risk management implementation, including

regular checks of the adequacy of risk-related operations at ourbranches. The Head Office departments, subsidiaries and individual
branches are also required to conduct self-inspections to confirm
that procedures are being followed as laid down. These inspections
improve the level of risk management and minimize the probability ofhuman or system error.

We are working to build up the trust of our customers through due measures for monitoring and minimizing risks of all kinds, andthrough creation of systems for early recognition and management of risk-related issues.

10Compliance System

Basic Policy
The function of banks is highly public in nature, and is intimately bound up with the welfare of society as a whole. Their primary role isto assist the sound development of the economy. At the Hyakujushi Bank, to honor the trust placed on us by our stockholders, customers and the local community, all our executives and employees assign a high priority to compliance with laws and regulations, aswell as the observance of high ethical standards in the conduct of the Bank’s business. Compliance is a key priority at the Hyakujushi
Bank.

Compliance System
The Compliance and Legal Affairs Office exercises overall supervisionof compliance issues, and implements centralized management ofmatters related to compliance. Furthermore, Compliance officers withresponsibility for compliance matters are designated in each division,
office, and branch of the Bank to ensure that the rules of complianceare observed and that all staff are fully aware of issues concerned. Staff
are also required to confirm the compliance status of each business
unit by filling out a checklist, and compliance seminars are held tokeep staff up-to-date and fully informed regarding compliance-related
matters. To further improve the efficiency of compliance systems, theCompliance Committee has been established, as well as the Rewards
and Penalties Committee.

Compliance measures
We have published a Compliance Manual as a practical handbook
covering specific compliance issues, and have initiated a Compliance
Program to serve as an action plan for realizing compliance measures.
We have also drawn up the Hyakujushi Bank Code of Ethics to
be followed by executives and employees, and put up complianceawareness posters (“Mamorimasu”) in all sections and branches of
the Bank. In internal educational activities, lectures on complianceare given in all training programs, including seminars designed for
all the different levels of employees within the Bank’s hierarchy. Thisinitiative to improve understanding of compliance is being conductedacross the whole Bank, with directors and corporate auditors
required to attend Compliance Seminars held by the Regional Banks
Association of Japan. We are instilling compliance awareness at all
branches, with guidance at branches and training of complianceofficers.

[Compliance System]

Whistleblower hotline
We set up a whistleblower hotline, and are strengthening compliancesystems by protecting users of the hotline, and taking measures to
identify and remedy wrongful activities at the early stage.

Board of Directors
Executive Committee
Compliance
Committee

Rewards andPenalties Committee

Abuse of power or position
To assure propriety in all of the Bank’s transactions (prevention of theabuse of power or position), the Bank has established the “Manualon Compliance with the Antimonopoly Act” based on the scenariosin the Fair Trade Commission publication “Types of Activities that
Can Cause Problems (Unfair Business Practices)” and we are making
strenuous efforts to keep all staff informed about compliance throughin-house training sessions and other methods, so that no unfair
transactions occur.

Overall Compliance Supervision
Compliance and Legal Affairs OfficeInstruction

Inspection

Auditing Division

Head Office, Branches and Group Companies

UpholdCompliance
Hyakujushi Bank’s Corporate Ethics

Code of Business Conduct

1. Awareness of public mission
2. Provide high-quality financial services
3. Strict observance of laws and rules
4. Communicate with society
5. Respect employees’ human rights
6. Tackle environmental problems
7. Undertake social contribution activities
8. Block relationships with anti-social forces

1. Obey rules
2. Keep promises
3. Keep public and private separate
4. Maintain no conflicts of interest
5. Do not compete unfairly
6. Do not abuse power or position
7. Do not leak or abuse inside information
8. Respect each other and create a comfortable working
environment
9. Rigorously enforce “report, contact, consult”

11Compliance System

Personal information protection
With society becoming increasingly information-driven day-by-day,the Bank has laid down regulations, set out guidelines, and built anorganizational system relating to the secure management of personal
information. We have also taken steps to properly handle customers’
personal information by providing rigorous training including inhouse workshops to all officers and employees.
At Hyakujushi Bank, we take the view that the appropriate
handling and protection of personal information entrusted to us isan absolute prerequisite for the long-term conduct of business activities. We have codified our policies regarding personal information
protection in our Privacy Policy, which is available for perusal on our
website, and has also been publicized via posters and pamphlets.

Controls on insider trading
The financial authorities of Japan impose restrictions on insider trading, which is defined as buying or selling of stocks or other securities
issued by a company before important information regarding thecompany is publicly released, by persons whose position gives themaccess to non-public information including management and financial
information that may influence investment decisions.
At the Hyakujushi Bank, we have drawn up a set of Insider
Trading Regulations to ensure that the Bank fulfills its social responsibilities as a corporate citizen and prevents insider trading. These
regulations specify the basic items pertaining to the management ofimportant non-public information known to executives and other
employees of the Bank, as well as the duties of Bank employees.
We have taken steps to prevent insider trading by providing rigorous training including in-house workshops to all executives andemployees.

Management of conflict of interest
In the transactions conducted by the Bank and its Group companies,
we appropriately manage potential conflicts of interest to ensure that
our customers’ interests are not unjustly harmed.
Specifically, to appropriately manage potential conflicts of interest,
we have established a unit to oversee the management of conflicts ofinterest, with a single executive appointed as officer with responsibility for the management of conflicts of interest. We have also set upa system whereby transactions that carry the possibility of conflict ofinterest are specified and all transactions with potential conflicts ofinterest are subject to unified management.
We have laid down a set of Policies on Management of Conflictsof Interest to specifically spell out the Bank’s measures to prevent
conflict of interest, and we are taking all necessary measures toappropriately manage potential conflicts of interest to ensure that ourcustomers’ interests are not unjustly harmed. These measures include
the conduct of regular training courses to ensure that all directors andemployees of the Bank and other companies in the Group are fully
aware of the issues involved.
An outline of the Bank’s Policies on Management of Conflicts ofInterest is available for public viewing on our website, and we are also
employing posters that convey the gist of these policies.

Exclusion of anti-social forces
In order to prevent the harm caused by anti-social forces and maintain the public trust in the Bank and its Group companies, we aretaking measures to exclude organized anti-social forces. For example,
we resolutely reject all illegitimate demands made by anti-social
forces, and we have no relationships with anti-social forces including
business relationships.
Specifically, we have established the “Regulations for Preventing
Harm by Anti-social Forces” and other guidelines, and are keeping
all of our staff well-informed about our policies for dealing with
anti-social forces. We are also collaborating with specialized externalorganizations such as the police, the National Center for the
Elimination of Boryokudan, lawyers, and others to block relationships
with anti-social forces.

12

Prevention of Money Laundering
Money laundering is “the act of trying to hide the source andattribution of criminal profits” and funding terrorism is “the act ofproviding funds for terrorist activities to terrorists.”
The operating methods of money laundering and criminal
circumstances are constantly changing and in recent years havebecome elaborately complex. Because of strong calls for international
cooperation to prevent money laundering, the Bank has instituted amoney laundering prevention policy that has been made public on its
website as an expression of its resolve to prevent money laundering sothat the Bank is never used as a channel for criminal funds.

Prevention of Money Laundering Policy
The Hyakujushi Bank, Ltd. (hereinafter, “the Bank”) strongly
recognizes the importance of measures to prevent money laundering and terrorist financing (hereinafter, “money laundering”). In
response to stern demands from the international community, theBank will build an internal control system like the one described
below for the prevention of money laundering, and thereby
conduct its business.

February 2014
The Hyakujushi Bank, Ltd.

Money laundering is “the act of trying to hide the source andattribution of criminal profits” and funding terrorism is “the act ofproviding funds to terrorists for terrorist activities.”
The operating methods and criminal circumstances ofmoney laundering are constantly changing and in recent years
have become elaborately complex. Because of strong calls forinternational cooperation to prevent money laundering, the Bank
stipulates this policy to reiterate its resolve to prevent money
laundering so that the Bank is never used as a channel for criminal
funds.

Operational policy• The Bank will clarify its role internally concerning the prevention of money laundering and will create a system capable of taking
appropriate measures in a timely manner.

Customer due diligence• With respect to customer due diligence, the Bank will establish an internal system capable of taking appropriate measures in atimely manner.
• With respect to customer due diligence, the Bank will instruct and train officers and employees and instill countermeasure about
the prevention of money laundering.

Confirmation of measures to freeze assets• With respect to the confirmation of measures to freeze the assets of terrorists, the Bank will establish an internal system capable oftaking appropriate measures in a timely manner.
• With respect to the confirmation of measures to freeze the assets of terrorists, the Bank will instruct and train officers and employees and instill countermeasures for the prevention of money laundering.

Notification of suspicious transactions• With respect to suspicious transactions, the Bank will establish an internal system capable of taking appropriate measures in a timely
manner.
• The Bank will, under law, promptly notify authorities of suspicious transactions.
• The Bank will promptly take appropriate measures concerning suspicious transactions.
• With respect to suspicious transactions, the Bank will instruct and train officers and employees and instill information about theprevention of money laundering.

Verification of compliance• The Bank will review compliance concerning the prevention of money laundering and work to continuously improve its system
based on the results of the review.

13

Board of Directors and Audit & Supervisory Board Members

Katsuhiko Takesaki

Tomoki Watanabe

ChairmanPresident

Yukio Hirao

Noriaki Iida

Director & Senior Managing
Executive Officer

Chairman

Katsuhiko Takesaki
President

Tomoki Watanabe
Directors & Senior Managing
Executive Officers

Yukio Hirao
Noriaki Iida

Director & Senior Managing
Executive Officer

Directors & Managing
Executive Officers

Executive Officers

Akihiro Matsubara

Kiyoshi Irie

Tadahiko Tamura

Ryuji Nishikawa

Masahiko Miyake

Teruo Kiuchi

Yasuo Miyake

Ryohei Kagawa

Kazuo Shirotori

Yujiro Ayada

Toshiya Yoritomi

Outside Directors

Yoshitaka Nishikawa

Etsuya Kanamori

Takayuki Miyataki

Michiyo Ihara

Kiichiro Oyama

Full-time Audit &Supervisory Board Members

Tsutomu Inamo
Masanobu Satomi
Outside Audit &Supervisory Board Members

Ichiro Terato
Hideki Kuwashiro
Kazuo Kobayashi

Koichi Zensho

Managing Executive Officers

Osamu Itami

Nobuyoshi Amano

Shinji Matsumoto

Akihiko Fujimura

Kazushi Kozuchi

Masakazu Toyoshima

Takashi Mori(as of July 1, 2015)

14

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2015
2014

As of March 31

Assets:Cash and due from banks................................................................................ ¥  305,246 ¥ 390,388
Call loans and bills bought...............................................................................
3,605—
Monetary claims bought...................................................................................
31,05932,387
Trading account securities (Note 7)...................................................................
2
8
Money held in trust (Note 8).............................................................................
4,901
4,901
Securities (Notes 7 and 11)............................................................................... 1,454,688
1,335,641
Loans and bills discounted (Note 10)................................................................ 2,696,444
2,614,215
Foreign exchange assets...................................................................................
13,507
17,446
Lease receivables and lease investment assets (Note 19)...................................
16,865
17,951Other assets.....................................................................................................
31,70932,609Tangible fixed assets (Notes 13, 16 and 17)......................................................
43,71645,041Intangible fixed assets......................................................................................
4,625
4,732
Net defined benefit asset..................................................................................
4,691
857
Deferred tax assets (Note 12)............................................................................
1,286
1,501
Customers’ liabilities for acceptances and guarantees.......................................
21,14017,249Reserve for possible loan losses........................................................................
(18,387)(21,720)
Total assets.................................................................................................. ¥4,615,105 ¥4,493,211

15

Thousands of
U.S. dollars(Note 1)2015

$ 2,540,124
30,000258,465
21
40,79012,105,256
22,438,586
112,403140,350
263,872
363,789
38,48839,036
10,709
175,924(153,014)$38,404,806

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2015
2014

As of March 31

Liabilities and net assets
Liabilities:
Deposits (Note 11)............................................................................................ ¥3,801,437
Negotiable certificates of deposit......................................................................
169,926
Call money and bills sold (Note 11)...................................................................
48,068
Payables under securities lending transactions..................................................
40,520Borrowed money (Notes 11 and 14).................................................................
128,635
Foreign exchange liabilities...............................................................................
354
Corporate bond (Note 15)................................................................................
10,000
Other liabilities.................................................................................................
71,955Reserve for directors’ bonuses..........................................................................
23
Net defined benefit liability...............................................................................
155
Accrued directors’ retirement benefits..............................................................
51
Provision for claims on dormant accounts.........................................................
539
Provision for contingent liabilities.....................................................................
107
Reserve for litigation loss..................................................................................
1,173
Deferred tax liabilities (Note 12)........................................................................
19,364
Deferred tax liability for land revaluation (Note 16)...........................................
6,176
Acceptances and guarantees............................................................................
21,140Total liabilities.............................................................................................. 4,319,629¥3,769,308
184,119
38,595
9,901
121,083140
10,00073,575
26
947
49
559
114
—
3,870
6,819
17,2494,236,360

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Retained earnings........................................................................................
143,886
138,689
Treasury stock..............................................................................................
(4,730)(4,181)
Total stockholders’ equity........................................................................
201,398
196,751
Accumulated other comprehensive income:Net unrealized gains on securities, net of taxes............................................
68,952
37,722
Net deferred losses on hedging instruments, net of taxes.............................
(3,010)(24)
Revaluation reserve for land (Note 16).........................................................
8,722
8,044
Remeasurements of defined benefit plans....................................................
1,631(2,719)Total accumulated other comprehensive income.....................................
76,29743,022
Share warrants.................................................................................................
196
156
Minority interests.............................................................................................
17,583
16,920Total net assets............................................................................................
295,476
256,851
Total liabilities and net assets....................................................................... ¥4,615,105 ¥4,493,211

Per share
Net assets.........................................................................................................
See accompanying notes to consolidated financial statements.

16$31,633,827
1,414,048
400,000
337,190
1,070,445
2,948
83,215598,781
197
1,292
425
4,493
892
9,765
161,141
51,398
175,924
35,945,988

310,582
207,376
1,197,354(39,363)
1,675,949
573,795(25,049)
72,587
13,577
634,910
1,633
146,323
2,458,817$38,404,806

2015

2014

U.S. dollars(Note 1)
2015

¥928.83¥798.27$7.729Yen
As of March 31

Thousands of
U.S. dollars(Note 1)
2015

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income

Millions of yen
2015
2014

For the years ended March 31

Thousands of
U.S. dollars(Note 1)
2015

Income:Interest on loans and bills discounted...............................................................
Interest and dividends on securities..................................................................
Other interest income.......................................................................................
Fees and commissions......................................................................................
Other operating income...................................................................................
Other income...................................................................................................
Total income................................................................................................

¥33,607
14,439463
10,844
5,692
12,624
77,671¥34,298
12,833414
10,725
6,429
15,89080,592$279,665
120,162
3,854
90,24047,368105,058
646,349

Expenses:
Interest on deposits and negotiable certificates of deposit................................
Interest on call money and bills sold.................................................................
Interest on borrowed money............................................................................
Other interest expenses....................................................................................
Fees and commissions......................................................................................
Other operating expenses.................................................................................
General and administrative expenses................................................................
Other expenses (Note 17).................................................................................
Total expenses.............................................................................................

2,208
236
401
990
2,823
2,661
40,108
10,90960,339

2,138
148
516
530
2,607
3,096
40,253
9,636
58,92818,378
1,969
3,340
8,240
23,497
22,146
333,763
90,782502,118

17,332

21,663

144,230

3,562
3,841
7,403
9,928
970
¥ 8,957

5,769
3,700
9,470
12,193963¥11,230

29,64431,96361,607
82,622
8,079$ 74,543

Income before income taxes and minority interests........................................
Income taxes (Note 12):Current............................................................................................................
Deferred...........................................................................................................
Subtotal.......................................................................................................
Income before minority interests......................................................................
Minority interests...............................................................................................
Net income.........................................................................................................

For the years ended March 31

2015

2014

U.S. dollars(Note 1)2015

Per share
Net income......................................................................................................

¥29.84¥37.16$0.248Yen

See accompanying notes to consolidated financial statements.
The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
Millions of yen
2015
2014

For the years ended March 31

Income before minority interests...........................................................................
Other Comprehensive income...............................................................................
Net unrealized income (loss) on other securities, net of taxes............................
Net deferred income (loss) on hedging instruments, net of taxes......................
Revaluation reserve for land.............................................................................
Remeasurements of defined benefit plans........................................................
Total comprehensive income.................................................................................
Total comprehensive income attributable to:Equity holders of the parent.............................................................................
Minority interests.............................................................................................
See accompanying notes to consolidated financial statements.

17

Thousands of
U.S. dollars(Note 1)2015

¥ 9,928
33,30431,302(2,985)636
4,350
43,233¥12,193
(318)
(430)
111
—
—
11,875$ 82,622
277,143
260,481(24,845)
5,300
36,206
359,766

42,190¥ 1,042

10,890¥   984

351,094$  8,671

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
Millions of yen
Stockholders’ equity
For the years ended March 31

Balance as of March 31, 2013........................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period..........
Balance as of March 31, 2014........................
Cumulative effects of changes inaccounting policies.........................................
Restated balance reflecting changes inaccounting policies.........................................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period..........
Balance as of March 31, 2015........................

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
stockholders’ equity¥37,322¥24,920¥129,575¥(2,935)¥188,882

—
—
—
—
—
—

—
—
—
—
—
—

(2,118)
11,230
—
(10)
16
(2)

—
—
(1,516)270——(2,118)
11,230(1,516)
259
16
(2)

—
—
37,322——
24,920—9,114
138,689—(1,245)(4,181)—
7,868
196,751——(1,611)—(1,611)

37,322

24,920137,077(4,181)

195,139

—
—
—
—
—
—

—
—
—
—
—
—

(2,103)
8,957
—
(4)
11
(52)

—
—
(780)
231
—
—

(2,103)
8,957
(780)
226
11
(52)

—
—
¥37,322——¥24,920—
6,808¥143,886—(549)¥(4,730)—
6,259¥201,398

Millions of yen
Accumulated other comprehensive income

For the years ended March 31

Balance as of March 31, 2013........................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period..........
Balance as of March 31, 2014........................
Cumulative effects of changes inaccounting policies.........................................
Restated balance reflecting changes inaccounting policies.........................................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period..........
Balance as of March 31, 2015........................

Net unrealized Net deferredgains onlosses on hedging
securities,
instruments,
net of taxes
net of taxes

Revaluation
reservefor land

Total accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincomeShare
warrants

Minority
interests

Total net
assets¥38,173¥  (136)¥8,057¥   —¥46,095¥120¥16,324¥251,422

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(2,118)
11,230(1,516)
259
16
(2)

(451)
(451)
37,722

111
111
(24)

(13)
(13)
8,044

(2,719)(2,719)(2,719)(3,072)(3,072)43,022

36
36
156

596
596
16,920(2,439)5,428
256,851

—

—

—

—

—

—

—

(1,611)37,722

(24)

8,044

(2,719)43,022

156

16,920255,239

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(2,103)
8,957
(780)
226
11
(52)

31,23031,230¥68,952(2,985)(2,985)¥(3,010)678
678¥8,722

4,350
4,350¥ 1,631

33,27433,274¥76,297

39
39
¥196

663
663
¥17,583

33,97740,236¥295,476

18

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets

Thousands of U.S. dollars (Note 1)
Stockholders’ equity
For the years ended March 31

Balance as of March 31, 2014........................
Cumulative effects of changes inaccounting policies.........................................
Restated balance reflecting changes inaccounting policies.........................................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period..........
Balance as of March 31, 2015........................

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
stockholders’ equity$310,582$207,376$1,154,110$(34,794)$1,637,274——(13,412)—(13,412)

310,582

207,376

1,140,698(34,794)

1,623,862

—
—
—
—
—
—

—
—
—
—
—
—

(17,506)
74,543
—
(37)
92
(435)

—
—
(6,491)
1,922——(17,506)
74,543(6,491)
1,885
92
(435)

—
—
$310,582——$207,376—
56,656$1,197,354—(4,568)$(39,363)—
52,087$1,675,949

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income

For the years ended March 31

Balance as of March 31, 2014........................
Cumulative effects of changes inaccounting policies.........................................
Restated balance reflecting changes inaccounting policies.........................................
Change of items during the period
Dividends from surplus.................................
Net income..................................................
Purchase of treasury stock...............................
Disposal of treasury stock...............................
Transfer from revaluation reserve for land....
Provision for revaluation reserve for land......
Net changes of items other thanstockholders’ equity...................................
Total changes of items during the period
Balance as of March 31, 2015........................

Net unrealized Net deferredgains onlosses on hedging
securities,
instruments,
net of taxes
net of taxes

Revaluation
reservefor land

Total accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincome$313,906$   (204)$66,943$(22,629)———

313,906

(204)

—
—
—
—
—
—
259,888259,888$573,795

Share
warrants

Minority
interests$358,016$1,302$140,805 $2,137,399

—

—

—

66,943(22,629)

358,016

1,302

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(24,845)(24,845)$(25,049)

5,643
5,643
$72,587

36,20636,206$ 13,577

276,893
276,893$634,910

331
331$1,633

See accompanying notes to consolidated financial statements.

19—

Total net
assets(13,412)140,805 2,123,986
—
—
—
—
—
—

(17,506)
74,543(6,491)
1,885
92
(435)

5,517
282,7435,517
334,830$146,323 $2,458,817

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows

Millions of yen
2015
2014

Thousands of
U.S. dollars(Note 1)2015

For the years ended March 31
Cash flows from operating activities
Income before income taxes and minority interests...............................................................
Depreciation.........................................................................................................................
Impairment losses.................................................................................................................
Amortization of goodwill......................................................................................................
Net change in reserve for possible loan losses.......................................................................
Net change in reserve for bonuses for directors and corporate auditors.................................
Net change in accrued retirement benefits............................................................................
Net change in net defined benefit asset................................................................................
Net change in net defined benefit liability.............................................................................
Net change in reserve for retirement payments to directors and corporate auditors...............
Net change in reserve for claims on dormant accounts..........................................................
Net change in reserve for contingent liabilities......................................................................
Net change in reserve for litigation loss.................................................................................
Interest income.....................................................................................................................
Interest expenses..................................................................................................................
Net loss (gain) related to securities transactions.....................................................................
Net gain related to foreign exchange....................................................................................
Net loss on disposal of fixed assets........................................................................................
Net change in trading account securities...............................................................................
Net change in loans and bills discounted...............................................................................
Net change in deposits..........................................................................................................
Net change in negotiable certificates of deposit....................................................................
Net change in borrowed money excluding subordinated borrowings.....................................
Net change in due from banks other than The Bank of Japan................................................
Net change in call loans and others.......................................................................................
Net change in call money and others....................................................................................
Net change in payables under securities lending transactions................................................
Net change in foreign exchange assets..................................................................................
Net change in foreign exchange liabilities..............................................................................
Net change in lease assets and lease investment assets.........................................................
Revenues from fund operations............................................................................................
Expenditure on fund procurement........................................................................................
Other....................................................................................................................................
Subtotal...........................................................................................................................
Payment of income taxes......................................................................................................
Net cash provided by (used in) operating activities.................................................................

¥ 17,332
3,361
91
6(3,332)
(2)
—
(521)
7
1
(19)
(6)
1,173
(48,510)3,836(1,818)(21,713)74
6(82,229)
32,128(14,192)
20,5529,443(2,277)
9,473
30,618
3,938
213
1,085
48,585(3,835)(1,105)2,365(5,687)(3,321)¥ 21,663
3,371
24
26
(4,614)6(504)(4,261)
148
(5)
78
(20)
—
(47,546)
3,333(3,437)(5,721)169
40(85,812)348,549(47,587)
47,429(40,764)
7,780(13,320)
9,901(10,064)
(438)
(940)
48,793(3,514)
8,010
230,772(6,071)
224,701$   144,230
27,972764
55(27,734)(21)—(4,339)
61
12
(166)
(57)
9,765
(403,681)
31,928(15,131)(180,692)
618
50(684,273)
267,360(118,107)
171,027
78,583(18,950)
78,829254,792
32,777
1,776
9,031
404,308(31,913)(9,196)
19,684(47,325)(27,640)

Cash flows from investing activities
Purchase of securities............................................................................................................
Proceeds from sales of securities...........................................................................................
Redemption of securities.......................................................................................................
Purchases of tangible fixed assets..........................................................................................
Purchases of intangible fixed assets.......................................................................................
Proceeds from sales of tangible fixed assets..........................................................................
Proceeds from sales of intangible fixed assets........................................................................
Net cash used in investing activities.......................................................................................

(645,628)
349,082
242,327(1,248)(1,289)406
3(56,347)(524,285)
410,620
109,565(2,618)(1,294)257—(7,755)(5,372,628)
2,904,901
2,016,538(10,386)(10,733)3,386
26(468,895)

Cash flows from financing activities
Repayment of subordinated borrowings................................................................................
Purchase of treasury stock.....................................................................................................
Proceeds from sales of treasury stock....................................................................................
Dividends paid......................................................................................................................
Dividends paid to minority interests.......................................................................................
Net cash used in financing activities......................................................................................

(13,000)(780)
226(2,103)(382)(16,040)—(1,516)259(2,118)(382)(3,758)(108,180)(6,491)
1,885(17,506)(3,185)(133,477)

Effect of exchange rate changes on cash and cash equivalents..............................................
Net change in cash and cash equivalents...............................................................................
Cash and cash equivalents at beginning of year....................................................................
Cash and cash equivalents at end of year..............................................................................

10(75,698)
316,529¥ 240,831

8
213,196
103,333¥ 316,529

89(629,924)
2,634,012$ 2,004,088

See accompanying notes to consolidated financial statements.

20

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial
statements(4) Derivatives
Under the Accounting Standard for Financial Instruments, derivatives
are stated at fair value.

The accompanying consolidated financial statements of The Hyakujushi
Bank, Ltd. (the “Bank”) and its consolidated subsidiaries are preparedon the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards,
and are compiled from the consolidated financial statements preparedby the Bank as required by the Financial Instruments and Exchange Law
of Japan.
The Japanese yen figures in the consolidated financial statements
are in millions, with fractions omitted.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of the reader, using the prevailingexchange rate at March 31, 2015, which was ¥120.17 to U.S.$1.00.
The convenience 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 otherrate of exchange.

(5) Depreciation(a) Tangible fixed assets
Depreciation of tangible fixed assets is calculated principally using thedeclining-balance method. Useful lives of tangible fixed assets are as
follows:
Buildings: 10 to 50 years
Equipment: 5 to 15 years
Tangible fixed assets held by the consolidated subsidiaries are depreciated, in principle, by the declining-balance method, based on therespective estimated useful lives of the assets.
(b) Intangible fixed assets
Intangible fixed assets are amortized on a straight-line basis.
Depreciation of software for internal use is calculated using thestraight-line method over the useful lives (principally 5 years).
(c) Lease assets
Assets held by our consolidated subsidiaries are depreciated over theleasing contract periods by the straight-line method.

2. Financial terms
Account closing dates of consolidated subsidiaries are as follows:
March 31st: 9 companies
January 31st: 1 company
Hyakujushi Preferred Capital Cayman Limited., whose account closing
date is January 31, has been included in the scope of consolidation on
the balance sheet based on the provisional closing of accounts, as ofMarch, 31.

(6) Reserve for possible loan losses
Reserve for possible loan losses is provided as follows, based on thedefined rules for write-offs and provisioning.
Reserve for possible loan losses for bankrupt or substantially bankrupt borrowers is provided based on the amount after deducting thecollectible portion, based on the fair value of any underlying collateralor guarantees, except for a portion written-off, as explained below.
Reserve for possible loan losses for borrowers not currently
bankrupt but likely to go bankrupt is provided considering the overall
solvency assessment after deducting the collectible portion, based on
the fair value of any underlying collateral or guarantees.
Reserve for possible loan losses on loans other than the above isprovided based on loan loss experience as calculated using historicaldefault rates.
In accordance with the Bank’s asset self-assessment standards,
loans are assessed by branch staff and head office staff in chargeof inspection, the results of which are audited by independent staff
in charge of audits. Provision is made to reflect these assessment
procedures.
In the case of loans to borrowers who are bankrupt or substantiallybankrupt, the amount remaining after deduction of the amount ofcollateral considered to be disposable and the amount recoverable
under guarantees is set off from the original outstanding loan balance.
The amount of such write-offs totaled ¥21,479 million ($178,742
thousand) and ¥23,626 million for the years ended March 31, 2015
and 2014, respectively.
A reserve for possible losses on ordinary loans held by the Bank’s
consolidated subsidiaries is provided based on loan loss experienceas calculated using the historical default rates. A reserve for possible
losses on specific loans held by the Bank’s consolidated subsidiaries
is provided based on the amount deemed irrecoverable after careful
examination of the recoverability of the loans in question on an
individual basis.

3. Significant accounting policies(1) Consolidation
The consolidated financial statements include the accounts of the Bankand its 10 subsidiaries.
Non-consolidated subsidiaries: 2
2nd Hyakujushi Venture Fund Cooperation Limited
3rd Hyakujushi Venture Fund Cooperation Limited
Non-consolidated subsidiaries were excluded from the scope of
consolidation because its assets, ordinary income, net income (corresponding to equity), retained earnings (corresponding to equity) andaccumulated other comprehensive income (corresponding to equity)
have no material impact on the Bank’s financial position and results ofoperations.
1st Hyakujushi Venture Fund Cooperation Limited completed
liquidation during the fiscal year ended March 31, 2015.

(2) Trading account securities
Under the Accounting Standard for Financial Instruments, trading
account securities are stated at fair market value.

(3) Securities
Marketable debt securities held to maturity are stated at amortizedcost using the moving-average cost method. Investments in
non-consolidated subsidiaries that are not accounted for by theequity method are stated at cost by the moving-average cost method.
Available-for-sale securities of which market prices are available arestated at fair value based principally on their market prices at thebalance-sheet date, whereas those for which the market value is notreadily determinable are stated at cost or amortized cost using themoving-average cost method.
Unrealized gain or loss on available-for-sale securities (net of therelated tax effect) has been reported as a component of net assets.

(7) R eserve for directors’ bonuses
A provision is made for the payments of bonuses to directors andcorporate auditors of the Bank based on an estimated amount deemednecessary.

21

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(8) Accrued directors’ retirement benefits

Pursuant to JICPA Industry Audit Committee Report No. 25, the Bank
assesses the effectiveness of currency swap and foreign exchange swap
transactions executed for the purpose of offsetting the risk of changes
in currency exchange rates by verifying that there are foreign currency
monetary claims and debts corresponding to the foreign-currency
positions.

In order to provide for the payment of retirement benefits to directorsof consolidated subsidiaries, a provision has been recorded as accrued
directors’ retirement benefits at the end of the consolidated reporting
period.

(9) Reserve for losses on claims on dormant accounts
A provision is made for losses on claims on dormant accounts in the
future in an amount deemed necessary, taking into account the Bank’s
historical refund record.

(16) Goodwill(10) Reserve for contingent liabilities(17) Statements of cash flows

A provision is made for an estimated amount considered necessary forlosses which may occur in the future due to contingencies other thanthose covered for in other reserves.

The reconciliations between cash and due from banks in the consolidated balance sheets and cash and cash equivalents in the consolidated
statements of cash flows are as follows:

The straight-line method is employed for the amortization of goodwill
over 5 years.

(11) Reserve for litigation loss
A provision is made for litigation losses for an estimated amountconsidered necessary for losses which may occur in the future.

March 31

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

Cash and due from banks............ ¥305,246 ¥390,388 $2,540,124
Time deposits with banksother than The Bank of Japan.... (62,542) (72,042)(520,450)
Deposits with banksother than The Bank of Japan....
(503)
(503)
(4,188)Other...........................................
(1,369)(1,312)(11,397)
Cash and cash equivalents...... ¥240,831 ¥316,529 $2,004,088(12) Accounting method for retirement benefits
To calculate retirement benefit obligations, the Bank used the benefit
formula as a method for attributing estimated retirement benefits overthe period until March 31, 2015. The amortization method for priorservice costs and actuarial differences is as follows:
Prior Service Costs:
Prior service costs are charged fully to income at the time ofoccurrence.
Actuarial Differences:
Actuarial differences of the plans are to be amortized by thestraight-line method from each succeeding fiscal year over a period of
10 years within the average remaining service period of the employees
at the time of occurrence in each fiscal year.
In calculating retirement benefit liabilities and retirement benefit
costs, some consolidated subsidiaries apply a simplified method thatprovides their retirement benefit obligation at an amount to be paidfor voluntary termination at the balance sheet date.

(18) Consumption taxes
In the accounting treatment of the Bank and its subsidiaries, theNational Consumption Tax and the Local Consumption Tax are
excluded from the transaction amounts.

4. Change in accounting policy(Adoption of Accounting Standard for Retirement Benefits)
From the fiscal year ended March 31, 2015, the Bank began applying
Accounting Standard for Retirement Benefits (ASBJ Statement No. 26,
issued on May 17, 2012) and Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, issued on March 26, 2015)
with respect to provisions set forth in the text of paragraph 35 of
Accounting Standard for Retirement Benefits and the text of paragraph
67 of Guidance on Accounting Standard for Retirement Benefits. The
Bank has reviewed its method of calculating retirement benefit obligations and service costs and has changed its method for attributing
estimated retirement benefits from the straight-line attribution method
to the benefit formula. At the same time, the method for determining
the discount rate with respect to the duration of the bond upon withthe discount rate decision is based, was changed from a method thatused the number of years approximating the average remaining service
period of the employees to one that uses a simple weighted average
discount rate that reflects the estimated payment period of retirement
benefits and the amount of each estimated payment period.
In applying the Accounting Standard for Retirement Benefits,
the Bank follows transitional treatment set forth in paragraph 37 of
Accounting Standard for Retirement Benefits. The financial impact
resulting from the change in the method of calculating retirement
benefit obligations and service costs has been adjusted in retained
earnings at the beginning of the fiscal year ended March 31, 2015.
As a result, at the end of the fiscal year ended March 31, 2014, theBank recorded net defined benefit assets of ¥1,279 million ($10,648
thousand) net defined benefit liabilities of ¥3,770 million ($31,378
thousand). Moreover, deferred tax assets increased by ¥879 million($7,317 thousand) and retained earnings decreased by ¥1,611 million($13,412 thousand). Further, this had no material impact on ordinary(13) Foreign currency translation
Receivables and payables in foreign currencies are translated into
Japanese yen at the year-end rates.

(14) Accounting standards for posting of earnings andexpenses
Consolidated subsidiaries engaged in the leasing business post income
and expenses relating to lease transactions as “Other income” and“Other expenses,” respectively, at the time of receipt of lease charges.

(15) Hedge accounting(a) Hedges against interest rate fluctuations
The Bank applies the deferred hedge accounting method to hedgetransactions to manage interest rate risk associated with various
financial assets, as defined under “Accounting and Auditing Treatment
relating to the Adoption of ‘Accounting for Financial Instruments’ for
Banks” (JICPA Industry Audit Committee Report No. 24).
The hedging instruments are considered to highly effectively offset
the change in fair value and cash flows arising from the hedged items
both at inception and onward because the terms of hedged items andthe corresponding hedging instruments are substantially identical.
(b) Hedging against currency fluctuations
The Bank applies the deferred hedge accounting stipulated in thebasic provisions of JICPA Industry Audit Committee Report No. 25 tocurrency swap and foreign exchange swap transactions executed forthe purpose of lending or borrowing funds in different currencies.

22

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
association on a fixed day every month. When the share price rises andearnings have accumulated in the trust, upon its termination a cash
distribution of the funds will be made to the employee beneficiaries inproportion to their contribution. When the share price declines and atransfer loss occurs, the Bank will bear the loss so there is no additionalburden on the employee members.
2. The Bank applies the “Practical Solution on Transactions ofDelivering the Company’s Own Stock to Employees, etc. throughTrusts” (ASBJ, PITF No. 30; March 26, 2015). However, this has beenaccounted for with a previously adopted method and transactions
between the Bank and the trust, such as dividends distributed by the
Bank to the trust, are offsetting.
3. Matters relating to the Bank’s shares held by the trusts(1) The book value of the trusts was ¥648 million as of March 31, 2014and ¥430 million ($3,584 thousand) as of March 31, 2015.
(2) The Bank’s shares held by the trusts have been recorded as treasury
stock in stockholders’ equity.
(3) The number of shares at year-end was 1,773 thousand as of March
31, 2014 and 1,177 thousand as of March 31, 2015. The average
number of shares during the year was 2,119 thousand for the fiscal
year ended March 31, 2014 and 1,487 thousand for the fiscal year
ended March 31, 2015.
(4) The number of shares at year-end and the average number ofshares during the year in (3) above are included in the treasury
shares to be deducted in the calculation of per share information.
4. The book value of borrowed money recorded due to the applicationof the gross price method was ¥699 million as March 31, 2014 and¥466 million ($3,881 thousand) as of March 31, 2015.

income and income before income taxes and minority interest.
The impact of this change on per share information is described in
the per share information section.
(Adoption of “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees, etc. through Trusts”)
The Bank started applying the “Practical Solution on Transactionsof Delivering the Company’s Own Stock to Employees, etc. throughTrusts” (ASBJ, PITF No. 30; March 26, 2015) from the fiscal year
ended March 31, 2015. However, this has been accounted for witha previously adopted method and had no impact on the consolidated
financial statement.
The impact of this change on per share information is described in
the per share information section.

5. Additional information(Employee Stock Ownership Plan (ESOP) Trust)As a benefit package for employees, the Bank conducts transactions
that deliver the Bank’s own stock to the employee shareholding
association through a trust.
1. Transaction Overview
The Bank sets up trusts that have as their beneficiaries employeesthat are members of the Hyakujushi Bank Employee Shareholding
Association (hereinafter “the Bank’s shareholding association”) who
meet specific requirements. Said trusts purchase in advance during
the acquisition period the number of Bank shares expected to bepurchased by the Bank’s shareholding association over a five-year
period. The trusts then sell the Bank shares to the Bank’s shareholding

6. Changes in net assets(1) Type and number of shares issued and treasury shares are as follows:

2015

March 31, 2014

Shares issued:
Common stock.........................................................................................
Total.........................................................................................................
Treasury shares:
Common stock (Notes 1, 2 and 3)............................................................
Total.........................................................................................................

Thousands of shares
Increase
Decrease

March 31, 2015

310,076
310,076————

310,076
310,076

9,711
9,711

2,017
2,017

625
625

11,104
11,104

Notes: 1. The number of shares of common stock at the beginning and end of the fiscal year ended March 31, 2015 includes 1,773 thousand shares and 1,177 thousand
shares of the Bank’s shares held by the Employee Stock Ownership Plan (ESOP) Trust.
2. The 2,017 thousand share increase in the number of common shares of treasury stock consists of a 2,000 thousand share increase by purchase based on a
resolution of the board of directors and a 17 thousand share increase due to a purchase demand for fractional shares.
3. The 625 thousand share decrease in the number of common shares of treasury stock consists of a 596 thousand share decrease due to sale of shares from ESOP
Trust to employee shareholding association, and a 29 thousand share decrease due to exercise of share warrants.

2014

March 31, 2013

Shares issued:
Common stock.........................................................................................
Total.........................................................................................................
Treasury shares:
Common stock (Notes 1 and 2)................................................................
Total.........................................................................................................

Thousands of shares
Increase
Decrease

310,076
310,076————

310,076
310,076

6,412
6,412

4,016
4,016

717
717

9,711
9,711

Notes: 1. A breakdown of the increase in the number of common shares in treasury is given below.
Increase by purchase based on resolution of the board of directors: 4,000 thousand shares
Increase due to purchase demand for fractional shares: 16 thousand shares
2. A breakdown of the decrease in the number of common shares in treasury is given below.
Decrease due to sale of shares from ESOP Trust to employee shareholding association: 665 thousand shares
Decrease due to exercise of share warrants: 51 thousand shares
Decrease by additional purchase demand for fractional shares: 1 thousand shares

23

March 31, 2014

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(2) Matters concerning share warrants and own share options
The balance of share warrants (for stock options) at the end of March 31, 2015 and 2014 stood at ¥196 million ($1,633 thousand) and ¥156 million,
respectively. At end of the previous and current fiscal year, no shares had been earmarked for share warrants.

(3) Information on dividends(a) Dividends paid
2015
Resolution

Total dividend
amount(Millions of yen)Type of share

June 27, 2014 (Regular Annual General Meeting of Shareholders).... Common stock
November 10, 2014 (meeting of the Board of Directors).... Common stock¥1,051
1,052

Dividend pershare (Yen)

¥3.5
3.5

Record date

Effective date

March 31, 2014
June 30, 2014
September 30, 2014 December 10, 2014

2014
Resolution

Total dividend
amount(Millions of yen)Type of share

June 27, 2013 (Regular Annual General Meeting of Shareholders).... Common stock
November 11, 2013 (meeting of the Board of Directors).... Common stock¥1,062
1,055

Dividend pershare (Yen)

¥3.5
3.5

Record date

Effective date

March 31, 2013
June 28, 2013
September 30, 2013 December 10, 20132015
Resolution

Total dividend amount
Dividend per(Thousands of U.S.
share (U.S. dollars)
dollars)

Type of share

June 27, 2014 (Regular Annual General Meeting of Shareholders).... Common stock
November 10, 2014 (meeting of the Board of Directors).... Common stock$8,7488,757$0.0290.029

Record date

Effective date

March 31, 2014
June 30, 2014
September 30, 2014 December 10, 2014

Note:	In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on June 27, 2014 and June 27, 2013, the total
amount of dividends paid excludes the ¥6 million ($51 thousand) and ¥8 million dividend payment to the Employee Stock Ownership Plan (ESOP) Trust. Moreover,
the total amount of dividends paid excludes the ¥5 million ($42 thousand) and ¥7 million dividend payment to the ESOP Trust pursuant to the resolution approvedby the Board of Directors at a meeting held on November 10, 2014 and November 11, 2013.
These exclusions reflect the Bank’s classification of the shares owned by the Trust as treasury stock.

(b) Dividends paid after the balance-sheet date2015
Resolution

Type of share

June 26, 2015 (Regular Annual General
Meeting of Shareholders)..................... Common stock

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,046

Retainedearnings¥3.5

March 31, 2015

June 29, 2015

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,051Retainedearnings¥3.5

March 31, 2014

June 30, 2014

Total dividend
amount (Thousands
Dividend perof U.S. dollars)
Source of dividends share (U.S. dollars)

Record date

Effective date

Retainedearnings

March 31, 2015

June 29, 2015

2014
Resolution

Type of share

June 27, 2014 (Regular Annual General
Meeting of Shareholders)..................... Common stock2015
Resolution

Type of share

June 26, 2015 (Regular Annual General
Meeting of Shareholders)..................... Common stock$8,707$0.029Note: The total dividend on March 31, 2015 and 2014 excludes the ¥4 million ($34 thousand) and ¥6 million dividends for the ESOP Trust.
This is because the shares owned by this trust are treated as treasury shares.

7. Securities and trading account securities(2) Held-to-maturity debt securities(1) Trading account securities

N/A

A valuation gain of ¥0 million ($0 thousand) was recognized for theyear ended March 31, 2015, and a valuation gain of ¥0 million wasrecognized for the year ended March 31, 2014.

24

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Other securities(a) Consolidated balance sheet amount and acquisition cost of othersecurities and their difference as of March 31, 2015 and 2014 were as
follows:

2015

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... $ 1,197,848 $   550,435
Bonds:
National.......................... 4,897,447 4,797,616
Local............................... 1,215,684 1,184,573
Corporate....................... 1,859,545 1,839,555
7,972,677 7,821,745
Other.............................. 1,987,993 1,889,763
Subtotal.......................... 11,158,520 10,261,944
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
134,960
150,562
Bonds:
National..........................
41,312
41,392
Local...............................
145,967
146,025
Corporate.......................
329,153
329,384
516,433
516,802
Other..............................
271,064
304,910
Subtotal..........................
922,459
972,275
Total......................................... $12,080,979 $11,234,220

Millions of yen
2015

Consolidatedbalance sheet
amountConsolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... ¥Bonds:
National..........................
Local...............................
Corporate.......................

Acquisition
cost

143,945 ¥Difference

66,145 ¥ 77,799

588,526
576,529
11,996
146,088
142,350
3,738
223,461
221,059
2,402
958,076
939,939
18,137
Other..............................
238,897
227,092
11,804
Subtotal.......................... 1,340,919 1,233,177 107,741
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
16,21818,093(1,874)
Bonds:
National..........................
4,964
4,974
(9)
Local...............................
17,54017,547(6)
Corporate.......................
39,554
39,582(27)
62,05962,104(44)
Other..............................
32,57336,641(4,067)
Subtotal..........................
110,851
116,838(5,986)
Total......................................... ¥1,451,771 ¥1,350,016 ¥101,754

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... ¥Bonds:
National..........................
Local...............................
Corporate.......................

Acquisition
cost

108,232 ¥Difference

61,155¥47,076

634,433
625,008
167,474
163,028
191,384
189,187
993,292
977,223
Other..............................
84,314
81,720Subtotal.......................... 1,185,839 1,120,100
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
20,09023,520Bonds:
National..........................
32,58332,610Local...............................
4,484
4,497
Corporate.......................
24,734
24,77961,802
61,887
Other..............................
64,78968,457
Subtotal..........................
146,682
153,864
Total......................................... ¥1,332,521 ¥1,273,965

9,425
4,445
2,197
16,0682,593
65,73899,831
31,111
19,989150,932
98,230896,575(15,601)
(80)
(58)
(230)
(369)
(33,846)(49,816)$846,758

Millions of yen
Sale amount Gains on sale Losses on sale

Equity stock.............................. ¥  8,543
Bonds:
National...............................
285,312
Local....................................
12,366
Corporate............................
1,262
298,941
Other........................................
15,178
Total......................................... ¥322,664

Millions of yen
2014$647,412(b) Gains and losses on sale of securities available for sale for the years
ended March 31, 2015 and 2014 are as follows:

2015
Consolidatedbalance sheet
amountThousands of U.S. dollars
Consolidatedbalance sheet Acquisition
amountcost
Difference

2014

(26)
(12)
(45)
(84)
(3,668)(7,182)¥58,55625¥    8

3,118
366
1
3,486
201
¥4,298

1,403
—
—
1,403
887
¥2,300Millions of yen
Sale amount Gains on sale Losses on sale

Equity stock.............................. ¥ 17,366
Bonds:
National...............................
166,845
Local....................................
88,624
Corporate............................
119,749
375,219
Other........................................
21,902
Total......................................... ¥414,489(3,429)¥  609¥2,111

¥ 353

871
1,382
2,390
4,645
121
¥6,877

635
138
164
938
2,097
¥3,389

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2015

10. Loans and bills discounted

Thousands of U.S. dollars
Sale amount Gains on sale Losses on sale

Equity stock.............................. $   71,096
Bonds:
National............................... 2,374,237
Local....................................
102,912
Corporate............................
10,5072,487,656
Other........................................
126,310
Total......................................... $2,685,064$ 5,073$    73

25,9533,053
829,015
1,677$35,766

11,683——
11,683
7,383$19,140

Loans and bills discounted as of March 31, 2015 and 2014 included
the following non-performing amounts:

Millions of yen
2015
2014

Loans under bankruptcy............... ¥ 1,438
Non-accrual loans........................ 33,218
Loans past due over 3 months.....
354
Restructured loans....................... 30,641
Total............................................ ¥65,652(4) Impairment losses on securities
Securities with fair values that have fallen significantly below theiracquisition cost and whose fair values are not expected to recover arerecorded at fair value on the consolidated balance sheet with the valuation differences are expensed on the consolidated income statement(“impairment loss”).
No impairment losses were recorded in the fiscal years ended March
31, 2015 and 2014.
The Bank has standards for determining whether fair value has
decreased significantly, based on “Practical Guidelines on AccountingStandards for Financial Instruments (JICPA Accounting PracticeCommittee Report No. 14). The following are the details of this policy.
If, as of the end of the consolidated fiscal year, fair value has
decreased by 50 percent or greater than acquisition cost, the entire
holding is deemed to have decreased materially. If the decrease is
between 30 percent and 50 percent, the determination shall be madein light of the issuing entity’s credit risk and other factors (classificationof creditor according to self-assessment; and external credit rating).

Assets pledged as collateral as of March 31, 2015 and 2014 consistedof the following:

Millions of yen
2015
2014

Assets pledged as collateral:
Securities................................ ¥278,547 ¥203,296
Liabilities corresponding
to assets pledged as collateral:
Deposits.................................
20,02327,076
Payables under securities
lending transactions.................
40,5209,901
Borrowed money....................
95,40576,415

Amount on the consolidated balance sheet as of March 31, 2015 and2014 was ¥4,901 million ($40,790 thousand) and ¥4,901 million,
respectively.

Millions of yen
2015
2014

Securities..................................... ¥42,686

9. Net Unrealized Gains on Securities Available for Sale

$2,317,946

166,629
337,189
793,924¥37,875

Thousands of
U.S. dollars
2015$355,215

As of March 31, 2015 and 2014, Other assets included guaranteemoney and household deposits of ¥1,250 million ($10,402 thousand)and ¥1,273 million, respectively.

The following is a breakdown of net unrealized gains on securities
available for sale recorded in the consolidated balance sheet:

Net unrealized gains attributable
to minority interests...................
Parent’s ownership of affiliates
unrealized gains on securities
available for sale (gain)...............

Thousands of
U.S. dollars
2015

In addition to the assets presented above, the following assets were
pledged as collateral for exchange clearance transactions and futurescontracts at March 31, 2015 and 2014:

Money held in trust classified as held for trading purposes

Valuation difference..................... ¥101,754 ¥58,556
Other securities....................... 101,754
58,556
Money held in trust................
——
Deferred tax liabilities................... (32,549) (20,653)
Net unrealized gains on securities
available for sale (before equity
equivalent).................................
69,20537,903$ 11,973
276,425
2,947
254,986$546,333

11. Assets pledged as collateral

8. Matters relating to money held in trust

Millions of yen
2015
2014

¥ 1,461
44,636416
30,947¥77,462

Thousands of
U.S. dollars
2015

Thousands of
U.S. dollars
2015

12. Income taxes$846,758
846,758—(270,863)

Major components of deferred tax assets as of March 31, 2015 and2014 were as follows:(1) Deferred tax assets

Millions of yen
2015
2014

Excess reserve for possible loan
losses......................................... ¥ 10,113 ¥ 13,317
Valuation gain on securities
available for sale.........................
1,915
2,535
Net defined benefit liability..........
2,149
2,357
Excess depreciation......................
1,329
1,632
Other...........................................
5,059
5,216
Subtotal....................................... 20,568
25,059Valuation reserve.........................
(4,026)(4,036)
Deferred tax assets....................... 16,542
21,023
Deferred tax liabilities................... (34,619) (23,392)
Net deferred tax assets(liabilities)................................... ¥(18,077) ¥ (2,369)

575,894

(252)

(181)

(2,099)———Net unrealized gains on
securities available for sale......... ¥ 68,952¥37,722$573,795

26

Thousands of
U.S. dollars
2015$ 84,164
15,941
17,886
11,064
42,104
171,161(33,505)
137,655(288,088)$(150,432)

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(2) Income taxes

revaluation reserve for land in stockholders’ equity.
As of March 31, 2015 and 2014, the difference between the carrying amount and the fair value of the land revalued was ¥16,129 million($134,221 thousand) and ¥15,983 million, respectively.

The following table shows the major items responsible for the difference between the statutory tax rate and the effective tax rate after
application of tax-effect accounting at March 31, 2015 and 2014.

Statutory income tax rate...................................
Reconciliation:
Non-deductible expenses,
including entertainment expenses................
Non-taxable income,including dividend income..........................
Other permanent differences,including write-offs of securities
with a long-term holding period.................
Per-capita resident tax..................................
Increase (decrease) of valuation reserve.........
Decrease in term-end balance of deferred
tax assets due to income tax changes.........
Other............................................................
Effective income tax rate
under tax-effect accounting.............................

2015

2014

17. Impairment losses

35.3%

37.7%

During the years ended March 31, 2015 and 2014, the Bank recorded
losses on impairment of fixed assets as described below:

0.4

0.4

(3.1)

(2.5)

0.1
0.4
(0.3)

(0.3)
0.3
6.1

7.3
2.6

1.8
0.2

42.7%

43.7%

Location

Usage

Type

Kagawa Pref..... Idle assets andLand, buildings
assets for disposal and movables(2015: 13 items,
2014: 15 items)
Other............ Idle assets andLand, buildings
assets for disposal and movables(2015: 3 items,
2014: 4 items)
Total.............

(3) Adjustment of deferred tax assets and deferred tax
liabilities due to change in income tax rate
The “Law for Partial Revision of the Income Tax Law” (Law No. 9, 2015)
was publicly announced on March 31, 2015 and the corporate tax was
reduced from the fiscal year beginning on or after April 1, 2015. The
statutory tax rate used to calculate deferred tax assets and deferred tax
liabilities was lowered from 35.3% to 32.8% for the temporary differences expected to be eliminated in the fiscal year starting April 1, 2015
and will be further lowered to 32.0% for the temporary differences
expected to be eliminated in the fiscal year starting April 1, 2016. As aresult of this tax rate change, deferred tax liabilities decreased ¥1,953
million ($16,255 thousand), valuation gain on securities available forsale increased ¥3,347 million ($27,853 thousands), and income taxes– deferred increased ¥1,258 million ($10,474 thousand). Deferred tax
liability for land revaluation decreased ¥636 million ($5,300 thousand)and revaluation reserve for land increased by the same amount.

Location

Usage

Type

Kagawa Pref..... Idle assets andLand, buildings
assets for disposal and movables(2015: 13 items)
Other............ Idle assets andLand, buildings
assets for disposal and movables(2015: 3 items)
Total.............

13. Accumulated depreciation

Millions of yen
Loss amount
2015
2014

¥26
land: 20
buildings: 5
movables: 0¥65
land: 62
buildings: 3
movables: —¥91
land: 83
buildings: 8
movables: 0¥18
land: 8buildings: 9
movables: 0¥ 5
land: 5buildings: —movables: —¥24
land: 14buildings: 9
movables: 0

Thousands of
U.S. dollars
Loss amount
2015

$220
land: 173
buildings: 45
movables:   0$544
land: 519
buildings: 25
movables: —$764
land: 692
buildings: 71
movables:   0

The Bank posted impairment losses of ¥91 million ($764 thousand)and ¥24 million, respectively, during the years ended March 31, 2015
and 2014 on land and buildings, to deal with continuous declines inland prices. The Bank reduced the book value of the assets in question
to the recoverable amounts, and recorded the difference between the
carrying amount and the amount deemed recoverable of each asset asa loss on impairment of fixed assets under Other expenses.
In general, the Bank treats each of its branches as a single asset
group unit for recognition and measurement of impairment loss: jointly
managed branches, however, are treated as a single unit. Values of idle
assets and assets for disposal are measured on an individual basis.
Regarding head office buildings, operation and training centers,
dormitories, and housing and welfare facilities, these facilities areclassified as the Bank’s common property, as it is deemed difficult tospecify each asset as a source of identifiable cash flows in the future.
At the Bank’s consolidated subsidiaries, each business base of subsidiaries is usually considered as the smallest grouping unit. Idle assets andassets for disposal, however, are valued on an individual basis.
Recoverable amounts are measured using net selling prices; that is,
the net present value of the future cash flows. Net selling prices arecalculated on the basis of appraisal values of land after deduction of
estimated cost of disposal, which is based on amounts computed using

Accumulated depreciation of tangible fixed assets as of March 31,
2015 and 2014 amounted to ¥35,675 million ($296,874 thousand)and ¥35,910 million, respectively.

14. Borrowed money
Borrowed money consists of loans from other financial institutions.
As of March 31, 2015 and 2014, subordinated borrowings in theamount of ¥4,000 million ($33,286 thousand) and ¥17,000 million,
respectively, were included in borrowed money.

15. Corporate bondCorporate bond consists solely of subordinated bonds in the amount of¥10,000 million ($83,215 thousand) and ¥10,000 million, as of March
31, 2015 and 2014.

16. Revaluation reserve for land
Based on the Law on the Revaluation of Land, the Bank’s land wasrevalued on March 31, 1999.
The amounts equivalent to deferred tax on the land revaluation
were recorded as deferred tax liabilities for land revaluation in liabilities,
and net unrealized gains on the land revaluation were recorded as

27

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
2. As lessor

the method laid down by the National Tax Agency for calculation ofland prices (used as the basis for computing taxable amounts as set
forth in Article 16 of the Land Tax Law).

(1) Breakdown of lease investment assets

18. M
 atters relating to consolidated statements ofcomprehensive income

Millions of yen
2015
2014

Lease receivables.......................... ¥16,716
Estimated residual value...............
1,703
Interest received...........................
(1,781)
Lease investment assets............... ¥16,637

The amount of recycling and amount of income tax effects associatedwith other comprehensive income
Millions of yen
2015
2014

Net unrealized gains on
securities, net of taxes:
Amount recognized during
the year................................... ¥ 46,679
Amount of recycling..................
(3,472)
Prior to income tax effect........
43,206
Income tax effect.................... (11,904)
Net unrealized gains on
securities available for sale......
31,302
Net deferred losses on hedges
instruments, net of taxes:
Amount recognized during
the year...................................
(5,151)
Amount of recycling..................
762
Prior to income tax effect........
(4,389)
Income tax effect....................
1,403
Deferred gains (losses)on hedges............................
(2,985)
Revaluation reserve for land:
Amount recognized during
the year...................................
—
Amount of recycling..................
—
Prior to income tax effect........
—
Income tax effect....................
636
Revaluation reserve for land....
636
Remeasurements of defined
benefit plans:
Amount recognized during
the year...................................
6,094
Amount of recycling..................
507
Prior to income tax effect........
6,602
Income tax effect ...................
(2,251)Remeasurements of defined
benefit plans.........................
4,350
Total other comprehensive income.... ¥ 33,304

Thousands of
U.S. dollars
2015¥ 3,661(4,326)(664)
234$388,443(28,894)359,548(99,067)(430)

260,481

(175)
348
172
(61)

(42,870)
6,343(36,526)
11,681

111(24,845)

—
—
—
—
—

50,7194,223
54,942(18,735)—¥  (318)

36,206$277,143$139,102
14,177(14,827)$138,452(2) S chedule for collection of lease receivables andreceivables on lease investment assets by leasing
contract maturity

2015

Up to 1 year..............................
Over 1 year, up to 2 years.........
Over 2 years, up to 3 years........
Over 3 years, up to 4 years........
Over 4 years, up to 5 years .......
Over 5 years..............................

2014

Up to 1 year..............................
Over 1 year, up to 2 years.........
Over 2 years, up to 3 years........
Over 3 years, up to 4 years........
Over 4 years, up to 5 years .......
Over 5 years..............................

—
—
—
5,300
5,300

—
—
—
—

¥17,907
1,778(1,933)¥17,752

Thousands of
U.S. dollars
2015

2015

Up to 1 year..............................
Over 1 year, up to 2 years.........
Over 2 years, up to 3 years........
Over 3 years, up to 4 years........
Over 4 years, up to 5 years .......
Over 5 years..............................

Millions of yen
Receivables on lease
Lease receivables
investment assets

¥56
50
46
41
33
2

¥5,311
4,344
3,142
2,161
1,093
662

Millions of yen
Receivables on lease
Lease receivables
investment assets

¥43
41
35
31
26
23

¥5,479
4,459
3,505
2,308
1,353
800

Thousands of U.S. dollars
Receivables on lease
Lease receivables
investment assets

$470
423
386
343
281
20

$44,202
36,153
26,14817,9879,098
5,511(3) Regarding finance lease transactions that do not transfer ownership ofthe leased assets to the lessee and whose date of commencement of leasing was prior to the start of application of the new accounting standards,
the book value (after deduction of accumulated depreciation expenses)of the tangible fixed assets and intangible fixed assets at the end of thelast business term prior to the start of application of the new accounting
standards is taken as the start-of-term value of the lease assets.
Regarding the lease investment assets in question, amounts equivalent to interest receivable under the new accounting standards will beallocated on a straight-line basis to the remaining interest period.
On the assumption of application of the new accounting standards
for leasing transactions at the beginning of the leasing transactions inquestion, net loss before income taxes and minority interests would
have decreased by ¥14 million ($116 thousand) (¥44 million in theprevious consolidated fiscal year) compared with the amount posted in
the Consolidated Statements of Operations.

19. Finance leases
Information on finance leases for the years ended March 31, 2015 and2014 are as follows:
1. As lessee
Finance lease transactions that do not transfer ownership(1) Components of lease assets(a) Tangible fixed assets
Primarily consisting of ATMs(b) Intangible fixed assets
None(2) Depreciation and amortization methods for lease assets
Depreciation and amortization methods for lease assets are describedin Note 3. Significant accounting policies (5) Depreciation and amortization methods for lease assets.

28

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
20. Financial instruments(3) Risk Management for financial instruments(a) Credit risk management
The Group has compiled Credit Risk Management Rules and related
documents, and, under the Risk Management Committee (Credit
Risk Management Subcommittee), monitors and manages credit risk
exposures.
In addition, the Risk Management Division acts as the credit risk
managing department for granting and verifying internal credit ratings,
measures the amount of credit risk and sets and manages credit limits.

1. Disclosures related to financial instruments(1) Financial instrument policies
The Bank and its subsidiaries (the “Group”) provides banking services,
including leasing and other financial services. We limit risk within thescope of its business capacity, while realizing profits commensuratewith the risk of the financial instruments held. To accomplish thisgoal, the Group quantifies, to the greatest extent possible, various
risks related to financial instruments using statistical methods. We
categorize capital (risk capital) according to the size of the risk, engaging in “integrated risk management,” incorporating a capital allocation
system that monitors risk versus return. We continue to improve ourefficiency in risk management, ensuring greater stability and soundness
for our business as a whole.

(b) Market risk management
The Group has established “Market Risk Management Rules” alongwith relevant documentation, and the “Risk Management Committee”(Market Risk Management Subcommittee), which monitors market
risk and maintains management systems. “The Revenue Management
Committee” (Budget ALM Subcommittee) deliberates on the stabilityof medium- and long-term profit in light of risk circumstances.
Departments involved in the execution of market transactions(Treasury and International Division) have been divided into front office(transaction execution), back office (clerical), and middle office (market
risk management) roles. This creates a system of internal checks andbalances, with the Risk Management Division in charge of managing
overall market risk.

(2) Nature and extent of risks arising from financial
instruments
The major types of financial assets held by the Group are loans andbills discounted and securities. Loans and bills discounted are mainly
for domestic corporations and individuals, and are exposed to credit
risk, interest rate risk, and foreign exchange risk. If loans and bills discounted are concentrated excessively on a particular corporate groupor industry type, the Group’s stockholders’ equity may suffer significant
adverse effects. Therefore, the Group has set maximum loan balancesfor each corporate group or industry type, and has in place a system
for monitoring compliance with these thresholds to prevent such an
excessive concentration of risk.
Securities mainly consist of stocks, bonds, investment trusts anddirect investments. These investments are as a pure investment vehicle
or as part of a Group investment policy. Certain bonds are held forresale. These investments are exposed to the credit risk of the issuingbody, interest rate risk, price volatility risk and/or foreign exchange risk.
Securities include financial instruments with limited market liquidity,
including private placement bonds underwritten by the Group, private
equity shares, and direct investments.
Financial liabilities mainly consist of deposits received from domestic
corporations and individuals. These financial liabilities are exposed tointerest rate risk, exchange rate risk, and liquidity risk.
Derivative transactions entered into by the Group include interest
rate and currency swaps, options, futures/forward contracts, and cap
transactions. These transactions are generally entered into with a client
to cover the underlying financial instrument. Such transactions are variously exposed to interest rate risk, foreign exchange risk, price volatility
risk, and the credit risk of the counter party.
Some derivatives transactions entered into by the Group involve
interest rate swaps that were concluded in line with the amount andtiming of the interest income cash flow of the underlying financial
assets for the purpose of hedging their exposure to interest rate risks.
Evaluation of the effectiveness of the hedges was omitted in accordance with “JICPA Industry Audit Committee Report No. 24” because
the conditions of the hedge techniques were matched with the hedged
assets for the most part. Some derivative transactions entered into by
the Group involve currency swaps and foreign exchange swaps forthe purpose of hedging exchange rate fluctuation risk associated withfinancial assets denominated in foreign currencies. Such transactions
are treated as deferred hedges as defined under “JICPA Industry Audit
Committee Report No. 25.” The Group assesses hedge effectivenessfor hedging transactions to confirm whether a position is commensurate with the value of the foreign currency-denominated financial asset
subject to the hedge.

(i) Interest rate risk management
The Group manages interest rate risk using statistical methods toquantify the size of the interest rate risk. When deemed necessary,
the Group establishes and manages limits on positions and profits andlosses for securities, derivatives, and other market transactions. The
Group also enters into derivative transactions for interest rate swaps tohedge interest rate risk as part of the ALM.
(ii) Foreign exchange risk management
The Group uses statistical methods to quantify and manage foreignexchange risk. The Group also establishes and manages limits on positions and profits and losses.
(iii) Price volatility risk management
The Group uses statistical methods to quantify and manage pricevolatility risk. The Group establishes and manages limits on positions
and profits and losses.
(iv) Quantitative information regarding market risks
a. Financial instruments held for trading purposes
In measuring the VaR of interest-rate risks associated with trading
securities, interest-rate futures and related transactions as well as
the VaR of foreign currency exchange risks associated with foreignexchange trading and related transactions, the Hyakujushi Bank
Group applies the historical simulation method with a holding periodof 10 days, level of confidence of 99% and observation period of
1,200 business days. As of March 31, 2015 (the consolidated balance sheet date), the volume of the aforementioned risks (estimatedamount of loss) amounted to ¥7 million ($58 thousand) (comparedwith ¥5 million at the end of the previous consolidated fiscal year).
b. Financial instruments not held for trading purposes
In measuring the VaR of interest-rate risks associated with loans
and bills discounted, investment securities, deposits, and interbank,interest-rate swap and related transactions, as well as the VaR forvolatility risks associated with the prices of publicly listed company
shares, the Hyakujushi Bank Group applies the historical simulation
method with a holding period of 120 days, confidence of 99% andobservation period of 1,200 business days. As of March 31, 2015,
the volume of the aforementioned risks (taking into consideration
the correlation or reciprocal risks) amounted to ¥28,210 million($234,750 thousand) (compared with ¥22,126 million in the end

29

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statementsof the previous fiscal year). Results of statistical analysis are used
for liquid deposits, which are recognized as being in part long-term
fixed procurement and as such subject to interest-rate risk.
In addition, in measuring the VaR of price volatility risks ofinvestment trusts, the Hyakujushi Bank Group applies the variancecovariance method with a holding period of 20 days, confidence
interval of 99% and observation period of 240 business days, while
in measuring the VaR of risks involving interest rates of money
held in trust, price volatility or exchange rates, the Group applies
the historical simulation method with a holding period of 20 days,
confidence interval of 99% and observation period of 1,200 business days. As of March 31, 2015, the volume of the aforementioned
risks amounted to ¥5,776 million ($48,065 thousand) (compared to¥3,993 million in the end of the previous fiscal year).
c. VaR
The Hyakujushi Bank Group uses back testing to compare the VaR
computed by the models and the hypothesized gain/loss (gain or loss
assumed generated when the portfolio is fixed at the time of measuring the VaR) to verify the reliability of these measured models.
However, VaR determined using the historical simulation and variance covariance methods is a measure of the volume of market risk
at a certain event probability statistically computed utilizing changes
in historical market data. In this context, there are cases in which
VaR cannot capture risk under sudden and dramatic changes in themarket beyond normal circumstances.
(c) Liquidity risk management
The Group has established “Liquidity Risk Management Rules” andother related guidelines as a basis for managing liquidity risk. The
Group has also established “Liquidity Crisis Response Rules” to ensure
a prompt response to unexpected situations that may affect cash
management. These rules assume that unexpected situations willarise and classifies them into the categories of “caution” and “crisis”
categories, thereby enabling the Group to respond in a timely andappropriate manner.
The Liquidity Risk Management Department (Treasury andInternational Division) performs daily and monthly cash projections
to ensure proper and stable cash management based on the Group’s
investment/acquisition structure, ensuring sufficient liquidity reserves.
The Liquidity Risk Management Department is also responsible for
identifying, analyzing, assessing and monitoring liquidity risk inconsideration of internal and external factors that may have an impact
on said risk.

Millions of yen

2015

Consolidatedbalance sheet
amountFair value(1) Cash and due from banks......... ¥ 305,246 ¥ 305,246(2) Call loans and bills bought........
3,605
3,605
(3) Trading account securities andsecurities available for sale......
22(4) Money held in trust...................
4,901
4,901
(5) Securities
Held-to-maturity debt securities....
——Other securities......................... 1,451,771 1,451,771(6) Loans and bills discounted........ 2,696,444
	Reserve for possible
loan losses..............................
(15,341)
2,681,103 2,703,404
Total Assets................................... 4,446,631 4,468,932(1) Deposits.................................... 3,801,437 3,801,853(2)	Negotiable certificates ofdeposit...................................
169,926
169,953(3) Call money and bills sold...........
48,06848,068(4) Borrowed money......................
128,635
128,650(5) Corporate bonds.......................
10,00010,034
Total Liabilities............................... 4,158,066 4,158,560
Derivative Transactions *1
Not subject to hedge
accounting..............................
12,194
12,194
Subject to hedge accounting.....
(10,097)(10,097)
Total Derivative Transactions.......... ¥   2,096 ¥   2,096

Difference¥    ——————

22,301
22,301
416
27
—
15
34
493

—
—
¥    —

Millions of yen

2014

Consolidatedbalance sheet
amountFair value(1) Cash and due from banks......... ¥ 390,388 ¥ 390,388(2) Call loans and bills bought........
——(3) Trading account securities andsecurities available for sale......
88(4) Money held in trust...................
4,901
4,901
(5) Securities
Held-to-maturity debt securities....
——Other securities......................... 1,332,521 1,332,521(6) Loans and bills discounted........ 2,614,215
	Reserve for possible
loan losses..............................
(18,785)
2,595,430 2,611,121
Total Assets................................... 4,323,251 4,338,942(1) Deposits.................................... 3,769,308 3,769,814(2)	Negotiable certificates ofdeposit...................................
184,119
184,156(3) Call money and bills sold...........
38,59538,595(4) Borrowed money......................
121,083
121,086(5) Corporate bonds.......................
10,00010,078
Total Liabilities............................... 4,123,105 4,123,731
Derivative Transactions *1
Not subject to hedge
accounting..............................
10,19010,190Subject to hedge accounting.....
(1,362)(1,362)
Total Derivative Transactions.......... ¥   8,827 ¥   8,827(4) Supplementary information regarding fair value offinancial instruments
The fair value of financial instruments includes their respective market
prices, and rationally calculated values if the fair value of the financial
instrument is not available. Certain assumptions are used to calculate saidvalues, and said values may vary when differing assumptions are used.

2. Fair value of financial instruments
The consolidated balance sheet amount, fair values and the differences
as of March 31, 2015 and 2014 are as follows. Private equity sharesor other shares whose fair values are not readily determinable are notincluded in the following table.

30

Difference¥    ——————

15,691
15,691
506
37
—
3
78
626

—
—
¥    —

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(5) Securities

Thousands of U.S. dollars

2015

Consolidatedbalance sheet
amountFair value(1) Cash and due from banks......... $ 2,540,124 $ 2,540,124(2) Call loans and bills bought........
30,00030,000(3) Trading account securities andsecurities available for sale......
21
21(4) Money held in trust...................
40,79040,790(5) Securities
Held-to-maturity debt securities....
——Other securities......................... 12,080,979 12,080,979(6) Loans and bills discounted........ 22,438,586
	Reserve for possible
loan losses..............................
(127,663)
22,310,923 22,496,504
Total Assets................................... 37,002,838 37,188,419(1) Deposits.................................... 31,633,827 31,637,290(2)	Negotiable certificates ofdeposit................................... 1,414,048
1,414,278(3) Call money and bills sold...........
400,000
400,000(4) Borrowed money...................... 1,070,445
1,070,574(5) Corporate bonds.......................
83,21583,503
Total Liabilities............................... 34,601,537 34,605,647
Derivative Transactions *1
Not subject to hedge
accounting..............................
101,475
101,475
Subject to hedge accounting.....
(84,029)(84,029)
Total Derivative Transactions.......... $   17,446 $   17,446

Stocks and corporate bonds are valued at market prices. Investment
trusts are valued at their published base price.
Private placement bonds guaranteed by the Group are categorizedaccording to internal credit rating and maturity, and valued at fairvalue, discounting by a projected interest rate applicable when a bondin the same total amount of principal and interest is issued.
See the section under “Securities and trading account securities”
for further information about the securities by intent of holding.

Difference$     ————

(6) Loans and bills discounted——

Loans and bills discounted are valued at present value in each category
by internal rating and maturity, discounting the total amount ofprincipal and interest by an assumed applicable interest rate whensimilar loans are made.
Loans to borrowers who are bankrupt, substantially bankrupt, or
likely to go bankrupt are valued net of the estimated uncollectible
amount based on the current value of estimated future cash flows, orthe estimated collectible portion based on the collateral or guarantee
underlying the loan. As such, the balance of the loan on the consolidated balance sheet as of the last day of the fiscal period less thecurrent estimated uncollectible amount approximates the fair value.
For loans and bills discounted with no repayment deadline, due totheir nature, such as the limited range of pledged assets for said loans,
their fair values are valued at book value, because they are assumed toapproximate the fair values due to expected repayment deadlines andinterest rate conditions.

185,581
185,581
3,462
230
—
128
288
4,109

—
—
$     —

Liabilities*1 All derivative transactions recorded in Other assets and Other liabilities are(1) Deposits and (2) Negotiable certificates of deposit

presented in one line item on a net basis. Net payables and receivables resulting from derivative transactions are presented at net of tax. Items that come tonet payables in the aggregate are presented in parentheses.
*2 Items with no material impact have not been listed.

The Group considers the fair value of demand deposits to be thepayment (book value) of the instrument as if demanded on the last dayof the consolidated fiscal year. The fair value of time deposits is valued
at present value in each category by specific deposit term, discounting
future cash flow by the interest rate used when accepting new deposits.
Since book value approximates fair value for items with a short deposit
term, the book value shall be the fair value for these instruments.

Calculation method for fair value of financial instruments
Assets(1) Cash and due from banks(3) Call money and bills sold

The fair value of due from banks with no maturity date is valued atbook value, since the book value approximates the fair value. Due frombanks with a maturity date is valued at present value in each category
by deposit term, discounting by an assumed applicable interest rate
when new deposit are accepted.
Items with a short contract period are valued at book value, sincebook value approximates their fair value.

Due to the short contract period of these instruments, the Groupconsiders their book value to approximate the fair value.

(4) Borrowed money
Borrowed money subject to variable interest rates reflects market
interest rates over a short-term. As the credit status of the Bank andits consolidated subsidiaries has not significantly changed since thesetransactions were executed the Group believes that the book value
approximates the fair value of these instruments. The fair value for borrowed money subject to fixed interest rates is valued at present value,
discounting the total amount of principal and interest categorizedby specific term by an assumed applicable interest rate when similarborrowings are entered into.

(2) Call loans and bills bought
Items with a short contract period are valued at book value, since thebook value approximates their fair value.

(3) Trading account securities
Corporate bonds and other available-for-sale securities are valued atmarket prices and internal model.

(5) Corporate bonds(4) Money held in trust

The fair value of corporate bonds is valued at present value by
discounting the total amount of principal and interest by an assumed
applicable interest rate when similar corporate bonds are issued.

With respect to securities that are managed as trust assets in individually managed money held in trust accounts whose main purpose is
securities investment, stocks are valued at the stock market price, whiledebt-securities are valued at the stock market price or the price statedby the correspondent financial institution.
Notes concerning money held in trust by purpose held arecontained in “8. Matters relating to money held in trust.”

Derivative Transactions
See the section under “(Derivative Transactions)” for further information about derivatives.
The following are financial instruments whose fair values are not

31

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements*1 As private equity shares have no market price, and their fair values are notreadily determinable, their fair values are not stated.
*2 The Group recorded a ¥0 million ($0 thousand) and ¥1 million impairment
loss for unlisted equity stock for the consolidated fiscal years ended March 31,
2015 and 2014.
*3 For investments in partnership for which the fair value is not readily determinable, the fair value has not been disclosed because the underlying partnershipassets are comprised of unlisted equity stock.

readily determinable as of March 31, 2015. These are not includedin the “Assets (5) Securities” section under fair value information for
financial instruments.
Millions of yen

Thousands of
U.S. dollars

Consolidatedbalance sheet
amountConsolidatedbalance sheet
amountCategory

2015

2014

2015

1. Private equity shares *1*2.........
2. Investment in partnership *3....
Total............................................

¥2,767150¥2,917¥2,787331¥3,119$23,027
1,250$24,277

Estimated redemption amounts of monetary claims and securities with maturities after the consolidated fiscal years as of March 31, 2015 and 2014
Millions of yen
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years

2015

Up to 1 year

Over 1 year,
up to 3 years

Deposits................................................................
Call loans and bills bought....................................
Monetary claims bought.......................................
Securities:
Other securities with maturities.............................
National government bonds..............................
Local government bonds...................................
Corporate bonds...............................................
Other................................................................
Loans and bills discounted*..................................
Total.....................................................................

¥ 268,053
3,605
29,982¥     ———

¥     ———

¥     ———

¥     ———

¥     ——
1,077

167,934
59,77347,67828,96931,513
1,066,934¥1,536,510

311,439
126,168
45,952
90,76948,548517,360¥828,800

413,180
186,074
28,23097,343
101,532
329,825¥743,006

155,847
127,588
2,949
13,933
11,376
178,914¥334,761

126,361
50,34938,81921,495
15,697
175,084¥301,445

66,06743,536—
10,505
12,026355,187¥422,333

2014

Up to 1 year

Over 1 year,
up to 3 years

Millions of yen
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years

Deposits................................................................
Monetary claims bought.......................................
Securities:
Other securities with maturities.............................
National government bonds..............................
Local government bonds...................................
Corporate bonds...............................................
Other................................................................
Loans and bills discounted*..................................
Total.....................................................................

¥ 353,488
31,038¥     ——

¥     ——

¥     ——

¥     ——

¥     —
1,349

208,503
131,609
34,792
29,305
12,796
1,071,030¥1,664,061

336,252
137,818
75,25672,43950,737
468,808¥805,061

254,199
105,801
26,362
73,62048,415331,817¥586,016

209,913155,122
19,41026,604
8,776
170,630¥380,543

152,490
121,184
16,13614,1481,020
161,547¥314,037

15,482
15,482———327,237¥344,068

Up to 1 year

Over 1 year,
up to 3 years

Thousands of U.S. dollars
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years$      ———

$      ———

$      ———

$      ———

$      —
—8,968

2,591,661
1,049,919
382,395
755,343
404,001
4,305,235$6,896,897

3,438,302
1,548,431
234,917810,049
844,904
2,744,656$6,182,959

1,296,890
1,061,735
24,541
115,944
94,6691,488,845$2,785,735

1,051,520
418,982
323,038
178,872
130,627
1,456,973$2,508,494

549,787362,286—
87,418100,0812,955,707$3,514,463

2015

Deposits................................................................ $ 2,230,617
Call loans and bills bought....................................
30,000
Monetary claims bought.......................................
249,497
Securities:
Other securities with maturities.............................
1,397,476
National government bonds..............................
497,404
Local government bonds...................................
396,759
Corporate bonds...............................................
241,071
Other................................................................
262,241
Loans and bills discounted*..................................
8,878,544
Total..................................................................... $12,786,136*Among loans and bills discounted, ¥34,672 million ($288,528 thousand) and ¥46,112 million in loans for bankrupt, substantially bankrupt and likely to go bankrupt
borrowers or other loans of which repayment is not expected, and ¥38,465 million ($320,093 thousand) and ¥37,031 million in loans with no established maturity havenot been included.

32

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Corporate bonds, borrowed money and other interest-bearing debt scheduled to be repaid after the end of the consolidated fiscal years as of March
31, 2015 and 2014
Millions of yen
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years

2015

Up to 1 year

Over 1 year,
up to 3 years

Deposits*..............................................................
Negotiable certificates of deposit..........................
Call money and bills sold.......................................
Borrowed money..................................................
Corporate bonds...................................................
Total.....................................................................

¥3,556,295
169,926
48,06820,480—¥3,794,769¥235,953——
62,047—¥298,000

2014

Up to 1 year

Over 1 year,
up to 3 years

Deposits*..............................................................
Negotiable certificates of deposit..........................
Call money and bills sold.......................................
Borrowed money..................................................
Corporate bonds...................................................
Total.....................................................................

¥3,474,218
183,819
38,59544,943—¥3,741,576¥285,220300—
52,206—¥337,727

Up to 1 year

Over 1 year,
up to 3 years

Thousands of U.S. dollars
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years

Deposits*.............................................................. $29,593,867
Negotiable certificates of deposit..........................
1,414,048
Call money and bills sold.......................................
400,000
Borrowed money..................................................
170,428
Corporate bonds...................................................
—
Total..................................................................... $31,578,344$1,963,493——
516,328—$2,479,822$ 68,383——
329,018—$397,4012015¥ 8,217——
39,538—¥47,755¥   522——5,164
10,000¥15,687

Millions of yen
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years¥ 8,871——
4,821—¥13,693¥   462——
14,077—¥14,539$  4,350——
42,97883,215$130,544

Over 7 years,
up to 10 years

Over 10 years

¥ 448
—
—
745
—
¥1,194

¥ —
—
—
659
—
¥659

Over 7 years,
up to 10 years

Over 10 years¥   534——
4,827
10,000¥15,362

¥ —
—
—
207
—
¥207

Over 7 years,
up to 10 years

Over 10 years$3,733——
6,207—$9,940

$   —
—
—
5,484
—
$5,484*Among deposits, demand deposits are included in “Up to 1 year.”

21. Accrued retirement benefits(2) Defined benefit plan(1) Overview of retirement benefit scheme adopted by
the Bank(a) Reconciliation of retirement benefit obligations at beginning andend of period

As defined-benefit type plans, the Bank has established a contract-typedefined benefit corporate pension plan and a retirement lump-sum
payment plan. In some cases, an extra severance package is provided
to employees on their retirement and so on. In addition, the Bank has
set up a retirement benefit trust.
The Bank’s domestic consolidated subsidiaries have established aretirement lump-sum payment plan as defined-benefit type plans, anda defined contribution pension plan as defined-contribution type plan.
Further, for the retirement lump-sum payment plan of domestic consolidated subsidiaries, the Bank calculates retirement benefit liabilities
and retirement benefit costs by the simplified method.

Retirement benefit obligations at
beginning of period...................
Cumulative effects of changes
in accounting policies............
Restated balance....................
Service costs...........................
Interest costs..........................
Actuarial differences...............
Retirement benefits paid.........
Prior service costs....................
Retirement benefit obligations at
end of period.............................

33

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015¥48,617¥47,154$404,571

2,491
51,108
1,491
468
277
(1,690)——47,154
1,439
432
1,545
(2,272)318

20,730425,301
12,4123,901
2,313(14,065)—¥51,656¥48,617$429,863

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(b) Reconciliation of pension assets at beginning and end of period

Millions of yen

Thousands of
U.S. dollars
Fiscal year ended March 31

2015

Pension assets at beginning of
period........................................ ¥48,527
Expected return on pension
assets.........................................
556
Actuarial differences....................
6,372
Contribution from employer........
2,105
Retirement benefits paid..............
(1,369)Pension assets at end of period.... ¥56,192

Actuarial differences....................
Total............................................

2014

2015

¥44,266$403,825

502
3,114
1,971
(1,327)¥48,527

4,627
53,032
17,519(11,396)$467,607

Retirement benefit obligations offunded plan................................. ¥ 51,656 ¥ 48,617
Pension assets.............................. (56,192) (48,527)(4,535)89
Retirement benefit obligations of
unfunded plan...........................
——Net amount of liabilities andassets recorded in consolidatedbalance sheet............................. ¥ (4,535) ¥    89Millions of yen
2015
2014

Retirement benefit liabilities......... ¥   155Retirement benefit assets............. (4,691)
Net amount of liabilities andassets recorded in consolidatedbalance sheet............................. ¥(4,535)

Unrecognized actuarial
differences.................................
Total............................................

Thousands of
U.S. dollars
2015

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

2015

¥2,399¥2,399¥(4,203)¥(4,203)$19,966$19,966

2015

2014

13%
56
25
6
100%

13%
53
28
6
100%

(ii) Method for determining expected long-term rate of return on
pension assets
To determine expected long-term rate of return on pension assets,
the Bank considers the current and projected pension asset allocations, as well as long-term rate of current returns and expected
returns from each category consisting pension assets.

(d) Breakdown of retirement benefit costs

Service costs*.............................. ¥1,491
Interest costs................................
468
Expected return on pension
assets.........................................
(556)
Amortization of actuarial
differences.................................
507
Amortization of past service costs.
—
Retirement benefit costs fordefined benefit plans................. ¥1,911

2014

Note: T otal pension assets include retirement benefit trusts established forthe corporate pension plan (23.28% in fiscal year ended March 31,
2015 and 22.93% in fiscal year ended March 31, 2014) and retirement
benefit trusts established for the retirement lump-sum payment plan
(20.61% in fiscal year ended March 31, 2015 and 19.77% in fiscal year
ended March 31, 2014).

$ (37,744)$(37,744)

Thousands of
U.S. dollars

2015

Bonds........................................................
Stocks........................................................
Life insurers’ general account.....................
Other.........................................................
Total..........................................................

—

¥ 89

$54,942$54,942(g) Items related to pension assets(i) The following is the percentage of total pension assets by maincategory:$ 429,863(467,607)(37,744)$ 1,292(39,036)¥—¥—

Millions of yen

Thousands of
U.S. dollars
2015

¥ 947
(857)

¥6,602¥6,602Thousands of
U.S. dollars
2015(April 1, 2014
to March 31,
2015)(f) Remeasurements of retirement benefit plans
The following is a breakdown of items (before deducting tax effects)
recorded in remeasurements of retirement benefit plans:(c) Reconciliation of retirement benefit obligations and pension
assets at end of period and retirement benefit liabilities and assets
recorded in the consolidated balance sheet

Millions of yen
2015
2014

Millions of yen
2014
2015
(April 1, 2014 (April 1, 2013
to March 31, to March 31,
2015)
2014)

(h) Assumptions for making actuarial calculation
Major assumptions for actuarial calculation at the end of the fiscal year
under review¥1,439432$12,412
3,901

(502)

(4,627)1) Discount rate2) Expected long-term rate of return3) Assumed salary increase rate

783
318

4,223
—

(3) Defined contribution pension plan

¥2,470$15,910

2015

2014

0.92%
2.00%
3.20%

0.92%
2.00%
3.20%

The required contribution to the defined contribution plans of consolidated subsidiaries was ¥6 million ($57 thousand) in fiscal year ended
March 31, 2015 and ¥7 million in fiscal year ended March 31, 2014.

*Retirement benefit costs of domestic consolidated subsidiaries that use thesimplified method are recorded in lump-sum in “Service costs.”(e) Remeasurements of defined benefit plans
The breakdown of items (before adjusting for tax effects) recorded inadjustment of defined benefit plan.

22. Stock options
1. Stock option expenses and accounts for the consolidated fiscal years
ended March 31, 2015 and 2014
Millions of yen
2015
2014

Operating expense.......................

34

¥48

¥51

Thousands of
U.S. dollars
2015

$400

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
2. Stock option details, size, and changes(1) Stock option details
2009 stock options

2010 stock options

2011 stock options

2012 stock options

2013 stock options

2014 stock options

Category and number ofgrant recipients������������������ The bank’s twelve
directors

The bank’s ten
directors

The bank’s ten
directors

The bank’s ten
directors

The bank’s ten
directors

The bank’s ten
directors(excluding outside
directors)

Common stock:
159,000 shares
July 26, 2010
No vesting terms
No service period
specified
July 27, 2010 toJuly 26, 2040

Common stock:
187,300 shares
July 26, 2011
No vesting terms
No service period
specified
July 27, 2011 toJuly 26, 2041

Common stock:
175,000 shares
July 24, 2012
No vesting terms
No service period
specified
July 25, 2012 toJuly 24, 2042

Common stock:
172,500 shares
July 23, 2013
No vesting terms
No service period
specified
July 24, 2013 toJuly 23, 2043

Common stock:
136,600 shares
July 25, 2014
No vesting terms
No service period
specified
July 26, 2014 to
July 25, 2044

2009 stock options

2010 stock options

2011 stock options

2012 stock options

2013 stock options

2014 stock options

50,700———50,70086,300———86,300105,000———
105,000

145,800——
14,600131,200

172,500——
14,400158,100—
136,600——
136,600

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
14,60014,600———14,40014,400
—
—

—
—
—
—
—

2009 stock options

2010 stock options

2011 stock options

2012 stock options

2013 stock options

2014 stock options

Per share:    ¥1Per share: ¥—Per share: ¥418

Per share:    ¥1Per share: ¥—Per share: ¥315

Per share:    ¥1Per share: ¥—Per share: ¥279

Per share:    ¥1Per share: ¥368
Per share: ¥256

Per share:    ¥1Per share: ¥368
Per share: ¥321

Per share:    ¥1Per share: ¥—Per share: ¥335

Type and number of stock
options granted (Note)�������
Grant date............................
Vesting terms........................
Service period����������������������
Exercise period���������������������

Common stock:
128,500 shares
July 24, 2009
No vesting terms
No service period
specified
July 25, 2009 to
July 24, 2039

Note: Converted to equivalent number of shares.

(2) Stock option size and changes(a) Number of stock options
Prior to vesting (shares):
Prior fiscal year end.............
Granted..............................
Expired...............................
Vested shares......................
Unvested shares..................
After vesting (shares):
Prior fiscal year end.............
Vested shares......................
Exercised.............................
Expired...............................
Unexercised........................
(b) Unit price information (in year)
Exercise price........................
Average price at exercise.......
Fair value on grant date........

3. Method for estimating fair value of stock options

4. Method for estimating number of vested stock options

The following method was used to estimate the fair value of 2014
stock options granted during the consolidated fiscal year ended March
31, 2015.

In general, as it is difficult to rationally estimate the future number of
expired stock options only the actual number of expired stock options
is reflected.

(1) Valuation technique: Black-Scholes formula

23. Derivative transactions(2) Important assumptions and estimation methods(1) Type of transactions

2014 stock options

Stock volatility*1................................
Projected remaining years*2...............
Projected dividend (in year)*3..............
Risk-free interest rate*4......................

The Bank and its consolidated subsidiaries undertake the following
derivatives transactions: in interest-rate related transactions, we handle
interest-rate futures, interest-rate options, and interest-rate swaps; incurrency-related transactions, we handle forward exchange contracts,
currency options, and currency swaps; and in securities-related transactions, we handle bond futures, and bond options.

29.8%
2.8 years
Per share: ¥7
0.07%*1 Calculated weekly for the period beginning the week of October 3, 2011
through the week of July 21, 2014 based on actual market prices.
*2 Estimated according to the average remaining tenures of directors as ofthe date of issuance based on the average service period from the date ofassumption of office to the date of resignation, or the period from the date ofassumption of office to the issuance date.
*3 Actual dividends for the fiscal year ended March 2014.
*4 Yield of government bonds during the period of estimated remaining years.

(2) Aims and policy
The Bank offers derivative products to meet customer needs, and tominimize risk from exchange rate and interest rate fluctuations regarding the Bank’s assets and liabilities.

35

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Market prices of interest-rate swap transactions as of March 31,
2015 and 2014 were as follows:
2014

2015

Millions of yen
Contracted value
Total
Over 1 year Fair valueOver the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... ¥49,276
Variable rate receivable/
fixed rate payable........ 49,276
Others:Sell................................
1,240
Buy...............................
1,240
Total...................................

2014

Over the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... ¥65,044
Variable rate receivable/
fixed rate payable........ 65,044
Others:Sell................................
1,813
Buy...............................
1,813
Total...................................

2015

¥ 917

¥ 917

41,587

(430)

(430)

1,101
1,101

1
1
¥ 490

69
(18)
¥ 538

Millions of yen
Contracted value
Total
Over 1 year Fair valueOver the counter
Currency swaps................ ¥245,670 ¥195,950
Forward exchange
contracts:
Sell................................ 60,163
4,836
Buy............................... 54,292
4,271
Currency options:Sell................................ 132,872
84,772
Buy............................... 132,872
84,772
Total...................................

Appraisedprofit/(loss)¥41,5872015¥1,165¥1,16554,355

(510)

(510)

1,615
1,615

4
4
¥ 663

79
(18)
¥ 715

$ 7,633$ 7,633(3,580)(3,580)14
14$ 4,082582(153)$ 4,482

2015

2015

Over the counter
Currency swaps................ ¥311,216 ¥225,509
Forward exchange
contracts:
Sell................................ 68,420
600
Buy............................... 61,076
1,081
Currency options:Sell................................ 168,184 110,460
Buy............................... 168,184 110,460
Total...................................

¥     99

(1,320)1,965(1,320)
1,965

5,468
5,468
¥11,681

2,579(1,128)¥ 2,195(2,863)
3,406(2,863)
3,406

4,435
4,435
¥9,5184,109(2,687)¥2,069Millions of yen
Contracted value
Total
Over 1 year Fair value

¥—
—

¥21
—
¥21

Appraisedprofit/(loss)

¥21
—
¥21

There were no bond-related derivative transactions as of March 31, 2014.

2015

Financial instruments
exchange
Bond futures:
Sell................................
Buy...............................
Total...................................

Appraisedprofit/(loss)¥    99¥ 104

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

Financial instruments
exchange
Bond futures:
Sell................................ ¥4,438
Buy...............................
—
Total...................................

Market price of currency-related swap transactions as of March 31,
2015 and 2014 were as follows:
Millions of yen
Contracted value
Total
Over 1 year Fair value¥ 104

Market price of bond-related derivative transactions as of March 31,
2015 was as follows:

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

Over the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... $410,060 $346,071
Variable rate receivable/
fixed rate payable........ 410,060 346,071
Others:Sell................................
10,325
9,168
Buy...............................
10,325
9,168
Total...................................

Appraisedprofit/(loss)

Over the counter
Currency swaps................ $2,589,804 $1,876,586 $    831 $    831Forward exchange
contracts:
Sell................................ 569,364
5,000 (10,992) (10,992)
Buy............................... 508,250
9,000
16,356
16,356
Currency options:Sell................................ 1,399,553
919,20345,50821,462
Buy............................... 1,399,553
919,20345,508(9,391)
Total...................................
$ 97,211$18,266

Appraisedprofit/(loss)¥54,355

Millions of yen
Contracted value
Total
Over 1 year Fair value

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)$36,935
—

$—
—

$182
—
$182

$182
—
$182

Notes: 1. T he above transactions were listed at market values and recognized gains(losses) were included in the consolidated statements of income.
2. The derivatives transactions for which hedge accounting has been
applied were excluded from the above tables.
3. Fair values for over the counter transactions were calculated at
discounted present values and formulas for option pricing.

36The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Derivative transactions subject to hedge accounting
The following are the contracted value, or the equivalent principal, and the fair value for each type of derivative transaction subject to hedge
accounting as of the end of the consolidated fiscal year, as well as the market price calculation method. The contracted value or other price or value
below does not indicate by itself the market risk of the derivative transaction.
(a) Interest rate transactions
As of March 31, 2015

Hedge accounting method

General accounting
rules

Type

Interest-rate swaps
Variable rate receivable/
fixed rate payable
Total

Main hedged item

Available-for-salesecurities(bonds)—Contracted value

Millions of yen
Contracted value
over 1 year

Fair value¥40,000¥    —¥40,000¥    —¥(3,169)¥(3,169)

Contracted value

Millions of yen
Contracted value
over 1 year

Fair value¥25,000¥    —¥25,000¥    —

Contracted value

Thousands of U.S. dollars
Contracted value
over 1 year

Fair value$332,861$     —

$332,861$     —$(26,376)$(26,376)

As of March 31, 2014

Hedge accounting method

General accounting
rules

Type

Interest-rate swaps
Variable rate receivable/
fixed rate payable
Total

Main hedged item

Available-for-salesecurities(bonds)
—

¥(33)
¥(33)

As of March 31, 2015

Hedge accounting method

General accounting
rules

Type

Interest-rate swaps
Variable rate receivable/
fixed rate payable
Total

Main hedged item

Available-for-salesecurities(bonds)—

Notes: 1. In general deferred hedge accounting is applied according to “Accounting and Auditing Treatment relating to the Adoption of ‘Accounting for Financial
Instruments’ for Banks” (JICPA Audit Committee Report No. 24).
2. Calculation of fair value
Calculated at discounted present values and formulas for option pricing.

(b) Currency transactions
As of March 31, 2015

Hedge accounting method

Type

Main hedged item

Contracted value

Millions of yen
Contracted value
over 1 year

General accounting
rules

Currency swaps
Monetary swaps
Total

Foreign currency
receivables—¥76,908
62,299¥    —¥34,849—¥    —¥(6,105)(822)¥(6,928)

Main hedged item

Contracted value

Millions of yen
Contracted value
over 1 year

Fair value

Foreign currency
receivables—¥33,963
70,503¥    —¥    ——¥    —¥(1,339)10¥(1,328)

Fair value$(50,806)(6,845)$(57,652)

Fair value

As of March 31, 2014

Hedge accounting method

Type

General accounting
rules

Currency swaps
Monetary swaps
Total

As of March 31, 2015

Hedge accounting method

Type

Main hedged item

Contracted value

Thousands of U.S. dollars
Contracted value
over 1 year

General accounting
rules

Currency swaps
Monetary swaps
Total

Foreign currency
receivables—$640,000
518,425$     —

$290,000—$      —

Notes: 1. In general, deferred hedge accounting is applied according to “Accounting and Auditing for Foreign Currency Transactions in the Banking Industry” (JICPA
Industry Audit Committee Report No. 25).
2. Calculation of fair value
Calculated at discounted present value.

37

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
24. Segment information(1) Overview of reportable segments
Reportable segments are the Group’s constituent business units for which separate financial data can be obtained and that are examined periodicallyby the Board of Directors for the purposes of determining the allocation of management resources and evaluating operating results.
The Group is engaged mainly in banking activities. Consolidated subsidiaries provide financial services primarily engaging in leasing activities. The Bankand its individual consolidated subsidiaries, which comprise a corporate group, each prepare business and other plans while developing business activities.
As a result, the Group has identified the two reportable segments of banking and leasing, which comprise the basic segments of the Bank andits individual consolidated subsidiaries by operation. Operations under the banking segment include the provision of services relating deposits, loans,marketable security and related investment as well as foreign currency exchange. Operations under the leasing segment include leasing and otheroperations conducted by 114 Lease Co., Ltd.

(2) Calculation methods for ordinary income, profit and loss, assets and liabilities and other items by reportable segment
The method of accounting treatment applied to reportable segments is the same as that described in “Notes to Consolidated Financial Statements.”
Moreover, reportable segment profit is based on ordinary profit.
Intersegment ordinary income is based on transaction prices between third parties.

(3) Information regarding ordinary income, profit and loss, assets and liabilities and other items by reportable segment
Information about industry segments of the Bank and its consolidated subsidiaries for the years ended March 31, 2015 and 2014 is as follows:

Banking

Leasing

Total

Millions of yen
Otherbusinesses¥   69,346
275¥   69,621¥   16,600¥4,596,706¥4,323,506¥ 6,523621¥ 7,145¥   476¥24,893¥20,656¥   75,870
896¥   76,767¥   17,076¥4,621,600¥4,344,162¥ 1,765
3,687¥ 5,453¥ 1,596¥30,717¥10,788¥   77,636
4,584¥   82,220¥   18,672¥4,652,318¥4,354,951¥     —
(4,584)¥ (4,584)¥     (0)¥(37,212)¥(35,321)

77,636—¥ 77,636¥ 18,671¥4,615,105¥4,319,629¥    2,866
48,475
4,181¥    93118125¥    2,959
48,593
4,306¥   335483
84¥    3,295
49,0774,390¥    66
(566)
(554)

¥    3,361
48,510
3,836

1,787

3

1,790

231

2,022

87

2,109

Total

Adjustment

Consolidated
total

2015

Ordinary income:Outside customers...................................
Inter-segment transactions.......................
Total.............................................................
Segment profit..............................................
Segment assets.............................................
Segment liabilities.........................................
Other items:
Depreciation............................................
Interest income........................................
Interest expenses.....................................
Increases in property, plant andequipment and intangible assets............

Adjustment

Consolidated
total

¥

Total

Millions of yen
Otherbusinesses¥ 6,616670¥ 7,286¥   326¥26,357¥22,482¥

78,6781,286¥ 79,965¥ 20,503¥4,502,695¥4,263,193¥ 1,901
3,632¥ 5,533¥ 1,683¥30,633¥11,350¥

80,5804,918¥ 85,499¥ 22,187¥4,533,328¥4,274,544¥     —
(4,918)¥ (4,918)¥   (329)¥(40,117)¥(38,183)

80,580—¥ 80,580¥ 21,857¥4,493,211¥4,236,360¥   2,857
47,5453,690¥   97127145¥   2,955
47,672
3,835¥   345509
90¥   3,300
48,182
3,925¥    71
(635)
(591)

¥   3,371
47,546
3,333

3,051

6

3,058

441

3,500

65

3,565

2014

Ordinary income:Outside customers...................................
Inter-segment transactions.......................
Total.............................................................
Segment profit..............................................
Segment assets.............................................
Segment liabilities.........................................
Other items:
Depreciation............................................
Interest income........................................
Interest expenses.....................................
Increases in property, plant andequipment and intangible assets............

Total

Banking

Leasing¥

72,062616¥ 72,678¥ 20,177¥4,476,338¥4,240,710

38¥

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2015

Banking

Ordinary income:Outside customers................................... $   577,071
Inter-segment transactions.......................
2,289
Total............................................................. $   579,361
Segment profit.............................................. $   138,138
Segment assets............................................. $38,251,699
Segment liabilities......................................... $35,978,250
Other items:
Depreciation............................................ $    23,856Interest income........................................    403,389
Interest expenses.....................................     34,793
Increases in property, plant andequipment and intangible assets............     14,873

Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

Adjustment

Consolidated
total$ 54,288  5,172$ 59,461$  3,961$207,155$171,893$   631,360     7,462$   638,822$   142,100$38,458,855$36,150,143$ 14,692
30,689$ 45,381$ 13,284$255,620$ 89,778$   646,052    38,151$   684,204$   155,385$38,714,475$36,239,922$      —
(38,151)$ (38,151)$      (5)$(309,669)$(293,933)$   646,052—$   646,052$   155,379$38,404,806$35,945,988$    774    982  1,040$    24,630   404,372    35,834$  2,791  4,026    705$    27,422   408,398    36,539$     550
(4,716)(4,610)$    27,972
403,681
31,928     30    14,903  1,923    16,827

727

17,554

Notes: 1. In place of sales which are usually posted by companies other than banks, the Bank and its consolidated subsidiaries report ordinary income. In addition, adjusted
differences are recorded as the difference between ordinary income and ordinary income recorded on consolidated statements of income.
2. The Other businesses segment is comprised of business segments not included in reportable segments and mainly consists of credit card and credit guarantee
operations.
3. The adjusted amounts of segment profit, segment assets, segment liabilities, depreciation, interest income, interest expenses and the amount of increase intangible fixed assets and intangible fixed assets are recorded as eliminations.
4. Segment profit is adjusted with ordinary profit recorded on consolidated statements of income.

(Associated information)
Information on Each Service
Millions of yen
2015

Income from external customers������������������

Lending services

Securities
investment services

Leasing services

Other

Total

¥33,843¥20,770¥6,523¥16,498¥77,636

Lending services

Securities
investment services

Leasing services

Other

Total

¥34,511¥21,647¥6,616¥17,804¥80,580

Lending services

Securities
investment services

Leasing services

Other

Total

$281,627$172,846$54,288$137,289$646,052

Millions of yen
2014

Income from external customers������������������

Thousands of U.S. dollars
2015

Income from external customers������������������

25. Related-party transactions
Not applicable to the years ended March 31, 2015 and 2014.

39

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
26. Per share data

27. Important subsequent events
Yen
2015

Net assets per share..................... ¥928.83
Net income per share...................
29.84
Net diluted earnings per share.....
29.78

2014

U.S. dollars
2015¥798.27
37.16
37.10

$7.7290.248
0.247

1. Purchase of treasury stock
At a meeting of the board of directors held on May 13, 2015, the Bank
resolved and carried out the following with respect to the purchase oftreasury stock based on the provisions of Article 156 of the Companies
Act applied by replacing the terms and phrases pursuant to Article 165,
paragraph 3 of said Act.

Notes: 1. The net assets per share figure is calculated on the basis of the following.
Millions of yen,
except number of shares
2015
2014

Thousands of
U.S. dollars
2015

Net assets......................................... ¥295,476 ¥256,851
Amount excluded from net assets.....
17,78017,077
New share subscription right.............
196
156(of which, held by minority interests)....
17,583
16,920Net assets attributable to common
stock at the fiscal year-end.............. 277,696 239,774
Number of common stock sharesat fiscal year-end used
for calculation of net assets
per share (in thousands).................. 298,971 300,364$2,458,817
147,957
1,633
146,323(a) Details of the board of directors’ resolution concerning the purchaseof treasury stock(i)	Type of stock to be purchased
The Bank’s common stock(ii)	Total number of shares to be purchased
1,000,000 shares (maximum)(iii)	Period of purchase
May 14, 2015 to June 12, 2015

2,310,860(ix)	Total purchase price¥500 million ($4,160 thousand) (maximum)(b) Purchase date
May 14, 2015 to June 3, 2015(c) Purchase results
1,000,000 shares (purchase price: ¥442 million [$3,683 thousand]) of
the Bank’s common stock were purchased.

2. Net income per share is calculated on the basis of the following.
Millions of yen,
except number of shares
2015
2014

Net income per share
Net income................................. ¥  8,957 ¥ 11,230
Amount not attributable
to common stockholders...........
——Net income attributable
to common stock......................
8,957
11,230
Average number of shares ofcommon stock during
the year (in thousands).............. 300,138 302,174
Diluted earnings per share
Increase in number ofcommon stock shares(in thousands)...........................
600
479
New subscription rights.........
600
479

Thousands of
U.S. dollars
2015

2. Conclusion of lawsuit$74,543

The Bank was subject to a lawsuit from “Bankrupt party: Sanuki Zosen
Tekkosho Co., Ltd.; Attorney: Sotaro Yamazaki, the trustee in bankruptcy” claiming to exercise a right of avoidance. On May 23, 2014 a
judgment was rendered in this case, and although a final appeal anda petition for the acceptance of a final appeal were filed, the Supreme
Court handed down its decision (on May 13, 2015) to dismiss thisrequest for an appeal hearing. This lawsuit has thus been concluded.
With respect to the appeal court’s judgment of ¥870 million($7,239 thousand) and the payment of (total of ¥1,180 million [$9,824
thousand]) 6% per annum on said ¥870 million judgment, as nearly
the total of that amount (¥1,173 million [$9,765 thousand]) has beenrecorded in the reserve for litigation loss in the fiscal year ended March
31, 2015, this will have no material impact on business performance inthe fiscal year ending March 31, 2016.

—
74,543	3. The Bank’s own stock remaining in the ESOP Trust and recorded astreasury stock in stockholders’ equity are included in treasury stock to be
deducted in the calculation of net assets per share, net income per share,and diluted net income per share.
The number of shares of said treasury stock to be deducted at yearend in the calculation of net assets per share was 1,773 thousand as ofMarch 31, 2014 and 1,177 thousand as of March 31, 2015. Moreover,
the average number of shares of said treasury stock to be deducted in
the calculation of net income per share and diluted net income per share
during the year was 2,119 thousand for the fiscal year ended March 31,
2014 and 1,487 thousand for the fiscal year ended March 31, 2015.
	4. As stated in “Changes in accounting policies,” from the fiscal year
ended March 31, 2015, the Bank began applying Accounting Standard for
Retirement Benefits (ASBJ Statement No. 26, issued on May 17, 2012) and
Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance
No. 25, issued on March 26, 2015) with respect to provisions set forth in
the text of paragraph 35 of Accounting Standard for Retirement Benefits
and the text of paragraph 67 of Guidance on Accounting Standard for
Retirement Benefits and the Bank follows transitional treatment set forthin paragraph 37 of Accounting Standard for Retirement Benefits. As
a result, net assets per share at the beginning of the fiscal year ended
March 31, 2015 decreased ¥5.36 ($0.044). Further, this had no material
impact on net income per share and diluted net income per share.
	5. As stated in “Changes in accounting policies,” the Bank started applying
the “Practical Solution on Transactions of Delivering the Company’s Own
Stock to Employees, etc. through Trusts” (ASBJ, PITF No. 30; March 26,2015) from the fiscal year ended March 31, 2015. However, this has beenaccounted for with a previously adopted method and had no impact on net
assets per share, net income per share, and diluted net income per share.

40

41

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)
Millions of yen
2015
2014

As of March 31

Assets:Cash and due from banks................................................................................ ¥  305,103 ¥ 390,227
Call loans.........................................................................................................
3,605—
Monetary claims bought...................................................................................
31,05932,387
Trading account securities................................................................................
2
8
Money held in trust..........................................................................................
4,901
4,901
Securities.......................................................................................................... 1,455,410
1,336,514
Loans and bills discounted................................................................................ 2,702,125
2,621,395
Foreign exchange assets...................................................................................
13,507
17,446
Other assets.....................................................................................................
28,43628,937
Tangible fixed assets.........................................................................................
38,98840,174
Intangible fixed assets......................................................................................
3,436
3,519
Prepaid pension cost........................................................................................
2,291
4,261
Customers’ liabilities for acceptances and guarantees.......................................
21,14017,249Reserve for possible loan losses........................................................................
(15,702)(18,996)
Total assets.................................................................................................. ¥4,594,307 ¥4,478,026

42

Thousands of
U.S. dollars
2015$ 2,538,929
30,000258,465
21
40,79012,111,262
22,485,855
112,403
236,631324,444
28,59819,070175,924(130,665)$38,231,733

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)

Millions of yen
2015
2014

As of March 31

Liabilities and net assets
Liabilities:
Deposits........................................................................................................... ¥3,808,271
Negotiable certificates of deposit......................................................................
174,426
Call money.......................................................................................................
48,068
Payables under securities lending transactions..................................................
40,520Borrowed money .............................................................................................
128,214
Foreign exchange liabilities...............................................................................
354
Corporate bond...............................................................................................
10,000
Other liabilities.................................................................................................
65,180Reserve for bonuses for directors......................................................................
23
Provision for claims on dormant accounts.........................................................
539
Provision for contingent liabilities.....................................................................
107
Reserve for litigation loss..................................................................................
1,173
Deferred tax liability.........................................................................................
18,554
Deferred tax liability for land revaluation..........................................................
6,176
Acceptances and guarantees............................................................................
21,140Total liabilities.............................................................................................. 4,322,750¥3,775,669
188,619
38,595
9,901
121,695
140
10,00064,974
26
559
114
—
5,325
6,819
17,2494,239,691

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Capital surplus reserve.............................................................................
24,92024,920Retained earnings........................................................................................
139,307
134,461
Earned surplus reserve.............................................................................
12,402
12,402Other retained earnings...........................................................................
126,905
122,059
Reserve for advanced depreciation of fixed assets...............................
267
254
Special reserve....................................................................................
119,161
110,161
Earned surplus bought forward...........................................................
7,476
11,644
Treasury stock..............................................................................................
(4,730)(4,181)
Total stockholders’ equity........................................................................
196,820
192,523
Valuation and translation adjustments:
Net unrealized gains on securities available for sale......................................
68,827
37,634
Net deferred losses on hedging instruments.................................................
(3,010)(24)
Revaluation reserve for land.........................................................................
8,722
8,044
Total valuation and translation adjustments.............................................
74,54045,654
Share warrants........................................................................................
196
156
Total net assets............................................................................................
271,556
238,335
Total liabilities and net assets....................................................................... ¥4,594,307 ¥4,478,026
Yen
As of March 31

Per share
Net assets.........................................................................................................

$31,690,697
1,451,495
400,000
337,190
1,066,943
2,948
83,215542,399
197
4,493
892
9,765
154,401
51,398
175,924
35,971,961

310,582
207,376
207,376
1,159,253
103,205
1,056,047
2,224
991,60362,219(39,363)1,637,848
572,751(25,049)
72,587620,289
1,633
2,259,771$38,231,733

2015

2014

U.S. dollars
2015¥907.64¥792.96$7.552

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥120.17 to US$1.00 on March 31, 2015.

43

Thousands of
U.S. dollars
2015

The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Income (Unaudited)
Millions of yen
2015
2014

For the years ended March 31

Thousands of
U.S. dollars
2015

Income:Interest on loans and bills discounted...............................................................
Interest and dividends on securities..................................................................
Other interest income.......................................................................................
Fees and commissions......................................................................................
Other operating income...................................................................................
Other income...................................................................................................
Total income................................................................................................

¥33,545
14,467
462
9,301
5,692
6,158
69,627¥34,241
12,892
412
9,230
6,429
9,475
72,681$279,152
120,390
3,846
77,40347,36851,245
579,407

Expenses:
Interest on deposits and negotiable certificates of deposit................................
Interest on call money......................................................................................
Interest on borrowed money............................................................................
Other interest expenses....................................................................................
Fees and commissions......................................................................................
Other operating expenses.................................................................................
General and administrative expenses................................................................
Other expenses................................................................................................
Total expenses.............................................................................................

2,213
236
706
1,024
3,444
2,662
38,373
5,669
54,330

2,141
148
819
580
3,161
3,096
38,484
4,269
52,702

18,419
1,969
5,876
8,528
28,664
22,155319,324
47,179452,117

15,296

19,978127,290

3,039
3,649
6,689
¥ 8,606

5,201
3,679
8,881
¥11,097

25,29630,371
55,668$ 71,622

Income before income taxes.............................................................................
Income taxes:
Current............................................................................................................
Deferred...........................................................................................................
Subtotal.......................................................................................................
Net income.........................................................................................................

For the years ended March 31

2015

Yen
2014

U.S. dollars
2015

Per share
Net income......................................................................................................

¥28.67¥36.72$0.238

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥120.17 to US$1.00 on March 31, 2015.

44

The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Changes in Net Assets (Unaudited)
Millions of yen
Stockholders’ equity
Retained earnings
Other retained earnings

Capital surplus

For the years ended March 31

Total
capitalsurplusReserve foradvanced
Earned depreciation
surplusof fixed
Specialreserveassetsreserve¥24,920¥24,920¥12,402

¥254

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
3,500
—
—
—

(2,118)(3,500)11,097—(10)(2,118)—
11,097
—
(10)

—
—
—
(1,516)270(2,118)—
11,097(1,516)
259

—

—

—

—

—

16

16

—

16

—

—

—

—

—

(2)

(2)

—

(2)

—

—

—

—

—

—

—

—

—

—
24,920—24,920—12,402

—
254

3,500
110,161

5,480
11,644

8,980
134,461(1,245)(4,181)

7,735
192,523—
24,920—24,920—12,402—
254—
110,161(1,611)
10,032(1,611)—
132,850 (4,181)(1,611)
190,911

—

—

—

—

—

(2,103)(2,103)—(2,103)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

12
—
—
—
—

—
9,000
—
—
—

(12)
(9,000)
8,606
—
(4)

—
—
8,606
—
(4)

—
—
—
(780)
231

—
—
8,606
(780)
226

—

—

—

—

—

11

11

—

11

—

—

—

—

—

(52)

(52)

—

(52)

—

—

—

—

—

—

—

—

—

—
¥24,920—¥24,920—¥12,40212¥267

CapitalCommon surplus
stock
reserve

Balance as of March 31, 2013........... ¥37,322
Change of items during the period
Dividends from surplus....................
—
Provision to general reserve..................
—Net income.....................................
—
Purchase of treasury stock..................
—
Disposal of treasury stock..................
—
Transfer from revaluation
reserve for land.............................
—
Provision for revaluation
reserve for land...............................
—Net changes of items otherthan stockholders’ equity..................
—
Total changes of items
during the period...............................
—
Balance as of March 31, 2014........... 37,322
Cumulative effects of changes inaccounting policies................................
—
Restated balance.................................... 37,322
Change of items during the period
Dividends from surplus....................
—
Increase in reserve due to change in
effective tax rate..............................
—
Provision to general reserve..................
—Net income.....................................
—
Purchase of treasury stock..................
—
Disposal of treasury stock..................
—
Transfer from revaluation
reserve for land.............................
—
Provision for revaluation
reserve for land...............................
—Net changes of items otherthan stockholders’ equity..................
—
Total changes of items
during the period...............................
—
Balance as of March 31, 2015........... ¥37,322

45

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity¥106,661 ¥ 6,163 ¥125,480 ¥(2,935) ¥184,788

9,000 (2,555)
6,457
(549)
5,908
¥119,161 ¥ 7,476 ¥139,307 ¥(4,730) ¥196,820

The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Changes in Net Assets (Unaudited)

Millions of yen
Valuation and translation adjustments

For the years ended March 31

Balance as of March 31, 2013...........
Change of items during the period
Dividends from surplus....................
Provision to general reserve..................
Net income.....................................
Purchase of treasury stock..................
Disposal of treasury stock..................
Transfer from revaluation
reserve for land.............................
Provision for revaluation
reserve for land...............................
Net changes of items otherthan stockholders’ equity..................
Total changes of items
during the period...............................
Balance as of March 31, 2014...........
Cumulative effects of changes inaccounting policies................................
Restated balance....................................
Change of items during the period
Dividends from surplus....................
Increase in reserve due to change in
effective tax rate..............................
Provision to general reserve..................
Net income.....................................
Purchase of treasury stock..................
Disposal of treasury stock..................
Transfer from revaluation
reserve for land.............................
Provision for revaluation
reserve for land...............................
Net changes of items otherthan stockholders’ equity..................
Total changes of items
during the period...............................
Balance as of March 31, 2015...........

Net unrealized
gains onsecurities
available for saleNet deferredlosses on
hedging
instruments¥38,094

Revaluation
reserve for land

Total valuationandtranslation
adjustments

Share warrants

Total net assets¥  (136)¥8,057¥46,016¥120¥230,925

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,118)—
11,097(1,516)
259

—

—

—

—

—

16

—

—

—

—

—

(2)

(460)

111

(13)

(361)

36

(325)

(460)
¥37,634111¥   (24)(13)¥8,044(361)¥45,654

36
¥156

7,409
¥238,335—
37,634

—
(24)

—
8,044

—
45,654—156(1,611)
236,723

—

—

—

—

—

(2,103)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
8,606
(780)
226

—

—

—

—

—

11

—

—

—

—

—

(52)

31,192(2,985)678

28,88539

28,92531,192¥68,827(2,985)¥(3,010)678¥8,722

28,885¥74,540

39¥196

34,833¥271,556

46

The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Changes in Net Assets (Unaudited)Thousands of U.S. dollars
Stockholders’ equity
Retained earnings
Other retained earnings

Capital surplus

For the year ended March 31

Total
capitalsurplusReserve foradvanced
Earned depreciation
surplusof fixed
Specialreserveassetsreserve$207,376$207,376$103,205$2,116$916,709 $ 96,898 $1,118,930 $(34,794) $1,602,094—
207,376—
207,376—
103,205—
2,116—
916,709

—

—

—

—

—

(17,506)(17,506)—(17,506)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

107
—
—
—
—

—
74,893———(107)(74,893)
71,622—(37)——
71,622
—
(37)

—
—
—
(6,491)
1,922——
71,622(6,491)
1,885

—

—

—

—

—

92

92

—

92

—

—

—

—

—

(435)

(435)

—

(435)

—

—

—

—

—

—

—

—

—

—
$207,376—$207,376—$103,205107$2,224

CapitalCommon surplus
stock
reserve

Balance as of March 31, 2014........... $310,582
Cumulative effects of changes inaccounting policies............................
—
Restated balance.................................. 310,582
Change of items during the period
Dividends from surplus....................
—
Increase in reserve due to change in
effective tax rate..............................
—
Provision to general reserve..................
—Net income.....................................
—
Purchase of treasury stock..................
—
Disposal of treasury stock..................
—
Transfer from revaluation
reserve for land.............................
—
Provision for revaluation
reserve for land...............................
—Net changes of items otherthan stockholders’ equity..................
—
Total changes of items
during the period...............................
—
Balance as of March 31, 2015........... $310,582

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity(13,412)(13,412)83,486 1,105,518—(13,412)(34,794) 1,588,681

74,893 (21,266)
53,735(4,568)49,166$991,603 $ 62,219 $1,159,253 $(39,363) $1,637,848

Thousands of U.S. dollars
Valuation and translation adjustments

For the year ended March 31

Balance as of March 31, 2014...........
Cumulative effects of changes inaccounting policies............................
Restated balance..................................
Change of items during the period
Dividends from surplus....................
Increase in reserve due to change in
effective tax rate..............................
Provision to general reserve..................
Net income.....................................
Purchase of treasury stock..................
Disposal of treasury stock..................
Transfer from revaluation
reserve for land.............................
Provision for revaluation
reserve for land...............................
Net changes of items otherthan stockholders’ equity..................
Total changes of items
during the period...............................
Balance as of March 31, 2015...........

Revaluation
reserve for land

Total valuationandtranslation
adjustments

Share warrants

Total net assets$   (204)$66,943$379,919$1,302$1,983,316—
313,180—(204)—
66,943—379,919—
1,302(13,412)
1,969,904

—

—

—

—

—

(17,506)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
71,622(6,491)
1,885

—

—

—

—

—

92

—

—

—

—

—

(435)

259,571(24,845)

5,643

240,369331

240,700

259,571$572,751(24,845)$(25,049)

5,643$72,587

240,369$620,289331$1,633289,867$2,259,771

Net unrealized
gains onsecurities
available for saleNet deferredlosses on
hedging
instruments$313,180

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥120.17 to US$1.00 on March 31, 2015.

47

Organization (as of July 1, 2015)
General Meeting of Stockholders
Board of Directors
Chairman

Corporate Headquarters

President[Corporate Administration Sector]
Corporate Planning Division

Deputy President

Risk Management Division
General Administration Division

Directors

Compliance and Legal Affairs Office
Personnel Division
Executive
Committee

VariousCommittees

Operations Supervision Division
Central Operations Division
Executive Secretariat Office
Tokyo Liaison Office[Market Sector]

Audit & Supervisory Board Members
Audit & Supervisory Board

Treasury and International Division[Marketing Related Sector]
Business Management Division

Directory

Retail Banking Division
Retail Business Promotion Division

Head Office
5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
Phone: 087-831-0114
URL: http://www.114bank.co.jp

Credit Supervision Division
Auditing Division
Audit & Supervisory Board Members’ OfficeTreasury and International Division
5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
Phone: 087-836-2161
Facsimile: 087-836-2158
SWIFT: HYAKJPJTCentral Business Division
Branch48

5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
Phone: (087) 831-0114
http://www.114bank.co.jp