ANNUALREPORT
2 014

The Hyakujushi Bank, Ltd.

Management Principles
Prosper together with customers and community
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 the Management Principles, The Hyakujushi Bank, Ltd. continues to playa central role as a leading financial institution in its area and surrounding regions, andaims to be the region’s best partner for each customer, so as to contribute to creating aprosperous future of the local economies.

Profile (Non-consolidated)(As of March 31, 2014)

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

Established:

November 1, 1878

Total assets:¥4,478.0 billion

Deposits and negotiable certificates of deposit:¥3,964.2 billion

Loans and bills discounted:¥2,621.3 billion

Paid-in capital:¥37.3 billion

Total shares issued:

310,076 thousand shares

Capital ratio:

10.86%

Employees:

2,200

Offices:123 (Head office, 101 branches, 21 sub-branches)

Non-branch ATMs and CDs:

221 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..... 13
Consolidated Balance Sheets....................................................... 14
Consolidated Statements of Income/Consolidated Statements Comprehensive Income..................... 16
Consolidated Statements of Changes in Net Assets...................... 17
Consolidated Statements of Cash Flows...................................... 19
Notes to Consolidated Financial Statements................................ 20
Report of Independent Auditors................................................. 40
Non-Consolidated Balance Sheets............................................... 41
Non-Consolidated Statements of Income.................................... 43
Non-Consolidated Statements of Changes in Net Assets............. 44
Organization/Directory.............................................................. 47

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights

Thousands of
U.S. dollars

Millions of yen
2014

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.........................................................................................

¥

80,59258,92821,663
5,769
3,700
963
11,230

2013

¥

2014

74,96164,331
10,6304,939(1,218)
1,056
5,851

$   783,055
572,562
210,492
56,05735,9589,358
109,118

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

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

2,528,403
1,318,454
7,382
280,089
4,134,329

25,400,463
12,977,553
169,515
5,109,789
43,657,322

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

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

3,652,466
579
229,861
3,882,906

38,412,626
1,368
2,747,687
41,161,682

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

37,322
24,920129,575(2,935)
188,882
38,173
(136)
8,057
—
46,095120
16,324
251,422¥4,134,329

362,637
242,134
1,347,546(40,626)
1,911,691
366,519(238)
78,163(26,442)
418,022
1,520
164,405
2,495,639$43,657,322

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 ¥102.92 to US$1.00 on March 31, 2014.

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

First, I would like to express my gratitude to our stakeholders
for their support of the Hyakujushi Bank.
In the over 135 years that have passed since its founding in
1878, the Hyakujushi Bank has prospered together with thelocal community.
The Bank exists today thanks only to the warm support ofour customers over many years to whom we are always
deeply grateful.
Looking ahead, all officers and employees will work
together, making ever-greater efforts to ensure that our customer’s trust that we have built up over the years becomeseven more unwavering.
I would like to again thank our stakeholders for theircontinued support.

Tomoki Watanabe, President

Our Management Principles

Ensure soundbusiness management and enhance
corporate value• Prosper together with customers and community• Create a vigorous corporate culture• Ensure sound business management and enhance corporate
value
These are the principles that guide the Bank in its businessactivities.
Under these principles, the Bank is determined to continue
to provide valuable services to its shareholders, customers,
local communities, employees and other stakeholders.

Prosper together
Ourwith customers
and community management

principles

Create a vigorous
corporate culture2Our New Medium-Term Management Plan:
The “Best Partners Plan”

Deposit-Taking Business
The Bank’s balance of total deposits (including CDs) at yearend, on a consolidated basis, increased by ¥300.9 billion fromthe end of the previous period, to ¥3,953.4 billion.

Beginning in April 2014, the Bank started the “Best Partners
Plan,” its medium-term management plan. Based on an
approach of becoming “a financial services group that contributes to the future of the region and its customers,” theBank will steadily take steps to contribute to the developmentof the regional economy. Each and every employee will work
to provide high-quality service as the customer’s best partner
so as to build greater value for their customers and improvethe earnings position of the Bank.

Lending Operations
The balance of loans outstanding at year-end increased ¥85.8
billion from the end of the previous year to ¥2,614.2 billion.
Securities
The balance of securities holdings at year-end increased ¥17.2
billion from the end of the previous period to ¥1,335.6
billion.

Our Goals
Profit & Loss
Total income for the period increased by ¥5.6 billion fromthe previous period to ¥80.5 billion. Total expenses declinedby ¥5.4 billion from the previous period to ¥58.9 billion. As aresult, net income for the period on a consolidated basis
increased ¥5.3 billion year-on-year to ¥11.2 billion.

Customer-Centric Principle
In order to actively provide value that deeply satisfies customers, and continue to be a bank that the region’s customers cantruly rely on for advice, we will put the customer first and takeaction from the customer’s point of view. Each and every
employee will demonstrate the ability to take action, propose
solutions, and solve problems and build stronger relationshipsof trust with our customers.

Capital Ratio
The capital ratio is calculated based on the formula set forthin the standard (FSA Notification No. 19 [2006]) for determining the capital adequacy ratio of a bank in light of theassets held by the bank, which is based on Article 14-2 of the
Banking Act of Japan.
Further, the Bank has applied the domestic standard, andsince March 31, 2014 the Bank has calculated the capital adequacy ratio by the Basel III standard in line with the partial
revision of the notification (FSA Notification No. 19 [2006])
concerning capital adequacy requirements (Pillar 1).
In addition, the Bank has adopted the standard method for
calculating crediting risk assets and the gross profit allocation
method for calculating the equivalent amount of operational
risk.

Initiatives to Revitalize the Region's Economy
We believe that the mission of a regional financial institution isto actively work to revitalize the region’s economy by ensuring
a reliable supply of funds and providing the financial services
that best meet its customers’ needs.
The Bank will meet the funding needs of our customers andsupport customer’s business expansion by providing consulting
capabilities including business start-up support and overseas
market entry support. We will propose financial products thatmeet the customer’s life stage and make their lives moreconvenient.
We place great value on our contact with customers and are
actively working to enhance our system that can support ourcustomers from every possible angle.

Cash FlowsNet cash provided by operating activities came to ¥224.7
billion, due to an increase in deposits, an increase of ¥217.5
billion from the net cash used in the previous year.
Net cash used in investing activities came to ¥7.7 billion,
due in part to sales of securities, a decrease of ¥66.7 billion
from the previous year.
Net cash used in financing activities amounted to ¥3.7 billion, an increase of ¥1.5 billion, attributable to an increase inpurchase of treasury stock.
As a result, cash and cash equivalents rose ¥213.1 billion
compared with the previous year-end to ¥316.5 billion.

Strengthening Internal Controls
To maintain the unshakeable trust of all our stakeholders,
including shareholders, customers, and the regional community as a whole, we believe it is essential for all the employeesof the Bank, from executives down, to maintain high ethicalstandards in the performance of their duties. In other words,
we position the rigorous observance of legal and ethical compliance as a high-priority management task. We conduct continuous training to ensure that all of our officers andemployees increase their awareness of the importance of legal
and ethical compliance, and the entire Bank is working tobuild an effective system of mutual checks as part of our overall program of strengthening internal control.

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), the Bank is prioritizing its two basic strategies – “rigorously promote retail transactions” and “strengthen
investment prowess” with the aim of achieving our ideal of becoming a “financial group that can contribute to the
future for our region and customers.”
In the mid- to long-term future, we will remain a locally based financial institution catering to our customers.
To that end, we are actively contributing to the revitalization of the regional economy and creating additional value.

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

An ideal we aim for:I. Rigorously promote retail businesses

II. Strengthen investment prowess

Partnering with each customer

Managing portfolio withdiversified investments

Corporate banking strategy

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

Active risk-taking•Expanding relations•Enhancing life planning capabilities

Constructing an optimal portfolio
More flexible investment

Increasing contact with customers Improving quality of business

Channel/process innovation

Risk monitoring

Development of human resources

III. Strengthening of organization and personnel
Strengthening of personnel capabilities

Administrative process reforms

IT strategy
Compliance

Risk management

Action guideline: Thorough practice of customer-centric principle
Numerical targets for Fiscal 2016
Indices

Final year targets

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

The Bank also employs the Audit & Supervisory Board system.
The Audit & Supervisory Board consists of 5 members (of whom
3 are outside members). By appointing outside auditors who arefair and have a high degree of professionalism, with experience andknowledge of corporate management, and with substantial knowledge about law, compliance, finance and accounting, we ensure theindependence of the audit system and improve its neutrality. Audit &Supervisory Board Members take an active role in the operations of
the Bank, based on auditing policies and plans decided by the Audit& Supervisory Board, making presentations and voicing opinions at
all important company meetings including Board of Director meetings. In addition, the Bank ensures stronger corporate governanceby appointing one outside director, and one outside auditors among
three outside auditors as independent officers. Additionally Audit &Supervisory Board Members are proactive, acting in an auditing
as well as supervisory capacity, visiting not only the head office
but also branches and subsidiaries, and ensuring that operations
and procedures, as well as the use of assets, are appropriate. Fromthe perspective of maintaining and improving the propriety andappropriateness of operations, the Auditing Division (an independent
division) also fulfils an internal audit role and conducts inspections ofassets and risks as required at any time, in the head office as well as atbranches and subsidiaries, to assure that operations and procedures
are appropriate and in compliance with laws. The results of audits arereported to the management.
We have appointed Ernst & Young ShinNihon as our accounting
auditors, as stipulated in the Corporate Law.

Basic approach to corporate governanceWe believe the fundamentals of corporate governance are the elevation of corporate value by endeavoring to ensure realization of thecorporation’s management principles, profitability, and soundness ofoperations, as well as management efficiency and transparency.
To assure this process is fully implemented, our directors andthe Audit & Supervisory Board system play an important role in theimplementation of the corporate governance to the highest degree.
Furthermore, the Revenue Management Committee, the Compliance
Committee and the Risk Management Committee are effectively used
to respond to various issues across the organization. To share ourbasic values and ethical view, the Bank has established a code of ethics
for officers and employees, including the Hyakujushi Bank Code of
Ethics and Compliance Manual, and has distributed it throughout theBank.
Measures adopted to improve corporate governance
The Board of Directors consists of 11 directors (of whom 1 is an
outside director) who are tasked with oversight of the directors in theperformance of their duties, and also decide matters of importance
relating to the overall management of our business as well as mattersprescribed by laws or the Bank’s articles of incorporation. To further
strengthen management decision-making and the oversight of
directors’ performance of their duties, the Bank passed a resolution
appointing one outside director at the 145th Regular Annual General
Meeting of Shareholders held on June 27, 2014.
We have introduced an executive officer system, entrusting
business duties of the Board to executive officers elected by the
Board of Directors (23 executive officers including 8 serving also as
directors, as of July 1, 2014). Important matters pertaining to their
management duties are discussed and decided on at the Executive
Committee consisting of managing executive officers and executivesof higher status, as well as other committees.

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

Appointment/Dismissal

Board of Directors

Audit & Supervisory Board

Appointment/Dismissal/Supervision

Representative Directors

Executive
Committee

RevenueManagement
Committee

Head Office and Branches

Compliance
Committee

Internal audit

Opinion,Comment, etc.

Risk
Management
Committee

Auditing Division

5

Appointment/Dismissal

Operations audit
Accounts audit

Accounting Auditors

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 System]

Audit & Supervisory Board
Members
Audit & Supervisory Board

Risk management system
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. We have also established an independent
Risk Management Division to integrate risk management and carryout comprehensive management. Additionally, through the establishment of the Risk Management Committee and sub-committees
for each risk category as organizations under the Committee, andcross-sectional consultations on matters regarding risk management
on a regular basis, we have put in place a highly sophisticated system
for the maintenance and management of risk.

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, branchGroup[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, human error, 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
OfficePersonnel 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

Physical 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 are monitored andassessed.

Practice of comprehensive risk management
We have introduced a system for risk-adjusted capital allocation inwhich 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 system, 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 the

Explanation of Terms
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[System for Risk-Adjusted Capital Allocation]
Equity capital

Equity capital(core capital)

Risk-adjusted capital allocation

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 Readinessregularly, 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, wemeasure the credit risk amount based on the internal rating on aregular basis, set the credit limit amount for each business segment
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 concepts
Credit risk is a category of risk that has a significant impact on thesoundness of a bank. In accordance with a credit risk management
rules approved by the Board of Directors, we identify, evaluate,
measure and monitor and carry out stress-testing regarding credit risk
on both an individual credit basis and a portfolio basis (total assets
managed under the bank account), and control credit risk within thescope of allocated risk-adjusted capital.
System
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; and the
Auditing Division, which audits and verifies the appropriateness ofoverall administration of credit risk management system. Additionally,
the results of credit risk amount measurement are reported to theCredit Risk Management Subcommittee and discussed therein[Credit Risk Management System]
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 to banktransaction derivative product deals, our preparations assume the possible need to furnish additional collateral should our creditworthinessdeteriorate. Should it become necessary to take this step, the impact
would be limited, since we own sufficient assets that can be provided.
We do not engage in long-term settlement period transactions 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
that satisfy a certain standard and about whose creditworthinessthere is judged to be no concern is the effect of 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, infrastructure risk, andother risks. Therefore, even after investing or lending, we establish
structures for regularly monitoring the various kinds of risk information inherent in these risks, and continuously monitor the status ofthese 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 concepts
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).

Management system
We have a system in which the section in charge of market transaction
execution (front office), clerical management (back office) andmarket risk management (middle office) are separated from eachother in the division that implements market transactions (Treasury
and International Division), so that mutual checking will operate
inside the Division. Then, through comprehensive management ofoverall market risk by the Risk Management Division, independent
from market transaction implementation departments, we are making
efforts toward centralized management of market risk, includinginterest 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 use the historical method
for interest-rate risk on trading account securities and interest-rate
futures transactions, and for foreign-exchange rate risk for foreignexchange trading.

Explanation of Terms
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 (public authority 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) rise 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 materialization of liquidity risk, the Board of Directors of the Bank has drawn up a set of
liquidity risk management rules to guide employees in the day-to-day
conduct of business operations with adequate countermeasures forliquidity 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 othermeasures. In addition, we have created mechanisms to deal promptly
and appropriately with developing and actual contingencies classified
as “normal,” “caution,” and “liquidity crisis,” enabling us to respondrapidly 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 concepts
Operational risk refers to risk relating to losses arising frominadequacies or failures of internal processes, on the part of personnel
or of systems, or from occurrence of external events. Operationalrisk covers a wide scope, such as improper paperwork processing
procedures, handling mistakes, system failure, damage due to criminal
acts (internal or external), and damage to assets due to disaster, orother causes.
We identify, assess, recognize, manage, and reduce the respective
operational risks appropriately in accordance with our operationalrisk management rules, drawn up by the Board of Directors, in orderto maintain and increase the trust of our customers. Meanwhile, wehave built management methods to achieve a comprehensive grasp ofoperational risks.

Management system
For process risk, system risk, legal risk, personnel risk, and physicalasset risk, we determine the risk management division and management rules for each risk, and carry out necessary risk control measures
based on an evaluation of risk control status. At the same time,through the establishment of an operational risk controlling division
to identify and manage operational risk as a whole, various risks aremanaged comprehensively.
Additionally, for cross-sectional monitoring of various risks, wehave established the Operational Risk Management Subcommittee asan organization under the Risk Management Committee. By regularly
performing risk actualization event analysis, monitoring the status ofrisk reduction measures, and ordering countermeasures as necessary,
we help 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

Overall Risk
Management
Divisions

Risk Control
Divisions

Policies andinstructions
Discussions
and reports

Risk Management Division
Reporting andloss information

Process risk

System risk

Operations Supervision
Division

Policies andinstructions

Overall control

Legal risk

Personnel risk

Physical 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

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.

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.
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.
Personal information protection
With society becoming increasingly information-driven day-by-day,the Bank has laid down regulations, set out guidelines, and built
organizational 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.

[Compliance System]
Board of Directors
Executive Committee
Compliance
Committee

Rewards andPenalties Committee

Overall Compliance Supervision
Compliance and Legal Affairs OfficeInstruction

Inspection

Auditing Division

Head Office, Branches and Group Companies

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.

11Compliance System

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 national centers for the elimination of
boryokudan (violent groups), lawyers, and others to block relationships with anti-social forces.

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 responsibilities
as a corporate citizen and prevents insider trading. These regulations
specify the basic items pertaining to the management of important
non-public information known to executives and other employeesof 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 and employees.

12Board of Directors and Audit & Supervisory Board Members

Katsuhiko Takesaki

Tomoki Watanabe

ChairmanPresident

Yukio Hirao

Toshinori Yano

Director & Senior Managing
Executive Officer

Chairman

Katsuhiko Takesaki
President

Tomoki Watanabe
Directors & Senior Managing
Executive Officers

Yukio Hirao
Toshinori Yano

Director & Senior Managing
Executive Officer

Directors & Managing
Executive Officers

Executive Officers

Shinji Matsumoto

Kiyoshi Irie

Tadahiko Tamura

Noriaki Iida

Masahiko Miyake

Ryuji Nishikawa

Yasuo Miyake

Harunori Ando

Kazuo Shirotori

Teruo Kiuchi

Toshiya Yoritomi

Ryohei Kagawa

Yoshitaka Nishikawa

Outside Director

Takayuki Miyataki

Etsuya Kanamori

Full-time Audit &Supervisory Board Members

Tsutomu Inamo
Masanobu Satomi
Outside Audit &Supervisory Board Members

Hiroshi Manabe
Ichiro Terato
Hideki Kuwashiro

Kiichiro Oyama
Koichi Zensho

Managing Executive Officers

Yujiro Ayada
Kazushi Kozuchi
Osamu Itami
Takashi Mori
Akihiro Matsubara(as of July 1, 2014)13

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2014
2013

As of March 31

Assets:Cash and due from banks................................................................................ ¥ 390,388 ¥ 136,427
Call loans and bills bought...............................................................................
—
6,301
Monetary claims bought...................................................................................
32,38733,867
Trading account securities (Note 7)...................................................................
8
49
Money held in trust (Note 8).............................................................................
4,901
4,901
Securities (Notes 7 and 11)............................................................................... 1,335,641
1,318,404
Loans and bills discounted (Note 10)................................................................ 2,614,215
2,528,403
Foreign exchange assets...................................................................................
17,446
7,382
Lease receivables and lease investment assets (Note 19)...................................
17,951
17,010
Other assets.....................................................................................................
32,60940,498
Tangible fixed assets (Notes 13, 16 and 17)......................................................
45,041
44,910Intangible fixed assets......................................................................................
4,732
4,996
Net defined benefit asset..................................................................................
857—
Deferred tax assets (Note 12)............................................................................
1,501
1,629
Customers’ liabilities for acceptances and guarantees.......................................
17,24915,882
Reserve for possible loan losses........................................................................
(21,720)(26,335)
Total assets.................................................................................................. ¥4,493,211 ¥4,134,329

14

Thousands of
U.S. dollars(Note 1)2014

$ 3,793,121—
314,68784
47,627
12,977,468
25,400,463
169,515
174,419
316,838
437,637
45,978
8,333
14,589167,598(211,043)$43,657,322

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2014
2013

As of March 31

Liabilities and net assets
Liabilities:
Deposits (Note 11)............................................................................................ ¥3,769,308
Negotiable certificates of deposit......................................................................
184,119
Call money and bills sold (Note 11)...................................................................
38,595
Payables under securities lending transactions..................................................
9,901
Borrowed money (Notes 11 and 14).................................................................
121,083
Foreign exchange liabilities...............................................................................
140
Corporate bond (Note 15)................................................................................
10,000
Other liabilities.................................................................................................
73,575Reserve for directors’ bonuses..........................................................................
26
Accrued retirement benefits (Note 21)..............................................................
—Net defined benefit liability...............................................................................
947
Accrued directors’ retirement benefits..............................................................
49
Provision for claims on dormant accounts.........................................................
559
Provision for contingent liabilities.....................................................................
114
Deferred tax liabilities (Note 12)........................................................................
3,870
Deferred tax liability for land revaluation (Note 16)...........................................
6,819
Acceptances and guarantees............................................................................
17,249Total liabilities.............................................................................................. 4,236,360¥3,420,759
231,706
51,915—73,654579
10,00068,436
19
504
—
55
481
135
1,947
6,828
15,8823,882,906

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Retained earnings........................................................................................
138,689
129,575
Treasury stock..............................................................................................
(4,181)(2,935)
Total stockholders’ equity........................................................................
196,751
188,882
Accumulated other comprehensive income:Net unrealized gains on securities, net of taxes............................................
37,722
38,173Net deferred losses on hedging instruments, net of taxes.............................
(24)
(136)
Revaluation reserve for land (Note 16).........................................................
8,044
8,057
Remeasurements of defined benefit plans....................................................
(2,719)—Total accumulated other comprehensive income.....................................
43,02246,095
Share warrants.................................................................................................
156
120
Minority interests.............................................................................................
16,92016,324
Total net assets............................................................................................
256,851
251,422
Total liabilities and net assets....................................................................... ¥4,493,211 ¥4,134,329

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

15$36,623,672
1,788,954
375,000
96,207
1,176,477
1,368
97,162
714,877
256
—
9,205
481
5,440
1,109
37,60966,260167,598
41,161,682

362,637
242,134
1,347,546(40,626)
1,911,691
366,519(238)
78,163(26,422)418,022
1,520
164,405
2,495,639$43,657,322

2014

2013

U.S. dollars(Note 1)
2014

¥798.27¥773.81$7.756Yen
As of March 31

Thousands of
U.S. dollars(Note 1)
2014

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income

Millions of yen
2014
2013

For the years ended March 31

Thousands of
U.S. dollars(Note 1)
2014

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................................................................................................

¥34,298
12,833414
10,725
6,429
15,89080,592¥36,034
14,158353
10,365
3,368
10,681
74,961$333,250
124,698
4,025
104,20762,473
154,400
783,055

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.............................................................................................

2,138
148
516
530
2,607
3,096
40,253
9,636
58,928

2,244
180
506
437
2,534
2,590
40,16915,66764,331

20,773
1,446
5,021
5,151
25,33530,087391,11393,632572,562

21,663

10,630210,492

5,769
3,700
9,470
12,193963¥11,230

4,939(1,218)
3,721
6,908
1,056
¥ 5,851

56,05735,95892,015
118,477
9,358$109,118

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

2014

2013

U.S. dollars(Note 1)2014

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

¥37.16¥19.29$0.361Yen

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

Consolidated Statements of Comprehensive Income
Millions of yen
2014
2013

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......................
Total comprehensive income.................................................................................
Total comprehensive income attributable to:Equity holders of the parent.............................................................................
Minority interests.............................................................................................
See accompanying notes to consolidated financial statements.

16

Thousands of
U.S. dollars(Note 1)
2014

¥12,193
(318)
(430)
111
11,875¥ 6,908
18,85818,925(66)
25,767$118,477(3,093)(4,179)1,086
115,383

10,890¥   984

24,713¥ 1,054

105,816$  9,567

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, 2012........................
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, 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........................

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
stockholders’ equity¥37,322¥24,920¥125,848¥(3,266)¥184,824

—
—
—
—
—
—

—
—
—
—
—
—

(2,121)
5,851
—
(30)
26
—

—
—
(7)
338
—
—

(2,121)
5,851
(7)
308
26
—

—
—
37,322——
24,920—3,726
129,575—331(2,935)—
4,058
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

Millions of yen
Accumulated other comprehensive income

For the years ended March 31

Balance as of March 31, 2012........................
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, 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........................

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¥19,245¥ (69)¥8,083¥   —¥27,259¥117¥15,652¥227,854

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(2,121)
5,851
(7)
308
26
—

18,92818,92838,173

(66)
(66)
(136)

(26)
(26)
8,057

—
—
—

18,835
18,83546,095

2
2
120

671
671
16,324

19,50923,567
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

17

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, 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........................

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
stockholders’ equity$362,637$242,134$1,258,989$(28,521)$1,835,239

—
—
—
—
—
—

—
—
—
—
—
—

(20,584)
109,118
(105)
156
(28)

—
—
(14,732)
2,626——(20,584)
109,118(14,732)
2,521
156
(28)

—
—
$362,637——$242,134—
88,556$1,347,546—(12,105)$(40,626)—
76,451$1,911,691

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

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$370,908$(1,324)$78,291$     —

$447,875$1,168$158,608 $2,442,892

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(4,388)(4,388)$366,519

1,086
1,086
$ (238)

(127)
(127)
$78,163(26,422)(26,422)$(26,422)(29,852)(29,852)$418,022351
351$1,520See accompanying notes to consolidated financial statements.

18

—
—
—
—
—
—

Total net
assets(20,584)
109,118(14,732)
2,521
156
(28)

5,796
(23,704)
5,796
52,747$164,405 $2,495,639

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows

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......................................................................
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.................................................................

Millions of yen
2014
2013

Thousands of
U.S. dollars(Note 1)
2014

¥ 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¥ 10,630
3,568
55
26
(377)
(1)
(233)
—
—
(12)
(58)
(141)
(50,546)
3,368
2,626
(6,747)
168
214(103,661)
38,51729,999(6,121)
18,341(4,324)27,258—(1,911)(262)(46)
50,436(4,153)
3,769
10,383(3,259)7,124$ 210,492
32,762237
258(44,838)62(4,906)(41,404)
1,438
(55)
763
(202)
(461,974)
32,393(33,402)(55,588)
1,646
398(833,780)
3,386,601(462,376)
460,833(396,082)
75,601(129,426)
96,207(97,786)(4,260)(9,142)474,091(34,148)
77,8372,242,249(58,988)
2,183,260

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.......................................................................................

(524,285)
410,620
109,565(2,618)(1,294)257—(7,755)(497,814)
300,821
125,757(3,078)(667)
522
1(74,457)(5,094,107)
3,989,702
1,064,569(25,443)(12,573)2,499—(75,352)

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

(1,516)259(2,118)(382)(3,758)(7)308(2,121)(382)(2,202)(14,732)
2,521(20,584)(3,719)(36,514)

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..............................................................................

8
213,196
103,333¥316,529

9(69,526)
172,859¥103,333

80
2,071,474
1,004,014$3,075,488

See accompanying notes to consolidated financial statements.

19

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of presenting consolidated financial
statements

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.

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, 2014, which was ¥102.92 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.

(4) Derivatives
Under the Accounting Standard for Financial Instruments, derivatives
are stated at fair value.

(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.

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.

(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.

3. Significant accounting policies(1) Consolidation(6) Reserve for possible loan losses

The consolidated financial statements include the accounts of the Bankand its 10 subsidiaries.

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 ¥23,626 million ($229,563
thousand) and ¥27,331 million for the years ended March 31, 2014
and 2013, 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(Changes in the scope of consolidation)
As Hyakujushi Comprehensive Maintenance Co., Ltd. has been
excluded from the scope of consolidation from the fiscal year ended
March 31, 2014 because it no longer falls under the category ofsubsidiary due to an absorption-type merger with Nihonbashi Real
Estate Co., Ltd. as the surviving company.
Hyakujushi Work Support Co., Ltd. has been excluded from thescope of consolidation from the fiscal year ended March 31, 2014
because it no longer falls under the category of a subsidiary due to thecompletion of liquidation.
Non-consolidated subsidiaries: 3
1st Hyakujushi Venture Fund Cooperation Limited
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.

(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

20

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(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.
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.

is provided based on the amount deemed irrecoverable after careful
examination of the recoverability of the loans in question on an
individual basis.

(7) Reserve 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.

(8) Accrued directors’ retirement benefits
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.

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

(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) Statements of cash flows
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:(10) Reserve for contingent liabilities
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.

March 31

Millions of yen
2014
2013

Thousands of
U.S. dollars
2014

Cash and due from banks............ ¥390,388 ¥136,427 $3,793,121
Time deposits with banksother than The Bank of Japan.... (72,042)(1,092)(699,985)
Deposits with banksother than The Bank of Japan....
(503)
(533)
(4,890)
Other...........................................
(1,312) (31,468)(12,756)
Cash and cash equivalents...... ¥316,529 ¥103,333 $3,075,488(11) Accounting method for retirement benefits
To calculate retirement benefit obligations, the Bank used the straightline attribution method as a method for attributing estimated retirement benefits over the period until March 31, 2014. The amortization
method for prior service 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.

(17) 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
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 May 17, 2012) (excluding the provisions set forth in the textof paragraph 35 of Accounting Standard for Retirement Benefits andthe text of paragraph 67 of Guidance on Accounting Standard for
Retirement Benefits) from the end of the fiscal year ended March 31,
2014, and an amount of pension assets deducted from retirement
benefit obligations is recorded as net defined benefit asset or net
defined benefit liability.
In applying Accounting Method for Retirement Benefits and other,
the Bank follows transitional treatment set forth in paragraph 37 of
Accounting Standard for Retirement Benefits. At the end of the fiscal
year ended March 31, 2014, unrecognized actuarial differences after
adjustment for tax effects are recorded as the amount of remeasurements of retirement benefit plans in accumulated other comprehensive
income.
As a result, at the end of the fiscal year ended March 31, 2014,
the Bank recorded net defined benefit asset of ¥857 million ($8,333
thousand) and net defined benefit liability of ¥947 million ($9,205
thousand). Moreover, deferred tax assets increased by ¥1,483 million($14,415 thousand) and accumulated other comprehensive income
decreased by ¥2,719 million ($26,422 thousand).
The impact of this change on per share information is described in
the per share information section.

(12) Foreign currency translation
Receivables and payables in foreign currencies are translated into
Japanese yen at the year-end rates.

(13) 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.

(14) 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.

21

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
5. New accounting standards not yet applied(2) Planned date of application

Accounting Standard for Retirement Benefits (May 17, 2012) and its
guidance

Application of the calculation methods for retirement benefit obligations and service costs will start at the beginning of the fiscal year
beginning April 1, 2014.

(1) Overview(3) Effect of applying said accounting standard

These accounting standards primarily revise accounting methods forunrecognized actuarial differences and unrecognized prior service
costs, calculation methods for retirement benefit obligations andservice costs, and also expand disclosure items based on improvements
in financial reporting and international trends.

The effect of applying said accounting standards is expected to result ina ¥1,611 million ($15,660 thousand) of decrease in retained earnings
at the beginning of the fiscal year beginning April 1, 2014.

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

2014

March 31, 2013

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

Thousands of shares
Increase
Decrease

March 31, 2014

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

2013

March 31, 2012

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

Thousands of shares
Increase
Decrease

March 31, 2013

310,076
310,076————

310,076
310,076

7,225
7,225

22
22

865
865

6,412
6,412

Notes: 1. A breakdown of the increase in the number of common shares in treasury is given below.
Increase due to purchase demand for fractional shares: 22 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: 720 thousand shares
Decrease due to exercise of share warrants: 145 thousand shares
Decrease by additional purchase demand for fractional shares: 0 thousand shares(2) Matters concerning share warrants and own share options
The balance of share warrants (for stock options) at the end of March 31, 2014 and 2013 stood at ¥156 million ($1,520 thousand) and ¥120 million,
respectively. At end of the previous and current fiscal year, no shares had been earmarked for share warrants.

22

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Information on dividends(a) Dividends paid
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, 20132013
Resolution

Total dividend
amount(Millions of yen)Type of share

June 28, 2012 (Regular Annual General Meeting of Shareholders).... Common stock
November 9, 2012 (meeting of the Board of Directors)...... Common stock¥1,059
1,061

Dividend pershare (Yen)

¥3.5
3.5

Record date

Effective date

March 31, 2012
June 29, 2012
September 30, 2012 December 10, 20122014
Resolution

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

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$10,326
10,257$0.034
0.034

Record date

Effective date

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

Note:	In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on June 27, 2013 and June 28, 2012, the total
amount of dividends paid excludes the ¥8 million ($82 thousand) and ¥11 million dividend payment to the Employee Stock Ownership Plan (ESOP) Trust. Moreover,
the total amount of dividends paid excludes the ¥7 million ($71 thousand) and ¥9 million dividend payment to the ESOP Trust pursuant to the resolution approvedby the Board of Directors at a meeting held on November 11, 2013 and November 9, 2012.
These exclusions reflect the Bank’s classification of the shares owned by the Trust as treasury stock.

(b) Dividends paid after the balance-sheet date2014
Resolution

Type of share

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

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,051Retainedearnings¥3.5

March 31, 2014

June 30, 2014

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,062Retainedearnings¥3.5

March 31, 2013

June 28, 2013

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

Record date

Effective date

Retainedearnings

March 31, 2014

June 30, 20142013
Resolution

Type of share

June 27, 2013 (Regular Annual General
Meeting of Shareholders)..................... Common stock2014
Resolution

Type of share

June 27, 2014 (Regular Annual General
Meeting of Shareholders)..................... Common stock$10,214$0.034

Note: The total dividend on March 31, 2014 and 2013 excludes the ¥6 million ($60 thousand) and ¥8 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

Held-to-maturity debt securities with fair market value consisted of
local government bonds. Book value and market value of the securities
were not recorded as of March 31, 2014. Book value and market valueof the securities amounted to ¥0 million and ¥0 million, respectively, as
of March 31, 2013.

A valuation gain of ¥0 million ($0 thousand) was recognized for theyear ended March 31, 2014, and a valuation gain of ¥0 million wasrecognized for the year ended March 31, 2013.

23

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, 2014 and 2013 were as
follows:

2014

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... $ 1,051,617 $   594,207
Bonds:
National.......................... 6,164,334 6,072,755
Local............................... 1,627,229 1,584,032
Corporate....................... 1,859,546 1,838,198
9,651,110 9,494,986
Other..............................
819,223
794,023
Subtotal.......................... 11,521,951 10,883,216
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
195,206
228,529
Bonds:
National..........................
316,593
316,852
Local...............................
43,573
43,695
Corporate.......................
240,325
240,764
600,492
601,313
Other..............................
629,511665,151
Subtotal.......................... 1,425,210 1,494,994
Total......................................... $12,947,161 $12,378,211

Millions of yen
2014

Consolidatedbalance sheet
amountConsolidated 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
65,738(3,429)
(26)
(12)
(45)
(84)
(3,668)(7,182)¥58,556

Acquisition
cost

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... ¥  100,611 ¥   63,157
Bonds:
National..........................
489,594
478,412
Local...............................
256,309247,426
Corporate.......................
279,762
273,548
1,025,666
999,387
Other..............................
85,782
82,021
Subtotal.......................... 1,212,060 1,144,566
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
21,57925,909Bonds:
National..........................
43,75343,904
Corporate.......................
7,536
7,588
51,28951,492Other..............................
30,49834,230Subtotal..........................
103,367
111,632
Total......................................... ¥1,315,428 ¥1,256,199

91,57843,197
21,347
156,123
25,200638,735(33,323)
(258)
(122)
(439)
(820)
(35,640)(69,784)$568,950

Millions 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

Millions of yen
2013$457,410(b) Gains and losses on sale of securities available for sale for the years
ended March 31, 2014 and 2013 are as follows:

2014
Consolidatedbalance sheet
amountThousands of U.S. dollars
Consolidatedbalance sheet Acquisition
amountcost
Difference

Difference¥37,454
11,181
8,883
6,214
26,2793,760
67,494

2013

(151)
(52)
(203)
(3,731)(8,264)¥59,229

24

¥ 353

871
1,382
2,390
4,645
121
¥6,877

635
138
164
938
2,097
¥3,389Millions of yen
Sale amount Gains on sale Losses on sale

Equity stock.............................. ¥  3,952
Bonds:
National...............................
212,291
Local....................................
2,516
Corporate............................
78,095292,903
Other........................................
3,943
Total......................................... ¥300,799(4,329)¥2,111¥  335¥  842

1,099
17
666
1,782
110
¥2,228

571
—
50
622
247
¥1,711

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2014

10. Loans and bills discounted

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

Equity stock.............................. $ 168,741
Bonds:
National............................... 1,621,120
Local....................................
861,102
Corporate............................ 1,163,518
3,645,741
Other........................................
212,812
Total......................................... $4,027,294$20,515$ 3,4398,468
13,43423,23145,135
1,177$66,827

6,173
1,342
1,598
9,114
20,379$32,932

Loans and bills discounted as of March 31, 2014 and 2013 included
the following non-performing amounts:

Millions of yen
2014
2013

Loans under bankruptcy............... ¥ 1,461
Non-accrual loans........................ 44,636
Loans past due over 3 months.....
416
Restructured loans....................... 30,947
Total............................................ ¥77,462(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 loss was recorded in the fiscal year ended March 31,
2014.
Impairment losses for the consolidated fiscal year ended March 31,
2013 amounted to ¥2,712 million ¥1,412 million in equity stock, other¥1,300 million.
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, 2014 and 2013 consistedof the following:

Millions of yen
2014
2013

Assets pledged as collateral:
Securities................................ ¥203,296 ¥195,230
Liabilities corresponding
to assets pledged as collateral:
Deposits.................................
27,07628,519
Payables under securities
lending transactions.................
9,901—
Borrowed money....................
76,41530,592Millions of yen
2014
2013

Securities..................................... ¥37,875

Amount on the consolidated balance sheet as of March 31, 2014 and2013 was ¥4,901 million ($47,627 thousand) and ¥4,901 million,
respectively.

The following is a breakdown of net unrealized gains on securities
available for sale recorded in the consolidated balance sheet:
Thousands of
U.S. dollars
2014$568,950
568,950—(200,671)

38,333368,278

(181)

(159)

(1,759)———Net unrealized gains on
securities available for sale......... ¥37,722¥38,173$366,519

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

$1,975,284

263,078
96,207
742,474¥39,755

Thousands of
U.S. dollars
2014$368,004

As of March 31, 2014 and 2013, Other assets included guaranteemoney and household deposits of ¥1,273 million ($12,378 thousand)and ¥1,287 million, respectively.

9. Net Unrealized Gains on Securities Available for Sale

¥59,229
59,229—(20,895)

Thousands of
U.S. dollars
2014

In addition to the assets presented above, the following assets were
pledged as collateral for exchange clearance transactions and futurescontracts at March 31, 2014 and 2013:

Money held in trust classified as held for trading purposes

Valuation difference..................... ¥58,556
Other securities....................... 58,556
Money held in trust................
—
Deferred tax liabilities................... (20,653)
Net unrealized gains on securities
available for sale (before equity
equivalent)................................. 37,903$ 14,201
433,704
4,050
300,693$752,649

11. Assets pledged as collateral

8. Matters relating to money held in trust

Millions of yen
2014
2013

¥ 2,381
45,633423
30,734¥79,172

Thousands of
U.S. dollars
2014

25

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
12. Income taxes

13. Accumulated depreciation(1) Deferred tax assets

Accumulated depreciation of tangible fixed assets as of March 31,
2014 and 2013 amounted to ¥35,910 million ($348,919 thousand)and ¥37,839 million, respectively.

Major components of deferred tax assets as of March 31, 2014 and2013 were as follows:

Excess reserve for possible loan
losses......................................... ¥13,317
Valuation gain on securities
available for sale.........................
2,535
Excess reserve for employee
retirement benefits....................
—Net defined benefit liability..........
2,357
Excess depreciation......................
1,632
Other...........................................
5,216
Subtotal....................................... 25,059
Valuation reserve.........................
(4,036)
Deferred tax assets....................... 21,023
Deferred tax liabilities................... (23,392)
Net deferred tax assets(liabilities)................................... ¥ (2,369)

14. Borrowed money

Thousands of
U.S. dollars
2014

Millions of yen
2014
2013

¥14,921$129,399

2,917

24,635

2,360
—
1,559
4,685
26,444(2,783)
23,661(23,980)—
22,907
15,86250,684
243,489(39,220)
204,269(227,289)¥  (318)$ (23,020)

Borrowed money consists of loans from other financial institutions.
As of March 31, 2014 and 2013, subordinated borrowings in theamount of ¥17,000 million ($165,176 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 ($97,162 thousand) and ¥10,000 million, as of March
31, 2014 and 2013.

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 asrevaluation reserve for land in stockholders’ equity.
As of March 31, 2014 and 2013, the difference between the carrying amount and the fair value of the land revalued was ¥15,983 million($155,300 thousand) and ¥15,663 million, respectively.

(2) Income taxes
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, 2014 and 2013.

Statutory income tax rate...................................
Reconciliation:
Unrecognized loss carryforwards at subsidiaries...
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.............................

2014

2013

37.7%

37.7%

—

(0.2)

0.4

0.7

(2.5)

(4.6)

(0.3)
0.3
6.1

0.8
0.6
(0.8)

1.8
0.2

—
0.8

43.7%

35.0%

17. Impairment losses
During the years ended March 31, 2014 and 2013, the Bank recorded
losses on impairment of fixed assets as described below:

Location

Usage

Type

Kagawa Pref..... Idle assets andLand, buildings
assets for disposal and movables(2014: 15 items,
2013: 15 items)
Other............ Idle assets andLand, buildings
assets for disposal and movables(2014: 4 items,
2013: 7 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. 10,2014) was publicly announced on March 31, 2014 and the special
corporate tax for reconstruction was abolished from the fiscal year
beginning April 1, 2014. The statutory tax rate used to calculatedeferred tax assets and deferred tax liabilities was changed from
37.7% to 35.3% for the temporary differences expected to beeliminated in the fiscal year starting April 1, 2014 and thereafter. As
a result of this tax rate change, deferred tax liabilities increased ¥396
million ($3,852 thousand) and income taxes – deferred rose ¥395
million ($3,846 thousand).

Location

Usage

Type

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

26

Millions of yen
Loss amount
2014
2013

¥18
land: 8buildings: 9
movables: 0¥ 5
land: 5buildings: —movables: —¥24
land: 14buildings: 9
movables: 0
Thousands of
U.S. dollars
Loss amount
2014

$181
land: 83
buildings: 89
movables:   7$ 56
land: 56
buildings: —movables: —$237
land: 140
buildings: 89
movables:   7¥31
land: 28
buildings: 2
movables: 0¥24
land: 22
buildings: 1
movables: 0¥55
land: 51
buildings: 4
movables: 0

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(b) Intangible fixed assets
None

The Bank posted impairment losses of ¥24 million ($237 thousand)and ¥55 million, respectively, during the years ended March 31, 2014
and 2013 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
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).

(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.
2. As lessor(1) Breakdown of lease investment assets
Millions of yen
2014
2013

Lease receivables.......................... ¥17,907
Estimated residual value...............
1,778
Interest received...........................
(1,933)
Lease investment assets............... ¥17,752

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..............................

The amount of recycling and amount of income tax effects associatedwith other comprehensive income

Net unrealized gains on
securities, net of taxes:
Amount recognized during
the year...................................
Amount of recycling..................
Prior to income tax effect........
Income tax effect....................
Net unrealized gains on
securities available for sale......
Net deferred losses on hedges
instruments, net of taxes:
Amount recognized during
the year...................................
Amount of recycling..................
Prior to income tax effect........
Income tax effect....................
Deferred gains (losses)on hedges............................
Total other comprehensive income....

Thousands of
U.S. dollars
2014

2013

¥3,661(4,326)(664)
234¥27,079
2,172
29,251(10,325)$35,579(42,035)(6,456)
2,276

(430)

18,925(4,179)

(175)
348
172
(61)

(363)
262
(100)
33

(1,709)
3,388
1,679
(592)

111
¥ (318)(66)¥18,858

1,086$ (3,093)$173,993
17,283(18,785)$172,491(2) S chedule for collection of lease receivables andreceivables on lease investment assets by leasing
contract maturity

18. Matters relating to consolidated statements ofcomprehensive income

Millions of yen
2014
2013

¥17,128
1,755(1,919)¥16,964

Thousands of
U.S. dollars
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..............................

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..............................

19. Finance leases

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

Millions of yen
Receivables on lease
Lease receivables
investment assets

¥13
13
11
6
3
—

¥5,510
4,258
3,248
2,271
1,135
702

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

$420
399
344
305
261
230

$53,237
43,33334,062
22,42813,1497,781(3) Regarding finance lease transactions that do not transfer

Information on finance leases for the years ended March 31, 2014 and2013 are as follows:

ownership of the 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 the last business term prior to the start of application of the new accounting standards is taken as the start-of-termvalue of the lease assets.

1. As lessee
Finance lease transactions that do not transfer ownership(1) Components of lease assets(a) Tangible fixed assets
Primarily consisting of ATMs

27

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
transactions to confirm whether a position is commensurate with thevalue of the foreign currency-denominated financial asset subject tothe hedge.

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 ¥44 million ($430 thousand) (¥87 million in theprevious consolidated fiscal year) compared with the amount posted in
the Consolidated Statements of Operations.

(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.

20. Financial instruments
1. Disclosures related to financial instruments(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.

(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.

(2) Nature and extent of risks arising from financial
instruments(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.

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 derivative transactions entered into by the Group involve
currency swaps and foreign exchange swaps for the purpose ofhedging exchange rate fluctuation risk associated with financial assets
denominated in foreign currencies. Such transactions are treated asdeferred hedges as defined under “JICPA Industry Audit Committee
Report No. 25.” The Group assesses hedge effectiveness for hedging(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, 2014 (the consolidated balance sheet date), the volume of the aforementioned risks (estimatedamount of loss) amounted to ¥5 million ($48 thousand) (comparedwith ¥7 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% and28

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
observation period of 1,200 business days. As of March 31, 2014,
the volume of the aforementioned risks (taking into consideration
the correlation or reciprocal risks) amounted to ¥22,126 million($214,982 thousand) (compared with ¥44,141 million in the endof 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, 2014, the volume of the aforementioned
risks amounted to ¥3,993 million ($38,797 thousand) (compared to¥1,955 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.
d. 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” toensure a prompt response to unexpected situations that may affectcash management. These rules assume that unexpected situations
will arise and classifies them into the categories of “caution” and“crisis” categories, thereby enabling the Group to respond in atimely and appropriate manner.
The Liquidity Risk Management Department (Treasury andInternational Division) performs daily and monthly cash projections
to ensure proper and stable cash management based on theGroup’s investment/acquisition structure, ensuring sufficient liquidity
reserves. The Liquidity Risk Management Department is also responsible for identifying, analyzing, assessing and monitoring liquidity risk
in consideration of internal and external factors that may have an
impact on said risk.
e. Supplementary information regarding fair value of financial
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
said values, and said values may vary when differing assumptions areused.

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

Difference¥    ——————

15,691
15,691
506
37
—
3
78
626

—
—
¥    —

Millions of yen

2013

Consolidatedbalance sheet
amountFair value(1) Cash and due from banks......... ¥  136,427 ¥  136,427(2) Call loans and bills bought........
6,301
6,301
(3) Trading account securities andsecurities available for sale......
49
49(4) Money held in trust...................
4,901
4,901
(5) Securities
Held-to-maturity debt securities....
00
Other securities......................... 1,314,929 1,314,929(6) Loans and bills discounted........ 2,528,403
	Reserve for possible
loan losses..............................
(23,068)
2,505,334 2,528,130
Total Assets................................... 3,967,944 3,990,740(1) Deposits.................................... 3,420,759 3,421,279(2)	Negotiable certificates ofdeposit...................................
231,706
231,746(3) Call money and bills sold...........
51,91551,915(4) Borrowed money......................
73,65473,709(5) Corporate bonds.......................
10,00010,099Total Liabilities............................... 3,788,035 3,788,750
Derivative Transactions *1
Not subject to hedge
accounting..............................
10,963
10,963
Subject to hedge accounting.....
(2,128)(2,128)
Total Derivative Transactions.......... ¥    8,834 ¥    8,834

2. Fair value of financial instruments
The consolidated balance sheet amount, fair values and the differences
as of March 31, 2014 and 2013 are as follows. Private equity sharesor other shares whose fair values are not readily determinable are notincluded in the following table.

29

Difference¥    ————
0—

22,796
22,796
520
39
—
55
99
714

—
—
¥    —

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(5) Securities

Thousands of U.S. dollars

2014

Consolidatedbalance sheet
amountFair value(1) Cash and due from banks......... $ 3,793,121 $ 3,793,121(2) Call loans and bills bought........
——(3) Trading account securities andsecurities available for sale......
84
84(4) Money held in trust...................
47,62747,627(5) Securities
Held-to-maturity debt securities....
——Other securities......................... 12,947,161 12,947,161(6) Loans and bills discounted........ 25,400,463
	Reserve for possible
loan losses..............................
(182,521)
25,217,942 25,370,403
Total Assets................................... 42,005,938 42,158,398(1) Deposits.................................... 36,623,672 36,628,594(2)	Negotiable certificates ofdeposit................................... 1,788,954
1,789,315(3) Call money and bills sold...........
375,000
375,000(4) Borrowed money...................... 1,176,477
1,176,514(5) Corporate bonds.......................
97,162
97,926
Total Liabilities............................... 40,061,266 40,067,350
Derivative Transactions *1
Not subject to hedge
accounting..............................
99,01099,010Subject to hedge accounting.....
(13,239)(13,239)
Total Derivative Transactions.......... $   85,771 $   85,771

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.

152,460
152,460
4,921
361
—
37
763
6,083

—
—
$     —

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

30

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 ¥1 million ($16 thousand) and ¥24 million impairment
loss for unlisted equity stock for the consolidated fiscal years ended March 31,
2014 and 2013.
*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, 2014. These are not includedin the “Assets (4) Securities” section under fair value information for
financial instruments.
Millions of yen

Thousands of
U.S. dollars

Consolidatedbalance sheet
amountConsolidatedbalance sheet
amountCategory

2014

2013

2014

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

¥2,787331¥3,119¥2,614361¥2,975$27,086
3,220$30,306

Estimated redemption amounts of monetary claims and securities with maturities after the consolidated fiscal years as of March 31, 2014 and 2013
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

2014

Up to 1 year

Over 1 year,
up to 3 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

2013

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................................................................
Call loans and bills bought....................................
Monetary claims bought.......................................
Securities:
Held-to-maturity debt securities........................
Local government bonds...................................
Other securities with maturities.............................
National government bonds..............................
Local government bonds...................................
Corporate bonds...............................................
Other................................................................
Loans and bills discounted*..................................
Total.....................................................................

¥  101,925
6,301
30,641¥     ——
1,000¥     ——
569

¥     ———

¥     ———

¥     —
—
1,656

0
0
98,53425,531
24,84733,683
14,472
1,121,016¥1,358,420——
322,496
145,429
83,711
58,383
34,972406,913¥730,410——
235,218
91,04545,093
66,99632,082
283,504¥519,291——
190,531122,036
25,69431,047
11,752
166,591¥357,122——
324,097
143,462
76,962
97,187
6,485
164,240¥488,337

—
—
5,843
5,843
—
—
—
298,876¥306,375

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$      ——

$      ——

$      ——

$      ——

$      —13,1103,267,125
1,339,084
731,218
703,843
492,979
4,555,079$7,822,205

2,469,874
1,027,997
256,141
715,315
470,420
3,224,030$5,693,905

2,039,579
1,507,209
188,602258,492
85,274
1,657,891$3,697,471

1,481,637
1,177,458
156,790
137,475
9,912
1,569,642$3,051,279

150,427
150,427———
3,179,531$3,343,070

2014

Deposits................................................................ $ 3,434,596
Monetary claims bought.......................................
301,576
Securities:
Other securities with maturities.............................
2,025,884
National government bonds..............................
1,278,750
Local government bonds...................................
338,050
Corporate bonds...............................................
284,743
Other................................................................
124,339
Loans and bills discounted*..................................
10,406,438
Total..................................................................... $16,168,495*Among loans and bills discounted, ¥46,112 million ($448,041 thousand) and ¥48,020 million in loans for bankrupt, substantially bankrupt and likely to go bankrupt
borrowers or other loans of which repayment is not expected, and ¥37,031 million ($359,807 thousand) and ¥39,239 million in loans with no established maturity havenot been included.

31

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, 2014 and 20132014

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

2013

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.....................................................................

¥3,124,940
231,706
51,91538,516—¥3,447,079¥285,112——
10,433—¥295,546

Up to 1 year

Over 1 year,
up to 3 years

Deposits*.............................................................. $33,756,496
Negotiable certificates of deposit..........................
1,786,039
Call money and bills sold.......................................
375,000
Borrowed money..................................................
436,684
Corporate bonds...................................................
—
Total..................................................................... $36,354,220$2,771,285
2,914—
507,252—$3,281,453

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¥   534——
4,827
10,000¥15,362

¥ —
—
—
207
—
¥207

Over 7 years,
up to 10 years

Over 10 years¥   663——
5,173
10,000¥15,836

¥ —
—
—
258
—
¥258

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$ 86,201——
46,843—$133,045$  5,198——
46,906
97,162$149,267

$   —
—
—
2,011
—
$2,011¥ 8,871——
4,821—¥13,693¥   462——
14,077—¥14,539

Millions of yen
Over 3 years,
Over 5 years,
up to 5 years
up to 7 years¥ 9,056——
5,113—¥14,170¥   985——
14,158—¥15,144$  4,489——
136,780—$141,269*Among deposits, demand deposits are included in “Up to 1 year.”

21. Accrued retirement benefits(2) Defined benefit plan

Fiscal year ended March 31, 2014
(April 1, 2013 to March 31, 2014)(a) Reconciliation of retirement benefit obligations at beginning andend of period(1) Overview of retirement benefit scheme adopted by
the Bank
Retirement benefit obligations at
beginning of period....................................
Service costs............................................
Interest costs...........................................
Actuarial differences................................
Retirement benefits paid..........................
Prior service costs.....................................
Retirement benefit obligations at
end 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.

Millions ofyen

Thousands of
U.S. dollars¥47,154
1,439
432
1,545
(2,272)318$458,170
13,981
4,197
15,021(22,083)
3,092¥48,617$472,380(b) Reconciliation of pension assets at beginning and end of period

Pension assets at beginning of period...........
Expected return on pension assets................
Actuarial differences.....................................
Contribution from employer.........................
Retirement benefits paid...............................
Pension assets at end of period.....................

32

Millions ofyen

Thousands of
U.S. dollars¥44,266
502
3,114
1,971
(1,327)¥48,527$430,108
4,883
30,264
19,151(12,900)$471,508

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(c) R econciliation of retirement benefit obligations and pension
assets at end of period and retirement benefit liabilities and assets
recorded in the consolidated balance sheet

Retirement benefit obligations of funded plan....
Pension assets...............................................
Retirement benefit obligations of
unfunded plan............................................
Net amount of liabilities and assets
recorded in consolidated balance sheet.......

Millions ofyen

Thousands of
U.S. dollars¥48,617(48,527)89$472,380(471,508)
872

—

—

¥   89$    872

Millions ofyen

Thousands of
U.S. dollars

¥947
(857)

$9,205(8,333)

¥ 89

$ 872

(g) Assumptions for making actuarial calculation
Major assumptions for actuarial calculation at the end of the fiscal year
under review
1) Discount rate
0.92%2) Expected long-term rate of return
2.00%(3) Defined contribution pension plan
The required contribution to the defined contribution plans of consolidated subsidiaries was ¥7 million ($69 thousand).

Fiscal year ended March 31, 2013
(April 1, 2012 to March 31, 2013)(1) Retirement benefits plan

Retirement benefit liabilities..........................
Retirement benefit assets..............................
Net amount of liabilities and assets
recorded in consolidated balance sheet.......

The Bank and its consolidated domestic subsidiaries have established adefined-benefit corporate pension plan and lump-sum payment plan,
as well as a defined contribution pension plan. Additionally, in somecases, a premium severance package is provided to employees on theirretirement. In addition, the Bank has set up a retirement benefit trust.

(d) Breakdown of retirement benefit costs

Service costs*...............................................
Interest costs.................................................
Expected return on pension assets................
Amortization of actuarial differences.............
Amortization of past service costs.................
Retirement benefit costs fordefined benefit plans..................................

Plan
Millions ofyen

Thousands of
U.S. dollars¥1,439
432
(502)
783
318

$13,981
4,197(4,883)
7,613
3,092

¥2,470$24,000

Lump-sum payment plan

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

¥4,203¥4,203$40,838$40,838

2011

Millions of yen

Retirement benefit obligation..........................................
Fair value of pension assets.............................................
Benefit obligation excess of pension assets......................
Unrecognized actuarial loss.............................................
Net retirement benefit obligation......................................
Prepaid pension costs......................................................
Accrued retirement benefits............................................

¥(47,154)
44,266(2,888)
6,555
3,667
4,172
¥   (504)(3) Retirement benefits expenses
Millions of yen(f) Items related to pension assets(i) The following is the percentage of total pension assets by maincategory:
Bonds...........................................................
Stocks...........................................................
Life insurers’ general account........................
Other............................................................
Total.............................................................

2004(2) Accrued retirement benefits(e) Remeasurements of retirement benefit plans
The following is a breakdown of items (before deducting tax effects)
recorded in remeasurements of retirement benefit plans:
Thousands of
U.S. dollars

Establishment

The Bank and its 11
The Bank inauguration
consolidated subsidiaries

Defined-benefit corporate
pension plan
The Bank
Defined-contribution
pension plan
11 companies*Retirement benefit costs of domestic consolidated subsidiaries that use thesimplified method are recorded in lump-sum in “Service costs.”

Millions ofyenCompanies adopting
the planService costs...................................................................
Interest costs...................................................................
Estimated return on pension assets.................................
Amortization of actuarial difference................................
Total retirement benefits expenses..................................
Gain on abolishment of retirement benefit plan..............
Total...............................................................................

13%
53
28
6
100%

¥1,199
805
(450)
731
2,286
—
¥2,286(4) Basis of computation

Note: Total pension assets include retirement benefit trusts established forthe corporate pension plan (22.93%) and retirement benefit trusts
established for the retirement lump-sum payment plan (19.77%).

Discount rate..................................................................
Expected rate of return on pension assets.......................

(ii) M ethod 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.

0.92%
2.00%

22. Stock options
1. Stock option expenses and accounts for the consolidated fiscal years
ended March 31, 2014 and 2013
Millions of yen
2014
2013

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

33

¥51

¥47

Thousands of
U.S. dollars
2014

$503

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
2. Stock option details, size, and changes(1) Stock option details
Category and number ofgrant recipients�����������������������
Type and number of stock
options granted (Note)������������
Grant date.................................
Vesting terms.............................
Service period���������������������������
Exercise period��������������������������

2009 stock options

2010 stock options

2011 stock options

2012 stock options

2013 stock options

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

Common stock:
128,500 shares
July 24, 2009
No vesting terms
No service period
specified
July 25, 2009 to July24, 2039

Common stock:
159,000 shares
July 26, 2010
No vesting terms
No service period
specified
July 27, 2010 to July26, 2040

Common stock:
187,300 shares
July 26, 2011
No vesting terms
No service period
specified
July 27, 2011 to July26, 2041

Common stock:
175,000 shares
July 24, 2012
No vesting terms
No service period
specified
July 25, 2012 to July24, 2042

Common stock:
172,500 shares
July 23, 2013
No vesting terms
No service period
specified
July 24, 2013 to July23, 2043

2010 stock options

2011 stock options

2012 stock options

2013 stock options

Note: Converted to equivalent number of shares.

(2) Stock option size and changes(a) Number of stock options
2009 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.............................

58,800——8,100
50,70099,400——13,10086,300120,500——
15,500105,000

160,400——
14,600145,800—
172,500——
172,500

—
8,100
8,100
—
—

—
13,10013,100———15,50015,500———14,60014,600
—
—

—
—
—
—
—

(b) Unit price information (in year)
Exercise price.............................
Average price at exercise............
Fair value on grant date.............

2009 stock options

2010 stock options

2011 stock options

2012 stock options

2013 stock options

Per share:    ¥1Per share: ¥326
Per share: ¥418

Per share:    ¥1Per share: ¥326
Per share: ¥315

Per share:    ¥1Per share: ¥326
Per share: ¥279

Per share:    ¥1Per share: ¥326
Per share: ¥256

Per share:    ¥1Per share: ¥—Per share: ¥321

3. Method for estimating fair value of stock options
The following method was used to estimate the fair value of 2013
stock options granted during the consolidated fiscal year ended March
31, 2014.

4. Method for estimating number of vested stock options
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

2013 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.

27.7%
3.6 years
Per share: ¥7
0.18%*1 Calculated weekly for the period beginning the week of December 7, 2009
through the week of July 15, 2013 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 2013.
*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.

34

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Market prices of interest-rate swap transactions as of March 31,
2014 and 2013 were as follows:
2013

2014

Millions of yen
Contracted value
Total
Over 1 year Fair valueOver 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...................................

2013

Over the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... ¥67,436
Variable rate receivable/
fixed rate payable........ 67,436
Others:Sell................................
2,788
Buy...............................
2,788
Total...................................

2014¥1,165¥1,16554,355

(510)

(510)

1,615
1,615

4
4
¥ 663

79
(18)
¥ 715

Millions of yen
Contracted value
Total
Over 1 year Fair valueOver the counter
Currency swaps................ ¥227,037 ¥133,143
Forward exchange
contracts:
Sell................................ 117,668
10,373
Buy............................... 52,434
12,324Currency options:Sell................................ 105,623
60,412
Buy............................... 105,623
60,412
Total...................................

Appraisedprofit/(loss)¥54,355

2014¥1,385¥1,38564,972

(658)

(658)

2,596
2,596

7
7
¥  741105(20)¥  811

2014

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

$11,323(4,958)2014

Over 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...................................

2014

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

Appraisedprofit/(loss)

¥ 104

¥ 104

(2,863)
3,406(2,863)
3,406

4,435
4,435
¥9,5184,109(2,687)¥2,069¥  148(2,766)
3,280(2,766)
3,280

4,780
4,780
¥10,2224,440(3,009)¥2,093$ 1,015$ 1,015(27,822)
33,095(27,822)
33,09543,09843,098$92,484

39,930(26,113)$20,104

Millions of yen
Contracted value
Total
Over 1 year Fair value¥5,793
—

¥—
—

¥ 8
—
¥ 8

Appraisedprofit/(loss)

¥ 8
—
¥ 8

There were no bond-related derivative transactions as of March 31, 2013.

769
(180)
$ 6,953

Market price of currency-related swap transactions as of March 31,
2014 and 2013 were as follows:
Millions of yen
Contracted value
Total
Over 1 year Fair value¥   148

Market price of bond-related derivative transactions as of March 31,
2014 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.... $631,989 $528,137 $11,323
Variable rate receivable/
fixed rate payable........ 631,989 528,137(4,958)Others:Sell................................
17,624
15,697
39
Buy...............................
17,624
15,69739
Total...................................
$ 6,443

Appraisedprofit/(loss)

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

Over the counter
Currency swaps................ $2,387,003 $1,903,912
Forward exchange
contracts:
Sell................................ 584,569
46,990
Buy............................... 527,519
41,500Currency options:Sell................................ 1,291,022
823,671
Buy............................... 1,291,022
823,671
Total...................................

Appraisedprofit/(loss)¥64,972

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)$56,288
—

$—
—

$81
—
$81

$81
—
$81

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.

35

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, 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)—Contracted value

Millions of yen
Contracted value
over 1 year

¥25,000¥    —¥25,000¥    —

Contracted value

Millions of yen
Contracted value
over 1 year

¥15,000¥    —¥15,000¥    —

Contracted value

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

$242,907$     —

$242,907$     —

Fair value

¥(33)
¥(33)

As of March 31, 2013

Hedge accounting method

General accounting
rules

Type

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

Main hedged item

Available-for-salesecurities(bonds)—Fair value¥(199)¥(199)

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)—Fair value$(327)$(327)

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, 2014

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

Main hedged item

Contracted value

Millions of yen
Contracted value
over 1 year

Fair value

Foreign currency
receivables—¥12,226
54,767¥    —¥    ——¥    —¥(2,003)74¥(1,929)

Fair value$(13,018)106$(12,911)

Fair value

As of March 31, 2013

Hedge accounting method

Type

General accounting
rules

Currency swaps
Monetary swaps
Total

As of March 31, 2014

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—$330,000
685,027$     —

$     ——
$     —

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.

36

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, 2014 and 2013 is as follows: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............

2013

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............

Banking

Leasing

Total

Millions of yen
Otherbusinesses

Total

Adjustment

Consolidated
total

¥

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

Adjustment

Consolidated
total

Banking

Leasing

Total

Millions of yen
Otherbusinesses

Total

80,580—¥ 80,580¥ 21,857¥4,493,211¥4,236,360¥   65,599
375¥   65,975¥    8,951¥4,117,713¥3,886,766¥ 6,849784¥ 7,633¥   268¥24,954¥21,285¥   72,448
1,159¥   73,608¥    9,220¥4,142,668¥3,908,052¥ 2,241
4,266¥ 6,507¥ 1,724¥30,234¥11,527¥   74,690
5,426¥   80,116¥   10,944¥4,172,903¥3,919,579¥    —(5,426)¥ (5,426)¥    (89)¥(38,574)¥(36,672)¥   74,690—¥   74,690¥   10,854¥4,134,329¥3,882,906¥    2,946
50,494
3,732¥   114105184¥    3,061
50,5993,917¥   384553
96¥    3,446
51,1524,014¥    122
(606)
(645)

¥    3,568
50,546
3,368

2,861

6

2,868

362

3,230

65

3,296

37

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2014

Banking

Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

Ordinary income:Outside customers................................... $   700,180
Inter-segment transactions.......................
5,986
Total............................................................. $   706,167
Segment profit.............................................. $   196,046
Segment assets............................................. $43,493,375
Segment liabilities......................................... $41,203,949
Other items:
Depreciation............................................ $   27,763
Interest income........................................
461,969
Interest expenses.....................................
35,857
Increases in property, plant andequipment and intangible assets............
29,653

Consolidated
total

Adjustment$ 64,286
6,516$ 70,802$  3,175$256,094$218,448$   764,466
12,502$   776,969$   199,221$43,749,470$41,422,397$ 18,477
35,290$ 53,768$ 16,355$297,641$110,288$   782,944
47,793$   830,738$   215,577$44,047,111$41,532,686$      — $   782,944(47,793)—$ (47,793) $   782,944$  (3,201) $   212,376$(389,789) $43,657,322$(371,004) $41,161,682$    949
1,234
1,410

$   28,713
463,204
37,268$  3,355 $   32,069
4,949
468,153876
38,145$     693 $   32,762(6,179)461,974(5,751)
32,39364

29,717

4,291

34,008635

34,644

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
2014

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

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

¥36,312¥17,821¥6,849¥13,706¥74,690

Lending services

Securities
investment services

Leasing services

Other

Total

$335,327$210,334$64,286$172,995$782,944

Millions of yen
2013

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

Thousands of U.S. dollars
2014

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

25. Related-party transactions

2. Net income per share is calculated on the basis of the following.

Not applicable to the years ended March 31, 2014 and 2013.

26. Per share data
Yen
2014

Net assets per share..................... ¥798.27
Net income per share...................
37.16
Net diluted earnings per share.....
37.10

2013

U.S. dollars
2014¥773.81
19.29
19.27

$7.7560.361
0.360

Net income per share
Net income.................................
Amount not attributable
to common stockholders...........
Net income attributable
to common stock......................
Average number of shares ofcommon stock during
the year (in thousands)..............
Diluted earnings per share
Increase in number ofcommon stock shares...............
New subscription rights.........

Notes: 1. The net assets per share figure is calculated on the basis of the following.
Millions of yen,
except number of shares
2014
2013

Thousands of
U.S. dollars
2014

Net assets......................................... ¥256,851 ¥251,422
Amount excluded from net assets.....
17,077
16,444
New share subscription right.............
156
120(of which, held by minority interests)....
16,92016,324
Net assets attributable to common
stock at the fiscal year-end.............. 239,774 234,978
Number of common stock sharesat fiscal year-end used
for calculation of net assets
per share (in thousands).................. 300,364 303,663$2,495,639
165,926
1,520
164,405

Millions of yen,
except number of shares
2014
2013

Thousands of
U.S. dollars
2014¥11,230¥5,851$109,118———

11,2305,851

109,118

302,174

303,255

479
479

396
396

(Change in accounting policies)
From the end of the fiscal year ended March 31, 2014, the Bank began
applying Accounting Standard for Retirement Benefits and Guidance on
Accounting Standard for Retirement Benefits (excluding the provisions set
forth in the text of paragraph 35 of Accounting Standard for Retirement
Benefits and the text of paragraph 67 of Guidance on AccountingStandard for Retirement Benefits) in accordance with transitional treatment
set forth in paragraph 37 of Accounting Standard for Retirement Benefits.
As a result, net assets per share as of March 31, 2014 decreased by¥9.5 ($0.087).

2,329,713

38

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
27. Important subsequent events(2) Receivables‌
of which collection may be impossible orlate(1) Lawsuit decision and filing of appeal

Hakugen Co., Ltd., a business partner of the Bank and its subsidiary
Hyakujushi Lease Co., Ltd., filed a petition on May 29, 2014 with theTokyo District Court to commence civil rehabilitation proceedings. As aresult, there is a risk that the collection of Hakugen’s receivables may
be impossible or late.

The Bank was subject to a lawsuit from “Bankrupt party: Sanuki
Zosen Tekkosho Co., Ltd.; Attorney: Sotaro Yamazaki, the trustee inbankruptcy” (first trial plaintiff, appellant) claiming to exercise a rightof avoidance (deny collection and receive reimbursement of loan
payment) for loan payments collected by the Bank from Sanuki Zosen
Tekkosho Co., Ltd.
The plaintiff’s claim was rejected at the first trial in the Takamatsu
District Court, but in the appeal court decision of the aforementioned
lawsuit in the Takamatsu High Court, the first trial was annulled (theappellant’s claim was recognized) on May 23, 2014. In response, theBank has filed a final appeal to the Supreme Court.

(a) Outline of said debtor(a) Party filing lawsuit (first trial, appellant)
Bankrupt party: Sanuki Zosen Tekkosho Co., Ltd.; Attorney: Sotaro
Yamazaki, the trustee in bankruptcy

Name
Address
Representative Director
and President

Hakugen Co., Ltd.
2-21-14 Higashi-ueno,Taito-ku, Tokyo
Makoto Kamada

CapitalBusiness¥4,324 million ($42,013 thousand)
Manufacturing and sales of chemical products
for daily use(b) Details about receivables of which collection is possibly impossibleor lateHakugen Co., Ltd. filed a petition on May 29, 2014 with the Tokyo
District Court to commence civil rehabilitation proceedings.

(b) Appeal court decision
The original decision of the Takamatsu District Court was annulled.
The Bank, the appellee, is to pay an amount of ¥870 million ($8,453
thousand) of tender together with an amount thereon at the rate of six
percents per annum from July 24, 2009 until full payment of such sum.

(c) Type and value of receivables of said debtors (as of May 29, 2014)
Name
Hyakujushi Bank(c) Sequence of events from filing of lawsuit to court’s decision
The Bank was subject to a lawsuit filed in Takamatsu District Court
on October 4, 2010 (claim to exercise right of avoidance pertaining to
the Bank’s collection of loan payments) and the plaintiff’s claim was
rejected by the court on November 21, 2012.
Subsequently, the Bank was subject to the aforementioned lawsuit
filed at the Takamatsu High Court on November 29, 2012. A verdict
was reached on May 23, 2014 annulling (the appellant’s claim wasrecognized) the first trial at Takamatsu District Court.

Type and value of receivables
Loans and bills discounted:¥3,688 million ($35,833 thousand)Hyakujushi Lease Co., Ltd. Lease receivables: ¥291 million ($2,827 thousand)(d) Impact of the abovementioned fact to the GroupOf the receivables described in (c) above, for the portion (about ¥1.4
billion; $13,602 thousand) not secured by collateral and reserves, wewill set aside a reserve in the full amount in the first quarter of the
fiscal ending March 31, 2015.

(d) Future prospects
Dissatisfied with the decision, the Bank filed a final appeal to theSupreme Court on June 6, 2014. Further, in case the Supreme Court
sides with the appeal court’s decision at the Takamatsu High Court, theBank plans to record approximately ¥1.1 billion ($10,687 thousand) inreserve for litigation loss for the first quarter of the fiscal year ending
March 31, 2015.

39

40

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)
Millions of yen
2014
2013

As of March 31

Assets:Cash and due from banks................................................................................ ¥ 390,227 ¥  136,307
Call loans.........................................................................................................
—
6,301
Monetary claims bought...................................................................................
32,38733,867
Trading account securities................................................................................
8
49
Money held in trust..........................................................................................
4,901
4,901
Securities.......................................................................................................... 1,336,514
1,319,325
Loans and bills discounted................................................................................ 2,621,395
2,536,687
Foreign exchange assets...................................................................................
17,446
7,382
Other assets.....................................................................................................
28,93732,908
Tangible fixed assets.........................................................................................
40,17439,980Intangible fixed assets......................................................................................
3,519
3,766
Prepaid pension cost........................................................................................
4,261
4,172
Customers’ liabilities for acceptances and guarantees.......................................
17,24915,882
Reserve for possible loan losses........................................................................
(18,996)(23,821)
Total assets.................................................................................................. ¥4,478,026 ¥4,117,711

41

Thousands of
U.S. dollars
2014$ 3,791,564—
314,68784
47,627
12,985,951
25,470,219
169,515
281,167
390,347
34,192
41,404
167,598(184,578)$43,509,782

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)

Millions of yen
2014
2013

As of March 31

Liabilities and net assets
Liabilities:
Deposits........................................................................................................... ¥3,775,669
Negotiable certificates of deposit......................................................................
188,619
Call money.......................................................................................................
38,595
Payables under securities lending transactions..................................................
9,901
Borrowed money .............................................................................................
121,695
Foreign exchange liabilities...............................................................................
140
Corporate bond...............................................................................................
10,000
Other liabilities.................................................................................................
64,974
Reserve for bonuses for directors......................................................................
26
Accrued retirement benefits.............................................................................
—
Provision for claims on dormant accounts.........................................................
559
Provision for contingent liabilities.....................................................................
114
Deferred tax liability.........................................................................................
5,325
Deferred tax liability for land revaluation..........................................................
6,819
Acceptances and guarantees............................................................................
17,249Total liabilities.............................................................................................. 4,239,691¥3,427,988
233,606
51,915—75,630579
10,00061,584
19
308
481
135
1,826
6,828
15,8823,886,786

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Capital surplus reserve.............................................................................
24,92024,920Retained earnings........................................................................................
134,461
125,480
Earned surplus reserve.............................................................................
12,402
12,402Other retained earnings...........................................................................
122,059
113,078
Reserve for advanced depreciation of fixed assets...............................
254
254
Special reserve....................................................................................
110,161
106,661
Earned surplus bought forward...........................................................
11,644
6,163
Treasury stock..............................................................................................
(4,181)(2,935)
Total stockholders’ equity........................................................................
192,523
184,788
Valuation and translation adjustments:
Net unrealized gains on securities available for sale......................................
37,63438,094
Net deferred losses on hedging instruments.................................................
(24)
(136)
Revaluation reserve for land.........................................................................
8,044
8,057
Total valuation and translation adjustments.............................................
45,65446,016
Share warrants........................................................................................
156
120
Total net assets............................................................................................
238,335
230,925
Total liabilities and net assets....................................................................... ¥4,478,026 ¥4,117,711
Yen
As of March 31

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

$36,685,477
1,832,677
375,000
96,207
1,182,431
1,368
97,162
631,314
256
—
5,440
1,109
51,74566,260167,598
41,194,050

362,637
242,134
242,134
1,306,469
120,503
1,185,966
2,471
1,070,355
113,139(40,626)
1,870,614
365,671(238)
78,163
443,596
1,520
2,315,732$43,509,782

2014

2013

U.S. dollars
2014¥792.96¥760.06$7.704

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥102.92 to US$1.00 on March 31, 2014.

42

Thousands of
U.S. dollars
2014The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Income (Unaudited)
Millions of yen
2014
2013

For the years ended March 31

Thousands of
U.S. dollars
2014

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................................................................................................

¥34,241
12,892
412
9,230
6,429
9,475
72,681¥35,975
14,167
351
8,839
3,368
3,285
65,988$332,697
125,262
4,009
89,68462,47392,064
706,192

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.............................................................................................

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

2,246
180
806
498
2,943
2,570
38,4409,770
57,45820,810
1,446
7,960
5,639
30,72030,083373,929
41,484
512,076

19,978

8,529

194,115

5,201
3,679
8,881
¥11,097

4,264(1,264)3,000¥ 5,529

50,53935,75386,292$107,822

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

For the years ended March 31

2014

Yen
2013

U.S. dollars
2014

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

¥36.72¥18.23$0.356

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥102.92 to US$1.00 on March 31, 2014.

43

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
—
—
—

(2,121)(3,500)
5,529
—
(30)

(2,121)
—
5,529
—
(30)

—
—
—
(7)
338

(2,121)
—
5,529
(7)
308

—

—

—

—

—

26

26

—

26

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
24,920—24,920—12,402

—
254

3,500
106,661

(95)
6,163

3,404
125,480331(2,935)

3,735
184,788

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
3,500
—
—
—

(2,118)(3,500)11,097—(10)(2,118)———
11,097—— (1,516)(10)
270(2,118)—
11,097(1,516)
259

—

—

—

—

—

16

16

—

16

—

—

—

—

—

(2)

(2)

—

(2)

—

—

—

—

—

—

—

—

—

—
¥24,920—¥24,920—¥12,402—¥254

CapitalCommon surplus
stock
reserve

Balance as of March 31, 2012........... ¥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, 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

44

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity¥103,161 ¥ 6,259 ¥122,076 ¥(3,266) ¥181,053

3,500
5,480
8,980 (1,245)
7,735¥110,161 ¥11,644 ¥134,461 ¥(4,181) ¥192,523

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, 2012...........
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, 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...........

Net unrealized
gains onsecurities
available for saleNet deferredlosses on
hedging
instruments¥19,164

Revaluation
reserve for land

Total valuationandtranslation
adjustments

Share warrants

Total net assets¥ (69)¥8,083¥27,179¥117¥208,350

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,121)
—
5,529
(7)
308

—

—

—

—

—

26

—

—

—

—

—

—

18,929(66)(26)

18,836

2

18,83918,929¥38,094(66)¥(136)(26)¥8,057

18,836¥46,016

2¥120

22,575¥230,925

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,118)—
11,097(1,516)
259

—

—

—

—

—

16

—

—

—

—

—

(2)

(460)

111

(13)

(361)

36

(325)

(460)
¥37,634

111
¥(24)

(13)
¥8,044(361)¥45,654

36
¥156

7,409
¥238,335

45

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

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity$242,134$242,134$120,503$59,885 $1,219,209 $(28,521) $1,795,459

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
34,006———(20,584)(34,006)
107,822—(105)(20,584)—
107,822
—
(105)

—
—
—
(14,732)
2,626(20,584)—
107,822(14,732)
2,521

—

—

—

—

—

156

156

—

156

—

—

—

—

—

(28)

(28)

—

(28)

—

—

—

—

—

—

—

—

—

—
$242,134—$242,134—$120,503

CapitalCommon surplus
stock
reserve

Balance as of March 31, 2013........... $362,637
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........... $362,637$2,471 $1,036,348—
34,006 53,253
87,260 (12,105)
75,155$2,471 $1,070,355 $113,139 $1,306,469 $(40,626) $1,870,614

Thousands of U.S. dollars
Valuation and translation adjustments

For the year 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...........

Revaluation
reserve for land

Total valuationandtranslation
adjustments

Share warrants

Total net assets$(1,324)$78,291$447,108$1,168$2,243,736

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(20,584)—
107,822(14,732)
2,521

—

—

—

—

—

156

—

—

—

—

—

(28)

(4,470)

1,086

(127)

(3,511)351(3,160)(4,470)$365,671

1,086$ (238)(127)$78,163(3,511)$443,596

351$1,52071,995$2,315,732

Net unrealized
gains onsecurities
available for saleNet deferredlosses on
hedging
instruments$370,141

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥102.92 to US$1.00 on March 31, 2014.

46

Organization (as of July 1, 2014)
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 Promotion Division

Directory

Retail Banking Division
Business Administration 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: HYAKJPJT

47

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