ANNUALREPORT
2 013
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

Japan established a modern banking system in 1872, and following legislation to facilitate
the founding of a number of government-controlled banks, 153 such national banks were
established across the country during the period 1872-1879. As its name indicates inJapanese, the Hyakujushi Bank was the 114th national bank to be set up.
The Hyakujushi Bank is headquartered in the city of Takamatsu, Kagawa Prefecture,on the major island of Shikoku. From the beginning to the present day, the Bank has
continuously played a crucial role in the economic life of Kagawa Prefecture and surrounding regions.

Profile (Non-consolidated)(As of March 31, 2013)

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

Established:

November 1, 1878

Total assets:¥4,117.7 billion

Deposits and negotiable certificates of deposit:¥3,661.5 billion

Loans and bills discounted:¥2,536.6 billion

Paid-in capital:¥37.3 billion

Total shares issued:

310,076 thousand shares

Capital ratio:

11.24% (Consolidated capital ratio: 11.63%)

Employees:

2,182

Offices:122 (Head office, 100 branches, 21 sub-branches)

Non-branch ATMs and CDs:

233 machines in 182 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................................................. 37
Non-Consolidated Balance Sheets............................................... 38
Non-Consolidated Statements of Income.................................... 40
Non-Consolidated Statements of Changes in Net Assets............. 41
Organization/Directory.............................................................. 44

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights

Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

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

¥   77,064
63,574
13,489
3,202
3,610
863
5,813

$   797,038
684,011
113,027
52,51912,952
11,23862,221AT YEAR-END:
Loans and bills discounted...................................................................
Securities and trading account securities..............................................
Foreign exchange assets.......................................................................
Other assets.........................................................................................
Total assets..........................................................................................

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

2,424,741
1,215,523
5,470
373,161
4,018,896

26,883,604
14,018,655
78,493
2,978,092
43,958,846

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

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

3,583,949
841
206,250
3,791,041

38,835,366
6,159
2,444,034
41,285,560

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.................................................................
Total accumulated other comprehensive income..................................
Share warrants.....................................................................................
Minority interests................................................................................
Total net assets....................................................................................
Total liabilities and net assets...............................................................

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

37,322
24,920125,848(3,266)
184,824
19,245(69)
8,083
27,259117
15,652
227,854¥4,018,896

396,838
264,970
1,377,727(31,211)2,008,324
405,888(1,449)85,675490,114
1,279
173,5672,673,285$43,958,846

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

¥

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 ¥94.05 to US$1.00 on March 31, 2013.

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 fortheir support of the Hyakujushi Bank.
In the over 130 years that have passed since our founding in
1878, the Hyakujushi Bank has always developed with the warm
support of the local community and in partnership with regionalsociety in Kagawa Prefecture, Shikoku.
The Bank exists today thanks only to our customers to whom
we are grateful and feel a deep obligation as a regional financial
institution.
Looking ahead, we are determined to approach all of ourchallenges with a spirit of innovation and to continue challenging
ourselves tirelessly in order to ensure that the trust of our customers that we have built up over the years becomes even moreunwavering.
I would like to again thank our stakeholders for their support.

Our Management Principles• 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 this philosophy, the Bank is determined to continue
to provide valuable services to its shareholders, customers,
local communities, employees and other stakeholders.

Prosper together
with customers
and community

Our
management
principles
Create a vigorous
corporate culture

2

Ensure soundbusinessmanagement andenhance corporate valueOur New Medium-Term Management Plan:
The New Value Up Planthe importance of legal and ethical compliance, and the entire
Bank is working to build an effective system of mutual checks
as part of our overall program of strengthening internal
control.

Based on our Value Up Plan for the medium term, now in its
third year, the Bank is working on a variety of policies to contribute to the further development of the regional economy.
The growth of our regional bank cannot be achieved without
our region’s development. Each and every employee will work
to provide high-quality service as a financial professional sothat the Bank can steadfastly fulfill its role as a regional financial institution, and both build greater value for its customers
and improve the earnings position of the Bank.

Deposit-Taking Business
The Bank’s balance of total deposits (including CDs) at yearend, on a consolidated basis, increased by ¥68.5 billion fromthe end of the previous period, to ¥3,652.4 billion.
Lending Operations
The balance of loans outstanding at year-end increased¥103.6 billion from the end of the previous year to ¥2,528.4
billion.

Our Goals
Putting the Customer FirstAs a regional financial institution, the Hyakujushi Bank’s mission is to contribute to the development of the regional economy by ensuring a reliable supply of funds. Simultaneously,
we endeavor to provide the financial services that best meet
our customers’ needs. Therefore, the Bank puts its top priority on its customers and promotes greater communication
with them, which enables it to make timely proposals andprovide better service.
In addition, we have established branches and various specialized departments, actively working to improve our customer support system in every possible way. The Bank
provides consulting in high-growth medical and nursing carefields, as well as in agricultural, environmental, and overseas
businesses, thereby helping customers to expand theirbusinesses.
We will continue to put the customer first and strive to bea bank customers can truly depend on to receive advice when
they want it. We will raise the skills of each and every
employee and build stronger relationships of trust with ourcustomers.

Securities
The balance of securities holdings at year-end increased¥103.1 billion from the end of the previous period to¥1,318.4 billion.
Profit & Loss
Total income for the period declined by ¥2.1 billion from theprevious period to ¥74.9 billion. Total expenses increased¥0.7 billion from the previous period to ¥64.3 billion. As aresult, net income for the period on a consolidated basis
increased ¥38 million year-on-year to ¥5.8 billion.
Capital Ratio
The Bank’s capital ratio by domestic standards, on a consolidated basis, fell 0.02 percentage points from the previous
year-end, to 11.63%. This is well above the 4% capital adequacy requirement for banks operating in Japan.
Cash FlowsNet cash provided by operating activities came to ¥7.1 billion,
due to an increase in loans and bills discounted, a decrease of¥158.1 billion from the net cash used in the previous year.
Net cash used in investing activities came to ¥74.4 billion,
due in part to sales of securities, a decrease of ¥56.1 billion
from the previous year.
Net cash used in financing activities amounted to ¥2.2 billion, a decrease of ¥2.1 billion, attributable in part to decreasein purchase of treasury stock.
As a result, cash and cash equivalents fell ¥69.5 billion
compared with the previous year-end to ¥103.3 billion.

Innovation
The business environment faced by financial institutions inJapan, such as fiscal- and demographic-related problems, ischanging daily. Given this environment, we must be moreinnovative than we were in the past in order to respond to thevarious problems of our customers. Without clinging to traditional approaches and empirical rules, we will continue to takeon challenges so as to contribute to the further development of
the regional economy by providing information that is useful
to local customers and proposing new services.
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 our staff are fully aware of

Tomoki Watanabe, President

3Medium-Term Management Plan

Medium-Term Management Plan

VALUE UP PLAN
with Innovative Spirit

Plan Period: April 1, 2011 - March 31, 2014 (3 years)
In the Value Up Plan for the medium term that was launched in April 2011 (plan period: April 2011 to March 2014),
the Bank is giving priority to its two basic strategies — “strengthen marketing capability” and “strengthen investment
prowess” — as it works toward its vision of the kind of bank it wants to be in five years and ten years from now.
Furthermore, we regard adapting to the changes in our environment as an opportunity for us to grow. We believe
we must respond aggressively and flexibly, to help the regional economy to develop. For this reason, we urge every
employee from executives down not to cling to old ideas but to embrace the spirit of innovation, and work to create
new value (Value Up).

Basic Policy in Detail
Financial group that consistently does that bit more to meet the needs of our region and customers

Two basic strategies
Strategy: Strengthen marketing capability

Strategy: Strengthen investment prowess

Rewarding
workplaces

Flexible, proactive
portfolio management

Build and consolidate
customer loyalty

Brings smiles to ourcustomers’ faces

More effective ALM

Human resource training and infrastructure to support basic strategy
Personnel strategy

Compliance and Risk Management

Administrative reforms at branches

Capital policy

Strengthened organization

Non-personnel expenses and IT investment strategy

Enhancing value-added for customers

Improve profitability

Win-Win

Making our part of Shikoku a more attractive place to live and a more vigorous community
Prospering together with customers and community

Numerical Targets for Fiscal 2013, the Final Year of the Plan
Profitability
Efficiency
Soundness

Core gross operating profit*1

Over ¥59.0 billion

Core operating profit*2

Over ¥20.0 billion

Net income

Over ¥7.5 billion
Below 65%

OHR (Expenses/gross operating profit)
Capital ratio (consolidated)*3

Approx. 12.0%

Tier 1 capital ratio*4

Approx. 9.8%

Notes: *1. Core gross operating profit = Gross operating profit – Net gains related to bonds*2. Core operating profit = Operating profit + Provision for general reserve for possible losses on loans – Net gains related to bonds*3. Capital ratio (consolidated) = Capital (consolidated) ÷ Risk-weighted assets (consolidated)*4. Tier I capital ratio (consolidated) = Core capital (consolidated) ÷ Risk-weighted assets (consolidated)*5. All figures apart from the Tier I ratio (consolidated) and capital ratio are non-consolidated

4

Corporate Governance

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, theexecutive officer system and the Audit & Supervisory Board system
play an important role in the implementation of the corporate governance to the highest degree. Furthermore, the Revenue Management
Committee, the Compliance Committee and the Risk Management
Committee have been established to assure timely response to various
issues across the organization.

Measures adopted to improve corporate governance
The Board of Directors consists of 10 directors who are tasked withoversight of the directors in the performance of their duties, and alsodecide matters of importance relating to the overall managementof our business as well as matters prescribed by laws or the Bank’s
articles of incorporation.
We have introduced an executive officer system, entrusting
business duties of the Board to executive officers elected by the
Board of Directors (24 executive officers including 8 serving also as
directors, as of July 1, 2013). 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.
The Bank also employs the Audit & Supervisory Board system.
The Audit & Supervisory Board consists of 5 members (of whom
3 are outside members). 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. 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.

[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

Risk
Management
Committee

Internal audit

Opinion,Comment, etc.

Compliance
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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 Tier I core capital lessthe operational risk equivalent amount, risk-adjusted capital to covercredit and market risk is allocated each half-year and the changes inrisk 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 theimpact that major changes in the economic and market environments

Explanation of Terms
Tier I capital: Principal component of equity capital
Operational risk equivalent amount: Calculated using the Basic
Indicator Approach stipulated in Basel II
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

Tier I

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 Management

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 creditworthinessof 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.
Additionally, we are working on building a system for ascertainmentof the current market value of collateral and the creditworthinessof guarantors on a regular basis, to make it possible to take proper
measures at times of damage to collateral value or decline in guarantor creditworthiness.
The collateral categories that we handle include own bank deposit
collateral, securities collateral, bill (including electronically recordedmonetary claims) collateral, real estate collateral, and movables collateral, among others. 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 ofMarket 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
risks appropriately in accordance with our operational risk management
rules, drawn up by the Board of Directors, in order to mitigate theoperational risks and make efforts to maintain the trust of our customers. Meanwhile, we are striving to introduce new management methods
to achieve a comprehensive grasp of important operational 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
Against the background of a rapid expansion in the use of data on
individuals accompanying the growing social importance of information technology, the Japanese Diet passed the Personal Information
Protection Law in April 2005, which mandates steps by corporations
to prevent the leakage or inappropriate use of personal informationin their possession, so as to protect the privacy and interests of theindividuals concerned. At the Hyakujushi Bank, we have laid down
regulations and set out guidelines relating to the secure managementof personal information. We have also taken steps to properly handle
customers’ personal information by providing rigorous training
including in-house workshops to all executives 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
As a result of amendments enacted in June 2009 to the Banking Law,
the Financial Instruments and Exchange Act, and other legislation, it
is now mandatory for banks (including companies under their control) to create and operate systems to ensure that conflicts of interest
are properly managed so as to ensure that the interests of customers
are not unjustly harmed as a result of transactions conducted by thebanks or their subsidiaries or affiliates.
At the Hyakujushi Bank, we have centralized the managementof all data relating to transactions with customers (including those
conducted by Group companies), and have set up a system whereby
transactions that carry the possibility of conflict of interest are
specified and handled separately. A special unit of the Bank has
been established to oversee the management of conflicts of interest,with a single executive appointed as officer with responsibility forthe management of conflicts of interest. In this way, all transactions
deemed to potentially involve conflicts of interest are subject tounified 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 andmaintain the public trust in the Bank, we are taking 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 antisocial forces. We have also established the General Administration
Group in the General Administration Division as the body in chargeof this area in the Bank. It collaborates 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

Masanobu Satomi

Kiyoshi Irie

Hitoshi Onishi

Noriaki Iida

Yoshikazu Fukunishi

Kazuyuki Negayama

Shinji Matsumoto

Ryuji Nishikawa

Takashi MoriHarunori Ando

Tadahiko Tamura

Teruo Kiuchi

Masahiko Miyake

Managing Executive Officers

Ryohei Kagawa

Akihiro Matsubara

Yujiro Ayada

Kazushi Kozuchi

Yasuo Miyake

Yasuo Oka

Kazuo Shirotori

Osamu Itami

Toshiya Yoritomi

Full-time Audit &Supervisory Board Members

Kazuo Mitani
Tsutomu Inamo
Audit &
Supervisory Board Members

Hiroshi Manabe
Ichiro Terato
Hideki Kuwashiro(as of July 1, 2013)13

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2013
2012

As of March 31

Assets:Cash and due from banks................................................................................ ¥ 136,427 ¥  224,295
Call loans and bills bought...............................................................................
6,301
2,465
Monetary claims bought...................................................................................
33,86733,378
Trading account securities (Note 6)...................................................................
49
264
Money held in trust (Note 7).............................................................................
4,901
4,901
Securities (Notes 6 and 9)................................................................................. 1,318,404
1,215,259
Loans and bills discounted (Note 8).................................................................. 2,528,403
2,424,741
Foreign exchange assets...................................................................................
7,382
5,470
Lease receivables and lease investment assets (Note 17)...................................
17,01016,964
Other assets.....................................................................................................
40,49840,456
Tangible fixed assets (Notes 11, 14 and 15)......................................................
44,91044,677
Intangible fixed assets......................................................................................
4,996
5,956
Deferred tax assets (Note 10)............................................................................
1,629
8,759
Customers’ liabilities for acceptances and guarantees.......................................
15,88218,018Reserve for possible loan losses........................................................................
(26,335)(26,712)
Total assets.................................................................................................. ¥4,134,329 ¥4,018,896

14

Thousands of
U.S. dollars(Note 1)2013

$ 1,450,580
67,000360,098
528
52,11914,018,127
26,883,604
78,493
180,864
430,608
477,513
53,131
17,322
168,868(280,014)$43,958,846

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Millions of yen
2013
2012

As of March 31

Liabilities and net assets
Liabilities:
Deposits (Note 9).............................................................................................. ¥3,420,759
Negotiable certificates of deposit......................................................................
231,706
Call money and bills sold (Note 9).....................................................................
51,915
Borrowed money (Notes 9 and 12)...................................................................
73,654Foreign exchange liabilities...............................................................................
579
Corporate bond (Note 13)................................................................................
10,000
Other liabilities.................................................................................................
68,436
Reserve for directors’ bonuses..........................................................................
19
Accrued retirement benefits (Note 19)..............................................................
504
Accrued directors’ retirement benefits..............................................................
55
Provision for claims on dormant accounts.........................................................
481
Provision for contingent liabilities.....................................................................
135
Deferred tax liabilities (Note 10)........................................................................
1,947
Deferred tax liability for land revaluation (Note 14)...........................................
6,828
Acceptances and guarantees............................................................................
15,882
Total liabilities.............................................................................................. 3,882,906¥3,382,241
201,70724,657
79,775841
10,00065,304
21
738
67
540
276
8
6,842
18,0183,791,041

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Retained earnings........................................................................................
129,575
125,848
Treasury stock..............................................................................................
(2,935)(3,266)
Total stockholders’ equity........................................................................
188,882
184,824
Accumulated other comprehensive income:Net unrealized gains on securities, net of taxes............................................
38,173
19,245Net deferred losses on hedging instruments, net of taxes.............................
(136)
(69)
Revaluation reserve for land (Note 14).........................................................
8,057
8,083
Total accumulated other comprehensive income.....................................
46,09527,259
Share warrants........................................................................................
120
117
Minority interests.............................................................................................
16,324
15,652
Total net assets............................................................................................
251,422
227,854
Total liabilities and net assets....................................................................... ¥4,134,329 ¥4,018,896

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

15$36,371,709
2,463,657
552,000
783,137
6,159
106,326
727,664
211
5,369
587
5,117
1,436
20,711
72,603
168,868
41,285,560

396,838
264,970
1,377,727(31,211)2,008,324
405,888(1,449)85,675490,114
1,279
173,5672,673,285$43,958,846

2013

2012

U.S. dollars(Note 1)
2013

¥773.81¥700.36$8.227Yen
As of March 31

Thousands of
U.S. dollars(Note 1)
2013

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income

Millions of yen
2013
2012

For the years ended March 31

Thousands of
U.S. dollars(Note 1)
2013

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

¥36,034
14,158353
10,365
3,368
10,681
74,961¥37,255
14,591
387
9,899
2,678
12,252
77,064$383,141
150,5393,756
110,20935,820113,570797,038

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 15).................................................................................
Total expenses.............................................................................................

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

2,636
73
502
395
2,471
1,403
42,334
13,75863,57423,863
1,921
5,384
4,647
26,951
27,543427,109
166,587
684,011

10,63013,489113,027

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

3,202
3,610
6,812
6,677
863
¥ 5,81352,519(12,952)
39,566
73,460
11,238$ 62,221

Income before income taxes and minority interests........................................
Income taxes (Note 10):
Current............................................................................................................
Deferred...........................................................................................................
Subtotal.......................................................................................................
Income before minority interests......................................................................
Minority interests...............................................................................................
Net income.........................................................................................................

For the years ended March 31

2013

2012

U.S. dollars(Note 1)2013

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

¥19.29¥18.92$0.205Yen

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

Consolidated Statements of Comprehensive Income
Millions of yen
2013
2012

For the years ended March 31

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

16

Thousands of
U.S. dollars(Note 1)2013

¥ 6,908
18,85818,925(66)—
25,767¥ 6,677
5,097
4,101
6
988
11,774$ 73,460
200,517201,228(711)—
273,978

24,713¥ 1,054

10,941¥   833

262,771$ 11,207

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
Millions of yen
Accumulated other comprehensive income
NetNet
deferredTotal
unrealized losses on
valuation
Total
gains onhedging Revaluation
andTreasury stockholders’ securities, instruments, reserve translation
Share
stock
equitynet of taxes net of taxes for land adjustments warrants

Stockholders’ equity

For the years ended March 31

Commonstock

CapitalsurplusRetainedearnings

Balance as ofMarch 31, 2011.................. ¥37,322 ¥24,920 ¥122,015 ¥(1,436) ¥182,822
Change of items
during the period
Dividends from surplus......
——(2,155)—(2,155)
Net income.......................
—
—
5,813
—
5,813
Purchase of treasury stock....
——— (1,859)(1,859)
Disposal of treasury stock....
—
—
(9)
28
19
Transfer from revaluation
reserve for land...............
—
—
184
—
184
Provision for revaluation
reserve for land...............
—
—
(0)
—
(0)
Net changes of items
other than stockholders’equity..............................
—
—
—
—
—
Total changes of items
during the period.................
——
3,832 (1,830)
2,002
Balance as ofMarch 31, 2012.................. 37,322 24,920 125,848 (3,266) 184,824
Change of items
during the period
Dividends from surplus......
—— (2,121)—(2,121)
Net income.......................
—
—
5,851
—
5,851
Purchase of treasury stock....
—
—
—
(7)
(7)
Disposal of treasury stock....
—
—
(30)
338
308
Transfer from revaluation
reserve for land...............
—
—
26
—
26
Net changes of items
other than stockholders’equity..............................
—
—
—
—
—
Total changes of items
during the period.................
—
—
3,726
331
4,058
Balance as ofMarch 31, 2013.................. ¥37,322 ¥24,920 ¥129,575 ¥(2,935) ¥188,882

17¥7,266 ¥22,303

Minority
interests

Total net
assets¥15,113¥ (76)

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(2,155)
5,813(1,859)
19

—

—

—

—

—

—

184

—

—

—

—

—

—

(0)

4,131

6

817

4,956

42

450

5,449

4,131

6

817

4,956

42

450

7,452

19,245

(69)

8,083

27,259

117

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(2,121)
5,851
(7)
308

—

—

—

—

—

—

26

18,928(66)(26)

18,8352671

19,50918,928(66)(26)

18,8352

671

23,567¥38,173¥(136)¥8,057 ¥46,095¥ 75 ¥15,202 ¥220,402

15,652 227,854¥120 ¥16,324 ¥251,422

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets

Stockholders’ equity

For the year ended March 31

Commonstock

Balance as ofMarch 31, 2012.................. $396,838
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...............
—Net changes of items
other than stockholders’equity..............................
—
Total changes of items
during the period.................
—
Balance as ofMarch 31, 2013.................. $396,838

CapitalsurplusRetainedearnings

Treasurystock

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
NetNet
deferredTotal
unrealized losses on
valuation
Total
gains on hedging Revaluation
andstockholdsecurities, instruments, reserve translation
Shareers’ equity net of taxes net of taxes for land adjustments warrants$264,970 $1,338,102 $(34,735) $1,965,175$204,628$ (738)$85,954$289,843$1,249Minority
interests

Total net
assets$166,430 $2,422,699

—
—
—
—

(22,556)
62,221
—
(320)

—
—
(75)
3,600

(22,556)
62,221
(75)
3,280

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(22,556)
62,221
(75)
3,280

—

278

—

278

—

—

—

—

—

—

278

—

—

—

—

201,260

(711)

(278)

200,27129

7,136

207,437—

39,624

3,524

43,148201,260

(711)

(278)

200,271

29

7,136

250,585$264,970 $1,377,727 $(31,211) $2,008,324$405,888$(1,449)$85,675$490,114$1,279See accompanying notes to consolidated financial statements.

18$173,567 $2,673,285

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 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 loss on investments in money held in trust......................................................................
Net loss 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 foreign exchange assets..................................................................................
Net change in foreign exchange liabilities..............................................................................
Net increase 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
2013
2012

Thousands of
U.S. dollars(Note 1)2013

¥ 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¥ 13,489
4,312
137
42
452
5
(453)
(11)
37
(205)
(52,234)
3,607
584
98
960
555
99
(35,661)
81,36638,04425,75019,775
4,097
12,517132135
557
51,373(4,683)
5,119
170,002(4,701)
165,300$  113,027
37,943593
283(4,010)(13)(2,478)(129)(624)(1,504)(537,437)
35,81727,925—(71,746)
1,795
2,283
(1,102,200)
409,542
318,969(65,091)
195,023(45,984)
289,830(20,328)(2,788)(490)
536,269(44,157)
40,082
110,400(34,651)
75,748Cash flows from investing activities
Purchase of securities............................................................................................................
Proceeds from sales of securities...........................................................................................
Redemption of securities.......................................................................................................
Purchase of money held in trust............................................................................................
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.......................................................................................

(497,814)
300,821
125,757—(3,078)(667)
522
1(74,457)(474,752)
221,422
132,118(5,000)(3,311)(1,335)282
1(130,573)(5,293,083)
3,198,524
1,337,130—(32,729)(7,097)5,560
12(791,683)

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

(7)308(2,121)(382)(2,202)(1,859)19(2,155)(382)(4,378)(75)
3,280(22,556)(4,069)(23,421)

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

9(69,526)
172,859¥103,333(1)
30,346
142,512¥172,859

105(739,251)
1,837,955$1,098,704

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

The accompanying consolidated financial statements of The Hyakujushi
Bank, Ltd. (the “Bank”) and its consolidated subsidiaries are preparedon the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards,
and are compiled from the consolidated financial statements preparedby the Bank as required by the Financial Instruments and Exchange Law
of Japan.
The Japanese yen figures in the consolidated financial statements
are in millions, with fractions omitted.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of the reader, using the prevailingexchange rate at March 31, 2013, which was ¥94.05 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 couldin the future be, converted into U.S. dollars at this or any other rate ofexchange.

(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.
Changes in accounting policies which are difficult to distinguish fromchanges in accounting estimates
In accordance with an amendment of the Corporation Tax Act ofJapan, the Bank and its domestic consolidated subsidiaries havechanged the depreciation and amortization method from the year
ended March 31, 2013 for tangible fixed assets (excluding buildings)
acquired on or after April 1, 2012.
This change had a minimal impact on profits and losses for the
fiscal year ended March 31, 2013.

2. Financial terms
Account closing dates of consolidated subsidiaries are as follows:
March 31st: 11 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).

3. Significant accounting policies(c) Lease assets
Assets held by our consolidated subsidiaries are depreciated over theleasing contract periods by the straight-line method.

(1) Consolidation(6) Reserve for possible loan losses

The consolidated financial statements include the accounts of the Bankand its 12 subsidiaries.
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.

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 ¥27,331 million ($290,600
thousand) and ¥29,157 million for the years ended March 31, 2013
and 2012, 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(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 nonconsolidated subsidiaries that are not accounted for by the equity
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.

20

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
losses on specific loans held by the Bank’s consolidated subsidiaries
is provided based on the amount deemed irrecoverable after careful
examination of the recoverability of the loans in question on an
individual basis.

in currency exchange rates by verifying that there are foreign currency
monetary claims and debts corresponding to the foreign-currency
positions.

(7) Reserve for directors’ bonuses

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

(15) Goodwill

A provision is made for the payments of bonuses to directors andcorporate auditors of the Bank based on an estimated amount deemednecessary.

(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:(8) Accrued retirement benefits
Reserve for retirement benefits is provided to state the retirement
benefit obligations less the fair value of the pension assets.
Prior service costs are charged to income at the time of occurrence.
Actuarial differences of the plans are to be amortized from thesucceeding fiscal year over a period of 10 years within the averageremaining service period of the employees at the time of occurrence.

March 31

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

Cash and due from banks............ ¥136,427 ¥224,295 $1,450,580
Time deposits with banksother than The Bank of Japan....
(1,092) (50,092)(11,616)
Deposits with banksother than The Bank of Japan....
(533)
(403)
(5,667)
Other........................................... (31,468)(939)(334,592)
Cash and cash equivalents...... ¥103,333 ¥172,859 $1,098,704(9) 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.

(10) Reserve for losses on claims on dormant accounts(17) Consumption taxes

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.

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

(11) Reserve for contingent liabilities

4. New accounting standards not yet applied

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.

Accounting Standard for Retirement Benefits (ASBJ Statement No. 26,
issued on May 17, 2012) and Guidance on the Accounting Standard
for Retirement Benefits (ASBJ Guidance No. 25, issued on May 17,2012).

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

(1) Overview

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.

These standards primarily aim to change accounting methods forunrecognized net actuarial gain or loss and unrecognized prior service
cost and also to expand disclosure items based on improvements infinancial reporting and international trends. In addition, methods forcalculating employee retirement benefits obligation and service costs
will be changed.

(14) Hedge accounting(2) Planned date of application(13) Accounting standards for posting of earnings andexpenses

Application of the accounting methods for unrecognized net actual
gain or loss and unrecognized prior service cost and the expansion
disclosure items will begin at the end of fiscal year beginning on April
1, 2013. Also, the method for calculating employee retirement benefits
obligation and service costs is scheduled to be applied at the end of
fiscal year beginning on April 1, 2014.

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

21

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
5. Changes in net assets(1) Type and number of shares issued and treasury shares are as follows:

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

2012

March 31, 2011

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

Thousands of shares
Increase
Decrease

March 31, 2012

310,076
310,076————

310,076
310,076

2,102
2,102

5,208
5,208

54
54

7,255
7,255

Notes: 1. A breakdown of the increase in the number of common shares in treasury is given below.
Increase due to ESOP Trust acquisition: 3,185 thousand shares
Increase due to acquisition based on Board of Directors’ resolution: 2,000 thousand shares
Increase due to purchase demand for fractional shares: 23 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: 27 thousand shares
Decrease due to exercise of share warrants: 26 thousand shares
Decrease by additional purchase demand for fractional shares: 1 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, 2013 and 2012 stood at ¥120 million ($1,279 thousand), respectively. At
end of the previous and reporting fiscal years, no shares had been earmarked for share warrants.

(3) Information on dividends(a) Dividends paid
2013
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, 20122012
Resolution

Total dividend
amount(Millions of yen)Type of share

June 29, 2011 (Regular Annual General Meeting of Shareholders).... Common stock
November 11, 2011 (meeting of the Board of Directors).... Common stock¥1,077
1,077

Dividend pershare (Yen)

¥3.5
3.5

Record date

Effective date

March 31, 2011
September 30, 2011

June 30, 2011
December 9, 2011

Record date

Effective date2013
Resolution

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

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$11,269
11,286$0.0370.037

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

Note:	In accordance with a resolution approved at the Bank’s Regular Annual General Meeting of Shareholders held on June 28, 2012, the total amount of dividends
paid excludes the ¥11 million ($117 thousand) dividend payment to the Employee Stock Ownership Plan (ESOP) Trust. Moreover, the total amount of dividends paid
excludes the ¥9 million ($103 thousand) dividend payment to the ESOP Trust pursuant to the resolution approved by the Board of Directors at a meeting held on
November 9, 2012.
These exclusions reflect the Bank’s classification of the shares owned by the Trust as treasury stock.

22

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(b) Dividends paid after the balance-sheet date2013
Resolution

Type of share

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

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,062Retainedearnings¥3.5

March 31, 2013

June 28, 2013

Total dividend
amount(Millions of yen)

Source of dividends

Dividend pershare (Yen)Record date

Effective date

¥1,059Retainedearnings¥3.5

March 31, 2012

June 29, 2012

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

Record date

Effective date

Retainedearnings

March 31, 2013

June 28, 2013

Note: The total dividend excludes the ¥8 million dividends for the ESOP Trust.
This is because the shares owned by this trust are treated as treasury shares.

2012
Resolution

Type of share

June 28, 2012 (Regular Annual General
Meeting of Shareholders)..................... Common stock2013
Resolution

Type of share

June 27, 2013 (Regular Annual General
Meeting of Shareholders)..................... Common stock$11,300$0.037

Note: The total dividend excludes the ¥8 million ($90 thousand) dividends for the ESOP Trust.
This is because the shares owned by this trust are treated as treasury shares.

6. Securities and trading account securities(3) Other securities(1) Trading account securities(a) Consolidated balance sheet amount and acquisition cost of othersecurities and their difference as of March 31, 2013 and 2012 were as
follows:

A valuation gain of ¥0 million ($1 thousand) was recognized for theyear ended March 31, 2013, and a valuation gain of ¥0 million wasrecognized for the year ended March 31, 2012.

Millions of yen(2) Held-to-maturity debt securities
Held-to-maturity debt securities with fair market value consisted of
local government bonds. Book value and market value of the securities
amounted to ¥0 million ($7 thousand) and ¥0 million ($7 thousand),
respectively, as of March 31, 2013, and ¥2 million and ¥2 million,
respectively, as of March 31, 2012.

2013

Consolidatedbalance sheet
amountAcquisition
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

23

Difference¥37,454
11,181
8,883
6,214
26,2793,760
67,494(4,329)
(151)
(52)
(203)
(3,731)(8,264)¥59,229

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(b) Gains and losses on sale of securities available for sale for the years
ended March 31, 2013 and 2012 are as follows:

Millions of yen
2012

Consolidatedbalance sheet
amountAcquisition
cost

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... ¥   79,430 ¥   54,206
Bonds:
National..........................
523,306
515,157
Local...............................
216,258
209,008
Corporate.......................
223,158
219,388962,723
943,555
Other..............................
60,245
58,119Subtotal.......................... 1,102,400 1,055,880
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
33,254
40,585
Bonds:
National..........................
7,995
8,002
Local...............................
7,478
7,497
Corporate.......................
23,01023,19738,48338,697
Other..............................
37,594
46,570Subtotal..........................
109,331
125,853
Total......................................... ¥1,211,731 ¥1,181,734

Difference
2013

Equity stock.............................. ¥  3,952
Bonds:
National...............................
212,291
Local....................................
2,516
Corporate............................
78,095292,903
Other........................................
3,943
Total......................................... ¥300,799¥25,224
8,149
7,249
3,769
19,1682,126
46,519

2012

(7)
(19)
(187)
(214)
(8,976)(16,521)¥29,997

Consolidated balance
sheet amount exceedingacquisition cost
Equity stock......................... $ 1,069,766 $   671,527
Bonds:
National.......................... 5,205,681 5,086,793
Local............................... 2,725,250 2,630,793
Corporate....................... 2,974,617 2,908,543
10,905,548 10,626,129
Other..............................
912,093872,109
Subtotal.......................... 12,887,409 12,169,767
Consolidated balance
sheet amount notexceeding acquisition cost
Equity stock.........................
229,450
275,486
Bonds:
National..........................
465,213466,822
Corporate.......................
80,12880,683545,341
547,506
Other..............................
324,282363,959
Subtotal.......................... 1,099,074 1,186,952
Total......................................... $13,986,483 $13,356,720$398,239
118,887
94,456
66,074279,418
39,983
717,641¥  842

1,099
17
666
1,782
110
¥2,228

571
—
50
622
247
¥1,711¥  535¥  921

1,307
27
1,335
28
¥1,898

852
—
852
491
¥2,265

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

Equity stock.............................. $   42,030
Bonds:
National............................... 2,257,214
Local....................................
26,754
Corporate............................
830,366
3,114,335
Other........................................
41,928
Total......................................... $3,198,294

Thousands of U.S. dollars
Consolidatedbalance sheet Acquisition
amountcost
Difference¥  335

Millions of yen
Sale amount Gains on sale Losses on sale

Equity stock.............................. ¥  3,452
Bonds:
National...............................
211,795
Corporate............................
1,919
213,714
Other........................................
4,506
Total......................................... ¥221,674(7,331)

2013

2013

Millions of yen
Sale amount Gains on sale Losses on sale

$ 3,569$ 8,957

11,685
185
7,082
18,953
1,170$23,693

6,080
—
534
6,614
2,628
$18,200(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”).
Impairment losses for the consolidated fiscal years ended March
31, 2013 and 2012 amounted to ¥2,712 million ($28,844 thousand)(¥1,412 million ($15,019 thousand) in equity stock, other ¥1,300
million ($13,824 thousand)) and ¥111 million (¥111 million in equity
stock), respectively.
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).

(46,036)(1,608)(555)(2,164)(39,677)(87,878)$629,763

24

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
7. Matters relating to money held in trust

10. Income taxes

Money held in trust classified as held for trading purposes(1) Deferred tax assets
Major components of deferred tax assets as of March 31, 2013 and2012 were as follows:

Amount on the consolidated balance sheet as of March 31, 2013 and2012 was ¥4,901 million ($52,119 thousand) and ¥4,901 million,
respectively.

Millions of yen
2013
2012

8. Loans and bills discounted
Loans and bills discounted as of March 31, 2013 and 2012 included
the following non-performing amounts:

Millions of yen
2013
2012

Loans under bankruptcy............... ¥ 2,381
Non-accrual loans........................ 45,633
Loans past due over 3 months.....
423
Restructured loans....................... 30,734
Total............................................ ¥79,172¥ 2,82945,801603
31,178¥80,413

Excess reserve for possible loan
losses......................................... ¥14,921
Valuation gain on securities
available for sale.........................
2,917
Excess reserve for employee
retirement benefits....................
2,360
Excess depreciation......................
1,559
Other...........................................
4,685
Subtotal....................................... 26,444
Valuation reserve.........................
(2,783)
Deferred tax assets....................... 23,661
Deferred tax liabilities................... (23,980)
Net deferred tax assets(liabilities)................................... ¥  (318)Thousands of
U.S. dollars
2013$ 25,316
485,199
4,502
326,793$841,812

9. Assets pledged as collateral
Assets pledged as collateral as of March 31, 2013 and 2012 consistedof the following:

Millions of yen
2013
2012

Assets pledged as collateral:
Securities................................ ¥195,230 ¥203,296
Liabilities corresponding
to assets pledged as collateral:
Deposits.................................
28,51910,984
Call money.............................
—
4,109
Borrowed money....................
30,59236,870

Securities..................................... ¥39,755¥92,569¥14,353$158,656

5,832

31,021

2,442
1,569
3,968
28,165(2,825)25,340(16,589)

25,097
16,57949,822
281,178(29,591)
251,586(254,975)¥ 8,750$ (3,388)(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, 2013 and 2012.

Thousands of
U.S. dollars
2013$2,075,816

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

303,239—
325,280

In addition to the assets presented above, the following assets were
pledged as collateral for exchange clearance transactions and futurescontracts at March 31, 2013 and 2012:

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

Thousands of
U.S. dollars
2013$422,707

As of March 31, 2013 and 2012, Other assets included guaranteemoney and household deposits of ¥1,287 million ($13,686 thousand)and ¥1,336 million, respectively.

2013

2012

37.7%

40.4%

(0.2)

0.1

0.7

0.6

(4.6)

(4.4)

0.8
0.6
(0.8)

(0.3)
0.5
0.6

—
0.8

14.2
(1.2)

35.0%

50.5%

11. Accumulated depreciation
Accumulated depreciation of tangible fixed assets as of March 31,
2013 and 2012 amounted to ¥37,839 million ($402,333 thousand)and ¥38,242 million, respectively.

12. Borrowed money
Borrowed money consists of loans from other financial institutions.
As of March 31, 2013 and 2012, subordinated borrowings in theamount of ¥17,000 million ($180,754 thousand) and ¥17,000 million,
respectively, were included in borrowed money.

25

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
13. Corporate bondRegarding 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).

Corporate bond consists solely of subordinated bonds in the amountof ¥10,000 million ($106,326 thousand) and ¥10,000 million, as ofMarch 31, 2013 and 2012.

14. 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, 2013 and 2012, the difference between the carrying amount and the fair value of the land revalued was ¥15,663 million($166,544 thousand) and ¥15,155 million, respectively.

16. Matters relating to consolidated statements ofcomprehensive income

15. Impairment losses

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

During the years ended March 31, 2013 and 2012, 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(2013: 15 items,
2012: 19 items)
Other............ Idle assets andLand, buildings
assets for disposal and movables(2013: 7 items,
2012: 9 items)
Total.............

Location

Usage

Type

¥31
land: 28
buildings: 2
movables: 0¥24
land: 22
buildings: 1
movables: 0¥55
land: 51
buildings: 4
movables: 0

Thousands of
U.S. dollars
2013

Millions of yen
2013
2012

Millions of yen
Loss amount
2013
2012

Net unrealized gains on
securities, net of taxes:
Amount recognized during
the year................................... ¥27,079
Amount of recycling..................
2,172
Prior to income tax effect........
29,251
Income tax effect.................... (10,325)
Net unrealized gains on
securities available for sale......
18,925Net deferred losses on hedges
instruments, net of taxes:
Amount recognized during
the year...................................
(363)
Amount of recycling..................
262
Prior to income tax effect........
(100)
Income tax effect....................
33
Deferred gains (losses)on hedges............................
(66)
Revaluation reserve for land:
Amount recognized during
the year...................................
—
Amount of recycling..................
—
Prior to income tax effect........
—
Income tax effect....................
—
Revaluation reserve for land....
—Total other comprehensive income.... ¥18,858¥ 54
land: 24
buildings: 28
movables:   1¥ 82
land:   7buildings: 70
movables:   4¥137
land: 31
buildings: 99
movables:   5

Thousands of
U.S. dollars
Loss amount2013

Kagawa Pref..... Idle assets andLand, buildings$336
assets for disposal and movables
land: 304
(2013: 15 items)
buildings:   27movables:    3Other............ Idle assets andLand, buildings$257
assets for disposal and movables
land: 238
(2013: 7 items)
buildings:   18movables:    0Total.............
$593
land: 543
buildings:   46movables:    4¥3,577
738
4,315
(213)

$287,922
23,096
311,018(109,789)

4,101

201,228

(157)
173
16
(9)

(3,860)2,795(1,064)
353

6

(711)

—
—
—
988
988
¥5,097—————$200,517

17. Finance leases
Information on finance leases for the years ended March 31, 2013 and2012 are as follows:

The Bank posted impairment losses of ¥55 million ($593 thousand)and ¥137 million, respectively, during the years ended March 31, 2013
and 2012 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.

1. As lessee
Finance lease transactions that do not transfer ownership(1) Components of lease assets(a) Tangible fixed assets
Primarily consisting of ATMs(b) Intangible fixed assets
None

26

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(2) Depreciation and amortization methods for lease assets

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 ¥87 million ($929 thousand) (¥127 million in theprevious consolidated fiscal year) compared with the amount posted in
the Consolidated Statements of Operations.

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
2013
2012

Lease receivables.......................... ¥17,128
Estimated residual value...............
1,755
Interest received...........................
(1,919)Lease investment assets............... ¥16,964¥17,132
1,822(2,018)¥16,936

18. Financial instruments
Thousands of
U.S. dollars
2013

1. Disclosures related to financial instruments(1) Financial instrument policies$182,117
18,669(20,405)$180,381

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) Schedule for collection of lease receivables andreceivables on lease investment assets by leasing
contract maturity

2013

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

2012

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

2013

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

Millions of yen
Receivables on lease
Lease receivables
investment assets

¥13
13
11
6
3
—

¥5,510
4,258
3,248
2,271
1,135
702

(2) N
 ature and extent of risks arising from financial
instruments
The major types of financial assets held by the Group are loans andbills discounted and investment securities. Loans and bills discounted
are mainly for domestic corporations and individuals, and are exposedto credit risk, interest rate risk, and foreign exchange risk. If loans andbills discounted are concentrated excessively on a particular corporategroup or industry type, the Group’s stockholders’ equity may suffer
significant adverse effects. Therefore, the Group has set maximum loanbalances for each corporate group or industry type, and has in placea 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 held-to-maturity, as a pureinvestment vehicle, or as part of a Group investment policy. Certain
bonds are held for resale. These investments are exposed to the credit
risk of the issuing body, 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
transactions to confirm whether a position is commensurate with thevalue of the foreign currency-denominated financial asset subject tothe hedge.

Millions of yen
Receivables on lease
Lease receivables
investment assets

¥7
7
7
5
0
0

¥5,708
4,344
3,112
2,129
1,211
625

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

$141
140
118
65
32
—

$58,595
45,28034,54024,157
12,0707,474(3) Regarding finance lease transactions that do not transfer
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.
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.

27

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Risk Management for financial instruments

shares, the Hyakujushi Bank Group applies the historical simulation
method with a holding period of 120 days, confidence of 99% andobservation period of 1,200 business days. As of March 31, 2013,
the volume of the aforementioned risks (taking into consideration
the correlation or reciprocal risks) amounted to ¥44,141 million($469,335 thousand) (compared with ¥36,578 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, 2013, the volume of the aforementioned
risks amounted to ¥1,955 million ($20,786 thousand) (compared to¥1,815 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.

(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 Credit Planning 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.
Following the organizational changes that entered effect April 2, 2012,
the credit risk managing department is currently the Risk Management
Division.
(b) Market risk management
The Group has defined “Market Risk Management Rules” andset up the “Risk Management Committee” and the “Market Risk
Management Subcommittee,” which periodically monitor theoperational status of market risk management. The Group has established the “Revenue Management Committee” and “Budget ALM
Subcommittee” as part of its Asset and Liability Management (ALM)
system. These committees deliberate on the stability of medium- andlong-term profit based on the inherent risks listed in the Risk Control
Matrix and the response measures to these potential risks.
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.
(i) Interest rate risk management
The Group manages interest rate risk using statistical methods toquantify the size of the interest rate risk. When deemed necessary,
the Group establishes and manages limits on positions and profits andlosses for securities, derivatives, and other market transactions. The
Group also enters into derivative transactions for interest rate swaps tohedge interest rate risk as part of the ALM.
(ii) Foreign exchange risk management
The Group uses statistical methods to quantify and manage foreignexchange risk. The Group also establishes and manages limits on positions and profits and losses.
(iii) Price volatility risk management
The Group uses statistical methods to quantify and manage pricevolatility risk. The Group establishes and manages limits on positions
and profits and losses.
(iv) Quantitative information regarding market risks
a. Financial instruments held for trading purposes
In measuring the VaR of interest-rate risks associated with trading
securities, interest-rate futures and related transactions as well as
the VaR of foreign currency exchange risks associated with foreignexchange trading and related transactions, the Hyakujushi Bank
Group applies the historical simulation method with a holding periodof 10 days, level of confidence of 99% and observation period of
1,200 business days. As of March 31, 2013 (the consolidated balance sheet date), the volume of the aforementioned risks (estimatedamount of loss) amounted to ¥7 million ($74 thousand) (comparedwith ¥8 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

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

28

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

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 *2............................... 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 *2........................... 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

Thousands of U.S. dollars

Difference

2013

¥   —
—

(1) Cash and due from banks......... $ 1,450,580 $ 1,450,580(2) Call loans and bills bought........
67,00067,000(3) Trading account securities andsecurities available for sale......
528528(4) Money held in trust...................
52,11952,119(5) Securities
Held-to-maturity debt securities....
7
7
Other securities......................... 13,981,173 13,981,173(6) Loans and bills discounted........ 26,883,604
	Reserve for possible
loan losses..............................
(245,279)
26,638,325 26,880,710
Total Assets *2............................... 42,189,734 42,432,119(1) Deposits.................................... 36,371,709 36,377,244(2)	Negotiable certificates ofdeposit................................... 2,463,657
2,464,076(3) Call money and bills sold...........
552,000
552,000(4) Borrowed money......................
783,137
783,728(5) Corporate bonds.......................
106,326
107,382
Total Liabilities *2........................... 40,276,830 40,284,431
Derivative Transactions *1
Not subject to hedge
accounting..............................
116,569
116,569
Subject to hedge accounting.....
(22,632)(22,632)
Total Derivative Transactions.......... $   93,937 $   93,937

—
—
0
—

22,796
22,796
520
39
—
55
99
714

—
—
¥   —

2012

Fair value(1) Cash and due from banks......... ¥  224,295 ¥  224,295(2) Call loans and bills bought........
2,465
2,465
(3) Trading account securities andsecurities available for sale......
264
264(4) Money held in trust...................
4,901
4,901
(5) Securities
Held-to-maturity debt securities....
2
2
Other securities......................... 1,211,731 1,211,731(6) Loans and bills discounted........ 2,424,741
	Reserve for possible
loan losses..............................
(23,967)
2,400,773 2,422,640
Total Assets *2............................... 3,844,435 3,866,302(1) Deposits.................................... 3,382,241 3,383,044(2)	Negotiable certificates ofdeposit...................................
201,707
201,750(3) Call money and bills sold...........
24,657
24,657(4) Borrowed money......................
79,77579,842(5) Corporate bonds.......................
10,00010,050Total Liabilities *2........................... 3,698,382 3,699,344
Derivative Transactions *1
Not subject to hedge
accounting..............................
20,466
20,466
Subject to hedge accounting.....
(1,240)(1,240)Total Derivative Transactions.......... ¥   19,226 ¥   19,226

Fair value

Difference$     ————
0—242,385
242,385
5,534
419
—
591
1,055
7,601

—
—
$     —

*1 All derivative transactions recorded in Other assets and Other liabilities arepresented 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 Monetary claims bought and foreign exchange, lease receivables and lease
investment assets, which are presented under “Assets,” as well as foreignexchange, which is presented under “Liabilities,” have been omitted from theconsolidated balance sheet due to the immaterial nature of these amounts.

Millions of yen
Consolidatedbalance sheet
amountConsolidatedbalance sheet
amountDifference

¥   —
—

Calculation method for fair value of financial instruments——

Assets(1) Cash and due from banks

0—

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.

21,867
21,867802(2) Call loans and bills bought

42
—
66
50
961

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.

(4) Securities

—
—
¥   —

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 bond

29

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Since book value approximates fair value for items with a short deposit
term, the book value shall be the fair value for these instruments.

in the same total amount of principal and interest is issued.
Considering the recent market environment, the Group had
determined that market prices could no longer be considered fair valueof floating rate government bonds. Accordingly, the Group had decided
to record these instruments at a rationally calculated value instead ofmarket prices on the consolidated balance sheet from the end of theconsolidated fiscal year ended March 31, 2009 onward. However, as thedisparity between the desired prices of sellers and those of buyers wasconsidered no longer significantly large, the Group has decided to record
these instruments at market prices on the consolidated balance sheet as
fair value as of the end of the fiscal year ended March 31, 2013.
Consequently, in comparison with rationally calculated prices
recorded on the consolidated balance sheet, securities, valuation difference of other securities and deferred tax liabilities decreased by ¥487
million ($5,185 thousand), ¥315 million ($3,354 thousand) and ¥172
million ($1,830 thousand), respectively as of March 31, 2013.
See the section under “Securities and trading account securities”
for further information about the securities by intent of holding.

(3) Call money and bills sold
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.

(5) Corporate bonds
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.

(5) 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.

Derivative Transactions
See the section under “(Derivative Transactions)” for further information about derivatives.
The following are financial instruments whose fair values are not readily determinable as of March 31, 2013. These are not included in the“Assets (4) Securities” section under fair value information for financial
instruments.

Category

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

Liabilities(1) Deposits and (2) Negotiable certificates of deposit

Millions of yen

Thousands of
U.S. dollars

Consolidatedbalance sheet
amountConsolidatedbalance sheet
amount¥2,614361¥2,975$27,794
3,842$31,636*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 ¥24 million ($264 thousand) impairment loss forunlisted equity stock for the consolidated fiscal year ended March 31, 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.

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.

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

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

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

0098,53425,531
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

30Over 7 years,
up to 10 years

Over 10 years¥     ———

¥     ———

¥     —
—
1,656

—
—
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

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Up to 1 year

Deposits................................................................ $ 1,083,738
Call loans and bills bought....................................
67,000
Monetary claims bought.......................................
325,797
Securities:
Held-to-maturity debt securities........................
7
Local government bonds...................................
7
Other securities with maturities.............................
1,047,684
National government bonds..................................
271,463
Local government bonds.......................................
264,195
Corporate bonds...................................................
358,143
Other....................................................................
153,883
Loans and bills discounted*..................................
11,919,368
Total..................................................................... $14,443,597

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$      —
—10,632$      —
—6,052$      ———

$      ———

$      —
—17,615——
3,428,992
1,546,298
890,078
620,770
371,845
4,326,570$7,766,195——
2,500,992
968,052
479,466
712,353
341,120
3,014,399$5,521,444——
2,025,848
1,297,572
273,201
330,117
124,957
1,771,311$3,797,160——
3,446,013
1,525,380
818,309
1,033,362
68,961
1,746,305$5,192,319——
62,126
62,126———
3,177,841$3,257,583*Among loans and bills discounted, ¥48,020 million ($510,587 thousand) in loans for bankrupt, substantially bankrupt and likely to go bankrupt borrowers or other loansof which repayment is not expected, and ¥39,239 million ($417,218 thousand) in loans with no established maturity have not been included.

Corporate bonds, borrowed money and other interest-bearing debt scheduled to be repaid after the end of the consolidated fiscal year as of March
31, 2013

Up to 1 year

Over 1 year,
up to 3 years¥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*.............................................................. $33,226,370
Negotiable certificates of deposit..........................
2,463,657
Call money and bills sold.......................................
552,000
Borrowed money..................................................
409,530
Corporate bonds...................................................
—
Total..................................................................... $36,651,558$3,031,502——
110,936—$3,142,439

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

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¥   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$ 96,295——
54,373—$150,668$  7,057——
55,003
106,326$168,387

$   —
—
—
2,752
—
$2,752¥ 9,056——
5,113—¥14,170¥   985——
14,158—¥15,144$ 10,483——
150,540—$161,023*Among deposits, demand deposits are included in “Up to 1 year.”

19. Accrued retirement benefits(2) Accrued retirement benefits(1) Retirement benefits plan

Accrued retirement benefits as of March 31, 2013 and 2012 were
calculated as below:

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.

Plan

Lump-sum payment plan

Companies adopting
the planMillions of yen
2013
2012

Retirement benefit obligation....... ¥(47,154) ¥(40,409)
Fair value of pension assets.......... 44,266
39,430Benefit obligation excess ofpension assets............................
(2,888)(979)
Unrecognized actuarial loss..........
6,555
4,164
Net retirement benefit obligation...
3,667
3,185
Prepaid pension costs...................
4,172
3,923
Accrued retirement benefits......... ¥   (504) ¥   (738)

Establishment

The Bank and its 11
The Bank inauguration
consolidated subsidiaries

Defined-benefit corporate
pension plan
The Bank
Defined-contribution
pension plan
11 companies

2004
2011

31

Thousands of
U.S. dollars
2013$(501,381)
470,672(30,708)
69,702
38,99344,362$  (5,369)

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(3) Retirement benefits expenses(4) Basis of computation

Retirement benefits expenses for the years ended March 31, 2013 and2012 consisted of the following:

The above computations for 2013 and 2012 were based on the following assumptions:Thousands of
U.S. dollars
2013

Millions of yen
2013
2012

Service costs................................
Interest costs................................
Estimated returnon pension assets.......................
Amortizationof actuarial difference................
Total retirement benefits
expenses....................................
Gain on abolishmentof retirement benefit plan..........
Total............................................

Discount rate...........................................
Expected rate of returnon pension assets...................................

2013

2012

0.92%

2.00%

2.00%

2.00%

¥1,199805¥1,204808$12,758
8,561

(450)

(430)

(4,794)

20. Stock options

731

1,107

7,783

1. Stock option expenses and accounts for the consolidated fiscal years

2,286

2,690

24,308—¥2,286(107)¥2,583—$24,308

ended March 31, 2013 and 2012
Millions of yen
2013
2012

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

¥47

¥51

Thousands of
U.S. dollars
2013

$506

2. Stock option details, size, and changes(1) Stock option details
Category and number of grant 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

The bank’s twelve
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

2009 stock options

2010 stock options

2011 stock options

2012 stock options

79,900——21,10058,800142,700——
43,30099,400187,300——
66,800120,500—
175,000—
14,600160,400—
21,10021,100———43,30043,300———66,80066,800———14,60014,600——2009 stock options

2010 stock options

2011 stock options

2012 stock options

Per share:    ¥1Per share: ¥314
Per share: ¥418

Per share:    ¥1Per share: ¥314
Per share: ¥315

Per share:    ¥1Per share: ¥312
Per share: ¥279

Per share:    ¥1Per share: ¥309
Per share: ¥256

Note: Converted to equivalent number of shares.

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

3. Method for estimating fair value of stock options
The following method was used to estimate the fair value of 2012 stock options granted during the consolidated fiscal year ended March 31, 2013.
(1) Valuation technique: Black-Scholes formula

32

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(2) Important assumptions and estimation methods
2012 stock options

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

2013

27.4%
3.7 years
Per share: ¥7
0.11%Over the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... $717,023 $690,825 $14,730
Variable rate receivable/
fixed rate payable........ 717,023 690,825(7,002)Others:Sell................................
29,64827,60875
Buy...............................
29,64827,60875
Total...................................
$ 7,880

Notes: 1. Calculated weekly for the period beginning the week of November 3,2008 through the week of July 18, 2012 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 dateof assumption of office to the date of resignation, or the period fromthe date of assumption of office to the issuance date.
3. Actual dividends for the fiscal year ended March 2012.
4. Yield of government bonds during the period of estimated remaining
years.

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.

2013(1) Type of transactions
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.

(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.
Market prices of interest-rate swap transactions as of March 31,
2013 and 2012 were as follows:

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

2012¥1,385¥1,38564,972

(658)

(658)

2,596
2,596

7
7
¥  741105(20)¥  811Millions of yen
Contracted value
Total
Over 1 year Fair valueOver the counter
Interest-rate swaps:
Fixed rate receivable/variable rate payable.... ¥51,425
Variable rate receivable/
fixed rate payable........ 51,425
Others:Sell................................
2,967
Buy...............................
2,967
Total...................................

2012

2013

¥1,047¥1,04749,472

(589)

(589)

2,809
2,809

3
3
¥  46584(19)¥  522

1,116(217)$ 8,627

Appraisedprofit/(loss)¥  148(2,766)
3,280(2,766)
3,280

4,780
4,780
¥10,2224,440(3,009)¥2,093

Millions of yen
Contracted value
Total
Over 1 year Fair value

Appraisedprofit/(loss)¥   189¥  1892,283(1,813)2,283(1,813)

9,671
9,671
¥20,001

1,234
392¥2,286

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

Over the counter
Currency swaps................ $2,414,012 $1,415,663 $  1,580
Forward exchange
contracts:
Sell................................ 1,251,126
110,300(29,419)
Buy............................... 557,517
131,040
34,880Currency options:Sell................................ 1,123,060
642,344
50,824
Buy............................... 1,123,060
642,344
50,824
Total...................................
$108,689

Appraisedprofit/(loss)¥49,472(7,002)¥   148

Over the counter
Currency swaps................ ¥148,475 ¥125,999
Forward exchange
contracts:
Sell................................ 60,917
5,671
Buy............................... 62,492
6,246
Currency options:Sell................................ 109,397
65,118
Buy............................... 109,397
65,118
Total...................................

Appraisedprofit/(loss)¥64,972

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

21. Derivative transactions

2013$14,730

Market price of currency-related swap transactions as of March 31,
2013 and 2012 were as follows:

4. Method for estimating number of vested stock options

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)$ 1,580(29,419)
34,88047,212(31,998)$22,255

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 table.
3. Market values for over the counter transactions were calculated at
discounted present values and formulas for option prices.

33

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, 2012
None
As of March 31, 2013

Hedge accounting method

General accounting
rules

Hedge accounting method

General accounting
rules

Type

Interest-rate swaps
Variable ratereceivable/
fixed rate payable
Total

Type

Interest-rate swaps
Variable ratereceivable/
fixed rate payable
Total

Main hedged item

Contracted value

Millions of yen
Contracted value
over 1 year

Fair value¥15,000¥    —¥15,000¥    —¥(199)¥(199)

Contracted value

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

Fair value$159,489$     —

$159,489$     —$(2,120)$(2,120)

Other securities(bonds)—Main hedged item

Other securities(bonds)—Note: 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)(b) Currency transactions (as of March 31, 2013)
As of March 31, 2013

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

Fair value¥  (738)(501)¥(1,240)

Fair value

As of March 31, 2012

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—¥10,684
21,484¥    —¥——¥—

Main hedged item

Contracted value

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

Fair value

Foreign currency
receivables—$130,000
582,327$     —$——$—$(21,306)
794$(20,511)

As of March 31, 2013

Hedge accounting method

Type

General accounting
rules

Currency swaps
Monetary swaps
Total

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.

(c) Equity stock transactions (as of March 31, 2013 and 2012)
None(d) Bond transactions (as of March 31, 2013 and 2012)
None

34

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
22. 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, 2013 and 2012 is as follows: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............

2012

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¥   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

Adjustment

Consolidated
total

Banking

Leasing

Total

Millions of yen
Otherbusinesses

Total¥   67,491
407¥   67,898¥   12,526¥4,002,569¥3,794,197¥ 7,069875¥ 7,945¥   491¥24,949¥21,574¥   74,560
1,282¥   75,843¥   13,017¥4,027,518¥3,815,772¥ 2,384
4,157¥ 6,542¥ 1,531¥29,842¥11,888¥   76,945
5,440¥   82,385¥   14,548¥4,057,361¥3,827,660¥    —(5,440)¥ (5,440)¥   (473)¥(38,465)¥(36,619)¥   76,945—¥   76,945¥   14,075¥4,018,896¥3,791,041¥    3,607
52,1683,970¥   118103210¥    3,726
52,272
4,181¥   370593
100¥    4,096
52,8654,282¥    215
(631)
(674)

¥    4,312
52,234
3,607

3,350

7

3,357

803

4,161

119

4,281

35

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2013

Banking

Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

Ordinary income:Outside customers................................... $   697,496Inter-segment transactions.......................
3,993
Total............................................................. $   701,490
Segment profit.............................................. $    95,177
Segment assets............................................. $43,782,178
Segment liabilities......................................... $41,326,599
Other items:
Depreciation............................................ $    31,333
Interest income........................................
536,889
Interest expenses.....................................
39,688
Increases in property, plant andequipment and intangible assets............
30,428

Consolidated
total

Adjustment$ 72,827
8,340$ 81,167$  2,855$265,337$226,326$   770,324
12,333$   782,657$    98,033$44,047,515$41,552,925$ 23,828
45,367$ 69,195$ 18,339$321,476$122,563$   794,152
57,700$   851,853$   116,372$44,368,991$41,675,489$     — $   794,152(57,700)—$ (57,700) $   794,152$   (956) $   115,416$(410,145) $43,958,846$(389,928) $41,285,560$  1,216
1,116
1,965

$    32,550
538,006
41,653$  4,090 $    36,640
5,884
543,890
1,031
42,685$   1,302 $    37,943(6,452)537,437(6,867)35,81769

30,4983,850

34,349698

35,047

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
2013

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

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

¥37,566¥17,580¥7,069¥14,728¥76,945

Lending services

Securities
investment services

Leasing services

Other

Total

$386,099$189,488$72,827$145,738$794,152

Millions of yen
2012

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

Thousands of U.S. dollars
2013

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

23. Related-party transactions

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

Not applicable to the years ended March 31, 2013 and 2012.

Millions of yen,
except number of shares
2013
2012

24. Per share data
Yen
2013

Net assets per share..................... ¥773.81
Net income per share...................
19.29
Net diluted earnings per share.....
19.27

2012

U.S. dollars
2013¥700.36
18.92
18.90

$8.2270.205
0.204

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
2013
2012

Thousands of
U.S. dollars
2013

Net assets......................................... ¥251,422 ¥227,854
Amount excluded from net assets.....
16,444
15,770New share subscription right.............
120
117(of which, held by minority interests)....
16,324
15,652
Net assets attributable to common
stock at the fiscal year-end.............. 234,978 212,084
Number of common stock sharesat fiscal year-end used
for calculation of net assets
per share (in thousands).................. 303,663 302,820$2,673,285
174,846
1,279
173,5672,498,439

36

Thousands of
U.S. dollars
2013¥5,851¥5,813$62,221

5,851

5,813

62,221

303,255

307,130

396
396

317
317

37

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)
Millions of yen
2013
2012

As of March 31

Assets:Cash and due from banks................................................................................ ¥  136,307 ¥  224,219
Call loans.........................................................................................................
6,301
2,465
Monetary claims bought...................................................................................
33,86733,378
Trading account securities................................................................................
49
264
Money held in trust..........................................................................................
4,901
4,901
Securities.......................................................................................................... 1,319,325
1,216,133
Loans and bills discounted................................................................................ 2,536,687
2,433,388
Foreign exchange assets...................................................................................
7,382
5,470
Other assets.....................................................................................................
37,08036,717
Tangible fixed assets.........................................................................................
39,98039,545Intangible fixed assets......................................................................................
3,766
4,686
Deferred tax assets...........................................................................................
—
7,218
Customers’ liabilities for acceptances and guarantees.......................................
15,88218,018Reserve for possible loan losses........................................................................
(23,821)(23,841)
Total assets.................................................................................................. ¥4,117,711 ¥4,002,567

38

Thousands of
U.S. dollars
2013$ 1,449,309
67,000360,098
528
52,11914,027,920
26,971,693
78,493394,268
425,095
40,048—168,868(253,288)$43,782,154

The Hyakujushi Bank, Ltd.

Non-Consolidated Balance Sheets (Unaudited)

Millions of yen
2013
2012

As of March 31

Liabilities and net assets
Liabilities:
Deposits........................................................................................................... ¥3,427,988
Negotiable certificates of deposit......................................................................
233,606
Call money.......................................................................................................
51,915
Borrowed money .............................................................................................
75,630Foreign exchange liabilities...............................................................................
579
Corporate bond...............................................................................................
10,000
Other liabilities.................................................................................................
61,584
Reserve for bonuses for directors......................................................................
19
Accrued retirement benefits.............................................................................
308
Provision for claims on dormant accounts.........................................................
481
Provision for contingent liabilities.....................................................................
135
Deferred tax liability.........................................................................................
1,826
Deferred tax liability for land revaluation..........................................................
6,828
Acceptances and guarantees............................................................................
15,882
Total liabilities.............................................................................................. 3,886,786¥3,387,272
203,60724,657
82,633841
10,00058,917
21
587
540
276
—
6,842
18,0183,794,216

Net assets:
Stockholders’ equity:
Common stock............................................................................................
37,32237,322
Capital surplus.............................................................................................
24,92024,920Capital surplus reserve.............................................................................
24,92024,920Retained earnings........................................................................................
125,480122,076
Earned surplus reserve.............................................................................
12,402
12,402Other retained earnings...........................................................................
113,078
109,674
Reserve for advanced depreciation of fixed assets...............................
254
254
Special reserve....................................................................................
106,661
103,161
Earned surplus bought forward...........................................................
6,163
6,259
Treasury stock..............................................................................................
(2,935)(3,266)
Total stockholders’ equity........................................................................
184,788
181,053
Valuation and translation adjustments:
Net unrealized gains on securities available for sale......................................
38,094
19,164
Net deferred losses on hedging instruments.................................................
(136)
(69)
Revaluation reserve for land.........................................................................
8,057
8,083
Total valuation and translation adjustments.............................................
46,01627,179
Share warrants........................................................................................
120
117
Total net assets............................................................................................
230,925
208,350
Total liabilities and net assets....................................................................... ¥4,117,711 ¥4,002,567
Yen
As of March 31

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

$36,448,570
2,483,859
552,000
804,147
6,159
106,326
654,810
211
3,278
5,117
1,436
19,41772,603
168,868
41,326,807

396,838
264,970
264,970
1,334,194
131,868
1,202,326
2,704
1,134,088
65,533(31,211)
1,964,791
405,050(1,449)85,675489,276
1,279
2,455,346$43,782,154

2013

2012

U.S. dollars
2013¥760.06¥687.64$8.081

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥94.05 to US$1.00 on March 31, 2013.

39

Thousands of
U.S. dollars
2013

The Hyakujushi Bank, Ltd.

Non-Consolidated Statements of Income (Unaudited)
Millions of yen
2013
2012

For the years ended March 31

Thousands of
U.S. dollars
2013

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

¥35,975
14,167
351
8,839
3,368
3,285
65,988¥37,182
14,599
386
8,321
2,678
4,730
67,898$382,515
150,633
3,740
93,98435,82034,932
701,627

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

2,246
180
806
498
2,943
2,570
38,4409,770
57,458

2,639
73
795
462
2,805
1,400
40,393
7,298
55,86823,891
1,921
8,574
5,301
31,302
27,331
408,728
103,886
610,937

8,529

12,03090,6904,264(1,264)3,000¥ 5,529

2,503
3,672
6,176
¥ 5,853

45,340(13,441)
31,898$ 58,791

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

For the years ended March 31

2013

Yen
2012

U.S. dollars
2013

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

¥18.23¥19.05$0.193

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥94.05 to US$1.00 on March 31, 2013.

40

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

OthercapitalsurplusTotal
capitalsurplusReserve foradvanced
Earned depreciation
surplusof fixed
Specialreserveassetsreserve¥24,920¥—¥24,920¥12,402¥234¥100,161

—

—

—

—

—

—

(2,155)(2,155)—(2,155)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

20
—
—
—
—

—
3,000
—
—
—

(20)
(3,000)
5,853
—
(9)

—
—
5,853
—
(9)

—
—
—
(1,859)
28

—
—
5,853
(1,859)
19

—

—

—

—

—

—

184

184

—

184

—

—

—

—

—

—

(0)

(0)

—

(0)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

20

3,000

853

3,873

(1,830)2,042

24,920—24,92012,402

254

103,161

6,259

122,076(3,266)

181,053

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
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

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

3,500

(95)

3,404

331

3,735

¥24,920¥—¥24,920¥12,402¥254¥106,661

CapitalCommon surplus
stock
reserve

Balance as ofMarch 31, 2011.................. ¥37,322
Change of items
during the period
Dividends from surplus......
—
Increase in reserve funds
following changes in
effective tax rate.............
—
Provision to general reserve....
—Net income.......................
—
Purchase of treasury stock....
—Disposal of treasury stock....
—Transfer from revaluation
reserve for land...............
—
Provision for revaluation
reserve for held...............
—Net changes of items otherthan stockholders’ equity....
—Total changes of items
during the period.................
—
Balance as ofMarch 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...............
—Net changes of items otherthan stockholders’ equity....
—Total changes of items
during the period.................
—
Balance as ofMarch 31, 2013.................. ¥37,322

41

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity¥5,406 ¥118,203 ¥(1,436) ¥179,010¥6,163 ¥125,480 ¥(2,935) ¥184,778

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 ofMarch 31, 2011..................
Change of items
during the period
Dividends from surplus......
Increase in reserve funds
following changes in
effective tax rate.............
Provision to general reserve....
Net income.......................
Purchase of treasury stock....
Disposal of treasury stock....
Transfer from revaluation
reserve for land...............
Provision for revaluation
reserve for held...............
Net changes of items otherthan stockholders’ equity....
Total changes of items
during the period.................
Balance as ofMarch 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...............
Net changes of items otherthan stockholders’ equity....
Total changes of items
during the period.................
Balance as ofMarch 31, 2013..................

Net unrealized
Net deferredgains on securities losses on hedging
available for sale
instruments

Revaluation
reserve for land

Total valuation andtranslation
adjustments

Share warrants

Total net assets¥15,017¥ (76)¥7,266¥22,206¥ 75¥201,292

—

—

—

—

—

(2,155)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
5,853
(1,859)
19

—

—

—

—

—

184

—

—

—

—

—

(0)

4,147

6

817

4,972

42

5,015

4,147

6

817

4,972

42

7,057

19,164

(69)

8,083

27,179117

208,350

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(2,121)
—
5,529
(7)
308

—

—

—

—

—

26

18,929(66)(26)

18,836

2

18,83918,929(66)(26)

18,836

2

22,575¥38,094¥(136)¥8,057¥46,016¥120¥230,925

42

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

For the year ended March 31

Total
capitalsurplus$264,970$—$264,970$131,868

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
37,214———(22,556)(37,214)58,791—(320)(22,556)—
58,791
—
(320)

—
—
—
(75)
3,600

(22,556)—
58,791
(75)
3,280

—

—

—

—

—

—

278

278

—

278

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

37,214(1,020)36,193

3,524

39,718$264,970$—$264,970$131,868

CapitalCommon surplus
stock
reserve

Balance as ofMarch 31, 2012.................. $396,838
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...............
—Net changes of items otherthan stockholders’ equity....
—Total changes of items
during the period.................
—
Balance as ofMarch 31, 2013.................. $396,838

Balance as ofMarch 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...............
Net changes of items otherthan stockholders’ equity....
Total changes of items
during the period.................
Balance as ofMarch 31, 2013..................

Other
capitalsurplusReserve foradvanced
Earned depreciation
surplusof fixed
Specialreserveassetsreserve$2,704 $1,096,874$2,704 $1,134,088

Earnedsurplus
Total
Totalbought retained Treasury stockholders’forward earnings
stock
equity$66,553 $1,298,000 $(34,735) $1,925,073$65,533 $1,334,194 $(31,211) $1,964,791

Thousands of U.S. dollars
Valuation and translation adjustments
Net unrealized
Net deferred
Total valuation andgains on securities losses on hedging
Revaluationtranslation
available for sale
instruments
reserve for land
adjustments

Share warrants

Total net assets$203,774$ (738)$85,954$288,989$1,249$2,215,312

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(22,556)—
58,791
(75)
3,280

—

—

—

—

—

278

201,275

(711)

(278)

200,28629

200,315201,275

(711)

(278)

200,28629

240,034$405,050$(1,449)$85,675$489,276$1,279$2,455,346

Note: U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥94.05 to US$1.00 on March 31, 2013.

43

Organization (as of July 1, 2013)
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

44

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