Annual
Repor t2 0 1 8Our Mission
Region-Based Operations and Sound Management
Maintaining a close relationship with the communities in the region where we operate,
we will contribute to the prosperity of the region and the development of its economy,
with a commitment to sound management that enjoys the trust of our customers,
while bolstering our business operations.

Management Vision (Ideal and prospective image)
A Bank that grows and develops together with Yamanashi andits surroundings as a driving force for regional economic revitalization

Yamanashi

Tokyo

Theme During the Medium-Term Management Plan
Live up to the trust accorded by customers andcontribute to regional revitalization

Mt. Fuji

Slogan (3Cs)
Concern, Change, Challenge

Basic Strategies of Medium-Term Management Plan S.T.E.P. up 2019

Head Office ealization of a business model adapted toRchanges in the environment— Selection and concentration, and differentiationfrom other financial institutions—●
Building and strengthening a robust management structure●

Profile (as of March 31, 2018)
Corporate Name:

Stock Listing:

Head Office:Long-Term Credit Rating:

Established:

Network:

The Yamanashi Chuo Bank, Ltd.
20-8, Marunouchi 1-chome, Kofu, Yamanashi
December 1, 1941

President:

Mitsuyoshi Seki

Common Stock:¥15,400 million

Number of Shares Issued:
174,915,000 sharesFirst Section of the Tokyo Stock Exchange
A (Rating and Investment Information, Inc.)
Domestic: Head Office and Branches: 90 (including 1 Internet Branch), District Offices: 2
Overseas: Hong Kong Representative OfficeBusinesses:

The Yamanashi Chuo Bank Group comprises the Yamanashi Chuo Bank and four
consolidated subsidiaries. Centered on its core banking business, the Group provides anintegrated financing service that includes a leasing and credit-card business. The Bank is
the leading local bank in Yamanashi Prefecture, and its sphere of operations encompasses
both the prefecture and the western part of the Tokyo metropolitan region.

Contents
1 Consolidated Financial Highlights
2 Message from the President
4 Medium-Term Management Plan S.T.E.P. up 20196 Region-Based Financial Services
8 Operational Review
10 Financial Review (on a consolidated basis)
11 Consolidated Balance Sheets
13 Consolidated Statements of Income
15 Consolidated Statements of Comprehensive Income
16 Consolidated Statements of Changes in Net Assets
19 Consolidated Statements of Cash Flows

21 Notes to Consolidated Financial Statements
48 Corporate Data
49 Board of Directors and Corporate Auditors
49 Organization
50 Internal Control and Risk Management
Forward-looking statements
Statements contained in this report regarding the Bank’s future
performance do not constitute statements of historical fact, and are thus
subject to a number of risks and uncertainties. Readers are therefore
cautioned not to place undue reliance on forward-looking statements,
as factors beyond the Bank’s control and outside its ability to predict,including general economic conditions and market fluctuations, could
cause results to diverge materially from the Company’s projections.

Consolidated Financial Highlights
The Yamanashi Chuo Bank, Ltd. and Consolidated Subsidiaries
Fiscal years ended March 31

Millions of yen

2014

2015

2016

2017

2018

Ordinary Income

50,51850,33555,71855,73654,120Ordinary Profit

12,826

13,464

13,82910,001

7,570

Profit Attributable to Shareholders of the Parent

8,736

8,753

9,452

7,282

4,920

Comprehensive Income

8,617

40,346

106(15,464)

2,135

Net Assets

199,258

237,440

235,158

216,977

217,311

Total Assets

3,041,323

3,155,903

3,239,117

3,285,408

3,306,502

Net Assets per Share (Yen)

1,136.72

1,367.58

1,370.62

1,277.73

1,286.03

Net Income per Share (Yen)

49.86

50.38

54.91

42.95

29.29

Capital Adequacy Ratio (Domestic Standard, %)

17.28

17.35

18.05

16.82

14.14

Return on Equity (%)

4.48

4.40

4.03

3.25

2.29

Price Earning Ratio (Times)

9.34

10.44

7.52

11.59

14.95

Cash Flows from Operating Activities

88,999(3,806)70,287(91,511)79,725

Cash Flows from Investing Activities(50,148)(61,232)(17,638)

245,900(27,367)

Cash Flows from Financing Activities(1,625)(2,018)(2,397)(2,868)(1,783)

126,115

59,058109,309260,830

311,403

Cash and Cash Equivalents

Notes(1) Amounts do not include consumption and local taxes payable by the Bank and its consolidated subsidiaries.
(2) Capital adequacy ratio is calculated on a consolidated basis in accordance with the Bulletin Notification No. 19 issued by the Financial Services Agency in2006 under Paragraph 2, Article 14 of the Banking Law. The Bank has adopted the Japanese standard for the calculation.

Total assets

Profit attributable toshareholders of the parent

ROE/
Capital adequacy ratio(Domestic standard)(¥ billion)(¥ billion)

(%)

3,400

10.0

18.0

3,300

15.0

8.0
3,200

Capital adequacy
ratio

12.0
6.0

3,100

9.0
3,000

4.0

2,900
2.0

3.0

2,800
0.0

2,700
March 31 2014

ROE

6.0

2015

2016

2017

2018

FY

0.0

2014

2015

2016

2017

THE YAMANASHI CHUO BANK 2018

1

2018

FY

2014

2015

2016

2017

2018

Message from the President

I would like to take this opportunity to thank the customers and patrons of the
Yamanashi Chuo Bank. Recently, customer needs and demands of financial
institutions have been diversifying due to changes in their lifestyles. The businessenvironment for financial institutions has also grown more difficult.
In this business environment, in the S.T.E.P. up 2019 medium-term management
plan for the period from April 2016 to March 2019, the Bank and all management
and employees are working together to implement various measures in order torealize the Bank’s ideal and prospective image (management vision) as “A Bank
that grows and develops together with Yamanashi and its surroundings as adriving force for regional economic revitalization.”
The Bank will continue to maintain a sound financial content that earns thetrust of local communities, customers and shareholders, and strive to provide
even higher quality services. I ask for your continued support and encouragement
going forward.
Below, we present an overview of our business performance for fiscal 2017
(April 2017 to March 2018), together with a report on future management plans.

President

Mitsuyoshi
Seki

Overview of fiscal 2017 performance

In agriculture and food-related fields, we held our Agri-BusinessIn the fiscal year ended March 31, 2018, the Japanese economy saw

Sector Business Matching Fair” to support customers’ development

production increase atop steady external demand, while capital invest-

and expansion of sales channels. In the tourism field, we supported

ment also became active with an improvement in corporate earnings.

our clients through a tourism advisor, held seminars and supported

Consumer spending also increased gradually, among other signs ofcustomers in welcoming in-bound tourists. In international operations,continued economic recovery throughout the fiscal year.

we strengthened our solutions businesses for export companies,

School for business operators, and conducted the “Yamanashi FoodIn Yamanashi Prefecture, the economy increased due to high levels

received fund-raising support from local financial institutions, andof production, mainly in the construction industry, as well as increases

further enhanced our support for overseas expansion such as holding

in capital expenditure and production capacity, as well as investments“Yamanashi Food Export Trade Seminar in Bangkok” and the “Myanmar

in rationalization and labor-saving, among others. Personal consump-

Economic Observation Mission.” As a result, we achieved our highest

tion showed signs of recovering against a backdrop of improving

ever trade volume.

employment and incomes. The overall business situation in theTurning to individual customers, we announced our Basic Policy

prefecture recovered gradually.

on Fiduciary Duty aimed at realizing customer-oriented businessLooking at the financial situation, in foreign exchange the yen

operations in asset building and asset management. We also strove totraded around the ¥110 level throughout the fiscal year, but turned

carry out consulting and enhance our product lineup in line with thehigher from the start of 2018, driven by a sense of uncertainty regard-

policy. Additionally, we started handling Tsumitate NISA and provided

ing the future trends in the fiscal policies of Japan and the US. Stockbroad support for customers’ asset building. Meanwhile, to fulfill the

prices continuing to trend favorably, reaching a level above ¥24,000 at

financial needs of its customers, the Bank also worked to improve

one point, but softened from February onward in reaction to a global

the performance of its housing and education loans, implemented

stock price adjustment and the impact of the yen’s appreciation.

preferential interest plans and so forth for housing and auto loans,

Moreover, domestic long-term interest rates remained level atand established a new card loan service with all procedures able toaround zero under the fiscal policy of the Bank of Japan.

be completed online. Through these measures, we provided products

Against this financial and economic backdrop, in the middle

and services in response to customers’ needs.

actively implemented the following measures.

As a result of the foregoing, at the end of the fiscal year ended March

The Bank supported the growth and development of our corporate

31, 2018, the Bank’s financial status was as follows. The year-end balanceand sole proprietorship customers by providing optimal solutionsof total deposits increased ¥73.9 billion to ¥2,874.3 billion, mainly due tobased on business feasibility studies, thereby strengthening its

an increase in deposits held by both individual and corporate custom-measures to facilitate regional revitalization. In the fields of supporting

ers. Total deposits including negotiable certificates of deposit (NCDs)

the startup and establishment phase, we implemented support forincreased ¥79.4 billion during the year to ¥2,941.7 billion. Turning tobusiness planning formulation and for business growth and develop-loans, the balance of loans increased by ¥78.3 billion to ¥1,619.9 billion,

ment after establishment, including our Schools for Business Startups

mainly reflecting an increase in loans to SMEs and individuals.

and Secondary Startups and our Entrepreneur Seminar for Women.
THE YAMANASHI CHUO BANK 20182

Message from the President

The Economy of Yamanashi Prefecture—Our Business Base
General Prefectural Production (fiscal 2014):
Real Growth Rate (fiscal 2014):
Shipment Value of Production in Prefecture(2016):

Shares in Yamanashi Pref. (%)¥3,480 billion
0.5%(as of March 31, 2018)13.4¥2,242 billion

Share

Ranking

31.2

28.7

No. 1

Precious Metal Products

29.8

25.7

No. 1

Flat-Panel Display Manufacturing Equipment

109.4

24.5

No. 2

Wafer Process for Processing Equipment

123.3

11.8

No. 4

Quartz Crystal Unit (except for clock use)

6.5

4.8

No. 4

(¥ billion)

(%)

Loan
Shares

49.9

28.1

Shipment Value

Mineral Water

9.3
6.4

Deposit
SharesMajor Products and Their Share in Japanese Market
Products

1.6

34.0
8.6

7.0
Yamanashi Chuo Bank
Major banks
Shinkin banks/credit unions
Agricultural cooperatives
Semi-government institutions/
other

Yamanashi Chuo Bank
Major banks
Shinkin banks/credit unions
Agricultural cooperatives
Semi-government institutions/
other

Future management policies

In order to improve customer convenience, the Bank will work to

In Yamanashi Prefecture, progress is being made on upgrading andopening new sales offices and increasing office hours to weekday

expanding transport infrastructure, such as the opening of the Chubu-

evenings and holidays, and to expand the functions of its non-OTC

Odan Expressway through to Shizuoka and the start of operations ofsales channels, including Internet banking.

enhance our over-the-counter (OTC) sales channels, including by

the Linear Chuo Shinkansen. Meanwhile, with Yamanashi Prefecture’s
population recently dropping below 820,000, there are concerns aboutIn order to strengthen its sales capabilities and earning capabilities,

a possible economic contraction in line with the prefecture’s declining

the Bank will take steps to rationalize and streamline its operations.

population.

Personnel freed up by this initiative will be shifted to the sales
divisions.

In the financial sector, the Bank of Japan’s negative interest rate
policy will make it even more difficult for banks to secure stableIn order to cope with the changes in the environment caused byearnings. Furthermore, innovative digital technology is expected todigital innovation, the Bank will gather market intelligence and do

profoundly transform conventional financial functions and services.

research on new financial functions and services, develop its human

To tackle these environmental changes and build a stable, highly

resources, and will strengthen cybersecurity.

profitable management structure, the Bank is focusing on developing
the following initiatives.

The Bank will focus further on improving CS (customer satisfaction)
and ES (employee satisfaction), both of which are indispensable forIn order to provide more sophisticated solutions to corporate andcarrying out these various measures. We will strive to continue to build

sole proprietorship customers, the Bank will strengthen support forand maintain everyone’s trust regarding our compliance initiatives bybranch operations with staff who have highly specialized knowledge

appropriately responding to society’s requests and expectations, inhaving experienced assignments at regional companies or second-

addition to observing all the relevant laws and regulations.

ment to other institutions. We will also further strengthen businessWe will also take appropriate countermeasures to avoid money

feasibility studies through ongoing personnel development andlaundering or financing of terrorism.

other means, as well as bolstering loans to SMEs.

Regarding the Corporate Governance Code, which prescribes theIn order to support stable asset-building and asset management

behavioral standards for listed companies, the Bank aims to pursue

by individual customers, the Bank will make proposals even more

the optimum form of corporate governance for the Bank, fully takingaligned with the customers’ perspectives based on the Basic Policy

into account the intentions of the Corporate Governance Code, and to

on Fiduciary Duty.

enhance its corporate value over the medium to long term.

In order to increase the sophistication of its management of market-

to contribute to community prosperity and economic development.

The Group and all management and employees will work together
able securities, the Bank will expand the scope of management andPresident

diversify management methods while implementing appropriate risk

Mitsuyoshi Sekimanagement.
THE YAMANASHI CHUO BANK 2018

3

41.8

Medium-Term Management Plan
S.T.E.P. up 2019
Overview

steadily and promptly execute two basic strategies, namely

In April 2016, the Bank launched its medium-term management

environment—Selection and concentration, and differentiation

plan S.T.E.P. up 2019 for the period April 2016 to March 2019.

from other financial institutions” and “Build and strengthen a“Realization of a business model adapted to changes in the

Under this plan, we have formulated our management visionrobust management structure,” and advance individual strategies(ideal and prospective image) as “A Bank that grows and develops

formulated based on those two strategies. In parallel, the Bank will

together with Yamanashi and its surroundings as a driving force forseek to win the resounding trust of the people of Yamanashi byregional economic revitalization.” Moreover, to realize this vision,

providing comprehensive financial services that are pertinent to

we have embraced “Live up to the trust accorded by customers

changing customer needs and economic conditions in a timely

and contribute to regional revitalization” as our theme during

and appropriate manner through rigorously enforcing compliancethe medium-term management plan, and “Concern, Change,

and the protection of customers and their privacy. The Bank will

Challenge” as our slogan. With these principles in mind, the Bank

also seek to earn trust by contributing to the development of thewill work to implement various strategies.

regional economy, as well as local industries and businesses, with
its financial intermediation capabilities.

Moreover, to achieve our management vision, we will

(Diagram of S.T.E.P. up 2019: April 2016 to March 2019)

Management vision
Ideal andprospective image

A Bank that grows and develops together with Yamanashi andits surroundings as a driving force for regional economic revitalization

Theme during the plan

Live up to the trust accorded by customers and contribute to regional revitalization

Enhance stakeholder satisfaction (society, customers, shareholders, and employees)
Establish a financial and revenue base supporting sustainable growth

Realization of a business model adapted to changes in the environment
Selection and concentration, and differentiation from other financial institutions
Strengthen retail
solution banking

Strengthen coordination
with industrial, government,
and academic funds

Strengthen corporate
solution banking

Strengthen and expand
the capital markets
investment approach

Build and strengthen a robust management structure
Develop human resources andstrengthen organizational capabilities

Optimally redistribute management resources
such as branches, human resources and IT systems

Fundamentally reform and reengineer operations
based on sophisticated risk management approaches

Strengthen the approach and enhancethe effectiveness of internal control

Strengthen the enhancement ofcustomer and employee satisfaction

Strengthen CSR activities

Rigorously enforce compliance andthe protection of customers and their privacy

THE YAMANASHI CHUO BANK 20184

Advance IT utilization

Medium-Term Management Plan
S.T.E.P. up 2019

Quantitative targets
Item

Net business profit

ProfitYear-end deposit balance*

Year-end loan balance

Target¥9.5 bn¥6.0 bn¥3,260.0 bn¥1,590.0 bn(Year ending March 2019)* Deposit balance: Deposits + Investment trusts + Public bonds

CSR Within the Medium-Term
Management Plan

revitalization through our core businesses, we will continue taking

At the Yamanashi Chuo Bank, we have been working to fulfill ourment to meet our obligations as a corporate citizen, thereby

corporate social responsibilities, as we recognize that this, alongcontributing to the sustainable development of the regional com-with sustained value creation and improved competitiveness, ismunity. In parallel, the Bank will actively disclose information on

essential in forging even stronger ties with all our stakeholders,

the status of its CSR activities as part of efforts to build relationships

including the regional community, our customers and sharehold-of trust with stakeholders and enhance its corporate value anders, other market investors, and our management and employees.

competitiveness, which will pave the way for earnings growth.

Looking ahead, in addition to contributing to regional economic
further measures to contribute to society and protect the environ-

Strengthening CSR activities
in the medium-term management plan S.T.E.P. up 2019
Enhance corporate value
and competitiveness

Increase earnings

Sustainable developmentof the regional community

Activities
to promote regional
economic revitalization

Help communities revitalize industries
Coordinate with local authorities
Participate in local projects
Collect and use market intelligence

Activities
to contribute to
the regional community

Strengthen support for education
Proactively take steps to promote artsand culture, sports and other activities
Promote corporate activities
from the standpoint of contributing to society,including wellness initiatives

Activities
to tackle environmental
problems

Strengthen activities to reduce the Bank’s
own environmental impact
Support and facilitate activities undertaken
by regional communities, customers andothers to reduce environmental impact

THE YAMANASHI CHUO BANK 20185

Build relationshipsof trust with stakeholders

Proactively disclose
the status of activities

Region-Based Financial Services
Region-Based Financial Services

2019, to realize its management vision (ideal and

The provision of region-based financial services

develops together with Yamanashi and its surroundings(relationship banking) is a long-term issue for the Bank.

as a driving force for regional economic revitalization.”

Accordingly, the Bank will vigorously push ahead with

Looking ahead, we will continue to take measures torelationship banking in the course of executing various

develop the regional economy and community, improvemeasures set forth in the medium-term management

our services for customers in the region, and promoteplan S.T.E.P. up 2019 for the period April 2016 to March

relationship banking.

prospective image) of becoming “A Bank that grows and

1 : Provide consulting services to corporate customers
2 : Proactively participate in broad-based regional revival
3 : Proactively provide information to the community and other stakeholders

Activities to promote relationship banking
in the medium-term management plan1

Provide consulting services
to corporate customers• Provide appropriate life-stage solutions to companies• Enhance the depth of solution banking groundedin business feasibility studies• Develop human resources who can address diversifying andincreasingly sophisticated needs

2(Ideal and prospective image)

Proactively participate
in broad-based regional revival• Support the growth and revitalization of industries that

support the region• Proactively engage in regional revitalization and other measuresin coordination with local municipalities and other entities• Conduct social contribution activities such as the promotionof support for education, arts and culture, and sports

3

Management vision

Proactively provide information to the communityand other stakeholders• Proactively provide clear information through various media,

including the Bank’s website and disclosure reports

THE YAMANASHI CHUO BANK 2018

6

A Bank that grows
and develops together with
Yamanashi and its surroundings
as a driving force for regional
economic revitalization

Region-Based Financial Services

Corporate growth assistance through collaboration with business advisors (April 2001 to March 2018)
Number of investment target and borrower
enterprises, investment amount190¥13.6 bn

Number of business matching deals

91 lines

The Bank’s business advisors are highly knowledgeable andexperienced. They have provided consulting services to 625
companies regarding the opening of marketing channels andthe evaluation of the potential of technology and business.

Yamanashi Chugin Management Support Coordination Services,and corporate customer support through business matching services
Number of companies that have received
support (problem-solving) from Yamanashi
Chugin Management Support Coordination
Services (January 2006 to March 2018)

Number of business matching deals successfully concluded via the Bank’s network
or Bank-sponsored business meetings (April
2005 to March 2018)

1,347

The network of contacts linking the Bank Group with external
institutions to offer corporate customers tailored proposals
backed up by specialist know-how.

2,522

Business matching has been achieved by using the Bank’s
network to provide data on customer companies, as well as
business fairs such as the Yamanashi Food Sector Business
Matching Fair, the Yamanashi Food Business Liaison
Conference, etc.

Achievements in support for management improvement (April 2017 to March 2018)
Debtors (excluding normal borrowers) as of the start of term: A
Of which, those receiving management improvement support: a

2,028
120

Of which, those upgraded their debtor categories as of the term-end: b

19

Of which, those drawing up reconstruction plans: c

81

Percentage receiving management improvement support: (a/A)

5.9%

Percentage upgraded: (b/a)

15.8%

Percentage drawing up reconstruction plans: (c/a)

67.5%

THE YAMANASHI CHUO BANK 20187

Operational Review

Corporate Banking

Support for companies
through our solutions businesses

In collaboration with outside organizations, the Group has
created approaches to support customers in establishingbusinesses, starting up new businesses, and growing
and revitalizing business, and is working to provide highquality financial services.
In fiscal 2017, we continued our previous fiscal year’s
efforts to facilitate smooth financing to local companies,
provide consulting services to corporate customers, andstrengthen our solutions businesses. In response to the“SME Finance Facilitation Act,” we meticulously consulted
with customers about financing based on the “Basic
Policy for Financial Facilitation” established by the Bank.
At the same time, we strengthened our support system,
formulated management improvement plans, andprovided strong support for the implementation of thoseplans.
The Bank provided optimal solutions based on
business feasibility studies, thereby strengthening its
measures to facilitate regional revitalization.
In the areas of supporting the startup and establishment phase, the Bank implemented support for businessplanning formulation, and for business growth anddevelopment after establishment, for example by holding
the Schools for Business Startups and Secondary Startups
and the Entrepreneur Seminar for Women.
In agriculture- and food-related areas, we held ourAgri- Business School for business operators, and conducted the “Yamanashi Food Sector Business Matching
Fair” to support customers’ development and expansionof sales channels.
In the tourism field, we held seminars, and supported
our business customers in welcoming in-bound tourists.

In international operations, we strengthened oursolutions businesses for export companies, received
fund-raising support from local financial institutions, andfurther enhanced our support for overseas expansion
such as holding “Yamanashi Food Export Trade Seminarin Bangkok” and the “Myanmar Economic Observation
Mission.” As a result, we achieved our highest every tradevolume.
In the fields of business succession and inheritanceservices, the Bank worked through partnerships with
Yamanashi Chugin Management Consulting Co., Ltd.
and external specialists such as tax accounting firms
to actively address customers business succession andinheritance strategies.
Moreover, the Bank worked to nurture highly specialized employees by assigning employees to seminars
held by the Regional Banks Association of Japan, such asa rigorous training course to develop corporate trading
and solutions sales capabilities, a business feasibility
research course, a course on developing corporate sales
capabilities among female employees, and others. The
Bank also assigned employees to the Bangkok Bank
Public Company Limited and the Vietnam Joint Stock
Commercial Bank for Industry and Trade.
The total of loans outstanding to SMEs as of March 31,2018 was up by ¥75.9 billion year on year to ¥614.9 billion,
and accounted for 38.0% of all loans outstanding.
Looking ahead, the Bank will work hard to provide
comprehensive financial services and strengthen its
consulting capabilities to better respond to the needs ofour corporate customers, who form the bedrock of theregional economy.

Agri-Business School

Yamanashi Food Business Liaison Conference

THE YAMANASHI CHUO BANK 20188

Operational Review

Consumer Banking
We announced our Basic Policy on Fiduciary Duty aimed
at realizing customer-oriented operations in asset building and asset management. We also strove to carry out
consulting and enhance our product lineup in line withthe policy. Additionally, we started handling Tsumitate
NISA and provided broad support for customers asset
building.
Meanwhile, to fulfill the financial needs of its customers, the Bank also worked to improve the performanceof its housing and education loans, implemented
preferential interest plans and so forth for housing andauto loans, and established a new card loan service withall procedures able to be completed online. ThroughMeeting customers’ diverse needs

these measures, we provided products and services in
response to customers’ needs.
The balance of loans to individuals as of March 31,2018 increased by ¥8.9 billion from the previous year-end
to ¥388.2 billion, accounting for 24.0% of all loans. Thebalance of housing
loans outstanding at
the year-end stood at¥383.1 billion, up ¥9.1
billion from March 31,
2017.
Various asset management
seminars held

Western Tokyo Bloc
Bordering Yamanashi Prefecture to the east, the westernpart of Tokyo in which we operate, is a large market thatis home to around 555,000 people, and 170,000 businesssites. We call it the Western Tokyo Bloc and it has tremendous growth potential. As of March 31, 2018, we had 15
branches within this Bloc, where we are well-established
as a local financial institution in the local communities. In
addition, the Bank currently operates four Loan Squareand Life Square offices, which provide service after 3 p.m.
on weekdays and on weekends for customers seeking toconsult on or apply for all kinds of personal loans or asset
management services.
This region has achieved profitability and efficiency
exceeding that within Yamanashi Prefecture and we view
this as one of the pillars for “increasing operating income”
in the medium-term management plan. In this plan,we will expand the marketing base multi-dimensionallythrough the active investment of human resources andthe aggressive expansion of new business bases with theaim of even greater profitability and efficiency.
In the fiscal year ended March 31, 2018, personal loans
increased by ¥4.2 billion year on year to ¥88.1 billion,
while business loans increased by ¥19.9 billion to ¥134.0

Seeking greater potential
beyond Yamanashi Prefecturebillion. The total number of commercial borrowers now
on our books increased by 202 to 2,280 (in terms of transactions). Loan RAROA (earnings after deduction of credit
cost/loans), a prime indicator of profitability, was better
than in Yamanashi Prefecture, reflecting high profitabilityof our operations in the Western Tokyo Bloc.

Loans and corporate borrowers
in Western Tokyo Bloc
Personal loans

Business loans

Corporate borrowers(¥ billion)

150

2,280

100

2,078

50

1,872
1,768

0
As of March, 31

2015

2016

2017

2018

* Local public bodies are excluded from corporate borrowers

THE YAMANASHI CHUO BANK 20189

Financial Review(on a consolidated basis)

Operating Environment

Analysis and Discussion of Operating Results

In the fiscal year ended March 31, 2018, the Japanese economy saw production
increase atop steady external demand, while capital investment also became
active with an improvement in corporate earnings. Consumer spending also
increased gradually, among other signs of continued economic recovery
throughout the fiscal year.
In Yamanashi Prefecture, the economy increased due to high levels of
production, mainly in the construction industry, as well as increases in capital
expenditure and production capacity, as well as investments in rationalizationand labor-saving, among others. Personal consumption showed signs ofrecovering against a backdrop of improving employment and incomes. The
overall business situation in the prefecture recovered gradually.
Looking at the financial situation, in foreign exchange the yen tradedaround the ¥110 level throughout the fiscal year, but turned higher from thestart of 2018, driven by a sense of uncertainty regarding the future trend in thefiscal policies of Japan and the US. Stock prices continued to trend favorably,reaching a level above ¥24,000 at one point, but softened from February
onward in reaction to a global stock price adjustment and the impact of the
yen’s appreciation.
Moreover, domestic long-term interest rates remained level at around zerounder the fiscal policy of the Bank of Japan.

The Bank’s financial status as of March 31, 2018 was as follows. Total deposits
including negotiable certificates of deposit (NCDs) performed strongly,
increasing by ¥79.4 billion. Loans and bills discounted increased by ¥78.3 billion
during the year, but yields decreased. In securities, Japanese government bonds
declined due to redemptions. In other securities, foreign securities declined due
to sales, while investment trusts increased. As a result of the above, securities
increased by ¥13.7 billion.
Looking at operating results for the fiscal year ended March 31, 2018, profit
attributable to shareholders of the parent decreased by ¥2,361 million year
on year to ¥4,920 million. The main factors were a decline in yields which saw
interest on loans decline despite an increase in the balance of loans, a decrease
in interest and dividends on securities due to the sale of securities, and a decline
in gains on sale of government bonds due to a fallback from the previous
fiscal year. The Bank recognizes that the increase in the balance of loans andimprovement of yields are urgent priorities and will work to strengthen loans to
SMEs and improve yields by providing solutions tailored to customers’ management issues through business feasibility studies. Moreover, the Bank has also
recognized that fees and commissions are a major source of earnings, and will
work to strengthen various types of commission income, mainly from salesof financial products. In management of marketable securities, the Bank also
faces an adverse management environment; however, it will aim to strengthen
earnings through diversification under appropriate risk management.

Overview of Operating Results
In terms of operating results for the fiscal year ended March 31, 2018, interest
income (balance of interest income and expenses) declined by ¥1,116
million year on year, mainly reflecting decreases in interest on loans and bills
discounted and interest and dividends on securities due to the impact of the
Bank of Japan’s negative policy interest rate. Fees and commissions (balance of
fee and commission income and expenses) increased by ¥480 million, mainly
due to an increase in commission income from sales of financial products.
Other operating income (balance of other operating income and expenses)
declined by ¥2,390 million, mainly reflecting a decline in Japanese government
bonds and other bond transactions. Credit-related expenses declined by ¥903
million due to improvements in business conditions of customers. Equity shareand similar transactions increased by ¥1,957 million, but loss on dissolution of
investment trusts also increased by ¥2,322 million. As a result, ordinary profit
decreased ¥2,430 million to ¥7,570 million.
Extraordinary losses increased by ¥311 million year on year, mainly reflecting an increase in impairment losses. Total income taxes declined by ¥374
million. As a result of the above, profit attributable to shareholders of the parent
was down by ¥2,361 million year on year to ¥4,920 million.

ROA

Cash FlowsNet cash provided by operating activities amounted to ¥79.7 billion (comparedwith a net outflow of ¥91.5 billion in the previous year), with deposits increasing¥79.4 billion and call loans decreasing ¥183.7 billion, despite loans and bills
discounted increasing by ¥78.3 billion and payables under securities lendingtransactions decreasing ¥132.0 billion.
Net cash used in investing activities totaled ¥27.3 billion (compared with a
net inflow of ¥245.9 billion in the previous year), with acquisition of investment
securities totaling ¥510.8 billion, despite sales and redemption of investment
securities totaling ¥485.5 billion.
Net cash used in financing activities came to ¥1.7 billion (compared with a
net outflow of ¥2.8 billion in the previous year), with expenses on acquisition oftreasury stock totaling ¥0.4 billion and dividend payments of ¥1.3 billion.
As a result, cash and cash equivalents at the end of the fiscal year came to¥311.4 billion (up ¥50.5 billion from the previous year).

OHR

Capital adequacy ratio(Domestic standard)

(%)

(%)

0.8

20.0

80.0

0.6

15.0

75.0

0.4

10.0

70.0

0.2

5.0

65.0

0.0

0.0
March 31

(%)

2014

2015

2016

2017

2018

March 31

60.0

2014

2015

2016

2017

2018

March 31

2014

ROA = Core net business profit / (Average Balance of Total Assets – Average Balance of Customers’ Liabilities for Acceptances & Guarantees)
Capital Adequacy Ratio = On a consolidated basis, domestic standard OHR = Operating expenses / Core Gross Business Profit
Note: A ll except for the capital adequacy ratio are on a non-consolidated basis.
THE YAMANASHI CHUO BANK 2018

10

2015

2016

2017

2018

【Consolidated Financial Statements】①【Consolidated Balance Sheets】
Millions of Yen
End of FY2017(March 31, 2018)

Thousands of U.S. Dollars

End of FY2016(March 31, 2017)

End of FY2017(March 31, 2018)

Assets:Cash and due from banks¥ 311,546¥ 260,999

Call loans and bills bought

6,670

192,933

62,789

Monetary claims bought

13,735

11,181

129,287

11

9

104

Securities *1, *8, *13

1,255,368

1,241,651

11,816,341

Loans and bills discounted*2, *3, *4, *5, *6, *7, *10

1,619,976

1,541,651

Foreign exchanges *6

2,962

1,629

27,888Other assets *8, *9

73,777

15,520694,437

Tangible fixed assets *11, *12

24,72425,414

232,727

Buildings

9,064

8,873

85,324Land

12,917

13,380121,592

7

359

73

2,734

2,800

25,738

2,775

3,008

26,129

2,275

2,514

21,414

Software in progress

168

161

1,589

Other intangible fixed assets

332

332

3,126

Net defined benefit asset

1,112

―

10,472

Deferred tax assets

1,619

2,086

15,242Customers’ liabilities for acceptances and guarantees

4,285

4,487

40,338(12,063)(15,164)(113,552)¥3,306,502¥3,285,408$31,122,950

Trading account securities

Construction in progress
Other tangible fixed assets
Intangible fixed assets
Software

Allowance for possible loan losses
Total assets

11

THE YAMANASHI CHUO BANK 201811$

2,932,474

15,248,273

Thousands of U.S. Dollars

Millions of Yen
End of FY2017(March 31, 2018)

End of FY2016(March 31, 2017)

End of FY2017(March 31, 2018)

Liabilities:¥2,874,395¥ 2,800,429$27,055,679

Negotiable certificates of deposit

67,32861,861

633,737

Payables under securities lending transactions *8

20,208152,243

190,219

Borrowed money *8, *9

91,825

5,486

864,319

Foreign exchanges

1,284

280

12,093

Other liabilities

19,19528,866

180,679

Accrued bonuses to directors and corporate auditors

46

47

442

Net defined benefit liability

212

3,131

2,005

Reserve for directors’ and corporate auditors’
retirement benefits

12

14

120

Reserve for reimbursement of deposits

229

210

2,163

Reserve for contingent losses

141

157

1,332

Deferred tax liabilities

10,023

11,216

94,352

Acceptances and guarantees

4,285

4,487

40,3383,089,191

3,068,431

29,077,476

Common stock

15,40015,400144,955

Capital surplus

8,287

8,287

78,006

Retained earnings

162,550

158,984

1,530,028

Treasury stock(3,685)(3,259)(34,692)

Total shareholders’ equity

182,551

179,412

1,718,296

Unrealized gains on available-for-sale securities

35,08839,159330,277

Remeasurements of defined benefit plans(2,900)(3,962)(27,298)

Total accumulated other comprehensive income

32,18835,197

302,979

155

173

1,460

2,415

2,194

22,739217,311

216,977

2,045,473¥3,306,502¥3,285,408$31,122,950

Deposits *8

Total liabilities

Net assets:

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

12

THE YAMANASHI CHUO BANK 201812

②【Consolidated Statements of Income and Consolidated Statements of Comprehensive Income】【Consolidated Statements of Income】
Millions of Yen

Thousands of U.S. Dollars

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Consolidated FY2016(From April 1, 2016
to March 31, 2017)

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Ordinary income:¥54,120¥55,736$509,416

Interest and dividends income

31,94633,444

300,698

Interest on loans and bills discounted

15,793

16,645

148,659

Interest and dividends on securities

15,853

16,558149,223

Interest on call loans and bills bought

186

202

1,751

Interest on due from banks

35

(32)

337

Other

77

70

728

Fees and commissions

8,330

8,031

78,409Other operating income

6,020

9,049

56,669Other ordinary income

7,823

5,210

73,639

651

－

6,132

Other *1

7,171

5,210

67,507

Ordinary expenses

46,54945,735438,157

Interest expenses

1,701

2,083

16,017

Deposits

427

950

4,020

Negotiable certificates deposits

10

28

102

Call money and bills sold

－

0

－

1,209

1,049

11,386

Borrowed money

54

55

510

Other

(0)

(0)

(1)

Fees and commissions

2,349

2,531

22,113

Other operating expenses

5,715

6,354

53,798General and administrative expenses *2

29,00529,075

273,015

Other expenses

7,778

5,689

73,213

－

153

－

7,778

5,535

73,213

7,570

10,001

71,259

Reversal of allowance for possible loan losses

Payables under securities lending transactions

Provision of allowance for possible loan losses
Other expenses *3
Ordinary profit

13

THE YAMANASHI CHUO BANK 201813

Millions of Yen

Thousands of U.S. Dollars

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Consolidated FY2016(From April 1, 2016
to March 31, 2017)

3

3

36

3

3

36

609

297

5,740

Impairment losses *3

464

249

4,372

Losses on disposal of fixed assets *4

145

48

1,368

Income before income taxes and non-controllinginterests

6,964

9,706

65,555

Income taxes – current

1,343

2,371

12,643

Income taxes – deferred

511

(142)

4,817

Total income taxes

1,854

2,229

17,460

5,109

7,477

48,095

Profit attributable to non-controlling interests

188

195

1,777

Profit attributable to shareholders of the parent¥4,920¥7,282$46,318

Extraordinary income:Gain on disposal of fixed assets
Extraordinary losses

Profit14

THE YAMANASHI CHUO BANK 201814

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

【Consolidated Statements of Comprehensive Income】
Millions of Yen

Thousands of U.S. Dollars

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Consolidated FY2016(From April 1, 2016
to March 31, 2017)

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Profit¥5,109¥7,477$48,095

Other comprehensive income *1(2,974)(22,941)(27,996)

Net unrealized gains on available-for-sale securities(4,036)(23,845)(37,996)

Remeasurements of defined benefit plans

1,062

(904)

10,001

2,135(15,464)

20,100Total comprehensive income attributable toshareholders of the parent

1,912(15,806)

17,999Total comprehensive income attributable tonon-controlling interests

223

341

2,101

Total comprehensive income

15

THE YAMANASHI CHUO BANK 201815

③【Consolidated Statements of Changes in Net Assets】

㻌 㻌㻌 㻌㻌 㻌㻌 㻌

Millions of Yen
Shareholders' equity

Consolidated FY2017 (From April 1,2017 to March 31, 2018)
Common stock Capital surplus
Balance at beginning of current year
¥15,400¥8,287
Cumulative effect of changes inaccounting policies
Balance at beginning of year
15,4008,287
㻌 reflecting changes in accounting
policies
Changes during year:㻌 Cash dividends
attributable to shareholders of㻌 㻌 Profit
the parent㻌 㻌 Purchases of treasury stock㻌 㻌 Disposals of treasury stock0(11)Transfer from retained earnings to㻌 㻌 capital surplus

㻌㻌Retained
Total shareholders’earnings
Treasury stock
equity㻌¥158,984¥(3,259)¥179,412

㻌㻌158,984㻌
(1,344)(1,344) 㻌

4,920

4,920
(494)
68

11

(11)

Net changes in items other than

Balance at end of current year

Consolidated FY2017 (From April 1,2017 to March 31, 2018)
Balance at beginning of current year
Cumulative effect of changes inaccounting policies
Balance at beginning of year㻌 㻌 reflecting changes in accounting
policies㻌㻌㻌Total changes during year

㻌

─㻌

(0)㻌

3,565

(426)

3,139

¥15,400¥8,287¥162,550¥(3,685)¥182,551

㻌㻌㻌

Millions 㻌of Yen

㻌

(494)
㻌
57㻌
㻌

㻌 㻌 shareholders㻓㻌equity㻌 㻌㻌㻌 㻌㻌 㻌㻌 㻌

179,412 㻌(3,259)㻌㻌㻌㻌

Accumulated other comprehensive income
Total
accumulated
Unrealized
othergains onRemeasurements
available-for- of defined benefit comprehensive Subscription
sale securities
plans
incomerights to shares

Non-controllinginterests

Total net
assets¥39,159¥(3,962)¥35,197¥173¥2,194¥216,977

39,159(3,962)35,197173

2,194

216,977

Changes during year:㻌Cash dividends(1,344)

㻌

Profit attributable to shareholders of
the parent

4,920

㻌 㻌 Purchases of treasury stock(494)

㻌 㻌 Disposals of treasury stock

57

Transfer from retained earnings to㻌 㻌 capital surplus㻌Net changes in items other than㻌 㻌 shareholders㻓㻌equity(4,071)

1,062(3,008)(18)

221(2,806)

Total changes during year

(4,071)

1,062(3,008)

(18)

221

333

Balance at end of current year

¥35,088¥(2,900)¥32,188¥155¥2,415¥217,311

16

THE YAMANASHI CHUO BANK 201816㻌 㻌㻌 㻌㻌 㻌㻌 㻌

Millions of Yen
Shareholders㻓㻌equity

Consolidated FY2016 (From April 1,2016 to March 31, 2017)
Common stock Capital surplus
Balance at beginning of current year
¥15,400¥8,287
Cumulative effect of changes inaccounting policies
Balance at beginning of year
15,4008,287
㻌 reflecting changes in accounting
policies
Changes during year:㻌 Cash dividends
attributable to shareholders of㻌 㻌 Profit
the parent㻌 㻌 Purchases of treasury stock㻌 㻌 Disposals of treasury stock
0

㻌
㻌

Total
shareholders’㻌equity¥174,886

Retainedearnings
Treasury stock¥153,207¥(2,009)㻌

110
153,318110

174,996 㻌(2,009)㻌

(1,616)(1,616) 㻌

7,282

7,282
(1,254)4㻌㻌㻌changes in items other than㻌 㻌 Netshareholders㻓㻌equity

㻌

Total changes during year
Balance at end of current year

Consolidated FY2016 (From April 1,2016 to March 31, 2017)
Balance at beginning of current year
Cumulative effect of changes inaccounting policies
Balance at beginning of year㻌 㻌 reflecting changes in accounting
policies㻌

(1,254)㻌
4㻌㻌 㻌 Transfer from retained earnings tocapital surplus㻌 㻌㻌㻌 㻌㻌 㻌㻌 㻌

㻌

㻌

─㻌

0㻌

5,666

(1,250)4,415¥15,400¥8,287¥158,984¥(3,259)¥179,412

㻌㻌㻌Millions 㻌of Yen

㻌

㻌
㻌
㻌

Accumulated other comprehensive income
Total
accumulated
Unrealized
othergains onRemeasurements
available-for- of defined benefit comprehensive Subscription
sale securities
plans
incomerights to shares¥63,152

63,152¥(4,866)(4,866)¥58,285

58,285¥133

133

Non-controllinginterests

Total net
assets¥1,853¥235,158

1

111

1,854

235,270

Changes during year:㻌Cash dividends(1,616)

㻌

Profit attributable to shareholders of
the parent

7,282

㻌 㻌 Purchases of treasury stock(1,254)

㻌 㻌 Disposals of treasury stock

4

Transfer from retained earnings to㻌 㻌 capital surplus㻌Net changes in items other than㻌 㻌 shareholders㻓㻌equity(23,992)904(23,088)40

340(22,708)

Total changes during year

(23,992)904(23,088)40

340(18,292)

Balance at end of current year

¥39,159¥(3,962)¥35,197¥173¥2,194¥216,977

17

THE YAMANASHI CHUO BANK 201817㻌 㻌㻌 㻌㻌 㻌㻌 㻌

Thousands of U.S. Dollars
Shareholders㻓㻌equity

Consolidated FY2017 (From April 1,2017 to March 31, 2018)
Common stock
Balance at beginning of current year

Capital surplus$144,955

Cumulative effect of changes inaccounting policies
Balance at beginning of year㻌 reflecting changes in accounting
policies

Retainedearnings$78,008$1,496,466

Total
shareholders’equityTreasury stock$ (30,682)$1,688,747

144,955

78,0081,496,466

Profit attributable to shareholders of㻌 㻌 the parent

1,688,747 㻌(30,682)(12,652)(12,652) 㻌

46,31846,318

㻌 㻌 Purchases of treasury stock㻌 㻌 Disposals of treasury stock(106)

from retained earnings to㻌 㻌 Transfer
capital surplus

104(4,656)(4,656)

645

539

(104)

㻌

Net changes in items other than㻌 㻌 shareholders㻓㻌equity

Cumulative effect of changes inaccounting policies
Balance at beginning of year㻌 㻌 reflecting changes in accounting
policies－㻌$144,955(2)㻌
$78,006

㻌㻌㻌

33,562$1,530,028(4,011)$ (34,692)

Thousands of㻌U.S. Dollars

㻌
㻌
㻌
㻌

㻌

Total changes during year
Balance at end of current year

Balance at beginning of current year㻌㻌

㻌 Cash dividends

Consolidated FY2017 (From April 1,2017 to March 31, 2018)

㻌㻌

Changes during year:㻌 㻌㻌㻌 㻌㻌 㻌㻌 㻌

㻌㻌㻌
29,549㻌
$1,718,296㻌㻌㻌Accumulated other comprehensive income
Total
accumulated
Unrealized
othergains onRemeasurements
available-for- of defined benefit comprehensive Subscription
sale securities
plans
incomerights to shares

Non-controllinginterests

Total net
assets$368,597$ (37,299)$331,299$1,638$20,654$2,042,337

368,597(37,299)

331,299

1,638

20,6542,042,337

Changes during year:㻌 Cash dividends(12,652)

Profit attributable to shareholders of㻌 㻌 the parent

46,318

㻌 㻌 Purchases of treasury stock(4,656)

㻌 㻌 Disposals of treasury stock

539

Transfer from retained earnings to㻌 㻌 capital surplus㻌Net changes in items other than㻌 㻌 shareholders㻓㻌equity(38,321)

10,001(28,320)

(178)

2,085

(26,413)

Total changes during year
Balance at end of current year

(38,321)$330,277

10,001$(27,298)(28,320)$302,979(178)$1,4602,085$22,7393,136$2,045,473

18

THE YAMANASHI CHUO BANK 201818

④【Consolidated Statements of Cash Flows】
Millions of Yen

Thousands of U.S. Dollars

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Consolidated FY2016(From April 1, 2016
to March 31, 2017)

Consolidated FY2017(From April 1, 2017
to March 31, 2018)¥6,964¥9,706$65,555

2,308

2,252

21,731

464

249

4,372

(3,100)(391)(29,188)

(0)

1

(1)

(1,112)－(10,472)

Increase (decrease) in net defined benefit liability(2,918)(1,021)(27,470)

Increase (decrease) in reserve for directors’ andcorporate auditors’ retirement benefits

(1)

4

(16)

Increase (decrease) in reserve forreimbursement of deposits

19

(51)

182

Increase (decrease) in reserve for contingent
losses

(15)

21

(146)

Interest income recognized on consolidated
statements of income(31,946)(33,444)(300,698)Interest expenses recognized on consolidated
statements of income

1,701

2,083

16,017

Losses (gains) on investment securities(7,192)(8,866)(67,701)

Foreign exchange losses – net

10,890943

102,510

141

44

1,332

Net increase (decrease) in loans and bills
discounted(78,325)(27,113)(737,247)

Net increase in deposits

73,96680,599696,217

Net increase in negotiable certificates of deposit

5,467(60,557)

51,460Net increase (decrease) in borrowed money

86,338(14,881)812,678

26

14

248

Net decrease (increase) in call loans

183,708(152,080)

1,729,186

Net increase (decrease) in payables under
securities lending transactions(132,034)

68,773(1,242,795)

Net decrease (increase) in foreign exchanges(assets)(1,333)(248)(12,547).
Operating activities:
Income before income taxes and non-controllinginterests
Adjustment for:
Depreciation and amortization
Impairment losses
Increase (decrease) in allowance for possible
loan losses
Increase (decrease) in accrued bonuses todirectors and corporate auditors
Decrease (increase) in net defined benefit asset

Losses on disposal of premises and equipment

Net decrease in due from banks (excluding cash
equivalents)

19

THE YAMANASHI CHUO BANK 201819

Millions of Yen

Thousands of U.S. Dollars

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

Consolidated FY2016(From April 1, 2016
to March 31, 2017)

Consolidated FY2017(From April 1, 2017
to March 31, 2018)

1,004

205

9,456

(58,600)－(551,581)

Interest income (cash basis)

34,702

36,103

326,642Interest expenses (cash basis)(2,085)(3,751)(19,628)

Other – net(7,121)

14,133(67,029)

Total adjustments

81,917(87,266)

771,065

Income taxes paid

(2,192)(4,244)(20,638)

Net cash provided by (used in) operating activities

79,725(91,511)

750,427

Purchases of investment securities(510,886)(453,587)(4,808,795)

Proceeds from sales of investment securities

371,932

399,327

3,500,870

Proceeds from redemption of investment securities

113,585

301,816

1,069,143

Purchases of premises and equipment(1,353)(1,089)(12,743)

63

17

600

(711)

(586)

(6,699)2

1

20(27,367)

245,900(257,604)(1,344)(1,616)(12,652)

(1)

(1)

(16)

(494)

(1,254)(4,656)

57

4

539

(1,783)(2,868)(16,785)

(1)

(0)

(11)

Net increase (decrease) in cash and cash equivalents

50,573

151,520

476,026

Cash and cash equivalents, beginning of year

260,830

109,3092,455,104

Cash and cash equivalents, end of year *1¥311,403¥260,830$2,931,130

Net increase (decrease) in foreign exchanges(liabilities)
Net increase (decrease) in Central clearing
counterparty margin requirements

Investing activities:

Proceeds from sales of premises and equipment
Purchases of intangible fixed assets
Proceeds from sales of intangible fixed assets
Net cash used in investing activities
Financing activities:
Dividends paid
Payment of dividends to non-controlling interests
Repurchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities
Foreign currency transaction adjustments on cash andcash equivalents

20

THE YAMANASHI CHUO BANK 201820

【Notes to Consolidated Financial Statements】
Important items used as basis for preparing consolidated financial statements
1. Items relating to scope of consolidation(1) Consolidated subsidiaries

4 companies

The names of consolidated subsidiaries are Yamanashi Chuo Guarantee Co., Ltd., Yamanashi Chugin Lease Co., Ltd.,
Yamanashi Chugin DC Card Co., Ltd. and Yamanashi Chugin Management Consulting Co., Ltd.
(2) Number of non-consolidated subsidiaries

3 companies

Yamanashi New Business Support Investment Limited Partnership
Yamanashi Sixth Industrialization Support Investment Limited Partnership
Yamanashi Chugin Regional Revitalization Investment Limited Business Partnership
Non-consolidated subsidiaries are excluded from the scope of consolidation since their assets, ordinary income, and ourownership percentage of their net income and retained earnings do not have a material impact on our results of operations
and financial condition.

2. Items relating to application of equity method(1) Non-consolidated subsidiaries accounted for by the equity method
Not applicable(2) Affiliates accounted for by the equity method
Not applicable(3) Number of non-consolidated subsidiaries not accounted for by the equity method

3 companies

Yamanashi New Business Support Investment Limited Partnership
Yamanashi Sixth Industrialization Support Investment Limited Partnership
Yamanashi Chugin Regional Revitalization Investment Limited Business Partnership
Non-consolidated subsidiaries not accounted for by the equity method are excluded from the scope of the equity method
since our ownership percentage of their net income and retained earnings does not have a material impact on ourconsolidated financial statements.
(4) Affiliates accounted for by the equity method
Not applicable

3. Items relating to business years of consolidated subsidiaries
All of the consolidated subsidiaries have their settlement day on March 31.

4. Items relating to accounting standards(1) Valuation standards and methods for trading account securities
Trading account securities, which are held for the purpose of earning capital gains, are reported at fair value and the related
unrealized gains and losses are included in earnings.
(2) Valuation standards and methods for securities
Held-to-maturity debt securities, which management has the positive intent and ability to hold to maturity are reported atamortized cost, and available-for-sale securities, which are not classified as either of the aforementioned securities, arereported at fair value with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Available-for-sale securities whose fair values are extremely difficult to be determined are stated at cost determined by themoving-average method. The cost of securities sold is determined based on the moving-average method.
(3) Valuation standards and methods for derivative transactions
Derivative transactions are measured at fair value.

21

THE YAMANASHI CHUO BANK 201821

(4) Methods of depreciation of fixed assets① Tangible fixed assets (excluding lease assets)
Depreciation of tangible fixed assets is calculated principally using the declining-balance method. (However, thestraight-line method is adopted for buildings (excluding facilities attached to buildings) that were acquired on or after April
1, 1998, and for facilities attached to buildings and structures that were acquired on or after April 1, 2016.)
Useful lives of tangible fixed assets are primarily as follows:
Buildings

3 to 50 years

Other

2 to 20 years

The depreciation period of lease investment assets held by consolidated subsidiaries and booked as tangible fixed
assets is the lease period, and those leases are depreciated using the straight-line method, with the residual value being
the estimated disposal price at the conclusion of the lease.
② Intangible fixed assets (excluding lease assets)
Amortization of intangible fixed assets is calculated principally using the straight-line method.
The amortization period of lease investment assets held by consolidated subsidiaries and booked as intangible fixed
assets is the lease period, and those leases are amortized using the straight-line method, with the residual value being
the estimated disposal price at the conclusion of the lease.
Software for internal use by the Bank and its subsidiaries is calculated over the useful life of the software (principally
five years).
③ Lease assets
Lease assets employed in leasing transactions that do not transfer ownership of the lease assets to the lessee – bothpremises and equipment and intangible fixed assets – are depreciated by the straight-line method over the lease period.
Residual value of those lease assets is zero unless any guaranteed amount is prescribed in the lease agreement.
(5) Allowance for possible loan losses
The allowance for possible loan losses is stated in amounts considered to be appropriate based on management’s
judgment and an assessment of future losses estimated through the Bank’s self assessment of the quality of all loans.
The Bank has a credit rating system and a self assessment system. These systems are used to assess the Bank’s asset
quality based on past experience of credit losses, possible credit losses, analysis of customers’ conditions, such as
business conditions, character and quality and the overall performance of the portfolio. For claims of debtors who haverestructured loans for which cash flows related to the recovery of loan principal or receipt of interest could be reasonably
estimated, an allowance for possible loan losses (based on the cash flow estimate method) is provided for the difference
between the present value of expected future cash flows discounted at the contracted interest rate and the carrying value ofthe claim. All loans are classified into one of five categories for self assessment purposes, “normal,” “caution,” “possible
bankruptcy,” “virtual bankruptcy” or “legal bankruptcy.”
The allowance for possible loan losses is calculated based on the actual past loss ratio for “normal” and “caution”
categories, and the fair value of the collateral for collateral-dependent loans and other factors, including the value of future
cash flows for other self assessment categories.
The policy for the allowance for possible loan losses of consolidated subsidiaries is similar to the Bank’s.
(6) Accrued bonuses to directors and corporate auditors
Accrued bonuses to directors and corporate auditors are provided in the amount of the estimated bonuses which are
attributable to each fiscal year.
(7) Reserve for directors’ and corporate auditors’ retirement benefits
A reserve for directors’ and corporate auditors’ retirement benefits is provided at the amount which would be required if all
directors and corporate auditors retired at the balance sheet date.

22

THE YAMANASHI CHUO BANK 201822

(8) Reserve for reimbursement of deposits
Provision is made for possible losses on future claims of withdrawal of deposits which were derecognized as liabilities undercertain conditions in an amount deemed necessary based on historical reimbursement experience.
(9) Reserve for contingent losses
Reserve for contingent losses, which is provided for possible losses from contingent events, is calculated by estimation of
the impact of those contingent events.
(10) Accounting procedures for retirement benefits
In calculating retirement benefit obligations, the Bank used the benefit formula as the method of attributing the estimatedretirement benefits to periods of service to the end of the consolidated fiscal year under review.
In addition, the method of recording expenses for past service costs and actuarial gains and losses are as follows.
Past service costs: Recognized in profit and loss using the straight-line method over a fixed period (10 years) within the
average remaining service period of employees at the time they occur.
Actuarial gains and losses: Recognized the amount equally divided by using the straight-line method over a fixed period(10 years) based on the average remaining service period in each consolidated fiscal year in which they occur and recorded
in profit and loss from each of the following year of the occurrence.
(11) Foreign currency items
Foreign currency assets and liabilities are translated into yen at the exchange rates prevailing at the balance sheet date.
(12) Lease transactions(Lessor)
Revenues and cost of revenues of finance lease transactions are recognized when lease payments are made.
(13) Cash and cash equivalents
For the purpose of reporting cash flows, cash and cash equivalents are defined as cash and due from the Bank of Japan.
(14) Consumption taxes
The accounting treatment of national consumption tax and local consumption tax is based on the tax exclusion method.

23

THE YAMANASHI CHUO BANK 201823

(Relating to Consolidated Balance Sheets)*1 Shares held or investments in non-consolidated subsidiaries and affiliates
As of March 31, 2018

(Millions of yen)

Investments¥601*2 The amounts of loans to customers in bankruptcy and past due loans included in loans and bills discounted were as follows:
As of March 31, 2018

(Millions of yen)

Loans to customers in bankruptcy¥2,239

Past due loans¥24,121Loans to customers in bankruptcy represent nonaccrual loans to debtors who are legally bankrupt, as defined in Article 96,
Paragraph 1, Subparagraphs 3 and 4 of Enforcement Ordinance for the Corporation Tax Law. Past due loans are defined
as nonaccrual loans except for loans to customers in bankruptcy and loans of which the interest payments are deferred inorder to assist in the financial recovery of a debtor in financial difficulties.
*3 The amount of accruing loans contractually past due three months or more included in loans and bills discounted was asfollows:
As of March 31, 2018

(Millions of yen)

Past due loans of three months or more¥－

Accruing loans contractually past due three months or more are loans on which the principal or interest is three months ormore past due.
*4 The amount of restructured loans for which the Bank has relaxed lending conditions included in loans and bills discounted was
as follows:
As of March 31, 2018

(Millions of yen)

Restructured loans for which the Bank has¥4,086

relaxed lending conditions

Restructured loans are loans for which the Bank has relaxed lending conditions, such as: reduction of the original interest
rate, deferral of interest payment, extension of maturity date, or reduction of the amount of the debt or accrued interest.
*5 The total amount of loans to customers in bankruptcy, past due loans, accruing loans contractually past due three months ormore and restructured loans for which the Bank has relaxed lending conditions was as follows:
As of March 31, 2018
Total amount(Millions of yen)
¥30,447

The loan amounts identified in the preceding items (2) to (5) are before deducting any allowance for possible loan losses.
*6 Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit Committee Report No. 24,
February 13, 2002, “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in
Banking Industry.” The Bank has the right to sell or pledge commercial bills discounted and foreign exchanges bought without
restrictions. The face amount was as follows:
As of March 31, 2018

(Millions of yen)
¥4,738*7 The amount of loan participation recorded in the consolidated balance sheet and included in participated principals that were
accounted for as loans to original debtors in accordance with JICPA Accounting System Committee Report No. 3, November
28, 2014, “Accounting Treatment and Representation of Loan Participation” was as follows:
As of March 31, 2018

(Millions of yen)
¥1,00524

THE YAMANASHI CHUO BANK 201824

*8 Assets pledged as collateral were as follows:
As of March 31, 2018

(Millions of yen)

Assets pledged as collateral
Investment securities¥176,314

Liabilities related to pledged assets
Deposits¥31,079

Payables under securities lendingtransactions¥20,208

Borrowed money¥91,180

In addition to the aforementioned, the following items were pledged as collateral for the settlement of foreign currency
exchange and other transactions:
As of March 31, 2018

(Millions of yen)

Investment securities¥5,069Other assets include central clearing counterparty margin requirements and guarantee deposits, the amounts of which
are as follows.
As of March 31, 2018

(Millions of yen)Central clearing counterparty margin¥58,600

requirements
Guarantee deposits¥293*9 Lease contract assets (the total sum of lease investment assets included in Other assets and interest receivables on lease
investment assets) for the remaining lease periods, which were pledged as collateral for a portion of borrowed money, wereas follows:
As of March 31, 2018

(Millions of yen)

Lease contract assets¥914

Corresponding borrowed money¥644*10 Commitment line contracts on overdrafts and loans are agreements to lend to customers when they apply for borrowing, up
to a prescribed amount, as long as there is no violation of any condition established in the contract. The amounts of unused
commitments as of March 31, 2018 were as follows:
As of March 31, 2018
Total amount of unused commitments as ofthe end of the period:
Amount of unused commitments whose
original contract terms were within one year
or unconditionally cancelable at any time

(Millions of yen)
¥385,751¥368,773

Since many of these commitments are expected to expire without being drawn upon, the total amount of unused
commitments does not necessarily represent actual future cash flow requirements. Many of these commitments haveclauses that allow the Bank to withdraw the commitment line offer or reduce the contract amounts in situations where
economic conditions are changed, the Bank needs to secure claims, or other conditions are triggered.
In addition, the Bank requires the customers to pledge collateral such as premises and securities and takes necessary
measures such as seizing the customers’ financial positions, revising contracts when the need arises and securing claims
after conclusion of the contracts.
*11 Accumulated depreciation of tangible fixed assets
As of March 31, 2018
Total amount of accumulated depreciation(Millions of yen)
¥33,727

25

THE YAMANASHI CHUO BANK 201825

*12 Deferred gains on tangible fixed assets deductible for tax purposes:
As of March 31, 2018

(Millions of yen)

Deferred gains¥1,037(Reduction entry amount for the(¥-)

consolidated fiscal year)*13 The amount of guarantee liabilities for private placement bonds in “Securities” (provided in accordance with the Financial
Instruments and Exchange Act, Article 2, Paragraph 3) was as follows:
As of March 31, 2018

(Millions of yen)
¥3,063(Relating to Consolidated Statements of Income)*1 “Other ordinary income” includes the following item:
From April 1, 2017 to March 31, 2018

(Millions of yen)

Gain on sales stock¥6,499*2 “General and administrative expenses” include the following:
From April 1, 2017 to March 31, 2018

(Millions of yen)

Salary allowance¥12,399*3 "Other ordinary expenses" include the following:
From April 1, 2017 to March 31, 2018

(Millions of yen)

Loss on cancellation of investment trusts¥7,556*4 In the case of the following asset groups, book values were written down to the recoverable levels due to falling land prices
and lower net cash from operating activities, and differences have been recorded as impairment losses.
From April 1, 2017 to March 31, 2018

(Millions of yen)

Location

Use

Category

Total impairment loss

Yamanashi Prefecture

Operating assets

Land and buildings¥196

Idle assets

Land

233

Tokyo

Operating assets

Buildings

34

Total

―

―

¥464

In this method of asset grouping, operating assets as a rule are treated as business premises units (however businesspremises groups that handle combined businesses are treated as Group units), and idle assets are treated as individual asset
units. Head Office, computing centers, company residences and dormitories, etc., are regarded as shared assets.
Recoverable amounts are whichever is the higher of net selling prices and value in use. In the case of net selling prices, thecalculation involves deduction of expected disposal expenses from the sum reasonably calculated by real estate asset valuation,etc. In the case of value in use, the calculation uses a 1.6% discount rate for future cash flow.
The calculation of recoverable amounts for the fiscal year ended March 31, 2017 employs a 2.3% discount rate in the case ofvalue in use.
All of the recoverable amounts for the fiscal year ended March 31, 2018 represent net selling prices.

26

THE YAMANASHI CHUO BANK 201826

(Relating to Consolidated Statements of Comprehensive Income)*1 Reclassification adjustment and tax effect related to comprehensive income
From April 1, 2017 to March 31, 2018

(Millions of yen)

Valuation difference on available-for-salesecurities:
Difference arising during the fiscal year

¥ (2,496)

Reclassification adjustment to profit and loss

(3,243)

Amount before income tax effect(5,739)

Income tax effect

1,702

Valuation difference on available-for-sale(4,036)securities:
Remeasurements of defined benefit plans
Gains (losses) arising during the fiscal year

407

Reclassification adjustment to profit and loss

1,120

Amount before income tax effect1,527

Income tax effect(465)

Remeasurements of defined benefit plans

1,062

Total other comprehensive income¥ (2,974)(Relating to Consolidated Statements of Changes in Net Assets)
From April 1, 2017 to March 31, 2018
1 Items relating to kind and total number of shares outstanding and treasury stock(Thousands of shares)
Number of shares atthe beginning of
FY2017

Increase in numberof shares during
FY2017

Decrease in numberof shares during
FY2017

Number of shares atthe end of FY2017

174,915――

174,915

6,954

1,128

146

7,936

Remarks

Shares outstanding
Common stock
Treasury stock
Common stock

Notes 1 Breakdown of increases in the number of shares during the consolidated fiscal year under review is as follows:
Increase by acquisition of treasury stock upon resolution of the board of directors
Increase by purchase claims of less than one unit

1,112 thousand
16 thousand

2 Breakdown of decrease in the number of shares during the consolidated fiscal year under review is as follows:
Decrease by exercise of stock option rights㻌

146 thousand

27

THE YAMANASHI CHUO BANK 201827

Note 1,2

2 Items relating to share subscription rights and own share options

Classification

Breakdown of
share
subscription
rightsThe Bank

Stock options as
share
subscription
rightsClass of shares tobe issued ortransferred upon
the exercise ofshare
subscription rights

Number of shares to be issued or transferred upon the exerciseof share subscription rights (shares)
FY2017
Beginning of
Increase
Decrease
End of FY2017
FY2017

Total

Balance as ofthe end of
FY2017(Millions of yen)

―

¥155

―

¥155

3 Items relating to dividends(1) Dividend paid during FY2017(Resolution)
Annual General
Meeting of
Shareholders on June27, 2017
Board of Directors’Meeting on
November 10, 2017

Total dividend

Dividends per share(Millions of yen)

(Yen)

Common stock¥755

Common stock

588

Type of stock

Reference date

Effective date

¥4.50

March 31, 2017

June 28, 2017

3.50

September 30, 2017

December 5, 2017

(2) Dividends whose reference date falls in the current fiscal year, but where the effective date of dividend occurs after the end of
FY2017.
(Resolution)

Type of stock

Total dividend(Millions of yen)Fund for dividend

Dividends per
share (Yen)

Reference date

Effective date

Annual General
Meeting of
Shareholders on
June 26, 2018

Common stock¥584

Retained earnings¥3.50

March 31, 2018

June 27, 2018

(Relating to Consolidated Statements of Cash Flows)*1 The reconciliation of the cash and due from banks in the consolidated balance sheets and the cash and cash equivalents at
March 31, 2018, is as follows:
From April 1, 2017 to March 31, 2018

(Millions of yen)

Cash and due from banks¥311,546

Due from banks, excluding due from Bank of Japan(142)

Cash and cash equivalents¥311,403(Relating to Lease Transactions)
Finance leases(Lessor)
1. Details of net investment in leases for the year ended March 31, 2018 are as follows:
As of March 31, 2018

(Millions of yen)

Gross lease receivables¥8,219Estimated residual value

135

Unearned interest income(742)

Net investment in leases¥7,61228

THE YAMANASHI CHUO BANK 201828

2. Expected amounts from the collection of gross lease receivables for the year ended March 31, 2018 are as follows:
As of March 31, 2018

(Millions of yen)

1 year or less

¥2,516

1 to 2 years

2,040

2 to 3 years

1,549

3 to 4 years

1,099

4 to 5 years

651

Over 5 years

362

Total

¥8,219(Financial Instruments and Related Disclosure)
1. Qualitative Information of Financial Instruments(1) Policy for financial instruments
The Group is involved in financial services including the leasing and the credit card business, etc., around the banking
business. Within banking, we are involved in the business of taking deposits, making loans and securities trading, as well as
domestic and foreign exchange operations, corporate bond underwriting, the over-the-counter sale of public bonds such as
Japanese government bonds, investment trusts and insurance. In addition, for the purpose of short-term fund raising, we
enter into call loans and call money in the interbank market. In hedging foreign exchange risk and finance and using different
currencies, we enter into arrangements such as forward exchange contracts and currency swap transactions. However, we
do not conduct transactions whose structures are complicated and speculative transactions. Because we hold financial
assets and liabilities with interest rate risk, we conduct Asset Liability Management (ALM) to limit the disadvantageous
influence from fluctuations in interest.
(2) Nature and extent of risks arising from financial instruments
The financial assets that the Group holds are loans for domestic customers and domestic and foreign securities. Loans havecredit risk, brought about by the borrower’s nonperformance of contractual obligations. The contents of securities are mainly
bonds, stocks and investment trusts. The Group holds these securities for the purpose of holding to maturity, investment
available for sale and policy investment (business promotion). Securities have issuer’s credit risk, interest rate risk and market
price risk.
The Group regards the deposits from customers as its main supply of financial funds. The Group secures stable financing
by maintaining the soundness of financial affairs, but has liquidity risk that it may not be possible to obtain necessary funds
due to the outflow of unexpected funds.
As with other transactions, derivative transactions are subject to risks such as market, credit, and liquidity risks. Hedge
accounting is applied for derivative transactions that meet the requirements of hedge accounting based on internal standardsin accordance with JICPA Industry Audit Committee Report No. 25, July 29, 2002, “Treatment of Accounting and Auditing
concerning Accounting for Foreign Currency Transactions in the Banking Industry.”(3) Risk management systems for financial instruments① Credit risk management
The Group performs maintenance of the credit screening system, fosters talented human resources and positively advances
credit risk management. The credit screening system keeps the credit screening section independent and performs strict
screening in advance, performs interim screening and assesses credit enhancements and credit risk management after
lending. Regarding administration, the marketing section and credit screening section or the headquarters and businessoffices perform mutual check functions. The Group tries for the observance of the financing rule and appropriate use andthereby acts in enhancement of system support such as the practical use of the financing support system. Furthermore, for
coping with risk fluctuating continually, the Group monitors the actual condition of customers through credit rating and self
assessment to be performed regularly or at any time. The Group introduced the “Credit risk information integration service,”
which is a joint undertaking of the banks that joined the Regional Bank Association, aiming at upgrading credit risk

29

THE YAMANASHI CHUO BANK 201829

management and refining measurement of value at risk (VaR).
We monitor credit information, current-prices and VaR, and manage the credit risk of issuers of securities andcounterparty risk of derivative transactions in the risk management section.
The situation of these risk management activities is reported to management regularly in the ALM Committee and theboard of directors.
② Market risk management(A) Interest-rate risk management
The Group supports the needs of customers properly and, for the earning capacity improvement of the bank, conducts
interest rate risk management as a basic policy. We devised “the basic policy for the interest rate risk hedge” as a
general rule every half term to control interest rate risk properly in the ALM Committee in which management is involved
as the main members and involved in examining interest rate changes and reviews it regularly. In addition, in the ALM
committee meeting held monthly, the Group examines an interest rate predictive report that the interest rate prediction
committee produces and monitors the change in the interest rate risk amount of the whole bank account closely. In therisk management section, the Group calculates VaR and basis point value (BPV), and manages the interest rate risk
amount of the banking account. In addition, the Group performs stress tests based on a stress scenario extending toeach risk category. These results are reported to management regularly in the ALM Committee and the board of
directors.
(B) Foreign exchange risk management
The Group manages foreign exchange risk by monitoring exposure to foreign exchange and VaR in the risk management
section. Moreover, it reports regularly to management in the ALM committee and board of directors, etc. The majority offoreign exchange risk is hedged by forward exchange contracts.
(C) Market price risk management
Regarding investment in financial instruments including securities, the Group conducts risk management in conformity
with a basic administration policy. The basic administration policy is as follows. The Group executes the market businesswhile attempting to secure fairness and prompt correspondence. The Group realizes the opportunity for earnings byactively taking risks that can be measured and managed. The proof of maximizing management vitality, like earnings andequity capital, is assumed to be a precondition. The operative plans are decided by the board of managing directors after
discussion with the ALM Committee.
In making the plans, the Group examines the expected rate of return based on the prospect of interest rate and stock
prices, market price risk and return in consideration of the correlation between the financial instruments invested in. The
Group measures market price risks such as stock price risk using the VaR method. The ALM Committee monitors VaR
based on risk limits and the results of stress tests and tries for coexistence of securing of financial soundness andearning profit.
(D) Derivative transactions
For derivative transactions, the aim is for maintenance of strong management so as not to exert a negative influence on
profit and loss, and the Group tries to set position limits and operate loss-cut rules strictly based on the risk management
standard. Moreover, the Group reports regularly to management in the ALM committee and the board of directors, etc.
(E) Quantitative information regarding market risk
In principle, the Group undertakes a quantitative analysis of the market risks applicable to all of its financial instruments.
The volume of market risk is mainly managed utilizing the VaR method. In specific terms, market risks are managed in amanner that ensures that VaR (the amount of risk after writing down investment in shares undertaken for strategic
business purposes for a portion of VaR) does not exceed the maximum amount of risk (amount of capital allocation)
determined by a resolution of the Board of Directors or other appropriate bodies. The variance-covariance method(holdings period: 240 days; confidence interval: 99%; observation period: 240 business days) is used to measure VaR(excluding trading account securities) while taking into consideration the correlation among interest rates for shares andinvestment trusts. In addition, with respect to the yen-denominated interest risk applicable to demand deposits, internal

30

THE YAMANASHI CHUO BANK 201830

models are used to estimate core deposits and VaR used as the means for measurement. Trading account securities(trading securities) VaR is measured using the separate holding period of 10 days. Financial instruments that areconsidered to have little relevance to market risks, including shares of non-listed companies, are managed on a credit
risk basis. Taking into consideration the nominal amount of market risk applicable to the financial instruments held byconsolidated subsidiaries, these financial instruments are excluded from the scope of VaR measurement.
The Group’s VaR (excluding trading account securities) amounted to ¥51,820 million as of March 31, 2018 comparedwith ¥42,632 million as of the end of the previous fiscal year. The VaR of trading account securities amounted to ¥0
million. (Previous consolidated fiscal year: ¥0 million). The Group undertakes backtesting to compare VaR, calculatedusing VaR measurement models with actual income and loss. The results of this comparison are reported to the ALM
Committee on a monthly basis. As a result of this backtesting, the Group is confident that the VaR measurement models
used are more than adequate in accurately identifying market risks. However, VaR represents the amount of market risks
arising with a certain probability using a statistical methodology based on historical market volatilities. Accordingly,
situations may arise where it is not possible to identify risks appropriately due to market environment volatility thatexceeds normally recognized parameters.
③ Liquidity risk management
The Group controls liquidity risk by managing the mismatch between the terms of investing and procuring funds as well as
holding highly liquid assets. Financing risk is limited by holding assets with high liquidity as payment reserves forunexpected capital outflows, and a smooth financing resource is secured. Moreover, the Group reports regularly to
management in the risk management committee and the board of directors, etc.
(4) Supplementary explanation of the fair value financial instruments
The fair value of financial instruments includes, in addition to the value based on the market price, the value reasonably
calculated if no market prices are available. Certain assumptions are used in the calculation of such amounts. Accordingly,
the results of such calculations may vary if different assumptions are used.

31

THE YAMANASHI CHUO BANK 201831

2. Fair Values of Financial Instruments
Fair value and carrying amounts of financial instruments are shown below. Some instruments, such as unlisted stocks, whose fairvalues are extremely difficult to determine, are not included in the table below (see Note 2).
As of March 31, 2018

(Millions of yen)
Carrying amount

Fair value

Difference(1) Cash and due from banks¥311,546¥311,546¥―(2) Call loans and bills bought

 6,670

6,670

―

11

11

―

3,063

3,058

(4)

1,251,186

1,251,186―

1,608,035

1,614,914

6,879

58,60058,600―Total¥3,239,112¥3,245,987¥6,875(1) Deposits¥2,874,395

2,874,701

44

67,32967,330020,20820,208―91,82591,822(2)¥3,054,021¥3,054,063

¥42

1,136

1,136

―

―

―

―

¥1,136¥1,136¥―(3) Trading account securities
Trading securities(4) Securities
Held-to-maturity
Available-for-sale securities

1,619,976(5) Loans and bills discounted
Accrued income (Interest on loans)

718

Deferred income (Interest on loans and guarantee
charge) (*1)(881)
(11,777)

Allowance for possible loan losses (*2)(6) Other assets
Central clearing counterparty margin requirements

262

Accrued expenses (Interest on deposits)

2,874,657
67,328(2) Negotiable certificates of deposits

1

Accrued expenses (Interest on NCDs)(3) Payables under securities lending transactions(4) Borrowed money
Total
Derivatives (*3)
Hedge accounting is not applied
Hedge accounting is applied
Total*1. Represents deferred interest received on loans and deferred guarantee fees received from a consolidated subsidiary performing guarantees
on the Bank’s loans to customers.
*2. General allowance for possible loan losses and specific allowance for possible loan losses provided to “Loans and bills discounted” areseparately presented in the above table.
*3. Derivative transactions recorded in “Other assets” and “Other liabilities” are aggregated and shown herein. Assets and liabilities attributable tothe derivative transactions are totally offset and the net liability position as a consequence of offsetting would be represented with brackets.

32

THE YAMANASHI CHUO BANK 201832

(Note 1) Method Used for Determining the Fair Value of Financial Instruments
Assets(1) Cash and due from banks
For due from banks without maturity, fair value is the value closest to acquisition cost or amortized cost. For due frombanks with maturity, the contract period is short (less than one year) and fair value is the value closest to acquisition cost or
amortized cost.
(2) Call loans and bills bought
The fair values of fixed-rate loans and bills discounted whose terms are short (within one year) approximate theiracquisition cost or depreciable cost, and the fair values are therefore deemed equal to these values.
(3) Trading account securities
The fair values of securities such as bonds that the Bank holds for engaging in dealing are determined by reference toquoted market price on stock exchanges or prices offered by correspondent financial institutions.
(4) Securities
The fair values of stocks are determined by reference to quoted market prices on stock exchanges. The fair values ofbonds are determined by reference to quoted market prices or prices offered by correspondent financial institutions. The
prices of the Bank’s guaranteed private placement bonds are calculated by discounting the estimated future cash flows foreach classification based on the issuers’ internal rating and terms by using the risk-free interest rates plus credit cost rates
and expense rates. Investment trusts are determined by reference to their publicly available net asset value.
Information outlining notes for investment securities according to the purpose for which they are held is contained under“Relating to securities.”(5) Loans and bills discounted
As floating-rate loans and bills discounted reflect market interest rates over short periods, unless the credit standing of theborrower is significantly different after the loan was made or the bill was drawn, the fair value approximates the carrying
value. The fair value is therefore deemed equal to the carrying value.
The fair values of fixed-rate loans and bills discounted are their present values that are estimated for each classification
based on their type, internal rating, status of collateral and guarantee, and terms, and by discounting the future cash flowsof the principal and interest using the rates at which similar new loans would be made or market interest rates plus credit
cost rates in accordance with internal ratings and expense rates. The fair values of fixed-rate loans and bills discounted
whose terms are short (within one year) approximating their carrying values and are therefore deemed equal to thecarrying values.
Losses from loans to borrowers in legal bankruptcy, in virtual bankruptcy and in possible bankruptcy are computed basedon estimated recoverable amounts. Thus, the fair values of those loans approximate the consolidated balance sheet
amounts at the closing date minus the currently estimated losses and are therefore deemed equal to the amounts.
The fair values of loans and bills discounted for which repayment terms are not set because of their attributes (e.g. loans
are limited to the amounts of pledged assets) are assumed to approximate their carrying values, considering the expected
repayment periods and interest rate conditions, and are deemed equal to the carrying values.
(6) Other assets
Since the fair value approximates the acquisition cost or the amortization cost, the fair value of central clearing
counterparty margin requirements is treated as the actual amount.

33

THE YAMANASHI CHUO BANK 201833

Liabilities(1) Deposits and (2) Negotiable certificates of deposit
The fair values of demand deposits are deemed equal to the amounts that would be paid (carrying values) if the payments
were demanded at the balance sheet date. The fair values of time deposits and negotiable certificates of deposit, which areclassified in accordance with their periods, are their present values that are estimated by discounting the future cash flows
using the rates that would be offered for new deposits to be received.
The fair values of deposits and negotiable certificates of deposit with short deposit terms (within one year) or withvariable interest rates approximate their carrying values and are deemed equal to their carrying values.
(3) Payables under securities lending transactions
Since the contract periods are short (1 year or less), the book value is treated as the fair value because the fair value
approximates the book value.
(4) Borrowed money
Since money borrowed at floating rates reflects short-term market interest rates, and since the credit standing of the Bankand its consolidated subsidiaries does not vary greatly following such loans, the fair value approximates the book value,
and the book value is treated as the fair value. The present value of money borrowed at fixed rates is calculated bydiscounting the total value of the principal and interest of the borrowed money by the expected interest rate for similar loans.
For borrowings with short contract periods (less than one year), the fair value approximates the book value, and the bookvalue is treated as the fair value.
Derivatives
Derivative transactions are listed under “Relating to derivative transactions.”(Note 2) Financial instruments, whose fair values are extremely difficult to determine, are recorded on the consolidatedbalance sheet are as follows: The following instruments are not included in ‘Assets (4) Securities’ in the abovetable showing the fair values of financial instruments as of March 31, 2018.
As of March 31, 2018

(Millions of yen)
Carrying amountUnlisted equity securities (*1) (*2)¥517

Contributions to unions (*1) (*3)

601

Total

¥1,118*1. They are excluded from disclosure because they do not have a market price and their fair values are extremely difficult to determine.
*2. Classified as available-for-sale securities; in the previous consolidated fiscal year, an impairment loss of ¥1 million was recognized.
Classified as available-for-sale securities; in the previous consolidated fiscal year, no impairment loss was recognized.
*3. Investment in non-consolidated subsidiaries.

34

THE YAMANASHI CHUO BANK 201834

(Note 3) Maturity analysis for monetary claims and securities with contractual maturities
As of March 31, 2018

(Millions of yen)Over 1 year less
3 years

Over 3 years less
5 years

Over 5 years less
7 years

Over 7 years less10 years

Over 10 years¥273,744

¥―

¥―

¥―

¥―

¥―

Call loans and bills
bought

6,670

―

―

―

―

―

Securities

63,94253,753

184,558

80,356

199,90238,437

621

910

1,132

400

―

―

621

910

1,132

400

―

―

63,321

52,843

183,426

79,956

199,90238,437

15,00013,000133,800

26,000134,400

33,000

Municipal bonds

40,79931,56742,082

16,39532,6075,437

Corporate bonds

5,396

8,275

7,544

11,32021,846―

Others

2,124

―

―

26,241

11,048―334,084

334,929

236,549

168,036

161,608244,232

58,600

―

―

―

―

―

¥737,041¥388,683¥421,107¥248,392¥361,510¥282,669

1 year or lessDue from banks

Held-to-maturity
Corporate bonds
Available-for-salesecurities that havematurities
Japanesegovernment bonds

Loans and bills
discounted (*1)
Central clearing
counterparty margin
requirement (*2)
Total

*1 Of loans and bills discounted, the portion whose timing of collection is unforeseeable, such as loans to borrowers in legal bankruptcy, in virtual
bankruptcy and in possible bankruptcy, amounting to ¥26,361 million, is not included in the above table. Loans that do not have contractual
maturities, amounting to ¥113,981million are not included either.
*2 Because no period is set for the central clearing counterparty margin requirement, it is included under “1 year or less.”(Note 4) Maturity analysis for interest-bearing debt
As of March 31, 2018

(Millions of yen)Over 1 year less
3 years

Over 3 years less
5 years

Over 5 years less
7 years

Over 7 years less10 years

Over 10 years¥2,514,268¥196,641¥78,597

¥―

¥―

¥―

67,288

40

―

―

―

―

20,208

―

―

―

―

―

2,092

337

89,395―――¥2,603,858¥197,018¥167,992

¥―

¥―

¥―

1 year or less
Deposits (*)
Negotiablecertificates ofdepositPayables under
securities lendingtransactions
Borrowed money
Total* Non-interest-bearing deposits such as checking accounts are excluded. Demand deposits are included in “1 year or less.”

35

THE YAMANASHI CHUO BANK 201835

(Relating to securities)*1 In addition to including the “Securities” listed on the Consolidated Balance Sheet, this includes “Trading account securities.”*2 Subsidiary and affiliated company shares are listed as notes to the financial statements.

1. Trading securities
As of March 31, 2018

(Millions of yen)
Unrealized gains/losses recognized as income

Trading securities(0)

2. Held-to-maturity debt securities
As of March 31, 2018

(Millions of yen)
Carrying amount

Fair value

Differences

Fair value exceeded carrying amount:

Corporate bonds

¥809

¥811

¥2

Fair value not exceeded carrying amount:

Corporate bonds

2,254

2,247

(6)

¥3,063¥3,058

¥(4)

Total

3. Available-for-sale securities
As of March 31, 2018

(Millions of yen)
Fair value

Fair value exceeded
cost:

Valuation differences

Japanese stocks¥61,383¥27,857¥33,525

Bonds total

585,486

564,114

21,371

Japanese Government bonds

387,810370,130

17,679Japanese municipal bonds

143,552

140,864

2,687Japanese corporate bonds

54,124

53,1191,004

143,927

137,888

6,038

2,126

2,124

1

790,797

729,860

60,936

Japanese stocks

8,427

9,246

(819)

Bonds total

35,42935,545(115)

Japanese Government bonds

6,172

6,176

(4)

Japanese municipal bonds

28,002

28,109(107)

Japanese corporate bonds

1,255

1,259

(4)

416,532

426,109(9,576)36,48437,360(876)

460,389

470,901(10,512)¥1,251,186¥1,200,762¥50,423

Other securities
Foreign securities
Sub-total

Fair value notexceeded cost:

Cost

Other securities
Foreign securities
Sub-total
Total

Note: Unlisted stocks that have a fair value and cost of ¥517 million, respectively, are excluded from the table above since there are no market
prices and their fair values are extremely difficult to determine.

36

THE YAMANASHI CHUO BANK 201836

4. Held-to-maturity debt securities soldFrom April 1, 2017 to March 31, 2018
Type(Millions of yen)
Sales costs

Japanese corporate bonds

Sales proceeds

Gains on sales

¥8

¥8

¥0

The above securities were sold due to redemption by the issuer.

5. Available-for-sale securities soldFrom April 1, 2017 to March 31, 2018
Type(Millions of yen)
Sales costs

Gross realized gains

Gross realized losses

Japanese stocks¥12,933¥5,818¥-

Bonds total

31,099

78

27

―

―

―

Japanese municipal bonds

31,09978

27

Japanese corporate bonds

―

―

―

174,426

2,767

1,444

160,429

286

1,444

¥218,459¥8,664¥1,471

Japanese Government bonds

Other securities
Foreign securities
Total

6. Securities for which the purpose for holding has changed
Not applicable
7. Securities recognized for revaluation loss
Among securities other than securities for trading purposes (except securities for which the fair value is extremely difficult toascertain), for securities that are not recognized as having prospects of recovery after their fair value fell sharply comparedwith the acquisition costs, fair value is recognized in the consolidated balance sheets, and valuation difference is treated as
an impairment loss (“revaluation loss”) in the consolidated year under review.
No revaluation loss was recognized during the previous fiscal year.
No revaluation loss was recognized during the consolidated fiscal year under review.
The impairment accounting standards applied in cases where fair value is judged to have fallen significantly are as follows:(1) Across-the-board impairment losses shall be booked for securities whose fair values as of the consolidated balance sheet
date decline by 50% or more compared with their acquisition costs.
(2) Impairment losses shall be booked for securities whose fair values decline by 30% or more, but less than 50% where it isdeemed that there is little likelihood of a recovery in value after taking into consideration fair value levels over the pastyear.
(3) Impairment losses shall be booked for securities whose fair values decline by less than 30% as and when deemednecessary after taking into consideration the financial standing and related factors of the issuer.
(Relating to money held in trust)Not applicable37

THE YAMANASHI CHUO BANK 201837

(Relating to Net Unrealized Gains/Losses on Available-for-Sale Securities)
Available-for-sale securities were valued at market and net unrealized gains/losses on valuation were as follows:
As of March 31, 2018

(Millions of yen)Amounts

Valuation difference¥50,423

Other securities

50,423

Deferred tax liabilities

15,146

Net unrealized gains (before non-controlling interests)

35,277
188

Non-controlling interests¥35,088

Net unrealized gains on available-for-sale securities(Relating to Derivative Transactions)
1 Derivative instruments not accounted for as hedges
Regarding the derivative instruments which are not accounted for as hedge transactions, Contract Amount or Notional Amount,
Fair Value and Unrealized Gain or Loss for each type of derivative transactions, respectively, at the end of the consolidatedbalance sheet date, and Determination of fair value are as follows. Contract or Notional Amounts do not show market risk ofderivative instruments.
(1) Interest-related derivative instruments
Not applicable(2) Currency-related derivative instruments
As of March 31, 2018

(Millions of yen)Contract Amount or
Notional AmountOver 1 Year

Fair Value

Unrealized Gain/Loss㻌 Currency futures

Financial㻌 㻌 Sold

―

―

―

―

㻌 㻌 Buy

―

―

―

―

㻌 㻌 Sold

―

―

―

―

㻌 㻌 Buy

―

―

―

―

¥22,383¥22,383¥1,049¥1,049

Sold

2,317

―

93

93

Buy

748

―

(5)

(5)

㻌 㻌 Sold

―

―

―

―

Buy

―

―

―

―

㻌 㻌 Sold

―

―

―

―

㻌 㻌 Buy

―

―

―

―

Total

―

―

¥1,136¥1,136

instruments
exchange 㻌 Currency options

Currency swaps
Forward Rate Agreements

㻌 Currency options
OTC㻌 Other38

THE YAMANASHI CHUO BANK 201838

(Notes)

1 Derivative instruments are revalued to fair value. Changes in fair value are included in the consolidated statement of operations.
2 Determination of fair value:
Fair value is determined based on the discounted net present value model.

(3) Stock-related derivative instruments
Not applicable(4) Bond-related derivative instruments
Not applicable(5) Commodity-related derivative instruments
Not applicable(6) Credit derivative transactions
Not applicable
2 Derivative Instruments accounted for as hedges
Not applicable(Relating to Employees’ Retirement Benefits)
1. Outline of employees’ retirement benefits
To provide for employees’ retirement benefits, the Bank has a funded defined-benefit pension plan. In the consolidated fiscal
year under review, the Bank adopted a defined-benefit corporate pension plan as its defined benefit pension plan. The
defined-benefit corporate pension plan (funded plan) pays a lump sum or a pension based on employee compensation andlength of service.
The defined benefit corporate pension plan has within it a retirement benefit trust.
The lump-sum retirement plan (an unfunded plan, but as a result of the establishment of the retirement benefit trust, it has
become a funded plan) pays a lump sum based on employee compensation and length of service.
2. Funded defined benefit pension plan
(1) Reconciliation of retirement benefits obligations at beginning of year and end of year
From April 1, 2017 to March 31, 2018

(Millions of yen)

Retirement benefit obligations at beginning of year

¥31,136

Service cost

1,119Interest cost

125

Actuarial gains and losses

214

Retirement benefits payment(1,270)

Past service cost

(70)

Other

―

Retirement benefits obligations at end of year

¥31,254

39

THE YAMANASHI CHUO BANK 201839

(2) Reconciliation of pension assets at beginning of year and end of year
From April 1, 2017 to March 31, 2018

(Millions of yen)

Pension assets at beginning of year

¥28,004

Expected return on plan assets

804

Actuarial gains and losses

550

Employer's contribution

3,516

Retirement benefits payment

(722)

Other

―

Pension assets at end of year

¥32,153(3) Reconciliation of retirement benefits obligations and pension assets at end of year and liabilities and assets of retirement
benefits recorded in the consolidated balance sheets
As of March 31, 2018

(Millions of yen)

Retirement benefits obligations of funded plan

¥31,254

Pension assets(32,153)(899)

㻌Retirement benefits obligations of unfunded plans―

Assets and liabilities recorded in consolidated balance sheets, net¥(899)(Millions of yen)
Liability of retirement benefits¥212

Assets of retirement benefits(1,112)

Liabilities and assets recorded in the consolidated balance sheets, net¥(899)(4) Breakdown of retirement benefit costs
From April 1, 2017 to March 31, 2018

(Millions of yen)

Service cost

¥1,119Interest cost

125

Expected return on plan assets(804)

Actuarial gains and losses recorded in expenses

1,140

Past service costs recorded in expenses

(20)

Other

―

Retirement benefit costs of defined benefit plan

¥1,56140

THE YAMANASHI CHUO BANK 201840

(5) Remeasurements of defined benefit plans
Breakdown of items (before tax-related effects) recorded in remeasurements of defined benefit plans are as follows:
From April 1, 2017 to March 31, 2018

㻌

Past service costs(Millions of yen)¥(50)

Actuarial gains and losses(1,477)Other―㻌Retirement benefit costs of defined benefit plan¥(1,527)(6) Accumulated adjustment for retirement benefits
The breakdown of items (before the deduction of tax effects) recorded in accumulated adjustment for retirement benefits is
as follows:
As of March 31, 2018

㻌 㻌 㻌 㻌 (Millions of yen)

Unrecognized past service costs¥(98)

Unrecognized actuarial gains and losses

4,269

Other

―㻌

Retirement benefit costs of defined benefit plan

¥4,170(7) Pension assets
1. The percentage of each main category for total pension assets is as follows:
As of March 31, 2018
Stocks

40％

Bonds

46％

Life insurance general account

7％

Other

7％

Total

100％

Note: Included in total pension assets is 14% (compared with 12% in the previous fiscal year) for retirement benefit trusts
established in the corporate pension plan, and 32% (compared with 29% in the previous fiscal year) for retirement benefit
trusts established in the lump-sum retirement plan.

2. Method for calculating the long-term expected rate of return on plan assets
To determine the long-term expected rate of return on plan assets, the Bank considers the current and projected pension
assets allocations, as well as the current and expected long-term rate of return for the various assets that make up thepension assets.
(8) Basis for calculating actuarial calculations
Basis for calculating main actuarial calculations (weighted average)
From April 1, 2017 to March 31, 2018
Discount rate

0.3%

Long-term expected rate of return on plan assets

2.6%

Rate of salary increase
Defined-benefit corporate pension plan

3.6%

Lump-sum retirement plan

3.5%

41

THE YAMANASHI CHUO BANK 201841

3. Defined contribution funds
The required contribution for the current consolidated fiscal year under the Bank’s defined-contribution pension plan is ¥99.0
million (¥0 million yen for all consolidated fiscal years).

(Stock options and other related information)
1. Accounting line item and the amount of stock options charged as expenses
From April 1, 2017 to March 31, 2018

(Millions of yen)

General and administrative expenses¥38

2. Description of stock options / Changes in the size of stock options(1) Description of stock options
2017 Stock Options
Category and number of people to whom stock options are granted

The Bank’s directors (excluding outside directors): 13

Type and number of shares granted as stock options

Common stock: 90,300 shares

Date on which stock options were granted

July 28, 2017

Vesting terms and conditions

Vesting terms and conditions have not been prescribed

Vesting period

Vesting period has not been prescribed

Exercise period

July 29, 2017 to July 28, 2047

Note: The number of stock options is presented after converting to the number of shares.

(2) Changes in the size of stock options
The following describes changes in the size of stock options that existed during the fiscal year ended March 31, 2018. The
number of stock options is converted into the number of shares.
①

Number of stock options
2017 Stock Options

Stock options which are not yet vested (shares):
As of March 31, 2017―

Granted90,300Forfeited―

Vested90,300

Balance of stock options not vested―

Stock options which have already been vested (shares):
As of March 31, 2017―

Vested90,300Exercised―

Forfeited―

Balance of stock options not exercised

90,30042

THE YAMANASHI CHUO BANK 201842

②

Per share price information2017 Stock Options

Exercise price (Yen)1

Average price per share upon exercise (Yen)―Fair value per share at the grant date (Yen)423

3. Method for estimating the per share fair value of stock options
During the fiscal year ended March 31, 2018, the fair value per share with respect to 2017 stock options was estimated asfollows:(1) Evaluation technique used to estimate the fair value per share: Black-Scholes method(2) Main numerical and estimation methods
2017 Stock Options
Stock price volatility (Note 1)

33.5％

Projected residual period (Note 2)

3.7years

Projected cash dividends (Note 3)¥9.00/share

Risk-free interest rate (Note 4)(0.09)％

Notes:
1. Stock price volatility is calculated based on the stock price performance for the period (weekly from the week of November 11, 2013 to theweek of July 24, 2017) that corresponds to the projected residual period.
2. The projected residual period is estimated based on the average period in office of directors (excluding outside directors) who have retiredin the past.
3. Projected cash dividends are based on cash dividend results for the fiscal year ended March 31, 2017.
4. The risk-free interest rate is the yield on government bonds for the period that corresponds to the projected residual period.

4. Estimation method for the number of stock options vested
Because it is difficult to reasonably estimate the number of stock options that will be forfeited in the future, the number of stock
options that has actually been forfeited is solely reflected for the stock options that have already been vested.

43

THE YAMANASHI CHUO BANK 2018

43

(Relating to tax effect accounts)
1. The tax effects of significant temporary differences and tax loss carry-forwards which resulted in deferred tax assets andliabilities are as follows:
As of March 31, 2018

(Millions of yen)

Deferred tax assets:
Net defined benefit liability¥3,983

Allowance for possible loan losses

3,354

Losses on investment securities

1,439
534

Depreciation
Other

2,035

Sub-total

11,346

Valuation allowance(3,916)

Total deferred tax assets

7,430

Deferred tax liabilities:(15,146)

Unrealized gains on available-for-sale securities

(688)

Other
Total deferred tax liabilities(15,834)

Net deferred tax assets (figures in parentheses represent liabilities)¥(8,404)

2. A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statements of income is as follows:
As of March 31, 2018
Normal effective statutory tax rate

30.7％

Valuation allowance(4.7)％

Income not taxable for income tax purposes(1.2)％

Expenses not deductible for income tax purposes

0.5％

Other—net

1.3％

Actual effective tax rate

26.6％

(Relating to asset retirement obligations)Not applicable(Relating to investment and rental property)
Not applicable(Segment information by type of business)【Segment information】
Segment information is not shown in these statements, since the banking business is the only reportable segment.

44

THE YAMANASHI CHUO BANK 201844

【Related information】
From April 1, 2017 to March 31, 2018
1 Information for service segment(Millions of yen)
Loans
Ordinary income from
customers

Securities investment¥17,428

Other¥24,602

Total¥12,089¥54,120(Note) Instead of the net sales of a non-financial company, ordinary income in gross is indicated.

2 Information for geographic areas(1) Ordinary income
Since the amount classified as ordinary income from external customers in Japan exceeds 90% of ordinary income on the
consolidated statement of income, it has been omitted here.
(2) Tangible fixed assets
Since the amount of tangible fixed assets located in Japan exceeds 90% of the amount of tangible fixed assets on the
consolidated statement of income, it has been omitted here.
3 Information about major customers
Since no ordinary income from specific customers represents more than 10% of ordinary income on the consolidated
statement of income, it has been omitted here.
【Information about impairment loss of fixed assets in segment】
Since the Group has only a single reporting segment (Banking), disclosure of segments lacks importance and has thus been
omitted here.
【Information about the amortization of goodwill and unamortized balance by reportable segment】
Not applicable.
【Information about the gain recognized on negative goodwill by reportable segment】
Not applicable.

【Related-Party Transactions】
1. Related-party transactions(1) Transactions with parties related to the company submitting consolidated financial statements㻌 ①The parent company and major shareholders of the company submitting consolidated financial statements (limited tocompanies, etc.)
Not applicable② Non-consolidated subsidiaries and related companies, etc. of the company submitting consolidated financial statements㻌 㻌 㻌 Not applicable③ Companies, etc. with the same parent company as the company submitting consolidated financial statements, andsubsidiaries, etc. of other related companies of the company submitting consolidated financial statements.
Not applicable

45

THE YAMANASHI CHUO BANK 201845

④ Related-party transactions involving directors, corporate auditors and major stockholders (individuals only) of the Bank.
From April 1, 2017 to March 31, 2018
Relationship

Statutory
auditorDirector’s
consortName

Address

Toshihito
FuruyaMayumi
Nagasaka(Millions of yen)
Votingrights [%]Details of
businessrelationship

Corporate
auditor of theBank,simultaneously
serving as legal
advisor

0.02

Lending
Compensation
for legal
advisory
services

Director’s consortof the Bank―

Paid-in
capitalPosition

―

―

―

―

Lending

Transactions

Transaction Accounting Year-end
amountnamebalanceLending
Interest
incomeLegaladvisoryfee paid
Lending
Interest
income

―

Loans

96

2

―

―

2

―

―

―

Loans

28

0

―

―

Note: Transaction terms and policies for determining transaction terms
1. Transaction terms are determined in the same manner as with clients in general.
2. With regards to Mayumi Nagasaka, since the officer involved as the related party resigned as a director of the Bank as of June 27, 2017, thetransaction amount as of that date and the year-end balance (the current balance as of that date) are both listed here.

(2) Transactions with consolidated subsidiaries and related parties of the company submitting consolidated financial statements㻌 㻌 Not applicable
2. Notes regarding parent company or other important related companies㻌 㻌 Not applicable(Relating to business combinations, etc.)
Not applicable(Per Share Information)
From April 1, 2017 to March 31, 2018

(Yen)

Net assets per share¥1,286.03

Net income per share

29.29

Diluted net income per share

29.22

Note: The basis for calculating net income per share and diluted net income per share is presented as follows.
From April 1, 2017 to March 31, 2018

(Millions of yen)

Net income per share
Net income¥4,920

Amount not attributable to owners of common stock―

Net income attribute to common stock¥4,920

Average balance of common stock (thousands)

167,967

Diluted net income per share

Adjustment amount of net income attributable to owners ofparent―Increase in the number of common stock (thousands)

388

New share subscription rights (thousands)

388(Important subsequent events)
1. Consolidation of shares
At its board of directors meeting held on May 11, 2018, the Bank resolved to submit a resolution concerning a consolidation ofshares to the 115th General Meeting of Shareholders held on June 26, 2018, and the resolution was passed by vote of the46

THE YAMANASHI CHUO BANK 201846

General Meeting of Shareholders. Details of the consolidation of shares are as follows.

(1) Reason
Since the announcement by the Japan Exchange Group (JPX) of its “Action Plan for Consolidating Trading Units,” the JPX has
been advancing efforts to standardize trading units of ordinary shares of all domestically listed companies to 100 share lots by
October 2018. As a company listed on the Tokyo Stock Exchange, the bank respects the intent of this effort, and at its Board of
Directors meeting held May 11, 2018, voted to change its trading unit from 1,000 to 100 shares.
In making this change, the Bank will implement a consolidation of shares, keeping in mind the JPX preferred investment unit
level (between ¥50,000 to ¥500,000).
(2) Method and ratio of consolidation
Every five shares of common stock of the Bank will be consolidated into one share as of October 1, 2018, based on thenumber of shares held by shareholders listed or recorded on the final shareholder registry of September 30, 2018 (effectively
September 28).
(3) Reduction in the number of shares resulting from the consolidation
Total number of outstanding shares prior to the consolidation (as of

174,915,000 shares

March 31, 2018):
Number of shares reduced as a result of the consolidation:

139,932,000 shares

Total number of outstanding shares following the consolidation:

34,983,000 shares㻌 㻌 Note: The number of shares reduced as a result of the consolidation is a theoretical value based on multiplying the total㻌
number of outstanding shares prior to the consolidation by the share consolidation ratio.
(4) Impact on per-share information
Per-share information for the previous consolidated fiscal year and the consolidated fiscal year under review, assuming theconsolidation of shares takes place at the beginning of the previous consolidated fiscal year, is as follows.
㻌 㻌 From April 1, 2017 to March 31, 2018

㻌 㻌 㻌 (Yen)Net assets per share¥6,430.17

Net income per share¥146.48

Diluted net income per share¥146.1447

THE YAMANASHI CHUO BANK 201847

Corporate Data(as of March 31, 2018)

Common Stock: ¥15,400 million

Breakdown of Stockholders

Number of Shares :	Authorized 398,000,000 shares
Issued		
174,915,000 shares

Financial institutions 68,457
Securities companies 1,241
Other corporations
31,283Foreigners
23,152
Individuals and others 49,723

Total

173,856

Number of
Stockholders: 5,582

Stock Listing: First Section of the Tokyo Stock Exchange

Transfer Agent: Mitsubishi UFJ Trust & Banking Corporation

shares39.38%
0.71%
17.99%
13.32%
28.60%*Shares (1 trading unit: 1,000 shares)
Note: The category “Individuals and others” contains treasury
stock of 4,794 trading units of shares.

Major Stockholders
Number of shares held
(thousands)

Percentage of
all shares issued (%)

Japan Trustee Services Bank, Ltd. (Trustee Account)

10,978

6.57

Meiji Yasuda Life Insurance Company

6,047

3.62

The Yamanashi Chuo Bank, Ltd. Employees’ Stockholdings

5,603

3.35

The Master Trust Bank of Japan, Ltd. (Trustee Account)

4,721

2.82

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

4,301

2.57

Fukoku Mutual Life Insurance Company

3,000

1.79

Teikyo University

2,977

1.78

CBNY-GOVERNMENT OF NORWAY

2,766

1.65

FUJI KYUKO CO., LTD

2,657

1.59

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,600

1.55

Name

Total

Yamanashi Chuo Bank’s Share Price and Trading Volume on the Tokyo Stock Exchange
2,000Tokyo Stock Price Index (TOPIX)

1,500
1,000
500

800

Yamanashi Chuo Bank’s share price (yen)

600
400

9,000
6,000

200

Trading volume (thousands)

3,000
0

Apr.
2016

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2017

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2018

Feb.

Mar.

Consolidated Subsidiaries
Tokyo Stock Price Index (TOPIX)
Name

1340.55
Yamanashi Chuo Guarantee
Co., Ltd.
1379.8
Yamanashi Chugin Lease 1245.82
Co., Ltd.
1322.74
Yamanashi Chugin DC Card
Co., Ltd.
1329.54
Yamanashi Chugin Management
1322.78Consulting Co., Ltd.
1393.021469.43
1518.61(yen)
Yamanashi
share price
Chuo
Capital Chuo Bank’sYamanashi(Millions of yen)

409
396
20
359
430
20
434
200
434
514
THE YAMANASHI CHUO506
BANK 2018
48
557

20

Bank’s share (%)

99.8
61.0
67.5
87.5

Trading volume (thousands)

Lines of business

3258
Loan guarantees
2400
Leasing3268
Credit cards 3028
2564
Consulting, economic
research
3425
3897
4529
6285

Board of Directors and Corporate Auditors(as of July 1, 2018)

ChairmanManaging Directors

Directors

Standing Corporate Auditors

Nakaba Shindo

Fumiaki Asakawa
Kazuhiko Kitta
Yukio Osada

Takeshi Nakajima
Hisanobu Yoshizawa
Hirohiko Yanada
Kimihiro Asai
Yutaka Fujita
Norihiko Tanaka
Michio Masukawa
Riyo Kano

Masaki Saito
Akira Omata
Corporate Auditors
Magozaemon Takano
Toshihito Furuya
Koichiro Horiuchi

President

Mitsuyoshi Seki
Senior Managing Director

Kimihisa Tanabe

Organization(as of July 1, 2018)

Annual General Meeting of Shareholders
Corporate Planning
Board of Directors

Chairman

Personnel Division
Planning and
Administration

Corporate
Administration

Management Control Division
General Affairs Division

President
Deputy President
Senior Managing Director

Credit Screening

Credit Screening Division

Financial Markets

Financial Market Division
Business Promotion Division

Managing Directors
Business Planningand Control
Department

Directors
Non-Standing Director

Corporate Planning DivisionMarketing(in charge of International Division)

Corporate Sales Promotion Division
Retail Sales Promotion Division
Operation Administration Division

Operations

Systems Administration Division

Board of Corporate Auditors
Central Operations Division
Standing Corporate Auditors
Corporate Auditors

Secretariat

Office of Corporate Auditors

Tokyo Liaison Office
Auditing Division

Auditing

Branches
THE YAMANASHI CHUO BANK 201849

Internal Control and Risk Management
Enhancing corporate governanceto the prosperity of the regional community and the developmentof its economy.
To this end, the Bank has built a stronger internal control system

Guided by its social responsibility as a banking institution and its
public-service mission in that role, Yamanashi Chuo Bank aims

and organizational structure, along with working to enhance cor-to secure the trust of various stakeholders, including customers,

porate governance, notably by maintaining high ethical standards

shareholders, staff members and the community it serves, by suchamong all management and staff members, and ensuring themeans as maintaining the Group’s sound management and assur-

active disclosure of corporate activities.

ing transparency of management, in conjunction with contributing

The structure of the internal control system
General Meeting of Stockholders
Board of Corporate Auditors

Board of Directors
ChairmanStanding Corporate Auditors

President

Non-Standing Director

Deputy President

Corporate Auditors

Senior Managing Director

Office of Corporate Auditors

Board of Managing Directors

Managing Directors
Directors

Independent Auditors
Auditing Division

Compliance Committee Risk Management Committee
Head Office Divisions
All Branches

Group Companies

Risk management

meet the demands and expectations of the broader community

The operating environment for financial institutions is changing

adroitly to changes in society as we strive to ensure the protection

constantly, and banks consequently face a diversifying array ofof customer rights and the enhancement of convenience.

as a corporate citizen. In other words, compliance entails adapting

increasingly complex risks. To secure a steady earnings stream into

At the Yamanashi Chuo Bank, we assign a high management

the future, it is therefore essential for the Bank to accurately ascer-priority to compliance. To maintain and reinforce the relationshiptain the monetary value of the various risks involved in the conductof trust we enjoy with our customers, we have set up a complianceof its banking operations, and then to continuously monitor andmanagement system headed by the Compliance Committee, andmanage those risks.

we work constantly to further strengthen our compliance stance.
To supervise and monitor compliance-related matters at all the

The risks to which the Bank is exposed are broadly categorized
for management purposes as credit risk, market risk, liquidity

Bank’s offices, compliance officers have been appointed in eachrisk and operational risk. To ensure integrated risk appraisal anddepartment at the Bank’s Head Office and at each branch.
We conduct the Compliance Program every fiscal year toanalysis, the Bank’s ALM committee and the Risk Management
Committee assess the possible impact of risk materialization on theestablish an effective compliance framework. The program lays

Bank’s operations and work out countermeasures. The Bank uses aout concrete steps to realize compliance with the provisions ofsystem of risk-adjusted capital allocation to ensure the soundness

particular laws and regulations, as well as compliance trainingof banking operations and effective use of capital.

courses. The staff at the Bank’s Head Office departments and its
branch offices are working together to ensure adequate compli-

Complianceance throughout the Bank. We have also distributed a handbook
for practicing compliance, called the “Compliance Related Matters,”

With regard to compliance, we believe that our duty is not solely toto all officers and employees. We intend to further reinforce ourabide by the law, but also to ensure the strict observance of a wide

compliance stance in the coming years.

range of social rules, including social norms and business ethics, to
THE YAMANASHI CHUO BANK 201850

20-8, Marunouchi 1-chome,
Kofu, Yamanashi 400-8601, Japan
Phone: 055-233-2111
URL: https://www.yamanashibank.co.jp/