Annual Report
The Bank of Iwate,Ltd. Annual ReportTop Message
1. Management Policy
Since its establishment in May 1932, The Bank of Iwate, Ltd. (the “Bank”) has been maintaining its two basic
positions of contributing to the development of the regional community and ensuring financial soundness of the
Bank under all circumstances as its fundamental mission objectives.
When the business environment surrounding the Bank changed drastically due to the impact of the Great East
Japan Earthquake which occurred in March 2011, we came up with the new long-term vision for the next 10 yearsof “demonstrating a dominant presence as a driving force in the region, while establishing our position as a top
quality bank,” along with the medium-term management plan formulated in April 2013. As such, it allows us totransform ourselves from a backstage player to a proactive driving force demonstrating our dominant presence,
while at the same time, strive to establish the No.1 position in terms of quality by improving and reinforcing ourintangibles, including our customer service capabilities.
Long-term Vision (April 2013 to March 2023)“Demonstrating a dominant presence as a driving force in the region, while establishing our position
as a top quality bank”
1st stage “”

2nd stage “– Reconstruction and Creation,
toward a Prosperous Future –April 2013”

– The Innovation –March 2016 April 2016

March 2019 April 2019

3rd stage “”– To the Next –Present

March 2023

2. Medium-term Management Plan
(1) Overview of the Medium-term Management Plan
We are implementing our medium-term management plan “Iwagin Frontier Plan – To the Next” (the “Plan”) (April
2019 to March 2023) to translate our goal of realizing co-prosperity with the region into concrete action. “To the
Next” embodies our desire of paving a path for the next generation of the regional community and the Bank tomove on “to the next” phase through various initiatives to solve issues facing the region.
The theme of the Plan is “pursuing CSV to build a future with the region.” CSV stands for “Creating Shared
Value,” and represents the creation of common values. In other words, as the Bank’s CSV, it means “by making
efforts to strengthen our relationships with customers, confronting issues facing our region head-on, andendeavoring to resolve them, we can enhance social and economic values for both the region and the Bank.” Under
the Plan, we will fulfill our ideal of co-prosperity with the region—our main base of operations—by giving shape tothis theme.
The Plan contains four basic policies. The first is “Provision of high-quality added value to realize regional andcustomer growth.” The aim of this policy is to provide high-quality added value to the region and customers
through highly specialized and convenient services such as the creation of business domains and digitaltransformation, in addition to our conventional finance functions. The second is “Improved operational efficiency
through promotion of BPR and optimization of resource allocation.” This aims to leverage digital technology andother means to increase productivity, shift corporate resources such as people and time to our customer-facing
business, and cut costs. The third is “Establishment of market operation/risk management/revenue management
frameworks that can respond flexibly to changes in the environment.” The aim of this is to consolidate andstreamline bank operations, define the scope of risk-taking, target revenue, and other elements, and upgrade risk
management and revenue management, with the ultimate goal of increasing revenue compared to risks. The fourthis “Fostering of an organizational culture in which each person can proactively tackle issues using his or her
knowledge and actions.” This aims to develop human resources that will proactively tackle issues, and create anenvironment that enables employees to demonstrate their full potential.
By taking measures in accordance with these four basic policies under the Plan, we will strive to realize theplan’s theme of “pursuing CSV to build a future with the region.”― 1 ―Medium-term Management Plan

Iwagin Frontier Plan – To the Next –April 2019 to March 2023

Theme

Pursuing CSV to build a future with the region
Creating Shared Value: By making efforts to strengthen our relationships with customers, confronting issues facing our region head-on,
and endeavoring to resolve them, we can enhance social and economic values for both the region and the Bank.

Four Basic Policies
Basic Policy I
Provision of high-quality added value to realize regionaland customer growth• Create new business domains • Upgrade sales activities• Drive loan business • Improve service quality• Drive asset management business • Strengthen partnerships with local governments• Upgrade supports to improve customers’ business • Upgrade CS promotion activities

Basic Policy IV
Fostering of an organizational culture in which each
person can proactively tackle issues using his or her
knowledge and actions• Initiatives to develop human resources• Develop an environment in which every employee can play anactive role

Basic Policy II
Improved operational efficiency through promotion of
BPR and optimization of resource allocation
Ingenuity andenthusiasm

Oneself
×
The future

StructuralreformFlexible andunwavering• Improve operational efficiency• Optimize placement of branches and ATMs
• Improve working environment• Cost management

Basic Policy III
Establishment of market operation/risk management/
revenue management frameworks that can respondflexibly to changes in the environment• Upgrade lending examination systems, securities management
systems, risk management systems, and internal audit systems• Upgrade compliance and risk management(2) Progress of the Medium-term Management Plan
The current Plan started in April 2019. In the first two years of the Plan, we moved ahead with BPR of our businessbranches and Head Office and reviewed our sales structure, and reorganization of branches to enable us to offer
helpful proposals to customers ahead of schedule under the Management Structure Reinforcement Project. In April
2020, we established two wholly-owned subsidiaries to create new business domains to support the regional
economy—Iwagin consulting Co., Ltd., a consulting company, and manorda Iwate Co., Ltd., a regional trading
company. Furthermore, recognizing that digital transformation is an important issue not only for the Bank but also
for the region, we prioritized investing corporate resources in the digital field and strengthened digital initiatives. In
February 2021, we established a dedicated department called the Digital Transformation Laboratory (DX Lab) tofurther accelerate those initiatives. The latter two years of the Plan have been designated as the period to respond tomultiple possible changes in the environment as well as reaping full-fledged profits and results generated from themeasures which were carried out in the first two years of the Plan, such as BPR and the creation of businessdomains.
As for the progress of our four principal target indicators in the year ended 31 March 2021, the second year of
the Plan, we achieved our targets for “OHR,” “capital ratio,” and “business succession/M&A support recipients,”
but did not achieve our target for “consolidated net income” as we failed to cover the increase in credit costs withrevenue.
FY2020targets

FY2022(final year of the Plan)
targets

Indicator

Calculation
methodFY2020results

Consolidated
net income

Figures stated infinancial statements¥3.0 billion¥2.8 billion¥5.0 billion

OHR

Expenses (excluding
non-recurring items)/ core gross businessprofit

84.1%

77.3%

70% levels

Consolidated
capital ratio

Equity capital /risk assets, etc.

Upper 11% levels

11.8%

Over 10%

Business
succession/
M&A support
recipients

No. of customers we
support for businesssuccession or M&As

1,200

1,218

2,400
*Accumulated total
plan period― 2 ―3. Business Environment
In the business environment surrounding regional financial institutions, the traditional business model that depends
on deposits and loans has declined because of prolonged low interest rates. Competition has become more intense
due to factors such as companies from other industries entering banking.
Iwate Prefecture, the Bank’s main base of operations, faces a rapid decrease in population as many young people
move to other prefectures. The lack of successors has led to an increase in businesses closing and decrease in thenumber of business establishments. These factors are causing the region to gradually lose vitality. Thanks to its
thriving manufacturing industry, however, Iwate Prefecture is growing as an industrial hub with a focus on the autoand semiconductor industries. The prefecture also has a wide variety of foods and crafts that are appreciatedworldwide, features two World Heritage sites, and boasts tourism resources including sea and mountains. Moreover,
it is one of the prefectures with the highest potential for renewable energy in Japan due to its abundant natural
resources.
As stated above, the region where the Bank is located faces a variety of challenges, but also has many strengths
and great potential. We hope to achieve co-prosperity with the region by helping it overcome such challenges andspurring further growth and development through initiatives to bring out its strengths and potential.

4. Issues to be Addressed
We have designated the first two years of the current medium-term management plan as the period to develop afoundation to expand business domains and strengthen digital fields, and build a revenue base to support the futureof the Group. We have designated the latter two years as the period to ensure that we reap the benefits of our efforts
to create new business domains and of the business foundation we established in the first two years. Based on thistimeline, we will strengthen efforts particularly in the following fields.
(1) Concrete actions to realize CSV
The latter half of the current medium-term management plan started in April 2021. In order to fulfill the theme of“pursuing CSV to build a future with the region,” it is crucial that all executives and employees deepen theirunderstanding, recognize that regional issues are matters that affect them, and proactively take action to solve awide range of issues. Specifically, the Bank’s problem-solving efforts center on understanding customers’ businessfeasibility in order to help increase corporate value by identifying and analyzing their current situation and issues
and accurately grasping the details of their business and its growth potential. Based on this policy, we will help
solve issues such as creating local jobs and maintaining technological capabilities and brands by helping customers
raise funds with loans and other means, and by leveraging Iwagin consulting Co., Ltd. to strengthen businesssuccession, M&A, and business improvement support. Furthermore, we believe efforts to cultivate the shoots of
new business, such as starting new companies and developing new businesses, are essential for maintaining thesustainable growth and development of the region; therefore, we will help entrepreneurs and companies working tobring about innovation for the region, and further enhance business matching support to contribute to creating new
businesses through our venture capital firm Iwagin Jigyo Souzou Capital Co., Ltd. In addition, we will actively rollout regional revitalization initiatives to attract spending and people from outside the region by further unlocking theregion’s potential such as its rich tourism resources and high-quality foods in partnership with manorda Iwate Co.,
Ltd., a regional trading company.
For individual customers, considering that people now live up to 100 years, we plan to offer products andservices in line with life plans and life events for a wide range of age groups in a way that is optimized to eachindividual. In terms of digital transformation initiatives, we will work to transform banking business with digitaltechnology, and drive digitalization that is optimal for the region through efforts such as digitalizing not only the
Bank but the regional community and utilizing digital tools to improve customers’ productivity and upgrade theirbusiness.
(2) Establishing a solid business foundation
In October 2017, the Bank launched the Management Structure Reinforcement Project. Phase 1 focused on BPR of
our Head Office and business branches and reorganization of branches, and Phase 2 focused on loan structurereforms and creation of new business domains. Phase 3 focuses on cost structure reforms. Through the initiatives
under the project, we reviewed our business processes and organizational and sales structures, and cost reductions
have progressed ahead of schedule. However, in order to reach the revenue targets of the current medium-term
management plan, it is necessary for us to further review the cost structure. We will, therefore, roll out more
rigorous measures to strengthen the revenue base.

― 3 ―Furthermore, branch reorganization is moving forward ahead of schedule, but customers’ needs are changing.
Customers today seek services remotely offered and consultation related to matters other than financing. We will
accurately identify the changing and diversifying needs of customers, and being fully aware of our role andresponsibility to support the financial infrastructure of the region as a financial institution, we will consider a branch
strategy optimal for customers.

Phase 1

Phase 2

From October 2017
Head Office andbusiness branch BPR

From October 2018

Branch reorganization

Loan structure reforms

Creation of new
business domains

Phase 3

From April 2020
Cost structure reforms

Digital transformation (DX)(3) Developing an environment in which every employee can play an active role
The Bank is driving diversity and inclusion initiatives with the aim of creating a diverse and comfortable workplacein which every employee respects one another and can play an active role and grow.
To utilize human resources, we consider training and retention of young employees who will lead the future of
the Bank and the active participation of female employees as essential tasks, and have adopted training measures topromptly make young employees work-ready and boost the skills of our female employees. Furthermore, we
support young employees by offering them opportunities to acquire specialized knowledge and demonstrate theirabilities by seconding them to other companies in the Group such as our venture capital and consulting subsidiaries
and regional trading company.
In addition, through the flextime system and other initiatives to accommodate diverse working styles, we havegreatly accelerated improving productivity, reducing working hours, and supporting “work-life balance,” including
the time for child-rearing, nursing and receiving medical treatment, and are continuing positive actions such asappointing women to managerial positions and supporting their career advancement.
(4) Responses to the impact of the spreading novel coronavirus disease (COVID-19)
As it remains unclear how the COVID-19 pandemic will impact our business, we plan to continue working
diligently to fulfill our responsibility as a regional financial institution—maintaining the financial infrastructure andensuring the stable and smooth provision of funds.
Preparation for the post-COVID-19 era, we are currently strengthening our efforts to support the core businessof customers. COVID-19 rapidly and dramatically changed our customers’ business environment and the sales
methods that customers expect us to adopt. It forced us to switch our sales and marketing activities from in-person
to remote, and besides having to deal with infection prevention measures we face a mountain of other challenges toadapt to the new normal, which include digitalization efforts such as going cashless and paperless. We do not expect
to return to pre-pandemic ways even after the virus is under control, so the entire Group will work together toprovide core business support quickly to help customers solve multiple challenges they face.

Sachio Taguchi, President― 4 ―Analysis of the Financial Position and Business Performance of the Bank(on a consolidated basis)

Financial Position
Principal Accounts
Deposits (including negotiable certificate of deposit) and Asset Under Management
Deposits (including negotiable certificate of deposit) at the fiscal year-end increased by ¥213.5 billion from theprevious fiscal year-end to ¥3,414.8 billion (US$30,845.5 million). This was due in large part to the impact of thenovel coronavirus disease (COVID-19), such as the voluntary restraints on consumption and the inflow of fixed
benefit payments, as well as the accumulation of COVID-19 loans to secure liquidity on hand, resulting in an
increase in deposits by individuals and corporate clients.
The fiscal year-end balance of assets under management posted an increase of ¥33.4 billion from the previous fiscal
year-end to ¥352.6 billion (US$3,184.9 million). This was due to an increase in sales and the outstanding balance ofinvestment trusts, on the back of market conditions recovering from the impact of COVID-19, as well as an increase
in insurance sales thanks to the partial resumption of yen-denominated insurance.
Loans
The fiscal year-end balance of loans increased by ¥83.4 billion from the previous fiscal year-end to ¥1,898.5 billion(US$17,148.9 million). This was attributable to a significant increase in loans to SMEs as a result of an increase in
COVID-19-related loans, as well as an increase in loans to individuals as a result of the Bank’s reinforced efforts topromote housing loans.
Securities
The value of total securities decreased by ¥12.3 billion from the previous fiscal year-end to ¥1,187.8 billion(US$10,729.3 million). This was attributable to a decrease in bonds under management, mainly as a result of theredemption of national government bonds and other yen-denominated bonds, despite an increase in foreign bonds
and other securities under management. In an effort to minimize the impact of the prolonged low interest rateenvironment, the Bank has been re-balancing its portfolio through diversified investments by utilizing the funds
from the redemption of national government bonds and other yen-denominated bonds and making diversified
investments in overseas assets with high investment efficiency such as sovereign bonds of industrialized countries
with a focus on liquidity.
Cash Flow Analysis
Net cash provided by operating activities was a net inflow of ¥240.0 billion (US$2,168.0 million) in the current
fiscal year, while net cash of ¥19.8 billion was used in the previous fiscal year. This was because an increase indeposits, etc. exceeded an increase in loans in the current fiscal year as the significant impact of COVID-19 led tovoluntary restraints on consumption, an inflow of fixed benefit payments, and as the accumulation of COVID-19
loans to secure liquidity on hand, compared to an increase in loans in the previous fiscal year.
Net cash provided by investing activities was a net inflow of ¥27.6 billion (US$249.9 million) in the current fiscal
year, while net cash of ¥1.1 billion was used in the previous fiscal year. This was due to proceeds from sale andredemption of securities falling below the acquisition of securities in the previous fiscal year, while the proceedsfrom sale and redemption of securities exceeded the acquisition of securities in the current fiscal year.
Net cash used in financing activities was a net outflow of ¥1.1 billion (US$10.6 million) in the current fiscal year,
while net cash of ¥2.5 billion was used in the previous fiscal year. This was due to the payment of cash dividends,
and the acquisition of treasury stock in the previous fiscal year.
As a result of the above, the fiscal year-end balance of cash and cash equivalents increased by ¥266.5 billion fromthe previous fiscal year-end to ¥636.3 billion (US$5,747.6 million).

― 5 ―Business Performance
Earnings
Total income increased by ¥0.0 billion from the previous fiscal year to ¥45.3 billion (US$409.6 million). This was
mainly attributable to an increase in gain on sale of securities thanks to a favorable stock market, despite a decrease
in interest income including interest and dividends on securities.
Total expenses decreased by ¥0.3 billion from the previous fiscal year to ¥39.8 billion (US$359.5 million).
Provision of allowance for doubtful accounts increased as a result of recording provisions that took into accountfuture estimates including the impact of COVID-19, while general and administrative expenses decreased thanks toefforts in reorganizing branches and cost structure reforms based on the Management Structure Reinforcement
Project.
As a result, income before income taxes increased by ¥0.3 billion from the previous fiscal year to ¥5.5 billion(US$50.0 million). Net income attributable to owners of parent decreased by ¥0.8 billion from the previous fiscal
year to ¥2.8 billion (US$26.2 million). This was mainly due to an increase in income taxes, in addition to therecording of an impairment loss related to the reorganization of branches.
Capital Ratio
The capital ratio declined 0.27 percentage points from the previous fiscal year-end to 11.83% on a consolidated
capital adequacy basis and by 0.31 percentage points from the previous fiscal year-end to 11.44% on a nonconsolidated capital adequacy basis, as a result of an increase in risk assets reflecting an increase in loans receivablefrom SMEs, most of which were related to COVID-19. Under its fundamental mission objective of ensuring
financial soundness of the Bank under all circumstances, the Bank sees the consolidated capital ratio as one of the
key indicators of the Medium-term Management Plan. The Bank maintains an ample capital ratio compared withthe capital ratio of over 10%, a target for the final year (FY2022) of the Medium-term Management Plan.

― 6 ―Corporate Governance■ Basic approachEver since its establishment, the management of the Bank has been based on the fundamental mission objectivesof contributing to the development of the regional community and ensuring the financial soundness of the Bank
under all circumstances. Even in today’s rapidly changing business environment, in order to fulfill the duties
expected of us as the leading bank in our region, by all stakeholders including our business partners andshareholders, we take complete responsibility for our management decisions and aim to establish the highest
standard of corporate governance that includes improved management transparency and strengthened oversightfunctions.
■ Corporate governance structure
The Bank, pursuant to the resolution on the partial amendments to the Articles of Incorporation at the General
Meeting of Shareholders held on June 22, 2018, transitioned to a company with Audit & Supervisory Committee.
By transitioning to a company with Audit & Supervisory Committee, the Bank shall strive to further improve its
corporate value through the enhancement of its corporate governance system by installing an Audit &Supervisory Committee, over half of whose members are Outside Directors, and strengthening oversightfunctions through the voting rights on the Board of Directors and the right to voice opinions on executive
appointments and dismissals held by the Directors serving as Audit & Supervisory Committee Members.
■ Board of Directors
The Board of Directors comprises a total of fifteen Directors, including ten Directors who are not serving as
Audit & Supervisory Committee Members, three of whom are Outside Directors, and five Directors serving as
Audit & Supervisory Committee Members, three of whom are Outside Directors. Outside Directors currently
account for 40.0% of the Board of Directors. Additionally, two female Outside Directors have been appointed.
■ Audit & Supervisory Committee
Directors serving as Audit & Supervisory Committee Members hold voting rights on the Board of Directors andare delegated certain business execution responsibilities, in addition to the auditing authority. The Audit &Supervisory Committee collaborates closely with the internal audit division and the Accounting Auditors tomaintain and enhance audit quality, as well as conducts effective and efficient audits by appointing Standing
Audit & Supervisory Committee Members and assigning support staff.
■ Executive Committee and Compliance Committee
The Bank has established the Executive Committee and the Compliance Committee as mechanisms that discussand decide the matters referred by the Board of Directors. The Bank is planning to reinforce its organization
with a greater emphasis on compliance by having the Compliance Committee, rather than the Executive
Committee, discuss important matters relating to compliance.
■ Nomination and Compensation Advisory Committee
The Nomination and Compensation Advisory Committee has been established as an advisory body to the Boardof Directors to improve the transparency and objectivity regarding decisions on the nomination andcompensation of Directors. The Bank stipulates that the Nomination and Compensation Advisory Committee
comprises a total of five members, including two Representative Directors and three Outside Directors (Directors
who are not serving as Audit & Supervisory Committee Members), so that the majority is made up of Outside
Directors, and that an Outside Director serves as chairman.

― 7 ―■ Enrichment of information disclosure activities
In compliance with relevant laws and regulations, the Bank strives to disclose accurate management information
in a timely manner and to enrich the content of the information that it discloses so that valuable information canbe viewed in a timely manner via the Bank’s website.
The Bank also actively makes efforts on investor relations to earn the confidence of business partners and themarket and corporate responsibility aimed at customers of the community.

[Corporate governance structure]
General Meeting of Shareholders
Appointment/dismissal

Nomination andCompensation
Advisory
Committee

Involvement
and advice

Board of Directors

Directors not serving as
Audit & Supervisory
Committee Members

Reports

Audit andoversight

Appointment/dismissal

Audit & Supervisory Committee

Reports

Directors serving as Audit &Supervisory Committee Members

Coordination

References and reports
on important items

Instructions
and orders

Coordination
Reports
Coordination

ALM Committee
Customer Interest Protection Committee
Operational Risk Committee

Compliance Committee

Executive Committee

Credit Risk Committee

Accounting
Auditors

Audit Division

Visiting audit andmonitoring

Business branches, Head Office, subsidiaries, etc.

― 8 ―· Board of Directors (As of July 1, 2021)
Inside Directors

Chairman

Masahiro
Takahashi

President

Sachio Taguchi

Director / Senior Managing
Executive Officer

Motomu Sato

Director / Managing
Executive Officer

Yasushi Sasaki

Director / Managing Executive
Officer

Kensei Ishikawa

Director / Managing
Executive Officer

Shinji Niisato

Director / Managing Executive
Officer

Toru Iwayama

Yuji Chiba

Director serving as an Audit &Supervisory Committee
MemberDirector serving as an Audit& Supervisory Committee
Member

Shuichi Fujisawa

Director (Outside Director)

Fumio Ube

Outside Directors
Director (Outside Director)

AtsushiTakahashi

Director (Outside Director)

AtsushiMiyanoyaDirector serving as an Audit &Supervisory Committee
Member (Outside Director)

Etsuko Sugawara

Managing Executive Officer /General Manager of Sendai
OfficeKatsuhiro
Kawamura

Executive Officer / General
Manager of Kitakami Branchand Kitakami Ekimae Branch

Satoshi Ito

Executive Officer / General
Manager of Head Office

Shinei Kishi

Executive Officer / General
Manager of Tokyo Office

ShinichiMatsumotoExecutive Officer / General
Manager of Personnel Division

Kazuhiro Sugawara

Executive Officer / General
Manager of Corporate
Strategy Division

Toshiaki Nagase

Executive Officer / General
Manager of Systems Division

Junya Sekimura― 9 ―Director serving as an Audit& Supervisory Committee
Member (Outside Director)
Director serving as an Audit& Supervisory Committee
Member (Outside Director)

Shinobu Obara
Masakazu
Watanabe· Organization (As of July 1, 2021)

General Meeting of Shareholders

Nomination and Compensation
Advisory Committee
Board of Directors
Audit & Supervisory Committee
Executive
Committee

General Planning Division
Profit Management OfficePublic Relations and CSR Office
Tokyo Liaison Office
General Affairs Division
Personnel Division
Human Resources Development OfficePublic Affairs and Regional Revitalization Office

Corporate Strategy Division
Retail Strategy Division
Direct Banking Center
Credit Card Center
Customer Response Center
Head Office
Local Office

Iwagin Jigyo Souzou Capital
Co.,Ltd.

Iwagin Lease Data Co., Ltd.

Iwagin DC Card Co., Ltd.

Iwagin Credit Service Co.,Ltd.

Iwagin consulting Co., Ltd.

manorda Iwate Co., Ltd.

― 10 ―CS Promotion OfficeMorioka Loan Plaza
Financial Markets DivisionInternational Business OfficeSendai Office

Hachinohe Office

Corporate Financial Support Office

Loan Supervision Division
Personal Loan Center

Local Office

Branches

Tokyo OfficeBusiness Management Division
Financial Products Management Office
Operations Concentration Center
Systems Division
Risk Management Division
Compliance Office
General Secretariat
DX Lab
Audit Division

Affiliate
Subsidiaries

· The Bank of Iwate GroupThe
Bank’sVotingRightsVoting RightsofSubsidiaries,
etc. Other than
Said
Subsidiaries,
etc.

Capital(Millions ofyen)

Main BusinessIwagin Lease Data
Co., Ltd.
1-5-31 Nakanohashi
Dori, Morioka City,
Iwate Prefecture

30

Computerizedaccounting
services,
leasing

April 1, 1972

100%

0%

Iwagin DC Card Co.,Ltd.
1-2-14 Nakanohashi
Dori, Morioka City,
Iwate Prefecture20

Credit cards
and consumer
loans

August 1, 1989

100%

0%

Iwagin Credit Service
Co., Ltd.
14-10-301 Morioka
Ekimae Dori, Morioka
City, Iwate Prefecture20

Credit cards
and consumer
loans

August 1, 1989

100%

0%

100

Business
succession
support,Management
support,Personnel
consulting

April 1, 2020

100%

0%

manorda Iwate Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

70

Sales channel
expansion
support,
Regional
revitalization
supportApril 1, 2020

100%

0%

Iwagin Jigyo Souzou
Capital Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

50

Investment
fundmanagement

April 1, 2015

40%

0%

Name/Address

Iwagin consulting Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

Date of
Establishment

1. Iwagin consulting Co., Ltd. and manorda Iwate Co., Ltd. were newly established and were included in thescope of consolidation of the Bank from the year ended 31 March 2021.
2. Iwagin Business Service Co., Ltd. was dissolved on 31 March 2021, and it is currently in the process ofliquidation.

― 11 ―

Consolidated Balance Sheets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020

ASSETSCash and due from banks (Notes 3 and 6)
Call loans and bills bought (Note 6)
Monetary claims bought (Note 6)
Money held in trust (Notes 5 and 6)
Securities (Notes 4, 6, 8 and 15)
Loans and bills discounted (Notes 6, 7, 9 and 27)
Foreign exchange assets
Premises and equipment (Notes 11 and 23)
Intangible assets (Notes 12 and 23)
Net defined benefit asset (Note 16)
Deferred tax assets (Note 17)
Customers’ liabilities for acceptances and guarantees (Note 15)
Other assets (Notes 6, 8 and 10)
Allowance for doubtful accounts (Note 6)
Total assets
LIABILITIES AND NET ASSETS
Liabilities:
Deposits (Notes 6, 8 and 13)
Call money and bills sold (Note 6)
Borrowed money (Notes 6 and 8)
Foreign exchange liabilities
Accrued bonuses for directors and corporate auditors
Net defined benefit liability (Note 16)
Retirement benefits for directors and corporate auditors
Provision for losses on reimbursement of dormant deposits
Provision for contingent losses
Deferred tax liabilities (Note 17)
Acceptances and guarantees (Note 15)
Other liabilities (Notes 6, 14 and 23)
Total liabilities
Net assets (Note 18):
Common stock:
Authorized — 49,450 thousand shares as at 31 March 2021 and 2020
Issued and outstanding —18,498 thousand shares as at 31 March 2021 and2020
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Net unrealized holding gains on available-for-sale securities (Note 4)
Net unrealized losses on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 16)
Total accumulated other comprehensive income
Stock acquisition rights (Note 19)
Total net assets
Total liabilities and net assets

Millions of yen
2021
2020
¥637,337¥370,821
23,000
－
5,607
4,840
10,707
10,7501,187,839
1,200,178
1,898,553
1,815,084
2,074
3,934
16,17916,826
1,506
1,465
5,812
3,698
353
493
4,963
5,359
62,10364,050(15,071)(11,960)¥3,840,962¥3,485,538

Thousands of
U.S. dollars(Note 1)2021
$5,756,815
207,750
50,646
96,712
10,729,284
17,148,884
18,733
146,139
13,60352,4983,188
44,829560,952(136,130)$34,693,903¥3,414,900
7,750
171,938
15
23
1,812
20
373
202
7,296
4,963
30,0393,639,331¥3,201,384
56,553
4
25
2,484
25
420
228
2,355
5,359
29,245
3,298,082$30,845,452
70,003
1,553,049
135
208
16,368
180
3,369
1,824
65,902
44,829271,330
32,872,649

12,09012,090109,204

5,667
158,440(3,885)
172,31232,859(3,304)(488)
29,067
252
201,631

5,667
156,688(3,906)
170,539
23,084(4,103)(2,289)16,692
225
187,456

51,188
1,431,126(35,091)
1,556,427
296,803(29,844)(4,408)262,551
2,276
1,821,254¥3,840,962¥3,485,538$34,693,903

2021

2020

U.S. dollars
2021¥11,445.57¥10,644.27－

Yen
Per share data:
Net assets (Note 25)

See accompanying notes.

― 12 ―$103.38

Consolidated Statements of Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 20)
Other income (Note 22)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses (Note 20)
General and administrative expenses (Note 21)
Other expenses (Note 22)
Total expenses

2021

2020

2021

¥17,358
10,627
69
8,237
4,601
4,451

¥17,277
12,528
43
8,544
4,623
2,311

$156,788
95,990623
74,402
41,55940,20445,34345,326

409,566

334
8
534
3,395
4,831
25,473
5,229

424
91
550
3,304
5,385
26,215
4,127

3,017
72
4,823
30,666
43,637230,088
47,23139,80440,096

359,534

Income before income taxes
Provision for income taxes (Note 17)
Current
Deferred

5,539

5,230

50,032

2,790
(147)

965
481

25,201(1,327)

2,643

1,446

23,874

Net income

2,896

3,784

26,158Net income attributable to owners of parent¥2,896¥3,784$26,158

Yen
Per share data:
Net income (Note 25)
Diluted net income (Note 25)
Cash dividends applicable to the year (Note 28)

See accompanying notes.

― 13 ―

U.S. dollars

2021

2020

¥164.64164.0360.00¥212.50211.86
70.00

2021
$1.49
1.48
0.54

Consolidated Statements of Comprehensive Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020

Millions of yen
2021
Net income
Other comprehensive income (losses) (Note 24):
Net unrealized holding gains (losses) on available-for-sale securities
Net unrealized gains (losses) on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 16)
Total other comprehensive income (losses)

Thousands of
U.S. dollars(Note 1)

2020

2021

¥2,896¥3,784$26,158

9,775
799
1,801

(13,946)
(163)
(961)

88,294
7,217
16,26812,375(15,070)

111,779

Comprehensive income (losses)¥15,271¥(11,286)$137,937

Total comprehensive income (losses)
Attributable to:
Owners of parent¥15,271¥(11,286)$137,937

15,271(11,286)

137,937

See accompanying notes.

― 14 ―

Consolidated Statements of Changes in Net Assets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020
Millions of yen
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2019
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulated

Stock

Total

of definedotheracquisition

net assets

benefit planscomprehensive

rightslosses¥12,090¥5,667¥154,162¥(2,946)¥168,973¥37,030¥(3,940)¥(1,328)¥31,762¥209¥200,944－－(1,254)－(1,254)

－

－

－

－

－

(1,254)

Disposal of treasury stock

－
－
－

－
－
－

3,784
－
(4)

－
(987)
27

3,784
(987)
23

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

3,784
(987)
23

Net changes in items other thanshareholders’ equity during the
year

－

－

－

－

－

(13,946)

(163)

(961)

(15,070)

16(15,054)－
12,090

－
5,667

2,526
156,688(960)(3,906)

1,566
170,539(13,946)
23,084(163)(4,103)(961)(2,289)(15,070)
16,692

16
225(13,488)
187,456－－(1,143)－(1,143)

－

－

－

－

－

(1,143)

Total change during the year
BALANCE, 1 April 2020
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2021

－

－

2,896

－

－

－

－

－

2,896

－
－

－

－
(1)

2,896

－
－

(1)

22

21

－
－

－
－

－
－

－
－

(1)

(1)

－
－

－
－
¥12,090－－¥5,667－
1,752¥158,440－21¥(3,885)－
1,773¥172,312

21

9,775

799

1,801

12,37527

12,402

9,775¥32,859799¥(3,304)

1,801¥(488)

12,375¥29,06727¥252

14,175¥201,631

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2020
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2021

$109,204

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulatedof definedotherbenefit planscomprehensive

StockacquisitionrightsTotal
net assets

losses$51,188 $1,415,301 $(35,281)$1,540,412$208,509$ (37,061)$(20,676)$150,772$2,032$1,693,216－－(10,324)－(10,324)

－

－

－

－

－

(10,324)

－
－
－

－
－
－

26,158
－
(9)

－
(9)
199

26,158
(9)
190

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

26,158
(9)
190

－
－
－
－
190
15,825$51,188 $1,431,126 $(35,091)－

88,294

7,217

16,268111,779244

112,023

16,015$1,556,427

88,294

7,217

16,268111,779244$296,803$(29,844)$(4,408)$262,551$2,276

128,038$1,821,254－－$109,204

See accompanying notes.

― 15 ―

Consolidated Statements of Cash Flows
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020
Thousands of
U.S. dollars(Note 1)
2021

Millions of yen
2021
2020
Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash used in operating activities:
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for contingent losses
Increase (decrease) in accrued bonuses for directors and corporate auditors(Increase) decrease in net defined benefit asset
Increase (decrease) in net defined benefit liability
Increase (decrease) in retirement benefits for directors and corporate auditors
Increase (decrease) in provision for losses on reimbursement of dormant deposits
Interest income
Interest expenses
Investment securities (gains) losses, net(Increase) decrease in money held in trust
Foreign exchange (gains) losses, net(Gains) losses on disposal of premises and equipment
Net (increase) decrease in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money
Net (increase) decrease in due from banks, excluding the Bank of Japan
Net (increase) decrease in call loans and others
Net increase (decrease) in call money and others
Net increase (decrease) in payables under securities lending transactions
Net (increase) decrease in foreign exchange assets
Net increase (decrease) in foreign exchange liabilities
Interest received
Interest paid
Other, net
Subtotal
Income taxes paid
Income taxes refunded
Net cash provided by (used in) operating activities¥5,539¥5,230$50,032

1,722
537
3,111
(26)
(2)
30
(228)
(5)
(47)
(28,054)876(2,658)
(145)
(657)
80
(83,469)
236,846(23,330)
115,386
14(23,767)
7,750
－
1,860
11
27,940(936)
1,878
240,256(1,044)806
240,018

1,690
78
(950)
(21)
(0)
(199)
(7)
5
29
(29,848)
1,065
296
189
286
13
(19,984)
11,732(27,870)
14,148(110)791(2,220)(6,514)(1,775)
4
30,738(1,132)
6,518(17,818)(2,082)
14(19,886)

15,554
4,851
28,100
(235)
(18)
271
(2,059)(45)(425)(253,401)
7,912(24,009)(1,310)(5,934)723(753,943)
2,139,337(210,731)
1,042,236
126(214,678)
70,003－
16,801
99
252,371(8,454)
16,9642,170,138(9,430)7,280
2,167,988

Cash flows from investing activities:
Acquisition of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Increase in money held in trust
Decrease in money held in trust
Acquisition of premises and equipment
Proceeds from sale of premises and equipment
Payment for retirement of premises and equipment
Acquisition of intangible assets
Payment for asset retirement obligations
Net cash provided by (used in) investing activities(508,350)
30,025507,831(4,900)4,900(1,197)
69
(79)
(571)
(63)
27,665(657,477)
44,801
611,708(4,591,726)
271,204
4,587,038(44,260)
44,260(10,812)623(713)(5,158)(569)
249,887― 16 ―－

1,816(1,237)
143
(88)
(784)
(38)
(1,156)

Consolidated Statements of Cash Flows (Continued)
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020
Millions of yen
2021
2020
Cash flows from financing activities:
Repayments of lease obligations
Cash dividends paid
Payment for acquisition of treasury stock
Proceeds from sale of treasury stock
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year (Note 3)

See accompanying notes.

― 17 ―

Thousands of
U.S. dollars(Note 1)2021

(30)
(1,143)(1)
0(1,174)(275)(1,254)(987)
0(2,516)(271)(10,324)(9)
0(10,604)20
266,529369,792¥636,321

19(23,539)
393,331¥369,792

181
2,407,452
3,340,186$5,747,638

Notes to Consolidated Financial Statements
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2021 and 2020
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Bank of Iwate, Ltd. (the “Bank”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan, its related
accounting regulations and the Banking Act of Japan, and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects, such as application and disclosure requirements, from International
Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some
supplementary information included in the statutory Japanese language consolidated financial statements, but not necessarily required
for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers, using the prevailingexchange rate as at 31 March 2021, which was ¥110.71 to U.S. $1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at thisor any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIESReporting entity
The consolidated financial statements include the accounts of the Bank and its significant subsidiaries. Japanese GAAP on
consolidated financial statements requires the consolidation of all significant investees that are controlled through substantial
ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances
are eliminated.
Iwagin Business Service Co., Ltd. was dissolved on 31 March 2021, and it is currently in the process of liquidation.
Iwagin consulting Co., Ltd. and Manorda Iwate Co., Ltd. were newly established and were included in the scope of consolidation of
the Bank from the year ended 31 March 2021.
A non-consolidated subsidiary is excluded from the scope of consolidation because in terms of its total assets, ordinary income, net
income or loss (amount corresponding to equity), retained earnings (amount corresponding to equity) and accumulated othercomprehensive income or loss (amount corresponding to equity), it has minor impact on the consolidated financial statements even if
it is excluded from the scope of consolidation.
Investments in affiliates over which the Bank has the ability to exercise significant influence in terms of operating and financial
policies of the investees are accounted for by the equity method.
There are no investments in affiliates that are accounted for by the equity method.
A non-consolidated subsidiary and investments in affiliates that are not accounted for by the equity method are excluded from thescope of the equity method because in terms of their net income or loss (amount corresponding to equity), retained earnings (amount― 18 ―

corresponding to equity) and accumulated other comprehensive income or loss (amount corresponding to equity), they have minor
impact on the consolidated financial statements even if they are excluded from the scope of the equity method.

Trading account securities and other securities
Securities are classified as follows based on the purpose: (a) securities held for trading purposes (“trading account securities”), (b)debt securities intended to be held to maturity (“held-to-maturity debt securities”), (c) equity securities issued by unconsolidated
subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the above categories above (“availablefor-sale securities”).
(a) Trading account securities — National government bonds held for trading purpose are presented as trading account securities.
Trading account securities are stated at fair value (cost of securities sold is calculated using the moving-average method). Gains andlosses realized on disposal and unrealized gains and losses from market value fluctuations are recognized as gains or losses in the
period of the change.
(b) Held-to-maturity debt securities are carried at amortized cost (straight-line method) using the moving-average method.
(c) Equity securities issued by subsidiaries and affiliated companies, which are not consolidated or accounted for by the equity method,
are carried at cost using the moving-average method.
(d) Available-for-sale securities with available fair values are primarily carried at the period-end market prices (cost of securities soldis calculated using the moving-average method).
Securities for which it is extremely difficult to determine the fair value are stated at the moving-average cost.
Net unrealized holding gains (losses) on these securities, net of applicable income taxes, are reported in a separate component of net
assets.
Available-for-sale securities with available fair values are written down when a significant decline in fair value below the cost of suchsecurities is deemed to be other than temporary. The amount written down is accounted for as an impairment loss.

Money held in trust
Securities invested as part of trust assets in independently managed money trusts that invest primarily in securities are stated at fairvalue.

Derivatives and hedge accounting
The Bank employs forward exchange contracts, currency swaps and interest rate swaps to meet customers’ needs and mitigate interest
rate risks and foreign exchange risks. Derivative financial instruments are stated at fair value.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Bank defers recognition of gains or losses
resulting from changes in fair value of the derivative financial instruments until the related gains or losses on the hedged items arerecognized (deferral method).
Transactions to hedge against interest rate risks affecting the financial assets and liabilities of the Bank are accounted for using deferredhedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing of Application of AccountingStandards for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public Accountants (“JICPA”) Industry
Committee Practical Guideline No. 24, 8 October 2020).
Regarding the effectiveness of a hedge, a hedge that is intended to offset the effects of market fluctuations is assessed based on a

― 19 ―

group-by-group comparison of hedged items and hedging instruments. Both hedged items, including deposits and loans, and hedging
instruments, including interest rate swaps, are classified into groups by the remaining maturity period. The effectiveness of a cash
flow hedge is assessed on the basis of the correlation between the base interest rate index of the hedged cash flow and that of thehedging instrument.
As for the hedging transactions against currency exchange risks arising from assets and liabilities in foreign currencies, the Bank
applies deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Committee Practical Guideline No. 25, 8
October 2020). The Bank assesses the effectiveness of currency swap and foreign exchange swap transactions executed for offsetting
the risks of changes in currency exchange rates by verifying that there exist foreign currency positions of the hedging instruments
corresponding to the foreign currency monetary claims and debts to be hedged.
Certain interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at fair value, but
the differential to be paid or received under the swap contracts is recognized as interest expense or income (exceptional method).
Depreciation and amortization methods(1)

Premises and equipment (excluding leased assets)

Premises and equipment are stated at cost less accumulated depreciation. The Bank depreciates its premises and equipment under the
declining-balance method over their estimated useful lives. Depreciation of buildings acquired on and after 1 April 1998 (excluding
installed facilities) and installed facilities and structures acquired on and after 1 April 2016 by the Bank is computed under the straightline method. Estimated useful lives are as follows:
Buildings: 3-30 years
Equipment and furniture: 2-20 years
Consolidated subsidiaries depreciate their premises and equipment primarily under the declining-balance method over their estimateduseful lives.
(2)

Intangible assets (excluding leased assets)

The Bank and its consolidated subsidiaries (the “Group”) amortize intangible assets under the straight-line method over their estimateduseful lives. Costs of computer software developed or obtained for internal use are amortized using the straight-line method overestimated useful lives of five years.
(3)

Leased assets

Depreciation and amortization of leased assets pertaining to finance lease transactions other than those that transfer the ownership ofthe leased assets to the Group, which are included in “Premises and equipment” and “Intangible assets,” are computed under thestraight-line method. The lease term is equal to the useful life and there is no residual value except where residual value guarantees
are stipulated in lease contracts.
Depreciation of leased assets pertaining to finance lease transactions that transfer the ownership of the leased assets to the Group iscomputed by the same method used for fixed assets owned by the Group.

― 20 ―

Allowance for doubtful accounts
The reserve for loans to borrowers that are classified as normal and requiring attention is primarily calculated based on the amount of
expected loss during the one-year period or the three-year period subsequent to the balance sheet date. The amount of expected loss
is calculated based on the average loan loss ratio derived from the actual loan loss during the past one year or the past three years withnecessary amendments such as future prospects.
The reserve for loans to borrowers that are classified as legally bankrupt or substantially bankrupt is calculated by deducting theestimated disposal value of collateral and the amount deemed collectible from guarantees from the book value.
The Bank also provides specific reserves for potentially bankrupt borrowers for an amount deemed necessary based on the loanbalance, less expected collection from disposal of collateral, guarantees and repayment on uncovered portion of the loan from historicalexperiences.
Allowance for doubtful accounts mentioned above is made on the basis of the results of a strict assessment of the quality of all the
Bank’s loan assets, using its internally established rules for self-assessment.
Allowance for doubtful accounts recorded in consolidated subsidiaries is calculated as follows:
General reserves are provided at an amount deemed necessary considering the historical ratio of loan losses. Specific reserves for
doubtful borrowers are provided at an amount expected to be uncollectable, considering collectability on an individual basis.

Accrued bonuses for directors and corporate auditors
Accrued bonuses for directors and corporate auditors are provided in the amount of the estimated bonuses that are attributable to eachfiscal year.

Retirement benefits for directors and corporate auditors
Retirement benefits for directors and corporate auditors are provided for the future payments of directors’ and corporate auditors’
retirement benefits incurred up to the end of the fiscal year based on the approved internal rules.

Provision for losses on reimbursement of dormant deposits
Provision for losses on reimbursement of dormant deposits that were recorded as profit is provided for the future reimbursement basedon the historical reimbursement experience.

Provision for contingent losses
Provision for contingent losses is provided for estimated future payments related to a risk-sharing agreement with public credit
guarantee associations for the Bank’s loans guaranteed by the associations. The provision is calculated using the expected loss ratios
computed based on the historical foreclosure ratio of each borrower category.

Accounting for retirement benefits
Upon the calculation of projected benefit obligation, the estimated amount of all retirement benefits to be paid at future retirement
dates is allocated using the benefit formula. The Bank has also set up retirement benefit trusts.
Actuarial differences are amortized as income or expenses commencing from the following year under the straight-line method over
10 years, which is determined as the amortization period within a range of estimated remaining service years of the eligible employees― 21 ―

at the time the actuarial differences occur.
The consolidated subsidiaries adopt a simplified method, as allowed for small companies, which is to record retirement benefit
liabilities for an amount assuming all employees would retire at the end of the fiscal year on a voluntary basis.

Income taxes
Income taxes consist of corporation, enterprise and inhabitant taxes. The provision for income taxes is computed based on the pretax
income of the Bank and each of its consolidated subsidiaries with certain adjustments required for tax purposes.
Deferred tax assets and liabilities are recorded based on the temporary differences between the financial statements and tax bases ofassets and liabilities. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and theamounts used for income tax purposes.

Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at the end ofeach year.

Appropriations of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given financial period is made by resolutionof the shareholders at a general meeting held subsequent to the close of the financial period. The accounts for that period, therefore,
do not reflect such appropriations. See Note 28.

Amounts per share
Net income per share of common stock is computed based on the weighted-average number of shares outstanding, excluding treasury
stock, during each year. Diluted net income per share reflects the potential dilution that could occur if stock options to issue common
stock were exercised. Cash dividends per share represent the amounts applicable to the corresponding years and consist of interim
dividends for the current year and year-end dividends declared after the end of the year.

Consumption taxes
National and local consumption taxes are accounted for by the tax exclusion method.

― 22 ―

Significant accounting estimates
Allowance for doubtful accounts(1) Carrying amounts in the consolidated financial statements for the current fiscal year
Allowance for doubtful accounts¥15,071 million ($136,130 thousand)(2) Information on the nature of significant accounting estimates for identified items
a. Calculation method
The calculation method of allowance for doubtful accounts is described in “Allowance for doubtful accounts” under “2.

SIGNIFICANT ACCOUNTING POLICIES.”
b. Key assumptions used in making accounting estimatesi. Categorization of receivables (self-assessment)
The Bank categorizes its outstanding receivables based on the level of risk of their recovery or impairment to their value (“selfassessment”). The self-assessment is conducted by comprehensively considering the use of funds and the situation of thecollateral or guarantees in place, after determining the category of borrowers based on the credit ratings in accordance with thelevel of credit risk of the borrowers.
The determination of the category of borrowers is based on borrower’s financial information and other quantitative information,in addition to qualitative factors. Specifically, the Bank assesses the borrowers’ solvency based on their substantive financial
condition, cash flows and profitability. The Bank also comprehensively takes into account the borrowers’ business sustainability,
future profitability, ability to pay obligations based on their cash flows, the reasonableness and feasibility of their business
improvement plans and support from other financial institutions to determine the category of borrowers in light of theirindustry/sector specific characteristics. Accordingly, the determination requires management’s judgment.
ii. Expected loss rate
Allowance for doubtful accounts is recorded based on the expected loss rate of the receivables classified in accordance withthe self-assessment. The expected loss rate is calculated based on the historical loan loss for each classification, with necessary
adjustments made to account for future prospects and other factors.
The Bank has prepared estimates for allowance for doubtful accounts assuming that the effects of the novel coronavirus disease(COVID-19) on the economy will last for another year or so and that the assumption above may be affected by COVID-19 toa certain degree; however, there was no significant effect on the consolidated financial statements for the year ended 31 March
2021.
c. Impact on the consolidated financial statements for the year ending 31 March 2022
If the assumption applied to the initial estimate changes due to changes in the business condition of individual borrowers or theactual loan loss rate, there is a possibility that there will be a significant impact on the allowance for doubtful accounts recordedin the consolidated financial statements for the year ending 31 March 2022.
It is very difficult to estimate to what extent COVID-19 will spread or when it will be contained in the future. Accordingly, there
is a high degree of uncertainty in the assumption above and if there is a change in the circumstances of COVID-19 or its effects
on the economic environment, there is a possibility that additional losses may be incurred in the consolidated financial statements
for the following fiscal year.

― 23 ―

Accounting standards that have not been applicable yet“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, 31 March 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, 26 March 2021)(1) Overview
The standards above are comprehensive standards on revenue recognition. Revenue will be recognized based on the following five
steps.
Step1: Identify contracts with customers.
Step2: Identify the performance obligations in the contract.
Step3: Determine the transaction price.
Step4: Allocate the transaction price to the performance obligations in the contract.
Step5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Application date
The Group will apply these accounting standards from the beginning of the fiscal year ending 31 March 2022.
(3) Effects of the application of the standards
The Group is currently assessing the effects of these standards.

“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, 4 July 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, 4 July 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, 4 July 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, 31 March 2020)(1) Overview
In order to improve the comparability with provisions of international accounting standards, “Accounting Standard for Fair Value
Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (hereinafter, “AccountingStandards for Fair Value Measurement, etc.”) have been developed, and guidance, etc. regarding fair value measurement have been
established. The Accounting Standards for Fair Value Measurement, etc. are applied to the fair value of the following item.
- Financial instruments defined in “Revised Accounting Standard for Financial Instruments”
In addition, “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” was revised, and note items were
established including the breakdown by level of fair value of financial instruments.

(2) Application date
The Group will apply these accounting standards and guidance from the beginning of the fiscal year ending 31 March 2022.
(3) Effects of the application of the standards
The Group is currently assessing the effects of these standards.

― 24 ―

Changes in presentation
Application of “Accounting Standard for Disclosure of Accounting Estimates”
The Bank adopted “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, 31 March 2020) startingwith the consolidated financial statements pertaining to the end of the current fiscal year, and therefore significant accounting estimates
are disclosed in the notes to the consolidated financial statements.
The notes, however, do not include information for the previous fiscal year in accordance with the transitional provision set out in theproviso of paragraph 11 of the Accounting Standard for Disclosure of Accounting Estimates.

― 25 ―

3. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWSCash and cash equivalents
In preparing the consolidated statements of cash flows, cash and due from the Bank of Japan are considered to be cash and cash
equivalents. As at 31 March 2021 and 2020, the reconciliation of cash and cash equivalents in the consolidated statements of cash
flows with cash and due from banks in the consolidated balance sheets is as follows:
Thousands of
U.S. dollars
2021$5,756,815(9,177)$5,747,638

Millions of yen
2021
2020
¥637,337¥370,821(1,016)(1,029)¥636,321¥369,792

Cash and due from banks
Less: Deposits in banks other than the Bank of Japan
Cash and cash equivalents

4. SECURITIESSecurities held by the Group as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars
2021$1,648,776
3,220,766
3,032,066
364,104
2,463,572$10,729,284

Millions of yen
2021
2020
¥182,536¥210,187
356,571375,118
335,680
318,719
40,31036,351
272,742
259,803¥1,187,839¥1,200,178

National government bonds
Local government bonds
Corporate bonds
Corporate stocks
Other securities

The securities placed under unsecured lending agreements, which borrowers have the right to sell or pledge in the amount of ¥67,100
million ($606,088 thousand) and ¥59,100 million as at 31 March 2021 and 2020, respectively, were included in national government
bonds.

A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values as at 31 March
2021 and 2020:(a) Held-to-maturity debt securities
Millions of yen
As at 31 March 2021:

Book value¥25,996

Fair value¥29,508

Difference¥3,512

Gain¥3,512As at 31 March 2020:¥25,412¥29,231¥3,819¥3,819As at 31 March 2021:

Book value$234,812

Fair value$266,534

Loss
¥－
¥－

Thousands of U.S. dollars― 26 ―

Difference$31,722Gain$31,722Loss$－

(b) Available-for-sale securities
Securities below include negotiable certificates of deposit classified as cash and due from banks.
Millions of yen
Acquisition cost
As at 31 March 2021:
Corporate stocks
Bonds
Other
As at 31 March 2020:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

¥17,428
835,201
252,863¥38,975
852,821
260,479¥21,547
17,6207,616¥22,085
19,015
10,320¥(538)(1,395)(2,704)¥1,105,492¥1,152,275¥46,783¥51,420¥(4,637)¥20,122860,713250,811¥35,132
881,761
247,859¥15,01021,048(2,952)¥16,091
22,203
4,494¥(1,081)(1,155)(7,446)¥1,131,646¥1,164,752¥33,106¥42,788¥(9,682)

Thousands of U.S. dollars
Acquisition cost
As at 31 March 2021:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

$157,421
7,544,043
2,284,012$352,046
7,703,198
2,352,804$194,625
159,155
68,792$199,485
171,755
93,216$(4,860)(12,600)(24,424)$9,985,476$10,408,048$422,572$464,456$(41,884)

B. There were no sales of held-to-maturity debt securities for the years ended 31 March 2021 and 2020.
Total sales of available-for-sale securities in the years ended 31 March 2021 and 2020 amounted to ¥30,025 million ($271,204
thousand) and ¥44,801 million, respectively. The related gains and losses amounted to ¥3,804 million ($34,360 thousand) and ¥318
million ($2,872 thousand), respectively, in the year ended 31 March 2021, and ¥2,142 million and ¥485 million, respectively, in theyear ended 31 March 2020.

C. Available-for-sale securities written down for the years ended 31 March 2021 and 2020 amounted to ¥189 million ($1,707
thousand) and ¥883 million, respectively.

D. Net unrealized holding gains on available-for-sale securities on the consolidated balance sheets as at 31 March 2021 and 2020
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Net unrealized holding gains before deferred tax on:
Available-for-sale securities (Note)
Deferred tax liabilities
Net unrealized holding gains before interest adjustment
Amount equivalent to non-controlling interests¥46,949(14,090)
32,859－¥33,082(9,998)23,084－$424,072(127,269)
296,803－

Net unrealized holding gains on available-for-sale securities¥32,859¥23,084$296,803

Note: The amounts of ¥166 million ($1,499 thousand) and ¥(24) million, which are net unrealized holding gains and losses,
respectively, before deferred tax on available-for-sale securities that are component assets of investment limited partnerships classified
as securities for which it is extremely difficult to determine the fair values, were included in the balance as at 31 March 2021 and2020, respectively.

― 27 ―

E. Equity securities issued by unconsolidated subsidiaries and affiliated companies are as follows:
Thousands of
U.S. dollars

Millions of yen
2021
SharesInvestments

2020

¥20
1,324

¥20
1,123

2021
$181
11,9595. MONEY HELD IN TRUST
Money held in trust as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Money held in trust for trading purposes:
Carrying amount
Realized gains (losses) included in earnings

2021

2020

2021

¥10,70768¥10,750(2)$96,712614

6. FINANCIAL INSTRUMENTS(1) Overview
a. Policy for financial instruments
The Group provides financial services, mainly focusing on banking businesses such as deposit-taking, grant of loans, trading of
securities and investment in securities, as well as lease operation and credit card operation.
For its main operations, the Group raises funds through deposits, call money, etc. and applies them to loans receivable and investment
in securities. Therefore, the financial assets and liabilities of the Group tend to be affected by interest rate fluctuations, and are exposed
to risks stemming from changes in financial market environments (interest rate risks and price fluctuation risks), as well as to risks
arising from fund shortage.
The Group manages those risks using the asset liability management (ALM) method in order to appropriately control the balance
between revenues and risks in consideration of the status of the financial assets and liabilities, trend of financial markets, policies forfund management and investment policies. The Group uses derivatives for the purpose of reducing risks, but not for speculative
purposes.

b. Types of financial instruments and related risks
The financial assets of the Bank consist mainly of loans for domestic enterprises and individuals and investment securities.
Loans are exposed to credit risks stemming from defaults of borrowers. The largest industrial category of loans as of the current fiscal
year end was individuals, followed by local governments, real estate industries, leasing industries, financial industries and insurance
industries, and loans are mostly distributed in each industry.
Securities fundamentally constitute bonds, stocks and investment trusts, which are held for investing purposes, held-to-maturity
purposes and maintaining business relationships, while trading account securities are held for trading purposes. These are exposed tocredit risks of issuers, interest rate risks and risks stemming from fluctuation of market prices.
Liabilities, such as deposits, corporate bonds and call money, are exposed to risks arising from fluctuation of interest rates stemming― 28 ―

from mismatch between interests or periods of assets and liabilities. In addition, these are exposed to risks of fund shortage where the
Bank fails to control cash receipts and disbursement due to unexpected fund outflow and suffers losses from imposed unusual highinterest rates, as well as market liquidity risks where the Bank fails to raise funds owing to market shrinkage and is obliged to enter
into unusual unfavorable transactions.
Regarding derivative transactions, the Bank enters into interest rate swap contracts in terms of the ALM control and applies hedge
accounting to them as hedging instruments for interest rate risks on loans and bonds as hedged items. The Bank evaluates theeffectiveness of the hedge based on accumulated fluctuation of cash flows of hedging instruments and hedged items for the periods
beginning from the implementation of the hedging to the date of the evaluation and analysis on them.
Furthermore, there are other interest rate swap contracts (hedging instruments) and loans and bonds (hedged items), which are treatedunder the exceptional method.

c. Monitoring of credit risks
In accordance with the internal policies of the Bank for managing credit risks arising from loans, each related division monitors credit
worthiness of its customers periodically and due dates and outstanding balances by individual customer. In addition, the Bank makes
efforts to identify and mitigate risks of bad debts from customers who face financial difficulties.
The results of the monitoring above are regularly reported to the board of directors, and the results of monitoring internal rating, loan
portfolios and quantification of credit risks are reported to the credit risk committee on a quarterly basis. The Audit Division strictly
reviews the results to ensure that the monitoring procedures function properly.
Credit risks of issuers of securities and counterparty risks of derivative transactions are controlled through periodic reviews on credit
information and fair value of securities by the Financial Markets Division.

d. Monitoring of market risks(Interest rate risks)
The risks arising from fluctuations in interest rates are controlled using the ALM by the ALM committee, with reference to thediscussion at the fund management meeting and interest rate analysis group meeting, through monitoring and analysis of the executionof the ALM and the discussion of future actions. Concretely, the results of the monitoring above are reported on a monthly basis to
the ALM committee using gap analysis or interest rate sensitivity analysis such as BPV and VaR. Derivative instruments such as
interest rate swap contracts to hedge interest rate risks are used in terms of the ALM.
(Foreign currency exchange risks)Foreign currency swap contracts and foreign currency exchange swap contracts are used in order to control the foreign currency
exchange risks.
(Price fluctuation risks)
In accordance with the internal policies of the Bank on managing market related risks, the risks arising from fluctuation of market
price of investment securities are controlled through a daily VaR based on certain holding periods and confidence intervals byconfirming whether the quantities of the Bank’s risk fall under a certain portion of equity capital or not. Upper limits on losses on an
aggregate or a realization basis are defined to control losses on a daily basis. These results are reported by the Risk Management
Division to the management on a daily basis.
Investments in securities by the Financial Markets Division are executed in accordance with the investable items and investing― 29 ―

guidelines prescribed in the market business operation standards, the market risk management standards and the primary polices oninvesting, and controlled through continuous monitoring. The information related to the market environment and the investment statusis reported to the management on a regular basis.
(Derivative transactions)
In conducting derivative transactions, each division responsible for the execution of transactions, and evaluation of effectiveness ofthe hedging and related administration is clearly identified, following the hedge transaction guidelines, the market business operation
standards and the market risk management standards, with setting up segregation of duties and checking systems.
(Information on volume of market risk)
The Bank employs the variance-covariance method (confidence interval of 99%, observation period of one year) in calculating VaRof deposits, loans receivable and securities (investments in bond, investments in stock, shares held for policy reasons, investments intrust). The holding period used as a parameter for the calculation is set as six months for deposits, loans receivable and shares held
for policy reasons, and three months for investments in bond, investments in stock and investments in trust.
The volume of market risk, which is supposed to be estimated losses, as at 31 March 2021 was ¥23,961 million ($216,430 thousand).
For securities, the Bank periodically verifies the effectiveness of risk measurement by a back-testing protocol that compares thevolume under VaR with the amount of actual gains or losses. As a result of conducting the back-testing protocol, the Group believes
that the method undertaken provides a reliable indicator of the market risks. The method of variance and covariance that the Bank
uses to measure the volume under VaR assumes that changes in the market follow a normal distribution. Accordingly, under conditions
subject to changes in the market exceeding the assumption, risks may be underestimated.

e. Monitoring of liquidity risks
The Bank adequately manages its liquidity risks based on various internal quantitative standards prescribed in liquidity risks
management regulations, monitoring its liquidity position on a daily basis with minimum fund reserve established twice a year.

f. Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, the fair value is reasonably estimated. Since various assumptions and factors are used in estimating the fair value,
different assumptions and factors could result in different fair values.

― 30 ―

(2) Fair value of financial instruments
The carrying amounts and the fair value of financial instruments as at 31 March 2021 and 2020 are as follows.
Millions of yen
2021

Assets:Cash and due from banks
Call loans and bills bought
Monetary claims bought
Money held in trust
Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Allowance for doubtful accounts
Liabilities:
Deposits
Call money and bills soldBorrowed money
Derivative transactions:
Derivative instruments not
qualifying for hedge accounting
Derivative instruments qualifying
for hedge accounting

Carrying
amounts

Thousands of U.S. dollars
2020

Fair value

Carrying
amounts¥637,337
23,0005,477
10,707¥637,337
23,0005,496
10,707

21,967
1,152,275
1,898,553(13,878)

2021

Fair value

Carrying
amounts

Fair value¥370,821－
4,682
10,750¥370,821－
4,689
10,750$5,756,815
207,750
49,472
96,712$5,756,815
207,750
49,64396,712

25,4601,152,275

22,264
1,164,752
1,815,084(11,444)

26,075
1,164,752

198,419
10,408,048
17,148,884(125,354)

229,970
10,408,048

1,884,675

1,887,558

1,803,640

1,804,838

17,023,530

17,049,571

3,414,900
7,750
171,938

3,414,975
7,750
171,937

3,201,384－
56,5533,201,455－
56,55330,845,452
70,003
1,553,049

30,846,130
70,003
1,553,039

(829)

(829)

(100)

(100)

(7,488)(7,488)(4,747)(7,992)(5,895)(9,751)(42,878)(72,189)(Note 1) Methods to determine the fair value of financial instruments
a. Cash and due from banks
All cash and due from banks are short-term in nature, and therefore their carrying amounts approximate the fair value.
b. Call loans and bills bought
All call loans and bills bought are short-term in nature, and therefore their carrying amounts approximate the fair value.
c. Monetary claims bought
As for monetary claims bought whose terms are less than one year, their carrying amounts approximate the fair value, while the fairvalue of long-term claims is based on the over-the-counter price (including an indicative price) determined by securities firms orbanks, etc.
d. Money held in trust
For the securities invested as part of trust assets in independently managed money trusts that invest primarily in securities, the fairvalue of equity securities is determined using quoted market prices and the fair value of debt securities is determined using either
quoted market prices or prices provided by counterparty financial institutions.
e. Held-to-maturity debt securities and available-for-sale securities
The fair values of held-to-maturity debt securities and available-for-sale securities are based on either quoted market prices or prices
provided by counterparty financial institutions. The fair values of investments in trust are based on published net asset value. Private
placement bonds are based on the discounted present value, which is calculated by discounting the estimated future cash flows arisingfrom the financial assets.

― 31 ―

f. Loans and bills discounted
Carrying amounts of loans and bills discounted with floating rates, which indicate the short-term market interest rates, are supposed
to approximate the fair value as long as the credit status of the borrower has not largely changed. The fair value of loans and bills
discounted with fixed rates is based on the present value of the total of principal and interest discounted by an interest rate to be
applied if similar new loans were entered into, by the types, self-assessment and the terms of loans and bills discounted. As for loans
and bills with short-term settlement (within a year), their carrying amounts are supposed to approximate the fair value.
The estimated uncollectable amount of loans to borrowers that are classified as legally bankrupt, substantially bankrupt and potentiallybankrupt is based on the estimated disposal value of collateral and the amount deemed collectible from guarantees, and therefore theircarrying amounts after deduction of allowance for doubtful accounts at the closing date are supposed to approximate the fair value.
Carrying amounts of loans and bills discounted with no specified repayment dates settled, due to some characteristics such as theoutstanding balance not exceeding the value of collateral, are supposed to approximate the fair value, given the estimated repayment
period, interest rates and other conditions.
g. Deposits
The fair value of deposits at notice is based on the payment amount that would be required at the end of the year.
The fair value of time deposits is based on the present value of the total of principal and interest discounted by an interest rate to be
applied if similar new deposits were entered into. As to time deposits with short-term maturities, their carrying amounts approximate
the fair value.
h. Call money and bills soldCall money and bills sold are short-term in nature, and therefore their carrying amounts approximate the fair value.
i. Borrowed money
The fair value of borrowed money is based on the present value discounted by an interest rate to be applied if a similar new borrowing
were entered into. As to borrowed money with short-term maturity, its carrying amount approximates the fair value.
j. Derivative transactions
Please refer to the following section of the notes on derivatives.

(Note 2) The following table summarizes book values of securities for which it is extremely difficult to determine the fair values as at
31 March 2021 and 2020:
Thousands of
U.S. dollars

Millions of yen
Available-for-sale securities
Monetary claims bought

2021

2020

2021

¥13,597130¥13,162158$122,817
1,174― 32 ―

(Note 3) Expected collections of assets and payments of liabilities with maturities as at 31 March 2021 and 2020 are as follows:
Millions of yen
2021
Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥598,475
23,000
1,448

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
4,159

－

－

－

1,989

－

19,978－－85,905－－
141,766－－
188,919

1,989－
203,584－－
320,999

19,978－
122,648

8,025
7,389
46,415
238,326

9,236－
68,782427,556

10,30535,052
92,882400,549

24,227122,029
24,397
155,194

48,762
158,141
70,554148,083

60,01433,96018,848359,007

Deposits
Call money and bills soldBorrowed money (*2)

3,304,090
7,750－

103,979
－
9

6,681
－
12

10
－
12

140
－
18

－
－
49

Millions of yen
2020
Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥344,497
－
1,533

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
3,307

301

－

－

1,987

－

19,976－
301
179,797－－
159,274－－
169,371

1,987－
146,037－－
326,468

19,976－
108,490

60,48822,027
47,832
274,046

14,3505,612
91,010379,200

10,34030,046
77,378368,590

9,170
85,562
16,729144,320

38,485
195,200
58,645
122,275

55,391
36,671
14,106
330,648

Deposits
Call money and bills soldBorrowed money (*2)

3,094,585－
1,306

99,740
－
3

5,948
－
12

1,071
－
12

40
－
18

－
－
55

― 33 ―

Thousands of U.S. dollars
2021
Within one
year

One tothree years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks(*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted$5,405,790
207,750
13,079

$－
－
－

$－
－
－

$－
－
－

$－
－
－

$－
－
37,567－－－

17,966－

180,453－－775,946－－
1,280,517－－
1,706,431

17,966－
1,838,894－－
2,899,458

180,453－
1,107,831

72,487
66,742419,248
2,152,705

83,425－621,281
3,861,946

93,081
316,611
838,967
3,618,002

218,833
1,102,240
220,369
1,401,807

440,448
1,428,426
637,287
1,337,576

542,083
306,747
170,247
3,242,769

Deposits
Call money and bills soldBorrowed money (*2)

29,844,549
70,003－

939,202－81

60,347
－
108

90
－
108

1,264
－
163

－
－
443

Notes: *1. Due from banks that does not have maturity is included in the “Within one year” column.
*2. Borrowed money is stated for the interest-bearing borrowed money.

Derivatives
As stated under “2. SIGNIFICANT ACCOUNTING POLICIES,” the Bank deals in interest rate swaps, currency swaps, and forward
exchange contracts.
a. Derivative instruments not qualifying for hedge accounting
Notional amounts, fair value and unrealized gains (losses) as at 31 March 2021 and 2020 were as follows:(Currency-related transactions)
Millions of yen
2021

Thousands of U.S. dollars
2020

Unrealized
Notional

Forward foreign exchange:
Sell
Buy
Notes:

gains

2021
Unrealized

Notional

gains

Unrealized
Notional

gains

amounts Fair value (losses)

amounts Fair value (losses)

amounts Fair value (losses)¥14,132
16¥17,458
16$127,649 $(7,298) $(7,298)145
00¥(808)
0¥(808)
0

¥82
0

¥82
0

1. Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.
2. The fair value of forward foreign exchange is based on the discounted present value.

― 34 ―(Credit derivative transactions)
Millions of yen

Thousands of U.S. dollars

2021

2020

Notional

Over

Fair

amounts

one year

value

Sell

¥1,000¥1,000

¥(21)

Buy

－

－

－

Unrealized

2021
Unrealized

Notional

Over

Fair

amounts

one year

value

¥(21)

¥1,000¥1,000¥(182)

－

－

－

－

gains
(losses)

Unrealized

Notional

Over

Fair

amounts

one yearvalue¥(182)$9,033$9,033$(190)$(190)

－

－

－

－

－

gains
(losses)

gains(losses)

Creditdefaultswap:

Notes:

1. Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.
2. The fair value of credit default swap is based on the prices provided by the financial institutions.
3. “Sell” transaction represents undertaking of credit risk.

(Earthquake derivatives)
Millions of yen

Thousands of U.S. dollars

2021

2020

2021

Unrealized
Notional

gains

amounts Fair value (losses)

Earthquake derivatives:
Sell
Buy

¥2,610
2,610

¥(34)
34

Unrealized
Notional

－
－

gains

amounts Fair value (losses)¥2,335
2,335

¥(30)
30

Unrealized
Notional

－
－

gains

amounts Fair value (losses)$23,575
23,575$(307)
307－－

Note: For transactions in the table above, acquisition costs are regarded as fair value as it is extremely difficult to determine the fairappraised value.

b. Derivative instruments qualifying for hedge accounting
Notional amounts and fair value as at 31 March 2021 and 2020 were as follows:(Interest-related transactions)
Millions of yen
2021
Notional
amounts
Interest rate swap:
Receive floating rate/Pay fixed rate
(Deferral method)
Receive floating rate/Pay fixed rate
(Exceptional method)

Thousands of U.S. dollars
2020

Fair value

Notional
amounts

2021
Fair value

Notional
amounts

Fair value¥38,002¥(4,747)¥38,973¥(5,894)$343,257$(42,878)

22,143(3,245)22,239(3,857)200,009(29,311)― 35 ―

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Bills discounted
Loans on notes
Loans on deeds
Overdrafts

2021

2020

2021

¥2,11947,2391,680,010
169,185¥2,59751,906
1,564,845
195,736$19,140
426,691
15,174,871
1,528,182¥1,898,553¥1,815,084$17,148,884

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Committee Practical Guideline No. 24.
The Group has the right to sell or pledge commercial bills discounted without restrictions. The total face values as at 31 March 2021
and 2020 were ¥2,119 million ($19,140 thousand) and ¥2,597 million, respectively.
The Group is required to disclose loans to customers who meet specific criteria in accordance with the Banking Act. Doubtful loans
as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Loans to borrowers under bankruptcy proceedings
Past due loans
Loans past due three months or more
Restructured loans, including loans to borrowers financiallyassisted by the Bank

¥724
39,2755

2020¥947
33,60612021$6,540354,756
45

5,317

4,683

48,026¥45,321¥39,237$409,367

8. PLEDGED ASSETS
As at 31 March 2021, deposits of ¥39,650 million ($358,143 thousand) and borrowed money of ¥171,500 million ($1,549,092
thousand) were secured by a pledge of securities in the amount of ¥252,012 million ($2,276,326 thousand) and guarantee money
deposits in the amount of ¥73 million ($659 thousand), respectively. As at 31 March 2020, deposits of ¥50,168 million and borrowed
money of ¥56,106 million were secured by a pledge of securities in the amount of ¥125,923 million and guarantee money deposits inthe amount of ¥71 million, respectively. In addition to the abovementioned assets pledged as collateral, the Group provided otherassets in the amount of ¥35,003 million ($316,168 thousand) and ¥35,003 million as collateral for transactions such as exchange
settlement transactions as at 31 March 2021 and 2020, respectively.
Other assets include cash collateral paid for financial instruments, guarantee deposits and lease deposits in the amount of ¥8,581
million ($77,509 thousand) and ¥9,790 million, ¥89 million ($804 thousand) and ¥89 million, and ¥155 million ($1,400 thousand)and ¥166 million as at 31 March 2021 and 2020, respectively.

9. COMMITMENT LINE AGREEMENTS
Commitment line agreements are agreements to lend customers a prescribed amount when they apply for borrowing, unless there isviolation of the conditions of the agreements. The amounts of unused commitment line related to such agreements as at 31 March
2021 and 2020 were ¥700,263 million ($6,325,201 thousand) and ¥686,008 million, respectively. The amounts of commitment line
agreements, having a condition that the original agreement period would be less than one year or unconditionally cancelable at any
time, were ¥658,043 million ($5,943,844 thousand) and ¥650,439 million as at 31 March 2021 and 2020, respectively. The amount― 36 ―

of unused commitment line does not necessarily affect the future cash flows of the Group because most of such agreements were
terminated without being used. The majority of these agreements contain provisions that stipulate that the Group may refuse to makeloans or may decrease the commitment line for reasons including certain changes in financial conditions or security for the loans.
When entering into loan agreements with the customers, the Group requests pledges of collateral in the form of premises or securities
if necessary. After entering into loan agreements, the Bank periodically checks the financial condition of the customers based on its
internal rules and performs certain actions relating to the security of the loans if necessary.

10. OTHER ASSETS
Other assets as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Accrued income
Other

2020

2021

¥3,07959,024¥3,00561,045$27,811533,141¥62,103¥64,050$560,952

11. PREMISES AND EQUIPMENT
Premises and equipment as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Land
Buildings
Equipment
Leased assets
Other¥8,67035,425
8,301
80
959

¥8,78635,142
8,285
80
1,354

$78,313319,980
74,980723
8,662

Accumulated depreciation

53,43537,25653,64736,821

482,658
336,519¥16,179¥16,826$146,139

To conform with the Companies Act of Japan, deferred gains on sale of real estate in the amount of ¥805 million ($7,271 thousand)and ¥805 million as at 31 March 2021 and 2020, respectively, were deducted from the acquisition cost of premises and equipment.

12. INTANGIBLE ASSETS
Intangible assets as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
SoftwareLeased assets
Other― 37 ―

2020

2021¥1,25660
190¥1,28776
102$11,345542
1,716¥1,506¥1,465$13,60313. DEPOSITS
Deposits as at 31 March 2021 and 2020 consisted of the following:
Millions of yen
Current deposits
Ordinary deposits
Deposits at noticeTime deposits
Other deposits
Negotiable certificates of deposit

Thousands of
U.S. dollars

2021

2020

2021

¥56,518
2,079,462
2,473
996,537
67,264
212,646¥45,702
1,834,753
1,880
1,005,353
77,720235,976$510,505
18,782,964
22,3389,001,328
607,569
1,920,748¥3,414,900¥3,201,384$30,845,452

14. OTHER LIABILITIESOther liabilities as at 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Accrued income taxes
Accrued expenses
Unearned income
Lease obligations
Other

2020

2021

¥2,032
1,905
597
1,359
24,146

¥91
2,047
647
1,494
24,966$18,354
17,207
5,392
12,275
218,102¥30,039¥29,245$271,330

15. CONTINGENT LIABILITIES, ACCEPTANCES AND GUARANTEESAll contingent liabilities including letters of credit, acceptances and guarantees are reflected in acceptances and guarantees. As a contra
account, customers’ liabilities for acceptances and guarantees are shown on the asset side, which represent the Group’s right ofindemnity from customers.
The amount of guarantee obligation for privately placed bonds (Financial Instruments and Exchange Act, Article 2, Paragraph 3), outof bonds included in securities, stood at ¥11,316 million ($102,213 thousand) as at 31 March 2021 compared with ¥8,338 million as
at 31 March 2020.

16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe Group has adopted funded and unfunded defined benefit plans to prepare for the employees’ retirement benefits. In addition, asof 1 April 2016, the Bank transferred part of the defined benefit plans (excluding the portion for vested pensioners in a waiting period
and current pensioners) to defined contribution plans.
Under the defined benefit pension plan, which is a funded plan, employees receive lump-sum payments or pensions based on salaries
and service periods; additionally, under this plan, a cash balance plan has been introduced. Each beneficiary has a hypotheticalindividual account under the defined benefit pension plan, where contributions by the Bank and source of pension payments for eachbeneficiary are accumulated. In hypothetical individual accounts, interest credits based on trends in market interest rates and benefit
credits based on the salary level are accumulated. In addition, the Bank has set up retirement benefit trusts related to the defined
benefit pension plan.
Under the lump-sum retirement benefit plan (an unfunded plan that has become a funded plan as a result of setting up retirement― 38 ―

benefit trusts.), predetermined points based on years of service and ability-based grade / job title are given to each beneficiary annually,and employees receive lump-sum payments, which are calculated by multiplying the unit price of points with the accumulated points
at the time of retirement, as retirement benefits.
A consolidated subsidiary adopts the simplified method in calculating net defined benefit liability and retirement benefit expenses.

Defined benefit plans(i) Change in projected benefit obligation
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Balance at the beginning of the year
Service costs (including the amount of employee contributions)Interest costs
Actuarial differences
Retirement benefits paid

¥25,132685
108
70(1,401)¥25,364692
108
117(1,149)$227,007
6,188
976
632
(12,655)

Balance at the end of the year

¥24,594¥25,132$222,148

Note: Since the consolidated subsidiaries, which adopt the simplified method, are insignificant, the net defined benefit liability,
retirement benefit expenses and retirement benefits paid are included in the accounts above. All retirement benefit expenses areincluded in service costs.

(ii) Change in plan assets
Millions of yen
2021

2020

Thousands of
U.S. dollars
2021

Balance at the beginning of the year
Expected return on plan assets
Actuarial differences
Employer contributions
Employee contributions
Retirement benefits paid

¥26,346
659
2,212
112
52
(787)

¥27,753694(1,475)
113
52
(791)

$237,973
5,952
19,9801,012
470(7,109)Balance at the end of the year

¥28,594¥26,346$258,278(iii) Reconciliation of projected benefit obligation and plan assets with net defined benefit liability (asset)
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Funded projected benefit obligation
Plan assets¥24,306(28,594)¥24,800(26,346)$219,547(258,278)

Unfunded projected benefit obligation(4,288)288(1,546)
332(38,731)2,601

Net liability (asset) recognized in consolidated balance
sheets¥(4,000)¥(1,214)$(36,130)

Net defined benefit liability
Net defined benefit asset

1,812(5,812)

2,484(3,698)16,368(52,498)

Net liability (asset) recognized in consolidated balance
sheets¥(4,000)¥(1,214)$(36,130)

Note: The table above includes the plans to which the simplified method is applied.

― 39 ―

(iv) Retirement benefit expenses and their breakdown
Millions of yen
2021
2020

Thousands of
U.S. dollars
2021

Service costs (excluding the amount of employee contributions)Interest costs
Expected return on plan assets
Amortization of actuarial differences

¥634
108
(659)
445

¥640
108
(694)
210

$5,726976(5,952)
4,019

Retirement benefit expenses

¥528

¥264

$4,769Note: The retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are included in service costs.

(v) Remeasurements of defined benefit plans in other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in other comprehensive income was asfollows:
Millions of yen
2021

Thousands of
U.S. dollars

2020

2021

Actuarial differences¥2,587¥(1,382)$23,367

Total¥2,587¥(1,382)$23,367(vi) Remeasurements of defined benefit plans in accumulated other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in accumulated other comprehensive income
was as follows:
Millions of yen
2021

Thousands of
U.S. dollars

2020

2021

Unrecognized actuarial differences¥ (702)¥ (3,289)$(6,341)

Total¥ (702)¥ (3,289)$(6,341)(vii) Plan assets(a) Percentage by major category of plan assets are as follows:
2021

2020

Bonds
Equities
General accountCash and deposits

55%
29%
13%
3%

26%
15%
14%
45%

Total

100%

100%

Retirement benefit trusts set up for defined benefit pension plans accounted for 20% and 20% of total plan assets for the years
ended 31 March 2021 and 2020, respectively. In addition, retirement benefit trusts set up for the lump-sum retirement benefit
plans accounted for 24% and 24% of total plan assets for the years ended 31 March 2021 and 2020, respectively.
(b) Procedure for determining long-term expected rate of return on plan assets
In determining a long-term expected rate of return on plan assets, the Bank considers the current and projected asset allocations,as well as a current and future long-term expected rate of return for various categories of the plan assets.

― 40 ―

(viii) Basis for calculation of actuarial assumptions
The basis for calculation of actuarial assumptions (presented as a weighted-average rate for discount rate and long-term expected
rate of return on plan assets) for the years ended 31 March 2021 and 2020 is as follows:
2021
Discount rateLong-term expected rate of return on plan assets
Expected salary increase rate in defined benefit plans
Expected salary increase rate in lump-sum retirement
benefit plans

2020
0.4%
2.5%
3.9%

0.4%
2.5%
3.9%

7.4%

7.4%

The contributions made by the Bank to defined contribution plans were ¥124 million ($1,120 thousand) and ¥125 million for the years
ended 31 March 2021 and 2020, respectively.

17. INCOME TAXESThe Group is subject to a number of taxes based on income such as corporation, inhabitant and enterprise taxes, which, in the aggregate,
indicated a statutory tax rate in Japan of approximately 30.4% and 30.4% for the years ended 31 March 2021 and 2020, respectively.
Significant components of the Group’s deferred tax assets and liabilities as at 31 March 2021 and 2020 are as follows:

Thousands of U.S.
dollars

Millions of yen
2021

2020

2021

Deferred tax assets:
Allowance for doubtful accounts
Net defined benefit liability
Accumulated depreciation
Securities
Deferred hedge
Other¥4,219
2,292
1,246
369
1,443
1,282

¥3,327
3,136
1,142
375
1,792
1,159

$38,10920,703
11,255
3,333
13,034
11,579Subtotal
Valuation allowance (*)

10,851(3,204)

10,931(2,287)98,013(28,941)

7,647

8,644

69,072(14,182)(407)(1)(10,100)(405)(1)(128,101)(3,676)(9)(14,590)(10,506)(131,786)¥(6,943)¥(1,862)$(62,714)

Total deferred tax assets
Deferred tax liabilities:
Net unrealized holding gains on available-for-sale securities
Deferred gains on sale of real estate
Other
Total deferred tax liabilities
Net deferred tax liabilities

Note (*): Valuation allowance increased by ¥917 million ($8,283 thousand) in the year ended 31 March 2021. The main reason ofthis increase was the recognition of valuation allowance for the portion of deductible temporary differences related toallowance for doubtful accounts incurred in the current fiscal year at the Bank and its consolidated subsidiaries that was notexpected to be realized in the reasonably estimated period in the future.

― 41 ―

The following summarizes the significant difference between the statutory tax rate and the Bank’s effective tax rate for the years
ended 31 March 2021 and 2020.
2021
Statutory tax rate

2020

30.4%

30.4%

Non-deductible expenses

0.4

0.5

Non-taxable income

(1.3)

(1.8)

Per capita inhabitant taxes

0.7

0.7

Valuation allowance

16.6

(2.5)

Other, net

0.9

0.3

47.7%

27.6%

Effective tax rate

18. NET ASSETS
Under the Companies Act and the Banking Act of Japan, the entire amount of the issue price of shares is required to be accounted for
as capital, although a company may, by a resolution of its board of directors, account for an amount not exceeding one-half of theissue price of the new shares as additional paid-in capital, which is included in capital surplus.
The Companies Act and the Banking Act provide that an amount equal to at least 20% of cash dividends and other cash appropriations
shall be appropriated and set aside as a legal earnings reserve until the total amount of legal earnings reserve and additional paid-in
capital equals 100% of common stock. The legal earnings reserve and additional paid-in capital may be used to eliminate or reduce a
deficit by a resolution of the shareholders’ meeting or may be capitalized by a resolution of the board of directors. On the condition
that the total amount of legal earnings reserve and additional paid-in capital remains equal to or exceeds 100% of common stock, it isavailable for distribution by a resolution of the shareholders’ meeting. Legal earnings reserve is included in retained earnings in theaccompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the non-consolidated financial statements of
the Bank in accordance with the Companies Act.
The number of treasury stock held by the Group was 903 thousand shares as at 31 March 2021 and 908 thousand shares as at 31 March
2020.

19. STOCK OPTIONS
1. Share-based compensation expenses accounted for as general and administrative expenses
The balances of stock acquisition rights granted for the stock option plan were ¥252 million ($2,276 thousand) and ¥225 million as at
31 March 2021 and 2020, respectively.
Share-based compensation expenses accounted for as general and administrative expenses for the years ended 31 March 2021 and2020 amounted to ¥48 million ($434 thousand) and ¥39 million, respectively.

― 42 ―

2. Details of stock options, volume and activity(a) Details of stock options
Title and number ofgrantees
Number of stock
options by type ofsharesGrant dateCondition for vesting
Requisite service period
Exercise period

2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Directors of the Bank:
9
Common stock:
13,400 shares

Directors of the Bank:
9
Common stock:
10,400 shares

Directors of the Bank:
9
Common stock: 9,100
sharesDirectors of the Bank:
9
Common stock:
12,100 shares

24 July 2013
Not applicableNot applicable
From 25 July 2013 to
24 July 2043

24 July 2014
Not applicableNot applicable
From 25 July 2014 to
24 July 2044

23 July 2015
Not applicableNot applicable
From 24 July 2015 to
23 July 2045

25 July 2016
Not applicableNot applicable
From 26 July 2016 to
25 July 2046

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

Directors of the Bank:
9
Common stock:
11,100 shares

Directors of the Bank:
7
Common stock:
10,200 shares

Directors of the Bank:
7
Common stock:
14,500 shares

Directors of the Bank:
7
Common stock:
18,600 shares

26 July 2017
Not applicableNot applicable
From 27 July 2017 to
Exercise period
26 July 2047
Note: Reported in terms of shares of stock.

25 July 2018
Not applicableNot applicable
From 26 July 2018 to
25 July 2048

25 July 2019
Not applicableNot applicable
From 26 July 2019 to
25 July 2049

27 July 2020
Not applicableNot applicable
From 28 July 2020 to
27 July 2050

Title and number ofgrantees
Number of stock
options by type ofsharesGrant dateCondition for vesting
Requisite service period(b) Volume and activity
The following describes volume and activity that existed during the year ended 31 March 2021. The number of stock options isreported in terms of shares of stock.
(i) Number of stock options
2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Before vesting (shares):
As at 31 March 2020
GrantedForfeited
VestedOutstanding

7,000
－
－
600
6,400

6,000
－
－
400
5,600

5,400
－
－
600
4,800

8,000
－
－
800
7,200

After vesting (shares):
As at 31 March 2020
VestedExercised
Forfeited
Outstanding

－
600
600
－
－

－
400
400
－
－

－
600
600
－
－

－
800
800
－
－

― 43 ―

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

As at 31 March 2020
GrantedForfeited
VestedOutstanding

7,500
－
－
700
6,800

8,600
－
－
800
7,800

14,500－－1,100
13,400－18,600－－18,600After vesting (shares):
As at 31 March 2020
VestedExercised
Forfeited
Outstanding

－
－
700
700
－
－

－
－
800
800
－
－

－
－
1,100
1,100
－
－

－
－
－
－
－
－

2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

¥1 ($0.01)¥2,580 ($23.30)¥4,119 ($37.21)¥1 ($0.01)¥2,580 ($23.30)¥4,437 ($40.08)¥1 ($0.01)¥2,580 ($23.30)¥5,287 ($47.76)¥1 ($0.01)¥2,580 ($23.30)¥4,032 ($36.42)

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

¥1 ($0.01)¥2,580 ($23.30)¥4,178 ($37.74)¥1 ($0.01)¥2,580 ($23.30)¥4,439 ($40.10)¥1 ($0.01)¥2,580 ($23.30)¥2,693 ($24.32)¥1 ($0.01)¥－ ($－)¥2,578 ($23.29)

Before vesting (shares):(ii) Price information
Exercise price
Average exercise price
Fair value at the grant

Exercise price
Average exercise price
Fair value at the grant

3. Valuation method for fair value of stock options
The valuation methods for fair value of stock options granted in the year ended 31 March 2021 were as follows:(a) Valuation method: Black-Scholes formula(b) Major basic numerical values and valuation method2020 stock option plan
Stock price volatility (*1)
Expected years to expiration (*2)
Expected dividends (*3)
Risk-free interest rate (*4)

51.5%
0.7 years¥70 ($0.63) per share(0.17)%

Notes:*1. Stock price volatility is calculated based on the actual stock prices from 4 November 2019 to 20 July 2020.
*2. As a rational estimation is difficult due to the insufficient amount of historical data, expected years to expiration aredetermined by the estimated average remaining service period.
*3. Expected dividends are determined based on actual dividends for the year ended 31 March 2020.
*4. Risk-free interest rate is the Japanese government bond yield corresponding to the expected years to expiration.
4. Estimation method for the number of vested stock options
Since it is difficult to make a reasonable estimate on the number of stock options that will be forfeited in the future, the actual
number of forfeited stock options is reflected in the estimation.

― 44 ―

20. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Other operating income:Gain on trading account securities transactions
Gain on sale of bonds
Gain on financial instruments
Other

2020

2021

¥0
145
161
4,295

¥0
423
－
4,200

$0
1,310
1,454
38,795¥4,601¥4,623$41,559

Thousands of
U.S. dollars

Millions of yen
2021
Other operating expenses:
Loss on sale of foreign bills of exchange
Loss on sale of bonds
Loss on redemption of bonds
Loss on financial instruments
Other

2020

2021

¥27
136
639
－
4,029

¥384
9
1,062
168
3,762

$244
1,229
5,772
－
36,392¥4,831¥5,385$43,637

21. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Salaries and allowances
Fringe benefits and welfare
Retirement benefit expenses
Depreciation for premises and equipment
Rental expenses
Taxes other than income taxes
Deposit insurance premium
Business outsourcing expenses
Other expenses

2020

2021

¥10,578
2,880
650
1,695
780
1,526
929
2,407
4,028

¥11,222
2,909
389
1,655
790
1,455
959
2,683
4,153

$95,547
26,014
5,871
15,310
7,045
13,784
8,391
21,74236,384¥25,473¥26,215$230,088

22. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended 31 March 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2021
Other income:Gain on sale of stocks and other securities
Gain on disposal of premises and equipment
Other― 45 ―

2020

2021¥3,65925
767¥1,72081
510$33,050
226
6,928¥4,451¥2,311$40,204

Thousands of
U.S. dollars

Millions of yen
2021
Other expenses:
Provision for allowance for doubtful accounts
Loss on disposal of premises and equipment
Loss on devaluation of stocks and other securities
Loss on sale of stocks and other securities
Impairment losses
Loss on money held in trust
Loss on transfer of receivables
Other

2020

2021

¥3,975
105
189
182
537
41
20
180

¥2,028
94
892
476
78
203
14
342

$35,905
949
1,707
1,644
4,851
370
180
1,625

¥5,229¥4,127$47,231

23. LEASE TRANSACTIONS
A. Finance leases(a) As lessee(1) Finance leases that transfer the ownership(i) Details of leased assets
Premises and equipment:
Not applicable
Intangible assets:
Mainly consist of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.
(2) Finance leases other than those that transfer the ownership(i) Details of leased assets
Premises and equipment:
Mainly consist of equipment for the branch operating system
Intangible assets:
Mainly consists of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.
(3) Current portion of lease obligations and lease obligations (excluding current portion) as at 31 March 2021 and 2020 consisted of
the following:
Millions of yen
2021
Current portion of lease obligations
Lease obligations (excluding current portion)

2020

Thousands of
U.S. dollars

Average interest
rate (%)

2021

2021

¥476
883

¥507
987

$4,2997,976¥1,359¥1,494$12,275

Note: The average interest rate represents the weighted-average rate applicable to the year-end balance.

― 46 ―

2.59%
2.40%

The aggregate annual maturities of lease obligations are summarized as follows:Year ending 31 MarchMillionsof yenThousands of U.S.
dollars

2021

2021

2022
2023
2024
2025
2026 and thereafter

¥476
350
265
168
100

Year ending 31 MarchMillions ofyen$4,299
3,162
2,394
1,517
903

2020
2021
2022
2023
2024
2025 and thereafter

¥507
371
267
194
155

B. Operating leases(a) As lessee
There were no future lease payments under non-cancelable operating leases as at 31 March 2021 and 2020.

(b) As lessor
Future lease receivables under non-cancelable operating leases as at 31 March 2021 were ¥257 million ($2,321 thousand) including¥27 million ($244 thousand) due within one year.
Future lease receivables under non-cancelable operating leases as at 31 March 2020 were ¥285 million including ¥28 million due
within one year.

― 47 ―

24. COMPREHENSIVE INCOME
Reclassification adjustments and tax effect amounts of other comprehensive income (losses) for the years ended 31 March 2021 and2020 were as follows:
Thousands of U.S.
dollars

Millions of yen
2021
Net unrealized holding gains (losses) on available-for-salesecurities:
Amount for the year
Reclassification adjustment

2020

2021

¥17,523(3,656)¥(18,547)(1,266)$158,278(33,023)

Amount before tax effectTax effect amount

13,867(4,092)(19,813)
5,867

125,255(36,961)

Net unrealized holding gains (losses) on availablefor-sale securities

9,775(13,946)

88,294

619
529

(775)
541

5,591
4,778

1,148
(349)

(234)
71

10,369(3,152)Net unrealized gains (losses) on hedging derivatives:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amount

799

(163)

7,217

Remeasurements of defined benefit plans:
Amount for the year
Reclassification adjustment

Net unrealized gains (losses) on hedging derivatives

2,142
445

(1,592)
210

19,3484,019

Amount before tax effectTax effect amount

2,587
(786)

(1,382)421

23,367(7,099)Remeasurements of defined benefit plans
Total other comprehensive income (losses)

1,801

(961)

16,268¥ 12,375¥ (15,070)$111,779

25. PER SHARE DATA
Amounts per share as at 31 March 2021 and 2020 and for the years then ended are as follows:Yen
Net assets per share
Net income per share
Diluted net income per share― 48 ―

U.S. dollars

2021

2020

2021

¥11,445.57
164.64164.03¥10,644.27
212.50211.86$103.38
1.49
1.48

Amounts per share were calculated based on the following:Thousands of
U.S. dollars

Millions of yen or
thousands of shares
Net assets per share:
Total net assets
Amount to be deducted from total net assets
Stock acquisition rights
Net assets at the end of the fiscal year attributed to common stock
Number of shares of common stock at the end of the fiscal year
used in computing net assets per share attributed to common
stock

2021

2020

2021

¥201,631
252
252
201,379¥187,456
225
225
187,231$1,821,254
2,276
2,276
1,818,97817,594

17,590Net income per share:
Net income attributable to owners of parent
Net income attributable to owners of parent attributed to common
stock
Average number of shares of common stock during the year

2,896

3,784

26,1582,896
17,594

3,784
17,80926,158

Diluted net income per share:
Number of increased common stock used in computing diluted net
income per share
Compensation-type stock options

66
66

54
54

26. SEGMENT INFORMATION(1) Reportable segment information
a. Description of reportable segments
The Group’s reportable segments are those components of the Group for which separate financial information is available andwhose operating results are regularly reviewed by the board of directors to decide on the allocation of resources and assess businessperformance.
The principal business of the Group is financial services primarily focused on domestic commercial banking business. The Group
has three reportable segments — “Commercial banking business,” “Leasing business” and “Credit card and credit guarantee
business” — classified by type of financial services.
“Commercial banking business” consists of deposits, loans, securities investment and foreign exchange operations.
“Leasing business” consists of leasing and computer processing contracted business.
“Credit card and credit guarantee business” consists of credit card and guarantee business.

Since the quantitative importance of “Credit card and credit guarantee business” became significant, the reportable segments havebeen changed to “Commercial banking business,” “Leasing business” and “Credit card and credit guarantee business” from thecurrent fiscal year. Segment information in the previous fiscal year has been reclassified to reflect the change in reportable segments.

― 49 ―

b. Methods of measurement of the amounts of income, profit (loss), assets, liabilities and other items for each reportablesegment
The accounting policies for each reportable segment are consistent with those disclosed under “2. SIGNIFICANTACCOUNTING POLICIES.”
Segment profit is adjusted with ordinary profit. Ordinary profit is profit derived from regular business activities, including wages,
dividends and interest.
Intersegment income is based on the prevailing market price.

c. Information about income, profit (loss), assets, liabilities and other items for each reportable segment
2021
Millions of yen
Reportable segment
Credit card
Commercial
banking

Ordinary income:
Income from externalcustomers¥39,870

guarantee¥4,301¥1,318

Total

OthersTotal¥45,489¥152¥45,641

Adjustments

Consolidated¥(323)¥45,318

337

263

454

1,054

46

1,100

(1,100)－¥40,207¥4,564¥1,772¥46,543¥198¥46,741¥(1,423)¥45,318

Intersegment income
Totaland credit
Leasing

5,542

(32)

879

6,389

0

6,389

(233)

6,156

Segment assets

3,838,826

12,794

9,963

3,861,583

199

3,861,782(20,820)

3,840,962

Segment liabilities

3,643,048

8,810

3,797

3,655,655

30

3,655,685(16,354)

3,639,331

Depreciation

1,682

39

1

1,722

-

1,722

-

1,722

Interest income

28,298044

28,342028,342(288)

28,054

875

37

1

913

-

913

(37)

876

2,404

4

232

2,640

3

2,643

-

2,643

1,700

4

0

1,704

-

1,704

1

1,705

Segment profit (loss)

Other items:

Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets

Notes 1. Ordinary income is stated instead of net sales of non-banking industries.
2. “Others” are business segments not included in the reportable segments, and include the consulting business and regional
trading company business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers are primarily adjustments for provision for allowance for
doubtful accounts.
(2) The adjustments for segment profit (loss) are primarily elimination of intersegment transactions.
(3) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(4) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
(5) The adjustments for interest income are primarily elimination of intersegment transactions.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.

― 50 ―

2020
Millions of yen
Reportable segment
Credit card
Commercial

Ordinary income:
Income from externalcustomers
Intersegment income
Totaland creditbanking

Leasingguarantee¥39,942¥4,206¥1,096

Total¥45,244

Others¥－Total¥45,244

Adjustments

Consolidated¥－¥45,244

222

462

445

1,129

－

1,129

(1,129)－¥40,164¥4,668¥1,541¥46,373¥－¥46,373¥(1,129)¥45,244

Segment profit

5,152

3

328

5,483

－

5,483

(163)

5,320

Segment assets

3,485,151

12,708

9,705

3,507,564－

3,507,564(22,026)

3,485,538

Segment liabilities

3,301,246

8,683

4,065

3,313,994－

3,313,994(15,912)3,298,082

Depreciation

1,642

47

1

1,690

－

1,690

－

1,690

Interest income

29,9940

50

30,044－30,044(196)

29,848Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets

1,064

35

2

1,101

－

1,101

(36)

1,065

1,350

13

83

1,446

－

1,446

－

1,446

2,178

15

－

2,193

－

2,193

(108)

2,085

Other items:

Notes 1. Ordinary income is stated instead of net sales of non-banking industries.
2. There is no business applicable to “Others.”
3. “Adjustments” are as follows.
(1) The adjustments for segment profit are primarily elimination of intersegment transactions.
(2) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(3) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
(4) The adjustments for interest income are primarily elimination of intersegment transactions.
(5) The adjustments for increase in premises and equipment and intangible assets are primarily elimination ofintersegment transactions.
4. Segment profit is adjusted with ordinary profit in the consolidated statements of income.

― 51 ―

2021
Thousands of U.S. dollars
Reportable segment
Creditcard andCommercial

Ordinary income:
Income from externalcustomers
Intersegment income
Total

creditbanking

Leasingguarantee

Total

OthersTotal$360,130$38,849$11,905$410,884$1,373$412,257

Adjustments

Consolidated$(2,917)$409,340

3,044

2,376

4,101

9,521

415

9,936

(9,936)－$363,174$41,225$16,006$420,405$1,788$422,193$(12,853)$409,340

50,059

(289)

7,940

57,710057,710(2,105)55,605

Segment assets

34,674,609

115,563

89,992

34,880,164

1,798

34,881,962(188,059)

34,693,903

Segment liabilities

32,906,224

79,57734,29733,020,098

271

33,020,369(147,720)

32,872,649

Depreciation

15,193352

915,554-

15,554-

15,554

Interest income

255,6050397

256,0020

256,002(2,601)

253,401

Segment profit (loss)

Other items:

Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets

7,903

334

9

8,246

-

8,246

(334)

7,912

21,71436

2,096

23,84628

23,874-23,874

15,35636

015,392-

15,392

915,401(2) Other segment-related informationa. Information by service
Information by service for the years ended 31 March 2021 and 2020 is as follows:
2021
Millions of yen

Ordinary income from external customers

Banking

Securities
investment

Other

Total

¥17,338¥14,431¥13,549¥45,318

2020
Millions of yen

Ordinary income from external customers

Banking

Securities
investment

Other

Total

¥17,280¥14,670¥13,294¥45,244

2021
Thousands of U.S. dollars

Ordinary income from external customers

Banking

Securities
investment

Other

Total

$156,607$130,350$122,383$409,340

Note: Ordinary income is stated instead of net sales of non-banking industries.

― 52 ―

b. Information by geographic regioni. Ordinary income
Information on ordinary income from domestic customers for the years ended 31 March 2021 and 2020 was omitted, because theamount of ordinary income from domestic customers was more than 90% of consolidated ordinary income.
ii. Premises and equipment
Information on premises and equipment for the years ended 31 March 2021 and 2020 was omitted, because there were no premises
and equipment located abroad.

c. Major customers’ segment information
Segment information on major customers was not shown for the years ended 31 March 2021 and 2020, since no customer accounted
for more than 10% of ordinary income in the consolidated statements of income.

d. Information on impairment of fixed assets for each reportable segment
2021
Millions of yen
Reportable segment
Credit card

Commercial
banking
Impairment losses¥537

and credit

Leasingguarantee

¥－

Total

¥－

¥537

Others
¥－

Total
¥537

2020
Millions of yen
Reportable segment
Credit card

Commercial
banking
Impairment losses¥78

and credit

Leasingguarantee

¥－

¥－

Total
¥78

Others
¥－

Total
¥78

2021
Thousands of U.S. dollars
Reportable segment
Credit card

Commercial
banking
Impairment losses

and credit

Leasing$4,851$－guarantee

¥－

Total
$4,851Others$－Total$4,851e. Segment information on amortization of goodwill and its remaining balance
There is no information to be reported on amortization of goodwill and its remaining balance for the years ended 31 March 2021 and2020.

f. Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill for the years ended 31 March 2021 and 2020.

― 53 ―

27. RELATED PARTY TRANSACTIONS(1) Related party transactions
a. Transactions between the Bank and related parties
Transactions with executive officers of the Bank and major shareholders (limited to individuals) and others
There is no significant transaction with executive officers of the Bank and major shareholders to be disclosed for the year ended 31
March 2021.

For the year ended 31 March 2020
Category

Corporate/
Individual name

Executive officer
and close family Mizuhiko Yoshidamembers

Business

Voting rights(%)

Relation to therelated party

Type of transaction

Amount oftransaction

Account

Balance as at 31
March 2019

Corporate Directorand Audit &Supervisory
Committee
Member of theBank－

Creditor

Term loan－

Loans and bills
discounted¥19 million

Note: Terms and conditions of the transaction are determined on an arm’s length basis.

b. Transactions between the Bank’s consolidated subsidiaries and related parties
There is no significant transaction to be disclosed between the Bank’s consolidated subsidiaries and related parties for the years
ended 31 March 2021 and 2020.

(2) Notes to the Bank’s parent company and significant affiliates
There is no information to be reported on the notes to the Bank’s parent company and significant affiliates for the years ended 31
March 2021 and 2020.

28. SUBSEQUENT EVENTS
Cash dividends
On 23 June 2021, the shareholders of the Bank authorized the following appropriation of retained earnings as at 31 March 2021:
Millions of yen
Cash dividends (¥30 ($0.27) per share for year end)¥528

― 54 ―

Thousands of
U.S. dollars$4,769Independent auditor’s report
To the Board of Directors of The Bank of Iwate, Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of The Bank of Iwate, Ltd. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprisethe consolidated balance sheets as at March 31, 2021 and 2020, the consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Reasonableness of the Company’s estimates of allowance for doubtful accounts for loans and bills
discounted to corporate customers
The key audit matter

How the matter was addressed in our audit

The Group recognized loans and bills
discounted of ¥1,898,553 million(approximately 49.4% of total assets) andallowance for doubtful accounts of ¥15,071
million in the current consolidated balance
sheet. Of these amounts, loans and bills
discounted of ¥1,904,305 million and

The primary procedures we performed to assess
whether the Company’s estimates of allowance for
doubtful accounts for loans and bills discounted tocorporate customers was reasonable included thefollowing:― 55 ―

allowance for doubtful accounts of ¥11,522
million (both include intra-group loans toconsolidated subsidiaries and allowance for
doubtful accounts for consolidated
subsidiaries) were recognized by the Company,
the parent company, of which the majority
was for corporate customers.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Allowance for
doubtful accounts” to the consolidated
financial statements, the Company reviews theloan assets based on its internally establishedrules for self-assessment of assets, andrecognizes an allowance for doubtful accounts
based on the category of borrowers determinedin accordance with its criteria for write-offs
and reserves.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Significant
accounting estimates” the corporate customersof the Company are categorized based on
quantitative information such as the borrowers’
financial information, as well as taking into
account qualitative factors. Specifically, theCompany assesses the borrowers’ solvency
based on their substantive financial condition,
cash flows and profitability. The Company
also comprehensively takes into account theborrowers’ business sustainability, future
profitability, ability to pay obligations based on
their cash flows, the reasonableness andfeasibility of their business improvement plans
and support from other financial institutions todetermine the category of borrowers in light of
their industry/sector specific characteristics.
Accordingly, the determination requires
management’s judgment.

(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevantto the process of recognizing allowance for doubtful
accounts, with a particular focus on the following:

Method of recognizing allowance for doubtful
accounts including internally established rules
for self-assessment and criteria for write-offs
and reserves

Determination of the category of borrowers
considering qualitative factors(2) Determination of the category of borrowers
In order to assess whether borrowers wereappropriately categorized, we selected certain
borrowers to test individually, based on bothquantitative and qualitative factors. Whilequantitative factors included the possible effect on
the amount of allowance for doubtful accounts frominappropriate categorization, qualitative factors
included the determination of whether a significant
change to their credit risk rating is expected, should
their internal or external economic environment,
including the impact of COVID-19, change.
In order to assess whether the corporate customers
selected through the process above were categorized
appropriately, we:inspected the results of the analysis performedby the Company on the borrowers’ financial
information and others, as well as records anddocuments used in the categorization of theborrowers, including qualitative information;



A change in the category of a large borrower,in particular, may have a material effect on theamount of allowance for doubtful accounts tobe recognized in the consolidated financial
statements. Therefore, a heightened level ofjudgment is required for large borrowers whose
credit risk could possibly change significantly,
should their internal or external economic
environment, including the impact of COVID19, change.

inquired of personnel in the relevant
departments (Business branches, the Loan
Supervision Department, and the Risk
Management Division) of the Company, taking
into account the information on the borrowersthat we independently obtained; and

We, therefore, determined that our assessmentof the reasonableness of the Company’s
estimates of allowance for doubtful accounts
for loans and bills discounted to corporate

assessed the reasonableness of significant
assumptions used in their business improvement
plans and the feasibility of key measures byassessing the progress of the plans, taking into
account comparisons with past results, external
environment factors, and their businesses.

In assessing whether the borrowers wereappropriately categorized, particularly for large
borrowers whose credit risk could significantly
change, should their internal or external economic― 56 ―

customers was of most significance in our
audit of the consolidated financial statements
for the current fiscal year, and accordingly, a
key audit matter.

environment change, we performed an overall
assessment of their business environment, financial
performance and condition, cash flows and support
from other financial institutions, as well as future
prospect of their industry and the borrower’s
competitive advantages.

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are― 57 ―

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with the audit and supervisory committee regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the audit and supervisory committee, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2021 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Jingu Atsuhiko
Designated Engagement Partner
Certified Public Accountant
Takahashi Hidekazu
Designated Engagement Partner
Certified Public Accountant
Narushima Toru
Designated Engagement Partner
Certified Public Accountant― 58 ―

KPMG AZSA LLC
Sendai Office, Japan
September 24, 2021
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

― 59 ―

Annual Report

The Bank of Iwate,Ltd. Annual Report

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