Annual Report

2019
The Bank of Iwate, Ltd.
Annual Report 2019

Sachio Taguchi
President

Message from the President
Thank you very much for your continued patronage of the Bank of Iwate.
In April 2019 we began implementing our new medium-term management plan “Iwagin Frontier Plan – To the
Next” (the “Plan”), which will last for a period of four years. The theme of the Plan is “pursuing CSV to build afuture with the region.” CSV stands for “Creating Shared Value,” and by confronting the various issues facing our
region head on as we execute the Plan, and endeavoring to resolve them, we aim to create shared value and achieve
growth for both the community and the Bank.
The environment surrounding the Bank is becoming increasingly uncertain, as not only is the local economy
shrinking due to a declining population and a shortage of successors, but we are also faced with challenges such as
the continuation of negative interest-rate policy by the Bank of Japan and entry into the financial business by firms
from other sectors. To tackle this situation and establish co-prosperity with our region, based on which we do thebulk of our business, our executives and employees are all working together to execute various measures inaccordance with the Plan.
Our corporate message, “Trust, and beyond,” embodies our commitment to gaining the confidence of our customers
and then taking that one step further to build a strong relationship of trust with them. Our executives and employees
will be working together to make sure that we remain a bank that local customers trust and choose, so we truly hopethat we can count on your continued support and patronage.

― 1 ―Overview of the Medium-term Management Plan

Sachio Taguchi, President― 2 ―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 decreased by ¥62.6 billion from theprevious fiscal year-end to ¥3,217.5 billion (US$28,989.3 million). This was attributable to a decrease in publicdeposits due mainly to a write off of reconstruction related funds, despite an increase in deposits by corporateclients and individuals.
The fiscal year-end balance of assets under management posted an increase of ¥15.8 billion from the previous fiscal
year-end to ¥333.7 billion (US$3,006.6 million), due to increases in insurances and public bonds.
Loans
The fiscal year-end balance of loans increased by ¥42.4 billion from the previous fiscal year-end to ¥1,795.0 billion(US$16,173.5 million). This was attributable to increases in loans to SMEs and individuals, despite a decrease inloans to local governments.
Securities
The value of total securities decreased by ¥79.8 billion from the previous fiscal year-end to ¥1,219.0 billion(US$10,983.0 million). This was attributable to a decrease in national government bonds and others undermanagement.
Cash Flow Analysis
Net cash used in operating activities was a net outflow of ¥73.0 billion (US$657.3 million) in the current fiscal year,
while net cash of ¥56.0 billion was used in the previous fiscal year. This was due to an increase in loans in both theprevious and current fiscal years, as well as a decrease in net cash resulting from a decrease in deposits, etc. in thecurrent fiscal year.
Net cash provided by investing activities was a net inflow of ¥70.5 billion (US$635.5 million) in the current fiscal
year, while net cash of ¥39.5 billion was provided in the previous fiscal year. This was due to the proceeds fromsale and redemption of securities exceeding the acquisition of securities in both the previous and current fiscal
years.
Net cash used in financing activities was a net outflow of ¥12.8 billion (US$115.3 million) in the current fiscal year,
while net cash of ¥1.6 billion was used in the previous fiscal year. This was due to the payment of cash dividends inaddition to the redemption of “convertible bond-type bonds with stock acquisition rights due 2018 payable in euro
and U.S. dollars” in the current fiscal year.
As a result of the above, the fiscal year-end balance of cash and cash equivalents decreased by ¥15.2 billion fromthe previous fiscal year-end to ¥393.3 billion (US$3,543.8 million).
Business Performance
Earnings
Total income increased by ¥1.3 billion from the previous fiscal year to ¥48.5 billion (US$437.4 million). This was
mainly attributable to an increase in other income including gain on sale of stocks and other securities, despite adecrease in interest income including interest on loans and discounts due to a decline in the yield.
Total expenses increased by ¥3.1 billion from the previous fiscal year to ¥42.3 billion (US$381.1 million). This was
mainly due to an increase in other expenses such as provision of allowance for doubtful accounts, despite adecrease in general and administrative expenses.
As a result, income before income taxes decreased by ¥1.8 billion from the previous fiscal year to ¥6.3 billion(US$56.3 million). Net income attributable to owners of parent decreased by ¥1.3 billion from the previous fiscal
year to ¥4.2 billion (US$37.7 million).
Capital Ratio
The capital ratio declined by 0.28 percentage points from the previous fiscal year-end to 12.24% on a consolidated
capital adequacy basis and by 0.24 percentage points from the previous fiscal year-end to 11.87% on a
non-consolidated capital adequacy basis, as a result of an increase in risk assets mainly due to an increase in
outstanding loans to SMEs, etc.
― 3 ―Corporate Governance■ Basic approachEver since its establishment, the management of the Bank has been based on the fundamental mission
objectives of contributing to the development of the regional community and ensuring the financial soundnessof 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
and shareholders, we take complete responsibility for our management decisions and aim to establish thehighest standard of corporate governance that includes improved management transparency and strengthened
oversight functions.
■ 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 tofurther 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
oversight functions 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% 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
and are 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
discuss and 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 theBoard of 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.

― 4 ―■ 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 can be 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

Appointment/dismissal

Reports
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
Credit Risk Committee
Operational Risk Committee

Accounting
Auditors

Compliance Committee

Executive Committee

Customer Interest Protection Committee

Audit Division

Visiting audit andmonitoring

Business branches, Head Office, subsidiaries, etc.

― 5 ―・Board of Directors (As of July 23, 2019)
Chairman

Masahiro
Takahashi

President

Sachio Taguchi

Managing Director

Shigeki Miura

Managing Director

Motomu SatoManaging Director (General
Manager of General Planning
Division)

Yasushi Sasaki

Managing Director

Kensei Ishikawa

Managing Director (General
Manager of Personnel Division)

Yasutaka Kakiki

Director (Outside Director)

Hiroshi Miura

Director (Outside Director)

AtsushiTakahashi

Director (Outside Director)

Fumio Ube

Director serving as an Audit &Supervisory Committee
Member (Standing)
Director serving as an Audit &Supervisory Committee
Member (Outside Director)
Managing Executive Officer /General Manager of Sendai
OfficeExecutive Officer / General
Manager of Retail Strategy
Division
Executive Officer / General
Manager of Mizusawa Branch

Yuji Chiba
Mizuhiko
YoshidaDirector serving as an Audit &Supervisory Committee
Member (Outside Director)
Director serving as an Audit &Supervisory Committee
Member (Outside Director)

Shinobu Obara
Etsuko Sugawara

Katsuhiro
Kawamura

Executive Officer / General
Manager of Corporate
Strategy Division

Yasuhiro Sasaki

Shinji Niisato

Executive Officer / General
Manager of Tokyo Office

Toru Iwayama

Satoshi Ito

Executive Officer / General
Manager of Head Office

Shinei Kishi― 6 ―・Organization (As of July 1, 2019)

General Meeting of Shareholders

Managing Directors
Executive Officers

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

ChairmanPresident

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

Local Office

Head Office

Customer Response Center

Public Affairs and Regional Revitalization Office

Corporate Strategy Division
Retail Strategy Division
Direct Banking Center
Credit Card Center
CS Promotion OfficeMorioka Loan Plaza
Financial Markets DivisionInternational Business OfficeSendai Office

Hachinohe Office
Corporate Financial Support Office

Loan Supervision Division
Personal Loan Center

Branches

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

Audit Division

Iwagin Jigyo Souzou Capital
Co.,Ltd.

Iwagin Business Service Co.,Ltd.

Iwagin Lease Data Co., Ltd.

Iwagin DC Card Co., Ltd.

Iwagin Credit Service Co.,
Ltd.

― 7 ―

Affiliate

Subsidiaries

・The Bank of Iwate Group

Iwagin Business
Service Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture
Iwagin Lease Data Co.,Ltd.
1-5-31 Nakanohashi
Dori, Morioka City,
Iwate Prefecture

10Administrative
work of theBank

September 4, 1979

100%

Voting Rights
of Subsidiaries,
etc. Other than
Said
Subsidiaries,
etc.
0%

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%

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

Capital(Millions ofyen)

Main Business― 8 ―Date of
Establishment

The Bank’s
VotingRightsEfforts towards Regional ESG Issues
In order to establish co-prosperity with our region, within which we do the bulk of our business, we will further
strengthen our functions to solve various issues in the region, while increasing our adaptability to changes in thesurrounding business environment, as part of “pursuing CSV to build a future with the region,” the theme of our
new medium-term management plan that we began implementing in April 2019. In addition, we will aim to create
mutually shared value for both the region and the Bank by making efforts to resolve various issues in the region.
ESG and SDGs are concepts and goals aimed at creating a sustainable regional society. Accordingly, when
implementing CSV (Creating Shared Value) with the region, the Bank will proactively adopt ESG and SDGs
concepts and goals, aiming to enhance our functions that contribute to solving local issues.
CSV stands for “Creating Shared Value.”
Environment■ Proactive responses to financing for renewable energies- We will proactively respond to financing for renewable energies thatutilize abundant regional resources. Renewable energy financing
executed in FY2018 was a total of ¥5.14 billion*.
* Results of project financing for renewable energies■ Efforts to protect the local natural environment and enhance brands- We support efforts aimed at “securing the stability of raw timber”
and “enhancing the lacquer brand” of Ninohe City, which boasts
around 70% of the production of lacquer in Japan.
- In September 2017, we signed the “Lacquer Forest Building
Partnership Agreement,” and as a partner company, acquired ourown lacquer forest (nicknamed the “IWAGIN URUSHI NO SATO”).
We are planting lacquer seedlings with local junior high school
students and utilizing it in learning about nature conservation.

― 9 ―Social■ Efforts that contribute to the sustainability of local companies and thedevelopment of educational environments in local schools, etc., through our
main business activities● “Backup Plan” financing with special waiver of principal during times of earthquake disasters- The Bank does the bulk of its business in areas that were affected by the Great East Japan Earthquake. We
actively support our local business partners in enhancing countermeasures for earthquakes that cannot be
avoided. The cumulative amount executed as of March 31, 2019: ¥2.4 billion/33 companies (from January
2018)● The Bank of Iwate donation loan “Cheering for Iwate”- We are contributing to regional revitalization and the activation of local economies by donating some of theloan interest income to businesses promoted by Iwate Prefecture.
The cumulative amount executed as of March 31, 2019: ¥1.0 billion/45 companies (from October 2018)● Donation-type CSR Private Placement Bonds: The Bank of Iwate “Future-Supporting Private Placement
Bonds”- When our business partners issue private placement bonds, the Bank contributes part of the private
placement bond issuance fee as a donation and donates necessary books and sporting goods to elementary,junior, and senior high schools specified by the issuing company.
The cumulative amount executed as of March 31, 2019: ¥1.9 billion/13 companies (from February 2017)■ Efforts to support the growth of children responsible for the future of the region
through financial education- FY2018 financial education activity results
Elementary school students“Visiting lectures on money basics”

12 times

Junior high school students

Accepting of workplace visits

8 timesHigh school students

Visiting lectures on finance “MoneyConnection®”

8 times

University students

Endowed lectures

2 times■ Efforts to create local activities- We have created local activities by operating “TheBank of Iwate Red Brick Building” (formerly the mainbuilding of the head office) as a public facility. In
addition to using it as an exhibition facility for theviewing of various materials on the building, thedesigner and the financial history of Iwate, we lend themultipurpose hall out as a venue for classical music
concerts and various exhibitions.
Governance■ Audit & Supervisory Committee and the Nomination and Compensation Advisory Committee- In June 2018, the Bank transitioned to a company with Audit & Supervisory Committee. In addition to further
strengthening governance, the Bank has established the Nomination and Compensation Advisory Committee andis striving to ensure transparency and objectivity regarding decisions on the nomination and compensation of
Directors.
■ Efforts to develop an environment in which every employee canplay an active role
- Through efforts for various measures related to “diverse working
styles,” “diversity” and “positive actions,” we are pushing forwardwith efforts to develop an environment in which every employee
can play an active role.
Iwate University/The Bank of Iwate Nursery School“Ganchan Sukusuku Nursery”(In-house nursery school)― 10 ―

Consolidated Balance Sheets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018ASSETSCash and due from banks (Notes 3 and 6)
Monetary claims bought (Note 6)
Money held in trust (Notes 5 and 6)
Securities (Notes 4, 6, 8 and 16)
Loans and bills discounted (Notes 6, 7, 9 and 28)
Foreign exchange assets
Premises and equipment (Notes 11 and 24)
Intangible assets (Notes 12 and 24)
Net defined benefit asset (Note 17)
Deferred tax assets (Note 18)
Customers’ liabilities for acceptances and guarantees (Note 16)
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)
Payables under securities lending transactions (Notes 6 and 8)
Borrowed money (Notes 6 and 8)
Foreign exchange liabilities
Corporate bonds with stock acquisition rights (Notes 6 and 14)
Accrued bonuses for directors and corporate auditors
Net defined benefit liability (Note 17)
Retirement benefits for directors and corporate auditors
Provision for losses on reimbursement of dormant deposits
Provision for contingent losses
Deferred tax liabilities (Note 18)
Acceptances and guarantees (Note 16)
Other liabilities (Notes 6, 15 and 24)
Total liabilities
Net assets (Note 19):
Common stock:
Authorized — 49,450 thousand shares as at 31 March 2019 and 2018
Issued and outstanding —18,498 thousand shares at 31 March 2019 and 2018
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 17)
Total accumulated other comprehensive income
Stock acquisition rights (Note 20)
Total net assets
Total liabilities and net assets

Millions of yen
2019
2018
¥394,250¥408,997
5,631
4,277
12,775
7,982
1,219,001
1,298,808
1,795,100
1,752,659
2,159
2,498
16,972
17,309
1,039
1,241
4,523
4,543
422
489
7,829
7,264
62,62960,027(12,910)(9,262)¥3,509,420¥3,556,832

Thousands of
U.S. dollars(Note 1)
2019
$3,552,122
50,734
115,100
10,982,980
16,173,529
19,453
152,915
9,361
40,752
3,802
70,538564,276(116,317)$31,619,245¥3,217,522
2,220
6,514
42,404
0
－
25
2,134
19
392
249
8,160
7,829
21,0083,308,476¥3,280,121
2,337
4,134
13,602
7
10,624
26
1,944
19
451
226
10,7497,264
21,9503,353,454$28,989,296
20,002
58,690382,052
0－
225
19,227
171
3,532
2,243
73,52070,538189,279
29,808,775

12,09012,090108,929

5,667
154,162(2,946)
168,973
37,030(3,940)(1,328)31,762
209
200,944

5,667
151,236(2,989)166,004
41,696(3,358)(1,167)
37,171
203
203,378

51,0591,388,972(26,543)
1,522,417
333,634(35,499)(11,965)
286,170
1,883
1,810,470¥3,509,420¥3,556,832$31,619,245

2019

2018

U.S. dollars
2019¥11,204.81¥11,346.27

Yen
Per share data:
Net assets (Note 26)

See accompanying notes.

― 11 ―$100.95

Consolidated Statements of Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
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 21)
Other income (Note 23)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses (Note 21)
General and administrative expenses (Note 22)
Other expenses (Note 23)
Total expenses
Income before income taxes
Provision for income taxes (Note 18)
Current
Deferred
Net income

2019

2018

2019

¥17,634
13,097
49
8,504
4,243
5,019

¥17,811
13,404
52
8,250
4,402
3,297

$158,879
118,002441
76,62038,22945,22048,54647,216437,391

440
237
562
3,245
5,219
27,089
5,501

525
155
575
3,112
5,522
28,108
1,154

3,964
2,135
5,064
29,23747,022
244,067
49,56342,29339,151

381,052

6,253

8,065

56,339

2,391
(325)

3,044
(499)

21,543(2,928)

2,066

2,545

18,615

4,187

5,520

37,724－(3)－¥4,187¥5,523$37,724

Net loss attributable to non-controlling interests
Net income attributable to owners of parent

Yen
Per share data:
Net income (Note 26)
Diluted net income (Note 26)
Cash dividends applicable to the year (Note 29)

See accompanying notes.

― 12 ―

U.S. dollars

2019

2018

¥233.72
225.1570.00¥308.70276.91
70.00

2019
$2.11
2.03
0.63

Consolidated Statements of Comprehensive Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen
2019
Net income
Other comprehensive income (losses): (Note 25):
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 17)
Total other comprehensive income (losses)

2018

2019

¥4,187¥5,520$37,724(4,666)
(582)
(161)

279
(3)
363

(42,039)(5,244)(1,451)(5,409)639(48,734)

Comprehensive income (losses)¥(1,222)¥6,159$(11,010)

Total comprehensive income (losses)
Attributable to:
Owners of parent
Non-controlling interests¥(1,222)¥6,159$(11,010)(1,222)
－

6,162
(3)

(11,010)－

See accompanying notes.

― 13 ―

Consolidated Statements of Changes in Net Assets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
Millions of yen
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding gains

shareholders’(losses) on

equityavailable-for-salesecurities

BALANCE, 1 April 2017
Change during year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock

Net unrealized
gains (losses)on hedging

Total
Remeasurements

accumulated

Stockof definedotheracquisition

comprehensive

rightsbenefit plans

derivatives

Noncontrollinginterests

Total
net assets

income (losses)¥12,090¥5,502¥146,965¥ (3,117)¥161,440¥41,417¥ (3,355)¥ (1,530)¥36,532

¥157

¥159

¥198,288－－(1,252)－(1,252)

－

－

－

－

－

－

(1,252)

Disposal of treasury stock

－
－
－

－
－
－

5,523
－
(0)

－
(3)
0

5,523
(3)
0

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

5,523
(3)
0

Sales of shares of parent held byconsolidated subsidiaries

－

7

－

131

138

－

－

－

－

－

－

138

－

158

－

－

158

－

－

－

－

－

－

158

Change in equity of parent
arising from transactions with
non-controlling shareholders
Net changes in items other thanstockholders’ equity during
year
Total change during year
BALANCE, 1 April 2018
Change during year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanstockholders’ equity during
year
Total change during year
BALANCE, 31 March 2019

－

－

－

－

－

279

(3)

363

639

46

(159)

526

－
12,090

165
5,667

4,271
151,236128(2,989)4,564
166,004279
41,696(3)(3,358)363(1,167)639
37,171

46
203

(159)
－

5,090
203,378－－(1,254)－(1,254)

－

－

－

－

－

－

(1,254)

－

－

4,187

－

－

－

－

－

－

4,187

－
－

－

－
(4)

4,187

－
－

(4)

47

40

－
－

－
－

－
－

－
－

－
－

(4)

(7)

－
－

－
－
¥12,090－－¥5,667－
2,926¥154,162－43¥ (2,946)－
2,969¥168,973(4,666)

(582)

(161)

(5,409)6－(5,403)(4,666)¥37,030(582)¥ (3,940)(161)¥ (1,328)(5,409)¥31,762

6
¥209

－
¥－

(2,434)¥200,944

40

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

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding gains

shareholders’(losses) on

equityavailable-for-salesecurities

BALANCE, 1 April 2018
Change during year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanstockholders’ equity during
year
Total change during year
BALANCE, 31 March 2019$108,929

Net unrealized
gains (losses)on hedging

Total
Remeasurements

accumulatedof definedotherbenefit plans

derivatives

comprehensive

Stockacquisitionrights

Noncontrollinginterests

Total
net assets

income (losses)$51,059 $1,362,609 $ (26,930)$1,495,667$375,673$ (30,255)$ (10,514)$334,904$1,829$－$1,832,400－－(11,298)－(11,298)

－

－

－

－

－

－

(11,298)

－
－
－

－
－
－

37,724
－
(63)

－
(36)
423

37,724
(36)
360

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

37,724
(36)
360

－
－
－
－
26,363387$51,059 $1,388,972 $ (26,543)－(42,039)(5,244)(1,451)(48,734)

54－(48,680)

26,750$1,522,417(42,039)(5,244)(1,451)(48,734)

54$333,634$ (35,499)$ (11,965)$286,170$1,883－$－(21,930)$1,810,470－－$108,929

See accompanying notes.

― 14 ―

Consolidated Statements of Cash Flows
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
Millions of yen
2019
2018

Thousands of
U.S. dollars(Note 1)
2019

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
Sub-total
Income taxes paid
Income taxes refunded
Net cash used in operating activities¥6,253¥8,065$56,339

1,940
76
3,648
23
(1)
3
(24)
0
(60)
(30,780)
1,239(3,045)182(807)
1(42,441)(123,098)
60,50028,802(449)(1,354)
(118)
2,380
339
(7)
31,558(1,371)(2,626)(69,237)(3,740)20(72,957)

2,064
181
354
(62)
0
329
(33)
(1)
(118)
(31,267)
1,255
(774)
(160)
877
37
(47,909)
23,861(15,139)(500)(1)(1,426)(3,272)
3,004
(624)
(12)
31,910(1,354)(24,285)(55,000)(1,638)635(56,003)

17,479685
32,868
207
(9)
27
(216)
0
(541)
(277,322)
11,163(27,435)
1,640(7,271)9(382,386)(1,109,091)
545,094259,501(4,045)(12,199)(1,063)
21,4433,054(63)284,332(12,353)(23,660)(623,813)(33,696)180(657,329)

Cash flows from investing activities:
Acquisition of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Increase of 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 investing activities(660,301)
30,230707,011(5,000)(1,156)
58
(21)
(220)
(63)
70,538(996,635)
43,760997,608(3,000)(1,828)
75
(63)
(353)
(30)
39,534(5,949,194)
272,367
6,370,042(45,049)(10,415)523(189)(1,982)(568)
635,535― 15 ―

Consolidated Statements of Cash Flows (Continued)
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
Millions of yen
2019
2018

Thousands of
U.S. dollars(Note 1)
2019

Cash flows from financing activities:
Redemption ofsubordinated bonds and corporate bonds with stock acquisition rights
Repayments of lease obligations
Cash dividends paid
Dividends paid to non-controlling interests
Payment for acquisition of treasury stock
Proceeds from sale of treasury stock(11,054)(485)(1,254)
－
(4)
0

－
(487)
(1,252)(0)(3)
0(99,595)(4,370)(11,298)－(36)
0

Payment for acquisition of shares of subsidiaries that do not result in change in scope of
consolidation
Proceeds from sale of shares of parent held by subsidiaries
Net cash used in financing activities－－(12,797)(2)
145(1,599)－－(115,299)

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)20(15,196)408,527¥393,331

14(18,054)426,581¥408,527

180(136,913)
3,680,755$3,543,842

See accompanying notes.

― 16 ―

Notes to Consolidated Financial Statements
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2019 and 2018
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 Law of Japan, its related
accounting regulations and the Banking Law of Japan, and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements to 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 Law. 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 at 31 March 2019, which was ¥110.99 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
this or 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 consolidation of all significant investees that are controlled through substantial ownershipof majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances are
eliminated.
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 equity method because in terms of their net income or loss (amount corresponding to equity), retained earnings (amountcorresponding 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 equity method.
Trading account securities and other securities― 17 ―

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(“available-for-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
sold is calculated using the moving-average method).
Securities for which it is extremely difficult to determine the fair value are stated at 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 ofsuch securities 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 orlosses resulting from changes in fair value of the derivative financial instruments until the related losses or gains on the hedged
items are recognized (deferral method).
Transactions to hedge against interest rate risks affecting the financial assets and liabilities of the Bank are accounted for using
deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing of Application of
Accounting Standards for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public Accountants(“JICPA”) Industry Audit Committee Report No. 24, 13 February 2002).
Regarding the effectiveness of a hedge, a hedge that is intended to offset the effects of market fluctuations is assessed on agroup-by-group comparison of hedged items and hedging instruments. Both hedged items, including deposits and loans, andhedging instruments, including interest rate swaps, are classified into groups by remaining maturity period. The effectiveness of acash flow hedge is assessed on the basis of the correlation between the base interest rate index of the hedged cash flow and that of
the hedging instrument.

― 18 ―

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 Audit Committee Report No. 25, 29 July
2002). The Bank assesses the effectiveness of currency swap and foreign exchange swap transactions executed for offsetting therisks 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 values,
but the differential to be paid or received under the swap contracts is recognized as interest expenses 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 straight-line 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 theirestimated useful lives.
(2)

Intangible assets (excluding leased assets)

The Bank and its consolidated subsidiaries (the “Group”) amortize the intangible assets under the straight-line method over theirestimated useful lives. Costs of computer software developed or obtained for internal use are amortized using the straight-line
method over estimated useful lives of 5 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 that transfer the ownership to the Group is computed by the same method used for owned assets.

― 19 ―

Allowance for doubtful accounts
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
historical experiences.
For all the other loans, general reserves are provided collectively. The ratio of the general reserves is determined based on the
Bank’s loan loss experience. The above-mentioned allowance for doubtful accounts is made on the basis of the results of a strict
assessment of the quality of all the Bank’s loan assets, using the Bank’s internally established rules for self-assessment.
The 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 toeach fiscal 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 rule.

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
based on the historical reimbursement experience.

Provision for contingent losses
Provision for contingent losses is provided for estimated future payments related to a risk-share agreement with public credit
guarantee associations for the Bank’s loans guaranteed by the associations. The provision is calculated by expected loss ratios basedon historical foreclosure experiences by the category of the borrowers.

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

― 20 ―

Income taxes
Income taxes consist of corporation, enterprise and inhabitants taxes. The provision for income taxes is computed based on thepretax 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 the amounts 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 Law of Japan, the appropriation of retained earnings with respect to a given financial period is made byresolution of 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 29.

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 issuecommon stock were exercised. Cash dividends per share represent the amounts applicable to the respective years and consist ofinterim 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 with the tax exclusion method.

― 21 ―

Accounting standards that have not been applicable yet“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No.29, 30 March2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30, 30 March 2018)(1) Overview
They are comprehensive standards on revenue recognition. Revenue will be recognized based on the following 5 steps.
Step 1: Identify contracts with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: 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.

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. At 31 March 2019 and 2018, 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 was as follows:
Millions of yen
2019
2018
¥394,250¥408,997
(919)
(470)
¥393,331¥408,527

Cash and due from banks
Less: Deposits in banks other than the Bank of Japan
Cash and cash equivalents― 22 ―

Thousands of U.S.
dollars2019$3,552,122(8,280)$3,543,842

4. SECURITIESSecurities held by the Group at 31 March 2019 and 2018 consisted of the following:
Millions of yen
2019
2018
¥239,026¥326,976
342,427
331,192
300,691
301,860
44,84853,131
292,009285,649¥1,219,001¥1,298,808

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

Thousands of
U.S. dollars
2019$2,153,581
3,085,206
2,709,172
404,072
2,630,949$10,982,980

The securities placed under unsecured lending agreements, which borrowers have the right to sell or pledge in the amount of¥22,100 million ($199,117 thousand) and ¥87,000 million at 31 March 2019 and 2018, 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 at 31 March
2019 and 2018:(a) Held-to-maturity debt securities
Millions of yen
At 31 March 2019:

Book value¥26,261Fair value¥30,726

Difference¥4,465

Gain¥4,465

At 31 March 2018:¥37,368¥41,627¥4,259¥4,260At 31 March 2019:

Book value$236,607

Fair value$276,836

Loss
¥ －
¥ (1)

Thousands of U.S. dollars
Difference$40,229

Gain$40,229

Loss

Gain

Loss

$ －

(b) Available-for-sale securities
Securities below include negotiable certificates of deposit classified as cash and due from banks.
Millions of yen
Acquisition cost
At 31 March 2019:
Corporate stocks
Bonds
Other
At 31 March 2018:
Corporate stocks
Bonds
Other

Book value

Difference¥22,760
831,211
278,389¥43,602859,883
281,794¥20,842
28,672
3,405¥22,015
28,760
6,668¥(1,173)(88)(3,263)¥1,132,360¥1,185,279¥52,919¥57,443¥(4,524)¥24,449
900,081271,797¥51,918
927,467
276,373¥27,469
27,386
4,576¥27,848
27,7137,855¥(379)(327)(3,279)¥1,196,327¥1,255,758¥59,431¥63,416¥(3,985)

Thousands of U.S. dollars
Acquisition cost
At 31 March 2019:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

$205,064
7,489,062
2,508,235$392,846
7,747,392
2,538,913$187,782
258,330
30,678$198,351
259,123
60,077$(10,569)(793)(29,399)$10,202,361$10,679,151$476,790$517,551$(40,761)― 23 ―

B. There were no sales of held-to-maturity debt securities for the years ended 31 March 2019 and 2018.
Total sales of available-for-sale securities in the years ended 31 March 2019 and 2018 amounted to ¥30,229 million ($272,358
thousand) and ¥43,759 million, respectively. The related gains and losses amounted to ¥4,508 million ($40,616 thousand) and ¥206
million ($1,856 thousand), respectively, in 2019, and ¥2,560 million and ¥60 million, respectively, in 2018.

C. Available-for-sale securities written down for the year ended 31 March 2019 amounted to ¥27 million ($243 thousand).
There were no available-for-sale securities written down for the year ended 31 March 2018.

D. Net unrealized holding gains on available-for-sale securities on the consolidated balance sheets at 31 March 2019 and 2018consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019

2018

2019

Net unrealized holding gains before deferred tax on:
Available-for-sale securities (Note)
Deferred tax liabilities
Net unrealized holding gains before interests adjustment
Amount equivalent to non-controlling interests¥52,895(15,865)
37,030－¥59,432(17,736)
41,696－$476,575(142,941)
333,634－

Net unrealized holding gains on available-for-sale securities¥37,030¥41,696$333,634

Note: The amounts of ¥(24) million ($(216) thousand) and ¥2 million, which are net unrealized holding gains (losses) before
deferred tax on available-for-sale securities that are component assets of investment limited partnerships classified as securities forwhich it is extremely difficult to determine the fair values, were included in the balance at 31 March 2019 and 2018, respectively.

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

Millions of yen
2019
SharesInvestments

2018
¥20
860

2019
¥20
916

$180
7,748

5. MONEY HELD IN TRUST
Money held in trust at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Money held in trust for trading purposes:
Carrying amount
Realized gains included in earnings¥12,775－― 24 ―

2018¥7,982－

2019$115,100－

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 financial services including 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 investingin 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 ALM method in order to appropriately control the balance between revenues and risks inconsideration of the status of the financial assets and liabilities, trend of financial markets, policies for fund management andinvestment 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 and leasing more or less all kinds of industries
and manufacturing industries.
Securities are fundamentally constituted of 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 to credit 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 stemmingfrom 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 unusual highinterest rates imposed on, 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
effectiveness of the hedge based on accumulated fluctuation of cash flows of hedging instruments and hedged items for the periods
beginning from implementation of the hedging to the date of the evaluation and analysis on them.
Furthermore, there are 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 Bankis making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties.
The results of the above monitoring are regularly reported to the board of directors and the results of monitoring internal rating, loan

― 25 ―

portfolios and quantification of credit risks are reported to the credit risk committee on a quarterly basis. Audit Division strictly
reviews to ensure 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 Financial Markets Division.

d. Monitoring of market risks(Interest rate risks)
The risks arising from fluctuations in interest rates are controlled using ALM at the ALM committee, with reference to thediscussion at the fund management meeting and interest rate analysis group, through monitoring and analysis of execution of the
ALM and the discussion of future actions. Concretely, the results of the above monitoring 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 interval byconfirming that the quantities of its risk fall under the certain portion of equity capital or not. Upper limits on losses on an
aggregation or a realization basis are defined to control them on a daily basis. These results are reported by Risk Management
Division to the management on a daily basis.
Investments in securities at Financial Markets Division are executed in accordance with invested items and investing guidelines
prescribed in the market business operation standards, the marketing risk management standards and the primary polices oninvesting, and controlled through continuous monitoring. The information related to the market environment and the investment
status is reported to the management on a regular basis.
(Derivative transactions)
In conducting derivative transactions, each division responsible for execution of transactions, and evaluation of efficiency of thehedging 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.

― 26 ―

(Information on volume of market risk)
The Bank employs the variance-covariance method (confidence interval of 99%, observation period of 1 year) in calculating VaR ofdeposits, 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 6 months for deposits, loans receivable and shares held forpolicy reasons, and 3 months for investments in stock and investments in trust.
The volume of market risk, which is supposed to be estimated losses, at the end of the year ended 31 March 2019 was ¥20,227
million ($182,242 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 or hypothetical gains or losses on a fixed portfolio. As a result ofconducting the back-testing protocol, the Group supposes the method undertaken to provide 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 their liquidity positions 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 reflected in estimating the fair value,
different assumptions and factors could result in different fair values.

― 27 ―

(2) Fair value of financial instruments
The carrying amounts and the estimated fair value of financial instruments at 31 March 2019 and 2018 were as follows.
Millions of yen

Thousands of U.S. dollars
2018

2019

Assets:Cash and due from banks
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 soldPayables under securities lendingtransactions
Borrowed money
Corporate bonds with stockacquisition rights
Derivative transactions:
Derivative instruments not
qualifying for hedge accounting
Derivative instruments qualifying
for hedge accounting

Carrying
amounts

Fair value

Carrying
amounts¥394,250
5,446
12,775¥394,250
5,458
12,77522,262
1,185,279
1,795,100(12,442)2019

Fair value

Carrying
amounts

Fair value¥408,997
4,005
7,982

¥408,997
4,024
7,982

$3,552,122
49,067
115,100$3,552,122
49,176
115,100

26,715
1,185,279

34,686
1,255,758
1,752,659(8,901)

38,926
1,255,758

200,576
10,679,151
16,173,529(112,100)

240,697
10,679,151

1,782,658

1,787,916

1,743,758

1,747,582

16,061,429

16,108,803

3,217,522
2,220

3,217,605
2,220

3,280,121
2,337

3,280,252
2,337

28,989,296
20,002

28,990,044
20,002

6,514
42,404

6,514
42,404

4,134
13,602

4,134
13,60358,690382,052

58,690382,052－－

10,624

10,619

－

－

(154)

(154)

182

182

(1,388)(1,388)(5,661)(9,429)(4,826)(8,200)(51,005)(84,954)(Note 1) Methods to determine the estimated 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. Monetary claims bought
As for monetary claims bought whose terms are less than one year, their carrying amounts are supposed to approximate the fairvalue, while the fair value of long term claims is based on either quoted market prices or prices provided by the financial institutions
making markets.
c. 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 the 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 the financial institutions that the Group has been dealing with.
d. 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 the financial institutions making markets in these bonds, etc. 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
estimated future cash flows arising from the financial assets.

― 28 ―

e. 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 the interest rate to be
applied if similar new loans were entered into, by the types, self-assessment and the terms. 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 andpotentially bankrupt is based on the estimated disposal value of collateral and the amount deemed collectible from guarantees, andtherefore their carrying 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.
f. Deposits
The fair value of deposits at notice is based on the payment amount that would be required to pay 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.
g. Call money and bills sold, and payables under securities lending transactions
Call money and bills sold, and payables under securities lending transactions are short-term in nature, and therefore their carrying
amounts approximate the fair value.
h. 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 is entered into. As to borrowed money with short-term maturity, its carrying amount approximates the fair value.
i. Corporate bonds with stock acquisition rights
The fair value of corporate bonds is determined using the prices provided by the financial institutions that the Bank has been dealing
with.
j. Derivative transactions
Please refer to the following section of the notes to Derivatives.

(Note 2) The following table summarizes book values of securities for which it is extremely difficult to determine the fair values at
31 March 2019 and 2018:
Thousands of
U.S. dollars

Millions of yen
2019
Available-for-sale securities
Monetary claims bought

2018¥11,460
185¥8,364272― 29 ―

2019$103,253
1,667

(Note 3) Expected collections of assets and payments of liabilities with maturities at 31 March 2019 and 2018 were as follows:
Millions of yen
2019Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consists of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consists of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥368,095
1,447

¥－
－

¥－
－

¥－
－

¥－
－

¥－
4,184

－

303

－

－

1,985

19,974－－
162,484－
303
250,840－－
148,928－－
125,411

1,985－
330,666

19,974－78,97455,527
6,456
60,060305,30269,55528,31997,645366,643

9,471
7,087
70,323332,910

10,51969,337
9,905
166,804

24,550210,834
45,423
126,61447,445
20,394
8,698
302,053

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

3,102,389
2,220
6,514

107,608
－
－

6,261
－
－

1,225
－
－

39
－
－

－
－
－

1,861

－

9

12

18

61

Millions of yen
2018
Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consists of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consists of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥384,041
1,323

¥－
－

¥－
－

¥－
－

¥－
－

¥－
2,954

10,301

2,430

－

－

1,983

19,972

10,000300
175,851－305
330,054－－
145,173－－
74,6591,983－
363,722

19,972－73,53577,547
6,842
54,724292,186

118,347
30,651
109,879
420,680

14,701
7,388
82,701
296,541

10,68630,671
8,848
147,20221,215245,597
33,234
131,637

52,525
10,043
4,557
274,173

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

3,160,552
2,337
4,134

111,678
－
－

6,532
－
－

278
－
－

1,081
－
－

－
－
－

4,762

85

－

－

－

－

― 30 ―

Thousands of U.S. dollars
2019
Within one
year

One tothree years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks(*1)
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consists of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consists of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted$3,316,470
13,037

$－
－

$－
－

$－
－

$－
－

$－
37,697

－

2,730

－

－

17,884

179,962－－
1,463,952－
2,730
2,260,023－－
1,341,815－－
1,129,931

17,884－
2,979,241

179,962－
711,542500,288
58,167541,130
2,750,716

626,678
255,149879,764
3,303,388

85,332
63,853
633,598
2,999,459

94,774
624,714
89,242
1,502,874

221,191
1,899,577
409,253
1,140,769

427,471
183,746
78,3672,721,443

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

27,951,969
20,002
58,690969,529－－

56,410－－11,037
－
－

351
－
－

－
－

16,767

－

81

108

162

550

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 in 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 values, and unrealized gains (losses) for the years ended 31 March 2019 and 2018 were as follows:(Currency-related transactions)
Millions of yen
2019

Thousands of U.S. dollars
2018

Unrealized
Notional

Forward foreign exchange:
Sell
Buy

Notes:

gains

2019
Unrealized

Notional

gains

Unrealized
Notional

gains

amounts Fair value (losses)

amounts Fair value (losses)

amounts Fair value (losses)¥21,539
1,987¥14,529
384$194,063 $(1,442) $(1,442)
17,903189
189¥(160)
21¥(160)
21

¥196
(14)

¥196
(14)

1. Transactions in the above table 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.

― 31 ―(Credit derivative transactions)
Millions of yen

Thousands of U.S. dollars

2019

2018
Unrealized2019

Notional

Over one

Fair

amounts

year

value

Sell

¥1,000¥1,000

¥(15)

¥(15)

－

－

－

Buy

－

－

－

－

－

－

－

gains
(losses)

Notional

Over one

Fair

amounts

year

value

Unrealized

Unrealized

Notional

Over one

Fair

amounts

year

value

－

$9,010$9,010$(135)$(135)

－

－

－

－

－

gains
(losses)

gains(losses)

Creditdefaultswap:

Notes:

1. Transactions in the above table 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

2019

2018

2019

Unrealized
Notional

gains

amounts Fair value (losses)

Earthquake derivatives:
Sell
Buy

¥1,740
1,740

¥(23)
23

Unrealized
Notional

－
－

gains

amounts Fair value (losses)

¥705
705

¥(10)
10

Unrealized
Notional

－
－

gains

amounts Fair value (losses)$15,677
15,677$(207)
207－－

Note: For transactions in the above table, 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 values for the years ended 31 March 2019 and 2018 were as follows:(Interest-related transactions)
Millions of yen
2019
Notional
amounts
Interest rate swap:
Receive floating / Pay fixed rate
(Deferral method)
Receive floating / Pay fixed rate
(Exceptional method)

Thousands of U.S. dollars
2018

Fair value

Notional
amounts

2019
Fair value

Notional
amounts

Fair value¥39,944¥(5,661)¥40,915¥(4,826)$359,888$(51,005)

22,335(3,768)22,430(3,374)201,234(33,949)― 32 ―

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

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

2019

2018

2019

¥4,06755,922
1,541,274
193,837¥4,782
67,7491,493,615
186,513$36,643
503,847
13,886,602
1,746,437¥1,795,100¥1,752,659$16,173,529

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit Committee Report No. 24. The
Group has rights to sell or pledge commercial bills discounted and foreign bills of exchange bought without restrictions. The total
face value at 31 March 2019 and 2018 was ¥4,067 million ($36,643 thousand) and ¥4,781 million, respectively.
The Group is required to disclose loans to customers who meet specific criteria in accordance with the Banking Law. Doubtful loans
at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
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

¥3,45530,593
4

2018¥853
29,34526

2019$31,129
275,637
36

7,371

7,695

66,411¥41,423¥37,919$373,213

8. PLEDGED ASSETSAt 31 March 2019, deposits of ¥46,412 million ($418,164 thousand), payables under securities lending transactions of ¥6,514
million ($58,690 thousand) and borrowed money of ¥42,176 million ($379,998 thousand) were secured by a pledge of securities in
the amount of ¥129,146 million ($1,163,582 thousand) and guarantee money deposits in the amount of ¥100 million ($901
thousand). At 31 March 2018, deposits of ¥42,482 million, payables under securities lending transactions of ¥4,134 million,
borrowed money of ¥13,162 million were secured by a pledge of securities in the amount of ¥102,353 million and guarantee money
deposits in the amount of ¥71 million. In addition to the above-mentioned assets pledged as collateral, the Group provided securitiesof ¥1,506 million at 31 March 2018, and other assets in the amount of ¥35,003 million ($315,371 thousand) and ¥34,225 million as
collateral for transactions such as exchange settlement transactions at 31 March 2019 and 2018, respectively.
Other assets include cash collateral paid for financial instruments, guarantee deposits and lease deposits in the amount of ¥9,453
million ($85,170 thousand) and ¥8,370 million, ¥89 million ($802 thousand) and ¥90 million, and ¥167 million ($1,505 thousand)and ¥193 million at 31 March 2019 and 2018, respectively.

9. COMMITMENT LINE AGREEMENTS
Commitment line agreements are agreements to lend to customers a prescribed amount when they apply for borrowing, unlessviolation of the condition of the agreement exists. The amount of unused commitment line related to such agreements at 31 March
2019 and 2018 amounted to ¥710,596 million ($6,402,343 thousand) and ¥707,700 million, respectively. The amount ofcommitment line agreements, having a condition that the original agreement period was less than one year or unconditionally― 33 ―

cancelable at any time, was ¥675,858 million ($6,089,359 thousand) and ¥673,027 million at 31 March 2019 and 2018, respectively.
The amount of unused commitment line does not necessarily affect the future cash flows of the Group because most of suchagreements were terminated without being used. The majority of these agreements contain provisions that stipulate that the Groupmay refuse to make loans or may decrease the commitment line when there are certain changes in financial conditions, security forthe loans or other reasons. When entering into loan agreements with the customers, the Group requests pledges of collateral in theform of premises or securities if necessary. After entering into loan agreements, the Bank periodically checks the financial conditionof 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 at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Accrued income
Other

2018

2019

¥3,432
59,197¥3,55856,469$30,922533,354¥62,629¥60,027$564,276

11. PREMISES AND EQUIPMENT
Premises and equipment at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019

2018

2019

Land
Buildings
Equipment
Leased assets
Other¥8,86235,229
8,288
1,278
1,064

¥8,88435,046
8,365
1,213
956

$79,845
317,407
74,673
11,515
9,587

Accumulated depreciation

54,72137,74954,46437,155493,027
340,112¥16,972¥17,309$152,915

To conform with the Companies Law of Japan, deferred gains on sale of real estate in the amount of ¥922 million ($8,307 thousand)and ¥922 million at 31 March 2019 and 2018, respectively, were deducted from the acquisition cost of premises and equipment.

12. INTANGIBLE ASSETS
Intangible assets at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
SoftwareLeased assets
Other― 34 ―

2018

2019

¥909
111
19

¥1,08294
65$8,1901,000
171¥1,039¥1,241$9,361

13. DEPOSITS
Deposits at 31 March 2019 and 2018 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

2019

2018

2019

¥52,090
1,775,199
1,493
1,048,702
76,192
263,846¥54,341
1,792,480
1,758
1,157,586
70,610203,346$469,321
15,994,225
13,452
9,448,617
686,476
2,377,205¥3,217,522¥3,280,121$28,989,296

14. CORPORATE BONDS WITH STOCK ACQUISITION RIGHTS
Corporate bonds with stock acquisition rights at 31 March 2019 and 2018 were summarized as follows:
Thousands of
U.S. dollars

Millions of yen
NameIssuedZero coupon convertiblebond-type bonds withstock acquisitionrights due 2018
payable in U.S.
dollars

25 July 2013

2019

2018

－

2019

¥10,624－

Coupon rate(%)

Secured or
unsecuredDue

Non-interest

Unsecured

25 July 2018

15. OTHER LIABILITIESOther liabilities at 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Accrued income taxes
Accrued expenses
Unearned income
Lease obligations
Other

2018

2019

¥548
2,370
487
1,884
15,719¥1,927
2,588
468
2,058
14,909$4,937
21,353
4,388
16,975
141,626¥21,008¥21,950$189,279

16. CONTINGENT LIABILITIES, ACCEPTANCES AND GUARANTEESAll contingent liabilities including letters of credit, acceptances and guarantees are reflected in acceptances and guarantees. As acontra account, customers’ liabilities for acceptances and guarantees are shown on the asset side, which represent the Group’s rightof indemnity from customers.
The amount of guarantee obligation for privately placed bonds (Financial Instruments and Exchange Law, Article 2, Paragraph 3),
out of bonds included in securities, stands at ¥3,521 million ($31,724 thousand) in 2019 and ¥2,518 million in 2018.

17. 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― 35 ―

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 onsalaries and service periods and a cash balance plan has been introduced. Each participant has a hypothetical individual account withthe amount equivalent to the reserve as resource of pension for each participant. In hypothetical individual accounts, interest credits
based on trends in market interest rates and benefit credits based on the salary level are accumulated. Also, the Bank has set up
retirement benefit trusts related to the defined benefit pension plan.
Under the lump-sum retirement benefit plan (even though it is an unfunded plan, this has become a funded plan as a result of setting
up retirement benefit trusts.), predetermined points based on years of service and ability-based grade / job title are given to eachparticipant annually, and employees receive lump-sum payments, which are calculated by multiplying the unit price of points to theaccumulated points at the time of retirement, as retirement benefits.
The 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
2019

2018

2019

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

¥25,514679
108
180(1,117)¥25,644673
107
219(1,129)$229,877
6,118
973
1,621
(10,064)

Balance at the end of the year

¥25,364¥25,514$228,525

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 above accounts. All retirement benefit expenses
are included in service costs.

(ii) Change in plan assets
Millions of yen
2019

2018

Thousands of
U.S. dollars
2019

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

¥28,113
703
(459)
113
52
(769)

¥28,015
582
97
114
53
(748)

$253,293
6,334(4,136)
1,018
469(6,928)

Balance at the end of the year

¥27,753¥28,113$250,050― 36 ―

(iii) Reconciliation from projected benefit obligation and plan assets to net defined benefit liability (asset)
Thousands of
U.S. dollars

Millions of yen
2019

2018

2019

Funded projected benefit obligation
Plan assets¥25,044(27,753)¥25,187(28,113)$225,642(250,050)

Unfunded projected benefit obligation(2,709)320(2,926)327(24,408)
2,883

Net liability (asset) recognized in consolidated balance
sheets¥(2,389)¥(2,599)$(21,525)

Net defined benefit liability
Net defined benefit asset

2,134(4,523)

1,944(4,543)

19,227(40,752)

Net liability (asset) recognized in consolidated balance
sheets¥(2,389)¥(2,599)$(21,525)

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

(iv) Retirement benefit expenses and their breakdown
Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

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

¥627
108
(703)
408

¥620
107
(582)
645

$5,649973(6,334)
3,676

Retirement benefit expenses

¥440

¥790

$3,964

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

(v) Remeasurements of defined benefit plans on other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) on other comprehensive income was asfollows:
Thousands of
U.S. dollars

Millions of yen
2019

2018

2019

Actuarial differences¥(231)¥523$(2,081)

Total¥(231)¥523$(2,081)(vi) Remeasurements of defined benefit plans on accumulated other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) on accumulated other comprehensive
income was as follows:
Millions of yen

Thousands of
U.S. dollars

2019

2018

Unrecognized actuarial differences¥ (1,908)¥ (1,677)$(17,191)

Total¥ (1,908)¥ (1,677)$(17,191)― 37 ―

2019

(vii) Plan assets(a) Percentage by major category of plan assets was as follows:
2019

2018

Bonds
Equities
General accountCash and deposits
Other

57%
16%
15%
12%
0%

53%
29%
15%
3%
0%

Total

100%

100%

Retirement benefit trusts set up for defined benefit pension plans account for 19% and 19% of total plan assets for the years
ended 31 March 2019 and 2018, respectively. In addition, retirement benefit trusts set up for the lump-sum retirement
benefit plans account for 23% and 22% of total plan assets for the years ended 31 March 2019 and 2018, respectively.
(b) Determination procedure of 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.

(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 asset) at 31 March 2019 and 2018 was as follows:
2019

2018

Discount rate

0.4%

0.4%

Long-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

2.5%
3.9%

2.0%
3.9%

7.4%

7.4%

The contribution made by the Bank to defined contribution plans was ¥126 million ($1,135 thousand) and ¥126 million for the year
ended 31 March 2019 and 2018, respectively.
The amount of plan assets transferred to the defined contribution plans resulting from the transfer of its portion from retirement
benefit plans to such plans was ¥1,802 million ($16,236 thousand) and the transfer is expected to be completed in four years.
The remaining transfer of plan assets as of 31 March 2019 in the amount of ¥408 million ($3,676 thousand) is included in accounts
payable under other liabilities.

18. INCOME TAXESThe Group is subject to a number of taxes based on income such as corporation, inhabitant and enterprise taxes, which, in theaggregate, indicated a statutory tax rate in Japan of approximately 30.4% and 30.6% for the years ended 31 March 2019 and 2018,
respectively.
Significant components of the Group’s deferred tax assets and liabilities at 31 March 2019 and 2018 were as follows:― 38 ―

Thousands of U.S.
dollars

Millions of yen
2019

2018

2019

Deferred tax assets:
Allowance for doubtful accounts
Net defined benefit liability
Accumulated depreciation
Securities
Deferred hedge
Other¥3,581
2,825
1,130
482
1,721
1,330

¥2,755
2,844
1,119
567
1,467
1,492

$32,264
25,453
10,181
4,343
15,506
11,983

Subtotal
Valuation allowance (*)

11,069(2,428)

10,244(2,240)99,730(21,876)

8,641

8,004

77,854(15,966)(412)(1)(17,838)(422)(4)(143,851)(3,712)(9)(16,379)(18,264)(147,572)¥ (7,738)¥ (10,260)$(69,718)

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 ¥189 million ($1,703 thousand) in the year ended 31 March 2019. The main reason ofthis increase is due to the recognition of valuation allowance against deductible temporary differences arising in the year
ended 31 March 2019 from allowance for doubtful accounts for the Bank and its consolidated subsidiaries, of which it is
not likely that the differences will be deductible within the future reasonable terms.

(Change in presentation)(Change in presentation associated with adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
The Bank adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, 16 February2018) from the year ended 31 March 2019 and changed the notes related to deferred tax accounting.
In the notes related to deferred tax accounting, the items described in the explanatory note 8 of “Accounting Standard for Tax EffectAccounting” (excluding total of the valuation allowance) provided in Paragraphs 3 to 5 of “Partial Amendments to AccountingStandard for Tax Effect Accounting” have been added.

The following summarizes the significant difference between the statutory tax rate and the Bank’s effective tax rate for the years
ended 31 March 2019 and 2018.
2019
Statutory tax rate

2018

30.4%

30.6%

Non-deductible expenses

0.4

0.4

Non-taxable income

(1.5)

(1.0)

Per capita inhabitant taxes

0.7

0.5

Valuation allowance

3.0

0.8

Other, net
Effective tax rate

― 39 ―

0.0

0.3

33.0%

31.6%

19. NET ASSETS
Under the Companies Law and the Banking Law of Japan, the following is provided: the entire amount of the issue price of shares isrequired to be accounted for as capital, although a company may, by a resolution of its board of directors, account for an amount notexceeding one-half of the issue price of the new shares as additional paid-in capital, which is included in capital surplus.
The Companies Law and the Banking Law 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 andadditional paid-in capital equals 100% of common stock. The legal earnings reserve and additional paid-in capital may be used toeliminate or reduce a deficit by a resolution of the shareholders’ meeting or may be capitalized by a resolution of the board of
directors. On condition that the total amount of legal earnings reserve and additional paid-in capital remains equal to or exceeds
100% of common stock, they are available for distribution by the resolution of the shareholders’ meeting. Legal earnings reserve is
included in retained earnings in the accompanying 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 Law.
The number of treasury stock held by the Group was 583 thousand shares and 591 thousand shares at 31 March 2019 and 2018,
respectively.

20. STOCK OPTIONS
1. Share-based compensation expenses accounted for as general and administrative expenses
The balance of stock acquisition rights granted for the stock option program was ¥209 million ($1,883 thousand) and ¥203 million
at 31 March 2019 and 2018, respectively.
Share-based compensation expenses accounted for as general and administrative expenses for the years ended 31 March 2019 and2018 amounted to ¥45 million ($405 thousand) and ¥46 million, respectively.

2. Details of stock options, volume and activity(a) Details of stock options

Title and number ofgrantees
Number of stock options
by type of shares
Grant dateCondition for vesting
Requisite service period
Exercise period

2013 Stock OptionPlan2014 Stock OptionPlan2015 Stock OptionPlan2016 Stock Option
Plan

Directors of the Bank:
9
Common stock: 13,400
shares24 July 2013
Not applicableNot applicable
From 25 July 2013 to
24 July 2043

Directors of the Bank:
9
Common stock: 10,400
shares24 July 2014
Not applicableNot applicable
From 25 July 2014 to
24 July 2044

Directors of the Bank:
9
Common stock: 9,100
shares23 July 2015
Not applicableNot applicable
From 24 July 2015 to
23 July 2045

Directors of the Bank:
9
Common stock: 12,100
shares25 July 2016
Not applicableNot applicable
From 26 July 2016 to
25 July 2046

― 40 ―

2017 Stock Option
Plan
Title and number ofgrantees
Number of stock options
by type of shares
Grant dateCondition for vesting
Requisite service period

Directors of the Bank:
9
Common stock: 11,100
shares26 July 2017
Not applicableNot applicable
From 27 July 2017 to
Exercise period
26 July 2047
Note: Reported in terms of shares of stock.

2018 Stock Option
Plan
Directors of the Bank:
7
Common stock: 10,200
shares25 July 2018
Not applicableNot applicable
From 26 July 2018 to
25 July 2048(b) Volume and activity
The following describes volume and activity that existed during the year ended 31 March 2019. The number of stock options isreported in terms of shares of stock.
(i) Number of stock options
2013 Stock Option Plan

2014 Stock Option Plan

2015 Stock Option Plan

2016 Stock Option Plan

Before vesting (shares):
At 31 March 2018
GrantedForfeited
VestedOutstanding

9,000
－
－
2,000
7,000

7,800
－
－
1,400
6,400

6,900
－
－
1,200
5,700

12,100
－
－
2,500
9,600

After vesting (shares):
At 31 March 2018
VestedExercised
Forfeited
Outstanding

－
2,000
2,000
－
－

－
1,400
1,400
－
－

－
1,200
1,200
－
－

－
2,500
2,500
－
－

2017 Stock Option Plan

2018 Stock Option Plan

At 31 March 2018
GrantedForfeited
VestedOutstanding

11,100
－
－
2,200
8,900

－
10,200－－
10,200After vesting (shares):
At 31 March 2018
VestedExercised
Forfeited
Outstanding

－
－
2,200
2,200
－
－

－
－
－
－
－
－

Before vesting (shares):― 41 ―

(ii) Price information2013 Stock Option
Exercise price
Average exercise price
Fair value at the grant2014 Stock Option¥1 ($0.01)¥4,205 ($37.89)¥4,119 ($37.11)
2017 Stock Option

Exercise price
Average exercise price
Fair value at the grant2015 Stock Option¥1 ($0.01)¥4,205 ($37.89)¥4,437 ($39.98)

2016 Stock Option¥1 ($0.01)¥4,205 ($37.89)¥5,287 ($47.63)¥1 ($0.01)¥4,205 ($37.89)¥4,032 ($36.33)

2018 Stock Option¥1 ($0.01)¥4,205 ($37.89)¥4,178 ($37.64)¥1 ($0.01)¥－ ($－)¥4,439 ($39.99)

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 2019 were as follows:(a) The valuation method: Black-Scholes formula(b) Major basic numerical values and valuation method
2018 Stock Option Plan
Stock price volatility (*1)
Expected years to expiration (*2)
Expected dividends (*3)
Risk-free interest rate (*4)

18.6%
1.6 years¥70 ($0.63) per share(0.11)%

Notes:*1. Stock price volatility was calculated based on the actual stock prices from 12 December 2016 to 16 July 2018.
*2. As a rational estimation was difficult due to the insufficient amount of historical data, expected years to expiration
were set up by the estimated average remaining service period.
*3. Expected dividends are determined based on actual dividends for the year ended 31 March 2018.
*4. Risk-free interest rate is Japanese government bond yield corresponding to the expected years to expiration.
4. Estimation method for the vested number of stock options
Since it is difficult to make a reasonable estimate on future forfeited stock options, the actual number of forfeited stock options isreflected in the estimation.

21. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Other operating income:Gain on trading account securities transactions
Gain on sale of bonds
Gain on financial instruments
Other― 42 ―

2018

2019

¥1
282
－
3,960

¥0
242
25
4,135

$9
2,541
－
35,679¥4,243¥4,402$38,229

Thousands of
U.S. dollars

Millions of yen
2019
Other operating expenses:
Loss on sale of foreign bills of exchange
Loss on sales of bonds
Loss on redemption of bonds
Loss on financial instruments
Other

2018

2019

¥486
79
1,229
14
3,411

¥152
4
1,726
－
3,640

$4,379712
11,073
126
30,732¥5,219¥5,522$47,022

22. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
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

2018

2019

¥11,558
3,043
565
1,900
797
1,458
989
2,687
4,092

¥11,762
3,069
918
2,033
817
1,571
1,068
2,691
4,179

＄104,135
27,417
5,091
17,1197,181
13,136
8,911
24,20936,868¥27,089¥28,108＄244,067

23. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended 31 March 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Other income:Gain on sale of stocks and other securities
Gain on disposal of premises and equipment
Other

2018

¥4,22625
768¥2,31848931$38,075
225
6,920¥5,019¥3,297$45,220
Thousands of
U.S. dollars

Millions of yen
2019
Other expenses:
Provision of allowance for doubtful accounts
Loss on disposal of premises and equipment
Loss on devaluation of stocks and other securities
Loss on sales of stocks and other securities
Impairment losses
Loss on money held in trust
Loss on transfer of receivables
Other― 43 ―

2019

2018

2019

¥ 4,550
26
29
127
76
203
135
355

¥ 598
85
0
57
181
31
202

$40,995
234
261
1,144
685
1,829
1,216
3,199

¥5,501¥1,154$49,56324. 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) at 31 March 2019 and 2018 consisted of
the following:
Millions of yen
2019
Current portion of lease obligations
Lease obligations (excluding current portion)

2018

Thousands of
U.S. dollars

Average interest
rate (%)

2019

2019

¥764
1,120

¥915
1,143

$6,884
10,091¥1,884¥2,058$16,975

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

The aggregate annual maturities of lease obligations were summarized as follows:Year ending 31 March
2020
2021
2022
2023
2024 and thereafter

Millions ofyen

Thousands of
U.S. dollars

2019

2019

¥764
404
291
199
226

― 44 ―$6,884
3,640
2,622
1,793
2,036

2.84%
2.47%

Year ending 31 MarchMillions of
yen
2018

2019
2020
2021
2022
2023 and thereafter

¥915
618
258
153
114

B. Operating leases(a) As lessee
There were no future lease payments under non-cancelable operating leases at 31 March 2019 and 2018.

(b) As lessor
Future lease receivables under non-cancelable operating leases at 31 March 2019 were ¥298 million ($2,685 thousand) including¥32 million ($288 thousand) due within one year.
Future lease receivables under non-cancelable operating leases at 31 March 2018 were ¥340 million including ¥42 million due
within one year.

― 45 ―

25. COMPREHENSIVE INCOME
Reclassification adjustments and tax effect amounts of other comprehensive income (losses) for the years ended 31 March 2019 and2018 were as follows:
Thousands of U.S.
dollars

Millions of yen
2019
Net unrealized holding gains (losses) on available-for-salesecurities:
Amount for the year
Reclassification adjustment

2018

2019

¥(2,108)(4,429)¥1,656(1,207)$(18,993)(39,904)

Amount before tax effectTax effect amount(6,537)
1,871

449
(170)

(58,897)
16,858Net unrealized holding gains (losses) on
available-for-sale securities(4,666)279(42,039)

Net unrealized gains (losses) on hedging derivatives:
Amount for the year
Reclassification adjustment(1,380)
545

(562)
557

(12,433)
4,910

Amount before tax effectTax effect amount

(835)
253

(5)
2

(7,523)2,279

Net unrealized gains (losses) on hedging derivatives

(582)

(3)

(5,244)Remeasurements of defined benefit plans:
Amount for the year
Reclassification adjustment

(639)
408

(122)
645

(5,757)
3,676

Amount before tax effectTax effect amount

(231)
70

523
(160)

(2,081)630

Remeasurements of defined benefit plans
Total other comprehensive income (losses)

(161)

363

(1,451)¥ (5,409)¥ 639$(48,734)

26. PER SHARE DATA
Amounts per share at 31 March 2019 and 2018 and for the years then ended were as follows:Yen
Net assets per share
Net income per share
Diluted net income per share― 46 ―

U.S. dollars

2019

2018

2019

¥11,204.81
233.72225.15¥11,346.27
308.70276.91$100.95
2.11
2.03

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

2019

2018

2019

¥200,944
209
209
200,735¥203,378203
203
203,175$1,810,470
1,883
1,883
1,808,587

17,915

17,907

Net 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

4,187

5,523

37,724

4,187
17,913

5,523
17,89337,724

Diluted net income per share:
Number of increased common stock used in computing diluted
net income per share
Convertible bond-type bonds with stock acquisition rights
Compensation-type stock option

682
635
47

2,054
2,011
43

27. 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 assessbusiness performance.
The principal business of the Group is financial services primarily focused on domestic commercial banking business. The
Group’s business consists of segments classified by type of financial services and has two reportable segments: “Commercial
banking business” and “Leasing business.”“Commercial banking business” consists of deposits, loans, securities investment, and foreign exchange operations.
“Leasing business” consists of leasing, and computer processing contracted business.
Although the Group had previously omitted the reportable segment information, since its reportable segment consisted solely of“Commercial banking business,” the Bank has changed the reportable segments to “Commercial banking business” and “Leasing
business” from the year ended 31 March 2019, since the Group’s leasing business had become material in terms of volume.
Following this change, the reportable segment information for the year ended 31 March 2018 is stated based on the reportablesegments after the change.

― 47 ―

b. Methods of measurement for the amounts of income, profit (loss), assets, liabilities and other items for each reportablesegment
The accounting policies of each reportable segment are consistent with those disclosed in Note 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
2019
Millions of yen
Reportable Segment
Commercial
Banking
Ordinary income:
Income from externalcustomers¥43,423

Total¥3,997¥47,420

OthersTotal¥1,100Adjustments

Consolidated¥－¥48,520¥48,520

289

332

621

413

1,034

(1,034)－¥43,712¥4,329¥48,041¥1,513¥49,554¥(1,034)¥48,520

Intersegment income
Total

Leasing

6,421

(151)

6,270

294

6,564

(235)

6,329

Segment assets

3,507,704

12,026

3,519,730

9,793

3,529,523(20,103)3,509,420

Segment liabilities

3,311,196

7,987

3,319,183

4,246

3,323,429(14,953)

3,308,476

Depreciation

1,886

53

1,939

1

1,940

－

1,940

Interest income

30,990030,99054

31,044(264)

30,780Interest expense

1,237

31

1,268

2

1,270

(31)

1,239

Provision for income taxes
Increase in premises andequipment and intangible
assets

1,874

55

1,929

137

2,066

－

2,066

1,530

－

1,530

－

1,530

10

1,540

Segment profit (loss)

Other items:

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 credit card business and credit
guarantee business.
3. “Adjustments” are as follows.
(1) The adjustments for segment profit (loss) were primarily elimination of intersegment transactions.
(2) The adjustments for segment assets were primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(3) The adjustments for segment liabilities were primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
(4) The adjustments for interest income were primarily elimination of intersegment transactions.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.

― 48 ―

2018
Millions of yen
Reportable Segment
Commercial
Banking
Ordinary income:
Income from externalcustomers¥41,895

Total¥4,144¥46,039

OthersTotal¥1,133Adjustments

Consolidated¥(3)¥47,169¥47,172

60

457

517

390

907

(907)

－

41,955

4,601

46,556

1,523

48,079(910)

47,169Intersegment income
Total

Leasing

8,020

(131)

7,889

405

8,294

(11)

8,283

Segment assets

3,554,547

11,411

3,565,958

10,0283,575,986(19,154)3,556,832

Segment liabilities

3,355,952

7,162

3,363,114

4,507

3,367,621(14,167)

3,353,454

Depreciation

2,017

48

2,065

1

2,066

(2)

2,064

Interest income

31,242

1

31,24360

31,303(36)

31,267

Interest expense

1,251

29

1,280

2

1,282

(27)

1,255

Provision for income taxes
Increase in premises andequipment and intangible
assets

2,329

62

2,391

178

2,569

(24)

2,545

2,162

152

2,314

－

2,314

16

2,330

Segment profit (loss)

Other items:

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 credit card business and credit
guarantee business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers were primarily adjustments for provision for allowance for
doubtful accounts.
(2) The adjustments for segment profit (loss) were primarily elimination of intersegment transactions.
(3) The adjustments for segment assets were primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(4) The adjustments for segment liabilities were primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.

― 49 ―

2019
Thousands of U.S. dollars
Reportable Segment

Ordinary income:
Income from externalcustomers

Commercial
Banking

Leasing

Total$391,233$36,012$427,245

Total$9,911

Adjustments

Consolidated$－$437,156$437,156

2,604

2,991

5,595

3,721

9,316

(9,316)－$393,837$39,003$432,840$13,632$446,472$(9,316)$437,156

Intersegment income
Total

Others

57,852(1,360)56,492

2,648

59,140(2,117)57,023

Segment assets

31,603,784

108,352

31,712,136

88,23331,800,369(181,124)

31,619,245

Segment liabilities

29,833,282

71,961

29,905,243

38,25629,943,499(134,724)

29,808,775

Depreciation

16,992478

17,470917,479－17,479Interest income

279,2140279,214487

279,701(2,379)277,322

Segment profit (loss)

Other items:

Interest expense

11,145279

11,42418

11,442(279)

11,163

Provision for income taxes
Increase in premises andequipment and intangible
assets

16,884496

17,3801,235

18,615－

18,615

13,785－

13,785－

13,78590

13,875(2) Other segment-related informationa. Information by service
Information by service for the years ended 31 March 2019 and 2018 was as follows:
2019
Millions of yen

Ordinary income from external customers

Banking

Securities
investment

Other

Total

¥17,624¥17,605¥13,291¥48,520

2018
Millions of yen

Ordinary income from external customers

Banking

Securities
investment

Other

Total

¥17,816¥15,964¥13,389¥47,169

2019
Thousands of U.S. dollars

Ordinary income from external customers

Banking

Securities
investment

Other

Total

$158,789$158,618$119,749$437,156

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

― 50 ―

b. Information by geographic regioni. Ordinary income
Information on ordinary income from domestic customers for the years ended 31 March 2019 and 2018 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 2019 and 2018 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 2019 and 2018, since there was no customer
accounting for more than 10% of ordinary income to customers in the consolidated statements of income.

d. Information on impairment of fixed assets for each reportable segment
2019
Millions of yen
Reportable Segment
Commercial
Banking
Impairment losses

Leasing

¥76

Total

¥－

Others

¥76

Total

¥－

¥76

2018
Millions of yen
Reportable Segment
Commercial
Banking
Impairment losses

Leasing

¥181

¥－

Total

Others

¥181

Total

¥－

¥181

2019
Thousands of U.S. dollars
Reportable Segment
Commercial
Banking
Impairment losses

Leasing

$685

$－

Total
$685

Others

Total

$－

$685

e. 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 2019and 2018.

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 2019 and 2018.

― 51 ―

28. 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 individual) and others
For the year ended 31 March 2019
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 at 31
March 2019

Corporate Directorand Audit &Supervisory
Committee
Member of theBank－

Creditor

Term loan－

Loans and bills
discounted¥21 million($189 thousand)Voting rights(%)

Relation to therelated party

Type of transaction

Amount oftransaction

Account

Balance at 31
March 2018－

Creditor

Term loan－

Loans and bills
discounted¥23 million

For the year ended 31 March 2018
Category

Corporate/
Individual nameBusiness

Executive officer
Corporate Auditor
and close family Mizuhiko Yoshidaof the Bank
members

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 2019 and 2018.

(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 2019 and 2018.

29. SUBSEQUENT EVENTS
Cash dividends
On 21 June 2019, the shareholders of the Bank authorized the following appropriations of retained earnings at 31 March 2019:
Millions of yen
Cash dividends (¥35 ($0.32) per share for year-end)¥627― 52 ―

Thousands of
U.S. dollars$5,649

― 53 ―

The Bank of Iwate, Ltd.

2-3, Chuodori 1-chome, Morioka, Iwate 020-8688, Japan
Phone: +81-19-623-1111
URL: https://www.iwatebank.co.jp/

General Planning Division
Public Relations and CSR Office2-3, Chuodori 1-chome, Morioka, Iwate 020-8688, Japan
Phone: +81-19-623-1111 Fax: +81-19-652-7571
SWIFT: BAIWJPJT