Annual Report

2017

The Bank of Iwate, Ltd. Annual Report 2017

Sachio Taguchi
President

Message from the President
The Bank is advancing its medium-term management plan“Iwagin Frontier Plan 2nd stage – The・Innovation,”
which spans the three years from April 2016 to March 2019.
In this medium-term management plan, we set four principal indicator targets: “consolidated net income,”“capital ratio,” “outstanding loans and bills discounted to SMEs” and “assets in custody.” In addition, we set“consolidated ROE” (return on shareholders’ equity) as a long-term management indicator (target indicator to be
aimed at all times without time frame toward achievement of long-term vision). In fiscal 2016, the first year of thisplan, we steadily achieved our goals for “consolidated net income,” “capital ratio” and “consolidated ROE,” butfell short of our goals for “outstanding loans and bills discounted to SMEs” and “assets in custody.” In the second
year of the plan, we intend to accelerate efforts toward achieving goals by further enhancing the promotion of loans
for SMEs to accumulate balances, and with regard to assets in custody, by broadening our business scope andenhancing our ability to make proposals through identifying needs.
The Bank will continue striving to promote policies to the best of our ability with the aim of being a bank that
local customers trust and choose.

― 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 term-end increased by ¥23.0 billion from the previous
term-end to ¥3,271.3 billion (US$29,159.4 million). This was attributable to an increase in deposits by corporateclients and individuals, despite a decrease in public deposits.
Furthermore, the term-end balance of asset under management posted an increase of ¥7.2 billion from the previous
term-end to ¥264.6 billion (US$23,585.0 million), due to an increase in insurances, despite decreases in publicbonds and investment trusts.
Loans
The term-end balance of loans decreased by ¥68.0 billion from the previous term-end to ¥1,704.7 billion(US$15,195.2 million). This was attributable to decreases in loans to corporate clients and local governments,
despite an increase in loans to individuals.
Securities
The value of total securities increased by ¥23.4 billion from the previous term-end to ¥1,344.7 billion (US$11,986.1
million). This was mainly attributable to an increase in investment trusts and others under management.
Cash Flow Analysis
With regards to the cash flow situation for the current fiscal year, net cash provided by operating activities was a net
inflow of ¥120.6 billion (US$1,075.2 million), partly due to a decrease in loans and an increase in deposits. Net
cash used in investing activities was a net outflow of ¥34.8 billion (US$310.4 million), partly due to acquisition of
securities. Net cash used in financing activities was a net outflow of ¥11.7 billion (US$104.7 million), mainly
attributable to repayment of subordinated borrowings. As a result of the above, the term-end balance of cash andcash equivalents increased by ¥74.1 billion from the previous term-end to ¥426.6 billion (US$3,802.3 million).
Business Performance
Earnings
Total income increased by ¥4.5 billion from the previous term to ¥51.1 billion (US$455.8 million). This was mainly
attributable to decreases in interest income and gain on sale of bonds and stocks, despite an increase in otheroperating income attributable to the consolidation of the three equity-method affiliates of the Bank (Iwagin Lease
Data Co., Ltd., Iwagin DC Card Co., Ltd. and Iwagin Credit Service Co., Ltd.; hereinafter, “Three Group
Companies”).
Total expenses increased by ¥3.0 billion from the previous term to ¥38.5 billion (US$342.9 million). This was
mainly due to increases in other operating expenses as well as general and administrative expenses, attributable tothe consolidation of the Three Group Companies.
As a result, income before income taxes increased by ¥1.5 billion from the previous term to ¥12.7 billion(US$112.8 million). Net income attributable to owners of parent increased by ¥3.0 billion from the previous term to¥10.2 billion (US$90.5 million), mainly due to recording a gain on negative goodwill in conjunction with theacquisition of additional shares of the Three Group Companies.
Capital Ratio
The capital ratio declined by 0.30% to 12.77% on a consolidated capital adequacy basis and by 0.65% on a
non-consolidated capital adequacy basis to 12.38%, mainly as a result of a decrease in equity capital throughrepayment of subordinated loans and the growth of risk assets.

― 3 ―Corporate Governance
1 Corporate Governance(1) Outline of the Bank’s Governance Structure① Governance structure and basic approach to corporate governance
The Governance structure of the Bank is developed on the basis of the coordination between appointed
outside directors and the Board of Corporate Auditors as well as internal audit divisions. The reason behind
the adoption of this structure is the philosophy that supervision of management should be reinforced by theenhanced functions of the Board of Directors and the appointment of highly independent outside directors
and outside auditors.
Ever since its establishment, the management of the Bank of Iwate has been based on the two fundamental
mission objectives of contributing to the development of the regional community and ensuring the financial
soundness of the Bank under all circumstances. Amid today’s rapidly changing business environment, themanagement of the Bank continues to uphold these principles in its day-to-day performance of business
operations. To fulfill the duties expected of us as the leading bank in our region, by our business partners,
shareholders, and the community as a whole, we take complete responsibility for our management
decisions and believe it is necessary to establish and maintain the highest standard of corporate governancethat includes improved management transparency and strengthened management oversight functions.
②

Outline of the corporate governance functions within the Bank
The Bank has chosen the corporate auditor system, under which the execution of business by directors ismonitored by the Board of Directors and corporate auditors. In regard to the business execution system, in
addition to utilizing the executive officers system, the Bank has also established the Executive Committee
and the Compliance Committee along with the Board of Directors as mechanisms that discuss and decide
the matters referred by the Board of Directors.
Moreover, the Bank continues to strengthen management oversight functions, as evidenced by the
expanded functions of the Board of Directors, the appointment of outside directors and the strengthened
functions of auditors. The Bank is also planning to reinforce its organization with a greater emphasis oncompliance, such as by positioning the Compliance Committee on a par with the Executive Committee.
Furthermore, in an effort to further enhance corporate governance, the Bank has established theNomination and Compensation Advisory Committee to obtain appropriate involvement and advice fromoutside directors.

― 4 ―

③

Organization chart
General Meeting of Shareholders

Involvement
and advice

Nomination
andCompensation
Advisory
Committee
Chairman andPresident
3 outside
directors

Appointment/dismissal

Board of Directors
12 directors(3 outside directors)
Appointment/
dismissal;
oversight

Appointment/dismissal

Appointment/dismissal

Board of Corporate Auditors
4 corporate auditors(3 outside auditors)

Audit
Audit

Reports

Accounting Auditors

Reports
Reports
Coordination

Coordination

Audit

President

Audit Division

Reports

Executive Committee(Discussion of important matters)

ALM Committee
Credit Risk Committee
Reports

Financing Facilitation
Committee

Visiting audit andmonitoring, etc.

Reports

References and reports
on important items

Operational Risk Committee
Compliance committee

Recommendations
on plans, reports, etc.

Disclosureof policies;
approval of plans

Customer Interest Protection Committee
Recommendations
on plans, reports, etc.

Disclosureof policies

Customer service offices (Head Office and branches), support divisions④

Internal control system development
With regard to internal control, the Board of Directors has laid down the Basic Policies Regarding theStructure of the Bank’s Internal Control System, and established a system for eleven items, including asystem that ensures that the conduct of all directors and employees conforms both to law and regulations aswell as to the Articles of Incorporation of the Bank and a system that ensures the adequacy of business
operations by the Group consisting of the Bank and subsidiaries etc.

⑤

Development of risk management structureWith regard to risk management, the Bank, upon developing structures for the execution of operations andmonitoring, has established a structure to manage individual risks as well as a structure to manage suchrisks on an integral basis. To firm up these management structures, the Risk Management Regulations havebeen set out to clearly indicate the basic principles of risk management and to clearly define the structureof responsibility. Furthermore, the Risk Management Division is in place as the department responsible forboth the integrated management of the various categories of risks, and risk management throughout theBank.
The Audit Division, upon ensuring its independence from the departments being audited, undertakes
auditing of the appropriateness and effectiveness of internal control systems, including compliance and risk
management, and strives to improve business administration based on the verification of that auditing.

⑥

Accounting audit
Accounting audits of the Bank are conducted by the independent auditing company KPMG AZSA LLC at
the request of the Bank. The certified public accountants in charge of auditing the Bank’s financial
statements for the reporting term are Atsushi Fukuda, Motofumi Okumura, and Toru Narushima, assisted
by nine other certified public accountants and seventeen additional staff.

― 5 ―(2) Internal Audits and Auditing by Corporate Auditors① Internal audits
The Bank’s Audit Division, with a staff of eighteen, is responsible for conducting internal audits as anorganization independent of all business divisions. Audits are conducted on all divisions of the head office,branches, subsidiaries and affiliates for the purpose of verifying adequacy and effectiveness of the internal
control system, as well as to prevent fraud and errors. Internal audits are furthermore conducted on Bank’s
securities reports and financial statements in order to confirm the effective operation of the Bank’s internal
control system. Staff of the division strives to enhance coordination with corporate auditors by exchanging
information to ensure objective and efficient auditing.
② Auditing by corporate auditors
The Board of Corporate Auditors comprises four corporate auditors. Auditing conducted by the Bank’s
corporate auditors consists of audits of divisions at the Bank’s Head office as well as on-site audits ofbranch offices conducted on a periodical basis. In addition, the corporate auditors carry out their auditing
tasks by collaborating and exchanging information with the Audit Division and the accounting auditors.
Furthermore, corporate auditors regularly meet with accounting auditors to receive reports and exchange
opinions, and also undertake activities such as fieldwork to confirm the adequacy of the execution of duties
by accounting auditors.
(3) Outside Directors and Outside Auditors① Human relationships, capital relationships, trading relationships and other conflicts of interest
The outside directors and outside auditors of the Bank have no special conflicts of interest with the Bankother than standard transactions such as deposits, and the Bank has determined that there are no risks ofconflict of interests between the outside directors and outside auditors, and the general shareholders. The
Bank has also determined that no conflicts of interest including human relationships, capital relationships
and significant trading relationships exist between the Bank and the entities that the outside directors andoutside auditors serve.
The Bank’s relationship with each of the outside directors and outside auditors is as follows.
Outside Directors- The Bank has three outside directors; Hiroshi Miura, Atsushi Takahashi and Fumio Ube. Mr. Miura, as
the President and CEO of IWATE NIPPO CO., LTD., is in an executive position of said company as ofthe date of submission of the Annual Securities Report (hereinafter “currently”). Mr. Takahashi served as
the Chairman of The Sumitomo Trust and Banking Company, Limited (currently Sumitomo Mitsui Trust
Bank, Limited) until March 2011, and is currently the Senior Corporate Advisor of said company, as wellas an outside director of Keio Corporation. Mr. Ube served as the Representative Director and Executive
Vice President of Tohoku Electric Power Company, Incorporated until June 2012, as the Vice Chairmanof TOHOKU ECONOMIC FEDERATION until June 2015, and currently serves as Chairman of Tohoku
Productivity Center.
- In terms of the transactions between the Bank and the outside directors, transactions including loans exist
between the entities in which the outside directors currently serve as executive directors, and entities inwhich the outside directors served as executive directors in the past; however, they are all standardtransactions and do not pose any special conflicts of interest.
- In terms of capital relationships between the Bank and outside directors, Mr. Takahashi holds 1,000
shares of the Bank’s shares; however, such shares only account for a small portion of outstanding shares.
- The Bank’s three outside directors have been reported to the Tokyo Stock Exchange, Inc. as independent
directors who pose no risk of conflict of interest with general shareholders.
Outside Auditors- The Bank has three outside auditors: Masahiko Mochizuki, Shinobu Obara and Mizuhiko Yoshida. Mr.
Obara currently serves as Director and Executive Vice President of Iwate Menkoi Television Co., Ltd.,― 6 ―and is in an executive position of said company.
- In terms of transactions between the Bank and the outside auditors, transactions including loans exist
between the entities in which Mr. Obara currently serves as executive director and Mr. Yoshida; however,they are standard transactions and do not pose special conflicts of interest. Additionally, there are no
special conflicts of interest between the Bank and Mr. Ikeda.
- The Bank’s three outside auditors have been reported to the Tokyo Stock Exchange, Inc. as independent
directors who pose no risk of conflict of interest with general shareholders.
② The status and standards for functions, duties, and appointment of outside directors and outside auditorswith regard to corporate governance
The Bank elects outside directors and outside auditors in order to reinforce the functions of monitoring andsupervision of the Bank’s management. The Bank’s Board of Directors and corporate auditors monitor the
directors’ execution of duties, while the outside directors undertake the role of reinforcing management
decision-making and supervisory functions, with full regard for the interests of general shareholders andfrom an objective, outside position based on extensive knowledge. Additionally, the outside auditors, basedon their extensive insight and specialized knowledge, undertake the role of reinforcing the audit functions
in regard to directors’ execution of duties.
In addition to the establishment of independence standards for outside directors and outside auditors, theBank expects the officers to objectively and appropriately fulfill the functions and roles of supervision andaudit based on specialty understanding and extensive knowledge, and elects them based on the fundamental
understanding that no conflicts of interest will arise with the general shareholders.
③ Cooperation between outside auditors and internal audit divisions
Outside auditors monitor and supervise the management of the Bank through attendance at the Board of
Directors meetings and the Board of Corporate Auditors meetings, reports from the Compliance Committee
and other committees, and cooperation with the Audit Division and accounting auditors to ensure effective
audits based on a high level of independence.
(4) Outline of the Liability Limitation Agreement
The Bank has concluded liability limitation agreements with its outside directors and outside auditors,
under which the liability for damages due to the negligence of duty on the side of outside directors andoutside auditors is confined to the minimum statutory limits, in accordance with the provisions of Article
427, Paragraph 1 of the Corporation Law.

― 7 ―(5) Compensation for Directors and Corporate Auditors① Aggregate amount of compensation paid to directors and corporate auditors, aggregate amount ofcompensation by category of compensation, and the number of eligible directors and corporate auditors
Classification of directors
and corporate auditors

Numberof persons

Aggregate amount of compensation
Basic
Bonus
(¥ million)
compensation

Stock option

Retirement
benefits

Directors (excluding
11
261
187
25
48
outside directors)
Corporate auditors
1
19
19(excluding outside
auditors)
Outside directors and733
33
outside auditors(Notes) 1. The above numbers of persons include two directors and one auditor who retired at the closing of
the 134th General Meeting of Shareholders held on June 23, 2016.
2. The above amounts include ¥25 million accrued bonuses for directors and corporate auditors during
the current fiscal year (¥25 million for directors), and ¥48 million for stock compensation-type stockacquisition rights (¥48 million for directors).
3. Apart from the above, ¥24 million employees’ compensation was paid as compensation to directors
concurrently serving as employees (¥20 million employees’ salaries and ¥4 million employees’
bonuses).
② Combined compensation for individual directors and corporate auditors
Not applicable, as there are no directors or corporate auditors whose combined compensations exceeded¥100 million.
③ Policies on determining the amount of compensation for directors and corporate auditors
Annual compensation limits payable to the Bank’s directors and corporate auditors are determinedaccording to a resolution passed at the General Meeting of Shareholders, and are set at a maximum of ¥260
million for directors, including outside directors, and a maximum of ¥60 million for corporate auditors. In
addition to the aforementioned limits for compensation, the General Meeting of Shareholders has passed a
resolution to allocate stock acquisition rights to directors (excluding outside directors) as stockcompensation-type stock options at an annual limit of ¥80 million.
The Bank’s compensation system for directors (excluding outside directors) comprises basic fixedcompensation, bonuses and stock compensation-type stock options, while that for outside directors andcorporate auditors comprises basic fixed compensation alone.
The monthly amount of basic fixed compensation is decided at the Board of Directors meeting and at theBoard of Corporate Auditors meeting following the General Meeting of Shareholders, based on the duties
and experience of each director and corporate auditor that is paid. The amount of bonus for directors andcorporate auditors is decided according to the Bank’s internal rules separately set out, in consideration of
the Bank’s financial business results each fiscal year as well as each director and corporate auditor’s
personal contribution thereto.

― 8 ―(6) Holding of Shares① Number of stocks held by the Bank for other purposes than pure investment and their balance sheet value
Number of stocks held: 135
Balance sheet value: ¥ 26,663 million② Classification, stock name, number of shares, balance sheet values, and purpose of holding investment
securities for purposes other than pure investment are as follows:(Previous fiscal year)
The stocks whose balance sheet values exceed a hundredth of capital amount are displayed below.
(Specific investment stocks)
Balance sheet
valuesNumber of shares
Stock namePurpose of holding(Millions of yen)
Tohoku Electric Power Company, Inc.

2,277,797

3,307

Mitsubishi UFJ Financial Group, Inc.

4,040,310

2,107

TAIYO NIPPON SANSO CORPORATION

1,822,849

1,946

East Japan Railway Company

200,000

1,942

SECOM CO., LTD.

104,644

875

Daiwa Securities Group Inc.

1,099,806

761

The Yamagata Bank, Ltd.

1,323,800

565

Tokio Marine Holdings, Inc.

127,086482

THE AKITA BANK, LTD.

1,517,159

465

The Bank of Kyoto, Ltd.

540,000

396

The Toho Bank, Ltd.

1,052,090

379

The Aomori Bank, Ltd.

937,000

307

Yamaguchi Financial Group, Inc.

300,000306

JFE Holdings, Inc.

200,047303

THE OITA BANK, LTD.

860,000

301

The Ogaki Kyoritsu Bank, Ltd.

863,000

293

The Daishi Bank, Ltd.

731,000

282

ARCS COMPANY, LIMITED

109,590276

Kyushu Financial Group, Inc.

418,470

271

The Yamanashi Chuo Bank, Ltd.

656,000

270

The Hyakugo Bank, Ltd.

619,000

261

DCM Holdings Co., Ltd.

317,949

258

― 9 ―

Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement ofbusiness relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationshipNumber of shares

Balance sheet
values(Millions of yen)

Electric Power Development Co., Ltd.

72,000253

NTN CORPORATION

657,555236

1,024,483

224

ORIX Corporation

132,300

212

MS&AD Insurance Group Holdings, Inc.

66,756

209

The Musashino Bank, Ltd.

71,600202

Sumitomo Seika Chemicals Company, Limited

356,000

197

The Kita-Nippon Bank, Ltd

68,250195

YAKUODO Co., Ltd.

60,000191

THE BANK OF SAGA LTD.

801,000

169

Nagase & Co., Ltd.

137,000

169

Mitsubishi UFJ Lease & Finance Company
Limited296,600

146

Stock nameTOSHIBA CORPORATION― 10 ―

Purpose of holding
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship(Current fiscal year)
The stocks whose balance sheet values exceed a hundredth of capital amount are displayed below.
(Specific investment stocks)
Balance sheet
Number ofvaluesPurpose of holding
Stock nameshares(Millions of yen)
Tohoku Electric Power Company, Inc.

2,277,797

3,434

TAIYO NIPPON SANSO CORPORATION

1,822,849

2,373

200,000

1,938

2,424,110

1,696

104,644

833

Daiwa Securities Group Inc.

1,099,806

745

The Yamagata Bank, Ltd.

1,323,800

642

Tokio Marine Holdings, Inc.

127,086596

THE AKITA BANK, LTD.

1,517,159

526

YAKUODO Co., Ltd.

180,000

500

The Toho Bank, Ltd.

1,052,090

440

The Bank of Kyoto, Ltd.

540,000437

JFE Holdings, Inc.

200,047

381

THE OITA BANK, LTD.

860,000374

NTN CORPORATION

657,555364

Yamaguchi Financial Group, Inc.

300,000

362

The Aomori Bank, Ltd.

937,000

357

Sumitomo Seika Chemicals Company, Limited

71,200337

The Yamanashi Chuo Bank, Ltd.

656,000

326

DCM Holdings Co., Ltd.

317,949

326

The Daishi Bank, Ltd.

731,000

322

ARCS COMPANY, LIMITED

109,590291

The Ogaki Kyoritsu Bank, Ltd.

863,000

285

Kyushu Financial Group, Inc.

418,470

284

The Hyakugo Bank, Ltd.

619,000274

1,024,483

247

East Japan Railway Company
Mitsubishi UFJ Financial Group, Inc.
SECOM CO., LTD.

TOSHIBA CORPORATION― 11 ―

Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement ofbusiness relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement
cooperative relationship
Close ties to local economy as well as
promotion of general transactions andreinforcement of relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationshipNumber ofsharesBalance sheet
values(Millions of yen)

THE BANK OF SAGA LTD.

801,000

244

MS&AD Insurance Group Holdings, Inc.

66,756236

The Musashino Bank, Ltd.

71,600236

The Kita-Nippon Bank, Ltd

68,250219

ORIX Corporation

132,300

217

Nagase & Co., Ltd.

137,000

212

Electric Power Development Co., Ltd.

72,000187

Mitsubishi UFJ Lease & Finance Company Limited

296,600

164

THE SHIMIZU BANK, LTD.

45,400153

Katakura Industries Co., Ltd.

99,000137

Stock name― 12 ―

Purpose of holding
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofcollaborative relationship forfinance-related businesses
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement ofbusiness relationship
Maintenance and reinforcement
cooperative relationship
Maintenance and reinforcement ofbusiness relationship③ Balance sheet value, dividend income, gain or loss on sales and gain or loss on valuation, in respect of theinvestment stocks held purely for investment purpose(Millions of yen)
At the end of the previous fiscal year
Gain or loss on
Balance sheet value Dividend income Gain or loss on sales
valuation
Listed stocks
22,983512
771
11,025
Unlisted stocks(Millions of yen)
At the end of the current fiscal year
Balance sheet value Dividend income Gain or loss on sales
Listed stocks
Unlisted stocks

26,624
-

529
-

636
-

Gain or loss on
valuation
13,066-④ Of all investment stocks held during the current fiscal year, those whose purpose of holding changed fromother than pure investment to pure investment
Balance sheet value
Stock name
Number of shares(Millions of yen)
Mitsubishi UFJ Financial Group, Inc.
1,616,200
1,130(7) Statutory Number of Directors
The Articles of Incorporation of the Bank stipulate that there shall be no more than twelve directors.
(8) Resolutions for Appointment of Directors
The Articles of Incorporation provide that resolutions for appointment of directors are passed by simple
majority at a General Meeting of Shareholders at which at least one-third of eligible shareholders withvoting rights are present, without use of cumulative voting.
(9) Important Items that may be Approved by Resolution of the Board of Directors① Based on Article 165, Paragraph 2 of the Corporation Law, the Articles of Incorporation of the Bank
provide that Bank shares may be purchased on the markets by resolution of the Board of Directors only,
without the need for approval at the General Meeting of Shareholders. This measure is intended to ensure
flexible adjustment of the number of the Bank’s shares on the market.
② Based on Article 454, Paragraph 5 of the Corporation Law, the Articles of Incorporation of the Bank
provide that an interim dividend may be paid by resolution of the Board of Directors only, with September
30 each year as date of record. This measure is to ensure a more stable distribution of profits toshareholders.
(10) Special Resolutions of the General Meeting of Shareholders
Based on Article 309, Paragraph 2 of the Corporation Law, special resolutions may be passed with amajority of two-thirds of eligible shareholders at a meeting at which at least one-third of shareholders withvoting rights are present. By relaxing quorum requirements for approval of special resolutions by theGeneral Meeting of Shareholders, our objective is to achieve smoother progress through the agenda at
meetings of shareholders.

― 13 ―

2 Compensation for Audit Certification Services(1) Compensation Paid to Certified Public Accountants for Audit Certification Services
FY2015Compensation forCompensation foraudit certification
services other thanservices
audit certification¥55¥0(Millions of yen)
FY2016Compensation forCompensation foraudit certification
services other thanservices
audit certification¥57¥4

For the Bank
For consolidated
subsidiaries of the
Bank
Total
¥55
¥0
¥57
¥4
Notes: 1. Compensation paid during the previous term with respect to audit certification services includes ¥1million paid to KPMG AZSA LLC for the auditing of the English-language version (translation) of theBank’s financial statements on a consolidated basis for fiscal 2015.
2. Compensation paid during the reporting term with respect to audit certification services includes ¥1million paid to KPMG AZSA LLC for the auditing of the English-language version (translation) of theBank’s financial statements on a consolidated basis for fiscal 2016.
(2) Other Important Compensatory Payments
None(3) Nature of Services Performed for the Bank by the Certified Public Accountants Other than Financial
Accounting
Previous fiscal year
This comprises advisory services regarding the interpretation of regulatory requirements relating to thecalculation of credit risk assets.
Current fiscal year
This is advisory services regarding the interpretation of regulatory requirements relating to the calculationof credit risk assets as well as the CRS.
(4) Changes in Policy Regarding Payment of Compensation for Auditing Services
There were no changes during the reporting period.

― 14 ―

Consolidated Balance Sheets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016

ASSETSCash and due from banks (Notes 3 and 6)
Call loans and bills bought (Note 6)
Monetary claims bought (Note 6)
Money held in trust (Notes 5 and 6)
Securities (Notes 4, 6, 8 and 17)
Loans and bills discounted (Notes 6, 7, 9 and 30)
Foreign exchange assets
Premises and equipment (Notes 11 and 25)
Intangible assets (Notes 12 and 25)
Net defined benefit asset (Note 18)
Deferred tax assets (Note 19)
Customers’ liabilities for acceptances and guarantees (Note 17)
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 (Notes 6 and 8)
Payables under securities lending transactions (Note 8)
Borrowed money (Notes 6, 8 and 14)
Foreign exchange liabilities
Corporate bonds with stock acquisition rights (Notes 6 and 15)
Accrued bonuses for directors and corporate auditors
Net defined benefit liability (Note 18)
Retirement benefits for directors and corporate auditors
Provision for losses on reimbursement of dormant deposits
Provision for contingent losses
Deferred tax liabilities (Note 19)
Acceptances and guarantees (Note 17)
Other liabilities (Notes 6, 16 and 25)
Total liabilities
Net assets (Note 20):
Common stock:
Authorized — 49,450 thousand shares at 31 March 2017 and 2016
Issued and outstanding —18,498 thousand shares at 31 March 2017 and 2016
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 18)
Total accumulated other comprehensive income
Stock acquisition rights (Note 21)
Non-controlling interests
Total net assets
Total liabilities and net assets

Millions of yen
2017
2016
¥427,050¥364,926－
20,000
2,851
3,907
4,982
4,985
1,344,719
1,321,286
1,704,750
1,772,818
1,874
1,710
16,907
16,287
1,556
1,875
4,080
1,180
557
7
7,281
6,527
44,7796,319(8,908)(7,480)¥3,552,478¥3,514,347

Thousands of
U.S. dollars(Note 1)
2017
$3,806,489－
25,41244,407
11,986,086
15,195,204
16,704
150,700
13,86936,367
4,965
64,899399,135(79,401)$31,664,836¥3,271,398
5,610
1,130
14,102
20
11,219
26
1,709
20
569
288
10,985
7,281
29,8333,354,190¥3,248,304
1,127－
13,584
1
11,268
25
1,440
2
501
297
12,306
6,527
25,8673,321,249$29,159,444
50,004
10,072
125,698
178
100,000
232
15,233
178
5,072
2,567
97,91464,899265,915
29,897,406

12,0905,502
146,965(3,117)
161,440
41,417(3,355)(1,530)36,532
157
159
198,288¥3,552,478

12,0904,811
138,254(3,748)151,40747,198(4,074)(1,580)41,544147－
193,098¥3,514,347

107,764
49,042
1,309,965(27,783)
1,438,988
369,168(29,905)(13,637)
325,6261,399
1,417
1,767,430$31,664,836

2017

2016

U.S. dollars
2017¥11,075.22¥10,867.07

Yen
Per share data:
Net assets (Note 27)

See accompanying notes.

― 15 ―$98.72

Consolidated Statements of Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
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 22)
Other income (Note 24)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses (Note 22)
General and administrative expenses (Note 23)
Other expenses (Note 24)
Total expenses

2017

2016

2017

¥18,296
13,501
66
8,406
3,742
7,120

¥19,442
14,408
120
7,610
2,090
2,934

$163,081
120,341588
74,92633,35463,464

51,131

46,604455,754

704
173
609
2,958
4,293
28,040
1,695

1,203
156
598
3,077
1,940
26,361
2,149

6,275
1,542
5,428
26,36638,266249,933
15,10838,47235,484

342,918

Income before income taxes
Provision for income taxes (Note 19)
Current
Deferred

12,65911,120112,836

1,827
672

3,657
356

16,285
5,990

2,499

4,013

22,275

Net income

10,1607,107

90,561

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

8

－

72

¥10,152¥7,107$90,489Yen
Per share data:
Net income (Note 27)
Diluted net income (Note 27)
Cash dividends applicable to the year (Note 31)

See accompanying notes.

― 16 ―

U.S. dollars

2017

2016

¥567.99509.8270.00¥400.26
359.19
70.00

2017
$5.06
4.54
0.62

Consolidated Statements of Comprehensive Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
Thousands of
U.S. dollars(Note 1)Millions of yen
Net income
Other comprehensive income (Note 26):
Net unrealized holding losses on available-for-sale securities
Net unrealized gains (losses) on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 18)
Share of the other comprehensive income (losses) of affiliates accounted forusing the equity method

2017

2016

2017

¥10,160¥7,107$90,561(5,769)719
50(1,203)(2,784)(1,514)(51,422)
6,409
446

(12)

(1)

(107)

(5,012)(5,502)(44,674)

Comprehensive income¥5,148¥1,605$45,887

Total comprehensive income (losses)
Attributable to:
Owners of parent
Non-controlling interests¥5,148¥1,605$45,887

5,140
8

1,605
－

45,81572

Total other comprehensive losses

See accompanying notes.

― 17 ―

Consolidated Statements of Changes in Net Assets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
Millions of yen
Shareholders’ equity

Accumulated other comprehensive income (losses)
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding gains

shareholders’(losses) on

equityavailable-for-salesecurities

BALANCE, 1 April 2015
Change during year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other thanshareholders’ equity during
year
Total change during year
BALANCE, 1 April 2016
Change during
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Change in equity of parent
arising from transactions with
non-controlling shareholders
Net changes of items other thanshareholders’ equity during
year
Total change during year
BALANCE, 31 March 2017

Net unrealized
gains (losses)on hedging
derivatives

Total
Remeasurements

accumulated

Stockof definedotheracquisition

benefit planscomprehensive

rightsNon-controlling
interests

Total
net assets

income (losses)¥12,090¥4,811¥132,390¥ (3,742)¥145,549¥48,402¥ (1,290)¥ (66)¥47,046¥99¥－¥192,694－－(1,243)－(1,243)

－

－

－

－

－

－

(1,243)

－
－
－

－
－
－

7,107
－
(0)

－
(6)
0

7,107
(6)
0

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

7,107
(6)
0

－

－

－

－

－

(1,204)(2,784)(1,514)(5,502)48－(5,454)－
12,090

－
4,811

5,864
138,254(6)(3,748)5,858
151,407(1,204)47,198(2,784)(4,074)(1,514)(1,580)(5,502)
41,544

48
147

－
－

404
193,098－－(1,246)－(1,246)

－

－

－

－

－

－

(1,246)－－

10,152－

10,152

－

－

－

－

－

－

10,152

－

－

－

(4)

(4)

－

－

－

－

－

－

(4)

－
－

－
－

(175)
(20)

761
(123)

586
(143)

－
－

－
－

－
－

－
－

－
－

－
－

586
(143)

－

691

－

(3)

688

－

－

－

－

－

－

688

－

－

－

－

－

(5,781)719

50(5,012)

10

159(4,843)－¥12,090691¥5,502

8,711¥146,965

631¥ (3,117)

10,033¥161,440(5,781)¥41,417719¥ (3,355)50¥ (1,530)(5,012)¥36,532

10
157

159
159

5,190
198,288

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

Accumulated other comprehensive income (losses)
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding gains

shareholders’(losses) on

equityavailable-for-salesecurities

BALANCE, 1 April 2016
Change during year

$107,764

Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
Change in equity of parent
arising from transactions with
non-controlling shareholders
Net changes of items other thanshareholders’ equity during
Total change during year
BALANCE, 31 March 2017

Net unrealized
gains (losses)on hedging

Total
Remeasurements

accumulatedof definedotherbenefit plans

derivatives

comprehensive

StockacquisitionrightsNon-controlling
interests

net assets

Total

income (losses)$42,883 $1,232,320 $ (33,408)$1,349,559$420,697$ (36,314)$ (14,083)$370,300$1,310$－$1,721,169－－(11,106)－(11,106)

－

－

－

－

－

－

(11,106)

－
－
－
－

－
－
－
－

90,489(1,560)
(178)

－
(35)
6,783
(1,096)90,489(35)
5,223(1,274)

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－

90,489(35)
5,223(1,274)

－

6,159

－

(27)

6,132

－

－

－

－

－

－

6,132

－
－

－
6,159

－

－

－

6,409
6,409

446
446

(44,674)(44,674)89
89(43,168)

89,429$1,438,988(51,529)(51,529)

1,417

77,645
5,625$49,042 $1,309,965 $ (27,783)$369,168$ (29,905)$ (13,637)$325,626$1,3991,417$1,417

46,261$1,767,430$107,764

See accompanying notes.

― 18 ―

Consolidated Statements of Cash Flows
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
Millions of yen
2017
2016
Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash provided by operating activities:
Depreciation
Impairment losses
Gain on bargain purchase
Loss on step acquisitions
Gain on revision of defined benefit plans
Equity in losses of affiliates
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for contingent losses
Increase in accrued bonuses for directors(Increase) decrease in net defined benefit asset
Decrease in net defined benefit liability
Decrease in retirement benefits for directors and corporate auditors
Increase in provision for losses on reimbursement of dormant deposits
Interest income
Interest expenses
Investment securities gains, net(Increase) decrease in money held in trust
Foreign exchange (gains) losses, net
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 decrease in due from banks, excluding the Bank of JapanNet decrease in call loans and others
Net increase (decrease) in call money
Net increase 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 provided by operating activities
Cash flows from investing activities:
Acquisition of securities
Proceeds from sale of securities
Proceeds from redemption of securities
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
Payment for acquisition of shares of subsidiaries resulting in change in scope of consolidation(Note3)
Net cash provided by (used in) investing activities― 19 ―

Thousands of
U.S. dollars(Note 1)
2017

¥12,659¥11,120$112,836

2,215
65(4,340)251(864)－(1,623)
(9)
1
130
(327)
(3)
68
(31,863)
1,486
(138)
2
(30)
145
67,42654,736(24,716)
8,758
11,954
21,056
4,483
1,130
(164)
19
33,082(1,742)(28,685)
125,162(4,541)
1
120,622

2,086
64
－
－
－
(30)
1,061
60
3
(1,104)
(411)
(3)
32
(33,970)
1,957(2,125)(30)74
4(31,802)(52,541)
31,077(253)
10,01587,188(8,873)－87(5)34,847(1,979)(19)
46,530(1,966)
1
44,56519,743579(38,684)
2,237(7,701)－(14,466)
(80)
9
1,159
(2,915)(27)606(284,010)
13,245(1,230)
18
(267)
1,292
600,998
487,887(220,305)
78,064
106,551
187,682
39,95910,072(1,462)
169
294,875(15,527)(255,682)
1,115,625(40,476)
9
1,075,158(587,093)
40,619515,930(1,689)
149
(155)
(523)
(82)

(213,921)
79,547
193,229(1,221)
52
－
(452)
－

(5,233,024)
362,055
4,598,716(15,055)
1,328(1,381)(4,662)(731)(1,982)(34,826)－
57,234(17,666)(310,420)

Consolidated Statements of Cash Flows (Continued)
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
Millions of yen
2017
2016

Thousands of
U.S. dollars(Note 1)
2017

Cash flows from financing activities:
Decrease in subordinated borrowings
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
Net cash used in financing activities(10,000)(489)(1,246)(6)(4)
0(11,745)－(523)(1,243)－(6)
0(1,772)(89,135)(4,359)(11,106)
(53)
(35)
0
(104,688)

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3)

16
74,067352,514¥426,581

19
100,046
252,468¥352,514

143
660,193
3,142,116$3,802,309

See accompanying notes.

― 20 ―

Notes to Consolidated Financial Statements
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2017 and 2016
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Bank of Iwate, Ltd. (the “Bank”) and its consolidated subsidiary 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 2017, which was ¥112.19 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.

The Bank acquired additional shares of Iwagin Lease Data Co., Ltd., Iwagin DC Card Co., Ltd. and Iwagin Credit

Service Co., Ltd., which were equity-method affiliates of the Bank in the previous consolidated fiscal year, and therefore, thesecompanies were included in the scope of consolidation from the year ended 31 March 2017,.
An 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.
As mentioned in the first paragraph of this section, from the year ended 31 March 2017, the three companies that wereequity-method affiliates of the Bank in the previous consolidated fiscal year are excluded from the scope of equity method; therefore,
there are no investments in affiliates that are accounted for by the equity method.

― 21 ―

The 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 securities
Securities are classified as follows based on the purpose: (a) securities held for trading purposes (“trading account securities”), (b)debt securities intended to be held to maturity (“held-to-maturity debt securities”), (c) equity securities issued by subsidiaries andaffiliated 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 purposes are presented as trading account securities.
Trading account securities are stated at fair value. Gains and losses 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 that are invested as part of trust assets in independently managed money trusts that invest primarily in securities are stated
at fair value.

Derivatives and hedge accounting
The Bank employs forward exchange contracts, currency swaps and interest rate swaps to meet customers’ needs and to 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 Standard for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public Accountants― 22 ―

(“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.
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 which 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 (except 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 (except 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 that 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.

― 23 ―

Allowance for doubtful accounts
The Bank provides allowance for doubtful accounts as follows:
The reserve for loans to borrowers which 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 which 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 which 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 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 year of the eligible― 24 ―

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.

Income taxes
Income taxes consist of corporation, enterprise and inhabitants taxes. The provision for income taxes is computed based on thepretax income of each of the Bank and 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 statement 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 31.

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.

― 25 ―

Changes in accounting policies
Application of “Practical Solution on a Change in Depreciation Method due to Tax Reform 2016”
Following the revision to the Corporate Tax Act, “Practical Solution on a Change in Depreciation Method due to Tax Reform 2016”(Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No. 32, 17 June 2016) is applied from theyear ended 31 March 2017 and the depreciation method of installed facilities and structures acquired on and after 1 April 2016 has
been changed from the declining-balance method to the straight-line method.
As a result, income before income taxes for the year ended 31 March 2017 has increased by ¥24 million ($214 thousand).

Additional information(1)“Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, 28 March 2016) wasapplied from the year ended 31 March 2017.

(2)

As of 1 April 2016, the Bank transferred part of the defined benefit plans (excluding the portion for vested pensioners in a
waiting period and current pensioners) to defined contribution plans. Regarding the accounting treatment associated with thistransfer, “Guidance on Accounting for Transfer between Retirement Benefit Plans” (ASBJ Guidance No. 1, 31 January 2002)
and “Practical Solution on Accounting for Transfer between Retirement Benefit Plans” (ASBJ PITF No. 2, 7 February 2007)
were applied to the portion transferred to the defined contribution plans as partial termination of retirement benefit plans.
A gain of ¥864 million ($7,701 thousand), which resulted from the decrease in projected benefit obligation associated with thetransfer, was recognized in other income for the year ended 31 March 2017.

3. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS(1) Cash 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 2017 and 2016, 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:

Cash and due from banks
Less: Time deposits
Deposits in other banks other than the Bank of Japan
Cash and cash equivalents― 26 ―

Millions of yen
2017
2016
¥427,050¥364,926－(12,000)
(469)
(412)
¥426,581¥352,514

Thousands of
U.S. dollars
2017$3,806,489－(4,180)$3,802,309

(2) Breakdown of assets and liabilities of companies newly consolidated through acquisition of shares
The breakdown of assets and liabilities at the time of commencing the consolidation of three subsidiaries, Iwagin Lease Data,
Iwagin DC Card and Iwagin Credit Service, through acquisition of their shares, and their acquisition cost and expenditure on
acquisition (net) were as follows:

Millions of yen
AssetsLiabilities
Non-controlling interests
Gain on bargain purchase
Acquisition cost of shares
Amount evaluated by the equity method until acquisition
Loss on step acquisition
Cash and cash equivalents
Less: Expenditure on acquisition, net¥22,321(13,108)(1,394)(4,340)
3,479
(455)
251
(1,293)¥1,982Thousands of
U.S. dollars$198,957(116,838)(12,425)(38,684)
31,010(4,056)
2,237(11,525)$17,666(3) Details of major non-monetary transactions
Transactions accompanied with making Iwagin DC Card and Iwagin Credit Service the Bank’s wholly owned subsidiaries
Millions of yen
2017
Increase in capital surplus due to share exchange
Decrease in treasury stock due to share exchange

2016
¥691
718

¥－
－

Thousands of U.S.
dollars
2017$6,1596,400

4. SECURITIESSecurities held by the Group at 31 March 2017 and 2016 consisted of the following:
Millions of yen
2017
2016
¥399,266¥435,353
317,940
284,845
325,054324,731
49,82544,571
252,634
231,786¥1,344,719¥1,321,286

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

Thousands of
U.S. dollars
2017$3,558,838
2,833,942
2,897,353
444,1132,251,840$11,986,086

The securities placed under unsecured lending agreements, which borrowers have the right to sell or pledge in the amount of¥97,000 million ($864,605 thousand) and ¥89,000 million at 31 March 2017 and 2016 were included in national government bonds,
respectively.

― 27 ―

A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values at 31 March2017 and 2016:(a) Held-to-maturity debt securities
Millions of yen
At 31 March 2017:

Book value¥36,576

Fair value¥40,806

Difference¥4,230Gain¥4,231

At 31 March 2016:¥37,724¥42,751¥5,027¥5,030At 31 March 2017:

Book value$326,018

Thousands of U.S. dollars
Fair value
Difference$363,722$37,704

Loss
¥ (1)
¥ (3)

Gain
$37,713

Loss

Gain

Loss

$ (9)

(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 2017:
Corporate stocks
Bonds
Other
At 31 March 2016:
Corporate stocks
Bonds
Other

Book value

Difference¥25,288
977,212
241,449¥48,6121,009,200
245,051¥23,324
31,988
3,602¥23,506
32,8736,755¥ (182)(885)(3,153)¥1,243,949¥1,302,863¥58,914¥63,134¥ (4,220)¥24,144967,596
222,846¥42,963
1,012,332
226,663¥18,819
44,736
3,817¥19,458
44,887
7,182¥ (639)(151)(3,365)¥1,214,586¥1,281,958¥67,372¥71,527¥ (4,155)

Thousands of U.S. dollars
Acquisition cost
At 31 March 2017:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

$225,403
8,710,331
2,152,144$433,301
8,995,454
2,184,250$207,898
285,123
32,106$209,520
293,01260,210$ (1,622)(7,889)(28,104)$11,087,878$11,613,005$525,127$562,742$ (37,615)

B. For the year ended 31 March 2017, cost of sales, total sales and related loss of held-to-maturity debt securities amounted to ¥100
million ($891 thousand), ¥97 million ($864 thousand) and ¥3 million ($27 thousand), respectively. Based on the investment
standard in consolidated subsidiaries, they were sold since a significant deterioration was seen in the issuer’s credit standing.
Total sales of available-for-sale securities sold in the years ended 31 March 2017 and 2016 amounted to ¥40,521 million ($361,182
thousand) and ¥79,536 million, respectively. The related gains and losses amounted to ¥1,738 million ($15,492 thousand) and ¥59
million ($526 thousand) in 2017, and ¥3,980 million and ¥5 million in 2016, respectively.

C. There were no available-for-sale securities other than trading securities written down for the years ended 31 March 2017 and2016.

― 28 ―

D. Net unrealized holding gains on available-for-sale securities on the consolidated balance sheets at 31 March 2017 and 2016
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Net unrealized holding gains before deferred tax on:
Available-for-sale securities (Note)
Deferred tax assets
Deferred tax liabilities
Net unrealized holding gains before interests adjustment
Amount equivalent to non-controlling interests
Equity of net unrealized holding gains on available-for-sale securities
owned by affiliates that are accounted for by the equity method

2016¥58,983(45)(17,521)
41,417(0)

Net unrealized holding gains on available-for-sale securities

2017¥67,373－(20,187)
47,186－$525,742(401)(156,173)
369,168
(0)

－

12

－

¥41,417¥47,198$369,168

Note: The amount of ¥71 million ($633 thousand), which is net unrealized holding gains before deferred tax on available-for-salesecurities that are component assets of investment limited partnerships classified as securities for which it is extremely difficult todetermine the fair values, was included in the balance at 31 March 2017.

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

Millions of yen
2017
SharesInvestments

2016
¥20
613

¥482
269

2017
$178
5,464

5. MONEY HELD IN TRUST
Money held in trust at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Money held in trust for trading purposes:
Carrying amount
Realized gains included in earnings¥4,982－― 29 ―

2016¥4,985－

2017$44,407－

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 and call money, etc. and applies them to loans receivable andinvesting in securities. Therefore, the financial assets and liabilities of the Group tend to be affected by interest rate fluctuations, andare exposed to risks stemming from changes in financial market environments (interest rate risks and price fluctuation risks), as wellas 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 categories of loans as of the current
fiscal year-end was local governments, followed by individuals, manufacturing industries, real estate industries and leasing - moreor less all kinds of industries.
Securities are fundamentally constituted of bonds, stocks and investment trusts, which are held for investing purposes,
held-to-maturity purposes and for maintaining business relationships, while trading securities are held for trading purposes. Theseare 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 mismatching 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 suffering losses from unusualhigh interest 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 ALM control and adopt 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 their customers periodically and due dates and outstanding balances by individual customer. In addition, the― 30 ―

Bank is 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
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 periodical review 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 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 basis or on 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 primary polices on investing,and controlled through continuous monitoring. The information related to the market environment and the investment status isreported to the management on a regular basis.
(Derivative transactions)
In conducting derivative transactions, each division responsible for execution of transactions, evaluation of efficiency of the hedging
and related administration is clearly identified, following the hedge transaction guidelines, the market business operation standards
and market risk management standards, with setting up segregation of duties and checking systems.
(Information on volume of market risk)
1. Financial instruments in Market Investment Division
The Bank employs the variance-covariance method in calculating VaR of bonds and stocks held using the following parameters forcalculation.

― 31 ―

Holding period

Confidence interval

Observation period

Investments in bond

3 months

99%

1 yearInvestments in stock

3 months

99%

1 yearShares held for policy reasons

6 months

99%

1 yearInvestments in trust

3 months

99%

1 year

The volume of market risk in market investment departments, which is supposed to be estimated losses, at the end of the years
ended 31 March 2017 and 2016 was as follows:
Millions of yen

Thousands of U.S. dollars

2017

2016

¥30,234¥34,3722017$269,489

The Bank periodically verifies the effectiveness of risk measurement by a back-testing protocol that compares the volume under
VaR with the amount of actual gains or losses or hypothetical gains or losses on a fixed portfolio. As a result of conducting theback-testing protocol, the Group supposes the method undertaken will provide a reliable indicator of the market risks.
The method of variance and covariance 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 beunderestimated.

2. Financial instruments such as deposits and loans receivable, etc.
The Bank employs the variance-covariance method in calculating VaR of deposits and loans receivable, etc., using such parametersof six months as holding period, 99% as confidence interval and one year as observation period.
The volume of interest rate risk of the Bank’s deposits and loans receivable, etc., which is supposed to be estimated losses, at theend of the years ended 31 March 2017 and 2016 was as follows:
Millions of yen
2017

Thousands of U.S. dollars

2016¥7,692¥4,995

2017$68,562

The calculation was conducted using cash flows allocated according to the interest terms of the related financial assets and liabilities
and the periodic fluctuations of interest. The method of variance and covariance the Bank undertakes to measure the volume under
VaR employs statistically calculated interest rate risks based on the past normal interest rate fluctuations, so if changes in theinterest market go beyond those assumptions, the impact may exceed the calculated amount.

e. Monitoring of liquidity risks
The Bank adequately manages its liquidity risks based on various internal quantitative standards prescribed in fund 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.

― 32 ―

(2) Fair value of financial instruments
The carrying amounts and the estimated fair value of financial instruments at 31 March 2017 and 2016 were as follows.
Millions of yen

Thousands of U.S. dollars
2016

2017

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

2017

Carrying
amounts

Fair value

Carrying
amounts

Fair value

Carrying
amounts

Fair value¥427,050
－
2,457
4,982

¥427,050
－
2,486
4,982

¥364,926
20,0003,907
4,985¥364,926
20,0003,976
4,985$3,806,489－
21,90044,407$3,806,489－
22,15944,40735,304
1,302,863
1,704,750(8,725)39,505
1,302,863

34,851
1,281,958
1,772,818(7,404)39,808
1,281,958

314,680
11,613,005
15,195,204(77,770)

352,126
11,613,005

1,696,025

1,700,818

1,765,414

1,775,739

15,117,434

15,160,157

3,271,398
5,610
14,102

3,271,593
5,610
14,105

3,248,304
1,127
13,584

3,248,655
1,127
13,63929,159,444
50,004
125,698

29,161,182
50,004
125,724

11,21911,30911,268

10,635100,000

100,802

56

56

308

308

499

499

5,053

1,679

(4,714)(8,620)45,04014,966(Note 1) Methods to determine the estimated fair value of financial instruments
a. Cash and due from banks, call loans and bills bought
All cash and due from banks, call loans and bills bought 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 those with longer terms is based on either quoted market prices or prices provided by the financial
institutions making markets.
c. Money held in trust
For the securities that are invested as part of trust assets in independently managed money trusts that invest primarily in securities,
the fair value of the equity securities is determined using quoted market prices and the fair value of debt securities is determinedusing the 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. Private placement bonds are based on the discounted present
value, which is calculated by discounting estimated future cash flows arising from the financial assets.

― 33 ―

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 which 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 which is not exceeding the value of collateral, are supposed to approximate the fair value, given the estimatedrepayment 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
Call money is 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 2017 and 2016:
Thousands of
U.S. dollars

Millions of yen
2017
Available-for-sale securities
Monetary claims bought

2016¥6,552394¥4,477－― 34 ―

2017$58,401
3,512

(Note 3) Expected collections of assets and payments of liabilities with maturities at 31 March 2017 and 2016 were as follows:
Millions of yen
2017
Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly 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¥404,081
－
1,185

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
1,666

500

12,545

307

－

1,982

19,970500－
180,531

10,001300
321,616－307
237,928－－
67,854

1,982－
332,501

19,970－83,35674,753
3,971
83,483
297,018

135,989
13,956
115,678
416,641

71,29429,21990,120286,572

9,612
24,37014,515
141,729

21,526226,246
13,046
133,677

53,63920,1783,209
253,624

Deposits
Call money
Borrowed money (*2)

3,138,796
5,610
4,945

124,078
－
385

7,110
－
－

169
－
－

1,245
－
－

－
－
－

Millions of yen
2016
Within one
year

One to three
years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly 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¥341,615
20,000
1,034

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
2,873

648

12,255－－－21,948－648
102,056

10,002－
344,166－－
339,518－－
80,141－－
275,181

21,948－70,81425,2982,922
36,571
314,827

168,288
11,123
138,327
397,005

129,999
32,098106,281
347,574

15,12725,29233,878144,866

13,782
203,367
6,181
139,077

50,90910,043
1,323
240,543

Deposits
Call money
Borrowed money (*2)

3,083,583
1,127
3,493

156,009
－
－

7,200
－
－

163
－
10,000

1,349
－
－

－
－
－

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.

― 35 ―

Thousands of U.S. dollars
2017
Within one
year

One tothree years

Three tofive years

Five toseven years

Seven toten years

Over tenyears

Due from banks
Call loans and bills bought
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$3,601,756－
10,562

$－
－
－

$－
－
－

$－
－
－

$－
－
－

$－
－
14,8504,457

111,819

2,736－

17,666

178,002

4,457－
1,609,154

89,143
2,674
2,866,708－
2,736
2,120,759－－
604,813

17,666－
2,963,731

178,002－742,990

666,30735,395744,122
2,647,455

1,212,131
124,396
1,031,090
3,713,709

635,476
260,442803,280
2,554,345

85,676217,221
129,379
1,263,294

191,871
2,016,632
116,285
1,191,523

478,109179,856
28,6032,260,665

Deposits
Call money
Borrowed money

27,977,503
50,00444,077

1,105,963－
3,432

63,375
－
－

1,506
－
－

11,097－－－－－

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 2017 and 2016 were as follows:(Currency-related transactions)
Millions of yen
2017

Thousands of U.S. dollars
2016

Unrealized
Notional

gains

amounts Fair value (losses)

Forward foreign exchange:
Sell
Buy

¥6,027
573

¥54
2

¥54
2

2017
Unrealized

Notional

gains

amounts Fair value (losses)¥7,632
1,328

¥303
5

¥303
5

Unrealized
Notional

gains

amounts Fair value (losses)$53,721
5,107

$481
18

$481
18

Note: Transactions in the above table are revalued at fair value. Unrealized gains (losses) are included in the consolidated statements
of income.

― 36 ―

b. Derivative instruments qualifying for hedge accounting
Notional amounts and fair values for the years ended 31 March 2017 and 2016 were as follows:(Interest-related transactions)
Millions of yen

Thousands of U.S. dollars

2017
Notional
amounts
Interest rate swap:
Receive floating / Pay fixed rate
(Deferral method)
Receive floating / Pay fixed rate
(Exceptional method)

2016

Fair value

Notional
amounts

2017
Fair value

Notional
amounts

Fair value¥41,885¥ (4,811)¥47,856¥ (5,823)$373,340$ (42,882)

22,526(3,374)

22,622(3,906)200,784(30,074)(Currency-related transactions)
Millions of yen
2017
Notional
amounts
Currency swap:(Deferral method)¥81,000

Thousands of U.S. dollars
2016

Fair value¥9,864

Notional
amounts

2017
Fair value¥80,000¥1,109

Notional
amounts

Fair value$721,989$87,922

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted at 31 March 2017 and 2016 consisted of the following:

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

Thousands of
U.S. dollars

2017

2016

2017

¥3,33075,354
1,453,321
172,745¥3,656
76,347
1,507,049
185,766$29,682
671,664
12,954,104
1,539,754¥1,704,750¥1,772,818$15,195,204

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 exchanges bought without restrictions. The total
face value at 31 March 2017 and 2016 was ¥3,329 million ($29,673 thousand) and ¥3,657 million, respectively.

― 37 ―

The Bank is required to disclose loans to customers who meet specific criteria in accordance with the Banking Law. Doubtful loans
at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017Loans 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

¥398
30,3653

2016¥893
31,70616

2017$3,547
270,657
27

8,077

9,640

71,994¥38,843¥42,255$346,225

8. PLEDGED ASSETSAt 31 March 2017, deposits of ¥55,534 million ($495,000 thousand), call money and bills sold of ¥5,610 million ($50,004 thousand),payables under securities lending transactions of ¥1,130 million ($10,072 thousand) and borrowed money of ¥13,300 million($118,549 thousand) were secured by a pledge of securities in the amount of ¥103,243 million ($920,251 thousand) and guaranteemoney deposits in the amount of ¥72 million ($642 thousand). At 31 March 2016, deposits of ¥35,260 million and borrowed moneyof ¥3,493 million were secured by a pledge of securities in the amount of ¥87,295 million and guarantee money deposits in theamount of ¥71 million. In addition to the above-mentioned assets pledged as collateral, the Group provided securities of ¥29,683
million ($264,578 thousand) and ¥47,136 million, and other assets in the amount of ¥9,798 million ($87,334 thousand) and ¥3
million, respectively, as collateral for transactions such as exchange settlement transactions at 31 March 2017 and 2016.
Other assets include cash collateral paid for financial instruments, guarantee deposits and lease deposits in the amount of ¥8,430
million ($75,140 thousand) and nil, ¥57 million ($508 thousand) and ¥105 million, and ¥193 million ($1,720 thousand) and ¥158
million at 31 March 2017 and 2016, respectively.

9. COMMITMENT LINE AGREEMENT
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 March2017 and 2016 amounted to ¥704,265 million ($6,277,431 thousand) and ¥691,264 million, respectively. The amount ofcommitment line agreements, having a condition that the original agreement period was less than one year or unconditionallycancelable at any time, was ¥667,893 million ($5,953,231 thousand) and ¥658,476 million at 31 March 2017 and 2016, 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 which 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.

― 38 ―

10. OTHER ASSETS
Other assets at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Accrued income
Other

2016

2017

¥3,521
41,258¥3,7152,604$31,384
367,751¥44,779¥6,319$399,135

11. PREMISES AND EQUIPMENT
Premises and equipment at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

Land
Buildings
Equipment
Leased assets
Other¥8,93934,160
8,350
1,214
850

¥8,84434,191
8,010
1,531
108

$79,677
304,483
74,427
10,821
7,577

Accumulated depreciation

53,51336,606

52,68436,397476,985
326,285¥16,907¥16,287$150,700

To conform with the Companies Law of Japan, deferred gains on sale of real estate in the amount of ¥932 million ($8,307 thousand)and ¥1,024 million at 31 March 2017 and 2016, respectively, were deducted from the acquisition cost of premises and equipment.

12. INTANGIBLE ASSETS
Intangible assets at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
SoftwareLeased assets
Other― 39 ―

20162017¥1,213
303
40

¥952
680
243

$10,8122,701
356¥1,556¥1,875$13,869

13. DEPOSITS
Deposits at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Current deposits
Ordinary deposits
Deposits at noticeTime deposits
Other deposits
Negotiable certificates of deposit

2017

2016

2017

¥56,063
1,670,039
2,896
1,150,184
173,731
218,485¥49,514
1,637,095
2,600
1,167,734
144,260
247,101$499,715
14,885,810
25,813
10,252,108
1,548,543
1,947,455¥3,271,398¥3,248,304$29,159,444

14. BORROWED MONEY
Subordinated borrowings with a special provision stipulating that fulfillment of obligation is subordinated to other obligations
included in borrowed money at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

Subordinated borrowings

2016
¥－

― 40 ―¥10,0002017$－

15. CORPORATE BONDS WITH STOCK ACQUISITION RIGHTS
Corporate bonds with stock acquisition rights at 31 March 2017 and 2016 were summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen
Name

IssuedZero coupon convertiblebond-type bonds withstock acquisitionrights due 2018
payable in U.S.
dollars

25 July 2013

2017

2016

¥11,2192017¥11,268$100,000

Coupon Rate(%)

Secured or
UnsecuredDue

Non-interest

Unsecured

25 July 2018

Notes: 1. Outline of corporate bonds with stock acquisition rights was as follows:
Zero coupon convertible bond-type bonds with stock acquisition rights due
2018 payable in U.S. dollars
Type of stock involved
Issue price of stock acquisition rights
Issue price of stock (Yen / U.S. Dollars)
Total amount of issue(Millions of Yen / Thousands of U.S. Dollars)
Total amount of stock acquisition rights exercised
Percentage of stock acquisition right granted
Exercise period of stock acquisition rights

Common stock
Gratis¥5,483 ($49.85)¥11,219 ($100,000)－
100%
From 8 August 2013 to 11 July 2018

Upon the request to exercise stock acquisition rights from the bondholders, it shall be deemed as payment by thebondholders of the full amount required to be paid upon the exercise of stock acquisition rights, rather than as redemptionof corporate bonds with stock acquisition rights at their total amount of issue. In addition, if the bondholders exercise thestock acquisition rights, it would be considered that such request has been made.
2. These corporate bonds are bonds issued in European markets and denominated in U.S. dollars. The amount of corporate
bonds with stock acquisition rights was translated into Japanese yen at the telegraphic transfer middle rate at 31 March2017 announced by the Bank.
3. Annual maturities of corporate bonds with stock acquisition rights at 31 March 2017 were as follows:Year ending 31 March
2018
2019
2020
2021
2022 and thereafter

Millions of yen¥－
11,219－－－― 41 ―

Thousands of U.S.
dollars$－
100,000－－－

16. OTHER LIABILITIESOther liabilities at 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Accrued income taxes
Accrued expenses
Unearned income
Lease obligations
Other

2016

2017

¥250
2,415
600
2,470
24,098¥2,179
2,586
630
1,868
18,604$2,22821,526
5,348
22,016
214,797¥29,833¥25,867$265,915

17. 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 ¥2,160 million ($19,253 thousand) in 2017 and ¥1,485 million in 2016.

18. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe Group has adopted funded and unfunded defined benefit plans to prepare for the employees’ retirement benefits. In addition, asof 1 April 2016, the Bank transferred part of the defined benefit plans (excluding the portion for vested pensioners in a waiting
period and current pensioners) to defined contribution plans.
Under the defined benefit pension plan, which is a funded plan, employees receive lump-sum payments or pensions based 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 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.

― 42 ―

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

Millions of yen
2017

2016

2017

Balance at beginning of year
Service costs (including the amount of employee contributions)Interest costs
Actuarial differences
Retirement benefits paid
Decrease due to transfer to defined contribution plans
Increase due to change in scope of consolidation¥28,469680
108
570(1,392)(3,096)305¥26,164
735
272
2,842
(1,544)－－$253,757
6,061
963
5,081
(12,408)(27,596)2,719

Balance at end of year

¥25,644¥28,469$228,577

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
Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

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

¥28,209
585
(317)
219
55
(736)

¥26,565
555
432
1,326
55
(724)

$251,440
5,215(2,826)
1,952
490(6,560)

Balance at end of year

¥28,015¥28,209$249,711(iii) Reconciliation from projected benefit obligation and plan assets to net defined benefit liability (asset)
Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

Funded projected benefit obligation
Plan assets¥25,317(28,015)¥28,455(28,209)$225,662(249,711)

Unfunded projected benefit obligation(2,698)
327

246
14

(24,049)
2,915¥ (2,371)

260$ (21,134)

1,709(4,080)1,440(1,180)15,233(36,367)¥ (2,371)¥260$ (21,134)

Net liability (asset) recognized in consolidated balance sheets
Net defined benefit liability
Net defined benefit asset
Net liability (asset) recognized in consolidated balance sheets

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

― 43 ―

(iv) Retirement benefit expenses and its breakdown
Millions of yen
2017
2016

Thousands of
U.S. dollars
2017

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

¥625
108
(585)
531

¥680
272
(555)
235

$5,571
963(5,215)
4,733

Retirement benefit expenses

¥679

¥632

$6,052

Notes: 1. The retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are included in service
costs.
2. Other than the above, a gain on revision of defined benefit plans in the amount of ¥864 million ($7,701 thousand) isrecorded, resulting from the partial transfer of the Bank’s retirement benefit plans to defined contribution plans for theyear ended 31 March 2017.
(v) Remeasurements of defined benefit plans on other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pre-tax) on other comprehensive income was asfollows:
Millions of yen
2017

2016

Thousands of
U.S. dollars
2017

Actuarial differences¥74¥ (2,175)

$659

Total

¥74

¥ (2,175)$659

Note: Actuarial differences include reclassification adjustment in the amount of ¥430 million ($3,833 thousand) due to the partial
transfer of the Bank’s retirement benefit plans to retirement contribution plans.

(vi) Remeasurements of defined benefit plans on accumulated other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pre-tax) on accumulated other comprehensive
income was as follows:
Millions of yen
2017

2016

Thousands of
U.S. dollars
2017

Unrecognized actuarial differences¥ (2,200)¥ (2,274)$ (19,610)

Total¥ (2,200)¥ (2,274)$ (19,610)― 44 ―

(vii) Plan assets(a) Percentage by major category of plans assets was as follows:
2017

2016

Bonds
Equities
General accountCash and deposits
Other

65%
16%
16%
2%
1%

68%
18%
11%
2%
1%

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 2017 and 2016, respectively. In addition, retirement benefit trusts set up for the lump-sum retirement
benefit plans account for 23% and 23% of total plan assets for the years ended 31 March 2017 and 2016, 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 2017 and 2016 was as follows:
2017

2016

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

2.0%
3.9%

2.0%
3.9%

7.4%

7.4%

The contribution made by the Bank to defined contribution plans was ¥126 million ($1,123 thousand) for the year ended 31 March2017.
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 ($16,062 thousand) and the transfer is expected to be completed in four years.
The remaining transfer of plan assets as of 31 March 2017 in the amount of ¥1,342 million ($11,962 thousand) is included inaccounts payable – other under other liabilities.

― 45 ―

19. 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 30.6% and 32.8% for the years ended 31 March 2017 and 2016,
respectively.
Significant components of the Bank’s deferred tax assets and liabilities at 31 March 2017 and 2016 were as follows:
Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

Deferred tax assets:
Allowance for doubtful accounts
Net defined benefit liability
Accumulated depreciation
Securities
Deferred hedge
Other¥2,463
2,576
1,115
579
1,466
1,628

¥1,755
3,279
1,126
620
1,779
1,362

$21,954
22,961
9,938
5,161
13,067
14,511

Subtotal
Valuation allowance

9,827(2,179)9,921(1,587)87,592(19,422)

7,648

8,334

68,170(17,643)(433)(0)(20,187)(446)(0)(157,260)(3,859)(0)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(18,076)(20,633)(161,119)¥ (10,428)¥ (12,299)$ (92,949)

The following summarizes the significant difference between the statutory tax rate and the Bank’s effective tax rate for the years
ended 31 March 2017 and 2016.
2017
Statutory tax rate

2016

30.6%

32.8%

Non-deductible expenses

0.2

0.3

Non-taxable income

(2.5)

(0.7)

Per capita inhabitant taxes

0.3

0.4

Valuation allowance

0.8

0.5

Decrease in deferred tax assets due to tax rate changes－

2.4

Gain on bargain purchase(10.5)－

Loss on step acquisition

0.6－

Other, net
Effective tax rate

― 46 ―

0.2

0.4

19.7%

36.1%

20. 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 623 thousand shares and 742 thousand shares at 31 March 2017 and 2016,
respectively.

21. STOCK OPTION
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 ¥157 million ($1,399 thousand) and ¥147 million
at 31 March 2017 and 2016, respectively.
Share-based compensation expenses which were accounted for as general and administrative expenses for the years ended 31 March2017 and 2016 amounted to ¥49 million ($437 thousand) and ¥48 million, respectively.

2. Details of stock options, volume and activity(a) Details of stock options
2013 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: 13,400
shares24 July 2013
Not applicableNot applicable
From 25 July 2013 to
Exercise period
24 July 2043
Note: Reported in terms of shares of stock.

2014 Stock OptionPlan2015 Stock OptionPlan2016 Stock Option
Plan

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

― 47 ―

(b) Volume and activity
The following describes volume and activity that existed during the year ended 31 March 2017. 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 2016
GrantedForfeited
VestedOutstanding

12,200
—
—
3,200
9,000

10,000
—
—
2,200
7,800

8,800
—
—
1,900
6,900

—
12,100——12,100After vesting (shares):
At 31 March 2016
VestedExercised
Forfeited
Outstanding

600
3,200
3,800
—
—

400
2,200
2,600
—
—

300
1,900
2,200
—
—

—
—
—
—
—

2014 Stock Option

2015 Stock Option

2016 Stock Option(ii) Price information2013 Stock Option
Exercise price
Average exercise price
Fair value at the grant¥1 ($0.01)¥3,843($34.25)¥4,119 ($36.71)¥1 ($0.01)¥3,843($34.25)¥4,437 ($39.55)¥1 ($0.01)¥3,843($34.25)¥5,287 ($47.13)¥1 ($0.01)¥－ ($－)¥4,032 ($35.94)

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 2017 were as follows:(a) The valuation method: Black-Scholes formula(b) Major basic numerical values and valuation method
2016 Stock Option Plan
Stock price volatility (*1)
Expected years to expiration (*2)
Expected dividends (*3)
Risk-free interest rate (*4)

30.4%
1.7 years¥70 ($0.62) per share(0.33)%

Notes:*1. Stock price volatility was calculated based on the actual stock prices from 3 November 2014 to 18 July 2016.
*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 2016.
*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.

― 48 ―

22. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Other operating income:Gain on sale of foreign bills of exchange
Gain on trading account securities transactions
Gain on sale of bonds
Other

2016

¥1
1
546
3,194

¥23
9
2,058
－

$9
9
4,867
28,469¥3,742¥2,090$33,354

Thousands of
U.S. dollars

Millions of yen
2017
Other operating expenses:
Loss on sales of bonds
Loss on redemption of bonds
Loss on financial instruments
Other

2017

2016

2017

¥18
1,538
－
2,737

¥5
1,798
136
1

$161
13,709－24,396¥4,293¥1,940$38,266

23. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
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― 49 ―

20162017¥11,739
3,050
805
2,193
814
1,487
1,212
2,645
4,095

¥11,257
2,712
632
2,086
758
1,382
1,197
2,673
3,664

$104,635
27,186
7,175
19,547
7,256
13,254
10,803
23,57636,501¥28,040¥26,361$249,933

24. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended 31 March 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017
Other income:Gain on sale of stocks and other securities
Gain on disposal of premises and equipment
Gain on revision of defined benefit plans
Gain on bargain purchase
Other

2016

¥1,192
60
864
4,340
664

¥1,92381－－
930$10,625535
7,701
38,684
5,919¥7,120¥2,934$63,464
Thousands of
U.S. dollars

Millions of yen
2017
Other expenses:
Provision of allowance for doubtful accounts
Loss on disposal of premises and equipment
Loss on devaluation of stocks and other securities
Impairment losses
Loss on transfer of receivables
Loss on step acquisition
Other― 50 ―

2017

2016

2017

¥453
205
－
65
213
251
508

¥1,459
85
2
64
92
－
447

$4,038
1,827
－
579
1,899
2,237
4,528

¥1,695¥2,149$15,10825. 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 consisted 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 consisted of equipment for the branch operating system
Intangible assets:
Mainly consisted 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 2017 and 2016 consisted of
the following:
Millions of yen
2017
Current portion of lease obligations
Lease obligations (excluding current portion)

2016

Thousands of
U.S. dollars

Average interest
rate (%)

2017

2017

¥849
1,621

¥535
1,333

$7,567
14,449¥2,470¥1,868$22,016

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
2018
2019
2020
2021
2022 and thereafter

Millions ofyen

Thousands of
U.S. dollars

2017

2017

¥849
810
522
170
119

― 51 ―$7,567
7,220
4,653
1,515
1,061

2.39%
2.61%

Year ending 31 MarchMillions of
yen
2016

2017
2018
2019
2020
2021 and thereafter

¥535
538
524
271
－

B. Operating leases(a) As lessee
There were no future lease payments under non-cancelable operating leases at 31 March 2017 and 2016.

(b) As lessor
Future lease receivables under non-cancelable operating leases at 31 March 2017 were ¥301 million ($2,683 thousand) including¥41 million ($365 thousand) due within one year.
Future lease receivables under non-cancelable operating leases at 31 March 2016 were ¥241 million including ¥11 million due
within one year.

― 52 ―

26. COMPREHENSIVE INCOME
Reclassification adjustments and tax effect amounts of other comprehensive income (losses) for the years ended 31 March 2017 and2016 were as follows:
Thousands of
U.S. dollars

Millions of yen
2017
Net unrealized holding losses on available-for-sale securities:
Amount for the year
Reclassification adjustment

2016

2017

¥ (6,631)(1,758)¥469(3,565)$ (59,105)(15,670)

Amount before tax effectTax effect amount(8,389)2,620(3,096)
1,893(74,775)
23,353Net unrealized holding losses on available-for-sale securities(5,769)(1,203)(51,422)431
601(4,496)
540

3,842
5,357

1,032
(313)

(3,956)
1,172

9,199
(2,790)Net unrealized gains (losses) on hedging derivatives:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amount719(2,784)

6,409

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

Net unrealized gains (losses) on hedging derivatives

(887)
961

(2,410)235(7,907)
8,566

Amount before tax effectTax effect amount

74
(24)

(2,175)
661

659
(213)

Remeasurements of defined benefit plans50(1,514)

446

－
(12)

1
(2)

－
(107)

(12)
－

(1)
－

(107)
－

Share of other comprehensive losses of affiliates accounted for by theequity method:Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amount
Share of other comprehensive losses of affiliates accounted forby the equity method
Total other comprehensive losses― 53 ―

(12)

(1)

(107)

¥ (5,012)¥ (5,502)$ (44,674)

27. PER SHARE DATA
Amounts per share at March 31 2017 and 2016 and for the years then ended were as follows:Yen
Net assets per share
Net income per share
Diluted net income per share

U.S. dollars

2017

2016

¥11,075.22
567.99509.82¥10,867.07
400.26359.192017$98.72
5.06
4.54

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
Non-controlling interests
Net assets at the end of fiscal year attributed to common stock
Number of shares of common stock at the end of fiscal year usedin computing net assets per share attributed to common stock

2017

2016

2017

¥198,288
316
157
159
197,972¥193,098
147
147－
192,951$1,767,430
2,816
1,399
1,417
1,764,614

17,87517,756

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

10,152

7,107

90,48910,152
17,874

7,107
17,75690,489Diluted 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

2,040
2,006
34

2,030
2,001
29

― 54 ―

28. BUSINESS COMBINATION
1. Business combination by additional acquisition of shares of affiliates
The Bank acquired additional shares of Iwagin Lease Data Co., Ltd. (“Iwagin Lease Data”), Iwagin DC Card Co., Ltd. (“Iwagin DC
Card “) and Iwagin Credit Service Co., Ltd. (“Iwagin Credit Service”), which were equity-method affiliates of the Bank in theprevious consolidated fiscal year, (hereinafter collectively “Three Group Companies”) to be its consolidated subsidiaries on 17 May
2016.
(a) Overview of the business combination by acquisition(i) Name and business description of acquired companies
Name of acquired companies

Business description

Iwagin Lease Data
Iwagin DC Card
Iwagin Credit Service

Leasing and computerized accounting services
Credit cards and credit guarantee services
Credit cards and credit guarantee services(ii) Major reason for the business combination
With an aim to maximize synergy by using the Group’s management resources more effectively and efficiently and also toaccelerate, and enhance the efficiency of the Group’s management, the Bank decided to make the Three Group Companies its
subsidiaries.
(iii) Date of the business combination
17 May 2016(iv) Legal form of the business combination
Acquisition of shares by cash(v) Name of the companies subsequent to the business combination
There will be no change to the names of the companies.
(vi) Ratio of voting rights acquired
Iwagin Lease Data

Iwagin DC Card

Iwagin Credit Service

Ratio of voting rights
immediately before thebusiness combination

5.0%

5.0%

5.0%

Ratio of voting rights
additionally acquired on
the date of businesscombination

91.3

70.0

70.0

Ratio of voting rights after
the business combination

96.3

75.0

75.0

(vii) Major reason for determining the acquiring company
The Bank acquired a majority of the voting rights of the Three Group Companies through the share acquisition in exchange
for cash, and hence the Bank became the acquirer.
(b) The period for which the operations of the acquired companies are included in the consolidated statement of income
The deemed acquisition date is 1 April 2016; therefore, the operations from 1 April 2016 to 31 March 2017 are included in the
consolidated statement of income for the year.

― 55 ―

(c) Calculation of acquisition cost(i) Acquisition cost of the acquired companies and the breakdown of respective considerations
Millionsof yenThousands of
U.S. dollars¥204$1,8183,275

29,192¥3,479$31,010

Carrying value on the date of business combination of common stock held by the Bank
immediately before the business combination
Consideration of common stock additionally acquired

Cash

Acquisition cost(ii) The difference between the acquisition cost of the acquired companies and the total amount of the acquisition costs of therespective transactions leading to the acquisition
Loss on step acquisitions: ¥251 million ($2,237 thousand)(iii) Details of the major cost related to acquisition and the amount
Consulting fee: ¥8 million ($71 thousand)(d) Allocation of acquisition cost(i) The amount of assets acquired and liabilities assumed on the date of the business combination and the breakdown thereofMillions of yen
Current assets
Non-current assets
Total assets

Thousands of U.S.
dollars¥18,943$168,847

3,378

30,110¥22,321$198,957

Millions of yen

Thousands of U.S.
dollars

Current liabilities¥7,374$65,728

Non-current liabilities

5,734

51,110¥13,108$116,838

Total liabilities(ii) The amount of gain on bargain purchase and the cause of the occurrencea. The amount of gain on bargain purchase: ¥4,340 million ($38,684 thousand)b. The cause of the occurrence

Gain on bargain purchase occurred as the amount of assets and liabilities of the acquired companies calculated by fairvalue on the date of the business combination exceeded the acquisition cost.

2. Making Iwagin DC Card and Iwagin Credit Service the Bank’s wholly owned subsidiaries by a share exchange
The Bank conducted a share exchange with Iwagin DC Card and Iwagin Credit Service (hereinafter collectively “TwoSubsidiaries”), where the Bank became a wholly owning parent company and the Two Subsidiaries became wholly owned
subsidiaries, with an effective date of 30 June 2016.
(a) Overview of the business combination(i) Name and business description of the combined companies
Name of combined companies

Business description

Iwagin DC Card

Credit cards and credit guarantee services― 56 ―

Iwagin Credit Service

Credit cards and credit guarantee services(ii) Date of the business combination
30 June 2016(iii) Legal form of the business combination
It is a simplified share exchange where the Bank is the wholly owning parent company and the Two Subsidiaries are thewholly owned subsidiaries.
(iv) Name of the companies subsequent to the business combination
There will be no change to the names of the companies.
(v) Any other significant matters
The purpose of the share exchange is as described in Section 1. (a) (ii) Major reason for the business combination.
(b) Overview of accounting treatment
Based on “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, 13 September 2013) and “Guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ GuidanceNo. 10, 13 September 2013), the share exchange is accounted for as a transaction with non-controlling interests among thetransactions under common control.

(c) Additional acquisition of shares of subsidiaries(i) Acquisition cost and the breakdown of respective considerations
Millions Thousands ofof yenU.S. dollars
Fair value of common stock of the Bank issued on the date of the business combination

Considerations
Acquisition cost¥548

$4,885¥548$4,885(ii) Share exchange ratio by class of shares, their calculation method and the number of shares delivereda. Share exchange ratios by class of sharesa) Iwagin DC Card
The Bank

Iwagin DC Card

(wholly owing parent company in share exchange)(wholly owned subsidiary in share exchange)

1730

Note: For each common stock issued by Iwagin DC Card, 730 shares of the Bank’s common stock were delivered byallotment. However, 300 shares of Iwagin DC Card’s common stock held by the Bank are not subject toallotment.
b) Iwagin Credit Service
The Bank

Iwagin Credit Service(wholly owing parent company in share exchange)(wholly owned subsidiary in share exchange)

1689

Note: For each common stock issued by Iwagin Credit Service, 689 shares of the Bank’s common stock were deliveredby allotment. However, 300 shares of Iwagin Credit Service’s common stock held by the Bank are not subject to― 57 ―

allotment.
b. Calculation method of exchange ratio
To ensure fairness and appropriateness in the determination of share exchange ratio in the share exchange, the Bank
appointed Deloitte Tohmatsu Financial Advisory LLC and the Two Subsidiaries appointed Minamiaoyama FAS
Corporation as independent third-party valuation institutions (hereinafter, collectively “Third Party Institutions”) andrequested to calculate a share exchange ratio to be used in each share exchange.
The Third Party Institutions determined that the value of the Bank’s common stock should be analyzed using the average
market price analysis (Using 17 May 2016 as the record date, the analysis is based on the closing price of the record date
and the simple average of closing prices over one-month, three-month, and six-month periods prior to the record date of
the Bank’s stock on the First Section of the Tokyo Stock Exchange), based on the fact that the Bank’s common stock islisted on the Tokyo Stock Exchange and the market price of the stock is available. On the other hand, to reflect thevaluation of future business activities, the Third Party Institutions determined that the value of the unlisted Two
Subsidiaries’ common stock should be analyzed using the discount dividend analysis method (DDM analysis), which is
widely adopted by financial institutions for evaluation. In the DDM analysis, the stock is evaluated by discounting the
profit attributable to shareholders by using the cost of capital to the present value after considering the internal reserves
required to maintain certain capital structures.
Based on these calculation results, share exchange ratios were determined through discussions among the parties
concerned.
c. Number of shares delivered
Upon the share exchange, the Bank delivered 141,900 shares of the Bank’s common stock to shareholders of the Two
Subsidiaries (excluding the Bank) as of the time immediately before the Bank acquires all the issued shares of the Two
Subsidiaries excluding common stock of the Two Subsidiaries held by the Bank.

(d) Matters regarding the change in equity of parent arising from transactions with non-controlling interests(i) Factor behind the change
The acquisition cost of shares of subsidiaries acquired from non-controlling interests was less than the amount of decrease in
non-controlling interests.
(ii) The amount of capital surplus increased from the transaction with non-controlling interests¥691 million ($6,159 thousand)― 58 ―

29. SEGMENT INFORMATION(1) Reportable segment information
Reportable segment information was omitted since the commercial banking business was the only reportable segment of theGroup, and the Group’s performance in “Other” was immaterial for the years ended 31 March 2017 and 2016.
(2) Other segment-related informationa. Information by services
Information by services for the years ended 31 March 2017 and 2016 was as follows:
2017
Millions of yen

Ordinary income from external customers

Banking

Investment
in securities

Other

Total

¥18,310¥15,239¥12,318¥45,867

2016
Millions of yen

Ordinary income from external customers

Banking

Investment
in securities

Other

Total

¥19,326¥18,388¥8,809¥46,523

2017
Thousands of U.S. dollars

Ordinary income from external customers

Banking

Investment
in securities

Other

Total

$163,205$135,832$109,796$408,833

Note: “Ordinary income” corresponds to net sales of non-banking industries.

b. Information by geographic regioni. Ordinary income
Information as to ordinary income from domestic customers for the years ended 31 March 2017 and 2016 was omitted, because theamount of ordinary income from domestic customers was more than 90% of consolidated ordinary income.
ii. Premises and equipment
Information as to premises and equipment for the years ended 31 March 2017 and 2016 was omitted, because there were no
premises and equipment located abroad.

c. Major customers’ segment information
Major customers’ segment information was not shown for the years ended 31 March 2017 and 2016, since there was no customer
accounting for more than 10% of ordinary income to customers in the consolidated statements of income.

― 59 ―

d. Information on impairment of fixed assets for each reportable segment
Information on impairment of fixed assets for each reportable segment was omitted for the years ended 31 March 2017 and 2016,
since the commercial banking business was the only reportable segment of the Group, and the Group’s performance in “Other” wasimmaterial.

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 2017and 2016.

f. Information on gain in negative goodwill for each reportable segment
Information on gain in negative goodwill for each reportable segment was omitted for the years ended 31 March 2017 and 2016,
since the commercial banking business was the only reportable segment of the Group, and the Group’s performance in “Other” wasimmaterial.

― 60 ―

30. 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 2017
Category

Executive officer
and close family
members

Corporate/
Individual nameBusiness

Voting rights(%)

Relation to therelated party

Type of transaction

Amount oftransaction

Account

Balance at 31
March 2017

Mizuhiko Yoshida

Corporate Auditorof the Bank－

Creditor

Term loan－

Loans and bills
discounted¥25 million($223 thousands)

Satoshi Kikuchi

Close family
member of a
Director of theBank－

Creditor

Term loan－

Loans and bills
discounted¥11 million($98 thousand)Voting rights(%)

Relation to therelated party

Type of transaction

Amount oftransaction

Account

Balance at 31
March 2016－

Creditor

Term loan－－

Creditor

Term loan－

For the year ended 31 March 2016
Category

Corporate/
Individual name
Mizuhiko Yoshida

Executive officer
and close family
members

Satoshi Kikuchi

Business
Corporate Auditorof the Bank
Close family
member of a
Director of the
Bank

Loans and bills
discounted
Loans and bills
discounted¥27 million¥12 million

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

b. Transactions between the Bank’s consolidated subsidiary and related parties
There is no significant transaction to be disclosed between the Bank’s consolidated subsidiary and related parties for the years ended
31 March 2017 and 2016.

(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 2017 and 2016.

31. SUBSEQUENT EVENTS
Cash dividends
On 22 June 2017, the shareholders of the Bank authorized the following appropriations of retained earnings at 31 March 2017:
Millions of yen
Cash dividends (¥35 ($0.31) per share for year-end)¥627― 61 ―

Thousands of
U.S. dollars$5,589─ 62 ── 63 ─

Corporate Profile
・Board of Directors and Corporate Auditors (As of July 1, 2017)
Chairman
Directors
Corporate Auditors
Masahiro Takahashi
Motomu Sato
Yuji Chiba (standing)
Yasushi Sasaki
Masahiko Mochizuki
President
Hiroshi Miura(standing)
Sachio Taguchi
Atsushi Takahashi
Shinobu Obara
Fumio Ube
Mizuhiko Yoshida
Senior Managing
Director
Yuichi KatoManaging Directors
Keiji Iwata
Shigeki Miura
Mikio Kikuchi
Hiroaki Takahashi

Executive Officers
Katsuhiro Kawamura
Kensei Ishikawa
Yasutaka Kakiki
Yasuhiro Sasaki

Notes:
1. Hiroshi Miura, Atsushi Takahashi and Fumio Ube satisfy the requirements foroutside directors as stipulated in Article 2, Item 15 of the Corporation Law.
2. Masahiko Mochizuki, Shinobu Obara and Mizuhiko Yoshida are outside auditors as
stipulated in Article 2, Item 16 of the Corporation Law.

― 64 ―

・Organization (As of July 1, 2017)Managing Directors
Directors
Executive Officers

Board of Directors
Board of Corporate Auditors
Corporate Auditors (standing)General Meeting of Shareholders

Corporate Auditors (part-time)

Executive
Committee

ChairmanPresident

Senior Managing Directors

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
Operations Concentration Center
Receivables Documents Center
Systems Division
Risk Management Division
Financial Products Management OfficeCompliance Office
General Secretariat

Audit Division

Iwagin Enterprise Creation
Capital Co., Ltd.

Iwagin Business Service Co.,Ltd.

Iwagin Lease Data Co., Ltd.

Iwagin DC Card Co., Ltd.

Iwagin Credit Service Co.,Ltd.

― 65 ―

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

96.3%

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 Enterprise
Creation 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― 66 ―

Date of
Establishment

The Bank’s
VotingRightsHead Office

A message from Iwate Bank concerning reconstruction

Trust, and beyond
By virtue of your support, the Bank of Iwate was able to celebrate the 85th
anniversary of its foundation in May of this year.
This is entirely thanks to your loyal patronage, and all executives and employeesof the Bank extend our heartfelt gratitude.
The Bank will continue to dedicate its utmost efforts to the reconstruction anddevelopment of the regional community, as we strive to be your trusted bank ofchoice.
We thank you for your continued support and loyal patronage.

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