JOYO BANK

Annual Report 2011

PROFILE

The Joyo Bank, Ltd., was established in 1935 out of the merger of the Tokiwa Bankand Goju Bank (both founded in 1878), and celebrated its 130th year in business.
As a leading financial institution in Ibaraki Prefecture and surrounding regions,
the Bank, with the philosophy of “Practicing sound management, creation ofvalues, and partnership with the home region,” is contributing to the growth of its
home region by providing stable and comprehensive financial services.

Management Philosophy“Sound management, creation of value, and partnership with the home region”(1) Focusing on retail banking as our core business, Joyo Bank will pursue sound management and steady banking activities.
(2) Joyo Bank will create high-value business together with our customers, regional communities, and shareholders.
(3) By providing financial services in our base territory of Ibaraki Prefecture and adjacent areas, Joyo Bank will contribute to social andeconomic progress in the home region.

Action Guidelines
We will—P rovide the most appropriate products and services based on a keen understanding of our customers.
—U ndertake steady banking activities and grow together with our customers.
— Seek to further improve our financial skills.

CONTENTS
1 Financial Highlights

30 Consolidated Statements of Changes in Net Assets

2 Message from the President

32 Consolidated Statements of Cash Flows

5 Management Policy

33 Notes to the Consolidated Financial Statements

7 Relationship Banking

90 Report of Independent Auditors

10 Business Highlights (Non-consolidated basis)

91 Organization

14 Corporate Social Responsibility (CSR)
19 Corporate Governance and Internal Control System

92	Board of Directors and Corporate Auditors/
Market Business Group and Overseas Office

28 Consolidated Balance Sheets

93 Service Network/Affiliated Companies

29	Consolidated Statements of Income

94 Corporate Data

29	Consolidated Statements of Comprehensive Income

2FINANCIAL HIGHLIGHTS
Consolidated
THE JOYO BANK, LTD. and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen

Years Ended March 31
For the Year Ended
Total Income
Total Expenses
Income before Income Taxes and Minority Interests
Net Income

2011

2010

2011

¥  156,955
135,119
21,835
13,990¥  163,587
141,562
22,025
14,051$ 1,887,612
1,625,014
262,597
168,254

At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets
Capital Ratio¥7,438,307
6,816,825
4,769,896
2,187,773
424,997
12.77%¥7,416,708
6,685,607
4,808,134
2,151,554
428,10112.70%$89,456,489
89,982,272
57,364,966
26,311,169
5,111,21412.77%For the Year Ended
Net Cash Provided by (Used in) Operating Activities
Net Cash (Used in) Provided by Investing Activities
Net Cash Used in Financing Activities
Net Decrease (Increase) in Cash and Cash Equivalents
Cash and Cash Equivalents at End of Year¥  211,708(93,459)(18,342)
109,885239,686¥    80,662(98,170)(6,232)(23,750)
129,800$ 2,666,370(1,123,985)(220,600)
1,321,536
2,882,577

Notes: 1 . Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥83.15 to US$1.00 on March 31, 2011.

Non-Consolidated
THE JOYO BANK, LTD.
Thousands of
U.S. dollars

Millions of yen

Years Ended March 31
For the Year Ended
Total Income
Total Expenses
Income before Income Taxes and Minority Interests
Net Income

2011

2010

2011

¥  137,412
117,650
19,761
12,912¥  143,677
123,662
20,013
12,994$ 1,652,579
1,414,912
237,654
155,285

At the Year End
Total Assets
Deposits
Loans and Bills Discounted
Securities
Net Assets¥7,421,342
6,830,476
4,800,612
2,185,635
417,816¥7,404,353
6,705,675
4,839,087
2,156,889
422,197$89,252,459
82,146,434
87,734,359
26,285,447
5,024,846

Notes: 1 . Japanese yen amounts are rounded down to the nearest million yen.
2. U.S. dollar amounts represent translation of Japanese yen at the exchange rate of ¥83.15 to US$1.00 on March 31, 2011.

1

MESSAGE FROM THE PRESIDENT
We will Contribute to the Reconstruction and Growth of our Customers andthe Region by Providing Comprehensive Financial Services

W• Looking Back on Fiscal 2010

e wish to express our heartfelt con-

The Japanese economy recovered moderately in the first

dolences for the victims of the Great

half of fiscal 2010 due to the increase in exports stimu-

East Japan Earthquake and Tsunami on

lated by the improvement in overseas economies, and the

March 11 2011, and deepest sympathies

effects of the government’s stimulus measures. However, into those who suffered from the disaster. We offer prayers

the second half the improvement slowed down as a result

for the early reconstruction and recovery of the disaster-of the reduced effect of the stimulus measures due to theaffected regions.

completion of the first round of the measures, and as a

Moreover, we are extremely grateful for the expressions

result of the strong yen. The economy of Ibaraki Prefectureof sympathy and the kind words of encouragement thatsimilarly showed several signs of a recovery in the first half

we have received from everyone with respect to the recent

which then weakened in the second half. Moreover, theearthquake disaster.

major earthquake and tsunami that occurred in March 2011

The Great East Japan Earthquake, an unprecedented

had a serious impact on the outlook for the economy.

disaster, caused tremendous damage in various parts ofIn this difficult business environment, we continued tothe country. Especially in Ibaraki Prefecture, Fukushima

pursue our 10th Medium-Term Business Plan which has thePrefecture, and Miyagi Prefecture, our main regional base,basic aims of “Strengthening profitability on a consolidated

the earthquake and tsunami left vast destruction behindbasis,” “Strengthening management organization,” andit, including human suffering, not to mention the devasta-“Building on management resources.” We explain the vari-tion of buildings, machinery, and equipment, liquefaction

ous measures taken by the Bank in fiscal 2010, which was

phenomena and the damage caused by the nuclear power

the final year of the business plan, as follows.

plant disaster.

In our corporate banking services, we responded proac-

The Joyo Bank is putting all of its effort into helping

tively to our regional customers’ fund procurement needs,

people get their lives back in order and assisting in theparticularly small and medium-sized enterprises, and also

recovery and turnaround of businesses with an eye towardenhanced our support for business including continuing

the vigorous reconstruction and growth of customers andto hold “the Ibaraki Commercial Food Fair” and “the Joyo

the region. The Bank will contribute so that customers andManufacturing Forum” and holding “the Medical Seminar”

the region are able to follow the road to renewed growth.

for our customers that operate medical institutions.
Moreover, we established the Environmental Rating and
Evaluation System to support the environmental conservation initiatives of our customers, including utilization of thefinancing facility of the Ministry of the Environment.

2• Aiming to be the Best Partner Bank that Grows with its

In retail banking services, we aimed to meet the cus-

Customers in the Home Region

tomers’ fund procurement needs by responding proactively to their inquiries about housing finance, and ourSocial and economic structural changes, such as declin-mortgage loan balance reached ¥1 trillion. Furthermore, we

ing population levels, the aging of the population, and theenhanced our systems for meeting diverse fund manage-

spreading of economic activities, are well underway. These

ment needs. For example, we commenced handling edu-

structural changes are transforming the regions’ industrial

cational endowment insurance.

structure, and together with the information technology

And we also expanded the number of branches

revolution, are accelerating the diversification of customer

offering intermediary services for financial instruments.

needs and affecting the traditional business domains

We enhanced our sales network by newly opening theof financial institutions. Further, the Great East Japan

Hitachino-Ushiku Branch, the Miraidaira Branch, theEarthquake has had a profound impact on the Japanese

Utsunomiya-Higashi Branch, and the J Plaza Mito, a com-economy, which was breaking out of economic stagnation,prehensive financial center for retail customers.

on a number of fronts including production and distribu-

We also responded to the earthquake disaster bytion and on corporate and household activities. Above all,opening for business on the day after the earthquake, athe impact on the local economy, especially earthquake-non-business day, to enable our customers to withdraw

stricken regions, has been immeasurable.

the deposits they needed, and by working to provide

Amid these changes in its operating environment,

easily-accessible financial functions, including offering an

beginning from April 2011, the Bank started its 11th

emergency financing facility for customers who had been

Medium-Term Business Plan “J-Cube” for building a strong

affected by the disaster.

management base, which covers the three-year period

As a result of these measures, in fiscal 2010 gains on

beginning from fiscal year 2011. The plan set forth thesales of bonds increased, and we made more progress ingoal of becoming “the best partner bank that grows with

cutting costs, but due to factors such as the increase in

its customers in the home region” and contributes to thecredit costs resulting from the disaster, ordinary income

reconstruction and growth of its customers and the region

posted a year-on-year increase of only ¥300 million to reachby providing comprehensive financial services.

¥18.9 billion, while net income came to ¥12.9 billion, theTo achieve this goal, we have positioned the following

same level as last year. We continued to maintain the capi-

six key strategies: 1) Expand customer base and strengthen

tal ratio, an indicator of the financial soundness of the bank,support for customer development, 2) Strengthen invest-

at the high level of 12.77% (consolidated).

ment capabilities, 3) Improve employee on-the-job capabilities, 4) Optimize sales channels, 5) Improve risk-taking
ability, and 6) Raise human resource capabilities. Throughthese strategies, we will make every effort to help people
get their lives back in order and assist in the recovery and3

turnaround of businesses so that customers and the region
are able to follow the road to renewed growth.
To contribute more than ever under a collective
Group effort to the recovery and growth of customers andthe region, we established the Regional Reconstruction
Promotion Committee, with the president as its chairperson. By having the Committee review and implement measures to promote reconstruction, we will address a varietyof customer and regional issues aimed at reconstruction.
• Sound Management, Creation of Value, andPartnership with the Home Region
By a resolution passed at the 120th General Meeting of
Shareholders held on June 28, 2011, and at the Board of

Kazuyoshi Terakado

Directors’ meeting, Kunio Onizawa and Kazuyoshi Terakado

President

have assumed the positions of Chairman and President of
the Board of Directors, respectively, and a new operating
execution system was initiated.
Under the Joyo Bank Group’s management philosophyof sound management, creation of value, and partnershipwith the home region, the Group will soundly operate andmanage the Company and contribute to the developmentof the regional society and economy by creating high-value
business together with its customers, regional communities, and shareholders.
Kazuyoshi Terakado

Everyone in the Joyo Bank Group is committed to meeting the expectations of our customers, our shareholders,President

and this region. I hope you will all continue to support us in

July 2011

the future.

4

MANAGEMENT POLICY• 11th Medium-Term Business Plan to Build a Sound Management Base (FY2011 – FY 2013)
Social and economic structural changes, such as declining population, the decrease of the working-age population, andthe spreading of economic activities, are well underway. Moreover, the Great East Japan Earthquake caused tremendous
devastation to our customers and to the region and completely transformed the business environment in which the Bank
operates.
Against this backdrop, to strongly encourage efforts to help customers get their lives back in order and assist in thereconstruction and turnaround of businesses, under this plan the Bank seeks to be the best partner bank that grows with
its customers in the home region. The Joyo Bank Group is working together to achieve this goal and will expand its customer base–proof of its relationship of trust with customers and strengthen employee on-the-job capabilities and humanresource capabilities, the core of our business foundation.

Our Goal

To be the best partner bank that grows with its customers
Contribute to the development and the growth of customers and the region by providing comprehensive financial services.

◆ Contribute to regional reconstruction and growth by expanding the customer base
Seek sustained growth that is capable of responding flexibly and with precision to the changing social and economic structure by focusing efforts oncustomer and regional recovery and expanding the customer base in the Ibaraki area.

◆ Build a stable and sound management base by focusing on strong employee
on-the-job performance
Enhance the ability of branches, which have the closest relationship with customers, to solidly execute their business in terms of both operations andadministration, in order to contribute to regional reconstruction and growth and increase the Bank’s earnings capacity.

◆ Strengthen the organization as a whole by improving human resource capabilities
Strengthen the organization by improving employees’ ability to achieve self-sustaining growth through their contributions to customer and regional
growth and revitalization and by developing each and every employees’ knowledge and their job performance capabilities as financial professionals.

The six sides of a cube represent key strategies for achieving our goal of becoming
the best partner bank that grows with its customers in the home region.
Customers,
Through the execution of these strategies, we will share our growth with stakeregion, employees,
holders
including customers, our region, employees and shareholders. Because weshareholders

express this growth as the three dimensions of a cube, we established J-Cube, our11th Medium-Term Business Plan to build a sound management base.

The Six Key Strategies of J-Cube
1. Expand the customer base and strengthen support forcustomer development
2. Strengthen investment capabilities
3. Improve employee on-the-job capabilities
4. Optimize sales channels
5. Improve risk-taking ability
6. Raise human resource capabilities
5

MANAGEMENT POLICY• Efforts to support Customers and the Region in their Recovery
Establishment of Regional Reconstruction Promotion Committee
To contribute under a collective Group effort to the reconstruction and growth of customers and the region in the aftermath of the Great East Japan Earthquake, the Regional Reconstruction Promotion Committee was established with thepresident as its chairperson.
The Bank will make the utmost effort to address a variety of customer and regional issues aimed at reconstruction andcontribute to regional social and economic recovery by having the Committee review and implement measures to promote reconstruction so that customers and the region are able to follow the road to renewed growth.
Items to be Reviewed by the Regional Reconstruction Promotion Committee
1. Development of financial products and services that contribute to the recovery and development of customers’
lives and businesses
2. Enhance business matching policies and management improvement support to strengthen customer businesssupport3. Further demonstrate financial capabilities by collaborating with the government and with regional groups that
promote reconstruction

Measure Taken to Support Reconstruction◆ E stablished loan system – Emergency loans to recover from damage caused by the Great East Japan
Earthquake
The Bank now offers loans at a special interest rate to retail customers for the purchase or repair of homes or buildings
and household goods damaged by the earthquake disaster.
The Bank established an emergency loan system for businessmen and farmers to support the restoration andrecovery of their businesses. These loans are offered at a special interest rate to be used for the repair of businessequipment damaged by the earthquake disaster or as working capital.

◆ S upport for Office Reconstruction
Utilizing our own network, the Bank introduces customers to raw material suppliers, companies that offer repair services for shops, factories, and various types of equipment, as well as business collaborators.

◆ S ponsored Business Forums
The Bank sponsors business meetings to support business reconstruction. The Bank sponsored the Ibaraki Area
Technology Now, a proposal-based technology business forum for local manufacturing companies, and the 10th Joyo
Commercial Food Fair in Utsunomiya for food-related businesses and farmers.

◆ S ave on electricity
The Bank has implemented various initiatives to reduce electrical power consumption during the summer by 15%
or more. These initiatives include switching off lights in show windows, reducing the hours of ATM operation, andrestricting the use of elevators and air conditioners. Although these initiatives may cause inconvenience to customers,
we ask for their understanding and cooperation during this difficult time.

◆ E stablished an inquiry counter open on holidays and a toll-free consultation service for disasters
The Bank offers consultations for disaster victims.

6

RELATIONSHIP BANKING• Relationship Banking Policies
The local economy is the bedrock of the operations of a regional bank. Our mission is to contribute to the development oflocal society and economy by providing communities with reliable financial services.
To fulfill this mission, the Bank has adopted the following three priority policies:(1) Strengthen support for customer companies tailored to their stage of corporate growth(2) Develop new financing options for SMEs
(3) Contribute to a sustainable growth of local economy
We will continue to contribute to regional recovery and prosperity by providing optimized general financial services toour customers while deepening our local roots as a core regional financial institution.

Main Initiatives and Fiscal 2010 Business Performance(1) Strengthen support for customer companies tailored to their stage of corporate growth1) Support for start-ups and launch of new businesses
	The Corporate Business Department’s Business Strategy Support Section (the current Marketing Department’sComprehensive Financial Services Section) have taken the lead and are cooperating with Joyo Bank Group companies and other institutions in providing support for business start-ups and their capital needs. In fiscal 2010, theBank provided support for business start-ups and new ventures for 37 client companies and also assisted in thedevelopment of market channels and helped companies go public.
2) Support for business succession and M&A activities	With an increasing number of customers facing business succession issues due to the aging of managers, the Bankhas been providing “business succession” assistance to help resolve its customers’ management issues. In fiscal
2010, the Bank collaborated with outside specialists including tax accountants and CPAs and has already submitted proposals to and consulted with 133 companies to help facilitate their smooth business succession. We havealso assisted in two merger and acquisition projects involving business succession.
3) Management improvement and business revitalization support
	The Bank’s branches and head office (the Corporate Business Department’s Business Strategy Support Section [thecurrent Marketing Department’s Comprehensive Financial Services Section] and the Loan Screening Department’s
Company Management Support Office) have been working together to provide not only financial restructuring
support, but also management improvement and business revitalization support covering all aspects of management including operations and systems. The Joyo Bank’s branches and head office have formulated management improvement plans for 1,600 corporate clients and have supported 40 clients through the use of the SME
Restructuring Support Council, and helped 186 clients improve their borrowing assessment rankings. Further, wehave closed 662 business matching contracts that have led to the expansion of the client’s marketing channels.

7(2) Develop new financing options for SMEs
1) Financing methods that are not overly dependent on real estate collateral or personal guarantees and complete financing using diverse methods
	As for loans that are not overly dependent on collateral or guarantees, the Bank continues to offer loans that use
the guarantees of the Credit Guarantee Association, such as the emergency credit guarantee system, as well as
asset-based lending (backed by real estate, receivables, etc.). In fiscal 2010, the bank used the emergency credit
guarantee system for 5,260 loans totaling ¥73.9 billion. In addition, to respond to the diverse needs of its customers, the Bank has undertaken six syndicated loans, 22 privately-placed bonds, and assisted in three loans utilizing
the environment rating assessment system.
2) Improving the ability to recognize business value in client companies
	By constantly improving its internal loan-related training, strengthening its information gathering capabilities
to understand industry trends, and sharing information across the organization, the Bank improves its ability torecognize business value in client companies in order to facilitate financing to SMEs and to revitalize businesses.
Moreover, we have taken steps to improve the screening skills through the use of a certification program for loan
officers, which we introduced in 2008.

(3) Contribute to a sustainable growth of local economy
1) Total re-growth with an eye toward revitalization of the entire region	As the region’s potential is attracting attention due to the upgrading of the transportation infrastructure, the Bank
has teamed up with Ibaraki Prefecture to promote an organized campaign for industrial siting. Through a range ofactivities including the co-sponsorship of an industrial siting study tour and the dispatching of representatives to
Ibaraki Prefecture’s headquarters’ for industrial siting promotion in Tokyo, the Bank has provided financing to sevencompanies that have entered Ibaraki Prefecture.
		 The Bank co-sponsored the Commercial Food Fair, the Regional Bank Food Selections and other events for
agricultural businesses, which resulted in the signing of 236 business contracts. We also helped three companies
obtain certification for businesses involved in agricultural, commercial and industrial collaboration and programs
for utilizing regional resources, and contributed to agricultural produce branding and increased value-added.
		 To model the nation’s most advanced industrial sites and spread them to as the regions’ industries as a whole,
we organized manufacturing companies and continued to expand Manufacturing Company Support, whose main
pillar is business matching for technology-user companies including major corporations and local manufacturing
companies. Though its sponsorship of the 3rd Joyo Manufacturing Forum in Tsukuba (attended by 150 companies), the Bank was able to conduct 20 matches between major corporations and local manufacturing companies,
and between local manufacturing companies.

8• Efforts to Facilitate Financing
Amid continuing difficult economic conditions, the Great East Japan Earthquake that struck in March 2011 caused tremendous damage to our customers and the region. Consequently, we recognized that efforts to facilitate financing, including
the smooth flow of funds to the regions, were increasingly growing in importance. With our efforts to provide management consulting and support and to promote community-based financing by providing support for our customer’sbusiness expansion through the facilitation of financing and assistance to manufacturing companies, and by helping toformulate management improvement plans, we have further facilitated regional financing.
We will continue to improve the effort to facilitate financing to the region and to more strongly promote communitybased financing and thereby contribute to the reconstruction and development of the regional society and economy.

Primary Initiatives(1) Upgrade the Internal Bank System
In light of the Law to Facilitate Financing that went into effect in December 2009, the Bank has developed thefollowing systems as it seeks to further demonstrate its financial intermediary capabilities.

• We established the Policy on Facilitate Financing and have responded swiftly and appropriately to customer consultations regarding changes in borrowing conditions and other issues.

• A Financial Facilitation Managing Officer was selected from among our Directors and appointed to be in charge ofpromoting and managing financial facilitation. Also, each branch has deployed a Financial Facilitation Promotion
Officer.

• We established a “Financial Facilitation Liaison Group” within our Head Office, which verifies the status of financial
facilitation efforts and reviews and implements specific measures.

(2) Enhancement of Our Customer Consultation Service
We have upgraded our customer consultation service as outlined below and are moving aggressively ahead toconsult with customers about financing and loan repayment.

• We established an “emergency consultation counter for mortgage loan repayments” for home loan customers.
		 Installed Counters: Loan Plaza and J-Plaza• We installed a dedicated toll-free “Loan Hotline” to accept customer feedback, requests and complaints about thefacilitation of financing including changes in borrowing conditions.

9

BUSINESS HIGHLIGHTS (NON-CONSOLIDATED BASIS)
Revenues and Earnings

Capital Ratio

Despite increased earnings on investments in bonds,
including Japanese government bonds, and expense
reductions, which helped lift earnings, business profit
increased only ¥0.3 billion year on year, to ¥41.9 billion due
to higher credit costs following the earthquake disaster.
Core business profit decreased ¥3.6 billion, to ¥41.7 billion
owing to a decline in interest income on loans in line with afall in interest rates.
Ordinary income increased ¥0.3 billion, to ¥18.9 billion.
Net income was in line with that of the previous fiscal year at ¥12.9 billion due to the recording of a loss due
to disaster, including Bank facility repair expenses, as an
extraordinary loss.

The capital ratio is one of the key indicators of a bank’s
financial soundness.
The Bank’s capital ratio remained at a high level. On
a consolidated basis at the reporting term-end, it stoodat 12.77% (Tier I ratio: 11.81%), while the ratio on a nonconsolidated basis stood at 12.45% (Tier I ratio: 11.62%). The
minimum level required for banks complying with domestic standards is 4%. Regarding the method of calculationof the capital ratio at the Joyo Bank, to more accurately
calculate risk-weighted assets, since the end of March 2008
we have been applying the Basic Internal Credit Rating
Method, a method of calculating credit risk that moreaccurately reflects the risk posed by borrowers and raises
the overall level of the Bank’s credit risk management. For
operational risk calculations, we consistently apply the standardized approach (TSA).

*Core business profit = Business profit + General provisions for possible
loan losses – gains and losses on bond trading

Deposits, Loans and Securities*Tier I capital: T his is a bank’s core equity capital and mainly consists ofcapital, legal reserve, and retained earnings.

Deposits (excluding CDs) increased ¥136.3 billion year
on year, to ¥6,817.5 billion. Of this total, ordinary deposits
climbed ¥152.9 billion, to ¥3,700.7 billion, while time deposits increased ¥2.4 billion, to ¥2,808.1 billion.
Loans decreased ¥38.4 billion, to ¥4,800.6 billion. Loans
to individuals, especially mortgage loans, increased ¥15.4
billion, to ¥1,115.5 billion, while loans to SMEs decreased¥80.5 billion, to ¥1,801.1 billion, as a result of sluggish
demand caused by the business downturn.
Securities holdings increased ¥28.7 billion, to ¥2,185.6
billion. Due to efforts to manage our portfolio with an eye
to ensuring stable earnings, the outstanding balance ofJapanese government bonds rose ¥76.8 billion, to ¥1,105.6
billion.

Consolidated Accounts
The Bank currently has nine consolidated subsidiaries.
Ordinary revenues decreased ¥6.9 billion, to ¥154.4 billion,
while ordinary expenses declined ¥7.4 billion, to ¥133.6 billion. As a result, ordinary income, increased ¥0.4 billion, to¥20.7 billion, while net income was ¥13.9 billion, largely inline with that of the previous fiscal year.
Regarding cash flows for the reporting term, net cash
provided by operating activities increased ¥141.0 billion,
and net cash used in investing activities declined ¥4.7 billion. Net cash used in financing activities increased ¥12.1
billion, due to the repayment of loans. As a result, cash andcash equivalents at the reporting term-end stood at ¥239.6
billion, up ¥109.8 billion.

Clients’ Assets, and Housing Loans
Clients’ assets including investment trusts and insurance,
decreased ¥27.2 billion, to ¥1,033.3 billion, due to a decline
in the net asset value of investment trusts, despite favorable insurance sales.
Housing mortgage loans remained firm, with housing
loans rising ¥22.3 billion, to ¥1,008.5 billion. Loans for thebuilding of apartments increased ¥6.6 billion, to ¥335.9
billion.

Asset Soundness
Strengthened support for customers’ restructuring andmanagement improvement
The Bank plays a vital role in the revitalization of theregional economy and in supporting the development of
the regional community through its support of corporate
restructuring and management improvement services. We
therefore take an active approach to these services, as a pillar of our community-based banking activities. Ensuring thefacilitating financing to corporate customers is particularly
10important in view of the recent severity of the businessenvironment, and the entire Bank is tackling this issue on apriority basis.
Specifically, our Company Management Support Office
is working with our branches to provide corporate customers with advice on management analysis and related
improvement measures and support for the making of fullscale management improvement plans. When necessary,
we also collaborate with external organizations such as the
SME Restructuring Support Council operated by the government’s Small and Medium Enterprise Agency.
In these ways, we offer consultation and guidance onmanagement improvement for our SME customers. As aresult of our activities in this field in fiscal 2010, we realized
an improvement in the borrower categorization (which
depends on the financial position of the borrower) of 186
enterprises. We will continue to exert every possible effort
toward supporting our customers’ management, so as tocontribute to the revitalization of the regional economy.

possible loan losses ratio of 59.47%. The Claims we deemed
to be uncollectible or valueless (¥40.9 billion) based on
self-assessment have been conducted on a “partial direct
write-off” basis, and have been deducted in the balance
sheet asset amounts. For the general reserve for possible
loan losses, we have conducted an appropriate reserve provision following the guidelines of the Financial Inspection
Manual prepared by the Financial Services Agency. For borrowers requiring caution, we have divided them into three
categories to include debtors requiring management, andhave provided reserves for possible loan losses based on
the Bank’s historical loan-loss ratio.
In the future, we will continue to improve our credit risk
management system, conduct appropriate write-offs, provide reserves for possible loan losses in a sufficient amount,
and work toward improving the soundness of our asset
portfolio.
Reserve Based on Self-Assessment
Billions of Yen

Results of Processing Non-performing Loans in Fiscal 2010
We have calculated write-off and reserve amounts for possible loan losses based on results of asset self assessment
in line with established internal rules. Credit costs for nonperforming loans processed in fiscal 2010 totaled ¥18.7 billion as shown below;
March 31
Write-off of claims
Net provision for specific reserves
Losses on bulk sale of loans
Provision for contingent losses
Other
Total

March 31, 2011
Claims of balance (i)Claims secured
by collateral (ii)Claims with uncertain
collectibility (A)=(i)-(ii)Specific reserve (B)Reserve ratio (B)/(A)Millions of Yen
2011
2010
Change¥ 5,067 ¥ 9,852 ¥(4,784)
12,551
6,166
6,385
108
159
(51)
387
1,090
(702)
606
330
275
¥18,720 ¥17,599 ¥ 1,121

Potentially Substantially
Legallybankrupt
bankrupt
bankrupt
borrowers borrowers borrowers

Total¥102.6

¥11.4

¥4.7

¥118.7

60.3

11.4

4.6

76.4

42.2
25.1
59.41%0¥   0
100.00%0¥ 0100.00%42.3¥25.1
59.47%

Reserve for Possible Loan Losses
March 312011
General loan loss reserve¥18.7
Specific reserve
25.2
Reserve for possible loan losses total
44.0
Reserve for assistance to specific borrowers—
Reserve for possible losses on sale of loans—
Reserve for other contingent losses¥ 1.8

Reserve for Possible Loan Losses
For debtors in a state of legally or substantially bankrupt
based on self-assessment, we reserved for possible loan
losses for an amount of 100% of the amount of the claims
thought to be uncollectible after we deducted the valueof collateral amounts from the loan amounts. Furthermore,
for a state of substantially bankrupt, we provided reserves
for 59.41% of uncollectible loans based on the Bank’s historical rate of loan-loss. As a result, compared to the ¥42.3
billion total of uncollectible loans, our specific reserves forpossible loan losses amount to ¥25.1 billion, a reserve forBillions of Yen
2010 Change¥14.5 ¥ 4.1
18.5
6.6
33.1
10.8
—
—
—
—
¥ 1.9 ¥  (0.1)

Disclosure of the Bank’s Assets
We continue to view the improvement of asset quality as
apriority management issue, work toward the disposal ofbad debt and ensure the soundness of our assets, with full
disclosure of all pertinent information.

11

Risk-Monitored Claims under the Banking Law
For loans subject to risk management under the Banking
Law, we have adopted four classifications for disclosure
purposes. Loans to debtors in legally bankrupt based on
self-assessment are “loans in bankruptcy and dishonored
bills.” Loans to debtors who are substantially or potentiallyin bankruptcy are “delinquent loans.” Loans to companies
requiring caution (those which have been delinquent forthree months or more) are “loans past due with respect tointerest payments for more than three months.” Loans to
debtors whom we support through interest reduction or
waiver of loan repayment are “restructured loans.”
Due to a re-examination of borrower classificationsin the aftermath of the Great East Japan Earthquake, riskmonitored loans increased ¥32.4 billion, to ¥151.4 billion.
The Bank maintained a coverage ratio of 76.56%.

Claims Subject to Mandatory Disclosure under the
Financial Revitalization Law
Disclosure of the results of an asset assessment is required
under the Financial Revitalization Law. Under the law, theBank regards non-performing loans determined throughself-assessment to be loans to legally or substantially bankrupt companies as “bankrupt and quasi-bankrupt assets.”
Loans to potentially bankrupt companies are “doubtful
assets.” Loans past due (three months or more) and restructured loans are “substandard loans.”
Claims subject to disclosure under the Financial
Revitalization Law during fiscal 2010 increased by ¥32.6
billion year-on-year, to ¥151.9 billion, accounting for 3.13%of all claims. Furthermore, the ¥0.5 billion differential
between the ¥151.9 billion in claims for disclosure under
the Financial Revitalization Law, which excludes normal
claims, and the ¥151.4 billion in claims (loans and bills discounted only) for mandatory disclosure in accordance with
the Banking Law represents non-loan claims including customers’ liabilities for acceptances and guarantees, accrued
interest and suspense payments.

Risk-Monitored Assets under the Banking Law(Non-consolidated)
March 31
Loans in bankruptcy
and dishonored bills
Delinquent loans
Loans past due with respect
to interest payments for morethan three months
Restructured loans
Total (a)Loans and bills discounted (b)Ratio of risk-monitored assets toloans outstanding (a)/(b)Portion covered by collateraland guarantees (c)Coverage ratio (c)/(a)(Consolidated)
March 31
Loans in bankruptcy anddishonored bills
Delinquent loans
Loans past due with respect tointerest payments for more than
three months
Restructured loans
Total

2011

Billions of Yen
2010
Change¥     4.5
113.7¥     5.2
92.7¥   (0.6)
20.9

1.5
31.5
¥  151.4¥4,800.6

1.6
19.3¥  119.0¥4,839.0

(0.0)
12.1
¥ 32.4¥ (38.4)

3.15%

2.45%

0.69%

¥ 115.9
76.56%¥    95.5
80.29%¥   20.3(3.73)%

Problem Assets under the Financial Revitalization Law

2011

March 31
Bankrupt andquasi-bankrupt assets (a)Doubtful assets (b)Substandard loans (c)Problem assets (A)=(a)+(b)+(c)Normal assets (d)Total (B)=(A)+(d)Ratio of problem assets (A)/(B)Billions of Yen
2010
Change¥    4.6
114.3¥   5.6
95.2¥ (0.9)
19.0

1.5
31.5
¥152.1

2.2
19.3¥122.4

(0.6)
12.1
¥29.6

2011
¥    16.2
102.6
33.1
151.9
4,690.6¥4,842.5
3.13%

Billions of Yen
2010
Change¥    21.0
77.3
21.0
119.4
4,767.9¥4,887.3
2.44%¥ (4.8)
25.3
12.1
32.6
(77.3)¥(44.8)0.69%

Coverage Status at Fiscal 2010 Year-End

March 31, 2011
Problem assets (a)Assets secured bycollateral andguarantees (b)Reserve for possible
loan losses (c)Coverage ratio{(b)+(c)}/(a)12Billions of Yen
Bankrupt andquasi-bankrupt Doubtful Substandard
assetsassetsloans¥16.2¥102.6¥33.1

Total¥151.9

16.1

60.3

9.2

85.7

0.1

25.1

5.6

30.7

100.00%83.25%

44.57%

76.60%

The disclosure-based assets for each borrower classification of self-assessment are summarized below.

Self-Assessment: Classification of Borrowers and Disclosure-Based Assets (Billions of Yen)
Self-Assessment
Classificationof Borrowers
Legally Bankrupt
Substantially Bankrupt
Potentially Bankrupt

Borrowers Requiring Caution

Normal Borrowers

Problem Assets
under Financial
Revitalization Law
Legally
Bankrupt 4.7

Bankrupt andQuasi-Bankrupt
Assets 16.2

Substantially
Bankrupt 11.4

Doubtful Assets
102.6

Risk-Monitored
Assets underthe Banking Law
Loans in Bankruptcy andDishonored Bills 4.5
Delinquent Loans
113.7

Substandard Loans
33.1

Loans Past Due with Respect
to Interest Payments forMore than Three Months 1.5
Restructured Loans 31.5

Subtotal 151.9

Subtotal 151.4

Normal Loans
4,690.6

Note: Assets Covered by Disclosure Standards

Note: Categorization of Disclosure Standards

Financial Revitalization Law:
Loans, securities lending, foreign exchange, interest receivable,suspense payments, and customers’ liabilities for acceptance andguarantees

Financial Revitalization Law:
Categorized by borrower basis, in accordance with selfassessment results. (As an exception, Substandard Loans are categorized on individual loan basis.)

Banking Law:
Loans and bills discounted

Banking Law:
Loans to Legally Bankrupt Borrowers, Substantially Bankrupt
Borrowers, and Potentially Bankrupt Borrowers are categorized on
an individual borrower basis, in accordance with selfassessment results. Loans to Borrowers Requiring Caution are disclosed on an individual loan basis.

13

CORPORATE SOCIAL RESPONSIBILITY (CSR)
Contributions to the Regional Community

Loans to Regional Customers

Under the management philosophy, “sound management,
creation of value, and partnership with the home region,”
we will continue to contribute to the development of theregional community and economy by providing regionalcustomers with comprehensive high-quality financial services, based on a robust business performance under asound management.
We regard supply of financial services for the region
as our mission. We will continue to ensure due disclosureof diverse information relating to our contribution to theregional economy.

Regional and SME Loans
Loans to customers in our region totaled ¥3,696.8 billion,
and accounted for 77.0% of all loans made by the Bank.
Loans to SMEs totaled ¥1,801.1 billion, and accounted for
37.5% of all loans. Of all regional loans, 44.1% went to SMEs.
The total number of SMEs is 33,333 of which 98.7% arelocal.
Balance of Loans, Balance of Loans andPercentage of Loans to Regional Customers(Billions of yen)

5,000

“Region” refers to Ibaraki Prefecture and neighboring areas forming
the main catchment area (by location of main branches) of the Bank:
Fukushima, Tochigi, Saitama, Chiba and Miyagi prefectures.
Loans to customers outside the local region are mainly limited toloans to corporate customers in Tokyo or Osaka who have factories oroffices in the areas mentioned above and who have a deep relationshipwith regional business.

4,000

(%)

¥4,945.9
76.4%¥3,779.3¥3,724.8¥4,800.6
77.0%

2,000

40

Balance of loans toregional customers

1,000

20

Percentage of loans
to regional customers

As of March 31, As of March 31, As of March 31,
2009
2010
2011

1,500

Deposits

1,000

18.33%

Joyo Bank
500

City banks/Trust banks

Joyo Bank

Other regional banks

0

Shinkin banks (credit unions)Other

16.50%

0

Balance of Loans and Percentage of Loans to SMEs, andBalance of Loans and Percentage of Loans to Regional SMEs
2,000

42.24%

Loan balance

60(Billions of yen)

15.90%

80¥3,696.8

3,000

0Market share within Ibaraki Prefecture (as of Sept. 30, 2010)
The Bank maintained a high market share for total deposits
and loans within Ibaraki Prefecture, at over 40% each.

¥4,839.0
76.9%

100

(%)

100
¥1,881.6¥1,801.1¥1,978.5¥1,717.1¥1,631.8¥1,778.1
80
47.0%

46.1%

44.1%

40.0%

38.8%

37.5%

As of March 31, As of March 31, As of March 31,
2009
2010
2011

Balance of loans to
SMEs

60

Balance of loans toregional SMEs

40

Percentage of loans to
SMEs

20

Loans to regional SMEs
as percentage of loans
to regional customers

0

Number of SME Customers and Number of Regional SME Customers

7.03%

Loans

(Unit: Customers)

40,00012.66%

33,69230,00033,22533,422
32,97933,33332,902

Joyo Bank

16.88%

43.14%

Joyo BankCity banks/Trust banks

Number of SMEs

20,000

Other regional banks
Shinkin banks (credit unions)

Number of regional
SMEs

10,000Other

22.02%

05.30%
Note: F igures for share exclude public sector.

14

As of March 31, As of March 31, As of March 31,
2009
2010
2011

Initiatives for Stimulating the Local Economy

Loans to Individuals
Loans to individuals have increased to ¥1,115.5 billion, withmortgage loans performing well. Of these, ¥1,114.2 billion
or 99.8% are loans to individuals in the region.
Loans to individuals are 23.2% of all loans, and loans to
individuals in the region are 30.1% of all regional loans.

Working with Agri-Business
We operate in a predominantly agricultural area, and are
actively engaged in agri-business. We aim to contribute toregional industrial and economic revitalization by fosteringand supporting ambitious farmers and agri-businesses.
In business funding support measures, we offer threeseries of “Daichi” multi-purpose loans to meet diversified needs, all guaranteed by Ibaraki Agriculture Credit
Guarantee Fund Association. For firms specializing in cattle
breeders, we have developed the Asset-Based Lending(ABL) system as a new method for providing finance using
fattening cattle as collateral.
By backing ambitious farmers and food producer companies we also aim to support the development of new
products and services in our region. To that end, we areproactively promoting alliances between farmers, commerce and industry. This means not only support for compilation of planning approval documents for applications
for various kinds of subsidy, but also support using affiliatecompanies’ consulting, leasing and IT services, leveraging
the Bank’s networks.
To support development of marketing channels neededby food producers and processors, we hold food-themed
business forum and continue to organize the Regional Bank
Food Selection events in partnership with regional banks allover Japan, as well as offering support for business contract
signings through business matching and follow-up activities connected with these events.

Optimal Financial Services for Local Customers
98.5% of deposits, in an amount of ¥6,716.5 billion, are fromregional customers, and 99.5% of assets in custody are fromregional customers.
Balance of Loans and Percentage of Loans to Individuals,
Percentage of Regional Loans used for Loans to Local Individuals(Billions of yen)

1,200

27.8%

900

21.3%
¥1,055.4

29.5%

30.1%

22.7%

23.2%

¥1,100.0¥1,115.530

20Percentage ofloans to individuals

600
10
300
0

As of March 31, As of March 31, As of March 31,
2009
2010
2011

Balance of loans
to individuals

0

Percentage ofregional loans used
for loans to local
individuals

Deposit Balance, Local Deposit(Billions of yen)

100

7,000
6,000
5,000
4,000

98.1%
¥6,562.7¥6,444.4

98.3%¥6,681.1¥6,573.5

98.5%¥6,817.5¥6,716.5

3,000

80
60
40

2,000
20

1,000
0

As of March 31, As of March 31, As of March 31,
2009
2010
2011

Deposit balance

Support for Manufacturers of Excellence
Our business area comprises Ibaraki, Tochigi and Fukushima
prefectures. Due to their proximity to Tokyo and their goodtransportation infrastructure, many major companies have
set up plants in these prefectures, and a need has arisen to
secure high-quality SMEs to act as suppliers. As a key player
in regional revitalization, we support highly capable manufacturing businesses in meeting these needs.
We create effective platforms for business talks by holding events such as the “Joyo Manufacturing Forum” andexhibition/confab events through which we support development of marketing channels by bringing major manufacturers and local manufacturing SMEs together throughbusiness-matching.

Local deposit
balance
Local deposit
balancepercentage

015attracting companies, the Bank is also a member of aCouncil for Regional Industrial Development established to
attract businesses and boost industry by eight areas of theprefecture.

We also proactively provide financial support to meet awide range of business funding needs. These include support for upgrading of technological capabilities, where wehelp through technology workshops arranged in partnership with major manufacturing companies, and for raisingquality management standards under the ISO certification
program.
Likewise, we have introduced an Environmental Ratingand Evaluation System to encourage capital and otherinvestment that is effective in combating global warming
and saving energy. Through this and measures such aspreferential loan rates, we support funding for environmental initiatives.

Joyo Area Research CenterWith the aim of contributing to the comprehensive promotion of the region, we conduct research into the economy,
industry and social change in Ibaraki Prefecture, and provide information needed by industries and for other strategic activities. The Joyo Area Research Center developed outof the Foundation for Industrial Research founded in March
1969.
This foundation cooperates with various economic
associations and research institutions, performing various tasks that contribute to the regional community andeconomy. The Center researches into and publishes dataon economic industry trends and regional development,
holding lectures and sending speakers to regional organizations and events.

Tie-ups with External Institutions
Including tie-ups with University of Tsukuba and Universityof Ibaraki, we foster and support new ventures andestablished companies beginning new businesses withentities such as National Institute of Advanced Industrial
Science and Technology (AIST), the Organization for Small& Medium Enterprises and Regional Innovation, Ibaraki
Corporation for Small and Medium Enterprise Promotion,
the Development Bank of Japan, the Shoko Chukin Bank,
the Japan Finance Corporation, and other partners in industry, academia and regional government.
Invitation of Companies to the Area
The business environment in Ibaraki Prefecture has been
upgraded through creation of infrastructure for wide-areatransportation networks typified by the now-completed
Kita-Kanto Expressway. Leveraging these strengths, we
are working to attract companies that can invigorate theregional economy.
We provide companies that are interested in initiating
business in our operational areas with advice on the ideal
location and conditions. For companies that have already
decided to newly move into our business area, we provide
needed funding support and business-related information
gathered through our branch networks.
The Bank has been working to attract companies incooperation with Ibaraki Prefecture and its municipalities down to the village level. In addition to cooperatingin Ibaraki-Prefecture-organized tours and seminars for

Joyo Industrial Research Institute
Joyo Industrial Research Institute was established as partof activities to commemorate the 60th anniversary of thefounding of the Bank, in April 1995 as a regional think tank.
The Institute consists of three departments: 1) the
Industrial Research Department, which provides consulting
services, mainly to private-sector enterprises, that include
support for management structural reforms and acquisitionof ISO certification; 2) the Regional Research Department,
which conducts surveys and analysis of the regional community to assist local governments in drawing up regional
plans and community development projects; and 3) the
Training Department, which holds lectures, practical seminars and other training events.

16

Environmental Policies— Building a regional community that contributes to theglobal environment —1. R
 educe the environmental load of the Bank’s business
operations through resource conservation, energy conservation, and recycling
2. S upport customers’ environmental preservation activities
by providing eco-friendly financial products and services
3. E nsure that all executives and employees of the GroupThe Institute also publishes the JIR News, a newsletter,and has created the Joyo Village website on which it posts
information for members to read to and provides forums
for members to exchange information and communicate
with each other.

are fully aware of these policies and actively participate intheir implementation
Forest Preservation Activities
The Bank is a member of Save The Forest In Japan, an organization established by regional banks all over the country
dedicated to ensuring healthily-growing forest, central to
the next generation.
We have also signed a “forestry partnership agreement”
with Ibaraki Prefecture and “Ibaraki forestry support center.” In Naka City, we established the Joyo Furusato Forest.
Through activities such as thinning and tree planting, weare establishing mixed forests based on local species.
In June 2010, we planted 1,000 seedlings within thenational park Hitachi Seaside Park, located in Hitachinaka City.

The Institute’s staff includes a large number of experts
in various fields to meet the diverse needs of its corporate
customers. These experts include certified SMEs management consultants, ISO auditors, first-class registered architects, and engineers that offer effective solutions to thewide range of issues faced by our customers in the region.
Environmental Preservation Activities
Through its environmental preservation activities, the Bank
seeks to reduce the environmental impact of its business
operations and provide support for customers tackling
the task of environmental preservation. These activities arepart of the Bank’s efforts undertaken in collaboration withnumerous partners in the region to realize a sustainablecommunity in Ibaraki Prefecture and neighboring areas.

Expanding lineup of environment-related financial
products and services
New eco-friendly products
To contribute to preservation of the region’s environment, the Bank provides environment-related financial
products to support companies working on environmental
preservation.
We constantly work to meet our customers’ needs bydeveloping new products and improving existing ones.

Environmental Principles and Policies (established July
2008)
Environmental Principles
The main operational base of the Joyo Bank Group is Ibaraki
Prefecture, an area blessed with beautiful natural scenery,
including abundant greenery and water resources. We
believe it is the Bank’s social mission to help protect andnurture this rich and varied natural environment while realizing a sustainable society in our local region. To this end,
we work hand in hand with a diverse range of partners inpreserving the natural environment of our home -Ibaraki on
a continuous basis.

Environmental Rating and Evaluation System
This system was set up as a support measure to companies
that contribute to environmental protection in our region.
In the program, we evaluate companies’ environmental
measures using a wide range of yardsticks. Ratings anddetails of initiatives are made public, and preferential interest rates are offered for companies with high ratings.

17

Addition of environment-type product "Joyo Eco SelectLoan" a subsidized interest rate program by Ministry of
the Environment
New eco-friendly farmer registrants added to “Daichi,” a freeloan program for farmers. Eco-friendly housing mortgage
loans and eco-friendly home renovation, loans for apartments with 100% electric amenities, “Eco-Jozu,” an energy
conserving gas-only home heating and cooling system, andsimilar eco-friendly home energy systems.

Addressing Revised Energy Conservation Act
Under the Revised Energy Conservation Act, companies
with a total energy consumption equivalent to 1,500 kiloliters of crude oil or more must report this to the relevant
authorities and be designated as a Specified BusinessCorporation.
In 2010, the Bank was designated a Specified BusinessCorporation, and has been selected as an Energy
Coordinator and Energy Management Planning Promoter
that reports its total energy consumption to the relevant
authorities, together with medium- and long-term energy
consumption and conservation plans.
The Bank has a system in place to monitor the energy
consumption awareness and attitude across the organizations in the Bank in line with the “@ Energy-Minded
Services” guidelines introduced in February 2009.

Loans for purchase of eco-friendly automobiles
Loans for the purchase of hybrid cars and other eco-friendly
automobiles.
Support for acquisition of ISO certification
Our affiliated company, the Joyo Industrial ResearchInstitute, Ltd., holds explanatory seminars on how toacquire ISO 14001 internationally recognized certificationfor environmental management systems, and also provides
consulting on an individual-company basis to help corporate customers acquire this important certification.
Registration under the Ibaraki Eco-Business Plan
The Bank applied for the Ibaraki Eco-Friendly BusinessPremises Registration System, operated by the Ibaraki
Prefectural Government, in which business premises thatengage in environment-friendly operations are listed. As aresult, we received certification for the listing of all 110 Bank
offices in Ibaraki Prefecture, as well as for all companies in
the Joyo Bank Group.
In addition, our 10 offices in Fukushima Prefecture
have signed the “Fukushima Protocol for the Prevention of
Global Warming.”

18

CORPORATE GOVERNANCE AND INTERNAL CONTROL SYSTEM
To ensure a greater trust from customers, the regional community and our shareholders, we believe it is essential that
our management be efficient, sound and transparent, andfirmly rooted in compliance. Constantly to be mindful ofthe importance of corporate ethics, we have establishedeight basic principles under which we are strengthening
and expanding our corporate governance.

In order to audit performance of duties by directors,
the auditors attend important meetings such as the Boardof Directors and Executive Officer Committee meetings,
peruse relevant documents, and carry out business andasset status inspections, all of which are based on theauditing policies and plans outlined at Board of Corporate
Auditors meetings (held once a month in principle).
With regard to internal auditing, the Corporate Audit
Division (the auditing office) monitors internal management in terms of appropriateness and effectiveness of conduct, and suggests improvements when problem areas are
identified. Results of the audits are regularly submitted in areport to the Board of Directors.
In addition to strengthening internal auditing, we havecreated a Compliance Audit Committee comprising four
outside experts including lawyers and Certified Public
Accountants (CPAs) to ensure greater expert input andobjectivity.

Corporate Governance at Joyo Bank
The Board of Directors meets twice a month in principle
to exercise decision-making and supervisory functions.
The Bank has a total of 12 directors, of whom two external
directors appointed to strengthen supervisory functions
by providing an outside perspective. Nine of them are
executive directors, and the others a managing director(in charge of internal auditing) and two external directors.
Major items relating to conduct of operations excluding
those decided by the Board of Directors are handled by an
Executive Officer Committee created as an assessment anddecision-making body. Executive Officer Committee meetings are held twice a month to discuss and implement specific policies and proposals in the conduct of business.
Special committees (Compliance Committee, General
Budget Committee, ALM Committee, Risk Management
Committee and Sound Asset Committee) have been established to determine the major themes for management
audits. Reports are compiled regarding the discussions anddecisions of these committees for perusal of the Board of
Directors.

The Joyo Bank Corporate Philosophy
Corporate Social Responsibly (CSR) and Public Mission
Always keep in mind the Bank’s CSR and public mission, and deepen trust
through sound and open business management.
Compliance
Comply with the legal and social code and execute honest and open business activities.
Fight Against Crime
Ensure that the Bank has no relationship with organized crime.
Provide Valuable Financial Services
We will contribute to the development of the region in which we operateby responding to our customers’ needs and providing valuable financial
services, considering the security of customers’ information.

(Internal audit)(Decision-making/
Management supervision)

Corporate Auditors
Board of Corporate
Auditors
General Meetingof Shareholders

Board of Directors

Corporate Audit Division(Operating execution)

Business Section

Executive Officer
Committee

Business Planning Div.
Customer Services Div.
Business Promortion Div.
Government and Municipal Business Div.
Treasury and Securities Div.
Markets Administration and International Div.
Credit Examination Div.
Operation Planning Div.
Computer System Div.
Corporate Risk Management Div.
Corporate Planning Div.
Personnel Div. • General Affairs Div.

Auditing Company

19

Risk Management Standards and other Controls
In addition to establishing risk management standards
for appropriate management of all categories of risk, it is
our mission to build a comprehensive internal risk management structure to ensure a sound financial positionand stable earnings in the future by creating frameworks
for comprehensive understanding and control of risk.
Moreover, we also have business contingency plans inplace should any event disrupt our core systems, such as
natural disasters or a systems failure.
The management of risk is the responsibility of various
risk management departments, as set down in the in-house
regulations. Comprehensive risk management is carried out
by one department that oversees risk management for theentire Bank. The Board of Directors has appointed the director to oversee the risk management program.
We have established a Risk Management Committee tomeasure the extent of various risks and make decisions onrisk management policies. This committee will meet regularly to ensure an accurate grasp of the situation regarding
risk management issues across the Bank. The officer incharge of risk management will make regular reports to theBoard of Directors on the current state of risk management
and the countermeasures that the Bank is taking against
risks.

Relationship with the Regional Community
We will communicate openly and freely with the community where we doour business, raising our transparency through active disclosure of corporate information.
Respecting the Human Rights of our Employees
We will provide a work environment that respects individuality and protects the rights of all employees.
Environmental Initiatives
We will reduce environmental load, and help the environment throughcore banking activities.
Community Contribution Activities
We are committed to contributing to the community we serve, as a good
corporate citizen that marches in step with regional society.

Internal Controls and Risk Management
Compliance
Based upon our philosophy of soundness, cooperation andpartnership with the home region, we attach great importance to compliance in our management. We have established a corporate ethics guideline and a code of conduct.
Moreover, we have established a new set of guidelines toensure that every director and employee complies withthe law and with the Bank’s Articles of Incorporation. Everycompany within Joyo Bank Group follows the same strict
guidelines. We have put standards into place to establish acompliance system across the Group as a whole.
To ensure the best standards in compliance, we haveestablished a Compliance Office that oversees the compliance program as defined by the Board of Directors.
The Office makes regular reports to the Board.
Moreover, we have established a whistleblower hotline forthe entire Group, called the Compliance Hotline.
In addition to the Compliance Committee, we haveappointed outside experts to form a Compliance Audit
Committee, which monitors compliance issues on a regularbasis.
To ensure that our internal controls perform theirintended functions, our various auditing functions, which
are independent from business execution departments,
carry out internal audits across the Group. We will resolutely
take action to prevent transactions with criminal bodies
that threaten public order and security or disrupt economic
development.

System to Ensure the Effective Execution of theirDuties by the Directors of Joyo Bank
We have put in place business plans to clarify our operational targets, as well as an overall budget every year, todefine specific policies.
We have determined the scope of decision-making
responsibilities for each director, to achieve efficient
operations.
We have established an Executive Officer Committeethat consists of executive directors and executive officers
to discuss important matters affecting the daily conductof operations. We have also set up a range of committees,grouping executive directors, executive officers and division heads, who meet as and when needed.

20Compliance System

Supporting Corporate Auditors
To support internal auditing, a staff who has enough knowledge and ability as an auditor is assigned to assist the corporate auditor is assigned to assist the corporate auditors.
To ensure the independence of this assistant from theinfluence of the business execution departments, in case oftransfer of the staff, the executive director in charge of all
personnel transfers should inform the corporate auditors
in advance. The corporate auditors are entitled to express
their opinions and advice regarding the personnel transferof the staff.
The corporate auditors attend meetings of the
Executive Officer Committee and offer their opinions on
the audit process and all related matters. The directors andemployees report any and all information the corporate
auditors deem necessary to complete the audit.
In order to enhance the efficiency of the audit system,
the corporate auditors maintain close coordination withall headquarters departments other than the internal audit
sections.
The representative directors and accounting auditors
each meet regularly with corporate auditors and exchange
opinions on the issues related to the audits.

Internal auditing function

We place high priority on strengthening our compliancesystem to ensure sound banking operations, fulfill our social
responsibility and public mission, and maintain the trust ofcustomers, shareholders and other stakeholders.
We establish a compliance program each year andensure that each executive and employee are fulfilling theirroles in compliance.
We build a compliance system whose ultimate supervisory organ is the Board of Directors and place dedicatedcompliance officers in each major division to undertakewide-ranging inspections of legal issues in each division.
To supplement internal compliance activities by outside
audits to inject the required professional knowledge andobjectivity, the Bank set up a Compliance Audit Committee,
consisting of outside professionals including lawyers and
CPAs. The Committee evaluates and audits the Bank’s
compliance activities. We strive to further strengthen andimprove compliance activities.

[Oversight of decision-making]Board of Directors[Auditing organizations]Board of Corporate Auditors(Auditors)[Policy establishing and performance evaluation]
Compliance Committee[Auditing department]
Corporate Audit Division
Branch audit group
Operations and asset auditing group
Main office[Management]
Compliance and Risk Management Division[Supervision]
Compliance and supervisory officer

Head office departments and branches, etc.
[Senior Manager] Supervisor [Administrator] Compliance officer
External auditing functions[Group company management]
Corporate Planning Division
Group business officeGroup company[Senior Manager] Representative [Manager] Compliance officer
Evaluation and audit[External audit]
Compliance Audit Committee

21[Compliance report]
Executive Officer Committee

Code of Conduct
We will• get to know our customers and offer optimal products and services• expand business scale and grow with our customers• increase our financial expertise

Policy Regarding Solicitations for Financial Products
In accordance with the Law Concerning the Sale of Financial Products, our solicitations for products are based on
the following policies.
1. Financial product solicitation is based on tailoring products to the level of understanding, experience and financial
status of the customer.
2. To ensure that our customers make choices based on their own judgment and at their own liability, we will provide
easy-to-understand explanations so that the customer has sufficient understanding of financial products and the risks
attached.
3. We assure that sales are never based on the provision of misleading or false statements or information, nor do we act
in a manner leading to any misunderstanding by our customers.
4. Our solicitations will not be conducted at times or in locations that cause inconvenience.
5. We are setting up a training system within the Bank to ensure proper solicitation to our customers.

Risk Management

results of transactions (business administration departments) are separated, thus creating an organizational structure that allows for mutual checks and balances.
The various risks that are incurred during banking operations are managed by specific risk management departments depending on the type of risk.
We also have established a risk management supervision department, which supervises the management systems for all risks and is responsible for holding meetings of
the Risk Management Committee, an organ for the examination of Bank-wide solutions to risks. The department also
provides regular reports on the overall status of risks to theBoard of Directors.
Additionally, internal auditing staff verify that risk
management is functioning appropriately and effectively
through the integrated risk management department
and each risk management related department, thereby
increasing the effectiveness of the system.

While the financial industry has grown due to deregulationand the advancement of financial technology, the risks carried by banks continue to diversify and become ever more
complicated. In this environment, we are working to meetthe highly advanced and various needs of our customers,
and we also have placed emphasis on the subject of “riskmanagement” to ensure the maintenance and improvement of sound operations which is one of the most vital
issues facing management.
The Risk Management System
In our fundamental rules regarding risk management, wehave outlined our fundamental thinking and management
procedures including policies regarding risk management,
organizational structure, and responsibilities.
In business management, the departments that carryrisks when conducting transactions (marketing departments) and the departments that internally manage the22Risk Management System
Risk Management
Committee

Board of Directors

Internal Auditing Dept.

Integrated Risk Management Dept.

Verification of suitability
and validity of the risk
management system

Risk Management Departments
Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Business Promotion Departments, Administrative Control Departments, Group Companies

Risk Management through the PDCA Cycle
At the Joyo Bank we use the PDCA cycle described below
in our risk management process. This allows continuous
improvement of risk management, and conforms to ourbelief in the need to consistently refine the Bank’s risk management methods.
Plan: Identify and evaluate the various risks to which
the Bank’s operations are exposed, and draw up
a plan for risk avoidance and mitigationDo:
Put the plan into practice
Check:	Evaluate the results of the plan’s
implementation
Act:	Take improvement measures in the event thatthe avoidance and mitigation plan process isinsufficient, or in the event that new problems
emergeIntegrated Risk Management
We have adopted integrated risk management for quantitative understanding of risk using statistical methods for eachcategory of risk, in order not only to manage individual risk
categories but also to enable systematic risk management
as the business of banking grows more diversified andcomplex.
This integrated approach enables us to manage what
extent of risk amount can be permitted relative to allocatedeconomic capital, the indicator of financial soundness, andwhether or not management resources are being deployed
efficiently.
Allocation of Risk CapitalIn our Comprehensive Risk Management rules, we allocate
a reasonable amount of risk capital, depending on risk
category and banking department, and control risk within
the those parameters. With regard to risk capital allocation,
we allocate suitable amounts from core Tier I capital, notcounting “risk buffer” capital (reserves for risk which is difficult to quantify and for extra capital for allocation shouldrisk exposure increase).
We carry out periodic stress-testing and assess theimpact on Bank capital and earnings of losses that could
arise from risk due to significant fluctuations that cannot be
predicted based historical data analysis or which is difficult
to quantify using statistical methods. In this way, we ensure
capital levels are adequate.

Continuous Improvement of Risk Management
Action

Check
Check
Check

Action

Do
Do

Plan
Plan
Plan

Do

23

Credit Risk Management

Asset Self-Assessment

Creditrisk is the risk of not receiving principal or loan payments as promised on loans due to a deterioration in credibility of the debtor. This is recognized as one of the mostserious risks make within banking operations.
In order to prevent the occurrence of nonperforming
loans and improve the soundness of our assets, we makeevery effort to ensure good credit risk management.

In asset self-assessments to evaluate the soundness ofassets, the branch carry out a primary evaluation by making
a decision on credit category based on a credit rating. Thenthe head office department in charge of credit screening
checks these (secondary assessment), and the Corporate
Audit Division audits the results of the asset self-assessment
and verifies the appropriateness of procedures. Based onthese results, the Bank provides appropriate reserves andwrites down problem loans based on the assessments.

 verview of Basic Policy and Procedures with Regard toO
Credit Risk Management
 e have compiled management guidelines for credit risk,
Wwhich serve as a basic policy for appropriate managementof credit risk on individual loans and management of thecredit portfolio, focusing on spreading risk as its basic tool.

Internal credit ratings and categories of borrowers
under asset self-assessment

Credit Risk Management for Individual Loans
We have separated credit-screening departments from loan
departments, and constantly work toward screening stricter
while also focusing on credit management before due dateto prevent the status of a claim from deteriorating.
We have created a set of basic parameters for loans,designed to speed up decision-making on loans and toensure more rigorous risk management. We also have a system for accurately reflecting in the asset self-assessments
the business performance achieved by the borrower andchanges in the value of collateral.
We have also adopted an automated scoring system forsmall-amount loans to unify credit screening standards andimprove efficiency.

1
2
3
4
5
6
7
8
9
10
11
12

Borrower
ratings
1
2
3
4
5
6
8-1
8-2
8-3
9
10-1
10-2

Borrower category
under asset
self-assessment

Normal borrowers

Borrowers requiring caution(Substandard loans)
Potentially bankrupt
Substantially bankrupt
Legally bankrupt

Quantification of Credit Risk ManagementT he quantification of credit risk management refers to thestatistical forecasting of future losses (amount of credit risk)that can be expected from the bankruptcy or deteriorationof business at borrowers. Based on credit ratings, we calculate credit risk for each customer in view of the security andother factors.

Internal Credit Ratings
We classify our customers into a 12-grade rating class basedon quantitative appraisal of financial condition and cash
flows, and qualitative appraisal. In addition to serving as
the basis for asset self-assessments, ratings for customers,
credit worthiness are used across the full range of credit risk
management, including monitoring of credit risk exposure,setting of lending rate and allocation of lending authority.

Loan Portfolio Management
We treat loan assets in their entirety as a single portfolio andconduct credit risk management from a macro-perspective.
Based on the quantification of credit risk, we carry out periodic monitoring to determine whether or not credit risk isconcentrated in specific rating groups, sectors or corporategroups, and analyze and evaluate credit situations by rating,region and sector.

24Market Risk Management
Market risk refers to fluctuation primarily in earnings caused
by interest rate changes, foreign exchange rate fluctuations,and changes in the demand for money within the financial
market. Assets like loans and securities and liabilities likedeposits are constantly influenced by such changes.
We manage all assets and liabilities (deposits, loans,securities, and others) comprehensively based on ALM(asset and liability management) to manage market risks.

Administrative Risk
Administrative risk is the risk of damages due to improper
administration resulting in accidents or improprieties. We
have taken steps to uphold and improve the quality of ouradministrative operations, to ensure that customers are notinconvenienced by inappropriate administrative management and that administrative management is as error-freeand prompt as possible.
In addition to analyzing and evaluating the circumstances, causes and processes surrounding administrative
mistakes, we verify the effectiveness of countermeasures
after their introduction and repeat them as often as necessary to ensure that the problem is resolved. We are drawing
up regulations for administrative processes, and ensuring
their strict application by all staff from executives downMarket Risk Management System
The front and back office departments are separated. We
have also established middle-office risk management sections to build a mutual checks and balances system.
Market Risk Control
The scale of risks involved in assets and liabilities (deposits,loans, securities) go through a broad ranging analysis —gap analysis, basis point value (BPV), simulation of interest
fluctuation, and Value at Risk (VaR) — in order to clarify thestate of risks and conduct asset allocation effectively andimplement risk control measures.
We engage in financial derivative transactions to meetthrough guidance and training. We are also verifying theeffectiveness of internal audits and taking steps to preempt
accidents.
System Risk
System risk is the risk of losses due to the breakdown ofcomputer systems, erroneous computer operation, andinappropriate computer use. Measures to ensure appropriate management of such risk is based on protection of
information data and ensuring stable operation of computer systems.

the diverse needs of our customers and hedge our own
risks arising from interest fluctuations. For the risks associated with financial derivatives, in addition to conducting
daily mark-to-market valuation and BPV analyses to accurately grasp the size and nature of the risk, we also manage risk appropriately by establishing limits according to
objectives.

Tangible Assets Risk, Human Resources Risk andCompliance (Legal) Risk
Risk to tangible assets (inadequate precautions to prevent
damage from earthquakes and neglect of building management), personnel management risk relating to safety
and hygiene at the workplace, and compliance risk (legalityof business, illegal behavior by any executives and employees) are addressed through appropriate measures after
identification and evaluation using methods to gauge risk
scale and features, and the effect of risk reduction measuresis later assessed.

Operational Risk Management
Operational risk refers to the risk of losses arising from
irregular procedures or employee conduct in banking operations, or inappropriate system operation or detrimental
external events. The Bank divides such risk into five categories: administrative risk, system risk, risk to tangible assets,
personnel management risk, and compliance (legal) risk.
We have also established a management office for eachrisk category, as well as supervision of overall operationalrisk measures.

25

Crisis Management

Ensuring strict confidentiality in the management of e have established a set of general emergency guidelines
W
providing specific measures for dealing with situations suchas major disasters, system failures and reputational damage,and for minimizing disruption of relations with business
partners. We aim to strengthen our crisis management
through continuous training and upgrading of procedures.

customer information
We ensure strict confidentiality in our management of customers’ personal data. We have drawn up detailed in-houserules for the handling of customer information, practicing
strict control of data access and office access as well as theencryption of confidential information. In these ways, we
protect our customers from the leakage of their personal
information to outside parties as a result of misconduct
or human error. Providers of outsourced services are also
required to conform to the Bank’s strict customer information protection policy, and we closely monitor their performance in this area.

Customer Protection
To ensure peace of mind for our customers as a Best
Partner Bank that grows with customers in the homeregion, the Bank is committed to providing adequate product explanations to customers and responding sincerely
to customer voices, while taking every measure to protect
customers by rigorously managing customer information.
In line with this management approach, we havelaid down the Customer Protection Management Policy
and are working to ensure that all Bank employees, fromexecutives down, are completely familiar with the policy.
From the organizational standpoint, we have established
the Customer Protection Group within the Corporate Risk
Management Division as a central unit for the supervisionof all customer management measures.

Protection of Confidential Private Information
We have drawn up and made public a privacy policy as a
response to the Law Concerning the Protection of Private
Information, and have put in place safeguards for the protection and appropriate handling of personal data.

Privacy Policy
We work to build on the mutual trust we have with our customers, the region, and our shareholders, stress the importance of our social responsibility, and offer high-quality
financial services. For the protection of personal data, wehave established the following policy based on our respect
for all individuals, and will put all our efforts into the protection of private information.

Adequate explanations of products and services
We always provide explanations of our financial products
and services to ensure that customers understand the
products or services adequately. Officers in charge of eachparticular facet of the Bank’s operations instruct and teachdetails and methods for how to best explain these products
to customers, and the Corporate Risk Management Division
works to further improve the quality of these explanations.
Listening attentively to customer feedback
Management of customer queries, consultation, requests,
complaints and disputes is undertaken on an integrated
basis by the Customer Counseling Office in the customer
services department. We have in place a system for discussing measures for improvement and for prevention of issues
arising within the operational departments. We have also
signed agreements with designated dispute settlement
organizations and also work through external entities toreach settlements.

26

Policy for Protection of Personal Confidential Information• Strict compliance with laws and regulations

entrusted to an outside organization under an outsourcing arrangement, we require that protection of
personal information be contractually assured, andcarries out checks.

	We comply with all laws, ordinances and otherregulations regarding confidentiality of personal
information.
• Appropriate access• Security management measures	We acquire personal information only by appropriate and legal methods, and only when necessary forbusiness operations. Personal information is nevergathered in an inappropriate way.

	We have in place appropriate security management
mechanisms to ensure prevention of leakage, loss ordestruction of personal data, and other measures.
• Appropriate response to complaints• Ban on unapproved use of personal information	When customers have questions or complaints
regarding our protection of personal information,
we investigate these questions or complaints anddeal with them appropriately and promptly, within areasonable period of time.

	We only use personal information inasmuch as itis necessary for achievement of business objectives, and do not use such information for any otherpurpose.
		 In addition, information that is registered withcredit-data organizations of which we are a member is used where appropriate for credit-related
purposes.

• Continuous improvement
	The Bank has compiled regulations for ensuring
strict legal compliance and protection of personal
information.
		 In addition to ensuring that these measures arefamiliar to all employees and other affected parties,
the Bank continually upgrades them. Regular audits
into acquisition, use and handling of personal information are part of our broad and thorough commitment to confidentiality.

• Ban on provision of personal information to third
parties	Except when prescribed by laws and ordinances, wenever provide personal information to third parties
without first obtaining the affected person’s agreement. In addition, when personal information isPrivacy MarkIn October 2006 we became the first regional financial institution in the North Kanto area tobe awarded Japan Information Processing Development Corporation (since April 2011 Japan
Institute for Promotion of Digital Economy and Community, or JIPDEC)’s “Privacy Mark.” This certification was renewed in December 2008 and November 2010.
Based on this “Privacy Mark” accreditation, the Bank meets the “requirements for management of personal information protection” (JISQ15001) laid down by Japanese Industrial
Standards Committee and now has in place mechanisms for appropriate protection of personal
information.
Financial Crime Prevention
We are fully committed to preventing crimes involving accounts held at our banks, and to protecting the financial assets of ourcustomers. We require identification when a new account is set up or for a large-amount transaction. In addition to working toprevent inappropriate transactions, when an account is used, we will cancel transactions when considered necessary and will
work hard toward crime prevention. We also have implemented measures to prevent the crimes of use of forged ATM cards
and online hacking.
27

F

I

N

A

N

C

I

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L

S

T

A

T

E

M

E

N

T

S

Consolidated Balance Sheets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2011

2010

Thousands of
U.S. dollars (Note 2)
2011

Assets:Cash and due from banks (Notes 3 and 25)
Call loans and bills purchased
Commercial paper and other debt purchased
Trading assets (Notes 5 and 26)
Securities (Notes 6, 8, 25 and 26)
Loans and bills discounted (Notes 7, 9, 11 and 25)
Foreign exchanges
Lease receivables and lease investment assets (Notes 3 and 24)
Other assets
Tangible fixed assets (Note 22)
Intangible fixed assets
Deferred tax assets (Note 14)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for devaluation of investment securities
Total assets¥  251,437—
37,755
7,675
2,187,773
4,769,896
7,816
28,52048,64894,455
8,237
25,857
21,373(50,838)(303)¥7,438,307¥  173,240
22,91546,0093,766
2,151,554
4,808,134
2,708
29,00570,59595,961
7,476
21,702
22,875(39,201)(35)¥7,416,708$ 3,023,900—
454,060
92,30626,311,169
57,364,966
94,007
342,998
585,066
1,135,967
99,072
310,978
257,042(611,401)(3,645)$89,456,489

Liabilities and net assets
Liabilities:
Deposits (Notes 8, 15 and 25)
Call money and bills sold (Notes 8 and 19)
Payables under securities lending transactions (Note 8)
Trading liabilities (Note 16)
Borrowed money (Notes 8, 10 and 25)
Foreign exchanges
Bonds (Note 12)
Due to trust account
Other liabilities
Reserve for directors’ bonuses
Reserve for employees’ retirement benefits (Note 13)
Reserve for directors’ retirement benefits
Reserve for reimbursement of dormant deposits
Reserve for frequent users services
Reserve for losses on interest refunded
Reserve for other contingent losses
Reserves under the special laws
Deferred tax liabilities for land revaluation (Notes 3 and 14)
Negative goodwill
Acceptances and guarantees
Total liabilities¥6,816,825
13,636
13,332282
53,188415
5,000
1964,035
—
5,165
25
1,582
129
9
1,883
1
13,9552,449
21,373
7,013,309¥6,685,607—
26,034371
119,490625
15,00018
93,531
37
4,840
22
1,458
102
7
1,991
0
13,984
2,607
22,875
6,988,606

81,982,272
163,995
160,340
3,393
639,663
4,996
60,132
229
770,124—
62,118304
19,032
1,552
116
22,657
13
167,830
29,458257,042
84,345,274

Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on hedging instruments, net of taxes
Land revaluation excess, net of taxes (Notes 3 and 14)
Total accumulated other comprehensive income
Equity warrants
Minority interests
Total net assets
Total liabilities and net assets

85,11358,574266,435(25,858)
384,264
30,129(2,304)
10,97838,803
69
1,859
424,997¥7,438,307

85,11358,574
261,752(26,845)
378,594
38,805(1,938)11,00047,86821
1,617
428,101¥7,416,708

1,023,608
704,437
3,204,274(310,981)
4,621,339
362,348(27,712)132,033
466,668840
22,366
5,111,214$89,456,489

Millions of yen
March 31,

See accompanying notes to the consolidated financial statements.

28

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A

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M

E

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T

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Consolidated Statements of Income
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2011

2010

Thousands of
U.S. dollars (Note 2)2011¥ 82,451
23,294931
22,274621
6,763
20,618
156,955¥ 90,019
23,294
1,080
22,404669
3,566
22,553
163,587$  991,598
280,150
11,201
267,881
7,469
81,344
247,966
1,887,612

Millions of yen
Years ended March 31,

Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Trading income (Note 18)
Other operating income
Other income (Note 20)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts (Note 19)
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses (Note 21)
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Tax refunds
Deferred (Note 14)
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

5,953
687
1,299
6,984
1,574
72,74045,879135,119
21,835

9,563
1,003
1,592
6,793
4,637
73,81944,152
141,562
22,02571,604
8,263
15,631
83,996
18,939874,808
551,771
1,625,014
262,597

5,817
—
1,786
14,230240¥ 13,990

1,594
(96)
6,229
—
246
¥ 14,051

69,963—
21,488171,145
2,890$  168,254

Net income per share (in yen and dollars)¥   18.14¥   18.17$      0.21

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2011

2010

Thousands of
U.S. dollars (Note 2)
2011¥14,230(9,040)(8,674)
(366)
5,190

¥—
—
—
—
—

$171,145(108,722)(104,319)(4,402)62,423

4,947
242

—
—

59,504
2,918

Millions of yen
Years ended March 31,

Income before minority interests
Other comprehensive income (loss)
Unrealized losses on available-for-sale securities
Deferred losses on hedging instruments, net of taxes
Comprehensive income(Attributable to)Shareholders of parent
Minority interest
See accompanying notes to the consolidated financial statements.

29

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Consolidated Statements of Changes in Net Assets
THE JOYO BANK, LTD. and Consolidated Subsidiaries

2011

2010

Thousands of
U.S. dollars (Note 2)
2011

Shareholders’ equity
Common stock
Balance at end of the previous year
Changes during the year
Total changes during the year
Balance at end of the current year

¥ 85,113——¥ 85,113¥ 85,113——¥ 85,113$1,023,608——$1,023,608

Capital surplus
Balance at end of the previous year
Changes during the year
Total changes during the year
Balance at end of the current year

¥ 58,574——¥ 58,574¥ 58,574——¥ 58,574$  704,437——$  704,437¥261,752¥254,154$3,147,960(6,182)
13,990(6)(3,140)22
4,682¥266,435(6,183)
14,051
(8)
—
(260)
7,598
¥261,752(74,358)
168,254(80)(37,767)265
56,313$3,204,274¥ (26,845)¥ (26,804)$  (322,854)(2,174)
21
3,140
987
¥ (25,858)

(71)
30
—
(40)
¥ (26,845)(26,150)
256
37,767
11,873$  (310,981)¥378,594¥371,036$4,553,152(6,182)
13,990(2,174)
14
—
22
5,669
¥384,264(6,183)
14,051
(71)
21
—
(260)
7,558
¥378,594(74,358)
168,254(26,150)
176—
265
68,186$4,621,339

Millions of yen
Years ended March 31,

Retained earnings
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Disposal of treasury stock
Retirement of treasury stock
Transfer from land revaluation excess
Total changes during the year
Balance at end of the current year
Treasury stock
Balance at end of the previous year
Changes during the year
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the current year
Total shareholders’ equity
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Transfer from land revaluation excess
Total changes during the year
Balance at end of the current year

30

2011

2010

Thousands of
U.S. dollars (Note 2)2011¥ 38,805¥  (6,397)$  466,695(8,676)(8,676)¥ 30,129

45,20245,202¥ 38,805(104,347)(104,347)$  362,348¥  (1,938)¥  (1,868)$    (23,310)

(366)
(366)
¥  (2,304)

(70)
(70)
¥  (1,938)(4,402)(4,402)$   (27,712)¥ 11,000¥ 10,739$  132,298

(22)
(22)
¥ 10,978260
260¥ 11,000

(265)
(265)
$  132,033¥ 47,868¥   2,474$  575,683(9,064)(9,064)¥ 38,803

45,39345,393¥ 47,868(109,014)(109,014)$  466,668¥     21¥      —

$      258

4848¥     69

21
21¥      21581581$      840¥   1,617¥   1,369$    19,450242
242¥   1,859

247
247¥   1,617

2,915
2,915
$    22,366¥428,101¥374,881$5,148,545(6,182)
13,990(2,174)14
22(8,773)(3,104)¥424,997(6,183)
14,051
(71)
21
(260)
45,66253,220¥428,101(74,358)
168,254(26,150)
176
265(105,517)(37,330)$5,111,214

Millions of yen
Years ended March 31,

Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Deferred losses on hedging instruments, net of taxes
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Land revaluation excess, net of taxes
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Total accumulated other comprehensive income
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Equity warrants
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Minority interests
Balance at end of the previous year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
Total net assets
Balance at end of the previous year
Changes during the year
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer from land revaluation excess
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the current year
See accompanying notes to the consolidated financial statements.

31

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I

N

A

N

C

I

A

L

S

T

A

T

E

M

E

N

T

S

Consolidated Statements of Cash Flows
THE JOYO BANK, LTD. and Consolidated Subsidiaries

Millions of yen
2011
2010

Years ended March 31,

Thousands of
U.S. dollars (Note 2)
2011

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment losses
Amortization of negative goodwill
Net increase in reserve for possible loan losses
Net increase (decrease) in reserve for devaluation of investment securities
Net increase (decrease) in reserve for directors’ retirement benefits
Net increase in reserve for reimbursement of dormant deposits
Net increase in reserve for frequent users services
Net (decrease) increase in reserve for other contingent losses
Net increase (decrease) in reserve for losses on interest refunded
Net (decrease) increase in reserve for bonuses to directors
Net increase in reserve for employees’ retirement benefits
Interest and dividend income
Interest expenses
Net losses related to securities transactions
Foreign exchange losses, net
Losses on disposal of tangible fixed assets
Net (increase) decrease in trading assets
Net (decrease) increase in trading liabilities
Net decrease in lease investment assets
Net decrease in loans and bills discounted
Net increase in deposits
Net decrease in negotiable certificates of deposit
Net (decrease) increase in borrowed money excluding subordinated borrowings
Net decrease in bonds
Net decrease (increase) in due from banks excluding cash equivalents
Net decrease in call loans and others
Net increase (decrease) in call money and bills soldNet decrease in payables under securities lending transactions
Net increase in foreign exchange (assets)
Net (decrease) increase in foreign exchange (liabilities)
Net decrease in due to trust accountInterest and dividends received
Interest paid
Others, net
Subtotal
Income taxes paid
Net cash provided by operating activities¥ 21,835
6,566
68
(158)
11,636
267
2
123
26
(107)
2
(37)
324
(111,396)
7,940
3,791
8,003
257
(3,909)(89)
485
38,237140,249(9,030)(56,302)(10,000)
31,68931,16913,636(12,701)(5,108)(209)
0111,709(9,190)13,500223,283(1,574)
221,708¥ 22,025
6,206
81
(158)
2,779
(12)
(719)
124
0
367
(1)
37
620
(118,253)
12,159
9,562
4,288
429
5,812
101
2,737
103,853
117,254(78,460)
38,605—(17,960)
11,868(111,947)(47,615)(1,392)440
3119,277(12,597)
11,78181,300(637)
80,662$  262,597
78,971822(1,900)139,942
3,212
33
1,490
314
(1,296)
31
(454)
3,904
(1,339,702)
95,49945,59496,256
3,092(47,013)(1,076)
5,835
459,867
1,686,702(108,606)(677,113)(120,264)
381,110374,864
163,995(152,757)(61,431)(2,525)10
1,343,467(110,533)
162,366
2,685,308(18,937)
2,666,370

Cash flows from investing activities:
Purchases of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash used in provided by investing activities(614,718)
314,379
213,661(3,687)97(3,191)(93,459)(487,758)
174,314
221,425(3,943)48(2,256)(98,170)(7,392,880)
3,780,866
2,569,589(44,352)
1,172(38,380)(1,123,985)

Cash flows from financing activities:
Proceeds from issuance of subordinated borrowings
Repayments of subordinated borrowings
Cash dividends paid
Cash dividends paid to minority interests
Purchases of treasury stock
Proceeds from sales of treasury stock
Net cash used in financing activities
Translation adjustment for 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)

5,000(15,000)(6,182)(0)(2,174)
14(18,342)(20)
109,885
129,800¥239,686——(6,183)(0)(71)
21(6,232)(9)(23,750)
153,550¥129,800

60,132(180,396)(74,358)(2)(26,150)
176(220,600)(248)
1,321,536
1,561,041$2,882,577

See accompanying notes to the consolidated financial statements.

32

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S

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A

T

E

M

E

N

T

Notes to the Consolidated Financial Statements
THE JOYO BANK, LTD. and Consolidated Subsidiaries

1. Basis of Preparation
The accompanying consolidated financial statements of The Joyo Bank, Ltd. (the “Bank”) and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards, and are compiled from the consolidated financial statements prepared by the Bank as
required by the Financial Instruments and Exchange Act of Japan.
For the convenience of readers outside Japan, certain items presented in the original consolidated
financial statements have been reclassified and rearranged.
In addition, the notes to the consolidated financial statements include information which is not required
under accounting principles generally accepted in Japan but is presented herein as additional information.

2. Japanese Yen and U.S. Dollar Amounts
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen
have been rounded off. As a result, the totals shown in the accompanying consolidated financial statements(both in yen and U.S. dollars) do not necessarily agree with the sums of the individual amounts. Solely forthe convenience of the reader, the U.S. dollar amounts represent a translation of the Japanese yenamounts at ¥83.15 = US$1.00, the exchange rate prevailing on March 31, 2011.

3. Significant Accounting Policies(a) Consolidation
The accompanying consolidated financial statements include the accounts of the Bank and nine major
subsidiaries.
All significant intercompany transactions have been eliminated in consolidation. Assets and liabilities heldby consolidated subsidiaries are stated at fair value at a time of acquisition.

(b) Transactions for trading purposes
Transactions for “trading purposes” (seeking to capture gains arising from short-term changes in interest
rates, currency exchange rates or market prices of securities and other market-related indices or fromarbitrage between markets) are valued at market or fair value, and have been included in trading assets
and trading liabilities on a trade date basis. Gain or loss on such trading transactions are reflected as
trading income or trading expenses in the consolidated statements of income.
Among the trading assets and liabilities, securities and monetary claims are carried at market value as of
the balance sheet date. Derivatives including swaps, futures, and options are valued assuming settlement

33

Son the balance sheet date.
Trading income or trading expenses include interest received or paid during the fiscal year. The
year-on-year valuation differences of securities and monetary claims are also recorded in theabove-mentioned accounts. As for the derivatives, assuming that the settlement will be made in cash, theyear-on-year valuation differences are also recorded in the above-mentioned accounts.

(c) Securities
Securities other than trading securities have been accounted for by the following methods:
Marketable debt securities held to maturity are stated at amortized cost by the moving-average cost
method. Equity shares and investment trusts listed on Japanese markets are stated at fair value based on
their average market prices over the month prior to the balance sheet date. (Acquisition cost is basicallycalculated by the moving-average cost method.) Other listed securities are stated at fair value based on themarket prices prevailing on the balance sheet date. (Acquisition cost is basically calculated by themoving-average cost method.) Other available-for-sale securities which are extremely difficult to determine
the fair value are stated at cost or amortized cost by the moving-average cost method.
Unrealized gain or loss on available-for-sale securities (net of the related tax effect) has been reported as
a component of net assets.

(d) Derivatives
Derivatives positions held by the Bank (not including transactions for trading purposes) are stated at fairvalue.

(e) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets held by the Bank is calculated by the declining-balance method,
except for buildings acquired on or after April 1, 1998 of which depreciation is calculated by the straight-line
method. The estimated useful lives are as follows:
Buildings: 6~50 years
Other: 3~20 years
Depreciation of tangible fixed assets held by the consolidated subsidiaries is calculated principally by the
declining-balance method, based on the respective estimated useful lives of the assets.
Depreciation of intangible fixed assets is calculated using the straight-line method. Software for internal
use is depreciated using the straight-line method over its estimated useful life (mainly 5 years).

(f) Reserve for possible loan losses
The reserve for possible loan losses of the Bank is provided as detailed below, in accordance with theinternal rules for providing reserves for possible loan losses:

34

For claims to debtors who are legally bankrupt (as a result of bankruptcy, special liquidation, etc.) or who
are substantially bankrupt, a reserve is provided based on the amount of the claims, net of the amounts
expected to be collected by the disposal of collateral or as a result of the execution of guarantees.
For claims to debtors who are not currently bankrupt, but are likely to become bankrupt, a reserve isprovided based on the amount considered necessary based on an overall solvency assessment of theamount of claims net of the amounts expected to be collected by the disposal of collateral or as a result of
the execution of guarantees.
For other claims, a reserve is provided based on the Bank’s historical loan-loss experience.
All claims are assessed by the Business Section (at the branches and the related head office divisions)based on the Bank’s internal rules for the self-assessment of asset quality.
The Corporate Audit Department, which is independent of the Business Section, subsequently conducts
audits of such assessments, and a reserve is provided based on the audit results.
The reserves of the consolidated subsidiaries are provided for general claims at an amount based on theactual historical rate of loan losses and for specific claims (from potentially bankrupt customers, etc.) at an
estimate of the amounts deemed uncollectible based on the respective assessments.
For collateralized or guaranteed claims from debtors who are legally or substantially bankrupt, theamounts of the claims deemed uncollectible in excess of the estimated value of the collateral or guarantees
have been written off in aggregate amounts of ¥42,933 million and ¥48,463 million as of March 31, 2011
and 2010, respectively.
Influence of the Great East Japan Earthquake on March 11, 2011 is reflected on the self-assessment as
far as debtors’ situation can be reasonably evaluated and the estimated loss amounts are accounted for on
the consolidated financial statements.

(g) Reserve for devaluation of investment securities
A reserve for the devaluation of investment securities is provided at the amount deemed necessary to coverestimated possible losses on investments which the Bank and its consolidated subsidiaries may incur in the
future.

(h) Reserve for employees’ retirement benefits
Reserve for retirement benefits of the Bank and its subsidiaries is provided for the amount deemednecessary, based on estimated pension benefits obligations and pension plan assets at the fiscal year end,
to cover required retirement benefits for eligible employees.
Prior service cost is deferred and amortized using the straight-line method over certain years (10 years)
within the average remaining service period of the eligible employees.
Unrealized actuarial losses are deferred and amortized using the straight-line method over a ten-year
period commencing with the following year, which is shorter than the average remaining service period of35

the eligible employees.

(i) Reserve for directors’ retirement benefits
Reserve is made for the payments of retirement allowances to directors and corporate auditors of theconsolidated subsidiaries based on an estimate of the amount attributable to the fiscal year.

(j) Reserve for reimbursement of dormant deposits
Reserve for reimbursement of dormant deposits which were derecognized as liabilities under certain
conditions is provided for possible losses on the future claims.

(k) Reserve for frequent users services
Reserve for frequent users services, which is provided to meet future use of credits granted to credit cardcustomers, is recorded in the amount deemed necessary based on the estimated future use of unused
credits. This program applies to cards issued by the Bank and one of its subsidiaries.

(l) Reserve for losses on interest refunded
One consolidated subsidiary provides a provision for losses on interest refunded in an amount deemednecessary based on estimated amounts to be refunded, taking into account historical records of interest
refunded on the portion of loans whose interest rates exceeded the maximum interest rate stipulated by theInterest Limitation Law.

(m) Reserve for contingent losses
The Bank makes reserve for possible losses on loans guaranteed by the credit guarantee corporations in
an amount deemed necessary based on estimated losses in the future, calculated using historical default
rates after exclusion of contingent losses covered by other reserves.

(n) Reserves under special laws
The reserve under the special laws is a reserve for contingent liabilities and provided for compensation forlosses from securities-related transactions or derivative transactions, pursuant to Article 46-5-1 of the
Financial Instruments and Exchange Act and Article 175 of the related cabinet order.

(o) Goodwill
Goodwill is amortized using the straight-line method over 20 years.

(p) Translation of foreign currencies
Foreign currency-denominated assets and liabilities of the Bank are translated into Japanese yen at the36rates prevailing at the balance sheet date. Foreign currency-denominated assets and liabilities held byconsolidated subsidiaries are translated into Japanese yen principally at the rates prevailing at therespective balance sheet dates.
All consolidated subsidiaries have a fiscal year end of March 31.

(q) Leases
As for finance lease transactions that do not transfer ownership of the leased property and which
commenced prior to April 1, 2008, their treatment was as follows.
As lessee
Using the same method applied to operating lease transactions.
As lessor
In line with the stipulations of Article 81 of the Guidance on Accounting Standard for Lease Transactions(ASBJ Guidance No. 16, issued on March 30, 2007), book value (after deduction of accumulated
depreciation) of lease assets included in tangible fixed assets and intangible assets as of the previous
balance sheet date (March 31, 2008) was recorded as the initial balance of “Lease receivables and lease
investment assets.” Income before income taxes and minority interests would have increased by ¥283
million for the year ended March 31, 2011 and would have increased by ¥206 million for the year ended
March 31, 2010, upon application of Article 80 of the Guidance.

(r) Hedging
Hedging against interest rate changes
The deferred method of hedge accounting is applied to transactions to hedge against the interest rate risks
associated with monetary claims and debt in accordance with the regulations set out in the “Accounting and
Auditing Treatment of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA
Industry Audit Committee Report No. 24).
The Bank assesses the effectiveness of such hedges in offsetting movement of the fair value with thechanges in interest rates, by classifying the hedged items (deposits or loans) and the hedging instruments(interest swaps) by their maturity. As to cash flow hedges, the Bank assesses the effectiveness of suchhedges in fixing cash flows by verifying the correlation between the hedged items and the hedging
instruments.

Hedging against foreign exchange fluctuation risk
The deferred method of hedge accounting is applied to transactions to hedge against the foreign exchange
fluctuation risks associated with monetary assets and liabilities denominated in foreign currencies, inaccordance with the regulations set out in the “Accounting and Auditing Treatment of Accounting Standards
for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No. 25).

37

To minimize foreign exchange fluctuation risk on monetary assets and liabilities, the Bank engages incurrency swaps, foreign exchange swaps, and similar transactions. The effectiveness of these transactionsin the hedging of the foreign exchange risks of monetary assets and liabilities denominated in foreign
currencies is assessed through comparison of the foreign currency position of the hedged monetary assets
and liabilities, with that of the hedging instruments.
When certain criteria are met, exceptional accrual method for interest rate swap is applied to someassets and liabilities held by the Bank and its consolidated subsidiaries.

(s) Consumption tax
Consumption tax is excluded from transactions reported by the Bank and its consolidated subsidiaries.
However, non-deductible consumption tax on tangible fixed assets is charged to income as incurred.

(t) Land revaluation excess
In accordance with the Law concerning the Revaluation of Land, the Bank revalued the land held for its
operations on March 31, 1998. The net unrealized gain is presented in net assets net of the applicable
income taxes as land revaluation excess, net of taxes.
The difference between the carrying amount and the fair value of premises revalued pursuant to Article
10 of the Law was ¥27,878 million and ¥25,771 million as of March 31, 2011 and 2010, respectively.

(u) Earnings per share
The computation of earnings per share of common stock is based on the weighted average number ofshares outstanding during each year.

(v) Statements of cash flows
Cash and cash equivalents in the statements of cash flows represent cash and due from banks in the
consolidated balance sheets, excluding deposits with banks other than the Bank of Japan as well as thetime deposits of certain consolidated subsidiaries.
Millions of yen
March 31,

2010

2011

Cash and due from banks¥251,437¥173,240

Deposits with banks other than the Bank of Japan

(11,750)(43,440)

Cash and cash equivalents¥239,686¥129,800

38

4. Application of New Accounting Standards
Accounting Standard for Asset Retirement Obligations
The Bank and its consolidated subsidiaries have adopted the “Accounting Standard for Asset Retirement
Obligations” (ASBJ Statement No.18, published on March 31, 2008) and “Guidance on AccountingStandard for Asset Retirement Obligations” (ASBJ Guidance No.21, published on March 31, 2008) at theend of the fiscal year ended March 31, 2011.
The adoption of the standards has no impact on the consolidated financial statements.

Change in Presentation Method（Consolidated Statements of Income）
Due to the application of the Cabinet Office Ordinance that partially amends Rules Concerning Terminology,
Forms, and Preparation Methods of Financial Statements, etc. (Cabinet Office Ordinance No. 5 of March 24,2009) based on Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22,
issued on December 26, 2010), “Income before minority interests” is being presented from the fiscal year
ended March 31, 2011.

Presentation of Comprehensive Income
The Bank adopted the “Accounting Standards for Presentation of Comprehensive Income“(ASBJ Statement
No. 25, published on June 30, 2010). However, the amounts of “Accumulated other comprehensive income”
and “Total accumulated other comprehensive income” for the fiscal year ended March 31, 2010 are recordedin the amounts of “Valuation and translation adjustments” and “Total valuation and translation adjustments.”

5. Trading Assets
Millions of yen
March 31,

2010

2011

Trading securities¥2,173¥3,146

Trading securities-related financial derivatives―

2

Trading-related financial derivatives

502

617

Other trading assets

4,999

―

Total

¥7,675¥3,76639

6. Securities
Millions of yen
March 31,

2010

2011

Japanese government bonds¥1,113,612¥1,029,305

Japanese local government bonds

335,015

386,679

Corporate bonds

382,499374,973

Corporate stocks

169,569

182,826

Other securities

187,076

177,769¥2,187,773¥2,151,554

Total

Notes: 1. Corporate bonds include ¥15,590 million and ¥19,925 million of guarantee obligations for privately placed bonds (under
Article 2-3 of the Financial Instruments and Exchange Act) as of March 31, 2011 and 2010, respectively.

7. Bills Discounted
Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Audit
Committee Report No. 24. The Bank has the rights to sell or pledge bank acceptances bought, commercial
bills discounted, documentary bills and foreign exchanges bought without restrictions. The face value atMarch 31, 2011 and 2010 totaled ¥25,407 million and ¥22,670 million, respectively.

40

8. Pledged Assets
Assets pledged as collateral at March 31, 2011 and 2010 were as follows:
Millions of yen
March 31,

2010

2011

Pledged assets:
Securities¥359,872¥226,878

Deposits

23,185

31,131

Payables under securities lending transactions

13,332

26,034

Borrowed money

14,88049,700Liabilities covered by pledged assets:

In addition to the above, securities amounting to ¥97,559 million and ¥100,880 million at book value were
pledged as collateral in connection with bank transfer settlements and futures transactions as of March 31,
2011 and 2010, respectively.
One consolidated subsidiary had pledged its lease receivables amounting to ¥2,385 million and ¥3,413
million as collateral for borrowed money of ¥1,725 million and ¥2,815 million as of March 31, 2011 and 2010,
respectively.
“Other assets” included lease deposits of ¥1,390 million and ¥1,430 million, at March 31, 2011 and 2010,
respectively.“Other assets”also included Initial margins on futures transactions of ¥160 million at both March 31,
2011 and 2010.

9. Commitments and Contingent Liabilities
Overdraft facilities and line-of-credit contracts are agreements under which, subject to compliance with thecontractual conditions, the Bank or consolidated subsidiaries pledge to provide clients with funds up to a
fixed limit upon submission of a loan application to the Bank. The unused amount related to such
facilities/contracts stood at ¥1,451,218 million and ¥1,369,249 million at March 31, 2011 and 2010,
respectively. Of this amount, facilities/contracts which expire within one year or which are unconditionallycancelable at any time, totaled ¥906,626 million and ¥862,086 million at March 31, 2011 and 2010,
respectively.
Most of these agreements will expire without the clients’ having utilized the financial resources available
to them, and the amount of the non-executed financing will not necessarily impact on the Bank or its
consolidated subsidiaries’ future cash flows. Most of these facilities/contracts contain a clause which allows
the Bank or its consolidated subsidiaries to reject a loan application or to reduce the upper limit requested inview of changing financial conditions, credit maintenance and other reasonable concerns.
When necessary, the Bank will demand collateral such as real estate or marketable securities at the dateon which an agreement is entered into. In addition, after facilities/contracts are set forth the Bank will41

regularly assess the business status of the clients, based on predetermined internal procedures and, when
prudent, will revise the agreements or reformulate their policies to maintain creditworthiness.

10. Borrowed Money
Borrowed money included subordinated debt of ¥25,000 and ¥35,000 million, at March 31, 2011 and 2010.
Borrowed money at March 2011 and 2010 consisted of the following:%

Millions of yen

Description

Due

Average interest

2010

2011

rate

Bills rediscounted

¥—

¥—

—

Other borrowings

53,188

119,490

1.19—

April 2011 September 2018

Notes: 1. Average interest rate represents the weight average interest rate based on the balances and rates at respective year-end.
2. The repayment schedule within five years on borrowed money at March 31, 2011 was as follows:
Millions of yen¥38,289

Within 1 year
After 1 year through 2 years

524

After 2 years through 3 years

5,225

After 3 years through 4 years

30

After 4 years through 5 years

5,030

11. Non-Performing Loans
In accordance with the disclosure requirements under the Rules for Bank Accounting in Japan, the balanceof loans and bills discounted at March 31, 2011 and 2010 included the following non-performing loans:

Millions of yen
March 31,

2010

2011

Loans in bankruptcy and dishonored bills¥4,680¥5,617

Delinquent loans

114,303

95,204than 3 months

1,572

2,270

Restructured loans

31,551

19,372¥152,107¥122,463

Loans past due with respect to interest payments for more

Total

Notes: 1. Loans in bankruptcy and dishonored bills refers to loans (excluding charged-off amounts) stipulated in Article 96, Paragraph 1,

42

Item 3 (a) to (e) or Item 4 of the Enforcement Regulation to Corporation Tax Act (1965 Enforcement Regulation No. 97) towhich accrued interest receivables are not recognized as accruals for accounting purposes since no repayment of principal or
payment of interest has been made for a considerable period. Delinquent loans refers to loans with respect to which accrued
interest receivables are not recognized as accruals for accounting purposes, excluding loans falling into the category of
restructured loans. Loans past due with respect to interest payments for more than 3 months refers to loans with respect towhich repayment of principal or payment of interest are past due three months or more, excluding loans falling into thecategories of loans in bankruptcy and dishonored bills or delinquent loans. Restructured loans refers to loans to borrowers towhom financial support is given in the form of reduction in interest, waiver of repayment of the principal or payment of interest,
or debt forgiveness with the aim of corporate rehabilitation, excluding loans falling into loan categories mentioned above.
2. The above amounts are stated before the deduction of the reserve for possible loan losses.

12. Bonds
Bonds at March 31, 2011 and 2010 consisted of the following:

IssuerDescription

Date of issue

The Joyo

2nd

May 24,

Bank, Ltd.

Unsecured

2000

Millions of yen

%

2010

2011

5,000

5,000

Interest rate

Collateral

2.64

—

Due

May 22,2020

Straight
Bonds
Total

¥5,000¥5,000Note: After the consolidated closing date, the Company had no amortization schedule for a period of five years or less.

13. Employees’ Retirement Benefits(a) Outline of current retirement benefit system
The Bank and its consolidated subsidiaries have adopted defined employees’ retirement benefit plans, i.e.,
the employees’ welfare pension fund supplemented by the employees’ public pension system andlump-sum retirement benefits. In addition, extra benefits may be paid on a case-by-case basis. The Bank
has established an employees’ retirement benefit trust. As of the end of March 31, 2011, the Bank and nine
consolidated subsidiaries have lump-sum retirement benefits for employees. The Bank and its consolidated
subsidiaries have jointly established a fund under a defined benefit pension plan.

(b) The following table sets forth the changes in the retirement benefit obligation, the plan assets and thefunded status of the Bank and its consolidated subsidiaries at March 31, 2011 and 2010:43

Millions of yen
March 31,

2010

2011

Retirement benefit obligation¥(63,011)¥(62,130)

Fair value of plan assets

48,02750,285Funded status(14,983)(11,844)

Unrecognized actuarial loss

14,30812,035368

467

Net retirement benefit obligation

(306)

658

Prepaid pension cost

4,859

5,499

¥(5,165)¥(4,840)

Unrecognized prior service costReserve for employees’ retirement benefits
Notes:

1. The above amounts do not include any extra benefits.
2. The consolidated subsidiaries have adopted a simplified method for the calculation of their retirement benefit obligation.

(c) Cost for retirement benefits of the Bank and its consolidated subsidiaries included the following
components for the years ended March 31, 2011 and 2010:
Millions of yen
Years ended March 31,

2010

2011

Service cost

¥1,827¥1,842

Interest cost

1,076

1,059

Expected return on plan assets

(710)

(569)

98

98

2,168

2,815

¥4,459¥5,246

Amortization:
Amortization of prior service cost
Amortization of unrecognized actuarial loss
Total retirement benefit cost

Note: Retirement benefit cost of consolidated subsidiaries which is calculated by a simplified method has been included in “service cost”
referred to above.

44

(d) The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2011
and 2010 were as follows:
Years ended March 31,

2010

2011

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

3.0%

3.0%

Straight-line method

Straight-line method

Amortization period of prior service cost

10 years

10 years

Amortization period of actuarial gain/loss

10 years

10 years

Periodic allocation of estimated retirement benefits

14. Deferred Tax Assets
Millions of yen
March 31,

2010

2011

Deferred tax assets:
Reserve for possible loan losses¥28,111¥26,256

Reserve for retirement benefits

9,545

9,156

Depreciation

3,301

4,142

Devaluation of securities

3,014

2,899

Reserve for employee bonuses

1,008

1,012

Reserve for reimbursement of dormant deposits

638

588

Net operating loss carry forwards

406

4,538

Others13,691

13,796

Valuation allowance(6,719)(7,368)¥52,997¥55,021¥(17,743)¥(23,487)(8,922)(9,495)

(30)

(32)

(443)

(303)

(27,139)(33,318)¥25,857¥21,702

Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Retirement benefit trust
Reversal of reserve for possible loan losses after
elimination of intercompany balances
OthersTotal
Net deferred tax assets

The effective tax rate reflected in the consolidated statements of income for the year ended March 31, 2011
and 2010 differs from the statutory tax rate for the following reasons:

45

2010

2011

Statutory tax rate

40.32%

40.32%

Valuation allowances(2.97)%(3.82)%

Permanent differences including dividends received deduction(3.06)%

―

Other

0.54%

(1.42)%

Effective tax rate

34.83%

35.08%

15. Deposits
Millions of yen
March 31,

2010

2011

Current deposits¥3,888,148¥3,731,088

Time deposits

2,799,648

2,793,747

Negotiable certificates of deposit

11,87020,900

Others117,159

139,870

Total¥6,816,825¥6,685,607

16. Trading Liabilities
Millions of yen
March 31,

2010

2011

Trading-related financial derivatives

282

371

Total

¥282

¥371

17. Shareholders’ Equity
In accordance with the Banking Act of Japan, the Bank has provided a legal reserve by appropriation ofretained earnings, which is included in retained earnings. The Banking Act of Japan provides that an
amount equivalent to at least 20% of the amount to be disbursed as distributions of earnings be
appropriated to the legal reserve until the total of such reserve and the capital surplus equals 100% of thecommon stock.
The Companies Act of Japan (the “Act”), provides that an amount equal to 10% of the amount to be
disbursed as distributions of capital surplus (other than the capital reserve) and retained earnings (otherthan the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sumof the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions canbe made at any time by resolution of the shareholders or by the Board of Directors if certain conditions are

46

met.
Under the Act, upon the issuance and sale of new shares of common stock, the entire amount of theproceeds is required to be accounted for as common stock, although a company may, by resolution of theBoard of Directors, account for an amount not exceeding one-half of the proceeds as capital surplus.

18. Trading Income
Millions of yen
Years ended March 31,

2010

2011

Revenue from trading securities

¥521

¥512

Revenue from trading-related financial derivatives

98

151

Other trading revenue

0

5

¥621

¥669

Total

19. Interest on Borrowings and Rediscounts
Millions of yen
Years ended March 31,

2010

2011

Call money and bills sold

¥91

¥57

Securities lending transactions

13

87

Borrowings

581

857

Total

¥687

¥1,003

20. Other Income
Millions of yen
Years ended March 31,

2010

2011

Other ordinary income
Gain on disposal of tangible fixed assets
Gains on collection of loan assets

Total

47

¥18,065¥20,324

50

―

2,502

2,228

¥20,618¥22,553

21. Other Expenses
Millions of yen
Years ended March 31,

2010

2011

¥307

¥429

68

81

Write-offs of claims

6,442

11,273

Write down of equity shares

1,734

1,936

Losses on sale of claims

313

472

Losses from the disaster

978－

Others36,03729,961

Total¥45,879¥44,152

Losses on disposal of tangible fixed assets
Losses on impairment

Impairment losses were recorded in an aggregate amount deemed irrecoverable on idle assets, primarily
located in Ibaraki Prefecture.
Impairment losses recognized on a consolidated basis for the fiscal years ended March 31, 2011 and2010 can be broken down into the two categories of losses on land holdings in the amount of ¥68 millionand ¥80 million, respectively, and losses on buildings in the amount of nil and ¥0 million, respectively.
The recoverable amounts used for the measurement of such impairment losses are net sales prices, which
are calculated on the basis of appraisal values after deduction of the estimated cost of disposal.

22. Accumulated Depreciation of Tangible Fixed Assets
Accumulated depreciation on tangible fixed assets amounted to ¥98,940 million and ¥100,089 million, as ofMarch 31, 2011 and 2010, respectively.

48

23. Segment Information
The Bank and its subsidiaries adopted the Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No. 17, revised on March 27, 2009) and Guidance on
Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ
Guidance No. 20, revised on March 21, 2008).

a. Outline of the reportable segments
The reportable segments of the Company are those units for which discrete financial information can beobtained and which are regularly examined by the management meeting, which is the highest
decision-making body for decisions on the allocation of management resources and for assessing businessperformance.
Comprised of the Bank and its nine subsidiaries, the Group’s main business is banking. Other operations include
leasing, credit guarantee services, banking administrative agency services, securities trading and other financial
business. “Banking” and “leasing” are its reportable segments, while credit guarantee services are included in“Other.”b. Calculation method of the amount of ordinary income, segment profit, assets and other items by
the reportable segment
Accounting method of the reportable segment is as described in “Significant Accounting Policies.” Ordinary
income is regarded as the segment profit. Ordinary income from internal transactions is calculated basedon actual market price.
In addition, ordinary profit is operating income plus non-operating revenue (including interest income,dividend income and gain/loss on sale of securities), after deduction of non-operating expenses (includinginterest expenses, gain/loss on sale of securities, and securities valuation gains/losses).

49

c. Information related to ordinary income, segment profit, assets and other items by the reportablesegment
Millions of yen
The reportable segment
Banking
Year ended March 31, 2011

operations

Leasing

Other

Total

Total

Adjustments

Consolidated

Ordinary income:From external¥133,988¥15,459¥149,447¥4,954¥154,402¥—¥154,402

1,207

1,267

2,474

4,656

7,130

(7,130)—

Total

135,196

16,726

151,922

9,610

161,532(7,130)*1

154,402

Segment profit

18,926

1,209

20,135894

21,030(238)

20,791

Assets7,424,168

40,876

7,465,044

36,706

7,501,751(63,444)7,438,307

Liabilities

7,004,665

35,5117,040,175

24,526

7,064,703(51,393)

7,013,309

Depreciation

5,857

50

5,907

293

6.201

365

6,566

Interest income

106,833

63

106,897273

107,170(492)

106,677

Interest expenses

7,871

370

8,241

191

8,433

(492)

7,940

50

—

50

—

50

—

50

2,165

23

2,189

313

2,502

—

2,502

278

0

278

29

307

—

307

Losses on impairment

68

—

68

—

68

—

68

Provision for reserves

—

—

—

0

0

—

0

Losses from the disaster

879

—

879

99

978

—

978

Other extraordinary loss*

154

—

154

—

154

—

154

Tax expenses

6,849

507

7,356

249

7,606

(2)

7,604

Increase in tangible and

6,589

54

6,643

236

6,879

—

6,879

customers
From internaltransactions

Gain on disposal of tangible
fixed assets
Gains on collection of loan
assets
Losses on disposal of
tangible fixed assets

under special law

intangible fixed assets* Other extraordinary loss refers to loss on disposal of noncurrent assets and impairment loss.
Notes:

1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.
2. Adjustments are as follows:50a) *1 Include intersegment transactions of ¥7,288 million.
b) Adjustments in assets of ¥63,444 million include elimination of intersegment transactions of ¥53,867 million.
c) Adjustments in liabilities of ¥51,393 million include elimination of intersegment transactions of ¥50,848 million.
d) Adjustments in depreciation of ¥365 million include depreciation of lease assets presented as tangible fixed assets on
the consolidated financial statements of ¥365 million.
e) Adjustments in Interest income of ¥492 million include intersegment interests of ¥444 million.
f) Adjustments in interest expenses of ¥492 million include intersegment interest of ¥444 million.
g) Adjustments in tax expenses of ¥2 million include deferred income taxes of ¥2 million due to eliminations of intersegment
reserve for possible loan losses.
Millions of yen
The reportable segment

Year ended March 31,
2010

Banking
operations

Leasing

Other

Total

Total

Adjustments

Consolidated

Ordinary income:From external¥140,641¥15,905¥156,547¥4,812¥161,359¥—¥161,359

1,057

1,443

2,500

4,625

7,125

(7,125)—

Total

141,699

17,348159,048

9,437

168,485(7,125)*1

161,359

Segment profit

18,528962

19,491

1,188

20,680(371)

20,308Assets7,407,180

42,9817,450,161

37,356

7,487,518(70,810)

7,416,708

Liabilities

6,983,296

38,3387,021,635

25,942

7,047,577(58,970)6,988,606

Depreciation

5,354

55

5,409

307

5,717

488

6,206

Interest income

114,620

74

114,694336

115,031(637)

114,394

Interest expenses

12,092473

12,566224

12,791(632)

12,159Gains on collection of loan

1,978

—

1,978

250

2,228

—

2,228

410

—

410

402

813

(383)

429

Losses on impairment

81

—

81

—

81

—

81

Provision for reserves

—

—

—

0

0

—

0

Tax expenses

7,018

239

7,258

458

7,716

10

7,727

Increase in tangible and

5,996

33

6,029

170

6,200

—

6,200

customers
From internaltransactions

assets
Losses on disposal of
tangible fixed assets

under special law

intangible fixed assets

51

Notes: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.
2. Adjustments are as follows:a) *1 Include intersegment transactions of ¥7,283 million.
b) Adjustments in assets of ¥70,810 million include elimination of intersegment transactions of ¥61,917 million.
c) Adjustments in liabilities of ¥58,970 million include elimination of intersegment transactions of ¥58,905 million.
d) Adjustments in depreciation of ¥488 million include depreciation of lease assets presented as tangible fixed assets on
the consolidated financial statements of ¥489 million.
e) Adjustments in Interest income of ¥637 million include intersegment interests of ¥583 million.
f) Adjustments in interest expenses of ¥632 million include intersegment interest of ¥583 million.
g) Adjustments in losses on disposal of tangible fixed assets of ¥383 million are an elimination of intersegment transactionsof ¥383 million.
h) Adjustments in tax expenses of ¥10 million include deferred income taxes of ¥10 million due to eliminations ofintersegment reserve for possible loan losses.

Related Informationa. Information by service
Millions of yen
Investment inYear ended March 31, 2011
Ordinary

incomeLendingsecurities

Leasing

Other

Total

from

external customers:¥82,418¥29,620¥15,459¥26,904¥154,402

Notes: 1. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.

b. Information by geographic area
Segment information by geographic area is not disclosed since over 90% of the total consolidated ordinary
income and tangible fixed assets of the Bank and its consolidated subsidiaries resides in Japan.

c. Information by customer
Segment information by customer has not been disclosed since no single customer represented 10% ormore of total ordinary income.

52

Impairment loss information by the reportable segments
Millions of yen
The reportable segment

Banking operations¥68

Impairment loss:

Other

Total

Leasing

Year ended March 31, 2011

¥—

¥68

Total

¥—

¥68

Amortization and unamortized balance of goodwill
Millions of yen
The reportable segment

Banking operations

Other

Total

Leasing

Year ended March 31, 2011

Total

Negative goodwill:
Amortization

¥158

—

¥158

—

¥158

Unamortized balance

2,449

—

2,449

—

2,449

(a) Business segment information
Segment information by type of business for the years ended March 31, 2010 is summarized as follows:
Millions of yen
Banking

Year ended March 31, 2010

Leasing

Other

Total

Adjustments

Consolidated

operations

Ordinary income:From external customers¥140,641¥15,905¥4,812¥161,359¥—¥161,359

From internal transactions

1,057

1,443

4,625

7,125

(7,125)—

Total

141,699

17,348

9,437

168,485(7,125)

161,359

Ordinary expenses

123,170

16,385

8,248

147,804(6,754)141,050

Ordinary income, net

18,528962

1,188

20,680(371)

20,308¥7,407,180¥42,981¥37,356¥7,487,518¥(70,810)¥7,416,708

5,354

55

307

5,717

488

6,206

Losses on impairment

81

—

—

81

—

81

Capital expenditures

5,996

33

170

6,200

—

6,200

AssetsDepreciation

Notes:

1. Classification is made according to nature of businesses of consolidated entities. In addition, “other” includes guarantee
business.
2. Ordinary income is presented as the counterpart of sales of a non-banking company. Adjustments refer to differences
between ordinary income and ordinary income posted in Consolidated Statements of Income.
3. The Bank and its consolidated subsidiaries have adopted the standard of “Accounting Standard for Financial

53

Instruments” (ASBJ Statement No. 10, revised on March 10, 2008) and “Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No.19, revised on March 10, 2008) at the end of the fiscal year ended March 31,
2010. As a result of this change, by comparison with the application of the previous accounting standard, “Ordinary
income” and “Income before income taxes and minority interests” of banking operations increased by ¥51 million,
respectively.

(b) Geographic segment information
Segment information by geographic area has not been disclosed since over 90% of the total consolidated
ordinary income and assets of the Bank and consolidated subsidiaries resides in Japan.

(c) Ordinary income from foreign operations
Segment information related to the Bank’s foreign operations for the years ended March 31, 2010 have notbeen disclosed since ordinary income on international operations was less than 10% of the total
consolidated ordinary income and assets.

24. Leases(a) Finance leases
Finance lease transactions in which ownership of leased property is not transferred to the lessee areaccounted for as operating leases (please see 3(q) “In line with the stipulations of Article 81 of the Guidanceon Accounting Standard for Lease Transactions (ASBJ Guidance No. 16, issued on March 30, 2007), bookvalue (after deduction of accumulated depreciation) of lease assets included in tangible fixed assets andintangible assets as of the previous balance sheet date (March 31, 2008) was recorded as the initialbalance of “Lease receivables and lease investment assets.”), as follows:
As lessee
Acquisition cost, aggregate depreciation expenses, and book value at March 31, 2011
Acquisition cost
Tangible fixed assets:¥8 million

Total:¥8 million

Accumulated Depreciation expenses
Tangible fixed assets:¥4 million

Total:¥4 million

Book value at term-end
Tangible fixed assets:¥3 million

Total:¥3 million

Note: The acquisition cost presented above is inclusive of interest amounts, as the balance of acquisition cost and minimum lease
payment is small as a percentage of the total book value of tangible fixed assets.

54

Lease payments that would have been required for finance leases:
Within one year:¥0 million

Over one year:¥2 million

Total:¥3 million

Note: Lease payments presented above is inclusive of interest amounts, as the balance of acquisition cost and minimum lease payment issmall as a percentage of the total book value of tangible fixed assets.

Lease fees paid and depreciation expenses that would have been incurred under finance leases:
Lease fees:¥1 million

Depreciation expenses:¥1 million

Note: Method of calculation of depreciation expenses
The lease assets are depreciated by the straight-line method on the assumption that the lease term is the useful life and the residual
value is zero.

(b) Operating leases
As lessee
Future lease payments under non-cancellable operating lease transactions were as follows:
Within one year:¥41 million

Over one year:¥355 million

Total:¥396 million

As lessor
Future lease payments under non-cancellable operating lease transactions were as follows:
Within one year:¥8 million

Over one year:¥21million

Total:¥29 million

No losses are recognized for the impairment of lease assets.

55

25. Financial Instruments(1) Status of Financial Instrumentsa. Policy on Financial Instruments
The Bank and its nine consolidated subsidiaries (the “Group”) provide financial services such as leasing,agent of banking administrative work and securities business, and centering on banking service.
The Group raises funds by acceptance of the deposits, and invests the funds in loans and securities. We
have financial assets and liabilities of which the values fluctuate with changes in interest rates, foreignexchange rates and market prices. To avoid adverse effects from such fluctuations, the Group performs
integrated assets and liabilities management (the “ALM”) in each company.
Moreover, we are engaged in derivatives transactions, such as those related to interest rates, currencies
and bonds, for hedging and non-hedging purposes. Some consolidated subsidiaries are also engaged ininterest rate related derivatives in connection with investments in securities and for hedging purposes.
b. Financial Instruments and Risks
The financial assets held by the Group consist primarily of securities and loans. Loans are subject to credit
risk which could cause financial losses to the Group from non-performance of obligations by borrowers.
With regard to securities, the Group is exposed to credit risk of issuers, interest-rate risk, and market pricevolatility risk.
The deposits include current deposits and savings deposits without maturities, and time deposits withmaturities. These deposits expose the Group to liquidity risk that could be caused by concentrated
withdrawals by customers.
The Group has liquidity risk with the borrowed money and bonds that it would become impossible toexecute payments at the due dates when the Group lost access to the financial markets. Although thefloating-rate borrowings expose us to the interest rate risk, we mitigate this risk using interest rate swaps
partially.
We are engaged in derivatives transactions to meet customers’ demands to hedge exchange-rate andinterest-rate risks and to appropriately manage the Bank’s market risks. Moreover, we utilize derivatives
transactions for efficient ALM and hedging of individual transactions.
Derivatives transactions have market risk that losses could arise from market changes including those ininterest rates and exchange rates. Additionally, derivatives transactions have credit risk that transactions
are not fulfilled as provided by the contracts due to an event such as a failure of the counterparty.
Regarding hedging transactions to offset fluctuations in interest rates, the hedged items (e.g., loans) andthe hedging instruments (e.g., interest rate swaps) are grouped by maturity to assess the effectiveness. As
for cash flow hedges, we examine interest-rate correlation between the hedged items and the hedging
instruments. Moreover, to assess the effectiveness of hedging transactions for foreign exchange risk, we
designate transactions such as currency swaps and foreign exchange swaps as the hedging instruments
and verify that we hold foreign currency positions of those hedging instruments that match the hedged items

56

including monetary claims and obligations denominated in foreign currencies. We also perform“after-the-fact test” to confirm certain interest rate swaps continuously meet the requirements for
exceptional accrual method.
We have set position limits and loss limits for trading transactions involving short-term purchases andsales of financial instruments.
c. Risk Management for Financial Instruments(a) Credit Risk Management
The Group has enacted “Guidelines for Credit Risk Management,” which provides for basic policies
comprising appropriate credit exposure management on individual and portfolio bases. The portfolio-based
credit exposure management involves diversification of risk. Credit Risk Management Group has been
segregated from the divisions under Business Headquarters to achieve rigorous credit review, andconducts thorough monitoring borrower’s financial condition to prevent deterioration of loans.
In the self-assessments that evaluate the quality of assets, the business offices categorize the borrowers
based on the credit ratings, which is then reviewed by Credit Examination Division in the Headquarters.
Furthermore, Corporate Audit Division examines results and processes of the self-assessments for
accuracy and adequacy. As for credit risk of the issuers of securities, Treasury and Securities Divisionmonitors credit information and market prices and gives the issuers credit ratings as well as carries out
self-assessments of the issuers like for general borrowers.
(b) Market Risk Management(i) Interest-rate Risk Management
The Group has set risk limits corresponding to the Group’s financial strength to interest-rate risk in thebanking account, and applies and monitors the limits rigorously through the ALM. In order to control theinterest-rate risk appropriately:•

The Group has established “Risk Management Basic Rules,” “Integrated Risk Management Rules,”and “ALM Guidance.”•

The Board of Directors (the “Board”) establishes risk tolerance limits for interest-rate risk within the
allocable capital range after discussions at the General Budget Committee every half year.
The ALM Committee discusses and reports to the Board detail plans to address interest-rate risk every

month.
Interest-rate risk is measured using value at risk (“VaR”). The ALM Committee sets alarm points
somewhat below the risk limits and monitors the points as well as the limits on a monthly basis.
Moreover, the Group analyzes interest-rate risk from various aspects using tools such as basis-pointvalue (“BPV”), the scenario analysis (simulation method) and the interest rate sensitivity analysis in addition
to VaR, and controls the risk within a tolerable range reflective of the Group’s financial strength.
(ii) Foreign Exchange Risk Management
The Group controls foreign exchange risk by using hedging instruments such as currency swaps and57

foreign exchange swaps. In addition, the Group also enters into offsetting transactions in financial markets
on an individual or aggregate basis, in order to reverse out foreign exchange risk arising from foreignexchange transactions offered by customers. Additionally, the Group converts into yen an amountequivalent to monthly interest income denominated in foreign currencies every month, in order to mitigate
foreign exchange risk arising from foreign-currency denominated revenues.
(iii) Price Fluctuation Risk Management
The Group has set risk limits corresponding to the Group’s financial strength to price-fluctuation risk arisingfrom financial instruments such as stocks and investment trusts, and applies and monitors the limits
rigorously through the ALM.
The Board establishes risk tolerance limits for price-fluctuation risk within the allocable capital range after
discussions at the General Budget Committee every half year.
Price-fluctuation risk is measured using VaR. The ALM Committee sets alarm points somewhat below therisk limits and monitors the points as well as the limits on a monthly basis. To prevent unrealized losses
from being accumulated, the Group monitors and manages unrealized gains and losses under certain
policies on a daily basis.
(iv) Derivatives Transactions
The Group utilizes derivatives transactions chiefly as hedging instruments for interest-rate and foreignexchange risks. The Group controls counterparty credit risk in derivatives transactions by setting credit
limits.
For derivatives transactions with financial institutions, the Group sets an individual credit line andmanages credit exposures on a daily basis in accordance with “Credit Line Management Rule for Banking
and Security Companies.”
For derivatives transactions with customers, the Group also sets an individual credit line to reflect factors
such as the creditworthiness and outstanding transactions, just like for financing transactions, and manages
the credit exposures together with those arising from other transactions on an individual basis.
(v) Trading Transactions
The Group primarily trades bonds, foreign exchanges and derivatives transactions for trading purposes. We
set utilize certain measures such as position limits, risk tolerance limits and loss limits in accordance with
“Trading and Risk Management Rules.”(vi) Quantitative Information related to Market Risk
1. Banking Account(1) Interest rate risk
The Bank adopts the variance-covariance method as measurement method (a holding period of 6 months,
a confidence interval 99%, and observation period of 5 years) for calculating VaR related to interest rate riskof interest rate swaps in loans and bills discounted, domestic bonds, deposits, borrowed money, corporate
bonds and derivatives. The bank adopts the historical simulation method (a holding period of 6 months, a58

confidence interval 99%, and observation period of 5 years) for calculating VaR related to interest rate riskof interest rate swaps and currency swaps in foreign bonds, trust beneficiary right, market fund transactions
and derivatives. As of March 31, 2011 VaR related to interest rate risk was ¥ 23,915 million.
(2) Price fluctuation risk
The Bank adopts the historical simulation method (a holding period of 6 months, a confidence interval 99%,
and observation period of 5 years) for calculating VaR related to price fluctuation risk of listed equities andmutual funds. As of March 31, 2011 VaR related to price fluctuation risk was ¥ 79,358 million. Correlation
between interest rate risk and price fluctuation risk has not been considered.
2. Trading Account
The Bank adopts the historical simulation method (a holding period of 1 day, a confidence interval 99%, andobservation period of 5 years) for calculating VaR related trading securities, trading purpose foreignexchange transactions and derivatives such as forward transactions and option transactions. As of March
31, 2011, VaR related to trading account was ¥ 1million.
3. Validity of VaR
The Bank performs back testing to compare VaR calculated by its internal model against actual profit andloss to confirm the measurement model used captures market risk with sufficient accuracy. However, VaR
statistically quantifies market risk calculated based on past market movements. Therefore, there could becases in which VaR cannot capture risk under sudden and dramatic changes in market conditions beyond
normal circumstances.
(c) Management of Liquidity Risk in Funding
To manage liquidity risk under “Market and Liquidity Risk Management Rules,” the Group:•

Conducts financing activities after fully analyzing its cash flows.

•

Pays continuous attention to the balance sheet structure, lines of credit provided to the Group,
collateral management and costs to maintain the liquidity.

•

Strives to maintain the diversity and stability of funding sources.

In addition, the liquidity risk borne by the Group is reported to the Board and the ALM Committee on amonthly basis.
d. Supplementary Explanation Concerning Matters Related to Fair Value of Financial Instruments
Fair value of financial instruments includes a value based on market prices as well as a reasonably
calculated value when no market price is available. Because certain assumptions are used in the fair value
calculation, such value may vary when different assumptions are used.

(2) Disclosures Regarding Fair Value of Financial Instruments and Other Items
The table below sets forth fair values of financial instruments at March 31, 2011 and 2010 except for those
whose fair values are extremely difficult to determine (see (Note2)). In addition, those financial instruments
which are immaterial are not below listed.

59

Millions of yen
Consolidated balance
March 31, 2011

sheet amount(1) Cash and due from banks

Fair value

Difference¥251,437¥251,437¥―

28,06428,200135

Available-for-sale securities

2,150,656

2,150,656―(3) Loans and bills discounted

4,769,896(2) Securities
Held-to-maturity debt securities

Reserve for possible loan losses（*1）(43,863)

Sub-total

4,726,033

4,795,725

69,691

Total assets

7,156,192

7,226,019

69,827(1) Deposits

6,804,955

6,808,161(3.205)

11,87011,870―53,18853,641(453)

6,870,013

6,873,673(3,659)

752

752

―

(4,760)(4,760)―(4,007)(4,007)―

Negotiable certificates of deposit(2) Borrowed money
Total liabilities
Derivatives transactions（*2）
Transactions not accounted for as hedging
instruments
Transactions accounted for as hedging instruments
Total derivatives transactions(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in other assets and other liabilities are presented in a lump sum. Net claims and debts that arosefrom derivatives transactions are presented on a net basis.

Millions of yen
Consolidated balance
March 31, 2010

sheet amount(1) Cash and due from banks

Fair value

Difference¥173,240¥173,240¥―

26,991

27,235

243

Available-for-sale securities

2,114,523

2,114,523―(3) Loans and bills discounted

4,808,134――(33,204)――

Sub-total

4,774,930

4,828,102

53,171

Total assets

7,089,687

7,143,102

53,415(2) Securities
Held-to-maturity debt securities

Reserve for possible loan losses（*1）

60

(1) Deposits

6,664,706

6,670,705(5,999)20,90020,900―

119,490

119,757(267)

6,805,097

6,811,363(6,266)

instruments

1,232

1,232

―

Transactions accounted for as hedging instruments

14,165

14,165―

15,397

15,397―

Negotiable certificates of deposit(2) Borrowed money
Total liabilities
Derivatives transactions（*2）
Transactions not accounted for as hedging

Total derivatives transactions(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in other assets and other liabilities are presented in a lump sum. Net claims and debts that arosefrom derivatives transactions are presented on a net basis.

(Note 1) Calculation Methods for Fair Value of Financial Instruments
Assets(1) Cash and Due from Banks
Since fair value of these items approximates the book value, we deem the carrying value to be the fairvalue.
(2) Securities
Fair value of shares is determined by reference to quoted market prices on stock exchanges. Fair value ofbonds is determined by reference to quoted market prices or prices offered by financial institutions, orbased on the price best estimated. Fair value of investment trusts is determined by reference to their
publicly available net asset value per unit. Fair value of privately placed bonds guaranteed by the Bank isdetermined by the discounted cash flow method. The discount rates used in the calculation were calculated
based on the bankruptcy probability by credit rating and the coverage ratio of an individual claim.
In the reporting term, the reasonably estimated value of Japanese Government Bonds (JGBs) withvariable interest rates that have widely fluctuating differences between market price and theoretical price
was set as the fair value. The reasonably estimated value is calculated based on the discounted cash flow
method or other pricing methods using JGB yields and the volatility of swaptions as primary pricing
variables.In the previous term, the reasonably estimated value of JGBs with variable interest rates was set
as the fair value. The reasonably estimated value is calculated based on the discounted cash flow method
or other pricing methods using JGB yields and the volatility of swaptions as primary pricing variables.
We used a reasonably estimated value as the fair value of securitized products (e.g., collateralized loan
obligations), except those subject to impairment, of which external credit rating is not downgraded, of whichcollateral asset pools are not deteriorated, and which the Group intends to continue to hold. The reasonably
estimated price was calculated by the discounted cash flow method or other pricing methods using the61

default rate, recovery rate, pre-payment rate and discount rate as primary pricing variables.
Please see “26. Securities Information” for details of securities in each purpose of holding.
(3) Loans and bills discounted
Since floating-rate loans and bills discounted reflect market interest rates in a short period, the fair value
approximates the carrying value unless the credit standing of the borrower is not significantly different after
the loan was made or the bill was drawn. The fair value is therefore deemed equal to the carrying value.
Fair value of fixed-rate loans and bills discounted are determined as the total of principal and interest
discounted by the type, internal credit rating and maturities. Discount rates used in the calculation wereinterest rates which would be applied when similar loans were newly extended. Fair value of fixed-rateloans and bills discounted whose terms are short (i.e., within one year) approximates their carrying value
and is therefore deemed equal to the carrying value.
Possible losses on legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans arecomputed based on recoverable amounts estimated as the present value of future cash flows or thecollectible amounts from collaterals and guarantees. Then the fair value of those loans approximates theconsolidated balance sheet amount at the closing date minus the currently estimated losses, and istherefore deemed equal to the amounts.
Fair value of loans and bills discounted for which repayment terms are not set because of their attributes(e.g., loans are limited to the amounts of assets pledged as collateral) is assumed to approximate theircarrying value, considering the expected repayment periods and interest rate conditions, and are deemed
equal to the carrying value.

Liabilities(1) Deposits and (2) Negotiable certificates of deposit
For demand deposits, we deem the amount that the Group would require to pay on the consolidatedbalance sheet date (i.e., carrying value) to be the fair value.
With respect to time deposits with long deposit terms (i.e., one year or longer), we used the present valueof future cash flows calculated by time band as the fair value. The discount rates used in the calculation
were the interest rates that would apply to newly accepted deposits.
(3) Borrowed money
We used as the fair value the present value of future cash flows calculated by borrowing period. The
discount rates used in the calculation were interest rate that would applied to new borrowings. Fair value ofborrowings for a short term (i.e., within one year) approximates the carrying value and is deemed equal tothe carrying value.

Derivatives Instruments
See “27. Derivatives.”

62

(Note 2) The following table summarizes financial instruments, of which fair value is extremely
difficult to determine:
Fair value of available-for-sale securities in the above table excludes the following items at March 31, 2011
and 2010.
Millions of yen
March 31, 2011

Consolidated balance sheet amounts

Unlisted stocks (*1)(*2)¥5,397

Investments in partnerships and others (*3)

3,655

Total

¥9,053(*1) Unlisted stocks are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other Items”
since no market price is available and their fair value is extremely difficult to determine.
(*2) Impairment losses on unlisted stocks were ¥89 million.
(*3) Out of investments in partnerships and others, certain partnerships holding assets whose fair value was extremely
difficult to determine are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other
Items.”

Millions of yen
March 31, 2010

Consolidated balance sheet amounts

Unlisted stocks (*1)(*2)¥6,354

Investments in partnerships and others (*3)

3,685

Total

¥10,039(*1) Unlisted stocks are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other Items”
since no market price is available and their fair value is extremely difficult to determine.
(*2) Impairment losses on unlisted stocks were ¥19 million.
(*3) Out of investments in partnerships and others, certain partnerships holding assets whose fair value was extremely
difficult to determine are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other
Items.”

63

(Note 3) Redemption schedule of money claims and securities with stated maturities after the
consolidated balance sheet date is as follows:
Millions of yen
1 year or

1-3 years

3-5 years

5-7 years

7-10 years

Over 10

March 31, 2011

less

years

Cash and due from banks¥251,437

¥―

¥―

¥―

¥―

¥―

10,315

10,281

7,337

158

―

―

7,000

1,000

―

―

―

―

Municipal bonds

1

―

―

―

―

―

Corporate bonds

3,314

9,281

7,337

158

―

―

235,386

475,731465,089273,547

387,91282,700bonds

89,000230,000

206,100

235,900

312,000―

Municipal bonds

29,805109,280

160,159

10,594

19,509―Corporate bonds

75,721

99,22164,75815,89551,90948,908Foreign bonds

40,85734,24528,891

8,481

3,540

33,791

1

2,983

5,180

2,677

953

―

Loans and bills discounted（*）

2,809,919

710,141

432,612

181,090

270,214

171,573

Total¥3,307,059¥1,196,153¥905,039¥454,795¥658,127¥254,274

Securities
Held-to-maturity debt
securities
Japanese government
bonds

Available-for-salesecurities with maturities
Japanese government

Other(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥118,983 million, andloans and bills discounted without maturities amounting to ¥75,361million were excluded from the table above.

64

Millions of yen
1 year or

1-3 years

3-5 years

5-7 years

7-10 years

Over 10

March 31, 2010

less

years

Cash and due from banks¥173,240

¥―

¥―

¥―

¥―

¥―

8,421

11,370

6,842

358

―

―

bonds

―

500

―

―

―

―

Municipal bonds

61

5

―

―

―

―

Corporate bonds

8,360

10,865

6,842

358

―

―

184,223

578,920

402,733

364,958

263,820

81,182bonds

99,000308,000

166,700

276,100

150,200―

Municipal bonds

31,560102,563

111,919

48,236

83,571―

Corporate bonds

33,451

107,360

98,886

26,702

26,03449,417

Foreign bonds

18,29759,70022,215

10,071

3,697

31,765

Other

1,913

1,295

3,012

3,847

317

―

Loans and bills discounted（*）

1,506,091

842,790

811,324

326,628

383,450757,033

Total¥1,871,976¥1,433,081¥1,220,900¥691,944¥647,271¥838,216

Securities
Held-to-maturity debt
securities
Japanese government

Available-for-salesecurities with maturities
Japanese government(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥98,551 million, andloans and bills discounted without maturities amounting to ¥82,263 million were excluded from the table above.

65

(Note 4) Redemption schedule of borrowed money and other interest-bearing liabilities after the
consolidated balance sheet date at March 31, 2011 and 2010 is as follows:
Millions of yen
1 year or

1-3 years

3-5 years

5-7 years

7-10 years

Over 10

March 31, 2011

less

years

Deposits（*）¥6,104,138¥621,476¥74,090¥1,389¥3,861¥―

deposit

11,870

―

―

―

―

―

Borrowed money

38,289

5,779

5,060

4,060

―

―

¥6,154,297¥627,255¥79,150¥5,449¥3,861¥―5-7 years

7-10 years

Negotiable certificates of

Total(*) Demand deposits were included in “1 year or less.”

Millions of yen
1 year or

1-3 years

3-5 years

Over 10

March 31, 2010

less

years

Deposits（*）¥5,936,543¥629,934¥94,053¥1,045¥3,130¥―deposit

20,900

―

―

―

―

―

Borrowed money

88,76521,365

270

7,060

2,030

―

¥6,046,209¥651,299¥94,323¥8,105¥5,160¥―

Negotiable certificates of

Total(*) Demand deposits were included in “1 year or less.”

26. Securities Information
Year ended March 31, 2011(a) Trading Securities
Millions of yen
March 31, 2011

Unrealized gain recognized as income

Trading securities¥166

(b) Held-to-maturity debt securities
Millions of yen
Consolidated
Type
March 31, 2011
Securities withbalance sheet

Fair value

Difference

amountBonds:¥18,560¥18,816¥256

fair value exceeding

Japanese

consolidated balance

government bond

500

500

0

sheet amount

Municipal bonds

―

―

―

Corporate bonds

18,06018,316

256

299

299

0

Foreign bonds

―

―

―

Other

299

299

0

Sub-total

18,85919,115

256

Bonds

9,504

9,383

(120)

Other:

Securities withfair value

Japanese

not exceeding

government bond

7,496

7,494

(1)

consolidated balance

Municipal bonds

1

1

0

sheet amountCorporate bond

2,006

1,887

(118)

Other:

3,843

3,831

(12)

―

―

―

Other

3,843

3,831

(12)

Sub-total

13,34813,215(132)¥32,207¥32,330¥123

Foreign bonds

Total

67

(c) Available-for-sale securities
Millions of yen
Consolidated
Type
March 31, 2011balance sheet
amountAcquisition
cost

Difference

Securities with

Stocks¥124,110¥84,503¥39,606

consolidated balance

Bonds

1,539,119

1,515,589

23,529sheet amountJapanese

exceeding acquisition

government bonds

914,457

900,730

13,726cost

Municipal bonds

314,894309,3705,523

Corporate bonds

309,768

305,489

4,278

72,01070,312

1,697

Foreign bonds

57,91856,795

1,122

Other

14,091

13,516574

Sub-total

1,735,239

1,670,405

64,834

Securities with

Stocks40,06149,471(9,409)consolidated balance

Bonds

263,944

265,924(1,980)Other

sheet amount not

Japanese

exceeding acquisition

government bonds

191,158

192,510(1,352)

cost

Municipal bonds

20,11920,238(118)

Corporate bonds

52,66553,175(509)

129,638

135,680(6,042)Foreign bonds

92,943

95,300(2,356)

Other

36,69440,380(3,685)Sub-total

433,643

451,076(17,432)¥2,168,883¥2,121,482¥47,401

Other

Total

(d) Held-to-maturity debt securities sold during the fiscal year
No held-to-maturity debt securities were sold during the year ended March 31, 2011.

68

(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2011

Sales proceeds

Gains on sales

Losses on sales

Stocks¥6,451¥356¥1,756

Bonds

282,795

5,569

234

bonds

157,192

2,020

234

Municipal bonds

106,9422,789―

Corporate bonds

18,660759―

16,731400

624

Foreign bonds

14,168

38

624

Other

2,562

361

―

¥305,978¥6,325¥2,615

Japanese government

Other

Total

(f) Securities Recognized for Impairment Loss
For available-for-sale securities with market values, in cases where the market value has fallen
substantially from the acquisition price and it is considered there is little likelihood of recovery to theacquisition price level, the securities are stated at market value on the consolidated balance sheets andthe difference between the market value and the acquisition price is posted as a loss (“impairment loss”).
Impairment losses for the fiscal year amounted to ¥2,290 million, comprising ¥1,644 million fromstocks and ¥645 million from bonds.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting
Committee Report No. 14), the Bank recognized the impairment losses on listed equity shares whose
average market price over the one-month period immediately prior to the balance sheet date declined by
30% or more compared with acquisition cost, and other securities whose market price at thebalance-sheet date also declined by 30% or more compared with acquisition cost.

(g) Money held in trust classified as available-for-sale securities
Not applicable as of March 31, 2011.

69

(h) Unrealized gain on available-for-sale securities
March 31, 2011

Millions of yen

Unrealized (losses) gains:
Available-for-sale securities¥47,872

Other money held in trust—

Deferred tax assets (liabilities)(17,743)

Net unrealized gains on available-for-sale securities

30,129Less minority interests

0

Unrealized gains on available-for-sale securities¥30,129

Note: The total unrealized losses include an unrealized gain of ¥471 million on available-for-sale securities, which constitute the propertyof related associations.

Year ended March 31, 2010(a) Trading Securities
Millions of yen
March 31, 2010

Unrealized gain recognized as income

Trading securities¥570

(b) Held-to-maturity debt securities
Millions of yen
Consolidated
Type
March 31, 2010
Securities withbalance sheet

Fair value

Difference

amountBonds:¥23,280¥23,581¥301

fair value exceeding

Japanese

consolidated balance

government bond

500

501

0

sheet amount

Municipal bonds

66

66

0

Corporate bonds

22,71423,014

300

484

484

0

Foreign bonds

―

―

―

Other

484

484

0

Sub-total

23,76524,066

301

Bonds

3,711

3,653

(57)

Other:

Securities withfair value

Japanese

not exceeding

government bond

―

―

―

consolidated balance

Municipal bonds

―

―

―

sheet amountCorporate bond

3,711

3,653

(57)

Other:

5,463

5,409

(54)

―

―

―

Other

5,463

5,409

(54)

Sub-total

9,174

9,062

(111)

¥32,939¥33,128¥189

Foreign bonds

Total

71

(c) Available-for-sale securities
Millions of yen
Consolidated
Type

Acquisition

balance sheet

March 31, 2010

Difference

cost

amountSecurities with

Stocks¥138,405¥90,579¥47,826

consolidated balance

Bonds

1,677,324

1,650,104

27,219sheet amountJapanese

exceeding acquisition

government bonds

967,842953,786

14,056cost

Municipal bonds

380,794372,3788,415

Corporate bonds

328,687

323,939

4,747

70,53868,3502,188

Foreign bonds

64,047

62,151

1,896

Other

6,490

6,198

291

Sub-total

1,886,268

1,809,034

77,234

Securities with

Stocks38,06745,900(7,833)

consolidated balance

Bonds

86,642

87,102

(460)

Other

sheet amount not

Japanese

exceeding acquisition

government bonds

60,962

61,173

(211)

cost

Municipal bonds

5,818

5,824

(5)

Corporate bonds

19,86020,104(243)

128,301

135,566(7,264)Foreign bonds

80,15083,222(3,071)

Other

48,151

52,344(4,192)Sub-total

253,011

268,569(15,558)¥2,139,279¥2,077,603¥61,676

Other

Total

(d) Held-to-maturity debt securities sold during the fiscal year
Millions of yen
Year ended March 31, 2010

Sales costs

Sales proceeds

Gains (losses) on sales

Japanese government bonds

¥―

¥―

¥―

Municipal bonds

―

―

―

Other

1,000

700

(300)

Total

¥1,000¥700¥(300)

72

(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2010

Sales proceeds

Gains on sales

Losses on sales

Stocks¥11,553¥1,782¥3,167

Bonds

144,348

2,384

25

bonds

51,407916―

Municipal bonds

88,1381,427―

Corporate bonds

4,802

39

25

19,703433

3,251

19,519

394

3,251

184

39

―

¥175,605¥4,600¥6,444

Japanese government

Other
Foreign bonds
Other
Total

(f) Securities Recognized for Impairment Loss
For available-for-sale securities with market values, in cases where the market value has fallen
substantially from the acquisition price and it is considered there is little likelihood of recovery to theacquisition price level, the securities are stated at market value on the consolidated balance sheets andthe difference between the market value and the acquisition price is posted as a loss (“impairment loss”).
Impairment losses for the fiscal year amounted to ¥2,977 million, comprising ¥1,917 million fromstocks and ¥1,060 million from bonds.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting
Committee Report No. 14), the Bank recognized the impairment losses on listed equity shares whose
average market price over the one-month period immediately prior to the balance sheet date declined by
30% or more compared with acquisition cost, and other securities whose market price at thebalance-sheet date also declined by 30% or more compared with acquisition cost.

(g) Money held in trust classified as available-for-sale securities
Not applicable as of March 31, 2010.

73

(h) Unrealized gain on available-for-sale securities
March 31, 2010

Millions of yen

Unrealized (losses) gains:
Available-for-sale securities¥62,271

Other money held in trust—

Deferred tax assets (liabilities)(23,467)

Net unrealized gains on available-for-sale securities

38,803

Less minority interests(2)

Unrealized gains on available-for-sale securities¥38,805

Note: The total unrealized losses include an unrealized gain of ¥595 million on available-for-sale securities, which constitute the propertyof related associations.

27. Derivatives
Year ended March 31, 2011
1. Derivative instruments not accounted for as hedges
Regarding the derivative instruments to which hedge accounting is not applied, the following tables
summarize contract amount, market value and unrealized gain or loss for each type of derivativetransactions, respectively, at the end of the consolidated balance sheet date, as well as determination offair value.
Contract amount does not represent itself market risk of derivative instruments.

74

(1) Interest-rate Derivatives
Millions of yen
Contract amountMarch 31, 2011

Over 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Interest-rate futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――payable102,386

25,832433

433

Receivable floating / payable

102,386

25,832

(211)

(211)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

1,137

707

(0)

64

Bought

1,137

707

0

(27)

Sold

35,410

1,450

(103)

33

Bought35,410

1,450

103

103

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥221

¥395

Interest-rate options:Over-the-counter transactions:
Forward rate agreements:

Interest-rate swaps:
Receivable

fixed

/

floating

fixed
Receivable floating / payable
floating
Interest-rate options:

Caps:

Swaption:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain75

(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on the Tokyo
International Financial Exchange, etc. The fair value of over-the-counter transactions has been calculated at their discounted
future cash flows or by utilizing option pricing models.

(2) Currency Derivatives
Millions of yen

March 31, 2011

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――920,449

742,353

461

461

Sold

4,374

2,776

(71)

(71)

Bought

3,653

1,411

141

141

Sold

10,239

2,107

(427)

(173)

Bought10,239

2,107

428

261

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥531

¥618

Currency options:Over-the-counter transactions:
Currency swaps
Forward foreign exchange
contracts:

Currency options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain
(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
Fair value is calculated at discounted future cash flows, etc.

76

(3) Stock Derivatives
Not applicable as of March 31, 2011.

(4) Bond Derivatives
Millions of yen

March 31, 2011

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Bond futures:
Sold

¥277

¥―

¥(1)

¥(1)

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥(1)

¥(1)

Bond future options:Over-the-counter transactions:
Bond options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain
(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on the Tokyo
International Financial Exchange, etc. The fair value of over-the-counter transactions has been calculated at their discounted
future cash flows or by option pricing models.

(5) Commodity Derivatives
Not applicable as of March 31, 2011.

(6) Credit Derivatives
Not applicable as of March 31, 2011.

77

2. Derivative Instruments accounted for as hedges
Regarding the derivative instruments to which hedge accounting is applied, the following tables summarize
contract amount, market value and unrealized gain or loss for each type of derivative transactions,
respectively, at the end of the consolidated balance sheet date, as well as determination of fair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives
March 31, 2011
Millions of yen
Method of hedge

Type

Hedged items

Contract

Over 1 year

Fair value

amounts
Deferred method

Interest rate swap

Interest bearing

Receivablefinancial assets

fixed / payable

and liabilities

floating

including loans,

Receivableavailable-for-salefloating /securities,

payable fixeddeposits andInterest rate futures

¥

―

―

¥

―

60,00060,000(3,958)negotiable

―

―

―

Interest ratecertificates of

―

―

―

options

deposit, etc.
―

―

―

9,000

9,000

623

48,021

42,489(2,931)Other
Exceptional¥

Interest rate swap

accrual method

Receivable

Loans, borrowed

for interest rate

fixed / payable

money

swap

floating
Receivable
floating /payable fixed

Total

―――

―――

―――

¥ (6,266)

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and Auditing Treatment
relating to the Adoption of ‘Accounting for Financial Instruments’ for Banks,” issued by the Japanese Institute of Certified Public
Accountants (“JICPA”), (JICPA Industry Audit Committee Report No. 24).
2. Determination of fair value:
The fair value of exchange-traded derivative instruments is based on closing prices at the Tokyo Financial Exchange or otherrelevant exchanges. The fair value of over-the-counter traded derivative instruments is determined based on a discounted

78

cash flows model, an option pricing model or other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with thehedged items as a whole, so that the fair value is included in the fair value of Loans and Bills Discounted and other items (See:31. Financial Instruments (2) Disclosures Regarding the Fair Value of Financial Instruments and Other Items).

(2) Currency Derivatives
March 31, 2011
Millions of yen
Method ofType

Hedged items

hedgeContract

Over 1 year

Fair value

amounts

Deferred

Currency swaps

ForeignmethodForward foreign

currency-denominatedexchangeloans, securities,

contracts

deposits and foreign

Foreignexchanges, etc.

¥30,373¥10,393(¥659)―――

15,989

―

(142)

Other

―

―

―

for

Currency swap

―

―

―

forward foreign

Forward foreign

―

―

―

exchangeexchange

contracts, etc.

contracts¥―¥―¥(802)

exchangeswaps

Treatment

Total

―

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and Auditing Treatment
relating to Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.
25).
2. Determination of fair value:
Fair value is determined based on the discounted cash flows model.

(3) Stock Derivatives
Not applicable as of March 31, 2011.

(4) Bond Derivatives
Not applicable as of March 31, 2011.

79

Year ended March 31, 2010
1. Derivative instruments not accounted for as hedges
Regarding the derivative instruments to which hedge accounting is not applied, the following tables
summarize contract amount, market value and unrealized gain or loss for each type of derivativetransactions, respectively, at the end of the consolidated balance sheet date, as well as determination offair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives

Millions of yen
Contract amountMarch 31, 2010

Over 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Interest-rate futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――payable98,48829,206580

580

Receivable floating / payable

98,48829,206

(334)

(334)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

3,196

1,272

(2)

108

Interest-rate options:Over-the-counter transactions:
Forward rate agreements:

Interest-rate swaps:
Receivable

fixed

/

floating

fixed
Receivable floating / payable
floating
Interest-rate options:

Caps:
Sold

80

Bought

3,196

1,272

2

(53)

Sold

37,190

3,870

(116)

37

Bought37,190

3,870

116

116

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥245

¥455

Swaption:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain
(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on the Tokyo
International Financial Exchange, etc. The fair value of over-the-counter transactions has been calculated at their discounted
future cash flows or by utilizing option pricing models.

(2) Currency Derivatives
Millions of yen

March 31, 2010

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――837,344

709,133

956

956

Sold

5,079

1,198

357

357

Bought

3,523

267

(327)

(327)

Sold

6,700

1,309

(247)

(63)

Bought

6,700

1,309

247

141

Currency options:Over-the-counter transactions:
Currency swaps
Forward foreign exchange
contracts:

Currency options:

Others:

81

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥986

¥1,063

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain
(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
Fair value is calculated at discounted future cash flows, etc.

(3) Stock Derivatives
Not applicable as of March 31, 2010.

(4) Bond Derivatives
Millions of yen

March 31, 2010

Contract amountOver 1 year

Unrealized gain

Fair value(loss)

Transactions listed on exchanges:
Bond futures:
Sold

¥278

¥―

¥2

¥2

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

¥―

¥―

¥2

¥2

Bond future options:Over-the-counter transactions:
Bond options:

Others:

Total

Notes: 1. The transactions in this table have been revalued at the market rate prevailing on the balance sheet date, and unrealized gain
(loss) is accounted for in the consolidated statements of income.
2. Calculation of fair value
The fair value of transactions listed on exchanges has been calculated on the basis of the closing prices on the Tokyo
International Financial Exchange, etc. The fair value of over-the-counter transactions has been calculated at their discounted
future cash flows or by option pricing models.

82

(5) Commodity Derivatives
Not applicable as of March 31, 2010.

(6) Credit Derivatives
Not applicable as of March 31, 2010.

2. Derivative Instruments accounted for as hedges
Regarding the derivative instruments to which hedge accounting is applied, the following tables summarize
contract amount, market value and unrealized gain or loss for each type of derivative transactions,
respectively, at the end of the consolidated balance sheet date, as well as determination of fair value.
Contract amount does not represent itself market risk of derivative instruments.

(1) Interest-rate Derivatives
March 31, 2010
Millions of yen
Method of hedge

Type

Hedged items

Contract

Over 1 year

Fair value

amounts
Deferred method

Interest rate swap

Interest bearing

Receivablefinancial assets

fixed / payable

and liabilities

floating

including loans,

Receivableavailable-for-salefloating /securities,

payable fixeddeposits andInterest rate futures

¥

¥

―

¥

―

60,00060,000(3,386)

negotiable

―

―

―

Interest ratecertificates of

―

―

―

options

deposit, etc.
―――

19,0009,000

676

53,50248,021(2,931)Other
Exceptional―

Interest rate swap

accrual method

Receivable

Loans, borrowed

for interest rate

fixed / payable

money

swap

floating
Receivable
floating /payable fixed

Total

―――

―――

83

―――

¥ (5,641)

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and Auditing Treatment
relating to the Adoption of ‘Accounting for Financial Instruments’ for Banks,” issued by the Japanese Institute of Certified Public
Accountants (“JICPA”), (JICPA Industry Audit Committee Report No. 24).
2. Determination of fair value:
The fair value of exchange-traded derivative instruments is based on closing prices at the Tokyo Financial Exchange or otherrelevant exchanges. The fair value of over-the-counter traded derivative instruments is determined based on a discounted
cash flows model, an option pricing model or other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with thehedged items as a whole, so that the fair value is included in the fair value of Loans and Bills Discounted and other items.

(2) Currency Derivatives
March 31, 2010
Millions of yen
Method ofType

Hedged items

hedgeOver 1 year

Fair value

amounts

Deferred

Currency swaps

ForeignmethodForward foreign

currency-denominatedexchangeloans, securities,

contracts

deposits and foreign

Otherexchanges, etc.

Treatment

Contract¥87,415¥―¥17,551

―

―

―

―

―

―

for

Currency swap

―

―

―

forward foreign

Forward foreign

―

―

―

exchangeexchange

contracts, etc.

contracts¥―¥―¥17,551

Total―

Notes: 1. Primarily, the Bank applies the deferred method of hedge accounting which is described in “Accounting and Auditing Treatment
relating to Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.
25).
2. Determination of fair value:
Fair value is determined based on the discounted cash flows model.

(3) Stock Derivatives
Not applicable as of March 31, 2010.

(4) Bond Derivatives
Not applicable as of March 31, 2010.

8428. Stock Options(a) The Bank recorded stock option expenses in “General and administrative expenses” of ¥49 million and¥21 million for the years ended March 31, 2011 and 2010.

(b) Outline of stock options, size and changes(1) Outline of stock options
March 31, 2011

1st equity warrant

2nd equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 12

Type and number of shares (*)

Common shares: 56,698

Common shares: 41,546

Grant dateAugust 24, 2009

August 24, 2009

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From August 25, 2009 to August

From August 25, 2009 to August24, 2039

24, 2039

March 31, 2011

3rd equity warrant

4th equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 13

Type and number of shares (*)

Common shares: 79,606

Common shares: 61,881

Grant dateJuly 21, 2010

July 21, 2010

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 22, 2010 to July 21,

From July 22, 2010 to July 21,

2040

2040

(*) The table above presents the number of common shares converted from the number of stock options.

March 31, 2010

1st equity warrant

2nd equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 12

Type and number of shares (*)

Common shares: 56,698

Common shares: 41,546

Grant dateAugust 24, 2009

August 24, 2009

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From August 25, 2009 to August

From August 25, 2009 to August24, 2039

24, 2039(*) The table above presents the number of common shares converted from the number of stock options.

85

(2) Size and changes of stock options
a. Number of stock options in the years ended March 31, 2011 and 2010
March 31, 2011

1st equity warrant

2nd equity warrant

3rd equity warrant

4th equity warrant

56,69841,546――

Granted――79,606

61,881

Forfeited

―

―

―

―

Vested

―

3,280

―

―

56,69838,266

79,606

61,881――――

Vested

―

3,280

―

―

Exercised

―

3,280

―

―

Forfeited

―

―

―

―

Exercisable

―

―

―

―

Non-vested:
Previous fiscal year-end
outstanding

Outstanding on March 31,
2011
Vested:Previous fiscal year-end
outstanding

March 31, 2010

1st equity warrant

2nd equity warrant――

Granted56,69841,546

Forfeited――

Vested――56,69841,546――

Vested――Exercised――

Forfeited――

Exercisable――

Non-vested:
Previous fiscal year-end outstanding

Outstanding on March 31, 2011
Vested:Previous fiscal year-end outstanding86

b. Price information
Yen
March 31, 2011

1st equity warrant

2nd equity warrant

3rd equity warrant

4th equity warrant

Exercise price

1

1

1

1

Average share price at exercise

―

345

―

―

Fair value at the grate date

417

439

297

318

Yen
March 31, 2010

1st equity warrant

2nd equity warrant

Exercise price

1

1

Average share price at exercise――

Fair value at the grate date

417

439

(c) Valuation technique for fair value of stock options
Stock options granted during the fiscal year ended March 31, 2011 were valued using theBlack-Scholes option pricing model and the following principal parameters:
3rd equity warrant

4th equity warrant

Expected volatility (*1)

33.00％

38.55％

Average expected life (*2)

6 years

3 years¥8 per share¥8 per share

0.45％

0.16％

Expected dividends (*3)
Risk-free interest rate (*4)(*1) Expected volatility is calculated based on the actual stock prices at the following period corresponding to the average expected life.
3rd equity warrant: From July 21, 2004 to July 20, 2010
4th equity warrant: From July 23, 2007 to July 20, 2010(*2) The average tenure of the directors and the executive officers who retired in the past is used as the average expected life in theabove table.
(*3) Actual dividends on common stock for the year ended March 31, 2010.
(*4) Japanese government bond yield corresponding to the average expected life.

87

Stock options granted during the fiscal year ended March 31, 2010 were valued using theBlack-Scholes option pricing model and the following principal parameters:
1st equity warrant

2nd equity warrant

Expected volatility (*1)

33.93％

38.25％

Average expected life (*2)

6 years

3 years¥8 per share¥8 per share

0.76％

0.36％

Expected dividends (*3)
Risk-free interest rate (*4)(*1) Expected volatility is calculated based on the actual stock prices at the following period corresponding to the average expected life.
1st equity warrant: From August 22, 2003 to August 21, 2009
2nd equity warrant: From August 22, 2006 to August 21, 2009(*2) The average tenure of the directors and the executive officers who retired in the past is used as the average expected life in theabove table.
(*3) Actual dividends on common stock for the year ended March 31, 2009.
(*4) Japanese government bond yield corresponding to the average expected life.

(d) Method of estimating number of stock options vested
Only the actual number of forfeited stock options is reflected because it is difficult to reasonably
estimate the number of stock options that will be forfeited in the future.

29. Related-Party Transactions
No material transactions occurred with related-party for the fiscal years ended March 31, 2011
and 2010.

8830. Per-share Data
Yen
March 31,

2010

2011

Net assets per share¥551.72¥551.79

Earnings per share-basic

18.14

18.17

Earnings per share-diluted

18.14

18.17

Note: Bases for calculation of earnings per share (basic and diluted) are as follows:
Millions of yen
March 31,

2010

2011

Earnings per share
Net income¥13,990¥14,051——

13,99014,051

770,891

772,917

Adjustment to net income——

Increase in common shares (in thousands)

194

59

Attributable to equity warrants

194

59

—

—

Earnings not available to common shareholders
Net income after deduction of the portion describedabove
Weighted average number of common shares for the
fiscal year (in thousands)
Diluted earnings per share

Equity warrants that have no dilutive effects on
earnings per share

89

90

Organization
As of June 28, 2011

The JOYO BANK, LTD.

Internal Administration Group
Corporate Audit Division

General Meeting of
Shareholders
Board of Corporate Auditors

Corporate Management Group
Corporate Risk Management Division
Credit Risk Management Office
Legal and Compliance Office
Corporate Planning DivisionCorporate Auditors
Board of Directors
Executive Officer Committee

Group Management OfficePublicity Office
Tokyo Sub-Headquarters
Personnel Division
Staff Counseling Office
Executive Secretariat
General Affairs Division

Credit Risk Management Group
Credit Examination Division
Loan Supervision Office
Company Management Support Office

Operation Systems GroupOperation Planning Division
Data Processing Center
Area Data Processing Center
Computer System Division

Business Headquarters
Area Management OfficeBusiness Planning Division
Customer Services Division
Customer Counceling OfficeBusiness Promotion Division
Asset Management Promotion OfficeIntegrated Finance Service OfficeDirect Banking Center
Living and Business Consulting Center
Pension Business Promotion Center
Government and Municipal Business DivisionInternational Market Business Group
Treasury and Securities DivisionMarkets Administration and International Division
Securities Business OfficeInternational Business OfficeInternational Operations Office
Overseas Representative Office91

Head Office
Tokyo Business Division (Tokyo Main Office)149 Branches, 25 Sub-branches

Board of Directors and Corporate Auditors
As of June 28, 2011

Chairman
Kunio Onizawa
President
Kazuyoshi Terakado
Senior Managing Directors
Mikio Kawamata
Toru Hakata

Managing Directors
Toshihisa Suzuki
Katsumi Tomita
Shigeru Ichimura
Hideo Sakamoto
Katsuhiko Ito
Yoshiyuki Suzuki

Corporate Auditors
Kyohei Tomita (standing)
Yoshiaki Terakado (standing)
Akira Yasu
Sanenori Hitomi
Toshio Mizushima

Directors
Toshihiko Kawamura (outside)
Ryuzaburo Kikuchi (outside)

Market Business Group and Overseas Offices
As of June 28, 2011

■ Head Office5-5, Minami-machi 2-chome, Mito,
Ibaraki 310-0021, Japan
Phone: 029-231-2151■ Market Operations

Senior Managing Director
Toru Hakata■	Markets Administration andInternational Division
7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-1741
General Manager
Shigeru Hirose
Deputy General Manager
Norihisa Nakamura■	International Business Office
5-5 Minami-machi 2-chome, Mito,
Ibaraki 310-0021, Japan
Phone: 029-300-2727
Chief Officer

Masayuki Ogawa■ International Operations Office3-3, Shinhara 1-chome, Mito,
Ibaraki 310-0045, Japan
Phone: 029-255-6671
Telex: J23278 JOYOBANK3632105 JOYOBKSwift: JOYOJPJTGeneral Manager
Akihiko Hashimoto■	Treasury and Securities Division
7-2, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Phone: 03-3273-5245
General Manager
Fuminori Nakajima
Deputy General Manager
Masahide Takauchi• Investment Group
Senior Manager
Shuichi Kodama• Business Promotion GroupManager
Hiroshi Iijima■	Shanghai Representative Office(Business Planning Division)
Room 1901, Shanghai International
Trade Centre, 2201 Yan An Road(West), Shanghai 200336 P.R. of China
Phone: 86-21-6209-0258

Advisory Officer
Osato Aizawa• Operations Group (Tokyo)
Senior Manager
Hiroki Otaka

Chief Representative
Hitoshi Gotou
Deputy Chief Representative
Hiroshi Kodaira92

Service Network
As of June 28, 2011

Miyagi Pref. (1 Branch)
Mito (Head Office, International Business Office,International Operations Office)Ibaraki Pref. (Head Office, 122 Branches,
23 Sub-Branches)
Fukushima Pref. (10 Branches)
Tochigi Pref. (Tochigi wholesale office
6 Branches, 1 Sub-Branch)

Overseas:
Shanghai Representative Office
Chiba Pref. (Tokatsu Wholesale office,5 Branches, 1 Sub-Branch)
Tokyo (Tokyo Business Div.
(Tokyo Main Office), 3 Branches)
Treasury and Securities Div.
Markets Administration and International Div.
Saitama Pref. (2 Branches)
Osaka Pref. (1 Branch)

Affiliated Companies
As of March 31, 2011

■ The Joyo Computer Service Co., Ltd.
16-25, Nishihara 2-chome, Mito, Ibaraki
Established:
1973
Capital Stock:¥47.5 million
Share of Voting Rights:
5%Sale of software and contract of calculation
businesses■ The Joyo Lease Co., Ltd.

■ The Joyo Credit Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1982
Capital Stock:¥100 million
Share of Voting Rights:
5%
Credit card services■ The Joyo Business Service Co., Ltd.

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1974
Capital Stock:¥100 million
Share of Voting Rights:
5%
Leasing of machinery and equipment, claim
acquisition

8-1, Sasano-machi 1-chome, Hitachinaka,IbarakiEstablished:
1984
Capital Stock:¥100 million
Share of Voting Rights: 100%
Agent in charge of administrative work for the
Bank■ The Joyo Credit Guarantee Co., Ltd.

■ The Joyo Industrial Research Institute, Ltd.

4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
1978
Capital Stock:¥30 million
Share of Voting Rights:
5%
Credit guarantee of housing loans from theBank

5-18, Sannomaru 1-chome, Mito, Ibaraki
Established:
1995
Capital Stock:¥100 million
Share of Voting Rights:
5%Consulting, investigation and research93■	The Joyo Equipment Management Co., Ltd.
5-5, Minami-machi 2-chome, Mito, Ibaraki
Established:
1999
Capital Stock:¥100 million
Share of Voting Rights: 100%
Maintenance and management of operational
properties and equipment of the Bank

■ The Joyo Cash Service Co., Ltd.
3-3, Jonan 1-chome, Mito, Ibaraki
Established:
1999
Capital Stock:¥50 million
Share of Voting Rights: 100%
Management and maintenance of ATMs and
CDs■ The Joyo Securities Co., Ltd.
4-12, Minami-machi 3-chome, Mito, Ibaraki
Established:
2007
Capital Stock: ¥3,000 million
Share of Voting Rights: 100%
Dealing of securities, mediation, commission
and substitution of trading of securities

Corporate Data
As of March 31, 2011

■ Date of Establishment

July 30, 1935

■ Head Office5-5, Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
Phone: 029-231-2151
URL: http://www.joyobank.co.jp/
http://www.joyobank.co.jp/joyobank/eng/ (English Page)■ Domestic Network

Head Office, Tokyo Business Division (Tokyo Main Office), and 149 Branches, 25 Sub-branches■ Overseas Network

1 Representative Office: Shanghai■ Number of Employees

3,360■ Stock Exchange Listing

Tokyo Stock Exchange■ Paid-in Capital¥85,113 million■N umber of Shares(as of March 31, 2011)

Authorized
Issued and Outstanding■ Number of Shareholders(1 trading unit = 1,000 shares)

23,9802,167,515 thousand
816,231 thousand■ Principal Shareholders
The 10 largest shareholders of the Bank and their respective shareholdings at March 31, 2011 were as follows:
Number of Shares Held(Thousands)

Percentage of Total Shares
Outstanding (%)

Northern Trust Company (AVFC) Sub Account American Client .........................

39,306

4.81%

The Bank of Tokyo-Mitsubishi UFJ, Ltd. ................................................................................

28,992

3.55

NIPPONKOA Insurance Company, Ltd. .................................................................................

28,973

3.54

Nippon Life Insurance Company .............................................................................................

28,003

3.43

Japan Trustee Services Bank, Ltd. (Trust Account 4G) .................................................

25,165

3.08

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

17,153

2.1

The Dai-ichi Mutual Life Insurance Company ..................................................................

17,0492.08

Sumitomo Life Insurance Company ......................................................................................

16,4482.01

Northern Trust Company (AVFC) US Tax Exempted Pension Funds .................

14,371

1.76

Meiji Yasuda Life Insurance Company ..................................................................................

9,722

1.19

Total......................................................................................................................................................

225,184

27.58%For further information,please contact to:Markets Administration and International Division, The Joyo Bank, Ltd.
7-2, Yaesu 2-chome, Chuo-ku, Tokyo 104-0028, Japan94