An n u al R ep o r t

2015

1

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 80th 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— Provide the most appropriate products and services based on a keen understanding of our customers.
— Undertake steady banking activities and grow together with our customers.
— Seek to further improve our financial skills.

CONTENTS
1 Corporate Data/Service Network

23 Consolidated Financial Statements

2 Message from the President

23 Consolidated Balance Sheets

4 Management Policy

24 Consolidated Statements of Income

6 Financial Highlights

24 Consolidated Statements of Comprehensive Income

8 Business Highlights

25 Consolidated Statements of Changes in Net Assets

12 Corporate Social Responsibility (CSR)

27 Consolidated Statements of Cash Flows

14 Corporate Governance and Internal Control System

28 Notes to the Consolidated Financial Statements
67 Report of Independent Auditors

68 Organization
69 Board of Directors and Corporate Auditors/
Market Business Group and Overseas Offices/
Affiliated Companies

Corporate Data
As of March 31, 2015

■ 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 152 Branches, 26 Sub-branches■ Overseas Network

3 Representative Office: Shanghai, Singapore, New York

■ Number of Employees

3,629■ Stock Exchange Listing

Tokyo Stock Exchange■ Paid-in Capital¥85,113 million■ Number of Shares(as of March 31, 2015)

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

26,7962,167,515 thousand
766,231 thousand

Service Network
As of March 31, 2015

Japan:
Miyagi
Fukushima
Tochigi Ibaraki
Mito-City
SaitamaShanghai Representative Office

Tokyo

Chiba

Osaka

New York Representative Office

Singapore Representative Office

Japan:• Miyagi Pref. (1 Branch)• Saitama Pref. (3 Branches)• Fukushima Pref. (10 Branches)• Chiba Pref. (6 Branches)• Tochigi Pref. (7 Branches, 1 Sub-Branch)• Mito-City (Head Office, International Business
Office, International Operations Office)• Tokyo (Tokyo Business Div. (Tokyo Main Office),
4 Branches)• Ibaraki Pref. (Head Office, 118 Branches,
25 Sub-Branches)• Treasury and Securities Div.
Markets Administration and International Div.
• Osaka Pref. (1 Branch)

1

MESSAGE FROM THE PRESIDENT
We will provide customers and communities solutions through comprehensive financial services.

meeting the challenges of economic globalization. These
included strengthened information gathering capabilities
thanks to the opening of a representative office in New
York, enhanced support for overseas expansion throughthe expansion of partnerships with overseas banks, and creation of opportunities for business negotiations between
local food-related companies and overseas buyers via the
Joyo Commercial Food Fair.
In retail banking, we worked to accommodate diversifying customer needs in the area of asset management.
Along with expanding lineups of investment trust andinsurance products, we originated the “Power of the
Future” investment trust for syndication to customers, asJapan’s first money trust with an asset portfolio of loans
we made to solar power providers. In addition to promoting the Nippon Individual Savings Account (NISA) tax
exemption system for small investments, we focused on
restructuring installment-based investment trusts andforeign currency deposit products and otherwise worked
to strengthen initiatives for customer asset formation.
Moreover, in the area of individual financing, we increasedhandling of housing loans intended to encourage longterm residency in coordination with municipal grant andinterest rate subsidy programs, and continued working tohelp solve various local issues through our function as afinancial intermediary.
In network initiatives, we relocated the Misato Branch
in Saitama Prefecture to the Misato-Chuo Station area on
the Tsukuba Express line and thereby enhanced our branch
network along a train line where there is vital economic
exchange with Ibaraki Prefecture. In addition, we introduced a new “Mobile Customer Inquiry Vehicle” to bringour financial inquiry counter and ATM services directly
to corporate customer offices, model home exhibitions
and other venues to better and more conveniently serve
customers. Our online initiatives included establishing“J-Pallete,” a portal specifically for female customers on the
bank’s website to enhance information tailored to the lifestyles of women and strengthen our point of contact with
them.
Joyo Bank was also involved in a range of social

Despite steady improvement in employment and income
conditions and a general upturn in corporate earnings
led by major exporters, against the larger backdrop of thegovernment’s economic policies and programs, Japan’s
economy in fiscal 2014 was limited to a moderate recovery due to consumer demand fell after it rose before theconsumption tax rate was raised. In the economy of Ibaraki
Prefecture as well, there were strong indications of a recovery in production as the employment situation and incomes
improved and exports bottomed out, but there was weakness overall as personal consumption and housing investment turned lackluster after the consumption tax increase.
Operating in this economic environment, since April
2014 Joyo Bank has carried out its 12th Medium-TermBusiness Plan (from fiscal 2014 to fiscal 2016), which represents our vision for becoming the “best partner bank for thecollaborative creation of the region’s future.”
The fiscal year under review was the first year of theplan, and we carried out the following policies, centeringon the “PLUS+” project for collaborative creation of theregion’s future.” Our objective is to help customers andcommunities solve local issues arising due to structuralchanges in society and the economy through provision ofcomprehensive financial services while translating these
efforts into our own growth as the Joyo Bank Group.
In corporate banking, we continued working to provide a smooth flow of funding to customers while also
further enhancing funding methods based on the stagesof customer businesses. Related measures included forming the Ibaraki Revitalization Fund in partnership with agovernment-affiliated financial institution to help revitalize
the local economy and spur local business creation. We
also continued to focus on identifying innovative and creative business plans and creating new business in the fiscal
year under review. Collaborating with the National Instituteof Advanced Industrial Science and Technology (JAT), we
started the “Action JAT” collaborative business creation
project to promote the development of new renewable energy technologies by local manufacturers, while
also strengthening various other initiatives for industrial
development. Moreover, we also reinforced initiatives for2

contribution activities. Continuing on from last year, we
held the Joyo Photo Contest to promote local tourism andsigned cooperation agreements for disaster preparedness with the cities of Mito, Tsukuba and Tsuchiura to help
ensure the safety and peace of mind of people living in
the region. Furthermore, in our role as a leading regionalbank driving growth in support of the local economy, webegan a project to assist in the formulation of an “Overall
Revitalization Strategy for Local Communities, People andJobs,” signed a partnership agreement with the Regional
Economy Vitalization Corporation of Japan on revitalizationof shopping districts and actively conducted a range ofother initiatives aimed at revitalizing the region.
As a result of these initiatives, non-consolidated ordinary profit increased by ¥4.5 billion year on year to ¥40.4
billion and net income by ¥1.8 billion year on year to¥23.9 billion in fiscal 2014, as interest income and fees andcommissions increased and general and administrative
expenses decreased. On a consolidated basis, ordinary
profit increased by ¥4.4 billion year on year to ¥45.7 billion
and net income rose by ¥3.6 billion year on year to ¥28.6
billion. Consolidated return on equity was 5.1%. The capital ratio, an indicator of banking soundness, remained at
the high level of 11.92% on a non-consolidated basis and12.40% on a consolidated basis.
In recognition of our shareholders’ support over theyears, we have increased the annual dividend in fiscal 2014by ¥1.0, to ¥10.0 per share. In fiscal 2015, we intend to raise
the ordinary dividend another ¥0.50 to ¥10.50 per share
while also paying a special dividend of ¥1.0 to commemorate our 80th anniversary, so a total annual dividend of¥11.50 is planned.
The Joyo Bank will celebrate its 80th anniversary on July30, 2015, an occasion made possible by the continuing support of customers, community members and shareholders.
Everyone at Joyo Bank is sincerely appreciative of this support, and to mark the occasion we will be carrying out anumber of commemorative programs to express our gratitude as well as our commitment to collaborative creation
for the future. Thank you for your ongoing encouragement
and support.

Kazuyoshi Terakado
President

Kazuyoshi Terakado
President
June 2015

3

MANAGEMENT POLICY• 12th Medium-Term Business Plan (Plan duration: Fiscal 2014 through fiscal 2016)

VisionBest Partner Bank for the Collaborative
Creation of the Region’s Future
In the environment surrounding the regional economy, along with changes to the socioeconomic structure such as thedecline in the total population and further decrease in the birthrate and aging of the population, and the decline in thepotential economic growth rate, a multitude of challenges are expected to emerge.
In the 12th Medium-Term Business Plan, we aim to solve — together with our customers and the region — the local
challenges accompanying socioeconomic changes by contributing more than ever to the reconstruction and growth of
our customers and the region and providing comprehensive financial services based on original and creative ideas, which

Five Basic Strategies to Achieve Our Vision

we tackled in the 11th Medium-Term Business Plan, and also to contribute to the Joyo Bank Group’s growth.
To define this approach, we established the vision of becoming the “Best Partner Bank for the Collaborative Creation of
the Region’s Future” and we will execute our five basic strategies starting with “collaborative creation.”

1. Collaborative Creation
We will share the various challenges brought about by changes in the socioeconomic structure with customers andlocal communities, and demonstrate collaborative creation*1 to contribute to solving customers’ and communities’
problems by providing comprehensive financial services that are original and creative.
As part of these efforts, we will launch the “project for the collaborative creation of the region’s future ‘PLUS+’”and move forward working together as a group.

2. Expansion of Customer BaseIn demonstrating collaborative creation, it is essential to spread business and expand our customer network basedon strong relationships of trust, which area prerequisite for sharing and solving the challenges facing customers’ andlocal communities, and we will expand our customer base in the Ibaraki region*2.

3. Strengthening investment return
In light of advancing globalization and securitization, we will strengthen investment returns by increasing returns on
securities and foreign currency loans in order to not only raise money for lending, but to also enhance profitability.

4. Renewal of operation
Seek to strengthen points of contact with customers in order to share and solve challenges facing customers andlocal communities, innovate marketing channels by strengthening direct channel marketing, strengthen collaboration among channels, and construct effective marketing channels. In addition, we will pursue innovations in marketing and administrative processes through ongoing construction of BPR promotion systems.

5. Remaking human resources portfolio
In the area of human resources, our most important business resource for achieving our vision, we will increase support for self-directed development, strengthen the organizational human resources development structure including
the restructuring of the development system, and expand opportunities to participate in comprehensive financial
resources.

*1. C
 ollaborative creation refers to sharing the various challenges brought about by changes in the socioeconomic structure with customers and local communities and contributeto solving the challenges facing customers’ and communities’ by providing comprehensive financial services based on creative and original ideas that leverage consulting, information technology (IT) and other services.
*2. T he Ibaraki region is that area where the provision and development of the transportation infrastructure is advancing and includes the Tsukuba Express, Kita-Kanto Expressway,
Metropolitan Inter-City Expressway (Ken-Ō Expressway) and is forming a deeper connection with Ibaraki Prefecture.

4

[About the logo]• Orange rectangles show “customers,” ”local communities,” ”Joyo
Bank,” the red rectangle shows “additional value.”• Spread made by four rectangles shows a “+” shape , and projects
the image of four rectangles making new value like a wind mill.

To “demonstrate collaborative creation” centered on the basic strategies of the 12th Medium-Term Business Plan, we started
the “project for the collaborative creation of region’s future ‘PLUS+.’” We will make ever-greater efforts to recover from theGreat East Japan Earthquake and contribute to solving the various challenges of the region.

Project Policy
Seeking to possibilities for utilizing comprehensive financial service to resolve challenges in local area, create collaboratively
the region’s future by business development through valuable planning and actions.

Three “PLUS’s”
1. Aiming to create additional values for customers, local communities and the Bank by solving challenges in our home region
and to provide greater support for recovery after the Great East Japan Earthquake.
2. Aiming to provide “advanced comprehensive financial service” which are essential service for the economy in our home region,such as “investment, funding, and settlement” and mixed creative functions such as “consulting and information technology.”
3. Acting to resolve agendas with positive thinking which improves motivation and brings about better business opportunities.

“Best partner bank forthe collaborative creation ofregion’s future”

Three components
1. Resolving challenges by smooth financial functions
development through activation
2. Businessthe local community and economy

3. Social contribution to region’s futureManagement Goals(Individual)
Contribution to satisfied lives(Corporate)
Assistance for growing sector(Public)
Creating active local communities

Expand consolidated net income
Aiming for record-high consolidated and nonconsolidated net income in final fiscal
year plan (FY2016)

Numerical targets (FY2016)
Consolidated
net income after tax¥30.0 billion or more

OHR*1

under 60%

Non-consolidated
net income after tax¥27.0 billion or more

ROE*2

approx. 5%

Non-consolidated
ordinary profit¥40.0 billion or more

Capital adequacy ratio

approx. 12%

Non-consolidated
gross business profit¥120.0 billion or more

*1. O
 HR is a primary indicator of management efficiency and shows the amount ofexpenses used to generate one unit of gross business profit.
*2. R
 OE is a primary indicator of capital efficiency and shows how much profit was
raised using shareholders’ equity.

5

FINANCIAL HIGHLIGHTS
Consolidated capital ratio
Remained at high levels

The Bank saw business profit, ordinary profit and net
income increase from fiscal 2013, in line with a rise in interest income and fees and commissions, and a fall in generaland administrative expenses.
On a non-consolidated basis, business profit rose ¥3.0
billion year on year to ¥40.2 billion, while ordinary profit
increased by ¥4.5 billion year on year to ¥40.4 billion andnet income by ¥1.8 billion year on year to ¥23.9 billion in
fiscal 2014.
The capital ratio remained at the high level of 11.92%
on a non-consolidated basis and 12.40% on a consolidated
basis.

(%)

14
13

12.81%

12

12.40%

12.60%

12.40%

12.19%

11.92%

11
10
0Basel II

Basel IIIAs of March 31,
2013

As of March 31,
2014

As of March 31,
2015

Consolidated capital ratio
Consolidated Tier I ratio

Net income
Net income climbed ¥1.9 billion to ¥23.9 billion year on year.

Deposits(Billions of yen)
(%)
100
5,000
Increased
3.1% from the previous fiscal year-end
to ¥7,728.7¥4,982.5
billion
75.9%
XX.X%
XX.X%
80

4,000

(Billions of yen) ¥3,785.6(Billions of yen)

25
20

¥23.9

¥22.0

¥20.3

98.4%

7,500
2,000

¥7,355.3 ¥7,238.6

10

100

(%)

98.3%

(%)

60

¥7,490.9 ¥7,369.3

80

6,000
1,000
4,500

15

60

2012

FY2012FY20130

FY2014

Balance of loans to¥7,728.7 ¥7,601.1
90
regional customers
40
Percentage of80loans
to regional customers
70

2013

1,500

98.3%
Loan balance
100

20

0
3,000 As of March 31, As of March
40 31, As of March 31,

5
0

9,000
3,000

0

60

2014

50

20
As of March 31,
2013

0 As of March 31,
2014

As of March 31,
2015

0

Loan balance
Balance of loans to regional customers
Percentage of loans to regional customers

Deposit balance
Local deposit balance
Local deposit balance percentage

Business profit, Ordinary income(Billions of yen)(%)
5,000 profit increased ¥3.0 billion year100
Businesson year to ¥40.2¥4,982.5¥4,800.6
billion,and ordinary
incomeincreased ¥4.5
billion to ¥40.4
77.0%
75.9%
80
4,000
¥3,785.6
billion.
¥3,696.8

Loans (Percentage of loans to regional customers)(Billions of yen)
(%)
100
5,000
Increased
4.7% fromtheprevious
fiscalyear-endto ¥5,656.4¥4,982.5¥4,800.6
billion
77.0%
75.9%

Loan balance

60
Balance of loans to50¥45.4
regional customers
40
2,000¥40.2 ¥40.4
40Percentage of loans¥37.2 ¥35.8
to regional customers
20
1,000
¥31.7
30
0
0
20 As of March 31, As of March 31, As of March 31,

3,000of yen)(Billions

2011

2012

¥3,696.8¥3,785.6

75.4%

(%)

60

3,000of yen)(Billions
7,000¥5,139.980
20¥4,073.6¥3,879.4
4,000
60
0
0
3,000 As of March 31, As of March 31, As of March 31,
5,000
1,000

2013

2011

2,000

2012

FY2013Business profit

0

FY20145,000¥4,982.5100

regional customers
70

Percentage of loans
60
to regional customers¥4,273.8

As of March 31,
2013

50
40
30
20

20
0 As of March 31,
2014

As of March 31,
2015

0

Loan balance
Balance of loans to regional customers
Percentage of loans to regional customers

Ordinary income

(%)

(%)

Balance of loans
80 to
75.5%

2013

40

6
(Billions of yen)

Loan balance40¥5,656.4¥5,399.3

1,000
FY2012

75.4%

100

2,000
6,000

10
0

80

4,000

(Billions of yen)

5,000

(%)

¥4,982.5100

Market share within Ibaraki Prefecture
Secured an ongoing high share of both deposits and loansof over 40%.
Deposits

Loans to individuals
Loans to individuals stood at ¥1,437.7 billion due to theongoing firm performance of housing loans.

Loans

1,500

12.02%

15.71%
42.97%

17.56%(Billions of yen)

1,250

15.06%

Joyo Bank¥1,437.7 ¥1,418.3

1,000

45.84%

Joyo Bank

750
500

22.37%

16.73%¥1,212.3 ¥1,211.3¥1,326.3 ¥1,317.8

250

7.03%
Joyo Bank
Other regional banks

0

4.71%

City banks/Trust banks
Shinkin banks (credit unions)

As of March 31,
2013

As of March 31,
2014

As of March 31,
2015

Balance of loans to individuals
Balance of loans to local individuals

Other

Note: Market share is calculated on the basis of private financial institutions.

Assets in custody(Billions of yen)
(%)
5,000
Increased
4.3% fromthe previous fiscal100
year-end to ¥1,180.0¥4,982.5¥4,800.6
billion
77.0%
75.9%
80
4,000
(Billions of yen)

1,200
3,000

200
0

¥3,696.8¥351.7¥388.7¥325.8¥298.1

As of March 31, ¥60.5
As of March 31, As of March
31,
¥58.3
2011
2012
2013

¥297.6
As of March 31,
2013(Billions of yen)

5,000
4,000

60 ¥1,089.0
40

Balance of loans toregional customers

3,000
3,000
2,500
2,000

20

Percentage of loans
to regional customers¥423.30¥298.8
As of March 31,
2014

80

¥3,785.6

(%)

60
41.8%

42.2%

35.7%

36.5%

0
1,000 As of March 31, As of March 31, As of March 31,¥372.7500¥1,838.3¥1,973.6¥1,623.9

2011

0

As of March 31,
2015¥2,106.3¥1,719.5
20

2012

As of March 31,
2013

Loan balance50

42.9%Balance of loans toregional customers
40
40 37.2%¥53.7

Percentage of loans
to regional customers
30¥1,833.802013

As of March 31,
2014

10

As of March 31,
2015

Number of loans to SMEs

(Number of loans)

1,500

36,000¥1,217.1¥1,110.0¥1,316.3

32,891(%)

32,425 100 32,995 32,374
80

24,000500¥426.9¥580.5¥496.9250

18,00060

12,00040

6,000
As of March 31,
2013

Housing loan

(Billions of yen)

¥4,800.6

As of March 31,
2014¥4,982.50

As of March 31,
201520
As of March 31,
2013

100

0 As of March 31,
2014

As of March 31,
2015

Number of loans to SMEs
Number of loans to regional SMEs

Apartment loan(%)

33,067 32,381

30,000

1,000
750

20

0

Balance of loans to regional SMEs
Balance of loans to SMEs
Percentage of loans to SMEs to total loans
Percentage of loans to regional SMEs to total regional loans(Billions of yen)

5,000

75.9%

¥239.2

Housing loan
Housing loans increased 8.1% from the previous fiscal yearend to ¥1,316.3 billion.

0¥4,800.6
77.0%

2,000
1,000
1,500

Insurance (based on the cumulative total of insurance premium revenue)
Government and other public bonds
Foreign currency-denominated deposits
Investment trust

1,250

(%)

100

¥4,982.5(Billions of yen) ¥3,696.8

Loan balance¥1,044.0¥1,035.8

1,000
2,000
800
1,000
600
0
400

¥3,785.6

Loans to SMEs

7

(Billions of yen)

5,000

¥4,800.6(%)¥4,982.5

100

BUSINESS HIGHLIGHTS
Support for Overseas Business Expansion

In addition, we also host business conferences to help
our customers expand their sales channels overseas. In fiscal 2014, this included a series of Manufacturing Forums
in China and Thailand and a Japanese Food Trade Fair in
Singapore, where we served as the intermediary providing
contact and business opportunities between local companies and our exhibiting customers.

We are also assisting our corporate customers to expand
business overseas through the issuance of local currency
stand-by credit and by providing local information, basedon our business alliance with nine financial institutions andone government agency in seven mainly ASEAN nations.
One recent alliance was a memorandum on businesscooperation in assisting overseas expansion that we concluded with the Foreign Investment Agency of Vietnam in
December 2014.

Overseas Network
Thailand

Representative Office

China• Kasikorn Bank
• Bangkok Bank

• Bank ofCommunications

Indonesia

Taiwan• Bank Negara Indonesia (BNI) • Chinatrust
Commercial Bank

Philippines• BDO Unibank
Provides information on each country’s domestic banking conditions and offers a variety of financial services,beginning with opening accounts• Opening of a New York Representative Office
In October 2014, we opened a representative
office in New York City to gather information on
the U.S., as the center of global economic activity
and finance, and to support customers expanding their businesses there. As a result, our directoverseas network now
consists of three representative offices inShanghai, Singapore
and New York.

New YorkJapan

Representative Office• Sompo Japan Nipponkoa Insurance Inc.
• Tokio Marine & Nichido• Mitsui Sumitomo Insurance Company, Ltd.
Manages a variety of overseas business risks• Nippon Export and Investment Insurance (NEXI)
Provides export insurance to manage the risks associatedwith overseas export transactions• Nippon Express (Tokyo Branch Office)Offers a full range of logistical services and expertiseSingapore• Hitachi Regional Technical Support Center (HITS)
Supports the overseas development of small- to mediumsized businesses in the Hitachi areaJapan

• Secom Co., Ltd.
• SOHGO SECURITY SERVICES CO., LTD. (ALSOK)
Provides and sells security systems and devices overseas
Proposes and provides overseas security services

Representative Office• Japan Bank for International Cooperation (JBIC)(State Bank of India)(Vietcom bank)

Provides information on country’s domestic banking
conditions and offers a variety of financial services,beginning with opening accounts

8Support for Manufacturers

technology and products of its corporate customers andholds a “Mekiki Ryoku (Discerning Eye) Training Seminar” tohelp its employees develop the required knowledge andexpertise.

Joyo Bank is expanding “next X” activities
to provide assistance to local manufacturing businesses over the next decade.
As part of these activities, we provide support for thecreation of new businesses and for promotion of alliancesamong companies and creation of new marketing channels
through forums such as the Joyo Manufacturing Forum,
technology and business meetings, in which many major
companies participate, as well as the “Action JAT” project, acollaborative venture with the National Institute of Advanced
Industrial Science and Technology (JAT). Likewise, we offer awide range of support through our own networks, including
support for industrial partnerships with universities and government agencies, such as the “Hizazume Meeting,” whichbrings together small groups for opinion exchanges on technological and product development with university professors and experts from research institutions. Another example
is our Joyo Practical Manufacturing Workshop, which supports personnel training.

Support for the Agri-Business
The Bank also convenes the “Joyo Commercial Food Fair”
and participates in the “Regional Bank Food Selection”
event on an ongoing basis to help food-related businesses
operators to expand their sales channels. In addition, weare enhancing our financial products for farmers by offering “Daichi” series farmers’ loans guaranteed by the Ibaraki
Agriculture Credit Guarantee Fund Association, and operating an “Asset-Based Lending (ABL) System” as a method forproviding finance to cattle breeders using fattening cattle as
collateral. At the same time, we make the most of our “JoyoDaichi to Umi (Land and Sea) Growth Support Fund” to help
business operators in the agriculture, forestry and fishingindustries make headway with sextic industrialization (integration of the primary × secondary × tertiary sectors) to drive
new business creation.

Joyo Manufacturing ForumRegional Bank Food Selection event

Initiatives Involving Collaborative
Industry-Academia-Government Teams

Support for Medical and Welfare Businesses

Joyo Bank provides support for the development of newtechnologies and products as well as assistance in applying
for various subsidies (408 cases in fiscal 2014) by collaborating with universities, government research institutions
and the private sector. These efforts are headed mainly bycollaborative industry-academia-government teams comprising staff with branch manager experience and threecoordinators with specialized knowledge, recruited fromamong academic and government institutions, and the
manufacturing sector.
To augment support for manufacturers, the Bank recognizes it must have a discerning eye for evaluating the

The ongoing demographic change in Japan (a falling birthrate coupled with an increasing number of aged), reformof the social security system and advances in medicalcare raise the prospect of a range of new financing needs,
including funding for upgrading of hospitals and theiroperation as businesses and for companies entering thehealthcare market. We have set up healthcare and welfare
teams within the Head Office and provide information
through consultations and seminars on longer-term business development and new business creation in these
new fields.
Moreover, in September 2014, we invested in a Regional9Support for Management Reform, Business
Revitalization, and Business Succession

Healthcare Industry Support Fund managed by the
Regional Economy Vitalization Corporation of Japan.
Going forward, Joyo Bank will continue contributing to
the development of the local economy by providing a raftof services to medical and healthcare business operators.

Branches and the Head Office work together to provide
corporate customers with management assistance ranging broadly in scope from management reform to business
revitalization, covering aspects such as business operation,organizational structure and financial administration. We also
help customers find solutions to management issues, suchas business succession for proprietors who are advancing inage and are faced with the challenge of finding a successor.

Online Banking for Corporations: JWEB OFFICEJWEB OFFICE is an online banking service that enables users
to perform balance and payment inquiries, money and bulk
transfers, salary deposits, collection of receivables and othertransactions from anywhere. Likewise, customers using
JWEB OFFICE can also use the Joyo Densai Service. JWEBOFFICE gives customers access to densai.net Co., Ltd., theJapanese Bankers Association’s subsidiary for the electronic
settlement of claims receivable, where they can obtainfunding through the transfer or discount of claims receivable by electronically registering the amounts and due
dates of the claims receivable.

Support for the Environment andRenewable Energy
We support companies that are working to bring about asustainable society through protection of the environment.
We offer loans with preferential interest rates to fund capital investment at companies that protect the environment
with renewable energy and energy conservation centeredon solar power generation businesses. In addition, we are
involved in environmental financing, including the introduction of environmental screening and ratings for lending.
In measures to respond to the government’s Feed-in
Tariff Scheme for Renewable Energy, we offer services tomeet a range of needs, including financing support frameworks for businesses involved in solar power generation
using the Asset-Based Lending System, acting as intermediary for solar-panel manufacturers and other companies, andbusiness consultation using the expertise of Joyo Industrial
Research Institute, Ltd.
In fiscal 2014, we offered support in the form of ¥34.6
billion in loans for solar power generation.

Joyo Industrial Research Institute
Joyo Industrial Research Institute conducts surveys andresearch on regional revitalization on a consignment basis
while providing various consulting services. The Institute’s
expert staff including certified SME management consultants and ISO auditors offer effective solutions to the wide
range of issues faced by our customers in the region.

Joyo Area Research Center
The Joyo Area Research Center cooperates with Ibaraki
Prefecture and various economic associations and research
institutions to perform various tasks that contribute to theregional community and economy. In particular, the center
conducts research and publishes data on economic industry trends and regional development, holding lectures andsending speakers to regional organizations and events.

10Initiatives in Support of Women’s Careers

The seminars were conducted based on feedback we
received from our Female Customer Service Task Force(Team of Hospitality).

Participation in Meeting of Regional Bank Presidents for
Accelerating Women’s Careers
The Meeting of Regional Bank Presidents for Promoting
Women’s Careers was launched in November 2014 withthe participation of the presidents of all 64 member banksof the Regional Banks Association of Japan. The meeting is
intended to promote the active appointment of talented,
motivated women, communicate the commitment of thenationwide network of regional banks toward women’s
career development, and work to foster women leaders
and their network. Joyo Bank fully supports these objectives and so takes part in the meeting. The Bank intends tofurther develop personnel programs for women’s careerdevelopment and strengthen related support.

Female Customer Service Task Force(Team of Hospitality)
This task force was formed to further enhance services
and products for female customers. It is led by our female
employees and considers a range of measures. New members were selected recently for the second stage of the task
force, to pick up where the first stage left off, with the goalof further improving service.

Appointment of Female Bank Officers
We believe that it is extremely important that the perspectives and mindsets of women are integrated into an organization if that organization is to thrive. Accordingly, we
actively appoint talented and motivated female employees
as bank officers. (As of March 31, 2015, we had 288 femalebank officers comprising 16.1% of the total.)

Support for Female Customers
Joyo Bank conducts a variety of initiatives to support thelife planning and asset formation of female customers. We
launched a new portal for women on our website called“J-Pallete” to introduce and recommend products matched
to different life stages and events of women, and to provide
useful information on money management and other topics. We also held asset management seminars in the cities
of Mito and Tsukuba for working women. Over 200 customers attended and, after the seminar, we provided advice tothe women seeking individual consultation.

11

CORPORATE SOCIAL RESPONSIBILITY (CSR)
Initiatives to Prevent Financial Crimes

Issuing Only IC Cash Cards
All new cash cards for ordinary deposits issued by The JoyoBank are cards embedded with an IC chip (“Joyo IC Card”).
The Joyo IC Card comes with an IC chip to make it difficult tocounterfeit or perpetrate skimming fraud, and the customer’s finger vein identification data is registered on the card,
which makes IC cards higher in security than conventional
magnetic strip cards. New cards are issued free of charge inorder to make them available to even larger numbers of customers. The Bank will continue working to further improve
both convenience and security for customers.

Security Measures for Online Banking
The Joyo Bank conducts a range of measures to ensure customers can use online banking services securely and withcomplete peace of mind. These measures include providing security software free of charge.
In September 2014, we introduced “one-push” authentication (two-channel authentication) for corporate customers. Two-channel authentication is a system for performing
login authentication through the combination of a computer and a smartphone; it reduces the risk of unauthorized
logins in the event passwords and other login information
is obtained by a criminal. We have also introduced authentication with one-time passwords and a function that partially limits real-time transfers.
In addition, for individual customers, we have distributed a Security Guide that provides an easy-to-understandsummary of the main methods used in online banking
crime along with important reminders for users. In addition,
our dedicated smartphone app comes embedded withsecurity software.

Disaster Preparedness Agreements with
Municipalities
The Joyo Bank has signed agreements with the cities ofMito, Tsukuba and Tsuchiura for cooperation in disasters
and other emergencies.
If there is a major disaster or power outage, for example,
we will provide electric vehicles, charging facilities, temporary evacuation sites, and storage facilities for relief
provisions.

Using Personal Checks to Fight Telephone-based
Identity Fraud
On the request of the Ibaraki Prefectural Police we have
implemented measures for preventing telephone-based
identity fraud that make use of bank cashier’s checks.
Requiring an ID to be shown at the teller window by the
person cashing the cashier’s check and requiring a waiting
period before the person can receive the money are effective measures for preventing customers from becoming
victims of this type of fraud. When elderly customers wish
to withdraw a large amount of money at a teller window,
we confirm the use of the funds through a questionnaire,a measure that has been in place for some time, and may
recommend the customer withdraw the money in the formof a bank cashier’s check. We intend to continue working with the police department to prevent damage fromphone-based identity fraud.

Environmental Preservation Initiatives
Forest Preservation Initiatives
Regional banks throughout Japan participate in Save The
Forest In Japan, an association they established to preserve
the beauty and health of country’s provincial woodlands for
future generations. At “Joyo Furusato Forest” in Naka Cityand the Mt. Tsukuba area, we are creating woodlands protecting and nurturing the greenery in our home prefecture
12Joyo Geibun Center Foundation

through forest thinning and tree planting activities. In April
2015, as a part of their training program, all new employees
took part in a commemorative tree-planting activity.

The Center’s ongoing objective is to contribute to prosperous and comfortable individual lifestyles by creating rich
local environments through art and culture. The center
focuses on promoting culture and supporting local culturalactivities.
The Center provides a venue for lifelong learning classes
centered on history, literature, and the liberal arts. Currently
there are some 1,300 people taking classes in Mito City andaround 400 in Tsukuba City.

“Eco-Ibaraki” Environmental Conservation Trust
Joyo Bank subsidizes organizations that engage in environmental preservation activities in Ibaraki Prefecture. In fiscal
2014, we oversaw the environmental protection activities ofMito City’s Shinso Elementary School, one of the recipientsof grants the Bank makes through the Trust, and held a ceremony for grant presentation.
Overview: jointly established with Sompo Japan
Nipponkoa Insurance Inc. in 1992. Each year, this trust
accepts entries from organizations seeking funding, which
are evaluated and selected by the executive committee.
Grants made in fiscal 2014:¥9,700,000 to 76
organizations

Joyo Historical Materials Museum
The Museum features the Currency Gallery, which displays
historical currency notes and banking materials, and theHistorical Materials Library, where visitors can view documents pertaining to local culture and finance. At the Art
Spot, the Museum periodically displays various exhibits.
In addition, the Museum holds classes on finance andprovides lectures to local residents on financial history andother topics.

Universal Design Initiatives
Approximately 240 of our employees assigned primarily tobranches are certified Service Care-Fitters® who have been
trained to assist customers with physical disabilities and theelderly so that they can use the financial services we provide with peace of mind. Apart from that, wheelchairs areavailable at 156 Joyo Bank branches. In addition, we run the
Dementia Supporter Training Program for all employees inan effort to promote a correct understanding of dementia
while cultivating “dementia supporters” who help those
suffering from the disease and offer heartfelt support totheir families.

Art Spot

Joyo Volunteer Club
The Bank operates the Joyo Volunteer Club to encourage
volunteer-based initiatives by Bank employees. Around3,700 employees registered in the club participate in activities in such areas as social welfare, environmental protection, international exchanges, sports activities and various
events. We also participate in support and fundraising activities for areas affected by the Great East Japan Earthquake.
In addition, we run an annual “One Towel Donation per
Employee Campaign,” which donated around 6,000 towels
to mainly welfare facilities in fiscal 2014.
13

CORPORATE GOVERNANCE AND INTERNAL CONTROL SYSTEM
To more securely earn the trust of all stakeholders including customers, local communities, employees and shareholders, Joyo Bank believes that its management must
be rooted firmly in compliance, sound and efficient, andextremely fair and transparent.
Always aware of the importance of corporate ethics,
the Bank has established a corporate philosophy comprising eight basic principles under which it is striving tostrengthen and enhance corporate governance.

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
We will resolutely build countermeasures and refuse all relationships withorganized crime and other antisocial forces, which threaten public law andCorporate Governance at Joyo Bank

order and safety and stand in the way of sound economic development.

Joyo Bank has adopted the company with an Audit &Supervisory Board. The system organization includes
the General Meeting of Shareholders, directors, Board of
Directors, Audit & Supervisory Board members, Audit &Supervisory Board, and an auditing company.
The Board of Directors meets once a month, in principle, to exercise decision-making and supervisory functions.
Since June 2009, 2 of the 12 directors have been outside
directors appointed to strengthen the supervisory functionof the Board of Directors.
The Audit & Supervisory Board consists of five Audit &Supervisory Board members, of which three are outside
members, and meets once a month in principle. Basedon an auditing policy and plan formulated by the Audit &Supervisory Board, the Audit & Supervisory Board members audit the directors’ execution of duties by attending
important meetings such as Board of Directors meetings,
examining documentation of important resolutions, andinvestigating the status of the Bank’s business operations
and assets.

We will contribute to economic and social development with valuable

Provide Valuable Financial Services
financial services that respond to customers’ needs and pay due consideration to the protection of their interests. To this end, we will apply
creativity and ingenuity to provide infrastructure and functions to support
customers’ economic activity, while upgrading the security level of ourservices and ensuring business continuity in the event of a disaster.
Relationship with the Regional Community
We will strive to disclose data such as business information actively andfairly, and to communicate broadly and openly with society.
Respecting the Human Rights of our Employees
We will respect the human rights and individuality of our employees,
ensuring a safe and productive work environment in which people fromdiverse backgrounds can achieve their full potential.
Environmental Initiatives
We will strive to reduce environmental burdens by efficiently using
resources and reducing waste, while working through our main businessas a bank to address environmental problems and provide financial services contributing to environmental protection.
Community Contribution Activities
We recognize that our continued existence and development is supported
by regional society, and as a good corporate citizen, we will develop
together with local communities and actively contribute to them.

(Internal audit)

Corporate Audit Division(Operating execution)(Decision-making/
Management supervision)

Business Section

Audit &
Supervisory Board
General Meetingof Shareholders

Board of Directors

Executive Officer
Committee

Business Management Div.
Business Promortion Div.
Government and Municipal Business Div.
Regional Partnership Div.
Treasury and Securities Div.
Markets Administration and International Div.
Credit Examination Div.
Business Innovation Div.

Consult

AdviseOperation Management Div.
Computer System Div.

Corporate GovernanceCommittee

Corporate Risk Management Div.
Corporate Planning Div.
Personnel Div.
General Affairs Div.

Auditing Company

14

The Bank has also adopted the Executive Officer
Committee system to expedite business execution. Under thissystem, important decisions for business execution other thanmatters to be resolved exclusively by the Board of Directors are
discussed and approved by the Executive Officer Committee.
Furthermore, the Bank has established a Corporate
Governance Committee to upgrade corporate governancewith a view to sustaining growth and enhancing corporate
value from a medium- to long-term perspective. As an advisory body to the Board of Directors, composed in majority by
independent directors, the Corporate Governance Committee
nominates candidates for appointment to the Board anddeliberates matters such as the compensation of directors, andreports back to the Board of Directors. Special committees are
established by the Bank to deal with important management
themes (Compliance Committee, General Budget Committee,
ALM Committee, Risk Management Committee, and Sound
Asset Committee). The committees conduct discussions andmake determinations, and follow procedures in their respective bylaws to report their findings and recommendations to
the Board of Directors and other pertinent bodies.

Board’s business decisions and supervision of directors’ execution of duties. The regulations also stipulate separation ofduties among directors to ensure that the Bank’s business iscarried out appropriately.
The Bank also has a Compliance and Risk Management
Division to supervise and rigorously enforce compliance.
This division implements a compliance program approvedby the Board of Directors to supervise compliance throughout the Bank and periodically report back to the Board of
Directors. The Bank also has a Compliance Hotline thatserves as an internal whistleblower system.
Important matters of compliance are discussed by the
Bank’s Compliance Committee, while a Compliance Audit
Committee comprising a panel of outside experts periodically verifies the Bank’s overall compliance standing.
Independent of the Bank’s business execution divisions,
there is also a Corporate Audit Division that conducts internal audits to ensure Joyo Bank’s internal controls are functioning properly.
Regulations and system for managing the risk of loss
The Bank has regulations for managing the risk of loss andstrives to manage various risks appropriately and establish
systems for comprehensively monitoring and managing
the risks to ensure sound management and a steady streamof revenue and income. At the same time, the Bank is building up a framework of business continuity plans (BCPs) in
preparation for emergency situations such as natural disasters and core ICT system failures.
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.
The Risk Management Committee is tasked with periodically assessing the Bank’s overall risk exposure, as wellas measuring individual risks and deliberating policies forcountering them. The director in charge of risk management
periodically reports back to the Board of Directors on thestatus of the Bank’s risk management and countermeasures.

Internal Controls and Risk Management
Joyo Bank is working to establish and strengthen internal
control through the following systems, based on a “Basic
Policy on Internal Control Systems” approved by the Boardof Directors. The systems ensure that the Bank’s directors are
executing their duties, and employees conducting business,both efficiently and in compliance with laws and regulations.
System for ensuring directors and employees are
executing their duties in compliance with laws andregulations and the Bank’s Articles of Incorporation
Compliance is the highest management priority under
Joyo Bank’s Management Philosophy of “Practicing soundmanagement, creation of values, and partnership with thehome region.” To ensure compliance, the Bank also has
a Corporate Philosophy and Action Guidelines providing
basic guidance for its corporate activities. Moreover, rules
governing the compliance system have been establishedand disseminated to the directors and employees to ensurethat the Bank remains in compliance with laws and regulations and its Articles of Incorporation.
Board of Directors Regulations govern the operation of
Joyo Bank’s Board of Directors. These regulations guide the

System for ensuring the efficient execution of duties
by directors
The Bank formulates business plans to clarify its management

15

System relating to reports from officers and employeesof the Joyo Bank Group and other reports to the Audit& Supervisory Board members
Audit & Supervisory Board members attend the Executive
Officer Committee and other important meetings of the
Joyo Bank Group, at which they are given the opportunity
to voice their opinions.
Officers and employees of the Joyo Bank Group areencouraged to report matters that could cause significant
damage to the Bank to the Audit & Supervisory Board
members, take advantage of the internal whistleblower
system to report the details confidentially and otherwise
provide information considered necessary by the Audit &Supervisory Board members.
Officers and employees are not to be treated unfairly
for having divulged such information to the Audit &Supervisory Board members.

vision and earnings targets, and compiles a general budget,among other details, each fiscal year to make the plans
more specific.
To carry out operations efficiently, the Bank has established Standards on Head Office Decision-Making Authoritythat clarify the decision-making authority attached to thebusiness assignments and duties of each director.
The Bank has an Executive Officer Committee andExecutive Officer Committee Regulations prescribing
details such as the committee’s role and when it meets. The
committee is tasked with deliberating important businessexecution matters. Various other committees made up of
executive directors, executive officers and division generalmanagers have also been established as needed to address
various business issues.
System for ensuring the reliability of financial reporting
The Bank and each of its Group companies have regulations governing the structure, organization, and implementation of internal control systems for financial reporting toensure that it is reliable.

Matters relating to advances or reimbursements for
expenses incurred by Audit & Supervisory Board
members when executing their duties and policy on
accounting for the expenses and reimbursements
The Bank is to bear the necessary expenses requested by
the Audit & Supervisory Board members, unless the Bank
can prove that the expenses were unnecessary for the execution of the Audit & Supervisory Board members’ duties.

System governing the treatment of employees
assigned to assist the Audit & Supervisory Board members with their duties when requested
The Bank is to assign at least one employee as the corporate auditing staff for assisting the Audit & Supervisory
Board members with their duties.
Furthermore, the Bank is to assign personnel withknowledge and capabilities suitable for assisting with auditing duties, and having no involvement in the Bank’s business execution.

Other systems for ensuring effectiveness of audits carried out by the Audit & Supervisory Board members
The Audit & Supervisory Board members, Corporate Audit
Division for internal audits, and other business divisions anddepartments cooperate with one another to raise the effectiveness of the auditing system.
The Chairman of the Board of Directors and the Bank’s
representative directors and the auditing company meet
periodically with the Audit & Supervisory Board members to
exchange opinions.

Matters relating to the independence of the above
employees from the Board of Directors and ensuringthat the employees carry out instructions from the
Audit & Supervisory Board members
In the event that the corporate auditing staff are to be reassigned, the director in charge is to give advance notice to
the Audit & Supervisory Board members, who are to beallowed to give their opinions.
Furthermore, the corporate auditing staff are to assist
the Audit & Supervisory Board members with their duties
by exclusively following their instructions.

Risk Management
On one hand, deregulation and globalization of finance,
advances in ICT, and the growing diversification andsophistication of customer needs have broadened the business opportunities for Joyo Bank. However, on the other
hand, this has also meant that the Bank’s risk exposures
have grown much more diversified and complex. Amid this16

Internal auditing function[Oversight of decision-making]Board of Directors[Auditing organizations]Audit and Supervisory Board(Auditors)[Compliance report]
Executive Officer Committee[Policy establishing and performance evaluation]
Compliance Committee[Auditing department]
Corporate Audit Division
Supervisory group
Branch audit group
Operations and Asset Auditing Group
Main office[Management]
Compliance and Risk Management Division[Supervision]
Compliance and Supervisory Officer

Group company[Senior Manager] Representative [Manager] Compliance Officer

Head office departments and branches, etc.
[Senior Manager] Supervisor [Administrator] Compliance Officer
External auditing functions[Group company management]
Corporate Planning Division
Group Business OfficeEvaluation and audit[External audit]
Compliance Audit 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.

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.

environment, the Bank is striving to increase the sophistication of its risk management, having positioned it as a priority business issue from the perspective of maintaining andimproving sound management.

17

Risk Management System
Risk Management
Committee
ALM Committee

Credit Risk
Management
Dept.

Market Risk
Management
Dept.

Board of Directors

Internal Auditing Dept.

Integrated Risk Management Dept.

Verification of suitability
and validity of the risk
management system

Liquidity Risk
Management
Dept.

Operational Risk Management Office

Administrative
Risk
Management
Dept.

System Risk
Management
Dept.

Personal
Management
Risk
Management
Dept.

Tangible
Assets Risk
Management
Dept.

Compliance(legal)Risk
Management
Dept.

Business Promotion Departments, Administrative Control Departments, Group Companies

Integrated Risk Management

In business management, the departments that carryrisks when conducting transactions (marketing departments) and the departments that internally manage theresults 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.

At a time of increasing diversification and complexity inbanking operations, we have adopted a policy of integrated
risk management to gain a quantitative understanding ofrisk, using statistical methods such as Value at Risk (VaR)
for individual risk categories (credit risk and market risk), toenable systematic risk management rather than management by individual risk category.
By comparing and contrasting comprehensive
amounts at risk with the bank’s financial resources (owncapital), we are committed to maintaining capital at an
appropriate level.
Allocation of Risk Capital
We pre-allocate capital to cover risk in terms of individual
categories (credit risk, interest-rate risk, price fluctuation risk
and operational risk). Each month, we carry out monitoring
to confirm that each quantified risk amount (amount ofrisk capital to be used) is kept within the allocated capital
parameters.
With regard to capital allocation, we ensure a risk buffer is in place to position us to deal with losses that exceed

18

scenarios used by our statistical tools, or which are difficult to quantify using statistical methods. To confirm ourcapital adequacy including the risks mentioned above, we
use stress tests that enable us to appraise the impact on
Bank capital of scenarios such as a sudden economic slowdown. In addition, back-testing through comparison of risk
amounts calculated using VaR formulas and actual profit
performance enables us to confirm the appropriatenessand effectiveness of our statistical methods.
Risk Buffer
Credit Risk

Interest-rate
Risk
Price
Fluctuation Risk
Operational
Risk(Allocated Resource) (Capital Allocation)

Credit Risk
Interest-rate
Risk
Price
Fluctuation Risk
Operational
Risk(Risk Capital)

Stress Test

Shareholders’Equity(Tier I basis)

system for accurately reflecting in the asset self-assessments the business performance achieved by the borrowerand changes in the value of collateral.
We have also adopted an automated scoring system forsmall-amount loans to unify credit screening standards andimprove efficiency.
• Internal Credit Ratings

Margin

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,

Risk
Exposure
Under
Stresscredit 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.
• Asset Self-Assessment
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.

Credit Risk Management
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.

• Quantification of Credit Risk Management

 verview of Basic Policy and Procedures with RegardO
to Credit Risk Management
We have compiled management guidelines for credit risk,
which serve as a basic policy for appropriate managementof credit risk on individual loans and management of thecredit portfolio, focusing on risk dispersion as its basic tool.

T 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.

 redit Risk Management for Individual LoansCWe 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

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.

19Market Risk Management

liquidity status, we are creating a system enabling us torapidly respond, to the fullest possible degree, in cases ofmaterialization of liquidity risk events, based on countermeasures drawn up for emergency situations.

Market risk refers to the possibility of losses arising fromexposure to risk of change in the value of assets and liabilities of the Bank and in its earnings, due to fluctuations ininterest rates, foreign exchange rates and stock prices, etc.
We manage all assets and liabilities (deposits, loans,securities, and others) comprehensively based on ALM(asset and liability management) to manage market risks.

Operational Risk Management
Operational risk refers to the risk of losses arising from
irregular procedures or employee conduct in 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.

Market Risk Management System
The front and back office departments are separated. We
have also established middle-office risk management sections to enable a mutual system of checks and balances.
Market Risk Control
To control market risk at appropriate levels, we set loss limits, position limits and other thresholds for each category oftransaction, after setting risk tolerance parameters (capital
allocation) reflecting the Bank’s financial strength, riskreturn profile and other factors.
We also have in place a system in which an ALM
Committee decides whether to conduct checks on statusof compliance with monthly thresholds and other mattersand takes measures when necessary. In addition to using
VaR, we also approach market risk with multifaceted analysis using tools such as basis point value (BPV) analysis, gap
analysis, scenario analysis (simulation method) and sensitivity analysis. This enables us to control risks within a tolerable range reflective of the Bank’s financial strength.

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 down
through guidance and training. We are also verifying theeffectiveness of internal audits and taking steps to preempt
accidents.

Liquidity Risk Management
Liquidity risk refers to the possibility of losses arising fromexposure to risk due to difficulty in securing needed funding after an unforeseen funding outflow or similar events,
or a sharp rise in fund-procurement costs. At the Bank,
maintaining liquidity risk at a safe and appropriate level is abasic management policy. As a matter of policy, we maintain a certain level of assets that can be quickly converted
into liquid form (liquidity reserve assets), and ensure thatany funding gap for a given period of time (the amountnecessary for fund procurement) is kept within the parameters of assets that can be quickly converted into liquid form.
In addition to continuous monitoring of market trends andSystem 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.

20

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.

Ensuring Strict Confidentiality in the Management of
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 orhuman error.
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.

Crisis Management
 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.

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.

Customer Protection
To ensure peace of mind for our customers, the Bank established the Customer Protection Management Policy, and isdeveloping a management system that includes the establishment of a controlling division.
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. We are working to further
improve the quality of explanations by perfecting our staff’s
knowledge of financial products and services, so they canenable customers to understand them more easily.
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 businessplanning division. 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.
21

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 is

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.

22

Consolidated Financial Statements

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

2015

2014

Thousands of
U.S. dollars (Note 2)
2015

Assets:Cash and due from banks (Note 23)
Call loans and bills purchased
Other debt purchased
Trading assets (Note 24)
Securities (Notes 7, 8, 13, 23 and 24)
Loans and bills discounted (Notes 6, 10, 11 and 23)
Foreign exchanges (Note 6)
Lease receivables and lease investment assets (Notes 7 and 22)
Other assets (Note 7)
Tangible fixed assets (Note 18)
Intangible fixed assets
Net defined benefit asset (Note 14)
Deferred tax assets (Note 15)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for devaluation of investment securities
Total assets¥  496,348
14,356
12,5094,999
2,742,510
5,618,019
3,296
38,571
52,71994,961
10,5701,438
1,966
14,961(41,765)(9)¥9,065,458¥  224,661
7,181
14,6603,387
2,760,304
5,363,389
2,251
36,08147,812
96,121
10,902—
2,245
14,522(46,915)(35)¥8,536,571$ 4,130,385
119,468
104,101
41,60522,821,921
46,750,603
27,435
320,974
438,710790,228
87,965
11,97016,367
124,506(347,553)(74)$75,438,616

Liabilities and net assets
Liabilities:
Deposits (Notes 7 and 23)
Call money and bills soldPayables under securities lending transactions (Notes 7 and 23)
Trading liabilities
Borrowed money (Notes 7, 10 and 23)
Foreign exchanges
Bonds (Note 12)
Bonds with warrant attached
Due to trust account
Other liabilities (Note 10)
Reserve for director’s bonuses
Net defined benefit liability (Note 14)
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 (Note 15)
Deferred tax liabilities for land revaluation (Note 3)
Negative goodwill
Acceptances and guarantees
Total liabilities¥7,725,643
44,324
143,395
160
345,388551
15,00036,051
13
66,084
62
7,997
39
2,164
138
7
1,169
2
48,507
10,136
1,817
14,961¥8,463,618¥7,489,932
71,839105,996141
218,248353
15,000—19
62,790
48
8,834
39
1,993
127
2
1,505
1
14,352
11,872
1,975
14,522¥8,019,600$64,289,288
368,846
1,193,272
1,338
2,874,166
4,592
124,823300,000
113
549,927519
66,552329
18,012
1,152
61
9,728
16
403,656
84,347
15,122
124,506$70,430,376

Net assets:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on available-for-sale securities (Note 24)
Deferred losses on hedging instruments, net of taxes
Land revaluation excess, net of taxes (Note 15)
Remeasurements of defined benefit plans (Note 14)
Total accumulated other comprehensive income
Equity warrants
Minority interests
Total net assets
Total liabilities and net assets¥   85,113
58,574
311,093(21,619)
433,160
159,909(1,725)
12,666(3,756)167,094
147
1,437
601,840¥9,065,458¥   85,113
58,574
300,506(21,079)
423,11386,445(2,072)
12,184(5,656)90,900113
2,843
516,971¥8,536,571$   708,272
487,426
2,588,775(179,907)
3,604,566
1,330,697(14,355)
105,402(31,257)
1,390,486
1,223
11,963
5,008,239$75,438,616

Millions of yen
March 31,

See accompanying notes to the consolidated financial statements.

23

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

2015

2014

Thousands of
U.S. dollars (Note 2)2015¥ 95,952
67,78827,455708
26,297
1,842
5,240
28,574
157,906¥ 95,180
69,63524,854689
24,3051,517
7,800
30,382
159,186$  798,471
564,105
228,471
5,894
218,837
15,32943,605
237,781
1,314,025

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
Other operating income
Other income
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses (Note 17)
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred (Note 15)
Income before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

2,395
903
1,821
7,490
2,263
72,161
24,926111,963
45,943

2,583
692
1,497
7,136
6,215
72,785
28,106
119,018
40,16819,936
7,516
15,15962,335
18,838600,491
207,430
931,708382,316

12,497
4,517
28,927247¥ 28,680

12,2772,500
25,389347¥ 25,042

103,999
37,594
240,723
2,059$  238,663

Net income per share (in yen and dollars) (Note 29)¥  39.48¥  33.52$     0.32

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

2015

2014

Thousands of
U.S. dollars (Note 2)2015¥ 28,927
76,78273,489
347
1,045
1,900
105,710¥25,389
(17)
(596)
579
—
—
25,372$240,723
638,952
611,542
2,892
8,703
15,814
879,675

105,438271

25,019352

877,413
2,261

Millions of yen
Years ended March 31,

Income before minority interests
Other comprehensive income (Note 19)
Unrealized gains on available-for-sale securities
Deferred gains on hedging instruments, net of taxes
Land revaluation excess, net of taxes (Note 15)
Remeasurements of defined benefit plans (Note 14)
Comprehensive income(Attributable to)Shareholders of parent
Minority interest
See accompanying notes to the consolidated financial statements.

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

2015

2014

Thousands of
U.S. dollars (Note 2)
2015

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$  708,272——$  708,272

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$  487,426——$  487,426¥300,506(748)
299,757¥286,893——$2,500,674(6,229)2,494,444(6,622)
28,680(3)(11,283)564
11,335¥311,093(6,735)25,042(24)(4,844)174
13,612¥300,506(55,106)
238,663(29)(93,895)
4,698
94,330$2,588,775¥ (21,079)¥ (23,299)$ (175,415)(11,842)
19
11,283(539)¥ (21,619)(2,710)
85
4,844
2,219
¥ (21,079)(98,551)
163
93,895(4,492)$ (179,907)¥423,113(748)
422,364¥407,281——$3,520,957(6,229)3,514,727(6,622)
28,680(11,842)16—
564
10,795¥433,160(6,735)25,042(2,710)60—
174
15,832¥423,113(55,106)
238,663(98,551)
134
—
4,698
89,838$3,604,566¥ 86,445¥ 87,047$  719,357

73,46473,464¥159,909

(601)
(601)
¥ 86,445

611,340
611,340$1,330,697

Millions of yen
Years ended March 31,

Retained earnings
Balance at end of the previous year
Cumulative effects of changes in accounting policies
Restated balance
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
Cumulative effects of changes in accounting policies
Restated balance
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
Accumulated other comprehensive income:Unrealized gains 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
25

2015

2014

Thousands of
U.S. dollars (Note 2)2015¥ (2,072)¥ (2,651)$  (17,247)

347
347¥ (1,725)579
579¥ (2,072)

2,892
2,892
$  (14,355)¥ 12,184¥ 12,359$  101,396

481
481¥ 12,666

(174)
(174)
¥ 12,184

4,005
4,005
$  105,402¥ (5,656)$  (47,072)

1,900
1,900
¥ (3,756)¥     ——
(5,656)(5,656)¥  (5,656)¥ 90,900¥ 96,754$  756,434

76,19476,194¥167,094(5,853)(5,853)¥ 90,900

634,052
634,052$1,390,486¥    113¥    120$      945

3333¥    147(6)(6)¥    113277
277$    1,223¥  2,843¥  2,493$   23,659(1,405)(1,405)¥  1,437

350
350¥  2,843(11,696)(11,696)$   11,963¥516,971(748)
516,222¥506,649——$4,301,997(6,229)4,295,767(6,622)
28,680(11,842)16
564
74,821
85,617¥601,840(6,735)25,042(2,710)60
174(5,510)
10,321¥516,971(55,106)
238,663(98,551)
134
4,698
622,633
712,472$5,008,239

Millions of yen
Years ended March 31,

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
Remeasurements of defined benefit plans
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
Cumulative effects of changes in accounting policies
Restated balance
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.

26

15,814
15,814$  (31,257)

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

Millions of yen
2015
2014

Years ended March 31,

Thousands of
U.S. dollars (Note 2)
2015

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment losses
Gain on negative goodwill
Amortization of negative goodwill
Net decrease in reserve for possible loan losses
Net decrease in reserve for devaluation of investment securities
Net increase in reserve for directors’ retirement benefits
Net increase in reserve for reimbursement of dormant deposits
Net increase (decrease) in reserve for frequent users services
Net decrease in reserve for other contingent losses
Net increase (decrease) in reserve for losses on interest refunded
Net increase (decrease) in reserve for bonuses to directors and corporate auditors
Net decrease in net defined benefit asset
Net decrease in net defined benefit liability
Interest and dividend income
Interest expenses
Net losses related to securities transactions
Foreign exchange gains, net
Losses on disposal of tangible fixed assets
Net increase in trading assets
Net increase (decrease) in trading liabilities
Net increase in lease investment assets
Net increase in loans and bills discounted
Net increase in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase in borrowed money excluding subordinated borrowings
Net decrease (increase) in due from banks excluding cash equivalents
Net decrease (increase) in call loans and others
Net increase (decrease) in call money and bills soldNet increase in payables under securities lending transactions
Net increase in foreign exchange (assets)
Net decrease in foreign exchange (liabilities)
Net decrease (increase) in due to trust accountInterest and dividends received
Interest paid
Others, net
Subtotal
Income taxes paid
Net cash provided by operating activities¥ 45,943
5,710
1,020
(1,335)(158)(5,150)
(26)
0
170
10
(336)
4
13
(1,438)(836)(103,319)
5,120
1,658
(35,769)
102(1,612)19(2,489)(254,630)
235,695
15
132,539
11,383(5,024)(27,515)
37,399(1,045)198(5)102,982(5,367)680
134,608(13,624)
120,983¥ 40,168
5,841
597
—
(158)
(4,504)
—
5
144
(2)
(13)
(3)
(1)
—
(606)
(101,539)
4,773
95(23,567)
554
(667)
(18)
(5,174)(255,073)
135,439(5,429)103,003(5,597)
7,324
33,373
14,712(407)
88(7)
102,620(5,724)(7,559)32,686(12,453)
20,232$   382,316
47,522
8,493(11,117)(1,315)(42,859)
(222)
4
1,421
87
(2,797)36
112(11,970)(6,964)(859,779)
42,61113,802(297,655)
851(13,415)158(20,718)(2,118,916)
1,961,353
126
1,102,935
94,727(41,812)(228,972)
311,219(8,698)1,648(46)856,975(44,663)
5,665
1,120,146(113,379)
1,006,766

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
Purchases of subsidiary stock
Net cash used in investing activities(863,354)
736,166
287,759(4,665)
1,941(2,259)(339)
155,249(794,302)
417,373
282,427(7,099)154(3,751)—(105,198)(7,184,440)
6,126,042
2,394,605(38,821)
16,152(18,799)(2,822)
1,291,916

Cash flows from financing activities:
Proceeds from issuance of bonds with warrant attached
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)

30,674(5,400)(6,622)(2)(11,842)3
6,810
27283,070
210,363¥ 493,433—(5,000)(6,735)(2)(2,710)60(14,386)20(99,332)
309,695¥ 210,363

255,261(44,936)(55,106)(18)(98,551)
26
56,675225
2,355,583
1,750,546$ 4,106,130

See accompanying notes to the consolidated financial statements.

27

Notestotothe
theConsolidated
ConsolidatedFinancial
FinancialStatements
Statements
Notes
THE
JOYO
BANK,
and Consolidated
Subsidiaries
THE
JOYO
BANK,
LTD.LTD.
and Consolidated
Subsidiaries

1. Basis of Preparation

The accompanying consolidated financial statements of The Joyo Bank, Ltd. (the “Bank”) and consolidated subsidiaries areprepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to theapplication 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 havebeen 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 for the convenience of the reader, the U.S. dollar amounts represent atranslation of the Japanese yen amounts at ¥120.17 = US$1.00, the exchange rate prevailing on March 31, 2015.

3. Significant Accounting Policies(a) Consolidation
The accompanying consolidated financial statements include the accounts of the Bank and nine major subsidiaries.
There are no unconsolidated subsidiaries. There are no unconsolidated subsidiaries and affiliates that are accounted for by theequity method. Three affiliates, Ibaraki-kizuna Investment Limited Partnership, Ibaraki New Industry Creation Investment Limited
Partnership, Ibaraki Revitalization Investment Limited Partnership are not accounted for under the equity method because theamounts of net income, retained earnings and accumulated other comprehensive income of the affiliate are immaterial, and as such,it does not have any significant impacts on the consolidated financial statements when excluded from the scope of equity method.
All significant intercompany transactions have been eliminated in consolidation. Assets and liabilities held by consolidated
subsidiaries are stated at fair value at a time of acquisition.
(b) Consolidated subsidiaries’ closing dateClosing date of nine consolidated subsidiaries is March 31.
(c) 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 from arbitrage between markets) are valued at market or fairvalue, 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 on the balance sheet date.
Trading income or trading expenses include interest received or paid during the fiscal year. The year-on-year valuationdifferences of securities and monetary claims are also recorded in the above-mentioned accounts. As for the derivatives, assumingthat the settlement will be made in cash, the year-on-year valuation differences are also recorded in the above-mentioned accounts.
(d) 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 andinvestment 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 basically calculated by the moving-average cost method.) Other listed securities arestated at fair value based on the market 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 statedat 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.
(e) Derivatives
Derivatives positions held by the Bank (not including transactions for trading purposes) are stated at fair value.

128

(f) Depreciation of tangible fixed assets
Depreciation of tangible fixed assets held by the Bank 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-balancemethod, 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).
Depreciation of lease assets in “Tangible fixed assets”, which are the finance leases other than those that transfer the ownershiplease property to the lessee is calculated using the straight-line method over the lease term with zero residual value unless residual
value is guaranteed by the corresponding lease contracts.
(g) Reserve for possible loan losses
The reserve for possible loan losses of the Bank is provided as detailed below, in accordance with the internal rules for providing
reserves for possible loan losses:
For claims to debtors who are legally bankrupt (as a result of bankruptcy, special liquidation, etc.) or who are substantiallybankrupt, a reserve is provided based on the amount of the claims, net of the amounts expected to be collected by the disposal ofcollateral 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 is provided based on theamount considered necessary based on an overall solvency assessment of the amount of claims net of the amounts expected to becollected 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 suchassessments, 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 the actual historical rate ofloan 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, the amounts of the claims deemed
uncollectible in excess of the estimated value of the collateral or guarantees have been written off in aggregate amounts of ¥16,905
million and ¥19,748 million as of March 31, 2015 and 2014, respectively.
(h) Reserve for devaluation of investment securities
A reserve for the devaluation of investment securities is provided at the amount deemed necessary to cover estimated possible
losses on investments which the Bank and its consolidated subsidiaries may incur in the future.
(i) Reserve for employees’ retirement benefits
In calculating the projected benefit obligation, the benefit formula basis is used to attribute the expected benefit attributable to therespective fiscal year.
Prior service cost is deferred and amortized using the straight-line method over certain years (10 years) within the averageremaining service period of the eligible employees.
Unrealized actuarial losses are deferred and amortized using the straight-line method over a ten-year period commencing withthe following year, which is shorter than the average remaining service period of the eligible employees.
(j) Reserve for directors’ bonuses
Reserve for directors’ bonuses represents estimated cost of directors’ (including executive officers) bonuses attributable to the fiscal year.

(k) Reserve for directors’ retirement benefits
Reserve is made for the payments of retirement allowances to directors and corporate auditors of the consolidated subsidiaries
based on an estimate of the amount attributable to the fiscal year.
(l) Reserve for reimbursement of dormant deposits
Reserve for reimbursement of dormant deposits which were derecognized as liabilities under certain conditions is provided for229possible losses on the future claims.
(m) Reserve for frequent users services
Reserve for frequent users services, which is provided to meet future use of credits granted to credit card customers, 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.
(n) Reserve for losses on interest refunded
One consolidated subsidiary provides a provision for losses on interest refunded in an amount deemed necessary 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 the Interest Limitation Law.
(o) Reserve for contingent losses
The Bank makes reserve for possible losses on loans guaranteed by the credit guarantee corporations in an amount deemednecessary based on estimated losses in the future, calculated using historical default rates after exclusion of contingent losses
covered by other reserves.
(p) Reserves under special laws
The reserve under the special laws is a reserve for contingent liabilities and provided for compensation for losses fromsecurities-related transactions or derivative transactions in the amount of ¥2 million and ¥1 million as of March 31, 2015 and 2014,
pursuant to Article 46-5-1 of the Financial Instruments and Exchange Act and Article 175 of the related cabinet order.
(q) Negative goodwill
Negative goodwill is amortized using the straight-line method over 20 years.
(r) Deferred charges
Bonds issuance costs and stock issuance costs are charged to expenses as incurred.
(s) Translation of foreign currencies
Foreign currency-denominated assets and liabilities of the Bank are translated into Japanese yen at the rates prevailing at thebalance sheet date. Foreign currency-denominated assets and liabilities held by consolidated subsidiaries are translated into
Japanese yen principally at the rates prevailing at the respective balance sheet dates.
All consolidated subsidiaries have a fiscal year end of March 31.
(t) 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 a lessee
Using the same method applied to operating lease transactions.
As a 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.
(u) Recognition of income on finance lease
As a lessor income and expense are recognized when lease receivables are collected as for finance lease transactions that do nottransfer ownership of the property.
(v) Hedging
Hedging against interest rate risks
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 AccountingStandards 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 the changes in interest rates,

330

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 such hedges in fixing cash flows by verifying the correlation between the hedged
items and the hedging instruments.
Hedging against foreign exchange fluctuation risks
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, in accordance 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).
To minimize the foreign exchange fluctuation risks on monetary assets and liabilities, the Bank engages in currency swaps,
foreign exchange swaps, and similar transactions. The effectiveness of these transactions in the hedging of the foreign exchangerisks 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 some assets and liabilities held by
the Bank and its consolidated subsidiaries.
(w) 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.
(x) Land revaluation excess
In accordance with the Law concerning the Revaluation of Land (Act No. 119, effective March 31, 1998), 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 asland 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¥28,950 million and ¥29,682 million as of March 31, 2015 and 2014, respectively.
(y) Earnings per share
The computation of earnings per share of common stock is based on the weighted average number of shares outstanding during
each year.
(z) 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 the time deposits of certain consolidated subsidiaries.
Millions of yen
2015

March 31,2014

¥496,348

Cash and due from banks
Deposits with banks other than the Bank of Japan
Cash and cash equivalents¥224,661(2,914)(14,298)¥493,433¥210,363

4. Accounting change

Accounting Standard for Retirement Benefits
From the fiscal year ended March 31, 2015, the Bank and its consolidated subsidiaries have adopted the Accounting Standard for
Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and the Guidance on Accounting Standard for Retirement Benefits(ASBJ Guidance No. 25, Mar 26, 2015), in terms of regulations stipulated in Accounting Standard, Paragraph 35 and the Guidance,
Paragraph 67. We have reviewed the calculation methods of the projected benefit obligations and service cost, which changed themethod of attributing the expected projected benefit obligations to periods of service from a straight-line basis to a benefit formulabasis, and we also reviewed the change in the calculation of the discount rate from the one using the discount rate based on the
average remaining service years of employees to the weighted average discount rate based on the estimated timing of each benefit
payment.
The Accounting Standard and the Guidance have been applied in accordance with the transitional treatment stipulated in the
Accounting Standard, Paragraph 37, and the amount of financial impact resulting from the change in the calculation method of the
projected obligations and service cost was added to or deducted from Retained earnings at the beginning of the fiscal year ended
March 31, 2015.
As a result of this change, net defined benefit liability increased by ¥1,156 million (¥1,962 million decrease in pension plan and431

¥3,119 million increase in lump-sum) and retained earnings decreased by ¥748 million at the beginning of the fiscal year ending
March 31, 2015. Effect on the income before income taxes and minority interests is minor for the year ended March 31, 2015.
Accounting changes that are difficult to distinguish from changes in accounting estimates
The Bank had applied the declining-balance method to the depreciation of its tangible fixed assets, except for buildings (excluding
accompanying facilities) acquired on or after April 1, 1998 and lease receivables and lease investment assets ). However, this waschanged to the straight-line method in the year ended March 31, 2015.
Under the 12th Medium-Term Business Plan launched in the year ended March 31, 2015 for becoming the "Best partner bank forthe collaborative creation of the region's future," the Bank had decided to innovate its marketing channels, as well as its marketingand operating processes. Specifically, the Bank plans to renovate or rebuild branches and invest in the renewal of office machineries
and other equipments to strengthen marketing and improve customer convenience. Having conducted a general review of suchinvestment projects, including the format of the investments, the Bank determined that its branches, office machineries andequipments, and other tangible fixed assets would be used constantly over a long period of time. Consequently, contemplating the
fixed nature of the value in use throughout the useful life of the assets, the Bank decided to change its depreciation method oftangible fixed assets to the straight-line method to more accurately reflect business conditions. As a result of this change, income
before income taxes and minority interests increased by ¥1,503 million.

5. Standards issued but not yet effective

Accounting Standard for Business Combinations(1) Outline
The accounting standards have been revised mainly on (i) the treatment of a change in the parent company’s ownership interestin a subsidiary in the case where the parent company continues to control the subsidiary upon additionally acquiring the sharesof the subsidiary or other cases, (ii) the treatment of acquisition cost, (iii) the treatment of the transitional accounting, and (iv) the
presentation of net income and the change in presentation from minority interests to non-controlling interests.
(2) Dates of application
The Bank intends to adopt revised accounting standards from the beginning of the fiscal year beginning on April 1, 2015.
(3) Impacts of adoption of the revised accounting standards
Impacts of adoption of the revised accounting standard are not yet determined.

6. 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 foreignexchanges bought without restrictions. The face value at March 31, 2015 and 2014 totaled ¥21,861 million and ¥22,859 million,
respectively.

7. Pledged Assets

Assets pledged as collateral at March 31, 2015 and 2014 were as follows:
Millions of yen
2015

March 31,

2014

Pledged assets:¥601,823

Securities¥440,698

Liabilities covered by pledged assets:
Deposits

40,714

26,047

Payables under securities lending transactions

143,395

105,996

Borrowed money

319,926

196,996

In addition to the above, securities amounting to ¥60,943 million and ¥48,096 million at book value were pledged as collateral inconnection with bank transfer settlements and futures transactions as of March 31, 2015 and 2014, respectively.
One consolidated subsidiary had pledged its lease receivables amounting to ¥127 million and ¥259 million as of March 31, 2015
and 2014, respectively.
“Other assets” included lease deposits of ¥1,365 million and ¥1,401 million, at March 31, 2015 and 2014, respectively.“Other
assets”also included Initial margins on futures transactions of ¥160 million at both March 31, 2015 and 2014.

532

8. Investments in unconsolidated subsidiaries and affiliates

Investments in unconsolidated subsidiaries and affiliates at March 31, 2015 and 2014 were as follows:
Millions of yen
2015

2014

¥425

Investments¥423

9. Commitments and Contingent Liabilities

Overdraft facilities and line-of-credit contracts are agreements under which, subject to compliance with the contractual 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 ¥1,605,200 million and ¥1,552,123 million at March 31,
2015 and 2014, respectively. Of this amount, facilities/contracts which expire within one year or which are unconditionally cancelable
at any time, totaled ¥879,018 and ¥876,495 million at March 31, 2015 and 2014, respectively.
Most of these agreements will expire without the clients’ having utilized the financial resources available to them, and the amountof the non-executed financing will not necessarily impact on the Bank or its consolidated subsidiaries’ future cash flows. Most ofthese 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 in view 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 date on which an agreement
is entered into. In addition, after facilities/contracts are set forth the Bank will 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 maintaincreditworthiness.

10. Borrowed Money

Borrowed money included subordinated debt of zero and ¥5,400 million, at March 31, 2015 and 2014.
Borrowed money at March 31, 2015 and 2014 consisted of the following:
Millions of yen
Description

2015

%
2014

Due

Average interest rate

Bills rediscounted

¥—

¥—

—

Other borrowings

345,388

218,248

0.19

April 2015 - March 2020

Lease obligations

25

30

4.91

April 2015 - July 2020

Notes:—

1. Average interest rate represents the weight average interest rate based on the balances and rates at respective fiscal year-end.
2. The repayment schedule within five years on borrowed money at March 31, 2015 was as follows:
Millions of yen
Other borrowings

Lease obligations

Within 1 year

¥79,562¥4

After 1 year within 2 years

103,555

5

After 2 years within 3 years

8,803

4

After 3 years within 4 years

150,725

4

After 4 years within 5 years

2,743

4

11. Non-Performing Loans

In accordance with the disclosure requirements under the Rules for Bank Accounting in Japan, the balance of loans and bills
discounted at March 31, 2015 and 2014 included the following non-performing loans:
Millions of yen
March 31,

2015

2014

Loans in bankruptcy and dishonored bills¥1,278¥1,694

Delinquent loans

87,175

100,471

Loans past due with respect to interest payments for more than 3 months
Restructured loans
Total

479

944

26,35323,823¥115,287¥126,933

Notes: 1. Loans in bankruptcy and dishonored bills refers to loans (excluding charged-off amounts) stipulated in Article 96, Paragraph 1, Item 3 (a) to (e) or
Item 4 of the Enforcement Regulation to Corporation Tax Act (1965 Enforcement Regulation No. 97) to which 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 3months refers to loans with respect to which repayment of principal or payment of interest are past due for three months or more, excluding loans
falling into the categories of loans in bankruptcy and dishonored bills or delinquent loans. Restructured loans refers to loans to borrowers to

6
33

whom financial support is given in the form of reduction in interest, waiver of repayment of the principal or payment of interest, or debt forgivenesswith 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, 2015 and 2014 consisted of the following:
IssuerDescription

The Joyo Bank,Ltd.

2nd Unsecured StraightBonds
1st Unsecured
Subordinated Bonds withearly redemption clause
Euro-USdollar-denominatedconvertible bonds withstock acquisition rights
maturing in 2019

The Joyo Bank,Ltd.
The Joyo Bank,
Ltd.

Date of issue

Millions of yen
2015

May 24, 2000
January 31,
2012

%

2014

Interest rate

Collateral

Due

5,000

5,000

2.64

—

10,00010,0001.22—

April 24, 2014

Total

May 22, 2020
January 31, 2022

April 24, 201936,051―¥51,051¥15,000―—

Note: 1. After the consolidated closing date, the Bank had no redemption schedule for a period of five years or less.
2. Information on convertible bonds with stock acquisition rights is as follows:
Bond nameJoyo Bank, Ltd. Euro-U.S. dollar-denominated convertible bonds with SAR maturing in 2019

Type of stock

Common stock

Issue price of stock acquisition rights

Free of charge

Issue price of stock$6.05

Total sum of issue price$300,000 thousand

Grant ratio of stock acquisition rights

100.0%

Exercise period of stock acquisition rights

From May 9, 2014 to April 10, 2019

Substitute payment

On execution of the stock acquisition rights the corresponding bonds are to be invested and the bonds
price is same as face amount.

13. Privately placed bonds

Privately placed bonds (Article 2-3 of Financial Instruments and Exchange Law) guaranteed by the Bank at March 31, 2015 and2014 were as follows:
Millions of yen
2015

2014

¥22,338

Privately placed bonds¥17,704

14. Employees’ Retirement Benefits

For the fiscal year ended March 31, 2015(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 and lump-sum retirement benefits. In addition, extra benefits
which are excluded from the projected benefit obligation in employees’ retirement benefits accounting may be paid on acase-by-case basis. The Bank has established an employees’ retirement benefit trust. As of the end of March 31, 2015, the Bankand 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 and it is included in the section of defined benefit pension plan of
the note. Net defined benefit liability and service cost in the defined benefit pension plan and lump-sum retirement benefit adopted
by the consolidated subsidiaries are calculated by the simplified method.

734

(b) Defined benefit pension plan
(1) Reconciliation of the projected benefit obligation between the beginning of the fiscal year and the end of the fiscal year
(Except for the simplified method):
Millions of yen
2015

2014

¥62,072¥64,418

Cumulative effects of changes in accounting policies

1,156

－

Restated balance

63,229－Service cost

1,444

1,790

Retirement benefit obligation at the beginning of the fiscal year

967

753

Actuarial loss incurred

6,678

1,068

Payment of retirement benefit(3,239)(3,399)Interest cost

Prior service cost incurred－－

Decrease due to amendment of defined benefit pension plan－

(2,559)¥69,080¥62,072

Retirement benefit obligations at the end of the fiscal year

(2) Reconciliation of the plan assets between the beginning of the fiscal year and the end of the fiscal year (Except for thesimplified method):
Millions of yen
2015

2014

¥53,763

Plan assets at the beginning of the fiscal year
Expected return on plan assets
Actuarial loss incurred¥50,730

794

737

8,414

4,226

Contribution by the Bank and its consolidated subsidiaries

2,038

2,153

Payment of retirement benefit(1,922)(1,893)

Decrease due to amendment of defined benefit pension plan
Plan assets at the end of the fiscal year－

(2,190)¥63,088¥53,763(3) Reconciliation of the net defined benefit liability adopting the simplified method between the beginning of the fiscal
year and the end of the fiscal year:
Millions of yen
2015

2014

Net defined benefit liability at the beginning of the fiscal year

¥526

Retirement benefit expense

393

412

Payment of retirement benefit

(32)

(34)

Contribution to the defined benefit pension plan

(320)

(349)

Net defined benefit liability at the end of the fiscal year

¥567

¥526

¥498

(4) Reconciliation of the projected benefit obligation and plan assets between net defined benefit liability and net defined
benefit asset is as follows:
Millions of yen
2015

2014

Retirement benefit obligation of the funded pension plan

¥76,723¥69,960

Plan assets(70,164)(61,125)

6,559

8,834

Retirement benefit obligation of the unfunded pension plan
Net defined benefit liability and asset on the consolidated balance sheet－－¥6,559¥8,834

Millions of yen
2015

2014

Net defined benefit liability¥7,997¥8,834

Net defined benefit asset

1,438

－

Net defined benefit liability and asset on the consolidated balance sheet¥6,559¥8,834

Note: Including the simplified method

835

(5) Components of retirement benefit expenses are as follows:
Millions of yen
2015

2014

Service cost

¥1,444

Interest cost

967

753

Expected return on plan assets

(794)

(737)

Amortization of unrecognized actuarial loss

1,402

1,082

¥1,790

Amortization of prior service cost

69

98

Retirement benefit expense adopting the simplified method

393

412

Other
Retirement benefit expense on defined benefit pension plan－37

¥3,482¥3,436(6) Components of remeasurements of defined benefit plans are as follows (Before deferred tax assets deduction):
Millions of yen
2015

2014

¥69

Prior service cost¥―

Actuarial loss

3,137

―

Total

¥3,207¥―(7) Components of remeasurements of defined benefit plans are as follows (Before deferred tax assets deduction):
Millions of yen
2015

2014

¥－

¥69

Unrecognized actuarial loss

5,532

8,670

Total

¥5,532¥8,740

Unrecognized prior service cost(8) Plan assets
Proportions of major components of plan assets are as follows:
2015

2014

Bond

38.1%

38.1%

Equity

41.8%

40.2%

General account

16.4%

17.8%

Other

3.7%

3.9%

Total

100.0%

100.0%

Note: A retirement benefit trust was established for corporate pension plans and totaling to 18.2% of the total plan assets
Expected rate of return on pension plan assets is determined considering current and future portfolio of pension assets and current
and future long term expected rate of return on various assets in the portfolio.
(9) The assumptions used in accounting for the defined benefit plans:
2015

2014

Discount rate

1.05%

1.27%

Expected rate of return on plan assets

2.50%

2.50%

Expected increase rate in salary

4.92%

5.04%

9
36

15. Deferred Tax Assets

Millions of yen
2015

March 31,2014

Deferred tax assets:
Reserve for possible loan losses
Net defined benefit liability¥16,783¥19,859

9,629

11,379

417

1,531

1,473

1,672

Reserve for employee bonuses

844

946

Reserve for reimbursement of dormant deposits

692

703

Others

7,666

7,726

Valuation allowance(3,474)(3,727)34,031

40,245

Depreciation
Devaluation of securities

Total
Deferred tax liabilities:¥(73,544)¥(45,535)

Retirement benefit trust(4,701)(5,186)

Reversal of reserve for possible loan losses after elimination ofintercompany balances
Others(7)(2,318)(11)(1,618)

Unrealized gain on available-for-sale securities(80,572)(52,351)¥(46,540)¥(12,106)

Total
Net deferred tax assets

The effective tax rate reflected in the consolidated statements of income for the fiscal years ended March 31, 2015 and 2014 differsfrom the statutory tax rate for the following reasons:
2015

2014

Statutory tax rate

35.28%

Effect of changes in statutory tax rate

4.49%

1.69%

Valuation allowance(0.55)%(1.40)%

37.66%

Permanent differences including dividends received deduction(2.24)%(2.00)%

Permanent differences including entertainment expenses

0.20%

0.25%

Other

(0.15)%

0.59%

Effective tax rate

37.03%

36.79%“Act on Partial Amendment to the Income Tax Act, etc.” (Act No. 9, 2015) and “Act on Partial Amendment to the Local Tax Act,etc.” (Act No. 2, 2015) were promulgated on March 31, 2015, and the corporate tax rate and other rates have been lowered fromthe fiscal year beginning on or after April 1, 2015.Due to this change, the effective statutory tax rate used for the calculation ofdeferred tax assets and deferred tax liabilities has been revised from the previous rate of 35.28%. The rate of 32.75% has been
applied to the temporary differences, expected to be realized in the fiscal year beginning on April 1, 2015, while the rate of
31.98% has been applied to the temporary differences, expected to be realized in or after the fiscal year beginning on April 1,
2016. As a result of this change, deferred tax liabilities decreased ¥5,261 million, remeasurements of defined benefit plansdecreased ¥175 million, deferred losses on hedging instruments, net of taxes decreased ¥83 million, unrealized gains onavailable-for-sale securities increased ¥7,585 million, deferred income taxes increased ¥2,065 million, deferred tax liabilities
decreased ¥1,045 million and land revaluation excess, net of taxes increased ¥1,045 million.

16. Shareholders’ Equity

In accordance with the Banking Act of Japan, the Bank has provided a legal reserve by appropriation of retained earnings, which isincluded 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 the common stock.
The Companies Act of Japan (the “Act”), provides that an amount equal to 10% of the amount to be disbursed as distributions ofcapital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capitalreserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock
account. Such distributions can be made at any time by resolution of the shareholders or by the Board of Directors if certain
conditions are met.
Under the Act, upon the issuance and sale of new shares of common stock, the entire amount of the proceeds is required to be

1037accounted for as common stock, although a company may, by resolution of the Board of Directors, account for an amount notexceeding one-half of the proceeds as capital surplus.

17. Other Expenses

Millions of yen
2015

Years ended March 31,

Write-offs of claims
Write down of equity shares2014¥3,347

4,000

534

1,458

122

121

Others

20,92322,527

Total¥24,926¥28,106

Losses on sale of claims

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, 2015 and 2014 can be broken down
into the three categories of losses on land holdings in the amount of ¥1,020 million and ¥424 million, respectively, losses onbuildings in the amount of zero and ¥171 million, respectively and losses on movable assets in the amount of zero and ¥1 million,
respectively.
The recoverable amounts used for the measurement of such impairment losses are net sales prices, which are calculated on thebasis of appraisal values after deduction of the estimated cost of disposal.

18. Tangible Fixed Assets

Accumulated depreciation on tangible fixed assets amounted to ¥87,601 million and ¥90,608 million, as of March 31, 2015 and2014, respectively.
The accumulated capital gains directly offset against the acquisition costs of tangible fixed assets to obtain tax benefits at March
31, 2015 and 2014 amounted to ¥7,108 million and ¥6,463 million, respectively. For the years ended March 31, 2015 and 2014, thecapital gains offset were ¥460 million and ¥46 million.

11
38

19. Supplementary Information to Consolidated Statements of Comprehensive Income
Millions of yen

2015

Years ended March 31,

2014

Unrealized gains on available-for-sale securities:¥107,924¥7,146(6,425)(7,820)

Before adjustments of tax effect101,498(673)

Tax effect(28,009)77

Unrealized gains on available-for-sale securities

73,489(596)

The amount arising during the period
Reclassification adjustments

Deferred gain (loss) on hedging instruments, net of taxes:
The amount arising during the period

2,157

2,065

Reclassification adjustments(1,492)(1,168)Before adjustments of tax effect

665

896

Tax effect

(317)

(317)

Deferred gain (loss) on hedging instruments, net of taxes

347

579

The amount arising during the period－－

Reclassification adjustments

－

－

－

－

Land revaluation excess, net of taxes:

Before adjustments of tax effectTax effect

1,045

－

Land revaluation excess, net of taxes

1,045

－

Remeasurements of defined benefit plans:－

The amount arising during the period

1,735Reclassification adjustments

1,471

－

Before adjustments of tax effect

3,207

－

Tax effect(1,306)－

Remeasurements of defined benefit plans

1,900

－

¥76,782¥(17)

Decrease

March 31, 2015

Total

－

20. Changes in Net Assets(1) Types and number of shares issues and treasury stock are as follows:
Number of shares
March 31, 2015

Increase

April 1, 2014

Shares issued:
Common stockTotal

789,231―

23,000766,231789,231―

23,000766,231

Treasury stock:
Common stock
Total
Notes:

43,43823,07423,04043,47343,43823,07423,04043,473

1. Decrease in number of shares issued is cancellation of treasury stock stipulated by the Article 178 of the ACT
2. Increase in number of treasury stock includes purchase of fractional shares 74 thousands and acquisition of common stock 23,000 thousands.
3. Decrease in number of treasury stock includes purchase of fractional shares 5 thousands, cancellation of treasury stock 23,000 thousands andexecution of stock options 34 thousands.
Number of shares

March 31, 2014

Increase

April 1, 2013

Decrease

March 31, 2014

Shares issued:
Common stockTotal

799,231―

10,000789,231799,231―

10,000789,231

48,455

5,159

10,17643,43848,455

5,159

10,17643,438Treasury stock:
Common stock
Total
Notes:

1. Decrease in number of shares issued is cancellation of treasury stock stipulated by the Article 178 of the ACT
2. Increase in number of treasury stock includes purchase of fractional shares 159 thousands and acquisition of common stock 5,000 thousands.
3. Decrease in number of treasury stock includes purchase of fractional shares 11 thousands, cancellation of treasury stock 10,000 thousands andexecution of stock options 164 thousands.

1239

(2) Information on stock acquisition rights is as follows:
Millions of yen

Number of shares

March 31, 2015

Detail of stockacquisitionrightsThe Bank

Stock Options

Type ofsharesIncrease

April 1, 2014

Total

Decrease

March 31, 2015

―

¥147

―

¥147
Millions of yen

Number of shares

March 31, 2014

Detail of stockacquisitionrightsThe Bank

Stock Options

Type ofsharesIncrease

April 1, 2013

Total

March 31, 2015

Decrease

March 31, 2014

March 31, 2014

―

¥113

―

¥113

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2015
Aggregate amount ofdividends (Millions of yen)

Cash dividends
per share (yen)Common stock¥3,356

4.5

March 31, 2014

June 27, 2014

Common stock¥3,266

4.5

September 30, 2014

December 2, 2014

Type of shares

Ordinary general
meeting of shareholders
held on June 26, 2014
Meeting of board of
directors held on
November 7, 2014

Record date

Effective date(b) Dividends to be paid after March 31, 2015

Ordinary general
meeting of shareholders
held on June 25, 2015

Type of shares

Aggregate amount ofdividends(Millions of yen)

Common stock¥3,975

Source ofdividends

Cash dividends
per share (yen)Retainedearnings

5.5

Record date

Effective date

March 31, 2015

June 26, 2015(c) Dividends paid in the fiscal year ended March 31, 2014
Aggregate amount ofdividends (Millions of yen)

Cash dividends
per share (yen)Common stock¥3,378

4.5

March 31, 2013

June 27, 2013

Common stock¥3,356

4.5

September 30, 2013

December 3, 2013

Type of shares

Ordinary general
meeting of shareholders
held on June 26, 2013
Meeting of board of
directors held on
November 8, 2013

Record date

Effective date(d) Dividends to be paid after March 31, 2014

Ordinary general
meeting of shareholders
held on June 26, 2014

Type of shares

Aggregate amount ofdividends(Millions of yen)

Common stock¥3,356

Source ofdividends

Retainedearnings

Cash dividends
per share (yen)

4.5

Record date

Effective date

March 31, 2014

June 27, 20141340

21. Segment Informationa. Outline of the reportable segments
The reportable segments of the Company are those units for which discrete financial information can be obtained and which are
regularly examined by the management meeting, which is the highest decision-making body for decisions on the allocation ofmanagement resources and for assessing business performance.
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 based on actual market price.
As described in accounting changes that are difficult to distinguish from changes in accounting estimates, the Bank had applied thedeclining-balance method to the depreciation of its tangible fixed assets, except for buildings. However, this was changed to thestraight-line method in the year ended March 31, 2015. As a result of this change, segment profit in banking operations increased by¥1,101 million.
c. Information related to ordinary income, segment profit, assets and other items by the reportable segment
Millions of yen

Year ended March 31, 2015

Banking
operations

The reportable segment
Leasing

Total

Other

Total

Adjustments

Consolidated

Ordinary income:From external
Customers
From internaltransactions
Total

131,532

18,270149,802

6,316

156,118－

156,118

1,882
133,415493
18,763

2,376
152,178

5,106
11,423

7,482
163,601(7,482)40,404956

41,361

3,703

45,064(7,482)
665－
156,118

Assets9,032,543

63,204

9,095,748

47,6989,143,447(77,988)9,065,458

Liabilities

8,447,816

54,5738,502,390

28,9338,531,324(67,705)

8,463,618

Segment profit

45,730

OthersDepreciation

5,855

211

6,067

256

6,323

(620)

5,703

Interest income

96,11180

96,191

161

96,353(400)

95,952

Interest expenses

5,062

327

5,389

127

5,517

(396)

5,120

108

－

108

343

451

－

451

－

－

－

－

－

Losses on disposal of
tangible fixed assets
Losses on impairment

1,335

1,335

546
1,020

0
－

546
1,020

7
－

553
1,020

－
－

553
1,020

Provision for Financial
Instruments Transaction
Liability Reserve
Tax expenses－
15,063－376－
15,44001,213

016,653－361

017,015

Increase in tangible andintangible fixed assets

6,239

253

6,492

431

6,924

－

6,924

Gain on disposal of
tangible fixed assets
Gain on negative goodwill

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) Adjustments in Ordinary income total of ¥(7,482) million include elimination of intersegment transactions of ¥(7,640) million.
b) Adjustments in assets of ¥(77,988) million include elimination of intersegment transactions of ¥(67,626) million.
c) Adjustments in liabilities of ¥(67,705) million include elimination of intersegment transactions of ¥(65,337) million.
d) Adjustments in depreciation of ¥(620) million include depreciation of lease assets presented as tangible fixed assets on the consolidated
financial statements of ¥(620) million.
e) Adjustments in Interest income of ¥(400) million include intersegment interests of ¥(392) million.
f ) Adjustments in interest expenses of ¥(396) million include intersegment interest of ¥(393) million.
g) Adjustments in tax expenses of ¥361 million include deferred income taxes of ¥366 million due to eliminations of intersegment reservefor possible loan losses.
g) Information on negative goodwill is described in “Gain on negative goodwill”.
3. Segment profit is adjusted to ordinary profit posted in the Consolidated Statements of Income.

14
41

Millions of yen

Year ended March 31, 2014

Banking
operations

The reportable segment
Leasing

Total

Other

Total

Adjustments

Consolidated

Ordinary income:From external
Customers
From internaltransactions
Total

136,663

16,503

153,167

6,012

159,179－

159,179

1,887
138,551543
17,047

2,431
155,598

5,277
11,289

7,708
166,887(7,708)(7,708)－159,179

35,837

1,290

37,1283,845

40,973346

41,320Assets8,509,629

54,6368,564,265

45,167

8,609,433(72,861)

8,536,571

Liabilities

8,005,924

46,645

8,052,570

29,2308,081,800(62,199)

8,019,600

Depreciation

5,807

102

5,910

239

6,149

(308)

5,840

Interest income

95,31662

95,378

186

95,565(384)

95,180Interest expenses

4,715

294

5,010

144

5,154

(380)

4,773

Segment profit

OthersGain on disposal of
tangible fixed assets
Losses on disposal of
tangible fixed assets
Losses on impairment

6

－

6

－

6

－

6

522
169

0
－

522
169

39
459

561
629

－
(31)

561
597

Provision for Financial
Instruments Transaction
Liability Reserve
Tax expenses－
13,047－498－
13,546

01,236

014,782－(3)

0
14,778

Increase in tangible andintangible fixed assets

10,455

8

10,464387

10,851－

10,851

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) Adjustments in Ordinary income total of ¥(7,708) million include elimination of intersegment transactions of ¥(7,866) million.
b) Adjustments in assets of ¥(72,861) million include elimination of intersegment transactions of ¥(59,106) million.
c) Adjustments in liabilities of ¥(62,199) million include elimination of intersegment transactions of ¥(56,064) million.
d) Adjustments in depreciation of ¥(308) million include depreciation of lease assets presented as tangible fixed assets on the consolidated
financial statements of ¥(308) million.
e) Adjustments in Interest income of ¥(384) million include intersegment interests of ¥(378) million.
f ) Adjustments in interest expenses of ¥(380) million include intersegment interest of ¥(378) million.
g) Adjustments in tax expenses of ¥(3) million include deferred income taxes of ¥(3) million due to eliminations of intersegment reserve forpossible loan losses.
3. Segment profit is adjusted to ordinary profit posted in the Consolidated Statements of Income.

Related Informationa. Information by service
Millions of yen
Year ended March 31, 2015

Ordinary income fromexternal customers:

Lending¥67,763

Investment insecurities¥35,052

Leasing¥18,270

Other¥35,033

Total¥156,118

Note: 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.
Millions of yen
Year ended March 31, 2014

Ordinary income fromexternal customers:

Lending¥69,594

Investment insecurities¥40,457

Leasing¥16,503

Other¥32,623

Total¥159,179

Note: 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.

15

42

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% or more of total ordinary
income.
Impairment loss information by the reportable segments
Millions of yen
The reportable segment
Year ended March 31, 2015

Impairment loss:

Banking operations

Leasing¥1,020

Other

Total

¥―

¥1,020Total¥―¥1,020Millions of yen
The reportable segment
Year ended March 31, 2014

Impairment loss:

Banking operations

Leasing

¥169

Other

Total

¥―

¥169

Total

¥427

¥597

Note: Other includes idle assets and the like of the consolidated subsidiaries and includes adjustments of ¥(31) million.
Amortization and unamortized balance of goodwill
Millions of yen
The reportable segment
Year ended March 31, 2015

Negative goodwill:
Amortization
Unamortized balanceBanking operations

Leasing

¥158
1,817

Other

Total

¥―
―

¥158
1,817

Total

¥―
―

¥158
1,817

Millions of yen
The reportable segment
Year ended March 31, 2014

Negative goodwill:
Amortization
Unamortized balanceBanking operations

¥158
1,975

Leasing

Other

Total

¥―
―

¥158
1,975

Total

¥―
―

¥158
1,975

Gain on negative goodwill
Gain on negative goodwill ¥1,335 million occurred in the fiscal year ended March 31, 2015, as the Bank acquired the stock fromminority shareholders due to improvement in capital efficiency.
Not applicable for the fiscal year ended March 31, 2014.

1643

22. Leases(a) Finance leases
Finance lease transactions in which ownership of leased property is not transferred to the lessee are accounted for as operatingleases, 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.”), as follows:
As lessee
Acquisition cost, aggregate depreciation expenses, and book value at March 31, 2015
Tangible fixed assets

Total

Acquisition cost

¥5 million¥5 million

Accumulated Depreciation expenses¥3 million¥3 million

Book value at term-end¥1 million¥1 million

Note: The acquisition cost presented above is inclusive of interest expenses, as the balance of acquisition cost and minimum lease payment is
insignificant compare to the total book value of tangible fixed assets.

Acquisition cost, aggregate depreciation expenses, and book value at March 31, 2014
Tangible fixed assets

Total

Acquisition cost

¥5 million¥5 million

Accumulated Depreciation expenses¥3 million¥3 million

Book value at term-end¥1 million¥1 million

Note: The acquisition cost presented above is inclusive of interest expenses, as the balance of acquisition cost and minimum lease payment is
insignificant compare to the total book value of tangible fixed assets.

Lease payments that would have been required for finance leases at March 31, 2015:
Within one year

Over one year

Total

¥0 million¥1 million¥1 million

Note: Lease payments presented above is inclusive of interest expenses, as the balance of acquisition cost and minimum lease payment is
insignificant compare to the total book value of tangible fixed assets.

Lease payments that would have been required for finance leases at March 31, 2014:
Within one year

Over one year

Total

¥0 million¥1 million¥1 million

Note: Lease payments presented above is inclusive of interest expenses, as the balance of acquisition cost and minimum lease payment is
insignificant compare to the total book value of tangible fixed assets.

Lease fees paid and depreciation expenses that would have been incurred under finance leases for the fiscal year ended
March 31, 2015:
Lease fees

Depreciation expenses¥0 million¥0 million

Note: Calculation method for 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.

Lease fees paid and depreciation expenses that would have been incurred under finance leases for the fiscal year ended
March 31, 2014:
Lease fees

Depreciation expenses¥0 million¥0 million

Note: Calculation method for 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.

17
44

(b) Operating leases
Future lease payments under non-cancellable operating lease transactions for the fiscal year ended March 31, 2015 were as
follows:
Within one year

Over one year

Total

As lessee¥65 million¥252 million¥317 million

As lessor¥0 million¥2 million¥2 million

Future lease payments under non-cancellable operating lease transactions for the fiscal year ended March 31, 2014 were as
follows:
Within one year

Over one year

Total

As lessee¥53 million¥250 million¥303 million

As lessor¥4 million¥― million¥4 million

No losses are recognized for the impairment of lease assets.

23. 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 andliabilities of which the values fluctuate with changes in interest rates, foreign exchange 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 in interest rate related derivatives in connection withinvestments 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. Securities include mainly bonds, stocks and theseare held trading, held-to-maturity and available-for-sale purposes. With regard to securities, the Group is exposed to credit risk ofissuers, interest-rate risk, and market price volatility risk.
The deposits include current deposits and savings deposits without maturities, and time deposits with maturities. 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 to execute payments at the due
dates when the Group lost access to the financial markets. Although the floating-rate borrowings expose us to the interest rate risk,
we partially mitigate this risk using interest rate swaps.
We are engaged in derivatives transactions to meet customers’ demands to hedge exchange-rate and interest-rate risks and to
appropriately manage the Bank’s market risks. Moreover, we utilize derivatives transactions for efficient ALM and hedging ofindividual transactions.
Derivatives transactions have market risk that losses could arise from market changes including those in interest rates andexchange 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) and the hedging instruments(e.g., interest rate swaps) are grouped by maturity to assess the effectiveness. As for cash flow hedges, we examine interest-ratecorrelation 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 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 and sales of financial
instruments.

1845

c. Risk Management for Financial Instruments(a) Integrated Risk Management
The Bank holistically controls risks from various financial assets and liabilities and risks related to banking business throughintegrated risk management. The Bank calculates apportionable risk capital using Tier I capital and allocates by risk category and by
department. The Bank periodically quantities risks it takes and controls such risks within the allocated capital. The Bank assesses
unquantifiable risks using stress test and other measures.
(b) 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 diversificationof risk. Credit Risk Management Group has been segregated from the divisions under Business Headquarters to achieve rigorous
credit review, and conducts thorough monitoring of 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 credit ratings,
which are 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 andSecurities Division monitors 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.
(c) 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 the banking account, and applies
and monitors the limits rigorously through the. In order to control the interest-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-point value (“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 and foreign exchange swaps. In
addition, the Group also enters into offsetting transactions in financial markets on an individual or aggregate basis, in order toreverse out foreign exchange risk arising from foreign exchange transactions offered by customers. Additionally, the Group converts
into yen an amount equivalent to monthly interest income denominated in foreign currencies every month, in order to mitigate foreignexchange 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 arising from 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 theGeneral Budget Committee every half year.
Price-fluctuation risk is measured using 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. To prevent unrealized losses from being accumulated, the Group monitors andmanages 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 foreign exchange 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 and manages credit exposures on adaily 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 thecreditworthiness and outstanding transactions, just like for financing transactions, and manages the credit exposures together withthose 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.”19
46

(vi) Quantitative Information related to Market Risk
1. Banking Account(1) Interest rate risk
The Bank adopts the variance-covariance method as the measurement method (a holding period of 6 months, a confidence intervalof 99%, and observation period of 5 years) for calculating VaR related to interest rate risk of 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, a confidence interval 99%, and observation period of 5 years) for calculating VaR related tointerest rate risk of interest rate swaps and currency swaps in foreign bonds, trust beneficiary right, market fund transactions andderivatives. As of March 31, 2015 VaR related to interest rate risk was ¥24,549 million.
(2) Price fluctuation risk
The Bank adopts the historical simulation method (a holding period of 6 months, a confidence interval of 99%, and observation
period of 5 years) for calculating VaR related to price fluctuation risk of listed equities and mutual funds. As of March 31, 2015 VaR
related to price fluctuation risk was ¥67,398 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 10 day, a confidence interval of 99%, and observation periodof 5 years) for calculating VaR related trading securities, trading purpose foreign exchange transactions and derivatives such as
forward transactions and option transactions. As of March 31, 2015, VaR related to trading account was ¥12 million.
3. Validity of VaR
The Bank performs back testing to compare VaR calculated by its internal model against actual profit and loss to confirm themeasurement model used captures market risk with sufficient accuracy. However, VaR statistically quantifies market risk calculated
based on past market movements. Therefore, there could be cases in which VaR cannot capture risk under sudden and dramaticchanges in market conditions beyond normal circumstances.
(d) Management of Liquidity Risk in Funding
To manage liquidity risk under “Market and Liquidity Risk Management Rules,” the Bank:
 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 andcosts to maintain the liquidity.
 Strives to maintain the diversity and stability of funding sources.
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.

20
47

(2) Disclosures Regarding Fair Value of Financial Instruments and Other Items
The table below sets forth fair values of financial instruments at March 31, 2015 and 2014 except for those whose fair values are
extremely difficult to determine (see (Note2)). In addition, those financial instruments which are immaterial are not listed below.
Millions of yen
March 31, 2015

Consolidated balance
sheet amount¥496,348(1) Cash and due from banks

Fair value

Difference¥496,348¥―(2) Securities
39,53939,760220

Available-for-sale securities

2,695,172

2,695,172―(3) Loans and bills discounted

5,618,019

Held-to-maturity debt securities(36,598)

Reserve for possible loan losses (*1)
Sub-total

5,581,420

5,653,947

72,526

Total assets

8,812,481

8,885,229

72,747(1) Deposits

7,715,598

7,716,010(411)(2) Negotiable certificates of deposit

10,045

10,045―(3) Payables under securities lending transactions

143,395

143,395―(4) Borrowed money

345,388

345,083305

8,214,428

8,214,534(106)―

Total liabilities
Derivatives transactions (*2)
Transactions not accounted for as hedging instruments
Transactions accounted for as hedging instruments
Total derivatives transactions

590

590

(5,819)(5,819)―¥(5,229)¥(5,229)¥―(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in trading assets/liabilities and other assets and other liabilities are presented on an aggregate basis. Claims anddebts that arose from derivatives transactions are presented on a net basis.
Millions of yen
March 31, 2014

Consolidated balance
sheet amount(1) Cash and due from banks¥224,661

Fair value

Difference¥224,661¥―(2) Securities
Held-to-maturity debt securities

35,75735,986

228

Available-for-sale securities

2,715,449

2,715,449―(3) Loans and bills discounted

5,363,389
5,322,040

5,392,304

70,263

Total assets

8,297,909

8,368,401

70,491(1) Deposits

7,497,902

7,480,413(511)(2) Negotiable certificates of deposit

10,03010,030―(3) Payables under securities lending transactions

105,996

105,996―

218,248

217,619629

7,814,178

7,814,059

118

Reserve for possible loan losses (*1)

(41,349)

Sub-total(4) Borrowed money
Total liabilities
Derivatives transactions (*2)
Transactions not accounted for as hedging instruments
Transactions accounted for as hedging instruments
Total derivatives transactions

494

494

―

(4,827)(4,827)―¥(4,332)¥(4,332)¥―(*1) General and individual reserves for possible loan losses are deducted from loans and bills discounted.
(*2) Derivatives transactions recorded in trading assets/liabilities and other assets and other liabilities are presented on an aggregate basis. Claims anddebts that arose from derivatives transactions are presented on a net basis.

21
48

(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 fair value.
(2) Securities
Fair value of shares is determined by reference to quoted market prices on stock exchanges. Fair value of bonds is determined byreference to quoted market prices or prices offered by financial institutions, or based on the price best estimated. Fair value ofinvestment trusts is determined by reference to their publicly available net asset value per unit. Fair value of privately placed bonds
guaranteed by the Bank is determined 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 fiscal year ended March 31, 2015, we treat market prices as fair value for Japanese Government Bonds (JGBs) withvariable interest rates and securitized products that we own.
We used a reasonably estimated value as the fair value of securitized products (e.g., collateralized loan obligations), except thosesubject to impairment, of which external credit rating is not downgraded, of which collateral asset pools are not deteriorated, andwhich the Group intends to continue to hold. The reasonably estimated price was calculated using the discounted cash flow method
or other pricing methods using the default rate, recovery rate, pre-payment rate and discount rate as primary pricing variables.
Please see “24. 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 fairvalue 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 were interest rates which would be applied when similarloans were newly extended. Fair value of fixed-rate loans 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 are computed based on
recoverable amounts estimated as the present value of future cash flows or the collectible amounts from collateral and guarantees.
Then the fair value of those loans approximates the consolidated balance sheet amount at the closing date minus the currently
estimated losses, and is therefore 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 tothe amounts of assets pledged as collateral) is assumed to approximate their carrying 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 consolidated balance 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 value of 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) Payables under securities lending transactions
As for short-term loans with maturity of one year or less, the book value is deemed as the fair value since the fair value approximates
the book value.
(4) Borrowed money
We used as the fair value the present value of future cash flows calculated by borrowing period. The discount rates used in thecalculation were interest rates that would be applied to new borrowings. Fair value of borrowings for a short term (i.e., within oneyear) approximates the carrying value and is deemed equal to the carrying value.
Derivatives Instruments
See “26. Derivatives.”

22
49

(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, 2015 and 2014.
Millions of yen
Consolidated balance sheet amounts
2015

Years ended March 31,

2014

Unlisted stocks (*1) (*2)

¥3,209Investments in partnerships and others (*3)

4,588

3,594

Total

¥7,797¥9,097¥5,502(*1) Unlisted stocks are excluded from “Disclosures Regarding Fair Value of Financial Instruments and Other Items” since no market price is available andtheir fair value is extremely difficult to determine.
(*2) Impairment losses on unlisted stocks were ¥0 million and ¥5 million, as of March 31, 2015 and 2014.
(*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.”(Note 3) Redemption schedule of money claims and securities with stated maturities after the consolidated balance sheet
date is as follows:
Millions of yen
March 31, 2015

Cash and due from banks

1 year or less

1-3 years

3-5 years

5-7 years

7-10 years¥―

Over 10 years¥421,670

¥―

¥―

¥―

¥―

Held-to-maturity debt securities

16,37910,78011,956423――

Japanese government bonds

11,500

1,000

―

―

―

―

Securities

Municipal bonds

―

―

200

―

―

―

Corporate bonds

4,879

9,780

11,756423――

185,775
67,000454,631
337,200

681,541
375,300

487,607304,500

236,378
50,000106,922
5,000

Available-for-sale securities
with maturities
Japanese government bonds
Municipal bonds

75,216

7,761

58,44919,246

41,775―

Corporate bonds

22,23734,864

81,761

107,857

119,91426,268Foreign bonds

20,04866,548140,279

55,22911,81875,654

Other

1,274

8,256

25,751774

12,870―Loans and bills discounted (*)

1,440,141

1,010,506

793,410474,640

491,894

1,250,182

Total¥2,063,967¥1,475,917¥1,486,908¥962,671¥728,272¥1,357,105(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥88,454 million, and loans and bills discounted without
maturities amounting to ¥68,789 million were excluded from the table above.
Millions of yen
March 31, 2014

Cash and due from banks

1 year or less

1-3 years

3-5 years

5-7 years

7-10 years

Over 10 years¥224,661

¥―

¥―

¥―

¥―

¥―

Held-to-maturity debt securities

12,054

12,526

11,174―――

Japanese government bonds

9,500

4,000

―

―

―

―

Municipal bonds

―

―

50

―

―

―

Corporate bonds

2,554

8,526

11,124―――248,496
140,700

448,986
260,600

671,099379,200

598,264
417,800

254,480
125,000

96,553―

Securities

Available-for-sale securities
with maturities
Japanese government bonds
Municipal bonds

60,462

87,123

123,104

15,75633,305―

Corporate bonds

31,061

41,58347,179129,795

94,257

28,109Foreign bonds

13,73058,962

117,780

34,685―68,444

Other

2,542

716

3,835

227

1,917

―

Loans and bills discounted (*)

1,482,505

1,016,357

782,908

443,699422,683

1,043,050

Total¥1,967,717¥1,477,871¥1,465,182¥1,041,964¥677,163¥1,139,604(*) Legally bankrupt loans, substantially bankrupt loans and potentially bankrupt loans amounting to ¥102,165 million, and loans and bills discounted without
maturities amounting to ¥70,018 million were excluded from the table above.

23
50

(Note 4) Redemption schedule of borrowed money and other interest-bearing liabilities after the consolidated balance
sheet date at March 31, 2015 and 2014 is as follows:
Millions of yen
3-5 years
5-7 years

March 31, 2015

1 year or less

Deposits (*)¥6,993,163¥618,246¥97,241¥2,596¥4,350¥―

Negotiable certificates of deposit

10,045

―

―

―

―

―

Payables under securities
lending transactions
Borrowed money

143,395
79,562―
112,358―
153,468

―
―

―
―

―
―

¥7,226,166¥730,604¥250,709¥2,596¥4,350¥―Total

1-3 years

7-10 years

Over 10 years(*) Demand deposits were included in “1 year or less.”
Millions of yen
1 year or lessMarch 31, 2014

1-3 years

3-5 years

5-7 years

7-10 years

Over 10 years¥6,772,166¥597,972¥103,132¥2,524¥4,106¥―

Negotiable certificates of deposit

10,030

―

―

―

―

―

Payables under securities
lending transactions
Borrowed money

105,996
206,032

―
9,191

―
3,025

―
―

―
―

―
―

¥7,094,226¥607,163¥106,157¥2,524¥4,106¥―

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

24. Securities Information
The amounts shown in the following tables include “Securities”, trading securities in “Trading assets” and trust beneficiary right in“Other debt purchased”.
Year ended March 31, 2015(a) Trading Securities
Millions of yen
March 31, 2015

Unrealized gain recognized as income¥(5)

Trading securities(b) Held-to-maturity debt securities
Type

March 31, 2015

Securities with fair value
exceeding consolidatedbalance sheet amountMillions of yen
Consolidated balance
sheet amount

Difference¥29,661

¥235

4,000

4,001

0

Municipal bonds

49

50

0

Corporate bonds

25,37525,609

233

―

―

―

Foreign bonds

―

―

―

Other

―

―

―

Sub-total

29,426

29,661235

Bonds

10,113

10,099(14)(0)

Japanese government bonds

Other:

Securities with fair value notexceeding consolidatedbalance sheet amount

Fair value¥29,426

Bonds:

8,500

8,500

Municipal bonds

150

149

(0)

Corporate bond

1,463

1,449

(13)

―

―

―

Foreign bonds

―

―

―

Other

―

―

―

Sub-total

10,113

10,099(14)¥39,539¥39,760¥220

Japanese government bonds

Other:

Total

24
51

(c) Available-for-sale securities
Type

March 31, 2015

Securities with consolidatedbalance sheet amountexceeding acquisition cost

Millions of yen
Consolidated balance
sheet amount

Difference¥266,760¥121,280¥145,479

Bonds

1,694,823

1,657,965

36,858Japanese government bonds

1,175,240

1,151,075

24,164

Municipal bonds

136,231

133,2862,945

Corporate bonds

383,351

373,603

9,748
53,977565,135

511,158

Foreign bonds

355,457

347,633

7,823

Other

209,678

163,524

46,153Sub-total

236,315

Other

Securities with consolidatedbalance sheet amount notexceeding acquisition cost

Acquisition cost

Stocks2,526,719

2,290,404

Stocks

5,091

5,578

(487)

Bonds

99,577

99,827(250)

Japanese government bonds

5,264

5,277

(13)

Municipal bonds

69,023

69,131(107)

Corporate bonds

25,29025,418

(128)

Other

70,55873,240(2,681)

Foreign bonds

40,48040,643

(163)

Other

30,07832,596(2,518)Sub-total
Total

175,227

178,646(3,419)¥2,701,946¥2,469,050¥232,896(d) Held-to-maturity debt securities sold during the fiscal year
No held-to-maturity debt securities were sold during the fiscal year ended March 31, 2015.
(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2015

Sales proceeds

Gains on sales

Losses on sales

Stocks¥17,249¥3,345

¥534

Bonds

623,644

2,767

1,250

Japanese government bonds

470,036

2,424

1,250

Municipal bonds

128,246

223―

Corporate bonds

25,361

119―

92,426

1,404

345

Foreign bonds

87,793

409

345

Other

4,632

994

―

¥733,320¥7,517¥2,130

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 the acquisition price level, the securities are stated at market value on
the consolidated balance sheets and the difference between the market value and the acquisition price is posted as a loss(“impairment loss”).
Impairment losses for the fiscal year were nil.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting Committee Report No. 14), theBank 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 atthe balance-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, 2015.

25
52

(h) Unrealized gain on available-for-sale securities
March 31, 2015

Millions of yen

Unrealized (losses) gains:¥233,486

Available-for-sale securities—

Other money held in trust
Deferred tax assets (liabilities)

73,544

Net unrealized gains on available-for-sale securities

159,941
31

Less minority interests¥159,909

Unrealized gains on available-for-sale securities

Note: The total unrealized gains include an unrealized gain of ¥590 million on available-for-sale securities, which constitute the property of related
associations.

Year ended March 31, 2014(a) Trading Securities
Millions of yen
March 31, 2014

Unrealized gain recognized as income¥(10)

Trading securities(b) Held-to-maturity debt securities
Type

March 31, 2014

Securities with fair value
exceeding consolidatedbalance sheet amountMillions of yen
Consolidated balance
sheet amount

Difference¥25,947¥26,178

¥230

4,903

4,904

1

Municipal bonds

49

50

0

Corporate bonds

20,994

21,223228

Bonds:
Japanese government bonds

Other:

Securities with fair value notexceeding consolidatedbalance sheet amount

Fair value

―

―

―

Foreign bonds

―

―

―

Other

―

―

―

Sub-total

25,947

26,178

230

Bonds

9,810

9,808

(2)

8,600

8,600

(0)

Japanese government bonds
Municipal bonds

―

―

―

Corporate bond

1,210

1,208

(1)
―

Other:――

Foreign bonds

―

―

―

Other

―

―

―

Sub-total
Total

9,810

9,808

(2)

¥35,757¥35,986

¥228

26
53

(c) Available-for-sale securities
Type

March 31, 2014

Securities with consolidatedbalance sheet amountexceeding acquisition cost

Millions of yen
Consolidated balance
sheet amount

Difference¥195,165¥111,070¥84,095

Bonds

2,004,673

1,969,315

35,357

Japanese government bonds

1,358,037

1,334,741

23,295

Municipal bonds

277,457

273,6113,845

Corporate bonds

369,178

360,962

8,215
15,940267,459

251,519

Foreign bonds

163,895

160,913

2,982

Other

103,563

90,606

12,957

Sub-total

2,467,298

2,331,905

135,393

Stocks13,96815,752(1,783)

Bonds

73,38673,449(62)

Japanese government bonds

10,002

10,002(0)

Municipal bonds

46,096

46,124

(27)

Other

Securities with consolidatedbalance sheet amount notexceeding acquisition cost

Acquisition cost

StocksCorporate bonds

17,287

17,322

(34)

Other

169,491

171,574(2,082)Foreign bonds

139,163

140,591(1,428)Other

30,32830,982(654)

Sub-total

256,846

260,776(3,929)¥2,724,144¥2,592,681¥131,463

Total(d) Held-to-maturity debt securities sold during the fiscal year
No held-to-maturity debt securities were sold during the fiscal year ended March 31, 2014.
(e) Available-for-sale securities sold during the fiscal year
Millions of yen
Year ended March 31, 2014

Sales proceeds

Gains on sales

Losses on sales

Stocks¥46,144¥7,352¥1,458

Bonds

258,419

1,231

2,277

249,416

1,224

1,911

Municipal bonds

―

―

―

Corporate bonds

9,003

7

365

Japanese government bonds

103,653

5,965

3,937

Foreign bonds

88,562

1,662

3,937

Other

15,0914,302

0¥408,217¥14,549¥7,673

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 the acquisition price level, the securities are stated at market value on
the consolidated balance sheets and the difference between the market value and the acquisition price is posted as a loss(“impairment loss”).
Impairment losses for the fiscal year were nil.
Pursuant to “Practical Guidelines for Accounting for Financial Instruments” (JICPA Accounting Committee Report No. 14), theBank 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 atthe balance-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, 2014.

27
54

(h) Unrealized gain on available-for-sale securities
March 31, 2014

Millions of yen

Unrealized (losses) gains:¥131,987

Available-for-sale securities—

Other money held in trust
Deferred tax assets (liabilities)(45,535)

Net unrealized gains on available-for-sale securities

86,452(7)

Less minority interests¥86,445

Unrealized gains on available-for-sale securities

Note: The total unrealized gains include an unrealized gain of ¥524 million on available-for-sale securities, which constitute the property of related
associations.

25. Money held in trust(1) Trading money held in trust
Not applicable as of March 31, 2015
Not applicable as of March 31, 2014
(2) Held-to-maturity money held in trust
Not applicable as of March 31, 2015
Not applicable as of March 31, 2014
(3) Other money held in trust
Not applicable as of March 31, 2015
Not applicable as of March 31, 201428
55

26. Derivatives

Year ended March 31, 2015
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 derivative transaction, respectively, at the end of the consolidated balance
sheet date, as well as determination of fair value.
Contract amount does not represent itself the market risk of derivative instruments.
(1) Interest-rate Derivatives
Millions of yen
Contract amountOver 1 year

Fair value

Unrealized gain (loss)

March 31, 2012
Transactions
listed on exchanges:

Interest-rate futures:
Sold

¥―

Bought

―

¥―

¥―

¥―

Interest-rate options:
Sold

―

―

―

―

Bought――――Over-the-counter transactions:
Forward rate agreements:
Sold

―

―

―

―

Bought

―

 ―

―

―

Receivable fixed / payable floating

172,11453,650665

665

Receivable floating / payable fixed

172,11453,650

(91)

(91)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

110

50

(0)

2

Bought

110

50

0

(1)

Sold

51,823

8,590

(108)

34

Bought

51,823

8,590

108

108

Sold

―

―

―

―

Bought

―

―

―

―

¥573

¥718

Interest-rate swaps:

Receivable floating / payable floating
Interest-rate options:

Caps:

Swaption:

Others:

Total

―――

―――

Notes: 1. The transactions in this table have been revalued at the market rates prevailing on the balance sheet date, and unrealized gain (loss) is included 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 Financial Exchange, etc. The fairvalue of over-the-counter transactions has been calculated at their discounted future cash flows or by utilizing option pricing models.

29
56

(2) Currency Derivatives
Millions of yen
Contract amountOver 1 year

Fair value

Unrealized gain (loss)March
31, 2013
Transactions
listed on exchanges:

Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――183,694

115,599

83

83

Sold

5,206

542

(124)

(124)

Bought

5,404

26

56

56

Sold

23,144

8,702

(524)

(130)

Bought23,144

8,702

526

269

Sold

―

―

―

―

Bought

―

―

―

―

¥16

¥155

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 rates prevailing on the balance sheet date, and unrealized gain (loss) is included 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, 2015.
(4) Bond Derivatives
Not applicable as of March 31, 2015.
(5) Commodity Derivatives
Not applicable as of March 31, 2015.
(6) Credit Derivatives
Not applicable as of March 31, 2015.

30
57

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 transaction, respectively, at the end of the consolidated balance sheet
date, as well as determination of fair value.
Contract amount does not represent itself the market risk of derivative instruments.
(1) Interest-rate Derivatives
March 31, 2015
Millions of yen
Method of hedge

Deferred method

TypeInterest rate swap
Receivable fixed /payable floating
Receivable floating /payable fixedInterest rate futures
Interest rate options

Hedged items

Interest bearing financial
assets and liabilities
including loans,available-for-salesecurities, deposits andnegotiable certificates ofdeposit, etc.

Contract amounts¥―¥―

170,000―

170,000―(2,643)
―

―

―

―

―

―

―

9,000

4,000

218

32,817―――

27,295―――(1,632)¥(4,057)

Interest rate swap
Receivable fixed /payable floating
Receivable floating /payable fixed

Total
Notes:

Fair value

¥―

Other
Exceptional accrual
method for interest
rate swap

Over 1 year

Loans, borrowed money―――

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 other relevant exchanges.
The fair value of over-the-counter traded derivative instruments is determined based on a discounted cash flows model, an option pricing modelor other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with the hedged items asa 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, 2015
Millions of yen
Method of hedge

Type

Deferred method

Currency swaps
Forward foreign exchange
contracts
Foreign exchange swaps
Other

Treatment for forward
foreign exchange
contracts, etc.

Hedged items

Foreigncurrency-denominatedloans, securities, deposits
and foreign exchanges,
etc.

Contract amounts¥(1,890)―
90,871―――(1,286)

―

―

―

―

―

―

―

―
¥(3,176)

Forward foreign exchange
contracts――――

Fair value¥180

Currency swap

Total

Over 1 year

¥71,784――――――

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, 2015.

(4) Bond Derivatives
Not applicable as of March 31, 2015.

31
58

Year ended March 31, 2014
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 derivative transaction, respectively, at the end of the consolidated balance
sheet date, as well as determination of fair value.
Contract amount does not represent itself the market risk of derivative instruments.
(1) Interest-rate Derivatives
Millions of yen
Contract amountOver 1 year

Fair value

Unrealized gain (loss)March
31, 2012
Transactions
listed on exchanges:

Interest-rate futures:
Sold

¥―

Bought

―

¥―

¥―

¥―

Interest-rate options:
Sold

―

―

―

―

Bought――――Over-the-counter transactions:
Forward rate agreements:
Sold

―

―

―

―

Bought

―

 ―

―

―

Receivable fixed / payable floating

153,920

33,626384

384

Receivable floating / payable fixed

153,920

33,626

(54)

(54)

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

Sold

340

110

(0)

9

Bought

340

110

0

(4)

Interest-rate swaps:

Receivable floating / payable floating
Interest-rate options:

Caps:

Swaption:Sold

48,783

4,650

(92)

22

Bought48,783

4,650

92

92

Sold

―

―

―

―

Bought

―

―

―

―

¥330

¥450

Others:

Total

―――

―――

Notes: 1. The transactions in this table have been revalued at the market rates prevailing on the balance sheet date, and unrealized gain (loss) is included 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 Financial Exchange, etc. The fairvalue of over-the-counter transactions has been calculated at their discounted future cash flows or by utilizing option pricing models.

32
59

(2) Currency Derivatives
Millions of yen
Contract amountOver 1 year

Fair value

Unrealized gain (loss)March
31, 2013
Transactions
listed on exchanges:

Currency futures:
Sold

¥―

¥―

¥―

¥―

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――258,937

169,438

163

163

Sold

2,062

351

(6)

(6)

Bought

1,110

10

7

7

Sold

12,733

3,583

(270)

(12)

Bought12,733

3,583

270

113

Sold

―

―

―

―

Bought

―

―

―

―

¥164

¥265

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 rates prevailing on the balance sheet date, and unrealized gain (loss) is included 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, 2014.
(4) Bond Derivatives
Millions of yen
Contract amountOver 1 year

Fair value

Unrealized gain (loss)

March 31, 2013
Transactions
listed on exchanges:

Bond futures:
Sold

¥434

¥―

¥0

¥0

Bought

―

―

―

―

Sold

―

―

―

―

Bought――――Bond future options:Over-the-counter transactions:
Bond over-the-counter options:
Sold

―

―

―

―

Bought

―

―

―

―

Sold

―

―

―

―

Bought

―

―

―

―

¥0

¥0

Others:

Total

―――

―――

Notes: 1. The transactions in this table have been revalued at the market rates prevailing on the balance sheet date, and unrealized gain (loss) is included 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 Osaka Exchange, Inc. The fair value ofover-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, 2014.

33
60

(6) Credit Derivatives
Not applicable as of March 31, 2014.
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 transaction, respectively, at the end of the consolidated balance sheet
date, as well as determination of fair value.
Contract amount does not represent itself the market risk of derivative instruments.
(1) Interest-rate Derivatives
March 31, 2014
Millions of yen
Method of hedge

Deferred method

TypeInterest rate swap
Receivable fixed /payable floating
Receivable floating /payable fixedInterest rate futures
Interest rate options

Hedged items

Interest bearing financial
assets and liabilities
including loans,available-for-salesecurities, deposits andnegotiable certificates ofdeposit, etc.

Contract amounts¥―¥―

90,000―90,000―(3,333)
―

―

―

―

―

―

―

9,000

9,000

367

38,339―――32,817―――(2,043)¥(5,008)

Interest rate swap
Receivable fixed /payable floating
Receivable floating /payable fixed

Total
Notes:

Fair value

¥―

Other
Exceptional accrual
method for interest
rate swap

Over 1 year

Loans, borrowed money―――

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 other relevant exchanges.
The fair value of over-the-counter traded derivative instruments is determined based on a discounted cash flows model, an option pricing modelor other models as appropriate.
3. The exceptional accrual method of hedge accounting, as specifically permitted for certain interest rate swaps, is valued with the hedged items asa 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, 2014
Millions of yen
Method of hedge

Type

Deferred method

Currency swaps
Forward foreign exchange
contracts
Foreign exchange swaps
Other

Treatment for forward
foreign exchange
contracts, etc.

Hedged items

Foreigncurrency-denominatedloans, securities, deposits
and foreign exchanges,
etc.

Contract amounts¥(1,153)―
47,704

―
―

―
(340)

―

―

―

―

―

―

―

―
¥(1,494)

Forward foreign exchange
contracts――――

Fair value¥154

Currency swap

Total

Over 1 year

¥46,084――――――

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, 2014.

34
61

(4) Bond Derivatives
Not applicable as of March 31, 2014.

35
62

27. Stock Options(a) The Bank recorded stock option expenses in “General and administrative expenses” of ¥46 million and ¥47 million for the fiscal
years ended March 31, 2015 and 2014, respectively.
(b) Outline of stock options, size and changes(1) Outline of stock options
March 31, 2015

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 24, 2039

From August 25, 2009 to August 24, 2039

March 31, 2015

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, 2040

From July 22, 2010 to July 21, 2040

March 31, 2015

Persons to whom stock options are granted

5th equity warrant

Directors of the Bank: 10

6th equity warrant

Executive officers of the Bank: 13

Type and number of shares (*)

Common shares: 78,720

Common shares: 60,999

Grant dateJuly 20, 2011

July 20, 2011

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 21, 2011 to July 20, 2041

From July 21, 2011 to July 20, 2041

March 31, 2015

7th equity warrant

8th equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 16

Type and number of shares (*)

Common shares: 76,174

Common shares: 73,080

Grant dateJuly 19, 2012

July 19, 2012

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 20, 2012 to July 19, 2042

From July 20, 2012 to July 19, 2042

March 31, 2015

9th equity warrant

10th equity warrant

Persons to whom stock options are granted

Directors of the Bank: 10

Executive officers of the Bank: 15

Type and number of shares (*)

Common shares: 47,254

Common shares: 41,968

Grant dateJuly 18, 2013

July 18, 2013

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 19, 2013 to July 18, 2043

From July 19, 2013 to July 18, 2043

March 31, 2015

Persons to whom stock options are granted

11th equity warrant

Directors of the Bank: 10

12th equity warrant

Executive officers of the Bank: 14

Type and number of shares (*)

Common shares: 48,960

Common shares: 41,133

Grant dateJuly 18, 2014

July 18, 2014

Condition for vesting

Not applicableNot applicable

Eligible service period

Not applicableNot applicable

Period for exercise of stock options

From July 19, 2014 to July 18, 2044

From July 19, 2014 to July 18, 2044(*) The table above presents the number of common shares converted from the stock options.

36
63

(2) Size and changes of stock options
a. Number of stock options in the fiscal years ended March 31, 2015
1st equity
warrant

2nd equity
warrant

3rd equity
warrant

4th equity
warrant

5th equity
warrant

6th equity
warrant

7th equity
warrant

8th equity
warrant

9th equity
warrant

23,596―

3,280―

33,129―9,056―

51,520―26,910 ―49,854―44,370―47,254―Forfeited

―

―

―

―

―

―

―

―

―

―

Vested

―

―

―

4,528

―

8,970

―

13,050―7,968

23,596

3,280

33,1294,528

51,52017,94049,85431,32047,25434,000March 31, 2015

10th
equitywarrant

Non-vested:
Previous fiscal
year-end outstanding
GrantedOutstanding on
March 31, 2015
Vested:Previous fiscal
year-end outstanding
Vested41,968
―

―

―

―

4,528

―

8,970

―

13,050―7,968

Exercised

―

―

―

4,528

―

8,970

―

13,050―7,968

Forfeited

―

―

―

―

―

―

―

―

―

―

Exercisable

―

―

―

―

―

―

―

―

―

―

March 31, 2015

11th
equitywarrant

12th
equitywarrant

Yen
6th equity
warrant

7th equity
warrant

8th equity
warrant

9th equity
warrant

10th
equitywarrant

Non-vested:
Previous fiscal
year-end outstanding
Granted―48,960―41,133Forfeited――

Vested――48,96041,133

Outstanding on
March 31, 2015
Vested:Previous fiscal
year-end outstanding
Vested――Exercised――

Forfeited――

Exercisable――

1st equity
warrant

2nd equity
warrant

3rd equity
warrant

4th equity
warrant

5th equity
warrant

1

1

1

1

1

1

1

1

1

1

b. Price information

March 31, 2015

Exercise price
Average share price at
exercise
Fair value at the grate
date

―

―

―

532

―

532

―

532

―

532

417

439

297

318

300

321

310

331

518

542

March 31, 2015

11th
equitywarrant

12th
equitywarrant

1

1

―

―

500

525

Yen

Exercise price
Average share price at
exercise
Fair value at the grate
date

37
64

c. Valuation technique for fair value of stock options
Stock options granted during the fiscal year ended March 31, 2015 were valued using the Black-Scholes option pricing model andthe following principal parameters:
11th equity warrant

12th equity warrant

Expected volatility (*1)

30.90%

25.77%

Average expected life (*2)

6 years

3 years

Expected dividends (*3)

¥9.0 per share¥9.0 per share

Risk-free interest rate (*4)

0.19%

0.08%

(*1) Expected volatility is calculated based on the actual stock prices at the following period corresponding to the average expected life.
11th equity warrant: From July 18, 2008 to July 17, 2014
12th equity warrant: From July 19, 2011 to July 17, 2014(*2) The average tenure of the directors and the executive officers who retired in the past is used as the average expected life in the above table.
(*3) Actual dividends on common stock for the fiscal year ended March 31, 2014.
(*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.

28. Related-Party Transactions

No material transactions occurred with related-parties for the fiscal year ended March 31, 2015 and 2014.

29. Per-share Data
Yen
2015

March 31,2014

¥830.50¥689.21

Earnings per share-basic

39.48

33.52

Earnings per share-diluted

39.46

33.51

Net assets per share

Note: Bases for calculation of net assets per share are as follows:
Millions of yen

Net assets
Deduction from nets assets

2015

2014

¥601,840¥516,971

1,584

2,956

Attributable to equity warrants

147

113

Attributable to minority interests

1,437

2,843

Net assets after deduction of the portion described above

600,255

514,014

Number of common shares (in thousands)

722,758

745,792

Note: Bases for calculation of earnings per share (basic and diluted) are as follows:
Millions of yen
2015

March 31,2014

Earnings per share¥28,680

Net income
Earnings not available to common shareholders¥25,042――

Net income after deduction of the portion described above

28,68025,042

Weighted average number of common shares for the fiscal year (in thousands)

726,349

746,908

Diluted earnings per share
Adjustment to net income――

Increase in common shares (in thousands)

346

320

Attributable to equity warrants (in thousands)

346

320

Equity warrants that have no dilutive effects on earnings per share―*1

From the fiscal year ended March 31, 2015, the Bank and its consolidated subsidiaries have adopted the Accounting Standard for Retirement Benefits (ASBJ
Statement No. 26, May 17, 2012) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, Mar 26, 2015), in terms of the
Accounting Standard, Paragraph 35 and the Guidance, Paragraph 67. Meanwhile the Bank and its consolidated subsidiaries are following the transition treatment
stipulated in the Accounting Standard, Paragraph 37.

38
65

As a result of the adoption, net assets per share decreased by ¥1.00 at the beginning of the fiscal year ended March 31, 2015 and effects to earnings per shareand diluted earnings per share is minor.
(*1): Euro-US dollar-denominated convertible bonds with stock acquisition rights maturing in 2019 (see (Note12))30. Business Combination

A consolidated subsidiary, The Joyo Credit Guarantee Co., Ltd. acquired the stock of consolidated subsidiaries from minority
shareholders at December 17, 2014.
1. Outline of the transaction(1) Names and businesses of combined entities
The Joyo Credit Guarantee Co.,Ltd. (Credit guarantee business of housing loan)
The Joyo Computer Service Co.,Ltd. (Development and sales of software and contracted calculation business)
The Joyo Lease Co.,Ltd. (Goods rental and factoring business)(2) Date of the business combination
December 17, 2014
(3) Legal form of business combination
Additional acquisition of stocks of consolidated subsidiaries(4) Name of the entity after the business combination
No change in the name of the entity(5) Other outline of the transaction
Acquisition from minority shareholders due to improvement in capital efficiency
2. Accounting method
The transaction has been accounted for as transaction with minority interest holders under common control situation based on ASBJ
Statement No. 21 issued on December 26, 2008, “Accounting Standard for Business Combinations” and ASBJ Guidance No.10
issued on December 26, 2008, “Guidance for Accounting Standard for Business Combinations and Business Divestitures.”
3. Additional acquisition of stocks of subsidiaries(1) Acquisition cost and details
Consideration, Cash and due from banks amounting to ¥339 million
Acquisition cost amounting to ¥339 million(2) Amount of negative goodwill and the reason for generating the negative goodwilli.
Amount of negative goodwill¥1,335 million
ii.
Reason for negative goodwill
Acquisition costs of the subsidiary stocks were less than the decrease in minority interests.

31. Significant Subsequent event
Nothing applicable

32. Asset retirement obligation

Information on asset retirement obligation is omitted as asset retirement obligation is not recorded as of April 1, 2014 and March 31,
2015.

39
66

67

Organization

As of June 26, 2015

The JOYO BANK, LTD.

Corporate Audit Division

General Meeting of
Shareholders
Audit & Supervisory Board
Audit & Supervisory Board Members
Board of Directors

Corporate Management Group
Corporate Risk Management Division
Credit Risk Management Office
Legal and Compliance Office
Corporate Planning Division
Group Management OfficePublicity Office
IT Strategy Office
Tokyo Sub-Headquarters
Personnel Division

Executive Officer Committee

Staff Counseling Office
Company Management Support Office
Human Resource Development Office
General Affairs Division

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

Operational Reforms GroupOperational Innovation Division

Operation Systems GroupOperation Management Division
Client Asset Service Office
Data Processing Center
Area Data Processing Center
Computer System Division

Business Headquarters
Business Management Division
Customer Service Office
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 Division
Regional Partnership DivisionInternational Market Business Group
Treasury and Securities DivisionMarkets Administration and International DivisionInternational Business OfficeInternational Operations Office
Overseas Representative Office68

Domestic Branches

Board of Directors and Corporate Auditors
Chairman
Kunio Onizawa

Senior Managing Directors
Hideo Sakamoto

President
Kazuyoshi Terakado

Managing Directors
Katsuhiko Ito
Atsuyuki Kurosawa
Eiji Murashima
Ritsuo Sasajima
Hiroshige Sonobe
Masaru Seki
Hiroaki Yokochi

As of June 26, 2015

Directors
Toshihiko Kawamura (outside)
Ryuzaburo Kikuchi (outside)

Corporate Auditors
Yoshiaki Terakado (standing)
Hideo Torihata (standing)
Akira Yasu
Sanenori Hitomi
Toshio Mizushima

Market Business Group and Overseas Offices
Head OfficeMarkets Administration and International DivisionInternational Business OfficeInternational Operations Office
Shanghai Representative Office
Singapore Representative OfficeTreasury and Securities Division

As of June 26, 2015

5-5, Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
7-2, Yaesu 2-chome, Chuo-ku, Tokyo 104-0028, Japan
5-5 Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
5-5 Minami-machi 2-chome, Mito, Ibaraki 310-0021, Japan
Room 1901, Shanghai International Trade Centre, 2201
Yan An Road (West), Shanghai 200336 P.R. of China
30 Cecil Street, #11-04 Prudential Tower, Singapore 049712

Phone: +81-29-231-2151
Phone: +81-3-3273-1741
Phone: +81-29-300-2727
Phone: +81-29-300-2386

7-2, Yaesu 2-chome, Chuo-ku, Tokyo 104-0028, Japan

Phone: +81-3-3273-5245

Phone: +86-21-6209-0258
Phone: +65-6225-6543

Affiliated Companies

As of March 31, 2015

Established

Capital Stock(millions of yen)

Share of
Voting Rights

Sale of software and contract of
calculation businesses

1973

47.5

5%

4-12, Minami-machi 3-chome, Mito,
Ibaraki

Leasing of machinery and equipment, claim
acquisition

1974

100

5%

The Joyo Credit Guarantee Co., Ltd.

4-12, Minami-machi 3-chome, Mito,
IbarakiCredit guarantee of housing loans from the
Bank

1978

30

5%

The Joyo Credit Co., Ltd.

4-12, Minami-machi 3-chome, Mito,
IbarakiCredit card services

1982

100

5%

The Joyo Business Service Co., Ltd.

8-1, Sasano-machi 1-chome,
Hitachinaka, Ibaraki

Agent in charge of administrative work for
the Bank

1984

100

100%

The Joyo Industrial Research Institute, Ltd.

5-18, Sannomaru 1-chome, Mito,
IbarakiConsulting, investigation and research

1995

100

5%

The Joyo Equipment Management Co., Ltd.

5-5, Minami-machi 2-chome, Mito,
Ibaraki

Maintenance and management of operational
properties and equipment of the Bank

1999

100

100%

3-3, Jonan 1-chome, Mito, Ibaraki

Management and maintenance of ATMs and
CDs

1999

50

100%

4-12, Minami-machi 3-chome, Mito,
Ibaraki

Dealing of securities, mediation, commission
and substitution of trading of securities

2007

3,000

100%

Company Name

Address

Main Business Activities

The Joyo Computer Service Co., Ltd.

16-25, Nishihara 2-chome,
Mito, Ibaraki

The Joyo Lease Co., Ltd.

The Joyo Cash Service Co., Ltd.
The Joyo Securities Co., Ltd.

■ Principal Shareholders
The 10 largest shareholders of the Bank and their respective shareholdings at March 31, 2015 were as follows:

The Bank of Tokyo-Mitsubishi UFJ, Ltd. .....................................................................................................
Nippon Life Insurance Company ...................................................................................................................
Japan Trustee Services Bank, Ltd. (Trust Account) ..............................................................................
Sompo Japan Nipponkoa Insurance Inc. ..................................................................................................
The Dai-ichi Mutual Life Insurance Company .......................................................................................
STATE STREET BANK AND TRUST COMPANY 505223........................................................................
Sumitomo Life Insurance Company ............................................................................................................
The Master Trust Bank of Japan, Ltd. (Trust Account) .......................................................................
Meiji Yasuda Life Insurance Company........................................................................................................
Northern Trust Co. (AVFC) Re-SSD00............................................................................................................
Total..........................................................................................................................................................................

Number of Shares Held(Thousands)

Percentage of Total Shares Outstanding(%)

28,992
25,20325,00023,17817,04916,861
16,44816,187
11,422
9,745
190,088

3.78
3.28
3.26
3.02
2.22
2.20
2.14
2.11
1.49
1.27
24.80%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, Japan

69