DAISHI HOKUETSU
INTEGRATED REPORT 2020
Disclousure for the Year Ended March 31, 2020

Contents

Message from Management

About the Daishi Hokuetsu FG

Medium-Term Management Plan

Financial Highlights / Non-Financial
Highlights

To Our Shareholders

TSUBASA Alliance

ESG Initiatives and Contributions
to SDGs

Company Information

Financial Data

1

DAISHI HOKUETSU REPORT 2020

P. 02

Message from Management

P. 05

History of the Daishi Bank & Hokuetsu Bank

P. 07

Business Area

P. 09

TopicsP. 11

Management Philosophy / Ideal Form

P. 13

1st Medium-Term Management Plan

P. 14

Synergy Effects of Management Integration, Basic Strategy

P. 15

Basic Strategy

P. 17

Financial Highlights

P. 20

Non-Financial Highlights

P. 23

Return to Shareholders / Shareholders Benefits

P. 24

Information Disclosure

P. 25

Wide-range regional partnerships by 10 regional bank "TSUBASA Alliance"

P. 27

Initiative Policy for ESG / SDGs Declarations

P. 28

SDGs Declaration 1 Regional Economy / Society

P. 35

SDGs Declaration 2 Aging Society

P. 36

SDGs Declaration 3 Financial Services

P. 40

SDGs Declaration 4 Diversity

P. 41

SDGs Declaration 5 Environmental Protection

P. 43

Corporate Governance

P. 49

List of Executives / Group Companies

P. 51

Organization Chart / Major stockholders

P. 52

Financial Data Contents

P. 53

Consolidated Balance Sheets

P. 55

Consolidated Statements of Income

P. 55

Consolidated Statements of Comprehensive Income

P. 56

Consolidated Statements of Shareholders' Equity

P. 59

Consolidated Statements of Cash Flows

P. 60

The Status of Financial Results (Consolidated)

P. 81

Non-Consolidated Balance Sheets(Daishi Bank)

P. 82

Non-Consolidated Statements of Income(Daishi Bank)

P. 83

Non-Consolidated Balance Sheets(Hokuetsu Bank)

P. 84

Non-Consolidated Statements of Income(Hokuetsu Bank)

Message from Management

Message from Management

Chairman and Representative Director

Katsuya Sato

President and Representative Director

Fujio Namiki

Thank you very much for your continued support.
We would like to express our deepest condolences for the people who have lost their lives in the
COVID-19 pandemic, and our sympathies for those who have been infected as well as their families andpeople close to them. At the same time, we wish to express our appreciation and respect for medical
professionals and others who are working hard to stop the spread of the virus and administer medical
treatments. Japan was also struck with heavy damage from torrential rains in July of this year, and we
express our sympathy for those affected as well as my hope that the stricken areas can recover andrebuild as quickly as possible.
We are also determined to go the extra mile in supporting communities in many different ways tocounter the spread of the coronavirus which does not yet have any clear end in sight. We haveestablished new COVID-19 consultation counters at all branches of our subsidiaries Daishi Bank andHokuetsu Bank and are working to keep finances flowing in local economies, while also providing
information on various support systems related to COVID-19 and offering matching support for finding
suppliers and customers. Whatever you might need, come talk to us. In the Daishi Hokuetsu Financial
Group, we will continue reinforcing our organizational structure to resist the spread of infections, making
the health and safety of all our customers and stakeholders our number one priority. At the same time, wewill fulfill our financial and information intermediary function and mission in the community to facilitate therecovery and growth of local economies.

Implementing the 1st Medium-Term Management Plan (October 2018 - March 2021) Looking at the economic environment surrounding our financial group, we are embarking on atransformation period unlike any we have experienced before. Japan’s population is shrinking faster than
expected as the birthrate declines and the society ages, while extremely low interest rate conditions dragon long-term. We are seeing increasingly intense competition that transcends the traditional industry
types, along with the accelerated advancement of digital technologies integrated with 5G (fifth-generation
mobile communication) systems.

DAISHI HOKUETSU REPORT 20202

Message from Management

In this business climate we are pursuing our three basic strategies of improving our financial andinformation functions, increasing management efficiency, and increasing the sophistication of our Groupmanagement system, in order to achieve the key business challenges defined in our 1st Medium-Term
Management Plan (October 2018 - March 2021) - revitalizing local economies, strengthening profitability,
and increasing management efficiency. In the 2019 fiscal year we achieved steady year-on-year
improvement on all of our declared growth KPIs - small and medium enterprise (SMEs) corporate loanbalance, consumer loan balance (to individuals), and non-interest income. Our performance also
exceeded all nine of the targets we had set as our evaluation indexes for contributing to the community.
In April of last year we established Bridge Niigata, Ltd. as a key initiative for contributing to communities.
Bridge Niigata operates in the business areas of market
development, tourism promotion, and productivity
improvement. In market development, the company
organizes the local food and product fair Niigata Marcheat seven locations in the Tokyo area including at large
corporate sites, and in October of last year opened apermanent“antenna shop”called Bridge Niigata in the
Nihonbashi area of Tokyo selling local Niigata products.
Additionally, the staffing company that our group
launched in October of last year Daishi Hokuetsu Career
Bridge Co., Ltd. receives staffing inquiries from clients in a"antenna shop" Bridge Niigata
broad range of industries, for positions including
executives and management personnel. In the six months
since launching operations they have already received atleast 400 staffing inquiries. Including these two newcompanies we will engage in even more in-depth
collaboration throughout the group as a whole going
forward, as we boldly go beyond the traditional boundsof the banking field.

Initiatives in the Tsubasa Alliance Daishi Hokuetsu Career Bridge Co., Ltd.

The Tsubasa Alliance regional collaborative framework
for regional banks now includes 10 member banks with the addition of Bank of the Ryukyus in April of thisyear. Since its initiation in October 2015 the alliance has been working together in many different fields
such as FinTech and at sharing system resources and administrative work. In FY2019 the allianceconcluded a partnership agreement on M&A operations, in addition to jointly developing andimplementing a tablet-operated item keeping management system to manage the receipt and return of
documents and other items from customers. As a joint effort between securities brokerage subsidiaries of
Tsubasa Alliance member banks we have also been working to expand the scope of collaboration,
including sales of World Bank sustainable development bonds by Daishi Hokuetsu Securities Co., Ltd.
Going forward, we will fully leverage the economies of scale made possible by this, the largest allianceof regional banks totaling roughly 70 trillion yen in assets, in order to provide high value-added financial
and information services.

Logo mark of Tsubasa Alliance

3

DAISHI HOKUETSU REPORT 2020

Initiatives for ESG and SDGs 
Our financial group’s 1st Medium-Term Management Plan defined key initiatives toward ESG(environment, social, and governance) and the SDGs (Sustainable Development Goals) in order to fulfill
our corporate social responsibility to help create a sustainable society. In May of last year we establishedthe Daishi Hokuetsu Financial Group SDGs Declarations, and we have been actively engaged in a series ofefforts based on this declaration. As part of these efforts we are administering donation-type private
placement bonds which donate someof the issuance fees to organizations
such as local government agencies andeducational institutions. During the2019 fiscal year both of our banks
issued private placement bonds geared
toward the SDGs. Our Private Placement
Bonds to Assist in P u b l i c i z i n g t h e
Attractiveness of Niigata facilitate
efforts to publicize appealing tourism
resources in Niigata Prefecture totourists in Japan and around the world.
Private Placement Bonds to Assist in
Private Placement Bonds to
Publicizing the Attractiveness of Niigata
Monitor Local Safety
Private Placement Bonds to Monitor
Local Safety help to keep local
communities safe while promoting attractive urban development projects. In total, 262 of our corporate
customers have expressed their support for each of these efforts, and we are donating part of theissuance fees to the Niigata Prefectural Tourist Association and municipal governments within Niigata
Prefecture.
We are determined to continue actively working to tackle issues in regional society such asenvironmental problems and educating future generations, while putting ESG management into practice to
do our part toward achieving the SDGs. Additionally, to solidify people’s trust in our financial group wewill continue dedicating our full efforts to strengthening our legal compliance system which forms a corecomponent of our management, with even higher ethical standards. At the same time, we will work tobuild a high-quality governance structure based on our corporate governance code, and strive to boost
corporate value from the viewpoint of our stakeholders.
In January 2021 our two banks will merge and set out
on a new path in history as the Daishi Hokuetsu Bank,
Ltd. Advance preparations for the merger are proceedingaccording to plan, including the consolidation of systems
Daishi Hokuetsu Bank logo
and clerical operations which will be the basis forharnessing the synergies of unified management. These preparations have now entered the final phase.
Officers and employees of our financial group will continue working together to ensure the success of thismerger, harness the maximum synergy effects in a short period of time, and by doing so, continuously
fulfill the ultimate goal of this management unification, to contribute to regional communities.
Please look forward to exciting developments at the Daishi Hokuetsu Financial Group going forward.
We ask for your continued support.
July 2020

DAISHI HOKUETSU REPORT 20204

About the Daishi Hokuetsu FG

History of the Daishi Bank & Hokuestu Bank

Profile of The Daishi Bank
(as of March 31, 2020)
Location of Head Office1071-1 Higashiborimae-dori, 7-bancho,
Chuo-ku, Niigata-shi

１８７３Founded as The Fourth
National Bank of Japan

１９１７

１９28

Corporate name changed to
The Daishi Bank, Ltd.

Finished construction of its
third head office

FoundedNovember 2, 1873
Total Assets¥5,947,000 million
Capital¥32,700 million
Number of Employees
2,095(2,160 when including employees
stationed from other organizations)
Number of Branches
122 branches; 1 representative office(Shanghai)
113 branches in Niigata Prefecture(including 5 field offices and 3 virtual
offices)
9 branches outside of Niigata Prefecture

THE HOKUETSU BANK
Profile of The Hokuetsu Bank
(as of March 31, 2020)

Founded in current-day
Niigata City as Japan’s thirdnational bank.

１８７８Founded as The Sixty-NinthNational Bank of JapanThe head office featured
stone construction usingarchitectural styles fromancient Greece.

Although the name had beenchanged to Niigata Bank in
1896, customers continued
to use the nickname“Daishi”
when referring to the bank.
Therefore, the name waschanged to The Daishi Bank.

１８９６

Founded as The Nagaoka
Bank

１９４２

Established as The Nagaoka
Sixty-Ninth Bank

Location of Head Office2-14 Ote-dori 2-chome, Nagaoka-shi
FoundedDecember 20, 1878

Established via
a merger by
The Sixty-NinthBank and The
Nagaoka Bank.

Total Assets¥2,977,400 million
Capital¥24,500 million
Number of Employees
1,302(1,352 when including employees
stationed from other organizations)

After the end of the Boshin
War, founded in current-day
Nagaoka City in order topromote economic growth.

Number of Branches
84 branches
79 branches in Niigata Prefecture
5 branches outside of Niigata
Prefecture

Founded in current-day
Nagaoka City in conjunction
with economic growth suchas a boom in the petroleum
industry and establishment ofrailway companies.

１９４８
Corporate namechanged to The
Hokuetsu Bank

Corporate Logo and Corporate Color of the Daishi Hokuetsu FG
Corporate Logo

Corporate Color

Azure
Daishi Hokuetsu Financial Group
Based on the motif of geography in Niigata Prefecture, thecorporate logo uses a golden color representing bountiful harvests ofrice to express the expansive land, and uses the corporate color
azure to express the rivers which moisten that land and the vast Sea
of Japan connecting with the rest of the world.
The elliptical shape in the center of the logo was designed in theimage of islands and rice in Niigata Prefecture.
The two lines rising upwards depict how the two banks form asingle massive surge, boldly challenging changes for the future andcontinuing to contribute to regional society.

5

DAISHI HOKUETSU REPORT 2020

Blue colors create positive images such as trust,sincerity, and future orientation. Among blue colors,
azure is a particularly rich and beautiful shade.
In our logo, the color azure represents the vast Sea ofJapan which borders Niigata Prefecture; the ShinanoRiver, Agano River, and other rivers which flow into the
Sea of Japan after moistening the fertile land; and theclear expanse of blue skies. This color represents how
our new financial group will continuously grow in the
future while earning the trust of regional society.

１９７３

Listed on the Second Sectionof the Tokyo Stock Exchange

１９９２Completed the current head
office１９７５

Listing changed to the First
Section of the Tokyo Stock
Exchange

Completed construction of
the current head office (thefifth head office built) byexpanding and remodeling forenhancement anddevelopment of functions andfacilities.

October
2018

Establishment of the Daishi
Hokuetsu Financial Group

Profile of the Daishi Hokuetsu
Financial Group(as of March 31, 2020)

１９６５

Completed the current head
office１９７３

Listed on the First Section of
the Tokyo Stock Exchange

Location of Head Office2-14 Ote-dori 2-chome, Nagaoka-shi

January
2021

Merger of the twobanks to form The
Daishi Hokuetsu Bank
(scheduled)

Location of Principal Head Office Functions
1071-1 Higashiborimae-dori 7-bancho,
Chuo-ku, Niigata-shi
Established
October 1, 2018
Capital¥30,000 million
Listed Securities ExchangeTokyo Stock Exchange (Securities
Code: 7327)

In contrast to the red bricksof the former head office, the
new head office was built inwhite marble.

Group Companies of the Daishi Hokuetsu FG

The Daishi Guarant y

The Hokuetsu Credit Guarantee

The Daishi Management Consulting

The Hokugin Economic Research Institute

The Daishi Lease

The H o k uet su L easing

The Daishi Computer Service

The H o k uet su Card

The Daishi JCB Card
The Daishi DC Card

DAISHI HOKUETSU REPORT 20206

About the Daishi Hokuetsu FG

Business Area
Niigata Prefecture is the main geographical base of the Daishi Hokuetsu Financial Group. Located on the
Sea of Japan side of Japan’s main island of Honshu, thanks to its geography and climate the prefecture
has long been recognized for its booming agriculture industry and for production of foods such as riceconfectionery and processed seafood products made from its abundant rice, agricultural and fisheryresources. Additionally, among the first five ports in Japan including Hakodate, Yokohama, Kobe, andNagasaki, the Port of Niigata was the only port on the Sea of Japan side designated to be created by theTreaty of Amity and Commerce Between the Unites States and Japan concluded in 1858. From its
opening in 1869 until this very day, the Port of Niigata has continuously been entrenching its position as aport of international trade. Today, in addition to manufacturing, agriculture, forestry, and fishery industries,
Niigata Prefecture ranks first in Japan in many different indexes, including for culture and education.

Current State and Future Potential of Niigata Prefecture
Major economic indexes
Index

Ratio of nominal gross product per economic activity typeNiigata Prefecture

Nationalrank

Applicable year or date

12,584.24 km2

5thOctober 1, 2019

Total area
Total population

Niigata
Prefecture

Nationally

Agriculture, forestry, and fishery

1.9%

1.2%

Mining

0.9％

0.1％

Manufacturing

22.5％

20.7％

Power, gas, water utilities, waste
management

3.9％

2.6％

Construction

6.1％

5.7％

Industry

2,223 thousand

15th

October 1, 20192.51 people/household

4th

January 1, 201978,000

4th

February 1, 2015

Agricultural output¥246.2 billion

13th

2018

Wholesale, retail

11.2％

13.9％

Wet rice harvest volume646,000 tons

1st

2019

Transport, postal services

4.4％

5.1％

Number of industrial business facilities

5,227

9th

June 1, 2019

Lodging, food service

2.7％

2.5％

Number of factory locations(not counting laboratories)

Telecommunications

2.8％

4.9％

38

7th

2019

Finance, insurance

3.2％

4.1％

Value of industriallymanufactured goods shipped

Real estate

13.3％

11.3％

¥5,077.1 billion

Specialized, science & technology,
business support services

5.3％

7.4％

Public sector

4.4％

4.9％

Education

4.1％

3.6％
7.0％

Household size
Number of farms

Number of commercial
business facilities
Annual value of goods sold

23rd

2018

29,00614th

June 1, 2016

¥7,015.7 billion

16th

2015

Health and social services

8.2％

Other services

4.6％

4.3％

Subtotal

99.4％

99.4％

Gross product (nominal)¥8,884 billion

16th

2016

74.0%

7th

October 1, 2018

1,845,000

13th

March 31, 2019

Homeownership rate
Cars owned

Other (tax)
Total

0.6％

0.6％

100.0％

100.0％

Source: Niigata Prefectural Statistics Box, Niigata Prefecture website
Statistical Data, Cabinet Office website

Source: Major Indexes for Niigata Prefecture, Niigata Prefecture website

Niigata Prefecture this-and-that top three
Rank

DomainManufacturing

1st

Item

Education

EnergyRank

DomainItem
Number of (National) Important
Tangible Folk Cultural Properties

Value of processed seafood
products shipped¥34 billion

2017

CultureValue of rice confectionery shipped¥146 billion

2017

Health,medicalValue of cut and packaged
mochi rice cakes shipped¥30.2 billion

2017

V a l u e o f k n i t t e d m e n’ssweaters, etc. shipped¥1.6 billion

2017

Value of knitted women’ssweaters, etc. shipped¥13.8 billion

2017

Metal silverware output¥11.4 billion

2017

Kerosene heater output¥48.1 billion

2017

Number of licensed sake breweries
Agriculture,
forestry, andfishery industries

Applicable year
or dateFigures98

March 31, 2019

Rice output¥144.5 billion

2018

Tulip (cut flowers) output¥600 million

2017

1st

Applicable year
or dateFigures
17

April 1, 2020

Average height of boys (age 7)

123.4 cm

2019

Average height of girls (age 5)

110.6 cm

2019

Socialservices

Number of regional childcare support
center program locations (for every
100,000 of the population)

10.3

2018

LivingVolume of sake consumed (per adult)

10.5 liters

Tourism

Number of inbound swans

NatureManufacturing

2nd Agriculture,
forestry, andfishery industries

21,1662018
January 2019

Area of natural parks

316,891 ha March 31, 2019

Sharp-edged tools andcraftsman tools shipped¥13.4 billion

2017

Cultivated mushrooms shipped¥46.5 billion

2018

Potted plants (flowers and trees) shipped

6.98 million

2018

13

April 1, 2020

High school advancement rate

99.63%

Graduating
March 2019

CultureNumber of (National) Important
Intangible Folk Cultural Properties

Vocational school (specialized
programs) advancement rate

25.99%

Graduating
March 2019

CultureNumber of Officially DesignatedTraditional Japanese Crafts

16

November 20,
2019

Number of hot spring areas(with lodging facilities)

144

March 31, 2019

Skiing and snowboarding resorts

43

October 1, 2018

Crude oil output
Natural gas output

338,659 kl

2018

2,139,994,000 ㎥

2018

3rd

Tourism

Source: Niigata Prefecture This-and-That Top Five in Japan, Niigata Prefecture website

7

DAISHI HOKUETSU REPORT 2020

oku
oku

oku
oku

Kanto
Kanto
a, Tokyoa, TokyoKantoa, TokyoKantookua, Tokyo

oku

Kanto

a, TokyoKantoa, Tokyo

Niigata Prefecture Transport Infrastructure
Niigata Prefecture can be quickly and efficiently reached from the Kanto, Kansai, and Tohoku regions andothers thanks to its outstanding high-speed transport infrastructure. Logistics business and tourist movement isalso active between Niigata Prefecture and countries in Northeast Asia such as China, South Korea and Russia.
Political and economic connections with
Northeast Asia

Nihonkai Tohoku Expressway◦Airline routes connecting to northeast China
and South Korea◦Consular offices for South Korea, China, andNiigata Airport

Russia in the city of Niigata

Niigata Port◦Utilization of natural energy and resources

Ban-etsu
Expressway

development in Russia

Advantages of transportation network
Highways stretching out in five different directions(Kan-etsu, Hokuriku, Joshin-etsu, Ban-etsu, andNihonkai Tohoku)
Joetsu Shinkansen

Naoetsu Port
Hokuriku
Expressway
JoetsuShinkansen
Hokuriku
Shinkansen

Hokuriku Shinkansen
Conventional railroad lines such as the Shin-Etsu Line,
Hokuriku Line, and Uetsu LineKan-etsu Expressway

Toward Tohoku

Joshin-etsu
Expressway

Niigata Airport
Domestic routes:
8 (New Chitose, Narita, Chubu Centrair
International, Komaki, Itami, KansaiInternational, Fukuoka, Okinawa)
International routes:
6 (Seoul, Shanghai, Harbin, Khabarovsk,
Vladivostok, Taipei)

Toward Hokuriku
Toyama, Ishikawa

TowardNaganoToward Kanto

Gunma, Saitama, Tokyo

Niigata Port
Comprehensive ports, function-specific ports:
International container shipping sector
Designated as LNG (liquefied natural gas) sector
Naoetsu Port
Function-specific ports:
Designated as LNG (liquefied natural gas) sector

As of May 31, 2020

Share of Business in Niigata Prefecture
Daishi Bank and Hokuetsu Bank
both have large shares of overallsavings deposits and lending in
Niigata Prefecture. Additionally, inJanuary 2021 the two banks will
merge and set out on a new pathin history as the Daishi Hokuetsu
Bank. Building on the customer
trust and regional community
networks our banks haveestablished over our 140 years ofhistory, we will quickly harness
maximum synergy effects from thismanagement unification andcontinuously fulfill its ultimate
goal, to contribute to regional
communities.

Share of savings deposits

OthersOur banks(second-tier regionalbanks,credit unions, etc.)

41.8％

54.6％

Major banks

3.6％

Share of issued loans

Others(second-tier regionalbanks, credit unions, etc.)

38.5％

Our banks

56.2％

Major banks

5.3％

Source: Financial Journal (end of March 2019)

DAISHI HOKUETSU REPORT 20208

About the Daishi Hokuetsu FG

Topics

Initiatives for the Merger of Daishi Bank and Hokuetsu Bank
Daishi Bank and Hokuetsu Bank plan to merge as of January 2021, contingent on gaining approval fromthe relevant authorities. Projects to consolidate systems and clerical operations for the merger of thebanks are currently proceeding on schedule.
Current

FY2019First half

January 2021 (Planned)

FY2020

Second halfFirst half

From FY2021 onward
Second halfFirst half

B

A Handle changes to products and services

C

Merge
the
banks

Changebranch names
and numbers

Integrate
branches

A Handle Changes to Products and Services - Reorganize Branches for Personal Loans -For personal loans, both of ourbanks are reorganizing branches(including newly establishedbranches) and handling sales
within the same branch office.
Hokuetsu Bank is not accepting
new applications for personalloans at this time, in order tofocus on facilitating smoothsystems integration for themerger.

B Merger of the Banks

As of May 31, 2020

Locations before reorganization

Locations after reorganization (combined branches)

Hokuetsu Bank Nagaoka Loan Plaza

Daishi Bank inside Nagaoka Consulting
Plaza

Hokuetsu Bank Joetsu Loan Plaza

Daishi Bank inside Joetsu Consulting
Plaza

Hokuetsu Bank Kurashi no Ouen
Hiroba Ken-ou

Daishi Bank inside Ken-ou Loan Center

Daishi Bank Niigata Minami Loan
CenterHokuetsu Bank inside Kurashi no Ouen
Hiroba Niigata

Daishi Bank Niigata Higashi Loan
Center (new establishment)

Hokuetsu Bank inside Fujimicho Loan
Plaza

*1. There is no change to Daishi Bank Niigata Loan Center, Dekijima Loan Center, Shibata Loan Center, orNagaoka Nishi Loan Center.
*2. Open days and business hours of both banks remain unchanged.

THE HOKUETSU BANK

Last day for new applications
No longer accepting new
applications

Housing loans
Unsecured loans (car loans, student
loans, etc.)

Wednesday, September 30, 2020

C Branch Integration after Merger of the Two Banks
Adjacent Branches Integration of 50 branches (20 Daishi and 30 Hokuetsu branches) over roughly three years starting in April 2021

We anticipate integrationof adjacent branches via abranch-in-branch format**Method in which the locations ofmultiple sales offices are merged
into the same location and coexist
in the same building

Branch A

Branch B

Branch A
After integration

Branch B is relocated to the adjacent Branch A

9

DAISHI HOKUETSU REPORT 2020

Branch B

Measures Against COVID-19
The Daishi Hokuetsu Financial Group is implementing organizational measures against the spread of
COVID-19, with the health and safety of our stakeholders first and foremost. We also provide many different
forms of support such as holding conferences about various financial grants and offering matching support
for finding suppliers and customers, while also providing the financing support to keep funds flowing in our
regional economy based on our management philosophy that emphasizes our role in underpinning theregional economy. For details about the measures we have taken to combat COVID-19, please see thewebsites for each of our two banks.
Daishi Bank measures against COVID-19

Hokuetsu Bank measures against COVID-19

https://www.daishi-bank.co.jp/release/corona_info.php

https://www.hokuetsubank.co.jp/dhfg/corona_info/

Key Measures Against the Spread of COVID-19 
We are taking a variety of measures to prevent the spread of infections at both of our banks to ensure
the safety of our customers.
Measures taken at sales offices

Measures taken by staff□ ‌Installed acrylic boards, plastic sheetsmasks, washing hands, disinfecting with alcohol, etc.
□ Wearing‌□ ‌Made sanitizer available□ Avoiding‌
the three C’s (canceling meetings, restricting trainings, etc.)□ Disinfectant‌cleanings inside business offices (twice daily)□ ‌Working staggered hours or from home□ ‌Informational posters□ Using‌video conference systems, having meetings by phone or online□C‌ o n d u c t i n g s a l e s a c c o r d i n g t o c u s t o m e r
preferences (by phone, email, postal mail, etc.)□‌“Split operations” □ Providing‌
instructions for procedures via Internet
Both banks letcustomers checkaccount balances,make bank transfers,
buy investment
trusts and more
online.

etc.

etc.

Daishi Bank

Main Forms of Regional Community Support 

Hokuetsu Bank
いい

いい

いい

いい

The Daishi Hokuetsu Financial Group provide various forms of support toresidents of regional communities affected by the spread of COVID-19.
□ ‌COVID-19 Consultation Counters are now available at all offices□「Conducting‌
individual consultations for Employment Adjustment Subsidies□ ‌Private Placement Bonds to Support Niigata Culture and Sports

COVID-19 Consultation Counter□ ‌Various Living Support Plan loan products for individuals□ ¥30‌
million in donations in Niigata Prefecture for improving medical care
□ Using‌
crowd-funding to donate to restaurants in the prefecture  etc.

Letter of gratitude from Niigata
Prefecture for donations

DAISHI HOKUETSU REPORT 202010

About the Daishi Hokuetsu FG

Management Philosophy / Ideal FormManagement Philosophy / Ideal Form

Main External Environment

Decline in
population due tolow birthrate andaging, and Decline
in the working-age
population

Management Philosophy
As a trusted financial group,

ActionPrinciples

we will continue to provide services
that live up to the expectations ofcustomers and contribute to thedevelopment of regional society.

MissionWe will boldly take on challenge tocreate new value.

Vision andApproach

Lengthening ofmonetary-easing
policyAcceleration ofdigital technology

Ideal Form
We establish ourselves as a financial andinformation services group that receives

Spread of
economic
globalization

overwhelming support by creating new value
through our financial intermediary function andinformation intermediary function, increasing theefficiency of management, and continuing tocontribute to the growth of regional society.

11

DAISHI HOKUETSU REPORT 2020

Increased
participation inbanking businessby corporations
from otherindustries

Strategy

For Achievement of a Sustainable Society

1st Medium-Term Management Plan

Five Declarations for Implementing
ESG Management and Achieving SDGs

Basic Strategy I
Improve our financial intermediary function
and information intermediary function
Create topline synergy*1 andreform our portfolio*2

Basic Strategy II

In order to fulfill our corporate social
responsibility for achieving a sustainable society,
the Daishi Hokuetsu FG actively works to resolve
social issues related to ESG (Environment,
Society, and Governance) and contributes to theachievement of SDGs (Sustainable Development
Goals) set by the United Nations. By doing so, we
seek to grow continually with regional society.

Increase management
efficiency
Create cost synergy*3

Basic Strategy III
Increased sophistication of theGroup management systemstrengthening ofmanagement infrastructure▲

For details, see pp. 13 to 16*1. Synergy‌which increases profits through management
integration and merger*2. Activities‌
for reforming the composition of owned
assets, heightening the composition ratio of interest on
loans and non-interest income in the gross profit of corebusinesses, and strengthening profitability*3. Synergy‌which decreases expenses throughmanagement integration and merger

Five Declarations
Declaration 1

Declaration 2

Regional Economy / Society

Aging Society

Contribute to revitalization of the
Support a safe and secure
regional economy and community.
lifestyle for the elderly.
Declaration 3

Financial Services

Provide financial services forleading an even better lifestyle.
Declaration 4
Declaration 5

Diversity

Environmental Protection

Promote diversity andwork-style reform.

Contribute to sustainable
environmental protection.

〈 TSUBASA Alliance 〉
 ramework for wide-ranging cooperation among regionalFbanks with the aim of proposing and implementing
measures to contribute in areas such as sustainableregional growth, increased sophistication of financial
systems, and increased corporate value of corporategroups participating in the alliance.

▲▲

For details, see pp. 25 to 26

For details, see pp. 27 to 48

DAISHI HOKUETSU REPORT 202012

Medium-Term Management Plan

1st Medium-Term Management Plan
The Daishi Hokuetsu Financial Group has a 1st Medium-Term Management Plan that runs through the2020 fiscal year when Daishi Bank and Hokuetsu Bank merge, and a 2nd Medium-Term Management Planin which to harness the maximum effects of the synergies from merging the two banks. In the first of these
two steps, we are pursuing our three basic strategies: I) improving the financial intermediary function andthe information intermediary function, II) increasing management efficiency, and III) increasing thesophistication of the Group management system. In order to overcome our key business challengesrevitalizing the regional economy, strengthening profitability, and increasing management efficiency.
October 2018 Financial Group established

2018年度FY2018FY2019January 2021 Merger of the two banks and integration of their systems

FY2020From FY2021 onward

FG MediumTerm Schedule

1st Medium-Term Management Plan (October 2018 - March 2021)

2nd Medium-Term Management Plan (April 2021 - March 2024)

Theme of Plan
PeriodEarly creation of synergistic effect and Creation of a foundation for creating a merger synergistic effectMaximization of synergistic effectManagement Indexes (KPI)
In addition to solid increases in KPIs such as small and medium enterprise (SMEs) corporate loan balance,
consumption loan balance, and non-interest income, we are also generally making improvements in our fiveindexes for portfolio reform. These include loans to SMEs which comprise a significant portion of overallloans. Our efforts are producing steady results.
*Items without consolidated figures are on a combined basis
FY2018Results

Management Index (KPI)
Profitability

Growthpotential

Consolidated income forthe period*1(100
million yen)

568

Average small and mid-sizedcorporate loan balance*2(100
million yen)

18,606

Average consumer loan balance(100
million yen)

12,293

Non-interest income*3(100
million yen)

176

(%)

74.8

Core business gross profit OHR
Efficacy

FinancialhealthConsolidated ROE (shareholder
capital base*4)(%)

Consolidated capital equity ratio

(%)

15.5

FY2019Results
△439
＋516
＋637
＋28
△0.7
△12.3

128
19,122
12,930
204
74.1
3.2

（17.8）

（3.3）

9.54

9.65

△14.5
＋0.11

FY2018Results

Five Indexes for Portfolio Reform
Ratio of small and mid-sizedcorporate loans to total loans

(%)

37.2

Ratio of consumer loans to total
loans

(%)

24.6

Ratio of unsecured loans to
consumer loans

(%)

8.0

Ratio of profit from assets on deposit
to core business gross profit

(%)

9.4

Ratio of financial solutions income tocore business gross profit

(%)

7.5

FY2019Results
37.9

＋0.7

25.6

＋1.0

8.3

＋0.3

△1.5

＋0.5

7.9
8.0

*1.Net income attributable to parent company shareholders.For the year ended March 2019, net
income includes 47,200 million yen in gain on bargain purchase due to the corporate integration.
*2. Annual average balance before partial direct depreciation*3. ‌Total amount of other business profits excluding fees/commissions and gains (losses)
related to bonds (government bonds, etc.)*4. ‌Calculated value subtracts valuation difference on available-for-sale securities, etc.,
From the net asset that is the denominator

Evaluation Indexes for Contributing to the Community
Figures for all nine of our evaluation indexes for contributing to the community in the fiscal year ended
March 2020 exceeded their targets, and efforts at both banks are making steady progress.
Evaluation Indexes for Contributing to the Community

TargetResults

Comparison with target

Top-priority index for measuringextent of contribution to community

Number of corporations doing business with the Daishi
Hokuetsu FG as their main bank

14,43014,891＋461

Maintenance/increase ofleaders for the regional
economyNumber of projects involving startup/restart of a business

1,175

1,612

＋437

Corporations supported in finding a business successor

1,470

1,555

＋85

Number of borrowers based on evaluation of businessfeasibility

Number of balance based on evaluation of businessfeasibility
Support for increasing added
value of corporations

Number of corporations utilizing Guidelines for Personal
Guarantee Provided by Business Owners
Number of business partners who reformed their
management indexes, etc.
Number of projects for supporting main businesses
Number of corporations being supported for formulation ofmanagement reform plans

13*Calculation base forthe two banks

FY2019DAISHI HOKUETSU REPORT 2020

3,350

3,790

＋440

740,000
million yen

793,300
million yen＋53,300
million yen

4,100

4,905

＋805

9,229

9,863

＋634

3,820

4,399

＋579

550

605

＋55

Synergy Effects of Management Integration, Basic Strategy

Synergy Effects of Management Integration
The Daishi Hokuetsu Financial Group officers and employees are working together on various measuresto harness the maximum synergy effects of the management integration in a short period of time. Thebalance of our total actual synergy effects in the 2019 fiscal year, including the negative impact ofexpenses from the management integration, outperformed the initial plan of negative 2 billion yen by amargin of 2.9 billion yen - achieving an overall gain of 800 million yen.

Synergy effects achieved and future forecast 
Actual in FY2019

Initial plan▲¥2 billion

FY2018 through FY2025 (Cumulative)

Results

Forecast

Initial plan+¥800 million+¥2.9 billion over plan

Forecast for at least
cumulative +¥20 billion

Cumulative +¥17 billion

FY2019 breakdown of synergy effects
Top-line + cost synergies for the year (+¥3.6 billion) exceeded the year plan (+¥1.3 billion) by ¥2.4 billion
Positive
effects

Negative
effects

Top-line synergies+ ¥3 billion

Cost synergies+ ¥600 million

Lending & finance solutions
Asset management advisory
Service charges+ ¥1.2 billion+ ¥600 million+ ¥1.2 billion

Reduced personnel expenses, etc.
Reduced outsourcing expenses, etc.

+ ¥500 million+ ¥100 million

Negative synergies (▲¥2.9 billion) were less costly than the year plan (▲¥3.3 billion) by ¥400 million
Negative synergies (expenses from management integration)▲ ¥2.9 billion

Basic Strategy I: Improving the financial intermediary function and the information intermediary function
We will further improve our financial and information intermediary functions by strengthening ourconsulting function and bolstering our products and services.

Strengthening our consulting function Bolstering our products and services Business Loan & Finance Solutions
▲

P.30

▲

◦ Joint project by both banks to handle donation-type SDGs Private Placement Bonds on commission◦ The Business Succession Support Program offered by both banks

P.36

▲

◦ Offering Daishi Bank’s business finance instrument Loans with Special Provisions for Exemption of
Principal at Earthquake Disaster to customers of Hokuetsu Bank
P.39
Consumption Loans▲◦ Integrating the loan offices of the two banks

P.9▲◦ Introducing the Web Completion Scheme for unsecured loans

P.38◦ Introducing Hokuetsu Bank housing loans Coverage Plan for the Three Major Ailments + All Illnesses and Injuries at Daishi Bank
Asset Management Advisory◦ Make Daishi Bank subsidiary Daishi Securities into a 100% subsidiary of the financial group, andchange trade name to Daishi Hokuetsu Securities◦ Expand Hokuetsu Bank’s securities brokerage operations with Daishi Hokuetsu Securities to all offices◦ Launch client introductory business in testamentary trusts at Daishi Bank and Daishi Hokuetsu Securities

DAISHI HOKUETSU REPORT 202014

Medium-Term Management Plan

Basic Strategy

Basic Strategy I: Improving the financial intermediary function and the information intermediary function
We will work to expand our new business areas and create additional added value.

Expand new business areas ■ Regional trading company Bridge Niigata, Ltd.
At Bridge Niigata, Ltd. we operate in the three business areas of market development, tourism
promotion, and productivity improvement.
The company is engaged in a variety of activities connecting the two cities of Niigata and Tokyo. In its
first year of operation in 2019 Bridge Niigata organized local food and product fair Niigata Marche atseven venues in Tokyo, and in October opened a permanent“antenna shop”called Bridge Niigata in the
Nihonbashi area of Tokyo as a support base for market development .

“Antenna shop”Bridge Niigata
Business

Main achievements (April 1, 2019 - March 31, 2020)

Developing markets

Received requests for market development support
from 480 companies (for 962 products)

Promoting tourism

Offered to implement multilingual translation tool
for foreign visitors to Japan (used by 30 companies)

Improvingproductivity

Proposing productivity improvement measures such as
RPA and services to digitalize forms. Three companies
have already implemented these measures, and 62
companies are currently considering them.

Multilingual translation tool thatuses QR codes■ Staffing company Daishi Hokuetsu Career Bridge Co., Ltd.
In the six months since launching operations (October 2019-March 2020) Daishi
Hokuetsu Career Bridge Co., Ltd. had already received over 400 staffing inquiries.
Since April 2020 Daishi Hokuetsu Career Bridge has also launched human resources
development operations through cooperation with Daishi Management Consulting
Co., Ltd., and Hokugin Economic Research Institute, offering the HR Development
Support Program as a training program for companies in Niigata Prefecture.
Through Daishi Hokuetsu Career Bridge, our financial group will continue working
together to solve problems in the areas of employment and staffing in the regional
community as a comprehensive HR consultancy that offers all the solutions that
regional companies need for their long-term HR strategies, all in one place.
Our financial group was selected as an indirect aid organization for the Cabinet
Office‘s Advanced Human Resources Matching Project that began in March 2020.
HR Development Support Program FY2020 schedule
MonthMarch, April

Rank-specificseminars

New employees in FY2020
One-day course

Rank-specificseminars
Purpose-specificseminars
One-day course

June

Two-day course

Purpose-specificseminars
One-day course
Month

May

October(as scheduled when the program began)
July

AugustSeptemberManagement basics

Follow-up for new and younger employees

Mid-career skills building

Career design forworking women

Cost accounting basics

Two-day course

Formulating businessplans

Improving customer service
skills and business etiquette

Basics of personnel systems
to develop human resources

November

DecemberJanuary

Step-up for younger
employees
One-day course

Facilitating internal
communication

Enhancing teaching
and coaching skills

Marketing and brandingthat learns from failures* Some seminars have been cancelled or rescheduled due to the spread of COVID-19.

15

DAISHI HOKUETSU REPORT 2020

Two-day course

Two-day course

February

March

Leadership development
One-day course

New employees in FY2021
Two-day course

Cash flow management andfocal points for bank screenings

Number of consultations
conducted

415 total

264

151

● Executives/managers● General employees/others

Basic Strategy II: Increasing management efficiency
In addition to pushing forward with our three-structure reform of administrative duties, branches, andchannels, we will also improve management efficiency through management integration and bycollaborating with other banks in the Tsubasa Alliance (p. 25-26).

Initiatives for Three-structure Reform 

Based on the principle of placing the customer first, we are actively implementing our Three-structure Reformin line with the three pillars of reforming administrative duties, reforming branches, and reforming channels.
Th r e e - s t r u ct u r e Re fo r m
StructuralreformReforming administrative
dutiesBranch reform

Shifting personnel to core operations (sales, planning)

Strengthening of
consulting capabilities

Adding personnel insales and planning

Results from core operations(sales, planning) personnel shifts

Channel reform

Cumulative since April 2018 (Daishi Bank)

92%
progressrate

Initiatives for
digitalization

152

165*

March 2020 Three-year plan

Human resources
development*Adjusted from the original plan of 200 personnel
due to impact from COVID-19, etc.

Main initiatives ● Daishi Hokuetsu Financial Group initiatives ● Tsubasa Alliance initiatives
Operational reform - Reduce administrative staff for operations and lending at sales offices November 2017 ● Implement RPA → Cumulative reduction of 30,557 man-hours (as of March 31, 2020)

May 2018 ● Consolidate the administrative duties of sales offices at Middle Office (Head
Office) → Consolidated 82 offices (as of March 31, 2020)
July 2019 ● Implement the item keeping management system
February 2020 ● Implement auto-execution feature for loans

Branch reform - Transform sales offices into consulting spaces January 2018 ● Launch paperless sales of investment trusts and life insurance
November ● Establish remote consultation service
November ● Implement the TSUBASA Smile counter reception system

Channel reform - Improve customer convenience through non-face-to-face channels November 2018 ● Implement the Web Completion Scheme for unsecured consumption loans
April 2019 ● Begin providing the Passbook App

Basic Strategy III: Increasing the sophistication of the Group management system
Add an extra level of sophistication to our Group management system and strengthen our management
infrastructure by building human resources capabilities and organizational strength, and strengthening governance.

Initiatives for Organization Harmony Status of personnel interaction
Since the management integration we have been implementing asystem to make the adjacent offices of both banks into“partner
offices,”and unifying the administrative duties of the banks’various
divisions. In April 2019 we also began personnel interactions between
ranks such as branch managers and assistant branch managers of thetwo banks. Furthermore, we are also providing more opportunities formutual interaction such as seminars on days off and in evenings, andjoint training sessions for personnel of our two banks.

7,265 total
participants in seminars
on days off and inevenings as of March
31, 2020(cumulative since
October 2018)

Joint training session
for our two banks

DAISHI HOKUETSU REPORT 202016

Financial Highlights / Non-Financial Highlights

Financial Highlights Overview of Financial Highlights for the Year Ended March 31, 2020
Consolidated Results for the Daishi Hokuetsu Financial Group

Profit and Loss

(Unit: 100 million yen)

Item

Year Ended March 31, 2019

Ordinary income

1,180

Ordinary profit

167

Profit attributable to owners of parent

568

Consolidated capital equity ratio

9.54 %

Year Ended March 31, 2020

＋366

1,546

194

＋27

128

△440

9.65 ％＋0.11％*‌Consolidated results for the first year of establishment (year ended March 31, 2019) were calculated by adding the consolidated
profit/loss of The Hokuetsu Bank after the management integration to the full-year consolidated profit/loss of The Daishi Bank.
*‌Net income attributable to shareholders of the parent company (year ended March 31, 2019) includes 47,200 million yen ingain on bargain purchase due to the corporate integration.

Ratings
Daishi Hokuetsu Financial Group◦Rating
The certainty of fulfillment
for bonds (corporate
bonds, etc.) issued by acorporation is evaluatedby a ratings organization
which is a fair third party.
The evaluation results are
displayed as an easy-tounderstand symbol that
objectively assesses thecreditworthiness andsafety of the corporation.
This rating is an important
index.

Japan Credit Rating Agency (JCR)

AAA
AA

A＋

A

A

BBB

Aー

BB
B
CCC
CC
C
D

The Daishi Bank

17

The Hokuetsu BankJapan Credit Rating Agency (JCR)

Moody’s

Japan Credit Rating Agency (JCR)

A+

A3

A+

DAISHI HOKUETSU REPORT 2020

The following numbers are a simple summation of the full-year non-financial results of the two banks. These numbers do not match
Totals of the Two Banks consolidated
the consolidated financial results of the Daishi Hokuetsu Financial Group.

Profit and Loss
Gross profit
Core business net profit¥82,200¥22,200

Gross proﬁt(100 million yen)millionOrdinary profit

millionCurrent net incomeCore business net proﬁt

300

851

800

834

Ordinary proﬁt(100 million yen)

1,000

150

400

231

200

222

211

0

millionCurrent net income

235

206

200

600

million

284

250

822

¥20,800¥15,300
208

153

143

100
50
0

Year ended March 31, 2018Year ended March 31, 2019Year ended March 31, 2020

Despite an increase profit from financial solutions, gross profit
decreased to 82,200 million yen (down 1,200 million yen year-onyear) due to a decrease in interest and dividends on securities, andlower profit in asset management advisory services.
Core business net profit excluding gains and losses related togovernment and other bonds increased to 22,200 million yen (up1,100 million yen year-on-year).
◦Gross profit◦Core business net profit

Total profit calculated by adding
capital income consisting of interest
income such as deposits, loans, andsecurities; fees and commissions which
are income from fees; and otherbusiness interest which is income fromother business activities.

Profit obtained from main businessactivities of the bank. Calculated bydeducting gains (losses) related tobonds (government bonds, etc.) fromgross profit and then subtracting
expenses such as personnel expenses
and property costs.

Year ended March 31, 2018Year ended March 31, 2019Year ended March 31, 2020

Ordinary profit decreased to 20,800 million yen (down 2,700 million
yen year-on-year) due to an increase in net credit costs in addition tolower net business profit.
Current net income increased to 15,300 million yen (up 1,000 million
yen year-on-year) which mainly reflects a reversion from the 6,400 million
yen in extraordinary losses recorded from branch integration andelimination expenses the previous year.
◦Ordinary profit
Profit obtained from normal
operating activities. Calculated
by subtracting ordinary
expenses from ordinary profit.

◦Current net income
Final income calculated bysubtracting extraordinary
losses, taxes, etc., fromordinary profit.

Deposits and Assets on Deposit
Deposits
(100 million yen)

¥7,658,000
All branches

Branches in Niigata Prefecture

77,00075,00073,000

million76,58074,123
72,46874,88074,904

73,167

Assets on deposit
Total(100 million yen)

Investment trust

millionInsurance

10,0008,000
6,000

71,0004,000

69,0002,000

67,000¥815,300
8,798

8,609

5,199

8,153
5,528

2,101

2,114

Year Ended March 31, 2018Year Ended March 31, 2019

5,615

1,604

0

Year Ended March 31, 2018Year Ended March 31, 2019Year Ended March 31, 2020

The deposit balance (including negotiable deposits)
increased to 7,658,000 million yen, with the main increase
being deposits from customers in Niigata Prefecture.

Year Ended March 31, 2020

Assets on deposit decreased to 815,300 million yen due to a decrease
in investment trust balances resulting from US-China trade friction as wellas the spread of COVID-19 which began during the 4th quarter.

DAISHI HOKUETSU REPORT 202018

Financial Highlights / Non-Financial Highlights

Financial Highlights Overview of Financial Highlights for the Year Ended March 31, 2020
The following numbers are a simple summation of the full-year non-financial results of the two banks. These numbers do not match
Totals of the Two Banks consolidated
the consolidated financial results of the Daishi Hokuetsu Financial Group.

Loans and Securities¥5,109,400

Loans

All branches(100 million yen)

60,00050,00040,000Branches in Niigata Prefecture

36,51430,00030,00025,00020,00015,00020,00010,00010,000

5,000

0

0

Year Ended March 31, 2018Year Ended March 31, 2019

¥2,319,000

Total

38,621

37,864

Securities

Domestic bonds(100 million yen)

51,09450,91549,443

millionYear Ended March 31, 2020

25,903Foreign government bonds

24,942

15,900Year Ended March 31, 2018

14,630
4,181

1,786

Stocks23,19014,971
3,566

million

3,870

1,471

Year Ended March 31, 2019

1,119Year Ended March 31, 2020

The loan balance increased to 5,109,400 million yen due to

The securities balance decreased to 2,319,000 million

more loans mainly to customers within Niigata Prefecture, thanks

yen due to curbed investment in low-yield domestic bonds

to our active efforts to address their financing needs.

and other factors.

Bad Debt¥75,000

Bad debt
Substandard claims(100 million yen)

1,200

Doubtful claims

1.40

300
0

717

564

543

82

（％）

1.6
1.2

50

81

million yen, which was 1.42% of non-performing loan.
The head offices and sales offices are working together to support

750

675

70

millionNon-performing loan ratio

1.42

1.28

900
600

Bankrupt/substantially bankrupt claims

Non-performing loan balance based on the Financial Revitalization Act(loans reported based on the Financial Revitalization Act) was 75,000

42

0.8

625

0.4

81

0

management reform at our customers.

◦Substandard claims
Delinquent loans of 3 months or longer and restructured loans to substandard
debtors, excluding doubtful claims and bankrupt/substantially bankrupt claims.

◦Doubtful claims
Loans for which the debtor has not entered business bankruptcy, but is
experiencing worsened financial status and economic performance, and there isa high possibility that it may not be possible to recover capital or receive
interest on the loan according to the contract.

◦Bankrupt/substantially bankrupt claims
Loans of debtors with bankrupt business due to reasons such as the start ofbankruptcy procedures, the start of reorganization procedures, or declaration forthe start of reorganization procedures, or loans to which these conditions apply.

Year Ended March 31, 2018 Year Ended March 31, 2019 Year Ended March 31, 2020

The Daishi Bank / The Hokuetsu Bank Consolidated / Non-Consolidated

Status of equity ratio

*A level of at least 4% is required for banks operating only in Japan.

The Daishi Bank
Non-consolidated equity ratio

9.65%

10.25%The Hokuetsu Bank

Consolidated equity ratio

9.25% 9.63%

9.23% 9.43%

4％
Domestic
standard

8.58%

9.06%

Consolidated equity ratio

8.47% 8.87%

8.69% 9.00%

4％
Domestic
standard

Year Ended March 31, 2018 Year Ended March 31, 2019 Year Ended March 31, 202019

Non-consolidated equity ratio

DAISHI HOKUETSU REPORT 2020

Year Ended March 31, 2018 Year Ended March 31, 2019 Year Ended March 31, 2020

Non-Financial Highlights
We have established the Daishi Hokuetsu Financial Group SDGs Declarations (p. 27) with theaim of helping to achieve the Sustainable Development Goals (SDGs) adopted by the United
Nations. Results from main initiatives related to the five declarations are as follows.
SDGs
Declaration 1

Regional Economy/Society Contribute to revitalization of the local economy and community

Support for Startups

Support for Business Succession/M&A

Business startups or re-startups(FY2019)

Number of companies supported
in business succession (FY2019)

1,612

976
Number of companies supported in M&A (FY2019)

579
Support for Growth of Next Generation
Number of participants in financial
education activities (cumulative since FY2013)

Support for Cultural Activities
Number of events* held by thetwo banks (cumulative since FY1992)

10,848
Number of students being issued
scholarships (cumulative since FY1962)

1,194
SDGs
Declaration 2

Aging Society151*Mainly consisting of classical music concerts andrakugo (Japanese comedy) performances with theaim of providing local residents with low-priced
events that contribute to the promotion of local
culture and art.

Support a safe and secure lifestyle for the elderly.

Support for the Elderly and Social welfare
Number of employees certified asService Care-Fitters

Number of Hokuetsu Bank Awards
presented to social welfare volunteer
groups and individuals (cumulative since FY1977)

227

454

(As of March 31, 2020)

Number of employees attending lectures totrain Dementia Supporters (As of March 31, 2020)

4,889

Number of tulips donated to social
welfare facilities, etc. (cumulative since FY1970)

209,710DAISHI HOKUETSU REPORT 202020

Financial & Non-Financial Highlights

Non-Financial Highlights
SDGs
Declaration 3

Financial Services Provide financial services for leading an even better lifestyle.

Donation-type Private Placement Bonds
Handling of donation-type private
placement bonds(cumulative since FY2013)

Bonds commissioned

1,400

Amount commissioned

¥124,600

million110

Amount loaned

SDGs
Declaration 4

Diversity

million¥124


millionNiigata Future Japan Stock Fund* past figuresand expected donation amount (FY2019)
Applications
Total expected donations

2,776
¥3.6
millionPromote diversity and work-style reform.

Work-style Reform

Female manager ratio* (as of March 31, 2020)

24.4

％

*Ratio of female employees holding the rank ofacting branch manager,assistant director, or higher
from among all bank employees holding the rank ofacting branch manager, assis-tant director, or
higher.

DAISHI HOKUETSU REPORT 2020753

*This investment trust donates a portion ofadministrative expenses (trust fees) paid bycustomers to help create a better future for Niigata
Prefecture.
Donations handled in FY2019 are scheduled to beprocessed in September 2020.

Promotion of Diversity

21

Donation recipients

Niigata Future Japan Stock Fund

Loans handled (cumulative since FY2018)¥16,200(cumulative since FY2013)

Total donations

Loans with Special Provisions for Exemptionof Principal at Earthquake Disaster

Loan recipients

Donations to local governments& educational institutions, etc.

Work hours reduced by
implementing RPA(cumulative since FY2017)30,557SDGs
Declaration 5

Environmental Protection Contribute to sustainable environmental protection.

Environmental Conservation
Results of environmental protection
activities by Hokugin Magokoro Association*

Number of participants inafforestation activities(cumulative since FY2012)(cumulative since FY2009)

3,470

49
857

Number of activities performed
Number of participants

* The Hokugin Magokoro Association is anorganization operated through voluntary
participation and donations from Hokuetsu Bank
executives and employees, which engages involunteer environmental protection and otheractivities in Niigata Prefecture.

Volume/Ratio of CO2 Reduction
Volume/ratio of CO2 reduction due toreduced usage of power, gas, and oil  

Volume of CO2 reduction through thePassbook App (reducing number of passbooks(in FY2019, compared to FY2009)

printed; reduction in FY2019 compared to FY2018)

3,713 24.6

3.0

Volume of CO2 reduction throughcollection of plastic bottle“eco caps”  

Volume of CO2 reduction through theItem Keeping Management System

1.2

0.8

t

％

(cumulative since FY2010)tt(reduction in FY2019 compared to FY2018)tVolume of carbon offset through use ofGreen ATMs (cumulative since August 2014)

287

t

DAISHI HOKUETSU REPORT 202022

To Our Shareholders

Return to Shareholders / Shareholders Benefits

Policy for Return to Shareholders
While considering the public nature of the banking business, in order to reward each one of our shareholders
moving forward, our basic policy is to continue stable returns to shareholders while also ensuring an increase ininternal reserves in order to strengthen our revenue base.
Dividends per share
Specifically, we aim for a shareholder return rate of approximately 40% when
Fiscal year ended
120 yenMarch 2020 (annual)
combining dividends and acquisition of treasury stock.
Interim dividend (actual) 60 yen
Furthermore, our policy is to work to increase ROE based on strengthening of current
Year-end dividend (actual) 60 yen
net income. Our mid- to long-term goal is at least 5%.

Shareholder Benefits System
We have implemented a shareholder benefits system in order to thank shareholders for their continued support,
to increase the appeal of investing in our company’s stock, and to encourage more people to engage in long-termownership of our company’s stock.

Applicable Shareholders Shareholders who have continuously owned at least 100 shares (1 unit) forat least one year (the same shareholder number is listed continuously atleast three times in the shareholder registry as of March 31 and
September 30 of each year), with March 31 as the date of record shall beapplicable.

As of March 31, 2020

Donation applications to the Hokugin
Scholarship Fund from shareholders

150donors

630,000 yen(Cumulative since FY2017)

Number of Shares Owned

Amount of Gift

100 shares to less than 1,000 shares

Equivalent to 2,500 yen

1,000 shares or more

Equivalent to 6,000 yen

Contents of the Shareholder Benefits System 
Depending on the number of shares owned, the shareholder can select their desired gift from either of thefollowing two catalogs.
(1) Catalog listing special local goods from Niigata Prefecture or donations to the Hokugin Scholarship Fund
(2) Catalog listing special local goods from other prefectures as TSUBASA Alliance Joint Plan**Catalog listing special local goods from four regional banks participating in the TSUBASA Alliance (The Chiba Bank: Chiba Prefecture, The
Chugoku Bank: Okayama Prefecture, The Iyo Bank: Ehime Prefecture, The Toho Bank: Fukushima Prefecture).

Notes ‌ his benefits system can only be used by the shareholder.
T
Benefits cannot be transferred, loaned, or otherwise assigned
to a third party, including family members.
● ‌For details on how to apply for the benefits services and how
to use the services, please refer to the catalogs sent to eligible
shareholders.
● ‌Catalogs are sent to the addresses recorded in ourshareholder registry. If you have moved please perform thechange of address procedure at your securities brokerage.
● ‌Contents, conditions, and other details of benefits are subject
to change depending on factors such as changes in the financeenvironment. Advance notifications of such changes will beannounced on the Company website or through othermediums.
●

23

DAISHI HOKUETSU REPORT 2020

Shareholder Benefits Catalog

Information Disclosure

Disclosure Activities
With the goal of achieving transparency and health of management, we
actively hold disclosure activities for disclosure of management status andother information. Through these activities, we seek to create understanding
towards our management status from stakeholders including customers,
regional residents, and shareholders.
In addition to disclosing our disclosure journal and other PR materials on our
website, we hold company information sessions in Tokyo for institutional
investors. Through these sessions, we seek to increase corporate value. We
also hold company information sessions for individual investors in Niigata
Prefecture, which is the main business infrastructure of our company.

Information session for investors

Disclosure Policy
At the time of our establishment in October 2018, we announced the Daishi Hokuetsu Financial Group
Disclosure Policy which defines topics such as our company’s basic posture towards disclosure of information.

１．Basic Posture 
Accurately conveying our company’s activities and management status to stakeholders is fundamental andessential for obtaining trust towards our company. We recognize that timely and appropriate disclosure ofcompany information will help increase the health and transparency of our management.
In particular, we recognize that timely and appropriate disclosure of important company information which willaffect the investment decisions of investors is an extremely important responsibility of a listed company. In the
future, we will continue to engage in sincere and timely disclosure.

２．Information Disclosure Method 
Our company discloses important information in compliance with the Companies Act, the Banking Act, the Financial
Instruments and Exchange Act, other related laws, and rules defined by the Tokyo Stock Exchange.
We use a Timely Disclosure Network (TDnet) system for timely disclosure of applicable items. Furthermore, we
immediately list said items on our company’s website in order to ensure broad transmission of applicable information.
Moreover, even in the case of information that is not subject to disclosure regulations, we consider fairness andappropriateness in order to actively disclose information which we believe will have a significant effect on investment
decisions and information which we consider as pertinent for increasing understanding towards our company.

３．Fair Disclosure Initiatives 
We strive to engage in fair disclosure of information through measures to avoid selective disclosure to certain
individuals when conveying undisclosed important information that will affect investment decisions.
Immediately after company information sessions held for institutional investors, we disclosure materials used at
the session on our website.

４．Development of Internal Systems We will continually develop and enhance internal systems for implementing our disclosure policy.
Moreover, we are working to further enhance the contents of timely disclosed information, etc., and to further enhance thecontents, issuance form, etc., of publications such as our disclosure journal. Additionally, through active utilization of tools such as
our website, we are working to enable fast and easy access by stakeholders to a variety of management and financial information.

５．Items Related to Future Forecasts Disclosed information includes future forecasts related to the financial condition and results of companies in the
Daishi Hokuetsu Financial Group. We make no guarantee that future results will be achieved in accordance withthese future forecasts. Future forecasts contain a certain element of risk and uncertainty. Actual results may differ
due to factors such as future changes in the environment surrounding management.

DAISHI HOKUETSU REPORT 202024

TSUBASA Alliance

Wide-range regional partnerships by 10 regional banks "TSUBASA Alliance"
The TSUBASA Alliance is a framework for wide-range regional partnerships aimed
at proposing and implementing measures for contributing to sustainable regional
growth, sophistication of financial systems, increased corporation value of memberbank groups, and other initiatives.
The Ryukyu Bank joined the alliance in April 2020. A total of ten banks now
participate in the alliance.

TSUBASA Alliance
Logo

Banks Participating in the TSUBASA Alliance Location of Head Office and Branches

Forming a network
encompassing allof Japan from
Hokkaido to
Okinawa

The Daishi Bank
The Hokuetsu Bank

North Pacific BankThe Daishi Bank
The Hokuetsu BankThe Toho BankThe Shiga BankThe Chugoku BankThe Chiba Bank
The Musashino BankThe Ryukyu Bank

Deploying large-scalenationwide businesscollaboration to leverage
economies of scale

Over 70 trillion
yen in total
assets rivaling
megabanks 

The Iyo Bank
Head Oﬃce
Branch

Eco-Friendly Shopping Bags Produced by the Alliance(for the fiscal year ended
March 2020)

The Daishi Bank
The Hokuetsu Bank

Tsubasa Alliance member banks have teamed up to produce original eco-friendly shopping bags
as part of efforts to reduce plastic waste. We plan to distribute these eco-friendly bags at futureseminars and events held by our banks.
Through this initiative the Tsubasa Alliance is participating in the Plastics Smart Campaign*
promoted by Japan’s Ministry of the Environment.
*Campaign that supports each and every
autonomous entity, including individuals,
companies, organizations and governments,
at engaging in whatever initiatives theirrespective positions allow, to tackle theproblem of marine plastic waste.

Plastics Smart logo

25

DAISHI HOKUETSU REPORT 2020

The tote bag type is highly
durable and easy to carry.
It even goes over yourshoulder, so you can also
use it for heavy items!

History of the Tsubasa Alliance

The Daishi Bank
The Hokuetsu Bank

Since it began in 2015 the alliance has been working together in many different fields including those ofgroup companies of member banks from FinTech to cooperating on system resources and administrative
work and inheritance-related services, to international banking and more. Harnessing maximum economies
of scale as the largest alliance of regional banks, the Tsubasa Alliance will continue to bolster its presence
as a strategic alliance.
NEW
May 2019

March 2019

April 2018

March 2016

Expansion of member
banks (Iyo Bank, Toho, Bank
North Pacific Bank)

Expansionof memberbanks(Hokuetsu
Bank)

Expansionof memberbanks(Musashino
Bank)

Expansion ofmemberbanks (ShigaBank)

April 2020

Pursuing further
synergies as thelargest alliance ofregional banks

Expansion ofmemberbanks(RyukyuBank)◦ October 2019 Broad-area M&A partnership◦ May 2019 Tsubasa SDGs Declarations◦ April 2019 Launch of Passbook App◦ November 2018 Launch of TSUBASA Smile

October 2015

◦ April 2018 Launch of Tsubasa FinTech common infrastructure

Start of Tsubasa
Alliance(Daishi Bank, Chiba
Bank, Chugoku Bank)◦ February 2018 Agreement on cooperative administrative divisions (Daishi Bank, Chiba Bank)◦ May 2017 Chugoku Bank core systems migration◦ January 2017 Daishi Bank core systems migration◦ October 2016 Alliance in inheritance-related services◦ July 2016 Established the T&I Innovation Center (Daishi Bank, Chiba Bank, Chugoku Bank, Iyo Bank, Toho Bank, North Pacific Bank, IBM Japan)◦ January 2016 Chiba Bank core systems migration

Increase the Top Line
Raise Business Capabilities through Shared Expertise
Co-financing

Utilize group companies

Information sharing & personnel exchange

Inheritance-related services

Reducing Costs, Raising Efficiency
Consolidating Common Functions and Back Office Departments
Cooperative subsystems
Tsubasa FinTech common infrastructure

Cooperative administrative divisions
Passbook App

Collaboration for more sophisticated AML* services

Cooperative core systems

TSUBASA Smile counter reception system* Acronym for Anti-Money Laundering - measures to counter money laundering, such as eliminating transactions with fraudulent
accounts and terrorist funds

DAISHI HOKUETSU REPORT 2020

26

ESG Initiatives and Contributions to SDGs

Initiative Policy for ESG
In order to fulfill its social responsibility for achieving a sustainable society, the Daishi Hokuetsu FG actively works
to resolve social issues related to ESG (Environment, Society, and Governance). Furthermore, the Group
contributes to achievement of SDGs (Sustainable Development Goals) set by the United Nations. Through these
activities, we seek to realize sustainable growth together with the region.

E nvironment

In order to protect the rich and beautiful natural environment of our home in Niigata Prefecture, andto contribute to the achievement of a sustainable society, the Group supports customers who
engage in environmental protection. Furthermore, as a corporate citizen, we actively holdenvironmental protection activities for the region and work to solve global environmental issues.

S ociety

In addition to supporting the real-life regional economy by providing a wide range offinancial services that respond to needs of the region and society, the Group conducts
activities based on regional and social needs for contributing to growth of regionalsociety by utilizing management resources such as diverse human resources.

G overnanceIn order to obtain high recognition and establish unshakeable trusts from stakeholders including customers, local residents,and shareholders, the Group will work to improve financial health and profitability. We recognize that strengthening andenhancing corporate governance is an important management issue, and we strive to augment auditing and supervisory
functions for corporate management, as well as to increase the transparency of management activities.

SDGs Declarations
In May 2019 we established the Daishi Hokuetsu Financial Group SDGs Declarations and we have been working toward

solutions to social and environmental problems in the regional community in order to help them achieve sustainable growth.

Declaration 1

Declaration 2

Declaration 3

Regional Economy / Society

Aging Society

Financial Services

Contribute to revitalization of thelocal economy and community.

Support a safe and secure
lifestyle for the elderly.

Provide financial services forleading an even better lifestyle.

Declaration 4

Diversity
▼△

〇●
●〇

DAISHI HOKUETSU REPORT 2020

Environmental Protection■□□

Promote diversity andwork-style reform.

27

Declaration 5

Contribute to sustainable
environmental protection.

SDGs Declaration 1 Regional Economy / Society Initiatives for achieving regional revitalization～ Actions to realize Regional revitalization ～In order to achieve perpetual contribution to regional society which is the prime purpose of the management integration, the entire Daishi
Hokuetsu FG is actively working to implement measures which will create a positive cycle for communities, people, and work.

Community

PeopleProblem-solving based onregional characteristics

Work

Create a flow of newpeople to rural areas

Create stable employment
in rural areas

Organizing Niigata Startup Contest 2019

The Daishi Bank
The Hokuetsu Bank

Daishi Bank and Hokuetsu Bank teamed up with Daishi Management Consulting tobusinesses in the regional community. In February 2020 a judging panel selected one

organize Niigata Startup Contest 2019 which facilitates the creation of appealing newcompany to receive the first prize and three companies to receive excellence awards.

Niigata Startup Contest 2019 awards ceremony〈 Award winners 〉
Category

Startup

RevitalizedcompanyAward

WinnerBusiness plan

First prize

iSEQ. incConsulting for health assistance services and insurance via analysis of
medical examination data

Excellenceaward

KaaP Inc.

E-commerce platform for colored carp fish which employs an AI pricecalculation system

Excellence
award

SIIG inc.
(Formerly sho. DESIGN WORKS inc.)

Smartphone app that uses gamification and AR to optimize fishingexperiences for anglers

Excellence
award

Soumei Arts Co., Ltd.

Laundry craft (a new method of wet cleaning for upscale fur clothing)

Established a Preparatory Committee for the SDGs Niigata Regional Revitalization Platform

The Daishi Bank
The Hokuetsu Bank

Our banks partnered with Niigata Prefecture, Niigata University,
Niigata Nippo Co., Ltd. and Niigata Hakuhodo Inc. to establish a
preparatory committee for the SDGs Niigata Regional Revitalization

わたしたちの、地域創生プラットフォーム

Platform in April 2020 with the aim of spreading awareness of theSDGs in Niigata Prefecture and promoting corporate actions towardachieving them.
In addition to working to build the organization for this platform thecommittee is also engaged in efforts toward achieving the SDGs. This
includes holding seminars and exchanging information related to
SDGs between members through the website.
Both of our banks also participated as collaborators at Niigata SDGs
Forum 2020 (Organizer: Niigata Nippo Co., Ltd.) held in February
2020. The forum introduced recent initiatives by nine different groups
in Niigata Prefecture, including the city of Mitsuke which has been
selected as an SDGs Future City.
〈 SDGs Niigata Regional Revitalization Platform preparatory committee 〉
Promoter members

Daishi Bank, Hokuetsu Bank, Niigata
Prefecture, Niigata University, Niigata Nippo
Co., Ltd., Niigata Hakuhodo Inc.

Number of members

115 companies/groups (as of July 15, 2020)にいがたを、ずっと元気に。
Logo of theSDGs Niigata Regional Revitalization Platform
SDGsとは、国連で採択された持続可能な世界をつくるための国際目標。
「地球上の誰一人として取り残さない」を目指す、世界的な約束です。17のゴールと169の指標が定められており、企業や地域の活動はもちろん、私たちの生活にも関わってきています。

SDGsは、ビジネスや地域活性化の鍵になる。
「地域創生プラットフォーム SDGsにいがた」は、新潟県内の経済・社会・環境と向き合い、持続可能でよりよいサイクルを生み出すため、同じ意志をもったみんなが集まれる場所。
企業、
団体、
自治体、
そして地域のネットワークを広げ、それぞれの課題に取り組めるよう後押ししていきます。

●「SDGsにいがた」が目指す3つのミッション
MI SSIO N .1

MI SSIO N .2

MI SSIO N .3

企業と地域の未来をつくる

産官学連携でビジネスチャンスも経済、社会、環境に好循環を企業の未来は地域にあり。
地域のみなさまと未来を切り拓いていきます。

産官学の連携によるイノベーションで地域創生。
ビジネスにも広げていきます。

誰にとってもよりよい経済、
社会、環境へ。
それぞれの目標が関わりあい、相乗効果を目指します。

「地域創生プラットフォーム SDGsにいがた」とは新潟県内でSDGsに基づく企業活動や地域づくりを推進していくために産官学が連携して立ち上げる会員組織です。
2020年度はその準備会として、新潟県、新潟大学、第四銀行・北越銀行、新潟博報堂、新潟日報社が推進メンバーを務めます。
（準備会事務局は新潟日報社内に設置します）

At Niigata SDGs Forum 2020

DAISHI HOKUETSU REPORT 2020

28

ESG Initiatives and Contributions to SDGs

SDGs Declaration 1 Regional Economy / Society Initiatives for achieving regional revitalization～ Actions to realize Regional revitalization ～Organizing JBMC Niigata Round 2019

The Daishi Bank
The Hokuetsu Bank

Working together with ICLOVE (Minamiuonuma City Local Industry

Minamiuonuma. The eight teams that passed the first round

Competition (JBMC) Niigata Round in December 2019 to promote

aim for development in local communities and revitalization of

Support Council) we organized the Japan Business Modelcreation of new business in the region and facilitate regional
revitalization. This competition was held through close cooperation

with industry, universities, financial institutions, and the city of

document review gave presentations on their business models that
regional economies.
After a rigorous review by the judges, two teams were awarded
prizes and earned spots in the nationwide JBMC Final held in Tokyo.

JBMC Niigata Round 2019 Award CeremonyAward received

Business model

Daishi Hokuetsu Financial
Group Award【Health Toothbrushes 】
Toothbrush production and sales services model that leverages manufacturing technologies ofNiigata Prefecture

ICLOVE Award【Toothbrushes that Pass Health on from Mother to Children 】
Development and market penetration plan for toothbrushes made with designs and materials
that are easy for pregnant women to use

Support for Overseas Business Expansion

The Daishi Bank
The Hokuetsu Bank

The two banks support overseas business expansion by customers in areas such as trade and settlement with overseas companies,
establishment of overseas branches, expansion of overseas sales, overseas fund raising, and overseas equipment leasing.

Distributing information through seminars 
Both of our banks partner with regional financial institutions, local governments, and other local entities to jointly organize business seminars, networking events, and business conventions
locally at overseas locations. In Ho Chi Minh City, Vietnam, we partnered with Nagaoka University of Technology to organize the Ho Chi Minh Industry-Academia-Finance Collaboration
Networking Event in October 2019, and the - From M&A to the Acquisition of Professional Human Resources - Use it to Your Advantage! Overseas Business Expansion Seminar in March 2020.

Support by local staff overseas Japanese employees of The
Daishi Bank are stationed full-time at the Daishi Bank
Shanghai Representative Officein order to support businessexpansion in China. The
employees also provide
information on local economic
development and opportunities
for business matching with
Chinese companies.
Furthermore, the two banks
dispatch employees to multiple
overseas financial institutions
who are our business partners
so that they can offer a wide
range of support for overseas
expansion by our customers.

29

DAISHI HOKUETSU REPORT 2020

Daishi Hokuetsu FG Overseas Network

Vietnam

Vietcombank
HD Bank
Bank for Investment andDevelopment of Vietnam

People’s Republic of China
Industrial and Commercial
Bank of China Limited
Bank of Communications
LimitedBank of China

Shanghai
Representative Oﬃce
MexicoIndia

Banco Nacional de
Mexico Sun

State Bank of India

ThailandKasikorn Bank

Indonesia

Bank Negara Indonesia

Philippines
Metrobank

United States (State of Hawaii)
Central Paciﬁc Bank

Support for Business Succession / M&As

The Daishi Bank
The Hokuetsu Bank

The two banks are engaged in a Business Succession Support
Program offering comprehensive one-stop support for topics
including succession among family members, succession to
executives or employees, and M&As. Support is offered whenmanagers are still unsure of whether they will find a successor
for their business or close the business.
Also, at the 8th Bank of the Year Awards held by Nihon M&A
Center Inc. in June 2020, The Hokuetsu Bank won the Deal of
the year for its efforts towards M&As.

The 8th Bank of the Year Awards Ceremoney

Support for Grants and Subsidy Applications

Information about theBusiness Succession
Support Program
The Daishi Bank
The Hokuetsu Bank

We are working to support problem solving via grants and subsidies for the business challenges of a variety ofcustomers, such as for capital investment to facilitate new business development and productivity improvements.

Distributing information through seminars 
Both of our banks hold seminars to ensure that customers arequickly informed of the latest information on grants and subsidies
offered by national and local governments. Subsidy Utilization
Seminars - Utilizing Monozukuri Subsidies and Energy Saving
Subsidies to Improve Productivity were held at four venues in
Niigata Prefecture in December 2020 to share recent trends in
Monozukuri (Manufacturing) Subsidies and Energy Saving Subsidies
that many companies take advantage of every year, as well as tips
for being selected to receive them.

As of March 31,
2020

Number of
seminar attendees

5,822（cumulative since2013）

Subsidy Utilization
SeminarAssisting subsidy applications through individual consultations 
Both of our banks held individual consultations for Employment
Adjustment Subsidies* at five different venues in Niigata Prefecturein May 2020. Customers who have been forced to reduce theirbusiness operations due to the impact of the COVID-19 pandemic
were given the opportunity to meet with social insurance
consultants about matters such as how to apply for Employment＊ Employment Adjustment Subsidies
This is Japan’s system to provide subsidies that compensate employers who havebeen forced to reduce business operations for the leave allowances and otherpayments made to employees in order to maintain their employment. Relevantcases and content were added to this system in April 2020 as special exceptions
due to the impact of the COVID-19 pandemic.

Adjustment Subsidies and labor management for employee leaveand other circumstances.

Holding Seminars for Healthcare and Nursing Care Providers

The Daishi Bank
The Hokuetsu Bank

In order to support healthcare providers and nursing care providers,
the two banks hold a variety of joint seminars aimed at providing
information.
In July 2019, the two banks held a joint seminar entitled“Nursing
Care Management Seminar: Work-Style Reform and Implementation of
IoT/AI at Nursing Care Facilities.”The seminar explained caution
points and latest trends related to implementation of the Act on the
Arrangement of Related Acts to Promote Work Style Reform. It also
explained utilization of IoT and AI while introducing actual examples.
In December 2019 our banks also held Healthcare Management
Seminars to explain points to keep in mind and recent trends in theapplication of the Work Style Reform Act in medical settings, as wellas the aims of fiscal year 2020 medical fee revisions and measures to

Healthcare Management Seminar

Information about
Healthcare
Management
Seminars

address them.

DAISHI HOKUETSU REPORT 2020

30

ESG Initiatives and Contributions to SDGs

SDGs Declaration 1 Regional Economy / Society Initiatives for achieving regional revitalization～ Actions to realize Regional revitalization ～Initiatives for PPP and PFIThe Daishi Bank
The Hokuetsu Bank

Supporting the construction, operation, etc., of public facilities through cooperation among municipalities, private businesses, and financial institutions 
We actively engage in PFI (Private Finance Initiatives) which
utilize private funds, management capability, andService purchase fees
(facility development fees)

technological capability in order to support the construction,
maintenance, operation, etc., of public facilities and other
Private Partnerships) in which government and the private
services, promote efficient use of financial capital, contribute

Business
contract

Repayment

Financial
institutionsector cooperate in order to improve various government

Loan

to efficient government administration, etc., by utilizing thediverse know-how and technology of the private sector.

SPC*(special purpose
company)

Insurancecompany
Insurance
contract
Dividends

SponsorInvestment

Various outsourcing
contracts

In September 2018, The Hokuetsu Bank constructed
uniquely arranged syndication-type project financing for

Construction
company

Design ﬁrm

development and operation of the Niigata Prefectural
Prefecture.

Directagreement

Service purchase fees
(maintenance, management,
and operation fees)organizations. Furthermore, we are active in PPP (Public-

Budokan, which is a PFI project implemented by Niigata

Local government bodies(entity placing order)

Maintenancecompany

Operationcompany*SPC (Special Purpose Company): A company established in order to execute a certain business.

Niigata Prefectural Budokan (nickname: Kenshinko
Budokan) opened on December 1, 2019 as the largest
budokan in the Hokushin’etsu area.

Niigata Prefectural Budokan (Kenshinko Budokan)

Initiatives Utilizing the Regional Industry Evaluation System of Daishi (RIED*)The Daishi Bank

Supporting industrial policy of local government based on industry analysis for each municipality 
The Daishi Bank uses big data to analyze industrial characteristics andregional commercial flow for each municipality and broad region. Based on
analysis results, we support the execution of regional comprehensive strategy
by holding discussions with local governments to propose methods forcultivating core corporations and measures for industry. Furthermore, we
cooperate with the Development Bank of Japan and the Value Management
Institute to hold study sessions on regional analysis.
We held discussions with 16 local governments in fiscal 2019.
*Regional Industry Evaluation System of Daishi

Regional analysis study session with local governments

Initiatives for Supporting Increased Productivity
Both of our banks have teamed up with Daishi Management Consulting
and the Hokugin Economic Research Institute to offer a Human Resources
Development Program to help business operators solve their problems in
the area of developing human resources. Starting in the 2019 fiscal year
there have been six types of purpose-specific seminars in addition to theexisting rank-specific seminars.
As part of this program we held the Work Style Reform Productivity
Improvement Seminar for supervisors and team leaders as a purposespecific seminar in February 2020. This seminar clarified the challenges thatwork styles present, and provided explanations of practical case examples
for improving productivity as well as subsidies that can be utilized.

31

DAISHI HOKUETSU REPORT 2020

Information on the Work Style Reform Productivity
Improvement Seminar

The Daishi Bank
The Hokuetsu Bank

Initiatives for Utilization of Vacant Homes

The Daishi Bank
The Hokuetsu Bank

Cooperating with municipalities in Niigata Prefecture to utilize vacant homes We h ave f o r med pa rt nership a greement s w i th 19
municipalities in Niigata Prefecture to encourage people
from the Tokyo metropolitan area to move and settle in our
prefecture and to promote effective utilization of vacant
homes. Additionally, we have partnered with the Japan
Trans-Housing Institute (JTI) to provide the Sumai no
Kakehashi (Home Bridge) Loan for renovating vacant homes,
as well as reverse mortgage loans that make use of vacant
homes.

List of partner municipalities (in order ofmunicipality code)
Niigata City, Nagaoka City, Sanjo City,
Kashiwazaki City, Shibata City, Ojiya City,
Tokamachi City, Mitsuke City, MurakamiCity, Tsubame City, Itoigawa City, Myoko
City, Gosen City, Joetsu City, Agano City,
Sado City, Uonuma City, Minamiuonuma
City, Tainai City

As of March 31, 2020

Number of partner
municipalities utilizing
vacant homes

Initiatives for Promoting Sports

The Daishi Bank
The Hokuetsu Bank

Both of our banks actively work to promote local andregional sports.
Daishi Bank has sponsored the Daishi Bank Battle of the
Flags youth baseball tournament since 1999, while
Hokuetsu Bank has sponsored the Healthy Hokuetsu Bank
Cup Volleyball Tournament for Niigata Prefecture

Daishi Bank Battle of the Flags youth baseball
tournament

Elementary School Students since 1989.
Through these efforts we are doing our part to promote
sports in communities while contributing to the healthy
physical and emotional growth of young boys and girls andalso helping them form friendships through sports.

Healthy Hokuetsu Bank Cup Volleyball
Tournament for Niigata Prefecture Elementary
School Students

Organizing the Life-Up Concert

The Daishi Bank
The Hokuetsu Bank

In order to promote regional music and artistic culture,
The Daishi Bank has continued to hold the Daishi Life-Up
Concert to provide high-quality music, traditional performing
arts, and other events at a low price.
In fiscal 2019, we held the Daishi Hokuetsu Life-Up
Concert in July. It was a classical concert by the Kuroda,
Campagnari, and Dillon Trio Orchestra composed of Aki
Kuroda, Aldo Campagnari, and Francesco Dillon.

Daishi Hall

19cities

A solo performance of Rakugo(Japanese comedy) by
Kenko Sanyutei scheduled for March 2020 was cancelled
due to circumstances caused by the COVID-19 pandemic.
We apologize for the inconvenience caused to everyone
who was planning to attend. Information about future
performances will be made available again once we canensure the safety of all visitors.

The Kuroda, Campagnari, andDillon Trio Orchestra

Kenko Sanyutei©Masako Yamada

DAISHI HOKUETSU REPORT 2020

32

ESG Initiatives and Contributions to SDGs

SDGs Declaration 1 Regional Economy / Society Initiatives for achieving regional revitalization～ Actions to realize Regional revitalization ～Holding the Daishi Hokuetsu Academy
In order to support the physical and emotional
development of children, The Daishi Bank has held the Daishi
Academy since fiscal 2013.
The Daishi Academy provides local children with theopportunity to interact with professionals in various fields onsocial themes to develop their sensitivities outside of schooland home, and to make them more familiar with finance.
Since the Daishi Academy was first held in fiscal 2013, over
1,000 children have participated every year, and the total
number of participants as of March 31, 2020 was 11,082.
Since fiscal 2018 we have also been incorporating theLife science

The Daishi Bank
The Hokuetsu Bank

perspective of SDGs in lesson material in order to develop
and educate human resources who contribute to thesustainable growth of the region. In fiscal 2019 it was held
jointly with Hokuetsu Bank as Daishi Hokuetsu Academy. To
give finance a more familiar feel we
As of March 31, 2020
have added an experience the flow of
Number ofmoney element to the lessons, in which
participants at Daishi
Academystudents sell their handicrafts and other
11,082
items in exchange for mimic paper(cumulative since FY2013)
money which they then deposit into abank.

Cooking

FinanceArt

Held the Niigata Regional Championships of the 14th All-Japan High School Economics Quiz Tournament
I n D e c e m b e r 2019, w e h e l d t h e N i i g a t a R e g i o n a lChampionships of the 14th All-Japan High School Economics
Quiz Tournament. It was the seventh time that thechampionships had been held in Niigata Prefecture. A totalo f 25 t e a m s (49 p e r s o n s ) p a r t i c i p a t e d i n t h e 2019
championships. After intense competition consisting of awritten preliminary round and a lightning round using
buzzers, the team from Niigata High School won thetournament and earned the right to compete in the national
tournament.

Then, among the 46 teams that
As of March 31, 2020
Number of
won their regional tournaments andparticipants in theadvanced to the national tournamentNiigata tournamenth e l d i n T o k y o i n F e b r u a r y 2020
359
(organizer: Association for the(Cumulative since FY2013)
Promotion of Financial Literacy), theteam from Niigata advanced all theway to the final round and achieved the incredible final
result of 3rd place in all of Japan.

Economics Koshien Niigata Tournament

Economics Koshien National Championship

Cooperation with Career Learning Programs Held by Local Governments for Elementary, Junior High, and High Schools
Both of our banks actively
cooperate with career learning
events hosted by local
governments in Niigata Prefecture
which offer opportunities for local
elementary, junior high, and highschool students to learn aboutindustries and companies that
support their community andactually experience the work theydo.
In fiscal 2019 we exhibited at

33

DAISHI HOKUETSU REPORT 2020

The Daishi Bank
The Hokuetsu BankThe Daishi Bank
The Hokuetsu Bank

the learning events Nagaoka
Work Experience Land (Nagaoka
City), Neighborhood Industry
Discovery Academy (Tokamachi
City), Ojiya Future Work Academy(Ojiya City), and Junior High FirstG r a d e r s “L e a r n a n d T r y J o b
Navigator”(Tainai City), where weoffered children and students theexperience of“working”at a bank.
Junior High First Graders“Learn and Try Job Navigator”organized by Tainai City

Scholarships from the Hokugin Scholarship Association
The administrative office of Hokugin Scholarship
Association has been established within Hokuetsu
Bank. The association aims to develop humanresources who will contribute to society by providing
assistance in the form of scholarships with norepayment obligations to young people who graduatedwith outstanding academic records from high schools
in Niigata Prefecture, but are unable to attend
university due to financial reasons.

The Hokuetsu BankT h e 57t h R e c e p t i o n f o r H o k u g i n S c h o l a r s h i p
Recipients was held in August 2019. Scholarship
recipients exchanged information with each other andobserved various companies based in Niigata
Prefecture.
The association started issuing scholarships in 1962.
A total of 1,194 students have received scholarships asof May 2020.

As of May 31, 2020

Number of scholarship
recipients

1,194(Cumulative since FY1962)

At the Reception for Hokugin Scholarship Recipients

Presented Banners Featuring a Traffic Safety Slogan

The Daishi Bank
The Hokuetsu Bank

In order to promote traffic safety campaigns andraise awareness for traffic ethics, we presented
banners featuring a traffic safety slogan to allelementary schools and junior high schools in Niigata
Prefecture.
The Hokuetsu Bank has continued this project every
year since 1969.
The two banks started jointly operating the projectfrom the 51st presentation in fiscal 2019.
Banners Featuring a Traffic Safety Slogan〈 Fiscal 2020 〉
Presentation
Destination

Traffic Safety Slogan

Number of
Banners Presented

Elementary
schools“Don’
t run into the street! Stop and lookboth ways!”

485
banners

Junior highschools“Always be cautious even on familiar
roads to and from school!”269
banners

Ceremony to present banners

Cooperating with Niigata University to Hold a Curriculum for Students
Both of our banks have partnered with Niigata
University to cooperate on curriculum offered to
students at the school and to encourage students tolearn about companies in Niigata Prefecture.
In December 2019 we participated in a curriculumfeaturing lectures on the topic of Exploring the Appealof Niigata Companies as part of a Niigata University-led
project to promote development in local communities.
Additionally, in January 2020, we participated in acurriculum entitled Corporate Principles andManagement Strategy in Niigata for students at Niigata
University. It was the fifth time our banks had
participated in such a curriculum this fiscal year.

The Daishi Bank
The Hokuetsu Bank

A lecture for students

DAISHI HOKUETSU REPORT 2020

34

ESG Initiatives and Contributions to SDGs

Declaration 2 Aging Society Support a safe and secure lifestyle for the elderly.

Concluded Agreements on Introductions of Testamentary Trust Services
Daishi Bank received authorization in September 2019 to engage in trust

business activities according to Article 1 of the Act on Engagement in Trust

Illustration of how the concluded agreements work
Daishi Bank

Business Activities by Financial Institutions, and in October began handlinginheritance strategies and asset succession-related instruments.
The bank then concluded testamentary trust services introduction agreements❺ Bequests toof Education in December 2019, and then with Sutoku Health & Welfare

Niigata University

Association in April 2020. Through these agreements, entities with whom wesupport from the drafting of will documents through their execution, catering tocustomers’will and bequest-related needs while ultimately facilitating theadvancement of education, healthcare, and other services in Niigata Prefecture.

❹ Support for drafting

universities, etc.

with Niigata University, Nagaoka University of Technology, and Joetsu University

have established agreements will introduce Daishi Bank to their customers whowant to make bequests to them. The bank will then provide comprehensive

The Daishi Bank

Nagaoka University of Technology
Joetsu University of Education
Sutoku Health & Welfare Association

will document,
execute will

❸ Application❶ Ask to make bequest

Interested customer❷ Introduce Daishi Bank

Received Award for Creating Communities that are Accessible to People (Facilities Category)
Our two banks are working to create branches which can beused with peace of mind by all customers, from elderly customers
to those with disabilities.
The Hokuetsu Bank Muikamachi Branch which opened in
December 2017 received the Award for Creating Communities
that are Accessible to People* in fiscal 2019, awarded by Niigata
Prefecture.
Located in an area that receives heavy snowfall, the Hokuetsu
Bank Muikamachi Branch has earned a strong recognition as a
facility catered to safe and easy use by the elderly and those withdisabilities, including a barrier-free environment inside the branch
and an arcade erected in the space leading to the entrance fromthe parking lot and the road.
The Daishi Bank Sanjo Branch and Sanjohigashi Branch that
relocated and opened in April 2017 also received the same award
in fiscal 2017.

The Hokuetsu Bank Awards

The Daishi Bank
The Hokuetsu Bank

Hokuetsu Bank Muikamachi Branch

Daishi Bank Sanjo Branch & Sanjohigashi Branch* The Award for Creating Communities that are Accessible to People is provided by
Niigata Prefecture in recognition of groups, individuals, and other entities thatspearhead community building efforts which take into consideration social welfare,enabling everyone including the elderly and those with disabilities to freely participate
in society while living independently. It is awarded for facilities, institutions, group
activities, and other efforts that serve as exemplary models within the prefecture.

The Hokuetsu Bank

The Hokuetsu Bank Awards are presented to support the activities
of groups and individuals who have made outstanding contributions
to social welfare and disaster relief in Niigata Prefecture. The awards
were created in 1977 to commemorate the 100th anniversary of the
Hokuetsu Bank’s founding. In fiscal 2019, the award was presented
to ten new groups and individuals at the 43rd awards ceremony.

Tulip Donation Activities

The Daishi BankThe Daishi Bank donates tulips (the official flower of the bank)to social welfare facilities, etc. in Niigata Prefecture. We haveconducted this activity since 1970, making it the longest-runningsocial contribution activity at The Daishi Bank. We deliver potted
plants every spring and bulbs every fall to a total of over 130
facilities.
As of March 31, 2020

As of March 31, 2020

Total award winners

454groups and individuals(Cumulative since FY1977)

The Hokuetsu
Bank Awards
ceremony

Number of tulips
donated to social
welfare facilities, etc.

209,710(Cumulative since FY1970)

Stationing of Service Care-Fitters and Dementia Supporters
The two banks station staff with expert knowledge at all of our sales
offices to support procedures at counters. This enables smooth visits
by elderly customers and customers with disabilities.
The Daishi Bank stations at least one employee certified as a Service
Care-Fitter and one employee certified as a Dementia Supporter at
each sales office. The Hokuetsu Bank stations at least one employee
certified as a Dementia Supporter at each sales office.

35

DAISHI HOKUETSU REPORT 2020

As of March 31, 2020

Service Care-Fitters

227 certified(Certified by the Nippon
Care-Fit Education Institute)

Donation oftulipsThe Daishi Bank
The Hokuetsu Bank

As of March 31, 2020

Total number of employees
who have taken lectures as
Dementia Supporters 4,889(Certified by the Community-Care
Policy Network (NPO))Declaration 3 Financial Services Provide financial services for leading an even better lifestyle.

Initiatives for Donation-type and SDGs Private Placement Bonds

The Daishi Bank
The Hokuetsu Bank

Private Placement Bonds to Assist in Publicizing Attractiveness of Niigata and Private Placement Bonds to Monitor Local Safety As a joint project in fiscal 2019 our two banks handled two
types of private placement bonds geared toward the SDGs Private Placement Bonds to Assist in Publicizing Attractivenessof Niigata and Private Placement Bonds to Monitor Local
Safety. In total, 262 companies have expressed their support
for each of these efforts, and we are donating part of thehandling fees to the Niigata Prefectural Tourist Associationand municipal governments within Niigata Prefecture.
Both of our banks have been handling these donation-typeprivate placement bonds since fiscal 2013, through which
753 total donations totaling 124 million yen have been madeto entities such as local governments and educational
institutions.

Flow from issuance of donation-type private placement bonds to donations
Issuingcompany❶ Issuance of private placement
bonds

Newspapers
media

Press release❸

Donate a portion ofhandling fees

Daishi Bank
Hokuetsu Bank❷

Local government,
educational
institution, etc.

As of March 31, 2020

Number of donations togovernments, schools,
and others throughdonation-type private
placement bonds

753

Total donations¥124million(Cumulative since FY2013)

Information on Private Placement Bonds to Assist in
Publicizing Attractiveness of Niigata

Information on Private Placement Bonds to Monitor
Local Safety

Private Placement Bonds to Supporting Niigata Culture and Sports Starting in May 2020 both of our banks began working on
Private Placement Bonds to Supporting Niigata Culture andSports as the fourth installment of this joint project for
donation-type private placement bonds.
The aim of this project is to collaborate with the Niigata
Musubu Project* to support culture and sports-related
business in Niigata Prefecture which was impacted by
COVID-19. While also supporting our customers with theirfinancing needs, we also donate a portion of the handlingfees from these bonds to the Niigata Cultural Foundation,
the Niigata Sport Association, and four professional sports
teams in Niigata Prefecture.

* The Niigata Musubu Project raises funds through methods suchas crowd-funding and donations to connect (musubu = connect)
sentiments of support for Niigata citizens with those who havebeen impacted by the COVID-19 pandemic. Both of our banks
are participating in the project through partnership with local
governments in the prefecture as well as Niigata Prefecture
itself, and businesses such as Niigata Nippo.

Information on Private Placement Bonds to Supporting
Niigata Culture and Sports

Niigata Musubu Project logo

DAISHI HOKUETSU REPORT 2020

36

ESG Initiatives and Contributions to SDGs

Declaration 3 Financial Services Provide financial services for leading an even better lifestyle.

Handling of the Niigata Future Japan Stock Fund

The Daishi Hokuetsu
Securities

Starting in May 2019, Daishi Hokuetsu Securities has been

conducting sales for the Niigata Future Japan Stock Fund(nicknamed Niigata no Kakehashi (Bridge to Niigata)), a

donation-type investment trust for supporting the future of
Niigata Prefecture.

This investment trust is a financial instrument that

supports companies which contribute to the prefectural

economy by investing a portion of its capital into Niigatarelated stocks of listed companies and other businesses

with their head offices in Niigata Prefecture. Additionally, it
donates a portion ofadministrative expenses

As of March 31, 2020

(trust fees) paid by

Niigata Future Japan Stock Fund

better future for Niigata

2,776cases ¥3.6million

customers to help create a
Prefecture.

Applications Total expected donations(Cumulative since May 2019)

Information about the Niigata Future Japan Stock Fund

Providing a Quality Smartphone App

The Daishi BankThe Daishi Bank Passbook App which Daishi Bank began

Passbook App

providing in April 2019 is a service that allows customers

real-time 24-hour access to their bank account balances andtransaction records via smartphone. The app is now highly
popular with customers.

See here
for iPhone

Because no passbooks are issued for the accounts towhich this service applies (Green Accounts), no procedures
are needed for updating the passbook record or carrying
over to new passbooks. The accounts are also

environmentally friendly because they help to reduce paper
and CO2. Because of these reasonsand since there is no danger of

See herefor Android

As of March 31, 2020

passbook loss or theft, we have

Passbook App

received large numbers of new

applications from customers, as well
as requests to switch over from31,908downloads

CO2 emissions reduction

3,095kg(Cumulative since April 2019)

existing accounts.

Going Cashless

The Daishi Bank
The Hokuetsu Bank

Both of our banks are working with many different

smartphone-based cashless payment services provided
by outside companies in order to offer greater

convenience for our customers by going cashless.
Illustration of how cashless payments work
Customersof either ofour banks
Savings
account

Chargedinstantly

Cashlesspayment
services by
variousproviders

Payments
Moneytransfers

For details about cashless payment services please see each company’s website

DAISHI HOKUETSU REPORT 2020

PartnerCashless payment service

DaishiBank

Hokuetsu
Bank

PayPay Corp.

PayPay〇〇LINE Pay Corp.

LINE Ｐａｙ〇〇

Mizuho Bank, Ltd.

Ｊ－Ｃｏ
ｉ
ｎＰａｙ

〇

Merpay, Inc.

Merpay〇Wellnet Corp.

Shiharaihisho〇

Withdrawals
etc.

37

Available cashless payment services

As of June 30, 2020

Web Completion Scheme for Personal Loans

The Daishi Bank
The Hokuetsu Bank

accessible since it eliminates the need for customers toBoth of our banks operate the Web Completion Scheme

come to the bank and perform procedures such as filling out

for loans to individual customers (excluding some loan types
such as housing loans).

contracts.

possible to do everything from loan application to receiving

campaigns for customers who have submitted loan

compatible device. This service makes personal loans moretry.

Both of our banks are running various promotional

The Web Completion Scheme is a service that makes it

applications online. Please give our online loan services aloan funds online via smartphone, computer, or any other

Information about Daishi Bank Car Loans

Information about Daishi Housing Loans

TSUBASA Smile Counter Reception System
Daishi Bank is using the TSUBASA Smile counter reception

system.

TSUBASA Smile is a system that guides customers throughthe application procedure on special tablets installed atbank counters, with on-screen instructions for entering therequired information fields until the application is complete.
This has greatly simplified the application procedure bydoing away with paper and rubber stamping.

From October 2019 onward we have been gradually

The Daishi Bank

Services available through the TSUBASA Smile counter reception system
November 2018
April 2019
July
OctoberNovemberBegan handling personal loans
Began handling new savings account setup
Began handling changes to notified matters(change of name or address)
Began handling installment savings
Began handling time and savings deposits

expanding the scope of banking services available through
TSUBASA Smile, such as processing new applications fortime and savings deposits.

TSUBASA Smile counter reception system

DAISHI HOKUETSU REPORT 2020

38

ESG Initiatives and Contributions to SDGs

Declaration 3 Financial Services Provide financial services for leading an even better lifestyle.

Handling of Loans with Special Provisions for Exemption of Principal at Earthquake Disaster
Daishi Bank offers Loans with Special Provisions for

Exemption of Principal at Earthquake Disaster for local

corporate customers, to support their business continuity

and recovery efforts when major earthquakes occur. In April
2019 we also began offering information about these loans
to Hokuetsu Bank customers. Many of them are now using
the loans.

The Daishi Bank
The Hokuetsu Bank

Main features of these loans◦ ‌The principal of the borrowed loan is exempted by a predetermined ratio (either 100% or50%) regardless of whether direct or indirect damage is suffered when a major earthquakeof intensity 6.0 or higher occurs as measured at a predetermined seismograph station.
◦ ‌The portion of the borrowed principal that is exempted becomes gain on forgiveness ofdebt, covering customers financially against the financial damage suffered in a major
earthquake occurrence while also supporting their business continuity and recovery efforts
by giving them the capacity to raise funds.

As of March 31, 2020

Loan statistics

110loans for¥16,200 million(Cumulative since April 2018)

Newspaper advertisement for Loans with Special Provisions for Exemption of Principal at Earthquake Disaster

Handling of World Bank Sustainable Development Bonds and Green
Bonds: Cooperation Measures of TSUBASA Alliance
As a joint effort between securities brokerage subsidiaries of
Tsubasa Alliance member banks, Daishi Hokuetsu Securities soldWorld Bank Sustainable Development Bonds (yen-denominatedfinancing projects aimed at achieving sustainable growth indeveloping nations.
The group securities subsidiaries of the TSUBASA Alliance havestep down-type debt subject to redemption before maturity,

served as a bridge between investors who want to contribute tolinked to two indexes) in September 2019.

society through investment and a variety of projects implemented

Sustainable Development Bonds are bonds issued inby the World Bank in developing nations. For example, theinternational capital markets by the World Bank in its efforts to aid

securities subsidiaries have sold Green Bonds which are issued bydevelopment and reduce poverty in developing countries. Thesethe World Bank.

bonds support projects and programs in a broad range of fields

Our Group will continue to promote impact investment which

including agriculture, food security, education, energy, finance,

seeks to balance social results with financial return, and to

trade and industry, insurance, government, infrastructure andcontribute to the achievement of Sustainable Development Goals

governance, water and public health, and the environment.

(SDGs).

The World Bank uses the capital received from investors in

TSUBASA Alliance logo

Information on the World Bank Sustainable Development Bonds

39

The Daishi Hokuetsu
Securities

DAISHI HOKUETSU REPORT 2020

ESG Initiatives and Contributions to SDGs

Declaration 4 Diversity Promote diversity and work-style reform.

Observation and Training at Japanese Companies for Female Bank Employees
In October 2019 both of our banks organized the second

The Daishi Bank
The Hokuetsu Bank

business managers.

edition of Observation and Training at Japanese Companies, in

For the second edition of the program, trainees heard lectures

which 18 female employees of our banks visited companies inabout leadership and management from an education and study-

Fukushima, Yamagata, and Miyagi Prefectures.

support business that won First Prize in the Japan Chamber of

The purpose of the training is to boost the motivation of female

Commerce and Industry Female Entrepreneur Awards, and abank employees by learning about the fulfilling aspects offemale business manager who also inherited a confectionery

managing businesses and organizations by interacting with female

wholesale business.

As of March 31, 2020

Number ofparticipants

35(Cumulative since FY2018)

Second edition of Observation and Training at Japanese Companies for Female Bank Employees

Established the Health Management Promotion Office
A priority tactic in the 1st Medium-Term Management Plan of

The Daishi Banksystem for even more active promotion of health management at

the Daishi Hokuetsu FG is“strengthening human resources

our Group. Specific activities include enhancing the medical

capability and organization capability.”As part of achieving thischeckup system for employees and implementing activities forgoal, we established Health Management Promotion Offices inpromoting health.

clinics at The Daishi Bank. By doing so, we have constructed a

Evaluation from External Institutions (Platinum Kurumin, Eruboshi, White 500)

The Daishi Bank
The Hokuetsu Bank

Both of our banks received the special Platinum Kurumin
certification from the Minister of Health, Labour and Welfare ascorporations that support child-raising in compliance with the Act
on Advancement of Measures to Support Raising Next-Generation
Children*1. Additionally, the banks also received Eruboshi
Accreditation III certification as companies taking excellent action
in compliance with the Act on Promotion of Women’sParticipation and Advancement in the Workplace*2.
Our banks were the first corporations in Niigata Prefecture tohave obtained double certification with both Platinum Kurumin
and Eruboshi Accreditation III.

Platinum Kurumin logo

We are bolstering organization-wide health management at both

Eruboshi Accreditation III
certification logo

of our banks. In March 2020, both of our banks were certified as
Excellent Enterprises of Health and Productivity Management 2020
(White 500) under the Certified Health & Productivity Management
Outstanding Organizations Recognition Program conducted by the
Ministry of Economy, Trade and Industry and the Nippon Kenko
Kaigi. This was the third consecutive year that Daishi Bank
received the certification, and the first for Hokuetsu Bank.
*1 The Act on Advancement of Measures to Support Raising Next-Generation Children
is a law intended to promote initiatives for supporting child-raising and work at
corporations, etc., with the goal of developing an environment for the healthy birthand growth of children who will lead society in the next generation.
*2 The Act on Promotion of Women’s Participation and Advancement in the
Workplace is a law that defines the responsibility of entities (nation government,
local governments, private business owners (general business owners)) in
promoting women’s participation and advancement in order to achieve a society
where women can fully exhibit their individuality and capabilities.

Excellent Enterprises of Healthand Productivity Management
2020 (White 500) logo

健 康 経 営 優 良 法 人 ロゴ デザイン ガ イドライン
経済産業省 商務・サービスグループ ヘルスケア産業課
2020年３月度版

DAISHI HOKUETSU REPORT 2020

40

ESG Initiatives and Contributions to SDGs

SDGs Declaration 5 Environmental Protection Contribute to sustainable environmental protection.better lifestyle.
Afforestation Activities

The Daishi Bank
The Hokuetsu Bank

In order to maintain green and abundant forests in the region into
the future, our banks participate in forest preservation activities.
In addition to the Daishi-no-Mori (Daishi Forest) project inAgamachi, Higashikanbara-gun, Niigata Prefecture that we havebeen involved with since fiscal 2009, we have been working on

afforestation activities at Araihama Forest Park in Tainai, Niigata
Prefecture since fiscal 2017.
In October 2019, a total of 407 of our financial group executives,
employees, and their family members participated in Daishi
Hokuetsu Afforestation Activities, planting 500 broadleaf trees.

As of March 31, 2020

Afforestation activity participants

3,470（cumulative since FY2009）
As of March 31, 2020

Tree planting statistics in Araihama Forest Park
Number of
Seedlings
Planting area
participants
planted

1，
580

1,500

1.5 ha（Cumulative since FY2017）

Afforestation Activities

Volunteer Activities by the Hokugin Magokoro Association
Hokuetsu Bank engages in volunteer environmental protection activities anddonates to environmental protection and social welfare groups in Niigata
Prefecture through the Hokugin Magokoro Association, an organization operated
through voluntary participation and donations from executives and employees.
Starting in fiscal 2019, Daishi Bank executives and employees have also joined

volunteer activities being performed in various locations, such as protecting thecrested ibis and the togeso which are endangered species in Niigata Prefecture,and environmental protection of the rice terraces in the Mitsuyama District ofTokamachi. In total 139 officers, employees, and related family members fromthe two banks have participated.

As of March 31, 2020

Volunteer activities by the
Hokugin Magokoro Association
Number of
Number ofactivities
participants
performed

49857（cumulative since FY2012）

Volunteer activities by the Hokugin Magokoro Association

41

DAISHI HOKUETSU REPORT 2020

The Daishi Bank
The Hokuetsu Bank

Protecting the Crested Ibis

The Daishi Bank
The Hokuetsu Bank

Hokuetsu Bank designated internationally protected bird the crested
ibis, the Niigata Prefectural bird, as its official bank bird starting in 1967.
From 1968, Hokuetsu Bank started the Crested Ibis Protection Fund as anactivity to protect and raise crested ibis birds. During the 52 years sincethen, the bank has been combining funds raised from bank employeeswith its own donations and giving these to Niigata Prefecture. Donations

have been made jointly with Daishi Bank starting in fiscal 2019.
Hokuetsu Bank is also selling investment trust instruments called theCrested Ibis Aid Fund and the Crested Ibis Chick Raising Aid Fund, andhas been donating a portion of the trust fee income to the Niigata
Prefecture Crested Ibis Protection Fund over the past 10 years since fiscal
2010.

As of March 31, 2020 As of March 31, 2020

Crested Ibis Protection Niigata Prefecture Crested
Fund
Ibis Protection Fund
Total donations
Total donations¥36,479thousand ¥21,616thousand（Cumulative since FY1968）（Cumulative since FY2010）

Crested Ibis Protection Fund
donation ceremony

Niigata Prefecture Crested Ibis Protection Fund
donation ceremony

Nature Preservation Activities

The Daishi BankThe Daishi
Securities

Daishi Bank works together with Daishi Hokuetsu Securities andAsset Management One to sell Natural Environment Preservation
Fund (nicknamed Oze Travelogue)
investment trust instruments, and over 13
years since fiscal 2007 has been donatinga portion of the trust fee income to theOze Preservation Foundation.

As of March 31, 2020

Total donations¥17,289thousand（Cumulative since FY2007）

Ceremony for donation to Oze
Preservation Foundation

Natural Environment Preservation
Fund investment trust

Green ATMs (Using Carbon Offset Function to Contribute to the Environment)

The Daishi Bank

Since August 2014, The Daishi Bank has installed green ATMs as
part of providing environmentally-friendly products and services.
Green ATMs have a carbon offset*1 function under the Niigata

Green ATMsymbolCredit*2 program based on the concept ofATMs that contribute to the environment
Carbon offset results
as of March 31, 2020

287 tons(total since August 2014)

more the more they are used. Specifically,
we offset 20g of CO2 every time theseATMs are used. As of March 31, 2020, 43
of these ATMs have been installed at 20
locations in Niigata Prefecture.

*1 Carbon offsetting is an approach in which greenhouse gases such as
CO2 emitted in daily life or economic activities are offset throughcredits recognized in other areas.
*2 Niigata Credit is a program in which Niigata Prefecture approvescredits (amount of reduction/absorption of greenhouse gases) for
increased CO2 absorption amounts achieved by maintaining forests in
Niigata Prefecture. These credits can be offset against the CO2 emitted
by a corporation or can be utilized in environmental activities.

Going Paperless (Item Keeping Management System)

The Daishi Bank
The Hokuetsu Bank

Daishi Bank introduced the Item Keeping Management System inpreventing clerical errors and improving

June 2019, which was then introduced at Hokuetsu Bank twowork efficiency when accepting items

months later.

from customers, the system also helps

Using this system, when bank employees accept items from
customers they use a tablet to register the items and get
signatures (electronic signature) from the customers. In addition to

reduce CO2 emissions by going
paperless.

As of March 31, 2020
Volume of CO2 reduction
through the Item Keeping
Management System

0.8t（Compared to FY2018）

DAISHI HOKUETSU REPORT 2020

42

ESG Initiatives and Contributions to SDGs

Corporate Governance

Basic Philosophy of Corporate GovernanceWe recognize the strengthening and enhancement of corporate governance as important management issue for
improving financial soundness and profitability in order to establish a strong reputation and unshakable credibility
from stakeholders including customers, the local community, and shareholders, and it works to enhance thefunctions of audits and oversight on corporate management and improve the transparency of management activities.

Corporate Governance Guidelines and Corporate
Governance Reports of the Daishi Hokuetsu FG are available
on our website.

URL：

https://www.dhfg.co.jp/esg/
governance/

Governance Structure
The Group has established governance organizations such as the Board of Directors, which attends to basic management
matters, makes important decisions regarding business management, and monitors the status of business execution by eachdirector, the Audit and Supervisory Committee, which has a supervisory function similar to the Board of Directors and also
audits the business execution of directors, and the Executive Committee, which decides on business management items on
the basis of policies decided at board meetings and manages the progress of Group management plans and strategies. Other
governance organizations include the ALM (Asset Liability Management) & Risk Management Committee, the Compliance
Committee, and the Merger Promotion Committee.
Furthermore, we have established a Nomination and Compensation Committee which ensures opportunities for obtaining
appropriate involvement and advice from outside directors when reviewing important matters related to the appointment,
dismissal and remuneration of directors, thus strengthening fairness, transparency, and objectivity.
Additionally, full-time members of the Audit and Supervisory Committee attend meetings of the Executive Committee andvarious other committee meetings in order to provide appropriate advice and recommendations.

◦Board of Directors 
In principle, board meetings are held once per month. In addition to attending to basic management matters and making
important decisions regarding business management, the Board of Directors monitors the status of business execution byeach director.

◦Audit and Supervisory Committee 
In principle, committee meetings are held once per month. The Committee complies with regulations such as laws, theArticles of Incorporation, and Rules of the Audit and Supervisory Committee. The Committee has a supervisory function
similar to the Board of Directors and also audits the business execution of directors.

◦Nomination and Compensation Committee As an advisory body to the Board of Directors, the Committee ensures opportunities for obtaining appropriate
involvement and advice from outside directors when reviewing important matters related to the appointment, dismissal
and remuneration of directors, thus strengthening fairness, transparency, and objectivity. In principle, the Committee meetsin March and April each year, and also holds special meetings as necessary.

◦Executive Committee 
The Executive Committee is established as management meeting under the Board of Directors. In principle, theCommittee meets twice per month. The Committee decides on business management items on the basis of policies
decided at board meetings, manages the progress of Group management plans and strategies, and decides on anddeliberates matters delegated from the Board of Directors.

◦Other Committees 
The ALM (Asset Liability Management) & Risk Management Committee, the Compliance Committee, and the Merger
Promotion Committee have been established as advisory bodies to the Executive Committee.

43

DAISHI HOKUETSU REPORT 2020

Corporate Governance Organization Chart General Meeting of Shareholders

Appointment and dismissal

Appointment anddismissal

Audit and supervision

Board ofDirectors

Consultation and report

Audit and Supervisory Committee

Committees
Instructions
and orders

Executive Committee

Compliance Committee
Merger Promotion Committee

Report

Audit

Secretariat of Audit andSupervisory Committee

ALM & Risk Management Committee

Cooperation andcoordination

Auditing Dept.

Accounting Auditors

Nomination andCompensation Committee

Audit

Corporate Planning Dept.

Human Resources
Planning Dept.

Sales Planning Dept.

Guidance, management and supervision

Systems & Administration
Management Dept.

Merger Promotion Dept.

Risk Management Dept.

Report and deliberation
Audit

THE HOKUETSU BANK
Report anddeliberation

Guidance, management
and supervision

Subsidiaries, etc.

Report anddeliberation

Audit

Guidance, management
and supervision

Subsidiaries, etc.

Governance Initiatives
Analyzing and Evaluating the Effectiveness of the Board of Directors We analyze and evaluate the effectiveness of our Board of Directors, including its composition and the state of its activities
and operations, to ensure its effectiveness while strengthening its function. During the fiscal year ended March 2020 all of ourdirectors completed self-evaluations in survey format. After compiling the results, we performed an analysis and evaluation at
the meeting of the Board of Directors in April 2020. The results of the analysis and evaluation at the Board of Dorectors
meeting in April 2020 affirmed that the Board of Directors had functioned effectively in the fiscal year ended March 2020,
which included proper advice and oversight regularly provided by outside directors based on their own knowledge.

Accordance with Japan’s Stewardship Code Through partnership with the Tsubasa Alliance, the corporate pension funds of both of our banks
expressed their accordance with the Principles for Responsible Institutional Investors (Japan’s
Stewardship Code)* in September 2019. The aim of the stewardship code is to engage in dialogue withinvestment target companies through the asset management institutions in order to promote thesustainable growth of these companies and increase their corporate value, while also increasing theirmedium to long-term investment returns.
＊ The Principles for Responsible Institutional Investors (Japan’s Stewardship Code) is a set of guidelines for the
behavior of institutional investors, released by Japan’s Financial Services Agency in 2014. Bolstering the
stewardship of our corporate pension funds as investors is expected to lead to stronger corporate governance forthe parent organization, help employees steadily build assets, and have a positive impact on the financial positionof our company.

DAISHI HOKUETSU REPORT 2020

44

ESG Initiatives and Contributions to SDGs

Corporate GovernanceInternal Controls Basic Policy◦System for Ensuring that Business Execution by Our

Directors and Employees is in Compliance with Laws,
Regulations, and the Articles of Incorporation

The Group has established Compliance Rules to ensure the directors
and employees of the Group and Group companies comply with laws,
regulations, the Articles of Incorporation, and social norms, and operatebusiness in an appropriate and healthy manner.
The Group has established a Compliance Committee anddepartments for the supervision of compliance. In addition tocomprehensively ascertaining and managing the status of complianceat the Group and Group companies, these organizations develop
systems related to compliance.
The Group has established an Auditing Department that is
independent from departments being audited. The Auditing
Department periodically implements audits on operations at the Groupand Group companies, and then reports the audit results to the Boardof Directors.
The Group has established Rules for Operation of the Whistleblowing
System. In addition to defining appropriate methods for whistleblowing
and consultation in regards to legal violations, etc., by directors andemployees of the Group and Group companies, the Group has
developed systems for the protection of whistleblowers, etc.
The Group has established the Management Policy for Protection ofCustomers, Etc., and has established the Rules for Managing Conflicts ofInterest. Furthermore, the Group has developed systems for protecting
and increasing convenience for customers of the Group and Group
companies, and developed systems for managing conflicts of interest to
prevent unfair damage to customer profit.
The Group has established the Basic Policy Against Anti-Social
Forces, and has established the Rules for Responding to Anti-Social
Forces. The Group develops systems for the Group and Group
companies to block relations with antisocial forces which harm theorder and safety of civil society. Furthermore, the Group implements
organizational response to unreasonable requests, etc., from antisocial
forces.
Based on Guidelines for Preventing Insider Trading, Etc., the Groupdevelops systems for appropriate management of undisclosed
important facts which are related to business partners of the Group orGroup companies, and which were obtained during business activities.

◦System for Saving and Managing Information on
Execution of Business by Directors

The Group has constructed a system for saving and managing
information on execution of business by directors for the applicable
period. Furthermore, based on the Document Management Rules, theGroup creates and saves minutes for the General Meeting of
Shareholders, meetings of the Board of Directors, and other important
meetings involving directors.

◦Regulations and Other Systems for Managing the Risk of Loss

The Group has established the Group Risk Management Basic
Regulations for establishing healthy management at the Group andGroup companies, and to secure appropriate income which iscommensurate with various risks.
The Group has established the Group Comprehensive Risk
Management Regulations in order to ensure appropriate and healthybusiness at the Group and Group companies. Furthermore, the Group
performs appropriate risk management in response to the types andscope of risk.
The Group has established the ALM & Risk Management Committee
and the Risk Management Administration Division in order to manage
risk at the Group and Group companies. Moreover, the Group develops
systems for managing the risk of loss.
The Group has constructed a system in which the Auditing
Department verifies the appropriateness and efficacy of risk
management systems at the Risk Management Administration Division,
and works to enhance/strengthen the risk management systems.
The Group has established Basic Rules for Business Continuity inorder to quickly recover business in the event of a crisis, andappropriately develops systems for crisis management.

◦System for Ensuring Efficient Execution of Business by Directors

In addition to defining management targets, the Group formulates
management plans and uses appropriate methods to manage business
operations.
The Group has established Rules for the Board of Directors andoperates the Board of Directors appropriately. Furthermore, the Grouphas established an Executive Committee which is delegated the
responsibility of deciding on certain matters from the Board of
Directors. In addition to deciding on the delegated issues, the Executive
Committee conducts preliminary review of items being deliberated by
the Board of Directors in order to contribute to decision-making by the
Board of Directors. In order to ensure the business is executed
efficiently by directors, officers, and employees, the Group has
established Organization Regulations, etc., which define rules forbusiness duties, authority, and decision-making.

45

DAISHI HOKUETSU REPORT 2020

◦Systems for Ensuring Appropriate Business at the Groupand at Corporate Bodies Composed of Group Companies
Based on our Management Philosophy, the Group and Group
companies share business strategy as a corporate body and conduct
management by utilizing the capabilities of the entire Group. The GroupManagement Regulations define basic rules related to deliberation,
reporting, etc., of important matters such as management plans ofsubsidiaries, etc., as pertains to management of Group companies by
the Group. The Group develops systems for ensuring healthy,
appropriate, and efficient management of the Group.
Based on the Group Internal Control Regulations for Financial
Reporting, the Group and Group companies develop an internal control
system to ensure the appropriateness and reliability of financial reportat the Group and Group companies.
In addition to ensuring appropriate response in compliance withlaws, regulations, etc., for transactions, etc., within the Group, theGroup and Group companies perform appropriate management with afocus on ensuring healthy business of the Group, as based on our Basic
Policy for Transactions Within the Group and our Basic Policy for
Business Partnerships in the Group.
Based on the Basic Policy for Internal Controls, the Auditing
Department conducts audits to ensure appropriate operation ofbusiness, and provides necessary recommendations for contributing to
the appropriateness of those operations.
The Group develops systems for immediate reporting to directors of
the Group if a director or employee of the Group or a Group company
discovers a significant legal violation or other important compliancerelated matter at a Group company. The Group has also clarified
standards for reporting from subsidiaries to the Group, and develops
reporting systems for matter required for Group operation.
The Group develops systems to ensure that directors and employees
engaging in reporting as described above are not subject to unfair
treatment as the result of reporting.

◦Matters Concerning the Dispatching of Employees toAssist in Duties of the Audit and Supervisory Committee
In order to increase the efficiency and efficacy of its duties, the Audit
and Supervisory Committee dispatches employees to supplement
duties of the Committee (hereinafter,“Assistants”).

◦Matters Concerning the Independence of Assistants from Directors (Excluding
Directors who are Members of the Audit and Supervisory Committee)

Appointment, transfer, personnel evaluation, and disciplinary action
for Assistants is decided upon after deliberation with the Audit andSupervisory Committee.
The Group develops systems to prevent Assistants from being
concurrently involved in executive positions which are related to their
execution of business duties. Furthermore, (excluding directors who aremembers of the Audit and Supervisory Committee) directors must show
consideration to ensure that Assistants are not subject to any unfair
restrictions on the execution of their business duties.

◦Systems for Reporting to the Audit and Supervisory

Committee by Directors and Employees, and Systems Related
to Other Reports to the Audit and Supervisory Committee
Based on internal regulations such as the Rules of the Audit andSupervisory Committee, if a director or employee of the Group or aGroup company discovers a matter which has the potential of causing
serious harm to the Group or a Group company, the director or
employee shall report said matter to the Audit and Supervisory
Committee. Furthermore, in addition to matter defined by laws,
regulations, and rules, the Audit and Supervisory Committee shall beable to request reports as necessary from directors, employees of theInternal Controls Department, and other persons. No individual who
has reported to the Audit and Supervisory Committee shall be subject
to unfair treatment as the result of reporting.
The Group develops systems for reporting the results of internal
audits at the Group and Group companies to the Audit and Supervisory
Committee from the Internal Controls Department.

◦Systems for Ensuring Efficient Auditing by the Audit
and Supervisory Committee

The Group develops systems for effective audits by facilitating
cooperation such as the exchange of opinions between the Audit andSupervisory Committee and accounting auditors, officers, the Risk
Management Department, the Auditing Department, and other internal
departments that possess internal controls functions.
If the Audit and Supervisory Committee requests that the Group payin advance, provide reimbursement, engage in debt processing, etc., forexpenses occurring due to execution of the Committee’s duties, theGroup shall immediately process those expenses. Moreover, the Groupshall pay the expenses for obtaining recommendations, etc., fromoutside experts when deemed it necessary by the Audit andSupervisory Committee.

Risk Management System
The Group’s basic policy of risk management is to stably secure profits

appropriate advice and recommendations. Minutes from meetings of thecorresponding to risk and plan the appropriate distribution of

ALM & Risk Management Committee are reported to the Board ofmanagement resources, as well as to construct a system of mutual checks

Directors and other entities as appropriate in an effort to resolve andand balances for the various risks faced by the Group. This is possible byreform problems related to risk. Additionally, the Auditing Department

accurately recognizing and ascertaining various risks, engaging in(Internal Controls Department) is under direct supervision of the Board ofappropriate management and supervision of risks, and auditing these

Directors and is ensured independence from the department being

processes related to risks.

audited. The Auditing Department conducts strict audits for overall

Based on this policy, the Group has established a Risk Managementbusiness, and verifies the appropriateness and effectiveness of internal

Department as a supervisory organization that understands and manages

controls systems. Under this risk management system, the Grouprisk comprehensively, cutting across organizational boundaries.

implements risk capital allocation at its subsidiary banks in order toFurthermore, the Group has established the ALM & Risk Management

maintain healthy business and achieve efficient utilization of capital.

Committee to comprehensively ascertain and manage the status of ALM

Additionally, the Group anticipates the interruption of business due toand risks throughout the Group, and to contribute to maintaining a healthy

unexpected emergencies such as earthquakes and other large-scaleGroup and increasing profitability by reviewing appropriate response

disasters, and defines priority business operations, etc., for continuity atmeasures, etc. Meetings of the ALM & Risk Management Committee aresubsidiary banks. The Group has established the Basic Rules for Businessheld as necessary. Full-time members of the Audit and Supervisory

Continuity to define timely and accurate management and instructions forCommittee attend meetings of this committee in order to provide

subsidiary banks, and has constructed a risk management system.

Diagram of FG Risk Management System 

Audit andSupervisory Committee

Board of Directors

Auditing Department (Internal Controls Department)
The Group’s Auditing Department conducts
audits of the Group and Group companies

Executive Committee
ALM & Risk Management Committee【Types of risks】

Risk Management Department (Risk Management Administration Division)

Credit risk

Market risk

Liquidity risk

Operational risk

Cybersecurity risk

Instructions (development of risk management systems, etc.)

Reporting & deliberation (risk status, response guidelines)

Board ofDirectors

Corporate Auditors/
Board of Corporate
Auditors

Reporting & deliberation (risk status, response guidelines)

Board ofDirectors

Audit and Supervisory Committee (The Daishi Bank)

Corporate Auditors/
Board of Corporate Auditors(The Hokuetsu Bank)

Executive oﬃcerMeeting

Management Meeting( T h e Dai s h i Ban k)
Risk Management and Compliance
Committee, ALM Committee,
Cybersecurity Management Committee

Corporate Planning Dept
(Risk Management Administration Division)

Risk Management Division(Risk Management Administration Division)( T h e H o k u e T s u Ban k)
ALM Meeting,Committee for Deliberating
the Prevention of Accidents,Committee
for Deliberating Loan Management【 Type s o f Risks 】
Capital reguirement regulatory risk,
System risk,

Cybersecurity risk,
Liquidity risk,Oﬃce risk

Departments with jurisdiction by risk category【 Typ es o f Risk s 】

Creditrisk

Marketrisk

Liquidity
risk

Board ofDirectors

Corporate
Auditors【 Typ es o f Ri s ks 】

Operationalrisk

Cybersecurity
risk

Operational risk,
Cybersecurity risk

Departments with jurisdiction by risk category
Sales oﬃces, Head Oﬃce, Group companies

DAISHI HOKUETSU REPORT 2020

46

ESG Initiatives and Contributions to SDGs

Corporate Governance
Credit Risk Management Systems Credit risk is the risk that the value of principal or interestof a loan will decrease or disappear due to bankruptcy,
deterioration of credit, etc., at a business partner to whom abank has lent money, thus resulting in a loss incurred by thebank.
The Group appropriately operates and manages credit risk
based on our regulations for credit risk management.
In the Group’s system, the Risk Management Department
serves as an organization for managing credit risk. The
Department develops regulations for credit risk
management, and plans and operates activities for analyzing,assessing, and improving risk.
At Both Banks, screening departments which arecompletely separated from sales departments perform strictloan screening and appropriate management of problem
loans. Also, the two banks strive to maintain healthy assets

through bank-wide initiatives such as activities to support
management reform at business partners. Strict credit
examinations and autonomous assessments of loans, etc.,
are carried out through a two-level examination system at
local sales offices and departments at the head office. Then,the Auditing Department conducts a final review to ensure
the accuracy and appropriateness of the credit examinations
and autonomous assessments. For our credit portfolio, we
appropriately manage credit concentration to particularregions, industries, corporations, groups, etc. Moreover, thetwo banks take measures such as quantifying credit risk* andsetting credit risk limits in accordance with equity capital.
*Q uantification of credit risk is the process of using statisticalmethods to quantify in numerical form and estimate the amountof credit risk contained in a credit portfolio.

Market Risk Management Systems Market risk is the risk that assets and obligations may
fluctuate in value due to changes in market factors, thus
resulting in a loss incurred by the Group. Such market factors
include domestic and foreign interest rates, valuations on
securities, and foreign exchange rates.
The Group has established an ALM Operation Policy inorder to adjust market risk to the appropriate amount andsecure stable income. Based on this policy, we set limits forrisk-taking, loss, etc., for securities management.
In addition, the ALM & Risk Management Committee
discusses important issues in market risk management. If a
serious incident has occurred in management of securities,
this system ensures that details are reported to management
immediately.

Liquidity Risk Management Systems Liquidity risk is the risk of the Group incurring a loss due todifficulty of securing required funds during financing or being
forced to procure funds at an interest rate which is muchhigher than normal (financing risk). It is also the risk of
incurring a loss due to being forced to engage in market
transactions at significantly disadvantageous conditions or
prices (market liquidity risk).
The Group has established the Liquidity Risk Management

Regulations at Both Banks. Management departments
involved in financing ascertain and analyze the financing
status, and engage in appropriate market procurement as
necessary. Furthermore, in preparation for unexpected
events, the Group has established response measures andreporting/contact systems to enable fast response in avariety of situations in accordance with the degree ofscarcity in financing.

Operational Risk Management Systems Operational risk is the risk that the Group’s internal
administrative procedures, actions of directors or employees,
or systems operations may be inappropriate or may fail tofunction, or that other external factors will occur resulting ina loss incurred by the bank. Based on risk factors, the Group
categorizes and manages the following types of risk: 1)
administrative risk, 2) systems risk, 3) information-security
risk, 4) compliance risk, 5) human-error risk, 6) tangible-asset
risk, 7) outsourcing risk, and 8) reputation risk.

In the Group, in order to manage operational risk
appropriately, the Risk Management Department (amanagement supervisory organization) conducts activities
such as making proposals on important matters related tooperational risk management, accepting reports on
operational risks from subsidiary banks and monitoring thoserisks, and verifying/improving the efficacy of management
systems for operational risks.

Cybersecurity Risk Management Systems Cybersecurity risk is the risk that the Group will incur aloss as the result of threats on the Group’s cybersecurity
from cyberattacks (the act of maliciously using an
information communications network or information system
for unauthorized entry via a cyberspace, for stealing,
modifying, or destroying information, for stopping theoperation of information systems or causing incorrect
operation, for executing unauthorized programs, for
conducting DDoS attacks, etc.).
In order to strengthen our response to cybersecurity, theGroup has established a Cybersecurity Management
Committee, a Basic Policy for Cybersecurity Management,

47

DAISHI HOKUETSU REPORT 2020

and response manuals for different types of cyberattacks.
Furthermore, the Group reviews advance prevention andpredictive management of cybersecurity incidents. In theevent that a cybersecurity incident occurs, the Group
reviews countermeasures for fast recovery, measures toprevent damage from spreading, measures to prevent
reoccurrence, etc.
Additionally, based on instructions from the Executive
Committee and other management organizations, werecognize cybersecurity risks as risk that must be managed
throughout the entire Group, and we work to strengthen ourmanagement of cybersecurity.

Business Continuity System 
The Group has defined rules such as Basic Rules for
Business Continuity. Even in the event of a disaster or other
unforeseen occurrence, the Group has developed a business
continuity system that will minimize the impact on ourcustomers and will enable us to maintain financial functions

by limiting the impact on the Group management.
In the event of a large-scale natural disaster or system
malfunction, we will immediately establish a Disaster
Response Headquarters and work for the recovery/continuityof business.

Compliance System
Compliance is one of the top management priorities at the Group. In accordance with the following Basic Policy, alldirectors and employees work to ensure management based on our Management Philosophy.

Basic Policy

１．All directors and employees in the Group always act in accordance with our Management Philosophy, and recognize
the social responsibility and public mission that must be fulfilled by our Group. Furthermore, all directors andemployees understand and follow the code of conduct regulated by the Japanese Bankers Association.
２．The Group works to develop and establish a compliance system for maintaining trust in the Group, and for ensuring
the health and appropriateness of our business.

Compliance System 
The Group has established the Risk Management Department as a department for overseeing compliance. The Department
engages in activities such as formulating compliance-related measures and monitoring the status of compliance in the Group.
In addition, the Group holds meetings of a Compliance Committee which is connected directly with management. The
Committee investigates matters such as the status of compliance management in the Group, and works to develop andestablish compliance systems in the Group.
Additionally, we formulate a Compliance Program every year as a detailed execution plan for thorough compliance, andwork to establish compliance systems in accordance with our Management Philosophy.

Board of Dire c t ors
Exe c u t iv e C ommit t e e

C o mpl ian c e C ommit t e e(deli bera t i on on i mp o rtan t matte rs an d statu s of in itiativ e s)
(Secret a ri a t O ﬃce : Risk Man age me n t D e p artme n t)

THE HOKUETSU BANK

Group

Group

DAISHI HOKUETSU REPORT 2020

48

Company Information

List of Executives / Group Companies

Daishi Hokuetsu Financial Group Board Members

(as of June 24, 2020)

Chairman and
Representative Director

President andRepresentative Director

Katsuya Sato

Fujio Namiki

Director

Director

Satoshi Hasegawa

Kazuyoshi Hirokawa

Director

Director

Takuya Watanabe

Makoto Takahashi

Director

Director

Michiro Ueguri

Ken Shibata

Director(Auditand Supervisory
Committee Member)

Outside Director(Audit and Supervisory
Committee Member)Yutaka Kimura

Koichi Masuda

Outside Director(Audit and Supervisory
Committee Member)

Outside Director(Audit and Supervisory
Committee Member)

Hiroshi Fukuhara

Toshizo Oda

Outside Director(Audit and Supervisory
Committee Member)

Kazuaki Matsumoto* ‌Each of the Outside Directors Koichi Masuda, Hiroshi Fukuhara, Toshizo Oda and Kazuaki Matsumoto are outside directors as defined
under Article 2, item (xv) of the Companies Act.

49

DAISHI HOKUETSU REPORT 2020

Directors at The Daishi Bank (as of June 24, 2020)

Directors at The Hokuetsu Bank (as of June 24, 2020)

President and CEO (Officer)

Fujio Namiki

President and CEO (Officer)

Katsuya Sato

Deputy President(Officer)

Satoshi Hasegawa

Senior Managing Director (Officer)

Kazuyoshi Hirokawa

Senior Managing Director (Officer)

Takuya Watanabe

Senior Managing Director (Officer)

Hiroyuki Kaizu

Managing Director

Michiro Ueguri

Managing Director

Ichiro Muromoto

Ken Shibata

Managing Director

Makoto Takahashi

Managing Director

Masami Watanabe

Managing Director
Managing Director
Managing Director
Director and Executive Officer
Director
Director (outside)

General Manager of Planning
Coordination Division
General Manager of Head OfficeBusiness Division
General Manager of Niigata Airport
OfficeGeneral Manager of Regional
Revitalization Headquaters
General Manager of Business
Headquaters
General Manager of Operation
Administration Division
Audit and Supervisory
Committee Member
Audit and Supervisory
Committee Member

Takayoshi Tanaka

Eiichi Tsurui
Katsuaki Fujikura

Executive Officer

General Manager ofTokyo Office
General Manager ofNagaoka Main Office
General Manager of
Minami-Niigata Office
General Manager of Takada
Main Office
General Manager of Honcho
OfficeGeneral Manager ofSystems Planning Division
General Manager of Sanjo Office
General Manager of Sanjohigashi
OfficeGeneral Manager of
Personnel Division

Naruhito Hosaka

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

General Manager ofNiigata Branch

Director

Takayoshi Konomura

Director (outside)

General Manager ofHead Office Sales Dept.

Director

Toshiyuki Kobayashi

Audit and Supervisory
Committee Member

Hiroki Hoshi

Managing Director

Toshiyuki Maki

Motoi Yamada

Director (outside)

Kiroku Takeuchi

Standing Corporate Auditor

Shuichi Nomizu

Standing Corporate Auditor

Matsuichi Nanba

Corporate Auditor (outside)

Toshio Kitamura
Yoshiharu Izu

Corporate Auditor (outside)

Takehiko Hori

Executive Officer

Katsutoshi Sakai

Executive Officer

Nobuaki Takahashi

Ryuji Takahashi

General Manager ofMarket Sales Dept.

Tadanori Miyakoshi

General Manager ofSales Supervision Dept.

Takashi Ishizaka

Kazuo Kokai
Masaki Kagoshima
Toru Hirota

Overview of Group CorporationsCompany

The Daishi Bank, Ltd.

1071-1 Higashiborimae-dori 7-bancho, Chuo-ku, Niigata-shi

The Hokuetsu Bank, Ltd.

2-14 Ote-dori 2-chome, Nagaoka-shi

Daishi Hokuetsu Securities Co., Ltd.
8-26 Jonaicho3-chome, Nagaoka-shi

Daishi Hokuetsu Career Bridge, Co., Ltd.

Hokuetsu Daiichi Bldg., 2nd Floor 2-25 Higashi-odori1-chome, Chuo-ku, Niigata-shi

The Daishi Guaranty Co., Ltd.

Fuyu-Sha Bldg., 3rd Floor 224-1 Honcho-dori 5-bancho, Chuo-ku, Niigata-shi

The Hokuetsu Credit Guarantee Co., Ltd.

Choryo-Sha Bldg., 1st Floor 13-23 Miyabara2-chome, Nagaoka-shi

The Daishi Management Consulting Co., Ltd.

Fuyu-Sha Bldg., 2nd Floor 224-1 Honcho-dori 5-bancho, Chuo-ku, Niigata-shi

The Hokugin Economic Research Institute, Ltd.

Omotemachi Bldg., 1st Floor 2-1 Omotemachi3-chome, Nagaoka-shi

The Daishi Lease Co., Ltd.

2-10 Akashi2-chome, Chuo-ku, Niigata-shi

The Hokuetsu Leasing Co., Ltd.

Hokuetsu Higashi Bldg., 5th Floor 9-20 Kesajiro1-chome, Nagaoka-shi

The Daishi Computer Service Co., Ltd.

1-17 Abumi1-chome, Chuo-ku, Niigata-shi (inside the Daishi Bank Business Center)

The Daishi JCB Card Co., Ltd.

Daishi Kami-Okawa-mae Bldg., 3rd Floor 1245 Kamiokawamae-dori 8-bancho, Chuo-ku, Niigata-shi

The Daishi DC Card Co., Ltd.

Daishi Kami-Okawa-mae Bldg., 1st Floor 1245 Kamiokawamae-dori 8-bancho, Chuo-ku, Niigata-shi

The Hokuetsu Card Co., Ltd.

Hokuetsu Higashi Bldg., 4th Floor 9-20 Kesajiro1-chome, Nagaoka-shi(as of July 1, 2020)
Ratio of the Group’s voting
rights in the subsidiary,
including indirect ownership

Main business activities

Date ofestablishment

BankingNovember 2,
1873¥32,700 million

100.0%

Banking

December 20,
1878¥24,500 million

100.0%

Securities

August 8,1952¥600 million

100.0%

Comprehensive HR consulting

May 24,2019¥30 million

100.0%

Credit guarantees

October 27,
1978¥50 million

100.0%

Credit guarantees

August 20,
1986¥210 million

100.0%

Consulting and venture capital

June 8,1984¥20 million

100.0%

Survey research and information provision
related to the economy and society

July 1,
1997¥30 million

50.0%

Comprehensive leasing services

November 11,
1974¥100 million

26.0%

Comprehensive leasing services

November 1,
1982¥100 million

100.0%

Computer-related business

May 10,1976¥15 million

30.0%

Credit cards and credit
guarantees

November 12,
1982¥30 million

66.6%

Credit cards

March 1,
1990

¥30 million

70.0%

Credit cards and credit
guarantees

June 1,
1983¥20.45 million

100.0%

CapitalDAISHI HOKUETSU REPORT 2020

50

Company Information

Organization Chart / Major stockholders

Organization Chart of the Daishi Hokuetsu Financial Group(as of July 1, 2020)

The Daishi BankTheTHE
Hokuetsu
Bank
HOKUETSUBANK

The Hokuetsu Bank

Major stockholders (10 largest)
株主名

51(As of March31,2020)
Number of Share

Percent

1

Japan Trustee Services Bank, Ltd. (Trust Account)

2,744 (Thousand)6.01 ％

2

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

2,204

4.83

3

Meiji Yasuda Life Insurance Company

1,624

3.55

4

Nippon Life Insurance Company

1,156

2.53

5

DFA INTL SMALL CAP VALUE PORTFOLIO（Standing proxy: Citibank N.A.,Tokyo Branch）

892

1.95

6

Tohoku Electric Power Co., Inc.

852

1.86

7

Daishi Bank Employee’s stockholdings

808

1.77

8

Sompo Japan Nipponkoa Insurance Inc.

803

1.76

9

Daido Life Insurance Company

705

1.54

10

Japan Trustee Services Bank , Ltd. (Trust Account 5)

695

1.52

DAISHI HOKUETSU REPORT 2020

Financial Data
CONTENTS 
Consolidated Balance Sheets

53

Consolidated Statements of Income

55

Consolidated Statements of Comprehensive Income

55

Consolidated Statements of Shareholders' Equity

56

Consolidated Statements of Cash Flows59

The Status of Financial Results (Consolidated)

60

Non-Consolidated Balance Sheets(Daishi Bank)81

Non-Consolidated Statements of Income(Daishi Bank)82

Non-Consolidated Balance Sheets(Hokuetsu Bank)83

Non-Consolidated Statements of Income(Hokuetsu Bank)84

DAISHI HOKUETSU REPORT 202052

Consolidated Balance Sheet
Years ended March 31,2020
Note:The translations of the Japanese yen amounts into US dollars are using the prevailing exchange rate at March 31, 2020,which was\108.83 to US $1.

■Assets

Cash and due from banks(Millions of Yen)

(Thousands of U.S. Dollars)

2019

2020

2020

¥1,108,007¥1,236,293$11,359,855

Call loans and bills bought

3,773

4,788

44,000

Monetary claims bought

17,414

13,288122,100

Trading account securities

3,911

3,181

29,237

Securities

2,496,047

2,326,206

21,374,678

Loans and bills discounted

46,708,806

5,065,891

5,083,319

Foreign exchanges

19,661

20,472

188,111

Other assets

160,157

189,980

1,745,666

Tangible fixed assets

54,16756,534519,472

Intangible fixed assets

14,22017,222

158,250

Asset for retirement benefits

3,387

2,697

24,790

Deferred tax assets

5,012

16,379150,502

Customersʼ liabilities for acceptances and guarantees
Allowance for loan losses
Total Assets■ Liabilities

19,10819,178176,225(20,538)(23,104)(212,302)¥8,950,224¥8,966,437$82,389,395（Millions of Yen）

(Millions of Yen)

(Thousands of U.S. Dollars)

2019

2020

2020

¥7,177,466¥7,373,174$67,749,465

279,430

252,208

2,317,456

4,994

2,176

20,000

Payables under repurchase agreements

110,272

72,437

665,606

Payables under securities lending transactions

403,529

326,1312,996,705

Borrowed money

433,879

399,232

3,668,400

755

289

2,661

―

126

1,157

Other liabilities

66,07991,860844,075

Provision for bonuses

2,290

2,331

21,425

Provision for directorsʼ bonuses

116

130

1,194

Provision for retirement benefits

7,852

8,945

82,195

41

39

360

2,989

2,418

22,219Deposits
Negotiable certificates of deposit
Call money and bills sold

Foreign exchanges
Borrowed money from trust account

Provision for directorsʼ retirement benefits
Provision for reimbursement of deposits
Provision for system cancellation losses
Provision for contingent loss
Reserves under the special laws
Deferred tax liabilities

457

412

3,789

1,131

1,265

11,627

11

11

107

5,504

2,377

21,849Deferred tax liabilities for land revaluation

5,239

5,236

48,114

Acceptances and guarantees

19,10819,178176,225¥8,521,150¥8,559,984$78,654,639

Total Liabilities

53（Millions of Yen）

DAISHI HOKUETSU REPORT 2020

■ Net Assets（Millions of Yen）

(Millions of Yen)

(Thousands of U.S. Dollars)

2019

2020

2020

Capital stock¥30,000¥30,000$275,659

Capital surplus

87,66787,670805,576

Retained earnings

258,756

266,1612,445,665

Treasury stock(1,336)(1,023)(9,402)

Shareholders' equity

375,088382,8093,517,498

Valuation difference on available-for-sale securities

41,032

20,596

189,258

Deferred gains or losses on hedges(5,657)(14,856)(136,510)

Revaluation reserve for land

6,424

6,417

58,967

Remeasurements of defined benefit plans(5,505)(6,850)(62,949)

Accumulated other comprehensive income

36,292

5,307

48,766

637

767

7,053

Subscription rights to shares
Non-controlling interests
Total Net assets
Total Liabilities and Net assets

17,054

17,569161,438

429,073

406,453

3,734,756¥8,950,224¥8,966,437$82,389,395

DAISHI HOKUETSU REPORT 202054

Consolidated Statements of Income
Years ended March 31,2020（Millions of Yen）

(Millions of Yen)

(Thousands of U.S. Dollars)

2019

2020

Ordinary Income¥118,007¥154,698$1,421,466

2020

Interest income

58,956

67,938624,259

Interest on loans and discounts

38,71347,170433,429

Interest and dividends on securities

19,66920,134

185,0084

880Interest on receivables under resale agreements

(6)

(13)

(125)

Interest on deposits with banks

226

237

2,183

Other interest income

349

400

3,682

―

1

12

Fees and commissions

24,53528,292259,971

Other ordinary income

25,38540,271

370,043

Other income

9,130

18,194

167,179

Ordinary Expenses

101,301

135,288

1,243,113

Interest expenses

6,454

5,939

54,571

Interest on deposits

946

1,002

9,209

Interest on negotiable certificates of deposit

35

36

334

Interest on call money and bills sold

38

55

513

Interest on bills sold

686

391

3,599

2,617

1,921

17,660

151

113

1,043

1,979

2,417

22,211Fees and commissions payments

6,752

8,654

79,518Other ordinary expenses

21,21433,478

307,620

General and administrative expenses

57,301

69,863641,954

Other expenses

9,578

17,352

159,448

Ordinary profit

16,706

19,410178,352

Extraordinary income

47,208240

2,208Interest on call loans and bills bought

Trust Fees

Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other interest expenses

Gain on disposal of noncurrent assets

0

240

2,208

47,207

―

―

2,472

108

995

131

74

687

2,248

33

307

92

―

―

Income before income taxes

61,441

19,542

179,566

Income taxes-current

6,988

6,988

64,218

Income taxes-deferred(3,121)(992)(9,122)

Net income

57,574

13,546

124,470

729

670

6,162

¥56,844¥12,875$118,307

Gain on bargain purchase
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss
Transfer to reserve for system cancellation losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent

Consolidated Statements of Comprehensive Income
Years ended March 31,2020（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars)

2019

2020

2020

Net Income¥57,574¥13,546$124,470

Other Comprehensive Income(20,221)(31,124)(285,990)

Valuation difference on available-for-sale securities(10,104)(20,580)(189,106)(84,524)Deferred gains or losses on hedges(5,276)(9,198)Remeasurements of defined benefit plans, net of tax(4,839)(1,344)(12,358)

Comprehensive income

37,353(17,578)(161,519)

36,634(18,103)(166,347)

719

525

4,828

(Comprehensive income attributable to)Comprehensive income attributable to equities of parent
Comprehensive income attributable to non-controlling interests

55

DAISHI HOKUETSU REPORT 2020

Consolidated Statements of Shareholders' Equity
Years ended March 31 , 2019

（Millions of Yen）
Shareholders' equity
Capital stock Capital surplus

Balance at March 31,2018\32,776\25,179(2,776)62,488Retained earnings

Treasury stock

Total equity\208,533\(4,240)\262,249(49)

59,661

Changes of items during the period
Increase by share transfers
Dividends from surplus(3,772)(3,772)

Profit attributable to owners of parent

56,84456,844Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stockReversal of revaluation reserve for land

(1,016)(1,016)

(84)

643

559

(3,326)

3,326

―

560

560

Net changes of items other thanshareholders' equity
Total changes of items during period(2,776)62,48850,222

2,904

112,838

Balance at March 31,2019\30,000\87,667\258,756\(1,336)\375,088

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at March 31,2018\51,126

Deferred gains Revaluation

Remeasurements

or losses onreserve forof defined benefit

hedges

land

plans

\6,984\(666)\(380)

Total accumulated Subscription
rights toothercomprehensive

shares

Noncontrolling

Total net assetsinterests

income\57,064\554\16,258\336,126

Changes of items during the period
Increase by share transfers

59,661Dividends from surplus(3,772)

Profit attributable to owners of parent

56,844Purchase of treasury stock(1,016)

Disposal of treasury stock

559

Retirement of treasury stock―Reversal of revaluation reserve for land
Net changes of items other than560
(10,093)(5,276)(560)(4,839)(20,771)83

796(19,891)

Total changes of items during period(10,093)(5,276)(560)(4,839)(20,771)83

796

92,947

Balance at March 31,2019\41,032\(5,657)\6,424\(5,505)\36,292\637\17,054\429,073

shareholders' equity

DAISHI HOKUETSU REPORT 202056

Consolidated Statements of Shareholders' Equity
Years ended March 31 , 2020

（Millions of Yen）
Shareholders' equity
Capital stock Capital surplus

Balance at March 31,2019\30,000\87,667

Retained earnings

Treasury stock

Total equity\258,756\(1,336)\375,088

Changes of items during the period
Dividends from surplus(5,476)(5,476)

Profit attributable to owners of parent

12,875

12,875
(5)

(5)

317

320

Purchase of treasury stock2

Disposal of treasury stock6

Reversal of revaluation reserve for land

6

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at March 31,2020

―

2

7,405

312

7,721

\30,000\87,670\266,161\(1,023)\382,809

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at March 31,2019\41,032

Deferred gains Revaluation

Remeasurements

or losses onreserve forof defined benefit

hedges

land

plans

\(5,657)\6,424\(5,505)

Total accumulated Subscription
rights toothercomprehensive

shares

Noncontrolling

Total net assetsinterests

income\36,292\637\17,054\429,073

Changes of items during the period
Dividends from surplus(5,476)

Profit attributable to owners of parent

12,875Purchase of treasury stock(5)

Disposal of treasury stock320
6

Reversal of revaluation reserve for land
Net changes of items other than

(20,435)(9,198)(6)(1,344)(30,985)129514(30,341)

Total changes of items during period(20,435)(9,198)(6)(1,344)(30,985)129514(22,619)

Balance at March 31,2020\20,596\(14,856)\6,417\(6,850)\5,307\767\17,569\406,453

shareholders' equity

57

DAISHI HOKUETSU REPORT 2020

Years ended March 31 , 2020

(Thousands of U.S. Dollars）
Shareholders' equity
Capital stock Capital surplus

Balance at March 31,2019$275,659$805,548

Retained earnings

Treasury stock

Total equity$2,377,619$(12,276)$3,446,551

Changes of items during the period
Dividends from surplus(50,323)(50,323)

Profit attributable to owners of parent

118,307

118,307

Purchase of treasury stock

27

Disposal of treasury stock

(46)

(46)

2,921

2,948

61

Reversal of revaluation reserve for land61

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at March 31,2020―

27

68,045

2,874

70,947$275,659$805,576$2,445,665$(9,402)$3,517,498

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at March 31,2019$377,030

Deferred gains Revaluation

Remeasurements

or losses onreserve forof defined benefit

hedges

land

plans

$(51,985)$59,029$(50,590)

Total accumulated Subscription
rights toothercomprehensive

shares

Noncontrolling

Total net assetsinterests

income$333,483$5,860$156,708$3,942,602

Changes of items during the period
Dividends from surplus(50,323)

Profit attributable to owners of parent

118,307

Purchase of treasury stock(46)

Disposal of treasury stock

2,948
61

Reversal of revaluation reserve for land
Net changes of items other than(187,772)(84,524)(61)(12,358)(284,717)

1,193

4,730

(278,793)

Total changes of items during period(187,772)(84,524)(61)(12,358)(284,717)

1,193

4,730

(207,845)

Balance at March 31,2020$189,258$(136,510)$58,967$(62,949)$48,766$7,053$161,438$3,734,756

shareholders' equity

DAISHI HOKUETSU REPORT 202058

Consolidated Statement of Cash Flows
Years ended March 31 , 2020

（Millions of Yen）

(Millions of Yen)

(Thousands of U.S. Dollars)

2019

2020

2020

Income before income taxes\61,441\19,542$179,566

Depreciation and amortization

4,270

5,393

49,561

Impairment loss

2,248

33

307

(47,207)――

Increase (decrease) in allowance for loan losses

2,353

2,566

23,580

Increase (decrease) in provision for contingent loss

Net cash provided by (used in) operating activities:

Gain on bargain purchase

(204)

134

1,234

Increase (decrease) in provision for bonuses

115

41

377

Increase (decrease) in provision for directors' bonuses

15

13

123

Increase (decrease) in provision for retirement benefits

94

689

6,333
10,040

Increase (decrease) in provision for retirement liability

335

1,092

Increase (decrease) in provision for directors' retirement benefits

(2)

(2)

(20)

Increase (decrease) in provision for reimbursement of deposits

312

(571)

(5,253)

Increase (decrease) in provision for system cancellation losses
Financing income
Financing expenses
Loss (gain) related to securities

92

(45)

(415)

(58,956)(67,938)(624,259)

6,454

5,939

54,571(2,224)(3,570)(32,806)

Loss (gain) on investments in money held in trust

18

3

31

Foreign exchange losses (gains)

(5)

(1)

(11)
(1,520)Loss (gain) on disposal of noncurrent assets

130

(165)

Net decrease (increase) in trading account securities

(574)

730

6,708

Net decrease (increase) in loans and bills discounted(122,750)(17,427)(160,136)

49,680195,707

1,798,290

Net increase (decrease) in negotiable certificates of deposit

Net increase (decrease) in deposit(16,867)(27,221)(250,132)

Net increase (decrease) in borrowed money (excluding subordinated borrowings)

76,723(34,647)(318,362)

Net decrease (increase) in deposit (excluding deposit paid to Bank of Japan)

1,551

320

2,948

(5,875)

3,111

28,594

Net decrease (increase) in call loans

7,890(40,652)(373,536)

Net increase (decrease) in payables under securities lending transactions

Net increase (decrease) in call money(11,989)(77,397)(711,179)

Net decrease (increase) in foreign exchanges-assets(5,470)(810)(7,445)

285

(465)

(4,279)

―

126

1,157

Revenue for finance

59,88372,369664,981

Payments for finance(6,069)(6,285)(57,750)

Other, net(5,278)

315

2,898

sub-total(9,577)30,929284,196

Net increase (decrease) in foreign exchanges-liabilities
Net increase (decrease) in borrowed money from trust accountIncome taxes paid
Net cash provided by (used in) operating activities(7,454)(8,045)(73,924)\(17,032)\22,883$210,271

Net cash provided by (used in) investment activities:
Purchase of securities(631,225)(991,579)(9,111,274)

Proceeds from sales of securities

525,926

789,399

7,253,508

Proceeds from redemption of securities

258,549

323,840

2,975,650―(2,000)(18,377)

1,984

1,996

18,343(1,484)(4,596)(42,233)

Purchase of increase in money trust
Proceeds from decrease in money trust
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

96

74

683

(3,138)(6,063)(55,719)\150,708\111,069$1,020,582(3,772)(5,476)(50,323)

(10)

(10)

(97)

(1,016)

(5)

(46)

248

143

1,322

\(4,549)\(5,348)(49,145)5

1

11

Net increase (decrease) in cash and cash equivalents

129,133

128,606

1,181,720

Cash and cash equivalents at beginning of the year

773,856

1,105,851

10,161,273

Increase in cash and cash equivalents due to share transfer

202,862――\1,105,851\1,234,458$11,342,994

Purchase of intangible assets
Net cash provided by (used in) investment activities:
Net cash provided by (used in) financing activities:
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury stock
Proceeds from sales of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

Cash and cash equivalents at the end of the year

59

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)
Notes (From April 1, 2019 to March 31, 2020)(Basic items that form the foundation for preparationof consolidated financial results)
1. Matters regarding the scope of consolidation(1) Consolidated subsidiaries: 14 companies
Company names:
The Daishi Bank, Ltd., The Hokuetsu Bank, Ltd., The Daishi
Hokuetsu Career Bridge Co.,Ltd., The Daishi Hokuetsu Securities
Co.,Ltd., The Daishi Lease Co., Ltd., The Daishi Computer Service
Co., Ltd., The Daishi Guaranty Co., Ltd., The Daishi JCB Card Co.,
Ltd., The Daishi DC Card Co., Ltd., The Daishi Management
Consulting Co., Ltd., Hokuetsu Leasing Co., Ltd., The Hokuetsu
Credit Guarantee Co., Ltd., The Hokuetsu Card Co., Ltd., The
Hokugin Economic Research Institute.
(Note) On October 1, 2019, the trade name of Daishi Securities
Co., Ltd. was changed to Daishi Hokuetsu Securities Co., Ltd.
(Change of scope of consolidation) Daishi Hokuetsu Career
Bridge Co., Ltd. was established on May 24, 2019, and istherefore included in the scope of consolidation starting thisconsolidated fiscal year.
(2) Non-consolidated subsidiaries: 3 companies
Daishi Food and Agriculture Assist Fund Investment Limited
Partnership, Daishi Start-up Support Fund Investment Limited
Partnership, Hokuetsu Sixth Industry Support Fund Investment
Limited Partnership.
Non-consolidated companies have been excluded from the scopeof consolidation since their assets, current account balance, net
profit or loss for the current term (amount corresponding toequity), retained earnings (amount corresponding to equity), andother accumulated comprehensive income (amount corresponding toequity), etc., have little relevance and will not prevent rational
judgment to be made regarding the financial status andmanagement performance of the corporate group.

2. Matters related to the application of equity method(1) Non-consolidated subsidiaries subject to application of equity
method:None(2) Affiliated companies subject to application of equity method:None(3) Non-consolidated subsidiaries not subject to application of equity
method: 3 companies
Daishi Food and Agriculture Assist Fund Investment Limited
Partnership, Daishi Start-up Support Fund Investment Limited
Partnership, Hokuetsu Sixth Industry Support Fund Investment
Limited Partnership.
Non-consolidated subsidiaries not subject to application of equity
method have been excluded from the scope of application ofequity method since their net profit or loss for the current term(amount corresponding to equity), retained earnings (amountcorresponding to equity), and other accumulated comprehensive
income (amount corresponding to equity), etc., do not haveimportant impact on the consolidated financial statement.
(4) Affiliated companies not subject to application of equity method:None.

3. Matters related to the fiscal year, etc., of
consolidated subsidiaries

The closing date for consolidated subsidiaries is as follows:
Last day of March: 14 companies

4. Matters related to accounting policies(1) Valuation criterion and valuation method for trading accountsecurities:
Valuation of trading account securities is made using the market
value method (cost of securities sold is calculated mainly by themoving average method).
(2) Valuation criterion and valuation method for valuable securities(i) The amortized cost method (straight-line method) using themoving average method is used for securities held forownership until maturity. For other trading accountsecurities, the market value method based on the market
price on the consolidated closing date (cost of sale to be
calculated using the moving average method) is used, as arule. However, the prime cost principle using the moving
average method is used for those for which market value isextremely difficult to ascertain.

(ii)

The valuation difference for other trading account securities
is processed by the all net asset direct entry method.
The market value method is used for valuation of securities
managed as estates in an individually operated monetarytrust held as trust assets with security operations as its main
purpose.

(3) Valuation criterion and valuation method for derivativetransaction
Valuation of derivative transactions is conducted using themarket value method.
(4) Depreciation method for fixed assets(i) Tangible fixed assets (excluding leased assets)
The straight-line method is mainly used for tangible fixed
assets.
Major service life is as follows:
Buildings: 10 to 50 years
Others:2 to 20 years(ii) Intangible fixed assets (excluding leased assets)
The straight-line method is used for intangible fixed assets.
Software used by the Company is depreciated based on theusage period (5 to 9 years) determined by the Company andits consolidated subsidiaries.
(iii) Leased assets“Tangible fixed assets” and “Intangible fixed assets”
included in leased assets related to finance leases exempt
from passage of title are depreciated by the straight-line
method with the lease period set to the statutory service life.
As for residual value, the guaranteed residual value shall be
used in cases in which residual value clause is included in
the lease agreement and zero for all other leases.
(5) Criteria for recording allowances for loan losses
Allowances for loan losses of consolidated subsidiaries in banking
business are recorded as per the depreciation and allowance
criteria set in advance, as follows:
Claims related to debtors who are legally insolvent, such as thosefacing bankruptcy or special liquidation (“Bankrupt debtors”) or
debtors under equivalent situations (“Effectively bankrupt
debtors”) are recorded as follows: The recorded amount is theremaining balance after deduction from the book value after
direct reduction as stated in the proviso, from the possible
marketable collateral amount and recoverable amount fromguarantees. For claims against debtors not currently insolvent
but with high risk of future insolvency (“Potentially bankrupt
debtors”), an amount judged to be necessary after
comprehensively considering the solvency of the debtor from theamount of balance, after deduction of the possible marketable
collateral amount and recoverable amount from guarantees fromthe claim amount, is recorded.
Claims other than the above were mainly recorded based on
predictions of anticipated losses over the next one year or
anticipated losses over the next three years. Amounts ofanticipated losses were calculated by determining the loss rate
based on average values of bad debt ratio over a set period oftime in the past, according to actual bad debt over one or three
years, then adding the necessary corrections for future
predictions and other factors.
Sales related divisions and HQ related divisions have conductedasset audits on all claims based on asset self-assessment criteria
and the assessment results have been audited by the asset
auditing division independent of the division being audited.
Provided however, that for collateral and claims with guarantees
against Bankrupt debtors and Effectively bankrupt debtors, thebalance after deduction of the validated amount of collateral andthe amount expected to be recoverable from the guarantee arededucted directly from the amount of the claim as the estimateduncollectable amount, and stands at \11,045 million.
An amount acknowledged to be necessary, in consideration of thepast loan loss rate for general claims and estimated uncollectableamount in consideration of individual recovery possibilities for
specific claims, such as those with default possibilities, arerecorded as allowances for loan losses of other consolidated
subsidiaries.

(Additional information)

The COVID-19 pandemic is a phenomenon with broadrepercussions on economics and corporate business activities.
We expect these repercussions to last for a certain amount of

DAISHI HOKUETSU REPORT 2020

60

The Status of Financial Results (Consolidated)time into the future. Although there will be some impact from thetemporary worsening of credit circumstances resulting from thecontraction in economic activities, it is also feasible to assume
that economic measures to counter this impact will also havesome effect against the worsening of credit. Based on thisassumption, we will not be making any changes to our method of
estimating allowances for loan losses at the end of thisconsolidated fiscal year.
However, there are many uncertainties about the future of thispandemic and the timing of when it will subside. It is possiblethat our consolidated financial statements next fiscal year andonward could also be impacted by additional losses.
(6) Criteria for recording provision for bonuses
In preparation for expected bonus payment to employees, theamount of the expected bonus payment pertaining to therelevant consolidated fiscal year has been recorded as a provision
for bonuses.
(7) Criteria for recording provision for directorsʼs bonuses
In preparation for expected bonus payments to directors, theamount of the expected bonus payment pertaining to therelevant consolidated fiscal year has been recorded as provision
for directorʼs bonuses.
(8) Criteria for recording provision for directorsʼs retirement benefits
In preparation for payment of retirement benefits to directors ofconsolidated subsidiaries, the amount of expected retirement
benefits for directors acknowledged to have occurred before theclosing of the current fiscal year has been recorded as provisions
for directorʼs retirement benefits.
(9) Criteria for recording provision for reimbursement of deposits
In preparation for reimbursement of deposits from depositors fordeposits in which recording as a liability has been suspended, loss
occurring from future reimbursement claims have been
estimated, and the amount deemed necessary has beenrecorded as a provision for reimbursement of deposits.
(10)Criteria for recording provision for systems cancellation loss
Provisions for systems cancellation loss are recorded for the
expected loss to be borne by Daishi Bank and Hokuetsu Bank,
related to cancellation before maturity of the systems currently inuse, accompanying the transition to the system to be adopted by
the bank after the merger.
(11)Criteria for recording provision for contingent loss
Provisions for contingent loss are recorded by estimating the loss
and recording the amount judged to be necessary, for possible
loss occurring in the future for contingent events other thanevents provided under other provisions.
(12)Criteria for recording reserves under the special laws
Reserves under special laws are reserves for financial producttransaction liabilities for consolidated subsidiaries conducting
securities business. The amount calculated under the provisionsof Article 46-5 of the Financial Instruments and Exchange Act is
set aside to compensate for loss in incidents occurring related tosecurities future transactions, etc.
(13)Accounting method related to retirement benefits
In the calculation of retirement benefit liabilities, the benefit
formula standard is adopted as the method of attributing the
expected amount of retirement benefits within the current
consolidated fiscal year. Furthermore, the methods of processing
profit and loss for prior service costs and actuarial gain or loss are
as follows:
Prior service cost: Profit and loss processing using thestraight-line method for a certain numberof years (10 years) within the average
employee residual term of service at thetime of occurrence.
Actuarial gain or loss: Profit and loss processing of theamount pro-rated by the straight-line
method for a certain number of years (10to 12 years) within the average employee
residual term of service at the time ofoccurrence, from the following fiscal year.
It must be noted that some consolidated subsidiaries have adopted asimplified method in the calculation of retirement benefit, in which

61

DAISHI HOKUETSU REPORT 2020

amount to be paid for voluntary retirement at the end of the current
term is taken as the retirement benefit liability in the calculation ofretirement benefit liability and retirement benefit cost.
(14) Criteria for conversion of foreign currency denominated assets
and liabilities into Japanese yen
Foreign currency denominated assets and liabilities areconverted into Japanese yen using the rate of exchange on the
consolidated closing date.
(15)Criteria for recording of profits and expenses related to financelease transactions
Criteria for recording profits and expenses related to financelease transactions are conducted by recording sales and cost of
sales, when lease fees are received.
(16)Important risk hedging methods(a) Interest risk hedge
As a method of hedge accounting of interest risk occurringfrom financial assets and liabilities of consolidated
subsidiaries in the banking industry, “Individual hedge” that
directly establish correspondence between the target of thehedge with the hedging method is partially adopted on
assets and liabilities to conduct accounting processing bydeferred hedges. This allows the target of the hedging
method and the target of the hedge to be integrally
managed. The effectiveness of the hedge is evaluated byverification of whether the interest risk subject to hedging
has been diminished by the hedging method. In addition,
exceptional processing for interest swaps are made, andjudgment regarding the requirements for exception
processing is used in lieu of the judgment of hedge
effectiveness.
(b) Exchange fluctuation risk hedging
Deferred hedge, as provided in “Handling in accounting andaudit of foreign currency denominated transactions, etc., in
the processing of accounts in the banking industry” (Special
Audit Committee Report No. 25 by The Japanese Instituteof Certified Public Accountants (JICPA) dated July 29, 2002.
Hereinafter “Industry-wise Audit Committee Report No.
25”) is adopted. The effectiveness of the hedge is evaluatedwith currency swap transactions and exchange swap
transactions, etc., conducted with the aim of diminishingexchange fluctuation risks of foreign currency denominateddebts and credits and the effectiveness of the hedge isevaluated by confirming the existence of a foreign currency
position equivalent amount that matches the foreign
currency denominated debts and credits, which are thetargets of the hedge.
(17) Scope of funds in consolidated cashflow statements
The scope of funds in consolidated cashflow statements are cash
and deposit with the Bank of Japan listed in “Cash and deposits”
in the consolidated balance sheet.
(18) Account processing of consumption tax, etc.
The excluding tax method is mainly adopted for accountprocessing of consumption tax and local consumption tax(“Consumption tax, etc.”) by the Company and consolidated
subsidiaries. However, non-deductible consumption tax related
to tangible fixed assets is recorded as expenses in the
consolidated accounting for the current fiscal year.

(Yet to be applied accounting standards, etc.)

・Accounting Standard for Fair Value Measurement (ASBJ Statement
No. 30 July 4, 2019)
・Implementation Guidance on Accounting Standard for Fair Value
Measurement (ASBJ Guidance No. 31 July 4, 2019)
・Accounting Standard for Financial Instruments (ASBJ Statement No.
10 July 4, 2019)・ Implementation Guidance on Disclosures about Fair Value of
Financial Instruments (ASBJ Guidance No. 19 March 31, 2020)(1) Overview
The Accounting Standard for Fair Value Measurement and the
Implementation Guidance on Accounting Standard for Fair Value
Measurement (collectively “Accounting Standard for Fair Value
Measurement, etc.”) were developed in order to improvecomparability with the stipulations of international accounting
standards, and guidance on methods for measuring fair value

The Status of Financial Results (Consolidated)
was defined. The Accounting Standard for Fair Value
Measurement, etc. applies to the fair value of the following items.
・Financial instruments specified in Accounting Standard for Financial
Instruments
The Implementation Guidance on Disclosures about Fair Value of
Financial Instruments was revised and items of note were added,
such as breakdowns of each level of fair value for financial
instruments.
(2) Scheduled date of application
Scheduled to apply starting at the beginning of the fiscal year
ending March 2022.
(3) Impact of the application of the accounting standard, etc.
At the time of creating these consolidated financial statements
we are assessing the financial amount of this impact.
・Accounting Standard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections (ASBJ Statement No. 24 March 31,
2020)(1) Overview
The purpose is to present an overview of the principles andprocedures for the accounting process chosen for cases in which
the stipulations of related accounting standards are unclear.
(2) Scheduled date of application
Scheduled to apply starting at the end of the fiscal year ending
March 2021.
・Accounting Standard for Disclosure of Accounting Estimates (ASBJ
Statement No. 31 March 31, 2020)(1) Overview
The purpose is to disclose information that helps those who use
our financial statements to understand details about the items
among the accounting estimates recorded in our financial
statements this fiscal year which involve risk that will have asignificant impact on our financial statements the following fiscal
year.
(2) Scheduled date of application
Scheduled to apply starting at the end of the fiscal year ending
March 2021.

(Additional information)(Transaction to grant shares of the Company to employees, etc.
through trust)(1) Summary of transaction
Daishi Bank Ltd., a subsidiary of the Company has been
conducting transaction to grant shares of the Company via a trust
through an employee stock ownership association from
November 13, 2015, as a part of its service and benefit programfor its employees. Accompanying the establishment of theholding company through a joint transfer of stock on October 1,
2018, its operating body has been transferred to the Company,
as well as the transfer of E-ship trust assets to the Company.
The scheme is an incentive plan targeted at all employees
participating in the “Daishi Bank Employee Stock Ownership
Association” (“Stock ownership association”). Under this scheme,
the Company has set up a “Special Trust for Daishi Bank
Employee Stock Ownership Association” (“Employee stock trust”)
and the Employee stock trust will acquire the shares of theCompany in numbers expected to be acquired by the Stockownership association during the period of five (5) years after its
establishment in advance. Thereafter, the shares of the Company
will be sold continuously from the Employee stock trust to the
Stock ownership association, and in the event that an amountequivalent to profit from sales of stock has accrued within the
Employee stock trust as of the end of the trust, such amountequivalent to profit from sales of stock shall be distributed toindividuals qualifying as beneficiaries. As the Company will be
providing guarantee for debt of the Employee stock trust topurchase the Company stock, in the event there is an accrued
debt balance equivalent to loss from sales of stock occurring froma drop in the Companyʼs stock price, the Company shall settle theremaining debt based on the guarantee contract.
Please note that this trust terminated on October 29, 2019.
(2) Shares of the company held by the trust
We recorded held shares of the company remaining in the trust
as treasury shares in the net assets section of the statements
according to their book value in the trust (excluding the amountof incidental expenses). However, since we sold all the treasury
shares held by the trust during this consolidated fiscal year, there
are no shares in the trust at the end of the fiscal year.

(3) Book value of payables recorded by application of gross pricemethodThere was no book value of payables recorded by application ofgross price method at the end of this consolidated fiscal year.

(Consolidated Balance Sheet related)

1. Total amount of shares or contribution in non-consolidated
subsidiaries and affiliated companies:
Contribution:\471 million
2. The amount of bankrupt debtor claims and overdue claims inloans are as follows:
Bankrupt debtor claims \2,445 million
Overdue claims\68,887 million“Bankrupt debtor claims” refers to loans which the events
indicated in a. through e. in Article 96, paragraph 1, item 3 orevents provided in item 4 of the Order for the Enforcement of the
Corporation Tax Act (Cabinet Order No. 97 of 1965) haveoccurred, for loans in which unreceived interest payment has notbeen recorded, being judged that collection of capital, interest
payment, or its settlement cannot be expected for continued
delay in the repayment of capital or payment of interest for areasonable period or for other causes (excluding portions forwhich bad debts have been written off) (“Uncollected interest
non-recorded loan”).
Furthermore, “Overdue claims” refers to uncollected interest
non-recorded loans, other than loans in which the payment ofinterest has been given a grace period for the purpose of
assisting the Bankrupt debtor claim or management
reorganization or support.
3. The amount of loans overdue for three (3) months or longer is asfollows:
Loans overdue for three (3) months or longer \684 million“Loans overdue for three (3) months or longer” refers to loans
where payment of interest or repayment of capital has been
delayed for three (3) months or longer, from the day following
the contract due dates, in which Bankruptcy debtor claims or
overdue claims do not apply.
4. Of the loans, those with relieved loan conditions are as follows:
Loans with relieved loan conditions: \3,868 million“Loans with relieved loan conditions” refers to loans for which a
reduction in interest, a grace period for interest payment, a grace
period for repayment of capital, debt forgiveness, or otheragreements favorable to the debtor have been made for the
purpose of assisting the debtor with management reorganizationor support, that do not fall under Bankrupt debtor claims,
overdue claims or loans overdue for three (3) months or longer.
5. The aggregate total of Bankrupt debtor claims, overdue claims,
loans overdue for three (3) months or longer, and loans withrelieved loan conditions are as follows:
Total amount:\75,886 million
Note that the amount of loans indicated in 2. through 5. above
are the amount prior to deduction of allowance for loan loss.
6. Discounting of bills is processed as financial transaction, based on“Handling in accounting and audit regarding the application offinancial instruments accounting standards in the banking
industry” (Special Audit Committee Report No. 24 by JICPA dated
February 13, 2002). The Bank retains the right to freely disposeof bank acceptance bills, commercial bills, documentary bills, andforeign bills bought, etc., and thus received in the form of sales or(re)mortgaging and their face value is as follows: \19,042 million
7. Assets provided as security are as follows:
Assets provided as security
Securities\762,274 million
Loans\137,383 million
Other assets\31 million
Total\899,689 million
Liabilities corresponding to security assets
Deposits\ 68,232 million
Payable under repurchase agreements\ 72,437 million
Payables under securities lending transactions \326,131 million
Borrowed money\390,359 million
In addition to the above, the following has been tendered as a
substitute for security for foreign currency settlement,

DAISHI HOKUETSU REPORT 2020

62

The Status of Financial Results (Consolidated)short-term financial transactions, or futures market transaction
deposits, etc.
Trading account securities\20 million
Securities\1,169 million
Furthermore, financial instruments security deposits, central
clearing organization security deposits, and guarantees areincluded in Other assets and their amount are as follows.
Financial instruments security deposits \33,324 million
Central clearing organization security deposits\50,000 million
Guarantees\1,411 million
8. Overdraft agreements and Commitment line agreements forloans are agreements to provide loans up to a prescribed limit,
when application for a loan has been made by customers, in theevent that there is no breach of the terms as provided for in theagreement. Unexecuted loan balances related to these
agreements are as follows:
Unexecuted loan balance\1,729,863 million
Of which the original term of loan is within 1 year
\1,650,474 million
or can be cancelled unconditionally at any time
Since many of these agreements terminate without the loan
being executed, the unexecuted loan balance itself does not
impact the future cashflow of the consolidated subsidiaries
engaged in the banking business or to some of the consolidated
subsidiaries. Many of these agreements contain a clause that theconsolidated subsidiaries engaged in the banking business or tosome of the consolidated subsidiaries may refuse the loan ordecrease the limit amount in the event that applications for loans
have been made, in the event that there have been changes infinancial situation, securing of loans, and other reasonablereasons. In addition, guarantees, such as real estate, valuable
securities, etc., are secured at the time of agreement as
necessary, and the state of the customers are checked regularly(semi-annually) even after the agreement in accordance with thein-house regulations, and review of the agreement and measures
to secure credit, etc., are conducted.
9. Based on the Act on Revaluation of Land (Act No. 34 dated March
31, 1998), revaluation of business-use land owned by Daishi
Bank was conducted. For the valuation difference, the amountequivalent to tax related to the subject valuation difference has
been recorded in Liabilities, as “Deferred tax liability related torevaluation” and the amount after deduction of this amount isrecorded in Net assets under “Land revaluation difference”.
Date of revaluation
March 31, 1998
Method of revaluation as provided in Article 3 paragraph 3 ofsaid Act.
Calculated based on the method provided and publishedby the Director General of National Tax Administration
Agency to calculate the value of land on which the taxable
value for the land tax, as provided in Article 16 of theLand-holding Tax Act (Act No. 69 of 1991) andestablished in the Order for Enforcement of Act on
Revaluation of Land (Order No. 119 dated March 31,
1998) Article 2 item 4, with reasonable adjustments (rateof value correction by depth, etc.) made.
The difference between the total amount of market
value of the business-use land revaluated as provided forin Article 10 of said Act as of the end of the term and thetotal amount of book value after revaluation of saidbusiness-use land:\13,252 million
10. Aggregate amount of depreciation of tangible fixed assets
Aggregate amount of depreciation\82,909 million
11. Amount of compressed entry of tangible fixed assets
Amount of compressed entry\8,110 million(Amount of compressed entry in current consolidated
fiscal year)(\63 million)
12. Amount of guarantee obligation for privately-placed bonds(under Article 2 paragraph 3 of Financial Instrument andExchange Act) in bonds included in “Securities”.
\138,550 million
13. Trust principal with principal compensation agreement
Money in trust\126 million(Consolidated Statements of Income Related)

1. The following is included in Other ordinary income.

63

DAISHI HOKUETSU REPORT 2020

Gain on sales of stocks and other securities\15,408 million

2. The following are included in General and administrative
expenses.
Salaries and allowances\31,895 million
Retirement benefit costs\1,747 million
3. The following are included in Other expenses.
Written-off of loans\2,009 million
Loss on sales of stocks and other securities\6,580 million
Loss on devaluation of stocks and other securities\2,151 million
4. Impairment loss have been recorded for the following asset
groups.
This information is omitted because it lacks materiality.

(Consolidated Statements of Comprehensive Income
Related)

1.

Recycling and amountcomprehensive income

of

tax

effects

related

to

Other(Unit: \ million)
Valuation difference on available-for-sale securities
Incurred cost for this term
(24,057)
Recycling(5,415)
Before tax effect adjustment(29,473)
Tax effect amount
8,892
Valuation difference on available-for-sale securities(20,580)
Deferred gains or losses on hedges
Incurred cost for this term
(17,565)
Recycling
4,348
Before tax effect adjustment(13,216)
Tax effect amount
4,018
Deferred gains or losses on hedges(9,198)Remeasurements of defined benefit plans(net of tax)
Incurred cost for this term
(2,636)
Recycling703
Before tax effect adjustment(1,933)Tax effect amount
588
Remeasurements of defined benefit plans(net of tax) (1,344)
Total Other comprehensive income(31,124)(Consolidated Statements of Shareholders Equity
related)1. Matters related to the type and total number of issued
shares, and type and number of Treasury stocks(Unit: 1,000 shares)
Number ofshares at

Number ofincreased

Number of
decreased

thebeginning ofsharesduring thesharesduring thethe current
consolidated

current
consolidated

current
consolidated

fiscal term

fiscal term

fiscal term

Ordinaryshares45,942

̶̶

45,942

Total

45,942

̶̶

45,942

Ordinaryshares

356

1

60

297

Total

356

1

60

297

Number ofshares at
the end of
the current
consolidated

Remarks

fiscal term

Number ofissuedsharesTreasurystocks(Note)
1, 2(Note) 1. Ordinary shares of Treasury stocks at the end of the current
consolidated term includes 47 thousand Daishi Bank shares owned by the
Employee stock trust.
2. The breakdown of increase in the number of ordinary shares ofTreasury stocks is as follows.
Increase by purchase request of fractional unit shares
1 thousand shares
Breakdown of decrease in the number of ordinary shares of Treasury stocks is asfollows.
Transfer by exercise of stock option rights

10 thousand shares

Decrease by sales of Company sharesby Employee stock trust

47 thousand shares

Decrease by purchase request of fractional unit shares

2 thousand shares

The Status of Financial Results (Consolidated)
2. Matters related to right to subscribe to new shares and right tosubscribe to new treasury stocks

Breakdown ofClassifica
tionright tosubscribe to
newsharesType

Number of shares to be target of the right toofsubscribe to new shares (shares)

sharesBalance as ofCurrent

to be

Beginnintargetg ofof theyear

currentright

consolidtosubscribe to

ated

Incre

Decre

fiscal

ase

ase

year

new

the

consolidated fiscal
End ofend ofcurrenttheRema

consolid

currentrks

atedfiscalfiscalyear

year(\ milli(Financial instruments related)on)sharesAs
Company

Stock

-

767

-

767

optionTotal

3. Matters related to dividends(1) Amount of dividends paid out during the current consolidated
fiscal year
Total
(Resolution)

Type

of

sharesamount ofDividend

dividends

per(\ million)

share (\)

Reference

Effective

date

date

(Note)
Boardof

directors,

OrdinaryMay

shares

10,

2,738

60.00

2,739

60.00

March

31,

June

3,

2019

2019

September

December30, 2019

2, 2019

2019
Board

of

Directors,

Ordinary

Novembershares8, 2019(Note) The total amount of dividends includes dividends for
Employee stock trust (\2 million from the Board of Directors
Meeting on May 10, 2019. \0 million from the Board of Directors
Meeting on November 8, 2019).
(2) Dividends for which the reference date falls within the current
consolidated fiscal year with the effective date occurring after thelast day of the current consolidated fiscal year.
Total(Resolution)

Type ofsharesamount ofdividends(\ million)

Dividend
Sourceper

Reference

Effectiveof fund

share

date

date

March 31,

June 1,

2020

2020

(\)

(Note)
Board ofDirectors,

Ordinary

May 15,

shares2,738

Retainedearnings

60.00

2020

(Consolidated cashflow statement related)

1. Relationship between the end of term cash and cash equivalents
and the amount indicated in the account titles in the consolidatedbalance sheet
Cash and deposit account\1,236,293 million
Deposits (excluding Bank of Japan deposit) (\1,834 million)
Cash and cash equivalents\1,234,458 million(Note: Figures indicated in parenthesis are negative values)(Lease transaction related)<Lender side>
Unearned lease fees concerning irrevocable operating leasetransactions(Unit: \ million)
One (1) year or less200
Exceeding one (1) year
355
Total
555

Operating lease transactions<Borrower side>
Unearned lease fees concerning irrevocable operating leasetransactions(Unit: \ million)
One (1) year or less80
Exceeding one (1) year
177
Total
257

Accounting titles with little relevance have been omitted from theamounts recorded in the consolidated balance sheet.
1. Matters concerning the status of financial instruments(1)Policy regarding approach towards financial instruments
The Company group is engaged, with focus on banking business
together with financial services covering lease operations,securities operations, credit guarantee operations, credit card
operations, and others. Funds raised by deposits and negotiablecertificate of deposits are mainly managed through loans andvaluable securities.
As the Company has financial assets and liabilities that areaccompanied by interest rate fluctuations, risks on assets andliabilities for the entire group is comprehensively grasped andcontrolled to avoid disadvantageous impact from interest rate
fluctuations. A comprehensive Asset and Liability Management(ALM) is implemented to improve profits as well as stability.
Derivative transactions are conducted as a part of the activities.
(2)Contents of financial instruments and their risks
Financial assets held by the Company group are mainly loans
made to domestic companies and individuals, and are exposed tocredit risk in which recovery of capital and interest on loans could
be made difficult by bankruptcy of the customers or deteriorationof financial status.
Valuable securities are mainly stocks, bonds, investment trusts,
and investment in capital of partnerships. In addition to securities
held for ownership until maturity, purely financial, and forbusiness promotion purposes, trading account securities arebonds and are held for trading. These are exposed to market
risks from fluctuation of market factors, in which the asset value
held by the Company group may be reduced, incurring loss
though credit risks of the issuing entity, domestic and overseasinterest rates, the price of valuable securities, etc., and foreignexchange rates.
Of the financial liabilities of the Company group, deposits, etc.,
and marketable fund raising are exposed to liquidity risk. In
addition to the possibility of outflow of deposits or not being able
to raise necessary funds by the deterioration of the Company
groupʼs credibility, there is also a possibility of incurring loss by
being forced to conclude transactions under unfavorable
conditions.
Derivative transactions conducted by the Company group
includes interest rate swaps, forward exchange contracts,
currency options, etc., to respond to needs to hedge risks related
to interest rates and foreign currency of the customers.
Furthermore, as a part of ALM, interest rate swap transactions,currency swap transactions, etc., are being conducted forinterest rate risk control in banking operations, as well as foradjustment of fund surplus or deficit in banking operations andfor stabilizing fund liquidity.
In addition, in the subsidiary banks and some of the consolidated
subsidiaries, credit futures transaction, etc., aimed at pursuing
trading profits are conducted within the extent of earning powerand corporate strength. Risks generated from these derivativetransactions include credit risks in which the counterpart of thetransaction has defaulted, and market risks in which loss can begenerated by fluctuation of interest rates and currency exchange.
“Hedge accounting” is adopted for derivative transactions aimed
a hedging risks. Evaluation of the effectiveness of hedging is
made by checking that the amount of derivative transaction risk,
as a hedge method, is within the range of allowable risk amount,as provided in the operating criteria concerning hedgetransaction management, and quarterly verification of whether
the risk subject to the hedge has been diminished is conducted.

(3) Risk management structure related to financial instruments(i)Credit risk management
The Company group operates and manages credit risk in an
appropriate matter based on various rules concerning credit
risk management.

DAISHI HOKUETSU REPORT 2020

64

The Status of Financial Results (Consolidated)
In terms of structure, the Risk Management Department is
responsible for controlling credit risks, and maintains
various rules concerning credit risk management, as well as
for the planning and operation of analysis, evaluation, andimprovement activities.
In both Daishi Bank and Hokuetsu Bank, credit divisions,completely detached from sales promoting divisions,conduct strict screening and manages problematic loans
appropriately. It also aims for sound management of assets
through management improvement support activities tocustomers, etc., the approach being promoted fully acrossboth banks. Credit rating and self -assessment of loans, etc.,
is strictly enforced through a two-stage assessment system,
one by the sales office and the other by the head officedivision. In addition, appropriateness and validity of credit
rating and self-assessment is verified in the audit conductedby the Audit division.
Regarding the credit portfolio, credit concentration
management for specific areas, industries, companies,
groups, etc., are conducted in an appropriate manner.
Furthermore, credit risk quantification (Note) is being
conducted and credit risk limits in line with total equity arebeing set.
(Note) Credit risk quantification is to digitize and estimate
the amount of credit risk involved in the credit portfolio,using statistical methods.
(ii)Market risk management
The Company group has established an operation policy for
ALM to adjust market risks to an appropriate magnitude andto secure stable income, and determines the risk limits andloss limits in valuable securities operation in line with thepolicy.
Furthermore,
importantmatters
concerningrisk
management are reviewed in the ALM & Risk Management
Committee, and is prepared to promptly report any
important situation that may occur in valuable securities
operations to the management.
As a rule, the Company group conducts quantitative analysis
concerning market risks for all financial instruments, mainly
using Value at Risk (VaR), and is calculated and managed by
Daishi Bank and Hokuetsu Bank respectively. Quantitative
analysis is not conduced on some of the financial
instruments that have little impact for its amount, etc., andsome of the financial instruments of some group companies.
Daishi Bank mainly adopts VaR by historical method(holding period: 120 days, confidence interval: 99%,
observation period: 1,250 days) (note that thevariance-covariance method is adopted on some of theinvestment trusts). The amount of market risk as of the endof the current consolidated fiscal year (excluding market
risks of financial instruments whose market value isextremely difficult to assess, such as non-listed stock) is\34,840 million.
Hokuetsu bank adopts the VaR by the variance/covariancemethod (holding period: 6 months, confidence interval:
99%, observation period: 5 years). The amount of market
risk as of the end of the current consolidated fiscal year
(excluding market risks of financial instruments whosemarket value is extremely difficult to assess, such as
non-listed stock) is \31,531 million.
A back test which compares the computed VaR and thetheoretical profit and loss (profit and loss assumed to havegenerated when the portfolio is fixed as of the timing of risk
amount measuring) is conducted to verify the validity of themeasurement model.
However, VaR only indicates the amount of risk under a fixedcertainty statistically computed from past market
fluctuations, and may not be able to capture risks when themarket environment should change inconceivably. This
being the case, it is supplemented by separate stress tests,
etc.
(iii)Liquidity risk management
In the Company group, “Liquidity risk management rules”
have been established in each subsidiary bank to grasp andanalyze the status of financing by the administration division
responsible for financing to raise funds from the market as
necessary.
In addition, response measures and reporting andcommunicating structure has been established in order to65

DAISHI HOKUETSU REPORT 2020

conduct prompt response under various situation, in theunlikely event to match the urgency of fund needs.
(4) Supplementary explanation regarding matters concerning themarket value of financial instruments, etc.
In addition to the prices based on market price, the market valueof financial instruments includes reasonably calculated prices inthe event that there are no market prices. In this calculation,certain presumptions are adopted and said price may differ if
calculated based on different presumptions.
2. Matters concerning the market value of financial instruments, etc.
The amount recorded in the consolidated balance sheet, theirmarket value and the differences are as follow. Market value fornon-listed shares that is extremely difficult to grasp has not been
included in the table to follow (refer to (Note 2))(Unit: \ million)
Amount recorded inconsolidated balance

DifferenceMarket value

(*1)

sheet
(1) Cash and due from banks

1,236,293

1,236,293―(2) Securities

1

1

―

59,93460,658724

2,257,248

2,257,248―

5,061,391

5,102,582

41,190Total Assets

8,614,868

8,656,783

41,915(1) Deposits

7,373,174

7,373,306(132)

252,208

252,209(0)

326,131

326,131―

Trading account securities
Held for ownership
until maturity
Other securities(3) Loans and bills
discounted
Allowances for loan
losses (*2)(2) Negotiable certificatesof deposit(3) Payables under securities
lending transactions(4) Borrowed money
Total Liabilities

5,083,319(21,927)

399,232

399,235(3)8,350,746

8,350,882(136)

Derivative transactions (*3)
Hedge accounting not applied

2,174

2,174

―

Hedge accounting applied(21,194)(21,217)(23)

Total derivative transactions(19,019)(19,043)(23)(*1) Appraisal profit or loss is indicated in the Difference column.
(*2) General and individual allowances for loan losses corresponding
to loans and bills discounted have been deducted.
(*3)Derivative transactions recorded in other assets and liabilities,
and transactions in which special processing of interest rate
swap is adopted are indicated together as a batch.
Net debts and credits generated from derivative transactions areindicated in net amount and items in which its total will be net
debt are indicated in (parenthesis).
Provisions for contingent loss corresponding to derivatives havebeen directly reduced in the consolidated balance sheet amounts
as they have little relevance.

The Status of Financial Results (Consolidated)(Note 1) Calculation method for the market value of financial instruments
Assets(1) Cash and due from banks
As the market price of due from banks without maturity is approximately the same as their book value, the book value is taken to be themarket value. For due from banks with maturity, as their agreed period is short (within one (1) year), and its market value is approximately
the same as their book value, the book value is taken to be the market value.
(2) Securities
Price at the exchange for stocks, reference bond trading statistics published by the Japan Securities Dealers Association or the price, etc.,
indicated by the correspondent financial institution is used for bonds. Price at the exchange, published reference price or price indicated by
the correspondent financial institution is used for investment trusts. Privately-placed bonds guaranteed by the issuing bank with floatinginterest rate are short term and will reflect the market interest rate and are approximately the same as their book value, unless the credit
status of the issuing body has differed significantly after its execution, and therefore said book value is taken to be the market value. Market
value of privately-placed bonds with fixed interest rate is calculated by adding guarantee fees to the amount discounted by the interest rate
added with a credit spread on appropriate indices, such as swap interest rate, on the total sum of capital and interest, for each classification
based on type, internal rating, and period.
Notes regarding securities by holding purposes are indicated in [(Valuable securities related)].
(3) Loans and bills discounted
Loans and bills discounted with floating interest rates are short term and reflects the market interest rates and are approximately the sameas their book value (before deduction of general allowance for loan losses) unless the credit status of the issuing body has differedsignificantly after its execution. Therefore said book value is taken to be the market value. Those with fixed interest rates are calculated byadding guarantee fees to the amount discounted by the interest rate added with a credit spread on appropriate indices, such as swap interest
rate, on the total sum of capital and interest, for each classification based on type, internal rating, and period. The market value for thosewith short agreed period (within one (1) year) is approximately the same as their book value (before deduction of general allowance for loan
losses) and the book value is taken to be the market value.
Since the estimated loan loss is calculated on claims, etc., for Bankrupt debtors, Effectively bankrupt debtors, and Potentially bankrupt
debtors based on the present value of estimated future cashflow or the expected recovery value from mortgages and guarantees, its market
value is approximately close to the amount of recorded amount of claims in the consolidated balance sheet after deduction of the recorded
amount of allowance for loan losses, this amount is taken as the market value.
For loans and bills discounted with no due date for repayment set, for special characteristics, such as restricting said loan within the extent
of security assets, its market value, from the estimated repayment period and interest rate conditions, etc., is assumed to be approximately
the book value (before deduction of general allowance for loan losses), and this is taken as the market value.
Liabilities(1) Deposits and (2) Negotiable certificates of deposit
For call deposits, the payment amount (book value) when payment request is made on the consolidated closing date is deemed to be themarket value. Furthermore, the market value of time and savings deposits and negotiable certificates of deposit is segmented by a fixed
period and their present value is calculated by discounting the future cash flow. The discount rate used is the interest rate used when
accepting new deposits. Since the market value and book value is approximately the same for those with short term deposit period (withinone (1) year), said book value is taken as the market value.
(3) Payables under securities lending transactions
Since the market value of those with short agreed period short (within one (1) year, its market value is approximately the book value, andthis is taken as the market value.
(4) Borrowed money
Of borrowed money, those with floating interest rates are short term, reflecting market interest rates. Furthermore, since the credit statusof the Company and its consolidated subsidiaries have not differed much after their execution, the market value is considered to beapproximate to the book value, and the book value is taken as the market value. For those with fixed interest rates, the present value iscalculated by segmenting the total amount of capital and interest of the borrowed money into a fixed period, and discounting it with aninterest rate expected to be applied in a similar borrowing.
Since the market value of those with short agreed period (within one (1) year) is approximately the book value, this is taken as the market
value.
Derivative transactions
Derivative transactions are listed in “(Derivative transactions)”.
(Note 2) The Amount of financial instruments recorded in the consolidated balance sheet of which the market value has been acknowledged to
be extremely difficult to grasp is as follows. These are not included in “Assets (2) Other securities.”(Unit: \ million)
Segment
March 31, 2020(i) Non-listed stock (*1) (*2)4,473(ii) Investment in capital of partnerships, etc. (*3)
4,642
Total
9,115
(*1)There are no market values for non-listed stocks and it is extremely difficult to grasp their market values and they have not been
made subject to market value disclosure.
(*2)In the current consolidated fiscal year, no impairment (\0 million) has been made for non-listed stocks.
(*3)Of investment in capital of partnerships, etc., those for which the market value is extremely difficult to grasp, such as cases in which
the partnership estate is in non-listed stocks, have not been made subject to market value disclosure. Parts of “Other assets” areincluded in investment in capital of partnership, etc.

DAISHI HOKUETSU REPORT 2020

66

The Status of Financial Results (Consolidated)(Note 3) Expected amount of redemption of monetary claims and securities with maturity after consolidated closing dateWithin 1 year

Exceeding 1
year but within
3 years―
445,553

Exceeding 3
years butwithin 5 years―
298,841

Exceeding 5
years butwithin 7 years―
219,974

Exceeding 7
years butwithin 10 years―
576,086(Unit: \ million)
Exceeding 10
years

Deposits
1,166,878―
Securities
273,000
293,142
Bonds to be held to32,353
26,110
150
―
1,300
―
maturity
Government bonds
32,00026,000――――
Corporate bonds
353
110
150
―
1,300
―
Other securities with
240,647
419,442
298,691
219,974
574,786
293,142maturity
Government bonds
97,473
134,907
76,114
24,684
17,146204,215
Local government
15,34335,61147,330101,354309,633
13,267bonds
Corporate bonds
46,188
118,579
102,142
18,527
17,37914,755Loans and bills discounted
659,883
869,848804,118
503,322475,617
1,046,288(*)
Total
2,099,762
1,315,401
1,102,960
723,297
1,051,703
1,339,431(*)
Loans and bills discounted do not include \71,333 million in cases in which the scheduled amount of redemption cannot be foreseen nor\653,311 million without an agreed due date, against Bankrupt debtors, Substantial Bankrupt debtors, and Effective Bankrupt debtors,
etc.
(Note 4) The amount of scheduled repayment of borrowed money and other interest-bearing debts after the consolidated closing date
(Unit: \ million)
Exceeding 1
Exceeding 3
Exceeding 5
Exceeding 7
Exceeding 10
Within 1 year
year but within
years but
years but
years butyears
3 years
within 5 years
within 7 years
within 10 years
Deposits (*)
6,835,768
479,147
52,776
1,916
3,564
―
Negotiable certificates of
251,808400――――
depositPayables under securities
326,131―――――
lending transaction
Borrowed money
127,113
190,807
81,233
58
20
―
Total
7,540,821
670,355
134,009
1,975
3,584
―
(*) Demand deposits in Deposits are included in “Within 1 year.”(Securities related)

1.The trust beneficiary rights in “Trading account securities” and “Monetary claims bought” are also included in addition to “Securities” in the
consolidated balance sheet.
2. “Subsidiary company stocks and affiliated company stocks” are listed as notes in the financial statements.

1. Trading securities
Valuation difference included in profit and loss of the consolidated fiscal year (\19 million)
2. Bonds to be held to maturity
TypeMarket value exceeds amountrecorded in consolidated balance
sheetMarket value does not exceed
amount recorded in consolidatedbalance sheet
Total

67

DAISHI HOKUETSU REPORT 2020

Government bonds
Corporate bonds
Sub total
Government bonds
Corporate bonds
Sub total

Amount recorded inconsolidated balance
sheet (\ million)
58,0201,330
59,350―583
583
59,934Market value(\ million)
58,7391,341
60,080―578
578
60,658Difference(\ million)
718
11
729
―
(5)
(5)
724

The Status of Financial Results (Consolidated)

3. Other securities
Type

Amount recorded in consolidatedbalance sheet exceeds cost of
acquisition

Amount recorded in consolidatedbalance sheet does not exceed costof acquisition

Total

Stocks
Bonds
Government bonds
Local government
bonds
Corporate bonds
Other
Foreign bonds
Sub total
Stocks
Bonds
Government bonds
Local government
bonds
Corporate bonds
Other
Foreign bonds
Sub total

Amount recorded inconsolidated balance
sheet (\ million)
73,583985,279
471,827

Acquisition cost(\ million)

Difference(\ million)

39,029970,438
461,155

34,554
14,84010,672351,723

348,889

2,833

161,727
467,004
373,160
1,525,867
41,041
417,856
86,831

160,393
436,422
347,096
1,445,891
53,361
420,355
88,077

1,333
30,581
26,063
79,975(12,319)(2,498)(1,245)

173,681

174,142(461)

157,344272,579
13,920731,477
2,257,345

158,136
305,523
14,348779,2392,225,131(791)(32,943)(428)(47,762)
32,213

4. Bonds to be held till maturity sold during the current consolidated fiscal year
No applicable items
5. Other valuable securities sold during the current consolidated fiscal year
Type
Stocks
Bonds
Government bonds
Local government bonds
Corporate bonds
Other
Foreign bonds
Total

Cost of sale (\ million)
34,885
230,815
155,51558,750
16,549321,274
177,553
586,975

Fiscal 2019
Amount of sale (\ million)
9,631
3,011
2,288
542
180
13,4696,044
26,112

Sales profit and loss (\ million)
1,837
497
487
―
10
9,095
582
11,431

6. Valuable securities with changes to the purpose of ownership
No applicable items
7. Valuable securities written-down
For valuable securities other than trading account securities (excluding those for which market value is extremely difficult to grasp) incases in which the market value has fallen significantly from the acquisition price and the market price is not expected to return to theacquisition price, said market price is recorded in the consolidated balance sheet and the valuation difference is processed as loss for thecurrent consolidated fiscal year (“Write-down”).
The amount of Write down in the current consolidated fiscal year in \3,168 million (of which, \2,150 million is in stock, \754 million is inbonds and 263 million is in other).
The criterion of judging the market value to have “fallen significantly” is provided in the Self-assessment criteria. For bonds, Write-down
is conducted in the event that market value has fallen by 30% or more from its acquisition price or in consideration of the financial
conditions, etc., of the issuing company. For stocks and investment trusts, Write-down for the full amount is made in the case of stocks forwhich the market price as of the end of the term has fallen by 50% or more from the acquisition price, and for stocks of which the market
price has fallen by 30% or more but not exceeding 50%, Write-down is judged by the possibility of recovery of the market price, taking
into account trends in market price for a fixed period prior to the reference date and the financial conditions, etc., of the issuing company.

(Monetary trust related)
No applicable items(Valuation difference on available-for-sale securities)

The breakdown of other securities valuation difference recorded in the consolidated balance sheet is as follows:
Amount (\ million)
Valuation difference
32,213
Other securities
32,213
Other monetary trust―
Deferred tax liabilities to be deducted
9,813
Valuation difference on available-for-sale securities (before adjustment for equity)
22,399Non-controlling interest equivalent to be deducted
1,802
Valuation difference on available-for-sale securities
20,596DAISHI HOKUETSU REPORT 2020

68

The Status of Financial Results (Consolidated)(Derivative transaction related)1.

Derivative transactions where hedge accounting has not been applied
The contract amount on the consolidated closing date or the amount equivalent to capital in contract, their market value and valuation
profit and loss, and the method of calculation of their market price, for each transaction subject type for derivative transactions where
hedge accounting has not been applied is as follows. It must be noted that the amount of contract itself does not indicate the market risk
related to the derivative transaction.
(1)
Interest rate related transactions
Contract
Of which,
Valuation profit
Classifi
Market valueTypeamount, etc.
exceeding 1 year
and losscation(\ million)(\ million)(\ million)(\ million)
Interest swap
Fixed receipt, floating payment
106,570
101,930
2,483
2,483
Floating receipt, fixed payment
106,570
101,930
(806)
(806)
Store
Interest options
Short commitment
2,000
―
―
―
Long commitment
2,001
―
―
(33)
Total
―
―
1,677
1,643
(Note)
1. Market valuation is made for the abovementioned transactions and the valuation profit or loss is recorded in the consolidate
balance sheet.
2. Calculation of market priceCalculation is done using discounted present value and option price computing models, etc.
(2)Currency related transactions

Classifi
cationType

Contract
amount, etc.
(\ million)
10,513

Of which,exceeding 1 year(\ million)
9,994

Contract
amount, etc.
(\ million)

Of which,exceeding 1 year(\ million)

Market value(\ million)

Valuation profit
and loss(\ million)(4)

Currency swap
(4)
Forward exchange contract
Short commitment
85,961
157
232
232
Long commitment
56,943―267
267
Currency option
Short commitment
303,341
217,480(2,395)
41,174
Long commitment
303,337
217,480
2,395(36,431)
Total
―
―
495
5,238
1. Market valuation is made for the abovementioned transactions and the valuation profit or loss is recorded in the consolidate
balance sheet.
2. Calculation of market priceCalculation is done using discounted present value, etc.

Store

(Note)(3)

Stock related transactions
No applicable items(4)

Bond related transactions
No applicable items(5)

Goods related transaction
No applicable items(6)

Credit and derivative transactions
No applicable items

(7)

Other

Classifi
cationType

Market value(\ million)

Valuation profit
and loss(\ million)

Earthquake derivative
Short commitment
15,510―(216)―
Long commitment
15,910
―
223
―
Total
―
―
7
―
(Note) The acquisition price is used as the market price, as determination of a fair valuation amount is extremely difficult for the abovetransactions.
Store

69

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)2.

Derivative transactions where hedge accounting has been applied
The contract amount as of the consolidated closing date or the amount equivalent to capital, market value provided under the contract,
and the method to calculate said market value, for each transaction subject type and hedge accounting method, for derivativetransactions where hedge accounting is applied are as follows: It must be noted that the amount of contract itself does not indicate themarket risk related to the derivative transaction.
(1) Interest rate related transactions
Contract
Of which,
Method of hedge
Market value
Type
Major hedge subjects
amount, etc.
exceeding 1
accounting(\ million)(\ million)
year (\ million)
Interest swap
Other securities,
Generally applied
Floating receipt,
loans and bills
111,140
108,090(20,584)
processing method
fixed payment
discounted
Interest swap
3,000
3,000
(12)
Fixed receipt,
Exceptional interest
Loans and bills
floating payment
swap processing
discounted
Floating receipt,
8,027
219
(10)
fixed payment
Total
―
―
―
(20,607)(Note) 1. A deferred hedge was adopted as the method of hedge accounting for interest risks occurring from financial assets andliabilities.
2. Calculation of market priceCalculation is done using discounted present value, etc.
(2) Currency-related transactions
Method of hedge
accounting

Type

Major hedge subjects

Contract
amount, etc.
(\ million)

Of which,exceeding 1 year(\ million)

Market value(\ million)

Foreign currency
denominated53,847
39,163(609)
securities, and loans
and bills discounted
Total
―
―
―
(609)
(Note) 1. Conducted mainly by deferred hedge based on “Handling in accounting and audit of foreign currency denominated transactions,etc., in the processing of accounts in the banking industry” (Special Audit Committee Report No. 25 by The Japanese Institute ofCertified Public Accountants, dated July 29, 2002).
2.Calculation of market priceCalculation is done using discounted present value, etc.
Generally applied
processing
method(3)(4)

Currency swap

Stock related transactions
No applicable items
Bond related transactions
No applicable items(Retirement benefit-related)1.

Summary of the adopted retirement benefits scheme
The consolidated subsidiaries engaged in banking business have established a defined contribution pension plan as a defined-benefit plan,in addition to the corporate pension fund scheme and retirement allowance scheme. Furthermore, extra retirement allowance may be
paid in case of retirement of employees.
A retirement benefit trust has been established on the defined contribution pension plan and retirement allowance scheme of consolidated
subsidiaries engaged in the banking business.
In other consolidated subsidiaries, in addition to retirement allowance schemes being established, some of the consolidated subsidiaries
have also established defined contribution pension plans.
Furthermore, liabilities related to retirement benefits and retirement benefit expenses of retirement allowance schemes held by some of
the consolidated subsidiaries are calculated using the simplified method.

2.

Defined contribution scheme(1)
Adjustment table of retirement benefit liabilities, as of the beginning and end of the term (excluding schemes adopting the simplified method)
Beginning of term retirement benefit liability balance\76,691 million
Service costs\1,796 million
Interest costs\164 million
Actuarial gain or loss amount generated\527 million
Amount of retirement benefits paid(\3,722 million)
Other\81 million
End of term retirement benefit liability balance\75,539 million(2)
Adjustment table of pension assets, as of the beginning and end of the term (excluding schemes adopting the simplified method)
Beginning of term pension assets balance\72,925 million
Anticipated operational earnings\1,508 million
Actuarial gain or loss amount generated(\2,108 million)
Contribution from employers\788 million
Amount of retirement benefits paid(\3,203 million)
Other\81 million
End of term pension assets balance\69,991 million

DAISHI HOKUETSU REPORT 2020

70

The Status of Financial Results (Consolidated)
(3)

(4)

Adjustment table for debts related to retirement benefit liabilities as of the beginning and end of the term for schemes adopting the simplified method
Beginning of term retirement benefits related debts\699 million
Retirement benefit costs\78 million
Amount of retirement benefits paid(\78 million)
End of term retirement benefits related debts\699 million
Adjustment table for end of term balance of retirement benefit liabilities and pension assets, and debts and assets related toretirement benefits recorded in the consolidated balance sheet
Retirement benefit liability of savings-type scheme\75,539 million
Pension assets(\69,991 million)\5,547 million
Retirement benefit liability of non-savings-type scheme\699 million
Net amount of liabilities and assets recorded in
the consolidated balance sheet\6,247 million(Note) Includes schemes where simplified method is adopted.
Liabilities related to retirement benefits
Assets related to retirement benefits
Net amount of liabilities and assets recorded in
the consolidated balance sheet\8,945 million(\2,697 million)
6,247 million(5)

Retirement benefit costs and its itemized breakdown
Service costs
Interest costs
Expected operational earnings
Actuarial gain or loss processing amountPrior service cost processing amount
Retirement benefit costs calculated by the simplified method
Other
Retirement benefit cost related to defined benefit plan

(6)

Retirement benefit adjustment amountThe breakdown of items recorded in the adjustment amount related to retirement benefits (before deduction of tax effects) is as follows:
Prior service cost(\62 million)
Actuarial gain or loss(\1,871 million)
Total(\1,933 million)(7)

Aggregate amount of adjustment related to retirement benefits
The breakdown of items recorded in the aggregate amount of adjustment related to retirement benefits (before deduction of tax
effects) is as follows:
Unrecognized prior service cost(\25 million)
Unrecognized actuarial gain or loss
\9,880 million
Total\9,854 million
Matters related to pension assets(i) Ratio for each major classification in total pension assets is as follows:
Bonds
33%
Stocks
33%
General life insurance account28%
Cash and deposits
0%
Other
3%
Total
100%
(Note)
Total pension assets include 9% from retirement benefit trust established on the corporate pension plan and 22% fromretirement benefit trust established on the retirement allowance respectively, for the current consolidated fiscal year.
(ii)
Method to set long-term expected rate-of-return (“ROR”)
To determine the expected long-term ROR for pension assets, consideration is given on the distribution of current andexpected pension assets, and the current and expected long-term ROR on diverse assets that comprise the pension assets.

(8)

(9)

Matters regarding the basis of actuarial calculation
Major actuarial calculation basis
Discount rateLong-term expected ROR
Corporate pension fundRetirement benefit trust
Expected salary increase rate

\1,796 million\164 million（\1,508 million）\765 million（\62 million）\78 million\126 million\1,361 million

0.2% to 0.3%
2.0%
1.8% to 2.5%
6.1% to 6.5%

3. Defined contribution scheme
Amount of required contribution to defined contribution schemes of consolidated subsidiaries for the current consolidated fiscal year is\385 million.

71

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)(Stock option related)

1. Amount and accounting titles of costs recorded for stock options)Fiscal 2019
General and administrative expenses\169 million
2. Contents, size and fluctuation of stock options(1) Contents of stock options
Daishi Hokuetsu
Financial Group 1st
Stock Option
May 11, 2018, Board of
Resolution dateDirectors, Daishi BankClassification and3 directors of Daishi
numbers of granted
Bank, Ltd.
persons
Number of stock
7,400 ordinary shares
options by type ofof the Company
stock (Note 2)
Grant date (Note 3)
July 27, 2010
Rights finalizing
Rights finalizing
conditions notconditions
determined
Applicable
Applicable appoint
appointment period
period not determined
Rights exercising
October 1, 2018 to July
period27, 2040

Resolution date
Classification andnumbers of granted
persons
Number of stock
options by type of stock(Note 2)Grant date (Note 3)
Rights finalizing
conditions
Applicable appointment
periodRights exercising period

Resolution date
Classification andnumbers of granted
persons
Number of stock
options by type of stock(Note 2)Grant date (Note 3)
Rights finalizing
conditions
Applicable appointment
periodRights exercising period

Daishi Hokuetsu
Financial Group 2nd
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank

Daishi Hokuetsu
Financial Group 3rd
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank

Daishi Hokuetsu
Financial Group 4th
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank

3 directors of Daishi
Bank, Ltd.

4 directors of Daishi
Bank, Ltd.

5 directors of Daishi
Bank, Ltd.

11,400 ordinary sharesof the Company

16,610 ordinary sharesof the Company

13,450 ordinary sharesof the Company

July 28, 2011
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July28, 2041

July 30, 2012
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July30, 2042

July 30, 2013
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July30, 2043

Daishi Hokuetsu
Financial Group 5th
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank

Daishi Hokuetsu
Financial Group 6th
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank

6 directors of Daishi
Bank, Ltd.

6 directors of Daishi
Bank, Ltd.

Daishi Hokuetsu
Financial Group 7th
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank
6 directors and 3
executive officers ofDaishi Bank, Ltd.

Daishi Hokuetsu
Financial Group 8th
Stock Option
May 11, 2018, Board of
Directors, Daishi Bank
6 directors and 5
executive officers ofDaishi Bank, Ltd.

13,540 ordinary sharesof the Company

10,220 ordinary sharesof the Company

21,420 ordinary sharesof the Company

18,050 ordinary sharesof the Company

July 30, 2014
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July30, 2044

July 30, 2015
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July30, 2045

July 29, 2016
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July29, 2046

July 28, 2017
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July28, 2047

Daishi Hokuetsu
Financial Group 10th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

Daishi Hokuetsu
Financial Group 11th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

Daishi Hokuetsu
Financial Group 12th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

Daishi Hokuetsu
Financial Group 13th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

1 director of Hokuetsu
Bank, Ltd.

2 directors of Hokuetsu
Bank, Ltd.

2 directors of Hokuetsu
Bank, Ltd.

6 directors of Hokuetsu
Bank, Ltd.

1,020 ordinary sharesof the Company

1,885 ordinary sharesof the Company

1,565 ordinary sharesof the Company

3,910 ordinary sharesof the Company

July 26, 2012
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July26, 2042

July 26, 2013
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July26, 2043

July 28, 2014
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July28, 2044

July 27, 2015
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July27, 2045

DAISHI HOKUETSU REPORT 2020

72

The Status of Financial Results (Consolidated)

Resolution date
Classification andnumbers of granted
persons
Number of stock
options by type of stock(Note 2)Grant date (Note 3)
Rights finalizing
conditions
Applicable appointment
periodRights exercising period

Resolution date
Classification andnumbers of granted
persons
Number of stock
options by type of stock(Note 2)Grant date (Note 3)
Rights finalizing
conditions
Applicable appointment
periodRights exercising period(Note)

Daishi Hokuetsu
Financial Group 14th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

Daishi Hokuetsu
Financial Group 15th
Stock Option
May 11, 2018, Board of
Directors, Hokuetsu
Bank

6 directors of Hokuetsu
Bank, Ltd.

10 directors of
Hokuetsu Bank, Ltd.

5,250 ordinary sharesof the Company

6,875 ordinary sharesof the Company

July 27, 2016
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July27, 2046

July 26, 2017
Rights finalizing
conditions notdetermined
Applicable appoint
period not determined
October 1, 2018 to July26, 2047

Daishi Hokuetsu Financial Group 16th Stock Option
November 9, 2018, Board of Directors, Daishi
Hokuetsu Financial Group
8 directors of Daishi Hokuetsu Financial Group, Inc.; 8
directors of Dasishi Bank, Ltd.; 8 executive officers ofDaishi Bank Ltd.; 11 directors of Hokuetsu Bank, Ltd.
50,440 ordinary shares of the Company

Daishi Hokuetsu Financial Group 17th Stock Option
June 25, 2019, Board of Directors, Daishi Hokuetsu
Financial Group
8 directors of Daishi Hokuetsu Financial Group, Inc.;
10 directors of Dasishi Bank, Ltd.; 6 executive officersof Daishi Bank Ltd.; 9 directors of Hokuetsu Bank,
Ltd.; 2 executive officers of Hokuetsu Bank, Ltd.
65,900 ordinary shares of the Company

December 7, 2018

July 29, 2019

Rights finalizing conditions not determined

Rights finalizing conditions not determined

Applicable appoint period not determined

Applicable appoint period not determined

December 8, 2018 to December 7, 2048

July 30, 2019 to July 29, 2049

1. From the 1st to the 15th stock options, the right to subscribe to new shares issued by both Daishi Bank and Hokuetsu Bank heldby the rightsholders have been issued with the right to subscribe to new shares of the Company, accompanying the establishmentof the Company as the full parent company of both banks through the joint transfer of shares dated October 1, 2018.
2. The options have been converted to number of shares.
3. The grant dates are the initial grant dates at Daishi Bank and Hokuetsu Bank respectively(2)Size and fluctuation of stock options
Stock options existing in the current consolidated fiscal year (year ending March 2020) have been converted to number of shares andlisted.
(i) Number of stock options
Daishi Hokuetsu
Daishi Hokuetsu
Daishi Hokuetsu
Daishi Hokuetsu
Financial Group 1st
Financial Group 2nd
Financial Group 3rd
Financial Group 4th
Stock Option
Stock Option
Stock Option
Stock Option
Before rights
finalization (shares)
End of previous
consolidated financial
7,400
11,40016,61013,450year
Granted――――
Lapsed――――Rights finalized――――
Unfinalized balance
7,400
11,40016,61013,450After rights finalization(shares)
End of previous
consolidated financial
―
―
―
―
year
Rights finalized――――
Rights exercised――――
Lapsed――――Unexercised balance
―
―
―
―

73

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)

Before rights
finalization (shares)
End of previous
consolidated financial
year
Granted
LapsedRights finalized
Unfinalized balance
After rights finalization(shares)
End of previous
consolidated financial
year
Rights finalized
Rights exercised
LapsedUnexercised balance

Before rights finalization(shares)
End of previous
consolidated financial
year
Granted
LapsedRights finalized
Unfinalized balance
After rights finalization(shares)
End of previous
consolidated financial
year
Rights finalized
Rights exercised
LapsedUnexercised balance

Before rights finalization(shares)
End of previous
consolidated financial
year
Granted
LapsedRights finalized
Unfinalized balance
After rights finalization(shares)
End of previous
consolidated financial
year
Rights finalized
Rights exercised
LapsedUnexercised balance

Daishi Hokuetsu
Financial Group 5th
Stock Option

Daishi Hokuetsu
Financial Group 6th
Stock Option

Daishi Hokuetsu
Financial Group 7th
Stock Option

Daishi Hokuetsu
Financial Group 8th
Stock Option

13,540

10,22021,42018,050―――13,540―――
10,220――1,540
19,880――1,080
16,970

―

―

―

―

―
―
―
―

―
―
―
―

1,540
1,540
―
―

1,080
1,080
―
―

Daishi Hokuetsu
Financial Group 10th
Stock Option

Daishi Hokuetsu
Financial Group 11th
Stock Option

Daishi Hokuetsu
Financial Group 12th
Stock Option

Daishi Hokuetsu
Financial Group 13th
Stock Option

1,020

1,885

1,565

3,910

―
―
―
1,020

―
―
―
1,885

―
―
―
1,565

―
―
1,130
2,780

―

―

―

―

―
―
―
―

―
―
―
―

―
―
―
―

1,130
1,130
―
―

Daishi Hokuetsu
Financial Group 14th
Stock Option

Daishi Hokuetsu
Financial Group 15th
Stock Option

Daishi Hokuetsu
Financial Group 16th
Stock Option

Daishi Hokuetsu
Financial Group 17th
Stock Option

5,250

6,875

50,440

―

―
―
1,520
3,730

―
―
1,360
5,515

―
―
3,620
46,82065,900――65,900

―

―

―

―

1,520
1,520
―
―

1,360
1,360
―
―

3,620
3,620
―
―

―
―
―
―

DAISHI HOKUETSU REPORT 2020

74

The Status of Financial Results (Consolidated)(ii)

Unit price information

Rights exercise price(\)
Average share price attime of exercise (\)
Average share price attime of exercise (\)

Rights exercise price(\)
Average share price attime of exercise (\)
Average share price attime of exercise (\)

Rights exercise price(\)
Average share price attime of exercise (\)
Average share price attime of exercise (\)

Rights exercise price(\)
Average share price attime of exercise (\)
Average share price attime of exercise (\)

Daishi Hokuetsu
Financial Group 1st
Stock Option

Daishi Hokuetsu
Financial Group 2nd
Stock Option

Daishi Hokuetsu
Financial Group 3rd
Stock Option

Daishi Hokuetsu
Financial Group 4th
Stock Option

1

1

1

1

―

―

―

―

2,860

2,360

2,110

3,000

Daishi Hokuetsu
Financial Group 5th
Stock Option

Daishi Hokuetsu
Financial Group 6th
Stock Option

Daishi Hokuetsu
Financial Group 7th
Stock Option

Daishi Hokuetsu
Financial Group 8th
Stock Option

1

1

1

1

―

―

2,756

2,756

3,690

5,110

3,430

4,900

Daishi Hokuetsu
Financial Group 10th
Stock Option

Daishi Hokuetsu
Financial Group 11th
Stock Option

Daishi Hokuetsu
Financial Group 12th
Stock Option

Daishi Hokuetsu
Financial Group 13th
Stock Option

1

1

1

1

―

―

―

2,756

1,330

1,780

1,900

2,230

Daishi Hokuetsu
Financial Group 14th
Stock Option

Daishi Hokuetsu
Financial Group 15th
Stock Option

Daishi Hokuetsu
Financial Group 16th
Stock Option

Daishi Hokuetsu
Financial Group 17th
Stock Option

1

1

1

1

2,756

2,756

2,756

―

1,830

2,394

3,276

2,571

(Note) The fair evaluated unit prices of Daishi Bank and Hokuetsu Bank shares, on the initial grant date, are listed from the 1st through15th stock options.
3.

Fair stock option evaluated unit price estimation method
The fair evaluated unit price estimation method for stock options granted in the current consolidated fiscal year is as follows.
(1) Evaluation technique used: Black-Scholes method(2) Major basic values and estimation method
Daishi Hokuetsu Financial
Group 17th Stock Option
Stock price variability (Note 1)
28.66%
Expected remaining period
2.5 years(Note 2)
Expected dividend (Note 3)\120/share
No-risk interest rate (Note 4)(0.208%)(Note) 1.
2.
3.
4.

4.

75

Calculations were based on the actual stock prices of our financial group, and of Daishi Bank, Ltd. and Hokuetsu Bank, Ltd.
during the 2.5-year expected remaining period (January 27, 2017-July 26, 2019).
Estimations were produced by setting this expected remaining period as the expected tenure of directors and executive
officers of our financial group, Daishi Bank, Ltd. and Hokuetsu Bank, Ltd.
According to expected dividend for the fiscal year ended March 2020.
The yield on Japanese government bonds for the expected remaining period.

Method to estimate the stock option rights finalized numbers
Since it is difficult to rationally estimate future lapses, a method only to reflect recorded lapses has been adopted.

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)(Tax effect accounting related)1.

Breakdown of major causes generating deferred tax assets and deferred tax liabilities
Deferred tax assets
Allowance for loan losses\8,633 million
Retirement benefit related liabilities\7,365 million
Depreciation and amortization\2,035 million
Valuable securities amortization\1,384 million
Deffered gains or losses on hedges\6,380 million
Book value correction for fair market valuation\2,862 million
Other\7,147 million
Subtotal deferred tax assets\35,809 million
Valuation reserve related to future subtraction
temporary difference, etc., total(\5,096 million)
Subtotal valuation reserve(\5,096 million)
Total deferred tax assets\30,713 million
Deferred tax liabilities
Valuation difference on available-for-sale securities(\9,813 million)
Retirement benefit trust establishment benefit(\1,105 million)
Book value correction for fair market valuation(\4,194 million)
Other(\1,598 million)
Total deferred tax liabilities(\16,712 million)
Net amount of deferred tax assets (liabilities)\14,001 million

2.

Breakdown of major items causing material difference between the enacted tax rate of companies submitting consolidated financial
statements and the burden rate of corporate tax, etc., after application of tax effect accounting
The difference between enacted tax rate and corporate tax rate after tax effect accounting was five percent or less of the enacted tax rate
so it is omitted.

(Real estate related, such as lease, etc.)

Some consolidated subsidiary companies own real estate for lease. However, their total amount is minor and has been omitted.

DAISHI HOKUETSU REPORT 2020

76

The Status of Financial Results (Consolidated)(Segment information, etc.)[Segment information]
1. Outline of reporting segments
The Company group consists of the Company, which is the bank holding company, and 14 consolidated subsidiaries, including The Daishi
Bank, Ltd. and The Hokuetsu Bank, Ltd. It provides a wide range of financial instruments and services to the customers in the region,
focused on banking operations, as well as for leasing, securities, credit guarantees, credit card operations, etc., and financial information bycompanies in the group are reported regularly to the Companyʼs board of directors.
Therefore, even though the Company group consists of segments formed by the Company and each consolidated subsidiary, “Banking”
which account for approximately 80% of all segments, together with “Leasing” and “Securities” have been established as reporting segments,
in view of their importance.
“Banking” is focused mainly on deposit operations and loan operations, with investments in securities, domestic currency operations, foreign
currency operations, and as the contact point for the sales of public bonds, investment trusts, insurance policies, etc., and is positioned as
the core of the group.
Furthermore, “Leasing” conducts integrated leasing operations, while securities operations are conducted in “Securities”.
2. The method of calculation for ordinary income, profit or loss, assets, liabilities, etc., of each reporting segment
The accounting method adopted for each reporting segments is identical to the preparation policy for consolidated financial statements.
Internal ordinary income between the segments is based on the actual amount of transaction.
3. Information regarding the amount of ordinary income, profit or loss, assets, liabilities, and other items of each reporting segment
Fiscal 2018 (April 1, 2018 through March 31, 2019)
Reporting segment
Banking
Ordinary income
Ordinary income from outside
customers
Internal
ordinary
incomebetween segments
Total
Segment profits
Segment assets
Segment liabilities
Other items
Depreciation costs
Interest income
Interest expenses
Increase in tangible andintangible fixed asset amount

Leasing

Securities
Total

Banking

Other

Total

(Unit: \ million)
Amountrecorded in
Adjustments
consolidated financial
statement

95,117

19,676

4,200

118,993

3,483

122,477（4,469）118,007

2,568

334

6

2,909

6,845

9,754

（9,754）―

97,68520,0104,206

121,903

10,328132,232（14,224）

118,007

19,849

1,034

1,497

22,381

5,262

27,644（10,938）

16,706

8,913,283

64,374

19,5498,997,207

358,727

9,355,934（405,710）

8,950,224

8,510,505

46,835

7,686

8,565,027

21,9428,586,969（65,818）

8,521,150

3,913
60,822

262
162

30
239

4,206
61,224

57
3,756

4,264
64,9805（6,024）

4,270
58,956

6,412
4,108

151
342

3
14

6,567
4,465

10
114

6,577
4,579

（123）
43

6,454
4,622

(Note) 1. Ordinary income is indicated instead of amount of sales used generally for corporations. “Adjustment difference” refers to thedifference between ordinary income and the recorded amount of ordinary income in the consolidated financial statement .
2.“Other” refers to are business segments not included in the reporting segments, and includes credit guarantee operations, credit card
operations, and others.
3. The amount of adjustments is as follows:(1)The adjustment amount of (\4,469 million) in ordinary income from outside customers includes ordinary income adjustment of(\3,799 million), accompanying the adoption of the purchase method.
(2) The adjustment of segment profit of (\10,938 million) is from profit adjustment accompanying purchase method of (\4,666
million) and elimination of transactions between segments, etc.
(3) The adjustment of segment assets of (\405,710 million) is from profit adjustment accompanying purchase method andelimination of transactions between segments, etc.
(4)The adjustment of segment liabilities of (\65,818 million) is from adjustment accompanying purchase method and elimination oftransactions between segments, etc.
(5) The adjustment of \5 million in depreciation costs is the amount of adjustment, etc. for deprecation related to lease items
acquired by contracts with the Leasing segment, in segments other than the Leasing segment.
(6) The adjustment of (\6,024 million) in interest income is for elimination of transactions between segments, etc.
(7) The adjustment of (\123 million) in interest expenses is for elimination of transactions between segments, etc.
(8) The adjustment of \43 million in increase in tangible and intangible fixed asset amount is mainly the acquisition cost of lease
items acquired by contracts with the Leasing segment, in segments other than the Leasing segment.
4. Segment profit has been adjusted with ordinary income of consolidated profit and loss statement.
5. The values for Hokuetsu Bank, Ltd. are a compilation of consolidated results of operations from October 1, 2018 through March 31, 2019.

77

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)
Fiscal 2019 (April 1, 2019 through March 31, 2020)(Unit: \ million)
Amountrecorded inconsolidate
Adjustments
d financial
statement

Reporting segment
Banking
Ordinary income
Ordinary income from outside
customers
Internal
ordinary
incomebetween segments
Total
Segment profits
Segment assets
Segment liabilities
Other items
Depreciation costs
Interest income
Interest expenses
Increase in tangible andintangible fixed asset amount

Leasing

Securities
Total

Banking

Other

Total

128,407

21,368

4,161

153,937

4,269

158,206(3,508)

154,698

3,914

367

10

4,292

11,381

15,674(15,674)―

132,322

21,736

4,171

158,230

15,651

173,881(19,183)

154,698

20,842839

1,169

22,852

8,208

31,060(11,650)

19,4108,924,449

64,083

19,336

9,007,869

360,830

9,368,699(402,261)

8,966,437

8,545,250

46,387

8,176

8,599,814

22,9988,622,813(62,829)8,559,984

5,074

262

25

5,362

84

5,447

(53)

5,393

71,756
5,897

193
162

183
5

72,132
6,065

6,685
18

78,818
6,084(10,880)(145)

67,938
5,939

10,237287

710,532

63

10,59564

10,660(Note) 1. Ordinary income is indicated instead of amount of sales used generally for corporations. “Adjustment difference” refers to thedifference between ordinary income and the recorded amount of ordinary income in the consolidated financial statement .
2.“Other” refers to are business segments not included in the reporting segments, and includes credit guarantee operations, credit card
operations, and others.
3. The amount of adjustments is as follows:(1)The adjustment amount of (\3,508million) in ordinary income from outside customers includes ordinary income adjustment of(\3,285 million), accompanying the adoption of the purchase method.
(2) The adjustment of segment profit of (\11,650 million) is from elimination of transactions between segments, etc.
(3) The adjustment of segment assets of (\402,261 million) is from elimination of transactions between segments, etc.
(4) The adjustment of segment liabilities of (\62,829 million) is from elimination of transactions between segments, etc.
(5) The adjustment of (\53 million) in depreciation costs is the amount of adjustment accompanying purchase method, etc. fordeprecation related to lease items acquired by contracts with the Leasing segment, in segments other than the Leasing segment.
(6) The adjustment of (\10,880 million) in interest income is for elimination of transactions between segments, etc.
(7) The adjustment of (\145 million) in interest expenses is for elimination of transactions between segments, etc.
(8) The adjustment of \64 million in increase in tangible and intangible fixed asset amount is mainly the acquisition cost of lease
items acquired by contracts with the Leasing segment, in segments other than the Leasing segment.
4. Segment profit has been adjusted with ordinary income of consolidated profit and loss statement.

DAISHI HOKUETSU REPORT 2020

78

The Status of Financial Results (Consolidated)[Related information]
Fiscal year 2018 (From April 1, 2018 through March 31, 2019)1.
Information by each service
Loan operations

Securities
investment
operations(Unit: \ million)
Lease operations

Other

Total

Ordinary income from43,022
27,766
19,41627,801
118,007
outside customers(Note) Ordinary income is indicated instead of amount of sales for corporations.
2.
Information for each region(1) Ordinary income
Listing has been omitted since the amount of ordinary income of the Company group, segmented into external customers in Japanaccounts for 90% or more of the ordinary income in the consolidated statements of income.
(2) Tangible fixed assets
Listing has been omitted since the amount of tangible fixed assets of the Company group existing inside Japan accounts for 90% or moreof the tangible fixed assets of the consolidated balance sheet.
3.
Information by each major customer
Listing has been omitted since there are no specific customers whose ordinary income account for 10% or more of the consolidated
statements of income.
Fiscal year 2019 (From April 1, 2019 through March 31, 2020)
1.
Information by each service
Loan operations

Securities
investment
operations(Unit: \ million)
Lease operations

Other

Total

Ordinary income from51,36848,08021,17734,071
154,698
outside customers(Note) Ordinary income is indicated instead of amount of sales for corporations.
2.
Information for each region(1) Ordinary income
Listing has been omitted since the amount of ordinary income of the Company group, segmented into external customers in Japanaccounts for 90% or more of the ordinary income in the consolidated statements of income.
(2) Tangible fixed assets
Listing has been omitted since the amount of tangible fixed assets of the Company group existing inside Japan accounts for 90% or moreof the tangible fixed assets of the consolidated balance sheet.
3.
Information by each major customer
Listing has been omitted since there are no specific customers whose ordinary income account for 10% or more of the consolidated
statements of income.
[Information regarding impairment loss of fixed assets for each segment]
Fiscal year 2018 (From April 1, 2018 through March 31, 2019)

Impairment loss

Banking
2,248

Reporting segment
Leasing
Securities――(Unit: \ million)
Total
2,248

Other

Total

―

2,248

Fiscal year 2019 (From April 1, 2019 through March 31, 2020)
This information is omitted because it lacks materiality.
[Information concerning amortization of good will and unamortized balance by reporting segment]
No applicable items[Information concerning negative goodwill generation profit by each reporting segment]
Fiscal year 2018 (From April 1, 2018 through March 31, 2019)
In the segment for banking, etc., a negative goodwill generation profit has been recorded owning to the merger of Daishi Bank andHokuetsu Bank on October 1, 2018. The amount of negative goodwill profit generated for said matter is \47,207 million.
Fiscal year 2019 (From April 1, 2019 through March 31, 2020)
No applicable items(Related party information)

1. Transactions with related parties(1)Transactions between consolidated companies submitting consolidated financial statements and related parties.
No applicable items(2)Transactions between consolidated subsidiaries submitting consolidated financial statements and related parties.
(a) The parent company and major shareholders (limited only to companies, etc.) of companies submitting consolidated financial
statements
No applicable items(b) Non-consolidated subsidiaries and affiliated companies of companies submitting consolidated financial statements
No applicable items(c) Companies with the same parent company as the company submitting consolidated financial statements and other affiliatedcompanies of companies submitting consolidated financial statements, etc.
No applicable items(d) Directors and major shareholders, etc. (limited only to individuals) of companies submitting consolidated financial statements,
etc.

79

DAISHI HOKUETSU REPORT 2020

The Status of Financial Results (Consolidated)
Ownership
Type

Company
name or

Address

full name
Director of an important
subsidiary of company
submitting consolidated
financial statement

Shiro
Watanabe―

Capital orcontribution

Businessorof votingrightsRelationshipwith related(\ million)

occupation(Ownedratio (%)

party

―

Auditor,The
Hokuetsu
Bank, Ltd.

Details oftransaction

Owned,

Debt

Debt

Direct,0.01

guarantee(note)

guarantee(note)

Transaction
amount(\ million)

55 (note)

Accounting

End ofterm

item

balance(\ million)――

Terms of transaction and policy to determine the terms of transaction, etc.
(Note) The Hokuetsu Bank, Ltd., a consolidated subsidiary of the Company has received debt guarantee from Mr. Shiro Watanabe, the auditorof said bank, for a loan to a third party. Shiro Watanabe resigned from his role as auditor of said bank on September 9, 2019, so thetransaction amount shown is the amount on the day of his resignation.
2. Notes concerning the parent company or important affiliated companies(1) Parent company information
No applicable items(2) Summarized financial information of important affiliated companies
No applicable information(Per share information)

Net assets per share\8,502.89
Net income per share for the current term
\282.17
Net income per share for the current term after adjustment
for potential voting\280.81(Note 1) The basis for calculation of net asset per share is as follows:
Total amount of Net assets\406,453 million
Amount to be deducted from net assets\18,336 million(of which, rights to subscribe to new shares)\767 million(of which, non-controlling shareholder equity)\17,569 million
Net asset amount at end of term concerning ordinary shares\388,116 million
Number of ordinary shares at the end of term used to calculate the amount of net assets per share
45,645 thousand shares(Note 2) The basis for calculation of net income per share for the current term and net profit per share for the current term after adjustment
for potential voting are as follows.
Net income per share for the current term
Net income reverting to parent company shareholders\12,875 million
Amount not reverting to ordinary shareholders\ -. million
Net income reverting to parent company shareholders related to ordinary shares\12,875 million
Average number of ordinary shares during the term
45,630 thousand shares
Net income per share for the current term after adjustment for potential voting
Amount of adjustment of net income for the current term reverting to parent company shareholders\ -. million
Increase in number of ordinary shares
219 thousand shares
Of which, rights to subscribe to new shares
219 thousand shares
Summary of potential voting shares not included for lack of diluting effects, in the calculation of net income per share for thecurrent term adjustment for potential voting.
(Note) Company shares remaining in trust recorded as treasury stock in shareholderʼs equity are included in the treasury stock
deducted from the number of shares at the end of the term in the calculation of the amount of net income per share forthe current term and in the calculation of net income per share for the current term after adjustment of potential voting.
The number of shares of treasury stock deducted at the end of the term in the calculation of the amount of net income pershare for the current term and in the calculation of net income per share for the current term after adjustment of potential
voting12 thousand shares.

(Important subsequent events)
There are no applicable items

DAISHI HOKUETSU REPORT 202080

Non-Consolidated Balance Sheet

Years ended March 31,2019 and 2020
Note:The translations of the Japanese yen amounts into US dollars are using the prevailing exchange rate at March 31, 2020,which was\108.83 to US $1.

■Assets（Millions of Yen）

(Thousands of U.S. Dollars）

2019

2020

2020

Cash and due from banks\915,086\1,117,430$10,267,669

Monetary claims bought

17,414

13,288122,100

Trading account securities

1,971

1,922

17,664

Securities

1,536,394

1,288,308

11,837,806

Loans and bills discounted

3,386,727

3,399,909

31,240,553

Foreign exchanges

11,885

13,771

126,539

Other assets

51,64349,778457,394

Tangible fixed assets

39,07639,857366,240

Intangible fixed assets

12,543

15,219139,850

Prepaid pension cost

1,783

1,867

17,155

Deferred tax assets

―

4,994

45,894

12,373

12,499114,855(10,705)(11,754)(108,006)\5,976,193\5,947,093$54,645,720

Customersʼ liabilities for acceptances and guarantees
Allowance for loan losses
Total Assets■ Liabilities（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars）

2019

2020

2020

\4,684,756\4,836,011$44,436,383

Negotiable certificates of deposit

188,780

171,038

1,571,614

Payables under repurchase agreements

40,73625,241

231,937

Payables under securities lending transactions

290,289

212,840

1,955,710

Borrowed money

424,329

380,264

3,494,118

459

173

1,593

―

126

1,157

Other liabilities

20,522

21,445

197,056

Provision for bonuses

11,396

Deposits

Foreign exchanges
Borrowed money from trust account

1,247

1,240

Provision for directorsʼ bonuses

79

81

746

Provision for retirement benefits

729

590

5,425

Provision for reimbursement of deposits

2,367

1,894

17,406

Provision for system cancellation losses

297

268

2,463

Provision for contingent loss

779

888

8,167

4,693

―

―

Deferred tax liabilities
Deferred tax liabilities for land revaluation

5,239

5,236

48,114

Acceptances and guarantees

12,373

12,499114,855\5,677,681\5,669,841$52,098,148

Total Liabilities■ Net Assets（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars）

2019

2020

2020

Capital stock\32,776\32,776$301,176

Capital surplus

18,635

18,635

171,237

Retained earnings

206,505

206,033

1,893,166

Treasury stock

257,917

257,446

2,365,580

Valuation difference on available-for-sale securities

34,635

13,919127,902(4,878)Deferred gains or losses on hedges

(466)

(530)

Revaluation reserve for land

6,424

6,417

58,967

Total Valuation and translation adjustments

40,59319,806

181,991

Total Net assets
Total Liabilities and Net assets

81（Millions of Yen）

DAISHI HOKUETSU REPORT 2020

298,511277,252

2,547,571\5,976,193\5,947,093$54,645,720

Non-Consolidated Statements of Income
Years ended March 31, 2019 and 2020

（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars)

2019

2020

Ordinary Income\76,616\89,562$822,960

2020

Interest income

47,742

46,142423,985

Interest on loans and discounts

30,022

30,779282,818

Interest and dividends on securities

17,194

14,812

136,109

―

(0)

(1)

Interest on deposits with banks

208

207

1,910

Other interest income

316

342

3,149

―

1

12

Fees and commissions

16,68715,452

141,984

Other ordinary income

4,253

10,959100,706

Other income

7,933

17,007156,272

Ordinary Expenses

60,57074,872687,972

Interest expenses

Interest on call loans

Trust fees

5,241

3,615

33,223

Interest on deposits

746

686

6,306

Interest on negotiable certificates of deposit

27

24

221

Interest on call money

(9)

(7)

(66)

Interest on bills sold

869

656

6,036

1,827

566

5,201

Interest on payables under securities lending transactions
Interest on borrowings and rediscounts

112

74

687

Interest on rate swaps

1,667

1,614

14,833

Other interest expenses

00452,137

Fees and commissions payments

5,507

5,674

Other ordinary expenses

3,264

10,55997,027

General and administrative expenses

42,07742,786393,145

Other expenses

4,479

12,236112,437

Ordinary profit

16,046

14,690134,987388

01Extraordinary income
Gain on disposal of noncurrent assets

0

0

1

387

―

―

2,653

55

506

107

42

388

2,248

12

118

297

―

―

Income before income taxes

13,781

14,635

134,482

Income taxes-current

4,335

4,498

41,335

Income taxes-deferred

(893)

(626)

(5,754)\10,339\10,763$98,900

Gain on reversal of subscription rights to shares
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss
Transfer to reserve for system cancellation losses

Net income

DAISHI HOKUETSU REPORT 202082

Non-Consolidated Balance Sheet

Years ended March 31, 2019 and 2020
Note:The translations of the Japanese yen amounts into US dollars are using the prevailing exchange rate at March 31, 2020,which was\108.83 to US $1.

■Assets

Cash and due from banks（Millions of Yen）

（Millions of Yen）

2019

2020

2020

\192,439\118,411$1,088,039

Call loans

3,773

4,788

44,000

Trading account securities

1,847

1,168

10,732

957,897

1,030,695

9,470,693
15,708,570

Securities
Loans and bills discounted

1,704,795

1,709,563

Foreign exchanges

7,776

6,700

61,571Other assets

38,094

67,349618,852

Tangible fixed assets

24,38925,723

236,363

Intangible fixed assets

1,315

1,643

15,098Prepaid pension cost

5,604

4,781

43,936

Deferred tax assets

2,829

6,855

62,990

Customersʼ liabilities for acceptances and guarantees
Allowance for loan losses
Total Assets■ Liabilities

Deposits
Negotiable certificates of deposit

6,734

6,678

61,369(6,020)(6,899)(63,398)\2,941,479\2,977,460$27,358,819（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars）

2019

2020

2020

\2,510,204\2,556,076$23,486,878

104,340

94,910872,094

Call money

4,994

2,176

20,000

Payables under repurchase agreements

69,53547,196433,668

Payables under securities lending transactions

113,239

113,291

1,040,994―

10,00091,886

Borrowed money
Foreign exchanges
Other liabilities
Provision for bonuses

295

116

1,068

18,08240,816

375,048

752

718

6,599

Provision for directorsʼ bonuses

25

25

229

Provision for reimbursement of deposits

622

523

4,812

Provision for system cancellation losses

160

144

1,326

Provision for contingent loss

351

376

3,459

Deferred tax liabilities for land revaluation

2,463

2,462

22,630Acceptances and guarantees

6,734

6,678

61,369\2,831,802\2,875,513$26,422,066

Total Liabilities■ Net Assets（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars）

2019

2020

2020

Capital stock\24,538\24,538$225,471

Capital surplus

16,964

16,964

155,879

Retained earnings

54,19857,153525,166

Shareholders' equity

95,70098,656

906,518

Valuation difference on available-for-sale securities

15,282

13,732

126,182

Deferred gains or losses on hedges(5,190)(14,325)(131,631)

3,883

3,883

35,683

Revaluation reserve for land
Total Valuation and translation adjustments

13,9753,290

30,235

Total Net assets

109,676

101,946

936,753\2,941,479\2,977,460$27,358,819

Total Liabilities and Net assets

83(Thousands of U.S. Dollars）

DAISHI HOKUETSU REPORT 2020

Non-Consolidated Statements of Income
Years ended March 31, 2019 and 2020

（Millions of Yen）

（Millions of Yen）

(Thousands of U.S. Dollars)

2019

2020

Ordinary Income\40,760\43,033$395,422

2020

Interest income

25,90425,610235,329

Interest on loans and discounts

17,04916,186

148,734

Interest and dividends on securities

85,922

8,786

9,350

Interest on call loans

(2)

6

56

Interest on receivables under resale agreements

(14)

(13)

(125)

Interest on deposits with banks

32

27

255

Other interest income

52

52

486

Consolidated Statements of Income

7,287

8,271

76,005

Other ordinary income

2,512

5,903

54,249Other income

5,055

3,247

29,838

Ordinary Expenses

33,23536,882

338,896

Interest expenses

1,923

2,279

20,944

Interest on deposits

445

316

2,908

Interest on negotiable certificates of deposit

17

13

124

Interest on call money

61

60

554

Interest on bills sold

(350)

(265)

(2,436)

Interest on payables under securities lending transactions

1,232

1,355

12,458Interest on borrowings and rediscounts

0

0

0

Interest on rate swaps

517

798

7,341

Other interest expenses

(0)

(0)

(6)

4,264

4,106

37,728701

3,905

35,882

General and administrative expenses

22,517

23,054

211,841

Other expenses

3,828

3,536

32,499Ordinary profit

7,524

6,151

56,525289

1

9Fees and commissions payments
Other ordinary expenses

Extraordinary income
Gain on disposal of noncurrent assets
Gain on system cancellation losses
Gain on reversal of subscription rights to shares
Extraordinary loss
Loss on disposal of noncurrent assets

―

1

9

204

―

―

84

―

―

4,264

31

292

34

26

242

4,230

5

49

Income before income taxes

3,549

6,120

56,242

Income taxes-current

1,559

920

8,459

Income taxes-deferred(2,020)

612

5,630

Net income\4,009\4,587$42,152

Impairment loss

DAISHI HOKUETSU REPORT 202084

DAISHI HOKUETSU REPORT 2020〈統合報告書〉

THE HOKUETSU BANK, LTD.
Daishi Hokuetsu Financial Group, Inc.
Location of head office :2-14 Ote-dori 2-chome, Nagaoka-shi, Niigata Prefecture
Location of principal head office functions :1071-1 Higashiborimae-dori 7-bancho, Chuo-ku, Niigata-shi, Niigata Prefecture
TEL : 025-224-7111 (representative)
URL : https://www.dhfg.co.jp/
Edited and issued by the Business Planning Division of Daishi Hokuetsu Financial Group
Issued in July 2020

This disclose uses easy-to-read
universal design font.

Daishi Hokuetsu FG and Tsubasa
alliance has set the SDGs
Declaration

The Daishi Bank and The Hokuetsu
Bank has signed the Principles for
Financial Action for the 21st Century.