ANNUAL REPORT 2012
Year ended March 31, 2012

AN NUA L R E P O RT 2 0 1 2
CONTENTS
01 Consolidated Financial Highlights

17 Together with the Local Community

02 Message from the President

18 Contributions to the Local Community(CSR Initiatives)

06 Medium-Term Management Plan
08 Business results for the year ended
March 31, 2012
10 Corporate Governance
11 Compliance
12 Management System Regarding
Customer Protection
13 Risk Management

21 Board of Directors and Corporate
Auditors
22 Consolidated Financial Statements
52 Independent Auditors’ Report
53 Capital Management
54 Organization, Group Network
55 Affiliates and Subsidiaries, Bank Data

PROFILEThe Nanto Bank, Ltd. (the “Bank” or “Nanto Bank”) is based in Nara Prefecture, a region rich in tradition andculture dating back to its development as Japan’s first capital in the early 8th century. Since its establishment in
1934, Nanto Bank has achieved steady growth in partnership with its region and continues to maintain a sound financial structure. As of March 31, 2012, Nanto Bank had deposits of ¥4,343.1 billion, loans of ¥2,785.6 billion, andtotal assets of ¥4,809.5 billion.
Nanto Bank’s domestic network of 134 branches extends
beyond Nara Prefecture to the neighboring prefectures ofOsaka, Kyoto, Hyogo, Mie, Wakayama, and Tokyo. The Bankhas become a trusted institution in communities throughout
its region thanks to its commitment to regionally focusedservices designed to meet the needs of local customers.
Nanto Bank continues to make a positive contribution toregional economic development by providing a comprehensive range of financial services, including overseas services,and maintains representative offices in Hong Kong andShanghai.

OSAKA

KYOTO

HYOGO

TOKYO
MIE

CORPORATE PHILOSOPHY
1. Pursuing sound and efficient management
2. Providing superior comprehensive financial services
3. Contributing to regional prosperity
4. Striving to become a highly reliable, friendly and attractive bank

NARA (NARA PREFECTURE)
WAKAYAMA

Consolidated Financial Highlights
Thousands of
U.S. dollars

Millions of yen

2012

2011

2010

2009

2008

2012

Total income .............................................

¥90,075¥92,751¥95,942¥109,639¥118,188$ 1,095,936

Total expenses ..........................................

78,84378,711

83,145

134,276108,262959,277

Income (loss) before income taxes ..........

11,231

14,03912,796(24,637)

9,926

136,646

Net income (loss) .....................................

3,467

6,584

7,293

(22,324)

5,170

42,182

Total assets ...............................................

4,809,575

4,608,561

4,568,768

4,607,649

4,565,111

58,517,763

Loans and bills discounted .......................

2,785,671

2,709,612

2,730,540

2,854,567

2,679,469

33,893,064

Securities ..................................................

1,755,495

1,668,948

1,560,110

1,425,966

1,540,174

21,358,985

Deposits and negotiable certificatesof deposit ................................................

4,343,154

4,181,096

4,117,975

4,083,246

4,082,565

52,842,851

Total liabilities .........................................

4,597,334

4,401,386

4,361,672

4,445,015

4,366,001

55,935,442

Minority interests .....................................

25,971

25,125

24,621

24,447

24,852315,987

Total net assets .........................................

212,241

207,175

207,095

162,634

199,1092,582,321

Common stock .........................................

29,24929,24929,24929,24929,249355,870

For the year:

At year-end:

Per share data:

Yen

U.S. dollars

Net income (loss) .....................................

¥ 12.57¥ 23.88¥ 26.45¥ (80.87)¥ 18.67$ 0.15

Stockholders’ equity ................................

675.42660.24661.81501.09630.66

8.21

Capital adequacy ratio (%) ......................

11.63

11.74

12.12

10.06

10.78

Note: U.S. dollar amounts are included solely for the convenience of readers and are calculated at the exchange rate of ¥82.19 to US$1.00, the rate prevailing on March 31, 2012.

Net Income

Total Assets

Total Net Assets(Billions of yen)(Billions of yen)(Billions of yen)

4,565.1
7.2

4,607.6

4,568.7

4,608.5

4,809.5
199.1

207.0

207.1

212.2

2010

2011

2012

6.5
162.6

5.1
3.4

-22.3

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

2008

2009

1

Message
Message fromfrom thethe President
President
The purpose of this Annual Report 2012 is to disclose our performance in fiscal 2011 (the year ended March 31, 2012) and theinitiatives conducted during the fiscal year. We would appreciate it if you would read through the report.
Although there are some factors that slow down the Japanese economy, including the high price of crude oil and restricted
electricity supply, the economic climate is gradually improving overall. On the other hand, with regard to the regional economy
centered on Nara Prefecture, although there is a sign of partial recovery, in which employment and consumer spending havebeen on a recovery track, production activities remain sluggish.
Against this background, the Bank plans to further promote relationship-based local banking based on our medium-term
management plan, Best Value NANTO (April 2011 to March 2014), which has been launched since April last year, as well as
develop face-to-face sales activities. For fiscal 2012, we will focus on improving customer satisfaction and enhancing profitability through deployment of high value-added services by developing solution-oriented marketing that enables us to increase
convenience for customers in the local community and maximize various consulting functions.
We look forward to your continued support as all of our officers and employees devote their full efforts to the achievement of
the medium-term management plan.

Aim for Becoming a Bank that Grows Together with the Region
It Serves through Further Promotion of “Relationship-Based
Local Banking”
I. Our Economic and Financial Environment
number of tourists, which decreased severely due to theGreat East Japan Earthquake and typhoon damages, arebeing implemented. In addition, there is a positive trend
throughout the Prefecture to bring new life to the local economy, including the promotion of new plans for the commemorative events following Nara’s 1,300th Anniversary.
With regard to the Bank’s business environment, the profit
margin of loans and deposits, etc., remains lower due to theslumping domestic stock market and monetary easing against
the backdrop of the debt crisis in Europe.
Under these circumstances, all the Bank officers andemployees are united in their commitment to achieve ourlong-term vision “aiming to further increase corporate value- a bank that grows together with the region it serves,” targetAlthough the Japanese economy still faces fierce conditions,
it is now recovering moderately against the background of
the demand for reconstruction, etc.

We consider our medium-term management plan, Best
Value NANTO, which has been launched since April last

In the local economy centered on Nara Prefecture,

year, as the second stage for achieving this long-term vision,

although there is a sign of partial recovery, in which employ-

and will speedily and steadily carry out measures based onment and consumer spending have been on a recovery track,

this plan in this fiscal year.

production activities remain sluggish. On the other hand, inthe southern part of the Prefecture, initiatives for reviving the2

ing our 80th anniversary in June 2014.

II. Initiatives for Achieving our Long-Term Vision
1. Promoting relationship-based local banking and enhancing our marketingbase and structure• Promoting relationship-based local banking

The Act concerning Temporary Measures to FacilitateWith recognition that it is indispensable to revitalize the local

Financing for SMEs (Small and Medium-Sized Enterprises),

economy for growth with customers and enduring develop-

etc., which came into effect in 2009, will expire in this fiscal

ment as a regional financial institution, the Bank has beenyear. However, the Bank considers this fiscal year as a start-

continuously promoting relationship-based local banking.

ing line for a new stage of facilitating finance and continues

We are making efforts to improve our structure by supporting activities at branches utilizing headquarters’ specialty
division along with public/external institutions through precise understanding of our customers’ current needs and iden-

to put in efforts on it to revitalize the local economy.

•	Enhancing marketing base and improving branch
networktification of their potential needs in order to make our initia-

The Bank is working toward establishing new operational

tive of relationship-based local banking more fruitful forbases and strengthening our marketing structure based on ourboth customers and the Bank.

medium-term management plan.

Specifically, we have installed professional BusinessIn the Osaka area, we aim to establish a geographically

Matching Navigator at headquarters as well as provided

broad-based business office network, which focuses on busi-

opportunities for a wide range of business meetings

ness loans, by setting up branches in regions with deep con-through holding of various fairs, including NANTO Nou-

nections based on continuity with Nara Prefecture and exist-

Shou-Kou (agriculture, commerce and industry) Businessing branches.

Fair. As for business succession, which has brought height-

We plan to newly establish two branches, the Eiwa

ened attention from business owners, we aim to establish

Branch and the Wakaeiwata Branch, along the Kintetsu Narafurther trusted relationships with customers by providing

line in Higashiosaka City this year. We have been developing

optimal solutions.

our sales activities in Higashiosaka City, a neighboring city

As for international businesses, the Asia Business Supportof Nara Prefecture, since 1974 when the Ishikiri Branch wasGroup provides advice on overseas advance and foreign

established. With four branches in the city altogether by add-exchange transactions, and our overseas representative offic-

ing these new branches, we will develop more region-based

es in Hong Kong and Shanghai also offer a full range of busi-

marketing activities.

ness assistance. Looking ahead, we will strengthen our sup-In Nara Prefecture, the JR Nara Ekimae Branch and theport system in Southeast Asia, to which our customers’ needs

Takada Branch were moved to temporary offices in January

for expansion are growing.

and March this year respectively due to reconstruction of the

The Bank considers growth industries such as medical

offices. Furthermore, in July, we moved the Yatayama Sub-and nursing care and environment as key fields with expecta-

branch of the Koriyama Branch to a newly constructedtion of market expansion, and has been bolstering the collab-

office, which is now called the Yataminami Sub-branch oforation between the headquarters and branches to carry out

the Koriyama Branch, as part of the gradual improvement ofsales activities taking advantage of our expertise.

our branch network.

• Facilitating finance in regions• Enhancing our products and services

Nanto Bank believes that facilitating finance is an important

The Bank strives to enhance lineup of various products andmission for regional financial institutions, and expert staff

services to increase customer satisfaction.

members at the Corporate Finance Support Office as well as

Recently, we have introduced new services to improvebranches have been striving to support management improve-

convenience for our customers, such as acceptance of foreign

ment by implementing consulting functions and providing

currency deposits through ATMs, sales of investment trust

appropriate follow-ups for management improvement plans,

products on the Internet called “NANTO Investment Trust on

etc.

the Internet,” a tie-up with Lawson ATM and other services.

3

Message
Message fromfrom thethe President
President
In addition, L-Plaza at 11 locations is open also on week-

have expanded the service lineup by introducing new servic-

ends as a teller window concerning housing loans and asset

es, including “L-Plaza Weekend Tax Practice Consultation

management for busy customers who cannot visit us on

Session” held on Sundays since April this year.

weekdays, and has been acquiring favorable feedback. We

2. Enhancement and upgrading of internal control systems
Establishing the “enhancement and upgrading of internal

makes utmost effort to instill a compliance mindset into notcontrol systems” as one of the basic policies of our medium-

only the management personnel but also every one ofterm management plan, the Bank carries out various mea-

employees in order to establish an effective compliancesures with key strategies, “further enhancement of our com-framework.

pliance framework” and “incorporation of more advanced
and enhanced risk management.”
Compliance is fundamental for banks to faithfully carry

In terms of risk management, we will continue to advanceand enhance risk management while appropriately controlling risks and returns.

out our social responsibilities and public missions. The Bank

3. Streamlining headquarters and branch operations
While actively pursuing marketing strategies, such as thethe “Inheritance Center” in order to provide consultation forestablishment of new operational bases and the improvement

customers who make inquiries about inheritance in an accu-

of existing branches, we have been making a great effort torate and timely manner as well as to promote the efficiency

effectively use our corporate resources.

in operations and labor saving at each branch.

In January this year, we successfully streamlined central-

We will continue to shift our staff to the sales sector byized operations at headquarters through the integration of

streamlining headquarters and branch operations in order totwo Business Support Centers responsible for centralized

strengthen our face-to-face sales activities.

processing of operations at branches. In April, we established44. Contributions to the local community (CSR initiatives)
Aiming to become a bank that grows together with the region

medium-term management plan. We enhance our CSR pro-it serves, the Bank continuously works on its CSR (corporate

gram rested on environmental conservation initiatives andsocial responsibility) initiatives, with “promotion of enduringsocial action programs while making good use of our corpo-

community contributions” as one of the basic policies of its

rate resources.

• Environmental conservation initiatives

In addition, our hockey team, which marks its 30th anni-

The Bank obtained ISO14001 environmental management

versary since its creation this year, contributes to the promo-

certification in 2002, and has steadily continued programs totion of sports in Nara Prefecture as well as focuses on being

conserve energy and reduce paper and other waste.

involved with the local community through various activities

Last December, we signed the “Principles for Financial

such as holding hockey schools for local students. Two play-

Action toward a Sustainable Society” proposed by theers on our team have been chosen for “Sakura Japan,”

Ministry of the Environment. Finance will play a significant

Japan’s national team for this year’s London Olympics.

role in creating a sustainable society in the 21st century, thus

We have supported the Yoshino Heart Project since 2009,

the Bank plans to enhance environmental conservation initia-

whose mission is forest conservation by maintaining andtives which link to finance more than ever, following therecovering a sound forest cycle through tree planting andsigning of the principles.

thinning backed by the vitalization of forestry and other

During the summer and winter seasons last year, we

related industries in the Yoshino region of Nara Prefecture.

achieved an electricity usage reduction (18.4% in summer

We have been working on activities by utilizing local net-

and 12.0% in winter), which exceeded our numerical target

works that we have established, including business matchingfor year-on-year reduction rate (15.0% in summer and 10.0%

support related to the production and sale of wooden prod-

in winter) as a result of thorough temperature control, educed

ucts and the promotion of use of Japanese-grown wood.

lighting and other actions at each branch lobby with cooperation from our customers.

We also participate in the Yoshino Cherry Tree
Preservation Group as a special member. The group was

For these efforts, we were honored as an “Excellent

founded to protect the shiroyama-zakura (cherry trees

Business Engaging in Energy Saving” by NARA

famous for their blossoms), which have recently shown visi-

DENRYOKU RIYOU GOURIKA IINKAI.

ble signs of deterioration such as blight, at a World Heritage

This year, we have set a new numerical target for reduction

site, Mount Yoshino. We actively provide cooperation inof electricity usage again for saving electricity during summer.

activities by sending volunteer staff to various events andmake a donation through an environmentally-friendly finan-• Social action programs

cial product, the Yoshino Cherry Tree Time Deposit, to sup-

The Bank, as a member of society, has developed a wide

port conservation and growing of cherry trees in Yoshino.

variety of social action programs since its foundation, includ-

Looking ahead, as a bank that grows together with theing the Small Kindness Society, which conducts cleanups

region it serves, we will continue to be involved in social

and blood donation to contribute to public service activities,

action programs with people in the local community.

the Nanto Scholarship Society, which offers academic scholarships, and the Manyo Charity Walk, which provides oppor-

President Yasuo Ueno

tunities to walk around historical sites featured in Manyoshu(a collection of Japanese poetry) in Nara Prefecture.

5

Medium-Term Management Plan
The Medium-Term Management Plan—Best Value NANTO
The Best Value NANTO medium-term management plan
(April 2011 to March 2014) represents the second stage of
our long-term vision of “aiming to further increase corporate
value - a bank that grows together with the region it serves,”
established in 2008 (a six-year vision), targeting our 80th

anniversary in June 2014. This management strategy aims tomaintain a balance between profitability and efficiency while
seeking sustainable growth.
Specifically, this plan will be implemented based on fourbasic policies and eight key strategies.

Medium-Term Management Plan

I. Increase customer satisfaction and enhance profitability through relationship-based
local banking•	We will devote ourselves to deployment of business

together closely with the local community as we work
toward creating business opportunities throughimproved convenience and solution-oriented marketingfor the local community and customers, and strive toimprove customer satisfaction and strengthen earnings
ability.

•	To expand the scope of operations and continue togrow in the future, we will work toward establishing
new operational bases and strengthening our marketing
structure while we make efforts to reinforce stableearnings ability in the market sector.

Key strategies
1. Establish a geographically broad-based business office network, which will focus on business loans, by enhancing our office
network mainly in Osaka Prefecture
2. Expand personal banking business focused on assets in custody and personal loans, and maintain or increase the loan market
share including business loans, mainly in Nara Prefecture; the potential markets
3. Construct a long-term and stable earnings structure by strengthening earnings ability in the market sector

Corporate philosophy
Pursuing sound and efficient management
2 Providing superior comprehensive financial services
3 Contributing to regional prosperity
4 Striving to become a highly reliable, friendly and attractive bank1

A positive cycle with stakeholders
through improvement of our brandStrengthened financial
service provision capabilities
Improvement in local
community andcustomer satisfaction(Local communityand customer value)

Improvement intreatment of employees
Improvement in
employee motivation(Employee value)

6

Improvement in profitability
Improvement inshareholder valueII. Efficient use of corporate resources•	We will invest in key fields and increase the number of

4. Foster human resources with high-level and practical marketing capabilities as well as management abilities for educating andmotivating staff
5. Shift staff to the sales sector by streamlining headquarters and branch operations

III. Enhancement and upgrading of internal control systems•	We will strive toward further strengthening of our•	For more efficient management of risks and returns,
compliance framework to gain even more trust fromwe will work toward more advanced and enhanced risk
stakeholders.
management.
Key strategies

Medium-Term Management Plan•	We will actively strive to foster human resources tosales staff. To make this possible we will streamline
support these measures.
headquarters and branch operations, and conduct acomprehensive review of business expenses in aneffort to efficiently use corporate resources.
Key strategies

6. Further enhancement of our compliance framework
7. More advanced and enhanced risk management

IV. Promotion of enduring community contributions•	We will employ corporate resources to make continual

development of the regional society and economy incontributions to environmental preservation and theorder to fulfill our corporate social responsibility.
Key strategies

8. Enhancement of CSR initiatives

Long-term vision“Aiming to further increase corporate value—— aa bankbank thatthat grows
grows together
together with
with thethe region
region itit serves”
serves”
To maintain the balance between profitability and soundness while seeking
sustainable growth, we have established a long-term business strategy target
based on the outlook for future changes in the business environment andcurrent awareness at the Bank.

Stage 2

Best Value NANTO (April 2011 to March 2014)

Four
Four basic
basic policies
policies
Eight
Eight key
key strategies
strategies
Measures

Stage 1

Numerical target

Fiscal year 2013

(the year ending March 31, 2014)

Core operational net profits:
over ¥20 billion

More Value “NANTO” (April 2008 to March 2011)7

Business results for the year ended March 31, 2012
Earnings
Ordinary income and net income
Ordinary income for the year ended March 31, 2012
Business results for the year ended March 31, 2012

decreased ¥1.1 billion from the previous fiscal year to ¥11.6

Ordinary income and net income
Ordinary income

15

11.6

10.9
10

Net income decreased by ¥3.1 billion from the previous fiscal year to ¥3.4 billion, largely as a result of the reversal of

Net income

12.7

billion due to the worsening of profit and loss balance instock value despite the decrease in credit-related expenses.

(Billions of yen)

7.2

6.5

5

3.4

deferred tax assets along with a reduction in the income tax
rate.
0

2010

2011

2012

Deposits and loans
Deposits

Deposit balance

Deposits increased by ¥162.0 billion from the previous fiscal
year to ¥4,343.1 billion as of March 31, 2012 as a result of(Billions of yen)

4,117.9

4,181.0

4,343.1

2010

2011

2012

4,000

the solid growth in both individual and corporate deposits.
This increase reflects our efforts to improve our products andservices and our continued focus on the stable of raising

3,500

funds.
3,000

0

Loans
We focused on maintaining a regular supply of funds in a

Loan balance(Billions of yen)

3,000

variety of forms to meet the needs of middle market enter-

2,730.5

2,709.6

2010

2011

2,785.6

prises as well as small and medium-sized enterprises andindividual customers in an effort to promote community-

2,500

focused financial services, while actively responding to thedemand for funds of the local governments.

2,000

As of March 31, 2012, the balance of loans increased by¥76.0 billion from the previous fiscal year to ¥2,785.6 billion, due to increases in loans for business enterprises andhousing loans.

8

0

2012

Capital adequacy ratios
Based on the Tier 1 measure, which consists of fundamen-

ratio was 11.63%, which was far beyond the 4% domestic

tal items as core capital and retained earnings, the consolidat-

standard benchmark required of banks subject to domestic

ed capital ratio stood at the 10.12%, the high level.

standards.
Capital adequacy ratio

(%)

14.00
12.00

Tier I ratio

12.12

11.74

11.63

12.00

10.00

10.00

8.00

8.00

9.57

10.20

10.12

2011

2012

6.00

6.00

Domestic
Standards
4.00

4.00

2.00

2.00

0

(%)

14.00

2010

2011

2012

0

2010

Business results for the year ended March 31, 2012

As of March 31, 2012, the consolidated capital adequacy

Bad debts
Risk-managed loans

Risk-managed loans

Risk-managed loans, under the Banking Law, comprised ofLoans to Bankrupt Obligors, Delinquent Loans, Loans Past
Due Three Months or More, and Restructured Loans. They
refer to loans only. As of March 31, 2012, the balance ofrisk-managed loans totaled ¥90.0 billion, representing 3.23%of total loans outstanding, which is the same percentage as in
the previous year.

Loans(Billions of yen)
120

80

Loans to Bankrupt Obligors
Delinquent Loans
Loans Past Due Three Months or More
Restructured Loans
Ratio

(%)
6.00

87.5
2.6

87.5
1.7

90.0
1.7

65.9

68.2

69.5

3.3
15.6
3.20

2.0
15.4
3.23

0.8
17.8
3.23

2010

2011

2012

40

0

5.00

4.00

3.00

9

Corporate GovernanceOur most important management priorities include enhancing
management transparency and efficiency and realizing fairmanagement. These priorities earn us the strong confidence ofour customers, stockholders and other stakeholders, allowing
us to fulfill and strengthen corporate governance. Also, they

allow for continuously increasing corporate values responding
to the expectations of the aforementioned parties. The main
aspects of the corporate governance system are as follows (asof July 2, 2012).

Corporate Governance System

Corporate Governance

The Board of Directors, comprising 15 directors, plays a central role in our corporate governance system. The Board of
Directors Regulations are strictly applied, and prompt andefficient decision making is undertaken.
The Board of Directors holds a regular meeting once amonth in principle, and it convenes extraordinary meetings
as necessary. At meetings of the Board of Directors, decisions are made on important managerial matters and operational execution, and all corporate auditors attend. In addition, reports concerning operational execution and various
committees are made.

Additionally, the Managing Directors’ Committee
Meeting, comprising the chairman, the president, the senior
managing director, and the managing directors (3 persons) isheld once a week in principle as a decision making institution for important matters concerning daily management.
Thereby, prompt decision making is attempted.
Moreover, in order to supplement appropriate operational
execution in response to diversification and advancement ofoperations, committees such as the ALM Committee, theCompliance Committee, and the like have been established.

Corporate Governance Structure

Appointment/Dismissal(As of July 2, 2012)

Stockholders’ Meeting

Appointment/Dismissal

Board of Directors

Discussion Session

President

Review

Managing Directors’ Committee

Evaluation(Titled Directors/Standing Corporate Auditors)
Instruction Supervision

Report(Deliberation of Important Cases)

Committees

Group Operation
Conference

ALM Committee Compliance Committee
Operational Risk Management Committee
Auditing

Headquarters

Branches

Internal
Auditing

Consolidated
Subsidiaries

Cooperation
ReportInternal Audit
Division

Accounting Auditor

ReportCooperation

ReportAssistance

Corporate Auditor’s
OfficeAppointment/Dismissal/Supervision

Board of Corporate Auditors

Auditing(15 Directors)(5 Corporate Auditors (including 3 External Corporate Auditors))

ReportAppointment/Dismissal

Consent of Appointment and Reappointment/Judgment of Reasonableness of Auditing

Matters related to Corporate Auditors and the Board of Corporate Auditors
The Bank is structured with a corporate auditor system consisting of two full-time corporate auditors with profoundknowledge of bank operations, finance and accounting andthree highly independent external corporate auditors (independent officers). The five corporate auditors combine theirknowledge and capabilities to enhance the effectiveness andtransparency of audits conducted by the corporate auditors
and the Board of Corporate Auditors.
To ensure that all management decisions are fair andlegal, the corporate auditors properly monitor and audit thedirectors in performance of their duties in various ways,
including by attending meetings of the Board of Directors,
the Managing Directors’ Committee, and other committees,
as well as presenting their opinions.
The Board of Corporate Auditors meeting is held once amonth in principle and also on an ad-hoc basis as needed.
The Corporate Auditor’s Office assists the Board of
Corporate Auditors with two full-time staff members.

Internal Audit and Corporate Auditors’ Audit
The Internal Audit Division consists of 36 staff memberswith necessary knowledge and experience. This division is
responsible for internal audits, and it preserves independence
from the departments that are audited. Audit results arereported to the Managing Directors’ Committee and theBoard of Directors.

In regards to the corporate auditors’ audits, operational
audits and accounting audits are performed at the sole discretion of such auditors. Audit results are reported to the Boardof Corporate Auditors, Representative Directors, and theBoard of Directors.

Systems to Ensure Proper Conduct of BusinessIn order for the Bank to ensure the proper conduct of its business, the Board of Directors made a decision to manage the structure
outlined below.
● System to ensure that execution of duties is conducted by directors and employees in conformance with laws, regulations, and articles of incorporation● System for retention and control of information concerning directors’ duties● Rules and other systems regarding management of risk of loss
● System to ensure execution of duties is conducted by directors efficiently● System to ensure proper conduct of business in the corporate group comprising the Bank and subsidiaries● Matters regarding employees if corporate auditors decide to appoint the employees to assist in the corporate auditors’ duties● Matters regarding the employees’ independence from directors● System for reporting by directors and employees to corporate auditors, and other systems for reporting to corporate auditors● Other systems to ensure effectiveness of auditing by corporate auditors

10Compliance
Compliance refers to strict observance of ethics and social

The Bank takes the following approaches in order tonorms as well as laws, regulations, government ordinances,increase awareness of compliance and respond to legal risks.

and the bank’s regulations. This is essential for banks tofaithfully carry out our social responsibilities and public
missions.

Thorough Execution of Compliance● To establish a basic framework for the compliance system, we have set our compliance regulations, established rules fordisciplinary action, and demonstrate fairness and transparency in the administration of disciplinary action as means ofestablishing a clear stance on compliance with laws and regulations.

Compliance● In recognition of the public missions and social responsibilities that financial institutions need to perform, the Bank regards
compliance with laws and regulations as the most important management issue and has established the Charter of Corporate
Behavior, which consists of Basic Policies and Code of Conduct, for all officers and employees to follow to gain trust from all
stakeholders including local communities, our customers and shareholders.

● Deliberations and decisions in matters of compliance are the responsibility of the Compliance Committee, which is chaired by the
President and operates horizontally across the bank’s organization. Plans and supervision of compliance are carried out in the
Compliance & Risk Management Division.
● A Compliance Program consisting of concrete plans to achieve compliance is drawn up each year and undergoes appropriate
review.
● The Bank strives to properly operate a Compliance Hotline on internal reporting system that was established to prevent legal
violations and misconduct before they occur, to discover them promptly if they occur and to rectify them immediately.
● To instill a compliance mindset throughout the Bank, we have compiled a Compliance Handbook, which serves as a guide forachieving compliance and has been distributed to all officers and employees, and regularly conduct seminars and other grouptraining at the workplaces of individual workgroups.
● The Bank has established the Regulations on Response to Antisocial Forces in order to take a resolute stand against anti-social
forces that pose a threat to the order and security of civil society and take strong measures to intervene and block any attempt bysuch forces to create any relationship with the Bank.

11

Management System Regarding Customer Protection
The Bank regards the increasing protection and convenienceof our customers as one of the most important management
priority, together with compliance. We have, therefore, put inplace a management system regarding customer protection tomaintain the trust that customers place in us.

Management System Regarding Customer Protection

Arrangement of Management System regarding Customer Protection
In order to increase the protection and convenience of ourcustomers, the Bank has established the following five categories under the Management Policy Regarding Customer
Protection.
The Solicitation Policy related to sales of financial instruments for Customer Explanation Management, the Personal

Information Protection Policy related to protection and treatment of personal information for Customer Information
Management, and the Management Policy on Conflicts ofInterest for Management of Conflicts of Interest have been
separately regulated and publicized.

● Customer Explanation Management
Appropriate and sufficient explanations for customers● Outsourcing Management
Appropriate management of outsourced operations
regarding customer information and communication● Management of Customer Support
Appropriate and sufficient responses to customers’ requests● Customer Information Management
Appropriate and sufficient management of customer
information● Management of Conflicts of Interest
Appropriate management of transactions that have thelikelihood of causing conflicts of interest in order not toillegally damage customer benefits

Based on the aforementioned Policies, the Bank has established Management Regulations Regarding Customer
Protection. These have regulated a basic framework for the
management system regarding customer protection. At thesame time, associated rules and a manual have been established. Furthermore, responsible personnel and management
divisions for each category related to customer protection
have been established. Thereby, a regulation system and anorganizational system have been arranged.
Additionally, measures related to management regarding
customer protection have been included within the

Compliance Program, such as familiarization and dissemination of the importance of management regarding customer
protection for officers and employees through training implementation. Such measures are discussed and formulated at
the Compliance Committee. Thereby, improvement of management system for customer protection has been continuously attempted.
As part of customer support arrangement, the Bank is subscribing to the service of the Japanese Bankers Association,
which is one of the certified Alternative Dispute Resolution
bodies under the Banking Act.

Management System Regarding Customer Protection
Board ofCorporate
Auditors

Board of Directors Managing Directors’ Committee

Compliance Committee

Management Regarding Customer Protection
Category

Customer Explanation
Management

Management of
Customer Support

Responsible
Personnel

Personnel
Responsible for
Customer
Explanation
Management

Personnel
Responsible forManagement of
Customer Support

Supervising
Division
Main Division in
Charge12

Management

Outsourcing Management

Management of Conflictof Interest

Personnel Responsible
for Controlling
Information
Management
Personnel Responsible
for Information
Management

Personnel
Responsible for
Outsourcing
Management

Personnel
Responsible forManagement ofConflicts of Interest

Compliance & Risk Management Division
General Business Division
Credit Analysis Division

General Business
Division
ReportInternal Audit
Division

Customer Information

Compliance & Risk
Management Division
Instruction/Supervision
Training/Familiarization

Compliance & Risk
Management Division
Monitoring

Supervision

Branches/Headquarters

Instruction

General Manager and Branch Manager/Compliance Officer

Compliance & Risk
Management Division

Risk Management
In recent years, the management environment surrounding
financial institutions has changed drastically, and the risks
they face have become more diversified and complex.
The Bank regards risk management as one of its mostimportant management issues and aims to create an advanced

risk management system, so that the Bank can maintainappropriate and sound management and provide reliable services to its customers.

Risk Management Coordination
risks by using the integrated risk management method,
intending to keep the amount of risks and its capital adequacy at appropriate levels in the light of its management vitality. Biannually, the Bank determines risk capital (risk based
amounts) for each category of risk within the scope of its
capital adequacy, to limit the value of each risk (e.g. VaR) to
the amount of risk capital.
The situation of each risk is evaluated at a monthly ALM
Committee meeting, which decides the appropriate level ofrisk control to implement, aiming at conducting more effective and efficient risk and return management from the viewpoint of maintaining sound management and higher profitability alongside effective utilization of capital.

Risk Management

To cope with the various risks that the Bank faces in its banking business, the Bank has established specified units foreach category of risk. The Bank also incorporates theCompliance & Risk Management Division responsible forrisk management coordination, in order to gain a precise
understanding of the nature and extent of risks and take
expeditious steps toward their management.
Furthermore, the Bank defines its basic risk management
policies in risk management regulations and other requirements including the Risk Management Coordination
Regulations, in an effort to appropriately manage the risks.
Moreover the Bank has adopted a policy of Risk
Management Coordination, under which it quantifies various
Risk Management Structure
Board ofDirectors

Board ofCorporate Auditors

Managing Directors’Committee

Emergency Council(Warning Council)

ALM Committee(ALM Subcommittee)

Committees

Operational Risk Management Committee(Operational Risk Management Subcommittee)

Compliance Committee(Compliance Subcommittee)

Organization

Risk Management Structure

Compliance Structure

Supervising Division

Compliance & Risk Management Division

Compliance & Risk
Management Division

Risk Categories

Credit Risk(

CreditAnalysis
Division

Main Divisionin Charge) (Market Risk)()(

Compliance &Risk Management
Division

Operational Risk
(Compliance & Risk Management Division)

Liquidity Risk)(

Compliance &Risk Management
Division

Administrative Risk
Operations Control
Division

Systems Risk

Legal Risk
Compliance &Personnel Risk

Tangible Assets Risk

Compliance
Reputational Risk

Personnel
General Affairs General Planning
Control
Risk Management) (Operations
Division ) ( Division ) ( Division ) ( Division ) ( Division )Operation

Divisions of Headquarters/Branches/Consolidated Subsidiaries

Auditing

Internal Audit Division(

Compliance &Risk Management
Division)

External Auditing

13

Risk Management• Managing Internal Capital 

Risk Management

Managing Internal Capital refers to the implementation of
measures to maintain a sufficient level of internal capital,
capital adequacy assessment and computation of the capital
adequacy ratio.
The Bank conducts a quarterly assessment of its internal
capital adequacy by analyzing factors that cause the capital
adequacy ratio and Tier I ratio to fluctuate.
We also use the integrated risk management method toquantify the various risks faced by the Bank, and we regularly compare the level of these risks with internal capital so as
to control each risk and carry out the assessments of ourinternal capital adequacy for each risk.

As for the capital adequacy assessment, the Bank positions itself to be able to review the allocation of its internal
capital, discuss necessary internal capital strategies and othernecessary actions through the monthly-held ALM Committee
meeting. We intend to maintain a sound management withthe help of appropriate risk control practices and increase
profitability through the effective utilization of our internal
capital, by fully operating this internal capital management
structure.

• Managing Credit Risk 
To ensure the continuing soundness of its assets, the Bank
manages credit risk under a credit screening structure that
operates independently of marketing operations.
We have established the Credit Analysis Division as a risk
management body that is responsible for examining the credit standing of customers, loan screening and the managementof claims.
The Credit Analysis Division consists of the Credit
Analysis Group, which handles general screening and industry-specific screening; the Management Group, which intensively supervises borrowers whose business performance has
deteriorated; and the Corporate Finance Support Office,which was established to assist borrowers with businessrestructuring and recovery initiatives. Together these units
form a structure that supports flexible risk management tailored to the specific circumstances of each customer.
Our credit analysis and risk management measures
include rigorous self-assessment, credit rating which is consistent with the borrower classifications used in self-assess-ment and other methods, with which the Bank subjectively
recognizes and manages each customer’s credit capability. In
addition, we have a policy of setting an interest rate (Pricing)
to be applied to individual customers according to their rating-based creditworthiness. Through this, we take measures
to strengthen our credit risk management and increase profitability.
The Bank regularly and appropriately reviews transaction
terms, and establishes credit limits to the borrowers with debt
exceeding a certain amount, with a view to reducing credit
risk by conducting strict credit control.
For the management of overall loan portfolios, the Bankhas worked on more efficient assessment support system byusing several systems, including segment analysis, e.g.
industry-based or rating group-based analysis, a real estatecollateral evaluation system, designed to refine the quantified
collateral evaluation of credit risk which calculates possible
losses in future by using statistical methods, etc.

• Managing Asset Appraisals 
Asset Appraisals are for the review of individual assets heldby a financial institutions in order to comprehend the accurate status of the institution’s assets. It is an important method of credit risk management and a preliminary procedure toappropriately determine the amount of depreciation andallowances. Asset assessment conducted by the financial
institution itself is referred to as a self-assessment.
The Bank carries out the following assessment of its
assets. Actual assessments are conducted by its operating

branches, in conformity to the Regulations on SelfAssessment of Assets. Assessment results are then subjected
to a rigorous verification process, where the results are examined by the Credit Analysis Division further audited by theInternal Audit Division. According to the audit results, theBank determines appropriate amounts of depreciation andallowances. In this way, it strives to perform appropriate
asset assessment practices and maintain and improve thesoundness of assets.

• Managing Market Risk 
The Bank controls its market operations under a system ofreciprocal checks and balances based on a clear demarcation
between front office units, which implement transactions,and back office units, which carry out administrative processing. The middle office unit responsible for risk management
is the Compliance & Risk Management Division, which

14

develops risk management systems, checks compliance withrisk management regulations and other requirements andmonitors the positions and profit performance of market
units. The Compliance & Risk Management Division also
carries out wide-ranging analyses to quantify the risk levelsof assets and liabilities, including deposits, loans and securi-ties. In its analyses, the division uses a variety of analyticaltechniques, including the value at risk (VaR) and basis pointvalue (BPV) methods and interest rate fluctuation simulations. The results of this work are used to provide timely
reports to management.
Allowable risk limits are measured based on VaR anddetermined by the Bank’s ALM Committee biannually, in
consideration of its capital status, market conditions andother factors. Market operation staff members make efforts togain profits while complying with these allowable risk limits.

Every month, ALM Committee obtains actual risk and revenue results from each market operation and discusses appropriate ways to control risks and generate earnings efficiently
by taking account of the market prospects and other conditions. In addition to this, the Bank conducts stress tests byusing scenarios that capture the characteristics of market
environments and its portfolios in order to understand theimpact of markets’ extreme fluctuations exceeding VaR projections, bracing up for contingency events.

Liquidity risk, known as fund-raising risk, is defined as therisk of the Bank making a loss, due to the possibility ofencountering an obstacle in raising the required funds either
because of a mismatch between the use and procurement offunds or an unexpected outflow of funds; or being forced toborrow at higher interest rates than usual.
According to monthly fund management plans formulatedby the ALM Committee, the Securities and International
Division closely manages the Bank’s cash flow position on a
day-to-day basis and the Compliance & Risk Management

Division monitors the management conditions. The ALM
Committee is also responsible for overall monitoring andmanagement of cash flow risk, including the monitoring ofassets available for liquidation and the amount of funds thatthe Bank can procure.
The cash flow situation is classified into one of three levels according to financial situations: “regular phase,” “concern phase” and “crisis phase.” The Bank has developed
management systems that can be flexibly implemented ineach of these situations.

Risk Management• Managing Liquidity Risk • Managing Operational Risks Operational risk is the risk of the Bank management resulting in the Bank making a loss, due to inadequate or failed
processes of banking operations, activities of executives andemployees (including part-time and temporary and othersimilarly classified workers) or systems, as well as external
events.
At the Bank, departments in charge of operational risks
apply the perspectives of specialists to the management ofadministrative risk, systems risk, legal risk, personnel risk,
tangible assets risk and reputational risk.
In addition, information about loss from operational accidents and results of potential risk analysis, etc. are collectively reported to the Operational Risk Management Committee,
which understands and manages each risk comprehensively.
This enables the Bank to preferentially deal with major risks
and minimize effects of the risks.

• Managing Administrative Risk Administrative risk refers to the risk of loss-making as aresult of neglecting accurate administrative processes alongside occurrences of accidents or fraud.
The Bank reinforces the provisions of Administrative regulations and requires strict staff compliance with the regulations to achieve customer confidence in its accurate and strict
administration. At the same time, the Bank aims to raise

executives and employees administrative work standards byconducting regular training programs or temporary office
work guidance. Separately, the Bank intends to establish
more accurate and efficient administrative operations byfacilitating the systemization and centralization of administrative processes.

• Managing System Risk 
System risk refers to failures or malfunctions of the computer system and loss incurred associated with inadequate system, etc. Furthermore, system risk includes the risk of loss
from unauthorized use of computers.
The Bank incorporates a system which copes with unexpected system failures or network errors and swiftly resumes
operations. It is prepared for these events with stand-by
equipment for each of the existing equipment in the network
system and dual communication lines. Also, the Bank has
formulated a manual which directs necessary action as
defined by its contingency plan in the event of a large scaledisaster, developed a decentralized data administration system and “back-up center”.
With a view to conducting strict control of customer dataand other confidential information, the Bank takes various
measures to prevent unauthorized use of the computer system or leakage of information. It addresses the provision ofsafer and more assured services by establishing security measures such as the formulation of handling regulations forclassified data, encryption of computer data and important
information, e.g. security codes, and others.

15

Risk Management• Managing Legal Risk 
The term “legal risk” refers to risk of incurring loss or damage arising from violation of obligations resulting from negligence concerning customers and inappropriate business
and/or market practice.

The Bank has attempted to avoid and mitigate legal risks
via legal examination by external experts, such as corporate
lawyers, and the Compliance & Risk Management Division.

• Managing Personnel Risk 

Risk Management

Personnel risk refers to the risk of loss and damages the
Bank suffers due to unfairness/unjustness in terms of personnel management concerning compensation, benefits, dismissal and acts of discrimination, such as sexual harassment, etc.
The Bank recognizes that economic loss, loss in confidence, etc. due to the materialization of personnel risk canhave a major impact on the Bank’s management and business
operations and strives to minimize the risk through appropriate management of such risk.

• Managing Tangible Assets Risk 
Tangible assets risk involves the risk of loss from impairment
or damage to tangible assets due to disaster or other unforeseeable events.
The Bank recognizes that economic loss, loss in confidence, etc. due to the materialization of tangible asset risk

can have a major impact on the Bank’s management andbusiness operations and strives to minimize the tangible
assets risk through appropriate management of such risk.

• Managing Reputational Risk 
Reputational risk refers to the risk of loss or damage incurred
if an organization has fallen into discredit due to the deterioration of its reputation or through damaging rumors, etc.
The Bank recognizes that economic loss, loss in confidence, etc. due to the materialization of reputational risk canhave a major impact on the Bank’s management and business
operations and strives to minimize that risk through appropriate management. In the event of the spread of damaging
rumors about the Bank, it will take appropriate and swift
action to curtail them and revitalize its reputation.

Internal Audit Posture
For the enhancement and reinforcement of risk management,
it is necessary to verify the effective function of the internal
control and improve problems as needed.
The Internal Audit Division, an internal auditing organization, promotes risk management and strives to ensure thesoundness of management and the appropriateness of business by ascertaining the risk management situation at thedivision and branch levels, evaluating and verifying thatinternal control is appropriately maintained and functioning
effectively, and providing advice as necessary.

Crisis Management Posture
Along with the above risk management, it is necessary to
respond suitably to the occurrence and materialization of crises related to business operations such as a large-scale natural disaster or systems malfunction. The Bank is appropriately positioned to manage these crises by having formulated a
Crisis Management Plan and response manuals to tackle eachtype of crisis and examining their effectiveness through risk
management training provided every year.
Taking into account damages caused by the Great East
Japan Earthquake and Typhoon No. 12 which occurred in

16

March and September 2011 respectively, the Bank, as anorganization responsible for social function maintenance,take measures to continuously provide customer services byreviewing our response manuals and improving facilities tocontinue our business operations in the event of disasters orother events.
When a crisis occurs, the Bank responds by having
Response Headquarters or Response Teams gather information and engage in centralized supervision and command tominimize the impact of the crisis on its business operations.

Together with the Local Community
Support Programs for Local Business . ...................................................... . . . . . . . . .. . . . . . .
Venture Business Support Office
In addition to support for financing for venture companies
during their founding and business development stages, we
conduct business consultations in collaboration with research

Corporate Solutions TeamThe expert staff at our Value Creation Division’s Support andSales Group conducts solution oriented marketing and sales
that respond accurately to the challenges that our customers
are facing by offering a wide variety of financing and consultation services, including business matching, succession sup-Asia Business Support GroupWe have created an Asia Business Support Group in order to

Our overseas representative offices in Hong Kong andsupport the overseas business of local companies, with aShanghai also offer business assistance in local areas andfocus on Asia. It provides information specific to expandingorganize business fairs, exchanges and seminars in collabora-

overseas as well as business assistances, such as procuring

tion with regional banks.

Support Programs for Local Business

port, M&A advice, derivatives products and syndicate loans.

● Business matching● Business succession supports● M&A advisory● Derivative products● Syndicate loans● Collaboration with academic institutions

Together with the Local Community

institutions, including public institutions and universities.

● Business venture financing program● Investment through investment funds● Support for IPOs (market driven services)financing at overseas sites and foreign exchange transactions.

•	Business Assistance Provided by the Asia BusinessSupport Group

Details
Provision of and advice foroverseas-related information
Support by representative
offices in local areas
Support for foreign exchangetransactions through overseas branches

2009

2010

2011

121

125

154

229

260

323

27

88

180

Total

377

473

657

39%
increasefrom thepreviousyear● Support and advice for expanding overseas● Provision of overseas information● Support for procuring financing atoverseas sites● Holding of overseas strategy seminars● Implementation of overseas inspection
missions● Overseas business matching

Overseas Seminars and Business Exchanges
Responding to increasing importance of overseas risk management surrounding local subsidiaries of Japanese companies, the Bank has set up a partnership with Tokio Marine &Nichido Fire Insurance Co., Ltd. for overseas business support operations in January, 2012, toprovide new business assistance in this field. This collaboration co-hosted an “Overseas Risk
Management Seminar in China” in Shanghai, and Shenzhen, Guangdong Province in March,
2012, for Japanese managers and representatives of local subsidiaries. This was the first seminar of its kind to be held by a regional bank.
In addition, the Bank hosted “the Fourth Hong Kong and South China Business Exchange
for Japanese Companies,” jointly with regional banks (17 banks including the Bank), whichhave subsidiaries in Hong Kong, in May, 2012. A great number of business partners of hostbanks joined the exchange. In the first part, a seminar was provided by Japan External Trade
Organization (JETRO) and in the second part, a business exchange was held as an opportunity for Japanese companies to exchange information and conduct business negotiations.

Overseas Risk Management Seminar in China

The Fourth Hong Kong and South China
Business Exchange for Japanese Companies

17

Contributions to the Local Community (CSR Initiatives)
About our CSR
Contributions to the Local Community (CSR Initiatives)

At Nanto Bank, one element of our business philosophy is contributing to regional prosperity. Since our establishment, we have provided a smooth flow of funds and business improvement support to local corporations and actively
pursued financing that is strongly tied to the region. We have also fulfilled our community and public roles as aregional financial institution in various areas, including environmental preservation and contribution to society.
One of the basic policies in our medium-term management plan is
promotion of enduring community contributions and we strive to ● Promotion of environmental
conservation initiatives
enhance our CSR program.
We will fulfill our social responsibilities by making good use of the ● Promotion of Social Action Program
Bank’s corporate resources to take an active role in efforts to develop ● Initiatives for Promotion of Forestry
the local community and economy, and environmental conservation inin the Yoshino Area
the region.

Outside Recognition of Nanto Bank’s CSR Activities

Promotion of environmental conservation initiatives● UK FTSE Group

The Bank’s stock included in constituents of FTSE4Good, an SRI stockindex (2008)● Kinki Local Finance Bureau

Award toward ‘Support and assistance for the Yoshino Heart Project’ (2009)● Kinki Regional Agricultural
Administration OfficeDirector-General Award in Corporate Lunch Menu Contest for Promotion of
Kinki Local Production for Local Consumption (2010)● Nara Prefecture (Governor)

Letter of Appreciation to Nanto Nara Support Group, a volunteer grouporganized by former employees of the Bank, acting as a tour guide (2010)● The Minister of Agriculture,
Forestry and Fisheries

Letter of Appreciation toward proactive dissemination and awareness raisingefforts regarding Kizukai Activities (2011)● Nara Prefecture (Governor)

Letter of Appreciation toward contributions to social welfare services (2011)● NARA DENRYOKU RIYOU
GOURIKA IINKAI

Award of “Commendation for Excellent Business Engaged in Energy
Saving” (2012)

Promotion of environmental conservation initiatives ....................... . . . . . . . . .. . . . . . . . . . . .
Commitment to Environmental Conservation• Commitment to ISO Environmental Standard 
The Bank obtained ISO 14001 environmental management
certification at its headquarters and Business Support Centerin 2002. In January 2009, it also obtained certifications forfour new locations including its Recycling Center andTraining Center.
The certified divisions continue to work to preserve theenvironment in accordance with the ISO standard. The entire
Nanto Group is united in its commitment to environmental
conservation even at branches and subsidiaries not coveredby the standard, and has adopted practices such as wearing
cooler attire in summer and incorporating greener practices
into day-to-day operations.

In addition to the introduction of electric vehicles as company cars in 2011 and plug-in hybrid vehicles in 2012, wehave also started new initiatives, including bondinvestment through thepurchase of US$20 million in Green Bonds
newly issued by the WorldBank in 2011 to contribute to measures against
This summer’s cooler attire program started
global warming.
at all branches on May 7. Indoor temperature
should be set at 28 degrees Celsius.

• The “Growing a Forest” Project 
In April 2004, the Bank carried out a tree-planting project on
the hillsides of Asuka-mura (Takaichi Gun, Nara) as an environmental conservation initiative commemorating the 70th
anniversary of the Bank’s establishment.

Since then, volunteers from the Bank go each year toclear underbrush and plant additional trees.
*Plants featured in Manyoshu (plum, cherry, bush clover, oriental paperbush, Thunberg’s meadowsweet, Japanese kerria, etc.) have been planted.

• Recycling Center 
A Recycling Center was set up in June 2007 for the purposeof maintaining the confidentiality of documents whose storage term had expired, and also serving as a recycling facility.
Paper is cut up in a large shredder and then taken to apaper mill where it is recycled as toilet paper, notepads, and18other products. The amount of paper recycled during the fiscal year ended March 31, 2012 reached 252 tons.
Going forward, we will continue to reduce the amount of
paper garbage produced and will contribute to the recyclingof paper resources.

Promotion of Social Action Program .......................................................... . . . . . . . . .. . . . . . .
Seventy-seven percent of Nara Prefecture is forested, which
is above the national average for Japan, and many of its forests are located in the Yoshino area. In the past, forestry wasa booming industry in Nara Prefecture, but in recent years
lower prices for wood and materials produced overseas have

led to continuing stagnation. The Bank supports the revitalization of forestry in Nara Prefecture with a focus on the
Yoshino area by using our unique corporate resources andcollection of information to expand sales channels for materials produced in Nara, mainly Yoshino wood.

• Yoshino Heart Project 

Example of promotional items made from
Yoshino wood for distribution at shops• Bookmark
Initiative that leads to restoration from the Great East
Japan Earthquake and employment creation in affectedareas, by ordering processing of thinned Yoshino cedar
to companies in Minamisanriku-cho, Miyagi Prefecture.
• Wooden envelope
Envelope made of thinly-sliced “wooden paper,” produced from thinned Yoshino cedar.

Wooden envelope (on the left), bookmark (on the right)

assets (local restoration)” in relationship-based local banking.
The Bank has strived to raise awareness of the need forforest conservation and forestry revitalization through its
Kizukai Activities (the Wood Movement), by distributing disposable chopsticks made of Yoshino wood, and using posters
and pamphlets made of Yoshino 3.9 paper produced fromthinned trees.
We aim to gain more supporters for Yoshino wood anddevelop further demand for wood materials by collaboratingwith Nara Prefecture and other organizations to support business matching related to the development, production, andsale of wooden products like tools used in everyday life andtoys that reach the consumer directly, and by introducing
promotional items made from Yoshino wood for distribution
at shops.

Wooden toy, “PaPaCo YOSHINO” series“PaPaCo YOSHINO” is released through a collaborative
project by a major advertising agency and NPO organization, Yoshino Heart, a parent organization of Yoshino
Heart Project. They aim to establish a wooden toy brandmade of thinned Yoshino wood.
The Bank cooperated in establishing a mass production
system by providing opportunities for business matchingwith wood processing companies in Nara Prefecture to
realize the design for some products created by thedesigner group.

Building blocks

Promotion of Social Action Program

The Bank supports the Yoshino Heart Project as part of our
CSR commitment. The project’s goal is to stimulate demand
for goods and materials produced in Yoshino, by popularizing the Yoshino Heart brand for wood products made using
cedar, cypress, and other types of wood grown in the Yoshino
forest.
The project’s ultimate aims are:
1. Vitalizing the forestry and related industries in Yoshino
2. Protecting the global environment by absorbing CO2
through forestation
A part of the proceeds from this project goes toward forest development and management, including tree planting
and thinning.
In December 2009, the Bank received an award for thisproject from the Director-General, Kinki Local Finance
Bureau, as an outstanding initiative to “contribute to the creation of a sustainable local economy using local information

Contributions to the Local Community (CSR Initiatives)

Initiatives for Promotion of Forestry

Animal domino

Kizukai Activities (the Wood Movement) and Yoshino Heart Project
The Wood Movement is restoring Japan’s forests to a sound cycle, by
making active use of Japanese-grown wood, through tree planting, thinning, and other activities, and creating healthy forests that will absorb
plenty of CO2. The goal is to reduce two thirds of the reduction target(-6%) of greenhouse gas prescribed in the Kyoto Protocol throughabsorption by improved domestic forests. In November 2008, the Bank
became the first member of the banking industry to be authorized to use
the Kizukai Activities logo promoted by Japan’s Forestry Agency.
As part of its support for the Yoshino Heart Project, the Bank highlights the importance of using wood for the environment by distributing
B-(3)-080031
environmentally friendly wood products, and using Yoshino 3.9 Paper,
Yoshino Heart logo
Thank You Green Style logo
and these activities are also linked to the Wood Movement.
In October, 2011, the Bank received a letter of appreciation from the Minister of Agriculture, Forestry and
Fisheries for its engagement, which has led to remarkably effective PR campaigns for Kizukai Activities.
19

Contributions to the Local Community (CSR Initiatives)
Nanto Bank Hockey Team
Contributions to the Local Community (CSR Initiatives)

On the occasion of the 1982 “Wakakusa” National Sports Festival, we created awomen’s hockey team, contributing to the promotion of sports in Nara prefecture, “the Hockey Kingdom,” by producing excellent players, including those
representing Japan in the Olympic Games.
In addition, we make an effort to be involved with the local community
through various activities such as inviting elementary and junior high school
students to hockey schools organized by the Bank.
For the London Olympics to be held this year, two Bank staff members werechosen for “Sakura Japan”, Japan’s field hockey team.

Hockey School

Small Kindness Movement
The Nanto Bank’s Small Kindness Society carries out a wide variety of public
service activities, such as cleanups and blood donations with the aim of creatinga cheerful local community.

Promotion of Social Action Program

Blood donations

Nanto Scholarship
In order to assist with fostering human resources in the local community, academic scholarship is provided for high school and university students of outstanding character and academic ability, who reside in Nara Prefecture.
As of April 2012, there are 70 students currently on scholarship, and thetotal number of graduates is 1,271.

Interview session for informally appointed scholars

Meeting the Needs of the Visually Impaired
For all ATMs installed (including those outside branches),
the Bank has adopted universal design specifications withfeatures making them accessible to the elderly, the visually
impaired, and those in wheelchairs. In addition, at the requestof customers, we provide account balance and transaction
records in Braille, and make bank book cases and card caseswith the account name and number in Braille.

*Special features of our ATMs
• Large, easy-to-read letters (enlarged display also available)• Easy-to-operate Voice Guidance System• Easy access to the display screen for wheelchair users

Enhancing the Barrier-Free Environment at Branches
We strive for barrier-free construction in our branches so that the elderly, children, and people with disabilities can use our branches at ease.
In addition, we promote use of equipment which reduces the environmental
burden, such as LED (light emitting diode) lighting and rooftop gardens.
*Special features of our barrier-free branches• Reserved parking spaces for wheelchair users• Textured paving blocks to guide the visually impaired• Eliminating steps and bumps

20

Rooftop gardens (the Ishikiri Branch)Board of Directors and Corporate Auditors(As of July 2, 2012)

Yasuo Ueno

Chairman(Representative Director)

President(Representative Director)

Board of Directors and Corporate Auditors

Hiromune Nishiguchi

Yasuo Shimakawa

Masaaki Hashimoto

Hiroki Matsuoka

Senior Managing Director(Representative Director)

Managing Director

Managing Director

Takashi Hashimoto

Kohsaku Yoshida

Yoshihiko Kita

Managing Director(Osaka Regional Headquarter)

Managing Director(Osaka Chuo Office)Managing Director(Tokyo Branch and Tokyo Liaison Office)

Chairman
Hiromune Nishiguchi
President
Yasuo Ueno
Senior Managing Director
Yasuo Shimakawa
Managing Directors
Masaaki Hashimoto
Hiroki Matsuoka
Takashi Hashimoto(Osaka Regional Headquarter)
Kohsaku Yoshida(Osaka Chuo Office)Yoshihiko Kita
(Tokyo Branch and Tokyo Liaison Office)Directors And General Managers
Hideaki Mitsuhashi(Head Office)Naoki Minowa(Credit Analysis Division)
Takeyoshi Tamura(Value Creation Division)
Hideaki Nishimoto(Operations Control Division)
Yoshiaki Morita(General Business Division)
Toru Hagihara(General Planning Division)
Kiyohide Sawamura(Personnel Division)

Corporate Auditors
Yasuo Horiuchi
Taro Hayama
Hiroyuki Sakai
Akihiko Minato
Mitsuhiko Noguchi

Note:	Hiroyuki Sakai, Akihiko Minato and Mitsuhiko Noguchi are outside corporate auditors pursuant to Item
16, Article 2 of the Company Law.

21

Consolidated Financial Statements
Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 1)Millions of yen

Consolidated Financial Statements

2012

2011

2012

Assets:Cash and due from banks (Notes 5 and 6) .....................................................
Call loans and bills bought (Note 6) ..............................................................
Debt purchased (Note 6) ................................................................................
Trading account securities (Notes 6 and 7) ....................................................
Money held in trust (Notes 6 and 7) ...............................................................
Securities (Notes 6, 7, 12 and 14) ..................................................................
Loans and bills discounted(Notes 6, 15 and 20) ............................................
Foreign exchanges (Note 20) .........................................................................
Lease receivables and lease investment assets ...............................................
Other assets (Note 14) ....................................................................................
Tangible fixed assets (Note 8) ........................................................................
Building .....................................................................................................
Land ...........................................................................................................
Construction in progress ............................................................................
Other tangible fixed assets .........................................................................
Intangible fixed assets (Note 14) ....................................................................
Software .....................................................................................................
Other intangible fixed assets ......................................................................
Deferred tax assets (Note 9) ...........................................................................
Customers’ liabilities for acceptances and guarantees ...................................
Reserve for possible loan losses (Notes 6 and 10) .........................................
Total assets .................................................................................................

¥131,459
12,0804,075
400
25,0001,755,495
2,785,671
1,310
15,052
21,447
40,574
11,794
24,629
102
4,047
8,171
6,703
1,468
24,08813,278(28,531)¥4,809,575¥91,151
3,429
4,716
786
24,5001,668,948
2,709,612
1,434
15,472
21,46841,99912,264
24,798307
4,629
10,1689,083
1,084
31,086
15,410(31,624)¥4,608,561$1,599,452
146,976
49,5804,866
304,173
21,358,985
33,893,064
15,938183,136
260,944493,661
143,496
299,659
1,241
49,23999,41581,554
17,861
293,077
161,552(347,134)$58,517,763

Liabilities and net assets:
Liabilities:
Deposits and negotiable certificates of deposit (Notes 6 and 14) ..................
Payable under securities lending transactions (Notes 6 and 14) ....................
Borrowed money (Notes 6 and 14) ................................................................
Foreign exchanges ..........................................................................................
Bonds/subordinated bonds, payable in yen (Note 6) .....................................
Other liabilities ...............................................................................................
Reserve for employee retirement benefits (Note 11) .....................................
Reserve for reimbursement of deposits ..........................................................
Reserve for contingent loss ............................................................................
Acceptances and guarantees ...........................................................................
Total liabilities ...........................................................................................

4,343,154
104,266
63,783148
20,00038,72912,207
131
1,633
13,278¥4,597,334

4,181,096
116,10927,369150
20,00027,497
11,477
121
2,153
15,410¥4,401,386

52,842,851
1,268,597
776,0431,800
243,338
471,213
148,521
1,593
19,868
161,552$55,935,442

Net assets:
Common stock: Authorized 640,000 thousand sharesand issued 281,756 thousand shares .....................................
Capital surplus ................................................................................................
Retained earnings ...........................................................................................
Less treasury stock: Issued 6,072 thousand shares in 2012
and 6,073 thousand shares in 2011 .................................

29,24918,829122,907

29,24918,830121,094355,870229,091
1,495,400(2,987)(2,990)(36,342)

Total stockholders’ equity
Net valuation difference on available-for-sale securities (Note 7) .................
Net deferred gains or losses on hedges ..........................................................
Total accumulated other comprehensive income .......................................
Stock acquisition rights ................................................................................
Minority interests .........................................................................................
Total net assets ...........................................................................................
Total liabilities and net assets ....................................................................

167,999
19,057(850)
18,20664
25,971
212,241¥4,809,575

166,184
16,540(706)
15,83431
25,125
207,175¥4,608,561

2,044,032
231,865(10,341)
221,511778
315,987
2,582,321$58,517,763

See Notes to Consolidated Financial Statements.

22
22

Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 1)Millions of yen

2011¥43,499
17,936426
18,2054,825
5,181
90,075¥46,236
18,646393
18,8604,992
3,622
92,751$529,249
218,226
5,183
221,498
58,70563,036
1,095,936

Expenses:
Interest expense:
Interest on deposits ....................................................................................
Interest on borrowings and rediscounts .....................................................
Interest on subordinated bonds ..................................................................
Other interest expense ................................................................................
Fees and commissions ....................................................................................
Losses on sales and redemption of bonds ......................................................
General and administrative expenses .............................................................
Other expenses (Note 17) ...............................................................................
Total expenses ........................................................................................

4,399
468
344
472
9,141
1,943
52,503
9,569
78,843

5,777
481
410
472
9,172
1,785
53,006
7,603
78,71153,522
5,694
4,185
5,742
111,217
23,640638,800
116,425959,277

11,231

14,039136,646

72
6,201
6,274
4,956
1,489
¥3,467

517
5,755
6,273
7,766
1,181
¥6,584876
75,44776,33560,29918,116$42,182

Income before income taxes .............................................................................
Income taxes:
Current ............................................................................................................
Deferred ..........................................................................................................
Total income taxes .................................................................................
Net income before minority interests ..............................................................
Minority interests .............................................................................................
Net income .........................................................................................................

U.S. dollars(Note 1)Yen

Per share of common stock: (Note 23)
Net income - basic ..........................................................................................
Net income - diluted .......................................................................................
Dividends .......................................................................................................

¥12.57
12.57
6.00

2012

Consolidated Financial Statements

2012

Income:Interest income:Interest on loans and bills discounted ........................................................
Interest and dividends on securities ...........................................................
Other interest income .................................................................................
Fees and commissions ....................................................................................
Gains on sales and redemption of bonds ........................................................
Other income (Note 16) .................................................................................
Total income ..........................................................................................

¥23.88
23.87
6.00

$0.15
0.15
0.07

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 1)Millions of yen

Net income before minority interests .................................................................
Other comprehensive income (Note 19):
Net valuation difference on available-for-sale securities ...............................
Net deferred gains or losses on hedges ..........................................................
Total other comprehensive income ............................................................
Total comprehensive income for the year ...........................................................
Total comprehensive income attributable to:
Owners of the parent ......................................................................................
Minority interests ...........................................................................................

2012

2011

¥4,956¥7,766$60,299

2012

2,548
(144)
2,403
¥7,360(5,201)(170)(5,371)¥2,395

31,001(1,752)
29,237$89,548¥5,839
1,521¥1,215
1,179$71,042
18,505

See Notes to Consolidated Financial Statements.

23
23

Consolidated Financial Statements
Consolidated Statements of Stockholders’ Equity
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2012 and 2011

Number ofshares ofcommonstock(thousands)

Consolidated Financial Statements

Balance at April 1, 2010 ................... 281,756
Cash dividends ...............................
—Net Income ....................................
—
Purchase of treasury stock .............
—
Disposition of treasury stock .........
—Net changes in the items other thanstockholders’ equity .......................
—
Balance at March 31, 2011 .............. 281,756
Cash dividends ...............................
—Net income .....................................
—
Purchase of treasury stock .............
—
Disposition of treasury stock .........
—Net changes in the items other thanstockholders’ equity .......................
—
Balance at March 31, 2012 (Note 4) ... 281,756

Balance at April 1, 2011 ......................
Cash dividends ..................................
Net income ........................................
Purchase of treasury stock ................
Disposition of treasury stock ............
Net changes in the items other thanstockholders’ equity ..........................
Balance at March 31, 2012 .................

Capitalsurplus¥29,249————¥18,830 ¥116,163—(1,654)
—
6,584
—
—
(0)
—

¥(2,973)
—
—
(18)
2

¥21,739————¥(536)
—
—
—
—

—
—
—
—
—

¥24,621 ¥207,095—(1,654)
—
6,584
—
(18)
—
2

—
¥29,249——¥18,830 ¥121,094—¥(2,990)(5,198)¥16,540(170)¥(706)

31¥31

504(4,833)¥25,125 ¥207,175(1,654)
3,467
—
—

—
—
(7)
9

—
—
—
—

—
—
—
—

—
—
—
—

—
—
¥18,829 ¥122,907—¥(2,987)

2,516¥19,057(144)¥(850)

33¥64—¥29,249———(0)Retainedearnings

Thousands of U.S. dollars (Note 1)
Net valuationdifference on Net deferred
Less treasury available-for- gains or losses
stock
sale securities on hedges

StockacquisitionrightsMinority
interests————

Total net
assets(1,654)
3,467
(7)
8

845
3,250
¥25,971 ¥212,241

Commonstock

Capitalsurplus$355,870————$229,103 $1,473,342—(20,124)—
42,182——(0)—$(36,379) $201,241
—
—
—
—
(85)
—
109
—

$(8,589)
—
—
—
—

$377
—
—
—
—

$305,694 $2,520,683—(20,124)—
42,182
—
(85)
—
97

—
$355,870——$229,091 $1,495,400—
30,611$(36,342) $231,865(1,752)$(10,341)

401
$778

10,281
39,542$315,987 $2,582,321

See Notes to Consolidated Financial Statements.

24
24

Common
stock

—
—
—
—

Retainedearnings

Millions of yen
Netvaluationdifference Net deferredon availablegains or
Stock
Less treasury
for-salelosses on
acquisitionstock
securities
hedgesrightsMinority
interests

Total net
assetsConsolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2012 and 2011
Thousands of
U.S. dollars(Note 1)Millions of yen

2011

2012

¥11,231
6,154
320(3,093)
730
—
10
(520)
(61,862)
5,685
1,039
52
3,912
106
—
1,194
(76,058)
160,321
1,736(7,991)
36,414123(1)(11,843)120
65,773(7,782)
1,485
127,260(566)
126,693¥14,039
6,206
98(3,875)
968
(454)
27
47
(65,276)
7,143(2,347)98
13,17717
325
2,745
20,92780,306(17,185)(1,395)(35,521)
(193)
(103)
32,536892
67,422(7,389)
9,395
122,635(322)
122,312$136,646
74,875
3,893(37,632)
8,881
—
121
(6,326)(752,670)
69,16812,641632
47,597
1,289—
14,527(925,392)
1,950,614
21,121(97,225)
443,046
1,496(12)(144,092)
1,460
800,255(94,683)
18,067
1,548,363(6,886)
1,541,464

Cash flows from investing activities
Purchases of securities ...................................................................................
Proceeds from sales of securities ...................................................................
Proceeds from maturities of securities ...........................................................
Increase in money held in trust ......................................................................
Decrease in money held in trust .....................................................................
Purchase of tangible fixed assets ....................................................................
Proceeds from sales of tangible fixed assets ..................................................
Purchase of intangible fixed assets .................................................................
Other ...............................................................................................................
Net cash used in investing activities ..........................................................

(462,591)
284,745
98,476(1,093)540(1,378)20(1,541)(36)(82,859)(477,226)
217,173
129,654(163)
3,523(2,283)67(1,584)(37)(130,874)(5,628,312)
3,464,472
1,198,150(13,298)
6,570(16,766)
243(18,749)(438)(1,008,139)

Cash flows from financing activities
Payment for redemption of subordinated bonds ............................................
Dividends paid ................................................................................................
Dividends paid by subsidiaries to minority stockholders ...............................
Purchases of treasury stock ............................................................................
Other ...............................................................................................................
Net cash used in financing activities ..........................................................
Effect of exchange rate changes on cash and cash equivalents ....................
Net increase (decrease) in cash and cash equivalents ....................................
Cash and cash equivalents at beginning of year ............................................
Cash and cash equivalents at end of year (Note 5) ........................................

—(1,652)(675)(7)
0(2,335)
4
41,503
68,103¥109,606(20,000)(1,650)
(675)
(18)
2
(22,342)(20)(30,924)
99,027¥68,103—(20,099)(8,212)(85)
0(28,409)48
504,964
828,604$1,333,568

Consolidated Financial Statements

2012

Cash flows from operating activities
Income before income taxes ...........................................................................
Depreciation ...................................................................................................
Loss on impairment of fixed assets ................................................................
Decrease in reserve for possible loan losses ..................................................
Increase in reserve for retirement benefits .....................................................
Decrease in reserve for executive retirement benefits ....................................
Increase in reserve for reimbursement of deposits .........................................
(Decrease) increase in reserve for contingent loss .........................................
Interest income ...............................................................................................
Interest expense ..............................................................................................
Loss (gain) on investment securities ..............................................................
Loss on money held in trust ...........................................................................
Foreign exchange losses .................................................................................
Losses on disposal of fixed assets ..................................................................
Loss on adjustment for changes of accounting standard for asset retirement obligations .......
Net decrease in due from banks .....................................................................
Net (increase) decrease in loans and bills discounted ....................................
Net increase in deposits ..................................................................................
Net increase (decrease) in negotiable certificates of deposit ..........................
Net increase in call loans and bills bought .....................................................
Net increase (decrease) in borrowed money ..................................................
Net decrease (increase) in foreign exchange assets .......................................
Net decrease in foreign exchange liabilities ...................................................
Net (decrease) increase in payables under securities lending transactions ........
Net decrease in lease receivables and lease investment assets .......................
Interest received .............................................................................................
Interest paid ....................................................................................................
Other ...............................................................................................................
Subtotal ......................................................................................................
Income taxes paid ...........................................................................................
Net cash provided by operating activities ..................................................

See Notes to Consolidated Financial Statements.

25
25

Consolidated Financial Statements
Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Statements

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of The Nanto Bank,
Ltd. (the “Bank”) and its consolidated subsidiaries (together, the “Companies”) have been prepared in accordance with the provision set forth in theJapanese Financial Instruments and Exchange Act, its related accounting
regulations, Ordinance for Enforcement of the Banking Law and in conformity with accounting principles generally accepted in Japan, which are
different in certain respects from the application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions
from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplemental information included in thestatutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan,
amounts less than one million yen have been omitted. As a result, the totals shown in the financial statements do not necessarily agree with thesum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollar amounts
is included solely for the convenience of the readers outside Japan, using
the prevailing exchange rate at March 30, 2012, which were ¥82.19 to
US$1.00. The translations should not be construed as representations that
the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at this or any other rate of exchange.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Principles of consolidation
The accompanying consolidated financial statements include the accountsof the Bank and its all twelve subsidiaries at March 31, 2012 and 2011, respectively. The Bank has no affiliates over which it has the ability to exercise significant influence over operating and financial policies.
All consolidated subsidiaries except for Nanto Preferred Capital Cayman Limited have fiscal years ending on March 31. The fiscal year closing
date of Nanto Preferred Capital Cayman Limited is January 31 and therefore, the pro forma financial statements as of March 31 are prepared forthe consolidation purpose. All significant intercompany accounts, transactions and unrealized profits on transactions are eliminated.
b. Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash and cash
equivalents represents cash and deposits with the Bank of Japan.
c. Finance leases
As lessor:
Finance leases are accounted for in a similar manner with ordinary saletransactions. Revenue from finance lease transactions and related cost arerecognized upon receipt of lease payments. Finance leases which transfer
ownership of the lease assets to the lessee are recognized as lease receivables, and all finance leases which do not transfer ownership of the leased
assets to the lessee are recognized as lease investment assets.
As for finance leases which commenced before April 1, 2008 and do
not transfer ownership of the leased assets to the lessee, the appropriate
book value (net of accumulated depreciation and amortization) of tangible
and intangible fixed assets as of March 31, 2008 was recorded as the beginning balance of “Lease receivables and lease investment assets” andthe total amount of interest equivalent for the remaining lease term after
the adoption of “Accounting Standard for Lease Transactions” Accounting

26
26Standards Board of Japan (“ASBJ”), (ASBJ Statement No. 13, issued on
March 30, 2007) is allocated over the remaining lease term using thestraight-line method.
Differences between income before income taxes for the fiscal year
ending March 31, 2012 and 2011, and income before income taxes calculated if accounting treatment for the ordinary sale transaction would havebeen applied to the finance leases which do not transfer ownership of theleased assets to the lessee are not material.
d. Securities
Trading securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations arerecognized as gains or losses in the period of the disposal or the change.
Held-to-maturity debt securities are stated at amortized cost, net of theamount considered not collectible. Available-for-sale securities with available fair values are stated at fair value. Unrealized gains and losses onthese securities are reported, net of applicable income taxes, as a separate
component of accumulated other comprehensive income. Available-forsale securities with no available fair value are stated at moving average
cost.
If the fair value of held-to-maturity debt securities or available-for-salesecurities declines significantly, such securities are stated at fair value, andthe difference between fair value and the carrying amount is recognized asa loss in the period of the decline. The fair value will be the carrying
amount of the securities at the beginning of the next fiscal year.
Money held in trust for trading purposes is reported at fair value.
e. Derivatives and hedge accounting
To account for hedging transactions in connection with interest rate risk
arising from financial assets and liabilities, the Bank applies the deferredhedge accounting method stipulated in “Treatment for Accounting and
Auditing of Application of Accounting Standard for Financial Instrumentsin the Banking Industry” (JICPA Industry Audit Committee Report No.
24). The Bank assesses the effectiveness of such hedge in offsetting movement in the fair value from changes in interest rates by classifying thehedged items, such as deposits and loans, and the hedging instruments,
such as interest rate swaps, by their maturity. Regarding cash flow hedges,
the Bank assesses the effectiveness through verifying the correlation of thehedged items with the hedging instruments.
A portion of the deferred hedge losses and gains that was previously
accounted for under the “macro hedge method,” which had been appliedin order to manage interest rate risk arising from large volume transactions
in loans, deposits and other interest earning assets and interest bearing liabilities as a whole using derivatives pursuant to “Temporary Treatment for
Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 15), is no longer subject to hedge accounting. The deferredhedge losses and gains are being charged to “Interest income” or “Interest
expenses” over a 15-year period (maximum) from March 31, 2004 according to their maturity and notional principal amount. The total amount ofdeferred hedge loss under the “macro hedge method” was ¥12 million($146 thousand) in 2012 and ¥29 million in 2011.
In order to hedge risk arising from the volatility of exchange rates forsecurities (excluding bonds) denominated in foreign currencies, the Bank
applies fair value hedge accounting on the conditions that the hedged securities are designated in advance and that sufficient on balance (actual) or
off-balance (forward) liability exposure exists to cover the cost of thehedged securities denominated in the same foreign currency.

g. Reserve for possible loan losses
The reserve for possible loan losses is provided according to predetermined standards. For loans to insolvent customers who are undergoingbankruptcy or other special liquidation (“bankrupt borrowers”) or who arein a similar financial condition (“effectively bankrupt borrowers”), the reserve for possible loan losses is provided based on the amount of theclaims net of the amount expected to be recovered from collateral andguarantees and net of the deducted amount mentioned below. For the unsecured and unguaranteed portions of loans to customers not presently inthe above circumstances, but for whom there is a high probability of so
becoming (“likely to become bankrupt borrowers”), the reserve for possible loan losses is provided for the estimated unrecoverable amounts determined after an evaluation of the customer’s overall financial condition. For
other loans, the reserve for possible loan losses is provided for based on
the Bank’s actual rate of loan losses in the past.
For claims against “bankrupt borrowers” and “effectively bankrupt
borrowers,” the amount exceeding the estimated value of collateral andguarantees is deemed uncollectible and deducted directly from thoseclaims. At March 31, 2012 and 2011, the deducted amounts were ¥17,150
million ($208,662 thousand) and ¥21,985 million, respectively. The reserve for possible loan losses of the consolidated subsidiaries is provided
for general claims by the amount deemed necessary based on the historical loan-loss ratio and for certain doubtful claims by the amount deemed
uncollectible based on an assessment of each claim.
h. Employee retirement benefits
The reserve for retirement benefits, which is provided for future pension
payments to employees, is recorded based on the projected benefit obligation and the estimated value of pension plan assets at the end of the fiscal
year.
Prior service costs are recognized as profit or loss at the time of occurrence, and actuarial gains or losses are recognized in gains or expenses inequal amounts from the following fiscal year by the straight-line method
over ten years, which is within the average remaining service years of thecurrent employees.

k. Lease assets
Lease assets with respect to finance leases that do not transfer ownershipof tangible fixed assets and intangible fixed assets are depreciated or amortized using the straight-line method with the assumption that the term of
the lease is the useful life. Residual values of leased assets are the guaranteed values determined in the lease contracts or zero for assets without
such guaranteed value.
l. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
m. Recognition criteria for lease income and costs
Lease income and costs are recognized at the time of receiving lease fees.
n. Reserve for reimbursement of deposits
A reserve for reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for possible losses on the future claims of withdrawal based on historical reimbursement experience.

Consolidated Financial Statements

f. Tangible fixed assets
Depreciation of tangible fixed assets of the Bank is computed by the declining balance method. The estimated useful lives of major items are as
follows:
Buildings
6 to 50 years
3 to 20 years
OthersDepreciation of the assets of the consolidated subsidiaries is principally provided on the declining balance method over the estimated useful lifeof the asset.

o. Reserve for contingent loss
Providing for the payment of contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not coveredby other reserves in an amount deemed necessary based on estimated losses in the future.
p. Consumption taxes
Transactions subject to national and local consumption taxes are recorded
at amounts exclusive of consumption taxes.
q. Accounting changes and error corrections
On December 4, 2009, the ASBJ issued ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error Corrections” andASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes and Error Corrections.” The new accounting standard has defined the accounting treatment for retrospective applications to past financial statements when changes in accounting policies, changes inpresentations and corrections of prior period errors are made as well as thetreatment for changes in accounting estimates. The Bank applied the new
accounting standard to accounting changes and error corrections made on
or after April 1, 2011.

i. Income taxes
Deferred income taxes are recorded to reflect the tax effects of temporary
differences between the carrying amounts of assets and liabilities for tax
and financial reporting purposes.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
j. Intangible fixed assets
Amortization of intangible fixed assets is computed by the straight-line
method. Acquisition costs of software to be used internally are capitalized
and amortized by the straight-line method primarily over a useful life of
five years.

27
27

Consolidated Financial Statements

Consolidated Financial Statements

3. SEGMENT AND RELATED INFORMATION(1) Overview of the Reportable Segments
The Bank’s reportable segments are determined on the basis that separate financial information for such segments is available and examined periodicallyby the Board of Directors to make decisions regarding the allocation of management resources and assess the business performances of such segments
within the Group. The Group’s main operations is banking. The Bank also provides securities services and operates credit guarantee business and leasing
and credit card businesses. The Group has divided its business operations into the two reportable segments of “Banking and Securities” and “Leasing.”
Banking and Securities includes banking and the security business, and Leasing includes leasing.
(2) Basis of measurement about reported segment profit (loss), segment assets, segment liabilities and other material items
The accounting method used for reportable business segments is presented in accordance with “Summary of significant accounting policies.” The reportable segment profit figures are based on operating profit. Intersegment internal rates of return and the amounts transferred are presented based on current
market prices at the time of this report.
(3) Information about reported segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the years ended March 31, 2012 and 2011 is summarized as follows:
Millions of yen

2012
Reportable segments

Ordinary income:Outside customers ......................................
Intersegment income ...................................
Total ........................................................
Segment profit .................................................
Segment assets ................................................
Segment liabilities ...........................................
Other item
Depreciation ...............................................
Interest income ...........................................
Interest expense ..........................................
Extraordinary gain ......................................
Extraordinary loss .......................................
Tax expense ................................................
Increase in tangible
and intangible fixed assets ..........................

Banking and
Securities

Leasing

Total

Other

Total

Adjustment

Consolidated¥79,928
475
80,4049,178
4,799,083
4,615,454¥6,469
1,638
8,107
(138)
22,071
19,479¥86,397
2,114
88,512
9,040
4,821,155
4,634,934¥2,080
4,366
6,446
2,450
36,7909,398¥88,478
6,480
94,958
11,4904,857,946
4,644,332¥1,597(6,480)(4,883)
185(48,370)(46,998)¥90,075—
90,075
11,676
4,809,575
4,597,334

5,107
61,945
6,371
—
444
5,418

274
1
247
—
0
(36)

5,381
61,946
6,619
—
444
5,382

85
807
20
—
0
1,061

5,466
62,754
6,639
—
444
6,444

687
(891)
(954)
—
—
(169)

6,154
61,862
5,685
—
444
6,274

2,833

374

3,207

37

3,244

(324)

2,920

Notes: 1.	“Other” includes business segments except the reporting segments, which includes credit guarantees, real estate leasing and management, software development and credit cards.
2.	Adjustments to each segment item are due to the elimination of transactions among reportable segments, except for the adjustment to increase in tangible fixed assets andintangible fixed assets which arose from transactions among reportable segments.
3.	Adjustments are as below:		 (1)	Adjustment of ordinary income for outside customers of ¥1,597 million is mainly the reversal of allowance for loan losses and recovery of written off claims included in“other.”		 (2)	Adjustment of segment profit of ¥185 million is the elimination of intersegment transactions.
		 (3)	Adjustment of segment assets of negative ¥48,370 million is the elimination of intersegment transactions.
		 (4)	Adjustment of segment debt of negative ¥46,998 million is the elimination of intersegment transactions.
		 (5)	Adjustment of depreciation of ¥687 million is the elimination of intersegment transactions.
		 (6)	Adjustment of interest income of negative ¥891 million is the elimination of intersegment transactions.
		 (7)	Adjustment of interest expenses of negative ¥954 million is the elimination of intersegment transactions.
		 (8)	Adjustment of tax expenses of negative ¥169 million is the elimination of intersegment transactions.
		 (9)	Adjustment of increase in tangible fixed assets and intangible fixed assets of negative ¥324 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to net income in the consolidated statements of income.

28
28

Millions of yen

2011
Reportable segments

Increase in tangible
and intangible fixed assets ..........................

Leasing

Total

Other

Total

Adjustment

Consolidated¥82,370
493
82,863
11,445
4,597,833
4,418,267¥6,653
1,838
8,492
255
23,05920,365¥89,023
2,332
91,355
11,7014,620,893
4,438,632¥1,957
4,679
6,637
980
35,9189,272¥90,981
7,011
97,993
12,681
4,656,812
4,447,905¥—(7,011)(7,011)
100(48,250)(46,519)¥90,981—
90,981
12,781
4,608,561
4,401,386

4,710
65,362
7,784
1,480
469
5,871

279
1
303
34
0
119

4,990
65,364
8,088
1,514
469
5,991

80
839
31
255
42
239

5,070
66,203
8,119
1,770
512
6,231

1,136
(927)
(976)
—
—
41

6,206
65,276
7,143
1,770
512
6,273

3,672

22

3,695

80

3,775

91

3,867

Consolidated Financial Statements

Ordinary income:Outside customers ......................................
Intersegment income ...................................
Total ........................................................
Segment profit .................................................
Segment assets ................................................
Segment liabilities ...........................................
Other item
Depreciation ...............................................
Interest income ...........................................
Interest expense ..........................................
Extraordinary gain ......................................
Extraordinary loss .......................................
Tax expense ................................................

Banking and
Securities

Notes: 1.	“Other” includes business segments except the reporting segments, which includes credit guarantees, real estate leasing and management, software development and credit cards.
2.	Adjustments to each segment item are due to the elimination of transactions among reportable segments, except for the adjustment to increase in tangible fixed assets andintangible fixed assets which arose from transactions among reportable segments.
3.	Adjustments are as below:		 (1) Adjustment of segment profit of ¥100 million is the elimination of intersegment transactions.
		 (2) Adjustment of segment assets of negative ¥48,250 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment debt of negative ¥46,519 million is the elimination of intersegment transactions.
		 (4) Adjustment of depreciation of ¥1,136 million is the elimination of intersegment transactions.
		 (5) Adjustment of interest income of negative ¥927 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest expenses of negative ¥976 million is the elimination of intersegment transactions.
		 (7) Adjustment of tax expenses of ¥41 million is the elimination of intersegment transactions.
		 (8) Adjustment of increase in tangible fixed assets and intangible fixed assets of ¥91 million is the elimination of intersegment transactions.
4. Segment profit is reconciled to net income in the consolidated statements of income.
Thousands of U.S. dollars

2012
Reportable segments

Ordinary income:Outside customers ......................................
Intersegment income ...................................
Total ........................................................
Segment profit .................................................
Segment assets ................................................
Segment liabilities ...........................................
Other item
Depreciation ...............................................
Interest income ...........................................
Interest expense ..........................................
Extraordinary gain ......................................
Extraordinary loss .......................................
Tax expense ................................................
Increase in tangible
and intangible fixed assets ..........................

Banking and
Securities

Leasing

Total

Other

Total

Adjustment

Consolidated$972,478
5,779
978,269
111,668
58,390,108
56,155,907$78,707
19,92998,637(1,679)268,536
236,999$1,051,186
25,7201,076,919
109,989
58,658,656
56,392,918$25,30753,12078,42829,808447,621
114,344$1,076,505
78,841
1,155,347
139,798
59,106,290
56,507,263$19,430(78,841)(59,411)2,250(588,514)(571,821)$1,095,936—
1,095,936
142,061
58,517,763
55,935,442

62,136753,680
77,515—
5,402
65,920

3,333
12
3,005
—
0
(438)

65,470753,692
80,532—
5,402
65,482

1,034
9,818
243
—
0
12,90966,504
763,523
80,776—
5,402
78,403

8,358(10,840)(11,607)——(2,056)74,875752,670
69,168—
5,402
76,33534,4684,550

39,019450

39,469(3,942)35,527

Notes: 1.	“Other” includes business segments except the reporting segments, which includes credit guarantees, real estate leasing and management, software development and credit cards.
2.	Adjustments to each segment item are due to the elimination of transactions among reportable segments, except for the adjustment to increase in tangible fixed assets andintangible fixed assets which arose from transactions among reportable segments.
3.	Adjustments are as below:		 (1)	Adjustment of ordinary income for outside customers of $19,430 thousand is mainly the reversal of allowance for loan losses and recovery of written off claims included in“other.”		 (2) Adjustment of segment profit of $2,250 thousand is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative $588,514 thousand is the elimination of intersegment transactions.
		 (4) Adjustment of segment debt of negative $571,821 thousand is the elimination of intersegment transactions.
		 (5) Adjustment of depreciation of $8,358 thousand is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative $10,840 thousand is the elimination of intersegment transactions.
		 (7) Adjustment of interest expenses of negative $11,607 thousand is the elimination of intersegment transactions.
		 (8) Adjustment of tax expenses of negative $2,056 thousand is the elimination of intersegment transactions.
		 (9) Adjustment of increase in tangible fixed assets and intangible fixed assets of negative $3,942 thousand is the elimination of intersegment transactions.
4.	Segment profit is reconciled to net income in the consolidated statements of income.

29
29

Consolidated Financial Statements(4) Information about services
Millions of yen

2012

Ordinary income from outside customers ......

Banking

Securities andinvestments

Leasing

OthersTotal¥43,507¥22,775¥6,469¥17,323¥90,075

Consolidated Financial Statements

Millions of yen

2011

Ordinary income from outside customers ......

Banking

Securities andinvestments

Leasing

OthersTotal¥46,214¥23,993¥6,653¥14,119¥90,981

Thousands of U.S. dollars

2012

Ordinary income from outside customers ......

Banking

Securities andinvestments

Leasing

OthersTotal$529,346$277,101$78,707$210,767$1,095,936

Note: Ordinary income is stated as in sales of general enterprises.

(5) Information about geographic areasa. Ordinary income
The ratio of ordinary income from outside customers within Japan to the total ordinary income in the consolidated statement of income exceeded 90% for
the both fiscal years ended March 31, 2012 and 2011; therefore, no information about geographic areas is required to be disclosed.
b. Tangible fixed assets
The ratio of tangible fixed assets located in Japan to the total tangible fixed assets in the consolidated balance sheet exceeded 90% for the both fiscal years
ended March 31, 2012 and 2011; therefore, no information about geographic areas is required to be disclosed.
(6) Information about major customers
Ordinary income from a specific customer exceeding 10% of the total consolidated ordinary income did not exist for either fiscal year ended March 31,
2012 or 2011. Therefore, information about major customers is not required to be disclosed.
(7) Information on Impairment of Fixed Assets for Each Reportable Segment
Millions of yen

2012
Reportable segments
Banking and
Securities

Impairment .....................................................

Leasing

¥320

—

Total

Others

¥320

Total

—

¥320

—

¥98

—

$3,893

Millions of yen

2011
Reportable segments
Banking and
Securities

Impairment .....................................................

Leasing

¥98

—

Total

Others

¥98

Total

Thousands of U.S. dollars

2012
Reportable segments
Banking and
Securities

Impairment .....................................................

Leasing$3,893—

Total$3,893(8) Information on amortization of goodwill and its remaining balance for each reportable segment
There is no information to be reported on amortization of goodwill and its remaining balance.
(9) Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill.

30
30

OthersTotal

4. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2012 and 2011 are as follows:(Thousands of shares)

2012
March 31, 2011

Increase

Decrease

March 31,2012

281,756
281,756————

281,756
281,756

6,073
6,073

17
17

19
19

6,072
6,072

Note: Increase/decrease in number of shares of treasury stock is due to the purchase/sale of fractional shares and shares less than one unit.
(Thousands of shares)

2011
March 31, 2010

Shares issued
Common stock ...........................................
Total .......................................................
Treasury stock
Common stock ...........................................
Total .......................................................

Increase

Decrease

March 31,2011

281,756
281,756————

281,756
281,756

6,037
6,037

41
41

4
4

6,073
6,073

Consolidated Financial Statements

Shares issued
Common stock ...........................................
Total .......................................................
Treasury stock
Common stock ...........................................
Total .......................................................

Note: Increase/decrease in number of shares of treasury stock is due to the purchase/sale of fractional shares and shares less than one unit.

(2) Matters concerning Stock Acquisition Rights
For the year ended March 31, 2012
Shares expected to be acquired upon exercise of stock acquisition rights
Number of sharesClassification
The Bank

Breakdown2012 stockacquisition rights
granted as stock
options

March 31, 2011

Total

Increase

Decrease

March 31, 2012

Balance at the end of (Thousands of U.S.
current fiscal year
dollars)(Millions of yen)

—

—

—

—

¥64

$778

—

—

—

—

¥64

$778

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2012
Resolution

Annual shareholders meeting held on
June 29, 2011
Board of Directors meeting held on
November 11, 2011

Type of shares

Millions of yen, except per share amount
Aggregate amount of
Cash dividends
dividends
per share
Record date

Effective dateCommon stock

¥827

¥3.00

March 31, 2011

June 30, 2011

Common stock

¥827

¥3.00

September 30, 2011

December 9, 2011

Dividends paid in the fiscal year ended March 31, 2011
Resolution

Annual shareholders meeting held on
June 29, 2010
Board of Directors meeting held on
November 12, 2010

Type of shares

Millions of yen, except per share amount
Aggregate amount of
Cash dividends
dividends
per share
Record date

Effective dateCommon stock

¥827

¥3.00

March 31, 2010

June 30, 2010

Common stock

¥827

¥3.00

September 30, 2010

December 10, 2010(b) Dividends to be paid in the fiscal year ending March 31, 2013
Resolution

Annual shareholders meeting held on
June 28, 2012

Type of shares

Common stock

Aggregate amount ofdividends¥827

Millions of yen, except per share amount
Source ofCash dividends
dividends
per share
Record date

Retainedearnings¥3.00

March 31, 2012

Effective dateJune 29, 201231
31

Consolidated Financial Statements

5. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2012 and 2011 and cash and cash equivalents in the
consolidated statements of cash flows for the years then ended are as follows:
Thousands of
U.S. dollars

Millions of yen

Consolidated Financial Statements

Cash and due from banks on the consolidated balance sheet
Time deposits due from banks
Other due from banks
Cash and cash equivalents on the consolidated statements of cash flows

6. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
a. Matters relating to the status of financial instruments(1) Policy on financial instruments
The Group (the Bank and its subsidiaries) is composed of the Bank andtwelve consolidated subsidiaries, and provides financial services such as
banking, securities, credit guarantee and leasing businesses.
Major banking business includes (i) acceptance of deposit, lending
services, bills discounting and remittance, and (ii) guarantee of debt, acceptance of bills, and other services related to banking business. Securities
business includes underwriting and dealing securities, over-the-counter
derivative transaction, and other related services including security index
future transactions in accordance with Financial Instruments and Exchange Act.
On the other hand, the Bank, in addition to being money lender andborrower in the interbank market to adjust the surplus funds, raises thefunds by loans and bonds with considering the balance of financial market
conditions and length.
The Bank conducts asset and liability management (ALM) and manages the risks identifying various types of risk exposures associated withthe banking business, since the Bank holds financial assets and liabilities
exposed to the market risk associated with the fluctuation of interest rates.
As part of its risk management, the Bank utilizes derivative transactions
such as interest rate swaps. The Bank also enters into derivative transaction for trading purposes with certain position limits.
(2) Contents and risk of financial instruments
Financial assets held by the Group are composed mainly of loans to corporate and individual customers which are exposed to credit risk arisingfrom nonperformance of the customers. In addition, the loan balances are
significantly concentrated to Nara prefecture where the head office of the
Bank is located. Accordingly, changes in the economic circumstances of
the region may have a great impact on the credit risk.
Securities principally consist of Japanese government bonds, Japanese
local government bonds, equity securities, foreign securities, investment
trusts that are classified as other securities (available-for-sale), privatebonds guaranteed by the Bank that are classified as held-to-maturity debt
securities and Japanese government bonds classified as trading purpose
securities. These securities are exposed to the credit risk of issuers and themarket risk of fluctuation in interest rates and market prices. In addition,
since financial assets denominated in foreign currencies are exposed to exchange rate risk, currency related derivative transactions are used to balance the amount of each currency to reduce the risk.
In the banking business, financial liabilities consist principally of deposits from retail clients in Japan and are exposed to interest rate risk. In
addition, foreign currency deposits are exposed to exchange rate risk. With
respect to borrowed money and bonds, the Group may be forced to raise
funds under unfavorable conditions and accordingly, significantly exposed
to liquidity risk if the fund raising capacity of the Group significantly de-

32
32

2012

2011

¥131,459(21,015)(838)¥109,606¥91,151(21,000)(2,048)¥68,1032012$1,599,452(255,688)(10,195)$1,333,568

clined and failed to repay under circumstances such as the significant deterioration of the financial position of the Group. Furthermore, borrowed
money with floating interest rates is exposed to interest rate risk.
Derivative transactions include interest rate swaps for interest rate related transactions, currency swaps, and forward foreign exchange transactions for currency related transactions and bond future transactions forbond related transactions. In addition, certain credit derivatives are embedded in the financial instruments. The Bank utilizes those derivative transactions in order to hedge the position of the customers as well as to capture various risks associated with transactions with customers and control
those risks properly. The Bank also uses derivatives for trading purposeswith certain position limits. The Bank applies the deferred hedge accounting method for derivative transactions when used as hedging instruments.
Interest rate swaps are used as hedging instruments to avoid interest raterisks of the hedged items such as loans with fixed interest rates and deposits with fixed interest rates. Deferred hedge accounting has been applied toderivatives used as hedging instruments.
The Bank assesses the effectiveness of hedges in offsetting movementin the fair value from changes in interest rates by classifying the hedged
items such as deposits and loans and the hedging instruments such as interest rate swaps by their maturity. For cash flow hedges, the Bank assesses the effectiveness by verifying the correlation between the hedged items
and the hedging instruments. Transactions which do not meet the requirements of hedge accounting and derivative transactions for trading purposes
are exposed to interest rate risk, currency risk, price fluctuation risk andcredit risk.
(3) Risk management system for financial instruments
Credit risk management:
The Group establishes a framework for credit control which includes
credit review by individual transaction, credit limit, credit information
management, internal credit rating, guarantees and collateral and self-assessment in accordance with the Group’s “Rules on credit risk management” and “Rules on self-assessment of assets.” These credit controls are
performed by each branch and the Credit Analysis Division, and the independent Audit Department audits the status of credit risk controls and its
results. The status of credit risk controls are periodically evaluated and reported to the managing directors’ committee and board meeting.
Credit risks associated with the issuers of securities are managed by
Securities & International Division and Compliance & Risk Management
Division. With respect to the credit risks associated with the issuer of the
securities and counterparty risk associated with derivative transactions, related credit information and fair values of the securities are periodicallychecked to monitor those risks.

(b) Foreign currency risk
With regard to foreign currency risk associated with operations and procurement of financial instruments denominated in foreign currency, theGroup manages risk by balancing the amount of funding and amount ofoperations for each currency. In addition, as for foreign currency exchangetransactions for investment purposes, the Compliance & Risk Management Division assesses the foreign currency risk by VaR, reports to the
ALM committee on a monthly basis and properly monitors its operations.
(c) Price fluctuation risk
With regard to investments in securities, the Group prepares its asset management plan semiannually and makes investment decisions at the ALM
Committee based upon expected returns and correlations between investment items and related market fluctuation risk. The Securities & International Division plays a part in investment for investment purposes, and theGeneral Business Division plays a part in investments for the purpose ofbusiness alliances and capital affiliation. Continuous monitoring of market
conditions and restrictions on riskier assets such as securitized instruments
help to avoid unnecessary price fluctuation risk.
The Compliance & Risk Management Division assesses the price fluctuation risk of equity securities, etc. by VaR, reports monthly to the ALM
Committee about compliance with risk limits and properly manages therisk.

(e) Quantitative information relating to market risk
The Group manages the quantity of market risk for financial instruments
such as loans, deposits, securities and derivatives by VaR. To calculate
VaR, the historical method (confidence level of 99%, observation period
of 1,250 business days, holding period of 60 business days [holding period
for the shares other than net investment purposes are 120 business days]
and correlation of risk categories are not considered.) is adopted.
At March 31, 2012, the Group’s total market risk (decrease in estimated economic value) was ¥51,731 million ($629,407 thousand) (¥57,576
million in 2011). In addition, the Group conducted back test to compare
actual income with the VaR calculated by the model. According to backtests conducted in 2011, the measurement model captured the quantity ofmarket risk with sufficient accuracy. However, VaR is a statistical measureof market risk based on past fluctuations in the market and certain probability of occurrence. It may not be possible to capture the risk if the market fluctuates rapidly under extraordinary circumstances.

Consolidated Financial Statements

Market risk management:(a) Interest rate risk
From the perspective of ALM, the Group manages market risk such as interest rate risk associated with assets and liabilities, including loans, deposits and securities comprehensively. The Group’s “Rules on Market
Risk Management” articulates that the Bank make efforts to manage themarket sector effectively, taking risk and reward into account as well as
avoiding excessive risk taking by setting appropriate risk limits based on
the Group’s ability to take risk and identifying market risk properly.
The ALM Committee, the decision making entity on the managementof market risks, sets certain semiannual risk limits determined by VaRbased upon the Bank’s capital adequacy and market conditions. The Bank
pursues profit opportunity within the risk limits above. The Compliance &Risk Management Division assesses interest rate risk by VaR, reports to
the ALM Committee on a monthly basis and properly monitors its operation. Other methodologies such as BPV and the simulation of the interest
rate fluctuation are also used so that the Bank can capture and analyze risk
from a broader point of view.

Management of liquidity risk associated with financing activities
The Securities & International Division manages the Bank’s cash position
based upon the monthly funding plan designed by the ALM Committee,
while The Compliance & Risk Management Division monitors the situation. The ALM Committee manages financing risk comprehensively by
understanding the amount of cash for which the Bank can liquidate andalso can raise funds from the market on a regular basis.
In addition the Group categorizes its financing situation into “RegularPhase,” “Concern Phase” and “Crisis Phase,” and prepares appropriate
management structures for each phase so that the Group can take proper
action accordingly.
(4) Supplementary explanation on the fair value of financial instruments
The fair values of financial instruments comprise the values determinedbased on the quoted market prices and the values calculated on a reasonable basis when no market price is available. Certain assumptions are used
for the calculation of such amounts, and, accordingly, the result of suchcalculations may vary if different assumptions are used.

(d) Derivative transactions
With respect to derivative transactions for hedging purposes, the Groupestablishes internal rules defining the authority and hedge policies which
are governed by The Compliance & Risk Management Division. With respect to derivative transactions for the trading purposes, certain trading
limits and loss limit rules are set semiannually by the ALM Committee.
The Compliance & Risk Management Division, which serves as the middle office, monitors compliance and calculates the total amount of risk.
The Securities & International Division, which serves as the back office,checks each derivative transaction, marked-to-market position, and evaluates the profit and loss from the transactions on a daily basis. Combinedwith those functions, the related divisions check each other so as not toexceed the limit on loss.
The directors of the Bank are reported to from both the middle office and back office and monitor the risk associated with the Bank’s
portfolio as a whole, including loans, deposits and securities at the
ALM Committee.

33
33

Consolidated Financial Statements

b. Fair value of financial instruments
The following table summarizes the carrying amounts, fair values and differences of financial instruments as of March 31, 2012 and 2011:
Note that equity securities whose fair values are extremely difficult to estimate and immaterial accounts are not included in the table (see Note 2 below).
Millions of yen

2012

Consolidated Financial Statements

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
Trading account securities:
Trading securities ...................................................................................
Money held in trust ....................................................................................
Securities
Held-to-maturity debt securities ............................................................
Available-for-sale securities ..................................................................
Loans and bills discounted .........................................................................
Reserve for possible loan losses (*1) ....................................................
Total assets .................................................................................................
Deposits ......................................................................................................
Negotiable certificates of deposit ...............................................................
Payable under securities lending transactions ............................................
Borrowed money ........................................................................................
Bonds .........................................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
To which hedge accounting is not applied .............................................
To which hedge accounting is applied ...................................................
Total derivative transactions .......................................................................

Carrying amount

Fair value

Difference¥131,459
12,0804,075¥131,459
12,080
4,075

¥—
—
—

400
25,000400
25,000——3,945
1,748,774
2,785,671(27,888)2,757,782¥4,683,518¥4,277,409
65,744104,266
63,78320,000¥4,531,204

3,979
1,748,774

34—

2,776,977¥4,702,748¥4,279,936
65,744104,266
63,72820,342¥4,534,018

19,194¥19,229¥2,527
—
—
(54)
342
¥2,814(1,590)(1,489)¥(3,079)(1,590)(1,498)¥(3,088)

—
(9)
¥(9)

Millions of yen

2011

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
Trading account securities:
Trading securities ...................................................................................
Money held in trust ....................................................................................
Securities
Held-to-maturity debt securities ............................................................
Available-for-sale securities ..................................................................
Loans and bills discounted .........................................................................
Reserve for possible loan losses (*1) ....................................................
Total assets .................................................................................................
Deposits ......................................................................................................
Negotiable certificates of deposit ...............................................................
Payable under securities lending transactions ............................................
Borrowed money ........................................................................................
Bonds .........................................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
To which hedge accounting is not applied .............................................
To which hedge accounting is applied ...................................................
Total derivative transactions .......................................................................

34
34

Carrying amount

Fair value

Difference¥91,151
3,429
4,716

¥91,151
3,429
4,716

¥—
—
—

786
24,500786
24,500——4,756
1,661,168
2,709,612(31,079)
2,678,533¥4,469,043¥4,117,087
64,008116,10927,36920,000¥4,344,575

4,804
1,661,168

47—

2,690,252¥4,480,810¥4,120,691
64,008116,10927,417
20,221¥4,348,448

11,718¥11,766¥3,603——48
221¥3,873(1,192)(1,296)¥(2,489)(1,192)(1,316)¥(2,509)—(19)¥(19)

Thousands of U.S. dollars

2012
Carrying amount

Total assets .................................................................................................
Deposits ......................................................................................................
Negotiable certificates of deposits .............................................................
Payable under securities lending transactions ............................................
Borrowed money ........................................................................................
Bonds .........................................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
To which hedge accounting is not applied .............................................
To which hedge accounting is applied ...................................................
Total derivative transactions .......................................................................

Difference$1,599,452
146,976
49,580$1,599,452
146,976
49,580

$—
—
—

4,866
304,173

4,866
304,173——

47,99821,277,211
33,893,064(339,311)
33,553,741$56,984,036$52,042,937
799,902
1,268,597
776,043
243,338$55,130,843

48,412
21,277,211

413—

33,787,285$57,218,007$52,073,682
799,902
1,268,597
775,374
247,499$55,165,080

233,532$233,957$30,745
—
—
(657)
4,161
$34,237(19,345)(18,116)$(37,461)(19,345)(18,226)$(37,571)—(109)$(109)Consolidated Financial Statements

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
Trading account securities
Trading securities ...................................................................................
Money held in trust ....................................................................................
Securities:
Held-to-maturity debt securities ............................................................
Available-for-sale securities ..................................................................
Loans and bills discounted .........................................................................
Reserve for possible loan losses (*1) ....................................................

Fair value(*1) General reserve for possible loan losses and specific reserve for possible loan losses corresponding to loans are deducted.
(*2) Derivative transactions recorded under other assets and other liabilities are presented on a net basis, and total amounts of net liabilities are presented in parentheses.

(Note 1) Computation method for fair value of financial instruments
AssetsCash and due from banks:
With respect to due from banks without maturities, the carrying amount ispresented as the fair value as the fair value approximates the carrying
amount. With respect to due from banks with maturities, the fair value iscalculated, by discounting its cash flow at the interest rate assumed if thesame due from banks were newly executed, for each category of maturities. The fair value of the derivative embedded due from banks is determined based on the prices presented by the financial institutions withwhich they are transacted.
Call loans and bills bought:
The carrying amount is presented as the fair value as the residual maturity
is less than one year and the fair value approximates the carrying amount.
Debt purchased:
The carrying amount of the lump sum factoring receivables is presented as
the fair value as the residual maturity is less than one year and the fair value approximates the carrying amount.
Trading account securities:
The fair values of the securities held for the trading purpose are determined based on the quoted market prices, or the values calculated on areasonable basis if no market price is available.
Money held in trust:
The fair values of the securities held in a stand-alone trust for the asset
management purpose are determined based on the values presented by thetrust bank. For additional information on money held in trust by holding
purpose, please see Note 7 “Securities and Money held in trust.”

Securities:
The fair values of equity securities are determined using the market priceat the exchanges. The fair values of debt securities are determined basedon the market prices or the values calculated on a reasonable basis if nomarket price is available. The fair values of listed investment trusts are determined using the market price at the exchanges and other investment
trusts are determined using standard prices published by the Investment
Trust Association, Japan or presented from the financial institutions withwhich they are transacted. The fair values of the private bonds guaranteedby the Bank are calculated, by discounting the aggregate value of principle
and interest at the interest rate assumed if the same bond were newly issued, for each category of type of terms, redemption method, and guarantees. With respect to the private bonds guaranteed by the Bank issued by“bankrupt borrowers,” “effectively bankrupt borrowers” and “likely to become bankrupt borrowers,” the possible amounts of loan loss are computed based on the present value of estimated future cash flow or the recoverable amounts from collaterals and guarantees; therefore, the fair value
approximates the carrying amount, net of reserve for possible loan losses
and such amount is presented as the fair value.
With regard to floating rate Japanese government bonds held as “securities,” the market value is unlikely to indicate the fair value due to extraordinary few trading case of such bonds, and determined such bonds
have been carried at their reasonably estimated amounts in this fiscal year
end. As a result, “Japanese Government Bond” included in “Securities”
and “Net unrealized gains on securities available for sale, net of tax” increased by ¥8,308 million ($101,082 thousand) and ¥5,367 million($65,299 thousand) at March 31, 2012, and ¥15,932 million and ¥9,495
million at March 31, 2011, respectively, and “deferred tax assets” decreased by ¥2,941 million ($35,782 thousand) at March 31, 2012, and¥6,436 million at March 31, 2011, compared with the result using themarket price.
Reasonably estimated amounts of floating-rate Japanese government
bonds consists of the net value of discounted cash flow adjusting convexity from the floating-rate Japanese government bonds and the net value of35
35

Consolidated Financial Statements

Consolidated Financial Statements

discounted cash flow of zero-floor options calculated by the Black-Sholes
option pricing model. The main variables of pricing decision for the above
calculations are the Japanese government bond spot rate as market-yieldand yen swaption volatility as forward rate volatility. The theoretical prices of parties of each series of floating-rate Japanese government bonds are
determined from the quotes of venders and verified for their adequacy by
the Bank.
For additional information on securities by holding purpose, please see
Note 7 “Securities and Money held in trust.”
Loans and bills discounted:
The fair value of loans with floating interest rates is presented using thecarrying amount as the fair value approximates the carrying amount, aslong as the credit situation of the borrowers does not vary significantly after executing the loans, since they reflect the market interest rates due totheir short-term nature. The fair value of loans with fixed rates is computed, by discounting the aggregate value of principal and interest at the interest rate assumed if the same loans were newly executed, for each category of type of loans, internal ratings and maturities. As for the loans
whose maturity is less than one year, the carrying amount is presented as
the fair value as the fair value approximates the carrying amount.
With respect to receivables from “bankrupt borrowers,” “effectively
bankrupt borrowers” and “likely to become bankrupt borrowers,” the possible amounts of loan loss are computed based on the present values of theestimated future cash flow or the recoverable amounts from collaterals andguarantees; therefore, the fair value approximates the carrying amount, netof reserve for possible loan losses and such amount is presented as the fairvalue.
The fair value of loans without predetermined repayment date due totheir characteristics which the lending amounts are limited within the values of the applicable collaterals is presented using the carrying amount, as
the fair value is deemed to approximate the carrying amounts considering
the estimated repayment term and interest rates. The fair value of embedded derivative loans is presented using market prices at financial institutions.

Liabilities
Deposits and negotiable certificates of deposits:
With respect to on-demand deposits, the payment obligation when demanded at the balance sheet date, which is the carrying amount, is deemed
to be the fair value. The fair value of time deposits is computed using thepresent value by discounting future cash flows for each category of certain
period. The interest rate to be applied when a new deposit is taken is usedas the discount rate. Deposits whose residual maturity is less than one
year, the carrying amount is presented as the fair value as the fair value
approximates the carrying amount.
Payables under securities lending transactions:
The carrying amount is presented as the fair value as the residual maturity
is less than one year and the fair value approximate the carrying amount.
Borrowed money:
The fair value of borrowed money with floating interest rate is presented
using the carrying amount as the fair value approximates the carrying
amount since the interest rates reflect the market interest rate due to theirshort-term nature and the credit situation of the Bank and its consolidated
subsidiaries does not vary significantly after the executing the borrowing.
The fair value of borrowed money with fixed interest rate is computed, by
discounting the aggregate value of principal and interest at the interest rate
assumed if the same borrowing were newly executed, for each category oftype of maturities. As for the borrowed money whose maturity is less than
one year, the carrying amount is presented as the fair value as the fair value approximates the carrying amount.
Bonds:The bonds issued by the Bank are all unsecured and subordinated bonds.
The fair value of such bonds is determined using market price.
Derivative transactions
For the derivative transactions, please see Note 21 “Derivative Transactions.”(Note 2) The following table summarizes financial instruments whose fair value is extremely difficult to estimate: Note that these instruments are not included in the aforementioned table regarding the fair value of financial instruments.
Carrying amountThousands of
U.S. dollars

Millions of yen

2012

Unlisted equity securities (*1) (*2) ....................................................................
Investment in Partnership (*3) ............................................................................
Total ....................................................................................................................

¥2,333441¥2,7752011¥2,270752¥3,023

2012$28,385
5,365$33,763(*1) The fair value of unlisted equity securities is not disclosed, since there is no market price and it is extremely difficult to estimate the fair value.
(*2)	The Bank recognized loss on impairment of ¥6 million on unlisted equity securities for the year ended March 31, 2011. No impairment loss was recognized for the year ended March
31, 2012.
(*3) The fair value of unlisted equity securities among the investment in partnership is not disclosed, since there is no market price and it is extremely difficult to estimate the fair value.

36
36

(Note 3) Redemption schedule of monetary claims and securities with maturities
Millions of yen

2012
Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years¥89,315
12,080
4,075
134,589
440
440

¥—
—
—
305,264
1,822
1,822

¥—
—
—
365,487
1,435
1,435

¥—
—
—
330,474
248
248

¥—
—
—
463,640
—
—

¥—
—
—
30,000——134,149
69,3005,203
14,46845,177
849,900¥1,089,960

303,442
167,800
35,33822,261
78,042
377,645¥682,909

364,052
244,000
60,336
14,23245,483
253,489¥618,976

330,226
282,500
34,492
6,508
6,725
181,237¥511,711

463,640
332,000
62,946
12,69456,000210,171¥673,812

30,000———30,000529,840¥559,840

Consolidated Financial Statements

Due from banks ..............................................
Call loans and bills bought .............................
Debt purchased ...............................................
Securities ........................................................
Held-to-maturity debt securities ................
Bonds .....................................................
Available-for-sale securities with
contractual maturities: ...............................
Japanese government bonds ..................
Japanese local government bonds .........
Corporate bonds ....................................
Other ......................................................
Loans and bills discounted (*) .......................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Millions of yen

2011

Due from banks ..............................................
Call loans and bills bought .............................
Debt purchased ...............................................
Securities: .......................................................
Held-to-maturity debt securities: ...............
Bonds .....................................................
Available-for-sale securities with
contractual maturities: ...............................
Japanese government bonds ..................
Japanese local government bonds .........
Corporate bonds ....................................
Other ......................................................
Loans and bills discounted (*) .......................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years¥41,182
3,429
4,523
95,179
580
580

¥—
—
—
289,596
1,636
1,636

¥—
—
192
322,615
1,951
1,951

¥—
—
—
192,450
588
588

¥—
—
—
565,140
—
—

¥—
—
—
72,500——94,59962,1004,132
9,590
18,776
783,764¥928,080

287,959
162,600
19,31522,91083,133391,149¥680,745

320,663
161,500
72,543
8,405
78,214
258,114¥580,922

191,861
150,000
28,456
1,405
12,000168,232¥360,682

565,140
442,500
58,626
8,014
56,000211,531¥776,671

72,50042,500——30,000514,582¥587,082

Thousands of U.S. dollars

2012

Due from banks ..............................................
Call loans and bills bought .............................
Debt purchased ...............................................
Securities: .......................................................
Held-to-maturity debt securities: ...............
Bonds .....................................................
Available-for-sale securities with
contractual maturities: ...............................
Japanese government bonds ..................
Japanese local government bonds .........
Corporate bonds ....................................
Other ......................................................
Loans and bills discounted (*) .......................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years$1,086,689
146,976
49,5801,637,534
5,353
5,353

$—
—
—
3,714,125
22,16822,168$———4,446,854
17,45917,459$———
4,020,854
3,017
3,017

$—
—
—
5,641,075
—
—

$—
—
—
365,007——

1,632,181
843,168
63,304
176,031549,665
10,340,674$13,261,467

3,691,957
2,041,610
429,954
270,848
949,5314,594,780$8,308,906

4,429,395
2,968,730
734,103
173,159553,388
3,084,182$7,531,037

4,017,836
3,437,157
419,661
79,182
81,822
2,205,097$6,225,952

5,641,075
4,039,420
765,859
154,447
681,348
2,557,135$8,198,223

365,007———
365,0076,446,526$6,811,534(*) Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, which are not expected to be repaid, amounting to ¥86,896 million ($1,057,257 thousand)and ¥65,064 million at March 31, 2012 and 2011, are not included respectively.
Loans, whose payment term is not determined, amounting to ¥312,413 million ($3,801,107 thousand) and ¥338,225 million at March 31, 2012 and 2011, are not included respectively.

3737

Consolidated Financial Statements(Note 4) Redemption schedule of bonds, borrowed money and interest bearing liabilities
Millions of yen

2012

Consolidated Financial Statements

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Payables under securities lending transactions ...
Borrowed money ............................................
Bonds .............................................................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years¥3,631,418
65,744104,266
59,151—¥3,860,581¥533,376
—
—
3,547
—
¥536,923¥112,613
—
—
1,085
—
¥113,698

¥—
—
—
—
—
¥—

¥—
—
—
—
20,000¥20,000

¥—
—
—
—
—
¥—

Millions of yen

2011

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Payables under securities lending transactions ...
Borrowed money ............................................
Bonds .............................................................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years¥3,532,229
64,008116,10922,829—¥3,735,176¥476,374
—
—
3,265
—
¥479,639¥108,484
—
—
1,275
—
¥109,759

¥—
—
—
—
—
¥—

¥—
—
—
—
20,000¥20,000

¥—
—
—
—
—
¥—

Due after sevenyears through ten
years

Due after ten
years

Thousands of U.S. dollars

2012

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Payables under securities lending transaction ...
Borrowed money ............................................
Bonds .............................................................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years$44,183,209
799,902
1,268,597
719,686—$46,971,419$6,489,548——
43,156—$6,532,704$1,370,154——
13,201—$1,383,355

$—
—
—
—
—
$—

$

—
—
—
—
243,338$243,338

$—
—
—
—
—
$—

(*) Demand deposits are included in “Due within one year or less.”

7. SECURITIES AND MONEY HELD IN TRUSTThe securities in this note include the “securities” and “trading securities” classified on the consolidated balance sheet.
(1) Information on trading account securities and securities with available market prices at March 31, 2012 and 2011 was as follows:(a) Trading securities
Thousands of
U.S. dollars

Millions of yen

2012

Carrying amount (fair value) ..............................................................................
Amount of net unrealized gains (losses) included in the statements of income ....

2011

¥400
0

2012

$4,866—¥7860(b) Held-to-maturity debt securities
The carrying amount and fair value of held-to-maturity debt securities which have a readily determinable fair value and the related unrealized gain andloss at March 31, 2012 and 2011 was as follows:
Millions of yen

2012

Corporate bonds ..........................................................................

Carrying amount

Fair value

Difference¥3,945¥3,979

¥34

Gain

¥34

Loss

¥—

Millions of yen

2011

Corporate bonds ..........................................................................

Carrying amount

Fair value

Difference¥4,756¥4,804

¥47

Gain

Loss

¥54

¥6

Thousands of U.S. dollars

2012

Corporate bonds ..........................................................................

38
38

Carrying amount

Fair value

Difference$47,998$48,412

$413

Gain

$413

Loss

$—

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

2012
Acquisition cost

Unrealized gains (losses)

Carrying amount exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................

¥49,058
1,355,600
1,096,265
204,080
55,255
169,820
157,425¥1,574,479¥37,582
1,324,237
1,072,121
197,426
54,689166,259
154,545¥1,528,079¥11,476
31,36324,144
6,653
566
3,560
2,880
¥46,400

Carrying amount not exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

¥21,903
54,49334,8901,306
18,297
97,897
90,587¥174,294¥1,748,774¥24,703
54,94934,9001,308
18,740114,921106,978¥194,573¥1,722,652¥(2,799)
(455)
(10)
(1)
(443)
(17,023)(16,390)¥(20,278)¥26,121

Consolidated Financial Statements

Carrying amountMillions of yen

2011
Carrying amount

Acquisition cost

Unrealized gains (losses)

Carrying amount exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................

¥47,443
1,078,037
874,400
172,050
31,586110,203102,277¥1,235,684¥35,948
1,050,127
852,137
166,989
31,000106,675
99,272¥1,192,751¥11,494
27,91022,263
5,060
586
3,527
3,004
¥42,933

Carrying amount not exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

¥29,580
222,986
184,584
16,39922,002
173,110
163,231¥425,677¥1,661,361¥33,813
224,137
185,325
16,484
22,326
187,929
177,473¥445,880¥1,638,631¥(4,232)(1,150)
(741)
(85)
(323)
(14,819)(14,241)¥(20,203)¥22,729

39
39

Consolidated Financial Statements

Thousands of U.S. dollars

2012
Carrying amount

Acquisition cost

Unrealized gains (losses)

Consolidated Financial Statements

Carrying amount exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................

$596,885
16,493,490
13,338,179
2,483,027
672,283
2,066,188
1,915,378$19,156,576$457,257
16,111,899
13,044,421
2,402,068
665,397
2,022,861
1,880,338$18,592,030$139,627
381,591
293,758
80,946
6,886
43,31435,040$564,545

Carrying amount not exceeding acquisition cost:
Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

$266,492
663,012424,504
15,890222,618
1,191,105
1,102,165$2,120,622$21,277,211$300,559
668,560
424,625
15,914228,008
1,398,235
1,301,593$2,367,356$20,959,386$(34,055)(5,535)(121)(12)(5,389)(207,117)(199,415)$(246,721)$317,812(2) Held-to-maturity debt securities sold for the years ended March 31, 2012 and 2011:
Millions of yen

2012
Sales amount

Cost of sales

¥100

¥100

Corporate bonds .........................................................................................

Gains (losses) on sales¥0

Thousands of U.S. dollars

2012
Sales amount

Cost of sales$1,126$1,216

Corporate bonds .........................................................................................

Gains (losses) on sales$0

Sales of corporate bonds were due to retirement of private placement bonds.
There were no sales of held-to-maturity debt securities for the year ended March 31, 2011.
(3) Available-for-sale securities sold for the years ended March 31, 2012 and 2011:
Millions of yen

2012
Sales amount

Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Total ...........................................................................................................

¥

6,231
211,644
202,769
6,252
2,622
62,95960,639¥280,836

Gains on sales

Losses on sales

¥ 120
2,034
1,815
192
26
2,617
2,498
¥4,772¥1,476
1,263
1,257
—
5
220
73
¥2,960Millions of yen

2011
Sales amount

Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Total ...........................................................................................................

40
40

¥

4,317
185,887
127,040
53,473
5,372
25,102
23,926¥215,307

Gains on sales

Losses on sales

¥ 471
2,809
1,549
1,188
72
1,752
1,719
¥5,034

¥ 516
1,240
1,199
40
—
263
17
¥2,019

Thousands of U.S. dollars

2012
Gains on sales

Losses on sales$75,812
2,575,057
2,467,076
76,06731,901
766,017
737,790$3,416,912$ 1,460
24,74722,082
2,336
316
31,84030,392$58,060$17,958
15,366
15,293
—
60
2,676
888
$36,014(4) Information on money held in trust at March 31, 2012 and 2011 was as follows:
Money held in trustThousands of
U.S. dollars

Millions of yen

Carrying amount (fair value) ..............................................................................
Amount of net unrealized gains (losses) included in the statement of income ....

2012

2011

2012

¥25,000
11¥24,500(6)$304,173
133

Consolidated Financial Statements

Stocks .........................................................................................................
Bonds .........................................................................................................
Japanese government bonds ..................................................................
Japanese local government bonds ..........................................................
Japanese corporate bonds ......................................................................
Others .........................................................................................................
Foreign securities included ....................................................................
Total ...........................................................................................................

Sales amount(5) The components of net unrealized gains on securities available for sale, net of taxes recorded under net assets at March 31, 2012 and 2011 are
as follows:
Thousands of
U.S. dollars

Millions of yen

Unrealized gains on securities available for sale ................................................
Deferred tax liabilities ........................................................................................
Unrealized gains on securities available for sale(before adjustments of minority interests) ........................................................
Minority interests ................................................................................................
Net unrealized gains on securities available for sale, net of taxes ......................

2012

2011

2012

¥26,121(6,971)¥22,729(6,128)$317,812(84,815)¥19,149(92)¥19,057¥16,601(60)¥16,540$232,984(1,119)$231,865(6) Securities reclassified for the years ended March 31, 2012 and 2011:
Not applicable.
(7) Impairment loss on the securities
In the event that the fair value of securities, excepting trading securities, with available fair values declines significantly compared with the acquisition
cost and the fair value is not expected to recover, such securities are stated at fair value, and the difference between fair value and the acquisition cost isrecognized as loss in the period of the decline (“impairment loss”).
Impairment losses for equity securities and other securities incurred were ¥2,897 million ($35,247 thousand) and ¥0 million ($0 thousand) for the fiscal year ended March 31, 2012, respectively, and ¥1,078 million and ¥224 million for the fiscal year ended March 31, 2011, respectively.
The fair value is regarded as “significantly declined” when (i) the fair value as of the end of the fiscal year declines by more than 50% of the acquisition cost or (ii) the fair value as of the end of the fiscal year declines by more than 30% but less than 50% of the acquisition cost, and is not expected to recover within one year.
8. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥44,357 million ($539,688 thousand) and ¥42,886 million at March 31, 2012 and 2011, respectively. Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥718 million ($8,735 thousand)and ¥739 million at March 31, 2012 and 2011, respectively.
9. INCOME TAXESThe Companies are subject to a number of taxes based on the income, which, in the aggregate, indicate a statutory rate in Japan of approximately 40.4%
for the years ended March 31, 2012 and 2011.
The following table summarizes the significant difference between the statutory tax rate and the Companies’ effective tax rate for financial statement
purposes for the years ended March 31, 2012 and 2011:41
41

Consolidated Financial Statements

2012

Consolidated Financial Statements

Statutory tax rate ...........................................................................................................................................
Valuation allowance .................................................................................................................................
Expense not qualifying for deduction ......................................................................................................
Non-taxable dividend income ..................................................................................................................
Tax rate difference for Special Purpose Company ...................................................................................
Adjustment of deferred tax assets for enacted changes in tax laws and rates ..........................................
Other .........................................................................................................................................................
Effective tax rate ...........................................................................................................................................

40.4%
0.0%
0.6%
(2.9%)(2.4%)
21.7%(1.6%)
55.8%

2011

40.4%
7.9%
0.5%
(2.2%)(1.9%)
—%
0.0%
44.6%

Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Excess bad debt expenses ...............................................................................
Retirement benefits .........................................................................................
Depreciation ...................................................................................................
Write-down of land ........................................................................................
Loss on impairment of fixed assets ................................................................
Valuation loss on securities ............................................................................
Tax loss carryforwards ...................................................................................
Net deferred gains on hedging instruments ....................................................
Other ..........................................................................................................
Subtotal deferred tax assets: ............................................................................
Valuation allowance ............................................................................................
Total deferred tax assets ...................................................................................
Deferred tax liabilities:
Net unrealized gain on securities available for sale .......................................
Other ...............................................................................................................
Total deferred tax liabilities .............................................................................
Net deferred tax assets .....................................................................................

2012

2011

2012

¥15,092
6,970
1,081
4,107
1,616
6,934
5,124
525
3,201
44,655(13,539)
31,115¥18,754
7,314
1,062
4,687
1,734
8,843
5,793
478
4,055
52,725(15,443)
37,282$183,623
84,803
13,152
49,96919,661
84,36562,343
6,387
38,946543,314(164,728)
378,574(6,971)(55)(7,027)¥24,088(6,128)(67)(6,195)¥31,086(84,815)(669)(85,497)$293,077

Adjustment of deferred tax assets and liabilities for enacted changes in tax laws and rates:
On December 2, 2011, the “Act on Partial Amendment to the Income Tax Act, etc. for the purpose of Creating a Taxation System Responding to Changes
in Economic and Social Structures” (Act No. 114 of 2011) and the “Act on Special Measures for Securing Financial Resources Necessary to Implement
Measures for Reconstruction Following the Great East Japan Earthquake” (Act No. 117 of 2011) were promulgated. Consequently, the corporate tax rate
will be reduced and a special recovery tax will be imposed. In accordance with this tax reform, the effective statutory tax rate, which is used to measuredeferred tax assets and deferred tax liabilities, has been reduced from 40.4% to 38.2 % for temporary differences that are expected to be eliminated during
the period from April 1, 2012 through March 31, 2015 and 35.4% for temporary differences to be eliminated on or after April 1, 2015. As a result, deferred
tax assets decreased by ¥1,590 million ($19,345 thousand) and net unrealized gain on securities available for sale, net of taxes and income taxes – deferredincreased by ¥879 million ($10,694 thousand) and ¥2,439 million ($29,675 thousand), respectively.
10. LOAN LOSS PROVISIONS
Loan loss provisions at March 31, 2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

General provision ...............................................................................................
Specific provision ...............................................................................................
Total ................................................................................................................

2012

2011

2012

¥12,013
16,517¥28,531¥15,678
15,946¥31,624$146,161
200,961$347,134

11. RETIREMENT BENEFIT OBLIGATIONS(1) Outline of employees’ retirement allowance
The Bank has a contributory defined benefit pension plan and a non-contributory unfunded lump-sum retirement allowance plan. The Bank grants additional retirement benefits occasionally. The Bank has employer retirement benefits trusts.
Eleven consolidated subsidiaries have non-contributory unfunded lump-sum retirement allowance plans.

4242

(2) Information about retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

Prepaid pension costs .........................................................................................
Reserve for employee retirement benefits ..........................................................

2012

2011

2012

¥(49,277)
28,800(20,476)
8,269(12,207)—¥(12,207)¥(49,077)
27,445(21,632)
10,155(11,477)—¥(11,477)$(599,549)
350,407(249,130)
100,608(148,521)—$(148,521)

Note:

1. Consolidated subsidiaries adopt the simple method in calculating the projected benefit obligations.
2. The principal assumptions used in determining benefit obligation and pension expenses at March 31, 2012 and 2011 and for the years then ended were as follows:		 (a) Discount rate: 2.0% in 2012 and 2011.
		 (b) Expected rate of return on plan assets: 2.0% in 2012 and 2011.

(3) Information relating to retirement benefit expense
Thousands of
U.S. dollars

Millions of yen

2012

Service cost .........................................................................................................
Interest cost on projected benefit obligation .......................................................
Expected return on plan assets ...........................................................................
Amortization of actuarial differences .................................................................
Other ...................................................................................................................
Total ................................................................................................................
Note:¥1,689
977
(450)
2,163
—
¥4,3792011¥1,652
947
(436)
2,335
—
¥4,498

Consolidated Financial Statements

Projected benefit obligation ................................................................................
Plan assets ...........................................................................................................
Unfunded projected benefit obligation ...............................................................
Unrecognized actuarial differences ....................................................................

2012$20,549
11,887(5,475)26,317—$53,278

Retirement benefit expenses of consolidated subsidiaries which adopt the simple method are included in “Service cost.”

12. GUARANTEESThe amount guaranteed by the Bank for privately-placed bonds (stipulated
by Article 2-3 of the Financial Instruments Exchange Act), which are included in “Bonds” of “Securities,” was ¥3,745 million ($45,565 thousand)and ¥4,556 million at March 31, 2012 and 2011, respectively.
13. STOCKHOLDERS’ EQUITY
Under the Banking Law of Japan and the Company law, the entire amountof the issue price of shares is required to be accounted for as capital, although the Bank may, by resolution of its Board of Directors, account for
an amount not exceeding one half of the issue price of the new shares asadditional paid-in capital, which is included in capital surplus.
The Banking Law provides that an amount equal to at least 20% of
cash dividends and other cash appropriations shall be appropriated and set
aside as legal earnings reserve until the total amount of legal earnings reserve and additional paid-in capital equals 100% of common stock. The
total amount of legal earnings reserve and additional paid-in capital of the
Bank has reached 100% of common stock. Therefore, the Bank is not required to provide any more legal earnings reserve.
The legal earnings reserve and additional paid-in capital may be used
to eliminate or reduce a deficit by resolution of the stockholders’ meetingor may be capitalized by resolution of the Board of Directors. On condition that the total amount of legal earnings reserve and additional paid-in
capital remains equal to or more than 100% of common stock, they areavailable for distribution by resolution of the stockholders’ meeting. Legalearnings reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the nonconsolidated financial statements of the Bank inaccordance with the Company Law.
14. PLEDGED ASSETSAt March 31, 2012 and 2011, securities of ¥413,699 million ($5,033,446
thousand) and ¥428,015 million, respectively, were pledged as collateralfor deposits and negotiable certificates of deposit of ¥32,786 million($398,904 thousand) and ¥19,801 million, respectively, payables under se-curities lending transactions of ¥104,266 million ($1,268,597 thousand)and ¥116,109 million, respectively, and borrowed money of ¥56,510 million ($687,553 thousand) and ¥20,400 million, respectively.
Securities of ¥72,119 million ($877,466 thousand) and ¥72,031 million were pledged for transaction guarantees at March 31, 2012 and 2011,
respectively.
Unexpired lease contract claims of ¥6,352 million ($77,284 thousand)and ¥6,806 million were pledged as collateral for borrowed money atMarch 31, 2012 and 2011, respectively.
At March 31, 2012 and 2011, other assets included initial margins of
futures markets of ¥34 million ($413 thousand) and ¥36 million, respectively, guarantees of ¥1,542 million ($18,761 thousand) and ¥1,587 million, respectively, and other intangible fixed assets included surety deposits and intangibles of ¥573 million ($6,971 thousand) and ¥574 million,
respectively.
15. LOAN COMMITMENTS
Commitment line contracts on overdrafts and loans are agreements to lend
to customers when they apply for borrowing up to prescribed amount aslong as there is no violation of any condition established in the contract.
The amounts of unused commitments at March 31, 2012 and 2011 were¥908,128 million ($11,049,130 thousand) and ¥885,641 million, respectively, and the amount of unused commitments whose original contract
terms were within one year or unconditionally cancelable at any time atMarch 31, 2012 and 2011 were ¥892,643 million ($10,860,725 thousand)and ¥867,512 million, respectively.
Since many of these commitment line contracts are expected to expire
without being drawn upon, the total amount of unused commitments does
not necessarily represent actual future cash flow requirements.
Many of these commitments line contracts have clauses that allow the
Bank and its consolidated subsidiaries to reject the application from customers or reduce the contract amounts if economic conditions change. In
addition, the Bank and its consolidated subsidiaries may request that customers pledge collateral such as premises and securities or take other necessary measures such as scrutinizing customers’ financial positions andrevising contracts when need arises to secure claims.

43
43

Consolidated Financial Statements

16. OTHER INCOME
For the fiscal years ended 2012 and 2011, other income consisted of the following:Thousands of
U.S. dollars

Millions of yen

Consolidated Financial Statements

Gains on sales of stocks and other securities ......................................................
Reversal of reserve for possible loan losses ...........................................................
Recoveries of written off claims ...........................................................................
Other ...................................................................................................................
Total ................................................................................................................

2012

2011

2012

¥ 214
1,966
1,656
1,344
¥5,181

¥ 526
—
1,709
1,387
¥3,622$ 2,603
23,92020,14816,352$63,036

17. OTHER EXPENSES
For the fiscal years ended 2012 and 2011, other expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loss on devaluation of stocks and other securities .............................................
Write-offs of loans ..............................................................................................
Loss on sales of stocks and other securities .......................................................
Other ...................................................................................................................
Total ................................................................................................................

2012

2011

2012

¥2,897
3,581
1,537
1,553
¥9,569¥1,085
3,942
—
2,576
¥7,603$ 35,247
43,56918,70018,895$116,425

18. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which are not cancelable at March 2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

Due within one year ............................................................................................
Due after one year ..............................................................................................
Total ................................................................................................................

2011

¥ 98
726
¥825

¥ 99
668
¥768

2012

$ 1,192
8,833$10,037

As lessor:
Future minimum lease payments under operating leases which are not cancelable at March 2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

Due within one year ............................................................................................
Due after one year ..............................................................................................
Total ................................................................................................................

¥ 3
9
¥13

2011

¥ 3
13
¥16

2012

$ 36
109
$158

19. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the year ended March 31, 2012 were as follows:
Net valuation difference on available-for-sale securities:
Gains incurred during the year ............................................................................................................
Reclassification adjustments to net income .........................................................................................
Amount before tax effect ................................................................................................................
Tax effect .........................................................................................................................................
Net valuation difference on available-for-sale securities ....................................................................
Net deferred gains or losses on hedges
Losses incurred during the year ..........................................................................................................
Reclassification adjustments to net income .........................................................................................
Amount before tax effect ................................................................................................................
Tax effect .........................................................................................................................................
Net deferred gains or losses on hedges ...............................................................................................
Total other comprehensive income ..........................................................................................................

Millions of yen

Thousands of
U.S. dollars¥2,306
1,084
3,391
(843)
2,548

$28,056
13,18841,258(10,256)
31,001

(657)
465
(191)
47
(144)
¥2,403(7,993)5,657(2,323)571(1,752)$29,237

The corresponding information for the year ended March 31, 2011 was not required under the accounting standard for presentation of comprehensive income because of an exemption for the first year of adoption of this accounting standard.

44
44

20. NON PERFORMING LOANS
Nonperforming loans at March 31, 2012 and 2011 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2011

¥ 1,735
69,542872
17,893¥90,043¥ 1,732
68,263
2,076
15,459¥87,5312012$

21,109846,112
10,609217,702$1,095,546

Bills discounted are accounted for as financing transactions in accordance with the JICPA Industry Audit Committee Report No. 24. This accounting treatment allows the Bank the right to sell or pledge them without restrictions. The total face value of commercial bills and purchased foreign exchange bills
obtained as a result of discounting was ¥23,657 million ($287,833 thousand) and ¥21,225 million at March 31, 2012 and 2011, respectively.
21. DERIVATIVE TRANSACTIONS(1) Derivative contracts to which hedge accounting is not applied:With respect to derivatives to which hedge accounting is not applied, the contract amount or notional principal amount defined in the contract, fair value,
unrealized gains (losses) and calculation method of fair value by transaction type as of March 31, 2012 and 2011 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.

Consolidated Financial Statements

Loans to bankrupt companies .............................................................................
Past due loans .....................................................................................................
Loans past due three months or more .................................................................
Loans with altered lending conditions ................................................................
Total ................................................................................................................

(a)Interest rate related transactions
Millions of yen

Thousands of
U.S. dollars

2012

2012

Contract amount or notional principal amount
Total
Maturities over one year

Over-the-counter transactions
Interest rate swaps:
Receive fixed rate, pay floating rate .................
Receive floating rate, pay fixed rate .................
Total ..............................................................

¥585
5,585
¥—

Unrealized gains (losses)

¥585
5,585
¥—

¥39
(159)
¥(120)

Unrealized gains (losses)$474(1,934)$(1,460)

Millions of yen

2011
Contract amount or notional principal amount
Total
Maturities over one year

Over-the-counter transactions
Interest rate swaps:
Receive fixed rate, pay floating rate .................
Receive floating rate, pay fixed rate .................
Total ..............................................................

¥1,151
6,151¥ —Unrealized gains (losses)

¥ 651
5,651
¥ —

¥44
(5)
¥39

Notes: 1. Unrealized gains (losses) are recognized in the consolidated statements of income.
2. Market values of over-the counter transactions are based on the discounted cash flow method, option pricing model, etc.

(b) Currency related transactions
Millions of yen

Thousands of
U.S. dollars

2012

2012

Contract amount or notional principal amount
Total
Maturities over one year

Over-the-counter transactions
Currency swaps .....................................................
Forward foreign exchange contracts:
Sold ...................................................................
Bought ..............................................................
Total ..............................................................

Unrealized gain (loss)

Unrealized gain (loss)¥124,754¥77,378¥(1,443)$(17,556)

1,286
1,190
¥—

—
—
¥—

(28)
2
¥(1,469)(340)
24$(17,873)

45
45

Consolidated Financial Statements

Millions of yen

2011
Contract amount or notional principal amount
Total
Maturities over one year

Consolidated Financial Statements

Over-the-counter transactions
Currency swaps .....................................................
Forward foreign exchange contracts:
Sold ...................................................................
Bought ..............................................................
Total ..............................................................

Unrealized gain (loss)¥84,346¥39,607¥(1,201)

1,343
374
¥—

—
—
¥—

(32)
1
¥(1,232)

Notes: 1. Unrealized gains (losses) are recognized in the consolidated statements of income.
2. Market values of over-the counter transactions are based on the discounted cash flow method.

(c) Stock related transactions
None(d) Bond derivatives
None(e) Commodity derivatives
None(f) Credit derivative transactions
There were no outstanding credit derivative transactions at March 31, 2012.
Millions of yen

2011
Contract amount or notional principal amount
Total
Maturities over one year

Over-the-counter transactions
Credit default swaps:
Sold ..............................................................

¥500

¥—

Unrealized gain (loss)¥(116)

Notes: 1. Unrealized gains (losses) are recognized in the consolidated statements of income.
2. Market values are calculated using market prices at security corporations, etc.
3. “Sold” means the underwriting of credit risk and “Bought” means the transferring of credit risk.

(2) Derivative contracts to which hedge accounting is applied:With respect to derivatives to which hedge accounting is applied, contract amount or notional principal amount defined in the contract, fair value and calculation method of fair value by transaction type and by hedge accounting method as of March 31, 2012 and 2011 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.
(a) Interest rate related
Millions of yen

2012
Hedge accounting method

Transaction type

Major hedged item

Fundamental method

Interest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Interest bearing
assets and liabilities
such as loans anddeposits

Interest rate futures
Interest rate options
Other
Exceptional accounting Interest rate swaps
Borrowed money
method for interest rate
Receive fixed rate/pay
swaps
floating rate
Receive floating rate/pay
fixed rate
Total

46
46

Contract amountContract amount due after
one year

Fair value

—

—

—

¥48,551¥45,673¥(1,489)

—
—
—

—
—
—

—
—
—

—

—

—

¥1,360¥1,145¥(9)¥(1,498)

Millions of yen

2011
Transaction type

Major hedged item

Fundamental method

Interest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Interest bearing
assets and liabilities
such as loans anddeposits

Interest rate futures
Interest rate options
Other
Exceptional accounting Interest rate swaps
Borrowed money
method for interest rate
Receive fixed rate/pay
swaps
floating rate
Receive floating rate/pay
fixed rate
Total

Contract amount

Fair value

—

—

—

¥52,596¥51,246¥(1,296)

—
—
—

—
—
—

—
—
—

—

—

—

¥ 2,280¥ 2,140¥ (19)¥(1,316)

Consolidated Financial Statements

Hedge accounting method

Contract amount due after
one yearThousands of U.S. dollars

2012
Hedge accounting method

Transaction type

Major hedged item

Fundamental method

Interest rate swaps:
Receive fixed rate/pay
floating rate
Receive floating rate/pay
fixed rate

Interest bearing
assets and liabilities
such as loans anddeposits

Interest rate futures
Interest rate options
Other
Exceptional accounting Interest rate swaps
Borrowed money
method for interest rate
Receive fixed rate/pay
swaps
floating rate
Receive floating rate/pay
fixed rate
Total

Contract amountContract amount due after
one year

Fair value

—

—

—

$590,716$555,700$(18,116)

—
—
—

—
—
—

—
—
—

—

—

—

$ 16,547$ 13,931$(109)$(18,226)

Notes: 1. Gain/loss on the above contacts is deferred until maturity of the hedged items as the fundamental method in accordance with the “Treatment for Accounting and Auditing ofApplication of Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24).
2. For transactions on exchanges, the fair value is the closing price of the Tokyo International Exchange, etc. For over-the-counter transaction, the fair value is determined using thediscounted cash flow method and option pricing model, etc.

(b) Currency related transactions
None(c) Stock related transactions
None(d) Bond related transactions
None

47
47

Consolidated Financial Statements

22. RELATED PARTY TRANSACTIONS
For the year ended March 31, 2012, related party transactions were as follows:
Relationshipwith the Bank

Consolidated Financial Statements

Relatives of adirector of theBank

Paid-in
Votingcapital Businessrights(millionsline
ownershipof yen)(%)

Name

Location

Hirokatsu
Horiuchi——Publicofficer—

TakashiHoriuchi——

Officeworker—Daito City
Osaka

10

Metal
processing—

A company inwhich majority
voting rights Nikken
are held byBlast Kogyo
relatives of a Co., Ltd. *3
director of theBank

Relationship ofrelated parties
Oldest son of Yasuo
Horiuchi(Corporate Auditor)
Loans
Second son of Yasuo
Horiuchi(Corporate Auditor)
Loans

Loans

Transaction
Accounting
amounttitle(millions of yen)

Details oftransactions

Year-endbalance(millions ofyen)

Year-end
Balance(thousands of
U.S. dollars)

Lending of money *2
Interest receivable

—
0

Loans
—

13
—

158
—

Lending of money *2
Interest receivable

—
0

Loans
—

22
—

267
—

Lending of money
Interest receivable

—
1

Loans
—

84
—

1,022
—

Policies regarding and terms and conditions of the transaction
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as a pledge of collateral for loan transactions.
3. Relatives of Naoki Minowa (Director of the Bank) have 50.6% of voting rights of this company directly.
4.	Tadashi Kasei retired from the position of a director of the Bank on June 29, 2011. The Bank has loans to his daughter’s husband, Atsushi Nakatani, in an amount of ¥15 million($182 thousand) and his daughter, Naomi Nakatani, in an amount of ¥15 million ($182 thousand).

For the year ended March 31, 2011, related party transactions were as follows:
Relationshipwith the Bank

Relatives of adirector of the
Bank

Name

Location

Paid-in
capital(millions ofyen)

Businessline

Votingrightsownership(%)

Atsushi Nakatani——

Officeworker—Naomi Nakatani——

Officer—

Hirokatsu Horiuchi——

Officer—

Takashi Horiuchi——

Officeworker

—Shuichi Nomura——

Member of
the Board of
Directors—

Toshiko Nomura——

Member of
the Board of
Directors—

Nara city
Nara Pref.

10

Parkingmanagement—

Daito City
Osaka

10

Metal
processing—

A company inwhich majority Miyako Hotelvoting rights Co., Ltd. *3
are held byrelatives of adirector of the Nikken Blast Kogyo
Co., Ltd. *5
BankRelationship ofrelated parties
Husband of daughterof Tadashi Kasei(Senior Managing
Director)
Loans
Oldest daughter ofTadashi Kasei(Senior Managing
Director)
Loans
Oldest son of Yasuo
Horiuchi(Senior Managing
Director)
Loans
Second son of Yasuo
Horiuchi(Senior Managing
Director)
Loans
Younger brother in law
of Yasuo Shimakawa(Managing Director)
Loans
Younger sister of Yasuo
Shimakawa(Managing Director)
Loans

Details oftransactions

Transaction
Accounting
amounttitle(millions of yen)

Lending of money *2
Interest receivable

—
0

Loans
—

15
—

Lending of money *2
Interest receivable

—
0

Loans
—

15
—

Lending of money*2
Interest receivable

—
0

Loans
—

14
—

Lending of money *2
Interest receivable

—
0

Loans
—

23
—

Lending of money *2
Interest receivable

—
0

Loans
—

24
—

Lending of money *2
Interest receivable

—
0

Loans
—

24
—

Loans

Lending of money*2
Interest receivable—
26

Bad anddoubtfulloans *4
—

431
—

Loans

Lending of money
Interest receivable

—
1

Loans
—

109
—

Policies regarding and terms and conditions of the transaction
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as a pledge of collateral for loan transactions.
3. Relatives of Masaaki Hashimoto (Managing Director of the Bank) have 84.0% of voting rights of this company directly.
4.	Reserve for possible loans loss of ¥135 million was appropriated to bad and doubtful loans.
		 Provision for possible loans losses of ¥135 million and loan amortization of ¥150 million was appropriated at this consolidated financial year end.
5. Relatives of Naoki Minowa (Director of the Bank) have 50.6% of voting rights of this company directly.

48
48

Year-endbalance(millions ofyen)23. PER SHARE INFORMATION
Net assets per share at March 31, 2012 and 2011 and net income per share for the years then ended were as follows:
Yen

2011

2012

¥675.42
12.57
12.57

¥660.24
23.88
23.87

$8.21
0.15
0.15

Basic information in computing above per share data was as follows:
Thousands of
U.S. dollars

Millions of yen(Net assets per share)
Net assets ............................................................................................................
Amounts to be deducted from net assets ............................................................
Acquisition Rights ..........................................................................................
Minority interests ...........................................................................................
Net assets attributed to common stock ...............................................................
Outstanding number of common stock at end of year
(unit: thousand shares) ......................................................................................
(Net income per share and Diluted net income per share)
Net income ..........................................................................................................
Net income to be attributed to common stock ....................................................
Average outstanding number of shares during the year
(unit: thousands of shares) ................................................................................
Adjustment in net income ...................................................................................
Increase in number of common stock .................................................................
Acquisition rights ...........................................................................................
Convertible securities not diluting earnings per common share .........................

2012

2011

¥212,241
26,035(64)(25,971)
186,205¥207,175
25,156(31)(25,125)
182,018

275,684

275,682

¥

3,467
3,467

$2,582,321
316,766(778)(315,987)
2,265,543

$

6,584
6,584

¥

275,690
—
136
(136)
—

2012

Consolidated Financial Statements

Net assets per share ............................................................................................
Net income per share-basic ................................................................................
Diluted net income per share ..............................................................................

U.S. dollars

2012

42,182
42,182

275,703
—
63
(63)
—

—
—
—
—

24. STOCK OPTIONS(a) Item and amount expensed in the current fiscal year related to stock options was as follows:
Thousands of
U.S. dollars

Millions of yen

2012

2011

¥42

General and administrative expenses ..................................................................

2012

$ 511

¥31

(b) Stock options outstanding at March 31, 2012 were as follows:a. Outline of the stock options
Beneficiaries qualified for stock option rights are entitled to acquire common stock upon exercise of the right. The following table summarizes the numberof shares upon exercise of the stock option rights granted by the Bank outstanding at March 31, 2012:
Stock
optionPersons
grantedNumber ofoptions granted

Date of
grant

Exercise
price

ExerciseperiodVesting
conditions

Target ofservice period

2010
Stock Option
2011
Stock Option

15 directorsof the Bank
14 directorsof the Bank

Common stock
94,400 shares
Common stock
109,400 shares

July 29, 2010¥1($0.01)¥1($0.01)

From July 30, 2010
To July 29, 2040
From July 30, 2011
To July 29, 2041

Not definedNot definedNot definedNot defined

July 29, 201149
49

Consolidated Financial Statementsb. Stock option activity:
1) Number of stock options
Number of shares

Consolidated Financial Statements

Non-vested
March 31, 2011 – Outstanding .................................................................................................................
Granted .....................................................................................................................................................
Forfeited ...................................................................................................................................................
Vested .......................................................................................................................................................
Unvested ...................................................................................................................................................
VestedMarch 31, 2011 – Outstanding .................................................................................................................
Vested .......................................................................................................................................................
Exercised ..................................................................................................................................................
Forfeited ...................................................................................................................................................
March 31, 2012 – Outstanding .................................................................................................................

2010
Stock Option

2011
Stock Option

23,600——23,600——109,400—
82,05027,35070,80023,60019,500—74,900—82,050——82,0502) Price information
Yen

Exercise price ...............................................................
Average stock price at exercise date .............................
Fair value price at grant date ........................................

U.S. dollars

2010
Stock option

2011
Stock option

¥

¥

1
408
441

1
—
386

2010
Stock option

2011
Stock option

$0.01
4.96
5.36

$0.01
—
4.69

(c) Assumptions used to measure the fair value of stock options
The assumptions used to measure the fair value of the stock options granted in the year ended March 31, 2012 were as follows:
1) The Black-Scholes option pricing model was used as a measurement method.
2) Assumptions used for the Black-Scholes option pricing model:
1.	Volatility of stock price: 30.73%, calculated using the market price of the Bank’s stock from October 2007 to July 2011.
2.	Estimated remaining outstanding period: 3.8 years, which was the average remaining tenure of the Board of Directors at the date of issue, determined by the average time from appointment to retirement and time from appointment to the date of issue.
3. Estimated dividend: ¥6 per share, which was calculated based on the actual amount of dividends for the fiscal year ended March 31, 2011.
4. Risk-free interest rate: 0.27%, determined using the yield of national bonds equivalent to the estimated remaining outstanding period.
(d) Estimation method for the total number of vested stock option rights
The total number of stock option rights issued is deemed to reflect the actual number of stock option rights expired due to difficulties in estimating reasonably the number of stock option rights that will expire in future.
25. SUBSEQUENT EVENTS(a) Redemption of preferred capital securities
Nanto Preferred Capital Cayman Limited, which is a consolidated subsidiary, redeemed the full amount of preferred capital securities. The redemption
was as detailed below.
Nanto Preferred Capital Cayman Limited
Issuer:Type of securities issued:
Non-cumulative dividend undated preferred capital securities in Japanese yen¥20,000 million ($243,338 thousand)Total amount of redemption:
Date of redemption:
July 25, 2012
Reason for redemption:
Due to maturity of voluntary due date of redemption

5050

Consolidated Financial Statements(b) Repurchase of treasury stock
The Bank announced that its Board of Directors at its meeting on August 3, 2012 approved the repurchase of treasury stock, based on Paragraph 3, Article
165, of Japan’s Companies Act, as interpreted in light of Article 156 of said Act. The repurchase was carried out as detailed below.
1) Contents of resolution
Reason for the repurchase:	The repurchase was approved to increase returns to shareholders and to give the Bank greater flexibility in capital policy in light of a changed business environment.
Common stock
Type of shares to be purchased:
Number of shares to be purchased: 6,000,000 shares (maximum)
Total value of purchase:¥2,400 million (maximum) ($29,200 thousand)Term of repurchase:
From August 6, 2012 to August 31, 2012
2) Results of repurchase
Number of common stocks to be purchased: 5,837,000 shares
Purchased price:¥2,013 million ($24,492 thousand)Date of repurchase:
August 8, 201251
51

Independent Auditors’ Report

Independent Auditors’ Report

52
52

Capital Management
Consolidated Capital Adequacy Ratio
As of March 31, 2012
Millions of yen

2011

2010

2009

2008

¥ 192,745—
192,745¥ 190,328—
190,328¥ 184,878—
184,878¥ 179,138—
179,138¥ 198,398—
198,398

12,51220,00032,512
31,897

11,65520,00031,65531,655

12,07340,00052,07352,073

12,96620,00032,96632,966

13,15220,00033,15233,152

3,109¥ 221,534

2,976¥ 219,007

2,665¥ 234,286

3,269¥ 208,835

4,516¥ 227,034

1,749,790
27,476¥1,777,267
126,340
10,107¥1,903,607

1,706,948
28,904¥1,735,852
129,077
10,326¥1,864,930

1,771,998
29,566¥1,801,565
130,157
10,412¥1,931,722

1,909,271
35,449¥1,944,720
129,880
10,390¥2,074,601

1,933,785
41,735¥1,975,520
128,825
10,306¥2,104,345

11.63%
10.12%

11.74%
10.20%

12.12%
9.57%

10.06%
8.63%

10.78%
9.42%

Capital Management

Tier I:
Capital .......................................................................................
Tax effect amount ......................................................................
Tier I total (A) .......................................................................
Tier II:
General provision ......................................................................
Qualifying subordinated debt ....................................................
Tier II total ............................................................................
Of which, added to capital (B) ..................................................
Deductions from capital (internal holding for other financial
institutions’ fund raising purposes) (C) ..................................
[Total capital (A)+(B)-(C)] (D) .............................................
Risk-weighted assets
On-balance-sheet risk-weighted assets .....................................
Off-balance-sheet risk-weighted assets .....................................
Total (E) ................................................................................
Operational risk equivalent ((G)/8%) (F) ..................................
(For reference) amount related to operational risk (G) .............
[Total (E)+(F)] (H) ................................................................
Capital adequacy ratio(Based on domestic standards) (D)/(H)x100(%) .......................
Tier I ratio = (A)/(H)x100(%) ...............................................

2012

Note: The capital adequacy ratio was calculated on the basis of the formula provided by the Ministry of Finance under Provision 14, Clause 2 of the Banking Law.

Nonconsolidated Capital Adequacy Ratio
As of March 31, 2012
Millions of yen

Tier I:
Capital .......................................................................................
Tax effect amount ......................................................................
Tier I total (A) .......................................................................
Tier II:
General provision ......................................................................
Qualifying subordinated debt ....................................................
Tier II total ............................................................................
Of which, added to capital (B) ..................................................
Deductions from capital (internal holding for other financial
institutions’ fund raising purposes) (C) ..................................
[Total capital (A)+(B)-(C)] (D) .............................................
Risk-weighted assets
On-balance-sheet risk-weighted assets .....................................
Off-balance-sheet risk-weighted assets .....................................
Total (E) ................................................................................
Operational risk equivalent ((G)/8%) (F) ..................................
(For reference) amount related to operational risk (G) .............
[Total (E)+(F)] (H) ................................................................
Capital adequacy ratio(Based on domestic standards) (D)/(H)x100(%) .......................
Tier I ratio = (A)/(H)x100(%) ...............................................

2012

2011

2010

2009

2008

¥ 184,611—
184,611¥ 182,915—
182,915¥ 177,971—
177,971¥ 172,326—
172,326¥ 191,215—
191,215

10,17320,00030,17330,173

11,52920,00031,52931,52911,95140,00051,951
51,951

12,84720,00032,847
32,847

13,03020,00033,03033,0303,109¥ 211,675

2,976¥ 211,468

2,665¥ 227,257

3,269¥ 201,904

4,516¥ 219,728

1,737,204
27,475¥1,764,680
118,852
9,508¥1,883,532

1,693,588
28,902¥1,722,491
122,271
9,781¥1,844,762

1,758,780
29,564¥1,788,344
123,903
9,912¥1,912,248

1,895,642
35,446¥1,931,089
124,515
9,961¥2,055,604

1,918,719
41,731¥1,960,450
124,411
9,952¥2,084,862

11.23%
9.80%

11.46%
9.91%

11.88%
9.30%

9.82%
8.38%

10.53%
9.17%

Note: The capital adequacy ratio was calculated on the basis of the formula provided by the Ministry of Finance under Provision 14, Clause 2 of the Banking Law.

53
53

Organization, Group Network(As of July 2, 2012)

ORGANIZATIONSTOCKHOLDERS’ MEETINGHEADQUARTERS
General Secretariat

BOARD OF DIRECTORS

General Planning Division

Organization, Group Network

Compliance & Risk Management Division

MANAGING DIRECTORS’COMMITTEE

General Business Division
Individual Sales Division

Chairman

Value Creation Division

President

Public Institutions Division

Senior Managing Directors

Credit Analysis Division

Managing Directors

Securities & International Division• DOMESTIC
OFFICESOperations Control Division

Directors

Operations Division

BOARD OF CORPORATE AUDITORSInternal Audit Division
Personnel Division
General Affairs Division

Standing Corporate Auditor

Regional Headquarters

Corporate Auditors

Tokyo Liaison Office

Corporate Auditors’ Office

NANTO BANK GROUP(As of July 2, 2012)
The Nanto Group, which consists of the Nanto Bank and its 12 consolidated subsidiaries, offers financial
services related to securities, credit guarantee and leasing as well as its primary business, banking services.

THE NANTO BANK, LTD.

BankingHead Office and 114 Branches
17 Sub-branches
2 Agencies (Nanto Bank Agency Co., Ltd.’s business offices)
2 Representative Offices (Hong Kong and Shanghai)

Securities

Securities & International Division

Credit Guarantees

Nanto Credit Guarantee Co., Ltd.

Leasing

Nanto Lease Co., Ltd.

Computer Software
Development andServices

Nanto Computer Service Co., Ltd.

Credit Card Business

Nanto DC Card Co., Ltd.
Nanto Card Services Co., Ltd.

Other Operations

Nanto Estate Co., Ltd.
Nanto Business Service Co., Ltd.
Nanto Staff Service Co., Ltd.
Nanto Asset Research Co., Ltd.
Nangin Agency Co., Ltd.
Nanto Investment Management Co., Ltd.
Nanto Preferred Capital Cayman, Ltd.

Companies indicated with a pink square are consolidated subsidiaries.

54
54

Affiliates and Subsidiaries, Bank Data
(As of July 2, 2012)

Outline of Consolidated Subsidiaries
Indirect
Direct holdings holdings through
Capital(millions of yen) of the Bank (%) subsidiaries (%) Business line

Address

Established

Nanto Credit
Guarantee Co., Ltd.

2-1, Saidaiji-Kunimi-cho
1-chome Nara City, Nara, Japan

October 9,
1984

¥10

3%

69%

Credit guarantee

Nanto Lease Co., Ltd.

52-1, Omori-cho Nara City,
Nara, Japan

December 22,
1984

50

5

65

Leasing

Nanto Computer Service
Co., Ltd.

93-2, Minami-Kyobate-cho
1-chome, Nara City, Nara, Japan

July 1,
1986

10

5

69

Computer softwaredevelopment and services

Nanto DC Card Co., Ltd.

61-7, Higashi-Ikoma
October 12,
1-chome, Ikoma City, Nara, Japan 1990

50

5

71

Credit card business

Nanto Card Services
Co., Ltd.

61-7, Higashi-Ikoma
December 10,
1-chome, Ikoma City, Nara, Japan 1990

50

5

71

Credit card business

Nanto Estate Co., Ltd.

16, Hashimoto-cho
Nara City, Nara, Japan

November 8,
1969

30

100

—

Leasing and managementof real estate

Nanto Business Service
Co., Ltd.

93-2, Minami-Kyobate-cho
1-chome, Nara City, Nara, Japan

June 1,
1984

10

100

—

Centralized processing ofclerical operations for the Bank

Nanto Staff Service
Co., Ltd.

2-1, Omiya-cho 6-chome Nara
City, Nara, Japan

March 18,
1991

20

100

—

Dispatch of temporary staff

Nanto Asset ResearchCo., Ltd.(*1)

16, Hashimoto-cho Nara City,
Nara, Japan

July 4,
2005

20

100

—

Research and appraisal ofreal estateNangin Agency Co., Ltd.

16, Hashimoto-cho Nara City,
Nara, Japan

October 6,
2009

50

100

—

Bank agency service

Nanto Investment
Management Co., Ltd.

2-1, Omiya-cho 6-chome Nara
City, Nara, Japan

November 21,
1986

120

5

68

Investment advisory
service

Nanto Preferred Capital
Cayman, Ltd.

PO Box 309GT, Ugland House,
South Church St., George Town,
Grand Cayman, Cayman Islands

January 29,
2007

20,600
(*2)

100

—

Issue of preferred
securities

Affiliates and Subsidiaries, Bank Data

Subsidiaries*1: It was relocated to 211-9, Minamikoriyama-cho, Yamatokoriyama City, Nara Prefecture on July 17, 2012.
*2: The capital was changed to ¥0.6 billion due to the redemption of the full amount of preferred securities amounting to ¥20.0 billion, in July 25, 2012.

HEAD OFFICECORPORATE DATASECURITIES & INTERNATIONAL DIVISION

Authorized shares:
Outstanding shares:
Stated capital:
Number of stockholders:Date of incorporation:
Domestic network:
Overseas network:
Number of employees:
Ordinary stockholders’ meeting:Stock listings:

HONG KONG REPRESENTATIVE OFFICEMAJOR STOCKHOLDERS (As of March 31, 2012)16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 22-1131
URL: http://www.nantobank.co.jp/
16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 27-1546
Fax: (0742) 26-1734
SWIFT address: NANT JP JT
E-mail address: skb-gaitame@nantobank.co.jp
ROOM 2104-2105,
21/F, HUTCHISON HOUSE,
10 HARCOURT ROAD,
HONG KONG
Phone: 852-2868-9932

SHANGHAI REPRESENTATIVE OFFICE

16F, Hang Seng Bank Tower, 1000 Lujiazui Ring Road,
Pudong New Area, Shanghai, China
Phone: 86-21-6841-2771

640,000,000
281,756 thousand
29,249 million
11,000June 1934
134 offices
2 representative offices
2,928
June 28, 2012
Tokyo Stock exchange
Osaka Securities exchange

Japan Trustee Services Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Nippon Life Insurance Co.
Meiji Yasuda Life Insurance Co.

(standing proxy: Trust & Custody Services Bank, Ltd.)The Nanto Bank Employees’ Shareholders Association
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Sumitomo Life Insurance Co.

(standing proxy: Japan Trustee Services Bank, Ltd.)

Mori Seiki Co., Ltd.
Kitamura Forestry Co., Ltd.
Daiichi Life Insurance Co.

(standing proxy: Trust & Custody Services Bank, Ltd.)

Total

Number of shares(thousands)

Percentage(%)

10,542
10,283
8,531

3.74
3.64
3.02

8,430
8,310
6,247

2.99
2.94
2.21

5,420
4,766
4,063

1.92
1.69
1.44

4,060
70,655

1.44
25.07

55
55

THE NANTO BANK, LTD.
16, Hashimoto-cho, Nara City, Nara 630-8677, Japan
Phone: (0742)22-1131