ANNUAL REPORT 2015
Year ended March 31, 2015

A N N UA L R E P ORT 2 0 1 5
CONTENTS
01 Consolidated Financial Highlights

14 Consolidated Financial Statements

02 Message from the President

46 Independent Auditors’ Report

06 Medium-Term Management Plan

47 Capital Management

08 Compliance

48 Organization, Group Network

09 Risk Management

49 Affiliates and Subsidiaries, Bank Data

13 Board of Directors and Corporate
Auditors

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, 2015, Nanto Bank had deposits of ¥4,691.0 billion, loans of ¥3,079.1 billion, andtotal assets of ¥5,328.6 billion.
Nanto Bank’s domestic network of 136 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. Pursue sound and efficient management
2. Provide superior comprehensive financial services
3. Contribute to regional prosperity
4. Strive to become a highly reliable, friendly and attractive bank

NARA (NARA PREFECTURE)
WAKAYAMA

Consolidated Financial Highlights
Thousands of
U.S. dollars

2015

2014

2013

2012

2011

2015

For the year:
Total income .............................................

¥

81,869¥82,717¥

88,875¥90,075¥92,751$

681,276

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

63,85762,923

77,661

78,84378,711

531,388

Income before income taxes ....................

18,012

19,794

11,214

11,231

14,039149,887

Net income ...............................................

9,874

9,079

7,621

3,467

6,584

82,166

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

5,328,661

5,187,191

5,025,037

4,809,575

4,608,561

44,342,689

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

3,079,175

2,972,159

2,898,844

2,785,671

2,709,612

25,623,491

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

1,693,517

1,907,331

1,840,741

1,755,495

1,668,948

14,092,677

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

4,754,414

4,662,888

4,514,604

4,343,154

4,181,096

39,564,067

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

5,077,342

4,966,542

4,809,291

4,597,334

4,401,386

42,251,327

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

7,935

7,336

6,658

25,971

25,12566,031

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

251,318

220,648

215,745

212,241

207,175

2,091,353

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

29,24929,24929,24929,24929,249243,396

At year-end:

Per share data:

Yen

U.S. dollars

Net income ...............................................

¥ 36.81¥ 33.78¥ 28.01¥ 12.57¥ 23.88$0.30

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

906.92794.95774.46675.42660.24

7.54

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

9.72

10.51

10.66

11.63

11.74

Note: U.S. dollar amounts are included solely for the convenience of readers and are calculated at the exchange rate of ¥120.17 to US$1.00, the rate prevailing on March 31, 2014.

Net Income

Total Assets(Billions of yen)(Billions of yen)
9.8
9.0

4,608.5

4,809.5

Total Net Assets(Billions of yen)
5,025.0

5,187.1

5,328.6

251.3
212.2

215.7

220.6

207.1

2011

2012

2013

2014

7.6
6.5

3.4

2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

2015

1

Message
Message fromfrom thethe President
President
We would like to sincerely thank you for your support for the Nanto Bank.
The purpose of this Annual Report 2015 is to disclose our performance in fiscal 2014 (the year ended March 31, 2015), andour initiatives conducted during the fiscal year. We would appreciate it if you would read through the report.
The Japanese economy is continuing on a gradual recovery track backed by a trend toward improvement in corporate
production activities and the employment situation, and the economy is expected to continue to pick up in the future amid
factors including improvement in the income environment.
Meanwhile, in the regional economy centered on Nara Prefecture, although a slight improvement has been observed inconsumer spending and other areas, the business climate overall continues to fluctuate, reflecting the impact of higher raw
material prices due to the weak yen.
Under these circumstances, we have entered the second year of the Bank’s medium-term management plan titled “Vitality
Creation Plan” (April 2014 to March 2017). We are making efforts toward regional development by strengthening our efforts
on key strategies including vitalizing the community, while promoting the stable and ongoing enhancement of our business
base.
Under the new system, our executives and employees are committed to dedicating our utmost efforts to make a contribution to regional development by offering our customers ever-better financial services.
We look forward to the continued understanding and support of all our stakeholders.

Aiming to Create Vitality of the Region
as the “Vitality Creating Bank”
Our Economic and Financial Environment
The Japanese economy is continuing on a gradual recovery
track backed by a recovery trend in corporate production activity and signs of a pickup in consumer spending, and the economy is expected to continue its recovery in the future amid
factors including improvement in the income environment.
In the regional economy centered on Nara Prefecture, thebusiness climate is fluctuating, with positive signs such as
improvement in capital investment demand, which are offset
by the adverse impact of factors such as soaring raw material
prices due to the weak yen.
Under these circumstances, the Bank celebrated the 80th
anniversary of its founding in June of last year, and havedefined a management vision for the decade leading to our
90th anniversary (in June 2024) as “Vitality Creating Bank.”
Under this vision, we aim to become a bank committed to creating vitality in the region in which we operate.
In order to realize this management vision, we have beenworking on the three-year medium-term management plan,“Vitality Creation Plan,” which we started in April of last year.
We are making efforts toward regional development bystrengthening our efforts on the key strategies of this plan,
including vitalizing the community, while promoting the stableand ongoing enhancement of our business base.

2

Vitalizing the Community
In December of last year, the government made a cabinet

In addition to the traditional roles of a bank, we are com-

decision on the Comprehensive Strategy for Creation ofmitted to practicing corporate social responsibility (CSR)

Towns, People, and Jobs, and regional financial institutions

through such activities as environment preservation andare expected to make proactive efforts toward regional cre-social contribution activities.

ation.

The Bank is cooperating with Nara Prefecture and other

The Bank has always supported the growth and develop-

organizations to promote the use of wooden materials pro-ment of the regional society and economy by offering a wide

duced in Nara Prefecture. We are also making efforts to assist

range of solutions (solution-oriented marketing), utilizing

the region by supporting revitalization of the forestry indus-

consulting capabilities, cooperating with industries, govern-

try through measures such as proactively using woodenments, schools and finance on efforts such as creation andmaterials produced in the prefecture mainly in the construc-development of industries, management improvement andtion of new branches, etc.

business rehabilitation.
In March 2015, we established the “Regional Creation
Project Team” within the Public Institutions & Regional

We will continue to leverage the Bank’s corporate
resources to fulfill our CSR by engaging proactively in environment preservation and social contribution activities.

Vitality Creation Division, as a core organization for planning and promoting regional revitalization.
General managers at 34 branches doing business withlocal public institutions joined the team as members incharge of promoting regional creation, working to contributeeven further to regional vitalization by actively participatingin the formulation and smooth implementation of a regionalversion of the comprehensive strategy.
We also concluded the Cooperative Agreement on
Vitalization of Tourism in Nara Prefecture with three external
institutions, and will support the promotion of tourism andregional vitalization after reviewing the formation and utilization of the Nara Prefecture Tourism Revitalization Fund.

Establishing a Revenue Base
Nara Prefecture has a fertile individual market, and we are

We will continue to expand our core area in Osaka

committed to further strengthening customer relations by thePrefecture and others by further filling our dense network oftrust we have cultivated and expanding personal banking

branches while ensuring continuity among bases, with thewith a focus on deposits, customer assets, and individual

aim of expanding personal as well as business banking.

loans.

In order to precisely meet the needs of our business cus-

With regard to business banking too, we are striving totomers, we have established dedicated sections at our head-cultivate transactions and increase the balance of loans

quarters, including the Value Creation Division and thethrough measures such as by utilizing our consulting capabil-

Corporate Finance Support Office in our Credit Analysis

ities to create new business opportunities.

Division. These sections work hand-in-hand with our branch-

Identifying Osaka Prefecture and others as an important

es to offer a wide range of solutions to our customers, includ-

strategic area, in April of this year we opened the Hatsushiba

ing support for overseas business and business succession, as

Branch, which will be our 17th branch in Osaka Prefecture.

well as support for improving management.

The branch was opened in our Sakai Branch building, andWe also actively carry out support for business creation

will move to a newly constructed branch around December

and new businesses by holding seminars, offering support forof this year.

commercialization of business plans, and other measures.

3Message
Message fromfrom thethe President
President
We will continue to work on proactive management sup-In addition, at NANTO L-Plaza, we have put in place aport by enhancing our support system for business customers

system to facilitate consultations with customers regarding

even further.

individual loans or asset-management by conducting busi-

In order to increase convenience and meet the diversifying

ness on Saturdays and Sundays in addition to weekdays.

needs of individual customers, we have enhanced our non-We will continue to enhance our personal banking base by

face-to-face channels by completely renewing our Internet

providing products and services to meet customer needsbanking for individuals and setting up new websites forthrough optimal channels.

smartphones.

Strengthening Human Resources and Organization
While we promote the efficient utilization of corporate

Furthermore, believing that the active participation of

resources, human resources are the core element of corporate

women is essential for the development of the Bank and the

management and the driver of all our operations.

region, in September 2014 we established the “Project TeamAs the regional economic climate surrounding the Bank
continues its change, we have been identifying the develop-

We are also proactively promoting women to managerial

ment of our human resources as one of our key challenges,

positions. In October 2014, we promoted our first female

and we have carried out various initiatives.

General Managers in three branches, and there are now a

In April of last year, we established a team in our Human

total of four as of the end of June 2015.

Resources Division dedicated to developing human resources

We will continue striving to strengthen our human(Human Resource Vitality Creation Group). The group’s mis-resources development to enable our bank to provide oursion is to expand on education and training to support thecustomers with more sophisticated financial services withacquisition of expertise, enhance judgment capabilities andhigher added value.

others of employees.

4

to Promote Active Roles for Women.”Improving Productivity
While we strongly advance initiatives to enhance our busi-

market, as we continue to expand existing area while improv-

ness strategy, such as establishing a revenue base, we are also

ing both customer convenience and efficiency.

working on revising our branch roles and personnel assign-

We are also working to consolidate and streamline ourments in accordance with local market characteristics, inoperations by such means as revising our operating process-order to become more cost-competitive and strengthen oures, in order to enhance our operational capabilities by reduc-management structure. In fiscal 2014, we converted three

ing administrative overhead.

branches into individual-specific branches, and one branch

On the sales front, we have introduced tablet terminals to

into a sub-branch, and in April 2015, one sub-branch into an

be used as tools to provide information at branches and when

agencyvisiting customers, with the aim of reducing expenses by

We are promoting building of new branches and relocating existing ones to keep pace with changes in the local

making sales activities more efficient and shifting to paperless operations.

Strengthening Internal Management Structure
As an important management issues, we are implementing acommitted to installing greater on compliance not only

variety of measures to overcome “further enhancement of ouramong executive management but among bank employees ascompliance framework” and “incorporation of morewell, as we enhance the efforts to build a more effective com-advanced and enhanced risk management” as well.

pliance framework.

Compliance is fundamental for banks to faithfully carry

In terms of risk management, we will continue to advanceout their social responsibilities and public missions. In orderand enhance various risk management while appropriately

to earn even greater trust from our stakeholders, we arecontrolling risks and returns.

In Partnership with the Local Community
The Bank has built up more than 80 years of history together

our ability to meet the expectations of our customers bywith the local community and people.

exerting our powers to their fullest in order to offer ever-bet-

Looking forward, as a “Vitality Creating Bank,” our executives and employees are committed to striving to the best of

ter financial services.
We look forward to your continued support.

President Takashi Hashimoto5

Medium-Term Management Plan
Medium-Term Management Plan “Vitality Creation Plan”
The Bank embraces a management vision for the period of 10
years up to 2024, its 90th anniversary, aiming to become abank which creates vitality in community and itself as“Vitality Creating Bank.” In order to fulfill this vision, theBank started its medium-term management plan called“Vitality Creation Plan” in April, 2014, that covers the three-year period from fiscal 2014 to fiscal 2016. This plan contains
five key strategies including “vitalizing the community,” firmly commit to realizing “enhancement of top-line margin,”“efficient operation,” and “creating strong organization
enabling self-fulfillment.”

Medium-Term Management Plan

Management vision to create“Vitality Creating Bank”
The Bank embraces a management vision for 10 years
up to its 90th anniversary, aiming to become a bankwhich creates vitality in community and itself as“Vitality Creating Bank.”
Development of regional strength in core areas* Core areas refers to local markets-Cultivation of relationships in existing areas-Further promotion of intense branch development incore strategic areas
Creation of earnings opportunities through pursuing scale
expansion, etc.
Development of a corporate culture with full of dreams
and pride

The 90th
anniversary(2024)

Medium-term management plan

“Vitality Creation Plan”
The 80th
anniversary(2014)

6

April 2014 to March 2017

Economic/financial environment

Earnings environment■ Falling birth rate in an aging society and declining population■ Decreasing business offices in Nara Prefecture■ Declining interest rate
■ Intensifying intrusion of competitor banks, etc.

■ Reduction of fund profit due to low interest rate
■ Fees and commission income flattening out, etc.

Corporate philosophy

Vitality Creation Plan(i) Pursue sound and efficient management(ii) Provide superior comprehensive financial services(iii) Contribute to regional prosperity(iv) Strive to become a highly reliable, friendly and attractive bankStrengthened financial
service provision
capabilities
Improvement in local communityand customer satisfaction(Local community and customer value)

Improvement in
employee satisfaction
Improvement in employee
motivation (Employee value)

Improvement in
profitability
Improvement inshareholder value■ Medium-term management plan “Vitality Creation Plan”■ April 2014 to March 2017 (three years)

2. Basic philosophy■ Aim to enhance top-line profit through practicing
customer-centricity and effective investment of funds.
■ Strive to realize management efficiency throughoptimum deployment of corporate resources.
■ Building up an organization enabling self-fulfillment
through human resource development and revitalization.

3. Numerical targets <fiscal 2016>

Medium-Term Management Plan

A positive cycle with stakeholders throughimprovement of NANTO brand

1. Name and term

■ Net income of ¥8.0 billion or above■ Balance of loans of ¥3,250.0 billion or above■ Balance of deposits of ¥5,000 billion or above

4. Key strategies
I. Vitalizing the community
II. Establishing a revenue baseIII. Strengthening human resources and organization
IV. Improving productivity
V. Strengthening internal management system<Key strategies>

I. Vitalizing the community
 im to vitalize regional economy through implementations such as creation and development of industries as well asAthrough cooperation with industries, governments, schools and finance.
Make effort in management improvement and business rehabilitation through utilizing consulting capabilities.

II. Establishing a revenue base evelop solid revenue base through cultivating relationship with customers in the existing areas.
DExpand core areas in the core strategic areas including Osaka Prefecture, through actively deploying corporate resources,
based on the continuity of branch presence.
Provide products and services depending on individual life stage of customers, at the right timing.
Strengthen fund investment in the market.

III. Strengthening human resources and organization
 adically review human resources development framework to strengthen marketing capabilities.
RDevelop organization with full of vitality by placing the right people in the right job along with adequate personnel management.
Reinforcing Group’s strength to enhance capabilities to provide comprehensive financial services.

IV. Improving productivityI mprove productivity through developing marketing framework geared to regional market characteristics.
Strive to streamline work processes and strengthen marketing capabilities through the review of work processes.

V. Strengthening internal management system einforce compliance framework in order to gain further trust from stakeholders.
REnhance and develop various risk management in consideration of risks/returns.

7Compliance
Compliance refers to strict observance of ethics and social

The Bank takes the following approach 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 their social responsibilities and public
missions.

Thorough Execution of Compliance

Compliance● In recognition of the public mission 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 a 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.
● To establish a basic framework for the compliance system, we have established our compliance regulations and rules fordisciplinary action and demonstrate fairness and transparency in the administration of disciplinary action as means of establishinga clear stance on compliance with laws and regulations.
● 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 structure. 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 as part of its 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 a 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 takes strong measures to intervene and block any attempt bysuch forces to create any relationship with the Bank.

8

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 theviewpoint 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

9

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 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 the Bank’s internal
capital so as to control each risk and carry out the assessments of our internal 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 its 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 for 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 a 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 determine assets heldby financial institutions in order to the accurate status of theinstitution’s assets. It is an important method of credit risk
management and a preliminary procedure to appropriately
determine the amount of depreciation and allowances. Assetassessment conducted by the financial institution itself isreferred to as a self-assessment.
The Bank carries out an assessment of its assets in which
actual assessments are conducted by its operating branches inconformity with the Regulations on Self-Assessment of
Assets. Assessment results are then subjected to a rigorous
verification process in which the results are examined by theCredit Analysis Division and further audited by the Internal
Audit Division. According to the audit results, the Bank
determines appropriate amounts of depreciation and allowances. In this way, the Bank strives to perform appropriate
asset assessment practices and maintain and improve thesoundness of its 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

10

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

Liquidity risk, also known as fund-raising risk, is defined as
the risk of the Bank incurring a loss due to encountering an
obstacle in raising the required funds either because of a mismatch between the use and procurement of funds or unexpected outflow of funds or being forced to borrow 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 incurring a loss due
to inadequate or failed processes of banking operations,activities of executives and employees (including part-timeand temporary and other similarly 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 the effects of the risks.

• Managing Administrative Risk Administrative risk refers to the risk of incurring loss as aresult of neglecting accurate administrative processes alongside occurrences of accident or fraud.
The Bank reinforces the provisions of its administrative
regulations and requires strict staff compliance with the regulations to achieve customer confidence in its accurate andstrict administration. At the same time, the Bank aims toraise executives and employees administrative work standards by conducting regular training programs and temporary
office work guidance. In addition, 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 systems, 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 and has 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.

11

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

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 theappropriate 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 the 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, the Bank will take appropriate andswift 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 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 level, evaluating and verifying that internal control is appropriately maintained and functioning effectively and providing advice as necessary.

Crisis Management Posture
Along with the above risk management, the Bank has formulated a Crisis Management Plan and a Crisis Management
Plan Response Manual for each type of crisis to respond suitably to the occurrence and materialization of crises related tobusiness operations, such as natural disasters including largescale earthquakes, systems malfunctions, or novel influenza
and other pandemics. In the event of a crisis, the Bank
responds, depending on the level of emergency of the crisis,by having the Emergency Council, Response Headquarters,
or other divisions gather information and engaging in cen-

12

tralized supervision and command, in an effort to minimize
the impact of the crisis on its operations.
In the meantime, the Bank, as an organization responsible
for social function maintenance, takes measures to continuously provide customer services, including improvement offacilities to continue its business operations in the event ofdisasters or other events, while striving to ensure the effectiveness of the crisis management posture and improve it
continuously, through measures including risk management
training provided every year.

Board of Directors and Corporate Auditors(As of July 1, 2015)

Takashi Hashimoto

ChairmanPresident(Representative Director)

Board of Directors and Corporate Auditors

Yasuo Ueno

Kohsaku Yoshida

Yoshihiko Kita

Managing Director(Representative Director)

Managing Director(Representative Director)

Naoki Minowa

Toru Hagihara

Hiromune Nishiguchi

Managing Director

Managing Director(Osaka Regional Headquarter)

Director And Executive Advisor

ChairmanYasuo Ueno
President
Takashi Hashimoto
Managing Director
Kohsaku Yoshida
Yoshihiko Kita
Naoki Minowa
Toru Hagihara(Osaka Regional Headquarter)
Director And Executive Advisor
Hiromune Nishiguchi

Directors And General Managers
Shigeyori Kawai(General Business Division)
Takao Handa(Personnel Division)
Nobuo Shibata(Osaka Chuo Office)Akira Kondo(Head Office)Keizo Nishikawa(Tokyo branch and Tokyo Liaison Office)Kazuomi Nakamuro(Internal Audit Division)
Hiroyuki Sakai

Corporate Auditors
Taro Hayama
Masaaki Hashimoto
Katsuhisa Yoshikawa
Tetsuya Wada

Note:	Hiroyuki Sakai is outside director pursuant to Item 15, Article 2 of the Company Law and Katsuhisa Yoshikawa and Tetsuya Wada are outside corporate auditors
pursuant to Item 16, Article 2 of the Company Law.

13

Consolidated Financial Statements
Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)Millions of yen

Consolidated Financial Statements

2015

2014

2015

Assets:Cash and due from banks (Notes 14 and 16) .................................................
Call loans and bills bought (Note 16) ............................................................
Debt purchased (Note 16) ..............................................................................
Trading account securities (Notes 16 and 17) ................................................
Money held in trust (Notes 16 and 17) ...........................................................
Securities (Notes 7, 10, 16 and 17) ................................................................
Loans and bills discounted (Notes 6, 8 and 16) ............................................
Foreign exchanges (Note 6) ...........................................................................
Lease receivables and lease investment assets ...............................................
Other assets (Note 7) ......................................................................................
Tangible fixed assets (Note 9) ........................................................................
Buildings ....................................................................................................
Land ...........................................................................................................
Construction in progress ............................................................................
Other tangible fixed assets .........................................................................
Intangible fixed assets ....................................................................................
Software .....................................................................................................
Other intangible fixed assets (Note 7) ........................................................
Deferred tax assets (Note 21) .........................................................................
Customers’ liabilities for acceptances and guarantees ...................................
Reserve for possible loan losses (Note 16) ....................................................
Total assets .................................................................................................

¥ 452,967
—
5,096
230
22,0001,693,517
3,079,175
5,918
13,85723,651
41,23011,72625,236
—
4,267
5,157
4,583
573
1,386
10,963(26,494)¥5,328,661¥ 202,724
895
4,515
213
22,0001,907,331
2,972,159
2,064
14,90522,274
41,902
11,93924,188
187
5,586
5,748
5,174
573
5,294
11,477(26,314)¥5,187,191$ 3,769,385—
42,406
1,913
183,073
14,092,677
25,623,491
49,246
115,311
196,812
343,097
97,578210,002—35,50842,914
38,137
4,768
11,53391,229(220,470)$44,342,689

Liabilities and net assets:
Liabilities:
Deposits (Notes 7 and 16) ..............................................................................
Negotiable certificates of deposit (Note 16) ...................................................
Payables under securities lending transactions (Notes 7 and 16) ...................
Borrowed money (Notes 7, 16 and 26) ..........................................................
Foreign exchanges ..........................................................................................
Bonds payable (Notes 16 and 26) ..................................................................
Other liabilities (Note 26) .............................................................................
Liability for retirement benefits (Note 19) .....................................................
Reserve for reimbursement of deposits ..........................................................
Reserve for contingent losses .........................................................................
Deferred tax liabilities (Note 21) ...................................................................
Acceptances and guarantees ...........................................................................
Total liabilities ...........................................................................................

4,691,065
63,349134,855
116,122399—
34,877
14,753
131
946
9,878
10,963¥5,077,342

4,585,357
77,531
141,600
85,388197
20,00024,602
19,039150
1,198—
11,477¥4,966,542

39,036,906
527,161
1,122,201
966,3143,320—
290,230
122,767
1,090
7,872
82,20091,229$42,251,327

Net assets (Note 3):
Common stock: Authorized 640,000 thousand shares
Issued 272,756 thousand shares in 2015 and 2014 ..............
Capital surplus ................................................................................................
Retained earnings ...........................................................................................
Less treasury stock: Issued 4,556 thousand shares in 2015
and 4,581 thousand shares in 2014 ...............................

29,24918,813140,20929,24918,813
132,594

243,396
156,553
1,166,755(1,907)(1,918)(15,869)

Total stockholders’ equity
Valuation difference on available-for-sale securities (Note 17) .....................
Net deferred gains or losses on hedges ..........................................................
Accumulated adjustments for retirement benefits (Note 19) .........................
Total accumulated other comprehensive income .......................................
Stock acquisition rights ................................................................................
Minority interests .........................................................................................
Total net assets ...........................................................................................
Total liabilities and net assets ....................................................................

186,365
58,818(668)(1,279)56,870146
7,935
251,318¥5,328,661

178,739
39,585(760)(4,376)34,448
123
7,336
220,648¥5,187,191

1,550,844
489,456(5,558)(10,643)
473,246
1,214
66,031
2,091,353$44,342,689

See Notes to Consolidated Financial Statements.

14
14

Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)Millions of yen

2014

2015

¥36,452
17,873508
18,375
4,729
3,930
81,869¥38,463
17,362373
17,766
3,804
4,946
82,717$303,336
148,730
4,227
152,908
39,35232,703
681,276

Expenses:
Interest expense:
Interest on deposits ....................................................................................
Interest on borrowings and rediscounts .....................................................
Interest on subordinated bonds ..................................................................
Other interest expense ................................................................................
Fees and commissions ....................................................................................
Other operating expenses ...............................................................................
General and administrative expenses .............................................................
Other expenses (Note 12) ...............................................................................
Total expenses ........................................................................................

2,611
478
318
358
9,063
883
47,7232,420
63,857

3,165
371
344
388
8,835
820
46,993
2,003
62,923

21,727
3,977
2,646
2,979
75,4187,347
397,129
20,138531,388

18,012

19,794

149,887

1,130
6,421
7,552
10,459585¥ 9,874

1,024
8,998
10,0239,770
691¥ 9,079

9,403
53,432
62,84487,035
4,868$ 82,166

Income before income taxes and minority interests ......................................
Income taxes (Note 21):
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 24):
Net income - basic ........................................................................................
Net income - diluted .....................................................................................
Dividends .....................................................................................................

¥36.81
36.76
7.00

Consolidated Financial Statements

2015

Income:Interest income:Interest on loans and bills discounted ....................................................
Interest and dividends on securities .......................................................
Other interest income .............................................................................
Fees and commissions ..................................................................................
Other operating income ................................................................................
Other income (Note 11) ...............................................................................
Total income ..........................................................................................

¥33.78
33.74
6.00

$0.30
0.30
0.05

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)Millions of yen

Net income before minority interests .................................................................
Other comprehensive income (Note 13):
Valuation difference on available-for-sale securities .....................................
Net deferred gains or losses on hedges ..........................................................
Adjustments for retirement benefits (Note 19) ...............................................
Total other comprehensive income ............................................................
Total comprehensive income for the year ...........................................................
Total comprehensive income attributable to:
Owners of the parent ......................................................................................
Minority interests ...........................................................................................
See Notes to Consolidated Financial Statements.

2015

2014

2015

¥10,459¥ 9,770$ 87,035

19,24791
3,097
22,436¥32,895

1,626
170
—
1,797
¥11,568

160,164757
25,771
186,702$273,737¥32,295
600¥10,888680$268,744
4,992

15
15

Consolidated Financial Statements
Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2015 and 2014

Number ofshares ofcommonstock(thousands)

Commonstock

Consolidated Financial Statements

Balance at April 1, 2013 ................... 275,756 ¥29,249
Cash dividends ...............................
——Net income .....................................
——
Purchase of treasury stock .............
——
Disposition of treasury stock .........
——
Retirement of treasury stock ..........
(3,000)—Transfer from retained earnings tocapital surplus ................................
——Net changes in the items other thanstockholders’ equity .......................
——
Balance at April 1, 2014 ................... 272,756 ¥29,249
Cumulative effects of changes inaccounting policies ........................
——
Restated balance at April 1, 2014 ...
—29,249Cash dividends ...............................
——Net income .....................................
——
Purchase of treasury stock .............
——
Disposition of treasury stock .........
——
Transfer from retained earnings tocapital surplus ................................
——Net changes in the items other thanstockholders’ equity .......................
——
Balance at March 31, 2015 (Note 3) ... 272,756 ¥29,249

Commonstock

CapitalsurplusCapitalsurplusRetainedearnings

Less
treasurystockMillions of yen
ValuationNet
differenceondeferred
gains oravailablelosses on
for-salesecurities
hedges¥18,813 ¥126,387 ¥(2,480) ¥37,947—(1,614)
—
—
—
9,079
—
—
—
—
(717)
—
(2)
—
24
—
(1,256)
—
1,256
—
1,258

(1,258)—16
16¥(931)
—
—
—
—
—

—
—
—
—
—
—

¥100
—
—
—
—
—

—

—

—

—

Minority
interests

Total net
assets¥6,658 ¥215,745—(1,614)
—
9,079
—
(717)
—
21
—
—
—

—

—
—
¥18,813 ¥132,594—
1,637¥(1,918) ¥39,585

170 ¥(4,376)¥(760) ¥(4,376)

22
¥123

678
(1,866)¥7,336 ¥220,648—
18,813(377)
132,216—(1,918)—39,585—(760)—(4,376)

—
123

—
7,336

(377)
220,271———(3)(1,877)
9,874
—
—

—
—
(11)
21

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(1,877)
9,874
(11)
18

3

(3)

—

—

—

—

—

—

—

91
3,097
¥(668) ¥(1,279)

22
¥146

—
—
¥18,813 ¥140,209

Retainedearnings—
19,232¥(1,907) ¥58,818

Thousands of U.S. dollars (Note 1)
ValuationNet
difference
deferred AccumulatedLess
on available- gains orStockadjustments
treasury
for-salelosses on for retirement acquisitionstock
securities
hedgesrightsbenefits

Balance at April 1, 2014 ................... $243,396 $156,553 $1,103,386 $(15,960) $329,408
Cumulative effects of changes inaccounting policies ........................
(3,137)————
Restated balance at April 1, 2014 ... 243,396 156,553 1,100,241 (15,960) 329,408——
Cash dividends ...............................
(15,619)————
Net income .....................................
82,166————
Purchase of treasury stock .............
—
(91)
—
—
(24)
Disposition of treasury stock .........
—
174—
Transfer from retained earnings tocapital surplus ................................
(24)
—
—
—
24
Net changes in the items other than——stockholders’ equity .......................
—— 160,039
Balance at March 31, 2015 (Note 3) .... $243,396 $156,553 $1,166,755 $(15,869) $489,456
See Notes to Consolidated Financial Statements.

Accumulated
adjustments
Stock
for
retirement acquisitionrightsbenefits

598
23,043¥7,935 ¥251,318

Minority
interests

Total net assets$(6,324) $(36,415)$1,023$61,046 $1,836,132——(6,324) (36,415)
—
—
—
—
—
—
—
—

—
1,023
—
—
—
—

—
61,046————(3,137)
1,832,994(15,619)
82,166
(91)
149

—

—

—

—

757
25,771$(5,558) $(10,643)

183$1,214—

4,976
191,753$66,031 $2,091,353

Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)Millions of yen

2014

2015

¥ 18,012
4,526
11
179
—
10
(19)
(251)
(54,835)
3,766(5,789)(304)(40,491)(162)(107,016)
105,708(14,182)
30,733¥ 19,794
4,462
15(2,043)(12,669)
12,264(14)(328)(56,199)
4,270(4,530)(239)(21,808)
63(73,314)167,220(18,936)
4,287$ 149,887
37,663
91
1,489
—
83
(158)
(2,088)(456,311)
31,338(48,173)(2,529)(336,947)(1,348)(890,538)
879,653(118,016)
255,746(257)
313(6,745)(3,853)
202
892
60,990(5,061)
9,216(4,406)(1,426)
9(5,822)(1,580)
(700)
3,365
1,958
56
(748)
65,061(4,341)(3,493)81,870(868)
2981,031(2,138)2,604(56,128)(32,062)
1,680
7,422
507,530(42,115)
76,691(36,664)(11,866)
74(48,448)

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 provided by (used in) investing activities ...................................

(625,395)
671,475
234,290(5)310(1,930)493(1,534)(21)
277,682(604,320)
393,198
164,360(1,022)261(3,934)91(1,788)(75)(53,228)(5,204,252)
5,587,709
1,949,654
(41)
2,579
(16,060)
4,102(12,765)(174)
2,310,743

Cash flows from financing activities
Redemption of subordinated bonds ................................................................
Dividends paid ................................................................................................
Dividends paid by subsidiaries to minority stockholders ...............................
Purchase 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 14) ......................................

(20,000)(1,878)(1)(11)
0(21,890)17249,986
200,655¥450,641—(1,614)(1)(717)
0(2,333)
11
25,481
175,173¥200,655(166,430)(15,627)(8)(91)
0(182,158)
141
2,080,269
1,669,759$3,750,029

Consolidated Financial Statements

2015

Cash flows from operating activities
Income before income taxes and minority interests .......................................
Depreciation ...................................................................................................
Loss on impairment of fixed assets ................................................................
Increase (decrease) in reserve for possible loan losses ..................................
Increase (decrease) in reserve for retirement benefits ....................................
Increase (decrease) in liability for retirement benefits ...................................
Increase (decrease) in reserve for reimbursement of deposits .......................
Increase (decrease) in reserve for contingent losses ......................................
Interest income ...............................................................................................
Interest expense ..............................................................................................
Loss (gain) on investment securities ..............................................................
Loss (gain) on money held in trust .................................................................
Foreign exchange losses (gains) .....................................................................
Losses (gains) on disposal of fixed assets ......................................................
Net decrease (increase) in loans and bills discounted ....................................
Net increase (decrease) in deposits ................................................................
Net increase (decrease) in negotiable certificates of deposit ..........................
Net increase (decrease) in borrowed money ..................................................
Net decrease (increase) in due from banks (excluding due fromthe Bank of Japan) ..........................................................................................
Net decrease (increase) in call loans and bills bought ...................................
Net increase (decrease) in payables under securities lending transactions ....
Net decrease (increase) in foreign exchange assets .......................................
Net increase (decrease) in foreign exchange liabilities ..................................
Net decrease (increase) in lease receivables and lease investment assets ......
Interest received ..............................................................................................
Interest paid ....................................................................................................
Other ...............................................................................................................
Subtotal ......................................................................................................
Income taxes paid ...........................................................................................
Income taxes refund .......................................................................................
Net cash provided by (used in) operating activities ...................................

See Notes to Consolidated Financial Statements.

17
17

Consolidated Financial Statements
Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014

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 “Group”)
have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting
regulations and the 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, fromthe consolidated financial statements of the Bank prepared in accordancewith Japanese GAAP and filed with the appropriate Local Finance Bureauof the Ministry of Finance as required by the Financial Instruments andExchange Act. Some supplemental information included in the statutory
Japanese language consolidated financial statements, but not required forfair 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 the sum 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 theprevailing exchange rate at March 31, 2015, which was ¥120.17 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 ten (eleven in 2014) subsidiaries at March 31, 2015.
Nanto Asset Research Co., Ltd. resolved its dissolution at the extraordinary
shareholders’ meeting held on September 30, 2014 and its liquidation wascompleted on January 29, 2015.
The Bank has one (0 in 2014) unconsolidated subsidiary, namely, Nanto Sixth Industry Support Investment Limited Partnership. The unconsolidated subsidiary is excluded from the scope of consolidation because theportion of its assets, net income (loss), retained earnings, accumulated
other comprehensive income and others that correspond to the Bank’s equity are immaterial to the extent that its exclusion from the scope of consolidation does not preclude reasonable judgment of the Group’s financial
position and results of operations.
The Bank has no affiliates over which it has the ability to exercise significant influence over operating and financial policies.
The Bank has one (0 in 2014) unconsolidated subsidiary not accounted
for by the equity method, namely, Nanto Sixth Industry Support Investment
Limited Partnership. The unconsolidated subsidiary not accounted for by
the equity method is excluded from the scope of the equity method because
its effect on the accompanying consolidated financial statements is not significant in terms of the portion of its net income (loss), retained earnings,
accumulated other comprehensive income, and others which correspond to
the Bank’s equity.
All consolidated subsidiaries have fiscal years ending on March 31.
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 due from the Bank of Japan.

18
18

c. Finance leases
As lessor:
Finance leases are accounted for in a manner similar to that used for ordinary sale transactions. Revenue from finance lease transactions and related
costs are recognized upon receipt of lease payments. Finance leases whichtransfer ownership of the lease assets to the lessee are recognized as leasereceivables, and all finance leases which do not transfer ownership of thelease assets to the lessee are recognized as lease investment assets.
As for finance leases which commenced before April 1, 2008 and do nottransfer ownership of the lease assets to the lessee, the appropriate bookvalue (net of accumulated depreciation and amortization) of tangible andintangible fixed assets as of March 31, 2008 was recorded as the beginningbalance of “Lease receivables and lease investment assets,” and the total
amount of interest equivalent for the remaining lease term after the adoption of the “Accounting Standard for Lease Transactions” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 13, issued on March 30,2007) is allocated over the remaining lease term using the straight-line
method.
Differences between income before income taxes and minority interests
for the fiscal years ended March 31, 2015 and 2014 and income before income taxes and minority interests calculated as if the accounting treatment
for the ordinary sale transactions had been applied to the finance leases
which do not transfer ownership of the leased assets to the lessee are notmaterial.
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.
Cost of sales for such securities is determined using the moving averagemethod. Held-to-maturity debt securities are stated at amortized cost on astraight-line method, cost of which is determined using the moving averagemethod. Available-for-sale securities with available fair values are stated atfair value in principle based on the market price as of the fiscal closing date.
Unrealized gains and losses on available-for-sale securities are reported,
net of applicable income taxes, as a separate component of accumulated
other comprehensive income. Available-for-sale securities for which it isextremely difficult to identify the 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 the fair value and the carrying amount is recognized
as a loss in the period of the decline. In such a case, the fair value will be
the carrying amount of the securities at the beginning of the next fiscal year.
Securities managed as trust assets in the individually managed money
held in trust primarily for securities management purposes are measured atfair value.
e. Derivatives and hedge accounting
Derivatives are measured at fair value.
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 Instruments in
the Banking Industry” (JICPA Industry Audit Committee Report No. 24).
The Bank assesses the effectiveness of such hedges in offsetting movementin the fair value from changes in interest rates by classifying the hedged
items, such as loans and deposits, and the hedging instruments, such as interest rate swaps, by their maturity. Regarding cash flow hedges, the Bank
assesses the effectiveness by verifying the correlation of the hedged itemswith the hedging instruments.

f. Tangible fixed assets (except for leased assets)
Depreciation of tangible fixed assets of the Bank is computed by the declining balance method, except for buildings (excluding building attachments
which are depreciated by the declining balance method) which are depreciated by the straight-line method. The estimated useful lives of major items
are as follows:
Buildings
6 to 50 years
Others3 to 20 years
Depreciation of the assets of the consolidated subsidiaries is principally
provided on the declining balance method over the estimated useful life of
the asset.
g. 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.
h. Lease assets
Lease assets with respect to finance leases that do not transfer ownership of
tangible fixed assets and intangible fixed assets are depreciated or amortized using the straight-line method with the assumption that the term of thelease is the useful life. Residual values of leased assets are the guaranteedvalues determined in the lease contracts or zero for assets without suchguaranteed value.
i. Reserve for possible loan losses
The reserve for possible loan losses is provided according to predetermined
standards. For loans to insolvent customers who are undergoing bankruptcy
or other special liquidation (“bankrupt borrowers”) or who are in a similar
financial condition (“effectively bankrupt borrowers”), the reserve for possible loan losses is provided based on the amount of the claims net of theamount expected to be recovered from collateral and guarantees and net ofthe deducted amount mentioned below. For the unsecured and unguaranteed portions of loans to customers not presently in the 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, thereserve for possible loan losses is provided for based on the Bank’s actual
rate of loan losses in the past.

All the claims are assessed by the operating divisions based on the selfassessment criteria on asset quality, and the assessment results are auditedby the Asset Audit Division, which is independent from the operating divisions.
For claims against “bankrupt borrowers” and “effectively bankrupt borrowers,” the amount exceeding the estimated value of collateral and guarantees is deemed uncollectible and deducted directly from those claims. At
March 31, 2015 and 2014, the deducted amounts were ¥7,434 million($61,862 thousand) and ¥10,508 million, respectively. The reserve for possible loan losses of the consolidated subsidiaries is provided for generalclaims 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.
j. Employee retirement benefits
In calculating projected benefit obligations, expected benefits are attributed
to each period by the benefit formula basis.
Prior service costs are recognized as profit or loss at the time of occurrence.
Actuarial gains and losses are amortized from the fiscal year following
the year in which the gains and losses are recognized by the straight-line
method over a fixed period (ten years), which is within the average remaining service years of the current employees.
Consolidated subsidiaries applied the simplified method where theamount to be required for voluntary termination at the fiscal year-end isrecorded as projected benefit obligations in the calculation of their liability
for retirement benefits and retirement benefit costs.

Consolidated Financial Statements

A portion of the deferred hedge losses and gains that were previously
accounted for under the “macro hedge method,” which had been applied inorder to manage interest rate risk arising from large volume transactions inloans, 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
expense” 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 ¥2 million ($16
thousand) in 2015 and ¥3 million in 2014.
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 condition 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.

k. 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.
l. Reserve for contingent losses
Providing for payment of the contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not covered byother reserves in an amount deemed necessary based on estimated losses in
the future.
m. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
n. 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.
o. Recognition criteria for lease income and costs for finance leases
Lease income and costs are recognized at the time of receiving lease fees.
p. Consumption taxes
Transactions subject to national and local consumption taxes are recorded
at amounts exclusive of consumption taxes.

19
19

Consolidated Financial Statements

Consolidated Financial Statements

q. Changes in accounting policies
For the year 2014
Effective from the year ended March 31, 2014, the Group has applied the“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26,
May 17, 2012, hereinafter, “Retirement Benefits Standard”) and “Guidanceon Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25,
May 17, 2012, hereinafter, “Retirement Benefits Guidance”) except Paragraph 35 of Retirement Benefits Standard and Paragraph 67 of Retirement
Benefits Guidance. Due to this application, actuarial gains and losses andpast service costs that are yet to be recognized have been recognized andthe difference between projected benefit obligations and plan assets has
been recognized as a liability for retirement benefits.
In accordance with Paragraph 37 of Retirement Benefits Standard, actuarial gains and losses and past service costs that are yet to be recognized,
after adjusting for tax effects, have been recognized in accumulated adjustments for retirement benefits under accumulated other comprehensive income.
As a result of the application, a liability for retirement benefits in theamount of ¥19,039 million has been recognized, and accumulated othercomprehensive income has decreased by ¥4,376 million at the end of thecurrent fiscal year.
The effects of this change on net assets per share are described in Note
24, “PER SHARE INFORMATION.”
For the year 2015
The Company and its consolidated domestic subsidiaries adopted Paragraph 35 of Retirement Benefits Standard and Paragraph 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No. 25, March 26, 2015, hereinafter, “Retirement Benefits Guidance”)
from the current fiscal year, and have changed the determination of projected benefit obligations and current service costs. In addition, the Company and its consolidated domestic subsidiaries have changed the methodof attributing expected benefit to periods from a straight-line method to abenefit formula basis and determining the discount rates from the method
using a discount rate which refers to the yields of bonds whose remaining
maturities approximate the estimated average remaining service years of
employees to the method using a single-weighted average discount rate
which reflects the estimated payment periods of retirement benefits and theamounts by the respective estimated payment periods.
In accordance with Paragraph 37 of Retirement Benefits Standard, theeffect of changing the determination of projected benefit obligations andcurrent service costs has been recognized in retained earnings at the beginning of the current fiscal year.
As a result of the application, liability for retirement benefits increasedby ¥584 million ($4,859 thousand) and retained earnings decreased by¥377 million ($3,137 thousand) at the beginning of the current fiscal year.
In addition, income before income taxes and minority interests increasedby ¥69 million ($574 thousand) in the current fiscal year.
The effects on segment information and per share information are explained in Note 22, “SEGMENT AND RELATED INFORMATION” andNote 24, “PER SHARE INFORMATION,” respectively.
r. Unapplied accounting standards
For the year 2014
“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26,
May 17, 2012)“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012)(1) Summary
The standards provide guidance for the accounting for actuarial gains andlosses and prior service costs that are yet to be recognized, the calculation
methods for projected benefit obligations and service costs, and the enhancement of disclosures thereof, in consideration of the improvements tofinancial reporting and international trends.
(2) Effective date
The Group is scheduled to apply the revised calculation methods for projected benefit obligations and service costs from the beginning of the fiscal
year starting on April 1, 2014.
(3) Effect of application of the standards
As a result of this application, the beginning balance of retained earnings
for the fiscal year starting on April 1, 2014 will decrease by ¥377 million.
For the year 2015
“Revised Accounting Standard for Business Combinations,” etc. (September 13, 2013)(1) Summary
The standards provide guidance for (1) the accounting for any changes in aparent’s ownership interest in a subsidiary when the parent retains control
over the subsidiary upon additional acquisition of shares in a subsidiary orother cases, (2) the corresponding accounting for acquisition-related costs,(3) the provisional accounting treatments, and (4) the presentation method
for net income and the change from minority interests to non-controllinginterests.
(2) Effective date
The Group is scheduled to apply the revised accounting standards, etc.
from the beginning of the fiscal year starting on April 1, 2015.
(3) Effects of application of the standard
The effects of this application have yet to be determined.

3. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2015 and 2014 were as follows:(Thousands of shares)

Remarks

2015

Shares issued
Common stock .............................

April 1, 2014

Increase

Decrease

272,756——

272,756

Total .........................................
Treasury stock
Common stock .............................

272,756——

272,756

4,581

26

52

4,556

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

4,581

26

52

4,556

Notes: 1.	The increase in common stock of treasury stock of 26 thousand shares is due to the purchase of shares of less than one unit.
2.	The decrease in common stock of treasury stock of 52 thousand shares is due to the execution of stock options.

20
20

March 31, 2015

Notes 1 & 2(Thousands of shares)

Remarks

2014
April 1, 2013

Increase

Decrease

March 31, 2014

275,756
275,756

—
—

3,000
3,000

272,756
272,756

Note 1

5,909
5,909

1,729
1,729

3,057
3,057

4,581
4,581

Notes 2 & 3

Notes: 1.	The decrease in common stock of 3,000 thousand shares issued is due to the retirement of treasury stock.
2.	The increase in common stock of treasury stock of 1,729 thousand shares comprises an increase of 1,698 thousand shares due to the purchase of treasury stock based on a
resolution of the Board of Directors’ meeting and an increase of 31 thousand shares due to the purchase of shares of less than one unit.
3.	The decrease in common stock of treasury stock of 3,057 thousand shares comprises a decrease of 3,000 thousand shares due to the retirement of treasury stock, a decrease of 56
thousand shares due to the execution of stock options and a decrease of 0 thousand shares due to sales of shares of less than one unit.

(2) Matters concerning Stock Acquisition Rights
For the fiscal year ended March 31, 2015
Shares expected to be acquired upon exercise of stock acquisition rights
Number of sharesClassification
The Bank

Breakdown
Stock acquisitionrights granted as
stock options

April 1, 2014

Total

Increase

Decrease

March 31, 2015

Balance at end ofcurrent fiscal year
(Millions of yen)

Consolidated Financial Statements

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

(Thousands of U.S.
dollars)

—

—

—

—

¥146

$1,214

—

—

—

—

¥146

$1,214

For the fiscal year ended March 31, 2014
Shares expected to be acquired upon exercise of stock acquisition rights
Number of sharesClassification
The Bank

Breakdown
Stock acquisitionrights granted as
stock options

April 1, 2013

Total

Increase

Decrease

March 31, 2014

Balance at end ofcurrent fiscal year
(Millions of yen)

—

—

—

—

¥123

—

—

—

—

¥123

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2015
Resolution

Annual shareholders’ meeting held on
June 27, 2014
Board of Directors’ meeting held on
November 14, 2014

Type of shares

Millions of yen (thousands of U.S. dollars), except per share amount
Aggregate amount of
Cash dividends
dividends
per share
Record date

Effective dateCommon stock¥804 ($6,690)¥3.00 ($0.02)

March 31, 2014

June 30, 2014

Common stock¥1,072 ($8,920)¥4.00 ($0.03)

September 30, 2014

December 5, 2014

Dividends paid in the fiscal year ended March 31, 2014
Resolution

Annual shareholders’ meeting held on
June 27, 2013
Board of Directors’ meeting held on
November 11, 2013

Type of shares

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

Effective dateCommon stock

¥809

¥3.00

March 31, 2013

June 28, 2013

Common stock

¥804

¥3.00

September 30, 2013

December 9, 2013

Millions of yen (thousands of U.S. dollars), except per share amount
Aggregate amount of
Source ofCash dividends
dividends
dividends
per share
Record date

Effective date(b) Dividends to be paid in the fiscal year ending March 31, 2016
Resolution

Annual shareholders’ meeting held on
June 26, 2015

Type of shares

Common stock¥804 ($6,690)

Retainedearnings¥3.00 ($0.02)

March 31, 2015

June 29, 201521
21

Consolidated Financial Statements

Consolidated Financial Statements

4. STOCKHOLDERS’ EQUITY
Under the Banking Law of Japan and the Company Law, the entire amount of 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 as additional
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 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 additional
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’ meeting or
may be capitalized by resolution of the Board of Directors. On condition that the total amount of legal earnings reserve and additional paid-in capitalremains equal to or more than 100% of common stock, they are available for distribution by resolution of the stockholders’ meeting. Legal earnings
reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the nonconsolidated financial statements of the Bank inaccordance with the Company Law.
5. INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES
Investments in capital of unconsolidated subsidiaries at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2014

¥0

Investments in capital .........................................................................................

2015

$0

¥—

6. NONPERFORMING LOANS
Nonperforming loans at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Loans to bankrupt borrowers ..............................................................................
Past due loans .....................................................................................................
Past due loans (three months or more) ...............................................................
Restructured loans ..............................................................................................
Total ................................................................................................................

2015

2014

2015

¥

¥ 1,078
67,766304
14,242¥83,391$

894
63,465762
14,805¥79,928

7,439
528,126
6,341
123,200$665,124

Bills discounted are accounted for as financing transactions in accordance with “Treatment for Accounting and Auditing of Application of AccountingStandard for Financial Instruments in the Banking Industry” (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 ¥19,970 million ($166,181 thousand) and ¥19,132 million at March 31, 2015 and 2014, respectively.
7. PLEDGED ASSETSAt March 31, 2015 and 2014, securities of ¥445,629 million ($3,708,321 thousand) and ¥452,101 million, respectively, were pledged as collateral for deposits,
and deposits of ¥57,489 million ($478,397 thousand) and ¥68,912 million, respectively, payables under securities lending transactions of ¥134,855 million($1,122,201 thousand) and ¥141,600 million, respectively, and borrowed money of ¥107,911 million ($897,986 thousand) and ¥77,731 million, respectively.
Securities of ¥79,326 million ($660,114 thousand) and ¥74,371 million were pledged for transaction guarantees at March 31, 2015 and 2014, respectively.
Unexpired lease contract claims of ¥4,980 million ($41,441 thousand) and ¥5,610 million were pledged as collateral for borrowed money of ¥4,019
million ($33,444 thousand) and ¥4,350 million at March 31, 2015 and 2014, respectively.
At March 31, 2015 and 2014, other assets included security deposits of ¥1,248 million ($10,385 thousand) and ¥1,308 million, respectively, and otherintangible fixed assets included key money of ¥573 million ($4,768 thousand) and ¥573 million, respectively.
8. LOAN COMMITMENTS
Commitment line contracts on overdrafts and loans are agreements to lend to customers when they apply for borrowing up to a prescribed amount as longas there is no violation of any condition established in the contract. The amounts of unused commitments at March 31, 2015 and 2014 were ¥895,274 million($7,450,062 thousand) and ¥868,462 million, respectively, and the amount of unused commitments whose original contract terms were within one year or
unconditionally cancelable at any time at March 31, 2015 and 2014 were ¥878,294 million ($7,308,762 thousand) and ¥850,512 million, respectively.
Since many of these commitment line contracts are expected to expire without being drawn upon, the total amount of unused commitments does notnecessarily affect actual future cash flow.
Many of these commitments line contracts have clauses that allow the Group to reject the application from customers or reduce the contract amounts if
economic conditions change. In addition, the Group may request that customers pledge collateral such as premises and securities or take other necessary
measures such as scrutinizing customers’ financial positions and revising contracts when the need arises to secure claims.
9. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥45,612 million ($379,562 thousand) and ¥46,323 million at March 31, 2015 and 2014, respectively.
Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥718 million ($5,974 thousand) at
March 31, 2015 and 2014.

22
22

10. GUARANTEESThe amount guaranteed by the Bank for privately placed bonds (stipulated by Article 2, Paragraph 3 of the Financial Instruments Exchange Act) included in“Bonds” of “Securities,” was ¥2,933 million ($24,407 thousand) and ¥2,876 million at March 31, 2015 and 2014, respectively.
11. OTHER INCOME
For the fiscal years ended March 31, 2015 and 2014, other income consisted of the following:
2015

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

2014¥1,515—678
1,735¥3,930¥1,831
294
1,611
1,208
¥4,9462015$12,607—
5,642
14,437$32,703

12. OTHER EXPENSES(1) Other expenses consisted of the following:
For the fiscal year ended March 31, 2015

Write-offs of loans .............................................................................................
Provision for possible loan losses ......................................................................
Loss on impairment of fixed assets ....................................................................
Other ..................................................................................................................
Total ..........................................................................................................

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥1,176563
11669¥2,420Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen$ 9,786
4,685
91
5,567
$20,138

For the fiscal year ended March 31, 2014
Millions of yen

2014

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

¥1,214
53
170
15
548
¥2,003

13. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the fiscal years ended March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Valuation difference on available-for-sale securities:
Gains incurred during the year .......................................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
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 ..........................................................
Adjustments for retirement benefits:
Gains incurred during the year .......................................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Adjustments for retirement benefits ...............................................................
Total other comprehensive income .....................................................................

2014

2015

¥30,733(5,790)24,943(5,696)
19,247¥7,122(4,530)
2,591
(965)
1,626

$255,746(48,181)
207,564(47,399)
160,164

(179)
360
181
(90)
91

(55)
385
329
(158)
170

(1,489)
2,995
1,506
(748)
757

3,507
1,374
4,881
(1,784)
3,097¥22,436—————¥1,797

29,183
11,43340,617(14,845)
25,771$186,702

23
23

Consolidated Financial Statements

14. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2015 and 2014 and cash and cash equivalents in the
consolidated statements of cash flows for the fiscal years then ended were as follows:
For the fiscal year ended March 31, 2015
Millions of yen

2015

Consolidated Financial Statements

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

Thousands of
U.S. dollars

2015¥452,967(1,648)(615)(63)¥450,641$3,769,385(13,713)(5,117)(524)$3,750,029

For the fiscal year ended March 31, 2014
Millions of yen

2014

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

¥202,724(315)(1,754)¥200,655

15. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

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

2015

2014

2015

¥ 126
1,125
¥1,251¥ 116
1,110¥1,227$ 1,048
9,361$10,410

As lessor:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

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

24
24

16. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
a. Matters relating to the status of financial instruments(1) Policy on financial instruments
The Group is composed of the Bank and ten consolidated subsidiaries andprovides financial services such as banking, securities, leasing and credit
guarantee businesses.
Its major banking business includes (i) the acceptance of deposits, lending services, bills discounting and remittance, and (ii) the guarantee ofdebt, acceptance of bills and other services related to the banking business.
The securities business includes underwriting and dealing in securities,
over-the-counter derivative transactions and other related services including security index future transactions in accordance with the Financial Instruments and Exchange Act.
The Bank, in addition to being a money lender and borrower in the interbank market to adjust surplus and deficit of funds, raises funds by loans
and bonds with consideration for the financial market conditions and thebalance of length.
The Bank conducts asset and liability management (ALM) and manages, identifying various types of risk exposures associated with the banking business, since the Bank holds financial assets and liabilities exposed tothe market risk associated with the fluctuation of interest rates. As part ofits risk management, the Bank utilizes derivative transactions such as interest rate swaps. The Bank also enters into derivative transactions for trading
purposes with certain position limits.

¥1
—
¥1

2014

¥3
1
¥5

2015

$8
—
$8

(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 arising fromthe nonperformance of its customers. In addition, loan balances are significantly concentrated to Nara prefecture, where the head office of the Bank islocated. Accordingly, changes in the economic circumstances of the region
could have a great impact on the credit risk.
Securities consist principally 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. Since financial
assets denominated in foreign currencies are exposed to exchange rate risk,
currency related derivative transactions are used to balance the amount offunding and amount of operations for 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 payable, the Group may be forced toraise funds under unfavorable conditions and, accordingly, become significantly exposed to liquidity risk if the fund raising capacity of the Groupsignificantly declined and led to the inability to repay under circumstances

(3) Risk management system for financial instruments
Credit risk management
The Group has established 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 is 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.
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 makes efforts to manage the market
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 for 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 opportunities within the risk limits. The Compliance & Risk
Management Division assesses interest rate risk by VaR, reports to the
ALM Committee on a monthly basis and properly monitors its operations.
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 froma broader point of view.

(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 investments 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 investments in 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.

Consolidated Financial Statements

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 andbond option transactions for bond 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 withcustomers and control those risks properly. The Bank also uses derivatives
for trading purposes with certain position limits.
The Bank applies the deferred hedge accounting method for derivativetransactions when used as hedging instruments. Interest rate swaps are usedas hedging instruments to avoid interest rate risks of hedged items such asloans with fixed interest rates and deposits with fixed interest rates. Deferred hedge accounting has been applied to derivatives 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 theeffectiveness by verifying the correlation between the hedged items and thehedging instruments. Transactions which do not meet the requirements ofhedge accounting and derivative transactions for trading purposes are exposed to interest rate risk, foreign currency risk, price fluctuation risk andcredit risk.

(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 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 backoffice, checks each derivative transaction, marked-to-market position, andevaluates the profit and loss from the transactions on a daily basis.
Combined with those functions, the related divisions check each other so
as not to exceed limits on loss.
The directors of the Bank are reported to from both the middle officeand the back office and monitor the risks associated with the Bank’s
portfolio as a whole, including loans, deposits and securities at the ALM
Committee.
(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 120 business days [holding
period for equity securities other than purely for investment purposes are
240 business days] and the correlation of risk categories are notconsidered.) is adopted.
At March 31, 2015, the Group’s total market risk (decrease inestimated economic value) was ¥27,083 million ($225,372 thousand)(¥43,999 million in 2014). In addition, the Group conducted back tests tocompare actual income with the VaR calculated by the model. According
to the back tests conducted in 2015, the measurement model captured thequantity of market risk with sufficient accuracy. However, VaR is astatistical measure of market risk based on past fluctuations in the market
and certain probability of occurrence. It may not be possible to capture therisk if the market fluctuates rapidly under extraordinary circumstances.
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

25
25

Consolidated Financial Statements

understanding the amount of cash for which the Bank can liquidate and also
can raise 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 quoted market prices and 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 such calculations may vary if different assumptions are used.

Consolidated Financial Statements

b. Fair value of financial instruments
The table below summarizes the carrying amounts, fair values and differences of financial instruments as of March 31, 2015 and 2014.
Note that unlisted equity securities for which it is extremely difficult to identify the fair value and immaterial accounts are not included in the table (seeNote 2 below).
Millions of yen

2015

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 ...............................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Bonds payable ............................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2) .......................................................................
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions

Carrying amount

Fair value¥ 452,967—
5,096¥ 452,967—
5,096

Difference

230
22,000230
22,000——2,933
1,688,677
3,079,175(26,006)
3,053,168¥5,225,075¥4,691,065
63,349134,855
116,122—¥5,005,392

2,950
1,688,677

16—

3,071,533¥5,243,457¥4,691,579
63,349134,855
116,080—¥5,005,864

18,365¥18,381
¥ 514
—
—
(41)
—
¥ 472

(11,978)(1,084)¥ (13,063)(11,978)(1,084)¥ (13,063)

—
—
—

¥

¥

—
—
—

Millions of yen

2014

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 ...............................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Bonds payable ............................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2) .......................................................................
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions .......................................................................

26
26

Carrying amount

Fair value¥ 202,724
895
4,515

¥ 202,724
895
4,515

213
22,000213
22,000——2,876
1,902,635
2,972,159(25,782)
2,946,376¥5,082,238¥4,585,357
77,531
141,600
85,38820,000¥4,909,877

2,901
1,902,635

24—

2,964,305¥5,100,191¥4,586,277
77,531
141,600
85,362
20,240¥4,911,012

17,928¥17,953
¥ 919
—
—
(25)
240
¥ 1,134(2,161)(1,270)(3,432)(2,161)(1,270)(3,432)

—
—
—

¥

¥

Difference

¥

¥

—
—
—

Thousands of U.S. dollars

2015
Carrying amount

Total assets .................................................................................................
Deposits .....................................................................................................
Negotiable certificates of deposit ...............................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Bonds payable ............................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2) .......................................................................
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions .......................................................................

Difference$ 3,769,385—
42,406$ 3,769,385—
42,406

1,913
183,073

1,913
183,073——

24,407
14,052,400
25,623,491(216,410)
25,407,073$43,480,694$39,036,906
527,161
1,122,201
966,314—$41,652,592

24,54814,052,400

133—

25,559,898$43,633,660$39,041,183
527,161
1,122,201965,964—$41,656,519

152,825$152,958$ 4,277——(341)—$ 3,927(99,675)(9,020)(108,704)(99,675)(9,020)(108,704)

—
—
—

$

$

$

$

—
—
—
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) Assets and liabilities arising from derivative transactions are presented on a net basis, and 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 for each category of maturity by discounting the cash flow at theinterest rate assumed if the same due from banks were newly executed.
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 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 value of securities held for trading purposes is determined based onquoted market prices or values calculated on a reasonable basis if no market
price is available.
Money held in trust:
The fair value of securities managed as trust assets in individually managed
money held in trust primarily for securities management purposes is determined based on the values presented by the trust bank. For additional information on money held in trust categorized by holding purposes, see Note
17, “SECURITIES AND MONEY HELD IN TRUST.”
Securities:
The fair value of equity securities is determined using the market price atthe exchanges. The fair value of debt securities is determined based onmarket prices or values calculated on a reasonable basis if no market priceis available. The fair value of listed investment trusts is determined using
the market price at the exchanges and the fair value of other investment
trusts is determined using standard prices published by the Investment
Trust Association, Japan or presented from the financial institutions withwhich they are transacted. The fair value of the private bonds guaranteed by
the Bank is calculated by discounting the aggregate value of principle andinterest at the interest rate assumed if the same bond were newly issued foreach category based on term, 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 losses are computed based on thepresent value of estimated future cash flow or the recoverable amounts
from collateral and guarantees. Therefore, the fair value approximates the
carrying amount, net of reserve for possible loan losses, and such amount ispresented as the fair value.
For additional information on securities categorized by holding purposes, see Note 17, “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
they execute the loans, since they reflect market interest rates due to theirshort-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 typeof loans, internal ratings and maturities. As for the loans whose maturity isless than one year, the carrying amount is presented as the fair value as thefair 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 losses are computed based on the present value of theestimated future cash flow or the recoverable amounts from collateral and2727

Consolidated Financial Statements

Consolidated Financial Statements

guarantees. 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 a predetermined repayment date due totheir lending amounts being limited within the values of the applicable collateral 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 due 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 a certain period. The interest rate to be applied when a new deposit is taken isused as the discount rate. For 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 approximates the carrying amount.

Borrowed money:
The fair value of borrowed money with floating interest rates is presented
using the carrying amount as the fair value approximates the carrying
amount since the interest rate reflects the market interest rate due to theshort-term nature and the credit situation of the Group does not vary significantly after executing the borrowing. The fair value of borrowed moneywith fixed interest rate is computed, by discounting the aggregate value ofprincipal and interest (with respect to borrowed money accounted for by
the exceptional accounting method for interest rate swaps, the aggregate
value of principal and interest using the interest rate swap rate) at the interest rate assumed if the same borrowing were newly executed, for each category of type of maturities. As for the borrowed money whose maturity isless than one year, the carrying amount is presented as the fair value as thefair value approximates the carrying amount.
Bonds payable:
Bonds issued by the Bank are all unsecured and subordinated bonds. The
fair value of such bonds is determined using the market price.
Derivative transactions
For derivative transactions, see Note 18, “DERIVATIVE TRANSACTIONS.”(Note 2) The table below summarizes financial instruments whose fair value is extremely difficult to estimate: Note that these instruments are not includedin the above table regarding the fair value of financial instruments.
Carrying amountThousands of
U.S. dollars

Millions of yen

2015

2014

¥1,596309¥1,906

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

2015$13,281
2,571$15,860¥1,493325¥1,818(*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 impairment loss of ¥0 million ($0 thousand) on unlisted equity securities for the fiscal year ended March 31, 2015. No impairment loss was recognized for the
fiscal year ended March 31, 2014.
(*3) The fair value of unlisted equity securities among the investment in partnerships is not disclosed since there is no market price and it is extremely difficult to estimate the fair value.

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

2015
Due within one
year or lessDue 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 ...............................................................

28
28

Due 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¥ 407,444—
5,096
240,438
789
789

¥

—
—
—
356,190
1,679
1,679

¥

—
—
—
341,955
422
422

¥

—
—
—
355,821
43
43

¥

—
—
—
219,300
—
—

¥

—
—
—
15,000——239,648
96,00051,243
20,493
71,911
876,822¥1,529,802

354,511
184,500
20,907
26,735
122,368
411,536¥767,727

341,533
251,500
30,985
3,204
55,844
311,973¥653,929

355,778
230,000
31,9704,029
89,778204,255¥560,076

219,300
101,500
34,372
44,97438,454
285,866¥505,166

15,000———15,000590,847¥605,848

Millions of yen

2014
Due within one
year or lessDue after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years¥ 156,777
895
4,515
229,838
370
370

¥

—
—
—
476,931
1,161
1,161

¥

—
—
—
229,342
1,048
1,048

¥

—
—
—
527,943
297
297

¥

—
—
—
273,642
—
—

¥

—
—
—
27,000——229,468
135,300
11,506
21,827
60,835
837,608¥1,229,634

475,770
267,500
63,63644,625100,008
384,621¥861,552

228,293
126,000
36,63911,90853,746
310,636¥539,978527,646
406,700
31,9892,107
86,849
182,811¥710,755

273,642
177,000
47,194
46,3893,058
267,101¥540,744

27,0007,000——
20,000581,525¥608,525

Due after sevenyears through ten
years

Due after ten
years

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 after one
year throughthree years

Thousands of U.S. dollars

2015
Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years$ 3,390,563—
42,4062,000,815
6,565
6,565

$

—
—
—
2,964,050
13,971
13,971$———
2,845,593
3,511
3,511

$

—
—
—
2,960,980
357
357

$

—
—
—
1,824,914——$

1,994,241
798,868
426,420
170,533
598,410
7,296,513$12,730,315

2,950,079
1,535,324
173,978
222,476
1,018,290
3,424,615$6,388,674

2,842,082
2,092,868
257,843
26,662464,7082,596,097$5,441,699

2,960,622
1,913,955
266,039
33,527747,091
1,699,717$4,660,697

1,824,914
844,636
286,028
374,253
319,996
2,378,846$4,203,761

124,823———
124,823
4,916,759$5,041,591

Due within one
year or lessDue 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 ...............................................................

———
124,823——(*) Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, which are not expected to be repaid and amounting to ¥62,915 million ($523,549 thousand)and ¥78,122 million at March 31, 2015 and 2014, respectively, are not included.
Loans whose payment term is not determined amounting to ¥334,958 million ($2,787,367 thousand) and ¥339,359 million at March 31, 2015 and 2014, respectively, are not included.

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

2015

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Payables under securities lending transactions ...
Borrowed money ............................................
Bonds payable ................................................
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¥4,102,219
63,349134,855
48,557—¥4,348,981¥527,443——
41,785—¥569,228¥61,402——25,780—¥87,182

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

Millions of yen

2014

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

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years¥3,976,761
77,531
141,600
38,056—¥4,233,949¥559,751——
42,311—¥602,063¥48,844——
5,020—¥53,864¥————
20,000¥20,000

29
29

Consolidated Financial Statements

Thousands of U.S. dollars

2015

Consolidated Financial Statements

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Payables under securities lending transactions ...
Borrowed money ............................................
Bonds payable ................................................
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$34,136,797
527,161
1,122,201
404,069—$36,190,238$4,389,140——
347,715—$4,736,856$510,959——
214,529—$725,488

$—
—
—
—
—
$—

$—
—
—
—
—
$—

$—
—
—
—
—
$—

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

17. SECURITIES AND MONEY HELD IN TRUSTThe securities in this note include “Trading account securities” and beneficial trust interests under “Debt purchased,” in addition to “Securities” classified
on the consolidated balance sheets.
(1) Information on trading account securities and securities with available fair values at March 31, 2015 and 2014 was as follows:(a) Trading securities
Thousands of
U.S. dollars

Millions of yen

2015

2014

¥0

Amount of net unrealized gains (losses) included in the statements of income ....

2015

$0

¥0

(b) Held-to-maturity debt securities
Millions of yen

2015
Carrying amount

Fair value

Fair value exceeding carrying amount:
Corporate bonds .........................................................................................
Subtotal ......................................................................................................

Unrealized gains (losses)¥2,903¥2,903¥2,921¥2,921¥18¥18

Fair value not exceeding carrying amount:
Corporate bonds..........................................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

¥ 30
¥ 30
¥2,933¥ 28¥ 28¥2,950

¥ (1)
¥ (1)
¥16

Millions of yen

2014
Carrying amount

Fair value

Fair value exceeding carrying amount:
Corporate bonds .........................................................................................
Subtotal ......................................................................................................

Unrealized gains (losses)¥2,826¥2,826¥2,854¥2,854¥28¥28

Fair value not exceeding carrying amount:
Corporate bonds..........................................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

¥ 50
¥ 50
¥2,876¥ 46¥ 46¥2,901

¥ (3)
¥ (3)
¥24

Thousands of U.S. dollars

2015

30
30

Carrying amount

Fair value

Fair value exceeding carrying amount:
Corporate bonds .........................................................................................
Subtotal ......................................................................................................

Unrealized gains (losses)$24,157$24,157$24,307$24,307$149$149

Fair value not exceeding carrying amount:
Corporate bonds..........................................................................................
Subtotal ......................................................................................................
Total ...........................................................................................................

$ 249
$ 249
$24,407

$ 233
$ 233
$24,548

$ (8)
$ (8)
$133

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

2015

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

Acquisition cost¥

95,556
1,125,369
850,070
174,865
100,434
400,753384,803¥1,621,679¥

50,565
1,098,662
830,744
169,540
98,377
390,159
377,492¥1,539,388¥44,990
26,707
19,326
5,324
2,056
10,593
7,311¥82,291

¥

¥

¥

2,636
38,78337,583—
1,199
26,577
19,464¥ 67,997¥1,689,677

2,779
38,87837,677—
1,200
27,14720,000¥ 68,805¥1,608,193

Unrealized gains (losses)

(143)
(94)
(94)
—
(0)
(569)
(535)
¥ (807)¥81,483

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 ......................................................................................................

Carrying amountMillions of yen

2014

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

Carrying amount

Acquisition cost¥

73,2481,319,769
1,020,833
190,130
108,805
233,194
214,866¥1,626,212¥

44,972
1,292,695
1,000,563
184,395
107,736
227,587
211,399¥1,565,255¥28,276
27,074
20,270
5,735
1,069
5,606
3,467
¥60,957

¥

¥

¥

8,108
156,131
129,665
7,077
19,387113,182
112,099¥ 277,422¥1,903,635

8,545
156,486
129,997
7,090
19,397
116,807
115,718¥ 281,839¥1,847,094

Unrealized gains (losses)

(437)
(354)
(331)
(12)
(9)
(3,624)(3,619)¥ (4,417)¥56,5403131

Consolidated Financial Statements

Thousands of U.S. dollars

2015
Carrying amount

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

Acquisition cost

Unrealized gains (losses)$

795,173
9,364,808
7,073,895
1,455,146
835,765
3,334,883
3,202,155$13,494,873$

420,778
9,142,564
6,913,073
1,410,834
818,648
3,246,725
3,141,316$12,810,085$374,386
222,243
160,82244,303
17,10988,15060,838$684,788$$$ (1,189)
(782)
(782)
—
(0)
(4,734)(4,452)$ (6,715)$678,064

21,935
322,734
312,748—
9,977
221,161
161,970$ 565,840$14,060,722

23,125323,525
313,530—
9,985
225,904
166,430$ 572,563$13,382,649(2) Held-to-maturity debt securities sold for the fiscal years ended March 31, 2015 and 2014
Not applicable.
(3) Available-for-sale securities sold for the fiscal years ended March 31, 2015 and 2014
Millions of yen

2015
Sales amount

¥

2,618
309,823
286,518
8,892
14,413324,882
324,882¥637,324

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

Gains on sales

Losses on sales¥1,401
2,096
2,012
38
45
2,438
2,438
¥5,936

¥ —
0
—
0
0
145
145
¥146

Millions of yen

2014
Sales amount

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

¥

6,033
327,436
228,859
15,01083,56750,52149,884¥383,992

Gains on sales

Losses on sales¥1,628
3,172
2,691
244
236
667
465
¥5,468

¥ 53
338
251
0
86
374
374
¥766

Thousands of U.S. dollars

2015
Sales amount

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

32
32

$

21,785
2,578,205
2,384,272
73,995
119,938
2,703,520
2,703,520$5,303,520

Gains on sales$11,658
17,441
16,742316
374
20,287
20,287$49,396

Losses on sales

$

—
0
—
0
0
1,206
1,206
$1,214

(4) Information on money held in trust at March 31, 2015 and 2014 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 statements of income ..

2015

2014

2015

¥22,000
18¥22,000
66$183,073
149

Thousands of
U.S. dollars

Millions of yen

Valuation difference ............................................................................................
Deferred tax liabilities ........................................................................................
Amounts equivalent to difference on available-for-sale securities .....................
Minority interests adjustment .............................................................................
Valuation difference on available-for-sale securities ..........................................

2015

2014

2015

¥ 81,483(22,602)¥ 58,881(63)¥ 58,818¥ 56,540(16,905)¥ 39,634(49)¥ 39,585$ 678,064(188,083)$ 489,980(524)$ 489,456

Consolidated Financial Statements(5) The components of the valuation difference on available-for-sale securities recorded under net assets at March 31, 2015 and 2014 were as follows:(6) Securities reclassified for the fiscal years ended March 31, 2015 and 2014
Not applicable.
(7) Impairment loss on securities
In the event that the fair value of securities, except trading securities, with available fair values declines significantly compared with the acquisition cost andthe fair value is not expected to recover, such securities are stated at fair value and the difference between the fair value and the acquisition cost is recognized
as loss in the period of the decline (“impairment loss”). 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. No impairment loss was recognized for the fiscal year ended March 31, 2015. Impairment loss recognized on equity securities was ¥170 million for the fiscal year ended March 31, 2014.
18. DERIVATIVE TRANSACTIONS(1) Derivative contracts to which hedge accounting is not appliedWith 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, 2015 and 2014 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.
(a) Interest rate related transactions
Millions of yen

2015
Category

Transaction typeInterest rate swaps
Receive fixed rate/pay floating rate ....
Receive floating rate/pay fixed rate ....
Total ..................................................................................

Over-the-countertransactions

Contract amount

¥389
389
¥ —

Contract amount due
after one year

Fair value

¥389
389
¥ —

¥ 15
(14)
¥ 1

Unrealized gains (losses)

¥ 15
(14)
¥ 1

Millions of yen

2014
Category

Transaction typeInterest rate swaps
Receive fixed rate/pay floating rate ....
Receive floating rate/pay fixed rate ....
Total ..................................................................................

Over-the-countertransactions

Contract amount

¥454
454
¥ —

Contract amount due
after one year

Fair value

¥454
454
¥ —

¥23
(21)
¥2

Unrealized gains (losses)

¥23
(21)
¥2

Thousands of U.S. dollars

2015
Category

Transaction typeInterest rate swaps
Receive fixed rate/pay floating rate ....
Receive floating rate/pay fixed rate ....
Total ..................................................................................

Over-the-countertransactions

Contract amountContract amount due
after one year

$3,2373,237$ —$3,2373,237$ —Fair value

$ 124
(116)
$ 19

Unrealized gains (losses)

$ 124
(116)
$ 19

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses) are recognized in the consolidated statements of income.
2. The fair values of exchange transactions are based on the closing price at the Tokyo Financial Exchange Inc., etc.
		 The fair values of over-the-counter transactions are based on the discounted cash flow method, option pricing model, etc.

3333

Consolidated Financial Statements(b) Currency related transactions
Millions of yen

2015
Category

Transaction type

Consolidated Financial Statements

Contract amountContract amount due
after one year

Fair value

Unrealized gains (losses)¥490,472¥254,191¥(11,679)¥(11,679)

4,401
196
¥
—

—
—
—

(302)
1
¥(11,980)(302)
1¥(11,980)

Contract amountContract amount due
after one year

Fair value

Unrealized gains (losses)¥301,312¥178,699¥(2,085)¥(2,085)

3,352
1,158
¥
—

—
—
—

(79)
0
¥(2,164)(79)
0¥(2,164)

Currency swaps .....................................
Forward foreign exchange contracts
Sold ....................................................
Bought ................................................
Total ..................................................................................

Over-the-countertransactions¥

Millions of yen

2014
Category

Transaction type

Currency swaps .....................................
Forward foreign exchange contracts
Sold ....................................................
Bought ................................................
Total ..................................................................................

Over-the-countertransactions¥

Thousands of U.S. dollars

2015
Category

Transaction type

Currency swaps .....................................
Forward foreign exchange contracts
Sold ....................................................
Bought ................................................
Total ..................................................................................

Over-the-countertransactions

Contract amountContract amount due
after one year

Fair value

Unrealized gains (losses)$4,081,484$2,115,261$(97,187)$(97,187)

36,623
1,631
—

—
—
—

(2,513)8$(99,692)(2,513)8$(99,692)$$

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses) are recognized in the consolidated statements of income.
2. The fair values are based on the discounted present value, etc.

(c) Stock related transactions
None(d) Bond related transactions
None(e) Commodity related transactions
None(f) Credit derivative transactions
None(2) Derivative contracts to which hedge accounting is appliedWith respect to derivatives to which hedge accounting is applied, the contract amount or notional principal amount defined in the contract, fair value andcalculation method of fair value by transaction type and by hedge accounting method as of March 31, 2015 and 2014 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.

34
34

(a) Interest rate related transactions
Millions of yen

2015
Transaction type

Major hedged items

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

—

—

—

¥26,027¥22,864¥(1,084)

—
—
—

—
—
—

—
—
—

—

—

—

180
—

Note 3¥(1,084)

¥
¥

60
—

¥
¥

Consolidated Financial Statements

Hedge accounting method

Contract amount due after
one year

Millions of yen

2014
Hedge accounting method

Transaction type

Major hedged items

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

—

—

—

¥28,545¥28,230¥(1,270)

—
—
—

—
—
—

—
—
—

—

—

—

180
—

Note 3¥(1,270)

¥
¥

265
—

¥
¥

Thousands of U.S. dollars

2015
Hedge accounting method

Transaction type

Major hedged items

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

—

—

—

$216,584$190,263$(9,020)

—
—
—

—
—
—

—
—
—

—

—

—

—
—

Note 3$(9,020)

$
$

499
—

$
$

Notes: 1. Gain/loss on the above contacts is deferred until maturity of the hedged items under 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. The fair values of exchange transactions are based on the closing price at the Tokyo Financial Exchange Inc., etc.
		 The fair values of over-the-counter transactions are based on the discounted cash flow method, option pricing model, etc.
3. Interest rate swaps accounted for by the exceptional accounting method are accounted for together with the borrowed money as a hedged item, and the fair values are describedin the fair values of “Borrowed money” under Liabilities of Note 16, “FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES.”

35
35

Consolidated Financial Statements(b) Currency related transactions
None(c) Stock related transactions
None
Consolidated Financial Statements(d) Bond related transactions
None
19. PROJECTED 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 has employer
retirement benefit trusts.
Ten consolidated subsidiaries have non-contributory unfunded lump-sum retirement allowance plans as defined benefit plans, and apply the simplified
method in the calculation of their liability for retirement benefits and retirement benefit costs.
(2) Defined benefit plans(a) Movement in projected benefit obligations
Thousands of
U.S. dollars

Millions of yen

Balance at April 1, 2014 .....................................................................................
Cumulative effects of changes in accounting policies ...................................
Restated balance at April 1, 2014 .......................................................................
Service cost ...................................................................................................
Interest cost ....................................................................................................
Actuarial loss (gain) .......................................................................................
Benefits paid ...................................................................................................
Balance at March 31, 2015 .................................................................................
Note:

2015

2014

2015

¥55,146584
55,731
1,654
869
48(2,427)¥55,877¥49,656—
49,656
1,671
987
5,352
(2,520)¥55,146$458,899
4,859
463,767
13,763
7,231
399(20,196)$464,982

Plans based on the simplified method have been included in the above.

(b) Movements in plan assets
Thousands of
U.S. dollars

Millions of yen

Balance at April 1, 2014 .....................................................................................
Expected return on plan assets .......................................................................
Actuarial gain (loss) .......................................................................................
Contributions paid by the employer ...............................................................
Benefits paid ...................................................................................................
Balance at March 31, 2015 .................................................................................
Note:

2015

2014

2015

¥36,107
626
3,556
2,380
(1,546)¥41,124¥32,901
560
1,822
2,406
(1,583)¥36,107$300,466
5,209
29,591
19,805(12,865)$342,215

Plans based on the simplified method have been included in the above.

(c) Reconciliation from projected benefit obligations and plan assets to liability (asset) for retirement benefits
Thousands of
U.S. dollars

Millions of yen

2015

2014

2015

Unfunded projected benefit obligations
Net liability (asset) for retirement benefits at March 31, 2015

¥45,669(41,124)
4,544
10,208¥14,753¥44,153(36,107)
8,045
10,993¥19,039$380,036(342,215)
37,81384,946$122,767

Liability for retirement benefits
Asset for retirement benefits
Net liability (asset) for retirement benefits at March 31, 2015

¥14,753—¥14,753¥19,039—¥19,039$122,767—$122,767

Funded projected benefit obligations
Plan assets

Note:

36
36

Plans based on the simplified method have been included in the above.

(d) Retirement benefit costs
Thousands of
U.S. dollars

Millions of yen

2015

Note:

2014

¥1,654
869
(626)
1,374
¥3,272

2015¥1,671
987
(560)
840
¥2,938$13,763
7,231(5,209)11,433$27,228Retirement benefit costs of consolidated subsidiaries which have applied the simplified method are included in “Service cost.”(e) Adjustments for retirement benefits
The components of adjustments for retirement benefits (before tax effect) were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Actuarial gain (loss)
Total adjustments for retirement benefits for the fiscal year ended March 31,
2015

2014

2015

¥4,881—$40,617¥4,881—$40,617

Consolidated Financial Statements

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Total retirement benefit costs for the fiscal year ended March 31, 2015(f) Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial gain (loss)
Total balance at March 31, 2015

2015

2014

2015

¥(1,893)¥(1,893)¥(6,775)¥(6,775)$(15,752)$(15,752)(g) Plan assets
1) Plan assets comprise:
2015

Bonds ............................................................................................................................................................
Stocks ...........................................................................................................................................................
Cash and deposits .........................................................................................................................................
Life insurance general accounts ...................................................................................................................
Other .............................................................................................................................................................
Total...............................................................................................................................................................
Note:

19.5%
36.1%
3.7%
30.9%
9.8%
100%

2014

17.5%
30.5%
1.5%
27.7%
22.8%
100%

Total plan assets include retirement benefit trusts which were set up for a corporate pension fund plan (5.9% and 18.5% of total plan assets at March 31, 2015 and 2014,
respectively).

2) Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term
expected rate of return.
(h) Actuarial assumptions
The principal actuarial assumptions for the fiscal years ended March 31, 2015 and 2014 were as follows:
2015

Discount rate .................................................................................................................................................
Long-term expected rate of return ................................................................................................................
Estimated rate of increase in salary ..............................................................................................................

1.57%
2.00%
3.90%

2014

1.27%
2.00%
3.90%

20. STOCK OPTIONS(a) Items and amounts expensed related to stock options were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

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

2014

¥41

2015

¥43

$341

37
37

Consolidated Financial Statements(b) Stock options outstanding at March 31, 2015 were as follows:a. Outline of stock options
Beneficiaries qualifying for stock option rights are entitled to acquire common stock upon the exercise of their rights. The following table summarizes thenumber of shares upon exercise of the stock option rights granted by the Bank outstanding at March 31, 2015:

Consolidated Financial Statements

Stockoptions

Persons
grantedNumber ofoptions granted

Date of
grant

Exercise
price

ExerciseperiodVesting
conditions

Target ofservice period

2010
Stock Options
2011
Stock Options
2012
Stock Options
2013
Stock Options
2014
Stock Options

15 directorsof the Bank
14 directorsof the Bank
15 directorsof the Bank
15 directorsof the Bank
14 directors(excluding
outsidedirectors)of the Bank

Common stock
94,400 shares
Common stock
109,400 shares
Common stock
136,200 shares
Common stock
119,500 shares
Common stock
99,700 shares

July 29, 2010¥1($0.00)¥1($0.00)¥1($0.00)¥1($0.00)¥1($0.00)From July 30, 2010
to July 29, 2040
From July 30, 2011
to July 29, 2041
From July 28, 2012
to July 27, 2042
From July 27, 2013
to July 26, 2043
From July 26, 2014
to July 25, 2044

Not definedNot definedNot definedNot definedNot definedNot definedNot definedNot definedNot definedNot defined

July 29, 2011
July 27, 2012
July 26, 2013
July 25, 2014

b. Stock option activity:
1) Number of stock options
Number of shares

2010
Stock Options

2011
Stock Options

2012
Stock Options

2013
Stock Options

2014
Stock Options

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

29,875——29,875——99,700—74,77524,925

54,100———54,10083,100—12,000—71,100113,700—
21,300—92,40089,62529,875
18,900—100,600—
74,775——74,775

Non-vested
March 31, 2014 – Outstanding .................................................
Granted .....................................................................................
Forfeited ...................................................................................
Vested .......................................................................................
March 31, 2015 – Outstanding .................................................
VestedMarch 31, 2014 – Outstanding .................................................
Vested .......................................................................................
Exercised ..................................................................................
Forfeited ...................................................................................
March 31, 2015 – Outstanding .................................................
2) Price information

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

Yen

U.S. dollars

2010
2011
2012
2013
2014
Stock Options Stock Options Stock Options Stock Options Stock Options

2010
2011
2012
2013
2014
Stock Options Stock Options Stock Options Stock Options Stock Options

¥

1
—
441

¥

1
420
386

¥

1
420
303

¥

1
420
372

¥

1
—
401

$0.00
—
3.66

$0.00
3.49
3.21

$0.00
3.49
2.52

$0.00
3.49
3.09

$0.00
—
3.33

(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 fiscal year ended March 31, 2015 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: 26.70%, calculated using the market price of the Bank’s stock from May 2010 to July 2014.
2.	Estimated remaining outstanding period: 4.2 years, which was the average remaining tenure of directors at the date of issue, determined by theaverage 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, 2014.
4. Risk-free interest rate: 0.12%, 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 the future.

38
38

21. INCOME TAXESThe Group is subject to a number of taxes based on the income such as corporation tax, inhabitant tax and enterprise tax, which, in the aggregate, indicate
a statutory tax rate in Japan of approximately 35.4 % and 38.2% for the fiscal years ended March 31, 2015 and 2014, respectively.
Significant components of deferred tax assets and liabilities as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Note:

2015

2014

2015

¥ 8,461
5,540
814
3,713
1,605
4,140
97
326
2,088
26,787(12,631)
14,156¥ 9,813
9,087
916
4,107
1,772
4,689
2,636
416
2,513
35,953(13,706)
22,246$ 70,408
46,101
6,773
30,897
13,35634,451807
2,712
17,375
222,909(105,109)
117,799(22,602)(45)(22,647)¥ (8,491)(16,905)(46)(16,952)¥5,294(188,083)(374)(188,458)$ (70,658)

Consolidated Financial Statements

Deferred tax assets:
Excess bad debt expense ................................................................................
Liability for retirement benefits .....................................................................
Depreciation ...................................................................................................
Write-down of land ........................................................................................
Loss on impairment of fixed assets ................................................................
Valuation loss on securities ............................................................................
Tax loss carryforwards ...................................................................................
Net deferred loss on hedging instruments ......................................................
Other ...............................................................................................................
Subtotal deferred tax assets:
Valuation allowance ............................................................................................
Total deferred tax assets ...................................................................................
Deferred tax liabilities:
Valuation difference on available-for-sale securities .....................................
Other ...............................................................................................................
Total deferred tax liabilities .............................................................................
Net deferred tax assets (liabilities) ..................................................................

Net deferred tax assets (liabilities) as of March 31, 2015 and 2014 are included in the following accounts in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen

2015

Deferred tax assets ..............................................................................................
Deferred tax liabilities ........................................................................................

¥1,386
9,878

2014¥5,294—2015$11,533
82,200The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial statement purposes for the
fiscal years ended March 31, 2015 and 2014:
Statutory tax rate ...........................................................................................................................................
Valuation allowance .................................................................................................................................
Non-deductible expenses ..........................................................................................................................
Non-taxable income .................................................................................................................................
Adjustment of deferred tax assets for enacted changes in tax laws and rates ..........................................
Other .........................................................................................................................................................
Effective tax rate ...........................................................................................................................................

2015

2014

35.4%
1.3%
0.3%
(2.6)%
6.4%
1.0%
41.9%

38.2%
10.8%
0.3%
(2.0)%
2.6%
0.7%
50.6%

For the year 2014
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 10 of 2014) was promulgated on March 31, 2014 and, as a result, the Group is nolonger subject to the Special Reconstruction Corporation Tax effective for years beginning on or after April 1, 2014. As a result, the effective statutory tax
rate used to measure the Group’s deferred tax assets and liabilities was changed from 38.2% to 35.4% for the temporary differences expected to be realized
or settled for the year beginning April 1, 2014. The effect of the change in the effective statutory tax rate as of and for the year ended March 31, 2014 was
to decrease deferred tax assets by ¥556 million and increase net deferred gains or losses on hedges and income taxes–deferred by ¥32 million and ¥524
million, respectively, from the amounts that would have been reported without the change.
For the year 2015
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) was promulgated on March 31, 2015, and as a result, income tax rate, etc.
was reduced effective for fiscal years beginning on or after April 1, 2015. As a result, the effective statutory tax rate used to measure the Group’s deferred
tax assets and liabilities was changed from 35.4% to 32.8% for the temporary differences expected to be realized or settled for the fiscal year beginning April
1, 2015, and to 32.0% for fiscal years beginning on or after April 1, 2016. The effect of the change in the effective statutory tax rate as of and for the fiscal
year ended March 31, 2015 was to decrease deferred tax assets, deferred tax liabilities, net deferred gains or losses on hedges, and accumulated adjustments
for retirement benefits by ¥42 million ($349 thousand), ¥1,187 million ($9,877 thousand), ¥25 million ($208 thousand) and ¥56 million ($466 thousand),
respectively, and increase valuation difference on available-for-sale securities and deferred income taxes by ¥2,392 million ($19,905 thousand) and ¥1,166
million ($9,702 thousand), respectively, from the amounts that would have been reported without the change.

39
39

Consolidated Financial Statements

Consolidated Financial Statements

22. 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 periodically by
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 are banking services. 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 securities business, and Leasing includes leasing.
(2) Basis of measurement for 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 Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES.” The reportable segment profit figures are based on operating profit. Income arising from intersegment transactions is based on arm’s length
prices.
As described in Note 2 (q), “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Changes in accounting policies,” effective from the fiscal
year ended March 31, 2015, with respect to the application of Retirement Benefits Standard and Retirement Benefits Guidance, the Group has applied theParagraph 35 of Retirement Benefits Standard and Paragraph 67 of Retirement Benefits Guidance. Accordingly, the Group has revised the methods used to
calculate projected benefit obligations and service cost, and also revised those of the business segments in the same manner.
As a result, segment profit in the “Banking and Securities” for the fiscal year ended March 31, 2015 increased by ¥69 million ($574 thousand) and segment liabilities in the “Banking and Securities” at the beginning of the fiscal year ended March 31, 2015 increased by ¥584 million ($4,859 thousand), fromthe amounts that would have been reported without the change.
(3) Information about reported segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the fiscal years ended March 31, 2015 and 2014 is summarized as follows:
Millions of yen

2015
Reportable segments
Banking and
Securities

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 ..........................

¥

Leasing

Total

73,453338
73,792
16,3795,317,675
5,076,096¥ 6,238
849
7,087
332
21,856
18,883

4,158
54,892
3,764
279
45
6,861
3,371

¥

Other

Total

¥

81,5743,435
85,00917,912
5,356,845
5,103,611

Adjustment¥

98(3,435)(3,337)(52)(28,184)(26,268)

Consolidated

79,692
1,187
80,88016,711
5,339,531
5,094,979¥ 1,881
2,247
4,128
1,201
17,314
8,631¥

81,672—
81,672
17,8605,328,661
5,077,342

212
1
171
—
0
219

4,370
54,893
3,935
279
45
7,080

86
53
11
—
0
486

4,457
54,947
3,947
279
46
7,566

69
(111)
(180)
(82)
—
(14)

4,526
54,835
3,766
197
46
7,552

7

3,379

48

3,427

37

3,464

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2. 	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥98 million is mainly the recovery of written off claims included in “other.”		 (2) Adjustment of segment profit of negative ¥52 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥28,184 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥26,268 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of ¥69 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥111 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥180 million is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of negative ¥82 million is the elimination of intersegment transactions.
		 (9) Adjustment of tax expense of negative ¥14 million is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of ¥37 million is the elimination of intersegment transactions.
4. Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.

40
40

Millions of yen

2014
Reportable segments
Banking and
Securities

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

¥

Leasing

Total

74,242376
74,61918,223
5,174,955
4,960,225¥ 6,129
1,028
7,158
163
24,095
21,243

3,989
56,264
4,264
0
79
9,316
5,451

¥

Other

Total

¥

82,265
3,848
86,113
19,887
5,216,175
4,990,470

Adjustment¥

451(3,848)(3,397)(13)(28,983)(23,928)

Consolidated

80,372
1,405
81,777
18,386
5,199,050
4,981,469¥ 1,893
2,443
4,336
1,500
17,124
9,001¥

82,716—82,716
19,873
5,187,191
4,966,542

293
1
191
—
0
60

4,282
56,266
4,455
0
79
9,377

74
62
13
—
—
646

4,357
56,3284,469
079
10,024

104
(129)
(199)
—
—
(0)

4,462
56,1994,270
079
10,023

290

5,742

203

5,945

(221)

5,723

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 ................................................

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2. 	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥451 million is mainly the recovery of written off claims included in “other.”		 (2) Adjustment of segment profit of negative ¥13 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥28,983 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥23,928 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of ¥104 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥129 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥199 million is the elimination of intersegment transactions.
		 (8) Adjustment of tax expense of negative ¥0 million is the elimination of intersegment transactions.
		 (9) Adjustment of increase in tangible and intangible fixed assets of negative ¥221 million is the elimination of intersegment transactions.
4. Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.
Thousands of U.S. dollars

2015
Reportable segments
Banking and
Securities

Ordinary income:Outside customers ...................................... $ 611,242
Intersegment income ...................................
2,812
Total ........................................................
614,063
Segment profit .................................................
136,298
Segment assets ................................................ 44,251,269
Segment liabilities ........................................... 42,240,958
Other item
Depreciation ...............................................
34,600456,786
Interest income ...........................................
Interest expense ..........................................
31,322Extraordinary gain ......................................
2,321
Extraordinary loss .......................................
374
Tax expense ................................................
57,094
Increase in tangible
and intangible fixed assets ..........................

28,051

Leasing

Total

Other

663,160
9,877
673,046
139,061
44,433,144
42,398,094$ 15,652
18,69834,351
9,994
144,079
71,823

1,764
8
1,422
—
0
1,822

36,365456,794
32,7452,321
374
58,916

715
441
91
—
0
4,044

37,089457,243
32,8452,321
382
62,960574(923)(1,497)
(682)
—
(116)

37,663456,311
31,338
1,639
382
62,844

58

28,118399

28,517307

28,825$ 51,909
7,064
58,974
2,762
181,875
157,135

$

Total

$

678,821
28,584
707,406
149,055
44,577,223
42,469,925

Adjustment

Consolidated$

815 $ 679,637(28,584)—(27,768)
679,637(432)
148,622(234,534) 44,342,689(218,590) 42,251,327

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2. 	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of $815 thousand is mainly the recovery of written off claims included in “other.”		 (2) Adjustment of segment profit of negative $432 thousand is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative $234,534 thousand is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative $218,590 thousand is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of $574 thousand is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative $923 thousand is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative $1,497 thousand is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of negative $682 thousand is the elimination of intersegment transactions.
		 (9) Adjustment of tax expense of negative $116 thousand is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of $307 thousand is the elimination of intersegment transactions.
4. Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.

41
41

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

2015

Ordinary income from outside customers ......

Banking

Securities andinvestments¥36,486¥24,114

Leasing¥6,238OthersTotal¥14,832¥81,672

Consolidated Financial Statements

Millions of yen

2014

Ordinary income from outside customers ......

Banking

Securities andinvestments¥38,506¥22,873

Leasing¥6,129OthersTotal¥15,206¥82,716

Thousands of U.S. dollars

2015

Ordinary income from outside customers ......

Banking

Securities andinvestments

Leasing

OthersTotal$303,619$200,665$51,909$123,425$679,637

Note: Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.

(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 statements of income exceeded 90% forboth fiscal years ended March 31, 2015 and 2014; 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 sheets exceeded 90% for both fiscal years
ended March 31, 2015 and 2014; 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, 2015or 2014. Therefore, information about major customers is not required to be disclosed.
(7) Information on loss on impairment of fixed assets for each reportable segment
Millions of yen

2015
Reportable segments
Banking and
Securities

Loss on impairment ........................................

Leasing

¥11

—

Total

Others

¥11

Total

—

¥11

Millions of yen

2014
Reportable segments
Banking and
Securities

Loss on impairment ........................................

Leasing

¥15

—

Total

Others

¥15

Total

—

¥15

Thousands of U.S. dollars

2015
Reportable segments
Banking and
Securities

Loss on impairment ........................................

Leasing

$91

—

Total

$91

(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.

42
42

Others

Total

—

$91

23. RELATED PARTY TRANSACTIONS
For the fiscal year ended March 31, 2015, related party transactions were as follows:
Relationshipwith the Bank

Location

TetsuyaMatsubara——

Publicofficer—

Shigeichi
Kawai

—

—

Forestry

—

10

Metal
processing—

A company inwhich majority
voting rights Nikken
City
are held byBlast Kogyo Daito
Osaka
relatives of a Co., Ltd. *4
director of theBank

Details oftransactions

Transaction
amount(millions ofyen)

Lending of money*2
Interest receivable

—
0

—
0

Loans
—

28
—

233
—

Repayments ofloans *3
Interest receivable

244
1

2,030
8

—
—

—
—

—
—

Lending of money
Interest receivable

—
0

—
0

Loans
—

89
—

740
—

Relationship ofrelated parties
Son-in-law ofHiroki Matsuoka(Senior Managing
Director)
Loans
Father of
Shigeyori Kawai(Director)
Loans

Loans

Transaction
Year-end
Year-end
amountAccounting balancebalance(thousands of
title(millions of (thousands of
U.S. dollars)
yen)
U.S. dollars)

Policies regarding and terms and conditions of the transactions
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as collateral for loan transactions.
3. Lump-sum repayments were made on December 17, 2014.
4. Relatives of Naoki Minowa (Corporate Auditor of the Bank) have 62.5% of voting rights of this company directly.

Consolidated Financial Statements

Relatives of adirector of theBank

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

Name

For the fiscal year ended March 31, 2014, related party transactions were as follows:
Relationshipwith the Bank

Relatives of adirector of the
Bank

Name

Paid-in
Votingcapital BusinessrightsLocation (millions
line
ownershipof yen)(%)

TetsuyaMatsubara——

Publicofficer—

Shigeichi
Kawai

—

—

Forestry

—

10

Metal
processing—

A company inwhich majority
voting rights Nikken
City
are held byBlast Kogyo Daito
Osaka
relatives of a Co., Ltd. *4
director of theBank

Relationship ofrelated parties

Details oftransactions

Son-in-law ofHiroki Matsuoka Lending of money*2(Managing Director) Interest receivable
Loans
Father of
Shigeyori Kawai Lending of money *2(Director)
Interest receivable
Loans

Loans

Lending of money
Interest receivable

Transaction
Year-end
amount Accounting balance(millions of
title(millions of
yen)
yen)
—
0

Loans
—

29
—

—
3

Loans*3
—

244
—

80
1

Loans
—

112
—

Policies regarding and terms and conditions of the transactions
Notes: 1. Terms and conditions of loans are determined on an arm’s length basis.
2. Real estate is accepted as collateral for loan transactions.
3. The Bank provided reserve for possible loan losses amounting to ¥86 million.
4. Relatives of Naoki Minowa (Corporate Auditor of the Bank) have 62.5% of voting rights of this company directly.
5. Yasuo Horiuchi retired from the position of Corporate Auditor of the Bank on June 27, 2013. The Bank has loans to his second son, Takashi Horiuchi, in the amount of ¥17
million as of that day.

24. PER SHARE INFORMATION
Net assets per share at March 31, 2015 and 2014 and net income per share for the fiscal years then ended were as follows:Yen

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

U.S. dollars

2015

2014

2015

¥906.92
36.81
36.76

¥794.95
33.78
33.74

$7.54
0.30
0.30

43
43

Consolidated Financial Statements

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

Millions of yen

Consolidated Financial Statements(Net assets per share)
Net assets ............................................................................................................
Amounts to be deducted from net assets: ...........................................................
Stock acquisition rights...................................................................................
Minority interests ...........................................................................................
Net assets attributed to common stock ...............................................................
Outstanding number of shares of common stock at end of year
(unit: thousand shares) ......................................................................................
(Basic and diluted net income per share)
Net income ..........................................................................................................
Net income attributed to common stock .............................................................
Average outstanding number of shares during the year
(unit: thousands of shares) ................................................................................
Adjustment to net income ...................................................................................
Increase in number of shares of common stock .................................................
Stock acquisition rights ..................................................................................
Convertible securities not diluting net income per share ....................................

2015

2014

¥251,318
8,082
(146)
(7,935)
243,236¥220,648
7,460
(123)
(7,336)
213,188$2,091,353
67,254(1,214)(66,031)2,024,099

268,200

268,175

—

¥

¥

9,874
9,874
268,201
—
382
(382)
—

9,079
9,079

2015

$

82,16682,166—————

268,779
—
325
(325)
—

For the year 2014
As described in Note 2 (q), “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Changes in accounting policies,” effective from the year ended
March 31, 2014, the Group has applied Retirement Benefits Standard and Retirement Benefits Guidance except Paragraph 35 of Retirement Benefits Standard and Paragraph 67 of Retirement Benefits Guidance, in accordance with Paragraph 37 of Retirement Benefits Standard.
As a result, net assets per share have decreased by ¥16.32 at March 31, 2014.
For the year 2015
As described in Note 2 (q), “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Changes in accounting policies,” effective from the fiscal year
ended March 31, 2015, with respect to the application of Retirement Benefits Standard and Retirement Benefits Guidance, the Group has applied Paragraph
35 of Retirement Benefits Standard and Paragraph 67 of Retirement Benefits Guidance in accordance with Paragraph 37 of Retirement Benefits Standard.
As a result, net assets per share decreased by ¥1.40 ($0.01) at the beginning of the fiscal year ended March 31, 2015 while basic and diluted net income
per share increased by ¥0.17 ($0.00) for the fiscal year ended March 31, 2015.
25. SUBSEQUENT EVENTS
Not applicable.
26. BORROWED MONEY, BONDS PAYABLE AND LEASE OBLIGATIONS
a. The details of borrowed money as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Borrowed money
Due from April 2015 through October 2019
Average interest rate: 0.22% p.a. ....................................................................

2015

2014

2015

¥116,122¥85,388$966,314

Millions of yen

Thousands of
U.S. dollars¥48,557
440
41,34522,4553,325¥116,122$404,069
3,661
344,054
186,860
27,669$966,314

Annual maturities of borrowed money as of March 31, 2015 were as follows:
2016 .........................................................................................................................................................
2017 .........................................................................................................................................................
2018 .........................................................................................................................................................
2019 .........................................................................................................................................................
2020 .........................................................................................................................................................
Total .........................................................................................................................................................

44
44

b. The details of bonds payable as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

2015

¥—

2014

¥20,000

2015$—

The Bank redeemed the entire amount of the Nanto Bank, Ltd. 2nd unsecured callable bonds (subordinated) prior to maturity on March 4, 2015 based on
the resolution of the Board of Directors’ meeting held on February 4, 2015.
c. Lease obligations
Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheets.
Annual maturities of lease obligation as of March 31, 2015 were as follows:
Millions of yen

2016 .........................................................................................................................................................
2017 .........................................................................................................................................................
Total .........................................................................................................................................................

¥0
0
¥0

Thousands of
U.S. dollars

Consolidated Financial Statements

Issuer:The Bank
Name of issue:	The Nanto Bank, Ltd. 2nd unsecured callable bonds(subordinated)
Issued on:
March 4, 2010
March 4, 2020
Due on:Interest rate: 1.72% from March 5, 2010 through March 4, 2015
6 m/s Euro Yen Libor+2.45% p.a. after March 4, 2015

$0
0
$0

Average interest rates are omitted since the interest equivalent amount included in total lease charges is allocated over the related period using the straightline method.
d. Other
The Group has not issued commercial paper by way of promissory notes for funding for operating activities.

45
45

Independent Auditors’ Report

Independent Auditors’ Report46
46

Capital Management
Consolidated Capital Adequacy Ratio
As of March 31, 2015
Millions of yen(1) Capital adequacy ratio ((2)/(3)) ..............................................................................................................
(2) Capital .....................................................................................................................................................
(3) Risk-weighted assets ...............................................................................................................................
(4) Requisite capital ......................................................................................................................................

2015

2014

9.72%
¥ 204,318
2,101,774
84,07010.51%¥ 216,468
2,059,263
82,370Note: 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.

As of March 31, 2015
Millions of yen(1) Capital adequacy ratio ((2)/(3)) ..............................................................................................................
(2) Capital .....................................................................................................................................................
(3) Risk-weighted assets ...............................................................................................................................
(4) Requisite capital ......................................................................................................................................

2015

2014

9.29%
¥ 193,405
2,080,814
83,23210.03%¥ 204,782
2,039,819
81,592

Capital Management

Nonconsolidated Capital Adequacy Ratio

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.

47
47

Organization, Group Network(As of July 1, 2015)

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

Public Institutions & Regional Vitality Creation Division

President

Value Creation Division

Managing Directors

Credit Analysis Division

Director And Executive Advisor

Securities & International Division

Directors

Operations Control Division• DOMESTIC
OFFICESOperations 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 1, 2015)
The Nanto Group, which consists of the Nanto Bank and its 10 consolidated subsidiaries, offers financial
services related to securities, credit guarantees and leasing as well as its primary business, banking services.

THE NANTO BANK, LTD.

BankingHead Office and 108 Branches
25 Sub-branches
3 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.
Nangin Agency Co., Ltd.
Nanto Investment Management Co., Ltd.

Companies indicated with a pink square are consolidated subsidiaries.

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Affiliates and Subsidiaries, Bank Data
(As of July 1, 2015)

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

Nangin Agency Co., Ltd.

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

October 6,
2009

50

100

—

Bank agency services

Nanto Investment
Management Co., Ltd.

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

November 21,
1986

120

5

68

Investment advisory
services

HEAD OFFICECORPORATE DATA (As of March 31, 2015)16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 22-1131
URL: http://www.nantobank.co.jp/

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

SECURITIES & INTERNATIONAL DIVISION
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

640,000,000
272,756 thousand
29,249 million
10,192June 1934
136 offices
2 representative offices
2,697
June 26, 2015
Tokyo Stock Exchange

MAJOR STOCKHOLDERS (As of March 31, 2015)

HONG KONG REPRESENTATIVE OFFICEROOM 2104-2105,
21/F, HUTCHISON HOUSE,
10 HARCOURT ROAD,
HONG KONG
Phone: 852-2868-9932

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

SHANGHAI REPRESENTATIVE OFFICEThe Nanto Bank Employees’ Shareholders Association
Sumitomo Life Insurance Co.

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

Affiliates and Subsidiaries, Bank Data

Subsidiaries(standing proxy: Trust & Custody Services Bank, Ltd.)(standing proxy: Japan Trustee Services Bank, Ltd.)DMG MORI Co., Ltd.
Kitamura Forestry Co., Ltd.
The Shiga Bank, Ltd.

(standing proxy: Trust & Custody Services Bank, Ltd.)The Master Trust Bank of Japan, Ltd.
Total

Number of shares(thousands)

Percentage(%)

10,283
8,991
8,531

3.77
3.29
3.12

8,430
7,940

3.09
2.91

5,420
4,766
4,063

1.98
1.74
1.48

3,204
3,094
64,724

1.17
1.13
23.72

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