ANNUAL
ANNUAL REPORTREPORT 2019
2019
Year
Yearended
endedMarch
March31,
31,20192019

AN NUA L R E P ORT 2 0 1 9
CONTENTS
01 Consolidated Financial Highlights

17 Compliance

02 Message from the President

18 Board of Directors, Executive Officers
and Corporate Auditors

06 Medium-Term Management Plan
19 Consolidated Financial Statements
08 Environmental Initiatives
58 Independent Auditors’ Report
10 In Partnership with the Community- Contributing to the Local Community -59 Capital Management

12 Corporate Governance

60 Organization, Group Network

14 Risk Management

61 Affiliates and Subsidiaries, Bank Data

PROFILEThe Nanto Bank, Ltd. (the “Bank” or “Nanto Bank”) is based in Nara Prefecture, a region rich in tradition andculture dating back to its development as Japan’s first capital in the early 8th century. Since its establishment in
1934, Nanto Bank has achieved steady growth in partnership with its region and continues to maintain a sound financial structure. As of March 31, 2019, Nanto Bank had deposits of ¥4,917.5 billion, loans of ¥3,392.3 billion and total
assets of ¥5,798.8 billion.
Nanto Bank’s domestic network of 141 branches extends
beyond Nara Prefecture to the neighboring prefectures ofOsaka, Kyoto, Hyogo, Mie, Wakayama and Tokyo including
Online Branches. The Bank has become a trusted institution
in communities throughout its region thanks to its commitment to regionally focused services designed to meet theneeds 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
NARA (NARA PREFECTURE)

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

WAKAYAMA

Consolidated Financial Highlights
Thousands of
U.S. dollars

Millions of yen

2019

2018

2017

2016

2015

2019

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

¥

86,414¥

79,899¥81,230¥76,417¥

81,869$778,574

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

70,94761,88464,45061,58663,857639,219

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

15,46718,015

16,77914,83118,012

139,354

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

11,174

13,16012,50812,1599,874

100,675

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

5,798,870

5,808,433

5,815,095

5,505,607

5,328,661

52,246,778

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

3,392,321

3,330,514

3,252,218

3,188,341

3,079,175

30,564,203

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

1,432,780

1,539,150

1,686,575

1,797,411

1,693,517

12,909,090

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

4,925,649

4,836,602

4,765,789

4,766,330

4,754,414

44,379,214

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

5,509,018

5,524,264

5,563,926

5,523,865

5,077,342

49,635,264

Non-controlling interests .........................

—

—

—

—

7,935

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

289,852

284,169

251,168

251,742251,318

2,611,514

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

37,92437,92429,24929,24929,249341,688

At year-end:

Per share data:

Yen

U.S. dollars

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

¥ 342.79¥ 418.05¥ 466.05¥ 453.22¥ 36.81$ 3.08Stockholders’ equity ................................

8,888.16

8,715.46

9,854.29

9,377.73

906.92

80.08

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

9.75

9.88

9.42

9.36

9.72

Note: U.S. dollar amounts are included solely for the convenience of readers and are calculated at the exchange rate of 110.99 to US$1.00 the rate prevailing on March 31, 2019.

Net Income

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

12.1

12.5

Total Net Assets(Billions of yen)
5,815.0

13.1
5,328.6

5,505.6

5,808.4

5,798.8

11.1

251.3

251.7

251.1

2015

2016

2017

284.1

289.8

2018

2019

9.8

2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

01

Message
Message fromfrom thethe President
President“Vitality Creating Bank”- Standing Together with the Local Society.
Becoming a Bank that Creates Our Own Unique Value -Introduction

02

In this landmark year that saw Japan transition to a new era,

declining population. As for the environment surrounding

from Heisei to Reiwa, we celebrated the 140th anniversary ofregional bank, we are facing various unprecedented challenges

the founding of our predecessor, the Sixty-Eighth Nationalsuch as the entry of players from other industries and the pro-Bank this January, and the 85th anniversary of our founding

longed ultra-low interest rate policy, in addition to the emer-

this June. This is entirely thanks to the kind understanding andgence of new financial services that utilize digital

support of many people, including our business partners andtechnologies. Under these circumstances, we entered the final

stockholders, and we would like to express our deepest appre-

year of ‘our medium-term management plan titled “Vitality

ciation to them.

Creation Plan II – Changing and Taking on Challenges.” (theThe Japanese economy has continued a gradual recovery“Plan”) We have continued to pursue changes unbound by

with steady improvement in the employment and wage condi-

obsolete ideas and to take on the challenge of new initiatives,tions, despite concerns about the risk of a downturn due to

but we still have a long way to go. During the current fiscal

U.S.-China trade friction and other issues. In local communi-

year, we will put the finishing touches on the Plan and imple-

ties the social structure itself is undergoing major changes

ment changes and challenges after sorting out and understand-including the lower fertility and aging population, and a

ing the actual situation and issues surrounding us.

Looking Back on the Two Years of the Medium-Term Management Plan
We have set five main target metrics under the Plan, namely

under the core business gross profit. As the low interest rate

OHR, non-interest income ratio, capital adequacy ratio, ROA

environment is expected to continue, we recognize that ourand ROE. However, we have to say that progress has not been

crucial tasks will be expanding fees and commissions andsteady on any of these metrics. While expenses are decreasingtransforming ourselves into an efficient and highly productive

mostly in line with the Plan, the biggest factor in the lack oforganization.

progress is stagnation, particularly in the non-interest income

Two Challenges Considering Progress Status of Medium-Term Management Plan
We recognize that our current challenges can be largely divid-of securities during the previous fiscal year by redeeming

ed into two main points. The first point is low profit, and the

JGBs, and selling foreign bonds in anticipation of a future risesecond is organizational operation, which forms the back-in interest rates.

ground to low profit. The first point, low profit, can be further

Yield on securities was down due to the decrease in divi-

broken down into two factors: (i) a deficit in the balance ofdends on investment trusts associated with deteriorating mar-core business profit; and, (ii) a decrease in gain on investments

ket conditions towards the end of the previous year, andin securities.

investment trust income declined considerably as a result of

Let us begin with the deficit in the balance of core businesscarrying out preventive sales of investment trusts for which

profit, which is one factor in the low profit that is our firstlatent losses were incurred. This decline in gain on invest-

challenge. The balance of core business profit is the sum of thements in securities was the main factor in the year-on-year

profit after subtracting interest on deposits from interest on

decrease of ¥5.4 billion in core net business profit. Going for-loans and bills discounted, and the fees and commissions

ward, I think that it will be an important challenge to anticipate

earned from the fee business, less expenses. Unfortunately,changes in the economic environment and secure stable gain

hawse have recorded a deficit in the balance of core businesson investments in securities that can supplement the balance ofprofit for 11 consecutive years, and we must increase ourcore business profit.

income and decrease our payments in order to improve to atleast the break-even level.

Next is the second challenge, organizational operation.
Since the start of the Plan, we have developed various reforms

Balance of loans increased steadily, mainly in retail loan.

and undertaken numerous measures to realize them aiming to

However, interest on loans and bills discounted was on abuild a robust structure, but these changes have not been suffi-

downward trend because the increase in loans failed to makecient. Furthermore, I believe that changes in our awarenessup for lower yield in the low interest rate environment. Since

may not happen without changes in our behavior, and we must

we may not expect a significant increase in interest on loans

explore awareness reform in greater depth than ever.

and bills discounted under current situation, expansion of fees
and commissions has become an important theme for us.
Although we have strived to increase earnings of fees andcommissions as a key strategy of the Plan, the gap between
our goals and actual results is growing. Putting in place astructure based on a retail business strategy may be the key toimproving the balance of core business profit. Meanwhile,regarding costs, the level of core net business profit per store
and per person is low, and we are not making profits in proportion to costs, even compared to other banks. In other words, interms of the balance of core business profit, I believe there isroom for improvement in both income and payments.
As for the decrease in gain on investments in securities,
which is another factor in low profit, we reduced the balance03Message
Message fromfrom thethe President
President

The Four Measures of the Final Year of the Medium-Term Management Plan
To address these challenges, we will work on the following

customers that are entering the period of maturity, we will con-four measures in the current fiscal year, which is the final year

tribute to their growth by discovering their real needs, such asof the Plan.

new business development, M&A and business succession, sothat they can proceed to a new growth stage without going into

Establishment of Consulting-oriented Salesa period of decline.

Let us begin with the first item, establishment of consultingoriented sales. We have emphasized both internally and exter-

Establishment of Securities Investment Management

nally the importance of customer-centric, consulting-oriented

We have consistently followed a policy of “pursuing stable,sales, but we still have not broken away from our Bank-centricmedium- to long-term income and asset formation, based onmarketing style that pursues volume and is based on achieving

investments that diversify time and portfolio” in our securities

targets and taking customer orders. Going forward, we will

investments. We will continue to aim for stable profit of atwork on the establishment of consulting-oriented sales, whereleast 1% or more through a combination of in-house manage-

we identify the customer’s true needs and issues, then propose

ment and investment trust management from a medium- to

optimal solutions to the customer and offer our products andlong-term perspective. By selling poorly performing invest-

services as the means to solve those issues. Our motto says

ment trusts ahead of time during the previous fiscal year, we“All employees should act as head clerks for our customers.”

have increased our freedom to invest in securities during theWe will work to “provide unique added value that only thecurrent fiscal year and will strive to maximize profits for the

Nanto Bank can offer” to resolve issues, based on thoroughperiod by making full use of permissible risk. At the sameknowledge of our customers and local society. That, I believe,time, we will make efforts to stabilize profit by rebalancing theis exactly the first step towards becoming the Nanto Bank that

portfolio (reallocating assets) and enhancing risk management

we want to be a decade from now.

in order to build a structure to ensure stable gain on invest-

Specifically, in the individual sales department, I thinkments in securities.

there are a lot of customers that need solutions to their plans
for retired life and asset succession. For such customers, we

Review of Branch and ATM Network

are practicing customer-centric consulting through all avail-With the advancement of decrease in population and the num-

able channels, including the trust operations launched two

ber of customers visiting our branches, we have implemented

years ago and Nanto Mahoroba Securities, a securities subsid-

measures to reduce expenses such as reviewing the operations

iary that started in March 2019. In this way, we hope to buildof branches and the ATM network.

strong relationships with customers that allow them to inquire
us on any matter.

Going forward, we will maintain customer convenience asmuch as possible as we make even deeper cost cuts while tak-Looking next at the corporate sales department, the life

ing into account factors such as the market and branch profit-

cycle of companies is said to progress from “foundation toability. In addition, the trend towards a cashless society andgrowth period, maturity, and decline.” In particular, forspread of ATMs in convenience stores have reduced the needto maintain our current ATM network, and we will sequentially reduce the number of our own
ATMs and promote the use ofATMs jointly operated with
Seven Bank.

04

Changes in Organization and Officers

between neighboring branches and allows for appropriate allo-

Finally, I would like to discuss changes in our organization

cation of management resources.

and officers.

Furthermore, in terms of human resources development, we

In April 2019, we established four headquarters, namely (i)have created an environment that nurtures highly specialized

Management Strategy, (ii) Corporate Administration, (iii)

human resources through the sharing of knowledge and know-

Business and (iv) Investment, and appointed a managing direc-

how that results from concentrating client liaison employees totor as general manager of each headquarter, thereby reclarify-

area supervisory branches. This also allows us to improve theing their roles and responsibilities. Going forward, we will

quality of services provided to customers. Most importantly,

pursue swift business operations with regard to management

we will shift from our previous headquarters-led, top-down

strategy and sales strategy, and aim to further strengthen oursales strategy to formulating worksite-led, bottom-up strate-

governance structure through enhancement of internal con-gies. In doing so, we will nurture our employees who cantrols, and the compliance and risk management systems, while

think and take action on their own, not just waiting for orders

promoting close collaboration among the four headquartersfrom the boss. In other words, through structural and opera-

and the departments under each headquarter.

tional changes that are expected to result in changes in behav-

At the same time, we had major changes in our officers andior, we will further promote awareness reform for all

invited a professional from outside the Bank to serve as theemployees and officers, and seek to solve the organizational

general manager of Management Strategy Headquarters, one

operation issues that we are facing.

of the four new headquarters. Not only have we never had afull-time officer from outside the Bank before, but we havealmost never hired mid-career employees. This break with tradition by bringing in external human resources stems from astrong sense of crisis that our previous management style,which focused on expanding volume, will not be sustainable
in the future amid the severe business environment surrounding regional banks. While there are good aspects to our organizational culture which has been made up of career Bank
employees, there is also a negative side that it is difficult tomake active changes in circumstances where there is a pressing need to transform our business model. The new generalmanager of Management Strategy invited from outside the
Bank has an extensive track record in reforming conventionalorganizations and is thoroughly familiar with our industry, inorder to reform our corporate culture.
Next, with regard to the establishment of a block/area sales

In conclusion, although the environment surrounding
regional banks is severe, the direction and path for developing
our future business model are opening up.

system, we radically revised our sales system starting from the

We believe that the mission and role of regional banks iscurrent fiscal year as part of introducing consulting-oriented

for all employees and officers to be highly motivated, to prac-sales. By dividing our sales areas into five blocks, and further

tice customer-centric, consulting-oriented sales and to contrib-organizing the multiple branches within the block into a single

ute to the growth and development of customers and of thesales unit, or area, we clarified the role of each branch based

local economy, which will ultimately contribute to our sustain-on the concept of offering full banking functions in the area as

able growth.

a whole. An executive officer is appointed as a general manag-

We will continue to exert to the utmost the collective abili-

er of each block and operating authority is largely transferredties of our officers and employees to generate new value

to him or her. In this way, we enable these general managers tounique to the Nanto Bank, with the aim of being a bank that isformulate and execute their own sales strategies that respondchosen by the community and customers.

flexibly to the unique characteristics of each market, as the
manager of the region for which they are responsible. This

We ask sincerely for the continued support of our stockholders and business partners.

solves the long-standing problem of overlapping of territories

05

Medium-Term Management Plan
We embraces a management vision up to our 90th anniversary, aiming to become a bank which creates vitality in our communityand ourselves as “Vitality Creating Bank.” In order to achieve this vision, our medium-term management plan titled “Vitality
Creation Plan II – Changing and Taking on Challenges” was started in April 2017. We have set three core strategies : (i) regional
revitalization, (ii) pursuit of the Four Reforms and (iii) upgrading of management and controls. In particular, for (ii) the pursuit of
the Four Reforms “awareness reform”, “sales reform”, “clerical operations reform” and “expenses reform”, ten strategies havebeen set so that we will strongly pursue business model reform.
Medium-Term Management Plan

Management
vision“Vitality Creating Bank”
We aim to become a bank that creates vitality in the community and ourselves through i) delivering highquality financial and consultation functions as a regional bank and ii) cultivating a corporate culture full of
dreams and pride.

Medium-term
management
plan(Term: April 2017 to March 2020)“Vitality Creation Plan II– Changing and Taking on Challenges”
We have set the three years as a period to strive to change ourselves to a robust organization to cope withthe changing financial environment. For the plan’s final year, coinciding with our 85th anniversary, we will
endeavor to achieve good results in terms of earnings and financial position.

The 90th
anniversary(2024)The 85th
anniversary(2019)The 80th
anniversary(2014)

06“Vitality Creation Plan”“Vitality Creation Plan II– Changing and Taking on
Challenges”(April 2014 toMarch 2017)(April 2017 toMarch 2020)

● Basic philosophy

Create local economic vitality

Deliver customer-centric services

Make utmost efforts to revitalize our salestarget areasin pursuit of co-creation with communities

Deliver optimum and sophisticated services bypromptly meeting the increasingly diverse needs ofcustomers

Improve productivity and profitability
through reviewing operations
Improve productivity and profitability throughenhancing the quality of sales, clerical operations andhuman resources based on the Four Reforms (toawareness, sales, clerical operations and expenses)

Bolster risk controls and earnings management, thusbuilding a management and controls framework
capable of responding to the changing environment
in a flexible manner(Initiatives policy)● Prioritized strategies and initiatives policy

Create local vitality by playing a leading role in community,
people and job areas

1) Regional Revitalization
Human resources andorganizational strategy

Vitalize our human resources and organization by fostering the spiritof taking on challenges among the bankers, bolstering the humanresource development system and realizing a work-life balance

Platform and market strategy

Revise the framework of our branches and sales, bolster points-ofcontact with customers and deliver high-quality services

Retail business strategy

Serve as the closest possible consultant for customers of all
generations by paying proper attention to their life stages

Corporate business strategy

Aim to become the true main bank for the customer through exercising the consultation
function and delivering solutions according to the company’s growth stage

Strategy for Osaka Market

Raise the Bank’s presence by actively allocating or reallocating ourcorporate resources based on branch continuity

Municipality strategy

Seek to develop relationships with individual municipalities by
delivering financing and consulting functions to themMarket investment strategy

Expand profits by diversifying our investment methods while
taking risks appropriately

Group strategy

Grow consolidated profits through delivering comprehensive
financial services by tapping into our Group’s capabilities

ClericalOperations
ReformClerical operations strategy

Fundamentally overhaul the clerical operations of branches and theheadquarters, thus transforming the organization into a more efficient one

Expenses
ReformExpenses strategy

Awareness
Reform2) Pursuit of the Four
Reforms

Sales
Reform3) Upgrading of Management and Controls

Medium-Term Management Plan

Upgrade the management and controls
framework

Revise expenses as a whole to transform our expense structure
Upgrade our management and controls to firmly support thebusiness model and to obtain even greater trust from customers● Target metrics
Fiscal 2016 Result

Fiscal 2017 Result

Fiscal 2018 Result

Fiscal 2019 Target

OHR

74.45%

77.03%

85.70%

Less than 70%

Non-interest income ratio

10.40%

10.83%

13.85%At least 20%

Capital adequacy ratio

9.19%

9.64%

9.40%

Approx. 10%

ROA

0.24%

0.20%

0.11%

At least 0.3%

ROE

4.88%

4.90%

4.01%

At least 5%

Calculation formals is more common plural form
for the metrics
・OHR: Expenses/Core business gross profit
・Non-interest income ratio : (Fees and commissions + Other
operating income (excluding gains/losses on bonds (JGBs, etc.))/Core
gross business profit
・Capital adequacy ratio : Core capital/Risk assets: Core net business profit/Total assets
・ROA: Net income/Net assets
・ROE

07

Initiatives on SDGs and ESG
Recently, in response to the spread of the idea of Sustainable Development Goals (SDGs) aimed at realizing a sustainable society,companies are being called upon to address social issues through their corporate activities and the role that they must play in society is becoming increasingly important.
Our management philosophy states that we “provide superior comprehensive financial services” and “contribute to local prosperity.” As a financial institution that supports the sustainability of the local society, we provide consulting and actively engage insocial contribution activities in order to help solve the issues faced that the local communities face.
In this report, we present our SDG initiatives organized within an Environment (E), Society (S) and Governance (G) framework
to aid the understanding of our investors and customers.
We will continue to contribute to the sustainable growth and development of the local society by actively promoting SDG- and
ESG-related initiatives.
Environmental Initiatives

What is the SDGs?
A set of international development goals from 2016 to 2030 listed in the 2030
Agenda for Sustainable Development, which was adopted by the UN
Sustainable Development Summit held in September 2015

Environmental Initiatives
Environmental Policy
Nanto Bank has its headquarters in historic Nara, an ancient capital of Japan and spiritual homeland of the Japanesepeople, where the Bank has grown together with the region. To preserve the splendid culture of Nara that has beenprotected from time immemorial for future generations, we strive to take regional leadership, and work to protect theenvironment and promote the creation of a recycling society.
1. We will establish environmental management systems for the purpose of recognizing that consideration of the preservationof the region’s blessed natural environment and historic features and reducing environmental impact is the basis forbusiness activities, and making actions accordingly. We strive to continually improve this system and prevent pollution to
improve environmental performance.
2. We will support customers involved in environmental conservation through the development and provision ofenvironmentally-conscious financial products and services.
3. We will promote resource and energy conservation and waste reduction by giving consideration to impacts on theenvironment in our day-to-day operations.
4. We will comply with environmental regulations and other requirements, and conduct environmental conservation
activities.
5. To implement these policies, we will establish specific environmental objectives and targets and review them periodically.
October 1, 2001 (established)
July 1, 2008 (revised)
December 1, 2017 (revised)

Nanto Bank, Ltd.
PRESIDENT Takashi HashimotoE x p l a n a t i o no ft e r m s

Environmental Management System
A framework for the management of an organization and auditing on its activities in order to conduct environmental conservation activities. The Environmental
Policy above serves as the basic policy for the management of this system.

08

Promotion of environmental conservation activities
Environmental ISO activities*

A comment regarding this self-declaration of conformity has been received from external consultant as a third-party assessment.

Recycling CenterWe established a recycling center in June 2007 for the purpose of maintaining the confidentiality of
documents and recycling them after their retention limits expire.
After paper leaves a large shredder, it is taken to a paper factory to be recycled into toilet paper,
notepads, and other items. The amount of paper recycled in this manner during Fiscal 2018 reached 294
tons.
We will continue to contribute to reducing paper waste and the recycling of paper resources in the
future.
Reduction of Energy Usage
The Bank has worked to reduce energy (electricity + city gas +heavy oil) usage through measures such as the standardizationof air-conditioning settings (a room temperature of 28°C whencooling and 20°C when heating) as part of environmental ISO
activities and the adoption of LED lighting in branches anddisplay windows.
In addition, we formulated a plan aimed at reducing energy

Environmental Initiatives

The Bank obtained the ISO 14001 certification for the Head Office and Business support center in 2002, and subsequently acquired
certification for the recycling center, training center, and other locations.
Members of the Nanto Bank Group are working together to conduct environmental conservation activities toaddress environmental issues such as global warming. These efforts include continued environmental
conservation activities through our main business, and initiatives such as cool biz and everyday environmental
conservation activities.
In light of the fact that a sufficient awareness of the activities conducted has been instilled, in February 2014,
we transitioned to a self-declaration of conformity* where we make a declaration based on our own
responsibility that our environmental management system is in compliance with the international ISO 14001
standard. Efforts have been further strengthened even after the transition to this system.
In addition, the Bank has approved and registered with the national movement, “COOL CHOICE” national
campaign, promoted by the Ministry of the Environment to cope with global warming. The Bank also
participates in the “Fun to Share” campaign, promoted by the Ministry of the Environment through activities that
aim to reduce carbon gas in a sustainable manner.

Recycling center

usage by over 5% compared to Fiscal 2009 over a period offour years since Fiscal 2010, and we have worked to streamline
energy usage over the medium- to long-term through measures
such as the introduction of energy-saving air-conditioning
equipment, etc.
We have also worked to save electricity since Fiscal 2011, andwe will continue efforts to reduce energy usage in the future.

Kizukai Activities (the Wood Movement) and Yoshino Heart Project
Kizukai Activities is a forest preservation movement that promotes the active use of domestic wood resources to restore sound cycles for forests throughtree planting and thinning and to create healthy forests that absorb plenty of CO2.
The Bank became the first company in the banking industry to receive the Kizukai Activities logo
mark of approval from the Forestry Agency in November 2008.
As part of its support for the Yoshino Heart Project*, the Bank has emphasized the importance ofwood use in environmental preservation though the distribution of environmentally-friendly wood
products and the use of Yoshino 3.9 Paper, and these activities are also linked with Kizukai Activities.
B-(3)-080031
The Bank received a letter of appreciation from the Minister of Agriculture, Forestry and Fisheries
Yoshino Heart logo mark Thank You Green Style logo
in October 2011 for our activities that served as significantly effective PR for Kizukai Activities.

Participation in the Yoshino Cherry Tree Preservation GroupIn recent years, signs of blight and decay have been noticed among shiroyama-zakura (cherry trees
famous for their blossoms) at the Mount Yoshino World Heritage Site in Yoshino, Nara Prefecture. To
preserve about 30,000 of these trees, the Bank is participating as a special member in the Yoshino
Cherry Tree Preservation Group established as a public-private partnership.
In addition to providing financial support for this group, the Bank also actively supports group
activities through means such as dispatching volunteer staff to various events to actively cooperate inprotection and cultivation efforts for the Yoshino Cherry Tree as a regional financial institution.

Fund raising during events

Environmentally-Conscious Financial Products
The Bank also actively backs up environmental conservation activities in the region through finance.
NANTO Green Privately Placed
Bonds

A product that provides preferential treatment for some guarantee fees and commissions when underwriting
privately placed bonds that are issued by businesses engaged in environmentally-conscious management orin the reduction of environmental burden.

NANTO EnvironmentallyConscious Finance

A product that provides preferential interest rates based on the Bank’s prescribed environmental ranking for
capital investment funds related to environmental considerations by businesses engaged in environmentallyconscious management.

NANTO Eco Private Car Loans

A low-interest product (compared to NANTO Private Car Loans) that supports the purchase of low emission
vehicles or low fuel consuming vehicles.

NANTO Eco Renovation Loans

A low-interest product (compared to NANTO Renovation Loans) which supports home renovations thatsave energy.

09

In Partnership with the Community - Contributing to the Local CommunityPracticing consulting-oriented sales to business partners<Development of Consulting-oriented Sales>
We carries out management support for our customer companies by providing solutions according to their life stage and leveraging our consulting
function.

Founding
periodGrowthperiodStableperiodStagnant
periodRevitalization
periodGrowthperiodThe Bank’s main consulting services
Support for startinga business

Assistance in utilizing SME support measures
Business matching
Overseas business support
Support for new business development

In Partnership with the Community - Contributing to the Local Community-

M&A advisory
Support for business succession
Support for management improvement andbusiness revitalization

Active participation in comprehensive regional revitalization<Initiatives toward “Regional Creation”>
Based on the Japanese Government’s “Comprehensive Strategies for Local Community, People and Job Creation,” theBank has established a “Regional Creation Project Team” in
the Solution Business Division. We have added the sales
branch managers of 3 4 branches that have transactions with
regional governments to this team as regional creation promotion managers for regional governments. This team has
actively participated in the planning and smooth implementation of regional comprehensive strategies and cooperated toprovide information from the perspective of a regional financial institution.
The Bank is also cooperating with local governments toform a comprehensive partnership for “community
revitalization,” and is making effective use of our resourcesin the fields of “communities, people, and jobs,” striving topromote regional vitality and the development of the local
economy.

■ Industrial support through collaboration among industries, government, governments, schools and finance[Strengthening collaboration with universities]
The Bank has entered into collaboration agreements with
universities, conducting technical consultation and joint research with local companies and matching them with thebusiness needs of our business partners.

In addition to the mutual development of the Bank anduniversities, we will make efforts to contribute to society byworking together to address the needs of local communities.

■ Initiatives for tourism support

In collaboration with various municipalities and tourism organizations in Nara Prefecture, we aremaking plans and proposals that utilize tourism resources in the prefecture and conducting seminars on tourism promotions. We also operate “Ee Koto (Good Ancient Capital) Nara,” a local
portal website packed with tourist information about Nara.
In addition, the “NANTO Nara Cheer Squad,” a volunteer group composed of retirees fromthe Bank, is working to revitalize Nara as a tourist destination, such as by offering guided toursof shrines and temples in Nara Prefecture.
“Ee Koto Nara” http://www.nantokanko.jp/■ Support for Traditional Local Industries

10[Forestry Business Field]
We support the Yoshino Heart Project, which consists of activities aimed at revitalizing
Yoshino’s forestry-related industries and preventing global warming by maintaining
forests. We are working to spread awareness of the necessity of “Kizukai,” in other words
paying attention to forest preservation and forestry revitalization, through activities such as
the distribution of disposable wooden chopsticks made in Yoshino and the use of Yoshino
3.9 Paper made with lumber from thinning in booklets. We are also collaborating with
Nara and other prefectures to promote the use of materials from Nara Prefecture, andstrives proactively to use materials produced in the prefecture primarily in construction of
new branches and other Bank facilities.
The Solution Business Division is currently playing a central role in carrying out
various initiatives to promote forestry and lumber-related industries.

Branch using materials from Nara Prefecture(Sakurai Branch)Promoting Social Contribution Activities
Initiatives in Financial and Economics Education
The Bank is focusing on local financial and economics education through means such as
sending instructors and offering bank tours for local junior-high schools, etc. and holding
financial seminars for parents and children.
In addition, we sponsored the Nara Tournament of the “National High School Student
Finance and Economics Quiz Championship ‘Economic Koshien’” and we broadly
provided high-school students in the prefecture with the opportunity to participate.
Economics Koshien Nara Tournament

PALRO

Nanto Bank Hockey Team

Nanto Scholarship Society
In order to assist fostering human resources in the local community, academic scholarships are provided for high-school and university
students of outstanding character and academic ability who reside in Nara Prefecture.
As of May 31, 2019, there were 67 students currently on scholarship, and the total number of graduates is 1,406.

Establishment of Nanto Challenged Co., Ltd., a wholly-owned subsidiary of the Bank
In August 2018, we established Nanto Challenged Co., Ltd. to promote employment of people with disabilities, and in February 2019acquired certification as a special subsidiary company according to the provisions of the Act on Employment Promotion etc. of Persons
with Disabilities. Our Group will contribute to local communities by preparing working environments where people with disabilities
can work enthusiastically with greater peace of mind, and making efforts to encourage diverse human resources to play active roles.

SDGs-Related Financial Products
The Bank also actively backs up the contributions of business to the local community through finance.
NANTO SDGs Privately Placed
Bonds

A product in which we purchase goods to support the growth and study of children and students within a set
ratio of the bond issuance amount to commemorate the bond issuance, reflecting the desires of the business.
The goods are then donated to nursery schools, kindergartens, elementary schools, junior-high schools,
senior-high schools, and universities designated by the businesses within our sales target area.

Certified as Mahoroba “ai Support Company”

In Partnership with the Community - Contributing to the Local Community-

On the occasion of the 1982 “Wakakusa” National Sports Festival, we formed a women’s
hockey team, to contribute to the promotion of sports in Nara Prefecture.
The team was certified as a Top Sports City Nara partner team in April 2016, and we areworking to contribute to the local community and interact with it through hockey withactivities such as participating in sports projects and visiting schools in Nara City andholding hockey school for local elementary-school students.

The Mahoroba “ai Support Campaign” encourages people to “help out when they see someone with an impairment who is having
difficulties in his or her daily life” that is promoted by Nara Prefecture, and we were certified for our involvement as a “ai Support
Company” in this campaign in December 2016.

Establishment of a New Financial Assistance for Child Rearing System
In April 2019, we established a new Financial Assistance for Child Rearing System to contribute to the revitalization and development oflocal communities. The system, which aims to support child rearing, pays our employees ¥5 0 0,0 0 0 on the birth of a third child and¥1,000,000 on the birth of a fourth child and any subsequent children. The previous Birth Celebration System has also been expanded, andamended to pay ¥5 0,0 0 0 for both the first and second child. As the birthrate continues to decline, we will continue contributing to therevitalization and development of local communities as a regional bank, by creating better environment for having and raising children andexpanding its support system for child rearing.

Recognized as 2019 Certified Health & Productivity Management Outstanding Organization – White 500
In February 2019, we were recognized as a 2019 Certified Health & Productivity Management Outstanding Organization (the large
enterprise category) - White 500 by the Ministry of Economy, Trade and Industry (METI) and the Nippon Kenko Kaigi, based on our
implementation of outstanding health and productivity management in collaboration with an insurer. We have carried out various
initiatives to practice health and productivity management, such as expanding medical checkups and other procedures, enhancing worklife balance, and prohibiting smoking at the workplace and during working hours. We will further promote such activities in order toachieve an even better workplace environment.
11Corporate GovernanceTo enhance and strenghthe our corporate governance, we
considers achieving fair management which can earn strong
trust from our customers, stockholders and otherstakeholders by increasing the transparency and efficiency ofmanagement, as well as meeting the expectations ofstakeholders and continuously enhancing corporate value, as
one of our most important management priorities. Our main
corporate governance system (as of July 1, 2 0 1 9) is asfollows.

Corporate Governance System
The Board of Directors, comprising 9 directors, including 3
outside directors, plays a central role in our corporate governancesystem. The Board of Directors Regulations are strictly applied,and prompt and efficient decision making are undertaken.
The Board of Directors meetings are held once a month inprinciple, and extraordinary meetings are convened as necessary.
At the meetings, decisions are made on important managerial
matters and business execution with all corporate auditors inattendance, and reports on the status of business execution andvarious committees are made.
Additionally, the Management Directors’ Committee

meeting, comprising directors (6 directors), excluding outside
directors, is held once a week in principle as a decision-making
body for important matters concerning daily operational
management to ensure swift decision making.
Moreover, with an aim of supplementing appropriate businessexecution in response to diversified and advanced operations,committees such as the ALM Committee and the Compliance
Committee have been established.
In April 2016, we introduced the executive officer system toassist business execution by directors and revitalize and speed up
decision making of the Board of Directors.

Corporate Governance Structure
Corporate Governance

Stockholders’ Meeting

Board of Directors(9 directors, including 3 outside directors)

President(Representative Director)

Discussion session
AdviceInstruction

Supervision

Various committees

Group Operation
Conference

ALM Committee
Compliance Committee

Accounting
audit

Headquarters

Sales branches

Consolidated
Subsidiaries

Cooperation
Report/Cooperation
Appointment/Dismissal/Non-reappointment/Judgment on reasonableness of accounting audit

12

ReportCooperation

Evaluation(Deliberation, etc. of important matters)(Directors (excluding outside directors) /Full-time corporate auditors)

Internal Audit

Accounting Auditor

Management Directors’ Committee
Review

Advisory
Board

ReportReport

Audit
ReportAppointment/
Dismissal/
SupervisionInternal Audit Division

ReportCorporate Auditors’ OfficeAppointment/
Dismissal

Board of Corporate Auditors (Four corporate auditors, including two outside corporate auditors)

Appointment/
Dismissal

AssistanceAppointment/
Dismissal

Corporate Auditors and Board of Corporate Auditors
We adopts a corporate auditor system, consisting of two fulltime corporate auditors with extensive knowledge of bankoperations, finance and accounting and two highly
independent outside corporate auditors (independent
officers). The four corporate auditors combine theirknowledge and capabilities to enhance the effectiveness andtransparency of audits conducted by corporate auditors andthe Board of Corporate Auditors.
Corporate auditors appropriately monitor and audit
directors in the performance of their duties throughinvestigations of operations and assets in various ways,
including attending the Board of Directors meetings, theManaging Directors’ Committee and other important
meetings, as well as inspecting important documents andother items, and ensures the fairness and legality ofmanagement decisions.

The Board of Corporate Auditors meeting is held once amonth in principle, and extraordinary meetings are convened
as necessary. In addition, the Board of Corporate Auditors
conducts effective audits while keeping close cooperation
through measures such as regularly holding discussion
sessions with Representative Directors, regular reporting
sessions with accounting auditors and the internal auditing
department, as well as exchanging opinions and hearing
information, etc. at a three-party audit meeting consisting ofcorporate auditors, internal auditing department, andAccounting Auditor. The Corporate Auditor’s Office assists
the Board of Corporate Auditors by assigning two dedicatedstaff members.

Internal Audit and Corporate Auditors’ Audit
Corporate Auditors conducts both operational andaccounting audits at the sole discretion of each responsible
auditor. Audit results are reported to the Board of Corporate
Auditors, Representative Directors and the Board of
Directors.

Systems to Ensure Proper Operations

Corporate Governance

The Internal Audit Division consists of 32 staff memberswith necessary knowledge and experience. This division is
independent from the departments that are audited and is
responsible for internal audits as an organization under the
direct control of the Board of Directors. Audit results arereported to the Board of Directors.

In order to ensure the proper operations, the Board of Directors’meeting has decided to establish the structure outlined below.

(1) A system to ensure that execution of duties by directors and employees is conducted in compliance withlaws, regulations and Articles of Incorporation;(2) A system regarding retention and management of information related to execution of duties by directors;(3) Regulations on management of risk of loss and other systems;(4) A system to ensure efficient execution of duties by directors;(5) A system to ensure appropriate operations in the corporate group comprising the Bank and its
subsidiaries;(6) Matters related to employees whose appointment is requested by corporate auditors to assist them intheir duties;(7) M atters related to the independence of employees assisting the duties of corporate auditors fromdirectors and ensuring the effectiveness of instructions to such employees;(8) A system for directors and employees of the Bank and directors, corporate auditors and employees ofsubsidiaries, as well as persons who have received reports from the aforementioned persons, to report tocorporate auditors and other systems for reporting to corporate auditors;(9) A system to ensure that any person who has made the aforementioned report will not be treateddisadvantageously on the grounds of having made such report;(10) Matters related to advance payment or reimbursement procedures for expenses incurred for execution ofduties by corporate auditors and other policies related to the processing of expenses or obligations
incurred for such execution of duties by corporate auditors;(11) Other systems to ensure that corporate auditors’ auditing is conducted effectively.
13

Risk Management
In recent years, the management environment surroundingbanks has changed drastically, and the risks they face havebecome more diversified and complex.
We regards risk management as one of its most importantmanagement issues and aims to create an advanced risk man-agement system so that we can maintain appropriate andsound management and provide reliable services to our customers.

Risk Management Coordination
To cope with the various risks that we faces in banking business, we have established specific units for each category of
risk. We also incorporate the Risk Management Division
responsible for risk management coordination in order togain a precise understanding of the nature and extent of risks
and take expeditious steps toward their management.
Furthermore, we define our 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, we have adopted a policy of Risk Management
Coordination under which it quantifies various 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, we
determine risk capital (risk based amounts) for each categoryof risk within the scope of its capital adequacy to limit thevalue 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 to conduct more
effective and efficient risk and return management from theviewpoint of maintaining sound management and higher
profitability alongside effective utilization of capital.

Risk Management

Risk Management Structure
Board ofDirectors

Board ofCorporate Auditors

Management Directors’Committee

Emergency Council(Warning Council)

ALM Committee(ALM Subcommittee)

Committees

Operational Risk Management Committee(Operational Risk Management Subcommittee)

Organization

Risk Management Structure

Compliance Structure

Supervising Division

Risk Management Division

Legal Planning Division

Risk Categories

Credit Risk(

Risk
Management
Division

Main Divisionin Charge) (Market Risk

)(

)(

Risk
Management
Division

Operational Risk
(Risk Management Division)

Liquidity Risk)

Risk
Management
Division

Compliance
Administrative Risk

Systems Risk

Operations
Planning
Division

Operations
Planning
Division()(

Legal Risk
Legal
Planning
Division)(

Personnel Risk)(

Personnel
Planning
Division

Tangible Assets Risk
General Affairs
Division)(

Reputational Risk
Corporate
Planning
Division) (Operations

Divisions of Headquarters/Branches/Consolidated Subsidiaries

Auditing

Internal Audit Division

External Auditing

14

Compliance Committee(Compliance Subcommittee))(Legal Planning Division)• Managing Internal Capital 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.
We conduct 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 we face, and regularly compare thelevel of these risks with our internal capital so as to control
and carry out the assessments of our internal capital adequacy for each risk.

As for the capital adequacy assessment, we position ourselves to be able to review the allocation of our internal capital, discuss necessary internal capital strategies and othernecessary actions through the monthly ALM Committee
meeting. We strive to maintain a sound management with thehelp of appropriate risk control practices and increase profitability through the effective utilization of our internal capitalby fully implementing this internal capital management
structure.

• Managing Credit Risk which was established to assist borrowers with businessrestructuring and recovery initiatives. Together these units
form a structure that supports flexible credit risk management tailored to the specific circumstances of each customer.
Our credit analysis and risk management measures
include rigorous self-assessment, credit ratings consistent
with the borrower classifications used in the self-assessmentand other methods with which we objectively recognizes andmanage 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 ratingbased creditworthiness. Through this, we have taken measures to strengthen our credit risk management and increase
profitability.
We regularly and thoroughly reviews transaction terms
and establishes credit limits for borrowers with debt exceeding a certain amount, with a view to reducing credit risk byconducting strict credit control.

Risk Management

Credit risk is the risk of the value of assets decreasing or disappearing due to factors such as deterioration in the financial
condition of a borrower and the incurring of loss as a result.
To ensure the soundness of its assets, we have established
the Risk Management Division and Credit Analysis Division
as credit risk management departments that are separate andindependent from business operations departments.
The Risk Management Division plans and supervises ourcredit risk management structure, conducts credit portfolio
analysis by segment and current status analysis by managing
the levels of credit concentration on major creditors for eachindustry and rating group and strives to build a sound credit
portfolio by measuring credit risks using statistical calculation methods for future potential loss.
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 Business Vitalization Support Office,• Managing Asset Appraisals 
Asset Appraisals are for the review of assets held by banks inorder to determine the accurate status of the bank’s assets. It
is an important method of credit risk management and a preliminary procedure to accurately assess the amount of depreciation and allowances. Asset assessment conducted by abank itself is referred to as a self-assessment.
We carry out an assessment of its assets in which the actual assessments are conducted by its operating branches in conformity 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 the Credit
Analysis Division and further audited by the Internal Audit
Division. According to the audit results, we determine theappropriate amounts of depreciation and allowances. In thisway, we strive to perform appropriate asset assessment practices and maintain and improve the soundness of our assets.

• Managing Market Risk Market risk is the risk of fluctuations in the value of ourassets and liabilities or profits due to volatility in interest
rates, exchange rates, stock prices, etc., and incurring of losses as a result.
We control our market operations under a check and balance system of setting a clear demarcation between front

office units, which implement transactions, and back officeunits, which carry out administrative processing. The middle
office unit responsible for risk management is the Risk
Management Division, which develops risk management systems, checks compliance with risk management regulations
and other requirements and monitors the positions and profit
15

performance of market units. The Risk Management Divisionalso carries out wide-ranging analyses to quantify the risk
levels of assets and liabilities, including deposits, loans andsecurities. In its analyses, the division uses a variety of analytical techniques, including the value at risk (VaR) and basis
point value (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 our ALM Committee biannually in consideration of its capital status, market conditions and other factors.

Market operations staff members make efforts to generate
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 into account the market prospects and otherconditions. In addition, we conduct stress tests by using scenarios that capture the characteristics of market environments
and its portfolios in order to understand the impact of
extreme market fluctuations exceeding VaR projections,
bracing for contingency events.

• Managing Liquidity Risk 

Risk Management

Liquidity risk, also known as fund-raising risk, is defined as
the risk of loss due to an obstacle in raising the required
funds either because of a mismatch between the use and procurement of funds or an 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 Financial Investment Division
closely manages our cash flow position on a day-to-day
basis, and the Risk Management Division monitors the management conditions. The ALM Committee is also responsible

for overall monitoring and management of cash flow risk,
including the monitoring of assets available for liquidationand the status of fund procurement.
The cash flow situation is classified into one of three levels according to financial situations: “regular phase,” “concern phase” and “crisis phase.” We have developed management systems that can be flexibly implemented in each ofthese situations.

• Managing Operational Risks Operational risk is the risk incurring a loss due to inadequate
or failed processes of banking operations, activities of executives and employees (including part-time and temporary andother similarly classified workers) or systems as well as
external events.
To address operational risks, we apply the perspectives of
specialists to the management of administrative risk, systems
risk, legal risk, personnel risk, tangible assets risk and repu-

tational 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 us to preferentially deal withmajor risks and minimize the effects of the risks.

Internal Audit System
For the enhancement and reinforcement of risk management,a PDCA cycle shoud be functioned effectively for selfimprovement through a check and balance between eachdivision and branch, and risk management departments foreach risk.

The Internal Audit Division promotes risk management
and strives to ensure the soundness of management and theappropriateness of business by ascertaining the risk occurrence situation for each operation and verifying the situationof the PDCA cycle function and providing advice as necessary.

Crisis Management System
Along with the above risk management, we have formulateda Crisis Management Plan and a Crisis Management Plan
Response Manual for each type of crisis to properly respondto the occurrence and materialization of crises related tobusiness operations such as natural disasters, including largescale earthquakes, systems malfunctions or virulent strains ofinfluenza or other pandemics. In the event of a crisis, we
respond, depending on the level of emergency of the crisis,by having the Emergency Council, Response Headquarters,
or other divisions gather information and engaging in cen16

tralized supervision and command in an effort to minimize
the impact of the crisis on its operations.
In the meantime, we, as an organization responsible forsocial function maintenance, takes measures to continuously
provide customer services, including improvement of facilities to continue our business operations in the event of disasters or other events while striving to ensure the effectivenessof the crisis management system and continuously improve it
through measures including risk management training conducted every year.

Compliance
Compliance refers to strict observance of ethics and social

We have taken 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. Compliance is essential forbanks to faithfully carry out their social responsibilities andpublic missions.

Thorough Execution of Compliance● In recognition of the public mission and social responsibilities that financial institutions need to perform, we regard compliancewith laws and regulations as the most important management issue and have established a Charter of Corporate Behavior which
consists of Basic Policies and a Code of Conduct for all officers and employees to follow to gain the trust of all our stakeholders,
including local communities, our customers and our 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.

● A Compliance Program consisting of concrete plans to achieve compliance is drawn up each year and undergoes appropriate
review.
● We strive 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.

Compliance● 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 organizational structure. Plans and supervision of compliance are carriedout in the Compliance & Risk Management Division.

● To instill a compliance mindset throughout the organization, we have compiled a Compliance Handbook, which serves as a guidefor achieving compliance and has been distributed to all officers and employees, and regularly conduct seminars and other grouptraining at the workplaces of individual workgroups.
● We have established Regulations on Response to Antisocial Forces in order to take a resolute stand against anti-social forces thatpose a threat to the order and security of civil society and takes strong measures to intervene and block any attempt by suchforces to create any relationship with the Bank.

17

Board of Directors, Executive Officers and Corporate Auditors(As of July 1, 2019)

Board of Directors and Corporate Auditors

Yasuo Ueno

Takashi Hashimoto

ChairmanPresident(Representative Director)

Satoshi IshidaKeizo Nishikawa

Kazuomi Nakamuro

Kazuya Yokotani

Director
VICE PRESIDENT(Representative Director)(Corporate Strategy Headquarters)

DIRECTORMANAGING EXECUTIVE OFFICER(Management Headquarters and General
Affairs Division)

ChairmanYasuo Ueno
President
Takashi Hashimoto(Representative Director)
Director And
VICE PRESIDENT
Satoshi Ishida(Representative Director)(Corporate Strategy
Headquarters)
Director And Senior
Managing Executive
Officers
Keizo Nishikawa(Representative Director)(Sales Headquarters)

18

Director And Managing
Executive Officers
Kazuomi Nakamuro(Management Headquarters
and General Affairs Division)
Kazuya Yokotani(Investment Management
Headquarters)
Directors
Hiroshi Nakagawa
Matazaemon Kitamura
Masami Ishii
Managing Executive
Officers
Satoru Wada
(North Nara Headquarters)

Director
SENIOR MANAGING EXECUTIVE OFFICER(Representative Director)(Sales Headquarters)

DIRECTORMANAGING EXECUTIVE OFFICER(Investment Management Headquarters)

Executive Officers
Tomomi Onishi(Financial Investment Division)
Kazunobu Nishikawa(Corporate Planning Division)
Takahiro Konaka(South Nara & Wakayama
Headquarters)
Takeshi Sugiura(Middle Nara Headquarters)
Naoki Ota
(In charge of Special
Assignment)
Koji Honda(Osaka Headquarters)
Akira Yabuuchi(Personnel Planning Division)

Hidetoshi Nishioka(Kyoto Headquarters)
Koshi Okamoto(Credit Analysis Division)
Hidetatsu Kasuga(Solution Business Division)
Masashi Hashimoto(Internal Audit Division)
Corporate Auditors
Naoki Minowa
Takao Handa
Masahiro Nakamura
Takahisa Kurahashi

Note: Hiroshi Nakagawa, Matazaemon Kitamura and Masami Ishii are outside directors pursuant to Item 15, Article 2 of the Company Law and Masahiro Nakamura and
Takahisa Kurahashi are outside corporate auditors pursuant to Item 16, Article 2 of the Company Law.

Consolidated Financial Statements
Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

2018

2019

¥ 830,696
388
3,514
34,0701,432,780
3,392,321
1,891
19,83846,225
41,183
12,40525,351
—
3,426
5,474
4,981
493
1,311
7,556
(18,382)¥5,798,870¥ 820,151
489
2,983
33,0001,539,150
3,330,514
2,206
16,093
27,574
41,587
12,871
25,416
18
3,281
4,464
3,971
493
1,281
8,748
(19,813)¥5,808,433$ 7,484,422
3,495
31,660306,964
12,909,090
30,564,203
17,037
178,736
416,478
371,051
111,766
228,407—
30,86749,31944,877
4,441
11,811
68,078(165,618)$52,246,778

Liabilities and net assets:
Liabilities:
Deposits (Notes 7 and 19)...............................................................................
Negotiable certificates of deposit (Note 19)....................................................
Call money and bills sold (Note 19)................................................................
Payables under repurchase agreements (Notes 7 and 19)...............................
Payables under securities lending transactions (Notes 7 and 19)....................
Borrowed money (Notes 7, 19 and 30)...........................................................
Foreign exchanges ..........................................................................................
Borrowed money from trust account...............................................................
Other liabilities (Note 30)...............................................................................
Liability for retirement benefits (Note 22)......................................................
Reserve for reimbursement of deposits...........................................................
Reserve for contingent losses..........................................................................
Reserve under special laws.............................................................................
Deferred tax liabilities (Note 24)....................................................................
Acceptances and guarantees............................................................................
Total liabilities............................................................................................

4,904,027
21,622—42,601
279,580
210,648
260
6,446
19,665
11,152
238
853
3
4,360
7,556
¥5,509,018

4,817,646
18,956531
74,699345,250
208,368251
2,850
20,141
21,936
244
867
—
3,771
8,748
¥5,524,264

44,184,404
194,810—
383,827
2,518,965
1,897,900
2,342
58,077
177,178
100,477
2,144
7,685
27
39,282
68,078$49,635,264

Net assets (Note 3):
Common stock: Authorized 64,000 thousand shares in 2019 and 2018
Issued 33,025 thousand shares in 2019 and 2018.................
Capital surplus.................................................................................................
Retained earnings............................................................................................
Less treasury stock: Issued 425 thousand shares in 2019and 433 thousand shares in 2018...................................

37,92434,749181,077

37,92434,749172,353

341,688
313,082
1,631,471(1,776)(1,812)(16,001)

Total stockholders’ equity
Valuation difference on available-for-sale securities (Note 20)......................
Deferred gains or losses on hedges (Note 21).................................................
Accumulated adjustments for retirement benefits (Note 22)..........................
Total accumulated other comprehensive income........................................
Stock acquisition rights.................................................................................
Total net assets............................................................................................
Total liabilities and net assets.....................................................................

251,974
38,687(210)(698)
37,77898
289,852¥5,798,870

243,215
45,328(282)(4,206)
40,840113
284,169¥5,808,433

2,270,240
348,562(1,892)(6,288)340,373882
2,611,514$52,246,778

Consolidated Financial Statements

2019

Assets:Cash and due from banks (Notes 17 and 19)..................................................
Call loans and bills bought (Note 19).............................................................
Debt purchased (Note 19)...............................................................................
Money held in trust (Notes 19 and 20)............................................................
Securities (Notes 5, 7, 10, 19 and 20).............................................................
Loans and bills discounted (Notes 6, 8 and 19)..............................................
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 24)..........................................................................
Customers’ liabilities for acceptances and guarantees....................................
Reserve for possible loan losses (Note 19).....................................................
Total assets..................................................................................................

See Notes to Consolidated Financial Statements.

19

Consolidated Financial Statements
Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

Consolidated Financial Statements

2019

2018

2019

Income:Interest income:Interest on loans and bills discounted.........................................................
Interest and dividends on securities............................................................
Other interest income..................................................................................
Trust fees.........................................................................................................
Fees and commissions.....................................................................................
Other operating income (Note 11)..................................................................
Other income (Note 12)..................................................................................
Total income...........................................................................................

¥30,485
13,654541
29
19,214
7,851
14,63786,414¥30,899
19,097568
28
17,5162,467
9,322
79,899$274,664
123,020
4,874
261
173,11470,736
131,876
778,574

Expenses:
Interest expense:
Interest on deposits ....................................................................................
Interest on borrowings and rediscounts .....................................................
Interest on payables under securities lending transactions ........................
Other interest expense ................................................................................
Fees and commissions ....................................................................................
Other operating expenses (Note 13) ...............................................................
General and administrative expenses (Note 14) .............................................
Other expenses (Note 15) ...............................................................................
Total expenses ........................................................................................

640
622
947
1,719
10,0579,720
41,618
5,619
70,947

779
453
1,150
1,434
9,059
4,000
43,366
1,641
61,884

5,766
5,604
8,532
15,487
90,611
87,575374,970
50,626639,219

15,46718,015

139,354

2,570
1,723
4,293
11,174¥11,174

4,355
498
4,854
13,160¥13,160

23,155
15,52338,679100,675$100,675

Income before income taxes .............................................................................
Income taxes (Note 24):
Current ............................................................................................................
Deferred ..........................................................................................................
Total income taxes .................................................................................
Net income .........................................................................................................
Net income attributable to owners of parent .................................................

U.S. dollars(Note 1)Yen

Per share of common stock (Note 28):
Net income - basic ..........................................................................................
Net income - diluted .......................................................................................
Dividends .......................................................................................................

¥342.79
342.4780.00¥418.05
417.63
70.00

$3.08
3.08
0.72

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

Net income ..........................................................................................................
Other comprehensive income (loss) (Note 16):
Valuation difference on available-for-sale securities .....................................
Deferred gains (losses) on hedges ..................................................................
Adjustments for retirement benefits (Note 22) ...............................................
Total other comprehensive income (loss) ..................................................
Total comprehensive income for the year ...........................................................
Total comprehensive income attributable to:
Owners of parent ............................................................................................
See Notes to Consolidated Financial Statements.

20

2019

2018

2019

¥11,174¥13,160$100,675(6,641)
71
3,507(3,061)¥ 8,112

1,802
127
2,625
4,555
¥17,716(59,834)639
31,597(27,579)$ 73,087¥ 8,112¥17,716$ 73,087

Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2019 and 2018

Balance at April 1, 2017 ...................
Cumulative effects of changes inaccounting policies ........................
Restated balance at April 1, 2017 ...
Issuance of new shares ..................
Cash dividends ...............................
Net income attributable to ownersof parent .........................................
Purchase of treasury stock .............
Disposition of treasury stock .........
Transfer from retained earnings tocapital surplus ................................
Net changes in the items other thanstockholders’ equity .......................
Balance at April 1, 2018 ...................
Cash dividends ...............................
Net income attributable to ownersof parent .........................................
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, 2019 (Note 3) ...

Millions of yen
Valuation
Deferreddifference
on availablegains or
Less treasury
losses on
for-salestockhedgessecurities

Number ofshares ofcommonstock(thousands)

Commonstock

CapitalsurplusRetainedearnings

27,275¥29,249¥26,075¥161,245¥(1,828)¥43,526

29,24926,07529
161,275(1,828)

5,750
—

8,674
—

8,674
—

—
(2,080)

—
—
—

—
—
—

—
—
(2)

—

—

—
33,025—

Accumulated
adjustments
for retirement
benefits

StockacquisitionrightsTotal net
assets¥(409)¥(6,831)¥112¥251,139

43,526(409)(6,831)

112

29
251,168

—
—

—
—

—
—

—
—

—
—

17,348(2,080)13,160
—
—

—
(5)
21

—
—
—

—
—
—

—
—
—

—
—
—

13,160
(5)
19

2

(2)

—

—

—

—

—

—

—
¥37,924——¥34,749——¥172,353(2,444)—¥(1,812)—1,802¥45,328—127¥(282)—

2,625¥(4,206)
—

1
¥113
—

4,556
¥284,169(2,444)

—
—
—

—
—
—

—
—
(5)

11,174
—
—

—
(4)
39

—
—
—

—
—
—

—
—
—

—
—
—

11,174
(4)
33

—

—

5

(5)

—

—

—

—

—

—

—
33,025—¥37,924—¥34,749—¥181,077—¥(1,776)(6,641)¥38,68771¥(210)

3,507¥(698)

Balance at April 1, 2018 ................... $341,688
Cash dividends ...............................
—Net income attributable to ownersof parent .........................................
——
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, 2019 (Note 3) ... $341,688

CapitalsurplusRetainedearnings$313,082 $1,552,869(22,020)—$(16,325) $408,397
—
—

Stock
acquisitionrightsTotal net assets$(2,540)—$(37,895)—$1,018—$2,560,311(22,020)——(45)

100,675
—
—

—
(36)
351

—
—
—

—
—
—

—
—
—

—
—
—

100,675
(36)
297

45

(45)

—

—

—

—

—

—

—
(59,834)$(16,001) $348,562

639$(1,892)

31,597$ (6,288)——$313,082 $1,631,471

Consolidated Financial Statements

Commonstock

Thousands of U.S. dollars (Note 1)
Valuation
Accumulateddifference on
Deferredadjustments
Less treasury available-for- gains or losses for retirement
stock
sale securities on hedges
benefits(14)(3,076)¥98 ¥289,852(126)(27,714)$ 882 $2,611,514

See Notes to Consolidated Financial Statements.

21

Consolidated Financial Statements
Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2019 and 2018
Thousands of
U.S. dollars(Note 1)Millions of yen

Consolidated Financial Statements

Cash flows from operating activities
Income before income taxes ...........................................................................
Depreciation ...................................................................................................
Impairment loss ..............................................................................................
Gain on step acquisitions ...............................................................................
Gain on negative goodwill .............................................................................
Increase (decrease) in reserve for possible loan losses ..................................
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 sales 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 call money ............................................................
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
Net increase (decrease) in borrowed money from trust account ....................
Interest received .............................................................................................
Interest paid ....................................................................................................
Other ...............................................................................................................
Subtotal ......................................................................................................
Income taxes paid ...........................................................................................
Net cash used in operating activities ..........................................................
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 .................................................................
Purchase of shares of a subsidiary resulting in change in scope of
consolidation ..................................................................................................
Other ...............................................................................................................
Net cash provided by investing activities ...................................................
Cash flows from financing activities
Proceeds from issuance of common stock .....................................................
Dividends paid ................................................................................................
Purchase of treasury stock ..............................................................................
Other ...............................................................................................................
Net cash provided by (used in) financing activities ...................................
Effect of exchange rate changes on cash and cash equivalents ....................
Net increase in cash and cash equivalents ......................................................
Cash and cash equivalents at beginning of year ............................................
Cash and cash equivalents at end of year (Note 17) ......................................
See Notes to Consolidated Financial Statements.

22

2019

2018

2019

¥15,467
3,582
41
(12)
(14)
(1,430)(5,796)(6)(13)(44,680)
3,930(4,475)190(5,492)
26(61,601)
86,5362,666
2,241¥18,015
3,622
95
—
—
(5,848)598
51(98)(50,565)
3,817(2,159)
(471)
2,380
28
(78,295)
80,310(9,497)3,060$139,354
32,273
369
(108)
(126)
(12,884)(52,220)(54)(117)(402,558)
35,408(40,318)
1,711(49,481)234(555,013)
779,673
24,02020,191(68)(429)(32,629)(65,669)315
9(3,877)
3,596
46,124(4,152)(20,319)(85,941)(3,038)(88,979)

1,141
12,60746,027(158,842)
2,825
115(2,345)2,850
51,517(4,061)
13,108(70,013)(7,143)(77,157)(612)(3,865)(293,981)(591,665)
2,838
81(34,931)
32,399415,568(37,408)(183,070)(774,313)(27,371)(801,684)(755,331)
749,645
112,443(247)
407(1,770)97(2,450)(392,267)
399,756
144,354(1,986)457(2,424)33(1,204)(6,805,396)
6,754,167
1,013,091(2,225)
3,666(15,947)873(22,074)

(867)
(79)
101,846—(0)146,719(7,811)(0)917,614—(2,442)(4)
0(2,447)
4
10,424
818,769¥829,194

17,348(2,079)(5)
015,263(5)
84,821
733,948¥818,769—(22,001)(36)0(22,047)
36
93,918
7,376,961$7,470,889

Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

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, 2019, which was ¥110.99 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.

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.
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 the lease payments. Finance leases
which transfer ownership of the lease assets to the lessee are recognized aslease receivables, and all finance leases which do not transfer ownership ofthe lease assets to the lessee are recognized as lease investment assets.
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) in 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) has been allocated over the remaining lease term using the straightline method.
For the fiscal years ended March 31, 2019 and 2018, differences between income before income taxes and income before income taxes calculated as if the accounting treatment for ordinary sale transactions had been
applied to the finance leases which do not transfer ownership of the leased
assets to the lessee were not material.
d. Securities
Trading securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations arerecognized as gains and 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. Stocks of unconsolidated subsidiaries and affiliates not accounted
for by the equity method are stated at cost using the moving average method. Available-for-sale securities with available fair values are stated at fairvalue in principle based on the market price as of the fiscal year-end 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 determine 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, the 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.

Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Principles of consolidation
The accompanying consolidated financial statements include the accountsof the Bank and its twelve (ten in 2018) subsidiaries at March 31, 2019.
Nanto Challenged Co., Ltd. and Nanto Mahoroba Securities Co., Ltd.
were included in the scope of consolidation for the year ended March 31,
2019 due to the new establishment of Nanto Challenged Co., Ltd. and theacquisition of shares of Nanto Mahoroba Securities Co., Ltd.
The Bank had two (two in 2018) unconsolidated subsidiaries, Nanto
Sixth Industry Support Investment Limited Partnership and Nanto Regional
Vitality Creation Support Investment Limited Partnership. The unconsolidated subsidiaries were excluded from the scope of consolidation because
the portion of their assets, net income (loss), retained earnings, accumulated other comprehensive income and others that correspond to the Bank’s
equity were immaterial to the extent that their exclusion from the scope of
consolidation did not preclude reasonable judgment of the Group’s financial position and results of operations.
The Bank had no affiliates over which it had the ability to exercise significant influence over operating and financial policies.
The Bank had two (two in 2018) unconsolidated subsidiaries not accounted for by the equity method, Nanto Sixth Industry Support Investment
Limited Partnership and Nanto Regional Vitality Creation Support Investment Limited Partnership, and one (one in 2018) affiliate not accounted forby the equity method, Nara Prefecture Tourism Revitalization Investment
Limited Partnership. The unconsolidated subsidiaries and affiliate not accounted for by the equity method were excluded from the scope of the equity method because the effect on the accompanying consolidated financial
statements was not significant in terms of the portion of net income (loss),retained earnings, accumulated other comprehensive income, and others
which correspond to the Bank’s equity.
Potager Co., Ltd., of which the Bank owns between 20% and 50% of
the voting rights (execution rights), was not recognized as an affiliate forthe year ended March 31, 2019, because it is held by the Bank’s unconsolidated subsidiary for the purpose of incubating the investees and not for the
purpose of controlling the entity.
All consolidated subsidiaries have fiscal years ending on March 31.
All significant intercompany accounts, transactions and unrealized
profits on transactions are eliminated.

23

Consolidated Financial Statements

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,
February 13, 2002). The Bank assesses the effectiveness of such hedges in
offsetting movement in 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. The Bank assesses
the effectiveness of cash flow hedges by verifying the correlation of thehedged items with the hedging instruments.
In order to hedge risk arising from the volatility of exchange rates foravailable-for-sale securities (excluding bonds) denominated in foreign currencies, the Bank applies fair value hedge accounting on the condition thatthe hedged available-for-sale securities are designated in advance and thatsufficient on-balance (actual) or off-balance (forward) liability exposure
exists to cover the cost of the hedged securities denominated in the same
foreign currency.

Consolidated Financial Statements
24

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 facilities attached tobuildings and structures acquired on or before March 31, 2016 which are
depreciated by the declining balance method) which are depreciated by thestraight-line method. The estimated useful lives of major items are as follows:
6 to 50 years
Buildings
Others3 to 20 years
Depreciation of the assets of the consolidated subsidiaries is computed
principally by the declining balance method over the estimated useful lifeof the asset.

reserve for possible loan losses is provided based on the Bank’s actual rateof loan losses in the past.
All claims are assessed by the operating divisions based on the self-assessment criteria for asset quality, and the assessment results are audited by
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 is deducted directly from those claims
in principle. At March 31, 2019 and 2018, the deducted amounts were
¥7,237 million ($65,204 thousand) and ¥7,118 million, respectively. The
reserve for possible loan losses of the consolidated subsidiaries is provided
for general claims by the amount deemed necessary based on the historicalloan-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) 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 the liability
for retirement benefits and retirement benefit costs.
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.

g. Intangible fixed assets (except for leased 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.

l. Reserve for contingent losses
To pay its contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not covered by other reserves in an
amount deemed necessary based on estimated future losses.

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. The residual value of lease assets is the value guaranteed in the lease contract or zero for assets without such guaranteedvalue.

m. Reserve under special laws
Reserve under the special laws represents Financial Instruments Transaction Liability Reserve prescribed in Article 46-5, Paragraph 1 of the Financial Instruments Exchange Act. The amount is recorded as determined by
the consolidated subsidiaries in accordance with the provisions of Article
175 of the Cabinet Office Order on Financial Instruments Business, etc., inorder to provide for losses arising from security related accidents.

i. Reserve for possible loan losses
A 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 each customer’s overall financial condition. For other loans, then. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
o. 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.

p. Recognition criteria for lease income and costs for finance leases
Lease income and costs are recognized at the time of receiving lease fees.

(1) Overview
The above standard and guidance provide comprehensive principles forrevenue recognition. Under the standard and guidance, revenue is recognized by applying following five steps:
Step 1: Identify the contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in
the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Effective date
The Group is scheduled to apply the accounting standard and its guidancefrom the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Bank and its consolidated domestic subsidiaries are currently in theprocess of determining the effects of these new standards on the consolidated financial statements.

q. Consumption taxes
Transactions subject to national and local consumption taxes are recorded
at amounts exclusive of the consumption taxes.
r. Changes in accounting policies
For the year ended March 31, 2019
The Bank adopted “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) from theyear ended March 31, 2019 and changed the treatments of deductible temporary differences related to the shares of subsidiaries, etc.
Such change in accounting policies was applied retrospectively and theconsolidated financial statements for the year ended March 31, 2018 wererevised to reflect such retrospective application.
As a result, in comparison with the amounts before the retrospective
application, deferred tax liabilities in the consolidated balance sheet as ofMarch 31, 2018 decreased by ¥29 million and retained earnings increasedby ¥29 million.
For the year ended March 31, 2018
Nones. Standards and guidance not yet adopted
For the year ended March 31, 2019
The following standard and guidance were issued but not yet adopted.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)

3. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2019 and 2018 were as follows:(Thousands of shares)

Remarks

2019

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

April 1, 2018

Increase

Decrease

March 31, 201933,025——33,025

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

33,025——33,025

433

1

9

425

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

433

1

9

425

Consolidated Financial Statementst. Additional information
On April 1, 2018, the Bank transferred its defined benefit pension plans torisk sharing pension plans and defined contribution pension plans classified
as a defined contribution pension plan provided in Paragraph 4 of “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26,
December 16, 2016). The Bank has applied “Practical Solution on Accounting for Risk Sharing Pension Plan” (Practical Issues Task Force(“PITF”) No. 33, December 16, 2016), “Accounting for Transfer between
Retirement Benefit Plans” (ASBJ Guidance No. 1, December 16, 2016) and“Practical Solution on Accounting for Transfer between Retirement Benefit
Plans” (PITF No. 2, February 7, 2007).
The effects associated with this change are described in Note 22,“PROJECTED BENEFIT OBLIGATIONS.”

Notes 1 & 2

Notes: 1.	The increase of 1 thousand shares in common stock of treasury stock was due to the purchase of shares of less than one unit.
2. The decrease of 9 thousand shares in common stock of treasury stock was due to the execution of stock options.

25Consolidated Financial Statements(Thousands of shares)

Remarks

2018

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

April 1, 2017

Increase

Decrease

March 31, 201827,27527,275

5,750
5,750

—
—

33,02533,025Note 1

437
437

1
1

5
5

433
433

Notes 2 & 3

Notes: 1.	The increase of 5,750 thousand shares in common stock issued was due to a capital increase through public offering (5,000 thousand shares) and third-party allocation (750 thousand shares).
2. The increase of 1 thousand shares in common stock of treasury stock was due to the purchase of shares of less than one unit.
3. The decrease of 5 thousand shares in common stock of treasury stock was due to the execution of stock options.

(2) Matters concerning Stock Acquisition Rights
For the fiscal year ended March 31, 2019
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, 2018

Total

Increase

Decrease

March 31, 2019

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

—

—

—

—

¥98

$882

—

—

—

—

¥98

$882

For the fiscal year ended March 31, 2018
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, 2017

Consolidated Financial Statements

Total

Increase

Decrease

March 31, 2018

Balance at end ofcurrent fiscal year
(Millions of yen)

—

—

—

—

¥113

—

—

—

—

¥113

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2019
Resolution

Annual stockholders’ meeting held on
June 28, 2018
Board of Directors’ meeting held on
November 9, 2018

Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars))
Aggregate amount of
Cash dividends
Type of shares
dividends
per share
Record date
Effective dateCommon stock
Common stock¥1,140 ($10,271) ¥35.00 ($0.31)

March 31, 2018

June 29, 2018

¥1,303 ($11,739) ¥40.00 ($0.36)

September 30,
2018

December 5, 2018(b) Dividends paid in the fiscal year ended March 31, 2018
Resolution

Annual stockholders’ meeting held on
June 29, 2017
Board of Directors’ meeting held on
November 10, 2017

Type of shares

Millions of yen, except per share amount (yen)Aggregate amount of
Cash dividends
dividends
per share
Record dateCommon stock
Common stock¥939¥1,140Effective date

¥35.00March 31, 2017

June 30, 2017¥35.00

September 30,
2017

December 5, 2017(c) Dividends to be paid in the fiscal year ending March 31, 2020
Resolution

Annual stockholders’ meeting held on
June 27, 2019

Type of shares

Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars))
Aggregate amount of
Source ofCash dividends
dividends
dividends
per share
Record dateCommon stock ¥1,303 ($11,739)

Retainedearnings¥40.00 ($0.36)

March 31, 2019

Effective dateJune 28, 2019

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 paidin 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.

26

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 capital remains
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 in accordance with the Company Law.
5. SHARES OR INVESTMENTS IN CAPITAL OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
Shares or investments in capital of unconsolidated subsidiaries and affiliates at March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

2019

Shares or investments in capital .........................................................................

2018

¥163

¥122

2019

$1,468

6. NONPERFORMING LOANS
Nonperforming loans at March 31, 2019 and 2018 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 ................................................................................................................

2019

2018

2019

¥ 1,41943,042571
8,921¥53,954¥ 1,60746,680467
6,764¥55,520$ 12,784
387,800
5,144
80,376$486,115

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, February 13, 2002). This accounting treatment gives the Bank the right to sell or pledge such bills without restrictions. The total face value of commercial bills and purchased foreign exchange bills
obtained as a result of discounting was ¥23,366 million ($210,523 thousand) and ¥23,052 million at March 31, 2019 and 2018, respectively.

Consolidated Financial Statements

7. PLEDGED ASSETSAt March 31, 2019 and 2018, securities of ¥643,515 million ($5,797,954 thousand) and ¥720,845 million, respectively, and other assets of ¥1,978 million($17,821 thousand) and ¥1,978 million, respectively, were pledged as collateral for deposits of ¥37,496 million ($337,832 thousand) and ¥43,693 million,
respectively, payables under repurchase agreements of ¥42,601 million ($383,827 thousand) and ¥74,699 million, respectively, payables under securities
lending transactions of ¥279,580 million ($2,518,965 thousand) and ¥345,250 million, respectively, and borrowed money of ¥202,520 million ($1,824,668
thousand) and ¥198,592 million, respectively.
Securities of ¥92 million ($828 thousand) and ¥24,146 million and other assets of ¥20,034 million ($180,502 thousand) and ¥55 million were pledged
for transaction guarantees at March 31, 2019 and 2018, respectively.
Unexpired lease contract claims of ¥3,984 million ($35,895 thousand) and ¥4,592 million were pledged as collateral for borrowed money of ¥2,897
million ($26,101 thousand) and ¥3,572 million at March 31, 2019 and 2018, respectively.
At March 31, 2019 and 2018, other assets included initial margins of futures markets of ¥192 million ($1,729 thousand) and ¥539 million, respectively,
and security deposits of ¥1,145 million ($10,316 thousand) and ¥1,029 million, respectively, and other intangible fixed assets included key money of ¥493
million ($4,441 thousand) and ¥493 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, 2019 and 2018 were ¥967,303 million($8,715,226 thousand) and ¥963,457 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, 2019 and 2018 were ¥916,872 million ($8,260,852 thousand) and ¥941,700 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 real estate and securities or take other necessary
measures such as scrutinizing customers’ financial positions and revising contracts when the need to secure claims arises.
9. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥44,892 million ($404,468 thousand) and ¥44,646 million at March 31, 2019 and 2018, respectively.
Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥783 million ($7,054 thousand) and¥783 million at March 31, 2019 and 2018, respectively. For the years ended March 31, 2019 and 2018, the capital gain offset from acquisition costs was nil.

27

Consolidated Financial Statements

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 ¥20,722 million ($186,701 thousand) and ¥13,660 million at March 31, 2019 and 2018, respectively.
11. OTHER OPERATING INCOME
For the fiscal years ended March 31, 2019 and 2018, other operating income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

Gains on sales of bonds ......................................................................................
Other ...................................................................................................................
Total ................................................................................................................

2018¥7,550301¥7,851¥2,100366¥2,467

2019$68,024
2,711$70,736

12. OTHER INCOME
For the fiscal years ended March 31, 2019 and 2018, other income consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

Gains on sales of stocks and other securities ......................................................
Reversal of allowance for loan losses .................................................................
Recovery of written-off claims ...........................................................................
Gain on revision of retirement benefit plan ........................................................
Other ...................................................................................................................
Total ................................................................................................................

2018¥ 8,379
—
407
4,784
1,067
¥14,637¥3,857
3,036
627
—
1,801
¥9,3222019$ 75,493—
3,666
43,102
9,613$131,876

13. OTHER OPERATING EXPENSES
For the fiscal years ended March 31, 2019 and 2018, other operating expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

Consolidated Financial Statements

Losses on sales of bonds .....................................................................................
Losses on redemption of bonds ..........................................................................
Other ...................................................................................................................
Total ................................................................................................................

2018¥5,6252,892
1,203¥9,720¥3,506—493¥4,0002019$50,680
26,056
10,838$87,575

14. GENERAL AND ADMINISTRATIVE EXPENSES
For the fiscal years ended March 31, 2019 and 2018, general and administrative expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

Salaries and allowances ......................................................................................
Retirement benefit costs .....................................................................................
Other ...................................................................................................................
Total ................................................................................................................

2019

2018

2019

¥19,832
1,638
20,148¥41,618¥19,863
3,645
19,856¥43,366$178,682
14,758
181,529$374,970

15. OTHER EXPENSES
For the fiscal years ended March 31, 2019 and 2018, other expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019

Write-offs of loans ..............................................................................................
Provision for possible loan losses .......................................................................
Losses on sales of stocks and other securities ....................................................
Other ...................................................................................................................
Total ................................................................................................................

28¥1,036
597
2,589
1,397
¥5,619

2018

¥ 514
—
291
835
¥1,641

2019$ 9,334
5,378
23,326
12,586$50,626

16. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the fiscal years ended March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

Valuation difference on available-for-sale securities:
Gains (losses) incurred during the year ..........................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Valuation difference on available-for-sale securities .....................................
Deferred gains or losses on hedges
Gains (losses) incurred during the year ..........................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Deferred gains or losses on hedges ................................................................
Adjustments for retirement benefits:
Gains (losses) incurred during the year ..........................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Adjustments for retirement benefits ...............................................................
Total other comprehensive income (loss) ...........................................................

2019

2018

2019

¥(1,653)(7,714)(9,368)2,727(6,641)¥ 5,344(2,159)3,184(1,381)
1,802$(14,893)(69,501)(84,404)
24,569(59,834)

(29)
132
103
(31)
71

(63)
248
184
(57)
127

(261)
1,189
928
(279)
639

200
4,839
5,039
(1,532)
3,507¥(3,061)

1,866
1,910
3,777
(1,152)
2,625¥ 4,555

1,801
43,59845,400(13,803)
31,597$(27,579)

17. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2019 and 2018 and cash and cash equivalents in the
consolidated statements of cash flows for the fiscal years then ended was as follows:
Thousands of
U.S. dollars

Millions of yen

2019

2018

¥830,696
(464)
(600)
(437)
¥829,194¥820,151
(428)
(600)
(353)
¥818,769

2019$7,484,422(4,180)(5,405)(3,937)$7,470,889

Major components of assets and liabilities of a company which has become a consolidated subsidiary due to acquisition of shares in the year ended March 31, 2019:
The major components of the assets and liabilities of NARA SECURITIES CO., LTD. (currently Nanto Mahoroba Securities Co., Ltd.), which was newly
consolidated through a share acquisition, at the inception of consolidation and the relationship between the acquisition cost of the shares and the payment
for the acquisition of shares were as follows:
Millions of yen

Assets ..................................................................................................................
Liabilities ............................................................................................................
Negative goodwill ...............................................................................................
Acquisition cost of shares ..............................................................................
Acquisition cost of shares before control was obtained .................................
Gain on step acquisitions ...............................................................................
Cash and cash equivalents ..................................................................................
Net payment for acquisition ...........................................................................

¥ 1,984(1,071)
(14)
898
(10)
(12)
(8)
¥ 867

Thousands of
U.S. dollars$17,875(9,649)
(126)
8,090
(90)
(108)
(72)
$ 7,811

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 ..........

18. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which were not cancelable at March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

2019

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

¥ 79
801
¥880

2018

¥ 87
859
¥946

2019

$ 711
7,216
$7,928As lessor:
There were no applicable matters to be noted regarding future minimum lease payments under operating leases which were not cancelable at March 31, 2019 and 2018.

29

Consolidated Financial Statements
19. 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 its ten consolidated subsidiaries
and provides financial services such as banking, securities, leasing andcredit guarantee businesses.
The Group’s major banking business includes (i) the acceptance of deposits, lending services, bills discounting and remittance, and (ii) the guarantee of debt, 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), identifying
various types of risk exposures associated with the banking business as the
Bank holds financial assets and liabilities exposed to the market risk associated with fluctuation in interest rates. As part of its risk management, theBank utilizes derivative transactions such as interest rate swaps. The Bank
also enters into derivative transactions for trading purposes with certain
position limits.

Consolidated Financial Statements
30(2) Contents and risk of financial instruments
Financial assets held by the Group are composed mainly of loans to corporate and individual customers that are exposed to credit risk arising from
customer nonperformance. In addition, loan balances are significantly concentrated in Nara prefecture, where the head office of the Bank is located.
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, the Group may be forced to raise funds underunfavorable conditions and, accordingly, become significantly exposed toliquidity risk if the fund raising capacity of the Group significantly declined
and led to the inability to repay under circumstances such as the significant
deterioration of the financial position of the Group. Furthermore, borrowed
money with floating interest rates is exposed to interest rate risk.
Derivative transactions include interest rate swaps for interest rate related transactions, currency swaps and forward foreign exchange transactions for currency related transactions, and bond future transactions 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 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.
(3) Risk management system for financial instruments
Credit risk management
The Group has established a framework for credit control which includes
credit reviews for individual transactions, credit limits, credit information
management, internal credit ratings, 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. The independent Audit Department audits the status of credit risk controls and its results. The status of credit risk controls is periodically evaluated andreported to the Management Directors’ Committee and board meeting.
Credit risks associated with the issuers of securities are managed by the
Financial Investment Division and 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 periodically checked tomonitor 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” stipulates 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 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 interest rate fluctuation are also
used so that the Bank can identify and analyze risk from a broader point ofview.
(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 Risk Management Division assesses the foreign currency risk by VaR, reports to the ALM committee ona 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 Financial Investment
Division plays a part in investments for investment purposes, and the Corporate Business Division plays a part in investments for the purpose ofbusiness 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 Risk Management Division assesses the price fluctuation risk ofequity securities, etc., by VaR, reports monthly to the ALM Committee
about compliance with risk limits and properly manages the 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 Risk Management Division. With respect to derivativetransactions for trading purposes, certain trading limits and loss limit rules
are set semiannually by the ALM Committee. The Risk Management Division, which serves as the middle office, monitors compliance and calculates
the total amount of risk. The Financial Investment Division, which serves
as the back office, checks each derivative transaction, marked-to-market
position, and evaluates the profit and loss from the transactions on a daily
basis. In addition to those functions, the related divisions check each otherso 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 Group has adopted the historical method (confidence level of 99%, observation period of 1,250 business days, holding period of 120 businessdays [holding period for equity securities other than purely for investment
purposes are 240 business days] and the correlation of risk categories are
not considered.).
At March 31, 2019, the Group’s total market risk (decrease in estimatedeconomic value) was ¥43,069 million ($388,043 thousand) (¥56,285 million in 2018). In addition, the Group conducted back tests comparing actual income with the VaR calculated by the model. 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 Financial Investment Division manages the Bank’s cash position based
upon the monthly funding plan designed by the ALM Committee, while theRisk Management Division monitors the situation. The ALM Committee
manages financing risk comprehensively by understanding the amount ofcash for which the Bank can liquidate and also can raise from the market ona 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 values based 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 suchamounts, and, accordingly, the result of such calculations may vary if different assumptions are used.

Millions of yen

2019

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
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 ...............................................................
Call money and bills sold ...........................................................................
Payables under repurchase agreements ......................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions .......................................................................

Carrying amount

Fair value¥ 830,696
388
3,514
34,070¥ 830,696
388
3,514
34,07020,722
1,404,641
3,392,321(17,953)
3,374,368¥5,668,401¥4,904,027
21,622—42,601
279,580
210,648¥5,458,480

20,796
1,404,641

74—

3,388,671¥5,682,778¥4,904,055
21,622—42,601
279,580
210,540¥5,458,400

14,302¥ 14,376
¥
28
—
—
—
—
(108)
¥
(80)

233
(221)
12

233
(221)
12

—
—
—

¥

¥

Difference

¥

¥

—
—
—
—

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, 2019 and 2018. 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 (see Note 2 below).

31

Consolidated Financial Statements
Millions of yen

2018

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
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 ...............................................................
Call money and bills sold ...........................................................................
Payables under repurchase agreements ......................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions .......................................................................

Carrying amount

Fair value¥820,151
489
2,983
33,000¥820,151
489
2,983
33,000Difference

13,6601,521,099
3,330,514(19,324)
3,311,190¥5,702,575¥4,817,646
18,956531
74,699345,250
208,368¥5,465,452

13,676
1,521,099

15—

3,332,246¥5,723,647¥4,817,749
18,956531
74,699345,250
208,274¥5,465,461

21,056¥21,071
¥ 102
—
—
—
—
(94)
¥
8

2,485
(287)
¥2,198

2,485
(287)
¥2,198

—
—
—

¥

¥

—
—
—
—

Thousands of U.S. dollars

2019
Carrying amount

Consolidated Financial Statements

Cash and due from banks ...........................................................................
Call loans and bills bought .........................................................................
Debt purchased ...........................................................................................
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 ...............................................................
Call money and bills sold ...........................................................................
Payables under repurchase agreements ......................................................
Payables under securities lending transactions ..........................................
Borrowed money ........................................................................................
Total liabilities ...........................................................................................
Derivative transactions (*2)
Hedge accounting not applied ...............................................................
Hedge accounting applied .....................................................................
Total derivative transactions .......................................................................

Fair value

Difference$ 7,484,422
3,495
31,660306,964$ 7,484,422
3,495
31,660306,964

186,701
12,655,563
30,564,203(161,753)
30,402,450$51,071,276$44,184,404
194,810—
383,827
2,518,965
1,897,900$49,179,926

187,368
12,655,563

666—

30,531,318$51,200,810$44,184,656
194,810—
383,827
2,518,965
1,896,927$49,179,205

128,858$129,525
$
252
—
—
—
—
(973)
$
(720)

2,099
(1,991)108

2,099(1,991)
108

—
—
—

$

$

$

$

—
—
—
—

(*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 and 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.

32

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
20, “SECURITIES AND MONEY HELD IN TRUST.”
Securities:
The fair value of equity securities is determined using the market price on
exchanges. The fair value of debt securities is determined based on market
price or value calculated on a reasonable basis if no market price is available. The fair value of listed investment trusts is determined using themarket price on exchanges and the fair value of other investment trusts isdetermined using standard prices published by the Investment Trust Association, Japan or presented from the financial institutions with which they
are transacted. The fair value of the private bonds guaranteed by the Bankis calculated by discounting the aggregate value of principle and interest at
the interest rate assumed if the same bond were newly issued for each category based on term, redemption method and guarantees. With respect tothe private bonds guaranteed by the Bank issued by “bankrupt borrowers,”“effectively bankrupt borrowers” and “likely to become bankrupt borrowers,” the amount of possible loan losses is computed based on the present
value of estimated future cash flow or the recoverable amounts fromcollateral 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 the purposes forwhich they are held, see Note 20, “SECURITIES AND MONEY HELD IN
TRUST.”

Call money and bills sold and 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.
Payables under repurchase agreements:
The carrying amount is presented as the fair value as the fair value isdeemed to approximate the carrying amount since the interest rate is thefloating interest rate which reflects the market interest rate due to theshort-term nature.
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 varysignificantly after executing the borrowing. The fair value of borrowed
money with fixed interest rates is computed, by discounting the aggregate
value of principal and interest at the interest rate assumed if the same borrowing were newly executed, for each category of type of maturities. As
for the borrowed money whose maturity is less than one year, the carrying
amount is presented as the fair value as the fair value approximates the
carrying amount.
Derivative transactions
For derivative transactions, see Note 21, “DERIVATIVE TRANSACTIONS.”

Consolidated Financial Statements

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 borrower does not vary significantly after
the loan is executed, 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 type of loan, internal rating and maturity. As for the loans whose maturity is less than one
year, the carrying amount is presented as the fair value as the fair value
approximates the carrying amount.
With respect to receivables from “bankrupt borrowers,” “effectively
bankrupt borrowers” and “likely to become bankrupt borrowers,” theamount of possible loan losses is computed based on the present value ofthe estimated future cash flow or the recoverable amounts from collateraland guarantees. Therefore, the fair value approximates the carrying amount,net of reserve for possible loan losses, and this amount is presented as thefair value.
The fair value of loans without a predetermined repayment date due tothe lending amount being limited within the value of the applicable collateral is presented using the carrying amount as the fair value is deemed toapproximate the carrying amount considering the estimated repayment
term and interest rate. 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, isdeemed to be the fair value. The fair value of time deposits is computed
using the present value by discounting future cash flows for each categoryof a certain period. The interest rate to be applied when a new deposit istaken is used as the discount rate. For deposits whose residual maturity isless than one year, the carrying amount is presented as the fair value as thefair value approximates the carrying amount.

(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

2019Unlisted equity securities (*1) (*2) ....................................................................
Investment in partnerships (*3) ..........................................................................
Total ....................................................................................................................

¥1,6395,776¥7,4152018¥1,6842,704¥4,3892019$14,767
52,040$66,807(*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) No impairment loss was recognized for either the fiscal year ended March 31, 2019 or 2018.
(*3) The fair value of unlisted equity securities among investment in partnerships is not disclosed since there were no market prices and it was extremely difficult to estimate the fair values.

33Consolidated Financial Statements(Note 3) Redemption schedule of monetary claims and securities with maturities
Millions of yen

2019
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 ...............................................................

Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years¥ 781,424
388
3,514
167,399
3,640
3,640

¥

—
—
—
196,765
7,995
7,995

¥

—
—
—
113,434
7,331
7,331

¥

—
—
—
53,186
1,755
1,755

163,759
153,500
5,695
2,564
2,000
470,631¥1,423,359

188,770
89,00033,02931,74035,000596,729¥793,494

106,102
27,00026,65043,794
8,657
529,312¥642,746

51,43040,000
6,304
5,126
—
358,355¥411,541

Due after sevenyears through ten
years

¥

Due after ten
years

—
—
—
126,299
—
—

¥

—
—
—
212,950——

126,299—
40,577
6,200
79,521
313,778¥440,077

212,950—
3,529
109,459
99,961
787,740¥1,000,691

Due after sevenyears through ten
years

Due after ten
years

Millions of yen

2018
Due within one
year or less

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

Due after three
years throughfive years

Due after five
years throughseven years¥ 773,023
489
2,983
103,940
2,597
2,597

¥

—
—
—
369,141
4,765
4,765

¥

—
—
—
179,538
5,287
5,287

¥

—
—
—
122,043
1,010
1,010

¥

—
—
—
183,985
—
—

¥

—
—
—
167,381——

101,343
53,00026,287
9,004
13,052479,864¥1,360,301

364,376
247,000
20,81330,53466,028618,828¥987,970

174,251
110,500
22,37338,296
3,080
471,773¥651,312

121,033
68,50031,412
20,377
743
338,806¥460,850

183,985—
66,757
14,004103,224
349,829¥533,814

167,381—
3,970
73,80189,609748,424¥915,806

Thousands of U.S. dollars

2019

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

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years$ 7,040,490
3,495
31,6601,508,234
32,79532,795$      ——
—1,772,817
72,03372,033$      ——
—1,022,020
66,05066,050$      ——
—479,196
15,812
15,812$      ——
—1,137,931——$      ——
—1,918,641——

1,475,439
1,383,007
51,31023,10118,0194,240,300$12,824,209

1,700,783
801,874
297,585
285,971
315,3435,376,421$7,149,238

955,959
243,265
240,111394,576
77,9984,769,006$5,791,026

463,375
360,392
56,797
46,184—3,228,714$3,707,910

1,137,931—
365,591
55,860716,469
2,827,083$3,965,014

1,918,641—
31,795986,205
900,630
7,097,396$9,016,046(*) Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers, which are not expected to be repaid, amounting to ¥35,530 million ($320,118 thousand) and¥40,490 million at March 31, 2019 and 2018, respectively, are not included.
Loans whose payment terms were not determined amounting to ¥300,243 million ($2,705,135 thousand) and ¥282,497 million at March 31, 2019 and 2018, respectively, are not included.

34

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

2019

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Call money and bills sold ...............................
Payables under repurchase agreements ..........
Payables under securities lending transactions ...
Borrowed money ............................................
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¥4,404,753
21,622—
13,710279,580
35,610¥4,755,276¥469,164——
28,890—78,927¥576,982¥ 30,110————
96,073¥126,183

¥—
—
—
—
—
37
¥37

¥—
—
—
—
—
—
¥—

¥—
—
—
—
—
—
¥—

Due after ten
years

Millions of yen

2018

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Call money and bills sold ...............................
Payables under repurchase agreements ..........
Payables under securities lending transactions ...
Borrowed money ............................................
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¥4,324,543
18,956531
47,045345,250
21,895¥4,758,222¥438,163————
164,522¥602,686¥ 54,939——
27,654—
21,862¥104,456

¥—
—
—
—
—
80
¥80

¥—
—
—
—
—
7
¥ 7

¥—
—
—
—
—
¥—

Thousands of U.S. dollars

2019
Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years$39,686,034
194,810—
123,524
2,518,965
320,839$42,844,184$4,227,083——
260,293—
711,118$5,198,504$ 271,285————
865,600$1,136,886

$ —
—
—
—
—
333
$333

$—
—
—
—
—
—
$—

$—
—
—
—
—
—
$—

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

20. 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, 2019 and 2018 was as follows:(a) Trading securities
Not applicable for the years ended March 31, 2019 and 2018

Consolidated Financial Statements

Deposits (*) ....................................................
Negotiable certificates of deposits .................
Call money and bills sold ...............................
Payables under repurchase agreements ..........
Payables under securities lending transactions ...
Borrowed money ............................................
Total ...............................................................

Due within one
year or lessDue after one
year throughthree years(b) Held-to-maturity debt securities
Millions of yen

2019
Carrying amount

Fair value

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

Unrealized gains (losses)¥19,028¥19,028¥19,103¥19,103¥75¥75

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

¥ 1,694¥ 1,694¥20,722¥ 1,692¥ 1,692¥20,796

¥ (1)
¥ (1)
¥74

35

Consolidated Financial Statements

Millions of yen

2018
Carrying amount

Fair value

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

Unrealized gains (losses)¥10,308¥10,308¥10,351¥10,351¥ 43¥ 43

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

¥ 3,352¥ 3,352¥13,660¥ 3,324¥ 3,324¥13,676

¥(27)
¥(27)
¥ 15

Thousands of U.S. dollars

2019
Carrying amount

Fair value

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

Unrealized gains (losses)$171,438$171,438$172,114$172,114

$675
$675

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

$ 15,262$ 15,262$186,701$ 15,244$ 15,244$187,368

$ (9)
$ (9)
$666

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

2019

Consolidated Financial Statements
36

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¥

91,044
634,334
315,130
117,925
201,278
462,349
191,611¥1,187,728¥

47,780623,759
309,636
115,718
198,404
454,282
187,511¥1,125,823¥43,263
10,574
5,493
2,206
2,874
8,066
4,099
¥61,905¥¥¥ (852)(0)——(0)(9,055)(1,364)¥ (9,908)¥51,997

9,379
929
—
70
859
206,604
55,296¥ 216,913¥1,404,641

10,231929—
70
859
215,659
56,661¥ 226,821¥1,352,644

Unrealized gains (losses)

Millions of yen

2018
Carrying amount

Acquisition cost

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

Unrealized gains (losses)¥ 104,803
814,404
490,505
167,470
156,428
145,529
114,646¥1,064,737¥

48,469796,656
480,043
162,894
153,719
141,479
111,406¥ 986,605¥ 56,333
17,747
10,462
4,576
2,709
4,050
3,239
¥ 78,131

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

¥5,79940,777—
8,566
32,210409,785
185,397¥ 456,362¥1,521,099¥6,21441,062—
8,702
32,359425,852
190,542¥ 473,128¥1,459,734¥(414)
(285)
—
(136)
(148)
(16,066)(5,144)¥(16,766)¥ 61,365

Thousands of U.S. dollars

2019
Carrying amount

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

Unrealized gains (losses)$

820,290
5,715,235
2,839,264
1,062,483
1,813,478
4,165,681
1,726,380$10,701,216$

430,489
5,619,956
2,789,764
1,042,598
1,787,584
4,092,999
1,689,440$10,143,463$389,791
95,26949,49019,87525,894
72,67336,931$557,752$$$ (7,676)
(0)
—
—
(0)
(81,583)(12,289)$ (89,269)$468,483

84,503
8,370
—
630
7,739
1,861,464
498,207$ 1,954,347$12,655,563

92,179
8,370
—
630
7,739
1,943,048
510,505$ 2,043,616$12,187,079

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

Acquisition cost

The securities loaned under unsecured securities lending transactions are included in Japanese government bonds under “Securities” in the amount of¥30,683 million ($276,448 thousand) and ¥20,790 at March 31, 2019 and 2018, respectively.
(2) Held-to-maturity debt securities sold for the fiscal years ended March 31, 2019 and 2018
Millions of yen

2019

Bonds .........................................................................................................
Japanese corporate bonds ......................................................................
Total ...........................................................................................................

Sales amount

Gains on sales

¥50
50
¥50

¥0
0
¥0

Losses on sales

¥—
—
¥—

Millions of yen

2018

Bonds .........................................................................................................
Japanese corporate bonds ......................................................................
Total ...........................................................................................................

Sales amount

Gains on sales

¥110
110
¥110

¥0
0
¥0

Losses on sales

¥—
—
¥—

37

Consolidated Financial Statements

Thousands of U.S. dollars

2019
Sales amount

Gains on sales

$450
450
$450

$0
0
$0

Bonds .........................................................................................................
Japanese corporate bonds ......................................................................
Total ...........................................................................................................

Losses on sales

$—
—
$—

(Reason for sale) Sales of Japanese corporate bonds comprise retirement by purchase of private bonds.
(3) Available-for-sale securities sold for the fiscal years ended March 31, 2019 and 2018
Millions of yen

2019

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

Sales amount

Gains on sales

Losses on sales¥ 18,088
246,249
154,797
71,004
20,447
314,626
283,325¥578,964¥ 6,402
4,807
2,355
1,986
465
4,719
4,077
¥15,929¥1,177
18
16
0
1
7,019
5,889
¥8,214

Millions of yen

2018

Consolidated Financial Statements

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

Sales amount

Gains on sales

Losses on sales¥ 11,547
88,271
84,563239
3,468
205,830
196,624¥305,649¥3,357
345
339
—
5
2,254
1,528
¥5,957

¥ 216
12
—
0
11
3,569
3,215
¥3,798

Thousands of U.S. dollars

2019

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

Sales amount

Gains on sales

Losses on sales$ 162,969
2,218,659
1,394,693
639,733
184,223
2,834,723
2,552,707$5,216,361$ 57,680
43,31021,21817,893
4,189
42,51736,733$143,517$10,604
162
144
0
963,23953,058$74,006(4) Information on money held in trust at March 31, 2019 and 2018 was as follows:
Money held in trust for trading purposes
Thousands of
U.S. dollars

Millions of yen

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

2019

2018

2019

¥33,000
21¥33,000
30$297,324
189

Other money held in trust for purposes other than investment or holding to maturity
Thousands of
U.S. dollars

Millions of yen

2019

Carrying amount .................................................................................................
Acquisition cost ....................................................................................................
Difference .............................................................................................................
Unrealized gain ................................................................................................
Unrealized loss .................................................................................................

38¥1,070
1,070
—
—
—

2018

2019

¥—
—
—
—
—

$9,6409,640———

The principal amount in trust with contracts to compensate losses on the principal was as follows:
Thousands of
U.S. dollars

Millions of yen

2019

Money in trust .....................................................................................................

2018¥6,4462019¥2,850$58,077(5) The components of the valuation difference on available-for-sale securities recorded under net assets at March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

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

2019

2018

2019

¥ 51,997(13,309)¥ 38,687—¥ 38,687¥ 61,365(16,036)¥ 45,328—¥ 45,328$ 468,483(119,911)$ 348,562—$ 348,562(6) Securities reclassified for the fiscal years ended March 31, 2019 and 2018
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 from the acquisition cost and the fairvalue 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
has declined by more than 50% of the acquisition cost or (ii) the fair value as of the end of the fiscal year has declined by more than 30% but less than 50%of the acquisition cost, and is not expected to recover within one year. The Bank recognized impairment loss of ¥335 million ($3,018 thousand) on stocks
for the fiscal year ended March 31, 2019. No impairment loss was recognized for the fiscal year ended March 31, 2018.

(a) Interest rate related transactions
Millions of yen

2019
Category

Transaction typeInterest rate futures
Sold ..........................................................
Bought ......................................................
Interest rate options
Sold ..........................................................
Bought ......................................................
Over-the-counter Forward rate agreements
transactions
Sold ..........................................................
Bought ......................................................
Interest rate swaps
Receive fixed rate/pay floating rate ..........
Receive floating rate/pay fixed rate ..........
Receive floating rate/pay floating rate ......
Interest rate options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount

Exchangetransactions

Contract amount due
after one year

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

¥2,1825,040—¥2,182
3,880
—

¥ 77
(114)
—

¥ 77
(114)
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
¥ (36)——¥ (36)¥¥

Consolidated Financial Statements

21. 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 the method used to calculate fair value by transaction type as of March 31, 2019 and 2018 were as follows.
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.

39

Consolidated Financial Statements

Millions of yen

2018
Category

Transaction typeInterest rate futures
Sold ..........................................................
Bought ......................................................
Interest rate options
Sold ..........................................................
Bought ......................................................
Over-the-counter Forward rate agreements
transactions
Sold ..........................................................
Bought ......................................................
Interest rate swaps
Receive fixed rate/pay floating rate ..........
Receive floating rate/pay fixed rate ..........
Receive floating rate/pay floating rate ......
Interest rate options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount

Exchangetransactions

Contract amount due
after one year

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

¥ 500
3,813
—

¥ 500
3,813
—

¥ 22
(140)
—

¥ 22
(140)
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
¥(117)——¥(117)¥¥

Thousands of U.S. dollars

2019
Category

Transaction type

Consolidated Financial Statements

Interest rate futures
Sold ..........................................................
Bought ......................................................
Interest rate options
Sold ..........................................................
Bought ......................................................
Over-the-counter Forward rate agreements
transactions
Sold ..........................................................
Bought ......................................................
Interest rate swaps
Receive fixed rate/pay floating rate ..........
Receive floating rate/pay fixed rate ..........
Receive floating rate/pay floating rate ......
Interest rate options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount

Exchangetransactions

Contract amount due
after one year

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

$19,659
45,409—$19,659
34,958—$ 693(1,027)—$ 693(1,027)
—

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
$ (324)——$ (324)$$

Notes: 1. The above transactions are measured at fair value, and unrealized gains (losses), except as in Note 3, are recognized in the consolidated statements of income.
2. The fair values of exchange transactions are based on the closing prices on 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. As of March 31, 2019 and 2018, “Receive floating rate/pay fixed rate” of interest rate swaps included the contract amount of ¥2,858 million ($25,750 thousand) and ¥3,313 million, fair value of ¥(86) million ($(774) thousand) and ¥(136) million and unrealized gains (losses) of ¥(86) million ($(774) thousand) and ¥(136) million, respectively, for which
the application of hedge accounting was cancelled since the requirements for hedge accounting were not met. Unrealized gains (losses) on “Receive floating rate/pay fixed rate”
of ¥(100) million ($(900) thousand) and ¥(146) million at March 31, 2019 and 2018, respectively, were deferred over the hedge period due to the cancellation.

40

(b) Currency related transactions
Millions of yen

2019
Category

Transaction type

Contract amount

Exchangetransactions

Currency futures
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Over-the-counter Currency swaps ...........................................
transactions
Forward foreign exchange contracts
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount due
after one year

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—
¥429,749——¥292,038

—
—
¥295

—
—
¥295

8,084
1,897

566
—

(44)
19

(44)
19

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
¥270

—
—
¥270

¥

¥

Millions of yen

2018
Category

Transaction type

Contract amount

Exchangetransactions

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—
¥455,423——¥314,731——¥2,458——¥2,458

7,648
945

1,057
—

147
(2)

147
(2)

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
¥2,603——¥2,603¥¥Thousands of U.S. dollars

Consolidated Financial Statements

Currency futures
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Over-the-counter Currency swaps ...........................................
transactions
Forward foreign exchange contracts
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount due
after one year

2019
Category

Transaction type

Currency futures
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Over-the-counter Currency swaps ...........................................
transactions
Forward foreign exchange contracts
Sold ..........................................................
Bought ......................................................
Currency options
Sold ..........................................................
Bought ......................................................
Other
Sold ..........................................................
Bought ......................................................
Total ........................................................................................

Contract amount

Exchangetransactions

Contract amount due
after one year

Fair value

Unrealized gains (losses)

—
—

—
—

—
—

—
—

—
—
$3,871,961——$2,631,210——$2,657——$2,657

72,83517,091

5,099
—

(396)
171

(396)
171

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
$2,432——$2,432$$

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.

41Consolidated Financial Statements(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 and themethod used to calculate fair value by transaction type and by hedge accounting method as of March 31, 2019 and 2018 were as follows. Note that thecontract amount does not represent the market risk exposure of the derivative transactions themselves.
(a)Interest rate related transactions
Millions of yen

2019
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

Consolidated Financial Statements

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

Fair value

—

—

—

¥5,505¥5,072¥(221)

—
—
—

—
—
—

—
—
—

—

—

—

—
—

—
¥(221)¥——¥

Millions of yen

2018
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—
method for interest rate
Receive fixed rate/pay
swaps
floating rate
Receive floating rate/pay
fixed rate
Total
—

42

Contract amountContract amount due after
one yearContract amountContract amount due after
one year

Fair value

—

—

—

¥6,479¥6,186¥(287)

—
—
—

—
—
—

—
—
—

—

—

—

—
—

—
¥(287)¥——¥

Thousands of U.S. dollars

2019
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—
method for interest rate
Receive fixed rate/pay
swaps
floating rate
Receive floating rate/pay
fixed rate
Total—

Contract amount due after
one yearContract amount

Fair value

—

—

—

$49,599$45,697$(1,991)

—
—
—

—
—
—

—
—
—

—

—

—

—
—

—
$(1,991)

$

—
—

$

Notes: 1. Gain/loss on the above contracts 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, February 13, 2002).
2. The fair values of exchange transactions are based on the closing prices on 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.

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

Consolidated Financial Statements

22. PROJECTED BENEFIT OBLIGATIONS(1) Outline of employees’ retirement allowance
The Bank provides a non-contributory unfunded lump-sum retirement allowance plan, a funded defined benefit pension plan, and a funded defined contribution pension plan for employees.
On April 1, 2018, the Bank transferred its defined benefit pension plans to risk sharing pension plans and defined contribution pension plans classified
as a defined contribution plan provided in Paragraph 4 of “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, December 16, 2016). In
addition, a plan similar to a cash balance plan has been introduced to some of the employees subject to the risk sharing pension plans.
In addition to the amounts that are equivalent to standard contributions, the Bank makes contributions to risk sharing pension plans that are commensurate with risks as prescribed in the plan terms. Benefits from the risk sharing pension plans increase or decrease each fiscal year based on the assets of thepension plan.
Under the plan similar to a cash balance plan, a virtual individual account balance corresponding to the funded amounts and source of pension funds will
be set up for each participant, and after retirement, interest principally based on market interest rate trends will be credited to the balance.
Twelve 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 using the method in which the necessary amounts to be paid
for retirement benefits on a voluntary basis is regarded as the retirement benefit obligations.
Certain consolidated subsidiaries participate in the Smaller Enterprise Retirement Allowance Mutual Aid Scheme (the “SERAMA Scheme”).
(2) Defined benefit plans(a) Movement in projected benefit obligations
Thousands of
U.S. dollars

Millions of yen

Balance at the beginning of the fiscal year .........................................................
Effects from transition to risk sharing pension plans .....................................
Balance at the beginning of the fiscal year reflecting transition to risk sharing pension plans ...
Service cost ....................................................................................................
Interest cost ....................................................................................................
Actuarial (gain) loss .......................................................................................
Benefits paid ...................................................................................................
Increase due to new consolidation .................................................................
Balance at the end of the fiscal year ...................................................................
Note:

2019

2018

2019

¥ 65,008(53,679)
11,329
719
75
(200)
(652)
52
¥ 11,324¥65,400—
65,400
2,084
454
(325)
(2,605)—¥65,008$ 585,710(483,638)
102,072
6,478
675(1,801)(5,874)468$ 102,027

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

43

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

Millions of yen

Balance at the beginning of the fiscal year .........................................................
Effects from transition to risk sharing pension plans .....................................
Transfer to the funded assets under the SERAMA Scheme ...........................
Balance at the beginning of the fiscal year reflecting transition
to risk sharing pension plans ..............................................................................
Expected return on plan assets ...........................................................................
Actuarial gain (loss) ...........................................................................................
Contributions paid by the employer ...................................................................
Benefits paid .......................................................................................................
Balance at the end of the fiscal year ...................................................................
Note:

2019

2018

2019

¥ 43,072(42,913)(158)¥40,284——$ 388,070(386,638)(1,423)

—
—
—
—
—
—

—
804
1,541
2,307
(1,866)¥43,072

—
—
—
—
—
—

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

Funded projected benefit obligations ..................................................................
Plan assets ...........................................................................................................
Funded assets under the SERAMA Scheme ......................................................
Unfunded projected benefit obligations ..............................................................
Net liability for retirement benefits recorded on the consolidatedbalance sheet .......................................................................................................

Consolidated Financial Statements

Liability for retirement benefits ..........................................................................
Asset for retirement benefits ...............................................................................
Net liability for retirement benefits recorded on the consolidatedbalance sheet .......................................................................................................
Note:

2019

2018

2019

¥

342
—
(171)
170
10,981¥ 53,982(43,072)—
10,91011,025$¥11,152¥ 21,936$100,477¥11,152—¥ 21,936—$100,477—¥11,152¥ 21,936$100,477

3,081—(1,540)
1,531
98,936

Plans based on the simplified method have been included in the above.
Funded assets under the SERAMA Scheme which was previously included in plan assets are separately presented from the year ended March 31, 2019.

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

Millions of yen

2019Service cost .........................................................................................................
Interest cost .........................................................................................................
Expected return on plan assets ...........................................................................
Net actuarial loss amortization ...........................................................................
Total retirement benefit costs ..............................................................................

2018

¥ 719
75
—
222
¥1,017¥2,084
454
(804)
1,910
¥3,6452019$6,478675—
2,000$9,162

Note: Retirement benefit costs of consolidated subsidiaries which have applied the simplified method are included in “Service cost.”
	In the year ended March 31, 2019, the Bank recorded other income of ¥4,784 million ($43,102 thousand) following the transfer of defined benefit pension plans to risk sharing pension plans and defined contribution pension plans.

(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

2019

Actuarial gain (loss) ...........................................................................................
Total ....................................................................................................................

2018¥5,039¥5,039¥3,777¥3,777

2019$45,400$45,400

Note:	The above actuarial gain (loss) at March 31, 2019 includes reclassification adjustments of ¥4,616 million ($41,589 thousand) following the transition to risk sharing pension plansand defined contribution pension plans.

(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 ....................................................................................................................

44

2019

2018

2019

¥(1,003)¥(1,003)¥(6,043)¥(6,043)$(9,036)$(9,036)(g) Plan assets
Plan assets comprise:
2019

2018

—%
—%
—%
—%
—%
—%

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

14.6%
31.1%
2.4%
32.9%
19.0%
100%

(h) Actuarial assumptions
The principal actuarial assumptions for the fiscal years ended March 31, 2019 and 2018 were as follows:
2019

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

2018

0.70%
—%
3.90%

0.70%
2.00%
3.90%

(3) Defined contribution plans(a) Retirement benefit costs for defined contribution plans
Contributions that the Bank is required to pay to the Bank’s defined contribution plans newly established in the year ended March 31, 2019 was ¥629 million($5,667 thousand).
(b) The amounts equivalent to contributions commensurate with risks
There is no amount equivalent to premiums corresponding to risks required to be contributed in the fiscal year ended March 31, 2019 or 2018.

23. STOCK OPTIONS(a) Items and amounts expensed related to stock options
Thousands of
U.S. dollars

Millions of yen

2019

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

2018

¥19

2019

¥20

$171

Consolidated Financial Statements(c) Other matters
The total amounts equivalent to special contributions included in the contributions prescribed in the agreement at the transition to a risk sharing pension planwas ¥1,364 million ($12,289 thousand) and the amounts equivalent to special contributions of ¥904 million ($8,144 thousand) at March 31, 2019 was recorded under other liabilities.
The number of years remaining for contributions equivalent to special contributions is two years.

45Consolidated Financial Statements(b) Stock options outstanding at March 31, 2019a. Outline of stock options
Beneficiaries qualifying for stock option rights are entitled to acquire shares of common stock upon the exercise of their rights. The following table summarizes the number of shares upon exercise of the stock option rights granted by the Bank outstanding at March 31, 2019:
Stock
options

Persons
granted2010
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
13 directors(excluding
outsidedirectors)of the Bank
7 directors(excluding
outsidedirectors)of the Bank
7 directors(excluding
outsidedirectors)of the Bank
7 directors(excluding
outsidedirectors)of the Bank

2015
Stock Options

2016
Stock Options

2017
Stock Options

Consolidated Financial Statements

2018
Stock Options

Note:

Date of
grant

Exercise
price

ExerciseperiodVesting
conditions

Target ofservice period

Common stock
9,440 shares
Common stock
10,940 shares
Common stock
13,620 shares
Common stock
11,950 shares
Common stock
9,970 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

Common stock
8,400 shares

July 24, 2015

¥1($0.00)From July 25, 2015
to July 24, 2045

Not definedNot defined

Common stock
6,560 shares

July 29, 2016¥1($0.00)From July 30, 2016
to July 29, 2046

Not definedNot defined

Common stock
6,910 shares

July 28, 2017¥1($0.00)From July 29, 2017
to July 28, 2047

Not definedNot defined

Common stock
7,800 shares

July 27, 2018¥1($0.00)From July 28, 2018
to July 27, 2048

Not definedNot defined

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

The number of stock options has been converted to the number of shares after the one-for-ten reverse stock split implemented on October 1, 2016.

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

2010
2011
2012
2013
2014
2015
2016
2017
2018
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

Nonvested
March 31, 2018 – Outstanding .....
Granted .........................................
Forfeited .......................................
Vested ...........................................
March 31, 2019 – Outstanding .....
VestedMarch 31, 2018 – Outstanding .....
Vested ...........................................
Exercised ......................................
Forfeited .......................................
March 31, 2019 – Outstanding .....
Note:

46

Number ofoptions granted(Note)

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

1,468
—
—
1,468
—

—
7,800
460
5,620
1,720

2,020
—
500
—
1,520

2,590
—
640
—
1,950

3,870
—
870
—
3,000

4,060
—
1,400
—
2,660

3,580
—
1,200
—
2,380

4,540
—
1,230
—
3,310

5,600
—
1,630
—
3,970

5,182
1,468
1,570
—
5,080

—
5,620
460
—
5,160

The number of stock options has been converted to the number of shares after the one-for-ten reverse stock split implemented on October 1, 2016.

2) Price information
Yen

2010
2011
2012
2013
2014
2015
2016
2017
2018
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

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

¥

1
2,838
4,410

¥ 1
2,838
3,860

¥

1
2,838
3,030

¥

1
2,525
3,720

¥

1
2,525
4,010

¥

1
2,544
3,970

¥

1
2,510
3,660

¥

1
2,479
2,861

¥

1
2,143
2,663

U.S. dollars

2010
2011
2012
2013
2014
2015
2016
2017
2018
Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options Stock Options

Exercise price....................................
Average stock price at exercise date...
Fair value price at grant date.............
Note:$ 0.0025.56
39.73$ 0.0025.56
34.77$ 0.0025.56
27.29$ 0.0022.74
33.51$ 0.0022.74
36.12$ 0.0022.92
35.76$ 0.0022.61
32.97$ 0.0022.33
25.77$ 0.0019.30
23.99“Average stock price at exercise date” and “Fair value price at grant date” have been calculated after the one-for-ten reverse stock split implemented on October 1, 2016.

(c) Assumptions used to measure the fair value of stock options
The assumptions used to measure the fair value of 2018 Stock Options granted in the fiscal year ended March 31, 2019 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: 28.30% calculated using the market price of the Bank’s stock from March 2013 to July 2018.
2.	Estimated remaining outstanding period: 5.4 years, which was the average remaining tenure of directors at the date of issue, determined by theaverage time from appointment to retirement and from appointment to the date of issue.
3. Estimated dividend: ¥70 per share, which was calculated based on the actual amount of dividends for the fiscal year ended March 31, 2018.
4. Risk-free interest rate: (0.07) %, 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.

Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Excess reserve for possible loan losses ..........................................................
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 (Note 1) .............................................................................
Total deferred tax assets ...................................................................................
Deferred tax liabilities: .....................................................................................
Valuation difference on available-for-sale securities .....................................
Other ...............................................................................................................
Total deferred tax liabilities .............................................................................
Net deferred tax liabilities ................................................................................
Note:

2019

2018

2019

¥ 5,892
3,398
819
872
1,258
2,967
133
91
1,937
17,371(7,042)
10,329¥ 6,383
6,676
797
1,029
1,276
2,989
25
123
1,742
21,044(7,458)13,585$ 53,085
30,615
7,379
7,856
11,334
26,732
1,198
819
17,452
156,509(63,447)
93,062(13,309)(69)(13,378)¥ (3,049)(16,036)(39)(16,075)¥ (2,490)(119,911)(621)(120,533)$ (27,470)

Consolidated Financial Statements

24. INCOME TAXESThe Group is subject to a number of taxes based on income, including corporation tax, inhabitant tax and enterprise tax, which, in the aggregate, indicate astatutory tax rate in Japan of approximately 30.4 % for the fiscal years ended March 31, 2019 and 2018.
Significant components of deferred tax assets and liabilities as of March 31, 2019 and 2018 were as follows:

Net deferred tax liabilities as of March 31, 2019 and 2018 are included in the following accounts in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen

2019

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

¥1,311
4,360

2018¥1,281
3,771

2019$11,81139,282

Notes: 1. A major component of the change in valuation allowance was a decrease in valuation allowance related to reserve for possible loan losses.
2. As described in “Changes in Accounting Policies,” the Bank adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28,
February 16, 2018) from the year ended March 31, 2019 and changed the treatments of deductible temporary differences related to the shares of subsidiaries, etc.
		 This accounting standard was retroactively applied to the figures for the year ended March 31, 2018.

47

Consolidated Financial Statements

The 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, 2019 and 2018:
Statutory tax rate ...........................................................................................................................................
Valuation allowance .................................................................................................................................
Non-deductible expenses ..........................................................................................................................
Non-taxable income .................................................................................................................................
Other .........................................................................................................................................................
Effective tax rate ...........................................................................................................................................

2019

2018

30.4%
(2.7)%
0.3%(1.0)%
0.7%
27.7%

30.4%
(4.3)%
0.2%(0.7)%
1.3%
26.9%

25. BUSINESS COMBINATIONSBusiness combination through acquisitiona. Outline of the business combination
The Bank has resolved to conclude a share transfer agreement with shareholders of NARA SECURITIES CO., LTD. (“NARA SECURITIES”) at the meeting of the Board of Directors held on August 3, 2018 in order to make it the Bank’s subsidiary by acquiring its shares. As a result, the shares of NARASECURITIES were acquired on October 1, 2018 and the company became a wholly owned subsidiary (with 100% portion of voting rights) on November
16, 2018.
(1) Name and business of the acquired company
Name:
NARA SECURITIES CO., LTD.
Business: Financial instruments business operator(2) Major reason for the business combination
The agreement aims to integrate the customer bases and know-how accumulated by the Bank and NARA SECURITIES and strengthen Group functions bymaking it a wholly owned subsidiary, enabling it to better provide a wide range of solutions and further contributing to the asset formation of local customers and the development of the regional society.
(3) Date of business combination
October 1, 2018

Consolidated Financial Statements(4) Legal form of the business combination
Share acquisition in consideration for cash(5) Name of the company after the business combination
NARA SECURITIES CO., LTD., whose trade name was changed to Nanto Mahoroba Securities Co., Ltd. on March 18, 2019(6) Ratio of voting rights acquired
Ratio of voting rights owned immediately prior to the acquisition: 2.53%
Ratio of voting rights additionally acquired:97.47%
Ratio of voting rights owned after the acquisition:
100%(7) Main basis behind the determination of the acquiring company
Determination of the Bank as the acquiring company is based on the fact that the Bank acquired 100% of voting rights by means of share acquisition inconsideration for cash.
b. The period for which the operations of the acquired company are included in the consolidated statements of income
From October 1, 2018 to March 31, 2019c. Acquisition cost of the acquired company and related details of each class of consideration
Fair value of shares owned immediately prior to the acquisitionon the date of business combination ........................................................................................................
Consideration for additional acquisition (cash) .......................................................................................
Acquisition cost .......................................................................................................................................

Millions of yen

Thousands of
U.S. dollars

¥ 22
875
¥898

$ 198
7,883
$8,090d. Details and amount of major acquisition-related cost
Advisory fees and commissions: ¥31 million ($279 thousand)e. Difference between acquisition cost of the acquired company and the total acquisition cost of individual transactions leading to the acquisition¥12 million ($108 thousand)Gain on step acquisitions:48

f. The amount of gain on negative goodwill and the reason for its occurrence(1) Amount of gain on negative goodwill¥14 million ($126 thousand)(2) Reasons for its occurrence
Gain on negative goodwill was recorded because the fair value of the net assets acquired at the time of the business combination exceeded the acquisition
costs.
g. The amounts of assets acquired and the liabilities assumed at the date of business combination. There is no “breakdown.”
Millions of yen

Thousands of
U.S. dollars¥1,984
1,071$17,875
9,649

Total assets ...............................................................................................................................................
Total liabilities .........................................................................................................................................

h. Estimated effect on the consolidated statements of income assuming the business combination had been completed at the beginning of the consolidated
fiscal year ended March 31, 2019
Millions of yen

Thousands of
U.S. dollars

¥185
160
25
23

$1,666
1,441
225
207

Ordinary income ......................................................................................................................................
Ordinary expenses ...................................................................................................................................
Ordinary profit .........................................................................................................................................
Net income attributable to owners of parent ............................................................................................

26. 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 the segments within theGroup. The Group’s main operations are banking services. The Bank also provides securities services and operates credit guarantee services, leasing services and credit card services. The Group has divided its business operations into the two reportable segments of “Banking” and “Leasing.”
From the year ended March 31, 2019, the name of the reportable segment “Banking and Securities” has been changed to “Banking.” This change only
concerns the segment name and there will be no effect on segment information.

(3) Information about reportable segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the fiscal years ended March 31, 2019 and 2018 is summarized as follows:
Millions of yen

2019
Reportable segments

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

¥

Banking

Leasing

72,5391,048
73,587
10,2585,782,222
5,503,239¥ 6,525
857
7,382
270
31,71327,294

3,238
45,149
3,939
4,806
70
3,850
3,884

Total

¥

Other

Total

¥

81,495
3,998
85,493
11,2595,838,167
5,541,653

Adjustment

Consolidated¥¥

79,065
1,905
80,97010,5295,813,935
5,530,534¥ 2,429
2,093
4,522
729
24,231
11,11986(3,998)(3,911)(535)(39,296)(32,635)

128
4
89
—
0
73

3,366
45,153
4,028
4,806
70
3,924

125
39
8
—
18
354

3,492
45,193
4,036
4,806
89
4,278

89
(512)
(106)
27
—
14

3,582
44,680
3,930
4,833
89
4,293

135

4,019

230

4,250

(29)

4,220

Consolidated Financial Statements(2) Basis of measurement for reported segment profit (loss), segment assets, segment liabilities and other material items
The accounting methods used for reportable business segments are 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.

81,581—
81,581
10,723
5,798,870
5,509,018

49

Consolidated Financial Statements

Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operatingcompanies 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, software development, credit cards and securities.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥86 million is mainly the recovery of written-off claims included in “Others.”		 (2) Adjustment of segment profit of negative ¥535 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥39,296 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥32,635 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of ¥89 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥512 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥106 million is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of ¥27 million is due to a business combination by acquisition.
		 (9) Adjustment of tax expense of ¥14 million is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of negative ¥29 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss
included in “Other expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before
income taxes” through the addition/deduction of extraordinary gain/loss, net.
Millions of yen

2018
Reportable segments

Consolidated Financial Statements
50

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

¥

Banking

Leasing

71,848748
72,596
17,1755,791,792
5,514,958¥ 5,766
952
6,718
475
26,75522,354

3,348
51,040
3,825
—
22
4,329
2,813

Total

¥

Other

Total

¥

79,832
3,787
83,62018,633
5,837,313
5,546,863

Adjustment

Consolidated¥¥

77,6141,700
79,315
17,6505,818,547
5,537,313¥ 2,217
2,086
4,304
982
18,7659,549

67(3,787)(3,720)(494)(28,879)(22,598)

79,899—79,89918,1395,808,433
5,524,265

118
2
92
—
0
129

3,467
51,043
3,917
—
23
4,459

91
31
7
—
101
403

3,558
51,074
3,924
—
124
4,862

63
(509)
(107)
—
—
(8)

3,622
50,565
3,817
—
124
4,854

205

3,019

689

3,709

(80)

3,628

Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operatingcompanies 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, software development and credit cards.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of ¥67 million is mainly the recovery of written-off claims included in “Leasing.”		 (2) Adjustment of segment profit of negative ¥494 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥28,879 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥22,598 million is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of ¥63 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥509 million is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative ¥107 million is the elimination of intersegment transactions.
		 (8) Adjustment of tax expense of negative ¥8 million is the elimination of intersegment transactions.
		 (9) Adjustment of increase in tangible and intangible fixed assets of negative ¥80 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss
included in “Other expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before
income taxes” through the addition/deduction of extraordinary gain/loss, net.

Thousands of U.S. dollars

2019
Reportable segments
Banking

Ordinary income:Outside customers ...................................... $ 653,563
Intersegment income ...................................
9,442
Total ........................................................
663,005
Segment profit .................................................
92,422
Segment assets ................................................ 52,096,783
Segment liabilities ........................................... 49,583,196
Others:Depreciation ...............................................
29,173406,784
Interest income ...........................................
Interest expense ..........................................
35,489Extraordinary gain ......................................
43,301
Extraordinary loss .......................................
630
Tax expense ................................................
34,687
Increase in tangible
and intangible fixed assets ..........................

34,994

Leasing

Total

Other

712,361
17,163
729,525
94,864
52,382,511
49,829,119$ 21,884
18,85740,742
6,568
218,316
100,180

1,153
36
801
—
0
657

30,327
406,820
36,29143,301630
35,354

1,126
351
72
—
162
3,189

1,216

36,2102,072$ 58,789
7,721
66,5102,432
285,728
245,914

$

Total

$

Adjustment

Consolidated$

774(36,021)(35,237)(4,820)(354,049)(294,035)

735,030—
735,030
96,612
52,246,778
49,635,264

31,462
407,180
36,36343,301
801
38,544801(4,613)
(955)
243
—
126

32,273
402,558
35,40843,544801
38,67938,291(261)

38,021

734,255
36,021
770,276
101,441
52,600,837
49,929,299(4) Information about services
Millions of yen

2019

Ordinary income from outside customers ......

Lending

Securities andinvestments¥30,582¥30,096

Leasing¥6,525

Other

Total

¥14,376¥81,581

Consolidated Financial Statements

Notes: 1.	Ordinary income (“Total income” less extraordinary gain included in “Other income” in the consolidated statements of income) is presented in place of net sales of operatingcompanies 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, software development, credit cards and securities.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of $774 thousand is mainly the recovery of written-off claims included in “Others.”		 (2) Adjustment of segment profit of negative $4,820 thousand is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative $354,049 thousand is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative $294,035 thousand is the elimination of intersegment transactions and the adjustment of liability for retirement benefits.
		 (5) Adjustment of depreciation of $801 thousand is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative $4,613 thousand is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative $955 thousand is the elimination of intersegment transactions.
		 (8) Adjustment of extraordinary gain of $243 thousand is due to a business combination by acquisition.
		 (9) Adjustment of tax expense of negative $126 thousand is the elimination of intersegment transactions.
		 (10) Adjustment of increase in tangible and intangible fixed assets of negative $261 thousand is the elimination of intersegment transactions.
4.	Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent “Total expenses” less extraordinary loss
included in “Other expenses” in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to “Income before
income taxes” through the addition/deduction of extraordinary gain/loss, net.

Millions of yen

2018

Ordinary income from outside customers ......

Lending

Securities andinvestments¥30,967¥25,989

Leasing¥5,766

Other

Total

¥17,177¥79,899

Thousands of U.S. dollars

2019

Ordinary income from outside customers ......
Note:

Lending

Securities andinvestments

Leasing

Other

Total

$275,538$271,159$58,789$129,525$735,030

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, 2019 and 2018; therefore, no information about geographic areas is required to be disclosed.

51

Consolidated Financial Statements

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, 2019 and 2018; therefore, no information about geographic areas is required to be disclosed.
(6) Information about major customers
There was no ordinary income from a specific customer exceeding 10% of the total consolidated ordinary income for either the fiscal year ended March 31,
2019 or 2018. Therefore, information about major customers is not required to be disclosed.
(7) Information on impairment loss on fixed assets for each reportable segment
Millions of yen

2019
Reportable segments
Banking

Leasing¥41

Impairment loss ..............................................

Other

¥—

Total

¥—

¥41

Millions of yen

2018
Reportable segments
Banking

Impairment loss ..............................................

Leasing

¥—

Other

¥—

Total

¥95

¥95

Thousands of U.S. dollars

2019
Reportable segments
Banking

Note:

Leasing$369

Impairment loss ............................................

Other

$—

Total

$—

$369

“Other” comprises real estate leasing and management.

(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.

Consolidated Financial Statements(9) Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill for the year ended March 31, 2018.
Information on gain on negative goodwill is omitted for the year ended March 31, 2019 as it is considered immaterial.
27. RELATED PARTY TRANSACTIONS
For the fiscal year ended March 31, 2019, related party transactions were as follows:
Relationshipwith the Bank

Relatives ofofficers of the
Bank

A company inwhich amajority ofvoting rights
are held byrelatives ofofficers of the
Bank

Name

Paid-in Occupa- Voting
capitalrightsLocation (millions
tion/ ownershipof yen) Business(%)

Relationship ofrelated parties

Details oftransactions

Second son of Yasuo
Ueno(Director &Lending of money*2
ChairmanInterest receivableof the Bank)
Loans
Eldest son of
Masaaki Hashimoto Lending of money*2(Corporate Auditor) Interest receivable
Loans
Son-in-law ofSatoru Wada
Lending of money*2(Executive Officer) Interest receivable
Loans

Kohei Ueno——

Officeworker—AtsutoHashimoto——Publicofficer—

Masato Ibi——

Officeworker—

NIKKEN
BLAST CO., Daito City
Osaka
LTD. *3

10

Metalprocessing

—

Loans

Kitamura
Osaka City
Forestry Co., Osaka
Ltd.*432

Forestry

Direct1.28

Loans

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

—
0

—
0

Loans
—

21
—

189
—

—
0

—
0

Loans
—

17
—

153
—

—
0

—
0

Loans
—

25
—

225
—

Lending of money
Interest receivable

—
0

—
0

Loans
—

36
—

324
—

Lending of money
Interest receivable

200
2

1,801
18

Loans
—

200
—

1,801
—

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. Relatives of Naoki Minowa (Senior Managing Executive Officer of the Bank) owned 62.5% of the voting rights of this company directly.
4. Matazaemon Kitamura (Director of the Bank) and his relatives owned 6% and 94% of the voting rights, respectively, of this company directly.

52

For the fiscal year ended March 31, 2018, related party transactions were as follows:
Relationshipwith the Bank

Relatives ofofficers of the
Bank

A company inwhich amajority ofvoting rights
are held byrelatives ofofficers of theBank

Location

Paid-in
Votingcapital Occuparightstion/(millions Business ownershipof yen)(%)

Kohei Ueno——

Officeworker—AtsutoHashimoto——Publicofficer—

Masato Ibi——

Officeworker

—

10

Metal
processing

—

Loans

32

Forestry

Direct1.28

36

Wholesaleof sheet
glass

—

Name

NIKKENCity
BLAST CO., Daito
Osaka
LTD. *3
Kitamura
Osaka City
Forestry Co., OsakaLtd. *4
Murashima
Glass Shoji
Co., Ltd. *5

YamatoTakada
City Nara

Relationship ofrelated parties

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

Details oftransactions

Second son of
Yasuo Ueno
(Director &Lending of money*2
ChairmanInterest receivableof the Bank)
Loans
Eldest son of
Masaaki Hashimoto Lending of money*2(Corporate Auditor) Interest receivable
Loans
Son-in-law ofSatoru Wada
Lending of money*2(Executive Officer) Interest receivable
Loans

23
0

Loans
—

22
—

—
0

Loans
—

18
—

—
0

Loans
—

26
—

Lending of money
Interest receivable

—
0

Loans
—

66
—

Loans

Lending of money
Interest receivable

200
2

Loans
—

200
—

Loans

Lending of money*2
Interest receivable

90
0

Loans
—

90
—

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. Relatives of Naoki Minowa (Senior Managing Executive Officer of the Bank) owned 62.5% of the voting rights of this company directly.
4. Matazaemon Kitamura (Director of the Bank) and his relatives owned 6% and 94% of the voting rights, respectively, of this company directly.
5. Relatives of Kozo Togawa (Executive Officer of the Bank) owned 91.8% of the voting rights of this company directly.

28. PER SHARE INFORMATION
Net assets per share at March 31, 2019 and 2018 and net income per share for the fiscal years then ended were as follows:
Yen

2018

2019

¥8,888.16
342.79342.47¥8,715.46
418.05417.63$80.083.08
3.08

Note: 	As described in “Changes in Accounting Policies,” the Bank adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February
16, 2018) from the year ended March 31, 2019 and changed the treatments of deductible temporary differences related to the shares of subsidiaries.
This accounting standard was applied retroactively and the resulting amounts after the retroactive application for the year ended March 31, 2018 are presented.

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

Millions of yen(Net assets per share)
Net assets ............................................................................................................
Amounts to be deducted from net assets: ...........................................................
Stock acquisition rights ..................................................................................
Net assets attributed to common stock ...............................................................
Outstanding number of shares of common stock at end of year
(unit: thousands of shares) ................................................................................
(Basic and diluted net income per share)
Net income attributable to owners of parent .......................................................
Net income attributable to common stockholders of parent ...............................
Average outstanding number of shares during the year
(unit: thousands of shares) ................................................................................
Adjustment to net income attributable to owners of parent ................................
Increase in number of shares of common stock:(unit: thousands of shares) ................................................................................
Stock acquisition rights (unit: thousands of shares) .......................................
Convertible securities not diluting net income per share ....................................

2019

2018

2019

¥289,852
98(98)
289,753¥284,139
113(113)
284,025$2,611,514
882
(882)
2,610,622

32,59932,592—¥ 11,174
11,174¥ 13,160
13,160$ 100,675
100,675

32,598—31,480
—

—
—

29
(29)
—

31
(31)
—

—
—
—

Consolidated Financial Statements

Net assets per share ............................................................................................
Net income per share – basic ..............................................................................
Net income per share – diluted ...........................................................................

U.S. dollars

2019

53

Consolidated Financial Statements

29. SUBSEQUENT EVENTS
Company split
At the Board of Directors’ meeting held on June 17, 2019, the Bank resolved to transfer a part of its subsidiary management operations (hereinafter referred
to as the “Business”) to Nanto Estate Co., Ltd. (“Nanto Estate”), a wholly owned subsidiary of the Bank, by means of an absorption-type company split(hereinafter referred to as the “Split”) in order to transition to an interim holding company structure effective September 2, 2019, subject to the approval
from the relevant authorities. On June 17, 2019, the Bank concluded the absorption-type split agreement with Nanto Estate and on September 2, 2019, theBank transferred the “Business.”a. Purpose of the company split
While the Bank has been offering comprehensive financial services as a group that includes its subsidiaries, it has decided to implement the Split to realize
efficient operations by centralizing management guidance operations such as the support for formulating the business plans and common operations of its
subsidiaries (shared services) in the interim holding company. Through the Split, the Bank will further increase the efficiency of the financial services provided by the whole Group and further contribute to development of the local community and economy.
b. Outline of the Split(1) Schedule of the Split
Resolution of the Board of Directors to approve the absorption-type split: June 17, 2019Conclusion of the absorption-type split agreement:
June 17, 2019
Extraordinary shareholders’ meeting of Nanto Estate to approve
June 17, 2019the absorption-type split agreement:
Effective date of the Split:
September 2, 2019
Note: As the Split falls under a simplified company split provided Article 784, Paragraph 2 of the Companies Act, the Bank, as a splitting company, didn’t convene a stockholders’ meeting to approve the absorption-type split agreement.

Consolidated Financial Statements
54(2) Method of the Split
The Split was implemented in the form of an absorption-type split in which the Bank became the splitting company and Nanto Estate became the successor company.
(3) Allocation of shares associated with the Split
The Bank was allocated one share of common stock to be newly issued by Nanto Estate upon the Split in consideration for the Split.
(4) Handling of stock acquisition rights and bonds with stock acquisition rights following the Split
Not applicable(5) Paid-in capital to be increased or decreased following the Split
There was no change in paid-in capital of the Bank.
(6) The rights and obligations to be assumed by the successor company
As a result of the Split, Nanto Estate assumed all the shares of the subsidiaries (Nanto Lease Co., Ltd., Nanto DC Card Co., Ltd., Nanto Card Service
Co., Ltd., Nanto Investment Management Co., Ltd., Nanto Credit Guarantee Co., Ltd., Nanto Computer Service Co., Ltd., Nanto Challenged Co., Ltd.,
Nanto Consulting Co., Ltd. (the trade name was changed from Nanto Staff Service Co., Ltd. on July 1, 2019) and Nanto Mahoroba Securities Co., Ltd.)
held by the Bank on the effective date.
(7) Prospects of fulfillment of obligations
The Bank has determined that there are no problems regarding the fulfillment of obligations born by the Bank and Nanto Estate that become due on orafter the effective date.

c. Outline of the parties related to the Split (as of March 31, 2019)
Splitting company

Successor company(1) Trade name

The Nanto Bank, Ltd.

Nanto Estate Co., Ltd. (*)(2) Head office address

16, Hashimoto-cho, Nara City, Nara

16, Hashimoto-cho, Nara City, Nara

(3) Representative

President
Takashi Hashimoto

Representative Director
Kozo Togawa(4) BusinessBanking

Leasing and management of real estate(5) Paid-in capital¥37,924.15 million ($341,689 thousand)¥30 million ($270 thousand)(6) Date of incorporation

June 1, 1934

November 8, 1969

(7) Issued shares

33,025 thousand shares

60 thousand shares(8) Fiscal year-end

March 31

March 31(9) Major stockholders and stockholding ratio

Japan Trustee Services Bank, Ltd.
(Trust account)

The Nanto Bank, Ltd.
100%
3.66%

Japan Trustee Services Bank, Ltd.
(Trust account 9)
3.24%
Nippon Life Insurance Company
3.23%
Meiji Yasuda Life Insurance Company
3.19%
The Master Trust Bank of Japan, Ltd.
3.16%(*) Nanto Estate Co., Ltd. changed its trade name to Nanto Management Service Co. Ltd. on September 2, 2019.

(10) Financial conditions and operating results for the most recent fiscal year
The Nanto Bank, Ltd. (Consolidated)

Consolidated total assets .....................................................................................
Consolidated net assets .......................................................................................
Net assets per share ............................................................................................
Consolidated ordinary income ............................................................................
Consolidated ordinary profit ...............................................................................
Net income attributable to owners of parent .......................................................
Net income per share ..........................................................................................

¥5,798,870
289,852
8,888.16
81,581
10,723
11,174342.79$52,246,778
2,611,514
80.08
735,030
96,612
100,675
3.08

Nanto Estate Co., Ltd. (Nonconsolidated)
Millions of yen (thousands of U.S. dollars),
except per share amounts (yen (U.S. dollars))

Total assets ..........................................................................................................
Net assets ............................................................................................................
Net assets per share ............................................................................................
Sales ....................................................................................................................
Operating profit ..................................................................................................
Net income ..........................................................................................................
Net income per share ..........................................................................................

¥2,0271,560
26,009.364505636604.52

Consolidated Financial Statements

Millions of yen (thousands of U.S. dollars),
except per share amounts (yen (U.S. dollars))$18,262
14,055234.33
4,054
504
324
5.44

55

Consolidated Financial Statements

d. Outline of the business section subject to the Split(1) Outline of the section
Management of operations of the Bank’s subsidiaries(Note) The Bank’s subsidiaries represent Nanto Lease Co., Ltd., Nanto DC Card Co., Ltd., Nanto Card Service Co., Ltd., Nanto Investment Management Co., Ltd., Nanto Credit Guarantee Co., Ltd., Nanto Computer Service Co., Ltd., Nanto Challenged Co., Ltd., Nanto Consulting Co., Ltd. (the trade name was changed from Nanto Staff Service Co., Ltd. on July
1, 2019) and Nanto Mahoroba Securities Co., Ltd.

(2) Operating results of the section
It is not applicable because the section is not engaged in operating activities in the Business.
(3) Items and amounts of the assets and liabilities subject to the Split as of September 2, 2019
Securities: ¥5,442 million ($49,031 thousand)e. Status after the Split
Regarding the Bank, which is the splitting company, there are no changes in the trade name, head office address, the representative’s position and name,business, paid-in capital or fiscal year-end due to the Split.
Regarding Nanto Estate, which is the successor company, the trade name, head office address, the representative’s position and name, business and paidin capital were changed after the Split on September 2, 2019 as follows: However, the fiscal year-end wasn’t changed due to the Split.
Item

Successor Company(1) Trade name

Nanto Management Service Co., Ltd.

(2) Head office address

297-2, Ohmiya 4 chome, Nara City, Nara

(3) Representative’s position and name

Representative Director and President Hiroki Matsuoka (former Representative Director and President ofNanto Lease Co., Ltd.)(4) Business

Management business of subsidiaries, leasing and management of real estate, outsourcing business,fee-charging employment agency services(5) Paid-in capital¥40 million ($360 thousand)f. Future outlook
The effects of the Split on the Bank’s operating results will be immaterial.

Consolidated Financial Statements5630. BORROWED MONEY AND LEASE OBLIGATIONS
a. The details of borrowed money as of March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen

Borrowed money
Due from April 2019 through May 2025
Average interest rate: 0.43% p.a. ....................................................................

2019

2018

2019

¥210,648¥208,368$1,897,900

Millions of yen

Thousands of
U.S. dollars¥ 35,610
77,313
1,613
95,848225
37¥210,648$ 320,839
696,576
14,532
863,573
2,027
333$1,897,900

Millions of yen

Thousands of
U.S. dollars

Annual maturities of borrowed money as of March 31, 2019 were as follows:2020 .........................................................................................................................................................
2021 .........................................................................................................................................................
2022 .........................................................................................................................................................
2023 .........................................................................................................................................................
2024 .........................................................................................................................................................
2025 and thereafter ..................................................................................................................................
Total .........................................................................................................................................................
b. Lease obligations
Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheets.
Annual maturities of lease obligation as of March 31, 2019 were as follows:2020 .........................................................................................................................................................
2021 and thereafter ..................................................................................................................................
Total .........................................................................................................................................................

¥0
0
¥0

$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.

Consolidated Financial Statements

c. Other
The Group has not issued commercial paper by way of promissory notes for funding for operating activities.

57Independent Auditors’ Report

Independent Auditors’ Report58Capital Management
Consolidated Capital Adequacy Ratio
As of March 31, 2019 and 2018
Millions of yen(1) Capital adequacy ratio ((2)/(3)) ..............................................................................................................
(2) Capital .....................................................................................................................................................
(3) Risk-weighted assets ...............................................................................................................................
(4) Requisite capital ......................................................................................................................................

2019

2018

9.75%
¥ 255,264
2,616,951
104,678

9.88%¥ 245,518
2,482,634
99,305

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

Nonconsolidated Capital Adequacy Ratio
As of March 31, 2019 and 2018
Millions of yen(1) Capital adequacy ratio ((2)/(3)) ..............................................................................................................
(2) Capital .....................................................................................................................................................
(3) Risk-weighted assets ...............................................................................................................................
(4) Requisite capital ......................................................................................................................................

2019

2018

9.40%
¥ 243,955
2,592,780
103,711

9.64%¥ 236,698
2,454,173
98,166

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.

Capital Management
59Organization, Group Network(As of July 1, 2019)

ORGANIZATIONSTOCKHOLDERS’ MEETINGHEADQUARTERS

BOARD OF DIRECTORS(9 Directors, 3 of whom are Outside Directors)

Corporate Strategy Headquarters

PRESIDENT AND REPRESENTATIVE DIRECTORMANAGEMENT DIRECTORS’ COMMITTEEManagement Headquarters

Sales Headquarters

BOARD OF CORPORATE AUDITORSCORPORATE AUDITORS(4 Corporate Auditors, 2 of whom are Outside Corporate Auditors)

Investment Management Headquarters

Corporate Auditors’ Office

Corporate Planning Division
Digital Strategy Division
Risk Management Division
Operations Planning Division
Personnel Planning Division
Legal Planning Division
Credit Analysis Division
General Affairs Division
Operations Concentration Division
North Nara Headquarters
Middle Nara Headquarters
South Nara & Wakayama
Headquarters
Kyoto Headquarters
Osaka Headquarters
Solution Business Division
Financial Investment Division(Tokyo Main Office)Internal Audit Division• DOMESTIC
OFFICESNANTO BANK GROUP

Organization, Group Network(As of July 1, 2019)
The Nanto Group, which consists of the Nanto Bank and its12 consolidated subsidiaries, offers financial
services related to credit guarantees and leasing as well as its primary business, banking services.

THE NANTO BANK, LTD.

BankingHead Office and 110 Branches (including Online Branches)
28 Sub-branches
2 Agencies (Nangin Agency Co., Ltd.’s business offices)
2 Representative Offices (Hong Kong and Shanghai)

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 Service Co., Ltd.

Securities Business

Nanto Mahoroba Securities Co., Ltd.

Other Operations

Nanto Estate Co., Ltd.
Nanto Business Service Co., Ltd.
Nanto Investment Management Co., Ltd.
Nanto Consulting Co., Ltd.
Nangin Agency Co., Ltd.
Nanto Challenged Co., Ltd.

Companies indicated with a pink square are consolidated subsidiaries.

60

Affiliates and Subsidiaries, Bank Data
(As of July 1, 2019)

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

Subsidiaries

Address

Nanto EstateCo., Ltd.
Nanto Business
Service Co., Ltd.

16, Hashimoto-cho
Nara City, Nara, Japan
93-2, Minami-Kyobate-cho
1-chome, Nara City, Nara,Japan
1-1, Shimo-Sanjo-cho Nara
City, Nara, Japan

November8, 1969
June 1,
1984

¥30

100%

—

Leasing and management of real estate

10

100

—

Centralized processing of clerical operations for the Bank

October 9,
1984

10

100

—

Credit guarantee

52-1, Omori-cho Nara City,
Nara, Japan
93-2, Minami-Kyobate-cho
1-chome, Nara City, Nara,
Japan
297-2, Omiya-cho 4-chome
Nara City, Nara, Japan

December
22, 1984
July 1,
1986

500

100

—

Leasing

10

100

—

Computer software development and services

November21, 1986

120

100

—

Investment advisory services

61-7, Higashi-Ikoma
October
1-chome, Ikoma City, Nara, 12, 1990
Japan
Nanto Card
61-7, Higashi-Ikoma
December
Service1-chome, Ikoma City, Nara, 10, 1990
Co., Ltd.
Japan
Nanto Consulting 16, Hashimoto-cho
March 18,
Co., Ltd. *2
Nara City, Nara, Japan
1991
Nangin Agency 93-2, Minami-Kyobate-cho October 6,
Co., Ltd.
1-chome, Nara City, Nara, 2009
Japan
Nanto
93-2 Minami-Kyobate-cho August 24,
Challenged
1-chome, Nara City, Nara, 2018
Co., Ltd.
Japan
Nanto Mahoroba 1-56, Saidaiji-Higashi-machi November
Securities
2-chome, Nara City, Nara, 25, 1944
Co., Ltd.
Japan

50

100

—

Credit card business

50

100

—

Credit card business

45

100

—

50

100

—

Dispatch of temporary staff. Began consulting
business-matching on July 1.
Bank agency services

20

100

—

3,000

100

—

Nanto Credit
GuaranteeCo., Ltd.
Nanto Lease
Co., Ltd.
Nanto Computer
Service Co., Ltd.
Nanto
Investment
Management
Co., Ltd.
Nanto DC Card
Co., Ltd.

Centrailzed processing of clerical operations for the
Bank (special subsidiary for the employment ofpeople with disabilities)
Securities Business

HEAD OFFICEMAJOR STOCKHOLDERS (As of March 31, 2019)16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 22-1131
URL: http://www.nantobank.co.jp/

HONG KONG REPRESENTATIVE OFFICE
Room 1203B, 12TH Floor,
Allied Kajima Building,No.138 Gloucester Road, Wanchai,Hong Kong
Phone: 852-2868-9932

SHANGHAI REPRESENTATIVE OFFICE

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

CORPORATE DATA (As of March 31, 2019)
Authorized shares:
Outstanding shares:
Stated capital:
Number of stockholders:Date of incorporation:
Domestic network:
Overseas network:
Number of employees:
Ordinary stockholders’ meeting:Stock listings:

64,000,000
33,025 thousand
37,924 million
13,027
June 1934
141 offices
2 representative offices
2,551
June 27, 2019
Tokyo Stock Exchange

Number of shares(thousands)

Percentage(%)

Japan Trustee Services Bank, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd(trust account 9)
Nippon Life Insurance Co.

1,195

3.66

1,058

3.24

1,053

3.23

Meiji Yasuda Life Insurance Co.
The Master Trust Bank of Japan, Ltd.
(trust account)
The Nanto Bank Employees’ Stockholders Association

1,043

3.19

1,031

3.16

811

2.48

Sumitomo Life Insurance Co.

662

2.03

GOVERNMENT OF NORWAY

637

1.95

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

508

1.55

JP MORGAN CHASE BANK 385151

486

1.49

8,486

26.03

Total

Affiliates and Subsidiaries, Bank Data

*1: Changed its trade name to Nanto Management Service Co., Ltd. As of September 2, 2019.
*2: Changed its trade name and location as of July 1, 2019. [As of March 31, 2019] Former Trade Name: Nanto Staff Service Co. Ltd. Former Location: 103-1, MinamiKyobate-cho 1-chome, Nara City, Nara, Japan

61

THE
THENANTO
NANTOBANK,BANK,LTD.
LTD.
16,
16,Hashimoto-cho,
Hashimoto-cho,Nara
NaraCity,
City,Nara
Nara630-8677,
630-8677,Japan
Japan
Phone:
Phone:(0742)22-1131(0742)22-1131