ANNUAL REPORT 2013
Year ended March 31, 2013

AN NUA L R E P O RT 2 0 1 3
CONTENTS
01 Consolidated Financial Highlights

14 Consolidated Financial Statements

02 Message from the President

46 Independent Auditors’ Report

06 Medium-Term Management Plan

47 Capital Management

08 Compliance

48 Organization, Group Network

09 Risk Management

49 Affiliates and Subsidiaries, Bank Data

13 Board of Directors and Corporate
Auditors

PROFILEThe Nanto Bank, Ltd. (the “Bank” or “Nanto Bank”) is based in Nara Prefecture, a region rich in tradition andculture dating back to its development as Japan’s first capital in the early 8th century. Since its establishment in
1934, Nanto Bank has achieved steady growth in partnership with its region and continues to maintain a sound financial structure. As of March 31, 2013, Nanto Bank had deposits of ¥4,418.1 billion, loans of ¥2,898.8 billion, andtotal assets of ¥5,025.0 billion.
Nanto Bank’s domestic network of 137 branches extends
beyond Nara Prefecture to the neighboring prefectures ofOsaka, Kyoto, Hyogo, Mie, Wakayama, and Tokyo. The Bankhas become a trusted institution in communities throughout
its region thanks to its commitment to regionally focusedservices designed to meet the needs of local customers.
Nanto Bank continues to make a positive contribution toregional economic development by providing a comprehensive range of financial services, including overseas services,and maintains representative offices in Hong Kong andShanghai.

OSAKA

KYOTO

HYOGO

TOKYO
MIE

CORPORATE PHILOSOPHY
1. Pursue sound and efficient management
2. Provide superior comprehensive financial services
3. Contribute to regional prosperity
4. Strive to become a highly reliable, friendly and attractive bank

NARA (NARA PREFECTURE)
WAKAYAMA

Consolidated Financial Highlights
Thousands of
U.S. dollars

Millions of yen

2013

2012

2011

2010

2009

2013

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

¥

88,875¥90,075¥92,751¥

95,942¥ 109,639$

944,976

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

77,661

78,84378,711

83,145

134,276825,741

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

11,214

11,231

14,03912,796(24,637)

119,234

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

7,621

3,467

6,584

7,293

(22,324)

81,031

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

5,025,037

4,809,575

4,608,561

4,568,768

4,607,649

53,429,420

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

2,898,844

2,785,671

2,709,612

2,730,540

2,854,567

30,822,371

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

1,840,741

1,755,495

1,668,948

1,560,110

1,425,966

19,571,940

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

4,514,604

4,343,154

4,181,096

4,117,975

4,083,246

48,002,169

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

4,809,291

4,597,334

4,401,386

4,361,672

4,445,015

51,135,470

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

6,658

25,971

25,125

24,621

24,44770,792

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

215,745

212,241

207,175

207,095

162,634

2,293,939

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

29,24929,24929,24929,24929,249310,994

At year-end:

Per share data:

Yen

U.S. dollars

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

¥ 28.01¥ 12.57¥ 23.88¥ 26.45¥ (80.87)$0.29

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

774.46675.42660.24661.81501.09

8.23

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

10.66

11.63

11.74

12.12

10.06

Note: U.S. dollar amounts are included solely for the convenience of readers and are calculated at the exchange rate of ¥94.05 to US$1.00, the rate prevailing on March 31, 2013.

Net Income

Total Assets

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

4,607.6
7.2

4,568.7

4,608.5

4,809.5

5,025.0

7.6

207.0

207.1

212.2

215.7

2010

2011

2012

2013

6.5
162.6
3.4

-22.3

2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

2009

1

Message
Message fromfrom thethe President
President
The purpose of this Annual Report 2013 is to disclose our performance in fiscal 2012 (the year ended March 31, 2013) and theinitiatives conducted during the fiscal year. We would appreciate it if you would read through the report.
The Japanese economy has begun to show signs of an economic recovery, such as an upswing in household consumer
confidence, backed by rising stock prices since the end of last year and improved profits in export industries following thecorrection of the yen appreciation. The regional economy centered on Nara Prefecture is also on a mild recovery track overall,with production and employment picking up and signs such as positive trends in consumer spending appearing recently.
Against this background, the Bank will celebrate the 80th anniversary of its founding, a major landmark, in June next year.
Furthermore, fiscal 2012 is the final year of the medium-term management plan, Best Value NANTO, and the Bank as a wholeis working hard on various policies in order to approach the 80th anniversary at a new stage.
We look forward to your continued support as all of our officers and employees devote their full efforts to steadily achieve
this plan with the goal of becoming a bank that grows together with the region it serves.

Maximizing Our Consulting Function for Our Customers for
Further Promotion of “Relationship-Based Local Banking”
I. Our Economic and Financial Environment
Signs of a gradual recovery have been seen in the Japanese
economy, such as rising stock prices since the end of lastyear and improved profits in export industries following thecorrection of the yen appreciation. The regional economy
centered on Nara Prefecture is also on a mild recovery trackoverall, mainly with production and employment picking up.
Meanwhile, the environment surrounding financial institutions remains severe due to factors such as intensifying competition, including that from other industries, and various
structural changes such as the declining population and birthrate, Japan’s aging society and globalization.

II. Towards the 80th Anniversary of the Bank’s Founding
Under these circumstances, all the Bank officers andemployees are united in their commitment to implement
the various measures of the medium-term management
plan, Best Value NANTO, which is in its final year, witha view to achieving our long-term vision of “aiming tofurther increase corporate value – a bank that grows

2

together with the region it serves,” as we approach our
80th anniversary in June of next year.
We will continue to steadily put this plan into action,
while building up even stronger relationships of trustwith all our stakeholders, including the region, our customers and our shareholders, as we strive to increasecustomer satisfaction and corporate value.

1. “Promoting relationship-based local banking” and “Strengthening ourmarketing structure”• Promoting relationship-based local banking

March 31, 2013, the Bank’s policy on facilitating financing

With recognition that it is indispensable to revitalize the local

has not changed. We will continue our efforts to revitalize theeconomy for growing with customers and enduring develop-

regional economy through utilizing our consulting function

ment as a regional financial institution, the Bank has been

to support management improvement and business rehabilita-

continuously promoting relationship-based local banking.

tion of our corporate clients.

Specifically, in order to meet the diversifying needs of ourcustomers, we have put in place a comprehensive support•	Expanding the branch network

system with the establishment of the headquarters’ specialty

The Bank seeks to further increase its balance of loans,divisions, including the Asia Business Support Group, thedeposits, and assets in custody by expanding its branch net-

Support and Sales Group (Corporate Solutions Team), thework mainly through the establishment of new branches.

Venture Business Support Office and the Corporate Finance

In Osaka Prefecture, identified as an important strategic

Support Office, which work together with the branches toarea in our medium-term management plan, two new branch-

carry out a variety of solution-oriented marketing and sales.

es, the Eiwa Branch and the Wakaeiwata Branch, were built

In order to strengthen and enhance support for customers

and opened in Higashiosaka City in September last year.

expanding into the Asian region in pursuit of further growth

Furthermore, in April this year, as part of our dynamic activi-

and development, the Asia Business Support Group formed

ties to cultivate new clients, we opened the Joto Corporate

business partnerships with seven external institutions in fiscal

Business Office and the Hokusetsu Corporate Business2012 and currently has solid ties with 17 institutions to

Office with a view to eventually developing these into

support the overseas expansion of customers. We are

branches. In addition, in the fall of this year, we are opening

strengthening the support system for overseas businessthe newly constructed Tezukayama Branch to handle mainly

through measures such as dispatching our employees to thethe Abeno-ku and Sumiyoshi-ku areas, and we will continue

Bangkok Bank in Thailand last December.

to actively deploy our regionally-based marketing in Osaka

The Corporate Solutions Team is actively working on

Prefecture.

business support in the fields of medicine and nursing careAlso, in Wakayama Prefecture, in June of this year, we

for which society’s needs are increasing as the population

increased the number of branches in Wakayama City to two,

continues to age, as well as on issues of interest to many

namely the Wakayama Branch and the Wakayama-Kita Sub-business owners such as business succession measures.

branch, in an effort to enhance convenience for our custom-

Additionally, by providing business matching opportunities,

ers and to broaden the marketing base.

including the “Venture Business Matching Fair,” we are supporting the expansion of operations through the broadening• Enhancing our products and servicesof sales channels and other measures. In this way, we will

With regard to assets in custody such as investment trusts andfurther promote relationship-based banking, which is thelife insurance, in addition to offering an abundant productstarting point of a regional financial institution.

line-up, we have set up locations such as the L-Plaza and FA
offices in order to enhance our consulting system and to pro-• Measures to support management improvement

vide products that meet the asset management needs of our

The Bank has always considered management support forcustomers.

clients to be an important mission of a regional financial

L-Plaza is open on Saturdays and Sundays until 5:00 p.m.

institution. Branches and the headquarters’ Corporate

in addition to weekday hours, creating a system that allows

Finance Support Office, which is staffed with employees

busy customers to come in for consultations at their conve-

with expert backgrounds, work together to closely monitor

nience. Since April of last year, the “L-Plaza Weekend Tax

the client’s management situation and to offer advice andPractice Consultation Session” by tax accountants has been

support with regards to matters such as drawing up manage-

held every Sunday and has been extremely well received forment improvement plans.

its appointment-only system that allows customers to enjoy

Although the Act Concerning Temporary Measures tounhurried consultations.

Facilitate Financing for SMEs (Small and Medium-Sized

The FA offices are staffed by bank personnel withEnterprises), etc. (which came into effect in 2009) expired on

advanced expertise in financial matters who work together

3Message
Message fromfrom thethe President
Presidentwith the branches to respond proactively to customer needs

account (ISA), in which a certain amount of small investment

in relation to consultations on matters such as asset manage-

is exempt from tax. We view this as an opportunity to further

ment, inheritance and business succession and real estate uti-

strengthen our ties with our customers, and in addition tolization.

enhancing our product line-up and other functions, we will

January 2014 will see the launch of the system known as“NISA,” the Japanese version of the U.K.’s individual savings

endeavor to provide services that will satisfy our customers
by refining the skills of each and every employee.

2. Effective use of corporate resources
While promoting our marketing strategy that includes

strengthening the marketing system. In addition, in order toenhancements for a new branch network, the Bank is also

streamline branch operations and to shorten customer wait-

engaged in reviewing the branch format and streamlining

ing times, we plan to install touch panel-model new termi-

branch operations in order to utilize corporate resources

nals in all branches by December this year.

more effectively. From May to June this year, six branches
were converted to sub-branches with the aim of boosting

The Bank will continue to take all possible measures tomake effective use of its limited corporate resources.

customer satisfaction and cost competitiveness and3. Enhancement and upgrading of internal control systems
Establishing the “enhancement and upgrading of internalBank makes utmost effort to instill a compliance mindset

control systems” as one of the basic policies of our medium-

into not only the management personnel but all employees interm management plan, the Bank carries out various

order to establish an effective compliance framework.

measures with “further enhancement of our compliance

In terms of risk management, we will continue to advanceframework” and “incorporation of more advanced andand enhance risk management while appropriately control-enhanced risk management”, which are considered as impor-ling risks and returns.

tant management issues.
Compliance is fundamental for banks to faithfully carryout their social responsibilities and public missions. The

44. Contributions to the local community
Aiming to become a bank that grows together with the region

community contributions” as one of the basic policies of its

it serves, the Bank continuously works on its CSR (corporate

medium-term management plan. We carry out various socialsocial responsibility) initiatives, with “promotion of enduring

action programs and environmental conservation initiatives.

• Social action programs

to conserve energy and reduce paper and other waste.

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

Furthermore, Bank employees volunteer every year to clear

ety of social action programs since its foundation, including

underbrush and do additional planting in Asuka-mura, where

the Small Kindness Society, which conducts cleanups andtrees were initially planted to commemorate our 70th anni-

blood donation to contribute to public service activities, theversary in 2004.

Nanto Scholarship Society, which offers academic scholar-

Since 2009, we have supported the Yoshino Heart Project,

ships, and the Manyo Charity Walk, which provides opportuni-

which promotes forest conservation through revitalization ofties to tour historical sites featured in Manyoshu (a collection

Nara Prefecture’s local industries of forestry and related sec-of Japanese poetry) in Nara Prefecture.

tors. By encouraging the use of Yoshino materials, we are

In addition, the Bank’s women’s hockey team, known as
the “Nanto Bank Shooting Stars”, has contributed to the pro-striving to revitalize the industry in the Yoshino area and toconserve its forests.

motion of sports in Nara Prefecture for 30 years since its cre-

The Bank is a special member of the Yoshino Cherry Tree

ation and is involved in the local community through hockey

Preservation Group, founded to protect the shiroyama-zakura

through activities such as by holding hockey schools for local(cherry trees famous for their blossoms) of Mount Yoshino,

students.

which have recently shown visible signs of deterioration suchas blight. In addition to supporting various events, we make• Environmental conservation initiatives
The Bank obtained ISO14001 environmental management
certification in 2002 and has diligently maintained programs

donations through an environmentally-friendly financial
product, the Yoshino Cherry Tree Time Deposit, to support
conservation and the growing of cherry trees in Yoshino.

III. In Conclusion
The Nanto Bank was formed in 1934 through the mergerof four banks: the Rokuju-hachi Bank, the Yoshino
Bank, the Yagi Bank, and the Gose Bank. Since theBank’s establishment, we have steadily built up our history with “sound management” as our fundamental principle and will mark the 80th anniversary of our foundingin June 2014.
Throughout its history, the Bank has worked tostrengthen its management structure while keeping pacewith the regional economy and society. Moreover, by
carrying out regionally-based marketing activities
through the branch network which spreads out over theentire local operating area, we have built a solid

marketing base, responsible for roughly 50 percent shareof the financing in Nara Prefecture, our hometown, and ahigh share of deposits.
This year, we set up the “80th Anniversary Project
Planning and Steering Committee” within the Bank andare currently looking into various ways to express our
gratitude to our stakeholders on the historical occasionof the 80th anniversary of our founding.
In the years ahead, we will continue to follow ourpath toward becoming “a highly reliable, friendly andattractive bank” for all of our stakeholders, and we ask
you all for your constant support.

President Yasuo Ueno

5

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

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

Medium-Term Management Plan

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

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

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

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

Corporate philosophy
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 bank1

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

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

6

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

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

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

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

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

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

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

8. Enhancement of CSR initiatives

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

Stage 2

Best Value NANTO (April 2011 to March 2014)

Four basic
policies

Stage 1

Eight keystrategies

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

Compliance
Compliance refers to strict observance of ethics and social

The Bank takes the following approach in order tonorms as well as laws, regulations, government ordinances

increase awareness of compliance and respond to legal risks.

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

Thorough Execution of Compliance

Compliance● In recognition of the public mission and social responsibilities that financial institutions need to perform, the Bank regards
compliance with laws and regulations as the most important management issue and has established a Charter of Corporate
Behavior which consists of Basic Policies and Code of Conduct for all officers and employees to follow to gain trust from all
stakeholders, including local communities, our customers and shareholders.
● To establish a basic framework for the compliance system, we have established our compliance regulations and rules fordisciplinary action and demonstrate fairness and transparency in the administration of disciplinary action as means of establishinga clear stance on compliance with laws and regulations.
● Deliberations and decisions in matters of compliance are the responsibility of the Compliance Committee, which is chaired by the
President and operates horizontally across the bank’s organization structure. Plans and supervision of compliance are carried out
in the Compliance & Risk Management Division.
● A Compliance Program consisting of concrete plans to achieve compliance is drawn up each year and undergoes appropriate
review.
● The Bank strives to properly operate a Compliance Hotline as part of its internal reporting system that was established to prevent
legal violations and misconduct before they occur, to discover them promptly if they occur and to rectify them immediately.
● To instill a compliance mindset throughout the Bank, we have compiled a Compliance Handbook, which serves as a guide forachieving compliance and has been distributed to all officers and employees, and regularly conduct seminars and other grouptraining at the workplaces of individual workgroups.
● The Bank has established a Regulations on Response to Antisocial Forces in order to take a resolute stand against anti-social
forces that pose a threat to the order and security of civil society and takes strong measures to intervene and block any attempt bysuch forces to create any relationship with the Bank.

8

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

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

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

Risk Management

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

Board ofCorporate Auditors

Managing Directors’Committee

Emergency Council(Warning Council)

ALM Committee(ALM Subcommittee)

Committees

Operational Risk Management Committee(Operational Risk Management Subcommittee)

Compliance Committee(Compliance Subcommittee)

Organization

Risk Management Structure

Compliance Structure

Supervising Division

Compliance & Risk Management Division

Compliance & Risk
Management Division

Risk Categories

Credit Risk(

CreditAnalysis
Division

Main Divisionin Charge) (Market Risk)()(

Compliance &Risk Management
Division

Operational Risk
(Compliance & Risk Management Division)

Liquidity Risk)(

Compliance &Risk Management
Division

Administrative Risk
Operations Control
Division

Systems Risk

Legal Risk
Compliance &Personnel Risk

Tangible Assets Risk

Compliance
Reputational Risk

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

Divisions of Headquarters/Branches/Consolidated Subsidiaries

Auditing

Internal Audit Division(

Compliance &Risk Management
Division)

External Auditing

9

Risk Management• Managing Internal Capital 

Risk Management

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

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

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

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

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

10

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

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

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

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

Risk Management• Managing Liquidity Risk • Managing Operational Risks Operational risk is the risk of the Bank incurring a loss due
to inadequate or failed processes of banking operations,activities of executives and employees (including part-timeand temporary and other similarly classified workers) or systems, as well as external events.
At the Bank, departments in charge of operational risks
apply the perspectives of specialists to the management ofadministrative risk, systems risk, legal risk, personnel risk,

tangible assets risk and reputational risk.
In addition, information about loss from operational accidents and results of potential risk analysis, etc. are collectively reported to the Operational Risk Management Committee,
which understands and manages each risk comprehensively.
This enables the Bank to preferentially deal with major risks
and minimize the effects of the risks.

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

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

11

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

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

• Managing Personnel Risk 

Risk Management

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

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

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

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

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

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

12

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

Board of Directors and Corporate Auditors(As of July 2, 2013)

Yasuo Ueno

Chairman(Representative Director)

President(Representative Director)

Board of Directors and Corporate Auditors

Hiromune Nishiguchi

Yasuo Shimakawa

Masaaki Hashimoto

Hiroki Matsuoka

Senior Managing Director(Representative Director)

Managing Director

Managing Director

Takashi Hashimoto

Kohsaku Yoshida

Yoshihiko Kita

Managing Director

Managing Director(Osaka Regional Headquarter and Osaka Chuo Office)Managing Director(General Planning Division)

Chairman
Hiromune Nishiguchi
President
Yasuo Ueno
Senior Managing Director
Yasuo Shimakawa
Managing Directors
Masaaki Hashimoto
Hiroki Matsuoka
Takashi Hashimoto
Kohsaku Yoshida(Osaka Regional Headquarter and Osaka Chuo Office)Yoshihiko Kita
(General Planning Division)

Directors And General Managers
Hideaki Nishimoto(Compliance & Risk Management Division)
Yoshiaki Morita(Head Office)Toru Hagihara(Tokyo Branch and Tokyo Liaison Office)Kiyohide Sawamura(Personnel Division)
Shigeyori Kawai(Internal Audit Division)
Takao Handa(Value Creation Division)
Nobuo Shibata(Operations Control Division and Operations Division)

Corporate Auditors
Taro Hayama
Naoki Minowa
Hiroyuki Sakai
Mitsuhiko Noguchi
Yasushi Marumori

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

13

Consolidated Financial Statements
Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2013 and 2012
Thousands of
U.S. dollars(Note 1)Millions of yen

Consolidated Financial Statements

2013

2012

2013

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

¥ 175,662
430
4,279
322
21,0001,840,741
2,898,844
4,023
14,377
20,74640,291
11,19324,204
327
4,564
6,066
5,304
762
13,01813,591(28,358)¥5,025,037¥ 131,459
12,0804,075
400
25,0001,755,495
2,785,671
1,310
15,052
21,447
40,574
11,794
24,629
102
4,047
8,171
6,703
1,468
24,08813,278(28,531)¥4,809,575$ 1,867,751
4,572
45,4973,423
223,285
19,571,940
30,822,371
42,775
152,865
220,584
428,399
119,011257,352
3,476
48,52764,49756,395
8,102
138,415
144,508(301,520)$53,429,420

Liabilities and net assets:
Liabilities:
Deposits (Notes 6 and 14) ..............................................................................
Negotiable certificates of deposit (Notes 6 and 14) .......................................
Payables under securities lending transactions (Notes 6 and 14) ...................
Borrowed money (Notes 6, 8 and 14) ............................................................
Foreign exchange ..........................................................................................
Bonds payable (Notes 6 and 8) ......................................................................
Other liabilities (Note 8) ................................................................................
Reserve for employee retirement benefits (Note 11) .....................................
Reserve for reimbursement of deposits ..........................................................
Reserve for contingent losses .........................................................................
Acceptances and guarantees ...........................................................................
Total liabilities ...........................................................................................

4,418,137
96,467138,235
81,100140
20,00027,25812,669165
1,526
13,591¥4,809,291

4,277,409
65,744104,266
63,783148
20,00038,72912,207
131
1,633
13,278¥4,597,334

46,976,469
1,025,699
1,469,803
862,307
1,488
212,652
289,824
134,704
1,754
16,225
144,508$51,135,470

29,24918,813
126,387

29,24918,829122,907

310,994
200,031
1,343,827(2,480)(2,987)(26,368)

171,970
37,947(931)
37,016100
6,658
215,745¥5,025,037

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

1,828,495
403,476(9,898)393,577
1,063
70,792
2,293,939$53,429,420

Net assets (Note 4):
Common stock: Authorized 640,000 thousand shares
Issued 275,756 thousand shares in 2013
and 281,756 thousand shares in 2012 ................................
Capital surplus ................................................................................................
Retained earnings ...........................................................................................
Less treasury stock: Issued 5,909 thousand shares in 2013
and 6,072 thousand shares in 2012 ...............................
Total stockholders’ equity
Valuation difference on available-for-sale securities (Note 7) .......................
Net deferred gains or losses on hedges ..........................................................
Total accumulated other comprehensive income .......................................
Stock acquisition rights ................................................................................
Minority interests .........................................................................................
Total net assets ...........................................................................................
Total liabilities and net assets ....................................................................
See Notes to Consolidated Financial Statements.

14
14

Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2013 and 2012
Thousands of
U.S. dollars(Note 1)Millions of yen

2012

2013

¥41,086
17,538369
18,447
6,995
4,438
88,875¥43,499
17,936426
18,2054,825
5,181
90,075$436,852
186,475
3,923
196,140
74,37547,187944,976

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

3,414
434
344
462
9,380
3,187
50,40810,03077,661

4,399
468
344
472
9,141
1,943
52,503
9,569
78,84336,299
4,614
3,657
4,912
99,73433,886535,970
106,645825,741

11,214

11,231

119,234

386
2,150
2,536
8,677
1,056
¥ 7,621

72
6,201
6,274
4,956
1,489
¥ 3,467

4,104
22,86026,964
92,25911,228$ 81,031

Income before income taxes and minority interests ......................................
Income taxes (Note 10):
Current ............................................................................................................
Deferred ..........................................................................................................
Total income taxes .................................................................................
Net income before minority interests ..............................................................
Minority interests ............................................................................................
Net income .........................................................................................................

U.S. dollars(Note 1)Yen

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

¥28.01
27.99
6.00

Consolidated Financial Statements

2013

Income:Interest income:Interest on loans and bills discounted ........................................................
Interest and dividends on securities ...........................................................
Other interest income .................................................................................
Fees and commissions ....................................................................................
Other operating income ..................................................................................
Other income (Note 16) .................................................................................
Total income ..........................................................................................

¥12.57
12.57
6.00

$0.29
0.29
0.06

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2013 and 2012
Thousands of
U.S. dollars(Note 1)Millions of yen

2013

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

2012

2013

¥ 8,677¥4,956$ 92,259

18,857(80)
18,777¥27,455

2,548
(144)
2,403
¥7,360200,499(850)
199,649$291,919¥26,431
1,023¥5,8391,521$281,031
10,877

See Notes to Consolidated Financial Statements.

15
15

Consolidated Financial Statements
Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2013 and 2012

Number ofshares ofcommonstock(thousands)

Consolidated Financial Statements

Balance at April 1, 2011 ................... 281,756
Cash dividends ...............................
—Net income .....................................
—
Purchase of treasury stock .............
—
Disposition of treasury stock .........
—Net changes in the items other thanstockholders’ equity .......................
—
Balance at April 1, 2012 ................... 281,756
Cash dividends ...............................
—Net income .....................................
—
Purchase of treasury stock .............
—
Disposition of treasury stock .........
—
Retirement of treasury stock ..........
(6,000)Transfer from retained earnings tocapital surplus ................................
—Net changes in the items other thanstockholders’ equity .......................
—
Balance at March 31, 2013 (Note 4) ... 275,756

Balance at April 1, 2012 ......................
Cash dividends ..................................
Net income ........................................
Purchase of treasury stock ................
Disposition of treasury stock ............
Retirement of treasury stock .............
Transfer from retained earnings tocapital surplus ...................................
Net changes in the items other thanstockholders’ equity ..........................
Balance at March 31, 2013 (Note 4) ..

Commonstock

Capitalsurplus¥29,249————¥18,830 ¥121,094—(1,654)
—
3,467
—
—
(0)
—

¥(2,990)——(7)
9¥16,540————¥(706)
—
—
—
—

¥ 31
—
—
—
—

¥25,125 ¥207,175—(1,654)
—
3,467
—
(7)
—
8

—
¥29,249——¥18,829 ¥122,907—¥(2,987)

2,516¥19,057(144)¥(850)

33
¥ 64

845
3,250
¥25,971 ¥212,241(1,636)
7,621
—
—
—

—
—
(2,019)
7
2,519

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(1,636)
7,621(2,019)
6
—

—

2,504

(2,504)

—

—

—

—

—

—

—
—
¥18,813 ¥126,387—¥(2,480)

18,890¥37,947(80)¥(931)

36¥100—¥29,249$310,994—————$200,202 $1,306,826—(17,395)—
81,031——(10)—(26,783)——$310,994

Total net
assets———(1)(2,519)

Capitalsurplus—Minority
interests

—
—
—
—
—

Commonstock

See Notes to Consolidated Financial Statements.

16
16

Retainedearnings

Millions of yen
Valuationdifference Net deferredon availablegains or
Stock
Less treasury
for-salelosses on
acquisitionstock
securities
hedgesrights26,624Retainedearnings(26,624)——$200,031 $1,343,827

Thousands of U.S. dollars (Note 1)
Valuationdifference on Net deferred
Less treasury available-for- gains or losses
stock
sale securities on hedges$(31,759) $202,626————(21,467)—74—
26,783—Stockacquisitionrights$(9,037)
—
—
—
—
—

$ 680
—
—
—
—
—

—

—

—

—
200,850$(26,368) $403,476(850)$(9,898)382$1,063—(19,313)(466)¥ 6,658 ¥215,745

Minority
interests

Total net
assets$276,140 $2,256,682—(17,395)—
81,031—(21,467)
—
63
—
—
—

—

(205,348)(4,954)$ 70,792 $2,293,939

Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2013 and 2012
Thousands of
U.S. dollars(Note 1)Millions of yen

2012

2013

¥ 11,214
5,859
648
(173)
461
33
(106)
(58,994)
4,654(2,692)(550)(23,686)
55
21,364(113,173)
140,727
30,722
11,445
17,317(2,712)(8)
33,968330
65,015(5,749)3,124
139,097(298)
268
139,067¥ 11,231
6,154
320(3,093)
730
10
(520)
(61,862)
5,685
1,039
52
3,912
106
1,194
(76,058)
160,321
1,736(7,991)
36,414123(1)(11,843)120
65,773(7,782)
1,485
127,260(566)—
126,693$ 119,234
62,296
6,889(1,839)4,901
350(1,127)(627,262)
49,484(28,623)(5,847)(251,844)
584
227,155(1,203,328)
1,496,299
326,656
121,690
184,125(28,835)(85)
361,1693,508
691,281(61,127)
33,216
1,478,968(3,168)2,849
1,478,649

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

(812,346)
677,208
84,888(2)
4,552(2,380)28(1,474)(2)(49,527)(462,591)
284,745
98,476(1,093)540(1,378)20(1,541)(36)(82,859)(8,637,384)
7,200,510
902,583(21)
48,399(25,305)297(15,672)(21)(526,602)

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

(20,000)(1,637)(337)(2,019)0(23,993)20
65,566109,606¥175,173—(1,652)(675)(7)
0(2,335)
4
41,503
68,103¥109,606(212,652)(17,405)(3,583)(21,467)
0(255,108)212
697,139
1,165,401$1,862,551

Consolidated Financial Statements

2013

Cash flows from operating activities
Income before income taxes and minority interests .......................................
Depreciation ...................................................................................................
Loss on impairment of fixed assets ................................................................
Increase (decrease) in reserve for possible loan losses ..................................
Increase (decrease) in reserve for retirement benefits ....................................
Increase (decrease) in 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 on disposal of fixed assets ..................................................................
Net decrease (increase) in due from banks ....................................................
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 call loans and bills bought ...................................
Net increase (decrease) in borrowed money ..................................................
Net decrease (increase) in foreign exchange assets .......................................
Net increase (decrease) in foreign exchange liabilities ..................................
Net increase (decrease) in payables under securities lending transactions ....
Net decrease (increase) in lease receivables and lease investment assets ......
Interest received ..............................................................................................
Interest paid ....................................................................................................
Other ...............................................................................................................
Subtotal ......................................................................................................
Income taxes paid ...........................................................................................
Income taxes refunded ...................................................................................
Net cash provided by operating activities ..................................................

See Notes to Consolidated Financial Statements.

17
17

Consolidated Financial Statements
Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Consolidated Financial Statements

1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of The Nanto Bank,
Ltd. (the “Bank”) and its consolidated subsidiaries (together, the “Group”)
have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act, its related accounting regulations, Ordinance for Enforcement of the Banking Law and in conformity
with accounting principles generally accepted in Japan, which are different in certain respects from the application and disclosure requirements ofInternational Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions,from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplemental information included in thestatutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan,
amounts less than one million yen have been omitted. As a result, the totals shown in the financial statements do not necessarily agree with thesum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollar amounts
is included solely for the convenience of the readers outside Japan, using
the prevailing exchange rate at March 31, 2013, which was ¥94.05 to
US$1.00. The translations should not be construed as representations that
the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Principles of consolidation
The accompanying consolidated financial statements include the accountsof the Bank and all its eleven (twelve in 2012) subsidiaries at March 31,
2013. The Bank has no affiliates over which it has the ability to exercise
significant influence over operating and financial policies.
Nanto Preferred Capital Cayman Limited, which had been consolidated until 2012, has been excluded from the scope of consolidation for theyear ended March 31, 2013 since it was liquidated in 2013.
All consolidated subsidiaries have fiscal years ending on March 31.
All significant intercompany accounts, transactions and unrealized
profits on transactions are eliminated.
b. Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash and cash
equivalents represents cash and deposits with the Bank of Japan.
c. Finance leases
As lessor:
Finance leases are accounted for in a manner similar to that used for manner ordinary sale transactions. Revenue from finance lease transactions
and related costs are recognized upon receipt of lease payments. Financeleases which transfer ownership of the lease assets to the lessee are recognized as lease receivables, and all finance leases which do not transfer
ownership of the leased assets to the lessee are recognized as lease investment assets.
As for finance leases which commenced before April 1, 2008 and do
not transfer ownership of the leased assets to the lessee, the appropriate
book value (net of accumulated depreciation and amortization) of tangible
and intangible fixed assets as of March 31, 2008 was recorded as the beginning balance of “Lease receivables and lease investment assets” andthe total amount of interest equivalent for the remaining lease term after

18
18

the adoption of “Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan (“ASBJ”), Statement No. 13, issued on
March 30, 2007) is allocated over the remaining lease term using thestraight-line method.
Differences between income before income taxes for the fiscal year
ended March 31, 2013 and 2012 and income before income taxes calculated as if the accounting treatment for the ordinary sale transaction had been
applied to the finance leases which do not transfer ownership of the leased
assets to the lessee are not material.
d. Securities
Trading securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations arerecognized as gains or losses in the period of the disposal or the change.
Cost of sales is determined using the moving average method. Held-tomaturity debt securities are stated at amortized cost on a straight-line
method, cost of which is determined 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 closing date.
Unrealized gains and losses on available-for-sale securities are reported,
net of applicable income taxes, as a separate component of accumulated
other comprehensive income. Available-for-sale securities for which it isextremely difficult to identify the fair value are stated at moving average
cost.
If the fair value of held-to-maturity debt securities or available-for-salesecurities declines significantly, such securities are stated at fair value, andthe difference between the fair value and the carrying amount is recognized as a loss in the period of the decline. In such a case, the fair value
will be the carrying amount of the securities at the beginning of the next
fiscal year.
Securities managed as trust assets in the individually managed money
held in trust primarily for securities management purposes are measured
at fair value.
e. Derivatives and hedge accounting
Derivatives are measured at fair value.
To account for hedging transactions in connection with interest raterisk arising from financial assets and liabilities, the Bank applies the deferred hedge accounting method stipulated in “Treatment for Accounting
and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report
No. 24). The Bank assesses the effectiveness of such hedges in offsetting
movement in 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. Regarding cash flow hedges,
the Bank assesses the effectiveness by verifying the correlation of thehedged items with the hedging instruments.
A portion of the deferred hedge losses and gains that were previously
accounted for under the “macro hedge method,” which had been appliedin order to manage interest rate risk arising from large volume transactions
in loans, deposits and other interest earning assets and interest bearing liabilities as a whole using derivatives pursuant to “Temporary Treatment for
Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 15) is no longer subject to hedge accounting. The deferredhedge losses and gains are being charged to “Interest income” or “Interest
expenses” over a 15-year period (maximum) from March 31, 2004 according to their maturity and notional principal amount. The total amount ofdeferred hedge loss under the “macro hedge method” was ¥4 million ($42
thousand) in 2013 and ¥12 million in 2012.
In order to hedge risk arising from the volatility of exchange rates forsecurities (excluding bonds) denominated in foreign currencies, the Bank
applies fair value hedge accounting on the condition that the hedged securities are designated in advance and that sufficient on balance (actual) or
off-balance (forward) liability exposure exists to cover the cost of thehedged securities denominated in the same foreign currency.

Changes in accounting policies<Changes in accounting policies based on justified reasons other than revisions of accounting standards or amendments of respective laws or regulations that are not distinguishable from changes in accounting estimates>
Depreciation of tangible fixed assets (except for leased assets) of the Bank
had been previously computed by the declining balance method. Effectivefrom the year ended March 31, 2013, however, the Bank changed the depreciation method for buildings, excluding building attachments, from thedeclining balance method to the straight-line method.
This change was made because management determined that thestraight-line method by which the depreciation charge is allocated equally
over the useful life reflects the actual use profit or loss more appropriately
than the declining balance method since the buildings are being used for along-term period. Management studied the depreciation method for buildings considered to increase in materiality after the fiscal year ended March
31, 2013, following the preparation of capital investment plans that include the establishment of new branches, expansion and improvement andthe Bank’s endeavoring to enhance customer satisfaction and strengthen
profitability through the development of community-based operations pursuant to the mid-term management plan “Best Value NANTO”, whichstarted from April 2011, and working to establish operational bases centering on business loan transactions by expanding the branch network as apart of the plan.
The effect of this change on the consolidated financial statements has
been immaterial.
<Changes in accounting policies with amendments of respective laws or
regulations that are not distinguishable from changes in accounting estimates>
From the year ended March 31, 2013, in accordance with the amendment
in the Corporate Tax Law, the Bank and its domestic subsidiaries havechanged the depreciation method for tangible fixed assets, except forbuildings (excluding building attachments) and leased assets. Assets acquired on or after April 1, 2012 are depreciated using the method prescribed in the amended Corporate Tax Law.
The effect of this change on the consolidated financial statements has
been immaterial.
g. Intangible fixed assets
Amortization of intangible fixed assets is computed by the straight-line
method. Acquisition costs of software to be used internally are capitalized
and amortized by the straight-line method primarily over a useful life of
five years.

i. Reserve for possible loan losses
The reserve for possible loan losses is provided according to predetermined standards. For loans to insolvent customers who are undergoingbankruptcy or other special liquidation (“bankrupt borrowers”) or who arein a similar financial condition (“effectively bankrupt borrowers”), the reserve for possible loan losses is provided based on the amount of theclaims net of the amount expected to be recovered from collateral andguarantees and net of the deducted amount mentioned below. For the unsecured and unguaranteed portions of loans to customers not presently inthe above circumstances, but for whom there is a high probability of so
becoming (“likely to become bankrupt borrowers”), the reserve for possible loan losses is provided for the estimated unrecoverable amounts determined after an evaluation of the customer’s overall financial condition. For
other loans, the reserve for possible loan losses is provided for based on
the Bank’s actual rate of loan losses in the past.
All the claims are assessed by the operating divisions based on the
self-assessment criteria on 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 andguarantees is deemed uncollectible and deducted directly from thoseclaims. At March 31, 2013 and 2012, the deducted amounts were ¥17,082
million ($181,626 thousand) and ¥17,150 million, respectively. The reserve for possible loan losses of the consolidated subsidiaries is provided
for general claims by the amount deemed necessary based on the historical loan-loss ratio and for certain doubtful claims by the amount deemed
uncollectible based on an assessment of each claim.

Consolidated Financial Statements

f. Tangible fixed assets (except for leased assets)
Depreciation of tangible fixed assets of the Bank is computed by the declining balance method, except for buildings (excluding building attachments which are depreciated by the declining balance method) which are
depreciated by the straight-line method. The estimated useful lives of major items are as follows:
6 to 50 years
Buildings
Others3 to 20 years
Depreciation of the assets of the consolidated subsidiaries is principally provided on the declining balance method over the estimated useful lifeof the asset.

h. Lease assets
Lease assets with respect to finance leases that do not transfer ownershipof tangible fixed assets and intangible fixed assets are depreciated or amortized using the straight-line method with the assumption that the term of
the lease is the useful life. Residual values of leased assets are the guaranteed values determined in the lease contracts or zero for assets without
such guaranteed value.

j. Employee retirement benefits
The reserve for retirement benefits, which is provided for future pension
payments to employees, is recorded based on the projected benefit obligation and the estimated value of pension plan assets at the end of the fiscal
year.
Prior service costs are recognized as profit or loss at the time of occurrence, and actuarial gains and losses are recognized in gains or expenses
in equal amounts from the following fiscal year by the straight-line method over ten years, which is within the average remaining service years of
the current employees.
k. Reserve for reimbursement of deposits
A reserve for reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for possible losses on the future claims of withdrawal based on historical reimbursement experience.
l. Reserve for contingent losses
Providing for payment of the contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not coveredby other reserves in an amount deemed necessary based on estimated losses in the future.

1919Consolidated Financial Statements

m. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.

Consolidated Financial Statements

n. Income taxes
Deferred income taxes are recorded to reflect the tax effects of temporary
differences between the carrying amounts of assets and liabilities for tax
and financial reporting purposes.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
o. Recognition criteria for lease income and costs
Lease income and costs are recognized at the time of receiving lease fees.
p. Consumption taxes
Transactions subject to national and local consumption taxes are recorded
at amounts exclusive of consumption taxes.

q. Unapplied accounting standards“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26,
May 17, 2012) and “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, May 17, 2012)(1) Summary
Under the amended rule, actuarial gains and losses and past service costs
that are yet to be recognized in profit or loss would be recognized within
the net asset section, after adjusting for tax effects, and the deficit or surplus would be recognized as a liability or asset without any adjustments.
For determining method of attributing expected benefit to periods, theStandard now allows to choose benefit formula basis, as well as straightline basis. Method for determination of discount rate has also been amended.
(2) Effective dates
The Bank is scheduled to apply above (i) from the consolidated financial
statements concerning the end of the fiscal year starting on April 1, 2013
and above (ii) from the beginning of the fiscal year starting on April 1,
2014.
(3) Effect of application of the standard
The effect of the application of this accounting standard is currently underconsideration.

3. SEGMENT AND RELATED INFORMATION(1) Overview of the Reportable Segments
The Bank’s reportable segments are determined on the basis that separate financial information for such segments is available and examined periodicallyby the Board of Directors to make decisions regarding the allocation of management resources and assess the business performances of such segments
within the Group. The Group’s main operations is banking. The Bank also provides securities services and operates credit guarantee business and leasing
and credit card businesses. The Group has divided its business operations into the two reportable segments of “Banking and Securities” and “Leasing.”
Banking and Securities includes banking and the security business, and Leasing includes leasing.
(2) Basis of measurement for reported segment profit (loss), segment assets, segment liabilities and other material items
The accounting method used for reportable business segments is presented in accordance with “Summary of significant accounting policies.” The reportable segment profit figures are based on operating profit. Income arising from intersegment transactions is based on arm’s length prices.
As referred to Note 2 (f), effective from the year ended March 31, 2013, the Bank has changed the depreciation method for buildings (excluding building attachments) under tangible fixed assets (except for leased assets) from the declining balance method to the straight-line method to reflect the actualuse of the buildings in profit or loss for the period more accurately. Accordingly, the depreciation method for such assets under the segment of “Banking
and securities” in the reportable segment has been changed from the declining balance method to the straight-line method.
In addition, effective from the year ended March 31, 2013, the Bank and its consolidated subsidiaries changed the depreciation method for tangible
fixed assets, except for buildings (excluding building attachments) and leased assets, acquired on or after April 1, 2012 to the depreciation method provided by the amended Corporate Income Tax Act. Accordingly, the depreciation method for such assets in the reportable segment has been changed to the depreciation method provided by the amended Corporate Income Tax Law.
The effect of these changes on the respective reportable segment profit has been immaterial.

20
20

(3) Information about reported segment profit (loss), segment assets, segment liabilities and other material items
Segment information for the years ended March 31, 2013 and 2012 is summarized as follows:
Millions of yen

2013
Reportable segments

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

¥

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

Leasing

79,685457
80,143
9,899
5,015,857
4,809,469¥ 6,754
1,166
7,920
250
22,102
19,3485,241
59,058
4,852
—
493
1,858
3,750

Total

¥

Other

Total

¥

88,541
4,482
93,023
11,7795,054,035
4,837,620

Adjustment¥

334(4,482)(4,147)
141(28,997)(28,328)

Consolidated

86,4401,623
88,063
10,1505,037,960
4,828,817¥ 2,101
2,858
4,959
1,629
16,0758,802¥

88,875—88,875
11,921
5,025,037
4,809,291

313
1
214
—
0
105

5,555
59,059
5,067
—
494
1,964

76
303
17
—
212
500

5,631
59,363
5,084
—
706
2,464

228
(369)
(429)
—
—
71

5,859
58,994
4,654
—
706
2,536

422

4,173

60

4,233

(378)

3,854

Consolidated Financial Statements

Banking and
Securities

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2.	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3.	Adjustments are as below:		 (1)	Adjustment of ordinary income for outside customers of ¥334 million is mainly the recovery of written off claims included in “other.”		 (2)	Adjustment of segment profit of ¥141 million is the elimination of intersegment transactions.
		 (3)	Adjustment of segment assets of negative ¥28,997 million is the elimination of intersegment transactions.
		 (4)	Adjustment of segment liabilities of negative ¥28,328 million is the elimination of intersegment transactions.
		 (5)	Adjustment of depreciation of ¥228 million is the elimination of intersegment transactions.
		 (6)	Adjustment of interest income of negative ¥369 million is the elimination of intersegment transactions.
		 (7)	Adjustment of interest expense of negative ¥429 million is the elimination of intersegment transactions.
		 (8)	Adjustment of tax expense of ¥71 million is the elimination of intersegment transactions.
		 (9)	Adjustment of increase in tangible and intangible fixed assets of negative ¥378 million is the elimination of intersegment transactions.
4.	Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.
Millions of yen

2012
Reportable segments
Banking and
Securities

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

¥

Leasing

79,928475
80,4049,178
4,799,083
4,615,454¥ 6,469
1,638
8,107
(138)
22,071
19,4795,107
61,945
6,371
—
444
5,418
2,833

Total

¥

Other

Total

86,3972,114
88,512
9,040
4,821,155
4,634,934¥ 2,080
4,366
6,446
2,450
36,790
9,398

274
1
247
—
0
(36)

5,381
61,946
6,619
—
444
5,382

374

3,207

¥

Adjustment

Consolidated

88,478
6,480
94,958
11,4904,857,946
4,644,332¥ 1,597(6,480)(4,883)
185(48,370)(46,998)¥

90,075—90,075
11,676
4,809,575
4,597,334

85
807
20
—
0
1,061

5,466
62,754
6,639
—
444
6,444

687
(891)
(954)
—
—
(169)

6,154
61,862
5,685
—
444
6,274

37

3,244

(324)

2,920

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2. 	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3. Adjustments are as below:		 (1)	Adjustment of ordinary income for outside customers of ¥1,597 million is mainly the reversal of allowance for loan losses and recovery of written off claims included in“other.”		 (2) Adjustment of segment profit of ¥185 million is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative ¥48,370 million is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative ¥46,998 million is the elimination of intersegment transactions.
		 (5) Adjustment of depreciation of ¥687 million is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative ¥891 million is the elimination of intersegment transactions.

21
21

Consolidated Financial Statements

		 (7) Adjustment of interest expense of negative ¥954 million is the elimination of intersegment transactions.
		 (8) Adjustment of tax expense of negative ¥169 million is the elimination of intersegment transactions.
		 (9) Adjustment of increase in tangible and intangible fixed assets of negative ¥324 million is the elimination of intersegment transactions.
4. Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.
Thousands of U.S. dollars

2013

Consolidated Financial Statements

Reportable segments
Banking and
Securities

Ordinary income:Outside customers ...................................... $ 847,262
Intersegment income ...................................
4,859
Total ........................................................
852,131
Segment profit .................................................
105,252
Segment assets ................................................ 53,331,812
Segment liabilities ........................................... 51,137,363
Other item
Depreciation ...............................................
55,725627,942Interest income ...........................................
Interest expense ..........................................
51,589Extraordinary gain ......................................
—
Extraordinary loss .......................................
5,241
Tax expense ................................................
19,755
Increase in tangible
and intangible fixed assets ..........................

39,872

Leasing

Total

Other

919,085
17,256936,342
107,92153,566,826
51,343,083$ 22,339
30,38852,727
17,320170,919
93,588

3,328
10
2,275
—
0
1,116

59,064
627,953
53,875—
5,252
20,882

808
3,221
180
—
2,254
5,316

59,872
631,185
54,056—
7,506
26,1982,424(3,923)(4,561)——
754

62,296627,262
49,484—
7,506
26,964

4,486

44,370637

45,007(4,019)40,978$ 71,812
12,397
84,2102,658
235,002205,720

$

Total

$

Adjustment

941,424
47,655
989,080
125,241
53,737,745
51,436,682

Consolidated$

3,551 $ 944,976(47,655)—(44,093)944,976
1,499
126,751(308,314) 53,429,420(301,201) 51,135,470

Notes: 1.	Ordinary income (“Total income” less extraordinary gain) is presented in place of net sales of operating companies of other industry groups.
2. 	“Other” includes business segments which are not included in the reportable segments and comprises credit guarantees, real estate leasing and management, softwaredevelopment and credit cards.
3. Adjustments are as below:		 (1) Adjustment of ordinary income for outside customers of $3,551 thousand is mainly the recovery of written off claims included in “other.”		 (2) Adjustment of segment profit of $1,499 thousand is the elimination of intersegment transactions.
		 (3) Adjustment of segment assets of negative $308,314 thousand is the elimination of intersegment transactions.
		 (4) Adjustment of segment liabilities of negative $301,201 thousand is the elimination of intersegment transactions.
		 (5) Adjustment of depreciation of $2,424 thousand is the elimination of intersegment transactions.
		 (6) Adjustment of interest income of negative $3,923 thousand is the elimination of intersegment transactions.
		 (7) Adjustment of interest expense of negative $4,561 thousand is the elimination of intersegment transactions.
		 (8) Adjustment of tax expense of $754 thousand is the elimination of intersegment transactions.
		 (9) Adjustment of increase in tangible and intangible fixed assets of negative $4,019 thousand is the elimination of intersegment transactions.
4. Segment profit is reconciled to income before income taxes and minority interests in the consolidated statements of income.

(4) Information about services
Millions of yen

2013

Ordinary income from outside customers ......

Banking

Securities andinvestments¥41,116¥26,423

Leasing¥6,754

OthersTotal¥14,582¥88,875

Millions of yen

2012

Ordinary income from outside customers ......

Banking

Securities andinvestments¥43,507¥22,775

Leasing¥6,469OthersTotal¥17,323¥90,075

Thousands of U.S. dollars

2013

Ordinary income from outside customers ......

Banking

Securities andinvestments

Leasing

OthersTotal$437,171$280,946$71,812$155,045$944,976

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

(5) Information about geographic areasa. Ordinary income
The ratio of ordinary income from outside customers within Japan to the total ordinary income in the consolidated statement of income exceeded 90% forboth fiscal years ended March 31, 2013 and 2012; therefore, no information about geographic areas is required to be disclosed.

2222

b. Tangible fixed assets
The ratio of tangible fixed assets located in Japan to the total tangible fixed assets in the consolidated balance sheet exceeded 90% for both fiscal years
ended March 31, 2013 and 2012; therefore, no information about geographic areas is required to be disclosed.

(7) Information on Impairment of Fixed Assets for Each Reportable Segment
Millions of yen

2013
Reportable segments
Banking and
Securities

Leasing¥480

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

Total

—

¥480

Others (Note)

¥167

Total

¥648

Consolidated Financial Statements(6) Information about major customers
Ordinary income from a specific customer exceeding 10% of the total consolidated ordinary income did not exist for either fiscal year ended March 31,
2013 or 2012. Therefore, information about major customers is not required to be disclosed.

Millions of yen

2012
Reportable segments
Banking and
Securities

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

Leasing

¥320

Total

—

Others

¥320

Total

—

¥320

Thousands of U.S. dollars

2013
Reportable segments
Banking and
Securities

Leasing$5,103

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

—

Total

OthersTotal$5,103$1,775$6,889Note: “Others” represents the amounts related to the real estate leasing and management business.

(8) Information on amortization of goodwill and its remaining balance for each reportable segment
There is no information to be reported on amortization of goodwill and its remaining balance.
(9) Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill.
4. CHANGES IN NET ASSETS(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2013 and 2012 are as follows:(Thousands of shares)

Remarks

2013

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

April 1, 2012

Increase

Decrease

March 31,2013

281,756—

6,000

275,756

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

281,756—

6,000

275,756

6,072

5,852

6,015

5,909

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

6,072

5,852

6,015

5,909

Note 1

Notes 2 & 3

Notes: 1.	The decrease in common stock of 6,000 thousand shares issued is due to the retirement of treasury stock.
2.	The increase in common stock of treasury stock of 5,852 thousand shares comprises an increase of 5,837 thousand shares due to the purchase of treasury stock based on a
resolution of the Board of Directors’ meeting and an increase of 15 thousand shares due to the purchase of shares of less than one unit.
3.	The decrease in common stock of treasury stock of 6,015 thousand shares comprises a decrease of 6,000 shares due to the retirement of treasury stock, a decrease of 13 thousand
shares due to the execution of stock options and a decrease of 2 thousand shares due to sales of shares of less than one unit.

23
23

Consolidated Financial Statements(Thousands of shares)

Remarks

2012

Consolidated Financial Statements

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

April 1, 2011

Increase

Decrease

March 31,2012

281,756
281,756————

281,756
281,756

6,073
6,073

17
17

19
19

6,072
6,072

Notes 1 & 2

Notes: 1.	The increase in common stock of treasury stock of 17 thousand shares is due to the purchase of shares of less than one unit.
2.	The decrease in common stock of treasury stock of 19 thousand shares comprises a decrease of 19 thousand shares due to the execution of stock options and a decrease of 0
thousand shares due to sales of shares of less than one unit.

(2) Matters concerning Stock Acquisition Rights
For the year ended March 31, 2013
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, 2012

Total

Increase

Decrease

March 31, 2013

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

—

—

—

—

¥100

$1,063

—

—

—

—

¥100

$1,063For the year ended March 31, 2012
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, 2011

Total

Increase

Decrease

March 31, 2012

Balance at end ofcurrent fiscal year
(Millions of yen)

—

—

—

—

¥64

—

—

—

—

¥64

(3) Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2013
Resolution

Annual shareholders meeting held on
June 28, 2012
Board of Directors meeting held on
November 12, 2012

Type of shares

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

Effective dateCommon stock¥827 ($8,793)¥3.00 ($0.03)

March 31, 2012

June 29, 2012

Common stock¥809 ($8,601)¥3.00 ($0.03)

September 30, 2012

December 7, 2012

Dividends paid in the fiscal year ended March 31, 2012
Resolution

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

Type of shares

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

Effective dateCommon stock

¥827

¥3.00

March 31, 2011

June 30, 2011

Common stock

¥827

¥3.00

September 30, 2011

December 9, 2011(b) Dividends to be paid in the fiscal year ending March 31, 2014
Resolution

Annual shareholders meeting held on
June 27, 201324
24

Type of shares

Aggregate amount ofdividends

Common stock¥809 ($8,601)

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

Retainedearnings¥3.00 ($0.03)

March 31, 2013

Effective dateJune 28, 2013

5. STATEMENTS OF CASH FLOWS
The reconciliation between cash and due from banks in the consolidated balance sheets at March 31, 2013 and 2012 and cash and cash equivalents in the
consolidated statements of cash flows for the years then ended are as follows:
Thousands of
U.S. dollars

Millions of yen

6. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
a. Matters relating to the status of financial instruments(1) Policy on financial instruments
The Group (the Bank and its subsidiaries) is composed of the Bank andeleven consolidated subsidiaries and provides financial services such as
banking, securities, credit guarantee and leasing businesses.
Its major banking business includes (i) the acceptance of deposits,
lending services, bills discounting and remittance, and (ii) the guaranteeof 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 funds, raises funds by loans and bonds
with consideration for the balance of financial market conditions andlength.
The Bank conducts asset and liability management (ALM) and manages, identifying various types of risk exposures associated with the banking business, since the Bank holds financial assets and liabilities exposedto the market risk associated with the fluctuation of interest rates. As partof its risk management, the Bank utilizes derivative transactions such as
interest rate swaps. The Bank also enters into derivative transactions for
trading purposes with certain position limits.
(2) Contents and risk of financial instruments
Financial assets held by the Group are composed mainly of loans to corporate and individual customers which are exposed to credit risk arisingfrom the nonperformance of its customers. In addition, loan balances are
significantly concentrated to Nara prefecture, where the head office of the
Bank is located. Accordingly, changes in the economic circumstances of
the region 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 raterisk, currency related derivative transactions are used to balance theamount of each currency to reduce the risk.
In the banking business, financial liabilities consist principally of deposits from retail clients in Japan and are exposed to interest rate risk. In
addition, foreign currency deposits are exposed to exchange rate risk. With
respect to borrowed money and bonds payable, the Group may be forced
to raise funds under unfavorable conditions and, accordingly, become significantly exposed to liquidity risk if the fund raising capacity of theGroup 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

2013

2012

¥175,662
(315)
(173)
¥175,173¥131,459(21,015)(838)¥109,6062013$1,867,751(3,349)(1,839)$1,862,551

exposed to interest rate risk.
Derivative transactions include interest rate swaps for interest rate related transactions, currency swaps and forward foreign exchange transactions for currency related transactions and bond future transactions forbond related transactions. In addition, certain credit derivatives areembedded in the financial instruments. The Bank utilizes those derivativetransactions in order to hedge the position of the customers as well as tocapture various risks associated with transactions with customers 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 areused as hedging instruments to avoid interest rate risks of hedged items
such as loans with fixed interest rates and deposits with fixed interest
rates. Deferred hedge accounting has been applied to derivatives used as
hedging instruments.
The Bank assesses the effectiveness of hedges in offsetting movementin the fair value from changes in interest rates by classifying the hedged
items such as deposits and loans and the hedging instruments such as interest rate swaps by their maturity. For cash flow hedges, the Bank assesses the effectiveness by verifying the correlation between the hedged items
and the hedging instruments. Transactions which do not meet the requirements of hedge accounting and derivative transactions for trading purposes
are exposed to interest rate risk, currency risk, price fluctuation risk andcredit risk.

Consolidated Financial Statements

Cash and due from banks on the consolidated balance sheet
Time deposits due from banks
Other due from banks
Cash and cash equivalents on the consolidated statements of cash flows(3) Risk management system for financial instruments
Credit risk management
The Group has established a framework for credit control which includes
credit review by individual transaction, credit limit, credit information
management, internal credit rating, guarantees and collateral and self-assessment in accordance with the Group’s “Rules on credit risk management” and “Rules on self-assessment of assets.” These credit controls are
performed by each branch and the Credit Analysis Division, and the independent Audit Department audits the status of credit risk controls and its
results. The status of credit risk controls is periodically evaluated and reported to the Managing Directors’ Committee and board meeting.
Credit risks associated with the issuers of securities are managed by
Securities & International Division and Compliance & Risk Management
Division. With respect to the credit risks associated with the issuer of the
securities and counterparty risk associated with derivative transactions, related credit information and fair values of the securities are periodicallychecked to monitor those risks.
Market risk management(a) Interest rate risk
From the perspective of ALM, the Group manages market risk such as interest rate risk associated with assets and liabilities, including loans, deposits and securities comprehensively. The Group’s “Rules on Market
Risk Management” articulates that the Bank make efforts to manage themarket sector effectively, taking risk and reward into account as well as2525

Consolidated Financial Statements

Consolidated Financial Statements

avoiding excessive risk taking by setting appropriate risk limits based on
the Group’s ability to take risk and identifying market risk properly.
The ALM Committee, the decision making entity for the managementof market risks, sets certain semiannual risk limits determined by VaRbased upon the Bank’s capital adequacy and market conditions. The Bank
pursues profit opportunities within the risk limits. The Compliance & Risk
Management Division assesses interest rate risk by VaR, reports to the
ALM Committee on a monthly basis and properly monitors its operations.
Other methodologies such as BPV and the simulation of the interest rate
fluctuation are also used so that the Bank can capture and analyze risk
from a broader point of view.
(b) Foreign currency risk
With regard to foreign currency risk associated with operations and procurement of financial instruments denominated in foreign currency, theGroup manages risk by balancing the amount of funding and amount ofoperations for each currency. In addition, as for foreign currency exchangetransactions for investment purposes, the Compliance & Risk Management Division assesses the foreign currency risk by VaR, reports to the
ALM committee on a monthly basis and properly monitors its operations.
(c) Price fluctuation risk
With regard to investments in securities, the Group prepares its asset management plan semiannually and makes investment decisions at the ALM
Committee based upon expected returns and correlations between investment items and related market fluctuation risk. The Securities & International Division plays a part in investment for investment purposes, and theGeneral Business Division plays a part in investments for the purpose ofbusiness alliances and capital affiliation. Continuous monitoring of market
conditions and restrictions on riskier assets such as securitized instruments
help to avoid unnecessary price fluctuation risk.
The Compliance & Risk Management Division assesses the price fluctuation risk of equity securities, etc. by VaR, reports monthly to the ALM
Committee about compliance with risk limits and properly manages therisk.
(d) Derivative transactions
With respect to derivative transactions for hedging purposes, the Groupestablishes internal rules defining the authority and hedge policies which
are governed by the Compliance & Risk Management Division. With respect to derivative transactions for trading purposes, certain trading limits
and loss limit rules are set semiannually by the ALM Committee. The
Compliance & Risk Management Division, which serves as the middle office, monitors compliance and calculates the total amount of risk. The Securities & International Division, which serves as the back office, checks
each derivative transaction, marked-to-market position and evaluates the
profit and loss from the transactions on a daily basis. Combined with thosefunctions, the related divisions check each other so as not to exceed limits
on loss.
The directors of the Bank are reported to from both the middle officeand back office and monitor the risks associated with the Bank’s portfolio
as a whole, including loans, deposits and securities at the ALM Committee.

2626(e) Quantitative information relating to market risk
The Group manages the quantity of market risk for financial instruments
such as loans, deposits, securities and derivatives by VaR. To calculate
VaR, the historical method (confidence level of 99%, observation period
of 1,250 business days, holding period of 120 business days [holding period for shares other than for net investment purposes are 240 businessdays] and the correlation of risk categories are not considered.) is adopted.
The holding period has been changed from 60 business days to 120 business days [holding period for shares other than for net investment purposes has been changed from 120 business days to 240 business days].
At March 31, 2013, the Group’s total market risk (decrease in estimated economic value) was ¥55,850 million ($593,833 thousand) (¥51,731
million in 2012). In addition, the Group conducted back tests to compare
actual income with the VaR calculated by the model. According to theback tests conducted in 2012, the measurement model captured the quantity of market risk with sufficient accuracy. However, VaR is a statisticalmeasure of market risk based on past fluctuations in the market and certain
probability of occurrence. It may not be possible to capture the risk if themarket fluctuates rapidly under extraordinary circumstances.
Management of liquidity risk associated with financing activities
The Securities & International Division manages the Bank’s cash position
based upon the monthly funding plan designed by the ALM Committee,
while the Compliance & Risk Management Division monitors the situation. The ALM Committee manages financing risk comprehensively by
understanding the amount of cash for which the Bank can liquidate andalso can raise from the market on a regular basis.
In addition, the Group categorizes its financing situation into “RegularPhase” “Concern Phase” and “Crisis Phase,” and prepares appropriate
management structures for each phase so that the Group can take proper
action accordingly.
(4) Supplementary explanation on the fair value of financial instruments
The fair values of financial instruments comprise the values determinedbased on quoted market prices and values calculated on a reasonable basis
when no market price is available. Certain assumptions are used for the
calculation of such amounts, and, accordingly, the result of such calculations may vary if different assumptions are used.

b. Fair value of financial instruments
The table below summarizes the carrying amounts, fair values and differences of financial instruments as of March 31, 2013 and 2012.
Note that unlisted equity securities for which it is extremely difficult to identify the fair value and immaterial accounts are not included in the table (seeNote 2 below).
Millions of yen

2013

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

Fair value¥ 175,662
430
4,279

¥ 175,662
430
4,279

322
21,000322
21,000——4,031
1,833,939
2,898,844(27,896)
2,870,948¥4,910,614¥4,418,137
96,467138,235
81,10020,000¥4,753,940

4,056
1,833,939

24—

2,888,782¥4,928,472¥4,419,757
96,467138,235
81,09920,436¥4,755,995

17,834¥17,858¥ 1,620——(1)436¥ 2,055(3,900)(1,609)(5,510)(3,900)(1,609)(5,510)

—
—
—

¥

¥

Difference

¥

¥

—
—
—

Consolidated Financial Statements

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

Carrying amountMillions of yen

2012

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

Carrying amount

Fair value¥ 131,459
12,0804,075¥ 131,459
12,0804,075

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

3,979
1,748,774

34—

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

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

—
(9)
(9)

¥

¥

Difference

¥

¥

—
—
—

27
27

Consolidated Financial Statements

Thousands of U.S. dollars

2013
Carrying amount

Consolidated Financial Statements

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

Fair value

Difference$ 1,867,751
4,572
45,497$ 1,867,751
4,572
45,4973,423
223,285

3,423
223,285——

42,86019,499,617
30,822,371(296,608)
30,525,762$52,212,801$46,976,469
1,025,699
1,469,803
862,307
212,652$50,546,943

43,125
19,499,617

255—

30,715,385$52,402,679$46,993,694
1,025,699
1,469,803
862,296
217,288$50,568,793

189,622$189,877$ 17,224
—
—
(10)
4,635
$ 21,850(41,467)(17,107)(58,585)(41,467)(17,107)(58,585)

—
—
—

$

$

$

$

—
—
—

(*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 its cash flow at theinterest rate assumed if the same due from banks were newly executed.
The fair value of the derivative embedded due from banks is determinedbased on the prices presented by the financial institutions with which they
are transacted.
Call loans and bills bought:
The carrying amount is presented as the fair value as the residual maturity
is less than one year and the fair value approximates the carrying amount.
Debt purchased:
The carrying amount of the lump sum factoring receivables is presented as
the fair value as the residual maturity is less than one year and the fair value approximates the carrying amount.
Trading account securities:
The fair values of securities held for trading purposes are determinedbased on quoted market prices or values calculated on a reasonable basis
if no market price is available.
Money held in trust:
The fair value of securities managed as trust assets in individually managed money held in trust primarily for securities management purposes
are determined based on the values presented by the trust bank. For additional information on money held in trust categorized by holding purposes,
see Note 7, “SECURITIES AND MONEY HELD IN TRUST.”

28
28

Securities:
The fair value of equity securities is determined using the market price atthe exchanges. The fair value of debt securities is determined based onmarket prices or values calculated on a reasonable basis if no market priceis available. The fair value of listed investment trusts is determined using
the market price at the exchanges and the fair value of other investment
trusts is determined using standard prices published by the Investment
Trust Association, Japan or presented from the financial institutions withwhich they are transacted. The fair value of the private bonds guaranteedby the Bank is 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 to the private bonds guaranteed by the Bank issued by “bankrupt borrowers,” “effectively bankrupt borrowers” and “likely to becomebankrupt borrowers,” the possible amounts of loan loss are computed
based on the present value of estimated future cash flow or the recoverable
amounts from collateral and guarantees. Therefore, the fair value approximates the carrying amount, net of reserve for possible loan losses, andsuch amount is presented as the fair value.
With regard to floating rate Japanese government bonds held as “securities,” the market value is unlikely to indicate the fair value due to the extraordinary limited trading of such bonds. Such bonds have been carried attheir reasonably estimated amounts at this fiscal year end. As a result,“Japanese Government Bonds” included in “Securities” and “Valuationdifference on available-for-sale securities” increased by ¥1,398 million($14,864 thousand) and ¥903 million ($9,601 thousand) at March 31,
2013 and ¥8,308 million and ¥5,367 million at March 31, 2012, respectively, and “Deferred tax assets” decreased by ¥494 million ($5,252 thousand) at March 31, 2013 and ¥2,941 million at March 31, 2012, comparedwith the result that would have been reported using the market price.
Reasonably estimated amounts of floating-rate Japanese government
bonds consist of the net value of discounted cash flow adjusting convexity
from the floating-rate Japanese government bonds and the net value ofLoans and bills discounted:
The fair value of loans with floating interest rates is presented using thecarrying amount as the fair value approximates the carrying amount, aslong as the credit situation of the borrowers does not vary significantly after executing the loans, since they reflect market interest rates due to theirshort-term nature. The fair value of loans with fixed rates is computed bydiscounting the aggregate value of principal and interest at the interest rate
assumed if the same loans were newly executed for each category of typeof loans, internal ratings and maturities. As for the loans whose maturity isless than one year, the carrying amount is presented as the fair value as thefair value approximates the carrying amount.
With respect to receivables from “bankrupt borrowers,” “effectively
bankrupt borrowers” and “likely to become bankrupt borrowers,” the possible amounts of loan loss are computed based on the present value of theestimated future cash flow or the recoverable amounts from collateral andguarantees. Therefore, the fair value approximates the carrying amount,net of reserve for possible loan losses, and such amount is presented as thefair value.
The fair value of loans without a predetermined repayment date due totheir lending amounts being limited within the values of the applicable
collateral is presented using the carrying amount as the fair value isdeemed to approximate the carrying amounts considering the estimatedrepayment term and interest rates. The fair value of embedded derivativeloans is presented using market prices at financial institutions.

Liabilities
Deposits and negotiable certificates of deposits:
With respect to on-demand deposits, the payment obligation due when demanded at the balance sheet date, which is the carrying amount, is deemed
to be the fair value. The fair value of time deposits is computed using thepresent value by discounting future cash flows for each category of a certain period. The interest rate to be applied when a new deposit is taken isused as the discount rate. For deposits whose residual maturity is less than
one year, the carrying amount is presented as the fair value as the fair value approximates the carrying amount.
Payables under securities lending transactions:
The carrying amount is presented as the fair value as the residual maturity
is less than one year and the fair value approximates the carrying amount.
Borrowed money:
The fair value of borrowed money with floating interest rates is presented
using the carrying amount as the fair value approximates the carrying
amount since the interest rate reflects the market interest rate due to theshort-term nature and that the credit situation of the Bank and its consolidated subsidiaries does not vary significantly after executing the borrowing. The fair value of borrowed money with fixed interest rate is computedby discounting the aggregate value of principal and interest (with respect
to borrowed money accounted for by the special treatment of interest rate
swaps, the aggregate value of principal and interest using the interest rate
swap rate) at the interest rate assumed if the same borrowing were newly
executed for each category of type of maturities. As for the borrowed
money whose maturity is less than one year, the carrying amount is presented as the fair value as the fair value approximates the carrying amount.

Consolidated Financial Statements

discounted cash flow of zero-floor options calculated by the Black-Sholes
option pricing model. The main variables of pricing decision for the above
calculations are the Japanese government bond spot rate as the marketyield and the yen swaption volatility as the forward rate volatility. The
theoretical prices of parties of each series of floating-rate Japanese government bonds are determined from the quotes of venders and verified fortheir adequacy by the Bank.
For additional information on securities categorized by holding purposes, see Note 7, “SECURITIES AND MONEY HELD IN TRUST.”

Bonds payable:
Bonds issued by the Bank are all unsecured and subordinated bonds. The
fair value of such bonds is determined using the market price.
Derivative transactions
For derivative transactions, see Note 21, “DERIVATIVE TRANSACTIONS.”(Note 2) The table below summarizes financial instruments whose fair value is extremely difficult to estimate. Note that these instruments are not includedin the above table regarding the fair value of financial instruments.
Carrying amountThousands of
U.S. dollars

Millions of yen

2013

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

¥2,356413¥2,7702012¥2,333441¥2,7752013$25,050
4,391$29,452(*1) The fair value of unlisted equity securities is not disclosed since there is no market price and it is extremely difficult to estimate the fair value.
(*2)	The Bank recognized loss on impairment of ¥0 million ($0 thousand) on unlisted equity securities for the year ended March 31, 2013. No impairment loss was recognized for the year
ended March 31, 2012.
(*3) The fair value of unlisted equity securities among the investment in partnerships is not disclosed since there is no market price and it is extremely difficult to estimate the fair value.

29
29

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

2013
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

Due after sevenyears through ten
years

Due after ten
years¥ 133,036
430
4,279
155,503
987
987

¥

—
—
—
425,806
1,275
1,275

¥

—
—
—
292,186
1,489
1,489

¥

—
—
—
339,202
279
279

¥

—
—
—
428,101
—
—

¥

—
—
—
60,000——154,516
90,0008,729
11,40044,386895,960¥1,189,210

424,530
153,600
66,62760,393
143,909371,881¥797,687

290,697
184,000
29,54265,322
11,832
256,541¥548,728

338,922279,600
43,744
7,504
8,073
189,654¥528,856

428,101
282,000
41,34850,75354,000239,961¥668,063

60,00030,000——30,000553,014¥613,014

Due after sevenyears through ten
years

Due after ten
years

Millions of yen

2012
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

89,31512,080
4,075
134,589440
440¥

134,149
69,3005,203
14,46845,177
849,900¥1,089,960

Due after three
years throughfive years

Due after five
years throughseven years———
305,264
1,822
1,822

¥

—
—
—
365,487
1,435
1,435

¥

—
—
—
330,474
248
248

¥

—
—
—
463,640
—
—

¥

—
—
—
30,000——303,442
167,800
35,33822,261
78,042
377,645¥682,909

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

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

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

30,000———30,000529,840¥559,840

Due after sevenyears through ten
years

Due after ten
years

Thousands of U.S. dollars

2013
Due after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years$ 1,414,524
4,572
45,497
1,653,407
10,494
10,494$———
4,527,442
13,556
13,556$———
3,106,709
15,832
15,832$———
3,606,613
2,966
2,966

$

—
—
—
4,551,844——$

1,642,913
956,937
92,812
121,212471,940
9,526,422$12,644,444

4,513,875
1,633,173
708,421642,137
1,530,132
3,954,077$8,481,520

3,090,877
1,956,406
314,109694,545
125,805
2,727,708$5,834,428

3,603,636
2,972,886
465,11479,787
85,8372,016,523$5,623,136

4,551,844
2,998,405
439,638
539,638
574,1622,551,419$7,103,274

637,958
318,979——
318,979
5,880,000$6,517,958

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

———
637,958——(*) Loans from “bankrupt,” “effectively bankrupt” and “likely to become bankrupt” borrowers which are not expected to be repaid and amounting to ¥89,660 million ($953,322 thousand)and ¥86,896 million at March 31, 2013 and 2012, respectively, are not included.
Loans whose payment term is not determined amounting to ¥318,320 million ($3,384,582 thousand) and ¥312,413 million at March 31, 2013 and 2012, respectively, are not included.

30
30

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

2013
Due after three
years throughfive years¥3,726,752
96,467138,235
76,809—¥4,038,264¥597,142
—
—
3,316
—
¥600,459¥94,241——975—¥95,216

Due after five
years throughseven years

Due after sevenyears through ten
years

Due after ten
years

—
—
—
—
20,000¥20,000

¥—
—
—
—
—
¥—

¥—
—
—
—
—
¥—

Due after sevenyears through ten
years

Due after ten
years

¥

Millions of yen

2012

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

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

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

¥—
—
—
—
—
¥—

¥

—
—
—
—
20,000¥20,000

¥—
—
—
—
—
¥—

Due after sevenyears through ten
years

Due after ten
years

$—
—
—
—
—
$—

$—
—
—
—
—
$—

Consolidated Financial Statements

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

Due within one
year or lessDue after one
year throughthree years

Thousands of U.S. dollars

2013

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

Due within one
year or lessDue after one
year throughthree years

Due after three
years throughfive years$39,625,220
1,025,699
1,469,803
816,682—$42,937,416$6,349,197——
35,257—$6,384,465$1,002,030——
10,366—$1,012,397

Due after five
years throughseven years

$

—
—
—
—
212,652$212,652(*) Demand deposits are included in “Due within one year or less.”

7. SECURITIES AND MONEY HELD IN TRUSTThe securities in this note include the “Securities” and “Trading account securities” classified on the consolidated balance sheet.
(1) Information on trading account securities and securities with available fair values at March 31, 2013 and 2012 was as follows:(a) Trading securities
Thousands of
U.S. dollars

Millions of yen

2013

2012

¥0

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

2013

$0

¥0

(b) Held-to-maturity debt securities
The carrying amount and fair value of held-to-maturity debt securities which have a readily determinable fair value and the related unrealized gain andloss at March 31, 2013 and 2012 were as follows:
Millions of yen

2013

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

Carrying amount

Fair value

Difference¥4,031¥4,056

¥24

Gain

Loss

¥26

¥1

Millions of yen

2012

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

Carrying amount

Fair value

Difference¥3,945¥3,979

¥34

Gain

¥34

Loss

¥—

Thousands of U.S. dollars

2013

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

Carrying amount

Fair value

Difference$42,860$43,125

$255

Gain

$276

Loss

$10

31
31

Consolidated Financial Statements(c) Available-for-sale securities
Millions of yen

2013

Consolidated Financial Statements

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

Carrying amount

Acquisition cost¥

69,591
1,379,136
1,018,770
193,292
167,073
193,584
180,820¥1,642,312¥

45,6101,347,173
995,912
185,855
165,404
186,790
178,086¥1,579,574¥23,980
31,96222,857
7,436
1,668
6,794
2,733
¥62,737¥¥¥ (1,037)
(278)
(206)
(5)
(65)
(7,473)(7,462)¥ (8,789)¥53,948

9,533
70,51834,711
5,113
30,694
111,574
111,392¥ 191,627¥1,833,939

10,57070,79634,9185,118
30,759119,048
118,854¥ 200,416¥1,779,991

Unrealized gains (losses)

Millions of yen

2012

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

32
32

Carrying amount

Acquisition cost¥

49,0581,355,600
1,096,265
204,080
55,255
169,820
157,425¥1,574,479¥

37,582
1,324,237
1,072,121
197,426
54,689166,259
154,545¥1,528,079¥ 11,476
31,36324,144
6,653
566
3,560
2,880
¥ 46,400¥¥¥ (2,799)
(455)
(10)
(1)
(443)
(17,023)(16,390)¥(20,278)¥ 26,121

21,90354,49334,8901,306
18,297
97,897
90,587¥ 174,294¥1,748,774

24,70354,94934,9001,308
18,740114,921106,978¥ 194,573¥1,722,652

Unrealized gains (losses)

Thousands of U.S. dollars

2013
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)$

739,936
14,663,859
10,832,216
2,055,204
1,776,427
2,058,309
1,922,594$17,462,115$

484,954
14,324,008
10,589,175
1,976,129
1,758,681
1,986,071
1,893,524$16,795,045$254,970
339,840
243,030
79,064
17,73572,23829,059$667,060$$$ (11,026)(2,955)(2,190)(53)(691)(79,457)(79,340)$ (93,450)$573,609

101,360
749,792
369,069
54,364
326,358
1,186,326
1,184,391$ 2,037,501$19,499,617

112,387752,748371,270
54,417
327,049
1,265,794
1,263,732$ 2,130,951$18,926,007

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(2) Held-to-maturity debt securities sold for the years ended March 31, 2013 and 2012
Millions of yen

2013
Sales amount

Cost of sales¥—¥—

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

Gains (losses) on sales¥—

Millions of yen

2012
Sales amount

Cost of sales

¥100

¥100

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

Gains (losses) on sales¥0

Thousands of U.S. dollars

2013
Sales amount

Cost of sales$—$—

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

Gains (losses) on sales$—

Sales of corporate bonds were due to retirement of private placement bonds.
(3) Available-for-sale securities sold for the years ended March 31, 2013 and 2012
Millions of yen

2013
Sales amount

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

¥

9,496
607,746
569,005
28,373
10,367
49,10347,123¥666,347

Gains on sales

Losses on sales¥1,379
6,033
5,206
681
145
1,137
1,012
¥8,550¥1,657
2,785
2,784
0
0
105
105
¥4,54833
33

Consolidated Financial Statements

Millions of yen

2012
Sales amount

Consolidated Financial Statements

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

Gains on sales

Losses on sales

¥ 120
2,034
1,815
192
26
2,617
2,498
¥4,772¥1,476
1,263
1,257
—
5
220
73
¥2,960¥6,231
211,644
202,769
6,252
2,622
62,95960,639¥280,836

Thousands of U.S. dollars

2013

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$ 100,967
6,461,945
6,050,026
301,679
110,228522,094
501,041$7,085,029$14,662
64,14655,3537,240
1,541
12,08910,760$90,909$17,618
29,611
29,601
0
0
1,116
1,116
$48,357(4) Information on money held in trust at March 31, 2013 and 2012 was as follows:
Money held in trustThousands of
U.S. dollars

Millions of yen

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

2013

2012

2013

¥21,000
320¥25,000
11$223,285
3,402(5) The components of the valuation difference on available-for-sale securities recorded under net assets at March 31, 2013 and 2012 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 .....................
Minority interests adjustment .............................................................................
Valuation difference on available-for-sale securities ..........................................

2013

2012

2013

¥ 53,948(15,940)¥ 38,007(60)¥ 37,947¥26,121(6,971)¥19,149(92)¥19,057$ 573,609(169,484)$ 404,114(637)$ 403,476(6) Securities reclassified for the years ended March 31, 2013 and 2012
Not applicable.
(7) Impairment loss on the securities
In the event that the fair value of securities, except trading securities, with available fair values declines significantly compared with the acquisition cost
and the fair value is not expected to recover, such securities are stated at fair value and the difference between fair value and the acquisition cost is recognized as loss in the period of the decline (“impairment loss“). The fair value is regarded as “significantly declined“ when (i) the fair value as of the end of
the fiscal year declines by more than 50% of the acquisition cost or (ii) the fair value as of the end of the fiscal year declines by more than 30% but lessthan 50% of the acquisition cost, and is not expected to recover within one year. Impairment loss recognized on equity securities was ¥1,309 million($13,918 thousand) and ¥2,897 million for the fiscal years ended March 31, 2013 and 2012, respectively.

34
34

8. BORROWED MONEY, BONDS PAYABLE AND LEASE OBLIGATIONS
a. The details of borrowed money as of March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2013

2012

2013

¥81,100¥63,783$862,307

Millions of yen

Thousands of
U.S. dollars¥76,809
1,971
1,345
670
305
¥81,100$816,682
20,956
14,3007,123
3,242$862,307

Annual maturities of borrowed money as of March 31, 2013 were as follows:2014 .........................................................................................................................................................
2015 .........................................................................................................................................................
2016 .........................................................................................................................................................
2017 .........................................................................................................................................................
2018 .........................................................................................................................................................
Total .........................................................................................................................................................

Consolidated Financial Statements

Borrowed money
Due from April 2013 through January 2018
Average interest rate: 0.18% p.a. ....................................................................

b. The details of bonds payable as of March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

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

2013

2012

2013

¥20,000¥20,000$212,652

Millions of yen

Thousands of
U.S. dollars

No repayment is scheduled within 5 years after March 31, 2013.
c. Lease obligations
Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheets.
Annual maturities of lease obligation as of March 31, 2013 were as follows:2014 .........................................................................................................................................................
2015 .........................................................................................................................................................
Total .........................................................................................................................................................

¥1
0
¥1

$10
0
$10

Average interest rates are omitted since the interest equivalent amount included in total lease charges is allocated over the related period using the straightline method.
d. Other
The Group has not issued commercial paper by way of promissory notes for funding for operating activities.
9. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets was ¥45,476 million ($483,530 thousand) and ¥44,357 million at March 31, 2013 and 2012, respectively. Accumulated capital gains directly offset against the acquisition cost of tangible fixed assets to obtain tax benefits were ¥718 million ($7,634 thousand)at March 31, 2013 and 2012.

35
35

Consolidated Financial Statements

10. INCOME TAXESThe Group is subject to a number of taxes based on the income such as corporation tax, inhabitant tax and enterprise tax, which, in the aggregate, indicate
a statutory tax rate in Japan of approximately 38.2 % and 40.4% for the years ended March 31, 2013 and 2012, respectively.
Significant components of deferred tax assets and liabilities as of March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

Consolidated Financial Statements

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

2013

2012

2013

¥ 13,344
7,031
954
4,107
1,832
4,914
5,016
575
2,952
40,728(11,716)
29,011¥ 15,092
6,970
1,081
4,107
1,616
6,934
5,124
525
3,201
44,655(13,539)
31,115$ 141,881
74,758
10,143
43,66819,47952,24853,333
6,113
31,387433,046(124,572)
308,463(15,940)(52)(15,993)¥ 13,018(6,971)(55)(7,027)¥ 24,088(169,484)(552)(170,047)$ 138,415

The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial statement purposes for theyears ended March 31, 2013 and 2012:2013

Statutory tax rate ...........................................................................................................................................
Valuation allowance .................................................................................................................................
Expense not qualifying for deduction ......................................................................................................
Non-taxable dividend income ..................................................................................................................
Tax rate difference for Special Purpose Company ...................................................................................
Adjustment of deferred tax assets for enacted changes in tax laws and rates ..........................................
Difference between current tax rate and future tax rate to be applied for elimination of temporary differences ....
Other .........................................................................................................................................................
Effective tax rate ...........................................................................................................................................

38.2%(17.5%)
0.6%(2.6%)(0.7%)
—%
3.4%
1.2%
22.6%

2012

40.4%
0.0%
0.6%
(2.8%)(2.4%)
21.7%—%(1.6%)
55.8%

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

Millions of yen

Projected benefit obligation ................................................................................
Plan assets ..........................................................................................................
Unfunded projected benefit obligation ...............................................................
Unrecognized actuarial differences ....................................................................
Prepaid pension costs .........................................................................................
Reserve for employee retirement benefits ..........................................................
Note:

36
36

2013

2012

2013

¥(49,656)
32,901(16,754)
4,085(12,669)—¥(12,669)¥(49,277)
28,800(20,476)
8,269(12,207)—¥(12,207)$(527,974)
349,824(178,139)
43,434(134,704)—$(134,704)

Consolidated subsidiaries have adopted the simple method in calculating projected benefit obligations.

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

Millions of yen

2013

Note:

¥1,684
980
(477)
1,867
—
¥4,0542012¥1,689
977
(450)
2,163
—
¥4,3792013$17,905
10,419(5,071)
19,851—$43,104

Retirement benefit expenses of consolidated subsidiaries which have adopted the simple method are included in “Service cost.”(4) Principal assumptions used in determining retirement benefit obligation and pension expenses(a) Discount rate: 2.0% in 2013 and 2012(b) Expected rate of return on plan assets: 2.0% in 2013 and 2012(c) Inter-period allocation method for estimated retirement benefits: straight-line method over the period(d) Amortization of past service costs: Full amounts are charged to income when incurred.
(e) Amortization of actuarial differences: 10 years (Actuarial differences are charged to income from the following year in the amount allocated by thestraight-line method over a definite period within the employees’ average number of service years when incurred.)
12. GUARANTEESThe amount guaranteed by the Bank for privately placed bonds (stipulated
by Article 2-3 of the Financial Instruments Exchange Act) included in“Bonds” of “Securities” was ¥3,831 million ($40,733 thousand) and¥3,745 million at March 31, 2013 and 2012, respectively.
13. STOCKHOLDERS’ EQUITY
Under the Banking Law of Japan and the Company law, the entire amountof the issue price of shares is required to be accounted for as capital, although the Bank may, by resolution of its Board of Directors, account for
an amount not exceeding one half of the issue price of the new shares asadditional paid-in capital, which is included in capital surplus.
The Banking Law provides that an amount equal to at least 20% of
cash dividends and other cash appropriations be appropriated and set aside
as legal earnings reserve until the total amount of legal earnings reserve
and additional paid-in capital equals 100% of common stock. The total
amount of legal earnings reserve and additional paid-in capital of the Bank
has reached 100% of common stock. Therefore, the Bank is not required
to provide additional legal earnings reserve.
The legal earnings reserve and additional paid-in capital may be used
to eliminate or reduce a deficit by resolution of the stockholders’ meetingor may be capitalized by resolution of the Board of Directors. On condition that the total amount of legal earnings reserve and additional paid-in
capital remains equal to or more than 100% of common stock, they areavailable for distribution by resolution of the stockholders’ meeting. Legalearnings reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the nonconsolidated financial statements of the Bank inaccordance with the Company Law.

Consolidated Financial Statements

Service cost .........................................................................................................
Interest cost on projected benefit obligation .......................................................
Expected return on plan assets ...........................................................................
Amortization of actuarial differences .................................................................
Other ...................................................................................................................
Total ................................................................................................................

Securities of ¥74,532 million ($792,472 thousand) and ¥72,119 million were pledged for transaction guarantees at March 31, 2013 and 2012,
respectively.
Unexpired lease contract claims of ¥5,238 million ($55,693 thousand)and ¥6,352 million were pledged as collateral for borrowed money atMarch 31, 2013 and 2012, respectively.
At March 31, 2013 and 2012, other assets included security deposits of¥1,465 million ($15,576 thousand) and ¥1,542 million, respectively, andother intangible fixed assets included key money of ¥574 million ($6,103
thousand) and ¥573 million, respectively.
15. LOAN COMMITMENTS
Commitment line contracts on overdrafts and loans are agreements to lend
to customers when they apply for borrowing up to a prescribed amount aslong as there is no violation of any condition established in the contract.
The amounts of unused commitments at March 31, 2013 and 2012 were¥888,911 million ($9,451,472 thousand) and ¥908,128 million, respectively, and the amount of unused commitments whose original contract
terms were within one year or unconditionally cancelable at any time atMarch 31, 2013 and 2012 were ¥871,842 million ($9,269,984 thousand)and ¥892,643 million, respectively.
Since many of these commitment line contracts are expected to expire
without being drawn upon, the total amount of unused commitments does
not necessarily represent actual future cash flow requirements.
Many of these commitments line contracts have clauses that allow the
Bank and its consolidated subsidiaries to reject the application from customers or reduce the contract amounts if economic conditions change. In
addition, the Bank and its consolidated subsidiaries may request that customers pledge collateral such as premises and securities or take other necessary measures such as scrutinizing customers’ financial positions andrevising contracts when the need arises to secure claims.

14. PLEDGED ASSETSAt March 31, 2013 and 2012, securities of ¥450,658 million ($4,791,685
thousand) and ¥413,699 million, respectively, were pledged as collateralfor deposits and negotiable certificates of deposit of ¥64,240 million($683,040 thousand) and ¥32,786 million, respectively, payables under securities lending transactions of ¥138,235 million ($1,469,803 thousand)and ¥104,266 million, respectively, and borrowed money of ¥74,083 million ($787,698 thousand) and ¥56,510 million, respectively.

3737

Consolidated Financial Statements

16. OTHER INCOME
For the fiscal years ended 2013 and 2012, other income consisted of the following:Thousands of
U.S. dollars

Millions of yen

Consolidated Financial Statements

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

2013

2012

2013

¥1,588
—
1,081
1,767
¥4,438

¥ 214
1,966
1,656
1,344
¥5,181$16,884—
11,493
18,787$47,187

17. OTHER EXPENSES(1) For the fiscal years ended 2013 and 2012, other expenses consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loss on devaluation of stocks and other securities .............................................
Write-offs of loans ..............................................................................................
Loss on sales of stocks and other securities .......................................................
Provision for possible loan losses .......................................................................
Impairment loss on fixed assets ..........................................................................
Other ...................................................................................................................
Total ................................................................................................................

2013

2012

2013

¥ 1,309
1,956
1,657
3,539
648
919
¥10,030¥2,897
3,581
1,537
—
320
1,233
¥9,569$ 13,918
20,797
17,61837,6286,889
9,771$106,645(2) (Impairment loss on fixed assets)
The Group reviews its long-lived assets for impairment by grouping its assets based on the unit of an operating office, which individually and continuously
identifies profit and loss, and based on individual assets unit for idle assets. Headquarters, administration centers, training centers, etc. are treated as common assets since they contribute to the generation of future cash flows from multiple assets or asset groups. Primarily, each consolidated subsidiary istreated as one asset group. The recoverable amount is measured principally at its net realizable value, which is determined by appraisal values based on
the real estate appraisal standards, less the expected disposal cost.
For the year ended March 31, 2013, the Group recognized impairment loss on the following asset groups:
Area

In Nara Pref.
Out of Nara Pref.
In Nara Pref.
Total

Purpose of use

2 idle assets
1 idle asset
1 dormitory

Type

Land, etc.
Land and buildings
Buildings

Millions of yen

¥452
27
167
¥648

Thousands of
U.S. dollars$4,805287
1,775$6,889For the above fixed assets, the carrying amounts were reduced to net realizable values due to the continuous decrease in real estate values and changes
in use. As a result, the Group recognized impairment loss of ¥648 million ($6,889 thousand) under “Other expenses.”
For the year ended March 31, 2012, the Group recognized impairment loss on the following asset groups:
Area

Out of Nara Pref.
In Nara Pref.
Out of Nara Pref.
Total

Purpose of use

1 operating office
2 idle assets
1 idle asset

Type

Land and buildings
Land and buildings
Land and buildings

Millions of yen

¥258
16
46
¥320

For the above fixed assets, the carrying amounts were reduced to net realizable values due to the continuous decrease in real estate values, changes in
use and decreases in operating cash flows. As a result, the Group recognized impairment loss of ¥320 million under “Other expenses.”

38
38

18. LEASE TRANSACTIONS
Operating leases
As lessee:
Future minimum lease payments under operating leases which were not cancelable at March 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2012

¥ 113
1,143
¥1,257

¥ 98
726
¥825

2013

$ 1,201
12,153$13,365

As lessor:
Future minimum lease payments under operating leases which were not cancelable at March 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2013

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

2012

¥3
5
¥9

¥ 3
9
¥13

2013

$31
53
$95

Consolidated Financial Statements

2013

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

19. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the year ended March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

Valuation difference on available-for-sale securities:
Gains incurred during the year .......................................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Valuation difference on available-for-sale securities .....................................
Net deferred gains or losses on hedges
Losses incurred during the year .....................................................................
Reclassification adjustments to net income ....................................................
Amount before tax effect ...........................................................................
Tax effect ....................................................................................................
Net deferred gains or losses on hedges ..........................................................
Total other comprehensive income .....................................................................

2013

2012

2013

¥30,519(2,692)
27,826(8,968)18,857¥2,306
1,084
3,391
(843)
2,548

$324,497(28,623)
295,863(95,353)
200,499

(579)
449
(129)
49
(80)
¥18,777

(657)
465
(191)
47
(144)
¥2,403(6,156)
4,774(1,371)
520(850)$199,649

20. NON PERFORMING LOANS
Nonperforming loans at March 31, 2013 and 2012 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 ................................................................................................................

2013

2012

2013

¥ 1,442
72,555712
14,750¥89,461¥ 1,735
69,542872
17,893¥90,043$ 15,332
771,451
7,570
156,831$951,206

Bills discounted are accounted for as financing transactions in accordance with the JICPA Industry Audit Committee Report No. 24. This accounting treatment allows the Bank the right to sell or pledge them without restrictions. The total face value of commercial bills and purchased foreign exchange bills
obtained as a result of discounting was ¥21,839 million ($232,206 thousand) and ¥23,657 million at March 31, 2013 and 2012, respectively.

3939

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 calculation method of fair value by transaction type as of March 31, 2013 and 2012 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.
Consolidated Financial Statements(a)Interest rate related transactions
Millions of yen

2013
Category

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

Over-the-countertransactions

Contract amountContract amount due
after one year

¥520
520
¥ —

Fair value

¥520
520
¥ —

¥ 32
(29)
¥ 3

Unrealized gains (losses)

¥ 32
(29)
¥ 3

Millions of yen

2012
Category

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

Over-the-countertransactions

Contract amountContract amount due
after one year

¥ 585
5,585
¥ —

¥ 585
5,585
¥ —

Fair value

¥ 39
(159)
¥(120)

Unrealized gains (losses)

¥ 39
(159)
¥(120)

Thousands of U.S. dollars

2013
Category

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

Over-the-countertransactions

Contract amountContract amount due
after one year

$5,5285,528$ —$5,5285,528$ —Fair value

$ 340
(308)
$ 31

Unrealized gains (losses)

$ 340
(308)
$ 31

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

(b) Currency related transactions
Millions of yen

2013
Category

Transaction type

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

Over-the-countertransactions

Contract amountContract amount due
after one year

Fair value

Unrealized gains (losses)¥205,974¥127,544¥(3,777)¥(3,777)

2,877
2,613
¥
—

—
—
—

(132)
5
¥(3,903)(132)
5¥(3,903)

Contract amountContract amount due
after one year

Fair value

Unrealized gains (losses)¥124,754¥77,378¥(1,443)¥(1,443)

1,286
1,190
¥
—

—
—
—

(28)
2
¥(1,469)(28)
2¥(1,469)¥

Millions of yen

2012
Category

Transaction type

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

Over-the-countertransactions

40
40

¥

Thousands of U.S. dollars

2013
Category

Transaction type

Contract amount

Fair value

Unrealized gains (losses)$2,190,047$1,356,129$(40,159)$(40,159)

30,59027,783————(1,403)53$(41,499)(1,403)53$(41,499)$$

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 value is based on the discounted present value, etc.

(c) Stock related transactions
None(d) Bond derivatives
None

Consolidated Financial Statements

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

Over-the-countertransactions

Contract amount due
after one year(e) Commodity derivatives
None(f) Credit derivative transactions
None(2) Derivative contracts to which hedge accounting is appliedWith respect to derivatives to which hedge accounting is applied, the contract amount or notional principal amount defined in the contract, fair value andcalculation method of fair value by transaction type and by hedge accounting method as of March 31, 2013 and 2012 were as follows:
Note that the contract amount does not represent the market risk exposure of the derivative transactions themselves.
(a) Interest rate related
Millions of yen

2013
Hedge accounting method

Transaction type

Major hedged items

Fundamental method

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

Interest bearing
assets and liabilities
such as loans anddeposits

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

Contract amountContract amount due after
one year

Fair value

—

—

—

¥41,457¥31,212¥(1,609)

—
—
—

—
—
—

—
—
—

—

—

—

525
—

Note 3¥(1,609)

¥
¥

645
—

¥
¥

41
41

Consolidated Financial Statements

Millions of yen

2012

Consolidated Financial Statements

Hedge accounting method

Transaction type

Major hedged items

Fundamental method

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

Interest bearing
assets and liabilities
such as loans anddeposits

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

Contract amountContract amount due after
one year

Fair value

—

—

—

¥48,551¥45,673¥(1,489)

—
—
—

—
—
—

—
—
—

—

—

—

¥ 1,360¥—¥ 1,145¥—¥(9)¥(1,498)

Thousands of U.S. dollars

2013
Hedge accounting method

Transaction type

Major hedged items

Fundamental method

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

Interest bearing
assets and liabilities
such as loans anddeposits

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

Contract amountContract amount due after
one year

Fair value

—

—

—

$440,797$331,866$(17,107)

—
—
—

—
—
—

—
—
—

—

—

—

$ 6,858$—$ 5,582$—

Note 3$(17,107)

Notes: 1. Gain/loss on the above contacts is deferred until maturity of the hedged items under the fundamental method in accordance with the “Treatment for Accounting and Auditing ofApplication of Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24).
2. For transactions on exchanges, the fair value is the closing price on the Tokyo International Exchange, etc. For over-the-counter transactions, the fair value is determined using
the discounted cash flow method and option pricing model, etc.
3. Interest rate swaps accounted for by the exceptional accounting method are accounted for together with the borrowed money as a hedged item, and the fair values are describedin the fair values of “Borrowed money” under Liabilities of Note 6, “FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES.”(b) Currency related transactions
None(c) Stock related transactions
None(d) Bond related transactions
None

42
42

22. RELATED PARTY TRANSACTIONS
For the year ended March 31, 2013, related party transactions were as follows:
Relationshipwith the Bank

Location

TetsuyaMatsubara——

Publicofficer—

TakashiHoriuchi——

Officeworker—Daito City
Osaka

10

Metal
processing—

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

Relationship ofrelated parties
Son-in-law ofHiroki Matsuoka(Executive Director)
Loans
Second son of
Yasuo Horiuchi(Corporate Auditor)
Loans

Loans

Details oftransactions

Transaction
Accounting
amounttitle(millions of yen)

Year-endbalance(millions ofyen)

Year-endbalance(thousands of
U.S. dollars)

Lending of money *2
Interest receivable

30
0

Loans
—

29
—

308
—

Lending of money *2
Interest receivable

—
0

Loans
—

17
—

180
—

Lending of money
Interest receivable

50
1

Loans
—

109
—

1,158
—

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 (Director of the Bank) have 50.6% of voting rights of this company directly.

Consolidated Financial Statements

Relatives of adirector of theBank

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

Name

For the year ended March 31, 2012, related party transactions were as follows:
Relationshipwith the Bank

Relatives of adirector of the
Bank

Name

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

Hirokatsu
Horiuchi——Publicofficer—

TakashiHoriuchi——

Officeworker—Daito City
Osaka

10

Metal
processing—

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

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

Loans

Details oftransactions

Transaction
Accounting
amounttitle(millions of yen)

Year-endbalance(millions ofyen)

Lending of money *2
Interest receivable

—
0

Loans
—

13
—

Lending of money *2
Interest receivable

—
0

Loans
—

22
—

Lending of money
Interest receivable

—
1

Loans
—

84
—

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 (Director of the Bank) have 50.6% of voting rights of this company directly.
4. Tadashi Kasei retired from the position of a director of the Bank on June 29, 2011. The Bank has loans to his daughter’s husband, Atsushi Nakatani, in the amount of ¥15 million
and his daughter, Naomi Nakatani, in the amount of ¥15 million.

43
43

Consolidated Financial Statements
23. PER SHARE INFORMATION
Net assets per share at March 31, 2013 and 2012 and net income per share for the years then ended were as follows:Yen

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

U.S. dollars

2013

2012

2013

¥774.46
28.01
27.99

¥675.42
12.57
12.57

$8.23
0.29
0.29

Consolidated Financial Statements

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

2013

2012

¥215,745
6,758
(100)
(6,658)208,987¥212,241
26,035(64)(25,971)
186,205$2,293,939
71,855(1,063)(70,792)
2,222,083

269,847

275,684

—

¥

¥

7,621
7,621
271,994
—
248
(248)
—

2013

$

3,467
3,467

81,031
81,031—————

275,690
—
136
(136)
—

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

Millions of yen

2013

2012

¥41

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

2013

$435

¥42

(b) Stock options outstanding at March 31, 2013 were as follows:a. Outline of stock options
Beneficiaries qualifying for stock option rights are entitled to acquire common stock upon the exercise of their rights. The following table summarizes thenumber of shares upon exercise of the stock option rights granted by the Bank outstanding at March 31, 2013:

44
44

Stock
options

Persons
grantedNumber ofoptions granted

Date of
grant

Exercise
price

ExerciseperiodVesting
conditions

Target ofservice period

2010
Stock Options
2011
Stock Options
2012
Stock Options

15 directorsof the Bank
14 directorsof the Bank
15 directorsof the Bank

Common stock
94,400 shares
Common stock
109,400 shares
Common stock
136,200 shares

July 29, 2010¥1($0.01)¥1($0.01)¥1($0.01)

From July 30, 2010
to July 29, 2040
From July 30, 2011
to July 29, 2041
From July 28, 2012
to July 27, 2042

Not definedNot definedNot definedNot definedNot definedNot defined

July 29, 2011
July 27, 2012

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

2010
Stock Options

2012
Stock Options

—
—
—
—
—

27,350——27,350——136,200—
102,150
34,05074,900—5,900—
69,00082,05027,3507,400—
102,000—
102,150——
102,1502) Price information
Yen

2010
Stock Options

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

¥

1
348
441

2011
Stock Options

¥

1
348
386

U.S. dollars

2012
Stock Options

¥

1
—
386

2010
Stock Options

2011
Stock Options

2012
Stock Options

$0.01
3.70
4.68

$0.01
3.70
4.10

$0.01
—
3.22

Consolidated Financial Statements

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

2011
Stock Options(c) Assumptions used to measure the fair value of stock options
The assumptions used to measure the fair value of the stock options granted in the year ended March 31, 2013 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: 23.77%, calculated using the market price of the Bank’s stock from May 2009 to July 2012.
2.	Estimated remaining outstanding period: 3.2 years, which was the average remaining tenure of the Board of Directors at the date of issue, determined by the average time from appointment to retirement and time from appointment to the date of issue.
3. Estimated dividend: ¥6 per share, which was calculated based on the actual amount of dividends for the fiscal year ended March 31, 2012.
4. Risk-free interest rate: 0.10%, determined using the yield of national bonds equivalent to the estimated remaining outstanding period.
(d) Estimation method for the total number of vested stock option rights
The total number of stock option rights issued is deemed to reflect the actual number of stock option rights expired due to difficulties in estimating reasonably the number of stock option rights that will expire in future.
25. SUBSEQUENT EVENTSThe Bank announced that its Board of Directors at its meeting on August 2, 2013 approved the repurchase of treasury stock, based on Paragraph 3, Article
165 of the Companies Act of Japan, as interpreted in light of Article 156 of the said Act. The repurchase was carried out as detailed below.
1) Contents of resolution
Reason for the repurchase:	The repurchase was approved to increase returns to shareholders and to give the Bank greater flexibility incapital policy in light of a changed business environment.
Common stock
Type of shares to be repurchased:
Number of shares to be repurchased: 1,800,000 shares (maximum)
Repurchase price:¥810 million (maximum) ($8,612 thousand)Term of repurchase:
From August 5, 2013 to August 30, 2013
2) Results of repurchase
Number of shares of common stock to be repurchased: 1,698,000 shares¥704 million ($7,485 thousand)Repurchase price:		
Date of repurchase:		
August 6, 201345
45

Independent Auditors’ Report

Independent Auditors’ Report46
46

Capital Management
Consolidated Capital Adequacy Ratio
As of March 31, 2013
Millions of yen

2012

2011

2010

2009

¥ 177,865—
177,865¥ 192,745—
192,745¥ 190,328—
190,328¥ 184,878—
184,878¥ 179,138—
179,138

10,45720,00030,45730,457

12,51220,00032,512
31,897

11,65520,00031,65531,655

12,07340,00052,07352,073

12,96620,00032,96632,966103¥ 208,219

3,109¥ 221,534

2,976¥ 219,007

2,665¥ 234,286

3,269¥ 208,835

1,808,800
30,277¥1,839,078
113,102
9,048¥1,952,180

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

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

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

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

10.66%
9.11%

11.63%
10.12%

11.74%
10.20%

12.12%
9.57%

10.06%
8.63%

Capital Management

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

2013

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, 2013
Millions of yen

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

2013

2012

2011

2010

2009

¥ 168,563—
168,563¥ 184,611—
184,611¥ 182,915—
182,915¥ 177,971—
177,971¥ 172,326—
172,326

8,650
20,00028,65028,65010,17320,00030,17330,173

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

12,84720,00032,847
32,847103¥ 197,110

3,109¥ 211,675

2,976¥ 211,468

2,665¥ 227,257

3,269¥ 201,904

1,801,427
30,276¥1,831,704
106,661
8,532¥1,938,366

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

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

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

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

10.16%
8.69%

11.23%
9.80%

11.46%
9.91%

11.88%
9.30%

9.82%
8.38%

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

47
47

Organization, Group Network(As of July 1, 2013)

ORGANIZATIONSTOCKHOLDERS’ MEETINGHEADQUARTERS
General Secretariat

BOARD OF DIRECTORS

General Planning Division

Organization, Group Network

Compliance & Risk Management Division

MANAGING DIRECTORS’COMMITTEE

General Business Division
Individual Sales Division

Chairman

Value Creation Division

President

Public Institutions Division

Senior Managing Directors

Credit Analysis Division

Managing Directors

Securities & International Division• DOMESTIC
OFFICESOperations Control Division

Directors

Operations Division

BOARD OF CORPORATE AUDITORSInternal Audit Division
Personnel Division
General Affairs Division

Standing Corporate Auditor

Regional Headquarters

Corporate Auditors

Tokyo Liaison Office

Corporate Auditors’ Office

NANTO BANK GROUP(As of July 1, 2013)
The Nanto Group, which consists of the Nanto Bank and its 11 consolidated subsidiaries, offers financial
services related to securities, credit guarantees and leasing as well as its primary business, banking services.

THE NANTO BANK, LTD.

BankingHead Office and 110 Branches
24 Sub-branches
2 Agencies (Nanto Bank Agency Co., Ltd.’s business offices)
2 Representative Offices (Hong Kong and Shanghai)

Securities

Securities & International Division

Credit Guarantees

Nanto Credit Guarantee Co., Ltd.

Leasing

Nanto Lease Co., Ltd.

Computer Software
Development andServices

Nanto Computer Service Co., Ltd.

Credit Card Business

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

Other Operations

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

Companies indicated with a pink square are consolidated subsidiaries.

48
48

Affiliates and Subsidiaries, Bank Data
(As of July 1, 2013)

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

Address

Established

Nanto Credit
Guarantee Co., Ltd.

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

October 9,
1984

¥10

3%

69%

Credit guarantee

Nanto Lease Co., Ltd.

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

December 22,
1984

50

5

65

Leasing

Nanto Computer Service
Co., Ltd.

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

July 1,
1986

10

5

69

Computer softwaredevelopment and services

Nanto DC Card Co., Ltd.

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

50

5

71

Credit card business

Nanto Card Services
Co., Ltd.

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

50

5

71

Credit card business

Nanto Estate Co., Ltd.

16, Hashimoto-cho
Nara City, Nara, Japan

November 8,
1969

30

100

—

Leasing and managementof real estate

Nanto Business Service
Co., Ltd.

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

June 1,
1984

10

100

—

Centralized processing ofclerical operations for the Bank

Nanto Staff Service
Co., Ltd.

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

March 18,
1991

20

100

—

Dispatch of temporary staff

Nanto Asset ResearchCo., Ltd. (*1)

16, Hashimoto-cho Nara City,
Nara, Japan

July 4,
2005

20

100

—

Research and appraisal ofreal estateNangin Agency Co., Ltd.

16, Hashimoto-cho Nara City,
Nara, Japan

October 6,
2009

50

100

—

Bank agency services

Nanto Investment
Management Co., Ltd.

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

November 21,
1986

120

5

68

Investment advisory
services

HEAD OFFICECORPORATE DATASECURITIES & INTERNATIONAL DIVISION

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

HONG KONG REPRESENTATIVE OFFICEMAJOR STOCKHOLDERS (As of March 31, 2013)16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 22-1131
URL: http://www.nantobank.co.jp/
16, Hashimoto-cho
Nara City, Nara 630-8677, Japan
Phone: (0742) 27-1546
Fax: (0742) 26-1734
SWIFT address: NANT JP JT
E-mail address: skb-gaitame@nantobank.co.jp
ROOM 2104-2105,
21/F, HUTCHISON HOUSE,
10 HARCOURT ROAD,
HONG KONG
Phone: 852-2868-9932

SHANGHAI REPRESENTATIVE OFFICE

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

640,000,000
275,756 thousand
29,249 million
10,771
June 1934
134 offices
2 representative offices
2,755
June 27, 2013
Tokyo Stock Exchange
Osaka Stock Exchange

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

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

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

Mori Seiki Co., Ltd.
Kitamura Forestry Co., Ltd.
The Master Trust Bank of Japan, Ltd.
The Shiga Bank, Ltd.

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

Total

Affiliates and Subsidiaries, Bank Data

Subsidiaries

Number of shares(thousands)

Percentage(%)

10,31010,283
8,531

3.73
3.72
3.09

8,430
8,285

3.05
3.00

5,420
4,766
4,063
3,628

1.96
1.72
1.47
1.31

3,336
67,054

1.20
24.31

49
49

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