PROFILE
Aichi Bank is a regional bank whose business base is Aichi Prefecture, the central prefecture of theTokai region, one of the country’s three main industrial areas. Since its establishment in 1910, theBank has worked to meet the diverse needs of customers in the region, based on its corporate missionof contributing to the prosperity of the community via a thorough commitment to sound management
and business growth.
Aichi Bank has a domestic service network comprising 106 branches, and also engages ininternational operations. The Bank’s head office is located in Nagoya, Aichi Prefecture, Japan’s fourthlargest prefecture by population, and an area that combines a beautiful natural environment with a richhistorical and cultural heritage.
As of March 31, 2016, the Bank had total assets of ¥3,003,317 million (US$26,653 million) on aconsolidated basis, and deposits amounting to ¥2,661,691 million (US$23,621 million). Its capital ratio,
calculated according to standards for banks operating only in Japan, stood at 12.09%.

FINANCIAL HIGHLIGHTS

Years ended March 31, 2016 and 2015
Millions of Yen

Consolidated

Thousands of U.S. Dollars

2016

2015

2016

2015

¥49,553¥49,308$439,767$437,593

Total expenses

40,89239,897362,903

354,073

Profit before income taxes

8,660

9,411

76,854

83,519Profit attributable to owners of parent

5,257

5,822

46,654

51,668¥2,661,691¥2,638,408$23,621,680$23,415,051

Loans and bills discounted

1,679,941

1,655,157

14,908,954

14,689,004

Investment securities

1,147,715

1,159,493

10,185,614

10,290,140

Total assets

3,003,317

3,034,142

26,653,505

26,927,067

226,670

236,300

2,011,625

2,097,089

For the year:

Total income

At year-end:
Deposits

Total net assets

Note: The U.S. dollar amounts represent translation of Japanese yen at the rate of ¥112.68 = US$1.00 on March 31, 2016.

MESSAGE FROM THE MANAGEMENTBusiness and Financial Conditions

Looking back at Japan’s economy during the year ended
March 31, 2016, in the first half of the year, although theoverall economy maintained a moderate tone of recovery
backed by the continued improvement in the employment
and income environment, which reflected solid corporate
results, there are starting to be signs of a downsiderisk for the economy due to the impact of an unstablefinancial market, such as the ongoing rapid appreciationof the yen in and after January.
Regarding our business base, which is centered in
Shinichi Koide, Chairman & Katsuyuki Yazawa, President
Aichi Prefecture, in the automobile industry, one of theprefecture’s primary industries, the economy is steadily
continuing to recover due to various elements such as an increase in exports and manufacturing, backed
by the strong U.S. economy; a continued trend toward improvement in business conditions; in addition to anincrease in capital investment, an upturn in housing investment and personal consumption, and others.
Looking forward, although there are causes for uncertainty such as the economic conditions overseas andfinancial market trends, the economy is expected to follow a modest recovery track following increases incapital investment and ongoing improvement in the employment and income environment.
In the financial sector, the Bank of Japan has been conveying strong determination with respect to its
ongoing aims of economic recovery, despite the postponement of the achievement period for the 2% year-onyear increase in the consumer price index from “approx. the second half of fiscal year 2016” to “approx. thefirst half of fiscal year 2017,” which was mainly a result of the drop in crude oil prices. This determination is
exemplified by their decision in January to introduce negative interest rates while beginning to include further
added monetary easing into their outlooks.
As a result of these factors, there was firm price fluctuation in the first half of the fiscal year such as the
Nikkei Stock Average marking an 18.5-year high of 20,868 points on June 24 of last year. However, theeconomy stagnated in the second half of the fiscal year following increased uncertainty regarding the global
economy’s future prospects. The Nikkei Stock Average subsequently ended the fiscal year at 16,758 points, adrop of 2,448 points from the previous fiscal year-end.

Earnings

Our business results on a consolidated basis for the year ended March 31, 2016 are as follows.
Total income increased ¥245 million year on year to ¥49,553 million (US$439 million) due to gain on refund
from retirement benefit trusts in the amount of ¥856 million being recorded under “Other income,” and despitea decrease in return of credit expenses among others. Total expenses increased ¥995 million year on year to¥40,892 million (US$362 million) mainly due to an increase in loss on the disposal of investment securities.
As a result, profit attributable to owners of parent decreased ¥565 million year on year to ¥5,257 million(US$46 million).
By segment, ordinary income of the banking segment decreased ¥733 million year on year to ¥42,896
million (US$380 million) and its segment profit decreased ¥1,486 million to ¥7,807 million (US$69 million).
Ordinary income of the leasing segment increased ¥291 million to ¥5,431 million (US$48 million), and its
segment profit decreased ¥27 million to ¥238 million (US$2 million).

Cash Flows

For the year ended March 31, 2016, net cash used in operating activities amounted to ¥31,382 million(US$278 million), an increase in cash used of ¥68,723 million year on year. This was mainly attributable to adecrease in security deposits received related to securities lending transactions and an increase in loans andbills discounted. Net cash used in investing activities amounted to ¥2,178 million (US$19 million), a decreasein cash used of ¥33,199 million. This is mainly attributable to purchases of tangible fixed assets. Net cashused in financing activities amounted to ¥940 million (US$8 million), an increase in cash used of ¥103 million.
This is mainly due to dividends paid.
As a result, cash and cash equivalents at the end of the year stood at ¥104,000 million (US$922 million), a
decrease of ¥34,501 million from the previous year-end.

Medium-term Strategy

In our tenth medium-term management plan we describe what we aim to be in ten years as “The leadingbank in Aichi that puts serious effort into regional procurement and regional operation, and contributes to thedevelopment of regional communities and the betterment of our customer’s lives.”
Contributing to the development of regional communities has been a major theme for us, with efforts suchas increasing staff at sales branches by primarily establishing the new business structure, started in Octoberof last year, and streamlining head office organizations, which has led to increased opportunities to visit ourcustomers in small and medium sized enterprises.

Shinichi Koide
Chairman

Katsuyuki Yazawa
President

BOARD OF DIRECTORS AND CORPORATE AUDITORS
Chairman

Directors

Directors

Shinichi Koide

Yukinori Ito

Audit and Supervisory Committee Members

Tomoyuki Takahashi

Shigemasa Yoshida*1

President

Wataru Ota

Akira Katsuragawa*3

Katsuyuki Yazawa

Hiroyasu Matsuno

Hiroshi Okamoto*3

Nobuhiko Kuratomi

Akio Hayashi*3

Teruyuki Ariga

Ichio Miwa*2

Managing Directors
Jun Hayakawa

Toshiyasu Hayashi*3

Eiji Miyachi
Minoru Ogura
Masato Kobayashi
Yoshihiro Ito*1‌Standing Audit and Supervisory Committee
Member*2‌Non-Standing Audit and Supervisory Committee
Member*3‌Outside Audit and Supervisory Committee
MemberCORPORATE DIRECTORY
Service Network
Head Office(Securities & Foreign Business Department)
14-12, Sakae 3-chome, Naka-ku, Nagoya 460-8678
Telephone: 81-52-251-3211
SWIFT: AICHJPJN
Facsimile: 81-52-262-5793

Domestic Branches

Gifu (3)Tokyo (1)Head Office
Shizuoka (1)Aichi (98)
Mie (2)
Osaka (1)Total 106 Domestic Branches
Consolidated Companies
Aigin Business Service Co., Ltd.
Aigin DC Card Co., Ltd.
Aigin Lease Co., Ltd.
Aigin Computer Service Co., Ltd.

The Aichi Bank, Ltd.
Consolidated Financial Statements
March 31, 2016 and 2015

KPMG AZSA LLC© 2016 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public
Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2016 and 2015

Millions of yen
2016
2015
Assets:Cash and due from banks(Note 3)¥
104,722 ¥ 139,407
Call loans and bills purchased(Note 3)
2,753
2,171
Trading securities (Notes 3 and 4)
77
Investment securities(Notes 3, 4 and 8)
1,147,715
1,159,493
Reserve for possible losses oninvestments
(11)
(14)
Loans and bills discounted(Notes 3, 5, 15 and 20)
1,679,941
1,655,157
Foreign exchange (Note 6)
2,717
3,636
Other assets
24,56525,681
Tangible fixed assets (Note 7)
35,21934,841
248
Intangible fixed assets
173
Employee retirement benefit asset(Note 11)
11,619
3,002
249
Deferred tax assets (Note 17)
179
Customers’ liabilities for acceptancesand guarantees (Note 12)
12,204
11,174
Reserve for possible loan losses(8,835)(10,633)
Total assets¥ 3,003,317¥ 3,034,142

Thousands of U.S. dollars
2016
2015

$

929,375

1,237,193

24,432-

19,266683

10,185,614

10,290,140

(97)

(124)

14,908,954
24,112
218,006
312,557
1,535

14,689,004
32,268
227,910309,203
2,200

26,641
1,588

103,115
2,209

99,165(78,407)108,306(94,364)$ 26,653,505$ 26,927,067

The accompanying notes are an integral part of these consolidated financial statements.

-2-$

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets (Continued)
March 31, 2016 and 2015
Millions of yen
2016
2015
Liabilities:
Deposits (Notes 3 and 9)¥ 2,661,691
Security deposits received related tosecurities lending transactions(Notes 3 and 8)
37,574
Borrowings (Notes 3 and 10)
18,915
Foreign exchange (Note 6)
706
Other liabilities (Note 10)17,114
Reserve for employee bonuses
652
Reserve for bonuses to directors
47
Employee retirement benefit
1,353
liability (Note 11)
Reserve for executive retirement
benefits
4
Reserve for reimbursement ofdeposits
104
Reserve for contingencies
1,848
Deferred tax liabilities (Note 17)
20,716
Deferred tax liabilities forrevaluation (Note 7)
4,742
Acceptances and guarantees(Note 12)
11,174
Total liabilities
2,776,646
Net assets (Note 13):
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive
incomeStock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Thousands of U.S. dollars
2016
2015

¥ 2,638,408$

23,621,680$

23,415,051

75,085
17,655980
17,660653
47333,457
167,864
6,265
151,8815,786
417

666,356
156,682
8,697
156,727
5,795
417

766

12,007

6,798

9

35

79

147
1,588
27,601922
16,400183,848

1,304
14,093244,950

5,032

42,08344,657

12,204
2,797,842

99,16524,641,870

108,306
24,829,978

18,00013,883125,966(787)
157,063

18,00013,883
121,529(774)
152,639

159,744
123,207
1,117,909(6,984)
1,393,885

159,744
123,207
1,078,532(6,869)1,354,623

65,604
194
3,806
226,670¥ 3,003,317

79,808148
3,704
236,300¥ 3,034,142

582,215
1,721
33,7772,011,625
26,653,505

708,271
1,313
32,871
2,097,089
26,927,067$

The accompanying notes are an integral part of these consolidated financial statements.

-3-$

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2016 and 2015

Income:Interest and dividend income:Interest on loans and bills discounted andpurchased¥
Interest on and dividends from securities
Other interest and dividend income
Total interest and dividend income
Fees and commissions
Other operating income (Note 4)
Other income (Notes 2(o) and 4)
Total income (Note 19)
Expenses:
Interest expense:
Interest on deposits
Interest on borrowings
Other interest expense
Total interest expense
Fees and commissions
Other operating expenses (Note 4)
General and administrative expenses(Notes 14 and 18)
Impairment loss on fixed assets (Note 2(k))
Other expenses (Note 4)
Total expenses (Note 19)
Profit before income taxes
Income taxes (Note 17)
ProfitProfit attributable tonon-controlling interests
Profit attributable to owners ofparent¥Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

19,791
12,64997
32,538
11,982
1,555
3,475
49,553

21,386
11,11894
32,599
11,692
1,340
3,676
49,308$ 175,638
112,255860
288,764
106,336
13,80030,839439,767

1,569
38
23
1,630
7,640
1,901

1,563
38
30
1,633
7,178
381

13,924337
204
14,46567,802
16,87013,871337
266
14,492
63,702
3,381

26,818230
2,671
40,892
8,660

28,84497
1,761
39,897
9,411

238,001
2,041
23,704362,90376,854

255,981860
15,628354,073
83,519

3,283
5,376

3,481
5,929

29,13547,71030,892
52,618

118

107

1,047

949

5,257

¥

¥

5,822

$

Yen
Earnings per share:
Basic
DilutedCash dividends¥

484.99483.31
80.00¥

46,654

189,794
98,668834
289,305
103,762
11,892
32,623
437,593$

51,668

U.S. dollars
536.59535.09
80.00

$

4.30
4.28
0.70

The accompanying notes are an integral part of these consolidated financial statements.

-4-

$

$

4.76
4.74
0.70

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2016 and 2015

Millions of yen
2016
2015
Profit¥Other comprehensive income (Note 21):
Unrealized gains on available-for-salesecurities
Land revaluation increment
Retirement benefit adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Total comprehensive income

¥

5,929

$

(10,667)
241(3,689)(14,116)¥ (8,739)¥

24,665512
2,870
28,04833,978(94,666)
2,138(32,738)(125,275)$ (77,555)

218,894
4,543
25,470248,917$ 301,544¥¥

33,831
146
33,978$ (78,478)922$ (77,555)$ 300,239
1,295$ 301,544

¥

5,376

Thousands of U.S. dollars
2016
2015

(8,843)104(8,739)¥47,710

The accompanying notes are an integral part of these consolidated financial statements.

-5-$52,618

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2016 and 2015
Shareholders’ equity
Number ofshares ofcommon stock
issuedBalance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2014
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2015
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity

10,943,240

Balance at March 31, 2016

10,943,240

Commonstock¥

18,000Capitalsurplus¥Retainedearnings

13,883¥

Total
shareholders’equityTreasurystock

115,345

¥

(712)

¥

146,516

Millions of yen
Accumulated other comprehensive income
Net unrealizedLand
Total accumulated
Retirement
gains onrevaluationotherbenefitavailable-for-saleincrement
comprehensive
adjustment
incomesecurities (Note 4)(Note 7)(Note 11)Stockacquisitionrights¥¥45,180

¥

7,796

¥

(1,114)¥51,863

Noncontrollinginterests

102

¥

Total
net assets

3,559

¥

202,042

10,943,240-

18,000-13,883(0)

1,058
116,404
5,822
(759)
63
-

(712)
(62)

1,058
147,575
5,822
(759)
63
(63)

45,180-7,796-(1,114)-51,863
-

102
-

3,559
-

1,058
203,101
5,822
(759)
63
(63)

-

-

0

(0)

-

-

-

-

-

-

-

-

-

10,943,240-

18,000-13,883(1)

121,529
5,257
(921)
102
-

(774)
(12)

152,639
5,257
(921)
102
(14)

24,62569,806
-

449
8,246
-

2,870
1,756
-

27,94579,808
-

45
148
-

144
3,704
-

28,135236,300
5,257
(921)
102
(14)

-

-

1

(1)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(10,653)

139(3,689)(14,203)

46

102(14,054)¥

18,000¥13,883¥125,966

¥

(787)

¥

157,063¥

59,152

¥

8,385

¥

(1,933)¥65,604

¥

194

¥

3,806

¥

226,670$(9,886)$460,268$905 $

31,585$

1,793,059

Thousands of U.S. dollars
Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2014
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2015
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity$

Balance at March 31, 2016$

159,744$

123,207$

1,023,651$(6,318) $1,300,283$

400,958$

69,187

9,389

159,744-

123,207(0)

9,389
1,033,049
51,668(6,735)559-(6,318)
(550)

9,389
1,309,682
51,668(6,735)559(559)

400,958-

69,187-(9,886)-460,268-

905-

31,585
-

-

0

(0)

-

-

-

-

-

-

-

-

159,744-

123,207(8)

1,078,532
46,654(8,173)905-(6,869)(106)

1,354,623
46,654(8,173)905(124)

218,539
619,506-

3,984
73,180-25,47015,583-

248,003708,271
-

399
1,313
-

1,277
32,871-

2,097,089
46,654(8,173)
905
(124)

-

8

(8)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(94,542)

1,233(32,738)(126,047)

408

905

(124,724)

1,721 $

33,777

159,744$

123,207$

1,117,909$(6,984) $1,393,885

The accompanying notes are an integral part of these consolidated financial statements.
-6-$524,955$

74,414$(17,154)$582,215$

1,802,458
51,668(6,735)559(559)
249,689$

2,011,625

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2016 and 2015
Millions of yen
2016
2015
Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation
Impairment loss on fixed assets
Gain on refund from retirement benefit trusts
Decrease in reserve for possible loan losses
Contribution to retirement benefit trusts
Interest and dividend income
Interest expense
Decrease in trading securities
Increase in loans and bills discounted(Increase) decrease in call loans and bills
purchased
Increase in deposits(Decrease) increase in security deposits received
related to securities lending transactions
Increase in borrowings(excluding subordinated borrowings)
Gain on securities transactions
Loss (gain) on foreign currency transactions
Increase (decrease) in reserve for contingencies
Interest and dividend income received
Interest expense paid
Other, net
Subtotal
Income taxes paid
Net cash (used in) provided by operating
activities¥

Cash flows from investing activities:
Purchases of securities
Proceeds from sales and maturities of securities
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for asset retirement obligations
Net cash used in investing activities

8,660

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 2(b))

¥

9,411

$

76,854$

83,519

1,456
230
(856)
(1,797)(32,538)
1,630
77(24,783)

1,417
97(4,001)(4,000)(32,599)
1,633
33(18,487)

12,921
2,041(7,596)(15,947)(288,764)
14,465683(219,941)(35,507)(35,498)(289,305)
14,492
292(164,066)(581)
23,283

1,609
45,858(5,156)206,629

14,279406,975(37,511)

13,251(332,898)

117,598

1,260
(764)
3,890
259
33,632(1,784)(3,190)(29,426)(1,955)4,810(2,150)(6,945)(204)
33,937(2,508)(1,926)39,234(1,893)

11,182(6,780)34,522
2,298
298,473(15,832)(28,310)(261,146)(17,350)

42,687(19,080)(61,634)(1,810)301,180(22,257)(17,092)
348,189(16,799)(31,382)

37,341(278,505)

331,389(329,188)
328,891(1,913)
94
(26)
(36)
(2,178)(337,844)
305,045(2,650)
131
(12)
(47)
(35,378)(2,921,441)
2,918,805(16,977)
834
(230)
(319)
(19,329)(2,998,260)
2,707,179(23,517)
1,162
(106)
(417)
(313,968)

(921)
(18)
(940)

(759)
(76)
(836)

(8,173)(159)(8,342)(6,735)(674)(7,419)(34,501)

1,125(306,185)

9,984

1,229,153
922,967

1,219,160$ 1,229,153

Cash flows from financing activities:
Dividends paid
Other, net
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents¥

Thousands of U.S. dollars
2015
2016

138,501
104,000¥

137,375
138,501

The accompanying notes are an integral part of these consolidated financial statements.

-7-$

12,575860-

The Aichi Bank, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2016 and 2015

1. Basis of Presenting Consolidated Financial Statements
The consolidated financial statements of The Aichi Bank, Ltd. (the “Bank”) and its subsidiaries(collectively the “Group”) have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act of Japan and its related accounting regulations and in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to the application and disclosure requirements from International Financial ReportingStandards. The accompanying consolidated financial statements have been reformatted 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. Certain supplementary
information included in the statutory Japanese language consolidated financial statements is not presented
in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was¥112.68 to U.S. $1.00. This translation should not be construed as a representation 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.
The Japanese yen amounts in the accompanying consolidated financial statements are expressed inmillions of Japanese yen and have been rounded down. U.S. dollar amounts in the accompanying
consolidated financial statements are expressed in thousands of U.S. dollars and also have been rounded
down. As a result, total amounts expressed in both Japanese yen and U.S. dollars appearing in the
consolidated financial statements and the notes thereto may not be equal to the sum of the individual
amounts.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of the Bank and all of its subsidiaries, which
are engaged primarily in providing a wide range of financial services. At both March 31, 2016 and 2015,
the Bank had four subsidiaries but no affiliates. All intercompany transactions and accounts have been
eliminated.
(b) Cash and cash equivalents
For the purpose of the consolidated statements of cash flows, cash and cash equivalents consisted of cash
and due from the Bank of Japan as follows:
Millions of yen
2016
2015
Cash and due from banks
Less due from banks other thanBank of Japan
Cash and cash equivalents

Thousands of U.S. dollars
2016
2015

¥

104,722¥

139,407$929,375$

1,237,193¥(722)
104,000¥(906)
138,501$(6,407)922,967$(8,040)1,229,153-8-

(c) Trading securities
Trading securities are stated at fair value at the end of the fiscal year. Related gains and losses, both
realized and unrealized, are included in the consolidated statements of income. Accrued interest on
trading securities is included in “Other assets.”(d) Investment securities
Debt securities for which the Group has both the intent and the ability to hold to maturity are classified as
held-to-maturity debt securities and are stated at amortized cost determined by the moving averagemethod. In principle, available-for-sale securities are carried at the fair value as of the balance sheet
date. Net unrealized gain and loss on these securities, net of tax, are reported as a component ofaccumulated other comprehensive income in net assets. Available-for-sale securities for which the fairvalue is extremely difficult to determine are stated at moving average cost. The carrying value ofindividual investment securities is reduced, if necessary, through a write-down when a decline in value isdeemed other than temporary. Gain and loss on the disposal of investment securities are computed
principally using the moving average method. Accrued interest on securities is included in “Other
assets.”(e) Derivative financial instruments
Derivative financial instruments are recorded at fair value if hedge accounting is not applied, and gain
and loss on the derivatives are recognized in the consolidated statements of income.
(f) Reserve for possible losses on investments
Pursuant to the internal rules of the Bank, a reserve for possible losses on investments is provided in an
amount necessary to absorb future losses after considering the financial positions of the issuers of the
securities. A provision of reserve for possible losses on investments is included in “Other expenses” andamounted to none and ¥1 million ($8 thousand) for the years ended March 31, 2016 and 2015,
respectively.
(g) Loans and bills discounted and reserve for possible loan losses
Loans and bills discounted are stated at the amount of unpaid principal. Unearned interest and discounts
are recorded as liabilities and recognized as income over the term of the loan or bill.
A reserve for possible loan losses of the Bank is provided to cover future credit losses in accordance withinternal rules for self-assessment of asset quality. Loans written off are charged either to a reserve forpossible loan losses and/or current income. Recoveries on loans that have been written off are recorded
as other income. The reserve for possible loan losses is made based on the Bank’s internal rules inaccordance with Report No. 4 of the Ad Hoc Committee for Audits of Banks, “Practical Guideline for
Audits of Write-off of Bad Loans and Allowance for Doubtful Loans of Banks and Similar Financial
Institutions,” issued by the Japanese Institute of Certified Public Accountants (“JICPA”). For loans toborrowers that are legally or substantially bankrupt, a reserve is provided based on the amount of theclaims, net of amounts expected to be collected through the disposal of collateral or the execution ofguarantees. For loans to borrowers who are likely to become bankrupt, a reserve is provided based onan overall solvency assessment, net of amounts expected to be collected through the disposal of collateralor the execution of guarantees. For loans to borrowers not mentioned above, a reserve is provided basedon the historical loss experience of the Bank for a certain past period. All claims are assessed by the
Bank’s operating divisions based on the Bank’s internal rules for self-assessment of asset quality. The
inspection division, which is independent from the operating divisions, conducts examinations of theseassessments.
A reserve for possible loan losses of the subsidiaries is made for the aggregate amount of estimated credit
loss based on an individual financial review of doubtful or troubled receivables and a general reservebased on historical loss experience for other receivables.

-9-(h) Tangible fixed assets and depreciation (except for leases)
Tangible fixed assets of the Bank are stated at cost, less accumulated depreciation. Depreciation iscomputed using the declining balance method over the estimated useful life of the asset, except forbuildings acquired on or after April 1, 1998. Such buildings, excluding facilities attached thereto, aredepreciated using the straight-line method. The useful lives of tangible fixed assets range from 8 to 50
years for buildings and from 3 to 20 years for other fixed assets.
Tangible fixed assets of the subsidiaries are depreciated principally by the straight-line method over theestimated useful life of the asset.
(i) Intangible fixed assets and amortization (except for leases)
Intangible fixed assets are amortized using the straight-line method. Costs of computer softwaredeveloped or obtained for internal use are deferred and amortized by the straight-line method principallyover the estimated useful life of five years as determined by the Bank and its subsidiaries.
(j) Leases
All finance lease transactions are accounted for in a manner similar to that used for ordinary sale andpurchase transactions.
(Accounting for leases as lessee)
The Group, as lessee, capitalizes lease assets used under finance leases, except for certain immaterial or
short-term finance leases which are accounted for as operating leases as permitted under the accounting
standard for leases. Depreciation of the leased assets capitalized in finance lease transactions arecomputed by the straight-line method over the lease term, which is used as the useful life, and with theassumption of no residual value.
(Accounting for leases as lessor)
A certain subsidiary engaged primarily in leasing operations as a lessor recognizes “investments in leased
assets” for finance leases that do not transfer ownership of the leased assets to the lessee in a manner
similar to the accounting treatment for ordinary sales transactions. The “investment in leased assets”
account is presented as other assets in the accompanying consolidated balance sheets. The total amountequivalent to interest is allocated over the lease term using the effective interest method, and thesubsidiary recognizes leasing income for lease payments received from customers and related costs, netof imputed interest, when it receives the lease payments, as permitted under the accounting standard forleases.
(k) Impairment loss on fixed assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying value of an asset may not be recoverable. If the carrying value of an asset or a group of assets
exceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposal of the asset or group of assets, impairment loss is recognized in the income statement
by reducing the carrying value of the impaired asset or group of assets to the recoverable amount,measured as the higher of net selling price or value in use. Fixed assets include intangible assets as wellas land, buildings and other forms of property and are grouped at the lowest level for which there are cash
flows identifiably different from those of other groups of assets. To recognize and measure an
impairment loss, fixed assets are grouped into cash-generating units such as operating business branches,other than idle or unused property. Recoverable amounts of the assets are based on value in use,
calculated using the discounted future cash flows at interest rates principally of 8.0% and 6.5% for theyears ended March 31, 2016 and 2015, respectively, or net selling prices based primarily on appraisal
valuations, net of estimated costs of disposal.
For the years ended March 31, 2016 and 2015, the Group recognized impairment loss including removal
costs for the property of operating business branches and idle property, which is included in “Impairment
loss on fixed assets,” in the accompanying consolidated statements of income as follows:- 10 -

Millions of yen
2016
Buildings andOtherstructuresproperties

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

¥

¥

33
1

¥

116
18
169

¥

¥

¥

-

¥

1
53
54

¥

Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

$

$

$

$

¥

0
0

¥

¥

11
12
0
5
30

¥

¥

0
0

-

Total
¥

-

¥

Removal
costs
¥

¥

292
8

$

230
195

-

0

12
12

-

$

Land

8
470
479

$

$

97
106
0
44
266

- 11 -

$

$

0
0

$

$

2
71
97

Total

Thousands of U.S. dollars
2015
Buildings andOther
Removalstructuresproperties
costs

$

11
12

¥

$

$

0

$

117
29
230

¥

1,029
159
1,499

-

8
88
541

$

60
23

Total

Thousands of U.S. dollars
2016
Buildings andOther
Removalstructuresproperties
costs

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

1
10
61

¥

Millions of yen
2015
Buildings andOtherstructuresproperties

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

26
22

Removal
costs

-

$

106
106

532
204
1,038
257
2,041

Total
$

$

97
106
17
630
860

(l) Foreign currency translation
Assets and liabilities denominated in foreign currencies are generally translated into Japanese yen at theexchange rate prevailing at the balance sheet date. Income and expenses are translated at the exchange
rate in effect at the transaction date. Gain and loss resulting from foreign currency translation are
included in the consolidated statements of income.
(m) Reserve for employee bonuses
A reserve for employee bonuses is provided based on the estimated amounts of future payments
attributable to the respective fiscal year.
(n) Reserve for bonuses to directors
A reserve for bonuses to directors and audit and supervisory board members is provided for future bonus
payments to directors and audit and supervisory board members that reflect an amount estimated to haveaccrued as of the consolidated balance sheet date.
(o) Employee retirement benefits
Employees who terminate their service with the Group are entitled to retirement benefits generally
determined with reference to the basic salary at the time of termination, years of service and conditions
under which the termination occurs.
The Group recognizes retirement benefits, including pension costs and related liabilities, based
principally on the actuarial present value of the retirement benefit obligation using an actuarial appraisal
approach and the value of pension plan assets available for benefits at the fiscal year-end.
In determining retirement benefit obligation, the benefit formula method is used for attributing expected
retirement benefits to the period up to the end of the respective fiscal year-end. Actuarial differences
arising from changes in the projected benefit obligation or value of pension plan assets resulting fromoutcomes which are different from those assumed and from changes in the assumptions themselves areamortized on a straight-line basis principally over 13 to 14 years, a period within the average remaining
years of service of employees at the time when the differences arise, from the fiscal year after the year thedifferences arise.
(Additional information)
The Bank has set up retirement benefit trusts to prepare for future payment of retirement benefits.
However, because the pension assets, including those in the retirement benefit trusts, substantially exceed
the retirement benefit obligations and because the overfunded status is expected to continue, the Bank
received equity securities of ¥5,245 million ($46,547 thousand) as a partial refund from the retirement
benefit trusts on June 29, 2015. As a result, gain on refund from retirement benefit trusts in the amountof ¥856 million ($7,596 thousand) was recorded under “Other income” for the year ended March 31,
2016.
(p) Reserve for executive retirement benefits
A reserve for executive retirement benefits is provided for payment of retirement benefits to directors,
audit and supervisory board members and other executive officers in the amount deemed to have accruedat the consolidated balance sheet date according to the internal rules of the Group.
(q) Reserve for reimbursement of deposits
A reserve for reimbursement of deposits is provided for possible losses on the future claims of withdrawal
based on historical reimbursement experience. A provision of reserve for reimbursement of deposits
was included in “Other expenses” and amounted to ¥65 million ($576 thousand) and ¥27 million ($239
thousand) for the years ended March 31, 2016 and 2015, respectively.
- 12 -

(r) Reserve for contingencies
A provision is made in an amount deemed necessary to cover possible losses resulting from the default ofloans under a responsibility-sharing system with Credit Guarantee Corporation based primarily on
historical default rates. A provision of reserve for contingencies is included in “Other expenses” and an
amount of ¥259 million ($2,298 thousand) and none were recorded for the years ended March 31, 2016
and 2015, respectively.
(s) Stock options
The Group has applied ASBJ Statement No. 8, “Accounting Standard for Stock Options,” and its related
guidance. This standard and guidance are applicable to stock options granted on or after May 1, 2006.
This standard requires companies to measure the cost of employee stock options based on the fair value atthe date of such grant and recognize compensation expense over the vesting period as consideration forreceiving goods or services from such employees. The standard also requires companies to account for
stock options granted to non-employees based on the fair values of either the stock options or goods orservices received from such non-employees. In the balance sheets, stock options are presented as stockacquisition rights, a separate component of net assets, until exercised. The standard covers equity-settled,share-based payment transactions, but does not cover cash-settled, share-based payment transactions. In
addition, the standard allows unlisted companies to measure options at their intrinsic value if the fair value
cannot be reliably estimated.
(t) Income taxes
Income taxes are accounted for using the asset-liability method. Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differences between the carrying values ofexisting assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred
tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income inthe years in which those temporary differences are expected to reverse. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in the period that includes the promulgation date.
(u) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings isapproved by the shareholders.
(v) Per share data
Earnings per share is computed by dividing profit attributable to owners of parent by the weighted
average number of shares of common stock outstanding during the respective year.
Diluted earnings per share is computed to reflect the potential dilution that could occur if securities were
exercised or converted into common stock, assuming the full exercise of the outstanding stock options.
Cash dividends per share shown in the accompanying consolidated statements of income represent
dividends declared by the Bank as applicable to the respective year.
(w) Change in Accounting Policy(Application of Accounting Standards for Business Combinations, etc.)
The Bank has applied the revised “Accounting Standard for Business Combinations” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 21, issued on September 13, 2013), the revised“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, issued on
September 13, 2013) and the revised “Accounting Standards for Business Divestitures” (ASBJ Statement
No. 7, issued on September 13, 2013) from the fiscal year ended March 31, 2016. Under the revised
accounting standards, the difference arising from a change in the Bank’s ownership interest in a
subsidiary is accounted for as capital surplus as long as the Bank retains control over the subsidiary, and- 13 -

the acquisition related costs are accounted for as expenses in the fiscal year in which the costs are
incurred. Furthermore, adjustments of acquisition cost allocation resulting from finalizing provisional
accounting treatments for a business combination are reflected in the consolidated financial statements
for the fiscal year to which the date of business combination belongs, effective for a business combination
which occurs on or after the beginning of the fiscal year ended March 31, 2016. In addition, thepresentation method for net income and other related items was changed, and the presentation of“minority interests” was changed to “non-controlling interests.” Certain reclassifications have been
made to the consolidated financial statements for the year ended March 31, 2015 to reflect thesepresentation changes.
In accordance with the transitional treatment provided for in Paragraph 58-2 (4) of the revised“Accounting Standard for Business Combinations,” in Paragraph 44-5 (4) of the revised “AccountingStandard for Consolidated Financial Statements” and in Paragraph 57-4 (4) of the revised “AccountingStandards for Business Divestitures,” the revised accounting standards have been prospectively applied
from April 1, 2015. These changes have had no effect on the consolidated financial statements and pershare data for the year ended March 31, 2016.
(x) New accounting standards not yet adopted by the Group
Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, issued on
March 28, 2016, hereinafter the “Implementation Guidance”)i) Overview
The Implementation Guidance basically continues to apply the framework stipulated in the Auditing
Guidance No. 66, Auditing Treatment for Judgment of Recoverability of Deferred Assets, issued by
Japanese Institute of Certified Public Accountants with certain revisions.
ii) Date of Application
The Implementation Guidance is applied effective from the beginning of the fiscal year ending March 31,
2017.
iii) Effect of application
The resulting effect of applying the Implementation Guidance on the consolidated financial statements iscurrently under assessment.

3. Financial Instruments(a) Qualitative information on financial instrumentsi) Policies for financial instruments
The Group procures funds by accepting deposits from clients and utilizes the funds for financial
investments in the bond and stock markets and for making loans to corporate and individual clients.
The Group enters into derivative transactions in order to avoid the risk of foreign currency fluctuations on
customers’ funds as well as to conduct foreign financing transactions and to avoid the risk of risinginterest rates for the Bank. From an overall risk management standpoint, the Bank uses derivative
instruments as hedging instruments in order to avoid the market risk to which financial assets andliabilities are exposed.
ii) Details of financial instruments and related risks
Financial assets of the Group consist mainly of loans to corporate and individual clients and are exposed
to interest rate risk and credit risk resulting from any deterioration in the financial condition of the- 14 -

counterparty.
Investment securities comprise mainly debt and equity securities. The Group holds debt securities
classified as held-for-sale, available-for-sale or held-to-maturity and equity securities to pursue capitalgain or to maintain relationships with corporate clients. These securities are exposed to the credit risk of
the issuers, interest rate risk, market risk and foreign currency risk. Deposits consist of demand deposits
and time deposits. The maturities of time deposits are within five years.
Asset-liability management techniques are employed to manage financial assets and liabilities sensitive tointerest rate fluctuations.
iii) Risk management for financial instruments
Credit risk management
The Bank manages credit risk by conducting strict credit examinations on respective debtors.
Additionally, the Bank analyzes the risk by credit rating and industry in chronological order anddiversifies the risk of its portfolios in the entirety.
The Group manages credit risk under the Credit Supervision Section, examining and assessing
financial circumstances, industry trends, purposes of loans and repayment plans of respective debtors.
Assessments are conducted to evaluate the credit standing of prospective debtors before entering intoa transaction, for credit management after execution, as a self-assessment on a regular basis and at
any time when a relevant event occurs. By the self-assessment, assets are classified by the degree ofrisk based on the debtor’s classification and the existence of any collateral or guarantees. The resultsof the self-assessments are examined by the Self-Assessment Verification Section and are reported to
the Asset Assessment Committee and management.
As to the credit portfolios in the entirety, the level of concentration in the industry and largetransactions are monitored by the Credit Management Section on a regular basis in order to constructportfolios that exclude concentration risk. The Credit Management Section periodically reports theresults to management.
Moreover, an internal credit rating system has been introduced that classifies debtors according tocreditworthiness. The Bank uses the credit rating for screening and credit management of debtors aswell as monitoring the credit portfolio.
Credit risk is quantified, which enables the Bank to manage the credit risk effectively.
Market risk management
The Risk Control Department of the Bank monitors market risk. The department quantifies the risk
whenever possible and performs stress tests and simulation analyses to analyze the possible effects ofchanges in market variables such as interest rates, stock prices and exchange rates on the amount ofmarket risk the Bank is exposed to and on the profit and loss of the Bank. The results of theanalyses are regularly reported to the Board of Directors, the Risk Management Committee and otherrelevant parties. The Risk Management Committee and other relevant parties confirm that the levelof risk is sufficiently limited considering the equity of the Bank and review the policies forcontrolling market risk.
Interest rate risk and stock price risk are significant risks for the Group. Major financial instruments
which are exposed to interest rate risk are “Loans and bills discounted,” debt securities classified asavailable-for-sale securities under “Investment securities” and “Deposits.” Financial instruments
which are exposed to stock price risk are equity securities classified as available-for-sale securities in“Investment securities.” The Group uses Value at Risk (“VaR”) calculated based on the financial
assets and liabilities categorized into “loans and deposits,” “debt securities,” “equity securities held
for investment” and “strategically held equity securities” to perform quantitative analysis and manageinterest rate and stock price fluctuation risks. For the years ended March 31, 2016 and 2015, VaR- 15 -

was calculated using the historical simulation method (and assuming a holding period of 125 businessdays, a 99% confidence interval and an observation period of 5 years).
The total market risk exposure of the Group as estimated loss amounted to ¥18,022 million ($159,939
thousand) and ¥14,048 million ($124,671 thousand) as of March 31, 2016 and 2015, respectively. In
calculating VaR, VaR amounts for interest rate risk associated with the banking account and pricefluctuation risk associated with the equity securities held for investment were summed with that for
price fluctuation risk associated with strategically held equity securities.
The Group ensures the reliability and accuracy of the measurement model by performing back-testing,that is, comparing VaR amounts measured using the model with actual amounts of profit and loss.
However, VaR reflects market risk exposures statistically calculated under certain probabilities basedon historical market volatility; therefore, it may not be able to accurately reflect the risks when themarket environment changes extraordinarily.
iv) Supplemental information on fair value of financial instruments
Fair values of financial instruments are estimated based on quoted market prices or based on reasonably
calculated prices if quoted market prices are not available. Certain assumptions are used to calculate
such prices. Therefore, prices may be different under different assumptions.

- 16 -

(b) Fair value of financial instruments
The following is a summary of the carrying values and fair values of financial instruments at March 31,
2016 and 2015.

Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

Carrying value

Millions of yen
2016
Fair value¥¥

104,722
2,753
-

¥

-

1,145,397

1,145,397-¥

1,679,941(8,118)
1,671,822
2,924,695¥

1,700,258
2,953,131¥

28,43528,435¥2,661,691¥

2,662,602

¥

910

¥

37,574
18,9152,718,181¥

37,574
18,9572,719,134

¥

42
953

¥
¥

960
960

¥
¥

960
960

¥
¥

-

2015
Fair value

Carrying value
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

104,722
2,753-

Difference¥

139,407
2,171
77

¥

1,157,415

139,407
2,171
77

Difference¥

1,157,415-¥

1,655,157(9,900)1,645,256
2,944,328¥

1,669,942
2,969,014¥

24,685
24,685¥2,638,408¥

2,638,976

¥

568

¥

75,085
17,6552,731,148¥

75,085
17,6782,731,740

¥

23
591

¥
¥

(202)
(202)

¥
¥

(202)
(202)

¥
¥

-

- 17 -

Thousands of U.S. dollars
2016
Carrying value
Fair value
Difference
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions$

929,375
24,432-$

10,165,042$-

10,165,042-$

14,908,954(72,044)
14,836,900
25,955,759$

15,089,261
26,208,120$

252,351
252,351$

23,621,680$

23,629,765

$

8,075

$

333,457
167,864
24,123,012$

333,457
168,237
24,131,469

$

372
8,457

$
$

8,519
8,519

$
$

8,519
8,519

$
$

-

2015
Fair value

Carrying value
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

929,375
24,432-$

1,237,193
19,266683$

Difference

1,237,193
19,266683$-

10,271,698

10,271,698-$

14,689,004(87,859)
14,601,135
26,129,996

14,820,216$ 26,349,077$

219,071
219,071$

23,415,051$

23,420,092

$

5,040

$

666,356
156,682
24,238,090$

666,356
156,886
24,243,343

$

204
5,244

$
$

(1,792)(1,792)$$(1,792)(1,792)$$-

Notes:(*1) The following securities were excluded from the above tables because their fair values were extremely
difficult to determine.
Millions of yen
2016
2015
Unlisted stocks*
Other nonmarketablesecurities

Thousands of U.S. dollars
2016
2015

¥

1,852

¥

1,757

$

16,435$

15,592

¥

465
2,318

¥

321
2,078

$

4,126
20,571$

2,848
18,441- 18 -

* For the year ended March 31, 2015, there was no write-down of these securities. For the year ended
March 31, 2016, loss on the write-down of these securities was recognized in the amount of ¥2 million($17 thousand).
(*2) Reserve for possible loan losses on ordinary and specific claims corresponding to loans and bills
discounted is deducted.
(*3) Derivative transactions recorded in other assets and liabilities are presented in a lump sum on a net basis.
A net liability position is shown in parenthesis.

Methods for calculating the fair value of financial instruments were as follows:
Financial assets:
Ɣ Cash and due from banks – The fair value of due from banks without maturities approximates the
carrying value. As for those with maturities, the present value calculated by discounting theamount categorized based on the remaining term to maturity as of the consolidated balance sheet
date at the risk free rate is used as the fair value. As for those with maturities up to one year as of
the consolidated balance sheet date, the carrying value is used as the fair value after it is confirmedthat the fair value approximates the carrying value.
Ɣ Call loans and bills purchased – The present value calculated by discounting the amount
categorized based on the remaining term to maturity as of the consolidated balance sheet date at therisk free rate is used as the fair value of call loans and bills purchased. As for those withmaturities up to one year as of the consolidated balance sheet date, the carrying value is used as thefair value after it is confirmed that the fair value approximates the carrying value.
Ɣ Trading securities – The fair value of trading securities such as debt securities held for dealing
operations is based on the quoted market price or the price obtained from the counterparty financial
institution.
Ɣ Investment securities – The fair value of equity securities is based on the quoted market price.
The fair value of debt securities is based on the quoted market price or the price obtained from thecounterparty financial institution. The fair value of investment trust funds is based on the constantvalue.
The fair value of private placement bonds guaranteed by the Bank is calculated by discounting thefuture cash flows at the risk free rate to which the consideration (risk premium) to cover
uncertainty inherent in cash flows (credit risk and others), which is calculated based on the amount
expected to be collected according to the internal credit rating and the existence of collateral or
guarantees, is added. As for transactions with maturities up to one year as of the consolidatedbalance sheet date, the carrying value is used as the fair value after it is confirmed that the fairvalue approximates the carrying value. Additional information on securities classified by holding
purpose is presented in Note 4, Trading Securities and Investment Securities.
Ɣ Loans and bills discounted – The fair value of loans and bills discounted to corporate clients is
calculated by discounting the future cash flows at the risk free rate to which the consideration (riskpremium) to cover uncertainty inherent in cash flows (credit risk and others), which is calculated
based on the amount expected to be collected according to the internal credit rating and theexistence of collateral or guarantees, is added. The fair value of those to individual clients is
calculated as the total of principal and interest discounted by the rate assumed when a similar loan
is executed.
As for transactions whose due date is within one year as of the consolidated balance sheet date, thecarrying value is used as the fair value after it is confirmed that the fair value approximates the
carrying value.
As for loans to borrowers that are legally or substantially bankrupt and those who are likely to
become bankrupt, the estimated loan losses are calculated based on the present value of theestimated future cash flows or the amount expected to be collected due to collateral or guarantees.
As a result, the fair value approximates the carrying value as of the consolidated balance sheet dateminus the reserve for possible loan losses.
- 19 -

Financial liabilities:
Ɣ Deposits – The fair value of demand deposits is deemed as the amount that would be paid if
demanded by the clients as of the consolidated balance sheet date (the carrying value). As fortime deposits, the present value, the discounted future cash flows by the amount categorized basedon a certain period, is used as the fair value. The discount rate is that used when a new deposit isaccepted. As for those with maturities up to one year as of the consolidated balance sheet date,the carrying value is used as the fair value after it is confirmed that the fair value approximates the
carrying value.
Ɣ Security deposits received related to securities lending transactions and borrowings – The present
value calculated by discounting the amount categorized based on the remaining term to maturity asof the consolidated balance sheet date at the risk free rate is used as the fair value. As fortransactions with maturities up to one year as of the consolidated balance sheet date, the carrying
value is used as the fair value after it is confirmed that the fair value approximates the carrying
value.
Derivative transactions:
Information on fair value of derivative transactions is presented in Note 16, “Derivative Financial
Instruments.”- 20 -

(c) Redemption schedule for financial instruments with maturities
The redemption schedule for financial instruments with maturities at March 31, 2016 was as follows:

Due after
1 yearthrough
3 years

Due in 1 year
or less
Financial assets:
Due from banks
Call loans and bills purchased
Investment securities:
Available-for-sale securities:
Japanese government
bonds
Local government bonds
Corporate bonds
Foreign bonds
Other
Total investment securities
Loans and bills discounted (*1)¥

17,50015,87975,30524,6409133,335
316,660
519,816¥ 2,378,489¥
Financial liabilities:
Deposits (*2)
Security deposits received
related to securities lendingtransactions
Borrowings

67,067
2,753

37,574
14,340¥ 2,430,403

¥

$

¥
¥

266,207¥

3,015
269,222¥¥

143,000
43,06392,38518,28736,948
333,686
227,238
560,924¥

16,995¥

1,560
18,555¥-¥23,60013,40848,5609,443
95,012
112,804
207,816

¥

-

¥

-

¥

-

$

-

$

Due after
10 years
-

-

¥

¥

11,0007,795
3,521
22,316308,215
330,532

¥

-

¥

-

¥

-

¥

-

Due after
7 years
through
10 years
-

¥

9,805
20,97376,937
107,716
124,795
232,511

Thousands of U.S. dollars
2016
Due after
Due after
3 years
5 years
throughthrough
5 years
7 years

Due after
1 yearthrough
3 years$-

Due after
7 years
through
10 years$

Due after
10 years-$-

155,307
140,921668,308
218,67279
1,183,306
2,810,259
4,613,205

533,368
226,331
1,375,914
157,348
75,1772,368,157
3,065,237$ 5,433,404

1,269,080
382,170819,888
162,291
327,9022,961,359
2,016,666$ 4,978,026

209,442
118,991
430,954
83,803
843,201
1,001,100$ 1,844,302

87,016
186,128
682,791
955,946
1,107,516$ 2,063,462$

97,621
69,17831,247
198,047
2,735,312
2,933,368$ 21,108,351$ 2,362,504$

150,825

$

-

$

-

$

-

333,457
127,263$ 21,569,071

26,757$ 2,389,261$

13,844
164,669

$

-

$

-

$

-

$
Financial liabilities:
Deposits (*2)
Security deposits received
related to securities lendingtransactions
Borrowings

595,198
24,432-60,10025,503155,038
17,7308,471
266,844345,391
612,236

Due in 1 year
or less
Financial assets:
Due from banks
Call loans and bills purchased
Investment securities:
Available-for-sale securities:
Japanese government
bonds
Local government bonds
Corporate bonds
Foreign bonds
Other
Total investment securities
Loans and bills discounted (*1)

Millions of yen
2016
Due after
Due after
3 years
5 years
throughthrough
5 years
7 years

Notes:(*1) At March 31, 2016, the total amount of loans which were not expected to be recovered, including claims toborrowers that were legally or substantially bankrupt and to those who were likely to become bankrupt,
amounted to ¥49,245 million ($437,034 thousand). Loans without due dates in the amount of ¥195,590
million ($1,735,800 thousand) were excluded.
(*2) Demand deposits were included in “Due in 1 year or less.”- 21 -

4. Trading Securities and Investment Securities
There was no carrying value of trading securities at March 31, 2016. At March 31, 2015, trading
securities consisted of Japanese government bonds only.
At March 31, 2016 and 2015, investment securities consisted of the following:

Millions of yen
2016
2015
Japanese government bonds
Local government bonds
Bonds and debentures
Equity securities
Other

¥

266,501
111,059
409,205
121,847
239,103¥ 1,147,715¥¥

Thousands of U.S. dollars
2016
2015

308,125
113,504
421,022129,090
187,750
1,159,493$ 2,365,113
985,614
3,631,567
1,081,354
2,121,964$ 10,185,614$ 2,734,513
1,007,312
3,736,439
1,145,633
1,666,222$ 10,290,140

At March 31, 2016 and 2015, investment securities included Japanese government bonds of ¥7,447
million ($66,089 thousand) and ¥6,366 million ($56,496 thousand), respectively, as loans without
collateral (securities lending transactions).
At March 31, 2016 and 2015, liabilities for guarantees on corporate bonds included in “Investment
securities,” which were issued by private placement (Article 2, Paragraph 3 of the Financial Instruments
and Exchange Act), amounted to ¥12,777 million ($113,391 thousand) and ¥14,027 million ($124,485
thousand), respectively.
Securities are classified as trading, held-to-maturity or available-for-sale. The classification determines
the respective accounting method that should be used to account for these securities, as stipulated by theaccounting standard for financial instruments. At March 31, 2016 and 2015, the carrying values of
trading securities and the related valuation differences included in the consolidated statements of income
were as follows:
Millions of yen
2016
Carryingvalue
Tradingsecurities¥-

Valuationdifference¥

Thousands of U.S. dollars
2016
2015

2015

-

Carrying
value

Valuationdifference

¥

¥

77

(0)

Carrying
value$

Valuationdifference

-

$

-

Carrying
value

Valuationdifference

$

$

683

The Group did not have any held-to-maturity debt securities as of March 31, 2016 and 2015.

- 22 -(0)At March 31, 2016 and 2015, gross unrealized gains and losses for available-for-sale securities with fairvalue were as follows:

Cost
Available-for-sale securities with fair value:
Japanese government bonds¥
Local government bonds
Bonds and debentures
Equity securities
Other¥

Available-for-sale securities with fair value:
Japanese government bonds¥
Local government bonds
Bonds and debentures
Equity securities
Other¥

Millions of yen
2016
Gross
Gross
unrealized
unrealized
gains
losses258,223
108,116
401,497
60,995
232,334
1,061,166

¥

8,277
2,942
7,830
61,4438,059
88,553¥

Cost

Millions of yen
2015
Gross
Gross
unrealized
unrealized
gains
losses

¥

7,962
2,919
6,972
73,168
10,993¥ 102,015

Cost

Thousands of U.S. dollars
2016
Gross
Gross
unrealized
unrealized
gains
losses

Cost
Available-for-sale securities with fair value:
Japanese government bonds$ 2,664,199
Local government bonds
981,558
Bonds and debentures
3,675,337
Equity securities
481,842
Other
1,567,314$ 9,370,269- 23 -$

73,455
26,10969,488545,287
71,521$ 785,880

¥

(0)
(122)
(2,444)(1,756)(4,323)

300,202110,602414,137
54,294
176,605
1,055,842

Available-for-sale securities with fair value:
Japanese government bonds$ 2,291,648
Local government bonds
959,495
Bonds and debentures
3,563,161
Equity securities
541,311
Other
2,061,892$ 9,417,518

¥

¥

¥

(38)
(17)
(87)
(129)
(170)
(442)

$

(0)
(1,082)(21,689)(15,583)$ (38,365)

Thousands of U.S. dollars
2015
Gross
Gross
unrealized
unrealized
gains
losses$70,66025,90561,874649,343
97,559$ 905,351

$

$

(337)
(150)
(772)
(1,144)(1,508)(3,922)

Fair andcarrying
value¥

266,501
111,059
409,205
119,994
238,637¥ 1,145,397

Fair andcarrying
value¥

308,125
113,504
421,022
127,333
187,428¥ 1,157,415

Fair andcarryingvalue$ 2,365,113
985,614
3,631,567
1,064,909
2,117,829$ 10,165,042

Fair andcarryingvalue$ 2,734,513
1,007,312
3,736,439
1,130,040
1,663,365$ 10,271,698

During the years ended March 31, 2016 and 2015, the Group recorded losses on the write-down ofavailable-for-sale securities with fair value due to other than temporary decline in value as follows:
Millions of yen
2016
2015
Equity securities
Corporate bonds

¥

55
3

¥

Thousands of U.S. dollars
2016
2015
1

$

488
26

$

8

The Group recognizes the write-down of available-for-sale securities with fair value in the case of adecline in value by 50% or more below cost or an other than temporary decline ranging from 30% to 50%
below cost.
At March 31, 2016 and 2015, net unrealized gains on available-for-sale securities, net of applicable
income taxes and non-controlling interests, recorded as a component of accumulated othercomprehensive income in net assets on the consolidated balance sheets were as follows:

Millions of yen
2016
2015
Unrealized gains
Less applicable income taxes
Less non-controlling interests portion
Net unrealized gains¥¥

84,230(25,009)(67)
59,152Thousands of U.S. dollars
2016
2015

¥ 101,572(31,684)(82)¥ 69,806$

747,515(221,947)(594)$ 524,955$$

901,419(281,185)(727)
619,506

During the years ended March 31, 2016 and 2015, the Group sold available-for-sale securities andrecorded gains and losses on sales of these securities on the consolidated statements of income as follows:
Millions of yen
2016
2015
Gains on sales of:Equity securities
Bonds and others

¥

2,157
1,481
3,638

¥
Losses on sales of:Equity securities
Bonds and others

¥

987
1,828
2,815

¥

¥
¥
¥
¥

1,570
1,195
2,765
232
380
612

Thousands of U.S. dollars
2016
2015
$
$
$
$

19,142
13,14332,286
8,759
16,222
24,982$$

13,933
10,60524,538

$
$

2,058
3,372
5,431

5. Loans and Bills Discounted
At March 31, 2016 and 2015, loans and bills discounted consisted of the following:
Millions of yen
2016
2015
Bills discounted
Loans on bills
Loans on deeds
Overdrafts¥

25,71453,651
1,402,379
198,195¥ 1,679,941¥¥

26,93460,626
1,359,374
208,221
1,655,157

Thousands of U.S. dollars
2016
2015
$

228,203
476,135
12,445,678
1,758,919$ 14,908,954$

239,030
538,036
12,064,022
1,847,896$ 14,689,004

Bills discounted are accounted for as financial transactions in accordance with the JICPA Industry Audit
Committee Report No. 24 issued on February 13, 2002, “Treatment of Accounting and Auditing- 24 -

Concerning Application of Accounting Standard for Financial Instruments in Banking Industry.” The
Group has the right to sell or pledge (repledge) bankers’ acceptances, commercial bills, documentary bills
and foreign bills of exchange purchased without restrictions. The total face value of these bills
amounted to ¥25,800 million ($228,966 thousand) and ¥27,110 million ($240,592 thousand) at March 31,
2016 and 2015, respectively.
Claims to borrowers in bankruptcy and past due loans amounted to ¥49,244 million ($437,025 thousand)and ¥53,228 million ($472,381 thousand) at March 31, 2016 and 2015, respectively, and are included in“Loans and bills discounted.” Loans are generally placed on non-accrual status when there is substantial
doubt about the ultimate collectability of either principal or interest because the principal or interest is
past due for a considerable period or for other reasons. Claims to borrowers in bankruptcy represent
non-accrual loans after charge-off to legally bankrupt borrowers as defined in Article 96, Paragraph 1,
Subparagraph 3 and 4 of the Order for Enforcement of the Corporation Tax Act of Japan. Past due loans
are non-accrual loans other than claims to borrowers in bankruptcy and loans for which interest payments
are deferred in order to assist the financial recovery of borrowers in financial difficulties.
At March 31, 2016 and 2015, delinquent loans for which the payment of principal or interest wascontractually past due three months or more, excluding non-accrual loans, amounted to ¥892 million($7,916 thousand) and ¥509 million ($4,517 thousand), respectively.
At March 31, 2016 and 2015, restructured loans for which the Bank had restructured the terms andconditions in favor of borrowers in financial difficulties, such as a reduction or exemption of the original
interest rate, extension of interest payments and/or principal repayments and debt forgiveness in order tosupport the borrowers in their financial recovery or restructuring, excluding “claims to borrowers inbankruptcy,” “past due loans” and “delinquent loans contractually past due three months or more”
disclosed above, amounted to ¥6,016 million ($53,390 thousand) and ¥8,067 million ($71,592 thousand),
respectively.
Total non-performing assets before charge-offs of claims deemed uncollectible, consisting of “claims toborrowers in bankruptcy,” “past due loans,” “delinquent loans contractually past due three months ormore” and “restructured loans,” aggregated ¥56,154 million ($498,349 thousand) and ¥61,804 million($548,491 thousand) at March 31, 2016 and 2015, respectively.
A provision of reserve for possible loan losses amounted to ¥126 million ($1,118 thousand) and none forthe years ended March 31, 2016 and 2015, respectively, and is included in “Other expenses” in theaccompanying consolidated statements of income.

- 25 -

6. Foreign Exchange
At March 31, 2016 and 2015, foreign exchange consisted of the following:

Assets:Due from banks
Foreign bills of exchange purchased
Foreign bills of exchange receivable¥¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

2,165
86
466
2,717

$

¥

¥

2,896
176
563
3,636

Millions of yen
2016
2015
Liabilities:
Foreign bills of exchange sold
Foreign bills of exchange payable

¥
¥

503
202
706

¥
¥

$

19,213763
4,135
24,112$$25,701
1,561
4,996
32,268

Thousands of U.S. dollars
2016
2015

458
521
980

$
$

4,463
1,792
6,265

$
$

4,064
4,623
8,697

7. Tangible Fixed Assets
At March 31, 2016 and 2015, tangible fixed assets consisted of the following:
Millions of yen
2016
2015
Land
Buildings and structures
Construction in progress
Other tangible fixed assets
Tangible fixed assets¥¥

23,249
8,428
34
3,507
35,219¥¥23,559
7,942
32
3,307
34,841Thousands of U.S. dollars
2016
2015
$

$

206,327
74,795301
31,123
312,557$$

209,078
70,482283
29,348309,203

Accumulated depreciation of tangible fixed assets at March 31, 2016 and 2015 was ¥22,931 million($203,505 thousand) and ¥22,865 million ($202,919 thousand), respectively.
As permitted by the accounting principles and practices generally accepted in Japan, deferred capitalgains on sales of real property are deducted from the original acquisition cost of property newly acquired
for replacement purposes in the same line of business as the property sold. At March 31, 2016 and 2015,
the amount of ¥2,286 million ($20,287 thousand) was directly reduced from the acquisition cost of land,
respectively.
The Bank elected the one-time revaluation of land used for the banking business effective on March 31,
1998, reflecting appropriate adjustments for land shape and other factors based on the appraisal values
issued by the Japanese National Tax Agency under the Act on Revaluation of Land. According to theAct, the amount equivalent to the tax effect on the excess of sound reassessed values over the original
book value is stated as “Deferred tax liabilities for revaluation,” and the rest of the excess, net of the tax
effect, is disclosed as “Land revaluation increment” and included in a component of accumulated othercomprehensive income in net assets on the consolidated balance sheets. At March 31, 2016 and 2015,
the differences in the carrying values of land used for the banking business after reassessment over themarket values amounted to ¥2,868 million ($25,452 thousand) and ¥3,792 million ($33,652 thousand),
respectively.

- 26 -

8. Pledged Assets
At March 31, 2016 and 2015, investment securities totaling ¥100,759 million ($894,204 thousand) and¥138,553 million ($1,229,614 thousand), respectively, were pledged as collateral for “Security deposits
received related to securities lending transactions” of ¥37,574 million ($333,457 thousand) and ¥75,085
million ($666,356 thousand) as well as for “Borrowings” of ¥12,200 million ($108,271 thousand) and¥12,400 million ($110,046 thousand), respectively.
At March 31, 2016 and 2015, investment securities totaling ¥25,254 million ($224,121 thousand) and¥24,953 million ($221,450 thousand), respectively, were pledged as collateral for the settlement of
exchange and other transactions.
9. Deposits
At March 31, 2016 and 2015, deposits consisted of the following:
Millions of yen
2016
2015
Demand deposits
Time deposits
Other¥ 1,373,221
1,257,601
30,869¥ 2,661,691¥ 1,358,867
1,251,027
28,512¥ 2,638,408

Thousands of U.S. dollars
2016
2015
$ 12,186,909
11,160,818
273,952$ 23,621,680$ 12,059,522
11,102,476
253,035$ 23,415,051

10. Borrowings and Lease Obligations
At March 31, 2016 and 2015, borrowings, which consisted of the borrowings from other financial
institutions, amounted to ¥18,915 million ($167,864 thousand) and ¥17,655 million ($156,682 thousand),
respectively. At March 31, 2016, the annual maturities of borrowings due through February 2021 at an
average interest rate of 0.18% per annum were as follows:Year ending March 31,

Thousands of
U.S. dollars

Millions of yen

2017
2018
2019
2020
2021

¥

¥

14,340
1,715
1,300
970
590
18,915$$

127,263
15,22011,537
8,608
5,236
167,864

At March 31, 2016 and 2015, other liabilities included lease obligations of 13 million ($115 thousand)and none, respectively.

11. Employee Retirement Benefits
The Group has corporate pension fund plans and lump-sum retirement benefit plans as defined benefit
plans that cover substantially all employees. Furthermore, retirement benefit trusts are set up to cover
lump-sum retirement benefit plans. At March 31, 2016 and 2015, employee retirement benefits
consisted of the following:- 27 -

(Defined benefit plans)(a) Movement in retirement benefit obligations:

Retirement benefit obligations at beginning of year ¥Cumulative effects of changes in accounting
policies
Restated balance
Service cost
Interest cost
Actuarial differences
Retirement benefits paid
Retirement benefit obligations at end of year¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

20,289

$

¥

668
249
2,624
(1,199)22,632 ¥21,941(1,637)
20,304690
249
127(1,083)
20,289 $180,058$

194,719

5,928
2,209
23,287(10,640)
200,851 $(14,527)
180,191
6,123
2,209
1,127
(9,611)
180,058(b) Movement in plan assets:

Plan assets at beginning of year
Expected return on plan assets
Actuarial differences
Contribution paid by the employer
Contribution to retirement benefit trusts
Refund of equity securities from retirement
benefit trusts
Retirement benefits paid
Plan assets at end of year¥¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

31,141 ¥613(1,661)357-

23,085
292
3,688
960
4,000

$ 276,366 $
5,440(14,740)
3,168-(5,245)(924)
24,281 ¥(885)
31,141 $(46,547)(8,200)215,486 $

204,872
2,591
32,7298,519
35,498(7,854)
276,366(c) Reconciliation from retirement benefit obligations and plan assets to employee retirement benefit asset or
liability recorded on the consolidated balance sheet:
Millions of yen
2016
2015
Funded retirement benefit obligations
Plan assets¥

Unfunded retirement benefit obligations
Net balance of (asset)/liability for retirement
benefits recorded on the consolidatedbalance sheet at end of year
Employee retirement benefit liability
Employee retirement benefit asset
Net balance of (asset)/liability for retirement
benefits recorded on the consolidatedbalance sheet at end of year¥

- 28 -

22,632(24,281)(1,648)-¥

Thousands of U.S. dollars
2016
2015

20,289 $ 200,851 $ 180,058(31,141)(215,486)(276,366)(10,852)(14,625)(96,308)-(1,648)(10,852)(14,625)(96,308)

1,353(3,002)766(11,619)

12,007(26,641)

6,798(103,115)(1,648) ¥(10,852) $(14,625) $(96,308)

(d) Net periodic retirement benefit expenses and their breakdown:
Millions of yen
2016
2015
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Gain on refund from retirement benefit trusts *Other
Net periodic retirement benefit expenses
under defined benefit plans

Thousands of U.S. dollars
2016
2015

¥

668 ¥
249
(613)
(224)
(856)
37

690 $
249
(292)
746
38

5,928 $
2,209
(5,440)(1,987)(7,596)
328

6,123
2,209
(2,591)
6,620
337

¥

(739) ¥

1,432

(6,558) $12,708$

Note: * Gain on refund from retirement benefit trusts of ¥856 million ($7,596 thousand) for the year ended March 31,
2016 was included in “Other income.”(e) Retirement benefit adjustment in other comprehensive income, before tax effects:

Actuarial differences
Total

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

(5,367) ¥(5,367) ¥

$
$

¥
¥

4,307
4,307

(47,630) $(47,630) $38,22338,223(f) Retirement benefit adjustment in accumulated other comprehensive income, before tax effects:
Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

(2,781) ¥(2,781) ¥$$Actuarial differences that are yet to be recognized ¥
Total
¥

2,585
2,585

(24,680) $(24,680) $22,941
22,941(g) Plan assetsi) Plan assets comprise:

Debt securities
Equity securities
Cash and deposits
General account
Other
Total

2016

2015

43.7%
36.8
5.3
13.5
0.7
100.0%

25.1%
48.1
0.0
10.4
16.4
100.0%

Note: At March 31, 2016 and 2015, 34.9% and 47.1% of plan assets consisted of retirement benefit trusts that are
set up for corporate pension plans and lump-sum retirement benefit plans, respectively.

ii) Determination of expected long-term rate of plan assets
The expected long-term rate of return on plan assets is determined considering current and future
portfolio of plan assets and current and expected long-term rate of return generated from various
components of the plan assets.

- 29 -

(h) Actuarial assumptions at end of year:

Discount rate for corporate pension plans
Discount rate for lump-sum retirement benefit plans
Expected long-term rate of return on plan assets

2016

2015

0.3%
0.2%
3.0%

1.2%
1.1%
2.0%

12. Acceptances and Guarantees
The Bank provides guarantees for liabilities of its customers for payments on loans from other financial
institutions. A contra account, “Customers’ liabilities for acceptances and guarantees,” is classified as
an asset in the consolidated balance sheets, indicating the Bank’s right of indemnity from customers.

13. Net Assets
At March 31, 2016 and 2015, the authorized number of shares of common stock without par value was 30
million, and the number of shares of common stock issued was 10,943,240 shares. At March 31, 2016
and 2015, the number of shares of treasury stock held by the Group was 102,855 and 100,763 shares,
respectively.
At March 31, 2016 and 2015, capital surplus consisted principally of additional paid-in capital.
Included in retained earnings was the legal earnings reserve of the Bank in the amount of ¥5,392 million($47,852 thousand) at both March 31, 2016 and 2015. The Japanese Banking Act provides that an
amount equivalent to at least 20% of the cash payments as appropriations of retained earnings shall beappropriated as the legal earnings reserve until the total amount of additional paid-in capital and suchreserve equals the common stock. The legal earnings reserve is not available for distributions as
dividends, but may be used to reduce a deficit or may be transferred to common stock by proper action of
the Board of Directors and/or the shareholders.
In November 2015, the Board of Directors of the Bank resolved to pay interim dividends of ¥433 million($3,842 thousand) at ¥40 per share ($0.35 per share). The shareholders of the Bank approved thefollowing appropriation of retained earnings at the annual shareholders meeting on June 24, 2016.
Thousands of
U.S. dollars

Millions of yen
Cash dividends, ¥40 per share ($0.35 per share)- 30 -

¥

433

$

3,842

14. Stock Options(a) Stock option expenses
The Bank recorded stock option expenses of ¥48 million ($425 thousand) and ¥45 million ($399
thousand) in “General and administrative expenses” for the years ended March 31, 2016 and 2015,
respectively.
(b) Outline of stock options and size of and changes in stock optionsi) Outline of stock options:2012 stock options

2013 stock options

2014 stock options

2015 stock options

13 directors of the
13 directors of the
Bank (excluding
Bank (excluding
outside directors)
outside directors)
Number of options
13,000 common
12,200 common
granted*shares of the Bank
shares of the Bank
Grant dateJuly 20, 2012
July 19, 2013
Conditions for vestingNot definedNot defined
Requisite service period
Not definedNot defined
Exercise period
From July 21, 2012
From July 20, 2013
to July 20, 2042
to July 19, 2043
Note: * Calculated in terms of the number of shares.

13 directors of the
Bank (excluding
outside directors)
9,100 commonshares of the Bank
July 25, 2014
Not definedNot defined
From July 26, 2014
to July 25, 2044

13 directors of the
Bank (excluding
outside directors)
7,100 commonshares of the Bank
July 24, 2015
Not definedNot defined
From July 25, 2015
to July 24, 2045

Position and number ofgranteesii) Size of and changes in stock options:
The following describes the size of and changes in stock options that existed during the years ended
March 31, 2016 and 2015. The number of stock options is calculated in terms of the number of shares.
a) Number of stock options
Non-vested:
Outstanding at April 1, 2014
GrantedForfeited
VestedOutstanding at March 31, 2015
GrantedForfeited
VestedOutstanding at March 31, 2016
Vested:Outstanding at April 1, 2014
VestedExercised
Forfeited
Outstanding at March 31, 2015
VestedExercised
Forfeited
Outstanding at March 31, 20162012 stock options

2013 stock options

2014 stock options

2015 stock options--

9,100 shares(9,100 shares)-

7,100 shares(7,100 shares)-

12,200 shares
12,200 shares
12,200 shares

9,100 shares
9,100 shares
9,100 shares

7,100 shares
7,100 shares

13,000 shares
13,000 shares(400 shares)
12,600 shares- 31 -

b) Price information(per share)
Exercise price
Average stock price at exercise
Fair value at grant date2012 stock options

2013 stock options

2014 stock options

2015 stock options¥1 ($0.00)¥6,520 ($57.86)¥3,645 ($32.34)¥1 ($0.00)¥4,556 ($40.43)¥1 ($0.00)¥4,959 ($44.00)¥1 ($0.00)¥6,811 ($60.44)iii) Valuation technique to estimate fair value of stock options granted for the years ended March 31,
2016 and 2015:(1) 2014 stock options:a) Valuation technique used: Black-Scholes modelb) Major assumptions and estimation method
2014 stock options
Expected volatility (*1)
Expected life (*2)
Expected dividends (*3)
Risk free interest rate (*4)

34.441%
1.3 years¥70 ($0.62) per share
0.050%

Notes: (*1) Expected volatility is calculated based on the actual stock prices during the period from March 2013 toJuly 2014, which corresponds to the expected life of the options.
(*2) Expected life is estimated based on the difference between the average term of office of directors who
retired during the past 10 years and the average term of office of existing directors in office.
(*3) Expected dividends are the actual dividends for the year ended March 31, 2014.
(*4) Risk free interest rate is a Japanese government bond yield which corresponds to the expected life.

(2) 2015 stock options:a) Valuation technique used: Black-Scholes modelb) Major assumptions and estimation method
2015 stock options
Expected volatility (*1)
Expected life (*2)
Expected dividends (*3)
Risk free interest rate (*4)

30.435%2.0 years¥80 ($0.70) per share
0.000%

Notes: (*1) Expected volatility is calculated based on the actual stock prices during the period from July 2013 to July
2015, which corresponds to the expected life of the options.
(*2) Expected life is estimated based on the difference between the average term of office of directors who
retired during the past 10 years and the average term of office of existing directors in office.
(*3) Expected dividends are the actual dividends for the year ended March 31, 2015.
(*4) Risk free interest rate is a Japanese government bond yield which corresponds to the expected life.

iv) Method of estimating number of stock options vested
Basically, only the actual number of forfeited stock options is reflected because it is difficult to rationallyestimate the number of stock options to be forfeited in the future.

- 32 -

15. Commitments(a) Loan commitments
Contracts related to overdraft facilities and loan commitment lines are agreements that allow customers toextend overdrafts or loans up to prescribed limits unless there is violation of any condition in the contract.
At March 31, 2016 and 2015, the unused amounts within the limits of these contracts, which originally
expire within one year or are revocable by the Bank at any time without any conditions, aggregated¥597,553 million ($5,303,097 thousand) and ¥574,824 million ($5,101,384 thousand), respectively.
Since many of these commitments expire without being drawn down, the unused amount does notnecessarily represent a future cash flow. In addition, most of these contracts have conditions that theGroup can refuse customer applications or decrease the contract limits for appropriate reasons such aschanges in the financial situation or deterioration in creditworthiness of the customer. At the executionof the contract, the Bank obtains real estate, securities, etc., as collateral if considered necessary.
Subsequently, the Bank performs periodic reviews of the customer’s business performance in accordancewith the Bank’s internal rules and takes necessary measures such as reconsidering conditions of thecontracts and/or requiring additional collateral and/or guarantees if necessary.
(b) Lease commitments
The Group has entered into various lease agreements as a lessee principally for land for office space.
These leases are generally cancelable with a few months advance notice and are accounted for as
operating leases. The Group has also entered into non-cancelable operating lease agreements. The
future minimum lease payments under these non-cancellable operating leases as of March 31, 2016 and2015 were as follows:
Millions of yen
2016
2015
Due within one year
Due after one year

¥
¥

102
1,154
1,257

¥
¥

98
958
1,056

Thousands of U.S. dollars
2016
2015
$
$

905
10,241
11,155

$
$

869
8,501
9,371

In addition, a subsidiary engaged in the leasing business as a lessor has entered into various long-term,
non-cancelable lease agreements with third parties that were categorized as finance leases. Information
concerning future minimum lease payments to be received as of March 31, 2016 and 2015 for financeleases which do not transfer ownership of the leased assets to the lessee was as follows:
Millions of yen
2016
2015
Total future minimum lease payments
to be received¥
Estimated residual value of leased
assets
Imputed interest

12,488697(538)- 33 -¥

Thousands of U.S. dollars
2016
2015

11,465$ 110,827

683
(665)

6,185
(4,774)$

101,748
6,061(5,901)

The aggregate annual maturities of future minimum lease payments to be received as of March 31, 2016
were as follows:Year ending March 31,

Thousands of
U.S. dollars

Millions of yen

2017
2018
2019
2020
2021
2022 and thereafter

¥

¥

3,530
2,896
2,257
1,626
993
1,183
12,488$$31,32725,701
20,03014,4308,812
10,498110,827

As permitted by the accounting standard for lease transactions with respect to finance leases entered into
before April 1, 2008, the appropriate carrying value, net of accumulated depreciation, of the underlying
assets at March 31, 2008 is recognized as the value of the investment in the leased assets, and the total
amount equivalent to interest income on these transactions is allocated over the lease term using thestraight-line method, instead of the effective interest method, as the principal method of the accounting
standard. As a result, profit before income taxes for the years ended March 31, 2016 and 2015 were ¥6
million ($53 thousand) and ¥10 million ($88 thousand) more, respectively, than the amounts that would
have been recorded under the effective interest method based on lease payments receivable.

- 34 -

16. Derivative Financial Instruments
Derivative financial instruments, other than those to which hedge accounting was applied, which weretraded on the over-the-counter market and stated at fair value and whose valuation gains and losses arerecognized in the consolidated statements of income, as of March 31, 2016 and 2015 are summarized asfollows:
Millions of yen
Notional principal orcontract amounts
Over one
Total
year
Fair value*

Valuation
gains (losses)

Currency swap:
At March 31, 2016
At March 31, 2015

¥

5,623
-

¥

-

¥

(25)
-

¥

(25)
-

Foreign exchange forward contracts:
At March 31, 2016
At March 31, 2015¥

34,60436,602

¥

-

¥

986
(202)

¥

986
(202)

Thousands of U.S. dollars
Notional principal orcontract amounts
Over oneFair value*
Total
year

Valuation
gains (losses)

Currency swap:
At March 31, 2016
At March 31, 2015$

49,902
-

$

-

$

(221)
-

$

(221)
-

Foreign exchange forward contracts:
At March 31, 2016
At March 31, 2015$

307,099
324,831

$

-

$

8,750
(1,792)$

8,750(1,792)

Note: * Fair value was based on the discounted cash flow method.

There were no outstanding derivative financial instruments to which hedge accounting was applied as ofMarch 31, 2016 and 2015.

- 35 -

17. Income Taxes
Income taxes for the years ended March 31, 2016 and 2015 consisted of the following:
Millions of yen
2016
2015
Income taxes:
Current
Deferred
Total income taxes

¥
¥

1,795
1,488
3,283

¥
¥

1,489
1,992
3,481

Thousands of U.S. dollars
2016
2015
$
$

15,93013,205
29,135$$

13,214
17,67830,892The tax effects of temporary differences that gave rise to a significant portion of deferred tax assets andliabilities at March 31, 2016 and 2015 were as follows:
Millions of yen
2016
2015
Deferred tax assets:
Reserve for possible loan losses¥
Employee retirement benefit asset
Employee retirement benefit liability
Investment securities
Other
SubtotalLess valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on available-for-salesecurities
Gains on transfer of investment
securities to trusts for retirement
benefit plans
Deferred gains on sale of property
and other
Total deferred tax liabilities
Net deferred tax liabilities¥

Thousands of U.S. dollars
2016
2015

2,286 ¥
39
1,634
1,512
3,169
8,642
(2,208)6,434

3,050 $
390
1,528
1,664
3,427
10,061(2,312)
7,749

20,287346
14,501
13,41828,123
76,695(19,595)
57,099$(25,009)(31,684)(221,947)(281,185)(1,755)(3,194)(15,575)(28,345)(205)(26,971)(20,536) ¥(222)(35,101)(27,352) $(1,819)(239,359)(182,250)(1,970)(311,510)(242,740)$

27,067
3,461
13,56014,76730,41389,288(20,518)
68,769At March 31, 2016 and 2015, deferred tax assets and liabilities reported on the accompanying
consolidated balance sheets were as follows:
Millions of yen
2016
2015
Deferred tax assets
Deferred tax liabilities¥

179
20,716¥249
27,601Thousands of U.S. dollars
2016
2015
$

1,588
183,848$2,209
244,950

In assessing the realizability of deferred tax assets, management of the Group considers whether some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. At March 31, 2016 and 2015, a valuation allowance wasprovided to reduce deferred tax assets to the extent that the management believed that the deferred tax
assets were not realizable.

- 36 -

A reconciliation of the Japanese statutory tax rate and the effective income tax rate on pre-tax income
reflected in the accompanying consolidated statements of income for the year ended March 31, 2016 was
as follows:
2016
Japanese statutory income tax rate
Increase (decrease) due to:Permanently non-deductible expenses
Tax exempt income
Change in valuation allowance
Change in tax rate
Other
Effective income tax rate

32.82%
4.26(1.93)
0.03
1.76
0.97
37.91%A reconciliation between the Japanese statutory tax rate and the effective income tax rate on pre-tax
income reflected in the accompanying consolidated statements of income for the year ended March 31,
2015 was not disclosed because the difference between the Japanese statutory tax rate and the effective
income tax rate was less than 5% of the Japanese statutory tax rate.
The “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 15 of 2016) and the “Act for Partial
Revision of the Local Tax Act, etc.” (Act No. 13 of 2016) were enacted on March 29, 2016, reducing thecorporate statutory tax rate from the year beginning on or after April 1, 2016. The statutory tax rateused to calculate deferred tax assets and deferred tax liabilities (limited to those to be realized or settled
on or after April 1, 2016) was changed from 32.06% to 30.69% for temporary differences expected to bereversed in the year beginning on April 1, 2016, to 30.74% for temporary differences expected to bereversed in the year beginning on April 1, 2017 and to 30.50% for temporary differences expected toreversed in the year beginning on or after April 1, 2018.
As a result of this change, as of March 31, 2016, “Deferred tax assets,” “Deferred tax liabilities” and“Retirement benefit adjustment” in accumulated other comprehensive income decreased by ¥1 million($8 thousand), ¥1,074 million ($9,531 thousand) and ¥43 million ($381 thousand), respectively, while“Unrealized gains on available-for-sale securities” increased by ¥1,269 million ($11,261 thousand).
“Income taxes – deferred” increased by ¥153 million ($1,357 thousand) for the year ended March 31,
2016. “Deferred tax liabilities for revaluation” decreased by ¥241 million ($2,138 thousand), and “Landrevaluation increment” increased by the same amount as of March 31, 2016.

18. General and administrative expenses
General and administrative expenses for the years ended March 31, 2016 and 2015 included following
items:
Millions of yen
2016
2015
General and administrative expenses:
Salaries and allowances
Net periodic retirement benefit
expenses
Rental expenses for land, buildings
and machinery¥

12,649¥12,786

Thousands of U.S. dollars
2016
2015
$

112,255$

113,471

116

1,432

1,029

12,708

2,882

2,878

25,57625,541- 37 -

19. Segment Information(a) General information about reportable segments
The Group defines a reportable segment as a component of the Group for which discrete financial
information is available and whose operating results are regularly reviewed by the Board of Directors tomake decisions about resources to be allocated to the segment and assess its performance.
The Group engages in a wide range of financial services to customers primarily in the areas of banking
and leasing. The reportable segments of the Group are based on operating segments as follows:“Banking”
x Deposits and loans
x Foreign exchange transactions
x Over-the-counter sales of investment trusts and life insurance products
x Securities business“Leasing”
x Leasing business(b) Bases used to measure reported segment profit, segment assets, segment liabilities and othermaterial items
Bases used to measure operating segment information follow the accounting principles used in the
consolidated financial statements as described in Note 2, “Summary of Significant Accounting Policies.”
The segment profit is based on ordinary income, which is defined as “Total income” less certain special
income included in “Other income” in the accompanying consolidated statements of income, andintersegment income is accounted for based on prices in ordinary transactions with independent third
parties.

- 38 -

(c) Information about reported segment profit, segment assets, segment liabilities and other material
items
Segment information as of and for the year ended March 31, 2016 was as follows:
Millions of yen
2016
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income¥

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

42,587309
42,896¥

7,807
2,988,280
2,771,412
¥

1,284

Total

5,088
343
5,431

¥

238
18,024
12,930¥128

Other (*2)

47,675652
48,328¥8,045
3,006,304
2,784,342
¥

1,412

1,020
589
1,609

Total
¥

247
5,782
1,075
¥

43

48,695
1,241
49,937

Reconciliation(*3)

Consolidated

¥

¥

8,293
3,012,087
2,785,418¥

1,456(1,241)(1,241)(182)(8,769)(8,771)¥-

48,695
48,6958,111
3,003,317
2,776,646

¥

1,456

32,687
1,655

11
57

32,6991,712

54
432,753
1,716

(214)
(86)

32,538
1,630

77

44

121

5

126

(0)

126

61

-

61

-

61

-

61

1,895

16

1,911

44

1,956

-

1,956

Thousands of U.S. dollars
2016
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income$

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

377,946
2,742
380,688

Leasing$

69,284
26,520,056
24,595,420$

11,395

Total

45,154
3,044
48,198$2,112
159,957
114,749$

1,135

Other (*2)

423,100
5,786
428,895$

71,396
26,680,014
24,710,170$

12,531

9,052
5,227
14,279

Total
$

2,192
51,313
9,540
$

381

432,152
11,013443,175

Reconciliation(*3)

Consolidated$$

73,597
26,731,336
24,719,719$

12,921(11,013)(11,013)(1,615)(77,822)(77,839)$-

432,152
432,152
71,982
26,653,505
24,641,870$

12,921

290,086
14,68797505

290,193
15,193479
35

290,672
15,228(1,899)(763)

288,764
14,465

683

390

1,073

44

1,118

(0)

1,118

541

-

541

-

541

-

541

16,817

141

16,959390

17,358-17,358Notes:(*1) Ordinary income represents “Total income” less certain special income included in “Other income” in the accompanying
consolidated statements of income. “Total income” of ¥49,553 million ($439,767 thousand) in the accompanying
consolidated statement of income is derived from ordinary income of ¥48,695 million ($432,152 thousand) through theaddition of certain special income of ¥857 million ($7,605 thousand).
(*2) The “Other” business segment in the table above represents operating segments not included in the reported segments andincludes credit card business, administrative outsourcing business and information technology management operations.
(*3) Reconciliation represents the eliminations of intersegment transactions.
(*4) Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses
represent “Total expenses” of ¥40,892 million ($362,903 thousand) less certain special expenses of ¥307 million ($2,724
thousand) included in “Other expenses” in the accompanying consolidated statements of income. Therefore, consolidated
segment profit, which shows ordinary profit of ¥8,111 million ($71,982 thousand), is reconciled to “Profit before income
taxes” of ¥8,660 million ($76,854 thousand) through the addition/deduction of certain special income/ (expenses), net.

- 39 -

Segment information as of and for the year ended March 31, 2015 was as follows:
Millions of yen
2015
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income¥

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

43,509120
43,629¥9,293
3,020,244
2,793,660
¥

1,223

Total

4,794
345
5,140

¥

266
15,196
10,250¥152

Other (*2)

48,304466
48,770¥9,559
3,035,440
2,803,910
¥

1,376

994
585
1,579

Total
¥

179
5,808
1,037
¥

41

49,2981,051
50,350Reconciliation(*3)

Consolidated

¥

¥

9,738
3,041,248
2,804,948¥

1,417(1,051)(1,051)(3)(7,105)(7,106)¥-49,29849,2989,735
3,034,142
2,797,842

¥

1,417

32,5581,654

956

32,5681,710

62
4

32,630
1,714

(30)
(81)

32,5991,633(1,510)(5)(1,515)23(1,491)(0)(1,491)

1

-

1

-

1

-

1

2,619

6

2,626

37

2,663

-

2,663

Thousands of U.S. dollars
2015
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income$

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

386,128
1,064
387,193$

82,47226,803,727
24,792,864$

10,853

Total

42,545
3,061
45,615$2,360
134,859
90,965$

1,348

Other (*2)

428,682
4,135
432,818$

84,83326,938,587
24,883,830$

12,211

8,821
5,191
14,013

Total
$

1,588
51,544
9,203
$

363

437,504
9,327
446,840

Reconciliation(*3)

Consolidated$$

86,421
26,990,131
24,893,042$

12,575(9,327)(9,327)(26)(63,054)(63,063)$-437,504
437,504
86,39526,927,067
24,829,978$12,575288,942
14,67879496

289,030
15,175550
35289,581
15,211

(266)
(718)

289,305
14,492(13,400)(44)(13,445)204(13,232)(0)(13,232)

8

-

8

-

8

-

8

23,242

53

23,304328

23,633-23,633

Notes:(*1) Ordinary income represents “Total income” less certain special income included in “Other income” in the accompanying
consolidated statements of income. “Total income” of ¥49,308 million ($437,593 thousand) in the accompanying
consolidated statement of income is derived from ordinary income of ¥49,298 million ($437,504 thousand) through theaddition of certain special income of ¥9 million ($79 thousand).
(*2) The “Other” business segment in the table above represents operating segments not included in the reported segments andincludes credit card business, administrative outsourcing business and information technology management operations.
(*3) Reconciliation represents the eliminations of intersegment transactions.
(*4) Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses
represent “Total expenses” of ¥39,897 million ($354,073 thousand) less certain special expenses of ¥333 million ($2,955
thousand) included in “Other expenses” in the accompanying consolidated statements of income. Therefore, consolidated
segment profit, which shows ordinary profit of ¥9,735 million ($86,395 thousand), is reconciled to “Profit before income
taxes” of ¥9,411 million ($83,519 thousand) through the addition/deduction of certain special income/ (expenses), net.

- 40 -

(d) Other informationi) Information by service
Millions of yen
ServiceSecurity
investments

Loans
Ordinary income from external customers:
For the year ended March 31, 2016
For the year ended March 31, 2015¥

19,803
21,374¥

Leasing

16,34913,943

¥

Other

5,088
4,794

¥

Total

7,454
9,186

¥

48,69549,298

Thousands of U.S. dollars
ServiceSecurity
investments

Loans
Ordinary income from external customers:
For the year ended March 31, 2016
For the year ended March 31, 2015$

175,745
189,687$

Leasing

145,092
123,739$

Other

45,15442,545$

Total

66,151
81,522$432,152
437,504ii) Information by geographical area for the years ended March 31, 2016 and 2015 is omitted since income
in Japan accounted for more than 90% of the consolidated ordinary income and all tangible fixed assets
were located in Japan.
iii) Information by major customer for the years ended March 31, 2016 and 2015 is omitted since there wasno single external customer accounting for 10% or more of the consolidated ordinary income.

(e) Information about impairment loss on fixed assets by reportable segment
Millions of yen
Reportable segment
Banking
Leasing
Total
Impairment loss:
For the year ended March 31, 2016
For the year ended March 31, 2015

¥

229
97

¥

-

¥

229
97

Other
¥

Total
0
-

¥

Thousands of U.S. dollars
Reportable segment
Other
Banking
Leasing
Total
Impairment loss:
For the year ended March 31, 2016
For the year ended March 31, 2015

$

2,032
860

$

- 41 -

-

$

2,032
860

$

230
97

Total
0
-

$

2,041
860

20. Transactions with Related Parties
Significant transactions with parties related to the Group for the years ended March 31, 2016 and 2015
were as follows:(a) Transactions with relatives of the Bank’s directors:

Name

Business

Descriptionof theBank’stransaction

Transaction amounts
Thousandsof U.S.
dollars
Millions of yen

Account

BalancesThousandsof U.S.
Millions
dollarsof yenFor the year ended March 31, 2016:
ChiekoHayashiRealestateleasingbusiness

Loan(Average balance
during period)¥ 19(Interest income)
¥
0

$ 168

(Average balance
during period)¥ 20(Interest income)
¥
0

$ 177

$

Loans andbills
discounted

¥

19

$

168

Loans andbills
discounted

¥

20

$

177

0

For the year ended March 31, 2015:
ChiekoHayashiRealestateleasingbusiness

Loan

$

0

Note: Terms and conditions of the loans are determined in the same manner as loans under general lending transactions
with third parties.

(b) Transactions with corporate pension plans for employees

NameBusiness

Descriptionof theBank’stransaction

Transaction amounts
Thousandsof U.S.
dollars
Millions of yen

Account¥5,245-

BalancesThousandsof U.S.
Millions
dollarsof yenFor the year ended March 31, 2016:Retirement Corporate
pensionbenefitplantrustsPartialrefund ofpensionassets$ 46,547

For the year ended March 31, 2015:
No applicable transactions occurred during the year ended March 31, 2015.

- 42 ---

21. Comprehensive Income
Amounts reclassified to profit (loss) in the current period that were recognized in other comprehensive
income in the current or previous periods and the tax effects for each component of other comprehensive
income for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen
2016
2015
Net unrealized gains on available-for-salesecurities:
Increase (decrease) during the year
Reclassification adjustments
Pre-tax amountTax effect amountNet unrealized gains on available-for-salesecurities, net of tax
Land revaluation increment:
Increase during the year
Reclassification adjustments
Pre-tax amountTax effect amountLand revaluation increment, net of tax
Retirement benefit adjustment:
Increase (decrease) during the year
Reclassification adjustments
Pre-tax amountTax effect amount
Retirement benefit adjustment, net of tax
Total other comprehensive income¥¥(15,078)(2,263)(17,342)
6,674

35,416 $(2,785)32,630(7,965)(133,812) $(20,083)(153,904)
59,229314,305(24,716)
289,581(70,686)(10,667)

24,665(94,666)

218,894

241
241

512
512

2,138
2,138

4,543
4,543

(4,333)(1,033)(5,367)
1,677(3,689)(14,116)

3,561
746
4,307
(1,437)2,870
28,048 $(38,454)(9,167)(47,630)
14,882(32,738)(125,275) $31,602
6,620
38,223(12,752)
25,470248,917- 43 -¥

Thousands of U.S. dollars
2016
2015

¥

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2016 and 2015

Millions of yen
2016
2015
Assets:Cash and due from banks(Note 3)¥
104,722 ¥ 139,407
Call loans and bills purchased(Note 3)
2,753
2,171
Trading securities (Notes 3 and 4)
77
Investment securities(Notes 3, 4 and 8)
1,147,715
1,159,493
Reserve for possible losses oninvestments
(11)
(14)
Loans and bills discounted(Notes 3, 5, 15 and 20)
1,679,941
1,655,157
Foreign exchange (Note 6)
2,717
3,636
Other assets
24,56525,681
Tangible fixed assets (Note 7)
35,21934,841
248
Intangible fixed assets
173
Employee retirement benefit asset(Note 11)
11,619
3,002
249
Deferred tax assets (Note 17)
179
Customers’ liabilities for acceptancesand guarantees (Note 12)
12,204
11,174
Reserve for possible loan losses(8,835)(10,633)
Total assets¥ 3,003,317¥ 3,034,142

Thousands of U.S. dollars
2016
2015

$

929,375

1,237,193

24,432-

19,266683

10,185,614

10,290,140

(97)

(124)

14,908,954
24,112
218,006
312,557
1,535

14,689,004
32,268
227,910309,203
2,200

26,641
1,588

103,115
2,209

99,165(78,407)108,306(94,364)$ 26,653,505$ 26,927,067

The accompanying notes are an integral part of these consolidated financial statements.

-2-$

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Balance Sheets (Continued)
March 31, 2016 and 2015
Millions of yen
2016
2015
Liabilities:
Deposits (Notes 3 and 9)¥ 2,661,691
Security deposits received related tosecurities lending transactions(Notes 3 and 8)
37,574
Borrowings (Notes 3 and 10)
18,915
Foreign exchange (Note 6)
706
Other liabilities (Note 10)17,114
Reserve for employee bonuses
652
Reserve for bonuses to directors
47
Employee retirement benefit
1,353
liability (Note 11)
Reserve for executive retirement
benefits
4
Reserve for reimbursement ofdeposits
104
Reserve for contingencies
1,848
Deferred tax liabilities (Note 17)
20,716
Deferred tax liabilities forrevaluation (Note 7)
4,742
Acceptances and guarantees(Note 12)
11,174
Total liabilities
2,776,646
Net assets (Note 13):
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive
incomeStock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Thousands of U.S. dollars
2016
2015

¥ 2,638,408$

23,621,680$

23,415,051

75,085
17,655980
17,660653
47333,457
167,864
6,265
151,8815,786
417

666,356
156,682
8,697
156,727
5,795
417

766

12,007

6,798

9

35

79

147
1,588
27,601922
16,400183,848

1,304
14,093244,950

5,032

42,08344,657

12,204
2,797,842

99,16524,641,870

108,306
24,829,978

18,00013,883125,966(787)
157,063

18,00013,883
121,529(774)
152,639

159,744
123,207
1,117,909(6,984)
1,393,885

159,744
123,207
1,078,532(6,869)1,354,623

65,604
194
3,806
226,670¥ 3,003,317

79,808148
3,704
236,300¥ 3,034,142

582,215
1,721
33,7772,011,625
26,653,505

708,271
1,313
32,871
2,097,089
26,927,067$

The accompanying notes are an integral part of these consolidated financial statements.

-3-$

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2016 and 2015

Income:Interest and dividend income:Interest on loans and bills discounted andpurchased¥
Interest on and dividends from securities
Other interest and dividend income
Total interest and dividend income
Fees and commissions
Other operating income (Note 4)
Other income (Notes 2(o) and 4)
Total income (Note 19)
Expenses:
Interest expense:
Interest on deposits
Interest on borrowings
Other interest expense
Total interest expense
Fees and commissions
Other operating expenses (Note 4)
General and administrative expenses(Notes 14 and 18)
Impairment loss on fixed assets (Note 2(k))
Other expenses (Note 4)
Total expenses (Note 19)
Profit before income taxes
Income taxes (Note 17)
ProfitProfit attributable tonon-controlling interests
Profit attributable to owners ofparent¥Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

19,791
12,64997
32,538
11,982
1,555
3,475
49,553

21,386
11,11894
32,599
11,692
1,340
3,676
49,308$ 175,638
112,255860
288,764
106,336
13,80030,839439,767

1,569
38
23
1,630
7,640
1,901

1,563
38
30
1,633
7,178
381

13,924337
204
14,46567,802
16,87013,871337
266
14,492
63,702
3,381

26,818230
2,671
40,892
8,660

28,84497
1,761
39,897
9,411

238,001
2,041
23,704362,90376,854

255,981860
15,628354,073
83,519

3,283
5,376

3,481
5,929

29,13547,71030,892
52,618

118

107

1,047

949

5,257

¥

¥

5,822

$

Yen
Earnings per share:
Basic
DilutedCash dividends¥

484.99483.31
80.00¥

46,654

189,794
98,668834
289,305
103,762
11,892
32,623
437,593$

51,668

U.S. dollars
536.59535.09
80.00

$

4.30
4.28
0.70

The accompanying notes are an integral part of these consolidated financial statements.

-4-

$

$

4.76
4.74
0.70

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2016 and 2015

Millions of yen
2016
2015
Profit¥Other comprehensive income (Note 21):
Unrealized gains on available-for-salesecurities
Land revaluation increment
Retirement benefit adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Total comprehensive income

¥

5,929

$

(10,667)
241(3,689)(14,116)¥ (8,739)¥

24,665512
2,870
28,04833,978(94,666)
2,138(32,738)(125,275)$ (77,555)

218,894
4,543
25,470248,917$ 301,544¥¥

33,831
146
33,978$ (78,478)922$ (77,555)$ 300,239
1,295$ 301,544

¥

5,376

Thousands of U.S. dollars
2016
2015

(8,843)104(8,739)¥47,710

The accompanying notes are an integral part of these consolidated financial statements.

-5-$52,618

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2016 and 2015
Shareholders’ equity
Number ofshares ofcommon stock
issuedBalance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2014
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2015
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2016

10,943,240

Commonstock¥

18,000Capitalsurplus¥Retainedearnings

13,883¥

Total
shareholders’equityTreasurystock

115,345

¥

(712)

¥

146,516

Millions of yen
Accumulated other comprehensive income
Net unrealizedLand
Retirement
Total accumulated
gains onrevaluation
benefitotheravailable-for-saleincrement
adjustment
comprehensive
securities (Note 4)(Note 7)(Note 11)
incomeStockacquisitionrights¥¥45,180

¥

7,796

¥

(1,114)¥51,863

Noncontrollinginterests

102

¥

Total
net assets

3,559

¥

202,042

10,943,240-

18,000-13,883(0)

1,058
116,404
5,822
(759)
63
-

(712)
(62)

1,058
147,575
5,822
(759)
63
(63)

45,180-7,796-(1,114)-51,863
-

102
-

3,559
-

1,058
203,101
5,822
(759)
63
(63)

-

-

0

(0)

-

-

-

-

-

-

-

-

-

10,943,240-

18,000-13,883(1)

121,529
5,257
(921)
102
-

(774)
(12)

152,639
5,257
(921)
102
(14)

24,62569,806
-

449
8,246
-

2,870
1,756
-

27,94579,808
-

45
148
-

144
3,704
-

28,135236,300
5,257
(921)
102
(14)

-

-

1

(1)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(10,653)

139(3,689)(14,203)

46

102(14,054)

10,943,240¥

18,000¥13,883¥125,966

¥

(787)

¥

157,063¥

59,152

¥

8,385

¥

(1,933)¥65,604

¥

194

¥

3,806

¥

226,670$(9,886)$460,268$905 $

31,585$

1,793,059

Thousands of U.S. dollars
Balance at April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance at April 1, 2014
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity
Balance at March 31, 2015
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation increment
Treasury stock acquired, net
Transfer to capital surplus from retained
earnings
Net changes in items other thanshareholders’ equity$

Balance at March 31, 2016$

159,744$

123,207$

1,023,651$(6,318) $1,300,283$

400,958$

69,187

9,389

159,744-

123,207(0)

9,389
1,033,049
51,668(6,735)559-(6,318)
(550)

9,389
1,309,682
51,668(6,735)559(559)

400,958-

69,187-(9,886)-460,268-

905-

31,585
-

-

0

(0)

-

-

-

-

-

-

-

-

159,744-

123,207(8)

1,078,532
46,654(8,173)905-(6,869)(106)

1,354,623
46,654(8,173)905(124)

218,539
619,506-

3,984
73,180-25,47015,583-

248,003708,271
-

399
1,313
-

1,277
32,871-

2,097,089
46,654(8,173)
905
(124)

-

8

(8)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(94,542)

1,233(32,738)(126,047)

408

905

(124,724)

1,721 $

33,777

159,744$

123,207$

1,117,909$(6,984) $1,393,885

The accompanying notes are an integral part of these consolidated financial statements.
-6-$524,955$

74,414$(17,154)$582,215$

1,802,458
51,668(6,735)559(559)
249,689$

2,011,625

The Aichi Bank, Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2016 and 2015
Millions of yen
2016
2015
Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation
Impairment loss on fixed assets
Gain on refund from retirement benefit trusts
Decrease in reserve for possible loan losses
Contribution to retirement benefit trusts
Interest and dividend income
Interest expense
Decrease in trading securities
Increase in loans and bills discounted(Increase) decrease in call loans and bills
purchased
Increase in deposits(Decrease) increase in security deposits received
related to securities lending transactions
Increase in borrowings(excluding subordinated borrowings)
Gain on securities transactions
Loss (gain) on foreign currency transactions
Increase (decrease) in reserve for contingencies
Interest and dividend income received
Interest expense paid
Other, net
Subtotal
Income taxes paid
Net cash (used in) provided by operating
activities¥

Cash flows from investing activities:
Purchases of securities
Proceeds from sales and maturities of securities
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for asset retirement obligations
Net cash used in investing activities

8,660

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 2(b))

¥

9,411

$

76,854$

83,519

1,456
230
(856)
(1,797)(32,538)
1,630
77(24,783)

1,417
97(4,001)(4,000)(32,599)
1,633
33(18,487)

12,921
2,041(7,596)(15,947)(288,764)
14,465683(219,941)(35,507)(35,498)(289,305)
14,492
292(164,066)(581)
23,283

1,609
45,858(5,156)206,629

14,279406,975(37,511)

13,251(332,898)

117,598

1,260
(764)
3,890
259
33,632(1,784)(3,190)(29,426)(1,955)4,810(2,150)(6,945)(204)
33,937(2,508)(1,926)39,234(1,893)

11,182(6,780)34,522
2,298
298,473(15,832)(28,310)(261,146)(17,350)

42,687(19,080)(61,634)(1,810)301,180(22,257)(17,092)
348,189(16,799)(31,382)

37,341(278,505)

331,389(329,188)
328,891(1,913)
94
(26)
(36)
(2,178)(337,844)
305,045(2,650)
131
(12)
(47)
(35,378)(2,921,441)
2,918,805(16,977)
834
(230)
(319)
(19,329)(2,998,260)
2,707,179(23,517)
1,162
(106)
(417)
(313,968)

(921)
(18)
(940)

(759)
(76)
(836)

(8,173)(159)(8,342)(6,735)(674)(7,419)(34,501)

1,125(306,185)

9,984

1,229,153
922,967

1,219,160$ 1,229,153

Cash flows from financing activities:
Dividends paid
Other, net
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents¥

Thousands of U.S. dollars
2015
2016

138,501
104,000¥

137,375
138,501

The accompanying notes are an integral part of these consolidated financial statements.

-7-$

12,575860-

The Aichi Bank, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2016 and 2015

1. Basis of Presenting Consolidated Financial Statements
The consolidated financial statements of The Aichi Bank, Ltd. (the “Bank”) and its subsidiaries(collectively the “Group”) have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act of Japan and its related accounting regulations and in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to the application and disclosure requirements from International Financial ReportingStandards. The accompanying consolidated financial statements have been reformatted 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. Certain supplementary
information included in the statutory Japanese language consolidated financial statements is not presented
in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was¥112.68 to U.S. $1.00. This translation should not be construed as a representation 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.
The Japanese yen amounts in the accompanying consolidated financial statements are expressed inmillions of Japanese yen and have been rounded down. U.S. dollar amounts in the accompanying
consolidated financial statements are expressed in thousands of U.S. dollars and also have been rounded
down. As a result, total amounts expressed in both Japanese yen and U.S. dollars appearing in the
consolidated financial statements and the notes thereto may not be equal to the sum of the individual
amounts.

2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accounts of the Bank and all of its subsidiaries, which
are engaged primarily in providing a wide range of financial services. At both March 31, 2016 and 2015,
the Bank had four subsidiaries but no affiliates. All intercompany transactions and accounts have been
eliminated.
(b) Cash and cash equivalents
For the purpose of the consolidated statements of cash flows, cash and cash equivalents consisted of cash
and due from the Bank of Japan as follows:
Millions of yen
2016
2015
Cash and due from banks
Less due from banks other thanBank of Japan
Cash and cash equivalents

Thousands of U.S. dollars
2016
2015

¥

104,722¥

139,407$929,375$

1,237,193¥(722)
104,000¥(906)
138,501$(6,407)922,967$(8,040)1,229,153-8-

(c) Trading securities
Trading securities are stated at fair value at the end of the fiscal year. Related gains and losses, both
realized and unrealized, are included in the consolidated statements of income. Accrued interest on
trading securities is included in “Other assets.”(d) Investment securities
Debt securities for which the Group has both the intent and the ability to hold to maturity are classified as
held-to-maturity debt securities and are stated at amortized cost determined by the moving averagemethod. In principle, available-for-sale securities are carried at the fair value as of the balance sheet
date. Net unrealized gain and loss on these securities, net of tax, are reported as a component ofaccumulated other comprehensive income in net assets. Available-for-sale securities for which the fairvalue is extremely difficult to determine are stated at moving average cost. The carrying value ofindividual investment securities is reduced, if necessary, through a write-down when a decline in value isdeemed other than temporary. Gain and loss on the disposal of investment securities are computed
principally using the moving average method. Accrued interest on securities is included in “Other
assets.”(e) Derivative financial instruments
Derivative financial instruments are recorded at fair value if hedge accounting is not applied, and gain
and loss on the derivatives are recognized in the consolidated statements of income.
(f) Reserve for possible losses on investments
Pursuant to the internal rules of the Bank, a reserve for possible losses on investments is provided in an
amount necessary to absorb future losses after considering the financial positions of the issuers of the
securities. A provision of reserve for possible losses on investments is included in “Other expenses” andamounted to none and ¥1 million ($8 thousand) for the years ended March 31, 2016 and 2015,
respectively.
(g) Loans and bills discounted and reserve for possible loan losses
Loans and bills discounted are stated at the amount of unpaid principal. Unearned interest and discounts
are recorded as liabilities and recognized as income over the term of the loan or bill.
A reserve for possible loan losses of the Bank is provided to cover future credit losses in accordance withinternal rules for self-assessment of asset quality. Loans written off are charged either to a reserve forpossible loan losses and/or current income. Recoveries on loans that have been written off are recorded
as other income. The reserve for possible loan losses is made based on the Bank’s internal rules inaccordance with Report No. 4 of the Ad Hoc Committee for Audits of Banks, “Practical Guideline for
Audits of Write-off of Bad Loans and Allowance for Doubtful Loans of Banks and Similar Financial
Institutions,” issued by the Japanese Institute of Certified Public Accountants (“JICPA”). For loans toborrowers that are legally or substantially bankrupt, a reserve is provided based on the amount of theclaims, net of amounts expected to be collected through the disposal of collateral or the execution ofguarantees. For loans to borrowers who are likely to become bankrupt, a reserve is provided based onan overall solvency assessment, net of amounts expected to be collected through the disposal of collateralor the execution of guarantees. For loans to borrowers not mentioned above, a reserve is provided basedon the historical loss experience of the Bank for a certain past period. All claims are assessed by the
Bank’s operating divisions based on the Bank’s internal rules for self-assessment of asset quality. The
inspection division, which is independent from the operating divisions, conducts examinations of theseassessments.
A reserve for possible loan losses of the subsidiaries is made for the aggregate amount of estimated credit
loss based on an individual financial review of doubtful or troubled receivables and a general reservebased on historical loss experience for other receivables.

-9-(h) Tangible fixed assets and depreciation (except for leases)
Tangible fixed assets of the Bank are stated at cost, less accumulated depreciation. Depreciation iscomputed using the declining balance method over the estimated useful life of the asset, except forbuildings acquired on or after April 1, 1998. Such buildings, excluding facilities attached thereto, aredepreciated using the straight-line method. The useful lives of tangible fixed assets range from 8 to 50
years for buildings and from 3 to 20 years for other fixed assets.
Tangible fixed assets of the subsidiaries are depreciated principally by the straight-line method over theestimated useful life of the asset.
(i) Intangible fixed assets and amortization (except for leases)
Intangible fixed assets are amortized using the straight-line method. Costs of computer softwaredeveloped or obtained for internal use are deferred and amortized by the straight-line method principallyover the estimated useful life of five years as determined by the Bank and its subsidiaries.
(j) Leases
All finance lease transactions are accounted for in a manner similar to that used for ordinary sale andpurchase transactions.
(Accounting for leases as lessee)
The Group, as lessee, capitalizes lease assets used under finance leases, except for certain immaterial or
short-term finance leases which are accounted for as operating leases as permitted under the accounting
standard for leases. Depreciation of the leased assets capitalized in finance lease transactions arecomputed by the straight-line method over the lease term, which is used as the useful life, and with theassumption of no residual value.
(Accounting for leases as lessor)
A certain subsidiary engaged primarily in leasing operations as a lessor recognizes “investments in leased
assets” for finance leases that do not transfer ownership of the leased assets to the lessee in a manner
similar to the accounting treatment for ordinary sales transactions. The “investment in leased assets”
account is presented as other assets in the accompanying consolidated balance sheets. The total amountequivalent to interest is allocated over the lease term using the effective interest method, and thesubsidiary recognizes leasing income for lease payments received from customers and related costs, netof imputed interest, when it receives the lease payments, as permitted under the accounting standard forleases.
(k) Impairment loss on fixed assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying value of an asset may not be recoverable. If the carrying value of an asset or a group of assets
exceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposal of the asset or group of assets, impairment loss is recognized in the income statement
by reducing the carrying value of the impaired asset or group of assets to the recoverable amount,measured as the higher of net selling price or value in use. Fixed assets include intangible assets as wellas land, buildings and other forms of property and are grouped at the lowest level for which there are cash
flows identifiably different from those of other groups of assets. To recognize and measure an
impairment loss, fixed assets are grouped into cash-generating units such as operating business branches,other than idle or unused property. Recoverable amounts of the assets are based on value in use,
calculated using the discounted future cash flows at interest rates principally of 8.0% and 6.5% for theyears ended March 31, 2016 and 2015, respectively, or net selling prices based primarily on appraisal
valuations, net of estimated costs of disposal.
For the years ended March 31, 2016 and 2015, the Group recognized impairment loss including removal
costs for the property of operating business branches and idle property, which is included in “Impairment
loss on fixed assets,” in the accompanying consolidated statements of income as follows:- 10 -

Millions of yen
2016
Buildings andOtherstructuresproperties

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

¥

¥

33
1

¥

116
18
169

¥

¥

¥

-

¥

1
53
54

¥

Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

$

$

$

$

¥

0
0

¥

¥

11
12
0
5
30

¥

¥

0
0

-

Total
¥

-

¥

Removal
costs
¥

¥

292
8

$

230
195

-

0

12
12

-

$

Land

8
470
479

$

$

97
106
0
44
266

- 11 -

$

$

0
0

$

$

2
71
97

Total

Thousands of U.S. dollars
2015
Buildings andOther
Removalstructuresproperties
costs

$

11
12

¥

$

$

0

$

117
29
230

¥

1,029
159
1,499

-

8
88
541

$

60
23

Total

Thousands of U.S. dollars
2016
Buildings andOther
Removalstructuresproperties
costs

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

1
10
61

¥

Millions of yen
2015
Buildings andOtherstructuresproperties

Land
Operating assets:
Aichi Prefecture
Other
Idle assets:
Aichi Prefecture
Other
Total

26
22

Removal
costs

-

$

106
106

532
204
1,038
257
2,041

Total
$

$

97
106
17
630
860

(l) Foreign currency translation
Assets and liabilities denominated in foreign currencies are generally translated into Japanese yen at theexchange rate prevailing at the balance sheet date. Income and expenses are translated at the exchange
rate in effect at the transaction date. Gain and loss resulting from foreign currency translation are
included in the consolidated statements of income.
(m) Reserve for employee bonuses
A reserve for employee bonuses is provided based on the estimated amounts of future payments
attributable to the respective fiscal year.
(n) Reserve for bonuses to directors
A reserve for bonuses to directors and audit and supervisory board members is provided for future bonus
payments to directors and audit and supervisory board members that reflect an amount estimated to haveaccrued as of the consolidated balance sheet date.
(o) Employee retirement benefits
Employees who terminate their service with the Group are entitled to retirement benefits generally
determined with reference to the basic salary at the time of termination, years of service and conditions
under which the termination occurs.
The Group recognizes retirement benefits, including pension costs and related liabilities, based
principally on the actuarial present value of the retirement benefit obligation using an actuarial appraisal
approach and the value of pension plan assets available for benefits at the fiscal year-end.
In determining retirement benefit obligation, the benefit formula method is used for attributing expected
retirement benefits to the period up to the end of the respective fiscal year-end. Actuarial differences
arising from changes in the projected benefit obligation or value of pension plan assets resulting fromoutcomes which are different from those assumed and from changes in the assumptions themselves areamortized on a straight-line basis principally over 13 to 14 years, a period within the average remaining
years of service of employees at the time when the differences arise, from the fiscal year after the year thedifferences arise.
(Additional information)
The Bank has set up retirement benefit trusts to prepare for future payment of retirement benefits.
However, because the pension assets, including those in the retirement benefit trusts, substantially exceed
the retirement benefit obligations and because the overfunded status is expected to continue, the Bank
received equity securities of ¥5,245 million ($46,547 thousand) as a partial refund from the retirement
benefit trusts on June 29, 2015. As a result, gain on refund from retirement benefit trusts in the amountof ¥856 million ($7,596 thousand) was recorded under “Other income” for the year ended March 31,
2016.
(p) Reserve for executive retirement benefits
A reserve for executive retirement benefits is provided for payment of retirement benefits to directors,
audit and supervisory board members and other executive officers in the amount deemed to have accruedat the consolidated balance sheet date according to the internal rules of the Group.
(q) Reserve for reimbursement of deposits
A reserve for reimbursement of deposits is provided for possible losses on the future claims of withdrawal
based on historical reimbursement experience. A provision of reserve for reimbursement of deposits
was included in “Other expenses” and amounted to ¥65 million ($576 thousand) and ¥27 million ($239
thousand) for the years ended March 31, 2016 and 2015, respectively.
- 12 -

(r) Reserve for contingencies
A provision is made in an amount deemed necessary to cover possible losses resulting from the default ofloans under a responsibility-sharing system with Credit Guarantee Corporation based primarily on
historical default rates. A provision of reserve for contingencies is included in “Other expenses” and an
amount of ¥259 million ($2,298 thousand) and none were recorded for the years ended March 31, 2016
and 2015, respectively.
(s) Stock options
The Group has applied ASBJ Statement No. 8, “Accounting Standard for Stock Options,” and its related
guidance. This standard and guidance are applicable to stock options granted on or after May 1, 2006.
This standard requires companies to measure the cost of employee stock options based on the fair value atthe date of such grant and recognize compensation expense over the vesting period as consideration forreceiving goods or services from such employees. The standard also requires companies to account for
stock options granted to non-employees based on the fair values of either the stock options or goods orservices received from such non-employees. In the balance sheets, stock options are presented as stockacquisition rights, a separate component of net assets, until exercised. The standard covers equity-settled,share-based payment transactions, but does not cover cash-settled, share-based payment transactions. In
addition, the standard allows unlisted companies to measure options at their intrinsic value if the fair value
cannot be reliably estimated.
(t) Income taxes
Income taxes are accounted for using the asset-liability method. Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differences between the carrying values ofexisting assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred
tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income inthe years in which those temporary differences are expected to reverse. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in the period that includes the promulgation date.
(u) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings isapproved by the shareholders.
(v) Per share data
Earnings per share is computed by dividing profit attributable to owners of parent by the weighted
average number of shares of common stock outstanding during the respective year.
Diluted earnings per share is computed to reflect the potential dilution that could occur if securities were
exercised or converted into common stock, assuming the full exercise of the outstanding stock options.
Cash dividends per share shown in the accompanying consolidated statements of income represent
dividends declared by the Bank as applicable to the respective year.
(w) Change in Accounting Policy(Application of Accounting Standards for Business Combinations, etc.)
The Bank has applied the revised “Accounting Standard for Business Combinations” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 21, issued on September 13, 2013), the revised“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, issued on
September 13, 2013) and the revised “Accounting Standards for Business Divestitures” (ASBJ Statement
No. 7, issued on September 13, 2013) from the fiscal year ended March 31, 2016. Under the revised
accounting standards, the difference arising from a change in the Bank’s ownership interest in a
subsidiary is accounted for as capital surplus as long as the Bank retains control over the subsidiary, and- 13 -

the acquisition related costs are accounted for as expenses in the fiscal year in which the costs are
incurred. Furthermore, adjustments of acquisition cost allocation resulting from finalizing provisional
accounting treatments for a business combination are reflected in the consolidated financial statements
for the fiscal year to which the date of business combination belongs, effective for a business combination
which occurs on or after the beginning of the fiscal year ended March 31, 2016. In addition, thepresentation method for net income and other related items was changed, and the presentation of“minority interests” was changed to “non-controlling interests.” Certain reclassifications have been
made to the consolidated financial statements for the year ended March 31, 2015 to reflect thesepresentation changes.
In accordance with the transitional treatment provided for in Paragraph 58-2 (4) of the revised“Accounting Standard for Business Combinations,” in Paragraph 44-5 (4) of the revised “AccountingStandard for Consolidated Financial Statements” and in Paragraph 57-4 (4) of the revised “AccountingStandards for Business Divestitures,” the revised accounting standards have been prospectively applied
from April 1, 2015. These changes have had no effect on the consolidated financial statements and pershare data for the year ended March 31, 2016.
(x) New accounting standards not yet adopted by the Group
Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, issued on
March 28, 2016, hereinafter the “Implementation Guidance”)i) Overview
The Implementation Guidance basically continues to apply the framework stipulated in the Auditing
Guidance No. 66, Auditing Treatment for Judgment of Recoverability of Deferred Assets, issued by
Japanese Institute of Certified Public Accountants with certain revisions.
ii) Date of Application
The Implementation Guidance is applied effective from the beginning of the fiscal year ending March 31,
2017.
iii) Effect of application
The resulting effect of applying the Implementation Guidance on the consolidated financial statements iscurrently under assessment.

3. Financial Instruments(a) Qualitative information on financial instrumentsi) Policies for financial instruments
The Group procures funds by accepting deposits from clients and utilizes the funds for financial
investments in the bond and stock markets and for making loans to corporate and individual clients.
The Group enters into derivative transactions in order to avoid the risk of foreign currency fluctuations on
customers’ funds as well as to conduct foreign financing transactions and to avoid the risk of risinginterest rates for the Bank. From an overall risk management standpoint, the Bank uses derivative
instruments as hedging instruments in order to avoid the market risk to which financial assets andliabilities are exposed.
ii) Details of financial instruments and related risks
Financial assets of the Group consist mainly of loans to corporate and individual clients and are exposed
to interest rate risk and credit risk resulting from any deterioration in the financial condition of the- 14 -

counterparty.
Investment securities comprise mainly debt and equity securities. The Group holds debt securities
classified as held-for-sale, available-for-sale or held-to-maturity and equity securities to pursue capitalgain or to maintain relationships with corporate clients. These securities are exposed to the credit risk of
the issuers, interest rate risk, market risk and foreign currency risk. Deposits consist of demand deposits
and time deposits. The maturities of time deposits are within five years.
Asset-liability management techniques are employed to manage financial assets and liabilities sensitive tointerest rate fluctuations.
iii) Risk management for financial instruments
Credit risk management
The Bank manages credit risk by conducting strict credit examinations on respective debtors.
Additionally, the Bank analyzes the risk by credit rating and industry in chronological order anddiversifies the risk of its portfolios in the entirety.
The Group manages credit risk under the Credit Supervision Section, examining and assessing
financial circumstances, industry trends, purposes of loans and repayment plans of respective debtors.
Assessments are conducted to evaluate the credit standing of prospective debtors before entering intoa transaction, for credit management after execution, as a self-assessment on a regular basis and at
any time when a relevant event occurs. By the self-assessment, assets are classified by the degree ofrisk based on the debtor’s classification and the existence of any collateral or guarantees. The resultsof the self-assessments are examined by the Self-Assessment Verification Section and are reported to
the Asset Assessment Committee and management.
As to the credit portfolios in the entirety, the level of concentration in the industry and largetransactions are monitored by the Credit Management Section on a regular basis in order to constructportfolios that exclude concentration risk. The Credit Management Section periodically reports theresults to management.
Moreover, an internal credit rating system has been introduced that classifies debtors according tocreditworthiness. The Bank uses the credit rating for screening and credit management of debtors aswell as monitoring the credit portfolio.
Credit risk is quantified, which enables the Bank to manage the credit risk effectively.
Market risk management
The Risk Control Department of the Bank monitors market risk. The department quantifies the risk
whenever possible and performs stress tests and simulation analyses to analyze the possible effects ofchanges in market variables such as interest rates, stock prices and exchange rates on the amount ofmarket risk the Bank is exposed to and on the profit and loss of the Bank. The results of theanalyses are regularly reported to the Board of Directors, the Risk Management Committee and otherrelevant parties. The Risk Management Committee and other relevant parties confirm that the levelof risk is sufficiently limited considering the equity of the Bank and review the policies forcontrolling market risk.
Interest rate risk and stock price risk are significant risks for the Group. Major financial instruments
which are exposed to interest rate risk are “Loans and bills discounted,” debt securities classified asavailable-for-sale securities under “Investment securities” and “Deposits.” Financial instruments
which are exposed to stock price risk are equity securities classified as available-for-sale securities in“Investment securities.” The Group uses Value at Risk (“VaR”) calculated based on the financial
assets and liabilities categorized into “loans and deposits,” “debt securities,” “equity securities held
for investment” and “strategically held equity securities” to perform quantitative analysis and manageinterest rate and stock price fluctuation risks. For the years ended March 31, 2016 and 2015, VaR- 15 -

was calculated using the historical simulation method (and assuming a holding period of 125 businessdays, a 99% confidence interval and an observation period of 5 years).
The total market risk exposure of the Group as estimated loss amounted to ¥18,022 million ($159,939
thousand) and ¥14,048 million ($124,671 thousand) as of March 31, 2016 and 2015, respectively. In
calculating VaR, VaR amounts for interest rate risk associated with the banking account and pricefluctuation risk associated with the equity securities held for investment were summed with that for
price fluctuation risk associated with strategically held equity securities.
The Group ensures the reliability and accuracy of the measurement model by performing back-testing,that is, comparing VaR amounts measured using the model with actual amounts of profit and loss.
However, VaR reflects market risk exposures statistically calculated under certain probabilities basedon historical market volatility; therefore, it may not be able to accurately reflect the risks when themarket environment changes extraordinarily.
iv) Supplemental information on fair value of financial instruments
Fair values of financial instruments are estimated based on quoted market prices or based on reasonably
calculated prices if quoted market prices are not available. Certain assumptions are used to calculate
such prices. Therefore, prices may be different under different assumptions.

- 16 -

(b) Fair value of financial instruments
The following is a summary of the carrying values and fair values of financial instruments at March 31,
2016 and 2015.

Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

Carrying value

Millions of yen
2016
Fair value¥¥

104,722
2,753
-

¥

-

1,145,397

1,145,397-¥

1,679,941(8,118)
1,671,822
2,924,695¥

1,700,258
2,953,131¥

28,43528,435¥2,661,691¥

2,662,602

¥

910

¥

37,574
18,9152,718,181¥

37,574
18,9572,719,134

¥

42
953

¥
¥

960
960

¥
¥

960
960

¥
¥

-

2015
Fair value

Carrying value
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

104,722
2,753-

Difference¥

139,407
2,171
77

¥

1,157,415

139,407
2,171
77

Difference¥

1,157,415-¥

1,655,157(9,900)1,645,256
2,944,328¥

1,669,942
2,969,014¥

24,685
24,685¥2,638,408¥

2,638,976

¥

568

¥

75,085
17,6552,731,148¥

75,085
17,6782,731,740

¥

23
591

¥
¥

(202)
(202)

¥
¥

(202)
(202)

¥
¥

-

- 17 -

Thousands of U.S. dollars
2016
Carrying value
Fair value
Difference
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions$

929,375
24,432-$

10,165,042$-

10,165,042-$

14,908,954(72,044)
14,836,900
25,955,759$

15,089,261
26,208,120$

252,351
252,351$

23,621,680$

23,629,765

$

8,075

$

333,457
167,864
24,123,012$

333,457
168,237
24,131,469

$

372
8,457

$
$

8,519
8,519

$
$

8,519
8,519

$
$

-

2015
Fair value

Carrying value
Financial assets:
Cash and due from banks
Call loans and bills purchased
Trading securities
Investment securities:
Available-for-sale securities (*1)
Loans and bills discounted:
Loans and bills discounted
Reserve for possible loan losses (*2)
Loans and bills discounted, net
Total assets
Financial liabilities:
Deposits
Security deposits received related tosecurities lending transactions
Borrowings
Total liabilities
Derivative transactions (*3):
Not qualifying for hedge accounting
Total derivative transactions

929,375
24,432-$

1,237,193
19,266683$

Difference

1,237,193
19,266683$-

10,271,698

10,271,698-$

14,689,004(87,859)
14,601,135
26,129,996

14,820,216$ 26,349,077$

219,071
219,071$

23,415,051$

23,420,092

$

5,040

$

666,356
156,682
24,238,090$

666,356
156,886
24,243,343

$

204
5,244

$
$

(1,792)(1,792)$$(1,792)(1,792)$$-

Notes:(*1) The following securities were excluded from the above tables because their fair values were extremely
difficult to determine.
Millions of yen
2016
2015
Unlisted stocks*
Other nonmarketablesecurities

Thousands of U.S. dollars
2016
2015

¥

1,852

¥

1,757

$

16,435$

15,592

¥

465
2,318

¥

321
2,078

$

4,126
20,571$

2,848
18,441- 18 -

* For the year ended March 31, 2015, there was no write-down of these securities. For the year ended
March 31, 2016, loss on the write-down of these securities was recognized in the amount of ¥2 million($17 thousand).
(*2) Reserve for possible loan losses on ordinary and specific claims corresponding to loans and bills
discounted is deducted.
(*3) Derivative transactions recorded in other assets and liabilities are presented in a lump sum on a net basis.
A net liability position is shown in parenthesis.

Methods for calculating the fair value of financial instruments were as follows:
Financial assets:
Ɣ Cash and due from banks – The fair value of due from banks without maturities approximates the
carrying value. As for those with maturities, the present value calculated by discounting theamount categorized based on the remaining term to maturity as of the consolidated balance sheet
date at the risk free rate is used as the fair value. As for those with maturities up to one year as of
the consolidated balance sheet date, the carrying value is used as the fair value after it is confirmedthat the fair value approximates the carrying value.
Ɣ Call loans and bills purchased – The present value calculated by discounting the amount
categorized based on the remaining term to maturity as of the consolidated balance sheet date at therisk free rate is used as the fair value of call loans and bills purchased. As for those withmaturities up to one year as of the consolidated balance sheet date, the carrying value is used as thefair value after it is confirmed that the fair value approximates the carrying value.
Ɣ Trading securities – The fair value of trading securities such as debt securities held for dealing
operations is based on the quoted market price or the price obtained from the counterparty financial
institution.
Ɣ Investment securities – The fair value of equity securities is based on the quoted market price.
The fair value of debt securities is based on the quoted market price or the price obtained from thecounterparty financial institution. The fair value of investment trust funds is based on the constantvalue.
The fair value of private placement bonds guaranteed by the Bank is calculated by discounting thefuture cash flows at the risk free rate to which the consideration (risk premium) to cover
uncertainty inherent in cash flows (credit risk and others), which is calculated based on the amount
expected to be collected according to the internal credit rating and the existence of collateral or
guarantees, is added. As for transactions with maturities up to one year as of the consolidatedbalance sheet date, the carrying value is used as the fair value after it is confirmed that the fairvalue approximates the carrying value. Additional information on securities classified by holding
purpose is presented in Note 4, Trading Securities and Investment Securities.
Ɣ Loans and bills discounted – The fair value of loans and bills discounted to corporate clients is
calculated by discounting the future cash flows at the risk free rate to which the consideration (riskpremium) to cover uncertainty inherent in cash flows (credit risk and others), which is calculated
based on the amount expected to be collected according to the internal credit rating and theexistence of collateral or guarantees, is added. The fair value of those to individual clients is
calculated as the total of principal and interest discounted by the rate assumed when a similar loan
is executed.
As for transactions whose due date is within one year as of the consolidated balance sheet date, thecarrying value is used as the fair value after it is confirmed that the fair value approximates the
carrying value.
As for loans to borrowers that are legally or substantially bankrupt and those who are likely to
become bankrupt, the estimated loan losses are calculated based on the present value of theestimated future cash flows or the amount expected to be collected due to collateral or guarantees.
As a result, the fair value approximates the carrying value as of the consolidated balance sheet dateminus the reserve for possible loan losses.
- 19 -

Financial liabilities:
Ɣ Deposits – The fair value of demand deposits is deemed as the amount that would be paid if
demanded by the clients as of the consolidated balance sheet date (the carrying value). As fortime deposits, the present value, the discounted future cash flows by the amount categorized basedon a certain period, is used as the fair value. The discount rate is that used when a new deposit isaccepted. As for those with maturities up to one year as of the consolidated balance sheet date,the carrying value is used as the fair value after it is confirmed that the fair value approximates the
carrying value.
Ɣ Security deposits received related to securities lending transactions and borrowings – The present
value calculated by discounting the amount categorized based on the remaining term to maturity asof the consolidated balance sheet date at the risk free rate is used as the fair value. As fortransactions with maturities up to one year as of the consolidated balance sheet date, the carrying
value is used as the fair value after it is confirmed that the fair value approximates the carrying
value.
Derivative transactions:
Information on fair value of derivative transactions is presented in Note 16, “Derivative Financial
Instruments.”- 20 -

(c) Redemption schedule for financial instruments with maturities
The redemption schedule for financial instruments with maturities at March 31, 2016 was as follows:

Due after
1 yearthrough
3 years

Due in 1 year
or less
Financial assets:
Due from banks
Call loans and bills purchased
Investment securities:
Available-for-sale securities:
Japanese government
bonds
Local government bonds
Corporate bonds
Foreign bonds
Other
Total investment securities
Loans and bills discounted (*1)¥

17,50015,87975,30524,6409133,335
316,660
519,816¥ 2,378,489¥
Financial liabilities:
Deposits (*2)
Security deposits received
related to securities lendingtransactions
Borrowings

67,067
2,753

37,574
14,340¥ 2,430,403

¥

$

¥
¥

266,207¥

3,015
269,222¥¥

143,000
43,06392,38518,28736,948
333,686
227,238
560,924¥

16,995¥

1,560
18,555¥-¥23,60013,40848,5609,443
95,012
112,804
207,816

¥

-

¥

-

¥

-

$

-

$

Due after
10 years
-

-

¥

¥

11,0007,795
3,521
22,316308,215
330,532

¥

-

¥

-

¥

-

¥

-

Due after
7 years
through
10 years
-

¥

9,805
20,97376,937
107,716
124,795
232,511

Thousands of U.S. dollars
2016
Due after
Due after
3 years
5 years
throughthrough
5 years
7 years

Due after
1 yearthrough
3 years$-

Due after
7 years
through
10 years$

Due after
10 years-$-

155,307
140,921668,308
218,67279
1,183,306
2,810,259
4,613,205

533,368
226,331
1,375,914
157,348
75,1772,368,157
3,065,237$ 5,433,404

1,269,080
382,170819,888
162,291
327,9022,961,359
2,016,666$ 4,978,026

209,442
118,991
430,954
83,803
843,201
1,001,100$ 1,844,302

87,016
186,128
682,791
955,946
1,107,516$ 2,063,462$

97,621
69,17831,247
198,047
2,735,312
2,933,368$ 21,108,351$ 2,362,504$

150,825

$

-

$

-

$

-

333,457
127,263$ 21,569,071

26,757$ 2,389,261$

13,844
164,669

$

-

$

-

$

-

$
Financial liabilities:
Deposits (*2)
Security deposits received
related to securities lendingtransactions
Borrowings

595,198
24,432-60,10025,503155,038
17,7308,471
266,844345,391
612,236

Due in 1 year
or less
Financial assets:
Due from banks
Call loans and bills purchased
Investment securities:
Available-for-sale securities:
Japanese government
bonds
Local government bonds
Corporate bonds
Foreign bonds
Other
Total investment securities
Loans and bills discounted (*1)

Millions of yen
2016
Due after
Due after
3 years
5 years
throughthrough
5 years
7 years

Notes:(*1) At March 31, 2016, the total amount of loans which were not expected to be recovered, including claims toborrowers that were legally or substantially bankrupt and to those who were likely to become bankrupt,
amounted to ¥49,245 million ($437,034 thousand). Loans without due dates in the amount of ¥195,590
million ($1,735,800 thousand) were excluded.
(*2) Demand deposits were included in “Due in 1 year or less.”- 21 -

4. Trading Securities and Investment Securities
There was no carrying value of trading securities at March 31, 2016. At March 31, 2015, trading
securities consisted of Japanese government bonds only.
At March 31, 2016 and 2015, investment securities consisted of the following:

Millions of yen
2016
2015
Japanese government bonds
Local government bonds
Bonds and debentures
Equity securities
Other

¥

266,501
111,059
409,205
121,847
239,103¥ 1,147,715¥¥

Thousands of U.S. dollars
2016
2015

308,125
113,504
421,022129,090
187,750
1,159,493$ 2,365,113
985,614
3,631,567
1,081,354
2,121,964$ 10,185,614$ 2,734,513
1,007,312
3,736,439
1,145,633
1,666,222$ 10,290,140

At March 31, 2016 and 2015, investment securities included Japanese government bonds of ¥7,447
million ($66,089 thousand) and ¥6,366 million ($56,496 thousand), respectively, as loans without
collateral (securities lending transactions).
At March 31, 2016 and 2015, liabilities for guarantees on corporate bonds included in “Investment
securities,” which were issued by private placement (Article 2, Paragraph 3 of the Financial Instruments
and Exchange Act), amounted to ¥12,777 million ($113,391 thousand) and ¥14,027 million ($124,485
thousand), respectively.
Securities are classified as trading, held-to-maturity or available-for-sale. The classification determines
the respective accounting method that should be used to account for these securities, as stipulated by theaccounting standard for financial instruments. At March 31, 2016 and 2015, the carrying values of
trading securities and the related valuation differences included in the consolidated statements of income
were as follows:
Millions of yen
2016
Carryingvalue
Tradingsecurities¥-

Valuationdifference¥

Thousands of U.S. dollars
2016
2015

2015

-

Carrying
value

Valuationdifference

¥

¥

77

(0)

Carrying
value$

Valuationdifference

-

$

-

Carrying
value

Valuationdifference

$

$

683

The Group did not have any held-to-maturity debt securities as of March 31, 2016 and 2015.

- 22 -(0)At March 31, 2016 and 2015, gross unrealized gains and losses for available-for-sale securities with fairvalue were as follows:

Cost
Available-for-sale securities with fair value:
Japanese government bonds¥
Local government bonds
Bonds and debentures
Equity securities
Other¥

Available-for-sale securities with fair value:
Japanese government bonds¥
Local government bonds
Bonds and debentures
Equity securities
Other¥

Millions of yen
2016
Gross
Gross
unrealized
unrealized
gains
losses258,223
108,116
401,497
60,995
232,334
1,061,166

¥

8,277
2,942
7,830
61,4438,059
88,553¥

Cost

Millions of yen
2015
Gross
Gross
unrealized
unrealized
gains
losses

¥

7,962
2,919
6,972
73,168
10,993¥ 102,015

Cost

Thousands of U.S. dollars
2016
Gross
Gross
unrealized
unrealized
gains
losses

Cost
Available-for-sale securities with fair value:
Japanese government bonds$ 2,664,199
Local government bonds
981,558
Bonds and debentures
3,675,337
Equity securities
481,842
Other
1,567,314$ 9,370,269- 23 -$

73,455
26,10969,488545,287
71,521$ 785,880

¥

(0)
(122)
(2,444)(1,756)(4,323)

300,202110,602414,137
54,294
176,605
1,055,842

Available-for-sale securities with fair value:
Japanese government bonds$ 2,291,648
Local government bonds
959,495
Bonds and debentures
3,563,161
Equity securities
541,311
Other
2,061,892$ 9,417,518

¥

¥

¥

(38)
(17)
(87)
(129)
(170)
(442)

$

(0)
(1,082)(21,689)(15,583)$ (38,365)

Thousands of U.S. dollars
2015
Gross
Gross
unrealized
unrealized
gains
losses$70,66025,90561,874649,343
97,559$ 905,351

$

$

(337)
(150)
(772)
(1,144)(1,508)(3,922)

Fair andcarrying
value¥

266,501
111,059
409,205
119,994
238,637¥ 1,145,397

Fair andcarrying
value¥

308,125
113,504
421,022
127,333
187,428¥ 1,157,415

Fair andcarryingvalue$ 2,365,113
985,614
3,631,567
1,064,909
2,117,829$ 10,165,042

Fair andcarryingvalue$ 2,734,513
1,007,312
3,736,439
1,130,040
1,663,365$ 10,271,698

During the years ended March 31, 2016 and 2015, the Group recorded losses on the write-down ofavailable-for-sale securities with fair value due to other than temporary decline in value as follows:
Millions of yen
2016
2015
Equity securities
Corporate bonds

¥

55
3

¥

Thousands of U.S. dollars
2016
2015
1

$

488
26

$

8

The Group recognizes the write-down of available-for-sale securities with fair value in the case of adecline in value by 50% or more below cost or an other than temporary decline ranging from 30% to 50%
below cost.
At March 31, 2016 and 2015, net unrealized gains on available-for-sale securities, net of applicable
income taxes and non-controlling interests, recorded as a component of accumulated othercomprehensive income in net assets on the consolidated balance sheets were as follows:

Millions of yen
2016
2015
Unrealized gains
Less applicable income taxes
Less non-controlling interests portion
Net unrealized gains¥¥

84,230(25,009)(67)
59,152Thousands of U.S. dollars
2016
2015

¥ 101,572(31,684)(82)¥ 69,806$

747,515(221,947)(594)$ 524,955$$

901,419(281,185)(727)
619,506

During the years ended March 31, 2016 and 2015, the Group sold available-for-sale securities andrecorded gains and losses on sales of these securities on the consolidated statements of income as follows:
Millions of yen
2016
2015
Gains on sales of:Equity securities
Bonds and others

¥

2,157
1,481
3,638

¥
Losses on sales of:Equity securities
Bonds and others

¥

987
1,828
2,815

¥

¥
¥
¥
¥

1,570
1,195
2,765
232
380
612

Thousands of U.S. dollars
2016
2015
$
$
$
$

19,142
13,14332,286
8,759
16,222
24,982$$

13,933
10,60524,538

$
$

2,058
3,372
5,431

5. Loans and Bills Discounted
At March 31, 2016 and 2015, loans and bills discounted consisted of the following:
Millions of yen
2016
2015
Bills discounted
Loans on bills
Loans on deeds
Overdrafts¥

25,71453,651
1,402,379
198,195¥ 1,679,941¥¥

26,93460,626
1,359,374
208,221
1,655,157

Thousands of U.S. dollars
2016
2015
$

228,203
476,135
12,445,678
1,758,919$ 14,908,954$

239,030
538,036
12,064,022
1,847,896$ 14,689,004

Bills discounted are accounted for as financial transactions in accordance with the JICPA Industry Audit
Committee Report No. 24 issued on February 13, 2002, “Treatment of Accounting and Auditing- 24 -

Concerning Application of Accounting Standard for Financial Instruments in Banking Industry.” The
Group has the right to sell or pledge (repledge) bankers’ acceptances, commercial bills, documentary bills
and foreign bills of exchange purchased without restrictions. The total face value of these bills
amounted to ¥25,800 million ($228,966 thousand) and ¥27,110 million ($240,592 thousand) at March 31,
2016 and 2015, respectively.
Claims to borrowers in bankruptcy and past due loans amounted to ¥49,244 million ($437,025 thousand)and ¥53,228 million ($472,381 thousand) at March 31, 2016 and 2015, respectively, and are included in“Loans and bills discounted.” Loans are generally placed on non-accrual status when there is substantial
doubt about the ultimate collectability of either principal or interest because the principal or interest is
past due for a considerable period or for other reasons. Claims to borrowers in bankruptcy represent
non-accrual loans after charge-off to legally bankrupt borrowers as defined in Article 96, Paragraph 1,
Subparagraph 3 and 4 of the Order for Enforcement of the Corporation Tax Act of Japan. Past due loans
are non-accrual loans other than claims to borrowers in bankruptcy and loans for which interest payments
are deferred in order to assist the financial recovery of borrowers in financial difficulties.
At March 31, 2016 and 2015, delinquent loans for which the payment of principal or interest wascontractually past due three months or more, excluding non-accrual loans, amounted to ¥892 million($7,916 thousand) and ¥509 million ($4,517 thousand), respectively.
At March 31, 2016 and 2015, restructured loans for which the Bank had restructured the terms andconditions in favor of borrowers in financial difficulties, such as a reduction or exemption of the original
interest rate, extension of interest payments and/or principal repayments and debt forgiveness in order tosupport the borrowers in their financial recovery or restructuring, excluding “claims to borrowers inbankruptcy,” “past due loans” and “delinquent loans contractually past due three months or more”
disclosed above, amounted to ¥6,016 million ($53,390 thousand) and ¥8,067 million ($71,592 thousand),
respectively.
Total non-performing assets before charge-offs of claims deemed uncollectible, consisting of “claims toborrowers in bankruptcy,” “past due loans,” “delinquent loans contractually past due three months ormore” and “restructured loans,” aggregated ¥56,154 million ($498,349 thousand) and ¥61,804 million($548,491 thousand) at March 31, 2016 and 2015, respectively.
A provision of reserve for possible loan losses amounted to ¥126 million ($1,118 thousand) and none forthe years ended March 31, 2016 and 2015, respectively, and is included in “Other expenses” in theaccompanying consolidated statements of income.

- 25 -

6. Foreign Exchange
At March 31, 2016 and 2015, foreign exchange consisted of the following:

Assets:Due from banks
Foreign bills of exchange purchased
Foreign bills of exchange receivable¥¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

2,165
86
466
2,717

$

¥

¥

2,896
176
563
3,636

Millions of yen
2016
2015
Liabilities:
Foreign bills of exchange sold
Foreign bills of exchange payable

¥
¥

503
202
706

¥
¥

$

19,213763
4,135
24,112$$25,701
1,561
4,996
32,268

Thousands of U.S. dollars
2016
2015

458
521
980

$
$

4,463
1,792
6,265

$
$

4,064
4,623
8,697

7. Tangible Fixed Assets
At March 31, 2016 and 2015, tangible fixed assets consisted of the following:
Millions of yen
2016
2015
Land
Buildings and structures
Construction in progress
Other tangible fixed assets
Tangible fixed assets¥¥

23,249
8,428
34
3,507
35,219¥¥23,559
7,942
32
3,307
34,841Thousands of U.S. dollars
2016
2015
$

$

206,327
74,795301
31,123
312,557$$

209,078
70,482283
29,348309,203

Accumulated depreciation of tangible fixed assets at March 31, 2016 and 2015 was ¥22,931 million($203,505 thousand) and ¥22,865 million ($202,919 thousand), respectively.
As permitted by the accounting principles and practices generally accepted in Japan, deferred capitalgains on sales of real property are deducted from the original acquisition cost of property newly acquired
for replacement purposes in the same line of business as the property sold. At March 31, 2016 and 2015,
the amount of ¥2,286 million ($20,287 thousand) was directly reduced from the acquisition cost of land,
respectively.
The Bank elected the one-time revaluation of land used for the banking business effective on March 31,
1998, reflecting appropriate adjustments for land shape and other factors based on the appraisal values
issued by the Japanese National Tax Agency under the Act on Revaluation of Land. According to theAct, the amount equivalent to the tax effect on the excess of sound reassessed values over the original
book value is stated as “Deferred tax liabilities for revaluation,” and the rest of the excess, net of the tax
effect, is disclosed as “Land revaluation increment” and included in a component of accumulated othercomprehensive income in net assets on the consolidated balance sheets. At March 31, 2016 and 2015,
the differences in the carrying values of land used for the banking business after reassessment over themarket values amounted to ¥2,868 million ($25,452 thousand) and ¥3,792 million ($33,652 thousand),
respectively.

- 26 -

8. Pledged Assets
At March 31, 2016 and 2015, investment securities totaling ¥100,759 million ($894,204 thousand) and¥138,553 million ($1,229,614 thousand), respectively, were pledged as collateral for “Security deposits
received related to securities lending transactions” of ¥37,574 million ($333,457 thousand) and ¥75,085
million ($666,356 thousand) as well as for “Borrowings” of ¥12,200 million ($108,271 thousand) and¥12,400 million ($110,046 thousand), respectively.
At March 31, 2016 and 2015, investment securities totaling ¥25,254 million ($224,121 thousand) and¥24,953 million ($221,450 thousand), respectively, were pledged as collateral for the settlement of
exchange and other transactions.
9. Deposits
At March 31, 2016 and 2015, deposits consisted of the following:
Millions of yen
2016
2015
Demand deposits
Time deposits
Other¥ 1,373,221
1,257,601
30,869¥ 2,661,691¥ 1,358,867
1,251,027
28,512¥ 2,638,408

Thousands of U.S. dollars
2016
2015
$ 12,186,909
11,160,818
273,952$ 23,621,680$ 12,059,522
11,102,476
253,035$ 23,415,051

10. Borrowings and Lease Obligations
At March 31, 2016 and 2015, borrowings, which consisted of the borrowings from other financial
institutions, amounted to ¥18,915 million ($167,864 thousand) and ¥17,655 million ($156,682 thousand),
respectively. At March 31, 2016, the annual maturities of borrowings due through February 2021 at an
average interest rate of 0.18% per annum were as follows:Year ending March 31,

Thousands of
U.S. dollars

Millions of yen

2017
2018
2019
2020
2021

¥

¥

14,340
1,715
1,300
970
590
18,915$$

127,263
15,22011,537
8,608
5,236
167,864

At March 31, 2016 and 2015, other liabilities included lease obligations of 13 million ($115 thousand)and none, respectively.

11. Employee Retirement Benefits
The Group has corporate pension fund plans and lump-sum retirement benefit plans as defined benefit
plans that cover substantially all employees. Furthermore, retirement benefit trusts are set up to cover
lump-sum retirement benefit plans. At March 31, 2016 and 2015, employee retirement benefits
consisted of the following:- 27 -

(Defined benefit plans)(a) Movement in retirement benefit obligations:

Retirement benefit obligations at beginning of year ¥Cumulative effects of changes in accounting
policies
Restated balance
Service cost
Interest cost
Actuarial differences
Retirement benefits paid
Retirement benefit obligations at end of year¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

20,289

$

¥

668
249
2,624
(1,199)22,632 ¥21,941(1,637)
20,304690
249
127(1,083)
20,289 $180,058$

194,719

5,928
2,209
23,287(10,640)
200,851 $(14,527)
180,191
6,123
2,209
1,127
(9,611)
180,058(b) Movement in plan assets:

Plan assets at beginning of year
Expected return on plan assets
Actuarial differences
Contribution paid by the employer
Contribution to retirement benefit trusts
Refund of equity securities from retirement
benefit trusts
Retirement benefits paid
Plan assets at end of year¥¥

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

31,141 ¥613(1,661)357-

23,085
292
3,688
960
4,000

$ 276,366 $
5,440(14,740)
3,168-(5,245)(924)
24,281 ¥(885)
31,141 $(46,547)(8,200)215,486 $

204,872
2,591
32,7298,519
35,498(7,854)
276,366(c) Reconciliation from retirement benefit obligations and plan assets to employee retirement benefit asset or
liability recorded on the consolidated balance sheet:
Millions of yen
2016
2015
Funded retirement benefit obligations
Plan assets¥

Unfunded retirement benefit obligations
Net balance of (asset)/liability for retirement
benefits recorded on the consolidatedbalance sheet at end of year
Employee retirement benefit liability
Employee retirement benefit asset
Net balance of (asset)/liability for retirement
benefits recorded on the consolidatedbalance sheet at end of year¥

- 28 -

22,632(24,281)(1,648)-¥

Thousands of U.S. dollars
2016
2015

20,289 $ 200,851 $ 180,058(31,141)(215,486)(276,366)(10,852)(14,625)(96,308)-(1,648)(10,852)(14,625)(96,308)

1,353(3,002)766(11,619)

12,007(26,641)

6,798(103,115)(1,648) ¥(10,852) $(14,625) $(96,308)

(d) Net periodic retirement benefit expenses and their breakdown:
Millions of yen
2016
2015
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Gain on refund from retirement benefit trusts *Other
Net periodic retirement benefit expenses
under defined benefit plans

Thousands of U.S. dollars
2016
2015

¥

668 ¥
249
(613)
(224)
(856)
37

690 $
249
(292)
746
38

5,928 $
2,209
(5,440)(1,987)(7,596)
328

6,123
2,209
(2,591)
6,620
337

¥

(739) ¥

1,432

(6,558) $12,708$

Note: * Gain on refund from retirement benefit trusts of ¥856 million ($7,596 thousand) for the year ended March 31,
2016 was included in “Other income.”(e) Retirement benefit adjustment in other comprehensive income, before tax effects:

Actuarial differences
Total

Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

(5,367) ¥(5,367) ¥

$
$

¥
¥

4,307
4,307

(47,630) $(47,630) $38,22338,223(f) Retirement benefit adjustment in accumulated other comprehensive income, before tax effects:
Millions of yen
2016
2015

Thousands of U.S. dollars
2016
2015

(2,781) ¥(2,781) ¥$$Actuarial differences that are yet to be recognized ¥
Total
¥

2,585
2,585

(24,680) $(24,680) $22,941
22,941(g) Plan assetsi) Plan assets comprise:

Debt securities
Equity securities
Cash and deposits
General account
Other
Total

2016

2015

43.7%
36.8
5.3
13.5
0.7
100.0%

25.1%
48.1
0.0
10.4
16.4
100.0%

Note: At March 31, 2016 and 2015, 34.9% and 47.1% of plan assets consisted of retirement benefit trusts that are
set up for corporate pension plans and lump-sum retirement benefit plans, respectively.

ii) Determination of expected long-term rate of plan assets
The expected long-term rate of return on plan assets is determined considering current and future
portfolio of plan assets and current and expected long-term rate of return generated from various
components of the plan assets.

- 29 -

(h) Actuarial assumptions at end of year:

Discount rate for corporate pension plans
Discount rate for lump-sum retirement benefit plans
Expected long-term rate of return on plan assets

2016

2015

0.3%
0.2%
3.0%

1.2%
1.1%
2.0%

12. Acceptances and Guarantees
The Bank provides guarantees for liabilities of its customers for payments on loans from other financial
institutions. A contra account, “Customers’ liabilities for acceptances and guarantees,” is classified as
an asset in the consolidated balance sheets, indicating the Bank’s right of indemnity from customers.

13. Net Assets
At March 31, 2016 and 2015, the authorized number of shares of common stock without par value was 30
million, and the number of shares of common stock issued was 10,943,240 shares. At March 31, 2016
and 2015, the number of shares of treasury stock held by the Group was 102,855 and 100,763 shares,
respectively.
At March 31, 2016 and 2015, capital surplus consisted principally of additional paid-in capital.
Included in retained earnings was the legal earnings reserve of the Bank in the amount of ¥5,392 million($47,852 thousand) at both March 31, 2016 and 2015. The Japanese Banking Act provides that an
amount equivalent to at least 20% of the cash payments as appropriations of retained earnings shall beappropriated as the legal earnings reserve until the total amount of additional paid-in capital and suchreserve equals the common stock. The legal earnings reserve is not available for distributions as
dividends, but may be used to reduce a deficit or may be transferred to common stock by proper action of
the Board of Directors and/or the shareholders.
In November 2015, the Board of Directors of the Bank resolved to pay interim dividends of ¥433 million($3,842 thousand) at ¥40 per share ($0.35 per share). The shareholders of the Bank approved thefollowing appropriation of retained earnings at the annual shareholders meeting on June 24, 2016.
Thousands of
U.S. dollars

Millions of yen
Cash dividends, ¥40 per share ($0.35 per share)- 30 -

¥

433

$

3,842

14. Stock Options(a) Stock option expenses
The Bank recorded stock option expenses of ¥48 million ($425 thousand) and ¥45 million ($399
thousand) in “General and administrative expenses” for the years ended March 31, 2016 and 2015,
respectively.
(b) Outline of stock options and size of and changes in stock optionsi) Outline of stock options:2012 stock options

2013 stock options

2014 stock options

2015 stock options

13 directors of the
13 directors of the
Bank (excluding
Bank (excluding
outside directors)
outside directors)
Number of options
13,000 common
12,200 common
granted*shares of the Bank
shares of the Bank
Grant dateJuly 20, 2012
July 19, 2013
Conditions for vestingNot definedNot defined
Requisite service period
Not definedNot defined
Exercise period
From July 21, 2012
From July 20, 2013
to July 20, 2042
to July 19, 2043
Note: * Calculated in terms of the number of shares.

13 directors of the
Bank (excluding
outside directors)
9,100 commonshares of the Bank
July 25, 2014
Not definedNot defined
From July 26, 2014
to July 25, 2044

13 directors of the
Bank (excluding
outside directors)
7,100 commonshares of the Bank
July 24, 2015
Not definedNot defined
From July 25, 2015
to July 24, 2045

Position and number ofgranteesii) Size of and changes in stock options:
The following describes the size of and changes in stock options that existed during the years ended
March 31, 2016 and 2015. The number of stock options is calculated in terms of the number of shares.
a) Number of stock options
Non-vested:
Outstanding at April 1, 2014
GrantedForfeited
VestedOutstanding at March 31, 2015
GrantedForfeited
VestedOutstanding at March 31, 2016
Vested:Outstanding at April 1, 2014
VestedExercised
Forfeited
Outstanding at March 31, 2015
VestedExercised
Forfeited
Outstanding at March 31, 20162012 stock options

2013 stock options

2014 stock options

2015 stock options--

9,100 shares(9,100 shares)-

7,100 shares(7,100 shares)-

12,200 shares
12,200 shares
12,200 shares

9,100 shares
9,100 shares
9,100 shares

7,100 shares
7,100 shares

13,000 shares
13,000 shares(400 shares)
12,600 shares- 31 -

b) Price information(per share)
Exercise price
Average stock price at exercise
Fair value at grant date2012 stock options

2013 stock options

2014 stock options

2015 stock options¥1 ($0.00)¥6,520 ($57.86)¥3,645 ($32.34)¥1 ($0.00)¥4,556 ($40.43)¥1 ($0.00)¥4,959 ($44.00)¥1 ($0.00)¥6,811 ($60.44)iii) Valuation technique to estimate fair value of stock options granted for the years ended March 31,
2016 and 2015:(1) 2014 stock options:a) Valuation technique used: Black-Scholes modelb) Major assumptions and estimation method
2014 stock options
Expected volatility (*1)
Expected life (*2)
Expected dividends (*3)
Risk free interest rate (*4)

34.441%
1.3 years¥70 ($0.62) per share
0.050%

Notes: (*1) Expected volatility is calculated based on the actual stock prices during the period from March 2013 toJuly 2014, which corresponds to the expected life of the options.
(*2) Expected life is estimated based on the difference between the average term of office of directors who
retired during the past 10 years and the average term of office of existing directors in office.
(*3) Expected dividends are the actual dividends for the year ended March 31, 2014.
(*4) Risk free interest rate is a Japanese government bond yield which corresponds to the expected life.

(2) 2015 stock options:a) Valuation technique used: Black-Scholes modelb) Major assumptions and estimation method
2015 stock options
Expected volatility (*1)
Expected life (*2)
Expected dividends (*3)
Risk free interest rate (*4)

30.435%2.0 years¥80 ($0.70) per share
0.000%

Notes: (*1) Expected volatility is calculated based on the actual stock prices during the period from July 2013 to July
2015, which corresponds to the expected life of the options.
(*2) Expected life is estimated based on the difference between the average term of office of directors who
retired during the past 10 years and the average term of office of existing directors in office.
(*3) Expected dividends are the actual dividends for the year ended March 31, 2015.
(*4) Risk free interest rate is a Japanese government bond yield which corresponds to the expected life.

iv) Method of estimating number of stock options vested
Basically, only the actual number of forfeited stock options is reflected because it is difficult to rationallyestimate the number of stock options to be forfeited in the future.

- 32 -

15. Commitments(a) Loan commitments
Contracts related to overdraft facilities and loan commitment lines are agreements that allow customers toextend overdrafts or loans up to prescribed limits unless there is violation of any condition in the contract.
At March 31, 2016 and 2015, the unused amounts within the limits of these contracts, which originally
expire within one year or are revocable by the Bank at any time without any conditions, aggregated¥597,553 million ($5,303,097 thousand) and ¥574,824 million ($5,101,384 thousand), respectively.
Since many of these commitments expire without being drawn down, the unused amount does notnecessarily represent a future cash flow. In addition, most of these contracts have conditions that theGroup can refuse customer applications or decrease the contract limits for appropriate reasons such aschanges in the financial situation or deterioration in creditworthiness of the customer. At the executionof the contract, the Bank obtains real estate, securities, etc., as collateral if considered necessary.
Subsequently, the Bank performs periodic reviews of the customer’s business performance in accordancewith the Bank’s internal rules and takes necessary measures such as reconsidering conditions of thecontracts and/or requiring additional collateral and/or guarantees if necessary.
(b) Lease commitments
The Group has entered into various lease agreements as a lessee principally for land for office space.
These leases are generally cancelable with a few months advance notice and are accounted for as
operating leases. The Group has also entered into non-cancelable operating lease agreements. The
future minimum lease payments under these non-cancellable operating leases as of March 31, 2016 and2015 were as follows:
Millions of yen
2016
2015
Due within one year
Due after one year

¥
¥

102
1,154
1,257

¥
¥

98
958
1,056

Thousands of U.S. dollars
2016
2015
$
$

905
10,241
11,155

$
$

869
8,501
9,371

In addition, a subsidiary engaged in the leasing business as a lessor has entered into various long-term,
non-cancelable lease agreements with third parties that were categorized as finance leases. Information
concerning future minimum lease payments to be received as of March 31, 2016 and 2015 for financeleases which do not transfer ownership of the leased assets to the lessee was as follows:
Millions of yen
2016
2015
Total future minimum lease payments
to be received¥
Estimated residual value of leased
assets
Imputed interest

12,488697(538)- 33 -¥

Thousands of U.S. dollars
2016
2015

11,465$ 110,827

683
(665)

6,185
(4,774)$

101,748
6,061(5,901)

The aggregate annual maturities of future minimum lease payments to be received as of March 31, 2016
were as follows:Year ending March 31,

Thousands of
U.S. dollars

Millions of yen

2017
2018
2019
2020
2021
2022 and thereafter

¥

¥

3,530
2,896
2,257
1,626
993
1,183
12,488$$31,32725,701
20,03014,4308,812
10,498110,827

As permitted by the accounting standard for lease transactions with respect to finance leases entered into
before April 1, 2008, the appropriate carrying value, net of accumulated depreciation, of the underlying
assets at March 31, 2008 is recognized as the value of the investment in the leased assets, and the total
amount equivalent to interest income on these transactions is allocated over the lease term using thestraight-line method, instead of the effective interest method, as the principal method of the accounting
standard. As a result, profit before income taxes for the years ended March 31, 2016 and 2015 were ¥6
million ($53 thousand) and ¥10 million ($88 thousand) more, respectively, than the amounts that would
have been recorded under the effective interest method based on lease payments receivable.

- 34 -

16. Derivative Financial Instruments
Derivative financial instruments, other than those to which hedge accounting was applied, which weretraded on the over-the-counter market and stated at fair value and whose valuation gains and losses arerecognized in the consolidated statements of income, as of March 31, 2016 and 2015 are summarized asfollows:
Millions of yen
Notional principal orcontract amounts
Over one
Total
year
Fair value*

Valuation
gains (losses)

Currency swap:
At March 31, 2016
At March 31, 2015

¥

5,623
-

¥

-

¥

(25)
-

¥

(25)
-

Foreign exchange forward contracts:
At March 31, 2016
At March 31, 2015¥

34,60436,602

¥

-

¥

986
(202)

¥

986
(202)

Thousands of U.S. dollars
Notional principal orcontract amounts
Over oneFair value*
Total
year

Valuation
gains (losses)

Currency swap:
At March 31, 2016
At March 31, 2015$

49,902
-

$

-

$

(221)
-

$

(221)
-

Foreign exchange forward contracts:
At March 31, 2016
At March 31, 2015$

307,099
324,831

$

-

$

8,750
(1,792)$

8,750(1,792)

Note: * Fair value was based on the discounted cash flow method.

There were no outstanding derivative financial instruments to which hedge accounting was applied as ofMarch 31, 2016 and 2015.

- 35 -

17. Income Taxes
Income taxes for the years ended March 31, 2016 and 2015 consisted of the following:
Millions of yen
2016
2015
Income taxes:
Current
Deferred
Total income taxes

¥
¥

1,795
1,488
3,283

¥
¥

1,489
1,992
3,481

Thousands of U.S. dollars
2016
2015
$
$

15,93013,205
29,135$$

13,214
17,67830,892The tax effects of temporary differences that gave rise to a significant portion of deferred tax assets andliabilities at March 31, 2016 and 2015 were as follows:
Millions of yen
2016
2015
Deferred tax assets:
Reserve for possible loan losses¥
Employee retirement benefit asset
Employee retirement benefit liability
Investment securities
Other
SubtotalLess valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on available-for-salesecurities
Gains on transfer of investment
securities to trusts for retirement
benefit plans
Deferred gains on sale of property
and other
Total deferred tax liabilities
Net deferred tax liabilities¥

Thousands of U.S. dollars
2016
2015

2,286 ¥
39
1,634
1,512
3,169
8,642
(2,208)6,434

3,050 $
390
1,528
1,664
3,427
10,061(2,312)
7,749

20,287346
14,501
13,41828,123
76,695(19,595)
57,099$(25,009)(31,684)(221,947)(281,185)(1,755)(3,194)(15,575)(28,345)(205)(26,971)(20,536) ¥(222)(35,101)(27,352) $(1,819)(239,359)(182,250)(1,970)(311,510)(242,740)$

27,067
3,461
13,56014,76730,41389,288(20,518)
68,769At March 31, 2016 and 2015, deferred tax assets and liabilities reported on the accompanying
consolidated balance sheets were as follows:
Millions of yen
2016
2015
Deferred tax assets
Deferred tax liabilities¥

179
20,716¥249
27,601Thousands of U.S. dollars
2016
2015
$

1,588
183,848$2,209
244,950

In assessing the realizability of deferred tax assets, management of the Group considers whether some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. At March 31, 2016 and 2015, a valuation allowance wasprovided to reduce deferred tax assets to the extent that the management believed that the deferred tax
assets were not realizable.

- 36 -

A reconciliation of the Japanese statutory tax rate and the effective income tax rate on pre-tax income
reflected in the accompanying consolidated statements of income for the year ended March 31, 2016 was
as follows:
2016
Japanese statutory income tax rate
Increase (decrease) due to:Permanently non-deductible expenses
Tax exempt income
Change in valuation allowance
Change in tax rate
Other
Effective income tax rate

32.82%
4.26(1.93)
0.03
1.76
0.97
37.91%A reconciliation between the Japanese statutory tax rate and the effective income tax rate on pre-tax
income reflected in the accompanying consolidated statements of income for the year ended March 31,
2015 was not disclosed because the difference between the Japanese statutory tax rate and the effective
income tax rate was less than 5% of the Japanese statutory tax rate.
The “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 15 of 2016) and the “Act for Partial
Revision of the Local Tax Act, etc.” (Act No. 13 of 2016) were enacted on March 29, 2016, reducing thecorporate statutory tax rate from the year beginning on or after April 1, 2016. The statutory tax rateused to calculate deferred tax assets and deferred tax liabilities (limited to those to be realized or settled
on or after April 1, 2016) was changed from 32.06% to 30.69% for temporary differences expected to bereversed in the year beginning on April 1, 2016, to 30.74% for temporary differences expected to bereversed in the year beginning on April 1, 2017 and to 30.50% for temporary differences expected toreversed in the year beginning on or after April 1, 2018.
As a result of this change, as of March 31, 2016, “Deferred tax assets,” “Deferred tax liabilities” and“Retirement benefit adjustment” in accumulated other comprehensive income decreased by ¥1 million($8 thousand), ¥1,074 million ($9,531 thousand) and ¥43 million ($381 thousand), respectively, while“Unrealized gains on available-for-sale securities” increased by ¥1,269 million ($11,261 thousand).
“Income taxes – deferred” increased by ¥153 million ($1,357 thousand) for the year ended March 31,
2016. “Deferred tax liabilities for revaluation” decreased by ¥241 million ($2,138 thousand), and “Landrevaluation increment” increased by the same amount as of March 31, 2016.

18. General and administrative expenses
General and administrative expenses for the years ended March 31, 2016 and 2015 included following
items:
Millions of yen
2016
2015
General and administrative expenses:
Salaries and allowances
Net periodic retirement benefit
expenses
Rental expenses for land, buildings
and machinery¥

12,649¥12,786

Thousands of U.S. dollars
2016
2015
$

112,255$

113,471

116

1,432

1,029

12,708

2,882

2,878

25,57625,541- 37 -

19. Segment Information(a) General information about reportable segments
The Group defines a reportable segment as a component of the Group for which discrete financial
information is available and whose operating results are regularly reviewed by the Board of Directors tomake decisions about resources to be allocated to the segment and assess its performance.
The Group engages in a wide range of financial services to customers primarily in the areas of banking
and leasing. The reportable segments of the Group are based on operating segments as follows:“Banking”
x Deposits and loans
x Foreign exchange transactions
x Over-the-counter sales of investment trusts and life insurance products
x Securities business“Leasing”
x Leasing business(b) Bases used to measure reported segment profit, segment assets, segment liabilities and othermaterial items
Bases used to measure operating segment information follow the accounting principles used in the
consolidated financial statements as described in Note 2, “Summary of Significant Accounting Policies.”
The segment profit is based on ordinary income, which is defined as “Total income” less certain special
income included in “Other income” in the accompanying consolidated statements of income, andintersegment income is accounted for based on prices in ordinary transactions with independent third
parties.

- 38 -

(c) Information about reported segment profit, segment assets, segment liabilities and other material
items
Segment information as of and for the year ended March 31, 2016 was as follows:
Millions of yen
2016
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income¥

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

42,587309
42,896¥

7,807
2,988,280
2,771,412
¥

1,284

Total

5,088
343
5,431

¥

238
18,024
12,930¥128

Other (*2)

47,675652
48,328¥8,045
3,006,304
2,784,342
¥

1,412

1,020
589
1,609

Total
¥

247
5,782
1,075
¥

43

48,695
1,241
49,937

Reconciliation(*3)

Consolidated

¥

¥

8,293
3,012,087
2,785,418¥

1,456(1,241)(1,241)(182)(8,769)(8,771)¥-

48,695
48,6958,111
3,003,317
2,776,646

¥

1,456

32,687
1,655

11
57

32,6991,712

54
432,753
1,716

(214)
(86)

32,538
1,630

77

44

121

5

126

(0)

126

61

-

61

-

61

-

61

1,895

16

1,911

44

1,956

-

1,956

Thousands of U.S. dollars
2016
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income$

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

377,946
2,742
380,688

Leasing$

69,284
26,520,056
24,595,420$

11,395

Total

45,154
3,044
48,198$2,112
159,957
114,749$

1,135

Other (*2)

423,100
5,786
428,895$

71,396
26,680,014
24,710,170$

12,531

9,052
5,227
14,279

Total
$

2,192
51,313
9,540
$

381

432,152
11,013443,175

Reconciliation(*3)

Consolidated$$

73,597
26,731,336
24,719,719$

12,921(11,013)(11,013)(1,615)(77,822)(77,839)$-

432,152
432,152
71,982
26,653,505
24,641,870$

12,921

290,086
14,68797505

290,193
15,193479
35

290,672
15,228(1,899)(763)

288,764
14,465

683

390

1,073

44

1,118

(0)

1,118

541

-

541

-

541

-

541

16,817

141

16,959390

17,358-17,358Notes:(*1) Ordinary income represents “Total income” less certain special income included in “Other income” in the accompanying
consolidated statements of income. “Total income” of ¥49,553 million ($439,767 thousand) in the accompanying
consolidated statement of income is derived from ordinary income of ¥48,695 million ($432,152 thousand) through theaddition of certain special income of ¥857 million ($7,605 thousand).
(*2) The “Other” business segment in the table above represents operating segments not included in the reported segments andincludes credit card business, administrative outsourcing business and information technology management operations.
(*3) Reconciliation represents the eliminations of intersegment transactions.
(*4) Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses
represent “Total expenses” of ¥40,892 million ($362,903 thousand) less certain special expenses of ¥307 million ($2,724
thousand) included in “Other expenses” in the accompanying consolidated statements of income. Therefore, consolidated
segment profit, which shows ordinary profit of ¥8,111 million ($71,982 thousand), is reconciled to “Profit before income
taxes” of ¥8,660 million ($76,854 thousand) through the addition/deduction of certain special income/ (expenses), net.

- 39 -

Segment information as of and for the year ended March 31, 2015 was as follows:
Millions of yen
2015
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income¥

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

43,509120
43,629¥9,293
3,020,244
2,793,660
¥

1,223

Total

4,794
345
5,140

¥

266
15,196
10,250¥152

Other (*2)

48,304466
48,770¥9,559
3,035,440
2,803,910
¥

1,376

994
585
1,579

Total
¥

179
5,808
1,037
¥

41

49,2981,051
50,350Reconciliation(*3)

Consolidated

¥

¥

9,738
3,041,248
2,804,948¥

1,417(1,051)(1,051)(3)(7,105)(7,106)¥-49,29849,2989,735
3,034,142
2,797,842

¥

1,417

32,5581,654

956

32,5681,710

62
4

32,630
1,714

(30)
(81)

32,5991,633(1,510)(5)(1,515)23(1,491)(0)(1,491)

1

-

1

-

1

-

1

2,619

6

2,626

37

2,663

-

2,663

Thousands of U.S. dollars
2015
Reported segment
Banking
Ordinary income (*1):
External customers
Intersegment
Total ordinary income$

Segment profit (*4)
Segment assets
Segment liabilities
Other material items:
Depreciation
Interest and dividend
incomeInterest expense
Provision of reserve forpossible loan losses
Loss on write-down ofsecurities
Increase in tangible
fixed assets andintangible fixed assets

Leasing

386,128
1,064
387,193$

82,47226,803,727
24,792,864$

10,853

Total

42,545
3,061
45,615$2,360
134,859
90,965$

1,348

Other (*2)

428,682
4,135
432,818$

84,83326,938,587
24,883,830$

12,211

8,821
5,191
14,013

Total
$

1,588
51,544
9,203
$

363

437,504
9,327
446,840

Reconciliation(*3)

Consolidated$$

86,421
26,990,131
24,893,042$

12,575(9,327)(9,327)(26)(63,054)(63,063)$-437,504
437,504
86,39526,927,067
24,829,978$12,575288,942
14,67879496

289,030
15,175550
35289,581
15,211

(266)
(718)

289,305
14,492(13,400)(44)(13,445)204(13,232)(0)(13,232)

8

-

8

-

8

-

8

23,242

53

23,304328

23,633-23,633

Notes:(*1) Ordinary income represents “Total income” less certain special income included in “Other income” in the accompanying
consolidated statements of income. “Total income” of ¥49,308 million ($437,593 thousand) in the accompanying
consolidated statement of income is derived from ordinary income of ¥49,298 million ($437,504 thousand) through theaddition of certain special income of ¥9 million ($79 thousand).
(*2) The “Other” business segment in the table above represents operating segments not included in the reported segments andincludes credit card business, administrative outsourcing business and information technology management operations.
(*3) Reconciliation represents the eliminations of intersegment transactions.
(*4) Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses
represent “Total expenses” of ¥39,897 million ($354,073 thousand) less certain special expenses of ¥333 million ($2,955
thousand) included in “Other expenses” in the accompanying consolidated statements of income. Therefore, consolidated
segment profit, which shows ordinary profit of ¥9,735 million ($86,395 thousand), is reconciled to “Profit before income
taxes” of ¥9,411 million ($83,519 thousand) through the addition/deduction of certain special income/ (expenses), net.

- 40 -

(d) Other informationi) Information by service
Millions of yen
ServiceSecurity
investments

Loans
Ordinary income from external customers:
For the year ended March 31, 2016
For the year ended March 31, 2015¥

19,803
21,374¥

Leasing

16,34913,943

¥

Other

5,088
4,794

¥

Total

7,454
9,186

¥

48,69549,298

Thousands of U.S. dollars
ServiceSecurity
investments

Loans
Ordinary income from external customers:
For the year ended March 31, 2016
For the year ended March 31, 2015$

175,745
189,687$

Leasing

145,092
123,739$

Other

45,15442,545$

Total

66,151
81,522$432,152
437,504ii) Information by geographical area for the years ended March 31, 2016 and 2015 is omitted since income
in Japan accounted for more than 90% of the consolidated ordinary income and all tangible fixed assets
were located in Japan.
iii) Information by major customer for the years ended March 31, 2016 and 2015 is omitted since there wasno single external customer accounting for 10% or more of the consolidated ordinary income.

(e) Information about impairment loss on fixed assets by reportable segment
Millions of yen
Reportable segment
Banking
Leasing
Total
Impairment loss:
For the year ended March 31, 2016
For the year ended March 31, 2015

¥

229
97

¥

-

¥

229
97

Other
¥

Total
0
-

¥

Thousands of U.S. dollars
Reportable segment
Other
Banking
Leasing
Total
Impairment loss:
For the year ended March 31, 2016
For the year ended March 31, 2015

$

2,032
860

$

- 41 -

-

$

2,032
860

$

230
97

Total
0
-

$

2,041
860

20. Transactions with Related Parties
Significant transactions with parties related to the Group for the years ended March 31, 2016 and 2015
were as follows:(a) Transactions with relatives of the Bank’s directors:

Name

Business

Descriptionof theBank’stransaction

Transaction amounts
Thousandsof U.S.
dollars
Millions of yen

Account

BalancesThousandsof U.S.
Millions
dollarsof yenFor the year ended March 31, 2016:
ChiekoHayashiRealestateleasingbusiness

Loan(Average balance
during period)¥ 19(Interest income)
¥
0

$ 168

(Average balance
during period)¥ 20(Interest income)
¥
0

$ 177

$

Loans andbills
discounted

¥

19

$

168

Loans andbills
discounted

¥

20

$

177

0

For the year ended March 31, 2015:
ChiekoHayashiRealestateleasingbusiness

Loan

$

0

Note: Terms and conditions of the loans are determined in the same manner as loans under general lending transactions
with third parties.

(b) Transactions with corporate pension plans for employees

NameBusiness

Descriptionof theBank’stransaction

Transaction amounts
Thousandsof U.S.
dollars
Millions of yen

Account¥5,245-

BalancesThousandsof U.S.
Millions
dollarsof yenFor the year ended March 31, 2016:Retirement Corporate
pensionbenefitplantrustsPartialrefund ofpensionassets$ 46,547

For the year ended March 31, 2015:
No applicable transactions occurred during the year ended March 31, 2015.

- 42 ---

21. Comprehensive Income
Amounts reclassified to profit (loss) in the current period that were recognized in other comprehensive
income in the current or previous periods and the tax effects for each component of other comprehensive
income for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen
2016
2015
Net unrealized gains on available-for-salesecurities:
Increase (decrease) during the year
Reclassification adjustments
Pre-tax amountTax effect amountNet unrealized gains on available-for-salesecurities, net of tax
Land revaluation increment:
Increase during the year
Reclassification adjustments
Pre-tax amountTax effect amountLand revaluation increment, net of tax
Retirement benefit adjustment:
Increase (decrease) during the year
Reclassification adjustments
Pre-tax amountTax effect amount
Retirement benefit adjustment, net of tax
Total other comprehensive income¥¥(15,078)(2,263)(17,342)
6,674

35,416 $(2,785)32,630(7,965)(133,812) $(20,083)(153,904)
59,229314,305(24,716)
289,581(70,686)(10,667)

24,665(94,666)

218,894

241
241

512
512

2,138
2,138

4,543
4,543

(4,333)(1,033)(5,367)
1,677(3,689)(14,116)

3,561
746
4,307
(1,437)2,870
28,048 $(38,454)(9,167)(47,630)
14,882(32,738)(125,275) $31,602
6,620
38,223(12,752)
25,470248,917- 43 -¥

Thousands of U.S. dollars
2016
2015

¥