Annual Report2013Profile
Musashino Bank is the only regional bank whose operationalbase consists of Saitama Prefecture. The prefecture lies
immediately to the north of Tokyo, and many of its residents
commute to work in the capital. Currently, 7.21 million(estimated) people live in Saitama, making it the country’s
fifth most populous prefecture after Tokyo, Kanagawa, Osaka,

and Aichi, and the population is still climbing.
Since its establishment in 1952, Musashino Bank has been
one of Saitama Prefecture’s core financial institutions, andhas played a major role in supporting the development of theregional economy and local industries for six decades.

Corporate Philosophy“Working in harmony with the local community it serves”“Maintaining a deep respect toward customers”

To contribute to the prosperity of the local community and to secure

To engage in bold management that anticipates change while provid-

growth and development in partnership with the region.

ing the highest quality services throughout the organization as a whole.

Bank Data (nonconsolidated basis, as of March 31, 2013)

Subsidiaries and Affiliated Companies

Head office:Home page:
Established:
Networks:

NameLine of Business

The Bugin General Lease
Co., Ltd.

General leasing, deferred paymenttransactions and auto leasing services

The Bugin Guarantee
Co., Ltd.

Loan guarantees for individuals

10-8, Sakuragi-cho 1-chome, Omiya-ku, Saitama
http://www.musashinobank.co.jp/ (Japanese only)
March 6, 1952
Number of branches: 94 (Saitama Prefecture: 92 [of which
1 is a sub-branch], outside Saitama Prefecture: 2)
Number of mortgage loan centers: 9
Number of corporate office: 1
Number of ATMs outside of branches: 117
Number of ATMs and cash dispensers (CDs) installed: 479
2,139¥3,914.7 billion¥3,660.3 billion¥2,962.6 billion¥45.7 billion

Employees:
Total assets:
Deposits:
Loans:
Common stock:
Number of correspondent
220
arrangements:
Issued common stock:33,805 thousand

The Musashino Card Co., Credit card business ( JCB, VISA),
Ltd.
loans and loan guarantees
The Bugin Business
Service Co., Ltd.

Clerical work for Musashino Bank

The Bugin System Service Development, sale and maintenanceCo., Ltd.
of computer systems
The Bugin Economic
Research Institute Co.,Ltd.

Research into the regional economy,
consultation, information services,and holding of seminars

The Bugin Capital Co.,Ltd.

Management support for venturebusinesses

Head Office

SaitamaPrefecture

IbarakiPrefecture

Tokyo
Kanagawa
Prefecture

Contents

1
Consolidated Financial Highlights
2
Message from the President5	Long-term Vision/Medium-Term Management Plan
6
Corporate Governance7
Risk Management

8Compliance9	Appealing Business Foundation(Saitama Prefecture)
10	Corporate Social Responsibility (Main Initiatives)
16 Consolidated Balance Sheets

Chiba
Prefecture

17	Consolidated Statements ofIncome and Comprehensive Income
18	Consolidated Statements of Changes in Net Assets
20	Consolidated Statements of Cash Flows
21 DirectoryConsolidated Financial Highlights
The Musashino Bank, Ltd. and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012

Thousands of
U.S. Dollars(Notes 1 and 2)
2013

Millions of Yen (Note 1)
2013
2012

At Year-end
Total Assets............................................................................................
Deposits.................................................................................................
Loans and Bills Discounted....................................................................
Trading Account Securities and Investment Securities............................
Total Net Assets.....................................................................................
Capital Ratio (based on domestic standards) (%)...................................
For the Year
Total Income.........................................................................................
Total Expenses.......................................................................................
Income before Income Taxes..................................................................
Net Income............................................................................................

¥3,929,343
3,649,510
2,950,897
722,478
194,654
10.76¥3,806,355
3,539,534
2,856,298
735,057
177,984
10.88$41,779,299
38,803,943
31,375,838
7,681,856
2,069,695¥¥   78,968
59,562
19,4069,621$   825,944
628,044
197,900
118,471

77,68059,067
18,612
11,142

Notes 1 . In this annual report, Japanese yen (in millions) and U.S. dollars (in thousands) are indicated with fractions omitted.
2. U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.

Total income

Total expenses

Net income(¥ million)(¥ million)(¥ million)

86,894

81,93878,96879,294
77,68011,142
67,37259,562

9,621
59,067
7,443

3,554

FY2009 FY2010 FY2011 FY2012

FY2009 FY2010 FY2011 FY2012

FY2009 FY2010 FY2011 FY2012

Forward-Looking Statements: This annual report contains forward-looking statements regarding the Bank’s financial condition and results ofoperations. These forward-looking statements, which include the Bank’s views and assumptions with respect to future events, involve certain
risks and uncertainties. Actual results may differ from forecasts due to changes in economic conditions and other factors.
1Message from the President

Kikuo Kato
President

Economic Trends

2

Looking back over fiscal 2012, the fiscal year
ended March 31, 2013, the Japanese economy wasmodestly recovering due to the effects of government stimulus measures including eco-car subsidies
and other factors. Nevertheless, by mid-year therecovery had weakened as exports and mining andmanufacturing production decreased owing todelayed economic recovery overseas, friction withneighboring countries, and other factors. However,after the start of the new administration, consumer
confidence improved thanks to a correction in the
yen’s high value, the wealth effect of rising stock
prices, and last-minute demand before consumption tax increases. In addition, export-relatedindustries picked up due to the economic upswing
in the United States, while the Japanese economy
showed signs of recovery.
Amid an export rally driven by overseas economic
recovery, the economy of Saitama Prefecture, justlike Japan’s economy, saw production activities
gradually rebound as a result of economic stimulus
measures including monetary easing.
Year ended March 31, 2013
Deposits and assets in custody
As a result of efforts to expand our communitybased business foundation and promote comprehensive transactions, deposits, etc.* in fiscal 2012
grew ¥110.8 billion compared with the previous
fiscal year to ¥3,660.3 billion. Assets in custodyincreased ¥38.2 billion year on year to ¥603.7
billion, due to favorable sales of investment trusts.
* Deposits, etc. means deposits including CDs.
Loans
Loans outstanding climbed ¥95.3 billion to¥2,962.6 billion owing mainly to active efforts to
respond to the needs of small- and medium-sizedenterprises (SMEs) within the Prefecture and toindividual customers.

Medium-Term Management Plan

Earnings
Amid continuing market interest rate declines,
the Bank’s capital profits, which shows its earning
capacity in the banking business, decreased by¥400 million to ¥18.8 billion, despite successful
efforts to more efficiently manage loaned money
and securities investments. Recurring income
decreased by ¥800 million to ¥17.1 billion, but net
income came to ¥10.5 billion, the fourth consecutive year of increase. On a consolidated basis,recurring income came to ¥18.9 billion thanks
to higher subsidiary earnings, and net income
increased ¥1.5 billion to ¥11.1 billion, the second
highest level it has ever achieved.

Fiscal 2012, the year we celebrated our 60th
anniversary, marks the final year of our previous
medium-term management plan, NEW PROJECT
60. Under a basic policy of practicing communitybased finance, thanks to our customers, we largely
achieved our sought-after targets as a result of all
directors and employees working together to build
stronger relationships with customers and create
more appealing products.
However, looking 10 years into the future, thebusiness environment in Saitama Prefecture will
undergo various changes such as a decline in birthrates and an aging population as well as economic
globalization. Moreover, the environment surrounding financial institutions is also expected tohave long-term low interest rates and intensifying
competition with other banks and institutions.
To flexibly and appropriately respond to thesechanges and sustainably develop with the local
community, all directors and employees need toshare the path the Bank needs to take into theCapital ratio
The Bank’s capital ratios for fiscal 2012 were 10.45%
and 10.76% on a non-consolidated and consolidated
basis, respectively. From an overall Group perspective, the Bank continued to maintain highly soundfinancial health.

Loans and bills discounted

Deposits including negotiable deposit(¥ billion)

2,715(¥ billion)

2,785

2,856

2,950

FY2009 FY2010 FY2011 FY2012

3,307

3,437

3,539

3,649

FY2009 FY2010 FY2011 FY20123

future. Therefore, the Bank formulated “MVP(Musashino Value-Making Plan),” its long-term
vision for turning it into “the region’s number one
bank” (a Value-Making Bank) that creates newvalue in Saitama.
The basic strategy of the long-term visionfocuses on the vast potential of Saitama Prefecture
and building the Bank to be number one in thetwo business domains of “growth” and “creation,”
leading to the growth of Saitama. To turn thislong-term vision into reality, the Bank started its
three-year medium-term management plan “MVP1/3,” which begins from April 2013.
The medium-term management plan seeks toenhance the awareness and behavior of all Bank
employees and to more effectively use businessresources to achieve our growth strategy and initiate
our creation strategy. Specifically, we will build
infrastructure with a focus on branches, develop
human resources including new employees andfemale employees, augment our sales and marketing staff, implement policy measures regarding

non-face-to-face banking channels, and gear up to
become the number one bank in the region.
Together with the people of Saitama
Musashino Bank will carry out community-based
sales and marketing activities, provide products andservices that match the needs of customers, andoffer appropriate and swift support.
Through these efforts, we will establish competitive management practices and all directors andemployees will work together and continue tomaximize their efforts with the goal of becoming
the number one bank in the region.
As we work toward achieving our establishedgoals, we kindly request your continued supportand understanding.

Kikuo Kato
President

Net business income (Non-consolidated)

Capital ratio(¥ million)(%)

20,214

20,547

19,336

18,853
10.59 10.45

8.14

8.26

10.88 10.76

8.33

8.50

4

FY2009 FY2010 FY2011 FY2012

Non-consolidated
FY2011 FY2012

Consolidated
FY2011 FY2012■ Capital ratio■ Tier I ratio
Minimum level required for banks operatingin Japan: 44Long-term Vision/Medium-term Management Plan

The Bank formulated a long-term vision aiming 10 years into the future of becoming the region’s number one bank that creates
new value in Saitama. To achieve this vision, the Bank started the medium-term management plan “MVP 1/3,” which divides
the next 10 years into three phases and positions the first three years as a period for enhancing readiness. Under this plan, we
will take various measures, focusing on growth and creation strategies, and establish a new growth engine in order to build thenumber one bank in the region.

Long-term Vision “MVP (Musashino Value-making Plan)”
The region’s number one bank that creates new value in Saitama~ Value-making Bank ~Playing a leading role in Saitama’s development by producing new value in Saitama andgrowing on its own initiative by meeting customer expectations

Reason for
Existence

To contribute to Saitama’s growth and to support its future, not only in its role as a leader ofcommunity-based finance, but by also playing a leading role in the creation of new local initiatives

Basic Policy: Build the Bank to be number one in the region in two business domains that lead to Saitama’s growth
GrowthDomainImprove financial intermediary functions and support local
growth as a local financial institution

Creation
DomainCreate new local industries and business models by ourselves
and stimulate local growth

Medium-term management plan “MVP 1/3”: April 2013 – March 2016
Completion of phase one (period for enhancing readiness) to become thenumber one bank in the region that contributes to the growth of Saitama Prefecture
Three-Year
Goal

GrowthDomainAs a local financial institution, build a foundation
capable of sustaining our growth strategy into the
future by reinforcing sales channels and humanresources, and allocating business resources

Creation
DomainMaintain readiness so that we can plan and achieve by
ourselves a framework for commercialization including
new local industries and business models

Overall Target
Shift in employee awareness andperformance and use of business resources

Three pillars for achieving our growth strategy

Initiate creation strategy

Sales strategy
Intensify sales coverage with focus on branches and expand area
Increase contact with customers with focus on the person andstrengthen problem resolution capabilities
Carry out measures focusing on non-face-to-face banking
channels

Conceive and promote commercialization
including local industries, business models, etc.

Human resource strategy
Build and put into effect human resource portfolio plan
Restructure human resource training

Strengthen management readiness in suchareas as compliance and customer protection

••
•
••
••

Build infrastructure
Review business processes
Focus investments on systems that generate revenue•

Strengthen business
management readinessWidelypromote theMusashino
brand

Strengthen Group strategy
Provide a variety of solutions and services thatleverage the Group’ s collective strength

Target figures

Item
Balance of deposits (year-end)*Includes balance of assets in custody
Balance of loans (year-end)
Net income
Core OHR
Capital ratio (current standard)

Fiscal 2012

Fiscal 2015 target¥4,264.0 billion¥2,962.6 billion¥10.5 billion
67.20%
10.45%¥5,000.0 billion¥3,500.0 billion¥10.0 billion
Less than 68%
10% or more

5

Corporate Governance

Basic StanceMusashino Bank recognizes that upgrading andexpanding its corporate governance capabilities are
key priorities of management. In addition to adhering
strictly to a policy of compliance with statutory andregulatory requirements as well as in-house rules
and regulations, every effort is made to ensure thatthe Board of Directors and the Board of Corporate
Auditors stringently monitor directors in the executionof their duties.
Moreover, the Bank has elected one outside director
and three outside auditors who pose no threat ofconflicts of interest with shareholders to monitor andaudit directors in the execution of their duties. They
also take part in meetings of the Board of Directors
where they are able to voice their opinions and offer
advice on management proactively from a broad,independent and neutral perspective. This ensures thatthe management monitoring function is both objective
and impartial.
Also, the Bank has adopted an executive officer
system in order to reduce the number of directors andto ensure a speedier decision-making process. Directors
delegate authority to executive officers, who are charged
with the responsibility of swiftly and efficiently carrying out their duties as leaders of the Bank’s mainstay
divisions.

Corporate Governance Structure
The Board of Directors is positioned as the ultimate
decision-making body of the Bank. While strictly
adhering to the Bank’s variety of in-house rules andregulations, the introduction of an executive officer
system allows the Bank to separate and clarify the management and business execution functions. A structure
has therefore been put in place to allow directors andexecutive officers to go about their assigned duties andresponsibilities.
Musashino Bank’s management decision-making,business execution and oversight structure is presented
as follows.

Corporate Governance Structure
General meeting of shareholders
Assignment

Assignment
Audit

Board of directors

Board of corporate auditors

Directors

Supervision

Auditors

Discussion

Business execution functions
Executive committee

Discussion

reportAssignment

Indication/
Verification

Audit
Compliance committee

Accounting auditors

Executive officers

Head office/Branches

6

Audit

AdviceAuditing division

Law officeLicensed tax accountants

Risk Management
Emergency
responsetraining

Risk Management Policy
The risks associated with banking operations are
becoming increasingly varied and complex. In order toensure that the manner in which it manages its businessis both sound and pertinent, Musashino Bank has formulated a set of internal management policies that take
into consideration the Bank strategic targets. Guided bythese policies, the Bank works diligently to manage risk.
In specific terms, the Bank classifies all pertinent risks
according to their nature and attributes. Classifications
comprise (1) comprehensive risks; (2) credit risks;(3) market risks; (4) liquidity risks; and (5) operationalrisks (including administrative and system risks). These
individual risks are then managed according to their
particular characteristics and requirements.

Management Department and Business Promotion
Division and to establish and develop a structure that is
capable of harnessing the checks-and-balance function.
At the same time, deliberations are undertaken by
the ALM and Credit Portfolio Management committees
as and when required.

(4) Liquidity Risk Management

Management Structure by Type of Risk

Musashino Bank has established the Liquidity Risk
Management and Cash Management departments in order
to appropriately manage liquidity risk. While ensuring
the independence of the Liquidity Risk Management
Department from the Cash Management Department,
Market Management Department and Business Promotion
Division, every effort is made to establish and develop
a structure that is capable of harnessing the checks-andbalance function. At the same time, deliberations areundertaken by the ALM Committee as and when required.

(1) Comprehensive Risk Management(5) Operational Risk Management

In order to appropriately manage the wide variety ofrisks on a comprehensive basis, the Bank has established
the Comprehensive Risk Management Department
and is working to develop and improve its management
structure. The Comprehensive Risk Management
Department puts in place rules and criteria for determining the scope of comprehensive risk management,
management methods, evaluation of new products
and operations as well as the level of acceptable risk
after taking into consideration management strategies,
management capacity as well as business scale andcharacteristics. Based on these rules and criteria the
ALM (Asset Liability Management) and other appropriate committees monitor and control risks. The resultsof these activities are reported to the Board of Directors
and other relevant bodies on a regular basis.

(2) Credit Risk Management
Musashino Bank has historically taken steps to maintainthe independence of the Credit Screening Division andto build a stringent screening and management structure
in order to maintain and strengthen the soundness of its
assets. At the same time, the Bank has adopted a ranking
system and endeavored to upgrade and expand its credit
risk management capabilities as a part of efforts to put
in place objective determination and lending policies on
an individual transaction counterparty basis.

(3) Market Risk Management
Musashino Bank has established the Market Risk
Management Department in order to appropriately
manage market risks. Relevant steps are taken to ensure
the independence of the Department from the Market

Musashino Bank confronts broad and varied operationalrisks. In addition to classifying each risk, putting inplace rules on an individual risk basis and promoting
the management of each risk by the appropriate
management department, the Bank has established the
Operational Risk Management Department to undertake the management of operational risks on a comprehensive basis. The Bank also pushes forward measures
aimed at establishing and developing a management
structure that is capable of harnessing the checks-andbalance function with respect to each business division.
Moreover, issues are deliberated by the Operational Risk
Management Committee as and when required.

Crisis Management / BCP Structure
As a regional financial institution with its operationalbase in Saitama Prefecture, Musashino Bank has established a Business Continuity Plan (BCP) as part of its
contingency planning to ensure operations will continue
in the case of events that are likely to have a major impact
on business, such as large-scale earthquakes, system faults
and pandemic influenza. The Bank has compiled manuals
that establish concrete codes of behavior and countermeasures, and is working to ensure that all employees arethoroughly familiar with business continuity management measures to apply during emergencies.
During the fiscal 2012 (year ended March 2013),
the Bank carried out drills to train its employees in
how to behave during emergencies such as large-scale
earthquakes and damage caused by harmful rumors andmisinformation. Systematic training like this enables it
to improve its BCP by enhancing its effectiveness andrectifying problems that emerge during drills.
7Compliance

Compliance Frame Work
The social and public mission for banking work makes
high demands for operations based on fair and transparent corporate activities in compliance with laws, regulations, and social norms and in accordance the principals
of self-discipline and self-responsibility. Accordingly, theBank considers the thorough compliance of its directors
and employees in business operations to be a top priority, and to this end management is actively involved in
the fulfillment of the Bank’s social and public mission as
the Bank works to strengthen its compliance framework
through steps such as system improvements and theestablishment of teaching methods.
However, with the liberalization, globalization, andderegulation of finance accompanying financial system
reform, society expects Banks to be even more publicly
and socially responsible. With a full awareness of theseissues, in the future the Bank will further strengthen
its corporate activities based on a strong sense of
ethics and integrity and its management approach inaccordance with principles of self-responsibility as it
further strengthens the compliance framework so thatthe Bank’s daily business activities and actions ensurecompliance with laws, regulations, and social norms.

Basic compliance policy
Musashino Bank’s basic compliance policy entails that
directors and employees go about their daily duties inaccordance with the Bank’s two fundamental management guidelines, namely its corporate philosophy and
Code of Behavior.
Under its unwavering corporate philosophy, theBank strives to work in harmony with the local community it serves while maintaining a deep respect toward
customers. This corporate philosophy is complemented
by the Code of Behavior which emphasizes the Bank’ssense of public mission toward society. Aspiring toaddress a variety of needs including the provision ofhigh-quality financial services and strict compliancewith statutory and regulatory requirements, directors
and employees go about their daily duties guided bythese basic policies.

8

Compliance management structure
The Legal Affairs Office of the Risk Management
Division serves as the compliance management department for the Bank. This Office undertakes the uniform
management of all legal issues relating to compliancewhile providing instructions based on investigation andresearch. At the same time, the Office coordinates with
officers responsible for legal compliance appointed to allbranches while working to strengthen the compliancestructure. Regular meetings are held with the officers
responsible for legal compliance appointed to eachbranch. These meetings serve as a forum to deliberateon compliance issues and to share information.
In addition to the aforementioned, periodic
compliance checks are undertaken at each branch by
the officers responsible for legal compliance. In thismanner, the Bank has put in place a mechanism thatis capable of grasping the status of daily compliancemanagement. Furthermore, Musashino Bank has
established the Compliance Committee, which serves as
the organization that checks the status of compliance on
a Bank-wide basis while considering any and all otherimportant matters through regularly held meetings.

Compliance manualTo ensure the compliance of its directors and employees, the Bank has distributed a compliance manual thathas been approved by the board of directors to all of its
directors and employees and is working to ensure thatall staff members are fully aware of its contents.
The compliance manual contains sections on the
Bank’s corporate philosophy, code of behavior, andbasic policies. It contains a section on compliancestandards that stipulates the matters directors andemployees should comply with, a section on thecompliance framework that provides an explanation onvarious structures at the Bank including education andverification structures, a section on laws and regulations
that require directors and employees compliance whichcontains an explanation on the laws and regulations
that bank employees are required to be knowledgeableof, and a pick-up compliance section that provides amore detailed explanation on matters that should beprioritized in the conduct of daily work. The compliance manual serves as a standard for making decisions
and taking actions in everyday business activities.

Appealing Business Foundation (Saitama Prefecture)

1. Favorable Climate and Topography

4. Collection of diverse manufacturing industries

Saitama Prefecture covers 3,798 square kilometers
and accounts for around 1% of Japan’s land area,
ranking 39th out of 47 prefectures in size. The areaof prefectural land covered by mountains is less than
the national average, while the area of lowlands andtableland is greater. Rivers account for 3.90% of theprefecture’s area, the highest figure in the country.
Although summers are hot and humid, and dry
winds often blow in winter, it is very comfortable tolive in because it has more clear days annually thananywhere else in Japan (ranking number one in six outof the past ten years), and has few natural disasters.

1) Diverse Manufacturing Industries

2. The Huge Tokyo Area Market andContinuing Population Growth
Saitama Prefecture, which is Musashino Bank’s mainarea of operations, borders Tokyo and six prefectures.
The Prefecture is located in the heart of the hugemarket comprising the Tokyo metropolitan area,
in which lives one-third of the population of Japan(approximately 40 million people). While urbanization and industrialization are progressing in Saitama
Prefecture due to the great convenience gained frombeing next to Tokyo, the population has grownconsistently thanks to an abundance of nature and acomfortable living environment.
(An estimated population of 7.21 million as of April
2013)

Saitama has a diversity of local industries with theautomotive-related industry at its core.
(e.g., molds and castings in Kawaguchi City, opticalequipment in Saitama City, etc.)

2) Aggressive Development by Attracting
Companies to Saitama Prefecture
Saitama is aggressively encouraging companies toestablish operations within the prefecture as part of its
efforts to promote industry there. The prefecture firstlaunched the “Chancemaker Saitama Strategy” in thefiscal 2007 (year ended March 2008), and successfully
persuaded 201 companies to set up operations there in
the three fiscal years from the fiscal 2010 (year ended
March 2011) through the fiscal 2012 (year ended
March 2013).

5. Concentration of Universities and ResearchInstitutes
More than 250 research institutes and 61 college
campuses are located in Saitama Prefecture. The Bank
has formed alliances with seven universities as part ofits commitment to meeting customer needs in areas
such as research and development and management
issue resolution through cooperation with industry andacademia.

3. Advanced Traffic Network
1) Advanced Road Traffic Network
Saitama is also well-positioned as a transportation hub,with the Kan’etsu, Tohoku, and Joban expressways
traversing north to south and the Tokyo Gaikan
Expressway and the Metropolitan Inter-City (Ken-O)
Expressway traversing east to west.

2) A High-Quality Railway Network

Economic and financial position of
Saitama Prefecture■ Number of companies (2009)

262,000 companies (5th among the 47 prefectures)■ Total prefecture production (nominal) (2010)¥20,108.3 billion (5th among the 47 prefectures)■ Value of product shipments (2010)¥12,853.1 billion (6th among the 47 prefectures)With our head office based in Omiya, the Bank is
directly connected to major cities via the Tohoku, Akita,
Yamagata, Joetsu, and Nagano Shinkansen (bullet train)
network.

9

Corporate Social Responsibility (Main Initiatives)

Contributing to the Local Economy
Deposits from region

Loans to region

In response to the lifestyles of our regions’ customers,
the Bank is enhancing its products and services sothat customers can use them with peace of mind. As
a result of these efforts, total balance of deposits as ofMarch 31, 2013 increased ¥1,108 billion, or 3.1%,
to ¥3,660.3 billion. Deposits from region steadily
increased, up ¥117.6 billion to ¥3,615.2 billion.
Accordingly, the Bank’s share of deposits within theprefecture as of March 31, 2013, improved 0.05 of apercentage point to 13.76%.

In addition, total balance of loans climbed ¥95.3
billion, or 3.3%, year on year to ¥2,962.6 billion due
mainly to maintaining increases in both business andnon-business loans. Loans to region rose ¥40.9 billion
to ¥2,614.7 billion for a loan to region ratio of 88.26%.
The Bank’s share of loans in the prefecture improved to18.38%.

Deposits from region

Loans to region(¥ billion)
4,000

99.47

99.46
3,660.3
3,615.2

3,549.5
3,497.6
3,000

(%)
100

(¥ billion)
4,000

95

3,000

2,000

90

2,000

1,000

85

1,000

80

0

0

FY2011FY2012■ Total balance of deposits (scale on left side)■ Deposits from region (scale on left side)● Deposit ratio from region (scale on right side)

2,962.6

2,573.8
89.77

2,614.7

95

90

88.26

85

FY2011FY201280

Loan ratio of SMEs

Other 4.70%

102,867.3■ Balance of loans (scale on left side)■ Loans to regional (scale on left side)● Loans to region rate (scale on right side)

Balance ratio by depositors
Corporate deposits
20.75%

(%)
100

Other
21.28%
Individual deposits
74.55%

Loan ratio of SMEs
78.72%

Establish Systems for Providing SME
Management Assistance
Towards a sounder financial position
The pursuit of a sounder financial position is ranked
as one of the Bank’s key priorities. Therefore, we arestrengthening our capital adequacy and reducing nonperforming loans (NPL).
Consolidated and non-consolidated capital ratios
were 10.76% and 10.45%, respectively, significantly
exceeding the domestic standard of 4%. (See page 4.)
The Bank also continued to maintain a very healthy
2.50% non-performing loan ratio based on standards
established by the Financial Reconstruction Act.

The Bank provides solutions for general management
issues that customers face during growth stages,
undertaking finely tuned responses by leveraging its
consulting functions and collaborating with outside
institutions as needed.

Management assistance system

Customers
Requests/
questions

Solution/
response
Non-performing loans(¥ billion)
50.0

(%)
5.0

Musashino Bank

40.0

4.0

Inquiry contact

13.0
30.0

20.0

42.7
2.5

11.3
44.7
2.5

3.0

2.0

••

BranchesMortgage Loan Center
Loan Repayment Support Center

Customer Service Promotion Office
10.0

0

16.4

18.7

FY2011FY2012

1.0

ReportDiscussion0■ Bankrupt and quasi-bankrupt assets (unrecoverable claims) (scale on left side)■ Claims on potentially bankrupt borrowers (scale on left side)■ Substandard loans (scale on left side)● Ratio of loans subject to mandatory disclosure of claims under the
Financial Reconstruction Law (scale on right side)

Head office
Promoting Committee
for Corporate Rehabilitation
ReportDiscussion

Board of directors
Collaboration

Outside consulting companies
and specialists
Public agencies

Economic andindustrialorganizations

Research
institutes

Educational
institutes

Government
financial
institutions

Overseas financial
institutions

11

Business Creation/New Business Assistance
The Bank provides a wide array of solutions regarding
the various business stages of client companies while
maintaining systems that meet the needs of clients.
• Diversify Financing Methods
In collaboration with Saitama Prefecture, various
municipalities and credit guarantee companies, theBank diversifies its financing methods by enhancing
government-directed credit service lineups to meetthe needs of client companies and by handling private
placement bonds.
• Financing Methods That Ascertain Corporate Value
The Bank of Japan established a new financing system
in August 2011 in order to strengthen financing
methods that suit different types of businesses. In
response, the Bank has established and is aggressively
promoting the ABL Fund, which is worth a total of¥5 billion.
• S trengthen Business Matching and Other Measures
The Bank maintains systems to meet a variety ofneeds in areas including market channel expansion
and technology partnerships by aggressively promoting large-scale business conferences and businessmatching activities.

Business Arena 2013

Assisting Companies Enter Overseas Markets
The Bank established the International Investment
Supporting Office within its head office in an effort
to bolster its support for the overseas expansion of
its client companies. This support involves offering
Chinese yuan-denominated payment services, forming
alliances with local banks in Asia, and offering businessmatching opportunities and overseas information tocompanies expanding abroad. In addition to Thailand
and China, the Bank assists client companies expanding
into Vietnam, the Philippines, Indonesia and other
ASEAN nations.

12

Business Assistance Involving Collaboration
with Outside Organizations
We actively support SMEs’ efforts to develop new
products and create new markets. In addition to
government agencies, we have formed partnerships withseven universities located in Saitama Prefecture to help
solve the management issues of client companies, particularly R&D and management innovation. Beyond
assisting individual customers, our measures based on
governmental, industrial and academic partnerships
contribute to regional development, including therevitalization of tourism.

Support for Corporate Rehabilitation
To provide specialized support to client companies
that seek corporate rehabilitation, we established
the Corporate Management Support Office in theCredit Division. In conjunction with individual bankbranches, this new division offers help with advice onmanagement analytics and improvement policies andsupport for compiling business improvement plans.
Further, we assist in corporate rehabilitation andmanagement improvement based on the circumstancesof each individual client company in collaboration
with outside consulting companies and specialists. In
addition, the Bank meets various needs that include
business succession and changes in business activities
as well as providing solutions that include M&A whennecessary. Based on its across-the-board assistancesystems, including Group companies, the Bank provides
optimal support in such areas as management improvement, corporate rehabilitation and changes in businessactivities.

Management Improvement Plan Formulation
Assistance
Number recipients 290

Number of customers whose operations
improved
Fiscal 2010 26
Fiscal 2011 23
Fiscal 2012 22
Total      71

Corporate Social Responsibility (Main Initiatives)

Initiatives for New Growth Fields
The Bank addresses financing needs related to
growth fields in a timely manner. The governmentdirected credit service, Musashino Growth Platform
Strengthening Fund, commenced in September 2010
and as of March 31, 2013 has reached 670 loans worth¥37.9 billion centered on the environmental, R&D andmedical fields.
• Activities in the Medical and Welfare Fields
In light of Saitama Prefecture’s rapidly aging population, the Bank meets a variety of needs that go beyond
financing medical and nursing facilities to include
providing matching services for medical institutions
and nursing facilities as well as helping to solve labor
shortages in these fields.
• Activities in the Agricultural Field
The Bugin Agricultural Management Course (Buginis a short way of reading the characters for MusashinoBank) has been held five times to date, with over
700 farmers participating. We also actively engage inbusiness matching initiatives in order to expand sales
channels. In November 2012, we held the Delicious
Food Fair, which attracted over 16,000 visitors.

• Renewable Energy and Environmental Measures
In 2012, the Bank began handling the Musashino
Solar Power Generation Business Assistance Loan tosupport businesses entering the solar power field byutilizing renewable energy feed-in tariffs. In addition,
we held solar power generation seminars in concert
with Bugin Economic Research Institute, Ltd. (aGroup company think tank) in order to help improveknowledge and knowhow regarding power generation
businesses.

Contributing to the Local Community
For Customers’ Worry-free Banking
The Musashino Bank is taking various initiatives tofurther raise customer satisfaction, build stronger trust,and better relations with local customers.
• Branches are being made barrier-free with automatedexternal defibrillators AEDs installed in all branches• For customers with impaired vision, we offer ATMs
with phone handsets

ATMs with audio assistance using phone handsets• Braille printing service provided for bank passbooks
and CDs• To improve communication with customers withhearing impairment, we provide sign language courses
to employees• Musashino Bank has prepared and uses communication boards developed by the Japanese Bankers
Association that use pictographs based on theprinciples of universal design to communicate withhearing impaired customers• The Bank has put in place a communication board in
the English, Chinese and Korean languages to assist
foreign nationals• The Bank offers financing to companies certified by
Saitama Prefecture’s certification system for leadingbusinesses that hire handicapped people

13

Contributing to Local Social Welfare
For the safety and security of local residents, the Bank iscooperating with the government of Saitama Prefecture
and local police in crime and accident prevention.
Other initiatives include the training of “Dementia
Supporters”* in cooperation with the Saitama Prefecture
government and local community-building by assisting
people with dementia and their families.
In May 2012, we established the Musashino
Volunteer Club as part of a project to commemorate
the 60th anniversary of the Bank’s founding. Volunteer
activities havebeen carried out
in the areas ofsocial welfare,environmental
protection,and financial
education.
Musashino Volunteer Club activities:
Regeneration of agricultural land affected byGreat East Japan Earthquake disaster

Aiming for Sound Growth for the Next Generation
To support the financial education of the next generation who are the bearers of the future, the Bank actively
conducts study tours of the Bank and onsite learningfor children. Moreover, the Bank has taken steps tofoster awareness about banking work by endowing
a university chair, offering internships aimed atuniversity students and high school students in Saitama
Prefecture, and through other initiatives.
The Bank actively supports the development of
global human resources through a number of initiatives
including by offering loans to students and non-student
adults from Saitama Prefecture who are going overseas
to study and by donating to the “Saitama Prefecture
Global Human Resources Development Fund.”Promoting Local Arts and Sports
To promotelocal culture
and the arts, theMusashino Bank
held a concert at
the Sai-no-Kuni
Saitama Arts
Theater tocelebrate its 60th
anniversary in March 2012. Many disabled people andstudents from elementary school and above attended
the concert. Since 2009, the Bank held violin concerts
14

at elementary school music classes and other locations.
To promote sports, Musashino Bank executed a top
partner agreement with J-League (a Japanese soccer
league) club OMIYA ARDIJA and sponsored theMusashino Bank Presents Match and also organized asoccer class for
local elementary
school students
in cooperation
with the coachesof OMIYA
ARDIJA.

Leveraging Diverse Human Resources
The Musashino Bank seeks diverse human resourcesby actively recruiting new, mid-career, and female
employees for a wide range of positions based on theirexperience and competency. The Bank has introduced
the Senior Staff System whereby employees who havereached the mandatory retirement age are rehired aswell as the Bugin Return System that allows employees
who have taken temporary leave due to marriage,
pregnancy, child-rearing, and other reasons to be
reemployed. The Bank proactively pursues a wide rangeof policies that enable all employees to balance theirwork and family life (work-life balance) with the goalof building a workplace where they can actively work
for many years. Having proactively sought to createa bank where women can play an important role, inJune 2013, we recruited a female officer as an outside
director.
• The Bank obtained the “NextGeneration Certification Mark”(also known as “Kurumin”) thatrecognizes companies for taking
positive steps to support childrearing and other employee needs.
• The Bank achieved “Platinum”
certification from Saitama Prefecture,
the highest level of recognition given
to “companies that practice diverse
ways of working.”• The Musashino Bank was awarded the 8th Saitama
Brilliance Ogino Ginko Prize by Saitama Prefecture
for its highly acclaimed efforts to institute a system ofwork-life balance for employees and to hire womenand expand their field of occupation.

Corporate Social Responsibility (Main Initiatives)

Concern for the Environment
In order to pass on the irreplaceable lush green natural
beauty of Saitama Prefecture to the next generation,
the Bank has offered environment-related products andbeen actively involved in programs to protect and create
environments. In 2011, the Bank signed the Principles
for Financial Action towards a Sustainable Society(Principles for Financial Action for the 21st Century)
and will continue its efforts to promote a sustainable
society as a local financial institution.

JHEP Certification Obtained — A First for a
Banking Institution!
The construction project for the New Operations
Center opened in October 2012 was acclaimed for its
biodiversity-friendly tree planting and greening activities. As a result, the Bank obtained the banking industry’s first Japan Habitat Evaluation and Certification
Program (JHEP) certification (certification rank: A),a certification program that evaluates businesses thathave enhanced their biodiversity, from the Ecosystem
Conservation Society-Japan.

Cooperating in Saitama Prefecture Greening
Projects
Every year, Musashino Bank donates to the Saitama
Green Trust Fund, which was established to appropriate
funds to bankroll expense required to protect theprefecture’s rich natural and precious historic environment. Donations thus far have totaled ¥104.05 million.
The Bank is also involved in the greening of the region
through tree-planting, and forest preservation.
JHEP certification ceremony

Environmental Education for Employees (theonly environmental program of a regional bank)Supporting the Environmental Protection
Activities of Prefectural Residents

With the support of the Ecosystem Conservation
Society – Saitama, Musashino Bank opened a College
in fiscal 2008.
The College provides an educational forum thatstrives to enhance natural environment conservation andecosystem protection knowledge.

The Musashino Green Fund, a charitable trust, hasdonated a total of ¥3.41 million to 16 organizations
in fiscal 2013, and over its entire history has donatedapproximately ¥55 million to 167 organizations. In
March 2013, the fund commemorated its 20th anniversary and published the commemorative magazine
Hikobae* (4th Series), which outlines the activities ofdonation recipients.
*Hikobae means the young buds that sprout from the stumps androots of trees.

15

Consolidated Balance Sheets
The Musashino Bank, Ltd. and Consolidated Subsidiaries As of March 31, 2013 and 2012

Millions of Yen
2013
2012

AssetsCash and due from banks.......................................................................
Call loans...............................................................................................
Commercial paper and other debt purchased.........................................
Trading account securities......................................................................
Money held in trust................................................................................
Investment securities..............................................................................
Loans and bills discounted.....................................................................
Foreign exchanges..................................................................................
Lease receivables and lease investment assets...........................................
Other assets............................................................................................
Tangible fixed assets...............................................................................
Intangible fixed assets.............................................................................
Deferred income taxes assets...................................................................
Customers’ liabilities for acceptances and guarantees..............................
Reserve for possible loan losses...............................................................
Total assets..............................................................................

¥ 178,775
—
1,545
282
1,495
722,195
2,950,897
2,545
15,231
23,44236,329
3,300
3,588
9,294
(19,582)¥3,929,343¥  105,269
30,000
2,327
203
1,500
734,854
2,856,298
2,292
14,94022,12635,680
2,967
8,812
9,674
(20,592)¥3,806,355$ 1,900,858—
16,4303,008
15,901
7,678,848
31,375,838
27,068161,952
249,255
386,279
35,091
38,154
98,827(208,216)$41,779,299

Liabilities
Deposits.................................................................................................
Call money and bills sold.......................................................................
Borrowed money....................................................................................
Foreign exchanges..................................................................................
Bonds.....................................................................................................
Other liabilities......................................................................................
Reserve for employees’ bonuses..............................................................
Reserve for directors’ bonuses.................................................................
Reserve for employees’ retirement benefits.............................................
Reserve for loss on interest refunded.......................................................
Reserve for reimbursement of dormant deposits.....................................
Reserve for point loyalty programs.........................................................
Reserve for contingent losses..................................................................
Deferred income taxes liability on land revaluation................................
Acceptances and guarantees....................................................................
Total liabilities.........................................................................

¥3,649,510
940
25,796114
10,00026,148
1,228
13
5,545
108
278
60
709
4,937
9,294
¥3,734,688¥3,539,534
2,652
28,919134
10,00024,545
1,226
15
5,549
81
236
70
791
4,937
9,674
¥3,628,370$38,803,943
10,000274,282
1,217
106,326
278,028
13,061
141
58,966
1,155
2,961
644
7,544
52,502
98,827$39,709,603¥¥   45,743
38,35173,996(905)
157,186
9,683(1,408)
7,653
15,92719
4,850
177,984¥3,806,355$   486,378
407,774
869,064(8,686)
1,754,531
193,536(15,137)
81,371
259,771396
54,9972,069,695$41,779,299

Net assets
Common stock......................................................................................
Capital surplus.......................................................................................
Retained earnings...................................................................................
Treasury stock........................................................................................
Total shareholders’ equity.........................................................
Unrealized gain on available-for-sale securities........................................
Deferred loss under hedge accounting....................................................
Land revaluation excess..........................................................................
Total accumulated other comprehensive income......................
Share warrant.........................................................................................
Minority interests...................................................................................
Total net assets........................................................................
Total liabilities and net assets..................................................

45,74338,351
81,735(816)
165,013
18,202(1,423)
7,653
24,431
37
5,172
194,654¥3,929,343* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.

16

Thousands of
U.S. Dollars*
2013Consolidated Statements of Income and Comprehensive Income
The Musashino Bank, Ltd. and Consolidated Subsidiaries For the Years Ended March 31, 2013 and 2012

Consolidated Statements of Income
IncomeInterest income:Interest on loans and discounts..........................................................
Interest and dividends on securities....................................................
Other interest income........................................................................
Fees and commissions............................................................................
Other operating income.........................................................................
Other income.........................................................................................
Total income............................................................................
Expenses
Interest expenses:
Interest on deposits............................................................................
Interest on borrowings and rediscounts..............................................
Other interest expenses......................................................................
Fees and commissions............................................................................
Other operating expenses.......................................................................
General and administrative expenses......................................................
Other expenses.......................................................................................
Total expenses..........................................................................
Income before income taxes...................................................................
Income taxes
Current..................................................................................................
Deferred.................................................................................................
Minority interests..................................................................................
Net income for year...............................................................................
Net income per share (yen and dollars)..................................................

Millions of Yen
2013
2012

Thousands of
U.S. Dollars*
2013¥45,454¥48,516$483,298

7,175

7,724

76,291

228

153

2,432

9,940

9,676

105,693

4,159

1,780

44,222

10,722

11,117

114,007

77,68078,968825,944

2,337

2,692

24,858

321

347

3,421

1,167

1,685

12,408

4,411

4,276

46,905

1,253

1,412

13,32538,06537,392404,739

11,51011,755

122,385

59,06759,562

628,044

18,612

19,406

197,900

6,463

4,510

68,721

719

4,701

7,645

7,182

9,212

76,366

287

571

3,062

¥11,142¥ 9,621$118,471¥330.11¥284.01$   3.51* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.

Consolidated Statements of Comprehensive Income
Income before minority interests............................................................
Other comprehensive income:Net unrealized losses on securities......................................................
Unrealized gains on hedging derivatives.............................................
Reversal of revaluation reserve for land..............................................
Total other comprehensive income....................................................
Comprehensive income..........................................................................
Comprehensive income attributable to:Shareholders of the Company............................................................
Minority interests..............................................................................

Millions of Yen
2013
2012

Thousands of
U.S. Dollars*
2013¥11,430¥10,193$121,533

8,556

8,323

90,979

(14)

69

(159)

—

701

—

8,541

9,094

90,820¥19,971¥19,287$212,354¥19,646¥18,693$208,891

325

594

3,463

* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 201317

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

Thousands of
U.S. Dollars*
2013

Millions of Yen
2013
2012

Shareholders’ equity
Common stock
Balance at end of previous year...............................................................
Changes during the accounting period...................................................
Balance at end of year.............................................................................
Capital surplus
Balance at end of previous year...............................................................
Changes during the accounting period:
Disposition of treasury stock..............................................................
Cancellation of shares........................................................................
Transfer to capital surplus from retained earnings..............................
Total changes during the accounting period.....................................
Balance at end of year.............................................................................
Retained earnings
Balance at end of previous year...............................................................
Changes during the accounting period:
Cash dividends..................................................................................
Net income........................................................................................
Transfer to capital surplus from retained earnings..............................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Treasury stock
Balance at end of previous year...............................................................
Changes during the accounting period:
Purchase of treasury stock..................................................................
Disposition of treasury stock..............................................................
Cancellation of shares........................................................................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Total shareholders’ equity
Balance at end of previous year...............................................................
Changes during the accounting period:
Cash dividends..................................................................................
Net income........................................................................................
Purchase of treasury stock..................................................................
Disposition of treasury stock..............................................................
Cancellation of shares........................................................................
Transfer to capital surplus from retained earnings..............................
Total changes during the accounting period......................................
Balance at end of year.............................................................................

¥ 45,743¥ 45,743———¥ 45,743¥ 45,743$ 486,378¥ 38,351¥ 38,351$ 407,774

(1)

—

(19)

(1,030)—(10,951)

1,031—

10,971———¥ 38,351¥ 38,351$ 407,774¥ 73,996¥ 66,407$ 786,779(2,371)(2,032)(25,214)

11,142

9,621

118,471(1,031)—(10,971)

7,738

7,588

82,285¥ 81,735¥ 73,996$ 869,064¥   (905)¥   (900)$   (9,623)

(950)

(4)

(10,111)

9

—

97

1,030

—

10,951

88

(4)

937

¥   (816)¥   (905)$   (8,686)¥157,186¥149,602$1,671,308(2,371)(2,032)(25,214)

11,142

9,621

118,471

(950)

(4)

(10,111)

7

—

77

—

—

—

—

—

—

7,827

7,584

83,222¥165,013¥157,186$1,754,531* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.

18$ 486,378

Millions of Yen
2013
2012

Accumulated other comprehensive income
Unrealized gain on available-for-sale securities
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Deferred loss under hedge accounting
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Land revaluation excess
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Accumulated other comprehensive income
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Share warrant
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Minority interests
Balance at end of previous year...............................................................
Changes during the accounting period:
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................
Total net assets
Balance at end of previous year...............................................................
Changes during the accounting period:
Cash dividends..................................................................................
Net income........................................................................................
Purchase of treasury stock..................................................................
Disposition of treasury stock..............................................................
Net change in items other than shareholders’ equity..........................
Total changes during the accounting period......................................
Balance at end of year.............................................................................

Thousands of
U.S. Dollars*
2013¥  9,683¥  1,381$ 102,957

8,518
8,518
¥ 18,202

8,301
8,301
¥  9,683

90,57890,578$ 193,536¥ (1,408)¥  (1,477)$  (14,978)

(14)
(14)
¥ (1,423)6969¥  (1,408)

(159)
(159)
$  (15,137)¥  7,653¥6,951——¥  7,653

701
701¥7,653¥ 15,927¥  6,855$ 169,351

8,503
8,503
¥ 24,431

9,071
9,071
¥ 15,927

90,41990,419$ 259,771¥    19¥     —

$     21017
17¥    3719
19¥     19185
185$     396¥  4,850¥  4,260$

51,573322
322¥  5,172

590
590¥  4,850

$

3,423
3,423
54,997¥177,984¥160,718$1,892,443(2,371)
11,142
(950)
7
8,843
16,670¥194,654(2,032)
9,621
(4)
—
9,682
17,266¥177,984(25,214)
118,471(10,111)77
94,029177,252$2,069,695$

81,371$——
81,371* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.
19

Consolidated Statements of Cash Flows
The Musashino Bank, Ltd. and Consolidated Subsidiaries For the Years Ended March 31, 2013 and 2012

Millions of Yen
2013
2012

Cash flows from operating activities
Income before income taxes...................................................................
Depreciation..........................................................................................
Impairment losses...................................................................................
Amortization of goodwill.......................................................................
Decrease in reserve for possible loan losses..............................................
Increase (decrease) in reserve for employees’ bonuses..............................
Decrease in reserve for directors’ bonuses...............................................
Decrease in reserve for employees’ retirement benefits............................
Decrease in reserve for directors’ retirement benefits..............................
Increase (decrease) in reserve for loss on interest refunded......................
Increase (decrease) in reserve for reimbursement of dormant deposits.....
Decrease (increase) in reserve for point loyalty programs........................
Decrease in reserve for contingent losses.................................................
Interest income......................................................................................
Interest expenses.....................................................................................
Loss (gain) on investment securities........................................................
Loss (gain) on money held in trust.........................................................
Foreign exchanges gain...........................................................................
Loss on disposition of fixed assets...........................................................
Net (increase) decrease in trading account securities...............................
Net increase in loans and bills discounted..............................................
Net increase in deposits..........................................................................
Net (decrease) increase in negotiable certificate of deposits.....................
Net decrease in borrowed money (excluding subordinated loans)...........
Net (increase) decrease in due from banks (excluding due from the Bank of Japan)....
Net decrease in call loans and others......................................................
Net (decrease) increase in call money.....................................................
Net (increase) decrease in foreign exchange, assets..................................
Net (decrease) increase in foreign exchange, liabilities............................
Interest received.....................................................................................
Interest paid...........................................................................................
Other, net..............................................................................................
Subtotal...................................................................................
Income taxes paid...................................................................................
Net cash provided by operating activities................................
Cash flows from investing activities
Purchases of securities............................................................................
Proceeds from sales of securities.............................................................
Proceeds from maturities of securities.....................................................
Increase in money held in trust..............................................................
Decrease in money held in trust.............................................................
Purchases of tangible fixed assets............................................................
Proceeds from tangible fixed assets.........................................................
Purchases of intangible fixed assets.........................................................
Payments for execution of asset retirement obligations...........................
Net cash provided by (used in) investing activities..................
Cash flows from financing activities
Borrowing of subordinated loans............................................................
Repayment of subordinated loans...........................................................
Issuance of subordinated bonds..............................................................
Redemption of subordinated bonds........................................................
Cash dividends paid...............................................................................
Cash dividends paid to minority shareholders........................................
Purchase of treasury stock.......................................................................
Proceeds from sales of treasury stock......................................................
Net cash used in financing activities........................................
Net increase (decrease) in cash and cash equivalents.............................
Cash and cash equivalents at beginning of year.....................................
Cash and cash equivalents at end of year...............................................
20

Thousands of
U.S. Dollars*
2013¥ 18,612
2,608
239
18
(1,009)
1
(1)
(3)
—
27
42
(10)
(81)
(52,858)
3,826
(954)
0
(420)
57
(79)
(94,598)
114,824(4,848)(623)(40,080)
30,781(1,712)(252)(20)
54,682(4,464)(2,653)21,048(5,320)15,728¥ 19,406
2,376
106
18
(3,733)
(49)
(0)
(138)
(281)
(18)
(93)
12
(117)
(56,394)
4,725
4,614
(6)
(339)
31
298
(71,003)
87,94913,838(2,806)615
18,9792,652
114
53
57,478(5,558)(4,335)68,391(1,566)
66,825$ 197,900
27,7382,550
191(10,735)
15
(19)
(41)
—
287
450
(108)
(865)
(562,021)
40,688(10,148)
9(4,474)612(844)(1,005,836)
1,220,889(51,547)(6,626)(426,165)
327,291(18,207)(2,689)(217)
581,416(47,467)(28,218)
223,805(56,570)
167,235(316,265)
263,541
80,273—0(2,798)5(1,237)(3)
23,515(258,923)
119,91454,520(10)—(2,495)0(941)(9)(87,946)(3,362,737)
2,802,141
853,524—
0(29,760)
59(13,159)(33)
250,033

2,500(5,000)——(2,371)(3)(950)
7(5,818)33,425
104,762¥138,187

14,000(9,000)10,000(18,000)(2,032)(3)(4)—(5,041)(26,161)
130,923¥104,762

26,581(53,163)——(25,214)(39)(10,111)
77(61,869)
355,399
1,113,896$1,469,295* U.S. dollar figures have been translated at the rate ¥94.05 to U.S.$1, the prevailing market rate as of March 31, 2013.

Directory

Organization Chart (as of July 1, 2013)
General Meeting of Shareholders

General Planning and Management Division
Strategic Planning OfficeFinancial Affairs Office
Tokyo Office

Corporate Auditors
Board ofCorporate Auditors

Risk Management Division
Legal Affairs Office
Personnel Division
Secretariat

Board of Directors

Business Promotion Division
Mortgage Loan Center Management Office

Executive Committee

Business Planning Division
Customer Service Promotion Office

President*
Vice President*
Senior Managing Director*
Managing Directors
Director

Local Community Support Division
Community Value Creation OfficePublic Funds Management Office
Credit DivisionCorporate Management Support Office
Industrial Research Office* and Representative Director

Credit Planning Division
Capital Markets Division
General Affairs Division
Administration Division
Systems Management Office
Administration Control Division
Auditing Division

Board of Directors, Corporate Auditors and Executive Officers (as of July 1, 2013)
President
Kikuo KatoManaging Directors
Motonobu Nakamura
Kenichiro Inaba
Koichi Akagi
Kazuya Koyama

Vice President
Masami Kurihara

Senior Managing Director
Director
Makoto Ishikawa
Emi Ishida (outside)

Corporate Auditors
Nobuhiro Fukazawa (standing)Hidemi Shimizu (standing)Shozo Nishijima (outside)
Atsumu Kuroishi (outside)
Tomio Kezuka (outside)

Managing Executive Officer
Minoru Watanabe
Executive Officers
Takeshi Sekiya
Hiromasa Miyazaki
Yuichi Tanaka

Yoshiro Kenmochi
Kazumasa Nagahori
Hiroshi Akimoto
Masahiro Saito
Takafumi Hoshina
Toshiyuki Shirai

Investor Information (as of March 31, 2013)
Common Stock
Authorized:
Issued:Number of shareholders:Number of Shares Held by Type of Shareholders
80,000 thousand shares
33,805 thousand shares
13,382Financial Institutions
41.90%

Major Shareholders
Name

Number ofsharesJapan Trustee Services Bank, Ltd. (trust account)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Japan Trustee Services Bank, Ltd. (trust account 4)
Musashino Bank Industries Employees’ Stockholding Association
Meiji Yasuda Life Insurance Company
The Master Trust Bank of Japan, Ltd. (trust account)
Sumitomo Life Insurance Company
The Chase Manhattan Bank, N.A. London Secs Lending
Omnibus Account (Standing proxy: Mizuho Corporate
Bank, Ltd. Custody & Proxy Dept.)
Nippon Life Insurance Company
MAEDA GLASS CO., LTD.

2,743,300
1,218,987
1,204,600
849,238
735,858
719,200
702,900

Shares held asa percentage of
total outstanding
shares (%)
8.11
3.60
3.56
2.51
2.17
2.12
2.07

585,7101.73

540,222509,100

1.59
1.50*The above figures have been rounded to the second decimal place.

Other corporations
26.25%

Foreign companies
and others
13.78%
Financial instruments
business operators
Individuals and others
1.18%
16.89%

Notes: 1. Some treasury stock is contained in “Individuals andothers.”2. “Other corporations” includes a unit of 14 shares under
the name of Japan Securities Depository Center, Inc.

21

10-8, Sakuragi-cho 1-chome, Omiya-ku,
Saitama 330-0854
Phone: +81-48-641-6111