C onsolidated Balance SheetThe Juroku Bank, Ltd. and Consolidated Subsidiaries

March 31, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS:

2021

2020

2021

Cash and due from banks (Notes 5 and 28)
Trading securities (Notes 6 and 28)
Money held in trust (Notes 7 and 28)
Securities (Notes 6, 12, 13 and 28)
Loans and bills discounted (Notes 8, 28 and 29)
Foreign exchanges (Notes 8 and 9)
Lease receivables and investments in leases (Note 27)
Other assets (Notes 10, 13, 28 and 30)
Premises and equipment (Note 11)
Goodwill
Intangible assets
Asset for retirement benefits for employees (Note 17)
Deferred tax assets (Note 26)
Customers’ liabilities for acceptances and guarantees (Note 12)
Allowance for loan losses (Notes 3 and 28)
Total Assets¥947,016
291
12,312
1,558,600
4,481,150
7,986
57,217104,968
59,415
4,098
3,485
12,428690
14,572(25,853)¥7,238,375¥632,783
408
8,512
1,251,602
4,345,574
7,979
59,21999,24962,333
4,550
4,075
2,332
853
17,028(24,043)¥6,472,454$8,554,024
2,628
111,209
14,078,222
40,476,470
72,135516,819
948,135
536,672
37,016
31,479112,257
6,233
131,623(233,520)$65,381,402¥6,072,473
28,100126,701
29,672
467,151
1,089
64,0766,239
6
518,735
6,546
14,572
6,835,365¥5,610,659
38,050140,754
15,153
208,421982
53,124
6,353
8
2
8,433
7,083
17,0286,106,050$54,850,267
253,816
1,144,440
268,016
4,219,592
9,837
578,774
56,35454
45
169,226
59,127
131,623
61,741,171

36,83936,839332,752

53,396
169
224,571

51,435
161
211,679

482,305
1,527
2,028,462(1,537)(1,554)(13,883)

59,291259
12,766
3,993
389,747
13,263403,010¥7,238,375

39,918(174)
13,925(1,997)350,232
16,172366,404¥6,472,454

535,552
2,340
115,31036,0673,520,432
119,799
3,640,231$65,381,402

LIABILITIES AND EQUITY:
Liabilities:
Deposits (Notes 13, 14 and 28)
Negotiable certificates of deposit (Note 28)
Payables under repurchase agreements (Notes 13 and 28)
Payables under securities lending transactions (Note 13)
Borrowed money (Notes 13, 15 and 28)
Foreign exchanges (Note 9)
Other liabilities (Notes 15, 16, 18, 27, 28 and 30)
Liability for retirement benefits for employees (Note 17)
Liability for retirement benefits for directors and Audit & Supervisory Board members
Provision required under the Special Act
Deferred tax liabilities (Note 26)
Deferred tax liabilities for land revaluation surplus
Acceptances and guarantees (Note 12)
Total Liabilities
Commitments and Contingent Liabilities (Note 29)
Equity (Notes 19, 20 and 33):
Common stock:authorized, 46,000,000 shares in 2021 and 2020;
issued, 37,924,134 shares in 2021 and 37,924,134 in 2020
Capital surplus (Note 4)
Stock acquisition rights
Retained earnings
Treasury stock—at cost,
551,242 shares in 2021 and 555,674 shares in 2020
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities (Note 6)
Deferred gain (loss) on derivatives under hedge accounting
Land revaluation surplus
Defined retirement benefit plans (Note 17)
Total
Noncontrolling interests
Total Equity
Total Liabilities and Equity
See notes to consolidated financial statements.

21

C onsolidated Statement of Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions
Other operating income (Note 21)
Other income (Note 22)
Total income
Expenses:
Interest on:
Deposits
Borrowings and re-discounts
Payables under repurchase agreements
Other
Fees and commissions
Other operating expenses (Note 6)
General and administrative expenses (Note 23)
Allowance for loan losses
Impairment loss on long-lived assets (Note 24)
Other expenses (Note 25)
Total expenses
Income before Income Taxes
Income Taxes (Note 26):
Current
Deferred
Total Income Taxes
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Owners of the Parent

2021

Per Share of Common Stock (Notes 2.v and 32):

2021

2021

2020

¥38,766
11,845464
21,24432,741
6,287
111,347¥39,184
15,171407
21,44728,562
2,092
106,863$350,158
106,991
4,191
191,889295,737
56,7881,005,754

383
200
(117)
70
5,653
27,542
46,809
4,005
2,005
2,272
88,822
22,525

657
287
1,940
48
5,645
24,78848,410
3,683
133
1,997
87,58819,2753,459
1,807(1,057)632
51,061
248,776
422,807
36,17618,11020,523
802,294
203,460

8,109
(939)
7,170
15,355632¥14,723

6,072
(13)
6,059
13,216354¥12,862

73,245(8,481)64,764
138,696
5,709$132,987

Yen

Basic net income
Diluted net income
Cash dividends applicable to the year—common stock
See notes to consolidated financial statements.

2020¥393.94
393.26
90.00

U.S. Dollars
2021
$3.56
3.55
0.81

¥344.22343.7070.00

C onsolidated Statement of Comprehensive Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
2021
Net income
Other Comprehensive Income (Loss) (Note 31):
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on derivatives under hedge accounting
Defined retirement benefit plans
Total other comprehensive income (loss)
Comprehensive Income (Loss)
Total Comprehensive Income (Loss) Attributable to:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

22

2020

2021

¥15,355¥13,216$138,696

19,355433
5,990
25,778¥41,133(13,864)(174)(1,566)(15,604)¥(2,388)

174,826
3,911
54,105
232,842$371,538¥40,518615¥(2,659)
271$365,983
5,555

C onsolidated Statement of Changes in Equity
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2021

Thousands

Millions of Yen

Outstanding
Number of Common
Stock
Shares ofCommon Stock

Balance at April 1, 2019
Purchase of shares of
consolidated subsidiaries
Net income attributableto owners of the parent
Cash dividends, ¥70.00
per share on common stock
Transfer of land revaluation surplus
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at April 1, 2020
Purchase of shares of
consolidated subsidiaries
Net income attributableto owners of the parent
Cash dividends, ¥80.00
per share on common stock
Transfer of land revaluation surplus
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at March 31, 2021

Accumulated Other
Comprehensive Income
Stock
CapitalRetained Treasury
Surplus Acquisition Earnings
Stock Unrealized Gain Deferred loss on
Land
DefinedRightson Available derivatives under Revaluation Retirement-for-sale
hedge
Surplus Benefit Plans
Securities
accounting

37,357¥36,839¥50,190

—

—

1,244

—

—

—

—

—

—

—

12,862

—

—

—

—

—
(2)
13
—
37,368————36,839——1—
51,435———¥ (431) ¥354,229

Total
Equity¥14,035

—

—

—

—

1,244

—

1,244

—

—

—

—

—

12,862—

12,862(2,615)

—

—

—

—

—

(2,615)—(2,615)

—
—
—
1
161

110
—
—
—
211,679—(4)
35—(1,554)———(13,781)
39,918———¥(174)
(174)

—
—
—
(110)
13,925———(1,566)(1,997)110(4)
36(15,630)
350,232———
202
16,172110(4)
36(15,428)
366,404

1,963

—

—

—

—

—

—

—

1,963

—

1,963

—

—

—

14,723

—

—

—

—

—

14,723—

14,723————(2,990)

—

—

—

—

—

(2,990)—(2,990)—————¥36,839——(2)—¥53,396

—
—
(9)
—
26
—
—
19,373¥(1,537) ¥ 59,291

—
—
—
433
¥259

—
—
—
(1,159)¥12,766

—
1,159
—
—
—
—
8
—
¥169 ¥224,571¥(1,585) ¥ 53,699

Noncontrolling
Interests

—

(5)
10
—
37,373¥160 ¥201,322

Total

—
1,159
—
(9)
—
24
5,990
24,645¥ 3,993 ¥389,747¥15,970 ¥370,199

—
1,159
—
(9)
—
24
(2,909) 21,736¥13,263 ¥403,010

Thousands of U.S. Dollars (Note 1)

CommonStock

Balance at April 1, 2020
Purchase of shares of
consolidated subsidiaries
Net income attributableto owners of the parent
Cash dividends, $0.72
per share on common stock
Transfer of land revaluation surplus
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at March 31, 2021

Accumulated Other
Comprehensive Income
Stock
CapitalRetained Treasury
Surplus Acquisition Earnings
Stock Unrealized Gain Deferred loss on
Land
DefinedRightson Available derivatives under Revaluation
Retirement-for-sale
hedge
Surplus Benefit Plans
Securities
accounting$332,752 $464,592$1,454 $1,912,013$(14,037) $360,564$(1,571) $125,779

Total

Noncontrolling
Interests

Total
Equity$(18,038) $3,163,508 $146,075 $3,309,583—

17,731

—

—

—

—

—

—

—

17,731—

17,731———

132,987

—

—

—

—

—

132,987—

132,987———(27,007)

—

—

—

—

—

(27,007)—(27,007)

—
—
—
—
—
(18)
—
—
$332,752 $482,305—
10,469————73—$1,527 $2,028,462

—
—
(81)
—
235
—
— 174,988$(13,883) $535,552———
10,469—10,469
—
—
—
(81)
—
(81)
—
—
—
217
—
217
3,911 (10,469) 54,105 222,608 (26,276) 196,332$ 2,340 $115,310 $ 36,067 $3,520,432 $119,799 $3,640,231

See notes to consolidated financial statements.

23

C onsolidated Statement of Cash Flows
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paid
Income taxes—refund
Depreciation
Impairment loss on long-lived assets
Interest income recognized on statements of income
Interest expense recognized on statements of income
Net gain on securities
Unrealized loss (gain) on derivatives
Net increase (decrease) in allowance for loan losses
Net increase in asset for retirement benefits for employees
Net decrease in liability for retirement benefits for employees
Net decrease in liability for retirement benefits for directors andAudit & Supervisory Board members
Net increase in provision required under the Special Act
Net increase in loans
Net increase in deposits
Net decrease in negotiable certificates of deposit
Net increase in borrowed money (excluding subordinated loans)
Net (increase) decrease in due from banks (excluding cash equivalents)
Net decrease in call money and others
Net increase in money held in trust
Net increase (decrease) in payables under securities lending transactions
Net decrease (increase) in lease receivables and investments in leases
Interest income—cash basis
Interest expense—cash basis
Other—net
Total adjustments
Net cash provided by operating activities—(Forward)

2021

2021

2020

¥ 22,525¥ 19,275$ 203,460(6,219)
2
3,577
2,005
(51,075)
536(4,597)498
1,810(1,609)(53)(5,313)2
3,923
133(54,762)
2,932(1,091)
(287)
(724)
(745)
(50)

(56,174)18
32,31018,110(461,340)
4,841(41,523)
4,498
16,349(14,533)
(479)

(2)

(1)

(18)

3
(135,576)
461,814(9,950)258,731(12,467)(14,053)(3,800)14,5192,001
51,923(1,157)1,204
558,065
580,5902(41,335)
118,432(17,549)
145,4192,025(45,317)(0)(90,778)(3,640)55,915(3,863)
1,641
64,96984,24427(1,224,605)
4,171,385(89,874)
2,337,016(112,610)(126,935)(34,324)
131,144
18,074
469,000(10,451)
10,876
5,040,782
5,244,242(695,422)
285,246
137,927(1,059)(922)
71(439,772)
215,077
295,175(1,208)(785)
149(6,281,474)
2,576,515
1,245,840(9,566)(8,328)641—(5,465)—(48)(274,207)(49)
63,122(433)(2,476,805)

0(9)—(3,235)

—
(3)
(558)
(2,814)

4(81)—(29,220)(1,380)(359)(12,465)(4,624)(3,734)(41,766)

7

(5)

63

301,766
629,152¥930,918

143,627
485,525¥629,152

2,725,734
5,682,883$8,408,617

INVESTING ACTIVITIES:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Purchases of premises and equipment
Purchases of intangible assets
Proceeds from sales of premises and equipment
Payments from changes in ownership interests in subsidiaries that
result in change in scope of consolidation (Note 4)
Other—net
Net cash (used in) provided by investing activities
FINANCING ACTIVITIES:
Proceeds from sales of treasury stock
Acquisition of treasury stock
Acquisition of treasury stock of subsidiaries
Dividends paid
Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation (Note 4)
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 5)

24

See notes to consolidated financial statements.

N otes to Consolidated Financial Statements
The Juroku Bank, Ltd. and Consolidated Subsidiaries

Year Ended March 31, 2021

1. BASIS OF PRESENTATION OF CONSOLIDATEDFINANCIAL STATEMENTS

The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations
and the Enforcement Regulation for the Banking Law, and in accordance with accounting principles generally accepted in Japan (JapaneseGAAP), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form
that is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which The Juroku Bank, Ltd. (the “Bank”) is
incorporated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥110.71 to $1, the approximate rate of exchange at March 31, 2021. Such translations should
not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation

The consolidated financial statements as of March 31, 2021, include theaccounts of the Bank and its seven (seven in 2020) significant subsidiaries, including Juroku Business Service Co., Ltd., Juroku ResearchInstitute Co., Ltd., Juroku Card Co., Ltd., Juroku Lease Co., Ltd.,
Juroku Computer Service Co., Ltd., Juroku Credit Guarantee Co., Ltd.,and Juroku Tokai Tokyo Securities Co., Ltd. (“Juroku TT Securities”)(together, the “Group”).
Under the control concept, those companies in which the Bank,
directly or indirectly, is able to exercise control over operations are fully
consolidated.
Investments in eight (seven in 2020) unconsolidated subsidiaries
are stated at cost. If the equity method of accounting had been applied
to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
The excess of the cost of acquisition over the fair value of the net
assets of an acquired subsidiary at the date of acquisition is being amortized over a period of 20 years.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profits included in
assets resulting from transactions within the Group have been eliminated in consolidation.
The balance sheet date for all consolidated subsidiaries is the end of
March for each year, which is consistent with the balance sheet date of
the Group.

b. Business Combinations

Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, areaccounted for as expenses in the periods in which the costs are incurred.
If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs,
an acquirer shall report in its financial statements provisional amounts
for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition,
the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and thatwould have affected the measurement of the amounts recognized as ofthat date. Such adjustments shall be recognized as if the accounting forthe business combination had been completed at the acquisition date.
A parent’s ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying
amount of noncontrolling interests is adjusted to reflect the change inthe parent’s ownership interest in its subsidiary while the parent retains
its controlling interest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and the amount by which thenoncontrolling interests are adjusted is accounted for as capital surplus
as long as the parent retains control over its subsidiary.

c. Cash and Cash Equivalents

For the purpose of the consolidated statement of cash flows, cash and cash
equivalents represent cash and amounts due from the Bank of Japan.

d. Trading Securities

Trading securities are stated at fair value and the related unrealized gains
and losses are included in earnings. The cost of trading securities sold isdetermined based on the moving-average method.

e. Securities

Securities other than trading securities are classified and accounted for,depending on management’s intent, as follows: (1) held-to-maturity
debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized costand (2) available-for-sale securities, which are not classified as held-tomaturity, are reported at fair value with unrealized gains and losses, netof applicable taxes, and are reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, securities are reduced to net realizable value by a charge to income.
Securities included in money held in trust for trading purposes
are stated at fair value, and the related unrealized gains and losses areincluded in earnings. Securities included in money held in trust forother purposes are accounted for by the same method as the above (2)available-for-sale securities.

f. Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment of the Bank, except forleased assets, is computed using the declining-balance method over theestimated useful lives of the assets.
The range of useful lives is principally from 15 to 50 years forbuildings and from 4 to 20 years for other premises and equipment.
Depreciation of lease assets from finance lease transactions that do
not deem to transfer ownership of the leased property to the lessee iscomputed using the straight-line method over the leasing period. Residual values of lease assets are the guaranteed values determined in thelease contracts or zero for assets without such guaranteed value.
Under certain conditions, such as exchanges of premises and equipment for similar kinds and sales and purchases resulting from expropriation, Japanese tax laws permit companies to defer the profit arisingfrom such transactions by reducing the cost of the assets acquired or byproviding a special reserve in the equity section. The deferred gain on
premises and equipment resulting from the reduction of the cost of theassets acquired, which is taxable for tax purposes in the future, was ¥989
million ($8,933 thousand) and ¥989 million as of March 31, 2021 and2020, respectively.

g. Long-Lived Assets

The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstances indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss is recognized
if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.

h. Land Revaluation

Under the “Law of Land Revaluation,” the Bank elected a one-timerevaluation of its own-use land to a value based on real estate appraisal
information as of March 31, 1998.
The resulting land revaluation surplus represents unrealized appreciation of land and is stated, net of income taxes, as a component ofequity. There was no effect on the consolidated statement of income.
Continuous readjustment is not permitted unless the land value subsequently declines significantly such that the amount of the decline invalue should be removed from the land revaluation surplus account andrelated deferred tax liabilities.
The carrying amount of the land after the above one-time revaluation exceeded the market value by ¥11,362 million ($102,628 thousand) and ¥14,081 million as of March 31, 2021 and 2020, respectively.

i. Intangible Assets

Amortization of intangible assets is calculated using the straight-line
method.
Amortization cost of software for internal use is calculated using thestraight-line method over the estimated useful life, principally, five years.

25

j. Allowance for Loan Losses

The Bank and its consolidated subsidiaries implemented a self-assessment system for its asset quality. The quality of all loans is assessed by
the related lending division with a subsequent audit by the asset audit
division in accordance with the Bank’s policies and rules for self-assessment of asset quality.
The Bank has established a credit rating system under which thecustomers are classified into five categories such as “normal,” “caution,”“possible bankruptcy,” “virtual bankruptcy” and “legal bankruptcy.” Thecredit rating system is used for the self-assessment of asset quality.
With respect to loans to customers who are likely to becomebankrupt or to be closely monitored, which are classified within normal
and caution loans, the allowance for loan losses is calculated based on
the projected future losses for the following three years, whilst for otherloans, for the following one year. The projected future losses are calculated by group (i.e. residential loans and non-residential loans), based on
the loss ratios, which are based on the average of actual past loss ratios
for the past three years or one year, respectively. For loans such as possible bankruptcy, the allowance for loan losses is calculated based on an
amount deemed necessary to cover possible losses on loans considering
the customer’s solvency and other factors after the estimated fair valueof the collateral real estate or guaranteed amount has been deducted. For
loans such as virtual bankruptcy or legal bankruptcy, the allowance forloan losses is calculated based upon the loan amount after the estimatedfair value of the collateral real estate or guaranteed amount has been
deducted.
For loans to possible bankruptcy customers and customers who arelikely to become bankrupt or to be closely monitored, the discounted
cash flow method is applied to calculate the loss provision. In thesecircumstances, the reserve is determined as the difference between thebook value of the loan and the present value of future cash flows, which
are discounted using the contractual interest rate in the case that future
cash flows of the principal and interest can be reasonably estimated.

k. Liability for Retirement Benefits

The Bank has a contributory funded defined benefit pension plan, lumpsum payment severance plan for employees and defined contribution
pension plan, and certain subsidiaries have lump-sum payment severance plans for employees and apply the simplified method to state theliability based on the amount that should be paid if employees retired at
the consolidated balance sheet date.
The liability for retirement benefits is based on projected benefit
obligations and plan assets at the end of the fiscal year. The projected
benefit obligations are attributed to periods on a benefit formula basis.
Past service costs are recognized in profit or loss as incurred over three
years within the expected average remaining service period of the employees. Actuarial gains and losses that are yet to be recognized in profit
or loss are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects and are recognized in profit orloss over 10 years no longer than the expected average remaining service
period of the employees, starting in the fiscal year following the occurrence of such differences.
Retirement benefits to directors and Audit & Supervisory Board
members of consolidated subsidiaries are provided at the amount thatwould be required if all directors and Audit & Supervisory Board members retired at the consolidated balance sheet date based on internal policies.
(Additional Information)
The Bank has revised its contributory funded defined benefit pension
plan on October 1, 2020, including a reduction in the interest rate used
to calculate the retirement benefits. As of July 10, 2020, the relevant
parties have been notified of the changes to the policies and rules pursuant to these revisions.
Regarding the accounting treatment of these revisions, the Bank
has applied “Accounting for Transfer between Retirement Benefit
Plans” (Accounting Standards Board of Japan (“ASBJ”) Guidance No.1,
December 16, 2016) and “Practical Solution on Accounting for Transfer
between Retirement Benefit Plans” (Practical Issues Task Force (“PITF”)
No. 2, February 7, 2007).
As a result, ¥4,408 million ($39,816 thousand) of past service costs(reduction of defined benefit obligations) were incurred, and the cost
processing process (reduction of expenses) was commenced in July 2020.

26

l. Stock Option

The cost of stock options is measured based at fair value on the date of
grant and is recognized as compensation expense over the vesting period
as consideration for receiving goods or services. In the consolidated balance sheet, the stock options are presented as stock acquisition rights as
a separate component of equity until exercised.

m. Leases

In regard to finance leases, sales and cost of sales are recognized whenlease payments are received.
All other leases are accounted for as operating leases.

n. Bonuses to Directors and Audit & Supervisory Board Members
Bonuses to directors and Audit & Supervisory Board members of consolidated subsidiaries are accrued at the end of the year to which suchbonuses are attributable.

o. Provision for Losses from Reimbursement of Inactive Accounts
The provision for losses from reimbursement of inactive accounts, which
are derecognized as liabilities under certain conditions, is provided forpossible losses on future claims of withdrawal based on historical reimbursement experience.

p. Provision for Contingent Losses

The Bank provides a provision for contingent losses not covered by otherprovisions in an amount deemed necessary based on estimated losses in
the future.

q. Provision Required under the Special Act

The provision required under the Special Act is a financial instruments
transaction liability reserve for consolidated subsidiaries engaged infinancial instruments business, and is provided to prepare for losses arising from operational incidents incurred in relation to trading and othersecurities transactions. The amount of the provision is calculated pursuant to the provisions of Article 46-5 of the Financial Instruments andExchange Act and Article 175 of the Cabinet Office Order on Financial
Instruments Business.

r. Income Taxes

The provision for current income taxes is computed based on the pretax
income included in the consolidated statement of income. The asset andliability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted income tax
rates to the temporary differences.

s. Foreign Currency Transactions

Foreign currency assets and liabilities of the Group are translated into
yen equivalents at the exchange rates prevailing at the fiscal year end.

t. Derivatives and Hedging Activities

The Bank uses a variety of derivative financial instruments.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on the derivative transactions are recognized in the consolidated
statement of income, and (2) for derivatives used for hedging purposes,
if the derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged
items, gains or losses on the derivatives are deferred until maturity of
the hedged transactions.
The Bank applies the deferral method of hedge accounting tohedges of interest rate risk associated with financial assets and liabilities
in accordance with “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA Industry-specific Committees Practical Guideline
No. 24 issued by the Japanese Institute of Certified Public Accountants.
Under JICPA Industry-specific Committees Practical Guideline No. 24,
hedges to offset changes in fair value of fixed rate instruments (such as
securities) (fair value hedges) are applied by grouping hedging instruments and hedged items by their maturities. The assessment of hedge effectiveness is generally based on the consideration of interest rate indicesaffecting the respective fair values of the group of hedging instruments
and hedged items.

u. Consumption Taxes

The Bank and its domestic consolidated subsidiaries account for consumption tax and local consumption tax by the tax-exclusion method.

v. Per Share Information

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average numberof common shares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for
related interest expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years
including dividends to be paid after the end of the year, not retroactively
adjusted for a reverse stock split.

w. New Accounting Pronouncements“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 26, 2021)(1) Overview
The above standard and guidance provide comprehensive principles forrevenue recognition. Under the standard and guidance, revenue will berecognized based on the following five steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations
under the contract
Step 5: Recognize revenue when (or as) the performance obligation
is satisfied(2) Application date
The Bank will apply the standard and guidance from the beginning of
the year ending March 31, 2022.
(3) Impact of adoption
The Bank is currently assessing the impact of adopting the above standard and guidance on the consolidated financial statements.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020)(1) Overview
In order to increase the international comparability of accounting
standards, “Accounting Standard for Fair Value Measurement” and“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (hereinafter referred to as the “Fair Value Measurement
Standards, etc.”) were developed, and guidance and other rules were
established with regard to the method for fair value measurement. Fair
Value Measurement Standards, etc. will be applicable for the fair valueof the following items.
• Financial instruments defined in “Accounting Standard for Financial
Instruments”
In addition, “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” was revised to include notes regarding
the breakdown by each level of fair value of financial instruments.
(2) Application date
The Bank will apply the standards and guidance from the beginning of
the year ending March 31, 2022.
(3) Impact of adoption
The Bank is currently assessing the impact of adopting the above standard and guidance on the consolidated financial statements.

x. Changes in Presentation

Application of the “Accounting Standard for Disclosure of Accounting
Estimates”
The Bank has adopted “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) from the year
ended March 31, 2021 and has disclosed additional information regarding significant accounting estimates.
However, information for the previous fiscal year is not provided inaccordance with the transitional treatment stated in Paragraph 11 of theabove accounting standard.

3. SIGNIFICANT ACCOUNTING ESTIMATES

Allowance for Loan Losses(1) Amount recorded on the consolidated financial statements in the year
ended March 31, 2021
Allowance for loan losses: ¥25,853 million ($233,520 thousand)(2) Information contributing to the understanding of details related tosignificant accounting estimates for certain items
1. Calculation method
The calculation method of allowance for loan losses is described in “Note
2.j, “Allowance for Loan Losses.””
2. Primary assumptionsa) The performance forecast of debtors, including those who prepare
management improvement plans, used to determine the debtor classification, estimate future cash flows related to the collection of the loan
principal and interest, is prepared based on assumptions derived fromavailable information.
Specifically, management improvement plans were developed basedon future performance forecasts, which include future sales forecast,prospect of future expense reduction, and future cash flow prospect,among others. Accordingly, the reasonableness and the feasibility of theplan are determined based on industry trends and individual management improvement plans of the debtors.
b) The effect of the spread of the new coronavirus disease on theeconomy is expected to continue over the next consolidated fiscal year
considering the current situation of the infection. Although the extent
of the effect is expected to vary by each debtor, the determination of the
debtor classification, estimate of future cash flows related to the collection of the loan principal and interest are based on the assumption thatthe credit risk for loans originating from the Bank and its consolidated
subsidiaries will be affected within the range of the above assumptions.
The above assumption has been changed from the one in the previous
fiscal year end, which stated that the effect of the spread of the new coronavirus disease is expected to converge moderately towards the end of
the current fiscal year.
c) For loans other than those for which the discounted cash flow method
is applied, it is assumed that “normal” loans will incur approximately
the same amount of losses as those from previous years, “caution” loans
will incur approximately the same amount of losses as those from previous years and loans to customers who are likely to become bankrupt or
to be closely monitored, which are classified within normal and cautionloans, will incur approximately the same amount of losses as those fromprevious years.
3. Impact on the consolidated financial statements for the next fiscal year
If the assumptions used in the initial estimate changes due to changes
in the external environment, including the situation of the spread of
the new coronavirus disease, or the internal environment of the debtor,
among others, there is a possibility that the amount of allowance will increase or decrease due to changes in the debtor classification, fluctuationsof cash flow estimates or the occurrence of circumstances in which actual
bad debt losses differ from the initial assumption, which may result in asignificant impact on the consolidated financial statements.

27

4. BUSINESS COMBINATIONS
For the Year Ended March 31, 2021

6. TRADING SECURITIES AND SECURITIESAcquisition of Additional Shares of a Consolidated Subsidiary
On June 29, 2020, the Bank has acquired part of the shares of Juroku
Lease Co., Ltd., which is a consolidated subsidiary, owned by noncontrolling interests, in exchange for cash in the amount of ¥1,380 million($12,465 thousand). This transaction was made to strengthen thegovernance and increase profitability of the Bank. The transaction was
accounted for as a transaction with noncontrolling interests undercommon control in accordance with ASBJ Statement No. 21, “Accounting Standard for Business Combinations” and ASBJ Guidance No. 10,“Guidance on Accounting Standard for Business Combinations andBusiness Divestitures.” As a result, the Bank’s voting rights ratio in
Juroku Lease Co., Ltd. has increased to 49.81% (36.28% prior toacquisition). The Bank has recognized an increase of capital surplus in
the amount of ¥1,963 million ($17,731 thousand) for the year ended
March 31, 2021.

Trading securities as of March 31, 2021 and 2020, consisted of the following:
2021

2021

2020

Cash
Due from banks
Total¥62,333
884,683¥947,016¥67,439
565,344¥632,783$563,030
7,990,994$8,554,024

A reconciliation between the cash and due from banks in the consolidated balance sheet and the cash and cash equivalents in the consolidated
statement of cash flows for the years ended March 31, 2021 and 2020,
was as follows:
Millions of Yen
2021
Cash and due from banks
Due from banksother than the Bank of Japan
Cash and cash equivalents

2020

Thousands of
U.S. Dollars
2021¥947,016¥632,783$8,554,024(16,098)(3,631)(145,407)¥930,918¥629,152$8,408,617

Major Breakdown of Assets and Liabilities of the Company, Which
Became a Consolidated Subsidiary as a Result of Acquisition of
SharesFor the Year Ended March 31, 2020
The major breakdown of assets and liabilities at the start of consolidation of Juroku TT Securities due to acquisition of shares, as well as therelationship between the acquisition value of Juroku TT Securities’
shares and the expenditure for the acquisition of Juroku TT Securities’
shares, were as follows:
Millions of Yen
AssetsCash
Liabilities
Other liabilities
Noncontrolling interests
Goodwill
Acquisition value of Juroku TT
Securities’ shares
Expenditure for acquisition of
Juroku TT Securities’ shares¥ 6,887
4,016(1,237)(976)(2,261)
2,076
5,465
5,465

There was no transaction applicable as of March 31, 2021.

28$2,375

¥372

28

36

253

¥291

¥408

$2,628The Bank records net valuation gains and losses as other operating income
and expenses, respectively. For the years ended March 31, 2021 and 2020,
the Bank recorded net valuation losses of ¥5 million ($45 thousand) and¥6 million, respectively.
Securities as of March 31, 2021 and 2020, consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen

Cash and due from banks as of March 31, 2021 and 2020, consisted of
the following:Thousands of
U.S. Dollars
2021

2020

¥263

Japanese government bonds
Japanese local government
bonds
Total

5. CASH AND DUE FROM BANKS

Millions of Yen

Thousands of
U.S. Dollars
2021

Millions of Yen

2021
Equity securities
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other securities
Total

2020

¥147,529 ¥118,933
258,074
181,970
480,454$ 1,332,572
2,331,081

334,349

4,339,752

290,757
219,332
381,786
397,018¥1,558,600 ¥1,251,602

2,626,294
3,448,523$14,078,222

Unsecured loaned securities which borrowers have the right to sell or
pledge in the amount of ¥58,329 million ($526,863 thousand) and¥55,693 million as of March 31, 2021 and 2020, were included inJapanese government bonds, respectively.
Information regarding available-for-sale and held-to-maturity
securities as of March 31, 2021 and 2020, was as follows:
March 31, 2021
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity—
debt securities

March 31, 2020
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity—
debt securities

March 31, 2021
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity—
debt securities

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

Fair
Value

¥53,486
971,656
366,167¥88,922
2,796
4,871

¥1,0993,245
7,653¥141,309
971,207363,385

58,079303

203

58,179Millions of Yen
Unrealized Unrealized
Gains
LossesFair
Value¥56,499
681,062
377,161¥58,907
3,414
7,419

¥2,974
1,894
7,784¥112,432
682,582376,796

53,069337

148

53,258

Cost

Cost

Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue$483,118
8,776,588
3,307,443$803,198
25,25543,998524,604

2,737$ 9,927 $1,276,389
29,311 8,772,532
69,127 3,282,314
1,833

525,508

Proceeds from sales of available-for-sale securities for the years ended
March 31, 2021 and 2020, consisted of the following:
March 31, 2021
Equity securities
Debt securities:
Japanese government bonds
Japanese corporate bonds
Other
Total

March 31, 2020
Equity securities
Debt securities:
Japanese government bonds
Japanese corporate bonds
Other
Total
March 31, 2021
Equity securities
Debt securities:
Japanese government bonds
Japanese corporate bonds
Other
Total

Millions of Yen
Proceeds
Realized Gains Realized Losses¥22,929¥4,971
¥875
9,317
3,214
224,411¥259,871

19
14
4,823
¥9,827103—
2,397¥3,375

Millions of Yen
Proceeds
Realized Gains Realized Losses¥4,107¥1,607¥305
39,682
1,907
132,130¥177,826

182
7
2,834
¥4,630692—
894¥1,891Thousands of U.S. Dollars
Proceeds
Realized Gains Realized Losses$207,109$44,901$ 7,904
84,15729,031
2,027,016$2,347,313

172
126
43,564$88,763

930—
21,651$30,485

In addition, held-to-maturity securities amounting to ¥252 million($2,276 thousand) and ¥170 million were reclassified as available-forsale securities due to a decline in the issuer’s credit worthiness as ofMarch 31, 2021 and 2020. The effect of these reclassifications on theaccompanying consolidated financial statements was immaterial.
Securities other than trading securities (excluding those securities
whose fair value cannot be reliably determined) whose fair value significantly declined below the acquisition cost and is considered not likely
to be recovered are written down to their respective fair value, which isrecorded as the carrying amount on the consolidated balance sheets.
The fair value is deemed to have significantly declined if the yearend fair value declined by 30% or more from the acquisition cost for
securities issued by bankrupt borrowers, virtually bankrupt borrowers,
potentially bankrupt borrowers, and borrowers who are likely to becomebankrupt or to be closely monitored, and if the fair value declined by
50% or more from the acquisition cost for securities issued by normal
borrowers.
The impairment loss on available-for-sale equity securities for theyear ended March 31, 2021, was ¥214 million ($1,933 thousand) ofdebt securities.
The impairment loss on available-for-sale equity securities for theyear ended March 31, 2020, was ¥1,204 million, which consisted of¥1,090 million of equity securities and ¥114 million of debt securities.
Unrealized gain on available-for-sale securities as of March 31, 2021
and 2020, consisted of the following:
Millions of Yen

Unrealized gain before
deferred tax on:
Available-for-sale securities
Money held in trust—other
Deferred tax liabilities
Unrealized gain on availablefor-sale securities before
interest adjustments
Noncontrolling interests
Unrealized gain on availablefor-sale securities

Thousands of
U.S. Dollars
2021

2021

2020

¥84,51712(25,068)¥57,038
11(16,944)$763,409
108(226,429)

59,461

40,105537,088

(170)

(187)

(1,536)¥59,291¥39,918$535,552

Unrealized gain before deferred tax on available-for-sale securities
includes ¥155 million ($1,400 thousand) and ¥117 million of revaluation gain on available-for-sale securities as of March 31, 2021 and 2020,
respectively, which are held by an investment limited partnership andsimilar groups.
Investments in and advances to subsidiaries and associated companies as of March 31, 2021 and 2020, were ¥663 million ($5,989
thousand) and ¥646 million, respectively.

7. MONEY HELD IN TRUSTInformation regarding money held in trust for trading purposes as ofMarch 31, 2021 and 2020, was as follows:
Carrying AmountMillions of Yen

Money held in trust classified
as trading purpose
Money held in trust—other
Total

Thousands of
U.S. Dollars
2021

2021

2020

¥ 6,000¥6,000$ 54,195

6,312¥12,3122,512¥8,51257,014$111,209

8. LOANS AND BILLS DISCOUNTED

Loans and bills discounted as of March 31, 2021 and 2020, consisted of
the following:
Millions of Yen
2021
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
OthersTotal

2020¥11,765 ¥20,085
93,957
123,376
4,038,394 3,809,349
332,355
388,685
4,679
4,079¥4,481,150 ¥4,345,574

Thousands of
U.S. Dollars
2021$106,269
848,677
36,477,229
3,002,032
42,263$40,476,470“Nonaccrual loans,” which include loans to borrowers in bankruptcy
and past due loans, are defined as loans upon which the Bank has discontinued the accrual of interest income. Borrowers are generally placedon nonaccrual status when substantial doubt is deemed to exist as to theultimate collectability of either the principal or interest and if the loans
are past due for a certain period of time or for other reasons.
“Loans to borrowers in bankruptcy” represent nonaccrual loans
to debtors who are legally bankrupt, which is defined in Article 96,
Paragraph 1, Subparagraphs 3 and 4 of Enforcement Ordinance for the
Corporate Tax Law. Loans to borrowers in legal bankruptcy as of March
31, 2021 and 2020, were ¥3,072 million ($27,748 thousand) and ¥3,943
million, respectively.
“Past due loans” are nonaccrual loans other than loans to borrowers
in bankruptcy and loans of which interest payments are deferred in order
to assist the financial recovery of a debtor in financial difficulty. Past dueloans as of March 31, 2021 and 2020, were ¥65,607 million ($592,602
thousand) and 58,876 million, respectively.
“Accruing loans past due three months or more” are defined as loans
on which principal or interest is past due more than three months. Loansclassified as loans to borrowers in bankruptcy and past due loans are
excluded from accruing loans past due three months or more. Accruingloans past due three months or more as of March 31, 2021 and 2020,
were ¥52 million ($470 thousand) and ¥99 million, respectively.
“Restructured loans” are defined as loans in which the Group isproviding financial support to a borrower by a reduction of interest rates,
deferral of interest payments, extension of maturity dates, or reductionof the face or maturity amount of the debt or accrued interest. Loansclassified as loans to borrowers in bankruptcy, past due loans and accruing loans past due three months or more are excluded from restructuredloans. Restructured loans as of March 31, 2021 and 2020, were ¥2,668
million ($24,099 thousand) and ¥1,958 million, respectively.
The total amount of loans to borrowers in bankruptcy, past dueloans, accruing loans past due three months or more and restructuredloans as of March 31, 2021 and 2020, were ¥71,399 million ($644,919
thousand) and ¥64,876 million, respectively.
Bills discounted are accounted for as financing transactions in accordance with “Accounting and Auditing Treatments on the Application29

of Accounting Standards for Financial Instruments in the Banking
Industry” (JICPA Industry-specific Committees Practical Guideline No.
24) issued by the Japanese Institute of Certified Public Accountants. The
Bank has rights to sell or pledge accepted commercial bills discounted
and foreign bills of exchange bought without restrictions. The total fairvalue of commercial bills discounted and foreign bills of exchange bought
included in foreign exchanges as of March 31, 2021 and 2020, were¥12,267 million ($110,803 thousand) and ¥20,918 million, respectively.

9. FOREIGN EXCHANGES

Foreign exchanges as of March 31, 2021 and 2020, consisted of the following:
Millions of Yen
Assets:Due from foreign
correspondent accountForeign bills of exchange bought
Foreign bills of exchange receivable
Total
Liabilities:
Due to foreign correspondent accountForeign bills of exchange payable
Total

Thousands of
U.S. Dollars
2021

2021

2020

¥7,033¥6,779$63,526502
451¥7,986834
366¥7,9794,535
4,074$72,135¥ 816
273¥1,089

¥805
177
¥982

$7,3712,466$9,837

10. OTHER ASSETS

Other assets as of March 31, 2021 and 2020, consisted of the following:
Millions of Yen

Accrued income
Accounts receivable
Installment receivables
Derivative assets
Other
Total

2021

2020

¥4,149
9,801
16,581
6,569
67,868¥104,968¥4,446
10,55815,353
6,624
62,268¥99,249

Thousands of
U.S. Dollars
2021$37,476
88,529149,770
59,335613,025$948,135

13. ASSETS PLEDGED

Assets pledged as collateral and their relevant liabilities as of March 31,
2021 and 2020, were as follows:

Assets pledged as collateral:
Securities
Other assets
Total
Relevant liabilities to above assets:
Deposits
Payables under repurchaseagreements
Payables under securities
lending transactions
Borrowed money
Total

Land
Building
Construction in progress
Other
Total

2021

2020

¥43,328
10,907
4
5,176¥59,415¥45,784
11,7302
4,817¥62,333$391,365
98,51936
46,752$536,672

The accumulated depreciation of premises and equipment as of March
31, 2021 and 2020, amounted to ¥62,369 million ($563,355 thousand)and ¥61,936 million, respectively.

Initial margins of future
markets
Cash collateral received forfinancial instruments liabilities
Guarantee deposits
Initial margins of Central
Counterparty
Total

30

¥407,966
73¥408,039$5,954,440
505$5,954,945¥110,382¥ 97,893$ 997,037

126,700

140,754

1,144,431

29,67215,153

268,016445,093¥711,847

186,470¥440,270

4,020,351$6,429,835

Thousands of
U.S. Dollars
2021

2021

2020

¥1,478¥507$13,350

1,602

242

14,470

2,070

2,181

18,69851,85053,350468,341¥57,000¥56,280$514,859

14. DEPOSITS

Deposits as of March 31, 2021 and 2020, consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen
2021
Current deposits
Ordinary deposits
Deposits at notice
Savings deposits
Time deposits
Other deposits
Total

2020

¥445,581 ¥363,391
3,432,907 2,982,591
40,89592,73799,01835,0401,975,548 2,052,819
78,52484,081¥6,072,473 ¥5,610,659$4,024,758
31,008,102
369,389
894,391
17,844,350
709,277$54,850,267

15. BORROWED MONEY AND LEASE OBLIGATION

Borrowed money and lease obligation as of March 31, 2021 and 2020,
consisted of the following:
2021

2020

Thousands of
U.S. Dollars
2021¥467,151¥208,421$4,219,592

—

0

—

Millions of Yen

12. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEESAll contingent liabilities arising from acceptances and guarantees arereflected in acceptances and guarantees. As a contra account, the customers’ liabilities for acceptances and guarantees are presented as assets,
representing the Bank’s right of indemnity from applicants.
The Enforcement Ordinance of the Banking Law was revised on
April 17, 2007, and effective from the fiscal years beginning on and after
April 1, 2006. The Bank offsets customer’s liabilities for acceptance andguarantees with acceptance and guarantees of ¥58,460 million ($528,046
thousand) and ¥53,242 million arising from guarantees of private placement securities as of March 31, 2021 and 2020, respectively.

¥659,216
56¥659,272

Millions of Yen

Premises and equipment as of March 31, 2021 and 2020, consisted of
the following:
Millions of Yen

2020

Additionally, initial margins of futures markets, cash collateral received
for financial instruments liabilities, guarantee deposits and initial margins of Central Counterparty included in other assets were as follows:

11. PREMISES AND EQUIPMENT

Thousands of
U.S. Dollars
2021

2021

Thousands of
U.S. Dollars
2021

Millions of Yen

Borrowings due serially to February
2026 with weighted average interest rates
of 0.01% in 2021 and 0.16% in 2020
Lease obligation

Weighted average interest rates of lease obligation are not represented
because the lease obligation is disclosed on the balance sheet without
deducting the interest portion which is included in the amount of thelease obligation.
Annual maturities of borrowings as of March 31, 2021 and 2020,
were as follows:
As of March 31, 2021
Year Ending March 31
2022
2023
2024
2025
2026
2027 and thereafter
Total
As of March 31, 2020
Year Ending March 31
2021
2022
2023
2024
2025
2026 and thereafter
Total

Millions of Yen¥259,351
33,870112,362
61,193375—¥467,151

Thousands of
U.S. Dollars$2,342,616
305,935
1,014,922
552,732
3,387—$4,219,592(1) The changes in defined benefit obligation for the years ended March
31, 2021 and 2020, were as follows:
Millions of Yen¥ 98,222
5,208
32,97871,513500—¥208,421

Balance at beginning of year
Current service cost
Interest cost
Actuarial losses
Benefits paid
Past service cost
Balance at end of year

Annual maturities of lease obligation as of March 31, 2020, were as follows:
¥ 0
—
—
—
—
—
¥ 0

Millions of Yen

Thousands of
U.S. Dollars
2021

2021

2020

¥154

¥139

$1,391

5,508
1,324
17,021
2,534
9,792
7,929
19,814¥64,076

3,557
1,900
16,543
2,571
6,253
8,491
13,670¥53,124

49,752
11,959
153,744
22,88988,447
71,620178,972$578,7742020¥46,543
1,500
147
256
(2,235)(4,408)¥41,803¥46,583
1,974
158
114
(2,286)—¥46,543

Millions of Yen

Balance at beginning of year
Expected return on plan
assetsActuarial gains (losses)
Contributions from theemployer
Benefits paid
Balance at end of year

Other liabilities as of March 31, 2021 and 2020, consisted of the following:

2021

Thousands of
U.S. Dollars
2021$420,405
13,5491,328
2,312(20,188)(39,816)$377,590(2) The changes in plan assets for the years ended March 31, 2021 and2020, were as follows:

Millions of Yen

16. OTHER LIABILITIESDomestic exchange settlement
account, credit*
Income taxes payable
Accrued expenses
Deferred income
Employees’ deposits
Derivative liabilities
Accounts payable
Other
Total

The Bank has a contributory funded defined benefit pension plan, lumpsum payment severance plan for employees and defined contribution
pension plan, and certain subsidiaries have lump-sum payment severance
plans for employees and apply the simplified method to state the liability based on the amount that would be paid if employees retired at theconsolidated balance sheet date. The Bank contributed certain assets tothe employee retirement benefit trust for the Bank’s contributory funded
defined benefit pension plan and the assets in this trust are qualified asplan assets. The Bank has revised its contributory funded defined benefit
pension plan on October 1, 2020, including a reduction in the interest
rate used to calculate the retirement benefits.

Millions of Yen

There was no lease obligation as of March 31, 2021.

As of March 31, 2020
Year Ending March 31
2021
2022
2023
2024
2025
2026 and thereafter
Total

17. RETIREMENT AND PENSION PLANS

Thousands of
U.S. Dollars
2021

2021

2020

¥42,522¥44,002$384,085

1,275

1,320

11,516

5,176(1,914)46,753

679

788

6,133

(1,660)¥47,992(1,674)¥42,522(14,994)$433,493(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets
as of March 31, 2021 and 2020, was as follows:
2021

2020

Thousands of
U.S. Dollars
2021¥35,564¥40,190$321,236(47,992)(12,428)(42,522)(2,332)(433,493)(112,257)

6,239

6,353

56,354¥(6,189)¥4,021$(55,903)

Millions of Yen

Funded defined benefit
obligation
Plan assets
Unfunded defined benefit
obligation
Net (asset) liability arising fromdefined benefit obligation* The domestic exchange settlement account consisted of outstanding
remittance bills from other banks and/or collection bills for which the
Bank has received notices for payment from other banks, which havenot been settled.

Millions of Yen

Liability for retirement benefits
for employees
Asset for retirement benefits for
employees
Net (asset) liability arising fromdefined benefit obligation

Thousands of
U.S. Dollars
2021

2021

2020

¥6,239¥6,353$56,354(12,428)(2,332)(112,257)¥(6,189)¥4,021$(55,903)

31

(4) The components of net periodic benefit costs for the years ended
March 31, 2021 and 2020, were as follows:
Thousands of
U.S. Dollars
2021

Millions of Yen
2021

2020

¥1,500147(1,275)¥1,974158(1,320)

321

(207)

2,899

(1,102)¥ (409)—¥ 605(9,954)$ (3,694)

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses(gains)Past service cost
Net periodic benefit costs$13,549
1,328(11,516)(5) Amounts recognized in other comprehensive income (before income
tax effect) in respect of defined retirement benefit plans for the years
ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. Dollars
2021

Millions of Yen
2021

2020

¥3,306
5,241¥8,547—¥(2,235)¥(2,235)

Past service cost
Actuarial gains (losses)
Total$29,862
47,340$77,202(6) Amounts recognized in accumulated other comprehensive income(before income tax effect) in respect of defined retirement benefit plans
as of March 31, 2021 and 2020, were as follows:
Thousands of
U.S. Dollars
2021

Millions of Yen
2021
Unrecognized past service cost
Unrecognized actuarial (gains)lossesTotal

2020¥(3,306)—(2,392)¥2,850$(29,862)(21,606)¥(5,698)¥2,850$(51,468)(7) Plan assets(a) Components of plan assets
Plan assets consisted of the following:
2021
Debt investments
Equity investments
General account for life insurance
Others
Total

27%
40
19
14
100%

2020
26%
34
22
18
100%

Note: The retirement benefit trust that contributed to the pension planis included in the plan assets and constitutes 19% and 16% of thetotal plan assets as of March 31, 2021 and 2020.
(b) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering
the current and future asset portfolio and the long-term rates of return
which are expected currently and in the future from the variety of plan
assets in the asset portfolio.
(8) Assumptions used for the years ended March 31, 2021 and 2020,
were set forth as follows:
Discount rate:
Lump-sum payment
Pension plan
Expected rate of return on plan assets

2021

2020

0.084%
0.382
3.000

0.084%
0.382
3.000

The amount to be paid to defined contribution pension plan was ¥369
million ($3,333 thousand) and ¥367 million for the years ended March
31, 2021 and 2020, respectively.

32

18. ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations are recognized for obligations of restoringleased buildings, such as branch premises, to their original state, basedon the real estate lease contracts and asbestos removal costs.
Asset retirement obligations are calculated based on the estimatedavailable periods of 4 to 47 years depending on the expected useful livesof buildings using discount rates from 0.000% to 2.461%.
The changes in asset retirement obligations, which are included inother liabilities, for the years ended March 31, 2021 and 2020, were as
follows:
Thousands of
U.S. Dollars
2021

Millions of Yen
2021
Balance at beginning of year
Reconciliation associatedwith passage of time
Decrease due to fulfillment ofasset retirement obligations
Balance at end of year

19. EQUITY

2020

¥219

¥216

$1,978

4

3

36

(20)

—

(180)

¥203

¥219

$1,834

Japanese banks are subject to the Companies Act of Japan (the “CompaniesAct”). The significant provisions in the Companies Act that affect financial
and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time
during the fiscal year, in addition to the year-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meetcertain criteria, the Board of Directors may declare dividends (except
for dividends-in-kind) at any time during the fiscal year if the company
has prescribed so in its articles of incorporation. However, the Bank
cannot do so because it does not meet the criteria. Semiannual interim
dividends may also be paid once a year upon resolution by the Boardof Directors if the articles of incorporation of the company so stipulate.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders, but
the amount of net assets after dividends must be maintained at no lessthan ¥3 million.
b. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Boardof Directors. The amount of treasury stock purchased cannot exceed
the amount available for distribution to the shareholders which isdetermined by a specific formula. Under the Companies Act, stockacquisition rights are presented as a separate component of equity. The
Companies Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.
Japanese Banking Law also provides that an amount equal to atleast 20% of the aggregate amount of cash dividends and certain othercash payments, which are made as an appropriation of retained earnings applicable to each fiscal period, shall be set aside as a legal reserve
until the total additional paid-in capital and legal reserve equals 100%of stated capital. The amount of total additional paid-in capital andlegal reserve that exceeds 100% of stated capital can be transferred toretained earnings by resolution of the shareholders, which may be available for dividends. The Bank’s legal reserve amount, which is included
in retained earnings, totals ¥20,155 million ($182,052 thousand) and¥20,155 million as of March 31, 2021 and 2020, respectively.

20. STOCK OPTIONSThe stock options outstanding as of March 31, 2021, are as follows:
Stock
OptionPersons
Granted2013 Stock
11 directors
Option2014 Stock
11 directors
Option2015 Stock
10 directors
Option7 directors
2016 Stock8 executive
Optionofficers
7 directors
2017 Stock8 executive
Optionofficers
7 directors
2018 Stock
9 executive
Optionofficers
7 directors
2019 Stock
9 executive
Optionofficers
6 directors
2020 Stock
9 executive
Optionofficers

Number of
Options
GrantedDate of
Grant

12,620 shares2013.7.23

15,550 shares2014.7.23

9,600 shares2015.7.23

16,350 shares2016.7.22¥ 1 From July 23, 2016($0.01) to July 22, 2046

12,350 shares2017.7.21¥ 1 From July 22, 2017($0.01) to July 21, 2047

14,230 shares2018.7.23¥ 1 From July 24, 2018($0.01) to July 23, 2048

2019.7.23¥ 1 From July 24, 2019($0.01) to July 23, 2049

18,410 shares
19,540 shares

Exercise
Price

Exercise
Period

¥1($0.01)¥1($0.01)¥1($0.01)

From July 24, 2013
to July 23, 2043
From July 24, 2014
to July 23, 2044
From July 24, 2015
to July 23, 2045

¥ 1 From July 23, 2020($0.01) to July 22, 2050

2020.7.22

2013 2014 2015 2016 2017 2018 2019 2020
Stock Stock Stock Stock Stock Stock Stock Stock
Option Option Option Option Option Option Option Option(Shares)
—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

March 31, 2020—Outstanding
VestedExercised
Canceled
March 31, 2021—Outstanding

3,520
—
—
—
3,520

7,760
—
760
—
7,000

4,680
—
540
—
4,140

7,500
—
1,150
—
6,350

Exercise price

¥1
¥ 1
¥1
¥1
¥1
¥1
¥1
¥1
($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01)— ¥2,065 ¥2,065 ¥2,065 ¥2,044 ¥2,044 ¥2,034 ¥2,002— ($18.65) ($18.65) ($18.65) ($18.46) ($18.46) ($18.37) ($18.08)¥3,650 ¥3,200 ¥4,640 ¥2,390 ¥3,170 ¥2,587 ¥2,068 ¥1,670($32.97) ($28.90) ($41.91) ($21.59) ($28.63) ($23.37) ($18.68) ($15.08)

March 31, 2020—Outstanding
GrantedCanceled
VestedMarch 31, 2021—Outstanding

—
—
—
—
—

—
—
—
—
—

4,365
—
— 19,540— 1,370
4,365 13,787.5— 4,382.5

VestedAverage stock price at exercise
Fair value price at grant date

Other operating income for the years ended March 31, 2021 and 2020,
consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen

Gains on sales of Japanese
government bonds and other
Income on lease transaction
and installment receivables
Other
Total

2021

2020

¥4,388¥2,984$39,635

24,16523,434

218,273

4,188¥32,741

2,144¥28,562

37,829$295,737

22. OTHER INCOME

Other income for the years ended March 31, 2021 and 2020, consistedof the following:Thousands of
U.S. Dollars
2021

Millions of Yen

Gain on sales of stock andother securities
Other
Total

2021

2020

¥5,440¥1,647$49,137

847¥6,287445¥2,092

7,651$56,788

23. GENERAL AND ADMINISTRATIVE EXPENSES

The stock option activity is as follows:Year Ended March 31, 2021
Non-vested

21. OTHER OPERATING INCOME

8,610 11,310 13,095——— 4,365 13,787.5
1,500 1,660 2,890
640
—
—
—
—
7,110 9,650 14,570 13,147.5

Note: Effective October 1, 2017, the Bank implemented a 1-for-10
reverse stock split of common stock, and the number of shares,
average stock price at exercise and fair value price at grant date arepresented on a post-reverse stock split basis.
The Assumptions Used to Measure the Fair Value of the 2020 Stock Option
Estimate method:Black-Scholes option pricing model
Volatility of stock price:
31.476%
Estimated remaining outstanding period: 3.6 years
Estimated dividend:¥70 ($0.63) per share(0.153)%
Risk free interest rate:

General and administrative expenses for the years ended March 31, 2021
and 2020, consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen

Salaries and wages
Commission fee
Other
Total

2021

2020

¥18,706
4,713
23,390¥46,809¥19,379
4,700
24,331¥48,410$168,964
42,571
211,272$422,807

24. IMPAIRMENT LOSS

Impairment loss on long-lived assets for the year ended March 31, 2021,
consisted of the following:
Location

PurposeCategory

Gifu City

Welfare facilities

Land, building

Gifu City

Warehouse

Land

Amount¥1,512 million($13,657 thousand)¥300 million($2,710 thousand)

The above long-lived assets were written down to their recoverable
amounts (planned selling price) as the Bank sold these assets during theyear March 31, 2021, due to a decline in the frequency of their usage.
Information for the year ended March 31, 2020 is omitted since theimpact was immaterial.

25. OTHER EXPENSE

Other expense for the years ended March 31, 2021 and 2020, consistedof the following:
Millions of Yen

Loss on sales of stock and othersecurities
Write-down of stock and othersecurities
Other
Total

Thousands of
U.S. Dollars
2021

2021

2020

¥878

¥326

2

1,090

18

1,392
¥2,272581¥1,997

12,574$20,523$7,93133

26. INCOME TAXESThe Bank and its subsidiaries are subject to Japanese national and local
income taxes, which in the aggregate, resulted in a normal effective
statutory tax rate of approximately 29.92% for the years ended March
31, 2021 and 2020.
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2021 and 2020, were as follows:
2021

2020

Thousands of
U.S. Dollars
2021¥6,4522,423¥5,885
1,918$58,279
21,886

1,871

3,159

16,900

1,309
—
2,274
(3,960)10,369

1,328
43
2,233
(3,701)
10,865

11,824—
20,540(35,769)
93,660(25,068)(16,944)(226,430)(1,718)—(15,518)

(955)

(955)

(8,626)(673)(28,414)¥(18,045)(546)(18,445)¥(7,580)(6,079)(256,653)$(162,993)

Millions of Yen
Deferred tax assets:
Allowance for loan losses
Write-down of securities
Liability for retirement
benefits for employees
Depreciation
Tax loss carry forward
Other
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on
available-for-sale securities
Net defined benefit asset
Gain on contribution ofavailable-for-sale securities to
employees’ retirement benefit trusts
Other
Total
Net deferred tax assets

A reconciliation between the normal effective statutory tax rate andthe actual effective tax rate reflected in the accompanying consolidated
statement of income for the years ended March 31, 2021 and 2020, was
as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Income not taxable for income tax purposes
Per capita tax
Net change in valuation allowance
Other—net
Actual effective tax rate

2021

2020

29.92%
0.41(1.46)
0.32
1.15
1.49
31.83%

29.92%
0.48(1.71)
0.37
0.55
1.82
31.43%

27. LEASES

Finance Leases(Lessee)A subsidiary leases certain premises.
There was no rental expense including lease payments under thefinance leases for the years ended March 31, 2021 and 2020.
(Lessor)A subsidiary leases certain equipment and other assets.
The net investments in leases as of March 31, 2021 and 2020, wereas follows:
Millions of Yen

Gross lease receivables
Unguaranteed residual values
Deferred interest income
Total

34

2021

2020

¥55,818
1,436(4,785)¥52,469¥57,530
1,561(5,115)¥53,976

Thousands of
U.S. Dollars
2021$504,182
12,971(43,221)$473,932

Maturities of lease receivables for finance leases that were deemed totransfer ownership of the leased assets to the lessee are as follows:
As of March 31, 2021
Year Ending March 31
2022
2023
2024
2025
2026
2027 and thereafter
Total
As of March 31, 2020
Year Ending March 31
2021
2022
2023
2024
2025
2026 and thereafter
Total

Millions of Yen¥1,491
1,182
978
645
343
417
¥5,056

Thousands of
U.S. Dollars$13,468
10,677
8,834
5,826
3,098
3,766
$45,669

Millions of Yen¥1,572
1,291
984
783
488
494
¥5,612

Maturities of investment in leases for finance leases that were deemed
not to transfer ownership of the leased assets to the lessee are as follows:
As of March 31, 2021
Year Ending March 31
2022
2023
2024
2025
2026
2027 and thereafter
Total
As of March 31, 2020
Year Ending March 31
2021
2022
2023
2024
2025
2026 and thereafter
Total

Millions of Yen¥14,940
12,867
10,306
7,484
4,621
5,600
¥55,818

Thousands of
U.S. Dollars$134,947
116,223
93,09067,60041,74050,582$504,182

Millions of Yen¥14,726
12,685
10,558
7,965
5,203
6,393
¥57,530

Operating Leases(Lessee)
The minimum rental commitments under noncancelable operatingleases as of March 31, 2021 and 2020, were as follows:
Millions of Yen

Due within one year
Due after one year
Total

2021

2020

¥ 274
1,901
¥2,175¥ 282
2,175¥2,457

Thousands of
U.S. Dollars
2021$ 2,475
17,171$19,646(Lessor)
Expected future rental revenues under operating leases as of March 31,
2021 and 2020, were as follows:
Millions of Yen

Due within one year
Due after one year
Total

2021

2020

¥ 491
660
¥1,151¥ 527
815¥1,342Thousands of
U.S. Dollars
2021$ 4,435
5,962$10,39728. FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURES(1) Group Policy for Financial Instruments
The Group provides banking services and comprehensive financial services including a leasing business. The Group meets the needs of local
business through providing various products and services in the banking
services, lending services, trading of securities, securities investments
and other financial services such as a derivatives business. The Group
has aligned its operations with local personnel and businesses and raises
funds from deposits from customers, which are low cost and stable. The
Group also raises funds by borrowing.
As for loans and bills discounted in the money management system,
the Group finances local companies based on their capital demands andindividuals mainly for home mortgages. As its main resources are bankdeposits from customers, the Group aims to ensure the soundness of theassets through appropriate credit decisions and credit rating by understanding the current credit status and managing the credit portfolio toprevent concentrations in specific customers or industries. In marketablesecurities, considering the nature that it is engaged in excess fund management relating to lending services and its responsibility as a bank toprovide settlement services, the Group focuses on running a fund basedon public bonds, which is superior in security and liquidity. To build up
a portfolio that is less subject to rising interest rates, the Group invests
in risk assets, such as securities whose values are expected to be less correlated with bonds.
The Group executes derivative transactions to fund and invest
capital to meet the various needs of its customers as well as to meet its
own needs. In trading transactions, the Group avoids excessive risk by
restricting the type of transactions and limiting the volume of transactions. Also, the Group will not trade a particular investment if its fairvalue is volatile compared to that of the underlying assets (i.e., highleverage-effect transaction).
(2) Nature and Extent of Risks Arising from Financial Instruments
The loans and bills discounted are to general business enterprises, individuals, and local public bodies, and there is a risk (credit risk) that thevalue of loaned money is reduced by financial deterioration of the borrower and a risk (interest risk) of losses due to changes in interest rates.
In securities, the Group holds domestic bonds, foreign securities,
stocks, investment trusts, and investment partnerships and so forth forinvestment purposes. Also, the Group holds certain domestic bonds
for held-to-maturity purposes. In trading securities, the Group holds
domestic bonds for trading. These items have interest risk, risk ofchanges in price, credit risk, and market liquidity risk. Market liquidity
risk represents the risk that market trades cannot be performed due tomarket turmoil and that the Group may suffer losses due to significantly
unfavorable financing conditions.
Deposits and borrowed money hold interest risk and cash flow risk
(liquidity risk). Cash flow risk refers to the risk that securing necessaryfinancing becomes difficult or significant unfavorable financing conditions result in recording of loss due to a mismatch of periods between
operations and financing and unexpected outflows of money. Derivativetransactions related to interest are comprised of interest-rate swap agreements, cap agreements, floor agreements, and interest futures.
Derivative transactions related to currency are comprised of exchange contracts, non-deliverable forwards (NDF), currency swap agreements, and currency option contracts. Derivative transactions related tosecurities are comprised of bond futures, options on bond futures, OTC
bond options, stock index futures, options on stock index futures, andindividual security options.
The Group utilizes derivative transactions to meet customer needs
and to control risk so that interest risk, risk of changes in prices, andforeign currency exchange risk are not excessive. In trading transactions,
the Group utilizes derivative transactions to earn a profit and to accumulate the know-how related to the transactions and understand market
trends.
The derivative transactions the Group utilizes are exposed to interest risk, currency exchange risk, the risk of change in prices, and credit
risk. In utilizing derivative transactions, the Group performs effective
covering of transactions to meet customers’ needs, and in trading transactions, the Group preliminarily establishes a risk limit to avoid exposing the Group to an excessive degree of market risk. Transactions suchas listed futures are exposed to limited credit risk and OTC transactions
such as interest swaps are assumed to have low risk since the counterparties are comprised of highly credible financial institutions and companies.

Certain derivatives utilized to mitigate risks from securities arerecorded on the basis of hedge accounting in accordance with “Practical
Guideline for Accounting for Financial Instruments” (JICPA Accounting System Committee Report No. 14). Such derivatives are interest rate
swaps that are utilized to control the risks from securities. The Bank
reviews the effectiveness of hedging activities using the methods permitted under the accounting standards.
(3) Risk Management for Financial Instruments
Integrated risk
The Group defines integrated risk management policies and regulations,and strengthens integrated risk management to ensure the soundness ofmanagement.
The Group monitors various risks holistically including measurement by statistical methods and aims to control risks within the rangeof management vitality. Specifically, the Group allocates risk capitalto credit risk, market risk, and operational risk based on Value at Risk(“VaR”) calculations according to assumptions about the market fluctuation rate and its half year business plan. In each operational division, theGroup aims to control risk and obtain returns within the range of risk
capital. Integrated risk is managed by the Risk Management Divisionand is reported monthly to the Integrated Risk Management Council
and semiannually to the Board of Directors’ meetings. Necessary actions
such as risk control are taken promptly.
Credit risk management
The Group defines credit risk management policy and rules such as
credit risk management regulation to understand, manage and take actions on credit risk appropriately.
In screening requests for loans, the Group clearly separates the credit department from the operating department and the Group performs
strict examination by the type of business. Also, the Group analyzes if
repayment resources are ensured and reasonably secured on individualloans based on the purpose of the loan, business plans and investment
effects.
For credit portfolio management, the Group aims to prevent concentrations in particular customers or industries and ensure profits tomeet credit costs.
In addition, in order to improve credit risk, the Group seeks to
implement management and business restructuring for customers experiencing difficult business conditions.
Regarding credit risk management, the Group defines a credit
rating system where the Group evaluates the degree of credit risk by an
integrated scale objectively and makes arrangements to reevaluate credit
ratings close to fiscal year end or when there are any changes in credit
status.
As for the level of credit risk and degree of concentration of credit
granting, the Risk Management Division manages credit risk, reportsmonthly to the Integrated Risk Management Council and quarterly to
management and discusses necessary actions.
Market risk management (foreign exchange risk and interest rate risk)
The Group considers interest rate risk, currency risk and the risk ofchange in prices as the main market risks and institutes a market risk
management policy to manage the risks properly to avoid a reduction in
the value of assets and losing credit. The Group also institutes market
risk management regulations according to the market risk management policy to clarify the identification of market risk, the role of thedepartment in charge, the method of evaluation and monitoring and themethods for controlling and reducing market risk.
Under integrated risk management, the Group allocates risk capitalto each business (deposit, loan, investment securities and other securities) and establishes a cap on the investment amount and a maximum
loss amount and matters to be discussed (level of loss to be re-examined).
The Group handles market transactions within these risk limits expeditiously and effectively. With regard to these risks, the Risk Management
Division manages and reports monthly to the Integrated Risk Management Council and semiannually to the Board of Directors’ meetings anddiscusses necessary actions.
Regarding derivative transactions, the Group follows internal regulations and policies. The market-risk-management department (middle
office) and office-work department (back office) manage and monitor
the balance, fair value, profit and loss and measurement of risk of thetransactions and report to top-management regularly to ensure mutual
supervision of risks. Especially in trading transactions, the market-riskmanagement department (middle office) manages the positions, measurement of risk and application for loss cut rule closely.

35

The Group holds financial instruments which are exposed to market
risks (e.g. interest rate risk, price-volatility risk and exchange risk) suchas loans and bills discounted, securities, deposits, negotiable deposits,
borrowed money and corporate bonds. To manage these market risks,
the Group calculates VaR, which is used for quantitative analysis.
The Group calculates VaR of yen-denominated bonds (including
private placement bonds), borrowed money and corporate bonds thatare exposed to interest rate risk by the variance-covariance method (sixmonths holding period with confidence interval of 99%, observation
period one year). The VaR of these financial instruments amounted to¥23,109 million ($208,735 thousand) and ¥36,025 million in aggregate
as of March 31, 2021 and 2020, respectively.
The Group has changed the calculation method of VaR and has
included yen-dominated bonds other than private placement bonds fromthe current fiscal year. As a result, the VaR decreased by ¥6,211 million($56,102 thousand) for the year ended March 31, 2021 and ¥36,025
million calculated based on the previous standard for the year ended
March 31, 2020.
The Group calculates VaR of investment securities that are exposed
to price-volatility risk by the variance-covariance method (six months
holding period with confidence interval of 99%, observation period oneyear). The VaR of these financial instruments amounted to ¥38,734 million ($349,869 thousand) and ¥32,969 million in aggregate as of March
31, 2021 and 2020, respectively.
In addition, the Group calculates VaR of securities, excluding investment securities, which are exposed to interest rate risk or the pricevolatility risk by the variance-covariance method (six months holding
period with confidence interval of 99%, observation period one year).
The VaR of these financial instruments amounted to ¥39,525 million($357,014 thousand) and ¥71,542 million in aggregate as of March 31,
2021 and 2020, respectively.
The Group compares VaR calculated by the formula with the actualfluctuation of realized gains and losses to verify that the calculated VaRreflects market risks with a high degree of accuracy.
However, VaR might not reflect market risks in circumstances suchas unforeseen wide fluctuations in market circumstances because VaRreflects a certain amount of market risks calculated statistically based on
historical fluctuation.
Liquidity risk management
As to liquidity risk, the Group defines liquidity risk management policies and liquidity risk management regulations, and aims to manage
stable cash flows. Also, to be prepared for unforeseeable circumstances,
the Group defines a contingency plan for liquidity risks and addresses
them in a timely manner.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active
markets. If quoted prices are not available, other rational valuation
techniques are used instead. Please see Note 30 for the details of the fairvalue of derivatives. Fair values are calculated based on certain assumptions; therefore, fair values may vary according to the assumptions used.
(a) Fair value of financial instruments
Millions of Yen
March 31, 2021

36

Cash and due from banks
Trading securities
Money held in trust
Securities:
Held-to-maturity securities
Available-for-sale securities
Loans and bills discounted
Less: Allowance for loan losses
Loans and bills discounted—net
Total
Deposits
Negotiable certificates of deposit
Payables under repurchaseagreements
Borrowed money
Total
Derivatives to which hedge
accounting is not applied
Derivatives to which hedge
accounting is applied *Carrying
Amount¥947,016
291
12,312

Fair Value¥947,016
291
12,312

Unrealized
Gains/Losses———

58,0791,475,901
4,481,150(24,555)
4,456,595¥6,950,194¥6,072,473
28,10058,1791,475,901¥

4,480,085¥6,973,784¥6,072,544
28,10023,490¥23,590¥71—

126,701

126,701—

467,151¥6,694,425

467,152¥6,694,497

1¥72¥(3,592)¥(3,592)

—

369

369

—

100
—

Millions of Yen
March 31, 2020
Cash and due from banks
Trading securities
Money held in trust
Securities:
Held-to-maturity securities
Available-for-sale securities
Loans and bills discounted
Less: Allowance for loan losses
Loans and bills discounted—net
Total
Deposits
Negotiable certificates of deposit
Payables under repurchaseagreements
Borrowed money
Total
Derivatives to which hedge
accounting is not applied
Derivatives to which hedge
accounting is applied

March 31, 2021
Cash and due from banks
Trading securities
Money held in trust
Securities:
Held-to-maturity securities
Available-for-sale securities
Loans and bills discounted
Less: Allowance for loan losses
Loans and bills discounted—net
Total
Deposits
Negotiable certificates of deposit
Payables under repurchaseagreements
Borrowed money
Total
Derivatives to which hedge
accounting is not applied
Derivatives to which hedge
accounting is applied *Carrying
Amount¥632,783
408
8,512

¥632,783
408
8,512

Unrealized
Gains/Losses———

Fair Value

53,0691,171,810
4,345,574(22,484)
4,323,090¥6,189,672¥5,610,659
38,05053,2581,171,810¥189—

4,342,129¥6,208,900¥5,610,686
38,05019,039¥19,228¥27—

140,754

140,754—

208,421¥5,997,884

208,413¥5,997,903

(8)
¥19

¥620

¥620

—

(249)

(249)

—

Thousands of U.S. Dollars
Carrying
Unrealized
Fair Value
AmountGains/Losses$8,554,024 $8,554,024
—
2,628
2,628
—
111,209111,209—524,604
525,508
13,331,235 13,331,235
40,476,470(221,795)
40,254,675 40,466,851$62,778,375 $62,991,455$54,850,267 $54,850,908
253,816
253,816
1,144,440$904—
212,176$213,080$641—

1,144,440—

4,219,592
4,219,601$60,468,115 $60,468,765

9
$650

$(32,445) $(32,445)

—

3,333

3,333

—

* Interest rate swap designated as a hedging instrument to offset thefluctuation of securities, which are the hedged items, and deferredhedge accounting is applied. The hedging relationships are accounted
for based on “Practical Solution on the Treatment of Hedge Accounting for Financial Instruments that Reference LIBOR” (PITF No. 40,
September 29, 2020).
AssetsCash and Due from Banks
The carrying amount of cash and due from banks with no maturities
represents the fair value because the fair value approximates such carrying amount.
Trading Securities
For securities such as bonds that are held for trading, the fair value isdetermined based on the prices quoted by the exchange or the financial
institutions from which these securities are purchased.
Money Held in Trust
For securities and bonds independently managed in monetary trust, thefair value of equity securities is determined based on the prices quoted
by the exchange and the fair value of bonds is determined based on theprices quoted by the exchange or the financial institutions from which
they are purchased.

Also, trusts for cash segregated as deposits for customers of consolidated subsidiaries engaged in the financial instruments exchange
business are based on the prices quoted by the financial institutions fromwhich they are purchased.
Information on money held in trust by classification is included in
Note 7, “Money Held in Trust.”
Securities
The fair value of equity securities is determined based on the prices
quoted by the exchange and the fair value of bonds is determined basedon the prices quoted by the exchange or the financial institutions fromwhich they are purchased. The fair value of investment trusts is determined based on the publicly available price.
For privately placed guaranteed bonds held by the Bank, the fairvalue is based on the present value of expected future cash flows, which
are adjusted to reflect default risk, amounts to be collected from collateral, guarantees and guarantee fees, and discounted at the market interest
rate as of the date of evaluation.
Information on securities by classification is included in Note 6,“Trading Securities and Securities.”
Loans and Bills Discounted
For loans with variable interest rates, the fair value approximates the
carrying value because it reflects the market interest rate in the shortterm as long as the credit status of the borrower has not changed significantly. For loans with fixed interest rates, the fair value is calculated
by bundling the type of loans and the internal credit rating using the
expected future cash flows, which are discounted by the risk free rateand certain management costs. Certain consumer loans, such as homemortgages, fair value is calculated by discounting the total loan principal with the same rate as a similar loan. For consumer loans that mature
within one year, the fair value approximates the carrying value due totheir short-term maturities. In addition, as for loans to legally bankrupt
borrowers, virtually bankrupt borrowers, and potentially bankrupt borrowers, the fair value is calculated by deducting the allowance, which is
calculated based on the present value of the estimated future cash flow or
the estimated collection of cash from collateral and guarantee, from thebalance in the consolidated balance sheet date. Therefore, the book value
approximates the fair value. Regarding loans that do not have repayment terms because the outstanding amount of the loan is limited to thevalue of collateral assets, the fair value approximates the carrying value
because of the estimated repayment periods and conditions of interest.
Liabilities
Deposits and Negotiable Certificates of Deposit
For demand deposits, the amount payable on demand as of the consolidated balance sheet date (i.e., the carrying amount) is considered tobe the fair value. Time deposits are grouped by maturity lengths andtheir fair value is calculated by discounting future cash flows with thesame interest rate as that of accepted new deposits. For the deposits andnegotiable certificates of deposits with the repayment period within one
year, the fair value approximates the carrying value due to their shortterm maturities.
Payables under Repurchase Agreements
The contract terms of payables under repurchase agreements are short(within one year). Therefore, the fair value approximates the carrying
value due to their short-term maturities.
Borrowed Money
For borrowed money with variable interest rates, the fair value approximates the carrying value because it reflects the market interest rate in
the short term and the credit status of the Bank and its consolidated
subsidiaries has not changed significantly since inception.
For borrowed money with fixed interest rates, the fair value iscalculated by discounting the total amount of principal and interest by
an interest rate that takes into account the credit risk of the Bank andits consolidated subsidiaries for each classification based on the type andduration of the borrowed money. Also, for borrowed money that mature
within one year, the fair value approximates the carrying value due to its
short-term maturities.

(b) Financial instruments whose fair value cannot be reliably determined
Carrying amountMillions of Yen

Unlisted equity securities *1, *2
Investments in unconsolidated
subsidiaries
Others
Total

2021

2020

¥6,220¥6,501

Thousands of
U.S. Dollars
2021$56,183

658

640

5,943

17,742¥24,620

19,582¥26,723

160,257$222,383*1 Since the fair values of unlisted stocks cannot be reliably determined,
their fair values are not disclosed.
*2 Impairment loss of ¥2 million ($18 thousand) is recorded for unlisted
equity securities for the year ended March 31, 2021.
(5) Maturity Analysis for Financial Assets, Securities and Financial
Liabilities with Contractual Maturities
March 31, 2021

Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years¥884,683———

Cash and due from banks
Securities:
Held-to-maturity securities:
Debt securities—
9,663 ¥38,811 ¥9,397 ¥208
Japanese corporate bonds
Available-for-sale securities
with contractual maturities:
Debt securities:
Japanese government bonds
25,00017,400150,000
65,000Japanese local
9,509
91,811
376,290678
government bonds
Japanese corporate bonds
25,19761,64634,939107,225
Other
14,38379,534160,458
109,293
Loans and bills discounted *831,070 1,212,278
958,055 1,401,071
Total¥1,799,505 ¥1,501,480 ¥1,689,139 ¥1,683,475

Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
March 31, 2021
Year through Years throughor Less
Years
5 Years
10 Years
Deposits¥5,663,805¥408,665¥3—
Negotiable certificates of deposit
28,100———
Payables under repurchase
126,701———agreements
259,351
207,800——
Borrowed money¥6,077,957¥616,465
¥3
—
Total

March 31, 2020

Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years¥565,344———

Cash and due from banks
Securities:
Held-to-maturity securities:
Debt securities—
9,205 ¥35,674 ¥7,916 ¥274
Japanese corporate bonds
Available-for-sale securities
with contractual maturities:
Debt securities:
Japanese government bonds
49,80045,40055,00030,000Japanese local
25,502
39,254
268,051
950
government bonds
Japanese corporate bonds
7,543
29,811
24,247100,784
Other
10,90478,047
155,295
122,375
Loans and bills discounted *874,200 1,220,656
862,053 1,304,329
Total¥1,542,498 ¥1,448,842 ¥1,372,562 ¥1,558,712

Derivatives
Information regarding the fair value for derivatives is included in Note 30.

37

Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
March 31, 2020
Year through Years throughor Less
Years
5 Years
10 Years
Deposits¥5,137,444¥473,210¥5—
Negotiable certificates of deposit
38,050———
Payables under repurchase
140,754———
agreements
98,222
110,199—
Borrowed money¥5,414,470¥583,409
¥5
—
Total

March 31, 2021

Thousands of U.S. Dollars
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years$7,990,994———

Cash and due from banks
Securities:
Held-to-maturity securities:
Debt securities—
87,282 $350,565 $84,879 $1,878
Japanese corporate bonds
Available-for-sale securities
with contractual maturities:
Debt securities:
Japanese government bonds
225,815
157,167 1,354,891
587,120
Japanese local
85,891
829,293 3,398,880
6,124
government bonds
Japanese corporate bonds
227,595
556,824
315,590
968,521
Other
129,916
718,399 1,449,355
987,201
Loans and bills discounted *7,506,730 10,950,032 8,653,735 12,655,325
Total$16,254,223 $13,562,280 $15,257,330 $15,206,169

Thousands of U.S. Dollars
Due after 1 Due after 5
Due in 1 YearDue after 10
March 31, 2021
Year through Years throughor Less
Years
5 Years
10 Years
Deposits$51,158,929 $3,691,311$27—
Negotiable certificates of deposit
253,816———
Payables under repurchase
1,144,440———
agreements
2,342,616 1,876,976——
Borrowed money$54,899,801 $5,568,287
$27
—
Total

* Loans and bills discounted whose cash flows cannot be estimated, suchas “legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy” loans amounting to ¥66,355 million ($599,358 thousand)and ¥60,566 million as of March 31, 2021 and 2020, respectively, andloans and bills discounted with no contractual maturities, amounting
to ¥12,321 million ($111,290 thousand) and ¥23,770 million as ofMarch 31, 2021 and 2020, respectively, are not included.
Please see Note 15 for annual maturities of borrowed money.

29. COMMITMENTS AND CONTINGENT LIABILITIESCommitment line contracts on overdrafts and loans are agreements tomake loans to customers when they apply for borrowing up to a prescribed amount, as long as there is no violation of any condition in thecontracts.
The total amounts of unused open commitments as of March 31,
2021 and 2020, were ¥1,392,877 million ($12,581,312 thousand) and¥1,359,616 million, respectively. Multi-purpose accounts included in
the unused open commitments as of March 31, 2021 and 2020, were¥559,449 million ($5,053,283 thousand) and ¥577,274 million, respectively. The amounts of unused commitments whose original contract
terms were within one year or unconditionally cancelable at any time asof March 31, 2021 and 2020, were ¥1,358,212 million ($12,268,196
thousand) and ¥1,327,570 million, respectively.
Since many of these commitments are expected to expire without
being drawn upon, the total amount of unused commitments does notnecessarily represent actual future cash flow requirements. Many of thesecommitments have clauses enabling the Bank and certain subsidiaries toreject the loans to customers or reduce the contract amounts of commitment, in the event monetary conditions have changed and the Bank andcertain subsidiaries need to secure claims, or other considerable events
have occurred.

38

In addition, if necessary, the Bank and certain subsidiaries can request the customers to pledge collateral such as premises and securities
at the execution of the contracts. After execution, the Bank and certain
subsidiaries periodically evaluate the customers’ financial position based
upon the Bank’s internal policy, and take necessary measures to manage
the credit exposures, such as revising the terms of contracts or securing
the claims.

30. DERIVATIVE INFORMATIONThe Bank enters into swaps related to interest rates, foreign exchange
forward contracts, swap and option contracts related to currencies, overthe-counter bond options and stock index options contracts related tosecurities.
Derivative Transactions to Which Hedge Accounting Is Not Applied as of March 31, 2021 and 2020
March 31, 2021
Over-the-counter:
Interest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-counter:
Currency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:Sell
Buy

March 31, 2020
Over-the-counter:
Interest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-counter:
Currency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:Sell
Buy

Contract
AmountMillions of Yen
Contract
Unrealized
Amount Due Fair Value
Gains (Losses)
after One Year¥9,046¥9,046

¥337

¥337

9,046

9,046

(5)

(5)

230,352

199,148

(553)

204

83,1835,801

22—(3,638)250(3,638)250

111,114110,951

75,70976,681(4,816)
4,833

2,340
(1,244)

—
—

—
—

—
—

—
—

Contract
AmountMillions of Yen
Contract
Unrealized
Amount Due Fair Value
Gains (Losses)
after One Year¥3,687¥3,687

¥182

¥182

3,687

3,687

(62)

(62)

209,188

158,773

675

1,181

27,732
12,426

109
—

(362)
176

(362)
176

121,539
121,986

84,206
84,812(5,208)
5,219

2,458
(1,223)

—
—

—
—

—
—

—
—

Thousands of U.S. Dollars
Contract
Contract
Unrealized
Amount Due Fair Value
AmountGains (Losses)
after One Year

March 31, 2021
Over-the-counter:
Interest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-counter:
Currency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:
Sell
Buy$81,709 $81,709
81,70981,709$3,044$3,044

(45)

(45)

2,080,679

1,798,826(4,995)

1,843

751,359
52,398199—(32,861)
2,258(32,861)
2,258

1,003,649
1,002,177

683,850
692,629(43,501)
43,655

21,136(11,237)

—
—

—
—

—
—

—
—

Notes:
1. Derivative transactions are valued at market and the gains/losses arerecognized in the consolidated statement of income.
2. Market values of exchange-traded transactions are based on closing
prices on the exchange markets, such as the Tokyo and Osaka International Financial Futures Exchange. Market values of over-the-countercontracts are based on valuation techniques such as the discounted
cash flow method and the option pricing calculation models.
3. There were no transactions applicable for stock-related contracts,bond-related contracts, commodities or credit derivatives for the years
ended March 31, 2021 and 2020.
Derivative Transactions to Which Hedge Accounting Is Applied
as of March 31, 2021 and 2020

2021
Principal method—
Interest rate swap—
receive float / pay fixed

2020
Principal method—
Interest rate swap—
receive float / pay fixed2021
Principal method—
Interest rate swap—
receive float / pay fixed

HedgedItem
Securities

HedgedItem
Securities

HedgedItem
Securities

31. COMPREHENSIVE INCOME

The components of other comprehensive income (loss) for the years
ended March 31, 2021 and 2020, were as follows:

Unrealized gain (loss) on
available-for-sale securities:
Gains arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain (loss) on hedges:
Adjustments arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive
income (loss)

Contract
Amount¥15,000¥15,000¥369

Millions of Yen
Contract
Amount Due Fair Valueafter One Year
¥15,000¥(249)

Thousands of U.S. Dollars
Contract
Contract
Amount Due Fair Value
Amountafter One Year
$135,489$135,489

2020¥34,143¥(17,795)$308,400(6,664)(1,668)(60,193)

27,479(8,124)
19,355(19,463)5,599(13,864)

248,207(73,381)
174,826

618

(249)

5,582

—

—

—

618
(185)
433

(249)
75
(174)

5,582
(1,671)
3,911

8,226

(2,028)74,303

321

(207)

2,899

8,547
(2,557)
5,990(2,235)669(1,566)

77,202(23,097)
54,105¥25,778¥(15,604)$232,842

32. PER SHARE INFORMATION

a. Net Income per Share
Reconciliation of the differences between basic and diluted net income
per share (“EPS”) for the years ended March 31, 2021 and 2020, was asfollows:
Millions of Thousands ofYen
SharesNet Income
Attributable Weightedto Owners of Average Shares
ParentMillions of Yen
Contract
Contract
Amount Due Fair Value
Amountafter One Year
¥15,000

2021

Thousands of
U.S. Dollars
2021

Millions of Yen

Year Ended March 31, 2021
Net income attributable to¥14,723owners of parent
Amount not attributable to—common shareholders
Basic EPS—Net income
available to common
14,723
shareholders
Effect of dilutive securities—
Stock acquisition rights
Diluted EPS—Net income forcomputation¥14,723

37,373Yen

U.S. Dollars
EPS¥393.94$3.56¥393.26

$3.55

65
65
37,438$3,333

Notes:
1. Deferred hedge accounting is applied principally in accordance with
“Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA Industry-specific Committees Practical Guideline No.
24) issued by the Japanese Institute of Certified Public Accountants.
2. Market values of exchange-traded transactions are based on closing
prices on the exchange markets, such as the Tokyo and Osaka International Financial Futures Exchange. Market values of over-the-countercontracts are based on valuation techniques such as the discounted
cash flow method and the option pricing calculation models.

39

Millions of Thousands ofYen
SharesNet Income
Attributable Weightedto Owners of Average Shares
ParentYear Ended March 31, 2020
Net income attributable to¥12,862
owners of parent
Amount not attributable to—common shareholders
Basic EPS—Net income
available to common
12,862shareholders
Effect of dilutive securities—
Stock acquisition rights

37,366

Yen
EPS¥344.22

56
56

Diluted EPS—Net income forcomputation¥12,862

37,422¥343.71b. Net Assets per Share
Net assets per share as of March 31, 2021 and 2020, were ¥10,424.06($94.16) and ¥9,368.09, respectively.
Net assets per share of common stock as of March 31, 2021 and2020, were calculated based on the following:
2021¥403,010

2020¥366,404

Thousands of
U.S. Dollars
2021$3,640,231

169
13,263

161
16,172

1,527
119,799¥389,578¥350,071$3,518,905

37,37337,368Millions of Yen
Total net assets
Deductions from total net assets:
Stock acquisition rights
Noncontrolling interests
Net assets attributable to common
stock at the end of the fiscal year
Number of shares of common stockat the end of the fiscal year used forthe calculation of net assets per share(shares in thousands)

33. SUBSEQUENT EVENTSAppropriation of Retained Earnings

On June 18, 2021, the Bank’s shareholders authorized an appropriationof retained earnings as follows:
Millions of Yen
Year-end cash dividends—¥55.00 ($0.50) per share oncommon stock¥2,056

Thousands of
U.S. Dollars$18,571

Transition to a Holding Company Structure through a Sole
Share Transfer

During the Board of Directors meeting held on May 13, 2021, the Bank
resolved to establish a holding company (wholly-owning parent company), Juroku Financial Group, Inc. (the “Holding Company”), by wayof a sole share transfer by the Bank (the “Share Transfer”) and transition
to a holding company structure with an (scheduled) effective date of October 1, 2021, on the condition that the relevant proposals are approvedat the Bank’s Annual General Meeting of Shareholders and the required
approval, etc. from the relevant authorities is obtained.
1. Purpose of the Share Transfer
As a financial institution with its operations in Gifu and Aichi prefectures, the Bank’s aim has been to become a comprehensive financialgroup that builds a future with its local communities and achieves
sustainable growth by creating common value through engagement
in dialogue with local communities for the purpose of contributing
to stimulating the economy. Recently, the Group has been seeking toenhance its group management system in order to respond to rapidly
advancing digital transformation and the needs and challenges of ourcustomers and local communities, in addition to SDGs and regional
revitalization efforts.
Concurrently, there have been major changes in the businessenvironment surrounding regional financial institutions, such as the40

ongoing low-interest policy, intensifying competition across industries
and business categories, a shrinking and aging population, and increasing uncertainty about the future market scale due to structural changes
in the industry. In order to contribute to the realization of a sustainable
society, regional financial institutions must transform their businessmodels and adapt to deregulation.
For these reasons, the Group has decided to transition to a holding
company structure in order to expand our business domain such as byestablishing new businesses, strengthen collaboration and optimize theallocation of resources within the Group by reforming the thinking andbehavior of our officers and employees, enhance auditing and supervisory
functions, and accelerate business execution.
Under the Holding Comapny structure, with the mission of“achieving growth and prosperity for our customers and the local community” as part of our Group management philosophy, the Group will
work to enhance corporate value by creating a business structure thatcan respond flexibly to changes in the business environment in order tosupport our customers’ businesses, in which the Group’s management
resources are concentrated, and fulfil our obligations toward sustainableregional growth.
In addition, the Holding Company will be a company with an audit
and supervisory committee, consisting of three or more directors, themajority of whom are outside directors, further enhancing its corporate
governance by strengthening not only the decision-making function,
but also the auditing and supervisory function of the board of directors.
Because the Bank will become a wholly owned subsidiary companyof the Holding Company through the Share Transfer, the shares of the
Bank will be delisted. However, the Group intends to apply to list theshares of the Holding Company—which will be delivered to all shareholders of the Bank as consideration for the shares of the Bank—on theFirst Section of the Tokyo Stock Exchange, Inc. (the “TSE”) and the First
Section of the Nagoya Stock Exchange, Inc. (the “NSE”). The date oflisting depends on the reviews by the TSE and NSE, but is scheduled for
October 1, 2021, which is the date of registration of the establishmentof the Holding Company and the effective date of the Share Transfer.
This policy means that the stock will effectively remain listed.
2. Summary of the Share Transfer(1) Schedule of the Share Transfer
Record date of Annual
General Meeting of Shareholders
Wednesday, March 31, 2021
Board of Directors to approve
the share transfer plan
Thursday, May 13, 2021
Annual General Meeting of
Shareholders to approve the sharetransfer plan
Friday, June 18, 2021
Wednesday, September 29, 2021
Delisting date of the Bank’s shares(subject to change)
Date of registration of establishment of
Friday, October 1, 2021
the Holding Company (effective date)(subject to change)
Listing date of the Holding Company’s
Friday, October 1, 2021
shares(subject to change)
However, the above schedule may change due to procedural reasons associated with the Share Transfer or other reasons.
(2) Method of the Share Transfer
This is a sole share transfer in which the Bank will be a wholly-owned
subsidiary and the Holding Company will be the wholly-owning parent
company through the share transfer.
(3) Details of allotment related to the Share Transfer (share transfer ratio)
Company
Name

Juroku Financial Group, Inc.
(Wholly-owning parent
company established by theshare transfer)

The Juroku Bank, Ltd.
(Wholly-owned subsidiary
after the share transfer)

Share transfer
ratio

1

1

1) Share transfer ratio
All shareholders of the Bank immediately before the timing of theacquisition by the Holding Company of all issued shares of the Bank
under the Share Transfer will receive an allotment of one share of thecommon stock of the Holding Company to be established per share ofcommon stock of the Bank that they hold.

2) Share unit number
The Holding Company will adopt a share unit system, and the numberof shares constituting a unit will be 100 shares.
3) Basis for calculation of the share transfer ratio
The Share Transfer is a sole share transfer to establish a single parent company of the Bank, and there is no change in the shareholding
structure of the Bank or the Holding Company at the time of the Share
Transfer; therefore, with the principal concern that no disadvantage be
incurred by the shareholders of the Bank, each shareholder will receive
an allotment of one share of the common stock of the Holding Company
per share of the common stock of the Bank that they hold.
4) Results of calculations by third-party organizations, calculation methods, and basis for calculation
As stated in 3) above, the Share Transfer is a sole share transfer by the
Bank, and therefore no calculation of the share transfer ratio has been
conducted by a third-party organization.
5) Number of new shares to be delivered through the Share Transfer(subject to change)
37,924,134 shares of common stock (subject to change)
However, if there is a change in the total number of issued shares of the
Bank prior to the Share Transfer taking effect, there will also be a change
in the above number of new shares to be delivered by the Holding Company. For each treasury share held by the Bank as of the effective date of
the Share Transfer, the same number of shares of the common stock of
the Holding Company will be allotted. As a result, the Bank will temporarily hold shares of common stock of the Holding Company, which it
will dispose of promptly in accordance with laws and regulations.
(4) Matters related to stock acquisition rights and bonds with stockacquisition rights due to the Share Transfer
Regarding stock acquisition rights issued by the Bank, the Holding
Company stock acquisition rights with the same details and number as
the Bank’s stock acquisition rights will be allotted to the holders of theBank’s stock acquisition rights in lieu of the Bank’s stock acquisitionrights. The Bank does not issue bonds with stock acquisition rights.
(5) Treatment of the new listing of the Holding Company
The Bank intends to apply for a new listing (technical listing) of theshares of the newly established Holding Company on the First Sectionof the Tokyo Stock Exchange and the First Section of the Nagoya Stock
Exchange, with a planned listing date of October 1, 2021. In addition,
because the Bank will become a wholly-owned subsidiary of the Holding Company through the Share Transfer, the shares of the Bank will
be delisted on September 29, 2021 from the First Section of the Tokyo
Stock Exchange and the First Section of the Nagoya Stock Exchange,ahead of the listing of the Holding Company.
The delisting date is subject to change as it is determined in accordance with the rules of the Tokyo Stock Exchange.
3. Overview of the Holding Company (wholly-owning parent company
established by the share transfer) to be established through the Share
Transfer (subject to change)(1) Name(2) Address(3) Scheduled
appointment ofrepresentatives
and officers

Juroku Financial Group, Inc.
8-26 Kandamachi, Gifu City
Yukio Murase
Chairman (representative director)(currently Chairman and CEO, The Juroku Bank, Ltd.)
Naoki Ikeda
President (representative director)(currently deputy president, The Juroku Bank, Ltd.)
Akihide Ishiguro
Deputy president(currently director and managing executive officer, The
Juroku Bank, Ltd.)
Yukiyasu Shiraki
Director(currently director and managing executive officer, The
Juroku Bank, Ltd.)
Makoto Mishima
Director(currently director and managing executive officer, The
Juroku Bank, Ltd.)

Hiroyuki Ota
Director(currently president, Juroku TT Securities Co., Ltd.)
Kikuo Asano
Director(currently outside director, The Juroku Bank, Ltd.)
Satoko Ito
Director(currently outside director, The Juroku Bank, Ltd.)
Naohiko Ishikawa
Director (Audit & Supervisory Committee Member)(currently auditor, The Juroku Bank, Ltd.)
Shinji Ishihara
Director (Audit & Supervisory Committee Member)(currently outside auditor, The Juroku Bank, Ltd.)
Rie Tsuge
Director (Audit & Supervisory Committee Member)Note:
Of the directors, Mr. Kikuo Asano, Ms. Satoko Ito,and of the directors (Audit & Supervisory Committee
Members), Mr. Shinji Ishihara and Ms. Rie Tsuge, areoutside directors as stipulated in Article 2, Item 15 of
the Companies Act.
(4) Business
1) Business management of a bank and companies able todescription
be subsidiaries under the Banking Act
2) All operations that are incidental or related to theoperations set forth in the preceding subparagraph3) In addition to the operations listed in the two preceding subparagraphs, operations that can be carried out by
a bank holding company under the Banking Act(5) Capital¥36,000 million ($325,174 thousand)(6) Fiscal year-end March 31

4. Overview of accounting treatment applied to the Share Transfer
As the share transfer corresponds to “transactions under common
control” for corporate accounting purposes, there will be no impact on
profit or loss.

Establishment of a Subsidiary

During the Board of Directors meeting held on December 18, 2020,
the Bank resolved to establish a wholly-owned subsidiary specializing ininvestment, and established the company on April 1, 2021.
1. Purpose of establishment
In view of the transition to a group management structure centered on
the Holding Comapny, the Group established a subsidiary specializing
in investment with the aim of contributing to the revitalization of thelocal economy by responding to deregulation and expanding businessdomains, such as providing new services to customers, actively supporting and nurturing venture companies, and supporting companies
engaged in business succession and business revitalization.
In addition, through its subsidiary specializing in investment, theGroup will consider making a foray into businesses related to regional
revitalization and businesses that meet the needs of the times, such as
those related to IT and FinTech, and will strive more than ever to support customers’ businesses and achieve sustainable regional growth.
2. Overview of subsidiary(1) Name
NOBUNAGA Capital Village Co., Ltd.
Kyowa No.2 Building, 6-11-1 Kandamachi,(2) Address
Gifu City(3) Business
Administration and management of limdescription
ited investment partnerships (funds), and all
operations that are incidental or related to theaforementioned operations(4) Established
April 1, 2021
(5) Capital¥50 million ($452 thousand)(6) Major shareholders Wholly owned by The Juroku Bank, Ltd.
and shareholding ratio

4134. SEGMENT INFORMATION

Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance No. 20, “Guidance on AccountingStandard for Segment Information Disclosures,” an entity is required to report financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components ofan entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is usedinternally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
a. Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Group’s management isbeing performed in order to decide how resources are allocated among the Group.
The Group consists of the Bank and seven (seven in 2020) consolidated subsidiaries. The Group provides banking services-based comprehensive financial services and leasing business. The Group operates its business by units which consists of some branches located in a certain range. However, theGroup discloses these units as a segment of the banking business because their economic nature is similar to each other. Therefore, the Group consists of
two reportable segments: banking business and lease business.
The banking business is operated by the Bank and provides various services such as deposit-taking and lending services, trading securities, securities investment, domestic exchange, foreign exchange, managing bonds, a derivatives business and other related businesses at headquarters and branchesof the Bank.
The lease business is operated by Juroku Lease Co., Ltd. It provides leasing business to meet local customers’ needs.
b. Methods of Measurement for the Amounts of Income, Profit, Assets and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies.”c. Information about Income, Profit, Assets, Liabilities and Other Items
Millions of Yen
2021
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Allowance for loan losses
Increase in premises and equipment and intangible assets

Reportable Segment
Banking
Lease
Total

Other

¥77,893
1,171¥79,064¥22,506
7,182,220¥25,483377¥25,860¥481
83,101¥103,376
1,548¥104,924¥22,987
7,265,321¥7,9711,311¥9,282¥2,111
60,093¥111,347
2,859¥114,206¥25,098
7,325,414—¥(2,859)¥(2,859)¥(490)(87,039)¥111,347—¥111,347¥24,608
7,238,375

2,700
245
51,288
466
3,890
1,542

556
—
161
197
53
256

3,256
245
51,449
663
3,943
1,798

185
207
255
8
62
25

3,441
452
51,704
671
4,005
1,823

136
—
(629)
(135)
—
159

3,577
452
51,075
536
4,005
1,982

Total

Reconciliations Consolidated

Millions of Yen
2020
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Allowance for loan losses
Increase in premises and equipment and intangible assets

42

Reportable Segment
Banking
Lease
Total

Other

¥75,843
813¥76,656¥18,524
6,418,957¥24,460
675¥25,135¥986
84,448¥100,303
1,488¥101,791¥19,510
6,503,405¥6,557
1,231¥7,788¥573
54,058¥106,860
2,719¥109,579¥20,083
6,557,463—¥(2,719)¥(2,719)¥(586)(85,009)¥106,860—¥106,860¥19,497
6,472,454

3,066
245
54,820
2,853
3,140
1,326

549
—
179
201
(21)
516

3,615
245
54,999
3,054
3,119
1,842

177
155
189
15
564
52

3,792
400
55,188
3,069
3,683
1,894

131
—
(426)
(137)
—
195

3,923
400
54,762
2,932
3,683
2,089

Total

Reconciliations Consolidated

Thousands of U.S. Dollars
2021
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Allowance for loan losses
Increase in premises and equipment and intangible assets

Reportable Segment
BankingLease
Total$703,577
10,577$714,154$203,288
64,874,176
24,3882,213
463,264
4,209
35,137
13,928$230,178 $933,755
13,9823,405$233,583 $947,737$4,345 $207,633
750,619 65,624,795
5,022
—
1,455
1,780
479
2,312

29,4102,213
464,719
5,989
35,616
16,240

Other

Total

Reconciliations Consolidated$71,999 $1,005,754
11,84225,824$83,841 $1,031,578$19,067 $226,700
542,796 66,167,591
1,671
1,870
2,303
72
560
226

— $1,005,754—$(25,824)$(25,824) $1,005,754$(4,426) $222,274(786,189) 65,381,402

31,081
4,083
467,022
6,061
36,176
16,466

1,229—(5,682)(1,220)—1,437

32,3104,083
461,340
4,841
36,176
17,903

Notes:
1. Ordinary income represents total income less certain extraordinary income included in “Other income” in the accompanying consolidated statementof income.
2. “Other” includes business segments of financial instruments business, credit cards, computer services and credit guarantees.
3. Reconciliations mainly represent elimination of intra-segment transactions.
4. Segment profit is adjusted to reconcile to income before income taxes less certain extraordinary items in the accompanying consolidated statement ofincome.
d. Associated Information(1) Information about services
2021
Ordinary income—Outside customers

Lending Service

2020
Ordinary income—Outside customers

Lending Service

2021
Ordinary income—Outside customers

Lending Service¥40,558¥40,780$366,345

Securities Services¥21,685
Securities Services¥19,842Millions of Yen
Leasing¥25,388
Millions of Yen
Leasing¥24,300

Thousands of U.S. Dollars
Securities Services
Leasing$195,872$229,320

Other

Total

¥23,716¥111,347

Other

Total

¥21,938¥106,860

Other

Total

$214,217$1,005,754(2) Geographical information(a) Operating Revenues
This information is not presented because the Group’s revenues in Japan account for more than 90% of revenues in the consolidated statement of income.
(b) Property and Equipment
This information is not presented because the Group’s property and equipment in Japan account for more than 90% of property and equipment in the
consolidated balance sheet.
(3) Information by major customer
This information is not presented because there are no customers for which income account for more than 10% of revenues in the consolidated statement of income.
(4) Information about impairment loss by reportable segment
2021
Impairment loss on long-lived assets

Banking¥2,005

Lease

2020
Impairment loss on long-lived assets

Banking
¥133

Lease

2021
Impairment loss on long-lived assets

Banking$18,110

Lease—

Millions of Yen
Other—Elimination/Corporate—

Total¥2,005—

Millions of Yen
Other—Elimination/Corporate
—

Total
¥133

Thousands of U.S. Dollars
Elimination/Corporate
Other
—
—
—

Total
$18,11043

(5) Information about goodwill and negative goodwill by reportable segment
2021
Amortization of goodwill
Goodwill at March 31, 2021
Gain on negative goodwill

Banking
¥245
2,385
—

Lease

2020
Amortization of goodwill
Goodwill at March 31, 2020
Gain on negative goodwill

Banking
¥245
2,630
—

Lease

2021
Amortization of goodwill
Goodwill at March 31, 2021
Gain on negative goodwill

Banking$2,213
21,543—Lease

Note: “Other” represents goodwill related to the financial instruments business.

44

Millions of Yen
Other
¥207
1,713

Elimination/Corporate
—
—
—

Total
¥452
4,098
—

Elimination/Corporate
—
—
—

Total
¥400
4,550
—

Thousands of U.S. Dollars
Elimination/Corporate
Other—$1,870——
15,473
—
—
—
—

Total
$4,083
37,016
—

—
—
—

—
—
—

Millions of Yen
Other
¥155
1,920
—