A Snapshot of Juroku Bank Now and Future

A Snapshot of Juroku Bank Now and Future

JUROKU BANKANNUAL REPORT

2021

P otential of the Regional Economy
PROFILEThe Juroku Bank Group provides comprehensive financial services in Greater Nagoya, the third largest region after Tokyo and Osaka,
primarily covering Gifu and Aichi prefectures. These prefectures have clusters of automotive and other manufacturing companies that
support Japan’s manufacturing, and the Group’s growth is closely related to the region’s growth.
New infrastructures being developed in the region include Tokai-Kanjo (ring) Expressway connecting Gifu, Aichi and Mie prefectures
and a longer-term project, the Linear Chuo Shinkansen (SCMAGLEV), which are expected to have positive impacts on the region’s economy.

The Juroku Bank, Ltd., has its business base in Gifu and Aichi prefectures, theindustrial center of the Chubu region of Japan. During the over 140 years since its
founding in 1877, it has played a pivotal role as a leading financial institution in its
area.
We will continue to follow our philosophy of “serving our community by fulfilling
our social mission as a financial institution.” We will also pursue reforms by staying
open-minded, managing our operations rationally and steadily, creating a strong
management style through stronger earnings power, and improving our personnel
and organization.
The head office of the Bank is located in Gifu prefecture. The Bank has 162 domestic
branch offices, mainly in Gifu and Aichi prefectures, as well as representative offices
in Shanghai, Singapore, Bangkok and Hanoi. On a consolidated basis, as of the endof March 2021, the Bank had total deposits of ¥6,072.5 bil (US$54,850 mil), total
assets of ¥7,238.4 bil (US$65,381 mil), and a capital ratio of 9.93% based on domestic
standards.

Industrial Structure: Region Supporting Japan’s Manufacturing
Gifu and Aichi prefectures are characterized by a large population with a high percentage of people working in manufacturing industries. The value of shipments of products manufactured in these prefectures is among the largest in Japan. They thus support Japan’s
industries and manufacturing.
7.5% of Japan’s population

12
9

3

¥6,472,454
4,345,574
1,251,602
5,610,659
366,404$65,381,402
40,476,470
14,078,222
54,850,267
3,640,231

Gunma

802,294
132,987(27,007)Gifu$1,005,754

87,58812,862(2,615)Nagano¥7,238,375
4,481,150
1,558,600
6,072,473
403,010¥106,863

Niigata¥111,347
88,822
14,723(2,990)2020

Miyagi

Kyoto

Hiroshima

IbarakiShizuoka

Fukuoka

Hokkaido

Hyogo

Chiba

SaitamaAichi

Total income

Total assets
Loans and bills discounted
Securities
Deposits
Total equity
Cash Flows

Osaka

Thousands of
U.S.Dollars
2021

Source: Prefectural Accounts 2017, Cabinet Office

Net cash provided by (used in) operating activities¥580,590(274,207)(4,624)930,918¥84,244
63,122(3,734)
629,152$5,244,242(2,476,805)(41,766)
8,408,617

Note: Amounts stated in United States dollars have been computed, solely for convenience, at the rate of ¥110.71 = US$1, the approximate rate ofexchange at March 31, 2021.

This annual report contains certain forward-looking statements. Those forward-looking statements are subject to risks and uncertainties, and Juroku
Bank’s actual results may differ from those described in the forward-looking statements. We are under no obligation, and expressly disclaim any
obligation, to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise.

40
30
20
10
2014

2015

2016

2017

2018

Source: C ensus of Manufacture 2018, Ministryof Economy, Trade and Industry

Japan’s largest trading port

Gifu Prefecture: Approx. ¥7.8 trillion
Aichi Prefecture: Approx. ¥40.3 trillion= Approx. ¥48 trillion (2017)

Total amount of exports from the Port of Nagoya
Approx. ¥10,410.0 billion (2020)

Accounts for 8.6% of Japan’s GDP

Largest port in Japan

Source: Prefectural Accounts 2017, Cabinet Office

Source: Trade Statistics of Japan, Ministry of Finance

Economic Zone: Expectations of Extensive Economic Impact
The infrastructures being developed are expected to help revitalize the industry and hence the region is expected to enjoy extensive positive impacts.
Tokai-Kanjo Expressway to connect Gifu,
Aichi, and Mie prefectures in a circle

Launch of Linear Chuo Shinkansen (SCMAGLEV) [A super mega-region initiative
based on a huge economic zone being created along the SCMAGLEV]

Travel time shortened

NagoyaShinagawaApprox. 40 min.
Approx. 1 hr. 30 min.
Gifu Prefecture station
Shinagawa(Nakatsugawa City)
Approx. 60 min.
Approx. 2 hr. 30 min.

Tokai-Kanjo Expressway would function as a detour routefor Tomei, Meishin, Chuo, Tokai-Hokuriku Expressways
when they are congested or in the event of accidents and as analternate route in the event of a large-scale natural disaster.

Travel time shortened/Access improved
Forming dual networks with the Tokaido Shinkansen bullet
train to provide an alternative route and thereby to prevent
suspension of economic activities in the event of a contingency

Tokai-Kanjo Expressway
Hakata
博多

Gifu

Omiya

Sendai

Iida

大宮

仙台

飯田

Okayama
岡山

Tokyo
東京

Hiroshima
Nagoya広島

Sannomiya

名古屋

三宮

中津川

大阪

Aichi
Mie

180min.

Nakatsugawa
Kofu
甲府

60min.
120min.

橋本HashimotoSuper Mega-region

HakataSendai
Okayama Omiya
仙台
大宮 Tokyo
Hiroshima 岡山
Iida 東京
広島
Nagoya 飯田
中津川 Nakatsugawa
名古屋
Sannomiya 三宮
博多

大阪

Osaka

甲府

Kofu

60min.橋本 Hashimoto
120min.
180min.

240min.

240min.

240 min. or more

240min. or more

2021

After launch of full service

Faster access to cities around JapanThe full launch of the Linear Chuo Shinkansen
service will greatly reduce the travel time tocities along the line and provide faster access tocities around Japan.

Source: P repared by the Bank based on the data on the SCMAGLEV website
of Central Japan Railway Company

CONTENTS
Financial Highlights (Consolidated)

Forward-Looking Statement

Aichi Prefecture
Gifu Prefecture

Gross prefectural productOsaka

Net cash (used in) provided by investing activities
Net cash used in financing activities
Cash and cash equivalents, end of year

(Trillions of Yen)
60
50

0

Source: 2 020 Population Census Results: Preliminary counts of the
population and households

Significantly exceeding the nationwide
average of 21.9%
Millions of Yen

Net Income Attributable to Owners of the Parent
Cash dividends
At Year-End

Kanagawa

Head Office

Tokyo

0

Year Ended March 31, 2021

Total expenses

Share of the two prefectures’
total shipment value in thatof Japan: 16.5%(Aichi alone accounts for
14.7%)

1.98

Gifu Prefecture: 27.9%
Aichi Prefecture 37.9% (2017)

2021

Largest in Japan

7.55

High percentage ofmanufacturing sector

For the Fiscal Year

Gifu Prefecture: approx. ¥6 trillion
Aichi Prefecture: approx. ¥49 trillion

6

F inancial Highlights (Consolidated)
The Juroku Bank, Ltd. and Subsidiaries

Shipment value of manufactured products

Gifu Prefecture: Approx.1.98 million
Aichi Prefecture: Approx. 7.55 million
Approx. 9.53 million (2020)(In Millions)15

2 Top Message
16 Non-Performing Loans
17 Contribution to the Regional Economy and Community
19 Board of Directors and Audit & Supervisory Board Members
19 Organization Chart
20 Financial Review
21 Consolidated Balance Sheet

22 Consolidated Statement of Income
22 Consolidated Statement of Comprehensive Income
23 Consolidated Statement of Changes in Equity
24 Consolidated Statement of Cash Flows
25 Notes to Consolidated Financial Statements
45 Independent Auditors’ Report
50 Corporate Data
50 Affiliates
51 Directory1

T op Message

Initiatives for COVID-19
We aspire to become a“comprehensive financialgroup that builds a futurewith local communities andachieves sustainable growthwith local economies”
in partnerships with ourcustomers and the region.
Yukio Murase
Chairman and President,
The Juroku Bank

The start of the year ended March 31, 2021 coincided with the outbreak of COVID-19, which triggered an unprecedented crisis for whichpast experience offered little guidance. Prioritizing the health and safety of our customers, officers and employees, the Group has been
making its best effort to provide the required financial services as much as possible, paying more attention than ever to communities andcustomers.
We swiftly provided support to customers affected by and suffered damage from the COVID-19 pandemic, centering on cash flow
support programs.

Cash flow support provided by the Bank
Number of COVID-19-related loans executed

11,491

Amount of COVID-19-related loans executed¥300.6 billion[Of which, amount of interest free loans executed]¥181.7 billion

Number of applications for revisions of the terms and conditions of mortgage loans in view of the
impact of the COVID-19 pandemic
Amount of mortgage loans whose terms and conditions were revised

316¥4.4 billion(as of March 31, 2021)

In the COVID-19 pandemic, besides cash flow
support programs, we strove to enhance
engagement with customers while

Launch of the 15th MediumTerm Management Plan

implementing the market-in approach(customer-first marketing strategy).
The Corporate Consulting Groupestablished in April 2021 is spearheading our

The year ended March 31, 2021 has a particular significance as
it began with the launch of the “15th Medium-Term
Management Plan ~ Engagement to the future ~.”In this plan, we uphold a long-term vision toward our150th anniversary in 2027, aspiring to be a “comprehensive
financial group that builds a future with local communities andachieves sustainable growth with local economies.”
To realize this vision, we are seeking to shift our businessmodel by implementing three reforms: “business reform,”

efforts to provide corporate customers support

Holding of business matchmaking conferences
We hold business matchmaking conferences in which the general managers of theBank’s branches, on behalf of their customers’ sales managers, make presentations on
their customers’ products and services to general managers of other branches of the
Bank in the vicinity. Preparing presentation materials is a great opportunity to gain indepth understanding of customers. At theconferences, likely partners are proposed andefforts are made to speed cooperation, leading todeals. The Bank’s conferences are increasingly
viewed as valuable opportunities for new businessmatching and fruitful engagement.

tailored to their individual situations in
combination with the conventional corebusiness support as well as our swift
responding capability. Personnel of the head
office visit corporate customers in cooperation
with sales branches to ensure close
communication with their management.

Serving as an intermediary for utilization of human resources
We are aware that certain customers who have a steady stream of orders are in need ofadditional human resources. Meanwhile, there are customers whose human resources
exceed their needs because of decreased production amid the COVID-19 pandemic. We
are endeavoring to serve as an intermediary between these customers. We made referrals
in cooperation with our branches, and by pairing customers with matching needs, wewere able to arrange for the employment of some 20 people. Both customers were alsoable to use the government’s subsidy system. This is an example of fruitful engagementwith customers.

“operation process/channel reform” and “human resources/
organization reform” while working to create shared value with

The Citrus Ribbon Project aims to eliminate discrimination and prejudice associated with COVID-19

an eye to the future needs of our customers and the region wethroughout the region, whether at home or in workplaces, and contribute to the resumption of aserve.

happy carefree life. In February 2021, the Bank endorsed the Citrus Ribbon Project and is working torealize a compassionate community.
Every member of the Bank is resolved to engage with people in the communities and take action,
always mindful of what they can usefully do now.

2

3

Review of the First Year of the 15th Medium-Term
Management Plan

Capital Policy
In regard to our capital, as profits have been
accumulated, a consolidated core capital ratio of

Progress of the 15th Medium-Term Management Plan
Numerical targets

10% or above, which is a long-term target under

At the launch of the plan
(FY2019 results)

FY2022 targets

FY2020 results

Profitability

Net income (consolidated)¥12.0 billion¥12.8 billion¥14.7 billion

Efficiency

Adjusted OHR(non-consolidated)

Around 67%

67.18%

65.38%

the 15th Medium-Term Management Plan, is
within reach.
Regarding dividends for the year ended March
31, 2021, we paid a year-end dividend of ¥55 pershare. Whereas our initial plan was to pay a year-

Long-term targets

At the launch of the plan
(FY2019 results)

Targets

FY2020 results

Profitability

ROE (consolidated)

5% or more

3.65%

3.98%

Soundness

Core capital ratio(consolidated)

10% or more

9.27%

9.93%

end dividend of ¥35, we revised it in November
2020 to ¥45, an increase of ¥10 per share. However,since our business results for the year ended March
31, 2021 exceeded the forecast announced in
November and in view of the imminent transition
to a holding company structure in October 2021,

In the year ended March 31, 2021, the first year of the 15th Medium-Term Management Plan, we refrained from face-to-face sales so as to

we added another ¥10 per share as aprevent the spread of COVID-19 and our business was affected, particularly in the first half. However, our financial performance recovered

commemorative dividend.
As a result, annual dividends amounted to ¥90,in the second half once we had established a sales system in response to the COVID-19 pandemic. On a non-consolidated basis, net core
operating profit increased by ¥1.0 billion year on year to ¥21.5 billion, ordinary profit increased by ¥4.0 billion year on year to ¥22.5

including the interim dividend of ¥35.

billion, and net income increased by ¥1.4 billion to ¥14.1 billion.
On a consolidated basis, ordinary profit increased by ¥5.2 billion year on year to ¥24.6 billion and net income attributable to owners of
the parent increased by ¥1.9 billion to ¥14.7 billion. Regarding both “net income (consolidated)” and “adjusted OHR (non-consolidated),”which are the key performance indicators for our numerical targets of the 15th Medium-Term Management Plan, our results in the first yearof the plan exceeded the targets for FY2022, the final year of the plan.

Core capital ratio
Consolidated equity

Changes in dividends
Non-consolidated(%)

Net income attributable to owners of the parent

Adjusted OHR(Billions of Yen)

14.7

(%)

Adjusted OHR (consolidated)
9.0

75.19

8.0

75.04

12.8

9.27

8.49

8.71

9.35
315.3

Special dividend
Commemorative dividend
Dividend payout ratio (consolidated)
(Yen)

68.69

Ordinary dividend
(%)

340

120

35.0

330

110

30.0

320

100

24.5
310

23.2

22.8

25.0
20.0

90

10

303.6

10.6

300

295.3

15.0

80

10

5.0

290

70

10.0

80
67.18

66.51
65.38

4

9.08

(Billions of Yen)

7.0
6.0

FY20189.93

10.0

Adjusted OHR (non-consolidated)

Consolidated

FY2019FY2020FY2018FY2019FY20204.0
3.0

FY2018FY2019FY2020

280

60

270

50

70

70

FY2018FY20195.0

FY20200.0

5

Reorganization

Transition to a Holding Company Structure

In April 2021, we executed a reorganization to upgrade the organizational structure of the Bank’s headquarters in view of the imminent

As a financial institution with its operating bases in Gifu and Aichi

transition to a holding company structure in October 2021.

prefectures, the Bank’s aim has been to become a comprehensive

As well as transforming the Bank’s organizational structure to facilitate effective collaboration with the holding company, we will

financial group that achieves sustainable growth with local economies

continue to implement the market-in approach (customer-first marketing strategy) and strengthen our initiatives for “digitalby creating shared value through dialogues with people in the local

transformation,” “regional revitalization,” and the “SDGs.”

communities so as to contribute to revitalization of the local economy.
At the same time, there have been major changes in the business

1. Implementation of the market-in approach(customer-first marketing strategy)
Change of the Personal Business Division to the Retail Business
Division
Reorganization within the division: Establishment of the Retail
Planning Group, the Retail Business Group, and the Personal Loan
Group

Change of the Corporate Business Division to the Solutions
Business Division
Reorganization within the division: Establishment of the FinanceGroup and the Solutions Group

2. Strengthening of the initiatives for “digital transformation”

environment in which regional financial institutions operate, such as the

Change of the Operational Reform Division to the Digital Reform
Division
Establishment of the Digital Transformation Promotion Group
within the divisionongoing low-interest policy, and intensifying competition acrossrealization of a sustainable society, regional financial institutions must
transform their business models and adapt to deregulation.

3. Strengthening of the initiatives for “regional revitalization”
Change of the Public Business Division to the Regional
Revitalization Division
Establishment of the Regional Revitalization Group within thedivision

4. Strengthening of the initiatives for the “SDGs”
Establishment of the Corporate Consulting Group within theEnterprise Support Divisionindustries and business categories. In order to contribute to theEstablishment of the SDGs Promotion Office within the
Regional Revitalization Division

For these reasons, the Group has decided to transition to a holding
company structure in order to expand its 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 company structure, the Group will create abusiness structure that can respond flexibly to changes in the businessenvironment in order to support its customers’ businesses byconcentrating the Group’s management resources and to fulfill its

Promoting digital transformation
Digital technology can dramatically enhance the productivity of existing industry and drive economic growth by contributing
to the transformation of business models and the creation of new businesses. Responding to these developments, we changed
the Operational Reform Division to the Digital Reform Division and established the Digital Transformation Promotion
Group within the division.
We will vigorously promote digital transformation (DX) to achieve two principal objectives: “improvement of usability”
through enrichment of non-face-to-face channels and data-driven mass-marketing and “improvement of productivity” by
expanding the scope of centrally executed business processes and through business process reengineering utilizing digitaltechnology.

Promoting regional revitalization
To step up our initiatives contributing to sustainable growth of the regional economy in collaboration with local governments
and community development organizations and earn Gifu and Aichi prefectures’ deep and enduring confidence in the Bank,
since those prefectures constitute our main field of our business operations, we changed the Public Business Division to the
Regional Revitalization Division and established the Regional Revitalization Group within the division.
We will identify and analyze issues for sustainable growth of the region and implement effective measures to resolve theissues in collaboration with Group companies, local governments, community development organizations, etc. by leveraging
not only our financial intermediary functions but also our knowledge and network.

obligations toward sustainable growth of the region so as to enhance
corporate value.

Establishment of NOBUNAGA Capital
Village Co., Ltd.
In April 2021, ahead of the transition to a holding company

the region,” NOBUNAGA Capital Village will vigorously support

structure, NOBUNAGA Capital Village Co., Ltd., a wholly-

and foster startups while also tackling business succession andowned subsidiary of the Bank, was established as a company

business rehabilitation. By offering new services and products

specializing in investment, and commenced its operations.

through collaboration between the Group and the enterprises inThrough corporate venture capital firms investing in startups

which NOBUNAGA Capital Village invests, we will contribute tothat can unleash synergies with “regional economies” and “finance,”

the growth and development of customers and the regionaland regional venture capital firms investing in “future leaders ineconomy.

Addressing the SDGs
In accordance with The Juroku Bank Group SDGs Declaration announced in February 2020, the Group has been addressing
the Sustainable Development Goals (SDGs). To step up the initiatives, we established the SDGs Promotion Office within the
Regional Revitalization Division.
In June 2021, we announced our endorsement of the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) with the aim of providing useful information to our stakeholders while strengthening our climate change
countermeasures. We are working to establish systems and ensure information disclosure in accordance with the TCFD
recommendations.
In view of the growing interest in the SDGs throughout society, addressing the SDGs may become a precondition for
doing business or a crucial factor in being chosen by investors and consumers.
The Group is committed to playing a central role in inculcating the SDGs among customers and people in the region byoffering diverse solutions through financial services. All officers and employees of the Group will address the SDGs to help
achieve a sustainable society.

6

To Achieve Sustainable Growth Together with Stakeholders
By transitioning to a holding company structure to achieve further
development of the Group and sustainable growth with its

I would greatly appreciate the continued support of our
stakeholders.

stakeholders, we will redouble our efforts to create shared value
with our stakeholders and enhance corporate value so as to meettheir expectations.

7A bout The Juroku Bank

Objectives of the transition to a holding company structure
1. Expand the business domain

Transition to a Holding
Company Structure

2. Optimize allocation of Group management resources
3. Enhance auditing and supervisory functions and accelerate business execution“Creating the future of the region together,” we willcontribute to achieving growth and prosperity forour customers and the local community bydemonstrating the Group’s comprehensive
capabilities as a provider of comprehensive financial
services to the region.
Naoki Ikeda

Change in market scale
Change in society

Respond flexibly to change in the environment
October
2021

Juroku Financial Group:

Deputy President

Creating the future of the region together

Juroku Lease
established

Juroku Diamond
Credit established(currently Juroku
Card)

Merger with The
Gifu Bank

Juroku ResearchInstituteestablished

Juroku Tokai
Tokyo Securities
commenced
operations

NOBUNAGA
Capital Village
established

March
1975

August1982

September
2012

June
2013

June
2019

April
2021

Group Management Philosophy
Our group management
philosophy is inherited fromGroup Management Philosophy

our customers andthe local community

the basic philosophy of The
Juroku Bank, and represents the

We aspire to be a comprehensive
financial group that builds afuture with local communities
and achieves sustainablegrowth with local economies

Resolving challenges
for customers and local
communities

Juroku Financial Group and thefoundation for all of our officers’

sustainable society.

and employees’ activities. It
consists of three parts: Mission,

The Juroku Financial Group intends to formulate its 1st Management Plan covering the period from October 2021 to March 2023. The
Juroku Financial Group seeks to maximize synergies through its three group strategies, with “expand the business domain” and “respond todiversifying needs” as its growth drivers, to become a “comprehensive financial group that builds a future with local communities andachieves sustainable growth with local economies.”
Group Strategy Outline

Trust &
Integrity

Creation &Innovation

Diversity &Inclusion

We will act with integrity tosecure the trust and business of
our customers and the local
community

We will respond to every changewith innovation anddetermination, and create newvalue for the next generation.

We will maximize our group’s
strengths by embracing
individuality and leveraging
diversity.

Vision, and Values. Whenputting our philosophy into
practice, the specific conduct ofour staff is governed by the
Code of Conduct.

Improve usability
and productivity
Leveraging digitaltechnology and data incustomer marketing
Accelerating
digitalization ofoperations to createtime for action andenhance value

Customer-firstmarketingstrategy

Further leverage
problem-solving
power
Leveraging consulting
functions by concentratinggroup management
resources
Proposing diverse
solutions to challenges

Expand the businessdomainRespond todiversifying
Regional
DX strategy
commitment
needs
strategy

Code of
Conduct

Code of Conduct

Engagement Cycle
Taking on the challenges faced by our customers and local communities, and resolving them together.

Juroku Financial Group: Creating the future of the region together
8

Enhancing corporate
value

Sustainable regional growthfundamental spirit of thein order to contribute to the realization of a

ValuesCreation of shared value

1st Management Plan (Outline)

Achieving growthand prosperity for

VisionTransition to a holding
company structure

The Group’s history

MissionTransformation of the business model

Regional total design
Fulfilling a central role in regional revitalization by expanding the business domain
Redoubling efforts by all group officers and employees toward SDGs andregional revitalization

Customer-first marketing strategy - Further leverage problem-solving

power -

Based on the principle of customer-first marketing, we will create shared value
with our customers and the local community by leveraging consulting functions
through the concentration of group management resources and proposing diverse
solutions to challenges.

DX strategy - Improve usability and productivity We will leverage digital technology and data through alliances within and outside
the group for customer marketing, accelerating digitalization of operations tocreate time for action, and engage our officers and employees in high value-added
activities.

Regional commitment strategy - Regional total design We will redouble efforts by all group officers and employees toward SDGs andregional revitalization to realize a sustainable society, and fulfill a central role inregional revitalization in our management bases in Gifu and Aichi prefectures by
expanding our business domain.

9

Corporate Governance
Basic Policy
At Juroku Bank, we believe that retaining the trust of our stakeholders by conducting all of our activities in a sound manner isvital to our role as a financial institution. Therefore, we place thehighest priority on building a solid organizational structure andestablishing systems that continually reinforce corporate governance.
In association with the entry into effect of the Companies
Act, we established a Basic Policy related to the Establishmentof an Internal Control System at a meeting of the Board of
Directors held on May 24, 2006. Since that time, we have revised this basic policy as necessary and in a timely manner, andhave endeavored to develop and continuously refine the system
to ensure the appropriate execution of business at the Bank andthe corporate group comprising the Bank and its subsidiaries.
Under this basic policy, we will pursue initiatives to enhance
corporate governance.

Progress Thus Far
The Board of Directors comprises nine members including
three Outside Directors (as of June 18, 2021) and it is held atleast once a month, in principle, to deliberate and decide matters stipulated in laws and regulations and important management issues, and it also monitors directors’ conduct of business
operations by having each director report his/her own executionof duties at least once every three months, pursuant to Article
363, Paragraph 2 of the Companies Act. Additionally, in orderto further ensure the transparency and fairness of the Board of
Directors’ decision-making activities, a Management Advisory
Council has been established as an advisory body to the Board of
Directors. The Council is chaired by an Outside Director, and amajority of its members are external figures.
The Bank has adopted the executive officer system andensures that executive officers appointed by the Board of Directors responsibly execute the business operations of the sectionsin their charge. The adoption of the executive officer systemallows the Board of Directors to take on the functions of management supervision in a more effective manner, while alsoenabling quick decision making by the management team. In
terms of important matters affecting the daily conduct of business operations, a Management Council, comprising the Chairman and President, deputy president and director and managing
executive officers, has been established to enable quick and bolddecision making.
Furthermore, an Operational Audit Committee has been
established to enhance the supervisory functions of the Boardof Directors on the execution of business operations, thereby further enhancing the corporate governance system.
The Audit & Supervisory Board comprises four Audit &Supervisory Board Members, including two Outside Audit &Supervisory Board Members and two Standing Audit & Supervisory Board Members (as of June 18, 2021). The Audit &10

Supervisory Board is held at least once a month, in principle.
To support the Audit & Supervisory Board Members, we haveestablished the Audit & Supervisory Board Members’ Office,which monitors the execution of business operations objectively
and ensures appropriate auditing functions.
With regard to internal controls, the Internal Audit Division conducts internal audits, and at least once per year The
Bank seeks outside opinions regarding the development andmanagement of the internal control system.
Based on these objective opinions, we work to further
improve the internal control system. Moreover, to reinforce thecompliance system, we have established a whistle-blower systemand have improved the effectiveness of the system by using an
external lawyer as the point of contact.
With respect to the risk control system, we have establishedthe Integrated Risk Management Council, the ComplianceCouncil, and the Anti-Money Laundering Council, chaired by
the President, in principle, held once in every three months,
once a month, and once a month, respectively, as well as the Operational Risk Management Council chaired by the Managing
Officer in charge of Risk Management Division and held onceor more in every half year. At these meetings, the appropriateness of operations is reviewed and risk management is applied tominimize loss due to unforeseen circumstances.
We have also signed consultation agreements with six lawyers, who provide advice on legal matters and perform a varietyof legal checks when necessary.
In response to risks associated with cyberattacks, extreme
weather and natural disasters, new strain of influenza, theprolonged COVID-19 crisis and other factors, the Bank has
formulated business continuity plans to prepare for each ofthem, anticipating possible risk events. It continues to improve
its business continuity readiness including by conducting firstresponse drills as appropriate.
The Bank’s accounts are audited by the independent auditing firm Deloitte Touche Tohmatsu LLC (as of June 30, 2021).
This firm provides accurate audits on the basis of appropriate
information disclosure.
Going forward, we will work to further enhance our corporate governance standards and ensure the soundness of our
ethical conduct and financial position.

Basic Policy on Strengthening Internal Control System
We are currently making efforts to build an internal control
system based on the policies described below.
1. 	System to ensure that the execution of duties by directors of the Bank and its affiliates comply with all
relevant laws, ordinances, regulations, and the Bank’s
Articles of Incorporation(1) Our Basic Policy establishes the Bank’s commitment to serve
local communities by fulfilling its mission as a financial institution, and to seek business growth through sound practices
founded on a broad and rational perspective.
(2) To implement this policy, directors and executive officersof the Bank are responsible for the establishment of various
standards including the Code of Ethics and Compliance Policy,
and for ensuring that business is conducted in accordance withthese standards and that laws, ordinances, and the Articles ofIncorporation are adhered to. In addition, directors are responsible for steadfastly confronting any anti-social forces that pose athreat to social order and safety; thereby directors consolidate asystem to sever all ties to these forces.
(3) The Bank’s affiliates make best efforts to pursue legitimate
and fair business practices that respond to social obligations,based on their own basic policy and management philosophy
that are adequate for the nature and scale of their business. In
addition, the affiliates are responsible for the establishment of
the Code of Ethics and Compliance Policy to ensure that business is conducted in accordance with laws and ordinances as well
as social norms.
2. 	System for storage and management of information related to the execution of duties by directors of the BankTo ensure efficient verification of proper business practices, regulations will be created and followed on the handling and control
of information and documents related to business operations (including electronic records); adherence to these regulations will
be monitored, and regulations will be revised when necessary.
In addition, a system will be established to enable directors
and Audit & Supervisory Board Members to view this information and the relevant documents when necessary.
3. 	Risk management regulations and other structures related to risk of loss at the Bank and its affiliates(1) The Bank positions the risk management as an important
duty to ensure the soundness and safety of business, and regulations related to each type of risk, including a Comprehensive
Risk Management Regulation, will be established in order tomanage risks associated with the business of the Bank and its affiliates in an exhaustive and comprehensive manner. Efforts will
be made to appropriately improve the measurement, evaluation,and management of risk by following these regulations.
An independent third party will regularly evaluate theBank’s management of major risks, and the Bank will continually work to improve risk management level evaluations.
(2) In addition to designating one department to comprehen­sively manage risk, individual departments will be made specifically responsible for each category of risk, ensuring effective risk
management. In addition, an organizational structure will beestablished, including the Integrated Risk Management Council chaired by the president and CEO and the Operational Risk
Management Council chaired by the director in charge of thedepartment responsible for comprehensive risk management.
Risk management reports will be made to the Board of Directors on a regular basis, or as necessary.
(3) The following are risks to be managed at the Bank. When
new risks arise, a department to handle them will be promptly
established by the Board of Directors.
1) credit risk, 2) market risk, 3) liquidity risk, 4) operationalrisk, and 5) money laundering and terrorist financing risk,
6) other risks that could have a serious impact on the Bank’sbusiness.
(4) In addition to establishing a Risk Management Council, theBank’s affiliates will manage risks in a proper and comprehensive manner, and set up a system to report any issues related torisk management to the Bank. The Internal Audit Departmentof the Bank conducts auditing of the Bank’s affiliates to assess
their risk management.
4. 	System to ensure the efficient execution of duties bydirectors of the Bank and its affiliates(1) Duties of the Bank will be executed centered on the Basic
Policy and an Action Plan. A Management Plan will be created,and guidelines based on this plan will be established for eachsix-month period.

(2) Progress made in implementing these plans will be reported
to the Board of Directors in a timely manner, and steps will betaken in response as needed.
(3) Items that should be taken up by the Board of Directors of
the Bank will be clearly stated in regulations such as the Boardof Directors Regulations, and important items will be discussed
as necessary by the Management Council, which comprises managing directors or above and other related personnel, to ensurethat issues are sufficiently examined. In addition, Regulations on
Decision-Making Authority Related to Operations will stipulate
the appropriate delegation of authority to subordinates basedon such factors as the importance of the operation, making thedirectors’ execution of duties more efficient.
(4) The Bank will reinforce collaboration with its affiliates andfacilitate information sharing. In addition, the managementof the Bank and representatives of its affiliates will exchange
opinions on a regular basis in order to resolve various issues efficiently.
(5) The Bank will establish regulations for top management,
organizations, risk management and others, and provide its affiliates with necessary information in order to have them create
their own systems efficiently in compliance with these regulations.
5. 	System to ensure that the execution of duties by employees of the Bank and its affiliates complies with laws,
ordinances, and the Articles of Incorporation(1) In addition to positioning compliance with laws and ordinances as one of our most important business responsibilities
and establishing regulations such as the Code of Ethics andCompliance Policy, the Bank will establish a department to provide overall control. In addition, a Compliance Council, chairedby the president and CEO, will be created, and this council will
be tasked with handling compliance-related issues.
(2) In addition to establishing a Compliance Council, the Bank’s
affiliates will manage and operate in-house compliance systemappropriately and set up a system to report any complianceviolation to the Bank. The Internal Audit Department of the
Bank conducts auditing of the Bank’s affiliates regarding theircompliance with laws, ordinances, and others.
(3) At the Bank and its affiliates, an in-house system will becreated for reporting violations of laws and ordinances andother compliance-related issues, and a whistle-blower systemthat employs an independent lawyer to receive reports will bemaintained. Efforts will be made to prevent or promptly detectproblems such as violations of laws.
6. 	System to ensure appropriate operations of the corporategroup, which is composed of the Bank and its affiliates(1) An internal auditing agreement will be concluded with
the Bank’s affiliates, and operations are audited by the Internal
Audit Department of the Bank to ensure proper business operations by the corporate group, which is centered on the Bank.
Operations at affiliates will be audited through various activities, including appointing officers or employees of the Bank as
officers of affiliates and having them attend the meeting of theBoard of Directors of the affiliates.
(2) The management of the Bank and representatives of its affiliates will exchange opinions on a regular basis to prevent problems such as inappropriate transactions between the Bank andits affiliates.
(3) When engaging in transactions with the Bank’s affiliates andother entities, steps will be taken to verify that the terms of thetransaction conform to the arms-length principle.
(4) A whistle-blower system will be established at the Bank

11

and all affiliates, making it possible for parties such as affiliate
employees to make reports or seek advice.
(5) A system will be created to ensure the reliability of thefinancial reporting of the Group, centered on the Bank.
7. 	System to report matters related to the execution of duties by directors of the Bank’s affiliates to the Bank
(1) By having officers of the Bank dispatched to its affiliates, theBank will receive reports related to the execution of duties bydirectors of its affiliates at the meeting of the Board of Directorsof the affiliates.
(2) The Bank will deliberate or request reports, on a regularbasis or as necessary, to accurately understand business operationof its affiliates, pursuant to the Group Companies Management
Regulation established by the Bank.
(3) The department undertaking overall control of the Bank’s affiliates and individual departments responsible for each affiliate
will monitor the status of affiliates in a timely and appropriatemanner, and promptly report any matters deemed important to
the management of the Bank, while taking necessary steps.
8. 	Items related to employees whose assignment to assist
Audit & Supervisory Board Members of the Bank intheir duties is requested by them
An Audit & Supervisory Board Members’ Office will be createdto assist the Audit & Supervisory Board Members in the performance of their duties, and at least one full-time employee will
be assigned to work in that office. Upon obtaining the opinionsof the Audit & Supervisory Board, decisions will be made on
the positions and qualifications of employees to be assigned toengage in this work, and a roster of such employees will be created.
9. 	Ensuring the independence of the above employees fromdirectors and the effectiveness of instructions given to
those employees
The appointment, transfer, and evaluation of employees who assist the Audit & Supervisory Board Members in their duties will
be subject to the approval of the Audit & Supervisory Board.
The said employees will solely comply with instructions andorders given by the Audit & Supervisory Board Members.
10. System for officers and employees of the Bank andits affiliates to report to Audit & Supervisory Board
Members of the Bank and a system for other reports to
Audit & Supervisory Board Members
Officers and employees of the Bank and its affiliates and persons who received reports from them shall submit reports andprovide information in response to requests from the Audit &Supervisory Board or individual Audit & Supervisory Board
Members. The following are the main topics of the reports andinformation to be provided.
(1) Department activities related to creating the Bank’s internal
control system(2) Activities of the Bank’s affiliates(3) Matters that may inflict a significant loss on the Bank and its
affiliates(4) Significant accounting policies and standards and changes tothem(5) Content of disclosed earnings, projections, and other important disclosure materials(6) Serious violations of the laws and ordinances(7) Operation of the whistle-blower system and notifications(8) Circulation of documents such as draft proposals and theminutes of important conference/committee meetings(9) Other items deemed necessary by the Audit & Supervisory
Board Members

12

11. System to ensure that a person who made a report inaccordance with the preceding paragraph does not receive unfair treatment on the grounds of making suchreport
The Bank and its affiliates prohibit a dismissal or any otherdisadvantageous treatment of the person who made a reportin accordance with the preceding paragraph on the grounds ofmaking such report, etc. and take appropriate steps to ensurethat such person will not receive unfair treatment.
12. Matters related to treatment of expenses incurred in
the execution of duties by Audit & Supervisory Board
Members
In the event that Audit & Supervisory Board Members made arequest for reimbursement of expenses incurred in the executionof their duties, it will be granted unless the expenses are proved
to be unnecessary to the execution of their duties.
13. System to ensure effective audits by Audit & Supervisory Board Members
The representative director will regularly meet and cooperatewith the Audit & Supervisory Board Members to ensure theeffectiveness of audits, and will regularly exchange opinions on
management problems and progress in auditing to ensure highaccuracy.

Compliance System
Recognizing that the survival of financial institutions depends
on trust, we put top priority on earning the firm trust of thegeneral public.
We are further strengthening our compliance system underour 15th Medium-Term Management Plan through our policy
which is designed to “promote awareness of the crucial importance of compliance among our staff.”
1) Earn the firm trust of the general public through themaintenance of high corporate ethical standards andawareness of the importance of legal compliance;
2) Promote awareness of the crucial importance of compliance among our staff; and3) Raise standards of compliance rigor still higher.
To further enhance the compliance system that we have built
to date, we formulate and implement a compliance programeach fiscal year. Specifically, all departments regularly hold study
meetings on compliance, and we have implemented curriculums
related to compliance for various training programs in order toboost the awareness of compliance and ingrain a complianceoriented corporate culture.

Organizational Structure
Compliance Council

department and branch. We are making every effort to educate
employees about the handling procedures and to bolster theirawareness of security issues so that we can ensure the maximum
degree of protection for customer data in daily operations.

Chaired by the president and CEO, consisting of managing
directors and the general managers from relevant divisions, theCompliance Council examines, discusses, and issues directives
concerning matters of compliance.

Money Laundering and Terrorist
Financing Risk Management Framework

Compliance Office(Risk Management Division)

Towards a more enhanced management framework
for money laundering and terrorist financing risks

As the entity responsible for overseeing compliance, the Compliance Office promotes compliance programs and serves as thesecretariat for the Compliance Council.

Inspection Section(Internal Audit Division)
The section conducts audits and other investigations related tothe compliance conditions in each division.

There is a strong international pressure for financial institutions
to prevent money laundering and terrorist financing (hereinafter,“Money Laundering, etc.”), amid increasing threats of international terrorism and the internationalization and expansion offund transfers by criminal groups and terrorists.
The Bank has placed the prevention of Money Laundering,etc. as one of its most important management issues, and will
aim to further enhance such risk management by constructing
an effective risk management framework.

Compliance at Each Division
Compliance officers are appointed in each of the divisions tocheck the day-to-day compliance of those divisions.

Customer Protection Management System
The Bank set up a Customer Protection Management Policyin September 2007 to develop and establish a system to ensure
customer protection. Under the Customer Protection Management Policy, we have clearly stated protection measures that we
had taken as part of compliance and risk management. We arefocusing more heavily on customer-oriented management. The
purpose of the policy is to improve the protection and convenience of customers through the following initiatives:(i)	Providing appropriate information and explanations on
products and services for customers(ii)	Responding properly to requests, consultation, inquiries
and complaints from customers(iii) Appropriately managing customer information(iv) Properly managing outsourced operations(v)	Properly managing of conflicts of interest so avoid unfair
detriment to the interests of our customers

Information Security, Management of Customer
Information
In line with the top priority that we assign to ensuring the confidentiality of our customers’ personal data, information security
risk is addressed by the Bank’s Information Security Management Rules. We have publicly announced our Declaration of
Personal Information Protection (Privacy Policy).
As stipulated in the aforementioned Security Management Rules, we have also appointed a chief information officer
at the Bank’s headquarters and an information officer in each

Organizational Structure
Chaired by the president and CEO, consisting of managing directors and the general
Anti-Money
managers from relevant divisions, the Anti-Money Laundering Council reports on
Laundering Council problematic cases relating to the prevention of Money Laundering, etc., discusses
policies on necessary responses, and issues directives to the divisions in charge.
First Line(Business Divisions
and Branches)

Fully understanding policies, procedures, and plans, etc.
related to countermeasures for Money Laundering, etc., theFirst Line accurately implements reduction measurescommensurate with the risks.

Second Line
(Risk Management
Division, Operations
Administration Division)

Checks the autonomous risk management of the First Line,
while concurrently providing information and answering
questions.

Third Line
(Internal Audit
Division)

Regularly performs audits from an independent position
regarding the effectiveness of measures to prevent Money
Laundering, etc. and the proper functioning of the First andSecond Lines.

Risk-Based Approach
The risk-based approach for Money Laundering, etc. countermeasures involves identification and evaluation of Money Laundering, etc. risks as well as implementation of effective measures
to reduce such risks. At the Bank, we compile a risk evaluation
document regarding the risk reduction measures formulated byapplying the risk-based approach, and use it as a guideline forwhen each of the sales division and branch conducts business.
The various products and services of the Bank that we provide to
our sound customers should never be abused by criminals. The
Bank aims to further enhance its risk management framework
towards preventing Money Laundering, etc., thereby fulfillingsocial responsibility.

13

Risk Management
The importance of risk management has grown as the risks confronting financial institutions have become more complex anddiverse. Recognizing risk management as crucial for safe andsound operations, we have established a Comprehensive Risk
Management Policy and other policies and rules relating to risk
management that enable an appropriate and prompt response tovarious types of risk.
We have established the Risk Management Division to stepup our commitment in this area. We aim to further strengthen
our risk management system through use of the PDCA cycle,
by laying down policy (planning), creating internal rules andorganizations (doing), assessing results of these measures (checking) and making improvements where needed (acting).
In addition, to ensure that our risk management mechanisms function effectively with regard to sections within theGroup subject to auditing (the Bank’s head office divisions,branches and consolidated affiliates), regular, planned, on-site
audits of such departments are carried out by staff of the Internal Audit Division, which is independent from business operation departments. In this way the Bank verifies the effectivenessof its risk management systems.

Comprehensive Risk
The Bank has formulated a comprehensive risk management
framework by determining a Comprehensive Risk Management
Policy and Rules.
The Bank’s risk management does not stop at managing
various risks individually, but extends a step ahead to control
the total amount of risks to keep it within the range of distributable capital, which is defined as “core capital (full implementation basis) less allowance for doubtful accounts,” through therisk quantification using statistical methods, thereby enforcing acomprehensive risk management aiming at ensuring soundnessof management.
We adopt a flexible approach to required responses by
getting the current state of such comprehensive risks checkedby the Integrated Risk Management Council and Committee,
which meet regularly and report directly to the Board of Directors, etc.

Credit Risk
To appropriately adapt to changes in the credit risk in relation
to assets held by the Bank, and to ensure stable profitability andmaintain sound operations, we conduct management appropriately with reference to our Credit Risk Management Policies
and Credit Risk Management Rules.
In order to objectively determine a borrower company’s
credit state and its capacity to repay loans, we perform a credit
rating system in a timely manner and reflect the result of thecredit rating in our credit risk management. More specifically,
we endeavor to maintain a sound asset base by implementing
our own assessment of loan assets and by making appropriate
provision for possible loan losses and write-offs based on thecredit rating system.
14

Meanwhile, the credit rating system enables a quantificationof the credit risk, controls concentration of risk with particularborrowers or industries, and further ensures profits that are balanced by credit costs, and thereby enables the Bank to improveits credit portfolio.
Regarding examination of loan applications, we have clearly
separated the sales promotion and credit screening functions
and undertake strict reviews and management under a policyof screening by borrower business sector. Individual cases arescreened by verifying various aspects including the use of funds,
income and expenditure plans, and investment outcomes, and by
carefully examining a borrower’s resources and plans for repayment.

Market Risk
For market risk, the Market Risk Management Rules have been
established, which stipulates the policies for monitoring, control
and mitigation of the risk, along with specific arrangements.
The Risk Management Division manages interest rate risk
related to deposits and loans, as well as the risk associated withsecurities, derivatives and other markets. Our current positions,
unrealized gains/losses and risk indicators such as BPV and VaR
are measured and evaluated on a daily or monthly basis andreported to management. From the perspective of managing
assets and liabilities together, we hold the monthly Integrated
Risk Management Committee, forecast interest rates, stock
prices and exchange rates, as a set of measures to enable anappropriate response to risk.

Liquidity Risk
We manage liquidity risk through our Liquidity Risk Management Policies and Liquidity Risk Management Rules and regard
stable cash flows as the primary objective. Moreover, we havein place a system (Liquidity Risk Contingency Plan) that can
respond to a wide variety of circumstances promptly and appropriately.

Operational Risk
We have drawn up an Operational Risk Management Policies
and Operational Risk Management Rules, with separate provisions for administrative risk, system risk, legal risk, personnel
risk, fixed asset risk and reputational risk. We implement necessary measures for required responses by getting the current
management status of such risks checked regularly by the
Operational Risk Management Council and reported to theBoard of Directors. For the important categories of administrative and system risk, we have drawn up the following subpolicies and procedures.

System Risk

System risk refers to the risk of incurring a loss due to computer
system failure, malfunction and other errors or system flaws andother deficiencies, as well as the risk of incurring a loss due tothe improper use of computers. This includes “cyber securityrisk” that threatens the safety of computer systems and computer networks as a result of cyber attacks. We have establisheda framework that swiftly responds to system failure throughour Computer System Failure Action Rules and Center Failure
Rules.
In regards to cyber security incidents that are increasingly
becoming a threat, the Bank has set up the Computer Security
Incident Response Team (CSIRT), an internal body with its

secretariat administered by the Risk Management Division andthe Operations Administration Division, that is expected to stayalert in ordinary times and to promptly respond to and solve any
incident.
To prepare for contingencies that cannot be dealt with using our conventional risk management mechanisms, we havecompiled a Business Continuity Plan, and have taken measuresthat would enable us to continue major business operations evenunder emergency conditions.
At Juroku Bank, we recognize the importance of integrated
risk management, and we will continue working to enhance thesophistication of our risk management system.

Business Continuity Plan
In response to the recent surge of risks associated with cyberattacks, extreme weather and natural disasters, new strain of influenza, the prolonged
COVID-19 crisis and other factors, the Bank has formulated business continuity plans to prepare for each of them, anticipating possible risk events. It
continues to improve its business continuity readiness including by conducting first-response drills.
Structure of the business continuity plan (BCP)
Rules on Business Continuity Readiness and Management
Basic Plan
Crisis Response Plan
Large-scale Earthquake Response Plan
Large-scale Earthquake Response Plan
Large-scale Earthquake Response Plan
New Influenza Virus Response Plan
Core System Emergency Response Plan
Cyberattack Response Plan
Contingency Plan for Liquidity Risk

Basic rules concerning the Bank’s business continuity plan and readiness
Provides a general concept of business continuity, the Bank’s policy and other basic matters
Provides first responses commonly applicable to different risks and other basic matters
Plan concerning responses to anticipated earthquakes(Response procedures for essential operations)(Version for the so-called (“Nankai megathrust earthquakes” countermeasures) anticipatedto occur in the Tokai region)
Response plan anticipating the epidemic of new strain of influenza and other diseases
Response plan anticipating failures in the core system and other similar problems
Response plan anticipating cyberattacks
Response plan anticipating actualization of liquidity risk

In regards to COVID-19, the Bank set up an Emergency Response Task Force in its early stage based on the above-mentioned New Influenza Virus
Response Plan and implements the following measures to prevent the spread of infection and concurrently to continue its essential operations that areneeded for supporting people’s livelihood and continuing the Bank’s operations.
<Examples of the Bank’s business continuity and infection prevention measures>• Working from home; staggered work hours; and splitting operations• Partial changes in business days and hours; suspension of customer visits• Ensuring sterilization of branches; installment of plastic shields at the counters; and social distancing between customers

Stakeholder Engagement
The Bank emphasizes engagement with all stakeholders. We have progressed from taking action “for” our stakeholders to acting “with”
them.
The 15th Medium-Term Management Plan launched in April 2020 centers on running a continuous “engagement cycle.” To do so,
our officers and employees are encouraged to bear in mind four basic stances in their daily work: “Let’s say,” “Let’s listen,” “Let’s act”
and “Let’s think” and to proactively exchange opinions with all stakeholders.

Administrative Risk

We manage administrative risk through our own Administrative Risk Management Policies and Administrative Risk Management Rules. While adapting to the growing diversificationand complexity of banking operations, our administration has
become more rigorous in an effort to retain and strengthen thetrust of our customers.
15

N on-Performing Loans

C ontribution to the Regional Economy and Community

The Bank provides information about the status of its assets inthree different ways. First, we conduct self assessment to calculate appropriate write-offs and reserves by classifying borrowers
according to their financial soundness. Second, disclosure basedon “The Financial Reconstruction Law” is used to classify prob-

lem assets. Third, we disclose the value of Risk-Monitored Loans
based on the Banking Law, which excludes non-loan assets suchas foreign exchange, accrued interest and advance payments.

Asset Self-Assessment / Assets Disclosed under the Financial Reconstruction Law /Risk-Monitored Loans under the Banking Law (as of March 31, 2021)(Non-consolidated)
Asset Self-Assessment
For all assets
Borrower category
Balances of credits
Legallybankrupt borrowers

2.5
[0.8]

Virtuallybankrupt borrowers

9.6
[4.1]

Potentiallybankrupt borrowers

54.4

I

Classification
II
III

IV

2.0

0.5

—
(0.1)

—
(1.7)

—
(0.8)

—
(5.5)

7.7

1.9

3.0

Others*1

433.3

Normal borrowers

4,082.9

33.3

11.4

9.8
(9.1)

12.1
[4.9]

54.4

2.7

8.1

Loan balances

Bankrupt loans

2.4
[0.7]

Non-accrual loans

63.8[58.3]

Past due loans(3 months or more)

0.0

Restructured loans

2.6

Total

69.0
[61.8]

100.0%

35.5

9.1

82.0%

2.0

0.3

84.5%

41.5

17.6

85.2%

Sub-total

0.5

2.5

160.8

272.6

69.3
[62.0]

Normal assets

4,516.5
4,082.9

4,287.1 288.8

9.8(10.0)—(7.3)*1 Borrowers requiring caution, excluding substandard borrowers*2 Portion of claims secured by collateral or guarantees

Ratio of disclosed claims under the Financial Reconstruction
Law (subtotal) to total credits
Figures in brackets are those after application of partial charge-offs(direct deduction).
1.5%[1.3%]

Ratio of risk-monitored loans to total
loans
Figures in brackets are those after application of partial charge-offs (direct
deduction).
1.5%[1.3%]

Juroku Bank’s Support for Overseas Business Development
 Overseas Business Support<The Bank’s International Network>
Utilizing our overseas network of four representative offices and15 overseas partnering financial institutions spanning 11 countries, we vigorously support our customers in their efforts to cultivate overseas sales channels and develop overseas local production
as well as disseminate the latest overseas business information.
Through such initiatives, we seek to capture new business opportunities together with our customers in local communities.

Corporate Business DivisionInternational Office

Shanghai Overseas
Representative
OfficeHanoi Overseas
Representative
OfficeBangkok Overseas
Representative
OfficeSingapore Overseas
Representative
Office<Video clips to deliver the latest overseas business information>
Although the COVID-19 pandemic is making it difficult for customers to travel overseas for business purposes, there are increasingneeds for the latest overseas business information with a view to the post-pandemic era. In these circumstances, we launched JUROKU
CROSSBORDER VIEW, an information service in which staff members of the Bank’s overseas representative offices in Shanghai, Singapore, Bangkok, and Hanoi disseminate the latest overseas business information.
JUROKU CROSSBORDER VIEW is a tool for directly delivering the local information our customers need. In addition toproviding video reports, these staff members of the Bank’s overseas representative offices offer online advice to customers and they also
conduct field surveys and visit sites on their behalf.
Through these activities, we will continue supporting our customers’ overseas business development.

SDGs Festival in Nagoya Marunouchi
From November 2020 to January 2021, SDGs Festival in Nagoya Marunouchi, an event disseminating information on the SDGs, was held at Nagoya Tokio Marine & Nichido Building and Juroku Bank
Nagoya Building.
Sponsored by Tokio Marine & Nichido Fire Insurance Co., Ltd. and co-sponsored by the Bank, Aichi
prefecture, and Nagoya city, the objective of this event was to give added momentum to SDG-related
activities in the Tokai and Hokuriku areas by disseminating information from Nagoya’s central business district and to strengthen collaboration among municipalities and companies addressing the SDGs in order to promote sustainable development of the region.
While the event was running, the Bank’s Nagoya Building was wrapped in a banner bearing the SDG logo and in the ATM lobby,
there were panels to raise awareness of the SDGs and introduce the Bank’s SDG initiatives.

Foundation of the Bank’s sustainable growthTotal

4,585.8[4,578.5]

Response to Environmental Issues*3 Substandard claims consist of loans only.

Notes:
1. Amounts in asset self-assessment and claims disclosed under
the Financial Reconstruction Law and the coverage of claims arerounded to the nearest 100 million yen. Amounts in risk-monitored loans are rounded down to the nearest 100 million yen.
Figures for ratios are rounded down to the first decimal place.
2. All credit items = Loans + Customers’ liabilities for acceptancesand guarantees + Bonds issued through private placements covered by guarantees of the Bank + Foreign exchanges + Suspense
payments with a similar nature to loans + Accrued interest.

16

4.0

Substandard loans*3

Total

4,585.8[4,578.5]

Bankrupt andquasi-bankrupt assets

Classification

Doubtful assets

Borrowers requiringcautionSubstandard
borrowers

Assets disclosed under the Financial Reconstruction Law
and coverage of the claims
For all claims
Classification
Portion of claims
Reserves
Coverage ratio
Balances of claims
secured*2

Billions of Yen
Risk-monitored loans
Loans only
(no other type of credit included)

Activities to Revitalize the Regional Economy

3. Amounts in asset self-assessment are those after deduction of
specific reserves for possible loan losses, and the amounts inparentheses are specific reserves for each classification.
4. The Bank does not implement partial charge-offs (direct deduction). If partial charge-offs were implemented, relevant figures
would decline to the figures shown in brackets.

Based on the environmental policy that the Bank established in April 2013, the divisions at headquarters and sales branches set
environmental objectives every year and conduct environmental activities. We are also systematizing the PDCA management cycle
to continue environmental protection initiatives. In June 2021 we announced our endorsement of the TCFD recommendations andare working to establish systems and ensure information disclosure in accordance with the TCFD recommendations.
By sincerely conducting environmental activities in the course of business, including education and other initiatives to raise
environmental awareness of each officer and employee, we will strive to contribute to the sustainable growth of local communities,
which will lead to creation of corporate value.
 Response to the TCFD Recommendations
Extreme weather and large-scale natural disasters have caused devastation around the world in recent years and the region we serve havealso frequently suffered major damage. Climate change has become an omnipresent issue, having emerged as a factor with a significant
impact not only on the business environment but also the businesses of our customers and ourselves. In these circumstances, aiming tostrengthen our response to climate change and to provide useful information to stakeholders, we announced our endorsement of the TCFD
recommendations and are working to establish systems and ensure information disclosure in accordance with the TCFD recommendations.
* Abbreviation of the Task Force on Climate-related Financial Disclosures
The TCFD is an international organization established by the Financial Stability Board (FSB) in December 2015 tosupport stability of financial systems. The TCFD recommends assessment of climate-related risks and opportunities
and disclosure of financial impacts to help promote a smooth transition to a low-carbon society.

17Governance

Strategy

The policy on response to climate change and other important matters are discussed at the Management Council and the results arereflected in management strategy and risk management.
The Management Council periodically reviews the situation.
Positioning response to climate change as an important management task, the Bank promotes initiatives in terms of both risks and opportunities.
RisksWe recognize climate-related risks, which are classified into two categories: physical risks and transition risks. Going forward, we
will consider the methodology for identifying and analyzing the impacts of the risks.
Opportunities
Business opportunities are expected to increase in line with the expansion of the market for climate-related financing and solutions.

Risk Management

We have established the “Investment and Lending Policy for Creation of a Sustainable Society.”
Recognizing climate-related risks as material risks, we are striving to establish a system for managing them within the framework ofintegrated risk management.

Metrics and Targets

Our target is to reduce our CO2 emissions in FY2030 by 50% compared with FY2013.
We aim to become carbon neutral by FY2050.

(t-CO2)
12,00011,083

10,783CO2 emissions attributable to the Bank’s energy consumption
10,01910,000

9,554

9,552
7,943

8,000

-50.0%

7,761

7,000
6,000

5,541

5,000
4,000

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019Chairman and President

Yukio Murase
Deputy President

Naoki Ikeda

Director and Managing Executive Officers

Yukiyasu Shiraki
Akihide Ishiguro
Shin Mishima
Tsutomu Niimi
Yuji Kume
Kikuo Asano
Satoko Ito

Yukio Murase
Chairman and PresidentManaging Executive Officers

Koichi Tokoro
Etsuro Ono
Executive Officers-29.9%

8,760

9,000

The Juroku Bank, Ltd. (as of June 30, 2021)

Outside Directors

 Initiatives for Reduction of Greenhouse Gas Emissions
We aim to become carbon neutral by FY2050 and our target is to reduce CO2 emissions in FY2030 by 50% compared with FY2013.

11,000B oard of Directors and Audit & Supervisory Board Members

FY2020

FY2030(Target)Shigeki Fujii
Hiroaki Sugino
Hirokazu Kusui
Eiji Kodama
Masayasu Toyoda
Fumitaka Yoshimura
Daisuke Sawada
Tatsuhiko Satake
Hirotaka Asai

Naoki Ikeda
Deputy President

Standing Audit & Supervisory Board Members

Naohiko Ishikawa
Shunsuke Uchigashima

Outside Audit & Supervisory Board Members

Investment and Lending Policy for Creation of a Sustainable Society
We have established the “Investment and Lending Policy for Creation of a Sustainable Society” in order to clarify the Juroku Bank
Group’s commitment to the resolution of environmental and social issues.
 Basic Policy
The Juroku Bank Group strives to contribute to medium- to long-term enhancement of corporate value and sustainable growth of customers by vigorously supporting
initiatives to resolve environmental and social issues through investment and lending.
Moreover, the Group strives to mitigate or avert the impact of investment and lending that may pose a significant risk or have a negative impact on the environmentand society by subjecting any such investment and lending to meticulous consideration.

Shinji Ishihara
Takuo Yoshikawa

Yukiyasu Shiraki
Director and Managing
Executive Officer andChief General Manager,
Business Support Division

SectorPolicyThe Group will not engage in investment or lending for the purpose of constructing new coal-fired thermal power stations or expanding
existing facilities. However, the Group may do so in exceptional cases, always proceeding with caution, such as if responding to a disasteror participating in projects that are in accordance with the energy policy of the Japanese government.

Weapons

In view of the inhumane nature of cluster bombs, antipersonnel landmines, and biological and chemical weapons, the Group will not
engage in investment or lending to companies that manufacture such weapons regardless of the use of the funds.

Deforestation

The Group will not engage in investment or lending to businesses involving illegal logging or incineration of forest. The Group will
adopt a cautious approach to investment and lending if the funds in question may be related to deforestation, taking into consideration
the impact on the local economy and the environment.

General Meeting of
Shareholders18

 Investment in ESG bonds in recent years
Number of cases

Total amount

FY20182¥0.9 billion

FY20193¥1.9 billion

FY202019¥21.3 billion

Audit & Supervisory
Board Members
Audit & Supervisory
Board

Investment in ESG Bonds
Fiscal year in whichinvestment was madeTsutomu Niimi
Director and Managing
Executive Officer andGeneral Manager,
Enterprise Support Division

The Juroku Bank, Ltd. (as of June 30, 2021)

Board of Directors Supporting efforts to realize a sustainable society through investment
in ESG bonds
We are vigorously investing in corporate bonds whose use is restricted toprojects that are expected to contribute to sustainable development of society,such as projects concerning the renewable energy business and social infrastructure development.
We will continue our initiatives to realize a sustainable society.

Shin Mishima
Director and Managing
Executive Officers

O rganization Chart

 Sector-specific Policies
Coal-fired thermal
power generation

Akihide Ishiguro
Director and Managing
Executive Officer

Management Meeting

Internal Audit Board

Audit & Supervisory Board Members’ OfficeInternal Audit Division
Operations Administration Division
Enterprise Support DivisionMarket Operations Division
Business Support Division
Regional Revitalization Division
Solutions Business DivisionInternational Office
Shanghai Representative Office
Representative Office Registered in Singapore
Bangkok Representative OfficeHanoi Representative Office
Retail Business Division
Aichi Business Division
Risk Management Division
Digital Reform DivisionCorporate Planning DivisionCorporate Administration Division
Secretariat
Head Office
Nagoya Main Office
Domestic Branches

19

F inancial Review

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

Business Environment
The Japanese economy remained in a difficult situation during the current fiscal year with severe restrictions on social andeconomic activities due to the impact of the COVID-19 global
pandemic, but there were some signs of recovery. In the corporate sector, capital investment was restrained due to declining
profits and uncertainty about the future of the global economy,
but with the resumption of economic activities in each country,
automobile-related exports recovered and production recovered
to an increasing trend. In the household budget sector, employment and income conditions remained weak, and although personal consumption showed signs of recovery after the first stateof emergency was lifted, consumption of services fell as a resultof the second and third waves of the pandemic and announcement of the second state of emergency.
Although there have been continued movements to curb
capital investment in both Gifu and Aichi prefectures, whichmake up the main business base of the Bank, there were signsof resilience such as exports and production returning to anincreasing trend mainly in the automobile industry. In thehousehold budget sector, personal consumption showed signs ofrecovery amid continued weakness in employment and income
conditions, but consumption of services such as lodging anddining fell with the suspension of the “Go To Travel” campaign
to stimulate tourist demand at the end of last year and announcement of the second state of emergency at the beginningof this year.

Performance
Ordinary income from banking operations increased by ¥2,408
million year on year to ¥79,063 million owing to an increase inother operating income. Ordinary expenses decreased by ¥1,575
million to ¥56,557 million due to decreases in interest expenseand operating expenses. As a result, ordinary profit increased by¥3,983 million year on year to ¥22,506 million.
In the leasing business, ordinary income increased by ¥724
million year on year to ¥25,859 million, ordinary expenses increased by ¥1,230 million year on year to ¥25,379 million, andordinary profit decreased by ¥506 million year on year to ¥480
million.
In other businesses, including the credit card business andcredit guarantee business, ordinary income increased by ¥1,495
million year on year to ¥9,282 million, and ordinary expenses
decreased by ¥44 million year on year to ¥7,171 million, and ordinary profit increased by ¥1,539 million year on year to ¥2,111
million.

20

As a result, ordinary income on a consolidated basis increased by ¥4,486 million year on year to ¥111,346 million,
and ordinary expenses decreased by ¥624 million year on year to¥86,738 million. Ordinary profit increased by ¥5,111 million
year on year to ¥24,608 million, and net income attributable toowners of the parent increased by ¥1,860 million to ¥14,722
million.
Net cash provided by operating activities amounted to¥580,590 million (¥84,244 million was provided in the previous fiscal year) mainly as a result of an increase in deposits. Net
cash used in investing activities amounted to ¥274,206 million (¥63,122 million was provided in the previous fiscal year)
mainly as a result of purchase of securities. Net cash used infinancing activities amounted to ¥4,624 million (¥3,734 million was used in the previous fiscal year) mainly as a result ofdividends paid. As a result, the closing balance of cash and cash
equivalents increased by ¥301,765 million during the fiscal year
under review to ¥930,917 million.

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:

Financial Position
As a “comprehensive financial group that builds a future with
its local communities and achieves sustainable growth withlocal economies,” we have endeavored to provide high-quality
customer-oriented services tailored to life events so that ourcustomers and their families can achieve their dreams.
The balance of deposits as of March 31, 2021 increased by¥454.1 billion year on year to ¥6,137.8 billion, mainly due toan increase in personal and corporate deposits.
In addition, as a result of responding to the diverse needsof individual customers with a wide range of products such as
personal pension insurance and investment trusts, our balanceof individual customer assets including deposits increased by¥315.0 billion to ¥4,971.6 billion.
With regard to loans, the balance increased by ¥133.1 billion year on year to ¥4,509.8 billion, reflecting our proactive
engagement in financing consultations with customers in theregion amid the COVID-19 pandemic and our initiatives for
personal loans centering on mortgage loans.
With regard to securities, we have endeavored to manage
securities appropriately in accordance with a basic policy of
expanding total profit over the medium to long term by building a portfolio that maintains a balance between risk and return
while flexibly responding to changes in market conditions.
As a result, the balance of securities as of March 31, 2021
increased by ¥309.1 billion year on year to ¥1,572.1 billion.

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

C onsolidated Statement of Changes in Equity
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

¥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

Year Ended March 31, 2021

2021

Thousands of
U.S. Dollars (Note 1)

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

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

—

—

—

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¥ (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)

$3.56
3.55
0.81

¥344.22343.7070.00

Millions of Yen

Millions of Yen

U.S. Dollars
2021

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

Thousands

2021

2020

Year Ended March 31, 2021

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

N otes to Consolidated Financial Statements
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

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(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

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.

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

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.

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

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:
Millions of Yen
2021

2021
Cash
Due from banks
Total

2020

¥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¥947,016¥632,783

Thousands of
U.S. Dollars
2021$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

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

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:Thousands of
U.S. Dollars
2021

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

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¥ 98,222
5,208
32,97871,513500—¥208,421

2020¥467,151¥208,421$4,219,592

—

0

—

(1) The changes in defined benefit obligation for the years ended March
31, 2021 and 2020, were as follows:

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

¥ 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

Annual maturities of lease obligation as of March 31, 2020, were as follows:
As of March 31, 2020
Year Ending March 31
2021
2022
2023
2024
2025
2026 and thereafter
Total

17. RETIREMENT AND PENSION PLANS

Millions of Yen

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

14. DEPOSITS

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

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:

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¥3,306
5,241¥8,547

Past service cost
Actuarial gains (losses)
Total

2020
—
¥(2,235)¥(2,235)$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)—$(29,862)(2,392)¥2,850(21,606)¥(5,698)¥2,850$(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———

53,2581,171,810¥189—

Fair Value

53,0691,171,810
4,345,574(22,484)
4,323,090¥6,189,672¥5,610,659
38,0504,342,129¥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
Amount¥3,687
3,687

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

¥182
(62)

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

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)

—
—

—
—

—
—

—
—

$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

¥182
(62)

Thousands of U.S. Dollars
Contract
Contract
Unrealized
Amount Due Fair Value
AmountGains (Losses)
after One Year2020
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.
(2) Address
Kyowa No.2 Building, 6-11-1 Kandamachi,
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

Thousands of U.S. Dollars

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

Total

Reconciliations Consolidated¥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

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

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 $933,755
3,405
13,982$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

I ndependent Auditors’ Report(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

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
—

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

44

45

46

47

48

49

C orporate Data

D irectory(as of March 31, 2021)(as of June 30, 2021)

10 Principal Shareholders:

Head Office

October 1877

The Master Trust Bank of Japan (Trust)

Authorized Shares:

Custody Bank of Japan, Ltd. (Trust)

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan
Telephone: +81-58-265-2111

46,000 thousand shares

Juroku Bank Employee Stockholding Association

Shares of Common Stock Issued and Outstanding:

Solutions Business Division International Office

MUFG Bank, Ltd.

Head Office

37,924 thousand shares

Fuji Baking Group

8-26, Kandamachi, Gifu-shi, Gifu
Telephone: +81-58-265-2111

Stock Listed:

Meiji Yasuda Life Insurance Company

First Sections of the Tokyo and Nagoya Stock Exchanges

Sompo Japan Insurance Inc.

Paid-in Capital:

Tokio Marine & Nichido Fire Insurance Co., Ltd.

¥36,839 million

Seino Holdings Co., Ltd.

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan P.O. Box 40
Telephone: +81-58-265-2111
Facsimile: +81-58-266-1698
SWIFT Address: JUROJPJ T
Head of Office
Takayuki Nishikawa

Number of Common Stock Shareholders:

The Bank of Nagoya, Ltd.

Overseas Network
Shanghai Representative Office

1-24, Sakaemachi, Tajimi-shi, Gifu
Telephone: +81-572-22-1301

18th Floor, Hang Seng Bank Tower,
1000 Lujiazui Ring Road, Pudong New Area,
Shanghai, People’s Republic of China
Telephone: +86-21-6841-1600
Facsimile: +86-21-6841-1881
Chief Representative
Noriaki Murase

Takayama Branch

Date of Establishment:

20,532
Number of Employees:
2,702

Branches Handling
Foreign Exchange
Business

Ichinomiya Branch
1-2-5, Sakae,
Ichinomiya-shi, Aichi
Telephone: +81-586-73-5116(10 Offices)

Nagoya-ekimae Branch
3-28-12, Meieki,
Nakamura-ku, Nagoya-shi, Aichi
Telephone: +81-52-561-5431

Ogaki Branch

Nagoya Main Office3-1-1, Nishiki, Naka-ku,
Nagoya-shi, Aichi
Telephone: +81-52-961-8111

1-26, Takayacho, Ogaki-shi, Gifu
Telephone: +81-584-78-2161
Tajimi Branch

Sakurayama Branch
5-91, Sakurayamacho, Showa-ku,
Nagoya-shi, Aichi
Telephone: +81-52-851-9216

136, Simo Sannomachi,
Takayama-shi, Gifu
Telephone: +81-577-32-1600

Osaka Branch
2-3-8, Honmachi, Chuo-ku,
Osaka-shi, Osaka
Telephone: +81-6-6264-1600
Tokyo Branch
4-1-10, Nihombashi Honcho,
Chuo-ku, Tokyo
Telephone: +81-3-3242-1661

Representative Office Registered in Singapore
50 Raffles Place #38-06 Singapore Land
Tower, Singapore 048623
Telephone: +65-6222-6616
Facsimile: +65-6532-6616
Chief Representative
Kunihiro Tomita
Bangkok Representative OfficethUnit 6 25 Floor CRC Tower, All Seasons
Place, 87/2 Wireless Road, Lumpini, Phatumwan, Bangkok, Thailand 10110
Telephone: +66-2655-8016
Facsimile: +66-2685-3016
Chief Representative
Yukiyasu Horie

A ffiliates(as of June 30, 2021)

Name

Business Lines

Capital(¥ Millions)

EquityStake*

EquityStake ofsubsidiaries*

Juroku Business Service Co., Ltd.

Clerical work service

Jan. 1979

10

100.0

—

Juroku Research Institute Co., Ltd.

Business consulting service
Survey and research service

June 2013

50

100.0

—

Juroku Tokai Tokyo Securities Co., Ltd.

Financial instruments service

Apr. 2018

3000

60.0

—

Juroku Card Co., Ltd.

Credit card flotation service

Aug. 1982

55

49.7

43.9

Juroku Lease Co., Ltd.

Leasing service
Venture capital service

Mar. 1975

102

49.8

30.3

Juroku Computer Service Co., Ltd.

Computer system development service

Aug. 1985

245

43.0

56.9

Juroku Credit Guarantee Co., Ltd.

Credit guaranty service
Operation and management of
Investment business Limited
partnership (fund)May 1979

58

49.8

16.3

Apr. 2021

50

100.0

—

NOBUNAGA Capital Village Co.,Ltd.

*Voting rights held by the Bank, or subsidiaries excluding the Bank, as a percentage of total voting rights.

50

EstablishedHanoi Representative Office
Unit 1206, Pacific Place,
83B Ly Thuong Kiet Street,
Hoan Kiem District, Hanoi City, Vietnam
Telephone: +84-24-3927-1616
Facsimile: +84-24-3927-1166
Chief Representative
Hiroyuki Kawase

Shanghai
Hanoi
Bangkok

Gifu Prefecture (106)Tokyo Branch

Singapore

Aichi Prefecture (53)Mie Prefecture (1)Osaka Branch

Total 162Domestic Offices51