Annual Report  201 && THE JUROKU BANK,LTD. The Juroku Bank, Ltd. and Subsidiaries        Years Ended March 31, 2011 and 2010
change at March 31, 2011.
PROFILE
The Juroku Bank, Ltd., has its business base in Gifu and Aichi prefectures, the industrial center of the Chubu region of Japan. During the over 130 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 147 domestic branch offices, mainly in Gifu and Aichi prefectures, as well as representative offices in Hong Kong and Shanghai. On a consolidated basis, as of the end of March 2011, the Bank had total deposits of ¥4,749.6 billion (US$57,121 million), total assets of ¥5,309.9 billion (US$63,859 million), and a capital ratio of 11.30% according to domestic standards.

Forward-Looking Statement
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. We will take a step forward as the “New Juroku Bank.” Looking at t the operating environment for financial institu- tions, we find regional economies facing increasing uncer- tainty, given the spreading aftermath of the Great East Japan Earthquake, in which we expect the harsh business conditions to continue. Under such circumstance, the Juroku Bank, as regional financial institution aiming at sustainable growth, must endeavor to raise profitability and improve its financial sound- ness through responding to the diverse needs of community customers. To meet these challenges, and that in view of the imminent radical change associated with the merger with The Gifu Bank, Ltd. scheduled in September 2012, we cut off our ongoing 11th Medium-term Management Plan, and newly launched from this April the "12th Medium-Term Management Plan ~Take-off towards the Glorious Tomorrow", that covers three years from FY2011 to FY2013. Based on this plan, we will be committed to enhancing our corporate value as the "New Juroku Bank" through prompting the implementation of our growth strategies along with early materialization of the maxi- mum effect of management integration with The Gifu Bank, with an aim to be "The No.1 bank in the Tokai Region," "A bank that bridges Gifu prefecture and Aichi prefecture," and "A bank that contributes to the regional economy and com- munity." I look forward to receiving the continued support and encouragement of all our stakeholders. July 2011 Hakumi Horie President
Beginning of the 12th Medium-term
Management Plan
In view of the imminent radical change in management environ- ment associated with the merger with The Gifu Bank scheduled in September 2012, the Bank cut off the 11th Medium-term Management Plan, and launched from April 2011 the 12th Medium-Term Management Plan ~Take-off towards the Glori- ous Tomorrow, covering three fiscal years. Under this management plan, we are setting up a long-term vision for the Bank as "The No.1 bank in the Tokai Region," "A bank that bridges Gifu prefecture and Aichi prefecture," and "A bank that contributes to the regional economy and community," which shall be fulfilled along with enhancement of our corporate value through accelerating the implementation of our growth strategies and early materialization of the maximum effect of management integration with The Gifu Bank, Ltd.
Based on this plan, we will be able to respond more effectively to problems that the Bank faces. Details are outlined below. We will be committed to implementing the following basic strategies under the manage- ment plan, in an effort to efectively deal with the challenges that surround the Group.
Basic Strategies
•Reinforcement of Management Base In view of the growth strategies to be pursued after the merger with The Gifu Bank, Ltd., we will be committed to improving the quality of capital while enhancing the soundness of assets, through the reinforcement of core tier I capital based on the strengthening of earnings capability while ensuring security and provision commensurate with the risks concerned. •Pursuit of the Regional Strategies for Aichi and Gifu Pre- fectures Envisaging the Post-merger Situation We will further deepen the relationship with customers by the deployment of distribution channels that suit each market, along with the reinforcement of products and services that meet the customer needs, whereby we will promote ourselves to be chosen by customers as their main bank. In Aichi prefecture, we will conduct proactive marketing activities including further focus on retail business and establish- ment of new distribution channels, while expanding business transactions with new customers, in an effort to be the "commu- nity-oriented" Bank. In Gifu prefecture on the other hand, we will focus on deep- ening business relationship with existing customers to establish rock-solid basis of business transactions, while creating easy-to- use channels. •Early Materialization of Cost Synergy and Its Maximization In merging with The Gifu Bank, we will be committed to early materialization of cost synergy and its maximization through the elimination and consolidation of existing branch offices fully paying attention not to compromise customer convenience, along with integration of system and administration while minimizing the impact to customers. ●Enhancement of Management Control Structure We will be committed to enhancing management control structure including the strengthening of various risk manage- ment systems to flexibly deal with changes in financial business environment, along with further reinforcement of compliance with laws and regulations and customer protection that serve as the basis of customer trust. •Consolidation of Corporate Culture and Human Resources between the Two Banks We will endeavor to amalgamate corporate culture and human resources between the Bank and The Gifu Bank while developing human resources with high level expertise that can respond to the customer needs, under the constructive competitive environment between the employees of the two banks. •Promotion of Community-based Financial Services and Flexible Facilitation of Finance We will be committed to adequately and actively providing financial intermediation functions based on the substance of the SME Financing Facilitation Act, while engaged in community- based operation with community-based financial services defined as one of the Bank's core management strategies, in an effort to fulfill our responsibility as a regional financial institution.
Corporate Governance
Basic Policy
At Juroku Bank, we believe that retaining the trust of our stake- holders by conducting all of our activities in a sound manner is vital to our role as a financial institution. Therefore, we place the highest priority on building a solid organizational structure and establishing systems that continually reinforce corporate gover- nance. In association with the entry into effect of the Companies Act, we established a Basic Policy related to the Establish- ment of an Internal Control System at a meeting of the Board of Directors held on May 24, 2006. Board meetings held on September 20, 2007 and February 26, 2009 adopted resolutions to partially amend this policy. In this way, we have developed a system to ensure the appropriate execution of our business and have refined our system. Under this basic policy, we will pursue initiatives to enhance corporate governance.
Progress Thus Far
The Board of Directors comprises 12 members who deliber- ate and decide matters stipulated in laws and regulations and important management issues, and monitor the conduct of busi- ness operations by each director. Under the Managing Directors Committee structure, autho- rized by the Board of Directors, the president, senior managing directors and managing directors are able to quickly decide on important matters affecting the daily conduct of business opera- tions. The Board of Corporate Auditors comprises four statutory auditors, including two outside auditors and two standing audi- tors. To support the statutory auditors, we have established the Corporate Auditors' Office, which monitors the execution of business operations objectively and ensures appropriate auditing functions. With regard to internal controls, the Audit & Inspection Di- vision conducts internal audits, and at least once per year seeks outside opinions regarding the development and management of the internal control system. Based on these objective opinions, we work to further improve the internal control system. More- over, to reinforce the compliance system, we have established a whistle-blower system and 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 established the ALM Committee and Compliance Committee. These com- mittees discuss risk management issues both on a regular basis and when necessary. At these meetings, the appropriateness of operations is reviewed and risk management is applied to minimize loss due to unforeseen circumstances. During the term under review, the ALM and Compliance committees both met at least once a month. We have also signed consultation agree- ments with three lawyers, who provide advice on legal matters and perform a variety of legal checks when necessary. The Bank's accounts are audited by the independent audit- ing firm Deloitte Touche Tohmatsu LLC (as of June 30, 2011). This firm provides accurate audits on the basis of appropriate information disclosure. Going forward, we will work to further enhance our cor- porate 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, in the execution of their duties, directors comply with all relevant laws, ordinances, regulations, and the Bank’s Articles of Incorporation Our Basic Policy establishes the Bank's commitment to serve local communities by fulfilling its mission as a financial insti- tution, and to seek business growth through sound practices founded on a broad and rational perspective. To implement this policy, directors of the Bank are respon- sible for the establishment of ethical standards and a compliance policy, and for ensuring that business is conducted in accordance with these standards and that laws, ordinances, and the Ar- ticles of Incorporation are adhered to. In addition, directors are responsible for preventing damage caused by anti-social forces. 2. System for storage and management of information related to the directors’ execution of their duties To ensure efficient verification of proper business practices, regu- lations will be created and followed on the handling and control of information and documents related to business operations (in- cluding 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 statutory auditors to view this information and the relevant documents when necessary.
3. Risk management regulations
(1) Risk management is positioned as an important duty to ensure the soundness and safety of business, and regulations re- lated to each type of risk, including a Comprehensive Risk Man- agement Policy, will be established, and efforts will be made to appropriately improve the measurement, evaluation, and man- agement of risk by following these regulations. An independent third party will regularly evaluate the Bank'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 comprehen- sively manage risk, individual departments will be made specifi- cally responsible for each category of risk, ensuring effective risk management. In addition, an organizational structure will be established, including an ALM Committee, chaired by the direc- tor in charge of the department 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. 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) operational risk, and 5) other risks that could have a serious impact on the Bank's business. 4. System to ensure the efficient execution of directors' du- ties (1) A Medium-Term Management Plan and guidelines based on this plan will be created for each six-month period, and duties will be executed in accordance with the Basic Policy and an Ac- tion Plan. (2) Progress made in implementing these plans will be reported to the Board of Directors in a timely manner, and steps will be taken in response as needed. (3) Items that should be taken up by the Board of Directors will be clearly stated in regulations such as the Board of Directors Regulations, and important items will be discussed by the Man- aging Directors Committee, which comprises managing direc- tors or above, to ensure that issues are sufficiently examined. In addition, Regulations on Decision-Making Authority Related to Operations will stipulate the appropriate delegation of author- ity to subordinates based on such factors as the importance of the operation, making the directors' execution of duties more efficient. 5. System to ensure that the execution of employees' du- ties complies with laws, ordinances, and the Articles of Incorporation (1) In addition to positioning compliance with laws and ordi- nances as one of our most important business responsibilities and establishing regulations such as the Code of Ethics and Compliance Policy, the Bank will establish a department to provide overall control. In addition, a Compliance Committee, chaired by the director responsible for the department undertak- ing overall control, will be created, and this committee will be tasked with handling compliance-related issues. (2) An in-house system will be created for reporting violations of laws and ordinances and other compliance-related issues, and a whistle-blower system that employs an independent lawyer to receive reports. Efforts will be made to prevent or promptly detect problems such as violations of laws. 6. System to ensure appropriate operations of the corporate group, which is composed of related companies, includ- ing affiliates (1) An internal auditing agreement has been concluded with 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 of the Bank as statutory auditor serving on a non-regular basis of affiliates and having them attend Board of Directors meetings of affiliates. (2) The directors of the Bank and presidents of affiliates will exchange opinions at least once every six months to prevent problems such as inappropriate transactions between the Bank and its affiliates. (3) When engaging in transactions with affiliates and other enti- ties, steps will be taken to verify that the terms of the transac- tion conform to the arms-length principle. (4) A whistle-blower system will be established at the Bank 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 the financial reporting of the Group, especially for the Bank. 7. Items related to employees whose assignment to assist them in their duties is requested by the statutory audi- tors of the Bank A Corporate Auditors' Office will be created to assist the statu- tory auditors (Corporate Auditors) in the performance of their duties, and at least one full-time employee will be assigned to work in that office. Upon obtaining the opinions of the Board of Auditors, decisions will be made on the positions and qualifica- tions of employees to be assigned to engage in this work, and a roster of such employees will be created. 8. Ensuring the independence of the above employees from directors The appointment, transfer, and evaluation of employees who as- sist the Corporate Auditors in their duties will be subject to the approval of the Board of Auditors. 9. System for directors and employees to report to Corpo- rate Auditors and a system for other reports to Corpo- rate Auditors Officers shall submit reports and provide information in re- sponse to requests from the Board of Auditors or individual Corporate Auditors. The following are the main topics of the reports and information to be provided. (1) Department activities related to creating the Bank's internal control system (2) Activities of the Bank's affiliates (3) Significant accounting policies and standards and changes to them (4) Content of disclosed earnings, projections, and other impor- tant disclosure materials (5) Operation of the whistle-blower system and notifications (6) Circulation of documents such as draft proposals and the minutes of important conference/committee meetings (7) Other items deemed necessary by the Corporate Auditors 10. System to ensure effective audits by Corporate Auditors The representative director will regularly meet and cooper- ate with the Corporate Auditors to ensure the effectiveness of audits, and will regularly exchange opinions on management problems and progress in auditing to ensure high accuracy.
Compliance System
Recognizing that the survival of financial institutions depends on trust, we put top priority on earning the firm trust of the general public. To this end, we embrace high corporate ethical standards and promote extensive awareness of the importance of legal compliance. We are further strengthening our compliance system under our 12th Medium-Term Management Plan through policies which are designed to: 1) Earn the firm trust of the general public through the maintenance of high corporate ethical standards and awareness of the importance of legal compliance; 2) Promote awareness of the crucial importance of compli- ance among our staff; and 3) 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 program each fiscal year. All departments hold monthly study meetings to foster knowledge of legal issues and increase compliance- related awareness. We have also prepared curriculums related to compliance for individual training programs in order to boost the knowledge and awareness of compliance among our employ- ees. In addition, each department conducts periodic self-checks according to its specific responsibilities. This is part of our initiative to ingrain a compliance-oriented corporate culture.
Organizational Structure
Compliance Committee
Chaired by the managing director in charge of the Compliance Management Division and consisting of general managers from relevant divisions, the Compliance Committee examines, dis- cusses, and issues directives concerning matters of compliance. Compliance Management Division As the entity responsible for overseeing compliance, the Com¬ pliance Management Division promotes compliance programs and serves as the secretariat for the Compliance Committee. Inspection Section (Audit and Inspection Division) The section conducts audits and other investigations related to the compliance conditions in each division. Compliance at Each Division Compliance officers are appointed in each of the divisions to check the day-to-day compliance of those divisions.
Customer Protection Management System
The Bank set up a Customer Protection Management Policy in September 2007 to develop and establish a system to ensure customer protection. Under the Customer Protection Manage- ment Policy, we have clearly stated protection measures that we had taken as part of compliance and risk management. We are focusing more heavily on customer-oriented management. The purpose of the policy is to improve the protection and conve- nience 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 con- fidentiality of our customers' personal data, information security risk is addressed by the Bank's Information Security Manage- ment 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 depart- ment and branch. We are making every effort to educate em- ployees to bolster their awareness of security issues so that we can ensure the maximum degree of protection for customer data in daily operations.
Risk Management
The importance of risk management has grown as the risks confronting financial institutions have become more complex and diverse. Recognizing risk management as crucial for safe and sound operations, we have established "Basic Policy of Risk Management" contained in our 12th Medium-Term Manage- ment Plan. In addition, we have established Comprehensive Risk Management Policy and other policies and rules relating to risk management that enable an appropriate and prompt response to various types of risk. We have established the Risk Management Division to step up 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 and organizations (doing), assessing results of these measures (check- ing) and making improvements where needed (acting). In addition, to ensure that our risk management mecha- nisms function effectively with regard to sections within the Group 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 Audit and Inspection Division, which is independent from business operation departments. In this way the Bank verifies the effec- tiveness of its risk management systems.
Basic Policy of Risk Management
(12th Medium-Term Management Plan)
●Risk Management
● Implement appropriate risk management to ensure that risk taking is handled in line with the Bank's financial ● Enhance the ability of risk analysis to support appropri- ate risk-taking. ● Development of risk management system in compliance with capital adequacy regulation. ● Strengthen credit risk management.
Comprehensive Risk Management
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 Tier I-based distributable capital, through the risk quantification us- ing statistical methods, thereby enforcing a comprehensive risk management aiming at ensuring soundness of management. We adopt a flexible approach to required responses by get- ting the current state of such comprehensive risks checked by the ALM Committee, which has monthly meetings and reports directly to the Board of Directors.
Credit Risk
To appropriately adapt to changes in the credit risk in relation to assets held by the Bank, and to ensure stable profitability and maintain sound operations, we conduct management appropri- ately 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 the credit 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 the credit rating system. 6 The credit rating system enables a quantification of the cred- it risk, eliminates concentration of risk with particular borrow- ers or industries, and further ensures profits that are balanced by credit costs, and thereby enables the Bank to improve its 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 policy of screening by borrower business sector. Individual cases are screened 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 repay- ment.
■ Market Risk
We manage market risk through the Bank's Market Risk Man- agement Policies and, as specific rules, Market Risk Manage- ment Rules. The Risk Management Division manages interest rate risk related to deposits and loans, as well as the risk associated with securities, 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 and reported to management. From the perspective of managing as- sets and liabilities together, we hold monthly ALM Committee meetings, forecast interest rates, stock prices and exchange rates, as a set of measures to enable an appropriate response to risk.
Liquidity Risk
We manage liquidity risk through our Liquidity Risk Manage- ment Policies and Liquidity Risk Management Rules and regard stable cash flows as the primary objective. Moreover, we have in place a system (Liquidity Risk Contingency Plan) that can respond to a wide variety of circumstances promptly and appro- priately.
Operational Risk
We have drawn up an Operational Risk Management Policies and Operational Risk Management Rules, with separate provi- sions for administrative risk, system risk, legal risk, personnel risk, fixed asset risk and reputational risk. For the important categories of administrative and system risk, we have drawn up the following sub-policies and procedures.
【Administrative Risk】
We manage administrative risk through our own Administra- tive Risk Management Policies and Administrative Risk Man- agement Rules. While adapting to the growing diversification and complexity of banking operations, our administration has become more rigorous in an effort to retain and strengthen the trust of our customers.
[System Risk]
System risk is managed through the Bank's System Risk Man- agement Policies and System Risk Management Rules. We have established a framework that swiftly responds to system failure through our Computer System Failure Action Rules and Center Failure Rules. To prepare for contingencies that cannot be dealt with us- ing our conventional risk management mechanisms, we have compiled a Business Continuity Plan, and have taken measures that would enable us to continue major business operations even under emergency conditions. At Juroku Bank, we recognize the importance of integrated risk management, and we will continue working to enhance the sophistication of our risk management system. The Bank provides information about the status of its assets in three different ways. First, we conduct self assessment to calcu- late appropriate write-offs and reserves by classifying borrowers according to their financial soundness. Second, disclosure based on "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 such as foreign exchange, accrued interest and advance payments.
*2 Portion of claims secured by collateral or guarantees Notes:
itored loans are rounded down to the nearest 100 million yen. Figures for ratios are rounded down to the first decimal place.
3. Amounts in asset self-assessment are those after deduction of specific reserves for possible loan losses, and the amounts in parentheses are specific reserves for each classification. 4. The Bank does not implement partial charge-offs (direct deduc- tion). If partial charge-offs were implemented, relevant figures would decline to the figures shown in brackets.
Asset Self-Assessment / Assets Disclosed under the Financial Reconstruction Law /
Risk-Monitored Loans under the Banking Law (as of March 31, 2011) a 9
Activities to Revitalize the Regional
Economy
Initiatives to Facilitate Financing
The Bank views the facilitation of regional financing as its most important duty and this is expressed in its basic philosophy of "serving our community by fulfilling our social mission as a fi- nancial institution." Therefore, the Bank has actively responded to its customers' demands in relation to their needs for funds or review of the conditions for borrowing. The Bank has enhanced its management system through the provision of a Financing Facilitation Meeting that was estab- lished in the headquarters during December 2009 to respond attentively to the increasing variety of requests we receive from customers in small- and medium-sized businesses and customers who have mortgage loans. Going forward, we will strive to provide a prompt, accurate and suitable response based on our Basic Policy related to the Facilitation of Financing which was established in January 2010 and thereby enable the Bank to function as a proactive financial intermediary in its role as a regional financial institution.
Commencement of Trade Settlement Service in RMB
From September 6, 2010, the Bank started providing Trade Settlement Service in RMB (handling remittance to and from overseas), as a pioneer among regional banks based in the Tokai region. Although yen and US dollar have hitherto been the currencies primarily used for settling trade with China, Trade settlement in RMB has been made available thanks to the regulatory relaxation by the Chinese government. We started this service ahead of other regional banks in an expectation of increasing needs among customers for Trade transaction in RMB in the future. a pioneer among the regional banks, and this latest event was the sixth round participated by 334 Japanese companies (12 of which were the Bank's customers), visited by 3,200 companies and 5,300 individuals, hosting 8,500 business talks for the two days, turning out to be the largest ever round. The Bank is also actively developing business cooperations with local financial institutions in foreign countries. It reached business cooperation agreement with PT. Bank Negara Indonesia (Persero) Tbk (headquartered in Jakarta), an Indonesian state-owned commercial bank on March 15, 2011, which was followed by the business cooperation on March 17 with Industrial and Commercial Bank of China Limited (head- quartered in Beijing), the largest commercial bank in China, and another on May 2 with State Bank of India (headquartered in Mumbai), the largest bank in the Republic of India, as the first to explore this territory among regional banks in the three prefectures of the Tokai region. Thanks to the now substantial cooperation network, our customers developing their businesses overseas will find it easier to do transactions with these partner financial institutions and to raise fund in local currencies, while it provides access to management information on local laws and taxation that will facilitate setting up of their local operations.
“Japan-China Monozukuri Business Talks Forum
@ Shanghai 2010"
The Bank organized "Japan-China Monozukuri Business Talks Forum @ Shanghai 2010" in Shanghai, China for the two days of September 16 and 17, 2010. The Bank has been providing support to business customers developing their presence in China for the past 17 years since it established its Shanghai Rep- resentative Office in 1993, as the first among the regional banks. This forum was inaugurated five years ago by the Bank again as
“Interregional Collaboration for
Overseas Business Support"
On May 18, 2011, the four banks including the Bank, San- In Godo Bank, Hiroshima Bank, and Hokkoku Bank signed "Memorandum regarding Overseas Business Support," to form a mutually collaborative arrangement at overseas. This collaboration among banks operating in different regions in Japan enables mutual use of each partner's represen- tative offices in Hong Kong (the Bank), Dalian (San-In Godo Bank), Bangkok (Hiroshima Bank), Singapore (Hokkoku Bank). Thereby, customers of each bank will enjoy fuller support in- cluding access to broader than ever spectrum of useful informa- tion in respect of local laws, taxation and economies in foreign countries.
Handling Eco-Friendly Financial Products
The Bank believes that a commitment to dealing with environ- mental issues is a public responsibility. Accordingly, we provide proactive support to customers, addressing environmental issues by offering eco-friendly financial products. For the purpose of promoting eco-friendly financial products, the Bank provides Every Support 21 and Juroku Eco Loan, besides it started pro- viding Juroku Eco-Rating Loan Scheme and Juroku Eco Private Placement Bond with an aim to realize eco-friendly financial services in the regional communities, by pushing from behind the business customers tackling environmental protection.
The Bank’s Activities in Connection to
the Great East Japan Earthquake
We would like to express heartfelt sympathy to all those affected by the Great East Japan Earthquake. The Bank is engaged in the following activities in this connection. • On March 14, 2011, special loan program was launched to offer support to the victims and businesses suspending their operation or otherwise affected by the earthquake. • All donations transferred over the counter at the Bank's branch- es are free of remittance charge. • On March 28, 2011, ¥10 million contributions collected from the Group companies were donated with the purpose to assist the victims as well as to support restoration of the affected areas. Meanwhile, contributions amounting to ¥13,725,877 were collected from officers and employees across the Group and donated on April 6, 2011. The Juroku Bank, Ltd. (as of June 30, 2011) President Hakumi Horie Senior Managing Director Yukio Murase Managing Directors Tomio Kawamura Yoji Matsuura Toshiro Hori Directors Yutaka Sugiyama Naoki Ikeda Kiyoshi Mabuchi Fumihiko Miura Hiroyuki Ota Kunisaku Muto Kenji Mori Standing Corporate Anditors Kunitaka Okamoto Yasuaki Kono Corporate Auditors Hisashi Yura Katsuhiko Kumazaki
rganization Chart
The Juroku Bank, Ltd. (as of June 30, 2011)
Shanghai Representative Office Credit Supervision Division Enterprise Support Division Operations Administration Division Risk Management Division Compliance Management Division Head Office Domestic Branches (146)
Performance
During the fiscal year under review, the Japanese economy was on a recovery trend, thanks to an increase in export to the rising countries, particularly in Asia, along with rise in production triggered by policies to stimulate demand for automobiles and electrical products. In the latter half of the year however, the situation worsened seriously as production activities declined massively in some of the manufacturing sectors due to disturbance in the supply chains and electricity supply, in the aftermath of the Great East Japan Earthquake, along with the stimulus policy effect running off because of the termination of Eco-Car Subsidies Scheme. In the meantime, employment situation remained severe while capital expenditures also remained weak. As the aftermath of the earthquake extended partially to our business base in Gifu and Aichi prefectures, business conditions remained harsh. On December 22, 2010, the Bank made The Gifu Bank a wholly owned subsidiary by a share exchange, and included The Gifu Bank and its three subsidiaries in the Bank's scope of con- solidation. Under these conditions, the Bank's consolidated results for the fiscal year under review were as follows: Ordinary income from banking operations increased by ¥2,087 million to ¥89,196 million (US$1,073 million), mainly due to The Gifu Bank becoming a subsidiary of the Bank, while ordinary expenses increased by ¥2,207 million to ¥74,291 mil- lion (US$893 million) and ordinary profit decreased by ¥120 million to ¥14,905 million (US$179 million). In the leasing business, ordinary income increased by ¥19 million to ¥21,699 million (US$261 million), while ordi¬ nary expenses decreased by ¥172 million to ¥20,489 million (US$246 million) and ordinary profit increased by ¥191 million to ¥1,210 million (US$15 million). In other businesses, including the credit card business and credit guarantee business, ordinary income decreased by ¥74 million to ¥5,370 million (US$65 million), while ordinary expenses decreased by ¥494 million to ¥4,046 million (US$49 million) and ordinary profit increased by ¥420 million to ¥1,324 million (US$16 million). As a result, ordinary income on a consolidated basis in- creased by ¥2,148 million to ¥114,626 million (US$1,379 million) and ordinary expenses increased by ¥1,649 million to ¥97,189 million (US$1,169 million), while ordinary profit in- creased by ¥499 million to ¥17,437 million (US$210 million), and net income increased by ¥285 million to ¥9,293 million (US$112 million).
Financial Position
In relation to balance of deposits, the Bank strived to procure stable, long-term funds at low cost through various sales ac- tivities such as special campaigns. The Bank also worked to strengthen its lineup of investment products, particularly for individuals. These included investment trusts, government bonds, pension insurance, and whole life insurance as a positive response to diversified asset management needs. As a result, our balance of deposits as of March 31, 2011 increased by ¥860.1 billion to ¥4,749.6 billion (US$57,121 million). In lending activities, the Bank responded actively to de¬ mand for funds from local enterprises. Along with this, we worked actively to provide mortgage loans and other financing to individuals and funds to local government entities. As a re- sult, both loans to individual customers and corporate loans in- creased. Consequently, our balance of loans as of March 31, 2011 increased by ¥555.4 billion to ¥3,564.2 billion (US$42,865 million). With regard to securities, in addition to underwriting and purchasing central and local government bonds, while closely watching market conditions, the Bank engaged in bond and other securities transactions in order to efficiently manage funds. As a result, our balance of securities as of March 31, 2011 in- creased by ¥328.5 billion to ¥1,300.5 billion (US$15,641 mil- lion). Year-end unrealized gain on available-for-sale securities came to ¥13,444 million (US$162 million), a decrease of ¥7,790 mil- lion from the previous term. Net cash provided by operating activities amounted to ¥159,893 million (US$1,923 million), an increase of ¥30,613 million from the previous term, as a result of a decrease in call loans. Net cash used in investing activities amounted to ¥105,427 million (US$1,268 million), an increase of ¥210 mil- lion from the previous term as a result of an increase in purchase of securities. Net cash used in financing activities amounted to ¥3,070 million (US$37 million), an increase of ¥10,395 million from the previous term as a result of a decrease in borrowings on subordinated loans. As a result, the closing balance of cash and cash equivalents increased by ¥51,379 million during the term under review, to ¥183,949 million (US$2,212 million). The Juroku Bank, Ltd. and Consolidated Subsidiaries

Commitments and Contingent Liabilities (Notes 22, 24 and 25)

See notes to consolidated financial statements.
onsolidated Statements of Income
The Juroku Bank, Ltd. and Consolidated Subsidiaries       Years Ended March 31, 2011 and 2010

onsolidated Statement of Comprehensive Income

14 15 The Juroku Bank, Ltd. and Consolidated Subsidiaries       Years Ended March 31, 2011 and 2010
See notes to consolidated financial statements. The Juroku Bank, Ltd. and Consolidated Subsidiaries       Years Ended March 31, 2011 and 2010
16 17 The Juroku Bank, Ltd. and Consolidated Subsidiaries       Years Ended March 31, 2011 and 2010 1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared in 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 confor- mity with accounting principles generally accepted in Japan ("Japanese "GAAP"), which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards. Under Japanese GAAP, a consolidated statement of comprehensive income is required from the fiscal year ended March 31, 2011 and has been presented herein. Accordingly, accumulated other comprehensive income is presented in the consolidated balance sheet and the consoli- dated statement of changes in equity. Information with respect to other comprehensive income for the year ended March 31, 2010 is disclosed in Note 26. In addition, "net income before minority interests" is disclosed in the consolidated statement of income for the year ended March 31, 2011. In preparing these consolidated financial statements, certain reclas- sifications and rearrangements have been made to the consolidated finan- cial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. The consolidated financial statements are stated in Japanese yen, the currency 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 ¥83.15 to $1, the ap- proximate rate of exchange at March 31, 2011. 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 Policies
a. Consolidation
The consolidated financial statements as of March 31, 2011 and 2010 include the accounts of the Bank and its eleven (seven in 2010) signifi- cant subsidiaries, including Juroku Business Service Co., Ltd., Juroku DC Card Co., Ltd., Juroku JCB Co., Ltd., Juroku Lease Co., Ltd., Juroku Computer Service Co., Ltd., Juroku Credit Guarantee Co., Ltd., Juroku Capital Co., Ltd., The Gifu Bank, Ltd., The Gifugin Hosho Services Co., Ltd., The Gifugin Card Co., Ltd., and The Gifugin Business Service Co., Ltd. (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 two (three in 2010) 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. 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 elimi- nated in consolidation.
b. Business Combination
In October 2003, the Business Accounting Council (the "BAC") issued a Statement of Opinion, "Accounting for Business Combinations", and in December 2005, the ASBJ issued ASBJ Statement No.7, "Accounting Standard for Business Divestitures" and ASBJ Guidance No.10, "Guid- ance for Accounting Standard for Business Combinations and Business Divestitures". The accounting standard for business combinations allows companies to apply the pooling of interests method of accounting only when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of-interests. For business combina- tions that do not meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of accounting is required. This standard also prescribes the accounting for combinations of entities under common control and for joint ven¬ tures. In December 2008, the ASBJ issued a revised accounting stan¬ dard for business combinations, ASBJ Statement No.21, "Accounting Standard for Business Combinations." Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting for business combinations only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed. (2) The current accounting standard accounts for the research and development costs to be charged to income as incurred. Un- der the revised standard, in-process research and development (IPR&D) acquired in the business combination is capitalized as an intangible asset. (3) The previous accounting standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase allocation. This standard was applicable to business combinations undertaken on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or after April 1, 2009. The Bank acquired 98.38% of shares of The Gifu Bank, Ltd. on December 22, 2010 and accounted for it by the purchase method of accounting. The related goodwill is systematically amortized over 20 years. c. Cash and cash equivalents For the purpose of the consolidated statements 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 is determined 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 cost and 2) available-for-sale securities, which are not classified as held-to- maturity, are reported at fair value with unrealized gains and losses, net of applicable taxes, 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 re- duced 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 are
included in earnings.
f. Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment of the Bank, except for leased assets, is computed by the declining-balance method over the estimated useful lives of the assets. Depreciation of premises and equipment of the consolidated subsidiaries, except for leased assets, is computed princi- pally by the same method as the Bank. The range of useful lives is principally from 15 to 50 years for buildings and from 4 to 20 years for other premises and equipment. Depreciation of leased assets under finance leases is computed by the straight-line method over the lease period. Under certain conditions, such as exchanges of premises and equip¬ ment for similar kinds and sales and purchases resulting from expro¬ priation, Japanese tax laws permit companies to defer the profit arising from such transactions by reducing the cost of the assets acquired or by providing a special reserve in the equity section. The deferred gain on premises and equipment taxable for tax purposes in the future was ¥3,073 million ($36,957 thousand) as of March 31, 2011. g. Long-lived assets The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted 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 car- rying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition. b. Land revaluation Under the "Law of Land Revaluation", the Bank elected a one-time revaluation 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 ap- preciation of land and is stated, net of income taxes, as a component of equity. There was no effect on the consolidated statements of income. Continuous readjustment is not permitted unless the land value sub- sequently declines significantly such that the amount of the decline in value should be removed from the land revaluation surplus account and related deferred tax liabilities. The carrying amount of the land after the above one-time revalu- ation exceeded the market value by ¥20,727 million ($249,272 thou- sand) as of March 31, 2011. i. Intangible assets Amortization of intangible assets is calculated by the straight-line method. Amortization cost for software for internal use is calculated by the straight-line method over the estimated useful life, principally, five years. j. Reserve for possible loan losses The Bank 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 the customers are classified into five categories such as "normal," "caution," "possible bankruptcy," "virtual bankruptcy" and "legal bankruptcy." The credit rating system is used for the self-assessment of asset quality. For normal and caution loans, the reserve for possible loan losses is provided for based on actual past loss ratios. For loans such as possible bankruptcy, the reserve for possible loan losses is provided for in an amount deemed necessary to cover possible losses on loans considering the customer's solvency and other factors, after the estimated fair value of the collateral real estate or guaranteed amount has been deducted. For loans such as virtual bankruptcy or legal bankruptcy, the reserve for possible loan losses is provided based upon the loan amount after the estimated fair value of the collateral real estate or guaranteed amount has been deducted. For loans to possible bankruptcy customers, if the exposure to a cus- tomer after deducting the estimated value of the collateral or guaranteed amount exceeds a certain amount, the discounted cash flow method is applied for reserve provision, under which the reserve is determined as the difference between the book value of the loan and its present value of future cash flows discounted using the contractual interest rate in the case that future cash flows of the principal and interest can be reasonably estimated. Reserve for possible loan losses of consolidated subsidiaries is provided based on historical loan loss experience and estimated collect- ability of specific claims. k. Liability for retirement benefits The Bank has a contributory funded defined benefit pension plan and lump-sum payment severance plan for employees and certain subsidiar- ies have lump-sum payment severance plans for employees. Also, the Bank and certain subsidiaries have lump-sum severance payment plans for directors and corporate auditors. Retirement benefits to directors and corporate auditors of the Group are provided at the amount that would be required if all directors and corporate auditors retired at the balance sheet date. I. Asset Retirement Obligations In March 2008, the ASBJ published an accounting standard for asset retirement obligations, ASBJ Statement No.18 "Accounting Standard for Asset Retirement Obligations" and ASBJ Guidance No.21 "Guidance on Accounting Standard for Asset Retirement Obligations". Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acqui¬ sition, construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement ob- ligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard was effective for fiscal years beginning on or after April 1, 2010. The Bank applied this accounting standard effective April 1, 2010. The effect of this change was to decrease operating income by ¥9 million ($108 thousand) and income before income taxes and minority interests by ¥106 million ($1,275 thousand). m. Leases In March 2007, the ASBJ issued ASBJ Statement No.13, "Accounting Standard for Lease Transactions," which revised the previous accounting standard for lease transactions issued in June 1993. The revised account- ing standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008. (As lessee) Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were to be capi- talized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain "as if capitalized" information was disclosed in the notes to the lessee's financial statements. The revised accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the revised accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to continue to be accounted for as operating lease transactions with certain "as if capitalized" information disclosed in the notes to the lessee's financial statements. The Bank applied the revised accounting standard effective April 1, 2008. In addition, the Bank continues to account for leases which existed at the transition date and do not transfer ownership of the leased property to the lessee as operating lease transactions. (As lessor) Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were to be treated as sales. However, other finance leases were permitted to be accounted for as operating lease transactions if certain "as if sold" information was disclosed in the notes to the lessor's financial state- ments. The revised accounting standard requires that all finance leases that are deemed to transfer ownership of the leased property to the lessee to be recognized as lease receivables and all finance leases that are not deemed to transfer ownership of the leased property to the lessee to be recognized as investments in leases. The Group applied the revised ac- counting standard effective April 1, 2008. For the finance lease contracts which existed on adoption and did not transfer ownership of the leased property to the lessee, the appropriate carrying amount of the leased assets (after deducting accumulated depreciation) at adoption is used as the beginning value of the investments in leases. Interest revenues of these finance lease contracts are calculated by the straight-line method over the remaining lease period. As a result of this treatment, income before income taxes and minority interests is ¥408 million ($4,907 thousand) larger than the amount calculated by interest method. All other leases are accounted for as operating leases. n. Bonuses to directors and corporate auditors Bonuses to directors and corporate auditors are accrued at the year end to which such bonuses are attributable.
o. Income taxes
The provision for current income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabili- ties 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 tax laws to the temporary differences. p. 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. q. Derivatives and bedging 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 recog- nized as either assets or liabilities and measured at fair value, and gains or losses on the derivative transactions are recognized in the income statement 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 interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap agreements is recognized and included in interest expense or income. All other derivatives are rec- ognized as either assets or liabilities and measured at fair value and gains or losses on derivative transactions are recognized in the statements of income. r. Per share information Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits. The weighted average numbers of common shares used in the computation for the years ended March 31, 2011 and 2010 were 366,440,516 shares and 364,238,491 shares, respectively. 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 conver- sion 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 war- rants. Cash dividends per share presented in the accompanying consolidat- ed statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year.
3. Business Combination
On December 22, 2010, the Bank acquired 98.38% shares of The Gifu Bank, Ltd. ("Gifu Bank") by share exchange and Gifu Bank became a wholly owned subsidiary of the Bank. Under the terms of the share exchange, as of the date of the share exchange, the Bank allot- ted 14,885,889 shares of common stock to the shareholders of Gifu Bank. Gifu Bank has been a banking company and this acquisition was conducted in accordance with the Business Integration Agreement dated September 28, 2010 between the Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd. ("MUFJ") and Gifu Bank. According to this agreement, the Bank is conducting this business combination, MUFJ is helping Gifu Bank re-capitalize and the Bank and MUFJ will work together and support management of Gifu Bank. The purpose of this agreement is to increase business efficiency and secure sustainable growth of the business valuation of Gifu Bank, contribute to the stabilization of the regional fi- nance system and stimulate the regional economy. The Bank will merge with Gifu Bank by around September 2012. The results of operations for Gifu Bank are included in the Bank's consolidated financial statements of income from January 1, 2011, since date of acquisition is regarded as December 31, 2010 in accounting for this transaction. The Bank accounted for this business combination by the purchase method of accounting. The acquisition cost determined by the Bank and Gifu Bank based on a third parties' valuation was ¥ 8,934 million ($ 107,444 thousand). The total cost of acquisition has been allocated to the assets acquired and the liabilities assumed based on their respective fair values. Goodwill recorded in connection with the acquisition totaled ¥ 4,893 million ($ 58,845 thousand) and is recognized as expense by the straight-line method for 20 years. The estimated fair values of the assets acquired and the liabilities as-
If this business combination had been completed as of April 1, 2010, the beginning of the current fiscal year, the unaudited condensed pro forma consolidated financial statement of income for the year ended March 31, 2011 would be as follows:
4. Cash And Due From Banks Cash and due from banks as of March 31, 2011 and 2010 consisted of
A reconciliation between the cash and due from banks on the consolidat- ed balance sheets and the cash and cash equivalents on the consolidated statements of cash flows for the years ended March 31, 2011 and 2010
5. Trading Securities And Securities Trading securities as of March 31, 2011 and 2010 consisted of the fol- lowing:
Valuation gains, which were included in other operating income for the years ended March 31, 2011 and 2010, were ¥7 million ($84 thousand) and ¥9 million, respectively. Valuation losses, which were included in other operating expenses for the years ended March 31, 2011 and 2010, were ¥5 million ($60 thousand) and ¥1 million, respectively. Securities as of March 31, 2011 and 2010 consisted of the follow- ing:
Information regarding available-for-sale and held-to-maturity securities as of March 31, 2011 and 2010 was as follows:
Proceeds from sales of available-for-sale securities for the year ended
In addition, held-to-maturity securities amounting to ¥1,010 million ($12,147 thousand) were reclassified as available-for-sale securities due to declining of issuer's credit worthiness. The impairment losses on available-for-sale equity securities for the years ended March 31, 2011 and 2010 were ¥ 2,406 million ($ 28,936 thousand) and ¥ 173 million, respectively.
6. Money Held In Trust
Information regarding money held in trust for trading purposes as of March 31, 2011 and 2010 was as follows:
7. Loans and Bills Discounted Loans and bills discounted as of March 31, 2011 and 2010 consisted of
"Nonaccrual loans", which include loans to borrowers in bankruptcy and past due loans, are defined as loans upon which the Bank has discontin¬ ued the accrual of interest income. Borrowers are generally placed on nonaccrual status when substantial doubt is deemed to exist as to the ultimate 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, 2011 and 2010 were ¥10,237 million ($123,115 thousand) and ¥7,044 million, respectively. "Past due loans" are nonaccrual loans other than loans to borrow- ers in bankruptcy and loans of which interest payments are deferred in order to assist the financial recovery of a debtor in financial difficulty. Past due loans as of March 31, 2011 and 2010 were ¥114,820 million ($1,380,878 thousand) and ¥102,928 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. Loans classified as loans to borrowers in bankruptcy and past due loans are excluded from accruing loans past due three months or more. Accruing loans past due three months or more as of March 31, 2011 and 2010 were ¥604 million ($7,264 thousand) and ¥993 million, respectively. "Restructured loans" are defined as loans in which the Group is pro- viding financial support to a borrower by a reduction of interest rates, deferral of interest payments, extension of maturity dates, or reduction of the face or maturity amount of the debt or accrued interest. Loans classified as loans to borrowers in bankruptcy, past due loans and accru- ing loans past due three months or more are excluded from restructured loans. Restructured loans as of March 31, 2011 and 2010 were ¥13,573 million ($163,235 thousand) and ¥8,070 million, respectively. The total amount of loans to borrowers in bankruptcy, past due loans, accruing loans past due three months or more and restructured loans as of March 31, 2011 and 2010 was ¥139,234 million ($1,674,492 thousand) and ¥119,035 million, respectively. Bills discounted are accounted for as financing transactions in ac- cordance with "Treatment of Accounting and Auditing in Applying Ac- counting Standard for Financial Instruments in the Banking Industry" 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 face value of commercial bills discounted and foreign bills of exchange bought included in foreign exchanges as of March 31, 2011 and 2010 was ¥35,841 million ($431,040 thousand) and ¥ 29,192 million, respec- tively. 8. Foreign Exchanges Foreign exchanges as of March 31, 2011 and 2010 consisted of the fol-
9. Other Assets Other assets as of March 31, 2011 and 2010 consisted of the following:
10. Premises and Equipment Premises and equipment as of March 31, 2011 and 2010 consisted of the following:
The accumulated depreciation of premises and equipment as of March 31, 2011 and 2010 amounted to ¥71,039 million ($854,348 thousand) and ¥65,585 million, respectively. 11. Customers' Liabilities for Acceptances and Guarantees All contingent liabilities arising from acceptances and guarantees are reflected in acceptances and guarantees. As a contra account, the custom- ers' 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 offset customer's liabilities for acceptance and guarantees with acceptance and guarantees of ¥50,382 million ($605,917 thousand) and ¥50,080 million arising from guarantees of private placement securities as of March 31, 2011 and 2010, respec- tively. 12. Assets Pledged Assets pledged as collateral and their relevant liabilities as of March 31, 2011 and 2010 were as follows:
In addition, the following assets were pledged or deposited with respects to foreign exchange settlements and derivatives as of March 31, 2011 and 2010:
Deposits included in other assets as of March 31, 2011 an 2010 were ¥2,347 million ($28,226 thousand) and ¥1,946 million, respectively.
13. Deposits
Deposits as of March 31, 2011 and 2010 consisted of the following:
Borrowings include subordinated borrowings of the Bank, which amounted to ¥35,000 million ($420,926 thousand) and ¥28,000 mil¬ lion as of March 31, 2011 and 2010.

14. Borrowed Money
Borrowed money as of March 31, 2011 and 2010 consisted of the following:
15. Bonds

(a) The interest rates of the bonds are 1.75% for the period from March 23, 2007 to March 22, 2012 and six-month Euroyen Libor plus 1.92% for the period from March 23, 2012 to March 22, 2017. (b) The interest rates of the bonds are 1.92% for the period from Sep¬ tember 19, 2007 to September 18, 2012 and six-month Euroyen Libor plus 2.03% for the period from September 19, 2012 to Sep- tember 15, 2017.
16. Other Liabilities
Other liabilities as of March 31, 2011 and 2010 consisted of the following:
* 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 have not been settled.
17. Retirement and Pension Plans
The Bank and certain subsidiaries have severance payment plans for employees, directors and corporate auditors. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service and certain other factors. If the termination is involun¬ tary, caused by retirement at the mandatory retirement age or death, or certain other causes, the employee is entitled to greater payments than in the case of voluntary termination. The liability for retirement benefits for directors and corporate auditors as of March 31, 2011 and 2010 was ¥352 million ($4,233 thousand) and ¥335 million, respectively. The retirement benefits for directors and corporate auditors are paid subject to the approval of the shareholders. The liability for retirement benefits for employees as of March 31, 2011 and 2010 consisted of the following:
The components of net periodic retirement benefit costs for the years ended March 31, 2011 and 2010 were as follows:
Assumptions used for the years ended March 31, 2011 and 2010 were
18. Asset Retirement Obligations The changes in asset retirement obligations, which are included in other liabilities, for the year ended March 31, 2011 were as follows:

19. Equity
Japanese banks are subject to the Companies Act of Japan (the "Compa- nies Act"). 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 resolu- tion at the shareholders meeting. For companies that meet certain crite- ria, 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 Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for divi- dends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥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 Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is deter- mined by specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acqui- sition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights. Other than above, the Japanese Banking Law provided that an amount at least equal to 20% of the aggregate amount of cash dividends and certain other cash 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 and legal reserve which exceeds 100% of stated capital can be transferred to retained 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 ($242,393 thou- sand) and ¥20,155 as of March 31, 2011 and 2010, respectively. 20. Other Expenses Other expenses for the years ended March 31, 2011 and 2010 consisted
21. Income Taxes The Bank and its subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in normal effective statu- tory tax rate of approximately 40% for the years ended March 31, 2011 and 2010. The tax effects of significant temporary differences and tax loss car- ryforwards, which result in deferred tax assets and liabilities as of March 31, 2011 and 2010 were as follows:
Reconciliations between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated state- ment of operations for the years ended March 31, 2011 and 2010 were

22. Leases
Finance leases
(Lessee)
A subsidiary leases certain premises. Total rental expense including lease payments under the finance leases for the years ended March 31, 2011 and 2010 was ¥22 million ($265 thousand) and ¥1 million, respectively. Pro forma information of leased assets whose lease inception was before March 31, 2008 ASBJ Statement No.13, "Accounting Standard for Lease Trans- actions", requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations in the balance sheet. How- ever,  the ASBJ Statement No. 13 permits leases that do not ownership transfer of the leased assets to the lessee and whose lease inception was before March 31, 2008 to continue to be accounted for as operating lease transactions if certain "as if capitalized" information is disclosed in the notes to the financial statements. The Group applied ASBJ Statement No. 13 effective April 1, 2008 and continued to account for such leases as operating lease transactions. Pro forma information of leased assets whose lease inception was before March 31, 2008 was as follows:
Thousands of U.S. Dollars 2011
Obligations under finance leases as of March 31, 2011 and 2010 were as follows:
Thousands of U.S. Dollars 2011

Operating leases
(Lessee) The minimum rental commitments under noncancellable operating leases as of March 31, 2011 and 2010 were as follows:
(Lessor) Expected future rental revenues under operating leases as of March 31, 2011 and 2010 were as follows:
23. Financial Instruments and Related Disclosures On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 "Ac- counting Standard for Financial Instruments" and issued ASBJ Guidance No.19 "Guidance on Accounting Standard for Financial Instruments and Related Disclosures". This accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010. (1) Group policy for financial instruments The Group provides banking services-based comprehensive financial services and also leasing business. Banking services are comprised of deposit-taking and lending services, securities investment and other fi- nancial services such as derivatives business. The Group provides various services such as local-based operations and low cost, stable, and lasting financing by deposits and borrowed money. As for loans and bills discounted in the money management system, the Group finances based on capital demand of local companies and against home mortgage loan-based individual financing. As its main re- sources are bank deposits from customers, the Group tries to ensure the soundness of the assets through appropriate credit granting and credit rating by understanding the current credit status and managing the credit granting portfolio to prevent concentrations in specific customers or industries. In marketable securities, considering the nature that it is an excess fund management relating to lending services and its respon- sibility as a bank to provide settlement services, the Group focuses on running a fund based on public bonds 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. In derivative transactions, the Group meets the various needs of its customers and also focuses on performing the derivative transactions to funding and investment aspects for its own needs as well. In trading transactions, the Group avoids taking excessive risk by preliminarily restricting the type of transactions and limiting the volume. Also, the Group will not perform a particular transaction if the variation of such transaction's fair value is high against the change in the price of the underlying assets (i.e. high leverage-effect transaction). (2) Nature and extent of risks arising from financial instruments The loaned money out of financial instruments that the Group holds are related to general business enterprises, individuals, and local public bodies and has the risk (credit risk) that the value of loaned money is reduced by financial deterioration and the risk (interest risk) of losses due to changes in interest rates. In marketable securities, the Group holds domestic bonds which are comprised mainly of public bonds such as government bonds and local government bonds, and foreign securities which are comprised of mainly US Treasury or foreign stocks, invest¬ ment trusts, and investment partnerships and so forth for investment purposes. Also, the Group holds certain domestic bonds for held-to-ma¬ turity purposes. These items have interest risk, risk of changes in price, credit risk, and market liquidity risk. Market liquidity risk represents the risk that market trades cannot be performed due to market turmoil and that the Group may suffer losses due to significantly unfavorable fi- nancing conditions. Deposits and borrowed money hold interest risk and cash flow risk (liquidity risk). Cash flow risk means the risk that secur- ing necessary financing becomes difficult due to a mismatch of periods between operations and financing and unexpected outflows of money and due to significantly unfavorable financing conditions. Derivative transac- tions related to interest are comprised of interest-rate swap agreements, cap agreements, floor agreements, and interest option contracts. Deriva- tive transactions related to currency are comprised of exchange contracts, non-delivery forwards, currency swap agreements, and currency option contracts. Derivative transactions related to securities are comprised of bond futures, options on bond futures, OTC bond options, stock future transactions, expiration and individual security options. The Group utilizes derivative transactions to meet customer needs and to control risk so that interest risk, risk of changes in prices, and foreign currency exchange risk are not excessive. In trading transactions, the Group per¬ forms derivative transactions to earn a profit and to accumulate know- how of the transactions and understand market trends. The derivative transactions the Group utilizes have interest risk, currency exchange risk and the risk of change in prices. In derivative transactions, the Group performs effective covering transactions to meet customers' needs and also in trading transactions, the Group preliminarily establishes a maxi- mum amount of risk to avoid too much market risk. Transactions in the market such as options have no credit risk and OTC transactions like interest swaps are assumed to have low risk since the counterparties are comprised of highly credible financial institutions and companies. The interest rate swaps on deposits which qualify for hedge accounting and meet specific matching criteria are not remeasured at market values but the differential paid or received under the swap agreements is recognized and included in interest expense or income. (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 of Maturities of investment in leases for finance leases that were deemed
Depreciation expense, which was not reflected in the accompanying consolidated statements of operations, was computed by the straight- line method with useful lives being equal to the lease period and all residual values at zero. Depreciation expense for the years ended March 31, 2011 and 2010 were ¥22 million ($265 thousand) and ¥1 million, respectively.
(Lessor)
A subsidiary leases certain equipment and other assets. The net investments in leases as of March 31, 2011 and 2010 were as follows: Thousands of
Maturities of lease receivables for finance leases that were deemed to
management. The Group monitors various risks holistically including measurement by statistical methods and tries to control risks within the range of management vitality. To be more precise, the Group allocates risk capital to credit risk, market risk, and operational risk based on Val- ue at Risk ("VaR") calculations according to assumptions about the rate of market variance and its half year business plan. In each operation, the Group tries to control risk and obtain returns within the range of risk capital. Integrated risk is managed by the risk management department and is reported at the monthly ALM committee and Board of Directors meetings. Necessary actions like risk control are taken promptly. Credit Risk Management The Group defines credit risk management policy and rules such as cred¬ it risk management regulation to understand, manage and take actions on credit risk appropriately. First of all, in screening 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 considers if repayment resources are ensured and repayment plans are reasonably secured on individual loans based on the purpose of the loan, business plans and investment effects. From the point of view of the portfolio, the Group tries to improve credit granting in order to prevent concentrations in particular customers and industries on credit granting and by ensuring profits to meet credit costs. In addition, in order to improve credit risk, the Group supports improved management and revitalization of business for customers whose business conditions have worsened. 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 controlling department reports to the ALM committee and management and discusses necessary actions. Market risk management (foreign exchange risk and interest rate risk) The Group considers interest risk, currency risk and the risk of change in prices as the main market risks and institutes a market risk manage- ment 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 how the Group specifies market risk, what is the role of the department in charge and how to evaluate and also to control and reduce market risk. Under integrated risk management, the Group allocates risk capital to each business (deposit, loan, investment securi- ties 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 controlling department reports to the ALM committee and manage- ment and discusses necessary actions. Regarding derivative transactions, the Group follows internal regulations and policies. Market-risk-man- agement department (middle office) and office- work department (back office) manage and monitor the balance, evaluate fair value, profit and loss, measurement of risk and report to such as top-management and risk controlling department regularly and ensures mutual supervision of risks. Especially in trading transactions, the market-risk-management department (middle office) manages the positions, measurement of risk and application for loss cut rule closely. The Group holds financial instruments which are exposed to market risks (e.g. interest-rate risk, price-volatility risk and exchange risk) such as loans and bills discounted, securities, deposits, borrowed money and bonds. To manage these market risks, the Group calculates VaR, which is used for quantitative analysis. The Group calculates VaR of *The amounts of obligations under finance leases include the imputed interest expense portion. private placement bonds, borrowed money and corporate bonds which are exposed to interest-rate 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 ¥10,072 million ($121,130 thousand) in aggregate as of March 31, 2011. The Group calculates VaR of investment securities which are exposed to price-volatility 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 ¥32,940 million ($121,130 thousand) in aggregate as of March 31, 2011. In addition, the Group calculates VaR of securities, excluding investment securities, which are exposed to interest-rate risk or the price volatility risk by the variance-covariance method (three months holding period with confidence interval of 99%, observation period one year). The VaR of these financial instruments amounted to ¥19,622 million ($235,983 thousand) in aggregate as of March 31, 2011. The Group compares VaR calculated by the formula with the actual fluctuation of realized gains and losses to verify that the calculated VaR reflects market risks with a high degree of accuracy. However, VaR might not reflect market risks in circumstances such as unimaginable wide fluctuations in market circumstances because VaR reflects a certain amount of market risks calculated statistically based on historical volatility. Liquidity risk management As to liquidity risk, the Group defines liquidity risk management poli¬ cies and liquidity risk management regulations, and tries to manage stable cash flow. 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 tech- niques are used instead. Please see Note 25 for the detail of the fair value of derivatives. Fair values are calculated based on certain assumptions, therefore fair values may vary according to the assumptions used.

Cash 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 car- rying amount. The carrying amount of cash and due from banks with maturities represents the fair value because the interest rates are floating or they have short-term maturities and the fair value approximates such carrying amount. For due from banks in which derivatives are embedded, the fair value is determined based on the prices quoted by the financial institu- tions from which they are purchased.
Call loans and bills bought
Contract terms of call loans and bills bought are short (within 1 year). Therefore, the carrying amount 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 is determined based on the prices quoted by the exchange or the financial institutions from which these securities are purchased.
Money held in trust
For securities that are part of trust property in an independently man¬ aged monetary trust with the primary purpose to manage 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 based on the prices quoted by the exchange or the financial institutions from which they are purchased. For money held in trust due to the securitization of credited loans, the carrying amount represents the fair value because the trust assets consist of ordinary deposits. Information on money held in trust by classification is included in Note 6, "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 based on the prices quoted by the exchange or the financial institutions from which they are purchased. The fair value of investment trusts is deter- mined based on the publicly available price. For privately placed guaranteed bonds held by our bank or trust subsidiaries, the fair value is determined based on the present value of expected future cash flows, which is adjusted to reflect default risk, amounts to be collected from collateral and guarantees and guarantee fees, and discounted at an interest rate based on the market interest rate as of the date of evaluation with certain adjustments. Information on securities by classification is included in Note 5, "Trading securities and Securities".
Loans and bills discounted
For loans with variable interest rates, the carrying amount represents the fair value as the fair value approximates such carrying value as it reflects the market interest rate in the short term as long as the creditworthiness of the borrower has not changed significantly. For loans with fixed inter- est rates, the fair value is calculated using the expected future cash flows from these borrowings classified by type of loan and the internal rating. Future cash flows are discounted by the risk free rate and certain man- agement costs. As for certain consumer loans such as home mortgages, fair value is calculated by discounting the total loan principal with the same rate as a similar loan. Also, for consumer loans that mature within one year, the carrying amount represents the fair value as the fair value approximates such carrying value. In addition, as for loans to legally bankrupt borrowers, virtually bankrupt borrowers, and potentially bank- rupt borrowers, the fair value is calculated by deducting the allowance from the balance in the consolidated balance sheet as of March 31, 2011. since its allowance is estimated by collectability based on discounted future cash flows and collateral. Regarding loans which do not have repayment terms because the outstanding amount of the loan is limited to the value of collateral assets, the carrying amount represents the fair value as the fair value approximates such carrying amount according to 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 consoli- dated balance sheet date (i.e., the carrying amount) is considered to be the fair value. For variable rate time deposits, the carrying amount repre- sents the fair value as the fair value approximates such carrying amount because the market interest rate is reflected in such deposits within a short time period. Fixed rate time deposits are grouped by certain ma- turity lengths. Their fair value is calculated by discounting future cash flows with the same interest rate as that of accepted new deposits.
Payable under securities of deposit
For payables under securities of deposit, the contract term is short (within 1 year). Therefore, the carrying amount represents the fair value because the fair value approximates such carrying amount.
Borroued money
For borrowed money with variable interest rates, the carrying amount represents the fair value as the fair value approximates such carrying value as it reflects the market interest rate in the short term as long as the creditworthiness of the borrowers has not changed significantly. For borrowed money with fixed interest rates, the fair value is calculated by discounting the total of the principal by the rate which reflects the credit risks of the Group. In addition, for short term borrowed money (within 1 year), the carrying amount represents the fair value as the fair value approximates such carrying value.
Derivatives
Information of the fair value for derivatives is included in Note 25. (b) Financial instruments whose fair value cannot be reliably determined
(5) Maturity analysis for financial assets, securities and financial liabili-

24. Commitments and Contingent Liabilities
Commitment line contracts on overdrafts and loans are agreements to make loans to customers when they apply for borrowing up to a pre- scribed amount, as long as there is no violation of any condition of the contracts. The total amounts of unused open commitments as of March 31, 2011 and 2010 were ¥1,399,015 million ($16,825,195 thousand) and ¥1,239,279 million, respectively. Multi-purpose accounts included in the unused open commitments as of March 31, 2011 and 2010 are ¥679,034 million ($8,166,374 thousand) and ¥571,530 million, respec- tively. The amounts of unused commitments whose original contract terms were within one year or unconditionally cancellable at any time as of March 31, 2011 and 2010 were ¥1,391,102 million ($16,730,030 thousand) and ¥1,230,987 million, respectively. Since many of these commitments are expected to expire without being drawn upon, the total amount of unused commitments does not necessarily represent actual future cash flow requirements. Many of these commitments have clauses enabling the Bank and certain subsidiaries to reject the loans to customers or reduce the contract amounts of commit¬ ment, in the event monetary conditions have changed and the Bank and certain subsidiaries need to secure claims, or other considerable events have occurred. In addition, if necessary, the Bank and certain subsidiaries can re- quest 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.
25. Derivative Information
The Bank enters into swap, future, cap and floor agreements related to interest rates, foreign exchange forward contracts, swap and option contracts related to currencies, bond futures, bond futures options, over- the-counter bond options, stock futures, stock futures options and stock option contracts related to securities. In addition, the Bank has credit derivatives embedded in compound instruments. As noted in Note 23, the Group applied ASBJ Statement No. 10 "Accounting Standard for Financial Instruments" and ASBJ Guidance No. 19 "Guidance on Accounting Standard for Financial Instruments and Related Disclosures". The accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010. Derivative transactions to which hedge accounting is not applied at
Notes: 1. Derivative transactions are valued at market and the gains/(losses) are recognized in the consolidated statements of operations. 2. Market values of exchange-traded transactions are based on closing prices on the exchange markets, such as the Tokyo International Fi- nancial Future Exchange. Market values of over-the-counter contracts are based on the valuation techniques, such as the discounted cash flow method and the option pricing calculation models. Derivative transactions to which hedge accounting is applied at March 31, 2011. Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March 31, 2011 and 2010 is as
Dilutive net income per share for the year ended March 31, 2010 is not disclosed since the Group had no dilutive securities. 28. Subsequent Event On June 24, 2011, the Bank's shareholders authorized an appropriation

29. Segment Information
In March 2008, the ASBJ revised ASBJ Statement No. 17 "Accounting Standard for Segment Information Disclosures" and issued ASBJ Guidance No.20 "Guidance on Accounting Standard for Segment Information Disclosures". Under the standard and guidance, 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 of an entity about which separate financial information is available and such informa- tion 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 used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. This accounting standard and the guidance are applicable to segment information disclosures for the fiscal years begin- ning on or after April 1, 2010. The segment information for the year ended March 31, 2010 under the revised accounting standard is also disclosed hereunder as required.
1. Description of reportable segments
The Group's reportable segments are those for which separately financial information is available and regular evaluation by the Group's management is being performed in order to decide how resources are allocated among the Group. The Group consists of the Bank and eleven consolidated subsidiaries. The Group provides banking services-based comprehensive financial services and also leasing business. The Group operates its business by units which consists of some branches located in a certain range. But the Group discloses these units as a segment of the Banking business because their economic nature is similar to each other. For the year ended March 31, 2011, the Bank includes Gifu Bank and its three subsidiaries (the "Gifu Bank Group") as consolidated subsidiaries due to the share exchange executed at December 22, 2010. The Gifu Bank Group consists of a single segment of Banking business because it provides mainly banking services. Therefore, the Group consists of two reportable segments of Banking business and Lease business. Banking business is operated by the Bank, Juroku Business Services Co., Ltd. and the Gifu Bank Group. They provide various services such as deposit-taking and lending services, trading securities, securities investment, domestic exchange, foreign exchange, managing bonds, derivatives busi- ness and other related businesses at headquarters and branches of the Bank and Gifu Bank. Lease business is operated by Juroku Lease Co., Ltd.. It provides leasing business to meet local customers' needs. 2. 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".
* Other includes business segments of credit cards, computer services and credit guarantees. Ordinary income represents total income less certain special income included in other income in the accompanying consolidated statements of income. Ordinary expenses represent total expenses less certain special expenses included in other expenses in the accompanying consolidated statements of income. 4. Associated Information
* Other includes business segments of credit cards, computer services and credit guarantees Ordinary income represents total income less certain special income included in other income in the accompanying consolidated statements of income. Ordinary expenses represent total expenses less certain special expenses included in other expenses in the accompanying consolidated statements of income. The Group operates only in Japan for the year ended March 31, 2010. Accordingly, the figures for ordinary income and assets by geographical segment for the Group were not presented. Ordinary income from overseas operations was not presented herein as it was less than 10% of consolidated ordinary income for the year ended March 31, 2010.
IN
on-Consolidated Six-Year Summary (Unaudit)
The Juroku Bank, Ltd.       Years Ended March 31 (Supplemental Information)
The Juroku Bank, Ltd.       March 31, 2011 and 2010 (Supplemental Information)
Commitments and Contingent Liabilities

on-Consolidated Statements of Income
The Juroku Bank, Ltd.      Years Ended March 31, 2011 and 2010 (Sapplemental Information)
The Juroku Bank, Ltd.      Years Ended March 31, 2011 and 2010 (Supplemental Information)
INDEPENDENT AUDITORS' REPORT To the Board of Directors of the Juroku Bank Ltd.: We have audited the accompanying consolidated balance sheets of the Juroku Bank, Ltd. (the "Bank") and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of income for the years then ended, the consolidated statement of comprehensive income for the year ended March 31, 2011, and the related consolidated statements of changes in equity and cash flows for the years then ended, all expressed in Japanese yen.  These consolidated financial statements are the responsibility of the Bank's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Juroku Bank, Ltd. and consolidated subsidiaries as of March 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan. Our audit was conducted for the purpose of forming an opinion on the basic 2011 and 2010 consolidated financial statements taken as a whole.  The supplemental non-consolidated financial information which includes non-consolidated balance sheets as of March 31, 2011 and 2010 and non-consolidated statements of operations and changes in equity for the years then ended and omits related footnote disclosures, is presented for the purpose of additional analysis and is not a required part of the basic consolidated financial statements.  The non-consolidated financial information is the responsibility of the Bank's management.  Such non-consolidated financial information for the years ended March 31, 2011 and 2010 has been subjected to our audit of the basic consolidated financial statements for the years then ended and, in our opinion, is fairly stated in all material respects when considered in relation to the basic consolidated financial statements taken as a whole. Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1.  Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan. June 24, 2011
orporate Data
(as of March 31, 2011) Date of Establishment: October 10, 1877 Authorized Shares: 460,000 thousand shares Shares of Common Stock Issued and Outstanding: 379,241 thousand shares Stock Listed: First Sections of the Tokyo and Nagoya Stock Exchanges Paid-in Capital: ¥36,839 million Number of Shareholders: 21,728 Number of Employees: 2,970
A ffiliates
(as of March 31, 2011) 10 Principal Shareholders: Japan Trustee Services Bank, Ltd. (Trust account) The Bank of Tokyo-Mitsubishi UFJ, Ltd. NIPPONKOA Insurance Co., Ltd. Meiji Yasuda Life Insurance Company Tokio Marine and Nichido Fire Insurance Co., Ltd. Fuji Baking Group Co., Ltd. The Juroku Bank Employee Shareholders' Association Mitsubishi UFJ Trust and Banking Corporation Nippon Life Insurance Company The Master Trust Bank of Japan, Ltd. (Trust Account) JD) irectory (as of June 30, 2011)
Head Office
8-26, Kandamachi, Gifu-shi, Gifu 500-8516, Japan Telephone: +81-58-265-2111 International and Securities Division 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 General Manager Kiyotaka Ikami Overseas Network Hong Kong Representative Office Suite 3307, Two Exchange Square, 8 Connaught Place, Central, Hong Kong Telephone: +852-2526-5716 Facsimile: +852-2810-6261 Chief Representative Yoshitaka Masuda Shanghai Representative Office 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 Masahiro Furuike Branches Handling Foreign Exchange Business (17 Offices) Head Office 8-26, Kandamachi, Gifu-shi, Gifu Telephone: +81-58-265-2111 Nagara Branch 1643-5, Nagarafukumitsu, Gifu-shi, Gifu Telephone: +81-58-232-1611. Yanagase Branch 3-10-2, Kandamachi, Gifu-shi, Gifu Telephone: +81-58-265-2521 Kakamigahara Branch 1, Higashinakacho, Naka, Kakamigahara-shi, Gifu Telephone: +81-58-383-1600
Ogaki Branch
1-26, Takayacho, Ogaki-shi, Gifu Telephone: +81-584-78-2161
Seki Branch
51-1, Higashikashiage, Seki-shi, Gifu Telephone: +81-575-22-2016
Tajimi Branch
1-24, Sakaemachi, Tajimi-shi, Gifu Telephone: +81-572-22-1301 Nakatsugawa Branch 2-5-1, Ootamachi, Nakatsugawa-shi, Gifu Telephone: +81-573-65-3116 Takayama Branch 136, Shimosannomachi, Takayama-shi, Gifu Telephone: +81-577-32-1600 Ichinomiya Branch 1-2-5, Sakae, Ichinomiya-shi, Aichi Telephone: +81-586-73-5116 Nagoya Ekimae Branch 3-28-12, Meieki, Nakamura-ku, Nagoya-shi, Aichi Telephone: +81-52-561-5431 Nagoya Branch 3-1-1, Nishiki, Naka-ku, Nagoya-shi, Aichi Telephone: +81-52-961-8111 Ozone Branch 3-5-23, Ozone, Kita-ku, Nagoya-shi, Aichi Telephone: +81-52-911-6116 Atsuta Branch 3-1-1, Shin-Otou, Atsuta-ku, Nagoya-shi, Aichi Telephone: +81-52-671-4116
Kariya Branch
3-20, Toyocho, Kariya-shi, Aichi Telephone: +81-566-21-1611 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.
😍 THE JUROKU BANK, LTD. http://www.juroku.co.jp/