hokuetsubank 2015 · 2018-11-05 · annual report hokuetsu bank 2015 april 1, 2014 - march 31, 2015...

ANNUAL REPORT HOKUETSU BANK 2015

April 1, 2014 - March 31, 2015

HOKUETSUBANK 2015

01_005_9338201372801.indd 3 2016/01/14 11:40:29

Contents

ANNUAL REPORT

HOKUETSU BANK 2015 April 1, 2014 ― March 31, 2015

Contents

Review of 2014 Fiscal Results P1～5

Trend of Key Management Indicators P6

Overview of Consolidated Settlement

Consolidated Financial Statements P7～12

Important Items Used as Basis for Preparing Consolidated Financial Statements P13～15 Notes to Consolidated Settlement P16～30

Overview of Non-consolidated Settlement

Non-consolidated Financial Statements P31～33

Subsidiaries P34

Corporate Data P35

Board of Directors and Corporate Auditors Basic Data Service Network

Review of 2014 Fiscal Result

1

Review of 2014 Fiscal Result ①

In the fiscal year under review, the Hokuetsu Bank’s core net operating income, which indicates profits from core banking operations, amounted to 7.6 billion yen, due primarily to an increase in gross financial margins resulting mainly from diversified investment to foreign bonds in the market and reduction of costs.

Further, net income increased to 5.9 billion yen due primarily to a decrease in credit costs.

②

The capital adequacy ratio of the Bank as of March 31, 2015 is 9.09% on a consolidated basis and 8.55% on a non-consolidated basis due primarily to an increase in risk assets and repayment of subordinated borrowings of 1.5 billion yen.

③

Information on non-performing loans disclosed in accordance with the Financial Revitalization Law (The Law concerning Emergency Measures for the Revitalization of the Financial Functions) is represented in this section. The amount of loans subject to disclosure is calculated reflecting results of self assessment.

Loans subject to disclosure are general loans subject to credit including customers’ liabilities for acceptances and guarantees, securities lent, foreign exchange and accrued interest in addition to loans and bills discounted.

Non-performing loans disclosed in accordance with the Financial Revitalization Law have decreased to 33.2 billion yen, with the ratio of non-performing loans standing at 2.19% as of March 31, 2015, because of the Bank’s enforcement in provision of support for its customers to improve their business conditions, amount of non-performing loans and its ratio both remained at low level.

Status of the preservation is sufficient, as 89.43% of the non-performing loans disclosed under the Law is covered by collateral, guarantee and reserve for possible loan losses.

④

The Bank’s unrealized holding gains on valuation of securities increased to 41.6 billion yen due to the stable bond markets and appreciation of stock markets.

Management Policy ⑤

The Hokuetsu Bank has implemented a new long-term management plan covering the three-year period from April 2014 to March 2017.

Under this plan, we are aiming at becoming one of the valuable regional banks by truly meeting expectations of local customers and contributing to the region. To meet this goal, we are working on the following three challenges: ◇ Development of human resources and strengthening of organizational power. ◇ Realization of low cost management and restructuring of efficient sales structures. ◇ Thorough expansion and deepening of the foundation of customers for strengthening of sales capabilities,

and innovation of earnings structures.


2

Risk Management ⑥

While banking operations are becoming more diverse and earnings opportunities are expanding, there have been more risks than ever before at the same time. In keeping with changes in the financial environment and the rapid progress of financial techniques, increasingly complex and advanced risks have greater impact on bank management.

The Bank fully recognizes the crucially important role of risk management, which is positioned as one of the primary tasks in its management. In accordance with the General Rules on Risk Management, the Bank has implemented a risk-management structure whereby the organizations responsible for the management of individual types of risks are specified and the Risk Control Division oversees the management of these diverse risks to ensure overall risk control.

The Audit Division, which is independent of sales operations and credit-assessment operations, conducts stringent internal audits of branches and divisions at the head office regarding their overall risk management.

Management Condition of Each Risk

⑦

[1] Capital Adequacy Management Capital adequacy management involves the use of measures aimed at improving capital adequacy, the

evaluation of the sufficiency of capital adequacy, and the calculation of an accurate capital adequacy ratio. The Bank’s basic policy includes: [1] maintain an appropriate capital adequacy level to ensure sound

management while allocating management resources efficiently to improve earning power and build a strong management constitution; and [2] ensure a proper response to increasingly diverse customer needs by monitoring changes in the environment of economics and finance while controlling total risks at levels according to the amount of capital.

To calculate an accurate capital adequacy ratio, the Bank also employs a system to ensure that the numbers calculated by related divisions are checked by other divisions. The Internal Audit Group of the Audit Division verifies the appropriateness and accuracy of this calculation process.

[2] Credit Risk Management Credit risk is a condition in which the value of loans and other assets of a financial institution decrease or are

lost due to the bankruptcies and deteriorating financial conditions of customers, leading to a loss on the part of the financial institution.

The Bank always conducts a loan assessment based on the strict assessment standards before approving any loan, and it operates on the basic policy of managing its funds on a widely diversified basis without providing excessive loans to certain customers, in order to enhance the soundness of its assets.

For appropriate risk management corresponding to the degree of credit risk, in addition to the “credit rating” system based on objective criteria, we also put in place assessment and management structures based on the authorization system according to credit ratings.

[3] Market Risk Management Market risk is a two-fold risk. It consists of the risk that the value of assets and liabilities held by a bank

fluctuates due to market fluctuations of interest rates, exchange rates, share prices, etc., and also of a risk that the profits generated by the assets and liabilities held by the bank will fluctuate and result in a loss.

The Bank’s Market and Capital Division is engaged in the market-capital-related activities. In addition to the segregation of duties between front-office operations and back-office operations, the Administration Group of the Risk Control Division is engaged in the management and control of market-related risks to ensure cross-checking.

Furthermore, the BPV (Basis Point Value) and VAR (Value at Risk) approaches are applied to measure market risks, and the results are reported monthly to the board of directors.


3

[4] Liquidity Risk Management Liquidity risk refers to the risk that a financial institution becomes unable to secure necessary funds and faces a

cash-flow crunch or is forced to procure funds at significantly higher interest rates than normal due to the deterioration of its financial condition, etc., and eventually generates a loss.

The Market and Capital Division is engaged in daily cash-flow management and administration, while the Administration Group of the Risk Control Division monitors liquidity risk management indicators in order to continually clarify the cash-flow position.

[5] Operational Risk Management Operational risk is the condition that emerges due to the inappropriateness or non-functioning of any of the

Bank’s operation processes or systems, due to the inappropriate action of any officer or employee of the Bank, or from the occurrence of any external event.

The Bank defines the six operational risks to be managed. They are: [1] administrative risk [2] system risk [3] reputation risk [4] legal risk [5] human risk [6] tangible asset risk

In managing operational risks, the Operation Administration Department centrally identifies and manages all operational risks, while each division subject to operational risks manages the applicable risks from a more detailed standpoint.

[6] Administrative Risk Management Administrative risk is the condition in which an administrative error or inadvertent action by an officer or

employee results in a loss to the financial institution. The Bank’s basic policy is to establish a reliable administrative structure with emphasis on the management of

administrative risks in order to prevent administrative errors and inadvertent actions related to administration. Accordingly, the Bank promotes the streamlining and enhancement of efficiency in administrative operations,

the strengthening of training and provision of on-site guidance to staff at branches, and the review of procedures and establishment of internal regulations and rules.

The Bank, in addition to complying with the Act on the Protection of Personal Information, is vigorously enacting measures to prevent any damage due to criminal acts, such as fraudulent withdrawals using stolen bankbooks and fraudulent bank transfers, which have emerged as significant problems in society.

[7] System Risk Management System risk is a condition that occurs due to an earthquake, flood or other force majeure; a hardware failure,

program error, fire or other accident; or due to computer crime, a detonation or other willful conduct. In addition to the aforementioned system risks, the risks of unauthorized or illicit disclosure of personal information and trade secrets must be fully addressed.

The Bank has relocated its mission-critical systems to the Regional Bank Integrated Services Center operated by NTT Data Corp. in May 2009.

The Center, which employs the cutting-edge, next-generation system “BeSTA,” is one of the country’s largest integrated service centers for regional banks. The Bank is one of 14 institutions that participate in.

The Center also has backup facilities to ensure smooth recovery in the event a natural disaster occurs. Additionally, the Bank is strengthening its risk-management structures based on the review of computer systems

planning and development processes and administrative processes. Moreover, the Bank is implementing measures to prevent fraudulent withdrawals using fake cards and phishing scams, in order to prevent these emerging societal problems from affecting its customers and operations.

[8] Reputation Risk Management Reputation risk is the risk involving the potential occurrence of a false reputation contrary to reality, such as the

dissemination of rumor or innuendo, that could negatively affect a company’s business status.


4

The Bank is strengthening the management of reputation risks under the basic management policy of acting in a timely and appropriate manner to maintain calm and minimize damage should any reputation risk be generated.

We are stepping up the management of reputation risks through appropriate disclosure, the establishment of systems for gathering and reporting information on the Bank’s reputation, and the implementation of contingency plans.

[9] Legal Risk Management Legal risk is the condition in which failure to strictly comply with any law, ordinance, the Bank’s internal

regulation or other social norm could result in a loss. The Bank’s Legal Affairs Office of the Risk Control Division oversees all compliance matters. It implements

proper measures to prevent these risks and thereby reinforce the management of legal risks.

[10] Human Risk Management Human risk is the condition in which any discriminatory action of the Bank’s officer or employee, such as fraud,

crime or sexual harassment, results in a loss. The Bank’s Human Resource Group, which is part of the Human Resource Division, implements proper

measures to prevent these risks to step up the management of human risks.

[11] Tangible Asset Risk Management Tangible asset risk is the condition in which any external events, such as natural disasters, stop of social

infrastructure and terrorism or destruction of tangible assets could result in a loss. The Bank is striving to avoid or reduce these risks by conducting regular inspections and practices for

prevention of accidents and disasters.


5

Compliance

Efforts Regarding Legal Compliance

⑧

Financial institutions, in view of their responsibilities and roles with respect to the society, are required to maintain corporate cultures incorporating transparency of management and thorough legal compliance.

Based on this understanding, the Bank, in accordance with the Hokuetsu Bank Ethics Charter and its principles established for the purpose of establishing corporate ethics, endeavors to ensure thorough compliance with the laws, regulations and rules. Additionally, the Bank has positioned the reinforcement of compliance as a top-priority management issue and is actively and organizationally applying measures based on the Bank’s compliance plan.

In the area of organizations and systems, important issues relating to compliance are decided by the Board of Directors, while the Legal Affairs Office of the Risk Control Division, which oversees compliance matters, the operations divisions and legal compliance coordinators in the respective divisions and branches are making thorough efforts for compliance. The efficiency of these processes is ensured through the audits performed by corporate auditors as well as verifications by the Audit Division, which is responsible for internal controls.

The Legal Affairs Office of the Risk Control Division, in order to enhance the cross-checking function for legal risks, conducts legal checks of the various documents and contracts used internally. Meanwhile, the twice-monthly Legal Consultation Meeting on Operations is one in which preliminary consultation and advice is sought on legal matters from our corporate counsel and various measures are examined according to the principles of compliance. If any legal matter requires further examination, a Compliance Conference Meeting is held, with attendance by the head of each relevant division and corporate counsel, to discuss a proper course of action in compliance with the law.

The Bank is implementing other measures to ensure compliance within the organization, such as the inclusion of compliance lectures as part of various seminars, the issuance of “Legal News,” and self-compliance checks conducted by all Bank personnel. Additionally, the Bank hands out its compliance manual to all personnel to make sure each person understands the key points and items to note regarding regulations related to banking operations. These are only a few examples of how the Bank is working to enhance its compliance system.

Trend of Key Management Indicators

6

Trend of Key Management Indicators ⑨

Consolidated Basis (Unit: Million yen, %)

Year ended March 31,

2011


2012


2013


2014


2015

Thousand U.S. dollars

Consolidated total income 50,342 53,539 48,940 51,413 57,013 $474,436

Consolidated ordinary profit (loss) 7,422 8,965 10,477 9,242 11,896 $98,993

Consolidated net income (loss) 5,314 5,457 5,854 4,838 6,438 $53,574

Consolidated comprehensive income 2,642 8,995 13,020 2,209 22,106 $183,956

Consolidated net assets 78,059 84,932 95,846 93,125 113,562 $945,011

Consolidated total assets 2,255,920 2,318,491 2,363,447 2,495,717 2,616,867 $21,776,375

Consolidated capital adequacy ratio (based on Japanese domestic standards, Basel III)

－－－ 11.02 9.09 9.09

Consolidated capital adequacy ratio (based on Japanese domestic standards, Basel II)

10.77 11.00 11.39 －－－

Non-consolidated Basis (Unit: Million yen, Thousand shares, %, persons)


2011


2012


2013


2014


2015

Thousand U.S. dollars

Total income 44,149 47,667 43,602 46,281 51,640 $429,724

Ordinary profit (loss) 6,711 8,045 9,085 8,214 10,571 $87,967

Net income (loss) 4,928 5,184 5,312 4,467 5,901 $49,105

Common stock 24,538 24,538 24,538 24,538 24,538 $260,903

Total number of outstanding shares 254,062 250,562 247,142 245,142 245,142 245,142

Total net assets 74,303 80,669 90,638 90,151 107,387 $893,625

Total assets 2,248,932 2,312,487 2,355,899 2489,268 2,610,936 $21,727,020

Deposits 2,041,726 2,089,874 2,146,143 2,164,734 2,220,376 $18,476,957

Loans and bills discounted 1,306,793 1,333,365 1,386,722 1,423,505 1,472,673 $12,254,913

Securities 769,816 858,457 831,468 854,354 942,841 $7,845,893

Non-consolidated capital adequacy ratio (based on Japanese domestic standards, Basel III)

－－－ 10.53 8.55 8.55

Non-consolidated capital adequacy ratio (based on Japanese domestic standards, Basel II)

10.44 10.61 10.94 －－－

Dividend payout ratio 30.90 29.10 28.12 32.94 24.76 24.76

Number of employees 1,256 1,267 1,262 1,429 1,444 1,444

(Note) The number of employees does not include seconded employees, employees on a short-term contract, and temporary employees.

Note： 1.Yen amounts of less than one million yen are omitted.

2.Amount in U.S. dollar is translated from Japanese yen, solely for convenience, at ¥120.17 = U.S. $1.00, the exchange

rate prevailing on March 31, 2015.


7

Overview of Consolidated Settlement Consolidated Financial Statements Consolidated Balance Sheet

(Unit: Million yen) Period

Item

End of previous consolidated

accounting year March 31, 2014

End of current consolidated


End of current consolidated


Thousand USD

ASSETS Cash and due from banks *(7) ¥ 156,476 ¥ 143,277 $ 1,192,285Trading account securities 193 1,427 11,874Securities *(1)(7)(13) 854,885 943,211 7,848,972Loans and bills discounted *(2)(3)(4)(5)(6)(8) 1,416,631 1,464,590 12,187,650Foreign exchange *(6) 10,719 6,789 56,494Lease claims and lease investment assets *(7) 10,269 10,318 85,861Other assets *(7) 14,252 14,396 119,796Tangible fixed assets *(10)(11) 29,699 29,919 248,972

Buildings 7,518 9,101 75,734Land *(9) 20,392 19,279 160,431Lease assets 152 83 690Construction in progress 456 7 58Other tangible fixed assets *(7)(9) 1,180 1,447 12,041

Intangible fixed assets 693 699 5,816Software 529 578 4,809Lease assets 45 32 266Other intangible fixed assets 118 88 732

Net defined benefit assets 1,059 3,959 32,944Deferred tax assets 2,888 378 3,145Customers' liabilities for acceptances and guarantees 7,729 6,765 56,295Reserve for possible loan losses (9,780) (8,863) (73,753)Total assets ¥ 2,495,717 ¥ 2,616,867 $ 21,776,375LIABILITIES Deposits *(7) 2,159,314 2,214,100 18,424,731Certificates of deposits 122,320 105,780 1,188,495Payables under repurchase agreements *(7) 6,712 68,938 880,252Borrowed money *(7)(12) 59,620 67,452 579,284Foreign exchange 115 146 1,214Bonds 10,000 ― ―Other liabilities 29,823 30,294 252,092Accrued bonuses 801 834 6,940Allowance for bonuses to directors and corporate auditors 25 25 208Net defined benefit liabilities 1,350 0 0Allowance for retirement benefits to directors and corporate auditors

13 8 66

Reserve for reimbursement of deposits 448 447 3,719Reserve for contingencies 468 401 3,336Reserve for losses on return of interest 40 39 324Deferred income taxes 194 5,015 41,732Deferred income taxes for revaluation *(9) 3,613 3,054 25,413Acceptances and guarantees 7,729 6,765 56,295Total liabilities ¥ 2,402,591 ¥ 2,503,304 $ 20,831,355NET ASSETS Common stock 24,538 24,538 204,194Capital surplus 16,965 16,965 141,175Retained earnings 36,315 41,858 348,323Treasury stock (290) (720) (5,991)Total stockholders' equity 77,529 82,641 687,700Unrealized holding gains (losses) on securities 14,151 29,283 243,679Deferred gains (losses) on hedges (629) (3,110) (25,880)Unrealized gains from revaluation of land held for use *(9) 2,588 2,521 20,978Remeasurements of defined benefit plans (2,888) (483) (4,019)Accumulated total of other comprehensive income 13,222 28,210 234,750Stock subscription rights 81 119 990Minority interests 2,293 2,591 21,561Total net assets 93,125 113,562 945,011Total liabilities and net assets ¥ 2,495,717 ¥ 2,616,867 $ 21,776,375


8

Consolidated Statement of Income (Unit: Million yen)

Period

Item

Previous consolidatedaccounting year

(April 1, 2013 through March 31, 2014)

Current consolidated accounting year


Current consolidatedaccounting year

(April 1, 2014 through March 31, 2015) Thousand USD

Ordinary income ¥ 51,413 ¥ 57,013 $ 474,436 Interest and dividends income 27,638 28,421 236,506 Loans and bills discounted 20,134 19,436 161,737 Interest and dividends on securities 7,433 8,869 73,803 Call loans and bills purchased 19 34 282 Receivables under resale agreements ― 0 0 Deposits 5 38 316 Other 45 42 349 Fees and commission 6,729 7,011 58,342 Other operating income 12,650 16,913 140,742 Other ordinary income 4,394 4,666 38,828 Gains from reversal of reserve for possible loan losses

Gains from recovery of written-off debts 559―

325 555

2,7044,618

Other income *(1) 3,835 3,784 31,488Ordinary expenses 42,170 45,116 375,434 Interest expenses 1,704 2,315 19,264 Deposits 886 891 7,414 Certificates of deposits 38 48 399 Call money and bills sold 3 0 0 Securities lending 5 32 266 Borrowed money 186 170 1,414 Bonds 232 192 1,597 Other 352 978 8,138 Fees and commissions 3,090 3,291 27,386 Other operating expenses 9,800 14,734 95,219 General and administrative expenses *(2) 23,966 23,352 122,609 Other expenses 3,608 1,422 11,833 Provision of allowance for doubtful accounts 2,406 ― ― Other expenses *(3) 1,201 1,422 11,833Ordinary profit 9,242 11,896 98,993Extraordinary gains 1 16 133 Gains from disposal of fixed assets 1 16 133Extraordinary losses 601 902 7,506 Losses on disposal of fixed assets 97 62 515 Losses on impairment of fixed assets *(4) 503 840 6,990Income before income taxes and minority interests 8,643 11,010 91,620Corporate tax, corporate inhabitant tax and business tax 2,207 3,468 28,859Adjustment of corporate taxes, etc. 1,365 810 6,740Total corporate taxes, etc. 3,572 4,278 35,599Net income before adjustment of minority interests 5,070 6,732 56,020Minority interests 231 294 2,446Net income ¥ 4,838 ¥ 6,438 $ 53,574


9

Consolidated Statement of Comprehensive Income (Unit: Million yen)

Period

Item







Thousand USD

Net income before adjustment of minority interests ¥ 5,070 ¥ 6,732 $ 56,020Other comprehensive income *(1) (2,860) 15,374 127,935 Unrealized holding gains (losses) on securities (2,723) 15,135 125,946 Deferred gains (losses) on hedges Unrealized gains from revaluation of land held for use Remeasurements of defined benefit plans

(136)――

(2,481) 314

2,404

(20,645)2,612

20,004Comprehensive income ¥ 2,209 ¥ 22,106 $ 183,956 Comprehensive income related to shareholders of parent company 1,961 21,807 181,467 Comprehensive income related to minority shareholders 247 298 2,479


10

Consolidated Statement of Changes in Stockholders’ Equity (Unit: Million yen)







Thousand USD

Stockholders’ equity Common stock Balance at end of previous period ¥ 24,538 ¥ 24,538 $ 204,194Restated balance 24,538 204,194Change during current period Total change during current period ― ― ―Balance at end of current period 24,538 24,538 204,194Capital surplus Balance at end of previous period 16,965 16,965 141,175Restated balance Disposal of treasury stock Change during current period

16,965 0 0

141,17500

Total change during current period ― ― ―Balance at end of current period 16,965 16,965 141,175Retained earnings Balance at end of previous period 33,182 36,315 302,196Cumulative effect of changes in accounting policies Restated balance Change during current period

213

1,772

Dividends from surplus (1,473) (1,462) (12,166)Net income (loss) 4,838 6,438 53,574Disposal of treasury stock (13) Retirement of treasury stock (409) Reversal of unrealized gains from revaluation of land held for use Change of scope of consolidation

191 382 (28)

3,178(233)

Total change during current period 3,133 5,329 30,441Balance at end of current period 36,315 41,858 352,846Treasury stock Balance at end of previous period (137) (290) (44,345)Restated balance Change during current period

(290)

(44,345)

Acquisition of treasury stock (611) (430) (3,578)Disposal of treasury stock 49 0 0Retirement of treasury stock 409 Total change during current period (152) (430) (3,578)Balance at end of current period (290) (720) (5,991)Total stockholders' equity Balance at end of previous period 74,548 77,529 645,161Cumulative effect of changes in accounting policies Restated balance Change during current period

213 77,742

1,772646,933

Dividends from surplus (1,473) (1,462) (12,166)Net income (loss) 4,838 6,438 53,574Acquisition of treasury stock (611) (430) (3,578)Disposal of treasury stock 35 0 0Retirement of treasury stock ― 0Reversal of unrealized gains from revaluation of land held for use Change of scope of consolidation

191 382 (28)

3,178(233)

Total change during current period 2,980 4,899 40,767Balance at end of current period 77,529 82,641 687,700


11

(Unit: Million yen)







Thousand USD

Other accumulated comprehensive income Unrealized holding gains (losses) on securities Balance at end of previous period Restated balance

¥ 16,891 ¥ 14,151 14,151

$ 117,758117,758

Change during current period Net changes of items other than stockholders’ equity during current period (net amount) (2,739) 15,131 125,913

Total change during current period (2,739) 15,131 125,913Balance at end of current period 14,151 29,283 243,679Deferred gains (losses) on hedges Balance at end of previous period (492) (629) (5,234)Restated balance Change during current period

(629)

(5,234)

Net changes of items other than stockholders’ equity during current period (net amount) (136) (2,481) (20,645)

Total change during current period (136) (2,481) (20,645)Balance at end of current period (629) (3,110) (25,880)Unrealized gains from revaluation of land held for use Balance at end of previous period 2,780 2,588 21,536Restated balance Change during current period

2,588

21,536

Net changes of items other than stockholders’ equity during current period (net amount) (191) (67) (557)

Total change during current period (191) (67) (557)Balance at end of current period 2,588 2,521 20,978Remeasurements of defined benefit plans Balance at end of previous period Restated balance

― (2,888) (2,888)

(24,032)(24,032)


Total change during current period (2,888) 2,404 20,004Balance at end of current period (2,888) (483) (4,019)Total of other accumulated comprehensive income Balance at end of previous period Restated balance

19,178 13,222 13,222

110,027110,027


Total change during current period (5,956) 14,987 124,714Balance at end of current period 13,222 28,210 234,750Stock subscription rights Balance at end of previous period 73 81 674Restated balance Change during current period

81

674

Net changes of items other than stockholders’ equity during current period (net amount) 7 38 316

Total change during current period 7 38 316Balance at end of current period 81 119 990Minority interest Balance at end of previous period 2,045 2,293 19,081Restated balance Change during current period

2,293

19,081

Net changes of items other than stockholders’ equity during current period (net amount) 247 298 2,479

Total change during current period 247 298 2,479Balance at end of current period 2,293 2,591 21,561Total net assets Balance at end of previous period 95,846 93,125 774,943Cumulative effect of changes in accounting policies Restated balance Change during current period

213 93,339

1,772776,724

Dividends from surplus (1,473) (1,462) (12,166)Net income (loss) 4,838 6,438 53,574Acquisition of treasury stock (611) (430) (3,578)Disposal of treasury stock 35 0 0Reversal of unrealized gains from revaluation of land Change of scope of consolidation 191 382

(28) 3,178(233)

Net changes of items other than stockholders’ equity during current period (net amount) (5,701) 15,323 127,511

Total change during current period (2,720) 20,223 168,286Balance at end of current period ¥ 93,125 ¥ 113,562 $ 945,011


12

Consolidated Statement of Cash Flows (Unit: Million yen)

Period

Item







Thousand USD

Cash flows from operating activities: Income (loss) before income taxes and minority interests ¥ 8,643 ¥ 11,010 $ 91,620Depreciation 1,667 1,249 10,393Impairment losses on fixed assets 503 840 6,990Net increase (decrease) in reserve for possible loan losses 2,514 (340) (2,829)Net increase (decrease) in accrued bonuses (13) 33 274Net increase (decrease) in accrued retirement benefits (19) ― ―Net decrease (increase) in defined benefit assets (1,059) (2,899) (24,124)Net increase (decrease) in defined benefit liabilities 1,350 (1,349) (11,225)Net increase (decrease) in allowance for retirement benefits to directors and corporate auditors

(3) (4) (33)

Net increase (decrease)in reserve for reimbursement of deposits 54 (1) (8)Net increase (decrease)in reserve for contingencies (94) (67) (557)Net increase (decrease) in reserve for losses on return of interest (7) (0) (0)Interest and dividends income (27,638) (28,421) (236,506)Interest expenses 1,704 2,315 19,264Net losses (gains) on securities transactions 1,348 6,763 56,278Net foreign exchange losses (gains) 15 25 208Net losses (gains) on disposal of fixed assets 96 45 374Net decrease (increase) in loans and bills purchased (36,560) (48,536) (403,894)Net increase (decrease) in deposits 17,967 54,785 455,895Net increase (decrease) in certificates of deposits 77,730 (16,540) (137,638)Net increase (decrease) in borrowings (other than subordinated borrowings)

23,154 12,832 106,782

Net decrease (increase) in due from banks (other than The Bank of Japan)

209 (1,019) (8,479)

Net decrease (increase) in call loans, etc. 362 ― ―Net increase (decrease) in payable under repurchase agreement 4,885 62,226 517,816Net decrease (increase) in foreign exchange (assets) (3,997) 3,929 32,695Net increase (decrease) in foreign exchange (liabilities) (84) 31 257Net decrease (increase) in lease claims and lease investment assets

(793) (49) (407)

Interest and dividends received 29,852 29,207 243,047Interest paid (1,684) (2,109) (17,550)Other 10,139 179 1,489Subtotal 110,241 84,134 700,124Income taxes paid (2,305) (2,287) (19,031)Net cash provided by (used in) operating activities 107,935 81,846 681,085Cash flows from investing activities: Purchase of securities (986,858) (2,368,880) (19,712,740)Proceeds from sales of securities 889,357 2,233,996 18,590,297Proceeds from redemption of securities 63,058 60,510 503,536Purchase of tangible fixed assets (2,087) (4,846) (40,326)Proceeds from sales of tangible fixed assets 55 342 2,845Purchase of intangible fixed assets (388) (281) (2,338)Other 46 12 99Net cash provided by (used in) investing activities (36,816) (79,146) (658,616)Cash flows from financing activities: Repayment of subordinated borrowed money Repayment of subordinated bonds Dividends paid

――

(1,471)

(5,000) (10,000)

(1,464)

(41,607)(83,215)(12,182)

Dividends paid to minority shareholders (0) (0) (0)Purchase of treasury stock (611) (430) (3,578)Proceeds from sale of treasury stock 0 0 0Net cash provided by (used in) financing activities (2,082) (16,894) (140,584)Translation adjustments of cash and cash equivalents (15) (25) (208)Increase (decrease) in cash and cash equivalents 69,020 (14,219) (118,324)Cash and cash equivalents at beginning of year 87,089 156,109 1,299,067Cash and cash equivalents at end of year *(1) ¥ 156,109 ¥ 141,890 $ 1,180,743

Important Items Used as Basis for Preparing Consolidated Financial Statements

13

Important Items Used as Basis for Preparing Consolidated Financial Statements 1. Items Relating to Scope of Consolidation

(1) Consolidated subsidiaries 4 The names of consolidated subsidiaries are omitted because they are listed in “Consolidated Subsidiaries

of The Hokuetsu Bank, Ltd.” (Changes in the scope of consolidation) The Hokuetsu Business Co., Ltd. is deconsolidated from this fiscal year due to completion of liquidation. (2) Non-consolidated subsidiaries None

2. Items Relating to Application of Equity Method

(1) Unconsolidated subsidiaries accounted for by the equity method Not applicable (2) Affiliated companies accounted for by the equity method Not applicable (3) Unconsolidated subsidiaries not accounted for by the equity method Not applicable (4) Affiliated companies not accounted for by the equity method The Hokuetsu Sextiary Support Fund Investment Limited Partnership

3. Items Relating to Business Years of Consolidated Subsidiaries and Other

All the consolidated subsidiaries have their settlement day on March 31. 4. Items Relating to Special Purpose Companies to be Disclosed

Not applicable 5. Items Relating to Accounting Standards

(1) Valuation standards and methods for trading account securities Trading account securities are valued by the fair market value method (cost of products sold is primarily

calculated by the moving average method). (2) Valuation standards and methods for securities

Among securities, held-to-maturity bonds are valued by the moving average method on amortized cost basis (straight line depreciation), while available-for-sale securities with a market price are valued by the fair market value method based on the market price, etc., on the consolidated settlement day (cost of products sold is primarily calculated by the moving average method), and available-for-sale securities whose market value is not readily determinable are valued by the moving average method on cost basis or amortized cost basis.

Note that the total amount of unrealized holding gains (losses) on valuation of available-for sale securities is included in valuation under the net assets.

(3) Valuation standards and methods for traded derivatives Traded derivatives are valued by the fair market value method.

(4) Depreciation/amortization methods [1] Tangible fixed assets (excluding lease assets)

Tangible fixed assets of the Bank are depreciated by the declining balance method. The durable years of key assets are as follows:

Buildings: 10 to 50 years Others: 3 to 15 years

Tangible fixed assets of consolidated subsidiaries are depreciated primarily by the declining balance method based on the estimated durable years of assets.

[2] Intangible fixed assets (excluding lease assets) Intangible fixed assets are amortized by the straight line method. Internal-use software is amortized based

on its useful period (primarily five years) determined by the Bank or its consolidated subsidiary. [3] Lease assets

Lease assets under “tangible fixed assets” and “intangible fixed assets” pertaining to finance lease transactions in which the ownership is not transferred, are amortized by the straight line method using the assumption that the term of lease corresponds to the durable years. Note that the residual value is equal to the assured residual value if the lease agreement specifies assurance of residual value, and is equal to zero


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(0) in all other cases. (5) Recording standards for reserves for possible loan losses

Reserves for possible loan losses of the Bank are recorded as follows according to the pre-determined depreciation/reserve standards.

As for claims pertaining to a debtor which filed for a special liquidation or otherwise became legally bankrupt (hereinafter referred to as “Bankrupt Entity”) or debtor in a similar situation (hereinafter referred to “Virtually Bankrupt Entity”), the amounts of securities that are likely disposable and amounts that are likely recoverable through guarantees are deducted from the book value of claims after the direct deduction explained in the paragraph starting with “Note…” below, and the remaining balance is recorded. As for claims pertaining to a debtor which is not yet bankrupt but is highly likely to become bankrupt (hereinafter referred to as “Potentially Bankrupt Entity”), the amounts of securities that are likely disposable and amounts that are likely recoverable through guarantees are deducted from the claims, and the necessary amount from the remaining balance determined after considering all aspects of the payment ability of the debtor, is recorded.

All other claims are recorded based on the actual loan loss ratio, etc., calculated from the actual loan losses incurred over a specific period in the past. There are no specified overseas claims.

All claims undergo a primary assessment by sales offices and Corporate Sales Department, and a secondary assessment by Corporate Loan Approval Department, etc, based on the Bank’s internal rules for self-assessment of asset quality. The Bank’s Asset Appraisal Department, which is independent from those departments, subsequently conducts audits of these assessments, and the reserve is provided based on such audit results.

Note that regarding secured/guaranteed claims, etc., on a bankrupt entity or virtually bankrupt entity, the balance of claims less the values of securities and amounts that are likely recoverable through guarantees is deemed uncollectible and thus directly deducted from the claims. The applicable amount stands at 4,478 million yen.

The general reserve for possible loan losses of consolidated subsidiaries is provided based on the actual loan loss ratio, etc. Additionally, the specific reserve for possible loan losses is provided by determining the possible collectability of individual receivables judging from the financial position of the debtors who are not currently bankrupt but are likely to become so.

(6) Recording standards for accrued bonuses As for accrued bonuses, the part of estimated bonuses payable to employees which is attributable to the

current consolidated fiscal year is set aside to pay for employee bonuses. (7) Recording standards for allowance for bonuses to directors and corporate auditors

As for allowance for bonuses to directors and corporate auditors, the part of estimated bonuses payable to directors and corporate auditors which is attributable to the current consolidated fiscal year is set aside to pay for directors’ and corporate auditors’ bonuses.

(8) Recording standards for accrued retirement benefits to directors and corporate auditors As for allowance for retirement benefits to directors and corporate auditors, the amount payable at the

end of the current consolidated fiscal year is calculated under an internal standard and recorded, to pay for retirement bonuses to directors and corporate auditors.

(9) Recording standards for reserves for reimbursement of deposits As for reserves for reimbursement of deposits, the necessary amount determined by considering the past

reimbursements, etc., is recorded at an estimated amount to be required to reimburse the customer’s claims on the derecognized dormant deposit accounts.

(10) Recording standards for reserves for contingencies As for reserves for contingencies, the necessary amount determined by estimating future potential losses

is recorded to pay for the burden money to the Credit Guarantee Corporations. (11) Recording standards for reserves for losses on return of interest

As for reserves for losses on return of interest, the reserve amount to be returned is rationally estimated by considering past refund, etc., to put aside sufficient fund for consolidated subsidiaries to provide for the customer’s claims to refund the interests exceeding the maximum limit of interest rate stipulated by the Maximum Interest Rate Law, and the aforementioned estimated reserve amount to be returned is recorded.

(12) Changes in accounting standards for retirement benefits The Bank adopts the benefit formula basis to attribute expected retirement benefit payment to the period

up to the end of fiscal accounting year in calculating retirement benefit obligations. Note that the expense or profit and loss accounting method applicable to “prior service cost” and “actuarial gains (losses)” is as explained below.

Prior service cost: The amount prorated by the straight line method over a certain number of years (3


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years) during the average remaining service years of employees at the time of incurrence of prior service cost.

Actuarial gains (losses): The amount prorated by the straight line method over a certain number of years (12 years) during the average remaining service years of employees at the time of incurrence of actuarial gains (losses) in each consolidated accounting year is expensed in the consolidated fiscal year immediately following the one in which the actuarial gains (losses) incurred.

As for accrued retirement benefits of consolidated subsidiaries, the simplified method is applied at the end of the current consolidated year.

(13) Conversion standards for foreign-currency denominated assets and liabilities Foreign-currency denominated assets and liabilities of the Bank are converted to yen based on the foreign

exchange rates on the consolidated fiscal year-end date. (14) Recording standards for income and expenses from finance lease transactions

Income and expenses pertaining to finance lease transactions are recorded in the form of recording the sale and cost of sale when the lease payments are received.

(15) Important items for hedge accounting Hedging interest rate risk The Bank applies the deferral method to account for financial instruments that hedge the interest rate risk

on financial assets and liabilities of the Bank. To avoid for interest risk that arises from financial assets and liabilities of the Bank, micro hedging is applied for each interest-swap transaction.

(16) Scope of cash in consolidated cash flow statement Cash in the consolidated cash flow statement covers cash and due from the Bank of Japan under “Cash

and due from banks” in the Consolidated Balance Sheet. (17) Accounting for consumption taxes, etc.

National and local consumption taxes of the Bank and its consolidated subsidiaries are accounted for by the net-of-tax method.

(Changes in Accounting Policies) Effective from the fiscal year ended March 31, 2015, the Bank adopted the provisions set forth in Paragraph 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012; hereinafter the “Retirement Benefits Accounting Standard”) and the provisions set forth in Paragraph 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015; hereinafter the “Guidance on Retirement Benefits”). As a result, the Bank revised the method of calculating retirement benefit obligations and service cost and also changed the method of attributing estimated retirement benefits to accounting periods from the straight line basis to the benefit formula basis. In addition, the Bank changed the method of determination of the discount rate from the single discount rate based on the remaining years of service to the multiple discount rates based on the estimated timing of benefit payments. In accordance with the transitional treatment stated in Paragraph 37 of the Retirement Benefits Accounting Standard, the effect of changes in the method of calculating retirement benefit obligations and service cost was recognized by adjusting retained earnings at the beginning of the fiscal year ended March 31, 2015. As a result, net defined benefit assets decreased by 167 million yen, net defined benefit liabilities decreased by 496 million yen and retained earnings increased by 213 million yen at the beginning of the fiscal year ended in March 31, 2015. In addition, “ordinary profit” and “income before income taxes and minority interests” increased by 167 million yen, respectively. The effect on per share amounts is presented in the relevant section. (Accounting Standards, etc. Not Yet Adopted) “Accounting Standards, etc. for Business Combinations” (September 13, 2013)

(1) Outline Under the above accounting standards, etc., the followings were mainly revised: [1] accounting treatment

for changes in a parent’s equity interest in a subsidiary in the case where the parent retains control over the subsidiary in the additional acquisition of shares in the subsidiary; [2] accounting treatment for acquisition related costs; [3] transitional provisions for accounting treatment; and [4] amendment of presentation method of net income as well as the change from the minority interests to non-controlling interests.

(2) Planned date of adoption The Bank plans to adopt the above accounting standards, etc. from the beginning of the fiscal year

commencing on April 1, 2015. (3) Impact of adoption of the above accounting standards, etc.

The impact of the adoption of the above accounting standard, etc. is not yet determined.

Notes to Consolidated Settlement

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〔Relating to Consolidated Balance Sheets〕 * (1) Total amount of investment in affiliates is 0 million yen. * (2) Of loans and bills discounted, claims on bankrupt entities amounted to 547 million yen, while delinquent

loans amounted to 30,954 million yen. Claims on bankrupt entities represent, among the loans for which accrued interests payable have not

been recorded by assuming that their principal or interest is deemed unlikely to be collected or repaid due to continuation over a substantial period of a delayed payment of the principal or interest (excluding portions that have been written down; hereinafter referred to as “Loans without Accrued Interest Receivable”), those loans subject to any of the reasons specified in Items 3-a through e or Item 4 under Article 96-1 of the Enforcement Ordinance for Corporate Income Tax Law (1965 Government Ordinance No. 97).

Delinquent loans represent loans without accrued interest receivable, except for those whose interest payment was postponed for the purpose of restructuring or supporting the bankrupt entity pertaining to claims on the bankrupt entity.

* (3) Of loans and bills discounted, delinquent loans overdue by 3 months or more amounted to 191 million yen. Note that delinquent loans overdue by 3 months or more represent loans whose principal or interest

payment was delayed by 3 months or more from the day immediately following the fixed payment date, and which do not qualify as claims on bankrupt entities or delinquent loans.

* (4) Of loans and bills discounted, restructured loans amounted to 1,849 million yen. Note that restructured loans represent loans subject to reduction/exemption of interest, postponement of

interest payment, postponement of principal repayment, abandonment of claim or other arrangement beneficial to the debtor made for the purpose of restructuring or supporting the debtor, and which do not qualify as claims on bankrupt entities, delinquent loans or delinquent loans overdue by 3 months or more.

* (5) The total sum of claims on bankrupt entities, delinquent loans, delinquent loans overdue by 3 months or more, and restructured loans, is 33,541 million yen.

Note that the claims in (2) to (5) above are amounts before deduction of reserves for possible loan losses.

* (6) Bills discounted are accounted for as financial transactions based on “Treatment of Accounting and Auditing in Applying Accounting Standard for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24).

Accordingly, the Bank has the right, without any restriction, to dispose of bank bills, commercial bills, documentary bills and purchased foreign currencies underwritten by means of sale or (re)collateralizing. The total face value of these bills amounted to 15,854 million yen.

* (7) The assets pledged as collateral are as follows: Pledged assets

Cash and due from banks 0 million yen Securities 174,171 million yen Lease claims and lease investment assets 753 million yen Other assets 457 million yen Other tangible fixed assets 0 million yen

Total 175,383 million yen Liabilities related to the above pledged assets

Deposits 4,535 million yen Payables under repurchase agreements 68,938 million yen Borrowed money 65,353 million yen

In addition to the above, 28,496 million yen of securities are pledged as collateral for transactions involving foreign exchange settlement, etc., or for use as margin money for futures trading.

Note that, guarantees under other assets amounted to 76 million yen, while deposits under other assets amounted to 50 million yen.

* (8) An overdraft facility agreement or commitment line agreement pertaining to loan is an agreement that promises to loan money to the customer until a specified limit is reached when a request for loan is received from the customer, unless there is a breach of any of the terms of the agreement. There is a balance of loans not yet drawn under these agreements amounting to 556,061 million yen. Of this amount,


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552,798 million yen pertains to agreements whose original term is within a year or which can be cancelled at any time unconditionally.

Note that many of these agreements will expire without customer’s request for execution of loan, and thus the balance of loans not yet drawn does not necessarily impact the future cash flows of the Bank or its consolidated subsidiaries. Many of these agreements include a provision that permits the Bank or its consolidated subsidiaries to deny any loan request or reduce the maximum loan limit under the agreement if there is a change in financial climate, to safeguard claims, or when any other legitimate reason exists. In addition, at the time of executing such agreement, the Bank collects real estate, securities or other collateral as necessary, and after the execution of the agreement, the Bank also periodically checks the business condition of the customer, etc., according to the pre-defined internal procedures, while revising the agreement and implementing measures to safeguard credit, etc., as necessary.

* (9) Based on the Law Concerning the Revaluation of Land (Law No. 34 promulgated on March 31, 1998), the Bank revalued its land held for use and any losses on valuation are recorded under “Liabilities” as “Deferred income taxes for revaluation” which corresponds to taxes pertaining to the applicable losses on valuation, and the amount after deducting these losses are recorded under “Net assets” as “Unrealized gains (losses) from revaluation of land held for use.”

Date of revaluation March 31, 1998

Method of revaluation pursuant to Article 3-3 of the Law Calculated by making rational adjustments such as the price correction by depth, based on the method

published by the Director of Tax Administration Agency for calculating the value of land to be used as the basis for calculating the taxable value for land value tax as specified in Article 16 of the Land Value Tax Law pursuant to Article 2-4 of the Enforcement Ordinance for the Law Concerning the Revaluation of Land (Government Ordinance No. 119 promulgated on March 31, 1998).

Difference between the total market value as of the end of the current consolidated fiscal year of all the land for operations revalued under Article 10 of the Law, and the total book value of the same land after revaluation

10,470 million yen * (10) Accumulated depreciation of tangible fixed assets

34,523 million yen * (11) Compacted book value of tangible fixed assets

1,807 million yen (Compacted book value in the current consolidated fiscal year --- XXX million yen)

* (12) Borrowed money includes 2,000 million yen of subordinated borrowings which are subject to a special clause specifying that the performance of the applicable liability is lower priority than other liabilities.

* (13) Of securities, bonds from private placements of securities (pursuant to Article 2-3 of the Financial Instruments and Exchange Law) account for 28,673 million yen of guaranteed liabilities.


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〔Relating to Consolidated Statement of Income〕 * (1) Other ordinary income includes 2,863 million yen of gain on sale of stocks, etc. * (2) General and administrative expenses include 12,271 million yen of salaries and allowances, and 1,399

million yen of retirement benefit expenses. * (3) Other expenses include 1,088 million yen of loans amortized. * (4) Since the property investment is unlikely to be recovered because of the continuously falling land prices,

the Bank has reduced the book value of the following assets to a recoverable level, and recorded such reduction amounting to 840 million yen (comprising 779 million yen for land and 61 million yen for buildings) on extraordinary losses as losses on impairment of fixed assets.

Location Primary use Description Losses on impairment of

fixed assets (million yen)

Inside Niigata Prefecture

Six (6) branches Land and buildings 411 (Of which, land 408)

(Of which, buildings 2) Eight (8) idle assets Land and buildings 218 and assets planned to

be disposed(Of which, land 177)

(Of which, buildings 40)Outside Niigata Prefecture Four (4) branches Land and buildings 210

Two (2) idle assets and assets planned tobe disposed

Land

(Of which, land 192)(Of which, buildings 17)

0(Of which, land 0)

Total 840 (Of which, land 779) (Of which, buildings 61)

Under the Bank’s assets grouping policies, each branch or each branch area covered by jointly operating business offices, serving as the smallest unit for the purpose of management accounting is also the smallest unit for the purpose of assets grouping, while, each idle asset and asset planned to be disposed is treated as the smallest unit on its own.

Meanwhile, each consolidated subsidiary is basically treated as the smallest unit for the purpose of assets grouping.

Net selling price was used as recoverable amount for the purpose of measuring losses on impairment of fixed assets in the current consolidated fiscal year. Net selling price was calculated based mainly on the appraisal value of the property after deduction of estimated disposal cost.

〔Relating to Consolidated Statement of Comprehensive Income〕

※(1) Other comprehensive income of current consolidated accounting year

Unrealized holding gains on securities: Amount accrued for current accounting year 14,445 million yen Conversion adjustment 6,623 million yen

Amount before tax-effect adjustment 21,068 million yen Tax effect (5,932) million yen

Unrealized holding gains on securities 15,135 million yen Deferred gains (losses) on hedges: Amount accrued for current accounting year (3,601) million yen Conversion adjustment － million yen Amount before tax-effect adjustment (3,601) million yen Tax effect 1,120 million yen

Deferred gains (losses) on hedges (2,481) million yen Unrealized gains from revaluation of land held for use: Amount accrued for current accounting year － million yen Conversion adjustment － million yen Amount before tax-effect adjustment － million yen Tax effect 314 million yen

Unrealized gains from revaluation of land 314 million yen held for use


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Remeasurements of deferred benefit plans: Amount accrued for current accounting year 2,690 million yen Conversion adjustment 1,061 million yen Amount before tax-effect adjustment 3,752 million yen Tax effect (1,348) million yen

Remeasurements of defined benefit plans 2,404 million yen Total of other comprehensive income (15,374) million yen

〔Relating to Consolidated Statement of Changes in Net Assets〕

(1) Items relating to type and total number of outstanding shares, and type and number of shares of treasury stock

(Unit: Thousand shares)

Number of shares at end of previous

consolidated accounting year

Number of shares increased during

current consolidated

accounting year

Number of shares decreased during

current consolidated

accounting year

Number of shares at end of current

consolidated accounting year

Remarks

Shares outstanding

Common stock 245,142 ― ― 245,142

Total 245,142 ― ― 245,142

Treasury stock

Common stock 1,418 1,751 1 3,168 (Note)

Total 1,418 1,751 1 3,168 (Note) Breakdown of increase is as follows:

Increase resulting from buyback of shares 1,678 Thousand shares Increase resulting from buyback of shares below one tradable unit 73 Thousand shares

Breakdown of decrease is as follows: Decrease resulting from sale of shares below one tradable unit 1 Thousand shares

(2) Items relating to stock subscription rights and treasury stock subscription rights

Type

of stock

Number of shares for stock subscription rights Amount

(million yen) RemarksAt beginning

Current consolidated accounting yearAt end Increase Decrease

Stock subscription

rights － 119

Total － 119

(3) Items relating to dividends

[1] Dividend paid during the current consolidated accounting year

(Resolution) Type of stock Total dividend (million yen)

Amount per share (yen) Reference date Effective date

Annual general meeting of shareholders on June 24, 2014

Common stock 731 3.00 March 31, 2014 June 25, 2014

Board of Directors’ meeting on November 14, 2014

Common stock 731 3.00 September 30, 2014

December 8, 2014

[2] Dividends whose reference date falls in the current consolidated accounting year, but where the effective date of dividend occurs after the last day of the current consolidated accounting year

(Resolution) Type of stock Total

dividend (million yen)

Fund for dividend

Amount per share (yen)

Reference date Effective date

Annual general meeting of shareholders on June 23, 2015

Common stock

725 Retained earnings

3.00 March 31, 2015

June 24, 2015


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〔Relating to Consolidated Statement of Cash Flows〕

* (1) Relationship between the balance of cash and cash equivalents at end of year and the amounts of account items stated in the Consolidated Balance Sheets

(Unit: Million yen)

Cash and due from banks 143,277Time deposits (1,050)Current deposits (0)Ordinary deposits (102)Special deposits (3)Postal savings deposits (230)Cash and cash equivalents 141,890

〔Relating to Lease Transactions〕 (Lessee)

Finance lease transactions where the ownership is not transferred (1) Details of lease assets

[1] Tangible fixed assets Vehicles, etc.

[2] Intangible fixed assets Software

(2) Depreciation methods for lease assets As explained in (4) “Depreciation/amortization methods” under 5 “Items Relating to Accounting Standards” specifying important items used as the basis for preparing consolidated financial statements.


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〔Relating to Financial Instruments〕 1. Items relating to status of financial instruments (1) The Group’s policies for financial instruments

The Group engages primarily in banking, along with businesses relating to other financial services including leasing, credit guarantee and credit card businesses.

The Group implements Asset Liability Management (ALM) whereby its assets and liabilities are managed in an integrated manner, for the purpose of primarily to avoid adverse impact of the interest rate volatility on some of its financial assets and liabilities subjected to variable interest rates, while secondarily to accommodate customers’ needs that are increasingly diversifying in a changing economic and financial environment.

Meanwhile, the Group uses traded derivatives, primarily hedging transactions to respond to diversifying customers financial needs, as well as to minimize the Group’s own exposure to interest rate risk and exchange risk.

(2) Description of financial instruments and the risks associated with them Main financial assets held by the Group are loans and bills discounted mainly provided to corporate and

individual customers in Japan, which are exposed to the credit risk involving losses associated with the difficulty in recovering principal and interest resulting from customers’ bankruptcies or deteriorated financial conditions. In addition, the Group holds securities including shares, bonds and investment trusts, either on a held-to-maturity or purely portfolio investment basis, or for the purpose of strategic long-term investment. These assets are individually exposed to each issuer’s credit risk, interest rate risk and market risk.

The Group’s financial liabilities are mainly deposits which are exposed to interest rate risk. The Group conducts derivative transactions including forward exchange transactions along with currency

option transactions in respect of currency, and bond futures transactions along with OTC bond options with respect to bond. These transactions are meant primarily to accommodate customers’ needs as well as to avoid interest rate risk and exchange risk, while the Group also engages in certain trading transactions in an effort to diversify its opportunities of earnings.

Risks associated with these derivative transactions include credit risk in the event of the counterparties’ contractual default and market risk involving loss resulting from fluctuations in interest rate and foreign exchange.

Furthermore, some of the Group’s consolidated subsidiaries have financial assets and liabilities that are exposed to credit risk, interest rate risk and price fluctuation risk.

(3) Risk management system for financial instruments [1] Credit risk management

To ensure adequate control of credit risk under the loan provision rules and other internal rules concerning credit risk management, the Bank conducts a loan assessment on a case-by-case basis according to strict assessment standards. For this purpose, the Bank has developed and maintains structures for credit management including “maximum credit limits” to avoid providing excessive loans to certain customers, “credit rating” system for appropriate credit risk management and provision of support for its customers to improve their business conditions. Each branch office along with Loan Division and Loan Division No. 2, are engaged in this credit risk management.

Meanwhile, in an effort to develop optimum credit portfolio based on adequate risk distribution, Risk Control Division identifies and analyzes the risk distribution of loan assets on a regular basis.

[2] Market risk management With the purpose to adequately control market risk, the Bank’s Executive Committee semi-annually sets

out the standard risk amount (risk limits) not exceeding the Bank’s risk capital, according to the General Rules on Risk Management as well as Rules on Market Risk Management, while setting out position limit for each business unit (upper limits for investment or holdings) within the range of the entire Bank’s risk tolerance, as well as alarm points in respect of risk limits and unrealized holding gains (losses) on valuation of securities. Market Business Department is engaged in market transactions in a flexible and efficient way, within these risk limits. (i) Management of interest rate risk

The Bank manages its interest rate risk under the ALM, in which investment is made according to the investments and loans policies developed at the ALM Committee, while interest rate risk associated with such investment is monitored by Risk Control Division.

In addition, rigorous risk management is in place against future fluctuation in interest rate, under the principle to control the amount of interest rate risk at a level commensurate with the Bank’s capital adequacy.


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The amount of interest rate risk for the market sector and that for the entire bank account are calculated on a daily basis and on a monthly basis, respectively. (ii) Management of exchange risk

The Bank manages exchange fluctuation risk by adopting market value measurement on a case-by-case basis. (iii) Management of price fluctuation risk

The Bank manages price fluctuation risks of stocks, etc. by setting out risk limits and loss-cutting rules with particular attention to the downside risk in stock prices, whereby avoiding excessive risk-taking.

Meanwhile, Executive Committee decides investment amount, based on the discussions at the ALM Committee, in consideration of expected earnings versus market fluctuation risk in view of the outlook of interest rate, stock market and other factors. (iv) Derivative transactions

The Bank conducts derivative transactions according to the investment management standards, while ensuring internal control by separating transaction execution function from back office function.

(V) Quantitative information related to market risk The Bank conducts quantitative analysis on banking transactions including deposits and loans and securities, etc., measures market risk amount mainly by VaR (Value at Risk) method. The Bank adopts delta method (possession period: 6 months; confidence interval: 99%; observing period 5 years) for calculation of VaR. For overall VaR, The Bank considers inverse effects of some securities, between the risk of interests and stock prices.

The Bank’s VaR on March 31, 2015 is 25 billion yen (inverse effects: 9.1 billion yen), excluding some stocks which are considered to be extremely difficult to calculate the market price. For interest rate risk of deposits and loans, it is calculated by core deposits using internal models, and the Bank allocates current deposits to each period based on the result and recognizes the average life of 4.0 years for interest rate risk.

The Bank tests the validity of measurement models by conducting a back-testing of the comparison of calculated VaR with actual profit and loss. As a result of the back-testing, the Bank considers that the measurement models in use acquire market risks with sufficient accuracy. However it might be difficult to acquire adequate risks under unexpected market turmoil.

[3] Funding liquidity risk management The Rules on Liquidity Risk Management is in place within the Bank, based on which Market and

Capital Division is manages daily cash flow, while Risk Control Division monitors liquidity risk situation at all times by closely checking the amount of immediately available fund based on securities holding as well as by monitoring liquidity risk management indicators.

(4) Supplementary explanations on items relating to the market value of financial instruments Market value of financial instruments are measured based on the quoted market price if available, or

reasonably assessed value if a quoted market price is not available. Such reasonably assessed value is derived by calculations based on certain assumptions, and the value might differ if different assumptions are adopted.


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2. Items relating to the market value of financial instruments The consolidated balance-sheet values and market values of financial instruments as of March 31, 2015,

along with the differences between these two are as follows. Financial instruments such as unlisted stocks whose market values appear to be extremely difficult to determine are not included in the table (See (Note2) below). Those items with insignificant consolidated balance-sheet values are omitted here.

(Unit: Million yen)

Consolidated balance-sheet

value Market value Difference

(1) Cash and due from banks 143,277 143,277 ―(2) Securities

Available-for –sale securities 941,447 941,447 ―(3) Loans and bills discounted 1,464,590

Reserve for possible loan losses (*1) (8,759) 1,455,830 1,475,750 19,920Total assets 2,540,554 2,560,474 19,920(1) Deposits 2,214,100 2,214,367 267(2) Certificates of deposits (3) Payable under securities lending transactions (4) Borrowed money

105,78068,93867,452

105,780 68,938 67,491

0―

39Total liabilities 2,456,271 2,456,577 306Traded derivatives (*2)

Traded derivatives for which hedge accounting is not applied

645 645 ―

Traded derivatives for which hedge accounting is applied

(4,574) (4,574) ―

Total traded derivatives (3,928) (3,928) ―(*1) This represents deduction of general reserve for possible loan losses as well as individual reserve for possible

loan losses which are corresponding to loans and bills discounted. (*2) This represents the whole of derivative transactions recorded in other assets and other liabilities.

Net receivables and payables generated as a result of traded derivatives are presented in net amounts, where items amounting to net receivables after summations of receivables and payables, are presented within parentheses.

(Note 1) Calculation method for the market value of financial instruments Assets (1) Cash and due from banks

Due from banks without maturity as well as those with shorter agreed term (one year or less) are stated at their book values, as their market values approximate book values. Due from banks on a longer term with maturity are stated at their market values calculated by discounting their future cash flow using the interest rate reflecting credit risk of the deposit-taking institutions. (2) Securities

Shares are stated at the stock exchange quoted price and bonds are stated at either the price announced by institutions such as Japan Securities Dealers Association or the price presented by transacting financial institutions, while investment trusts are stated at either the official reference price or the price presented by transacting financial institutions.

Privately-offered bonds with the Bank’s guarantee are stated at their market value, calculated by discounting the expected future cash flow reflecting the issuer’s credit risk, using the risk-free interest rate. (3) Loans and bills discounted

Loans and bills discounted on variable interest rates reflect market interest rate at shorter intervals, and thus are stated at book value because of its proximity to the book value, unless there are significant changes in the borrowers’ creditworthiness. Loans and bills discounted on fixed interest rate are stated at their market value as calculated by discounting their expected future cash flows reflecting credit risks involved, using risk-free interest rate, for each category of cases classified by nature of loans, by grade of internal credit rating and by term. For loans and bills discounted with short enough agreed term (1 year or less), book value is recorded as its market value because of the proximity between the two.

Loan receivables associated with Bankrupt Entities, Virtually Bankrupt Entities and Potentially Bankrupt


24

Entities, are stated at their consolidated balance sheet values at the closing date less the currently expected amount of possible loan losses because of the proximity between their market values, since expected amount of possible loan losses for these receivables are calculated based on the expected recoverable amount through their collateral securities or credit guarantee.

Loans and bills discounted without due dates due to their specific attributes such as loan amount being limited within the value of collateral assets, are stated at book value which are deemed to approximate their market value due to the factors including estimated payment periods and interest rates conditions. Liabilities (1) Deposits, and (2) Certificates of deposits

For demand deposits, market value is deemed to be the amount payable to meet a call on the consolidated fiscal year-end date (book value). For time deposits, market value is the present value calculated by discounting future cash flow per each section of period of time, using discount rate that are interest rate applicable to new deposits. For deposits with short enough deposit term (1 year or less), book value is recorded as its market value because of the proximity between the two. (3) Payables under securities lending transactions For payables under securities lending transactions with short enough agreed term (1 year or less), book value is recorded as its market value because of the proximity between the two. (4) Borrowed money

Borrowed money is stated at present market value calculated by discounting the total amount of its principal and interest classified into relevant periods, using the interest rate assumed to be applicable to borrowings on similar conditions. For borrowed money with short enough agreed term (1 year or less), book value is recorded as its market value because of the proximity between the two. Derivative Transactions

Derivative transactions are the transactions concerning currency such as forward exchange contracts and currency options, which are stated at the value calculated based on their discounted present values. (Note 2) Financial instruments whose market values determined to be extremely difficult to determine, are as

follows: These are not included in “Assets (2) Available-for-sale securities” of the information on the market values of financial instruments.

(Unit: Million yen)

Classification Consolidated balance-sheet value [1] Unlisted stocks (*1) (*2) 1,550[2] Investments in limited investment partnerships (*3) 214

Total 1,764(*1) Market values of unlisted stocks are not disclosed as they have no market prices, thus their market values are not readily determinable. (*2) In the fiscal year under review, 0 million yen of impairment adjustment has been recorded for unlisted stocks. (*3) Market values of the investments in limited investment partnerships are not disclosed in the cases where assets of such partnerships comprise investments whose market values are not readily determinable, such as unlisted stocks.


25

(Note 3) The scheduled redemption amount of monetary claims and securities with maturity (Unit: Million yen)

1 year or less

More than 1 year but not exceeding 3

years

More than 3 years but not exceeding 5

years


years


years

More than 10 years

Deposits 120,061 ― ― ― ― ―Securities 86,263 108,242 181,066 144,358 183,854 156,625

Available-for-sale securities with maturity

86,263 108,242 181,066 144,358 183,854 156,625

National government bonds 24,158 32,277 71,844 85,622 143,330 138,056Municipal bonds Short-term corporate bonds

34,809 ―

25,180―

14,374―

7,791―

6,157 ―

――

Corporate bonds 22,687 27,773 26,879 15,768 10,979 18,568Other 4,608 23,011 67,968 35,176 23,386 0

Loans and bills discounted (*) 302,755 306,684 193,311 101,180 127,108 245,819

Total 509,081 414,927 374,377 245,539 310,962 402,444

(*) 31,501 million yen loan receivables for which schedule of redemption amount cannot be projected, such as those of Bankrupt Entities, Virtually Bankrupt Entities and Potentially Bankrupt Entities, as well as 156,227 million yen of loan receivables without defined terms are not included in loans and bills discounted. (Note 4) Repayment amounts of bonds, borrowed money and other interest-bearing liabilities scheduled after the fiscal year-end date

(Unit: Million yen)

1 year or less

More than 1 year but not exceeding 3

years


years


years


years

More than 10 years

Deposits (*) 1,960,150 219,957 32,958 413 620 ―Certificates of deposits Payable under securities lending transactions

105,580 68,938

200―

――

――

― ―

――

Borrowed money 65,402 50 ― 2,000 ― ―Total 2,200,071 220,207 32,958 2,413 620 ―

(*) Of deposits, demand deposits are disclosed, as included in “1 year or less” above.

〔Relating to Retirement Benefits〕 (1) Overview of retirement benefit plan adopted

The Bank has a corporate pension fund and lump-sum retirement allowance scheme, while its consolidated subsidiaries have a lump-sum retirement allowance scheme. An additional retirement allowance may be payable upon retirement of employees, etc.

The Bank has a retirement benefit trust. Liabilities for retirement benefits and retirement benefit expense at consolidated subsidiaries are calculated

by the simplified method. The Bank revised its retirement allowance regulations in the fiscal year ended March 31, 2015 including

partial transition to defined contribution pension plan. (2) Defined benefit plans

[1] Changes in retirement benefit obligation

Classification Amount

(million yen) Retirement benefit obligation at the end of previous period Cumulative effect of changes in accounting policies

27,546 (329)

Restated balance Service cost

27,216 719

Interest cost 212 Actuarial loss 1,617 Retirement benefits paid (1,510) Prior service cost (1,906)

Other ― Retirement benefit obligation at the end of current period 26,349


26

[2] Changed in plan assets

Classification Amount (million yen)

Plan assets at the end of previous period 27,255 Expected return on plan assets 545 Amount of actuarial gains (losses) 2,455 Contributions by the Bank 878 Retirement benefits paid (826) Other ― Retirement benefit obligation at the end of current period 30,307

[3] Changed in retirement benefit obligations and plan assets, and reconciliations of liability for retirement benefits and assets for retirement benefits recorded on the consolidated balance sheets


(million yen) Funded retirement benefit obligation Plan assets at fair value

26,348 (30,307)

Unfunded retirement benefit obligation

(3,959) 0

Net liabilities (assets) for retirement benefits in the balance sheets (3,958)


Liabilities for retirement benefits Assets for retirement benefits

0 (3,959)

Net liabilities (assets) for retirement benefits in the balance sheets (3,958) [4] Components of retirement benefit expenses


(million yen) Service cost Interest cost Expected return on plan assets Amortization of actuarial gains (losses) Prior service cost Other

719 212

(545) 1,061

(52) 4

Retirement benefit expense associated with defined benefit plans 1,399 [5] Remeasurements of defined benefit plans


Prior service cost Actuarial gains (losses) Other

1,853 1,899

―

Retirement benefit expense associated with defined benefit plans 3,752 [6] Remeasurements of defined benefit plans (accumulated)


(million yen) Unrecognized prior service cost Unrecognized actuarial gains (losses) Other

1,853 1,899

―

Total 3,752 [7] Fair value of plan assets by major category

Bonds Stocks Life insurance company general accounts Cash and due from banks

41.7% 34.7% 22.9% 0.7%

Total 100.0% [8] Items relating to actuarial assumptions

Discount rate Expected long-term return on plan assets Expected salary increase rate

0.9% 2.0% 8.1%

(3) Defined contribution plans

Not applicable


27

〔Relating to Stock Subscription Rights, etc.〕

(1) Amount and type of account listed 42 million yen (2) Details of stock subscription rights (i) Contents of stock subscription rights

Stock subscription rights for fiscal 2011




Entitled persons 11 directors of the Bank

11 directors of the Bank



Type of stock subscription rights (Note)

239,100 shares of common stock




Given date July 26, 2011 July 26, 2012 July 26, 2013 July 28, 2014 Fix conditions Not decided Not decided Not decided Not decided Employment period

Not decided Not decided Not decided Not decided

Exercise period July 27, 2011 to July 26, 2041

July 27, 2012 to July 26, 2042

July 27, 2013 to July 26, 2043

July 29, 2014 to July 28, 2044

(Note) Calculated in terms of number of shares. (ii) Number of Stock Subscription Rights

Stock subscription rights for fiscal

2011


2012


2013


2014 Number of shares not vested

At the end of previous consolidated accounting year

112,200 159,000 240,700 －

Of which, granted shares

－－－ 200,000

Of which, forfeited shares

－－－－

Of which, vested shares

－－－－

Of which, shares not vested

112,200 159,000 240,700 200,000

Number of fixed shares At the end of previous consolidated fiscal year

－－－－

Of which, vested shares

－－－－

Of which, exercised shares

－－－－

Of which, forfeited shares

－－－－

Of which unexercised shares

－－－－

Unit–price Information Stock subscription

rights for fiscal 2011


2012


2013


2014Exercise price (yen) 1 1 1 1Average stock price upon exercise (yen)

－－－－

Fair value per share at the grant date (yen)

152 133 178 190

(Note) Calculated in terms of per-share price.


28

(3)Method of estimation for fair evaluation price of stock subscription rights (i) Method used Black-Scholes option pricing model

(ii) Principal data and method of estimation Stock subscription rights for fiscal 2014 Volatility (Note) 1 26.2%Expected remaining period (Note) 2 3.7 yearsExpected dividends (Note) 3 6 yen per shareRisk-free interest rate (Note) 4 0.09%

(Note) 1 Calculated by actual stock prices from November 8, 2010 to July 21, 2014. (Note) 2 Estimated by the difference between average tenure of retired directors and that of current directors. (Note) 3 Actual dividends for fiscal 2014. (Note) 4 Yield of government bonds for the expected remaining period.

(4) Method of estimation for vested subscription rights Reasonable estimation is so difficult that actual number of forfeited shares are reflected.


29

〔Relating to Tax Effect Accounting〕 (1) Breakdown of key causes of deferred tax assets and deferred tax liabilities:

(Unit: Million yen)

Deferred tax assets Reserve for possible loan losses 3,943Net defined benefit liabilities 2,584Retirement of shares, etc. 973Depreciable assets 564Tax losses carried forward 0Other

Subtotal of deferred tax assets Valuation allowance Total of deferred tax assets Deferred tax liabilities

Valuation difference on available-for-sale securities

3,39111,457(2,733)

8,724

(13,355)Other (7)

Total of deferred tax liabilities (13,362) Net deferred tax assets

(4,637)

(2) Breakdown of key items that generated a significant discrepancy, if any, between the effective statutory tax rate applicable to the company submitting the consolidated financial statements and the burden ratio of corporate taxes, etc., after application of tax effect accounting:

Effective statutory tax rate 35.3%(Adjustment) Increase in valuation allowance (1.9) Items, such as entertainment expenses that are not deductible for the purpose of income tax 0.4 Items, such as dividends on securities that are not included in revenues Inhabitants’ per capita taxes

(1.2) 0.3

Reduction of deferred income tax assets at the end of fiscal year due to changes in tax rate 6.0 Others 0.0 Burden ratio of corporate taxes, etc., after application of tax effect accounting 38.9 %

(3) Revisions to the amount of deferred income tax assets and liabilities due to changes in tax rate: With the promulgation of the “Act for Partial Revision of the Income Tax Act, etc.” (Act No. 9 of 2015) on March 31, 2015, the statutory tax rate used for the calculation of deferred income tax assets and liabilities has been changed from 35.3% to 32.8% for the temporary differences expected to be settled in the fiscal year commencing on April 1, 2015, to 32.0% for those to be settled in the fiscal year commencing on April 1, 2016. As a result, deferred income tax assets decreased by 30 million yen, deferred income tax liabilities decreased by 558 million yen, valuation difference on available-for-sale securities increased by 1,362 million yen, deferred gains (losses) on hedges decreased by 150 million yen remeasurements of defined benefit plans decreased by 23 million yen, adjustment of corporate taxes, etc. increased by 660 million yen, deferred income taxes for revaluation decreased by 314 million yen and unrealized gains from revaluation of land held for use increased by 314 million yen, respectively.


30

〔Per-share Information〕

Previous consolidated

accounting year (April 1, 2013 through

March 31, 2014)



Net assets per share Yen 372.35 458.11Net income (loss) per share Yen 19.72 26.43Diluted net income per share Yen 19.68 26.36

(Note) 1. The basis of calculation of net assets per share is as follows.

End of previous consolidated

accounting year (March 31, 2014)

End of current consolidated accounting year

(March 31, 2015)Total net assets (million yen) 93,125 113,562

Deduction from total net assets (million yen) 2,374 2,710

(Of which, stock subscription rights) 81 119

(Of which, minority interests) 2,293 2,591Net assets attributable to common stock shareholders at end of year (million yen) 90,751 110,852

Number of shares of common stock at end of year used for calculation of net assets per share (thousand shares) 243,724 241,974

(Note) 2. The calculation basis for net income (loss) per share and diluted net income per share is as follows.

Previous consolidated

accounting year (April 1, 2013 through

March 31, 2014)



Net income (loss) per share

Net income (loss) million

yen 4,838 6,438

Amount not attributable to common stock shareholders

million yen

― ―

Net income (loss) attributable to common stock shareholders

million yen

4,838 6,438

Weighted average number of shares of common stock

thousand shares

245,309 243,560

Diluted net income per share

Adjusted for net income million

yen ― ―

Number of the shares of common stock to be increased

thousand shares

489 643

Of which, stock subscription rights thousand shares

489 643

Overview of diluted shares excluded from calculation of diluted net income per share due to its non-dilutive effect

― ―

(Note) 3. As described in “Changes in Accounting Policies,” effective from the fiscal year ended March 31, 2015, the

Bank adopted the provisions set forth in Paragraph 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012; hereinafter the “Retirement Benefits Accounting Standard”) and the provisions set forth in Paragraph 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015; hereinafter the “Guidance on Retirement Benefits”) in accordance with the transitional treatment stated in Paragraph 37 of the Retirement Benefits Accounting Standard. As a result, net assets per share at the beginning of the fiscal year ended March 31, 2015 increased by 0.87 yen, net income per share and diluted net income per share increase by 0.47 yen, respectively.

〔U.S. dollar Amount〕

Amount in U.S. dollars is translated from Japanese yen, solely for convenience, at ¥120.17 = U.S. $1.00, the exchange rate prevailing on March 31, 2015.


31

Overview of Non-Consolidated Settlement Financial Statements

Balance Sheet (Unit: Million yen)

Period

Item

End of 109th periodMarch 31, 2014

End of 110th period March 31, 2015


Thousand USD

(Assets) Cash and due from banks ¥ 156,423 ¥ 143,224 $ 1,191,844Cash 25,732 23,215 193,184Deposits 130,691 120,009 998,660Trading account securities 193 1,427 11,874National government bonds 7 724 6,024Municipal bonds 186 703 5,850Securities 854,354 942,841 7,845,893National government bonds 459,214 495,289 4,121,569Municipal bonds 118,556 88,313 734,900Corporate bonds 115,981 122,656 1,020,687Stocks 25,060 30,573 254,414Other securities 135,542 206,008 1,714,304Loans and bills discounted 1,423,505 1,472,673 12,254,913Bills discounted 12,692 13,073 108,787Loans on bill 54,988 49,726 413,797Loans on deed 1,204,741 1,247,964 10,384,987Overdrafts 151,082 161,908 1,347,324Foreign exchange 10,719 6,789 56,494Deposits with other foreign branches 8,146 4,008 33,352Foreign exchange purchased 2,572 2,781 23,142Other assets 10,767 10,964 91,237Accrued income 2,394 3,519 29,283Financial derivatives 1,450 2,773 23,075Cash collateral paid for financial instruments ― 3,010 25,047Other assets 6,922 1,662 13,830Tangible fixed assets 28,519 28,804 239,693Buildings 7,393 8,983 74,752Land 19,702 18,589 154,689Lease assets 16 0 0Construction in progress 456 7 58Other tangible fixed assets 950 1,223 10,177Intangible fixed assets 631 653 5,433Software 515 567 4,718Other intangible fixed assets 116 86 715Prepaid pension cost 4,174 4,617 38,420Deferred tax assets 898 ― －Customers' liabilities for acceptances and guarantees 7,723 6,763 56,278Reserve for possible loan losses (8,644) (7,823) (65,099)Total assets ¥ 2,489,268 ¥ 2,610,936 $ 21,727,020


32

(Unit: Million yen) Period

Item


End of 110th period March 31, 2015


Thousand USD

(Liabilities) Deposits ¥ 2,164,734 ¥ 2,220,376 $ 18,476,957Current deposits 99,508 100,927 839,868Ordinary deposits 1,022,997 1,077,111 8,963,227Savings deposits 28,763 29,367 244,378Demand deposits 6,905 7,389 61,487Time deposits 945,598 949,238 9,187,699Time savings deposits 107 85 707Other deposits 60,852 56,256 468,136Certificates of deposits 122,320 105,780 880,252Payables under repurchase agreements 6,712 68,938 573,670Borrowed money 58,732 67,000 557,543Borrowings 58,732 67,000 557,543Foreign exchange 115 146 1,214Foreign exchange sold 24 56 466Foreign exchange payable 91 90 748Bonds 10,000 －－Other liabilities 23,439 24,818 206,524Corporate taxes, etc. payable 1,044 2,077 17,283Unpaid expenses 1,091 1,296 10,784Unearned income 814 774 6,440Benefit compensation reserve 0 0 0Financial derivatives 3,009 6,702 55,770Payables under financial instruments, etc. ― 514 4,277Lease obligations 18 0 0Asset retirement obligations 72 53 441Other liabilities 17,388 13,398 111,492Accrued bonuses 782 814 6,773Allowance for bonuses to directors and corporate auditors 25 25 208Reserve for reimbursement of deposits 448 447 3,719Reserve for contingencies 468 401 3,336Deferred income taxes ― 4,981 41,449Deferred income taxes for revaluation 3,613 3,054 25,413Acceptances and guarantees 7,723 6,763 56,278Total liabilities 2,399,117 2,503,548 20,833,386(Net assets) Common stock 24,538 24,538 204,194Capital surplus 16,964 16,964 141,166Capital reserve 16,964 16,964 141,166Other capital surplus ― 0 0Retained earnings 33,017 38,052 316,654Legal reserve 1,353 1,645 13,688Other retained earnings 31,664 36,406 302,954Net retained earnings forwarded 31,664 36,406 302,954Treasury stock (290) (720) (5,991)Total stockholders' equity 74,229 78,834 656,020Unrealized holding gains (losses) on securities 13,881 29,023 241,516Deferred gains (losses) on hedges (629) (3,110) (25,880)Unrealized gains from revaluation of land held for use 2,588 2,521 20,978Total valuation and translation adjustments 15,840 28,434 236,614Stock subscription rights 81 119 990Total net assets 90,151 107,387 893,625Total liabilities and net assets ¥ 2,489,268 ¥ 2,610,936 $ 21,727,020


33

Statement of Income (Unit: Million yen)

Period

Item

109th period (April 1, 2013 through

March 31, 2014)


March 31, 2015)


March 31, 2015) Thousand USD

Ordinary income: ¥ 46,281 ¥ 51,640 $ 429,724Interest and dividends income 27,572 28,368 236,065Loans and bills discounted 20,084 19,400 161,437Interest and dividends on securities 7,419 8,855 73,687Call loans and bills purchased 19 34 282Receivables under resale agreements ― 0 0Deposits 3 36 299Other 45 42 349Fees and commissions 6,066 6,354 52,875Foreign exchange commissions receivable 2,332 2,305 19,181Income from other services 3,734 4,049 33,693Other operating income 8,434 12,772 106,282Gain on foreign exchange trading 438 603 5,017Gain on securities trading 76 ― ―Income from national government and other bonds 1,643 1,385 11,525Income from financial derivatives 6,275 10,784 89,739Other operating income 0 0 0Other ordinary income 4,207 4,143 34,476Gains from reversal of allowance for loan losses Gains from recovery of written-off debts

―558

491 325

4,0852,704

Gain on sale of stocks, etc. 3,133 2,589 21,544Other ordinary income 515 737 6,132Ordinary expenses: 38,067 41,069 341,757Interest expenses 1,687 2,304 19,172Deposits 887 892 7,422Certificates of deposits 38 48 399Call money and bills sold 3 0 0Securities lending 5 32 266Borrowed money 165 159 1,323Bonds 232 192 1,597Interest swaps 351 977 8,130Other 4 0 0Fees and commissions 3,645 3,850 32,037Foreign exchange commissions payable 376 369 3,070Other fees and commissions 3,268 3,480 28,958Other operating expenses 6,007 10,983 91,395Loss on trading securities transactions Loss on sale of national government and other bonds

―6,007

7 10,976

5891,337

General and administrative expenses 23,135 22,568 187,800Other expenses 3,591 1,361 11,325Provision of reserve for possible loan losses 2,443 ― ―Loans amortized 666 1,082 9,003Losses on sale of stocks, etc. 1 12 99Amortization of stocks, etc. 113 0 0Other expenses 367 266 2,213Ordinary profit 8,214 10,571 87,967Extraordinary gains 1 16 133Gains from sales of fixed assets 1 16 133Extraordinary losses 601 902 7,506Losses on disposal of fixed assets 97 62 515Losses on impairment of fixed assets 503 840 6,990Income before income taxes and minority interests 7,614 9,685 80,594Corporate tax, corporate inhabitant tax and business tax 1,893 3,083 25,655Adjustment of corporate taxes, etc. 1,253 699 5,816Total corporate taxes, etc. 3,147 3,783 31,480Net income ¥ 4,467 ¥ 5,901 $ 49,105

Subsidiaries

34

Subsidiaries

Consolidated Subsidiaries of The Hokuetsu Bank, Ltd.

Name of Companies Type of Business Capital

(Million yen)

Voting Share

(%)

The Hokuetsu Leasing Co., Ltd. Leasing 100 50.0

The Hokuetsu Card, Ltd. Credit Guarantee Business Credit Card Business

20 2.6

The Hokuetsu Credit Guarantee Co., Ltd. Credit Guarantee Business 210 47.8

The Hokugin Economic Research

Institute, Ltd.

Research and investigation as well as provision of information on socioeconomic issues

30 5.0

Corporate Data

35

Corporate Data

BOARD OF DIRECTORS AND CORPORATE AUDITORS

President Satoru Araki Senior Managing Directors Yoshifumi Matsunaga Katsuya Sato Managing Directors Yukio Maruyama Minoru Kurihara Atsushi Sato Ichiro Muromoto Directors Hiroyuki Kaizu Satoru Kumakura Terasu Sato Kazuyoshi Hirokawa Hiroshi Fukuhara Kiroku Takeuchi Standing Corporate Auditors Toshiaki Sakai Mikiya Toyooka Corporate Auditors Toshio Kitamura Shiro Watanabe (as of June 23, 2015)

BASIC DATA

Date of Foundation December 20, 1878 Date of Incorporation December 7, 1942 Authorized Shares (in thousands) 600,000 Outstanding Shares (in thousands) 245,142 Paid-in Capital 24,538 million yen Number of Shareholders 6,809 Employees 1,444 Stock Listing First Section of the Tokyo Stock Exchange (as of March 31, 2015)

SERVICE NETWORK

Head Office 2-14, Otedori 2-chome, Nagaoka City, Niigata 940-8650 Phone: (0258) 35-3111 International Business Department Address: same as Head Office SWIFT: HETSJPJT Phone: (0258) 39-7371 Foreign Exchange Offices The following are the major branches providing a full range of foreign exchange banking services: Head Office Ken-oh Tsubame Branch 1-2 Butsuryu Center, Tsubame City, Niigata 959-1277 Niigata Branch 1300, Hachibancho, Kamiookawamaedori, Chuo-ku, Niigata City, Niigata 951-8602 Sanjo Branch 2-4-31, Asahicho, Sanjo City, Niigata 955-0065 Tokyo Branch 16-1, Nihonbashi Koamicho Chuo-ku, Tokyo 104-0016 Tsubame Branch 2-10, Kokucho, Tsubame City, Niigata 959-1200

Number of Branches by Area Niigata Prefecture 79 Gunma Prefecture 2 Saitama Prefecture 2 Tokyo 1 Total 84

(as of July 31, 2015)

hokuetsubank 2015 · 2018-11-05 · annual report hokuetsu bank 2015 april 1, 2014 - march 31, 2015...

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