2 0 15
THE 77 BANK, LTD.
ANNUAL REPORT
2015
77BANK
2015
ANNUAL REPORT2015
Bank Data
P ro f i l e
The 77 Bank, Ltd., was founded in 1878 as Japan’s 77th national bank. Headquartered in Sendai—the capital of Miyagi Prefecture—the Bank is the largest in
the Tohoku region, with a branch network covering the northern part of Honshu,
Japan’s largest island.
Based on its philosophy, The 77 Bank continues to strengthen its business foundation and enhance its management quality in order to be the “Value-creating
bank” that grows together with and is the most trusted by the region. As of March
31, 2015, The 77 Bank had capital of ¥24.7 billion, 141 domestic branches and
2,791 employees.
THE 77 BANK, LTD.
As of March 31, 2015
Head Office
Paid-in Capital
3-20, Chuo 3-chome, Aoba-ku, Sendai,
Miyagi 980-8777, Japan
Phone: +81-22-267-1111
http://www.77bank.co.jp/
¥24,658 million (US$205 million)
Number of Stockholders
8,760
Shares Outstanding
Founded
383,278 thousand
December 1878
Major Stockholders
Number of Branches
141
Number of Employees
Number of
Shares
(Thousands)
%
18,928
15,431
15,412
14,795
12,275
11,449
10,767
9,017
8,478
8,392
4.93
4.02
4.02
3.86
3.20
2.98
2.80
2.35
2.21
2.18
Meiji Yasuda Life Insurance Company
Nippon Life Insurance Company
Sumitomo Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Dai-ichi Life Insurance Company, Limited
The Master Trust Bank of Japan, Limited (trust account)
Japan Trustee Services Bank, Limited (trust account)
Aioi Nissay Dowa Insurance Co., Ltd
Tohoku Electric Power Co., Ltd
Japan Trustee Services Bank, Limited (trust account 4)
2,791
Treasury Administration &
International Division
Planning & Business Department
3-20, Chuo 3-chome, Aoba-ku, Sendai,
Miyagi 980-8777, Japan
Phone: +81-22-211-9914
Facsimile: +81-22-211-9916
SWIFT Address: BOSSJPJT
Note:The Bank owned 9,051 thousand shares of treasury stock as of March
31, 2015, which is excluded from the major stockholders listed above.
Service Network
As of June 30, 2015
SAPPORO
1 Branch
AKITA
Con t e n t s
Consolidated Financial Highlights ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Message from the President ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Toward a Firmer Business Position ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Growing with the Region -Toward Reconstruction from the Great East Japan Earthquake- ・・・・
77 Bank Group ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Board of Directors and Audit & Supervisory Board Members ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Organization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Financial Section ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Five-Year Summary ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Performance for Fiscal 2015 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Comprehensive Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Changes in Equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Cash Flows ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes to Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Independent Auditors’ Report ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Capital Adequacy Ratios ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Non-Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Non-Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loan Portfolio ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Bank Data ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
1 Branch
TOHOKU
REGION
1
2
5
9
11
12
12
13
13
14
15
16
16
17
18
19
37
38
39
40
41
43
IWATE
2 Branches
OSAKA
1 Branch
TOKYO
2 Branches
NAGOYA
1 Branch
YAMAGATA
1 Branch
MIYAGI
126 Branches
SHANGHAI
SENDAI
Headquarters
Treasury Administration &
International Division
FUKUSHIMA
6 Branches
Shanghai Representative Office
Address:16th floor, Hang Seng Bank Tower, 1000 Lujiazui Ring Road, Pudong New Area, Shanghai,
P. R. China
Phone:+86-21-6841-2077
43
Consolidated Financial Highlights
THE 77 BANK, LTD. AND SUBSIDIARIES
As of March 31
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
For the fiscal year
Net interest income
Net fees and commission
Net other operating income
Net income
¥70,280
11,843
2,407
17,049
¥70,148
11,705
469
15,059
$584,838
98,552
20,029
141,874
At the fiscal year-end
Total assets
Deposits
Loans and bills discounted
Trading account securities and investment securities
Equity
Common stock
¥8,588,463
7,849,299
4,219,621
3,708,968
472,029
24,658
¥8,507,205
7,871,879
3,998,209
3,746,477
397,011
24,658
$71,469,276
65,318,290
35,113,763
30,864,342
3,928,010
205,192
Yen
2015
Per share of common stock
Basic net income
Diluted net income
Equity
Cash dividends applicable to the year
Capital adequacy ratio (%)
Domestic standard
2015
U.S. Dollars
2014
¥45.56
45.38
1,223.49
8.50
¥40.26
40.10
1,027.15
7.50
12.51
12.68
2015
$0.379
0.377
10.181
0.070
Note: Throughout this report, U.S. dollar amounts are translated, for convenience only, at the rate of ¥120.17 = US$1, the exchange rate prevailing
on March 31, 2015.
1
Message from the President
The 77 Bank aims to be the “Value-creating bank” that grows
together with and is the most trusted by the region.
2
The moderate recovery of the Japanese economy is continuing as exports and production
start to gain vigor owing to the recovery of the
U.S. economy and the depreciation of the yen,
despite the lingering weakness of personal
consumption.
The economy of Miyagi Prefecture, the primary base of operations for The 77 Bank, is
recovering at a modest pace. Economic activity has been generally upbeat, supported by
demand associated with reconstruction in the
aftermath of the Great East Japan Earthquake,
notwithstanding weakness in certain areas.
Four years have passed since the Great East
Japan Earthquake. In coastal areas, despite a
sharp rise in prices of construction materials
and labor shortages, projects promoting group
relocation for disaster mitigation and construction of public housing for people affected
by the disaster are underway. Underpinned by
development of highway networks and resumption of railway operations that will promote exchanges among regions, initiatives to
put the lives and livelihoods of disaster victims back on a firm footing and to build new
Teruhiko Ujiie, President
communities are moving into high gear.
Looking to the future, through daily, ongoing customer relations, financial institutions need to share
the recognition of management issues with their customers who are at various life phases and vigorously fulfill financial intermediary functions by utilizing our judgment capability, paying attention to
feasibility and the potential of customers without being overly dependent on financial data, collateral
and guarantees. Moreover, in view of the population decrease and the aging of society confronting regional cities, financial institutions should strengthen their initiatives to foster companies and industries capable of becoming the driving force of the regional economy. Moreover, it is incumbent on
them to fulfill consulting functions while utilizing the expertise of external specialists so as to contribute to sustainable growth of the region.
As a financial institution based in the region struck by the Great East Japan Earthquake, we need to
identify the situation in the disaster-stricken areas and the changing needs of the disaster victims corresponding to the phase of the recovery. Our task is to support the acceleration of reconstruction and
recovery in collaboration with the national government and municipalities.
On the other hand, in Sendai and the surrounding area, competition among banks is intensifying as
they seek to address vigorous needs for funds and capture business opportunities in view of the demand to endow Sendai, the core city in the Tohoku region, with enhanced urban functions and the
trend toward concentration of economic activity in Sendai. While the mission of regional banks in the
future is the subject of debate, in order to maintain and enhance the management foundation of the
Bank, it is necessary to enhance the Bank’s presence in Miyagi Prefecture and the wider Tohoku region.
With this in mind, we need to strengthen earnings power and enhance operational efficiency by utilizing information networks and helping customers resolve their issues by offering consulting services.
In order to vigorously address these issues, the Bank launched a new medium-term management
plan “Value Up: Challenge Value Creation” in April 2015 that covers three years. Based on this plan,
we are deepening our relationships with the people of the region and ensuring that all aspects of our
business contribute to the fulfillment of our mission as a regional financial institution, that is, to contribute to the revitalization and development of the regional society and economy.
Outline of Medium-term Management Plan
In view of the achievement and review of the previous medium-term management plan and in light of
change in the business environment, the Bank has formulated a new medium-term management plan
“VALUE UP: Challenge Value Creation” with the aim of enhancing the Bank’s corporate value through
enhancement of the value of the region it serves.
Bank Image
Sought by
The 77 Bank
“Value-creating bank that grows together with and is the most
trusted by the region”
Medium-term Management Plan
“VALUE UP: Challenge Value Creation”
Name
• Vitality
• Activity (Action)
• Low-cost (Improved productivity)
• Utility (Contribution)
• Effort
Period
Basic Policies
Code of Conduct of Officers and Employees
We will take action with vitality, undeterred by changes, and
further improve productivity. At the same time, in order to
contribute to the region, we will make our best efforts and
unceasingly take on challenges of value creation.
Three years (from April 1, 2015 to March 31, 2018)
1. Strengthen earthquake recovery support (Support acceleration of recovery)
2. Reinforce the earnings base (Shrug off the low-profit structure)
3. Enhance the value of the region (Enhanced value of the region will lead to
enhancement of the Bank’s corporate value.)
4. Smooth migration to and utilization of MEJAR (Achieve smooth migration and
effective utilization)
Targets for the final year of the Plan (FY2018)
Earnings
power
Basic
Objectives
Proposal
capabilities
Enhancement • Net income(*)
of
• I ncrease of interest on loans and bills
profitability
discounted [compared with FY2015]
• Fees and commissions
Pursuit of
efficiency
Increase of
the market
shares
• Core OHR
(core gross operating income expense ratio)
• Increase of loans and bills discounted in Miyagi
Prefecture (balance as of March 31, 2018)
[compared with the balance as of March 31, 2015]
• Increase of loans and bills discounted in Sendai
(balance as of March 31, 2018) [compared with
the balance as of March 31, 2015]
JPY20.0 billion or more
JPY 1.5 billion or more
JPY 10.5 billion or more
Less than 65%
JPY 250.0 billion or more
JPY 150.0 billion or more
*When net income of JPY20.0 billion or more is achieved, ROE (net income basis) is expected to be
around 5%.
The Bank’s
Configuration
in 10 Years
(Long-term
Vision)
Priorities
(FY 2016)
“Leading bank in the Tohoku region with scale and earnings power ranked within
the top 10 regional banks based on the established earnings base capable of coping
with any change in the business environment through creation of new value in the
region”
1. Total of deposits, loans and assets in custody: around JPY 15 trillion
(as of March 31, 2015: JPY 12.8 trillion)
—Achieve deposits of JPY 8 trillion and loans of JPY 5 trillion—
2. ROE (net income basis): around 7%
(FY2015: 4.0%)
1.Strengthen earthquake recovery support
• Vigorously supply risk money
•Strengthen support for business
rehabilitation and management
improvement
•Contribute to reconstruction and
development of the region
2.Reinforce the earnings base (Shrug off
the low-profit structure)
•Increase interest income and fees and
commissions
•Diversify sources of earnings by expanding
the scope of business
•Further pursue productivity improvement
3.Enhance the value of the region
•Display the established presence in the region
•Bolster the 77 brand (differentiation from
other banks)
4.Smoothly migrate to MEJAR
3
Bank Creed as a Code of Conduct
The Bank Creed has been deeply engrained as a code of conduct among the Bank’s executives and
employees to this day, since its establishment as the basic principle of management in 1961. The Bank
Creed declares our commitment to “contribute to the local community while achieving a harmonious
balance between self-interest and public interest.” In this context, it gives top priority to “elevating the
spirit of voluntary service” and advocates a service-minded approach to bring about prosperity in the
local community.
Bank Creed
The Bank’s mission is to absorb funds and create credit by exercising its own creativity based on the
principle of self-responsibility, in a spirit of maintaining orderly credit conditions and protecting
depositors, and thereby contribute to the growth of the national economy. In light of such public mission,
the Bank shall contribute to the local community while seeking a harmonious balance between self-interest
and public interest as a regional bank.
Based on the aforementioned principles, the code of conduct to be observed by any and all persons
employed by the Bank is set forth as follows.
1. Elevate the Spirit of Voluntary Service
Acknowledge that the Bank’s progress goes hand in hand with prosperity in the local
community, and seek to elevate the spirit of voluntary service at all times.
2. Improve Creditworthiness
Bear in mind that credit is the Bank’s lifeblood, and endeavor to improve credit at all times.
3. Nurture the Spirit of Harmony
Recognize that the spirit of harmony is fundamental to the execution of duties, and strive to
nurture such spirit at all times.
Based on such basic principles, the Bank aspires to become an enterprise in harmony with the local
community by demonstrating its leadership and fulfilling its social responsibility for the sustained
growth of the local community.
Specifically, our activities include supplying the region with funds smoothly, offering products and
services tailored to customers’ needs and providing support to corporate activities as well as various
information. We also continually engage in activities that contribute to society, from the standpoint of a
good corporate citizen.
In order to fulfill the principles set forth in our Bank Creed, we will continue to proactively
contribute to the local community and make efforts so that they are fully understood by local residents.
Corporate Governance Status
The 77 Bank positions enhancement of corporate governance as a management priority, including the
strengthening of the functions of the Board of Directors including outside directors, the strengthening
of the audit system including outside audit & supervisory board members, and the enhancement of
compliance and risk management systems.
The Board of Directors consisting of 15 directors, two of whom are outside directors, is responsible
for decision-making on key issues related to operations. The Executive Committee discusses important
business matters and determines courses of action within the authority granted to it by the Board of
Directors. The Bank has introduced an executive officer system for the purpose of separating
management decision-making and supervision from execution of operations, as well as from the
viewpoint of strengthening and expediting implementation of these functions.
The Bank maintains an audit & supervisory board member system under which three of the five
members of the Audit & Supervisory Board are outside audit & supervisory board members, a
structure that raises the level of impartiality of internal audits. Audit & supervisory board members
check that the actions of directors are constructive and appropriate by attending Board of Directors’
meetings and issuing opinion statements on discussions and decisions made at those meetings.
With regard to compliance and risk management structures, in accordance with the Compliance
Policies and the Basic Policy for Risk Management established by the Board of Directors, The 77 Bank
emphasizes clarity and effectiveness of compliance-related initiatives and aims to establish a sturdy
risk management system for the Bank’s stable and sustainable growth.
Teruhiko Ujiie
President
4
Toward a Firmer Business Position
Toward a Firmer Business Position
Some of the key indicators of sound financial management are “capital adequacy ratio” and “ratings.”
The Bank has always concentrated on the improvement of financial soundness and kept these indicators at favorable levels.
Capital Adequacy Ratio
Capital adequacy ratio refers to the ratio of capital relative to assets calculated according to risks (risk
assets). It is one of the major barometers of a bank’s financial soundness. Banks that have no overseas
bases are required to maintain a capital adequacy ratio of at least 4% under domestic standards.
The 77 Bank applies domestic standards for calculation of the capital adequacy ratio, and had a capital adequacy ratio of 12.19% for the fiscal year ended March 31, 2015, well above the required level.
In December 2011, we received ¥20.0 billion in public funds (subordinated loan based on the earthquake-related special provision of the Act on Special Measures for Strengthening Financial Functions),
as a result of which our capital adequacy ratio rose 0.66 percentage points as of the end of March
2015.
The Bank completed repayment of public funds as of June 29, 2015.
•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
*The Bank has applied Basel III for calculation of the capital adequacy ratio since the end of March 2014.
Trends in Capital Adequacy Ratio (domestic standard)
(%)
(As of March 31)
Basel II
Basel III
15
14
13
11.69
12
11
12.57
12.54
12.68
12.51
12.33
12.22
12.33
12.19
March 2012
March 2013
March 2014
March 2015
11.44
10
8
4
0
March 2011
Consolidated
Non-consolidated
Ratings
“Rating” is an indicator of the certainty of the principal, interest, etc. of bonds issued by companies
and other entities and those of bank deposits being paid in accordance with predetermined terms and
conditions, and is denoted by such symbols as alphabets. As a third-party rating agency assesses the financial position, etc. and discloses the results to the market, ratings are used as an indicator of a
bank’s credit worthiness and security.
The 77 Bank has acquired ratings from three domestic and overseas rating agencies that are among
the highest of any Japanese financial institution.
The 77 Bank’s Ratings
(As of June 30, 2015)
Solid
debt-repayment
capabilities
Rating
Category
Rating Agency
AAA
Japan Credit Rating Agency, Ltd. (JCR)
Long-term issuer rating
AA
AA
A
Rating and Investment Information, Inc. (R&I) Issuer credit rating
A+
BBB
BB
Standard & Poor’s Corp. (S&P)
Issuer credit rating
A
B
CCC
Notes:
1. Some rating agencies do not use D.
CC
2. Ratings from level AA to level CCC (including level B by some agencies) are further qualified with the use of a + or – sign.
C
D
Definition
Highest certainty of
fulfillment of obligations
Higher credibility and partially
superior performance
Strong capacity to meet
its financial commitments
5
Risk-Management Structure
Sophisticated Techniques Based on Sound Principles
Rapidly changing conditions in the financial sector have significantly transformed the operating environment for financial institutions and caused the risk that surrounds financial institutions to become
comparatively more complex than in the past. These conditions demand that financial institutions execute even more accurate identification and analysis of risks, and take appropriate control of such risks.
The 77 Bank works to reinforce comprehensive risk management with the improved soundness of
business in mind. The risks the Bank faces are assessed by category and comprehensive risk management systems are established for self-control type risk management by taking an overall look at them,
and comparing and contrasting with the Bank’s capital. At the same time, efforts are being made to improve risk management methods by such means as the enhancement of risk measurement techniques.
We have implemented risk capital management as a specific framework for comprehensive risk management. Risk capital management is a management method where a risk capital budget, which is the
risk tolerance, is allocated by risk category to each unit (domestic business units, funds and securities
units, and another unit), and the measured risks of each unit are monitored to ensure that they do not
exceed the respective budget. Risk capital management is also utilized to monitor whether expected
profits suitable for the risks taken are being secured.
Roles of the Bank’s Risk-Management Units
Various risks have been classified into four categories—credit risks, market risks, liquidity risks, and
operational risks—and each risk category is overseen by dedicated divisions, in addition to comprehensive risk management by the Risk Management Division. Credit risks, market risks and liquidity
Flow of Risk Management and Compliance Responsibilities
Audit & Supervisory Board
Executive Committee/Directors and General Managers Liaison Committee
/Compliance Committee
Board of Directors
Independent Auditors
Directors Responsible for Each Type of Risk
Directors Responsible for Compliance
Risk Management Division
Capital management
Comprehensive Risk Management
Credit Risk
Management
Market Risk
Management
Liquidity Risk
Management
Comprehensive Operational Risk Management
Administrative Risk Information Technology
Management
Risk Management
Risk Management Division
Compliance
Legal Risk
Management
Human Risk
Management
Tangible Asset Risk
Management
Outsourcing Risk
Management
Operations
Management
Division
System
Development
Division
Compliance
Management
Division
Personnel
Division
General
Affairs
Division
Reputational Risk Disaster and Other Contingency
Management
Risk Management
General Affairs
Division
Operations
Management
Division
Risk
Management System Development
Division
Division
Compliance
Management
Division
Head Office, Branches and Group Subsidiaries
Audit & Inspection Division
Asset Assessment Audit
6
Internal Audit
risks are managed by the Risk Management Division and the Risk Management Division supervises
the comprehensive operational risk management. Of the operational risks, administrative risks are
managed by the Operations Management Division, information technology risks by the System Development Division, legal risks by the Compliance Management Division, human risks by Personnel Division, tangible assets risks by the General Affairs Division, reputational risks by the Risk Management
Division, and outsourcing risks by the Operations Management Division and System Development Division, and disaster and other contingency risks by the General Affairs Division, Operations Management Division, and System Development Division.
The Audit & Inspection Division is independent of all business units, as it is the evaluating unit for
internal processes and asset status. The Audit & Inspection Division assesses the risk-management
positions of each division and branch, as well as those of group companies. The Bank conducts two
types of audit: a comprehensive audit for internal management systems, including financial facilitation, compliance, customer protection, governance and management, and risk control; and physical
inspection of cash and cash equivalents for the prevention of illegality. In addition, the Bank undergoes external audits, performed by outside audit & supervisory board members, in order to further
consolidate the internal management structure.
Compliance
The Bank formulated the Compliance Policies in order to clarify its stance on compliance and to ensure the effectiveness thereof. Further, the Bank established the Compliance Guidelines (Compliance
Standards) to articulate specific guidelines and a code of conduct so that the executives and employees
place importance on compliance, thereby ensuring the lawful conduct of business.
Compliance Guidelines
Basic Direction
1.Ensure sound management and pay the utmost attention to sustaining the Bank’s
credibility and its ability to maintain smooth financing.
2.Comply with laws and the code of corporate ethics and maintain fair and honest
practices.
3.Take a principled stand with regard to issues that threaten social order or public
peace.
4.Provide financial services that the region, customers, and society broadly trust
and endeavor to achieve sustainable development together with them as a good
corporate citizen.
5.Foster a flexible and constructive working environment conducive to the well-being of all employees.
Code of Conduct
1.We will comply with laws, ordinances, the Articles of Incorporation, the Rules of
Employment, and internal rules of the Bank.
2.We will not force unfair transaction on our customers.
3.We will not divulge confidential information of our customers or the Bank, or material information that has not been made public.
4.We will not neglect to provide reports required by laws, ordinances, and internal
rules of the Bank, or provide false reports.
5.We recognize the public nature and the large social responsibility of the Bank and
will devote ourselves to our duties.
7
6.We will not follow instructions or orders given by an individual that go beyond or
deviate from the authorities given to said individual.
7.We will not engage in such conduct as will undermine the credibility or honor of
the Bank.
8.We will not do favors for our customers in violation of law, ordinances, or internal
rules of the Bank.
9.We will not seek to make unfair profits by taking advantage of our duties or position.
10.We will not borrow from or mediate for someone to borrow from our customers,
other executives, or other employees without legitimate reason.
11.We will not engage in socially unacceptable entertaining or gift giving.
12.We will make efforts to maintain order in the workplace.
Compliance Structure
Subsidiaries
Board of Directors
(Directors)
＝
President
Director responsible
For compliance
Compliance Committee
(Chaired by President)
Compliance
Departments
(Chaired by General
Manager of Compliance
Management Division)
Audit & Supervisory
Board Members
(Audit & Supervisory
Board)
Compliance
supervisors
(Major Roles)
Compliance-related education,
inspection, monitoring and
the like within each company
Compliance management
Compliance Management
Division
Audit & Inspection
Division
Compliance Manager (General Manager of Compliance Management Division)
Chief Compliance Officer (Manager of Legal Affairs Section)
(Complaints, antisocial influences)
Compliance Monitor (Senior Auditor)
(Dishonest actions, internal audits)
General Planning &
Coordination Division (Risk management, disclosure)
Personnel Division
General Affairs
Division
(Maintenance of discipline and
work discipline)
(General meeting of shareholders,
traffic accidents)
Head Office
Business
Division and
Branches
Compliance
promotion
committees
Divisions and Main Branch:
Compliance Officer
Other:
Compliance liaison officers
(Chaired by
General Managers)
Operations
(Operational accidents)
Management Division
Note: Compliance officers and compliance liaisons maintain their independence in the performance of their duties related to
compliance and do not follow the instructions of higher-ranking individuals.
Audit compliance efforts
throughout the Bank
8
Thorough compliance with laws and the code of corporate ethics is essential for a financial institution
if it is to uphold its social responsibility and public duty and thus maintain the trust of the region in
which it operates, customers and society at large. From this perspective, The 77 Bank established the
Legal Affairs Office in 1998 to monitor legal compliance. Following subsequent organizational reforms, the authority of the Legal Affairs Office was superseded by the Compliance Management Division, which now tracks the situation with respect to legal compliance.
The President is the director ultimately responsible for legal compliance. He is supported by the
general manager of the Compliance Management Division, who supervises inspections, and the head
of the Legal Affairs Section, who acts as a compliance officer. Each division and branch is assigned a
compliance officer and other oversight personnel who undertake regular inspections to ascertain the
situation with respect to compliance. The 77 Bank also advocates measures to preclude inappropriate
behavior or legal errors. The Bank encourages greater awareness of laws and other compliance issues
among executives and employees, and strives to foster a deeper understanding of pertinent laws.
To further strengthen the compliance structure, the Bank established the Compliance Committee
chaired by the President and compliance departments as subcommittees of the Compliance Committee. Also, divisions and branches have compliance promotion committees.
Growing with the Region -Toward Reconstruction from the Great East Japan EarthquakeThe Economy of Miyagi Prefecture
Miyagi Prefecture, the primary base of operations for The 77 Bank, is located in the southeast of the
Tohoku region. The prefecture is an important crossroads linking Tohoku to Tokyo, the nation’s capital. In 1989, Sendai, the prefectural capital, became the 11th city in Japan specially designated by ordinance. The higher profile encouraged major national businesses and organizations, including
government agencies, to set up branches and offices in Sendai, thereby positioning Sendai as the preeminent city of the Tohoku region.
In Miyagi Prefecture, the Great East Japan Earthquake damaged many houses and other buildings,
mainly on the coast, and devastated infrastructure such as roads and ports, but progress is now being
made toward reconstruction and revitalization.
Composition of Gross Prefectural and Gross Domestic Product (Nominal)
(%)
Miyagi Prefecture
Agriculture, forestry and fishery
Manufacturing
Construction
Utilities
Wholesale and retail
Financial institutions
Real estate
Transportation
Information and communications
Services
Municipalities and others
Total
1.3
11.9
10.6
1.9
14.4
3.7
14.6
3.6
4.6
19.8
13.7
100.0
Japan
1.1
18.2
5.2
2.1
13.5
4.7
14.0
4.8
5.2
19.6
11.7
100.0
Progress of Reconstruction Projects in Miyagi Prefecture
Source: “Reconstruction Progress Statuses” issued by Miyagi Prefecture and other materials
Item
Railway
Infrastructure Roads and bridges
Ports
Rubble removal
Residential
environment
Relocation of communities
from disaster prone areas
Public housing
Fishing boats
Agriculture/
Fisheries
Fishing ports
Agricultural facilities
Horticultural facilities
Commerce
and industry
Resumption of
operation
Fish processing
facilities
Progress (% of completion)
20 40 60 80100
85% (track length with service resumed)
95% (completed locations)
47% (completed locations)
100% (volume disposed of)
50% (relocation completed)
35% (construction completed)
93% (number of fishing boats restored)
31% (completed locations)
85% (completed area)
92% (area recovered)
81% (number of chamber of commerce members near the coastline that resumed operation)
84% (number of facilities that resumed operation)
Overview
(State of reconstruction/
damage and base date)
386/456km (total track
length) (May 31, 2015)
1,459/1,538locations (May
31, 2015)
137/292locations (May 31,
2015)
1,888/1,888t (March 31,
2014)
97/195communities (May
31, 2015)
5,545/15,988houses (May
31, 2015)
8,400/9,000boats (May 31,
2015)
450/1,439fishing ports (May
31, 2015)
11,020/13,000ha (May 31,
2015)
163/178ha (May 31, 2015)
6,300/7,800members (May
31, 2015)
388/462facilities
(December 31, 2014)
9
Reconstruction Support Policy
In view of the massive damage inflicted by the Great East Japan Earthquake, The 77 Bank formulated
its “Reconstruction Support Policy” to contribute to the reconstruction and development of the
regional economy. The objective of this policy is to fulfill the Bank’s responsibility as a regional
financial institution that should work hand-in-hand with the local region, through the provision of
financial services and financial intermediary functions aimed at supporting reconstruction efforts of
the region and customers.
All executives and employees of the Bank are working to support the region and the Bank’s
customers by tackling various challenges in order to restore Miyagi and the wider Tohoku region to
their original states of places brimming with vitality, affluence and kindness.
Reconstruction Support Policy
-To restore the Miyagi and Tohoku region with flourishing vitality, abundance, and overflowing kindness1. Fulfill our financial intermediation function
As a financial institution working with the local region, we are striving to meet funding needs
related to reconstruction and revitalization efforts. We are working sincerely to resolve the
problems of customers who were affected by the disaster through altering lending conditions and
resolving double mortgages for customers who are working proactively for rebuilding.
2. Contribute to reconstruction and further development for the region
We will further enhance our consulting and judgment capabilities, and provide swift and optimal
solutions to customers with reconstruction needs that were identified through vigorous customer
visiting. At the same time, we will participate actively in initiatives for regional rehabilitation and
industrial revitalization through enhanced collaboration with the municipal governments that are
taking the lead in implementing reconstruction measures in the region. In this way, we will
contribute to reconstruction and further development of the region.
Additionally, we will work to improve the branch network and sales platform in an effort to help
enhance customer convenience and to fully assist efforts to achieve regional revitalization and
rehabilitation through stable provision of financial services.
3. Assist efforts to achieve a disaster prevention-aware, safe and environmentally-friendly society
In light of the massive damage caused by the earthquake, we will pay even closer attention to
disaster prevention and mitigation, as well as safety. In addition, we will take measures to bolster
the business continuity framework in order to provide continuous financial services in disasters
and other emergencies.
Furthermore, we will make long-term and sustainable contributions to the local community
through initiatives to enhance energy conservation and environmental friendliness in anticipation
of an environmentally-friendly society in the region after reconstruction.
Repayment of public funds
In an aim to achieve regional reconstruction goals through joint efforts of the Japanese government
and the Bank, the Bank received ¥20.0 billion in public funds (subordinated loan based on the
earthquake-related special provision of the Act on Special Measures for Strengthening Financial
Functions) in December 2011.
Based on the state of reconstruction of earthquake-damaged areas, mainly in Miyagi Prefecture, and
the Bank’s financial situation, the Bank determined that it established a financial base sufficiently
capable of strengthening earthquake recovery support (further accelerating reconstruction) if it were
to repay public funds. Consequently, the Bank repaid public funds in their entirety in June 2015.
Following the repayment, all executives and employees of the Bank are united in making the utmost
efforts to reinforce earthquake recovery support toward the reconstruction of the regional economy
following the Great East Japan Earthquake.
Deposit and Loan Shares in Miyagi Prefecture
Our mission, as a regional financial institution, is to contribute to regional socioeconomic development through the timely and accurate provision of financial services geared to the needs of the region.
Our efforts have earned us the support of customers, boosting our regional share of deposits and loans
to the highest level among Japanese regional banks.
Deposit and Loan Shares in Miyagi Prefecture
(As of March 31, 2015)
Other Banks 6.3%
The 77 Bank 56.3%
Deposits
2nd Regional
Banks 13.6%
Other Regional
Banks 5.4%
Trust Banks 4.3%
10
Other Banks 7.2%
The 77 Bank 41.9%
Shinkin Banks 6.7%
Shinkin Banks 9.0%
2nd Regional
Banks 9.8%
(As of March 31, 2015)
Loans
Other Regional
Banks 13.8%
City Banks and Others 8.9%
Trust Banks 2.8%
City Banks and Others 14.0%
77 Bank Group
(As of June 30, 2015)
Main Business and Organization of the Bank and Subsidiaries
The 77 Bank Group is engaged in leasing, credit card and other financial businesses in addition to the
banking business. The Group consists of the following:
Head Office, 135 branches,
and five sub-branches
77 Business Services Co., Ltd.
Two consolidated subsidiaries
engaged mainly in operations
directly related to the banking
business
The 77 Bank, Ltd.
• Management of cash and other banking clerical
operations
77 Jimu Daiko Co., Ltd.
• Investigation and valuation of mortgaged
property, custody of credit documents,
and contract services for back office operations
77 Lease Co., Ltd.
• Leasing business
Four consolidated subsidiaries
engaged mainly in businesses
related to financial services
77 Shin-Yo Hosyo Co., Ltd.
• Guaranty and credit investigation services
77 Computer Services Co., Ltd.
• Computer-based contract services such as
calculations for other companies
The 77 Card Co., Ltd.
• Credit card business
Consolidated Subsidiaries
Established
Paid-in capital
Percentage of
parent
company’s
voting stock
Percentage of
consolidated
companies’
voting stock
77 Business Services Co., Ltd.
January
1980
¥020 million
100.00%
—
77 Jimu Daiko Co., Ltd.
March
1987
¥030 million
100.00%
—
77 Lease Co., Ltd.
November 1974
¥100 million
5.88%
52.94%
77 Shin-Yo Hosyo Co., Ltd.
October
1978
¥030 million
5.00%
45.90%
77 Computer Services Co., Ltd.
January
1982
¥020 million
5.00%
45.00%
The 77 Card Co., Ltd.
February 1983
¥064 million
6.06%
28.28%
Notes: 77 Computer Services Co., Ltd., and The 77 Card Co., Ltd., are regarded as consolidated subsidiaries because institutions that have a
close relationship with the Bank hold 45.00% and 45.45% of voting stock, respectively.
11
Board of Directors and Audit & Supervisory Board Members
(As of June 30, 2015)
Chairman
Hiroshi Kamata
Outside Directors
Masahiro Sugita
Ken Nakamura
President
Teruhiko Ujiie
Mitsutaka Kambe
Atsushi Shitoh
Yoshikazu Onodera
Kazuhiro Kudo
Akira Konno
Kenji Kikuchi
Masashi Aita
Managing Directors
Standing Audit & Supervisory Board Members
Deputy President
Yoshiaki Nagayama
Senior Managing Director
Tetsuya Fujishiro
Isamu Suzuki
Makoto Igarashi
Hidefumi Kobayashi
Directors
Takeshi Takahashi
Masakatsu Tsuda
Toshimi Homareda
Toru Sugawara
Koichi Suzuki
From left: Teruhiko Ujiie, President; Hiroshi Kamata, Chairman;
and Yoshiaki Nagayama, Deputy President
Executive Officers
Shuji Nakamura
Hirofumi Sawano
Outside Audit & Supervisory Board Members
Masaaki Shoji
Toshio Suzuki
Masai Yamaura
Organization
(As of June 30, 2015)
General Meeting
of Stockholders
Board of Directors
Chairman
President
Deputy President
Senior Managing Director
Managing Directors
Audit &
Supervisory
Board
Secretariat
Executive
Committee/
Directors
and General
Managers
Liaison
Committee/
Compliance
Committee
Risk Management Division
General Planning & Coordination Division
Compliance Management Division
Business Promotion Division
Corporate & Retail Banking Division
Mortgage Loan Division
Regional Development Promotion Division
Credit Supervision Division
Treasury Division
Head Office Business Division
Treasury Administration & International Division
Branches
Shanghai Representative Office
Personnel Division
General Affairs Division
Operations Management Division
System Development Division
Tokyo Liaison Office
Audit & Inspection Division
12
Financial Section
l Consolidated
Five-Year Summary
THE 77 BANK, LTD. AND SUBSIDIARIES
As of March 31
Millions of Yen
2015
For the fiscal year
Net interest income
Net fees and commissions
Net other operating income
Net income (loss)
At the fiscal year-end
Total assets
Deposits
Loans and bills discounted
Trading account securities and
investment securities
Equity
Common stock
2014
2013
2012
2011
¥70,280 ¥70,148 ¥68,688 ¥72,785 ¥73,483
11,843
11,705
11,344
11,165
10,852
2,407
469
1,508
2,945
3,250
17,049
15,059
12,446
10,690
(30,458)
¥8,588,463 ¥8,507,205 ¥8,261,103 ¥7,616,779 ¥6,217,663
7,849,299
7,871,879
7,745,804
7,170,216
5,633,396
4,219,621
3,998,209
3,762,620
3,639,528
3,495,671
3,708,968
472,029
24,658
3,746,477
397,011
24,658
3,439,268
367,533
24,658
2,890,083
318,013
24,658
2,152,996
306,499
24,658
Yen
2015
Per share of common stock
Basic net income (loss)
Diluted net income
Equity
Cash dividends
Capita adequacy ratio (%)
Domestic standard
2014
2013
2012
2011
¥(80.35)
—
793.64
6.00
¥45.56
45.38
1,223.49
8.50
¥40.26
40.10
1,027.15
7.50
¥33.29
33.18
953.77
7.00
¥28.60
28.53
826.80
7.00
12.51
12.68
12.54
12.57
11.69
Notes:1. The national consumption tax and the local consumption tax are excluded from transaction amounts.
2. The Bank’s capital adequacy ratio on the domestic standard is accompanied by the revision of Article 14, Paragraph 2, of the Banking Law
of Japan, in line with enforcement of the related law for financial system reform.
13
l Consolidated
Performance for Fiscal 2015
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31
Financial and Economic Conditions
Based in Miyagi Prefecture, The 77 Bank has a network of
branches extending across Fukushima Prefecture, Iwate Prefecture, Yamagata Prefecture, Akita Prefecture, Tokyo, Aichi
Prefecture, Osaka and Hokkaido. Based on the principle of
sound management, the Bank’s basic policy is to aspire to be
the “Value-creating bank that grows together with and is the
most trusted by the region.” The Bank’s configuration in 10
years is “Leading bank in the Tohoku region with scale and
earnings power ranked within the top 10 regional banks
based on the established earnings base capable of coping with
any change in the business environment through creation of
new value in the region.”
In fiscal 2015, the year ended March 31, 2015, the Japanese
economy was overall on a moderate recovery path, attributable to the revival of exports and production as a result of the
recovery of the U.S. economy and the further weakening of
the yen, although there were signs of weak personal consumption.
In these circumstances, long-term interest rates remained at
low levels; falling at one point in January 2015 to below 0.2%
and declining to the lowest level historically against the background of quantitative and qualitative monetary easing by the
Bank of Japan. Short-term interest rates continued to remain
extremely low. Share prices trended upward, partly attributable to strong corporate performances as evidenced by the
Nikkei Stock Average recovering to the ¥19,000 level for the
first time in approximately fifteen years. In foreign exchange
markets during this period, the yen reached an exchange rate
of ¥120 to the U.S. dollar, from ¥103 at the start of the fiscal
year ended March 31, 2015, as a result of the weakening of
the yen throughout the second half of the fiscal year.
In view of the massive damage caused by the Great East Japan Earthquake, the Bank strove to maintain the stable provision of financial services and to continue to fulfill its financial
intermediation function, in order to contribute to the recovery
and reconstruction of communities and the regional economy
as a financial institution working with the local region.
Regarding the Bank’s branches that were damaged by the
Great East Japan Earthquake, the Bank increased the floor
area of the Hebita Branch (Ishinomaki-shi) and the Ishinomaki Loan Center located at the Hebita Branch by building extensions due to the further influx in population that is
anticipated in this area in view of the concentration of commercial complexes and hospitals and the ongoing advances
made by group relocation promotion projects for disaster mitigation and the land readjustment project.
In terms of support for enterprises that were affected by the
Great East Japan Earthquake, we vigorously responded to
their funding needs for the resumption of business and restoration of facilities by using the Restoration and Maintenance
Subsidy Project for Facilities of Small and Medium-sized Enterprise Groups and Compensation for Interest Rates on Special Zones for Reconstruction of central and local government.
Through business matching and other core business support,
we continued to make efforts toward the resolution of customers’ management issues, including the development and
expansion of sales routes. Additionally, together with Regional
Economy Vitalization Corporation of Japan and others, we established Miyagi Reconstruction Regional Vitalization Support
Investment L.P. to provide support for the reconstruction and
reactivation of the region.
To support customers facing difficulties in continuing business or making loan repayments because of the impact of the
earthquake, the Bank continued to be flexible, such as accepting change of loan terms and conditions, in light of the situation faced by each customer. In response to the “double loan”
14
problem, the Bank utilized external institutions, such as the
Corporation for Revitalizing Earthquake-affected Business and
the Miyagi Industry Revitalization Corporation, as necessary,
to support corporate customers burdened by double loans,
and offered consultation to help them improve management
and revitalize their businesses through collaboration with external experts present at the Bank’s headquarters. For individual customers, with the aim of helping them rebuild their
lives and revitalizing the community as soon as possible, the
Bank strove to communicate the advantages and implications
of the Individual Debtor Guidelines for Out-of-Court Workouts by holding free-of-charge consultations at various locations in collaboration with the Tohoku Local Finance Bureau,
etc. Moreover, for customers subject to group relocation projects for disaster mitigation, the Bank continued to vigorously
offer the 77 Earthquake Recovery Support Home Loan (Group
Relocation Type and Leased Land Type), a dedicated mortgage
product to support the building of new homes.
In these circumstances, all officers and employees at the
Bank and its consolidated subsidiaries made a concerted effort
to promote business while helping the region in its drive to
recover from the Great East Japan Earthquake with the support of shareholders and customers. Consolidated business
results were as stated below.
Consolidated Business Results
Deposits, including negotiable deposits, amounted to
¥7,849.2 billion at the end of the year under review, having
decreased by ¥22.5 billion.
Loans and bills discounted increased by ¥221.4 billion to
¥4,219.6 billion at the end of the year. Investment securities
decreased by ¥32.7 billion to ¥3,697.5 billion at the end of
the year.
Total assets stood at ¥8,588.4 billion at the end of the year
under review, having increased by ¥81.2 billion.
With regard to profit and loss, total income increased by
¥3,926 million from the previous year to ¥112,986 million as
the result of an increase in interest income mainly owing to
an increase in interest income due to an increase in interest
and dividends on trading accounts and investment securities,
and an increase in other income as a result of the recording of
gains on reversal of reserve of possible loan losses. Total expenses stood at ¥80,136 million, around the same figure as
the previous year, mainly owing to a decrease in loss on redemption of government bonds.
As a result, ordinary profit increased by ¥3,944 million
from the previous year to ¥32,849 million. Net income increased by ¥1,990 million from the previous year to ¥17,049
million. Net income per share was ¥45.56.
Entries regarding performance by business segment will be
omitted from the fiscal year ended March 31, 2015.
Cash Flows
Net cash from operating activities totaled ¥(107,370) million,
a decrease of ¥335,039 million from the previous year, mainly
due to an increase in loans and bills discounted.
Net cash from investing activities totaled ¥117,910 million,
an increase of ¥411,633 million from the previous year, mainly due to the sale and redemption of securities.
Net cash from financing activities amounted to ¥(3,018
million), a decrease of ¥384 million from the previous year,
mainly due to dividends paid, etc.
Consequently, cash and cash equivalents at March 31, 2015
amounted to ¥512,082 million, having increased by ¥7,559
million from the previous year.
l Consolidated
Balance Sheet
THE 77 BANK, LTD. AND SUBSIDIARIES
March 31, 2015
2015
2014
Thousands of
U.S. Dollars
(Note 1)
2015
¥ 514,617
20,636
4,561
11,397
84,093
3,697,570
4,219,621
3,328
¥507,353
161,091
3,003
16,132
59,235
3,730,344
3,998,209
6,639
$ 4,282,408
171,723
37,954
94,840
699,783
30,769,493
35,113,763
27,694
15,879
16,578
132,137
9,179
20,571
135
536
6,984
8,277
20,258
174
929
7,384
76,383
171,182
1,123
4,460
58,117
18
306
2,292
26
333
2,656
149
2,546
19,072
Millions of Yen
Assets:
Cash and due from banks (Notes 3 and 26)
Call loans and bills bought (Note 26)
Debt purchased
Trading account securities (Note 4)
Money held in trust (Note 5)
Investment securities (Notes 4, 10, 11, 26 and 27)
Loans and bills discounted (Notes 6, 12, 26, 27 and 28)
Foreign exchange assets (Note 7)
Lease receivables and investments in leases
(Notes 25 and 28)
Tangible fixed assets (Notes 8, 9 and 16):
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Deferred tax assets (Note 23)
Customers’ liabilities for acceptances and
guarantees (Notes 10 and 28)
Other assets (Notes 11, 27 and 28)
Reserve for possible loan losses
Total
Liabilities:
Deposits (Notes 11, 13 and 26)
Call money and bills sold (Note 26)
Payables under securities lending transactions
(Note 11)
Borrowed money (Note 14)
Foreign exchange liabilities (Note 7)
Liability for employees' retirement benefits (Note 15)
Reserve for reimbursement of deposits
Reserve for contingent losses
Reserve for disaster losses
Deferred tax liabilities (Note 23)
Acceptances and guarantees (Notes 10 and 28)
Other liabilities (Notes 16 and 27)
Total liabilities
37,650
23,034
(83,954)
¥8,588,463
32,677
28,627
(92,728)
¥8,507,205
313,306
191,678
(698,626)
$71,469,276
¥7,849,299
67,054
¥7,871,879
62,935
$65,318,290
557,992
39,264
24,871
296
27,703
339
934
7
36,714
37,650
32,298
8,116,434
33,974
25,240
164
37,439
331
969
7
5,928
32,677
38,646
8,110,194
326,737
206,965
2,463
230,531
2,821
7,772
58
305,517
313,306
268,769
67,541,266
24,658
7,835
521
279,808
205,192
65,199
4,934
2,433,386
Equity (Notes 17 and 31):
Common stock—
authorized, 1,344,000,000 shares;
issued, 383,278,734 shares in 2015 and 2014
24,658
Capital surplus
7,835
Stock acquisition rights (Note 18)
593
Retained earnings
292,420
Less: treasury stock—at cost, 9,051,746 shares and 9,174,446
shares in 2015 and 2014, respectively
(4,393)
Accumulated other comprehensive income:
Unrealized gains on available-for-sale securities (Note 4)
139,396
Deferred losses on derivatives under hedge accounting
(Note 27)
(415)
Defined retirement benefit plans (Note 15)
(1,637)
Total
458,458
Minority interests
13,571
Total equity
472,029
Total
¥8,588,463
See notes to consolidated financial statements.
(4,450)
80,409
(248)
(3,749)
384,784
12,226
397,011
¥8,507,205
(36,556)
1,159,990
(3,453)
(13,622)
3,815,078
112,931
3,928,010
$71,469,276
15
l Consolidated
Statement of Income
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31, 2015
Millions of Yen
2014
2015
Income:
Interest income:
Interest on loans and discounts
Interest and dividends on trading account and
investment securities
Other
Fees and commissions (Note 28)
Other operating income (Note 19)
Reversal of reserve for possible loan losses
Thousands of
U.S. Dollars
(Note 1)
2015
¥45,589
¥ 47,186
$379,370
28,278
164
17,291
11,742
4,601
26,355
134
17,073
11,954
235,316
1,364
143,887
97,711
38,287
2,691
Gain on transfer of a substitute portion of
the government pension program fund
Gains on sales of money held in trust
Other income (Note 20)
Total income
2,878
2,441
112,986
2,388
109,308
Expenses:
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses (Note 21)
General and administrative expenses (Note 18)
Other expenses (Notes 9 and 22)
Total expenses
Income before income taxes and minority interests
2,885
388
477
5,447
9,334
60,118
1,669
80,321
32,664
3,046
160
319
5,367
11,485
57,739
2,157
80,276
29,031
24,007
3,228
3,969
45,327
77,673
500,274
Income taxes (Note 23):
Current
Deferred
Total income taxes
5,560
8,781
14,341
7,363
4,882
12,245
46,267
73,071
119,339
Net income before minority interests
Minority interests in net income
Net income
247
1,276
16,786
(1,727)
¥ 15,059
18,323
(1,273)
¥17,049
Yen
Per share of common stock (Note 30):
Basic net income
Diluted net income
Cash dividends applicable to the year
¥45.56
45.38
8.50
23,949
20,312
940,218
13,888
668,394
271,814
152,475
(10,593)
$141,874
U.S. Dollars
¥40.26
40.10
7.50
$0.379
0.377
0.070
See notes to consolidated financial statements.
l Consolidated
Statement of Comprehensive Income
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31, 2015
Millions of Yen
16
Thousands of
U.S. Dollars
(Note 1)
2015
2015
2014
Net income before minority interests
Other comprehensive income (Note 24):
Unrealized gains on available-for-sale securities
Deferred (losses) gains on derivatives under hedge accounting
Defined retirement benefit plans
Total other comprehensive income
¥18,323
¥16,786
Comprehensive income
¥79,334
¥35,730
$660,181
Total comprehensive income attributable to:
Owners Of The Parent
Minority Interests
¥77,981
1,353
¥33,965
1,764
$648,922
11,259
See notes to consolidated financial statements.
59,066
(167)
2,112
61,011
18,853
90
18,943
$152,475
491,520
(1,389)
17,575
507,705
l Consolidated
Statement of Changes in Equity
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31, 2015
Thousands
Number of
Shares of
Common
Stock
Outstanding
BALANCE, APRIL 1, 2013
Net income
Cash dividends, ¥7.00
per share
Purchase of treasury
stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2014
(APRIL 1, 2014,
as previously reported)
Cumulative effects of
changes in
accounting policies
BALANCE, APRIL 1, 2014
(as restated)
Net income
Cash dividends, ¥8.00
per share
Purchase of treasury
stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015
373,859
Millions of Yen
Accumulated Other Comprehensive Income
Unreal- Deferred
ized
Losses on Defined
Gains on DerivaRetireStock AcAvailable- tives under ment
Common Capital quisition Retained Treasury for-Sale Hedge Ac- Benefit
Stock
Surplus Rights Earnings Stock Securities counting
Plans
¥24,658
¥7,835
¥482 ¥267,400
15,059
¥(4,569) ¥61,593
¥(338)
(33)
374,104
24,658
7,835
521
279,808
(4,450)
18,816
90
80,409
(248)
(2,617)
(2,617)
(10)
96
15,195
1,755
(10)
96
16,950
(3,749) 384,784
12,226
397,011
¥(3,749)
(1,426)
374,104
24,658
7,835
521
278,382
17,049
(1,426)
(4,450)
80,409
(248)
(3,749) 383,358
17,049
(2,993)
(33)
374,226
¥24,658
¥7,835
(18)
76
72
58,986
¥593 ¥292,420 ¥(4,393) ¥139,396
BALANCE, APRIL 1, 2014
(as restated)
Net income
Cash dividends, $0.066
per share
Purchase of treasury
stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2015
$205,192
$65,199
$4,335 $2,328,434
$(37,030) $ 669,127
65,199
4,335 2,316,568
141,874
(37,030)
669,127
(24,906)
(149)
$205,192
$65,199
599
$4,934 $2,433,386
(158)
632
490,854
$(36,556) $1,159,990
395,585
17,049
(19)
(19)
58
(167)
2,112 61,004
¥(415) ¥(1,637) ¥458,458
58
1,344 62,348
¥13,571 ¥472,029
Total
Minority
Interests
Total
Equity
$(2,063) $(31,197) $3,201,997 $101,739 $3,303,744
(11,866)
205,192
12,226
(2,993)
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unreal- Deferred
ized
Losses on Defined
Gains On Derivatives RetireStock AcAvailable- under
ment
Common Capital quisition Retained Treasury For-Sale Hedge Ac- Benefit
Stock
Surplus Rights Earnings Stock Securities counting
Plans
BALANCE, MARCH 31, 2014
(APRIL 1, 2014,
as previously reported)
Cumulative effects of
changes in
accounting policies
(1,426)
(2,993)
(19)
156
Total
Equity
¥10,471 ¥367,533
15,059
(10)
129
38
Minority
Interests
¥357,061
15,059
(2,617)
(21)
265
Total
(2,063)
(11,866)
(11,866)
(31,197) 3,190,130
141,874
101,739 3,291,878
141,874
(24,906)
(24,906)
(158)
(158)
482
482
(1,389)
17,575 507,647
11,184 518,831
$(3,453) $(13,622) $3,815,078 $112,931 $3,928,010
See notes to consolidated financial statements.
17
l Consolidated
Statement of Cash Flows
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31, 2015
2015
Operating activities:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paid
Depreciation and amortization
Losses on impairment of fixed assets
Net change in reserve for possible loan losses
Net change in reserve for reimbursement of deposits
Net change in reserve for contingent losses
Net change in reserve for disaster losses
Net change in liability for employees’ retirement benefits
Interest income
Interest expense
(Gains) losses on investment securities—net
Gains on money held in trust—net
Foreign exchange gains—net
Losses on sales and disposals of fixed assets—net
Net change in loans and bills discounted
Net change in deposits
Net change in borrowed money (except for subordinated loans)
Net change in due from banks
Net change in call loans and bills bought
Net change in call money and bills sold
Net change in payables under securities lending transactions
Net change in trading account securities
Net change in foreign exchange assets
Net change in foreign exchange liabilities
Net change in lease receivables and investments in leases
Interest received
Interest paid
Other—net
Total adjustments
Net cash (used in) provided by operating activities
Investing activities:
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from maturity of investment securities
Investment in money held in trust
Proceeds from dispositions of money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for execution of asset retirement obligations
Net cash provided by (used in) investing activities
Financing activities:
Purchases of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Dividends paid for minority interest stockholders
Net cash used in financing activities
Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year (Note 3)
See notes to consolidated financial statements.
18
Millions of Yen
2014
¥32,664
(10,077)
4,336
184
(8,773)
8
(35)
¥29,031
Thousands of
U.S. Dollars
(Note 1)
2015
$271,814
(8,552)
(74,032)
3,751
(761)
(2,878)
(36,326)
219
(221,411)
(22,580)
(369)
295
138,895
4,119
5,290
4,735
3,310
131
699
81,182
(3,974)
2,577
(140,037)
¥(107,370)
(2,851)
3,759
121
(6,532)
56
(111)
(114)
(921)
(73,675)
3,526
1,879
(1,157)
(15,420)
9
(235,589)
126,074
(2,562)
19,490
225,936
60,114
15,484
8,228
(4,615)
53
(12)
81,033
(4,378)
812
198,637
¥227,669
(71,165)
(616,060)
31,214
(6,332)
(23,949)
(302,288)
1,822
(1,842,481)
(187,900)
(3,070)
2,454
1,155,820
34,276
44,020
39,402
27,544
1,090
5,816
675,559
(33,069)
21,444
(1,165,324)
$(893,484)
(506,684)
142,003
497,753
(12,500)
2,384
(5,149)
128
(1)
(24)
117,910
(732,130)
110,125
334,200
(1,000)
986
(5,947)
63
(12)
(9)
(293,723)
(4,216,393)
1,181,684
4,142,073
(104,019)
19,838
(42,847)
1,065
(8)
(199)
981,193
(19)
(10)
1
(2,616)
(8)
(2,634)
39
(68,648)
573,172
¥ 504,523
(158)
(2,991)
(8)
(3,018)
37
7,559
504,523
¥512,082
(83,856)
36,082
1,531
(73,004)
66
(291)
(24,889)
(66)
(25,114)
307
62,902
4,198,410
$4,261,313
l Notes
to Consolidated Financial Statements
THE 77 BANK, LTD. AND SUBSIDIARIES
Year Ended March 31, 2015
1. Basis Of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations and the Enforcement Regulation for the
Banking Law of Japan (the “Banking Law”), and in accordance
with accounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to
present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the
2014 consolidated financial statements to conform to the classifications used in 2015.
In accordance with the Companies Act of Japan (the “Companies Act”) and other relevant regulations, all Japanese yen figures
in the consolidated financial statements have been rounded down
to the nearest million yen, except for per share data. Accordingly,
the total of each account may not be equal to the combined total
of individual items. Also, U.S. dollar amounts have been rounded
down to the nearest thousand dollars.
The consolidated financial statements are stated in Japanese
yen, the currency of the country in which The 77 Bank, Ltd. (the
“Bank”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely
for the convenience of readers outside Japan and have been made
at the rate of ¥120.17 to U.S.$ 1, the approximate rate of exchange as of March 31, 2015. Such translations should not be
construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.
2. Summary Of Significant Accounting Policies
a. Consolidation—The consolidated financial statements include
the accounts of the Bank and its subsidiaries (collectively, the
“Companies”). There were six consolidated subsidiaries as of
March 31, 2015 and 2014.
Under the control and influence concepts, those companies in
which the Bank, directly or indirectly, is able to exercise control
over operations are fully consolidated.
All significant intercompany balances and transactions have
been eliminated in consolidation. All material unrealized profits
included in assets resulting from transactions within the Companies are eliminated in consolidation.
b. Cash and Cash Equivalents—For the purpose of the consolidated statement of cash flows, cash and cash equivalents
represent cash and amounts due from the Bank of Japan.
c. Trading Account Securities, Investment Securities and Money
Held in Trust—Securities other than investments in affiliates are
classified into three categories, based principally on the Companies’ intent, as follows: (1) trading account securities, which are
held for the purpose of earning capital gains in the near term, are
reported at fair value and the related unrealized gains and losses
are included in earnings; (2) held-to-maturity debt securities,
which are expected to be held to maturity with the positive intent
and ability to hold to maturity, are reported at amortized cost;
and (3) available-for-sale securities, which are not classified as
either of the aforementioned securities, are reported at fair value
with unrealized gains and losses, net of applicable taxes, reported
in a separate component of equity.
The cost of trading account securities and available-for-sale securities sold is determined based on the moving-average method.
Available-for-sale securities for which fair value is extremely
difficult to identify are reported at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
Securities included in money held in trust are also classified
and accounted for using the same method as above.
The components of trust assets are accounted for based on the
standard appropriate for each asset type. Instruments held in
trust for trading purposes are recorded at fair value and unrealized gains and losses are recorded in other income/expenses.
Instruments held in trust classified as available-for-sale are recorded at fair value with the corresponding unrealized gains/
losses recorded directly in a separate component of equity. Instruments held in trust classified as held to maturity are carried at
amortized cost.
d. Tangible Fixed Assets—Tangible fixed assets are stated at cost
less accumulated depreciation and gains deferred on the sale and
replacement of certain assets. Depreciation of tangible fixed assets, except for lease assets, is mainly computed using the
declining-balance method at rates based on the estimated useful
lives of the assets. The range of useful lives is principally from 5
to 31 years for buildings and from 4 to 20 years for equipment.
Lease assets under finance lease transactions, in which substantial
ownership is not deemed to have been transferred, are depreciated using the straight-line method over the lease term. The
salvage value is zero or the guaranteed amounts if specified in the
lease contracts (see Note 2.o).
e. Intangible Fixed Assets—The amortization of intangible fixed
assets is calculated using the straight-line method. Capitalized
costs of computer software developed/obtained for internal use
are amortized using the straight-line method over the estimated
useful lives of five years.
f. Long-Lived Assets—The Companies review their long-lived
assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group
may not be recoverable. An impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds the sum
of the undiscounted future cash flows expected to result from the
continued use and eventual disposition of the asset or asset
group. The impairment loss would be measured as the amount
by which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash flows
(“DCFs”) from the continued use and eventual disposition of the
asset or the net selling price at disposition.
g. Foreign Currency Items—Assets and liabilities denominated in
foreign currencies held by the Bank at year-end are translated
into Japanese yen at the current exchange rates in effect at each
consolidated balance sheet date. Exchange gains and losses are
recognized in the fiscal periods in which they occur.
h. Reserve for Possible Loan Losses—The Bank determines the
amount of the reserve for possible loan losses by means of management’s judgment and assessment of future losses based on a
self-assessment system. This system reflects past experience of
credit losses, possible future credit losses, business and economic
conditions, the character, quality and performance of the portfolio, and other pertinent indicators.
As part of the Bank’s self-assessment system, the quality of all
loans is assessed by branches and the credit supervisory division
with a subsequent audit by the Bank’s asset review and inspection
division in accordance with the Bank’s policy and rules for selfassessment of asset quality.
The Bank has established a credit rating system under which
its debtors are classified into five categories. The credit rating system is used in the self-assessment of asset quality. All loans are
classified into one of the following five categories for self-assessment purposes: “normal,” “caution,” “possible bankruptcy,”
“virtual bankruptcy,” and “legal bankruptcy.”
For large debtors who are likely to become bankrupt and debtors with restructured loans, if the cash flows from collection of
the principal and interest can be reasonably estimated, the reserve
is provided based on the difference between the relevant cash
flows discounted by the initial contractual interest rates and the
carrying amounts of the loans (“DCF method”).
19
The reserve for other possible loan losses is calculated based on
the specific actual past loss ratio for normal and caution categories and the fair value of the collateral for collateral-dependent
loans and other solvency factors including the value of future
cash flows for the other self-assessment categories.
The Bank’s subsidiaries determine the reserve for possible loan
losses by a similar self-assessment system as that of the Bank.
i. Reserve for Reimbursement of Deposits—Reserve for reimbursement of deposits which were derecognized as liabilities is
provided for the future estimated payments for reimbursement
claims on sleeping deposit accounts based on the historical reimbursement experience.
j. Reserve for Contingent Losses—Reserve for contingent losses
is provided for the future estimated payments of burden money
to the Credit Guarantee Corporations based on the historical experience of subrogation.
k. Reserve for Disaster Losses—Reserve for disaster losses is
provided for the future estimated payments of repairs required
for restoration of the branches damaged by the Great East Japan
Earthquake based on reasonable estimates.
l. Employees’ Retirement and Pension Plans—In calculation of
projected benefit obligations, expected benefits are attributed to
periods on a benefit formula basis. Treatment of prior service cost
and actuarial gains and losses is as follows:
Prior service cost is charged to expenses when incurred.
Unrecognized actuarial gains and losses are amortized by the
straight-line method from the following fiscal year after the fiscal
year when they were incurred over a definite period (10 years)
with the employees’ average remaining service period when incurred.
Consolidated subsidiaries apply a shortcut method whereby
the amount of the retirement benefits required to be paid if all
the employees voluntarily retired at the end of the fiscal year is
regarded as projected benefit obligations in determining the liability for employees’ retirement benefits and net periodic
retirement benefit costs.
m. Asset Retirement Obligations—The asset retirement obligation is recognized as the sum of the DCFs required for the future
asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a
reasonable estimate of the asset retirement obligation cannot be
made in the period the asset retirement obligation is incurred, the
liability should be recognized when a reasonable estimate of the
asset retirement obligation can be made. Upon initial recognition
of a liability for an asset retirement obligation, an asset retirement
cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset
retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time,
the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as an increase
or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost.
n. Stock Options—The Bank recognizes compensation expense
for employee stock options based on the fair value at the date of
grant and over the vesting period as consideration for receiving
goods or services. The Bank also accounts for stock options
granted to nonemployees based on the fair value of either the
stock option or the goods or services received. In the consolidated balance sheet, the stock option is presented as a stock
acquisition right as a separate component of equity until exercised.
20
o. Leases
As a lessee
Finance lease transactions are capitalized to recognize lease assets
and lease obligations in the consolidated balance sheet.
As a lessor
All finance leases that are deemed to transfer ownership of the
leased property to the lessee are recognized as lease receivables,
and all finance leases that are deemed not to transfer ownership
of the leased property to the lessee are recognized as investments
in leases.
p. Income Taxes—The provision for income taxes is computed
based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to
recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes
are measured by applying currently enacted tax laws to the temporary differences.
q. Derivatives and Hedging Activities—It is the Bank’s policy to
use derivative financial instruments (“derivatives”) primarily for
the purpose of reducing market risks associated with its assets
and liabilities. The Bank also utilizes derivatives to meet the
needs of its clients while entering into derivatives as a part of its
trading activities. The Bank enters into interest rate swaps and
interest rate swaptions as a means of hedging its interest rate risk
on certain loans and investment securities and to meet the needs
of its clients. The Bank also enters into currency swaps, foreign
exchange forward contracts, and currency options to hedge foreign currency exchange risk associated with its assets and
liabilities denominated in foreign currencies and to meet the
needs of its clients.
Derivatives are recognized as either assets or liabilities and
measured at fair value. Gains or losses on derivative transactions
are recognized in the consolidated statement of income. If derivatives qualify for hedge accounting because of high correlation and
effectiveness between the hedging instruments and the hedged
items, the gains or losses on derivatives are deferred until maturity of the hedged transactions.
The interest rate swaps which qualify for hedge accounting and
meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense or income.
r. Per Share Information—Basic net income per share is computed by dividing net income attributable to common
stockholders by the weighted-average number of common shares
outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common stock. Diluted net income per share of common stock
assumes full conversion of the outstanding convertible notes and
bonds at the beginning of the year (or at the time of issuance)
with an applicable adjustment for related interest expense, net of
tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the consolidated statement of income are dividends applicable to the respective years
including dividends to be paid after the end of the year.
s. Changes in Accounting Policies
Accounting Standard for Retirement Benefits—Effective the year
ended March 31, 2015, the Bank applied “Accounting Standard
for Retirement Benefits” (the Accounting Standards Board of Japan (“ASBJ”) Statement No. 26, revised on May 17, 2012;
“Retirement Benefit Standard”) and “Guidance on Accounting
Standard for Retirement Benefits” (ASBJ Guidance No. 25, revised
on March 26, 2015; “Retirement Benefit Guidance”) for the provisions prescribed in the main clause of paragraph 35 of the
Retirement Benefit Standard and the main clause of paragraph 67
of the Retirement Benefit Guidance and made certain amendments relating to the calculation methods for projected benefit
obligations and service cost. Accordingly, the Bank changed the
method of determining the portion of expected benefits attrib-
uted to periods from a straight-line basis to a benefit formula
basis. In addition, the method of determining the discount rates
applied in the calculation of projected benefit obligations was
changed from the method using the years approximate to the employees’ average remaining service years as the period of bonds to
be based for determining the discount rates to the method using
the single weighted average discount rate that reflects the estimated period and amount of benefit payment in each period.
The revised accounting standard and guidance for retirement
benefits were applied in accordance with the transitional treatment prescribed in paragraph 37 of Retirement Benefit Standard,
and the amount of the change in calculation methods for projected benefit obligations and service cost were reflected in
retained earnings as of April 1, 2014.
As a result, liability for employees’ retirement benefits increased
by ¥2,204 million ($18,340 thousand) and retained earnings decreased by ¥1,426 million ($11,866 thousand) as of April 1,
2014. The effect of this change on net income is immaterial.
The effect on per share information is stated in Note 30.
3. Cash And Cash Equivalents
The reconciliation of cash and cash equivalents at the end of the
year and cash and due from banks in the consolidated balance
sheets as of March 31, 2015 and 2014, was as follows:
Millions of Yen
2015
2014
Cash and due from banks
Due from banks, excluding
due from the Bank of Japan
Cash and cash equivalents at the
end of year
Thousands of
U.S. Dollars
2015
(2,534)
(2,829)
(21,086)
¥512,082 ¥504,523 $4,261,313
Millions of Yen
2015
2014
¥886
2,512
7,998
¥11,397
¥1,029
3,105
11,998
¥16,132
Thousands of
U.S. Dollars
2015
$ 7,372
20,903
66,555
$94,840
Investment securities as of March 31, 2015 and 2014, consisted of the following:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
¥2,012,132 ¥2,160,674 $16,744,045
80,330
81,747
668,469
950,662
933,935
7,910,976
142,928
113,090
1,189,381
511,516
440,896
4,256,603
¥3,697,570 ¥3,730,344 $30,769,493
Securities loaned under securities lending agreements are included in the above national government bonds in the amount of
¥20,204 million ($168,128 thousand) and ¥10,098 million as of
March 31, 2015 and 2014, respectively.
The carrying amounts and aggregate fair values of securities as
of March 31, 2015 and 2014, were as follows:
Securities below include trading account securities and investment securities:
Unrealized
Gains
Cost
Unrealized
Losses
Securities classified as:
Trading
Available-for-sale:
Equity securities* ¥60,132 ¥81,310
Debt securities
2,990,549 39,555
Other securities*
445,532 68,207
Held to maturity
13,502
36
Fair
Value
¥ 11,397
¥511 140,931
481 3,029,622
4,013 509,726
1
13,538
Millions of Yen
2014
Unrealized
Gains
Cost
Securities classified as:
Trading
Available-for-sale:
Equity securities*
Debt securities
Other securities*
Held to maturity
Fair
Value
Unrealized
Losses
¥ 16,132
¥ 60,190
3,123,636
414,300
13,509
¥51,964
39,320
30,745
39
¥1,076
111,078
109 3,162,847
5,913
439,132
3
13,544
Thousands of U.S. Dollars
2015
Cost
Trading account securities as of March 31, 2015 and 2014, consisted of the following:
National government bonds
Local government bonds
Corporate bonds
Equity securities
Other securities
Total
2015
¥514,617 ¥507,353 $4,282,408
4. Trading Account Securities And Investment Securities
National government bonds
Local government bonds
Other securities
Total
Millions of Yen
Unrealized
Gains
Securities classified as:
Trading
Available-for-sale:
Equity securities* $ 500,391 $676,624
Debt securities
24,885,986 329,158
Other securities*
3,707,514 567,587
Held to maturity
112,357
299
Fair
Value
Unrealized
Losses
$
94,840
$ 4,252 1,172,763
4,002 25,211,134
33,394 4,241,707
8
112,657
* Unlisted equity securities for which fair value is extremely difficult to identify are not included.
Securities, other than trading account securities, with readily
determinable fair value, whose fair value significantly declined
compared with the acquisition cost and whose fair value is not
considered likely to recover to their acquisition cost, are written
down to the respective fair value. The related losses on revaluation are charged to income for the fiscal year.
Impairment losses were recognized for available-for-sale securities in the amount of ¥635 million ($5,284 thousand) for the year
ended March 31, 2015.
No impairment loss was recognized for securities for the year
ended March 31, 2014.
The criteria for determining whether the fair value has “significantly declined” are defined based on the asset classification of
the issuer in the internal standards for asset quality self-assessment as follows:
(a) Normal issuer: Fair value declined by 50% or more of the
acquisition cost or fair value declined between 30% and
50% and average fair value during the past one month declined by 50% or more (30% or more for issuers who have
credit risk more than a certain level).
(b) Caution issuers: Fair value declined by 30% or more of the
acquisition cost.
(c) Legally bankrupt, virtually bankrupt, and possibly bankrupt issuers: Fair value is lower than the acquisition cost.
Proceeds from sales of available-for-sale securities for the years ended
March 31, 2015 and 2014, were ¥141,789 million ($1,179,903
thousand) and ¥106,718 million, respectively. Gross realized gains and
losses on these sales, computed on a moving average cost basis, were
¥2,388 million ($19,871 thousand) and ¥657 million ($5,467 thousand), respectively, for the year ended March 31, 2015, and ¥1,548
million and ¥1,736 million, respectively, for the year ended March 31,
2014.
21
Unrealized gains on available-for-sale securities as of March 31, 2015
and 2014, consisted of the following:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Valuation differences:
Available-for-sale securities
¥184,066 ¥114,931 $1,531,713
Available-for-sale money held in trust
18,871
7,008
157,035
Deferred tax liabilities
(63,279) (41,348) (526,579)
Minority interests
(262)
(182)
(2,180)
Unrealized gains on
available-for-sale securities
¥139,396 ¥80,409 $1,159,990
5. Money Held In Trust
The carrying amounts and aggregate fair values of money held in
trust as of March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
Unrealized
Gains
Cost
Money held in trust
classified as:
Trading
Available-for-sale
Total
¥21,581
¥21,581
Unrealized
Losses
Fair
Value
¥43,639
40,453
¥84,093
¥18,871
¥18,871
Millions of Yen
2014
Unrealized
Gains
Cost
Money held in trust
classified as:
Trading
Available-for-sale
Total
¥21,581
¥21,581
Unrealized
Losses
Fair
Value
¥30,645
28,590
¥59,235
¥7,008
¥7,008
Thousands of U.S. Dollars
2015
Unrealized
Gains
Cost
Money held in trust
classified as:
Trading
Available-for-sale
Total
Unrealized
Losses
Fair
Value
Loans to borrowers in
bankruptcy
Past due loans
Past due loans (three months or
more)
Restructured loans
Total
¥ 1,336
91,246
¥ 1,185 $ 11,117
100,841
759,307
397
31,406
¥124,387
427
3,303
32,122
261,346
¥134,577 $1,035,091
Loans to borrowers in bankruptcy represent nonaccrual loans
to debtors who are legally bankrupt, as defined in the Enforcement Ordinance for the Corporation Tax Law.
Past due loans are nonaccrual loans which include loans
classified as “possible bankruptcy” and “virtual bankruptcy.”
Nonaccrual loans are defined as loans (after the partial
charge-off of claims deemed uncollectible) for which the Bank
has discontinued accruing interest income due to substantial
doubt existing about the ultimate collection of principal and/or
interest. Such loans are classified either as “possible bankruptcy”
or “virtual bankruptcy” under the Bank’s self-assessment guidelines.
In addition to past due loans as defined, certain other loans
classified as “caution” under the Bank’s self-assessment guidelines
include past due loans (three months or more) which consist of
loans for which the principal and/or interest is three months or
more past due, but exclude loans to borrowers in bankruptcy and
past due loans.
Restructured loans are loans where the Bank and its subsidiaries relax lending conditions by reducing the original interest rate
or by forbearing interest payments or principal repayments to
support the borrower’s reorganization. Restructured loans exclude
loans to borrowers in bankruptcy, past due loans or past due
loans (three months or more).
$363,143
336,631
$699,783
$179,587 $157,035
$179,587 $157,035
Foreign exchange assets and liabilities as of March 31, 2015 and
2014, consisted of the following:
Millions of Yen
2015
2014
6. Loans And Bills Discounted
Assets
Foreign exchange bills bought
Foreign exchange bills receivable
Due from foreign correspondent
accounts
Total
Loans and bills discounted as of March 31, 2015 and 2014, consisted of the following:
Thousands of
Millions of Yen
U.S. Dollars
Liabilities
Foreign exchange bills sold
Foreign exchange bills payable
Total
2015
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Total
Thousands of
U.S. Dollars
2015
Millions of Yen
2015
2014
7. Foreign Exchanges
Available-for-sale securities held in trust, whose fair value significantly
declined compared with the acquisition cost and whose fair value is not
considered likely to recover to their acquisition cost, are written down to
the respective fair value.
No impairment loss was recognized for money held in trust for the
years ended March 31, 2015 and 2014.
2014
2015
¥12,104 ¥ 12,267 $ 100,723
166,062
164,568 1,381,892
3,446,428 3,229,079 28,679,603
595,026
592,294 4,951,535
¥4,219,621 ¥3,998,209 $35,113,763
Bills discounted are accounted for as financial transactions in
accordance with “Treatment of Accounting and Auditing of Application
22
of Accounting Standard for Financial Instruments in the Banking
Industry” (the Japanese Institute of Certified Public Accountants (the
“JICPA”) Industry Audit Committee Report No. 24). The Bank has rights
to sell or pledge these bills discounted. The total of the face value of bills
discounted was ¥12,430 million ($103,436 thousand) and ¥12,474
million as of March 31, 2015 and 2014, respectively.
Loans and bills discounted as of March 31, 2015 and 2014, included
the following loans:
Thousands of
U.S. Dollars
2015
¥326
2
¥ 211
63
$ 2,712
16
2,999
6,364
24,956
¥3,328
¥6,639
$27,694
¥199
96
¥296
¥ 84
79
¥164
$1,655
798
$2,463
8. Tangible Fixed Assets
The accumulated depreciation of tangible fixed assets as of March
31, 2015 and 2014, amounted to ¥76,427 million ($635,990
thousand) and ¥76,186 million, respectively.
As of March 31, 2015 and 2014, deferred gains for tax
purposes of ¥7,726 million ($64,292 thousand) and ¥7,777
million, respectively, on tangible fixed assets sold and replaced
with similar assets have been deducted from the cost of newly
acquired tangible fixed assets.
9. Long-Lived Assets
The Bank recognized impairment losses of ¥184 million ($1,531
thousand) and ¥121 million on certain operating branches,
business premises, branches to be closed, and unused facilities
for the years ended March 31, 2015 and 2014, respectively.
The impairment losses were composed of ¥79 million ($657
thousand) on buildings, ¥55 million ($457 thousand) on land
and ¥49 million ($407 thousand) on other fixed assets for the
year ended March 31, 2015, and ¥100 million on buildings, ¥10
million on land and ¥10 million on other fixed assets for the year
ended March 31, 2014.
For the purpose of testing for impairment, the Bank recognizes
each individual branch office as a cash-generating unit for which
it continues to manage and monitor identifiable cash flows.
Branch offices to be closed and facilities not used in operation are
individually assessed for impairment. Subsidiaries recognize each
company as a cash-generating unit. An impairment loss would be
recognized if the carrying amount of an asset or asset group
exceeds the sum of the undiscounted future cash flows expected
to result from the continued use and eventual disposition of the
asset or asset group.
The impairment loss would be measured as the amount by
which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the DCFs from the continued use
and eventual disposition of the asset or the net selling price at
disposition. The DCFs were calculated using discount rates of
2.8% and 2.9% for the years ended March 31, 2015 and 2014,
respectively, and the net selling price was determined by
quotation from a third-party vendor.
10. Customers’ Liabilities For Acceptances And Guarantees
All contingent liabilities arising from acceptances and guarantees
are reflected in “Acceptances and guarantees.” “Customers’
liabilities for acceptances and guarantees” are shown as contra
assets, representing the Bank’s right to receive indemnity from the
applicants.
The amount of guarantee obligations for privately placed
corporate bonds included in securities as of March 31, 2015 and
2014, was ¥4,448 million ($37,014 thousand) and ¥5,974
million, respectively.
substitute securities for future transaction initial margin and
others.
Other assets include guarantee deposits for leased tangible
fixed assets (lessee side) amounting to ¥94 million ($782
thousand) and ¥98 million as of March 31, 2015 and 2014,
respectively.
12. Loan Commitments
Contracts of overdraft facilities and loan commitments are contracts with customers to lend up to the prescribed limits in
response to customers’ applications for a loan, as long as there is
no violation of any condition within the contracts. As of March
31, 2015, the unused amount of such contracts totaled
¥1,645,147 million ($13,690,163 thousand), of which amounts
with original agreement terms of less than one year were
¥1,599,474 million ($13,310,094 thousand). As of March 31,
2014, the unused amount of such contracts totaled ¥1,576,948
million, of which amounts with original agreement terms of less
than one year were ¥1,537,212 million.
Since many of the commitments expire without being drawn
upon, the unused amount does not necessarily represent a future
cash requirement. Most of these contracts have conditions allowing the Companies to refuse customers’ applications for a loan or
decrease the contract limits with proper reasons (e.g., changes in
financial situation, deterioration in customers’ creditworthiness).
At the inception of the contracts, the Companies obtain collateral
real estate, securities, etc., if considered to be necessary. Subsequently, the Companies perform a periodic review of the
customers’ business results based on internal rules and take necessary measures to reconsider conditions in contracts and require
additional collateral and guarantees.
13. Deposits
Deposits as of March 31, 2015 and 2014, consisted of the following:
Millions of Yen
2015
2014
Current deposits
Ordinary deposits
Deposits at notice
Time deposits
Negotiable certificates of
deposit
Other deposits
Total
Thousands of
U.S. Dollars
2015
¥169,416 ¥ 166,223 $ 1,409,802
4,244,724 4,199,006 35,322,659
11,591
16,030
96,455
2,505,436 2,496,970 20,849,097
659,390
743,420 5,487,143
258,740
250,229 2,153,116
¥7,849,299 ¥7,871,879 $65,318,290
11. Assets Pledged
Assets pledged as collateral and their relevant liabilities as of
March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
Assets pledged as collateral:
Investment securities
Other assets
Relevant liabilities to above assets:
Deposits
Payables under securities
lending transactions
¥258,231
141
76,985
2014
Thousands of
U.S. Dollars
2015
¥250,249 $2,148,880
141
1,173
59,071
640,634
39,264
33,974
326,737
Additionally, investment securities amounting to ¥134,705
million ($1,120,953 thousand) and ¥131,947 million as of March
31, 2015 and 2014, respectively, are pledged as collateral for
transactions, such as exchange settlement transactions or as
23
14. Borrowed Money
Borrowed money as of March 31, 2015 and 2014, consisted of the
following:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Borrowings from banks and other
¥24,871
¥25,240 $206,965
Borrowed money as of March 31, 2015 and 2014, included subordinated borrowings in the amount of ¥20,000 million ($166,430
thousand).
Annual maturities of borrowed money as of March 31, 2015,
were as follows:
Year Ending March 31
2016
2017
2018
2019
2020
2021 and thereafter
Total
Thousands of
U.S. Dollars
Millions of Yen
¥2,105
1,082
772
397
239
20,273
¥24,871
$17,516
9,003
6,424
3,303
1,988
168,702
$206,965
At March 31, 2015 and 2014, the weighted-average annual interest rates applicable to borrowed money were 0.287% and
0.357%, respectively.
15. Liability For Employees’ Retirement Benefits
The Companies have severance payment plans consisting of contributory pension fund plans and noncontributory lump-sum
payment plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits based on the rate of
pay at the time of termination, years of service, and certain other
factors. Such retirement benefits are made in the form of a lumpsum severance payment from the Companies and annuity
payments from trustees. Employees are entitled to larger payments if the termination is involuntary, by retirement at the
mandatory retirement age, by death or by voluntary retirement at
certain specific ages prior to the mandatory retirement age.
(1)The changes in projected benefit obligations for the years
ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
Balance at beginning of year
(as previously reported)
Cumulative effect of changes in
accounting policies
Balance at beginning of year
(as restated)
Service cost
Interest cost
Actuarial losses
Benefits paid
Prior service cost
Decrease due to return of substitute portion of welfare pension
fund
Others
Balance at end of year
24
Thousands of
U.S. Dollars
2015
¥62,929 ¥75,214 $523,666
2,204
65,134
1,590
948
311
(3,371)
(2)The changes in plan assets for the years ended March 31,
2015 and 2014, were as follows:
Millions of Yen
2015
2014
Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Decrease due to return of substitute portion of welfare pension
fund
Others
Balance at end of year
(16,132)
186
189
1,547
¥64,799 ¥62,929 $539,227
¥25,490 ¥38,469 $212,116
892
670
7,422
2,662
2,079
22,151
9,747
1,778
81,110
(1,883)
(1,812) (15,669)
(15,884)
186
189
1,547
¥37,095 ¥25,490 $308,687
(Note)Plan assets related to the multiemployers’ welfare pension
fund plans adopted by certain consolidated subsidiaries are
not included in the above plan assets.
(3)Reconciliation between the liability recorded in the consolidated balance sheet and the balances of projected benefit
obligations and plan assets as of March 31, 2015 and 2014
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Funded projected benefit obligations ¥ 42,836 ¥44,595 $ 356,461
Plan assets
(37,095) (25,490) (308,687)
5,740
19,105
47,765
Unfunded projected benefit obligations 21,963
18,334 182,766
Net liability arising from projected
benefit obligations
¥ 27,703 ¥37,439 $ 230,531
Millions of Yen
2015
2014
Liability for employees’ retirement
benefits
Asset for employees’ retirement
benefits
Net liability arising from projected
benefit obligations
Thousands of
U.S. Dollars
2015
¥27,703
¥37,439 $230,531
¥27,703
¥37,439 $230,531
(4)The components of net periodic retirement benefit costs for
the years ended March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
18,340
75,214 542,015
1,451
13,231
1,173
7,888
4,368
2,588
(3,335) (28,051)
Thousands of
U.S. Dollars
2015
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Amortization of prior service cost
Others
Net periodic retirement benefit costs
Thousands of
U.S. Dollars
2015
¥1,608
948
(892)
1,036
¥1,468 $13,381
1,173
7,888
(670) (7,422)
672
8,621
¥2,701
¥2,645
$22,476
(Notes) 1.Employees’ contribution to corporate pension funds is deducted.
2.Net periodic retirement benefit costs of the consolidated subsidiaries which adopt a shortcut method are included in
“Service cost.”
(5)Amounts recognized in other comprehensive income (before
income tax effect) in respect of defined retirement benefit
plans for the years ended March 31, 2015 and 2014
Millions of Yen
2015
2014
Prior service cost
Actuarial gains
Others
Total
Thousands of
U.S. Dollars
2015
¥3,387
$28,185
¥3,387
$28,185
(6)Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans as of March 31, 2015 and 2014
Millions of Yen
2015
2014
Unrecognized prior service cost
Unrecognized actuarial gains
Others
Total
Thousands of
U.S. Dollars
2015
¥2,407
¥5,794
$20,029
¥2,407
¥5,794
$20,029
(7)Plan assets as of March 31, 2015 and 2014
a. Components of plan assets
Plan assets consisted of the following:
2015
2014
Debt investments
21%
Equity investments
34
Cash and cash equivalents
Life insurance company accounts (general accounts) 20
Call loans, etc.
25
Others
Total
100%
28%
43
1
25
2
1
100%
b.Method of determining the long-term expected rate of return
on plan assets
The expected rate of return on plan assets is determined considering allocation of plan assets which are expected currently and
in the future and the long-term rates of return which are expected
currently and in the future from the various components of the
plan assets.
(8)Assumptions used for the years ended March 31, 2015 and
2014, were set forth as follows:
Discount rate
Long-term expected rate of return on plan assets
Expected rate of salary increase
2015
2014
1.5%
3.5
5.2
1.5%
3.0
5.2
16. Asset Retirement Obligations
Asset retirement obligations which were recognized on the consolidated balance sheets for the years ended March 31, 2015 and
2014, were as follows:
a. Overview of asset retirement obligations
Asset retirement obligations are recognized for obligations of restoring leased buildings, such as branch premises, to their
original state, based on the real estate lease contracts and asbestos
removal costs.
b. Calculation of asset retirement obligations
Asset retirement obligations are calculated based on the estimated
available periods of 16 to 31 years depending on the expected
useful lives of buildings using discount rates from 1.604% to
2.324%.
c. The changes in asset retirement obligations for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Balance at beginning of year
Increase due to acquisition of
tangible assets
Reconciliation associated with
passage of time
Decrease due to execution of asset
retirement obligations
Other
Balance at end of year
2014
2015
¥614
¥645
$5,109
21
9
174
11
11
91
(14)
(5)
¥626
(42)
(8)
¥614
(116)
(41)
$ 5,209
17. Equity
Japanese banks are subject to the Banking Law and to the Companies Act. The significant provisions in the Companies Act and
the Banking Law that affect financial and accounting matters are
summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any
time during the fiscal year in addition to the year-end dividend
upon resolution at the general meeting of stockholders. For companies that meet certain criteria such as (1) having a Board of
Directors, (2) having independent auditors, (3) having an Audit &
Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than two years of normal term by
its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of
incorporation. The Bank meets all the above criteria. The Companies Act permits companies to distribute dividends-in-kind
(noncash assets) to stockholders subject to certain limitations and
additional requirements. Semiannual interim dividends may also
be paid once a year upon resolution by the Board of Directors if the
articles of incorporation of the company so stipulate. The Bank can
do so because it stipulates this in its articles of incorporation. The
Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation
is defined as the amount available for distribution to the stockholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve
and Surplus
The Banking Law requires that an amount equal to 20% of dividends must be appropriated as a legal reserve (a component of
retained earnings) or as additional paid-in capital (a component of
capital surplus) depending on the equity account charged upon
the payment of such dividends until the total of the aggregate
amount of the legal reserve and additional paid-in capital equals
100% of stated capital.
Under the Companies Act and the Banking Law, the aggregate
amount of additional paid-in capital and the legal reserve that exceeds 100% of the stated capital may be made available for
dividends by resolution of the stockholders after transferring such
excess to retained earnings in accordance with the Companies
Act. Under the Companies Act, the total amount of additional
paid-in capital and the legal reserve may be reversed without limitation. The Companies Act also provides that stated capital, legal
reserve, additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under
certain conditions upon resolution of the stockholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the
Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the
stockholders which is determined by a specific formula. Under
the Companies Act, stock acquisition rights are presented as a
separate component of equity. The Companies Act also provides
25
that companies can purchase both treasury stock acquisition
rights and treasury stock. Such treasury stock acquisition rights
are presented as a separate component of equity or deducted directly from stock acquisition rights.
18. Stock Options
Expenses related to stock options in the amount of ¥130 million
($1,081 thousand) and ¥133 million are recorded under general
and administrative expenses for the years ended March 31, 2015
and 2014, respectively.
The stock options outstanding as of March 31, 2015, are as follows:
Nature and extent of stock options:
2009 Stock 2010 Stock 2011 Stock 2012 Stock 2013 Stock 2014 Stock
Option
Option
Option
Option
Option
Option
13 directors
(excluding
direc15 directors outside
tors) and 4
of
the
Bank
Persons 16 directors 16 directors 16 directors 16 directors (excluding executive ofgranted of the Bank of the Bank of the Bank of the Bank outside direc- ficers
(excluding
tors)
executive directors) of the
Bank
Number of 281,800
498,900
296,800
245,800
357,500
498,900
stock shares of
shares of
shares of
shares of
shares of
shares of
common
common
common
common
options common
common
stock of
stock of
stock of
stock of
by type stock of
stock of
of share* the Bank
the Bank
the Bank
the Bank
the Bank
the Bank
Date of August 3, August 2, August 1, July 27, 2012 July 29, 2013 August 1,
2014
grant
2009
2010
2011
Vesting Not defined Not defined Not defined Not defined Not defined Not defined
conditions
Eligible
service
Not defined Not defined Not defined Not defined Not defined Not defined
period
From August From August From August
August
July 28, From July 30, From
Exercise 4, 2009 to 3, 2010 to 2, 2011 to From
2, 2014 to
2012
to
2013
to
period
August 3, August 2, August 1, July 27, 2037 July 29, 2038 August 1,
2034
2035
2036
2039
*Number of stock options is converted into number of shares.
Stock option activity is as follows:
171,500
237,700
375,000
418,200
296,800
245,800
17,900
20,900
29,200
50,800
36,500
153,600
216,800
345,800
367,400
260,300
2009 Stock 2010 Stock 2011 Stock 2012 Stock 2013 Stock 2014 Stock
Option
Option
Option
Option
Option
Option
Exercise price
¥1
¥1
¥1
¥1
¥1
¥1
($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00)
Average stock
¥540
¥540
¥540
¥540
¥540
price at the time ($4.49) ($4.49) ($4.49) ($4.49) ($4.49)
of exercise
Fair value at
¥523
¥415
¥317
¥275
¥444
¥527
the date of
($4.35) ($3.45) ($2.63) ($2.28) ($3.69) ($4.38)
grant
The estimation method of the fair value of the 2014 Stock Option
granted in the year ended March 31, 2015, is as follows:
(1)The valuation technique used is the Black-Scholes optionpricing model.
(2)Major assumptions are as follows:
Stock price volatility (see Note 1 below)
Expected remaining service period
(see Note 2 below)
Expected cash dividend (see Note 3 below)
Risk-free interest rate (see Note 4 below)
4 years and 2 months
¥7.5 per share
0.125%
(Notes) 1.Stock price volatility is computed based on past stock prices
during the period from May 2010 to August 2014 corresponding to the expected remaining period.
2.The expected remaining service period is estimated by deducting the current service period and age from the
presumed remaining service period calculated from average
terms of office and retirement ages of the directors who retired within the past 10 years.
3.Actual cash dividends for the year ended March 31, 2014.
4.Risk-free interest rate refers to yields of Japanese government bonds corresponding to the expected remaining period.
The estimation method of the number of stock options to be vested:
The Bank uses the method to reflect the actual forfeited options, since it
is difficult to estimate the number of stock options to be forfeited in the
future on a reasonable basis.
245,800
Other operating income for the years ended March 31, 2015 and
2014, consisted of the following:
Millions of Yen
2015
2014
Gain on sales and redemption of
bonds and other securities
Lease receipts
Other
Total
¥ 1,533
7,282
2,926
¥11,742
¥1,188
7,718
3,047
¥11,954
Thousands of
U.S. Dollars
2015
$12,756
60,597
24,348
$97,711
20. Other Income
17,900
17,900
20,900
20,900
29,200
29,200
50,800
50,800
36,500
36,500
Other income for the years ended March 31, 2015 and 2014,
consisted of the following:
Millions of Yen
2015
2014
Gains on sales of stocks and other
securities
Gains on sales of tangible fixed assets
Other
Total
26
33.174%
19. Other Operating Income
2009 Stock 2010 Stock 2011 Stock 2012 Stock 2013 Stock 2014 Stock
Option
Option
Option
Option
Option
Option
(Shares)
Non-vested
March 31, 2014
—Outstanding
Granted
Forfeited
Vested
March 31, 2015
—Outstanding
Vested
March 31, 2014
—Outstanding
Vested
Exercised
Forfeited
March 31, 2015
—Outstanding
Unit price information is as follows:
¥1,082
61
1,297
¥2,441
¥826
47
1,513
¥2,388
Thousands of
U.S. Dollars
2015
$ 9,003
507
10,793
$20,312
21. Other Operating Expenses
Other operating expenses for the years ended March 31, 2015
and 2014, consisted of the following:
Millions of Yen
2015
2014
Losses on sales, redemption and
devaluation of bonds and other
securities
Lease costs
Other
Total
¥1,702
6,542
1,089
¥9,334
¥3,574
6,956
954
¥11,485
Thousands of
U.S. Dollars
2015
$14,163
54,439
9,062
$77,673
22. Other Expenses
Other expenses for the years ended March 31, 2015 and 2014,
consisted of the following:
Millions of Yen
2015
2014
Bad debt losses
Losses on dispositions of money held
in trust
Losses on sales of loans
Losses on impairments and disposals
of fixed assets
Provision for reserve for reimbursement of deposits
Other
Total
Thousands of
U.S. Dollars
2015
¥ 36
¥68
$ 299
466
118
895
3,877
466
179
3,877
202
497
¥1,669
197
697
¥2,157
1,680
4,135
$13,888
A reconciliation between the normal effective statutory tax rate
and the actual effective tax rate reflected in the accompanying
consolidated statement of income for the years ended March 31,
2015 and 2014, was as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividend income
Inhabitants taxes
Valuation allowance
Reduction of deferred tax assets due to tax rate changes
Other—net
Actual effective tax rate
2015
2014
35.5%
0.3
(2.7)
0.2
2.6
7.8
0.2
43.9%
37.9%
0.3
(2.6)
0.2
4.4
2.4
(0.4)
42.2%
Adjustments of Deferred Tax Assets and Liabilities Due to a
Change in the Corporate Income Tax Rate, Etc.
“Partial Amendments to Income Tax Act, etc.” (Act No. 9, 2015)
enacted on March 31, 2015, has reduced corporate income tax
rates, etc., from the year beginning on or after April 1, 2015. As a
result, the normal effective statutory tax rate to be used in computing deferred tax assets and liabilities has been reduced from
35.5% to 33.0% for the temporary differences expected to be
eliminated in the year beginning on April 1, 2015, 32.2% for
those expected to be eliminated in the year beginning on April 1,
2016 and 32.0% for those expected to be eliminated in the years
beginning on and after April 1, 2017. As a result, deferred tax assets and deferred tax liabilities decreased by ¥114 million ($948
thousand) and ¥3,978 million ($33,103 thousand), respectively,
and unrealized gains on available-for-sale securities and income
taxes—deferred increased by ¥6,517 million ($54,231 thousand)
and ¥2,553 million ($21,244 thousand), respectively.
24. Other Comprehensive Income
The components of other comprehensive income for the years
ended March 31, 2015 and 2014, were as follows:
23. Income Taxes
The Companies are subject to Japanese national and local income
taxes which, in the aggregate, resulted in normal effective statutory tax rates of approximately 35.5% and 37.9% for the years
ended March 31, 2015 and 2014, respectively.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2015
and 2014, were as follows:
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Deferred tax assets:
¥ 24,464 ¥29,714 $ 203,578
Reserve for possible loan losses
Liability for employees’ retirement benefits
8,916
13,240
74,194
Fixed assets (depreciation)
5,771
5,656
48,023
Losses on devaluation of stocks
2,241
2,304
18,648
and other securities
Other
6,340
7,087
52,758
Less valuation allowance
(18,521) (19,527) (154,123)
Total
29,212
38,477
243,088
Deferred tax liabilities:
Unrealized gains on available-for63,279
41,348
526,579
sale securities
Fixed assets (deferred gain on sales
343
390
2,854
and replacements)
Other
11
9
91
Total
63,634
41,748
529,533
Net deferred tax liabilities
¥(34,421) ¥ (3,271) $(286,435)
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Unrealized gains on available-for-sale securities:
Gain arising during the year
¥ 81,950 ¥25,974 $ 681,950
Reclassification adjustment to profit or loss
(952) 1,952
(7,922)
Amount before income tax effect
80,998 27,926 674,028
Income tax effect
(21,931) (9,072) (182,499)
Total
¥ 59,066 ¥18,853 $ 491,520
Deferred gains (losses) on derivatives
under hedge accounting:
Loss arising during the year
¥ (626) ¥(65) $ (5,209)
Reclassification adjustment to profit or loss
399
204
3,320
Amount before income tax effect
(227)
139
(1,888)
Income tax effect
60
(49)
499
Total
¥ (167) ¥90 $ (1,389)
Defined retirement benefit plans:
Gain arising during the year
¥ 2,350
$ 19,555
Reclassification adjustment to profit or loss 1,036
8,621
Amount before income tax effect
3,387
28,185
Income tax effect
(1,275)
(10,609)
Total
¥ 2,112
$ 17,575
Total other comprehensive income
¥61,011 ¥18,943 $ 507,705
27
25. Leases
Finance Leases
a. Lessee
The Companies lease certain machinery, computer equipment,
and other assets including software.
b. Lessor
A subsidiary leases certain equipment and other assets to various
customers.
The net investments in leases as of March 31, 2015 and 2014,
are summarized as follows:
Thousands of
U.S. Dollars
2015
Millions of Yen
2015
2014
Gross lease receivables
Estimated residual values
Unearned interest income
Investments in leases
¥16,799 ¥17,612 $139,793
976
1,039
8,121
(1,923) (2,073) (16,002)
¥15,851 ¥16,577 $131,904
Maturities of lease receivables for finance leases that are
deemed not to transfer ownership of the leased property to the
lessee as of March 31, 2015, are as follows:
Year Ending March 31
Millions of Yen
2016
2017
2018
Total
Thousands of
U.S. Dollars
¥10
10
8
¥30
$83
83
66
$249
Maturities of investment in leases for finance leases that are
deemed not to transfer ownership of the leased property to the
lessee as of March 31, 2015, are as follows:
Year Ending March 31
2016
2017
2018
2019
2020
2021 and thereafter
Total
Millions of Yen
Thousands of
U.S. Dollars
¥5,782
4,478
3,140
2,012
915
468
¥16,799
$48,115
37,263
26,129
16,742
7,614
3,894
$139,793
Operating Leases
As of March 31, 2015 and 2014, future lease payment receivables
including interest receivables under noncancelable operating
leases were as follows:
Future Lease Payment Receivables
Thousands of
U.S. Dollars
2015
Millions of Yen
2015
2014
Due within one year
Due after one year
Total
¥5
1
¥6
¥3
¥3
$41
8
$49
26. Financial Instruments And Related Disclosures
(1) Group Policy for Financial Instruments
The Companies provide financial services such as credit card business and leasing operations in addition to banking operations. In
the course of these operations, the Companies raise funds principally through deposit taking and invest funds in loans, securities,
and others. As such, the Bank holds financial assets and liabilities
which are subject to fluctuation in interest rates and conducts
comprehensive Asset and Liability Management (“ALM”) to avoid
unfavorable effects from interest rate fluctuations. Derivatives are
also employed by the Bank as part of ALM.
(2) Nature and Extent of Risks Arising from Financial Instruments
Financial assets held by the Companies mainly consist of loans to
28
domestic corporations, local government agencies, and individual
customers which are exposed to credit risk that the Companies
may suffer from losses resulting from nonperformance of borrowers and interest rate risk that the Companies may suffer from losses
resulting from fluctuations in interest rates.
Securities, mainly debt securities, equity securities, and investment trusts are held to maturity and for other purposes and also
certain debt securities are held for the purpose of selling to customers. These securities are exposed to credit risk of issuers and
market risks of fluctuations in interest rates and market prices. In
addition, they are exposed to market liquidity risk that the Companies may suffer from losses resulting from difficulties in
executing financial transactions in certain environments such as
market turmoil.
Financial liabilities, mainly consisting of liquid deposits or time
deposits taken from corporate and individual customers, are exposed to cash flow risk that the Bank may experience a situation
where unexpected cash flows are incurred in certain environments
where the credit rating of the Bank may be lowered and, accordingly, necessary funding may become difficult.
Foreign currency denominated assets and liabilities are exposed
to foreign exchange risk that the Bank may suffer from losses resulting from fluctuations in foreign exchange rates.
Derivatives mainly include interest rate swaps and bond futures,
which are used to manage exposure to market risks from changes
in interest rates of loans and investment securities, and foreign exchange forward contracts, which are used to hedge foreign
exchange risk associated with foreign currency-denominated assets
and liabilities. Hedge accounting is applied to certain hedging activities related to loans and investment securities as hedged items.
(3) Risk Management for Financial Instruments
Credit risk management
The Bank has established the “Credit Risk Control Policy” as a basic policy for credit risk management and various rules concerning
credit risk management. Based on these policies and rules, the
Companies clarify fundamental approaches to secure the soundness of assets and control procedures for identifying, monitoring,
and controlling credit risk. Additionally, the Bank utilizes the
“Credit Rating System” applied to counterparties granted with
credit from the viewpoint of identifying credit risk objectively and
enhancing credit risk control.
In addition, as an organization responsible for credit risk management, credit risk control functions and review functions have
been established to secure the effectiveness of credit risk management.
The Risk Management Division, as a credit risk control function,
is engaged in identifying the level of future possible credit risk and
the status of credit concentration in major borrowers through measurement of the level of credit risk and analysis of credit portfolios.
The Credit Supervision Division, as a review control function, is
engaged in reviewing lending operations based on strict examination standards, system development for strengthening the daily
control of loan receivables, and appropriate maintenance of operational procedures.
Market risk management
a. Market Risk Management System
The Bank has established the “Market Risk Control Policy” as a basic policy for market risk management and various rules
concerning market risk management. Based on these policies and
rules, the Bank clarifies fundamental approaches for appropriate
market risk control operations and control procedures for identifying, monitoring and controlling market risk.
As an organization responsible for market risk management, a
market risk control function (middle office) has been established
and furthermore, an operating function (front office) and an administration function (back office) have been separated.
Additionally, market risk control function staff are assigned to the
operating function to secure the effectiveness of market risk management.
The Risk Management Division, as a market risk control function, measures the level of market risk of the Bank as a whole
using Value-at-Risk (“VaR”) approach models and other models
and regularly monitors the compliance status with position limits
and loss limits established according to the type and characteristics
of transactions to control the level of market risk within a certain
range.
In addition, an ALM and Income Control Committee were established for the purpose of studying flexible investment strategies
in order to prevent risks resulting from fluctuations in interest
rates and market prices, while forecasting future interest rates,
market prices, and trends of fund and business conditions. The
committee is also responsible for securing the soundness of management and also improving profitability at the same time based
on appropriate asset and liability management through the unification of risk management and earnings control.
b. Quantitative Information about Market Risk
The Bank adopts the variance-covariance method (holding period:
125 business days for strategic equity securities and 60 business
days for others, confidence interval: 99.0%, observation period:
250 business days) in computing the VaR with respect to securities, Japanese yen deposits and loans, and Japanese yen money
market funds. The volume of market risk (estimated losses) that
the Bank is exposed to as of March 31, 2015, amounts to ¥72,897
million ($606,615 thousand) (¥91,671 million in 2014) as a
whole. However, the risk under certain abnormal market fluctuations may not be captured, since under the VaR method, the
market risk volume under a definite probability of incidence statistically computed is measured based on historical market
fluctuations.
The Bank implements back testing to compare the VaR computed by the model with actual profit and loss in the securities and
confirms that the measurement model in use captures the market
risk with sufficient precision.
Liquidity risk management
The Bank has established the “Liquidity Risk Control Policy” as a
basic policy for liquidity risk management and various rules concerning liquidity risk management. Based on these policies and
rules, the Bank clarifies fundamental approaches for stable funding
operations and control procedures for identifying, monitoring and
controlling liquidity risk. In addition, the Bank has established the
“Contingency Plan for Liquidity” to enable it to make quick and
correct responses to unexpected events.
Furthermore, as an organization responsible for liquidity risk
management, the liquidity risk control function has been established and a cash management function and a settlement control
function have been established to control daily cash management
and settlement related to cash and securities.
The Risk Management Division, as a liquidity risk control function, manages the liquidity risk of the Bank as a whole by
identifying, monitoring and controlling liquidity risk.
The Treasury Administration and International Division, as a
cash management control function and settlement control function, prepares daily or monthly cash flow projections and conducts
cash management by identifying possible funds and liquidity of
assets and verifying the concentration of settlement of major account funds to a certain date. The Division also controls settlement
by identifying the status of settlement through systems such as the
BOJ-NET and among financial institutions.
Risk management system of subsidiaries
The subsidiaries have a risk management system similar to that of
the Bank.
(4) Supplementary Explanation about Fair Values of Financial Instruments
The fair values of financial instruments include, in addition to the
value determined based on market prices, valuations calculated on
a reasonable basis if no market prices are available. Since certain
assumptions are used in calculating the value, the outcome of such
calculation may vary if different assumptions are used.
(5) Fair Values of Financial Instruments
The carrying amount, the fair value, and their related differences as
of March 31, 2015 and 2014, are disclosed below. Note that unlisted equity securities for which fair value is extremely difficult to
identify are not included in the following table (see Note 2 below)
and insignificant accounts in terms of the carrying amount are
omitted:
Millions of Yen
Carrying Amount
March 31, 2015
(1) Cash and due from banks ¥514,617
(2) Investment securities
3,693,783
Held-to-maturity securities
13,502
Available-for-sale securities 3,680,280
(3) Loans and bills discounted 4,219,621
Reserve for possible loan
(80,667)
losses*
4,138,953
Total assets
¥8,347,354
(1) Deposits
¥7,849,299
(2) Call money and bills sold
67,054
Total liabilities
¥7,916,354
Fair Value
Difference
¥514,617
3,693,819
13,538
3,680,280
¥35
35
4,183,272
¥8,391,708
¥7,849,909
67,054
¥7,916,964
44,318
¥44,353
¥610
¥610
Millions of Yen
Carrying Amount
March 31, 2014
(1) Cash and due from banks ¥507,353
(2) Call loans and bills bought
161,091
(3) Investment securities
3,726,567
Held-to-maturity securities
13,509
Available-for-sale securities 3,713,058
(4) Loans and bills discounted 3,998,209
Reserve for possible loan
(88,984)
losses*
3,909,225
Total assets
¥8,304,237
(1) Deposits
¥7,871,879
Total liabilities
¥7,871,879
Fair Value
Difference
¥ 507,353
161,091
3,726,603
13,544
3,713,058
3,949,457
¥8,344,505
¥7,872,910
¥7,872,910
¥35
35
40,232
¥40,268
¥1,031
¥1,031
Thousands of U.S. Dollars
Carrying Amount Fair Value
Difference
March 31, 2015
(1) Cash and due from banks $4,282,408 $4,282,408
(2) Investment securities
30,737,979 30,738,279 $291
Held-to-maturity securities
112,357
112,657
291
Available-for-sale securities 30,625,613 30,625,613
(3) Loans and bills discounted 35,113,763
Reserve for possible loan
(671,274)
losses*
34,442,481 34,811,284
368,794
Total assets
$69,462,877 $69,831,971 $369,085
(1) Deposits
$65,318,290 $65,323,366 $5,076
(2) Call money and bills sold
557,992
557,992
Total liabilities
$65,876,291 $65,881,368 $5,076
*General and specific reserves for possible loan losses corresponding to loans and bills discounted are deducted.
Notes:
1. Calculation method for the fair value of financial instruments
Assets:
(1) Cash and due from banks
For due from banks, the carrying amount is presented as the
fair value since the fair value approximates the carrying
amount.
(2) Investment securities
The fair values of equity securities and debt securities are determined using the quoted price of the stock exchange, Japan
Securities Dealers Association, or the price calculated by financial institutions. The fair value of investment trust is
determined using the published standard quotation or the
standard quotation offered by the securities investment advisors. With respect to privately placed guaranteed bonds, the
fair value is determined using the future cash flows (coupons,
redemption of principal, guarantee fees) discounted at an interest rate considering the market interest rates and issuers’
credit risk.
29
(3) Loans and bills discounted
With respect to loans with floating interest rates, the carrying
amount is presented as the fair value since the fair value approximates the carrying amount as they reflect the market
interest rates over a short period, unless the creditworthiness
of the borrower has changed significantly since the loan origination. With respect to loans with fixed interest rates, for
each category of loans based on the type of loan, internal ratings, and maturity length, the fair value is determined based
on the present value of expected cash flows of aggregated
principal and interest discounted at a rate which is the rate
assumed if a new loan were made, or market interest rate,
which is adjusted by the standard spread (including overhead
ratio) by credit rating. The carrying amount is presented as
the fair value if the maturity is within a short time period (less
than one year) and the fair value approximates the carrying
amount.
For receivables from “legally bankrupt,” “virtually bankrupt,” and “possibly bankrupt” borrowers, possible loan
losses are estimated based on the DCF method or factors such
as the expected amounts to be collected from collateral and
guarantees. Since the fair value of these items approximates
the carrying amount, net of the currently expected loan losses, such carrying amount is presented as the fair value.
For loans for which the repayment due date is not defined
because of the characteristics that the loan amount is limited
within the pledged assets, the carrying amount is presented
as the fair value since the fair value is assumed to approximate the carrying amount considering the expected
repayment schedule and terms on the interest rates.
Liabilities:
(1) Deposits
Regarding demand deposits, the amount payable as of the
balance sheet date (i.e., the carrying amount) is considered to
be the fair value. Time deposits and negotiable certificates of
deposit are grouped by maturity length, and the fair value is
determined using the present value of the aggregate amounts
of principal and interest discounted at an interest rate that
would be applied to newly accepted deposits. For deposits
with maturities within a short time period (less than one
year) and whose fair value approximates the carrying amount,
the carrying amount is presented as the fair value.
(2) Call money and bills sold
For call money and bills sold, the carrying amount is presented as the fair value since the fair value approximates the
carrying amount.
2. The financial instruments whose fair value is extremely difficult to identify are as follows. These items are not included in
(2) “Available-for-sale securities” under “Assets” in the aforementioned table of fair value information of financial
instruments.
Category
Unlisted equity securities*1,*2
Capital subscription in investment
business partnerships*3
Total
Carrying Amount
Thousands of
Millions of Yen
U.S. Dollars
2015
2014
2015
¥1,997
¥2,012
$16,618
1,789
¥3,787
1,764
¥3,776
14,887
$31,513
*1 Unlisted equity securities are not treated as instruments whose fair
value is required to be disclosed since there is no market price and it
is extremely difficult to identify the fair value.
*2 Impairment losses in the amount of ¥10 million ($83 thousand) and
¥2 million were recognized for unlisted equity securities for the years
ended March 31, 2015 and 2014, respectively.
*3 Capital subscription in investment business partnerships, whose assets (i.e., unlisted equity securities) consist of those whose fair values
are extremely difficult to identify, is not treated as instruments whose
fair value is required to be disclosed.
3. Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2015
Millions of Yen
Due in 1 Year or
Less
Due from banks
Investment securities
Held-to-maturity securities
National government bonds
Local government bonds
Available-for-sale securities with
contractual maturities
National government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted*
Total
30
Due after 1 Year
through 3 Years
Due after 3 Years
through 5 Years
Due after 5 Years
through 7 Years
Due after 7 Years
through 10 Years
Due after 10
Years
¥466,920
664,080
2,300
500
1,800
¥942,708
5,100
3,900
1,200
¥954,416
6,100
4,400
1,700
¥529,483
¥273,113
¥12,368
661,780
937,608
948,316
529,483
273,113
12,368
458,300
14,116
159,250
30,113
1,118,030
¥2,249,031
591,100
5,186
188,920
152,402
834,682
¥1,777,391
526,100
346,050
8,000
170,036
5,397
368,959
¥898,443
43,000
46,300
124,821
58,992
372,537
¥645,650
12,368
681,822
¥694,190
285,488
136,727
660,229
¥1,614,645
Thousands of U.S. Dollars
Due from banks
Investment securities
Held-to-maturity securities
National government bonds
Local government bonds
Available-for-sale securities with
contractual maturities
National government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted*
Total
Due in 1 Year or
Less
Due after 1 Year
through 3 Years
Due after 3 Years
through 5 Years
$3,885,495
5,526,171
19,139
4,160
14,978
$7,844,786
42,439
32,454
9,985
$7,942,215
50,761
36,614
14,146
5,507,031
3,813,763
117,466
1,325,205
250,586
9,303,736
$18,715,411
7,802,346
4,918,864
43,155
1,572,106
1,268,220
6,945,843
$14,790,638
7,891,453
4,377,964
2,375,701
1,137,779
5,494,124
$13,436,340
Due after 5 Years
through 7 Years
Due after 7 Years
through 10 Years
Due after 10
Years
$4,406,116
$2,272,721
$102,920
4,406,116
2,879,670
66,572
1,414,962
44,911
3,070,308
$7,476,433
2,272,721
357,826
385,287
1,038,703
490,904
3,100,083
$5,372,805
102,920
102,920
5,673,812
$5,776,732
* Of loans and bills discounted, the portion whose timing of collection is unforeseeable, such as loans to “Legally bankrupt” borrowers, loans to “Virtually bankrupt” borrowers, and loans to “Possibly bankrupt” borrowers, amounting to ¥92,583 million ($770,433 thousand) are not included in the above table. Loans that do not have a
contractual maturity, amounting to ¥90,776 million ($755,396 thousand), are not included either.
4. Repayment schedule of bonds, borrowed money, and other interest-bearing liabilities subsequent to March 31, 2015
Millions of Yen
Due in 1 Year or
Less
Deposits*
Call money and bills sold
¥7,373,654
67,054
Due after 1 Year
through 3 Years
¥410,859
Due after 3 Years
through 5 Years
Due after 5 Years
through 7 Years
Due after 7 Years
through 10 Years
Due after 10
Years
Due after 7 Years
through 10 Years
Due after 10
Years
¥64,785
Thousands of U.S. Dollars
Due in 1 Year or
Less
Deposits*
Call money and bills sold
$61,360,189
557,992
Due after 1 Year
through 3 Years
$3,418,981
Due after 3 Years
through 5 Years
Due after 5 Years
through 7 Years
$539,111
* Demand deposits included in deposits are presented under “Due in 1 year or less.”
27. Derivatives
It is the Bank’s policy to use derivatives primarily for the purpose
of reducing market risks associated with its assets and liabilities.
The Bank also utilizes derivatives to meet the needs of its clients
while entering into derivatives as a part of its trading activities.
The Bank enters into interest rate swaps and interest rate swaptions as a means of hedging its interest rate risk on certain loans
and investment securities while entering into interest rate swaps
and interest rate swaptions to meet the needs of its clients.
The Bank also enters into currency swaps, foreign exchange forward contracts, and currency options to hedge foreign exchange
risk associated with its assets and liabilities denominated in foreign
currencies and to meet the needs of its clients.
Derivatives are subject to market risk and credit risk. Market
risk is the exposure created by potential fluctuations of market
conditions, including interest or foreign exchange rates. Credit risk
is the possibility that a loss may result from a counterparty’s failure
to perform its obligations under a contract.
The Bank sets limits to credit risk on those derivatives by limiting the counterparties to major financial institutions and securities
companies and establishing maximum risk exposures to the counterparties.
The Bank has established a standard of risk management including management approaches for each type of risk. Derivative
transactions entered into by the Bank have been made in accordance with internal policies which regulate trading activities and
credit risk management including maximum risk exposures and
loss-cutting rules. Concerning risk management associated with
derivative transactions, the front and back offices of the trading
divisions are clearly separated and risk managers are assigned to
the trading divisions, while the Risk Management Division synthetically manages the Bank’s market risks. In this manner, an
internal control system is effectively secured.
The Bank’s positions, gain and loss, risk amount, and other conditions are periodically reported to the executive committee.
31
The Bank has the following derivatives contracts outstanding as of March 31, 2015 and 2014:
Derivative Transactions to Which Hedge Accounting Is Not Applied
With respect to derivatives to which hedge accounting is not applied, contract or notional amount, fair value, and unrealized gains/losses,
and the calculation method of fair value are as shown below. Note that the contract or notional amounts of the derivatives which are shown
in the table do not represent the amounts of the Bank’s exposure to credit or market risk.
Millions of Yen
2015
Contract or Notional
Amount
Total
Interest rate-related over-thecounter (“OTC”) transactions:
Interest rate swaps:
Floating rate receipt/
¥10,918
fixed rate payment
Floating rate payment/
10,350
fixed rate receipt
Interest rate swaption:
Selling
1,900
Buying
1,900
Currency-related OTC transactions:
30,200
Currency swaps
Foreign exchange forward
contracts:
165,531
Selling
Buying
3,351
Currency option:
Selling
6,617
Buying
6,617
Due after
One Year
¥4,202
Fair
Value
¥(15)
Unrealized
Gains/
Losses
¥(15)
3,750
30,200
4,997
4,997
2014
Contract or Notional
Amount
Total
Due after Fair
One Year Value
Total
¥8,664
¥(16)
¥(16)
14,040
7,750
(2)
(2)
86,127
(4)
4
(4)
4
15,810
15,810
41
41
(759)
26
(759)
26
1,377,473
27,885
(262)
262
251
(130)
55,063
55,063
(5)
5
4,100
4,100
27
27
29,532
(1,727) (1,727)
38
38
139,468
2,696
94
(13)
Fair
Value
¥15,269
(5)
5
(224)
224
Due after
One Year
Unrealized
Gains/
Losses
Thousands of
U.S. Dollars
2015
Contract or Notional
Amount
8,792
8,792
28,010
6,359
6,359
$90,854 $34,967
Unrealized
Gains/
Losses
$(124)
$(124)
(41)
41
(41)
41
224
224
31,205
251,310 251,310
(14,371) (14,371)
316
316
41,582
41,582
(1,864)
1,864
782
(108)
Notes:
1.The above transactions are stated at fair value and unrealized gains (losses) for the years ended March 31, 2015 and 2014, were recognized in the consolidated statement of income.
2.The fair value of interest rate-related OTC transactions is determined using the discounted present value or option-pricing models, and
the fair value of currency-related OTC transactions is determined using the discounted present value.
Derivative Transactions to Which Hedge Accounting Is Applied
With respect to derivatives to which hedge accounting is applied, contract or notional amount, fair value, and the calculation method of fair
value are as shown below. Note that the contract or notional amounts of the derivatives which are shown in the table do not represent the
amounts of the Bank’s exposure to market risk.
At March 31, 2015
Hedge Accounting Method
Normal method
Special matching criteria
Type of Derivatives
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Major Hedged Item
Loans and
investment
securities
Loans
Millions of Yen
Contract or Notional Amount
Due after One
Total
Year
¥224,492
¥221,036
¥(689)
105,803
87,644
(1,543)
¥(2,233)
Total
At March 31, 2014
Hedge Accounting Method
Normal method
Special matching criteria
Total
32
Type of Derivatives
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Major Hedged Item
Fair Value
Millions of Yen
Contract or Notional Amount
Due after One
Total
Year
Fair Value
Loans
¥ 22,549
¥18,843
¥ (394)
Loans
132,930
96,422
(1,814)
¥(2,209)
At March 31, 2015
Hedge Accounting Method
Type of Derivatives
Normal method
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Interest rate swaps–
Floating rate receipt/
fixed rate payment
Special matching criteria
Major Hedged Item
Loans and
investment
securities
Loans
Thousands of U.S. Dollars
Contract or Notional Amount
Due after One Fair Value
Total
Year
$1,868,120
$1,839,360
$(5,733)
880,444
729,333
(12,840)
$(18,582)
Total
Notes:
1.These are principally accounted for under the deferral hedge method in accordance with JICPA Industry Audit Committee Report No.
24, “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”
2.Fair value is determined using the discounted present value.
28. Related-Party Transactions
Related-party transactions for the years ended March 31, 2015 and 2014, were as follows:
a. Transactions between the Bank and Its Related Parties
Transactions for the Year*4
Millions of Yen
Account Classification *3
Related Party
Department Store Fujisaki Co., Ltd.
Fuji Styling Co., Ltd.
*1
*1
Fujisaki Agency Co., Ltd. *1
Medical Corp. Shoukeikai *1 *5
Mr. Junichi Matsuoka *2
Mr. Minokichi Akaizawa *2
2015
Loans and bills discounted ¥5,007
Customers’ liabilities for
acceptances and guarantees
200
Loans and bills discounted
245
Customers’ liabilities for
acceptances and guarantees
700
Loans and bills discounted
Loans and bills discounted
Loans and bills discounted
57
2014
¥4,496
Thousands of
U.S. Dollars
2015
Balance at End of Year
Millions of Yen
2015
$ 41,665 ¥5,404
Thousands of
U.S. Dollars
2014
2015
¥5,917
$44,969
200
262
1,664
2,038
200
240
200
250
1,664
1,997
700
21
11
63
5,825
700
5,825
474
54
700
21
10
60
449
Notes:*1Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries of such company).
*2 Mr. Junichi Matsuoka and Mr. Minokichi Akaizawa are close relatives of directors.
*3 Terms are substantially the same as for similar transactions with third parties.
*4 Amounts of transactions were reported at the average balance for the period.
*5 The director, who was regarded as a related party, retired from his position as director of the Bank due to the expiration of the term of
office on June 27, 2013. Accordingly, transactions through that date and balance as of that date are reported in the above table.
b. Transactions between a Consolidated Subsidiary and Its Related Party
Transactions for the Year
Millions of Yen
Thousands of
U.S. Dollars
Balance at End of Year
Millions of Yen
Account Classification *2
2015
2014
2015
2015
2014
Fees and commissions
¥20
¥19
$166
Other assets
5
41
¥30
Lease receivables and
Akaizawa Co., Ltd. *¹
investments in leases
4
3
33
11
¥15
Notes:*1Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries of such company).
*2 Terms are substantially the same as for similar transactions with third parties.
Related Party
Department Store Fujisaki Co., Ltd. *¹
Fuji Styling Co., Ltd. *¹
Thousands of
U.S. Dollars
2015
$249
91
33
29. Segment Information
For the Year Ended March 31, 2015
(1) Description of Reportable Segments
The Companies are principally engaged in the banking business and also leasing business and other financial services. The reportable
segments of the Bank are the segments about which separate financial information is available, and are subject to periodic review by the
chief operating decision maker to determine the allocation of management resources and assess performance.
Since the reportable segment of the Companies consists of only the “Banking” segment and since the “Other” segment is immaterial,
the segment information is omitted.
(2) Change in the Reportable Segments
Effective from the year ended March 31, 2015, the only reportable segment is the “Banking” segment since the “Leasing” segment has become less material in terms of quantity.
Since the “Other” segment is immaterial, segment information is omitted from the year ended March 31, 2015.
For the Year Ended March 31, 2014
(1) Description of Reportable Segments
The reportable segments of the Bank are subject to periodic review by the chief operating decision maker to determine the allocation of
management resources and assess performance and from the viewpoint of the nature of its major financial instruments and services. The
Bank is composed of the operating segments of “Banking” and “Leasing” activities as the reportable segments.
The “Banking” segment provides customers with banking operations including deposit taking, lending, and exchange businesses as
well as scrutinizing of cash as a banking related service.
The “Leasing” segment provides customers with leasing business.
Financial segment information is for those segments about which separate financial information is available.
(2) Methods of Measurement of Sales, Profit (Loss), Assets, and Other Items for Each Reportable Segment
Accounting policies adopted by the reportable segments are almost the same as those described in Note 2, “Summary of Significant Accounting Policies.” Segment profit of the reportable segments is based on the figures of ordinary profit, and intersegment income is based
on an arm’s length transaction basis.
(3) Reportable Segment Information concerning Income, Profit (Loss), Assets, and Other Items
Millions of Yen
2014
Reportable Segments
Ordinary income:
External customers
Intersegment income
Total
Segment profit
Segment assets
Other information:
Depreciation
Interest income
Interest expense
Increase in tangible and
intangible fixed assets
Banking
Leasing
Total
Other
Total
¥96,297
273
¥96,570
¥25,710
8,478,458
¥9,379
765
¥10,144
¥1,125
22,769
¥105,676
1,039
¥106,715
¥26,835
8,501,228
¥3,384
1,596
¥4,980
¥2,144
22,841
¥109,060
2,635
¥111,696
¥28,980
8,524,069
¥(2,635)
¥(2,635)
¥(74)
(16,863)
¥109,060
¥28,905
8,507,205
3,631
73,491
3,466
94
6
146
3,725
73,497
3,613
33
300
26
3,759
73,797
3,639
(122)
(112)
3,759
73,675
3,526
5,763
100
5,864
11
5,875
Reconciliations
Consolidated
¥109,060
5,875
Notes:1. Segment profit is reconciled with ordinary profit. Ordinary profits, ordinary income, and ordinary expenses are defined as follows:
“Ordinary profits” means “Ordinary income” less “Ordinary expenses.”
“Ordinary income” represents total income less certain special income included in other income in the accompanying consolidated
statement of income.
“Ordinary expenses” represent total expenses less certain special expenses included in other expenses in the accompanying consolidated
statement of income.
2.“Other” is a business segment which does not belong to reportable segments and consists of credit guarantee business, credit card business,
etc.
3.“Reconciliations” of segment profit of ¥(74) million, segment assets of ¥(16,863) million, interest income of ¥(122) million, and interest
expense of ¥(112) million are eliminations of intersegment transactions.
34
Related Information for the Years Ended March 31, 2015 and 2014
Information by Service Line
Millions of Yen
2015
Securities
Investment
Loan
External customers
¥45,497
¥33,701
Other
Lease
¥8,497
Total
¥25,289
¥112,986
Millions of Yen
2014
Securities
Investment
Loan
External customers
¥46,895
¥29,596
Other
Lease
¥8,942
Total
¥23,626
¥109,060
Thousands of U.S. Dollars
2015
Loan
External customers
$378,605
Securities
Investment
Lease
$280,444
$70,708
Other
Total
$210,443
$940,218
Information about Asset Impairment Losses
Information about asset impairment losses for the year ended March 31, 2015, is omitted because the only reportable segment is “Banking” and “Other” is immaterial.
Millions of Yen
2014
Reportable Segments
Banking
Impairment losses
Leasing
¥121
Total
Other
Total
¥121
¥121
Information about geographical areas is omitted because the Companies conduct banking and other related activities only in Japan and
do not have foreign subsidiaries or foreign branches.
Information about major customers is not presented because there are no customers having over a 10% share of ordinary income.
30. Net Income Per Share
Basic and diluted net income per share (“EPS”) for the years ended March 31, 2015 and 2014, is as follows:
Millions of Yen
Year Ended March 31, 2015
Basic EPS—Net income attributable
to common stockholders
Effect of dilutive securities—Stock
acquisition rights
Diluted EPS—Net income for
computation
Net Income
¥17,049
Thousands of Shares
Weighted-Average
Shares
374,204
Yen
U.S. Dollars
EPS
¥45.56
$0.37
$0.37
1,508
¥17,049
375,712
¥45.38
¥15,059
374,047
¥40.26
Year Ended March 31, 2014
Basic EPS—Net income attributable
to common stockholders
Effect of dilutive securities—Stock
acquisition rights
Diluted EPS—Net income for
computation
1,418
¥15,059
375,465
¥40.10
(Changes in Accounting Policies)
As noted in Note 2.s, effective the year ended March 31, 2015, the Bank applied the provisions prescribed in the main clause of paragraph 35 of the Retirement Benefit Standard and paragraph 67 of the Retirement Benefit Guidance in accordance with the transitional
treatment prescribed in paragraph 37 of the Retirement Benefit Standard.
As a result, net assets per share as of April 1, 2014, decreased by ¥3.81 ($0.03). The effect on basic and diluted EPS for the year ended
March 31, 2015, was immaterial.
35
31. Subsequent Event
At the Bank’s general meeting of stockholders held on June 26, 2015, the Bank’s stockholders approved the following appropriations of
retained earnings:
Thousands of
Millions of Yen
U.S. Dollars
Year-end cash dividends, ¥4.50 ($0.037)
per share
¥1,684
$ 14,013
36
l Independent
Auditors’ Report
37
l Capital
Adequacy Ratios
THE 77 BANK, LTD. AND SUBSIDIARIES
March 31, 2015
Millions of
U.S. Dollars
Millions of Yen
Consolidated (Domestic standard)
2014
2015
12.51
12.68
(A)
¥387,960
¥ 373,939
$3,228,426
Risk-adjusted assets: (B)
3,099,926
2,947,961
25,796,172
Capital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)
Capital:
Millions of
U.S. Dollars
Millions of Yen
Non-Consolidated (Domestic standard)
2015
2014
2015
12.19
12.33
(A)
¥373,794
¥ 359,636
$3,110,543
Risk-adjusted assets: (B)
3,065,938
2,916,122
25,513,339
Capital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)
Capital:
38
2015
l Non-Consolidated
THE 77 BANK, LTD.
March 31, 2015
Balance Sheet (Parent Company)
Millions of Yen
2015
2014
Thousands of
U.S. Dollars
2015
Assets:
Cash and due from banks
Call loans and bills bought
Debt purchased
Trading account securities
Money held in trust
Investment securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Customers’ liabilities for acceptances and guarantees
Other assets
Reserve for possible loan losses
Total
¥514,606
20,636
4,561
11,397
84,093
3,683,636
4,227,655
3,328
¥507,344
161,091
3,003
16,132
59,235
3,716,530
4,007,815
6,639
$ 4,282,316
171,723
37,954
94,840
699,783
30,653,540
35,180,619
27,694
9,166
20,571
376
536
6,323
301
37,650
10,920
(76,044)
¥8,559,715
8,261
20,258
650
929
6,446
328
32,677
15,395
(84,381)
¥8,478,360
76,275
171,182
3,128
4,460
52,617
2,504
313,306
90,871
(632,803)
$71,230,049
Liabilities:
Deposits
Call money
Payables under securities lending transaction
Borrowed money
Foreign exchange liabilities
Liability for retirement benefits
Reserve for reimbursement of deposits
Reserve for contingent losses
Acceptances and guarantees
Reserve for disaster losses
Deferred tax liabilities
Other liabilities
Total liabilities
¥7,854,938
67,054
39,264
20,474
296
24,865
339
934
37,650
7
37,504
18,515
8,101,845
¥7,876,482
62,935
33,974
20,432
164
31,238
331
969
32,677
7
7,991
24,664
8,091,869
$65,365,215
557,992
326,737
170,375
2,463
206,915
2,821
7,772
313,306
58
312,091
154,073
67,419,863
Equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Total valuation adjustments
Stock acquisition rights
Total equity
Total
24,658
7,835
290,249
(4,419)
318,323
139,368
(415)
138,953
593
457,870
¥8,559,715
24,658
7,835
277,810
(4,476)
305,827
80,390
(248)
80,142
521
386,490
¥8,478,360
205,192
65,199
2,415,319
(36,772)
2,648,939
1,159,757
(3,453)
1,156,303
4,934
3,810,185
$71,230,049
39
l Non-Consolidated
THE 77 BANK, LTD.
Year Ended March 31, 2015
Statement of Income (Parent Company)
Millions of Yen
2015
2014
Income:
Interest income:
Interest on loans and discounts
Interest on dividends on trading account and
investment securities
Other
Fees and commissions
Other operating income
Other income
Total income
¥45,480
¥47,046
$378,463
28,233
164
16,273
1,533
10,100
101,785
26,303
134
16,121
1,296
5,983
96,886
234,942
1,364
135,416
12,756
84,047
847,008
Expenses:
Interest expense:
Interest on deposits
Interest on call money
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses
Total expenses
2,886
313
534
5,956
1,881
58,323
1,611
71,507
3,047
59
401
5,920
3,623
56,142
2,107
71,301
24,015
2,604
4,443
49,563
15,652
485,337
13,406
595,048
Income before income taxes
30,278
25,584
251,959
Income taxes:
Current
Deferred
Total income taxes
4,941
8,459
13,401
6,700
4,137
10,837
41,116
70,391
111,517
¥16,876
¥14,747
$140,434
Net income
40
Thousands of
U.S. Dollars
2015
l Loan
Portfolio
Billions of yen
Loan Portfolio by Industry
Domestic offices (Excluding Japan offshore banking accounts)
Manufacturing
Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other
Japan’s offshore banking accounts
Financial institutions
Total
Millions of
U.S. Dollars
2015
2015
¥4,227
482
5
4
1
146
108
35
93
423
316
684
272
766
885
$35,180
4,013
42
40
8
1,221
906
293
777
3,522
2,633
5,699
2,267
6,379
7,372
—
—
¥4,227
$35,180
Billions of yen
Loan Portfolio by Industry
2014
Domestic offices (Excluding Japan offshore banking accounts)
Manufacturing
¥4,007
476
Japan’s offshore banking accounts
Financial institutions
Total
¥4,007
Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other
3
4
0
131
98
39
80
400
322
619
256
740
831
—
Millions of
U.S. Dollars
Billions of yen
Loans by Collateral
Securities
Commercial claims
Real estate
Subtotal
Guaranteed
Unsecured
Total [Subordinated loans]
2015
¥
0
28
677
706
1,286
2,234
¥4,227 [4]
2014
¥0
29
605
635
1,248
2,123
¥4,007 [6]
2015
$
4
233
5,638
5,876
10,708
18,595
$35,180 [35]
41
Billions of yen
Reserve for Loan Losses
General reserve for loan losses
Specific reserve for estimated loan losses on certain doubtful loans
Total
42
2015
¥38
37
¥76
2014
¥42
41
¥84
Millions of
U.S. Dollars
2015
$322
309
$632
ANNUAL REPORT2015
Bank Data
P ro f i l e
The 77 Bank, Ltd., was founded in 1878 as Japan’s 77th national bank. Headquartered in Sendai—the capital of Miyagi Prefecture—the Bank is the largest in
the Tohoku region, with a branch network covering the northern part of Honshu,
Japan’s largest island.
Based on its philosophy, The 77 Bank continues to strengthen its business foundation and enhance its management quality in order to be the “Value-creating
bank” that grows together with and is the most trusted by the region. As of March
31, 2015, The 77 Bank had capital of ¥24.7 billion, 141 domestic branches and
2,791 employees.
THE 77 BANK, LTD.
As of March 31, 2015
Head Office
Paid-in Capital
3-20, Chuo 3-chome, Aoba-ku, Sendai,
Miyagi 980-8777, Japan
Phone: +81-22-267-1111
http://www.77bank.co.jp/
¥24,658 million (US$205 million)
Number of Stockholders
8,760
Shares Outstanding
Founded
383,278 thousand
December 1878
Major Stockholders
Number of Branches
141
Number of Employees
Number of
Shares
(Thousands)
%
18,928
15,431
15,412
14,795
12,275
11,449
10,767
9,017
8,478
8,392
4.93
4.02
4.02
3.86
3.20
2.98
2.80
2.35
2.21
2.18
Meiji Yasuda Life Insurance Company
Nippon Life Insurance Company
Sumitomo Life Insurance Company
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Dai-ichi Life Insurance Company, Limited
The Master Trust Bank of Japan, Limited (trust account)
Japan Trustee Services Bank, Limited (trust account)
Aioi Nissay Dowa Insurance Co., Ltd
Tohoku Electric Power Co., Ltd
Japan Trustee Services Bank, Limited (trust account 4)
2,791
Treasury Administration &
International Division
Planning & Business Department
3-20, Chuo 3-chome, Aoba-ku, Sendai,
Miyagi 980-8777, Japan
Phone: +81-22-211-9914
Facsimile: +81-22-211-9916
SWIFT Address: BOSSJPJT
Note:The Bank owned 9,051 thousand shares of treasury stock as of March
31, 2015, which is excluded from the major stockholders listed above.
Service Network
As of June 30, 2015
SAPPORO
1 Branch
AKITA
Con t e n t s
Consolidated Financial Highlights ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Message from the President ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Toward a Firmer Business Position ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Growing with the Region -Toward Reconstruction from the Great East Japan Earthquake- ・・・・
77 Bank Group ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Board of Directors and Audit & Supervisory Board Members ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Organization ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Financial Section ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Five-Year Summary ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Performance for Fiscal 2015 ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Comprehensive Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Changes in Equity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Consolidated Statement of Cash Flows ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Notes to Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Independent Auditors’ Report ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Capital Adequacy Ratios ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Non-Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Non-Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Loan Portfolio ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
Bank Data ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
1 Branch
TOHOKU
REGION
1
2
5
9
11
12
12
13
13
14
15
16
16
17
18
19
37
38
39
40
41
43
IWATE
2 Branches
OSAKA
1 Branch
TOKYO
2 Branches
NAGOYA
1 Branch
YAMAGATA
1 Branch
MIYAGI
126 Branches
SHANGHAI
SENDAI
Headquarters
Treasury Administration &
International Division
FUKUSHIMA
6 Branches
Shanghai Representative Office
Address:16th floor, Hang Seng Bank Tower, 1000 Lujiazui Ring Road, Pudong New Area, Shanghai,
P. R. China
Phone:+86-21-6841-2077
43
2 0 15
THE 77 BANK, LTD.
ANNUAL REPORT
2015
77BANK
2015