One Step Ahead

ANNUAL REPORT 2019

THE OGAKI KYORITSU BANK, LTD.

SHIGA

Chubu region

MIE

GIFU

AICHI

GIFU

TAKAYAMA

NAGOYA

HANDA

OGAKI

OKAZAKI

TOYOHASHI

Profile

Aichi PrefectureGifu Prefecture

Mie Prefecture Shiga Prefecture(million)

Note: Population figures are rounded down to the nearest 10,000.

0

3

6

9

12

15

1.41

1.80

7.50

2.02

12.75

1.41

1.80

7.52

2.00

12.74

1.41

1.79

7.53

1.99

12.73

2016 2017 2018

Notes:1. Amounts are rounded down to the nearest ¥100 million.2. Shares are rounded down to the nearest 0.1 percentage point.

(¥ billion)

Gifu: 2,903.7 (57.6%)

Aichi: 1,959.7 (38.9%)

Mie: 91.5 (1.8%)

Shiga: 57.6 (1.1%)

Tokyo/Osaka: 24.7 (0.5%)

Notes:1. Amounts are rounded down to the nearest ¥100 million.2. Shares are rounded down to the nearest 0.1 percentage point.

(¥ billion)

Gifu: 1,254.5 (30.4%)

Aichi: 2,089.6 (50.6%)

Mie: 125.1 (3.0%)

Shiga: 62.2 (1.5%)

Tokyo/Osaka: 601.8 (14.6%)

Branches Loan Plazas

Gifu 92 5 Aichi 55 15 Mie 4 1 Shiga 2 0 Tokyo/Osaka 2 0 Total 155 21

Japan Credit Rating Agency, Ltd. Long-term Issue Rating, A

To always be respected and trusted by the local community.

Management Vision

Demographic trends(as of October 1, 2018)

Balance of deposits (Non-consolidated)(breakdown by area; as of March 31, 2019)

Balance of loans (Non-consolidated)(breakdown by area; as of March 31, 2019)

Number of branches and loan plazas(as of March 31, 2019)

Credit rating(as of March 31, 2019)

SHIGA

Chubu region

MIE

GIFU

AICHI

GIFU

TAKAYAMA

NAGOYA

HANDA

OGAKI

OKAZAKI

TOYOHASHI

It gives us great pleasure to introduce the 2019 Annual Report of

Ogaki Kyoritsu Bank.

Ogaki Kyoritsu Bank is a regional financial institution

headquartered in Gifu Prefecture, approximately the center of Japan.

Our domestic network of 155 branches and offices is centered

in Gifu, Aichi, Mie, and Shiga Prefectures.

Since the Company was founded in March 1896, it has been

guided by its management vision of always being respected and

trusted by the local community. We have advanced in step with our

region, always aiming to earn and maintain the unshakable trust of

our customers, shareholders, financial markets, our employees and

members of regional community. This history has led to the solid

reputation we now enjoy from the people in our home region, and

to our being named an officially designated financial institution by

Gifu Prefecture in 2015.

Adopting the standpoint of our customers, all members

of Ogaki Kyoritsu Bank and its 10 consolidated subsidiaries and

affiliates—collectively comprising the Ogaki Kyoritsu Group—will

work together to help revitalize the regional economy.

Toshiyuki Sakai President

Takashi Tsuchiya Chairman

Message from the Chairman and President

1

The policy that lies at the heart of the business activities of the

Company is to always view its products and services from the

customer’s perspective.

For many decades, Japanese banks had been protected by a

web of regulations often described as the convoy system. Under

this protection, the banks had cultivated no sense of competition,

let alone a willingness to approach the issue of improving customer

convenience.

In the 1990s, a wave of financial deregulation swept across

Japan, heralding a new era in which banks could leave the

confines of the convoy system and compete with each other by

implementing their own ideas. In that context, we that the most

urgent task for all directors and employees is to realize that a bank

is no longer a privileged institution but a company in the service

sector, which must compete by providing the most attractive and

convenient services.

Since adopting this policy, Ogaki Kyoritsu Bank has consistently

maintained a customer-first approach and tackled the challenges

that followed the deregulation of the banking sector, so that it

could boost customer convenience. Some of our key initiatives are

shown below.

Launched next-generation Web-ATMs (first in Japan)

ATMs operated 365 days of the year(a first for

Japanese banks)

Point service commenced(first in Japan)

Sales of Super Gold multi-purpose account commenced

Launch of sales of “Futari-de” loans for married couples to undergo treatment for infertility (first in Japan)

Launch of sales of Life Plan “Re,” loans for those who are divorcing (first in Japan)

Hida No. 1 mobile branch (vehicle) started operation (first in Japan)

Aiming to become a

comprehensive financial services

company

1994 19951998

20002002

2005

2009

2011

2012

2015

2018

2019

2017

2016

OKB Super Frontier mobile branch (vehicle) started operation

Launched Origami, a smartphone payment service(first in Japan)

Pioneering improved customer convenience by adopting

the customer’s perspective

Ogaki Kyoritsu Bank

Everyday Plaza opened (special branches open all year round)(first in Japan)

“ATM Slot Game” service started(first in Japan)

2007

2006

2013

Disaster recovery support vehicle: “The Rescue” mobile “Loan Plaza” offered lifestyle support loans (first in Japan)

Opened a branch featuring ATM-equipped drive-through teller windows(first in Japan)

Official designation as financial institution by Gifu Prefecture

Launched biometric ATMs that allow customers to carry out transactions with just a scan of their palm(first in Japan)

September 2017Verifying identity just by scanning the palm at teller windows, ATMs, and safety deposit boxes at the newly opened Terrasse Nayabashi branch (first in Japan)

October 2017Commenced a burial expense loan plan for women called Matinee (first in Japan)

May 2017Transactions with just by scanning the palm become possible at teller windows

July 2017Joint ATM service with Japan Post Bank begins in FamilyMart convenience stores

November 2017OKB Southern Wind mobile branch (vehicle) started operation

Our Fundamental Policy

April 2019Launched provision of trust services

2

(¥ billion)

2,000

3,000

4,000

1.71

(million)

2,3382,444

2,563

3,0023,150

2,8952,776

3,259Balance of individuals’ deposits (left scale)Retail banking customers (right scale)

1.72 1.731.721.701.681.66

1.751.74

1.2

1.5

1.8

3,346

1.76

3,551

1.80

3,465

1.77

2,656

3,644

1.79

201520142013201220112010200920082007 2016 2017 2018 2019

Note: Monetary figures (shown in units of billions) are rounded down. Numbers of customers (shown in millions) are rounded down to the second decimal place.

Achievements Thus Far

The number of people who have registered their biometric information required

when using the “Pipit” ATM, which permits transactions with just a scan of their palm

identification (ID), surpassed 570,000. The Company began offering the “Pipit” ATM in

September 2012.

“Pipit” enables transactions with just a scan of the palm without a cash card, because

it recognizes users when they hold up their palm to the machine and it matches their

pre-registered palm biometric data. The reason the Company developed ATM transactions with palm ID was due to the many

depositors who lost their ATM cards during the Great East Japan Earthquake.

Since customers do not need to walk around with their ATM cards, “Pipit” offers everyday convenience, and thus registration is

growing along with rising disaster awareness.

In May 2017, using this palm recognition technology, we made it possible to verify identity with the palm when making

transactions at teller windows. Then in September of the same year, the Company opened the Terrasse Nayabashi branch, where

customers can verify their identity at ATMs, teller windows, and safety deposit boxes just by scanning the palm.

Customers Registered to Use Biometric ATM “Pipit” with Palm Identification Surpass 570,000

We have pursued a number of initiatives for 26 years to transform

the Company into a service supplier with the customer’s perspective

as the starting point.

These initiatives are now finally beginning to show significant

results. Because Ogaki Kyoritsu Bank is a regional financial

institution, the number of individuals with whom it does business

is a very important barometer of its overall performance. The “Pipit”

ATM, which allows customers to conduct transactions with a scan of

their palm, is helping to accelerate the rate of increase in individual

deposit accounts, as the number of its registered users has now

surpassed 570,000. The Company’s approach, focused on raising

customer convenience, appears to have gradually gained the

approval of individual customers.

Biometric ATMs that allow customers to carry out transactions with just a scan of their palm

TOPICS

Transactions with retail banking customers & balance of deposits

3

Consolidated Financial Highlights

Millions of Yen Thousands of U.S. Dollars

2019 2018 2019At Year-End: Deposits ¥5,084,021 ¥4,963,065 $45,806,117 Loans and bills discounted 4,113,132 4,023,090 37,058,581Securities 1,245,105 1,333,203 11,218,172Total assets 5,833,869 5,754,276 52,562,113Total net assets 309,676 309,229 2,790,125Common stock 46,773 46,773 421,416For the Year: Total income ¥117,493 ¥119,698 $1,058,590Total expenses 106,943 104,997 963,537Income before income taxes 10,550 14,701 95,053Net income attributable to owners of the parent 6,861 9,673 61,816Per Share Data (in yen and U.S. dollars): Net income attributable to owners of the parent —basic ¥164.23 ¥231.55 $1.47

—diluted 164.03 231.30 1.47Net assets 7,139.69 7,140.93 64.32

ROE 2.30% 3.26%Notes: 1. In this annual report, the Japanese yen in millions are indicated with fractions omitted.

2. Figures stated in U.S. dollars in this annual report are translated from Japanese yen, solely for convenience, at the rate of ¥110.99 per U.S. $1.00, the rate prevailing at March 31, 2019.

10.67

10.32

(¥ billion) (¥ billion) (¥ billion) (%)

4

10

16

7

13

2,000

2,500

3,000

3,500

4,000

2,500

3,000

3,500

4,500

4,000

5,000

0

3

6

9

12

15

9.83 9.36

5,084

8.26

4,113

6.8

2015 2015 20152015 2016 2016 2016 20162017 2017 2017 20172018 2019 2019 2019 20192018 2018 2018

During the fiscal year under review, deposits increased ¥120 billion

year on year to ¥5,084 billion (US$ 45,806 million) mainly due to

accounts held by individuals.

The year-end balance of loans and bills discounted increased

¥90 billion year on year to ¥4,113 billion (US$ 37,058 million) as

a result of proactive measures to meet financing demand from

corporate and individual customers.

In the fiscal year under review, total income (operating income

plus extraordinary income) amounted to ¥117,493 million

(US$ 1,058,590 thousand), a decrease of ¥2,204 million year on

year. The decrease was mainly due to the impact of retirement

benefits appropriated in the previous fiscal year on extraordinary

income. Total expenses (operating expenses plus extraordinary

expenses) came to ¥106,943 million (US$ 963,537 thousand), up

¥1,946 million over the previous fiscal year. This was primarily

due to an increase in other operating expenses resulting from

the disposal of a portion of unrealized debt in the United States.

As a result of these and other factors, income before income

taxes for the year totaled ¥10,550 million(US$ 95,053 thousand),

while net income attributable to owners of the parent amounted

to ¥6,861 million (US$ 61,816 thousand).

Deposits & Loans (on a consolidated basis)Business Performance (on a consolidated basis)

The Ogaki Kyoritsu Bank, Ltd. and its Consolidated SubsidiariesYears ended March 31

Deposits Loans and bills discounted

Net income attributable to owners of the parent Capital adequacy ratio

4

In June 2018, the Company received a regional revitalization minister’s prize at the second annual Nihon Service Awards, the first awards program in Japan that recognizes initiatives for providing outstanding services. The award recognized the Company’s contribution to regional revitalization through a variety of user-friendly services, including ATMs that operate 365 days a year, drive-through branches, and services integrating biometric palm vein identification.

The Ogaki Kyoritsu Bank was ranked as the No.1 bank in Japan by U.S. business magazine, Forbes, in its “World’s Best Banks 2019” issue, published in January 2019. The rankings are based on a customer satisfaction survey of more than 40,000 customers in 23 countries, covering items such as reliability and customer service.

Ogaki Kyoritsu Bank Chairman Takashi Tsuchiya received an Outstanding Leadership Award in Corporate Communications* from the Japan Institute for Social and Economic Affairs. He accepted the award at the 35th Corporate Communications Awards ceremony held in September 2019.

* Outstanding Leadership Awards in Corporate Communications are given to top managers who recognize the importance of public relations, demonstrate receptiveness to ideas from in and outside their company, and actively promote communication and dialogue with stakeholders on business and community development initiatives, management philosophy, future business goals, and other relevant issues.

Presented with a Nihon Service Award

Ranked as Japan’s top bank by Forbes magazine

Chairman Tsuchiya receives an Outstanding Leadership Award in Corporate Communications

The balance of nonperforming loans subject to mandatory disclosure under the Financial Revitalization Law decreased by ¥8.6 billion from the previous reporting term, to ¥62.4 billion.

The ratio of such loans to total loans declined by 0.24 of a percentage point from the previous reporting term, to 1.49%, as a result of growth in the volume of the loan balance.

The majority of these nonperforming loans are covered by reserves for possible loan losses or by collateral or guarantees. Consequently, the coverage ratio (coverage of total bad debt) was 79.97% (¥49.9 billion).

Risk-managed loans under the stipulations of the Banking Law amounted to ¥61.6 billion.

Hitherto, in addition to accumulating profits as retained earnings, the Company has endeavored to build up its regulatory capital through financing for capital expansion, in order to create the sort of sound financial position required of a regional financial institution.

Regulatory capital as of the reporting term-end decreased from the previous reporting term-end to ¥243.9 billion, and risk assets increased reflecting a major increase in the loan balance. As a result, the capital adequacy ratio according to the BIS-based domestic standards decreased by 1.10 of a percentage point, to 8.26%.

10.67

5.19

10.32

4.95

(%)

20162015

9.83

5.15

2017

9.36

5.18

2018

8.26

5.11

20190

3

6

9

12

15

Consolidated capital adequacy ratio (domestic standard)Capital adequacy ratio

Note: The capital adequacy ratio was calculated by taking (total net assets at year-end – stock acquisition rights at year-end – non-controlling interests at year-end) and dividing it by total assets at year-end.

(¥ billion) (%)

0

1.2

0.6

1.8

2.4

3.0

0

80

40

120

160

200

10.7

50.9

24.285.7

2.37

18.7

48.0

20.587.2

2.34

12.5

47.2

20.380.0

2.04

12.941.6

16.571.0

1.73

Note: No direct charge-offs were made.

Ratio of nonperforming loansSubstandard loansCredit for bankrupt and quasi-bankrupt borrowers

Doubtful credit

2015 2016 2017 2018

10.339.512.5

62.4

1.49

2019

Present Status of the Bank’s Assets Capital Adequacy

Asset Quality

Recognition from external organizations

Term-end balance of nonperforming loans (according to the criteria of the Financial Revitalization Law) Regulatory capital

5

New Medium-Term Management Plan

One Step Ahead

Financial targets

April 2019 to March 2021 (Two Years)Plan Period

In April 2019, the Company commenced its new medium-term management plan, One Step Ahead, effective through March 2021. The plan lays out a business model designed to realize growth of the OKB Group and its customers in step with regional growth by providing services tailored to every customer’s needs. To realize this goal, the plan establishes the following three main strategies for taking a leading role in the community.

¥6billion

annually

¥5billion

annually

¥6trillionby March 31, 2021

Core net business profit

Net income

Assets undermanagement

Create value in line with

customer needs

Improve operations

while maintaining customer contact

points

Engage with the community and help ensure

its vitality

Guided by its management vision of always being respected and trusted

by the local community, the entire OKB Group is committed to realizing the

Sustainable Development Goals (SDGs) through proactive efforts to solve

issues facing the local community, with the aim of growing sustainably

with the surrounding region.

OKB Group SDGs Declaration

Initiatives for the United Nations’ Sustainable Development Goals

The OKB Group’s key initiatives

6

OKB Gallery Ogaki

O K B B ra n d

New Medium-Term Management Plan

One Step Ahead

Financial targets

April 2019 to March 2021 (Two Years)Plan Period

In April 2019, the Company commenced its new medium-term management plan, One Step Ahead, effective through March 2021. The plan lays out a business model designed to realize growth of the OKB Group and its customers in step with regional growth by providing services tailored to every customer’s needs. To realize this goal, the plan establishes the following three main strategies for taking a leading role in the community.

¥6billion

annually

¥5billion

annually

¥6trillionby March 31, 2021

Core net business profit

Net income

Assets undermanagement

Create value in line with

customer needs

Improve operations

while maintaining customer contact

points

Engage with the community and help ensure

its vitality

We add color to the community with facilities and products prefixed with “OKB,” the mark of Ogaki Kyoritsu Bank brand.

Public facilities in Gifu Prefecture with OKB naming rights

Collaboration with local specialty products

Hydrogen supply facility for FCVs on the bank premises

OKB Farm OKB Forest Republic OKBike

OKB Gifu Seiryu ArenaOKB Fureai Plaza OKB Ogaki Yoro Hydrogen Station

OKB Gymnastics Arena

NEWNEW

OKB Water “Shall We” OKB Farm Rice OKB Premium Wine

OKB Premium Blueberry Jelly OKB Premium Whole Sansho (Japanese Pepper) OKB Farm Hand Soap

7

The Company has drawn up a set of basic policies regarding the

creation of an internal control system, and the management

is working to enhance the effective functioning of the system,

particularly with respect to compliance and risk management.

We are also working to construct a system that will ensure the

adequacy of the Group’s internal controls on financial reporting

under the Financial Instruments and Exchange Act.

The Board of Directors of Ogaki Kyoritsu Bank meets once

a month in principle to make decisions on important

matters and operational execution regarding the Company’s

management. In addition, directors periodically report on the

execution of operations and the risk status to the Board.

The Company ensures that operations are audited by its

management by requiring its corporate auditors to attend meetings

of the Board of Directors. To prevent complacency and to clarify

its management responsibilities, the Company limits the term of

office for directors to one year. With these initiatives, the Company is

committed to strengthening the functions of the Board of Directors.

The corporate auditors of Ogaki Kyoritsu Bank hold meetings,

in principle every month, to discuss, determine and report on

important matters relating to audits, based on audit policies and

audit plans resolved by the Board of Corporate Auditors.

The Executive Committee consists of the chairman, president

and managing director of the Company. The committee discusses

important management matters, and controls and manages

the Company’s operations in general. In addition to Executive

Committee members, full-time corporate auditors attend

committee meetings.

As an advisory body to the Board of Directors, the Management

Advisory Committee submits proposals concerning the nomination

and remuneration of directors. The committee is comprised of the

full-time directors, external directors, and external auditors.

The Compliance Committee, chaired by the president of the

Company, holds regular meetings twice a year in addition to ad hoc

meetings as deemed necessary, and sets out the Company’s policies

on legal compliance. A Compliance Manual—detailing the procedures

to be followed to ensure compliance—is distributed to all executives

and regular employees of the Company, and compliance study

sessions are held for each separate employee rank. In this and other

ways, the management of the Company is actively working to foster a

corporate culture grounded in the spirit of compliance and a thorough

understanding of the laws applicable to the banking business.

Ogaki Kyoritsu Bank and its Group companies are pursuing the following as a means toward the ultimate objective: To always be respected

and trusted by the local community.

• Seeking to achieve swift decision-making at the management level, as well as overall management efficiency

• Realizing transparent management through substantial disclosure of corporate information

• Demonstrating the sincerity of the Group by practicing compliance and making contributions to the communities in our home region

These are the basic policies that we plan to follow in enhancing our corporate governance.

Basic Stance on Corporate Governance

Establishment of the Internal Control System

Legal Advisor

Group Companies

Audit Division

External audits based on risk analyses

Accounting Auditors

Collaboration

Collaboration

Mutual checking

Internal audits

General Meeting of Shareholders

Consultation/Advice

Head Office Divisions

Branch Offices

Executive Committee

Compliance Committee

Board of DirectorsBoard of Corporate Auditors

Mutual checkingProposals

Management Advisory Committee

Internal control system

Corporate Governance

8

The management of Ogaki Kyoritsu Bank recognizes the importance

of the public role played by banks, and the necessity of fulfilling

corporate social responsibilities. The establishment of an effective

compliance system is the vital first step that a bank must take to earn

the trust of its customers and shareholders, and for this reason we are

working to strengthen legal compliance within Ogaki Kyoritsu Bank.

The organizational structure of the Company’s compliance

system consists, first of all, of a Compliance Office within the

Management Administration Division, which serves as the central

supervisory unit for compliance-related matters. In addition, an

officer responsible for compliance is designated within each

division of the Company and at each branch office. By means of

constant liaison and collaboration between these officers and the

Compliance Office, we are able to operate a unified system for the

monitoring of compliance, covering both the Company’s head

office and all branch offices.

Additionally, the Compliance Committee (chaired by the president)

works to enhance the Company’s practice of compliance, and is

responsible for drawing up and revising the Company’s Compliance

Manual and Compliance Program, and for raising awareness of

compliance issues among the Company’s directors and employees.

The Compliance Manual, which is distributed to all directors

and employees, specifies the procedures to be followed to ensure

the practice of legal compliance. By overseeing the day-to-day

practice of compliance, the management of the Company is

working to build a compliance-focused corporate culture. Staff

education in the principles of compliance and specific banking-

related laws is also provided by means of separate study courses for

the different ranks in the Company’s hierarchy, as part of the

Company’s rigorous approach to ensuring legal compliance.

Inter-industry Training SystemIn 1998, we started an inter-industry training system that allows

young bankers to experience working in other industries and to

look beyond the boundaries of banking.

Participants train in a variety of industries, including hotels,

manufacturing and mass media. Entry into the training program

is by open application, and many young bankers enthusiastically

apply. Those who are chosen spend about a year in their second

workplace, where they consider the real meaning of service and

how banks should act as companies within the service sector. Later,

they provide feedback to the Company.

Convenience Plaza Handa is our representative branch

designed from the customer’s point of view. The idea came

from a banker who took inter-industry training as the manager

of a convenience store and then modeled a bank branch on a

convenience store. Also, a banker who did inter-industry training at

a TV station used his experience to plan, shoot, and edit a currently

airing TV commercial for Ogaki Kyoritsu Bank as well as promotional

videos shown in our branches.

Our inter-industry training system promotes flexible thinking

that is not limited by bank boundaries and that drives us to provide

services from the customer’s point of view.

A trainee at a TV station shooting a scene

OKB Friends activity for club activity support plan at Special Needs School

The basic mission of a regional financial institution is to contribute to the

growth and healthy development of its regional community.

Ogaki Kyoritsu Bank launched its Social Contributions Committee in 1996.

This panel, comprised of members from all Group companies, revised its

name to the OKB Social Contribution Club in April 2016. This club leads

initiatives by the Group to make a real contribution to the development of

the region in which we operate.

Clean-up operation

Compliance Maintaining Organizational Flexibility

Handa Branch, aka Convenience Plaza Handa, planned by a trainee managing a convenience store

Social ContributionCSR Initiatives

9

Credit Risk ManagementCredit risk refers to the risk of a reduction or elimination of

asset value, and the resulting loss, owing to factors such as the

aggravation of the financial position of borrowers.

The Company carries out rigorous credit screening on an individual

loan basis prior to the extension of each loan, based on its Credit Risk

Management Regulations, and follows this up with close monitoring of

repayment. We also manage our loan portfolio as a whole to ensure

that loans are not overly concentrated on particular industries or

large-scale borrowers. Through this two-pronged approach, we are able

to maintain the soundness of the Company’s loan assets.

Maintaining its objective and independent status, the Loan

& Credit Supervision Division applies strict criteria to individual

loans in both the credit screening and post-loan management

phases to ensure that the loans contribute to the public good, have

reasonable prospects of repayment, the loans are profitable, and

borrowers have a sufficient degree of future growth potential.

In the management of the Company’s loan asset portfolio as a

whole, the Company conducts credit rating and self-assessments to

ensure that there is no undue concentration of loans in particular

industries, in particular corporate borrower sizes, or particular

geographic areas. The aim of these regular checks is to disperse risk

and create a well-balanced asset portfolio.

Market Risk ManagementMarket risk refers to the risk of a downward adjustment in the

value of the Bank’s assets (including off-balance-sheet assets)

as a result of fluctuations in market factors, including interest

rates, currency exchange rates and share prices, and the risk of a

downward adjustment in the value of the Bank’s assets as a result

of fluctuations in income generated by assets and liabilities. This

risk category is principally subdivided into interest rate risk, price

fluctuation risk, and exchange rate risk.

Ogaki Kyoritsu Bank has drawn up a set of Market Risk

Management Regulations. The Company controls market risk

adequately through the administration of its credit limits. In

addition, the Company has established an organization that allows

controls to function by separating the market risk management

division (middle office) and the office work management division

(back office) from the market division (front office).

Liquidity Risk ManagementLiquidity risk refers to the possibility that the Company may not be

able to secure sufficient funds from its normal sources for necessary

operations, due to a mismatched term between fund procurement

and investment, or the occurrence of a contingent withdrawal of

deposits (known as funding risk). This may result in the Company

being forced to take funds at considerably higher interest rates

than normal, thus causing the Company to suffer a loss. Liquidity

risk also refers to the possibility that the Company may not be able

to engage in market transactions, due to factors such as market

turmoil (known as market liquidity risk). This may result in the

Company being forced to carry out transactions at much more

disadvantageous prices than normal, generating a loss.

Ogaki Kyoritsu Bank has drawn up a set of Liquidity Risk

Management Regulations. The Company is applying the rules so

that it manages its funds in a conservative way. To prepare for any

contingency, the Company has also adopted measures to deal with

a liquidity crisis, and has established an organization that allows it to

make an immediate response.

The ALM CommitteeAt meetings of the ALM Committee held each month, policies on

securities management, funding and other matters are discussed

and adopted to improve profitability by keeping market risk,

liquidity risk and credit risk within their allowable ranges.

Operational Risk Management Operational risk refers to the risk of loss resulting from bank business

processes, the activities of executives and employees, or systems

being inappropriate, as well as from external events.

Ogaki Kyoritsu Bank is committed to managing its risks properly, by keeping them in balance with income. The Company has developed and

adopted appropriate and effective risk management systems, based on risk details and scale. These systems comply with the Company’s Risk

Management Policies, which set out handling policies and organizational structures relating to risk management, and other risk management

regulations, management procedures and risk management regulations are stipulated for each risk category.

Specifically, the Company has established committees dedicated to risk management, including the ALM Committee. The Company has

also set up sections that manage risks in an integrated manner, as well as risk control and supervisory sections in each category. In doing so,

the Company has built a system through which the risk status is reported regularly and as required from the risk management sections to

the management directly. Operational audits are also carried out by the Audit Division, which is organizationally independent of the units of

the Company that it audits, to confirm the appropriateness and validity of risk management.

Progress in Perfecting the Risk Management System

Risk Management

10

Compliance Committee ALM Committee Accident Countermeasures Committee

Compliance Risk Market Risk Credit Risk Liquidity Risk System Risk Administrative Risk

Board of Directors Board of Corporate Auditors

Executive Committee

Branch Offices and Head Office Divisions

Audit DivisionInternal audits

Management Administration Division

Compliance OfficeLegal Section, Compliance OfficeCustomer Service Section, Compliance OfficeMarket Risk Management Section

Credit Risk Management SectionOperational Risk Management Section

The Company classifies risks into the categories of (1) administrative

risk, (2) system risk, (3) legal risk, (4) human resource risk, (5) tangible

asset risk, and (6) reputational risk, and addresses risk management

in accordance with the Operational Risk Management Regulations.

Furthermore, at the Operational Risk Management Committee

that is held on a regular basis, efforts are made to improve the

effectiveness of risk management through discussions

aimed at understanding the status of operational risks and

possible countermeasures.

The management systems for the administrative risk and system

risk, which are key proponents of operational risk, are as follows.

Administrative Risk Management Administrative risk refers to the risk of losses, as a result of

negligence on the part of executives and regular employees in

the performance of clerical duties, accidents they cause, or acts

of dishonesty they commit.

Ogaki Kyoritsu Bank is working to strengthen the

administrative risk management organization in compliance with

its Administrative Risk Management Regulations in order to

minimize the materialization of foreseeable categories of

administrative risk and thereby enable the Company to cope with

the diversification of the banking business and the trend toward

an increasing number of transactions.

Specifically, we are collecting and analyzing information on

administrative errors so that we can put in place measures to prevent

any recurrence and improve our administrative processes. We have

also set up administrative work support teams to help the branch

offices maintain an adequately high level of accuracy in

administrative work. Members of the team visit the branches to

supervise work procedures directly, and the team also conducts training

courses to raise the skill levels of branch staff. In addition, regular

training courses are conducted for different rankings of employees by

division to raise the administrative skill levels of the whole Bank.

System Risk ManagementSystem risk refers to the risk of the Company suffering monetary

loss as a result of the crashing or serious malfunctioning of one or

more of the Company’s computer systems, or the unauthorized

use of a computer system (such as the leakage of confidential

information to persons outside the Company).

In view of the vital importance to a bank of the information

in its possession and of the computer systems it employs,

Ogaki Kyoritsu Bank has taken appropriate steps to protect the

information in its safekeeping and to ensure the secure and

continued operation of its computer systems.

Specifically, the Company has instituted computer system risk

management, and has laid down the System Risk Management

Regulations, which set out policies regarding the management

of the computer systems themselves and the data (information)

contained within them. The Company is exerting its full efforts to

assure the confidentiality of information in its possession through

the application of the Regulations.

Information Asset ManagementThe term “information assets” as used here refers both to

information itself and to the computer systems used to store and

disseminate the said information. In the event that confidential

information is leaked to persons outside the Company, or

improper use is made of the Company’s information assets, the

Company could suffer considerable damage.

To ensure that Ogaki Kyoritsu Bank conducts its banking

business in an ethically correct manner, we have published our

Security Policy, which clarifies the principles that the Company

applies to the protection of information assets, in addition to the

Customer Information Management Regulations, which set out in

detail the procedures to be followed for the proper protection and

use of the Company’s customer information assets.

Risk management system

11

Millions of YenThousands of

U.S. Dollars (Note 1)As of March 31, 2019 and 2018 2019 2018 2019

ASSETSCash and Due from Banks (Notes 7, 25 and 28) ¥ 246,288 ¥ 197,287 $ 2,219,010Call Loans and Bills Bought 8,478 3,021 76,385Monetary Claims Bought 3,371 4,033 30,372Trading Account Securities (Notes 3 and 7) 1,173 587 10,568Money Held in Trust (Note 3) 3,000 — 27,029Securities (Notes 3, 4, 7 and 28) 1,245,105 1,333,203 11,218,172Loans and Bills Discounted (Notes 5, 6, 8 and 28) 4,113,132 4,023,090 37,058,581Foreign Exchanges (Note 6) 6,686 7,290 60,239Lease Receivables and Investments (Notes 7 and 26) 72,173 65,669 650,265Other Assets (Notes 4 and 7 ) 85,830 69,209 773,312Tangible Fixed Assets (Notes 9 and 10 ) 33,503 35,162 301,856Intangible Fixed Assets 8,717 10,194 78,538Net Defined Benefit Asset (Note 14) 6,484 6,241 58,419Deferred Tax Assets (Note 11) 1,906 1,888 17,172Customers’ Liabilities for Acceptances and Guarantees (Note 15) 22,577 24,366 203,414Less Reserve for Possible Loan Losses (Note 28) (24,545) (26,955) (221,146)Less Reserve for Possible Investment Losses (15) (15) (135)

Total Assets ¥ 5,833,869 ¥ 5,754,276 $ 52,562,113

LIABILITIES AND NET ASSETSLiabilitiesDeposits (Notes 7 and 28) ¥ 5,084,021 ¥ 4,963,065 $ 45,806,117Call Money and Bills Sold 9,989 25,351 89,999Payables under Repurchase Agreements 33,774 — 304,297Payables for Securities Lending Transactions (Notes 7 and 28) 77,299 141,255 696,450Borrowed Money (Notes 7, 12 and 28) 207,895 189,836 1,873,096Foreign Exchanges 669 463 6,027Corporate Bonds (Note 13) — 15,000 —Other Liabilities 66,206 63,184 596,504Accrued Employees’ Bonuses 1,828 1,837 16,469Net Defined Benefit Liability (Note 14) 3,499 3,246 31,525Reserve for Directors’ Retirement Benefits 30 30 270Reserve for Reimbursement of Deposits 314 255 2,829Reserve for Customer Point Program 905 888 8,153Deferred Tax Liabilities (Note 11) 13,031 14,039 117,406Deferred Tax Liability on Land Revaluation (Note 9) 2,151 2,226 19,380Acceptances and Guarantees (Notes 7 and 15) 22,577 24,366 203,414

Total Liabilities 5,524,193 5,445,046 49,771,988

Net AssetsCommon Stock (Note 21):

Authorized — 80,000,000 shares Issued — 41,831,897 shares 46,773 46,773 421,416

Capital Surplus 37,834 37,834 340,877Retained Earnings 162,104 157,992 1,460,527Less Treasury Stock (Note 21):

— 57,784 shares in 2019 and 58,450 shares in 2018 (211) (216) (1,901)Accumulated Other Comprehensive Income:

Net Unrealized Gains on Available-for-Sale Securities (Note 3) 47,706 49,488 429,822Net Deferred Hedge Gains 4,974 7,186 44,814Land Revaluation Reserve (Note 9) 2,504 2,680 22,560Remeasurements of Defined Benefit Plans (Note 14) (3,431) (3,438) (30,912)

Stock Acquisition Rights 153 133 1,378Non-Controlling Interests 11,268 10,794 101,522

Total Net Assets 309,676 309,229 2,790,125Total Liabilities and Net Assets ¥ 5,833,869 ¥ 5,754,276 $ 52,562,113

Note: On October 1, 2017, the Company consolidated 10 shares into one share. The numbers of shares are stated assuming the consolidation of shares was executed on April 1, 2017.

See Notes to Consolidated Financial Statements.

Consolidated Balance SheetsThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated Subsidiaries

12

Millions of YenThousands of

U.S. Dollars (Note 1)For the Years Ended March 31, 2019 and 2018 2019 2018 2019

IncomeInterest and Dividends on:

Loans and Bills Discounted ¥ 39,232 ¥ 39,113 $ 353,473Securities 12,737 15,626 114,758Others 4,760 3,364 42,886

Fees and Commissions 13,983 15,285 125,984Other Operating Income 5,618 3,829 50,617Other Income (Notes 14 and 16) 41,160 42,478 370,844

Total Income 117,493 ¥119,698 1,058,590

ExpensesInterest on:

Deposits 1,421 1,965 12,802Borrowings and Rediscounts 4,796 4,291 43,211Corporate Bonds 56 132 504Others 246 408 2,216

Fees and Commissions 6,754 7,578 60,852Other Operating Expenses 6,223 2,136 56,068General and Administrative Expenses (Note 17) 49,286 51,900 444,058Other Expenses (Notes 18 and 19) 38,157 36,583 343,787

Total Expenses 106,943 104,997 963,537Income before Income Taxes 10,550 14,701 95,053Income Taxes (Note 11):

Current 2,698 3,133 24,308Deferred 428 1,389 3,856

Total Income Taxes 3,127 4,522 28,173Net Income 7,423 10,178 66,879Net Income Attributable to Non-Controlling Interests 562 505 5,063Net Income Attributable to Owners of the Parent ¥ 6,861 ¥ 9,673 $ 61,816

Yen U.S. Dollars (Note 1)

2019 2018 2019

Per Share of Common StockNet Income Attributable to Owners of the Parent ¥ 164.23 ¥ 231.55 $ 1.47Diluted Net Income Attributable to Owners of the Parent 164.03 231.30 1.47Dividends 70.00 70.00 0.63Net Assets 7,139.69 7,140.93 64.32

Note: On October 1, 2017, the Company consolidated 10 shares into one share. Per share information was calculated assuming the consolidation of shares was executed on April 1, 2017.

See Notes to Consolidated Financial Statements.

Millions of YenThousands of

U.S. Dollars (Note 1)For the Years Ended March 31, 2019 and 2018 2019 2018 2019

Net Income ¥ 7,423 ¥ 10,178 $ 66,879Other Comprehensive Income (Note 20) (4,072) (2,007) (36,687)

Net Unrealized Losses on Available-for-Sale Securities (Note 3) (1,867) (2,505) (16,821) Net Deferred Hedge Losses (2,211) (1,913) (19,920) Remeasurements of Defined Benefit Plans 6 2,412 54

Comprehensive Income 3,351 8,171 30,191 Comprehensive Income Attributable to: Owners of the Parent 2,873 7,516 25,885 Non-Controlling Interests 477 654 4,297

See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive IncomeThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated Subsidiaries

Consolidated Statements of IncomeThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated Subsidiaries

13

Millions of Yen

STOCKHOLDERS’ EQUITY

CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock

TotalStockholders’

Equity

Balance at April 1, 2017 ¥46,773 ¥37,834 ¥150,875 ¥(231) ¥235,251Cash Dividends — — (2,924) — (2,924)Net Income Attributable to Owners of the Parent 9,673 9,673Purchases of Treasury Stock — — — (11) (11)Losses on Sales of Treasury Stock — — (6) 26 20Land Revaluation — — 374 — 374Net Changes in Items Other Than Stockholders’ Equity

Balance at March 31, 2018 46,773 37,834 157,992 (216) 242,384Cash Dividends — — (2,924) — (2,924)Net Income Attributable to Owners of the Parent — — 6,861 — 6,861Purchases of Treasury Stock — — — (4) (4)Losses on Sales of Treasury Stock — — (0) 9 8Land Revaluation — — 176 — 176Net Changes in Items Other Than Stockholders’ Equity — — — — —

Balance at March 31, 2019 ¥46,773 ¥37,834 ¥162,104 ¥(211) ¥246,500

Millions of Yen

ACCUMULATED OTHER COMPREHENSIVE INCOMENet Unrealized

Gains onAvailable-for-

SaleSecurities

Net Deferred Hedge Gains

Land Revaluation

Reserve

Remeasurements of Defined

Benefit Plans

Total Accumulated

Other Comprehensive

Income

Stock Acquisition

RightsNon-Controlling

InterestsTotal

Net Assets

Balance at April 1, 2017 ¥52,143 ¥9,100 ¥3,054 ¥(5,850) ¥58,448 ¥126 ¥10,145 ¥303,971Cash Dividends — — — — — — — (2,924)Net Income Attributable to Owners of the Parent 9,673Purchases of Treasury Stock — — — — — — — (11)Losses on Sales of Treasury Stock — — — — — — — 20Land Revaluation — — — — — — — 374Net Changes in Items Other Than Stockholders’ Equity (2,654) (1,913) (374) 2,412 (2,530) 7 649 (1,874)

Balance at March 31, 2018 49,488 7,186 2,680 (3,438) 55,917 133 10,794 309,229Cash Dividends — — — — — — — (2,924)Net Income Attributable to Owners of the Parent — — — — — — — 6,861Purchases of Treasury Stock — — — — — — — (4)Losses on Sales of Treasury Stock — — — — — — — 8Land Revaluation — — — — — — — 176Net Changes in Items Other Than Stockholders’ Equity (1,782) (2,211) (176) 6 (4,163) 20 474 (3,668)

Balance at March 31, 2019 ¥47,706 ¥4,974 ¥2,504 ¥(3,431) ¥51,753 ¥153 ¥11,268 ¥309,676

Consolidated Statements of Changes in Net AssetsThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated Subsidiaries

14

Thousands of U.S. Dollars (Note 1)STOCKHOLDERS’ EQUITY

CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock

TotalStockholders’

Equity

Balance at April 1, 2018 $ 421,416 $ 340,877 $ 1,423,479 $ (1,946) $ 2,183,836Cash Dividends — — (26,344) — (26,344) Net Income Attributable to Owners of the Parent — — 61,816 — 61,816 Purchases of Treasury Stock — — — (36) (36) Losses on Sales of Treasury Stock — — (0) 81 72 Land Revaluation — — 1,585 — 1,585 Net Changes in Items Other Than Stockholders’ Equity — — — — —

Balance at March 31, 2019 $421,416 $340,877 $1,460,527 $(1,901) $2,220,920

Thousands of U.S. Dollars (Note 1)ACCUMULATED OTHER COMPREHENSIVE INCOME

Net UnrealizedGains on

Available-for-Sale

SecuritiesNet Deferred Hedge Gains

Land Revaluation

Reserve

Remeasurements of Defined

Benefit Plans

Total Accumulated

Other Comprehensive

Income

Stock Acquisition

RightsNon-Controlling

InterestsTotal

Net Assets

Balance at April 1, 2018 $ 445,878 $ 64,744 $ 24,146 $ (30,975) $ 503,802 $ 1,198 $ 97,252 $ 2,786,097Cash Dividends — — — — — — — (26,344) Net Income Attributable to Owners of the Parent — — — — — — — 61,816 Purchases of Treasury Stock — — — — — — — (36) Losses on Sales of Treasury Stock — — — — — — — 72 Land Revaluation — — — — — — — 1,585 Net Changes in Items Other Than Stockholders’ Equity (16,055) (19,920) (1,585) 54 (37,507) 180 4,270 (33,048)

Balance at March 31, 2019 $429,822 $44,814 $22,560 $(30,912) $466,285 $1,378 $101,522 $2,790,125

See Notes to Consolidated Financial Statements.

15

Millions of YenThousands of

U.S. Dollars (Note 1)For the Years Ended March 31, 2019 and 2018 2019 2018 2019

Cash Flows from Operating Activities:Income before Income Taxes ¥ 10,550 ¥ 14,701 $ 95,053Depreciation 4,893 5,083 44,085Impairment Loss on Fixed Assets 274 1,040 2,468Increase (Decrease) in Reserve for Possible Loan Losses (2,409) (1,414) (21,704) Increase (Decrease) in Reserve for Investment Losses — (0) —Increase (Decrease) in Accrued Employees’ Bonuses (9) 0 (81)Decrease (Increase) in Net Defined Benefit Asset (327) 1,396 (2,946)Increase (Decrease) in Net Defined Benefit Liability 347 267 3,126Increase (Decrease) in Reserve for Directors’ Retirement Benefits (0) 9 (0)Increase (Decrease) in Reserve for Reimbursement of Deposits 58 51 522Interest and Dividend Income (56,730) (58,104) (511,127) Interest Expense 6,520 6,797 58,744Securities Gains, Net (1,803) (4,135) (16,244)Losses on Sale of Fixed Assets, Net 72 168 648Gains on Securities Contribution to Retirement Benefits Trust — (3,245) —Gains on Revision of Retirement Benefit Plan — (1,681) —Net Changes in Trading Account Securities (586) 319 (5,279)Net Changes in Loans and Bills Discounted (90,041) (171,633) (811,253) Net Changes in Deposits 120,956 114,372 1,089,791Net Changes in Borrowed Money 27,058 37,099 243,787Net Changes in Deposits with Banks (977) (2,355) (8,802) Net Changes in Call Loans (5,456) 3,045 (49,157)Net Changes in Call Money 18,411 (3,884) 165,879 Net Changes in Payables for Securities Lending Transactions (63,955) (80,084) (576,223) Net Changes in Foreign Exchange Assets 603 (1,166) 5,432 Net Changes in Foreign Exchange Liabilities 206 (186) 1,856 Interest Income Received 60,513 62,699 545,211Interest Expense Paid (7,997) (7,376) (72,051) Net Changes in Lease Assets (88) (47) (792) Net Changes in Lease Receivables and Investments (6,504) (4,118) (58,599) Others (41,845) 14,421 (377,015)

Subtotal (28,266) (77,962) (254,671) Income Taxes Paid (2,374) (5,687) (21,389) Income Taxes Refunded 747 11 6,730

Net Cash Used in Operating Activities (29,894) (83,638) (269,339)

Cash Flows from Investing Activities:Purchases of Securities (500,457) (347,835) (4,509,027) Proceeds from Sales of Securities 451,663 290,095 4,069,402Proceeds from Maturities of Securities 158,591 152,902 1,428,876Increase in Money Held in Trust (3,000) — (27,029)Purchases of Tangible Fixed Assets (1,956) (2,791) (17,623) Proceeds from Sales of Tangible Fixed Assets 1,180 907 10,631Payments for Retirement of Tangible Fixed Assets (20) (2) (180) Purchases of Intangible Fixed Assets (1,159) (1,934) (10,442) Others 2 8 18

Net Cash Provided by Investing Activities 104,844 91,350 944,625

Cash Flows from Financing Activities:Decrease in Subordinated Loans (9,000) (6,500) (81,088) Redemption of Subordinated Bonds (15,000) — (135,147)Cash Dividends Paid (2,924) (2,924) (26,344) Cash Dividends Paid to Non-Controlling Interests (5) (5) (45) Payments from Non-Controlling Interests 2 — 18Purchases of Treasury Stock (4) (11) (36) Proceeds from Sales of Treasury Stock 0 0 0

Net Cash Used in Financing Activities (26,932) (9,439) (242,652)

Effect of Foreign Exchange Rate Changes 5 (6) 45 Net Increase (Decrease) in Cash and Cash Equivalents 48,023 (1,734) 432,678 Cash and Cash Equivalents at Beginning of the Year 193,294 195,028 1,741,544Cash and Cash Equivalents at End of the Year (Note 25) ¥ 241,318 ¥ 193,294 $ 2,174,231

See Notes to Consolidated Financial Statements.

Consolidated Statements of Cash FlowsThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated Subsidiaries

16

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements of The Ogaki Kyoritsu Bank, Ltd. (the “Bank”) and its consolidated subsidiaries (together the “Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from the International Financial Reporting Standards (“IFRS”).

The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of the Group prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.

The translations of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan using the prevailing exchange rate at March 31, 2019, which was ¥110.99 to U.S. $1.00. The translations should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.

Amounts in yen are stated in millions of yen by discarding fractional amounts less than one million. Amounts in U.S. dollars are stated in thousands of U.S. dollars by discarding fractional amounts less than one thousand. Therefore, the total or subtotal amounts in both yen and U.S. dollars appearing in the consolidated financial statements and the notes thereto do not necessarily match with the aggregation of account balances.

2. Significant Accounting Policies(a) ConsolidationThe consolidated financial statements include the accounts of the Company and ten significant subsidiaries. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to non-controlling shareholders, are evaluated using the fair value at the time the Company acquired control of the respective subsidiaries.

Certain subsidiaries may be excluded from consolidation due to their insignificance if their exclusion would not mislead one’s judgment as to the financial condition or result of operations of the Group considering the total assets, operating income, net income, retained earnings, accumulated other comprehensive income, etc.

(b) Cash Flow StatementsIn preparing the consolidated statements of cash flows, cash on hand and deposits with the Bank of Japan are considered to be cash and cash equivalents.

(c) Trading Account SecuritiesTrading account securities of the Company are stated at fair market value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations are recognized in earnings for the period in which the gains and losses arise.

(d) SecuritiesHeld-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries that are not consolidated or accounted for using the equity method are stated at moving average cost. Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of stockholders’ equity. Realized gains and losses on the

sale of such securities are computed using moving average cost method. Other securities for which the fair market values are extremely difficult to calculate are stated at moving average cost or amortized cost.

Securities invested as trusted assets held by money held in trust whose primary objective is security investment are stated at fair market value.

(e) Tangible Fixed Assets (Except for Lease Assets)Tangible fixed assets are generally stated at cost less accumulated depreciation.

Depreciation of tangible fixed assets of the Company is computed primarily using the declining balance method. However, depreciation of facilities of buildings and structures acquired on or after April 1, 2016, is computed using the straight-line method. Estimated useful lives range from 3 to 60 years for buildings and 3 to 20 years for equipment. Depreciation of tangible fixed assets of consolidated subsidiaries is computed mainly using the declining balance method.

(f) Intangible Fixed Assets (Except for Lease Assets)Depreciation of intangible fixed assets is computed using the straight-line method. Internally used software costs of the Company and its consolidated subsidiaries are amortized using the straight-line method over the estimated useful life of the software (mainly five years).

For certain consolidated subsidiaries, software that is for sale is depreciated based on the estimated useful life of the software.

(g) Lease AssetsDepreciation of lease assets in “Tangible fixed assets” and “Intangible fixed assets” under finance leases, other than those that are deemed to transfer ownership of the leased property to the lessee, is computed using the straight-line method over the lease term with zero residual value, unless the residual value is guaranteed by the lease contract.

(h) Deferred ChargesAll costs incurred in connection with the issuance of corporate bonds are amortized over the redemption period using the straight-line method.

(i) Foreign Currency TranslationForeign currency denominated assets and liabilities of the Company are translated into yen primarily at the exchange rate prevailing on the consolidated balance sheet date.

Foreign currency denominated assets and liabilities of consolidated subsidiaries are translated into yen at the exchange rate prevailing on their respective balance sheet dates.

(j) Reserve for Possible Investment LossesThe Group makes provisions for possible investment losses based on evaluations of its investments.

(k) Reserve for Possible Loan LossesA reserve for possible loan losses is provided according to write-off/reserve standards. For loans to normal borrowers and borrowers requiring special attention as stipulated in the “Practical Guidelines for Internal Regulations Governing Asset Self-Assessment by Banks and Other Financial Institutions and for Audits of Bad Loan Write-offs and Bad Loan Reserves” (Report No. 4 of the Special Committee for Audits of Banks and Other Financial Institutions by the Japanese Institute of Certified Public Accountants (“JICPA”), July 4, 2012), a reserve is provided based on the loan loss ratio, which is calculated for each category of loans using the actual loan losses during a specified period in the past. For loans to borrowers threatened with bankruptcy, a reserve is provided for the remainder of such loans in an amount deemed necessary after deducting the portion deemed recoverable through the disposal of collateral and/or the enforcement of guarantees. For loans to borrowers who are legally bankrupt or otherwise deemed insolvent, a reserve is provided to cover the losses remaining after deducting the portions deemed recoverable through the disposal of collateral and/or the enforcement of guarantees.

For claims originating in specific overseas countries, an additional reserve is provided for in an amount deemed necessary based on the assessment of such countries’ political and economic conditions.

Notes to Consolidated Financial StatementsThe Ogaki Kyoritsu Bank, Ltd. and its Consolidated SubsidiariesFor the years ended March 31, 2019 and 2018

17

Self-assessments of assets are conducted for all loans by the relevant business divisions in compliance with the Bank’s asset self-assessment standards, and the results of the assessments are verified and examined by the independent asset audit division. The reserves are provided based on the results of these assessments.

The consolidated subsidiaries write off loans and make provisions for possible loan losses based on their actual rate of loan losses in the past. However, unrecoverable portions of loans to customers who have a high probability of becoming bankrupt are estimated, and a reserve for possible loan losses is provided based on such estimation.

(l) Accrued Employees’ BonusesAccrued employees’ bonuses are provided for the payment of employees’ bonuses based on the estimated amount of future payments attributed to the current fiscal year.

(m) Reserve for Directors’ Retirement BenefitsA reserve for directors’ retirement benefits of the consolidated subsidiaries is provided to pay for future retirement benefits to directors and corporate auditors in the amount deemed accrued at the fiscal year-end.

(n) Reserve for Reimbursement of DepositsA reserve for reimbursement of deposits is provided for deposits derecognized from liabilities at the estimated amount of future claims for withdrawal based on historical reimbursement experience.

(o) Reserve for Customer Point ProgramA reserve for the Customer Point Program is provided mainly to meet the future use of points under the customer point system, entitled the “Thanks Point Present,” and the credit card point system provided by some consolidated subsidiaries at the amount deemed necessary based on the estimate of the future use of such points.

(p) Employees’ Severance and Retirement BenefitsIn calculating projected benefit obligation, the benefit formula method is used to attribute the expected benefit to the respective fiscal year.

Prior service cost is recognized as expense using the straight-line method over five years, which is a period within the estimated average remaining service years.

Actuarial differences are recognized as expenses using the straight-line method over 14 years, which is a period within the estimated average remaining service years, commencing from the year following the differences are recognized.

Consolidated subsidiaries use the simplified method for the calculation of net defined benefit liability and expense for severance and retirement benefits.

(q) Leasing TransactionsIncome and expenses related to finance lease transactions are recognized at the due date for lease payments.

(r) Derivatives and Hedge AccountingDerivative financial instruments are carried at market value.

(1) Hedging Interest RiskIn order to hedge the interest rate risk associated with various financial assets and liabilities, the Company applies the deferred hedge method stipulated in the “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002). In assessing the effectiveness of cash flow hedges, the interest sensitivities between the hedged items and the hedging instruments are examined. The hedging of certain assets and liabilities is accounted for by special treatment for interest rate swaps. Certain consolidated subsidiaries have adopted the special treatment for interest rate swaps.

(2) Hedging Foreign Currency RiskThe Company applies the deferred method of hedge accounting to hedge foreign exchange risks associated with various foreign currency denominated monetary assets and liabilities as stipulated in the “Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No. 25, July 29, 2002). The assessment of hedge effectiveness is conducted by confirming whether the notional amounts of hedging foreign exchange swaps or similar instruments correspond to the hedged

foreign currency denominated receivables or payables.

(s) Consumption TaxConsumption taxes of the Group are accounted for using the tax-excluded method.

(t) Amounts per ShareNet assets per share are calculated by dividing net assets attributable to the stockholders by the number of common stocks outstanding at the year-end (excluding “treasury stock”). Net income per share is calculated by dividing net income attributable to owners of the parent by the average number of shares of common stock outstanding during the year (excluding “treasury stock”). Dividends per share represent the actual amounts declared as applicable to the respective years.

(u) Accounting Standards Issued but Not Yet Effective“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, March 30, 2018) and “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)

(1) OutlineThe International Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board of the United States of America (“FASB”) jointly developed a comprehensive accounting standard for revenue recognition and issued “Revenue from Contracts with Customers” (IFRS No. 15, issued by IASB and Topic 606, issued by FASB) in May 2014. Considering the situation that IFRS No. 15 has become applicable from the fiscal year beginning on and after January 1, 2018 and Topic 606 from the fiscal year beginning after December 15, 2017, ASBJ developed a comprehensive accounting standard for revenue recognition and issued it together with implementation guidance.

ASBJ’s basic policy in developing the accounting standard for revenue recognition was to establish accounting standards as a starting point to adopt basic principles of IFRS No. 15 from the viewpoint of comparability of financial statements, which is one of the benefits of maintaining consistency with IFRS No. 15, and to add alternative treatments to the extent not to impair comparability in cases where previous practices and others in Japan should be considered.

(2) Date of ApplicationThe Company intends to adopt the standard and guidance from the beginning of the year ending March 31, 2022.

(3) Effect of Adopting the Revised Accounting StandardsThe impact of the adoption of the “Accounting Standard for Revenue Recognition,” etc., on the consolidated financial statements is currently under assessment.

18

3. Securities and Money Held in Trust(a) The following tables summarize the acquisition cost, book value and fair value of securities as of March 31, 2019 and 2018.

(1) Trading Account Securities

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Amount of Net Unrealized Gains and Losses Included in the Statement of Income ¥9 ¥(2) $81

(2) Held-to-Maturity Debt Securities

Millions of Yen Thousands of U.S. Dollars (Note 1)2019 2018 2019

Book Value Fair Value Difference Book Value Fair Value Difference Book Value Fair Value Difference

Unrealized Gain Japanese Government Bonds ¥ 5,505 ¥ 5,600 ¥ 94 ¥ 5,508 ¥ 5,636 ¥ 127 $ 49,599 $ 50,454 $ 846Municipal Bonds 500 507 6 — — — 4,504 4,567 54Corporate Bonds 11,397 11,435 38 8,196 8,234 37 102,684 103,027 342Others — — — — — — — — —Subtotal 17,403 17,543 139 13,705 13,870 164 156,797 158,059 1,252

Unrealized Loss Japanese Government Bonds — — — — — — — — —Municipal Bonds — — — — — — — — —Corporate Bonds 5,681 5,642 (38) 4,870 4,816 (53) 51,184 50,833 (342) Others — — — — — — — — —Subtotal 5,681 5,642 (38) 4,870 4,816 (53) 51,184 50,833 (342) Total ¥ 23,084 ¥ 23,185 ¥ 100 ¥ 18,575 ¥ 18,687 ¥ 111 $ 207,982 $ 208,892 $ 900

(3) Available-for-Sale Securities

Millions of Yen Thousands of U.S. Dollars (Note 1)2019 2018 2019

Book Value Acquisition Cost Difference Book Value Acquisition

Cost Difference Book Value Acquisition Cost Difference

Unrealized Gain Equity Securities ¥ 103,573 ¥ 43,425 ¥ 60,147 ¥ 117,460 ¥ 49,219 ¥ 68,241 $ 933,174 $ 391,251 $ 541,913Bonds

Japanese Government Bonds 91,269 88,813 2,455 139,830 136,421 3,409 822,317 800,189 22,119Municipal Bonds 388,079 384,931 3,148 177,906 176,038 1,867 3,496,522 3,468,159 28,362Corporate Bonds 308,217 304,153 4,064 390,554 383,786 6,768 2,776,979 2,740,363 36,615

Others Foreign Securities 56,145 54,917 1,228 13,333 13,024 309 505,856 494,792 11,064Other Securities 29,601 27,776 1,824 19,270 18,057 1,212 266,699 250,256 16,433

Subtotal 976,887 904,017 72,869 858,357 776,548 81,808 8,801,576 8,145,031 656,536Unrealized Loss Equity Securities 9,258 10,449 (1,190) 8,340 9,299 (958) 83,412 94,143 (10,721)

BondsJapanese Government Bonds — — — 13,713 14,015 (302) — — —Municipal Bonds 41,199 41,231 (32) 146,734 147,527 (793) 371,195 371,483 (288) Corporate Bonds 35,075 35,106 (30) 35,035 35,180 (144) 316,019 316,298 (270)

Others Foreign Securities 104,157 105,618 (1,460) 202,934 209,969 (7,035) 938,435 951,599 (13,154) Other Securities 43,907 46,000 (2,093) 39,834 41,892 (2,057) 395,594 414,451 (18,857)

Subtotal 233,597 238,405 (4,807) 446,593 457,884 (11,290) 2,104,667 2,147,986 (43,310) Total ¥ 1,210,485 ¥ 1,142,423 ¥ 68,062 ¥ 1,304,950 ¥ 1,234,432 ¥ 70,518 $ 10,906,252 $ 10,293,026 $ 613,226

(b) The following table summarizes sales of held-to-maturity debt securities for the years ended March 31, 2019 and 2018 .

Millions of Yen Thousands of U.S. Dollars (Note 1)2019 2018 2019

Cost of Securities Sold Amount Sold Gains (Losses) Cost of

Securities Sold Amount Sold Gains (Losses) Cost of Securities Sold Amount Sold Gains (Losses)

BondsCorporate Bonds ¥300 ¥301 ¥1 ¥— ¥— ¥— $ 2,702 $ 2,711 $ 9Total ¥300 ¥301 ¥1 ¥— ¥— ¥— $ 2,702 $ 2,711 $ 9

The sales of held-to-maturity debt securities for the year ended March 31, 2019 was due to the purchase and cancellation of privately placed corporate bonds. There was no sale of held-to-maturity debt securities for the year ended March 31, 2018.

(c) The following table summarizes sales of available-for-sale securities for the years ended March 31, 2019 and 2018.

Millions of Yen Thousands of U.S. Dollars (Note 1)2019 2018 2019

Amount Sold Gains Losses Amount Sold Gains Losses Amount Sold Gains Losses

Equity Securities ¥ 11,641 ¥ 2,841 ¥ 1,034 ¥ 8,186 ¥ 1,624 ¥ 91 $ 104,883 $ 25,596 $ 9,316Bonds

Japanese Government Bonds 101,078 464 160 119,947 3,002 — 910,694 4,180 1,441Municipal Bonds 76,921 34 122 57,149 82 — 693,044 306 1,099Corporate Bonds 161,738 3,959 8 27,165 49 1 1,457,230 35,669 72

OthersForeign Securities 79,771 5 3,923 89,959 193 834 718,722 45 35,345Other Securities 7,029 815 — 1,042 144 — 63,330 7,343 —

Total ¥ 438,181 ¥ 8,120 ¥ 5,249 ¥ 303,452 ¥ 5,096 ¥ 927 $ 3,947,932 $ 73,159 $ 47,292

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(d) Securities reclassified by holding purposeThere were no corresponding items for either the year ended March 31, 2019 or 2018.

(e) Impairment of securitiesSecurities at fair value other than trading securities are written down if their respective fair values have declined significantly as of the fiscal year-end and such decline is not temporary. The valuation differences based on such decline are recognized as losses.

Loss for impairment of securities recognized for the year ended March 31, 2019 was ¥948 million ($8,541 thousand). There was no corresponding item for the year ended March 31, 2018.

A portion of security is recognized as having a “remarkable decline” when the fair value declines by 30% or more of its acquisition cost. A security is deemed impaired if its fair value has declined by 50% or more of its acquisition cost as of the end of the fiscal year. If the fair value of a security declines by 30% or more but less than 50% of acquisition cost, a portion of such security may be deemed impaired, considering the possibilities of recovery in fair value.

(f) Money held in trust

(1) Money Held in Trust for Trading Purpose

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Book Value ¥3,000 ¥— $27,029Amount of Net Unrealized Gains Included in the Consolidated Statements of Income — — —

(2) Money Held in Trust being Held-to-MaturityThere were no corresponding items for either the year ended March 31, 2019 or 2018.

(3) Other Money Held in Trust (other than for trading purpose and being held-to-maturity)

There were no corresponding items for either the year ended March 31, 2019 or 2018.

(g) Net unrealized gains on available-for-sale securitiesNet unrealized gains on available-for-sale securities that have been stated at market value were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Available-for-Sale Securities ¥ 68,061 ¥ 70,518 $ 613,217Deferred Tax Liabilities (19,758) (20,347) (178,016) Net Unrealized Gains on Available-for-Sale Securities (before Adjustment for Non-Controlling Interests) 48,303 50,170 435,201Non-Controlling Interests (596) (681) (5,369)Net Unrealized Gains on Available-for-Sale Securities ¥ 47,706 ¥ 49,488 $ 429,822

Unrealized gains on available-for-sale securities include ¥(0) million ($(0) thousand) and ¥0 million of unrealized gains on available-for-sale securities which comprise component assets of partnerships and others at March 31, 2019 and 2018, respectively.

(h) Guarantee obligations for corporate bondsCorporate bonds in the securities account included guarantee obligations for privately placed corporate bonds (as provided for in the Paragraph 3 of Article 2 of the Financial Instruments and Exchange Law) and amounted to ¥16,078 million ($144,859 thousand) and ¥12,066 million at March 31, 2019 and 2018, respectively.

(i) Securities received as collateral for resale agreement that can be freely disposed by means of sale or re-collateralization

Securities received as collateral for resale agreements that can be freely disposed by means of sale or re-collateralization were ¥73 million ($657 thousand) at March 31, 2019. There were no corresponding items at March 31, 2018.

4. Investments in Unconsolidated SubsidiariesSecurities included investments in unconsolidated subsidiaries of ¥204 million ($1,838 thousand) and ¥157 million at March 31, 2019 and 2018, respectively.

5. Loans under Risk Management ReviewLoans under risk management review at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Loans to Companies Legally Bankrupt ¥ 3,537 ¥ 3,287 $ 31,867Non-Accrual Delinquent Loans 45,678 50,561 411,550Loans Past Due over 3 Months 21 61 189Restructured Loans 12,477 16,444 112,415

Total ¥ 61,716 ¥ 70,354 $ 556,050

Notes:

1. Loans to Companies Legally Bankrupt:“Loans to Companies Legally Bankrupt” means loans subject to Article 96-1-3 and 96-1-4 of the Order for Enforcement of the Corporation Tax Act (Cabinet Order No.97 of 1965), excluding those written off as bad debts, for which interest is not being accrued, owing to the fact that there is no hope of repayment of the principal or collection of interest because repayment or collection has been overdue for a considerable period of time or because of another valid reason.

2. Non-Accrual Delinquent Loans:“Non-Accrual Delinquent Loans” means loans for which interest is not being accrued.This category excludes Restructured Loans as defined below, as well as Loans to Companies Legally Bankrupt.

3. Loans Past Due over 3 Months:"Loans Past Due over 3 Months" means loans (excluding Loans to Companies Legally Bankrupt and Non-Accrual Delinquent Loans) for which the payment of principal or interest is delayed by 3 months or more.

4. Restructured Loans:“Restructured Loans” means loans provided to facilitate loan recovery by making certain concessions to borrowers such as reduced or waived interest, suspended payment of interest or delayed repayment of principal to allow borrowers to implement business reorganization or otherwise provide them with support. This category excludes loans in the above three categories.

6. Commercial BillsThe total face value of commercial bills and documentary bills of exchange obtained as a result of discounting was ¥17,052 million ($153,635 thousand) and ¥17,268 million at March 31, 2019 and 2018 respectively.

7. Assets PledgedAssets pledged as collateral at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Cash and Due from Banks ¥ 91 ¥ 95 $ 819Securities 334,643 385,729 3,015,073Lease Receivables and Investments 1,015 1,444 9,144Other Assets 448 696 4,036

The above pledged assets secure the following liabilities:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Deposits ¥ 27,536 ¥ 28,210 $ 248,094Payables under Repurchase Agreements 33,774 — 304,297Payables for Securities Lending Transactions 77,299 141,255 696,450Borrowed Money 151,359 129,987 1,363,717Acceptances and Guarantees 83 80 747

At March 31, 2019, certain securities and trading account securities in the aggregate amount of ¥1,544 million ($13,911 thousand) and ¥104 million ($937

20

thousand), respectively, were pledged as collateral for settlement of exchange at the Bank of Japan as a substitute for margin payments and for other purposes. “Other Assets” included guaranty money deposited for futures trading in the amount of ¥197 million ($1,774 thousand), deposits with the central counterparty in the amount of ¥40,000 million ($360,392 thousand), guarantees in the amount of ¥657 million ($5,919 thousand) and lease deposits in the amount of ¥718 million ($6,469 thousand).

At March 31, 2018, certain securities and trading account securities in the aggregate amount of ¥53,328 million and ¥104 million, respectively, were pledged as collateral for settlement of exchange at the Bank of Japan as a substitute for margin payments and for other purposes. “Other Assets” included guaranty money deposited for futures trading in the amount of ¥205 million, cash collateral paid for financial instruments in the amount of ¥344 million, guarantees in the amount of ¥641 million and lease deposits in the amount of ¥675 million.

Bills rediscounted are accounted for as financial transactions in accordance with the “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry” (Industry Audit Committee Report No. 24, February 13, 2002), issued by JICPA. There were no rediscounted bills at March 31, 2019 and 2018.

8. Commitment LinesCommitment line agreements relating to loans oblige the Group to lend funds up to certain limits agreed to in advance. The Group lends funds upon the request of an obligor to draw down funds under such agreements as long as there is no breach of the terms and conditions stipulated in the relevant loan agreement. The unused commitment balances relating to these agreements at March 31, 2019 and 2018 amounted to ¥1,372,792 million ($12,368,609 thousand) and ¥1,366,511 million, respectively. Of these amounts, ¥1,317,309 million ($11,868,717 thousand) and ¥1,317,229 million, respectively, related to loans for which the term of the agreement was one year or less or unconditional cancellation of the agreement was allowed at any time.

In many cases, the terms of such agreements run their course without the loans ever being drawn down. Therefore, the unused loan commitments do not necessarily affect future cash flows. Conditions are included in certain loan agreements which allow the Group either to decline a request for a loan drawdown or to reduce the agreed limit when there is cause to do so, such as when there is a change in financial condition of the borrower or it is necessary to protect the Group’s credit. The Group takes various measures to protect its credit, including having the obligor pledge collateral such as real estate or securities, upon signing the loan agreement and confirming the obligor’s financial condition at regular intervals in accordance with the Group’s established internal procedures.

9. Land Revaluation ReserveLand for commercial use was revalued in accordance with the Land Revaluation Law in the year ended March 31, 1998. The Company recorded in the consolidated balance sheets the difference in value before and after revaluation, net of taxes, as “Land Revaluation Reserve” in Net Assets and the amount equivalent to accrued taxes in relation to the revaluation difference as “Deferred Tax Liability on Land Revaluation” in liabilities.

At March 31, 2019 and 2018 the total fair value of land for commercial use that was revalued in accordance with the law was below book value by ¥7,025 million ($63,293 thousand) and ¥7,449 million, respectively.

10. Tangible Fixed AssetsAccumulated depreciation of tangible fixed assets amounted to ¥52,270 million ($470,943 thousand) and ¥53,164 million as of March 31, 2019 and 2018, respectively.

The accumulated capital gain directly offset against the acquisition costs of tangible fixed assets to obtain tax benefits at March 31, 2019 and 2018 in the amount of ¥1,500 million ($13,514 thousand) and ¥1,504 million, respectively. There was no such a capital gain offset for the years ended March 31, 2019 and 2018.

11. Deferred Tax Assets and LiabilitiesThe difference between the statutory income tax rates and the effective tax rates reflected in the accompanying consolidated statement of income for the years ended March 31, 2019 and 2018 were less than 5% of the statutory income tax rates applied to the years ended March 31, 2019 and 2018, respectively, and therefore, no reconciliation has been disclosed.

Significant components of the Group’s deferred tax assets and liabilities as of March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Deferred Tax AssetsExcess Reserve for Possible Loan Losses ¥ 5,966 ¥ 6,526 $ 53,752Valuation Loss on Securities 1,648 1,405 14,848Net Defined Benefit Liability 1,893 1,754 17,055Excess Depreciation 1,263 1,238 11,379Accrued Employees' Bonuses 567 569 5,108Others 1,884 2,343 16,974Valuation Allowance (2,447) (2,554) (22,047)

Total Deferred Tax Assets 10,776 11,283 97,089Deferred Tax Liabilities

Net Unrealized Gains on Available-for-Sale Securities (19,758) (20,347) (178,016)Others (2,143) (3,086) (19,308)

Total Deferred Tax Liabilities (21,901) (23,434) (197,324)Net Deferred Tax Assets (Liabilities) ¥ (11,124) ¥ (12,150) $ (100,225)

Net deferred tax assets (liabilities) were included in the consolidated balance sheets as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Deferred Tax Assets ¥1,906 ¥1,888 $ 17,172Deferred Tax Liabilities 13,031 14,039 117,406

12. Borrowed MoneyBorrowed money at March 31, 2019 and 2018 consisted of the following:

Millions of YenAverage

RateThousands of

U.S. Dollars (Note 1)2019 2018 2019 2019

Borrowings from Banks, Life Insurance Companies and Others ¥207,895 ¥189,836 0.91% $1,873,096Lease Liabilities 154 269 — 1,387

At March 31, 2018 borrowed money included subordinated loans of ¥9,000 million, for which the subordinated status was expressly stated in the underlying loan agreements.

The aggregate annual maturities of borrowings from banks, life insurance companies and others outstanding at March 31, 2019 were as follows:

Year Ending March 31 Millions of YenThousands of

U.S. Dollars (Note 1)

2020 ¥88,279 $795,3772021 23,363 210,4962022 36,962 333,0202023 56,250 506,8022024 2,970 26,759

The aggregate annual maturities of lease liabilities at March 31, 2019 were as follows:

Year Ending March 31 Millions of YenThousands of

U.S. Dollars (Note 1)

2020 ¥115 $1,036 2021 23 2072022 11 992023 2 182024 0 0

21

13. Corporate BondsCorporate bonds at March 31, 2019 and 2018 consisted of the following:

Millions of YenThousands of

U.S. Dollars (Note 1)Name of Company Issuance Date Maturity Date Collateral 2019 2018 Average Rate 2019

The Ogaki Kyoritsu Bank, Ltd.

Unsecured corporate bonds with an early amortization clause (subordinated)

September 4, 2013 — — ¥— ¥15,000

First 5 years: 0.88%Later: Euro-yen

6 months Libor + 1.89%

$—

Total — — — — ¥— ¥15,000 — $—

14. Employees’ Severance and Retirement BenefitsFor the years ended March 31, 2019 and 2018The Company has a corporate pension fund plan and a lump-sum severance payment plan as defined benefit plans and a defined contribution pension plan as a defined contribution plan.

Certain subsidiaries have defined benefit corporate pension fund plans for employees and the other subsidiaries have lump-sum severance payment plans for employees. The Company has set up a retirement benefit trust.

(a) Defined benefit plan

(1) Reconciliation of the Retirement Benefit Obligation between the beginning of the year and the end of the year was as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Retirement Benefit Obligation at the Beginning of the Year ¥43,126 ¥46,313 $388,557Service Cost 1,744 2,033 15,713Interest Cost 125 133 1,126Actuarial Differences Incurred 143 61 1,288Payment of Retirement Benefit (1,699) (1,668) (15,307) Recognized Prior Service Cost — 246 —Decrease Due to Transfer to the Defined Contribution Pension Plan — (3,998) —Others 10 3 90Retirement Benefit Obligation at the End of the Year ¥43,450 ¥43,126 $391,476

(2) Reconciliation of the Plan Assets between the beginning of the year and the end of the year was as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Plan Assets at the Beginning of the Year ¥46,121 ¥38,954 $415,541Expected Return on Plan Assets 1,136 857 10,235Actuarial Differences Incurred (436) 2,101 (3,928)Contribution by the Group 712 749 6,414Payment of Retirement Benefit (1,105) (1,124) (9,955) Securities Contribution to Retirement Benefits Trust at Establishment — 6,186 —Decrease Due to Transfer to the Defined Contribution Pension Plan — (1,607) —Others 6 4 54Plan Assets at the End of the Year ¥46,435 ¥46,121 $418,371

(3) Reconciliation between Retirement Benefit Obligation and Plan Assets and Net Defined Benefit Liability and Net Defined Benefit Asset was as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Projected Benefit Obligation of the Funded Pension Plan ¥ 42,679 ¥ 42,419 $ 384,530Plan Assets (46,435) (46,121) (418,371)

(3,756) (3,702) (33,840) Projected Benefit Obligation of the Unfunded Pension Plan 771 707 6,946Net Defined Benefit Liability and Asset on the Consolidated Balance Sheets (2,985) (2,994) (26,894)

Net Defined Benefit Liability 3,499 3,246 31,525Net Defined Benefit Asset (6,484) (6,241) (58,419) Net Defined Benefit Liability and Asset on the Consolidated Balance Sheets ¥ (2,985) ¥ (2,994) $ (26,894)

(4) Components of Expenses for Severance and Retirement Benefits were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Service Cost ¥ 1,744 ¥ 2,033 $ 15,713Interest Cost 125 133 1,126Expected Return on Plan Assets (1,136) (857) (10,235) Amortization of Actuarial Differences 512 926 4,613Amortization of Prior Service Cost 75 12 675Others 0 (4) 0Expenses for Severance and Retirement Benefits ¥ 1,322 ¥ 2,244 $ 11,910Gains on Transfer to the Defined Contribution Pension Plan (Note) ¥ — ¥ 1,681 $ —

Note: Gains on transfer to the defined contribution pension plan was recorded in other income for the year ended March 31, 2018.

(5) Remeasurements of Defined Benefit Plans (Other Comprehensive Income)

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Prior Service Cost ¥ 75 ¥ (366) $ 675 Unrecognized Actuarial Differences (66) 3,807 (594)Total ¥ 9 ¥ 3,441 $ 81

(6) Remeasurements of Defined Benefit Plans (Accumulated Other Comprehensive Income)

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Unrecognized Prior Service Cost ¥ (290) ¥ (366) $ (2,612)Unrecognized Actuarial Differences (4,605) (4,538) (41,490)Total ¥ (4,895) ¥ (4,904) $ (44,103)

22

(7) Plan AssetsProportions of major components of plan assets were as follows:

2019 2018

Japanese Bond 17% 22%Japanese Equity 42% 44% Foreign Bond 6% 8%Foreign Equity 7% 8% General Account 13% 12%Other 12% 3%Total (Note) 100% 100%

Note: Plan Assets includes Retirement Benefits Trust as follows:

2019 2018

Corporate Pension Plan 15% 15%Lump-Sum Payment Severance Plan 21% 21%

Long-Term Rates of Expected Return on Fund Assets is determined considering the current and future portfolios of pension assets and current and future expected returns on various assets.

(8) Actuarial Assumptions2019 2018

Discount Rate 0.3% 0.3%Long-Term Rates of Expected Return on Fund Assets (Retirement Benefits Trust)

2.5%(2.5%)

2.0%(2.0%)

Expected increase rate in salary 3.8% 3.8%Lump sum selection rate 10% 10%

(b) Defined contribution planThe required contribution amount to the defined contribution plan by the Company was ¥192 million ($1,729 thousand) and ¥29 million for the years ended March 31, 2019 and 2018, respectively.

(c) Other mattersThe effects of partial transfer of the corporate defined benefit fund pension plan to the defined contribution pension plan for the year ended March 31, 2018 were as follows:

Millions of Yen2018

Decrease in Retirement Benefit Obligation ¥(3,998)Assets Transferred to the Defined Contribution Pension Plan 1,607

(2,390)Amortization of Actuarial Differences 840Amortization of Prior Service Cost (132)Total ¥(1,681)

The effects of this transfer were recorded in other income for the year ended March 31, 2018.

15. Acceptances and GuaranteesAll commitments and contingent liabilities arising in compliance with customers’ needs in foreign trade and other transactions are included in “acceptances and guarantees.” As a contra account, “customers’ liabilities for acceptances and guarantees” are shown as assets, representing the Company’s right of indemnity from customers.

16. Other IncomeFor the years ended March 31, 2019 and 2018, other income included income related to the leasing business in the amount of ¥34,349 million ($309,478 thousand) and ¥32,696 million, respectively.For the years ended March 31, 2019 and 2018, other income included gain from sales of stock in the amounts of ¥3,218 million ($28,993 thousand) and ¥1,789 million, respectively.

17. General and Administrative ExpensesFor the years ended March 31, 2019 and 2018, general and administrative expenses included salary in the amounts of ¥23,981 million ($216,064 thousand) and ¥24,270 million, respectively.

For the years ended March 31, 2019 and 2018, general and administrative expenses included expenses for severance and retirement benefits in the amounts of ¥1,514 million ($13,640 thousand) and ¥2,274 million, respectively.

18. Other ExpensesFor the years ended March 31, 2019 and 2018, other expenses included expenses related to the leasing business in the amounts of ¥32,246 million ($290,530 thousand) and ¥30,663 million, respectively.

19. Impairment LossesImpairment Losses for the years ended March 31, 2019 and 2018 were as follows.For the year ended March 31, 2019

Location Use Category Millions of Yen Thousands of U.S. Dollars (Note1)

Gifu Prefecture

Banking Office

(four assets)

LandBuilding

Equipment

¥272(Land 219)(Building 48)(Equipment 3)

$2,450(Land 1,973)(Building 432)(Equipment 27)

Gifu Prefecture

Idle assets and others

(three assets)Land 1

(Land 1)9

(Land 9)

Shiga Prefecture

Banking Office

(one asset)

LandBuilding

Equipment

0(Land 0)(Building 0)(Equipment 0)

0(Land 0)(Building 0)(Equipment 0)

Total — — ¥274 $2,468

For the year ended March 31, 2018Location Use Category Millions of Yen

Gifu Prefecture

Banking Office(seven assets)

LandBuilding

Equipment

¥777 (Land 655)(Building 99)(Equipment 22)

Gifu Prefecture

Idle assets and Others

(three assets)Land 2

(Land 2)

Aichi Prefecture

Banking Office

(three assets)

LandBuilding

Equipment

258(Land 3)(Building 202)(Equipment 52)

Shiga Prefecture

Banking Office

(one asset)

LandBuilding

Equipment

2(Land 2)(Building 0)(Equipment 0)

Total — — ¥1,040

The carrying amounts of the asset groups have been written down to the recoverable amounts due to the continuous decline in land prices, decreased operating cash flows and decisions to relocate such assets. The amounts by which the assets were written down were recognized as impairment loss. Operating assets are grouped by branch and idle assets are grouped severally. Head offices, business center, training institutes and company residences are classified as shared assets.

Recoverable amounts of the assets are based on the higher of net selling prices or value in use. Net selling prices were calculated based primarily on appraisal valuations, net of estimated costs of disposal, and value in use was calculated by discounting the expected future cash flows at a rate of 7.6% and 5.8% for the years ended March 31, 2019 and 2018, respectively.

23

21. Outstanding Shares and Treasury Stock

(1) The types and numbers of outstanding shares and treasury stock for the year ended March 31, 2019 were as follows:

Thousands of Shares

April 1, 2018

Increase during the Fiscal Year

Decrease during the Fiscal Year

March 31, 2019

Outstanding Shares:Common Stock 41,831 — — 41,831

Total 41,831 — — 41,831Treasury Stock:

Common Stock (Note) 58 1 2 57Total 58 1 2 57

Note: The increase in treasury common stock in the amount of 1,000 shares was due to the purchase of fractional shares of 1,000. The decrease in treasury common stock in the amount of 2,000 shares was due to the execution of stock options of 2,000 shares and the sales of 0 thousand fractional shares based on the additional purchase request.

The types and numbers of outstanding shares and treasury stock for the year ended March 31, 2018 were as follows :

Thousands of Shares

April 1, 2017

Increase during the Fiscal Year

Decrease during the Fiscal Year

March 31, 2018

Outstanding Shares:Common Stock (Notes 1,2) 418,318 — 376,487 41,831

Total 418,318 — 376,487 41,831Treasury Stock:

Common Stock (Notes 1,3) 618 10 570 58Total 618 10 570 58

Notes: 1. As of October 1, 2017, the Company consolidated 10 shares into one share.

2. The decrease in common stock in the amount of 376,487 thousand shares was due to the consolidation of shares.

3. The increase in treasury common stock in the amount of 10 thousand shares was due to the purchase of fractional shares of 10 thousand (7 thousand shares before the consolidation of shares, 2 thousand shares after the consolidation of shares). The decrease in treasury common stock in the amount of 570 thousand shares was due to the consolidation of shares of 502 thousand shares, the execution of stock options of 67 thousand shares before the consolidation of shares, and the sales of 0 thousand fractional shares (0 thousand shares before the consolidation of shares, 0 thousand shares after the consolidation of shares) based on the additional purchase request.

(2) Information on stock acquisition rights for the year ended March 31, 2019 was as follows:Number of Shares

Details of Stock Acquisition Rights Type of Shares April 1, 2018 Increase Decrease March 31, 2019 Millions of Yen

Thousands of U.S. Dollars (Note 1)

The Company Stock Options — — — — — ¥153 $1,378

Information on stock acquisition rights for the year ended March 31, 2018 was as follows:Number of Shares

Details of Stock Acquisition Rights Type of Shares April 1, 2017 Increase Decrease March 31, 2018 Millions of Yen

The Company Stock Options — — — — — ¥133

20. Consolidated Statements of Comprehensive IncomeFor the years ended March 31, 2019 and 2018, reclassification adjustments and the

related tax effects concerning other comprehensive income were as follows:

Millions of YenThousands of U.S. Dollars (Note 1)

2019 2018 2019

Unrealized Losses on Available-for-Sale Securities:

Increase (Decrease) during the Period ¥ (697) ¥ 3,893 $ (6,279)

Reclassification Adjustments (1,758) (7,412) (15,839)

Before Adjustments to Tax Effect (2,456) (3,519) (22,128)

The Amount of Tax Effect 588 1,013 5,297

Net Unrealized Losses on Available-for-Sale Securities (1,867) (2,505) (16,821)

Net Deferred Hedge Losses:

Increase during the Period 1,214 100 10,937

Reclassification Adjustments (4,369) (2,831) (39,363)

Before Adjustments to Tax Effect (3,155) (2,730) (28,425)

The Amount of Tax Effect 943 816 8,496

Net Deferred Hedge Losses (2,211) (1,913) (19,920)

Remeasurements of Defined Benefit Plans:

Increase (Decrease) during the Period (579) 1,577 (5,216)

Reclassification Adjustments 588 1,863 5,297

Before Adjustments to Tax Effect 9 3,441 81

The Amount of Tax Effect (2) (1,028) (18)

Remeasurements of Defined Benefit Plans 6 2,412 54

Total Other Comprehensive Income ¥ (4,072) ¥ (2,007) $ (36,687)

24

2. Outline of stock options and changes

(1) Outline of stock options

Stock Options 2018

Stock Options 2017

Stock Options 2016

Stock Options 2015

Stock Options 2014

Stock Options 2013

Stock Options 2012

Stock Options 2011

Stock Options 2010

Title and number of grantees

11 directors of the Company

(Except for the external

directors)

10 directors of the Company

(Except for the external

directors)

8 directors of the Company

(Except for the external

directors)

9 directors of the Company

(Except for the external

directors)

10 directors of the Company

(Except for the external

directors)

10 directors of the Company

11 directors of the Company

11 directors of the Company

10 directors of the Company

Number of stock options*

Common shares: 10,410

Common shares: 8,710

Common shares: 8,440

Common shares: 5,910

Common shares: 9,910

Common shares: 10,630

Common shares: 11,930

Common shares: 13,680

Common shares: 9,290

Grant date July 26, 2018 July 26, 2017 July 26, 2016 July 28, 2015 July 28, 2014 July 26, 2013 July 26, 2012 July 26, 2011 July 27, 2010Condition for vesting N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.Requisite service period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Exercise period July 27, 2018 to July 26, 2068

July 27, 2017 to July 26, 2067

July 27, 2016 to July 26, 2066

July 29, 2015 to July 28, 2065

July 29, 2014 to July 28, 2064

July 27, 2013 to July 26, 2063

July 27, 2012 to July 26, 2062

July 27, 2011 to July 26, 2061

July 28, 2010 to July 27, 2060

* The number of stock options was converted and stated as number of shares. Also, the numbers of shares were converted and stated as number of shares after the consolidation of shares on October 1, 2017 (10 common shares into one common share).

(2) Stock options granted and changes

Number of stock options

Stock Options 2018

Stock Options 2017

Stock Options 2016

Stock Options 2015

Stock Options 2014

Stock Options 2013

Stock Options 2012

Stock Options 2011

Stock Options 2010

Before vestingPrevious fiscal year-end — 8,710 — — — — — — —Granted 10,410 — — — — — — — —Forfeited — — — — — — — — —Vested — 8,710 — — — — — — —Outstanding 10,410 — — — — — — — —

After vestingPrevious fiscal year-end — — 7,410 4,690 6,440 5,810 5,360 6,180 3,030Vested — 8,710 — — — — — — —Exercised — 890 940 590 — — — — —Forfeited — — — — — — — — —Exercisable — 7,820 6,470 4,100 6,440 5,810 5,360 6,180 3,030

Note: The numbers of shares were converted and stated as number of shares after the consolidation of shares on October 1, 2017 (10 common shares into one common share).

22. EquityJapanese banks are subject to the Banking Law and the Companies Act. The significant provisions in the Companies Act and the Banking Law that affect financial and accounting matters are summarized below:

(a) DividendsUnder the Companies Act, companies may pay dividends at any time during the fiscal year in addition to the year-end dividends upon resolution at the general meeting of stockholders. A company may declare dividends (except for dividends in kind) at any time during the fiscal year if prescribed in its articles of incorporation and certain criteria such as the following are met: (1) the company has a Board of Directors; (2) the company has independent auditors; (3) the company has a Board of Corporate Auditors; and (4) the company’s articles of incorporation provide for a one-year term of service for directors rather than the normal two-year term. The Company meets all of the above criteria.

The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to certain limitations and additional requirements. Semi-annual 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 Company may do so as its articles of incorporation stipulate as such. 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 the dividends must be appropriated as legal reserve (a component of retained earnings) or 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 between such accounts under certain conditions upon resolution of the stockholders.

(c) Treasury Stock and Treasury Stock Acquisition RightsThe 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. In addition, the Companies Act provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

23. Information on Stock OptionsInformation on stock acquisition rights for the years ended March 31, 2019 and 2018 was as follows:

1. Share-based compensation expenses which were accounted for as general and administrative expenses

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Share-based compensation expenses ¥28 ¥26 $252

25

Price information

YenU.S. Dollars

(Note 1)Stock Options

2018Stock Options

2017Stock Options

2016Stock Options

2015Stock Options

2014Stock Options

2013Stock Options

2012Stock Options

2011Stock Options

2010Stock Options

2018Exercise price ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 $ 0.00 Average exercise price — 2,792 2,792 2,792 — — — — — —Fair value at the grant date 2,820 3,020 3,150 4,310 2,730 2,890 2,500 2,310 2,600 25.40 Note: The numbers of shares were converted and stated as number of shares after the consolidation of shares on October 1, 2017 (10 common shares into one common share).

(3) Valuation technique used for valuating fair value of stock options

Stock options granted in the year ended March 31, 2019 were valued using the Black-Scholes option pricing model, and the principal parameters applied were as follows:

Stock Options 2018Expected volatility (Note 1) 25.2%Average expected life (Note 2) 1 year and 6 monthsExpected dividends (Note 3) ¥70 per shareRisk-free interest rate (Note 4) (0.12) %

Notes: 1. Calculated based on actual weekly stock prices from January 16, 2015 to July 16, 2018.2. The average tenure of directors who had retired in the past.3. The actual dividends on common stock for the year ended March 31, 2018, after taking into account the consolidation of shares executed on October 1, 2017.4. Japanese government bond yield corresponding to the average expected life.

(4) Method of estimating number of stock options vested

Only the actual number of forfeited stock options is reflected because it is difficult to rationally estimate the actual number of stock options that will be forfeited in the future.

24. Information on DividendsInformation on dividends for the year ended March 31, 2019 was as follows:

Resolution Type of SharesCash Dividends(Millions of Yen)

Cash Dividendsper Share (Yen)

Cash Dividends(Thousands of

U.S. Dollars)(Note 1)

Cash Dividendsper Share

(U.S. Dollars)(Note 1) Record Date Effective Date

June 20, 2018Annual Shareholders' Meeting Common Stock ¥ 1,462 ¥35.0 $13,172 $0.31 March 31, 2018 June 21, 2018

November 12, 2018Board of Directors Meeting Common Stock ¥1,462 ¥35.0 $13,172 $0.31 September 30, 2018 December 10, 2018

Note: Cash dividends on common stock, as a matter to be resolved at the annual shareholders’ meeting scheduled to be held on June 19, 2019, were proposed as follows.Cash dividends: ¥1,462 million ($13,172 thousand) Cash dividends per share: ¥35.00 ($0.31) Record date: March 31, 2019 Effective date: June 20, 2019

Information on dividends for the year ended March 31, 2018 was as follows:

Resolution Type of SharesCash Dividends(Millions of Yen)

Cash Dividendsper Share (Yen) Record Date Effective Date

June 21, 2017Annual Shareholders' Meeting Common Stock ¥1,461 ¥3.50 March 31, 2017 June 22, 2017

November 10, 2017Board of Directors Meeting Common Stock ¥1,462 ¥3.50 September 30, 2017 December 8, 2017

Notes: 1. On October 1, 2017, the Company consolidated 10 shares into one share. Cash dividends per share were stated as the amounts before the consolidation of shares.

2. Cash dividends on common stock, as a matter to be resolved at the annual shareholders’ meeting scheduled to be held on June 20, 2018, were proposed as follows: Cash dividends: ¥1,462 million Cash dividends per share: ¥35.00 Record date: March 31, 2018 Effective date: June 21, 2018

25. Cash and Cash EquivalentsCash and cash equivalents in the consolidated statements of cash flows for the years ended March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Cash and Due from Banks in the Consolidated Balance Sheets ¥246,288 ¥197,287 $2,219,010

Due from Banks except Deposits with the Bank of Japan (4,970) (3,992) (44,778)

Cash and Cash Equivalents in the Consolidated Statements of Cash Flows ¥241,318 ¥193,294 $2,174,231

26. Leases(a) Finance Leases

(1) As Lessee

Finance leases that do not transfer ownership of the lease assetsDetails of lease assets are as follows:

(a) Tangible fixed assetsComputer and computer peripherals

(b) Intangible fixed assetsSoftware

26

27. Derivative TransactionsThe Group enters into various contracts, including swaps, options, forwards and futures covering interest rates, foreign currencies, bonds and stocks, in order to meet customers’ needs and manage risk of market fluctuations related to the assets, liabilities and interest rates of the Group. The Group has established procedures and controls to minimize market and credit risks, including setting limits on transaction levels, hedging exposed positions and daily reporting to management.

Outstanding derivatives at March 31, 2019 and 2018 were as follows. The contract amounts, market values, unrealized gains and losses and computation methods for market value by types of transactions as of March 2019 and 2018 were as set forth in the tables below. The contract amounts do not necessarily measure the Company’s exposure to market risk.

Derivative transactions to which the deferred hedge accounting method has not been applied

(a) Interest Rate Related TransactionsMillions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

Over-the-Counter Transactions:Interest SwapsReceive Fixed Rate and Pay Floating Rate ¥ 20,000 ¥ 20,000 ¥742 ¥742 $ 180,196 $ 180,196 $6,685 $6,685

Total ¥ — ¥ — ¥742 ¥742 $ — $ — $6,685 $6,685Millions of Yen

2018ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

Over-the-Counter Transactions:Interest SwapsReceive Fixed Rate and Pay Floating Rate ¥ 10,017 ¥— ¥310 ¥310Receive Floating Rate and Pay Fixed Rate 17 — (0) (0)

Total ¥ — ¥— ¥310 ¥310Notes: 1. The above transactions were recorded at market value, and unrealized gains (losses) were included in the consolidated statements of income.

2. Market values were calculated mainly using the discounted cash flow method and option pricing method.3. “Receive fixed rate and pay floating rate” in interest swaps includes the derivative transactions for which hedge accounting was discontinued as the transactions did not meet the

qualifying criteria for hedge accounting. The amount of those transactions at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Contract Amount ¥20,000 ¥10,000 $180,196Market Value 742 ¥310 6,685Unrealized Gain (Loss) 742 310 6,685

At March 31, 219 and 2018, the unrealized gain (loss) caused by the discontinuance of hedge accounting which was deferred over the hedge period was ¥727 million ($6,550 thousand) and ¥304 million, respectively.

(2) As LessorLease investments included the following components at March 31, 2019 and 2018:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Lease Payments to be Received ¥60,945 ¥55,690 $549,103Residual Value 2,013 1,927 18,136Assumed Interest (3,645) (3,193) (32,840)

Total ¥59,314 ¥54,425 $534,408

The aggregate annual maturities of lease receivables and investments at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2019

Year Ending March 31Lease

ReceivablesLease

InvestmentsLease

ReceivablesLease

Investments

2020 ¥3,544 ¥18,094 $31,930 $163,0232021 2,725 14,331 24,551 129,1192022 2,114 11,330 19,046 102,0812023 1,734 8,246 15,623 74,2942024 1,282 4,978 11,550 44,8502025 and Thereafter 2,174 3,964 19,587 35,714

Millions of Yen 2018

Year Ending March 31Lease

ReceivablesLease

Investments

2019 ¥3,117 ¥16,8782020 2,355 13,6812021 1,828 10,1502022 1,461 7,2602023 1,094 4,4672024 and Thereafter 2,044 3,252

(b) Operating Leases

(1) As Lessee

Future minimum lease payments payable under operating leases at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Future Minimum Lease PaymentsDue within One Year ¥32 ¥32 $288Due after One Year 39 53 351

Total ¥72 ¥85 $648

(2) As Lessor

Future minimum lease payments receivable under operating leases at March 31, 2019 and 2018 were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Future Minimum Lease PaymentsDue within One Year ¥ 498 ¥ 469 $ 4,486Due after One Year 660 618 5,946

Total ¥1,159 ¥1,087 $10,442

27

28. Financial Instruments1. Overall Situation concerning Financial Instruments

(1) Policy for Financial Instruments

The Group is comprised of the Company and ten consolidated subsidiaries. The main businesses of the Group are the banking operations business and the financial services business, which consist of the leasing and credit card businesses.

The Company provides business and consumer loans, conducts trading of marketable securities, invests in securities and performs other short-term cash

management activities. These operations are generally run using funds received in deposits from local customers; however, the Company also procures funds through borrowings and others. Consolidated subsidiaries borrow from banks. The Company engages in Asset Liability Management (ALM) to avoid the negative impact of interest rate fluctuations.

The Company engages in derivative transactions to meet its customers’ needs for hedging foreign currencies and interest rates. The Company also utilizes derivatives for risk control purposes as well as for trading transactions designed to increase short-term revenues.

(b) Currency and Foreign Exchange Related TransactionsMillions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

Over-the-Counter Transactions:Currency Swaps ¥ 49,436 ¥ 18,745 ¥ (212) ¥ (212) $ 445,409 $ 168,889 $ (1,910) $ (1,910)Exchange Contracts (Sell) 5,351 458 (44) (44) 48,211 4,126 (396) (396)Exchange Contracts (Buy) 2,176 396 61 61 19,605 3,567 549 549Currency Options (Sell) 59,119 46,387 (3,708) 563 532,651 417,938 (33,408) 5,072Currency Options (Buy) 59,119 46,387 3,708 15 532,651 417,938 33,408 135

Total ¥ — ¥ — ¥ (194) ¥ 384 $ — $ — $ (1,747) $ 3,459Millions of Yen

2018ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

Over-the-Counter Transactions:Currency Swaps ¥ 93,054 ¥ 15,204 ¥ (440) ¥ (440)Exchange Contracts (Sell) 12,574 1,109 335 335Exchange Contracts (Buy) 6,102 606 (51) (51)Currency Options (Sell) 57,175 45,388 (3,797) 544Currency Options (Buy) 57,175 45,388 3,797 50

Total ¥ — ¥ — ¥ (155) ¥ 438Notes: 1. The above transactions were recorded at market value, and unrealized gains (losses) were included in the consolidated statements of income.

2. Market values were calculated mainly using the discounted cash flow method and option pricing method.

(c) OthersMillions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

ContractAmount

Portion Maturingover One Year

MarketValue

Unrealized Gain(Loss)

Over-the-Counter Transactions:Earthquake Derivatives (Sell) ¥ 575 ¥— ¥ (9) ¥— $ 5,180 $— $ (81) $—Earthquake Derivatives (Buy) 575 — 9 — 5,180 — 81 —

Total ¥ — ¥— ¥ — ¥— $ — $— $ — $—

Notes: The above transactions were recorded at acquisition costs because the fair market values are extremely difficult to calculate.

Derivative transactions to which the deferred hedge accounting method has been applied.

(a) Interest Rate Related TransactionsMillions of Yen Thousands of U.S. Dollars (Note 1)

2016 2019 2019

Hedged Item ContractAmount

Portion Maturing over One Year

Market Value

ContractAmount

Portion Maturing over One Year

Market Value

Deferred Hedge Method:Interest Swaps

Receive Floating Rate and Pay Fixed Rate Deposits, Loans ¥ 2,000 ¥— ¥(13) $ 18,019 $— $(117)Special Treatment for Interest Rate Swaps:

Interest SwapsReceive Floating Rate and Pay Fixed Rate Loans 95 45 Note 3 855 405 Note 3

Total ¥ — ¥— ¥(13) $ — $— $(117)Millions of Yen

2016 2018

Hedged Item ContractAmount

Portion Maturing over One Year

MarketValue

Deferred Hedge Method:Interest Swaps

Receive Fixed Rate and Pay Floating Rate Deposits, Loans

¥ 220,000 ¥ 220,000 ¥ 6,315Receive Floating Rate and Pay Fixed Rate 27,000 2,000 (342)

Special Treatment for Interest Rate Swaps:Interest Swaps

Receive Fixed Rate and Pay Floating Rate Loans and Others

— — Note 3Receive Floating Rate and Pay Fixed Rate 323 215

Total ¥ — ¥ — ¥ 5,972Notes: 1. Pursuant to the “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report

No. 24, February 13, 2002), deferred hedge accounting has been applied.2. The market value of market transactions is calculated using the final price on the Tokyo Financial Exchange, and the market value of OTC transactions is calculated using the

discounted cash flow and option pricing methods.3. The fair value of interest rate swaps qualifying for special treatment is included in that of loans in Note 28, “Financial Instruments.”

28

(2) Nature and Extent of Risks Arising from Financial Instruments

Financial assets held by the Company comprise mainly loans to domestic corporate entities and individuals. Loans are subject to credit risk which represents a loss due to the default of borrowers.

As of March 31, 2019 and 2018, most of the Company’s loans were those originating from the Company’s branches located in the three Tokai Prefectures (i.e., Aichi, Gifu and Mie Prefectures). A material change in the regional economic environment may potentially lead to the default of obligations and non-performance of the terms and conditions of the relevant loan agreements.

As one component of cash management strategy, the Company invests in national, regional and public bonds as well as marketable securities issued by publicly listed companies. These investments involve credit risk related to the issuing bodies, interest rate risk and market risk.

Cash management through loans and marketable securities as well as fund procurement through deposits involves liquidity risk. Such risk causes difficulties in securing necessary funds due to interest rates or term mismatches, unexpected cash outlays or being forced to secure funds at unusually high interest rates.

The Company owns assets and liabilities denominated in foreign currencies, which are subject to foreign exchange risk.

The Company holds positions of interest rate derivatives such as interest rate futures, interest rate swaps and interest rate options. The Company holds positions of foreign currency derivatives such as currency swaps, forward exchange contracts and currency options. The Company also holds positions in bond futures, bond futures options and stock futures transactions as securities derivatives.

In transactions with customers, the Company utilizes interest rate swaps, interest rate options, currency swaps, forward exchange contracts and/or currency options.

The Company utilizes bond futures, bond futures options and stock futures transactions to avoid market price fluctuation risk in investments of marketable securities.

The Company utilizes interest rate and currency swaps to avoid interest rate risk, foreign currencies risk and liquidity risk in investments of marketable securities denominated in foreign currencies.

Under ALM, the Company utilizes interest rate swaps to avoid interest rate risk. Certain interest rate swaps are entered into as individual or comprehensive hedges and accounted for using hedge accounting. The assessment of hedge effectiveness is conducted according to the “Accounting Standards and Auditing Treatment for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24, February 13, 2002). The hedge effectiveness tests are conducted at inception to meet the requirements of “interest rate swaps subject to special treatment.”

The Company utilizes interest rate futures, bond futures and bond futures options in trading transactions.

Derivative transactions involve market risk, credit risk and other risks.

(3) Risk Management System for Financial Instruments

The Company endeavors to balance risks and revenues by executing an optimal risk management program. Under the program, the Company establishes an appropriate and effective risk management system according to the nature and scale of the risk in question. The system strives to conform to the Company’s “Risk Management Policy,” which sets forth risk management rules and structures as well as risk management procedures according to each risk category.

Specifically, the Company has established an ALM Committee and other risk management committees. In addition, the Company has established departments that address different risks in a comprehensive manner as well as a general managing department and a supervisory department for each specific risk category. These risk management departments report risk conditions directly to the Company’s management regularly and/or on an as-needed basis.

An ALM Committee meeting is held monthly to determine policies with respect to marketable securities investments and cash management for the purpose of controlling market risk, liquidity risk and credit risk within allowable limits, focusing on improving the Company’s profitability.

The Company’s Audit Division, which is organizationally independent from the Company’s other departments, is responsible for verifying the appropriateness and effectiveness of risk management by the Company.

(a) Credit risk management

The Company exercises appropriate control over credit risk related to loans through credit assessment of individual loan proposals, credit management (managing compliance of credit terms granted, daily credit management, management of problem loans), credit ratings and credit portfolio management (measuring credit risk through statistical methods, analyzing and setting maximum limits to eliminate credit risk concentration), all based on its “Credit Risk Management Regulations” and credit risk rules established by the Company. A general managing department and a supervisory department have been established as credit risk management departments, providing a structure for risk management.

Credit assessments and credit management are conducted at each branch of the Company or at the Company’s Loan & Credit Supervision Division. The Board of Directors and the Executive Committee hold meetings to report and discuss major customers regularly and/or on an as-needed basis. Credit portfolio management is conducted by the Company’s Management Administration Division, which regularly reports the status of credit risks to the Board of Directors.

The Company’s Audit Division conducts audits on the state of this risk management structure.

(b) Market risk management

The Company exercises appropriate control of risk by setting limits according to its “Market Risk Management Regulations.” The Company has segregated the market risk management section (middle office) and administrative department (back office) from transaction departments (front office), establishing an organizational structure with proper control functions. (i) Management of interest rate risk

The Company’s Market Risk Management Section sets risk limits, loss limits, maximum transaction limits and other limits related to interest rate risk as deemed necessary. The Market Risk Management Section reports daily and monthly regarding positions, gains/losses and risk status to the relevant directors, and also reports the same to the Board of Directors regularly and/or on an as-needed basis.

The Company exercises proper control of interest rate risks by setting limits according to its “Market Risk Management Regulations.”

(ii) Management of foreign exchange rate riskThe Company’s Market Risk Management Section sets risk limits, loss limits, maximum transaction limits and other limits related to foreign exchange rate risk as deemed necessary. The Market Risk Management Section reports daily and monthly regarding positions, gains/losses and risk status to the relevant directors, and also reports the same to the Board of Directors regularly and/or on an as-needed basis.

The Company exercises proper control of foreign exchange rate risks by setting limits according to its “Market Risk Management Regulations.”

(iii) Management of price fluctuation riskThe Company’s Market Risk Management Section sets risk limits, loss limits, maximum transaction limits and other limits related to price fluctuation risk as deemed necessary. The Market Risk Management Section reports daily and monthly about position, gains/losses and risk status to the relevant directors, and also reports the same to the Board of Directors regularly and/or on as-needed basis.

The Company exercises proper control of price fluctuation risks by setting limits according to its “Market Risk Management Regulations.”

(iv) Management of derivative transaction riskDerivative transactions involve market risk and credit risk. However, most derivatives are entered into for the purpose of hedging, thus market risk is limited mainly to trading transactions.

The Company establishes limits for each customer, thus avoiding risk concentration and reducing credit risk.

The Company’s counterparties are all highly trusted financial institutions and corporations which represent low levels of risk.

The department executing derivative transactions monitors daily balances and unrealized gains/losses and reports them to the Company’s management through the Company’s Management Administration Division, which serves as the general risk management department.

The Company establishes certain limits on trading transactions entered into for the purpose of short-term revenues so as to prevent excessive risk.

29

Note 1. Method for calculating the fair value of financial instruments

Assets

(1) Cash and Due from BanksThe fair value of due from banks with no maturity is considered to be equal to the book value since the book value approximates fair the value.

The fair value of due from banks with maturity is calculated at the present value discounted at an interest rate that reflects an interest rate estimated for new deposits per each contractual term. The fair value of due from banks with short contractual terms (within one year) is considered to be equal to the book value since the book value approximates the fair value.

(2) SecuritiesThe fair value of stocks is based on market price and that of bonds is based on market price or prices quoted by the corresponding financial institutions. The fair value of investment trusts is based on base value publicly disclosed.

Due to guarantee fees received from the issuing body, the fair value of guaranteed private placement bonds is estimated based on future cash flows (including guarantee fees) discounted by a yield estimated for newly issued guaranteed private placement bonds.

For additional information concerning held-to-maturity debt securities with fair values and available-for-sale securities with fair values held by the Company, see page 19, factor 3, “Securities and Money Held in Trust.””

2. Fair Values of Financial Instruments

The consolidated balance sheet amounts, market values and unrecognized gain or loss as of March 31, 2019 and 2018 were as follows. Unlisted securities, the market values of which were extremely difficult to calculate, were excluded from the table below:

Millions of Yen Thousands of U.S. Dollars (Note 1)2019 2018 2019

BookValue

Market Value

UnrecognizedGain (Loss)

BookValue

Market Value

UnrecognizedGain (Loss)

BookValue

Market Value

UnrecognizedGain (Loss)

Cash and Due from Banks ¥ 246,288 ¥ 246,288 ¥ — ¥ 197,287 ¥ 197,287 ¥ — $ 2,219,010 $ 2,219,010 $ —Securities:

Held-to-Maturity Debt Securities 23,084 23,185 100 18,575 18,687 111 207,982 208,892 900Available-for-Sale Securities 1,210,485 1,210,485 — 1,304,950 1,304,950 — 10,906,252 10,906,252 —

Loans and Bills Discounted: 4,113,132 4,023,090 37,058,581Less Reserve for Possible Loan Losses (Note 1) (18,555) (20,558) (167,177)

Net Loans and Bills Discounted 4,094,576 4,106,361 11,784 4,002,531 4,008,575 6,043 36,891,395 36,997,576 106,171Total Assets 5,574,435 5,586,320 11,885 5,523,345 5,529,500 6,154 50,224,659 50,331,741 107,081Deposits 5,026,306 5,026,769 463 4,898,528 4,899,390 862 45,286,115 45,290,287 4,171Negotiable Certificates of Deposit 57,715 57,715 — 64,536 64,536 0 520,001 520,001 —Payables for Securities Lending Transactions 77,299 77,299 — 141,255 141,255 — 696,450 696,450 —Borrowed Money 207,895 207,897 2 189,836 189,897 60 1,873,096 1,873,114 18Total Liabilities 5,369,216 5,369,682 465 5,294,157 5,295,080 923 48,375,673 48,379,872 4,189Derivative Transactions: (Note 2)

Deferred Hedge Accounting is not Applied 548 548 — 154 154 — 4,937 4,937 —Deferred Hedge Accounting is Applied (13) (13) — 5,972 5,972 — (117) (117) —

Total Derivative transactions ¥ 534 ¥ 534 ¥ — ¥ 6,126 ¥ 6,126 ¥ — $ 4,811 $ 4,811 $ —Notes: 1. Only the reserve for possible loan losses on loans and bills discounted has been included.

2. Net receivables and payables arising from derivative transactions have been presented on a net basis.

Risk management is conducted according to the Company’s “Market Risk Management Regulations” and “Credit Risk Management Regulations.” Market risk in particular is centrally determined and managed by the ALM Committee (the general managing body).

(v) Quantitative information related to market risksa. Financial instruments for trading The Company holds securities and a portion of its derivative transactions for the purpose of trading, establishes various limits, such as risk, loss and transaction limits as deemed necessary and monitors the status of positions, gains/losses and risk of such financial instruments on a daily and monthly basis. The value at risk (VaR) for such financial instruments is not calculated since risks related to such financial instruments are limited.b. Financial instruments for other than tradingThe principal financial instruments of the Company that are affected by major risk indicators, interest rate risk and price volatility risk are stocks, bonds and investment trusts included in securities, loans and bills discounted, deposits, negotiable certificates of deposit, borrowed money and corporate bonds and interest rate swaps included in derivative transactions.

When calculating the VaR of these financial assets and liabilities, the Company applies the variance-covariance method (with a holding period of 120 days, confidence interval of 99% and observation period of five years). For those instruments whose VaR is difficult to calculate using the variance-covariance method, such as capped floater bonds, the VaR is calculated conservatively based on price volatility and the basis point value observed in similar types of instruments in the past. The calculated VaR is used in quantitative analysis when managing interest rate volatility risk and/or price volatility risk. The VaRs for financial instruments other than for-trading were ¥44,281 million ($398,963 thousand) and ¥50,929 million at March 31, 2019 and 2018 respectively.

The Company has performed back testing to compare VaR calculated by its internal model against actual profit and loss. The Company believes that the measurement model used captures market risks with sufficient accuracy. However, VaR measures the amount of market risk by certain occurrence probabilities which are statistically calculated based on past market movements. Therefore, the VaR may not capture risk with sufficient accuracy if there are sudden and dramatic changes in the market beyond normal circumstances.

The principal financial instruments of the Company that are affected by the major risk indicators of foreign currency risk are foreign exchanges, foreign currency denominated bonds including securities, foreign currency deposits and currency related transactions included in derivative transactions. The Company controls its foreign currency risk by establishing various limits such as risk, loss and transaction limits as deemed necessary and monitors the status of positions, gains/losses and risk of such financial instruments on a daily and monthly basis. The VaR for such financial instruments are not calculated since foreign currency risk related to such financial instruments is limited.

(c) Management of liquidity risk

The Company engages in conservative cash management according to its “Liquidity Risk Management Regulations.” The Company has also established the “Liquidity Crisis Response Measures” which serve as guideline for quick response in dealing with unexpected circumstances.

(4) Supplemental explanation for fair value of financial instruments

The fair values of financial instruments include market prices as well as reasonably calculated values in cases in which no market prices are available. Since the calculations of reasonably calculated values are implemented under certain conditions and assumptions, the results of such calculations will differ if such calculations are made under different conditions and assumptions.

30

(3) Loans and Bills DiscountedThe fair value of loans and bills discounted with floating rates is considered to be equal to the book value since the floating rate reflects market rate in a short period, and the book value of such financial instrument approximates the fair value, unless the creditworthiness of the borrower changes significantly from the origination of the financial instrument. The fair value of loans and bills discounted with fixed rates is calculated at the present value, discounting principal and interest of loans (grouped by type of loans, internal rating and period) at an interest rate estimated for a new loan of the same type. The fair value of loans and bills discounted with short contractual terms (within one year) is considered to be equal to the book value since the book value of such financial instruments approximates the fair value.

In addition, the fair value of loans to borrowers who are legally bankrupt or otherwise deemed insolvent and borrowers threatened with bankruptcy approximates the corresponding consolidated balance sheet amounts at the year-end less the reserve for possible loan losses since such loans, considered to be bad debts, are calculated based on the present values of expected future cash flows or the estimated recoverable amounts from collateral and/or guarantees.

The fair value of loans and bills discounted with no maturities due to conditions such as limiting the loans to the value of pledged assets is deemed to be the book value since such book value is expected to approximate the fair value considering the estimated loan period, interest rate and other conditions.

The fair value of loans hedged by interest rate swaps subject to special treatment includes the fair value of the derivative transactions.

Liabilities

(1) Deposits (excluding Negotiable Certificates of Deposit)The fair value of demand deposits is deemed to be the amount payable (i.e., the book value) if demanded on the consolidated balance sheet date. The fair value of fixed-term deposits is calculated at the present value, discounting the future cash flow for each specified term at an interest rate used for a new deposit. The fair value of deposits with short contractual terms (within one year) is considered to be equal to the book value since the book value approximates fair value.

(2) Negotiable Certificates of DepositThe fair value of negotiable certificates of deposit is calculated at the present value, discounting future cash flows for each specified term at an interest rate used for a new certificate of deposit. The fair value of negotiable certificates of deposit with short contractual terms (within one year) is considered to be equal to the book value since the book value of such financial instrument approximates the fair value.

(3) Payables for Securities Lending TransactionsThe fair value of payables for securities lending transactions with short contractual terms (within one year) is considered to be equal to the book value since the book value approximates the fair value.

(4) Borrowed MoneyThe fair value of borrowed money with a floating rate is considered to be equal to the book value since the floating rate reflects the market rate in a short period, the creditworthiness of the Company and the subsidiaries would not have changed significantly since the inception date and the book value of borrowed money approximates the fair value. The fair value of borrowed money with a fixed rate is calculated at the present value, discounting principal and interest and/ or discounted at an interest rate estimated for a new borrowing of the same type. The fair value of fixed-rate loans with short contractual terms (within one year) is considered to be equal to the book value since the book value of such financial instruments approximates the fair value.

The fair value of borrowed money hedged by interest rate swaps subject to special treatment includes the fair value of the related derivative transaction.

Derivative TransactionsInformation on derivative transactions is described in page 27, factor 27, “Derivative Transactions.”

Note 2. Financial instruments for which the fair value was extremely difficult to calculate were as follows:

Millions of YenThousands of

U.S. Dollars (Note 1)2019 2018 2019

Unlisted Securities ¥ 5,134 ¥ 4,768 $ 46,256Bonds 20 21 180Others

Foreign Securities 2,250 2,124 20,272 Other Securities 4,129 2,762 37,201

Total ¥ 11,535 ¥ 9,677 $ 103,928

Notes: 1. Unlisted stocks were excluded as there were no market prices available for unlisted stocks and their fair value was extremely difficult to calculate.

2. For the years ended March 31, 2019 and 2018, impairment loss for unlisted stocks amounted to ¥120 million ($1,081 thousand) and ¥53 million, respectively.

Note 3. Maturities of money claims and securities that have maturities:Millions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

Cash and Due from Banks ¥ 246,288 ¥ — ¥ — ¥ — ¥ — ¥ — $ 2,219,010 $ — $ — $ — $ — $ —Securities

Held-to-Maturity Debt Securities 5,162 9,338 6,761 1,321 500 — 46,508 84,133 60,915 11,901 4,504 —

Japanese Government Bonds 1,500 3,003 1,001 — — — 13,514 27,056 9,018 — — —Municipal Bonds — — — — 500 — — — — — 4,504 —Corporate Bonds 3,662 6,334 5,759 1,321 — — 32,993 57,068 51,887 11,901 — —

Available-for-Sale Securities with Maturities 58,934 104,837 200,998 244,488 124,439 271,890 530,984 944,562 1,810,955 2,202,793 1,121,173 2,449,680

Japanese Government Bonds 5,000 54,000 19,000 — — 11,000 45,049 486,530 171,186 — — 99,108Municipal Bonds 17,921 39,795 109,222 173,825 68,546 12,331 161,464 358,545 984,070 1,566,132 617,587 111,100Corporate Bonds 35,012 11,041 62,786 45,140 2,802 179,077 315,451 99,477 565,690 406,703 25,245 1,613,451Foreign Securities 1,000 — 9,989 25,522 53,090 69,480 9,009 — 89,999 229,948 478,331 626,002

Loans and Bills Discounted 855,168 593,463 420,070 346,733 410,749 1,434,195 7,704,910 5,346,995 3,784,755 3,124,002 3,700,774 12,921,839Total ¥ 1,165,553 ¥ 707,638 ¥ 627,830 ¥ 592,542 ¥ 535,689 ¥ 1,706,086 $ 10,501,423 $ 6,375,691 $ 5,656,635 $ 5,338,697 $ 4,826,461 $ 15,371,528Note: Loans in legal bankruptcy, virtual bankruptcy and potential bankruptcy amounting to ¥49,047 million ($441,904 thousand) and loans and bills discounted without maturities

amounting to ¥3,704 million ($33,372 thousand) were excluded from the table above.

31

Millions of Yen2018

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

Cash and Due from Banks ¥ 197,287 ¥ — ¥ — ¥ — ¥ — ¥ —Securities

Held-to-Maturity Debt Securities 2,016 8,073 7,365 1,120 — —

Japanese Government Bonds — 2,502 3,006 — — —Corporate Bonds 2,016 5,571 4,359 1,120 — —

Available-for-Sale Securities with Maturities 179,019 118,572 110,308 123,619 275,140 302,324

Japanese Government Bonds 42,500 22,000 57,000 12,000 — 17,000Municipal Bonds 25,699 39,328 25,385 55,789 174,836 771Corporate Bonds 107,643 43,867 13,050 31,957 28,222 193,259Foreign Securities 3,176 13,376 14,873 23,872 72,081 91,294

Loans and Bills Discounted 868,494 558,660 438,784 326,098 404,096 1,370,574Total ¥ 1,246,817 ¥ 685,306 ¥ 556,459 ¥ 450,837 ¥ 679,237 ¥ 1,672,898Note: Loans in legal bankruptcy, virtual bankruptcy and potential bankruptcy amounting to ¥53,671 million and loans and bills discounted without maturities amounting to

¥2,709 million were excluded from the table above.

Note 4. Maturities of borrowed money and other interest-bearing liabilities:Millions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

Deposits ¥4,586,926 ¥342,946 ¥ 86,266 ¥2,466 ¥7,700 ¥— $41,327,380 $3,089,881 $ 777,241 $22,218 $69,375 $—Negotiable Certificate of Deposits 57,715 — — — — — 520,001 — — — — —Payables for Securities Lending Transactions 77,299 — — — — — 696,450 — — — — —Borrowed Money 88,279 60,325 59,220 62 7 — 795,377 543,517 533,561 558 63 —Total ¥4,810,220 ¥403,271 ¥ 145,486 ¥2,529 ¥7,708 ¥— $43,339,219 $3,633,399 $ 1,310,802 $22,785 $69,447 $—Note: Demand deposits are reported in the “Within One Year” column.

Millions of Yen2018

WithinOne Year

Over One Yearbut withinThree Years

Over Three Yearsbut withinFive Years

Over Five Yearsbut within

Seven Years

Over Seven Yearsbut withinTen Years

OverTen Years

Deposits ¥4,386,417 ¥428,850 ¥ 75,418 ¥2,388 ¥5,453 ¥—Negotiable Certificate of Deposits 64,536 — — — — —Payables for Securities Lending Transactions 141,255 — — — — —Borrowed Money 123,456 31,250 34,915 202 11 —Total ¥4,715,665 ¥460,100 ¥ 110,334 ¥2,591 ¥5,465 ¥—Note: Demand deposits are reported in the “Within One Year” column.

29. Segment Information(a) Outline of the Reported SegmentsThe Group changed its reported segments from the year ended March 31, 2019 to separately present the “Credit Guarantees” segment previously included in “Others” due to increased materiality, in addition to the “Banking Operations” segment and the “Leasing & Installment Sales” segment. Segment information for the year ended March 31, 2018 has been retrospectively reclassified to conform to the change in the reported segments. In the Banking Operations segment, the Group deals with deposits, loans, domestic exchanges and foreign exchanges, sales of Japanese government bonds, mutual funds and insurance and investments in securities. In the Leasing & Installment Sales segment, the Group engages in the leasing business and installment sales business. In the Credit Guarantees segment, the Group engages in credit guarantees business. OKB Securities Establishment Pre-Opening Co., Ltd. which has been established during the year ended March 31, 2019 is included in Others.

The reported segments of the Group are those units for which separate financial information can be obtained and which are regularly examined by the Board of Directors for revenue management and performance evaluation.

(b) Calculation Method of the Amount of Ordinary Income, Segment Profit, Segment Assets and Other Items by the Reported SegmentThe accounting methods applied to the reported segments are same as the described in Note (2), “Significant Accounting Policies.” Ordinary income from internal transactions between segments is calculated based on actual market price.

32

(c) Information Related to Ordinary Income, Segment Profit, Segment Assets and Other Items by Reported Segment

Millions of Yen2019

The Reported SegmentBanking

OperationsLeasing &

Installment Sales Credit

Guarantees Total Others Total Elimination Consolidated

Ordinary Income: Ordinary Income from External Customers ¥ 76,576 ¥ 34,396 ¥ 1,956 ¥ 112,929 ¥ 4,121 ¥ 117,051 ¥ — ¥ 117,051Ordinary Income from Internal Transactions 1,654 821 1,082 3,558 3,962 7,520 (7,520) —

Total 78,231 35,217 3,038 116,487 8,084 124,572 (7,520) 117,051Segment Profit 8,977 1,119 1,311 11,408 770 12,178 (1,538) 10,639Segment Assets 5,746,914 101,064 22,518 5,870,498 17,564 5,888,062 (54,192) 5,833,869Others

Depreciation 4,675 71 28 4,775 125 4,900 (7) 4,893Interest Income 57,202 48 43 57,295 860 58,156 (1,425) 56,730Interest Expense 6,374 185 — 6,560 35 6,595 (75) 6,520Reserve for Possible Loan Losses (12) (141) 167 14 32 46 3 50Increase in Tangible and Intangible Fixed Assets 3,043 430 15 3,489 229 3,718 (145) 3,572

Thousands of U.S. Dollars (Note 1)2019

The Reported SegmentBanking

OperationsLeasing &

Installment Sales Credit

Guarantees Total Others Total Elimination Consolidated

Ordinary Income: Ordinary Income from External Customers $ 689,936 $ 309,901 $ 17,623 $ 1,017,470 $ 37,129 $ 1,054,608 $ — $ 1,054,608Ordinary Income from Internal Transactions 14,902 7,397 9,748 32,056 35,696 67,753 (67,753) —

Total 704,847 317,298 27,371 1,049,526 72,835 1,122,371 (67,753) 1,054,608Segment Profit 80,881 10,081 11,811 102,784 6,937 109,721 (13,857) 95,855Segment Assets 51,778,664 910,568 202,883 52,892,134 158,248 53,050,382 (488,260) 52,562,113Others

Depreciation 42,120 639 252 43,021 1,126 44,148 (63) 44,085Interest Income 515,379 432 387 516,217 7,748 523,975 (12,838) 511,127Interest Expense 57,428 1,666 — 59,104 315 59,419 (675) 58,744Reserve for Possible Loan Losses (108) (1,270) 1,504 126 288 414 27 450Increase in Tangible and Intangible Fixed Assets 27,416 3,874 135 31,435 2,063 33,498 (1,306) 32,183

Millions of Yen2018

The Reported SegmentBanking

OperationsLeasing &

Installment Sales Credit

Guarantees Total Others Total Elimination Consolidated

Ordinary Income: Ordinary Income from External Customers ¥ 76,145 ¥32,735 ¥ 1,903 ¥ 110,783 ¥ 3,884 ¥ 114,668 ¥ — ¥ 114,668Ordinary Income from Internal Transactions 1,154 753 983 2,890 3,094 5,985 (5,985) —

Total 77,300 33,488 2,886 113,674 6,978 120,653 (5,985) 114,668Segment Profit 9,243 984 660 10,888 103 10,992 (9) 10,983Segment Assets 5,673,113 93,204 22,273 5,788,592 15,531 5,804,123 (49,847) 5,754,276Others

Depreciation 4,954 71 50 5,076 108 5,184 (100) 5,083Interest Income 58,016 40 42 58,099 116 58,216 (111) 58,104Interest Expense 6,646 193 — 6,839 35 6,875 (77) 6,797Reserve for Possible Loan Losses 927 (187) 506 1,246 33 1,279 (0) 1,279Increase in Tangible and Intangible Fixed Assets 4,792 553 10 5,356 182 5,539 (47) 5,491

Notes: 1. The tables above list “Ordinary Income” instead of gross sales of companies in other industries.2. Ordinary income represents “total income” less certain special income included in “other income” in the accompanying consolidated statements of income. “Total income”

of ¥117,493 million ($1,058,590 thousand) and ¥119,698 million in the accompanying consolidated statements of income for the years ended of March 31, 2019 and 2018, respectively, is derived from ordinary income of ¥117,051 million ($1,054,608 thousand) and ¥114,668 million, respectively, through adding certain special income of ¥442 million ($3,982 thousand) and ¥5,029 million, respectively.

3. “Others” include the computing services and the credit card businesses.4. “Elimination” means the amount of intersegment transactions.

Related Information

(a) Information by ServiceMillions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019

LendingInvestment in

Securities Leasing Others Total LendingInvestment in

Securities Leasing Others Total

Ordinary Income from External Customers ¥44,978 ¥20,876 ¥34,343 ¥16,852 ¥117,051 $405,243 $188,089 $309,424 $151,833 $1,054,608

Millions of Yen2018

LendingInvestment in

Securities Leasing Others Total

Ordinary Income from External Customers ¥43,548 ¥20,760 ¥32,690 ¥17,669 ¥114,668

33

(b) Segment Information by Location

As ordinary income from international operations was less than 10% of total ordinary income for both the years ended March 31, 2019 and 2018, information concerning ordinary income from international operations was omitted.

As tangible fixed assets overseas were less than 10% of total fixed assets for both the years ended March 31, 2019 and 2018, information concerning tangible fixed assets overseas was omitted.

(c) Ordinary Income by CustomerAs ordinary income attributable to any customer was less than 10% of total ordinary income for both the years ended March 31, 2019 and 2018, information concerning ordinary income by customer was omitted.

Impairment Loss on Fixed Assets Information by the Reported SegmentMillions of Yen Thousands of U.S. Dollars (Note 1)

2019 2019The Reported Segment The Reported Segment

Banking Operations

Leasing & Installment Sales

Credit Guarantees Total Others Total

Banking Operations

Leasing & Installment Sales

Credit Guarantees Total Others Total

Impairment Loss on Fixed Assets ¥274 ¥ — ¥ — ¥274 ¥ — ¥274 $2,468 $ — $ — $2,468 $ — $2,468

Millions of Yen2018

The Reported SegmentBanking

OperationsLeasing &

Installment Sales Credit

Guarantees Total Others Total

Impairment Loss on Fixed Assets ¥1,040 ¥ — ¥ — ¥1,040 ¥ — ¥1,040

30. Transactions with Related PartiesThere were no corresponding items for the year ended March 31, 2019.

Significant transactions with related parties for the year ended March 31, 2018 were as follows:

Name BusinessDescription of the Bank’s Transaction

Transaction Amount(Millions of Yen) Account

Balances(Millions of Yen)

Tetsuzo Ogawa Father of a representative director of a consolidated subsidiary Loan lending ¥107 Loans and bills

discounted ¥106

Notes: 1. Transaction amount represents average balance during the year. Mr. Tetsuzo Ogawa’s son resigned as a director of the consolidated subsidiary above on June 19, 2017. The transaction amount represents average balance up to the resigned month, and the balances represent the amounts at the end of the resigned month.

2. The above transactions were entered into with conditions that are identical to ones with independent third parties.

31. Per Share InformationNet assets per share at March 31, 2019 and 2018 and net income per share for the years then ended were as follows:

Yen U.S. Dollars (Note 1)2019 2018 2019

Net assets per share ¥7,139.69 ¥7,140.93 $64.32Net income per share – basic 164.23 231.55 1.47

Net income per share – diluted 164.03 231.30 1.47

Note: On October 1, 2017, the Company consolidated 10 shares into one share. Per share information was calculated assuming the consolidation of shares was executed on April 1, 2017.

Basic information in computing the above per share data is as follows:Yen U.S. Dollars (Note 1)

2019 2018 2019

(Net assets per share)

Net assets per balance sheet ¥309,676 ¥309,229 $2,790,125

Amounts to be attributed to stock acquisition rights to shares (153) (133) (1,378)

Amounts to be attributed to non-controlling interests (11,268) (10,794) (101,522)

Net assets attributed to common stock 298,254 298,301 2,687,215

Outstanding shares of common stock at end of year (unit: thousands of shares) 41,774 41,773

(Net income per share – basic)

Net income attributable to owners of the parent per income statement 6,861 9,673 61,816

Net income attributable to owners of the parent to be attributed to common stock 6,861 9,673 61,816

Average outstanding shares of common stock during the year (unit: thousands of shares) 41,774 41,773

(Net income per share – diluted)

Increase in common stock (unit: thousands of shares) 51 44

Of which, stock acquisition rights to shares (unit: thousands of shares) 51 44

34

China

VietnamThailand

1

2

4

9

7

8

6 21

3

7

6

8

4

5 5

3

Myanmar

Cambodia

LaosTaiwan

Hong Kong

Korea

Malaysia

Singapore

Indonesia

Japan

Philippines

India

9

12

1314

1010

1511

Los Angeles

Chicago

Cincinnati

Detroit

New York

Mexico

16

17

1

2

4

3

OKB Overseas Representative O�ce and Subsidiary

OKB Overseas Support Desk

OKB Overseas Representative Office and Subsidiary

OKB Overseas Support Desk

Business Alliance Bank

Shanghai Representative O�ce

1 Ho Chi Minh City Representative O�ce

2

Manila Representative O�ce

3 OKB Consulting Vietnam Co., Ltd.4

OKB Myanmar Support Desk1 OKB India Support Desk2

OKB Malaysia Support Desk3 OKB Singapore Support Desk4

OKB Indonesia Support Desk5 OKB Taiwan Support Desk6

OKB Cambodia Support Desk7 OKB Laos Support Desk8

OKB Korea Support Desk9 OKB Mexico Support Desk10

Business Alliance Bank

Bank of China Limited Bank of Communications Co., Ltd.

Bangkok Bank Public Company Limited

JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIET NAM

PT. Bank Maybank Indonesia Tbk State Bank of India

Metropolitan Bank and Trust Company

Malayan Banking Berhad

The Bank of East Asia, Limited BANCO NACIONAL DE MÉXICO, S.A.

OKB New York Support Desk11 OKB Los Angeles Support Desk12

OKB Chicago Support Desk13 OKB Cincinnati Support Desk14

OKB Detroit Support Desk15 OKB Hong Kong Support Desk16

1

3

5

7

9

2

4

6

8

10

OKB Thailand Support Desk17

Ogaki Kyoritsu Bank strengthened its Asian support network

by opening OKB Consulting Vietnam Co., Ltd., in Hanoi in April

2017, followed by the Manila Representative Office in the city

of Makati, the national capital region of the Philippines, in

May. In May 2019, the Company established its OKB Thailand

Support Desk service on the premises of Wise & OK Co., Ltd.,

a consulting agency based in Bangkok, aimed at assisting

customers in expanding their businesses in Thailand. In

addition to OKB’s overseas representative offices and subsidiary,

we make use of the overseas bases of Sompo Japan Nipponkoa

Insurance Inc. and Mitsui Sumitomo Insurance Co., Ltd., both

of which are alliance partners. In this way, we are able to

support customers who are expanding business overseas by

offering services such as local information from overseas and

introductions to specialized consultants, which members of

the OKB Asia Kyoritsu Society* can access through the “OKB

Overseas Support Desk” service.

* A membership organization that serves businesses intent on expanding in Asia, started in February 2013.

To Meet the Needs of Customers Who Are Expanding Business Overseas, the Company Has Expanded Its Network through Business Alliances.

OKB Overseas Business Support Network— Our overseas network extending to 16 countries and territories, mainly in Asia (including Japan) —

O ve r s e a s To p i c s

35

Head Office98, Kuruwamachi 3-chome, Ogaki, Gifu 503-0887, JapanPhone: 81 (584) 74-2111URL: https://www.okb.co.jp

Operations Support Division98, Kuruwamachi 3-chome, Ogaki, Gifu 503-0887, JapanPhone: 81 (584) 74-2111SWIFT Address: OGAK JPJT

Tokyo Branch6-1, Hatchobori 2-chome, Chuo-ku, Tokyo 104-0032, JapanPhone: 81 (3) 3552-5151

Osaka Branch5-7, Hon-machi 3-chome, Chuo-ku, Osaka 541-0053, JapanPhone: 81 (6) 6260-0500

Shanghai Representative OfficeRoom 4406A, 44th Floor, Jin Mao Tower, 88 Century Boulevard, Pudong New Area, Shanghai, The People’s Republic of ChinaPhone: 86 (21) 5047-2700

Ho Chi Minh City Representative Office20th Floor, Sun Wah Tower, 115 Nguyen Hue Boulevard, District 1, Ho Chi Minh City, VietnamPhone: (84) 28-3827-8571

Manila Representative OfficeUnit507, 5th Floor, Tower One & Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City, 1226 PhilippinesPhone: (63)2-810-6856

OKB Consulting Vietnam Co., Ltd.Unit2.11, 2nd Floor, CornerStone Building, 16 Phan Chu Trinh Street, Phan Chu Trinh Ward, Hoan Kiem District, Hanoi, VietnamPhone: (84)24-3823-8247

Company name Business lines Established Capital(Millions of Yen)

Percentage of the Bank’s voting rights

(%)

Percentage of the Bank’s subsidiaries’

voting rights (%)

Kyoyu Lease Co., Ltd. Leasing July 14, 1964 120 8.6 64.1

Kyoritsu Computer Service Co., Ltd.

Computing service and software development December 3, 1980 45 5.0 75.7

OKB Research Institute Co., Ltd.

Research on economy, industry, information processing technology, and culture

July 22, 1996 50 5.0 80.5

OKB Guarantee Co., Ltd.Credit guarantee and investigation, appraisal of real estate collateral July 1, 1982 90 43.0 56.9

OKB Payment Plat Co., Ltd. Credit card business July 15, 1983 30 5.0 71.6

OKB Capital Co., Ltd. Securities investment October 1, 1984 100 35.0 60.0

OKB Business Co., Ltd.

Close examination and adjustment of cash accounts, maintenance of CDs, clerical operations for the Bank, centralized processing

December 15, 1979 20 100.0 —

OKB Partners Co., Ltd.Preparation and printing of documents, receiving and forwarding

April 3, 1984 10 100.0 —

OKB Front Co., Ltd. Bank agent services June 24, 2014 10 100.0 —

OKB Securities Establishment Pre-Opening Co., Ltd.

Preparing for the commencement of securities services March 5, 2019 1,500 100.0 —

International Directory

Subsidiaries

(as of June 30, 2019)

(as of June 30, 2019)

36

Year of Establishment1896

Common StockAuthorized 80,000,000 sharesIssued 41,831,897 sharesCapital ¥46,773 million

Number of Stockholders24,571

Stock ListingFirst Section of the Tokyo Stock Exchange (Ticker Code: 8361)

Number of Employees (The Ogaki Kyoritsu Bank, Ltd.)

2,900

Number of Branches and Offices159Domestic 155Foreign 4*

Board of Corporate AuditorsCorporate Auditors

General Meeting of Shareholders

SecretariatPlanning & Coordination Division

Business Promotion Division

Management Administration DivisionPersonnel DivisionRelated Business Division

Executive Committee

Board of Directors

Audit Division

Public Relations Division

IT Management Division

Corporate Business Division

Loan & Credit Supervision Division

Treasury DivisionOperations Administration DivisionOperations Support DivisionSystem Development DivisionGeneral A�airs DivisionTokyo Liaison O�ce

Business & Public A�airs Division

Consumer Banking Division

Nagoya Liaison O�ce

International Business Promotion Division

Head O�ceDomestic BranchesShanghai Representative O�ce

Manila Representative O�ceHo Chi Minh City Representative O�ce

Management Advisory Committee

Organization Chart (as of June 30, 2019)

Name Shares (Thousand)

%

Japan Trustee Services Bank, Ltd. (Trustee Account) 2,399 5.74

Mizuho Bank, Ltd. 1,474 3.52The Master Trust Bank of Japan, Ltd.(Trustee Account) 1,121 2.68

Ogaki Kyoritsu Bank Employees’ Shareholding Association 1,112 2.66

Japan Trustee Services Bank, Ltd.(Trustee Account 9) 1,107 2.65

Giken Co., Ltd. 1,064 2.54Meiji Yasuda Life Insurance Company 791 1.89JP MORGAN CHASE BANK 385151(Standing proxy: Settlement & Clearing Service Division, Mizuho Bank, Ltd.) 658 1.57

Japan Trustee Services Bank, Ltd. (Trustee Account 5) 609 1.45

The Master Trust Bank of Japan (Toyota Motor Corporation's account) 547 1.31

Major Stockholders

Chairman Takashi TsuchiyaPresident Toshiyuki SakaiManaging Directors Tsutomu Sakaida

Satoshi TsuchiyaYuzo MoritaTakaharu Hayashi

Directors Hiroyuki YoshinariMasayuki NogamiYoshinori GotoKatsutoshi GotoMasaki KakehiMasaaki Kanda*1

Yasutake Tango*1

Standing Corporate Auditors Hajime HiraiSusumu Hayasaki

Corporate Auditors Tsuneo Kikuchi*2

Takashi Saeki*2

*1 External director*2 External auditor

Corporate Data(as of March 31, 2019)

Notes: 1. The number of shares held is rounded down to the nearest thousand and the shareholding ratio is rounded off to two

decimal places.

2. Treasury stock is not included in the calculation of the percentage of total share issued.

*Representative office in Bangkok was closed on May 2019.

Board of Directors and Corporate Auditors(as of June 30, 2019)

37

Printed in Japan on recycled paper

The Ogaki kyOriTsu Bank, LTD.98, Kuruwamachi 3-chome, Ogaki, Gifu 503-0887, Japan

Phone: 81 (584) 74-2111

URL: https://www.okb.co.jp

The OKB Group, including Ogaki Kyoritsu Bank and its subsidiaries and affiliates,

has enacted the OKB Group Charter.

Each and every person in the Group pledges to uphold OKB’s culture,

traditions, and way of thinking. We will thrive in tandem with our region and

take the customer’s point of view in all things.