Nanto Bank : ①Consolidated Financial Statements (467kb)

Financial Data

Consolidated Financial Statements

• Consolidated Balance Sheets

The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2022 and 2021

							Thousands of
		Millions of yen				U.S. dollars
					(Note 1)
		2022		2021			2022
Assets:
Cash and due from banks (Notes 24 and 26) .................................................	¥	1,495,598	¥	1,191,207	$	12,219,936
Debt purchased (Note 26)..............................................................................		1,466		1,827			11,978
Money held in trust (Notes 26 and 27)............................................................		44,017		40,500			359,645
Securities (Notes 10, 11, 12, 15, 26 and 27) ..................................................		1,470,517		1,428,362			12,015,009
Loans and bills discounted (Notes 11, 12, 13 and 26)....................................		3,870,774		3,786,878			31,626,554
Foreign exchanges (Note 11) .........................................................................		2,488		1,238			20,328
Lease receivables and lease investment assets (Note 12)...............................		24,990		25,180			204,183
Other assets (Notes 11, 12 and 16) ...............................................................		55,922		55,287			456,916
Tangible fixed assets (Note 14).......................................................................		37,782		38,106			308,701
Buildings ....................................................................................................		10,708		10,978			87,490
Land ..........................................................................................................		23,915		24,162			195,399
Construction in progress ............................................................................		313		-			2,557
Other tangible fixed assets .........................................................................		2,845		2,965			23,245
Intangible fixed assets....................................................................................		4,858		5,297			39,692
Software ....................................................................................................		4,411		4,846			36,040
Other intangible fixed assets (Note 12) .......................................................		447		450			3,652
Deferred tax assets (Note 31).........................................................................		7,247		1,054			59,212
Customers' liabilities for acceptances and guarantees (Note 11) ....................		8,261		7,172			67,497
Reserve for possible loan losses (Notes 3 and 26)..........................................		(22,485)		(21,768)			(183,715)
Total assets................................................................................................	¥	7,001,441	¥	6,560,343	$	57,205,989
Liabilities and net assets:
Liabilities:
Deposits (Notes 12 and 26)............................................................................	¥	5,647,407	¥	5,439,967	$	46,142,715
Negotiable certificates of deposit (Note 26) ....................................................		7,540		4,040			61,606
Call money and bills sold (Note 26) ................................................................		176,835		-			1,444,848
Payables under repurchase agreements (Notes 12 and 26)............................		12,742		37,077			104,109
Payables under securities lending transactions (Notes 12 and 26)..................		102,432		106,465			836,931
Borrowed money (Notes 12, 26 and 36) ........................................................		709,227		626,700			5,794,811
Foreign exchanges.........................................................................................		473		578			3,864
Borrowed money from trust account..............................................................		5,467		6,265			44,668
Other liabilities (Note 36) ................................................................................		31,586		24,893			258,076
Liability for retirement benefits (Note 29).........................................................		11,976		11,872			97,851
Reserve for reimbursement of deposits ..........................................................		104		158			849
Reserve for contingent losses ........................................................................		834		1,134			6,814
Reserve for share-based payment .................................................................		61		-			498
Reserve under special laws............................................................................		3		3			24
Deferred tax liabilities (Note 31) ......................................................................		12		454			98
Acceptances and guarantees.........................................................................		8,261		7,172			67,497
Total liabilities .............................................................................................	¥	6,714,967	¥	6,266,784	$	54,865,323

Net assets (Note 8):

Common stock: Authorized 64,000 thousand shares in 2022 and 2021

Issued 33,025 thousand shares in 2022 and 2021 ...............

Capital surplus ...............................................................................................

Retained earnings ..........................................................................................

Less treasury stock: Issued 472 thousand shares in 2022

and 407 thousand shares in 2021..................................

Total stockholders' equity ..........................................................................

Valuation difference on available-for-sale securities (Note 27) .........................

Deferred gains or losses on hedges (Note 28) ................................................

Accumulated adjustments for retirement benefits (Note 29)............................

Total accumulated other comprehensive income ......................................

Stock acquisition rights...............................................................................

Total net assets ..........................................................................................

Total liabilities and net assets......................................................................

See Notes to Consolidated Financial Statements.

¥	37,924	¥	37,924
	34,749		34,749
	199,208		189,973
	(1,799)		(1,693)
	270,083		260,953
	15,121		31,221
	1,814		2,008
	(546)		(688)
	16,390		32,542
	-		63
	286,473		293,559
¥	7,001,441	¥	6,560,343

$ 309,861

283,920

1,627,649

(14,698)

2,206,740

123,547

14,821

(4,461)

133,916

-

2,340,656

$ 57,205,989

60 Nanto Report 2022, the integrated report of Nanto Bank

• Consolidated Statements of Income

The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2022 and 2021

							Thousands of
		Millions of yen				U.S. dollars
					(Note 1)
		2022		2021			2022
Income (Note 16):
Interest income:
Interest on loans and bills discounted.........................................................	¥	32,340	¥	31,956	$	264,237
Interest and dividends on securities............................................................		14,201		15,528			116,030
Other interest income.................................................................................		1,644		635			13,432
Trust fees .......................................................................................................		8		8			65
Fees and commissions ..................................................................................		22,246		22,257			181,763
Other operating income (Note 17) ..................................................................		3,425		4,597			27,984
Other income (Note 18)..................................................................................		3,750		6,306			30,639
Total income...........................................................................................		77,616		81,291			634,169
Expenses:
Interest expense:
Interest on deposits....................................................................................		350		423			2,859
Interest on borrowings and rediscounts......................................................		151		320			1,233
Interest on payables under securities lending transactions..........................		34		48			277
Other interest expense ...............................................................................		366		463			2,990
Fees and commissions ..................................................................................		12,310		11,935			100,580
Other operating expenses (Note 19)...............................................................		2,418		3,869			19,756
General and administrative expenses (Note 20)..............................................		40,234		41,622			328,736
Other expenses (Notes 21 and 22).................................................................		3,840		7,245			31,375
Total expenses .......................................................................................		59,706		65,931			487,833
Income before income taxes............................................................................		17,910		15,359			146,335
Income taxes (Note 31):
Current ..........................................................................................................		5,885		4,606			48,083
Deferred.........................................................................................................		156		(108)			1,274
Total income taxes .....................................................................................		6,042		4,497			49,366
Net income ........................................................................................................		11,867		10,861			96,960
Net income attributable to owners of parent...................................................	¥	11,867	¥	10,861	$	96,960
							U.S. dollars
			Yen				(Note 1)
Per share of common stock (Note 34):
Net income - basic.........................................................................................	¥	364.29	¥	333.02	$	2.97
Net income - diluted ......................................................................................		-		332.73			-
Dividends.......................................................................................................		110.00		80.00			0.89

See Notes to Consolidated Financial Statements.

• Consolidated Statements of Comprehensive Income

The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2022 and 2021

							Thousands of
		Millions of yen				U.S. dollars
					(Note 1)
		2022		2021			2022
Net income .........................................................................................................	¥	11,867	¥	10,861	$	96,960
Other comprehensive income (loss) (Note 23):
Valuation difference on available-for-sale securities.........................................		(16,099)		27,863			(131,538)
Deferred gains (losses) on hedges..................................................................		(193)		2,171			(1,576)
Adjustments for retirement benefits (Note 29).................................................		142		110			1,160
Total other comprehensive income (loss) ....................................................		(16,151)		30,146			(131,963)
Total comprehensive income (loss) for the year....................................................	¥	(4,283)	¥	41,008	$	(34,994)
Total comprehensive income (loss) attributable to:
Owners of parent ...........................................................................................	¥	(4,283)	¥	41,008		$	(34,994)

See Notes to Consolidated Financial Statements.

Nanto Report 2022, the integrated report of Nanto Bank 61

Financial Data

Consolidated Financial Statements

• Consolidated Statements of Changes in Net Assets

The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2022 and 2021

					Millions of yen
					Valuation
Number of					difference
shares of					on	Deferred	Accumulated
common					available-	gains or	adjustments	Stock
stock	Common	Capital	Retained	Less treasury	for-sale	losses on	for retirement	acquisition	Total net
(thousands)	stock	surplus	earnings	stock	securities	hedges	benefits	rights	assets

Balance at April 1, 2020 ........................

Cumulative effects of changes in

accounting policies ............................

Restated balance at April 1, 2020.........

Cash dividends ..................................

Net income attributable to owners

of parent ............................................

Purchase of treasury stock.................

Disposition of treasury stock ..............

Transfer from retained earnings to

capital surplus....................................

Net changes in items other than

stockholders' equity ............................

Balance at April 1, 2021 ........................

Cash dividends .................................

Net income attributable to owners

of parent ...........................................

Purchase of treasury stock...............

Disposition of treasury stock ............

Transfer from retained earnings to

capital surplus ..................................

Net changes in items other than

stockholders' equity...........................

Balance at March 31, 2022 (Note 8)......

33,025	¥	37,924	¥	34,749	¥ 181,640	¥	(1,745)	¥	3,357	¥	(162)	¥	(798)	¥	88	¥ 255,053
					91											91
33,025		37,924		34,749	181,732		(1,745)		3,357		(162)		(798)		88	255,145
					(2,609)											(2,609)
					10,861											10,861
							(1)									(1)
				(11)			53									41
				11	(11)											-
									27,863		2,171		110		(24)	30,121
33,025	¥	37,924	¥	34,749	¥ 189,973	¥	(1,693)	¥	31,221	¥	2,008	¥	(688)	¥	63	¥ 293,559
					(2,609)											(2,609)
					11,867											11,867
							(147)									(147)
				(22)			41									18
				22	(22)											-
									(16,099)		(193)		142		(63)	(16,214)
33,025	¥	37,924	¥	34,749	¥ 199,208	¥	(1,799)	¥	15,121	¥	1,814	¥	(546)	¥	-	¥ 286,473

							Thousands of U.S. dollars (Note 1)
									Valuation
									difference		Deferred	Accumulated
								on available-		gains or		adjustments		Stock
		Common		Capital	Retained	Less treasury		for-sale		losses on	for retirement		acquisition	Total net
		stock		surplus	earnings		stock		securities		hedges		benefits		rights	assets
Balance at April 1, 2021 ........................	$	309,861	$	283,920	$ 1,552,193	$	(13,832)	$	255,094	$	16,406	$	(5,621)	$	514	$ 2,398,553
Cash dividends .................................					(21,317)											(21,317)
Net income attributable to owners					96,960											96,960
of parent ...........................................
Purchase of treasury stock...............							(1,201)									(1,201)
Disposition of treasury stock ............				(179)			334									147
Transfer from retained earnings to				179	(179)											-
capital surplus ..................................
Net changes in items other than									(131,538)		(1,576)		1,160		(514)	(132,478)
stockholders' equity...........................
Balance at March 31, 2022 (Note 8)......	$	309,861	$	283,920	$ 1,627,649	$	(14,698)	$	123,547	$	14,821	$	(4,461)	$	-	$ 2,340,656

See Notes to Consolidated Financial Statements.

62 Nanto Report 2022, the integrated report of Nanto Bank

• Consolidated Statements of Cash Flows

The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2022 and 2021

								Thousands of
		Millions of yen					U.S. dollars
						(Note 1)
		2022		2021				2022
Cash flows from operating activities
Income before income taxes ......................................................................	¥	17,910	¥	15,359	$	146,335
Depreciation...............................................................................................		3,296		3,574				26,930
Impairment loss..........................................................................................		62		389				506
Share of loss (profit) of entities accounted for using equity method.............		9		-				73
Increase (decrease) in reserve for possible loan losses ...............................		716		957				5,850
Increase (decrease) in liability for retirement benefits...................................		419		188				3,423
Increase (decrease) in reserve for reimbursement of deposits .....................		(53)		(57)				(433)
Increase (decrease) in reserve for contingent losses ...................................		(300)		33				(2,451)
Increase (decrease) in reserve for share-based payment ............................		61		-				498
Interest income ..........................................................................................		(48,185)		(48,121)				(393,700)
Interest expense.........................................................................................		902		1,258				7,369
Loss (gain) on securities .............................................................................		(1,260)		(997)				(10,294)
Loss (gain) on money held in trust ..............................................................		167		(534)				1,364
Foreign exchange losses (gains).................................................................		(8,530)		(5,353)				(69,695)
Losses (gains) on sales of fixed assets .......................................................		17		2				138
Net decrease (increase) in loans and bills discounted .................................		(83,896)		(329,601)				(685,480)
Net increase (decrease) in deposits ............................................................		207,439		410,208				1,694,901
Net increase (decrease) in negotiable certificates of deposit .......................		3,500		(3,330)				28,597
Net increase (decrease) in borrowed money...............................................		82,526		491,162				674,287
Net decrease (increase) in due from banks (excluding due from the Bank of Japan)...		1,077		(406)				8,799
Net decrease (increase) in call loans and bills bought .................................		361		584				2,949
Net increase (decrease) in call money.........................................................		152,500		(10,839)				1,246,016
Net increase (decrease) in payables under securities lending transactions ...		(4,032)		(28,679)				(32,943)
Net decrease (increase) in foreign exchange assets....................................		(1,250)		(123)				(10,213)
Net increase (decrease) in foreign exchange liabilities .................................		(104)		422				(849)
Net decrease (increase) in lease receivables and lease investment assets....		135		(181)				1,103
Net increase (decrease) in borrowed money from trust account .................		(797)		(497)				(6,511)
Interest received.........................................................................................		48,537		46,631				396,576
Interest paid ...............................................................................................		(972)		(1,566)				(7,941)
Other .........................................................................................................		1,094		(3,122)				8,938
Subtotal .................................................................................................
	371,351		537,362				3,034,161
Income taxes paid......................................................................................		(3,769)		(5,283)				(30,794)
Net cash provided by operating activities ...............................................		367,581		532,079				3,003,358
Cash flows from investing activities
Purchases of securities ..............................................................................		(362,645)		(847,735)				(2,963,028)
Proceeds from sales of securities ...............................................................		229,244		655,200				1,873,061
Proceeds from maturities of securities........................................................		80,753		162,204				659,800
Increase in money held in trust ...................................................................		(19,719)		(1,104)				(161,116)
Decrease in money held in trust .................................................................		15,578		608				127,281
Purchase of tangible fixed assets ...............................................................		(1,753)		(1,194)				(14,323)
Proceeds from sales of tangible fixed assets ..............................................		426		261				3,480
Purchase of intangible fixed assets.............................................................		(1,209)		(658)				(9,878)
Payments for asset retirement obligations ..................................................		(26)		(77)				(212)
Other .........................................................................................................		(13)		24				(106)
Net cash used in investing activities ...............................................................		(59,366)		(32,470)				(485,055)
Cash flows from financing activities
Dividends paid ..........................................................................................		(2,609)		(2,607)				(21,317)
Purchase of treasury stock.........................................................................		(147)		(1)				(1,201)
Other .........................................................................................................		0		0				0
Net cash used in financing activities .......................................................		(2,756)		(2,609)				(22,518)
Effect of exchange rate changes on cash and cash equivalents..................		9		3				73
Net increase (decrease) in cash and cash equivalents..................................		305,468		497,002				2,495,857
Cash and cash equivalents at beginning of year ...........................................		1,188,367		691,364				9,709,673
Cash and cash equivalents at end of year (Note 24) .....................................	¥	1,493,835	¥	1,188,367	$	12,205,531

See Notes to Consolidated Financial Statements.

Nanto Report 2022, the integrated report of Nanto Bank 63

Financial Data

Consolidated Financial Statements

Notes to Consolidated Financial Statements

The Nanto Bank, Ltd. and Consolidated Subsidiaries

Years Ended March 31, 2022 and 2021

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements of The Nanto 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 Act and its related accounting regulations and the Ordinance for Enforcement of the Banking Law and in conformity with accounting principles generally accepted in Japan, which are different in certain respects from the application and disclosure requirements of International Financial Reporting Standards.

The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions, from the consolidated financial statements of the Bank 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 Act. Some supplemental 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.

As permitted by the Financial Instruments and Exchange Act of Japan, amounts less than one million yen have been omitted. As a result, the totals shown in the financial statements do not necessarily agree with the sum of the individual amounts.

The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2022, which was ¥122.39 to US$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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Bank and its eleven (twelve in 2021) subsidiaries at March 31, 2022. (Changes in scope of consolidation)

In the fiscal year ended March 31, 2022, Nanto Investment Advisors Co., Ltd. was excluded from the scope of consolidation because the

company resolved to dissolve at the annual stockholders' meeting held on June 30, 2021 and its liquidation was completed on December 9, 2021.

In the fiscal year ended March 31, 2021, Nanto Capital Partners Co., Ltd. was included in the scope of consolidation due to its new establishment on October 1, 2020. In addition, Nangin Agency Co., Ltd. was excluded from the scope of consolidation because the company resolved to dissolve at the extraordinary general meeting of stockholders held on September 30, 2020, and its liquidation was completed on March 25, 2021.

The Bank had three (two in 2021) unconsolidated subsidiaries in the fiscal year ended March 31, 2022, Nanto Sixth Industry Support Investment Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership and Nanto CVC No. 3 Akebono Investment Limited Partnership. The unconsolidated subsidiaries were excluded from the scope of consolidation because the portion of their assets, net income (loss), retained earnings, accumulated other comprehensive income and others that correspond to the Bank's equity were immaterial to the extent that their exclusion from the scope of consolidation did not preclude reasonable judgment of the Group's financial position and results of operations. (Establishment of unconsolidated subsidiaries)

In the fiscal year ended March 31, 2022, Nanto CVC No. 3 Akebono Investment Limited Partnership became an unconsolidated subsidiary due to its new establishment on February 1, 2022.

The Bank had two (0 in 2021) affiliates over which it had the ability to exercise significant influence over operating and financial policies, Nara Mirai Design Co., Ltd. and Nara Kominka Machizukuri Partners Co., Ltd., and both are accounted for by the equity method.

(Changes in scope of the equity method)

In the fiscal year ended March 31, 2022, Nara Mirai Design Co., Ltd. was included in the scope of the equity method due to its new establishment on April 1, 2021. In addition, Nara Kominka Machizukuri Partners Co., Ltd. was included in the scope of the equity method due to the acquisition of its shares by the Bank on January 20, 2022.

The Bank had three (two in 2021) unconsolidated subsidiaries not accounted for by the equity method in the fiscal year ended March 31, 2022, Nanto Sixth Industry Support Investment Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership and Nanto CVC No. 3 Akebono Investment Limited Partnership, and three (two in 2021) affiliates not accounted for by the equity method, Nanto CVC Investment Limited Partnership, Nanto CVC No. 2 Investment Limited Partnership and Nara Kominka Machizukuri Fund Investment Limited Partnership. The unconsolidated subsidiaries and affiliates not accounted for by the equity method were excluded from the scope of the equity method because the effect of their inclusion on the consolidated financial statements would not have been significant in terms of the portion of net income (loss), retained earnings, accumulated other comprehensive income and others which correspond to the Bank's equity.

(Establishment of an unconsolidated subsidiary not accounted for by the equity method)

In the fiscal year ended March 31, 2022, Nanto CVC No. 3 Akebono Investment Limited Partnership became an unconsolidated subsidiary not accounted for by the equity method due to its new establishment on February 1, 2022.

(Addition or deletion of affiliates not accounted for by the equity method)

In the fiscal year ended March 31, 2022, Nara Kominka Machizukuri Fund Investment Limited Partnership became an affiliate not accounted for by the equity method because Nara Kominka Machizukuri Partners Co., Ltd., an affiliate accounted for by the equity method, is an unlimited liability partner.

From the fiscal year ended March 31, 2021, Nanto CVC Investment Limited Partnership and Nanto CVC No. 2 Investment Limited Partnership have been treated as affiliates not accounted for by the equity method due to the fact that Nanto Capital Partners Co., Ltd., a subsidiary of the Bank, has become an unlimited liability partner of both partnerships jointly with another company. Furthermore, Nara Prefecture Tourism Revitalization Investment Limited Partnership was dissolved and its liquidation completed.

Potager Co., Ltd., of which the Bank owns between 20% and 50% of the voting rights (execution rights), was not recognized as an affiliate for the fiscal years ended March 31, 2022 and 2021 because it is held by the Bank's unconsolidated subsidiary for the purpose of incubating the investees and not for the purpose of controlling the entity.

All consolidated subsidiaries have fiscal years ending on March 31.

All significant intercompany accounts, transactions and unrealized profits on transactions are eliminated.

64 Nanto Report 2022, the integrated report of Nanto Bank