The Bank of Okinawa, Ltd. Bank of Okinawa Financial Statements

Transcription

1 The Bank of Okinawa, Ltd. Bank of Okinawa Financial Statements 2012

2 Profile The Bank s main base of operations is Okinawa Prefecture, an island prefecture blessed with an unspoiled natural environment, at the far southwestern end of the Japanese archipelago. It has a thriving tertiary sector, thanks to tourist attractions such as a subtropical oceanic climate and unique traditions and culture. The Bank of Okinawa, Ltd. was established in June 1956, in response to growing demand from society for the establishment of a commercial bank, to promote economic progress in Okinawa after the war. Since then, the Bank has worked to promote the industrial economy of the region and improve the living conditions of its people. It has steadily grown along with the region as a bank that offers international operations and medium-to-long-term financial trust services. Thanks to the cooperation of the people of the region, the Bank saw remarkable growth and listed its stock on the First Section of the Tokyo Stock Exchange in September We are committed to enhancing and strengthening our comprehensive financial services as a bank that is trusted and respected by the people of the region. To this end, we are guided by our corporate message of strengthening relationships with our customers and our management philosophy of actively contributing to the welfare of the regional community. The Bank of Okinawa Group As of March 31, 2012, the Group comprised the Bank and 15 consolidated subsidiaries (including 8 dormant partnerships). With the Bank s operations at the center, financial services extend across securities operations, trust banking, leasing and other operations. Operating Structure of the Bank and Subsidiaries Banking operations Head Office and 60 branches, 4 sub-branches The Bank of Okinawa, Ltd. Leasing operations Other operations Consolidated subsidiary Okigin General Lease Co., Ltd. (Leasing, financing and factoring) Consolidated subsidiaries Okigin Business Service Co., Ltd. (Clerical operations) Okigin General Administration Co., Ltd. (Purchase and sale of property through auctions) Okigin Economic Research Institute, Ltd. (Surveys of local economic conditions, general research) Okigin SPO Co., Ltd. (Computer-related services) Okigin Credit Guarantee Co., Ltd. (Credit guarantees) Okigin JCB Co., Ltd. (Credit card services) Others (8 silent partnerships) Consolidated Five-Year Financial Summary Years ended March For the year Total income... 49,998 54,476 55,523 54,897 56,366 Ordinary income... 49,998 54,229 54,609 54,499 55,795 Extraordinary income Total expenses... 39,579 43,295 39,783 49,853 44,331 Ordinary expenses... 39,555 43,025 39,590 49,507 43,848 Extraordinary loss Income before income taxes... 10,419 11,180 15,739 5,043 12,034 Net income... 5,977 5,833 9,567 2,797 6,737 At year-end Total assets... 1,864,838 1,743,642 1,610,665 1,454,095 1,393,358 Deposits... 1,643,063 1,529,833 1,426,137 1,294,675 1,220,622 Loans and bills discounted... 1,181,866 1,133,325 1,125,898 1,101,615 1,065,288 Securities , , , , ,592 Total net assets , , ,378 99,471 98,066 Capital ratio (based on domestic standards) (%) Note: The figures for deposits and loans shown in the Bank s consolidated financial statements do not include trust accounts. 1

3 Message from the President Yoshiaki Tamaki, President Operating Environment and Business Results During fiscal 2011 ended March 31, 2012, the Japanese economy continued to face a harsh environment that included problems at the Fukushima Daiichi Nuclear Power Plant caused by the impact of the Great East Japan Earthquake, the sovereign debt crisis in Europe, floods in Thailand, and the ongoing appreciation of the yen. Despite these problems, there were signs of recovery with a modest rebound due to the rapid rebuilding of the supply chain, growing reconstruction demand, and economic stimulus measures such as energy policies. Against this backdrop, in Okinawa Prefecture, while supermarket and department store sales surpassed those of the previous fiscal year, the total shipment value of consumer electronics and sales of automobiles consumer durables fell below those of the previous fiscal year. Moreover, in the construction field, the value of public works contracts decreased year on year due to fewer large projects. The decrease in the number of domestic tourists visiting Okinawa offset the increase in visiting overseas tourists, thereby pushing down the total number of tourists visiting Okinawa and leading to a year-on-year decline. Nevertheless, as there were signs of a partial recovery, the total number of tourists remained largely unchanged. Under these conditions, in fiscal 2011, the first year of our medium-term management plan ( ), we took steps to enhance customer service and improve business performance by steadily implementing measures based on our business strategy. As a result of these efforts, our business results were as follows. Deposits (banking and trust accounts combined) increased by billion year on year, to 1,702.7 billion(us$20,717 million). As we commemorated our 55th anniversary and a new president assumed office, deposits of individuals increased as a result of the promotion of mainstay products such as our time deposit with cash rewards Spring Atarumba Campaign, Okigin Churashima Branch Time Deposit Campaign II, and our time deposit with cash rewards Let s Smile Campaign. Also contributing to the increase was our greater focus on marketing the Strong Relations Plan and tracking of funding for corporate clients. Loans and bills discounted (banking and trust accounts combined) increased 47.0 billion year on year, to 1,188.5 billion (US$14,460 million). This reflected greater efforts to extend loans to SMEs and stronger marketing of loans to individuals, especially life-related loans. As a result of efficient fund management and stable earnings, mainly from investments in public bonds such as JGBs and local government bonds, the value of securities holdings rose 93.3 billion during the period to end the year at billion (US$6,561 million). Reinforcing our Foundation as the Top Bank in Okinawa The Bank entered the final year of SPEED&PROGRESS (Speed Management and Progress to the Next Generation), its medium-term management plan for fiscal years 2011 and The Bank has continued to implement Speed Management to respond with greater agility to whatever changes it faces. The Bank has also steadily executed Progress Strategy = Progress to the Next Generation, its strategy to promote the building of new systems, human resources, and a bank culture best suited for a new stage of growth. Our basic policy is to solidify our foundation as the region s number one bank and contribute to the region s economic development by building stronger ties with the local community through the development of ever-stronger relationships with customers and the provision of more sophisticated financial services. By constantly meeting our customers expectations, we seek to become the financial institution of choice for the people of Okinawa Prefecture as the People s Bank. Bank executives and employees will work together as one to enhance our management systems and improve the quality of customer service. I look forward to the continued support and encouragement of all our stakeholders in this endeavor. Yoshiaki Tamaki President Consolidated Risk-Monitored Loans Consolidated risk-monitored loans at March 31, 2012 and 2011 are stated below. Years ended March Loans to bankrupt borrowers... 1,495 (0.12%) 1,906 (0.16%) Delinquent loans... 17,689 (1.48%) 16,722 (1.46%) Past due loans more than 3 months (0.03%) 701 (0.06%) Restructured loans... 1,166 (0.09%) 1,389 (0.12%) Total risk-monitored loans [A]... 20,775 (1.74%) 20,719 (1.81%) Provisions for possible loan losses [B]... 12,850 13,694 Coverage ratio [B/A] % 66.09% Notes: 1. Figures relate to the sum of banking and trust banking main accounts. 2. Percentages in parentheses refer to total term-end loan balance. 2

4 Consolidated Balance Sheets The Bank of Okinawa, Ltd. and Consolidated Subsidiaries As of March 31, 2012 and 2011 U.S. dollars (Note 2) Assets Cash and due from banks... 42,504 37,648 $ 517,153 Call loan and bills bought... 45,939 68, ,948 Monetary claims bought ,946 Securities , ,893 6,561,090 Loans and bills discounted (Note 3)... 1,181,866 1,133,325 14,379,682 Foreign exchanges... 2,425 2,824 29,508 Lease claims and lease investment assets... 15,563 17, ,357 Other assets... 15,439 15, ,845 Tangible fixed assets... 17,844 18, ,111 Intangible fixed assets... 1,487 1,231 18,098 Deferred tax assets... 3,696 4,365 44,980 Customers liabilities for acceptances and guarantees... 11,297 11, ,454 Allowance for loan losses... (12,724) (13,518) (154,814) Total assets... 1,864,838 1,743,642 $22,689,365 Liabilities and Net assets Liabilities Deposits (Note 3)... 1,643,063 1,529,833 $19,991,042 Borrowed money... 11,605 13, ,205 Foreign exchanges Due to trust accounts... 53,114 45, ,240 Other liabilities... 17,263 20, ,043 Provision for bonuses ,381 Provision for directors' bonuses Provision for retirement benefits... 5,808 5,772 70,670 Provision for directors retirement benefits Reserve for compensation for trust principal losses ,326 Reserve for losses on interest refunded ,720 Reserve for reimbursement of dormant deposits Deferred tax liabilities on land revaluation... 1,468 1,679 17,864 Acceptances and guarantees... 11,297 11, ,454 Total liabilities... 1,744,683 1,629,391 21,227,441 Net assets Capital stock... 22,725 22, ,495 Capital surplus... 17,629 17, ,498 Retained earnings... 73,348 68, ,429 Treasury stock... (2,685) (2,196) (32,668) Shareholders equity , ,878 1,350,754 Valuation difference on available-for-sale securities... 4,394 3,224 53,469 Deferred losses on hedges Revaluation reserve for land... 1, ,026 Accumulated other comprehensive income... 5,547 4,177 67,495 Subscription rights to shares ,287 Minority interests... 3,483 3,151 42,384 Total net assets , ,250 1,461,923 Total liabilities and net assets... 1,864,838 1,743,642 $22,689,365 3

5 Consolidated Statements of Income The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2011 U.S. dollars (Note 2) Ordinary income... 49,998 54,229 $608,329 Interest income... 31,422 32, ,313 Interest on loans and discounts... 28,064 28, ,456 Interest and dividends on securities... 3,148 3,689 38,308 Interest on call loans and bills bought ,963 Interest on deposits with banks Other interest income Trust fees ,848 Fees and commissions... 3,950 3,698 48,064 Other ordinary income... 13,080 16, ,145 Other income... 1,065 1,451 12,958 Ordinary expenses... 39,555 43, ,266 Interest expenses... 5,009 5,025 60,953 Interest on deposits... 4,250 4,436 51,710 Interest on call money and bills sold Interest on borrowings and rediscount ,176 Other interest expenses ,056 Fees and commissions payments... 1,596 1,468 19,424 Other ordinary expenses... 10,053 12, ,324 General and administrative expenses... 20,208 19, ,872 Other expenses... 2,686 4,301 32,691 Provision of allowance for loans losses ,696 Others... 2,054 3,340 24,994 Ordinary profits... 10,443 11, ,063 Extraordinary income Gain on disposal of noncurrent assets... 0 Recoveries of written-off claims Reversal of reserve for compensation of trust fund principal Reversal of reserve for reimbursement of dormant deposits... 0 Extraordinary loss Loss on disposal of noncurrent assets Impairment loss Loss on adjustment for changes of accounting standard for asset retirement obligations Income before income taxes and minority interests... 10,419 11, ,774 Income taxes current... 3,616 4,998 43,999 Income taxes deferred (167) 5,932 Total income taxes... 4,103 4,831 49,932 Income before minority interests... 6,315 6,348 76,841 Minority interests in income ,110 Net income... 5,977 5,833 $ 72,731 Notes 1. The original Japanese financial statements of the Bank of Okinawa, Ltd. and its consolidated subsidiaries as of March 31, 2012 that are the basis of the accompanying English consolidated financial statements have been audited in accordance with auditing standards, procedures and practices generally accepted and applied in Japan by Deloitte Touche Tohmatsu LLC. 2. Amounts in US dollars are included solely for the convenience of readers outside Japan. The rate of = US$1, the rate of exchange on March 31, 2012, has been used in translation. 3. The figures for deposits and loans shown in the Bank s consolidated financial statements do not include trust accounts. Consolidated Statement of Comprehensive Income The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2011 U.S. dollars (Note 2) Income before minority interests... 6,315 6,348 $76,841 Other comprehensive income... 1,369 (1,673) 16,665 Valuation difference on available-for-sale securities... 1,169 (1,675) 14,229 Deferred losses on hedges... (10) 2 (127) Comprehensive income... 7,685 4,675 $93,507 Comprehensive income attributable to owners of the parent... 7,347 4,161 89,398 Comprehensive income attributable to minority interests ,108 4

6 Consolidated Statements of Changes in Net Assets The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2011 U.S. dollars (Note 2) Shareholders equity Capital stock the current period... 22,725 22,725 $ 276,495 Total change during the period... Balance at the end of the current period... 22,725 22,725 $ 276,495 Capital surplus the current period... 17,629 17,630 $ 214,498 Retirement of treasury stock... (0) during the period... (0) Balance at the end of the current period... 17,629 17,629 $ 214,498 Retained earnings the current period... 68,719 65,704 $ 836,103 Dividends from surplus... (1,345) (1,355) (16,372) Net income... 5,977 5,833 72,731 Retirement of treasury stock... (1,463) Disposal of treasury stocks... (3) (36) Reversal of revaluation reserve for land during the period... 4,629 3,015 56,325 Balance at the end of the current period... 73,348 68,719 $ 892,429 Treasury stock the current period... (2,196) (3,177) $ (26,719) Purchase of treasury stocks... (501) (482) (6,103) Disposal of treasury stocks Retirement of treasury stock... 1,463 during the period... (488) 981 (5,949) Balance at the end of the current period... (2,685) (2,196) $ (32,668) Total shareholders equity the current period , ,882 $1,300,378 Dividends from surplus... (1,345) (1,355) (16,372) Net income... 5,977 5,833 72,731 Purchase of treasury stocks... (501) (482) (6,103) Disposal of treasury stocks Retirement of treasury stock... Reversal of revaluation reserve for land during the period... 4,140 3,995 50,376 Balance at the end of the current period , ,878 $1,350,754 U.S. dollars (Note 2) Valuation and transition adjustments accumulated other comprehensive income Valuation difference on available-for-sale securities the current period... 3,224 4,899 $ 39,237 shareholders equity... 1,169 (1,674) 14,231 during the period... 1,169 (1,674) 14,231 the current period... 4,394 3,224 $ 53,469 Deferred losses on hedges the current period $ 127 shareholders equity... (10) 2 (127) during the period... (10) 2 (127) Balance at the end of the current period $ Revaluation reserve for land the current period $ 11,463 shareholders equity ,563 during the period ,563 Balance at the end of the current period... 1, $ 14,026 Total valuation and transition adjustments accumulated other comprehensive income the current period... 4,177 5,849 $ 50,828 shareholders equity... 1,369 (1,672) 16,667 during the period... 1,369 (1,672) 16,667 Balance at the end of the current period... 5,547 4,177 $ 67,495 Subscription rights to shares the current period $ 526 shareholders equity during the period Balance at the end of the current period $ 1,287 Minority interests the current period... 3,151 2,646 $ 38,343 shareholders equity ,041 during the period ,041 Balance at the end of the current period... 3,483 3,151 $ 42,384 Total net assets the current period , ,378 $1,390,076 Dividends from surplus... (1,345) (1,355) (16,372) Net income... 5,977 5,833 72,731 Purchase of treasury stocks... (501) (482) (6,103) Disposal of treasury stocks Reversal of revaluation reserve for land shareholders equity... 1,764 (1,123) 21,470 during the period... 5,905 2,872 71,846 Balance at the end of the current period , ,250 $1,461,923 5

7 Consolidated Statements of Cash Flows The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2012 and 2011 U.S. dollars (Note 2) Cash flows from operating activities Income before income taxes and minority interests... 10,419 11,180 $ 126,774 Depreciation and amortization... 1,585 1,701 19,291 Impairment loss Change in allowance for loan losses... (794) (184) (9,668) Change in provision for bonuses Change in provision for directors bonuses Change in provision for retirement benefits (147) 441 Change in provision for directors retirement benefits... (2) (260) (35) Change in reserve for compensation for trust principal losses... (44) (79) (546) Change in reserve for losses on interest refunded... (30) 39 (368) Change in reserve for reimbursement of dormant deposits... 2 (0) 24 Interest income... (31,422) (32,446) (382,313) Interest expenses... 5,009 5,025 60,953 Loss (gain) on related to securities transactions... (4) (1,318) (57) Loss on disposal of noncurrent assets Net change in loans and bills discounted... (48,540) (7,426) (590,586) Net change in deposits , ,695 1,377,668 Net change in borrowed money (excluding subordinated loans)... (2,169) (267) (26,393) Net change in due from banks (excluding due from the Bank of Japan)... (20) 70 (243) Net change in call loans and others... 23,024 (31,459) 280,141 Net change in foreign exchange assets (1,279) 4,853 Net change in foreign exchange liabilities... (50) (27) (614) Net change in due to trust account... 8,051 27,834 97,956 Interest received... 31,620 33, ,723 Interest paid... (6,407) (3,489) (77,958) Other... 2,146 5,296 26,114 Subtotal , ,858 1,290,472 Income taxes paid... (4,738) (6,961) (57,648) Net cash provided by (used in) operating activities , ,896 1,232,823 Cash flows from investing activities Purchases of securities... (281,868) (576,143) (3,429,478) Proceeds from sales of securities , ,572 1,477,008 Proceeds from maturities of securities... 67,005 16, ,246 Increase in money held in trust... (600) (600) (7,300) Decrease in money held in trust ,300 Purchases of tangible fixed assets... (648) (716) (7,889) Proceeds from sales of tangible fixed assets ,077 Purchases of intangible assets... (684) (494) (8,330) Net cash provided by (used in) investing activities... (94,630) (97,750) (1,151,365) Cash flows from financing activities Cash dividends paid... (1,345) (1,355) (16,372) Cash dividends paid to minority shareholders... (5) (8) (67) Purchase of treasury stock... (501) (482) (6,103) Proceeds from sales of treasury stock... Net cash used in financing activities... (1,852) (1,846) (22,543) Effect of exchange rate changes on cash and cash equivalents... (6) (44) (74) Net change in cash and cash equivalents... 4,836 3,255 58,841 Cash and cash equivalents at beginning of year... 37,438 34, ,513 Cash and cash equivalents at end of year... 42,274 37,438 $ 514,354 6

8 Corporate Data Organization Chart (As of July 1, 2012) General Meeting of Stockholders Board of Directors Chairman Executive Committee President Senior Managing Director Managing Directors Board of Corporate Auditors Corporate Auditors Office General Planning Division Risk Management Division Personnel Division Securities & International Division Business Administration Division Loan Marketing Division Credit Screening Division Corporate Banking Division Credit Supervision Division Operations Administration Division Auditing Division Board of Directors and Corporate Auditors (As of July 1, 2012) Chairman Masatoshi Asato President Yoshiaki Tamaki Senior Managing Director Shin Benoki Managing Directors Tadashi Kinjo Tomokazu Kobashikawa Masatake Toguchi Directors Kaoru Tamaki Noriaki Nishihira Directors (Part-time) Masateru Higa Hirokazu Taminato Corporate Auditor Isamu Nerome Corporate Auditors (Part-time) Moritake Tomikawa Denichiro Ishimine Susumu Tsuchida Corporate Outline (As of March 31, 2012) Date of Establishment June 21, 1956 Head Office 10-1, 3-chome, Kumoji, Naha, Okinawa , Japan TEL: FAX: URL: Securities & International Division 10-1, 3-chome, Kumoji, Naha, Okinawa , Japan TEL: FAX: Network Head Office and Branches: 65 Number of Employees: 1,099 Stock Exchange Listing Tokyo Stock Exchange and Fukuoka Stock Exchange Capital: 22,725 million Number of Shares of Common Stock Authorized: 44 million Issued and Outstanding: 21.4 million Number of Stockholders: 6,171 Major Stockholders (As of March 31, 2012) Name Number of shares owned (Thousands) Proportion of total shares (%) NORTHERN TRUST CO. (AVFC) SUB A/C AMERICAN CLIENTS... 1, NORTHERN TRUST CO. AVFC RE U.S. TAX EXEMPTED PENSION FUNDS JAPAN TRUSTEE SERVICES BANK, LTD. (TRUST ACCOUNT) NIPPON LIFE INSURANCE CO THE SILCHESTER INTERNATIONAL INVESTORS INTERNATIONAL VALUE EQUITY TRUST EMPLOYEE STOCKHOLDERS ASSOCIATION OKINAWA TOCHI JUTAKU K.K THE OKINAWA ELECTRIC POWER CO., INC SUMITOMO LIFE INSURANCE CO THE DAIDO FIRE & MARINE INSURANCE CO. LTD TOTAL... 6, Note: In addition, shares in treasury totaled 771,000 (3.6%). Printed in Japan