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

Transcription

1 The Bank of Okinawa, Ltd. Bank of Okinawa Financial Statements 2013

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, 2013, the Group comprised the Bank and 10 consolidated subsidiaries (including 3 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 (3 silent partnerships) Consolidated Five-Year Financial Summary Years ended March For the year Total income... 49,701 49,998 54,476 55,523 54,897 Ordinary income... 49,700 49,998 54,229 54,609 54,499 Extraordinary income Total expenses... 38,778 39,579 43,295 39,783 49,853 Ordinary expenses... 38,766 39,555 43,025 39,590 49,507 Extraordinary loss Income before income taxes... 10,922 10,419 11,180 15,739 5,043 Net income... 5,953 5,977 5,833 9,567 2,797 At year-end Total assets... 1,959,174 1,864,838 1,743,642 1,610,665 1,454,095 Deposits... 1,701,553 1,643,063 1,529,833 1,426,137 1,294,675 Loans and bills discounted... 1,222,230 1,181,866 1,133,325 1,125,898 1,101,615 Securities , , , , ,847 Total net assets , , , ,378 99,471 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 2012 ended March 31, 2013, there were signs of an overall recovery in the Japanese economy amid indications that construction was steady in areas including housing and public investment which was underpinned by disaster recovery-related demand in the first half and a stabilization of exports and production in the second half. This recovery trend occurred despite lackluster conditions primarily caused by a slowdown of the world economy. Against this backdrop, the economy of Okinawa Prefecture continued to grow mainly thanks to stable consumer demand for food items sold at supermarkets and other retail outlets; the effect of government policies on sales of automobiles consumer durables in the first half; and demand for light automobiles. In the construction field, the value of public works contracts increased year on year largely due to an upswing in construction orders from municipalities, while private-sector housing investment remained steady. In Okinawa s tourism industry, overseas flights increased due to the impact of low-cost carriers in the second half, and port calls were made by large cruise ships. These factors drove up the number of tourists and, in turn, enabled hotels to maintain steady occupancy rates. Under these conditions, in fiscal 2012, the final 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 75.0 billion year on year to 1,777.8 billion (US$18,903 million). This was attributable to an increase in liquid deposits of individuals following our promotion of direct payroll deposits and other compound transactions. 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) rose 38.9 billion year on year to 1,227.4 billion (US$13,050 million). This reflected greater efforts to extend loans to the medical and welfare fields as well as 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, based on a close examination of financial market trends, the value of securities holdings at the end of the fiscal year under review was billion (US$6,374 million), up 60.2 billion compared with the previous fiscal year-end. Steadily Implementing Our Customer- Focused Management Strategies In fiscal 2013, the Bank commenced its new two-year medium-term management plan SPEED&SPIRITS. While continuing to implement Speed Management to respond with greater agility to whatever changes we face, we will implement our customer-focused management strategy, known as Okigin spirits, which involves being mindful of customer perspectives during all banking operations. 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. With this in mind, 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, 2013 and 2012 are stated below. Years ended March Loans to bankrupt borrowers... 1,022 (0.08%) 1,495 (0.12%) Delinquent loans... 17,199 (1.40%) 17,689 (1.48%) Past due loans more than 3 months (0.02%) 424 (0.03%) Restructured loans... 2,728 (0.22%) 1,166 (0.09%) Total risk-monitored loans [A]... 21,300 (1.73%) 20,775 (1.74%) Provisions for possible loan losses [B]... 12,277 12,850 Coverage ratio [B/A] % 61.85% 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, 2013 and 2012 U.S. dollars (Note 2) Assets Cash and due from banks... 46,340 42,504 $ 492,721 Call loan and bills bought... 35,734 45, ,951 Monetary claims bought ,535 Securities , ,256 6,374,722 Loans and bills discounted (Note 3)... 1,222,230 1,181,866 12,995,535 Foreign exchanges... 2,766 2,425 29,415 Lease claims and lease investment assets... 14,795 15, ,319 Other assets... 15,995 15, ,077 Tangible fixed assets... 19,320 17, ,429 Intangible fixed assets... 2,631 1,487 27,981 Deferred tax assets... 1,807 3,696 19,223 Customers liabilities for acceptances and guarantees... 10,047 11, ,832 Allowance for loan losses... (12,277) (12,724) (130,545) Total assets... 1,959,174 1,864,838 $20,831,200 Liabilities and Net assets Liabilities Deposits (Note 3)... 1,701,553 1,643,063 $18,092,014 Borrowed money... 10,398 11, ,568 Foreign exchanges Due to trust accounts... 71,142 53, ,429 Other liabilities... 28,913 17, ,432 Provision for bonuses ,354 Provision for directors bonuses Provision for retirement benefits... 5,641 5,808 59,983 Provision for directors retirement benefits Reserve for compensation for trust principal losses Reserve for losses on interest refunded Reserve for reimbursement of dormant deposits Deferred tax liabilities Deferred tax liabilities on land revaluation... 1,468 1,468 15,611 Acceptances and guarantees... 10,047 11, ,832 Total liabilities... 1,830,232 1,744,683 19,460,210 Net assets Capital stock... 22,725 22, ,628 Capital surplus... 17,629 17, ,449 Retained earnings... 76,573 73, ,182 Treasury stock... (1,993) (2,685) (21,198) Shareholders equity , ,018 1,222,062 Valuation difference on available-for-sale securities... 8,788 4,394 93,446 Revaluation reserve for land... 1,152 1,152 12,256 Accumulated other comprehensive income... 9,941 5, ,703 Subscription rights to shares ,683 Minority interests... 3,906 3,483 41,540 Total net assets , ,155 1,370,990 Total liabilities and net assets... 1,959,174 1,864,838 $20,831,200 3

5 Consolidated Statements of Income The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2013 and 2012 U.S. dollars (Note 2) Ordinary income... 49,700 49,998 $528,451 Interest income... 30,907 31, ,628 Interest on loans and discounts... 27,509 28, ,502 Interest and dividends on securities... 3,297 3,148 35,063 Interest on call loans and bills bought Interest on deposits with banks Other interest income Trust fees ,518 Fees and commissions... 4,406 3,950 46,856 Other ordinary income... 13,032 13, ,565 Other income ,065 8,882 Ordinary expenses... 38,766 39, ,186 Interest expenses... 3,175 5,009 33,769 Interest on deposits... 2,327 4,250 24,743 Interest on call money and bills sold Interest on payables under securities lending transactions Interest on borrowings and rediscount ,416 Other interest expenses ,589 Fees and commissions payments... 1,792 1,596 19,063 Other ordinary expenses... 10,235 10, ,833 General and administrative expenses... 20,178 20, ,551 Other expenses... 3,382 2,686 35,969 Provision of allowance for loans losses... 1, ,921 Others... 1,697 2,054 18,048 Ordinary profit... 10,934 10, ,264 Extraordinary income Gain on disposal of noncurrent assets Extraordinary loss Loss on disposal of noncurrent assets Impairment loss Income before income taxes and minority interests... 10,922 10, ,139 Income taxes current... 4,755 3,616 50,567 Income taxes deferred... (212) 487 (2,264) Total income taxes... 4,542 4,103 48,303 Income before minority interests... 6,379 6,315 67,835 Minority interests in income ,532 Net income... 5,953 5,977 $ 63,303 Notes 1. The original Japanese financial statements of the Bank of Okinawa, Ltd. and its consolidated subsidiaries as of March 31, 2013 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, 2013, 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 Statements of Comprehensive Income The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2013 and 2012 U.S. dollars (Note 2) Income before minority interests... 6,379 6,315 $ 67,835 Other comprehensive income... 4,396 1,369 46,746 Valuation difference on available-for-sale securities... 4,396 1,169 46,747 Deferred losses on hedges... (10) Revaluation reserve for land... (0) 210 Comprehensive income... 10,776 7,685 $114,582 Comprehensive income attributable to owners of the parent... 10,347 7, ,023 Comprehensive income attributable to minority interests ,559 4

6 Consolidated Statements of Changes in Net Assets The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2013 and 2012 U.S. dollars (Note 2) Shareholders equity Capital stock the current period... 22,725 22,725 $ 241,628 Total change during the period... Balance at the end of the current period... 22,725 22,725 $ 241,628 Capital surplus the current period... 17,629 17,629 $ 187,449 during the period... Balance at the end of the current period... 17,629 17,629 $ 187,449 Retained earnings the current period... 73,348 68,719 $ 779,890 Dividends from surplus... (1,334) (1,345) (14,187) Net income... 5,953 5,977 63,303 Disposal of treasury stocks... (0) (3) Retirement of treasury stock... (1,394) (14,825) Reversal of revaluation reserve for land during the period... 3,225 4,629 34,291 Balance at the end of the current period... 76,573 73,348 $ 814,182 Treasury stock the current period... (2,685) (2,196) $ (28,548) Purchase of treasury stocks... (703) (501) (7,482) Disposal of treasury stocks Retirement of treasury stock... 1,394 (14,825) during the period (488) 7,350 Balance at the end of the current period... (1,993) (2,685) $ (21,198) Total shareholders equity the current period , ,878 $1,180,420 Dividends from surplus... (1,334) (1,345) (14,187) Net income... 5,953 5,977 63,303 Purchase of treasury stocks... (703) (501) (7,482) Disposal of treasury stocks Retirement of treasury stock... Reversal of revaluation reserve for land during the period... 3,916 4,140 41,642 Balance at the end of the current period , ,018 $1,222,062 U.S. dollars (Note 2) Valuation and transition adjustments accumulated other comprehensive income Valuation difference on available-for-sale securities the current period... 4,394 3,224 $ 46,726 shareholders equity... 4,394 1,169 46,720 during the period... 4,394 1,169 46,720 the current period... 8,788 4,394 $ 93,446 Deferred losses on hedges the current period $ shareholders equity... (10) during the period... (10) Balance at the end of the current period... $ Revaluation reserve for land the current period... 1, $ 12,257 shareholders equity... (0) 210 (1) during the period... (0) 210 (1) Balance at the end of the current period... 1,152 1,152 $ 12,256 Total valuation and transition adjustments accumulated other comprehensive income the current period... 5,547 4,177 $ 58,984 shareholders equity... 4,393 1,369 46,719 during the period... 4,393 1,369 46,719 Balance at the end of the current period... 9,941 5,547 $ 105,703 Subscription rights to shares the current period $ 1,125 shareholders equity during the period Balance at the end of the current period $ 1,683 Minority interests the current period... 3,483 3,151 $ 37,039 shareholders equity ,500 during the period ,500 Balance at the end of the current period... 3,906 3,483 $ 41,540 Total net assets the current period , ,250 $1,277,570 Dividends from surplus... (1,334) (1,345) (14,187) Net income... 5,953 5,977 63,303 Purchase of treasury stocks... (703) (501) (7,482) Disposal of treasury stocks Reversal of revaluation reserve for land shareholders equity... 4,869 1,764 51,777 during the period... 8,786 5,905 93,420 Balance at the end of the current period , ,155 $1,370,990 5

7 Consolidated Statements of Cash Flows The Bank of Okinawa, Ltd. and Consolidated Subsidiaries For the years ended March 31, 2013 and 2012 U.S. dollars (Note 2) Cash flows from operating activities Income before income taxes and minority interests... 10,922 10,419 $ 116,139 Depreciation and amortization... 1,615 1,585 17,181 Impairment loss Change in allowance for loan losses... (446) (794) (4,745) Change in provision for bonuses Change in provision for directors bonuses... (1) 1 (20) Change in provision for retirement benefits... (166) 36 (1,775) Change in provision for directors retirement benefits... 3 (2) 41 Change in reserve for compensation for trust principal losses... (24) (44) (477) Change in reserve for losses on interest refunded... (57) (30) (610) Change in reserve for reimbursement of dormant deposits Interest income... (30,907) (31,422) (328,628) Interest expenses... 3,175 5,009 33,769 Gain on related to securities transactions... (174) (4) (1,854) Loss on disposal of noncurrent assets Net change in loans and bills discounted... (40,364) (48,540) (429,176) Net change in deposits... 58, , ,905 Net change in borrowed money (excluding subordinated loans)... (1,206) (2,169) (12,831) Net change in due from banks (excluding due from the Bank of Japan)... (20) Net change in call loans and others... 10,209 23, ,550 Net change in foreign exchange assets... (341) 398 (3,627) Net change in foreign exchange liabilities (50) 806 Net change in due to trust account... 18,027 8, ,682 Interest received... 31,748 31, ,573 Interest paid... (5,965) (6,407) (63,427) Other... (1,524) 2,146 (16,209) Subtotal... 53, , ,699 Income taxes paid... (2,957) (4,738) (31,443) Net cash provided by operating activities... 50, , ,255 Cash flows from investing activities Purchases of securities... (325,213) (281,868) (3,457,883) Proceeds from sales of securities , ,395 1,730,589 Proceeds from maturities of securities ,270 67,005 1,278,790 Increase in money held in trust... (900) (600) (9,569) Decrease in money held in trust ,569 Purchases of tangible fixed assets... (1,450) (648) (15,421) Proceeds from sales of tangible fixed assets ,386 Purchases of intangible assets... (923) (684) (9,823) Net cash used in investing activities... (44,331) (94,630) (471,362) Cash flows from financing activities Cash dividends paid... (1,334) (1,345) (14,187) Cash dividends paid to minority shareholders... (5) (5) (58) Purchase of treasury stock... (703) (501) (7,482) Proceeds from sales of treasury stock Net cash used in financing activities... (2,042) (1,852) (21,721) Effect of exchange rate changes on cash and cash equivalents (6) 610 Net change in cash and cash equivalents... 3,835 4,836 40,782 Cash and cash equivalents at beginning of year... 42,274 37, ,493 Cash and cash equivalents at end of year... 46,110 42,274 $ 490,275 6

8 Corporate Data Organization Chart (As of July 1, 2013) 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, 2013) Chairman Masatoshi Asato President Yoshiaki Tamaki Senior Managing Director Shin Benoki Managing Directors Tadashi Kinjo Masatake Toguchi Mamoru Ikei Directors Kaoru Tamaki Masayasu Yamashiro Directors (Part-time) Masateru Higa Hirokazu Taminato Corporate Auditor Yoshinori Matsugawa Corporate Auditors (Part-time) Moritake Tomikawa Denichiro Ishimine Yoshio Ishikawa Corporate Outline (As of March 31, 2013) 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: 1,107 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: 21.0 million Number of Stockholders: 7,571 Major Stockholders (As of March 31, 2013) 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 Nippon Life Insurance Co The Silchester International Investors International Value Equity Trust Employee Stockholders Association Japan Trustee Services Bank, Ltd. (trust account) Okinawa Tochi Jutaku K.K The Okinawa Electric Power Co., Inc Sumitomo Life Insurance Co The daido fire & marine Insurance Co. LTD Total... 7, Note: In addition, shares in treasury totaled 571,000 (2.71%). Printed in Japan