Investor Presentaiton

4. Related information Information by service Year ended March 31, 2014 (Millions of yen) Loan Security investment Lease Other Total Ordinary income from external customers ¥ 19,583 ¥ 11,356 ¥ 4,640 ¥ 10,157 ¥ 45,738 Year ended March 31, 2013 Loan Ordinary income from external customers ¥ 20,345 ¥ Security investment 11,692 (Millions of yen) Lease Other Total ¥ 4,782 ¥ 11,106 ¥ 47,927 Year ended March 31, 2014 (Thousands of U.S.dollars) Loan Security investment Lease Other Total Ordinary income from external customers. $ 190,273 $ 110,338 $ 45,083 $ 98,688 $ 444,403 Information about geographical areas is omitted because the Bank and its consolidated subsidiaries conduct banking and other related activities in Japan without having foreign subsidiaries or foreign branches. Information about major customers is not presented because there are no customers having over a 10% share of ordinary income. 5. Information concerning the impairment loss of fixed assets by reportable segment Year ended March 31, 2014 Impairment loss Year ended March 31, 2013 Impairment loss Year ended March 31, 2014 Impairment loss Reportable segment Banking Leasing ¥ 124 ¥ Reportable segment Banking Leasing ¥ 36 ¥ Reportable segment $ Banking 1,204 Leasing $ Total \ 124 ¥ Total Y 36 * Total $ 1,204 $ Other Other Other (Millions of yen) Total ¥ 124 (Millions of yen) Total ¥ 36 (Thousands of U.S.dollars) Total $ 1,204 2014 2013 2014 (Thousands of U.S. dollars) 61,513 20. Amounts Per Share Amounts per share of net income and net assets, as presented below, are based on the weighted average number of shares of common stock outstanding during each year and the number of shares outstanding at each balance sheet date, respectively. 2014 2013 2014 Net income ¥ (Millions of yen) 6,331 ¥ 5,452 $ Amount not attributable (Yen) (U.S. dollars) to common stock: ¥ 37.14 ¥ 31.98 $ ¥789.89 ¥ 747.20 $ 0.36 7.67 Net income related to common stock 6,331 5,452 61,513 Net income Net assets Diluted net income per share has not been disclosed because the Bank does not issue any potentially dilutive common stock equivalents. The basis for the calculation of net income per share for the year ended March 31, 2014 and 2013 are summarized as follows: Weighted average number of shares of common stock outstanding 170,473 thousand 170,487 thousand 170,473 thousand 21. Financial Instruments 1. Matters relating to the state of financial instruments (1) Policy for financial instruments "Bank" below) The Yamagata Bank group (referred to as the provides financial services mainly connected with the banking business including deposits, loans, buying and selling trading securities and security investments. In the banking business, which is the main business of the Bank, funds are raised by means such as accepting deposits and borrowing money from the call money market, and are invested by providing loans and buying securities. Financial assets and liabilities are susceptible to interest rate fluctuations, so the Bank bears market risk, which is the risk of loss caused by changes in financial market conditions (for example, interest rate risk and price fluctuation risk), and the risk of failing to raise sufficient funds. The Bank performs comprehensive asset and liability management (ALM) to appropriately control the balance of profit and risk in a way that suits fund raising and investment policy as well as taking into consideration the state of assets and liabilities and the trends of the financial and capital markets. The Bank uses derivatives as part of such management. (2) Nature and risk of financial instruments The Bank's financial assets consist mainly of loans to domestic companies and individuals, and the Bank is exposed to the credit risks arising from customers' default on their loans. Securities mainly consist of stocks, bonds and investment trusts, some of which are held until the maturity date, others are held for purposes such as investment and business promotion. Those securities are exposed to credit risk of the relevant issuer, the risks of fluctuations in interest rates and market prices. Deposits, call money, etc., that are financial liabilities have interest rate fluctuation risks caused by differences in interest rates and the periods between financial liabilities and financial assets. Financial liabilities also have the funding risk of loss due to inability to raise funds, because of reasons such as unexpected outflow of funds, and by raising funds at interest rates much higher than the normal rate because of unavoidable reasons; and the market liquidity risk of loss caused by the inability to raise the required funds because of disruption such as a credit crunch in the entire market and by trading at prices greatly disadvantageous compared with the normal price. (3) Risk management for financial Instruments i. Credit risk management The Bank measures the risk amount through credit judgments, credit ratings and self-assessments, attaching importance to the public good, safety, growth potential and profitability, and controls the risk on the principle of elimination of concentration with specific customers, in accordance with credit policy (lending standards), which states the basic ideas about lending, the code of conduct and other matters, and with the credit risk management rules, which specify credit risk management methods. The Bank's credit review division and sales promotion division are separated to ensure independence of each other and stringent credit risk management. The Bank conducts rigorous self-assessment, which includes audits by the audit division, from the aspect of securing the soundness of the assets. Based on the results, the Bank appropri- ately writes off bad debts and sets aside reserves. The Bank has a credit rating system for business loans to understand the true state of companies from both quantitative and qualitative aspects. To reduce and offset credit risk, the Bank receives collateral and guarantees for lending transactions and offsets loans against deposits. The basic ideas about security are stated in the credit policy, and security assessments, management policies and procedures are set out in the operation manual. Measurement method and procedures for credit risk amount are stipulated in the operation manual and the risk is measured monthly based on the borrowers' credit rating and other factors. The results are reported to the ALM Council (the board of managing directors). ii.Market risk management a.Interest rate risk management The Bank's interest rate fluctuation risk is managed by ALM. Risk management methodology and procedures are stated in detail in the rules and manuals related to ALM. Present conditions are checked, state of execution is checked and future actions are discussed by the ALM Council, based on the outcome of the deliberations of the ALM Committee. Risks are monitored using methodology such as basis point value (BPV) and value at risk (VAR), and mainly with gap analyses and interest rate sensitivity analyses, and the results are reported monthly to the ALM Council. As part of ALM, derivatives such as interest rate swap transactions are conducted to hedge interest rate risks. b.Price fluctuation risk management Trading and management of investment instruments such as securities are performed in accordance with the investment policy and risk management policy as determined by the board of directors half-yearly. The Middle Section of the Financial Market Division and the Risk Control Section of the General Planning & Coordinations Division measure market risk for securities investments quantitatively and comprehensively using VaR, etc. The results are reported to the relevant directors, the ALM Council, etc., with the frequency set for each financial instrument to check the state of compliance with the rule. c.Quantitative information concerning market risk The principal financial instruments that are subject to interest rate risk and price fluctuation risk, which are the main risk variables affecting the Bank, are loans and bills discounted, securities, deposits and derivatives transactions. The variance-covariance method (holding period: 90 days*, confidence interval: 99%, observation period: 250 business days) was used for the calculation of VaR, the market risk volume. The volume of overall market risk (estimated loss) as of March 31, 2014 (consolidated accounts settlement date) and 2013 were ¥30,385 million ($295,229 thousand) and ¥20,147 million. The Bank believes that the measurement model estimates market risk with sufficient accuracy because the Bank examines the model by means such as performing backtesting to compare the VaR calculated using the model with the actual profit and loss. However, VaR measures market risk volume with a certain probability that is calculated statistically based on historical market movements, and therefore VaR may fail to represent risk in the case of exceptionally drastic change in market conditions. Holding period for shares purchased for the business relation- ship, which are included in the securities: 125 days. iii.Liquidity risk management Sections managing liquidity risks at the Bank are clearly stated in the liquidity risk management rule that stipulate the liquidity risk management procedures, system and so on. The Bank has a management system to secure sufficient liquidity in case of unexpected events by setting liquidity standards for various cases including times of normality, times of concern, and times of emergency. (4) Supplementary explanation of fair values, of financial instruments Fair value of financial instruments includes market price as well as reasonably determined value where market price is unavailable.The reasonably determined value could differ depending on different conditions and assumptions because calculation of such value is conducted based on certain conditions and assumptions. 2. Fair value of financial instruments Carrying amount and fair value, as of March 31, 2014 and 2013, and the difference between the values are shown in the table below. Unlisted stocks and others whose fair value is deemed to be extremely difficult to determine are not listed in the table (see Note 2). Accounts considered to be immaterial are omitted. 20 20 24 21