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About the Representative System Shinkin banks are the Japanese equivalent of a credit union, and are a form of financial institution with a cooperative structure based on the fundamental principles of "mutual trust" and "reciprocity" between members, and that maximizes the value of the opinions of each and every member. Each member of a shinkin bank therefore has a single voting right regardless of the number of asset accounts, and participates in the operation of the bank through the general meetings. However, because of the large number of members of the Okazaki Shinkin Bank, it is not possible in practice to actually hold general meetings. In order to maintain member consensus while ensuring the completeness of deliberations, a representative system is therefore used instead of general meetings. The representatives committee is the highest-level decision-making body for deciding important issues such as approval of accounts or change to statutes of the bank, and appointment of the board of directors and auditors. The representatives committee therefore conducts business through representatives that are selected by some appropriate procedure from among the members, and the opinions of each and every member are therefore reflected in the running of the bank in the same way as a general meeting. Furthermore, communication with representatives and members that occurs not only in the representative meetings, but also in everyday operations is treated as important, and is incorporated into various improvements in the running of the bank.

The Okazaki Shinkin Bank was established in 1924 in Okazaki City, Aichi Prefecture to serve small and medium-sized companies and their employees. Under its corporate mission of sincerely striving for the prosperity of society and the development of regional industry, the Bank continues to maintain sound operations, and is steadily widening its business scope. The Bank currently enjoys an overwhelming share of deposits and loans in Okazaki City, and is one of the top-ranked shinkin banks in Japan. Amid the present dramatic changes in the financial sector, the Bank reaffirms its customer-focused business stance. We are continuing to improve our services and lineup of financial products, streamline our corporate organization, raise operational efficiency, and further reinforce our risk management capability and earning power.

employees serving 131,658 members. The total balance of deposits stood at ¥3,043,268 million (US$28,645 million), and loans and bills discounted totaled ¥1,584,243 million (US$14,911 million).(exchanging ¥106.24, end of March 2018)

OKAZAKI

NAGOYA

JAPAN

AICHI

• Established: July 1924• Head Office: 41 Motosuga, Sugo-cho, Okazaki• Members: 131,658• Capital: 3,167.7 million yen• Deposits: 3,043.2 billion yen• Loans: 1,584.2 billion yen• Full-time employees: 2,010• Location: 99 locations Number of Offices by Area

Profile of The Okazaki Shinkin Bank

29195

3016

Okazaki AreaNagoya AreaOwari AreaWest-Mikawa AreaEast-Mikawa Area

(As of March 31, 2018)

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Aiming to Be the Most Trusted, Number-One Community Bank

Thank you for using the Okazaki Shinkin Bank.We are publishing "The State of Okashin 2018," our annual disclosure report, in order to foster an even deeper understanding of our bank, and we would invite everyone to read it.Local economic conditions continued along the path of a gentle recovery in 2017, including a transition to stronger production activities due to increases in exports and equipment investment. However, the sense of uncertainty about the future also increased due to a greater sense of labor shortages among companies as well as concerns over increasing tension surrounding North Korea and trade friction caused by the United States. On the financial side of the economy during this time, interest rate levels have continued to be extremely low, with the Bank of Japan maintaining a policy of negative interest rates.Amidst these financial and economic conditions, we have striven to improve the quality of our financial services with a focus on fields in which our clients have growing needs, such as business match-making, business succession and inheritance, real estate utilization, health care and welfare, and overseas business support, based on an approach that seeks mutual advantage and puts fairness before profits, in accordance with the medium-term business plan we launched in 2015, our "Three-Year Plan for Transitioning from Quantity to Quality."With regard to bank locations, we moved our Nagoya Branch to the Nagoya Building newly constructed in the Misono district of Nagoya, and our Okazaki Ekinishi Branch, Ikeura Branch, Handa Branch, and Hina Branch also moved to new facilities. We have also worked to offer greater convenience for our customers by continuing to install new ATMs in shopping centers and other locations.With the new medium-term management plan that we are starting in 2018, our "Three-Year Plan for Reform and Creativity," we aim to become a financial institution that thrills customers and enriches employees by creating new added value without being limited by previous ways of thinking, via five strategies that concern sales, bank branches, business operations, personnel, and finances. Our personnel and executives are united in our efforts to pursue business operations that will earn an even higher level of trust from our customers, and we humbly ask for your continued support in these efforts.

July 2018

Ichiro ObayashiChairman of the Board

Makoto Okawara President

Message from the Management

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Review of Operations

Personal deposits increased 45 billion yen, and corporate deposits increased 83.3 billion yen, resulting in a savings and deposits increase of 132.7 billion yen compared to the end of the previous fiscal year. The period-end balance was 3,043.2 billion yen.

28,283

21,956

End of March 2018End of March 2016 End of March 20170

(unit: 100 million yen)

Savings and Deposits

29,105

22,435

30,432

22,886

Personalsavings

Loans increased by 13.5 billion yen compared to the end of the previous fiscal year, for a period-end balance of 1,584.2 billion yen.

15,495

5,869

End of March 2018End of March 2016 End of March 20170

(unit: 100 million yen)

Loans15,706

6,237

15,842

6,393

Individualloans

Our isolated capital ratio was 12.47% (a 0.34 point decrease compared to the end of the previous fiscal year). This is over 3 times more than the domestic standard of 4%, and it demonstrates both the soundness and security of the Okazaki Shinkin Bank. To further alleviate risks, our total capital is 200 billion yen, putting our bank in a position of excellent operational strength that ranks among Japan’s top shinkin banks.

1,926

End of March 2018End of March 2016 End of March 20170

(unit: 100 million yen)

Capital ratio

1,953 2,000

Operating profit was 6.779 billion yen, and current operating profit was 5.204 billion yen.

7,129

5,670

End of March 2018End of March 2016 End of March 20170

(unit: million yen)

Profit and Loss Conditions

4,338

3,258

6,779

5,204

Operating profit

Current operating profit

The non-performing loan amount based on the Financial Revitalization Act declined 5.04 billion yen compared to the end of the previous fiscal year, for a total of 46.225 billion yen.

193,991

End of March 2018End of March 2016 End of March 20170

(unit: million yen)

Non-performing Loan Conditions

59,73851,265

46,225

We were able to grow our savings and deposit balance to 3 trillion yen in December 2017. We are now ranked third nationwide among all shinkin banks in this area. Going forward, we aim to be a financial institution that continues to please and be chosen by customers, and we hope to continue receiving the exceptional support you have shown us.

0

1 trillion

2 trillion

3 trillion(yen)

1986 1994 2017

3.83

3.24

Accumulated earnings

Accumulated earnings

Non-performing loan rate (%)3.24

2.902.990

3.8313.11 12.81

Isolated capital ratio (%)

12.818 12.4712.4713.11

a ee.

Reached 3 trillionyen

Reached 2 trillionyen

Capital amount Non-performing

loans

Thanks to you, our savings and deposit balance reached 3 trillion yen in

December 2017.

Reached 1 trillion yen

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The Okazaki Shinkin Bank has established a fundamental policy of prioritizing compliance as our most important management issue, and all of our executives and employees are active in efforts to comply with laws and regulations, etc. A set of "in-house rules for supervising compliance" have been established based on the compliance policy, and these rules determine the basic items related to preparations for complying with laws, etc. A strong management system has also been built with the board of directors at the top. In terms of actions, the "compliance program" that details specific implementation plans is decided every year. Through this program, all of our executives and employees strive to be active in each of the areas for improving employee awareness and building systems for complying with laws, etc.

The final decision-making body in relation to compliance is the board of directors. In addition to deciding on our fundamental policies and compliance standards, the board of directors appropriately evaluates the range of compliance measures in addition to the state of compliance. The compliance committee was established in accordance with our compliance policy and is involved in investigating, planning, and evaluating from the standpoint of comprehensive business management. Furthermore, the risk management division (legal affairs administration office) has been established as the supervising office, and in addition to performing business and planning related to compliance measures, also undertakes guidance and training, and responds to questions and consultations. Regarding the organization of each position, a "compliance officer" is stationed in the primary work supervision role, and a "compliance supervisor" is stationed in each branch. They provide instruction, guidance, and verification related to the work within their branch and to the staff within their branch. In order to respond swiftly and appropriately in the rare event that a violation of the law occurs, there is a system in place to facilitate a prompt response, so that when a staff member becomes aware of a compliance violation or that there is a risk of a compliance violation, the staff member is to notify a compliance officer or compliance supervisor, and in addition, there is a hotline through which the risk management division (legal affairs administration office), corporate auditors or advising lawyers can be notified directly.

Through the annual compliance program, in addition to branch guidance by managers and training workshops being held, efforts are progressing towards appropriate work management, centered on each of the officers and supervisors, such as holding study seminars that utilize tools such as the compliance manual.

Compliance-Related Activities

Compliance Management System

Fundamental Compliance Policy

ComplianceOfficer

Compliance Committee

Executive Committee

Board of Directors Corporate auditors

Hotline

ComplianceSupervisor

Risk Management Division(Legal Affairs Administration Office)

Staff

Efforts towards Compliance (Adhering to Laws)

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Credit risk is the risk of loss to a financial institution if the value of assets held by the financial institution is reduced or destroyed by worsening financial conditions, bankruptcy, etc. of borrowers. At the Okazaki Shinkin Bank, the basic attitude that executives and staff take part in our credit business is established by our "Credit Policy," and we strive to maintain a suitable screening and management system based on it. Furthermore, for all borrowers, a calculation of the credit risk is carried out by a VaR through the applicable credit rating based on the business conditions by considering quantitative information such as financial information, and qualitative information such as the strength of the business, and a rigorous asset assessment is carried out based on the "rules related to self-assessment" in order to ensure the soundness of loan assets. In addition to this, monitoring is performed periodically to ensure that there is no bias of credit to particular borrowers or industries (credit concentration risk) and the risk is dispersed. The Okazaki Shinkin Bank endeavors to appropriately manage the credit risk associated with market transactions by internal regulations decided by the bank.

Credit Risk

Market risk is the risk of loss to a financial institution if the value of assets or debts held by the financial institution, such as cash deposits and securities, fluctuates due to changes in interest rates or variations in the market. Specific examples of market risk include the interest risk that occurs when interest rates change, value variation risk that occurs when the value of securities, etc. change, and exchange risk due to variations in exchange rates. At the Okazaki Shinkin Bank, a cross-checking system has been established where the investment department that performs the market transactions (front office), and business administration department that performs the business processing (back office) are separate, and the risk management department (middle office) is organizationally separate from these market departments. Furthermore, the bank adheres to the appropriate risk limit (the limiting value on the amount of risk) that suits the equity capital approved by the board of directors, and the position limits (the limits on the amount invested and the amount retained). Furthermore, for the market risk, which varies daily due to market trends, rigorous management is performed by periodically monitoring the amount of risk as calculated by a VaR.

Market Risk

Liquidity risk is the risk of loss out of the necessity to obtain funds at much higher interest rates than are normally used to procure funds in the event that the required funds become difficult to secure and there is a shortfall in cash as a result of unexpected losses in liquid funds due to market turmoil or worsening of the financial conditions of the bank. In addition to taking care to hold securities that have a highly liquid market, such as national and municipal bonds, in order that sudden demands for cash can be handled adequately, strict management is made to ensure that surplus funding reserves are held, and that the liquidity risk is not actualized.

Liquidity Risk

Efforts to Strengthen the Risk Management System

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System risk is the risk of loss due to damage, incorrect operation due to malfunctions, illicit usage, information leaks, cyber-attacks, etc. involving our computer system. The Okazaki Shinkin Bank endeavors to ensure the stability and reliability of hardware and software based on the "Computer System Safety Guidelines for Financial Institutions" in order to provide stable, high quality, and appropriate system functionality. Furthermore, as measures for dealing with disasters such as large-scale earthquakes, the Okazaki Shinkin Bank has duplicated the system circuitry, and strives to ensure the effectiveness of emergency response by carrying out system failure training.

●System Risk

Administrative risk is the risk of loss due to any executive or employee neglecting to properly carry out their duties, or due to accidents or illegal activities. At the Okazaki Shinkin Bank, the Operations Management Division periodically updates the "Administrative Procedure Guidelines", and also strives to maintain an internal environment in which administrative work is carried out correctly and where employee knowledge of administrative procedures is acquired and improved through education, training, and in-branch lecture. Furthermore, when an administrative error occurs, the cause of the error is investigated, and all employees are notified of how to handle the situation in the future in order to prevent the mistake from occurring again. In addition, an internal control structure has been setup to prevent mistakes whereby each branch conducts a monthly internal inspection, and internal audits are carried out periodically by the Audit Division.

●Administrative Risk

Efforts are made to maintain the appropriate administrative readiness and reduce risks during normal business operations.●Other Risk

This is the risk of loss due to an executive or employee violating the law or behaving inappropriately while performing their duties.Legal Risk

This is the risk of loss due to employment problems with executives and employees or occupational injuries in the workplace.Personal Risk

This is the risk of loss due to the tangible assets being held by the Okazaki Shinkin Bank being destroyed by natural disasters, etc.Tangible Asset Risk

This is the risk of loss due to a dramatic drop in the level of trust in the Okazaki Shinkin Bank due to rumors of poor financial conditions or due to the words and actions of executives and employees.

Reputation Risk

Operational risk is a collective term for risks that have a major impact on operations and where losses are caused by errors in business process, the activities of managers and employees, computer system processing, etc. or from changes in external conditions. In response to operational risk, the Okazaki Shinkin Bank decides the basic policies for risk management each year for system risks and administrative risks and proceeds with preparations and maintenance, and also the relevant departments take efforts to prevent the occurrence of other risks, including legal risks, personal risks, tangible asset risks, and reputation risks.

Operational Risk

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The Okazaki Shinkin Bank offers a wide variety of international operations, including overseas remittances and trade transactions, as part of an effort to better tailor services to the more diversified and sophisticated requirements of a client base increasingly engaged in cross-border activities. All branches offer some foreign currency exchange services, and five are capable of offering a full range of such services. Other services include providing exchange-rate information and holding seminars on overseas investment to support local companies as they seek to expand their trade and business connections with overseas countries. We have been broadening our range of international operations since 1986, when we first became involved in international correspondent banking. To support these operations, we set up international communications channels and a dedicated computer system for administration of correspondent banking in fiscal 1994, and a new online international accounts service in fiscal 2001. In May 2006, we launched our internet application service for foreign exchange transaction to enhance customer convenience. As of June 30, 2018 the Bank's international correspondent banking network encompassed 219 banks located in 37 countries.

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total: 219ASIABANGLADESHCAMBODIACHINAHONG KONGINDIAINDONESIAKOREAMALAYSIAPAKISTANPHILIPPINESSINGAPORESRI LANKATAIWANTHAILANDVIETNAMJAPAN

221

33375

1162427

196

1427

NORTH AMERICACANADAU.S.A.

LATIN AMERICAARGENTINABRAZILPERUPARAGUAY

212

1311

EUROPEBELGIUM DENMARKFRANCEGERMANYITALYLUXEMBOURGNETHERLANDSRUSSIASPAINSWEDENSWITZERLANDU.K.

211452412111

MIDDLE EASTCYPRUS

OCEANIAAUSTRALIANEW ZEALAND

1

22

Offices of Correspondent Banks Abroad

EUROPE 25

ASIA142

OCEANIA4

LATIN AMERICA 6

NORTH AMERICA14MIDDLE EAST

1

(As of June 30, 2018)

International Operations

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We support the activities of Attic Art, an organization that supports the independence of artists who have incredible talent despite their disabilities.As part of this program, we adopted paintings by seven students at Toyota Koto Tokubetsusien Gakko (Special Support Education High School) in Aichi prefecture to use as tissue box designs for 2017.Additionally, we hosted the Aichi Art Brut × Attic Art Cooperative Exhibit at our Nagoya Branch from Dec. 6 to 17, 2017. The exhibit received many visitors while it ran, including Hideaki Omura, the governor of Aichi Prefecture.

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TopicsEvents to Commemorate the 100th Anniversary of the Completion of the Okazaki Shinkin Bank Museum

Community Contribution Activities

In 2017, we celebrated the 100th anniversary of the completion of the Okazaki Shinkin Bank Museum.Our lectures and exhibitions commemorating its 100th anniversary were a great success, with all events visited by large numbers of people.

A lecture was delivered by film director Masahiro Shinoda and architect Shigeru Wakayama in the second-floor large hall at our main branch. This unusual combination of a film director and architect, whose lecture touched on the depths of Japanese culture and looked at the past from the

"Japanese idol" culture, drew about 200 attendees despite the event taking place on a weekday.

Lecture to Commemorate the 100th Anniversary of the Completion of the Okazaki Shinkin Bank Museum (Sept. 13)

In 1927, over 12,000 American blue-eyed dolls were sent from the United States to Japan as a gesture of friendship. In response, Japan sent over 58 Japanese dolls, including Miss Aichi.The whereabouts of Miss Aichi had been unknown, but it was miraculously rediscovered in 2014, and an exhibition of American blue-eyed dolls and Japanese friendship dolls was held to commemorate its return home after 90 years. Miss Aichi

Exhibition of American Blue-eyed Dolls and Japanese Friendship Dolls including "Miss Aichi" (Aug. 2-13)

AthenaKira Junior High School, Nishio

Grace EssaKota Elementary School, Kota

Colma DelMiyazaki Elementary School, Okazaki

Sally Hirohata Elementary School, Okazaki● New American blue-eyed doll

The museum hosted an exhibit of folding screens illustrated by Terufumi Karasawa, a pen artist living in Okazaki. Some 20 works of

Folding Screen, which depicts Okazaki as it appeared roughly 100 years ago. Karasawa created this highly detailed illustration after gathering contemporary documents, old photographs, and other materials, and it became a feast for the eyes of museum visitors.

1916 Okazaki Bird’s-eye View Folding Screen Exhibit (Mar. 13-Apr. 13)

The museum was designated a "Scenically Important Building" by the City of Okazaki on Oct. 31, 2017. The building is a valuable historical and cultural property for the residents of the city, and it joins the Okazaki Castle Donjon and Hatcho Miso Storehouse as a structure designated as scenically important to the community and an

urban development.

Designated a "Scenically Important Building" by the City of Okazaki

Committee hosted Relay for Life Japan Okazaki 2017 on Sept. 23 and 24, 2017. Relay for Life is a walking event in which cancer patients and their family, friends, and supporters take turns walking the event grounds for 24 hours to celebrate the courage of people confronted with cancer. Team Okazaki represented our bank at the event, with employees and their family members — 72 people in total — participating.

Participation in Relay for Life Japan Okazaki 2017

Attic Art Support Activities

On Feb. 19, 2018, a results presentation by the students receiving scholarships from the Okashin Advanced Science Scholarship Fund took place in the large hall at our main branch. The purpose of the Okashin Advanced Science Scholarship Fund is to contribute to the development of local society and human resource education. It was established in August 2012 through a local partnership with the National Institutes of Natural Sciences located in Okazaki city.

Okashin Advanced Science Scholarship Fund Results Presentation

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Board of Directors and Corporate Auditors

President Makoto Okawara

Chairman of the BoardIchiro Obayashi

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(As of June 30, 2018)

Toshihiro AsayamaKaoru SugiyamaTadashi Fujiura

Directors Corporate AuditorsYoshiharu Shiraki (standing)Shigeki Sakai (standing)

Jun KawaiTsuchio Hosoi*

*External auditor in accordance with provisions of the Commercial Code

Kenro KobayashiKazuo KawaharaYuki Inaba

Takahiro AndoAkiyoshi SakakibaraTeiji Tachibana

Directory

Deputy PresidentHideaki Tanaka

Managing DirectorSugao Asakura

Managing DirectorMasahiro Kuroyanagi

Senior Managing DirectorKazunari Uno

Deputy PresidentMasahiko Ueno

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Organization Chart (As of June 30, 2018)

General

Meeting

Board of Corporate Auditors

Board of Directors

Executive Committee

Directors

SeniorManaging Director

Managing Directors

Chairman of the Board

Deputy President

President

Audit Division

General Planning Division

Risk Management Division

General Affairs Division

Property Administration Division

Branch Banking Support Division No.1

Human Resources Division

Branch Banking Support Division No.2

New Business and Growing Market Development Division

Retail Business Division

Business Support Division

Treasury&Securities Division

International Business Division

Operations Management Division

Deposit Operations Administration Division

Loan Operations Administration Division

Market Operations Division

Innovation Promotion Division

Operational Reform Project

Regional Development Division

Offices

Sub-OfficeOkazaki Main Office(Business Div.)

International Business Division41 Motosuga, Sugo-cho, Okazaki, Aichi 444-0035, Japan　Telephone: +81-564-25-7198Mailing Address: Okazaki P.O. Box No. 30, Aichi 444-8602, JapanSWIFT Address: OKSB JP JZ　Facsimile: +81-564-24-9660

Head OfficeTHE OKAZAKI SHINKIN BANK

41 Motosuga, Sugo-cho, Okazaki, Aichi 444-0035, Japan　Telephone: +81-564-21-6111

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