Consolidated Financial Report
2022

Year ended March 31, 2022

CONTENS
01

Consolidated Balance Sheet

02

Consolidated Statement of Income

03

Consolidated Statement of Changes in Net Assets

05

Consolidated Statement of Cash Flows06

Notes to Consolidated Financial Statements

35

Independent Auditor's ReportConsolidated Balance SheetThe Iyo Bank, Ltd. and its Consolidated Subsidiaries
March 31, 2022

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

2022

2022

2021

ASSETSCash and due from banks
Monetary claims purchased
Trading account securities
Money held in trust
Securities (Notes 2-1,2-4 and 2-8)
Loans and bills discounted (Notes 2-2,2-3,2-4 and 2-5)
Reserve for loan losses
Foreign exchange (Note 2-3)
Lease receivables and investment assets
Other assets (Note 2-4)
Tangible fixed assets (Note 2-7)
Intangible fixed assets
Net defined benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Total assets¥1,514,760
6,211
525
5,767
1,681,624
5,046,997(37,600)
11,31029,992
136,839
72,507
9,424
37,842
197
28,396¥8,544,797¥1,415,522
6,834
649
6,427
1,897,768
4,975,984(37,043)
8,596
31,680100,097
72,991
9,035
33,201
195
28,796¥8,550,739$12,376,501
50,747
4,289
47,11913,739,880
41,237,004(307,214)
92,409245,052
1,118,057
592,425
76,999309,191
1,609
232,012$69,816,136

LIABILITIES AND NET ASSETS
Liabilities
Deposits (Note 2-4)
Call money and bills soldPayables under repurchase agreements (Note 2-4)
Payables under securities lending transactions (Note 2-4)
Borrowed money (Note 2-4)
Foreign exchange
Borrowed money from trust account
Other liabilities
Accrued employees’ bonuses
Net defined benefit liability
Reserve for losses on repayment of dormant bank accounts
Reserve for contingent losses
Reverse for share-based payments
Reserve under the special laws
Deferred tax liabilities
Deferred taxes on revaluation excess (Note 2-6)
Acceptances and guarantees
Total liabilities¥6,626,125
7,343
74,232
139,898
750,302
1,837
554
86,086
1,781
10,712
1,175
881
413
3
73,7309,520
28,396
7,812,998¥6,495,645
61,624
199,289
91,604
743,645266
576,058
1,785
11,326
1,652
703
289
3
87,228
9,573
28,796
7,809,498$54,139,431
59,996
606,520
1,143,050
6,130,419
15,0094,526
703,374
14,551
87,523
9,600
7,198
3,374
24
602,418
77,784232,01263,836,898

Net assets
Common stock
Authorized — 600,000,000 shares
Issued — 323,775,366 shares
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Valuation difference on available-for-sale securities
Net deferred gains (losses) on derivatives under hedge accounting
Land revaluation excess (Note 2-6)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

20,94820,289468,487(4,871)
504,854
190,431
1,152
19,058
8,973
219,616208
7,119
731,798¥8,544,797

20,94820,352446,871(5,045)483,127
222,338(374)
19,1788,279
249,421273
8,418
741,240¥8,550,739

171,157
165,773
3,827,820(39,799)
4,124,961
1,555,935
9,412
155,71573,314
1,794,394
1,699
58,166
5,979,230$69,816,136

See Notes to Consolidated Financial Statements.

IYO BANK Annual Report 20221

Consolidated Statement of Income
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2022

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

INCOMEInterest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Interest on receivables under resale agreements
Other interest income
Fees and commissions
Other operating income
Other income
Total income
EXPENSESInterest expense:
Interest on deposits
Interest on borrowings and rediscounts
Interest on payables under repurchase agreements
Interest on payables under securities lending transactions
Other interest expense
Fees and commissions
Other operating expenses
General and administrative expenses (Note 3-1)
Other expenses (Notes 3-2)
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total taxes
ProfitProfit attributable to noncontrolling interests
Profit attributable to owners of parent

2022

2021

¥ 48,852
24,816—
2,028
14,41536,656
7,220
133,990¥ 49,572
25,530(160)
1,049
14,321
29,882
4,655
124,852$ 399,150
202,761—
16,569117,779
299,501
58,991
1,094,778

1,529
256
70
78
1,082
5,032
30,522
49,771
7,870
96,214
37,776

1,722
974
187
12
1,479
5,319
21,30851,90916,13899,052
25,79912,492
2,091
571
637
8,840
41,114249,383
406,659
64,302
786,126
308,652

10,302847
11,14926,626208¥ 26,417

8,845(1,295)
7,549
18,250162¥ 18,088

84,173
6,920
91,094
217,550
1,699$ 215,842

Per share of common stock (yen and U.S. dollars):
Basic net income
Diluted net income
Dividends

Yen¥83.39
83.32
16.00

2022

U.S. dollars (Note 1-1)

¥57.12
57.05
14.00

$0.68
0.68
0.13

See Notes to Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2022

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

ProfitOther comprehensive income (Note 4-1)
Valuation difference on available-for-sale securities
Net deferred gains (losses) on derivatives under hedge accounting
Remeasurements of defined benefit plans
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Noncontrolling interests
See Notes to Consolidated Financial Statements.

2

IYO BANK Annual Report 2022

2022

2021

2022

¥26,626(31,213)(33,435)
1,527
693¥ (4,587)¥18,250
64,42856,666(1,167)
8,929¥82,678$217,550(255,029)(273,184)
12,476
5,662$ (37,478)¥ (3,267)(1,319)¥81,4131,265$ (26,693)(10,777)

Consolidated Statement of Changes in Net Assets
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2022

Millions of yen
Stockholders’ equity

For the year ended March 31, 2022

Balance at the beginning of
the accounting period
Cumulative effects of changes inaccounting polices
Restated balance
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Totalstockholders’equityCommonstock

CapitalsurplusRetainedearnings

Treasurystock¥20,948¥20,352¥446,871¥(5,045)¥483,127

20,94820,352(167)
446,704(5,045)(167)
482,959(4,754)
26,417
(638)
812

(62)
119

(4,754)
26,417
(638)
750
119

—

(62)

21,782

174

21,894¥20,948¥20,289¥468,487¥(4,871)¥504,854

Thousands of U.S. dollars (Note 1-1)
Stockholders’ equity

For the year ended March 31, 2022

Balance at the beginning of
the accounting period
Cumulative effects of changes inaccounting polices
Restated balance
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Commonstock

CapitalsurplusRetainedearnings$171,157$166,288 $3,651,205

171,157

166,288(1,364)
3,649,840

Treasurystock$(41,220) $3,947,438(41,220)(38,843)
215,842(5,212)
6,634

(506)
972

—
$171,157(506)

177,972$165,773 $3,827,820

Total
stockholders’equity1,421(1,364)
3,946,065(38,843)
215,842(5,212)
6,127
972

178,887$(39,799) $4,124,961
Millions of yen

Accumulated other comprehensive income

For the year ended March 31, 2022

Balance at the beginning of
the accounting period
Cumulative effects of changes inaccounting polices
Restated balance
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Net deferred
Valuation
gains (losses)
difference on on derivatives
available-for- under hedge
sale securities accountingLandrevaluation
excessRemeasure- Total accumuments oflated otherdefinedcomprehenbenefit plans sive income

Stockacquisitionrights

Noncontrollinginterests

Total net
assets¥222,338¥ (374)¥19,178¥8,279¥249,421¥273¥ 8,418¥741,240

222,338(374)

19,1788,279

249,421

273

8,418

(167)
741,073(4,754)
26,417
(638)
750
119

(31,906)

1,527

(119)

693

(29,804)(65)(1,299)(31,169)(31,906)

1,527

(119)

693

(29,804)(65)(1,299)(9,274)¥190,431¥1,152¥19,058¥8,973¥219,616¥208¥ 7,119¥731,798

IYO BANK Annual Report 20223

Thousands of U.S. dollars (Note 1-1)
Accumulated other comprehensive income

For the year ended March 31, 2022

Net deferred
Valuation
gains (losses)
difference on on derivatives
available-for- under hedge
sale securities accounting

Balance at the beginning of
the accounting period$1,816,635
Cumulative effects of changes inaccounting polices
Restated balance
1,816,635
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Changes in items other thanstockholders’ equity, net(260,691)
Total changes during
the accounting period(260,691)
Balance at the endof the accounting period$1,555,935

Land
revaluation
excessRemeasure- Total accumuments oflated otherdefinedcomprehenbenefit plans sive income

Stockacquisitionrights$(3,055)$156,695$67,644 $2,037,919$2,230(3,055)

156,695

67,6442,230

Noncontrollinginterests

Total net
assets$ 68,780 $6,056,377(1,364)

2,037,919

68,7806,055,012(38,843)
215,842(5,212)
6,127
972

12,476

(972)

5,662

(243,516)(531)(10,613)(254,669)

12,476

(972)

5,662

(243,516)(531)(10,613)(75,774)$ 9,412$155,715$73,314 $1,794,394$1,699$ 58,166 $5,979,230

Millions of yen
Stockholders’ equity

For the year ended March 31, 2021

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥20,948¥14,578¥433,082¥(5,131)(4,436)18,088
(0)
86

11
137
5,761

Total
stockholders’equity¥463,478(4,436)18,088
(0)
98
137
5,761

—

5,773

13,78985

19,648¥20,948¥20,352¥446,871¥(5,045)¥483,127

Millions of yen
Accumulated other comprehensive income

For the year ended March 31, 2021

Balance at the beginning of
the accounting period
Changes during the accounting period
Dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stockReversal of land revaluation excess
Increase (decrease) in equity resulting
from the acquisition of shares of aconsolidated subsidiary
Changes in items other thanstockholders’ equity, net
Total changes during
the accounting period
Balance at the endof the accounting period
4

IYO BANK Annual Report 2022

Net deferred
Valuation
gains (losses)
difference on on derivatives
available-for- under hedge
sale securities accounting¥166,775

¥792

Land
revaluation
excess¥19,315

Remeasure- Total accumuments oflated otherdefinedcomprehenbenefit plans sive income¥(650)¥186,233

Stockacquisitionrights

Noncontrollinginterests

Total net
assets¥343¥21,792¥671,848(4,436)18,088(0)
98
137(5,761)—

55,563(1,167)

(137)

8,929

63,187(69)(7,612)55,50555,563(1,167)

(137)

8,929

63,187(69)(13,374)

69,392¥222,338¥(374)¥19,178¥8,279¥249,421¥273¥8,418¥741,240

Consolidated Statement of Cash Flows
The Iyo Bank, Ltd. and its Consolidated Subsidiaries
For the year ended March 31, 2022

Thousands of U.S.
dollars (Note 1-1)

Millions of yen

Cash flows from operating activities
Income before income taxes
Depreciation
Impairment losses
Increase (decrease) in reserve for loan losses
Increase (decrease) in accrued employees’ bonuses
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Increase (decrease) in reserve for losses on repayment of dormant bank accounts
Increase (decrease) in reserve for contingent losses
Increase (decrease) in reserve for share-based payments
Increase (decrease) in reserve under special laws
Interest and dividend income
Interest expense
Securities losses (gains), net
Money in trust losses (gains), net
Foreign exchange losses (gains), net
Losses (gains) on disposal of tangible fixed assets, net
Net changes in loans and bills discounted
Net changes in deposits
Net changes in borrowed money (excluding subordinated borrowings)
Net changes in due from banks
Net changes in call loans
Net changes in call money
Net changes in payables under securities lending transactions
Net changes in foreign exchange assets
Net changes in foreign exchange liabilities
Net changes in lease receivables and investment assets
Net increase (decrease) in borrowed money from trust accountInterest income received
Interest expense paid
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from share issuance to noncontrolling stockholders
Repayments to noncontrolling shareholders
Cash dividends paid
Cash dividends paid to noncontrolling stockholders
Purchases of treasury stock
Proceeds from sales of treasury stock
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Net cash provided by (used in) financing activities
Foreign currency translation adjustments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year (Note 6-1)

¥

2022

2021

37,776
5,077
421
557
(3)
(4,640)
(614)
(476)
178
123
0
(75,698)
3,017(1,169)49(36,592)
41(71,012)130,480
6,656
(542)
610
(179,337)
48,293(2,713)
1,571
1,687
549
77,215(3,195)
11,478(50,207)(10,035)(60,242)¥2022

25,799
5,089
200
5,668
136
(14,467)(1,160)
(741)
111
97
0
(75,992)
4,376(3,604)(14)(9,498)171(242,893)
766,902(26,732)(759)
356,890
12,938(106,832)
2,144
(29)
2,123
(23)
74,857(5,171)
16,990786,579(7,845)
778,734$

308,652
41,482
3,439
4,551
(24)
(37,911)(5,016)(3,889)
1,454
1,004
0
(618,498)
24,650(9,551)
400(298,978)
334(580,210)
1,066,100
54,383(4,428)4,984(1,465,291)
394,582(22,166)
12,836
13,783
4,485
630,893(26,105)
93,782(410,221)(81,991)(492,213)(1,027,100)
1,039,949
155,652(83)
910(2,517)84(3,254)
163,640(864,892)
594,326
206,516(3,073)
3,516(2,849)154(3,448)(69,750)(8,392,025)
8,497,009
1,271,770
(678)
7,435
(20,565)686(26,587)
1,337,037

22(0)(4,754)
(2)
(638)
638

52
(3)
(4,436)
(5)
(0)
0

179
(0)
(38,843)(16)(5,212)
5,212—(4,734)(8,921)(13,314)—(38,679)

33
98,696
1,413,563¥ 1,512,259

6
695,675
717,887¥1,413,563

269
806,405
11,549,660$12,356,066

See Notes to Consolidated Financial Statements.

IYO BANK Annual Report 2022

5

Notes to Consolidated Financial Statements
The Iyo Bank, Ltd. and Its Consolidated Subsidiaries
For the year ended March 31, 2022

1-1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Financial
Instruments and Exchange Act and its related accounting regulations
and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as
to application and disclosure requirements from International Financial
Reporting Standards.
The accompanying consolidated financial statements havebeen restructured and translated into English with certain expandeddisclosures from the consolidated financial statements of The Iyo Bank,
Ltd. (the “Bank”) prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Financeas required by the Financial Instruments and Exchange Act. Some
supplementary 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.
Japanese yen amounts are rounded down to the nearest million.
Translations of the Japanese yen amounts into U.S. dollar amounts were
included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2022, which was ¥122.39 to
U.S. $1.00. The translations should not be construed as representations
that the Japanese yen amounts have been, could have been or couldin the future be converted into U.S. dollars at this or any other rate ofexchange.
Under Japanese laws and regulations, including the Companies Act(the “Act”), the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolutionof the Board of Directors, designate an amount not exceeding one halfof the price of the new shares as additional paid-in capital, which isincluded in capital surplus.
Under the Act and the Banking Law, in cases in which a dividend
distribution of surplus is made, the smaller of an amount equal to 20%of the dividend or the excess, if any, of 100% of common stock over
the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legalearnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Act, legal earnings reserve and additional paid-in capitalcan be used to eliminate or reduce a deficit or can be capitalized by aresolution of the stockholders’ meeting. Additional paid-in capital andlegal earnings reserve may not be distributed as dividends. Under the
Act and the Banking Law, however, by resolution of the stockholders’meeting, all additional paid-in capital and all legal earnings reserve
may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Bank can distribute as dividends is
calculated based on the unconsolidated financial statements of the Bankin accordance with Japanese laws and regulations.
(Basis of Presenting Consolidated Financial Statements)
1 Scope of consolidation(1) Principles of consolidation
The consolidated financial statements include the accounts of the Bankand the following 16 consolidated subsidiaries.
• The Iyogin Credit Guaranty Company Limited• The Iyogin Business Service Company Limited• Iyogin Capital Company Limited

6

IYO BANK Annual Report 2022

• Iyogin Venture Fund Corporation Limited IV• Iyogin Venture Fund Corporation Limited V• Iyogin Venture Fund Corporation Limited VI• Iyo Evergreen Sixtiary Industrialization Support Fund Investment
Business Limited Partnership• Iyo Evergreen Agriculture Support Fund Investment Business Limited
Partnership• Iyo Evergreen Agriculture Support Fund II Investment Business Limited
Partnership• Iyo Evergreen Business Succession Support Fund Investment Business
Limited Partnership• Iyogin Regional Economy Research Center, Inc.
• Iyogin DC Card Co., Ltd.
• Iyogin Challenge & Smile Co., Ltd.
• Iyogin Leasing Company Limited• Iyogin Computer Service Company Limited• Shikoku Alliance Securities Co., Ltd.
(2) The consolidated financial statements exclude the following
subsidiary.
• Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership• Iyo Evergreen Business Succession Support Fund II Investment Business
Limited Partnership
Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership and Iyo Evergreen Business Succession
Support Fund II Investment Business Limited Partnership are excluded
from the scope of consolidation because its assets, ordinary income,net income, retained earnings and accumulated other comprehensive
income are immaterial to the consolidated financial statements.
No unconsolidated subsidiary is accounted for by the equity method.
Iyogin-Ehime University Originated Venture Support Fund Investment
Business Limited Partnership and Iyo Evergreen Business Succession
Support Fund II Investment Business Limited Partnership are excluded
from the scope of the equity method because its net income andretained earnings are immaterial to the consolidated financial statements.

2 Affiliated companies not accounted for by the equity method
The consolidated financial statements exclude the following affiliatedcompanies.
• Iyogin REVIC Investments Company Limited• Shikoku Alliance Capital Co., Ltd.
• Ozu Town Creation Fund
• Shikoku Brand Co., Ltd.
Iyogin REVIC Investments Company Limited, Shikoku Alliance CapitalCo., Ltd, Ozu Town Creation Fund and Shikoku Brand Co., Ltd. are
excluded from the scope of the equity method because their net income
and retained earnings are immaterial to the consolidated financial
statements.
3 The fiscal year of consolidated subsidiaries
The consolidated financial statements include the accounts of 7
consolidated subsidiaries with fiscal years that end December 31.
Appropriate adjustments are made for significant transactions during
the period from December 31 to March 31, the date of the consolidated
financial statements.
All significant intercompany balances, transactions and unrealized
profits and losses included in assets and liabilities are eliminated.

4 Significant accounting policies(1) Trading account securities
Trading account securities of the Bank and its consolidated subsidiaries
are stated at fair market value. Gains and losses realized on the disposal
and unrealized gains and losses from market value fluctuations of thesesecurities are recognized as gains and losses in the period of the change.
Realized gains and losses on the sale of such trading account securities
are computed using moving average cost.
(2) Securities①	Held-to-maturity debt securities are stated at amortized cost by thestraight-line method. Available-for-sale securities with available fairmarket values are stated at fair market value. Realized gains andlosses on the sale of such securities are computed using moving
average cost. Note that, however, equity and other securities without
fair market value are stated at cost using the moving average cost.
Unrealized gains and losses on these securities are reported, net of
applicable income taxes, as a separate component of net assets.
②	Securities included in the money held in the trust account are treatedin the same manner as the securities mentioned above.
(3) Derivatives and hedge accounting
Derivative transactions are valued at fair value with changes in fair value
included in current income.
(4) Tangible and intangible fixed assets and lease assets①	Tangible and intangible fixed assets are generally stated at cost, lessthe accumulated depreciation.
		
Depreciation of tangible fixed assets, except for lease assets,of the Bank and its consolidated subsidiaries is recorded using thedeclining balance method. However, buildings acquired after April 1,
1998 and accompanying facilities and structures acquired on or after
April 1, 2016 are depreciated using the straight-line method. The
estimated useful lives of these assets are 15 – 40 years for buildings
and 5 – 10 years for equipment.
②	Depreciation for intangible fixed assets, except for lease assets, ofthe Bank and its consolidated subsidiaries is recorded using thestraight-line method. Internal use software costs of the Bank andits consolidated subsidiaries are depreciated using the straight-line
method over the estimated useful life of mainly five years.
③	Both tangible and intangible lease assets under finance leases thatare not deemed to transfer ownership of the lease property to thelessee are depreciated using the straight-line method over the leaseterm with zero residual value. In cases in which there is a residual
value guarantee in the contract, the residual value is the guaranteedvalue. In other cases, it is deemed to be zero.
(5) Reserve for possible loan losses
The Bank and its consolidated subsidiaries write off loans and makeprovisions for possible loan losses. For loans to insolvent customers who
are undergoing bankruptcy or other collection proceedings or who arein a similar financial condition, the reserve for possible loan losses isprovided in the full amount of such loans, excluding amounts written off
and the portion that is estimated to be recoverable due to the existenceof security interests or guarantees. For the unsecured and unguaranteed
portions of loans to customers not in the above circumstances but for who
there is a high probability of becoming so, the reserve for possible loan
losses is provided for the estimated unrecoverable amounts determined
after an evaluation of the customer’s overall financial condition.

For loans, other than to insolvent customers mentioned above,that have been restructured due to the impact of the COVID-19 or for
debtors in specific industries that are highly affected by the COVID-19,
an allowance is provided for the amount of claims, net of the expectedamount of recoveries from the disposable security and guarantees,
multiplied by a certain ratio of the remaining amount.
With regard to other receivables, the Bank principally posts
estimated losses for the next 1 year or the estimated losses for the next
3 years. The estimated losses are calculated based on actual averageloan loss ratios for certain 1 year or 3 years periods with necessary
adjustments.
Assessments and classifications are made by each business and credit
supervision department and are audited by the Credit Administration
Department, an independent department. The reserve for possible loan
losses is provided based on such procedures.
The estimated unrecoverable portions of loans to insolvent
customers who are undergoing bankruptcy or other collection
proceedings or who are in a similar financial condition are written off.
The estimated unrecoverable amounts are determined after excluding
amounts considered recoverable due to the existence of security
interests or guarantees. As of March 31, 2022 and 2021, the estimatedunrecoverable amounts were ¥20,345 million ($166,230 thousand) and¥19,347 million, respectively.
The consolidated subsidiaries write off loans and make provisions forpossible loan losses based on the actual rate of loan losses in the past.
However, unrecoverable amounts of loans to customers who have a highprobability of becoming bankrupt are separately estimated and a reservefor possible loan losses is provided based on those estimations.
(6) Accrued employees’ bonuses
Accrued employees’ bonuses are provided for the future payment of
employees’ bonuses based on the estimated amounts of the future
payments that are attributed to the current fiscal year.
(7) Reserve for losses on repayment of dormant bank accounts
Reserve for losses on repayment of dormant bank accounts is provided inconnection with inactive bank accounts the balances of which have been
derecognized as liabilities. The reserve is provided for the possible future
demands on claims of withdrawal from these accounts in an amountbased on historical reimbursement experience.
(8) Reserve for contingent losses
Reserve for contingent losses is maintained to provide against possible
losses from contingencies which are not covered by other specificreserves. The amount of reserve is based on an estimate of the amountpossible future losses.
(9) Reserve for share-based payments
Reserve for share-based payments is provided for the estimated amountof share benefit obligations at the end of the current fiscal year in orderto prepare for delivery of the bank’s shares to the bank’s directors(excluding the audit committee members) and executive officers under
the internal share delivery regulations.
(10) Reserve under special laws
Reserve under special laws is provided for contingent liabilities fromfinancial instruments and exchange. This is a reserve pursuant to Article
46-5 of the Financial Instruments and Exchange Act and Article 175
of Cabinet Office Ordinance on the Financial Instruments Business toindemnify losses incurred in connection with the purchase and sale ofsecurities and derivatives and other financial related transactions.

IYO BANK Annual Report 20227

(11) Accounting method for retirement benefits
In calculating retirement benefit obligations, the benefit formula basis isused to attribute the projected amount of retirement benefits to periods
up to the end of the current fiscal year. Prior service cost and actuarial
differences are amortized as follows:
Prior service cost:
Prior service cost is amortized using the straight-line method over acertain number of years (10 years) within the average remaining service
years of employees at the time of recognition.
Actuarial differences:
Actuarial differences are amortized on a pro-rata basis using thestraight-line method over a certain number of years (10 years) within
the average remaining service years of employees from the fiscal year
following the respective fiscal year of recognition.
Some consolidated subsidiaries use a simplified method to calculate
net defined benefit liability and retirement benefit cost. This simplified
method assumes the Company’s retirement benefit obligations to beequivalent to the benefits that would be payable upon the voluntary
retirement of all employees at the fiscal year-end to calculate net defined
benefit liability and retirement benefit cost.
(12) Foreign currency translations
Foreign currency assets and liabilities and the accounts of overseas
branches of the Bank are translated into yen at the rates prevailing at
the consolidated balance sheet date. Consolidated subsidiaries’ foreign
currency assets and liabilities are translated into yen at the rate prevailingat their respective balance sheet dates.
(13) Recognition of significant revenue and expenses①	Recognition of revenue from contracts with customers
	Revenue from contracts with customers is received primarily as
consideration for the provision of services incidental to, among
other services, deposit and lending services, exchange services andsecurities-related services. Revenue is recognized when the promised
goods or services are transferred to the customer through theprovision of services to customers in an amount that reflects theconsideration to which the Bank expects to be entitled in exchange
for those goods or services.
②	Recognition of revenue related to finance lease transactions
	Revenue and cost of sales are recognized upon the receipt of leasecharges.
③	Recognition of revenue related to operating lease transactions
	Lease charges corresponding to lease periods are recognized on thebasis of monthly lease charges to be received under lease contracts.
(14) Significant hedge accounting methods①	Hedge interest rate risk
	In order to hedge the interest rate risk associated with various
financial assets and liabilities, the Bank applies the deferred hedge
accounting method stipulated in JICPA Industry-specific Committees
Guidance No. 24, March 17, 2022, “Treatment for Accounting
and Auditing of Application of Accounting Standard for Financial
Instruments in the Banking Industry.” The effectiveness of hedging
is assessed for (i) each identified group of hedged items, such as
deposits, loans and similar instruments and (ii) the corresponding
group of hedging instruments, such as interest rate swaps, in thesame maturity bucket.

8

IYO BANK Annual Report 2022②	Hedge against fluctuation in foreign exchange rates
	For certain assets and liabilities, the Bank and its consolidated
subsidiaries apply the exceptional treatment permitted for interest
rate swaps. The Bank applies the deferred method of hedge
accounting to hedge foreign exchange risk associated with various
foreign currency denominated monetary assets and liabilities as
stipulated in JICPA Industry-specific Committees Guidance No.
25, October 8, 2020, “Treatment for Accounting and Auditingof Accounting for Foreign Currency Transactions in the Banking
Industry.” The effectiveness of the currency swap transactions,exchange swap transactions and similar transactions that hedge theforeign exchange risk of monetary assets and liabilities denominatedin foreign currencies is assessed based on a comparison of the foreign
currency positions of the hedged monetary assets and liabilities andthe hedging instruments.
		
The Bank also applies fair value hedge accounting to portfolio
hedges of the foreign exchange risk associated with foreign currency
denominated available-for-sale securities (other than bonds) identified
as hedged items in advance as long as the amount of spot andforward foreign exchange contracts payable exceeds the acquisition
costs of the hedged securities in foreign currency.
(15) Cash flow statements
In preparing the consolidated statements of cash flows, cash on handand deposits with the Bank of Japan are considered to be cash and cash
equivalents.
(16) Application of consolidated tax payment system
The Bank and certain of its consolidated subsidiaries have adopted aconsolidated tax payment system with the Bank as the taxable parent
company. The Bank submitted a required notification of not transitioning
to the group tax sharing system before the end of the current fiscal year.
(17) Significant Accounting Estimates
Reserve for loan losses①	Carrying amounts were ¥37,600 million ($307,214 thousand) and¥37,043 million at March 31,2022 and 2021, respectively.
(Note) The amount includes ¥7,310 million ($59,727 thousand) and¥8,681 million at March 31,2022 and 2021, respectively,reflecting the effects of the COVID-19.
②	Information on the nature of significant accounting estimates for
identified items(a) Method in making the accounting estimates
For the calculation of Reserve for loan losses, See (5) Reserve forpossible loan losses of “4 Significant accounting policies. “(b) Key assumptions used in making the accounting estimates
The main assumption is “Credit risk of loans in determining
debtor classification.” “Credit risk of loans in determining debtor
classification” was determined by evaluating the repayment
capacity of each debtor based on its financial condition, cash
flow, profitability, etc.
In addition, for loans that have been restructured due to theimpact of the COVID-19 or for debtors in specific industries thatare highly affected by the COVID-19, it was highly assumed tohave a deterioration in their future financial condition, cash flow,
profitability, etc. than other debtors.
(c) The effect on the next year’s financial statements
Changes for the original assumption due to the inflection in theperformance of individual debtors or the impact of the spreadof the COVID-19 could effect on reserve for loan losses of theconsolidated financial statements for the following fiscal year.

(18) Per share data
Net income per share is based on the weighted average number ofshares of common stock outstanding during the year, excluding treasury
stock. Diluted net income per share reflects the potential dilution that
could occur if stock options were exercised. Diluted net income per shareof common stock assumes the full exercise of outstanding warrants atthe time of issuance.
Cash dividends per share shown in the accompanying consolidated
statements of income represent dividends declared as applicable to therespective year.

(Changes in Accounting Policies)
1. Application of Accounting Standard for Revenue Recognition,
etc.
The Bank has applied the Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020) and other standards fromthe beginning of the current fiscal year. In line with the application, theBank recognizes revenue upon the transfer of control of promised goods
or services to customers in an amount that reflects the consideration towhich the Bank expects to be entitled in exchange for those goods andservices. The impact of this application on the consolidated financial
statements for the current fiscal year was immaterial.
In accordance with the transitional treatment stipulated in
Accounting Standard for Revenue Recognition Paragraph 89(3), notes torevenue recognition for the previous fiscal year are not provided.
2. Application of Accounting Standard for Fair Value
Measurement, etc.
The Bank has applied the Accounting Standard for Fair Value
Measurement (ASBJ Statement No. 30, July 4, 2019; hereinafter the“Fair Value Measurement Standard”) and other standards from the
beginning of the current fiscal year. In accordance with Paragraph 8of the Fair Value Measurement Standard, the Bank has revised its fairvalue adjustment method used to determine the fair value of derivativetransactions to maximize the use of relevant observable inputs estimatedfrom derivatives and other instruments traded in the market. This
revision comes in line with the application of the Fair Value Measurement
Standard and other standards. In accordance with the transitional
treatment provided for in Paragraph 20 of the Fair Value Measurement
Standard, the cumulative effects of retrospective application of the new
accounting policy prior to the beginning of the current fiscal year werereflected in retained earnings at the beginning of the current fiscal year.
As a result, retained earnings, other assets, other liabilities, deferred
tax liabilities and stockholders’ equity per share as of April 1, 2021
decreased by ¥167 million, ¥382 million, ¥141 million, ¥73 million and¥0.52, respectively.
In the notes to its financial instruments, the Bank has decided tomake notes regarding matters related to the breakdown of fair value by
the level of the financial instruments. In accordance with the transitional
treatment stipulated in the Implementation Guidance on Disclosure of
Fair Value of Financial Instruments (ASBJ Guidance No. 19, July 4th,2019) Paragraph 7(4), however, notes to the relevant matters of theprevious fiscal year were not provided.
(Accounting standards not yet adopted)
Implementation Guidance on Accounting Standard for Fair Value
Measurement (ASBJ Guidance No. 31, June 17, 2021)

1 Overview
The handling of the calculation and notes for the market value ofinvestment trusts and the handling of the notes for the market value ofinvestment in partnerships, etc., that record the amount equivalent tothe share in the balance sheet in net amount have been stipulated.
2 Effective date
Effective from the beginning of the fiscal year ending March 31, 2023.
3 The impact of the adoption of this accounting standard is expected to
be insignificant.
(Additional Information)
The share-based payment program using the trust
The Bank has introduced a share-based payment program using a trust
for its directors (excluding audit committee members) and executive
officers with the aim of raising awareness of contribution to the Bank’s
medium to long-term performance and enhancement of its corporate
value.
(1) Overview of transactions
The trust acquires shares of the Bank using funds contributed by theBank.
In accordance with internal share delivery policies set forth by the
Board of Directors of the Bank, the Bank grants points to its directors(excluding audit committee members) and executive officers. At thetime of retirement, shares of the Bank and money will be delivered inaccordance with the points through the trust.
(2) Shares of the Bank held by the trust①	Shares of the Bank held by the trust are recorded as treasury stock in
net assets at the book value in the Bank.
②	The book value of the trust at March 31, 2022 and 2021 was ¥781
million ($6,381 thousand) and ¥191 million, respectively.
③	The number of shares of the Bank held by the Trust at March 31,
2022 and 2021 was 1,186 thousand shares and 247 thousand
shares, respectively.

(Notes to Consolidated Balance Sheet)
2-1. STOCKS AND INVESTMENTS IN UNCONSOLIDATEDSUBSIDIARIES AND AFFILIATES
Stocks in unconsolidated subsidiaries and affiliates amounted to ¥100
million ($817 thousand) and ¥100 million at March 31, 2022 and 2021,
respectively.
Investments in unconsolidated subsidiaries and affiliates amounted
to ¥264 million ($2,157 thousand) and ¥212 million at March 31, 2022
and 2021, respectively.
2-2. LOANS AND BILLS DISCOUNTED
The amounts of loans disclosed under the Banking Act and the Act on
Emergency Measures for the Revitalization of Financial Functions are as
described below. These loans include corporate bonds recorded under“Securities” (limited to corporate bonds for which the payment ofprincipal and interest is wholly or partially guaranteed and which were
issued through the private placement of securities as defined in Article 2,
Paragraph 3 of the Financial Instruments and Exchange Act), loans andforeign exchange, accrued interest, suspense payments and customers’
liabilities for acceptances and guarantees recorded under “Other assets,”

IYO BANK Annual Report 20229

as well as securities if the Bank lent such securities which are required
to be disclosed in the notes to its consolidated balance sheet (they are
limited to loans for use or lending under rental contract).
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2022
Bankrupt and quasi-bankrupt
loans
Doubtful loans
Substandard loans
Loans overdue threemonths or more
Restructured loans
Subtotal
Normal loans
Total

¥

1,980
63,38823,7802,076
21,704
89,1485,257,437¥5,346,586

2022

2021
¥

3,823
54,228
16,845

1,790
15,05574,897
5,187,898¥5,262,796$

16,177517,918
194,296

16,962
177,334
728,392
42,956,426$43,684,827

Bankrupt and quasi-bankrupt loans are loans to debtors who are subject
to bankruptcy, corporate reorganization or rehabilitation or other similar
proceedings and other debtors in serious financial difficulties.
Doubtful loans are loans to debtors who have not gone bankrupt
but whose financial position and operating results have so deteriorated
that it is unlikely that the principal and interest on the loans will berecovered under the contract, excluding bankrupt and quasi-bankrupt
loans.
Loans overdue three months or more are loans whose principal and/or interest payments have been past due for three months or more,excluding bankrupt and quasi-bankrupt loans and doubtful loans.
Restructured loans are loans that have been restructured to grantcertain concessions favorable to the debtors, such as reduced interest
rates or the deferral or waiver of interest and/or principal payments to
support or financially rehabilitate such debtors, excluding bankrupt andquasi-bankrupt loans, doubtful loans and loans overdue three months or
more.
Normal loans are loans that do not fall under the categories ofbankrupt and quasi-bankrupt loans, doubtful loans, loans overdue threemonths or more or restructured loans, and in which the debtors have noproblem with their financial position or operating results.
The above amounts of loans are before the deduction of reserve forloan losses.

(Changes in presentation method)
In line with the enforcement of the Cabinet Office Ordinance for Partial
Revision of the Ordinance for Enforcement of the Banking Act, etc.,(Cabinet Office Ordinance No. 3, January 24, 2020) as of March 31,
2022, the classification of “risk management loans” required to bedisclosed under the Banking Act is presented in accordance with theclassification of loans to be disclosed defined in the Act on Emergency
Measures for the Revitalization of Financial Functions.
2-3. COMMERCIAL BILLS
Bills discounted are accounted for as financing transactions in accordancewith JICPA Industry-specific Committees Guidance No. 24, March
17, 2022, “Treatment for Accounting and Auditing of Application of
Accounting Standard for Financial Instruments in the Banking Industry.”
although the Bank has the right to sell or pledge them without
restrictions. The total face value of commercial bills and purchased
foreign exchange bills obtained as a result of discounting was ¥13,719
million ($112,092 thousand) and ¥13,187 million at March 31, 2022 and
2021, respectively.

10

IYO BANK Annual Report 2022

2-4. ASSETS PLEDGED
Assets pledged as collateral were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Securities
Loans
Total

2022
¥ 573,692
682,501¥1,256,1942021¥ 710,931
661,447¥1,372,378

2022$ 4,687,409
5,576,444$10,263,861

The above pledged assets secure the following liabilities:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Deposits
Payables under repurchaseagreements
Payables under securities
lending transactions
Borrowed money

2022¥ 26,345

2021¥ 26,029

2022$ 215,254

74,232

199,289

606,520

139,898
736,356

91,604732,257

1,143,050
6,016,471

In addition to the above, assets pledged as collateral for transactions
such as exchange settlement transactions and others were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Securities
Other assets

2022
¥ 406
35,0002021¥ 434
50,0002022$ 3,317285,971

Other assets above mentioned were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Initial margins of futures
markets
Cash collateral paid forfinancial instruments
Guarantees
Security deposits

2022

2021

2022

¥ 2,612¥292$ 21,341

35,98372
295

10,23974276

294,002588
2,410

2-5. COMMITMENT LINES
Commitment line agreements related to loans are agreements which
oblige the Bank and its consolidated subsidiaries to lend funds up
to certain limits agreed to in advance. The Bank and its consolidated
subsidiaries will lend the funds upon the request of an obligor to draw
down the funds under the loan agreement as long as there is no breach of
the various terms and conditions stipulated in the relevant loan agreement.
The unused commitment balances related to these loan agreements at
March 31, 2022 and 2021 amounted to ¥1,270,918 million ($10,384,165
thousand) and ¥1,247,214 million, respectively. Of these amounts,¥1,115,276 million ($9,112,476 thousand) and ¥1,105,322 million asof March 31, 2022 and 2021, respectively, related to loans in which theterm of the agreement was one year or less or in which unconditional
cancellation of the agreement was allowed at any time.
In many cases, the term of the loan agreement runs its course without
the loan ever being drawn down. Therefore, unused loan commitments
do not necessarily affect future cash flows.
Conditions are included in certain loan agreements which allow the
Bank and its consolidated subsidiaries either to decline the request for aloan draw-down or to reduce the agreed limit when there is cause to doso, such as when there is a change in the financial condition of the obligor
or when it is necessary to protect the Bank’s or a consolidated subsidiary’scredit. The Bank and its consolidated subsidiaries take various measures
to protect their credit, including having the obligor pledge collateral in
the form of real estate, securities, etc., on signing the loan agreement orin accordance with the Bank and its consolidated subsidiaries’ establishedinternal procedures for confirming an obligor’s financial condition, etc., atregular intervals.

2-6. LAND REVALUATION EXCESSIn accordance with the Revaluation Act of Land Properties, the Bank
revalued land used in the ordinary course of business as of March 31,
1998. The revaluation excess, net of deferred taxes, is shown as aseparate component of net assets. The current market value of therevalued land was lower than the revalued amount by ¥13,271 million($108,432 thousand) and ¥12,635 million at March 31, 2022 and 2021,
respectively.
2-7. TANGIBLE FIXED ASSETS
Accumulated depreciation of tangible fixed assets at March 31, 2022
and 2021 amounted to ¥55,193 million ($450,960 thousand) and¥54,267 million, respectively. The amounts that were directly offset
against acquisition costs as of March 31, 2022 and 2021 were ¥8,224
million ($67,195 thousand) and ¥8,243 million, respectively.
2-8. GUARANTEE OBLIGATIONS
Guarantee obligations for private placement bonds in securities inaccordance with the Article 2, Paragraph 3 of the Financial Instruments
and Exchange Act amounted to ¥61,743 million ($504,477 thousand)and ¥62,323 million at March 31, 2022 and 2021, respectively.
2-9. MONEY TRUSTS TO BE INDEMNIFIED
The principal amount of money trusts to be indemnified by the Bank andits consolidated subsidiaries was ¥554 million ($4,526 thousand) and ¥5
million at March 31, 2022 and 2021, respectively.

(Notes to Consolidated Statement of Comprehensive Income)
4-1. RECLASSIFICATION ADJUSTMENTS AND THE RELATED TAX
EFFECTS CONCERNING OTHER COMPREHENSIVE INCOME
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Valuation difference on
available-for-sale securities
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effect
Valuation difference on
available-for-sale securities
Net deferred gains (losses)
on derivatives under hedge
accounting
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effect
Net deferred gains(losses) on derivatives
under hedge accounting
Remeasurements ofdefined benefit plans
Incurred during the period
Reclassification adjustments
Before tax effectadjustments
Tax effectRemeasurements ofdefined benefit plans
The total amount of othercomprehensive income

2022

2021

2022

¥(47,547)(1,188)¥ 85,864(3,717)$(388,487)(9,706)(48,736)
15,30082,147(25,480)(398,202)
125,010(33,435)

56,666(273,184)

1,322
875

(2,895)1,215

10,801
7,149

2,197
(670)

(1,680)512

17,950(5,474)

1,527(1,167)

12,476

3,015(2,016)

13,263(415)

24,634(16,471)

998
(304)

12,848(3,918)

8,154(2,483)

693

8,929

5,662

¥(31,213)¥ 64,428$(255,029)(Notes to Consolidated Statement of Income)3-1. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses included salaries and allowancesin the amount of ¥21,146 million ($172,775 thousand) and ¥21,173
million at March 31, 2022 and 2021, respectively.
3-2. OTHER EXPENSES
Other expenses consisted of the following:
Millions of yen

Loans written off
Securities written off

2022
¥ 16
274

2021
¥ 20
106

Thousands of
U.S. dollars(Note 1-1)

2022
$ 130
2,238

IYO BANK Annual Report 2022

11

(Notes to Consolidated Statement of Changes in Net Assets)
5-1. Type and number of shares issued and treasury stock
Type and number of shares issued and treasury stock in the year ended March 31, 2022 and 2021 were as follows:

Number of shares at the beginningof the accounting period

Shares issued
Common stock
Total
Treasury stock
Common stock
Total(Thousands)
2022
Increase in number of shares
Decrease in number of shares
during the accounting period
during the accounting period

Number of shares at the end of
the accounting period

323,775
323,775————

323,775
323,775

7,104
7,104

1,001
1,001

1,142
1,142

6,962
6,962

1 The increase in number of shares of treasury stock was due to the purchase of treasury stock by the Trust for the share-based payment system (1,000
thousand shares) and the purchase of fractional shares (1 thousand shares).
2 The decrease in number of shares of treasury stock was due to the disposal of treasury stock in line with a third-party allotment of newly issued sharesto the Trust for the share-based payment system (1,000 thousand shares), the delivered shares of the Bank through the Trust (61 thousand shares)
and the exercise of stock acquisition rights (81 thousand shares).
3 The number of shares of treasury stock at the beginning of the current fiscal year and at the end of the current fiscal year includes the Bank’s shares
held by the Trust for the share-based payment system (247 thousand shares and 1,186 thousand shares, respectively).

Number of shares at the beginningof the accounting period

Shares issued
Common stock
Total
Treasury stock
Common stock
Total(Thousands)
2021
Increase in number of shares
Decrease in number of shares
during the accounting period
during the accounting period

Number of shares at the end of
the accounting period

323,775
323,775————

323,775
323,775

7,222
7,222

1
1

119
119

7,104
7,104

1 The increase in number of shares of treasury stock was from the purchase of fractional shares (1 thousand shares)
2 The decrease in number of shares of treasury stock was due to the delivered shares of the Bank through the Trust (36 thousand shares) and theexercise of stock acquisition rights (82 thousand shares).
3 The number of shares of treasury stock at the beginning of the current fiscal year and at the end of the current fiscal year includes the Bank’s shares
held by the Trust for the share-based payment system (284 thousand shares and 247 thousand shares, respectively).

5-2. Stock acquisition rights and own stock acquisition rights
Stock acquisition rights and own stock acquisition rights in the year ended March 31, 2022 and 2021 were as follows:

Division

Details of stockacquisition rights

The Bank

Stock acquisition rights
as stock options

Type of shares
to be issued2022
Number of shares subject to stock acquisition rights
Beginningbalance
Increase
Decrease
Closing balance

Total

Closing balance
Thousands of U.S.
dollars (Note 1-1)

Millions of yen

—

208

1,699

—

208

1,699

2021

Division

Details of stockacquisition rights

The Bank

Stock acquisition rights
as stock options

Total

12

IYO BANK Annual Report 2022

Type of shares
to be issued

Number of shares subject to stock acquisition rights
Closing balance
Beginningbalance
Increase
Decrease
Closing balance Millions of yen

—

273

—

273

5-3. Dividends
The following dividends were paid in the year ended March 31, 2022 and March 31, 2021, respectively.

Date of resolution

Directors’ meeting held on
May 14, 2021
Directors’ meeting held on
November 12, 2021

2022
Amount of dividends
Thousands of U.S.
Millions of yen dollars (Note 1-1)

Type of shares

Cash dividends per share
U.S. dollars
Yen(Note 1-1)

Record date

Effective date

March 31, 2021

June 8, 2021

Common stock¥2,218$18,122

¥7.00

$0.05

Common stock¥2,535$20,712¥8.00$0.06 September 30, 2021 December 10, 2021

1. The total amount of dividends on common stock resolved at the Directors’ meeting held on May 14, 2021 includes ¥1 million ($8 thousand) in
dividends to the Bank’s shares held by the Trust for the share-based payment system.
2. The total amount of dividends on common stock resolved at the Directors’ meeting held on November 12, 2021 includes ¥1 million ($8 thousand) in
dividends to the Bank’s shares held by the Trust for the share-based payment system.
Dividends whose record date is attributable to the year ended March 31, 2022 but which became effective after March 31, 2022

Date of resolution

Directors’ meeting held on
May 13, 2022

Type ofsharesAmount of dividends
Thousands of U.S.
Millions of yen dollars (Note 1-1)

Commonstock¥2,543$20,777

Source ofdividends
Retainedearnings

Cash dividends per share
U.S. dollars
Yen(Note 1-1)

¥8.00

Record date

$0.06 March 31, 2022

Effective dateJune 9, 2022

The total amount of dividends on common stock includes ¥9 million ($73 thousand) in dividends to the Bank’s shares held by the Trust for the sharebased payment system.
2021

Date of resolution

Directors’ meeting held on
May 26, 2020
Directors’ meeting held on
November 6, 2020

Amount ofdividends

Cashdividends
per share

Type of shares

Millions of yen

Yen

Record date

Effective dateCommon stock¥2,217¥7.00

March 31, 2020

June 5, 2020

Common stock¥2,218¥7.00

September 30, 2020

December 10, 2020

1. The total amount of dividends on common stock resolved at the Directors’ meeting held on May 26, 2020 includes ¥1 million in dividends to the
Bank’s shares held by the Trust for the share-based payment system.
2. The total amount of dividends on common stock resolved at the Directors’ meeting held on November 6, 2020 includes ¥1 million in dividends to the
Bank’s shares held by the Trust for the share-based payment system.
Dividends whose record date is attributable to the year ended March 31, 2021 but which became effective after March 31, 2021

Date of resolution

Directors’ meeting held on
May 14, 2021

Amount ofdividends

Type ofsharesMillions of yen

Commonstock¥2,218Source ofdividends
Retainedearnings

Cashdividends
per share
Yen

Record date

¥7.00 March 31, 2021

Effective dateJune 8, 2021

The total amount of dividends on common stock includes ¥1 million in dividends to the Bank’s shares held by the Trust for the share-based payment
system.

(Notes to Consolidated Statement of Cash Flows)
6-1. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statements of cash flows
included due from banks, except for deposits with the Bank of Japan, as
follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Cash and due from banks
in the balance sheets
Due from banks, except
for deposits with the Bankof JapanCash and cash equivalentsin the statements ofcash flows

2022

2021

2022

¥1,514,760¥1,415,522$12,376,501(2,500)(1,958)(20,426)¥1,512,259¥1,413,563$12,356,066(Notes to Financial Instruments)
1 Financial instruments(1) Policy on financial instruments
The Bank and its consolidated subsidiaries engage mainly in thefinancial services business and provide lending services and leasing
services. Accordingly, the Bank holds financial assets and liabilities
that are subject to interest rate fluctuations and undertakes asset andliability management (ALM) in order to curb any unfavorable impact
from interest rate fluctuations. The Bank also engages in derivativetransactions as part of its ALM.
(2) Descriptions and risks of financial instruments
The financial assets of the Bank and its consolidated subsidiaries consist
mainly of loans to customers, which are subject to default risk. Also, theBank holds securities that are mainly stocks, bonds and mutual funds for

IYO BANK Annual Report 202213

investment, management or trading purposes. They are subject to theissuer’s credit risk, interest rate risk and market price risk.
The foreign currency denominated financial assets and liabilities
are subject to foreign currency risk. The Bank uses currency swaps tomanage the risk.
The Bank’s derivative transactions include interest rate swaps. The
Bank applies hedge accounting to the interest on loans to hedge interest
rate risks regarding the interest rate swaps as hedge instruments. The
effectiveness is ensured by maintaining a balance of hedge instrumentsthat does not exceed the balance of the hedged items, which aregrouped by incidence and remaining period.
Other transactions not qualifying for hedge accounting expose the
Bank to foreign exchange and interest rate risks.
(3) Risk management system for financial products① Credit risk management
The Bank prescribes its credit risk management policy in its “RiskManagement Plan,” which is issued by the Board of Directors biannually.
In particular, the Bank diversifies credit risk by ensuring that credit
granted is not overconcentrated in certain customers, groups orindustries. The Bank periodically analyzes and evaluates the credit
conditions classified by internal ratings, business area and industry.
The Bank strives to optimize its credit portfolio by promoting effective
credit risk management. Feedback regarding credit risk management isreported to the Board of Directors on a regular basis.
The Bank manages each customer’ credit in compliance with its“Internal Rating System,” part of the Bank’s credit risk management.
The Risk Management Division (RMD), which is completely independent
from other banking business divisions, is responsible for planning andadministrating the internal rating system and conducting, coordinating
and monitoring the internal ratings. The Loan Group is responsible forsupervising the individual credit granted and examining each customers’
finances, purpose for the loan and ability to repay. The group is
independent from the business promotion group and is divided into
three divisions: the Credit Division - responsible for planning creditrelated services, assessing customers’ loans, offering management
consultations on corporate rehabilitation, managing problem loans,assessing collaterals and providing other services; the Ship Finance
Division – responsible for assessing loans, including those in the
shipping and shipbuilding industries; and the Customer Loan Center responsible for assessing personal loans. The assets are initially assessedby each branch and then by the head office, followed by a validation by
RMD, which is also responsible for the formulation of the assessment
standards.
The credit granted by the consolidated subsidiaries is managed foreach customer along with the credit granted by the Bank. RMD also
manages the credit risk of issuers and counterparty risk in derivativetransactions by monitoring and periodically evaluating credit informationand market prices.
② Market risk management
In order to properly manage market risk and maintain the Bank’ssoundness and profitability, the Bank has established a comprehensive
risk management structure set forth by the ALM Committee. The ALM
Committee uses various measures such as the gap method, market
value analysis, periodic income/loss simulation and the VaR method tocontrol risk. The ALM Committee also coordinates risk management
plans and hedging strategies by analyzing the profitability structure andforecasting the market and the economic environment. RMD, set up

14

IYO BANK Annual Report 2022

as an independent supervisor, evaluates the appropriateness of market
transactions dealt with by other divisions.
The Bank sets limits on the quantity of risk that may be undertaken
in its “Risk Management Plan,” which is developed by the Board of
Directors biannually. RMD monitors compliance with the plan andreports to the Board of Directors on a monthly basis.
(Quantitative information on market risk)
The Bank measures market risk based on the VaR method. The variancecovariance model (holding period: 120 business days; confidence
interval: 99.9%; and historical observation period: 1,200 business days)
is applied in the measurement of VaR.
The major market risks for the Bank are equity risk and interest raterisk. Financial instruments affected by interest rate risk are loans andbills discounted, available-for-sale securities, deposits, borrowed money,
interest swap transactions and interest rate cap derivative transactions.
At March 31, 2022 and 2021, the quantity of market risk (expected loss),which included equity risk and interest rate risk, amounted to ¥174.0
billion ($1,421 million) and ¥199.8 billion, respectively.
The Bank confirms the validity of the measurement model by
biannually performing back-testing which compares VaR with actualfluctuations in profit and loss during the observation period. However,
VaR, the quantity of market risk which is statistically measured withhistorical market fluctuations, may not reflect drastic changes in themarket.
③ Liquidity risk management
The liquidity risk management of the Bank is conducted through assetliability management (ALM) and the duration of funds procured withconsideration for the market environment.
(4) Supplementary explanation of matters related to fair values offinancial instruments and others
As the fair values of financial instruments are estimated on certain
assumptions, the values may differ when other assumptions are applied.

2 Fair values of financial instruments
The table below summarizes book values, fair values and any differences between them. Equity and other securities without fair market value andinvestments in partnerships, etc., were excluded from the table (see Note i). Notes are omitted for cash and due from banks, call money and bills
sold, payables under repurchase agreements and payables under securities lending transactions because their fair market values approximate thecorresponding book values due to their short-term settlements.

Book value(1) Monetary claims purchased(2) Trading account securities
Trading securities(3) Money held in trust(4) Securities
Available-for-sale securities(5) Loans and bills discounted
Reserve for loan losses (*1)
Total Assets(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money
Total Liabilities
Derivative Transactions (*2)
Derivative transactions to which hedge accounting is
not applied
Derivative transactions to which hedge accounting isapplied (*3)
Total Derivative Transactions¥6,211

Millions of yen
2022
Fair value

¥

6,211

Thousands of U.S. dollars (Note 1-1)
2022
Book value
Fair value
Difference

Difference

¥

—

$

50,747 $

50,747$—

4,289
47,1194,289
47,119———(467,407)$(467,407)$(3,832)(0)(2,647)$(6,479)

525
5,767

525
5,767

—
—

1,660,146
5,046,997(35,923)
5,011,073¥6,683,724¥6,021,850
604,275
750,302¥7,376,428

1,660,146
4,953,866—

4,953,866¥6,626,517¥6,021,381
604,275
749,978¥7,375,634(57,206)¥(57,206)¥ (469)(0)(324)¥ (793)

13,564,392 13,564,392
41,237,004 40,476,068(293,512)
40,943,483 40,476,068$54,610,049 $54,142,634$49,202,140 $49,198,308
4,937,290
4,937,290
6,130,419
6,127,771$60,269,858 $60,263,371¥(7,533)¥(7,533)¥—$(61,549) $(61,549)$—(18,844)¥(26,378) ¥(18,844)(26,378)

¥

—
—

$

(153,966)(215,524) $(153,966)(215,524)—$—(*1) General and specific reserves for loan losses relevant to loans and bills discounted are excluded.
(*2) D erivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions arepresented on a net basis.
(*3) Derivative transactions to which hedge accounting is applied are interest rate swaps, etc., designated as hedging instruments to offset market fluctuationsof loans and bills discounted in hedged items. The Bank uses mainly deferred hedges. The Bank applies the Practical Solution on the Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR (PITF No. 40, March 17, 2022) to these hedging relationships.
(*4) Immaterial items are omitted.

(1) Monetary claims purchased(2) Trading account securities
Trading securities(3) Money held in trust(4) Securities
Available-for-sale securities(5) Loans and bills discounted
Reserve for loan losses (*1)
Total Assets(1) Deposits(2) Negotiable certificates of deposit(3) Borrowed money
Total Liabilities
Derivative Transactions (*2)
Derivative transactions to which hedge accounting is
not applied
Derivative transactions to which hedge accounting isappliedTotal Derivative Transactions

Book value

Millions of yen
2021
Fair value¥6,834¥6,834

649
6,427

649
6,427

—
—

1,878,329
4,975,984(35,526)
4,940,458¥6,832,699¥5,963,676
531,969
743,645¥7,239,291

1,878,329
4,896,054—

4,896,054¥6,788,295¥5,963,765
531,969
743,686¥7,239,421(44,403)¥(44,403)
¥
89
—
40
¥
130

¥2,329¥2,329¥—(7,166)¥(4,837)(7,166)¥(4,837)¥——

Difference¥—(*1) G eneral and specific reserves for loan losses relevant to loans and bills discounted are excluded.
(*2) D erivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions arepresented on a net basis.
(*3) Derivative transactions to which hedge accounting is applied are interest rate swaps, etc., designated as hedging instruments to offset market fluctuationsof loans and bills discounted in hedged items. The Bank uses mainly deferred hedges. The Bank applies the Practical Solution on the Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR (PITF No. 40, September 29, 2020) to these hedging relationships.
(*4) Immaterial items are omitted.

IYO BANK Annual Report 2022

15

Note i. Consolidated balance sheet amounts of equity and other securities without fair market value and investments in partnerships, etc., are described
below and are not included in “Available-for-sale securities” of the fair market value information on financial instruments.
Millions of yen

Equity and other securities without fair market value (*1) (*2)
Investments in partnerships, etc. (*3)

2022
¥13,685
7,792

2021¥13,649
5,788

Thousands of
U.S. dollars(Note 1-1)

2022
$111,814
63,665(*1) E quity and other securities without fair market value include unlisted stocks, which are not included in the disclosure of fair value in accordance with Paragraph
5 of the Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31, 2020).
(*2) A n impairment loss of ¥66 million was recorded for unlisted stocks during the current fiscal year.
(*3) Investments in partnerships, etc., include mainly silent partnerships and investment partnerships. These items are not included in the disclosure of fair value inaccordance with Paragraph 27 of the Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019).

Note ii. Expected redemption of monetary claims and securities with maturities

Due from banks
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Due from banks
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Due from banks
Monetary claims purchased
Securities
Held-to-maturity debt securities
Securities with maturities
Japanese government bonds
Municipal bonds
Corporate bonds
Loans and bills discounted (*)
Total

Within 1 year

1-3 years

Millions of yen
2022
3-5 years
5-7 years¥1,462,276
4,054
48,193—48,193—
15,39522,2501,172,155¥2,686,679¥——279,954—279,954
9,500
32,031
43,386
906,863¥1,186,818¥——251,122—251,12257,50062,86915,106
726,860¥977,982

Within 1 year

1-3 years

Millions of yen
2021
3-5 years
5-7 years¥1,365,176
3,911
147,030—
147,030
91,10030,40820,3101,152,470¥2,668,588¥——104,177—
104,177—
30,816
41,937895,548¥999,725¥——
190,471—
190,471
63,50043,231
23,722745,139¥935,610¥——
189,328—
189,328
10,00062,875
2,277
539,493¥728,822¥——
202,469—
202,469
3,500
63,955962
530,836¥733,306

7-10 years¥——
242,870—
242,870—
77,556
1,366
556,469¥799,339

7-10 years¥——
315,186—
315,186
10,00076,9482,459
539,218¥854,404

Within 1 year

Thousands of U.S. dollars (Note 1-1)2022
1-3 years
3-5 years
5-7 years
7-10 years$11,947,675
33,123393,765—
393,765—
125,786
181,795
9,577,212$21,951,785$——
2,287,392—
2,287,392
77,620261,712354,489
7,409,616$9,697,017$——
2,051,817—
2,051,817
469,809513,677
123,425
5,938,883$7,990,701$——
1,546,923—
1,546,923
81,706
513,726
18,604
4,407,982$5,954,914$——
1,984,394—
1,984,394—
633,679
11,161
4,546,686$6,531,080

Over 10 years

¥—
2,157
123,518—
123,518
16,00041,206
10,267
1,052,488¥1,178,165

Over 10 years

¥—
2,911
341,650—
341,650
16,00040,335
12,197
1,024,919¥1,369,481

Over 10 years$—
17,623
1,009,216—
1,009,216
130,729
336,677
83,8878,599,460$9,626,317(*) Loans and bills discounted on which full repayment is not expected from debtors such as bankrupt obligors, substantially bankrupt obligors and intensively
controlled obligors amounted to ¥65,199 million ($532,715 thousand) and ¥57,924 million at March 31, 2022 and 2021, respectively, and loans and bills with nomaturities amounted to ¥27,466 million ($224,413 thousand) and ¥29,928 million at March 31, 2022 and 2021, respectively.

16

IYO BANK Annual Report 2022

Note iii. Amounts to be repaid for borrowed money and other interest bearing liabilities

Within 1 year

Deposits (*)
Negotiable certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total

Deposits (*)
Negotiable certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total

Deposits (*)
Negotiable certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Total¥5,640,299
604,265
7,343
74,232
139,898
539,885¥7,005,925

1-3 years¥347,87810———
185,028¥532,917

Millions of yen
2022
3-5 years
5-7 years¥30,535————
22,487¥53,023

7-10 years¥1,213————891¥2,105

Within 1 year

1-3 years

Millions of yen
2021
3-5 years
5-7 years¥5,598,460
531,969
61,624
199,289
91,604
435,587¥6,918,535¥328,346————
105,313¥433,660¥ 34,025————
202,138¥236,163¥1,922————773¥2,695

7-10 years¥1,047————238¥1,286¥1,795————236¥2,032

Within 1 year

Thousands of U.S. dollars (Note 1-1)2022
1-3 years
3-5 years
5-7 years
7-10 years$46,084,639
4,937,208
59,996
606,520
1,143,050
4,411,185$57,242,626$2,842,372
81———
1,511,790$4,354,252$249,489————
183,732$433,229$9,910
—
—
—
—
7,280
$17,199$15,703
—
—
—
—
6,315
$22,019

Over 10 years

¥—
—
—
—
—
1,235
¥1,235

Over 10 years

¥—
—
—
—
—
130
¥130

Over 10 years

$—
—
—
—
—
10,090$10,090(*) Demand deposits are included in “Within 1 year.”

3. Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of inputs used to measure
the fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or liabilities that are the subject of themeasurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its entirety at the level of thelowest level input that is significant to the entire measurement.

IYO BANK Annual Report 202217

(1) Financial instruments measured at fair value
As of March 31, 2022

Classification
Monetary claims purchased
Trading account securities
Trading securities
Japanese government
bonds
Money held in trust
Securities:
Available-for-sale securities
Japanese government
bonds
Municipal bonds
Corporate bonds
Equity securities
OthersTotal Assets
Derivative transactions
Interest rate-related
derivatives
Currency-related derivatives
Bond-related derivatives
Credit derivatives
Total Derivative Transactions

Level 1Millions of yen
Fair value
Level 2
Level 3Thousands of U.S. dollars (Note 1-1)
Fair value
Level 2
Level 3

Total

Level 1¥—¥—¥2,157¥2,157

$—

$—

525
—

—
—

—
1,507

525
1,507

4,289
—

—
—

18,130——331,294456,549¥806,499

81,845
294,005
50,295449
150,038¥576,635——
62,393—
11,273¥77,332

99,975
294,005
112,689
331,744617,861¥1,460,467

148,133——
2,706,871
3,730,280$6,589,582

668,722
2,402,197
410,940
3,668
1,225,900$4,711,455—
816,855—
2,402,197
509,788920,736—2,710,548
92,107
5,048,296$631,849 $11,932,894

¥—
—
—
—
¥—

¥5,115(31,492)——¥(26,377)

¥—
—
—
(0)
¥(0)

¥5,115(31,492)—(0)¥(26,378)

$—
—
—
—
$—

$41,792(257,308)——$(215,515)$— $41,792—(257,308)
—
—
(0)
(0)
$(0) $(215,524)

Total$17,623 $17,623—
12,313

4,289
12,313(*) The above table does not include investment trusts that applied the transitional treatment stipulated in Paragraph 26 of the Implementation Guidance on
Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019). The amount of such investment trusts in the consolidated balance sheet
was ¥203,869 million ($1,665,732 thousand).

(2) Financial instruments other than those measured at fair value
As of March 31, 2022

Classification
Monetary claims purchased
Money held in trust
Loans:
Total Assets
Deposits:
Negotiable certificates ofdepositBorrowed money:
Total Derivative Transactions

Level 1Millions of yen
Fair value
Level 2
Level 3

Total

Level 1Thousands of U.S. dollars (Note 1-1)
Fair value
Level 2
Level 3

Total

¥—
—
—
¥—
¥—

¥—
—
—
¥—
¥6,021,381¥4,0544,260
4,953,866¥4,962,181¥—¥4,0544,260
4,953,866¥4,962,181¥—$— $— $33,123 $33,123——
34,80634,806—— 40,476,068 40,476,068$— $— $40,544,006 $40,544,006$— $49,198,308 $— $———¥—

604,275
749,978¥7,375,634

—
—
¥—

—
—
¥—

—
4,937,290———
6,127,771——$— $60,263,371 $— $—

Note 1: A description of the valuation techniques and inputs used in the fair value measurements
AssetsMonetary claims purchased
Of monetary claims purchased, trustee beneficial rights are measured
based on prices quoted by correspondent financial institutions and areclassified as Level 3 fair value based on the inputs used for the quoted
prices. Monetary claims purchased other than trustee beneficial rights
are classified as Level 3 fair value. This is because their book value isconsidered as the fair value, taking into consideration that such items fallunder short contractual terms and their fair value approximates the bookvalue.
Trading account securities
Trading account securities are classified as Level 1 fair value because they aregovernment bonds and use unadjusted market prices in active markets.
Money held in trust
Of money held in trust, the components of trust property are measured
based on prices quoted by correspondent financial institutions and areclassified as Level 3 fair value according to component levels.

18

IYO BANK Annual Report 2022

Securities
Securities using unadjusted market prices in active markets are classified
as Level 1 fair value. These Level 1 securities include mainly listed stocks
and government bonds.
Securities that use announced market prices but are not traded in active
markets are classified as Level 2 fair value. These Level 2 securities
include municipal bonds and corporate bonds.
Of corporate bonds, private placement bonds with guarantee obligations
are measured as the present value discounted at a rate that reflects theproper market rate corresponding to the remaining period and credit risk
based on the internal rating. As these discount rates are unobservable
inputs, such private placement bonds are classified as Level 3 fair value.
Securities that do not fall under these classifications are measured basedon prices quoted by correspondent financial institutions and are classified
as Level 3 fair value based on the inputs used for the quoted prices.

Loans and bills discounted
Loans and bills discounted with floating rates are classified as Level
3 fair value. This is because their book value is considered as the fairvalue, taking into account that the rates reflect the market rate ina short period and that the fair value approximates the book value
unless the borrower’s creditworthiness changes significantly after the
inception date. Loans and bills discounted with fixed rates are classified
as Level 3 fair value. This is because their fair value is measured as thepresent value, discounting future cash flows arising from principal andinterest at a rate that reflects the proper market rate corresponding to
the remaining period and credit risk based on the internal rating andbecause these discount rates are unobservable inputs.
Loans and bills with short-term contractual terms (within one year) areclassified as Level 3 fair value because their fair value approximates thebook value and such book value is considered as the fair value.
In addition, loans to bankrupt borrowers, substantially bankrupt
borrowers and potentially bankrupt borrowers are classified as Level 3
fair value. Their fair value approximates the consolidated balance sheet
amount as of the consolidated balance sheet date less the reserve forloan losses since the loan losses are calculated based on the estimatedcollectable amount from collateral and/or guarantees.
Of loans and bills discounted, loans and bills discounted with no maturity
due to conditions such as limiting the loans to the value of pledged
assets are classified as Level 3 fair value.
Their fair value is deemed as the book value since the fair value is
expected to approximate the book value considering the estimated loan
period, interest rate and other conditions.
Liabilities
Deposits and negotiable certificates of deposit
The fair value of demand deposits is considered the payable amount asof the consolidated balance sheet date (the book value). In addition, thefair value of fixed-term deposits and negotiable certificates of deposit
is calculated as the present value, discounting the future cash flow at a

rate that reflects the proper market rate corresponding to the remaining
period and credit risk of the Bank. The fair value of deposits with shortcontractual terms (within one year) is considered equal to the bookvalue since the fair value approximates the book value. These items areclassified as Level 2 fair value.
Borrowed money
The fair value of borrowed money with a floating rate is consideredequal to the book value because the fair value of these items
approximates the book value, taking into account that the rate reflects
the market rate in a short period and that the creditworthiness of the
Bank and its consolidated subsidiaries and subsidiary corporations, etc.,
has not changed significantly since the inception date. The fair valueof borrowed money with a fixed rate is calculated as the present value,
discounting future cash flows for its principal and interest at a rate thatreflects the proper market rate corresponding to the remaining period
and credit risk of the Bank. These items are classified as Level 2 fairvalue.
Derivative transactions
Derivative transactions using unadjusted market prices in active markets
are classified as Level 1 fair value and includes bond futures.However, as
most derivative transactions are traded over the counter and their market
prices are not announced, their fair value is calculated using valuation
techniques, including the present value model and the option pricing
model. These valuation techniques input mainly interest rates, foreignexchange rates, volatilities and others. In addition, the valuation amountis adjusted based on the credit risk of counterparties and the Bank.
If unobservable inputs are not used or their impact is insignificant, thosederivative items are classified as Level 2 fair value and include interest
rate swaps and forward exchange contracts.
If significant unobservable inputs are used, the items are classified as
Level 3 fair value.

Note 2: Information on Level 3 fair value of the financial instruments that are recognized at fair value in the consolidated balance sheet(1) Quantitative information on significant unobservable inputs (as of March 31, 2022)
Classification

Significant
unobservable
input

Valuation technique

Weighted
average of
inputsRange ofinputsSecurities: Corporate bonds Discounted present value method Discount rate 0.1%-16.8%

0.50%(2) A reconciliation from the beginning balances to the ending balances and gains or losses on valuation of financial assets and financial liabilities held at
the end of the reporting period
included in profit or loss for the period (as of March 31, 2022)
Millions of yen
Profit or loss or othercomprehensive income forthe period

Beginningbalance

Monetary claims purchased
Money held in trust
Securities:
Available-for-sale securities
Corporate bonds
OthersTotal Derivative Transactions
Credit derivatives

Purchases,
sales,
issuances,
RecognizedandRecognizedin otherin profit or comprehensive settlements(net)loss (*1)
income (*2)

Transfer
into
Level 3

Transferout ofLevel 3

Gains or losses
on valuation offinancial assets
and financial
liabilities heldat the end of
the reporting
periodincluded in
profit or loss
for the period(*1)

Endingbalance¥ 2,922
1,257

¥ —
(85)

¥ (11)
252¥ (753)
83

¥—
—

¥—
—

¥ 2,157
1,507

¥ —
(85)

63,137
12,583

1
—

4
(9)

(749)
(1,300)————62,393
11,273

—
—

(2)

1

—

—

—

—

(0)

(0)

IYO BANK Annual Report 2022

19

Thousands of U.S. dollars (Note 1-1)
Profit or loss or othercomprehensive income forthe period

Beginningbalance

Monetary claims purchased
Money held in trust
Securities:
Available-for-sale securities
Corporate bonds
OthersTotal Derivative Transactions
Credit derivatives$ 23,874
10,270Purchases,
sales,
issuances,
RecognizedandRecognizedin otherin profit or comprehensive settlements(net)loss (*1)
income (*2)$

Transfer
into
Level 3

Transferout ofLevel 3

Gains or losses
on valuation offinancial assets
and financial
liabilities heldat the end of
the reporting
periodincluded in
profit or loss
for the period(*1)

Endingbalance—(694)$ (89)
2,058$ (6,152)
678

$—
—

$—
—

$ 17,623
12,313$—(694)

515,867
102,810

8
—

32
(73)

(6,119)(10,621)————509,788
92,107

—
—

(16)

8

—

—

—

—

(0)

(0)

(*1) P rofit or loss is included mainly in Other operating income, Other operating expenses, Other income and Other expenses of Consolidated Statement of Income.
(*2) O ther comprehensive income is included in Valuation difference on available-for-sale securities in Other comprehensive income of Consolidated Statement ofComprehensive Income.
(3) A description of valuation processes used for fair value measurements
The Risk Management Division of the Group has established policies and procedures for measuring fair value and procedures for using the fair value
valuation model. The Bank verifies whether the fair value obtained is measured using valid valuation techniques and inputs and whether they are classified
into an appropriate level of the fair value hierarchy. When using quoted prices obtained from third parties as fair values, the Bank verifies whether the prices
are valid using appropriate methods, such as by confirming the valuation techniques and inputs used and comparing them with the fair value estimated by
the Bank.
(4) Sensitivity of the fair value measurement to changes in significant unobservable inputs
Of corporate bonds, the fair value of private placement bonds with guarantee obligations is calculated by adjustment rates against standard market interest
rates such as LIBOR and swap rates. These adjustment rates comprise risk premiums required by market participants against uncertainties on cash flows
arising mainly from credit risks. A significant increase (decrease) in discount rates generally leads to a significant decrease (rise) of fair value.

(Notes to Securities)*1 In addition to “Securities” on the consolidated balance sheets, this includes “Trading account securities” and trust beneficiary interests in “Monetaryclaims purchased.”
1 Trading securities:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2022
Unrealized gains (losses) included in profit
and loss for the fiscal year

2 Held-to-maturity debt securities:
None

20

IYO BANK Annual Report 2022

¥(19)

2021
¥(16)

2022
$(155)

3 Available-for-sale securities:

Securities with unrealized gains
Equity securities
Bonds
Japanese government
bonds
Municipal bonds
Corporate bonds
Other
Total

Millions of yen
2022
Acquisition
Book value
cost
Difference

Millions of yen
2021
Acquisition
Book value
cost
Difference

Thousands of U.S. dollars (Note 1—1)
2022
Acquisition
Book value
cost
Difference¥ 314,181
301,341¥

69,125
292,616¥245,055
8,725¥ 363,242
431,109¥70,440421,561¥292,801
9,547$ 2,567,047 $ 564,792
2,462,137
2,390,848$2,002,246
71,28899,975
137,594
63,771
561,494¥1,177,017

95,587
134,524
62,504
513,993¥ 875,735

4,388
3,070
1,266
47,501¥301,282

119,985
226,478
84,645632,551¥1,426,903

116,895
221,733
82,933
584,427¥1,076,429

3,090
4,745
1,712
48,123¥350,473

816,855
781,003
1,124,225
1,099,142
521,047
510,695
4,587,744
4,199,632$ 9,616,937 $ 7,155,282

35,85225,083
10,343
388,111$2,461,655¥

23,577
206,860¥ (6,013)(1,531)¥¥

21,489172,815¥ (5,141) $ 143,500 $ 192,638(1,526)
1,677,653
1,690,170$—
157,517
49,343272,817503,255¥1,378,990—(1,106)(425)(10,424)(17,969)¥283,312

68,552
63,852
38,885
266,711454,349¥1,881,252

69,37564,09639,344
278,091
472,396¥1,548,825

(823)
—
—
(243)
1,277,972
1,287,008(459)
399,681403,162(11,379)
2,143,908
2,229,079(18,046)
3,965,070
4,111,896¥332,426 $13,582,016 $11,267,178—(9,036)(3,472)(85,170)(146,817)$2,314,829

LossesMillions of yen
2021
Amount sold
Gains

Securities with unrealized losses
Equity securities¥ 17,563
Bonds
205,328
Japanese government
bonds—
Municipal bonds
156,411
Corporate bonds
48,917
Other262,393
Total
485,285
Total¥1,662,303

16,347
171,289(49,129)(12,509)

4 Available-for-sale securities sold:Millions of yen
2022
Amount sold
Gains

Equity securities
Bonds
Corporate bonds
Other
Total

¥

8,483
523
523
929,886¥938,893¥ 4,7831
1
13,685¥18,470¥818——
16,170¥16,988

5 Securities impaired
Certain securities other than trading securities (excluding equity
and other securities without fair market value and investments inpartnerships, etc.) are written down to the fair value, and the difference
between the acquisition cost and the fair value is treated as loss for the
fiscal year (impairment (devaluation)) if the fair value has significantly
deteriorated from the acquisition cost, unless it is deemed that there isa possibility of a recovery in the fair value. The amount of impairment(devaluation) was ¥246 million ($2,009 thousand), including ¥208
million ($1,699 thousand) of equity securities and ¥38 million ($310
thousand) of bonds at March 31, 2022, and ¥16 million, including ¥16
million of equity securities at March 31, 2021. A security is deemed tohave “significantly deteriorated” if the fair value has decreased to 50%
or less of the acquisition cost. If the fair value exceeds 50% but is 70%
or less of the acquisition cost, the security may be deemed “significantly
deteriorated” considering the change in the quoted market price duringa certain period in the past, the related business performance and otherfactors.

¥

4,704
589
589
488,156¥493,449¥ 2,7632
2
8,259¥11,025

Losses

¥ 223
—
—
7,116
¥7,340Thousands of U.S. dollars (Note 1-1)
2022
Amount sold
Gains
Losses$69,311
4,273
4,273
7,597,728$7,671,321$ 39,0798
8
111,814$150,911

$

6,683
—
—
132,118$138,802(Notes to Money Held in Trust)
The following table summarizes the book values (fair values) andamounts of net unrealized gains and losses for money held in trust
included in profit and loss for the fiscal year.
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

2022
Money held in trust forinvestment
Book value (fair value)
Amount of net
unrealized gain (loss)
included in profit andloss for the fiscal year
Other money held in trustBook value (fair value)
Acquisition cost
Difference
Unrealized gains
Unrealized losses

2022

2021

¥

—

¥

—

$

—

¥

—

¥

—

$

—

5,767
5,436
330
330
—

6,427
6,349
78
78
—

47,11944,415
2,696
2,696
—

IYO BANK Annual Report 2022

21

(Notes to Valuation difference on available-for-sale securities)
Valuation difference on available-for-sale securities were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Valuation gains
Available-for-salesecurities
Other money held in
trust
Deferred tax liabilities
Valuation difference on
available-for-sale securities(before adjustment forminority interests)
Noncontrolling interests
Valuation difference on
available-for-sale securities

2022

2021

2022

¥283,437¥ 332,426$2,315,850

330(86,927)78(102,228)

2,696(710,245)

196,841(6,409)230,276(7,938)

1,608,309(52,365)¥190,431¥ 222,338$1,555,935(Note) E xchange translation differences, etc., related to foreign currency
denominated equity and other securities without fair market value andinvestments in partnerships, etc., are included above in Available-forsale securities of Valuation gains.

(Notes to Derivative Transactions)
At March 31, 2022
1 Derivative transactions to which hedge accounting was not applied
Derivative transactions to which hedge accounting was not applied are set forth in the tables below.
The contract amount do not reflect the market risk associated with the derivatives.
(1) Interest rate contracts

Over-the-counter transactions:Swaps:
Receive fixed rate and pay
floating rate
Receive floating rate and pay
fixed rate
Total

Contract
amountMillions of yen
2022
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Thousands of U.S. dollars (Note 1-1)
2022
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)¥110,664¥110,654¥(1,021)¥(1,021)$904,191$904,109$ (8,342)$ (8,342)

110,664—

110,654—

2,295¥ 1,274

2,295¥ 1,274

904,191—

904,109—18,751$10,40918,751$10,409

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
(2) Currency and foreign exchange contracts

Contract
amountOver-the-counter transactions:
Currency swaps
Forward exchange contracts:
Sell
Buy
Currency options:
Sell
Buy
Total

Millions of yen
2022
Portionmaturing over
one year
Fair value¥493,137¥416,969

333,693
255,749

61,056
60,83775,50575,505—49,25349,253—¥247

Recognized
gains(losses)¥Thousands of U.S. dollars (Note 1-1)
2022
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)

247$4,029,226$3,406,887

$

2,018

(22,530)
13,514(22,530)
13,514

2,726,472
2,089,623

498,864
497,074(184,083)
110,417(184,083)
110,417(2,768)2,729¥ (8,807)

(609)
909
¥ (8,467)

616,921616,921—402,426
402,426—(22,616)
22,297$ (71,958)(4,975)7,427$ (69,180)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.

22

IYO BANK Annual Report 2022

$

2,018

(3) Credit derivatives
Millions of yen
2022
Portionmaturing over
one year
Fair value

Contract
amountThousands of U.S. dollars (Note 1-1)
2022
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)

Recognized
gains(losses)Over-the-counter transactions:Credit default swaps
Sell
Buy
Total

¥1,000
—
—

¥—
—
—

¥ (0)
—
¥ (0)

¥ (0)
—
¥ (0)

$8,170
—
—

$—
—
—

$(0)
—
$(0)

$(0)
—
$(0)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
(4) Others
Millions of yen
2022
Portionmaturing over
one year
Fair value

Contract
amountThousands of U.S. dollars (Note 1-1)
2022
PortionRecognizedContract
maturing overgains
amountone year
Fair value(losses)

Recognized
gains(losses)Over-the-counter transactions:
Earthquake derivatives
Sell
Buy
Total

¥2,050
2,050
—

¥—
—
—

¥(24)
24
¥ —

¥—
—
¥—

$16,749
16,749—$———$(196)
196
$ —

$—
—
$—

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.

2 Derivative transactions to which hedge accounting was applied
Derivative transactions to which hedge accounting was applied are set forth in the tables below.
The contract amount do not reflect the market risk associated with the derivatives.
(1) Interest rate contracts

Hedgeditems
Method of hedge accounting
Deferral hedge
methodInterest rate swaps
Loans
Receive fixed rate
and pay floating rate
Receive floating rate
and pay fixed rate
Total—

Millions of yen
2022
Portionmaturing over
one yearContract
amountHedgeditems

Fair value

—

—

—

¥364,756—¥364,756—¥3,840¥3,840—Thousands of U.S. dollars (Note 1-1)
2022
PortionContract
maturing overamountone year
Fair value

—

—

—

$2,980,276—$2,980,276—$31,375$31,375

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry-specific Committees Guidance No. 24, March 17,2022, “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”(2) Currency and foreign exchange contracts

Method of hedge accounting
Deferral hedge method
Currency swaps
Fund related swaps
Total

Hedged items

Foreign currency
monetary assets

Contract
amount¥261,245
649—

Millions of yen
2022
Portionmaturing over
one year¥212,289——

Fair value¥(22,691)
5¥(22,685)

Thousands of U.S. dollars (Note 1-1)
2022
PortionContract
maturing overamountone year
Fair value$2,134,528
5,302—$1,734,528——$(185,399)
40$(185,350)

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry-specific Committees Guidance No.
25, October 8, 2020, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.”

IYO BANK Annual Report 2022

23

At March 31, 2021
1 Derivative transactions to which hedge accounting was not applied
Derivative transactions to which hedge accounting was not applied are set forth in the tables below.
The contract amount do not reflect the market risk associated with the derivatives.
(1) Interest rate contracts

Contract
amountOver-the-counter transactions:Swaps:
Receive fixed rate and pay
floating rate
Receive floating rate and pay
fixed rate
Total

Millions of yen
2021
Portionmaturing over
one year
Fair value

Recognized
gains(losses)¥81,450¥76,292¥1,619¥1,61981,450—76,292
—

(669)
¥ 950

(669)
¥ 950

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
(2) Currency and foreign exchange contracts

Contract
amountOver-the-counter transactions:
Currency swaps
Forward exchange contracts:
Sell
Buy
Currency options:
Sell
Buy
Total

Millions of yen
2021
Portionmaturing over
one year
Fair value

150

Recognized
gains(losses)¥389,160¥362,590

¥

¥

150

267,668
226,168

135,092
29,942(3,055)
4,286(3,055)
4,286

80,82280,822—53,07053,070—(2,462)
2,462¥ 1,381378
273¥ 2,034

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
(3) Credit derivatives

Contract
amountMillions of yen
2021
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Over-the-counter transactions:Credit default swaps
Sell
Buy
Total

¥1,000——¥1,000
—
—

¥ (2)
—
¥ (2)

¥ (2)
—
¥ (2)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income.
(4) Others

Contract
amountMillions of yen
2021
Portionmaturing over
one year
Fair value

Recognized
gains(losses)Over-the-counter transactions:
Earthquake derivatives
Sell
Buy
Total

¥1,500
1,500
—

¥—
—
—

¥ (27)
27
¥ —

¥—
—
¥—

Transactions above for which the values were not readily determinable are stated at cost.

24

IYO BANK Annual Report 2022

2 Derivative transactions to which hedge accounting was applied
Derivative transactions to which hedge accounting was applied are set forth in the tables below.
The contract amount do not reflect the market risk associated with the derivatives.
(1) Interest rate contracts

Hedgeditems
Method of hedge accounting
Deferral hedge
methodInterest rate swaps
Loans
Receive fixed rate
and pay floating rate
Receive floating rate
and pay fixed rate
Total—

Millions of yen
2021
Portionmaturing over
one yearContract
amountFair value

—

—

—

¥302,523—¥302,523—¥(722)¥(722)

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry-specific Committees Guidance No. 24, March 17,2022, “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry.”(2) Currency and foreign exchange contracts

Contract
amountHedged item

Method of hedge accounting
Deferral hedge method
Currency swaps
Fund related swaps

Millions of yen
2021
Portionmaturing over
one year

Foreign currency
monetary assets

Fair value¥218,488
3,120¥195,039—¥(6,392)
(52)

—

—

¥(6,444)

Total

The above transactions are accounted for with the deferral hedge accounting treatment stipulated in JICPA Industry-specific Committees Guidance No.
25, October 8, 2020, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.”(Notes to Retirement Benefits)
1 Outline of retirement and severance benefits plans
The retirement benefit plans of the Bank consist of a defined benefit
corporate pension fund plan and a retirement lump-sum grant system.
Extra retirement benefits may be paid upon the retirement of employees.
In addition, the Bank set up a retirement benefit trust. On April 1, 2014,
the Bank transformed its corporate pension fund plan to a cash balance
plan and established a defined contribution pension plan.
On April 1,2021, consolidated subsidiaries established a defined
contribution pension plan.
Consolidated subsidiaries use the simplified method in calculating
net defined benefit liability and retirement benefit expenses for theirretirement lump-sum grant systems.

(2) Reconciliation of pension assets between the beginning andthe end of the period

2 Defined benefit plan
(1) Reconciliation of retirement benefit obligations between the
beginning and the end of the period(Note) Pension assets include assets in the retirement benefit trust.

Millions of yen

Pension assets at the
beginning of the period
Expected return on
pension assets
Actuarial differences
incurred
Employer’s contributions
Retirement benefits paid
Pension assets at the endof the period

2022

2021

2022

¥91,750¥78,279$749,652

786

1,042

6,422

2,163
2,728
(2,363)

12,0032,726(2,301)

17,67322,289(19,307)

95,06691,750776,746

Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Retirement benefit
obligations at the
beginning of the period
Service cost
Interest cost
Actuarial differences
incurred
Retirement benefits paid
Prior service cost
Retirement benefit
obligations at the end of
the period

Thousands of
U.S. dollars(Note 1-1)

2022

2021

2022

¥69,876
2,305
234¥72,0322,362
170$570,928
18,833
1,911(851)(3,627)—(1,259)(3,429)—(6,953)(29,634)—

67,93669,876555,078

IYO BANK Annual Report 202225

(3) Reconciliation of retirement benefit obligations and pension
assets at the end of the period to net defined benefit liability
and net defined benefit asset in the consolidated balance
sheetsThousands of
U.S. dollars(Note 1-1)

Millions of yen

Retirement benefit
obligations of thesavings plan
Pension assets
Retirement benefit
obligations of thenon-savings plan
Net liabilities and assets
recorded on the
consolidated balance sheets
Net defined benefit liability
Net defined benefit asset
Net liabilities and assets
on the consolidatedbalance sheets

2022

2021

2022

¥ 67,487(95,066)(27,578)¥ 69,460(91,750)(22,289)$ 551,409(776,746)(225,328)

449

415

3,668

(27,129)
10,712(37,842)(21,874)
11,326(33,201)(221,660)
87,523(309,191)(27,129)(21,874)(221,660)(Note) Pension assets include assets in the retirement benefit trust.

(4) Retirement benefit cost and its breakdown
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Service cost
Interest cost
Expected return on
pension assets
Recognized actuarial
differences
Amortization of priorservice cost2022
¥ 2,113234

2021¥ 2,171170

2022$ 17,264
1,911

(789)

(1,042)(6,446)(1,419)181(11,594)

(597)
(456)

(597)
883

(4,877)(3,725)(Note 1) Retirement benefit costs of consolidated subsidiaries using thesimplified method are included in “Service cost.”(Note 2) Employee contribution to the corporate pension fund is deducted from“Service cost.”(5) Remeasurements of defined benefit plans
The breakdown of items included in remeasurements of defined benefit
plans (before applicable tax effects) was as follows:
Millions of yen

Prior service cost
Actuarial differences
Total

2022
¥ (597)
1,595
998

2021
¥ (597)
13,445
12,848

Thousands of
U.S. dollars(Note 1-1)

2022
$ (4,877)
13,032
8,154(6) Remeasurements of defined benefit plans
The breakdown of items included in remeasurements of defined benefit
plans (before applicable tax effects) was as follows:
Millions of yen

Unrecognized prior service
cost
Unrecognized actuarial
differences
Total

26

IYO BANK Annual Report 2022

Thousands of
U.S. dollars(Note 1-1)

2022

2021

2022

¥ (1,462)¥ (2,059)$ (11,945)(11,448)(12,910)(9,853)(11,912)(93,537)(105,482)(7) Pension assets① Pension asset portfolio
Bonds
Equity securities
Other
Total

2022
48.1%
44.8%
7.1%
100.0%

2021
46.9%
46.3%
6.8%
100.0%(Note) 34.3% of the total pension assets as of March 31, 2022 (33.4% as ofMarch 31, 2021) represent assets in the retirement benefit trust for the
corporate pension fund, 4.1% of which as of March 31, 2022 (4.0% as
of March 31, 2021) corresponds to the lump-sum grant system.

②	Determination of the long-term expected rate of return on pension
assetsThe long-term expected rate of return on pension assets is determinedbased on the average investment yield on the pension assets for the past
three years. When the average rate is below 1.25% or above 2.0%, it isstated as 1.25% and 2.0%, respectively.
(8) Actuarial assumptions
The weighted average rate for assumptions used for the actuarial
computation of the retirement benefit obligations for the years ended
March 31, 2022 and 2021 were as follows:
2022
2021
Discount rates
Retirement lump-sum
grant system
0.20%
0.10%
Corporate pension
fund plans
0.50%
0.40%
Long-term expected
return on assets
Pension assets ofcorporate pension fund
2.00%
1.37%
Retirement benefit trust(Retirement lump-sum
grant system andcorporate pension
fund plans)
0.00%
0.00%
(Note) A point system is applied to the substantive portion of the retirement
lump-sum grant system and a cash balance plan to defined benefit
corporate pension fund plans, respectively. The “Estimate rate of salary
increase” is not disclosed due to the insignificant impact it would haveon the calculation of retirement benefit obligations.

3 Defined contribution plan
The amount of required contribution of the Bank and its consolidated
subsidiaries to the defined contribution plans was ¥361 million ($2,949
thousand) and ¥334 million at March 31, 2022 and 2021, respectively.

(Notes to Stock Options)
1 Outline of stock options and changes
At the 115th Ordinary General Meeting of Shareholders held on Jun. 28, 2018, the Bank abolished compensation type stock options and introduced ashare-based payment system using the trust.
In line with the introduction of this system, the Bank will not grant new stock options. However, the unexercised stock acquisition rights alreadygranted as stock options will continue to exist.
(1) Outline of stock options
2017
2016
2015
2014
2013
2012
2011
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Stock Options
Title and number
Directors of the
Directors of the
Directors of the
Directors of the
Directors of the
Directors of the
Directors of theof grantees
Bank: 8
Bank: 7
Bank: 7
Bank: 16
Bank: 18
Bank: 17
Bank: 17
Executive Officers Executive Officers Executive Officers Executive Officersof the Bank: 12of the Bank: 15of the Bank: 14of the Bank: 4
Number of stock
Common shares: Common shares: Common shares: Common shares: Common shares: Common shares: Common shares:
options (*)
140,900
184,600
79,500123,100
140,900
199,500
156,800
Grant dateJuly 14, 2017
July 15, 2016
July 15, 2015
July 16, 2014
July 16, 2013
July 17, 2012
July 15, 2011
Conditions for vesting
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Requisite service
period
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Exercise period
July 15, 2017 to July 16, 2016 to July 16, 2015 to July 17, 2014 to July 17, 2013 to July 18, 2012 to July 16, 2011 toJuly 14, 2047
July 15, 2046
July 15, 2045
July 16, 2044
July 16, 2043
July 17, 2042
July 15, 2041(*) Reported in terms of shares of stock(2) Stock options granted and changes
The table below represents stock options outstanding at the year-end and the number of stock options is converted into the number of stock.
① Number of stock options
2017
Stock Options
shares

2016
Stock Options
shares2015
Stock Options
shares2014
Stock Options
shares2013
Stock Options
shares2012
Stock Options
shares2011
Stock Options
shares81,000——18,00063,00077,900——17,40060,50029,900——5,600
24,30038,200——8,800
29,40031,900——10,40021,50046,800——15,20031,60027,800——6,300
21,500—18,00018,000———17,40017,400
—
—

—
5,600
5,600
—
—

—
8,800
8,800
—
—

—
10,40010,400———15,20015,200
—
—

—
6,300
6,300
—
—

Average exercise
price

2017
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share

2016
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share2015
Stock Options
Yen (U.S. dollars)¥
1 ($0)
per share¥ 543 ($4)
per share2014
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share2013
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share2012
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share

2011
Stock Options
Yen (U.S. dollars)¥ 1 ($0)
per share¥543 ($4)
per share

Fair value at the
grant date

¥867 ($7)
per share¥601 ($4)
per share¥1,473 ($12)
per share¥989 ($8)
per share¥918 ($7)
per share¥550 ($4)
per share¥704 ($5)
per share

Before vesting
Previous fiscal
year-end
GrantedForfeited
VestedOutstanding
After vesting
Previous fiscal
year-end
VestedExercised
Forfeited
Exercisable② Price information

Exercise price2 Method of estimating the number of stock options vested
Only the actual number of forfeited stock options is reflected because it is difficult to rationally estimate the actual number of stock options that will be
forfeited in the future.

IYO BANK Annual Report 2022

27

(Notes to Income Taxes)
1 Significant components of deferred tax assets and liabilities
were as follows:
Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Deferred tax assets:
Excess reserve for loan
lossesImpairment loss on land
Accrued employees’
bonuses
Excess depreciation
Write-down ofsecurities
Reserve for losses on
repayments on
dormant bank accounts
Other
Valuation reserve
Total deferred
tax assets
Deferred tax liabilities:
Valuation difference
on available-for-salesecurities
Retirement benefit
asset
Deferred gains on real
property
Net deferred gains(losses) on derivatives
under hedge accounting
Total deferred
tax liabilities
Net deferred tax liabilities:

2022

2021

2022

¥ 16,221671¥ 15,910
622$ 132,535
5,482

536
488

546
497

4,379
3,987

441

399

3,603

358
2,281
(943)

503
2,319
(924)

2,925
18,637(7,704)20,056

19,875

163,869¥(86,853)¥(102,138)$(709,641)(5,338)(3,873)(43,614)

(893)

(896)

(7,296)(505)—(4,126)(93,590)¥(73,533)(106,908)¥ (87,032)(764,686)$(600,808)

2 A reconciliation of the statutory tax rate and effective tax
rate for the years ended March 31, 2022 and 2021 were as
follows:
For the fiscal year ended March 31, 2022 and 2021, a reconciliation of
the statutory tax rate and the effective income tax rate is not stated as
the difference between the two was less than 5% of the statutory tax
rate.

(Notes to Revenue Recognition)
Disaggregation of revenue from contracts with customers (as of March 31, 2022)
Millions of yen
Reportable segments
Commercial
Other
Banking
LeasingTotalbusinesses

Fees and commissions
Deposit and loan services
Foreign exchange services
Securities-related services
Other services
Ordinary income fromcontracts with customers
Ordinary income from otheritems above
Ordinary income fromexternal customers

¥

3,531
3,226
965
3,808

¥

—
—
—
—

¥

3,531
3,226
965
3,808

¥

—
—
1,236
267

Total

¥

Thousands of U.S. dollars (Note 1-1)
Reportable segments
Commercial
Other
Banking
LeasingTotalbusinesses

3,531
3,226
2,202
4,076

$ 28,850
26,358
7,884
31,113

$

—$
—
—
—

28,85026,358
7,884
31,113

$

Total

—$
—
10,0982,181

28,85026,35817,99133,303

11,532—

11,532

1,503

13,036

94,223—

94,223

12,280106,511103,170

16,468

119,638

1,296

120,935

842,961

134,553

977,514

10,589988,111¥114,702¥16,468¥131,170¥2,800¥133,971$937,184$134,553 $1,071,737$22,877 $1,094,623

Notes: The “Other businesses” category is a business segment not included in reportable segments and represents information processing entrustment and thesoftware development business and securities business.

(Notes to Segment Information)
1 Summary of reportable segments
Reportable segments are components of the Bank and its consolidated subsidiaries for which separate financial information is available and is subject toperiodic examination by the Board of Directors to determine the allocation of management resources and assess performances.
The Bank and 16 consolidated subsidiaries (16 consolidated subsidiaries as of March 31, 2021) are engaged mainly in the financial services businessthat includes commercial banking services and leasing services. Therefore, the Bank and its consolidated subsidiaries’ reportable segments comprise‘Commercial Banking’ and ‘Leasing’ and are distinguished by the financial services provided. ‘Commercial Banking’ includes deposit services, lending
services, securities investment services and exchange services. ‘Commercial Banking’ represents the Bank’s banking services as well as the consolidated
subsidiaries’ business support services, credit guarantee services, credit card services, securities trading services and fund management services. ‘Leasing’
includes leasing services by Iyogin Leasing Company Limited, one of the consolidated subsidiaries.

28

IYO BANK Annual Report 2022

2 Methods used to calculate ordinary income, profit and loss, amounts of assets, debt and other items by reportable segment
The accounting policies described int the Note in (Basis of Presenting Consolidated Financial Statements) have been adopted for the reportablesegments. Reportable segment profit corresponds to ordinary profits. Ordinary income arising from intersegment transactions is based on arm’s length
prices.
3 Information about reported ordinary income, profits and losses, amounts of assets, debts and other items
Segment information as of and for the years ended March 31, 2022 and 2021 were as follows:
Millions of yen
2022
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment debt
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gain on disposal of noncurrent assets
Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Provision of reserve for financial products
transaction liabilities
Tax expense
Increase in tangible fixed assets
and intangible fixed assets

Total

Other
businesses¥ 114,702
541¥ 115,244¥ 37,284¥8,521,345¥7,804,876¥16,468358¥16,826¥ 521¥55,768¥35,497¥ 131,170899¥ 132,070¥ 37,805¥8,577,114¥7,840,374¥ 2,800
1,901¥ 4,701¥ 424¥13,759¥ 6,658

¥

¥

¥

¥

5,091
75,672
3,002
19
(19)
482
(60)
(421)

34
130
104
—
—
—
—
—

5,126
75,803
3,107
19
(19)
482
(60)
(421)

Total

Adjustments¥ 133,971
2,801¥ 136,772¥ 38,230¥8,590,874¥7,847,032

38 ¥
3
4
—
—
0
(0)
—

5,164
75,806
3,112
19
(19)
482
(60)
(421)

¥

—
(2,801)¥ (2,801)¥
9¥(46,076)¥(34,033)¥

Consolidated
total¥ 133,971—¥ 133,971¥ 38,239¥8,544,797¥7,812,998(87) ¥
(108)
(94)
—
—
—
—
—

5,077
75,698
3,017
19
(19)
482
(60)
(421)

—
10,812—
169—
10,981

(0)
163

(0)
11,145—4(0)
11,149

6,007

3

6,011

30

6,041

(82)

5,958

Notes:
1. Ordinary income is presented as the counterpart of sales of companies in other industries. The difference between ordinary income and operating income in the
consolidated statement of income is in “Adjustments.”
2. ”Other businesses” includes software development, information processing and securities business not included in the reportable segments.
3. Adjustments are as below.
(1) Adjustment of segment profit includes eliminations of intersegment transactions of ¥9 million ($73 thousand).
(2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥46,076 million ($376,468 thousand).
(3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥34,033 million ($278,070 thousand).
(4) Eliminations of intersegment transactions include adjustment of depreciation of negative ¥87 million ($710 thousand), adjustment of interest income received ofnegative ¥108 million ($882 thousand), adjustment of interest expense paid of negative ¥94 million ($768 thousand), adjustment of tax expense of ¥4 million($32 thousand) and adjustment of increase in tangible fixed assets and intangible fixed assets of negative ¥82 million ($669 thousand).
4. Segment profit is adjusted to ordinary income in the consolidated statement of income.

IYO BANK Annual Report 2022

29

Millions of yen
2021
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers
Intersegment
Total
Segment profit
Segment assets
Segment debt
Other items
Depreciation
Interest income received
Interest expense paid
Extraordinary income
Gain on disposal of noncurrent assets
Extraordinary losses
Losses on disposal of fixed assets
Impairment loss
Provision of reserve for financial products
transaction liabilities
Tax expense
Increase in tangible fixed assets and intangible
fixed assets¥ 104,986
598¥ 105,584¥ 25,093¥8,517,978¥7,797,071¥16,692424¥17,117¥ 583¥65,562¥40,009

¥

¥

5,130
75,986
4,358
34
(34)
406
(206)
(200)

Total

Other
businesses¥ 121,678
1,023¥ 122,702¥ 25,677¥8,583,541¥7,837,080

29 ¥
119
115
—
—
0
(0)
—

5,160
76,106
4,474
34
(34)
406
(206)
(200)

—
7,201

—
196

7,506

89

¥ 3,138
1,968¥ 5,107¥ 489¥15,304¥ 8,462¥

Total

Adjustments¥ 124,817
2,992¥ 127,809¥ 26,167¥8,598,846¥7,845,543

46 ¥
3
6
—
—
0
(0)
—

5,206
76,110
4,481
34
(34)
407
(206)
(200)

—
7,397

(0)
159

7,595

36

Consolidated
total

¥

—
(2,992)¥ (2,992)¥
5¥(48,106)¥(36,044)¥¥ 124,817—¥ 124,817¥ 26,172¥8,550,739¥7,809,498(117) ¥
(118)
(105)
—
—
—
—
—

5,089
75,992
4,376
34
(34)
407
(206)
(200)

(0)
7,556

—
(7)

(0)
7,549

7,631

(92)

7,539

Notes:
1. Ordinary income is presented as the counterpart of sales of companies in other industries. The difference between ordinary income and operating income in the
consolidated statement of income is in “Adjustments.”
2. ”Other businesses” includes software development, information processing and securities business not included in the reportable segments.
3. Adjustments are as below.
(1) Adjustment of segment profit includes eliminations of intersegment transactions of ¥5 million.
(2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥48,106 million.
(3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥36,044 million.
(4) Eliminations of intersegment transactions include adjustment of depreciation of negative ¥117 million, adjustment of interest income received of negative ¥118
million, adjustment of interest expense paid of negative ¥105 million, adjustment of tax expense of negative ¥7 million and adjustment of increase in tangible
fixed assets and intangible fixed assets of negative ¥92 million.
4. Segment profit is adjusted to ordinary income in the consolidated statement of income.
Thousands of U.S. dollars (Note 1-1)
2022
Reportable segments
Commercial
Banking
Leasing

Ordinary income
Customers$ 937,184
Intersegment
4,420
Total
$ 941,612
Segment profit$ 304,632
Segment assets$69,624,519
Segment debt
$63,770,536
Other items
Depreciation$
41,596
Interest income received
618,285
Interest expense paid
24,528Extraordinary income
155
Gain on disposal of noncurrent assets(155)
Extraordinary losses
3,938
Losses on disposal of fixed assets(490)
Impairment loss
(3,439)Provision of reserve for financial products
transaction liabilities—
Tax expense
88,340
Increase in tangible fixed assets and intangible
fixed assets
49,08030

IYO BANK Annual Report 2022

Total

Other
businesses

Total

Adjustments

Consolidated
total$134,553 $ 1,071,737
2,925
7,345
$137,478 $ 1,079,091$ 4,256 $ 308,889$455,658 $70,080,186$290,031 $64,060,576$ 22,877 $ 1,094,623
15,532
22,885$ 38,410 $ 1,117,509$ 3,464 $ 312,362$112,419 $70,192,613$ 54,399 $64,114,976— $ 1,094,623(22,885)—$ (22,885) $ 1,094,623$
73 $ 312,435$(376,468) $69,816,136$(278,070) $63,836,898

$

$

$

277 $
1,062
849
—
—
—
—
—

41,882
619,356
25,386
155
(155)
3,938
(490)
(3,439)

310 $
24
32
—
—
0
(0)
—

—
1,380

—
89,721

(0)
1,331

24

49,113245

42,192
619,380
25,426
155
(155)
3,938
(490)
(3,439)$(710) $
(882)
(768)
—
—
—
—
—

41,482
618,498
24,650
155
(155)
3,938
(490)
(3,439)(0)
91,061—32(0)91,09449,358(669)

48,680(4) Related information
Information by service
Millions of yen
2022
Securities
investments

Loans¥52,033

Ordinary income customers

Otherbusinesses

Lease¥43,547¥16,468¥21,922

Total¥133,971

Millions of yen
2021
Securities
investments

Loans

Ordinary income customers¥52,795

Other
businesses

Lease¥36,895¥16,692¥18,434

Total¥124,817

Thousands of U.S dollars (Note 1-1)
2022
Securities
investments

Loans$425,140

Ordinary income customers

Otherbusinesses

Lease$355,805$134,553$179,115

Total$1,094,623

Millions of yen
2022
Reportable segments
Commercial
Banking¥421

Impairment loss

Leasing

Otherbusinesses

Total

¥—

¥421

¥—

Total

¥421

Millions of yen
2021
Reportable segments
Commercial
Banking
Leasing

Impairment loss

¥200

¥—

Other
businesses

Total

¥200

¥—

Total

¥200

Thousands of U.S dollars (Note 1-1)
2022
Reportable segments
Commercial
Banking$3,439Impairment loss

Leasing$—

Otherbusinesses

Total$3,439Total$—$3,439Account

Outstandingbalance(Millionsof yen)(Notes to Related Party Transactions)
For the year ended March 31, 2022
(1) Transactions between the Bank and related parties.
Directors or major individual stockholders

Type

Name

Companies inwhich a majorityof voting rights
Ability Center,is owned by aInc
director or the
director’s close
relatives

Type

Name

Companies inwhich a majorityof voting rights
Ability Center,is owned by aInc
director or the
director’s close
relatives

Capital(Millions
Location of yen)

Ehime

¥50

Capital(Thousandsof U.S.
Location dollars)

Ehime

$408

Business

Temporarystaffing

Business

Temporarystaffing

Transaction
amountOwnerships of(Millionsvoting rights (%) Relationship Transactionsof yen)—Temporary Temporary
staffing
staffing¥2

Transaction
amount(Thousands
Ownerships ofof U.S.
voting rights (%) Relationship Transactions
dollars)—

Temporary Temporary
staffing
staffing$16—

Account—¥—

Outstandingbalance(Thousandsof U.S.
dollars)$—(Notes)1 The conditions of the above transactions were the same as these of arm’s length transactions.
2 Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

IYO BANK Annual Report 202231

(2) Transactions between consolidated subsidiaries of the Bank and related parties.
Directors or major individual stockholders

Type

Name

Capital(Millions
Location of yen)Companies inwhich a majorityof voting rights
Ability Center,is owned by aInc
director or the
director’s close
relatives

Type

Name

Ehime

¥50

Business

Ownerships ofvoting rights (%) Relationship Transactions

Temporarystaffing

Direct Temporary Temporary
19.2% holding
staffing
staffing

Capital(Thousandsof U.S.
Location dollars)Companies inwhich a majorityof voting rights
Ability Center,is owned by aInc
director or the
director’s close
relatives

Ehime

$408

Business

Temporarystaffing

Transaction
amount(Millionsof yen)¥22

Account

Otherliabilities

Transaction
amount(Thousands
Ownerships ofof U.S.
voting rights (%) Relationship Transactions
dollars)

Account

Direct Temporary Temporary
19.2% holding
staffing
staffing

Otherliabilities$179

Outstandingbalance(Millionsof yen)¥0

Outstandingbalance(Thousandsof U.S.
dollars)$0(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

For the year ended March 31, 2021
(1) Transactions between the Bank and related parties.
Directors or major individual stockholders

Type

Name

Companies inwhich a majorityof voting rights
is owned by adirector or the
director’s close
relatives

Ability Center,
Inc

Capital(Millions
Location of yen)

Ehime

¥50

Business

Temporarystaffing

Transaction
amountOwnerships of(Millionsvoting rights (%) Relationship Transactionsof yen)—Temporarystaffing

Temporarystaffing¥2

Account—

Outstandingbalance(Millionsof yen)¥—(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

(2) Transactions between consolidated subsidiaries of the Bank and related parties.
Directors or major individual stockholders

Type

Name

Companies inwhich a majorityof voting rights
is owned by adirector or the
director’s close
relatives

Ability Center,
Inc

Capital(Millions
Location of yen)

Ehime

¥50

Business

Transaction
amountOwnerships of(Millionsvoting rights (%) Relationship Transactionsof yen)Account

Temporarystaffing

Direct Temporary
19.2% holding
staffing

Otherliabilities

Temporarystaffing¥26(Notes)1. The conditions of the above transactions were the same as those of arm’s length transactions.
2. Ms. Junko Miyoshi, a director and Supervisory Committee member, has a close relative who owns a majority of the voting rights of Ability Center, Inc.

32

IYO BANK Annual Report 2022

Outstandingbalance(Millionsof yen)¥—(Consolidated Supplementary Schedules)
1 BORROWED MONEY AND LEASE LIABILITIES
Borrowed money consisted of the following:Thousands of
U.S. dollars(Note 1-1)

Millions of yen

Borrowings from banks
Lease liabilities(due within one year)
Lease liabilities(due after one year)

2022¥750,302

2021¥743,645

2022$6,130,419

291

270

2,377

1,435

1,544

11,724

The weighted average interest rates on the outstanding balances at
March 31, 2022 and 2021 were as follows:
2022
2021
Borrowings from banks
0.06%
0.02%
Lease liabilities(due within one year)——
Lease liabilities(due after one year)——(Note) The “average interest rate” is not shown for lease obligations because the
Bank uses a method in which amounts equal to the interest in the total
capital lease obligations are spread equally over each fiscal year of the lease
period.

(Significant subsequent events)(Transition to Holding Company Structure through a Sole Share
Transfer)
The Bank resolved to transform to a holding company structure byincorporating “Iyogin Holdings, Inc.” a holding company (the wholly
owning parent company) (the “Holding Company”) at the Board of
Directors meeting held on May 13, 2022 through a sole-share transfer(the “Share Transfer”) dated October 3, 2022 (scheduled), on theassumption that approval at the annual stockholder’s meeting andnecessary approvals of the relevant authorities would be obtained.
The Share Transfer plan was approved at the annual stockholder’smeeting on June 29, 2022.
1. Objectives of the Share Transfer
The Bank defined the meaning of its existence in its corporate credo:“creating a bright and prosperous future for the region,” and has madeefforts to stabilize regional financing and stimulate the local economy
through the expansion, etc., of finance-related services by merging withToho Mutual Bank and Fuji Savings Credit Union and establishing groupsubsidiaries for leasing services and securities services, etc.
While doing so, the business environment surrounding regional
financial institutions has changed greatly due to circumstances such as
the normalization of a low-interest policy, changes in spending behavior,changes to the social structure such as the decreasing population andthe diversification and enhancement of customer needs in conjunction
with progressing digitalization. In response, the Bank is seeking to
improve its corporate value as a group, grounded on the importanceof sustainability and in light of the impact of the COVID-19 pandemic,
and it recognizes that it faces the task of changing its business model tocontribute to growth in the local economy.
Therefore, the Bank established its long-term vision to become a“corporate group continuing to create and provide new value” in its
Fiscal 2021 Medium-Term Management Plan that commenced in April
last year, further deepening and evolving the “Digital-Human-Digital
Model”* it has been pursuing and has worked as a unified group totransform its business model.
In order to further move forward with this transformation, theBank has decided to transition to a holding company structure with theobjective of expanding its fields of business in light of the relaxation ofregulations, enhancing group governance by strengthening business
management functions and maximizing group synergies.
With the transition to a holding company structure, the Bank will
strive to grow the Iyogin group sustainably and improve its corporate
value by promoting changes in employee and officer awareness andbehavior and creating a structure that can respond as a cohesive group
to diversified and enhanced customer needs, with the aim of earning
the unwavering trust of its shareholders, customers, employees and local
residents, which in turn will contribute to the realization of a sustainable
society.
As a result of the Share Transfer, the Bank will become a wholly
owned subsidiary of the Holding Company and the shares of the Bank
will be delisted. However, we plan to make an application to list theHolding Company shares that will be delivered to all shareholders as
consideration for the Bank’s shares on the Prime Market of the Tokyo
Stock Exchange, Inc. (“TSE”). The listing date is subject to review by TSE,
but is planned for October 3, 2022, which is the date of registration
for the establishment of the Holding Company (the effective date of
the Share Transfer), and we intend to effectively maintain the listing ofshares.
* Focusing on customer service by utilizing digital technology to expand
points of contact with customers and thoroughly streamline administrative
procedures.

2. Outline of the Share Transfer(1) Schedule
Record date for ordinary general meeting of shareholders: March 31,
2022 (Thursday)
Board of directors meeting to approve the share transfer plan: May 13,2022 (Friday)
Ordinary general meeting of shareholders to approve the share transfer
plan: June 29, 2022 (Wednesday)
Delisting of the shares of the Bank: September 29, 2022 (Thursday)(scheduled)
Registration of establishment of the Holding Company (effective date):
October 3, 2022 (Monday) (scheduled)
Listing of the shares of the Holding Company: October 3, 2022 (Monday)(scheduled)
Note that this schedule is subject to change as necessary due to theprogress in the Share Transfer procedures or for any other reasons.
(2) Format
Sole share transfer with the Holding Company as the wholly owningparent company incorporated through a share transfer and the Bank as
the wholly owned subsidiary resulting from a share transfer.
(3) Details of allotment
Company name

Iyogin Holdings, Inc.
The Iyo Bank, Ltd.
(wholly owning parent (wholly owned subsidiarycompany incorporated
resulting from a sharethrough a share transfer)transfer)
Share transfer ratio
11(i) Ratio
All shareholders of the Bank entered or recorded in the Bank’s
shareholder register immediately prior to the time that the Holding
Company acquires all of the issued shares of the Bank pursuant to the
Share Transfer (the “Reference Time”) will receive an allotment of one
share of common stock of the Holding Company per share of common
stock of the Bank that they hold.
(ii) Number of shares per unit
The Holding Company will adopt a share unit system with one unit
equaling 100 shares.

IYO BANK Annual Report 2022

33

(iii) Basis for calculation of the share transfer ratio
The Share Transfer will establish the Holding Company alone as thewholly owning parent company of the Bank by the Bank’s sole sharetransfer, and there will be no change in the shareholding structure of
the Bank or the Holding Company at the time of the Share Transfer.
Therefore, with the principal concern that no disadvantage be caused tothe shareholders of the Bank, each shareholder will receive an allotmentof one share of the common stock of the Holding Company per share of
the common stock of the Bank. Therefore, no third-party calculation of
the share transfer ratio has been conducted.
(iv) Results, methods and the basis of calculation by a third party
organization
For the reasons described in (iii) above, no third party organization has
calculated the share transfer ratio.
(v) Number of new shares to be delivered
Number of new shares: 317,998,884 shares of common stock (subject
to change)
However, if there is a change in the total number of issued shares of the
Bank prior to the Share Transfer taking effect, there will also be a change
in the number of new shares to be delivered by the Holding Company.
Because the treasury shares held by the Bank that are able to be retired
in practice will be retired by the Reference Time, the 5,776,482 treasury
shares held by the Bank as of March 31, 2022 are excluded from the
new shares to be delivered in the above calculation. Furthermore, if thenumber of treasury shares held by the Bank as of March 31, 2022 haschanged by the Reference Time, such as the case in which the Bank’s
shareholders have exercised the right to request a purchase of shares,
the number of new shares to be delivered by the Holding Company willchange accordingly.
(4) Matters regarding share options and bonds with share options
involved with the Share Transfer
The holders of stock options issued by the Bank will be delivered andallotted equivalent stock options of the Holding Company in exchange
for the stock options of the Bank. The Bank has not issued bonds withshare options.
(5) Handling of new listing of the Holding Company
The Bank intends to make an application to list the shares of the newly
established Holding Company on the Prime Market of TSE (TechnicalListing) as of October 3, 2022. Because the Bank will become a wholly
owned subsidiary of the Holding Company through the Share Transfer,the shares of the Bank are expected to be delisted from the Prime
Market of TSE as of September 29, 2022, before listing the shares of theHolding Company.
The delisting date may change as determined in accordance with
TSE’s rules.

34

IYO BANK Annual Report 2022

3. Outline of the Holding Company to be Newly EstablishedThrough the Share Transfer (wholly owning parent company
incorporated through a share transfer) (scheduled)(1) Name
Iyogin Holdings, Inc.
(2) Address
1 Minami-Horibata-cho, Matsuyama-shi, Ehime(3) Representatives, Chairman
directors andIwao Otsuka (Currently: Chairman, Iyo Bank)
executives, etc. President and Director (Representative Director)
expected toKenji Miyoshi (Currently: President, Iyo Bank)
assume office Director, Senior Managing Executive Officer(Representative Director)
Hiroshi Nagata (Currently: Senior Managing
Director, Iyo Bank)
Director, Managing Executive Officer
Kensei Yamamoto (Currently: Managing Director,
Iyo Bank)
Director (Audit and Supervisory Committee Member)
Tetsuo Takeuchi (Currently: Director, Iyo Bank)
Director (Audit and Supervisory Committee Member)
Junko Miyoshi (Currently: Outside Director, Iyo
Bank)
Director (Audit and Supervisory Committee Member)
Keiji Joko (Currently: Outside Director, Iyo Bank)
Director (Audit and Supervisory Committee Member)
Yoriko Noma (Currently: Outside Director, Iyo Bank)(Note) The Directors (Audit and Supervisory
Committee Members) Ms. Junko Miyoshi, Mr. Keiji
Joko, and Ms. Yoriko Noma are outside directors
defined in Article 2(xv) of the Companies Act.
(4) Amount of¥20,000 million ($163 million)
stated capital(5) Net assets
Not yet decided(6) Total assets
Not yet decided(7) Description of • Management and operation of banks and otherbusinesscompanies that may be subsidiaries pursuant to the
Banking Act and any and all business incidental or
related thereto• Other business that may be conducted by a holding
company of a bank pursuant to the Banking Act

4. Outline of Accounting Treatment of the Share Transfer
The Share Transfer constitutes a common control transaction for the
purpose of corporate accounting and, therefore, does not affect profit
and loss.
(Repurchase of Treasury Stock)
The Bank resolved to repurchase its treasury stock in accordance with
Article 33 of Articles of Incorporation based on Article 459, Paragraph 1,
Item 1 of the Companies Act of Japan at its Board of Directors meeting
held on May 13, 2022 in order to enhance shareholder return, toimprove capital efficiency and implement flexible capital policies.
1. Class of Share: Common Stock
2. Total number of shares of common stock to be repurchased: Up to
5,000,000 shares
3. Total amount: Up to ¥3,000 million ($24 million)
4. Repurchase method: Auction market on Tokyo Stock Exchange
5. Period: From May 16, 2022 to July 29, 2022

Independent Auditor’s Report
To the Board of Directors of The Iyo Bank, Ltd.:

OpinionWe have audited the accompanying consolidated financial statements of The Iyo Bank, Ltd. and its
consolidated subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance
sheet as at March 31, 2022, the consolidated statements of income, comprehensive income, changes in net
assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting
policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2022, and its consolidated financial performanceand its consolidated cash flows for the year then ended in accordance with accounting principles generally
accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Appropriateness of the estimates of reserve for loan losses
The key audit matter

How the matter was addressed in our audit

The Iyo Bank, Ltd. (hereinafter referred to as the“Iyo Bank”) and its consolidated subsidiaries
reported loans and bills discounted of ¥5,046,997
million and reserve for loan losses of ¥37,600
million in the consolidated balance sheet for thecurrent fiscal year.

The primary procedures we performed to assess
whether Iyo Bank’s estimates of reserve forloan losses for loans and bills discounted was
reasonable included the following:

IYO BANK Annual Report 2022

35

As described in “Basis of Presenting Consolidated
Financial Statements” Note 4 Significant
accounting policies (5) Reserve for possible loan
losses and “Significant accounting estimates” tothe consolidated financial statements, the amountof reserve for loan losses on the receivables
including loans and bills discounted was measured
for each borrower category. The borrower
categories were determined for individual
borrowers according to their assigned credit risk
rating. When determining the borrower categories,
each borrower’s repayment ability is assessed
based on their financial position, cash flows andprofitability.
Iyo Bank is a regional financial services institution
with a solid operating base in the Setouchi
region, primarily in Ehime Prefecture, providing
comprehensive financial services to support local
economy and society. As a trait of such regional
financial institution, it furnishes loans to manysmall and medium-sized businesses in its main
business operation amounting to ¥2,634,699
million, which accounted for a high proportion in
total balance of loans and bills discounted.
Unlike major companies, small and medium-sizedbusinesses generally have weak business bases
and are subject to local economic conditions. As aresult, Iyo Bank is required to determine borrower
categories based on not only a borrower’s
financial position but also its business conditions
while comprehensively taking into consideration
its technological capabilities, sales strengths,
potential growth, payment status of remuneration
to executive officers including a representative,
as well as their income status, details of theirassets, and guarantee status and capabilities ofa representative and others. For a borrower who
developed a business improvement plan, Iyo Bank
needs to appropriately assess the reasonablenessand feasibility of the plan. Determining theborrower categories requires significant
management judgment.

36

IYO BANK Annual Report 2022

(1) Internal control testing
We tested the design and operating
effectiveness of certain internal controls
relevant to determining the borrower categories
in the self-assessment of loan quality.
• controls to validate whether the internal selfassessment criteria, and the policy for writeoffs and provisions complied with accounting
standards;• controls to ensure the reliability of financial
information of borrowers used in determining
quantitative credit rating; and• controls to ensure the effectiveness of
examination performed by the secondary
assessment department in determining theborrower categories.
(2) Assessment of the appropriateness of theborrower categories
In order to assess whether the borrower
categories were appropriately determined, we:• assessed whether borrower information suchas financial information, which was usedas the basis for determining the borrower
categories, was based on sufficient and thelatest information of borrowers by inspecting
the underlying documents and comparing
them to relevant documents;

In addition, as described in “Significant
accounting estimates” to the consolidated
financial statements, Iyo Bank provided reserve
for loan losses of ¥7,310 million by estimating
credit deterioration considering the impact fromthe COVID-19 pandemic. This reserve for loan
losses is calculated by multiplying a population
by a certain rate. The population consists ofrestructured loans to certain borrowers andloans to certain borrowers in specific sectors
significantly affected by COVID-19. It is assumed
that future financial conditions, cash flows
and profitability of these borrowers have highchances of deterioration compared with otherborrowers. Therefore, there is an assumption thatthe borrower categories of certain borrowers will
be negatively changed. This assumption involved
a high degree of uncertainty because of changes
in impact from the COVID-19 pandemic andsignificant management judgment.

• inspected and analyzed relevant documents
and inquired of the personnel responsiblefor determination of the borrower categories
to assess whether borrower categories
were appropriately determined by selecting
borrowers after considering quantitative
information including the balance of loans
and qualitative factors such as sectors,
reflecting relevant information including
financial indicators and projected financial
performance. The procedures include asset
turnover analysis, comparison with relevant
documents and inquiry of the personnel
responsible for determination of the borrower
categories to assess whether unrealized
losses on assets were appropriately reflected
on a borrower’s financial statements andwhether management indicators including theability to redeem a debt were appropriately
calculated; andWe, therefore, determined that our assessment of
the reasonableness of the estimates of reserve forloan losses for loans and bills discounted at Iyo
Bank was of most significance in our audit of theconsolidated financial statements for the current
fiscal year, and accordingly, a key audit matter.

• For a borrower who is in unfavorable
business conditions and whose management
improvement plan is a significant factor
in determining the borrower categories,
assessed the appropriateness of the borrower
categories with comprehensive considerationof differences between the plan and actual
results and trends of the sector to which theborrower belongs.

IYO BANK Annual Report 202237

(3) Assessment of appropriateness of reserve forloan losses recorded in response to COVID-19
In order to assess whether reserve forloan losses in response to COVID-19 wasappropriately recorded, we:• assessed the effectiveness of internal controls
relevant to inspection and approval at Iyo
Bank to ensure that reserve for loan losses
in response to COVID-19 was appropriately
recorded based on the internal rules. We
also assessed the effectiveness of Iyo Bank’s
internal controls to ensure the accuracy andcompleteness of the significant basic datasuch as borrower information used for theinternal controls; and• assessed the appropriateness of the selectionof borrowers with restructured loans andsectors affected by the COVID-19 pandemic
as well as the degree of downgrading
the internal credit rating of the borrower
by comparing with available external
information.

Other Information
The other information comprises the information included in the disclosure documents that contain or
accompany the audited financial statements, but does not include the financial statements and our auditor’sreport thereon.
We do not perform any work on the other information as we determine such information does not exist.

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with38

IYO BANK Annual Report 2022

accounting principles generally accepted in Japan and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but todo so.
The audit and supervisory committee are responsible for overseeing the directors’ performance of their duties
with regard to the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards generally accepted in Japan will always detect a material
misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:	
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

●	Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Group’s internal control.

●	
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.

●	Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.

●	
Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordancewith accounting standards generally accepted in Japan, the overall presentation, structure and content of
the consolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.

●

IYO BANK Annual Report 2022

39

●

	
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.

We communicate with the audit and supervisory committee regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit and supervisory committee , we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine thata matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2022 are presented solely for convenience. Our audit also included the translation of yen amounts
into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note
1-1 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan.

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IYO BANK Annual Report 2022

Kazuhiro Matsuyama
Designated Engagement Partner
Certified Public Accountant

Ryosuke Koike
Designated Other Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
July 29, 2022

IYO BANK Annual Report 2022

41

HEAD OFFICE
1, Minami-Horibata-cho, Matsuyama 790-8514
URL: https://www.iyobank.co.jp/