Annual Securities Report“Yukashoken Hokokusho”(Excerpt)
For the fiscal years ended March 31, 2022 and 2021

FIDEA Holdings Co. Ltd.
and Subsidiaries

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2022 and 2021

Millions of yen
2022
2021
Assets:Cash and due from banks (Notes 12, 21 and 25)
Monetary claims bought (Note 25)
Trading account securities (Notes 5 and 25)
Money held in trust (Note 25)
Securities (Notes 5, 6, 8, 12, 14 and 25)
Loans and bills discounted (Notes 7, 8, 12, 24 and 25)
Foreign exchange assets (Note 8)
Lease receivables and investments in leases
Tangible fixed assets (Notes 4 and 9):
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Goodwill
Other intangible fixed assets
Defined benefit asset (Note 13)
Deferred tax assets (Notes 4 and 22)
Customers’ liabilities for acceptances and guarantees(Notes 8 and 24)
Other assets (Notes 8 and 12)
Allowance for loan losses (Notes 4 and 25)
Total assets¥

725,949
3,811
589
51,717680,385
1,712,140
1,963
5,091

¥

612,3313,775
553
47,358729,245
1,731,224
1,604
4,249

Thousands of
U.S. dollars(Note 1)2022$

5,930,471
31,133
4,811
422,489
5,558,246
13,986,929
16,036
41,58912,951
8,290
21
2,254

13,502
8,558
41
237
1,827

105,800
67,723
171
18,413

2,090
44
145
1,081
2,662

2,288
74
153
734
1,293

17,073
359
1,184
8,830
21,746

17,95819,401

146,70349,641(13,593)

56,553(13,549)

405,530(111,044)¥ 3,265,199¥ 3,221,460$ 26,674,283(Continued)
1

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2022 and 2021

Millions of yen
2022
2021
Liabilities:
Deposits (Note 25)
Negotiable certificates of deposit (Note 25)
Payables under securities lending transactions(Notes 12 and 25)
Borrowed money (Notes 11, 12 and 25)
Foreign exchange liabilities
Provision for bonuses for directors and other officers
Defined benefit liability (Note 13)
Provision for reimbursement of deposits
Provision for contingent loss
Deferred tax liabilities (Notes 4, 6 and 22)
Deferred tax liabilities for land revaluation (Note 10)
Acceptances and guarantees
Other liabilities (Note 11)

Thousands of
U.S. dollars(Note 1)2022

¥ 2,656,962
54,867¥ 2,593,356
57,152$ 21,705,432
448,223

52,82575,999431,541

343,800
58
45
645
126
459
2,040
416
17,95825,758323,700
16
30
614
239
443
3,424
454
19,401
26,5542,808,594
473
367
5,269
1,029
3,749
16,665
3,398
146,703
210,423

3,155,965

3,101,387

25,781,921

18,00023,55055,942(24)
97,46818,00029,19753,564(6)
100,756

147,046
192,386
457,005(196)
796,242

10,317
(203)
914
421
11,449314

18,255
(387)
1,000
154
19,023
293

84,282(1,658)7,466
3,439
93,5292,565

Total net assets

109,233

120,073

892,353

Total liabilities and net assets¥ 3,265,199¥ 3,221,460$ 26,674,283

Total liabilities
Net assets (Note 15):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities (Note 6)
Deferred loss on hedges
Revaluation reserve for land (Note 10)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests

See notes to consolidated financial statements.

(Concluded)2

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2022 and 2021
Thousands of
U.S. dollars(Note 1)
2022

Millions of yen
2022
2021
Income (Note 16):
Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income¥

Total income

18,45011,366
688
8,500
7,641
4,452

¥

19,477
12,961
136
8,328
7,737
4,691

$

150,72292,851
5,620
69,43862,42136,36951,10053,332

417,449

139
42
0
(18)
3,457
9,842
25,702
2,116
4,187

366
52
0
78
3,615
11,222
26,781
1,755
4,144

1,135
343
0
(147)
28,24180,401
209,966
17,28634,204

Total expenses

45,471

48,017

371,464

Income before income taxes

5,628

5,314

45,976

Income taxes (Note 22):
Current
Deferred

1,579
517

1,913
84

12,899
4,223

2,097

1,998

17,130

3,531

3,315

28,84525

1204

Expenses:
Interest expenses:
Interest on deposits
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses (Note 17)
Provision of allowance for loan losses (Note 4)
Other expenses (Notes 4, 18 and 19)

Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

¥

3,506

¥

3,314

Yen
Per share of common stock (Note 27):
Basic net income
Diluted net income
Cash dividends applicable to the year¥

190.15148.5975.00$

28,641

U.S. dollars¥

176.41132.8960.00$

1.5533
1.21380.6126

Note: Effective October 1, 2021, the Company implemented the stock consolidation, whereby 10 shares of its common stock and preferred stockclass B were consolidated to one share. The information on per share, attributable to common stock shareholders shown above, arecalculated on the assumption that the stock consolidation had been implemented at the beginning of the year ended March 31, 2021.

See notes to consolidated financial statements.
3

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended March 31, 2022 and 2021

Millions of yen
2022
2021
Net income¥

Other comprehensive income (Note 20):
Unrealized gain (loss) on available-for-sale securities
Deferred gain (loss) on hedges
Remeasurements of defined benefit plans
Total other comprehensive income

3,531

¥

(7,943)
184
267(7,491)

3,315

Thousands of
U.S. dollars(Note 1)
2022
$

6,399
(561 )
321
6,159

28,845(64,888)
1,503
2,181
(61,195)

Comprehensive income¥(3,959)

¥

9,475

$

(32,342)

Total comprehensive income attributable to:
Owners of parent
Non-controlling interests¥(3,981)
21

¥

9,465
9

$

(32,521)171

See notes to consolidated financial statements.

4

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Changes in Net Assets
Years Ended March 31, 2022 and 2021
Shareholders’ equity

Commonstock
Balance as of April 1, 2020¥

18,000Capitalsurplus¥

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stockReversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity

29,197Retainedearnings

Treasury
stock

¥

¥

51,398(1,202)
3,314

(0)

(5)

Total
shareholders’equity¥¥11,865

Deferred loss
on hedges

Revaluation
reserve for
land

¥

¥

173

1,054

Remeasurements of defined
benefit plans
¥

(167)

Total
accumulated
othercomprehensive
income¥12,926

Noncontrollinginterests¥

Total
net assets

283(1,202)
3,314
(0)
0
54

(0)
0

54

98,590

Unrealized
gain onavailable-forsale
securities

Millions of yen
Accumulated other comprehensive income¥ 111,800(1,202)
3,314
(0)
0
54

6,390

(561)

(54 )

321

6,096

9

6,106

Balance as of March 31, 2021

18,00029,19753,564(6)

100,756

18,255

(387)

1,000

154

19,023

293

120,073

Cumulative effects of changes inaccounting policies
Restated balance

18,00029,19796
53,660(6)

96
100,852

18,255(387 )

1,000

154

19,023

293

96120,169

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stock
Cancellation of treasury stockReversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2022

(1,310)3,506(0)(5,647)(1,310)3,506(5,665)086(5,665)
0
5,647

86

(7,938)¥18,000¥23,550¥55,942¥(24)¥

97,468

Shareholders’ equity

Balance as of March 31, 2021

Commonstock$ 147,046

Capitalsurplus$ 238,518

Retainedearnings$ 437,578

Cumulative effects of changes inaccounting policies
Restated balance

147,046

238,518784
438,362

Cash dividends
Net income attributable to owners of parent
Acquisition of treasury stock
Sale of treasury stock
Cancellation of treasury stockReversal of revaluation reserve for land
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2022

(1,310)3,506(5,665)086

Total
Treasuryshareholders’stockequity$(49)$ 823,102(49)(10,701)
28,641(0)(46,131)(46,278)
046,131

702¥

10,317184¥$ 192,386$ 457,005

$

(196)

¥

914

267
¥

421

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Unrealized
gain onavailable-forRevaluation
Remeasuresale
Deferred loss
reserve forments of defined
securities
on hedges
landbenefit plans$(3,161)$ 149,129
$
8,169
$
1,258

784
823,886

149,129(3,161)

8,169(7,573)21(7,552)314¥ 109,233

Total
accumulated
othercomprehensive
income$ 155,403

Noncontrollinginterests
$
2,393

Total
net assets$ 980,908

155,403

2,393

784
981,692¥

1,258

11,449¥(10,701)
28,641(46,278)0702(10,701)
28,641(46,278)0702(64,847)$ 147,046

(203)

(86 )

$ 796,242$

See notes to consolidated financial statements.

584,282

1,503$(1,658)

(702)
$

7,466

2,181
$

3,439

(61,865)$

93,529$171(61,694)

2,565$ 892,353

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2022 and 2021

Millions of yen
2022
2021
Operating activities:¥ 5,628
Income before income taxes
Adjustments for:
Income taxes—paid(1,849)Depreciation and amortization
1,925
659
Loss on impairment—fixed assets
Amortization of goodwill
29
Change in allowance for loan losses
44
Change in provision for bonuses for directors and other officers
15(37)
Change in defined benefit asset
Change in defined benefit liability
60
Change in provision for reimbursement of deposits(112)
Change in provision for contingent loss
16
Change in other provisions
Interest income(30,504)
Interest expenses
164
2,019
Loss on securities—net(297)
Gain on money held in trust—net(9)
Foreign exchange gain—net
284
Loss on sale and disposal of fixed assets—net
3
Loss on reduction of fixed assets
Subsidy income(3)
Net change in loans and bills discounted
19,084
Net change in deposits
63,606
Net change in negotiable certificates of deposit(2,285)
Net change in trading account securities(36)
Net change in borrowed money, excluding subordinatedborrowings
20,100Net change in due from banks, excluding due from Bank of Japan(27)
Net change in call loans and bills bought(35)
Net change in call money and bills soldNet change in payables under securities lending transactions(23,174)
Net change in foreign exchange assets(358)
Net change in foreign exchange liabilities
42
Net change in lease receivables and investments in leases(842)Interest received
30,785Interest paid
(211)
1,218
Other—net
Total adjustments
80,274¥ 85,902
Net cash provided by operating activities —(Forward)

¥

5,314

Thousands of
U.S. dollars(Note 1)2022$

45,976(1,087)
1,953
891
29
1,087
30
(72)
(1,219)
(154)
34
(14)
(32,574)
498
1,301
(41)
(3)
688
5
(5)
(33,277)
203,059(16,886)(322)(15,104)
15,725
5,383
236
359
122
(302)
490
(914)
130
(249,195)
1,339
16,493(2,426)
(73)
2,320
24
(24)
155,902519,614(18,666)(294)

309,800
1,257
369(11,427)
9,893
234
7
(467)
32,825(621)(1,474)464,315¥ 469,629

164,202(220)(285)(189,314)(2,924)343(6,878)251,490(1,723)9,950
655,779$ 701,756(Continued)

6

FIDEA Holdings Co. Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2022 and 2021
Thousands of
U.S. dollars(Note 1)
2022

Millions of yen
2022
2021
Net cash provided by operating activities —(Forward)
Investing activities:
Purchase of securities
Proceeds from sale of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Purchase of intangible fixed assets
Proceeds from sale of intangible fixed assets
Subsidy income
Net cash provided by (used in) investing activities
Financing activities:
Repayment of lease obligations
Dividends paid
Purchase of treasury stock
Proceeds from sale of treasury stock
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year (Note 21)¥

85,902¥ 469,629$

701,756(478,619)
410,524
108,551(4,000)105(1,384)
46
(528)
0
3
34,700(499,093)
396,288
126,831(31,568)
5,344
(786)
607
(771)
5
(3,141)(3,909,966)
3,353,680
886,782(32,677)857(11,306)375(4,313)0
24
283,473(47)(1,308)(5,665)0(7,021)(60)(1,200)(0)0(1,260)(383)(10,685)(46,278)
0(57,356)9
113,590609,301¥ 722,891

3465,230
144,070¥ 609,301

73
927,947
4,977,542$ 5,905,489

See notes to consolidated financial statements.

(Concluded)

7

FIDEA Holdings Co. Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
1. Basis of Presentation
FIDEA Holdings Co. Ltd. (the “Company”) is a holding company and conducts its operations through its
subsidiaries and affiliates. The Company was established as a joint holding company between The Shonai Bank,
Ltd. (“Shonai”) and The Hokuto Bank, Ltd. (“Hokuto”) on October 1, 2009 by way of a transfer of shares.
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, the Ordinancefor the Enforcement of the Banking Act of Japan (the “Banking Act”) and the Companies Act of Japan (the“Companies Act”), and in conformity with accounting principles generally accepted in Japan, which are different
in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is morefamiliar to readers outside Japan.
In preparing the accompanying consolidated financial statements, Japanese yen amounts are presented in millionsof yen by rounding down figures to the nearest million. As a result, the totals in yen in the accompanying
consolidated financial statements do not necessarily agree with the sums of the individual amounts.
The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan and has been made at ¥122.41 = U.S.$1.00, the exchange rate prevailing on March 31, 2022. This translation
should not be construed as a representation that yen can be converted into U.S. dollars at the above or any otherrate.
2. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its 6 subsidiaries (collectively the“Group”) as of March 31, 2022 and 2021.
Under the control of influence concept, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated. The Company has 4 unconsolidated subsidiaries as ofMarch 31, 2022 and 2021.
All significant intercompany accounts and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is eliminated.
The excess of the acquisition cost over the underlying equity in the net assets of the consolidated subsidiaries
measured at fair value at their respective dates of acquisition is presented as “goodwill” and is amortized by thestraight-line method over a period of five years. Insignificant amounts of goodwill are fully charged to income in
the fiscal year when it is incurred.
The balance sheet dates of all 6 subsidiaries are March 31.
Those companies over which the Company has the ability to exercise significant influence, but does not control
are accounted for using the equity method. However, the Company has no affiliates to be accounted for using theequity method.

8

3. Significant Accounting Policies(1) Trading account securities
Trading account securities are stated at fair value as of the balance sheet date, and cost of trading accountsecurities sold is determined principally using the moving-average method.
(2) Securities
Non-trading securities are classified into two categories: held-to-maturity debt securities and available-forsale securities. Held-to-maturity debt securities are carried at amortized cost being determined by the movingaverage method. Available-for-sale securities are stated at fair value. Cost of sale of these available-for-salesecurities is principally determined using the moving-average method. Equity securities without market prices
are stated at cost determined by the moving-average method.
Unrealized gain or loss on available-for-sale securities is recorded under net assets, net of income taxes.
(3) Securities held in money trusts
Securities that are part of trust assets in independently managed money trusts with the primary purpose to
manage securities are stated at fair value as of the balance sheet date.
(4) Derivatives
Derivatives are stated at fair value.
(5) Tangible fixed assets
Depreciation of tangible fixed assets of the Group, except for lease assets, is calculated by the straight-line
method. The principal useful lives are as follows:
Buildings
Others5 to 50 years
4 to 20 years

The Group leases automated teller machines, etc. under finance lease arrangements as a lessee.
Lease assets under finance lease arrangements which do not transfer ownership of the lease assets to the lessee
are depreciated over the respective lease contract periods using the straight-line method with salvage values
defined in the lease contracts, otherwise with no residual value.
(6) Intangible fixed assets
Intangible fixed assets, except for lease assets, are amortized by the straight-line method. Amortization of thecost of software intended for internal use is calculated by the straight-line method based on a useful life
(principally five years) determined by the Group.
(7) Allowance for loan losses
Allowance for loan losses is provided by the consolidated banking subsidiaries and other major consolidated
subsidiaries in accordance with the prescribed standards.
(i) For claims on borrowers who have declared bankruptcy or have commenced special liquidation
proceedings or similar legal proceedings (the “bankrupt borrowers”), or borrowers who are not legallyor formally insolvent but are regarded as substantially in the same situation (the “virtually bankrupt
borrowers”), an allowance is generally provided based on the carrying amount of the claims, after thewrite-off stated below, net of the expected amount recoverable from collateral and guarantees.
For collateralized and guaranteed claims on the bankrupt borrowers or virtually bankrupt borrowers of
Hokuto and its certain consolidated subsidiaries, the amount of claims exceeding the estimated value ofcollateral and guarantees is deemed to be uncollectible and is charged off against the total amount ofoutstanding claims. These write-offs amounted to ¥13,007 million ($106,257 thousand) and ¥12,621
million for the years ended March 31, 2022 and 2021, respectively.
(ii) For claims on borrowers who are not currently bankrupt but are likely to become bankrupt (the“potentially bankrupt borrowers”), an allowance is provided at the amount deemed necessary based on
the overall solvency assessment of the borrowers and the amount of the claims, net of the expectedamount recoverable from collateral and guarantees (hereinafter the “unsecured amount”). In particular,
a. For the unsecured amount, an allowance is provided based on the expected loan loss over the next
three years. The expected loan loss amount is determined based on the loan loss ratio, which is9estimated by taking the average of historical loan loss ratio over a certain period of time based on theirpast loan loss experience over three years, with necessary adjustments such as future projections.
b. Of claims on above borrowers, as to claims on borrowers with certain amounts or more of theunsecured amount, the allowance estimated based on the expected loan loss as described in thepreceding paragraph is individually reviewed if the allowance is sufficient. Then as necessary, acollectible amount reasonably estimated based on the borrower’s financial status is deducted from theunsecured amount to provide the amount of the allowance.
(iii) For claims on borrowers with restructured loans, etc., an allowance is provided based on the expectedloan loss over the next three years. The expected loan loss amount is determined based on the loan loss
ratio, which is estimated by taking the average of historical loan loss ratio over a certain period of time
based on their past loan loss experience over three years, with necessary adjustments such as future
projections.
(iv) For other claims, an allowance is provided based on the expected loan loss over the next one year. The
expected loan loss amount is determined based on the loan loss ratio, which is estimated by taking the
average of historical loan loss ratio over a certain period of time based on their past loan loss experience
over one year, with necessary adjustments such as future projections.
(v) Allowances for loan losses of other consolidated subsidiaries are provided based on the historical loan
loss ratio.
All claims are assessed for the quality by the Asset Assessment Department with the cooperation by operating
offices in accordance with the Standards for Asset Self-Assessment, and then the assessment results areaudited by the Asset Audit Department which is independent from the Asset Assessment Department.
(8) Provision for bonuses for directors and other officers
Provision for bonuses for directors and other officers is provided for the payment of bonuses to directors andother officers at an estimated amount attributed to the current fiscal year.
(9) Provision for reimbursement of deposits
Provision for reimbursement of deposits is provided at an estimated amount of the future payments to be madefor reimbursement claims on deposits which were derecognized and credited from liability to income.
(10) Provision for contingent loss
Provision for contingent loss is provided at an estimated amount of the future payments to be made for a(11) Retirement benefits
The benefit formula method is used as a method of attributing expected retirement benefits to each period in
calculating retirement benefit obligation.
Past service costs are amortized by the straight-line method over a certain period (five years) within the
average remaining years of service of the eligible employees when such past service costs occur.
Actuarial gains and losses are amortized from the year following the year in which the gains and losses occur
by the straight-line method over a certain period of 10 to 13 years within the average remaining years ofservice of the eligible employees when such actuarial gains and losses occur.
Certain consolidated subsidiaries adopt the simplified method in calculating defined benefit liability andretirement benefit expenses. Under this method, the severance payment amount required at the fiscal yearend for voluntary termination is deemed as retirement benefit obligations.
(12) Recognition of significant revenue and expenses
Major performance obligations in major businesses related to revenue from contracts with customers of theCompany and its consolidated subsidiaries are providing services through deposits and loans operations,foreign exchange operations, securities-related operations, agency operations, custody/safe deposits
operations and other.
10

As to fees and commissions from ATM services, direct debit services (deposits and loans operations),
domestic and overseas remittance services (foreign exchange operations), underwriting public and corporate
bonds (securities-related operations) and sale of investment trusts and insurances (agency operations), a
performance obligation is satisfied and the revenue is recognized at a point in time when a transaction
occurs or a related service is provided. As to fees and commissions from services, such as safe-deposit box
fees (custody/safe deposit operations), for which a performance obligation is satisfied over the period inwhich the related service is provided, the revenue is recognized over the relevant period.
(13) Foreign currency translation
The assets and liabilities denominated in foreign currencies of the consolidated subsidiaries are translated into
Japanese yen at the exchange rates in effect at the balance sheet date.
For the translation difference of debt securities out of available-for-sale securities denominated in foreign
currencies, the translation difference related to changes in fair value is recognized as unrealized gain or loss
and other differences are recognized as foreign exchange gain or loss under other operating income or
expenses.
(14) Hedge accounting
Interest rate risk hedging
With respect to the hedge accounting for the interest rate risk arising from financial assets and liabilities of
the consolidated banking subsidiaries, the Group applies deferral hedge accounting, under which gain or loss
on derivatives are deferred until maturity of the hedged transactions, as stipulated in the Japanese Institute ofCertified Public Accountants (“JICPA”) Industry Committee Practical Guideline No. 24 (March 17, 2022).
With respect to hedging transactions to offset fluctuations of the market price, the effectiveness of hedging
transactions is assessed by specifying the hedged items such as deposits and loans and bills discounted andhedging instruments such as interest rate swaps after grouping these items by definite remaining maturity.
With respect to hedging transactions to fix cash flows, the effectiveness of hedging is assessed by verifying
the correlation of interest floating factors of hedged items and hedging instruments.
Foreign exchange risk hedging
With respect to the hedge accounting for the foreign exchange risk arising from financial assets and liabilities
denominated in foreign currencies of the consolidated banking subsidiaries, the Group applies deferral hedge
accounting, under which gain or loss on derivatives are deferred until maturity of the hedged transactions, as
stipulated in the JICPA Industry Committee Practical Guideline No. 25 (October 8, 2020). Hedge effectivenessis assessed by comparing the amount of monetary assets and liabilities denominated in foreign currencies as
underlying hedged items with the corresponding foreign-currency amount of the respective hedging
instruments such as currency swaps and foreign exchange swaps entered into in order to hedge foreignexchange risk associated with monetary assets and liabilities denominated in foreign currencies.
In addition, in order to hedge foreign exchange risk of available-for-sale securities denominated in foreign
currencies except for debt securities, the fair value hedge is applied as portfolio hedging on the condition thatliabilities of spot and forward foreign exchange contracts exceeding the acquisition costs of the foreign
currency denominated securities on a basis of foreign currency exist, designating the issues of foreign currency
denominated securities to be hedged in advance.
Equity price fluctuation risk hedging
With respect to hedge accounting for the equity price fluctuation risk arising from equity securities out ofavailable-for-sale securities held by the consolidated banking subsidiaries, the Group applies deferral hedge
accounting for equity forward contracts and others as hedging instruments.
Hedge effectiveness is assessed by periodically comparing the aggregate amounts of price fluctuations orchanges in cash flows of underlying hedged items with those of corresponding hedging instruments, inprinciple, for the period from the beginning of the hedge and the point in time of evaluating hedge
effectiveness. However, if the material conditions of the hedged item and the hedging instrument are consistentand it is obvious that the hedge is highly effective, the assessment for the effectiveness is omitted.
(15) Cash and cash equivalents
In preparing the consolidated statements of cash flows, of cash and due from banks in the consolidated balance
sheets, cash and due from Bank of Japan (“BoJ”) are considered to be cash and cash equivalents.

11

(16) Accounting treatments and procedures applied in cases where relevant accounting standards areunclear
Regarding gain or loss on cancellation or redemption of investment trusts, when an aggregate amount on
investment trusts as a whole including interim distributions is a gain, the gain is recognized as interest anddividends on securities under interest income, and when it is a loss, the loss is recognized as loss on redemptionof bonds under other operating expenses.
(17) Changes in accounting policies(Application of Accounting Standard for Revenue Recognition)
Applying the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020,
hereinafter the “Accounting Standards for Revenue Recognition”), etc. effective from the beginning of theyear ended March 31, 2022, the Group recognizes revenue at the amount assumed to be received in exchange
for a promised good or service at the point in time when a control of the said good or service is transferred
to a customer.
In accordance with the transitional treatment prescribed in the proviso to paragraph 84 of the AccountingStandard for Revenue Recognition, the Group adjusted the beginning balance of retained earnings for the
cumulative effect of retroactive application of the new accounting policy prior to the beginning of the year
ended March 31, 2022, and then has applied the new accounting policy.
As a result, the beginning balance of retained earnings in the consolidated statement of changes in net assets
for the year ended March 31, 2022 increased by ¥96 million ($784 thousand). There is no significant impact
on the consolidated financial statements and per share information from the changes.
Furthermore, in accordance with the transitional treatment prescribed in the proviso to paragraph 89-3 of the
Accounting Standard for Revenue Recognition, the previous fiscal year’s disclosure is not stated in Note “16.
Revenue Recognition.”(Application of Accounting Standard for Fair Value Measurement)
Effective from the beginning of the year ended March 31, 2022, the Group has applied the “AccountingStandard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019, hereinafter, the “AccountingStandard for FVM”), etc. In accordance with the transitional treatment prescribed in paragraph 19 of the
Accounting Standard for FVM and paragraph 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019), the Group has applied this new accounting policy prospectively.
As a result, of available-for-sale securities, equity securities with market prices are stated at fair value
determined based on their market prices as of the balance sheet date, although they were previously stated atfair value determined based on average market prices during one month before the balance sheet date.
In addition, the fair value hierarchy of financial instruments is disclosed in Note “25. Financial Instruments
and Related Disclosures.” In accordance with the transitional treatment prescribed in paragraph 7-4 of the“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ GuidanceNo. 19, July 4, 2019), relevant information for the year ended March 31, 2021 is not stated.
(18) Accounting standards and guidance issued but not yet applied(Accounting standards and guidance for fair value measurement)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, June 17, 2021)(i) Overview
When the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31) was originally issued on July 4, 2019, it was considered necessary to spend a certain
period of time to complete discussions among parties concerned with regard to the “fair value
measurement of investment trusts.” It was also considered necessary to discuss how fair value of the“investments in partnerships, etc., which are presented in a balance sheet at the net amount equivalent to
the holding equity interest” should be disclosed. Those discussions were to be carried out for
approximately one year after the issuance of the “Accounting Standard for Fair Value Measurement,”
and finally the relevant amendment was issued on June 17, 2021.

12

(ii) Scheduled date of application
The Company and its consolidated subsidiaries will apply the new implementation guidance effectivefrom the beginning of the year ending March 31, 2023.
(iii) Effect from the application of the new accounting standards and implementation guidance
The effect from the application of the new implementation guidance on the Company’s consolidated
financial statements is under evaluation.
4. Significant Accounting Estimates
The following summarizes items that are recognized in the current fiscal year’s consolidated financial
statements based on the accounting estimates and such estimates may give significant impacts on the
consolidated financial statements in the following fiscal year.
(1) Allowance for loan losses(i) Amount recognized in the consolidated financial statements in the current fiscal year
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Allowance for loan losses¥

13,593¥

13,549$111,044(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
It is described in Note “3. Significant Accounting Policies, (7) Allowance for loan losses.”b. Major assumptions
For estimating the allowance, it is particularly important to determine the borrower classification.
Major assumptions used for determining the borrower classification are “outlook for future
performance of borrowers,” which the Company assesses by each individual borrower based on theevaluation of each borrower’s ability to earn income, after comprehensively evaluating the qualitativeand quantitative information collected, including each borrower’s management performance, financial
status, lending terms, repayment status, and formulation and progress of a management improvement
plan.
In addition, the COVID-19 pandemic may have a certain impact, mainly on the credit risk of loans andbills discounted. While assuming the economic impact of the COVID-19 pandemic would continue
over a few years or so, the Company determines the allowance for loan losses based on assumptions
that the risk would be controlled to some extent by economic stimulus measures taken by thegovernment and local governments and supports from financial institutions.
c. Impact on the consolidated financial statements in the following fiscal year
Since the major assumptions: “outlook for future performance of borrowers” involve uncertainty, there
is a risk to have a significant impact on determining the borrower classification if any changes occur inthe status of borrowers or the future economic environment including the impact of the COVID-19
pandemic. When the borrower classification changes, there is a possibility that the allowance for loan
losses in the consolidated financial statements in the following fiscal year may increase or decrease.
Although the Company estimates the impact of the COVID-19 pandemic by taking all possible events
into account based on information available as of March 31, 2022, there is a high degree of uncertainty
in the assumptions used in the estimate under the current economic environment. If the status of thepandemic, its duration, and the impact on the economy and other factors would change, the amounts ofallowance for loan losses in the consolidated financial statements of the following year may increaseor decrease.

13(2) Deferred tax assets(i) Amount recognized in the consolidated financial statements in the current fiscal year
Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Deferred tax assets¥

Deferred tax liabilities

2,662
2,040

¥

1,293
3,424

$

21,746
16,665(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
A deferred tax asset is an asset allowed to recognize to the extent that the taxable income will be reduced,
thereby the tax burden will be reduced, for the fiscal period when the tax loss carryforward and thetemporary differences, which are the differences between the carrying amount of an asset or liability inthe consolidated balance sheet and its tax base, are reversed. Accordingly, deferred tax assets arerecognized at the amount expected to be recovered based on the assessment of recoverability of theassets to reduce future tax burden. In addition, the Company reviews the future recoverability of theassets every fiscal year.
In particular, the Company estimates deferred tax assets using the scheduling of temporary differences
for the future reasonable estimable period of five years based on the estimates of taxable income before
deductible or taxable temporary differences for the estimable period. For the preparation of thescheduling, it is especially important to project a future deductible temporary difference for anindividual allowance for loan losses; thus, the Company prepares the scheduling after a detailed
analysis of timing and compliance with requirements for the use of tax loss carryforward for anindividual allowance for loan losses over certain amounts.
b. Major assumptions
For determining the recoverability of deferred tax assets, it is particularly important to estimate futuretaxable income.
Future taxable income is estimated based on the Group’s profit plan, which is established by taking
into account past performance, prevailing market yields and the future economic environment including
the impact of the COVID-19 pandemic. The major assumptions used for the establishment of the plan
are: “outlook for income from assets under management and corporate-related fees and commissions”
and “outlook of general and administrative expenses such as personnel expenses,” which are projectedbased on the Group’s management policy of “strengthening of top-line profitability including income
from assets under management and corporate-related fees and commissions, and further reduction ofgeneral and administrative expenses.” Considering the uncertainty of achieving the profit plan, theCompany determines the recoverability of deferred tax assets with a certain stress scenario to the plan.
c. Impact on the consolidated financial statements in the following fiscal year
Although the Company determines the recoverability of deferred tax assets at every fiscal year-end, themajor assumptions: “outlook for income from assets under management and corporate-related fees andcommissions” and “outlook of general and administrative expenses such as personnel expenses”
involve high uncertainty. When the future economic environment including the impact of the COVID19 pandemic changes, the estimates of future taxable income based on the profit plan may change, andit may result in a risk of having a significant impact on the recoverability of deferred tax assets. When
the Company determines that a part or all of the deferred tax assets recognized in the last fiscal year
cannot be recovered since estimated future taxable income may be insufficient to offset the future
deductible temporary differences, the deferred tax assets will be reversed and the same amount will berecognized as income tax-deferred.

14(3) Impairment of fixed assets(i) Amount included in “Other expenses” in the consolidated financial statements in the current fiscal year
Thousands ofMillions of yen
U.S. dollars
2021
2022
2022
Impairment loss

¥

659

¥

891

$

5,383

(ii) Information that contributes to an understanding of the nature of significant accounting estimates for theidentified items
a. Estimation method
It is described in Note “19. Impairment Loss.”b. Major assumptions
It is necessary to estimate the future cash flows, used for the purposes of measuring the value in use
and determining the recognition of impairment loss, based on reasonable and explainable assumptions
and predictions reflecting unique circumstances of an entity. These future cash flows are estimatedbased on the profit plan with a certain stress scenario, for determining the recoverability of deferred
tax assets as stated in aforementioned “(2) Deferred tax assets.”
c. Impact on the consolidated financial statements in the following fiscal year
The major assumptions used to establish the profit plan as stated in aforementioned “(2) Deferred tax
assets” involve high uncertainty. When the future economic environment including the impact of the
COVID-19 pandemic changes, the estimates of future cash flows based on the profit plan may change,
and it may result in a risk of having significant impact on determining the recognition of impairment
loss and measuring the value in use. When the estimates of future cash flows decrease, it may become
necessary to recognize additional impairment loss.
5. Securities
Gain and loss from revaluation of trading account securities included in the consolidated statements of income was¥0 million ($0 thousand) and ¥0 million for the years ended March 31, 2022 and 2021, respectively.
Securities at March 31, 2022 and 2021 consisted of the following:
Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2022
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

¥

-

¥

11,956
194,891
39,724
103,61151,554133,418¥ 340,266

¥

¥

-

¥

6,027
190,331
38,969100,876
50,485
120,604¥ 316,964

¥

-

¥

-

¥

4,309
264,83167,803
122,664
74,36367,427¥ 336,568¥ 676,834¥

4,626
268,245
68,854
124,163
75,22872,152¥ 345,024¥ 661,988

¥

¥

¥

15

Unrealized
gain (loss)
-

5,928
4,559
754
2,735
1,068
12,813¥ 23,302-(317)(3,414)(1,050)(1,499)(864)(4,724)¥ (8,456)¥ 14,845

Millions of yen
Acquisition
cost

Carrying
amountMarch 31, 2021
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

¥

-

¥

16,642286,270
49,016
163,568
73,685
164,296¥ 467,209

¥

¥

-

¥

8,878
279,40247,775
159,534
72,093
145,623¥ 433,904

¥

7,763
6,868
1,241
4,034
1,592
18,673¥ 33,305

-

¥

-

¥

2,356
173,383
68,06360,691
44,62982,446¥ 258,186¥ 725,396¥

2,533
175,123
68,912
61,24044,97087,586¥ 265,243¥ 699,147¥¥¥

Thousands of U.S. dollars
Acquisition
cost

Carrying
amountMarch 31, 2022
Securities whose carrying amount exceeds theiracquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Securities whose carrying amount does not exceed
their acquisition cost:
Held-to-maturity debt securities
Available-for-sale securities:
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Subtotal
Total

Unrealized
gain (loss)

$

-

-

(176)
(1,739)
(849)
(549)
(341)
(5,139)¥ (7,056)¥ 26,249

Unrealized
gain (loss)-$

97,671
1,592,116
324,515
846,425
421,158
1,089,927$ 2,779,723$

49,236
1,554,864
318,348824,082
412,425985,246$ 2,589,363$ 48,427
37,243
6,159
22,342
8,724
104,672$ 190,360

$

-

$

-

$

35,201
2,163,475
553,900
1,002,074
607,491
550,829$ 2,749,513$ 5,529,237$

37,791
2,191,365
562,486
1,014,320
614,557
589,428$ 2,818,593$ 5,407,956

$

$

$

-

$

-

-

(2,589)(27,889)(8,577)(12,245)(7,058)(38,591)$ (69,079)$ 121,272

As of March 31, 2022 and 2021, ¥371 million ($3,030 thousand) and ¥383 million of capital investment inunconsolidated subsidiaries were included in the balance of securities, respectively.
16

Available-for-sale securities sold for the years ended March 31, 2022 and 2021 were as follows:
Millions of yen
March 31, 2022
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

¥

¥

¥

March 31, 2021
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

¥

¥

¥

March 31, 2022
Equity securities
Debt securities:
Japanese government bonds
Municipal bonds
Corporate bonds
Other
Total

Sales proceeds

Realized gain

Realized loss

$

$

$

¥

20,994
143,204
129,687
12,934582
249,190
413,389

¥

2,953
324
239
83
1
3,340
6,618

¥

1,309
807
804
1
2
6,516
8,633

Millions of yen¥

13,809132,12287,732
44,322
66
250,352
396,284

¥

2,997
672
201
469
0
3,895
7,564

¥

471
569
560
8
7,714
8,754

Thousands of U.S. dollars
171,505
1,169,871
1,059,447
105,661
4,754
2,035,699$ 3,377,085$

24,123
2,646
1,952
678
8
27,28554,064$

10,693
6,592
6,568
8
16
53,23070,525

Write-down of securities
Non-trading securities, with the exception of equity securities without market prices or investments in partnerships,
whose fair value significantly declined compared with their acquisition cost and is not considered to be able torecover their acquisition cost, are written down to their respective fair value which is recorded as the carrying
amount on the consolidation balance sheet. The related loss on revaluation is charged to income for the year.
For the years ended March 31, 2022 and 2021, no available-for sale securities were written down.
The criteria for determining whether the fair value is “significantly declined” are as follows:(1) If the fair value as of the balance sheet date declines 50% or more compared to the acquisition cost, thedifference is recognized as write-down of securities.
(2) If the fair value as of the balance sheet date declines by 30% or more but less than 50% compared to theacquisition cost, write-down of securities is recognized for the securities which meets criteria of the Group after
considering the financial condition of the issuer and past trend of the market value for a certain period.

17

6. Unrealized Gain on Available-for-Sale Securities
Unrealized gain on available-for-sale securities at March 31, 2022 and 2021 consisted of the following:
Millions of yen
2022
2021
Unrealized gain:
Available-for-sale securities
Deferred tax liabilities
Unrealized gain on available-for-sale securities before
adjustments by equity interest:
Non-controlling interests
Unrealized gain on available-for-sale securities¥¥

14,845(4,514)
10,331(14)
10,317¥¥

Thousands of
U.S. dollars
2022

26,249(7,974)$ 121,272(36,876)

18,274(18)
18,25584,396(114)
84,282$

7. Bills Discounted
Bills discounted are accounted for as financial transactions rather than as purchased bills in accordance with JICPA
Industry Committee Practical Guideline No. 24 (March 17, 2022). The Group has the right to sell or pledge(repledge) such bills without any restrictions. These include commercial bills discounted and foreign bills bought
etc. The total face value of such financial transactions at March 31, 2022 and 2021 amounted to ¥2,414 million($19,720 thousand) and ¥2,912 million, respectively.
Contracts for overdraft facilities and loan commitments are contracts under which the Group lends money tocustomers up to their prescribed limits at the customers’ request as long as there are no violations of any of theconditions in the contracts. The aggregate unutilized balances within the limits of these contracts totaled ¥294,339
million ($2,404,533 thousand) and ¥287,946 million at March 31, 2022 and 2021, respectively, including thecontracts whose contractual periods were either less than one year or revocable at any time, in the amount of¥280,057 million ($2,287,860 thousand) and ¥280,808 million, respectively.
Since many of these commitments expire without being fully utilized, the unutilized amounts do not necessarily
represent future cash commitments of the consolidated subsidiaries. Most of these contracts include provisions
which stipulate that the consolidated subsidiaries can reject customers’ requests or decrease the contract limits foran appropriate reason, such as a change in financial situation and preservation of claims. At the inception of thecontracts, they obtain collateral in the form of real estate, securities, and so forth, if deemed necessary. Subsequently,
they, based on its internal rules, perform periodic reviews of the customers’ business results and may take necessary
measures such as reconsidering the terms and conditions of the contracts and/or requiring additional collateral or
guarantees.
8. Claims to Be Disclosed Under the Financial Revitalization Act and the Banking Act
With the “Cabinet Office Order to Partially Amend the Ordinance for Enforcement of the Banking Act” (Cabinet
Office Order No. 3, January 24, 2020) coming into effect on March 31, 2022, the Group has changed the asset
categories to be disclosed as “risk monitored loans” under the Banking Act to those to be disclosed as claims underthe Act on Emergency Measures for the Revitalization of the Financial Functions (the “Financial RevitalizationAct”).
Claims to be disclosed under the Financial Revitalization Act and the Banking Act are included in: corporate bonds (limited to those principal and interest are fully or partially secured and issued under
private placements as permitted in Article 2, paragraph 3 of the Financial Instruments and Exchange Act)
under “Securities,”
 “Loans and bills discounted,”
 “Foreign exchange assets,”
 Accrued interest and suspense payments under “Other assets,”
 “Customers’ liabilities for acceptances and guarantees” and securities when such securities are lending (limited to those under loan for use contracts or lease contracts).
The following table summarizes claims to be disclosed under the Financial Revitalization Act and the Baking Act.
18

Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Claims against bankrupt or quasi-bankrupt
obligors
Doubtful claims
Claims past due for three months or more
Restructured claims
Total¥ 8,615
23,896
1,441¥ 33,953¥ 10,771
19,834
1,024¥ 31,630$ 70,378
195,212
11,771$ 277,371

Claims against bankrupt or quasi-bankrupt obligors present loans to obligors in bankruptcy procedures, includingcommencement of bankruptcy proceedings, reorganization proceedings and rehabilitation proceedings, and otherrelevant claims.
Doubtful claims present loans, other than claims against bankrupt or quasi-bankrupt obligors, for which the obligors
have not yet entered into bankruptcy, but their financial conditions and business performance have deteriorated,
and therefore, it is highly probable that the principal and interest cannot be collected in accordance with contracts.
Claims past due for three months or more represent loans on which the payment of principal and/or interest has notbeen received for three months or more from the day after the due date, and which are not classified as “claims
against bankrupt or quasi-bankrupt obligors” or “doubtful claims.”
Restructured claims are loans which have been restructured to facilitate or support the reconstruction of obligors
who are experiencing financial difficulties, with the intention of ensuring the recovery of the loans by providing
more flexible repayment terms for the obligors (such as reducing the rate of interest, suspending the payment ofprincipal/interest, forgiving debt, etc.) and loans which are not classified in any of the above categories.
The amounts of claims are before deducting allowance for loan losses.
9. Tangible Fixed Assets
At March 31, 2022 and 2021, accumulated depreciation of tangible fixed assets was ¥29,347 million ($239,743
thousand) and ¥30,183 million, respectively.
The amounts of advanced depreciation by reduction of carrying amount of assets as of and for the years ended
March 31, 2022 and 2021 were as follows:
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
Balance as of the fiscal year-end
Amount applicable for the year

¥ 1,010
-

¥

1,010
-

$

8,250
-

10. Revaluation of Land
In accordance with the “Act on Revaluation of Land” (Act No. 34 of March 31, 1998), land used for business
operations of Shonai was revalued as of the date indicated below. The excess of revaluation to carrying amount at
the time of revaluation, net of income taxes corresponding to the excess which are recognized as “Deferred tax
liabilities for land revaluation,” is stated as “Revaluation reserve for land” under net assets.
Date of revaluation: September 30, 1999
The method of revaluation of asset set forth in Article 3, paragraph 3 of the “Act on Revaluation of Land”:
Fair values are determined based on the land price registered in the book of taxation on land stipulated in Article
2-3 of the “Order for Enforcement of Act on Revaluation of Land” (the “Ordinance”) (Cabinet Order No. 119 ofMarch 31, 1998), with price adjustments by shape and time and the appraisal value by an independent real estateappraiser as provided by Article 2-5 of the Ordinance.
The difference between the total fair value of land used for business operations revalued pursuant to Article 10 of
the “Act on Revaluation of Land” and carrying amount after revaluation of the relevant land at March 31, 2022
and 2021 was ¥1,169 million ($9,549 thousand) and ¥1,230 million, respectively.

1911. Borrowed Money and Lease Obligations
Borrowed money and lease obligations at March 31, 2022 and 2021 were as follows:
Thousands of
U.S. dollars

Millions of yen

Averageinterest rate
(%)

2022

2021

2022

¥ 343,800¥323,700$2,808,594

0.00

Current portion of lease obligations

23

44

187

1.24

Lease obligations, less current
portion

27

35

220

1.39

Borrowed money

Maturity
Apr. 2022
throughJun. 2025
Apr. 2023
throughDec. 2026

Note: Average interest rate is calculated based on the interests and the balances as of the balance sheet date by the weighted averagemethod.

Annual maturities of borrowed money and lease obligations within five years at March 31, 2022 are as follows:
Millions of yen

Due in one year
or less

Borrowed money
Lease obligations¥ 326,800
23

Due after one
year through twoyears

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

¥

¥

¥

¥

12,100
14

6

4,900
5

1

Thousands of U.S. dollars

Due in one year
or less

Borrowed money
Lease obligations$2,669,716
187

Due after one
year through two
years

$

98,848114

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

$

$

$

49

40,02940

8Note: Lease obligations are included in “Other liabilities” in the accompanying consolidated balance sheet.

12. Assets Pledged
Assets pledged as collateral at March 31, 2022 and 2021 consisted of the following:
Millions of yen
2021
2022
Securities

Thousands of
U.S. dollars
2022¥ 157,238¥ 145,927$ 1,284,519

Loans and bills discounted

239,959

256,845

1,960,289

Total¥ 397,197¥ 402,773$ 3,244,808

The liabilities secured by the above pledged assets at March 31, 2022 and 2021 consisted of the following:Thousands ofMillions of yen
U.S. dollars
2021
2022
2022
Payables under securities lending transactions¥ 52,825¥ 75,999

343,800

323,700

Borrowed money$

431,5412,808,594

In addition to the pledged assets listed above, the following assets are pledged as collateral of domestic exchangetransactions or as margins on futures contracts at March 31, 2022 and 2021:
20

Thousands of
U.S. dollars
2022

Millions of yen
2021
2022
Securities¥ 159,533¥ 175,186$ 1,303,267

8

8

65

35,07843,711

286,561

Cash and due from banks
Other assets

Note: Other assets include guarantee deposits in the amount of ¥366 million ($2,989 thousand) and ¥470 million at March 31, 2022
and 2021, respectively.

13. Retirement Benefit Plans
The Company and its consolidated banking subsidiaries have a defined contribution plan as well as a corporate
pension plan and a lump-sum payment plan, as defined benefit plans. In addition, additional retirement allowance
may be paid to employees when they retire. Further, a retirement benefit trust is established for the lump-sum
payment plan of consolidated banking subsidiaries of the Company.
On April 1, 2020, the Company and its consolidated banking subsidiaries unified the comprehensive retirement
plan and adopted the point system under which certain points are given based on the functional classes and titles
and employees are entitled to lump-sum payments based on the accumulated points at the time of the termination
multiplied by unit price by point.
Certain consolidated subsidiaries other than the consolidated banking subsidiaries have lump-sum payment plans
as defined benefit pension plans, and adopt the simplified method in calculating defined benefit liability andretirement benefit expenses.
Defined benefit pension plans(1) Reconciliation between retirement benefit obligations at beginning of year and end of year
Thousands of
U.S. dollars
Millions of yen
2022
Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial gains and losses arising during year
Retirement benefits paid¥

Retirement benefit obligations at end of year¥

11,788
394
14
(119)
(813)
11,2642021¥

11,902
387
16
295
(814)
11,788

¥

2022
$

$

96,299
3,218
114
(972)
(6,641)
92,018(2) Reconciliation between plan assets at beginning of year and end of year
Millions of yen
2022
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses
Contribution from employer
Retirement benefits paid¥

Plan assets at end of year¥

Note: Retirement benefit trust is included in plan assets.

21

11,908
178
230
94
(711)
11,700Thousands of
U.S. dollars

2021
¥

¥

10,346
155
709
1,396
(699)
11,9082022$$

97,279
1,454
1,878
767
(5,808)95,580(3) Reconciliation between retirement benefit obligations and plan assets at end of year and defined benefit
liability and defined benefit asset on the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen
2022
Funded retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Net balance of liability and asset recorded on the
consolidated balance sheets

2021

¥

11,043(11,700)
(657)
221

¥

11,572(11,908)
(335)
215

$

90,213(95,580)(5,367)
1,805

¥

(436)

¥

(119)

$

(3,561)Thousands of
U.S. dollars

Millions of yen
Defined benefit liability
Defined benefit asset
Net balance of liability and asset recorded on the
consolidated balance sheets

2022

¥

645
(1,081)

¥

614
(734)

$

5,269
(8,830)

¥

(436)

¥

(119)

$

(3,561)

Note: Retirement benefit trust is included in plan assets.

(4) Retirement benefit expenses and components thereofService costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs
Other
Retirement benefit expenses on defined benefit
plans

Millions of yen
2022
2021
¥
394
¥
387
14
16
(178)
(155)
206
187
(217)
(217)
12
8

Thousands of
U.S. dollars
2022
$
3,218
114
(1,454)
1,682(1,772)
98

¥

$

232

¥

226

1,895

Note: Retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are collectively included in“Service costs.”(5) Components of items recorded in remeasurements of defined benefit plans in other comprehensive income,before tax, are as follows:
Thousands ofMillions of yen
U.S. dollars
2021
2022
2022
Past service costs
¥
(217)
¥
(217)
$ (1,772)601
4,542
Actuarial gains and losses
556
¥
339
¥
383
$
2,769
Total
(6) Components of items recorded in remeasurements of defined benefit plans in accumulated othercomprehensive income, before tax, are as follows:
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
Unrecognized past service costs
¥
(652)
¥
(870)
$ (5,326)
595
310
Unrecognized actuarial gains and losses
38
¥
(614)
¥
(274)
$
(5,015)Total
22

(7) Components of plan assets(i) Percentages to total plan by major category are as follows:
2022
35.6%
26.5
4.7
0.0
6.2
27.0
100.0%

Debt securities
Equity securities
Cash and deposits
Call loans
General account
Other
Total

2021
32.2%
27.0
20.4
0.1
6.3
14.0
100.0%

Note: 37.8% and 38.0% of the total plan assets consisted of the retirement benefit trust established for the lump-sum
payment plan as of March 31, 2022 and 2021, respectively.

(ii) Determination of expected long-term rate of plan assets
The expected long-term rate of return on plan assets is determined considering current and expecteddistribution of plan assets and current and expected long-term rate of return derived from various
components of plan assets.
(8) Actuarial assumptions at end of year
2022
0.16% - 0.38%
1.50%
2.20% - 2.30%

Discount rate
Expected long-term rate of return on plan assets
Expected rate of salary increase

2021
0.05% - 0.25%
1.50%
2.20% - 2.30%

Defined contribution pension plans
The amounts to be contributed to the defined contribution pension plans of the Company and its consolidated
subsidiaries were ¥165 million ($1,347 thousand) and ¥171 million as of March 31, 2022 and 2021, respectively.
14. Contingent Liabilities
Guarantee liabilities for corporate bonds acquired through private offering (as defined in Article 2-3 of the Financial
Instruments and Exchange Act) among those classified as corporate bonds in “Securities” amounted to ¥25,969
million ($212,147 thousand) and ¥20,445 million at March 31, 2022 and 2021, respectively.

2315. Shareholders’ Equity
Japanese banks are required to comply with the Banking Act and the Companies Act. The Companies Act stipulates
that neither additional paid-in capital nor the legal reserve is available for dividends, but that both may be used toreduce or eliminate a deficit. Under the Banking Act, an amount which is at least equal to 20% of the aggregate
amount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicableto each fiscal period is to be appropriated to the legal reserve until the aggregate amount of the legal reserve andthe capital surplus account equals 100% of the amount of share capital. The Companies Act also provides that if
the aggregate amount of additional paid-in capital and the legal reserve exceeds 100% of the amount of sharecapital, the excess may be distributed to the shareholders either as a return of capital or as dividends subject to theapproval of the shareholders.
The maximum amount which the bank can distribute as dividends is calculated based on the non-consolidated
financial statements of the bank and in accordance with the Companies Act.
Movements in common stock, preferred stock and treasury stock during the years ended March 31, 2022 and 2021
are summarized as follows:
Number of shares (in thousands)
April 1, 2021
Increase
Decrease March 31, 2022
Issued shares:
Common stock
Preferred stock class B
Total
Treasury stock:
Common stock
Preferred stock class B
Total

Ref.

181,42125,000206,421-

163,279
23,750187,029

18,142
1,250
19,392(1), (2)31
31

15
12,50012,51529
12,50012,5291717(1), (4), (5)Notes: (1) Effective October 1, 2021, the Company implemented the stock consolidation, whereby 10 shares of its common stock andpreferred stock class B were consolidated to one share.
(2) Decrease in number of issued shares of common stock is due to the stock consolidation.
(3) Decrease in number of issued shares of preferred stock class B is due to 12,500 thousand shares of cancellation and 11,250
thousand shares of the stock consolidation.
(4) Increase in number of treasury stock of common stock is due to 2 thousand shares of purchase and 12 thousand shares ofrequest for purchase of less than one unit.
(5) Decrease in number of treasury stock of common stock is due to 28 thousand shares of the stock consolidation and 0
thousand shares of request for sale of less than one unit.
(6) Increase in number of treasury stock of preferred stock class B is due to 12,500 thousand shares of acquisition based on the
resolution at the Board of Directors’ meeting held on September 28, 2021. Decrease of 12,500 thousand shares is due tocancellation.

Number of shares (in thousands)
April 1, 2020
Increase
Decrease March 31, 2021
Issued shares:
Common stock
Preferred stock class B
Total
Treasury stock:
Common stockTotal

181,42125,000206,421--

181,42125,000206,421

30
30

1
1

0
0

31
31

Ref.

Note

Note: Increase in number of shares is due to request for purchase of less than one unit. Decrease in number of shares is due to request
for sale of less than one unit.

24

16. Revenue Recognition(1) Information on disaggregated revenue from contracts with customers
Thousands ofMillions of
U.S. dollars
yen
2022
2022
Fees and commissions:
Deposits and loans operations¥ 1,712$ 13,985
Foreign exchange operations
12,588
1,541
Securities-related operations
612
75
Agency operations
26,264
3,215
Custody/safe deposits operations
498
61
Other operations
9,410
1,152
Total
7,759
63,385
Other ordinary income
21,1992,595
Ordinary income from contracts with customers
84,592
10,355
Ordinary income other than above (Note 1)
40,738332,799
Ordinary income (Note 2)¥ 51,094$ 417,400
Notes: (1) It mainly consists of transactions related to financial instruments included in the scope of ASBJ Statement No. 10“Accounting Standard for Financial Instruments,” lease transactions included in the scope of ASBJ Statement No. 13“Accounting Standard for Lease Transactions” and fees and commissions received on origination or acquisition of financial
instruments.
(2) “Ordinary income” is defined as income less certain special income included in the accompanying consolidated statements
of income.

(2) Information on basis of revenue from contracts with customers
Information on basis of revenue from contracts with customers is omitted since it is described in Note “3.
Significant Accounting Policies, (12) Recognition of significant revenue and expenses.”
17. General and Administrative Expenses
General and administrative expenses for the years ended March 31, 2022 and 2021 included the following:

Salaries and allowances
Retirement benefit expenses
Outsourcing expenses

Millions of yen
2022
2021
¥ 11,089¥ 11,678
398
398
2,792
2,801

Thousands of
U.S. dollars
2022$ 90,589
3,251
22,808

18. Other Expenses
Other expenses for the years ended March 31, 2022 and 2021 included the following:

Loss on sale of equity securities, etc.

Millions of yen
2022
2021
¥ 2,232¥595

25

Thousands of
U.S. dollars
2022$ 18,233

19. Impairment Loss
For the years ended March 31, 2022 and 2021, with regard to assets from which cash flows declined due todecrease in income from operating activities, idle properties and assets which were determined to be sold, theCompany recognized the impairment loss by writing off the carrying amount of each asset to its respective
recoverable amount.
March 31, 2022
Category

Area

Main use

Description

Business assets

Within Yamagata
Prefecture

Banking office –eight locations

Land andbuildings

Business assets

Within Akita
Prefecture

Banking office –four locations

Land andbuildings

Business assets

Within Fukushima
Prefecture

Banking office –one location

Land

Impairment loss
Thousands ofMillions of yen
U.S. dollars
¥

398

1,903

26

212

¥

March 31, 2021

Impairment loss
Area

Business assets

Within Akita
Prefecture

Banking office –10 locations

Main use

Land andbuildings

Business assets

Within Miyagi
Prefecture

Banking office –three locations

Buildings

Business assets

Within Yamagata
Prefecture

Banking office –six locations

Land andbuildings

Business assets

Within Tokyo
Banking office –Metropolitan Area
one location

Buildings

Idle assets

Within Akita
Prefecture

Land andbuildings

Idle assets –four locations

Description

Total

3,251

233

Total

Category

$

659

$

5,383

Millions of yen
¥

444
201
199
14
30

¥

891

Banking offices of consolidated subsidiaries in the banking business are grouped by office which is the minimum
unit for management accounting purposes. Certain banking office group which operates in cooperation isconsidered as one unit, and banking offices located in the same building are also considered as one unit. For idle
assets and assets held for sale, each asset is considered as the minimum unit. Head office, administrative centersand others are considered as corporate assets since they contribute to generate future cash flows of multiple assets
or asset groups.
The Company and consolidated subsidiaries in other than the banking business are grouped by entity as a generalrule.
The recoverable amount of relevant asset group is measured at net selling price and calculated by deducting
estimated costs to sell from the amount which properly reflects the fair market value such as real estate appraisal
value or roadside land prices.

2620. Other Comprehensive Income
Reclassification adjustments and income tax effect for each component of other comprehensive income (loss) for
the years ended March 31, 2022 and 2021 were as follows:
Thousands of
U.S. dollars
Millions of yen
2022
2021
2022
Unrealized gain (loss) on available-for-salesecurities:
Gain (loss) arising during the year
¥ (13,425)¥
7,989$ (109,672)
Reclassification adjustments
2,022
1,191
16,518Before income tax effect(11,403)
9,181(93,154)
Income tax effect
3,460(2,782)
28,265
Unrealized gain (loss) on available-forsale securities(7,943)
6,399(64,888)
Deferred gain (loss) on hedges:
Adjustments arising during the year
264
(807)
2,156
Reclassification adjustments
Before income tax effect
264
(807)
2,156
Income tax effect
(80)
245
(653)
Deferred gain (loss) on hedges
(561)
1,503
184
Remeasurements of defined benefit plans:
Adjustments arising during the year
349
413
2,851
Reclassification adjustments
(10)
(30)
(81)
Before income tax effect
339
383
2,769
Income tax effect
(72)
(62)
(588)
Remeasurements of defined benefit plans
321
2,181
267
Total other comprehensive income
¥
6,159
$
(61,195)¥(7,491)
21. Cash and Cash Equivalents
A reconciliation of cash and due from banks in the accompanying consolidated balance sheets to cash and cash
equivalents in the accompanying consolidated statements of cash flows at March 31, 2022 and 2021 is summarized
as follows:
Thousands ofMillions of yen
U.S. dollars
2022
Cash and due from banks
Due from banks (excluding due from BoJ)
Cash and cash equivalents¥¥

725,949(3,057)
722,89127

2021¥ 612,331(3,029)¥ 609,301

2022$5,930,471(24,973)$5,905,489

22. Income Taxes
The tax effect of temporary differences which gave rise to significant portions of the deferred tax assets andliabilities at March 31, 2022 and 2021 consisted of the following:

Millions of yen
2021
2022
Deferred tax assets:
Allowance for loan losses
Defined benefit liability
Tax loss carryforwards
Depreciation
Write-down of securities
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets¥

Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Thousands of
U.S. dollars
2022

7,529
1,699
756
606
138
1,318
12,048(6,159)¥ 5,889

¥

7,374
1,727
1,078
663
138
1,452
12,435(5,945)$61,506
13,879
6,175
4,950
1,127
10,76798,423(50,314)

¥

6,490

$

48,108¥¥(7,974)(646)(8,621)(2,130)$(36,876)(6,151)(43,027)
5,073¥(4,514)(753)(5,267)621¥$

Reconciliation of the statutory tax rate to the effective tax rate for the years ended March 31, 2022 and 2021 isshown as below.
2022
2021
Normal effective statutory tax rate
30.58%
30.58%
Non-deductible expenses such as entertainment expenses
0.26
0.36
Non-taxable income such as dividend income(11.15)(7.26)Per capita inhabitant tax
0.87
0.95
Valuation allowance
4.56
4.59
Consolidation adjustments
10.54
6.36
1.59
2.03
Other
37.61%
37.25%
Actual effective tax rate28

23. Segment Information(1) Segment information
The Group has a single segment of banking business. Accordingly, segment information by reportable segment
is omitted.
(2) Related information
Information by service

March 31, 2022
Ordinary income from external customers

March 31, 2021
Ordinary income from external customers

March 31, 2022
Ordinary income from external customers

Lending¥ 18,587

Millions of yen
Securities
investment
Other¥ 17,985¥ 14,521¥

Lending¥ 19,534

Millions of yen
Securities
investment
Other¥ 20,526¥ 13,130

Total¥ 53,191

Lending$ 151,842

Thousands of U.S. dollars
Securities
investment
Other$ 146,924$ 118,625

Total$ 417,400

Total
51,094

Note: “Ordinary income” is defined as income less certain special income included in the accompanying consolidated statements
of income.

Geographic information(i) Ordinary income
Information about ordinary income by geographic area for the years ended March 31, 2022 and 2021 isomitted as ordinary income from external customers in Japan was more than 90% of ordinary income inthe consolidated statements of income.
(ii) Tangible fixed assets
Information about tangible fixed assets by geographic area as of March 31, 2022 and 2021 is omitted astangible fixed assets in Japan was more than 90% of “Tangible fixed assets” in the consolidated balance
sheets.
Information by major customer
Information by major customer for the years ended March 31, 2022 and 2021 is omitted since there was no
single external customer accounting for 10% or more of the consolidated ordinary income.

29

24. Related Party Transactions
Transactions between the Company’s consolidated subsidiaries and their directors and major shareholders as ofMarch 31, 2022 and 2021 and for the years then ended are as follows:
2022
Type

Companies,
etc. whose
voting rights
are owned by
the director(including thedirector oftheconsolidated
subsidiaries)
or his/her
relatives

Name

Address

Capital(Millions ofyen)

Akita Kubota
Co., Ltd.
Note (1)

Akita city,
Akita Pref.

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥195 million($1,593
thousand)

Loans andbills
discounted¥156 million($1,274
thousand)Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥1,029million($8,406
thousand)

Loans andbills
discounted¥1,380
million($11,273
thousand)Akita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥540 million($4,411thousand)

Loans andbills
discounted¥540 million($4,411thousand)Lending¥1,029million($8,406
thousand)

Loans andbills
discounted¥1,085
million($8,863
thousand)Guarantee forliabilities¥245 million($2,001
thousand)Customers’
liabilities for
acceptancesandguarantees¥293 million($2,393
thousand)

Netz Toyota
Akita Co.,
Ltd.
Note (2)Toyota Renta
Lease Akita
Co., Ltd.
Note (2)OkuyamaBoring Co.,
Ltd.
Note (3)

Yokote city,
Akita Pref.

¥40

Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Balance at
March 31,2022

Construction-

2021
Business

Ownershipsof votingrights (%)

Transaction
type

Transaction
amountAccount

Balance at
March 31,
2021

Type

Name

Address

Capital(Millions ofyen)

Relative ofthe director

Yuki
Fukuoka
Note (6)--Doctor-Lending¥88 million

Loans andbills
discounted¥121 million

Akita Kubota
Co., Ltd.
Note (1)

Akita city,
Akita Pref.

¥60

Agricultural
machines
distributor

0.0% directly
heldLending¥223 million

Loans andbills
discounted¥196 million

Akita city,
Akita Pref.

¥40

Car
distributor

0.0% directly
heldLending¥950 million

Loans andbills
discounted¥1,080
millionAkita city,
Akita Pref.

¥36

Rental andlease ofvehicles

0.0% directly
heldLending¥526 million

Loans andbills
discounted¥540 million

Lending¥1,164
millionLoans andbills
discounted¥1,139million¥225 million

Customers’
liabilities for
acceptancesandguarantees¥259 million

Companies,
etc. whose
voting rights
are owned by
the director(including thedirector oftheconsolidated
subsidiaries)
or his/her
relatives

Notes:

Netz Toyota
Akita Co.,
Ltd.
Note (2)Toyota Renta
Lease Akita
Co., Ltd.
Note (2)OkuyamaBoring Co.,
Ltd.
Note (3)

Yokote city,
Akita Pref.

¥40

Construction

Guarantee forliabilities(1) Akita Kubota Co., Ltd. is a subsidiary of Ishii Shoji Co., Ltd. Tadanari Ishii, who is a director of Hokuto which is a significant consolidated subsidiary of theCompany, and his relatives own the majority of voting rights of Ishii Shoji Co., Ltd.
(2) Tadanari Ishii, who is a director of Hokuto which is a significant consolidated subsidiary of the Company, his relatives and Ishii Shoji Co., Ltd. own the majorityof voting rights of Netz Toyota Akita Co., Ltd. Toyota Renta Lease Akita Co., Ltd. is a subsidiary of Netz Toyota Akita Co., Ltd.
(3) Kazuhiko Okuyama, a director and audit & supervisory board member of Hokuto which is a significant consolidated subsidiary of the Company, and his relatives
own the majority of voting rights of Okuyama Boring Co., Ltd.
(4) The transactions are with Hokuto, which is a significant consolidated subsidiary of the Company, and the trading conditions and policies are the same as those of
the transactions with general parties.
(5) The transaction amount is shown by the average balance.
(6) Yuki Fukuoka is a relative of Eikichi Saito who is a director of Hokuto which is a significant consolidated subsidiary of the Company.

There is no other related party transaction to be disclosed for the years ended March 31, 2022 and 2021.

30

25. Financial Instruments and Related Disclosures(1) Status of Financial Instruments(i) Policy on financial instruments
The Group is engaged in financial information services centering on banking business such as deposittaking and lending services for domestic corporate and individual customers and management of
securities such as debt and equity securities and investment trusts. The Group accepts risk as long as it
remains financially healthy and intends to improve its earning power in order to continue to conduct
these services.
The Group holds financial assets and liabilities exposed to the fluctuation risk of interest rates.
Accordingly, the Group conducts asset and liability management (ALM) and enters into derivativetransactions, if necessary, in order to avoid adverse effect by the interest-rate fluctuation.
(ii) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans and bills discounted to domestic corporate
and individual customers, which are exposed to credit risk arising from customers’ nonperformance ofcontractual obligations. In addition, securities, principally consisting of equity securities, debt securities,
investment trusts and investments in partnerships, are held for the purposes of net investment andstrategic investment. These financial assets are exposed to credit risk of issuers and fluctuation risk ofinterest rates and market prices.
Major financial liabilities, consisting of deposits and negotiable certificates of deposit, are principally
deposits accepted from domestic corporate and individual customers. They require attentions to liquidity
risk arising from concentrated cancellation of deposits, but most of those deposits are from individual
customers and accordingly, the risk is dispersed to small accounts. The liquidity risk is also controlled
by limiting the ratio of large deposit accounts to a certain level.
Derivative contracts which the Group enters into consist of interest rate swaps employed as part of ALM
and futures of debt securities held as available-for-sale securities, options, etc. These derivatives are notentered into for speculative purpose but mainly for hedging purposes.
(iii) Risk management system for financial instruments
The Group has established the “Basic Policy on Risk Management” and various risk control rules and asystem to conduct the risk management as follows:a. Credit risk management:
In accordance with the “Credit Policy” and “Credit Risk Management Rule,” for loans and bills
discounted, a credit control system has been established and maintained, including credit review by
individual contract, credit limit control, credit information control, internal ratings, retrospective
control including self-assessment, establishment of guaranty and security, countermeasures for problem
accounts, credit concentration risk management, etc. These credit controls are performed by the loan
departments in addition to each operating office, being reported to and discussed at the management
meetings on a regular basis. Furthermore, the status of credit control is examined by the internal audit
department.
b. Market risk management:
For market transactions, front office, middle office and back office, each of which is independent ofothers, are mutually controlled.
Interest rate risk management:
The Group manages the fluctuation risk of interest rates by ALM. In accordance with the “Market Risk
Management Rule,” the Group measures the exposure of interest rate risk, monitoring by gap analysis
and sensitivity analysis on a regular basis, and the monitoring results are reported to the management
meetings on a regular basis. In addition, the future countermeasures based on the analysis of current
status are discussed.
Foreign exchange risk management:
The Group manages foreign exchange risk, in accordance with the “Market Risk Management Rule,”by establishing total positions and loss limits or entering into hedging activities.
Price fluctuation risk management:
The Group manages price fluctuation risk in accordance with “Market Risk Management Rule.” Risk
31

exposures to securities are monitored for usage against the pre-set limit by the Risk Control Department
on a daily basis based on Value at Risk (VaR) and other risk indexes such as 10BVP and reported to the
management meetings.
Derivative transactions:With respect to derivative transactions, the Group segregates the duties of the departments responsible
for execution of transactions, verification of hedge effectiveness, and operation administration andconducts transactions under the management and control based on the handling rules.
Quantitative information about market risk:
Financial instruments not for trading purposes
The Group identifies and manages the market risk volume using VaR on a daily basis (monthly basiswith regard to interest rate risk volume of deposits, loans and bills discounted, etc.), since the Groupholds many financial instruments whose fair value fluctuates on a daily basis and such fluctuation
amount is greater than other risk categories. The market risk volume of the Group is controlled as thetotal amounts of market risk volume of Shonai and Hokuto which are the subsidiaries.
Market risk volume of the banking business of the Group at March 31, 2022 and 2021 and for the years
then ended was as follows:
Billions of yen
2022
As of theAverage
Maximum
Minimum
fiscal year-end
Due from banks, loans and bills
discounted and others
¥
0.0
¥
0.0
¥ 0.0
¥ 0.0
Securities:
27.1
29.9
26.0
27.9
Debt securities
6.3
7.3
5.6
6.9
Equity securities
4.9
6.8
4.1
6.6
Other
21.1
22.6
19.9
22.2
Billions of yen
2021

Due from banks, loans and bills
discounted and others
Securities:
Debt securities
Equity securities
Other

Average

Maximum

Minimum

As of thefiscal year-end

¥

¥

¥

¥

0.0
51.6
12.4
6.6
39.4

0.0
60.3
16.6
7.8
47.2

0.0
31.5
6.1
5.0
24.3

0.0
31.5
6.1
5.6
24.3

Millions of U.S. dollars
2022

Due from banks, loans and bills
discounted and others
Securities:
Debt securities
Equity securities
Other

Average

Maximum

Minimum

$

$

$

0.0
221.3
51.4
40.0
172.3

0.0
244.2
59.6
55.5
184.6

0.0
212.4
45.7
33.4
162.5

As of thefiscal year-end
$ 0.0
227.9
56.3
53.9
181.3

(*1) VaR is measured in principle using the variance/co-variance method.
(*2) Holding period is assumed to be 60 business days for higher market liquidity financial instruments such as Japanese
government bonds, municipal bonds, listed equity securities (excluding strategic investments), etc., 250 business days for32cross-holding shares of listed equity securities, and 125 or 250 business days for less market liquidity financial instruments,
due from banks, loans and bills discounted, etc.
(*3) 99 % is used for confidence interval, and 250 business days are used as extraction period of market data to measure
volatility.
(*4) The total amount does not agree with the sum of the individual amounts since correlation between the risk factors of debt
securities and equity securities is taken into account.
(*5) The current interest rate risk volume of deposits, loans and bills discounted, etc., represents decreasing interest rate risk,
not increasing interest rate risk. The increasing interest rate risk is managed as internal control. Therefore, the interest raterisk volume of due from banks, loans and bills discounted and others is considered to be zero.

Within the Group, each banking subsidiary implements backtests comparing the VaR of one day holding
period measured by the model and the actual loss, in order to verify the accuracy of the measurement
model of the market risk volume concerning the VaR of securities.
The measurement model currently in use is deemed to capture the market risk on the reasonably
accurate basis. However, the Group will take conservative actions as necessary when VaR is expected
to increase due to an increase in volatility.
In implementing the risk management using the VaR, the following particular points are paid attentionto:(a) Quantitative information such as VaR of market risk is determined based on the statisticalassumptions and may result in a different value depending on the different assumptions andcalculation methods.
(b) Quantitative information such as VaR of market risk is a statistical value calculated based on theassumptions and not intended to estimate the maximum loss amount. Profit or loss is assumed to
exceed VaR on the frequency corresponding to the confidence interval.
(c) Future market conditions may differ significantly from the past.
Financial instruments for trading purposes are excluded from the scope of disclosure, since theoutstanding balance at any banking subsidiary is very insignificant and the materiality of effect on the
management is quite limited.
c. Liquidity risk management:
The Group sets limits on liquidity risk management and reports to the management meetings,
monitoring the results on a daily basis in accordance with the “Liquidity Risk Management Rule.”(iv) Supplementary explanation about fair value of financial instruments
As certain assumptions are used in calculating the fair value of financial instruments, the result of suchcalculation may vary if different assumptions are used.
(2) Fair value of financial instruments
The carrying amount, the fair value and their difference as of March 31, 2022 and 2021 were as follows. Note that
equity securities without market prices or investments in partnerships are not included in the following table (SeeNote 1 below). In addition, the disclosure of carrying amount, fair value and difference is omitted for cash and duefrom banks, monetary claims bought, foreign exchange assets and liabilities and payables under securities lendingtransactions since their fair value approximates their carrying amount due to short maturities.

33

March 31, 2022
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)

Carrying amount¥589
51,717

Millions of yen
Fair value¥

589
51,717

Difference¥-

676,477-

Assets, total

676,477
1,712,140(13,185)
1,698,955¥ 2,427,739

1,723,414¥ 2,452,199

24,45924,459Deposits
Negotiable certificates of deposit
Borrowed money
Liabilities, total¥ 2,656,962
54,867
343,800¥ 3,055,630¥ 2,656,971
54,867343,789¥ 3,055,627

¥

¥

¥

¥

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Derivative transactions, total

March 31, 2021
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)¥

[3,342]183[3,158]Carrying amount¥553
47,358¥[3,342]183[3,158]¥¥¥Millions of yen
Fair value¥

553
47,358

8
(10)
(2)
-

Difference¥-

725,318-

Assets, total

725,318
1,731,224(13,130)
1,718,094¥ 2,491,325

1,747,376¥ 2,520,606

29,281
29,281

Deposits
Negotiable certificates of deposit
Borrowed money
Liabilities, total¥ 2,593,356
57,152
323,700¥ 2,974,209¥ 2,593,387
57,152
323,700¥ 2,974,240

¥

¥

¥

¥

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Derivative transactions, total¥

34[2,726][208][2,934]¥[2,726][208][2,934]

¥

¥

¥

30
30
-

March 31, 2022
Trading account securities:
Trading securities
Money held in trust
Securities:
Available-for-sale securities
Loans and bills discounted:
Allowance for loan losses (*1)

Thousands of U.S. dollars
Carrying amount
Fair value
Difference

$

4,811
422,489$

4,811
422,489$-

5,526,321-

Assets, total

5,526,321
13,986,929(107,711)
13,879,217$19,832,848

14,079,029$20,032,668

199,812
199,812

Deposits
Negotiable certificates of deposit
Borrowed money
Liabilities, total$21,705,432
448,223
2,808,594$24,962,257$21,705,506
448,223
2,808,504$24,962,233

$

$

$

$

Derivative transactions (*2):
To which hedge accounting is not applied
To which hedge accounting is applied
Derivative transactions, total$[27,301]
1,494[25,798]$[27,301]
1,494[25,798]

$
$

$

65
(81)
(16)
-

(*1) General and specific allowances for loan losses corresponding to loans and bills discounted are deducted.
(*2) Assets and liabilities arising from derivative transactions are presented in net amounts, and net liabilities are shown in squareparentheses.

(Note 1) For equity securities without market prices and investments in partnerships, their carrying amount is asfollows. These financial instruments are not included in “Available-for-sale securities” of the fair value informationof financial instruments.
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
Unlisted equity securities (*1) (*2)
¥ 1,434¥ 1,580$ 11,714
Investments in partnerships (*3)
2,473
2,346
20,202(*1) The fair value of unlisted equity securities is not disclosed 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) The Company recognized write-down of unlisted equity securities in an amount of ¥4 million ($32 thousand) and ¥110
million for the years ended March 31, 2022 and 2021, respectively.
(*3) The fair value of investments in partnerships is not disclosed in accordance with paragraph 27 of the “Implementation
Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019).

35

(Note 2) Repayment schedule of monetary receivables and securities with contractual maturities subsequent toMarch 31, 2022
Millions of yen

March 31, 2022

Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due from banks (*1)

¥ 690,980

¥

¥

¥

3,811

-

51,20589,364

Japanese government bonds

14,50013,000

Municipal bonds

13,562

41,589

Monetary claims bought
Securities:
Available-for-sale securities withmaturity:-

Due after sevenyears throughten years-

81,774¥-Due after ten
years
¥

-

85,129140,865

162,535

5,000－

51,00023,20035,316

38,58844,50650,620

Corporate bonds

5,567

14,75818,00910,915450

75,982

Other

17,57620,01523,44835,62544,90912,731

322,923

304,754274,222

181,110

199,801

345,674¥ 1,068,921¥ 394,119¥ 355,996¥ 266,239¥ 340,667¥ 508,209

March 31, 2022

Due in one
year or lessDue after one
year throughthree years

Due after three
years throughfive years

Due after five
years throughseven years

Due after sevenyears throughten years

Due after ten
years

Due from banks (*1)

$ 5,644,800

$

$

$

Loans and bills discounted (*2)
Total

Thousands of U.S. dollars

Monetary claims bought

-

-

-

$

-

$

-

31,133

-

-

-

-

-

418,307730,038

668,033

695,441

1,150,763

1,327,791

Securities:
Available-for-sale securities withmaturity:
Japanese government bonds

118,454

106,200

40,846-416,632

189,526

Municipal bonds

110,791

339,751

288,505

315,235

363,581413,528

Corporate bonds

45,478120,562

147,120

89,167

3,676

620,717

143,583

163,507

191,552

291,030

366,873

104,002

Loans and bills discounted (*2)

Other2,638,044

2,489,616

2,240,192

1,479,535

1,632,227

2,823,903

Total$ 8,732,301$ 3,219,663$ 2,908,226$ 2,174,977$ 2,782,999$ 4,151,695(*1) Due from banks without maturity is shown under “Due in one year or less.”(*2) Loans and bills discounted as of March 31, 2022 do not include ¥29,538 million ($241,303 thousand) of receivables such as those duefrom bankrupt, virtually bankrupt or potentially bankrupt borrowers since these are not certain when they can be collected or redeemed,and ¥54,114 million ($442,071 thousand) of receivables without maturity.

(Note 3) Repayment schedule of bonds payable, borrowed money and other interest-bearing liabilities subsequent
to March 31, 2022
Millions of yen

March 31, 2022

Due in one
year or lessDue after one
year throughthree years

Deposits (*)¥ 2,352,050¥

Negotiable certificates of deposit
Payables under securities lendingtransactions
Borrowed money
Total

97,205Due after
three years
through fiveyears¥

Due after
seven years
through ten
years

Due after five
years throughseven years

5,642

¥

-

¥

-

Due after ten
years
¥

-

54,867

-

-

-

-

-

52,825

-

-

-

-

-

326,800

12,100

4,900

-

-

-

¥ 2,786,542¥

109,30536¥

10,542

¥

-

¥

-

¥

-

Thousands of U.S. dollars

March 31, 2022

Due in one
year or lessDue after one
year throughthree years

Deposits (*)$19,214,524$

Negotiable certificates of deposit
Payables under securities lendingtransactions
Borrowed money
Total

Due after
three years
through fiveyears

794,093$

46,091

Due after five
years throughseven years

Due after
seven years
through ten
years

Due after ten
years

$

$

$

-

-

-

448,223

-

-

-

-

-

431,541

-

-

-

-

-

2,669,716

98,84840,029---$22,764,006$

892,941$

86,120

$

-

$

-

$

-

(*) Demand deposits are shown under “Due in one year or less” of deposits.

(3) Fair value hierarchy of financial instruments
The Group classifies the fair value of financial instruments into three categories depending on whether inputs fora fair value measurement are observable or significant.
Level 1 fair value:
Fair value measured by using quoted prices in active markets as observable inputs
for assets or liabilities subject to a fair value measurement
Level 2 fair value:
Fair value measured by using observable inputs other than those for Level 1
Level 3 fair value:
Fair value measured by using unobservable inputs
When multiple inputs of different categories are used in measuring fair value, the Group classifies the fair value
into a category to which the lowest priority is assigned.
(i) Financial instruments measured at fair value in the consolidated balance sheet

March 31, 2022
Money held in trust
Securities:
Trading securities:
Japanese government bonds, Municipal bonds
Available-for-sale securities:
Japanese government bonds, Municipal bonds
Corporate bonds
Equity securities
Other
Derivative transactions:Interest rate related
Currency related
Equity securities related
Assets, total
Derivative transactions:
Currency related
Liabilities, total

Millions of yen
Fair value
Level 2
Level 3

Level 1¥-

¥ 47,089

10

579

-

589

102,510231,293
99,848-333,804
125,918
16,26576,20916,26519,193

¥

Total

-

¥ 47,089

26,070--¥ 137,979

81
46
102
¥ 436,056¥ 26,070

81
46102¥ 600,107

¥
¥

¥
¥

¥
¥

¥
¥

57,015
-

37

-

3,388
3,388

-

3,388
3,388

March 31, 2022
Money held in trust
Securities:
Trading securities:
Japanese government bonds, Municipal bonds
Available-for-sale securities
Japanese government bonds, Municipal bonds
Corporate bonds
Equity securities
Other
Derivative transactions:Interest rate related
Currency related
Equity securities related
Assets, total
Derivative transactions:
Currency related
Liabilities, total

Thousands of U.S. dollars
Fair value
Level 2
Level 3

Level 1$-

$ 384,682

81

4,730

837,431

1,889,494
815,684

132,873
156,792

$

Total

-

-

4,811

-

2,726,934
1,028,657
132,873622,571

212,972--

465,770-$ 384,682$1,127,187

661
375
833
$3,562,257$ 212,972

661
375
833
$4,902,434

$
$

$
$

$
$

$
$

-

27,677
27,677--

27,677
27,677(*) The above table does not include investment trusts, etc., for which the transitional treatment prescribed in paragraph 26 of
the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019)are applied. The amount of the investment trusts, etc. in the consolidated balance sheet is ¥128,907 million ($1,053,075
thousand) as of March 31, 2022.

(ii) Financial instruments other than those measured at fair value in the consolidated balance sheet

March 31, 2022
Loans and bills discounted
Assets, total
Deposits
Negotiable certificates of deposit
Borrowed money
Liabilities, total

March 31, 2022
Loans and bills discounted
Assets, total
Deposits
Negotiable certificates of deposit
Borrowed money
Liabilities, total

Millions of yen
Fair value
Level 2
Level 3

Level 1

¥
¥

-

¥
¥

¥

-

¥ 2,656,971
54,867343,789¥ 3,055,627

¥

-

$
$

-

$
$

$

-

$ 21,705,506
448,223
2,808,504$ 24,962,233

38¥ 1,723,414¥ 1,723,414¥ 1,723,414¥ 1,723,414¥¥ 2,656,971
54,867343,789¥ 3,055,627¥-

Thousands of U.S. dollars
Fair value
Level 2
Level 3

Level 1

$

Total

-

Total

$ 14,079,029$ 14,079,029$ 14,079,029$ 14,079,029$$ 21,705,506
448,223
2,808,504$ 24,962,233$-

(Note 1) Explanation of valuation techniques and inputs used for fair value measurement
AssetsMoney held in trust
For financial instruments that are invested as trust assets in an independently managed money trust with the primary
purpose of managing securities, the fair value is determined using the price at the exchange or the price presented
by the financial institutions with which they are transacted. The fair value is classified into Level 3 when the impact
from unobservable inputs is significant, otherwise it is classified into Level 2.
Trading securities and available-for-sale securities
Trading securities and available-for-sale securities for which unadjusted quoted prices in active markets areavailable are classified into Level 1 fair value. Such securities mainly include listed equity securities and Japanese
government bonds.
Even if available quoted prices are used, securities are classified into Level 2 when the relevant markets are notactive. Such securities mainly include municipal bonds and corporate bonds.
When quoted prices are not available, the fair value is measured by using valuation techniques such as the present
value technique discounting future cash flows. The Group makes maximum use of observable inputs in thevaluations. Inputs include TIBOR, government bond yield, conditional prepayment rates, credit spreads,
probability of default, loss given default and others. When significant unobservable inputs are used, the fair value
is classified into Level 3.
The fair value of investment trusts, for which the publicized net asset value is used, is not included in the fair value
hierarchy of financial instruments in accordance with the transitional treatment prescribed in paragraph 26 of the“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4,2019).
Loans and bills discounted
For the loans and bills discounted with short remaining terms (within one year), the carrying amount is used as thefair value since the fair value approximates the carrying amount. For the loans and bills discounted without
predetermined maturity because of characteristics such as the loans and bills discounted being limited within theamount of the pledged assets, the carrying amount is used as the fair value since the fair value is deemed toapproximate the carrying amount considering the expected repayment term and interest rate conditions.
The fair value of loans and bills discounted with fixed interest rates, categorized by the type, internal rating andterm to maturity, is calculated by discounting the total of principal and interest using credit spreads by credit rating
and market interest rate.
The fair value of the loans and bills discounted with floating interest rates, categorized by the internal rating andterm to maturity, is calculated by discounting the total of principal and interest, basically until the interest maturity
date, using credit spreads by credit rating and market interest rate. Credit spreads are calculated by remaining term
based on accumulated default rate by credit rating and loss rate by borrower classification.
For loans and bills discounted due from bankrupt, virtually bankrupt or potentially bankrupt borrowers, loan losses
are estimated based on factors such as the expected amount to be collected from collaterals and guarantees. Since
the fair value of these items approximates the carrying amount net of the recorded amount of allowance for loan
losses, such carrying amount is used as the fair value.
The fair value is classified into Level 3 when the impact from unobservable inputs is significant, otherwise it isclassified into Level 2.
Liabilities
Deposits and Negotiable certificates of deposit
For demand deposits, the amount payable on demand as of the balance sheet date (i.e., the carrying amount) is usedas the fair value. The fair value of time deposit is measured at the present value calculated by discounting future
cash flows, grouping by certain maturity length. The discount rate used is the interest rate that would be applied to
newly accepted deposits. For deposits whose remaining term is short (within one year), the carrying amount is usedas the fair value since the fair value approximates the carrying amount. The said fair value is classified into Level2.
39

Borrowed money
The fair value of borrowed money is measured by discounting the aggregate amount of principal and interest,
categorized by the term to maturity, at market rates. For borrowed money whose remaining term is short (within
one year), the carrying amount is used as the fair value since the fair value approximates the carrying amount.
The said fair value is classified into Level 2.
Derivative transactions
For derivative transactions, the fair value measured by using unadjusted quoted prices in active markets is classified
into Level 1, which includes those of bond futures and interest rate futures. However, the Group’s derivativetransactions are mostly over-the-counter (“OTC”) transactions for which quoted prices are not available. Thus, thefair value is measured by using valuation techniques such as option pricing models or the present discounted value
technique, depending on the type of transactions or the term to maturity. Major inputs used for the valuation
techniques are interest rates, foreign exchange rates, volatilities and other. Adjustments are made to prices basedon the credit risks of counterparties and the Group’s banks. When unobservable inputs are not used or the impact
is not significant, the fair value is classified into Level 2, and such transactions include interest rate swaps andforeign exchange forward contracts. When significant unobservable inputs are used, the fair value is classified into
Level 3.
(Note 2) Information on Level 3 fair value, of financial instruments measured at fair value in the consolidatedbalance sheet(1) Quantitative information on significant unobservable inputs
Significant
unobservable
Valuation
inputsMarch 31, 2022
techniques
Securities:
Available-for-sale securities:
Corporate bonds
Probability ofdefault
Private placement bonds
Present value
Loan recovery
rate

Range of inputs

Weightedaverage of
inputs

0.04% - 100.00%

2.20%

0.0%- 33.50%

29.63%(2) Reconciliation from beginning balance to ending balance and valuation gain or loss recognized for the year
ended March 31, 2022
Millions of yen
Income or othercomprehensive income(“OCI”) recognized for thecurrent fiscal year

March 31, 2022

Beginning ofIncome (*1)
the year

OCI (*2)

Purchase,sale, issuance
Reclassiand
fication tosettlement, net Level 3 (*3)

Reclassification fromLevel 3 (*4)

End of theyear

Valuation gain
(loss)(*5)

Securities:
Available-for-salesecurities:
Corporate bonds
Private placement
bonds

¥

20,445

¥

1

¥

100

¥ 5,524

40

¥

-

¥

-

¥

26,070¥-Thousands of U.S. dollars
Income or othercomprehensive income(“OCI”) recognized for thecurrent fiscal year

March 31, 2022

Beginning ofIncome (*1)
the year

OCI (*2)

Purchase,sale, issuance
Reclassiand
fication tosettlement, net Level 3 (*3)

Reclassification fromLevel 3 (*4)

End of theyear

Valuation gain
(loss)(*5)

Securities:
Available-for-salesecurities:
Corporate bonds
Private placementbonds$ 167,020

$

8

$

816

$ 45,127

$

-

$

-

$ 212,972$-(*1) The amount is included in “Other operating income” in the consolidated statement of income.
(*2) The amount is included in “Unrealized gain (loss) on available-for-sale securities” of “Other comprehensive income” in the
consolidated statement of comprehensive income.
(*3) It presents the reclassification from Level 2 fair value to Level 3 fair value. None for the year ended March 31, 2022.
(*4) It presents the reclassification from Level 3 fair value to Level 2 fair value. None for the year ended March 31, 2022.
(*5) It presents valuation gain (loss) of financial assets or liabilities held at the consolidated balance sheet date, out of income
recognized for the current fiscal year.

(3) Fair value valuation procedures
Each division in charge performs a fair value measurement in accordance with the policies and procedures preparedby the risk management division of the Group. The measured fair value is verified by the independent valuation
division for the reasonableness of inputs and valuation techniques used for the measurement and appropriatenessof the level categories of the fair value. The verification result is reported to the risk management division every
period, and thus, the Group ensures the appropriateness of the policies and procedures of the fair value
measurement.
The fair value is measured using a valuation model that most appropriately reflects the nature, characteristics andrisk of each asset. In case where quoted prices obtained from third parties are used, the Group verifies thereasonableness of the prices by confirming the valuation techniques and inputs used and by applying appropriate
methods including comparison with the market prices of similar financial instruments.
(4) The impact on the fair value in case where any changes made to significant unobservable inputs
The significant unobservable inputs used in measuring the fair value of corporate bonds are probability of default
and recovery ratio. Significant increase (decrease) in probability of default results in significant decline (rise) in
the fair value, and significant increase (decrease) in recovery ratio. results in significant rise (decline) in the fairvalue. In general, changes in assumptions used for probability of default have reverse effects on assumptions
used for recovery ratio.

4126. Derivatives
Derivative transactions to which hedge accounting is not appliedWith respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fairvalue and related valuation gain or loss by transaction type at the balance sheet date and calculation method of thefair value were as follows. Note that contract amounts do not represent the market risk exposure associated withthe derivative transactions.
Interest rate related derivatives
There was no interest rate related derivative at March 31, 2022.
Interest rate related derivatives at March 31, 2021 were as follows:
Millions of yen
Contract amount
Total

March 31, 2021

Over one year

Fair value

Valuation gain
(loss)¥¥¥¥OTC transactions:Interest rate swaps:
Receive floating / Pay fix

¥

3,000

¥ 3,000

Total

14
14

14
14

Note: Above transactions are stated at the fair value, and the related valuation gain (loss) are reported in the consolidated statements
of income.

Currency related derivatives
Currency related derivatives at March 31, 2022 and 2021 were as follows:
Millions of yen
Contract amountMarch 31, 2022
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Total

Over one year

¥ 64,219
4,964

¥

-

Fair value

Valuation gain
(loss)¥ (3,368)26¥ (3,342)¥ (3,368)26¥ (3,342)

Millions of yen
Contract amountMarch 31, 2021
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Total

Over one year

¥ 84,456
3,773

¥

-

Fair value

Valuation gain
(loss)¥ (2,754)14¥ (2,740)¥ (2,754)14¥ (2,740)

Thousands of U.S. dollars
Contract amountMarch 31, 2022
OTC transactions:
Forward foreign exchange contracts:
Sold
Bought
Total

Total

Over one year

$ 524,622
40,552$-

Fair value

Valuation gain
(loss)$ (27,514)
212$(27,301)$ (27,514)
212$ (27,301)

Note: Above transactions are stated at the fair value, and the related valuation gain (loss) are reported in the consolidated statements
of income.

42

Derivative transactions to which hedge accounting is appliedWith respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fairvalue at the balance sheet date by transaction type and hedge accounting method and calculation method of the fairvalue were as follows. Note that contract amounts do not represent the market risk exposure associated with thederivative transactions.
Interest rate related derivatives
Interest rate related derivatives at March 31, 2022 were as follows:
March 31, 2022

Millions of yen
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction typeInterest rate
swaps:
Receive floating/ Pay fix

Major hedged item
Available-for-sale securities(Japanese government bonds)

¥

Total

Over one year

6,500

¥ 6,500

Total

Fair value

¥
¥

81
81

There was no interest rate related derivative at March 31, 2021.
March 31, 2022

Thousands of U.S. dollars
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction typeInterest rate
swaps:
Receive floating/ Pay fix

Major hedged item
Available-for-sale securities(Japanese government bonds)

$

Total

Total

Over one year

53,100$ 53,100

Fair value

$
$

661
661

Note: In principle, the deferred hedge accounting is applied in accordance with the JICPA Industry Committee Practical Guideline
No. 24 (March 17, 2022).

43

Equity securities related derivatives
Equity securities related derivatives at March 31, 2022 and 2021 were as follows:
March 31, 2022

Millions of yen
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts:
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

¥

Total

Over one year

1,599
-

¥

-

Fair value

¥
¥

Total
March 31, 2021

102
102

Millions of yen
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts:
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

¥

Total

Over one year

1,507
-

¥

-

Fair value

¥
¥

Total
March 31, 2022

(208)
(208)

Thousands of U.S. dollars
Contract amount

Hedge accounting
methodDeferral hedge
accounting

Transaction type
Equity forward
contracts:
Sold
BoughtMajor hedged item
Available-for-sale securities(Equity securities)

$

Total

Over one year

13,062-$-

Fair value

$
$

Total

833
833

Note: In principle, the deferred hedge accounting is applied in accordance with the JICPA Industry Committee Practical Guideline
No. 24 (March 17, 2022).

44

27. Amounts per Share
Amounts per share at March 31, 2022 and 2021 and for the years then ended are summarized as follows:Yen
Net assets
Net income:
Basic
Diluted¥2022
5,732.01¥

190.15148.592021
6,049.00$

176.41132.89U.S. dollars
2022
46.8263
1.5533
1.2138Notes: (1) Effective October 1, 2021, the Company implemented the stock consolidation, whereby 10 shares of its common stock
and preferred stock class B were consolidated to one share. Net assets per share, basic net income per share and diluted
net income per share are calculated on the assumption that the stock consolidation had been implemented at the
beginning of the year ended March 31, 2021.
(2) Net income per share—basic and net income per share—diluted for the years ended March 31, 2022 and 2021 were
calculated based on the following information:
Thousands ofMillions of yen
U.S. dollars
2022
Net income attributable to owners of parent —basic:
Amounts not attributed to common stock shareholders
O/W, dividends for preferred stock based on the resolution at theBoard of Directors’ meeting
O/W, interim dividends for preferred stock
Net income attributable to common stock owners of parent
Average outstanding number of shares of common stock(Unit: thousand shares)
Net income attributable to owners of parent —diluted:
Adjustments to net income attributable to owners of parent
O/W, dividends for preferred stock class B
Increase in number of shares of common stock (Unit: thousand shares)
O/W, preferred stock class B

¥

¥

3,506
57
28
28
3,448

¥

¥

18,134

¥

57
57
5,461
5,461

2021
3,314
114
57
57
3,200

$

2022
28,641
465

$

228
228
28,167

18,139

¥

114
114
6,802
6,802

$

465
465

(3) Net assets per share at March 31, 2022 and 2021 were calculated based on the following information:
Thousands ofMillions of yen
U.S. dollars
Total net assets
Amounts deducted from total net assets:
O/W, payment for preferred stock
O/W, dividends for preferred stock
O/W, non-controlling interests
Net assets attributable to common stock as of March 31, 2022 and2021
Number of shares of common stock as of March 31, 2022 and 2021
used to calculate net assets per share (Unit: thousand shares)2022¥ 109,233
5,343
5,000
28
314

2021
¥ 120,073
10,35010,00057
293

2022$ 892,353
43,64840,846228
2,565¥ 103,889¥ 109,722$ 848,697

18,124

18,138

28. Subsequent Events
Stock compensation plan
At the meeting of the Compensation Committee held on May 13, 2022, the Company reviewed the directors’
remuneration plan and resolved to introduce the restricted stock compensation plan (hereinafter the “Plan”).
(1) Purpose of introducing the Plan
This new compensation plan was implemented to give the Company’s directors (excluding outside directors andmembers of the Auditing Committee) and executive officers (collectively, the “Directors, etc.”) an incentive tocontinuously improve the Company’s corporate value, and to further share the sense of value with shareholders.

45(2) Outline of the Plan
The Company provides the Directors, etc. with monetary compensation receivables as the compensation under thePlan based on a resolution at the Compensation Committee, and the restricted shares are allotted to the Directors,
etc. in exchange for all of the monetary compensation receivables as contributions in kind.
The monetary compensation receivables are provided to the Directors, etc. with the condition that the Directors,
etc. agree with the aforementioned contributions in kind and enter into the restricted share allotment agreement,
which stipulates that the Directors, etc. shall not transfer, dispose or pledge the allotted shares with transfer
restrictions as collateral for certain period.
In addition, if any of the Directors, etc. retires or resigns any position of directors and executive offers of theCompany and directors and executive officers of the Company’s consolidated banking subsidiaries, from thecommencement date of the period of transfer restrictions to the day before the first Ordinary General Meeting of
Shareholders of the Company, the Company shall acquire all of the restricted shares held by him/her for free, unlessthere is any good reason approved by the Compensation Committee.
Other details with related to the allotment of the restricted shares are determined by the Compensation Committee
which determines the amount of monetary compensation receivables to each of the Directors, etc.
The Company plans to allot restricted shares of the Company to directors (excluding outside directors and membersof the Auditing Committee members) and executive officers of consolidated banking subsidiaries of the Company
as well as the Directors, etc.
Acquisition of treasury stock
At the Board of Directors’ meeting held on May 13, 2022, it was resolved to acquire its own shares as treasury
stock in accordance with the provision of Article 156 of the Companies Act as applied pursuant to the provision of
Article 165, paragraph 3 of the same act.
(1) Purpose of the acquisition of treasury stock
The Company will acquire treasury stock for the purpose of proving shares to persons eligible for the restricted
stock compensation plan.
(2) Outline of the acquisition(i) Class of stock to be acquired:
Common stock of the Company(ii) Total number of shares to be acquired: 100,000 shares (Upper limit)(Ratio to total number of issued shares less treasury stock: 0.55%)(iii) Total acquisition price¥130 million ($1,062 thousand) (Upper limit)(iv) Acquisition period
From May 16, 2022 to June 17, 2022(v) Acquisition method
Market purchase on the Tokyo Stock Exchange
Acquisition of treasury stock by a subsidiary
FIDEA Information & Research Institute, Inc. (hereinafter, “FIDEA Information & Research”), a consolidated
subsidiary of the Company, resolved to acquire its own shares as treasury stock at the Ordinary General Meetingof Shareholders held on June 14, 2022.
(1) Purpose of the acquisition of treasury stock
FIDEA Information & Research will acquire its own shares from shareholders other than the Company, aiming tobecome a wholly owned subsidiary of the Company, for the purpose of strengthening the corporate governancestructure of the Group.
(2) Outline of the acquisition(i) Class of stock to be acquired:
Common stock of FIDEA Information & Research(ii) Total number of shares to be acquired: 18,000 shares (Upper limit)(Ratio to total number of issued shares: 15%)(iii) Total acquisition price¥234 million ($1,911 thousand) (Upper limit)(iv) Acquisition period
From July 1, 2022 to March 31, 2023(v) Acquisition method
OTC transactions outside the markets

4629. Non-Consolidated Financial Statements of Shonai Bank and Hokuto Bank as of March 31, 2022 and 2021
and for the Years Then Ended
The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2022 and 2021
Millions of yen
2022
2021
Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Prepaid pension cost
Customers’ liabilities for acceptances and guarantees
Other assets
Allowance for loan losses¥

Total assets

426,778
1,599
426
25,654343,309854,611
1,000¥

348,693
1,583
417
21,253397,258
870,494
1,050

Thousands of
U.S. dollars
2022$

3,486,463
13,062
3,480
209,5742,804,582
6,981,545
8,169

8,286
4,877
12
956

8,304
5,058
16
237
992

67,69039,841
98
7,809

687
65
42
5,697
17,348(7,059)

932
65
33
5,926
17,363(6,889)

5,612
531
343
46,540141,720(57,666)¥ 1,684,296¥ 1,672,793$ 13,759,464(Continued)

47

The Shonai Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2022 and 2021
Millions of yen
2022
2021
Liabilities:
Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Provision for bonuses for directors and other officers
Provision for retirement benefits
Provision for reimbursement of deposits
Provision for contingent loss
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Other liabilities

Thousands of
U.S. dollars
2022¥ 1,297,919
42,64749,315
213,200
18
18
147
32
272
1,835
416
5,697
8,313

¥ 1,262,562
45,84568,658209,000
7
10
146
60
302
3,289
454
5,926
8,805

$ 10,603,047
348,394402,867
1,741,687
147
147
1,200
261
2,222
14,9903,398
46,54067,911

1,619,836

1,605,068

13,232,873

8,500
20,30826,45555,263
8,281
914
9,196

8,500
20,30825,424
54,232
12,492
1,000
13,492

69,438
165,901
216,117451,458
67,6497,466
75,124

Total net assets

64,46067,725526,590

Total liabilities and net assets¥ 1,684,296¥ 1,672,793$ 13,759,464

Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments(Concluded)

48

The Shonai Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2022 and 2021
Millions of yen
2022
2021
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income¥

Thousands of
U.S. dollars
2022

9,406
5,708
407
3,894
1,710
2,805

¥ 10,098
8,795
93
3,886
1,944
2,393

23,933

27,211

195,515

91
2
27
0
(2)
2,347
2,633
12,303
3,612

249
6
40
0
48
2,419
4,957
12,993
3,673

743
16
220
0
(16)
19,17321,509100,506
29,507

Total expenses

21,01624,388

171,685

Income before income taxes

2,916

2,822

23,821

Income taxes:
Current
Deferred

1,025
334

1,363
(107)

8,373
2,728

1,359

1,256

11,102

Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses

Total income taxes
Net income

¥

49

1,557

¥

1,566

$

$

76,84046,6303,324
31,811
13,96922,914

12,719

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2022 and 2021

Assets:Cash and due from banks
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Other assets
Allowance for loan losses

Millions of yen
2022
2021

Thousands of
U.S. dollars
2022

298,597
941
163
26,062336,979
872,628962

262,658
973
135
26,105331,887
874,866553$ 2,439,318
7,687
1,331
212,9072,752,871
7,128,731
7,858

4,325
5,955
21
1,169

4,842
6,394
23
697

35,332
48,647
171
9,549

1,212
62
464
2,288
12,27729,019(4,927)

1,125
62
428
882
13,49235,893(4,840)

9,901
506
3,790
18,691
100,294
237,063(40,249)¥ 1,588,204¥ 1,556,182$ 12,974,462¥

Total assets¥(Continued)

50

The Hokuto Bank, Ltd.
Non-Consolidated Balance Sheets
March 31, 2022 and 2021
Millions of yen
2022
2021
Liabilities:
Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Provision for bonuses for directors and other officers
Provision for retirement benefits
Provision for reimbursement of deposits
Provision for contingent loss
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Other liabilities

Thousands of
U.S. dollars
2022¥ 1,364,255
12,2193,509
130,600
40
14
274
93
187
797
12,277
13,520¥ 1,336,786
11,307
7,340
114,700
9
10
236
179
141
914
13,492
12,273$11,144,963
99,82028,665
1,066,906
326
114
2,238
759
1,527
6,510
100,294
110,448

1,537,788

1,497,391

12,562,601

12,50014,352
20,09546,948
2,020
(203)
1,650
3,468

12,50019,99919,01951,519
5,745
(387)
1,915
7,272

102,115
117,245
164,161
383,530
16,501(1,658)13,47928,331

Total net assets

50,416

58,791

411,861

Total liabilities and net assets¥ 1,588,204¥ 1,556,182$12,974,462

Total liabilities
Net assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Unrealized gain on available-for-sale securities
Deferred loss on hedges
Revaluation reserve for land
Total valuation and translation adjustments(Concluded)
51

The Hokuto Bank, Ltd.
Non-Consolidated Statements of Income
Years Ended March 31, 2022 and 2021

Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other
Fees and commissions
Other operating income
Other income

Millions of yen
2022
2021

Thousands of
U.S. dollars
2022

¥

$

Total income

9,113
5,655
280
4,111
1,264
1,736

¥

9,444
4,163
42
3,890
1,801
2,350

74,44646,1972,287
33,583
10,325
14,181

22,161

21,692

181,039

44
1
14
0
3
(21)
1,536
3,890
12,017
2,855

108
2
11
0
1
26
1,630
3,466
12,463
2,269

359
8
114
0
24
(171)
12,547
31,77898,17023,323

Total expenses

20,343

19,980166,187

Income before income taxes

1,818

1,711

14,851

378
26

408
144

3,087
212

405

553

3,308

Expenses:
Interest expenses:
Interest on deposits
Interest on negotiable certificates of deposit
Interest on payables under securities lending transactions
Interest on borrowings and rediscounts
Interest on interest rate swaps
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses

Income taxes:
Current
Deferred
Total income taxes
Net income

¥

52

1,413

¥

1,158

$

11,543