ANNUAL REPORTOverview of Juroku Financial Group

irectoryData
CDorporate

G roup Management Philosophy

Organizational Structure

wholly owned subsidiary of Juroku Financial Group or The Juroku Bank, and a group management system was established for the
purpose of strengthening consolidated profitability and group governance.

(as of June 30, 2022)

Juroku Financial Group

Investment Ratio(Financial Group / Bank)The Juroku Bank

100%

Banking service

Juroku Business Service Co., Ltd.

100%

Clerical work service

Juroku Credit Guarantee Co., Ltd.

100%

Credit guaranty service

Juroku Research Institute Co., Ltd.

100%

Business consulting service, Survey and research service

Juroku Tokai Tokyo Securities Co., Ltd.

60%

Financial instruments service

Juroku Card Co., Ltd.

100%

Credit card flotation service

Juroku Lease Co., Ltd.

100%

Leasing service

Juroku Densan Digital Service Co., Ltd.

60%

Payments and digital solutions service

NOBUNAGA Capital Village Co., Ltd.

100%

Operation and management of Investment business Limited partnership

Kanda Machi Okoshi Co., Ltd.

99%

Consulting services related to local revitalization

Business Lines

Audit & Supervisory
Committee

Deputy President

Executive Officers(4 Offices)
Head Office8-26, Kandamachi,
Gifu
DirectorGifu-shi,
and Managing
Telephone: +81-58-265-2111
Executive Officers
Ogaki Branch
1-26, Takayacho, Ogaki-shi, Gifu
Director andTelephone: +81-584-78-2161

Ichinomiya Branch
1-2-5,
GroupSakae,
Administration Management Division
Ichinomiya-shi, Aichi
Telephone: +81-586-73-5116
Nagoya-ekimae Branch
3-28-12,
Meieki, Planning Division
Group Corporate
Nakamura-ku, Nagoya-shi, Aichi
Telephone: +81-52-561-5431
Group Digital Management OfficeGroup Risk Management Division

Executive Officers

Overseas Network
Shanghai Representative OfficeDirectors

18th Floor, Hang Seng Bank Tower,
1000 Lujiazui Ring Road, Pudong New Area,
Shanghai, People’s Republic of China
Telephone: +86-21-6841-1600
Facsimile: +86-21-6841-1881
Chief Representative
Kazuhiro Mitsuishi

Group Sales Management Division

Senior Managing Executive Officers

Sustainability Management Office

Managing Executive Officers
Executive Officers
Group Management Audit Division

Representative Office Registered in Singapore

E xternal ratings
Both Juroku Financial Group and The Juroku Bank have obtained long-term issuer rating “A +” from the Japan Credit Rating
Agency, Ltd. (JCR).
Rated companies

Juroku Financial Group

About The Juroku Bank

Long-term issuer rating

A+ (New)

A→A+ (Upgrade)

Rating outlook

StableStableOctober 1, 2021

Branches Handling
Foreign Exchange
Director and Senior Managing
Business

Solutions Business Division International Office

Shareholders Meeting

After our transition to a holding company structure, as a general rule, each group company except joint ventures was made a(as of June 30, 2022)

PresidentGroup Management Meeting

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan
Telephone: +81-58-265-2111

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan P.O. Box 40
Telephone: +81-58-265-2111
Facsimile: +81-58-266-1698
SWIFT Address: JUROJPJ T
Head of Office
Hiroyuki Kawase

G roup Structure

Rating date

Head Office

Board of Directors

Our group management philosophy is inherited from the basic philosophy of The Juroku Bank, and represents thefundamental spirit of the Juroku Financial Group and the foundation for all of our officers’ and employees’ activities. It
consists of three parts: Mission, Vision, and Values. When putting our philosophy into practice, the specific conduct ofour staff is governed by the Code of Conduct.

Chairman(as of June 30, 2022)

Audit & Supervisory Committee’s Office

Gifu Prefecture (106)50 Raffles Place #38-06 Singapore Land
Tower, Singapore 048623
Telephone:Group+65-6222-6616
companies
Facsimile: +65-6532-6616
Chief Representative Name
Masahiko Takai
The Juroku Bank, Ltd.
Bangkok Representative Office
JurokuResearchCo.,thFloor Institute
CRC Tower,
AllLtd.
Seasons
Unit 6 25(as of June 30, 2022)

Address

8-26 Kandamachi, Gifu-shi
Banking service+81-58-265-2111
Aichi Prefecture (53)7-12 Kandamachi, Gifu-shi
Business consulting service, Survey and research
Mie
Prefecture (1)+81-58-266-1916
service7-12 Kandamachi, Gifu-shi Osaka Branch
Financial instruments service+81-58-266-4516
Total 162Domestic Offices
7-12 Kandamachi, Gifu-shi
Credit card flotation service+81-58-263-1116
7-12 Kandamachi, Gifu-shi
Leasing service+81-58-262-3116
7-12 Kandamachi, Gifu-shi
Payments and digital solutions service+81-58-262-1116
6-11 Kandamachi, Gifu-shi
Operation and management of Investment+81-58-264-5516
business Limited partnership
6-11 Kandamachi, Gifu-shi
Consulting services related to local revitalization+81-58-262-1613
34 Nakatakeyacho, Gifu-shi
Clerical work service+81-58-266-2682
7-12 Kandamachi, Gifu-shi
Credit guaranty service+81-58-266-1616

Place, 87/2 Wireless Road, Lumpini, PhaJuroku
TokaiTokyoThailand
Securities
Co., Ltd.
tumwan,Bangkok,
10110
Telephone: +66-2655-8016
JurokuCardCo., Ltd.
Facsimile:+66-2685-3016
Chief Representative
JurokuLease Co., Ltd.
Yukiyasu Horie
JurokuDensan Digital
Hanoi Representative
OfficeService Co., Ltd.
Unit 1206, PacificPlace,Village Co., Ltd.
NOBUNAGA
Capital
83B Ly Thuong Kiet Street,
Hoan Kiem
City, Vietnam
Kanda
MachiDistrict,OkoshiHanoi
Co., Ltd.
Telephone: +84-24-3927-1616
Facsimile:+84-24-3927-1166
JurokuBusiness
Service Co., Ltd.
Chief Representative
Hiroyasu
Kawahata
JurokuCreditGuarantee Co., Ltd.

CONTENTS

Business
Lines
Tokyo
BranchShanghai
Hanoi
Bangkok

Singapore
22 Environmental
Conservation and Climate Change Actions

35 Consolidated Statement of Changes in Equity

1 Corporate Data

26 Corporate Governance

36 Consolidated Statement of Cash Flows

2 Message from the President

27 Risk Management Structure / Compliance System

Overview of Juroku Financial Group8

Dialogue between Chairman andOutside Director

12 Operational and Financial Highlights

31 Stakeholder Engagement
32

Board of Directors and Audit &Supervisory Board Members

16 History of Juroku

33 Consolidated Balance Sheet

18 Potential of the Local Community

Consolidated Statement of Income /34
Consolidated Statement of Comprehensive Income

20 Initiatives for Sustainability

37 Notes to Consolidated Financial Statements
57 Independent Auditors Report
62 Corporate Data
63 Directory163

M essage from the President

Aiming to become a “Frontrunner”
that helps our customers and local
community
The Juroku Bank Ltd. was established in
October 1877. Since its establishment, The
Juroku Bank has continued growing
together with the local community for 144
years.
Then on October 1, 2021, The Juroku
Bank established Juroku Financial Group,
Inc. for the purpose of transforming its
business model to a provider ofcomprehensive financial services to theregion, and made a transition to a holding
company structure.
The transition to a holding company
structure marked a major reorganizationthat can be described as a second founding.
What prompted the decision to make thistransition was the changing environment
surrounding regional financial institutions.
The environment surrounding regional
financial institutions has changed
significantly, with the prolonging lowinterest policy, intensifying competition
across industries and business categories,
and increasing uncertainty. Amid thesefactors, it has become difficult to accurately
anticipate what lies ahead, and financial
institutions are being required to conduct
management by assuming that they cannot
anticipate the future. In suchcircumstances, it is becoming difficult to
expect the so-called deposit and loanbusiness which has supported our growthto achieve high growth, in terms of bothrevenue and function. In a prolonged lowinterest environment, banks are facing
difficulty in increasing revenue forbusinesses centered on deposits and loans.
Meanwhile, regarding growth as simply

2

procuring funds and aiming at businessexpansion is a thing of the past.
Given a shrinking population and theimminent maturity phase, regional
institutions are required to not only lendmoney, but also to mull over the customer’svision together with them and provide
added value, in order to demonstrate thevalue of our existence.
We believe that, going forward, it will
be vital to make efforts for the growth of
our customers and the local community
through the initiatives for sustainability,
carbon neutrality, SDGs, and regional
revitalization, as well as the provision of
comfortable services that support digitaltransformation (DX), by not only
demonstrating our financial intermediaryfunctions but also leveraging the strengthsof a regional financial institution consistingof regional human resources, informationand network.
Through the transition to a holding
company structure, we strive to expand ourbusiness domain such as by establishing
new businesses, strengthen collaborationand optimize the allocation of resources
within the Group by reforming the thinking
and behavior of our officers and employees,
enhance auditing and supervisory functions,and accelerate business execution.
By leveraging the benefits of such aholding company structure and becoming a“Frontrunner” that helps our customers andthe local community, we will contribute to
the realization of a sustainable society.

Juroku Financial Group, Inc.

Naoki Ikeda
Representative Director and President

3Our Mission is to “Achieve Growth and Prosperity for Our Customers and the Local Community”
In making a transition to a holding company structure, we
inherited the basic philosophy of The Juroku Bank and newly
formulated our group management philosophy.
As the basic philosophy of The Juroku Bank had long been
inherited, our group management philosophy is placed as thefundamental spirit of the Juroku Financial Group and thefoundation for all of our officers’ and employees’ activities so that
it will be inherited for many decades.
Our Mission as the highest concept, which is also the purposeof the Juroku Financial Group in the region, would be “achieving
growth and prosperity for our customers and the local
community.” Considering the Group’s purpose in the region, it is
to contribute to the sustainable growth and development of ourcustomers and the local community. We will not survive if we are
not needed by the local community. In order to express ourcommitment to our customers and the local community, we madeour Mission to be “achieving growth and prosperity for ourcustomers and the local community.”
Our Vision for achieving our Mission is to be aGroup“comprehensive financial group that builds a future with local
communities and achieves sustainable growth with local
economies.” With the recent rise in momentum toward SDGs and
ESG, initiatives for sustainability have become important. We set
our Vision to be a “comprehensive financial group that builds afuture with local communities and achieves sustainable growthwith local economies” in order to contribute to the realization of asustainable society or to make proactive efforts on a Group-widebasis.
In addition, our Values, the organization’s common values
which form the foundation of our Mission and Vision, consist of“Trust & Integrity,” “Creation & Innovation,” and “Diversity &Inclusion.”
Regional financial institutions and local communities sharethe same destiny. We believe that it is important to act as though
the matter is our own concern so as to contribute to “achieving
growth and prosperity for our customers and the local community”
with our group management philosophy as the foundation at all
times.

Achieving growthand prosperity for

Missionour customers andthe local community

Management

We aspire to be a comprehensive
financial group that builds afuture with local communities
and achieves sustainablegrowth with local economies

Philosophy

in order to contribute to the realization of a

VisionValuesCode of
Conduct

Code of
Conduct

sustainable society.

Trust &
Integrity

Creation &Innovation

Diversity &Inclusion

We will act with integrity tosecure the trust and business of
our customers and the local
community

We will respond to every changewith innovation anddetermination, and create newvalue for the next generation.

We will maximize our group’s
strengths by embracing
individuality and leveraging
diversity.

Engagement Cycle
Taking on the challenges faced by our customers
and local communities, and resolving them together.

Juroku Financial Group: Creating the future of the region together

To be Needed and Respected by the Local Community
Many of our customers in Gifu and Aichi prefectures, the main areas
where the Group operates, prefer sound management. As such, weare required to provide them not only cash flow support programs
but also core business support tailored to their individual situations.

4

In particular, in the current situation where a post-COVID-19
pandemic world is anticipated, we feel that expectations for theGroup are shifting to support other than the provision of funds.
For example, in the region concerned where manufacturing

thrives, many customers face the challenge of business succession
as they lack successors. From about 20 years ago, The Juroku Bankhas been supporting business succession. Looking at the present
situation, we believe that we need to further enhance this service.
In addition, we feel that recently there has been an increasing
number of customers who are aware of carbon neutral issues andrequire support. The Group entered into a business alliance with aconsulting firm that has knowledge in carbon neutrality mattersand started providing consulting services to support customers’
decarbonization management.
Other than these issues, we will grasp the needs of our customers

as a regional comprehensive financial group to provide detailed
custom-made responses to solve issues, including responses to SDGs
and human resource referrals.
The Group proactively takes such initiatives because it has asound sense of urgency that the Group will not be able to survive
in this region going forward unless it is “needed and respected by
the local community.”
We believe that it is essential for us to share issues of interest
with customers in a timely manner, such as business succession,
carbon neutrality and SDGs, and appropriately provide services,
also for the purpose of our own sustainable growth.

Expanding Business Domains to Take on New Challenges
In order to be “needed and respected by the local community,” weare seeking to be the “Frontrunner” of the region while aiming at
helping our customers and the local community more than ever.
Under the holding company structure, the Group has worked
to support its customers’ core businesses by concentrating theGroup’s management resources, while at the same time creating abusiness structure that can respond flexibly to changes in thebusiness environment as a “Frontrunner” of the region.
On April 1, 2021, ahead of the transition to a holding
company structure, NOBUNAGA Capital Village Co., Ltd. wasestablished as a company specializing in investment for the
purpose of actively supporting and nurturing venture companies.
In addition, on March 1, 2022, Juroku Computer Service Co.,
Ltd. was made a joint venture withDensan System Holdings Co., Ltd.
and commenced operations as thedigital transformation company Juroku
Densan Digital Service Co., Ltd., withthe aim of promoting digitalizationand digital transformation of regional
companies and local governments
and improving the Group’s digitaltransformation capabilities.
Moreover, on April 1, 2022,
the community development
company Kanda Machi Okoshi Co.,
Ltd. was established with a view
to further promoting consulting forregional total design and regional
revitalization. Through theseand other initiatives, the Group
has steadily created a businessstructure to expand its businessdomains.

Juroku Densan Digital Service and Kanda Machi Okoshi wereboth established with a license of a non-banking service
enhancement company stipulated in the amended Banking Act
which took effect in November 2021, and will be able to engage
in a wider range of operations.
We firmly believe that these companies which were
established around the time of transition to a holding company
structure will definitely grow to become companies that help
customers and the local community.
Now that the Group has developed its business structure, we
intend to use the fruits of our efforts to take on the challenge ofvarious financial businesses to achieve growth and prosperity forour customers and the local community.

5

Nurturing Human Resources to Break Out of the Shell of Banking

Growing Together with Partners in the Relationship of Trust and Mutual Understanding

We believe that, in order to break out of the conventional businessmodel centered on the deposit and loan business and maximize
group synergy to evolve into a “provider of comprehensive
financial services to the region,” it is paramount to nurture“human resources” since they comprise the Group’s largest andconstant management resource.
We need to further nurture human resources that can endeavor
to build strong relations with customers and solve a wide range ofissues, such as human resources that can work actively for the sakeof customers by involving many people both within and outside of
the Group.
It is certainly convenient to have non-face-to-face contact
points such as online interviews which have been widely
conducted following the spread of COVID-19. However, we are

We recognize that there are several patterns of a growth strategy
that regional financial institutions will likely follow to expand
businesses.
One pattern is management integration in the same industry
that expands scale through a merger with other banks and othermeans. The other pattern is a business alliance in the same
industry to find synergies in the alliance with another bank. These
strategies are chosen by various regional financial institutions. We
have chosen the third path of cooperation between different
industries that deepens alliance with different industries with aview to achieving growth through business cooperation andestablishment of joint ventures.
We believe that such cooperation between different industries
is an essential strategy for aiming at becoming a more sustainable
and stronger regional comprehensive financial group that breaks
out of the shell of the conventional business model centered on thedeposit and loan business, while leveraging our major strengths.
These strengths consist of an “extensive and deep customer base,”“information accumulated on a daily basis,” and the “extensive
human network” which we have built over the course of ourhistory.
For example, Juroku Tokai Tokyo Securities Co., Ltd. (“Juroku
TT Securities”) commenced operations through a joint venturewith Tokai Tokyo Financial Holdings, Inc. in June 2019. Whileintent on nurturing human resources whom people would like tomeet and consult in person.
To that end, we are focusing our efforts on “nurturing humanresources that can build relationships of trust with customers”
through training sessions for young and mid-career employees,
including shifting from the conventional input-type to outputtype approach.
In addition, we will carry out “active inter-Group personnel
exchange including young and mid-career employees,” and the“active and appropriate appointment to higher posts,” in an effort
to revitalize the organization and further strengthen Group
cooperation.
Upon the start of operations of Juroku Densan Digital Service
and Kanda Machi Okoshi, in-house job posting was implemented
mainly for young employees. As a result, a total of 130 people
applied for the two companies, far exceeding the capacity limit.
Seeing these results, we feel very encouraged by how highly
motivated employees were to advance their careers. In addition, we
also realized that the message that the Group is breaking out of
the shell of the banking-centered business with the aim to become
a “provider of comprehensive financial services to the region” isspreading among young employees as well.
Going forward, it will be essential to nurture a large numberof human resources to “break out of the shell of banking,” and tothat end, it is necessary to “nurture human resources that brokeout of the shell of conventions.” We will engage in these efforts as
the most important management task.

putting into practice high-value-added proposals through banksecurities cooperation with The Juroku Bank, Juroku TT
Securities has produced strong results, such as substantially
increasing both the number of accounts and the deposit asset
balance.
Going forward, we will enhance corporate value as a
“Frontrunner” that helps our customers and the local community
through cooperation with partners with whom we can growtogether based on a relationship of trust and mutual
understanding.

Management integrationin the same industry

Sameindustry

Business
Expansion
as a Growth
StrategyManagement integration
Business alliance in thesame industry

Business alliance
Cooperation between
different industries

Different
industry

Cooperation/
joint venture

Risky to Change. Riskier Not to Change.
Enhancing Sustainability of Local Communities
Words like sustainability, carbon neutrality and SDGs have now
become common around the world, and we are being required tomeet various social expectations in our activities as a regional
comprehensive financial group.
The Group has formulated the Sustainability Policy as its basic
policy on sustainability initiatives.
In addition, in the Juroku Financial Group SDGs Declarationthat was established to coincide with the establishment of theCompany, five key challenges (Materiality) were established topromote various initiatives in line with the declaration.

The proactive promotion of these initiatives by officers andemployees together will likely lead to enhanced sustainability ofsociety and achievement of growth and prosperity for ourcustomers and the local community.
Putting into broad perspective “how daily activities affect thewhole society” will make companies and individuals recognize
their own purpose.
We are now at a major 50-year turning point in the industrial
structure centered on carbon neutrality, and all officers andemployees will make every effort to conduct activities that enhance
the sustainability of the local community.

Sustainability Policy
The Juroku Financial Group recognizes sustainability initiatives to be an important management issue. We will strive to solve various social
issues such as climate change through our core business of a “provider of comprehensive financial services to the region” and contribute to“achieving growth and prosperity for our customers and the local community,” which is our group management philosophy, while aiming at
sustainable growth and enhancing corporate value of the Group.

6

Amid substantial changes in the environment surrounding
regional financial institutions, our ability to respond to theuncertain changes in environment is being put to the test.
We will not be able to ride out the waves of change with thehalf-hearted approach which we have taken so far of keeping what
is good and changing what needs to be changed. As a
“Frontrunner” of regional reform, we need to be prepared tochange the status quo without hesitation and bring about new
innovations based on flexible ideas free from preconceived notions.
“Risky to change. Riskier not to change.” These are the wordsof John W. Young, an astronaut who reached the moon in the
Apollo Program, which was a moon landing project proposed by
U.S. President John F. Kennedy in 1961.
We believe that, as a regional comprehensive financial group,
we may be exposed to greater risk if we do not change in this day
and age. Although we may fail if we take on a new challenge, weneed to change in order to become a sustainable organization.
The Apollo program was thought to be unviable at the time
but the aspirations of the American people were brought together
to successfully achieve the goal.

This “Moon Shot” was able to unify the aspirations of theAmerican people because the project was highly original andinnovative, and also the goal was appealing and inspiring.
In an age of the new normal, social demands toward corporate
activities are expected to rise in the future. However, it is in thesetimes that we need to keep asking ourselves what our purpose is.
We have a major goal of “achieving growth and prosperity forthe people of this region where we were born, brought up andsupported.”
Although this is a grand and highly impactful goal, toward
this goal, we will aim to become a “Frontrunner” that helps ourcustomers and the local community with a sense of joy and pride
that we can achieve this ourselves by using backcasting in ourdaily activities.
We ask you to look forward to “the Juroku Financial Group
creating the future of the region together” and also would greatly
appreciate your continued support.

7

Dialogue between
Chairman andOutside Director

Yukio Murase
Juroku Financial Group
Representative Director andChairman—Aiming at Sustainable Growth Together with the Region—

Satoko Ito
Juroku Financial Group
Outside Director

industries may have slightly lagged behind that of other regions. If

that should be inherently valued are underrated at home. However, I

this sector develops in this region as well in the future, I’m sure that

am hopeful that a fresh appreciation of such products overseas will

the region will become even more attractive.

lead to a renewed assessment at home.

Ito: I feel that this region has many companies that have been

Yukio Murase (Chairman and Representative Director) and Satoko Ito (Outside Director) had a dialogue session rediscovering the appeal

operating for more than 100 years and still are active on theof Gifu and Aichi prefectures, the operating base of the Company, as well as the issues that the region faces and their future outlook.

frontlines. I feel that these companies have flexibility as they
continue to take on new challenges in line with the changing times

Ito: Although the shrinking population has become a social issue, I

while inheriting tradition.

am concerned about overconcentration in Tokyo especially as many

Murase: Director Ito was appointed as an Outside Director of The

appealing in this region?

Murase: There was an announcement that indicated the strength ofyoung people are looking to go to Tokyo. I feel that Japan’s future is

Juroku Bank in June 2020. Also, as Outside Director of the Juroku

Ito: I feel that this region plays a huge role as a manufacturing basesmall and medium-sized enterprises in Gifu Prefecture. “TAKUMIin danger if nothing changes. The more young people gather in

Financial Group, Director Ito has given appropriate advice, includingthat supports Japan’s industries. I’m also paying attention to tourism.

NEXT 2021”, organized by JETRO, aims to support theTokyo, not only the rural population but also the population of Japan

her thoughts from a fresh perspective that we did not realize, since

A visit to Takayama, Shirakawa-go and Gero shows that the local

development of overseas sales channels for excellent domestic

as a whole will continue to decrease. I think that their values need to

October 2021. As a result, lively discussions were held at meetings ofpeople properly pass on the good old assets of the region to future

products. Out of the 155 companies that were selected throughoutchange so that they will find it appealing to work and live in their

the Board of Directors.

generations under a clear policy. That is where I feel the spirit ofJapan, 16 were companies based in Gifu Prefecture, making up therespective regions without looking to go to Tokyo and be able to say,

Ito: Two years have passed since I decided to take office after being

developing new ideas by studying the past.

largest number. This number was more than the 15 Tokyo-based“I am happier living this way. ” Amid these circumstances, COVID-

asked to express my candid opinions. The opinions I gave on

Murase: Many people often say, “Gifu and Aichi prefectures arecompanies and 10 Osaka-based companies that were selected. The

19 broke out and made us reexamine the living environment whichcountermeasures against global warming and other matters at

attractive. ” Not only large enterprises but also small and medium-

person in charge at JETRO was surprised at how enthusiastic thewe had taken for granted.

meetings of the Board of Directors were immediately used andsized enterprises have advanced technological capabilities. I thinkbusiness managers in Gifu Prefecture were. I felt very proud that

Murase: I feel the same way. Overconcentration in Tokyo has been

adopted, and I felt how speedily and effectively the Board ofthat people are attracted by the region’s distinctive characteristics

companies that are being forced to change their business model amid

actively discussed for some time now. It was very difficult to change

Directors operates.

coming from the concentration of companies that support

the COVID-19 pandemic are constantly exploring what they should

the perception of young people in rural areas that Tokyo is solely

manufacturing. This region has developed and grown mainly in thebe doing and continuing to take on challenges.

attractive. The outflow of population from rural areas to Tokyo did

manufacturing industries such as automobiles and aircraft, in

Ito: That is wonderful. There is probably that kind of DNA in thisnot change easily. I feel that COVID-19 prompted a change in

addition to traditional textiles, ceramics and cutlery. On the otherregion. I feel that the good old products that have been inherited invalues.

Murase: The Company does business with many customers withhand, because of the strong performance of the manufacturing

Japan, as well as products and services that have been refined by

Ito: Although this situation is not something that had been wished

Gifu and Aichi prefectures as its home. Is there anything you findindustries, the growth of tourism and IT, startups and other tertiarytechnique and knowledge, are highly competitive. I feel that things

for and turned out to be like a drastic remedy, it made us become

The Appeal of Gifu and Aichi

8

Regional Issue —Overconcentration in Tokyo—

9

aware of the risks of the so-called three Cs (closed spaces, crowded

Regional Issue —Gender Gap—

Initiatives for Diversity

Murase: The Company, too, regards initiatives for sustainability as
an important issue for management. In addition, we need to become

places and close-contact settings) which we had not given muchthought to. That prompted us to ask ourselves again whether we

Ito: The migration of the population from rural areas to Tokyo is

Ito: I am paying close attention to the Company’s initiatives foran entity that helps regional companies specifically put into practicewant to live the way we have, including the struggle of commuting

seen most conspicuously among young women.

diversity. I find the initiatives to support the active involvement of

the concept of and initiatives for sustainability.

to work every day in packed trains and dealing with high housing

Murase: Juroku Research Institute Co., Ltd., a Group company,

women by “Jewelia”, the Company’s product and service

Ito: The Company also offers appropriate consulting on

costs. The pandemic marked a major turning point in the value of

published a proposal document entitled “Rural Areas Preferred bydevelopment project team consisting of female staff, and thedecarbonization, but many small and medium-sized enterprises say

moving to Tokyo.

Women” in April 2022 with a focus on the gender gap in rural areas.

initiative to have many women play active roles on the frontlines inthat they still do not know what specifically they should start with.

Murase: As a result of COVID-19, remote work became widespread

As pointed out in that document, in terms of the Gender Gap Index

the field of asset management consulting, which aims to protect

In the Prime Market, since strict decarbonization initiatives will be

rapidly. Owing to working from home, the work style of not limiting

2021 announced by the World Economic Forum, Japan ranked 120th

customers’ assets in bank operations, to be wonderful because theyrequired going forward, small and medium-sized enterprises that do

the residence has been increasing steadily mainly among large

among 156 countries (March 2021), coming in last place among theare forward-thinking and distinctive.

business with large companies listed on the Prime Market need tocompanies. It is becoming possible to work for a company located inseven developed countries. The reality is that there is still a genderMurase: I am glad that women in the Group are playing active roles.

anticipate that they will be required more than ever to takean urban area while living in a rural area. The available options are

gap in rural areas.

I am intent on improving the organization to further enable womendecarbonization initiatives. We must prepare for the risk that

Ito: I see. I feel that until recently there was this idea that the mostto play active roles through proper communication so that womenbusiness transactions will become difficult in the future if we fall

important job for women was to get married and have children. In

actively working on the frontlines are made known internally andbehind the curve.

addition, the notion that women should work a little and concentratealso recognized externally very well.

on taking care of children after bearing children was probably the

Ito: The Group has adopted the customer-first marketing strategy as

mainstream way of thinking. The Japanese education system provides

one of its management strategies. Although this may be my own

an environment where male and female students truly have equal

theory, I believe that this area is women’s field of specialty because

opportunities to receive an education. On the other hand, even if

women have a disposition suited for market-in. I think they are good

women enter the workforce and work like men, and have the sameat handling tasks with empathy from the customer’s viewpoint.

aspirations and dreams as men have, there were times when, for someMurase: In the customer-first marketing strategy, we engage inreason, they had their path cut off for just being women.

consulting to realize lifelong trading relations. I say this again, but

Murase: As you pointed out, a look at the Gender Gap Index by

we need to create an organization that can make people within andcategory shows that while the gap was small in health/education,

outside the Group aware of the active involvement of women in theindicating fairness, the score was extremely low in economy/politics,

Group. I feel that more women will be appointed to seniorhighlighting the current situation in which there is a wide gap

management positions such as officers in the future at Groupbetween men and women.

companies as well.

Ito: The low score in the category of economy/politics suggests that

Ito: I am looking forward to that.

women have difficulty or are unable to play an active part in society. I
think that the way things are now, highly motivated young womenInitiatives for Sustainability

feel that, since the gender gap is smaller in Tokyo, they will be able10

to have more life opportunities and get closer to their dreams if they

Ito: Amid rapidly changing circumstances such as the post-

increasing, and the disadvantages of living in rural areas are

go to Tokyo.

COVID-19 pandemic and the invasion of Ukraine, there is an

becoming fewer and fewer. In rural areas, we need to take advantage

Murase: In the World Happiness Report as well, released every year

emerging risk that resources will not be available mainly due toMurase: We believe that the provision of comprehensive financialof this opportunity and take initiatives and build systems to makeby the Sustainable Development Solutions Network (SDSN), a UN

soaring resource prices and supply chain disruptions. It is necessary

services by the Group that have the potential of achieving sustainable

working, raising children, and getting an education in rural areas

agency, Japan ranks 54th out of 146 countries (March 2022), lower

to have a system of circulating products and materials domestically as

growth by demonstrating comprehensive capabilities and making use

appealing. In particular, it is vital to create attractive jobs.

than other developed countries. I believe that there is a link between

much as possible, including reusing waste, etc. and utilizingof the potential of Gifu and Aichi prefectures will lead to “achieving

Ito: It is now possible and common to lead a work style of going to

the Gender Gap Index and the World Happiness Ranking, and thematerials that return to nature based on the concept of a circular

growth and prosperity for our customers and the local community,”

Tokyo or overseas on business trips for two or three days a week while

gender gap needs to be eliminated in order to enhance happiness.

economy. As the socioeconomic system is reviewed drastically,

which is the mission of the Juroku Financial Group.

living in a rural area. Many jobs can now be completed as long as

Ito: Women are seeking an environment where they can work

regional and local companies will no doubt have a greater presence in

Ito: I think it is important that, as a regional financial institution,

there is a digital environment where people can work. All thanks toenthusiastically with a sense of fulfillment, and bear and raise

the eyes of urban companies.

the Group properly plays the role of guiding regional small andtechnological advances.

children with peace of mind. All of these factors need to be met for

Murase: Ito-san has expressed her opinions regarding the policy on

medium-sized enterprises and supporting them so that they do not

Murase: Even if one works in a rural area, progress in digitalization

women to find the region attractive and live there. The disappearance

sustainability and carbon neutrality at meetings of the Board offall behind the curve. I will do my utmost to support the sustainable

has made it easy to be connected to the city center and the world.

of women from a rural area means that a rural area will become a city

Directors as well.

growth of the Company and the region by leveraging the years ofWith the option to work in the office or via an online system easily

at risk of disappearing. When thinking seriously about the active

Ito: Up to now, sustainability had a somewhat mandatory aspect andexperience and knowledge I gained from having been engaged in theavailable, the image of working in the rural area has changed

involvement of women in the workplace, the common work style ofhad become a CSR-type initiative. However, in today’s society,media business and regional revitalization.

considerably from the past.

working long hours needs to be changed inevitably. The provision ofsustainability lies at the heart of the growth strategy of eachan environment that empowers women would actually increase job

company. Companies have substantially changed their way ofsatisfaction among men as well. And if satisfaction rises among boththinking as they now see linking sustainability to a businessmen and women, they will have a happy family life. This is the kind

becoming the strength of that region and the growth engine ofof virtuous cycle we should be aiming for.

sustainable companies.

11O perational and Financial Highlights

The Juroku Bank, the core company of the Group, reported
expansion in fees and commissions as a result of record highs inindividual-related revenues and corporate-related revenues, inaddition to increases in net interest income, resulting in core grossoperating profit of ¥68.4 billion, an increase of ¥6.2 billion year
on year.
Additionally, due to a decrease in expenses of ¥1.3 billion year
on year to ¥39.4 billion, core net operating profit increased by¥7.4 billion year on year to ¥28.9 billion, which reached a recordhigh.
Ordinary profit increased by ¥2.0 billion year on year to ¥24.5
billion, and net income increased by ¥3.2 billion to ¥17.3 billion,
both representing increases in profits for the fifth consecutive
term.
Profit of customer services, one of the Group’s key performanceindicators for profits from the Bank’s main business, is also
increasing steadily.
In FY2021, profit of customer services increased by ¥3.2
billion year on year to ¥11.4 billion, reaching levels exceeding ¥10billion.

 rends in fees and commissions of theT
non-consolidated Juroku BankThe Juroku Bank

Akihide Ishiguro, President

Individual-related(Deputy President, Juroku Financial Group, Inc.)

Corporate-related

Others15.0

The Japanese economy in the current fiscal year remained in adifficult situation, as was the case in the previous fiscal year, due tothe impact of the COVID-19 global pandemic.
In both Gifu and Aichi prefectures, which make up the main
business base of the Bank, strong downward pressure continued toprevail in the personal consumption of services such as lodging
and dining. In the corporate sector, production and exports of theautomobile-related industry, which is concentrated in this area,
remained at a standstill. Meanwhile, the soaring prices of natural
resources and raw materials also adversely affected corporate
earnings.
In such an economic environment, the Group demonstrated its
comprehensive capabilities and made efforts to provide a broad
range of support to its customers amid the COVID-19 pandemic,
including cash flow support and core business support, while
engaging in high-value-added consulting activities, among others.
As a result, consolidated core gross operating profit increased by¥7.0 billion year on year to ¥78.2 billion.
In addition, expenses including personnel expenses and nonpersonnel expenses decreased by ¥1.4 billion year on year to ¥46.0
billion. As a result, consolidated core net operating profit
increased significantly by ¥8.3 billion year on year to ¥32.1
billion.
Although consolidated net business profit decreased, as aresult of reporting a realized loss on the portion of thedeteriorating valuation gains and losses of securities reflecting therise in U.S. interest rates since the beginning of the calendar year,
ordinary profit increased by ¥2.1 billion year on year to ¥26.7
billion, and net income attributable to owners of the parent
increased by ¥2.4 billion year on year to ¥17.1 billion, both
representing increases in profits for the fourth consecutive term.
12

10.6

Summary of Consolidated Financial
Results of the Juroku Financial Group(Billions of Yen)

March
2022

(Year-onyear)

78.2

7.0

Net interest income

54.3

3.8

Fees and commissions

17.1

1.6

Other operating profit (Excluding profit on
JBGs and other debt securities)

6.7

1.6

46.0

(1.4)

Personnel expenses

24.7

(0.8)

Non-personnel expenses

18.3

(0.5)

Consolidated core net operating profit

32.1

8.3

Profit on JGBs and other debt securities(10.8)(10.8)

Consolidated net business profit

21.3

(2.6)

Credit-related costs

2.8

(1.4)

Profit on equities

6.5

2.0

Ordinary profit

26.7

2.1

Net income attributable to owners of the parent

17.1

2.4

Consolidated core gross operating profit

Expenses(*) The Juroku Financial Group was established on October 1, 2021. As such, thefinancial results for FY2021 contain the financial results for the six months
ended September 30, 2021 of The Juroku Bank, which became a wholly-owned
subsidiary through a sole-share transfer. The year-on-year figures represent thecomparison with the consolidated financial results of the Juroku Bank Group,
which has The Juroku, as the parent company.

10.0

5.0

9.8

3.8

3.5

1.7

1.9

5.0

4.4

March 2020

March 2021

(Billions of Yen)

March
2022

(Year-onyear)

Core gross operating profit

68.4

6.2

Net interest income

54.5

3.7

Fees and commissions

11.1

1.3

Other operating profit (Excluding profit on
JBGs and other debt securities)

2.6

1.1

39.4

(1.3)

Personnel expenses

19.5

(1.4)

Non-personnel expenses

Expenses

17.1

0.1

Core net operating profit

28.9

7.4

Profit on JGBs and other debt securities(10.8)(10.8)Net business profit

18.0

(3.5)

Credit-related costs

2.5

(1.6)

Profit on equities

6.7

2.2

Ordinary profit

24.5

2.0

Net income

17.3

3.2

 rends in profit of customer services of theT
non-consolidated Juroku Bank(Billions of Yen)

Performance for FY2021

 he Juroku BankT
Summary of non-consolidated results

11.1
2.9
2.0
6.1

0.0

Profit of customer services =Average loan balance x Deposit-loan interest rate difference +Fees & commissions – Operating expenses(Billions of Yen)

12.0
10.0
8.0
6.0
4.0
2.0
0.0
(2.0)
(4.0)

In FY2022, based on conservative estimates of credit-related costs
and estimated decreases in profit on equities, we expect Group
consolidated ordinary profit of ¥25.5 billion, a decrease of ¥1.2
billion year on year. Meanwhile, net income attributable to ownersof the parent is expected to increase by ¥0.4 billion year on year to¥17.5 billion, due to the contribution of consolidated interests in
the Group companies throughout the year.

11.4

3.6

(3.0)
March
2018

March 2022

Business Projections for FY2022

7.2

+3.2
8.2

March
2019

March
2020

J uroku Financial Group
Consolidated Business Projection
Consolidated core gross operating profit

March
2021

March
2022

(Billions of Yen)

March 2023 (Year-onyear)(projection)
72.4

(5.8)

Net interest income

49.6

(4.7)

Fees and commissions

17.5

0.4

Other operating profit (Excluding profit on
JBGs and other debt securities)

5.3

(1.4)

45.9

(0.1)

Personnel expenses

24.6

(0.1)

Non-personnel expenses

Expenses

18.3

0.0

Consolidated core net operating profit

26.5

(5.6)

Ordinary profit

25.5

(1.2)

Net income attributable to owners of the parent

17.5

0.4

13

Progress of the 1st Management Plan

Shareholder Returns

VisionThe Group commenced the 1st Management Plan from October

We aspire to become a “comprehensive financial groupthat builds a future with local communities andachieves sustainable growth with local economies” inpartnerships with our customers and the region.

2021.
Under the Plan, we will engage in three management
strategies of the “Customer-first marketing strategy” to further
leverage our problem-solving power, the “DX strategy” to improve

As disclosed in its “Juroku Financial Group’s Shareholder
Return Policy” at its founding, the Company’s basic policy
is to pay stable dividends continuously while striving tofurther improve its fiscal robustness in the face ofdiversifying risks surrounding financial transactions. In

usability and productivity, and the “Regional commitment

view of the business environment and income levels, thestrategy” to handle regional total design, thereby aiming toCompany has determined that shareholder returns will aim

become a “comprehensive financial group that builds a future withto achieve a total payout ratio of at least 25%.
Maximizing
groupsynergy

local communities and achieves sustainable growth with local
economies.”

In FY2021, in consideration of the completion of a shift
to a holding company structure on October 1, 2021, theUtilizingcustomerbase,
informationand network

Reforming
the thinking
and behaviorof ourofficers andemployees

As a result of engaging in business activities based on the 1st
Management Plan, we exceeded the numerical targets for“consolidated net income,” “consolidated capital adequacy ratio,”“consolidated adjusted OHR,” and “consolidated non-interest

Additionally, “consolidated ROE,” which has been set as a

Regional
commitment
strategy

DX strategy

long-term indicator has also been rising each year, while

Improve usability
and productivity

profitability, fiscal integrity, and efficiency, which form the

Numerical
targets

Consolidated net income Securing good profitability(Billions of Yen)

(%)

14.7

March 2019

March 2020

March 2021

March 2022

9.08

March 2018

March 2019

March
2022

¥80

¥90

¥120

¥35

¥35

¥35

¥35

¥35

¥45

¥50

¥50

Other

—

Consolidated adjusted OHR (%)

Numerical
targets

Securing high efficiency

Consolidated non-interest profit ratio (%)

Achieved numerical targets

82.49

March 2020

March 2021

March 2022

Long-term targets

Consolidated ROE (%)

Long-term target: 5% and above

4.36

Numerical target: 30% and above

75.19

29.10
68.69

3.98
3.65

66.51

26.53

Numerical target: 65% or less

March
2018

14

March
2019

March
2020

March
2021

58.87

24.50

March
2022

March
2018

2.94

24.04
March
2019

Total payout ratio (consolidated)

(%)

35.0

32.3

30.0

24.5

23.2

22.8

25.0

1,111

4,000

20.0

3,000

15.0

2,000

¥10
¥20
(Commemorative (Commemorative
dividend)
dividend)

2,615

2,989

3,363

March 2020

March 2021

4,453

10.0
5.0

0

0.0
March 2019

March 2022

9.27

Improving levels year after year

30.53

Acquisition of own shares

6,000

1,000

¥10
(Special
dividend)

Reduction of Cross-shareholdings
The Group, since FY2009, has been engaged in efforts to reduce

Numerical
targets

Total dividends(Millions of Yen)(*) Figures before the interim of FY2021 are the actual dividends paid by The
Juroku Bank

9.93
9.15

¥70

End-ofyear

Numerical target: 10% and above

10.6

9.9

Ordinary
dividend

Consolidated capital adequacy ratio Maintaining high fiscal integrity

10.52

12.8

March
2021

5,000
Ordinary
Interimdividend

17.1
Numerical target: ¥16.0 billion and above

March
2020

7,000
Annual dividends

Further leverage ourproblem-solving
power

Trends in total dividends and total payout ratio (consolidated)
March
2019

Regional
total design

Customer-firstmarketingstrategy

management foundation, have also been steadily improving.

March 2018

comprising the ordinary dividend and a commemorative dividend of ¥20. Together with the acquisition of treasury shares, the total payout

Dividends

time in FY2021.

Numerical
targets

interim dividend for FY2021 paid by The Juroku Bank and the year-end dividend paid by the Juroku Financial Group for FY2021) of ¥120
ratio reached 32.3% on a consolidated basis.

Creating the future of the region together

profit ratio” set for FY2022, the final year of the Plan, ahead ofCompany paid an annual dividend (the total amount of theits cross-shareholdings. Accordingly, the balance of cross-(Billions of Yen)

90.0

shareholdings including listed and unlisted stock decreased from80.0

¥88.3 billion as of March 31, 2009, to ¥47.8 billion as of March

70.0

31, 2022.

60.0

In addition, since FY2012, we have been verifying the

50.0

profitability of cross-shareholdings based on the risks and returns

40.0

of holding these stocks while reviewing our shareholding policy.

30.0

Going forward, we will continue to reduce our cross-

3.05

Trends in cross-shareholdings (book value)

shareholdings, aligning with the purpose of the Corporate

88.3

54.9

54.2

52.7

50.3

47.8

20.0
March
2009

March
2018

March
2019

March
2020

March
2021

March
2022

Governance Code.
March
2020

March
2021

March
2022

March
2018

March
2019

March
2020

March
2021

March
2022

15

H istory of Juroku

June 2019

2022

Juroku Tokai Tokyo Securities Co., Ltd.
commenced operations

Since our establishment as the 16th National Bank in October 1877, Juroku Bank has grown steadily and earned the deep trust ofpeople of the local community.
Juroku Financial Group was established on October 1, 2021. Under the newly established group management system, we willcontribute to the sustainable growth of the local community by demonstrating the Group’s comprehensive capabilities and solving
problems for customers and the local community.

March:

2018

March:March:

Agreed on a comprehensive
business alliance with Tokai Tokyo
Financial Holdings, Inc.
Established Hanoi
Representative Office

April:
April:May:

Launched business of Juroku Densan Digital
Service Co., Ltd.
Established Kanda Machi Okoshi Co., Ltd.
Transferred to the Prime Market of the Tokyo
Stock Exchange
Commenced collaboration with SoftBank
Corp. to promote DX

October 2027

October 2017

1896

March:

Moved the Head Office to a
newly built building in
Nakatakeyacho, Gifu-shi
December: Changed corporate name to The
Juroku Bank, Ltd.

Onward to the150th anniversaryof establishment

140th anniversary of establishment

1977

April:
Completed construction of the new Head OfficeJuly:Appointed female employee as Officer
October: 100th anniversary of establishment

2015

March:March:

August 1985

Established Juroku Computer Service Co., Ltd.
(current Juroku Densan Digital Service Co., Ltd.)

Established Bangkok
Representative Office
Established Singapore
Representative Office

March 1993

September 2012

Established Shanghai
Representative OfficeMerged with The Gifu Bank
2021

April:

April 1984

October: Established Juroku Financial Group,

Established ourManagement Policy

Juroku Bank Head Office after reorganization(while still in Takeyacho)

Established NOBUNAGA Capital Village
Co., Ltd.

Inc.

April 1980
Head Office (Gifu-shi)

October 1897

Founded our women’stable tennis clubJune 2013

Established Juroku ResearchInstitute Co., Ltd.

Opened the first branch of Juroku Bankin Fumoto (current Kawaramachi, Gifu-shi)August 1997
March 1975

Establishment of Juroku Foundation
for Regional Promotion

Established Juroku Lease Co., Ltd.
March 1994

Completed construction of Nagoya Building

Fumoto (current Kawaramachi, Gifu-shi)

2020

February: Enacted The Juroku Bank Group SDGs
Declaration
March: Entered into a capital and businessalliance agreement with Densan System
Co., Ltd.
April:
Launch of The Juroku Bank 15th
Medium-Term Management Plan

August 1982

Established Juroku Diamond Credit Co., Ltd.
(currently Juroku Card Co., Ltd.)
September 1972

• Enacted the Group Management
Philosophy• Launch of the 1st Management Plan
• Enacted the Juroku Financial Group
SDGs Declaration

June 2020:
Total deposits of ¥6 trillion

Listed on the First Section of the Tokyo Stock Exchange
April 1966

Establishment of Basic Policy and Action Guidelines

December 2012:
Total deposits of ¥5 trillion

Nagoya Building (Nagoya-shi)

April 1931

Completed construction of the former Head Office
December 2010:
Total deposits of ¥4 trillion

February 1907

Hired female
employees forthe first time

March 1990:
Total deposits of ¥3 trillion

October 1877

Established as the 16th National Bank

16

December 2008:
Total loans of ¥3 trillion

September 1987:
Total deposits of ¥2 trillion
Former Head Office（Gifu-shi）

Meiji

December 2016:
Total loans of ¥4 trillion

TaishoShowa

November 1989:
Total loans of ¥2 trillion
November 1983:
Total loans of ¥1 trillion

December 1979:
Total deposits of ¥1 trillion

HeiseiReiwa

17

P otential of the Local Community

See the figures

Juroku Financial Group’s main business areas are Gifu Prefecture and Aichi Prefecture. Thisregion has many distinctive local industries including automobiles, as well as cutlery,ceramics, and plastic products, and it is a bulwark of Japanese manufacturing. In the future,
there are plans for further infrastructure development such as the planned opening of thecompleted Tokai-Kanjo Expressway and the Linear Chuo Shinkansen (SCMAGLEV), andgreater economic benefits are expected. As there are many draws for tourism that make themost of nature and culture in the area, inbound demand in the region is expected to surge
after the COVID-19 pandemic.
Japan’s foremost
manufacturing
regionManufacture productshipment amount
Total ofboth prefectures: ¥53,838.6 billion

60

Aichi
Prefecture:

Population(2021)(2020)

10,621

Gifu
Prefecture

km2

11,3647th

5,914.2 billion 20th
¥47,924.3 billion 1st

5,173

Aichi
Prefecture¥

houseskm2

58,9401,979,781

people

17th

18th

27th

4.8

5.1

5.4

5.4

5.6

5.9

5.9

42.0

43.8

46.0

44.9

47.0

48.7

47.9

houses4th

7,542,415

people

4th

2013

2014

2015

2016

2017

2018

2019

See the tourism draws

40
20

New houses under construction(2022)

Gifu Prefecture

Aichi Prefecture(Trillions of Yen)

Gifu
Prefecture:

Total area0
Source: Ministry of Economy, Trade and Industry, Census of Manufacture (2019)

High ratio of manufacturing businesses
Gifu
Prefecture:
Aichi
Prefecture:

29.1%
38.4% 22.0

Greatly exceeds
the national
standard of%

Gross prefectural product8.6% ofJapan’s GDP

48,857.9 billion¥7,920.7 billion 20th
¥ 40,937.2 billion 2nd

Total ofboth prefectures: ¥Gifu
Prefecture:

Source: Cabinet Office, Prefectural Accounts (FY2018)

Aichi
Prefecture:

Source: Cabinet Office, Prefectural Accounts (FY2018)

See projects

Gifu
Prefecture
Hydropower:

Construction of the Tokai-Kanjo Expressway• An expressway built to high standards, with a length of approximately
153 kilometers, spanning the three prefectures of Aichi, Gifu, and Mie.
• Expected to have stock effects, such as improving corporate activities,
making logistics more efficient, and revitalizing tourism.
• The full expressway is scheduled to open in 2026.
• The Tokai-Kanjo Expressway can also serve as a detour in the event oftraffic congestion or accidents on the Tomei, Meishin, Chuo, or
Tokai-Hokuriku Expressways, and as an alternative route in the event of alarge-scale disaster.

13,624 GWh

1st in Japan for the stored hydroelectric power thatcan be used for hydroelectric power generation
Source: Agency for Natural Resources and Energy website (2021)

38.7 billion

Ceramic /tile shipment amount: ¥Aichi
Prefecture

Accounts for approximately 40%of the national market share.

Source: Ministry of Economy, Trade and Industry;
calculated by the Company based on the Census of Manufacture (2019)39.5 billion

Household knife
shipment amount: ¥Accounts for approximately 52%of the national market share.

Source: Ministry of Economy, Trade and Industry;
calculated by the Company based on the Census of Manufacture (2019)26,663.3 billion

Shipment amount of transportation machineryand equipment for the manufacturing industry: ¥1st in Japan

Source: Ministry of Economy, Trade and Industry, Census of Manufacture (2019)12,480.5 billion

Total exports from Nagoya Port: ¥1st among 5 major ports of Japan
Source: Ministry of Finance, Trade Statistics (2021)

18

Source: Gifu National Highway Office website

Launch of the Linear Chuo Shinkansen
ShinagawaApprox. 1 hour
30 minutes

Nagoya40 minutes at maximum
speed

Shinagawa

Gifu Prefecture
Station(Nakatsugawa-shi)

Approx. 2 hours and  Approx. 60 minutes
30 minutes(Assuming stops at every station)
Source: Central Japan Railway Company website

19

I nitiatives for Sustainability

Sustainability KPIs
The Group has set Sustainability KPIs for five key challenges (Materiality) in order to further strengthen our initiatives forsustainability.

Formulation of the Sustainability Policy

Targets by FY2030
Key challenges

The Group has formulated the Sustainability Policy as its basic policy for sustainability initiatives.

Sustainability Policy
The Juroku Financial Group recognizes sustainability initiatives to be an important management issue. We will
strive to solve various social issues such as climate change through our core business of a “provider ofcomprehensive financial services to the region” and contribute to “achieving growth and prosperity for ourcustomers and the local community,” which is our group management philosophy, while aiming at sustainablegrowth and enhancing corporate value of the Group.
(*) Definition of sustainability: Creating a society that facilitates the growth and prosperity of customers and local communities, and passing it over tofuture generations

Establishment of the Sustainability Meeting

Revitalization of the local
economyItem

Numerical targets

Sustainable finances provided(of which, environment-related finances)¥2 trillion(¥800 billion)

Balance of Group assets on deposit¥550 billion

Sustainable development of thelocal community

Social impact investments¥2 billion

DX-support consultation cases

3,000 cases

Environmental conservationand climate change actions

CO2 emission (vs. FY2013 level)

50% reduction

Paper use (vs. FY2019 level)

50% reduction

Empowerment of diverse
human resources

Ratio of female managers

20%

Ratio of paid leave claimed

80%

On-going targets
Key challenges

The Group has established the Sustainability Meeting to appropriately address initiatives for climate change and other sustainability
issues, recognizing them as an important management challenge. The Committee is chaired by the President and consists ofGroup Management Meeting members, Division General Managers and the head of the Sustainability Management Office.

Advancing governance

Item

Numerical targets

Initial response training for emergency preparedness

At least twice a year

Dialog with investors

At least 10 times a year

— Sustainability Management Structure —Addressing Key Challenges (Materiality)
Board of Directors
ReportKey challenges

SuperviseGroup Management Meeting

ReportInstructSustainability Management OfficeGroup Administration
Management Division

ReportOverseeGroup Corporate
Planning Division

Group Risk Management
DivisionGroup Sales Management
Division

Business

Sustainability Meeting
Chaired by the PresidentGroup Companies

The Group has restructured the organization as of April 1, 2022, for the purpose of appropriately addressing issues surrounding
sustainability.

20

Juroku Financial GroupThe Juroku Bank

Newly established the Sustainability Management
Office within the Group Sales Management Division

Upgraded the SDGs Promotion Office within the Regional
Revitalization Division to the Sustainability Promotion
Department within the Business Support Division (with theSDGs Promotion Group established within the Department)

Management

Reorganization

Initiatives

Revitalization of thelocal economyS upporting business foundation and new business operations tofoster future leaders of local economySupporting local companies’ core business operations andmanagement succession to contribute to their growthSupporting asset formation to achieve enriched living

Sustainable
development of thelocal community

 reating comfortable and appealing communities
CUsing local resources to create value that will benefit future
generations
Promoting digital transformation of local companies and local
governments

Environmental
conservation andclimate change
actionsS upporting local companies’ carbon neutral business management
Implementing initiatives for environmental conservation andenvironmental impact mitigation
Responding to climate change and disclosing information in linewith TCFD

Empowerment ofdiverse humanresources uilding a corporate culture that boasts diversity as strengthBImplementing work style reform to provide a good work-life balanceCreating workplaces that facilitate growth of diverse humanresources and empower them

Advancinggovernance dvancing corporate governanceAStrengthening risk management and complianceAchieving stakeholder engagement21

E nvironmental Conservation and Climate Change Actions

Scenario analysis
The Juroku Financial Group conducts scenario analysis on physical risks and transitional risks in order to identify how climate-related risks
would affect the Group.

Information Disclosure Based on TCFD Recommendations
The Group recognizes initiatives for climate change as an important management issue, and strives to grasp the opportunities andrisks brought by climate change.
We have also expressed our endorsement for TCFD (Task Force on Climate-related Financial Disclosures) recommendations,and are proceeding with appropriate information disclosure based on the disclosure framework advocated for by TCFD.

Governance
Sustainability Management Structure
As stated in the Sustainability Policy, the Juroku Financial Group recognizes sustainability initiatives such as climate change as animportant management issue. “The Juroku Financial Group SDGs Declaration” lists “environmental conservation and climatechange actions” as one of the key challenges.
In order to address this challenge appropriately, the Group has set up the Sustainability Meeting, which is chaired by the
President and consists of Group Management Meeting members, Division General Managers and the head of the Sustainability
Management Office.
The Meeting meets at least once every 3 months in principle to deliberate on important matters such as drawing up a policy
for implementing initiatives for climate change and other sustainability issues, setting targets and checking progress, andreflecting results to management strategies and risk management. Items deliberated on at this Meeting are reported periodicallyto the Board of Directors at least once a year for appropriate supervision.

Strategy
Opportunities and risks brought by climate change
The Juroku Financial Group analyses risks and opportunities associated with climate change in the timeframes of “short term,”“mid term” and “long term.” The results of analyzing scenarios are used to organize active dialogue (Engagement) for supporting
customers who are working toward a decarbonized society, and reinforce financial support in the forms of sustainable financing
and transition financing to create business opportunities and reduce risks.

Opportunities

Assessment item
Resource efficiency
Energy sources
Products and services
Robustness
Acute risks
Physical risks

Risk

Chronic risks
Policies / laws
Transitionalrisks

Technologies
MarketReputation

Main opportunities and risks

Timeframe

Increasing business opportunities such as offering investments, loans and consultation
services to help customers’ transition to a decarbonized society
Reducing business costs through resource saving and energy saving
Boosting corporate value by implementing appropriate initiatives on climate change anddisclosing information about them
Increasing public works projects for disaster management and demand for customers’ capital
investment fund
Deterioration in customers’ business performance and damage to collateral value due to theincrease in frequency and severity of abnormal climate patterns, causing a decline in loan
asset value
Business disruption at Group sites affected by a disaster

Short- to long-term

Deterioration in customers’ business performance and damage to collateral value due tohigher average temperature and higher sea level, causing a decline in loan asset value
Deterioration in customers’ business performance due to climate-related regulationtightening, failed investment in low-carbon technology and changes in consumer behaviors,
causing a decline in loan asset value
Slower implementation of appropriate climate-related initiatives and disclosure of information
about them than competitors, lowering corporate value

Short- to long-term
Short- to long-termMid- to long-term

Physical risks

Transitional risksRain-prone Japan experiences heavy precipitations eachyear, causing rivers to swell and triggering flooding. In
recent years, the number of heavy localized rainstorms has
become more common, causing significant damage tomany areas including our sales territories.
In terms of physical risks, we have anticipated anincrease in the frequency of large-scale flooding due toclimate change, and calculated the impact of climateattributable large flooding in Gifu Prefecture on theGroup’s credit-related costs on the premise of the RCP8.5
scenario (4 °C scenario). The result points to a cost increaseof approx. 3.1 billion yen.

Following a qualitative analysis of sectors with large credit
exposure and sectors referred to in TCFD
recommendations, we have identified the “electric power
sector” and “automotive sector” as sectors of significant
transitional risks for the Group.
In terms of transitional risks, on the premise of the
RCP2.6 scenario (2 °C scenario) and NZE scenario (1.5 °C
scenario), we calculated the impact on the Group’s creditrelated costs in view of the increased cost of transition into a
decarbonized society such as the introduction of the carbon
tax, a decline of net sales and future market trends. The
result points to a cost increase of approx. 2.2 billion yen.

Physical risks

Transitional risks

Scenario

IPCC / RCP8.5 scenario (4 °C scenario)

IPCC / RCP2.6 scenario (2 °C scenario)
IEA / NZE scenario (1.5 °C scenario)

Risk event

Large-scale flooding

Transition to a decarbonized society

Analysis target

Borrowers in Gifu Prefecture
Collateral of real estate (buildings) in Gifu Prefecture(excluding secured home loans)

Electric power sector
Automotive sector

Analysis content

Deterioration of business performance due to customers’
business suspension / stagnation
Damage to the Group’s real estate (buildings) collateral

Deterioration of customers’ business performance due to cost
increase and sales decline

Analysis period

Up to 2050

Up to 2050

Analysis results

Increase of credit-related costs: Up to 3.1 billion yen

Increase of credit-related costs: Cumulative total of approx.
2.2 billion yen*IPCC (Intergovernmental Panel on Climate Change)*IEA (International Energy Agency)

Short- to long-term

Analysis results are calculated under specific preconditions.
Short- to long-termMid- to long-term

The impact on the Group’s finances has been found to be limited within the scope of this analysis, but we will continue to enhance thescenario analysis.

Mid- to long-term
Short- to long-term*Short term = Around 5 years; Mid term = Around 10 years; Long term = Around 30 years

2223Carbon-related assets

Indicators and targets

Of carbon-related assets defined in the TCFD recommendations,loan balance to the energy and utilities sectors accounts for 1.4%

 atio of carbon-related assets against Juroku
R
Bank’s loan balance (as of the end of March 2022)(Millions of Yen)of the total loan balance. We will examine target sectors for othercarbon-related assets for future information disclosure.

CO2 emissions reduction targets
The following reduction targets are set on CO2 emissions generated by the Group’s energy use in our efforts to establish a decarbonized

Loan balance

Ratio

Utilities

45,936

1.0%

Energy19,1100.4%

TargetTotal

65,047

1.4%

Halve CO2 emissions by FY2030 (SCOPE 1, 2) from the FY2013 level and achieve carbon neutrality by FY2050*Loan balance = Total of loans, foreign exchange, acceptance and guarantee, etc.
*Utilities include electric power and gas supply sectors and exclude water andrenewable energy power sectors

society.

CO2 emissions (SCOPE1, 2)(t-CO2)

Risk management

13,11012,892

12,218

11,873

11,733

10,8099,836(34.4)%

9,452

8,600

Approach to risk management(50.0)%

6,555

The Group has an integrated risk management framework in place, managing its overall financial risks in the categories of “credit risk,”

Carbonneutrality“market risk,” “liquidity risk” and “operational risk.”
Climate change risk is recognized as one of the top risks and a driver of financial risk, and is controlled with the risk management
framework for credit risk and operational risk.

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2030FY2050TargetTargetFormulating an investment and lending policy

In FY2021, the Group reduced CO2 emissions by 852 tons from the previous year, due partly to the introduction of CO2-free electricity

The Group has the Investment and Lending Policy for Creation of a Sustainable Society.

generated in Gifu Prefecture for use at Juroku Bank’s head office building, which began in November. This has reduced our CO2 emissions
by 34.4% in FY2021 compared to the FY2013 level.

Basic policy
The Juroku Bank Group strives to contribute to medium- to long-term enhancement of corporate value and sustainablegrowth of customers by vigorously supporting initiatives to resolve environmental and social issues through investment andlending. Moreover, the Group strives to mitigate or avert the impact of investment and lending that may pose a significant
risk or have a negative impact on the environment and society by subjecting any such investment and lending to
meticulous consideration.

Sector-specific policies
Coal-fired
thermal power
generation

The Group will not invest in or extend loans to projects that involve building new coal-fired thermal power
stations or expanding existing power generation facilities, while taking a prudent approach in considering
exceptional cases in response to emergencies or in projects in line with the Japanese government’s energy policy.

Weapons

The Group will not invest in or extend loans to companies that manufacture weapons, regardless of fund usage, in viewof the inhumane nature of cluster bombs, anti-personnel landmines and biological / chemical weapons.

CO2 emissions (SCOPE 3)
FY2021[Category 6] Business trips

49[Category 7] Employee commuting

3,135

Deforestation24

Calculation methods for other categories will be explored for
future information disclosures.

Sustainable finance targets
The following targets are set on sustainable finances in order to support, through our core business, customers’ initiatives for solving
environmental issues and to contribute to establishing a decarbonized society.

Targets
Target amount
PeriodThe Group will not invest in or extend loans to projects that involve illegal logging or forest incineration.
Investment in / loan to projects whereby the fund is used for operations that involve deforestation will beconsidered carefully in view of their impact on the local economy and the environment.

(t-CO2)

Target investment
and lending, etc.

¥2 trillion (including ¥800 billion yen in the environmental field)
9 years (FY2022 – FY2030)
Sustainable finances
Investment and lending for SDGs / ESG initiatives that contribute to building a sustainable society
Environmental field
Investment and lending for initiatives to reduce environmental impact

25

Evaluation of the Effectiveness of the Board of Directors

Corporate GovernanceCorporate Governance System
Juroku Financial Group is a company with an Audit &Supervisory Committee, and the functions of the Board of
Directors are strengthened not only in its decision-making functions, but also in its auditing and supervisory functions.
By separately electing Executive Directors and Directors
who are members of the Audit & Supervisory Committee, wehave enhanced the audit system of Group-wide business management and the supervision system of Executive Directors by
the members of the Audit & Supervisory Committee.

In addition, we are working to further enhance our corporate
governance system by monitoring the status of business execution, the status of risk management, and the compliance systemof group companies, and striving to build a Group-wide business management system.
Group companies are striving for efficient business operations by preparing business plans based on Group-wide management policies, and by making prompt management decisions
and speeding up business execution.

Election / Dismissal

Election / Dismissal

Management
Meeting

AdvicePersonnel Affairs
Committee

Counseling

Board of Directors

Compensation
Committee

Group Management
Meeting

Direct
Order
ReportGroup Risk Compliance MeetingGroup Digital
Management OfficeGroup Risk
Group SalesManagement Division Management Division

Instruct / Manage

Audit
Sustainability
Management Office

We have established the Group Risk Management Division to
oversee risk management and compliance, and are working to
improve the risk management structure and compliance systemof the Group. In addition, we have organized the Group Risk
Compliance Meeting chaired by the President to grasp the

Audit & Supervisory
Committee’s Office
Collaboration

Group Management
Audit Division

Report / Discuss

Group-wide Risk Management Structure and Compliance System

Collaboration

Audit & Supervisory
Committee

Audit

Collaboration

Audit

Accounting Auditor

Juroku Financial Group

Group Corporate
Planning Division

the effectiveness of the Board of Directors has been secured byensuring its diversity and expertise.
We will continue with our efforts to provide timely andappropriate information for the sustainable growth of the Groupand the enhancement of corporate value over the medium- tolong-term. Furthermore, we will fully exercise the functions ofdecision-making and supervision of the Board of Directors andfurther enhance its effectiveness, by continuously reviewing theoperation of the Board of Directors with Outside Officers tohold constructive discussions.

Risk Management Structure / Compliance System

Shareholders MeetingGroup Administration
Management Division

The Company has all Directors conduct a self-evaluation basedon a “Questionnaire regarding Effectiveness Evaluation of theBoard of Directors.” After compiling results of aggregating andanalyzing the contents of these self-evaluations, the Board of
Directors deliberate on them following a consultation with theManagement Meeting, which is an advisory body to the Boardof Directors.
The following is a summary of the results of the “Overall
Effectiveness Evaluation of the Board of Directors” in FY2021.
As a result of aggregating and analyzing these self-evaluations, the Board of Directors of the Company confirmed thatstatus of risk management and compliance within the Group.
The Meeting holds deliberations or debates on analysis, evaluation, and improvement activities for risk management andcompliance, and reports and discusses to the Board of Directors
on a regular basis and on an irregular basis as necessary.

Risk management structure / compliance system
Juroku Financial Group

Group Management MeetingGroup companies

Group Management
Audit Division<Whistleblowing system>

The Juroku Bank
Instruct / Manage

Report / Discuss

Subsidiaries of The Juroku Bank

Other subsidiaries
Juroku Research Institute, Juroku TT Securities, Juroku Card, Juroku Lease
Juroku Densan Digital Service, NOBUNAGA Capital Village
Kanda Machi Okoshi

Audit<<Integrated risk management / compliance divisions>>

Lawyers

Participate

Group companies

Juroku Business Service, Juroku Credit GuaranteeGroup Risk Management Division

Comprehensive
audit monitoring

The Juroku Bank
Integrated Risk Management Meeting
Integrated Risk Management Committee
Operational Risk Management Meeting
Compliance Meeting
Compliance Committee
Anti-Money Laundering Meeting

Composition of the Board of Directors

Audit & Supervisory
Committee

Board of Directors

Group Risk Compliance MeetingGroup Risk Compliance Committee

Management
audit monitoring

Report<<Integrated risk management / compliance divisions>>
Risk Management Division

ReportOther subsidiaries
Risk management /compliance divisions

Report(as of June 30, 2022)

The Group strives to ensure that the Board of Directors has a wellbalanced structure with diverse knowledge and expertise.
In order to enhance the objectivity and rationality of decision-making by the Board of Directors in addition to supervising management,
we appoint Independent Outside Directors so that they consist of morethan one-third of the total number of Directors.

Internal Directors

Subsidiaries of
The Juroku Bank

Risk management /compliance divisions

Outside Directors
The Company positions risk management and compliance as an important duty to ensure the soundness and safety of group management, and has established policies and regulations related to risk management and compliance. Each group company has also established its own policies and regulations based on the Company’s policies and regulations, and strives to conduct appropriate business.

Risk management and compliance-related policies and regulations, etc.

Management Meeting
In order to further ensure transparency and fairness of the Boardof Directors’ decision-making activities, we have established theManagement Advisory Board, which consists of two committees, thePersonnel Affairs Committee and the Compensation Committee, as anadvisory body to the Board of Directors.
Each committee is chaired by an Outside Director, and the majority of its members are Outside Directors. The Committees provide
advice on the matters shown in the table on the right.

Juroku Financial Group

Personnel Affairs Committee
1

Matters concerning determination of candidates for Director

2

Matters concerning selection and dismissal of Executive Directors, etc.

1

Matters concerning compensation for Directors
Matters concerning evaluation of the effectiveness of theBoard of Directors
Other important matters related to management

Integrated Risk Management Rules

Operational Risk
Management Rules

Compliance Policy

Compliance Rules

Whistleblowing System
Implementation Rules

Money Laundering
Prevention Policy

Risk Management Regulations for
Money Laundering and Financingof Terrorism

Integrated Risk Management Policy

Code of Ethics[Compliance]

Compensation Committee

2
3

26

[Risk management][Anti-money
laundering measures]Group Companies

Business operations in accordance with Juroku Financial Group’s policies and regulations

27

Integrated risk management

Risk management structure
Risk Appetite Framework
The Group has clarified the type and amount of risk to be taken appropriately as “risk appetite,” and introduced a “Risk Appetite Framework(RAF)” for business and risk management using the risk appetite as astarting point.
In order to achieve our “Vision” in the Group management philosophy, we seek to “optimize profits, risks and capital” through RAF
management, and enable the pursuit of more profit opportunities andmore appropriate risk control. By doing so, we are improving the effectiveness of our business strategies including management plans andcomprehensive budgets.

Overview of the Risk Appetite Framework
Management plan
Comprehensive budget, etc.

Risk appetite
Business strategy

The Group has established the “Integrated Risk Management
Rules” for the purpose of ensuring the soundness of management and building an integrated risk management system.
We comprehensively track various risks with quantification
using statistical methods, and control these risks so that they
are within the scope of our management abilities. The status of
integrated risks is managed by the Group Risk Management
Division, and reported to the Group Risk Compliance Meetingand the Group Risk Compliance Committee quarterly, as wellas the Board of Directors biannually, in principle, and we have astructure to flexibly implement necessary measures such as risk
control.

Risk management

Credit risk management
Recognition of Top Risks
From the perspective of probability and degree of impact, the Group has chosen as top risks the “risk events that may have a significant
impact on our financial position and business performance, such as disrupting our business strategy and reducing profitability approximately within the next year.” We are taking necessary measures in advance to control such risks, and striving to manage them in orderto respond dynamically even if they manifest.
Top risks selected by the Board of Directors in March 2022 are as follows:
Risk event

Risk scenario (example)

Deterioration of the global economic and financial
environment due to strengthening hegemonism• Deterioration of the global economy, weak demand for funds, and deterioration of the business conditionsof borrowers, triggered by hegemonic behavior including the Ukraine situation, the Taiwan issue, and the
U.S.-China friction• Pressure on deposit and loan profit due to continued ultra-low interest rate policies• Fewer profit opportunities and higher credit-related costs due to deterioration of economic conditions in
our operating bases, Gifu and Aichi prefectures

Continuous inflation and interest rate policies in
the USA• Market fluctuation risks, such as deterioration of gain (loss) on valuation of securities due to normalizationof monetary policy and interest rate hikes by the Federal Reserve Board (FRB) of the U.S. (in anticipationof midterm elections this autumn, the ruling Democratic Party is putting pressure on the FRB to raiseinterest rates, in order to curb inflation and restore public support.)

Climate change risks
Impact of the spread of COVID-19

28• Deterioration of borrower performance and obsolescence of business models due to abnormal weather,climate change, delayed response to decarbonization, etc.
• Prolonged stagnation of economic activity due to the continued COVID-19 pandemic• Difficulty in maintaining business continuity

Large-scale disasters• Impact on the financial condition of the Group due to difficulty maintaining business continuity in theevent of the Nankai Trough Earthquake, etc., and from the deterioration of the business performance ofborrowers resulting from the ensuing turmoil in the local economy

Cyber-attacks• Functional failure, as well as large compensation for loss due to leakage of customer information or service
suspension

Rapid progress of DX• Customer attrition due to further entry to other businesses, intensified competition due to the emergence ofalternative services, and declining competitiveness due to delays in introducing digital services, etc.

Credit-related risks• Higher credit-related costs due to credit deterioration in real estate and other credit-intensive industries• High credit-related costs being incurred due to deterioration of the business performance or bankruptcy oflarge borrowers• Increasing credit-related costs resulting from the decline of regional industries due to their inability tochange their business structure to adapt to the era

Personnel risks• Impacted sustainable growth and business strategy of the Company and workplace control confusion,
resulting from accidents occurring to executive management• Loss of credibility and customer attrition due to administrative sanctions such as business suspension orders
by the Financial Services Agency and media reports, as a result of scandals of officers and employees• Decreased productivity, difficulty in continuing professional work due to insufficient education, outflow ofhuman resources, etc.

Inadequate response to antisocial forces andanti-money laundering measures• Loss of credibility due to transactions with antisocial forces• Disciplinary actions such as business suspension orders, payment of surcharges, and deterioration of
reputation due to failure in addressing money laundering and violations of various foreign exchange laws
and regulations

Insufficient implementation of “Customeroriented Business Operation Policy”• Customer attrition and administrative sanctions such as business suspension orders by the Financial Services
Agency, due to inadequate customer-oriented business operations

Credit risk refers to the risk of incurring losses due to the decrease or loss of asset value caused by deterioration of the financial condition of borrowers.
As a prerequisite for credit risk management, we have established a “credit rating system” which objectively evaluates thedegree of credit risk on a uniform scale. In addition to monitoring the credit risk management status of group companies andthe credit concentration risk of the whole Group, we also discusscountermeasures with group companies as necessary.

Market risk management
Market risk refers to the risk of incurring losses from the fluctuation of the value of assets and liabilities, as a result of changes
in various market risk factors such as interest rates, foreignexchange rates, and stocks, as well as the risk of incurring losses
due to fluctuations in the income generated from assets and liabilities.
Based on our integrated risk management, our consolidated
subsidiaries that engage in the banking business allocate risk
capital by business (deposits and loans, cross-shareholdings,
securities other than cross-shareholdings, etc.) biannually. Ourconsolidated subsidiaries also set position management limits(maximum investment amount or holding amount), loss amountlimits, and negotiation points (levels of losses for reviewing response policies). Their divisions in charge of conducting market
transactions flexibly and efficiently within these set risk limits.

Liquidity risk management
Liquidity risk refers to funding risk and market liquidity risk.
Funding risk refers to the risk of difficulty in securing the necessary funds due to mismatches between investment and funding
periods or unexpected outflows of funds, as well as the risk of incurring losses due to being forced to raise funds at significantly
higher interest rates than usual. Market liquidity risk refers to
the risk of incurring losses due to market disturbances making
it impossible to trade in the market, or being forced to trade at
prices that are significantly more disadvantageous than usual.
We monitor the status of funding risk and liquidity risk as wellas matters that affect funding, and we have established a structure to respond quickly and appropriately even under unforeseen
circumstances.

Operational risks
Operational risk refers to the risk of incurring losses due toinappropriate business processes, activities of officers and employees, or systems, or external events. Each group company has
established “Operational Risk Management Rules,” and classifies and manages operational risks as administrative risk, systemrisk, legal risk, personnel risk, fixed asset risk, and reputationalrisk.
For administrative and system risks, which are important
categories among operational risks, we have drawn up the following sub-policies and procedures.
■ Administrative risk
Administrative risk refers to the risk of incurring losses because of officers or employees neglecting to perform accurate
administrative work, or causing accidents, committing fraud,etc. The Group manages administrative risk through our own
Administrative Risk Management Rules. While adapting to thegrowing diversification and complexity of banking operations,
our administration has become more rigorous in an effort toretain and strengthen the trust of our customers.
■ System risk
System risk refers to the risk of incurring losses due to computer
system failure, malfunction and other errors or system flaws andother deficiencies, as well as the risk of incurring a loss due tothe improper use of computers. This includes “cyber securityrisk” that threatens the safety of computer systems and computer networks as a result of cyber-attacks.
The Group has established “System Risk Management
Rules” in order to deal with these system risks. By ensuring theeffectiveness of our system risk management system, we strive tomaintain sound and appropriate group operations, and strengthen our cyber security management system.
In response to cyber security incidents that are increasingly
becoming a threat, each group company has set up a CSIRT(Computer Security Incident Response Team). The CSIRTSecretariat of The Juroku Bank collaborates with the rest of theGroup to stay alert in ordinary times and to promptly respondto and solve any incident.

Crisis management system
The Group places the highest priority on ensuring the safety ofhuman lives in the event of a crisis such as a major disaster or an
infectious disease epidemic. In order to continue business operations necessary to maintain the functions of the financial system,in addition to the risk management systems described above, wehave established the “Rules on Business Continuity Readinessand Management” and have established an appropriate crisis
management system.

29

Customer Information Management

Compliance system
Compliance Structure
The Company has designated the Group Risk Management
Division to oversee compliance and manage the status of compliance for the entire Group.
Every fiscal year, the division formulates a Group
Compliance Program, a concrete action plan for compliance, andconducts appropriate compliance risk management for the entire
Group.

In addition, the Group Risk Compliance Meeting and theGroup Risk Compliance Committee hold meetings regularly
and as needed, to confirm that the Group is properly practicing
compliance, and to deliberate and give instructions regarding
the compliance system. The Group Risk Compliance Committee
reports to the Board of Directors on the content of their deliberations.

Internal Reporting System
The Company has established a whistleblowing system for theentire Group. In order to detect and correct compliance violations early on, the Company and other Group companies haveeach set up whistleblowing contact points.
In addition to internal contact points, we are working toenhance and improve our whistleblowing system via designatedexternal lawyers as contact points for reporting and consultation.

We have appointed a Chief Whistleblowing Officer as thegeneral manager of the whistleblowing system, and are working
to raise awareness of the whistleblowing system among officers
and employees throughout the Group, while engaging in efforts
to enhance the system.
In line with revisions to the Whistleblower Protection Act,
we are also developing internal regulations to make it easier for
officers and employees to use the internal reporting system.

Customer Protection
The Company has established a Group-wide “Customer
Protection Management Policy,” and is striving to protect
customers and improve convenience for the whole Group. The
Juroku Bank and Juroku TT Securities have planned and announced a “Customer-oriented Business Operation Policy,” andare working to further improve the quality of their products andservices from a customer-oriented perspective.
The “Customer Protection Management Policy” is aimed at
protecting customers and improving convenience through thefollowing measures.

(1) Giving appropriate explanations and providing information
on products and services to customers(2) Appropriately handling customer requests, consultations,inquiries, complaints, etc.
(3) Appropriately managing customer information(4) Appropriately managing outsourced business(5) Appropriately managing conflicts of interest in order toprevent unduly infringement on the interests of customers

The Company recognizes the secure management of customer
information as one of its most important issues.
We are fully aware of various risks such as leakage and loss of
information to external parties with regard to customer information acquired by each group company. As such, we have established the “Information Security Management Rules” to ensure
proper handling of customer information, and also disclose a“Personal Information Protection Policy” (Privacy Policy).
Based on these regulations, we have appointed a Chief
Information Officer as the general manager of the protection of
information assets, and designated responsible divisions according to the type of information assets, as efforts to protect information assets more effectively.

Initiatives to Prevent Money Laundering, etc.
There is a growing threat of international terrorism, and fund transfers by criminal organizations and terrorists are spreading andbecoming international. As such, there is stronger international demand for financial institutions to prevent money laundering andfinancing of terrorism.
■ Risk management system
We have positioned the prevention of money laundering andfinancing of terrorism as a top management issue, and we havebuilt an effective risk management system and are working tofurther enhance it.
■ Risk assessment documents
We identify and assess risks we are facing associated with money
laundering and financing of terrorism, and plan “documents
prepared by specified companies (risk assessment documents),”in order to implement mitigation measures commensurate withthe risks.

■ Training for officers and employees
We continuously implement training for officers and employees, so that they can gain deeper knowledge and understanding
regarding measures against money laundering and financing ofterrorism, and improve their expertise and adaptability according to the roles of various divisions.
■ Audits on compliance status
The Audit Division conducts internal audits from an independent perspective on a regular basis and as necessary. Based on the
results of these audits, we strive to further improve our systems.

Stakeholder Engagement
The Group emphasizes engagement with all stakeholders. We have progressed from taking action “for” our stakeholders to acting “with”
them.
In our “Group management philosophy,” we set the “Engagement Cycle” as our Code of Conduct, with the aim of taking on thechallenges faced by our customers and local communities, and resolving them together.

Designated dispute resolution organization
The Juroku Bank has concluded a basic agreement for the execution of procedures with the following designated dispute resolution organization. By involving a neutral and fair third-party

30

organization, we are appropriately responding to the financial
ADR system, which are procedures intended for simple andswift dispute resolution without resorting to litigation.

31

B oard of Directors and Audit & Supervisory Board Members
The Juroku Financial Group, Inc. (as of June 30, 2022)

C onsolidated Balance SheetThe Juroku Financial Group, Inc. and Consolidated Subsidiaries

Yukio Murase
Representative Director
and Chairman

Naoki Ikeda
Representative Director
and President

Akihide Ishiguro
Director and Deputy
President

Yukiyasu Shiraki
Director

March 31, 2022

Millions of Yen

Thousands of
U.S. Dollars (Note 1)

ASSETS:

2022

2022

Cash and due from banks (Notes 6)
Trading securities (Notes 7 and 28)
Money held in trust (Note 8)
Securities (Notes 7, 9, 13, 14 and 28)
Loans and bills discounted (Notes 9, 14, 28 and 29)
Foreign exchanges (Notes 9 and 10)
Lease receivables and investments in leases (Note 9, 27)
Other assets (Notes 9, 11, 14, 28 and 30)
Premises and equipment (Note 12)
Goodwill
Intangible assets
Asset for retirement benefits for employees (Note 18)
Deferred tax assets (Note 26)
Customers’ liabilities for acceptances and guarantees (Note 9, 13)
Allowance for loan losses (Notes 3 and 28)
Total Assets¥2,135,695
115
11,612
1,459,223
4,521,824
8,861
54,544
114,829
58,313
3,646
3,758
14,220149
14,352(25,809)¥8,375,332$17,449,914
940
94,877
11,922,731
36,946,025
72,400445,657
938,222476,452
29,79030,705
116,186
1,218
117,264(210,875)$68,431,506¥6,225,291
14,000133,747
87,538
1,405,797
1,595
62,4886,172
815,332
6,408
14,352
7,972,728$50,864,376
114,388
1,092,794
715,238
11,486,208
13,032
510,565
50,42966
125,272
52,357
117,264
65,141,989

36,000294,142

61,807180
238,135

505,000
1,471
1,945,706(2,221)(18,147)

49,18912,4683,341
398,899
3,705
402,604¥8,375,332

401,904
101,871
27,2983,259,245
30,272
3,289,517$68,431,506

LIABILITIES AND EQUITY:

Yoshiaki Bito
Director

Hiroyuki Ota
Director

Liabilities:
Deposits (Notes 14, 15 and 28)
Negotiable certificates of deposit (Note 28)
Payables under repurchase agreements (Notes 14 and 28)
Payables under securities lending transactions (Note 14)
Borrowed money (Notes 14, 16 and 28)
Foreign exchanges (Note 10)
Other liabilities (Notes 17, 19, 27, 28 and 30)
Liability for retirement benefits for employees (Note 18)
Provision required under the Special Act
Deferred tax liabilities (Note 26)
Deferred tax liabilities for land revaluation surplus
Acceptances and guarantees (Note 13)
Total Liabilities
Commitments and Contingent Liabilities (Note 29)

32

Kikuo Asano
Director

Satoko Ito
Director

Naohiko Ishikawa
Director (Audit & Supervisory Committee Member)

Shinji Ishihara
Director (Audit & Supervisory Committee Member)

Satoe Tsuge
Director (Audit & Supervisory Committee Member)

Koichi Tokoro
Managing Executive Officer

Tsutomu Niimi
Managing Executive Officer

Hirokazu Kusui
Managing Executive Officer

Eiji Kodama
Executive Officer

Fumitaka Yoshimura
Executive Officer

Hirotaka Asai
Executive Officer

Tomoatsu Kaku
Executive Officer

Equity (Notes 20, 21 and 34):
Common stock:authorized, 46,000,000 shares in 2022;
issued, 37,924,134 shares in 2022
Capital surplus (Note 5)
Stock acquisition rights
Retained earnings
Treasury stock—at cost,
1,002,848 shares in 2022
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities (Note 7)
Land revaluation surplus
Defined retirement benefit plans (Note 18)
Total
Noncontrolling interests
Total Equity
Total Liabilities and Equity
See notes to consolidated financial statements.

33

C onsolidated Statement of Income
The Juroku Financial Group, Inc. and Consolidated Subsidiaries

C onsolidated Statement of Changes in Equity
The Juroku Financial Group, Inc. and Consolidated Subsidiaries

Year Ended March 31, 2022

Millions of Yen

Thousands of
U.S. Dollars (Note 1)

2022

2022

Income:Interest on:
Loans and discounts
Securities
Other
Fees and commissions
Other operating income (Note 22)
Other income (Note 23)
Total income (Note 33)
Expenses:
Interest on:
Deposits
Borrowings and re-discounts
Payables under repurchase agreements
Other
Fees and commissions
Other operating expenses (Note 7)
General and administrative expenses (Note 24)
Allowance for loan losses
Other expenses (Note 25)
Total expenses
Income before Income Taxes
Income Taxes (Note 26):
Current
Deferred
Total Income Taxes
Net Income
Net Income Attributable to Noncontrolling Interests
Net Income Attributable to Owners of the Parent

Per Share of Common Stock (Notes 2.t and 32):

Yen
2022

¥ 38,333
14,1872,168
22,86932,156
7,654
117,367$313,204
115,916
17,714
186,854262,734
62,537
958,959

205
54
26
33
5,758
36,20744,5602,807
1,072
90,722
26,645

1,675
441
212
270
47,046295,833
364,082
22,9358,759
741,253
217,706

7,237
1,721
8,958
17,687496¥ 17,191

59,131
14,062
73,193
144,513
4,052$140,461¥460.45459.62120.00

Basic net income
Diluted net income
Cash dividends applicable to the year—common stock
See notes to consolidated financial statements.

U.S. Dollars
2022
$3.76
3.76
0.98

C onsolidated Statement of Comprehensive Income
The Juroku Financial Group, Inc. and Consolidated Subsidiaries

Net income
Other Comprehensive Loss (Note 31):
Unrealized loss on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Defined retirement benefit plans
Total other comprehensive loss
Comprehensive Income
Total Comprehensive Income
Attributable to:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

34

Year Ended March 31, 2022

Millions of Yen

Thousands of
U.S. Dollars (Note 1)

2022

2022

¥ 17,687$144,513(10,271)
(259)
(652)
(11,182)¥ 6,505(83,920)(2,116)(5,327)(91,363)$ 53,150¥ 6,178327$ 50,478
2,672

Year Ended March 31, 2022

Thousands

Millions of Yen

Outstanding
Number of Common
Stock
Shares ofCommon Stock

Balance at April 1, 2021
Changes due to share transfer, etc.
Purchase of shares of
consolidated subsidiaries
Sales of shares of
consolidated subsidiaries
Net income attributable toowners of the parent
Cash dividends, ¥105.00
per share on common stock
Transfer of land revaluation surplus
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at March 31, 2022

Accumulated Other
Comprehensive Income
Stock
CapitalRetained Treasury
Surplus Acquisition Earnings
Stock Unrealized Gain Deferred Gain on Land
DefinedRightson Available Derivatives-for-sale
under Hedge Revaluation Retirement
Surplus Benefit Plans
Securities
Accounting

37,373—¥36,839(839)¥53,396
435¥169 ¥224,571
—
—

—

—

7,971

—

—

—

—

—

6

—

—

—

—

—

—

—

—

—

—

—
(462)
10
—
36,921————¥36,000——(1)—¥61,807¥3,993 ¥389,747
—
—

Total
Equity¥ 259—¥12,766
—

—

—

—

—

7,971

—

7,971

—

—

—

—

—

6

—

6

17,191

—

—

—

—

—

17,191—

17,191(3,925)

—

—

—

—

—

(3,925)—(3,925)——(1,116)—28—— (10,102)¥(2,221) ¥ 49,189

—
—
—
(259)
¥ —

—
—
—
(298)
¥12,468

—
298
—
—
—
—
11
—
¥180 ¥238,135¥(1,537) ¥ 59,291
404—

Noncontrolling
Interests

Total

—
298
—
(1,116)—27(652) (11,300)¥3,341 ¥398,899¥13,263 ¥403,010
—
—

—
298
—
(1,116)—27(9,558) (20,858)¥ 3,705 ¥402,604

Thousands of U.S. Dollars (Note 1)

CommonStock

Balance at April 1, 2021
Changes due to share transfer, etc.
Purchase of shares of
consolidated subsidiaries
Sales of shares of
consolidated subsidiaries
Net income attributable toowners of the parent
Cash dividends, $0.86
per share on common stock
Transfer of land revaluation surplus
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at March 31, 2022

Accumulated Other
Comprehensive Income
Stock
CapitalRetained Treasury
Surplus Acquisition Earnings
Stock Unrealized Gain Deferred Gain on Land
DefinedRightson Available Derivatives-for-sale
under Hedge Revaluation Retirement
Surplus Benefit Plans
Securities
Accounting$300,997 $436,277(6,855)
3,554$1,381 $1,834,880——$(12,558) $484,443
3,301—$ 2,116 $104,306
—
—

Total

Noncontrolling
Interests

Total
Equity$32,625 $3,184,467 $108,367 $3,292,834
—
—
—
—

—

65,128

—

—

—

—

—

—

—

65,128—65,128

—

49

—

—

—

—

—

—

—

49

—

49

—

—

—

140,461

—

—

—

—

—

140,461—

140,461———(32,070)

—

—

—

—

—

(32,070)—(32,070)

—
—
—
—
—
(8)
—
—
$294,142 $505,000

—
2,435
—
—
—
—
90
—
$1,471 $1,945,706——(9,119)—229—— (82,539)$(18,147) $401,904

—
—
—
—
—
—
(2,116)(2,435)$ — $101,871

—
2,435
—
2,435
—
(9,119)—(9,119)—221—
221(5,327) (92,327) (78,095) (170,422)$27,298 $3,259,245 $ 30,272 $3,289,517

See notes to consolidated financial statements.

35

C onsolidated Statement of Cash Flows
The Juroku Financial Group, Inc. and Consolidated Subsidiaries

N otes to Consolidated Financial Statements
The Juroku Financial Group, Inc. and Consolidated Subsidiaries

Year Ended March 31, 2022

Millions of Yen

Thousands of
U.S. Dollars (Note 1)

OPERATING ACTIVITIES:

2022

2022

Income before income taxes
Adjustments for:
Income taxes—paid
Income taxes—refund
Depreciation
Interest income recognized on statements of income
Interest expense recognized on statements of income
Net loss on securities
Unrealized gain on derivatives
Net decrease in allowance for loan losses
Net increase in asset for retirement benefits for employees
Net decrease in liability for retirement benefits for employees
Net increase in provision required under the Special Act
Net increase in loans
Net increase in deposits
Net decrease in negotiable certificates of deposit
Net increase in borrowed money (excluding subordinated loans)
Net decrease in due from banks (excluding cash equivalents)
Net increase in call money and others
Net decrease in money held in trust
Net increase in payables under securities lending transactions
Net decrease in lease receivables and investments in leases
Interest income—cash basis
Interest expense—cash basis
Other—net
Total adjustments
Net cash provided by operating activities—(Forward)¥

26,645$

217,706(10,532)42
3,362(54,688)
318
4,305
(449)
(44)
(2,764)(25)
3(40,674)
152,818(14,100)
938,646
11,0897,047
700
57,866
2,673
55,204(371)(12,896)
1,097,530¥1,124,175(86,053)343
27,470(446,834)
2,598
35,174(3,669)(360)(22,584)(204)
25(332,331)
1,248,615(115,205)
7,669,303
90,60457,5785,720
472,800
21,840451,050(3,031)(105,368)
8,967,481$ 9,185,187(513,552)
489,717
109,124(1,691)(1,674)830(52)
82,702(4,196,029)
4,001,283
891,609(13,816)(13,678)
6,781
(425)
675,725

0(1,116)(2,928)(4,061)

0(9,118)(23,924)(33,181)

988

8,073

(7,117)(58,150)974

1,199,769
930,918¥2,130,687

9,802,836
7,606,160$17,408,996

INVESTING ACTIVITIES:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturities of securities
Purchases of premises and equipment
Purchases of intangible assets
Proceeds from sales of premises and equipment
Other—net
Net cash provided by investing activities
FINANCING ACTIVITIES:
Proceeds from sales of treasury stock
Acquisition of treasury stock
Acquisition of treasury stock of subsidiaries (Note 5)
Dividends paid
Proceeds from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation (Note 5)
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 6)
See notes to consolidated financial statements.

36

Year Ended March 31, 2022

1. BASIS OF PRESENTATION OF CONSOLIDATEDFINANCIAL STATEMENTS

The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations
and the Enforcement Regulation for the Banking Law, and in accordance with accounting principles generally accepted in Japan (JapaneseGAAP), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form
that is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which The Juroku Financial Group,
Inc. (the “Company”) is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts are included solely forthe convenience of readers outside Japan and have been made at the rateof ¥122.39 to $1, the approximate rate of exchange at March 31, 2022.
Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars at that or any
other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation
The consolidated financial statements as of March 31, 2022, include theaccounts of the Company and its nine significant subsidiaries, including
Juroku Bank, Ltd., Juroku Research Institute Co., Ltd., Juroku Card
Co., Ltd., Juroku Lease Co., Ltd., Juroku Densan Digital Service Co.,
Ltd., NOBUNAGA Capital Village Co., Ltd., Juroku Business Service
Co., Ltd., Juroku Credit Guarantee Co., Ltd., and Juroku Tokai Tokyo
Securities Co., Ltd. (“Juroku TT Securities”) (together, the “Group”).
Due to the establishment of NOBUNAGA Capital Village Co.,
Ltd., it is included in the scope of consolidation of Juroku Bank, Ltd.
from the fiscal year ended March 31, 2022. Since Juroku Bank, Ltd.,
became a wholly-owned subsidiary following the establishment of theCompany, the Juroku Bank., Ltd., and its consolidated subsidiaries areincluded in the scope of consolidation from the fiscal year ended March
31, 2022.
Under the control concept, those companies in which the Company,
directly or indirectly, is able to exercise control over operations are fully
consolidated.
Investments in ten unconsolidated subsidiaries are stated at cost. If
the equity method of accounting had been applied to the investments inthese companies, the effect on the accompanying consolidated financial
statements would not be material.
The excess of the cost of acquisition over the fair value of the net
assets of an acquired subsidiary at the date of acquisition is being amortized over a period of 20 years.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profits included in
assets resulting from transactions within the Group have been eliminated in consolidation.
The balance sheet date for all consolidated subsidiaries is the end of
March for each year, which is consistent with the balance sheet date of
the Group.

b. Business Combinations

Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, areaccounted for as expenses in the periods in which the costs are incurred.
If the initial accounting for a business combination is incomplete by theend of the reporting period in which the business combination occurs,
an acquirer shall report in its financial statements provisional amounts
for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition,
the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and thatwould have affected the measurement of the amounts recognized as ofthat date. Such adjustments shall be recognized as if the accounting forthe business combination had been completed at the acquisition date.
A parent’s ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying
amount of noncontrolling interests is adjusted to reflect the change inthe parent’s ownership interest in its subsidiary while the parent retains
its controlling interest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and the amount by which thenoncontrolling interests are adjusted is accounted for as capital surplus
as long as the parent retains control over its subsidiary.

c. Cash and Cash Equivalents

For the purpose of the consolidated statement of cash flows, cash and cash
equivalents represent cash and amounts due from the Bank of Japan.

d. Trading Securities

Trading securities are stated at fair value and the related unrealized gains
and losses are included in earnings. The cost of trading securities sold isdetermined based on the moving-average method.

e. Securities

Securities other than trading securities are classified and accounted for,depending on management’s intent, as follows: (1) held-to-maturity
debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized costand (2) available-for-sale securities, which are not classified as held-tomaturity, are reported at fair value with unrealized gains and losses, netof applicable taxes, and are reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, securities are reduced to net realizable value by a charge to income.
Securities included in money held in trust for trading purposes
are stated at fair value, and the related unrealized gains and losses areincluded in earnings. Securities included in money held in trust forother purposes are accounted for by the same method as the above (2)available-for-sale securities.

f. Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment of the Company, except
for leased assets, is computed using the declining-balance method overthe estimated useful lives of the assets.
The range of useful lives is principally from 15 to 50 years forbuildings and from 4 to 20 years for other premises and equipment.
Depreciation of lease assets from finance lease transactions that do
not deem to transfer ownership of the leased property to the lessee iscomputed using the straight-line method over the leasing period. Residual values of lease assets are the guaranteed values determined in thelease contracts or zero for assets without such guaranteed value.
Under certain conditions, such as exchanges of premises and equipment for similar kinds and sales and purchases resulting from expropriation, Japanese tax laws permit companies to defer the profit arisingfrom such transactions by reducing the cost of the assets acquired or byproviding a special reserve in the equity section. The deferred gain on
premises and equipment resulting from the reduction of the cost of theassets acquired, which is taxable for tax purposes in the future, was ¥983
million ($8,032 thousand) as of March 31, 2022, respectively.

g. Long-Lived Assets

The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstances indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss is recognized
if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.

h. Land Revaluation

Under the “Law of Land Revaluation,” the Company elected a one-timerevaluation of its consolidated subsidiary’s land operating as Bank to avalue based on real estate appraisal information as of March 31, 1998.

37

The resulting land revaluation surplus represents unrealized appreciation of land and is stated, net of income taxes, as a component ofequity. There was no effect on the consolidated statement of income.
Continuous readjustment is not permitted unless the land value subsequently significantly declines such that the amount of the decline invalue should be removed from the land revaluation surplus account andrelated deferred tax liabilities.
The carrying amount of the land after the above one-time revaluation exceeded the market value by ¥14,043 million ($114,740 thousand) as of March 31, 2022.

i. Intangible Assets

Amortization of intangible assets is calculated using the straight-line
method.
Amortization cost of software for internal use is calculated using thestraight-line method over the estimated useful life, principally, five years.

j. Allowance for Loan Losses

The Company’s consolidated subsidiaries implemented a self-assessment
system for its asset quality. The quality of all loans is assessed by the
related lending division with a subsequent audit by the asset audit
division in accordance with the Company’s policies and rules for selfassessment of asset quality.
The Company has established a credit rating system under which
the customers are classified into five categories such as “normal,” “caution,” “possible bankruptcy,” “virtual bankruptcy” and “legal bankruptcy.” The credit rating system is used for the self-assessment of asset
quality.
With respect to loans to customers who are likely to become bankrupt or to be closely monitored and caution loans with equivalent credit
risk, which are classified within normal and caution loans (hereinafter,“loans to customers who are likely to become bankrupt or to be closely
monitored, etc.”) the allowance for loan losses is calculated based on
the projected future losses for the following three years, whilst for otherloans, for the following one year. The projected future losses are calculated by group (i.e. residential loans and non-residential loans) for loans
to customers who are likely to become bankrupt or to be closely monitored, etc. and other loans, based on the loss ratios, which are based on
the average of actual past loss ratios for the past three years and one year,
respectively. For loans such as possible bankruptcy, the allowance forloan losses is calculated based on an amount deemed necessary to coverpossible losses on loans considering the customer’s solvency and otherfactors after the estimated fair value of the collateral real estate or guaranteed amount has been deducted. For loans such as virtual bankruptcy
or legal bankruptcy, the allowance for loan losses is calculated based
upon the loan amount after the estimated fair value of the collateral realestate or guaranteed amount has been deducted.
For loans to possible bankruptcy customers and customers who arelikely to become bankrupt or to be closely monitored, the discounted
cash flow method is applied to calculate the loss provision. In thesecircumstances, the reserve is determined as the difference between thebook value of the loan and the present value of future cash flows, which
are discounted using the contractual interest rate in the case that future
cash flows of the principal and interest can be reasonably estimated.

k. Liability for Retirement Benefits

The Company has a contributory funded defined benefit pension plan,
lump-sum payment severance plan for employees and defined contribution pension plan, and certain subsidiaries have lump-sum payment severance plans for employees and apply the simplified method to state theliability based on the amount that should be paid if employees retired at
the consolidated balance sheet date.
The liability for retirement benefits is based on projected benefit
obligations and plan assets at the end of the fiscal year. The projected
benefit obligations are attributed to periods on a benefit formula basis.
Past service costs are recognized in profit or loss as incurred over three
years within the expected average remaining service period of the employees. Actuarial gains and losses that are yet to be recognized in profit
or loss are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects and are recognized in profit orloss over 10 years no longer than the expected average remaining service
period of the employees, starting in the fiscal year following the occurrence of such differences.

38

Retirement benefits to directors and Audit & Supervisory Board
members of consolidated subsidiaries are provided at the amount thatwould be required if all directors and Audit & Supervisory Board members retired at the consolidated balance sheet date based on internal policies.

l. Stock Option

The cost of stock options is measured based at fair value on the date of
grant and is recognized as compensation expense over the vesting period
as consideration for receiving goods or services. In the consolidated balance sheet, the stock options are presented as stock acquisition rights as
a separate component of equity until exercised.

m. Leases

In regard to finance leases, sales and cost of sales are recognized whenlease payments are received.
All other leases are accounted for as operating leases.

n. Provision for Losses from Reimbursement of Inactive Accounts
The provision for losses from reimbursement of inactive accounts, which
are derecognized as liabilities under certain conditions, is provided forpossible losses on future claims of withdrawal based on historical reimbursement experience.

o. Provision for Contingent Losses

The Company provides a provision for contingent losses not coveredby other provisions in an amount deemed necessary based on estimatedlosses in the future.

p. Provision Required under the Special Act

The provision required under the Special Act is a financial instruments
transaction liability reserve for consolidated subsidiaries engaged infinancial instruments business, and is provided to prepare for losses arising from operational incidents incurred in relation to trading and othersecurities transactions. The amount of the provision is calculated pursuant to the provisions of Article 46-5 of the Financial Instruments andExchange Act and Article 175 of the Cabinet Office Order on Financial
Instruments Business.

q. Income Taxes

The provision for current income taxes is computed based on the pretax
income included in the consolidated statement of income. The asset andliability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted income tax
rates to the temporary differences.

r. Foreign Currency Transactions

Foreign currency assets and liabilities of the Group are translated into
yen equivalents at the exchange rates prevailing at the fiscal year end.

s. Derivatives and Hedging Activities

The Company uses a variety of derivative financial instruments.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on the derivative transactions are recognized in the consolidated
statement of income, and (2) for derivatives used for hedging purposes,
if the derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged
items, gains or losses on the derivatives are deferred until maturity of
the hedged transactions.
The Company applies the deferral method of hedge accounting tohedges of interest rate risk associated with financial assets and liabilities
in accordance with “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in the Banking Industry” (JICPA Industry-specific Committees Practical Guideline
No. 24 issued by the Japanese Institute of Certified Public Accountants.
Under JICPA Industry-specific Committees Practical Guideline No. 24,
hedges to offset changes in fair value of fixed rate instruments (such as
securities) (fair value hedges) are applied by grouping hedging instruments and hedged items by their maturities. The assessment of hedge effectiveness is generally based on the consideration of interest rate indicesaffecting the respective fair values of the group of hedging instruments
and hedged items.

t. Per Share Information

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average numberof common shares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for
related interest expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years
including dividends to be paid after the end of the year, not retroactively
adjusted for a reverse stock split.

u. Changes in Accounting Policies

Application of Accounting Standards for Revenue Recognition
The Accounting Standard for Revenue Recognition (AccountingStandards Board of Japan (“ASBJ”) Statement No. 29, March 31, 2020)
has been applied from the beginning of the fiscal year ended March
31, 2022, and revenue will be recognized in the amount expected tobe received in exchange for the goods or services when control of thepromised goods or services is transferred to a customer. The impact of
this change on the consolidated financial statements is immaterial.
Application of Accounting Standards for Fair Value Measurement“Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019; hereinafter referred to as the “Fair Value Measurement Accounting Standards”) has been applied from the beginningof the fiscal year ended March 31, 2022, and the Company has decided
to prospectively apply the new accounting policies stipulated in the
Fair Value Measurement Accounting Standards, etc. in accordance withthe transitional treatment set forth in Paragraph 19 of the Fair Value
Measurement Accounting Standards and Article 44-2 of the “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10, July 4,2019). This change has no impact on the consolidated financial statements. In addition, in the note “FINANCIAL INSTRUMENTS AND
RELATED DISCLOSURES,” the Company has decided to make notes onmatters such as financial instruments categorized by fair value hierarchy.

v. New Accounting Pronouncements“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021)(1) Overview
The calculation of the fair value of investment trusts and the treatmentof notes as well as notes on the fair value of investments in associations,etc. whose equity interests are reported on the consolidated balance sheet
at a net amount were stipulated.
(2) Application date
The Company will apply the guidance from the beginning of the year
ending March 31, 2023.
(3) Impact of adoption
The Company is currently assessing the impact of adopting the above
guidance on the consolidated financial statements.

3. SIGNIFICANT ACCOUNTING ESTIMATES

Allowance for Loan Losses(1) Amount recorded on the consolidated financial statements in the year
ended March 31, 2022
Allowance for loan losses: ¥25,809 million ($210,875 thousand)(2) Information contributing to the understanding of details related tosignificant accounting estimates for certain items
1. Calculation method
The calculation method of allowance for loan losses is described in “Note
2.j, “Allowance for Loan Losses.”
2. Primary assumptionsa) The performance forecast of debtors, including those who prepare
management improvement plans, used to determine the debtor classification, estimate future cash flows related to the collection of the loan
principal and interest, is prepared based on assumptions derived fromavailable information.
Specifically, management improvement plans were developed basedon future performance forecasts, which include future sales forecast,prospect of future expense reduction, and future cash flow prospect,among others. Accordingly, the reasonableness and the feasibility of theplan are determined based on industry trends and individual management improvement plans of the debtors.
b) The effect of the spread of the new coronavirus disease on the economy is expected to continue over the next consolidated fiscal year considering the current situation of the infection. Although the extent of theeffect is expected to vary by each debtor, the determination of the debtor
classification, estimate of future cash flows related to the collection of
the loan principal and interest are based on the assumption that thecredit risk for loans and bills discounted originating from the Company’s
consolidated subsidiaries will be affected within the range of the above
assumptions. The above assumption has been changed from the one in
the previous fiscal year end, which stated that the effect of the spread of
the new coronavirus disease is expected to continue in the current fiscal
year for Juroku Bank, Ltd.
c) For loans other than those for which the discounted cash flow method
is applied, it is assumed that “normal” loans will incur approximately
the same amount of losses as those from previous years, “caution” loans
will incur approximately the same amount of losses as those from previous years and loans to customers who are likely to become bankrupt or
to be closely monitored, which are classified within normal and cautionloans, will incur approximately the same amount of losses as those fromprevious years.
3. Impact on the consolidated financial statements for the next fiscal year
If the assumptions used in the initial estimate changes due to changes
in the external environment, including the situation of the spread of
the new coronavirus disease, or the internal environment of the debtor,
among others, there is a possibility that the amount of allowance will increase or decrease due to changes in the debtor classification, fluctuationsof cash flow estimates or the occurrence of circumstances in which actual
bad debt losses differ from the initial assumption, which may result in asignificant impact on the consolidated financial statements.

4. CHANGES IN THE ACCOUNTING ESTIMATES

Change in the method of recording allowances for loan losses
Due to the spread of the new coronavirus disease, from the fiscal year
ended March 31, 2022, consolidated subsidiaries engaged in the banking business have determined that among caution loans other thanloans to customers who are likely to become bankrupt or to be closely
monitored, the credit risk has increased for loans to debtors who require
the equivalent support of loans to customers who are likely to becomebankrupt or to be closely monitored. Therefore, they have recorded expected losses equivalent to loans to customers who are likely to becomebankrupt or to be closely monitored for those loans. As a result of thischange in the estimate, allowance for loan losses at the end of the fiscal
year ended March 31, 2022 increased by ¥1,036 million ($8,465 thousand), and income before income taxes decreased by the same amount.

39

5. BUSINESS COMBINATIONS
For the Year Ended March 31, 2022

Establishment of a holding company through a sole share transfer
On October 1, 2021, the Company has become a holding company
through a sole share transfer of Juroku Bank, Ltd. The Company wasestablished with the aim of expanding business areas by entering new
businesses, etc., strengthening group collaboration through awarenessand behavior reform among executives and employees, optimizing theallocation of group management resources, strengthening auditing andsupervisory functions, and improving the speed of business execution.
The Company acquired all of the shares of the consolidated subsidiaries,
Juroku Research Institute Co., Ltd. and Juroku Computer Service Co.,
Ltd. (trade name was changed to Juroku Densan Digital Service Co.,
Ltd. on March 1, 2022), among the subsidiary shares held by Juroku
Bank, Ltd., which is a wholly-owned subsidiary of the Company, as of
October 1, 2021 through a transfer of shares from Juroku Bank, Ltd.,and these two companies are directly owned by the Company.
In addition, the Company acquired all of the shares of the consolidated subsidiaries, Ltd., Juroku Tokai Tokyo Securities Co., Ltd., Juroku
Card Co., Ltd., Juroku Lease Co., Ltd. and Nobunaga Capital Village
Co., Ltd., and all of the Company’s shares among the subsidiary shares
held by the Juroku Bank, Ltd. as of October 1, 2021 using the methodof receiving dividends in kind from the Juroku Bank, Ltd., and thesefour companies are directly owned by the Company. The Company’s
shares held by the Juroku Bank, Ltd. are allocated and issued with thesame number of the Company’s common shares to one treasury shareheld by the Juroku Bank, Ltd. at the time of the enforcement of theshare transfer and are promptly disposed of in accordance with the provisions of laws and regulations.
The transaction was accounted for as a transaction under common
control in accordance with ASBJ Statement No. 21, “Accounting Standard for Business Combinations” and ASBJ Guidance No. 10, “Guidance on Accounting Standard for Business Combinations and Business
Divestitures.”

Acquisition of Treasury Stock by Consolidated Subsidiaries

On October 1, 2021, the Company has acquired part of the treasury
stock which are owned by noncontrolling interests, in exchange for cashin the amount of ¥1,549 million ($12,657 thousand). This transaction was made to perform flexible implementation of capital measuresin response to changes in the business environment and strengthen thegovernance and increase profitability of the Juroku Card Co., Ltd. andJuroku Credit Guarantee Co., Ltd. The transaction was accounted for
as a transaction with noncontrolling interests in accordance with ASBJ
Statement No. 21, “Accounting Standard for Business Combinations”
and ASBJ Guidance No. 10, “Guidance on Accounting Standard forBusiness Combinations and Business Divestitures.” The Company has
recognized an increase of capital surplus in the amount of ¥4,005 million ($32,723 thousand) for the year ended March 31, 2022.

Acquisition of Treasury Stock by Consolidated Subsidiaries

On December 20, 2021, the Company has acquired part of the treasury
stock which are owned by noncontrolling interests, in exchange for cashin the amount of ¥1,379 million ($11,267 thousand). This transaction was made to perform flexible implementation of capital measuresin response to changes in the business environment and strengthen thegovernance and increase profitability of the Juroku Lease Co., Ltd. The
transaction was accounted for as a transaction with noncontrolling interests in accordance with ASBJ Statement No. 21, “Accounting Standard
for Business Combinations” and ASBJ Guidance No. 10, “Guidance on
Accounting Standard for Business Combinations and Business Divestitures.” The Company has recognized an increase of capital surplus in theamount of ¥3,966 million ($32,405 thousand) for the year ended March
31, 2022.

Sale of Stocks of Consolidated Subsidiary

At a meeting of the Board of Directors held on February 24, 2022, theCompany resolved to partially sell the shares of Juroku Computer Service Co., Ltd. (trade name was changed to Juroku Densan Digital Service
Co., Ltd. on March 1, 2022), a consolidated subsidiary of the Company,

40

to Densan System Holdings Co., Ltd., and partially sold the shares inexchange for cash on March 1, 2022. The aim of this transaction is
to contribute to the digitalization and promotion of DX in regional
companies and government and to the advancement of the Group’s DX
capabilities by combining the foundations and networks in the group’sbusiness areas with the capabilities of solution proposal of Densan System Holdings Co., Ltd. The transaction was accounted for as a transaction under common control in accordance with ASBJ Statement No. 21,“Accounting Standard for Business Combinations” and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations
and Business Divestitures.” The Company has recognized an increase ofcapital surplus in the amount of ¥6 million ($49 thousand) for the year
ended March 31, 2022.

6. CASH AND DUE FROM BANKS

Cash and due from banks as of March 31, 2022 consisted of the following:
Millions of Yen
2022
Cash
Due from banks
Total

Thousands of U.S.
Dollars
2022¥

61,604
2,074,091¥ 2,135,695$

503,342
16,946,572$17,449,914

A reconciliation between the cash and due from banks in the consolidated balance sheet and the cash and cash equivalents in the consolidated statement of cash flows for the year ended March 31, 2022 was asfollows:
2022

Thousands of
U.S. Dollars
2022¥2,135,695$17,449,914(5,008)(40,918)¥2,130,687$17,408,996

Millions of Yen

Cash and due from banks
Due from banksother than the Bank of Japan
Cash and cash equivalents

7. TRADING SECURITIES AND SECURITIES

Trading securities as of March 31, 2022 consisted of the following:
Millions of Yen
2022
Japanese government bonds
Japanese local government
bonds
Total

Thousands of U.S.
Dollars
2022

¥ 87

$711

28

229

¥115

$940

The Company records net valuation gains and losses as other operating
income and expenses, respectively. For the year ended March 31, 2022, theCompany recorded net valuation losses of ¥2 million ($16 thousand).
Securities as of March 31, 2022 consisted of the following:
2022

Thousands of U.S.
Dollars2022¥ 138,421
204,739$ 1,130,983
1,672,841

549,054

4,486,102

273,266
293,743¥ 1,459,223

2,232,748
2,400,057$ 11,922,731

Millions of Yen

Equity securities
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other securities
Total

Unsecured loaned securities which borrowers have the right to sell or
pledge in the amount of ¥62,738 million ($512,607 thousand) as ofMarch 31, 2022 were included in Japanese government bonds.

Information regarding available-for-sale and held-to-maturity
securities as of March 31, 2022 was as follows:
March 31, 2022
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity—
debt securities

March 31, 2022
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other
Held-to-maturity—
debt securities

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

Unrealized gain on available-for-sale securities as of March 31, 2022
consisted of the following:¥ 45,695
971,548
287,099¥88,138
1,232
1,453

¥ 1,465
8,516
11,045¥132,368
964,264
277,50762,795281

216

62,860

Cost

Thousands of U.S. Dollars
Unrealized Unrealized
Fair
Gains
LossesValue$ 373,356
7,938,132
2,345,771$720,140
10,066
11,872513,073

2,296$11,970 $1,081,526
69,581 7,878,617
90,244 2,267,399
1,765

513,604

Proceeds from sales of available-for-sale securities for the year ended
March 31, 2022 consisted of the following:
March 31, 2022
Equity securities
Debt securities:
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other
Total
March 31, 2022
Equity securities
Debt securities:
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other
Total

2022

Thousands of U.S.
Dollars2022¥ 69,914
12(20,736)$ 571,240
98(169,426)

49,190401,912(1)(8)¥ 49,189$ 401,904

Millions of Yen

Fair
Value
Unrealized gain before
deferred tax on:
Available-for-sale securities
Money held in trust—other
Deferred tax liabilities
Unrealized gain on availablefor-sale securities before
interest adjustments
Noncontrolling interests
Unrealized gain on availablefor-sale securities

Unrealized gain before deferred tax on available-for-sale securities includes ¥490 million ($4,004 thousand) of revaluation gain on availablefor-sale securities as of March 31, 2022, which is held by an investment
limited partnership and similar groups.
Investments in and advances to subsidiaries and associated companies as of March 31, 2022 were ¥840 million ($6,863 thousand).

8. MONEY HELD IN TRUSTMillions of Yen
Proceeds
Realized Gains Realized Losses¥ 33,305¥ 6,643¥ 197
43,318196

151

16,13734

29

43,612339,947¥476,319

26
1,845¥ 8,744—
12,121¥12,498

Thousands of U.S. Dollars
Proceeds
Realized Gains Realized Losses$ 272,122$54,277$ 1,610
353,934

1,602

1,234

131,849278

237

356,336
2,777,572$3,891,813

212
15,075$71,444—
99,035$102,116

In addition, held-to-maturity securities amounting to ¥21 million($172 thousand) were reclassified as available-for-sale securities due to a
decline in the issuer’s credit worthiness as of March 31, 2022. The effectof these reclassifications on the accompanying consolidated financial
statements was immaterial.
Securities other than trading securities (excluding those securities
that do not have a market price and investments in partnerships) whose
fair value significantly declined below the acquisition cost and is considered not likely to be recovered are written down to their respective
fair value, which is recorded as the carrying amount on the consolidatedbalance sheets.
The fair value is deemed to have significantly declined if the yearend fair value declined by 30% or more from the acquisition cost for
securities issued by bankrupt borrowers, virtually bankrupt borrowers,
potentially bankrupt borrowers, and borrowers who are likely to becomebankrupt or to be closely monitored, and if the fair value declined by
50% or more from the acquisition cost for securities issued by normal
borrowers.
The impairment loss on available-for-sale equity securities for theyear ended March 31, 2022, was ¥33 million ($270 thousand), which
consisted of ¥17 million ($139 thousand) of equity securities and ¥16
million ($131 thousand) of debt securities.

Information regarding money held in trust for trading purposes as ofMarch 31, 2022 was as follows:
Carrying AmountThousands of U.S.
Millions of Yen
Dollars
2022
2022
Money held in trust classified
as trading purpose
Money held in trust—otherTotal¥ 6,000$49,024

5,612¥11,61245,853$94,877

9. LOANS AND BILLS DISCOUNTED

Loans and bills discounted as of March 31, 2022 consisted of the following:
Millions of Yen
2022
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
OthersTotal¥

12,02688,196
4,078,798
337,839
4,965¥ 4,521,824

Thousands of U.S.
Dollars
2022$

98,260720,61433,326,236
2,760,348
40,567$ 36,946,025

Loans under the Banking Act and the Act on Emergency Measures for the
Revitalization of Financial Functions are as follows: Loans are corporate
bonds in “Securities” on the consolidated balance sheet (guaranteed forall or part of the redemption of the principal and payment of interest,
and the issuance of such bonds is limited to private placement of securities (Article 2, Paragraph 3 of the Financial Instruments and ExchangeAct).), loans and bills discounted, foreign exchange, accrued interest andadvance payments in “Other Assets”, etc., as well as securities recorded ineach account, such as customers’ liabilities for acceptances and guarantee,
and securities (limited to those under use leases or lease agreements) inthe case of lending of securities that are to be noted.

41Millions of Yen
2022
Loans under bankruptcy/
rehabilitation or similar
proceedings
Doubtful loans
Loans requiring management
Accruing loans past due
three months or more
Restructured loans
Normal loans
Total

¥

12,288

Thousands of U.S.
Dollars2022$

100,400

56,831
2,262

464,344
18,482

19

155

2,243
4,613,945¥ 4,685,326

18,327
37,698,709$ 38,281,935“Loans under bankruptcy/rehabilitation or similar proceedings” are loans
against borrowers who have fallen into bankruptcy due to reasons suchas the commencement of bankruptcy proceedings, the commencementof rehabilitation proceedings, or the application for the commencementof rehabilitation proceedings, and the commencement of rehabilitation
proceedings, as well as similar loans.
“Doubtful loans” are claims in which the debtor has not yet reacheda state of bankruptcy, but whose financial position and operating results
have deteriorated and there is a high possibility that the principal of
the receivables and interest cannot be collected in accordance with thecontract. Loans under bankruptcy/rehabilitation or similar proceedings
are excluded from doubtful loans.
“Accruing loans past due three months or more” are defined as loans
and bills discounted for which principal or interest is past due more than
three months from the date following the prescribed payment date. Loans
under bankruptcy/rehabilitation or similar proceedings and doubtful
loans are excluded from accruing loans past due three months or more.
“Restructured loans” are defined as loans and bills discounted inwhich the Company is providing financial support to a borrower by areduction of interest rates, deferral of interest payments, extension of
maturity dates, or reduction of the face or maturity amount of the debt
or accrued interest. Loans under bankruptcy/rehabilitation or similar
proceedings, doubtful loans and accruing loans past due three months ormore are excluded from restructured loans.
“Normal loans” are those that do not have any particular problems
with the financial position and operating results of the borrower andclassified other than loans under bankruptcy/rehabilitation or similar proceedings, doubtful loans, accruing loans past due three months or more
and restructured loans.
Bills discounted are accounted for as financing transactions in accordance with “Accounting and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in the Banking
Industry” (JICPA Industry-specific Committees Practical Guideline No.
24) issued by the Japanese Institute of Certified Public Accountants. The
Bank has rights to sell or pledge accepted commercial bills discounted
and foreign bills of exchange bought without restrictions. The total fairvalue of commercial bills discounted and foreign bills of exchange bought
included in foreign exchanges as of March 31, 2022 were ¥12,363 million ($101,013 thousand).

Changes in Presentation

In accordance with the Cabinet Office Ordinance Partially Amending
the Enforcement Regulations of the Banking Act, etc. (Cabinet Office
Ordinance No. 3 of January 24, 2020) that came into effect on March 31,
2022, the classification of “risk management loans” under the Banking
Act is presented in accordance with the classification of disclosure loans
based on the Act on Emergency Measures for the Revitalization of Financial Functions.

42

10. FOREIGN EXCHANGES

Foreign exchanges as of March 31, 2022 consisted of the following:
Millions of Yen
2022
Assets:Due from foreign
correspondent accountForeign bills of exchange bought
Foreign bills of exchange receivable
Total
Liabilities:
Due to foreign correspondent accountForeign bills of exchange payable
Total

Thousands of U.S.
Dollars
2022¥7,952$64,973

337
572¥8,861

2,753
4,674$72,400¥1,165430¥1,595$ 9,519
3,513$13,032

11. OTHER ASSETS

Other assets as of March 31, 2022 consisted of the following:
2022

Thousands of U.S.
Dollars
2022

4,338
11,016
18,256
6,995
74,224¥ 114,829$ 35,444
90,007
149,163
57,153
606,455$ 938,222

Millions of Yen

Accrued income
Accounts receivable
Installment receivables
Derivative assets
Other
Total

¥

12. PREMISES AND EQUIPMENT

Premises and equipment as of March 31, 2022 consisted of the following:
2022

Thousands of
U.S. Dollars
2022¥43,437
10,576
3
4,297¥58,313$354,906
86,412
25
35,109$476,452

Millions of Yen

Land
Building
Construction in progress
Other
Total

The accumulated depreciation of premises and equipment as of March
31, 2022 amounted to ¥62,558 million ($511,137 thousand).

13. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEESAll contingent liabilities arising from acceptances and guarantees arereflected in acceptances and guarantees. As a contra account, the customers’ liabilities for acceptances and guarantees are presented as assets,
representing the Company’s right of indemnity from applicants.
The Enforcement Ordinance of the Banking Law was revised on
April 17, 2007, and effective from the fiscal years beginning on and after
April 1, 2006. The Company offsets customer’s liabilities for acceptanceand guarantees with acceptance and guarantees of ¥62,847 million($513,498 thousand) arising from guarantees of private placement securities as of March 31, 2022.

14. ASSETS PLEDGED

Assets pledged as collateral and their relevant liabilities as of March 31,
2022 were as follows:
2022

Thousands of
U.S. Dollars
2022¥ 884,605
1,187,313
94¥ 2,072,012$ 7,227,756
9,701,062
768$ 16,929,586¥ 105,140$

Millions of Yen
Assets pledged as collateral:
Securities
Loans and bills discounted
Other assets
Total
Relevant liabilities to above assets:
Deposits
Payables under repurchaseagreements
Payables under securities
lending transactions
Borrowed money
Total

133,747

859,057
1,092,794

87,538715,238

1,384,230¥ 1,710,655

11,309,993$13,977,082

Additionally, initial margins of futures markets, cash collateral received
for financial instruments liabilities, guarantee deposits and initial margins of Central Counterparty included in other assets were as follows:
2022

Thousands of U.S.
Dollars2022¥ 2,215$ 18,098

3,489

28,507

1,884

15,39336,345296,961¥43,933$ 358,959

Millions of Yen

Initial margins of future
markets
Cash collateral received forfinancial instruments liabilities
Guarantee deposits
Initial margins of Central
Counterparty
Total

Borrowed money and lease obligation as of March 31, 2022 consisted of
the following:
2022

Thousands of
U.S. Dollars
2022¥1,405,797$11,486,208——

Millions of Yen

Borrowings due serially to December 2026 with weighted averageinterest rates of 0.00% in 2022
Lease obligation

Weighted average interest rates of lease obligation are not represented
because the lease obligation is disclosed on the balance sheet without
deducting the interest portion which is included in the amount of thelease obligation.
Annual maturities of borrowings as of March 31, 2022 were as follows:
As of March 31, 2022
Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen¥1,227,702
113,770
62,475
1,435
415—¥1,405,797

Deposits as of March 31, 2022 consisted of the following:
2022

Thousands of U.S.
Dollars2022¥ 442,580
3,673,361
48,122
99,7901,892,701
68,737¥ 6,225,291$ 3,616,145
30,013,571
393,186
815,344
15,464,507
561,623$50,864,376

Millions of Yen

Thousands of
U.S. Dollars$10,031,065
929,569
510,458
11,725
3,391—$11,486,208

There was no lease obligation as of March 31, 2022.

17. OTHER LIABILITIESOther liabilities as of March 31, 2022 consisted of the following:
Millions of Yen

15. DEPOSITS

Current deposits
Ordinary deposits
Deposits at notice
Savings deposits
Time deposits
Other deposits
Total

16. BORROWED MONEY AND LEASE OBLIGATION

2022
Domestic exchange settlement
account, credit*
Income taxes payable
Accrued expenses
Deferred income
Derivative liabilities
Accounts payable
Other
Total

¥

158

3,005
1,168
17,496
10,674
7,382
22,605¥62,488

Thousands of
U.S. Dollars
2022
$

1,291

24,553
9,543
142,953
87,21360,315
184,697$ 510,565* The domestic exchange settlement account consisted of outstanding
remittance bills from other banks and/or collection bills for which theCompany has received notices for payment from other banks, whichhave not been settled.

43

18. RETIREMENT AND PENSION PLANS

The consolidated subsidiary engaged in banking business (the “Bank”),
has a contributory funded defined benefit pension plan, lump-sum payment severance plan for employees and defined contribution pension
plan. The Bank contributed certain assets to the employee retirement
benefit trust for its contributory funded defined benefit pension plan andthe assets in this trust are qualified as plan assets. Certain subsidiaries
other than above have lump-sum payment severance plans for employees and apply the simplified method to state the liability based on theamount that would be paid if employees retired at the consolidated balance sheet date.
(1) The changes in defined benefit obligation for the year ended March
31, 2022 were as follows:
2022

Thousands of
U.S. Dollars
2022¥41,803
1,491
141
99
(2,184)¥41,350$341,556
12,182
1,152
809(17,845)$337,854

Millions of Yen

Balance at beginning of year
Current service cost
Interest cost
Actuarial losses
Benefits paid
Balance at end of year

(2) The changes in plan assets for the year ended March 31, 2022 wereas follows:
2022

Thousands of
U.S. Dollars
2022¥47,992$392,123

1,440

11,766

919

7,509

695

5,678

(1,648)¥49,398(13,465)$403,611

Millions of Yen

Balance at beginning of year
Expected return on plan
assetsActuarial gains
Contributions from theemployer
Benefits paid
Balance at end of year

(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets
as of March 31, 2022 was as follows:
2022

Thousands of
U.S. Dollars
2022¥ 35,178$ 287,425(49,398)(14,220)(403,611)(116,186)

6,172

50,429¥ (8,048)$ (65,757)

Millions of Yen

Funded defined benefit
obligation
Plan assets
Unfunded defined benefit
obligation
Net asset arising from defined
benefit obligation

Millions of Yen
2022
Liability for retirement benefits
for employees
Asset for retirement benefits for
employees
Net asset arising from defined
benefit obligation

44¥

Thousands of
U.S. Dollars
2022

6,172

$ 50,429(14,220)(116,186)¥ (8,048)$ (65,757)(4) The components of net periodic benefit costs for the year ended
March 31, 2022 were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022¥ 1,491
141(1,440)(282)(1,469)¥(1,559)

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial gains
Past service cost
Net periodic benefit costs$ 12,182
1,152(11,766)(2,304)(12,002)$ (12,738)(5) Amounts recognized in other comprehensive income (before income
tax effect) in respect of defined retirement benefit plans for the year
ended March 31, 2022 were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022¥(1,469)539¥ (930)

Past service cost
Actuarial gains
Total$ (12,002)
4,404$ (7,598)(6) Amounts recognized in accumulated other comprehensive income(before income tax effect) in respect of defined retirement benefit plans
as of March 31, 2022 were as follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022
Unrecognized past service cost
Unrecognized actuarial gains
Total¥(1,836)(2,931)¥(4,767)$ (15,001)(23,948)$ (38,949)(7) Plan assets(a) Components of plan assets
Plan assets consisted of the following:2022
Debt investments
Equity investments
General account for life insurance
Others
Total

26%
44
17
13
100%

Note: The retirement benefit trust that contributed to the pension planis included in the plan assets and constitutes 20% of the total
plan assets as of March 31, 2022.
(b) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering
the current and future asset portfolio and the long-term rates of return
which are expected currently and in the future from the variety of plan
assets in the asset portfolio.
(8) Assumptions used for the year ended March 31, 2022 were set forth
as follows:
2022
Discount rate:
Lump-sum payment
Pension plan
Expected rate of return onplan assets

19. ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations are recognized for obligations of restoringleased buildings, such as branch premises, to their original state, basedon the real estate lease contracts and asbestos removal costs.
Asset retirement obligations are calculated based on the estimatedavailable periods of 4 to 47 years depending on the expected useful livesof buildings using discount rates from 0.000% to 2.461%.
The changes in asset retirement obligations, which are included inother liabilities, for the year ended March 31, 2022 were as follows:
Millions of Yen
2022
Balance at beginning of year
Reconciliation associatedwith passage of time
Balance at end of year

20. EQUITY

Thousands of
U.S. Dollars
2022

¥203

$1,658

4

33

¥207

$1,691

Japanese banks are subject to the Companies Act of Japan (the “CompaniesAct”). The significant provisions in the Companies Act that affect financial
and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time
during the fiscal year, in addition to the year-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meetcertain criteria, the Board of Directors may declare dividends (except
for dividends-in-kind) at any time during the fiscal year if the company
has prescribed so in its articles of incorporation. However, the Bank
cannot do so because it does not meet the criteria. Semiannual interim
dividends may also be paid once a year upon resolution by the Boardof Directors if the articles of incorporation of the company so stipulate.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders, but
the amount of net assets after dividends must be maintained at no lessthan ¥3 million.
b. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Boardof Directors. The amount of treasury stock purchased cannot exceed
the amount available for distribution to the shareholders which isdetermined by a specific formula. Under the Companies Act, stockacquisition rights are presented as a separate component of equity. The
Companies Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.
Japanese Banking Law also provides that an amount equal to at least
20% of the aggregate amount of cash dividends and certain other cash
payments, which are made as an appropriation of retained earnings applicable to each fiscal period, shall be set aside as a legal reserve until the
total additional paid-in capital and legal reserve equals 100% of statedcapital. The amount of total additional paid-in capital and legal reservethat exceeds 100% of stated capital can be transferred to retained earnings by resolution of the shareholders, which may be available for dividends. The Juroku Bank, Ltd.’s legal reserve amount, which is included
in retained earnings, totals ¥20,155 million ($164,678 thousand) as ofMarch 31, 2022.

21. STOCK OPTIONSThe stock options outstanding as of March 31, 2022 are as follows:
Stock
OptionPersons
GrantedNumber of
Options
GrantedDate ofGrant

1st Stock
Option11 directors(Juroku
Bank, Ltd.)2,780 shares2013.7.23¥ 1 From October 1, 2021($0.01) to July 23, 2043

2nd Stock 11 directors(Juroku
Option Bank, Ltd.)6,240 shares2014.7.23¥ 1 From October 1, 2021($0.01) to July 23, 2044

3rd Stock
Option10 directors(Juroku
Bank, Ltd.)3,600 shares2015.7.23¥ 1 From October 1, 2021($0.01) to July 23, 2045

4th Stock
Option7 directors
8 executive
officers(Juroku
Bank, Ltd.)

5,200 shares2016.7.22¥ 1 From October 1, 2021($0.01) to July 22, 2046

5th Stock
Option7 directors
8 executive
officers(Juroku
Bank, Ltd.)

6,100 shares2017.7.21¥ 1 From October 1, 2021($0.01) to July 21, 2047

6th Stock
Option7 directors
9 executive
officers(Juroku
Bank, Ltd.)8,530 shares2018.7.23¥ 1 From October 1, 2021($0.01) to July 23, 2048

7th Stock
Option7 directors
9 executive
officers(Juroku
Bank, Ltd.)

13,100 shares2019.7.23¥ 1 From October 1, 2021($0.01) to July 23, 2049

8th Stock
Option6 directors
9 executive
officers(Juroku
Bank, Ltd.)

15,900 shares2020.7.22¥ 1 From October 1, 2021($0.01) to July 22, 2050

6 directors
3 executive
officers
9th Stock (the Company)
6 directors 29,470 shares
Option 12 executive
officers(Juroku
Bank, Ltd.)

2021.12.23¥ 1 From December 24, 2021($0.01) to December 23, 2051

Exercise
Price

Exercise
PeriodNote: The 1st to 8th Stock Option are the rights issued by the Company
to the holders of stock option rights issued by the Juroku Bank,
Ltd. due to the establishment of the Company through the sole
share transfer of the Juroku Bank, Ltd.

0.084%
0.382
3.000

The amount to be paid to defined contribution pension plan was ¥373
million ($3,048 thousand) for the year ended March 31, 2022.

45

The stock option activity is as follows:
1st Stock
Option2nd Stock
Option

3rd Stock
OptionYear Ended March 31, 2022
Non-vested
March 31, 2021—Outstanding
GrantedCanceled
VestedMarch 31, 2022—Outstanding

—
2,780
—
2,780
—

—
6,240
—
6,240
—

—
3,600
—
3,600
—

4th Stock 5th Stock
OptionOption(Shares)
—
5,200
—
5,200
—

—
6,100
—
6,100
—

Volatility of stock price (%):
Estimated remaining
outstanding period (years):
Estimated dividend (per share):

—
2,780
—
—
2,780

—
6,240
—
—
6,240

—
3,600
—
—
3,600

—
5,200
—
—
5,200

—
6,100
—
—
6,100

Exercise price¥ 1($0.01)——¥3,650($29.82)¥ 1($0.01)——¥3,200($26.15)¥ 1($0.01)——¥4,640($37.91)¥ 1($0.01)——¥2,390($19.53)¥ 1($0.01)——¥3,170($25.90)

Average stock price at exercise
Fair value price at grant date

6th Stock
Option7th Stock
Option8th Stock
Option

—
8,530
—
8,530
—

—
13,100—13,100——15,900—15,900——29,470—16,84012,630March 31, 2021—Outstanding
VestedExercised
Canceled
March 31, 2022—Outstanding

—
8,530
540
—
7,990

—
13,100710—
12,390—15,900790—
15,110—16,840——16,840Exercise price¥ 1($0.01)¥2,112($17.26)¥2,587($21.14)¥ 1($0.01)¥2,112($17.26)¥2,068($16.90)¥ 1($0.01)¥2,112($17.26)¥1,670($13.64)¥ 1($0.01)——¥1,748($14.28)

Fair value price at grant date

9.2

8.7

5.6

5.1

¥70
($0.57)0.484¥70($0.57)0.328¥70($0.57)(0.337)¥70($0.57)(0.052)

6th Stock 7th Stock 8th Stock 9th Stock
Option Option Option Option
32.072 32.063 31.476 34.594

Risk free interest rate (%):

4.3

4.2

3.6

4.3

¥70
($0.57)(0.116)¥70($0.57)(0.229)¥70($0.57)(0.153)¥100($0.82)(0.096)

22. OTHER OPERATING INCOME

Other operating income for the year ended March 31, 2022 consisted of
the following:
2022

Thousands of U.S.
Dollars2022¥ 1,730$ 14,135

24,811

202,7215,615¥32,156

45,878$ 262,734

Millions of Yen

Gains on sales of Japanese
government bonds and other
Income on lease transaction
and installment receivables
Other
Total

Millions of Yen
2022
Gain on sales of stock andother securities
Other
Total

Thousands of U.S.
Dollars
2022¥7,013$57,300

641¥7,654

5,237$62,537

24. GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the year ended March 31, 2022
consisted of the following:
2022

Thousands of U.S.
Dollars
2022¥18,359
4,706
21,495¥44,560$150,004
38,451
175,627$364,082

Millions of Yen

Note: For the 1st to 8th Stock Options, the fair valuation rate as of theinitial date granted by the Juroku Bank, Ltd. is described.
Salaries and wages
Commission fee
Other
Total

The Bank and its subsidiaries are subject to Japanese national and local
income taxes, which in the aggregate, resulted in a normal effective
statutory tax rate of approximately 29.92% for the year ended March
31, 2022.
The tax effects of significant temporary differences and tax loss carryforwards, which result in deferred tax assets and liabilities as of March
31, 2022 were as follows:
2022

Thousands of U.S.
Dollars2022¥ 6,672
6,671$ 54,514
54,506

1,851

15,124

1,274
2,102(8,435)
10,135

10,40917,175(68,919)
82,809(20,736)(169,425)(2,198)(17,959)(955)(7,803)(1,429)(25,318)¥ (15,183)(11,676)(206,863)$ (124,054)

Millions of Yen
Deferred tax assets:
Allowance for loan losses
Write-down of securities
Liability for retirement
benefits for employees
Depreciation
Other
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on
available-for-sale securities
Net defined benefit asset
Gain on contribution ofavailable-for-sale securities to
employees’ retirement benefit trusts
Other
Total
Net deferred tax liabilities

A reconciliation between the normal effective statutory tax rate and theactual effective tax rate reflected in the accompanying consolidated statement of income for the year ended March 31, 2022 was as follows:
2022

23. OTHER INCOME

Other income for the year ended March 31, 2022 consisted of the following:

VestedAverage stock price at exercise

Volatility of stock price (%):
Estimated remaining
outstanding period (years):
Estimated dividend (per share):

5.9¥70($0.57)0.322

9th Stock
OptionYear Ended March 31, 2022
Non-vested
March 31, 2021—Outstanding
GrantedCanceled
VestedMarch 31, 2022—Outstanding

1st Stock 2nd Stock 3rd Stock 4th Stock 5th Stock
Option Option Option Option Option
30.795 30.872 30.851 29.674 31.781

Risk free interest rate (%):

VestedMarch 31, 2021—Outstanding
VestedExercised
Canceled
March 31, 2022—Outstanding

26. INCOME TAXESThe Assumptions Used to Measure the Fair Value of the Stock Option(1) Estimate method: Black-Scholes option pricing model(2) Main basic amount and the method of estimation

25. OTHER EXPENSE

Normal effective statutory tax rate
Expenses not deductible for income
tax purposes
Income not taxable for income tax
purposes
Per capita tax
Net change in valuation allowance
Elimination of dividend income
Consolidated adjustment for gains
on sale of shares of subsidiaries
Other—net
Actual effective tax rate

29.92%
1.12(20.81)
0.26
13.87
3.51
4.32
1.41
33.61%

27. LEASES

Finance Leases(Lessee)A subsidiary leases certain premises.
There was no rental expense including lease payments under thefinance leases for the year ended March 31, 2022.
(Lessor)A subsidiary leases certain equipment and other assets.
The net investments in leases as of March 31, 2022 were as follows:

Gross lease receivables
Unguaranteed residual values
Deferred interest income
Total

2022

46

Loss on sales of stock and othersecurities
Write-down of stock and othersecurities
Other
Total

¥ 461

Thousands of U.S.
Dollars
2022¥53,339
1,353(4,449)¥50,243$435,812
11,055(36,351)$410,516

Maturities of lease receivables for finance leases that were deemed totransfer ownership of the leased assets to the lessee are as follows:
As of March 31, 2022
Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen¥1,362
1,158
835
503
310
456
¥4,624

Thousands of
U.S. Dollars$11,128
9,462
6,822
4,110
2,533
3,726
$37,781

Maturities of investment in leases for finance leases that were deemed
not to transfer ownership of the leased assets to the lessee are as follows:
As of March 31, 2022
Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen¥14,992
12,489
9,687
6,786
4,231
5,154
¥53,339

Thousands of
U.S. Dollars$122,494
102,043
79,14855,446
34,57042,111$435,812

Operating Leases(Lessee)
The minimum rental commitments under noncancelable operatingleases as of March 31, 2022 were as follows:
Millions of Yen
2022
Due within one year
Due after one year
Total

¥ 241
1,430
¥ 1,671

Thousands of U.S.
Dollars2022$ 1,969
11,684$13,653(Lessor)
Expected future rental revenues under operating leases as of March 31,
2022 were as follows:

Other expense for the year ended March 31, 2022 consisted of the following:
Millions of Yen

2022

Thousands of U.S.
Dollars2022

Millions of Yen

Millions of Yen
2022
Due within one year
Due after one year
Total

¥ 474
598
¥ 1,072

Thousands of U.S.
Dollars2022$3,873
4,886$8,759$3,767

21

172

590
¥1,072

4,820$8,75947

28. FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURES(1) Group Policy for Financial Instruments
The Group provides banking services and comprehensive financial services including a leasing business. The Group meets the needs of local
business through providing various products and services in the banking
services, lending services, trading of securities, securities investments
and other financial services such as a derivatives business.
In the core banking business, in addition to procurement throughthe acceptance of deposits, the Group raises funds through borrowings
and other means, manage loans with a focus on business loans and housing loans, and manage securities investment with a focus on bonds.
In this way, since the Group has financial assets and liabilities
mainly with interest rate fluctuations, the Group conducts comprehensive management of assets and liabilities (ALM) so that adverse effects
from interest rate fluctuations do not occur. As part of this, the Groupalso conducts derivative transactions.
(2) Nature and Extent of Risks Arising from Financial Instruments
The loans and bills discounted are to general business enterprises, individuals, and local public bodies, and there is a risk (credit risk) that thevalue of loaned money is reduced by financial deterioration of the borrower and a risk (interest risk) of losses due to changes in interest rates.
In securities, the Group holds domestic bonds, foreign securities,
stocks, investment trusts, and investment partnerships and so forth forinvestment purposes. Also, the Group holds certain domestic bonds
for held-to-maturity purposes. In trading securities, the Group holds
domestic bonds for trading. These items have interest risk, risk ofchanges in price, credit risk, and market liquidity risk. Market liquidity
risk represents the risk that market trades cannot be performed due tomarket turmoil and that the Group may suffer losses due to significantly
unfavorable financing conditions.
Deposits and borrowed money hold interest risk and cash flow risk
(liquidity risk). Cash flow risk refers to the risk that securing necessaryfinancing becomes difficult or significant unfavorable financing conditions result in recording of loss due to a mismatch of periods between
operations and financing and unexpected outflows of money. Derivativetransactions related to interest are comprised of interest-rate swap agreements, cap agreements, floor agreements, and interest futures.
Derivative transactions related to currency are comprised of exchange contracts, non-deliverable forwards (NDF), currency swap agreements, and currency option contracts. Derivative transactions related tosecurities are comprised of bond futures, options on bond futures, OTC
bond options, stock index futures, options on stock index futures, andindividual security options.
The Group utilizes derivative transactions to meet customer needs
and to control risk so that interest risk, risk of changes in prices, andforeign currency exchange risk are not excessive. In trading transactions,
the Group utilizes derivative transactions to earn a profit and to accumulate the know-how related to the transactions and understand market
trends.
The derivative transactions the Group utilizes are exposed to interest risk, currency exchange risk, the risk of change in prices, and credit
risk. In utilizing derivative transactions, the Group performs effective
covering of transactions to meet customers’ needs, and in trading transactions, the Group preliminarily establishes a risk limit to avoid exposing the Group to an excessive degree of market risk. Transactions suchas listed futures are exposed to limited credit risk and OTC transactions
such as interest swaps are assumed to have low risk since the counterparties are comprised of highly credible financial institutions and companies.
(3) Risk Management for Financial Instruments
Integrated risk
The Group defines integrated risk management policies and regulations,and strengthens integrated risk management to ensure the soundness ofmanagement.
The Group monitors various risks holistically including measurement by statistical methods and aims to control risks within the rangeof management vitality. Integrated risk is managed by the Group Risk
Supervisory Division and is reported generally quarterly to the Group
Risk Compliance Meeting and Group Risk Compliance Committee andgenerally semiannually to the Board of Directors’ meetings. Necessary
actions such as risk control are taken promptly.

48

Credit risk management
Credit risk refers to the risk of incurring losses due to a decrease or loss
in the value of assets as a result of deterioration in the financial situationof a creditor.
Regarding credit risk management, the Group defines a credit
rating system where the Group evaluates the degree of credit risk by
an integrated scale objectively and discusses countermeasures with theGroup companies as necessary in addition to monitoring the status ofcredit risk management at the Group companies and the risk of credit
concentration throughout the Group.
Market risk management (foreign exchange risk and interest rate risk)
Market risk refers to the risk that the value of assets and liabilities
will fluctuate due to fluctuations in various market risk factors such as
interest rates, foreign exchange rates, and stocks, and the risk of incurring losses due to fluctuations in the earnings generated from assets andliabilities.
Under integrated risk management, the consolidated subsidiaries
engaged in banking business semi-annually allocate risk capital to eachbusiness (deposit, loan, investment securities and other securities) andestablish a cap on the investment amount and a maximum loss amountand matter to be discussed (level of loss to be re-examined) and department in charge handles market transactions within these risk limits
expeditiously and effectively.
The Group holds financial instruments which are exposed to market
risks (e.g. interest rate risk, price-volatility risk and exchange risk) suchas loans and bills discounted, securities, deposits, negotiable deposits,
borrowed money and corporate bonds. To manage these market risks,
the Group calculates VaR, which is used for quantitative analysis.
The Group calculates VaR of yen-denominated bonds (including
private placement bonds), borrowed money and corporate bonds thatare exposed to interest rate risk by the variance-covariance method (sixmonths holding period with confidence interval of 99%, observation
period one year). The VaR of these financial instruments amounted to¥22,170 million ($181,142 thousand) in aggregate as of March 31,
2022.
The Group calculates VaR of investment securities that are exposed
to price-volatility risk by the variance-covariance method (six months
holding period with confidence interval of 99%, observation period oneyear). The VaR of these financial instruments amounted to ¥42,442 million ($346,777 thousand) in aggregate as of March 31, 2022.
In addition, the Group calculates VaR of securities, excluding investment securities, which are exposed to interest rate risk or the pricevolatility risk by the variance-covariance method (six months holding
period with confidence interval of 99%, observation period one year).
The VaR of these financial instruments amounted to ¥39,326 million($321,317 thousand) in aggregate as of March 31, 2022.
The Group compares VaR calculated by the formula with the actualfluctuation of realized gains and losses to verify that the calculated VaRreflects market risks with a high degree of accuracy.
However, VaR might not reflect market risks in circumstances suchas unforeseen wide fluctuations in market circumstances because VaRreflects a certain amount of market risks calculated statistically based on
historical fluctuation.
Liquidity risk management
Liquidity risk refers to cash flow risk and market liquidity risk. Cashflow risk refers to the risk of incurring losses due to a mismatch between
the investment and funding periods or an unexpected outflow of funds,
which makes it difficult to secure the necessary funds, or due to being
forced to raise funds at a significantly higher interest rate than usual.
Market liquidity risk refers to the risk of incurring losses due to the inability to trade in the market due to market turmoil or other factors or
being forced to trade at a significantly more disadvantageous price thanusual. The Company monitors the status of cash flow and liquidity risk
and matters affecting cash flow and has established a system to respondpromptly and accurately even if an unforeseen situation occurs.
(4) Financial Instruments Categorized by Fair Value Hierarchy
Fair values of financial instruments are calculated based on certain assumptions; therefore, fair values may vary according to the assumptions
used.

The amount recorded on the consolidated balance sheet, market value, the difference between these, and the market value for each level are as follows. Shares without market prices and investment in partnerships are not included in the following table.
The fair value of financial instruments is categorized into the following three levels according to the observability and significance of the inputs
used in making fair value measurements:
Level 1: Fair values measured by using observable inputs, i.e. quoted prices in active markets for assets or liabilities that are the subject of the measurement.
Level 2: Fair values measured by using observable inputs other than Level 1 inputs.
Level 3: Fair values measured by using unobservable inputs.
If multiple inputs are used that have a significant impact on the measurement of fair value, fair value is classified at the lowest level in the fair value
measurement among the levels to which each of these inputs belongs.
(a) Financial instruments measured at fair value:
March 31, 2022
Securities(available-for-sale securities)
Japanese equity securities
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other securities
Total assets

Level 1Millions of Yen
Carrying Amount
Level 2
Level 3

¥ 318,463¥ 945,113¥ 28¥ 1,263,604

129,724
186,434

2,644
18,305——

132,368
204,739—

549,054—549,054—2,305¥ 318,463

210,443
164,667¥ 945,113

28
—
¥ 28

210,471
166,972¥ 1,263,604

Derivative transactions
Interest-related transaction
Currency-related transaction
Credit derivative transaction

—
—
—
—

¥ (3,664)
350(4,014)—¥ (15)
—
—
(15)

¥

Total

March 31, 2022
Securities(available-for-sale securities)
Japanese equity securities
Japanese government bonds
Japanese local government
bonds
Japanese corporate bonds
Other securities
Total assets(3,679)350(4,014)(15)

Thousands of U.S. Dollars
Carrying Amount
Level 1
Level 2
Level 3
Total
$2,602,034$7,722,142

1,059,923
1,523,278

21,603
149,563—4,486,101—
18,833$2,602,034

1,719,446
1,345,429$7,722,142

229
1,719,675—
1,364,262$ 229 $ 10,324,405

—
—
—
—

$ (29,937)
2,860(32,797)—$ (123) $
—
—
(123)

Derivative transactions
Interest-related transaction
Currency-related transaction
Credit derivative transaction$ 229 $ 10,324,405——

1,081,526
1,672,841—

4,486,101(30,060)
2,860(32,797)(123)(*1) Investment trusts to which the transitional measures stated in Paragraph 26 of the “Implementation Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, July 4, 2019) are not included in the above table. The amount of the investment trusts on the consolidated balance sheet is ¥110,535 million ($903,138 thousand).
(*2) Derivative transactions recorded in other assets and liabilities are presented collectively. Net receivables and liabilities arising from derivative transactions are presented in net amounts, and items that constitute net liabilities in total are presented in parentheses.
(b) Financial instruments other than those measured at fair value:
Cash and due from Banks, negotiable certificates of deposit, payables under repurchase agreements and payables under securities lending transactions
are settled in a short period of time, and the fair value approximates the carrying amount. Therefore, the notes are omitted.
Millions of Yen
Fair Value
March 31, 2022
Securities (held-to-maturity—debt securities)
Corporate bonds
Loans and bills discounted
Reserve for possible loan losses

Level 1

Level 2

Level 3——¥

Total assets

—
—

—
—

4,510,646¥ 4,573,506

Deposits
Borrowed money
Total liabilities———¥ 6,225,324
1,405,773¥ 7,631,097

—
—
—

Total

62,860¥Carrying Amount62,860Difference¥¥

4,510,646¥ 4,573,506

62,795
4,521,824(24,429)
4,497,395¥ 4,560,190¥ 6,225,324
1,405,773¥ 7,631,097¥ 6,225,291
1,405,797¥ 7,631,088¥

65

13,251¥13,316

¥

33
(24)
9

Thousands of U.S. Dollars
Fair Value
March 31, 2022
Securities (held-to-maturity—debt securities)
Corporate bonds
Loans and bills discounted
Reserve for possible loan losses

Level 1

Level 2

Level 3
513,604

Total$

513,604

Carrying Amount

Difference

$

$

$

—

—

$

Total assets

—
—

—
—

36,854,694$ 37,368,298

36,854,694$ 37,368,298

513,073
36,946,025(199,600)
36,746,425$ 37,259,498

Deposits
Borrowed money
Total liabilities———$ 50,864,646
11,486,012$ 62,350,658———$ 50,864,646
11,486,012$ 62,350,658$ 50,864,376
11,486,208$ 62,350,584

531

108,269$ 108,800

$

270
(196)
74

* Allowances for general doubtful accounts and allowances for individual doubtful accounts corresponding to loans are deducted.

49

(Note 1) Explanation of evaluation techniques used for the measurement ofmarket value and inputs related to the measurement of market value
AssetsSecurities
Securities whose unadjusted quoted prices in active markets are available are categorized as Level 1. This mainly includes listed stocks andgovernment bonds.
Securities whose quoted prices are not considered to be in active
markets due to low market transactions are categorized as level 2. This
mainly includes Japanese local government bonds and corporate bonds.
When the quoted price is not available, the fair value is measured byusing valuation techniques such as the discounted present value methodof future cash flows. The Company makes maximum use of observable
inputs for valuation techniques, which include TIBOR, prepayment
rate, credit spread, bankruptcy probability, and bankruptcy loss rate.
Securities whose fair values are measured by using significant unobservable inputs are categorized as Level 3.
Loans and Bills Discounted
The fair values of loans are measured by discounting the total amountof principal and interest at a discount rate that reflects credit risk, etc.
in the market interest rate for each type of loan, internal rating, andclassification based on period. For loans with variable interest rates, thefair value approximates the carrying value because it reflects the market
interest rate in the short term as long as the credit status of the borrower
has not changed significantly. In addition, as for loans to legally bankrupt borrowers, virtually bankrupt borrowers, and potentially bankrupt
borrowers, the fair value is calculated by deducting the allowance, whichis calculated based on the discounted present value of the estimatedfuture cash flow or the estimated collection of cash from collateral andguarantee, from the balance in the consolidated balance sheet date.
Therefore, the fair value approximates the carrying amount. The fairvalue is classified as a level 3 fair value.
Liabilities
Deposits
For demand deposits, the amount payable immediately on demand asof the consolidated balance sheet date is considered to be the fair value.
Time deposits are grouped by maturity lengths and their fair value iscalculated by discounting future cash flows with the market interest
rate. For the deposits and negotiable certificates of deposits with therepayment period within one year, the fair value approximates the carrying amount due to their short-term maturities. The fair value is classified as a level 2 fair value.
Borrowed Money
For borrowed money, the present value is calculated by discounting thetotal principal and interest of the borrowings divided into certain periods by the interest rate that is taken into account the remaining termof the borrowing and credit risk. For borrowed money with variableinterest rates, the fair value approximates the carrying value because it
reflects the market interest rate in the short term and the credit status of
the Company and its consolidated subsidiaries has not changed significantly since inception. Also, for borrowed money that mature within
one year, the fair value approximates the carrying amount due to its
short-term maturities. The fair value is classified as a level 2 fair value.
Derivatives
Derivatives whose unadjusted quoted prices in active markets are available are categorized as Level 1. This mainly includes transactions ofbond futures and interest rate futures.
However, since most derivatives transactions are over-the-countertransactions and there is no published quoted price, the fair value iscalculated using valuation techniques such as the discounted present
value method and the Black Scholes model according to the type oftransaction and the period until maturity. The main inputs used in thesevaluation techniques are interest rates, exchange rates, volatility, etc.
If unobservable inputs are not used or their effects are not significant,they are classified as Level 2, and include plain vanilla interest rate swap
transactions, foreign exchange contract transactions, etc. Derivatives
whose fair values are measured by using significant unobservable inputs
are categorized as level 3.

50(Note 2) Information about Level 3 of financial instruments measured at fairvalue(1) Quantitative information on significant unobservable inputs
Categories
Securities(available-for-salesecurities)
Corporate bonds

Valuationtechniques

Significant
Weighted
unobservable Scope of inputs average of
inputsinputs

Probability of
Discounted cash
4.7% - 33.6%
bankruptcy
flow method
Loss rate at the time(*1)
20.0% - 100.0%
of bankruptcy

24.5%
66.7%

(*1) For some corporate bonds, the estimated amount of loan losses iscalculated based on the estimated amount of collateral and guarantees, etc. and the fair value is the amount obtained by deducting
the estimated amount of loan losses from the corporate bond value.
(2) A reconciliation from the beginning balances to the ending balancesand gains or losses on valuation of financial assets and financial liabilities held at the end of the reporting period included in profit orloss for the period

March 31, 2022
Beginning balance
Profit or loss or othercomprehensive income forthe period
Recorded in profit or loss(*1)
Recorded in othercomprehensive income (*2)
Purchases, sales, issuances, andsettlements
Transfer into Level 3 (*3)
Transfer out of Level 3
Ending balance
Gains or losses on valuation offinancial assets and financial
liabilities held at the endof the reporting period
included in profit or loss forthe period (*1)

March 31, 2022
Beginning balance
Profit or loss or othercomprehensive income forthe period
Recorded in profit or loss(*1)
Recorded in othercomprehensive income (*2)
Purchases, sales, issuances, andsettlements
Transfer into Level 3 (*3)
Transfer out of Level 3
Ending balance
Gains or losses on valuation offinancial assets and financial
liabilities held at the endof the reporting period
included in profit or loss forthe period (*1)

Millions of Yen
Securities
Derivative
Available-for-saletransactions
Credit derivative
Corporate
Otherstransactions (*4)
bonds
¥ 181
¥ 4,002
—

(11)

—

¥(16)

2

(2)

—

(165)

(4,000)

—

21
—
¥ 28

—
—
—

—
—
¥(16)

¥

—

—

(90)

—

$ (131)

16

(16)

—

(1,348)(32,682)

—

172
—
229

—
—
—

—
—
$ (131)—$ (123)—$(Note4) Maturity Analysis for Financial Assets, Securities and Financial Liabilities with Contractual Maturities(3) A description of valuation processes used for fair value measurements
The risk management division of the Group has established policies andprocedures for measuring fair value, and each trading division measuresfair value following the policies and procedures. A risk management
division verifies whether the fair value obtained is measured using valid
valuation techniques and inputs as well as whether they are classified
into an appropriate level of the fair value hierarchy.
In measuring fair value, the Company uses a valuation model thatmost appropriately reflects the nature, characteristics and risks of each
asset. In addition, when using quoted prices obtained from third parties,
the Company verifies whether the prices are valid using appropriate
methods, such as confirming the valuation techniques and inputs usedand comparing them with the fair value of similar financial instruments.
(4) A narrative description of sensitivity of the fair value measurement
to changes in significant unobservable inputs
Significant unobservable inputs used in measuring the fair value of thecorporate bonds are probability of bankruptcy and loss rate at the timeof bankruptcy. Significant increases (decreases) in any of those inputs in
isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for probabilityof bankruptcy is accompanied by a directionally similar change in theassumption used for loss rate at the time of bankruptcy.

2,400

15,000135,000

54,0008,649

123,345

418,550200(Note 3) Securities, etc. that do not have a market price and investment in partnerships are as follows and are not included in “Securities (availablefor-sale securities)” in the table of financial instruments measured atfair value.
Carrying AmountThousands of U.S.
Dollars2022
2022

Millions of Yen¥(15)

Thousands of U.S. Dollars
Securities
Derivative
Available-for-saletransactions
Credit derivative
Corporate
Otherstransactions (*4)
bonds
$ 1,479$ 32,698—$(*1) Included in “Other operating income” and “Other operating expenses” in the Consolidated Statement of Income.
(*2) Included in the “Unrealized gain (loss) on available-for-sale securities” under “Other Comprehensive Income” in the Consolidated
Statement of Comprehensive Income.
(*3) These are privately placed guaranteed bonds held by the Bank, anddue to the significant deterioration in the credit condition of theissuer of the bonds, the holding classification of the bond has beenchanged from held -to-maturity to available-for-sale.
(*4) Net receivables, payables, profits and losses arising from derivatives
transactions are presented as net amounts, and items that constitutenet payables and losses in total are presented in parentheses.

Securities, etc. that do not have amarket price (*1, *2)
Investment in partnerships (*3)
Total

¥ 6,114$ 49,955

16,174¥22,288

132,151$182,106(*1) Securities, etc. that do not have a market price are not subject tofair value disclosure 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) Impairment loss of ¥5 million ($41 thousand) is recorded for unlisted equity securities for the year ended March 31, 2022.
(*3) Investments in partnerships are not subject to fair value disclosurein accordance with Article 27 of the “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31, July 4, 2019).

March 31, 2022
Securities:
Held-to-maturity securities:
Debt securities—
Japanese corporate bonds
Available-for-sale securities
with contractual maturities:
Debt securities:
Japanese government bonds
Japanese local
government bonds
Japanese corporate bonds
Other
Loans and bills discounted *Total

March 31, 2022
Deposits
Borrowed money
Total

March 31, 2022

Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years¥ 15,496 ¥

40,550 ¥6,607 ¥

142

14,67038,26850,139106,019
5,472
86,85642,534
138,813796,069 1,201,325
922,044 1,526,135¥ 842,756 ¥ 1,505,344 ¥ 1,574,874 ¥ 1,825,309
Millions of Yen
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years¥5,762,350¥462,936¥5—
1,227,702
178,095——¥6,990,052¥641,031¥5—
Thousands of U.S. Dollars
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years

Securities:
Held-to-maturity securities:
Debt securities—$ 126,612 $ 331,318 $ 53,983 $
1,160Japanese corporate bonds
Available-for-sale securities
with contractual maturities:
Debt securities:
Japanese government bonds
19,609122,559 1,103,031
441,213
Japanese local
70,668 1,007,803 3,419,806
1,634
government bonds
Japanese corporate bonds
119,863
312,672
409,666
866,239
Other
44,709709,666
347,528 1,134,186
Loans and bills discounted *6,504,363 9,815,549 7,533,655 12,469,442
Total$ 6,885,824 $12,299,567 $12,867,669 $14,913,874

March 31, 2022
Deposits
Borrowed money
Total

Thousands of U.S. Dollars
Due after 1 Due after 5
Due in 1 YearDue after 10
Year through Years throughor Less
Years
5 Years
10 Years$47,081,869 $3,782,466$41—
10,031,065 1,455,143——$57,112,934 $5,237,609$41—* Loans and bills discounted whose cash flows cannot be estimated, suchas “legal bankruptcy,” “virtual bankruptcy,” and “possible bankruptcy”
loans amounting to ¥66,403 million ($542,552 thousand) as of March
31, 2022 and loans and bills discounted with no contractual maturities, amounting to ¥9,849 million ($80,472 thousand) as of March 31,
2022 are not included.
Please see Note 16 for annual maturities of borrowed money.

51

29. COMMITMENTS AND CONTINGENT LIABILITIESCommitment line contracts on overdrafts and loans are agreements tomake loans to customers when they apply for borrowing up to a prescribed amount, as long as there is no violation of any condition in thecontracts.
The total amounts of unused open commitments as of March 31,
2022 were ¥1,307,876 million ($10,686,134 thousand). Multi-purpose
accounts included in the unused open commitments as of March 31,
2022 were ¥535,278 million ($4,373,544 thousand). The amounts ofunused commitments whose original contract terms were within one
year or unconditionally cancelable at any time as of March 31, 2022
were ¥1,227,145 million ($10,026,514 thousand).
Since many of these commitments are expected to expire without
being drawn upon, the total amount of unused commitments does notnecessarily represent actual future cash flow requirements. Many of thesecommitments have clauses enabling the Bank and certain subsidiaries toreject the loans to customers or reduce the contract amounts of commitment, in the event monetary conditions have changed and the Bank andcertain subsidiaries need to secure claims, or other considerable events
have occurred.
In addition, if necessary, the Bank and certain subsidiaries can request the customers to pledge collateral such as premises and securities
at the execution of the contracts. After execution, the Bank and certain
subsidiaries periodically evaluate the customers’ financial position based
upon the Bank’s internal policy, and take necessary measures to manage
the credit exposures, such as revising the terms of contracts or securing
the claims.

30. DERIVATIVE INFORMATIONThe Bank enters into swaps related to interest rates, foreign exchange
forward contracts, swap and option contracts related to currencies, overthe-counter bond options and stock index options contracts related tosecurities.
Derivative Transactions to Which Hedge Accounting Is Not Applied as ofMarch 31, 2022
March 31, 2022

Contract
AmountMillions of Yen
Contract
Unrealized
Amount Due Fair Value
Gains (Losses)
after One Year

Over-the-counter:
Interest-related contracts:
Interest rate swap:
Fixed rate receipt,¥ 10,320 ¥ 10,320
variable rate payment
Variable rate receipt,
10,320
10,320fixed rate payment
Over-the-counter:
Currency-related contracts:
Currency swap
282,396 282,396
Foreign exchange forward:
Sell
43,56583
Buy
20,946—
Currency option:
Sell
79,18053,384
Buy
81,12054,997
Other:
Sell
—
—
Buy
—
—
Over-the-counter:
Credit derivative contracts:
Credit default options
Sell
—
—
Buy
—
—
Credit default swap
Sell
—
—
Buy
711
711
Other:
Sell
—
—
Buy
—
—

52

¥

226
124

¥

226
124

(2,679)(1,612)(2,557)1,225(2,557)
1,225(4,195)
4,192

1,115
(377)

—
—

—
—

—
—

—
—

—
(15)

—
(15)

—
—

—
—

March 31, 2022
Over-the-counter:
Interest-related contracts:
Interest rate swap:
Fixed rate receipt,
variable rate payment
Variable rate receipt,
fixed rate payment
Over-the-counter:
Currency-related contracts:
Currency swap
Foreign exchange forward:
Sell
Buy
Currency option:
Sell
Buy
Other:Sell
Buy
Over-the-counter:
Credit derivative contracts:
Credit default options
Sell
Buy
Credit default swap
Sell
Buy
Other:Sell
Buy

Thousands of U.S. Dollars
Contract
Contract
Unrealized
Amount Due Fair Value
AmountGains (Losses)
after One Year$ 84,321$ 84,321$ 1,847$ 1,847

84,321

84,321

1,013

1,013

2,307,345

2,307,345(21,889)(13,171)355,952
171,141678—(20,892)
10,009(20,892)
10,009646,948662,799

436,179
449,359(34,276)
34,251

9,110(3,080)

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
—

—
5,809

—
5,809

—
(123)

—
(123)

—
—

—
—

—
—

—
—

Notes:
1. Derivative transactions are valued at market and the gains/losses arerecognized in the consolidated statement of income.
2. There were no transactions applicable for stock-related contracts,bond-related contracts, and commodities for the year ended March
31, 2022.
Derivative Transactions to Which Hedge Accounting Is Applied as of March
31, 2022
There were no derivative transactions to which hedge accounting is applied as of March 31, 2022.

31. COMPREHENSIVE INCOME

The components of other comprehensive loss for the year ended March
31, 2022 were as follows:
2022

Thousands of U.S.
Dollars
2022¥(18,050)$ (147,479)

Millions of Yen

Unrealized loss onavailable-for-sale securities:
Gains arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred loss on hedges:
Adjustments arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments
to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive loss

3,447

28,164(14,603)
4,332(10,271)(119,315)
35,395(83,920)(124)(1,013)(245)(2,002)

(369)
110
(259)

(3,015)899(2,116)

821

6,708

(1,751)(14,307)

(930)
278
(652)
¥(11,182)(7,599)2,272(5,327)$ (91,363)

32. PER SHARE INFORMATION

a. Net Income per Share
Reconciliation of the differences between basic and diluted net income
per share (“EPS”) for the year ended March 31, 2022 was as follows:
Millions of Thousands of
Yen
U.S. Dollars
Yen
SharesNet Income
Attributable WeightedYear Ended March 31, 2022
EPS
to Owners of Average Shares
Parent
Net income attributable to¥17,191
owners of parent
Amount not attributable to—common shareholders
Basic EPS—Net income
available to common
17,19137,335 ¥460.45$3.76
shareholders
Effect of dilutive securities—
68
Stock acquisition rights
68
Diluted EPS—Net income for¥17,191
37,403 ¥459.62$3.76
computation

Since the Company was established on October 1, 2021 through a sole
share transfer, the average number of shares of its common stock during
the period from April 1, 2021 to September 30, 2021 prior to the establishment of the Company was calculated using the average number ofshares during the period of the Juroku Bank, Ltd., and it was calculatedusing the average number of shares of the Company during the period
from October 1, 2021 to March 31, 2022.
b. Net Assets per Share
Net assets per share as of March 31, 2022 were ¥10,799.18 ($88.24).
Net assets per share of common stock as of March 31, 2022 were
calculated based on the following:
2022

Thousands of U.S.
Dollars
2022¥402,604$3,289,517

180
3,705

1,471
30,272¥398,719$3,257,774

Millions of Yen

Total net assets
Deductions from total net assets:
Stock acquisition rights
Noncontrolling interests
Net assets attributable to common
stock at the end of the fiscal year
Number of shares of common stockat the end of the fiscal year used forthe calculation of net assets per share(shares in thousands)

36,92153

33. REVENUE RECOGNITION

35. SEGMENT INFORMATION

Disaggregation of revenue from contracts with customers
Information regarding disaggregation of revenue from contracts with customers for the year ended March 31, 2022 is as follows.
March 31, 2022
Interest income
Fees and commissions
Deposit and Lending Service
Foreign exchanges service
Securities-related service
Guarantee service
Credit card service
Other operating income
Other income
IncomeMarch 31, 2022
Interest income
Fees and commissions
Deposit and Lending Service
Foreign exchanges service
Securities-related service
Guarantee service
Credit card service
Other operating income
Other income
IncomeUnder ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance No. 20, “Guidance on AccountingStandard for Segment Information Disclosures,” an entity is required to report financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components ofan entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is usedinternally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
a. Description of Reportable Segments(1) Method for determining the reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Group’s management isbeing performed in order to decide how resources are allocated among the Group.
The Group provides banking services-based comprehensive financial services and leasing business. The Group consists of two reportable segments:banking business and lease business.
(2) Types of products and services belonging to each reportable segment
The banking business is operated by the Juroku Bank, Ltd. and provides various services such as deposit-taking and lending services, trading securities,
securities investment, domestic exchange, foreign exchange, managing bonds, a derivatives business and other related businesses at headquarters andbranches of the Juroku Bank, Ltd. In addition, consolidated subsidiaries operate credit guarantee business and supplement the banking business.
The lease business is operated by Juroku Lease Co., Ltd. It provides leasing business to meet local customers’ needs.
(3) Matters regarding changes, etc. to the reporting segments
From the fiscal year ended March 31, 2022, in accordance with the establishment of the Company and the reorganization within the Group, thebusiness segment of Juroku Credit Guarantee Co., Ltd., which was previously included in “Other,” has been changed to “Banking”.

Millions of Yen

Banking¥54,588
18,590
3,288
4,054
2,836
1,993
—
4,425
9,087
¥86,690

Reportable Segment
Lease
¥ 195
—
—
—
—
—
—
26,3601,615¥28,170

Banking$446,017
151,891
26,86533,124
23,172
16,284—36,15574,246$708,309

Millions of U.S. Dollars
Reportable Segment
Lease
Total
$ 1,593$447,610—
151,891—
26,865—33,124—
23,172—
16,284——215,377
251,532
13,19687,442$230,166$938,475

Total¥ 54,783
18,590
3,288
4,054
2,836
1,993
—
30,785
10,702¥114,860

Other

Total

¥ 2,971
5,928
—
—
1,856
118
2,471
1,934
438
¥11,271¥ 57,754
24,518
3,288
4,054
4,692
2,111
2,471
32,719
11,140¥126,131

Other

Total

$24,275
48,435——
15,165964
20,19015,802
3,579$92,091$ 471,885
200,326
26,86533,12438,337
17,24820,190267,334
91,021$ 1,030,566

b. Methods of Measurement for the Amounts of Income, Profit, Assets and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies.”c. Information about Income, Profit, Assets, Liabilities and Other Items
Millions of Yen*1. The above table also includes revenue based on the ASBJ statement No. 10 “Accounting Standards for Financial Instruments.”*2. “Other” refers to business segments that are not included in the reporting segment, such as financial instruments transactions, credit card service,
and computer-related service.
*3. The difference between the “total” amount in the above table and the amount recorded in the consolidated statement of income is mainly the elimination of intersegment transactions.

34. SUBSEQUENT EVENTSAppropriation of Retained Earnings

On May 12, 2022, the Board of Director resolved an appropriation ofretained earnings as follows:
Millions of Yen
Year-end cash dividends—¥70.00 ($0.57) per share oncommon stock¥2,584

Thousands of
U.S. Dollars$21,113

Establishment of a Subsidiary

At the Board of Directors meeting held on March 29, 2022, the Company resolved to establish a wholly-owned subsidiary of Kanda Machiokoshi Co., Ltd., and established the company on April 1, 2022.
1. Purpose of establishment
The Company has set forth the “Regional Commitment Strategy” as oneof the pillars of its management plan and has been working on improving the attractiveness of the region and supporting the resolution ofissues as priority measures.

The Company will establish a subsidiary within the Group thatplays a central role in regional revitalization as a banking company inother industries (*) to expand our business domains, further promotetotal design and consulting for regional revitalization, and contribute to
the fulfillment of our responsibilities for the sustainable growth of theregion and regional revitalization.
(*) Banking companies in other industries: A subsidiary of a bank holding company stipulated in Article 52-23, Paragraph 1, Item 14 of
the Banking Act
2. Overview of a subsidiary(1) Name
Kanda Machiokoshi Co., Ltd.,(2) Address
Kyowa No.2 Building, 6-11-1
Kandamachi, Gifu City
(3) Business description Consulting services related to regional
revitalization(4) Established
April 1, 2022
(5) Capital¥80 million ($654 thousand)(6) Major shareholders
The Juroku Financial Group, Inc.
and shareholding ratio
Music Securities Co., Ltd.

99%
1%

2022
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Allowance for loan losses
Increase in premises and equipment and intangible assets

Reportable Segment
Banking
Lease
Total
¥

Other

Total

Reconciliations Consolidated

84,313
2,377¥ 86,690¥ 26,941
8,305,412¥26,201
1,969¥28,170¥ 1,958
82,273¥ 110,514
4,346¥ 114,860¥ 28,899
8,387,685¥ 6,836
4,435¥ 11,271¥ 4,248336,250¥ 117,350
8,781¥ 126,131¥ 33,147
8,723,935—¥ (8,781)¥ (8,781)¥ (6,348)(348,603)¥ 117,350—¥ 117,350¥ 26,799
8,375,332

2,564
245
54,588
250
2,376
2,879

532
—
195
190
369
336

3,096
245
54,783
440
2,745
3,215

139
207
2,971
16
62
105

3,235
452
57,754
456
2,807
3,320

127
—
(3,066)
(138)
—
46

3,362
452
54,688
318
2,807
3,366

Thousands of U.S. Dollars
2022
Ordinary income:(1) Outside customers(2) Intersegment transactions
Total
Segment profit
Segment assets
Other:
Depreciation
Amortization of goodwill
Interest income
Interest expense
Allowance for loan losses
Increase in premises and equipment and intangible assets

Reportable Segment
Banking
Lease
Total
$

688,888
19,421$ 708,309$ 220,124
67,860,217
20,9492,002
446,017
2,043
19,413
23,523$214,078 $ 902,966
16,08835,509$230,166 $ 938,475$ 15,998 $ 236,122
672,220 68,532,437
4,347
—
1,593
1,552
3,015
2,745

25,296
2,002
447,610
3,595
22,42826,268

Other

Total

$

55,854 $ 958,820
36,23771,746$ 92,091 $ 1,030,566$ 34,709 $ 270,831
2,747,365 71,279,802
1,136
1,691
24,275131507
858

26,432
3,693
471,885
3,726
22,93527,126

Reconciliations Consolidated— $ 958,820$ (71,746)—$ (71,746) $ 958,820$ (51,867) $ 218,964(2,848,296) 68,431,506
1,038—(25,051)(1,128)—376

27,4703,693
446,834
2,598
22,93527,502

Notes:
1. Ordinary income represents total income less certain extraordinary income included in “Other income” in the accompanying consolidated statementof income.
2. “Other” includes business segments of financial instruments business, credit cards and computer services.
3. Reconciliations mainly represent elimination of intra-segment transactions.
4. Segment profit is adjusted to reconcile to income before income taxes less certain extraordinary items in the accompanying consolidated statement ofincome.
5. NOBUNAGA Capital Village Co., Ltd., newly established on April 1, 2021, and the Company newly established on October 1, 2021, are included
in “Other.”54

55

I ndependent Auditors’ Reportd. Associated Information(1) Information about services
2022
Ordinary income—Outside customers

Lending Service

2022
Ordinary income—Outside customers

Lending Service

Securities Services¥40,206¥22,930

Millions of Yen
Leasing¥26,066

Thousands of U.S. Dollars
Securities Services
Leasing$328,507$187,352$212,975

Other

Total

¥28,148¥117,350

Other

Total

$229,986$958,820(2) Geographical information(a) Operating Revenues
This information is not presented because the Group’s revenues in Japan account for more than 90% of revenues in the consolidated statement of income.
(b) Property and Equipment
This information is not presented because the Group’s property and equipment in Japan account for more than 90% of property and equipment in the
consolidated balance sheet.
(3) Information by major customer
This information is not presented because there are no customers for which income account for more than 10% of revenues in the consolidated statement of income.
(4) Information about impairment loss by reportable segment
There was no impairment loss by reportable segment for the year ended March 31, 2022.
(5) Information about goodwill and negative goodwill by reportable segment
2022
Amortization of goodwill
Goodwill at March 31, 2022
Gain on negative goodwill

Banking
¥ 245
2,141
—

Lease

2022
Amortization of goodwill
Goodwill at March 31, 2022
Gain on negative goodwill

Banking$ 2,002
17,493—Lease

Millions of Yen
Other
¥ 207
1,505

Elimination/Corporate
—
—
—

Total
¥ 452
3,646
—

Thousands of U.S. Dollars
Elimination/Corporate
Other—$ 1,691——
12,297
—
—
—
—

Total
$ 3,693
29,790————Note: “Other” represents goodwill related to the financial instruments business.

56

57

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59

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61

Overview of Juroku Financial GroupC orporate Data
G roup Management Philosophy

D irectory(as of March 31, 2022)(as of June 30, 2022)

10 Principal
Shareholders:Date
Establishment:
Ourof
group
management philosophy is inherited from the basic philosophyof TheJuroku Bank, and represents thefundamental
all ofTrust
our officers’
and employees’
activities. It
TheforMasterBank of Japan(Trust)October
1877 spirit of the Juroku Financial Group and the foundationconsistsofthreeparts:
Mission,Vision,andValues.
Whenputtingourphilosophy
intopractice,thespecific
conduct ofCustody Bank of Japan, Ltd. (Trust)
Authorized Shares:
our staff is governed by the Code of Conduct.
Juroku Bank Employee Stockholding Association
46,000 thousand shares

Head Office

Shares of Common Stock Issued and Outstanding:Fuji Baking Group

Solutions Business Division International Office

Head Office

37,924 thousand shares

Meiji Yasuda Life Insurance Company

8-26, Kandamachi, Gifu-shi, Gifu
Telephone: +81-58-265-2111

Stock Listed:

MUFG Bank, Ltd.

First Sections of the Tokyo and Nagoya Stock Exchanges

Sompo Japan Insurance Inc.

Paid-in Capital:

Seino Holdings Co., Ltd.

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan P.O. Box 40
Telephone: +81-58-265-2111
Facsimile: +81-58-266-1698
SWIFT Address: JUROJPJ T
Head of Office
Hiroyuki Kawase

G roup Structure

The Bank
Nagoya, Ltd.
¥36,839
million to a holding company structure, as a general rule, eachAfter
our transitiongroupofcompany
except joint ventures was made a
Number of Common Stock Shareholders:

Nippon Life Insurance Company

wholly owned subsidiary of Juroku Financial Group or The Juroku Bank, and a group management system was established for the
17,912

purpose of strengthening consolidated profitability and group governance.
Number of Employees:(as of June 30, 2022)

8-26, Kandamachi, Gifu-shi,
Gifu 500-8516, Japan
Telephone: +81-58-265-2111

Ichinomiya Branch
1-2-5, Sakae,
Ichinomiya-shi, Aichi
Telephone: +81-586-73-5116(4 Offices)

Nagoya-ekimae Branch
3-28-12, Meieki,
Nakamura-ku, Nagoya-shi, Aichi
Telephone: +81-52-561-5431

Ogaki Branch
1-26, Takayacho, Ogaki-shi, Gifu
Telephone: +81-584-78-2161

Overseas Network
Shanghai Representative Office
18th Floor, Hang Seng Bank Tower,
1000 Lujiazui Ring Road, Pudong New Area,
Shanghai, People’s Republic of China
Telephone: +86-21-6841-1600
Facsimile: +86-21-6841-1881
Chief Representative
Kazuhiro Mitsuishi

2,705
JurokuFinancial Group

Investment Ratio(Financial Group / Bank)The Juroku Bank

100%

Banking service

Juroku Business Service Co., Ltd.

100%

Clerical work service

Juroku Credit Guarantee Co., Ltd.

100%

Credit guaranty service

Juroku Research Institute Co., Ltd.

100%

Business consulting service, Survey and research service

Juroku Tokai Tokyo Securities Co., Ltd.

60%

Financial instruments service

Juroku Card Co., Ltd.

100%

Credit card flotation service

Juroku Lease Co., Ltd.

100%

Leasing service

Juroku Densan Digital Service Co., Ltd.

60%

Payments and digital solutions service

NOBUNAGA Capital Village Co., Ltd.

100%

Operation and management of Investment business Limited partnership

Unit 6 25 Floor CRC Tower, All Seasons
Place, 87/2 Wireless Road, Lumpini, Phatumwan, Bangkok, Thailand 10110
Telephone: +66-2655-8016
Facsimile: +66-2685-3016

Kanda Machi Okoshi Co., Ltd.

99%

Consulting services related to local revitalization

Chief Representative
Yukiyasu HorieBusiness Lines

Branches Handling
Foreign Exchange
Business

Representative Office Registered in Singapore

Gifu Prefecture (106)50 Raffles Place #38-06 Singapore Land
Tower, Singapore 048623
Telephone: +65-6222-6616
Facsimile: +65-6532-6616
Chief Representative
Masahiko Takai

Tokyo Branch
Aichi Prefecture (53)Mie Prefecture (1)Bangkok Representative OfficethOsaka Branch

Total 162Domestic Offices

Hanoi Representative Office

E xternal ratings
Both Juroku Financial Group and The Juroku Bank have obtained long-term issuer rating “A +” from the Japan Credit Rating
Agency, Ltd. (JCR).
Rated companies

Juroku Financial Group

About The Juroku Bank

Long-term issuer rating

A+ (New)

A→A+ (Upgrade)

Rating outlook

StableStableRating date

62

Unit 1206, Pacific Place,
83B Ly Thuong Kiet Street,
Hoan Kiem District, Hanoi City, Vietnam
Telephone: +84-24-3927-1616
Facsimile: +84-24-3927-1166
Chief Representative
Hiroyasu Kawahata

Shanghai
Hanoi
Bangkok
Singapore

October 1, 2021

63