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Becoming the "No. 1 Reliable Bank for the Regional
Communities and Customers"

OB

We would first like to express our gratitude for your ongoing support and patronage.
I hope you will take the opportunity to read through the business performance report of Senshu Ikeda Holdings,
the former Bank of Ikeda and the former Senshu Bank for the fiscal year ended March 2010 (fiscal year 2009).
The combined core banking profit of the two banks was ¥14.0 billion. However, a reversal of deferred tax assets
resulted in net loss for the fiscal year 2009 of ¥4.6 billion (consolidated net loss for Senshu Ikeda Holdings for the
fiscal year 2009 was ¥2.8 billion).
Deposit increased by ¥168.1 billion, and loans also increased by ¥67.9 billion during the fiscal year.
A capital adequacy (consolidated Senshu Ikeda Holdings) was 10.21%.
Furthermore, the NPLs ratio for the fiscal year 2009 was 2.02%, which is in the lowest level comparing with anyother banks in Japan.
The Senshu Ikeda Bank was born from a merger of the Bank of Ikeda and the Senshu Bank on May 1st, 2010.
As an independent regional bank leading the Kansai region, our aim is to be the “bank that serves all of theregional communities and customers.”
The new bank intends to put the following three distinct strategies into execution.
(1) Reinforce “Asia and China Business” through utilizing the locality benefits and advantages of the region.
(2) Put into practice “Advanced Technologies” cultivated through “the business-academia-government collaboration.”(3) Promote “Private Banking Business” which meets various needs of our customers.
On June 11th, 2010 , we held the “Symposium on Revitalization of Kansai economy” as a ceremony commemorating the launch of the new bank at the Theater Drama City of the Umeda Arts Theater.
At this event, I had an opportunity to express the bank’s fervent wish to “above all else, we would like to support
revitalization of the Kansai region,” and to meet not only with important figures from three universities including thePresidents of the Kyoto University, the Osaka University and the Kobe University, but also the Director-General of
the Kinki Bureau of Economy, Trade and Industry and various
other representatives of the Kansai Business world as panellists. It
was my pleasure to welcome far more audiences than we had
expected.
We will work hard in its role of stimulating the regional economy,
and will make every effort to develop further and to improve ourcorporate value in a way that enhances our regional power andensures our standing as the “No.1 reliable bank for the regional
communities and customers.”
July 2010

Moritaka Hattori
Senshu Ikeda Holdings Representative Director, President and CEO
Senshu Ikeda Bank Representative Director, President and CEO

1

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Su

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On May 1st, 2010

Born as The Senshu Ikeda Bank!
Kyoto

Sanda

Ikeda
Takarazuka

Umeda
Namba
Kobe

Sakai

SuzhouShanghai

Kishiwada

Izumisano

Summary of the Senshu Ikeda Bank
Company Name:

The Senshu Ikeda Bank, Ltd.

Representative:

President and CEO Moritaka Hattori

Location of Head office: 18-14 Chayamachi, Kita-ku, Osaka-City

Wakayama

Share capital:¥50.7 billion

Deposits:¥4.3 trillion

Loans:¥3.5 trillion

Number of Branches:

140 (including Sub-branches)

Number of ATMsoutside of branches:

178 (including 62 Patsat at railway stations)

SENSHU IKEDA HOLDINGS,INC.

(As of end of March 2010)

ANNUAL REPORT 20102

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Objectives of the Senshu Ikeda Bank
The business area covered by the new bank comprises an advanced traffic network and includes four
government-ordinance-designated cities. The number of business offices within this area along with the populationis comparable with that of Metropolitan Tokyo and, with the Ports of Osaka and Kobe and its three airports whichthemselves provide a gateway into Asia and China, it is regarded as Japan’s leading market area with enormous
potential, which has growing power so-called “regional power” representing Osaka economic zone.

13.7

640

millionpeopleMetropolitan Tokyo
12.5 million people

Total Japanese
Population
127.06 million

thousandbusinesses

Metropolitan Tokyo
690 thousand businesses

Total Number ofBusinesses in Japan
5.91 million

Advanced Traffic Network[Population and businesses of a high density equivalent
to that in Metropolitan Tokyo]

Sanda

The area has the Ports of Osaka and Kobe,
and three airports.
The region ranks No. 1 in Japan for Asia trade.
Export/Import
Volume Share (with Asia)

Kyoto

Osaka/Kobe Port:
14.6%
Nagoya Port:
9.1%

Ikeda

Tokyo Port:
10.7%
Yokohama Port: 8.9%

Other:
55.1%

Moji Port: 1.6%

Kobe
Umeda

Namba

Beijing

Sakai

SuzhouG ateway To Asia a

h
nd C

ina

Kishiwada

Shanghai

Four Government-Ordinance-Designated Cities
Wakayama

3

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

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The merger has resulted in a dramatic increase in the bank’s capability to contribute to the region as a whole, tothe region’s expectations of the bank, and to the potential of the bank itself.
The exploitation of the potential of the region to build the strength of the bank itself will ensure great strides about tobe made by the bank in the future.
The new bank will work hard for becoming the “No.1 reliable bank for the regional communities and customers,” andwill set itself the challenge of creating a new “regional bank model” which, through the implementation of “threesurvival strategies” and “three challenging strategies,” will strive to provide a return to all its shareholders.
The Senshu Ikeda Bank aims to employ its “stronghold position” and “challenging strategies that utilize this stronghold
position” to create a regional bank that is representative of Japan as a whole.

Creation of a "New Regional Bank Model"(Returns to Stakeholders)No.1 Reliable Bank for the
Regional Communities and Customers

Enhancing
the Potential
through Merger

Capability ofContributing
to the Region

Three Survival Strategies
Increasing of
Expectationfrom Region

Contribution to
Revitalization of
Kansai Economy

Three Challenging Strategies

The Senshu Ikeda Bank
The Bank of Ikeda

The Senshu Bank

Strong "Regional Power"
Business Area
(Advantaged Market in Japan)

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 20104

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Management Strategies of the Senshu Ikeda Bank
Challenging StrategiesAll

As part of the challenging strategies which will characterize the new bank and which are designed to exploit the“regional power,” three business Headquarters have been established.

1 Asia and China Business Headquarters
The “Asia and China Business Headquarters” has been
established to strengthen the function of the bank in the“gateway to Asia and China” utilizing the local benefits
and advantages of the region including the Kansai Bay
Area, the Ports of Osaka and Kobe, and the region’s three
airports. Most notably including the regional bank’s sole
expatriate Suzhou Representative Office, the network withclients with whom the bank has close ties will be utilized,
which will significantly strengthen the bank’s capability torespond and support Asia and China businesses.

Enthusiastic Support for New Advances
into Foreign Markets and BusinessTrading companies
Network inoverseas companies

A

Tradingcompanies

Network inoverseas companies

Local government
Local
government〜Specific Regional Support〜

Reliable response and consultation offered from theexpression of interest stage of local businesses
Provision of local investment environment information
Introduction of consignment, production sites
and material procurement sites
Support for overseas market channel development
Provision and introduction of financial services
including finance, capital investment, exchange
risk and hedging, etc.

L

Mit
IBJ
JC

SuzhouRepresentative
OfficeMegabanks
local banks
Legal firms andAccountancy firms

Li

Lif
a
No
a

Megabanks
local banks

P

2 Advanced Technology Business Supporting Headquarters
Through the employment of hitherto established close-knit
business-academia-government network with Kansai’s
leading universities and public organizations and so on, andsupport for the next generation of industry and technology, theAdvanced Technology Business Supporting Headquarters will
work enthusiastically to utilize advanced technologies toprovide new products and services such as a new and moreconvenient multi-functional IC cash cards.

Advanced Technology BusinessSupporting Headquarters
The bank’s advanced technology
business network is made up of
more than 1000 companies.

. Supporting business growth througha regional revitalization system. Consortium-based R&D grant

Legal firms andAccountancy firms

ImDe
establishment, secondary business establishment
1 Business(support for entrepreneurs)
and utilization of
2 Establishment
business-academia-government network
services utilizing advanced technologies such as
3 New
multi-functional IC card, mnemonic authentication

3 Private Banking Headquarters
The Private Banking Headquarters will provide advanced corporate and individual integrated services,which in addition to the provision of asset management advice to individual customer, comprise theutilization the new bank’s broad network of experts to extensively fulfil the diversity of advanced needsof company owners pertaining to, for example, business succession, inheritance measures, fundprocurement associated therewith, and M&A (mergers and acquisitions).

5

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

A sy
Spe
rein

Sy

The
affo
Mor
imp

Sy

Ja

The
Ban
ensu

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SENSHU IKEDA HOLDINGS,INC.

Alliance Strategies
As an independent regional bank, we are building the “original business network that possesses great flexibility beyond
conglomerate groups,” and we offer our customers improved and superior products and services without any restriction. This
allows us to provide customer-oriented products and services meeting the various different needs of our customers.
Asia
Securities Companies and Investment Companies
Japan-China business promotion
Economic and cultural exchange

Securities companies
Investment companies:
Domestically and internationally
Product provision (Investment trusts)

Lease and Credit
Mitsubishi UFJ Lease & Finance Company Limited
IBJ Leasing Company, Limited, JACCS CO., LTD.
JCB Co., Ltd., Visa Inc.

Financial Institutions

Asset based lending, card, leasing

Megabank, Development Bank ofJapan Inc., other regional banks,
public financial institutions
Total support in alliance
Personnel exchange, personnel training
Investment promotion, coordinated investment

Senshu Ikeda
Bank GroupThink Tank

Life and Non-life Insurance

Mitsubishi Research Institute, Inc.
Japan Economic Research Institute Inc.
Mitsubishi UFJ Research and Consulting Co.,Ltd.

Life Insurance: Domesticallyand internationallyNon-life Insurance: Domesticallyand internationally

Proposals to local government bodies

Product Provision (Insurance)

Public Assistance Agencies
The Kansai Bureau of Economy, Trade and Industry
National Institute of Advanced Industrial Science and Technology
Organization for Small & Medium Enterprises andRegional Innovation, JAPANManagement support, technology development support

Universities

Being an independent financial agency, we

Kyoto University, Osaka University,
Kobe University, Osaka Prefecture University,
Osaka City University, Kwansei Gakuin University,
Konan University, Doshisha University, etc.
The business-academia collaboration“have great flexibility beyond conglomerate groups”“offer proposals that meet our customers’ needs”“have the original network across which a regional presence is demonstrated”

Improved Efficiency Strategies
Demonstration of Synergistic EffectA synergistic effect will be swiftly demonstrated and will be evidenced in low-cost operations.
Specifically, the individual strengths of the two banks will be mutually expanded across a shared mother market, and this will additionallyreinforce the bank’s operational strength.

System Integration
The improved efficiency in business branch operations, together with the credit screening flow and the integration of other operations
afforded by the system integration (scheduled for January 2012) will give rise to improved operational quality.
Moreover, the implementation of integrated operations processing and the centralization of outsourcing will ensure even further
improvements in administration efficiency.
The (former) Bank of Ikeda

System Integration
January 2012

The experience of The former
Bank of Ikeda will be utilized toensure a smooth transition

Regional Bank Integrated
Services Center

Unifying Administrative
Process

The (former) Senshu Bank

Improving the Quality of Administration

Improving Administration Efficiency. Improving efficiency of. Concentrating operation

branch operations. Unification of verification

processes. Integration of the outsourcing

flow and other operations

The Senshu Ikeda BankSENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 20106

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Business Overview of Senshu Ikeda Holdings
Consolidated

Bu

Non-consolidated

Summary of Profit and Loss
Items

( ¥ million)

Fiscal year 2009

Ordinary revenue

118,332

Ordinary expenses

112,274

Ordinary income

6,057

Net income (loss)(2,845)

Summary of Profit and Loss
Items

( ¥ million)

Fiscal year 2009

Operating revenue

6,971

Operating expenses

543

Operating income

6,428

Ordinary income

5,944

Net income

5,955

Con

S

Ord

Ordi

Ordin

Business Environment

Matters to Be Addressed

The Japanese economy was picking up in the consolidated
fiscal year 2009,due to each government’s large-scaleeconomic measures and recovery in exports primarily to thehigh-growth emerging countries. However, domestic demandremained weak because of severe employment and income
situations.
Although the job cuts by companies eased up a little, asense of overstaffing was deep-rooted. Furthermore,
employees' income remained to reduce, which kept personal
consumption at a severely low level.
Capital investments ceased to fall after a dramatic decline,
while housing investment was picking up recover at a low
level.
With respect to prices, the year-on-year rate of reduction
tended to decrease during the fiscal year under review,reflecting overseas market conditions recovery.
In the financial markets, policy rate for the unsecured
overnight call rate remained steadily at around 0.1% because
the Bank of Japan continued to provide sufficient funds to themarket.
A mixture of cautious forecast for economy and concerns
over the deteriorating supply-demand situation of Japanese
government bonds influenced long-term interest rates. The
Japanese 10-year interest rates fluctuating within a range
centered on 1.3%.
Overall stock prices remained steadily, as recovering
overseas economies raised expectations of turnaround in
profits of export-oriented companies, and of corporate
earnings recovery.

The Company was established in October 2009 as a result ofmanagement integration between the Bank of Ikeda and theSenshu Bank through a joint share transfer method, with theaim of becoming the best regional financial institution as the“leading independent financial group” in the Kansai region.
Furthermore, the above two banks merged as the new bank,“The Senshu Ikeda Bank, Ltd.” on May 1, 2010 with a view tomaximizing the synergy effect from the business integration.
The Group’s operating bases are located in the densely
populated Osaka Bay area, encompassing highly integrated
industries. The Group is aware that its most fundamental
mission is to “strengthen the relationship banking” and“carefully-crafted services.” In consideration of the mission,
the Group is striving to conduct its business by addressing to“enhance relationship networks” as the important matters of
the financial group, which contributes to regional customers
and evolves together with the region. The Group also intends
to “contribute to the revitalization of the Kansai economy”
through the creation of business networks from a broad
viewpoint and the introduction of high-quality financial
products and services, as well as contributing to the regionalcustomers as the “No.1 reliable bank for the regional
communities and customers.”

Business PerformanceWith regard to consolidated performance of Senshu Ikeda
Holdings Group (the “Group”), consolidated ordinary revenue
for the fiscal year under review stood at ¥118,332 million,
while consolidated ordinary expenses was ¥112,274 million.
As a result, the Group’s consolidated ordinary income cameto ¥6,057 million.However, the Group posted ¥2,845 million
consolidated net loss due to a reversal of deferred tax assets
at the subsidiary bank.
On a non-consolidated basis, Senshu Ikeda Holdings (the“Company”) posted operating revenue of ¥6,971 million,
mainly due to dividends from its subsidiary bank. At the sametime, the Company posted selling, general and administrative
expenses of ¥543 million. As a result, the Company posted
operating income of ¥6,428 million. In addition, it logged
stock delivery expenses and other non-operating expenses of¥484 million, consequently posting net income of ¥5,955
million for the fiscal year under review.

7

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Dividend Policy
With a view to its highly public nature as a bank’s holding
company, the Company has a basic policy of positively
returning profits to our shareholders, whilst sustaining asound financial standing through the enhancement of anadequate retained earnings base and keeping up the policyof stable dividends.
In respect of the dividend of retained earnings for the fiscal
year under review, based on the basic policy and inconsideration of its overall business performance and thecurrent management environment, the Company decided to
pay dividend of ¥2.70 per common stock. With regard to firstclass preferred stock and second-class preferred stock, theCompany plans to pay the amount of ¥196 divided by 18.5
and ¥204.50 divided by 18.5 for each stock respectively, in
accordance with the provisions of the Articles ofIncorporation.
Meanwhile, the Company intends to utilize its retained
earnings for future business developments or improve its
financial strength.

Net

Net i

Non

S

Gros

Ne
Net
Net

Exp

Pe

No

Core

Bank

Ordin
Net
Net

C

2

1

1

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SENSHU IKEDA HOLDINGS,INC.

Business Overview of The Bank of Ikeda
Consolidated

Summary of Profit and Loss
Items

( ¥ million)

Fiscal year 2008

Fiscal year 2009

Year-eariler
levels

83,201

66,151(17,050)

Ordinary revenue

Net income (loss)( ¥ million)

7,373

7,500

5,000

Ordinary expenses

117,937

59,737(58,200)

Ordinary income (loss)(34,736)

6,413

41,149Net credit costs

13,745

10,932(2,813)

Net income (loss)(37,453)

7,373

44,8262,500

0(54,968)(37,453)

March 2008

March 2009

(55,000)

March 2010

Non-consolidated

Summary of Profit and Loss

( ¥ million)

Items

Fiscal year 2008

Fiscal year 2009

Year-eariler
levelsGross profit

29,554

41,892

12,338Net interest income

41,794

31,400(10,394)

Net fees and commissions income

3,293

4,068

775

Net other operation income (loss)(15,533)

6,423

21,95627,38025,174(2,206)

Personnel expenses

11,70810,808(900)

Non-personnel expenses

14,176

13,078(1,098)Core banking profit

17,943

10,054(7,889)Banking profit (loss)(2,439)10,897

13,336

Ordinary income (loss)(34,150)

5,935

40,085

Net credit costs

12,4459,929(2,516)

Net income (loss)(37,234)

7,104

44,338

Expenses

Core banking profit( ¥ million)

Banking profit (loss)( ¥ million)

12,00010,897

8,000

4,000

0

(47,089)(2,439)March 2008

March 2009

(48,000)

Net income (loss)( ¥ million)

7,500

20,000March 2010

7,104

17,9435,000

15,00010,00010,054

9,751

2,500

5,000

0

(55,015)(37,234)

March 2008

March 2009

(55,000)

0March 2008

March 2009

March 2010

SENSHU IKEDA HOLDINGS,INC.

March 2010
ANNUAL REPORT 20108

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 9 (1,1)

So
Non-consolidated

Deposits( ¥ billion)

Deposits held by individuals( ¥ billion)

C

1,900

2,350

2,314.2

1,861.2

1,869.3

March 2009

March 2010

1,806.6

2,253.7
1,800

2,250

2,191.1
2,150

1,700

2,050

1,600

1,500

1,950

March 2008

March 2009

March 2010

Loans and bills discounted( ¥ billion)

March 2008

Housing loans( ¥ billion)

* Met

B

506.6
1,700

1,665.6

1,670.5

500

486.8

8

461.7
1,600

1,599.4

450

6

1,500

400

4

1,400

350

2

300

1,300

March 2008

March 2009

March 2010

March 2008

March 2009

March 2010

Business Performance(Summary of Profit and Loss)
Ordinary revenue for the consolidated fiscal year underreview decreased ¥17,050 million from the year-earlier
levels to ¥66,151 million. This was mainly due to reductionsin interest on securities and gains on sales of securities. On
the other hand, the Bank of Ikeda wrote off almost all of
unrealized capital losses from devaluation of securities witha view to creating sound assets during the first half of the
fiscal year under review, which drastically reduced losses
on sales of securities and depreciation and amortization
costs. As a result, its ordinary expenses for the
consolidated fiscal year under review decreased ¥58,200
million from the year-earlier levels to ¥59,737 million.
Consequently, the Bank of Ikeda posted ordinary
income of ¥6,413 million ( ordinary loss of ¥34,736 million in
the previous consolidated fiscal year), and net income for9

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

the consolidated fiscal year under review was ¥7,373
million (net loss of ¥37,453 million for the previous
consolidated fiscal year).
On a non-consolidated basis, banking profit of the Bankof Ikeda increased ¥13,336 million from the previous fiscal
year to ¥10,897 million. This was because in spite of
posting net credit costs of ¥9,929 million, reducing
expenses such as personnel and non- personnel expenses¥2,206 million from the previous fiscal year throughincreasing efficiency, as well as gains or loss on bonds
turned positive.
In the fiscal year under review, the Bank of Ikeda posted
gains related to stocks, and it continued its effort to secure
the soundness of its assets. As a result, it posted ordinary
income of ¥5,935 million (ordinary loss of ¥34,150 million in010̲0161301372209.qxd 10.9.14 3:01 PM ページ 10 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Soundness of The Bank of Ikeda’s Operation
Capital ratio (domestic standard, non-consolidated)( %)Securing a sound asset
Disclosure under the Financial Revitalization Law

12.00

Bankruptcy and quasi-bankrupt credit

10.75

Doubtful credit( ¥ billion)

Substandard credit

10.42
9.55

42.9

45

40.5

39.0
8.00

14.1

12.5

24.2

23.6

9.2
30

4.00

22.7
15

7.1
0.00

4.5

0

March 2008

March 2009

March 2010

Basic components(Capital, retained earnings, etc.)+

March 2009

March 2010

2.41%

2.54%

2.39%

NPLs ratio* Method of Calculating the Capital Ratio (domestic standard)

4.2

March 2008

Supplemental components(General reserve for possible loan losses, subordinated debt, etc.)

Risk-weighted assets, etc. (Credit risk-weighted equivalent amount)

Balance of Securities100( ¥ billion)

830.7
800

646.5

Coverage of credits (End of March 2010)( ¥ billion)

Amount of loans

Secured amount

Coverage ratio

Bankruptcy andquasi-bankrupt credit

12.5

12.5

100.00%

Doubtful credit

23.6

20.9

88.32%

Substandard credit

4.2

2.4

57.29%

Total

40.5

35.9

88.67%

Normal credit

1,651.4

600

Coverage amount: Amount of coverage by collaterals, etc.
+ Reserve for possible loan losses

Bankruptcy and quasi-bankrupt credit
Bankruptcy and quasi-bankrupt credits represent the credits held by borrowers who
have been declared insolvent, on the grounds of the commencement of bankruptcy or
rehabilitation proceedings, filing for the proceedings of rehabilitation or other similar
legal proceedings.

400

357.6

Doubtful credit
Doubtful credits represent the credits held by borrowers who have not yet failed but
their financial conditions and business performances have deteriorated, with a highpossibility that the principal and interest on these credits are not received as per
agreement.

200

Substandard credit
0March 2008

March 2009

March 2010

Substandard credits represent the credits that are past due three months or more, andconsidered as restructured loans among the credits requiring special caution.
(Borrowers requiring special caution: Borrowers who have concerns in lending
conditions, exercising their obligations and financial situation, requiring special caution
on their future situations).

Normal credit
Normal credits represent the credits held by borrowers who show no particular
problems regarding financial conditions and business performances; therefore they areclassified other than the aforementioned credits.

the previous fiscal year) and net income of ¥7,104 million(net loss of ¥37,234 million in the previous fiscal year).

(Assets and Liabilities)
The balance of deposits at the end of the consolidated
fiscal year under review increased ¥56.5 billion to ¥2,305.2
billion, due mainly to an increase of deposits held by bothindividuals and corporate in the banking services.
As for loans and bills discounted, although the balanceof housing loans increased ¥19.8 billion, the corporate
lending decreased in the banking services. As a result,loans and bills discounted increased ¥1.4 billion to¥1,658.6 billion during the consolidated fiscal year underreview.

The balance of securities at the end of the consolidated
fiscal year under review increased ¥182.8 billion from theprevious consolidated fiscal year to ¥829.9 billion, due
mainly to an increase of bonds and other securities.
On a non-consolidated basis, the balance of deposits
increased ¥60.5 billion from the end of the previous fiscal
year to ¥2,314.2 billion; the balance of loans and bills
discounted increased ¥4.9 billion to ¥1,670.5 billion; andthe balance of securities increased ¥184.2 billion to ¥830.7
billion.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201010

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Bu

Con

Disclosure of Risk-Monitored LoansS
It should be noted that not all of the disclosed amountof risk-monitored loans are irrecoverable. The majority ofsuch loans are secured by collaterals and guarantees,
and the reserves for possible loan losses have been set
aside for the portion deemed irrecoverable.

Risk-monitored loans are stipulated in the Banking Law
and classified into the four subcategories of “Loans tobankrupt borrowers,” “Delinquent loans,” “Loans past due
three months or more,” and “Restructured loans.” Riskmonitored loans are subject to mandatory disclosure on
both a consolidated and non-consolidated basis.

Consolidated

Non-consolidated( ¥ billion)

March 2009

Subcategories

March 2010

3.6
35.8
0.7
3.8
44.0
2.65%

Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total
Ratio of total risk-monitored loans( ¥ billion)

March 2009

Subcategories

2.1
35.2
0.6
3.7
41.7
2.51%

Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total
Ratio of total risk-monitored loans

3.3
34.9
0.7
3.8
42.8
2.57%

Ord

Ordi

March 2010

1.8
34.2
0.5
3.6
40.4
2.42%

Loans to bankrupt borrowers

Loans with high possibility of their principals becoming irrecoverable. Specifically, among the loans and bills discounted on which accrued
interest is not recorded as accrued revenues, they are the loans to borrowers who have been declared failed on grounds of thecommencement of legal bankruptcy or special liquidation proceedings under applicable laws such as Corporate Reorganization Act orBankruptcy Act, or whose notes have been dishonored and suspended from processing through clearing houses.

Delinquent loans

Among the loans and bills discounted on which accrued interest is not recorded as accrued revenues, they are the loans excluding those on
which interest payments are reprieved with a view to recovery, reconstructing or supporting of the loans to bankrupt borrowers andborrowers.

Loans past due three months or moreAmong the loans and bills discounted on which the principal or interest is in arrears of payment for three months or more after the contracted
payment due date. These are not classified into the loans to bankrupt borrowers or delinquent loans.

Restructured loans

These are loans which have been restructured in favor of the borrower (such as by reducing or suspending the rate of interest, suspending
the capital, loan forgiveness, cash donation, acceptance of substitute payment, etc.) with the aim of restructuring and supporting financiallydistressed obligators and facilitating the recovery of relevant loans.

Ordin

Net

Net

No

S

Gro

Ne

Self-assessment results, and categories and coverage by disclosure standard (Non-consolidated)(End of March 2010)
Borrower classification under self-assessment guidelines(Credit exposures)Classification
Outstanding loans
Bankrupt

1.8
Effectively bankrupt

10.6
Potentially bankrupt

23.6
Requiring
special caution
Watch list

4.8

Category
No assetclassification Category II Category III Category IV
-----

1.0
1.4

8.1

0.8

9.2
12.7

( ---)

(---)

---

---

(0)

(0)

Claims disclosed under the Financial Revitalization Law(Credit exposures)
Coverage
Classification
Secured or
Reserveratio
Outstanding loans guaranteed
Bankruptcy andquasi-bankrupt

2.7
(6.4)

Doubtful

23.6
4.2

4.6

Subtotal

40.5
Other borrowers
requiring caution

44.1

105.5
Normal

1,651.4
Normal1,501.2

Total

1,692.0

1,556.2 132.9

2.7
(6.4)

Risk monitored loans
under the Banking Law

Classification

Outstandingbalance ofloans

Loans to bankrupt
borrowers

1.8

Delinquent loans

34.2

Loans past due three months or more
Restructured loans

0.5
3.6

Total

40.4

---

Total

(---)

1,692.0

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Pe

No

Core

Ban

Ordin
Net

14.4

6.4

88.32%

0.9

1.5

57.29%

27.9

7.9

88.67%

C

1

Ratio of risk managed loans to totalloans: 2.42%[Definition of Borrower Classification]
Bankrupt: Borrowers who are in bankrupt legally and formally
Effectively bankrupt: Borrowers who are not yet in bankrupt legally nor formally, but are recognized thatthey have no prospect of reconstruction or rehabilitation of their business.
Potentially bankrupt: Borrowers who are not yet in bankrupt, but are in financial difficulties and the progress of management
improvement plans is not good so that the future bankruptcy possibility is highly concerned.
Requiring special Borrowers whose lending conditions is concerned, and repayment of principal or
caution: payment for interest is not according to the schedule as contracted, or financial
situation is not prosperous that their situation requires to be addressed and managed.
Normal: Borrowers whose business is prosperous and their financial situation has no particularconcerns.

Notes 1. Credits include: Corporate Bonds (when financial institutions holding the bonds guarantee all or part of the repayment of principal and payments of interest, when such bonds are issued throughprivate placement in accordance with the Article 2, paragraph 3 of the Financial Instruments and Exchange Law (No.25 in 1948)); Loans and bills discounted; Foreign exchanges; Accrued income
and Suspense payment account under Other assets; and Customers’ liabilities for acceptances and guarantees in the Balance Sheet; as well as the lended securities (limited for use agreements orlease contracts,) which are required to be stated in a note to the Balance Sheet.
2. The figures in the parentheses under Borrower classification under self-assessment guidelines represent reserved amounts for classified loans. All amounts for Categories III and IV for borrowers inbankrupt and effectively bankruptcy are reserved.

11

Exp

Net

100.00%

Ratio of NPLs (subtotal) pursuant to
the disclosure standards of the
Financial Revitalization Law to total
credit: 2.39%

149.7

1,501.2

0Ne( ¥ billion)

12.5

Substandard

0.2

12.5

Net

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 12 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Business Overview of The Senshu Bank
Consolidated

Summary of Profit and Loss
Items

( ¥ million)

Fiscal year 2008 Fiscal year 2009

Year-eariler
levels52,278(6,774)

Ordinary revenue

59,052

Net income (loss)
3,000( ¥ million)

2,800

2,000

Ordinary expenses

59,34650,989(8,357)

Ordinary income (loss)

(293)

1,288

1,581

Net credit costs

9,726

7,862

(1,864)

Net income (loss)

63(10,021)(10,084)

1,000

0

63

(10,021)

March 2009

March 2010

(10,000)

March 2008

Non-consolidated

Summary of Profit and Loss

( ¥ million)

Fiscal year 2008 Fiscal year 2009 Year-eariler
levels

Items

Gross profit

32,70030,890(1,810)Net interest income

33,53430,536(2,998)

Net fees and commissions income (loss)(1,254)(1,927)(673)

Net other operation income

420

2,280

1,860

Expenses

24,80025,206406

Personnel expenses

12,01012,285275

Banking profit
8,000

7,858
7,298

5,684

6,000

4,000

Non-personnel expenses

11,682

11,721

39

Core banking profit

8,072

3,948

(4,124)

Banking profit

7,298

5,684

(1,614)

Ordinary income (loss)

32(1,991)(2,023)

Net credit costs

4,819

1,478

(3,341)

Net income (loss)

169(11,741)(11,910)

March 2008( ¥ million)

Net income (loss)

Core banking profit
12,000( ¥ million)

2,000

0

March 2009

March 2010

( ¥ million)

3,000

11,608

2,245
9,000

2,000

8,072

1,000

6,000

3,948
169
3,000

0

(11,741)(12,000)

0March 2008

March 2009

March 2010

March 2008

March 2009

SENSHU IKEDA HOLDINGS,INC.

March 2010

ANNUAL REPORT 201012

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 13 (1,1)

So
Non-consolidated

Deposits( ¥ billion)

Deposits held by individuals( ¥ billion)

1,700

2,000

12.

1,952.5

1,639.5
1,600

1,900

1,564.4

8.

1,844.9
1,800

C

1,500

1,771.2

1,497.5

4.
1,700

1,400

1,600

1,300

0.

March 2008

March 2009

Loans and bills discounted( ¥ billion)

1,793.0

1,800

March 2008

March 2010

March 2009

Housing loans

March 2010( ¥ billion)

1,300

* Met

B

5

1,241.8

1,729.9
1,700

1,200

3

1,150.7
1,619.4
1,600

1,100

2

1,039.9
1,500

1,000

1,400

1

900

March 2008

March 2009

March 2010

March 2008

March 2009

March 2010

Business Performance(Summary of Profit and Loss)
Ordinary revenue for the consolidated fiscal year underreview decreased ¥6,774 million from the year-earlier levels
to ¥52,278 million. This was mainly due to decrease ininterest income through lower yields on loans andsecurities, and decline in gains on sale of stocks. On theother hand, ordinary expenses decreased ¥8,357 million
from the year-earlier levels to ¥50,989 million. This was
because of decreasing interest expenses and loss on
separately classified collateralized debt obligation (CDO),
and reduction in NPLs write-offs. As a result, the Senshu
Bank posted ordinary income of ¥1,288 million (ordinary
loss of ¥293 million in the previous consolidated fiscal
year), net loss of ¥10,021 million in the consolidated fiscal
year under review, reflecting a reversal of deferred tax

13

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

assets for following the formation of more realizable andconservative future income projections of the Senshu Bank.
On a non-consolidated basis, core banking profit of theSenshu Bank decreased ¥4,124 million from the yearearlier levels to ¥3,948 million. This was because of
decrease in net interest income, net fees and commissions
income as well as increase in expenses. The Senshu Bank
posted ordinary loss of ¥1,991 million (ordinary income of¥32 million in the previous fiscal year) and a net loss of¥11,741 million (net income of ¥169 million in the previousyear).

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 14 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Soundness of The Senshu Bank’s Operation
Capital ratio (domestic standard, non-consolidated)( %)Securing a sound asset
Disclosure under the Financial Revitalization Law

12.00

Bankruptcy and quasi-bankrupt credit

11.30

Doubtful credit( ¥ billion)

Substandard credit

40

10.32
9.33

35.1

33.3

31.1

30

8.00

14.7

12.3

13.6
20
4.00

14.7

16.9

13.9

10

6.2
0.00

March 2008

March 2009

March 2008

March 2010

NPLs ratio* Method of Calculating the Capital Ratio (domestic standard)
Basic components(Capital, retained earnings, etc.)+

Supplemental components(General reserve for possible loan losses, subordinated debt, etc.)

Risk-weighted assets, etc. (Credit risk-weighted equivalent amounts)

Balance of Securities100( ¥ billion)

500

430.6

410.3

412.6

375

3.4

3.4

0

March 2009

March 2010

1.96%

1.68%

1.97%

Coverage of credits (End of March 2010)( ¥ billion)

Amount of loans

Secured amount

Coverage ratio

Bankruptcy andquasi-bankrupt credit

13.6

13.6

100.00%

Doubtful credit

13.9

12.7

91.28%

Substandard credit

3.4

2.5

74.51%

29.0

93.25%

Total

31.1

Normal credit

1,810.4

Coverage amount: Amount of coverage by collaterals, etc.
+ Reserve for possible loan losses

Bankruptcy and quasi-bankrupt credit
Bankruptcy and quasi-bankrupt credits represent the credits held by borrowers who
have been declared insolvent, on the grounds of the commencement of bankruptcy or
rehabilitation proceedings, filing for the proceedings of rehabilitation or other similar
legal proceedings.

250

Doubtful credit
Doubtful credits represent the credits held by borrowers who have not yet failed but
their financial conditions and business performances have deteriorated, with a highpossibility that the principal and interest on these credits are not received as per
agreement.

125

Substandard credit
0March 2008

March 2009

March 2010

Substandard credits represent the credits that are past due three months or more, andconsidered as restructured loans among the credits requiring special caution.
(Borrowers requiring special caution: Borrowers who have concerns in lending
conditions, exercising their obligations and financial conditions, requiring special
caution on their future situations).

Normal credit
Normal credits represent the credits held by borrowers who show no particular
problems regarding financial conditions and business performances; therefore they areclassified other than the aforementioned credits.

(Assets and Liabilities)
The Senshu Bank continued to enjoy a strong acquisition of
new deposits through “pension time deposits” and “Direct
Branch” programs. As a result, the balance of deposits at
the end of the consolidated fiscal year under review
increased ¥107.5 billion from the end of the previous fiscal
year to ¥1,951.6 billion.
Loans and bills discounted at the end of theconsolidated fiscal year under review increased ¥64.5
billion from the year-earlier levels to ¥1,789.9 billion due toan expansion in personal loans, particularly related tohousing loans. The rate of increase in housing loans during
the period was 7.9%.

The balance of securities at the end of the consolidated
fiscal year under review increased ¥6.3 billion from theyear-earlier levels to ¥409.1 billion. This was due to anincrease in the balance of Japanese government bonds
through implementing the policies of stable investment
management.
On a non-consolidated basis, the balance of deposits
increased ¥107.6 billion from the end of the previous fiscal
year to ¥1,952.5 billion; the balance of loans and bills
discounted increased ¥63.1 billion to ¥1,793 billion, and thebalance of securities increased ¥2.3 billion to ¥412.6
billion.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201014

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 15 (1,1)

Disclosure of Risk-Monitored Loans
Risk-monitored loans are stipulated in the Banking Law
and classified into the four subcategories of “Loans tobankrupt borrowers,” “Delinquent loans,” “Loans past due
three months or more,” and “Restructured loans.” Risk
monitored loans are subject to mandatory disclosure on
both a consolidated and non-consolidated basis.

Consolidated

It should be noted that not all of the disclosed amountof risk-monitored loans are irrecoverable. The majority ofsuch loans are secured by collaterals and guarantees,
and the reserves for possible loan losses have been set
aside for the portion deemed irrecoverable.

Non-consolidated( ¥ billion)

Subcategories

March 2009

March 2010

10.9
19.6
0
3.4
34.0
1.97%

10.0
17.4
--3.8
31.3
1.75%

Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total
Ratio of total risk-monitored loans( ¥ billion)

March 2009

Subcategories

Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total
Ratio of total risk-monitored loans

9.8
Effectively bankrupt

3.8
Potentially bankrupt

13.9
Requiring
special caution
Watch list

4.2

Delinquent loans

Among the loans and bills discounted on which accrued interest is not recorded as accrued revenues, they are the loans excluding those on
which interest payments are reprieved with a view to recovery, reconstructing or supporting of the loans to bankrupt borrowers andborrowers.

Loans past due three months or moreAmong the loans and bills discounted on which the principal or interest is in arrears of payment for three months or more after contracted
payment due date. These are not classified into the loans to bankrupt borrowers or delinquent loans.

Restructured loans

These are loans which have been restructured in favor of the borrower (such as by reducing or suspending the rate of interest, suspending
the capital, loan forgiveness, cash donation, acceptance of substitute payment, etc.) with the aim of restructuring and supporting financiallydistressed obligators and facilitating the recovery of relevant loans.

Category
No assetclassification Category II Category III Category IV

1.8

8.0

---

---

(0)

(0.6)

---

---

1.8

1.9

(0.1)

(0.9)

6.7

6.0

1.2
(2.0)

Risk monitored loans
under the Banking Law

Coverage
Classification
Secured or
Reserveratio
Outstanding loans guaranteed

Classification

Outstandingbalance ofloans

Loans to bankrupt
borrowers

9.1

Delinquent loans

16.5

Bankruptcy andquasi-bankrupt

13.6
Doubtful

13.9
Substandard

3.4

3.4

0.7

Subtotal

53.9

84.3
Normal

1,810.4
Normal

1,671.3

Total

1,841.5

1,736.4 103.8

11.8

1.8

100.00%10.7

2.0

91.28 %

1.9

0.5

74.51%

24.6

4.4

93.25%

Ratio of NPLs (subtotal) pursuant to
the disclosure standards of the
Financial Revitalization Law to total
credit: 1.68%

138.3

1,671.3

1.2(2.1)( ¥ billion)

Claims disclosed under the Financial Revitalization Law(Credit exposures)

31.1
Other borrowers
requiring caution

9.1
16.5
--3.4
29.1
1.62%

Loans with high possibility of their principals becoming irrecoverable. Specifically, among the loans and bills discounted on which accrued
interest is not recorded as accrued revenues, they are the loans to borrowers who have been declared failed on grounds of thecommencement of legal bankruptcy or special liquidation proceedings under applicable laws such as Corporate Reorganization Act orBankruptcy Act, or whose notes have been dishonored and suspended from processing through clearing houses.

Borrower classification under self-assessment guidelines(Credit exposures)

Bankrupt

March 2010

Loans to bankrupt borrowers

Self-assessment results, and categories and coverage by disclosure standard (Non-consolidated)(End of March 2010)

Classification
Outstanding loans

10.2
18.6
0
3.4
32.3
1.87%

---

Total

(1.6)

1,841.5

Loans past due three months or more---

Restructured loans

3.4

Total

29.1

Ratio of risk managed loans to totalloans: 1.62%[Definition of Borrower Classification]
Bankrupt: Borrowers who are in bankrupt legally and formally
Effectively bankrupt: Borrowers, who are not yet in bankrupt legally nor formally, but are recognized thatthey have no prospect of reconstruction or rehabilitation of their business.
Potentially bankrupt: Borrowers who are not yet in bankrupt, but are in financial difficulties and the progress of management
improvement plans is not good so that the future bankruptcy possibility is highly concerned.
Requiring special Borrowers whose lending conditions is concerned, and repayment of principal or
caution: payment for interest is not according to the schedule as contracted, or financial
situation is not prosperous that their situation requires to be addressed and managed.
Normal: Borrowers whose business is prosperous and their financial situation has no
particular concerns.

Notes 1. Credits include: Corporate Bonds (when financial institutions holding the bonds guarantee all or part of the repayment of principal and payments of interest, when such bonds are issued throughprivate placement in accordance with the Article 2, paragraph 3 of the Financial Instruments and Exchange Law (No.25 in 1948)); Loans and bills discounted; Foreign exchanges; Accrued income
and Suspense payment account under Other assets; and Customers’ liabilities for acceptances and guarantees in the Balance Sheet; as well as the lended securities (limited for use agreements orlease contracts,) which are required to be stated in a note to the Balance Sheet.
2. The figures in the parentheses under Borrower classification under self-assessment guidelines represent reserved amounts for classified loans. All amounts for Categories III and IV for borrowers inbankrupt and effectively bankruptcy are reserved.

15

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 16 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Corporate GovernanceIn light of the public nature of our operation as a regional
financial institutions group, the Group is focused on an
adequate development and maintenance of corporate
governance structure, which is one of the crucial
management tasks.
Under the policy, the Company aims to be the trustworthy
and indispensable institution for all of our stakeholders
including customers and employees, as well as shareholders
and investors. To this end, the Company adopts the basic
management policies focused on compliance (with laws andregulations,) risk management and managementtransparency through emphasizing contribution to the regional
communities, and sustaining management soundness andindependence.

Outline of Corporate Governance Structure
The Company has adopted a corporate governance structure
for sustainable enhancement of its corporate value throughreinforcing supervision of management by electing the outside
directors and cooperating with the Board of Corporate
Auditors.
Specifically, directors who are familiar with banking
business -involving complex and sophisticated management
decisions- supervise business execution of representative
directors, while corporate auditors audit business execution of
directors through attendance to important meetings andinspection of critical documents. The Company reinforces its
corporate governance structure through outside directors andoutside corporate auditors who possess well-seasoned
characters and insights presenting meetings including theBoard of Directors and expressing their opinions actively.
Furthermore, with the purpose to enhance transparency
and objectivity of management, the Company has establishedan Advisory Board as consultative body to the Management
Committee, for advice from outside experts on the issues
including critical management strategies and agenda, latest
issues in the financial industry and other matters concerning
general management of the Company.
The Company has concluded liability limitation agreementwith outside directors and outside corporate auditors. Under
this agreement, their liabilities to the Company are restricted tothe minimum level as required by the applicable laws andregulations.
Corporate governance functions within the Company● The Board of Directors
The Board of Directors that comprises eleven directors(including one outside director,) is responsible for making
decisions on critical management issues while receiving
relevant reports from within the company, and supervising
the business execution of representative directors under therules of the Board of Directors. The Board of Directors isheld once a month in principle, attended by directors andexecutive officers along with corporate auditors, to makedecisions in due consideration of compliance and risk
management.
● The Board of Corporate Auditors
The Company has adopted a corporate auditor system.
Under this system, the Company ensures transparency
through appointing two outside corporate auditors of thefour corporate auditors in all. Each corporate auditor audits
business execution of directors through attendance toimportant meetings including the Board of Directors and theManagement Committee , inspection of critical documents
and other means, according to the auditing guidelines andaudit schedule decided by the Board of Corporate Auditors.
All Corporate Auditors are qualified with high degree of
integrity along with superior insight and capability, as well as
expertise and hands-on experience in respective area ofspecialty, providing advice on management from diversified
points of view.
● Management Committee
With the purpose to make more adequate and prompt
management decisions in the execution of company
business, the Management Committee comprising directors
has been established under the Board of Directors, whichmakes decisions on critical management matters based on
the authorities delegated from the Board of Directors while
receiving relevant reports from within the company. The
Management Committee is held once a week in principle
inviting corporate auditors, to make decisions in due
consideration of compliance and risk management.
● Internal control, management and auditing functions
For the purpose of internal control, management andauditing functions, the Company has established Internal
Control Group within the Corporate Planning Division,
Compliance Management Division, Risk Management
Division and Internal Audit Division.
The Internal Control Group within the Corporate Planning
Division is the department responsible for the coordination ofinternal control, for the purpose of Companies Act and
Financial Instruments and Exchange Act. The ComplianceManagement Division is responsible for compliancemanagement that serves as a linchpin for internalmanagement. Measures for compliance are planned andtheir implementation status is managed under thecompliance program approved by the Board of Directors.
Meanwhile, the Risk Management Division is responsible forregular review and reform of the risk management structure,referring to the financial inspection rating system by the
Financial Services Agency.
On the other hand, the Internal Audit Division is
responsible for coordinated management of the overall
internal audit work across the Group according to the annual
audit plan approved by the Board of Directors, while it audits
subsidiaries on its own or on a joint basis with the internal
audit department of each subsidiary as appropriate, andprovides specific instruction and advice to improve business
operation at concerned subsidiary.
● Accounting auditors
Mr. Tamon Tsuda, Mr. Hisashi Tsurumori and Ms. Mayumi
Ikai are the certified public accountants that conducted thelatest accounting audit of the Company, while accounting
auditors that conduct audits of the Company for the purposeof Companies Act as well as for the purpose of Financial
Instruments and Exchange Act, belong to Ernst & Young
ShinNihon LLC. None of them have been engaged in theaudit of the Company for longer than seven years on
continuous basis, hence no statement in respect of thenumber of continuous years of service engaged in the auditof the Company.
Assistants for the accounting audit of the Company arenine certified public accountants and ten others.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201016

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 17 (1,1)

Basic approach to the internal control system and its
status of development
The Company as well as the Group is developing a structurenecessary to ensure the adequacy of operation based on thefollowing concepts through aiming to be a financial groupwhich respects personal relationship, sincerity andfriendliness and become the most “trustworthy” for customers.
(1) Structure to ensure that directors and employees executebusiness in compliance with laws and regulations as well as
the articles of incorporation
The Company and the Group focus on compliance withlaws and regulations (hereinafter “compliance”) as one of
the most critical management task. The Company and theGroup also set out the code of ethics along with the codeof conduct to ensure that directors and employees behave
in compliance with laws and regulations as well as thearticles of incorporation and other company rules, whilesetting out basic rules of compliance under which overall
compliance policies and specific measures are discussed
at the Compliance Committee.
To ensure the above compliance implementation, theCompany and the Group appoint directors who areresponsible for compliance. In addition, the ComplianceManagement Division coordinates compliancearrangement across the Company and the Group, while
conducting education and training for directors andemployees by developing compliance program andcompliance manual, and arranging compliance seminars.
Furthermore, a hot line has been set up and managed inorder to allow employees to directly provide information
about any questionable conducts in light of laws andregulations.
Basic rules that directors and employees must abide by
are set out for the prevention of insider trading.
Besides, the Company and the Group have taken
uncompromising stance against anti-social forces andorganizations that threaten the order and safety of thecommunity, while making every effort to eliminate theirinvolvement in any trading activities. The Company and theGroup have also taken every measure to eliminate money
laundering in consideration of the possibility that funds
transferred via financial institutions could be used for
criminal purposes including terrorism.
Moreover, the Company and the Group provide effective
customer management including customer protection, withthe purpose to reassure our customers of their security andto promote their convenience in an effort to implement athorough ‘customer first policy’.
(2) Structure for the preservation and management of
information concerning the directors’ business execution
The Company and the Group have prepared and kept
documents such as minutes of important meetings
including the Board of Directors and the Management
Committee , as records of directors’ execution of duties.
The Company and the Group have also prepared andkept documents and attachment sanctioned by directors
as appropriate.
(3) Arrangement including the rules to manage risk of potential
loss
With the purpose to ensure soundness of management
and stable corporate earnings, the Company and theGroup has set out basic rules of risk management. The

17

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Company and the Group have also classified risks into
credit risk, market risk, funding liquidity risk andoperational risk, and defined the department responsible
for the management of each category of risk, while
establishing the Risk Management Committee to monitor
the status of management of each such category.
Meanwhile, the Company and the Group have set out
rules of risk management are, with the purpose to minimize
the financial loss along with loss of confidence resulting
from the crisis event, and to ensure business continuity
through prompt restoration of normal operational functions.
(4) Structure to ensure efficient business execution of directors
The Board of Directors establishes the Management
Committee with the purpose to enable directors toefficiently execute their business, while setting out
management objectives and developing management
plans.
The Management Committee discusses beforehand theagenda of the Board of Directors, to facilitate decisionmaking process at the board meeting, while discussing thecritical issues in implementing the basic management
policies decided by the Board of Directors on the basis ofsuch policies.
The Management Committee also defines theheadquarters under the command of each director, alongwith the authority and responsibility involved, whiledeveloping and maintaining a structure for efficientbusiness execution by utilizing IT.
(5) Structure to ensure adequacy of operation at the Group thatcomprises the Company and the Group companies
The Company regards all subsidiaries and affiliatedcompanies as one group under the flag of Senshu Ikeda
Holdings. Thus each member company of the Group runs
its operation through developing an adequate internalmanagement structure according to its scale and nature ofoperation under the adequate guidance of, and incoordination with the Company.
The Company, as a responsible party for the
management of the Group, develops a structure in which it
receives necessary reports from, and consults businesswith its subsidiaries and affiliates.
(6) Arrangement for employing staff at the request of corporate
auditors as their assistants, as well as the arrangement toensure such assistants’ independence from executive
officers
In order to support corporate auditors’ businessexecution, the Company and the Group employ corporate
auditors’ staff as secretariat for the Board of Corporate
Auditors. Such corporate auditors’ staff receive instructions
from the Board of Corporate Auditors for their businessexecution, while their personnel change and evaluation
duly reflect the opinions of the Board of Corporate
Auditors. Thus the Company and the Group ensure their
independence from directors.
(7) Structure to facilitate reporting from directors andemployees to corporate auditors and other arrangement toensure that corporate auditors are adequately informed
Directors and employees shall immediately report tocorporate auditors on matters that could have significant
impact on the Company as well as the Group, or any othermatters as necessary, in addition to matters legallyrequired to be reported.

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SENSHU IKEDA HOLDINGS,INC.

To reinforce this arrangement, the Company and theGroup develop a structure that corporate auditors areallowed to attend important meetings such as the Board of
Directors, the Management Committee, the Compliance
Committee, the Risk Management Committee and the ALM
Committee.
(8) Other structure to ensure that corporate auditors conduct
effective audits
Corporate auditors hold meetings to exchange opinionswith representative directors, internal audit division andaccounting auditors.
Corporate auditors attend important meetings such as
the Board of Directors, the Management Committee, theCompliance Committee, the Risk Management Committee
and the ALM Committee, in an effort to find out various
problems they need to address in the execution of theirduties.

Status of Internal Audits and Audits by Corporate Auditors● Internal audits

The Company has established the Internal Audit Divisionthat conducts internal audits based on the basic rules of
intra-group audits, set out to provide objectives andguidelines of internal audits. The Company develops
effective internal audit structure that has independence andexpertise in order to ensure soundness and adequacy ofoperation. The Company also inspects and evaluateadequacy and effectiveness of the risk management andinternal control practices, and to make recommendations as
appropriate to the senior management of the Company on
ways to improve and rectify questionable areas. Thus theCompany's internal audit guidelines facilitate effective
achievement of management objectives including theimprovement of the Group's internal management structure
and the enhancement of its enterprise value.
The Internal Audit Division of the Company currently
comprises ten staff (three full-time staff and sevenconcurrent staff), and they are all transferred from subsidiarybanks. They conduct internal audits of all departments within
the Company according to the audit plan approved by the
Board of Directors, as well as internal audits of subsidiarybanks as appropriate under the relevant auditing contracts.
Results of these audits are regularly reported to the Board of
Directors and so on.
● Audits by corporate auditors
Each corporate auditor audits the business execution of
directors through attendance to important meetings such as
the Board of Directors and the Management Committee, as
well as inspection of critical documents, according to
guidelines such as the guidelines for audits by corporate
auditors and the guidelines for implementing audits ofinternal control system, generally subject to the auditing
guidelines and audit plan decided by the Board of
Corporate Auditors.
Corporate auditors and accounting auditors are
performing their audit duties efficiently and effectively
through establishing close mutual cooperation byexchanging opinions about various auditing issues.
Corporate auditors and internal audit division are also
performing their audit duties efficiently and effectively
through establishing close mutual cooperation by corporate

auditors’ attendance to internal audits and exchanging
opinions about various auditing issues.
The Company has made every effort for efficient andeffective implementation of all audits including internal
audits, audits by corporate auditors and accounting auditors
through close cooperation and communication between thedepartments and functions concerned. The Company has
also made effort to audit efficiently and effectively throughreceiving various reports from the internal control division.

Outside directors and outside corporate auditors
The Company has one outside director and two outside
corporate auditors.
Outside director, Nobuo Kuroyanagi, is from major
shareholder of the Company, Mitsubishi UFJ Financial Group,
Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., and has nointerest in the Company in terms of personnel, capital, tradingor other relationship. He performs his duties by supervising
the business execution as a director of the Company, which isbased on his wealth of experience over the years as senior
management of financial institutions. He serves concurrently
as an outside director of the Company's wholly-owned
subsidiary, The Senshu Ikeda Bank.
Outside corporate auditor, Toshiaki Imanaka, is anindependent officer without any potential conflict of interest
with general shareholders, as required to be designated by
Tokyo Stock Exchange and Osaka Securities Exchange, andhas no interest in the Company in terms of personnel, capital,
trading or other relationship. Qualified as an attorney, he has
good deal of knowledge in finance and accounting as has
been earned through his hands-on experience in corporate
accounting as reorganization trustee, and is performing his
duties as corporate auditor from his professional standpoint.
Outside corporate auditor, Toshiaki Sasaki, has no interestin the Company in terms of personnel, capital, trading or otherrelationship. He performs his duties as corporate auditor
based on his wealth of experience and broad insight earned
over the years as corporate auditor in financial institutions.
The Company has appointed one outside director out of
eleven directors while two outside corporate auditors out offour. Thus the Company has developed a structure sufficient
to continuously enhance its enterprise value through suchappointment of outside directors and outside corporate
auditors.
Outside directors receive reports about the status of audits
by corporate auditors, internal audits and accounting audits,
as well as the status of internal control from the internal control
division through Board of Directors. On the other hand,outside corporate auditors receive reports about the status ofaudits by corporate auditors, internal audits and accounting
audits, as well as the status of internal control from thecorporate auditors. Both outside directors and outside
corporate auditors give recommendations and advice inreturn for these reports.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201018

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Corporate governance structure of the GroupSenshu Ikeda Holdings

General Meeting of
Shareholders
Appointment/Removal

Appointment/Removal
Joint coordination

Accounting Auditor

Reporton Audit

Accounting audit

Bringing important
issues to meetings/
Reporting on business Appointment/
Supervision
execution

Board of Directors

Reporton AuditAppointment/Removal

Board of Corporate Auditors

Joint coordination

Audit<Organizations in business execution>
Representative Director

Advisory Board

ReportInternal Audit Division

AdviceCommittees(Risk Management Committee)(Compliance Committee)(ALM Committee)

Corporate
Planning
Division

Bringing discussed
issues to meetings/
ReportingManagement Committee
Internal audit
Instruction/
Direction

Personnel
Affairs
Division

GeneralAffairs
Division

The Senshu Ikeda Bank

Risk
Management
Division

ComplianceManagement
Division

Operation
SystemPlanning
Division

Business
Planning
Division

BusinessInnovation
Division

General Meetingof Shareholders
Appointment/Removal

Accounting Auditor
Accounting audit

Appointment/Removal
Joint coordination
ReportBoard of Directors
on Audit
Bringing important
issues to meetings/
Reporting on business Appointment/
execution
Supervision

ReportAppointment/Removal

Board of Corporate Auditors

Joint coordination

Audit<Organizations in business execution>
Representative Director

Committees(Risk Management Committee)(Compliance Committee)(ALM Committee)(Facilitation of Financing Promotion Committee)(Business Integration Promotion Committee)

Bringing
discussed
issues to meetings/
Reporting

ReportInternal Audit Division

Management Committee
Internal audit
Instruction/
Direction

7 Headquarters, 23 Divisions, 1 Regional Headquarters, 2 Representative Offices, 1 Center,
133 Head Office and branches, 7 Sub-branches

19

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

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SENSHU IKEDA HOLDINGS,INC.

Compliance Structure
The Company and the Group sets “compliance” as one of themost important management priority. We are coping with it inorder to fulfill our social responsibility and public duties, and toearn the trust of our customers and regional communities.
We have set up a “Compliance Committee” in the Company
and The Senshu Ikeda Bank respectively, to deliberate
important matters regarding compliance. We have also
formed the Compliance Management Division under the
director in charge of compliance to manage mattersregarding compliance unitarily.
The Compliance Management Division ensures complianceby creating, reviewing, and following up the “Compliance
Program,” which is a practical plan for reinforcement ofcompliance, by creating, updating, and distributing the“Compliance Manual,” which stipulates basics regarding
compliance, and by conducting compliance education
activities though various training programs.

Senshu Ikeda Holdings

Board of Directors and Management Committee
Bringing issues to meetings/Reporting

Instruction

Compliance Committee(Administrative Office: Compliance Management Division)

Compliance Officer(Director in charge of Compliance Management Division)
Compliance Management Division

Consultation /Reporting

Instruction

Compliance Managers in each Division (General Managers)
Compliance Managers (Deputy General Managers)

Consultation /Reporting

Instruction

The Senshu Ikeda Bank
Subsidiaries and affiliates of The Senshu Ikeda BankSENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201020

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 21 (1,1)

We assign “Compliance Managers” and “Compliance
Officers” to each division and branch in order to implement
and penetration of compliance. In addition, we check theoperations from compliance point of view and facilitate theconduction of seminars to ensure compliance.
We also set up an internal hotline including external contact
point in order to take corrective actions for complianceproblems in early stages.

We intend to enrich and enhance our compliance structure
through improving various regulations and giving training toour employees continuously so that customers can deal with
us reliably.

Code of Ethics
The Group sets up Code of Ethics as follows that our directors and employees mustabide by. The directors and employees will regard the observance of the Code of Ethics
as a fundamental part of routine operations and will conduct a fair and honest corporate
activities, while complying with laws and rules strictly to implement the Group's
management philosophy and policies.

1. Winning the trust from our customers
Taking its social responsibility and public duties into consideration, we will intend to
become the most reliable financial group for the customers through conducting
sound and appropriate operations, including information management and proper
disclosure.
2. Implementing “customer first policy”
We will always consider any matters on customer first basis and will contribute to thedevelopment of the regional economy and community through providing high-quality
financial services that are both original and innovative.
3. Strict compliance
We will strictly comply with all laws and rules, and will conduct fair and honest
corporate activities that are consistent with social code.
4. Respecting human rights and the environment
We will respect personal relationship, characters and personalities of the others, andconduct environment-friendly corporate activities.
5. Eliminating anti-social forces
We will take an uncompromising stance against anti-social forces and organizations,and resolutely eliminate all undue intervention by such forces and organizations
which threaten the order and safety of the community.

21

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

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SENSHU IKEDA HOLDINGS,INC.

Risk Management Structure■ Basic Approach to Risk Management

categories of credit risk, credit concentration risk

While business opportunities for financial institutions
multiply as a result of deregulation, sophistication andglobalization of financial operations, and the significant
development in ICT, the risks that financial institutions faceare becoming more complicated and diverse qualitatively.
Moreover, it has been more important for banks tomonitor, assess and manage risks properly, and torespond to the changes quickly in the environment inorder to earn the stable and continuous profits, whileserving various needs of customers. Under suchcircumstances, the Group regards enhancing andstrengthening risk-management structure as a high-priority
management task in order to maintain and enhance thesoundness of its business execution.

outside the calculation of capital ratio, interest rate risk inSpecifically, the Group determines the structure andvarious rules regarding risk management and thedepartments in charge of each risk category at the Boardof Director. The group has also set up the risk
management division to oversee the departments
regarding risk management. Furthermore, the Risk
Management Committee and the ALM Committee,
consisting principally of management personnel havebeen established, with the purpose to identify the risk
situation within the Group as well as the subsidiary bank,and to discuss the relevant agenda and countermeasures
which shall subsequently be reported and further
discussed at the Board of Directors. Thus the Group
ensures effective risk management structure atbanking accounts, market risk and operational risk, andcompares them with its management strength (capitalratio).
The group regards development and reinforcement ofrisk management structure as its crucial managementtask. Furthermore, the Group has developed an
integrated risk management structure that the risk
management division manages all risks in order tocomprehensively identify and appreciate various risks
associated with the Company’s operations by as uniform
as possible measurement, and to earn the stablerevenue, realize appropriate capital composition andallot management resources properly.
● Risk capital management system

The Group is running its operation based on the risk
capital management system that controls all risks withincertain proportion of capital base, under the integrated
risk management structure.
Specifically, the Company allocates risk capital thatsourced from Tier I capital base to credit risk, market
risk and operational risk, based on the calculated risk
amount in each category. The Company has also
monitored risk amount continuously to ensure that it is
kept within the tolerable limit from management point ofview. Thus the Company ensures smooth operations andmanagement soundness across the Group.

management level.
Meanwhile, as action plans for risk management basedon the Group strategies, basic risk management principles
are set out semi-annually and reviewed continually inorder to deal with the risks newly emerging as a result ofchanges in environment for timely and adequate way.

Tier II

With the purpose to objectively examine the adequacyand effectiveness of the risk management structure, theDeduction item

internal audit division which independents from the

Deduction item: Net unrealized loss onavailable-for-sale securities, etc.
Risk buffer: Provisions against unpredictablerisks and risks associated withaffiliated companies

Risk buffer

audited departments conducts an audit. Thus the Group
Credit Risk

ensures appropriate administrative processing and soundbusiness operations through finding out and improving theTier I

Risk
capitalto beallottedmatters on risk management.

■ Integrated Risk Management

Credit Risk
Market Risk
Market Risk
Operational
Risk● Integrated risk management

Operational
Risk

Integrated risk management refers to the process toadequately manage the risks that financial institutions
face. The Company evaluates the risks divided into

Capital ratio

Financialresource forallocation

Risk capital
to beallocated

SENSHU IKEDA HOLDINGS,INC.

Risk amount

ANNUAL REPORT 201022

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 23 (1,1)■ Market Risk Management● Dealing with Basel II

In respect of capital ratio calculation for the purpose of
the new capital ratio regulation (Basel II) enforced inJapan from the end of March 2007, the Group’s current
status is as follows:

Credit Risk

Operational Risk

Standard method

Gross profit allocation method

Senshu Ikeda Holdings

Senshu Ikeda Holdings

The Senshu Ikeda BankThe Senshu Ikeda Bank

■ Credit Risk Management
Credit risk, as identified by the Group, is the risk that theinterest and principal of loans and other amounts payable
by the borrower may not be able to be collected, due todeterioration of the financial condition of the borrower.
The Group has set up “Credit Policy” in the subsidiarybank that clarifies its policy for extending credit, based on
its management policy in order to maintain and enhance
the soundness of its business execution.
Under this policy, the responsible division for the
management of credit risk, the Loan Planning Division at
subsidiary bank, in accordance with the management
methods stipulated in the Credit Management
Regulations, administers finely-tuned responses to risks
for the purpose of building up an optimum portfolio.
Specifically, the division analyzes and manages the credit
portfolio from various aspects including credit
concentration risk, type of business, borrowerclassification and credit ratings.
As for the credit analysis and management of each loan
at the subsidiary bank, the Group makes efforts to ensure
the independence of the audit division and the division in
charge of problem loans (Credit Division I and II) from thebusiness promotion division. The Board of Directors andother appropriate body review each loan for large obligor
as well as the credit policy. Thus the Group has focusedon the development and improvement of its credit analysis
system. Meanwhile, Loan Business Division establishedwithin the Loan Headquarters, is managing housing loans
receivable.
The subsidiary bank has also established the Internal
Audit Division, to manage auditing of the self-assessmentof assets, in order to maintain and enhance the soundnessof its asset base.

23

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Market risk, as identified by the Group, point to “marketrisk” and “market liquidity risk.” Market risk is the risk of
suffering losses through changes in the prices of assets
and liabilities held by the Group due to the fluctuations ofmarket risk factors, such as interest rates, foreignexchange rates, stock prices and so on. Market liquidity
risk is the risk of suffering losses arising from the inability
to execute sufficient transactions under appropriate
conditions, due to market confusion or an insufficient
trading base. The Group has established the Risk
Management Committee and the ALM Committee,
consisting principally of management personnel, anddiscussed appropriate and timely measures to address
the risks in order to earn the stable and continuous profit
through managing its assets and liabilities in acomprehensive way.

■ Funding Liquidity Risk Management
Funding liquidity risk, as identified by the Group, is the riskof suffering funding difficulties from being unable to raisenecessary funds due to market conditions or deteriorationin the Group’s financial condition, as well as the risk of
suffering losses from being forced to raise funds at higher
interest rates than usual.
The Group takes control of its funding situation thoroughcareful monitoring of the fund management andfundraising. The Group also ensures liquidation of its
assets and diversifies the sources of fundraising. Thus theGroup has taken every possible measure to manage
funding liquidity risk.

■ Operational Risk Management
Operational risk, as identified by the Group, is the risk of
suffering losses from the inappropriate business activity of
the Group - including its employees-, systems, or external
premises.
The Group has set a rule for operational risk
management and classified the risks into the six
categories as follows; (1) administrative risk, (2)information asset (system) risk, (3) tangible fixed asset
risk, (4) personnel risk, (5) legal risk, and (6) reputationrisk.

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SENSHU IKEDA HOLDINGS,INC.

Furthermore, the Group identifies and evaluates all risks
associated with new products and services before they
are actually developed and provided, for the purpose of
adequate risk management. Besides, the Group manages
customer information sufficiently and ensuresmanagement soundness when outsources certain
business operation.
● Administrative risk management

Administrative risk, as identified by the Group, is the riskof suffering losses from administration, fraud, accidents
and other risks that the Group’s operations will not be
carried out as intended.
The Group prescribes detailed rules on administrative
procedures and strives to prevent accidents throughdoing the administration promptly and accurately, sothat the customer can enter into transactions with theGroup without any concern. Meanwhile, the Groupmakes every effort to eliminate administrative risk bymeasures such as review of the administrative
procedure from identification of potential risks throughthe analysis of administrative processes.
● Information asset (system) risk management
Information asset (system) risk, as identified by theGroup, is the risk of suffering losses due to loss,
alteration, unauthorized use, leakage of information, as
well as to system defects caused by natural disasters or
breakdowns.
In consideration of the fact that its business
operations are supported by various computer systems,
the Group ensures the reliability and security of systems
and has established back-up systems and structures incase of emergency.
The Group is also working to establish appropriate
operation and management systems to prevent theleakage of information and unauthorized access to its
systems through encoding of data and strengthening ofaccess authority management.
● Tangible fixed asset risk
Tangible fixed asset risk, as identified by the Group, isthe risk of suffering losses associated with damage ofbuilding and equipment or deterioration of working
environment as a result of disasters or poor asset
management.
The Group is preparing for disaster throughconducting quake resistance tests and implementing
countermeasures against power failures in order toensure business continuity in the event of emergencies.
● Personnel risk
Personnel risk, as identified by the Group, is the risk of
suffering losses associated with the delay of failing insuccession of expertise within the Group, as a result ofdrain or loss of key staff, or degradation of morale.
The Group is striving to develop working environment
to enable each employee to fully exert ability, while
helping him or her to improve their skills.
● Legal risk management
Legal risk, as identified by the Group, is the risk of
suffering losses from violations of laws and regulations,as well as inappropriate responses to changes in various
systems.
The Group strives to prevent the occurrence of legalrisk and to reduce the risk itself. To this end, the Grouphas established the Compliance Management Division tocollect information concerning legal matters, and to
manage legal risk identified from such information, as
well as appropriately responds to the legal risk.
● Reputation risk management
Reputation risk, as identified by the Group, is the risk of
suffering losses arising from deterioration of the Group’s
reputation due to circulation of unfounded rumors or due
to inadequate responses of the Group concerning thefacts.
The Group works to avoid reputation risk bydisclosing information proactively thorough increases
the transparency of its management, taking into
consideration the crucial influence on the managementof the Group.

■ Crisis Management
The Group has established the “Crisis Management
Rules,” which set out the basic policies in responding toemergencies including large-scale disasters and system
failures. In the event of large-scale crisis, the Group sets
up a “Crisis Management Headquarters” take charge ofcompany-wide response. Specific action programs are set
out in a “Contingency Plan,” with the purpose to ensure
safety of customers and employees, as well asset up
business continuity structure of the financial system.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201024

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The risk management structure of the GroupSenshu Ikeda Holdings

Board of Directors

Board of Corporate Auditors
Crisis Management Headquarters

Management Committee

Risk Management Committee

Supervising
division

Type of risks

Responsible
divisions

ALM Committee

Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Risk Management Division

Divisions in chargeof operating
and managing

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

Operation System
Planning Division

Tangible Fixed Personnel
Risk
Asset Risk

Legal Risk

Reputation
Risk

General Affairs
Division

ComplianceManagement
Division

Corporate
Planning Division

Personnel Affairs
DivisionInternal Audit Division

Committee

Subsidiary bank and outsiders

Direction of basic policies etc.

Administration and management

Reporting on status of risk management

Consultation on risk management

The Senshu Ikeda Bank

Board of Corporate Auditors

Board of Directors

Crisis Management Headquarters
Management Committee

Supervising
division

Type of risks

Responsible
divisions

Risk Management Division

Credit Risk Market Risk

Loan Planning
Division

Divisions in chargeof operating andmanaging

25

ALM Committee

Risk Management Committee

SENSHU IKEDA HOLDINGS,INC.

Funding
Liquidity
Risk

Risk Management
Division

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

Tangible
Fixed
Asset Risk

Personnel
Risk

Legal Risk

Reputation
Risk

Operations
Management
Division

Operations
Management Division
System Division

General Affairs
Division

Personnel Affairs
Division

ComplianceManagement
Division

Corporate
Planning Division

Each division of Headquarters, each branch, affiliates and outsiders

ANNUAL REPORT 2010

Internal Audit Division

Committee

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SENSHU IKEDA HOLDINGS,INC.

Approach to Facilitation of Financing
The Senshu Ikeda Bank (hereinafter the “Bank”) is focusedon providing adequate and sufficient financial
intermediary function to customers in need of businessloans or housing loans, as one of the crucial management
priorities. The Bank has formulated basic policy forfacilitation of financing (hereinafter the “Policy”,) in order topromote facilitation of financing to those in needparticularly under the current tight economic environment.
The Bank intends to communicate with our customers
and promote facilitation of financing positively.

● Organizational structure(1) With the purpose to develop a management structurenecessary to supply facilitation of financing (hereinafter“Facilitation of Financing Management”) under the Policy,
the Bank establishes the Facilitation of Financing
Promotion Committee along with the Facilitation of
Financing Manager to check whether Facilitation of
Financing Management is effectively working.

(2) The Facilitation of Financing Promotion Committee will
engage in the development and reinforcement of thestructure for Facilitation of Financing Management
through checking the progress in respect of Facilitation of
Financing Management.
(3) The Bank appoints the director in charge of theCompliance Management Division to the Facilitation of

System for accepting consultation of facilitation of financing

The Senshu Ikeda Bank
[Headquarters][Branches]
Facilitation of Financing Manager
Consultation,
application andcomplaints

Reporting andconsultation

Facilitation of Financing
Promotion Committee
Boardof
Directors

Deliberation

Facilitation of Financing Officer
Facilitation of Financing Manager
ReportingOver-the-counter Consultation Service
Coordination

Divisions managing Facilitation of Financing
Divisions associated with Facilitation of Financing

Sincere andadequate
respondenceOver-the-counter Consultation Service

Customers

Facilitation of Financing Promotion Office[Consultation Service over holidays]
Support andinstruction

Toll-free Consultation Service

Instructions

Smooth financing
Appropriate explanations to customers
Dealing with complaints and consultations appropriately
Support in improving management
Support in restructuring
Personnel training
Analysis and improvement of management structureManagement
Committee[Consultation Service]Consultation, application and complaints
Toll-free Consultation Service

Sincere and adequate respondence

ReportingBoard ofCorporate
Auditors

Repayment Consultation ApproachContact for opinions and requests(complaints)
concerning facilitation of financing<Toll-free>

Coordination

Businesstransactions etc.

Credit Guarantee Corporation, Enterprise
Turnaround Initiative Corporation of Japan,
Japan Housing Finance Agency and other financial institutions

Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201026

010̲0161301372209.qxd 10.9.14 3:01 PM ページ 27 (1,1)

Financing Manager. Under the Facilitation of Financing
Promotion Committee, the Manager coordinates theoverall business in respect of Facilitation of Financing
Management such as instructions to the division
responsible for Facilitation of Financing Management, anddrawing up of the rules governing facilitation of financing,with the purpose to ensure adequacy, sufficiency andeffectiveness of Facilitation of Financing Management.

(4) The Facilitation of Financing Promotion Office within the
Loan Planning Division is responsible for Facilitation of
Financing Management. The Facilitation of Financing
Promotion Office engages in the adequate operation,
examination and improvement of Facilitation of Financing
Management under the command of the Facilitation of
Financing Manager through gathering informationnecessary for Facilitation of Financing Management.

● Basic Policies(1) On receiving consultations or applications for new loans,or changes in loan terms from customers, the Bank
intends to make sincere effort to conduct adequate andprompt credit screening through considering customers’
recent financial results, assets and income as well as
future potential and prospect . The Bank also deals withthe applications for new loans, after changes in loan terms
in a similar way as referred to above.
(2) On receiving consultations or applications for new loans,or changes in loan terms from customers, the Bank
intends to provide sufficient explanation in order to gaincustomers’ understanding and satisfaction, on the basisof past trading records, customers’ knowledge,

experience and assets situation. If the Bank has to decline
customers’ application, we will explain the reason
background of the decision as concretely and courteously
as possible.
(3) The Bank intends to improve capability of directors andemployees about facilitation of financing by giving
internal training, to enable them to make appropriate
decisions based on good understanding of customers’situations.
(4) The Bank intends to respond to any comments, requests,
consultations and complaints from customers in respectof facilitation of financing promptly and sincerely.

● Policies for handling of application for loans from small to medium businesses and sole proprietors(1) On receiving applications for changes in business terms
such as loan terms from small to medium businesses andsole proprietors, the Bank intends to accommodate suchapplication and offer adequate changes in terms
adequately as far as possible, taking into consideration of
the specialty and the circumstance of customers’
businesses.
(2) The Bank intends to provide small to medium businesses
and sole proprietors with management consultation,
guidance and other adequate assistance in support oftheir effort for management improvement, taking into
consideration the operational circumstance of customers.
(3) In the cases that customers borrow from other financial
institutions as well as the Bank, we will, upon customers’
approval, strive to make arrangements in coordination

with the other financial institutions in order to help toreduce the burden of repayment.
(4) On receiving request for the corporate rehabilitation
procedure through Alternative Dispute Resolution (ADR)
for corporate rehabilitation (*) or Enterprise Turnaround
Initiative Corporation of Japan, the Bank makes utmost
effort to respond adequately to such request as far as
possible, in full consideration of the prospect ofimprovement or rehabilitation of the business.
(Note) This refers to certified dispute resolution procedure
set out in Article 2, Paragraph 26 of the Law on
Special Measures for Industrial Revitalization, in
which a private third party organization formulates
a rehabilitation plan, as coordinator of the interestsof creditors.

● Policies for handling of application for housing loan
(1) On receiving applications for changes in housing loan
terms from housing loan customers, the Bank intends toaccommodate such application and offer adequatechanges in terms adequately as far as possible, taking
into consideration of circumstances including customers’
assets and income and transactions with other financial
institutions.

27

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010(2) In the cases that customers have transaction with otherfinancial institutions as well as the Bank or with Japan
Housing Finance Agency, we will, upon customers’
approval, strive to make arrangements in coordination
with the other financial institutions in order to help toreduce the burden of repayment,.

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SENSHU IKEDA HOLDINGS,INC.

Business Description of the Group
Organizational Chart of the Group (As of May 1, 2010)
Head office and branches:133
Banking services

Sub-branches:

7

Representative offices:2

Ikeda Bank Lease Co., Ltd.
Leasing services

The Senshu Ikeda Bank, Ltd.

Senshu Ikeda Holdings, Inc.

Sengin General Leasing Company Limited
Ikegin Guarantee Co., Ltd.
Credit guarantee services
Kinki Credit Guarantee Company Limited
J. I. Co., Ltd.
D. I. Co., Ltd.
Credit card services
Vui I Co., Ltd.
The Senshu Card Company Limited
Ikegin Capital Co., Ltd.
Ikeda Business Service Co., Ltd.
Sengin Business Service Company Limited(Note:
indicates consolidated
subsidiaries andindicates equity-method
affiliate.)

Ikegin Office Service Co., Ltd.
I. M. S. Co., Ltd.
Hitachi & Ikeda Brains, Co., Ltd.
Other services
Senshu Software Service Company Limited
Ikeda Investment Management Co., Ltd.
Shizen Soken Co., Ltd.
Bank Computer Service Corporation
Investment enterprise partnerships: 11
Ikeda Preferred Capital Cayman Limited

Subsidiaries and Affiliates (As of May 1, 2010)
Name

Address

Share Capital(millions ofJapanese yen)

18-14, Chayamachi, Kita-ku, Osaka-city Banking services

September 1, 1951

Ikeda Bank Lease Co., Ltd.

3-3-6, Kyutaromachi, Chuo-ku, Osaka-city Leasing services

April 1, 1986

50

50,710

Leasing services

October 23, 1985

120

2-1-11, Jonan, Ikeda-city

Credit guarantee services

July 20, 1973

180

Kinki Credit Guarantee Company Limited 2-1-1, Nishiki, Kaizuka-city

Credit guarantee services

April 1, 1975

6,400

Ikegin Guarantee Co., Ltd.

Subsidiaries

Date ofestablishment

The Senshu Ikeda Bank, Ltd.

Sengin General Leasing Company Limited 27-1, Miyamotocho, Kishiwada-city

J. I. Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

February 1, 1983

30

D. I. Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

September 5, 1990

30

Vui I Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

November 2, 1990

40

Credit card services

August 28, 1987

30

March 6, 1989

426

Cash settlement and printing services April 1, 1983

10

The Senshu Card Company Limited 27-1, Miyamotocho, Kishiwada-city
Ikegin Capital Co., Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Venture capital services

Ikeda Business Service Co., Ltd. 3-2-4, Jonan, Ikeda-city

Sengin Business Service Company Limited 1-7-1, Koryonishimachi, Sakai-ku, Sakai-city Back-office administration

April 1, 1983

30

Ikegin Office Service Co., Ltd. 2-1-11, Jonan, Ikeda-city

Personnel services

July 11, 1988

20

Appraisal of real-estate collateral and real-estate research services

October 28, 1991

20

I. M. S. Co., Ltd.

Affiliates

Major Business

6-2-5-301, Mino, Mino-city

Hitachi & Ikeda Brains, Co., Ltd. 2-1-11, Jonan, Ikeda-city

Development of computer software June 10, 1985

50

Senshu Software Service Company Limited 1-5, Rinku Oraikita, Izumisano-city

Computer software development and sale October 6, 1986

30

Ikeda Investment Management Co., Ltd. 3-3-6, Kyutaromachi, Chuo-ku, Osaka-city

Investment advisory and discretionary
investment services

April 1, 1987

120

Shizen Soken Co., Ltd.

2-1-11, Jonan, Ikeda-city

Information offering services

November 1, 1996

80

Bank Computer Service Corporation

1-5, Rinku Oraikita, Izumisano-city

Development and sale of computer programs
used for operations at financial institutions

December 27, 2000

400

SENSHU IKEDA HOLDINGS,INC.

Investment ratio (%)
The Company

Subsidiaries
and affiliates

100.0

-

-

81.0
41.2
58.7
100.0
90.0
90.0
100.0
85.0
65.9
100.0
100.0
100.0
100.0
63.1
85.0
100.0
15.0
45.0

ANNUAL REPORT 201028

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Organization and Board of Directors
Senshu Ikeda Holdings
Organization (As of May 1, 2010)
Advisory Board(Note 1)

Management Committee

Personnel Affairs Division

General Affairs Division

Compliance Management Division
ALM Committee

Compliance Committee

Risk Management Committee

Risk Management DivisionCorporate Auditors Office

Corporate Auditors

Board of Corporate Auditors

Board of Directors

General Meeting of Shareholders

Corporate Planning Division

Operations and System Planning Division

Business Planning Division

Business Innovation Division(Note 2)

Internal Audit Division

Notes: 1. The Advisory Board was established as anconsultative body for Management Committee toseek external advice from experts and specialists
in academic circle and various fields. The
Company intends to enhance corporate
governance through the transparent management
while developing deep relationship with local
Members: (In the order of the Japanese syllabary)
Noriyuki Inoue(Chairman of the Board and CEO of Daikin Industries, Ltd.)
Masahiro Shima(President of SHIMA SEIKI Mfg., Ltd.)
Motohiro Sugai(Former president of Hankyu Corporation)
Hidenobu Hiraoka(Chairman of the Board of Trustee of Seifu Gakuen Junior and Senior High School)
Makoto Yamanaka(Chairman and CEO of Nankai Electric Railway Co., Ltd.)
2. The Business Innovation Division was established todrive the growth of the new financial group
perceiving the business integration as a greatchance for business reinvention. It develops new
business models that go beyond the existing
frameworks and executes innovative sales strategies.

Board of Directors (as of June 29, 2010)
Representative Director,
President and CEO

Representative Director
and Chairman

Moritaka Hattori

Norimasa Yoshida

Director

Shoichi Ogawa

Director

Akihide Takigawa

Corporate Auditor(Full-time)

Katsutoshi Horii

Director

Kiyotsugu Ito

Director

Hirohisa Fujita

Corporate Auditor(Full-time)

Motoyasu Tsuji

Director

Kazuhiro Masao

Director

Naoya Fukuchi

Corporate Auditor(Outside)

Toshiaki Imanaka

Director

Kazuyuki Kataoka

Director(Outside)Nobuo Kuroyanagi

Corporate Auditor(Outside)

Toshiaki Sasaki

Director

29

SENSHU IKEDA HOLDINGS,INC.

Noboru Komiya

ANNUAL REPORT 2010

(Chairman of The Bank of Tokyo-Mitsubishi UFJ, Ltd.)

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SENSHU IKEDA HOLDINGS,INC.

The Senshu Ikeda Bank
Organization (As of May 14, 2010)

Corporate Planning Division
Business Integration Promotion Office
PR Office
Personnel Affairs Division
Career Development Supporting Office
General Affairs Division
Secretary Office

Management Committee

Suzhou Representative Office
Risk Management Division
Compliance Management Division
Risk Product Management OfficeFinancial Crime Prevention Center
Operations and System Headquarters

System Management Division
Operations Management Division

Risk Products Operations Division

Business Integration Promotion Committee

ALM Committee

Facilitation of Financing Promotion Committee

Compliance Committee

Risk Management Committee

Operating Center

Corporate Auditors Office

Corporate Auditors Board of Corporate Auditor

Board of Director

General Meeting of Shareholders

Tokyo Office

Branches (including Sub-branches): 140
Regional Headquarters
CS Headquarters

Business Planning Division
Business Promotion DivisionCorporate Banking Division
Securities and Insurance Business Promotion Division
Personal Loan Division
Customer Center

Asia and China Business Headquarters

International Business Promotion DivisionInternational Business Division

Advanced Technology Business Supporting Headquarters

Advanced Technology Business Supporting Division

Private Banking Headquarters

Private Banking Division

Financial Market Headquarters

Financial Market Division

Loan Headquarters

Loan Planning DivisionMarket Operations Office

Facilitation of Financing Promotion Office
Credit Division I
Credit Division II
Loan Business DivisionInternal Audit Division

Board of Directors (as of June 29, 2010)
Representative Director,
President and CEO

Moritaka Hattori

Managing
Director

Hirohisa Fujita

Director

Yasuo Kitamura

Corporate Auditor(Full-time)

Masato Yamagiwa

Representative Director
and Chairman

Norimasa Yoshida

Managing
Director

Naoya Fukuchi

Director

Yoshiyuki Goto

Corporate Auditor(Full-time)

Masanori Ueki

Representative Director
and Deputy President

Shoichi Ogawa

Managing
Director

Shigeru Aoyagi

Director

Hiroshi Kubota

Corporate Auditor(Outside)

Taro Ohashi

Representative Director
and Deputy President

Kiyotsugu Ito

Managing
Director

Takashi Nishi

Director

Jiro Tsuji

Corporate Auditor(Outside)

Hisanori Uzawa

Senior Managing
Director

Kazuhiro Masao

Managing
Director

Akira Uchimura

Director

Hirokazu Morihata

Senior Managing
Director

Kazuyuki Kataoka

Managing
Director

Yutaka Sakato

Director

Akira Tahara

Senior Managing
Director

Noboru Komiya

Managing
Director

Kazuhiro Isumi

Director(Outside)

Senior Managing
Director

Akihide Takigawa

Managing
Director

Nobuo Kuroyanagi(Chairman of The Bank of Tokyo-Mitsubishi UFJ, Ltd.)

Hiroaki Kobayashi
SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201030

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Senshu Ikeda Holdings,Inc
18-14, Chayamachi, Kita-ku,
Osaka 530-0013, Japan
Phone: 81-(0)6-4802-0181
URL: http://www.senshuikeda-hd.co.jp
The Senshu Ikeda Bank, Ltd.
Head Office:18-14, Chayamachi, Kita-ku,
Osaka 530-0013, Japan
Phone: 81-(0)6-6375-1005
URL: http://www.sihd-bk.jp

International Business Division:
18-14, Chayamachi, Kita-ku,
Osaka 530-0013, Japan
Phone : 81-(0)6-6375-3484
Facsimile : 81-(0)6-6375-3492
SWIFT Address : BIKEJPJSFinancial Market Division:Suzhou Representative Office:18-14, Chayamachi, Kita-ku, 110 North Dongwu Road,
Osaka 530-0013, Japan
Wuzhong District, Suzhou,
Phone : 81-(0)6-6375-3879
Jiangsu, China
Facsimile : 81-(0)6-6375-3998 Phone : 86-(0)512-6585-1791
Facsimile : 86-(0)512-6585-2312(As of March 31, 2010)

1. Common stock
Name

Japan Trustee Services Bank, Ltd. (Trust Account) *1
The Master Trust Bank of Japan, Ltd. (Trust Account)*1
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Financial Group, Inc.
Mitsubishi UFJ Trust and Banking Corporation
Mizuho Corporate Bank, Ltd.
OBAYASHI CORPORATION
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 4G)*1
Hankyu Hanshin Holdings, Inc.

144,946
136,924
59,597
29,79928,607
17,282
16,594
14,05910,315
10,120

12.15
11.48
4.99
2.49
2.39
1.44
1.39
1.17
0.86
0.84

111,000

100.0032,37523,125
9,250
9,250
9,250
9,250
4,625
4,625
4,625
4,625
2,312
2,312

28.00
20.00
8.00
8.00
8.00
8.00
4.00
4.00
4.00
4.00
2.00
2.00

*1: These shares do not disclose the names of beneficiaries.

2. First-class preferred stockName

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
3. Second-class preferred stockName

OC FINANCE CORPORATION
Daikin Industries, Ltd.
Fukoku Mutual Life Insurance Company
ITAMI SANGYO CO., LTD.
NICHIA STEEL WORKS, LTD.
ROHTO Pharmaceutical Co., Ltd.
DAINIHON JOCHUGIKU CO., LTD.
Hankyu Hanshin Holdings, Inc.
T.T CO., LTD.
Non-Destructive Inspection Company Limited.
Shionogi & Co., Ltd.
Nippon Paper Core Industrial Co., Ltd.

31

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

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SENSHU IKEDA HOLDINGS,INC.

Consolidated Balance Sheet
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2010

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

¥

111,817
10,0001,250
919,0001,239,135
3,448,581
5,064
69,26837,2703,874
39,94037,796(45,352)¥ 4,977,656$ 1,201,816
107,480
13,43596
204,213
13,318,303
37,065,573
54,428744,496
400,580
41,638429,277
406,233(487,446)$ 53,500,171¥ 4,252,016
12,50045,000255,324
101,887394
33,30056,544
968
6,072
446
321
793
13
37,796
4,803,380$ 45,700,945
134,350
483,6622,744,239
1,095,088
4,234
357,910
607,738
10,40465,262
4,793
3,450
8,523
139
406,233
51,627,042

72,311
83,063
31,107(1)
186,480

777,203892,766
334,340(10)
2,004,299(13,110)(0)(13,111)907
174,276¥ 4,977,656(140,907)(0)(140,917)
9,748
1,873,129$ 53,500,171

AssetsCash and due from banks (Notes 24 and 29)
Call loans and bills bought (Note 29)
Monetary claims bought (Note 29)
Trading account securities (Notes 29 and 30)
Money held in trust (Notes 29 and 31)
Securities (Notes 5, 10, 17, 29 and 30)
Loans and bills discounted (Notes 6, 10, 28 and 29)
Foreign exchange assets (Notes 7 and 29)
Other assets (Notes 8, 10 and 27)
Tangible fixed assets (Notes 9 and 10)
Intangible fixed assets (Note 10)
Deferred tax assets (Note 26)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Liabilities and net assets
Liabilities
Deposits (Notes 10, 11 and 29)
Negotiable certificates of deposit (Note 29)
Call money and bills sold (Notes 10 and 29)
Payables under securities lending transactions (Notes 10 and 29)
Borrowed money (Notes 10, 12, 29 and 33)
Foreign exchange liabilities (Notes 13 and 29)
Corporate bonds and notes (Notes 14 and 29)
Other liabilities (Note 15)
Provision for employees’ bonuses
Accrued retirement benefits for employees (Note 16)
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for contingent losses
Negative goodwill
Acceptances and guarantees (Note 17)
Total liabilities
Net assets
Shareholders’ equity (Note 18):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments:
Net unrealized loss on available-for-sale securities (Note 32)
Net unrealized loss on deferred hedges (Note 33)
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets
See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201032

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Consolidated Statement of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the year ended 31st March, 2010

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

IncomeInterest income:Interest on loans and bills discounted (Note 28)
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 19)
Gain on sales of fixed assets
Recoveries of written-off claims
Other income (Note 20)¥

Total income

62,635
15,973
149
16,936
10,5780
1,471
12,059$673,205
171,678
1,601
182,029
113,693
0
15,810129,610

119,804

1,287,661

14,184
757
1,817
5,665
1,550
55,926107
1032,373

152,450
8,136
19,52960,887
16,659601,096
1,150
107
347,947

112,392
7,412

1,207,996
79,664687
9,662
10,350(92)(2,845)

7,383
103,847
111,242(988)(30,578)

ExpenseInterest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses (Note 21)
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Other expenses (Note 22)
Total expenses
Income before income taxes and minority interests
Income taxes (Note 26)
Current
Deferred
Total income taxes
Minority interests
Net loss¥

See accompanying notes to consolidated financial statements

33

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010$

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SENSHU IKEDA HOLDINGS,INC.

Consolidated Statement of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the year ended 31st March, 2010

Shareholders’ equity
Common stock
Balance at beginning of the year
Changes during the year:
Issuance of common stock
Total changes during the year
Balance at end of the year
Capital surplus
Balance at beginning of the year
Changes during the year:
Issuance of common stock
Transfer from capital surplus to retained earnings
Disposition of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the year
Retained earnings
Balance at beginning of the year
Changes during the year:
Transfer from capital surplus to retained earnings
Cash dividends
Net loss
Change in scope of consolidation
Retirement of treasury stock
Total changes during the year
Balance at end of the year
Treasury stock
Balance at beginning of the year
Changes during the year:
Acquisition of treasury stock
Disposition of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the year
Total shareholders’ equity
Balance at beginning of the year
Changes during the year:
Issuance of common stock
Transfer from capital surplus to retained earnings
Cash dividends
Net loss
Change in scope of consolidation
Acquisition of treasury stock
Disposition of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the year

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

¥

¥

50,000$537,403

22,311
22,311
72,311

239,800
239,800
777,203

98,201

1,055,470

22,311(37,234)(1)(213)(15,138)
83,063239,800(400,193)(10)(2,289)(162,704)
892,766(792)(8,512)

37,234(2,286)(2,845)(117)(85)
31,90031,107400,193(24,570)(30,578)(1,257)(913)
342,863334,340(327)(3,514)

(9)
36
298
325
(1)

(96)
386
3,202
3,493
(10)

147,081

1,580,836

44,623–(2,286)(2,845)
(117)
(9)
34
–
39,399186,480

479,610–(24,570)(30,578)(1,257)(96)365–423,463$ 2,004,299

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201034

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Consolidated Statement of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the year ended 31st March, 2010

Valuation and translation adjustments
Net unrealized loss on available-for-sale securities
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year
Net unrealized loss on deferred hedges
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year
Total valuation and translation adjustment
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year
Minority interests
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year
Total net assets
Balance at beginning of the year
Changes during the year:
Issuance of common stock
Cash dividends
Net loss
Change in scope of consolidation
Acquisition of treasury stock
Disposition of treasury stock
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
See accompanying notes to consolidated financial statements

35

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

¥

¥

(16,457)
3,346(13,110)$(176,880)
35,963(140,907)

(0)
(0)
(0)

(0)
(0)
(0)

(16,458)
3,346(13,111)(176,891)
35,963(140,917)

1,020
(113)
907

10,963(1,214)
9,748

131,643

1,414,907

44,623(2,286)(2,845)
(117)
(9)
34
3,233
42,632
174,276

479,610(24,570)(30,578)(1,257)(96)
365
34,748458,211$ 1,873,129011̲0161301372209.qxd 10.9.14 3:05 PM ページ 36 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statement of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the year ended 31st March, 2010

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Loss on impairment of fixed assets
Amortization of goodwill
Amortization of negative goodwill
Increase in reserve for possible loan losses
Increase in accrued bonuses
Earnings from investments under the equity method
Increase in accrued retirement benefits for employees
Decrease in accrued retirement benefits for directors and corporate auditors
Increase in reserve for reimbursement of deposits
Increase in reserve for contingent losses
Interest income
Interest expenses
Gain on securities
Gain on money held in trust
Loss on foreign exchange
Loss on sales or disposal of fixed assets, net
Net increase in loans and bills discounted
Net increase in deposits
Net decrease in negotiable certificates of deposits
Net increase in borrowed money (excluding subordinated borrowings)
Net increase in due from banks (excluding due from the Bank of Japan)
Net decrease in trading account securities
Net decrease in call loans and bills bought
Net decrease in call money and bills soldNet increase in payables under securities lending transactions
Net increase in foreign exchange (assets)
Net increase in foreign exchange (liabilities)
Interest received
Interest paid
Other
Subtotal
Income taxes paid
Net cash provided by operating activities

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

¥

¥

7,412
4,776
10
2
(2)
6,772
100
(161)
477
(110)
19
492
(78,758)
16,759(10,615)
(134)
3,046
106
(66,417)160,682(8,000)36,919(2,538)510
20,182(50,000)
75,526(1,113)150
77,989(16,527)
6,435
183,993(450)
183,543

SENSHU IKEDA HOLDINGS,INC.

$$

79,664
51,332107
21(21)
72,785
1,074(1,730)5,126(1,182)
204
5,288(846,496)
180,126(114,090)(1,440)32,7381,139(713,854)
1,727,020(85,984)
396,807(27,278)
5,481
216,917(537,403)
811,758(11,962)
1,612
838,230(177,633)
69,163
1,977,568(4,836)
1,972,732

ANNUAL REPORT 201036

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Consolidated Statement of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the year ended 31st March, 2010

Millions of yen

Thousands of U.S.
dollars (Note 1)

2010

2010

¥ (1,771,223)
1,319,860
270,717(1,613)(1,019)9(183,269)$ (19,037,220)
14,185,941
2,909,684(17,336)(10,952)
96(1,969,787)

Cash flows from financing activities
Increase in subordinated borrowings
Decrease in subordinated borrowings
Decrease in subordinated bonds and bonds with stock subscription rights
Proceeds from issuance of common stock
Cash dividends paid
Purchases of treasury stock
Proceeds from disposal of treasury stock
Net cash provided by financing activities

8,000(8,000)(32,342)
44,623(2,286)(9)
79
10,06585,984(85,984)(347,613)
479,610(24,570)(96)849
108,179

Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net increase in cash and cash equivalents resulting from consolidation
Cash and cash equivalents at end of year (Note 24)(73)
10,265
95,631
0
105,897(784)
110,328
1,027,848
0
1,138,187

Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Net cash used in investing activities

See accompanying notes to consolidated financial statements

37

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010¥$

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SENSHU IKEDA HOLDINGS,INC.

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Year Ended 31st March, 2010

1. Basis of Presentation

2. Principles of Consolidation

Senshu Ikeda Holdings, Inc. (the “Company”) is a holding
company and conducts its operations through its
subsidiaries and affiliates. The Company was established asa joint holding company between The Bank of Ikeda, Ltd.
(“Ikeda”) and The Senshu Bank, Ltd. (“Senshu”) on 1st
October, 2009 by way of a transfer of shares.

The accompanying consolidated financial statements
include the accounts of the Company and the significant
companies which it controls directly or indirectly.
Companies over which the Company exercises significant
influence in terms of their operating and financial policies
have been included in the accompanying consolidated
financial statements on an equity basis.

The Company accounted for the transfer of shares under thepooling of interest method in accordance with “AccountingStandard for Business Combinations” (issued on October 31,
2003 by the Business Accounting Council of Japan) and“Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business
Divestitures” (Accounting Standards Board of Japan(“ASBJ”) Guidance No. 10 issued on 15th November, 2007).
These standards require the Company to prepare its
consolidated financial statements as if the transfer of sharesis made at the beginning of the fiscal year. As a result, theaccompanying consolidated financial statements include
financial positions and operating results of Ikeda and Senshu
as of 31st March, 2010 and for the year then ended.
Consolidated financial statements are available for only one
fiscal year, as the Company was established in October
2009 and no comparative financial figures have beenpresented.
The Company and its subsidiaries (collectively, the “Group”)
maintain their books of account in accordance with theprovisions set forth in the Corporation Law of Japan (the“Law”) and in conformity with accounting principles andpractices generally accepted in Japan, which are different incertain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements havebeen compiled from the consolidated financial statements
prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan. Certain accounts
have been reclassified for the convenience of readers
outside Japan.
In preparing the accompanying consolidated financial
statements, Japanese yen amounts are presented in millionsof yen by rounding down figures below one million. As aresult, the totals in yen in the accompanying consolidated
financial statements do not necessarily agree with the sumsof the individual amounts.
The translation of yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside Japanand has been made at ¥93.04 = U.S.$1.00, the exchange
rate prevailing on 31st March, 2010. This translation should
not be construed as a representation that yen can beconverted into U.S. dollars at the above or any other rate.

Seven subsidiaries and ten partnerships controlled by theCompany have been included in the scope of consolidation
since the third quarter period, the time of the businesscombination. The Company has applied the equity method
to its investment in two affiliates for the year ended 31st
March 2010. The consolidated financial statements do notinclude the accounts of Ikeda Preferred Capital Cayman
Limited, since its total assets, operating income, ownership
percentage of net profits and losses, retained earnings andnet unrealized gain or loss on deferred hedges do not have amaterial impact on the consolidated financial statements of
the Company.
All significant intercompany accounts and transactions havebeen eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within theGroup is eliminated.
The difference between the cost and the underlying equity inthe net assets of the consolidated subsidiaries measured atfair value at their respective dates of acquisition is presented
as “goodwill” or “negative goodwill” and is amortized by thestraight-line method over a period of five years.
The balance sheet date of 11 subsidiaries is 31st December.
Appropriate adjustments have been made for significant
intervening transactions occurring during the period from31st December to 31st March.

3. Significant Accounting Policies(1) Trading account securities
Trading account securities are stated at fair value as of
the balance sheet date. Cost of trading accountsecurities sold is determined using the moving averagemethod.
(2) Securities
Non-trading securities are classified into three
categories: held-to-maturity debt securities, equity
securities of an unconsolidated subsidiary andavailable-for-sale securities. Held-to-maturity debt
securities are carried at amortized cost, cost being
determined by the moving average method. Equity
securities of an unconsolidated subsidiary are stated atcost determined by the moving-average method. Equity
SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201038

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 39 (1,1)

securities and investment trusts classified as availablefor-sale securities whose fair values are available arestated at fair value determined by the monthly average
market price during one month preceding the balance
sheet date and other securities are stated at fair value
determined based on the quoted market price and otherinformation at the balance sheet date. Cost of sales ofthese available-for sale securities is determined using
the moving average method. Other securities, if theirfair value is extremely difficult to determine, are stated atcost determined by the moving-average method.
Unrealized gain or loss on available-for-sale securities is
included in net assets, net of income taxes.
(3) Investment securities held in money trusts
Investment securities that are part of trust assets in
independently managed money trusts with the primary
purpose to manage securities are stated at the fair value
as of the balance sheet date.
(4) Derivatives
Derivatives are stated at fair value.
(5) Tangible fixed assets
Depreciation of tangible fixed assets of the Group,
except for leased assets, is calculated principally by the
declining-balance method, while the straight-line
method is applied to buildings (except for the structuresattached to the buildings) acquired prior to April 1,
1998. The principal useful lives are as follows:
Buildings ..................3 to 50 years
Other ........................2 to 20 years(6) Intangible fixed assets
Intangible fixed assets, except for leased assets, areamortized by the straight-line method. Amortization of
the cost of software intended for internal use iscalculated by the straight-line method based on a usefullife (5 years) determined by the Company and its
consolidated subsidiaries.
(7) Reserve for possible loan losses
A reserve for possible loan losses is provided byconsolidated subsidiaries engaged in the banking
business (the “banking subsidiaries”) in accordancewith the prescribed standards. For claims on borrowers
who have declared bankruptcy or have commenced
special liquidation proceedings or similar legal
proceedings (“bankrupt borrowers”), or borrowers who
are not legally or formally insolvent but are regarded as
substantially in the same situation (“effectively bankrupt
borrowers”), a reserve is provided based on the bookvalue of the claims, after the write-off stated below, netof the expected amount recoverable from collateral andguarantees.

39

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

For claims on borrowers who are not currently bankrupt
but are likely to become bankrupt (“potentially bankrupt
borrowers”), a reserve is provided at the amountdeemed necessary based on the overall solvency
assessment of the borrowers and the amount of theclaims, net of the expected amount recoverable fromcollateral and guarantees.
For other claims, a reserve is provided based on thehistorical loan-loss ratio.
The Group conducts self-assessments of asset quality
at its loan offices. The assessments are audited by the
independent credit audit section in accordance with theGroup’s policy and guidelines for the self-assessment ofasset quality. Based on the results of theseassessments, an appropriate reserve is provided for the
resulting losses and for write-offs of doubtful assets.
For consolidated subsidiaries other than the banking
subsidiaries specific reserves for possible loan losses at
the total amount of loans deemed to be uncollectible
based on a solvency analysis of each loan, plus ageneral reserve at an amount calculated based on
historical experience.
For collateralized or guaranteed claims on bankrupt
borrowers and effectively bankrupt borrowers, theamount of the claims exceeding the estimated value ofcollateral and guarantees is deemed to be uncollectible
and is written off against the total amount of theoutstanding claims. These write-offs amounted to¥55,546 million ($597,012 thousand) for the year ended
31st March, 2010.
(8) Provision for employees’ bonuses
Provision for employees’ bonuses is calculated basedon an estimated payment amount, which is attributable
to the fiscal year. Accrued expenses in other liabilities
included an accrued bonuses of ¥823 million ($8,845
thousand) at 31st March, 2010.
(9) Accrued retirement benefits for employees
Accrued retirement benefits for employees are provided
at an estimated amount based on an actuarial
calculation of the retirement benefit obligation and thepension plan assets at the balance sheet date. Certain
consolidated subsidiaries estimate the retirement benefit
obligation using the simplified method whereby theamount that would be payable if the eligible employees
terminate at the balance sheet date.
Prior service cost is amortized by the straight-line
method over a period of 11 to 12 years, which is within
the average estimated remaining years of service of theeligible employees.

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SENSHU IKEDA HOLDINGS,INC.

Actuarial gain or loss is amortized commencing the year
following the year in which the gain or loss is recognizedby the straight-line method principally over a period of
11 to 12 years, which is within the average estimatedremaining years of service of the eligible employees.
Unrecognized transitional obligation incurred at the timeof the accounting change in the amount of ¥9,894
million ($106,341 thousand) is amortized over a periodof 15 years.
(10) Accrued retirement benefits for directors and corporate
auditors
Accrued retirement benefits for directors and corporate
auditors are provided at an amount that would be
required if all directors and corporate auditors retired at
the balance sheet date.
(11) Reserve for reimbursements of deposits
Reserve for reimbursements of deposits is provided at
an estimate of the future payments to be made forreimbursement claims on deposits which were
derecognized and credited from liability to income
based on the Group’s historical experience.
(12) Reserve for contingent losses
Reserve for contingent losses is provided at an estimateof the future loss on contingencies other than those
covered by other reserves or provisions.
(13) Foreign currency transactions
Assets and liabilities of consolidated subsidiaries
denominated in foreign currencies are translated into
Japanese yen at the exchange rates in effect at thebalance sheet date.
(14) Leases
Leased assets under finance lease arrangements which
do not transfer ownership of the leased assets to thelessee are depreciated over the respective lease
contract periods using the straight-line method withresidual values defined in the lease contracts, otherwise
the residual values is zero.
As lessee:
Finance leases which commenced prior to 1st April,
2008, except for those substantially requiring thetransfer of ownership of the leased assets to the lessee,
are accounted for as operating leases.
As lessor:
Finance lease income and related cost are recognizedwhen lease payment is received. Finance leases which
do not transfer ownership of the leased assets to thelessee and commenced prior to 1st April, 2008 aredeemed to have been entered into contracts at theamount of the cost less accumulated depreciation at
31st March, 2008.
(15) Hedge accounting
Interest rate risk hedging
With respect to hedge accounting for the interest raterisk arising from financial assets and liabilities of thebanking subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions,as stipulated in the Japanese Institute of Certified Public
Accountants (JICPA) Industry Audit Committee Report
No. 24. Interest rate swap contracts entered into bycertain consolidated subsidiaries which qualify forhedge accounting are accounted for as if the interest
rate for the swap contract is applied to the underlying
debt.
Foreign exchange rate risk hedging
With respect to hedge accounting for derivativetransactions used to hedge the risk of financial assets
and liabilities denominated in foreign currencies of thebanking subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions,as stipulated in the JICPA Industry Audit Committee
Report No. 25 effective the year ended 31st March,
2004. The Group assesses the effectiveness of its
currency swaps and foreign exchange swaps enteredinto in order to hedge the risk of fluctuation in foreignexchange rates by comparing the foreign-currency
amount of each underlying hedged item with thecorresponding foreign-currency amount of therespective hedging instruments.
(16) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(17) Cash flows
In preparing the consolidated statement of cash flows,
cash and deposits with the Bank of Japan are
considered to be cash and cash equivalents.

4. Changes in Method of Accounting
Accounting standards for financial instruments
Effective the year ended 31st March, 2010, the Group has
adopted “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10 issued on 10th March, 2008) and“Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19 issued on 10th March,
2008). As a result of this adoption, “Securities,” “Netunrealized loss on available-for-sale securities” and “Income
before income taxes and minority interests” increased by¥206 million ($2,214 thousand), ¥214 million ($2,300
SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201040

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 41 (1,1)

thousand) and ¥86 million ($924 thousand), respectively,
and net loss decreased by ¥49 million ($526 thousand) fromthe corresponding amounts which would have beenrecorded under the previous method.

5. Securities
Securities at 31st March, 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

StocksBonds:
Government bonds
Local government bonds
Corporate bonds
Other
Total

¥

71,410¥535,905
78,978174,134
378,705
1,239,135$

767,519

5,759,941
848,860
1,871,603
4,070,346$ 13,318,303

Stocks in the table above included investments in affiliates of¥79 million ($849 thousand) at 31st March, 2010.

6. Loans and Bills Discounted and Risk
Monitored Loans(1) Loans and bills discounted
Loans and bills discounted at 31st March, 2010
consisted of the following:Thousands of
U.S. dollars

Millions of yen

Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Other
Total

¥

¥

18,541
134,887
3,088,137
205,8421,172
3,448,581$

199,279
1,449,774
33,191,498
2,212,403
12,596$ 37,065,573

Discounting of bills are accounted for as financetransactions rather than as purchasing of bills inaccordance with the JICPA Industry Audit Committee
Report No. 24. The Group has the right to sell or pledge
such bills without any restrictions. These include
bankers acceptances bought, commercial bills
discounted, documentary bills and foreign exchangebills. The total face value of such outstanding bills at
31st March, 2010 totaled ¥18,865 million ($202,762
thousand).
At 31st March, 2010, loans and bills discounted
included the portion of loans extended to originators
based on loan participation agreements, as permitted

41

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010by the JICPA Accounting Committee Report No. 3, in theamount of ¥23,620 million ($253,869 thousand).
Contracts for overdraft facilities and loan commitments
are contracts under which the Group lends money tocustomers up to their prescribed limits at the customers’
request as long as there are no violations of any of theconditions in the contracts. The aggregate unutilizedbalances within the limits of these contracts totaled¥613,893 million ($6,598,162 thousand) at 31st March,2010 including the contracts whose contractual periods
were either less than one year or revocable at any time,in the amount of ¥613,356 million ($6,592,390
thousand).
Since many of these commitments expire without being
fully utilized, the unutilized amounts do not necessarily
represent future cash commitments. Most of thesecontracts include provisions which stipulate that theconsolidated subsidiaries can reject customers’
requests or decrease the contract limits for an
appropriate reason, (for example, a change in financial
situation or a deterioration in customers’
creditworthiness).
At the inception of the contracts, the Group obtains
collateral in the form of real estate, securities, and soforth, if deemed necessary. Subsequently, the Group,
based on its internal rules, performs periodic reviews of
the customers’ business results and may take necessary
measures such as reconsidering the terms of thecontracts and/or requiring additional collateral or
guarantees.
(2) Risk monitored loans
Risk monitored loans which were included in loans andbills discounted at 31st March, 2010 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen

Loans to bankrupt borrowers
Delinquent loans
Loans past due for 3 months or more
Restructured loans
Total

¥

¥

12,19952,709619
7,590
73,119$$131,115566,519
6,653
81,577785,887

Loans to bankrupt borrowers represent non-accrualloans to borrowers who are legally bankrupt as definedin Articles 96-1-3 and 96-1-4 of the Corporation Tax Law
Enforcement Regulations (Article 97 of the 1965 Cabinet
Order).
Delinquent loans represent non-accrual loans other than(i) loans to bankrupt borrowers and (ii) loans on whichinterest payments have been suspended in order to011̲0161301372209.qxd 10.9.14 3:05 PM ページ 42 (1,1)

SENSHU IKEDA HOLDINGS,INC.

assist or facilitate the restructuring of borrowers who areexperiencing financial difficulties.
Loans past due for 3 months or more represent loans on
which the payment of principal and/or interest has notbeen received for three months or more from the duedate, and which are not classified as “loans to bankrupt
borrowers” or “delinquent loans.”

Under the Tax Law, capital gains arising from the exchangeor replacement of assets under certain conditions are
permitted to be deducted from the cost of tangible fixed
assets in order to obtain certain tax benefits. The amountdeducted from the cost of tangible fixed assets at 31st
March, 2010 was ¥517 million ($5,556 thousand).

10. Assets Pledged
Restructured loans are loans which have been
restructured to support the rehabilitation of borrowers
who are encountering financial difficulties, with theintention of ensuring the recovery of the loans byproviding more flexible repayment terms for the
borrowers (such as reducing the rate of interest or
suspending the payment of principal/interest, etc.) or
loans which are not classified in any of the above
categories.
The amounts presented in the table above are stated
before the provision of specific loan loss reserves.

Assets pledged as collateral at 31st March, 2010 consistedof the following:

Securities
Loans
Other assets
Tangible fixed assets
Software which is included
in intangible fixed assets

Foreign exchange assets at 31st March, 2010 consisted of
the following:Thousands of
U.S. dollars

Millions of yen

¥

4,097

¥

225
741
5,064

¥

436,175
60,000
4,272
391

$

4,688,037
644,883
45,915
4,202
6,513

606

The liabilities secured by the above pledged assets at 31st
March, 2010 consisted of the following:

7. Foreign Exchange Assets

Due from foreign
correspondent banks
Foreign bills of exchange bought
Foreign bills of exchange receivable
Total

Thousands of
U.S. dollars

Millions of yen$

44,034

$

2,418
7,964
54,428

Thousands of
U.S. dollars

Millions of yen

Deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money

¥

6,384
20,000255,324
76,368$68,615214,9612,744,239
820,808

In addition to the pledged assets listed above, certain othersecurities were pledged as collateral for domestic exchangetransactions or as margins on futures contracts. Theseamounted to ¥74,742 million ($803,331 thousand) at 31st
March, 2010.

8. Other Assets
Other assets at 31st March, 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Investments in leased assets
Other receivables
Accrued income
Prepaid expenses
Other
Total

¥

¥

15,823
13,2979,145
106
30,894
69,268$$170,066
142,917
98,291
1,139
332,050
744,496

At 31st March, 2010, margins on futures contracts in theamounts of ¥2,307 million ($24,795 thousand), guarantee
deposits of ¥5,474 million ($58,834 thousand), deposits for
futures transactions of ¥503 million ($5,406 thousand) andguarantee deposits pledged for derivative transactions of¥500 million ($5,374 thousand) were included in “Other
assets.”9. Tangible Fixed Assets
At 31st March, 2010, accumulated depreciation of tangible
fixed assets was ¥40,927 million ($439,886 thousand).
SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201042

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 43 (1,1)

11. Deposits

14. Corporate Bonds and Notes

Deposits at 31st March, 2010 consisted of the following:

Short-term and long-term bonds payable at 31st March,2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen¥

Current deposits
Ordinary deposits
Savings deposits
Deposits at noticeTime deposits
Other deposits
Total

¥

152,036
1,439,752
32,07916,8182,566,644
44,685
4,252,016$

1,634,092
15,474,548
344,787
180,760
27,586,457
480,277$ 45,700,945

Issuer
Ikeda

SenshuSenginGeneral Leasing
Company Limited

7th subordinated bonds
8th subordinated bonds
9th subordinated bonds
2nd subordinated bonds,
redeemable before maturity
2nd unsecured bonds

29th September, 2006
20th March, 2007
28th December, 2007
27th February, 2007
28th March, 2008

Total

12. Borrowed Money
Borrowed money at 31st March, 2010 consisted ofborrowings from the Bank of Japan and certain otherfinancial institutions.

Issuer
Ikeda

Subordinated borrowings of ¥21,500 million ($231,083
thousand) were included in borrowed money at 31st March,
2010.

SenshuSenginGeneral Leasing
Company Limited

Millionsof yenThousands of Interest Secured/
U.S. dollars rate (%) Unsecured¥ 15,000 $ 161,220
5,000
53,7403,000
32,24410,000107,480
300

3,224

Due

1.78
1.79
3.06
1.97

Unsecured 29th September, 2016
Unsecured 17th March, 2017–
Unsecured
Unsecured 27th February, 2017

1.16

Unsecured

28th March, 2011

The average interest rate applicable to borrowed money at
31st March, 2010 was 0.78%.

Total

The aggregate annual maturities of borrowed money
subsequent to 31st March, 2010 were summarized asfollows:

The aggregate annual maturities of short-term and long-termbonds payable subsequent to 31st March, 2010 weresummarized as follows:Year ending 31st March,Millions of yen

2011
2012
2013
2014
2015
2016 and thereafter
Total

¥

¥

78,787
899
522
148
30
21,500101,887

Thousands of
U.S. dollars$

846,807
9,662
5,610
1,590
322
231,083
1,095,088$¥ 33,300 $ 357,910

Year ending 31st March,Millions of yen

2011
2017
Total

¥

Thousands of
U.S. dollars

Millions of yen

SENSHU IKEDA HOLDINGS,INC.

¥
¥

373
21
394

$

$
$

ANNUAL REPORT 2010

4,009
225
4,234

3,224
354,686
357,910$

Other liabilities at 31st March, 2010 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen

Foreign exchange liabilities at 31st March, 2010 consisted of
the following:

Foreign bills sold
Foreign bills of exchange payable
Total

¥

300
33,00033,300Thousands of
U.S. dollars

15. Other Liabilities

13. Foreign Exchange Liabilities

43

IssuedDescription

Accrued expenses
Unearned income
Accrued income taxes
Other
Total

¥

¥

13,32415,086889
27,24456,544$$

143,207
162,1459,555
292,820
607,738

Lease obligations of ¥33 million ($354 thousand) were
included in “Other” in the table above. The average interest
rates on lease obligations at 31st March, 2010 with maturity
dates on or before and subsequent to 31st March, 2011were 3.29% and 3.20%, respectively.

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SENSHU IKEDA HOLDINGS,INC.

The aggregate annual maturities of lease obligations
subsequent to 31st March, 2010 were summarized asfollows:
Year ending 31st March,Millions of yen

2011
2012
2013
2014
2015
2016 and thereafter

¥

6
6
6
6
3
2
33

¥

(3) The assumptions used in accounting for the above plans
for the year ended 31st March, 2010 were as follows:

Thousands of
U.S. dollars

$

64
64
64
64
32
21
354

$

Discount rates
Expected rates of return on plan assets

1.3% – 2.2%
2.1% – 3.0%

17. Contingent Liabilities
Contingent liabilities for guarantee of corporate bonds
included in “Securities,” which were issued by private
placement (Article 2, Paragraph 3 of the Financial
Instruments and Exchange Law) amounted to ¥33,796 million($363,241 thousand) at 31st March, 2010.

16. Retirement Benefit Plans
18. Shareholders’ Equity
Certain consolidated subsidiaries have defined benefit
pension plans consisting of corporate pension plans, taxqualified pension plans and lump-sum payment plans.
(1) The assets and liabilities of the employees’ retirement
benefit plans at 31st March 2010 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation
Pension plan assets at fair value
Unfunded benefit obligation
Unrecognized net retirement
benefit obligation at transition
Unrecognized actuarial loss
Unrecognized prior service cost
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits for
employees¥(33,088)
25,307(7,781)$35,447
84,243(9,812)
26,246
91,509

3,298
7,838
(913)
2,442
8,514
¥

(6,072)(355,631)
272,001(83,630)$(65,262)(2) Retirement benefit expenses for the year ended 31st
March, 2010 consisted of the following:¥¥

The maximum amount which the Company can distribute as
dividends is calculated based on the non-consolidated
financial statements of the Company and in accordance with
the Law.
Movements in common stock, first-class preferred stock andtreasury stock during the year ended 31st March, 2010 weresummarized as follows:

Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Amortization of transitional obligation
Additional retirement benefits and other
Net periodic retirement benefit
expenses

Japanese banks, including the Company, are required tocomply with the Banking Law and the Law. The Law
stipulates that neither additional paid-in capital nor the legal
reserve is available for dividends, but that both may be used
to reduce or eliminate a deficit. Under the Banking Law, anamount which is at least equal to 20% of the aggregate
amount of cash dividends and certain appropriations ofretained earnings associated with cash outlays applicable toeach fiscal period is to be appropriated to the legal reserve
until the aggregate amount of the legal reserve and thecapital surplus account equals 100% of the amount of sharecapital. The Law also provides that if the aggregate amountof additional paid-in capital and the legal reserve exceeds
100% of the amount of share capital, the excess may be
distributed to the shareholders either as a return of capital oras dividends subject to the approval of the shareholders.

1,208
520
(445)
(225)
1,538
659
28

$

3,283

$

12,983
5,588(4,782)(2,418)
16,5307,082
300
35,285

Number of shares (in thousands)
1st April,
31st March,
2009
2010
Increase Decrease
Outstanding shares:
940,231
Common stock
111,000
First-class preferred stock
Second-class preferred stock 115,625
7,530First series preferred stock
1,174,386
Total
Treasury stock:
1,203
Common stock
1,250First series preferred stock
2,453
Total

253,134–––
253,134
40
6,280
6,320

Note

1,073 1,192,293–
111,000–
115,6257,530–
8,603 1,418,918

1 and 2

1,238
7,530
8,768

4 and 5
6 and 7SENSHU IKEDA HOLDINGS,INC.

5
–
5

3

ANNUAL REPORT 201044

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 45 (1,1)

Notes:

20. Other Income

1. Increase in common stock (253,134 thousand shares)
consisted of issuance due to the exercise of right of claim
for acquisition by first series preferred stock shareholders(20,382 thousand shares), issuance by public offering(210,000 thousand shares) and issuance by allotment tothird parties (22,751 thousand shares).
2. Decrease in common stock (1,073 thousand shares) was
due to disposal of treasury stock pursuant to Article 178 of
the Law.
3. Decrease in first series preferred stock (7,530 thousand
shares) was due to disposal of treasury stock pursuant to
Article 178 of the Law.
4. Increase in treasury stock of common stock (40 thousand
shares) was due to issuance request from theshareholders who owned fractional shares less than one
voting right.
5. Decrease in treasury stock of common stock (1,238
thousand shares) consisted of decrease (1,073 thousand
shares) due to disposal of treasury stock pursuant to
Article 178 of the Law, sales of common stock (160thousand shares) owned by a subsidiary and disposition(5 thousand shares) by purchase request from theshareholders who owned fractional shares less than one
voting right.
6. Increase in treasury stock of first series preferred stock(6,280 thousand shares) is due to the exercise of right ofclaim for acquisition by first series preferred stock
shareholders.
7. Decrease in treasury stock of first series preferred stock(7,530 thousand shares) is due to disposal of treasury
stock pursuant to Article 178 of the Law.

Other income for the year ended 31st March, 2010 consistedof the following:Thousands of
U.S. dollars

Millions of yen

Gain on sales of equity securities
Gain on money held in trust
Other
Total

¥

¥

2,590
173
9,294
12,059$$21. Other Operating Expenses
Other operating expenses for the year ended 31st March,2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Loss on sales of debt securities
Loss on redemption of debt securities
Loss on devaluation of debt securities
Other
Total

¥

¥

367
483
194
505
1,550

$

Other operating income for the year ended 31st March, 2010
consisted of the following:Thousands of
U.S. dollars

Millions of yen

Gain on sales of securities andtrading account securities
Other
Total

¥
¥

9,762
815
10,578$$104,922
8,759
113,693

3,944
5,191
2,085
5,427
16,659$22. Other Expenses
Other expenses for the year ended 31st March, 2010
consisted of the following:Thousands of
U.S. dollars

Millions of yen

19. Other Operating Income

27,837
1,859
99,892
129,610

Provision for possible loan losses
Write-offs of loans and bills discounted
Loss on sales of equity securities
Loss on devaluation of equity securities
Loss on money held in trust
Other
Total

¥

¥

9,749
9,035
243
454
38
12,851
32,373$$

104,782
97,108
2,611
4,879
408
138,123
347,947

23. Dividends
Cash dividends paid during the fiscal year ended 31st
March, 2010
The Company was established as a joint holding company
between Ikeda and Senshu on 1st October, 2009 by way of atransfer of shares. Accordingly, cash dividend presented in
the table below were resolved by the annual shareholders’meeting and the Board of Directors’ meeting of Senshu, awholly owned subsidiary of the Company.

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SENSHU IKEDA HOLDINGS,INC.

(a) Resolution by annual shareholders’ meeting on 26th
June, 2009
Dividend amountType ofstock

Recorddate

Effective
date

Dividends per share

Millions Thousands ofof yenU.S. dollars

Common31st March, 29th June,
stock
2009
2009
First series 31st March, 29th June,
preferred stock 2009
2009

¥

Yen

1,149 $ 12,349 ¥

¥

31 $

25. Leases

333 ¥U.S. dollars

2.50 $

0.02

5.00 $

0.05

a.

Finance lease
As Lessee
Finance lease transactions that do not transfer
ownership:
Leased assets are vehicles.

(b) Resolution by Board of Directors’ meeting on 13th
November, 2009
Dividend amountType ofstock
Commonstock

Recorddate

Effective
date

Dividends per share

Millions Thousands ofof yenU.S. dollars

30th September, 9th December,
2009
2009
¥

1,105 $ 11,876 ¥Yen

U.S. dollars

2.30 $

0.02

Cash dividends with record dates falling in the fiscal year
ended March 31, 2010 and effective dates coming after
the end of the fiscal year

Source ofdividends

Record date

Effective date

Retained earnings
Retained earnings

31st March, 2010
31st March, 2010

30th June, 2010
30th June, 2010

Retained earnings

31st March, 2010

30th June, 2010

Types of stock
Common stock
First-classpreferred stock
Second-classpreferred stock

Cash dividends
Millionsof yenTypes of stock
Common stock
First-classpreferred stock
Second-classpreferred stock

3,219 $ 34,598¥

1,176 $ 12,639¥

1,278 $ 13,736

Yen

The Group accounts for finance leases commencing
prior to 1st April, 2008 that do not transfer ownership ofthe leased assets to the lessee as operating leasetransactions as permitted by the accounting standard.
The following pro forma amounts represent theacquisition costs, accumulated depreciation and net
book value of the leased tangible fixed assets as of 31st
March, 2010, which would have been reflected in theaccompanying consolidated balance sheet if financelease accounting had been applied to the financeleases for which the Group is a lessee and which are
currently accounted for in a manner similar to theaccounting treatment for operating lease transactions:

U.S. dollars¥
2.70 $
0.02¥196 divided$2.10 divided
by 18.5by 18.5¥204.5 divided$2.19 divided
by 18.5by 18.5

24. Cash and Cash Equivalents
A reconciliation of cash and due from banks in theaccompanying consolidated balance sheets to cash andcash equivalents in the accompanying consolidated
statements of cash flows at 31st March, 2010 is summarized
as follows:

Cash and due from banks
Deposits other than deposits
with the Bank of Japan
Cash and cash equivalents

Finance lease transactions that do not transfer
ownership accounted for as operating leasetransactions:

Cash dividends per share

Thousands of
U.S. dollars¥

The method for computing the amount ofdepreciation is described in “3. Significant
Accounting Policies (14) Leases.”Millions of yen

Thousands of
U.S. dollars¥

111,817$ 1,201,816¥(5,919)105,897(63,617)$ 1,138,187

Thousands of
U.S. dollars

Millions of yen

Acquisition costs
Accumulated depreciation
Net book value

¥
¥

70
53
16

$
$

752
569
171

The above acquisition costs include amounts
corresponding to interest expense not presented
separately because the total balance of the future
minimum lease payments was immaterial to the net bookvalue of tangible fixed assets.
Future minimum lease payments subsequent to 31st
March, 2010 for finance leases accounted for in amanner similar to the accounting treatment for operatinglease transactions are summarized as follows:Year ending 31st March,Millions of yen

20112012 and thereafter
Total

¥
¥

9
6
16

SENSHU IKEDA HOLDINGS,INC.

Thousands of
U.S. dollars

$
$

96
64
171

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The above future minimum lease payments include
amounts corresponding to interest expense notpresented separately because the total balance of the
future minimum lease payments was immaterial to thenet book value of tangible fixed assets.

The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Total lease payments related to finance leases
accounted for as operating leases and depreciation
expense, which have not been reflected in theaccompanying consolidated statement of operations forthe year ended 31st March, 2010, are summarized asfollows:
Thousands of
U.S. dollars

Millions of yen

Total lease payments
Depreciation expense

¥

12
12

$

128
128

Depreciation expense has been computed by thestraight-line method assuming the lease periods to be
the useful lives of the respective assets and a nil
residual value.
There was no loss on impairment of fixed assets
allocated to leased assets or reversal of the reserve for
impairment of tangible fixed assets under finance leases
for the year ended 31st March, 2010.
b.

Operating leases

Deferred tax assets:
Reserve for possible loan losses
Provision for employees’ bonuses
Accrued retirement
benefits for employees
Loss on devaluation of securities
Tax loss carryforwards
Depreciation
Net unrealized loss on availablefor-sale securities
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Non-taxable accrued
dividend income
Net unrealized gain on
available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets¥¥

33,808729$

363,370
7,835

3,006
15,08331,842633

32,308
162,113342,239
6,803

5,431
3,586
94,122(53,784)
40,33858,37238,542
1,011,629(578,073)
433,555(371)(3,987)

(26)
(0)
(398)
39,940(279)(0)(4,277)429,277$

A reconciliation of the statutory tax rate to the effective tax
rate for the year ended 31st March, 2010 is as follows:

As Lessee
Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2010 wereas follows:Year ending 31st March,Millions of yen

20112012 and thereafter
Total

¥
¥

523
4,461
4,984

Thousands of
U.S. dollars

$
$

5,621
47,94753,56826. Income Taxes
Income taxes applicable to the Company and its domestic
subsidiaries comprise corporate tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in a statutory
tax rate of 40.6% for the year ended 31st March, 2010.

Statutory tax rate
Valuation allowance
Per capita portion of inhabitants’ taxes
Unused tax loss carryforwards that had expired
Other
Effective tax rate

40.6%
88.1
1.2
4.4
5.3
139.6%

27. Segment Information(1) Business segment information
The Group has leasing and other businesses in addition
to its principal commercial banking business. Segment
information by type of business has been omitted assuch other businesses constitute only an immaterial
portion of the whole business segments of the Company
and its consolidated subsidiaries.
(2) Geographic segment information
Segment information by geographic area has not beenpresented as the Group had no overseas subsidiaries orbranches.

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SENSHU IKEDA HOLDINGS,INC.

(3) Ordinary income from international operations
Ordinary income from international operations has notbeen presented as it accounts for less than 10% of theconsolidated ordinary income.

29. Financial Instruments and Related Disclosures
As discussed in Note 4, the Group adopted ASBJ Statement
No. 10 “Accounting Standard for Financial Instruments” andASBJ Guidance No. 19 “Guidance on Disclosures about Fairvalue of Financial Instruments.” The information required bythese standards to be disclosed is as follows:

28. Related Party Transactions
A company in which a director of the Company and the
director’s close relatives hold the majority ratio of voting
rights1.

A executive officer of the Company, Yutaka Himeno directly
owns 5% shares and his relatives directly own 95% shares in
HIMENO GIKEN Co., Ltd. (“HIMENO GIKEN”) HIMENO
GIKEN is located in Higashiyodogawa-ku, Osaka, records
share capital of ¥20 million ($214 thousand) and is engaged
in the construction business.
Transactions and balances with HIMENO GIKEN as of 31st
March, 2010 and for the year then ended were summarized
as follows.
2010
Transactions

Balances

Type of
Millions Thousands oftransaction of yen U.S. dollars

Millions Thousands ofof yen U.S. dollars

Loans and bills
discounted
Other assets
10 Otherliabilities

Loan

¥ 114

$ 1,225

Interest
income¥$1

Account
name

¥

0

$

0

¥

0

$

0

2010
Balances

Type of
Millions Thousands oftransaction of yen U.S. dollars

Interest
income

¥

2

$

21

Account
nameLoans and bills
discounted(1) Policy for financial instruments
The Group consists of Ikeda and Senshu, which areengaged in the banking business involving transactions
such as deposit-taking and lending services andholding financial assets and liabilities exposed to thefluctuation of interest rates. In addition, the Group holds
equity securities for the purpose of strategic investment
and other financial assets consisting of debt securities
and investment trusts for the purpose of generatinginterest and dividend income, capital gains and so forth.
These are exposed to market fluctuation risk.
In order to prevent these businesses from being
negatively affected by fluctuations of interest rates ormarket prices, the Group conducts integrated asset andliability management (“ALM”) and utilizes derivative
contracts as a part of ALM.

¥ 117 $ 1,257

Transaction and balances with Setsuko Sasaki who was a
relative of a director and engaged in the property leasing
business, Transactions and balances with Setsuko Sasaki asof 31st March, 2010 and for the year ended weresummarized as follows:
Transactions

General Information

Millions Thousands ofof yen U.S. dollars

¥

80

$

(2) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist ofloans to domestic corporate and individual customers,
which are exposed to credit risk arising from customers’
nonperformance of contractual obligations. In addition,certain loans such as house mortgage loans with fixedinterest rates are exposed to the fluctuation risk ofinterest rates. Securities held by the Group principallyconsist of equity securities, debt securities, investment
trusts and investments in partnerships, which are held
for the purposes of holding to maturity, generatinginterest and dividend income, capital gains and so forthand strategic investment and partially for trading. These
financial assets are exposed to credit risk of issuers andfluctuation risk of interest rates and market prices.

859

The conditions of the loan transactions are determinedbased on the general conditions of similar transactions withthird parties.

The major fund raising source of banking subsidiaries isdeposit-taking, but fund raising through borrowed
money and corporate bonds is also undertaking.
Liquidity risk, the failure to settle on the maturity date,
could result if the Group is unable to utilize market
lending due to certain unfavorable circumstances.
Furthermore, these financial liabilities are exposed to thefluctuation risk of interest rates.
Derivative transactions consist of interest rate swaps aspart of ALM and currency swaps related to foreign
currencies.
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In addition, the Group enters into futures transactions on
debt securities and equity securities to mitigate pricefluctuation risk of securities and also for trading
purposes.
(3) Risk management system for financial instruments
The Group has established the risk control department
independent from front offices and defines basic risk
management policies. Specifically, the risk
management system and various rules including thebasic policy on risk control are determined by the Boardof Directors, and the responsible functions by risk
categories and the integrated risk control function are
clearly defined. In addition, the “Risk Management
Committee” and the “ALM Committee” have been
established, and they discuss risk profiles and issues aswell as risk control measures and report such matters to
the Board of Directors to ensure the soundness ofeffective management on the management level.
a. Integrated risk management
The Group conducts integrated risk management inaccordance with the basic policy on risk control andvarious integrated risk control rules. Specifically, theGroup conducts integrated control by identifying therisks assessed by risk categories such as credit risk,
market risk and others including credit concentration
risk not considered in the computation process of thecapital ratio and interest rate risk of banking accounts
and compares them with management capacity(capital).
b. Credit risk management
The Group analyzes and controls the credit portfolioin accordance with the Company’s policy on credit
risk control and various credit risk control rules. The
Group maintains and operates a system ofinvestigation, internal rating, asset self-assessment inmonitoring individual transactions.
These credit control procedures are performed byeach operating office, credit investigation department
and risk control departments of the consolidatedbanking subsidiaries. With respect to credit risk ofissuers of securities and counterparty risk ofderivative transactions, the risk control departmentsof the banking subsidiaries monitor the identificationof credit information and fair values. In addition, therisk control department of the Company reports on aregular basis to the Risk Management Committee
and the Board of Directors of the Company.
Furthermore the internal audit departments audit thestatus of credit control.

c. Market risk management(i) Market risk management
The Group manages interest rate risk, foreignexchange risk and price fluctuation risk inaccordance with the Company’s policy on market
risk control and various market risk control rules.
Specifically, the risk control department of theCompany identifies the volume of market risk
using the Value-at-Risk (VaR) method andmonitors compliance with the risk limits resolvedby the Board of Directors through continuous
monitoring system. The relevant information isperiodically reported by the risk control
department to the Risk Management Committee
and the Board of Directors.
The ALM Committee identifies and confirms the
make-up of assets and liabilities and interest raterisk and discusses future measures. Specifically,
the responsible department of the Company for
ALM identifies comprehensively interest rates andperiods of financial assets and liabilities andmonitors using gap analysis and interest ratesensitivity analysis.
The banking subsidiaries execute foreignexchange transactions and foreign currency bondinvestments, which are exposed to foreignexchange risk, but the subsidiaries strive tominimize foreign exchange risk by balancing theforeign exchange positions where possible.
(ii) Derivative transactions
With respect to derivative transactions, theCompany has established an internal control
system including segregation of duties of thedepartments responsible for execution oftransactions, risk control and operation
administration and complies with the various
market risk control rules.
d. Liquidity risk management associated with fundraising
The Group conducts liquidity risk control for funding
activities in accordance with the Company’s policy on
liquidity risk control and various liquidity risk control
rules. Specifically, the department responsible for
ALM and the treasury department identify theinvestment and funding status of the whole Group ona timely basis and control liquidity risk by diversifying
the funding instruments and adjusting the short-termand long-term funding balances considering themarket environments.
The risk control department of the Company identifies
its response capability if liquidity risk is revealed
through monitoring the amount of liquid reserve

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SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars

assets that can be readily converted into cash andreports it to the risk management committee.
(4) Supplementary explanation about fair value of financial
instruments
The fair value of financial instruments include, in
addition to the value determined based on the market
price, a valuation calculated on a reasonable basis if nomarket price is available. Since certain assumptions areused in calculating the value, the result of suchcalculation may vary if different assumptions are used.
2.

Fair value of financial instruments

The carrying value, the fair value and the difference as of
31st March, 2010 are summarized in the following table.
Note that securities such as unlisted equity securities forwhich fair value is extremely difficult to determine were notincluded in the following table (See (Note 2) below):
Millions of yen

Cash and due from banks
Call loans and bills bought
Monetary claims bought (*1)
Trading account securities:
Trading securities
Money held in trust
Securities:
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Reserve for possible loan losses
Foreign exchange assets (*1)
Total assets
Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities
lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Total liabilities
Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

Carrying
value

Fair value Difference¥¥

111,817
10,0001,173
919,000111,817 ¥10,000
1,173

–
–
–

9
19,000––(238)
97,88098,119–1,132,131
1,132,131
3,448,581(41,688)
27,3783,434,271
3,406,892
6
5,064
5,058
¥ 4,784,202 ¥ 4,811,348 ¥ 27,146¥ 4,252,016 ¥ 4,258,251 ¥ 6,235–
12,50012,500–45,00045,000255,324
101,887394
33,300¥ 4,700,423¥¥

255,324
102,267394
32,486¥ 4,706,226 ¥

–
380
–
(813)
5,803

121 ¥
(93)
28 ¥

–
–
–

121 ¥
(93)
28 ¥

Cash and due from banks
Call loans and bills bought
Monetary claims bought (*1)
Trading account securities:
Trading securities
Monetary held in trust
Securities:
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Reserve for possible loan losses
Foreign exchange assets (*1)
Total assets
Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities
lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Total liabilities
Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

Carrying
value

Fair value Difference$ 1,201,816
107,480
12,607$ 1,201,816 $
107,480
12,607–––96
204,21396
204,213––(2,558)1,052,020
1,054,589–
12,168,217
12,168,217
37,065,573(448,065)
294,260
36,617,497 36,911,769
64
54,42854,363$51,420,915 $51,712,682 $ 291,766$45,700,945 $45,767,960 $ 67,014–
134,350
134,350–
483,662
483,6622,744,239
1,095,088
4,234
357,910$50,520,453$$

2,744,239
1,099,172
4,234
349,161$50,582,824 $

–
4,084
–
(8,738)62,3711,300 $
(999)
300 $

–
–
–

1,300 $
(999)
300 $

(*1) General and specific reserves for loan losses
corresponding to loans are deducted. With respect toreserve for loan losses related to monetary claimsbought and foreign exchange assets, carrying value isshown, net of reserve, since the amount is insignificant.
(*2) Derivative transactions include all derivatives recordedin other assets and other liabilities. Assets and liabilities
arising from derivative transactions are shown on a net
basis.

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ANNUAL REPORT 201050

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 51 (1,1)(Note 1) Valuation method for the fair value of financial
instruments
Assets:Cash and due from banks
The carrying value of due from banks without maturities ispresented as the fair value since the fair value approximatesthe carrying value. The carrying value of due from bankswith maturities is presented as the fair value since the fairvalue approximates the carrying value due to remaining
maturities of less than one year.
Call loans and bills bought
The carrying value is presented as the fair value since thefair value approximates the carrying value due to contractual
term of less than one year.
Monetary claims bought
Receivables related to factoring business are computed in
the same manner as loans.
Trading account securities
The fair value of securities such as debt securities held for
trading is determined using the quoted market price or the
price provided by counterparty financial institutions.
Money held in trust
For securities that are invested as part of trust assets in an
independently managed money trust with securities
management as the primary purpose, the fair value of equity
securities is determined using quoted market prices and thefair value of debt securities is determined using quoted
market prices or the prices provided by counterparty
financial institutions. Note that information on money held in
trust by holding purpose is disclosed in Note 31.
Securities
The fair value of equity securities is determined using thequoted market prices and the fair value of debt securities isdetermined using the quoted market prices or the prices
provided by counterparty financial institutions. The fair valueof investment trusts is determined based on the publishedstandard quotation prices. The fair value of privately placed
guaranteed bonds issued by the banking subsidiaries isdetermined in the same manner as loans.
(Valuation of fair value of financial assets)
For floating rate Japanese government bonds, if there is awide spread between the offer price and the bid price, theirfair value is determined using a value calculated on areasonable basis based on the management’s estimates,
since the market price cannot be deemed as the fair value.
The carrying value of “Securities” and “Net unrealized loss
on available-for-sale securities” increased by ¥3,455 million($37,134 thousand) from the corresponding amounts thatwould have been reported using the market prices.

51

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

The fair value of floating rate Japanese government bonds
computed on a reasonable basis is determined using theprices obtained from reliable and independent external
brokers. The value computed on a reasonable basis iscomputed based on the discounted present value assuming
future cash flows that are derived from the model of futureinterest rate trends based on the discount rates consisting of
the price of fixed rate Japanese government bonds and adiversification of interest rates corresponding to swaption
volatility quoted in the market.
Major pricing parameters adopted in above computation are
discounted short-term government bonds, 10-year
government bonds, 20-year government bonds and 30-year
government bonds for discount rates, one month to ten years
for the period of swaption volatility and one year to ten years
for the period of swaps.
Note that information on securities by holding purposes isdisclosed in Note 30.
Loans and bills discounted
The carrying value of the loans with floating interest rates,
which reflect short-term market interest rates, is presented as
the fair value since the fair value approximates the carrying
value as long as the creditworthiness of the borrower has notchanged significantly since the loan origination. The fairvalue of the loans with fixed interest rates is determinedbased on the aggregated value of principal and interest by
categories of types of loans, internal ratings and maturities
discounted using the interest rate assumed if the same loans
were newly originated. The carrying value of the loans withshort contractual terms (less than one year) is presented as
the fair value since the fair value approximates the carrying
value.
Loan losses on receivables from bankrupt, effectively
bankrupt or likely to become bankrupt borrowers are
estimated based on factors such as the present value of
expected future cash flows or the expected amount to becollected from collateral and guarantees. Since the fair valueof these items approximates the carrying value, net of thecurrently expected loan losses, such carrying value ispresented as the fair value. The carrying value of the loans
which do not have defined repayment due dates because
the loans are limited to within the amount of pledged assets
is presented as the fair value since the fair value
approximates the carrying value considering the expected
repayment schedule and interest rate conditions.
Foreign exchange assets
Foreign exchange assets consist of foreign currency
deposits with other banks (due from other foreign banks),
export bills and traveler’s checks, etc, (purchased foreign
bills) and loans on notes using import bills (foreign bills
receivables). The carrying value of these items is presented
as the fair value, since the fair value approximates the011̲0161301372209.qxd 10.9.14 3:05 PM ページ 52 (1,1)

SENSHU IKEDA HOLDINGS,INC.

carrying value due to being deposits without maturity or
having short contract terms (less than one year).

Derivative transactions:
See Note 33.

Liabilities:
Deposits, including negotiable certificates of deposit
The amount payable on demand as of the balance sheet
date (i.e., the carrying value) is considered to be the fairvalue of the demand deposit. The fair value of time deposits
is determined using the discounted present value of future
cash flows, grouped by certain maturity lengths. The
discount rate used is the interest rate that would be applied
to newly accepted deposits. The carrying value of deposits
whose remaining maturity is within the short-term period (lessthan one year) is presented as the fair value since the fairvalue approximates the carrying value.
Call money and bills sold, and Payables under securities
lending transactions
The carrying value is presented as the fair value since thefair value approximates the carrying value due to remaining
maturities of less than one year.
Borrowed money
The carrying value of floating rate borrowed money ispresented as fair value. This is because it reflects themarket interest rate in the short-term period, also thecreditworthiness of the consolidated subsidiaries has not
significantly changed since the borrowed money was
originated and accordingly fair value approximates the
carrying value. The fair value of fixed rate borrowed moneyis calculated as the present value of expected future cash
flows from the aggregated value of principal and interest (theaggregated value of principal and interest using the interest
rate swap rate, in case of borrowings subject to special
treatment of hedge accounting for interest rate swaps) on
these borrowings grouped by certain maturity lengths, which
is discounted at an interest rate applicable to similarborrowings. The carrying value of borrowed money whose
remaining maturity is due within the short-term period (lessthan one year) is presented as the fair value since the fairvalue approximates the carrying value.
Foreign exchange liabilities
Foreign exchange liabilities consist of foreign bills sold andforeign bills payable. The carrying value is presented as thefair value since the fair value approximates the carrying
value due to remaining maturities of less than one year.
Corporate bonds and notes
The fair value of bonds and notes issued by the Group isdetermined using the market price. The carrying value ofcorporate bonds and notes with remaining maturities lessthan one year is presented as the fair value since the fairvalue approximates the carrying value.

(Note 2) Financial instruments whose fair value is extremely
difficult to determine are as follows: These
securities are not included in “Securities” under“Assets” as part of the fair value information offinancial instruments.
Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities (*1) (*2)
Investment in partnerships (*3)
Other
Total

¥

¥

6,349
2,454
0
8,804

$

$

68,23926,3750
94,625(*1) No market price is available for unlisted equity securities
and the fair value is not disclosed since it is extremely
difficult to determine the fair value.
(*2) The Company recognized impairment losses on unlisted
equity securities in the amount of ¥244 million ($2,622
thousand) for the year ended 31st March, 2010.
(*3) The fair value of investments in partnerships, whose
assets consist of securities such as unlisted equity
securities for which fair value is extremely difficult todetermine, is not disclosed.

(Note 3) Repayment schedule of monetary receivables andsecurities with contractual maturities
Millions of yen

31st March, 2010

Due after Due after
Due inone year three years
one year throughthroughor less three years five years¥
Due from banks
Call loans and bills bought
Monetary claims bought (*1)
Securities:
Held-to maturity debt securities:
Government bonds
Corporate bonds
Other
Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds (*1)
Other
Loans and bills discounted (*1, *2)
Foreign exchange assets¥
Total

63,130 ¥10,0001,173
128,749
4,400
–
400
4,000

– ¥
–
–
213,325
17,800–17,800––––300,890
20,400–20,400–124,349
100,000
6,282
15,681
2,385
691,232
5,064
899,349 ¥

195,525
25,01232,09353,85584,564
498,581–
711,907 ¥280,490103,000
37,812
37,629102,047
362,748–
663,639SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201052

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Millions of yen

31st March, 2010

Due after
Due after
five years seven years
throughthroughseven years ten years¥
Due from banks
Call loans and bills bought
Monetary claims bought (*1)
Securities:
Held-to maturity debt securities:
Government bonds
Corporate bonds
Other
Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds (*1)
Other
Loans and bills discounted (*1, *2)
Foreign exchange assets¥
Total

Thousands of U.S. dollars

Due after
ten years– ¥––87,217
11,00010,000
–
1,000

– ¥
–
–
228,899
16,00016,000–––––105,762
29,00029,000––76,217
46,200965
10,12818,924
259,542–
346,760 ¥

76,762
212,899
58,500143,600
–
830
8,666
8,223
9,595
60,246
1,249,952
322,908––551,808 ¥ 1,355,714

Thousands of U.S. dollars

31st March, 2010

Due after Due after
Due inone year three years
one year throughthroughor less three years five years–– $$ 678,525 $Due from banks––
107,480
Call loans and bills bought––
12,607
Monetary claims bought (*1)
3,233,985
2,292,831
1,383,802
Securities:
219,260
191,315
47,291
Held-to maturity debt securities:–––
Government bonds
219,260
191,315
4,299
Corporate bonds––
42,992
Other
Available-for-sale securities
3,014,724
2,101,515
1,336,511
with maturities:
1,107,050
268,830
1,074,806
Government bonds
406,405
344,937
67,519Local government bonds
404,438
578,837
168,540
Corporate bonds (*1)
1,096,807
908,899
25,634Other
3,898,839
5,358,781
7,429,406
Loans and bills discounted (*1, *2)––
54,428Foreign exchange assets$ 9,666,261 $ 7,651,622 $ 7,132,835
Total

53

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

31st March, 2010

Due after
Due after
five years seven years
throughthroughseven years ten years

Due after
ten years

–
– $
$
– $
Due from banks–––
Call loans and bills bought–––
Monetary claims bought (*1)
1,136,736
2,460,221
937,414
Securities:
311,693
171,969
118,228
Held-to maturity debt securities:
311,693
171,969
107,480
Government bonds–––
Corporate bonds––
10,748Other
Available-for-sale securities
825,0422,288,252
819,185
with maturities:
628,761
1,543,422
496,560
Government bonds–
8,920
10,371
Local government bonds
93,142
88,381
108,856
Corporate bonds (*1)
103,127
647,527
203,396
Other
3,470,636 13,434,565
2,789,574
Loans and bills discounted (*1, *2)–––
Foreign exchange assets$ 3,726,999 $ 5,930,868 $ 14,571,302
Total(*1) Loans and bills discounted, monetary claims bought
and corporate bonds do not include ¥63,764 million($685,339 thousand) of receivables such as those duefrom bankrupt, effectively bankrupt or likely to becomebankrupt borrowers, since it is not certain when they canbe collected or redeemed.
(*2) Overdraft accounts of loans are shown under “Due in
one year or less.”(Note 4) Repayment schedule of bonds, borrowed moneyand other interest bearing liabilities.
Millions of yen

31st March, 2010

Due after Due after
Due inone year three years
one year throughthroughor less three years five years¥ 3,720,118 ¥Deposits (*1)
12,500
Negotiable certificates of deposits
45,000Call money and bills soldPayables under securities
255,324
lending transactions
78,787
Borrowed money (*2)
300
Corporate bonds (*3)
¥ 4,112,030 ¥Total

452,006 ¥––78,176
–
–

–
1,421
–
453,427 ¥–178–
78,355

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SENSHU IKEDA HOLDINGS,INC.

30. Trading Account Securities and Securities

Millions of yen

31st March, 2010

Due after
Due after
five years seven years
throughthroughseven years ten years¥
Deposits (*1)
Negotiable certificates of deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money (*2)
Corporate bonds (*3)
¥
Total

1.
Due after
ten years

725 ¥
–
–

989 ¥
–
–

–
–
–

–
–
30,00030,725 ¥–9,500–
10,489 ¥––––Trading account securities
Valuation gain on trading account securities included inincome before income taxes and minority interests was¥0 million ($0 thousand) for the year ended 31st March,
2010.

2.

Held-to-maturity debt securities with fair value at 31st
March, 2010 were as follows:
Millions of yen
Carrying value

Thousands of U.S. dollars

31st March, 2010
Deposits (*1)
Negotiable certificates of deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money (*2)
Corporate bonds (*3)
Total

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years$ 39,984,071 $ 4,858,190 $–
134,350–
483,662

840,240–––
2,744,239
15,273846,807–3,224$ 44,196,367 $ 4,873,463 $

–
1,913
–
842,164

Government bonds
Corporate bonds
Other
Total

¥

¥

31st March, 2010$
Deposits (*1)
Negotiable certificates of deposits
Call money and bills soldPayables under securities
lending transactions
Borrowed money (*2)
Corporate bonds (*3)$
Total

Fair value¥

54,38338,866
4,630
97,880¥Millions of yen
Difference
Government bonds
Corporate bonds
Other
Total

¥

¥

Unrealized Unrealized
gain
loss

(280) ¥
411
(369)(238) ¥

739 ¥
435
22
1,197 ¥

(1,020)(23)(391)(1,435)

Thousands of U.S. dollars

Thousands of U.S. dollars
Due after
Due after
five years seven years
throughthroughseven years ten years

54,66438,4545,000
98,119Carrying value
Due after
ten years

7,792 $––

10,629 $
–
–

–
–
–

–
–
322,441
330,234 $–102,106–
112,736 $––––(*1) Demand deposits are disclosed under “Due in one year
or less” of deposits.
(*2) Borrowed money whose repayment schedule is notdetermined in the amount of ¥12,000 million ($128,976
thousand) is not included.
(*3) Corporate bonds whose repayment schedule is notdetermined in the amount of ¥3,000 million (32,244
thousand) are not included.

Government bonds
Corporate bonds
Other
Total

$

$

587,532
413,306
53,7401,054,589

Fair value$$

584,512
417,734
49,763
1,052,020

Thousands of U.S. dollars
Difference
Government bonds
Corporate bonds
Other
Total

Unrealized Unrealized
gain
loss

$ (3,009) $ 7,942 $ (10,963)
4,417
4,675
(247)
(3,966)236(4,202)$ (2,558) $ 12,865 $ (15,423)

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201054

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 55 (1,1)

3.

Available-for-sale securities with fair value at 31st March,2010 were as follows:

5.

Available-for-sale securities sold during the year ended
31st March, 2010 were as follows:

Millions of yen
Acquisition
cost

Carrying value
Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

¥

64,981¥

481,241
78,978135,679
695,899371,250
1,132,131

Millions of yen¥

66,963¥476,193
78,175
134,307
688,676
389,540
1,145,181

Proceeds
from sales
Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

¥

2,568 ¥

(131)

765,900
23,742
24,707814,350
475,118¥1,299,618 ¥

4,835
298
253
5,387
4,395
12,351 ¥

(46)
–
(1)
(47)
(422)
(602)

Thousands of U.S. dollars

Unrealized Unrealized
Difference
gain
loss
5,633 ¥¥ (1,982) ¥(7,616)

(902)
5,950
5,048
(24)
827
802
(33)
1,405
1,372
(960)
8,184
7,223
(21,948)
3,658(18,289)¥(13,049) ¥ 17,476 ¥ (30,525)

Thousands of U.S. dollars

Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

$

698,420

5,172,409
848,860
1,458,286
7,479,567
3,990,219$ 12,168,217$

719,722

5,118,153
840,230
1,443,540
7,401,934
4,186,801$ 12,308,480

55

Loss

$

27,601 $(1,407)8,231,943
51,966
255,180
3,202
265,552
2,719
8,752,687
57,8995,106,599
47,237$13,968,379 $ 132,749 $

(494)
–
(10)
(505)
(4,535)(6,470)109,071 $6.

There were no securities whose holding purpose hadchanged during the year ended 31st March, 2010.

7.

Impairment losses on securities
Available-for-sale securities whose fair value
substantially declined from the acquisition cost arevalued at fair value and losses on devaluation of thosesecurities are recognized in the consolidated statementof operations unless the value is considered
recoverable.

(9,694)
63,95054,256
(257)
8,888
8,619
(354)
15,101
14,746(10,318)
87,962
77,633(235,898)
39,316(196,571)$(140,251) $ 187,833 $ (328,084)

Determining whether the fair value is “significantly
declined” is based on the fair value declining by morethan 50% or the criteria considering the trend of the fairvalue during a certain past period and credit risks of theissuers when the fair value declined between 30% and
50% of the acquisition cost.

Unrealized Unrealized
gain
loss

$ (21,302) $There were no held-to-maturity debt securities soldduring the year ended 31st March, 2010.

SENSHU IKEDA HOLDINGS,INC.

Gain

60,543 $ (81,857)

Differences

4.

Proceeds
from sales

Loss on devaluation of securities for the year ended 31st
March, 2010 was ¥218 million ($2,343 thousand), which
consisted of ¥210 million ($2,257 thousand) on equity
securities and ¥8 million ($85 thousand) on corporate
bonds.

Thousands of U.S. dollars

Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

Acquisition
cost

Carrying valueLoss

10,148 ¥Millions of yen

Equity securities
Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

Gain

ANNUAL REPORT 2010

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SENSHU IKEDA HOLDINGS,INC.

31. Money Held in Trust(1) Interest related derivatives at 31st March, 2010
Millions of yen

Money held in trust at 31st March, 2010 consisted of thefollowing:

Contract amount/notional principal(1) Money held in trust for trading purposes

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:Thousands of
U.S. dollars

Millions of yen

Carrying value
Valuation gain included inconsolidated statementof operations¥

19,000$Interest rateswaps

204,213
Total

¥

10

$

Receivable fixed rate/
7 ¥– ¥Payable floating rate ¥Receivable floating rate/¥ 4,007 ¥ 4,000
Payable fixed rate
¥

107

0

¥

0

(84)
(84) ¥(84)(84)

Thousands of U.S. dollars
Contract amount/notional principal(2) Money held in trust for other purposes
There were no reportable items at 31st March, 2010.

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:32. Net Unrealized Loss on Available-for-Sale
Securities

Interest rate
swaps

Net unrealized loss on available-for-sale securities at 31st
March, 2010 consisted of the following:

Total

Thousands of
U.S. dollars

Millions of yen

Differences between
acquisition cost and fair value:
Available-for-sale securities
Deferred tax liabilities
Differences between acquisition
cost and fair value, net of taxes
Amounts corresponding tominority interests
Net unrealized loss onavailable-for-sale securities,
net of taxes¥¥(13,049)(34)$(140,627)

(26)

(279)

(13,110)$(140,907)

0
(902)
(902)

Notes:
1. Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) are
reported in the consolidated statement of operations.

(140,251)(365)(13,084)

Receivable fixed rate/
0 $
75 $
– $
Payable floating rate $Receivable floating rate/(902)$ 43,067 $ 42,992
Payable fixed rate
$ (902) $2. The fair value of transactions listed on exchanges isdetermined using the last quoted market price at theTokyo Financial Exchange Inc. or others. The fairvalue of over-the-counter transactions is determinedby using the discounted cash flow method, option
pricing models or others.

(2) Currency related derivatives at 31st March, 2010
Millions of yen

33. Derivatives

Contract amount/notional principal

1. Derivative transactions to which hedge accounting is notapplied

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:With respect to derivatives to which hedge accounting is
not applied, contract amount or notional principal, fairvalue and related valuation gain or loss and computation
method of fair value are as follows: Note that contract
amounts do not represent the market risk exposure ofderivative transactions.

¥ 122,397 ¥100,371 ¥208

Selling
Buying

¥
¥

(53)
50

(53)
50

Selling
Buying¥ 19,121 ¥ 14,174¥ 19,121 ¥ 14,174(1,518)1,518¥ 206 ¥

(73)
310
443

Currency swaps
Forward foreignexchange contracts:

2,185
3,611

–
–

¥

208

Currency options:

Total

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201056

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 57 (1,1)

Thousands of U.S. dollars*1

The fair value of transactions listed on exchanges isdetermined using the last quoted market price at theTokyo Financial Exchange, Inc. or others. The fair valueof over-the-counter transactions is determined by using
the discounted cash flow method, option pricing models
or others.

*2

The interest rate swaps which qualify for hedged
accounting and meet specific matching criteria are notvalued at the fair value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expenses or income on the
borrowed money as hedged items. Accordingly, the fairvalue of interest rate swaps is considered to be includedin the fair value of the borrowed money.

Contract amount/notional principal
Fair
value

Valuation
gain (loss)$1,315,530 $1,078,794 $ 2,235$ 2,235

Total

Over
one year

Over-the-counter transactions:
Currency swaps
Forward foreignexchange contracts:
Selling
Buying$$23,48438,811

Selling
Buying$ 205,513 $ 152,343$ 205,513 $ 152,343

–
–

(569)
537

(569)
537

Currency options:

Total

(784)
(16,315)3,331
16,315$ 2,214 $ 4,761

Notes:
1. Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) are
reported in the consolidated statement of operations.
2. The fair value is determined by using the discounted
cash flow method or others.
2. Derivative transactions to which hedge accounting isapplied(1) Interest related derivatives at 31st March, 2010
Millions of yen
Contract amount/notional principal
Transaction
type

Major hedged
item

Over
one yearFairvalue (*1)

1,800 ¥ 1,050

*2

Total

Swap rate Interest rate swaps
applied to Receivable floating
Borrowed
underlyingrate/money ¥
debt
Payable fixed rate

Millions of yen
Contract amount/notional principal
Hedge accounting
methodTransaction
type

DeferralCurrency
hedge
swaps
accounting

With respect to derivatives to which hedge accounting isapplied, contract amount or notional principal and fairvalue at the balance sheet date by transaction type andhedge accounting method and computation method of
the fair value are as follows. Note that contract amount or
notional principal does not represent the market risk
exposure of derivative transactions.

Hedge accounting
method(2) Currency related derivatives at 31st March, 2010

Major hedged item
Total
Securities
denominated inforeign currencies ¥

6,245

Over
one year

– ¥

Fair
value

(93)

Thousands of U.S. dollars
Contract amount/notional principal
Hedge accounting
methodTransaction
type

DeferralCurrency
hedge
swaps
accounting

Major hedged item
Total
Securities
denominated inforeign currencies $ 67,121

Over
one year

– $

Fair
value

(999)

Derivatives in the table above are mainly accounted forhedge accounting (deferral hedge accounting) inaccordance with JICPA Industry Audit Committee Report
No.25 “Accounting and Auditing Treatment Relating to the
Adoption of the Accounting Standard for Foreign Currency
Transactions for Banks.” The fair value is determined byusing the discounted cash flow method.

34. Business Combination
Thousands of U.S. dollars
Contract amount/notional principal
Hedge accounting
method57

Transaction
type

Over
one yearFairvalue (*1)

Swap rate Interest rate swaps
applied to Receivable floating
Borrowed
underlyingrate/money $ 19,346 $ 11,285
debt
Payable fixed rate

*2

SENSHU IKEDA HOLDINGS,INC.

Major hedged
item

Total

ANNUAL REPORT 2010

Ikeda and Senshu achieved a business integration throughthe incorporation of a joint-holding company on 1st October,2009. This business combination is accounted for under thepooling-of-interest method. The summary of the businesscombination is as follows:
1. Names of the companies involved, their businesses,
purpose of the business combination, date of the businesscombination, legal form of the business combination andname of the company after business combination

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 58 (1,1)

SENSHU IKEDA HOLDINGS,INC.

(1) Name of the companies involved and their businesses
Ikeda: ordinary banking business
Senshu: ordinary banking business(2) Purpose of the business combination
The aim of the integration of Ikeda and Senshu is tobecome the best regional financial institution as anindependent financial group representing the Kansaiarea. The new financial group consisting of Ikeda,
Senshu and the joint holding company plans topromote regional financial stability and sounddevelopment of the regional economy through an
expansion of its operating structure considering its
public mission as a regional financial institution. In
addition, the new financial group also plans toenhance convenience for regional customers, itsquality of service and internal control system,
maintaining its independence of management.
(3) Date of the business combination
1st October, 2009(4) Legal form of the business combination
Transfer of shares(5) Name of the company after the business combination
Senshu Ikeda Holdings, Inc.
2. Share transfer ratio, number of shares issued,
computation method of share transfer ratio and the reason
why this business combination was determined to be a
combination of interest.
(1) Share transfer ratio and number of shares issued
a. Share transfer ratio–Allotment of 18.5 shares of common stock of thejoint-holding company for one share of common
stock of Ikeda–Allotment of one share of common stock of thejoint-holding company for one share of common
stock of Senshu–Allotment of 18.5 shares of first-class preferredstock of the joint-holding company for one shareof the first-class preferred stock of Ikeda–Allotment of 18.5 shares of second-classpreferred stock of the joint-holding company for
one share of the second-class preferred stock of
Ikeda
The Company paid to the holders of shares of lessthan one unit in cash for the shares less than one
unit of common stock, of first-class preferred stockand of second-class preferred stock of the jointholding company to be issued to the shareholders
of Ikeda and Senshu as a result of the sharetransfer in accordance with Article 234 of the Law
and other related laws and regulations.

b. Number of shares to be issued by the joint-holding
company
Common stock:959,541,463 sharesFirst-class preferred stock:
111,000,000 shares
Second-class preferred stock:
115,625,000 shares(2) Computation method of share transfer ratioa. Common stock
To ensure the fairness in computing the sharetransfer ratio to be used for the share transfer,
Ikeda designated Nomura Securities Co., Ltd. and
Senshu designated Morgan Stanley Securities
Co., Ltd. and American Appraisal Japan Co., Ltd.
as their respective advisors to perform thecalculation of the share transfer ratio.
b. Preferred stock
Both parties agreed that with respect to first-classpreferred stock and the second-class preferredstock issued by Ikeda, the same conditions
through the share transfer ratio be defined in theissue terms as the respective issue terms of thecorresponding preferred stock to be newly issued
by the joint-holding company, considering theshare transfer ratio of common stock, since theirmarket prices are not available unlike those forcommon stock. Consequently, 18.5 shares of thefirst-class preferred stock of the joint-holding
company were issued for one share of the firstclass preferred stock issued by Ikeda and 18.5
shares of the second-class preferred stock of thejoint-holding company were issued for one shareof the second-class preferred stock issued by
Ikeda.
(3) Reason why this business combination wasdetermined to be a combination of interest
With respect to the ownerships of voting rights ofSenshu Ikeda Holdings, Inc. owned by the former
shareholders of Ikeda and Senshu as a result of thebusiness combination, which is the base todistinguish whether the business combination shouldbe accounted for by the purchase method or thepooling-of-interest method, 55% are owned byshareholders of Ikeda and 45% by Senshu.
Accordingly, either company is not deemed to havecontrol over the other and risks and benefits after thebusiness combination will be successfully andcontinuously shared between both parties.
3. Operating results for the year from 1st April, 2009 until
31st March, 2010 of the combined entities are included in
the accompanying consolidated financial statements.

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 201058

011̲0161301372209.qxd 10.9.14 3:05 PM ページ 59 (1,1)

4. Assets, liabilities and net assets succeeded from the
combined entities are as follows:

Yen

Ikeda:
Total assets
Total liabilities
Total net assets¥2,529,655 million ($27,188,897 thousand)¥2,473,088 million ($26,580,911 thousand)¥ 56,567 million ($ 607,985 thousand)Senshu:Total assets
Total liabilities
Total net assets¥2,226,858 million ($23,934,415 thousand)¥2,150,983 million ($23,118,905 thousand)¥ 75,874 million ($ 815,498 thousand)

5. Unification of accounting policies, details of elimination oftransactions before the business combination and
expenditures and nature of expenses required for thebusiness combinationa.

Unification of accounting policies
Prior to the business combination, certain
consolidated subsidiaries stated stocks andinvestment trusts with market value classified asavailable-for-sale securities at fair value determinedbased on the quoted market prices as of the balance
sheet date. However, effective the year ended 31st
March, 2010, these securities are stated at fair value
based on the average quoted market price during themonth before the balance sheet date.

b.

There was no transaction to be eliminated before thebusiness combination.

c.

Expenditures and their nature of expenses required
for the business combination
Thousands of
U.S. dollars

Millions of yen

Stock issuance expenses
Incorporation expenses
Initial public offering expenses
Total

¥

¥

4
175
13
192

$

$

42
1,880
139
2,063

Net assets
Net loss:
Basic
Cash dividends:
Common stock
First-class preferred stock
Second-class preferred stock

U.S. dollars

¥

97.22

$

1.04

¥

5.47

$

0.05

¥
2.7 $
0.02
¥196 divided by 18.5 $2.10 divided by 18.5
¥204.5 divided by 18.5 $2.19 divided by 18.5

Net assets per share as of 31st March, 2010 is computed
based on the following information:

Total net assets
Payment for first-classpreferred stock
Dividends for first-classpreferred stock
Payment for second-classpreferred stock
Dividends for second-classpreferred stock
Minority interests
Amounts to be deducted fromtotal net assets
Net assets attributable tocommon stock as of 31st
March, 2010
Number of shares of common
stock as of 31st March, 2010
used to compute net asset per
share (Unit: thousand shares)

Millions of yen

Thousands of
U.S. dollars¥

174,276$ 1,873,129(30,000)(322,441)(1,176)(12,639)(25,000)(268,701)(1,278)(907)(13,736)(9,748)(58,361)(627,267)

115,915$ 1,245,861¥

1,192,287

Net loss per share for the year ended 31st March, 2010 iscomputed based on the following information:
Thousands of
U.S. dollars

Millions of yen

6. There was no significant business to be disposed as aresult of the business combination.

35. Amounts per Share
Amounts per share at 31st March, 2010 and for the year thenended are summarized as follows:

59

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

Net loss for the year
Dividends for first-class preferred stock
based on the resolution at the regular
general shareholders’ meeting
Dividends for second-classpreferred stock based on the
resolution at the regular generalshareholders’ meeting
Amounts not attributed tocommon stock shareholders
Net loss attributable to common stock
Average outstanding numberof shares of common stock(Unit: thousand shares)¥¥(2,845)$(30,578)(1,176)(12,639)(1,278)(13,736)(2,454)(5,299)967,232$(26,375)(56,953)011̲0161301372209.qxd 10.9.14 3:05 PM ページ 60 (1,1)

SENSHU IKEDA HOLDINGS,INC.

Outline of potential shares not included in computing diluted
earnings per share by potential shares since there is no
dilutive effect is as follows:
Ikeda:
3rd unsecured subordinated convertible bonds with
subscription rights to shares
Number of potential shares:
473 thousand
Balance of convertible bonds: ¥5,342 million ($57,416 thousand)Conversion price:¥5,043 ($54.20)
These bonds were fully redeemed before the maturity on
11th September, 2009.
Senshu:First series preferred stock
Number of potential shares:
6,618 thousand
Conversion price:¥308.10 ($3.31)
All the stocks were claimed for conversion by 31st July,2009.
Although potential shares exist, diluted earnings per shareare not presented, since the Company recorded net loss per
share.
Diluted net income per share is computed based on the net
income available for distribution to the shareholders and theweighted-average number of shares of common stock
outstanding during each year after giving effect to thedilutive potential of shares of common stock to be issued
upon the conversion of convertible bonds or the exercise ofstock subscription rights. Diluted net income per share forthe year ended 31st March, 2010 is not disclosed because
net loss was recorded for the year then ended.

(2) Legal form of the business combination
Absorption type merger under which Ikeda was thesurviving company and Senshu was an acquiree
based on the equality policy.
(3) Name of the company after business combination
The Senshu Ikeda Bank, Ltd.
(4) Outline of the transactions including the objectives ofthe business combination
Ikeda and Senshu established the Company on 1st
October, 2009 achieving management integration
aiming to become the best regional financial
institution as an independent financial grouprepresenting the Kansai area. Ikeda and Senshu
merged to maximize the integration effect under theobjective of the management integration.
2. Accounting method
The Company accounted for the business combination asa transaction under the common control in accordancewith “Accounting Standard for Business Combinations”(ASBJ Statement No. 21 issued on December 26, 2008)
and “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10 issued on
December 26, 2008).

Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to thefiscal year.

36. Subsequent Events
Ikeda and Senshu, both of which are wholly owned
subsidiaries of the Company, were merged effective 1st
May, 2010 in accordance with the resolution approving themerger agreement between Ikeda and Senshu at theextraordinary shareholders’ meeting of each subsidiary heldon 13th January, 2010. As a result, Ikeda changed its nameto “The Senshu Ikeda Bank, Ltd.” and took over all theassets, liabilities, rights and obligations of Senshu.
1. Summary of the business combination is as follows:(1) The companies which were the parties of businesscombinations and their business
Ikeda
Ordinary banking business
SenshuOrdinary banking business

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Report of Independent Auditors
Senshu Ikeda Holdings, Inc.

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SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Balance Sheet (Unaudited)
The Bank of Ikeda, Ltd.
As of 31st March, 2010

Millions of yen

Thousands of U.S.
dollars

2010

2010

AssetsCash and due from banks
Call loans and bills bought
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Other assets
Tangible fixed assets
Intangible fixed assets
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets¥

72,737
10,0001,173
619,000830,784
1,670,505
2,751
27,927
21,861
3,116
21,875
17,465(24,457)¥ 2,674,747$

781,782
107,480
12,60764
204,2138,929,320
17,954,696
29,567300,161
234,963
33,490235,113
187,714(262,865)$ 28,748,355¥ 2,314,245
204,670
13,79342
23,000
16,233
377
435
51
386
17,4652,590,701$ 24,873,656
2,199,806
148,248451
247,205
174,473
4,052
4,675
548
4,148
187,714
27,845,023

50,71033,651
7,104
91,466545,034
361,683
76,354
983,082(7,420)(0)(7,421)
84,045¥ 2,674,747(79,750)(0)(79,761)
903,321$ 28,748,355

Liabilities and net assets
Liabilities
Deposits
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Other liabilities
Accrued retirement benefits for employees
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for contingent losses
Acceptances and guarantees
Total liabilities
Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Valuation and translation adjustments:
Net unrealized loss on available-for-sale securities
Net unrealized loss on deferred hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

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Non-consolidated Statement of Operations (Unaudited)
The Bank of Ikeda, Ltd.
For the year ended 31st March, 2010

Millions of yen

Thousands of U.S.
dollars

2010

2010

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities¥

28,021
11,577$301,171
124,430

Other interest income
Fees and commissions

78
8,021

838
86,210

Other operating income

7,974

85,705

Recoveries of written-off claims
Other income

584
3,048

6,276
32,76059,306

637,424

Interest on deposits

6,675

71,743

Interest on borrowings and rediscounts
Other interest expenses

337
1,324

3,622
14,230Fees and commissions
Other operating expenses

3,953
1,551

42,487
16,670General and administrative expenses

26,404

283,791

29
1

311
10

12,54052,818

134,780
567,691

6,488

69,733

Total income

Expenses
Interest expenses:

Loss on disposal of fixed assets
Loss on impairment of fixed assets
Other expenses
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income¥

See accompanying notes to consolidated financial statements

63

SENSHU IKEDA HOLDINGS,INC.

ANNUAL REPORT 2010

45

483

(661)
(615)

(7,104)(6,610)7,104$

76,354

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SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Balance Sheet (Unaudited)
The Senshu Bank, Ltd.
As of 31st March, 2010

Millions of yen

Thousands of U.S.
dollars

2010

2010

AssetsCash and due from banks
Monetary claims bought
Trading account securities
Securities
Loans and bills discounted
Foreign exchange assets
Other assets
Tangible fixed assets
Intangible fixed assets
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets¥

38,87702412,633
1,793,040
2,312
12,855
13,848282
14,347
12,532(8,466)¥ 2,292,266$

417,8520
21
4,435,006
19,271,711
24,849138,166
148,8393,030
154,202134,694(90,993)$ 24,637,424¥ 1,952,575
33,02045,00050,65480,300352
10,00017,744
813
5,619
269
407
12,532
2,209,288$ 20,986,403
354,901
483,662
544,432
863,069
3,783
107,480
190,713
8,738
60,393
2,891
4,374
134,694
23,745,571

55,655
15,054
17,96388,673598,183
161,801
193,067
953,063(5,696)(5,696)82,977¥ 2,292,266(61,220)(61,220)
891,842$ 24,637,424

Liabilities and net assets
Liabilities
Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Other liabilities
Provision for employees’ bonuses
Accrued retirement benefits for employees
Reserve for reimbursement of deposits
Reserve for contingent losses
Acceptances and guarantees
Total liabilities
Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Valuation and translation adjustments:
Net unrealized loss on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

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Non-consolidated Statement of Operations (Unaudited)
The Senshu Bank, Ltd.
For the year ended 31st March, 2010

Millions of yen

Thousands of U.S.
dollars

2010

2010

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities¥

34,4504,395$

370,270
47,237

Other interest income
Fees and commissions

41
5,115

440
54,976

Other operating income

2,603

27,977

Gain on sales of fixed assets
Gain on reversal of reserve for possible loan losses

0
844

0
9,071

Recoveries of written-off claims
Gain on reversal of reserve for possible losses on investment securities

436
128

4,686
1,375

824
48,8408,856
524,935

7,448
270

80,051
2,901

Other interest expenses

631

6,782

Fees and commissions
Other operating expenses

7,042
322

75,687
3,460

General and administrative expenses
Loss on sales or disposal of fixed assets

26,25952

282,233
558

Loss on impairment of fixed assets

885

Expenses for business integration
Other expenses

1,550
7,447

16,65980,040Total expenses
Loss before income taxes

51,034(2,193)

548,516(23,570)

(84)
9,632

(902)
103,525

Other income
Total income

Expenses
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts

Income taxes
Current
Deferred
Total income taxes
Net loss

65

SENSHU IKEDA HOLDINGS,INC.

¥

ANNUAL REPORT 2010

(9,547)(11,741)$(102,611)(126,193)