ANNUAL REPORT

2013

Year Ended March 31,2013

Profile(As of March 31, 2013)

Senshu Ikeda Holdings, Inc.
Establishment: October 1, 2009
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka
Share Capital:¥72.3 billion
Business Activities: Management and other related operations ofbanks and affiliates whose shares can be heldin accordance with the Banking Act and otherrelated operations.
Number of Employees: 117
Tokyo Stock Exchange, Osaka Securities Exchange
Stock Listing:

The Senshu Ikeda Bank, Ltd.
Establishment: September 1, 1951
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka
Share Capital:¥50.7 billion
Deposits:¥4.5128 trillion
Loans:¥3.5630 trillion
Number of Branches: 138
Number of Employees: 2,727

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

CONTENTS

Message from the President .............................................

4

To be the “No.1 Reliable Bankfor the Regional Communities and Customers” ................

5

Management Strategies of The Senshu Ikeda Bank .........

7

Starting The Senshu Ikeda Bank’s“New Three-Year Plan” .....................................................

9

CSR Activities .................................................................. 11
Business Overview of Senshu Ikeda Holdings ................. 12
Business Overview of The Senshu Ikeda Bank ................ 13
Soundness of The Senshu Ikeda Bank’s Operation .......... 16
Corporate Governance ..................................................... 19
Compliance Structure ....................................................... 23
Risk Management Structure ............................................. 25
Approach to Facilitation of Financing ................................ 29
Corporate Data ................................................................. 31
Business Description of the Group ................................... 32
Organization and Board of Directors ................................. 33
Consolidated Financial Informationof Senshu Ikeda Holdings ................................................ 35
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ............................ 69

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20132

This symbol in the shape of Kansai’s six prefectures is suitable for the new financialgroup, leading the Kansai region characterized by a spirit of openness. The vertical lines
stretching upward express the spread of the various networks linking the Kansai areathat were created with the birth of the new financial group.
The brand color is associated with water, a clear blue that symbolizes the growth potential of the new financial group and the corporate culture of unrestricted freedom.

Kyoto

Sanda

Ikeda
Takarazuka

Umeda
Namba
Kobe

Sakai

SuzhouShanghai

Kishiwada

IzumisanoManagement Principle

Strive to become a financial group that is “loved” by the regional
community by providing services tailored to customers’ needs, whilevaluing “broad networks of relationships” and “an enterprising spirit.”

Management Policy

Wakayama

3

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

1. Create a “most trusted by customers” financial group which
respects personal relationships and promotes honest andapproachable banking.
2. Create a financial group with a commanding regional presence byresearching and predicting trends to provide advanced, highquality services.
3. Pursue transparent operations and live up to the trust of theshareholders, while maintaining a competitive edge through strong
financial standing, high profitability and management efficiency.
4. Promote “coexistence with the region” by utilizing industrial,academic and management networks for business matching.
5. Focus on gaining the trust of the community through compliancewith laws and regulations and corporate activities that are considerate of the environment.
6. Provide a workplace for employees of the financial group which
encourages employees to exercise talents and develop skills, with
an emphasis on proactive self improvement, thereby contributing
to the development of upstanding citizens.

To be the “No. 1 Reliable Bankfor the Regional Communities and Customers”
I sincerely thank you for your continued support and patronage of Senshu Ikeda Holdings and the Senshu Ikeda
Bank.
In March of this year, Senshu Ikeda Holdings was no longer an equity-method affiliate of the Mitsubishi UFJ
Financial Group, and this has substantially clarified our “independence.”
Furthermore, three years have passed since the foundation of the Senshu Ikeda Bank by the merger.
We completed system integration in January of last year, and expanded the “Patsat” train station ATM networkfrom the Hankyu/Hanshin Line to the South Osaka area along the Nankai Line as “NBANK” Patsat.
Collaboration with local governments has been expanded to a total of 16 municipalities. As for financial institutions overseas, in addition to three major banks in China, we have tied up with the KASIKORNBANK (Thailand),Bank Negara Indonesia, and the Korea Exchange Bank.
The basic management strategies, consists of the “improved efficiency strategies,” “alliance strategies” and“growth strategies,” have gone well.
Thus we have reached the step to move up to the “rapid progress phase” from the “integration phase” implemented so far, and the Senshu Ikeda Bank has started the “New Three-Year Plan” from this April to faithfully
respond to changes in the external environment,.
The “New Three-Year Plan” aims to enhance our corporate value and contribute to all stakeholders by continuing with the “basic management strategies” while working to “expand market share” and fundamentallystrengthen “group strategies.”
Based on our unwavering “community-oriented” and “customer-oriented” principles, we will make every effort tobe the No. 1 Relational Regional Financial Group in the Kansai Area and to ensure our standing as the “No. 1
Reliable Bank for the Regional Communities and Customers.”
We look forward to serving you with the best services for many years to come.
July 2013

Hirohisa Fujita
Representative Director and President of Senshu Ikeda Holdings, Inc.
Representative Director and President of the Senshu Ikeda Bank, Ltd.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20134

We aim to be the “No. 1 Reliable Bank for the Regional
Communities and Customers” in Japan’s leading market area.
13.49

million720

Metropolitan
Tokyo
12.70 million

Total Populationof Japan126.66 million

thousandMetropolitan
Tokyo
770 thousand

Total Number ofBusinesses in Japan
6.36 million[Population and businesses of a high density equivalent to that in Metropolitan Tokyo]

Advanced Traffic Network(Data Source)
Population = Statistics from the Ministry of Internal Affairs and Communications (2012)
Number of businesses = Statistics from the Ministry of Internal Affairs and Communications (2009)

Ports of Osaka and Kobe, and three airports
in the area
No. 1 in Japan for Asia trade
Osaka/Kobe Ports:
Export/Import
16.06%
Volume Share (with Asia)
Other:
51.73%

Sanda
Kyoto

Nagoya Port:
9.33%

Ikeda

Tokyo Port:
12.14%(Data source)
Trade Statistics of Japan (2011)by the Ministry of FinanceYokohama Port:
9.18%
Moji Port: 1.53%

Kobe
Osaka

Sakai
Beijing

KishiwadahinaSuzhouShanghai G a t e w ay to

A sia

C
and

Four Government-Ordinance-Designated Cities
Wakayama

5

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

The business area we cover comprises an advanced traffic network and includes four government-ordinance-designated cities. The number of business offices within this area along with the population iscomparable with that of Metropolitan Tokyo, with the Ports of Osaka and Kobe and its three airports whichthemselves provide a gateway into Asia and China, regarded as Japan’s leading market area.
Furthermore, in addition to the existing well-balanced industrial structure, large-scale projects are currently
underway in the region, such as the opening of the “GRAND FRONT OSAKA” as a first stage project in the“Umekita” area surrounding Osaka Station in April, and the partial launch of Osaka’s new leading landmark“ABENO HARUKAS” in June. As such, the market is expected to grow further and has extremely high potential, or what we call “Regional Power.”In this environment, we will use its signature strategies, “Three Survival Strategies” and “Three Challenging
Strategies,” to create a “new regional bank model,” to be the “No. 1 Reliable Bank for the Regional Communities and Customers,” and becoming as Japan’s leading regional bank for many years to come.

Strengths of the Senshu Ikeda Bank
Regional Bank

Cycle of co-existence and co-prosperity with the region

Community-oriented

Our mission is to offer the service for the communities
and for the local residents.

Independent Regional Bank Optimized proposals
We will improve our independent brand power andmeet the needs of customers.

Urban Regional Bank

Unique Services

We will take full advantages of our uniqueness to beatcompetitors.

Three Survival Strategies
Community-oriented
Improved
efficiency
strategies

Customer-oriented

Growth strategies (Three Challenging Strategies)

Enhance ability
to contributeto the region

The Bank
itself canalso grow

Able to contributeto regional
revitalization

Increase“regional power”

Asia and China
Business Headquarters
Regional power (regional strength and potential)

Alliance
strategies

Advanced Technology
Business Supporting
Headquarters

PrivateBanking
Headquarters“Serving to revitalize the Kansai region”
Foster “brand image” of the Bank

Proposal Offering Promotion Office(Strengthen organization-wide coordination
to enhance “consultation sales capabilities”)

Become the “No.1 Reliable Bankfor the Regional Communities and Customers”

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20136

Management Strategies of The Senshu Ikeda Bank
Improved efficiency Strategies
Achieving merger synergies and improving administrative efficiencies
Realize merger synergies at an early stage and aim for low-cost operations.
Aim for additional enhancement in operational efficiency through system integration to provide products and services on a common platform.

Alliance Strategies
As an independent regional bank, we are building the “original business network that possesses great flexibility beyond conglomerate groups.”(Local governments, domestic and overseas financial institutions, universities and research institutions, government agencies, etc.)
In addition, to meet the various needs of customers, we will utilize these high-quality collaborative networks to introduce excellent products and services.

Coordination with Local Governments
Beginning with the conclusion of an agreement with
Sakai City in March 2011, we have concluded“Collaborative Agreements for Regional Industrial
Promotion” with a total of 16 municipalities. In
addition, we have established “Industrial Promotion
Funds” in conjunction with these agreements.
We aim to revitalize region communities and improvecustomer service through providing local businesses
with funds, developing “regional brands” andcommunicating these brands throughout Japan.

Legal firms
Accountancy firms
Consultants

Japan Bank forInternational Cooperation
Japanese financial
institutions

International logistics
NIPPON EXPRESS
CO., LTD.

Collaboration with Universities
Through efforts such as “Basic Agreements for
Business-Academia Collaboration,” we have enteredpartnerships with a total of 14 leading universities in
the Kansai region.
We will contribute to the development of local
communities through mutual interchange andrevitalization in various fields including financial
support for university-launched venture companies,
industries, business-academia research, humanresources development, and community building.

Experts

Financial institutions

China and South Korea
Bank of China
Industrial and Commercial
Bank of China Limited
Bank of Communications

Overseas insurance

Nippon Export andInvestment Insurance
Tokio Marine & Nichido
Fire Insurance Co., Ltd.

SuzhouSuzhouPeople’s
Government Representative
Office(Thailand, Indonesia, Vietnam, etc.)

Local bankLocal
institutions

KASIKORNBANK(Thailand)Overseas expansion
Client Companies
Trading companies

Local bank
Bank Negara
Indonesia(Indonesia)

Conclusion of agreement with Ritsumeikan University

Collaboration with Overseas Banks
In addition to three major banks in China, we entered partnerships with local banks in the ASEAN region (Thailand
and Indonesia) last year. In April of this year, we concluded a “Business Cooperation Agreement” with Korea
Exchange Bank, one of South Korea’s major banks.
We will continue to actively support the Asia and China business of our local companies by expanding our networkin the Asia and China region.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Korea Exchange
Bank

ASEAN

Japanese companies

7

Local bank

Local banks

SENSHU IKEDA HOLDINGS,INC.

Three Challenging Strategies
Asia and China Business Headquarters: Enhance support capabilities for the Asia and China businessWe will provide detailed, broad and concrete support for the overseas expansion and trade of local companies throughutilizing the collaborative networks between business enterprises, banks, and legal firms.
We will work to provide our customers with useful information and services such as seminars with local governments andchambers of commerce and industry, overseas missions, and import product expositions.

Advanced Technology Business Supporting Headquarters: Promotion of industrial-academia-government collaboration and support for advanced technology companies
We will work to support growing companies with advanced technologies, start-up business, and the creation of new industries by means such as utilizing andexpanding close networks between countries, local governments, universities, and public research (support) organizations, etc. and operating grant program systems(New Business Grant Program, Consortium-based Research & Development Grant Program) and technology matching to companies applying for our grants.

Private Banking Headquarters: Promote private banking business
Our experienced “private bankers” provide our customers with “custom-made” services in order to meet thevarious needs such as business succession, asset succession, fund management, M&As, loan arrangement
and investment trust agent operations from a “professional” “long-term” and “wide-range” perspective.

Lease and Credit

Life and Non-life Insurance
Public Assistance Agencies
The Kansai Bureau of Economy, Trade and Industry
National Institute of Advanced Industrial Scienceand Technology
Organization for Small & Medium Enterprises andRegional Innovation, JAPANMitsubishi UFJ Lease &Finance Company Limited
IBJ Leasing Company, Limited
JACCS CO., LTD.
JCB Co., Ltd.
Visa Inc.

Life Insurance:
Domestically and internationallyNon-life Insurance:
Domestically and internationallyManagement support,
technology
development support

Product provision(Insurance)

Securities Companies andInvestment Companies
Securities companies
Investment companies:
Domestically and internationally

Asset based lending,card, leasing
Product provision(Investment trusts)

Senshu Ikeda
Bank GroupBanks

Total support in alliance
Personnel exchange, personnel training
Investment promotion, coordinated investment

Think Tank
Proposals and consulting

Mitsubishi Research Institute, Inc.
Japan Economic ResearchInstitute Inc.
Mitsubishi UFJ Research andConsulting Co., Ltd.

Responding to sophisticated needs
The business-academia collaboration

Megabanks
Development Bank of Japan Inc.
Japan Bank for International Cooperation
The Shoko Chukin Bank, Ltd.
Other regional banks

Collaboration for regional industrial promotion
Experts

Universities
Kyoto University, Osaka University, Kobe University,
Wakayama University, Osaka Prefecture University,
Osaka City University, University of Hyogo,
Kwansei Gakuin University, Konan University, Doshisha University,
Kansai University, Kinki University,
Ryukoku University and Ritsumeikan University

Local governments

Lawyers
Accountants
Tax accountants

Sakai-city, Mino-city, Itami-city, Kishiwada-city, Toyonaka-city,
Kawanishi-city, Ikeda-city, Suita-city, Settsu-city, Izumi-city,
Kaizuka-city, Izumisano-city, Matsubara-city, Takarazuka-city,
Takaishi-city, and Kumatori-town

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20138

New Three-Year Plan

Starting the Senshu Ikeda Bank’s “New Three-Year Plan” to become
the “No. 1 Relational Regional Financial Group in the Kansai Area”
New Three-Year Plan
March 2011

Bank merger(May 2010)

March 2012

March 2013

System integration(January 2012)

Integration phase

March 2014

March 2015

March 2016

Excluded from an equity method affiliate(March 2013)

Rapid progress phase

MergereffectManagement strategies
Asia and China business
GrowthAdvanced technology businessstrategies Private banking business

Improved efficiency strategies
Alliance strategies

Start of
Increase of corporate value“New Three-Year Plan”
Contribute to all stakeholders
in April 2013
Expansion of market share Introduction of new products and services
Expanding fee-based businesses and establishing them as main businesses
Maximize merger effect through BPR and facility integration
Relational regional financial group

Group strategy Integrated operations as a group and independent accounting system

The basic management strategies, consists of the “improved efficiency strategies,” “alliance strategies” and “growth strategies,” have gone well.
We will inherit these basic management strategies, as well as work to “expand market share” and fundamentally strengthen “group strategies.”
We have worked to improve local brands in order to realize “co-existence and co-prosperity with the region,” whileproviding the regional customers with our “unique products and services” and “original proposals.”Through these activities, local brands and the “Senshu Ikeda brand” have steadily become widespread through theregion and customers, and we have received recognition that our presence have been increasing.
Based on the above, we intend to expand the Group’s market share in the region through the implementation of the “NewThree-Year Plan.”
Expansion of Market Share
We have expanded the “Patsat train station ATM” and “multi-functional integrated IC card” from the Hankyu/Hanshin
Line to the “South Osaka area” on the Nankai Line. We will work towards expanding partner train lines in the future.
We will strive to further expand our business base and become the main bank for family finances through utilizing the Basic Agreements for Business-Academia
Collaboration with leading universities in the Kansai region and Collaborative Agreements for Regional Industrial Promotion with the local governments, etc.
We aim to acquire new financing clients by means such as promoting “the Bank’s capabilities to offer original proposals” using our three strategic headquarters andthe function of the Group, and focused investments on the growth fields of medical treatment and nursing care, environment and special international strategic areas.
Strengthen Group Strategy
For the purpose of regional revitalization and supporting business revitalization, we formed business alliance with ORIX Corporation and J-Will Partners, Co., Ltd., and established
two business revitalization subsidiaries in January of this year. In addition, through a joint investment with Tokai Tokyo Financial Holdings, Inc., we plan to establish a “securities
subsidiary” in this fall which will be affiliated with the Senshu Ikeda Holdings, Inc. We will be the first regional bank in the Kansai region that establish a “securities subsidiary.”
We will work towards enhancing its proposal capabilities, product development capabilities and profitability on a consolidated basis through strengthening the Group companies
functions such as leasing subsidiaries and system development companies,.

9

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

A goal to reach for in three years
Through these efforts, under the “New Three-Year Plan,” we aim to become the “No. 1 Relational Regional Financial Group in the KansaiArea” that is indispensable for the region, based on its strong “regional relations,” its original “Group functions” and variety of “alliances.”
In addition, the Group will work to enhance its corporate value and make concrete contributions by living up to the expectations of all
stakeholders including customers, regional communities, shareholders, investors and employees.

A goal to reach for

No. 1 Relational Regional Financial Group in the Kansai Area
No. 1 Reliable Bank for the Regional Communities and Customers

High quality productservice network in order
to contribute to the region

Strengthen profitability
in order to contributeto the region

Original “Group functions”
Strong “regional relations”

Variety of “alliances”

Core banking profit

Core OHR

Core equity capital ratio

60% level

10% or higher

Net income¥21.0 billion or more ¥15.0 billion or more

To become a financial group that is loved and the most trusted by the regional customers
SIHD Group’s
corporate social
responsibility (CSR)

Regional
communities

Customers
Exercise its financial
intermediary function

Shareholders
and investors

Employees

Contribute to the region Improve corporate value Improve job satisfaction

The Senshu Ikeda Bank’s Management Targets in Three Years
As of the end of March, 2013

As of the end of March, 2016

Deposits¥4.5 trillion¥4.8 trillion

Loans and bills discounted¥3.6 trillion¥3.8 trillion

Balance of securities¥1.2 trillion¥1.3 trillion

Investment trust sales¥111.8 billion¥170.0 billion

Insurance sales¥90.7 billion¥90.0 billion

Core banking profit¥13.1 billion¥21.0 billion or more

Net income¥8.0 billion¥15.0 billion or moreCore OHR

78%

60% level

Personnel

3,850 persons

3,600 persons

Capital ratio

10.39%

10% or higher
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201310

CSR Activities
The Stance of Senshu Ikeda Holdings towards CSR Activities
The Group strives to become “a financial group that is loved by the regional customers andthe most trusted by the regional communities” based on its management principle.
The Group also considers its CSR activities to be living up to the expectations of
all stakeholders including customers, regional communities,
shareholders and employees mainly through its business activities.
We will continue to aggressively conduct CSR activities through carrying out
the activities done until now “permanently” and “more deepening.”
CSR: Corporate Social Responsibility

Contribute to the economy,
community andenvironment

Hospitality basedon the stageof life

Customers

Management
principle

Regional
communities

To become a financial group that is loved by the regionalcustomers and the most trusted by the regional communities

Live up to the expectations of all stakeholders mainly throughits business activities as a provider of regional finance

Shareholders
andinvestors
Stable dividend
Consideration of shareholder
return ratio, etc.

11

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Employees

Improve job satisfaction
Establish ideal working
environments andgrowth supportingWork-life balance

SENSHU IKEDA HOLDINGS,INC.

Business Overview of Senshu Ikeda Holdings
Consolidated

Non-consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2011

Fiscal year 2012

Ordinary revenue

115,952

111,558

Ordinary expenses

105,047

98,752

Ordinary income

10,90512,806

Net income

3,810

10,102Business Environment

Although the Japanese economy in the first half of the consolidated
fiscal year 2012 showed signs of a strong upturn in terms of domestic demand supported by increasing restoration demand both in the
public and private sectors, it began to soften in the second half ofthe year due to the decrease in exports and in mining and manufacturing production in the wake of the economic slowdown overseas.
With respect to prices, consumer prices (excluding fresh food)have turned to a negative figure compared to the previous fiscal year
since July.
In the financial markets, the unsecured overnight call rate
generally stayed at a level below 0.1% because the Bank of Japan
continued to provide sufficient funds to the market.
Meanwhile, mounting concerns over the re-election in Greece
and problems with the financial system in Spain once again forced
investors to resort to risk-hedging behavior, dragging down the rateof return on 10-year Japanese government bonds from early spring
to the end of the year. Subsequently, it dropped even further to the
0.5% level by the end of March, amid anticipation of the implementation of bold monetary easing policies by the Bank of Japan in orderto lead the economy out of deflation.
Stock prices had hovered below the 9,000 yen mark due to thesustained soaring yen until the beginning of fall. However, with theinauguration of the new administration, the market bounced backand shifted toward cheaper yen and bolstered stock market, and by
the end of March, prices had recovered and closed above the 12,000
yen mark.

Business PerformanceWith regard to consolidated performance of Senshu Ikeda HoldingsGroup (“the Group”), consolidated ordinary revenue for the fiscal
year under review decreased ¥4.4 billion from the fiscal year 2011 to¥111.5 billion as a result of an increase in fees and commissions
reflecting an increase in sales commission for assets in custody,
surpassed by a decrease in interest income due primarily to decline
in yields on loans and gain on securities. On the other hand, consolidated ordinary expenses decreased ¥6.3 billion from the fiscal year
2011 to ¥98.7 billion, mainly due to a decrease in interest expenses
resulting from lower yields on funding, primarily deposits and negotiable certificates of deposit, along with a decrease in general andadministrative expenses due primarily to a decrease in costs related
to system integration.
As a result of the preceding factors, consolidated ordinary
income for the fiscal year under review increased ¥1.9 billion fromthe fiscal year 2011 to ¥12.8 billion, and net income for the fiscal year
after recording a total of ¥2.7 billion in extraordinary income or loss
and income taxes increased ¥6.3 billion from the fiscal year 2011 to¥10.1 billion.
On a non-consolidated basis, Senshu Ikeda Holdings (“theCompany”) posted operating revenue of ¥6,434 million, mainly due
to dividends from its subsidiary bank. At the same time, the Company recorded operating expenses, including selling, general andadministrative expenses of ¥738 million, resulting in operating
income of ¥5,695 million. Furthermore, non-operating expenses
reached ¥52 million mainly due to amortization of deferred organization expenses, consequently posting net income of ¥5,649 million for
the fiscal year 2012.
In respect of the dividend of retained earnings for the fiscal year
under review, based on the basic policy and in consideration of its

n Summary of Profit and Loss
Items

Fiscal year 2011(¥ million)

Fiscal year 2012

Operating revenue

7,206

6,434

Operating expenses

808

738

Operating income

6,397

5,695

Ordinary income

6,340

5,664

Net income

6,334

5,649

overall business performance and the current management environment, the Company decided to pay dividend of ¥15.00 per common
stock. With regard to first-class preferred stock and second-classpreferred stock, the Company plans to pay the amount of ¥980.00
divided by 18.5 and ¥1,020.00 divided by 18.5 for each stock
respectively, in accordance with the provisions of the Articles ofIncorporation.

Matters to Be Addressed

The Group’s operating bases called the Osaka Bay area are regarded as Japan’s leading market area, with the Ports of Osaka and Kobe
and three airports, and the population and businesses of a highdensity equivalent to that in Metropolitan Tokyo.
Our mission is to facilitate regional revitalization as a regional
financial institution group through fulfilling “Regional Power (economic potential)” and to that end, we have committed to pursuing our“business model (community-based financing)” through actively
taking the initiative in enhancing the “Regional Power,” and thereby
we will be able to grow up with the region.
In order to put this business model into practice, we set up theGroup’s management strategies; “Exhaustive Efficiency,” “Promotionof Business Alliances” and “the Three Challenging Strategies toEnhance Competitiveness (Growth Strategies).”
As for “Exhaustive Efficiency,” we intend to realize low-cost
operation by an integrated review of the administrative framework
and personnel strategy, along with operational streamlining including
elimination of duplicate process through reviewing the work process.
With regard to “Promotion of Business Alliance,” we will provide
high quality products and services meeting needs of our customers
through capitalizing on our original network that possesses great
flexibility beyond conglomerate groups, as an independent financial
institution.
In pursuit of “the Three Challenging Strategies to Enhance ourCompetitiveness (Growth Strategies),” we are committed to enhancing our customer services by focusing on our challenging strategies
of “community-oriented” and “capabilities to offer original proposals”
through the efforts of the three strategic headquarters (Asia andChina Business Headquarters, Private Banking Headquarters andAdvanced Technology Business Supporting Headquarters), underthe motto of “Kindness and Innovation.”

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 ourshareholders, whilst sustaining a sound financial standing throughthe enhancement of an adequate retained earnings base andkeeping up the policy of stable dividends.
In respect of the dividend of retained earnings for the fiscal year
under review, based on the basic policy and in consideration of its
overall business performance and the current management environment, the Company decided to pay dividend of ¥15.00 per common
stock. With regard to first-class preferred stock and second-classpreferred stock, the Company plans to pay the amount of ¥980.00
divided by 18.5 and ¥1,020 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.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201312

Business Overview of The Senshu Ikeda Bank
Consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2011

Fiscal year 2012

Ordinary revenue

116,007

111,597

Ordinary expenses

105,214

98,848

Ordinary income

10,792

12,749Net credit costs

12,18912,261n Net income(¥ million)

12,00010,095
9,000

7,652

6,000

3,770
3,000

Net income

3,770

10,0950March 2011

March 2012

March 2013

Non-consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2011

Fiscal year 2012

Gross profit

74,051

69,022

Net interest income

60,143

55,109Net fees and commissions income

2,911

4,662

Net other operation income

10,995

9,251

Expenses

50,75947,642

Personnel expenses

24,76023,821

Non-personnel expenses

23,252

21,670Core banking profit

14,031

13,163

Banking profit

20,881

24,460Ordinary income

7,716

9,492

Net credit costs

9,379

9,255

Net income

2,050

8,075

n Core banking profit(¥ million)n Banking profit

22,113

20,881

20,00015,00010,0005,000

0March 2011

March 2012(¥ million)

8,075

6,321
14,031

15,00013,1636,000

10,000

4,000

5,000

2,000

March 2011

March 2013

n Net income

16,477

13

24,46025,0008,000

20,0000(¥ million)

March 2012

March 2013

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

0

2,050

March 2011

March 2012

March 2013

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated

n Deposits

4,500(¥ billion)

4,512.8
4,357.0

n Deposits held by individuals

4,000

4,407.7

3,562.6
4,000

3,500

3,500

3,000

0

End of March 2011 End of March 2012 End of March 2013n Loans and bills discounted
Non-consolidated(¥ billion)

3,596.7
33.7

3,619.5

End of March 2011 End of March 2012 End of March 2013n Housing loans(¥ billion)

1,800

1,753.8

3,527.4

1,720.2

3,500

1,721.0

1,700

3,400

3,563.0

3,300

0

0

3,566.8

Business rehabilitation subsidiaries

3,600

3,512.3(¥ billion)

1,600

1,500

Including two businessEnd of March 2011 End of March 2012 rehabilitation subsidiaries
End of March 20130

End of March 2011 End of March 2012 End of March 2013

Business Performance(Summary of Profit and Loss)
With regard to consolidated performance of the Senshu
Ikeda Bank Group (“the Bank Group”), ordinary revenue
for the consolidated fiscal year under review was¥111,597 million, including interest income of ¥64,387
million, fees and commissions of ¥17,914 million, otheroperating income of ¥16,543 million, and other income of¥12,752 million. Ordinary expenses were ¥98,848 million,
including interest expenses of ¥9,382 million, fees andcommissions expenses of ¥6,095 million, other operating
expenses of ¥7,290 million, general and administrative
expenses of ¥53,814 million, and other expenses of¥22,264 million.

As a result of the factors above, the Bank Group
posted ordinary income of ¥12,749 million, and income
before income taxes and minority interests was ¥13,173
million after recording extraordinary income or loss. Net
income for the fiscal year was ¥10,095 million after
allocated total income taxes of ¥2,769 million andminority interests in income of ¥308 million.
On a non-consolidated basis, gross profit was¥69,022 million. After deducting personnel expenses
and non-personnel expenses, as well as provision forgeneral reserve for possible loan losses, banking profit
was ¥24,460 million.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201314

n Assets in custody sales
Investment trusts sales(¥ billion)
Public bonds sales

240Life insurance salesn Soundness of the assets
Status of credits disclosed under the Financial
Revitalization Law

214.7

Non-consolidated

Business rehabilitation subsidiaries

100
180

169.6

169.0

111.8
73.5

66.7

4.6

12.8

12.1

90.8

90.0

90.7

(¥ billion)

86.1

80

20.3

64.7

63.0
60

120

60

40
65.8
20
0

0

March 2011

March 2012

March 2013n Balance of Securities(¥ billion)

End of March 2011

End of March 2012

1.76%

1.81%

NPLs ratio

1,203.7

1,193.1

1,081.5
1,000

Bankruptcy andquasi-bankrupt credit
Doubtful credit
Substandard credit
Total
Normal credit

750

Secured amount

Coverage ratio

11.2

11.2

100.00%

42.7

39.5

92.54%

11.8

6.1

51.92%

56.9

86.52%

65.8
3,532.7

Amount of loans
250

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

End of March 2011 End of March 2012 End of March 2013

Secured amount

Coverage ratio

11.7

11.7

100.00%

60.0

54.3

90.56%

Substandard credit

14.3

7.3

50.99%

Total

86.1

73.4

85.25%

Bankruptcy andquasi-bankrupt credit
Doubtful credit

Normal credit

The Bank posted ordinary income of ¥9,492 million
after moderated NPL write-offs and nonrecurring income
or loss, such as gains or losses on stock to banking
profit. After allocating extraordinary income or loss andincome taxes, net income for the fiscal year under review
was ¥8,075 million.

(Assets and Liabilities)
The balance of deposits at the end of the consolidated
fiscal year under review was ¥4,495.9 billion.

15

2.37%

(Reference)(Aggregated including business rehabilitation subsidiaries)(¥ billion)


500

0

End of March 2013

Coverage of credits disclosed under the Financial Revitalization
Law (End of March 2013)(¥ billion)
Non-consolidated
Amount of loans

1,250

Including two businessrehabilitation subsidiaries

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

3,546.2

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

The balance of loans and bills discounted at the endof the consolidated fiscal year under review was¥3,588.2 billion.
The balance of securities at the end of theconsolidated fiscal year under review was ¥1,169.2
billion.
On a non-consolidated basis, the balance of deposits
increased ¥105.1 billion from the end of the previous
fiscal year to ¥4,512.8 billion. The balance of loans andbills discounted increased ¥35.6 billion from the end of
the previous fiscal year to ¥3,563.0 billion, and thebalance of securities decreased ¥10.6 billion to ¥1,193.1
billion.

SENSHU IKEDA HOLDINGS,INC.

Soundness of The Senshu Ikeda Bank’s Operationn Self-assessment results, and categories and coverage by disclosure standard(1) Self-assessment
In order to ensure soundness of the operation, the Bank
classifies its claims according to its in-house rule based on
the “Financial Inspection Manual” prepared by the Financial
Services Agency. This process is called “self-assessment”.
At first part of the self-assessment, the Bank classifies
borrowers into five classifications of “bankrupt borrowers,”“effectively bankrupt borrowers,” “potentially bankrupt
borrowers,” “borrowers requiring caution (including
borrowers requiring special caution and others)” and“normal borrowers” (See Table 1) according to theirfinancial standing and management condition. Then theclaims held by the Bank are classified into four categories
of “No asset classification,” “Category II,” “Category III” and“Category IV,” in reference to the above five classificationsof borrowers but also based on the probability of recovery
through security and/or guarantee (See Table 2).
The Bank can grasp the value of its claims by suchclassification/category of claims according to its own
standards.

l Five classifications of borrowers (Table 1)
Classification

Description

Bankrupt

Borrowers who are in bankrupt legally and formally.

Effectively
bankrupt

Borrowers who are not yet in bankrupt legally or formally, but are recognized that they have no prospect ofreconstruction or rehabilitation of their business.

Potentiallybankrupt

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.

Watch list

Borrowers whose lending conditions is concerned, and repayment of principal or payment for interest is notaccording to the schedule as contracted, or financial situation is not prosperous that their situation requires tobe addressed and managed.

Requiring
special caution

Loans past due three months or more, or restructured loans.

OthersOther borrowers requiring caution.

NormalBorrowers whose business is prosperous and their financial situation has no particular concerns.

l Four categories of assets (Table 2)
Category

Definition

Description
Claims provided to “normal borrowers,” orNo assetclassification

Assets with no risk of becoming irrecoverable or of its
asset value impaired

Category II

Assets such as claims with higher than normal perceived
risk of becoming irrecoverable due primarily to thereasons such as the conditions for ensuring the recovery
of claim not fully met, or quality of credit being questionable

Category III

Assets with high risk of involving loan loss because ofserious concerns about its eventual collectability or
value, and that such loss is not reasonably estimable

Category IV

Assets determined as irrecoverable or of no value

Claims provided to borrowers other than “normal
borrowers” that are backed up by superior security
or guarantee including deposits as collateral
Claims provided to “watch list borrowers” classified
as other than No asset classification, orClaims provided to “potentially bankrupt
borrowers,” “effectively bankrupt borrowers” and“bankrupt borrowers” secured by general collateralor guarantee such as mortgage collateral
Claims provided to “potentially bankrupt borrowers”
that fall into neither of No asset classification nor
Category II, or
Difference between estimated collateral value andestimated disposable value, of the claims provided
to “effectively bankrupt borrowers” and “bankrupt
borrowers”
Claims provided to “effectively bankrupt borrowers”
and “bankrupt borrowers” that fall into neither of No
asset classification, Category II nor Category III
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201316

l Relationship between borrower classification and asset category
Classification

Category
No asset classification

Bankrupt
Effectively
bankrupt
Potentiallybankrupt
Watch list

Requiring
special caution

Claims provided to borrowers other than “normal
borrowers” that arebacked up by superior
security or guarantee
including deposits as
collateral

Category III

Category IV

Claims provided to “bankrupt borrowers,”“effectively bankrupt
borrowers” and “potentiallybankrupt borrowers”
secured by generalcollateral or guaranteesuch as mortgage collateral

Difference between estimatedcollateral value and estimateddisposable value, of theclaims provided to “bankrupt
borrowers” and “effectively
bankrupt borrowers”

Claims provided to “bankrupt borrowers” and“effectively bankrupt borrowers” that fall into neitherof No asset classification,
Category II nor Category III

Claims that fall into neitherof No asset classification
nor Category II

Claims classified as otherthan No asset classification

Other borrowers
requiring caution

NormalCategory II

Claims provided to “normal borrowers”(2) Reserves and write-offs based on the results of self-assessment
Reserves are set aside based on the results of the selfassessment (reserves for possible loan losses are set aside in
the event the loan goes irrecoverable).
“Specific reserves for possible loan losses” are provided
for bankrupt borrowers, effectively bankrupt borrowers andpotentially bankrupt borrowers, while “general reserves forpossible loan losses” are provided to watch list borrowers andnormal borrowers.

Meanwhile, the Bank may need write-off (reduction ofbalance sheet assets which is posted as loss). Results of selfassessments as well as reserves and write-offs, are subject tointernal audit by the independent Internal Audit Division as well
as external audit by the audit corporation, in order to ensure
objectivity.

l Standard for reserves and write-offs
Classification

Category
No asset classification

Category II

Bankrupt

Secured by collateral and/or guarantee
Potentiallybankrupt

Watch list

17

Category IV

Amount equivalent to the expected loss which isassumed by the size of whole claim for each borrower,
can be set aside as specific reserves for possible loan
losses, or can be directly written off.

Effectively
bankrupt

Estimating expected loss for the next three years, or the
average remaining outstanding period based on the informaRequiring
special caution tion including the historical loan-loss ratio, amount equivalent
to which is posted as general reserves for possible loan losses.
Estimating expected loss for the next one year, or the average
Other borrowers remaining outstanding period based on the information
requiring caution including the historical loan-loss ratio, amount equivalent towhich is posted as general reserves for possible loan losses.

NormalCategory III

Estimating expected loss forthe next one year based on
the information including thehistorical loan-loss ratio,
amount equivalent to which isposted as general reserves
for possible loan losses.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Estimating expected loss forthe next three years for eachborrower, based on theinformation including thehistorical loan-loss ratio,
amount equivalent to which isposted as specific reserves
for possible loan losses.

SENSHU IKEDA HOLDINGS,INC.

(3) Relationship between self-assessment and the disclosed claims
Claims disclosed under the Financial Revitalization Law (claims
disclosed according to Financial Revitalization Law), riskmonitored loans (claims disclosed under the Banking Law) andthe claim corresponding to the borrower classification underthe Bank’s self-assessment, are different from one another intheir scopes of claims and classification methods. Theirtrilateral relationship is as follows.

l Relationships between self-assessment, claims disclosed under the Financial Revitalization Law andRisk-Monitored Loans (End of March 2013)(¥ billion)

Borrower classification under self-assessment
guidelines (Credit exposures)
Category
Classification
No
asset
Category
Category Category
Outstanding loansclassification
II
III
IV
Bankrupt

4.6

Effectively
bankrupt6.5

0.7

1.8

3.9

—
(0.1)

—
(—)

4.6

—
(0.8)

—
(0)

23.6

15.9

Requiring special
caution24.9

1.4

23.4

Other borrowers
requiring caution
212.9

89.3

123.5

Watch list

Potentiallybankrupt42.7

NormalTotal

3,306.7

3,598.6

3.1(14.1)

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

Doubtful

42.7

Substandard
11.8
Subtotal
65.8

3,532.7

3,306.7

171.5

10.1

3.1
(15.1)—(0)

1.1

100.00%Classification

Outstandingbalance of loans

Loans tobankrupt
borrowers

4.6

Delinquent
loans

48.8

11.2

Normal

3,423.8

Risk monitored loans
under the Banking Law

Total

3,598.6

25.4

14.1

92.54%

2.6

3.5

51.92%

Loans past due three months or more

Restructured loans

0
11.8

38.2

18.7

86.52%

Total

65.3

Notes: 1.	Credits include: Corporate Bonds (when financial institutions holding thebonds guarantee all or part of the repayment of principal and payments
of interest, when such bonds are issued through private placement inaccordance with the Article 2, paragraph 3 of the Financial Instruments
and Exchange Act (No.25 in 1948)); Loans and bills discounted; Foreignexchanges; 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 or lease contracts,) which are required to be stated in a noteto the Balance Sheet.
2.	The figures in the parentheses under Borrower classification under selfassessment guidelines represent reserved amounts for classified loans.
All amounts for Categories III and IV for borrowers in bankrupt and effectively bankruptcy are reserved.

n Capital ratio
Capital ratio -calculated as the ratio of capital (common
stock, etc.) against the risk assets (assets includingloans)- is one of the important measures indicating thereliability and soundness of a bank’s management.
The Bank’s capital ratio was 9.91% as of March 31,
2013,which is beyond 8% required under the uniform
international standard, let alone the 4% required under
the domestic standard.

l Capital ratio (domestic standard, non-consolidated)

12.00

10.54

10.66

(%)

9.91

8.00

4.00

0.00

End of March 2011 End of March 2012 End of March 2013
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201318

Corporate Governance

The Company is a holding company which has subsidiaries such as
the Senshu Ikeda Bank. In light of the public nature of our operation
as a regional financial institutions group, the Company is focused onan adequate development and maintenance of corporate governancestructure, which is one of the crucial management tasks.
Under the policy, the Company aims to be the trustworthy andindispensable institution for all of our stakeholders including customers and employees, as well as shareholders and investors. To thisend, the Company adopts the basic management policies focused oncompliance (with laws and regulations,) risk management and management transparency through emphasizing contribution to theregional communities, and sustaining management soundness andindependence.

Outline of Corporate Governance Structure
The Company has adopted a corporate governance structure forsustainable enhancement of its corporate value through reinforcing
supervision of management by electing the outside directors andcooperating with the Audit & Supervisory Board.
Specifically, directors who are familiar with banking business- involving complex and sophisticated management decisions - supervise business execution of representative directors, while audit &supervisory board members audit business execution of directors
through attendance to important meetings and inspection of critical
documents. The Company reinforces its corporate governancestructure through outside directors and outside audit & supervisoryboard members who possess well-seasoned characters and insights
presenting meetings including the Board of Directors and expressing
their opinions actively.
Furthermore, with the purpose to enhance transparency andobjectivity of management, the Company has established an 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 othermatters concerning general management of the Company.
The Company has concluded liability limitation agreement withoutside directors and outside audit & supervisory board members.
Under this agreement, their liabilities to the Company are restricted tothe minimum level as required by the applicable laws and regulations.
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 criticalmanagement issues while receiving relevant reports from within thecompany, and supervising the business execution of directors andexecutive officers under the rules of the Board of Directors. The
Board of Directors is held once a month in principle, attended also
by audit & supervisory board members, to make decisions in due
consideration of compliance and risk management.
The Audit & Supervisory Board
The Company has adopted a audit & supervisory board member
system. Under this system, the Company ensures transparency
through appointing two outside audit & supervisory board membersof the four audit & supervisory board members in all. Each audit &supervisory board member audits business execution of directors
through attendance to important meetings including the Board of
Directors and the Management Committee, inspection of critical
documents and other means, according to the auditing guidelines
and audit schedule decided by the Audit & Supervisory Board.
Outside audit & supervisory board members are qualified with high19

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013degree of integrity along with superior insight and capability, as well
as expertise and hands-on experience in respective area of specialty, providing advice on management from diversified points ofview.
Management Committee
With the purpose to make more adequate and prompt management
decisions in the execution of company business, the Management
Committee has been established under the Board of Directors,
which makes 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 audit & supervisoryboard members, to make decisions in due consideration of compliance and risk management.
Internal control, management and auditing functions
For the purpose of internal control, management and auditing
functions, the Company has established Corporate Planning
Division, General Risk Management Division and Internal Audit
Division.
The Corporate Planning Division is the department responsible
for the coordination of internal control, for the purpose of Companies
Act and Financial Instruments and Exchange Act. The General Risk
Management Division is responsible for compliance managementthat serves as a linchpin for internal management. Measures forcompliance are planned and their implementation status is managed under the compliance program approved by the Board of
Directors. Furthermore, the General Risk Management Division, as
an overall supervisory function of risk management, is responsible
for regular 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 forcoordinated management of the overall internal audit work acrossthe 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, and provides specific instruction and advice to improvebusiness operation at concerned subsidiary.
Accounting auditors
Mr. Kenichiro Arai, Mr. Hisashi Tsurumori and Ms. Mayumi Ikai are
the certified public accountants that conducted the latest accounting audit of the Company, while accounting auditors that conduct
audits of the Company for the purpose of 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 the audit of the Company for longer than seven years on
continuous basis, hence no statement in respect of the number ofcontinuous years of service engaged in the audit of the Company.
Assistants for the accounting audit of the Company are fourteen
certified public accountants and four others.
(Certified public accountant Kenichiro Arai replaced Tamon Tsuda
on July 2.)
Basic approach to the internal control system and its status ofdevelopment
The Company as well as the Group is developing a structure necessary to ensure the adequacy of operation based on the following
concepts through aiming to be a financial group which respects
personal relationship, sincerity and friendliness and become the most“trustworthy” for customers.

SENSHU IKEDA HOLDINGS,INC.

(1)	Structure to ensure that directors and employees execute businessin compliance with laws and regulations as well as the articles ofincorporation
The Company and the Group focus on compliance with laws andregulations (hereinafter “compliance”) as one of the most criticalmanagement task. The Company and the Group also set out thecode of ethics along with the code of conduct to ensure that directors and employees behave in compliance with laws andregulations as well as the articles of incorporation and othercompany rules, while setting out basic rules of compliance underwhich overall compliance policies and specific measures are
discussed at the Compliance Committee.
To ensure the above compliance implementation, the Company and the Group appoint directors who are responsible forcompliance. In addition, the General Risk Management Division
coordinates compliance arrangement across the Company and
the Group, while conducting education and training for directors
and employees by developing compliance program and compliance manual, and arranging compliance seminars.
Furthermore, a hot line has been set up and managed inorder to allow employees to directly provide information about anyquestionable conducts in light of laws and regulations.
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 and organizations thatthreaten the order and safety of the community, while making
every effort to eliminate their involvement in any trading activities.
The Company and the Group have also taken every measure toeliminate money laundering in consideration of the possibility thatfunds 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, with the
purpose to reassure our customers of their security and topromote their convenience in an effort to implement a thorough‘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 and kept
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 stablecorporate earnings, the Company and the Group has set out
basic rules of risk management. The Company and the Group
have also classified risks into credit risk, market risk, funding
liquidity risk and operational 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 ofrisk management, with the purpose to minimize the financial loss
along with loss of confidence resulting from the crisis event, andto 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 Committeewith the purpose to enable directors to efficiently execute theirbusiness, while setting out management objectives and developing management plans.
The Management Committee discusses beforehand the agenda of the Board of Directors, to facilitate decision-making process
at the board meeting, while discussing the critical issues in
implementing the basic management policies decided by the
Board of Directors on the basis of such policies.
The Management Committee also defines the headquarters
under the command of each director, along with the authority andresponsibility involved, while developing and maintaining a
structure for efficient business 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 affiliated companies as
one group under the flag of Senshu Ikeda Holdings. Thus eachmember company of the Group runs its operation through developing an adequate internal management structure according to
its scale and nature of operation under the adequate guidance of,and in coordination 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 business with its subsidiaries andaffiliates.
(6)	Arrangement for employing staff at the request of audit &supervisory board members as their assistants, as well as thearrangement to ensure such assistants’ independence fromdirectors
In order to support audit & supervisory board members’ businessexecution, the Company and the Group employ audit & supervisory board members’ staffs as secretariat for the Audit &Supervisory Board. Such audit & supervisory board members’
staffs receive instructions from the Audit & Supervisory Board fortheir business execution, while their personnel change andevaluation duly reflect the opinions of the Audit & Supervisory
Board.
Thus the Company and the Group ensure their independence
from directors.
(7)	Structure to facilitate reporting from directors and employees toaudit & supervisory board members and other arrangement toensure that audit & supervisory board members are adequately
informed
Directors and employees shall immediately report to audit &supervisory board members on matters that could have significant
impact on the Company as well as the Group, or any other matters
as necessary, in addition to matters legally required to be reported.
To reinforce this arrangement, the Company and the Groupdevelop a structure that audit & supervisory board members 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 audit & supervisory board members
conduct effective audits
Audit & supervisory board members hold meetings to exchange
opinions with representative directors, internal audit division andaccounting auditors.
Audit & supervisory board members attend important meetings such as the Board of Directors, the Management Committee,
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201320

the Compliance Committee, the Risk Management Committee andthe ALM Committee, in an effort to find out various problems theyneed to address in the execution of their duties.

Status of Internal Audits and Audits by Audit & Supervisory Board Members
Internal audits
The Company has established the Internal Audit Division that
conducts internal audits based on the basic rules of intra-groupaudits, set out to provide objectives and guidelines of internal
audits. The Company develops effective internal audit structure that
has independence and expertise in order to ensure soundness andadequacy of operation. The Company also inspects and evaluates
adequacy and effectiveness of the risk management and internal
control practices, and makes recommendations as appropriate to
the senior management of the Company on ways to improve andrectify questionable areas. Thus the Company’s internal audit
guidelines facilitate effective achievement of management objectives including the improvement of the Group’s internal management
structure and the enhancement of its enterprise value.
The Internal Audit Division of the Company, which comprises
eleven members who have been seconded from banking subsidiary(three full-time members and eight members serving concurrently
with other posts; as of March 31, 2013), conducts internal audits ofall departments within the Company according to the audit plan
approved by the Board of Directors, as well as internal audits of thebanking subsidiary as appropriate under the relevant auditing
contracts. Results of these audits are regularly reported to the Boardof Directors and so on.
Audits by audit & supervisory board members
Each audit & supervisory board member audits the businessexecution 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 audit & supervisory board
members” and the “guidelines for implementing audits of internal
control system,” generally subject to the auditing guidelines andaudit plan decided by the Audit & Supervisory Board, as an independent body mandated by shareholders.
Audit & supervisory board members and accounting auditors
are performing their audit duties efficiently and effectively throughestablishing close mutual cooperation by exchanging opinions
about various auditing issues. In addition, working together withaudit & supervisory board members of banking subsidiary, audit &supervisory board members and internal audit division are also
performing their audit duties efficiently and effectively throughestablishing close mutual cooperation by audit & supervisory board
members’ attendance to internal audits and exchanging opinions
about various auditing issues.
The Company has made every effort for efficient and effective
implementation of all audits including internal divisions, audit &supervisory board members, and accounting auditors through close
cooperation and communication between the departments andfunctions concerned. The Company has also made effort to audit
efficiently and effectively through receiving various reports from theinternal control division.

Outside Directors and Outside Audit & Supervisory Board Members
The Company has one outside director and two outside audit &supervisory board members. Although we have no specific appointment criteria or policies to evaluate the independence of outside

21

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

directors and outside audit & supervisory board members, appointment is made in reference to each candidate’s business relationshipwith the Company or its subsidiaries, along with the assessment
criteria of the independence of independent officers provided byexchanges.
Outside director, Kazuo Hiramatsu, serves as a trustee of Kwansei
Gakuin.
Between he or Kwansei Gakuin, and the Company or the Group,
there is no interest in terms of personnel, capital or other relationship,
except ordinary banking transactions with the Senshu Ikeda Bank,
Ltd. Also, the Bank made a donation to Kwansei Gakuin in fiscal year
2011. He also concurrently serves as an officer at Sumitomo ElectricIndustries, Ltd. and ShinMaywa Industries, Ltd. as well as DAIDO LIFE
INSURANCE COMPANY. The Senshu Ikeda Bank has ordinarybanking transactions with the first two, while capital relationship andinsurance agency relationship on top of ordinary banking transactions
with the last. As a director of the Company, he performs his duties bysupervising the execution of business, based on his extensive
experience in educational corporations and in business. He servesconcurrently as an outside director of the Company’s wholly-owned
subsidiary, The Senshu Ikeda Bank.
Outside audit & supervisory board member, Toshiaki Imanaka, isan independent officer without any potential conflict of interest withgeneral shareholders, as required to be designated by Tokyo Stock
Exchange and Osaka Securities Exchange, and has no interest in the
Company or the Group in terms of personnel, capital or other relationship, except ordinary banking transactions with the Senshu Ikeda
Bank, Ltd. He also concurrently serves as a farm member of Kansai
Law and Patent Office, which is in contractual relationship with theSenshu Ikeda Bank as the bank’s legal advisor.
Qualified as an attorney, he has good deal of knowledge infinance and accounting as has been earned through his hands-on
experience in corporate accounting as reorganization trustee, and is
performing his duties as an audit & supervisory board member fromhis professional standpoint.
Outside audit & supervisory board member, Toshiaki Sasaki,
serves as a president of Senshu Gakuen.
Between he or Senshu Gakuen, and the Company or the Group,
there is no interest in terms of personnel or other relationship, except
ordinary banking transactions with the Senshu Ikeda Bank, Ltd. Also,
he holds 24,660 shares of the common stock of the Company.
He performs his duties as an audit & supervisory board member
based on his wealth of experience and broad insight earned over theyears as an audit & supervisory board member in financial institutions.
The Company has appointed one outside director out of elevendirectors while two outside audit & supervisory board members out offour. Thus the Company has developed a structure sufficient tocontinuously enhance its enterprise value through such appointmentof outside directors and outside audit & supervisory board members.
Outside directors receive reports about the status of audits byaudit & supervisory board members, 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 audit &supervisory board members receive reports from full-time audit &supervisory board members about the status of audits by audit &supervisory board members, internal audits and accounting audits, aswell as the status of internal control from the internal control division.
Both outside directors and outside audit & supervisory board members give recommendations and advice in return for these reports.

SENSHU IKEDA HOLDINGS,INC.

Corporate governance structure of the Group[Senshu Ikeda Holdings](As of the end of July, 2013)

General Meeting of
Shareholders
Appointment/Removal
Joint coordination

Appointment/Removal

Accounting Auditors
Accounting audit

Reporton Audit

Reporton Audit

Board of Directors

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

Supervision

Appointment/Removal

Audit & Supervisory Board
Audit

Joint
coordination<Organizations in business execution>
Representative Directors

Advisory Board

Reporton AuditInternal Audit Division

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

Bringing discussed
issues to meetings/
ReportingManagement Committee

Directors/Executive Officers
Internal audit

Instruction/
Direction

Corporate Planning Division[The Senshu Ikeda Bank]

Personnel andGeneral Affairs Division

General Risk Management Division

General Meeting of
Shareholders

Appointment/Removal

Accounting Auditors
Accounting audit

Appointment/Removal
Joint coordination

Appointment/Removal

ReportReportBoard of Directors
Audit & Supervisory Board
on Auditon Audit
Bringing important
issues to meetings/
Audit
Joint
Reporting on business Appointment/ Supervision
coordination
execution
Supervision<Organizations in business execution>
Committees(Risk Management Committee)(Compliance Committee)(ALM Committee)(Facilitation of Financing Promotion Committee)

Representative Directors
Bringing
discussed
issues to meetings/
ReportingManagement Committee

Reporton AuditInternal Audit Division

Directors/Executive Officers
Instruction/
Direction

Internal audit

7 Headquarters, 14 Divisions, 1 Regional Headquarters, 2 Representative Offices, 1 Center, 1 Office
133 Head Office and Branches, 5 Sub-branches

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201322

Compliance Structure
The Company and the Group sets “compliance” as oneof the most important management priorities. We are coping with it in order to fulfill our social responsibility andpublic duties, and to earn the trust of our customers andregional communities.
The Company has set up a “Compliance Committee”
to deliberate important matters regarding groupcompliance. We have also formed the General Risk
Management Division under the “Chief Compliance
Officer” to manage matters regarding compliance
unitarily.

The General Risk Management Division ensurescompliance by creating, reviewing, and following up the“Compliance Program,” which is a practical plan forreinforcement of compliance, by creating, updating, anddistributing the “Compliance Manual,” which stipulates
basics regarding compliance, and by conducting compliance education activities through various training
programs.
We assign “Compliance Officers” and “ComplianceManagers” to each division and branch in order to implement and penetration of compliance. In addition, weSenshu Ikeda Holdings

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

Instruction

Compliance Committee(Administrative Office: General Risk Management Division)

Chief Compliance Officer(Director in charge of General Risk Management Division)
General Risk Management Division
Consultation /Reporting

Instruction

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

Consultation /Reporting

Instruction

The Senshu Ikeda Bank
Subsidiaries and affiliates of The Senshu Ikeda Bank

23

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

check the operations from compliance point of view andfacilitate the conduction of training programs to ensurecompliance.
We also set up and operate a hotline including external contact point in order to find compliance problems inearly stages and take corrective actions.
Compliance has become an increasingly important
issue for financial institutions. The Company and theGroup are committed to strict observance of the Banking
Act, Financial Instruments and Exchange Act, and related
laws and regulations. We also work toward the eliminationof anti-social forces, and strive to strengthen an appropriate protection system for our customers.
We intend to enrich and enhance our compliancestructure through improving various regulations andgiving training to our 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 fair and honest
corporate activities, while complying with laws and rules strictly to implement theGroup’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
the development 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,
and conduct 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 andorganizations which threaten the order and safety of the community.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

24

Risk Management Structuren Basic Approach to Risk Management
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
face are 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 such circumstances, the Group regards enhancing andstrengthening risk-management structure as a highpriority management task in order to maintain andenhance the soundness of its business execution.
Specifically, the Group determines the structure andvarious rules regarding risk management and the departments in charge of each risk category at the Board of
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 have been established, with the
purpose to identify the risk situation within the Group as
well as the banking subsidiary, and to discuss the relevant agenda and countermeasures which shallsubsequently be reported and further discussed at theBoard of Directors. Thus the Group ensures effective risk
management structure at management level.
Meanwhile, as action plans for risk management
based on the Group strategies, basic risk management
principles are set out semi-annually and reviewed continually in order to deal with the risks newly emerging asa result of changes in environment for timely and adequate way.
With the purpose to objectively examine the adequacy and effectiveness of the risk management structure,
the internal audit division which independents from theaudited departments conducts an audit. Thus the Group
ensures appropriate administrative processing andsound business operations through finding out andimproving the matters on risk management.

face. The Company evaluates the risks divided into
categories of credit risk, credit concentration risk
outside the calculation of capital ratio, interest rate risk
in banking accounts, market risk and operational risk,
and compares them with its management strength(capital ratio).
The Group regards development and reinforcement of risk management structure as its crucial
management task. Furthermore, the Group has developed an integrated risk management structure that therisk management division manages all risks in order tocomprehensively identify and appreciate various risks
associated with the Company’s operations by asuniform as possible measurement, and to earn thestable revenue, realize appropriate capital composition and allot management resources properly.
l Risk capital management system
The Group is running its operation based on the risk
capital management system that controls all risks
within certain 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 pointof view. Thus the Company ensures smooth operations
and management soundness across the Group.

Tier II
Deduction item

Deduction item: Net exceeded amount of unrealized
loss on available-for-sale securities
Risk buffer: Provisions against unpredictablerisks and risks associated withaffiliated companies

Risk buffer
Credit Risk
Tier I

Risk
capitalto beallotted

Credit Risk
Market Risk
Market Risk
Operational
Risk

n Integrated Risk Managementl Integrated risk management
Integrated risk management refers to the process toadequately manage the risks that financial institutions
25

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Capital ratio

Financialresource forallocation

Risk capital
to beallocated

Operational
Risk
Risk amountSENSHU IKEDA HOLDINGS,INC.

l Dealing with Basel II
In respect of capital ratio calculation for the purpose of
the capital ratio regulation (Basel II), which has been
enforced in Japan from the end of March 2007, theGroup currently applies the standard method to credit
risk and the gross profit allocation method to operational risk.
Credit Risk

Operational Risk

Standard method

Gross profit allocation method

Senshu Ikeda Holdings

Senshu Ikeda Holdings

The Senshu Ikeda BankThe Senshu Ikeda Bankn 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 to deterioration of the financial condition of theborrower.
The Group has set up “Credit Policy” in the banking
subsidiary that clarifies its policy for extending credit,
based on its management policy in order to maintain andenhance the soundness of its business execution.
Under this policy, the responsible division for the
management of credit risk, the Risk Management Division at banking subsidiary, in accordance with the
management methods stipulated in the Credit Management Regulations, administers finely-tuned responses torisks for the purpose of building up an optimum portfolio.
Specifically, the division analyzes and manages thecredit portfolio from various aspects including credit
concentration risk, type of business, borrower classification and credit ratings.
As for the credit analysis and management of eachloan at the banking subsidiary, the Group makes efforts
to ensure the independence of the audit division (Loan
Division, Solutions Division and Loan Business Division)from the business promotion division. The Board of
Directors and other appropriate body review each loan
for large obligor as well as the credit policy. Thus theGroup has focused on the development and improvement of its credit analysis system. Meanwhile, Loan
Business Division established within the Loan Headquarters, is managing housing loans receivable.
The banking subsidiary has also established theInternal Audit Division, to manage auditing of the self-

assessment of assets, in order to maintain and enhance
the soundness of its asset base.

n Market Risk Management
Market risk, as identified by the Group, points 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, foreign exchange 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, and discussed appropriate and timely measures to address the risks inorder to earn the stable and continuous profit throughmanaging its assets and liabilities in a comprehensiveway.

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

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201326

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 Groupmanages customer information sufficiently and ensuresmanagement soundness when outsources certain business operation.
l Administrative risk management
Administrative risk, as identified by the Group, is therisk of 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
through doing the administration promptly and accurately, so that the customer can enter into transactions
with the Group without any concern. Meanwhile, theGroup makes every effort to eliminate administrativerisk by measures such as review of the administrative
procedure from identification of potential risks throughthe analysis of administrative processes.
l 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 wellas to system defects caused by natural disasters or
breakdowns.
In consideration of the fact that its business operations are supported by various computer systems, theGroup ensures the reliability and security of systems
and has established back-up systems and structuresin case 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 strengtheningof access authority management.
l 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 through conducting quake resistance tests and implementing
countermeasures against power failures in order to27

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

ensure business continuity in the event of emergencies.
l 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.
l 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 invarious systems.
The Group strives to prevent the occurrence oflegal risk and to reduce the risk itself. To this end, theGroup has established the General Risk Management
Division to collect information concerning legal matters, and to manage legal risk identified from suchinformation, as well as appropriately responds to thelegal risk.
l Reputation risk management
Reputation risk, as identified by the Group, is the riskof suffering losses arising from deterioration of theGroup’s reputation due to circulation of unfounded
rumors or due to inadequate responses of the Group
concerning the facts.
The Group works to avoid reputation risk by disclosing information proactively thorough increases thetransparency of its management, taking into consideration the crucial influence on the management of theGroup.

n 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 toensure safety of customers and employees, as well as
set up business continuity structure of the financial
system.

SENSHU IKEDA HOLDINGS,INC.

The risk management structure of the Group(As of the end of July, 2013)

Senshu Ikeda Holdings

Board of Directors

Audit & Supervisory Board
Crisis Management Headquarters

Management Committee

Supervising
division

Type of risks

Responsible
divisions

ALM Committee

Risk Management Committee

General Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

General Risk Management Division

Divisions in chargeof operating
and managing

Personnel
Risk

Legal Risk

Reputation
Risk

Personnel and General
Affairs Division

General Risk
Management DivisionCorporate Planning
Division

Tangible Fixed
Asset Risk

Internal Audit Division

Committee

Banking subsidiary and outsiders

Direction of basic policies, etc.

Administration and management

Reporting on status of risk management

Consultation on risk management

The Senshu Ikeda Bank

Audit & Supervisory Board

Board of Directors

Crisis Management Headquarters
Management Committee

Supervising
division

Type of risks

Responsible
divisions
Divisions in chargeof operating
and managing

ALM Committee

Risk Management Committee

Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Risk Management Division

Operational Risk
Information
Asset(system) Risk

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Reputation
Risk

Operations Management
Division

General Affairs
Division

Personnel Affairs
Division

Risk
Management
Division

Corporate
Planning Division

Administrative
Risk

Internal Audit Division

Committee

Each division of Headquarters, each branch, affiliates and outsiders

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201328

Approach to Facilitation of Financing
The Senshu Ikeda Bank (hereinafter the “Bank”) is focused on 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 orderto promote 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.

l 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 the Risk
Management Division to the Facilitation of Financing
Manager. Under the Facilitation of Financing Promotion Committee, the Manager coordinates the overallbusiness in respect of Facilitation of Financing Management such as instructions to the division
responsible for Facilitation of Financing Management,
and drawing up of the rules governing facilitation offinancing, with the purpose to ensure adequacy,
sufficiency and effectiveness of Facilitation of Financing Management.
(4)	The Solutions Division is responsible for Facilitation of
Financing Management. The Solutions Division engages in the adequate operation, examination andimprovement of Facilitation of Financing Management
under the command of the Facilitation of Financing
Manager through gathering information necessary for
Facilitation of Financing Management.

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

Over-the-counter Consultation Service
Coordination[Consultation Service over holidays]

Sincere andadequate
respondence

Customers

Over-the-counter Consultation Service

Support andinstruction

Toll-free Consultation Service

Divisions managing Facilitation of Financing
Divisions associated with Facilitation of Financing
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 structure

Instructions
Management
Committee[Consultation Service]Consultation, application and complaints

Toll-free Consultation Service
Repayment Consultation Approach

Sincere and adequate respondence

Coordination
Businesstransactions, etc.

29

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Reporting

Audit &
Supervisory
Board

Contact for opinions and requests(complaints) concerning facilitationof financing <Toll-free>Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC.

l Basic Policies(1)	On receiving consultations or applications for newloans, or changes in loan terms from customers, theBank intends to make sincere effort to conduct adequate and prompt credit screening throughconsidering customers’ recent financial results,
assets and income as well as future potential andprospect. The Bank also deals with the applications
for new loans, after changes in loan terms in a similar
way as referred to above.
(2)	The Bank intends to make efforts to supply funds(including new credit granting) smoothly as well as tomake changes in loan terms by monitoring the conditions of the customers carefully and fully coordinatingwith other related financial institutions including otherbusiness categories.
(3)	Additionally, keeping in mind the purpose of the provisions of Article 64 of the Act on Regional Economy
Vitalization Corporation of Japan (Law No. 63, 2009)(*), the Bank intends to appropriately and proactively
engage in the vitalization of the regional economy
and the facilitation of regional financing.
(Note) The provision sets forth, “The Corporation andfinancial institutions, when providing support
to business activities that contribute to thebusiness rehabilitation of business operatorsand the vitalization of the regional economy,
shall strive to mutually cooperate with eachother in order to vitalize the regional economy
and facilitate regional financing through theenhancement of overall economic capabilitiesof the region.”(4)	Consequently, the Bank intends to provide maximum
support to the business improvement efforts of its
customers not only through its role as a provider offinancing but also through various customer services
including business consultation and guidance.
(5)	On receiving consultations or applications for newloans, or changes in loan terms from customers, theBank intends to provide sufficient explanation in orderto gain customers’ understanding and satisfaction, on
the basis of 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.
(6)	The Bank intends to improve capability of directors
and employees about facilitation of financing bygiving internal training, to enable them to makeappropriate decisions based on good understandingof customers' situations.
(7)	The Bank intends to respond to any comments,
requests, consultations and complaints from
customers in respect of facilitation of financing
promptly and sincerely.

l Policies for handling of application for loans from small and medium enterprises and sole proprietors(1)	On receiving applications for changes in businessterms such as loan terms from small and medium
enterprises and sole proprietors, the Bank intends toaccommodate such application and offer adequatechanges in terms adequately as far as possible,
taking into consideration of the specialty and thecircumstance of customers’ businesses.
(2)	The Bank intends to provide small and medium
enterprises and sole proprietors with management
consultation, guidance and other adequate assistance in support of their 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, uponcustomers’ approval, strive to make arrangements incoordination with the other financial institutions inorder to help to reduce 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 theprospect of improvement or rehabilitation of thebusiness.
(Note) This refers to certified dispute resolution procedure set out in Article 2, Paragraph 25 of the
Law on Special Measures for Industrial
Revitalization, in which a private third party
organization formulates a rehabilitation plan,
as coordinator of the interests of creditors.

l Policies for handling of application for housing loan(1)	On receiving applications for new loans or changes inhousing loan terms from housing loan customers, theBank intends to accommodate such application andoffer adequate new loans or changes in terms adequately as far as possible, taking into considerationof circumstances including customers’ assets andincome and transactions with other financial institutions.

(2)	In the cases that customers have transaction withother financial institutions as well as the Bank or withJapan Housing Finance Agency, we will, upon customers’ approval, strive to make arrangements incoordination with the other financial institutions inorder to help to reduce the burden of repayment.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201330

Corporate Data (As of July 1, 2013)
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

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

Major Shareholders (As of March 31, 2013)
1. Common stock
Name

Number of Shares Owned (Thousands)

Japan Trustee Services Bank, Ltd. (Trust Account) *1
The Master Trust Bank of Japan, Ltd. (Trust Account)50,131*1

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Proportion of Total Shares (%)

21.02

23,142

9.70

11,919

4.99

The Senshu Ikeda Bank Employees’ Shareholders Association

4,088

1.71

ITAMI SANGYO CO., LTD.

3,692

1.54

Mizuho Corporate Bank, Ltd.

3,456

1.44

OBAYASHI CORPORATION

3,318

1.39

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,811

1.17

Japan Trustee Services Bank, Ltd.(Trust Account 4G)*1
The Nomura Trust and Banking Co., Ltd.
Trust Account of The Senshu Ikeda Bank Employees’ Shareholders Association

2,473

1.03

2,218

0.93

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

2. First-class preferred stockName

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Number of Shares Owned (Thousands)

7,400

Proportion of Total Shares (%)

100.003. Second-class preferred stock
Name

31

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

OC FINANCE CORPORATION

6,475

28.00

Daikin Industries, Ltd.

4,625

20.00

Fukoku Mutual Life Insurance Company

1,850

8.00

ITAMI SANGYO CO., LTD.

1,850

8.00

NICHIA STEEL WORKS, LTD.

1,850

8.00

ROHTO Pharmaceutical Co., Ltd.

1,850

8.00

DAINIHON JOCHUGIKU CO., LTD.

925

4.00

Hankyu Hanshin Holdings, Inc.

925

4.00

T.T CO., LTD.

925

4.00

Non-Destructive Inspection Company Limited.

925

4.00

Shionogi & Co., Ltd.

462

2.00

Nippon Paper Core Industrial Co., Ltd.

462

2.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

Business Description of the Group
Non-consolidated
nConsolidated
Organizational Chart of the Group (As of the end of July, 2013)

Head office and branches: 133
Sub-branches: 5

T he Sen sh u I k eda B an k , L t d.

Senshu Ikeda Holdings, Inc.

Banking services

Representative offices: 2● Senshu Ikeda Turnaround Partners Co., Ltd.
● Senshu Ikeda Corporate Partners Co., Ltd.
● Senshu Ikeda Lease Co., Ltd.

Leasing services● Sengin General Leasing Company Limited● Senshu Ikeda Guarantee Co., Ltd.

Credit guarantee services● Kinki Credit Guarantee Company Limited● Senshu Ikeda JCB Co., Ltd.

Credit card services● D. I. Co., Ltd.
● Senshu Ikeda VC Co., Ltd.
● Senshu Ikeda Capital Co., Ltd.
● Senshu Ikeda Business Service Company Limited●● Senshu Ikeda Office Service Co., Ltd.
(Note:● indicates consolidated
subsidiaries and○ indicates equity-method
affiliates)● S.I.M.S. Co., Ltd.
● Senshu Ikeda System Co., Ltd.
● Senshu Ikeda Investment Management Co., Ltd.

Other services● Senshu Ikeda Finance Co., Ltd.
Shizen Soken Co., Ltd.
Bank Computer Service Corporation
Station Network Kansai Co., Ltd.
● Investment enterprise partnerships: 12
Ikeda Preferred Capital Cayman Limitedn Subsidiaries and Affiliates (As of the end of July, 2013)

Affiliates

Subsidiaries

Name

Address

Date ofestablishment

Major Business

The Senshu Ikeda Bank, Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Senshu Ikeda Turnaround3-2-1, Toyosaki, Kita-ku, Osaka-city Banking services
Partners Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Corporate Partners 3-2-1, Toyosaki, Kita-ku, Osaka-city Banking services
Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Lease Co., Ltd.
3-3-6, Kyutaromachi, Chuo-ku, Osaka-city Leasing services
Sengin General Leasing Com27-1, Miyamotocho, Kishiwada-city
Leasing services
pany Limited
Senshu Ikeda Guarantee Co., Ltd. 2-1-11, Jonan, Ikeda-city
Credit guarantee services
Kinki Credit Guarantee Company 2-1-1, Nishiki, Kaizuka-city
Credit guarantee services
LimitedSenshu Ikeda JCB Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
D. I. Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
Senshu Ikeda VC Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
18-14, Chayamachi, Kita-ku, Osaka-city Venture capital services
Senshu Ikeda Capital Co., Ltd.
Senshu Ikeda Business Service
18-14, Chayamachi, Kita-ku, Osaka-city Back-office administration
Company Limited
Senshu Ikeda Office Service Co., 2-1-11, Jonan, Ikeda-city
Personnel services
Ltd.
S.I.M.S. Co., Ltd.
6-2-5-301, Minoh, Minoh-city
Appraisal of real-estate collateraland real-estate research services
Senshu Ikeda System Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Computer software development
and sale services
Senshu Ikeda Investment
3-3-6, Kyutaromachi, Chuo-ku, Osaka-city Investment advisory and discreManagement Co., Ltd.
tionary investment services
Senshu Ikeda Finance Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Money-lending services
Shizen Soken Co., Ltd.
2-1-11, Jonan, Ikeda-city
Information offering services
Bank Computer Service Corpora- 1-5, Rinku Oraikita, Izumisano-city
Development and sale of comtion
puter programs used for
operations at financial institutions
Station Network Kansai Co., Ltd. 1-4-8, Shibata, Kita-ku, Osaka-city
Planning and operation of ATM at
stationShare Capital Investment ratio (%)(millions of
Subsidiaries
Japanese yen) The Company and affiliates

September 1, 1951
January 4, 2013

50,710
2,025

100.0
–

–
100.0

January 4, 2013

2,025

–

100.0

April 1, 1986
October 23, 1985

50
120

–
–

81.0
95.6

July 20, 1973
April 1, 1975

180
100

–
–

58.7
100.0

February 1, 1983
September 5, 1990
November 2, 1990
March 6, 1989
April 1, 1983

60
30
40
90
30

–
–
–
–
–

88.4
90.0
100.0
100.0
100.0

July 11, 1988

20

–

100.0

October 28, 1991

20

–

100.0

June 10, 1985

50

–

63.1

April 1, 1987

120

–

100.0

March 15, 2013
November 1, 1996
December 27, 2000

10
80
400

–
–
–

100.0
15.0
45.0

June 29, 2000

100

–

40.0

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201332

Organization and Board of Directors
Senshu Ikeda Holdingsn Organization (As of the end of July, 2013)(Note)

Management Committee

Corporate Planning Division

Accounting Office

PR & IR Office

ALM Committee

Compliance Committee

Risk Management Committee

Related Business Management Office

Audit & Supervisory Board Members Office

Audit & Supervisory Board Members Audit & Supervisory Board

Board of Directors

General Meeting of Shareholders

Advisory Board

Personnel and General Affairs Division

Secretary Office(Note) The Advisory Board was established as aconsultative body for Management Committee toseek external advice from experts and specialists inacademic circle and various fields. The Company
intends to enhance corporate governance throughthe transparent management while developing deep
relationship with local communities.

General Risk Management DivisionInternal Audit Division

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.)n Board of Directors (As of June 26, 2013)
Representative Director
and President

Hirohisa Fujita

Director

Hiroshi Kubota

Director

Masahiro Saito

Audit & Supervisory
Board Member(Full-time)

Kazuhiro Masao

Representative Director
and Chairman

Kazuyuki Kataoka

Director

Akira Tahara

Director

Nobuaki Nanchi

Takashi Nishi

Representative
Director

Naoya Fukuchi

Director

Jiro Tsuji

Director(Outside)Kazuo Hiramatsu

Kazuhiro Isumi

Director

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)

Representative
Director

33

Atsushi Ukawa

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

(Professor, School of Business Administration, Kwansei
Gakuin University
Trustee of Kwansei Gakuin)

Toshiaki Imanaka
Toshiaki Sasaki

SENSHU IKEDA HOLDINGS,INC.

The Senshu Ikeda Bankn Organization (As of the end of July, 2013)
Corporate Planning Division
Personnel Affairs Division
Career Development Supporting Office
General Affairs Division
Secretary Office

Management Committee

Board of Directors

General Meeting of Shareholders

Tokyo OfficeSuzhou Representative Office
Risk Management Division
Compliance Management Office
Operations and System Headquarters

Operations Management Division
Operating Center

ALM Committee

Regional Headquarters

Facilitation of Financing Promotion Committee

Compliance Committee

Risk Management Committee

Branches (including Sub-branches): 138

Audit & Supervisory Board Members Office

Audit & Supervisory Board Members Audit & Supervisory Board

Risk Products Operations Office

CS Headquarters

Business Planning Division
Business Promotion Division
Securities and Insurance Business Promotion Office
Personal Loan Promotion Office
Proposal Offering Promotion Office
Customer Center
Asia and China Business Promotion Division

Asia and China Business Headquarters

International Division
Advanced Technology Business Supporting Division

Advanced Technology Business Supporting Headquarters
Private Banking Headquarters

Private Banking Division

Financial Market Headquarters

Financial Market DivisionMarket Operations Office

Loan Headquarters

Loan Division
Solutions Division
Loan Business DivisionInternal Audit Divisionn Board of Directors (As of June 26, 2013)
Representative Director
and President

Hirohisa Fujita

Managing
Director

Hiroshi Kubota

Director

Masahiro Saito

Audit & Supervisory
Board Member(Full-time)

Masanori Ueki

Representative Director
and Chairman

Kazuyuki Kataoka

Managing
Director

Akira Tahara

Director

Nobuaki Nanchi

Satoshi Kitagawa

Naoya Fukuchi

Managing
Director

Jiro Tsuji

Director(Outside)Kazuo Hiramatsu

Kazuhiro Isumi

Director

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)

Representative Senior
Managing Director
Representative Senior
Managing Director

Atsushi Ukawa(Professor, School of Business Administration, Kwansei
Gakuin University
Trustee of Kwansei Gakuin)

Taro Ohashi
Jiro Yoshida

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201334

Consolidated Balance Sheets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2013 and 2012

Millions of yen
2013
2012

AssetsCash and due from banks (Notes 27 and 33)
Call loans and bills bought (Note 33)
Monetary claims bought (Note 33)
Trading account securities (Notes 4 and 33)
Money held in trust (Notes 6 and 33)
Securities (Notes 5, 7, 12, 20 and 33)
Loans and bills discounted (Notes 8 and 33)
Foreign exchange assets (Notes 9 and 33)
Other assets (Notes 10 and 12)
Tangible fixed assets (Note 11)
Intangible fixed assets
Deferred tax assets (Note 29)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Thousands of U.S.
dollars (Note 1)
2013¥100,867
5,603
956
108
19,0001,169,201
3,578,225
4,376
73,975
38,105
7,617
29,47821,758(54,814)¥4,994,458¥134,000
698
1,494
69
19,0001,199,965
3,516,142
4,328
58,831
38,4399,039
32,844
26,114(48,304)¥4,992,667$1,072,482
59,574
10,164
1,148
202,020
12,431,695
38,045,986
46,528786,549
405,156
80,988313,429
231,345(582,817)$53,104,284¥4,490,736
124,915
71,909208
50,00042,239
1,708
4,511
136
315
163
393
68
5
21,7584,809,069¥4,390,453
237,307
69,764431
53,00044,800
1,749
4,515
335
258
141
473
2
7
26,114
4,829,355$47,748,389
1,328,176
764,582
2,211
531,632
449,112
18,16047,963
1,446
3,349
1,733
4,178
723
53
231,345
51,133,110

72,311
62,23535,431(1,350)168,627

72,311
72,67530,910(1,944)
173,952

768,856
661,722376,725(14,354)
1,792,950

7,808
0
7,809
63
8,888
185,389¥4,994,458(11,878)(2)(11,880)
62
1,177
163,311¥4,992,667

83,019083,030669
94,502
1,971,174$53,104,284

Liabilities and net assets
Liabilities
Deposits (Notes 12, 13 and 33)
Payables under securities lending transactions (Notes 12 and 33)
Borrowed money (Notes 12, 14, 33 and 34)
Foreign exchange liabilities (Notes 15 and 33)
Corporate bonds and notes (Notes 16 and 33)
Other liabilities (Note 17)
Provision for employees’ bonuses
Accrued retirement benefits for employees (Note 18)
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Deferred tax liabilities (Note 29)
Negative goodwill
Acceptances and guarantees (Note 20)
Total liabilities
Net assets
Shareholders’ equity (Note 21):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gain (loss) on available-for-sale securities (Note 7)
Net unrealized gain (loss) on deferred hedges (Note 34)
Total accumulated other comprehensive income
Stock subscription rights (Note 21)
Minority interests
Total net assets
Total liabilities and net assets
See accompanying notes to consolidated financial statements

35

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Millions of yen
2013
2012

Thousands of U.S.
dollars (Note 1)
2013

IncomeInterest income:Interest on loans and bills discounted (Note 32)
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 22)
Recoveries of written-off claims
Other income (Note 23)
Total income¥54,701
9,470
211
17,900
16,543
1,419
11,801
112,049¥58,450
12,290172
16,265
18,132
1,321
9,506
116,139$581,616
100,691
2,243
190,324
175,895
15,087
125,475
1,191,376

6,769
944
1,681
5,307
7,290
54,46074
25
22,29898,851
13,197

7,937
857
1,981
5,284
6,977
56,243269
166
25,764105,483
10,656

71,972
10,037
17,87356,42777,511
579,053786
265
237,086
1,051,047
140,318

998
1,784
2,783
10,414312¥10,102

616
6,082
6,698
3,958
147
¥3,810

10,611
18,96829,590110,7283,317$107,410

Millions of yen
2013
2012
¥10,414¥3,958

Thousands of U.S.
dollars (Note 1)
2013$110,728

19,7142
19,717¥30,132

1,018
17
1,036
¥4,995

209,61121
209,643$320,382

29,792
340

4,833
161

316,767
3,615

Expenses

Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses (Note 24)
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Other expenses (Note 25)
Total expenses
Income before income taxes and minority interests

Income taxes (Note 29)
Current
Deferred
Total income taxes
Net income before minority interests
Minority interests
Net income
See accompanying notes to consolidated financial statements

Consolidated Statements of Comprehensive Income
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Net income before minority interests
Other comprehensive income (Note 30)
Net unrealized gain on available-for-sale securities
Net unrealized gain on deferred hedges
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201336

Consolidated Statements of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Thousands of U.S.
dollars (Note 1)
2013

Millions of yen
2013
2012
Shareholders’ equity
Common stock
Balance at beginning of the year
Total changes during the year
Balance at end of the year¥72,311¥72,311$768,856–––

72,311

72,311

768,856

72,67583,063772,727

Capital surplus
Balance at beginning of the year
Changes during the year:
Disposition of treasury stock

(73)

1

(776)

Retirement of treasury stock(10,366)(10,389)(110,217)

Total changes during the year

(10,439)(10,388)(110,994)

Balance at end of the year

62,23572,675

661,72230,91033,125

328,654(5,585)(6,024)(59,383)3–

31

Retained earnings
Balance at beginning of the year
Changes during the year:
Cash dividends
Increase by merger

10,102

3,810

107,410

Total changes during the year

Net income

4,520(2,214)48,059Balance at end of the year

35,43130,910376,725(1,944)(116)(20,669)(10,369)(12,488)(110,249)

Treasury stock
Balance at beginning of the year
Changes during the year:
Acquisition of treasury stock
Disposition of treasury stock

596

270

6,337

Retirement of treasury stock

10,366

10,389110,217

Total changes during the year
Balance at end of the year593

(1,828)6,305(1,350)(1,944)(14,354)

173,952

188,383

1,849,569(5,585)(6,024)(59,383)

Total shareholders’ equity
Balance at beginning of the year
Changes during the year:
Cash dividends
Increase by merger

3

–

31

Net income

10,102

3,810

107,410

Acquisition of treasury stock(10,369)(12,488)(110,249)

Disposition of treasury stock

523

272

5,560

Retirement of treasury stock

–

–

–

Total changes during the year
Balance at end of the year

37

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

(5,325)(14,431)(56,618)¥168,627¥173,952$1,792,950

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Thousands of U.S.
dollars (Note 1)
2013

Millions of yen
2013
2012
Accumulated other comprehensive income
Net unrealized gain (loss) on available-for-sale securities¥(11,878)¥(12,884)$(126,294)

Net changes in items other than shareholders’ equity

19,686

1,005

209,314

Balance at end of the year

7,808

(11,878)

83,019Balance at beginning of the year

(2)

(19)

(21)

Net changes in items other than shareholders’ equity

2

17

21

Balance at end of the year

0

(2)

0

Balance at beginning of the year

Net unrealized gain (loss) on deferred hedges

Total accumulated other comprehensive income
Balance at beginning of the year

(11,880)(12,904)(126,315)

Net changes in items other than shareholders’ equity

19,6891,023

209,346

Balance at end of the year

7,809

(11,880)

83,03062

6659

Net changes in items other than shareholders’ equity

1

55

10

Balance at end of the year

63

62

669

Balance at beginning of the year

1,177

1,197

12,514

Net changes in items other than shareholders’ equity

7,711

(20)

81,988

Balance at end of the year

8,888

1,177

94,502

163,311

176,684

1,736,427(5,585)(6,024)(59,383)

3–31

Stock subscription rights
Balance at beginning of the year

Minority interests

Total net assets
Balance at beginning of the year
Changes during the year:
Cash dividends
Increase by merger
Net income

10,102

3,810

107,410

Acquisition of treasury stock(10,369)(12,488)(110,249)

Disposition of treasury stock
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

523

272

5,560

27,402

1,058

291,355

22,077(13,372)

234,736¥185,389¥163,311$1,971,174

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201338

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Thousands of U.S.
dollars (Note 1)
2013

Millions of yen
2013
2012
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
Gains on negative goodwill incurred
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in accrued bonuses(Earnings) losses from investments under the equity method
Increase (decrease) in accrued retirement benefits for employees¥13,197
5,004
25
84
(2)
(491)
6,510
(41)
(1)
(3)

¥10,656
4,391
166
5
(2)
(187)
5,555
(28)
38
(2,010)$140,318
53,205265
893(21)(5,220)69,218
(435)
(10)
(31)

(198)
56
22
(79)
–
(64,383)
9,394(7,269)64(20,465)74(62,082)
100,282

(51)
(50)
5
7
(717)
(70,913)
10,776(8,812)
285
2,592
269
(15,125)
41,582(2,105)
595
233
(839)
–
(684,561)
99,883(77,288)680(217,597)
786(660,095)
1,066,262

Net increase (decrease) in borrowed money (excluding subordinated borrowings)

8,645

15,347

91,919Net (increase) decrease in due from banks (excluding due from the Bank of Japan)
Net (increase) decrease in trading account securities(2,500)
(39)

8
(32)

(26,581)(414)

Net (increase) decrease in call loans and bills bought(4,366)(881)(46,422)(112,392)
(47)
(223)
65,857(11,219)102

64,581
1,882(49)
71,137(13,372)313(1,195,023)(499)(2,371)
700,233(119,287)
1,084(76,486)(908)¥(77,395)

117,368(369)¥116,999(813,248)(9,654)$(822,913)

Increase (decrease) in accrued retirement benefits for directors and corporate auditors
Increase (decrease) in reserve for reimbursement of deposits
Increase (decrease) in reserve for point services
Increase (decrease) in reserve for contingent losses
Increase (decrease) in reserve for loss on integration
Interest income
Interest expenses(Gain) loss on securities(Gain) loss on money held in trust(Gain) loss on foreign exchange(Gain) loss on sales or disposal of fixed assets, net
Net (increase) decrease in loans and bills discounted
Net increase (decrease) in deposits

Net increase (decrease) in payables under securities lending transactions
Net (increase) decrease in foreign exchange (assets)
Net increase (decrease) in foreign exchange (liabilities)
Interest received
Interest paid
Other
Subtotal
Income taxes paid
Net cash provided by (used in) operating activities

39

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2013 and 2012

Thousands of U.S.
dollars (Note 1)
2013

Millions of yen
2013
2012
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for execution of assets retirement obligations
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in subordinated borrowings
Decrease in subordinated borrowings
Increase in subordinated bonds and bonds with stock subscription rights
Decrease in subordinated bonds and bonds with stock subscription rights
Proceeds from stock issuance for minority shareholders
Cash dividends paid
Cash dividends paid for minority shareholders
Purchases of treasury stock
Proceeds from disposal of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 27)¥(1,056,879)
830,989
287,658(205)
135(2,689)
(668)
27
(22)
58,346¥(1,650,619)
1,333,067
201,719(339)
39(2,904)(5,279)51–(124,263)$(11,237,416)
8,835,608
3,058,564(2,179)1,435(28,591)(7,102)287(233)
620,372

7,000(13,500)–(3,000)8,000(5,585)(19)(10,369)596(16,877)

10,000–35,000(30,000)–(6,024)–(12,488)270(3,243)74,428(143,540)–(31,897)
85,061(59,383)(202)(110,249)
6,337(179,447)

291

168

3,094

(35,634)
130,996¥95,361(10,339)
141,335¥130,996(378,883)
1,392,833$1,013,939

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201340

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Years Ended 31st March, 2013 and 2012

1. Basis of Presentation
Senshu Ikeda Holdings, Inc. (the “Company”) is a holding
company and conducts its operations through its subsidiaries
and affiliates. The Company and its subsidiaries (collectively,
the “Group”) maintain their books of account in accordancewith the provisions set forth in the Companies Act of Japan(the “Act”) 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 a result,
the totals in yen in the accompanying consolidated financial
statements do not necessarily agree with the sums of theindividual 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 ¥94.05 = U.S.$1.00, the exchange rate
prevailing on 29th March, 2013. This translation should not be
construed as a representation that yen can be converted into
U.S. dollars at the above or any other rate.

2. Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and the 30 (26 in 2012)
significant subsidiaries which it controls directly or indirectly.
Affiliates 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.
As a result of the establishment, Senshu Ikeda Turnaround
Partners Co., Ltd., Senshu Ikeda Corporate Partners Co., Ltd.,Senshu Ikeda Capital Business Succession Fund Kizuna
Investment Enterprise Limited Partnership and Senshu Ikeda
Capital Yumejikomi Fund OI Investment Enterprise Limited
Partnership have been included in the scope of consolidation
during the fiscal year ended 31st March, 2013. In Addition, asa result of the incorporation-type company split of Senshu
Ikeda Capital Co., Ltd., Senshu Ikeda Finance Co., Ltd. has
been included in the scope of the consolidation during the
fiscal year ended 31st March, 2013.

41

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

S·I· Soft Company Limited and Hitachi & Ikeda Brains, Co.,
Ltd., both of which were wholly owned subsidiaries of theCompany, were merged effective 1st November, 2012. As aresult, Hitachi & Ikeda Brains, Co., Ltd., which is a surviving
company, changed its name to Senshu Ikeda System Co., Ltd.
and took over all the assets, liabilities, rights and obligationsof S·I· Soft Company Limited.
The Company has applied the equity method to its
investments in three affiliates for the years ended 31st March,2013 and 2012, respectively. The consolidated financial
statements do not include the accounts of Ikeda Preferred
Capital Cayman Limited, since its total assets, operating
income, ownership percentage of net profits and losses,
retained earnings and net unrealized gain or loss on deferredhedges do not have a material 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 the Groupis 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. However,goodwill recognized in the years ended 31st March, 2013 and2012 is amortized over a year.
The balance sheet date of 12 subsidiaries is 31st December.
Appropriate adjustments have been made for significant
intervening transactions occurring during the period from 31st
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 account securities
sold is determined using the moving average method.
(2) Securities
Non-trading securities are classified into three categories:
held-to-maturity debt securities, equity securities of an
unconsolidated subsidiary and available-for-salesecurities. Held-to-maturity debt securities are carried atamortized cost, and the cost being determined by themoving average method. Equity securities of an
unconsolidated subsidiary are stated at cost determinedby the moving-average method. Equity securities andinvestment trusts classified as available-for-sale securities
whose fair values are available are stated at fair value
determined by the monthly average market price during
one month preceding the balance sheet date and othersecurities are stated at fair value determined based on

SENSHU IKEDA HOLDINGS,INC.

the quoted market price and other information at thebalance sheet date. Cost of sales of these available-forsale securities is determined using the moving averagemethod. Other securities, whose fair value is extremely
difficult to determine, are stated at cost determined by themoving-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 straightline method. 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 thecost of software intended for internal use is calculated by
the straight-line method based on a useful life (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 accordance withthe 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 legallyor formally insolvent but are regarded as substantially inthe same situation (“effectively bankrupt borrowers”), a
reserve is provided based on the book value of theclaims, after the write-off stated below, net of the
expected amount recoverable from collateral andguarantees.
For claims on borrowers who are not currently bankrupt
but are likely to become bankrupt (“potentially bankrupt
borrowers”), a reserve is provided at the amount deemednecessary based on the overall solvency assessment of
the borrowers and the amount of the claims, net of the
expected amount recoverable from collateral andguarantees.

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 these assessments,
an appropriate reserve is provided for the resulting losses
and for write-offs of doubtful assets.
For consolidated subsidiaries other than the banking
subsidiaries, a specific reserve for possible loan losses at
the total amount of loans deemed to be uncollectible
based on a solvency analysis of each loan, in addition toa general reserve at an amount calculated based on
historical experience, is provided.
For collateralized or guaranteed claims on bankrupt
borrowers and effectively bankrupt borrowers, the amountof the claims exceeding the estimated value of collateraland guarantees is deemed to be uncollectible and iswritten off against the total amount of the outstanding
claims. These write-offs amounted to ¥56,999 million($606,049 thousand) and ¥61,781 million for the years
ended 31st March, 2013 and 2012, respectively.
(8) Provision for employees’ bonuses
Provision for employees’ bonuses is calculated based onan estimated payment amount, which is attributable to thefiscal year.
(9) Accrued retirement benefits for employees
Accrued retirement benefits for employees are provided
at an estimated amount based on an actuarial calculationof the retirement benefit obligation and the pension plan
assets at the balance sheet date. Certain consolidated
subsidiaries estimate the retirement benefit obligation
using the simplified method whereby the amount thatwould 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.
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($105,199 thousand) is amortized over a period of 15
years.

For other claims, a reserve is provided based on thehistorical loan-loss ratio.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201342

(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 basedon the Group’s historical experience.
(12) Reserve for point services
Reserve for point services, which is provided to meet
future use of credits granted to customers, is recorded in
the amount deemed necessary based on the estimatedfuture use of unused credits.
(13) 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.
(14) 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.
(15) 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 with residual
values defined in the lease contracts, otherwise theresidual values is zero.
As lessee:
Finance leases which commenced prior to 1st April, 2008,
except for those substantially requiring the transfer ofownership of the leased assets to the lessee, areaccounted 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.

43

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013(16) Hedge accounting
Interest rate risk hedging
With respect to hedge accounting for the interest rate risk
arising from financial assets and liabilities of the banking
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 for hedge
accounting are accounted for as if the interest rate for theswap 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. 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 the respective
hedging instruments.
(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.
(18) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(19) Issued but not yet adopted accounting standard and others“Accounting Standard for Retirement Benefits” (theAccounting Standards Board of Japan (hereinafter“ASBJ”) Statement No. 26, 17th May, 2012) and“Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, 17th May, 2012)(1) Overview
Accounting standard for retirement benefits has beenrevised from the viewpoint of improvements tofinancial reporting and international convergence,
mainly focusing on (a) how unrecognized actuarial
gain or loss and unrecognized prior service costshould be accounted for, and enhancement of
disclosures and (b) how retirement benefit obligationand service cost should be determined.
(2) Scheduled date of adoption
The Company will adopt the accounting standard,relating to the (a) above, from the fiscal year ending
31st March, 2014. However, the Company will adopt
the amendments to the method for calculating

SENSHU IKEDA HOLDINGS,INC.

retirement benefit obligation and service cost,
relating to the (b) above, from the beginning of the
fiscal year ending 31st March, 2015.
(3) The effect of adopting this accounting standard
The effect of adopting this accounting standard iscurrently under evaluation.

Millions of yen
31st March, 2012
Corporate bonds

Carrying value

Fair value¥47,953¥48,440

Other

2,000

1,987

Total

¥49,953¥50,428

Millions of yen

4. Trading account securities
Valuation gain or loss on trading account securities included
in income before income taxes and minority interests was ¥(0)
million ($ (0) thousand) and ¥(0) million for the years ended
31st March, 2013 and 2012, respectively.

31st March, 2012
Corporate bonds
Other

Unrealized Unrealized
gain
loss

¥487 ¥502 ¥(14)
(12)

Total

–

(12)

¥474 ¥502 ¥(27)Thousands of U.S. dollars

5. Securities

31st March, 2013

Securities at 31st March, 2013 and 2012 consisted of thefollowing:

Corporate bonds

Thousands of
U.S. dollars

Millions of yen
2012

2013
StocksDifference

Carrying value

Fair value$341,084$345,039

Other

170,122

171,515

Total$511,206$516,555

2013

Thousands of U.S. dollars¥76,074 ¥62,283 $808,867
31st March, 2013

Bonds:

Difference

Unrealized Unrealized
gain
loss

Government bonds

401,161

398,3814,265,401

Corporate bonds

Local government bonds

56,333

77,972598,968

Other

Corporate bonds

229,218

229,198

2,437,192

Total

406,413432,129

4,321,244

There were no held-to-maturity debt securities sold during theyears ended 31st March, 2013 and 2012.

Other
Total

¥1,169,201 ¥1,199,965 $12,431,695

Stocks in the above table include investments in affiliates of¥236 million ($2,509 thousand) and ¥234 million at 31st
March, 2013 and 2012, respectively.
Held-to-maturity debt securities with fair value at 31st March,2013 and 2012 were as follows:

Corporate bonds

Carrying value

Fair value¥32,079¥32,451

Other

16,00016,131

Total¥48,079¥48,582

Millions of yen
31st March, 2013
Corporate bonds
Other
Total

Difference(584)

Millions of yen
31st March, 2013
Equity securities

Carrying value

Acquisitioncost¥70,185¥57,533
401,014

Government bonds

401,161

Local government bonds

56,33356,047

Corporate bonds

197,138

195,104

Subtotal

654,633

652,166

Other

389,166

394,597Total¥1,113,986¥1,104,297

Unrealized Unrealized
gain
loss
186

1,977

Available-for-sale securities with fair value at 31st March, 2013
and 2012 were as follows:

Millions of yen¥372 ¥372 ¥–
131

1,392

$5,348 $5,943 $(584)

Bonds:

Millions of yen
31st March, 2013

$3,955 $3,955 $–(55)¥503 ¥559 ¥(55)

31st March, 2013
Equity securities

Difference

Unrealized Unrealized
gain
loss

¥12,652 ¥15,454 ¥(2,802)

Bonds:
Government bonds

147

254

Local government bonds

285

293

(8)

Corporate bonds

2,034

2,079

(44)

Subtotal
Other
Total

(107)

2,467

2,628

(161)

(5,430)

9,682(15,113)¥9,689 ¥27,766 ¥(18,076)
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

44

Available-for-sale securities sold during the years ended 31st
March, 2013 and 2012 were as follows:

Millions of yen
31st March, 2012
Equity securities

Carrying value

Acquisitioncost¥56,292¥62,134

Millions of yen
2013

Bonds:

Proceeds
from sales

Gain

Loss

Government bonds

398,381

398,334

Equity securities

Local government bonds

77,972

77,404

Bonds:

Corporate bonds

181,245

179,282

Government bonds

198,714821

Subtotal

657,599

655,021

Local government bonds

10,719

141

–

Other

428,823437,229

Corporate bonds

78,169

1,352

(107)

Total

¥1,142,714¥1,154,385

Subtotal

287,603

2,315

(269)

554,332

13,046(1,161)

Other
Millions of yen
31st March, 2012
Equity securities

Total¥3,774 ¥338 ¥(970)(162)¥845,710 ¥15,699 ¥(2,402)

Unrealized Unrealized
Difference
gain
loss

Millions of yen¥(5,841) ¥4,836 ¥(10,678)
2012

Bonds:

Equity securities

Proceeds
from sales

Gain

Loss

¥995 ¥305 ¥(440)Government bonds

47

349

Local government bonds

567

573

(6)

Corporate bonds

1,962

2,064

(102)

Government bonds

661,250

6,892

Subtotal

2,577

2,987

(410)

Local government bonds

1,011

14

–

(8,406)2,888(11,294)

Corporate bonds

33,346403(69)

Subtotal

695,608

7,310

(226)

637,226

9,085(1,497)

Other
Total

(301)

¥(11,670) ¥10,712 ¥(22,383)

Bonds:

Other
Total

Thousands of U.S. dollars
31st March, 2013
Equity securities

Carrying value

Acquisitioncost$746,251$611,727

Bonds:
Government bonds

4,265,401

4,263,838

Local government bonds

598,968

595,927

Corporate bonds

2,096,097

2,074,471

Subtotal

6,960,478

6,934,247

Other

4,137,862

4,195,608

Total$11,844,614$11,741,594

31st March, 2013
Equity securities

Difference

Unrealized Unrealized
gain
loss

$134,524 $164,316 $(29,792)

Bonds:
Government bonds

1,562

2,700

Local government bonds

3,030

3,115

(85)

Corporate bonds

21,626

22,105(467)

Subtotal
Other
Total

(1,137)

26,23027,942(1,711)(57,735)

102,945(160,691)¥1,333,830 ¥16,700 ¥(2,164)
Thousands of U.S. dollars
2013

Equity securities

Proceeds
from sales

Gain

Loss

$40,127 $3,593 $(10,313)

Bonds:
Government bonds

2,112,854

8,729

Local government bonds

113,971

1,499–

Corporate bonds

831,143

14,375(1,137)

Subtotal

3,057,979

24,614(2,860)5,894,013

138,713(12,344)

Other
Total

Thousands of U.S. dollars(156)(1,722)$8,992,131 $166,921 $(25,539)

Securities for which the holding purpose were changed during
the year ended 31st March, 2013
¥1,300 million ($13,822 thousand) of securities werereclassified from “held-to-maturity securities” to “available-forsale securities” during the year ended 31st March, 2013, as
credit condition of the issuer of the securities deteriorated
significantly. This change had no effect on income before
income taxes and minority interests and net income for theyear ended 31st March, 2013.

$103,019 $295,225 $(192,195)

Impairment losses on securities
Available-for-sale securities whose fair value significantly
declined from the acquisition cost are valued at fair value andlosses on devaluation of those securities are recognized in the
consolidated statement of operations unless the value isconsidered recoverable.

45

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

Losses on devaluation of securities for the years ended 31st
March, 2013 and 2012 were ¥212 million ($2,254 thousand)and ¥3,283 million, respectively, which consisted of ¥212
million ($2,254 thousand) on equity securities for the year
ended 31st March, 2013, and ¥315 million on equity securitiesand ¥2,967 million on investment trusts for the year ended
31st March, 2012.
Determining whether the fair value is “significantly declined” isbased on the fair value declining by more than 50% or thecriteria considering the trend of the fair value during a certain
past period and credit risks of the issuers when the fair value
declined between 30% and 50% of the acquisition cost.

8.	Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted:
Loans and bills discounted at 31st March, 2013 and 2012
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2013
Bills discounted

2012

2013

¥20,591 ¥21,580 $218,936

Loans on bills

87,890104,638

934,502

Loans on deeds

3,256,470

3,192,410

34,624,880

Overdrafts

212,670

196,769

2,261,244

601

743

6,390

Other

6. Money Held in Trust

Total

Money held in trust at 31st March, 2013 and 2012 consistedof the following:
Money held in trust for trading purposes

Discounting of bills is accounted for as finance transactions
rather than as purchasing of bills in accordance 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 foreignexchange bills. The total face value of such outstanding bills
at 31st March, 2013 and 2012 totaled ¥20,956 million($222,817 thousand) and ¥21,947 million, respectively.
At 31st March, 2013 and 2012, loans and bills discounted
included the portion of loans extended to original borrowers
based on loan participation agreements, as permitted by the
JICPA Accounting Committee Report No. 3, in the amount of¥15,600 million ($165,869 thousand) and ¥16,500 million,
respectively.

Thousands of
U.S. dollars

Millions of yen
2013
Carrying value

2012

2013

¥19,000 ¥19,000 $202,020

Valuation gain (loss) included in consolidated¥49 ¥(0) $520
statements of income

There were no money held in trust owned for other purposes
at 31st March, 2013 and 2012.

7.	Net Unrealized Gain (Loss) on Availablefor-Sale Securities
Net unrealized gain (loss) on available-for-sale securities at
31st March, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Differences between acquisition costand fair value:
Available-for-sale securities
Deferred tax liabilities¥9,689 ¥(11,670) $103,019(1,813)(167)(19,276)

Differences between acquisition costand fair value, net of taxes

7,876(11,838)

83,742

Amounts corresponding to minority interests

(67)

(40)

(712)

Net unrealized gain (loss) on availablefor-sale securities, net of taxes¥7,808 ¥(11,878) $83,019¥3,578,225 ¥3,516,142 $38,045,986

Contracts for overdraft facilities and loan commitments arecontracts under which the Group lends money to customers
up to their prescribed limits at the customers’ request as longas there are no violations of any of the conditions in thecontracts. The aggregate unutilized balances within the limitsof these contracts totaled ¥662,018 million ($7,039,000
thousand) and ¥656,430 million at 31st March, 2013 and2012, respectively, including the contracts whose contractual
periods were either less than one year or revocable at any
time, in the amount of ¥651,749 million ($6,929,813 thousand)and ¥649,505 million, respectively.
Since many of these commitments expire without being fully
utilized, the unutilized amounts do not necessarily represent
future cash commitments. Most of these contracts include
provisions which stipulate that the consolidated 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 collateralin the form of real estate, securities, and so forth, if deemednecessary. Subsequently, the Group, based on its internal
rules, performs periodic reviews of the customers’ businessresults and may take necessary measures such as
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201346

10. Other Assets

reconsidering the terms of the contracts and/or requiring
additional collateral or guarantees.
Risk monitored loans:
Risk monitored loans which were included in loans and bills
discounted at 31st March, 2013 and 2012 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2012

2013
Loans to bankrupt borrowers
Delinquent loans¥5,355 ¥6,364 $56,937
68,436Loans past due for 3 months or more
Restructured loans
Total

2013

53,016727,655

14

51

148

14,3497,401

152,567

Other assets at 31st March, 2013 and 2012 consisted of thefollowing:

2013
Investment in leased assets

Delinquent loans represent non-accrual loans other than (i)loans to bankrupt borrowers and (ii) loans on which interest
payments have been suspended in order to assist or facilitate
the restructuring of borrowers who are experiencing financial
difficulties.
Loans past due for 3 months or more represent loans on which
the payment of principal and/or interest has not been received
for three months or more from the due date, and which are notclassified as “loans to bankrupt borrowers” or “delinquentloans.”
Restructured loans are loans which have been restructured tosupport the rehabilitation of borrowers who are encountering
financial difficulties, with the intention of ensuring the recoveryof the loans by providing more flexible repayment terms forthe 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.

27,43912,838291,749

Accrued income

7,778

8,288

82,700Prepaid expenses

253

231

2,690

23,266

21,786247,379

Other
Total

¥73,975 ¥58,831 $786,549

11. Tangible Fixed Assets
At 31st March, 2013 and 2012, accumulated depreciation of
tangible fixed assets was ¥42,104 million ($447,676 thousand)and ¥40,971 million, respectively.
Under the Tax Act, capital gains arising from the exchange orreplacement of assets under certain conditions are permitted
to be deducted from the cost of tangible fixed assets in orderto obtain certain tax benefits. The amount deducted from thecost of tangible fixed assets at 31st March, 2013 and 2012was ¥517 million ($5,497 thousand) and ¥517 million,
respectively.

12. Assets Pledged
Assets pledged as collateral at 31st March, 2013 and 2012
consisted of the following:
Millions of yen
2013
Securities
Other assets

Foreign exchange assets at 31st March, 2013 and 2012
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

¥3,316 ¥3,209 $35,257

Foreign bills of exchange bought

273

210

2,902

Foreign bills of exchange receivable

786

908

8,357

¥4,376 ¥4,328 $46,528

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

2013

1,608

2,573

17,097The liabilities secured by the above pledged assets at 31st
March, 2013 and 2012 consisted of the following:
Millions of yen
Deposits

9. Foreign Exchange Assets

2012

Thousands of
U.S. dollars¥244,044 ¥363,766 $2,594,832

2013

47

2013

Other receivables

The amounts presented in the table above are stated before
the provision of specific loan loss reserves.

Total

2012

¥15,237 ¥15,686 $162,009¥88,156 ¥66,833 $937,331

Loans to bankrupt borrowers represent non-accrual loans toborrowers who are legally bankrupt as defined in Articles
96-1-3 and 96-1-4 of the Order for Enforcement of the
Corporation Tax Act (the “Tax Act”) (Article 97 of the 1965
Cabinet Order).

Due from foreign correspondent banks

Thousands of
U.S. dollars

Millions of yen

2012

Thousands of
U.S. dollars
2013¥2,685 ¥2,833 $28,548

Payables under securities
lending transactions

124,915

237,307

1,328,176

Borrowed money

34,48730,101

366,687

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 ¥38,516 million ($409,526 thousand) and¥74,602 million at 31st March, 2013 and 2012, respectively.

SENSHU IKEDA HOLDINGS,INC.

At 31st March, 2013 and 2012, margins on futures contracts inthe amounts of ¥2,778 million ($29,537 thousand) and ¥2,330
million, guarantee deposits of ¥5,143 million ($54,683
thousand) and ¥5,243 million, deposits for futures transactionsof ¥503 million ($5,348 thousand) and ¥503 million andcollateral money deposited for financial instruments of ¥500
million ($5,316 thousand) and ¥500 million were included in“Other assets”, respectively.
In accordance with the amendment of the Ordinance for
Enforcement of the Banking Act (Ordinance of the Ministry of
Finance No. 10, 1982), guarantee deposits pledged forderivative transactions of ¥500 million ($5,316 thousand) havebeen reclassified to collateral money deposited for financial
instruments from the fiscal year ended 31st March, 2013.

The aggregate annual maturities of borrowed money
subsequent to 31st March, 2013 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2014¥42,144$448,102

2015

1,190

12,652

2016

971

10,324

2017

2,059

21,892

2018

367

3,902

25,176

267,687¥71,909$764,582

2019 and thereafterTotal

15. Foreign Exchange Liabilities
13. Deposits

Foreign exchange liabilities at 31st March, 2013 and 2012
consisted of the following:

Deposits at 31st March, 2013 and 2012 consisted of thefollowing:
Millions of yen
2013
Current deposits

2012

Thousands of
U.S. dollars
2013¥151,963 ¥155,145 $1,615,768

Ordinary deposits

1,690,783

1,593,588

17,977,490

Savings deposits

27,382

29,879291,143

Deposits at notice

8,995

13,567

95,6402,544,899

2,549,420

27,059,000

66,712

48,853

709,324

Time deposits
Other deposits
Total

Thousands of
U.S. dollars

Millions of yen¥4,490,736 ¥4,390,453 $47,748,389

2012

2013
Foreign bills sold2013

¥199 ¥431 $2,115

Foreign bills of exchange payable
Total

0

9

95

¥208 ¥431 $2,211

16. Corporate Bonds and Notes
Short-term and long-term bonds payable at 31st March, 2013
and 2012 consisted of the following:
Millionsof yen14. Borrowed Money
Borrowed money at 31st March, 2013 and 2012 consisted ofborrowings from the Bank of Japan and certain other financial
institutions.
Subordinated borrowings of ¥25,000 million ($265,816
thousand) and ¥31,500 million were included in borrowed
money at 31st March, 2013 and 2012, respectively.
The average interest rate applicable to borrowed money at
31st March, 2013 and 2012 was 1.11% and 1.38%,
respectively.

IssuerDescription

Issued2013

The Senshu Ikeda
Bank, Ltd.

9th subordinated bonds

28th Dec., 2007

¥–

1st subordinated bonds

17th Dec., 2010

15,000

2nd subordinated bonds

21st Sep., 2011

10,000

3rd subordinated bonds

16th Dec., 2011

5,000

4th subordinated bonds

23rd Mar., 2012

20,000Total¥50,000Millions Thousands ofof yenU.S. dollars Interest
2013

rates (%)

Secured/unsecuredDue

The Senshu Ikeda ¥3,000 $–Bank, Ltd.
15,000159,489

3.06

Unsecured–

1.67

Unsecured 17th Dec., 2020

Issuer

Total

2012

10,000106,326

2.01

Unsecured 21st Sep., 2021

5,000

53,163

2.06

Unsecured 16th Dec., 2021

20,000212,652

2.23

Unsecured 23rd Mar., 2022

¥53,000 $531,632

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

48

The aggregate annual maturities of short-term and long-termbonds payable subsequent to 31st March, 2013 weresummarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2014

¥–

$–

2015

–

–

2016

–

–

2017

–

–

2018

–

–

50,000531,632¥50,000$531,632

2019 and thereafter
Total

18. Retirement Benefit Plans
Certain consolidated subsidiaries have defined benefit
pension plans consisting of corporate pension plans andlump-sum payment plans. In addition, increased retirement
benefits are paid for retirement, etc. of employees in certain
circumstances.
Certain consolidated subsidiaries have lump-sum payment
plans as defined benefit pension plans.
(1)	The assets and liabilities of the employees’ retirement
benefit plans at 31st March 2013 and 2012 consisted of
the following:Thousands of
U.S. dollars

Millions of yen

17. Other Liabilities

2013

2012

2013

¥(32,008) ¥(30,324) $(340,329)

Other liabilities at 31st March, 2013 and 2012 consisted of thefollowing:

Pension plan assets at fair value

29,37024,655

312,280

Thousands of
U.S. dollars

Unfunded benefit obligation(2,637)(5,669)(28,038)

Unrecognized net retirement benefit
obligation at transition

1,319

1,978

14,024

Millions of yen
2013
Accrued expenses
Unearned income
Accrued income taxes
Other
Total

2012

2013

¥7,284 ¥9,992 $77,448
10,89912,506

115,885

766

729

8,144

23,28821,572

247,612¥42,239 ¥44,800 $449,112

The amounts of lease obligations included in “Other” were ¥24
million ($255 thousand) and ¥19 million at 31st March, 2013
and 2012, respectively. The average interest rates on leaseobligations at 31st March, 2013 with maturity dates on or
before and subsequent to 31st March, 2014 were 2.87% and2.33%, respectively. The average interest rates on leaseobligations at 31st March, 2012 with maturity dates on or
before and subsequent to 31st March, 2013 were 3.31% and3.08%, respectively.
The aggregate annual maturities of lease obligations
subsequent to 31st March, 2013 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2014

¥7

$74

2015

6

63

2016

5

53

2017

3

31

2018

0

0

2019 and thereafter

–

–

¥24

$255

Total

49

Retirement benefit obligation

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Unrecognized actuarial loss

5,206

8,344

55,353

Unrecognized prior service cost

(2,786)(3,214)(29,622)

Net retirement benefit obligation

1,102

1,440

11,717

Prepaid pension cost

5,613

5,955

59,681

Accrued retirement benefits for employees ¥(4,511) ¥(4,515) $(47,963)

Notes:
1.	Increased retirement benefits paid on a temporary
basis are not included.
2.	Certain consolidated subsidiaries apply the simplified
method in calculating retirement benefit obligation.
(2)	Retirement benefit expenses for the years ended 31st
March, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2013
Service cost

2012

2013

¥996 ¥1,076 $10,590

Interest cost

614

641

6,528

Expected return on plan assets

(564)

(542)

(5,996)

Amortization of prior service cost

(427)

(356)

(4,540)

Amortization of actuarial loss

1,263

1,408

13,429Amortization of transitional obligation

659

659

7,006

Net periodic retirement benefit expenses ¥2,541 ¥2,886 $27,017

Note:
Retirement benefit expenses of consolidated subsidiaries
which apply the simplified method are included in“service cost” collectively.

SENSHU IKEDA HOLDINGS,INC.

21. Shareholders’ Equity(3)	The assumptions used in accounting for the above plans
for the years ended 31st March, 2013 and 2012 were as
follows:
Discount rates

2013

2012

1.0%-1.3%

1.7%-2.1%

2.5%

2.5%

Expected rates of return onplan assets

19. Asset Retirement Obligations(1) Outline of asset retirement obligation
The Group recognizes asset retirement obligations
associated with leasehold contracts of certain
subsidiaries’ branches and offices and removal costs ofcertain branches for hazardous substances such as
asbestos.
(2)	Method of determining the amount of asset retirement
obligation
The Group recognizes asset retirement obligations using
a discount rate of 2.3% with the useful life estimated to be
37 years after acquisition.
(3)	Changes in asset retirement obligations for the years
ended 31st March, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013
Balance at beginning of the year2013¥165 ¥192 $1,754

Additional provisions associated with theacquisition of tangible fixed assets

–

17

–

Adjustment due to passage of time

3

3

31

Decrease due to fulfillment ofasset retirement obligations

(22)

(43)

(233)

Other
Balance at end of the year

(6)

(3)

(63)

¥140 ¥165 $1,488

Japanese banks, including the Company, are required tocomply with the Banking Act and the Act. The Act stipulates
that neither additional paid-in capital nor the legal reserve isavailable for dividends, but that both may be used to reduceor eliminate a deficit. Under the Banking Act, an amount which
is at least equal to 20% of the aggregate amount of cash
dividends and certain appropriations of retained earnings
associated with cash outlays applicable to each fiscal period
is to be appropriated to the legal reserve until the aggregate
amount of the legal reserve and the capital surplus accountequals 100% of the amount of share capital. The Act also
provides that if the aggregate amount of additional paid-in
capital and the legal reserve exceeds 100% of the amount ofshare capital, the excess may be distributed to theshareholders either as a return of capital or as dividends
subject to the approval of the shareholders.
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 Act.
(1) Class and number of shares issued and treasury stock
Movements in common stock, first-class preferred stock,second-class preferred stock and treasury stock during
the years ended 31st March, 2013 and 2012 weresummarized as follows:
Number of shares (in thousands)
Year ended 31st
March, 2013

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 Act of Japan) amounted to ¥12,460 million($132,482 thousand) and ¥19,723 million at 31st March, 2013
and 2012, respectively.

Note

Outstanding shares:
Common stock

1,192,293–

953,834

238,458

First-class preferred stock

74,000–66,6007,400

2Second-class preferred stock

115,625–

92,50023,125

1

1

Total

1,381,918– 1,112,934

268,983

Treasury stock:
Common stock

20. Contingent Liabilities

1st April,
31st March,2012 Increase Decrease 2013

First-class preferred stock
Total

16,9296

14,5832,352

3 and 4

–

7,400

7,400

–

5 and 6

16,9297,406

21,983

2,352

Notes:
1.	Decrease in outstanding shares of common stock (953,834
thousand shares) and outstanding shares of second-classpreferred stock (92,500 thousand shares) was due toreverse stock split.
2.	Decrease in outstanding shares of first-class preferred stock(66,600 thousand shares) consisted of reverse stock split(59,200 thousand shares) and disposition of treasury stock
based on resolution of the Board of Directors (7,400
thousand shares).
3.	Increase in treasury stock of common stock (6 thousand
shares) was due to acquisition of shares from theshareholders who owned fractional shares less than one
voting right (before reverse stock split: 0 thousand shares,
after reverse stock split: 5 thousand shares).
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201350

4.	Decrease in treasury stock of common stock (14,583
thousand shares) consisted of reverse stock split (11,630
thousand shares), issuance request from the shareholders
who owned fractional shares less than one voting right (0thousand shares, before reverse stock split: 0 thousand
shares, after reverse stock split: 0 thousand shares),transfer due to exercise of stock option (298 thousand
shares, before reverse stock split: 298 thousand shares)
and transfer to the Senshu Ikeda Bank Employees’
Shareholders Association (2,653 thousand shares, before
reverse stock split: 2,093 thousand shares, after reverse
stock split: 560 thousand shares).
5.	Increase in treasury stock of first-class preferred stock(7,400 thousand shares) was due to purchase of treasury
stock based on resolution of annual shareholders’ meeting.
6.	Decrease in treasury stock of first-class preferred stock(7,400 thousand shares) was due to disposition of treasury
stock based on resolution of the Board of Directors.

(2) Stock subscription rights
The Company resolved to grant stock subscription rights(stock option) to certain directors and executive officers
of its subsidiaries at the Board of Directors’ meeting heldon 31st August, 2012, 28th July, 2011 and 24th February,
2011.
The balance of stock subscription rights granted for stock
option program are ¥63 million ($669 thousand) and ¥62
million at 31st March, 2013 and 2012, respectively.
Stock option related expenses for the years ended 31st
March, 2013 and 2012 amounted to ¥32 million ($340
thousand) and ¥62 million, respectively.
The stock option outstanding at 31st March, 2013 is asfollows:
Date of resolution
Persons granted

Number of shares (in thousands)
Year ended 31st
March, 2012

1st April,
31st March,2011 Increase Decrease 2012

First-class preferred stock

1,192,293
111,000––

Note

Second-class preferred stock

115,625–

Total

1,418,918

–

1,008

18,274– 1,192,293
37,00074,000–115,625

4

37,000 1,381,918

Treasury stock:
Common stock
First-class preferred stock
Total

2,353

16,9291 and 23 and 4–37,00037,000–1,008

55,27439,353

16,929Notes:
1.	Increase in treasury stock of common stock (18,274
thousand shares) consisted of acquisition of shares from theshareholders who owned fractional shares less than one
voting right (1 thousand shares) and acquisition by the
Senshu Ikeda Bank Employees’ Shareholders Association
special trust (18,273 thousand shares).
2.	Decrease in treasury stock of common stock (2,353
thousand shares) consisted of issuance request from theshareholders who owned fractional shares less than one
voting right (0 thousand shares), transfer due to exercise ofstock option (69 thousand shares) and transfer from theSenshu Ikeda Bank Employees’ Shareholders Association
special trust to the Senshu Ikeda Bank Employees’
Shareholders Association (2,283 thousand shares).
3.	Increase in treasury stock of first-class preferred stock(37,000 thousand shares) was due to purchase of treasury
stock based on resolution of annual shareholders’ meeting.
4.	Decrease in outstanding shares of first-class preferred stockand treasury stock (37,000 thousand shares) was due todisposition of treasury stock based on resolution of theBoard of Directors.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

28th July, 2011
Directors of thesubsidiaries: 

16

Executive officers of
the subsidiaries:18

Number of stock option
by type of shares (*)

Common stock:
Common stock:
84,78072,760Date of grant

15th March, 2011

31st August, 2011

Vesting conditions

To exercise within 10
days after retirement

To exercise within 10
days after retirement

Applicable service
periodFrom 15th March, 2011 to
the date of retirement

From 31st August, 2011 to
the date of retirement

Exercise period

From 16th March, 2011
to 31st July, 2041

From 1st September,2011 to 31st July, 2041

Date of resolution
Persons granted

51

22

Executive officers of
the subsidiaries: 19

Outstanding shares:
Common stock

24th February, 2011
Directors of thesubsidiaries: 

31st August, 2012
Directors of thesubsidiaries: 

10

Executive officers of
the subsidiaries: 16
Number of stock option
by type of shares (*)

Common stock:69,500Date of grant

1st October, 2012

Vesting conditions

To exercise within 10
days after retirement

Applicable service
periodFrom 1st October, 2012 to
the date of retirement

Exercise period

From 2nd October, 2012
to 31st July, 2042(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.

SENSHU IKEDA HOLDINGS,INC.

The stock option activity is as follows:
Date of resolution

24th February, 28th July,
2011
2011

31st August,2012

Non-vested:
31st March, 2012-Outstanding
GrantedForfeited
Vested31st March, 2013-Outstanding

70,90072,760–––69,500–––29,76029,960–41,14042,80069,500*3	¥15 of latest annual dividend (including the effect of reverse
stock split) /¥479 of stock price on the base date*4	Yield of Japanese government bonds approximating theestimated remaining outstanding period
In estimating the vested number of stock options, theCompany basically reflects only the actual forfeited number,since it is difficult to make a reasonable estimate on the future
forfeited number.

Vested:31st March, 2012-Outstanding

–

–

–

Vested29,76029,960–Exercised

29,76029,960–Forfeited

–

–

–

–

–

–

31st March, 2013-Outstanding(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.

Date of resolution

24th February, 28th July,
2011
2011

Exercise price¥1 ¥1 ¥1Fair value price at grant date535

31st August,
2012

535

–

¥490 ¥535 ¥449

Note:
The impact of the one-for-five reverse stock split ofcommon stock on 1st August, 2012 is taken into
consideration.

Date of resolution
Volatility of stock price *1
Estimated remaining outstanding period *2
Interest rate with risk free *4

Thousands of
U.S. dollars

Millions of yen
2012

2013
Gain on sales of securities andtrading account securities¥15,361 ¥16,399 $163,328
1,182

Total

2013

1,732

12,567¥16,543 ¥18,132 $175,895

23. Other Income
Other income for the years ended 31st March, 2013 and 2012
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Gain on sales of equity securities ¥354 ¥305 $3,763

The method for estimating the fair value price of 2012 stock
option granted in the year ended 31st March, 2013 was asfollows:
Measurement method: Black-Scholes model
Major fundamental factors and assumptions used to measurefair value

Estimated dividend *3

Other operating income for the years ended 31st March, 2013
and 2012 consisted of the following:

Other

Price information is as follows:

Average stock price at exercise

22. Other Operating Income

31st August, 2012
33.00%
1.9 years

Gain on money held in trust
Other
Total

41

1,467

9,159

120,233¥11,801 ¥9,506 $125,475

24. Other Operating Expenses
Other operating expenses for the years ended 31st March,2013 and 2012 consisted of the following:

3.1%

Thousands of
U.S. dollars

Millions of yen

0.098%*1	Actual stock price during the period (from 7th October,2010 to 1st October, 2012) corresponding to the estimatedremaining outstanding period*2	For each director or executive officer in office, the difference
between “the average term of office of retired directors or
executive officers” and “the years in office of the director or
executive officer at the time stock options were granted”
was calculated, and if said difference was less than 0.75
years, the average of the estimated remaining outstanding
period was calculated using 0.75 years, by taking into
account the period remaining to the next annual
shareholders’ meeting.

138
11,308

2012

2013

2013

Loss on sales of debt securities ¥1,431 ¥1,724 $15,215
Loss on redemption of debt securities

5,710

2,281

Loss on devaluation of debt securities

–

2,967

–

149

4

1,584

Other
Total

60,712¥7,290 ¥6,977 $77,511

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201352

25. Other Expenses

Cash dividends paid during the fiscal year ended 31st
March, 2012

Other expenses for the years ended 31st March, 2013 and2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Provision for possible loan losses ¥7,878 ¥6,679 $83,763
Write-offs of loans and bills discounted

4,646

5,504

49,399Loss on sales of equity securities

976

454

10,377

Loss on devaluation of equity securities

327

462

3,476

Loss on money held in trust

202

326

2,147

Other

8,266

12,337

87,889Total¥22,298 ¥25,764 $237,086

26. Dividends
Cash dividends paid during the fiscal year ended 31st
March, 2013
Resolution by annual shareholders’ meeting on 28th June,
2012
Type ofstock
Commonstock

RecorddateType of stock
Common stock

Record date Effective date

Dividend
amountDividends
per share

Millions of
yen

Yen

31st March, 2011 30th June, 2011 ¥3,573 ¥3First-class
31st March, 2011 30th June, 2011¥ 196 divided
preferred stockby 18.5¥1,176
Second-class
31st March, 2011 30th June, 2011¥ 204 divided
preferred stockby 18.5¥1,275

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2012 and effective dates coming after
the end of the fiscal year

Type of stock
Common stock

Source of Record
dividends
dateEffective
date

Dividend
amountDividends
per share

Millions of
yen

Yen

Retained 31st March, 29th June,earnings¥3,574 ¥3
2012
2012

Dividend amount Dividends per shareFirst-class
Retained 31st March, 29th June,¥ 196 divided¥784
preferred stockearnings
2012
2012
by 18.5

U.S.
dollars

Second-class
Retained 31st March, 29th June,¥ 204 divided¥1,275
preferred stockearnings
2012
2012
by 18.5

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

31st March, 29th June,¥3,574 $38,001 ¥3 $0.03
2012
2012

First-class
31st March, 29th June,¥196 divided $2.08 divided¥784 $8,335
preferred stock
2012
2012
by 18.5by 18.5

27. Cash and Cash Equivalents

Second-class
31st March, 29th June,¥204 divided $2.16 divided
preferred stock¥1,275 $13,556
2012
2012
by 18.5by 18.5

A reconciliation of cash and due from banks in theaccompanying consolidated balance sheets to cash and cash
equivalents in the accompanying consolidated statements ofcash flows at 31st March, 2013 and 2012 was summarized asfollows:

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2013 and effective dates coming after
the end of the fiscal year
Types of stock
Common stock

Source ofdividends

Record date

Second-class
Retained earnings 31st March, 2013 27th June, 2013
preferred stock
Dividend amountTypes of stock
Common stock

Millionsof yenThousands of
U.S. dollars

Dividends per share
Yen

U.S. dollars¥3,574 $38,001 ¥15 $0.15

First-class¥ 980 divided $10.41 divided
preferred stock ¥392 $4,167
by 18.5by 18.5
Second-class¥1,020 divided $10.84 divided
preferred stock ¥1,275 $13,556
by 18.5by 18.5

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Millions of yen

Effective date

Retained earnings 31st March, 2013 27th June, 2013

First-class
Retained earnings 31st March, 2013 27th June, 2013
preferred stock53

Resolution by annual shareholders’ meeting on 28th June,
2011

2013
Cash and due from banks
Deposits other than deposits
with the Bank of Japan
Cash and cash equivalents

2012

Thousands of
U.S. dollars
2013¥100,867 ¥134,000 $1,072,482(5,505)(3,004)(58,532)¥95,361 ¥130,996 $1,013,939

SENSHU IKEDA HOLDINGS,INC.

28. Leasesa.

Total lease payments related to finance leases accounted
for as operating leases and depreciation expense, whichhave not been reflected in the accompanying
consolidated statement of operations for the years ended
31st March, 2013 and 2012, were summarized as follows:

Finance leases
As Lessee
The Group leases vehicles under finance leasearrangements, which do not transfer ownership of thelease assets to the lessee.
The Group accounts for finance leases commencing prior
to 1st April, 2008 that do not transfer ownership of theleased assets to the lessee as operating leasetransactions as permitted by the accounting standard.
The following pro forma amounts represent the acquisition
costs, accumulated depreciation and net book value ofthe leased tangible fixed assets as of 31st March, 2013
and 2012, which would have been reflected in theaccompanying consolidated balance sheet if financelease accounting had been applied to the finance leases
for which the Group is a lessee and which are currently
accounted for in a manner similar to the accounting
treatment for operating lease transactions:Thousands of
U.S. dollars

Millions of yen
2012

2013
Acquisition costs
Accumulated depreciation
Net book value

Depreciation expense

6

2

21

There was no loss on impairment of fixed assets allocatedto leased assets or reversal of the reserve for impairmentof tangible fixed assets under finance leases for the years
ended 31st March, 2013 and 2012.
b.

Operating leases
As Lessee
Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2013 wereas follows:106¥0 ¥3 $0

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.

2013¥2 ¥6 $21

Depreciation expense has been computed by thestraight-line method assuming the lease periods to be theuseful lives of the respective assets and a nil residual
value.

2013
35

2012

2013
Total lease payments¥10 ¥38 $106
10

Thousands of
U.S. dollars

Millions of yen

Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2014

¥644

$6,8472015 and thereafter
Total

4,865

51,727¥5,509$58,575

Future minimum lease payments subsequent to 31st
March, 2013 for finance leases accounted for in a manner
similar to the accounting treatment for operating leasetransactions were summarized as follows:Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2014

¥0

$0

2015 and thereafter
Total

–

–

¥0

$0

The above future minimum lease payments 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.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201354

29. Income Taxes

30. Comprehensive Income

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 37.9% and 40.6% for the years ended 31st March,2013 and 2012, respectively.

Reclassification adjustments and tax effect amounts of othercomprehensive income for the year ended 31st March, 2013
and 2012 were as follows:

2012

2013

2013

The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2013 and 2012 consisted of the following:

Unrealized gain (loss) on
available-for-sale securities:

Thousands of
U.S. dollars

Reclassification adjustment(2,229)(6,183)(23,700)

Amount before tax effect

21,3591,093

227,102

Tax effect amount(1,645)(74)(17,490)

Net unrealized gain on availablefor-sale securities

19,714

1,018

209,611

Millions of yen
2012

2013

2013

Deferred tax assets:
Reserve for possible loan losses ¥35,348 ¥32,572 $375,842
Provision for employees’ bonuses

649

Accrued retirement benefits for employees
Loss on devaluation of securities
Tax loss carryforwards

Amount for the year¥23,589 ¥7,277 $250,813

664

6,900

3,275

3,127

34,821

Amount for the year

(19)

(79)

(202)

8,144

12,516

86,592

Reclassification adjustment

25

97

265

17,273

19,285

183,657

Amount before tax effect

5

17

53

Depreciation

762

574

8,102

Tax effect amount

(2)

(0)

(21)

Net unrealized loss on availablefor-sale securities

3,088

4,743

32,833Net unrealized gain on
deferred hedges

2

17

21

Other

3,693

4,333

39,266

Unrealized gain (loss) on deferred hedges:

Total other comprehensive income ¥19,717 ¥1,036 $209,643

Gross deferred tax assets

72,236

77,817768,059

Valuation allowance(40,576)(43,986)(431,430)

Total deferred tax assets

31,65933,831

336,618

31.	Segment Information and RelatedInformation

Non-taxable accrued dividend income

(354)

(394)

(3,763)Net unrealized gain on availablefor-sale securities(1,871)(569)(19,893)

(23)

(24)

(244)

(2,249)(989)(23,912)Segment information
Reportable segment information is omitted because the Groupis engaged only in banking business and “other” in ouroperating results, including leasing business was immaterial
for the years ended 31st March, 2013 and 2012.

Deferred tax liabilities:

Other
Total deferred tax liabilities
Net deferred tax assets¥29,409 ¥32,842 $312,695

A reconciliation of the statutory tax rate to the effective tax rate
for the years ended 31st March, 2013 and 2012 was asfollows:
2012

2013

(1) Related informationa. Information about services
For the year ended 31st March, 2013
Millions of yen
Lending

Statutory tax rate

37.9%

Permanently non–taxable income

(0.8)

–

Permanently non–deductible expenses

0.5

0.6

(14.5)(34.0)Per capita portion of inhabitants’ taxes

0.7

0.9

Unused tax loss carryforwards that
had expired

1.0–

Deduction limit of tax loss carryforwards

–

30.3

Decrease in deferred tax assets due
to changes in tax rate

–

32.0

Effect of consolidated tax payment

–

(8.9)

Valuation allowance

55

Thousands of
U.S. dollars

Millions of yen

40.6%

(3.8)

1.3

Effective tax rate

21.0%

62.8%

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

Other

Total

Income from external¥54,701 ¥27,321 ¥29,535 ¥111,558
customers

For the year ended 31st March, 2012
Millions of yen
Lending

Other

Securities trading
and investment

Securities trading
and investment

Other

Total

Income from external¥58,450 ¥29,881 ¥27,620 ¥115,952
customers

Note:“Income” is presented in lieu of net sales presented by
non-financial companies.

SENSHU IKEDA HOLDINGS,INC.

32. Related Party Transactions

For the year ended 31st March, 2013
Thousands of U.S. dollars
Lending

Securities trading
and investment

Other

Total

Income from external$581,616 $290,494 $314,035 $1,186,156
customersb. Information about geographical areas(i) Income
Information about income has not been presented
as income from external customers inside Japanaccounts for more than 90% of the consolidated
income for the years ended 31st March, 2013 and2012.
(ii) Tangible fixed assets
Information about tangible fixed assets has notbeen presented as tangible fixed assets inside
Japan accounts for more than 90% of theconsolidated tangible fixed assets at 31st March,2013 and 2012.
c. Information about main customers
Information about main customers has not beenpresented as there is no income from particularcustomer which accounts for more than 10% of theconsolidated income for the years ended 31st March,2013 and 2012.
(2) Other information about reportable segments
Other information about reportable segments has notbeen presented as the Group is engaged only in banking
business for the years ended 31st March, 2013 and 2012.

Transactions between a consolidated subsidiary andrelated parties:
Setsuko Sasaki
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, 2013 and 2012 and for the years then ended
were summarized as follows:
The balance at 31st March, 2013 is not presented since theperson does not meet the definition of the related party of theCompany at 31st March, 2013.
2012
Transactions
Type oftransaction

Balances

Millions of yen

Account
nameMillions of yen

Loan

Loans and bills¥–
discounted¥67Interest
income¥1 Other assets

¥0

Other
liabilities¥0

The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201356

33.	Financial Instruments and Related
Disclosures
1.

General Information(1) Policy for financial instruments
The Group, whose core operation is The Senshu Ikeda
Bank, Ltd. (the “Bank”), is engaged in the various
financial services as a regional financial institution. The
Group holds financial assets and liabilities which are
subject to fluctuations in the interest rates and market
prices in the principal businesses such as deposit-taking
and lending services and market activities including
securities investment. In order to serve for setting up
strategic targets in response to the changes in market
environments, the Group conducts integrated asset andliability management (“ALM”) and utilizes derivative
contracts as a part of ALM.
(2) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans
to domestic corporate and individual customers, which
are exposed to credit risk arising from customers’
nonperformance of contractual obligations and interest
rate movement risk. Securities held by the Groupprincipally consist of equity securities, debt securities andinvestment trusts, which are held for pure investment
purpose and strategic investment purpose as availablefor-sale securities and partially, for holding to maturity andtrading purposes. These financial assets are exposed tocredit risk of issuers and market risk associated withinterest rates, stock prices and foreign exchanges.
Deposits which are major financial liabilities are exposed
to liquidity risk that unexpected cash flow might arise. In
addition, other fund raising sources are exposed to theliquidity risk that necessary fund might not be secured
when the Group fails to utilize the market under certain
circumstances, or that the Group might be obliged tofund at more unfavorable interest rates than normal. In
addition, these financial liabilities are exposed to the riskof fluctuations in interest rates as well as financial assets.
The Group uses derivative contracts to meet thecustomers’ needs and principally as a means of risk
control over the assets and liabilities. In addition, as apart of trading activities (to earn short-term trading gains),
futures instruments including equity and debt securities
are utilized. These derivatives are exposed to the credit
risk (counterparty risk) arising from customers’
nonperformance of contractual obligations and market
risk arising from the fluctuations in interest rates, stock
prices, foreign exchanges, etc.

57

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

(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 the basic policy onrisk control are determined by the Board of Directors, andthe responsible functions by risk categories and theintegrated risk control function are clearly defined. In
addition, the “Risk Management Committee” and the“ALM Committee” have been established to monitor therisk profiles of the Group and discuss management issues
as well as risk control measures. And such matters arereported to the Board of Directors and accordingly,
effective risk management system at the managementlevel is structured.
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 portfolio in
accordance with the Company’s policy on credit risk
control and various credit risk control rules. The Group
maintains and operates a system of investigation,internal rating, asset self-assessment in monitoring
individual transactions.
These credit control procedures are performed byeach operating office, credit investigation department
and risk control departments of the Bank. With respect
to credit risk of issuers of securities and counterparty
risk of derivative transactions, the risk control
departments of the Bank monitor the identification of
credit information and fair values. In addition, the risk
control department of the Company reports on aregular basis to the Board of Directors of the Company.
Furthermore the internal audit departments audit thestatus of credit control.

SENSHU IKEDA HOLDINGS,INC.

c. Market risk management(i) Market risk management
The Group controls market risk arising fromfluctuations in interest rates, stock prices, foreignexchanges, etc. in accordance with the Company’s
policy on market risk control and various market risk
control rules. Specifically, the risk control
department of the Company identifies the volume ofmarket risk using the Value-at-Risk (VaR) method
and monitors compliance with the risk limits
resolved by the Board of Directors throughcontinuous monitoring system. For securities, inaddition to above risk limit control policy, the Grouphas established and managed loss cut rules. The
relevant information is periodically reported by therisk 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 to secure stable and continuous
earnings.
The Bank executes foreign exchange transactions
and foreign currency bond investments, which areexposed to foreign exchange risk, but thesubsidiary strives to minimize foreign exchange risk
by balancing the foreign 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.
(iii)Quantitative information of market risk
The Group monitors the value at market risk offinancial instruments, such as deposits, loans andbills discounted and securities, using VaR everyday
as the change in market risk is larger than otherrisks.
The Group calculates the value at market risk
according to the variance-covariance approach(holding period–120 business days, confidence
interval–99.0%, and observation period–240
business days).

The value of market risk on financial instrumentswas ¥10.0 billion ($106.3 million) for interest rateand ¥15.2 billion ($161.6 million) for stocks at 31st
March, 2013. The value of market risk as a wholewith correlation in consideration was ¥34.0 billion($361.5 million).
The Group carries out back-testing to compare themodel-calculating VaR of securities on the banking
activities which influenced by market fluctuation(holding period–one business day) with real gain
and loss in order to verify their accuracy. As real
loss exceeded the model-calculating VaR only once
for the year ended 31st March, 2013, the Groupconsiders that the model calculates the value ofmarket risk with sufficient confidence level.
However, VaR, which calculates the value of market
risk based on past fluctuations in the market,
sometimes cannot calculate the value of market risk
accurately under the condition that market
environment changes abruptly.
d. Liquidity risk management associated with fund raising
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 of the Bank identify theinvestment and funding status of the whole Group on atimely basis and control liquidity risk by securingliquidity of the assets, diversifying the funding
instruments and adjusting the short-term and longterm funding balances considering the market
environments to secure stable fund management.
The risk control department identifies its response
capability if liquidity risk is revealed through monitoring
periodically the amount of liquid reserve assets thatcan be readily converted into cash, monitors theappropriateness of its fund management and reports itto the Risk Management Committee and the Board of
Directors.
(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, avaluation calculated on a reasonable basis if no market
price is available. Since certain assumptions are used in
calculating the value, the result of such calculation mayvary if different assumptions are used.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

58

2.

Fair value of financial instruments

Millions of yen

The carrying value, the fair value and the difference as of 31st
March, 2013 and 2012 are summarized in the following tables:
Note that securities such as unlisted equity securities forwhich fair value is extremely difficult to determine were notincluded in the following tables (See (Note 2) below):

31st March, 2013
Cash and due from banks

Fair value Difference

Call loans and bills bought

5,603

5,603

–

Monetary claims bought (*1)

946

946

–

Trading account securities:
Trading securities

108

108

–

19,00019,000–

Held-to-maturity debt securities

48,07948,582503

Available-for-sale securities

1,113,986

1,113,986–

Money held in trust
Securities:

Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

3,578,225(51,929)3,526,295

3,546,899

20,603

4,374

4,376

1

Total assets¥4,819,262 ¥4,840,370 ¥21,107

Deposits¥4,490,736 ¥4,491,736 ¥1,000

Payables under securities
lending transactions

124,915

124,915–

Borrowed money

71,90972,631721

Foreign exchange liabilities

208

208

–

Corporate bonds and notes

50,00051,167

1,167

Total liabilities¥4,737,769 ¥4,740,659 ¥2,889

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

59¥(615) ¥(615) ¥–
616

616

–

¥1 ¥1 ¥–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

698

698

–

Monetary claims bought (*1)

1,473

1,473

–

69

69

–

19,00019,000–

Trading account securities:
Money held in trust¥100,867 ¥100,867 ¥–Fair value Difference¥134,000 ¥134,000 ¥–Call loans and bills bought

Trading securities

Millions of yen
Carrying
value

31st March, 2012
Cash and due from banks

Carrying
value

Securities:
Held-to-maturity debt securities

49,95350,428474

Available-for-sale securities

1,142,714

1,142,714–

3,470,571

3,495,031

24,460

4,323

4,328

4

Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

3,516,142(45,571)

Total assets¥4,822,805 ¥4,847,744 ¥24,939

Deposits¥4,390,453 ¥4,392,564 ¥2,111

Payables under securities
lending transactions

237,307237,307–

Borrowed money

69,76469,78015Foreign exchange liabilities

431

431

–

Corporate bonds and notes

53,00052,666(333)

Total liabilities¥4,750,957 ¥4,752,751 ¥1,793

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions¥145 ¥145 ¥–
(2)

(2)

–

¥143 ¥143 ¥–SENSHU IKEDA HOLDINGS,INC.

(Note 1)	Valuation method for the fair value of financial
instruments

Thousands of U.S. dollars
31st March, 2013
Cash and due from banks

Carrying
value

Fair value Difference$1,072,482 $1,072,482 $–Call loans and bills bought

59,57459,574–

Monetary claims bought (*1)

10,05810,058

–

1,148

1,148

–

202,020

202,020–

Trading account securities:
Trading securities
Money held in trust
Securities:
Held-to-maturity debt securities

511,206

516,555

5,348

Available-for-sale securities

11,844,614

11,844,614–

Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

38,045,986(552,142)
37,493,833

37,712,908

219,064

46,507

46,528

10

Total assets$51,241,488 $51,465,922 $224,423

Deposits$47,748,389 $47,759,021 $10,632

Payables under securities
lending transactions

1,328,176

1,328,176–

Borrowed money

764,582

772,259

7,666

2,211

2,211

–

531,632

544,040

12,408Foreign exchange liabilities
Corporate bonds and notes
Total liabilities$50,375,002 $50,405,730 $30,717

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions$(6,539) $(6,539) $–
6,549

6,549

–

$10 $10 $–(*1)	General and specific reserves for loan losses
corresponding to loans are deducted. With respect toreserve for loan losses related to monetary claims bought
and foreign exchange assets, carrying value is shown,net of reserve, since the amount is insignificant.
(*2)	Derivative transactions include all derivatives recorded inother assets and other liabilities. Assets and liabilities
arising from derivative transactions are shown on a net
basis.

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 banks withmaturities is presented as the fair value since the fair value
approximates the carrying value due to remaining maturitiesof less than one year.
Call loans and bills bought
The carrying amount is presented as the fair value since thefair value approximates the carrying amount because thecontractual term is short (less than one year).
Monetary claims bought
Receivables related to factoring business are computed in thesame 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 byholding purpose is disclosed in Note 6.
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 published net
assets value. The fair value of privately placed guaranteedbonds issued by the Bank is determined in the same manner
as loans. Note that information on securities by holding
purposes is disclosed in Note 5.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201360

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 fair valueof the loans with fixed interest rates is determined based 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 with shortcontractual terms (less than one year) is presented as the fairvalue since the fair value approximates the carrying value.

Liabilities:

Loan losses on receivables from bankrupt, effectively bankrupt
or likely to become bankrupt borrowers are estimated basedon factors such as the present value of expected future cash
flows or the expected amount to be collected from collateraland guarantees. Since the fair value of these items
approximates the carrying value, net of the currently expectedloan losses, such carrying value is presented 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.

Payables under securities lending transactions
The carrying value is presented as the fair value since the fairvalue approximates the carrying value due to remaining
maturities of less than one year.

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

Deposits
The amount payable on demand as of the balance sheet date(i.e., the carrying value) is considered to be the fair value ofthe demand deposit. The fair value of time deposits isdetermined using the discounted present value of future cash
flows, grouped by certain maturity lengths. The discount rateused 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 (less than
one year) is presented as the fair value since the fair value
approximates the carrying value.

Borrowed money
The carrying value of floating rate borrowed money ispresented as fair value. This is because it reflects the market
interest rate in the short-term period, also the creditworthinessof the Company and the consolidated subsidiaries have notsignificantly changed since the borrowed money was
originated and accordingly fair value approximates the
carrying value. The fair value of fixed rate borrowed money iscalculated 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 consolidated
subsidiary is determined using the market price.

61

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

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

Derivative transactions:
See Note 34.

Millions of yen(Note 2)	Financial instruments whose fair value is extremely
difficult to determine at 31st March, 2013 and 2012were as follows: These securities are not included in“Securities” under “Assets” as part of the fair value
information of financial instruments.
Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Unlisted equity securities (*1) (*2) ¥5,652 ¥5,756 $60,095
Investments in partnerships (*3)
Other
Total

1,241

1,302

13,1954

4

42¥6,899 ¥7,063 $73,354(*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 ¥114 million ($1,212
thousand) and ¥146 million for the years ended 31st
March, 2013 and 2012, respectively.
(*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.

31st March, 2013
Due from banks

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years¥41,255 ¥– ¥–Call loans and bills bought

5,603

–

Monetary claims bought (*1)

946

–

–

359,739

198,046

224,855

7,000

21,70019,4007,000

21,700

3,400

–

–

16,000205,455

Securities:
Held-to maturity debt securities:
Corporate bonds
Other
Available-for-sale securities
with maturities:–

352,739

176,346

Government bonds

316,500

41,0002,000

Local government bonds

13,05639,322

1,770

Corporate bonds

18,77367,362

56,247

Other

4,409

28,662

145,437

682,522574,916

427,255

4,376

–

–

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥1,094,444 ¥772,963 ¥652,110
Millions of yen

31st March, 2013
Due from banks

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥– ¥– ¥–Call loans and bills bought––

Monetary claims bought (*1)

–

–

–

49,13034,635

104,762

Securities:
Held-to maturity debt securities:

–

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

49,13034,635

104,762

21,00018,500

–

740

1,050

–
49,493Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds

2,724

303

Other

24,666

14,78255,268279,146

326,430

1,212,848–––

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥328,277 ¥361,066 ¥1,317,611

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201362

Millions of yen

31st March, 2012
Due from banks

Due inone yearor less

Thousands of U.S. dollars

Due after Due after
one year three years
throughthroughthree years five years¥76,520 ¥– ¥–

31st March, 2013
Due from banks

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years$438,649 $– $–Call loans and bills bought

698

–

–

Call loans and bills bought

59,574–

Monetary claims bought (*1)

1,473

–

–

Monetary claims bought (*1)

10,058––130,922356,758

236,1903,824,976

2,105,752

2,390,802

14,60021,10014,30074,428

230,728

206,273

14,60021,10012,300

Corporate bonds

74,428

230,728

36,150

–

–

2,000

Other

–

–

170,122

116,322335,658

221,890

3,750,547

1,875,023

2,184,529

Government bonds

30,000221,500

87,000Government bonds

3,365,231

435,938

21,265

Local government bonds

25,26437,596

12,593

Local government bonds

138,819

418,096

18,819Corporate bonds

52,07635,74235,881

Corporate bonds

199,606

716,236

598,054

Other

8,982

40,81986,416

Other

46,879304,752

1,546,379

638,106

520,613451,224

7,257,012

6,112,876

4,542,849

4,328

–

–

46,528––

Securities:
Held-to maturity debt securities:
Corporate bonds
Other
Available-for-sale securities
with maturities:

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥852,049 ¥877,372 ¥687,414

31st March, 2012
Due from banks

Securities:
Held-to maturity debt securities:

Available-for-sale securities
with maturities:

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

–

$11,636,831 $8,218,639 $6,933,652

Millions of yen

Thousands of U.S. dollars

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

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥– ¥– ¥–

31st March, 2013
Due from banks$– $– $–Call loans and bills bought

–

–

–

Call loans and bills bought––

Monetary claims bought (*1)

–

–

–

Monetary claims bought (*1)

–

–

–

158,382

34,704

137,395

522,381368,261

1,113,896

Securities:
Held-to maturity debt securities:

Securities:

–

–

–

–

–

–

Corporate bonds

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

Other

–

–

–

522,381368,261

1,113,896

223,285

196,703–

7,868

11,164–

Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

Held-to maturity debt securities:–

Available-for-sale securities
with maturities:

158,382

34,704

137,395

40,00017,000–Government bonds

350

1,530

–

Local government bonds

1,908

2,404

51,114

Corporate bonds

28,963

3,221

526,241

116,123

13,77086,280Other262,264

157,171587,644

266,155

325,6311,226,163

2,968,059

3,470,813

12,895,778

–

–

–

–

–

–

¥424,537 ¥360,336 ¥1,363,558

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total$3,490,451 $3,839,085 $14,009,686(*1)	Loans and bills discounted and monetary claims bought
do not include ¥75,113 million ($798,649 thousand) and¥88,269 million of receivables such as those due frombankrupt, effectively bankrupt or likely to becomebankrupt borrowers at 31st March, 2013 and 2012,
respectively, since it is not certain when they can becollected or redeemed.
(*2)	Overdraft accounts of loans are shown under “Due in one
year or less.”

63

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

(Note 4)	Repayment schedule of bonds, borrowed money andother interest bearing liabilities.

Thousands of U.S. dollars

Millions of yen

31st March, 2013
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,134,093 ¥289,726 ¥38,917

Payables under securities
lending transactions

124,915––

Borrowed money

42,144

2,161

2,427

–

–

–

Corporate bonds
Total

31st March, 2013
Deposits (*1)
Payables under securities
lending transactions––$4,837 $11,068 $–Payables under securities
lending transactions––

Corporate bonds–

531,632–

Total

Millions of yen
Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,021,132 ¥331,424 ¥36,258

Payables under securities
lending transactions

237,307––

Borrowed money (*2)

34,247

1,532

2,484

Corporate bonds (*3)

–

–

–

¥4,292,688 ¥332,956 ¥38,743
Millions of yen

Total

31st March, 2013
Deposits (*1)–

¥8,631 ¥68,041 ¥–Corporate bonds (*3)–$45,732,610 $3,103,540 $439,595

180,754–

Borrowed money (*2)

–

Total

–

–

Payables under securities
lending transactions–

Corporate bonds

86,932

17,00031st March, 2012

25,805

Borrowed money¥455 ¥1,041 ¥–

50,000

Deposits (*1)–

22,977

Millions of yen
Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years

–

Total

–

448,102

Thousands of U.S. dollars

8,176

31st March, 2012

1,328,176

Borrowed money

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

Corporate bonds

Deposits (*1)$43,956,331 $3,080,552 $413,790

Payables under securities
lending transactions¥4,301,152 ¥291,888 ¥41,344

Borrowed money
Total

31st March, 2013
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥613 ¥1,024 ¥–
–

–

–

1,500

18,000––50,000––$91,770 $723,455 $–(*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 at 31st
March, 2012 is not included.
(*3)	Corporate bonds whose repayment schedule is notdetermined in the amount of ¥3,000 million at 31st March,2012 are not included.

34. Derivatives
1.	Derivative transactions to which hedge accounting is notappliedWith respect to derivatives to which hedge accounting is
not applied, contract amount or notional principal, fair value
and related valuation gain or loss and computation methodof fair value are as follows: Note that contract amounts do
not represent the market risk exposure of derivativetransactions.

¥2,113 ¥69,024 ¥–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201364

2.	Derivative transactions to which hedge accounting isapplied(1)	Currency related derivatives at 31st March, 2013 and2012
Millions of yen
Contract amount/notional principal
31st March, 2013

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥46,607 ¥36,111 ¥75 ¥75

Forward foreignexchange contracts:
Selling¥35,471

–

(673)

(673)

Buying¥8,260

–

(17)

(17)

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 thefair value are as follows. Note that contract amount or
notional principal does not represent the market risk
exposure of derivative transactions.
(1)	Interest related derivatives at 31st March, 2013 and2012
31st March, 2013

Currency options:
Selling¥6,938 ¥4,792

(351)

271

Buying¥6,938 ¥4,792

351

(186)

Total

¥(615) ¥(530)

Contract amount/notional principal
31st March, 2012

Total

Over
one year

Fair
value

Hedge accounting
methodSwap rateapplied tounderlying
debt

Millions of yen

Millions of yen
Contract amount/notional principal

Valuation
gain (loss)

Transaction
type

Major hedged
itemInterest rate swaps:
Receivable floating
rate/
Borrowed
Payable fixed ratemoney

¥74,353 ¥44,764 ¥116 ¥116

Forward foreignexchange contracts:
Selling¥2,431

–

(26)

(26)

Buying¥2,330–

55

55

Currency options:
Selling¥10,686 ¥6,768

(988)

(84)

Buying¥10,686 ¥6,768

988

217

Total

Hedge accounting
methodSwap rateapplied tounderlying
debt

31st March, 2013

Total

Over
one year

Fair
value

Valuation
gain (loss)(*2)

Millions of yen

Transaction
type

Major hedged
item

Total

Over one
Fair
year
value (*1)

Interest rate swaps:
Receivable floating
rate/
Borrowed
Payable fixed rate money
31st March, 2013

¥450

¥100

(*2)

Thousands of U.S. dollars
Contract amount/notional principal

Hedge accounting
methodContract amount/notional principal¥–Contract amount/notional principal¥145 ¥278
Thousands of U.S. dollars¥100

31st March, 2012

Over-the-counter transactions:
Currency swaps

Over one
Fair
year
value (*1)

Total

Swap rateapplied tounderlying
debt

Transaction
type

Major hedged
item

Total

Over
Fair
one year value (*1)

Interest rate swaps:
Receivable floating
rate/
Borrowed
Payable fixed ratemoney

$1,063$–(*2)

Over-the-counter transactions:
Currency swaps$495,555 $383,955 $797 $797

Forward foreignexchange contracts:
Selling$377,150–(7,155)(7,155)

Buying$87,825

–

(180)

(180)

Selling$73,769 $50,951(3,732)

2,881

Buying$73,769 $50,951

3,732(1,977)

Currency options:Total$(6,539) $(5,635)

Notes:
1.	Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) is reported in
the consolidated statement of operations.
2.	The fair value is determined by using the discounted
cash flow method or others.

65

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013*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 value ofover-the-counter transactions is determined by using thediscounted cash flow method, option pricing models orothers.
*2	The interest rate swaps which qualify for hedge
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 fair value ofinterest rate swaps is considered to be included in the fairvalue of the borrowed money disclosed in Note 33.

SENSHU IKEDA HOLDINGS,INC.

(2)	Currency related derivatives at 31st March, 2013 and2012
31st March, 2013

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Securities
denominated inforeign currencies ¥5,165

¥940

¥(3)

Forwardforeignexchange
contracts–

30,882

–

Total

619
¥616

31st March, 2012

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Securities
denominated inforeign currencies ¥21,783

¥–

¥(2)

31st March, 2013

Thousands of U.S. dollars
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting
Forwardforeignexchange
contracts

Major hedged
item

Total

Over
one year

Fair
value

Securities
denominated inforeign currencies $54,917$9,994$(31)–

Total

328,357–6,581$6,549

Derivatives in the table above are mainly accounted for hedge
accounting (deferral hedge accounting) in accordance withJICPA 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 by using the discounted
cash flow method.

(1)	The companies which were the parties to the company
split
The splitting company: ‌The Senshu Ikeda Bank, Ltd.
(wholly owned subsidiary of theCompany)
The succeeding companies: ‌Senshu Ikeda Turnaround
Partners Co., Ltd.
Senshu Ikeda Corporate
Partners Co., Ltd.
(2)	Summary of operations subject to the company split(a) Management of loans, bills discounted and others, (b)supporting the business rehabilitation of borrowers and(c) collections and other related transactions(3)	Legal form of the company split
Simplified absorption-type company split under which the
Bank was the splitting company and both of Senshu
Ikeda Turnaround Partners Co., Ltd. and Senshu Ikeda
Corporate Partners Co., Ltd. were the succeedingcompanies.
(4)	Outline of transactions including the objective of thecompany split
The objective was to exercise consulting function throughsupporting administrative improvement of management
and business rehabilitation of borrowers as well assmooth fund supply to the regional customers.
(5)	Summary of accounting treatment
This transaction was treated as a transaction undercommon control and accounted for as follows:a)	Appropriate carrying value of assets and liabilities
transferred in respect of the company split
Millions of yen

Thousands of U.S. dollars

SenshuSenshuSenshuSenshu
Ikeda
Ikeda
Ikeda
Ikeda
Turnaround Corporate Turnaround Corporate
Partners
Partners
Partners
PartnersCo., Ltd.
Co., Ltd.
Co., Ltd.
Co., Ltd.
Cash and due from banks
Loans and bills discounted
Other assets¥2,386 ¥3,135 $25,369 $33,333
15,342

20,458163,1252

1

21

217,522
10(5,094)(9,376)(54,162)(99,691)

35. Business Combination

Reserve for possible loan losses
Total assets

12,637

14,218134,364

151,174

The Bank transferred rights and obligations related to the
management of customer loans, supporting businessrehabilitation of borrowers, collections and other relatedtransactions, which the Solution Supporting Office of Loan
Division of the Bank (the name of which has subsequently
changed to Solutions Division) had jurisdiction over, to Senshu
Ikeda Turnaround Partners Co., Ltd. and Senshu Ikeda
Corporate Partners Co., Ltd., both of which were whollyowned subsidiaries of the Company, through a simplified
absorption-type company split effective on 25th March , 2013.

Borrowed money

4,000

4,000

42,53042,530

3

7

31

74

Other liabilities
Total liabilities¥4,003 ¥4,007 $42,562 $42,604

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201366b)Acquisition cost and the number of allotted shares ofinvestment in affiliates which were acquired inconsideration for the company split
Millions of yen

Acquisition cost¥8,633 ¥10,210 $91,791 $108,559

Number of allotted shares

196,316

202,900

2013
Net income for the year

(392)

(784)

(4,167)(1,275)(1,275)(13,556)(1,667)(2,059)(17,724)

Amounts per share at 31st March, 2013 and 2012 and for theyears then ended were summarized as follows:

Net income attributable tocommon stock

Net assets

U.S. dollars
2012

2013

¥591.97 ¥489.26 $6.29

Net income:Average outstanding numberof shares of common stock(Unit: thousand shares)¥8,435 ¥1,751 $89,686

235,617

235,624

Diluted net income per shareafter adjusting potential shares

Basic

35.80

7.43

0.38

Adjustment to net income

Diluted

35.77

7.43

0.38

Number of increased common
stock (Unit: thousand shares)

147

104

Of which, stock subscription rights

147

104

Cash dividends
Common stock¥15 ¥3 $0.15

First-class preferred stock¥ 980 divided ¥ 196 divided $10.41 divided
by 18.5by 18.5by 18.5

Second-class preferred stock ¥1,020 divided ¥ 204 divided $10.84 divided
by 18.5by 18.5by 18.5

Net assets per share as of 31st March, 2013 and 2012 werecomputed based on the following information:
Thousands of
U.S. dollars

Millions of yen
2013
Total net assets
Payment for first-class preferred stock

2012

2013

¥185,389 ¥163,311 $1,971,174(10,000)(20,000)(106,326)

Dividends for first-classpreferred stock

(392)

(784)

(4,167)

Payment for second-classpreferred stock(25,000)(25,000)(265,816)

Dividends for second-classpreferred stock(1,275)(1,275)(13,556)

Stock subscription rights

(63)

(62)

(669)

(8,888)(1,177)(94,502)(45,619)(48,298)(485,050)

Minority interests
Amounts to be deducted from total net assets

Net assets attributable to common stock¥139,769 ¥115,013 $1,486,113
as of 31st March, 2013 and 2012
Number of shares of common stock as of 31st
March, 2013 and 2012 used to compute net
asset per share (Unit: thousand shares)

236,105

235,072

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20132013

Dividends for second-classpreferred stock based on the
resolution at the regular generalshareholders’ meeting

36. Amounts per Share

Yen

2012

¥10,102 ¥3,810 $107,410

Dividends for first-class preferred stock
based on the resolution at the regular
general shareholders’ meeting

Amounts not attributed tocommon stock shareholders

2013

Thousands of
U.S. dollars

Millions of yen

Thousands of U.S. dollars

SenshuSenshuSenshuSenshu
Ikeda
Ikeda
Ikeda
Ikeda
Turnaround Corporate Turnaround Corporate
Partners
Partners
Partners
PartnersCo., Ltd.
Co., Ltd.
Co., Ltd.
Co., Ltd.

67

Net income per share for the years ended 31st March, 2013
and 2012 are computed based on the following information:¥– ¥– $–Notes:
1.	Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to thefiscal year.
2.	On 1st August, 2012, the Company implemented a
one-for-five reverse stock split to each of our common
stock, first-class preferred stock and second-classpreferred stock. The calculation of net income pershare and diluted net income per share are made as if
the reverse stock split was implemented at the
beginning of the fiscal year ended 31st March, 2012.

SENSHU IKEDA HOLDINGS,INC.

Report of Independent Auditors
Senshu Ikeda Holdings, Inc.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201368

Non-consolidated Balance Sheets (Unaudited)
The Senshu Ikeda Bank, Ltd.
As of 31st March, 2013 and 2012

Millions of yen
2013
2012

Thousands of U.S.
dollars (Note 1)
2013

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
Reserve for possible investment losses
Total assets¥100,384
5,603
946
108
19,0001,193,126
3,563,023
4,376
46,862
37,6758,435
27,592
19,071(32,302)(559)¥4,993,344¥133,027
698
1,473
69
19,0001,203,706
3,527,485
4,328
30,42137,977
9,592
30,653
21,482(37,681)–¥4,982,234$1,067,347
59,574
10,0581,148
202,020
12,686,081
37,884,348
46,528498,266
400,584
89,686
293,375
202,775(343,455)(5,943)$53,092,440

Liabilities
Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Other liabilities
Provision for employees’ bonuses
Accrued retirement benefits for employees
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Acceptances and guarantees
Total liabilities¥4,512,893
19,900124,915
62,036208
50,00021,213
1,540
4,403
114
315
79
393
19,071
4,817,085¥4,407,710
17,200237,30760,130431
53,00023,739
1,585
4,416
313
258
53
473
21,482
4,828,103$47,983,976
211,589
1,328,176
659,606
2,211
531,632
225,550
16,37446,815
1,212
3,349
839
4,178
202,775
51,218,341

Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized gain (loss) on available-for-sale securities
Net unrealized gain (loss) on deferred hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

50,71093,932
23,812
168,456
7,802
0
7,802
176,259¥4,993,344

50,71093,932
21,381
166,025(11,892)(2)(11,894)
154,130¥4,982,234

539,181998,745
253,184
1,791,132
82,955082,955
1,874,098$53,092,440

Liabilities and net assets

69

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2013

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2013 and 2012

Millions of yen
2013
2012

Thousands of U.S.
dollars (Note 1)
2013

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Recoveries of written-off claims
Other income
Total income¥54,633
9,582
175
14,10816,542902
3,842
99,787¥58,391
12,280144
12,712
18,132
631
1,843
104,137$580,893
101,8811,860
150,005
175,885
9,590
40,8501,060,999

6,772
825
1,721
9,445
7,290
51,54370
25
12,66390,357
9,429

7,939
732
2,041
9,801
7,136
53,048176
166
15,65896,7007,436

72,004
8,771
18,298100,425
77,511
548,038744
265
134,641
960,733
100,255

(135)
1,489
1,354
¥8,075

86
5,299
5,385
¥2,050(1,435)
15,832
14,396$85,858

Expenses
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative 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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201370