Annual Report
The Bank of Iwate,Ltd. Annual ReportTop Message
1. Management Policy
Since its establishment in May 1932, The Bank of Iwate, Ltd. (the “Bank”) has been maintaining its two basic
positions of contributing to the development of the regional community and ensuring financial soundness of the
Bank under all circumstances as its fundamental mission objectives.
When the business environment surrounding the Bank changed drastically due to the impact of the Great East
Japan Earthquake which occurred in March 2011, we came up with the new long-term vision for the next 10 yearsof “demonstrating a dominant presence as a driving force in the region, while establishing our position as a top
quality bank,” along with the medium-term management plan formulated in April 2013. As such, it allows us totransform ourselves from a backstage player to a proactive driving force demonstrating our dominant presence,
while at the same time, strive to establish the No.1 position in terms of quality by improving and reinforcing ourintangibles, including our customer service capabilities.
Long-term Vision (April 2013 to March 2023)“Demonstrating a dominant presence as a driving force in the region, while establishing our position
as a top quality bank”
1st stage “”

2nd stage “– Reconstruction and Creation,
toward a Prosperous Future –April 2013”

– The Innovation –March 2016 April 2016

March 2019 April 2019

3rd stage “”– To the Next –Present

March 2023

2. Medium-term Management Plan
(1) Overview of the Medium-term Management Plan
We are implementing our medium-term management plan “Iwagin Frontier Plan – To the Next” (the “Plan”) (April
2019 to March 2023) to translate our goal of realizing co-prosperity with the region into concrete action. “To the
Next” embodies our desire of paving a path for the next generation of the regional community and the Bank tomove on “to the next” phase through various initiatives to solve issues facing the region. The theme of the Plan is“pursuing CSV to build a future with the region.” CSV stands for “Creating Shared Value,” and represents thecreation of common values. In other words, as the Bank’s CSV, it means “by making efforts to strengthen our
relationships with customers, confronting issues facing our region head-on, and endeavoring to resolve them, we
can enhance social and economic values for both the region and the Bank.” Under the Plan, we will fulfill our idealof co-prosperity with the region—our main base of operations—by giving shape to this theme.
The Plan contains four basic policies. The first is “Provision of high-quality added value to realize regional andcustomer growth.” The aim of this policy is to provide high-quality added value to the region and customers
through highly specialized and convenient services such as the creation of business domains and digitaltransformation, in addition to our conventional finance functions. The second is “Improved operational efficiency
through the promotion of BPR and optimization of resource allocation.” This aims to leverage digital technology
and other means to increase productivity, shift corporate resources such as people and time to our customer-facing
business, and cut costs. The third is “Establishment of market operation/risk management/revenue management
frameworks that can respond flexibly to changes in the environment.” The aim of this is to consolidate andstreamline bank operations, define the scope of risk-taking, target revenue, and other elements, and upgrade risk
management and revenue management, with the ultimate goal of increasing revenue compared to risks. The fourthis “Fostering of an organizational culture in which each person can proactively tackle issues using his or her
knowledge and actions.” This aims to develop human resources that will proactively tackle issues, and create anenvironment that enables employees to demonstrate their full potential.
By taking measures in accordance with these four basic policies under the Plan, we will strive to realize theplan’s theme of “pursuing CSV to build a future with the region.”― 1 ―Medium-term Management Plan

Iwagin Frontier Plan – To the Next –April 2019 to March 2023

Theme

Pursuing CSV to build a future with the region
Creating Shared Value: By making efforts to strengthen our relationships with customers, confronting issues facing our region head-on,
and endeavoring to resolve them, we can enhance social and economic values for both the region and the Bank.

Four Basic Policies
Basic Policy I
Provision of high-quality added value to realize regionaland customer growth• Create new business domains • Upgrade sales activities• Drive loan business • Improve service quality• Drive asset management business • Strengthen partnerships with local governments• Upgrade supports to improve customers’ business • Upgrade CS promotion activities

Basic Policy IV
Fostering of an organizational culture in which each
person can proactively tackle issues using his or her
knowledge and actions• Initiatives to develop human resources• Develop an environment in which every employee can play anactive role

Basic Policy II
Improved operational efficiency through promotion of
BPR and optimization of resource allocation
Ingenuity andenthusiasm

Oneself
×
The future

StructuralreformFlexible andunwavering• Improve operational efficiency• Optimize placement of branches and ATMs
• Improve working environment• Cost management

Basic Policy III
Establishment of market operation/risk management/
revenue management frameworks that can respondflexibly to changes in the environment• Upgrade lending examination systems, securities management
systems, risk management systems, and internal audit systems• Upgrade compliance and risk management(2) Progress of the Medium-term Management Plan
During the first two years of the Medium-term Management Plan, we have engaged in “transformation of theearnings structure and rebuilding of the system” and “proactive investments in new businesses, digital fields, etc.”
We have designated the latter two years of the Plan as a period to bring about full-fledged results. In the first two
years, we have established two new subsidiaries and a new division responsible for digital strategy, with the aim of
expanding our business domains. We also moved ahead with the Management Structure Reinforcement Project,strengthening the revenue base. In the third year, we have entered the phase where we link the results of measures
implemented in the first half of the Plan to revenue. We have enhanced the collaboration and cooperation between
the different components of the Iwagin combined financial group—banking, leasing, card, and consulting
businesses, regional trading company, etc.—and promoted initiatives for digitalization. We also provided a broad
range of measures, not limited to cash flow assistance, to support the core businesses of our corporate customers
under stress due to the prolonged novel coronavirus (COVID-19) pandemic. In addition, we actively engaged in
activities aimed at achieving decarbonization, amid growing public awareness of this issue. Moreover, we further
reinforced the management structure in view of the need to respond to new changes in the environment in the
future, implemented measures focused on cost structure reforms, such as the reconstruction of Group companies
and Head Office consolidation, and began working on operational reforms aimed at improving the profitability ofbanking operations in each division. As a result of these initiatives, we made progress on our four principal target
indicators in the year ended 31 March 2022, achieving our targets for “consolidated net income,” “OHR,” “capitalratio,” and “business succession/M&A support recipients.”
FY2021targets

FY2022(final year of the Plan)
targets

Indicator

Calculation
methodFY2021
results

Consolidated
net income

Figures stated infinancial statements¥3.3 billion¥4.1 billion¥5.0 billion

OHR

Expenses (excluding
non-recurring items)/ core gross businessprofit

84.6%

75.0%

70% levels

Consolidated
capital ratio

Equity capital /risk assets, etc.

Over 10%

11.62%

Over 10%

Business
succession/
M&A support
recipients

No. of customers we
support for businesssuccession or M&As

1,800

1,856

2,400
*Accumulated total
plan period― 2 ―3. Business Environment
In the business environment surrounding regional financial institutions, the traditional business model that depends
on deposits and loans has declined because of prolonged low interest rates. Competition has become more intense
due to factors such as companies from other industries entering banking.
Iwate Prefecture, the Bank’s main base of operations, faces a rapid decrease in population as many young people
move to other prefectures. The lack of successors has led to an increase in businesses closing and a decrease in thenumber of business establishments. These factors are causing the region to gradually lose vitality. Thanks to its
thriving manufacturing industry, however, Iwate Prefecture is growing as an industrial hub with a focus on the autoand semiconductor industries. In addition, the prefecture has a wide variety of foods and crafts that are appreciatedworldwide, features three World Heritage sites, and boasts tourism resources including sea and mountains.
Moreover, it is one of the prefectures with the highest potential for renewable energy in Japan due to its abundantnatural resources. Furthermore, with the full opening of the Sanriku Coast Expressway (Restoration Road) in
December 2021, access has been improved substantially, not only between inland and coastal areas, but also toother prefectures. This can be expected to boost the development of industry and tourism.
As stated above, the region where the Bank is located faces a variety of challenges, but also has many strengths
and great potential. We hope to achieve co-prosperity with the region by helping it overcome such challenges andspurring further growth and development through initiatives to bring out its strengths and potential.

4. Issues to be Addressed
We are at the stage of ensuring that we reap the benefits of our efforts to create new business domains and of thebusiness foundation we have established towards achieving the final goals of our medium-term management plan.
However, the business environment surrounding the Bank is recently changing ever more dramatically, and it has
become difficult to forecast even a few years into the future. We must further strengthen the Bank’s revenue base torespond to any changes that may occur. To this end, we will focus on strengthening the following efforts.
(1) Establishing a sustainable revenue structurea. Operational reforms
Since October 2017, we have engaged in initiatives to reinforce the management structure, focusing on Head Officeand business branch BPR and the reorganization of branches, under the Management Structure Reinforcement
Project. Head Office and business branch BPR consists of adjusting the number of personnel and redeploying
personnel in accordance with business operations. The initiatives under the Project, including BPR, branchreorganization, and cost structure reform, are aimed at increasing customer contact points and strengthening earning
capacity by improving the efficiency and productivity of operations and freeing-up sales personnel, while also
optimizing the cost structure and building a management structure that can support the region, in any environment,
into the future.
In order to advance these initiatives, we are presently engaged in operational reforms aimed at improving
revenue, based on the classification of banking operations and the analysis of revenue for each operation. We haveespecially designated “corporate sales activities based on an understanding of business feasibility” as a domain
where we will strengthen revenue in the future, and we will prioritize the allocation of personnel to this domain. To
this end, we will move ahead with the digitalization of personal loan and face-to-face services, including the
introduction of online-only services and tablet devices. At the same time, we will consolidate a range of different
operations presently carried out by business branches at the Head Office. We also aim to achieve an efficient assets
management structure for assets under management by consolidating sales personnel at the controlling office.
b. Active investment in digital domains
At the DX Lab, our section dedicated to promoting digital transformation, we will continue to move ahead withinitiatives such as 1) reinforcing digital contact points, 2) omnichannel, 3) data utilization, and 4) supporting sales
activities by employees with an aim of creating a customer-oriented digital environment.
We will also engage in digitalization efforts in various areas, including further expansion of the range of onlineonly loan products, asset management public relations activities targeting the mass demographic, and promotion of
the use of smart passbooks through the Iwagin app, actively investing in these areas.

― 3 ―c. Alliance with The Akita Bank, Ltd.
In October 2021, we announced our agreement with The Akita Bank, Ltd. regarding a comprehensive business
partnership (alliance). The two banks have hitherto engaged in multi-faceted collaboration through Netbix, etc., andbuilt a cooperative relationship. Together, we considered how to use our respective sales bases and management
resources to the maximum effect, including how to share and accumulate know-how in new domains for the future,to actively reap the benefits of deregulation and contribute to the development of each region. As a result, we cameto the conclusion that this alliance, which further deepens the cooperative relationship that currently exists, would
lead to even greater synergies, expanding top-line revenue and reducing costs through shared back-office operations,etc., and contribute to achieving the financial group vision to which each bank aspires, while maintaining
management independence and a sound competitive relationship. At present, our efforts are focused on sevensubcommittees: (1) corporate and regional revitalization, (2) clerical work and systems, (3) cost structure reform,(4) digital transformation, (5) retail sales activities, (6) credit control, and (7) regional trading companies. We areengaged in extensive discussions and consideration of specific measures, which we will proceed to implement after
setting quantitative goals and targets.
*Netbix: an abbreviation of Network For Business Information Exchange, a collaborative organization launched in
April 2003 by three banks in northern Tohoku—the Bank, The Aomori Bank, Ltd., and The Akita Bank,
Ltd.—to leverage their mutual branch networks and information-gathering capacity to enhance services
for corporate customers.
(2) Developing an environment in which every employee can play an active role, and developing human resources
Regarding the development of an environment in which every employee can play an active role, we introduced aflextime system in April 2020, aiming to improve productivity, reduce working hours, and further encourage “worklife balance,” including the time for child-rearing, nursing and receiving medical treatment, through the autonomousand effective allocation of working hours by employees. From April 2021, we have also diversified dress
requirements during working times, allowing employees to engage in sales activities in clothing that is clean,functional, appropriate to their duties, and appropriate to each time, place, and occasion. This step is aimed at
cultivating a frank, vigorous, and open organizational culture, and generating even more flexible ideas. Moreover,the Bank is driving diversity and inclusion initiatives with the aim of creating a diverse and comfortable workplacein which every employee respects one another and can play an active role and grow. We have established two KPIs
for FY2030: 40% or more females among new executive promotions (from FY2025 onward) and a usage ratio of
80% or more for childcare leave, etc. among eligible male employees. By engaging more fully in these initiatives,
we will proceed to build an organization with diverse career paths and working styles, where everyone can play anactive role.
To utilize human resources, we consider training and retention of young employees who will lead the future of
the Bank as an essential task. We are also considering career design for specialized human resources, given theincreasing diversity of business operations in recent years and the need for human resources who possess a deeplevel of specialist knowledge and know-how in areas such as customer life planning, consulting, and fintech.
Furthermore, we are actively seconding young employees to other companies in the Group to encourage them toacquire specialized knowledge and demonstrate their abilities. By enabling them to experience a broad range of
duties not limited to banking, we aim to expand their horizons and advance their level of knowledge.
(3) Responses to the impact of the prolonged COVID-19 pandemic and soaring crude oil prices
The COVID-19 pandemic is having a protracted impact, with no sign of an end in sight. At the same time, shortages
and soaring prices of crude oil and other raw materials are exerting a growing impact, and the scale of this impact isalso increasingly unclear, compounded by Russia’s invasion of Ukraine. We plan to continue working diligently tofulfill our responsibility as a regional financial institution—maintaining the financial infrastructure and ensuring thestable and smooth provision of funds.
We have now established a cross-organizational Regional Support Team at the Head Office, as well as
management consultation points at each business branch. As well as continuing to support the cash flow ofcustomers affected by these issues, we will work to strengthen support for their core operations, including assistancein rebuilding businesses and digitalization.
Recently, the business environment surrounding our customers is changing dramatically, and they face various
challenges. In this context, we will provide our customers with swift and appropriate support, including corebusiness support, management improvement support, and financial support, based on an understanding of theiractual conditions. The entire Group will strive together, working even harder to help them solve the various
challenges they face.

Toru Iwayama, President― 4 ―Analysis of the Financial Position and Business Performance of the Bank(on a consolidated basis)

Financial Position
Principal Accounts
Deposits (including negotiable certificate of deposit) and Asset Under Management
Deposits (including negotiable certificate of deposit) at the fiscal year-end increased by ¥29.1 billion from theprevious fiscal year-end to ¥3,444.1 billion (US$28,140.3 million). This was due in large part to the impact ofvoluntary restraints on consumption due to the spread of COVID-19, resulting in an increase in deposits byindividuals.
The fiscal year-end balance of assets under management posted an increase of ¥26.7 billion from the previous fiscal
year-end to ¥379.3 billion (US$3,099.1 million). This was due to an increase in sales and the outstanding balance ofinvestment trusts, on the back of market conditions recovering from the impact of COVID-19, as well as an increase
in insurance sales thanks to the partial resumption of sales of yen-denominated insurance and a rise in the interest
rate on savings associated with the rise in overseas interest rates.
Loans
The fiscal year-end balance of loans increased by ¥44.6 billion from the previous fiscal year-end to ¥1,943.2 billion(US$15,876.9 million). This was attributable to an increase in loans to individuals, mainly housing loans, in thecontext of continuing growth in housing investment in Iwate Prefecture, despite a reactionary decline in loans to
SMEs after an increase in COVID-19-related loans in the previous fiscal year.
Securities
The value of total securities decreased by ¥37.8 billion from the previous fiscal year-end to ¥1,150.0 billion(US$9,396.2 million). The Bank has aimed to build a portfolio with a high expected return compared to risk throughdiversified investments in assets with high investment efficiency, including overseas assets, in the context of acontinuing decline in interest income from bonds amid the prolonged low interest rate environment. Based on thispolicy, the Bank has been reinvesting funds from the redemption of Japanese bonds to carefully include and rotate
overseas assets in its portfolio, with a focus on diversified duration and risk balance.
Cash Flow Analysis
Net cash provided by operating activities was a net inflow of ¥43.2 billion (US$353.3 million) in the current fiscal
year, while net cash of ¥240.0 billion was provided in the previous fiscal year. This was because the increase infunds from the inflow of deposits, etc. and borrowed money was lower than in the previous fiscal year.
Net cash provided by investing activities was a net inflow of ¥22.6 billion (US$184.6 million) in the current fiscal
year, while net cash of ¥27.7 billion was provided in the previous fiscal year. This was due to proceeds from saleand redemption of securities exceeding the acquisition of securities in both the previous fiscal year and the current
fiscal year.
Net cash used in financing activities was a net outflow of ¥1.6 billion (US$12.8 million) in the current fiscal year,
while net cash of ¥1.2 billion was used in the previous fiscal year. This was due to the payment of cash dividends,
and the acquisition of treasury stock in the current fiscal year.
As a result of the above, the fiscal year-end balance of cash and cash equivalents increased by ¥64.3 billion fromthe previous fiscal year-end to ¥700.6 billion (US$5,724.3 million).

― 5 ―Business Performance
Earnings
Total income decreased by ¥1.1 billion from the previous fiscal year to ¥44.3 billion (US$361.8 million). This was
mainly attributable to a decrease in interest income including interest and dividends on securities mainly due toredemption of bonds, as well as a decline in gain on sale of securities such as shares, impacted by the rise inoverseas interest rates and the soaring price of crude oil. This was despite an increase in fees and commissions
related to assets under management.
Total expenses decreased by ¥2.5 billion from the previous fiscal year to ¥37.3 billion (US$304.5 million).
Provision of allowance for doubtful accounts saw a reactionary decrease after increasing in the previous fiscal year
as a result of recording provisions that took into account future estimates including the impact of COVID-19, while
general and administrative expenses decreased due to the effect of cost structure reforms such as reorganizing
Group companies and revising the number of internal mails sent inside the Bank.
As a result, income before income taxes increased by ¥1.5 billion from the previous fiscal year to ¥7.0 billion(US$57.3 million) and net income attributable to owners of parent increased by ¥1.2 billion from the previous fiscal
year to ¥4.1 billion (US$33.7 million).
Capital Ratio
The capital ratio declined 0.21 percentage points from the previous fiscal year-end to 11.62% on a consolidated
capital adequacy basis and by 0.14 percentage points from the previous fiscal year-end to 11.30% on a nonconsolidated capital adequacy basis, as a result of an increase in risk assets reflecting an increase in risk-taking byloans divisions.
Under its fundamental mission objective of ensuring the financial soundness of the Bank under all circumstances,the Bank sees the consolidated capital ratio as one of the key indicators of the Medium-term Management Plan. The
Bank maintains an ample capital ratio compared with the capital ratio of over 10%, a target for the final year
(FY2022) of the Medium-term Management Plan.

― 6 ―Corporate Governance■ Basic approachEver since its establishment, the management of the Bank has been based on the fundamental mission objectivesof contributing to the development of the regional community and ensuring the financial soundness of the Bank
under all circumstances. Even in today’s rapidly changing business environment, in order to fulfill the duties
expected of us as the leading bank in our region, by all stakeholders including our business partners andshareholders, we take complete responsibility for our management decisions and aim to establish the highest
standard of corporate governance that includes improved management transparency and strengthened oversightfunctions.
■ Corporate governance structure
The Bank, pursuant to the resolution on the partial amendments to the Articles of Incorporation at the General
Meeting of Shareholders held on June 22, 2018, transitioned to a company with Audit & Supervisory Committee.
By transitioning to a company with Audit & Supervisory Committee, the Bank shall strive to further improve its
corporate value through the enhancement of its corporate governance system by installing an Audit &Supervisory Committee, over half of whose members are Outside Directors, and strengthening oversightfunctions through the voting rights on the Board of Directors and the right to voice opinions on executive
appointments and dismissals held by the Directors serving as Audit & Supervisory Committee Members.
■ Board of Directors
The Board of Directors comprises a total of fifteen Directors, including ten Directors who are not serving as
Audit & Supervisory Committee Members, three of whom are Outside Directors, and five Directors serving as
Audit & Supervisory Committee Members, three of whom are Outside Directors. Outside Directors currently
account for 40.0% of the Board of Directors. Additionally, two female Outside Directors have been appointed.
■ Audit & Supervisory Committee
Directors serving as Audit & Supervisory Committee Members hold voting rights on the Board of Directors andare delegated certain business execution responsibilities, in addition to the auditing authority. The Audit &Supervisory Committee collaborates closely with the internal audit division and the Accounting Auditors tomaintain and enhance audit quality, as well as conducts effective and efficient audits by appointing Standing
Audit & Supervisory Committee Members and assigning support staff.
■ Assessment of the effectiveness of the Board of Directors
Each year, the Bank carries out an analysis and assessment of the effectiveness of the Board of Directors, basedon information such as a self-assessment by all Directors and Audit & Supervisory Committee Members, with theaim of enhancing the function of the Board of Directors and further ensuring its effectiveness. The self-assessment
is implemented in the form of an anonymous survey, and an external agency is commissioned to compile andanalyze the survey results, to obtain the frank and unreserved opinions of respondents.
An overview of the results is reported to the Board of Directors, and measures are implemented accordingly.
■ Nomination and Compensation Advisory Committee
The Nomination and Compensation Advisory Committee has been established as an advisory body to the Boardof Directors to improve the transparency and objectivity regarding decisions on the nomination andcompensation of Directors. The Bank stipulates that the Nomination and Compensation Advisory Committee
comprises a total of five members, including two Representative Directors and three Outside Directors (Directors
who are not serving as Audit & Supervisory Committee Members), so that the majority is made up of Outside
Directors, and that an Outside Director serves as chairman.
― 7 ―■ Executive Committee and Compliance Committee
The Bank has established the Executive Committee and the Compliance Committee as mechanisms that discussand decide the matters referred by the Board of Directors. The Bank is planning to reinforce its organization
with a greater emphasis on compliance by having the Compliance Committee, rather than the Executive
Committee, discuss important matters relating to compliance.
■ Enrichment of information disclosure activities
In compliance with relevant laws and regulations, the Bank strives to disclose accurate management information
in a timely manner and to enrich the content of the information that it discloses so that valuable information canbe viewed in a timely manner via the Bank’s website.
The Bank also actively makes efforts on investor relations to earn the confidence of business partners and themarket and corporate responsibility aimed at customers of the community.

[Corporate governance structure]
General Meeting of Shareholders
Appointment/dismissal

Nomination andCompensation
Advisory
Committee

Involvement
and advice

Directors not serving as
Audit & Supervisory
Committee Members

Reports

Appointment/dismissal

Board of Directors

Audit andoversight

President

Appointment/dismissal

Audit & Supervisory Committee

Reports

Directors serving as Audit &Supervisory Committee Members

Coordination

References and reports
on important items

Directions

Reports

Reports

Operational Risk Committee

Compliance Committee

Directions

Reports
Coordination

ALM Committee
Credit Risk Committee

Accounting
Auditors

Executive Committee

Customer Interest Protection Committee

Audit Division

Visiting audit andmonitoring

Business branches, Head Office, subsidiaries, etc.

― 8 ―· Board of Directors (As of July 1, 2022)
Inside Directors

Chairman

Sachio Taguchi

President

Toru Iwayama

Director / Managing Executive
Officer

Kensei Ishikawa

Director / Managing
Executive Officer

Shinji Niisato

Director / Managing Executive
Officer

Shinei Kishi

Director / Managing
Executive Officer

Fumihiko Kikuchi

Director serving as an Audit &Supervisory Committee
MemberYuji Chiba

Director serving as an Audit& Supervisory Committee
Member

Shuichi Fujisawa

Director (Outside Director)

Fumio Ube

Director (Outside Director)

Atsushi Miyanoya

Director (Outside Director)

Yutaka Takahashi

Director serving as an Audit &Supervisory Committee
Member (Outside Director)

Masakazu Watanabe

Managing Executive Officer /General Manager of Sendai
OfficeKatsuhiro
Kawamura

Executive Officer / General
Manager of Tokyo Office

Shinichi Matsumoto

Executive Officer / General
Manager of Personnel Division

Kazuhiro Sugawara

Executive Officer / General
Manager of Corporate
Strategy Division

Toshiaki Nagase

Executive Officer / General
Manager of Systems Division

Junya Sekimura

Outside Directors

Director serving as an Audit& Supervisory Committee
Member (Outside Director)
Director serving as an Audit& Supervisory Committee
Member (Outside Director)

Executive Officer / General
Manager of Head Office― 9 ―Executive Officer / General
Manager of Business
Management Division
Executive Officer / General
Manager of Kitakami
BranchExecutive Officer / General
Manager of General
Planning Division

Etsuko Sugawara
Chikako Maeda

Manabu Fujiwara
Shigeo Takano
Katsumi Yamazaki
Toru Obara

· Organization (As of July 1, 2022)

General Meeting of Shareholders

Nomination and Compensation
Advisory Committee
Board of Directors
Audit & Supervisory Committee
Executive
Committee

General Planning Division
Profit Management OfficePublic Relations and CSR Office
Tokyo Liaison Office
General Affairs Division
Personnel Division
Human Resources Development OfficePublic Affairs and Regional Revitalization Office

Corporate Strategy Division
Retail Strategy Division
Personal Loan Support Center
Direct Banking Center
Customer Response Center
Head Office
Local Office
Hachinohe OfficeSendai Office
Tokyo Office
Branches
Local Office

Iwagin Jigyo Souzou Capital
Co.,Ltd.

Iwagin Lease Data Co., Ltd.

Iwagin DC Card Co., Ltd.

Iwagin Credit Service Co.,Ltd.

Iwagin R&Consulting Co., Ltd.

manorda Iwate Co., Ltd.

― 10 ―

Credit Card Center
CS Promotion Office
Loan Plaza
Financial Markets DivisionInternational Business Office
Loan Supervision DivisionCorporate Financial Support OfficeBusiness Management Division
Financial Products Management Office
Operations Concentration Center
Systems Division
Risk Management Division
Compliance Office
General Secretariat
DX Lab
Audit Division

Affiliate
Subsidiaries

· The Bank of Iwate GroupThe
Bank’sVotingRightsVoting RightsofSubsidiaries,
etc. Other than
Said
Subsidiaries,
etc.

Capital(Millions ofyen)

Main BusinessIwagin Lease Data
Co., Ltd.
1-5-31 Nakanohashi
Dori, Morioka City,
Iwate Prefecture

30

Computerizedaccounting
services,
leasing

April 1, 1972

100%

0%

Iwagin DC Card Co.,Ltd.
1-2-14 Nakanohashi
Dori, Morioka City,
Iwate Prefecture20

Credit cards
and consumer
loans

August 1, 1989

100%

0%

Iwagin Credit Service
Co., Ltd.
14-10-301 Morioka
Ekimae Dori, Morioka
City, Iwate Prefecture20

Credit cards
and consumer
loans

August 1, 1989

100%

0%

100

Consulting
Services,
Regional
EconomicResearch

April 1, 2020

100%

0%

manorda Iwate Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

70

Sales channel
expansion
support,
Regional
revitalization
supportApril 1, 2020

100%

0%

Iwagin Jigyo Souzou
Capital Co., Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

50

Investment
fundmanagement

April 1, 2015

40%

0%

Name/Address

Iwagin consulting Co.,Ltd.
1-2-3 Chuo Dori,Morioka City, Iwate
Prefecture

Date of
Establishment

The company name of Iwagin consulting Co., Ltd. was changed to Iwagin R&Consulting Co., Ltd., effective
April 1, 2022.

― 11 ―

Consolidated Balance Sheets

The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021

ASSETSCash and due from banks (Notes 3 and 6)
Call loans and bills bought (Note 6)
Monetary claims bought (Note 6)
Money held in trust (Notes 5 and 6)
Securities (Notes 4, 6, 8 and 15)
Loans and bills discounted (Notes 6, 7 and 9)
Foreign exchange assets
Premises and equipment (Notes 11 and 23)
Intangible assets (Notes 12 and 23)
Net defined benefit asset (Note 16)
Deferred tax assets (Note 17)
Customers’ liabilities for acceptances and guarantees (Note 15)
Other assets (Notes 6, 8 and 10)
Allowance for doubtful accounts (Note 6)
Total assets
LIABILITIES AND NET ASSETS
Liabilities:
Deposits (Notes 6, 8 and 13)
Call money and bills sold (Note 6)
Payables under securities lending transactions (Notes 6 and 8)
Borrowed money (Notes 6 and 8)
Foreign exchange liabilities
Accrued bonuses for directors and corporate auditors
Net defined benefit liability (Note 16)
Retirement benefits for directors and corporate auditors
Provision for losses on reimbursement of dormant deposits
Provision for contingent losses
Deferred tax liabilities (Note 17)
Acceptances and guarantees (Note 15)
Other liabilities (Notes 6, 14 and 23)
Total liabilities
Net assets (Note 18):
Common stock:
Authorized — 49,450 thousand shares as at 31 March 2022 and 2021
Issued and outstanding —18,498 thousand shares as at 31 March 2022 and2021
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Net unrealized holding gains on available-for-sale securities (Note 4)
Net unrealized losses on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 16)
Total accumulated other comprehensive income
Stock acquisition rights (Note 19)
Total net assets
Total liabilities and net assets

Millions of yen
2022
2021
¥701,403¥637,337
36,00023,0005,832
5,607
10,571
10,707
1,149,998
1,187,839
1,943,178
1,898,553
3,947
2,074
15,763
16,179
2,239
1,506
5,521
5,812
265
353
4,583
4,963
56,535
62,103(15,575)(15,071)¥3,920,260¥3,840,962

Thousands of
U.S. dollars(Note 1)2022
$5,730,885
294,142
47,651
86,371
9,396,176
15,876,934
32,249128,793
18,294
45,1102,165
37,446
461,925(127,256)$32,030,885¥3,444,092$28,140,306－

10,054
236,935
48
20
799
20
286
174
3,071
4,583
26,613
3,726,695¥3,414,900
7,750
171,938
15
23
1,812
20
373
202
7,296
4,963
30,0393,639,331

12,09012,09098,783

5,667
161,506(4,354)
174,909
22,100(2,505)(1,232)
18,363
293
193,565

5,667
158,440(3,885)
172,31232,859(3,304)(488)
29,067
252
201,631

46,303
1,319,601(35,575)
1,429,112
180,570(20,467)(10,066)
150,037
2,394
1,581,543¥3,920,260¥3,840,962$32,030,885

2022

2021

U.S. dollars
2022¥11,166.80¥11,445.57

Yen
Per share data:
Net assets (Note 25)

See accompanying notes.

― 12 ―－

82,147
1,935,902
392
163
6,528
163
2,337
1,422
25,09237,446
217,444
30,449,342－$91.24

Consolidated Statements of Income

The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021
Thousands of
U.S. dollars(Note 1)Millions of yen
Income:Interest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 20)
Other income (Note 22)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses (Note 20)
General and administrative expenses (Note 21)
Other expenses (Note 22)
Total expenses
Income before income taxes
Provision for income taxes (Note 17)
Current
Deferred

2022

2021

2022

¥17,290
9,536
448
8,780
4,717
3,513

¥17,358
10,627
69
8,237
4,601
4,451

$141,270
77,915
3,660
71,73838,541
28,70344,28445,343361,827

246
11
520
3,418
5,220
24,853
3,004

334
8
534
3,395
4,831
25,473
5,229

2,010
90
4,249
27,92742,651203,064
24,54437,27239,804

304,535

7,012

5,539

57,292

2,369
517

2,790
(147)

19,356
4,224
23,580

2,886

2,643

Net income

4,126

2,896

33,712

Net income attributable to owners of parent¥4,126¥2,896$33,712Yen
Per share data:
Net income (Note 25)
Diluted net income (Note 25)
Cash dividends applicable to the year (Note 28)

See accompanying notes.

― 13 ―

U.S. dollars

2022

2021

¥235.91234.7480.00¥164.64164.03
60.00

2022
$1.93
1.92
0.65

Consolidated Statements of Comprehensive Income
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021

Millions of yen
2022
Net income
Other comprehensive income (losses) (Note 24):
Net unrealized holding gains (losses) on available-for-sale securities
Net unrealized gains on hedging derivatives (Note 6)
Remeasurements of defined benefit plans (Note 16)
Total other comprehensive income (losses)

Thousands of
U.S. dollars(Note 1)

2021

2022

¥4,126¥2,896$33,712(10,759)
799
(744)

9,775
799
1,801

(87,908)
6,529(6,079)(10,704)

12,375(87,458)

Comprehensive income (losses)¥(6,578)¥15,271$(53,746)

Total comprehensive income (losses)
Attributable to:
Owners of parent¥(6,578)¥15,271$(53,746)(6,578)15,271(53,746)

See accompanying notes.

― 14 ―

Consolidated Statements of Changes in Net Assets
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021

Millions of yen
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2020
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 1 April 2021
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2022

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulated

Stock

Total

of definedotheracquisition

net assets

benefit planscomprehensive

rightslosses¥12,090¥5,667¥156,688¥(3,906)¥170,539¥23,084¥(4,103)¥(2,289)¥16,692¥225¥187,456－－(1,143)－(1,143)

－

－

－

－

－

(1,143)

－
－
－

－
－
－

2,896
－
(1)

－
(1)
22

2,896
(1)
21

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

2,896
(1)
21

－

－

－

－

－

9,775

799

1,801

12,37527

12,402－
12,090

－
5,667

1,752
158,440

21(3,885)

1,773
172,312

9,775
32,859799(3,304)

1,801
(488)

12,37529,06727
252

14,175
201,631－－(1,056)－(1,056)

－

－

－

－

－

(1,056)

－

－

4,126

－

－

－

－

－

4,126

－
－

－

－
(480)

4,126

－
－

11

7

－
－

－
－

－
－

－
－

(480)

(4)

－
－

－
－
¥12,090－－¥5,667－
3,066¥161,506－(469)¥(4,354)－
2,597¥174,909(10,759)

799

(744)

(10,704)

41(10,663)(10,759)¥22,100

799¥(2,505)(744)¥(1,232)(10,704)¥18,36341¥293(8,066)¥193,565(480)

7

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

Accumulated other comprehensive income
Net unrealized

Common stock

CapitalRetained

Treasury

surplusearnings

stock, at costTotalholding

shareholders’losses onequityavailable-for-salelossessecurities

BALANCE, 1 April 2021
Change during the year
Cash dividends
Net income attributable toowners of parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders’ equity during theyear
Total change during the year
BALANCE, 31 March 2022

$98,783$46,303 $1,294,550 $(31,743)

Net unrealized
on hedging
derivatives

Total
Remeasurements

accumulatedof definedotherbenefit planscomprehensive

StockacquisitionrightsTotal
net assets

losses$1,407,893$268,478$ (26,996)$(3,987)$237,495$2,059$1,647,447－－(8,628)－(8,628)

－

－

－

－

－

(8,628)

－
－
－

－
－
－

33,712－(33)－(3,922)
90

33,712(3,922)
57

－
－
－

－
－
－

－
－
－

－
－
－

－
－
－

33,712(3,922)
57－－－－
25,051(3,832)$46,303 $1,319,601 $(35,575)－(87,908)

6,529(6,079)(87,458)

335(87,123)

21,219$1,429,112(87,908)

6,529(6,079)(87,458)

335$180,570$(20,467)$(10,066)$150,037$2,394(65,904)$1,581,543－－$98,783

See accompanying notes.

― 15 ―

Consolidated Statements of Cash Flows
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021

Millions of yen
2022
2021

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

Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash used in operating activities:
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for contingent losses
Increase (decrease) in accrued bonuses for directors and corporate auditors(Increase) decrease in net defined benefit asset
Increase (decrease) in net defined benefit liability
Increase (decrease) in retirement benefits for directors and corporate auditors
Increase (decrease) in provision for losses on reimbursement of dormant deposits
Interest income
Interest expenses
Investment securities (gains) losses, net(Increase) decrease in money held in trust
Foreign exchange (gains) losses, net(Gains) losses on disposal of premises and equipment
Net (increase) decrease in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiable certificates of deposit
Net increase (decrease) in borrowed money
Net (increase) decrease in due from banks, excluding the Bank of Japan
Net (increase) decrease in call loans and others
Net increase (decrease) in call money and others
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, net
Subtotal
Income taxes paid
Income taxes refunded
Net cash provided by operating activities¥7,012¥5,539$57,292

2,004
645
504
(28)
(2)
(262)
(1,528)(0)(88)(27,274)
777(1,544)132(2,853)
112(44,625)(40,688)
69,88064,997205(13,225)(7,750)10,054(1,873)33
27,489(835)
5,697
46,966(3,735)
4
43,235

1,722
537
3,111
(26)
(2)
30
(228)
(5)
(47)
(28,054)876(2,658)
(145)
(657)
80
(83,469)
236,846(23,330)
115,386
14(23,767)
7,750
－
1,860
11
27,940(936)
1,878
240,256(1,044)806
240,018

16,374
5,270
4,118
(229)
(16)
(2,141)(12,485)(0)(719)(222,845)
6,349(12,615)
1,079(23,311)915(364,613)(332,445)
570,962531,065
1,675(108,056)(63,322)
82,147(15,304)269
224,602(6,822)
46,547383,741(30,517)32
353,256

Cash flows from investing activities:
Acquisition of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Increase in money held in trust
Decrease in money held in trust
Acquisition of premises and equipment
Proceeds from sale of premises and equipment
Payment for retirement of premises and equipment
Acquisition of intangible assets
Payment for asset retirement obligations
Net cash provided by investing activities(285,997)
22,688288,956－－(1,565)25(102)(1,306)(108)
22,591(508,350)
30,025507,831(4,900)4,900(1,197)
69
(79)
(571)
(63)
27,665(2,336,768)
185,375
2,360,944－－(12,787)204(833)(10,671)(882)
184,582― 16 ―

Consolidated Statements of Cash Flows (Continued)
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021

Millions of yen
2022
2021
Cash flows from financing activities:
Repayments of lease obligations
Cash dividends paid
Payment for acquisition of treasury stock
Proceeds from sale of treasury stock
Net cash 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 the beginning of the year
Cash and cash equivalents at the end of the year (Note 3)

See accompanying notes.

― 17 ―

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

(30)
(1,056)(480)
0(1,566)(30)(1,143)(1)
0(1,174)(245)(8,628)(3,922)0(12,795)

11
64,271
636,321¥700,592

20
266,529369,792¥636,321

90
525,133
5,199,126$5,724,259

Notes to Consolidated Financial Statements
The Bank of Iwate, Ltd. and its consolidated subsidiaries
Years ended 31 March 2022 and 2021
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Bank of Iwate, Ltd. (the “Bank”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan, its related
accounting regulations and the Banking Act of Japan, and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects, such as application and disclosure requirements, from International
Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some
supplementary information included in the statutory Japanese language consolidated financial statements, but not necessarily required
for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers, using the prevailingexchange rate as at 31 March 2022, which was ¥122.39 to U.S. $1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at thisor any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIESReporting entity
The consolidated financial statements include the accounts of the Bank and its significant subsidiaries. Japanese GAAP on
consolidated financial statements requires the consolidation of all significant investees that are controlled through substantial
ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances
are eliminated.
Iwagin Business Service Co., Ltd. was excluded from the scope of consolidation of the Bank from the year ended 31 March 2022
due to the completion of its liquidation.
A non-consolidated subsidiary is excluded from the scope of consolidation because in terms of its total assets, ordinary income, net
income or loss (amount corresponding to equity), retained earnings (amount corresponding to equity) and accumulated othercomprehensive income or loss (amount corresponding to equity), it has minor impact on the consolidated financial statements even if
it is excluded from the scope of consolidation.
Investments in affiliates over which the Bank has the ability to exercise significant influence in terms of operating and financial
policies of the investees are accounted for by the equity method.
There are no investments in affiliates that are accounted for by the equity method.
A non-consolidated subsidiary and investments in affiliates that are not accounted for by the equity method are excluded from thescope of the equity method because in terms of their net income or loss (amount corresponding to equity), retained earnings (amountcorresponding to equity) and accumulated other comprehensive income or loss (amount corresponding to equity), they have minor― 18 ―

impact on the consolidated financial statements even if they are excluded from the scope of the equity method.

Trading account securities and other securities
Securities are classified as follows based on the purpose: (a) securities held for trading purposes (“trading account securities”), (b)debt securities intended to be held to maturity (“held-to-maturity debt securities”), (c) equity securities issued by unconsolidated
subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the categories above (“available-forsale securities”).
(a) Trading account securities — National government bonds held for trading purpose are presented as trading account securities.
Trading account securities are stated at fair value (cost of securities sold is calculated using the moving-average method). Gains
and losses realized on disposal and unrealized gains and losses from fair value fluctuations are recognized as gains or losses in the
period of the change.
(b) Held-to-maturity debt securities are carried at amortized cost (straight-line method) using the moving-average method.
(c) Equity securities issued by subsidiaries and affiliated companies, which are not consolidated or accounted for by the equity method,
are carried at cost using the moving-average method.
(d) Available-for-sale securities with available fair values are primarily carried at the market prices (cost of securities sold is calculatedusing the moving-average method).
Shares, etc. that do not have a market price are stated at the moving-average cost.
Net unrealized holding gains (losses) on these securities, net of applicable income taxes, are reported in a separate component of
net assets.
Available-for-sale securities with available fair values are written down when a significant decline in fair value below the cost ofsuch securities is deemed to be other than temporary. The amount written down is accounted for as an impairment loss.

Money held in trust
Securities invested as part of trust assets in independently managed money trusts that invest primarily in securities are stated at fairvalue.

Derivatives and hedge accounting
The Bank employs forward exchange contracts, currency swaps and interest rate swaps to meet customers’ needs and mitigate interest
rate risks and foreign exchange risks. Derivative financial instruments are stated at fair value.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Bank defers recognition of gains orlosses resulting from changes in fair value of the derivative financial instruments until the related gains or losses on the hedged items
are recognized (deferral method).
Transactions to hedge against interest rate risks affecting the financial assets and liabilities of the Bank are accounted for using
deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing of Application of AccountingStandards for Financial Instruments in the Banking Industry” (Japanese Institute of Certified Public Accountants (“JICPA”) Industry
Committee Practical Guideline No. 24, 17 March 2022).
Regarding the effectiveness of a hedge, a hedge that is intended to offset the effects of market fluctuations is assessed based on agroup-by-group comparison of hedged items and hedging instruments. Both hedged items, including deposits and loans, and hedging― 19 ―

instruments, including interest rate swaps, are classified into groups by the remaining maturity period. The effectiveness of a cash
flow hedge is assessed on the basis of the correlation between the base interest rate index of the hedged cash flow and that of thehedging instrument.
Among the hedging relationships above, those included in the scope of application of “Practical Solution on the Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR” (ASBJ PITF No. 40, 17 March 2022) are subject to the special treatment
stipulated in the Practical Solution. The details of hedging relationships to which the Practical Solution is applied are as follows.
a. Method of hedge accounting: deferred hedging and special treatment of interest rate swaps
b. Hedging instruments: interest rate swaps
c. Hedged items: government bonds, municipal bonds and loans
d. Types of hedging transactions: those that offset market fluctuations
As for the hedging transactions against currency exchange risks arising from assets and liabilities in foreign currencies, the Bank
applies deferred hedge accounting in accordance with the provisions of “Treatment of Accounting and Auditing Concerning
Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Committee Practical Guideline No. 25, 8
October 2020). The Bank assesses the effectiveness of currency swap and foreign exchange swap transactions executed for offsetting
the risks of changes in currency exchange rates by verifying that there exist foreign currency positions of the hedging instruments
corresponding to the foreign currency monetary claims and debts to be hedged.
Certain interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at fair value,
but the differential to be paid or received under the swap contracts is recognized as interest expense or income (exceptional method).
Depreciation and amortization methods(1)

Premises and equipment (excluding leased assets)

Premises and equipment are stated at cost less accumulated depreciation. The Bank depreciates its premises and equipment under the
declining-balance method over their estimated useful lives. Depreciation of buildings acquired on and after 1 April 1998 (excluding
installed facilities) and installed facilities and structures acquired on and after 1 April 2016 by the Bank is computed under the straightline method. Estimated useful lives are as follows:
Buildings: 3-30 years
Equipment and furniture: 2-20 years
Consolidated subsidiaries depreciate their premises and equipment primarily under the declining-balance method over theirestimated useful lives.
(2)

Intangible assets (excluding leased assets)

The Bank and its consolidated subsidiaries (the “Group”) amortize intangible assets under the straight-line method over their estimateduseful lives. Costs of computer software developed or obtained for internal use are amortized using the straight-line method overestimated useful lives of five years.
(3)

Leased assets

Depreciation and amortization of leased assets pertaining to finance lease transactions other than those that transfer the ownership ofthe leased assets to the Group, which are included in “Premises and equipment” and “Intangible assets,” are computed under thestraight-line method. The lease term is equal to the useful life and there is no residual value except where residual value guarantees
are stipulated in lease contracts.

― 20 ―

Depreciation of leased assets pertaining to finance lease transactions that transfer the ownership of the leased assets to the Groupis computed by the same method used for fixed assets owned by the Group.

Allowance for doubtful accounts
The reserve for loans to borrowers that are classified as legally bankrupt or substantially bankrupt is calculated by deducting theestimated disposal value of collateral and the amount deemed collectible from guarantees from the book value.
The Bank also provides specific reserves for potentially bankrupt borrowers by calculating the amount of loss expected during thethree-year period subsequent to the balance sheet date on the loan balance (“unsecured amount”), less expected collection from
disposal of collateral, guarantees and repayment on the uncovered portion of the loan from historical experiences. The amount of
expected loss is calculated based on the average loan loss ratio derived from the actual loan loss during the past three years withnecessary amendments such as future prospects.
For loans to large borrowers whose unsecured amount exceeds a certain level, cash flows related to the collection of loan principal
and the receipt of interest are estimated using a reasonable method, and the difference between the amount of cash flows discounted
at the initial contracted interest rate and the book value of the loans is recorded as allowance for doubtful accounts (cash flow
estimation method [“DCF method”]).
The reserve for loans to borrowers that are classified as requiring supervision but are substantially equivalent to requiring attention
is calculated based on the amount of expected loss during the three-year period subsequent to the balance sheet date. The amount of
expected loss is calculated based on the average loan loss ratio derived from the actual loan loss during the past three years withnecessary amendments such as future prospects.
For loans to large borrowers whose credit amount exceeds a certain level, cash flows related to the collection of loan principal andthe receipt of interest are estimated using a reasonable method, and the difference between the amount of cash flows discounted at theinitial contracted interest rate and the book value of the loans is recorded as allowance for doubtful accounts (cash flow estimation
method [“DCF method”]).
The reserve for loans to borrowers that are not classified as any of the above are calculated based on the amount of expected loss
during the one-year period subsequent to the balance sheet date. The amount of expected loss is calculated based on the average loan
loss ratio derived from the actual loan loss during the past year with necessary amendments such as future prospects.
Allowance for doubtful accounts mentioned above is made on the basis of the results of a strict assessment of the quality of all the
Bank’s loan assets, using its internally established rules for self-assessment.
Allowance for doubtful accounts recorded in consolidated subsidiaries is calculated as follows:
General reserves are provided at an amount deemed necessary considering the historical ratio of loan losses. Specific reserves for
doubtful borrowers are provided at an amount expected to be uncollectable, considering collectability on an individual basis.

Accrued bonuses for directors and corporate auditors
Accrued bonuses for directors and corporate auditors are provided in the amount of the estimated bonuses that are attributable to eachfiscal year.

― 21 ―

Retirement benefits for directors and corporate auditors
Retirement benefits for directors and corporate auditors are provided for the future payments of directors’ and corporate auditors’
retirement benefits incurred up to the end of the fiscal year based on the approved internal rules.

Provision for losses on reimbursement of dormant deposits
Provision for losses on reimbursement of dormant deposits that were recorded as profit is provided for the future reimbursement basedon the historical reimbursement experience.

Provision for contingent losses
Provision for contingent losses is provided for estimated future payments related to a risk-sharing agreement with public credit
guarantee associations for the Bank’s loans guaranteed by the associations. The provision is calculated using the expected loss ratios
computed based on the historical foreclosure ratio of each borrower category.

Accounting for retirement benefits
Upon the calculation of projected benefit obligation, the estimated amount of all retirement benefits to be paid at future retirement
dates is allocated using the benefit formula. The Bank has also set up retirement benefit trusts.
Actuarial differences are amortized as income or expenses commencing from the following year under the straight-line method
over 10 years, which is determined as the amortization period within a range of estimated remaining service years of the eligible
employees at the time the actuarial differences occur.
The consolidated subsidiaries adopt a simplified method, as allowed for small companies, which is to record retirement benefit
liabilities for an amount assuming all employees would retire at the end of the fiscal year on a voluntary basis.

Income taxes
Income taxes consist of corporation, enterprise and inhabitant taxes. The provision for income taxes is computed based on the pretax
income of the Bank and each of its consolidated subsidiaries with certain adjustments required for tax purposes.
Deferred tax assets and liabilities are recorded based on the temporary differences between the financial statements and tax basesof assets and liabilities. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes andthe amounts used for income tax purposes.

Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing at the end ofeach year.

Revenue recognition
The Bank and its consolidated subsidiaries apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, 31
March 2020) and other standards, and recognize revenue when control of a promised good or service is transferred to a customer inan amount that reflects the consideration expected to be received in exchange for those good and services.

― 22 ―

Appropriations of retained earnings
Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given financial period is made by resolutionof the shareholders at a general meeting held subsequent to the close of the financial period. The accounts for that period, therefore,
do not reflect such appropriations. See Note 28.

Amounts per share
Net income per share of common stock is computed based on the weighted-average number of shares outstanding, excluding treasury
stock, during each year. Diluted net income per share reflects the potential dilution that could occur if stock options to issue common
stock were exercised. Cash dividends per share represent the amounts applicable to the corresponding years and consist of interim
dividends for the current year and year-end dividends declared after the end of the year.

Significant accounting estimates
Allowance for doubtful accounts(1) Carrying amounts in the consolidated financial statements for the current fiscal year
Allowance for doubtful accounts¥15,575 million ($127,256 thousand)(2) Information on the nature of significant accounting estimates for identified items
a. Calculation method
The calculation method of allowance for doubtful accounts is described in “Allowance for doubtful accounts” under “2.

SIGNIFICANT ACCOUNTING POLICIES.” In the current fiscal year, in light of the lingering uncertainty over when
the novel coronavirus disease (COVID-19) will be contained, the Bank has made the following changes to the method of
calculating allowance for doubtful accounts for large borrowers whose business performance deterioration caused by COVID19 will increase uncertainty in the Bank’s financial results.
・ The scope of borrowers to which the DCF method is applicable has been expanded. In addition to loans related to large
borrowers that require supervision and whose credit amount exceeds a certain level, to which the DCF method had been
applicable, loans related to large potentially bankrupt borrowers whose unsecured amount exceeds a certain level are now
subject to the method.
Of the allowance for doubtful accounts recorded in the consolidated financial statements for the current fiscal year, theamount of allowance for doubtful accounts recorded due to the change in the scope of the DCF method was ¥1,756 million($14,348 thousand).
There were no borrowers requiring supervision in the previous and current fiscal years.
b. Key assumptions used in making accounting estimatesi. Categorization of receivables (self-assessment)
The Bank categorizes its outstanding receivables according to the degree of risk of recovery or impairment of value (“selfassessment”). The self-assessment is conducted by comprehensively considering the details of the use of funds and the statusof the collateral or guarantees in place, after determining the borrowers’ category based on the credit ratings in accordance with
their level of credit risk.

― 23 ―

The borrowers’ category is determined based on their financial information and other quantitative information, in addition toqualitative factors. Specifically, the Bank assesses the borrowers’ solvency based on their substantive financial condition, cash
flows and profitability. The Bank also comprehensively takes into account the borrowers’ business sustainability, future
profitability, ability to repay debts based on their cash flows, the reasonableness and feasibility of their business improvement
plans and support from other financial institutions to determine the borrowers’ category in light of their industry/sector-specificcharacteristics. Such determination is made at the discretion of management.
ii. Expected loss rate
Allowance for doubtful accounts is provided for receivables classified according to the self-assessment based on the expected
loss rate for each classification. The expected loss rate is calculated based on the historical loan loss for each classification,with necessary adjustments made to account for future prospects and other factors.
iii. Future cash flows used in the discounted cash flow method (DCF method)
The expected loss under the discounted cash flow method (DCF method) is calculated by multiplying future cash flows basedon the debtor's repayment plan, etc. by the probability of occurrence premised on the debtor’s rating transition forecasts, anddiscounting this at the contracted interest rate before the easing of loan terms.
The rating transition forecasts are based on the situation of the debtor in addition to the historical rating transition rate.
We do not expect a significant increase in bad debts due to the impact of COVID-19, on account of economic measures takenby the national and local governments and funding support provided by financial institutions. However, in light of the lingering
uncertainty over when COVID-19 will be contained, as described in calculation method a. above, we have recorded an
additional allowance for doubtful accounts under the DCF method for large borrowers whose COVID-19-related decline inbusiness performance will increase uncertainty in the Bank’s financial results.
c. Impact on the consolidated financial statements for the year ending 31 March 2023
If the assumption applied to the initial estimate changes due to changes in the business condition of individual borrowers or theactual loan loss rate, there is a possibility that there will be a significant impact on the allowance for doubtful accounts recordedin the consolidated financial statements for the year ending 31 March 2023.
It is very difficult to estimate to what extent COVID-19 will spread or when it will be contained in the future. Accordingly,
there is a high degree of uncertainty in the assumption above and if there is a change in the circumstances of COVID-19 or its
effects on the economic environment, there is a possibility that additional losses may be incurred in the consolidated financial
statements for the following fiscal year.

Changes in accounting policies(1) Application of the accounting standards for revenue recognition
The Bank has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, 31 March 2020; the “Revenue
Recognition Standard”) and other standards from the beginning of the current fiscal year. The Bank recognizes revenue when control
of a promised good or service is transferred to a customer in an amount that reflects the consideration to which the Bank expects tobe entitled in exchange for those goods and services.
This change has no impact on the profit and loss of the current fiscal year and the beginning balance of retained earnings.
In accordance with the transitional treatment set forth in Paragraph 89-3 of the Revenue Recognition Standard, the Bank does notinclude notes on revenue recognition for the previous fiscal year.

― 24 ―

(2) Application of the accounting standards for fair value measurement
The Bank has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, 4 July 2019; the “Fair Value
Measurement Standard”) and other standards from the beginning of the current fiscal year. In accordance with the transitional
treatment set forth in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, 4 July 2019), the Bank will prospectively apply the new accounting policy stipulated
in the Fair Value Measurement Standard, etc.
The impact of this change on the consolidated financial statements for the current fiscal year is immaterial.
In addition, the Bank has included notes on fair value information by level within the fair value hierarchy in Note “6. FINANCIAL
INSTRUMENTS.” However, in accordance with the transitional treatment set forth in Paragraph 7-4 of the “Implementation Guidanceon Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, 4 July 2019), notes pertaining to the previous
fiscal year are not presented.

Accounting standards that have not been applicable yet“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, 17 June 2021)(1) Overview
The implementation guidance defines the treatment regarding fair value measurement of investment trusts and notes thereof as wellas the treatment regarding notes on the fair value of investments in partnerships in which the net amount of equity interests is recordedon the balance sheet.
(2) Application date
The Group will apply these accounting standards and guidance from the beginning of the fiscal year ending 31 March 2023.
(3) Effects of the application of the standards
The Group is currently assessing the effects of these standards.

Additional information
Additional contributions to retirement benefit trusts
In the current fiscal year, the Bank made an additional contribution of ¥1,400 million ($11,439 thousand) in cash to the retirement
benefit trust for the purpose of further improving the soundness of the retirement benefit system. As a result, liabilities related toretirement benefits have decreased by the same amount.

― 25 ―

3. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWSCash and cash equivalents
In preparing the consolidated statements of cash flows, cash and due from the Bank of Japan are considered to be cash and cash
equivalents. As at 31 March 2022 and 2021, the reconciliation of cash and cash equivalents in the consolidated statements of cash
flows with cash and due from banks in the consolidated balance sheets is as follows:
Thousands of
U.S. dollars
2022$5,730,885(6,626)$5,724,259

Millions of yen
2022
2021
¥701,403¥637,337(811)(1,016)¥700,592¥636,321

Cash and due from banks
Less: Deposits in banks other than the Bank of Japan
Cash and cash equivalents

4. SECURITIESSecurities held by the Group as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022$1,508,023
2,659,368
2,641,360
305,450
2,281,975$9,396,176

Millions of yen
2022
2021
¥184,567¥182,536
325,480
356,571323,276
335,680
37,38440,310279,291
272,742¥1,149,998¥1,187,839

National government bonds
Local government bonds
Corporate bonds
Corporate stocks
Other securities

The securities placed under unsecured lending agreements, which borrowers have the right to sell or pledge in the amount of ¥72,100
million ($589,100 thousand) and ¥67,100 million as at 31 March 2022 and 2021, respectively, were included in national government
bonds.

A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values as at 31 March2022 and 2021:(a) Held-to-maturity debt securities

As at 31 March 2022:

Book value¥21,971

Fair value¥24,966

Millions of yen
Difference¥2,995Gain¥2,995As at 31 March 2021:¥25,996¥29,508¥3,512¥3,512As at 31 March 2022:

Book value$179,516

Thousands of U.S. dollars
Fair value
Difference$203,987$24,471― 26 ―

Gain$24,471

Loss
¥－
¥－

Loss
$－

(b) Available-for-sale securities
Securities below include negotiable certificates of deposit classified as cash and due from banks.
Millions of yen
Acquisition cost
As at 31 March 2022:
Corporate stocks
Bonds
Other
As at 31 March 2021:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

¥16,067
800,873
264,442¥35,876
811,352
265,426¥19,809
10,479984¥20,117
13,6689,105¥(308)(3,189)(8,121)¥1,081,382¥1,112,654¥31,272¥42,890¥(11,618)¥17,428
835,201
252,863¥38,975
852,821
260,479¥21,547
17,6207,616¥22,085
19,015
10,320¥(538)(1,395)(2,704)¥1,105,492¥1,152,275¥46,783¥51,420¥(4,637)

Thousands of U.S. dollars
Acquisition cost
As at 31 March 2022:
Corporate stocks
Bonds
Other

Book value

Difference

Gain

Loss

$131,277
6,543,615
2,160,650$293,129
6,629,234
2,168,690$161,852
85,6198,040$164,368
111,676
74,393$(2,516)(26,057)(66,353)$8,835,542$9,091,053$255,511$350,437$(94,926)

B. There were no sales of held-to-maturity debt securities for the years ended 31 March 2022 and 2021.
Total sales of available-for-sale securities in the years ended 31 March 2022 and 2021 amounted to ¥22,687 million ($185,366
thousand) and ¥30,025 million, respectively. The related gains and losses amounted to ¥3,180 million ($25,983 thousand) and ¥511
million ($4,175 thousand), respectively, in the year ended 31 March 2022, and ¥3,804 million and ¥318 million, respectively, in theyear ended 31 March 2021.

C. Available-for-sale securities written down for the years ended 31 March 2022 and 2021 amounted to ¥308 million ($2,517
thousand) and ¥189 million, respectively.

D. Net unrealized holding gains on available-for-sale securities on the consolidated balance sheets as at 31 March 2022 and 2021
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Net unrealized holding gains before deferred tax on:
Available-for-sale securities (Note)
Deferred tax liabilities
Net unrealized holding gains before interest adjustment
Amount equivalent to non-controlling interests¥31,513(9,413)
22,100－¥46,949(14,090)
32,859－$257,480(76,910)
180,570－

Net unrealized holding gains on available-for-sale securities¥22,100¥32,859$180,570

Note: The balance as at 31 March 2022 includes ¥241 million ($1,969 thousand) of net unrealized holding gains on available-for-salesecurities, which are component assets of investment limited partnerships classified as securities whose fair value is not stated on thebalance sheet. The balance as of 31 March 2021 includes ¥166 million of net unrealized holding gains on available-for-sale securities,
which are component assets of investment limited partnerships classified as securities for which it is extremely difficult to determine― 27 ―

fair values.

E. Equity securities issued by unconsolidated subsidiaries and affiliated companies are as follows:
Thousands of
U.S. dollars

Millions of yen
2022
SharesInvestments

2021

¥20
1,375

¥20
1,324

2022
$163
11,235

5. MONEY HELD IN TRUST
Money held in trust as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Money held in trust for trading purposes:
Carrying amount
Realized gains (losses) included in earnings

2022

2021

2022

¥10,571(80)¥10,70768$86,371(654)

6. FINANCIAL INSTRUMENTS(1) Overview
a. Policy for financial instruments
The Group provides financial services, mainly focusing on banking businesses such as deposit-taking, grant of loans, trading of
securities and investment in securities, as well as lease operation and credit card operation.
For its main operations, the Group raises funds through deposits, call money, etc. and applies them to loans receivable and investment
in securities. Therefore, the financial assets and liabilities of the Group tend to be affected by interest rate fluctuations, and are exposed
to risks stemming from changes in financial market environments (interest rate risks and price fluctuation risks), as well as to risks
arising from fund shortage.
The Group manages those risks using the asset liability management (ALM) method in order to appropriately control the balance
between revenues and risks in consideration of the status of the financial assets and liabilities, trend of financial markets, policies forfund management and investment policies. The Group uses derivatives for the purpose of reducing risks, but not for speculative
purposes.

b. Types of financial instruments and related risks
The financial assets of the Bank consist mainly of loans for domestic enterprises and individuals and investment securities.
Loans are exposed to credit risks stemming from defaults of borrowers. The largest industrial category of loans as of the current fiscal
year end was individuals, followed by local governments, real estate industries, leasing industries, financial industries and insurance
industries, and loans are mostly distributed in each industry.
Securities fundamentally constitute bonds, stocks and investment trusts, which are held for investing purposes, held-to-maturity
purposes and maintaining business relationships, while trading account securities are held for trading purposes. These are exposed tocredit risks of issuers, interest rate risks and risks stemming from fluctuation of market prices.
Liabilities, such as deposits, corporate bonds and call money, are exposed to risks arising from fluctuation of interest rates stemming― 28 ―

from mismatch between interests or periods of assets and liabilities. In addition, these are exposed to risks of fund shortage where the
Bank fails to control cash receipts and disbursement due to unexpected fund outflow and suffers losses from imposed unusual highinterest rates, as well as market liquidity risks where the Bank fails to raise funds owing to market shrinkage and is obliged to enter
into unusual unfavorable transactions.
Regarding derivative transactions, the Bank enters into interest rate swap contracts in terms of the ALM control and applies hedge
accounting to them as hedging instruments for interest rate risks on loans and bonds as hedged items. The Bank evaluates theeffectiveness of the hedge based on accumulated fluctuation of cash flows of hedging instruments and hedged items for the periods
beginning from the implementation of the hedging to the date of the evaluation and analysis on them.
Furthermore, there are other interest rate swap contracts (hedging instruments) and loans and bonds (hedged items), which are treatedunder the exceptional method.

c. Monitoring of credit risks
In accordance with the internal policies of the Bank for managing credit risks arising from loans, each related division monitors credit
worthiness of its customers periodically and due dates and outstanding balances by individual customer. In addition, the Bank makes
efforts to identify and mitigate risks of bad debts from customers who face financial difficulties.
The results of the monitoring above are regularly reported to the board of directors, and the results of monitoring internal rating,loan portfolios and quantification of credit risks are reported to the credit risk committee on a quarterly basis. The Audit Divisionstrictly reviews the results to ensure that the monitoring procedures function properly.
Credit risks of issuers of securities and counterparty risks of derivative transactions are controlled through periodic reviews on
credit information and fair value of securities by the Financial Markets Division.

d. Monitoring of market risks(Interest rate risks)
The risks arising from fluctuations in interest rates are controlled using the ALM by the ALM committee, with reference to thediscussion at the fund management meeting and interest rate analysis group meeting, through monitoring and analysis of the executionof the ALM and the discussion of future actions. Concretely, the results of the monitoring above are reported on a monthly basis to
the ALM committee using gap analysis or interest rate sensitivity analysis such as BPV and VaR. Derivative instruments such as
interest rate swap contracts to hedge interest rate risks are used in terms of the ALM.
(Foreign currency exchange risks)Foreign currency swap contracts and foreign currency exchange swap contracts are used in order to control the foreign currency
exchange risks.
(Price fluctuation risks)
In accordance with the internal policies of the Bank on managing market related risks, the risks arising from fluctuation of market
price of investment securities are controlled through a daily VaR based on certain holding periods and confidence intervals byconfirming whether the quantities of the Bank’s risk fall under a certain portion of equity capital or not. Upper limits on losses on an
aggregate or a realization basis are defined to control losses on a daily basis. These results are reported by the Risk Management
Division to the management on a daily basis.
Investments in securities by the Financial Markets Division are executed in accordance with the investable items and investing― 29 ―

guidelines prescribed in the market business operation standards, the market risk management standards and the primary polices oninvesting, and controlled through continuous monitoring. The information related to the market environment and the investment statusis reported to the management on a regular basis.
(Derivative transactions)
In conducting derivative transactions, each division responsible for the execution of transactions, and evaluation of effectiveness ofthe hedging and related administration is clearly identified, following the hedge transaction guidelines, the market business operation
standards and the market risk management standards, with setting up segregation of duties and checking systems.
(Information on volume of market risk)
The Bank employs the variance-covariance method (confidence interval of 99%, observation period of one year) in calculating VaRof deposits, loans receivable and securities (investments in bond, investments in stock, shares held for policy reasons, investments intrust). The holding period used as a parameter for the calculation is set as six months for deposits, loans receivable and shares held forpolicy reasons, and three months for investments in bond, investments in stock and investments in trust.
The volume of market risk, which is supposed to be estimated losses, as at 31 March 2022 was ¥21,128 million ($172,628 thousand).
For securities, the Bank periodically verifies the effectiveness of risk measurement by a back-testing protocol that compares thevolume under VaR with the amount of actual gains or losses. As a result of conducting the back-testing protocol, the Group believes
that the method undertaken provides a reliable indicator of the market risks. The method of variance and covariance that the Bank
uses to measure the volume under VaR assumes that changes in the market follow a normal distribution. Accordingly, under conditions
subject to changes in the market exceeding the assumption, risks may be underestimated.

e. Monitoring of liquidity risks
The Bank adequately manages its liquidity risks based on various internal quantitative standards prescribed in liquidity risks
management regulations, monitoring its liquidity position on a daily basis with minimum fund reserve established twice a year.

f. Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are used in estimating the fair value of financial instruments, different assumptions and factors
could result in different fair values.

― 30 ―

(2) Fair value of financial instruments
The carrying amounts and the fair value of financial instruments as at 31 March 2022 and 2021 are as follows.
Millions of yen

Thousands of U.S. dollars
2021

2022

Assets:Monetary claims bought
Money held in trust
Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Allowance for doubtful accounts
Liabilities:
Deposits
Borrowed money
Derivative transactions:
Derivative instruments not
qualifying for hedge accounting
Derivative instruments qualifying
for hedge accounting

Carrying
amounts

2022
Carrying
amounts

Fair value

Carrying
amounts

Fair value¥5,832
10,571¥5,80910,571¥5,477
10,707¥5,496
10,707$47,651
86,371$47,463
86,371

21,971
1,112,654
1,943,178(13,940)

24,965
1,112,654

21,967
1,152,275
1,898,553(13,878)

25,4601,152,275

179,516
9,091,053
15,876,934(113,898)

203,979
9,091,053

1,929,238

1,930,472

1,884,675

1,887,558

15,763,036

15,773,119

3,444,092
236,935

3,444,126
236,932

3,414,900
171,938

3,414,975
171,937

28,140,306
1,935,902

28,140,583
1,935,877(1,073)(1,073)

(829)

(829)

(8,767)(8,767)(3,600)(6,075)(4,747)(7,992)(29,414)(49,636)

Fair value

Note 1: Book values of shares, etc. that do not have a market price and investments in partnerships as at 31 March 2022 and 2021:
Thousands of
U.S. dollars

Millions of yen
Available-for-sale securities
Monetary claims bought

2022

2021

2022

¥15,373¥13,597130$125,607－― 31 ―－

Note 2: Redemption schedule for monetary receivables and securities with maturity dates after the balance sheet date:Millions of yen
2022

Within one
year

Over oneyear andwithin three
years

Over three
years andwithin five
years

Over five
Over sevenyears andyears andwithin seven within ten
years
years

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥598,475
36,000
1,505

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
4,327

－

－

1,991

－

－

19,980－－83,529－－166,273

1,991－
152,495－－
218,002－－
290,869

19,980－108,189

6,063－
43,608281,883

10,587
12,47978,533451,790

9,055
27,601
67,063354,267

18,044
141,182
22,921
146,838

56,258132,029
75,331
158,671

62,58912,18921,965379,286

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

3,337,226－

100,066
－

6,650
－

27
－

123
－

－
－

10,054

－

－

－

－

－

3

12

12

12

18

43

Over five Over sevenyears andyears andwithin seven within ten
years
years

Over tenyears

Over tenyears

Millions of yen
2021

Within one
year

Over oneyear andwithin three
years

Over three
years andwithin fiveyears

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted¥598,475
23,000
1,448

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
－

¥－
－
4,159

－

－

－

1,989

－

19,978－－85,905－－
141,766－－
188,919

1,989－
203,584－－
320,999

19,978－
122,648

8,025
7,389
46,415
238,326

9,236－
68,782427,556

10,30535,052
92,882400,549

24,227122,029
24,397
155,194

48,762
158,141
70,554148,083

60,01433,96018,848359,007

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

3,304,090
7,750

103,979
－

6,681
－

10
－

140
－

－
－

－

－

－

－

－

－

－

9

12

12

18

49

― 32 ―

Thousands of U.S. dollars
2022

Within one
year

Over oneyear andwithinthree years

Over three
years andwithin five
years

Over five
years andwithinseven years

Over sevenyears andwithin ten
years

Due from banks (*1)
Call loans and bills bought
Monetary claims bought
Securities
Held-to-maturity debt securities
Mainly consist of the following:
National bonds
Corporate bonds
Available-for-sale securities
Mainly consist of the following:
National bonds
Local government bonds
Corporate bonds
Loans and bills discounted$4,889,901
294,142
12,297

$－
－
－

$－
－
－

$－
－
－

$－
－
－

$－
－
35,354－－

16,268－－163,248－－
682,482－－
1,358,551

16,268－1,245,976－－
1,781,208－－
2,376,575

163,248－
883,969

49,538－356,304
2,303,154

86,502
101,961
641,662
3,691,396

73,985225,517547,9452,894,575

147,430
1,153,542
187,278
1,199,755

459,662
1,078,756
615,500
1,296,438

511,390
99,592
179,467
3,098,995

Deposits
Call money and bills soldPayables under securities lendingtransactions
Borrowed money (*2)

27,267,146－

817,599－

54,335
－

221
－

1,005
－

－
－

82,147

－

－

－

－

－

25

98

98

98

147

351

Over tenyears

Notes:*1 Due from banks with no maturity date is included in “Within one year.”*2 Borrowed money is stated for those that bear interest.

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

― 33 ―

a. Financial instruments measured at fair value
Millions of yen
2022
Fair value
Level 1
Monetary claims bought
Money held in trust
Securities
Available-for-sale securities
Mainly consist of the followings:
National bonds and municipal bonds
Corporate bonds
Corporate stocks
Other securities (*1)
Derivative transactions:
Forward foreign exchange
OthersLevel 2

Level 3

Total

¥－
－

¥－
10,571¥－－¥－
10,571

198,741

711,672

48,345

154,030－
35,876
8,835

334,046
307,463－
70,163－
15,813－32,532

958,758－
488,076
323,276
35,876
111,530

－
－

0
－

－
21

0
21

－
－
－

6,075
1,072
1

－
－
21

6.075
1,072
22

Derivative transactions:Interest rate
Forward foreign exchange
OthersNote: *1 Investment trusts, etc. to which the transitional measures set forth in Article 5, Paragraph 6 of the Supplementary Provisionsof the “Cabinet Office Order Partially Amending the Regulation on the Terminology, Forms, and Preparation Methods ofFinancial Statements, etc.” (Cabinet Office Order No. 9, 6 March 2020), are applied are not included in the above table. The
amount of such investment trusts, etc. in the consolidated balance sheet is ¥153,897 million ($1,257,431 thousand).

Thousands of U.S. dollars
2022
Fair value
Level 1
Monetary claims bought
Money held in trust
Securities
Available-for-sale securities
Mainly consist of the followings:
National bonds and municipal bonds
Corporate bonds
Corporate stocks
Other securities
Derivative transactions:
Forward foreign exchange
OthersDerivative transactions:Interest rate
Forward foreign exchange
OthersLevel 2

Level 3

Total

$－
－

$－
86,371$－－$－
86,371

1,623,834

5,814,789

395,008

7,833,631

1,258,518－
293,129
72,1872,729,357
2,512,158－
573,274－
129,202－265,806

3,987,875
2,641,360
293,129
911,267

－
－

0
－

－
172

0
172

－
－
－

49,636
8,759
8

－
－
172

49,6368,759
180― 34 ―

b. Financial instruments other than those measured at fair value
Millions of yen
2022
Fair value
Level 1
Monetary claims bought
Securities
Bonds held for maturity
Mainly consist of the followings:
National bonds and municipal bonds
Corporate bonds
Other securities
Loans and bills discounted

Level 2

Level 3

Total

¥－

¥－

¥5,809¥5,80924,965－－24,965
－
－
－

－
－
－
9,005

－
－
－
1,921,467

24,965－24,965－－
1,930,472－

3,444,126
236,932－3,444,126
236,932

Deposits
Borrowed money

Thousands of U.S. dollars
2022
Fair value
Level 1
Monetary claims bought
Securities
Bonds held for maturity
Mainly consist of the followings:
National bonds and municipal bonds
Corporate bonds
Other securities
Loans and bills discounted

Level 2

Level 3

Total

$－

$－

$47,463$47,463

203,979－－

203,979
－
－
－

－
－
－
73,576－－－
15,699,542

203,979－
203,979－－
15,773,118－

28,140,583
1,935,877－

28,140,583
1,935,877

Deposits
Borrowed money

Note 1: Description of the valuation techniques and inputs used in fair value measurements
a. Monetary claims bought
For securitized instruments within the monetary claims bought, the fair value is the price obtained from brokers and other sources andis classified as Level 3 fair value based on the input used. Fair value of other transactions with short remaining terms is assumed toapproximate book value, and therefore book value is used as fair value and classified as the Level 3 fair value.

b. Money held in trust
For money held in trust, in principle, the fair value is the amount of securities held in trust calculated by the same method as that for“securities” and is classified as Level 2 fair value.
Notes regarding money held in trust by purpose of holding are described in Note “5. MONEY HELD IN TRUST.”c. Held-to-maturity debt securities and available-for-sale securities
Securities for which unadjusted quoted market prices in active markets are available are classified as Level 1 fair value. This mainly
includes listed stocks and government bonds. Even if a quoted market price is used, if the market is not active, the item is classified― 35 ―

as Level 2 fair value. This mainly includes municipal bonds and corporate bonds. For corporate bonds, etc. for which the market priceis not available, the fair value is the price obtained from the broker and other sources and is classified as Level 3 fair value based on
the input used.
For privately placed bonds without a market price, the fair value is calculated by discounting the total amount of principal andinterest at a discount rate reflecting market interest rates, which are adjusted for credit risk and other factors, for each category basedon the internal rating of the counterparty and the private placement period. However, for private-placement bonds of potentiallybankrupt borrowers, effectively bankrupt borrowers, and bankrupt borrowers, the fair value is the amount obtained by deducting theestimated amount of doubtful accounts from the book value, as with loans and bills discounted. These transactions are classified as
Level 3 fair value.

d. Loans and bills discounted
The fair value of loans and bills discounted is calculated by discounting the total amount of principal and interest at a discount rate
reflecting market interest rates, which are adjusted for credit risk and other factors, for each category based on the type of loans andbills discounted, internal rating, and loan terms. For loans and bills with floating interest rates, which reflect market interest rates in ashort period of time, the book value is used as the fair value because they approximate each other as long as the borrower’s credit
status has not largely changed since the execution of the loan. As for loans and bills with short-term settlement (within a year), theircarrying amounts approximate the fair value.
The estimated uncollectable amount of loans to potentially bankrupt borrowers, effectively bankrupt borrowers, and bankrupt
borrowers is calculated based on the estimated disposal value of collateral, the amount deemed collectible from guarantees, or thepresent value of estimated future cash flows. Therefore, the fair value approximates the carrying amount less estimated bad debts atthe closing date, and such amount is used as the fair value. For loans containing credit derivatives, the fair value of such derivatives
is reflected. If the effect of unobservable inputs on fair value is significant, the fair value is classified as Level 3 fair value; otherwise,
the fair value is classified as Level 2 fair value.

e. Deposits
The fair value of demand deposits that are payable immediately on demand on the balance sheet date is based on the amount of suchdeposits. The fair value of deposits is based on the present value of the total of principal and interest discounted by an interest rate tobe applied if similar new deposits were entered into at the consolidated closing date. These transactions are classified as Level 2 fairvalue.

f. Call money and bills soldCall money and bills sold are short-term in nature, and therefore their carrying amounts approximate the fair value.

g. Borrowed money
Among borrowings, for transactions with variable interest rates and short-term remaining maturities, which reflect market interest
rates in a short period of time, the book value is used as the fair value because they approximate each other. For other transactions,the fair value is calculated based on the discounted present value discounted on the estimated future cash flow. As for the discountrate, the replacement rate up to the remaining period of the same kind of product in the market is used. These transactions are classified― 36 ―

as Level 2 fair value.

h. Derivative transactions
Since derivative transactions are mainly over-the-counter transactions and there is no quoted market price, the fair value is calculatedusing valuation methods such as present value techniques according to the type of transaction and the period until maturity. The main
inputs used in these valuation techniques are interest rates, exchange rates, etc., and if unobservable inputs are not used or their effects
are not significant, they are classified as Level 2 fair value (e.g., in cases of interest rate swap transactions, exchange contract
transactions, etc.). In addition, when important non-observable inputs are used, they are classified as Level 3 fair value (e.g., in casesof earthquake derivatives, etc.).

Note 2: Information about Level 3 fair value of financial instruments measured at fair value(1)

Quantitative information on significant unobservable inputs

The quantitative information on significant unobservable inputs at 31 March 2022 is as follows.
Valuationtechniques

Significant
unobservable
inputsPresent value
technique

Probability ofbankruptcy

Scope of inputs

Weighted averageof inputs

0.000% - 17.647%

0.314%

Securities
Available-for-sale securities(2)

Reconciliation of beginning balance and ending balance and valuation gains/losses recognized in profit or loss for the year
A reconciliation of beginning balance and ending balance and valuation gains/losses recognized in profit or loss for the year
ended 31 March 2022 is as follows.
Millions of yen
2022
Profit/loss or othercomprehensive income
for the period
Recorded in

Valuation gains (losses) on
Net amountfinancial assets andRecorded inof purchase,financial liabilities held atothersales,

balanceSecurities:
Other securities
Derivative transactions:
Other (assets)
Other (liabilities)(*1)

income (*2)

settlements

the balance sheet date

Transfer out

Beginning profit/ loss comprehensive issuances and Transfer into
Level 3 (*3)

of Level 3

Endingrecognized in profit/loss(*4)

balancefor the period (*1)

¥50,192¥8¥(185)¥(1,670)¥－¥－ ¥48,345

¥－

34
(34)

(47)
47

－
－

34
(34)

－
－

－
－

21
(21)

(13)
13

Notes: *1 Included in “other operating income” and “other operating expenses” in the consolidated statements of income.
*2 Included in “net unrealized holding gains (losses) on available-for-sale securities” under “other comprehensive income inthe consolidated statements of comprehensive income.
*3 There was no transfer from Level 2 fair value to Level 3 fair value.
*4 There was no transfer from Level 3 fair value to Level 2 fair value.

― 37 ―

Thousands of U.S. dollars
2022
Profit/loss or othercomprehensive income
for the period
Recorded in
BeginningbalanceSecurities:
Other securities
Derivative transactions:
Other (assets)
Other (liabilities)(3)

Valuation gains (losses) on
Net amountfinancial assets andRecorded inof purchase,financial liabilities held atothersales,(*1)

income (*2)$410,099

$65

278
(278)

(384)
384

settlements

the balance sheet date

Transfer out

profit/loss comprehensive issuances and Transfer intoof Level 3

Endingrecognized in profit/loss(*4)

balancefor the period (*1)

Level 3 (*3)$(1512) $(13,644)$－$－ $395,008

$－

278
(278)

－
－

－
－

172
(172)

(106)
106

－
－

Description of valuation process used for fair value measurements
The Risk Management Division of the Group has established policies and procedures for measuring fair value, and each divisionin charge measures fair value accordingly. An independent valuation division verifies whether the fair value obtained is measured
using valid valuation techniques and inputs as well as whether they are classified into an appropriate level of the fair value
hierarchy.
In the market valuation model, we make use of observable data as much as possible. When using quoted prices obtained fromthird parties, the Group verified whether the prices are valid comparing with the results of recalculation by the Group.

(4)

Description of sensitivity of the fair value measurement to changes in significant unobservable inputs
The bankruptcy probability indicates the possibility of bankruptcy occurring, and is an estimate calculated based on pastbankruptcy experience of borrowers. A significant increase (decrease) in the loss rate at the time of bankruptcy will cause asignificant decline (rise) in fair value.

Derivatives
As stated under “2. SIGNIFICANT ACCOUNTING POLICIES,” the Bank deals in interest rate swaps, currency swaps, and forward
exchange contracts.
a. Derivative instruments not qualifying for hedge accounting
Notional amounts, fair value and unrealized gains (losses) as at 31 March 2022 and 2021 were as follows:(Currency-related transactions)
Millions of yen
2022

Thousands of U.S. dollars
2021

Unrealized
Notional

Forward foreign exchange:
Sell
Buy
Note:

gains

2022
Unrealized

Notional

gains

Unrealized
Notional

gains

amounts Fair value (losses)

amounts Fair value (losses)

amounts Fair value (losses)¥17,038 ¥(1,068) ¥(1,068)
616
(5)
(5)

¥14,132
16$139,211 $(8,726) $(8,726)
5,033
(41)
(41)

¥(808)
0¥(808)
0

Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.

― 38 ―(Credit derivative transactions)
Millions of yen

Thousands of U.S. dollars

2022

2021

Notional

Over

Fair

amounts

one yearvalue

Unrealized
gains(losses)2022

Notional

Over

Fair

amounts

one yearvalue

Unrealized
gains(losses)

Notional

Over

Fair

amounts

one yearvalue

Unrealized
gains(losses)

Creditdefault
swap:
Sell¥1,000

－

¥(0)

¥(0)

¥1,000¥1,000

¥(21)

¥(21)

$8,171

－

$(0)

$(0)

Buy

－

－

－

－

－

－

－

－

－

－

－

－

Notes:

1. Transactions in the table above are revalued at fair value. Unrealized gains (losses) are included in the consolidated
statements of income.
2. “Sell” transaction represents undertaking of credit risk.

(Earthquake derivatives)
Millions of yen

Thousands of U.S. dollars

2022

2021

2022

Unrealized
Notional

gains

Notional

amounts Fair value (losses)

Earthquake derivatives:
Sell
Buy

¥2,680
2,680

¥(21)
21

Unrealized

－
－

gains

amounts Fair value (losses)¥2,610
2,610

¥(34)
34

Unrealized
Notional

－
－

gains

amounts Fair value (losses)$21,897
21,897$(172)
172－－

b. Derivative instruments qualifying for hedge accounting
Notional amounts and fair value as at 31 March 2022 and 2021 were as follows:(Interest-related transactions)
Millions of yen
2022
Notional
amounts
Interest rate swap:
Receive floating rate/Pay fixed rate
(Deferral method)
Receive floating rate/Pay fixed rate
(Exceptional method)

Thousands of U.S. dollars
2021

Fair value

Notional
amounts

2022
Fair value

Notional
amounts

Fair value¥37,032¥(3,600)¥38,002¥(4,747)$302,574$(29,414)

22,048(2,475)22,143(3,245)

180,145(20,222)― 39 ―

7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Bills discounted
Loans on notes
Loans on deeds
Overdrafts

2022

2021

2022

¥1,64343,311
1,728,119
170,105¥2,11947,2391,680,010
169,185$13,424
353,877
14,119,773
1,389,860¥1,943,178¥1,898,553$15,876,934

Bills discounted are accounted for as financial transactions in accordance with JICPA Industry Committee Practical Guideline No.
24. The Group has the right to sell or pledge commercial bills discounted without restrictions. The total face values as at 31 March2022 and 2021 were ¥1,643 million ($13,424 thousand) and ¥2,119 million, respectively.
The Group is required to disclose loans to customers who meet specific criteria in accordance with the Banking Act. Doubtful loans
as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022

2021
¥5,74335,26852022

Bankrupt and quasi-bankrupt loans
Doubtful loans
Loans past due three months or more
Restructured loans, including loans to borrowers financiallyassisted by the Bank

¥4,734
37,127
1$38,680
303,350
8

4,285

5,317

35,011

Total¥46,147¥46,333$377,049

Following the enforcement of the “Cabinet Office Ordinance Partially Revising the Ordinance for Enforcement of the Banking Act,etc.” (Cabinet Office Ordinance No. 3, January 24, 2020) on March 31, 2022, the classification of “risk management loans” and others
required to be disclosed under the Banking Act are presented in accordance with the classification of loans to be disclosed under the
Act on Emergency Measures for the Revitalization of the Financial Functions.

8. PLEDGED ASSETS
As at 31 March 2022, deposits of ¥17,601 million ($143,811 thousand), payables under securities lending transactions of ¥10,054
million ($82,147 thousand) and borrowed money of ¥236,500 million ($1,932,347 thousand) were secured by a pledge of securities
in the amount of ¥336,843 million ($2,752,210 thousand) and guarantee money deposits in the amount of ¥72 million ($588 thousand),
respectively. As at 31 March 2021, deposits of ¥39,650 million and borrowed money of ¥171,500 million were secured by a pledgeof securities in the amount of ¥252,012 million and guarantee money deposits in the amount of ¥73 million, respectively. In addition
to the abovementioned assets pledged as collateral, the Group provided other assets in the amount of ¥30,003 million ($245,143
thousand) and ¥35,003 million as collateral for transactions such as exchange settlement transactions as at 31 March 2022 and 2021,
respectively.
Other assets include cash collateral paid for financial instruments, guarantee deposits and lease deposits in the amount of ¥6,758
million ($55,217 thousand) and ¥8,581 million, ¥88 million ($719 thousand) and ¥89 million, and ¥123 million ($1,005 thousand)and ¥155 million as at 31 March 2022 and 2021, respectively.

― 40 ―

9. COMMITMENT LINE AGREEMENTS
Commitment line agreements are agreements to lend customers a prescribed amount when they apply for borrowing, unless there isviolation of the conditions of the agreements. The amounts of unused commitment line related to such agreements as at 31 March2022 and 2021 were ¥693,736 million ($5,668,241 thousand) and ¥700,263 million, respectively. The amounts of commitment line
agreements, having a condition that the original agreement period would be less than one year or unconditionally cancelable at any
time, were ¥648,375 million ($5,297,614 thousand) and ¥658,043 million as at 31 March 2022 and 2021, respectively. The amountof unused commitment line does not necessarily affect the future cash flows of the Group because most of such agreements were
terminated without being used. The majority of these agreements contain provisions that stipulate that the Group may refuse to makeloans or may decrease the commitment line for reasons including certain changes in financial conditions or security for the loans.
When entering into loan agreements with the customers, the Group requests pledges of collateral in the form of premises or securities
if necessary. After entering into loan agreements, the Bank periodically checks the financial condition of the customers based on its
internal rules and performs certain actions relating to the security of the loans if necessary.

10. OTHER ASSETS
Other assets as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
Accrued income
Other

2021

2022

¥3,11053,425¥3,07959,024$25,411436,514¥56,535¥62,103$461,925

11. PREMISES AND EQUIPMENT
Premises and equipment as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Land
Buildings
Equipment
Leased assets
Other¥8,31935,177
9,214
80
542

¥8,67035,425
8,301
80
959

$67,971
287,41775,284654
4,429

Accumulated depreciation

53,332
37,56953,43537,256435,755
306,962¥15,763¥16,179$128,793

To conform with the Companies Act of Japan, deferred gains on sale of real estate in the amount of ¥788 million ($6,438 thousand)and ¥805 million as at 31 March 2022 and 2021, respectively, were deducted from the acquisition cost of premises and equipment.

― 41 ―

12. INTANGIBLE ASSETS
Intangible assets as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
SoftwareLeased assets
Other

2021

2022

¥2,07744
118¥1,25660
190$16,970360
964¥2,239¥1,506$18,294

13. DEPOSITS
Deposits as at 31 March 2022 and 2021 consisted of the following:
Millions of yen
Current deposits
Ordinary deposits
Deposits at noticeTime deposits
Other deposits
Negotiable certificates of deposit

Thousands of
U.S. dollars

2022

2021

2022

¥55,8122,100,109
1,179
960,939
43,527
282,526¥56,518
2,079,462
2,473
996,537
67,264
212,646$456,018
17,159,155
9,633
7,851,450
355,6422,308,408¥3,444,092¥3,414,900$28,140,306

14. OTHER LIABILITIESOther liabilities as at 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
Accrued income taxes
Accrued expenses
Unearned income
Lease obligations
Other

2021

2022

¥617
1,771
657
1,462
22,106¥2,032
1,905
597
1,359
24,146$5,041
14,470
5,368
11,945
180,620¥26,613¥30,039$217,444

15. CONTINGENT LIABILITIES, ACCEPTANCES AND GUARANTEESAll contingent liabilities including letters of credit, acceptances and guarantees are reflected in acceptances and guarantees. As a contra
account, customers’ liabilities for acceptances and guarantees are shown on the asset side, which represent the Group’s right ofindemnity from customers.
The amount of guarantee obligation for privately placed bonds (Financial Instruments and Exchange Act, Article 2, Paragraph 3),
out of bonds included in securities, stood at ¥15,807 million ($129,153 thousand) as at 31 March 2022 compared with ¥11,316 million
as at 31 March 2021.

― 42 ―

16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe Group has adopted funded and unfunded defined benefit plans to prepare for the employees’ retirement benefits. In addition, asof 1 April 2016, the Bank transferred part of the defined benefit plans (excluding the portion for vested pensioners in a waiting period
and current pensioners) to defined contribution plans.
Under the defined benefit pension plan, which is a funded plan, employees receive lump-sum payments or pensions based onsalaries and service periods; additionally, under this plan, a cash balance plan has been introduced. Each beneficiary has a hypotheticalindividual account under the defined benefit pension plan, where contributions by the Bank and source of pension payments for eachbeneficiary are accumulated. In hypothetical individual accounts, interest credits based on trends in market interest rates and benefit
credits based on the salary level are accumulated. In addition, the Bank has set up retirement benefit trusts related to the defined
benefit pension plan.
Under the lump-sum retirement benefit plan (an unfunded plan that has become a funded plan as a result of setting up retirement
benefit trusts.), predetermined points based on years of service and ability-based grade / job title are given to each beneficiary annually,and employees receive lump-sum payments, which are calculated by multiplying the unit price of points with the accumulated points
at the time of retirement, as retirement benefits.
A consolidated subsidiary adopts the simplified method in calculating net defined benefit liability and retirement benefit expenses.

Defined benefit plans(i) Change in projected benefit obligation
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Balance at the beginning of the year
Service costs (including the amount of employee contributions)Interest costs
Actuarial differences
Retirement benefits paid

¥24,594683
106864(1,217)¥25,132685
108
70(1,401)$200,948
5,581
866
7,059
(9,944)

Balance at the end of the year

¥25,030¥24,594$204,510

Note: Since the consolidated subsidiaries, which adopt the simplified method, are insignificant, the net defined benefit liability,
retirement benefit expenses and retirement benefits paid are included in the accounts above. All retirement benefit expenses areincluded in service costs.

(ii) Change in plan assets
Millions of yen
2022

2021

Thousands of
U.S. dollars
2022

Balance at the beginning of the year
Expected return on plan assets
Actuarial differences
Employer contributions
Employee contributions
Retirement benefits paid

¥28,594
732
(358)
1,512
52
(780)

¥26,346
659
2,212
112
52
(787)

$233,630
5,981(2,925)
12,354425(6,373)

Balance at the end of the year

¥29,752¥28,594$243,092― 43 ―

(iii) Reconciliation of projected benefit obligation and plan assets with net defined benefit liability (asset)
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Funded projected benefit obligation
Plan assets¥24,746(29,752)¥24,306(28,594)$202,190(243,092)

Unfunded projected benefit obligation(5,006)284(4,288)288(40,902)2,320

Net liability (asset) recognized in consolidated balance
sheets¥(4,722)¥(4,000)$(38,582)

Net defined benefit liability
Net defined benefit asset

799(5,521)

1,812(5,812)

6,528(45,110)

Net liability (asset) recognized in consolidated balance
sheets¥(4,722)¥(4,000)$(38,582)

Note: The table above includes the plans to which the simplified method is applied.

(iv) Retirement benefit expenses and their breakdown
Millions of yen
2022
2021

Thousands of
U.S. dollars
2022

Service costs (excluding the amount of employee contributions)Interest costs
Expected return on plan assets
Amortization of actuarial differences

¥631
106
(732)
154

¥634
108
(659)
445

$5,156866(5,981)
1,258

Retirement benefit expenses

¥159

¥528

$1,299Note: The retirement benefit expenses of the consolidated subsidiaries adopting the simplified method are included in service costs.

(v) Remeasurements of defined benefit plans in other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in other comprehensive income was asfollows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Actuarial differences¥(1,068)¥2,587$(8,726)

Total¥(1,068)¥2,587$(8,726)(vi) Remeasurements of defined benefit plans in accumulated other comprehensive income
The component of items recognized in remeasurements of defined benefit plans (pretax) in accumulated other comprehensive income
was as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Unrecognized actuarial differences¥ (1,770)¥ (702)$(14,462)

Total¥ (1,770)¥ (702)$(14,462)― 44 ―

(vii) Plan assets(a) Percentage by major category of plan assets are as follows:
2022

2021

Bonds
Equities
General accountCash and deposits

56%
17%
13%
14%

55%
29%
13%
3%

Total

100%

100%

Retirement benefit trusts set up for defined benefit pension plans accounted for 19% and 20% of total plan assets for the years
ended 31 March 2022 and 2021, respectively. In addition, retirement benefit trusts set up for the lump-sum retirement benefit
plans accounted for 27% and 24% of total plan assets for the years ended 31 March 2022 and 2021, respectively.
(b) Procedure for determining long-term expected rate of return on plan assets
In determining a long-term expected rate of return on plan assets, the Bank considers the current and projected asset allocations,as well as a current and future long-term expected rate of return for various categories of the plan assets.

(viii) Basis for calculation of actuarial assumptions
The basis for calculation of actuarial assumptions (presented as a weighted-average rate for discount rate and long-term expected
rate of return on plan assets) for the years ended 31 March 2022 and 2021 is as follows:
2022
Discount rateLong-term expected rate of return on plan assets
Expected salary increase rate in defined benefit plans
Expected salary increase rate in lump-sum retirement
benefit plans

2021
0.4%
2.5%
3.9%

0.4%
2.5%
3.9%

7.8%

7.4%

The contributions made by the Bank to defined contribution plans were ¥124 million ($1,013 thousand) and ¥124 million for theyears ended 31 March 2022 and 2021, respectively.

― 45 ―

17. INCOME TAXESThe Group is subject to a number of taxes based on income such as corporation, inhabitant and enterprise taxes, which, in the aggregate,
indicated a statutory tax rate in Japan of approximately 30.4% and 30.4% for the years ended 31 March 2022 and 2021, respectively.
Significant components of the Group’s deferred tax assets and liabilities as at 31 March 2022 and 2021 are as follows:

Thousands of U.S.
dollars

Millions of yen
2022

2021

2022

Deferred tax assets:
Allowance for doubtful accounts
Net defined benefit liability
Accumulated depreciation
Securities
Deferred hedge
Other¥4,402
2,495
1,248
424
1,094
1,410

¥4,219
2,292
1,246
369
1,443
1,282

$35,967
20,386
10,197
3,464
8,939
11,520Subtotal
Valuation allowance (*)

11,073(3,964)

10,851(3,204)90,473(32,388)

7,109

7,647

58,085(9,514)(395)(6)(14,182)(407)(1)(77,735)(3,227)(50)(9,915)(14,590)(81,012)¥(2,806)¥(6,943)$(22,927)

Total deferred tax assets
Deferred tax liabilities:
Net unrealized holding gains on available-for-sale securities
Deferred gains on sale of real estate
Other
Total deferred tax liabilities
Net deferred tax liabilities(*) Valuation allowance increased by ¥760 million ($6,210 thousand) in the year ended 31 March 2022. The main reason of thisincrease was the recognition of valuation allowance for the portion of deductible temporary differences related to allowance for
doubtful accounts incurred in the current fiscal year at the Bank and its consolidated subsidiaries that was not expected to berealized in the reasonably estimated period in the future.

The following summarizes the significant difference between the statutory tax rate and the Bank’s effective tax rate for the years
ended 31 March 2022 and 2021.
2022
Statutory tax rate

2021

30.4%

30.4%

Non-deductible expenses

0.3

0.4

Non-taxable income

(1.0)

(1.3)

Per capita inhabitant taxes

0.6

0.7

Valuation allowance

10.9

16.6

Other, net
Effective tax rate

― 46 ―

0.0

0.9

41.2%

47.7%

18. NET ASSETS
Under the Companies Act and the Banking Act of Japan, the entire amount of the issue price of shares is required to be accounted for
as capital, although a company may, by a resolution of its board of directors, account for an amount not exceeding one-half of theissue price of the new shares as additional paid-in capital, which is included in capital surplus.
The Companies Act and the Banking Act provide that an amount equal to at least 20% of cash dividends and other cash
appropriations shall be appropriated and set aside as a legal earnings reserve until the total amount of legal earnings reserve andadditional paid-in capital equals 100% of common stock. The legal earnings reserve and additional paid-in capital may be used toeliminate or reduce a deficit by a resolution of the shareholders’ meeting or may be capitalized by a resolution of the board of directors.
On the condition that the total amount of legal earnings reserve and additional paid-in capital remains equal to or exceeds 100% ofcommon stock, it is available for distribution by a resolution of the shareholders’ meeting. Legal earnings reserve is included inretained earnings in the accompanying financial statements.
The maximum amount that the Bank can distribute as dividends is calculated based on the non-consolidated financial statementsof the Bank in accordance with the Companies Act.
The number of treasury stock held by the Group was 1,190 thousand shares as at 31 March 2022 and 903 thousand shares as at 31
March 2021.

19. STOCK OPTIONS
1. Share-based compensation expenses accounted for as general and administrative expenses
The balances of stock acquisition rights granted for the stock option plan were ¥293 million ($2,394 thousand) and ¥252 million as at
31 March 2022 and 2021, respectively.
Share-based compensation expenses accounted for as general and administrative expenses for the years ended 31 March 2022 and2021 amounted to ¥47 million ($384 thousand) and ¥48 million, respectively.

― 47 ―

2. Details of stock options, volume and activity(a) Details of stock options
Title and number ofgrantees
Number of stock
options by type ofsharesGrant dateCondition for vesting
Requisite service period
Exercise period

Title and number ofgrantees
Number of stock
options by type ofsharesGrant dateCondition for vesting
Requisite service period
Exercise period

2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Directors of the Bank:
9
Common stock:
13,400 shares

Directors of the Bank:
9
Common stock:
10,400 shares

Directors of the Bank:
9
Common stock: 9,100
sharesDirectors of the Bank:
9
Common stock:
12,100 shares

24 July 2013
Not applicableNot applicable
From 25 July 2013 to
24 July 2043

24 July 2014
Not applicableNot applicable
From 25 July 2014 to
24 July 2044

23 July 2015
Not applicableNot applicable
From 24 July 2015 to
23 July 2045

25 July 2016
Not applicableNot applicable
From 26 July 2016 to
25 July 2046

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

Directors of the Bank:
9
Common stock:
11,100 shares

Directors of the Bank:
7
Common stock:
10,200 shares

Directors of the Bank:
7
Common stock:
14,500 shares

Directors of the Bank:
7
Common stock:
18,600 shares

26 July 2017
Not applicableNot applicable
From 27 July 2017 to
26 July 2047

25 July 2018
Not applicableNot applicable
From 26 July 2018 to
25 July 2048

25 July 2019
Not applicableNot applicable
From 26 July 2019 to
25 July 2049

27 July 2020
Not applicableNot applicable
From 28 July 2020 to
27 July 2050

2021 stock option plan
Title and number ofgrantees
Number of stock
options by type ofsharesGrant dateCondition for vesting
Requisite service period

Directors of the Bank:
7
Common stock:
28,000 shares

27 July 2021
Not applicableNot applicable
From 28 July 2021 to
Exercise period
27 July 2051
Note: Reported in terms of shares of stock.
(b) Volume and activity
The following describes volume and activity that existed during the year ended 31 March 2022. The number of stock options isreported in terms of shares of stock.

― 48 ―

(i) Number of stock options
2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

Before vesting (shares):
As at 31 March 2021
GrantedForfeited
VestedOutstanding

6,400
－
－
－
6,400

5,600
－
－
－
5,600

4,800
－
－
－
4,800

7,200
－
－
－
7,200

After vesting (shares):
As at 31 March 2021
VestedExercised
Forfeited
Outstanding

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

－
－
－
－
－

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

As at 31 March 2021
GrantedForfeited
VestedOutstanding

6,800
－
－
－
6,800

7,800
－
－
－
7,800

13,400－－1,100
12,30018,600－－1,300
17,300After vesting (shares):
As at 31 March 2021
VestedExercised
Forfeited
Outstanding

－
－
－
－
－
－

－
－
－
－
－
－

－
－
1,100
1,100
－
－

－
－
1,300
1,300
－
－

2013 stock option plan2014 stock option plan

2015 stock option plan

2016 stock option plan

¥1 ($0.01)¥－ ($－)¥4,119 ($33.65)¥1 ($0.01)¥－ ($－)¥4,437 ($36.25)¥1 ($0.01)¥－ ($－)¥5,287 ($43.20)¥1 ($0.01)¥－ ($－)¥4,032 ($32.94)

2017 stock option plan2018 stock option plan2019 stock option plan2020 stock option plan

¥1 ($0.01)¥－ ($－)¥4,178 ($34.14)¥1 ($0.01)¥－ ($－)¥4,439 ($36.27)¥1 ($0.01)¥1,697 ($13.87)¥2,693 ($22.00)¥1 ($0.01)¥1,697 ($13.87)¥2,578 ($21.06)

Before vesting (shares):2021 stock option plan
Before vesting (shares):
As at 31 March 2021
GrantedForfeited
VestedOutstanding－
28,000－－28,000After vesting (shares):
As at 31 March 2021
VestedExercised
Forfeited
Outstanding

－
－
－
－
－
－

(ii) Price information
Exercise price
Average exercise price
Fair value at the grant

Exercise price
Average exercise price
Fair value at the grant― 49 ―

2021 stock option plan
Exercise price
Average exercise price
Fair value at the grant¥1 ($0.01)¥－ ($－)¥1,664 ($13.60)

3. Valuation method for fair value of stock options
The valuation methods for fair value of stock options granted in the year ended 31 March 2022 were as follows:(a) Valuation method: Black-Scholes formula(b) Major basic numerical values and valuation method2021 stock option plan
Stock price volatility (*1)
Expected years to expiration (*2)
Expected dividends (*3)
Risk-free interest rate (*4)

32.6%
0.7 years¥60 ($0.49) per share(0.13)%

Notes:*1. Stock price volatility is calculated based on the actual stock prices from 9 November 2020 to 19 July 2021.
*2. As a rational estimation is difficult due to the insufficient amount of historical data, expected years to expiration aredetermined by the estimated average remaining service period.
*3. Expected dividends are determined based on actual dividends for the year ended 31 March 2021.
*4. Risk-free interest rate is the Japanese government bond yield corresponding to the expected years to expiration.
4. Estimation method for the number of vested stock options
Since it is difficult to make a reasonable estimate on the number of stock options that will be forfeited in the future, the actual
number of forfeited stock options is reflected in the estimation.

20. OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses for the years ended 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
Other operating income:Gain on trading account securities transactions
Gain on sale of bonds
Gain on financial instruments
Other

2021

¥0
39
21
4,657

¥0
145
161
4,295

$0
319
172
38,050¥4,717¥4,601$38,541

Thousands of
U.S. dollars

Millions of yen
2022
Other operating expenses:
Loss on sale of bonds
Loss on redemption of bonds
Other― 50 ―

2022

2021

2022

¥185
817
4,218

¥136
639
4,056

$1,512
6,675
34,464¥5,220¥4,831$42,651

21. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
Salaries and allowances
Fringe benefits and welfare
Retirement benefit expenses
Depreciation for premises and equipment
Rental expenses
Taxes other than income taxes
Deposit insurance premium
Other expenses

2022

2021

2022

¥10,476
2,861
283
1,992
748
1,316
917
6,260

¥10,578
2,880
650
1,695
780
1,526
929
6,435

$85,595
23,376
2,312
16,276
6,112
10,753
7,492
51,148¥24,853¥25,473$203,064

22. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended 31 March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
Other income:Gain on sale of stocks and other securities
Gain on disposal of premises and equipment
Other

2021

¥3,141
4368¥3,65925
767$25,664
33
3,006¥3,513¥4,451$28,703

Thousands of
U.S. dollars

Millions of yen
2022
Other expenses:
Provision for allowance for doubtful accounts
Loss on disposal of premises and equipment
Loss on devaluation of stocks and other securities
Loss on sale of stocks and other securities
Impairment losses
Loss on money held in trust
Loss on transfer of receivables
Other

23. LEASE TRANSACTIONS
A. Finance leases(a) As lessee(1) Finance leases that transfer the ownership(i) Details of leased assets
Premises and equipment:
Not applicable
Intangible assets:― 51 ―

2022

2021

2022

¥1,187
116
308
326
645
132
212
78

¥3,975
105
189
182
537
41
20
180

$9,699
948
2,516
2,664
5,270
1,078
1,732
637

¥3,004¥5,229$24,544

Mainly consist of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.
(2) Finance leases other than those that transfer the ownership(i) Details of leased assets
Premises and equipment:
Mainly consist of equipment for the branch operating system
Intangible assets:
Mainly consists of software for the branch operating system(ii) Depreciation and amortization methods of leased assets
Depreciation and amortization methods of leased assets are described in Note 2. Depreciation and amortization methods, (3) Leased
assets.
(3) Current portion of lease obligations and lease obligations (excluding current portion) as at 31 March 2022 and 2021 consisted of
the following:
Millions of yen
2022
Current portion of lease obligations
Lease obligations (excluding current portion)

2021

Thousands of
U.S. dollars

Average interest
rate (%)

2022

2022

¥499
963

¥476
883

$4,077
7,868¥1,462¥1,359$11,945

Note: The average interest rate represents the weighted-average rate applicable to the year-end balance.

The aggregate annual maturities of lease obligations are summarized as follows:Year ending 31 March
2023
2024
2025
2026
2027 and thereafterYear ending 31 MarchMillions ofyen

Thousands of
U.S. dollars

2022

2022

¥499
383
273
170
137
Millions of
yen
2021

2022
2023
2024
2025
2026 and thereafter

¥476
350
265
168
100

― 52 ―$4,077
3,129
2,231
1,389
1,119

2.37%
2.42%

B. Operating leases(a) As lessee
There were no future lease payments under non-cancelable operating leases as at 31 March 2022 and 2021.

(b) As lessor
Future lease receivables under non-cancelable operating leases as at 31 March 2022 were ¥230 million ($1,879 thousand) including¥24 million ($196 thousand) due within one year.
Future lease receivables under non-cancelable operating leases as at 31 March 2021 were ¥257 million including ¥27 million due
within one year.

24. COMPREHENSIVE INCOME
Reclassification adjustments and tax effect amounts of other comprehensive income (losses) for the years ended 31 March 2022 and2021 were as follows:
Thousands of U.S.
dollars

Millions of yen
2022
Net unrealized holding gains (losses) on available-for-salesecurities:
Amount for the year
Reclassification adjustment

2021

2022

¥(13,028)(2,408)¥17,523(3,656)$(106,446)(19,675)

Amount before tax effectTax effect amount(15,436)
4,677

13,867(4,092)(126,121)
38,213Net unrealized holding gains (losses) on availablefor-sale securities(10,759)

9,775(87,908)

631
516

619
529

5,156
4,216

1,147
(348)

1,148
(349)

9,372
(2,843)Net unrealized gains (losses) on hedging derivatives:
Amount for the year
Reclassification adjustment
Amount before tax effectTax effect amount

799

799

6,529

Remeasurements of defined benefit plans:
Amount for the year
Reclassification adjustment

Net unrealized gains (losses) on hedging derivatives(1,222)
154

2,142
445

(9,984)
1,258

Amount before tax effectTax effect amount(1,068)
324

2,587
(786)

(8,726)
2,647

Remeasurements of defined benefit plans
Total other comprehensive income (losses)― 53 ―

(744)

1,801

(6,079)¥ (10,704)¥ 12,375$(87,458)

25. PER SHARE DATA
Amounts per share as at 31 March 2022 and 2021 and for the years then ended are as follows:Yen
Net assets per share
Net income per share
Diluted net income per share

U.S. dollars

2022

2021

2022

¥11,166.80
235.91
234.74¥11,445.57
164.64164.03$91.24
1.93
1.92

Amounts per share were calculated based on the following:Thousands of
U.S. dollars

Millions of yen or
thousands of shares
Net assets per share:
Total net assets
Amount to be deducted from total net assets
Stock acquisition rights
Net assets at the end of the fiscal year attributed to common stock
Number of shares of common stock at the end of the fiscal year
used in computing net assets per share attributed to common
stock

2022

2021

2022

¥193,565
293
293
193,272¥201,631
252
252
201,379$1,581,543
2,394
2,394
1,579,149

17,30817,594

Net income per share:
Net income attributable to owners of parent
Net income attributable to owners of parent attributed to common
stock
Average number of shares of common stock during the year

4,126

2,896

33,712

4,126
17,4902,896
17,59433,712

Diluted net income per share:
Number of increased common stock used in computing diluted net
income per share
Compensation-type stock options

88
88

66
66

26. SEGMENT INFORMATION(1) Reportable segment information
a. Description of reportable segments
The Group’s reportable segments are those components of the Group for which separate financial information is available andwhose operating results are regularly reviewed by the board of directors to decide on the allocation of resources and assess businessperformance.
The principal business of the Group is financial services primarily focused on domestic commercial banking business. The
Group has three reportable segments — “Commercial banking business,” “Leasing business” and “Credit card and credit guarantee
business” — classified by type of financial services.
“Commercial banking business” consists of deposits, loans, securities investment and foreign exchange operations.
“Leasing business” consists of leasing and computer processing contracted business.
“Credit card and credit guarantee business” consists of credit card and guarantee business.

― 54 ―

b. Methods of measurement of the amounts of income, profit (loss), assets, liabilities and other items for each reportable segment
The accounting policies for each reportable segment are consistent with those disclosed under “2. SIGNIFICANT ACCOUNTINGPOLICIES.”
Segment profit is adjusted with ordinary profit. Ordinary profit is profit derived from regular business activities, including
wages, dividends and interest.
Intersegment income is based on the prevailing market price.

c. Revenue recognition
Information on disaggregation of revenue from contracts with customers is as presented in the table in d. below.

d. Information about income, profit (loss), assets, liabilities and other items, and information on disaggregation of revenue for eachreportable segment
2022
Millions of yen
Reportable segment
Credit cardand credit

Commercial
banking

Ordinary income:Revenue from contracts
with customers
Revenue from othersources

Leasingguarantee

Total

Others

Total

Adjustments

Consolidated¥6,958¥420¥103¥7,481¥277¥7,758¥-¥7,75831,430

4,225

1,015

36,6703736,707(186)

36,521

Income from externalcustomers

38,388

4,645

1,118

44,151

314

44,465(186)

44,279Intersegment income

736

94

440

1,270

64

1,334

(1,334)-

Total

39,124

4,739

1,558

45,421378

45,799(1,520)44,279Segment profit (loss)

8,124

(463)

716

8,377

43

8,420

(651)

7,769

Segment assets

3,918,950

13,307

9,697

3,941,954

246

3,942,200(21,940)

3,920,260

Segment liabilities

3,729,841

9,947

3,585

3,743,373

54

3,743,427(16,732)

3,726,695

Depreciation

1,987

15

1

2,003

1

2,004

-

2,004

Interest income

27,9290

40

27,969027,969(695)

27,274

777

42

1

820

-

820

(43)

777

2,673

2

192

2,867

19

2,886

-

2,886

2,951

0

1

2,952

3

2,955

1

2,956

Other items:

Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets

Notes 1. Ordinary income is stated instead of net sales of non-banking industries. Ordinary income other than revenue arising fromcontracts with customers includes revenue based on the “Accounting Standards for Financial Instruments” (ASBJ
Standard No. 10), such as loans and securities investment operations.
2. “Others” are business segments not included in the reportable segments, and include the consulting business and regional
trading company business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers are primarily adjustments for provision for allowance for
doubtful accounts.

― 55 ―

(2) The adjustments for segment profit (loss) are primarily elimination of intersegment transactions.
(3) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(4) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
(5) The adjustments for interest income are primarily elimination of intersegment transactions.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.
2021
Millions of yen
Reportable segment
Credit cardand credit

Commercial
banking

Leasingguarantee¥39,870¥4,301¥1,318¥45,489

¥152

337

263

454

1,054

¥40,207¥4,564¥1,772

5,542

(32)

879

Segment assets

3,838,826

12,794

Segment liabilities

3,643,048

8,810

Depreciation

1,682

39

1

1,722

-

1,722

-

1,722

Interest income

28,298044

28,342028,342(288)

28,054

875

37

1

913

-

913

(37)

876

2,404

4

232

2,640

3

2,643

-

2,643

1,700

4

0

1,704

-

1,704

1

1,705

Ordinary income:
Income from externalcustomers
Intersegment income
Total
Segment profit (loss)

Total

Others

Total

Adjustments

Consolidated¥45,641¥(323)¥45,318

46

1,100(1,100)－¥46,543¥198¥46,741¥(1,423)¥45,318

6,389

0

6,389

(233)

6,156

9,963

3,861,583

199

3,861,782(20,820)

3,840,962

3,797

3,655,655

30

3,655,685(16,354)

3,639,331

Other items:

Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets

Notes 1. Ordinary income is stated instead of net sales of non-banking industries.
2. “Others” are business segments not included in the reportable segments, and include the consulting business and regional
trading company business.
3. “Adjustments” are as follows.
(1) The adjustments for income from external customers are primarily adjustments for provision for allowance for
doubtful accounts.
(2) The adjustments for segment profit (loss) are primarily elimination of intersegment transactions.
(3) The adjustments for segment assets are primarily elimination of intersegment transactions and adjustments fornet defined benefit assets.
(4) The adjustments for segment liabilities are primarily elimination of intersegment transactions and adjustments
for net defined benefit liability.
(5) The adjustments for interest income are primarily elimination of intersegment transactions.
4. Segment profit (loss) is adjusted with ordinary profit in the consolidated statements of income.

― 56 ―

2022
Thousands of U.S. dollars
Reportable segment
Creditcard andcreditCommercial
banking

Leasingguarantee$56,851$3,431

256,802

Income from externalcustomers
Intersegment income

Ordinary income:Revenue from contracts
with customers
Revenue from othersources

Total

Others

Total

Adjustments

Consolidated$842$61,124$2,264$63,388$-$63,388

34,521

8,293

299,616302

299,918(1,520)298,398

313,653

37,9529,135

360,740

2,566

363,306(1,520)361,786

6,014

768

3,595

10,377523

10,900(10,900)

361,786

Total

319,667

38,72012,730371,1173,089

374,206(12,420)

Segment profit (loss)

66,378(3,783)5,850

68,445351

68,796(5,319)63,477

Segment assets

32,020,181

108,726

79,231

32,208,138

2,010

32,210,148(179,263)

32,030,885

Segment liabilities

30,475,047

81,27329,29230,585,612

441

30,586,053(136,711)

30,449,342

Depreciation

16,235123

816,366

8

16,374-

16,374

Interest income

228,1970

327

228,5240

228,524(5,679)222,845

6,349

343

8

6,700

-

6,700

(351)

6,349

21,84016

1,569

23,425

155

23,580-23,58024,1110

8

24,11925

24,1448

24,152Other items:

Interest expense
Provision for income
taxes
Increase in premises
and equipment andintangible assets(2) Other segment-related informationa. Information by service
Information by service for the years ended 31 March 2022 and 2021 is as follows:
2022
Millions of yen
Securities
Ordinary income from external customers

Banking

investment

Other

Total

¥17,259¥12,715¥14,305¥44,279

2021
Millions of yen
Securities
Ordinary income from external customers

Banking

investment

Other

Total

¥17,338¥14,431¥13,549¥45,318

2022
Thousands of U.S. dollars
Securities
Ordinary income from external customers

Banking

investment

Other

Total

$141,016$103,889$116,881$361,786

Note: Ordinary income is stated instead of net sales of non-banking industries.

― 57 ―

b. Information by geographic regioni. Ordinary income
Information on ordinary income from domestic customers for the years ended 31 March 2022 and 2021 was omitted, because theamount of ordinary income from domestic customers was more than 90% of consolidated ordinary income.
ii. Premises and equipment
Information on premises and equipment for the years ended 31 March 2022 and 2021 was omitted, because there were no premises
and equipment located abroad.

c. Major customers’ segment information
Segment information on major customers was not shown for the years ended 31 March 2022 and 2021, since no customer accounted
for more than 10% of ordinary income in the consolidated statements of income.

d. Information on impairment of fixed assets for each reportable segment
2022
Millions of yen
Reportable segment
Credit card

Commercial
banking
Impairment losses

and credit

Leasing¥485

guarantee

¥154

Total

¥6

¥645

Others
¥－

Total
¥645

2021
Millions of yen
Reportable segment
Credit card

Commercial
banking
Impairment losses

and credit

Leasing¥537

guarantee

¥－

¥－

Total
¥537

Others
¥－

Total
¥537

2022
Thousands of U.S. dollars
Reportable segment
Credit card

Commercial

and creditbanking
Impairment losses

Leasing$3,963$1,258guarantee

$49

Total
$5,270

Others$－Total$5,270e. Segment information on amortization of goodwill and its remaining balance
There is no information to be reported on amortization of goodwill and its remaining balance for the years ended 31 March 2022 and2021.

f. Information on gain on negative goodwill for each reportable segment
There is no information to be reported on gain on negative goodwill for the years ended 31 March 2022 and 2021.

― 58 ―

27. RELATED PARTY TRANSACTIONS(1) Related party transactions
a. Transactions between the Bank and related parties
Transactions with executive officers of the Bank and major shareholders (limited to individuals) and others
There is no significant transaction with executive officers of the Bank and major shareholders to be disclosed for the years ended 31
March 2022 and 2021.

b. Transactions between the Bank’s consolidated subsidiaries and related parties
There is no significant transaction to be disclosed between the Bank’s consolidated subsidiaries and related parties for the years
ended 31 March 2022 and 2021.

(2) Notes to the Bank’s parent company and significant affiliates
There is no information to be reported on the notes to the Bank’s parent company and significant affiliates for the years ended 31
March 2022 and 2021.

28. SUBSEQUENT EVENTS
Cash dividends
On 22 June 2022, the shareholders of the Bank authorized the following appropriation of retained earnings as at 31 March 2022:
Millions of yen
Cash dividends (¥50 ($0.41) per share for year end)

¥865

Thousands of
U.S. dollars$7,068

Note: The dividends per share includes a commemorative dividend of ¥10 in celebration of the 90th anniversary of the Bank’s founding.

― 59 ―

,QGHSHQGHQWDXGLWRUųVUHSRUW
To the Board of Directors of The Bank of Iwate, Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of The Bank of Iwate, Ltd. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprisethe consolidated balance sheets as at March 31, 2022 and 2021, the consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2022 and 2021, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
$ppropriateness of the determination of the borrower category of corporate customers and thereasonableness of the estimate of cash flows used in the DCF method
The key audit matter
The Group recognized loans and bills
discounted of ¥1, 943,177 million (49.6% of
total assets) and allowance for doubtful
accounts of ¥15, 574 million in the current
consolidated balance sheet. Of theseamounts, loans and bills discounted of ¥1,

How the matter was addressed in our audit
The primary procedures we performed to assess theappropriateness of the determination of the borrower
category of corporate customers and the reasonableness― 60 ―

950,020 million and allowance for doubtful
accounts of ¥11,845 million (both include
intra-group loans to consolidated subsidiaries
and allowance for doubtful accounts forconsolidated subsidiaries) were recognizedby the Company, the parent company. The
majority of the allowance for doubtful
accounts was for loans to corporate
customers.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Allowance for
doubtful accounts” to the consolidated
financial statements, the Company reviews
the loan assets based on its internallyestablished rules for self-assessment ofassets, and recognizes an allowance for
doubtful accounts based on the category ofborrowers determined in accordance with its
criteria for write-offs and reserves, which
include the estimate using the discounted
cash flow (DCF) method.
As described in Note 2, “SIGNIFICANTACCOUNTING POLICIES, Significant
accounting estimates” the corporate
customers of the Company are categorizedbased on quantitative information such as theborrowers’ financial information, as well as
taking into account qualitative factors.
Specifically, the Company assesses theborrowers’ solvency based on theirsubstantive financial condition, cash flows
and profitability. The Company also
comprehensively takes into account theborrowers’ business sustainability, future
profitability, ability to repay debts based on
their cash flows, the reasonableness andfeasibility of their business improvement
plans and support from other financial
institutions, among others, to determine thecategory of borrowers in light of theirindustry/sector specific characteristics.
Accordingly, the determination requires
management’s judgment.
A change in the category of a large borrower,in particular, may have a material effect on
the amount of allowance for doubtful
accounts to be recognized in the consolidated
financial statements. Therefore, a heightenedlevel of judgment is required for large
borrowers whose credit risk could possibly
change significantly, should their internal orof the estimate of cash flows used in the DCF method
included the following:(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevant to
the process of recognizing allowance for doubtful
accounts, with a particular focus on the following:z

Determination of the category of borrowers
considering qualitative factorszEstimate of cash flows used in the DCF method(2) Assessment of the appropriateness ofdetermination of the category of borrowers
In order to assess whether borrowers wereappropriately categorized, we selected certain
borrowers to test individually, based on bothquantitative and qualitative factors. While quantitative
factors included the possible effect on the amount ofallowance for doubtful accounts from inappropriate
categorization, qualitative factors included thedetermination of whether a significant change to their
credit risk rating is expected, should their internal orexternal economic environment, including the impact
of COVID-19, change.
In order to assess whether the corporate customers
selected through the process above were categorized
appropriately, we:zinspected the results of the analysis performed by
the Company on the borrowers’ financial
information and others, as well as documents usedin the categorization of the borrowers, including
qualitative information;z

inquired of personnel in the relevant departments(Business branches, the Loan Supervision
Department, and the Risk Management Division)of the Company regarding the current situationand future outlook of the borrowers, among
others; andzassessed the appropriateness of significant
assumptions used in their business improvement
plans and the feasibility of key measures, taking
into account past results, external environment
factors, and their businesses, and checked theprogress of the plans.

(3) Assessment of the reasonableness of the― 61 ―

external economic environment, including
the impact of COVID-19, change.
In addition, as described in Note 2,“SIGNIFICANT ACCOUNTINGPOLICIES, Significant accounting
estimates” to the consolidated financial
statements, in the current fiscal year theCompany recognized an additional allowancefor doubtful accounts of ¥1,756 million after
applying the DCF method to loans related tolarge potentially bankrupt borrowers whose
unsecured amount exceeded a certain level.
The estimate of cash flows used in the DCF
method highly relies on management’s
assessment of the repayment plans ofborrowers, among others, and involves a highdegree of uncertainty.

estimate of cash flows used in the DCF method
In order to assess whether the estimate of cash flows
used in the DCF method was reasonable, we assessed
the solvency of borrowers to which the DCF method
was applied by comparing their future cash flows withrepayment histories and taking into account their
repayment resources and schedules.

We, therefore, determined that ourassessment of the appropriateness of thedetermination of the borrower category ofcorporate customers and the reasonablenessof the estimate of cash flows used in the DCF
method were of most significance in our
audit of the consolidated financial statements
for the current fiscal year, and accordingly, a
key audit matter.

Other Information
The other information comprises the information included in the Annual Report, but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
Management is responsible for the preparation and presentation of the other information. The audit andsupervisory committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the reporting process for the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements― 62 ―

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern and disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:x

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

x

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

x

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

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

x

Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

x

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain― 63 ―

solely responsible for our audit opinion.
We communicate with the audit and supervisory committee regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the audit and supervisory committee, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2022 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Miyata Seiki
Designated Engagement Partner
Certified Public Accountant
Jingu Atsuhiko
Designated Engagement Partner
Certified Public Accountant
NarushimaToru
Designated Engagement Partner

Certified Public Accountant
KPMG AZSA LLC
Sendai Office, Japan
September 27, 2022

Notes to the Reader of Independent Auditor’s Report:㻌㻌This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

― 64 ―

Annual Report

The Bank of Iwate,Ltd. Annual Report