ANNUAL REPORT 2022 Year Ended March 31,2022 😍😍 SENSHU IKEDA HOLDINGS, INC. THE SENSHU IKEDA SENSHU IKEDA TOKAI TOKYO SECURITIES CO.,LTD. BANK, LTD. D

Management Principle
Strive to become a financial group that "endear ourselves to the regional community by providing services tailored to customers' needs, while valuing "broad networks of relationships" and "an enterprising spirit."
Management Policy
1. Create a "most trusted by customers" financial group which respects personal relationships and promotes honest and approachable banking. 2. Create a financial group with a commanding regional presence by researching and predicting trends to provide advanced, high-quali- ty services. 3. Pursue transparent operations and live up to the trust of the shareholders, while maintaining a competitive edge through strong financial standing, high profitability and management efficiency. 4. Promote "coexistence with the region" by utilizing industrial, academic and management networks for business matching. 5. Focus on gaining the trust of the communities through compliance with laws and regulations and corporate activities that are consider- ate of the environment. 6. Provide a workplace for employees of the financial group which encourages employees to exercise talents and develop skills, with an emphasis on proactive self improvement, thereby contributing to the development of upstanding citizens.
Vision '25
We contribute to build a future society where everyone can be active, by offering absolute solutions to our regional customers and develop- ing our potential ability.
Basic Policy
1. Offer the most suitable solutions exactly from customers' point of view through the various issues of customers. 2. Create a workplace where employees can be active in diverse fields by meeting customers' trust. 3. Contribute to realize a sustainable development of the regional communities and reliable and fulfilling life of regional customers through our business activities.
C O N T E N T S

Top Message @e @ Pursuing thorough solutions and becoming a tinancial group that f endear ourselves to the z regional community” Atsushi Ukawa Representative Director, President and CEO Our mission as a regional financial institution is to firmly support our customers in a difficult business environment I would like to express my sincere gratitude to all our investors and other stakeholders for their constant support of Senshu Ikeda Holdings and the Group. I would like to talk about the environment and issues surrounding management, as well as our policies for future growth. First of all, the regional financial market is in a very difficult situation. However, rather than simply pointing out the negative factors and working to maintain the status quo, we will proactively find business opportunities within this difficult environment, and we are confident that by further refining and demonstrating the Group’s strengths, we will be able to achieve business growth centered on improving profitability. In fact, the Group is taking on various initiatives without being bound by stereotypes, and we have been consistently achieving new growth opportunities. I believe it is my mission to further accelerate this and accurately communicate the results to stakeholders. Regarding the current state of management, when I assumed the position of Representative Director and President in 2018, the lending service, which is our main business, was experiencing difficulty securing profits due to a decline in profit margins, despite an increase in the loan balance. Although we made efforts to invest in securities in order to supplement our profit source in the lending service, unrealized losses occurred. Moreover, in the midst of the adverse impact of negative interest rates, increases in consumption tax rates, and COVID-19, we have made company-wide efforts to restore base profitability in terms of management. In terms of the current business environment, although the financial condition of small-to-medium- sized enterprises is relatively stable under so-called "zero-zero financing," I believe that many companies are actually suffering from a decline in profitability. In addition, the impact of geopolitical risks in Eastern Europe will increase risk aversion, and the reduction of financial assets will likely have a negative impact on all economic activities going forward. In light of this situation, from FY2022 onwards, when COVID-19 is expected to subside, we see it as an immediate priority for the Group to firmly support customers’ efforts to improve their constitution and minimize the impact of the global economic downturn on regional economies. As we strive to become a financial group that “endear ourselves to the regional community,” we will place the utmost importance on expressing gratitude to our customers The Group's business area is centered in urban areas such as the center of Osaka, which is a prosperous location. While it is true that the business environment surrounding the Group is extremely difficult, we cannot overlook our strengths in this market. In addition, the Expo 2025 Osaka, Kansai, Japan is scheduled for 2025, and a development plan for an integrated resort (IR) is underway. On the other hand, looking at the changes in the number of businesses in Osaka, both the number of closures and the number of new openings are among the highest in Japan. In other words, remarkable economic metabolism is a major characteristic of this business area. We believe that there are many things that the Group can do to help customers in this environment of vigorous economic activity. Through initiatives such as the Innovation Promotion Council and the Innovation Fund, we are aiming to contribute to the revitalization of local communities as a so¬ called regional platformer. In addition to the strength of our business area, our position as an independent financial institution is also one of our defining characteristics. Up to now, we have thoroughly developed customer-oriented solutions without being bound by capital ties. For about 20 years, we have continued to support the growth of our startup customers. We expect that the knowledge we have cultivated through initiatives that are ahead of their time will be of great use in the coming era. Another strength and defining characteristic of the Group is that we strive to become a financial group that “endear ourselves to the regional community," as stated in our management principle. The core company of the Group is The Senshu Ikeda Bank, which is a combination of the Bank of Ikeda, which had operated mainly in the northern part of Osaka, and the Senshu Bank, which had operated mainly in the southern part of Osaka. Although they were originally financial institutions with different business areas, they are both regional financial institutions that were born about 70 years ago and have grown since then with the support of regional communities. I have often told the Group's employees that I would like for them to always gratefully remember that it is because of the support of regional communities that we have been able to grow to this point. As small-to- medium-sized enterprise customers are in a difficult situation due to COVID-19, now is the time to return to our founding aspirations and fulfill our duty as a regional financial institution so that we may endear ourselves to the regional community.
Develop business solutions with the
“balance sheet of potentials” as a unique
strength
Within the Company, we refer to the various strengths of the Senshu Ikeda Holdings Group as the “balance sheet of potentials." These include prosperous business areas and growth opportunities as a regional financial institution, a wide range of industry-academia- government alliances that can be built because we are an independent financial institution, and the human resource base that we continue to strengthen, centered on the acquisition of the 1st-grade CSPFP (Certified Skilled Professional of Financial Planning) certification. We believe that these are the potential assets and driving forces for the sustainable growth of the Senshu Ikeda Holdings Group. As stated in the Fifth Medium-Term Business Plan formulated last year, we are moving forward with our priority strategies, including the establishment and provision of thorough solutions as a regional financial institution that endears itself to customers, with the "balance sheet of potentials" at its core. The city of Osaka has a large economy and the ability to grow autonomously; therefore, the idea that regional financial institutions drive the economy does not apply. In this city with an underlying strength, we believe that it is our mission to be of service to customers by facing each problem one by one, concentrating our knowledge and working hard to find solutions. The results of this will lead to the growth of the Group itself. For this reason, the Fifth Medium-Term Business Plan is positioned as a medium-term business plan that emphasizes growth strategies. In the previous medium- term business plan, we focused on improving the balance sheet and increasing profitability as a medium- term plan for strengthening our business constitution. Based on those results, we will draw a trajectory for growth over the three years until FY2023. The main concrete measure for growth is the establishment and provision of thorough solutions. Below, I would like to discuss the three new arrows that will contribute to achieving the goals of the Fifth Medium-Term Business Plan. A
1st Arrow: Improving potential
Aiming to improve skills for listening to customers
The first of the new arrows for the smooth development of solutions is about improving the potential of the Group, and at the root of this is the improvement of the potential of every employee. Two years ago in the New Year, we announced the “Declaration to Raise Potential!” The intention of the declaration was to sincerely listen to the requests and problems of our customers. For financial institutions, sales are about offering financial products and services, and they tend to push to sell what they want to sell. However, this approach will make it difficult to gain the trust of customers. Therefore, I fundamentally changed my way of thinking and declared to the entire company that I would like for us to prioritize listening to customers over pushing sales. Two years ago, we abolished the performance award system for sales. To my knowledge, there are not many financial institutions that have eliminated this system. I believe that this is an unusual initiative, given that the main focus of sales is usually to achieve sales targets. In order to seriously listen to customers, it is, of course, necessary for us to have the answers to their questions. This is the reason why we aim to improve the potential of every employee. Specifically, we have encouraged employees to acquire the 1st-grade CSPFP certification. Thanks to this, 47 employees obtained the 1st-grade certification in FY2021 alone. All employees of the Group, including those at The Senshu Ikeda Bank, are extremely diligent and talented. Once they decide to achieve something, they spare no effort in improving their abilities. Those who have obtained the 1st-grade certification have been able to demonstrate their knowledge to the fullest and respond to all needs of customers. Going forward, I expect that those who have obtained the 1st-grade certification will be a great help in developing solutions. A
2nd Arrow: Improving empathy
Empathizing with customers’ thoughts and working
together to solve issues
The second arrow, which follows the first arow whose aim is to improve the potential of every employee, aims to improve empathy. In this year's New Year's greeting to the Company, we announced the “Declaration to Raise Empathy!" It would be a waste to simply raise the potential of every employee and do nothing more. Therefore, I called on all Group companies to not only listen to customers, but to acquire the ability to empathize with the feelings of customers. This is because I believe that we can only offer truly useful solutions when we empathize with our customers' thoughts and dreams. Going forward, I am confident that we will be able to further increase value for our customers by sharing empathy throughout the entire Group.
3rd Arrow: Improving Presence
The third arrow, presence, aims to go beyond and further increase the improvement of potential and empathy. I would like to display the underlying strength of the entire Group so that we may demonstrate our presence to the extent that customers will say such things as “It’s helpful to have Senshu Ikeda by my side,” and “This is something that only Senshu Ikeda can do." From this fiscal year onward, we will strengthen our initiatives to serve customers and improve business performance.
Maximizing the abilities of employees
with thorough back-up systems
For the thorough development of solutions, it is important to provide offers and support that are rooted in the customer's situation while building a foundation with the three arrows. Rather than a strategy in which the head office makes uniform plans and assigns them to branches, each branch will determine the solutions to be provided based on an understanding of customer needs and issues. The head office is designed to play a supporting role to ensure that these activities proceed smoothly. A 180-degree shift from the conventional way of thinking of financial institutions is the key to these measures.
Receiving feedback from customers
saying that Senshu Ikeda has changed,
and deepening feelings of gratitude and
confidence
In terms of the progress of the Fifth Medium-Term Business Plan, we are seeing a concrete response. For instance, upon visiting customers and talking to them, we have received comments such as, “Recently, the way that salespeople talk has changed." In the past, our salespeople tended to focus on sales when talking with customers, saying such things as, "How about a loan?" and "I'm here to inform you about investment trusts." However, with this, there is no hope of differentiating ourselves from our rivals. One example of a solution that has seen significant growth in recent years is the staffing service. We are probably amongst one of the top regional banks for the number of placements made. This solution is a result of listening to our customers and responding to their needs. Led by The Senshu Ikeda Bank, the Group is not limited to staffing services and has started to move forward with solutions that meet a variety of needs. That is why I am proud that customers are saying that Senshu Ikeda has changed. There are people within and outside of the Company who are concerned that eliminating the performance award system will negatively affect sales. Of course, we have not abandoned our sales goals, and, as an executive, I am fully aware that my responsibility to achieve successful sales figures is first and foremost. However, I believe that the Group will not be able to achieve sustainable growth unless it thoroughly implements customer-oriented sales. To that end, it is necessary to develop business solutions centered on sales sites, and, through this strategy, we intend to steadily build up our business performance and earn the trust of our stakeholders. As a reborn Senshu Ikeda Holdings Group, we are making progress towards achieving the goals of the Fifth Medium- Term Business Plan When it comes to offering solutions thoroughly, one of the reasons why I took on the challenge of a sales strategy that goes against the conventions of the financial industry is that I do not come from a sales background. If I had been a banker with extensive experience in sales, I would most likely have stuck to head office-driven, target-based sales. However, as times have changed dramatically, banks must also undergo a major shift in thinking. Moreover, it would be a contradiction to say that we are a customer-oriented bank that endears itself to customers while at the same time striving to push sales of financial products and services. Sales are supposed to be helpful to customers, yet they seem to have become bank-oriented rather than customer-oriented activities. As we believe that the system of having sales offices and managers compete for performance awards was spurring bank orientation, we decided to conduct a drastic review of the sales strategy, including the abolition of the performance award system. Stakeholders may feel concerned about the impact of the sales personnel with less competitive spirit on our business results. However, in terms of solutions, we are steadily increasing the number of cases supporting our customer's core business, busines succession, etc., in addition to staffing service. At the same time, the atmosphere within the Company has definitely changed. We recognize that due to this, combined with the improvement of every individual’s potential and empathy, we are making strong progress as a new Senshu Ikeda Holdings Group. Going forward, we will meet the expectations of all stakeholders by demonstrating new initiatives to increase performance and achieving the goals of the Fifth Medium-Term Business Plan.
By 2030, we will develop business solutions
related to customer assets worth ¥7 trillion
I am certain that the solutions pursued by the Group have a great potential going forward. They are business opportunities that should be called discontinuous. In conventional sales strategies, the head office sets a target such as “103% compared to the previous year" and orders each branch to achieve this target. Branches then do what it takes to achieve 103%, but achieving anything higher is difficult. On the other hand, by having each branch work closely with regional issues and develop markets through independent target setting at sales sites, it is possible to achieve discontinuous growth of 200% or 300% compared to the previous period. In fact, many branches are achieving such results one after another. Honestly speaking, at this point, the Group as a whole is only halfway there. However, I would like all our stakeholders to understand that we are taking on the challenge of new possibilities and steadily producing results. In the Fifth Medium-Term Business Plan, we set a target of 10,000 cases of solution consulting by 2025. At the time, there were still only about 4,000 cases, so many employees did not believe that 10,000 cases could be possible. On the other hand, an outside director made a stern remark, saying, "if we were to take on 10,000 cases of solution consulting, how much profit would we make?" In the first year of the initiative, we had expected about 5,700 cases, but the number exceeded 7,000. We expect that 10,000 cases will be achieved as early as FY2023. Therefore, we would like to go beyond 10,000 cases by FY2025 and revise it to 12,000 cases. In terms of numbers, results are steadily improving in proportion to the increase in solution proposals in sales of deposited assets. Looking at the development of solutions over the medium- to long-term up to 2030, we aim to increase the assets of customers involved with the Group to ¥7 trillion. At present, our deposit balance is approximately ¥5.6 trillion, and we expect an increase in deposits of approximately ¥300 billion. As for how to secure the remaining ¥1 trillion and more, we can achieve it by offering solutions and getting involved with all of our customers' assets, including investment trusts, insurance, and real estate. We estimate that the total assets of our Group's individual customers alone are roughly ¥13 trillion. Given this scale, we believe that an increase of ¥1 trillion in 2030 is sufficiently possible. The entire Senshu Ikeda Holdings Group, rather than just The Senshu Ikeda Bank alone, will work as one to achieve this goal. For this reason, we established an in-house Group Strategy Division last year to promote group-wide sales.
Becoming a Senshu Ikeda Holdings Group
that inspires customers to say, “I see
how it has changed. I have high
expectations for the future"
The pursuit of thorough solutions has also had a positive impact on the sales of corporate financing, which is the core of our business. In July last year, we integrated the Dojima Branch and the Shin-Osaka Branch into the Head Office Sales Department, which was the core base, to newly establish the Head Office Sales Division. The Division consists of first and second departments, and while the first department works toward traditional small-to-medium-sized enterprise financing, the second department is dedicated to large- and medium-sized enterprises. In the past, customers with large scales of business were not very interested in us, but when we approached them with proposals from the perspectives of solutions, the presidents themselves began to listen to what we had to say. Looking at this alone, the Group is undergoing a major transformation. Regarding these initiatives, we intend to form a team of specialists from the perspective of Group- wide sales, dedicate ourselves to offering customer- oriented solutions, and produce results. As part of this, we will further strengthen our collaboration with outside specialists. Over the past few years, stock prices have caused a great deal of concern to our stakeholders. However, based on the results of the Fourth Medium-Term Business Plan, we will set a definitive growth trajectory in the Fifth Medium-Term Business Plan and pave the way for sustainable growth. In terms of sustainability, we announced the "Sustainability Declaration" last year. It was formulated from the perspective of aiming to be a company that endears itself to customers in regional communities. In terms of regional communities, the environment, and human resources, we will come up with measures that value on-site perspectives. In the process of implementing these initiatives, we will aim to be a corporate group that inspires investors, shareholders, regional customers, and Group employees to say, “I see how Senshu Ikeda has changed. I have high expectations for the future." It is the mission of top management to realize this promise. We sincerely appreciate your continued support for the Group. 7
Basic Policy Customers Offer the most suitable solutions exactly from customers' point of view through the various issues of customers. Employees: Create a workplace where employees can be active in diverse fields by meeting customers' trust. Regions: Contribute to realize a sustainable development of the regional communities and reliable and fulfilling life of regional customers through our business activities. Strategic Priorities (growth strategies, productivity improvement) (As of May 2021) Establish and provide thorough solutions ● Senshu Ikeda Holdings Group's comprehensive solutions sales structure (Established 5 divisions) ● Strengthen the holding group's functions Thorough customer-oriented policy Swiftly provide comprehensive solutions by the Group Demonstrate group synergy
Establish a structure for the Fifth Medium-Term Business Plan ● Improve customer convenience and optimize operations ● Countermeasures to COVID-19 Human resources strategy ● Bank staff and human resource solution planning Capital and dividend policy Improve customer convenience by utilizing tablet devices Promote rationalization and optimization of sales branches for 1,800 employees members Human resource development for branch management with a small number of employees
● Dividend of ¥7.5 or more per share   ● Shareholder return ratio of 30% or more Capital policy ● Preferred stock ¥25.0 billion Acquired and retired on the call date (cost: - ¥750 million) (scheduled for July 2022) Sustainable management Formulate Senshu Ikeda Holdings Group's Sustainability Declaration (*) The Board of Directors resolved to acquire and retire stock on July 15, 2022, at the Board of Directors meeting held on June 28, 2022. Implementation of “Review of Senshu Ikeda Holdings Group’s Growth Engine” in Response to Environmental Changes Progress in the first year of the Fifth Medium-Term Business Plan was favorable, but in light of environmental changes such as the prolonged impact of COVID-19 and the uncertainty of the global economy due to the situation in Ukraine, we implemented the “Review of Senshu Ikeda Holdings Group’s Growth Engine.” While the foundation of our growth strategy (six strategic priorities) remains unchanged, we will work towards the realization of steady growth through reviews that respond to environmental changes. There are many risk factors in the future outlook Prolonged impact of COVID-19 Continuous supply chain disruptions Pressure on corporate profits due to soaring prices of resources and raw materials Impact of the situation in Ukraine on financial markets and the economy Update the “growth strategy” in light of environmental changes Implement a review of the Fifth Medium-Term Business Plan (FY2022 to FY2023)
Shareholder Return Policy Dividend of ¥7.5 or more per share Shareholder return ratio Capital policy Preferred stock ¥25.0 billion July 2022 as originally planned To be acquired and retired on the call date (cost: - ¥750 million) (*) (*) The Board of Directors resolved to acquire and retire stock on July 15, 2022, at the Board of Directors meeting held on June 28, 2022.
Establish and provide thorough solutions
Senshu Ikeda Holdings Group has established five divisions to oversee the Group. We will strive to swiftly provide solutions by the Group, demonstrate Group synergy, and respond quickly to changes in the environment, issues and needs. In May 2022, we decided to move the KPI, which aimed for 10,000 cases of solution consulting by FY2025, two years ahead of schedule to achieve it by FY2023. Moreover, we set a new KPI, customer-related assets, to protect, enhance and connect with individual customers' financial assets, real estate and family. (customer-related assets = personal B/S)
Senshu Ikeda Holdings Group

Securities Senshu Ikeda Tokai Tokyo Securities Co., Ltd. Major roles Provide solutions, such as asset formation, utilization, management, succession, to individual customers
Private Banking Division Leasing Senshu Ikeda Lease Co., Ltd. Major roles Provide tailor-made solutions, such as asset management Credit card Senshu Ikeda credit card wealthy customers and succession, mainly to © For asset builders: Strengthen very convenient face-to-face and non-face-to-face channels © For the elderly: Support healthy and fulfilling lives by creating a safe and secure environment ● Integrated services of banking and securities: Expand the range of products that can be handled, and build a sales and consulting structure that meets a wide range of customer needs KPI  Number of cases of solution consulting KPI  Number of cases of solution consulting … ➤ 1,500 cases (+1,050 compared to FY2020) ● The wealthy class: High value-added, tailor-made solutions Develop wealth management solutions 450 cases FY2020 FY2023 KPI  Number of cases of solution consulting ▲ 5300 cases (+3,400 compared to FY2020) ● Provide accompany solutions which address issues and needs at each life stage of company, based on business feasibility ● Strengthen M&A solutions (including hands-on solutions) ● Strengthen human resource solutions to meet the diverse human resource 1,900 cases needs of companies Investment management Senshu Ikeda Investment Management Co., Ltd.
Major roles Contact customers Credit guarantee Senshu Ikeda Guarantee Co., Ltd. Improve functions and convenience (Branches, channels, digital) ATM management Station Network Kansai Co., Ltd.
● Expand sales area efficiently ● New channel with customers ● Strengthen a sales ability by digital technology ● Build "Senshu Ikeda" brand ● Generate innovation Generate innovation and revitalize regions through unique venture and startup support programs ● Industry/regional revitalization Solve regional social issues through public-private partnerships Leverage regional growth opportunities to support the growth of regional companies KPI FY2021 results Before revision After revision
Major roles Develop regional communities and industries, and generate innovation services Shizen Soken
Capital Senshu Ikeda Capital Co., Ltd. companies FY2025 FY2025 Non-financial FY2025 12,000 cases ide solution

Senshu Ikeda Holdings
Non-financial Highlights

The Senshu Ikeda Holdings Group announced the Sustainability Declaration in May 2021 and set climate change as one of the important management issues (materiality). In November 2021, we endorsed the purpose of the TCFD (Task Force on Climate-related Financial Disclosures) and joined the TCFD Consortium, aiming for the enhancement of recommended information disclosure.
Governance
As mentioned above, we set climate change as an important management task. We are promoting concrete initiatives under the supervision of the Board of Directors. In April 2022, we established the Sustainability Committee, chaired by the President and CEO of Senshu Ikeda Holdings. The committee consists of the President and CEO of Senshu Ikeda Holdings, and directors in charge. We hold the committee meetings every quarter in principle. As a medium- to long-term growth strategy that contributes to the realization of sustainable regional communities, we aim to transform the business Board of Directors model by incorporating SDGs and ESG, including climate change issues, into Supervisio Reporting management. We regularly report the content of discussion  to the Bord of Directors, and we have a system in place to ensure appropriate supervision. Resolution of important matters Management Committee We submit and report key initiatives for climate change response to the Board of Directors after discussions by the Management Committee. Deliberation of important matters Sustainability Committee Moreover, we have newly established the SX (Sustainability Transformation) Meetings: Every quarter, in principle Strategy Office within the Corporate Planning and General Affairs Division in order to Chairperson: President and CEO further promote SDGs and ESG-related measures for the entire Group. Administrative office: SX Strategy Office
Strategy
The impact of climate change is highly uncertain, and the period to be analyzed should be long. In our climate change analysis, we used two scenarios to understand the risks and opportunities that climate change poses to our business: one in which the average temperature rises by 1.5°C or less compared to before the Industrial Revolution and one in which the average temperature rises by 4°C compared to before the Industrial Revolution. Regarding the timeline of evaluation, we analyzed the impact over the short-term (less than 5 years), the medium-term (about 15 years), and the long-term (about 30 years).

Ratio of carbon-related assets* in our loans, etc.: Approximately 0.9%
*Based on the definition initially endorsed by TCFD recommendations, we calculate exposure for the electric power sector (excluding solar power generation, biomass power generation and electrical work) and the energy sector (including oil retail and wholesale). We are currently investigating the calculation of the
exposure rati
Scenario Analysis
● Transition risks
● Based on analysis by various specialized institutions such as TCFD and ŚASB (Sustainability Accounting Standards Board), we investigated the magnitude of potential risk by sector and investigated the sectors with the greatest impact, taking into account the Company's exposure. As a result of this investigation, "electric power" and "oil, gas and consumable fuel (including oil retail and wholesale)" were selected as priority sectors in 2021. The priority sectors may be added to or changed based on future professional analysis and market trends. ● For the two selected sectors, we identified the risks and opportunities for businesses in these sectors and analyzed the impact on future business, based on the 1.5°C and the 4°C scenarios. ● In analyzing transition risks, we made forecasts of changes in the financial situation and business performance of borrowers by 2050 and analyzed changes in credit-related costs using forecast data and carbon tax forecast data related to resource demand and composition by power source in power generation found in the Net Zero Emissions by 2050 Scenario (NZE scenario), etc. of the International Energy Agency (IEA) World Energy Outlook report. ● The analysis results regarding transition risks are as follows.

● Physical risks
Regarding physical risks, we analyzed the impact of the amount of collateral value damage caused by damage to real estate collateral of business loan partners and the impact of deterioration in business performance due to business stagnation, etc. on increases in credit-related costs using a hazard map, while referring to the RCP8.5 scenario (4°C scenario), etc. of the Intergovernmental Panel on Climate Change (IPCC). The analysis results regarding physical risks are as follows.
From the above analysis, we have confirmed that the impact of climate change risk on our strategy is limited. As this calculation is based on certain assumptions, we will continue to work on improving and refining scenario analyses.
Reflection in strategy
The Senshu Ikeda Bank, a subsidiary, has established a "sustainable loan policy". The Bank carefully considered whether
Risk Management
The Group is running its operation based on the risk capital management system that controls all risks within certain proportion of capital base, under the integrated risk management structure. We recognize that the risks of climate change may have a significant impact on business operations, strategies and financial plans through the performance of our business partners. Based on the analysis results of transition risks and physical risks related to climate change, we respond to the impact on the business operations of our business partners within the framework of credit risk management. The risks of climate change require consideration of the timeline and its uncertainties, but regarding the risks to the Group, or not to make loans that may have a negative impact on ESG (environment, society, governance), and strive  to reduce and avoid this impact. In addition the Bank established a loan policy for specific sectors as follows.
Loan policy for specific sectors
1.
Weapons We will not lend to companies involved in the development and manufacturing of inhumane weapons such as cluster munitions. 2. Coal-fired power generation As a general rule, we will not make loans that use the construction of new coal-fired power plants as funds. However, in the case of new power plant construction that contributes to the next generation and to higher efficiency, taking into account international guidelines, etc., we will carefully consider partaking by each individual project. Deforestation We will carefully consider whether or not to make loans that use funds from development involving deforestation based on impact on the environment and involvement in illegal logging or illegal labor. Similarly, we have formulated a "sustainable loan policy" in securities investment to limit investment in specific sectors. which are driven by climate change, we will monitor the situation and consider an appropriate response while using the existing management framework. As mentioned above, we have set a sustainable loan policy and a loan policy for specific sectors, and we carefully consider the negative impact of climate change when deciding whether or not to make a loan. Moreover, by exchanging opinions with business partners based on understanding risks in significant sectors using scenario analysis, we plan to promote support for climate change response, such as sustainable finance and initiatives to reduce CÓ2. We believe that such a response will lead to the reduction of risks for the Group.
Indicators and Targets
The Group has set sustainable finance and CO2 emissions reduction targets as long-term targets for climate change issues. ● Sustainable finance As a financial institution, we believe that it is possible to contribute to the realization of a decarbonized society by financing through loans. The Group has set the following sustainable finance amount as a target for FY2030. Cumulative amount of sustainable finance* to be executed (FY2022 to FY2030): ¥1 trillion * Loans that use funds to solve problems in the environmental and social fields, and loans that support and promote initiatives towards SDGs ● CO2 emissions reduction The Group has set a target to reduce CO2 emissions by 60% by FY2030 compared to FY2013, as well as a target to achieve carbon neutrality by FY2050. The graph below shows changes in the Group's CO2 emissions. We are also investigating the measurement of CO2 emissions related to the Group's supply chain, and are considering setting targets in the future.
The Company is a holding company with subsidiaries such as the Senshu Ikeda Bank, which upholds the Management Principle of striving to become a financial group that "endear ourselves to the regional community" by providing services tailored to customers' needs, while valuing "broad networks of relationships" and "an enterprising spirit." In order to ensure sustainable growth and the medium- to long-term enhancement of corporate value, the Company is engaged in initiatives to develop its corporate governance in line with the following basic principles. (1) We respect the rights of our shareholders and strive to ensure their equality. (2) We consider the interests of stakeholders and strive to ensure appropriate cooperation. (3) We disclose corporate information in an appropriate manner and strive to ensure the transparency of such information. (4) The Board of Directors and the Audit & Supervisory Board strive to enhance the effectiveness of their supervision and audits of the execution of duties in line with their fiduciary responsibilities for our shareholders. (5) We strive to engage in constructive dialogue with our shareholders in order to contribute to sustainable growth and the medium- to long-term enhancement of corporate value.
Outline of Corporate Governance Structure and
Reasons for Adopting the Structure
The Company has adopted a corporate governance structure for sustainable enhancement of its corporate value through reinforcing supervision of management by electing the outside directors and cooperating with the Audit & Supervisory Board. Specifically, directors who are familiar with banking business – involving complex and sophisticated management decisions – supervise business execution of representative directors, while audit & supervisory board members audit business execution of directors through attendance to important meetings and inspection of critical documents. The Company reinforces its corporate governance structure through outside directors and outside audit & supervisory board members (hereinafter "outside officers") who possess well-seasoned characters and insights presenting meetings including the Board of Directors and expressing their opinions actively. The Company has concluded a liability limitation agreement with outside officers to the effect that their liability for damages set forth in Article 423, Paragraph 1, of the Companies Act shall be the amount prescribed by Article 425, Paragraph 1 of said Act, in accordance with the relevant provisions of the Articles of Incorporation of the Company, as long as they perform their duties in good faith and without gross negligence.
Corporate governance functions within the Company
● Board of Directors
The Board of Directors is comprised of 9 directors including 5 internal directors and 4 outside directors. The Board of Directors is held once a month in principle, attended also by audit & supervisory board members, to make decisions on critical business execution including basic management policies and management plans, and to supervise the business execution of directors and executive officers under the rules of the Board of Directors. ● Personnel Committee The Personnel Committee is comprised of 5 directors including 1 internal director and 4 outside directors. As a voluntary advisory body to the Board of Directors, the Committee accepts the involvement and advice of independent outside directors on important matters related to the personnel affairs of officers, including the selection of candidates for directors. ● Remuneration Committee The Remuneration Committee is comprised of 6 directors including 2 internal directors and 4 outside directors. The Remuneration Committee, as a voluntary advisory body to the Board of Directors, accepts the involvement and advice of independent outside directors on important matters related to the remuneration of directors, etc. ● Audit & Supervisory Board The Audit & Supervisory Board is comprised of 4 audit & supervisory board members including 2 internal audit & supervisory board members and 2 outside audit & supervisory board members. Each audit & supervisory board member audits the business execution of directors through attendance at important meetings including the Board of Directors and the Management Committee, inspection of critical documents and other means, according to the auditing guidelines and audit plan decided by the Audit & Supervisory Board. Outside audit & supervisory board members are qualified with a high degree of integrity along with superior insight and capability, as well as expertise and hands-on experience in their respective areas of specialty, getting involved from diverse points of view. ● Management Committee The Management Committee is comprised of internal directors and executive officers with titles, as well as officers commissioned with responsibilities (excluding persons concurrently serving as president of a Group company). The Committee is held once a week in principle, attended also by internal audit & supervisory board members, to make decisions on critical matters concerning the business execution as well as to discuss agenda items for the Board of Directors based on the authorities delegated by the Board of Directors. The Management Committee accepts appropriate involvement of and advice from outside officers who attend the Committee as needed and express their opinions.

Status of Audits
● Audits by audit & supervisory board members Organization and Personnel of Audits by Audit & Supervisory Board Members The Audit & Supervisory Board is comprised of 4 audit & supervisory board members including 2 internal and 2 outside members (as of the date of submission of the annual securities report). The Company has allocated several staff members who support the duties of audit & supervisory board members. The status of each audit & supervisory board member and their attendance at Audit & Supervisory Board meetings for the fiscal year under review is as follows:
business execution of directors through attendance at important meetings such as the Board of Directors and the Management Committee, as well as inspection of critical documents, according to guidelines such as the "Guidelines for Audits by Audit & Supervisory Board Members" and the "Guidelines for Implementing Audits of Internal Control System," generally subject to the auditing guidelines and audit plan decided by the Audit & Supervisory Board, as an independent body mandated by shareholders. Status of Main Activities of the Audit & Supervisory Board Audit & Supervisory Board meetings are held once a month, in principle, and in the fiscal year under review they were held a total of 19 times. In accordance with the auditing guidelines, audit plan, audit methodologies, responsibilities for audit tasks and other items resolved upon at the Audit & Supervisory Board at the beginning of the fiscal year, full-time audit & supervisory board members report on their activities, and opinions are exchanged with directors of the Company and from each Group company. In addition, the Audit & Supervisory Board also gives consent to the election and dismissal of accounting auditors, amounts of remuneration and other matters.
Status of Main Activities of Audit & Supervisory
Board Members
In accordance with the auditing duties decided upon at the Audit & Supervisory Board, full-time audit & supervisory board members execute audits objectively and rationally through their attendance at important meetings, inspection of critical documents, auditing visits, and reports from each division of the headquarters. In addition, auditing effectiveness is enhanced through the exchange of opinions with the internal audit division and each Group company, as well as with accounting auditors. Part-time outside audit & supervisory board members enhance the effectiveness of audits by their participation in Board of Directors' meetings, as well as by exchanging opinions with directors and accounting auditors at Audit & Supervisory Board meetings, and receiving audit activity reports from full-time audit & supervisory board members. Audit & supervisory board members and accounting auditors perform their audit duties efficiently and effectively by establishing close mutual cooperation through exchanging opinions about various auditing issues at regular meetings to exchange information. In addition, efficient and effective audit duties are also performed by working together with the audit & supervisory board members of subsidiaries, as well as through close mutual cooperation between audit & supervisory board members and the internal audit division such as audit & supervisory board members' attendance at internal audits and the exchange of opinions.
● Internal Audits
The Company has established the Internal Audit Division, which conducts internal audits based on the basic rules of intra-group audits, set out to provide objectives and guidelines of internal audits. The Company's Internal Audit Division comprises 14 members of whom 13 serve concurrently in the Internal Audit Division of the banking subsidiary (as of March 31, 2022). The Internal Audit Division conducts internal audits on each division of the Company based on the internal audit plan approved by the Board of Directors each year. The Internal Audit Division also conducts internal audits on each Group company, as necessary, on its own or by cooperating and coordinating with internal audit divisions of the subsidiaries, etc. and provides specific instructions and advice on the improvement of operations, in addition to managing and overseeing internal audit operations of the entire Group. Furthermore, the officer in charge of internal audits regularly reports the results of the audits to the Board of Directors and the Audit & Supervisory Board. The Company develops an effective internal audit structure that has independence and expertise in order to ensure the soundness and adequacy of operation. The Company also inspects and evaluates the adequacy and effectiveness of the risk management and internal control practices, and makes recommendations as appropriate to the senior management of the Company on ways to improve and rectify questionable areas. Thus the Company's internal audit guidelines facilitate effective achievement of management objectives including the improvement of the Group's internal management structure and the enhancement of its enterprise value.
● Accounting Audits
Name of the auditing firm Ernst & Young ShinNihon LLC Successive period of audit services provided Twelve years and 6 months (audit contract dating from October 2009 at the time of the Company's founding) The Bank of Ikeda (currently The Senshu Ikeda Bank) concluded an audit contract with Ernst & Young ShinNihon LLC (then Showa Audit Corporation) in 1976. The Senshu Ikeda Bank, established through a merger between the Bank of Ikeda (currently The Senshu Ikeda Bank) and the Senshu Bank, subsequently continued the audit contract with Ernst & Young ShinNihon LLC. Certified public accountants who conducted the latest accounting audit Mr. Hideya Nanba and Mr. Tetsuro Tone Starting with appointments and replacements for the fiscal years commenced since April 1, 2016, the lead audit engagement partner is not permitted to re-engage in audits after engagement of five consecutive fiscal years, and other audit engagement partners are not permitted to re-engage in audits for five consecutive fiscal years after engagement of seven consecutive fiscal years, which is a rotation rule more stringent than as regulated in laws and regulations. Composition of assistants for the accounting audit Assistants for the accounting audit of the Company are 6 certified public accountants and 13 others. Policy and reasons for selecting the auditing firm In accordance with the Practical Guidelines for Cooperation with Accounting Auditors, released by the Japan Audit & Supervisory Board Members Association, the Audit & Supervisory Board of the Company regularly checks if the accounting auditors conform to auditing standards, quality control standards, the practical guidelines for auditing, and internal regulations of the auditing firm, to which they should conform as professional specialists, and keeps itself updated on accounting standards, through inquiries and dialogues. The Company has selected the aforementioned certified public accountants and others as a team responsible for the accounting audit, after comprehensively examining their track record of auditing and execution of duties for the previous fiscal year, which led the Company to determine that the appropriateness and reliability of accounting audits can be ensured. The Audit & Supervisory Board shall dismiss an accounting auditor, subject to unanimous consent of the audit & supervisory board members, if it determines that the accounting auditor satisfies one or more of the conditions described in the provisions of Article 340, Paragraph 1 of the Companies Act. If the Audit & Supervisory Board comprehensively examines the status of the execution of duties by the accounting auditors and determines that the appropriateness and reliability of accounting audits cannot be ensured, the Audit & Supervisory Board shall determine the contents of a proposal for a general meeting of shareholders on dismissal or non- reappointment of the accounting auditors. Content of the Audit & Supervisory Board's evaluation of the auditing firm In accordance with the Practical Guidelines for Audit & Supervisory Board Members, etc. in developing the Standards for Evaluating and Selecting Accounting Auditors, released by the Japan Audit & Supervisory Board Members Association, the Audit & Supervisory Board has established the Standards for Evaluating and Selecting Accounting Auditors, based on which the Audit & Supervisory Board conducts evaluation. As a result of the evaluation, it was found that the accounting auditors satisfy none of the conditions described in the provisions of Article 340, Paragraph 1 of the Companies Act. The Company, therefore, reappointed the accounting auditors, taking into account the results of the evaluation on the accounting auditors by the Audit & Supervisory Board.
Status of Outside Officers
The Company has 4 outside directors (as of the date of submission of the annual securities report). Outside Director Minoru Furukawa holds 25,000 shares of common stock of the Company and has ordinary banking transactions with The Senshu Ikeda Bank. He also concurrently serves as an officer at Hitachi Zosen Corporation, Unitika Corporation, and Osaka International Convention Center Corp. The Senshu Ikeda Bank has ordinary banking transactions with Hitachi Zosen Corporation and Unitika Corporation, and has ordinary convention center use transactions with Osaka International Convention Center Corp. As an outside director of the Company, he performs his duties of supervising the business execution based on his extensive experience and superior insight into corporate management as a representative director of a listed company. He also concurrently serves as a non-executive director (non-full-time) at The Senshu Ikeda Bank. Outside Director Takao Koyama holds 25,000 shares of common stock of the Company and has ordinary banking transactions with The Senshu Ikeda Bank. He previously served as an officer at Hitachi, Ltd. and Hitachi Solutions, Ltd. The Senshu Ikeda Bank has ordinary banking transactions and commissions of system development and operation with Hitachi, Ltd. and Hitachi Solutions, Ltd.; and the Company has a capital relationship with Hitachi, Ltd. As an outside director of the Company, he performs his duties of supervising the business execution based on his extensive experience and superior insight into corporate management as a representative director. He also concurrently serves as a non-executive director (non-full- time) at The Senshu Ikeda Bank. Outside Director Tomokazu Yamazawa holds 25,740 shares of common stock of the Company and has ordinary banking transactions with The Senshu Ikeda Bank. He previously served as an officer at Hankyu Hanshin Holdings, Inc. He also concurrently serves as an officer at Hankyu Hanshin Hotels Co., Ltd, Hanshin Expressway Company Limited and Charm Care Corporation. The Senshu Ikeda Bank has ordinary banking transactions with Hankyu Hanshin Holdings, Inc., Hankyu Hanshin Hotels Co., Ltd, Hanshin Expressway Company Limited and Charm Care Corporation. The Company has a capital relationship with Hankyu Hanshin Holdings, Inc. As an outside director of the Company, he performs his duties of supervising the business execution based on his extensive experience and superior insight into corporate management as a representative director. He also concurrently serves as a non-executive director (non-full- time) at The Senshu Ikeda Bank. Outside Director Atsuko Ogasawara holds 4,700 shares of common stock of the Company and has ordinary banking transactions with The Senshu Ikeda Bank. As an outside director of the Company, she performs her duties of supervising the business execution based on her wide range of experience and achievements in the business world, including serving in key positions at a press firm. She concurrently serves as a non-executive director (non-full-time) at The Senshu Ikeda Bank. The Company has 2 outside audit & supervisory board members Outside Audit & Supervisory Board Member Seiji Morinobu has ordinary banking transactions with The Senshu Ikeda Bank. He also concurrently serves as an officer at KITAKEI CO., LTD. The Senshu Ikeda Bank has ordinary banking transactions with KITAKEI CO., LTD. He performs his duties as an outside audit & supervisory board member in auditing the legality of the management execution from an objective and neutral position, based on his experience as an outside director, wide range of experience and superior insight as an attorney, and sufficiently high social credibility. Outside Audit & Supervisory Board Member Kohei Nakanishi holds 10,000 shares of common stock of the Company and has ordinary banking transactions with The Senshu Ikeda Bank. He previously served as an officer at Japan Bank for International Cooperation ("JBIC"). Although The Senshu Ikeda Bank has concluded a memorandum of understanding with JBIC for supporting Japanese firms with expanding overseas, no consideration arises from transactions under the memorandum. He performs his duties as an outside audit & supervisory board member independently from an objective and neutral position, based on his wide range of experience and knowledge regarding international finance as well as experience in corporate management and insight into corporate governance through serving as director of a bank and outside director of corporations, and sufficiently high social credibility. The Company has set forth the following standards for the independence of outside directors and outside audit & supervisory board members (hereinafter "outside officers") in order to objectively determine their independence and elects outside officers on the basis of these standards. All 6 outside officers, namely outside directors Minoru Furukawa, Takao Koyama, Tomokazu Yamazawa, and Atsuko Ogasawara and outside audit & supervisory board members Seiji Morinobu and Kohei Nakanishi, satisfy the standards for the independence. They have been designated as independent officers and registered with the Tokyo Stock Exchange as such, as they satisfy the requirements of independence stipulated by the relevant stock exchange and pose no potential conflict of interests with general shareholders. <Standard for judging the independence> At the Senshu Ikeda Group, as a general rule, Outside Directors/Audit & Supervisory Board Members shall be those who do not fall under any of the following requirements, at present or recently. ¹ 1. A person who deems the Group to be a major ² business partner, or in the case of a company, an executing person thereof. 2. A person who the Group deems to be a major business partner, or in the case of a company, an executing person thereof. 3. A business consultant, an accounting specialist or a legal specialist who has received a large sum 3 of money and other properties other than Officers' remuneration from the Group (or a quasi-executing person who has belonged to the payee's group). 4. A person who the Company deems to be a major shareholder' of the Company, or in the case of a company, an executing person thereof. 5. A payee of a large sum of donation from the Group, or a quasi-executing person of the payee's group, in the case where the receiver of the monies, etc., is an entity. 6. A former executing person of any of the Group companies in the past. 5 7. A relative 6 of a person (excluding those who are not significant) mentioned below: A. A person who is mentioned in the aforesaid items 1 through 6. B. Directors, Audit & Supervisory Board Members, Executive Officers and important employees of any of the Group companies. Notes: 1. Definition of "recently": Refers to cases that might be regarded as almost "at present," for example, including the case where said person fell under any infringement requirement item since the content of a proposal for the selection as Outside Director or Outside Audit & Supervisory Board Member was determined. 2. Definition of "major": Refers to 2% or more of the consolidated net sales per annum (Consolidated ordinary income in case of the Company) for the nearest fiscal year, as a benchmark for judgment. 3. Definition of "a large sum": Refers to a three-year average amount of ¥10 million or more per annum for the past three years. 4. Definition of "major shareholder": Refers to a shareholder who held 10% or more of the total voting rights at the end of the nearest fiscal year. 5. Definition of "past": Refers to "within 10 years up to the present.' 6. Definition of "relative": Refers to "within the second degree of kinship of a person." Supervision or Audit by Outside Directors or Outside Audit & Supervisory Board Members, Interconnection with Internal Auditing, Audits by Audit & Supervisory Board Members, and Accounting Auditing, and Relationship with the Internal Control Division Outside directors receive reports about the status of audits by audit & supervisory board members, internal audits and accounting audits, as well as the status of internal control from the internal control division through Board of Directors. On the other hand, outside audit & supervisory board members receive reports from full-time audit & supervisory board members about the status of audits by audit & supervisory board members, internal audits and accounting audits, as well as the status of internal control from the internal control division. Both outside directors and outside audit & supervisory board members give recommendations and advice in return for these reports.
(As of the end of June, 2022)
Basic approach to the internal control system and its
status of development
The Company and the Group companies are developing a structure necessary to ensure the adequacy of operation based on the following concepts; create a "most trusted by customers" financial group which respects personal relationships and promotes honest and approachable banking. (1) Structure to ensure that directors and employees of the Company and the Group companies execute business in compliance with laws and regulations as well as with the Articles of Incorporation The Company and the Group companies focus on compliance with laws and regulations (hereinafter "compliance") as one of the most critical management task. The Company and the Group also set out the code of ethics along with the code of conduct to ensure that directors and employees behave in compliance with laws and regulations as well as social norms, while setting out basic rules of compliance under which overall compliance policies and specific measures are discussed at the Compliance Committee. To ensure the above compliance implementation, the Company and the Group companies appoint directors who are responsible for compliance. In addition, the General Risk Management Division coordinates compliance arrangement across the Company and the Group companies, while conducting education and training for directors and employees by developing compliance program and compliance manual, and arranging compliance seminars. Furthermore, the Group Compliance Hotline, a whistleblowing system has been set up and managed to allow directors and employees of the Company and the Group companies to directly provide information about questionable conduct in light of laws and regulations. The hotline system is structured to guarantee that the informants who provide such compliance-related information are protected from being treated in a disadvantageous manner. Basic rules that directors and employees must abide by are set out for the prevention of insider trading. Besides, the Company and the Group companies have taken uncompromising stance against anti-social forces and organizations that threaten the order and safety of the community, while making every effort to eliminate their involvement in any trading activities. The Company and the Group companies have also taken every measure to eliminate money laundering in consideration of the possibility that funds transferred via financial institutions could be used for criminal purposes including terrorism. Moreover, the Company and the Group companies provide effective customer management including customer protection, with the purpose to reassure our customers of their security and to promote their convenience in an effort to implement a thorough 'customer first policy.' (2) Structure for the preservation and management of information concerning the directors' business execution The Company and the Group companies have prepared and kept documents such as minutes of important meetings including the Board of Directors and the Management Committee, as records of directors' execution of duties. The Company and the Group companies have also prepared and kept documents and attachment sanctioned by directors as appropriate. (3) Arrangements including rules to manage the risk of potential losses of the Čompany and the Group companies With the purpose of ensuring the soundness of management and stable corporate earnings, the Company and the Group companies have set out basic rules of risk management. The Company and the Group companies have classified risks into credit risk, market risk, funding liquidity risk and operational risk, and defined the department responsible for the management of each category of risk, while establishing the Risk Management Committee to monitor the status of management of each such category. Meanwhile, the Company and the Group have set out rules of risk management, with the purpose to minimize the financial loss along with loss of confidence resulting from the crisis event, and to ensure business continuity through prompt restoration of normal operational functions. (4) Structure to ensure efficient business execution by directors of the Company and the Group companies The Board of Directors sets out the management objectives of the Company and the Group companies with the purpose of enabling the directors and employees of the Company and the Group companies to efficiently execute their business. The Board of Directors also formulates the Group Management Plan and sets forth operational plans on an annual basis to bring said Plan into shape. In addition, the Board of Directors establishes the Management Committee with the purpose of enabling directors to efficiently execute their business. The Management Committee discusses beforehand the agenda of the Board of Directors to facilitate the decision-making process at those meetings, while discussing the critical issues for resolution in implementing the basic management policies that have been resolved by the Board of Directors on the basis of such policies. The Management Committee also defines the headquarters under the command of each director, along with the authority and responsibility involved, while developing and maintaining a structure for efficient business execution by utilizing IT. (5) Structure to ensure the adequacy of business operation at the Group, which comprises the Company and the Group companies The Company regards the respective Group companies as one group under the flag of Senshu Ikeda Holdings. Thus each member company of the Group runs its operation through developing an adequate internal management structure according to its scale and nature of operation under the adequate guidance of, and in coordination with the Company. The Company, as a responsible entity for the administrative management of the entire Group, has established administrative management rules targeting its subsidiaries. The Company has developed a structure in which it receives necessary reports concerning the business execution of directors and employees and other relevant matters from and consults on those issues with the respective Group companies. (6) Matters concerning employees who assist audit & supervisory board members in the performance of their duties, the independence of those employees from directors, and structure to ensure the effectiveness of the instructions to such employees In order to support audit & supervisory board members' business execution, the Company and the Group employ audit & supervisory board members' staffs as secretariat for the Audit & Supervisory Board. Such audit & supervisory board members' staff shall receive instructions from the audit & supervisory board members for their business execution, while their personnel changes and evaluations shall require an accord of the relevant audit & supervisory board members to ensure the staff's independence from directors. Thus the Company and the Group companies ensure their independence from directors. (7) Structure to facilitate reporting from directors and employees to audit & supervisory board members and other arrangements to ensure that audit & supervisory board members are adequately informed, as well as the structure to ensure that no disadvantageous treatment is conducted because of having reported to audit & supervisory board members Directors and employees of the Company and the Group companies shall immediately report to audit & supervisory board members on matters that could have significant impact on the Company and the Group companies, or any other matters as necessary, in addition to matters legally required to be reported. In addition, the hotline system is structured to guarantee that the informants who provide the Group Compliance Hotline with compliance-related information are protected from being treated in a disadvantageous manner. Moreover, to complement this arrangement, the Company and the Group companies have established a structure whereby audit & supervisory board members are permitted to attend important meetings such as those of the Board of Directors, the Management Committee, the Compliance Committee, the Risk Management Committee and the ALM Committee. (8) Other structure to ensure that audit & supervisory board members conduct effective audits Audit & supervisory board members hold meetings to exchange opinions with representative directors, outside directors, internal audit division and accounting auditors. Audit & supervisory board members attend important meetings such as the Board of Directors, the Management Committee, the Compliance Committee, the Risk Management Committee and the ALM Committee, in an effort to find out various problems they need to address in the execution of their duties. Furthermore, audit & supervisory board members shall be permitted to request posteriori for redemption of the expenses that they deem necessary in executing their duties if such expenses were previously budgeted by them and have been disbursed for an emergency or temporarily.
The Company and the Group sets "compliance" as one of the most important management priorities. We are cop- ing with it in order to fulfill our social responsibility and public duties, and to earn the trust of our customers and regional communities. The Company has set up a "Compliance Committee" to deliberate important matters regarding group compliance. We have also formed the General Risk Management Division under the “Chief Compliance Officer" to manage matters regarding compliance unitarily. The General Risk Management Division ensures compliance by creating, reviewing, and following up the “Compliance Program,” which is a practical plan for reinforcement of compliance, by creating, updating, and distributing the “Compliance Manual,” which stipulates basics regarding compliance, and by conducting compli¬ ance education activities through various training programs. We assign “Compliance Officers” and “Compliance Managers" to each division and branch in order to imple- ment and penetration of compliance. In addition, we check the operations from compliance point of view and facilitate the conduction of training programs to ensure compliance. We also set up and operate a hotline including exter- nal contact point in order to find compliance problems in early stages and take corrective actions. Compliance has become an increasingly important issue for financial institutions. The Company and the Group are committed to strict observance of the Banking Act, Financial Instruments and Exchange Act, and related laws and regulations. We also work toward the elimination of anti-social forces, and strive to strengthen an appropri- ate protection system for our customers. We intend to enrich and enhance our compliance structure through improving various regulations and giving training to our employees continuously so that cus¬ tomers can deal with us "reliably."
Code of Ethics
The Group sets up Code of Ethics as follows that our directors and employees must abide by. The directors and employees will regard the observance of the Code of Ethics as a fundamental part of routine operations and will conduct fair and honest corporate activities, while complying with laws and rules strictly to implement the Group's management philosophy and policies. 1. Winning the trust from our customers Taking its social responsibility and public duties into consideration, we will intend to become the most reliable financial group for the customers through conducting sound and appropriate operations, including information management and proper disclosure. 2. Implementing "customer first policy" We will always consider any matters on customer first basis and will contribute to the development of the regional economy and community through providing high-quality financial services that are both original and innovative. 3. Strict compliance We will strictly comply with all laws and rules, and will conduct fair and honest corporate activities that are consistent with social code. 4. Respecting human rights and the environment We will respect personal relationship, characters and personalities of the others, and conduct environment-friendly corporate activities. 5. Eliminating anti-social forces We will take an uncompromising stance against anti-social forces and organiza- tions, and resolutely eliminate all undue intervention by such forces and organizations which threaten the order and safety of the community.

■ Basic Approach to Risk Management
While business opportunities for financial institutions multiply as a result of deregulation, sophistication and globalization of financial operations, and the significant development in ICT, the risks that financial institutions face are becoming more complicated and diverse quali¬ tatively. Moreover, it has been more important for financial institutions to monitor, assess and manage risks properly, and to respond to the changes quickly in the environ- ment in order to earn the stable and continuous profits, while serving various needs of customers. Under such circumstances, the Group regards enhancing and strengthening risk-management structure as a high- priority management task in order to maintain and enhance the soundness of its business execution. Specifically, the Group determines the structure and various rules regarding risk management and the depart- ments in charge of each risk category at the Board of Director. The group has also set up the risk management division to oversee the departments regarding risk man¬ agement. Furthermore, the Risk Management Committee and the ALM Committee, consisting principally of man- agement personnel have been established, with the purpose to identify the risk situation within the Group as well as its subsidiaries, and to discuss the relevant agenda and countermeasures which shall subsequently be reported and further discussed at the Board of Direc- tors. Thus the Group ensures effective risk management structure at management level. Meanwhile, as action plans for risk management based on the Group strategies, basic risk management principles are set out annually and reviewed continually in order to deal with the risks newly emerging as a result of changes in environment for timely and adequate way. With the purpose to objectively examine the adequa- cy and effectiveness of the risk management structure, the internal audit division which independents from the audited departments conducts an audit. Thus the Group ensures appropriate administrative processing and sound business operations through finding out and improving the matters on risk management.
■ Integrated Risk Management
● Integrated risk management
Integrated risk management refers to the process to adequately manage the risks that financial institutions face. The Company evaluates the risks divided into categories of credit risk, credit concentration risk outside the calculation of capital ratio, interest rate risk in banking accounts, market risk and operational risk, and compares them with its management strength (capital ratio). The Group regards development and reinforce- ment of risk management structure as its crucial management task. Furthermore, the Group has devel¬ oped an integrated risk management structure that the risk management division manages all risks in order to comprehensively identify and appreciate various risks associated with the Company’s operations by as uniform as possible measurement, and to earn the stable revenue, realize appropriate capital composi¬ tion and allot management resources properly.
● Risk capital management system
The Group is running its operation based on the risk capital management system that controls all risks within certain proportion of capital base, under the integrated risk management structure. Specifically, the Company allocates risk capital sourced from core capital base to credit risk, market risk and operational risk, based on the calculated risk amount in each category. The Company has also monitored risk amount continuously to ensure that it is kept within the tolerable limit from management point of view. Thus the Company ensures smooth operations and management soundness across the Group. ● Calculation method for capital ratio regulation In respect to risk asset calculation for the purpose of the capital ratio regulation, the Group applies the Foundation Internal Ratings-Based Approach for credit risk and the gross profit allocation method for opera¬ tional risk.
■ Credit Risk Management
Credit risk, as identified by the Group, is the risk of suffering losses as a result of a decline or loss of the value of assets due to reasons such as the deteriorating financial conditions of or default by the obligor. The Group has set up "Credit Policy" in the banking subsidiary that clarifies its policy for extending credit, based on its management policy in order to maintain and enhance the soundness of its business execution. Under this policy, the responsible division for the management of credit risk, the Risk Management Divi- sion at banking subsidiary, in accordance with the management methods stipulated in the Credit Manage- ment Regulations, administers finely-tuned responses to risks for the purpose of building up an optimum portfolio. Specifically, the division analyzes and manages the credit portfolio from various aspects including credit concentration risk, type of business, borrower classifica¬ tion and credit ratings. As for the credit analysis and management of each loan at the banking subsidiary, the Group makes efforts to ensure the independence of the investigation division from the business promotion division. The Board of Directors and other appropriate body review each loan for large obligor as well as the credit policy. Thus the Group has focused on the development and improve- ment of its credit analysis system. Meanwhile, Loan Division is managing housing loans receivable. The banking subsidiary has also established the Internal Audit Division, to manage auditing of the self- assessment of assets, in order to maintain and enhance the soundness of its asset base.
■ Market Risk Management
Market risk, as identified by the Group, points to "market risk" and "market liquidity risk." Market risk is the risk of suffering losses through changes in the prices of assets and liabilities held by the Group due to the fluctuations of market risk factors, such as interest rates, prices of securities, foreign exchange rates and so on. Market liquidity risk is the risk of suffering losses arising from the inability to execute sufficient transactions under appro- priate conditions, due to market confusion or an insufficient trading base. The Group has established the Risk Management Committee and the ALM Committee, consisting principally of management personnel, and discussed appropriate and timely measures to address the risks in order to earn the stable and continuous profit through managing its assets and liabilities in a compre- hensive way.
■ Funding Liquidity Risk Management
Funding liquidity risk, as identified by the Group, is the risk of suffering funding difficulties from being unable to raise necessary funds due to market conditions or dete- rioration in the Group’s financial condition, as well as the risk of suffering losses from being forced to raise funds at higher interest rates than usual. The Group takes control of its funding situation through careful monitoring of the fund management and fundraising. The Group also ensures liquidation of its assets and diversifies the sources of fundraising. Thus the Group has taken every possible measure to manage funding liquidity risk.
■ Operational Risk Management
Operational risk, as identified by the Group, is the risk of suffering losses from the inappropriate business activity of the Group - including its employees-, systems, or external premises. The Group has set a rule for operational risk manage- ment and classified the risks into the six categories as follows; (1) administrative risk, (2) information asset (system) risk, (3) tangible fixed asset risk, (4) personnel risk, (5) legal risk, and (6) reputation risk. Furthermore, the Group identifies and evaluates all risks associated with new products and services before they are actually developed and provided, for the pur- pose of adequate risk management. Besides, the Group manages customer information sufficiently and ensures management soundness when outsources certain busi- ness operation. ● Administrative risk management Administrative risk, as identified by the Group, is the risk of suffering losses from administration, fraud, accidents and other risks that the Group's operations will not be carried out as intended. The Group prescribes detailed rules on administrative procedures and strives to prevent accidents through doing the administration promptly and accurately, so that the customer can enter into transactions with the Group without any concern. Meanwhile, the Group makes every effort to eliminate administrative risk by measures such as review of the administrative procedure from identification of potential risks through the analysis of administrative processes. ● Information asset (system) risk management Information asset (system) risk, as identified by the Group, is the risk of suffering losses due to loss, altera¬ tion, unauthorized use, leakage of information, as well as to system defects caused by natural disasters or breakdowns. In consideration of the fact that its business opera- tions are supported by various computer systems, the Group ensures the reliability and security of systems and has established back-up systems and structures in case of emergency. The Group is also working to establish appropriate operation and management systems to prevent the leakage of information and unauthorized access to its systems through encoding of data and strengthening of access authority management. ● Risk management related to cyberattacks, etc. Risk related to cyberattacks, etc., as identified by the Group, is the risk of suffering losses due to cyberat- tacks, etc., such as targeted email attacks and website defacement. To prepare for risks such as computer viruses, which have been rapidly increasing recently, and increasingly sophisticated cyberattacks, the Group is implementing various measures such as establishing a system to appropriately manage risks related to cyber security, improving security measures according to the degree of risk impact, and formulating contingency plans. Furthermore, the Group has established a special- ized team for computer security (CSIRT) and is working to strengthen its structure by enhancing various security measures and conducting cyberattack exercises.
● Tangible fixed asset risk
Tangible fixed asset risk, as identified by the Group, is the risk of suffering losses associated with damage of building and equipment or deterioration of working environment as a result of disasters or poor asset man¬ agement. The Group is preparing for disaster through con- ducting quake resistance tests and implementing countermeasures against power failures in order to ensure business continuity in the event of emergencies.
● Personnel risk
Personnel risk, as identified by the Group, is the risk of suffering losses associated with the delay of failing in succession of expertise within the Group, as a result of drain or loss of key staff, or degradation of morale. The Group is striving to develop working environ- ment to enable each employee to fully exert ability, while helping him or her to improve their skills.
● Legal risk management
Legal risk, as identified by the Group, is the risk of suffering losses from violations of laws and regulations, as well as inappropriate responses to changes in various systems. The Group strives to prevent the occurrence of legal risk and to reduce the risk itself. To this end, the Group has established the General Risk Management Division to collect information concerning legal mat- ters, and to manage legal risk identified from such information, as well as appropriately responds to the legal risk.
● Reputation risk management
Reputation risk, as identified by the Group, is the risk of suffering losses arising from deterioration of the Group's reputation due to circulation of unfounded rumors or due to inadequate responses of the Group concerning the facts. The Group works to avoid reputation risk by dis- closing information proactively thorough increases the transparency of its management, taking into consider- ation the crucial influence on the management of the Group.
■ Crisis Management
The Group has established the “Crisis Management Rules," which set out the basic policies in responding to emergencies including large-scale disasters and system failures. In the event of large-scale crisis, the Group sets up a “Crisis Management Headquarters” take charge of company-wide response. Specific action programs are set out in a “Contingency Plan,” with the purpose to ensure safety of customers and employees, as well as set up business continuity structure of the financial system.
(As of the end of June, 2021) INC
The Senshu Ikeda Bank (hereinafter the “Bank”) is fo- cused on providing adequate and sufficient financial intermediary function to customers in need of business loans or housing loans, as one of the crucial manage- ment priorities. The Bank has formulated basic policy for facilitation of financing (hereinafter the "Policy") in order to promote facilitation of financing to those in need particularly under the current tight economic environ- ment. The Bank intends to communicate with our customers and promote facilitation of financing positively.
● Organizational structure
(1) With the purpose to develop a management structure necessary to supply facilitation of financing (hereinaf- ter “Facilitation of Financing Management”) under the Policy, the Bank appoints the Facilitation of Financing Manager to check whether Facilitation of Financing Management is effectively working. (2) The Bank appoints the director in charge of the Loan Division to the Facilitation of Financing Manager. The Manager will engage in the development and rein- forcement of the structure for Facilitation of Financing Management through checking the progress in respect of Facilitation of Financing Management. (3) The Facilitation of Financing Manager coordinates the overall business in respect of Facilitation of Financing Management such as instructions to the division responsible for Facilitation of Financing Management, and drawing up of the rules governing facilitation of financing, with the purpose to ensure adequacy, sufficiency and effectiveness of Facilitation of Financ- ing Management. (4) The Loan Division is responsible for Facilitation of Financing Management. The Loan Division engages in the adequate operation, examination and improve- ment of Facilitation of Financing Management under the command of the Facilitation of Financing Manager through gathering information necessary for Facilita¬ tion of Financing Management.
● Basic Policies
(1) On receiving consultations or applications for new loans, or changes in loan terms from customers, the Bank intends to make sincere effort to conduct ad- equate and prompt credit screening through considering customers' recent financial results, assets and income as well as future potential and prospect. The Bank also deals with the applications for new loans, after changes in loan terms in a similar way as referred to above. (2) The Bank intends to make efforts to supply funds (including new credit granting) smoothly as well as to make changes in loan terms by monitoring the condi- tions of the customers carefully and fully coordinating with other related financial institutions including other business categories. (3) Additionally, keeping in mind the purpose of the provi- sions of Article 64 of the Act on Regional Economy Vitalization Corporation of Japan (Law No. 63, 2009) (*), the Bank intends to appropriately and proactively engage in the vitalization of the regional economy and the facilitation of regional financing. (Note) The provision sets forth, "The Corporation and financial institutions, when providing support to business activities that contribute to the business rehabilitation of business operators and the vitalization of the regional economy, shall strive to mutually cooperate with each other in order to vitalize the regional economy and facilitate regional financing through the enhancement of overall economic capabilities of the region.' (4) Consequently, the Bank intends to provide maximum support to the business improvement efforts of its customers not only through its role as a provider of financing but also through various customer services including business consultation and guidance. (5) Furthermore, keeping in mind the purpose of the “Guidelines on Proprietor Guarantees” (Study Group on Guidelines on Proprietor Guarantees, December 5, 2013; hereinafter "Guidelines on Proprietor Guarantees"), the Bank intends to further promote loans that are not dependent on proprietor guarantees, while at the same time making efforts to deal with its customers based on the concept of reasonable guarantee contracts as set forth in the "Guidelines on Proprietor Guarantees." (6) On receiving consultations or applications for new loans, or changes in loan terms from customers, the Bank intends to provide sufficient explanation in order to gain customers' understanding and satisfaction, on the basis of past trading records, customers' knowledge, experience and assets situation. If the Bank has to decline customers' application, we will explain the reason background of the decision as concretely and courteously as possible. (7) The Bank intends to improve capability of directors and employees about facilitation of financing by giving internal training, to enable them to make appropriate decisions based on good understanding of customers' situations. (8) The Bank intends to respond to any comments, requests, consultations and complaints from customers in respect of facilitation of financing promptly and sincerely.
● Policies for handling of application for loans from small and medium enterprises and sole proprietors
(1) On receiving applications for changes in business terms such as loan terms from small and medium enterprises and sole proprietors, the Bank intends to accommodate such application and offer adequate changes in terms adequately as far as possible, taking into consideration of the specialty and the circumstance of customers' businesses. (2) The Bank intends to provide small and medium enterprises and sole proprietors with management consultation, guidance and other adequate assis- tance in support of their effort for management improvement, taking into consideration the opera¬ tional circumstance of customers. (3) In the cases that customers borrow from other finan- cial institutions as well as the Bank, we will, upon customers' approval, strive to make arrangements in coordination with the other financial institutions in order to help to reduce the burden of repayment. (4) On receiving request for the corporate rehabilitation procedure through Alternative Dispute Resolution (ADR) for corporate rehabilitation (*) or Enterprise Turnaround Initiative Corporation of Japan, the Bank makes utmost effort to respond adequately to such request as far as possible, in full consideration of the prospect of improvement or rehabilitation of the business. (Note) This refers to certified dispute resolution pro- cedure set out in Article 2, Paragraph 25 of the Law on Special Measures for Industrial Revitalization, in which a private third party organization formulates a rehabilitation plan, as coordinator of the interests of creditors.
● Policies for handling of application for housing loan
(1) On receiving applications for new loans or changes in housing loan terms from housing loan customers, the Bank intends to accommodate such application and offer adequate new loans or changes in terms ad- equately as far as possible, taking into consideration of circumstances including customers' assets and income and transactions with other financial institu- tions. (2) In the cases that customers have transaction with other financial institutions as well as the Bank or with Japan Housing Finance Agency, we will, upon cus- tomers’ approval, strive to make arrangements in coordination with the other financial institutions in order to help to reduce the burden of repayment.
Corporate Data (As of the end of March 2022) Senshu Ikeda Holdings, Inc. Establishment: October 1, 2009
18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan 81-(0)6-4802-0181 https://www.senshuikeda-hd.co.jp Share Capital: ¥102.9 billion Business Activities: Management and other related operations of banks and affiliates whose shares can be held in accordance with the Banking Act and other related operations, and businesses which bank holding company can operate in accordance with the Banking Act. Number of Employees: 117 Stock Listing: Tokyo Stock Exchange The Senshu Ikeda Bank, Ltd. Establishment: September 1, 1951 Location: 18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan Phone: 81-(0)6-6375-1005 URL: https://www.sihd-bk.jp Share Capital: ¥61.3 billion Deposits: ¥5.5681 trillion Loans: ¥4.5628 trillion Number of Branches: 139 Number of Employees: 2,226 Credit Ratings: A-(Japan Credit Rating Agency, Ltd.) International Network Suzhou Representative Office: 399 East Baodai Road, Ho Chi Minh City Representative Office:

Senshu Ikeda Tokai Tokyo Securities Co.,Ltd.
Establishment:
January 30, 2013 3-2-1 Toyosaki, Kita-ku, Osaka-City, Osaka 530-0013, Japan 81-(0)6-6485-0031 https://www.sittsec.co.jp ¥1.25 billion URL: Share Capital: Assets Under Management: ￥149.5 billion Number of Branches: 7 Number of Employees: 132
Major Shareholders  (As of March 31, 2022)

series of seventh-class preferred stock, and implemented this on July 15, 2022.
(Note: ● indicates consolidated subsidiaries and ○ indicates equity-method affiliates)
.INC
Senshu Ikeda Holdings ■ Organization (As of the end of June, 2022)
■ Board of Directors (As of June 28, 2022)
failve Drector Takayuki Ota Atsushi Ukawa Director & Toshiyuki Wada Excome Once Director & Hirohito Sakaguchi (angro Unctor 8 Osamu Tsukagoshi Director
(Outside) Minoru Furukawa
■ Executive Officers (As of June 28, 2022)
enior Managing   Yasuki Hosomi Senior Managing   Shinji Inoue Managing  Hiromasa  Hirai Officer Managing  Keisuke Misaki
Officer Director
(Outside) Director
(Outside) Director
(Outside) Audit & Superior Board Monberg
(Full time) Executive Executive
Officer Takao Koyama Tomokazu Yamazawa Atsuko Ogasawara Satoshi Kitagawa Audi & Supervisory Hiroo Maeno (Ful tme) Audi & Supervisory  Seiji  Morinobu
(Ouside) Audi & Supervisory Kouhei Nakanishi (Outside) Atsushi Otsuka Tomoyuki Shinohara
The Senshu Ikeda Bank
l Board of Directors (As of June 28, 20
Takayuki Ota Atsushi Ukawa " Toshiyuki Wada Hiromasa Hirai Hirohito Sakaguchi Osamu Tsukagoshi Takayoshi Fujiwara Minoru Furukawa Takao Koyama Tomokazu Yamazawa Atsuko Ogasawara Osamu Horiuchi Audi & Supervisory
Board Mercer (Fullere)    Katsumi Hiramatsu Audit & Supervisory
Board Member (Duside) Ken-ichi Yoshimoto Audit & Supervisory
Board Member (Ouside) Kazuyuki Tanaka
l Executive Officers (As of June 28, 2022)

Ryoichi limuro Masahide Inui Yasuji Kanbayashi Takahiro Doki Masayoshi Onishi
Tsuyoshi Kotani Akira Nishikawa Kengo Hounoki Yasushi Yamanaka Senshu  Ikeda Tokai Tokyo  Securities ■ Organization (As of the end of June, 2022) ■ Board of Directors (As of June 28, 2022)
■ Executive Officers (As of June 28, 2022) Executive Officer Toshiyuki Inoue Executive Officer Masaomi Umezawa Executive Officer Shigeki Kawamura
Consolidated Balance Sheets Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaties

Consolidated Statements of Comprehensive Income
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries For the years ended March 31, 2022 and 2021

Consolidated Statements of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaties For the Years Ended 31st March, 2022 and 2021
1. Basis of Presentation
Senshu Ikeda Holdings, Inc. (the "Company") is a holding company and conducts its operations through its subsidiaries and affiliates. The Company and its subsidiaries (collectively, the "Group") maintain their books of account in accordance with the provisions set forth in the Companies Act of Japan (the "Act") and in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements have been compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan. Certain accounts have been reclassified for the convenience of readers outside Japan. In preparing the accompanying consolidated financial statements, Japanese yen amounts are presented in millions of yen by rounding down figures below one million. As a result, the totals in yen in the accompanying consolidated financial statements do not necessarily agree with the sums of the individual amounts. The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at ¥122.39 = U.S.$1.00, the exchange rate prevailing on March 31, 2022. This translation should not be construed as a representation that yen can be converted into U.S. dollars at the above or any other rate.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its 20 (20 in 2021) significant subsidiaries which it controls directly or indirectly. Affiliates over which the Company exercises significant influence in terms of their operating and financial policies have been included in the accompanying consolidated financial statements on an equity basis.
Change in the scope of consolidation
Senshu Ikeda Capital Business Succession Fund Kizuna No.2 Investment Enterprise Limited Partnership which was consolidated subsidiaries of the Company in the fiscal year ended March 31, 2021 was excluded from the scope of consolidation from the fiscal year ended March 31, 2022, due to completion of their liquidation procedures. Senshu Ikeda Capital Business Succession Fund Kizuna No.3 Investment Enterprise Limited Partnership has been included in the scope of consolidation from the fiscal year ended March 31, 2022 as a result of contribution by the Company. The company has applied the equity method to its investments in 2 affiliates for the years ended March 31, 2022 and 2021, respectively. All significant intercompany accounts and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated. The difference between the cost and the underlying equity in the net assets of the consolidated subsidiaries measured at fair value at their respective dates of acquisition is presented as "goodwill" or "negative goodwill". Goodwill is amortized by the straight-line method over a period of 5 years. The balance sheet date of 7 subsidiaries is December 31. Appropriate adjustments have been made for significant intervening transactions occurring during the period from December 31 to March 31.
3. Significant Accounting Policies
(1) Securities
Non-trading securities are classified into three categories: held-to-maturity debt securities, equity securities of an unconsolidated subsidiary and available- for-sale securities. Held-to-maturity debt securities are carried at amortized cost, and the cost being determined by the moving average method. Equity securities of an unconsolidated subsidiary are stated at cost determined by the moving-average method. Available-for-sale securities whose fair values are available are stated at fair value determined based on the quoted market price and other information at the balance sheet date. Cost of sales of these available-for sale securities is determined using the moving average method. Non-marketable equity securities are stated at cost determined by the moving-average method. Unrealized gain or loss on available-for-sale securities is included in net assets, net of income taxes. However, for consolidated subsidiaries engaged in banking business, regarding the effect of exchange rate changes on bonds among available-for-sale securities denominated in foreign currencies, the effect on changes in the market prices of foreign currencies is treated as unrealized gain (loss), and other differences are treated as gain (loss) on foreign exchange. (2) Investment securities held in money trusts Investment securities that are part of trust assets in independently managed money trusts with the primary purpose to manage securities are stated at the fair value as of the balance sheet date. (3) Derivatives Derivatives are stated at fair value.
(4) Tangible fixed assets
Depreciation of tangible fixed assets of the Group, except for leased assets, is calculated principally by the straightline method. The principal useful lives are as follows: Buildings …………… 3 to 50 years Other ………………… 2 to 20 years
(5) Intangible fixed assets
Intangible fixed assets are amortized by the straight-line method. Amortization of the cost of software intended for internal use is calculated by the straight-line method based on a useful life (5 years) determined by the Company and its consolidated subsidiaries.
(6) Reserve for possible loan losses
A reserve for possible loan losses is provided by consolidated subsidiaries engaged in the banking business (the "banking subsidiaries") in accordance with the prescribed standards. For claims on borrowers who have declared bankruptcy or have commenced special liquidation proceedings or similar legal proceedings ("bankrupt borrowers"), or borrowers who are not legally or formally insolvent but are regarded as substantially in the same situation ("effectively bankrupt borrowers"), a reserve is provided based on the book value of the claims, after the write-off stated below, net of the expected amount recoverable from collateral and guarantees. For claims on borrowers who are not currently bankrupt but are likely to become bankrupt ("potentially bankrupt borrowers"), a reserve is provided at the amount deemed necessary based on the overall solvency assessment of the borrowers and the amount of the claims, net of the expected amount recoverable from collateral and guarantees. For other claims, a reserve is projected and provided primarily at the amount of estimated losses over a subsequent one-year period or three-year period. Estimated losses are calculated using a loss rate based on the average historical loan-loss ratio over a certain period obtained from historical loan losses for a one-year period or three-year period. The Group conducts self-assessments of asset quality at its loan offices. The assessments are audited by the independent credit audit section in accordance with the Group's policy and guidelines for the self-assessment of asset quality. Based on the results of these assessments, an appropriate reserve is provided for the resulting losses and for write-offs of doubtful assets. For consolidated subsidiaries other than the banking subsidiaries, a specific reserve for possible loan losses at the total amount of loans deemed to be uncollectible based on a solvency analysis of each loan, in addition to a general reserve at an amount calculated based on historical experience, is provided. For collateralized or guaranteed claims on bankrupt borrowers and effectively bankrupt borrowers, the amount of the claims exceeding the estimated value of collateral and guarantees is deemed to be uncollectible and is written off against the total amount of the outstanding claims. These write-offs amounted to ¥24,645 million ($201,364 thousand) and ¥26,096 million for the years ended March 31, 2022 and 2021, respectively.
(7) Provision for employees' bonuses
Provision for employees' bonuses is calculated based on an estimated payment amount, which is attributable to the fiscal year.
(8) Provision for directors' bonuses
Provision for directors' bonuses is calculated based on an estimated payment amount for directors, which is attributable to the fiscal year, in order to prepare for the payment of performance-linked compensation to directors, etc.
(9) Accrued retirement benefits for directors and audit &
supervisory board members
Accrued retirement benefits for directors and audit & supervisory board members are provided at an amount that would be required if all directors and audit & supervisory board members retired at the balance sheet date.
(10) Reserve for reimbursements of deposits
Reserve for reimbursements of deposits is provided at an estimate of the future payments to be made for reimbursement claims on deposits which were derecognized and credited from liability to income based on the Group's historical experience.
(11) Reserve for point services
Reserve for point services, which is provided to meet future use of credits granted to customers, is recorded in the amount deemed necessary based on the estimated future use of unused credits.
(12) Reserve for contingent losses
Reserve for contingent losses is provided at an estimate of the future loss on contingencies other than those covered by other reserves or provisions.
(13) Reserve under special laws
Reserve under special laws consist of the financial instruments transaction liability reserve of ¥11 million ($89 thousand) as of March 31, 2022, posted by Senshu Ikeda Tokai Tokyo Securities Co., Ltd., which were calculated according to the specifications of Article 46-5 of the Financial Instruments and Exchange Act and Article 175 of the Cabinet Office Ordinance Related to the Financial Instruments Business, to prepare for losses originating from incidents relating to the purchase and sale of securities or other transactions.
(14) Accounting treatment for retirement benefits
In the calculation of retirement benefit obligation, the Company applies the benefit formula basis in attributing expected retirement benefits to periods until the end of this fiscal year. Prior service cost is amortized by the straight-line method over a period of 11 years, which is within the average estimated remaining years of service of the eligible employees. Actuarial gain or loss is amortized commencing the year following the year in which the gain or loss is recognized by the straight-line method principally over a period of 11 to 12 years, which is within the average estimated remaining years of service of the eligible employees. Some of the consolidated subsidiaries calculate their net defined benefit liability and retirement benefit expenses by adopting the simplified method, assuming the amount of year-end retirement benefit payable due to voluntary terminations as retirement benefit obligation.
(15) Foreign currency transactions
Assets and liabilities of consolidated subsidiaries denominated in foreign currencies are translated into Japanese yen at the exchange rates in effect at the balance sheet date.
(16) Leases
Leased assets under finance lease arrangements which do not transfer ownership of the leased assets to the lessee are depreciated over the respective lease contract periods using the straight-line method with residual values defined in the lease contracts, otherwise the residual values is zero.
As lessee:
Finance leases which commenced prior to 1st April, 2008, except for those substantially requiring the transfer of ownership of the leased assets to the lessee, are accounted for as operating leases. As lessor: Finance lease income and related cost are recognized when lease payment is received. Finance leases which do not transfer ownership of the leased assets to the lessee and commenced prior to 1st April, 2008 are deemed to have been entered into contracts at the amount of the cost less accumulated depreciation at March 31, 2008.
(17) Revenues and expenses
Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customer. The amount of revenue recognized from contracts with customers is calculated based on the amount expected to be received in exchange for goods or services. For point programs operated by other companies in which the Company's consolidated subsidiaries participate, the amount expected to be used in the future is recognized as an amount to be collected on behalf of third parties and deducted from fees and commissions.
(18) Revenue recognition for share dividends
Regarding the revenue recognition for share dividends distributed from other retained earnings (limited to cases of cash dividends), they are recorded as follows in accordance with Paragraph 94 of "Practical Guidelines on Accounting for Financial Instruments" (JICPA Accounting System Committee Report No. 14, July 4, 2019). (1) Shares with a market price As of the ex-dividend date of each share (the day after the last trading day with dividend rights), the Company estimates and records accrued dividends receivable based on the previous actual dividend or the published forecast dividend per share. (2) Shares without a market price Dividends to be paid within the period normally required after the effective date of a resolution regarding dividends passed at a general meeting of shareholders, a meeting of the board of directors, or other body with decision-making authority of the issuing company are recorded in the fiscal year that includes the date of payment.
(19) Hedge accounting
Interest rate risk hedging With respect to hedge accounting for the interest rate risk arising from financial assets and liabilities of the banking subsidiaries, the Group applies deferral hedge accounting, under which gains or losses on derivatives are deferred until maturity of the hedged transactions, as stipulated in the Japanese Institute of Certified Public Accountants (JICPA) Industry Committee Practical Guidelines No. 24, 8th October, 2020.
Foreign exchange rate risk hedging
With respect to hedge accounting for derivative transactions used to hedge the risk of financial assets and liabilities denominated in foreign currencies of the banking subsidiaries, the Group applies deferral hedge accounting, under which gains or losses on derivatives are deferred until maturity of the hedged transactions, as stipulated in the JICPA Industry Committee Practical Guidelines No. 25, 8th October, 2020. The Group assesses the effectiveness of its currency swaps and foreign exchange swaps transactions, etc. entered into in order to hedge the risk of fluctuation in foreign exchange rates by comparing the foreign-currency amount of each underlying hedged item with the corresponding foreign currency amount of the respective hedging instruments.
(20) Cash flows
In preparing the consolidated statement of cash flows, cash and deposits with the Bank of Japan are considered to be cash and cash equivalents.
(21) Consolidated tax payment system
The Company and certain of its consolidated subsidiaries have adopted the consolidated tax payment system in accordance with the Corporation Tax Act (Act No. 34, 1965).
(22) Application of tax effect accounting for the transition
from the consolidated taxation system to the group
tax sharing system
For the items transitioned to the group tax sharing system established under the "Act for Partial Amendment to the Income Tax Act, etc." (Act No. 8 of 2020) and items that underwent revisions to the individual taxation system upon the transition to the group tax sharing system, the amounts of deferred tax assets and deferred tax liabilities are recorded based on the provisions of tax laws before amendment without applying the provisions in Item 44 of the "Implementation Guidance on Tax Effect Accounting" (ASBJ Guidance No. 28, February 16, 2018) in accordance with the treatment in Paragraph 3 of the "Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System" (PITF No. 39, March 31, 2020). From the beginning of the next consolidated fiscal year, the Company intends to apply the "Practical Solution on the Accounting and Disclosure under the Group Tax Sharing System" (PITF No.42, August 12, 2021), which stipulates the accounting procedures and disclosure for income and local taxes effect accounting when the group tax sharing system is applied.
(23) Accounting principles and procedures adopted when
the provisions of relevant accounting standards, etc.
are unclear Accounting treatment for gain (loss) on cancellation of investment trusts Gain (loss) on cancellation and redemption of investment trusts is recorded as "Interest and dividends on securities." In cases where the total amount of profit distribution, etc. from investment trusts during the period is a loss, the amount is recorded as "Loss on redemption of bonds."
(24) Significant accounting estimates
1. Valuation of loans and bills discounted
(1) Amount recorded in the consolidated financial statements for this fiscal year.
(2) Information for an understanding of the nature of significant accounting estimates for the identified items (i) Calculation method Reserve for possible loan losses of consolidated subsidiaries engaged in banking business is calculated by assessing the borrower classification based on the asset self- assessment standards and using a certain calculation method according to the borrower classification as described in "3. Significant Accounting Policies (6) Reserve for possible loan losses." With regards to the borrowers for which additional reserve for possible loan losses was provided in the fiscal year ended March 31, 2021, based on the "deemed borrower classification" that takes into account the possibility of a future downward shift in the borrower classification, the Company continues to provide reserve for possible loan losses based on the "deemed borrower classification" for those borrowers for which the possibility of a future downward shift in borrower classification is still considered in light of the uncertainty caused by COVID-19. (ii) The key assumption in determining the borrower classification for business loan borrowers with deteriorating business conditions is "Outlook for future performance of business loan borrowers". "Outlook for future performance of business loan borrowers" is determined based on an individual assessment of each business loan borrower's ability to earn a profit. Regarding the impact of COVID-19, it is difficult to predict when the pandemic will end, but we assume that the situation will settle down to a certain degree and economic activities will gradually recover. However, for borrowers that were assigned to "deemed borrower classification" in the fiscal year ended March 31, 2021, if their financial condition or performance meets certain requirements in this fiscal year, the Company will continue to assign them to "deemed borrower classification," assuming that there is a possibility that their business performance will not recover and their borrower classification will shift downward. (iii) Impact on the consolidated financial statements for the fiscal year ending March 31, 2023 The future economic environment, including the impact of COVID-19, as well as changes in the business performance of borrowers and the success or failure of their business strategies, could have a significant impact on reserve for possible loan losses stated in the consolidated financial statements for the fiscal year ending March 31, 2023.
2. Recoverability of deferred tax assets
(1) Amount recorded in the consolidated financial
statements for the fiscal year ended March 31, 2022
(2) Information for an understanding of the nature of significant accounting estimates for the identified items
(i)
Calculation method
Deferred tax assets are recognized to the extent that it is possible to reduce the future tax burden due to deductible temporary differences and tax losses carried forward as of March 31, 2022, based on the classification of companies as stipulated by the "Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No. 26, February 16, 2018). The Company estimates taxable income before adjusting temporary differences based on future profitability. In calculating future taxable income before adjusting temporary differences for consolidated subsidiaries engaged in banking business, the earnings plan included in the revised Fifth Medium-Term Business Plan is adjusted to reflect earnings stress scenarios that take into account future uncertainties, and tax adjustment items that will arise in the future are added or subtracted. As the Company has adopted a consolidated taxation system, the income of the entire group for consolidated taxation is estimated based on “Practical Solution on Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 1)" (PITF No.5, January 16, 2015) and “Practical Solution on Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 2)" (PITF No. 7, January 16, 2015). In addition, the Company will shift to a group tax sharing system from the fiscal year ending March 31, 2023, and its response to this shift is described in “Notes (Significant Accounting Policies for Preparation of Consolidated Financial Statements) 3. Significant Accounting Policies (22) Application of tax effect accounting for the transition from the consolidated taxation system to the group tax sharing system. Key assumptions The key assumptions used in estimating the taxable income before adjusting temporary differences of the consolidated subsidiaries engaged in banking business for the future period during which estimates can be reasonably made (recoverable period) of five
(ii)

(iii) Impact on the consolidated financial statements for the fiscal year ending March 31, 2023 If the assumptions used in the initial estimates change due to the impact of COVID-19 on the future economic environment, there may be a significant impact on deferred tax assets stated in the consolidated financial statements for the fiscal year ending March 31, 2023. If the assumptions for future taxable income before adjusting temporary differences during the recoverable period change as shown below and the schedule for reversal of temporary differences during the recoverable period remains unchanged, the estimated amount of impact (sensitivity) for the fiscal year ended March 31, 2022, will be as follows.

(25) Change in accounting policies
Application of Accounting Standard for Revenue
Recognition and other standards The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020, hereinafter "Revenue Recognition Standard") and related changes in other standards from the beginning of the fiscal year ended March 31, 2022. The Company recognizes revenue when control of promised goods or services is transferred to a customer in an amount that the Company expects to be entitled to receive in exchange for those goods and services. Accordingly, for certain securities-related and credit card services provided by consolidated subsidiaries, the Company previously recognized the full amount of the consideration as revenue when it was received and recorded it in "Fees and commissions", but changed its method to recognize revenue when the obligation is fulfilled for goods or services for which the performance obligation is satisfied over a certain period of time. With respect to point programs operated by other companies in which the Company's consolidated subsidiaries participate, the Company previously accounted for the balance of unused credits converted into monetary value and the amount expected to be used in the future as "Reserve for point services" and included the amount provided as the reserve for point services in "Operating expenses", but changed the method to recognize the amount expected to be used in the future as the amount to be collected on behalf of a third party and deduct it from revenue. The Company applies the Revenue Recognition Standard and related changes in standards in accordance with the transitional treatment stipulated in the proviso to Paragraph 84 of the Revenue Recognition Standard. The cumulative impact of retrospectively applying the new accounting policies to prior periods is added to or subtracted from retained earnings at the beginning of this fiscal year, with the new accounting policies applied from the beginning balance. As a result, deferred tax assets and other liabilities increased by ¥117 million and ¥503 million, respectively, in the consolidated balance sheet for this fiscal year, while reserve for point services, retained earnings, and non-controlling interests decreased by ¥134 million, ¥251 million, and ¥0 million, respectively. In the consolidated statements of income for this fiscal year, fees and commissions and operating expenses decreased by ¥30 million and ¥122 million, respectively, while ordinary income and income before income taxes each increased by ¥91 million. In the consolidated statements of cash flows for this fiscal year, income before income taxes increased by ¥91 million, while increase (decrease) in reserve for point services and others decreased by ¥17 million and ¥74 million, respectively. The cumulative impact of this change has been reflected on net assets at the beginning of this fiscal year. As a result, the beginning balances of retained earnings and non-controlling interests decreased by ¥315 million and ¥0 million, respectively, in the consolidated statements of changes in net assets. Net assets per share for this fiscal year decreased by ¥0.89, while net income per share increased by ¥0.22 and diluted net income per share increased by ¥0.19. In accordance with the transitional treatment stipulated in Paragraph 89-3 of the Revenue Recognition Standard, notes on revenue recognition for the fiscal year ended March 31, 2021 are not presented.
Application of Accounting Standard for Fair Value
Measurement and other standards The Company has applied the "Accounting Standard for Fair Value Measurement" (ASBJ Statement No. 30, July 4, 2019, hereinafter "Fair Value Measurement Standard") and related changes in standards from the beginning of the fiscal year ended March 31, 2022, and will prospectively apply the new accounting policies stipulated by the Fair Value Measurement Standard, etc. in accordance with the transitional treatment provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments" (ASBJ Statement No. 10, July 4, 2019). Accordingly, valuation of available-for-sale securities with a market price, such as stocks and investment trusts, was changed from the fair value method based on the average market price in the month prior to the balance sheet date to the fair value method based on the market price at the end of the fiscal year. In addition, the Company will include notes on fair value information by level within the fair value hierarchy in the notes on financial instruments and related disclosures. However, in accordance with the transitional treatment stipulated in Paragraph 7-4 of the "Implementation Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19, July 4, 2019), notes pertaining to the fiscal year ended March 31, 2021 are not presented
(26) New accounting pronouncements
"Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31, June 17, 2021) Overview The accounting standard prescribes the treatment of fair value measurement for investment trusts and notes to such fair value measurement, as well as notes to fair value of investments in partnerships, etc., in which the net amount of the Company's equity interest is recorded on the balance sheet. Planned date of application The Company plans to apply the accounting standard from the beginning of the fiscal year ending March 31, 2023 Impact of applying this accounting standard, etc. It has no impact on consolidated financial statements.
4. Trading account securities
There were no valuation gain or loss on trading account securities included in income before income taxes and non- controlling interests at March 31, 2022 and 2021, respectively.
5. Securities
Securities at March 31, 2022 and 2021 consisted of the
Stocks in the above table include investments in affiliates of ¥90 million ($735 thousand) and ¥91 million at March 31, 2022 and 2021, respectively. The securities loaned under unsecured securities lending transactions are included in Government bonds and Corporate bonds under "Securities" in the amount of ¥30,942 million ($252,814 thousand) and ¥25,397 million at March 31, 2022 and 2021, respectively.
There were no held-to-maturity debt securities at March
31, 2022 and 2021.
There were no held-to-maturity debt securities sold during the years ended March 31, 2022 and 2021. Available-for-sale securities with fair value at March 31, 2022 and 2021 were as follows:
Available-for-sale securities sold during the years ended March 31, 2022 and 2021 were as follows:

Impairment losses on securities
Available-for-sale securities whose fair value significantly declined from the acquisition cost are valued at fair value and losses on devaluation of those securities are recognized in the consolidated statement of operations unless the value is considered recoverable. Losses on devaluation of securities for the years ended March 31, 2022 was ¥39 million ($318 thousand), which consisted of ¥39 million ($318 thousand) on equity securities for the year ended March 31, 2022. Determining whether the fair value is "significantly declined" is based on the fair value determined by the monthly average market price during one month preceding the balance sheet date declining by more than 50% or the criteria considering the trend of the fair value during a certain past period and credit risks of the issuers when the fair value determined by the monthly average market orice during one month preceding the balance sheet date declined between 30% and 50% of the acquisition cost.
6. Money Held in Trust
Money held in trust at March 31, 2022 and 2021 consisted of the following:
There were no money held in trust owned for other purposes at March 31, 2022 and 2021.
7. Net Unrealized Gain (Loss) on Available-
for-Sale Securities
Net unrealized gain (loss) on available-for-sale securities at March 31, 2022 and 2021 consisted of the following:

8. Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted: Loans and bills discounted at March 31, 2022 and 2021
Discounting of bills is accounted for as finance transactions rather than as purchasing of bills in accordance with the JICPA Industry Committee Practical Guidelines No. 24. The Group has the right to sell or pledge such bills without any restrictions. These include bankers acceptances bought, commercial bills discounted, documentary bills and foreign exchange bills. The total face value of such outstanding bills at March 31, 2022 and 2021 totaled ¥8,487 million ($69,343 thousand) and ¥8,485 million, respectively. At March 31, 2022 and 2021, loans and bills discounted included the portion of loans extended to original borrowers based on loan participation agreements, as permitted by the JICPA Accounting Committee Report No. 3, 28th November, 2014, in the amount of ¥7,973 million ($65,144 thousand) and ¥8,003 million, respectively. Contracts for overdraft facilities and loan commitments are contracts under which the Group lends money to customers up to their prescribed limits at the customers'request as long as there are no violations of any of the conditions in the contracts. The aggregate unutilized balances within the limits of these contracts totaled ¥741,183 million ($6,055,911 thousand) and ¥759,036 million at March 31, 2022 and 2021, respectively, including the contracts whose contractual periods were either less than one year or revocable at any time, in the amount of ¥721,415 million ($5,894,394 thousand) and ¥737,192 million, respectively. Since many of these commitments expire without being fully utilized, the unutilized amounts do not necessarily represent future cash commitments. Most of these contracts include provisions which stipulate that the consolidated subsidiaries can reject customers' requests or decrease the contract limits for an appropriate reason, (for example, a change in financial situation or a deterioration in customers' creditworthiness). At the inception of the contracts, the Group obtains collateral in the form of real estate, securities, and so forth, if deemed necessary. Subsequently, the Group, based on its internal rules, performs periodic reviews of the customers' business results and may take necessary measures such as reconsidering the terms of the contracts and/or requiring additional collateral or guarantees.
Risk monitored loans:
Risk monitored loans which were included in loans and bills discounted at March 31, 2022 and 2021 consisted of the
Bankruptcy and quasi-bankrupt claim represent the claim to borrowers who have been declared insolvent, on the grounds of the commencement of bankruptcy or rehabilitation proceedings, filing for the proceedings or other similar legal proceedings. Doubtful claim represent the claim to borrowers who have not yet failed but their financial and business performances have deteriorated, with a high possibility that the principal and interest on these claim will not to be received. Loans past due for 3 months or more represent loans on which the payment of principal and/or interest has not been received for three months or more from the due date, and which are not classified as "bankruptcy and quasi-bankrupt claim" or "doubtful claim." Restructured loans are loans which have been restructured to support the rehabilitation of borrowers who are encountering financial difficulties, with the intention of ensuring the recovery of the loans by providing more flexible repayment terms for the borrowers (such as reducing the rate of interest or suspending the payment of principal/interest, etc.) or loans which are not classified in any of the above categories. The amounts presented in the table above are stated before the provision of specific loan loss reserves.
(Change in presentation method)
In accordance with Cabinet Office Order Partially Amending the Ordinance for Enforcement of the Banking Act, etc. (Cabinet Office Order No. 3, January 24, 2020), which came into effect on March 31, 2022, the classification, etc. of "Risk- monitored loans" under the Banking Act is presented in accordance with the classification, etc. of disclosed receivables under the Act on Emergency Measures for the Revitalization of the Financial Functions.
9. Foreign Exchange Assets
Foreign exchange assets at March 31, 2022 and 2021

10. Other Assets
Other assets at March 31, 2022 and 2021 consisted of the

11. Tangible Fixed Assets
At March 31, 2022 and 2021, accumulated depreciation of tangible fixed assets were ¥55,459 million ($453,133 thousand) and ¥54,788 million, respectively. Under the Tax Act, capital gains arising from the exchange or replacement of assets under certain conditions are permitted to be deducted from the cost of tangible fixed assets in order to obtain certain tax benefits. The amount deducted from the cost of tangible fixed assets at March 31, 2022 and 2021 were ¥372 million ($3,039 thousand) and ¥373 million, respectively.
12. Assets Pledged
Assets pledged as collateral at March 31, 2022 and 2021
The liabilities secured by the above pledged assets at March
At March 31, 2022 and 2021, margins on futures contracts in the amounts of ¥- million ($- thousand) and ¥653 million, guarantee deposits of ¥3,801 million ($31,056 thousand) and ¥3,954 million, collateral money deposited for financial instruments of ¥392 million ($3,202 thousand) and ¥98 million and margins for Central Counter Party of ¥20,000 million ($163,412 thousand) and ¥20,000 million were included in "Other assets", respectively.
13. Deposits
Deposits at March 31, 2022 and 2021 consisted of the

14. Borrowed Money
Borrowed money at March 31, 2022 and 2021 consisted of borrowings from the Bank of Japan and certain other financial institutions. The average interest rate applicable to borrowed money at March 31, 2022 and 2021 were 0.00%. The aggregate annual maturities of borrowed money

15. Foreign Exchange Liabilities
Foreign exchange liabilities at March 31, 2022 and 2021

16. Other Liabilities
Other liabilities at March 31, 2022 and 2021 consisted of the
The amounts of lease obligations included in "Other" were ¥7 million ($57 thousand) and ¥9 million at March 31, 2022 and 2021, respectively. The average interest rates on lease obligations at March 31, 2022 with maturity dates on or before and subsequent to March 31, 2023 were 3.00%.The average interest rates on lease obligations at March 31, 2021 with maturity dates on or before and subsequent to March 31, 2022 were 3.00%.
The aggregate annual maturities of lease obligations
17. Retirement Benefit Plans
Outline of the retirement benefit plan adopted by the Company The consolidated subsidiaries have adopted funded defined benefit plans to cover the payment of retirement benefits to employees. As for the defined benefit pension plans (funded) of the consolidated subsidiaries, lump-sum benefits or pensions are provided depending on the service years, etc. Retirement benefit trust is established for the defined benefit pension plan. As for lump-sum payment plans of the consolidated subsidiaries (which are unfunded plans, but after the establishment of retirement benefit trust scheme, have become funded plans), lump-sum payments are made as retirement benefits depending on the service years, etc. Certain consolidated subsidiaries have adopted lump-sum payment plans (all unfunded) as defined benefit plans, where net defined benefit liability and retirement benefit expenses are calculated by the simplified method.
(1) Reconciliation of the beginning balance to the

(2) Reconciliation of the beginning balance to the

(3) Reconciliation of the ending balance of retirement benefit obligation and pension plan assets to the consolidated balance sheet amounts of net defined benefit liability and asset

Retirement benefit expenses consisted of the
(4)

(5) Remeasurements of defined benefit plans included
in other comprehensive income
Remeasurements of defined benefit plans included in other comprehensive income (before related tax effects)

Remeasurements of defined benefit plans included
(6)
in accumulated other comprehensive income
Remeasurements of defined benefit plans included in accumulated other comprehensive income (before

(7) Matters related to pension plan assets
1) Ratio of the main components in the total pension plan

Note:
Total pension plan assets included retirement benefit trust of which securities were contributed for the pension plan, which accounts for 39% and 38% of the total at March 31, 2022 and 2021, respectively.
2) Setting of long-term expected rates of return on plan
assets For the purpose of determining the long-term expected return on plan assets, the present and anticipated allocation of plan assets and the present and expected long-term rates of return on various assets composing the plan assets are taken into account.

18. Asset Retirement Obligations
Notes concerning asset retirement obligations are omitted due to lack of significance of its total amount.
19. Contingent Liabilities
Contingent liabilities for guarantee of corporate bonds included in "Securities," which were issued by private placement (Article 2, Paragraph 3 of the Financial Instruments and Exchange Act of Japan) amounted to ¥26,019 million ($212,590 thousand) and ¥26,795 million at March 31, 2022 and 2021, respectively.
20. Shareholders' Equity
Japanese banks, including the Company, are required to comply with the Banking Act and the Act. The Act stipulates that neither additional paid-in capital nor the legal reserve is available for dividends, but that both may be used to reduce or eliminate a deficit. Under the Banking Act, an amount which is at least equal to 20% of the aggregate amount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicable to each fiscal period is to be appropriated to the legal reserve until the aggregate amount of the legal reserve and the capital surplus account equals 100% of the amount of share capital. The Act also provides that if the aggregate amount of additional paid- in capital and the legal reserve exceeds 100% of the amount of share capital, the excess may be distributed to the shareholders either as a return of capital or as dividends subject to the approval of the shareholders. The maximum amount which the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company and in accordance with the Act.
(1) Class and number of shares issued and treasury
stock
Movements in common stock, first series of seventh- class preferred stock and treasury stock during the years ended March 31, 2022 and 2021 were summarized as
Notes: 1. Increase in treasury stock of common stock (1 thousand shares) was due to acquisition of shares from the shareholders who owned fractional shares less than one unit (1 thousand shares). 2. Decrease in treasury stock of common stock (89 thousand shares) consisted of transfers due to exercise of stock option (89 thousand shares) .
Notes: 1. Increase in treasury stock of common stock (602 thousand shares) was due to purchase based on resolution of the Board of Directors (600 thousand shares) and acquisition of shares from the shareholders who owned fractional shares less than one unit (2 thousand shares). 2. Decrease in treasury stock of common stock (75 thousand shares) consisted of disposal of shares following the acquisition request from the shareholders who owned fractional shares less than one voting right (0 thousand shares) and transfer due to exercise of stock option (75 thousand shares) .
(2) Stock subscription rights
The Company resolved to grant stock subscription rights (stock option) to certain directors, executive officers and certain directors and executive officers of its subsidiaries at the Board of Directors' meeting held on, July 30, 2021, July 31, 2020, July 30, 2019, July 31, 2018, July 31, 2017, July 27, 2016, July 29, 2015, July 30, 2014, July 31, 2013, August 31, 2012, July 28, 2011 and  February 24, 2011. The balance of stock subscription rights granted for stock option program were ¥86 million ($702 thousand) and ¥76 million at March 31, 2022 and 2021, respectively. Stock option related expenses for the years ended March 31, 2022 and 2021 amounted to ¥29 million ($236 thousand) and ¥19 million, respectively.
Note: The impact of the one-for-five reverse stock split of common stock on August 1, 2012 is taken into consideration. (*) The number of stock options is converted into the number of shares after the one-for-five reverse stock split of common stock on August 1, 2012. The method for estimating the fair value price of 2021 stock option granted in the year ended March 31, 2022 were as follows: Measurement method: Black-Scholes model Major fundamental factors and assumptions used to measure fair value
*1 Actual stock price during the period (from November 13, 2016 to August 27, 2021) corresponding to the estimated remaining outstanding period *2 For each director or executive officer in office, the difference between "the average term of office of retired directors or executive officers" and "the years in office of the director or executive officer at the time stock options were granted" was calculated, and if said difference was less than 0.8 years, the average of the estimated remaining outstanding period was calculated using 0.8 years, by taking into account the period remaining to the next annual shareholders' meeting. *3 ¥7.5 ($0.06) of latest annual dividend /¥166 ($1.35) of stock price on the base date *4 Yield of Japanese government bonds approximating the estimated remaining outstanding period In estimating the vested number of stock options, the Company basically reflects only the actual forfeited number, since it is difficult to make a reasonable estimate on the future forfeited number.
21. Other Ordinary Income
Other ordinary income for the years ended March 31, 2022

22. Other Income
Other income for the years ended March 31, 2022 and 2021

23. Other Ordinary Expenses
Other ordinary expenses for the years ended March 31, 2022

24. Other Expenses
Other expenses for the years ended March 31, 2022 and

Note:
"Other"for the year ended March 31, 2022 and 2021 includes ¥8 million ($65 thousand) and ¥57 million of one-time costs associated with branch relocations based on a fundamental review of branch functions at the banking subsidiary, The Senshu Ikeda Bank.
25. Dividends
Cash dividends paid during the fiscal year ended March
31, 2022 Resolution by annual shareholders' meeting on June 23, 2021
Resolution by Board of Directors on November 11, 2021

Cash dividends paid during the fiscal year ended March
31, 2021
Resolution by annual shareholders' meeting on June 25, 2020
Resolution by Board of Directors on November 12, 2020

Cash dividends with record dates falling in the fiscal year
ended March 31, 2021 and effective dates coming after

26. Cash and Cash Equivalents
A reconciliation of cash and due from banks in the accompanying consolidated balance sheets to cash and cash equivalents in the accompanying consolidated statements of cash flows at March 31, 2022 and 2021 were summarized as

27. Leases
a.
Finance leases
As Lessee
Information on finance leases is omitted due to lack of significance.
b.
Operating leases
As Lessee
Future minimum lease payments under non-cancellable operating leases subsequent to March 31, 2022 were as follows:

28. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries comprise corporate tax, inhabitants' taxes and enterprise tax which, in the aggregate, resulted in a statutory tax rate of 30.6% for the years ended March 31, 2022 and 2021, respectively. The tax effect of temporary differences which gave rise to significant portions of the deferred tax assets and liabilities at

Notes:
1.Valuation allowance decreased by ¥1,988 million ($16,243 thousand), mainly due to the decrease of valuation allowance for tax loss carryforward. 2.Tax loss carryforwards and deferred tax assets by expiration of carryforward are as follows:
(*1) Amounts of tax loss carryforwards are multiplied by the statutory tax rate. (*2) Deferred tax assets of ¥2,749 million ($22,460 thousand) are recorded for tax loss carryforward of ¥4,555 million ($37,217 thousand). This tax loss carryforward is deemed to be recoverable as it is expected that there will be taxable income in the future. A reconciliation of the statutory tax rate to the effective tax rate for the years ended March 31, 2022 and 2021 were as
2022

30. Revenue recognition
1. Disaggregation of revenue from contracts with customers Fiscal year (from April 1, 2021 to March 31, 2022)
1. "Banking" includes credit guarantee services. 2. "Other" includes business segments which are not included in the reportable segments and comprises credit cards business and securities business. 3. "Other revenue" mainly includes the following transactions. a. Transactions related to financial instruments within the scope of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019) b. Lease transactions included in the scope of the Accounting Standard for Lease Transactions (ASBJ Statement No. 13, March 30, 2007) c. Commission received when structuring or acquiring financial instruments 2. Useful information in understanding revenue from contracts with customers (1) Timing of recording revenue Revenue is recognized when control of a promised good or service is transferred to a customer. For cases where performance obligations are satisfied over time, revenue is recognized as the obligations are fulfilled. (2) Recorded amount of revenue The recorded amount of revenue is calculated based on the amount expected to be received in exchange for goods or services. Regarding point programs operated by other companies in which consolidated subsidiaries participate, the amount expected to be used in the future is recognized as the amount collected for the benefit of a third party and deducted from fees and commissions. 3. Reconciliation of satisfaction of performance obligations within contracts with customers and cash flows arising from such contracts, and the amount and timing of revenue arising from customers existing at the end of this fiscal year expected to be recognized after the end of this fiscal year.
(1) Beginning and ending balances of receivables, contract assets and contract liabilities from contracts with
Notes:
In the consolidated balance sheets, receivables and contract assets from contracts with customers are included in "Other assets" and contract liabilities are included in "Other liabilities." (2) Revenue recognized during the fiscal year that was included in the contract liabilities balance at the beginning
(3) Transaction price allocated to the remaining performance obligations The total transaction price allocated to the remaining performance obligations and the time frame the Company

31. Segment Information and Related
Information
(1) Segment Information
The Group's reportable segments are determined on the basis that separate financial information for such segments is available and examined periodically by the Board of Directors to make decisions regarding the allocation of management resources and assess the business performances of the segments within the Group. The Group mainly provides banking services and operate other financial services including leasing. The Group sets two reportable segments of banking business and leasing business. Banking business engages in banking services and credit guarantee services, while leasing business engages in leasing and other services, etc..
(2)   Basis of measurement for reported segment profit
(loss), segment assets, segment liabilities and other
material items
The accounting methods used for reportable business segments are presented in accordance with Note 3, "Significant Accounting Policies". The reportable segment profit figures are based on operating profit. Income arising from intersegment transactions is based on arm's length prices.
(3) Information about reportable segment profit (loss),
segment assets, segment liabilities and other
material items
Segment information for the fiscal years ended March 31, 2022 and 2021 was summarized as follows:
Notes: 1. Ordinary income ("Total income" less extraordinary gain included in "Other income" in the consolidated statements of income) is presented in place of net sales of operating companies of other industry groups. 2. "Other" includes business segments which are not included in the reportable segments and comprises credit cards business and securities business. 3. Adjustments are as below: (1) Adjustment of segment profit of negative ¥334 million is the elimination of intersegment transactions. (2) Adjustment of segment assets of negative ¥32,003 million is the elimination of intersegment transactions. (3) Adjustment of segment liabilities of negative ¥32,003 million is the elimination of intersegment transactions. (4) Adjustment of interest income of negative ¥441 million is the elimination of intersegment transactions. (5) Adjustment of interest expense of negative ¥140 million is the elimination of intersegment transactions. (6) Adjustment of extraordinary gain of negative ¥24 million is the elimination of intersegment transactions. 4. Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent "Total expenses" less extraordinary loss included in "Other expenses" in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to "Income before income taxes" through the addition/deduction of extraordinary gain/loss, net. 5. Changes in reportable segments, etc. As described in "Changes in Accounting Policies," the Company has adopted the "Accounting Standard for Revenue Recognition" and related changes in standards from this fiscal year, and as a result, ordinary income from outside customers in the banking business increased by ¥86 million while ordinary income from other outside customers decreased by ¥117 million, compared with the amounts based on the previous method. In addition, segment profit of the banking business and other segments increased by ¥86 million and ¥4 million, respectively. Notes: 1. Ordinary income ("Total income" less extraordinary gain included in "Other income" in the consolidated statements of income) is presented in place of net sales of operating companies of other industry groups. 2. "Other" includes business segments which are not included in the reportable segments and comprises credit cards business and securities business. 3. Adjustments are as below: (1) Adjustment of segment profit of negative ¥476 million is the elimination of intersegment transactions. Adjustment of segment assets of negative ¥30,679 million (2) is the elimination of intersegment transactions. (3) Adjustment of segment liabilities of negative ¥30,678million is the elimination of intersegment transactions. (4) Adjustment of interest income of negative ¥610 million is the elimination of intersegment transactions. (5) Adjustment of interest expense of negative ¥135 million is the elimination of intersegment transactions. (6) Adjustment of extraordinary gain of negative ¥19 million is the elimination of intersegment transactions. 4. Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent "Total expenses" less extraordinary loss included in "Other expenses" in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to "Income before income taxes" through the addition/deduction of extraordinary gain/loss, net.

Notes:
1. Ordinary income ("Total income" less extraordinary gain included in "Other income" in the consolidated statements of income) is presented in place of net sales of operating companies of other industry groups. 2. "Other" includes business segments which are not included in the reportable segments and comprises credit cards business and securities business. 3. Adjustments are as below: (1) Adjustment of segment profit of negative $2,728 thousand is the elimination of intersegment transactions. (2) Adjustment of segment assets of negative $261,483 thousand is the elimination of intersegment transactions. Adjustment of segment liabilities of negative $261,483 (3) thousand is the elimination of intersegment transactions. (4) Adjustment of interest income of negative $3,603 thousand is the elimination of intersegment transactions. (5) Adjustment of interest expense of negative $1,143 thousand is the elimination of intersegment transactions. (6) Adjustment of extraordinary gain of negative $196 thousand is the elimination of intersegment transactions. 4. Segment profit is reconciled to ordinary profit, which represents ordinary income less ordinary expenses. Ordinary expenses represent "Total expenses" less extraordinary loss included in "Other expenses" in the consolidated statements of income. Therefore, consolidated segment profit, which shows ordinary profit, is reconciled to "Income before income taxes" through the addition/deduction of extraordinary gain/loss, net. 5. Changes in reportable segments, etc. As described in "Changes in Accounting Policies," the Company has adopted the "Accounting Standard for Revenue Recognition" and related changes in standards from this fiscal year, and as a result, ordinary income from outside customers in the banking business increased by $702 thousand while ordinary income from other outside customers decreased by $955 thousand, compared with the amounts based on the previous method. In addition, segment profit of the banking business and other segments increased by $702 thousand and $32 thousand, respectively. (5) each reportable segment

(6) Information on amortization of goodwill and its
remaining balance for each reportable segment

(7) Information on gain on negative goodwill for each
reportable segment There is no information to be reported on gain on negative goodwill.
(8)
Related information
a.  Information about services For the year ended March 31, 2022
For the year ended March 31, 2021
Note: "Income" is presented in lieu of net sales presented by non- financial companies. For the year ended March 31, 2022

b.  Information about geographical areas
(i) Income Information about income has not been presented as income from external customers inside Japan accounts for more than 90% of the consolidated income for the years ended March 31, 2022 and 2021.
(ii) Tangible fixed assets
Information about tangible fixed assets has not been presented as tangible fixed assets inside Japan accounts for more than 90% of the consolidated tangible fixed assets at March 31, 2022 and 2021.
c.  Information about main customers
Information about main customers has not been presented as there is no income from particular customer which accounts for more than 10% of the consolidated income for the years ended March 31, 2022 and 2021.
32. Financial Instruments and Related
Disclosures
1.
General Information
(1) Policy for financial instruments
The Group, whose core operation is The Senshu Ikeda Bank, Ltd. (the "Bank"), is engaged in the various financial services as a regional financial institution. The Group holds financial assets and liabilities which are subject to fluctuations in the interest rates and market prices in the principal businesses such as deposit-taking and lending services and market activities including securities investment. In order to serve for setting up strategic targets in response to the changes in market environments, the Group conducts integrated asset and liability management ("ALM") and utilizes derivative contracts as a part of ALM.
(2)   Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans to domestic corporate and individual customers, which are exposed to credit risk arising from customers' nonperformance of contractual obligations and interest rate movement risk. Securities held by the Group principally consist of equity securities, debt securities and investment trusts, which are held for pure investment purpose and strategic investment purpose as available-for-sale securities and partially, for holding to maturity and trading purposes. These financial assets are exposed to credit risk of issuers and market risk associated with interest rates, stock prices and foreign exchanges. Deposits which are major financial liabilities are exposed to liquidity risk that unexpected cash flow might arise. In addition, other fund raising sources are exposed to the liquidity risk that necessary fund might not be secured when the Group fails to utilize the market under certain circumstances, or that the Group might be obliged to fund at more unfavorable interest rates than normal. In addition, these financial liabilities are exposed to the risk of fluctuations in interest rates as well as financial assets. The Group uses derivative contracts to meet the customers' needs and principally as a means of risk control over the assets and liabilities. In addition, as a part of trading activities (to earn short-term trading gains), futures instruments including equity and debt securities are utilized. These derivatives are exposed to the credit risk (counterparty risk) arising from customers' nonperformance of contractual obligations and market risk arising from the fluctuations in interest rates, stock prices, foreign exchanges, etc. (3) Risk management system for financial instruments The Group has established the risk control department independent from front offices and defines basic risk management policies. Specifically, the risk management system and various rules including the basic policy on risk control are determined by the Board of Directors, and the responsible functions by risk categories and the integrated risk control function are clearly defined. In addition, the "Risk Management Committee" and the "ALM Committee" have been established to monitor the risk profiles of the Group and discuss management issues as well as risk control measures. And such matters are reported to the Board of Directors and accordingly, effective risk management system at the management level is structured.
a. Integrated risk management
The Group conducts integrated risk management in accordance with the basic policy on risk control and various integrated risk control rules. Specifically, the Group conducts integrated control by identifying the risks assessed by risk categories such as credit risk, market risk and others including credit concentration risk not considered in the computation process of the capital ratio and interest rate risk of banking accounts and compares them with management capacity (capital).
b.  Credit risk management
The Group analyzes and controls the credit portfolio in accordance with the Company's policy on credit risk control and various credit risk control rules. The Group maintains and operates a system of investigation, internal rating, asset self-assessment in monitoring individual transactions. These credit control procedures are performed by each operating office, credit investigation department and risk control departments of the Bank. With respect to credit risk of issuers of securities and counterparty risk of derivative transactions, the risk control departments of the Bank monitor the identification of credit information and fair values. In addition, the risk control department of the Company reports on a regular basis to the Board of Directors of the Company. Furthermore the internal audit departments audit the status of credit control.
c. Market risk management
(i) Market risk management The Group controls market risk arising from fluctuations in interest rates, stock prices, foreign exchanges, etc. in accordance with the Company's policy on market risk control and various market risk control rules. Specifically, the risk control department of the Company identifies the volume of market risk using the Value-at-Risk (VaR) method and monitors compliance with the risk limits resolved by the Board of Directors through continuous monitoring system. For securities, in addition to above risk limit control policy, the Group has established and managed loss cut rules. The relevant information is periodically reported by the risk control department to the Risk Management Committee and the Board of Directors. The ALM Committee identifies and confirms the make-up of assets and liabilities and interest rate risk and discusses future measures. Specifically, the responsible department of the Company for ALM identifies comprehensively interest rates and periods of financial assets and liabilities and monitors using gap analysis and interest rate sensitivity analysis to secure stable and continuous earnings. The Bank executes foreign exchange transactions and foreign currency bond investments, which are exposed to foreign exchange risk, but the subsidiary strives to minimize foreign exchange risk by balancing the foreign exchange positions where possible.
(ii) Derivative transactions
With respect to derivative transactions, the Company has established an internal control system including segregation of duties of the departments responsible for execution of transactions, risk control and operation administration and complies with the various market risk control rules.
(iii)Quantitative information of market risk
The Group monitors the value at market risk of financial instruments, such as deposits, loans and bills discounted and securities, using VaR everyday as the change in market risk is larger than other risks. The Group calculates the value at market risk according to the variance-covariance approach (holding period−120 business days, confidence interval–99.0%, and observation period–240 business days). The value of market risk on financial instruments was ¥14.1 billion ($115.2 million) for interest rate and ¥8.1 billion ($66.1 million) for stocks at March 31, 2022. The value of market risk as a whole with correlation in consideration was ¥20.5 billion ($167.4 million). The Group carries out back-testing to compare the model-calculating VaR of securities on the banking activities which influenced by market fluctuation (holding period–one business day) with real gain and loss in order to verify their accuracy. However, VaR, which calculates the value of market risk based on past fluctuations in the market, sometimes cannot calculate the value of market risk accurately under the condition that market environment changes abruptly.
d. Liquidity risk management associated with fund
raising
The Group conducts liquidity risk control for funding activities in accordance with the Company's policy on liquidity risk control and various liquidity risk control rules. Specifically, the department responsible for ALM and the treasury department of the Bank identify the investment and funding status of the whole Group on a timely basis and control liquidity risk by securing liquidity of the assets, diversifying the funding instruments and adjusting the short-term and long- term funding balances considering the market environments to secure stable fund management. The risk control department identifies its response capability if liquidity risk is revealed through monitoring periodically the amount of liquid reserve assets that can be readily converted into cash, monitors the appropriateness of its fund management and reports it to the Risk Management Committee and the Board of Directors.
(4) Supplementary explanation about fair value of
financial instruments
Since certain assumptions are used in calculating the fair value of financial instruments , the result of such calculation may vary if different assumptions are used.
2.
Fair value of financial instruments
The carrying value, the fair value and the difference as of March 31, 2022 and 2021 are summarized in the following tables: Shares and other securities without a quoted market price and investments in partnerships are not included in the following table (see Note 1). In addition, cash and due from banks, call loans and bills bought, monetary claims bought, foreign exchange (assets and liabilities), payables under securities lending transactions and borrowed money from trust account are omitted because their fair values approximate their carrying values due to their short maturities.
(*1) Unlisted equity securities are not subject to fair value disclosure, in accordance with Paragraph 5 of the "Implementation Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19, March 31, 2020). (*2) The Company recognized impairment losses on unlisted equity securities in the amount of ¥53 million ($433 thousand) and ¥77 million for the year ended March 31, 2022 and 2021, respectively. (*3) Investments in partnerships are not subject to fair value disclosure, in accordance with Paragraph 27 of the "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31, July 4, 2019).
(*1) Loans and bills discounted do not include ¥38,321 million ($313,105 thousand) and ¥28,999 million of receivables such as those due from bankrupt, effectively bankrupt or likely to become bankrupt borrowers at March 31, 2022 and 2021, respectively, since it is not certain when they can be collected or redeemed. (*2) Overdraft accounts of loans are shown under "Due in one year or less." (Note 3) Repayment schedule of bonds, borrowed money and other interest bearing liabilities.
(*1) Demand deposits were disclosed under "Due in one year or less" of deposits. Deposits did not include ¥20,006 million ($163,461 thousand) and ¥21,946 million of time deposits beyond maturity at March 31, 2022 and 2021, respectively.
3.
The breakdown of fair value of financial instruments
by level, etc.
The fair value of financial instruments is classified into the following three levels based on the observability and materiality of the inputs used to determine fair value. Level 1: Fair value determined based on quoted market prices for assets or liabilities for which such fair value is calculated that are formed in an active market, among the inputs for the determination of observable fair value Level 2: Fair value determined using inputs related to observable fair value other than Level 1 inputs Level 3: Fair value determined using unobservable inputs for fair value calculations When multiple inputs that have a significant impact on the determination of fair value are used, fair value is classified as the level with the lowest priority in the determination of fair value among the levels to which each of those inputs belongs.
(1) Financial instruments recorded at fair value in the
consolidated balance sheets

(*) Investment trusts to which the transitional treatment prescribed in Paragraph 26 of "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31, July 4, 2019) is applied are not included in the table above. Carrying amounts of such investment trusts included in money held in trust and included in securities in the consolidated balance sheets were ¥1,631 million and ¥99,933 million, respectively.
(Note 1) Valuation method for the fair value of finacial instruments
Assets:
Money held in trust
For securities that are invested as part of trust assets in an independently managed money trust with securities management as the primary purpose, the fair value of equity securities is determined using quoted market prices and the fair value of debt securities is determined using quoted market prices or the prices provided by counterparty financial institutions. The fair value of securities for which unadjusted quoted market prices in active markets are available is classified as Level 1, that for which the impact of unobservable inputs is significant is classified as Level 3, and that for which the impact of unobservable inputs is not significant is classified as Level 2. Note that information on money held in trust by holding purposes is presented under the "Money Held in Trust" section.
Securities
The fair value of securities for which unadjusted quoted market prices in active markets can be used is classified as Level 1. Such securities mainly include listed equity securities and government bonds. If the market is not active even when published market prices are used, the fair value is classified as Level 2. Such securities mainly include local government bonds and corporate bonds. When quoted market prices are not available, fair value is determined using such valuation methods as the method for discounted present value of future cash flows. The valuation makes maximum use of observable inputs, which include credit spreads and expected loss ratios. When significant unobservable inputs are used in the determination, the fair value is classified as Level 3.
Loans and bills discounted
The fair value of loans is determined based on the aggregated value of principal and interest by categories of types of loans, internal ratings and maturities discounted using the interest rate assumed if the same loans were newly originated. The carrying value of the loans with floating interest rates, which reflect short-term market interest rates, is presented as the fair value since the fair value approximates the carrying value as long as the creditworthiness of the borrower has not changed significantly since the loan origination. Loan losses on receivables from bankrupt, effectively bankrupt or likely to become bankrupt borrowers are estimated based on factors such as the present value of expected future cash flows or the expected amount to be collected from collateral and guarantees. Since the fair value of these items approximates the carrying value recorded on the consolidated balance sheets at the closing date, net of the currently expected loan losses, such carrying value is presented as the fair value. The carrying value of the loans which do not have defined repayment due dates because the loans are limited to within the amount of pledged assets is presented as the fair value since the fair value approximates the carrying value considering the expected repayment schedule and interest rate conditions. Such fair value is classified as Level 3. The fair value of loans with embedded derivative is determined using quoted the prices provided by counterparty financial institutions, etc. Such fair value is classified as Level 2i
Liabilities:
Deposits
The amount payable on demand as of the consolidated balance sheet date is presented as the fair value of the demand deposit. The fair value of time deposits is determined using the discounted present value of future cash flows, grouped by certain maturity lengths. The discount rate used is the interest rate that would be applied to newly accepted deposits. The carrying value of deposits whose remaining maturity is within the short-term period (one year or less) is presented as the fair value since the fair value approximates the carrying value. Such fair value is classified as Level 2.
Borrowed money
The present value of borrowed money is determined by discounting the aggregated value of principal and interest of such borrowings, grouped by certain maturity lengths, by the interest rate assumed for similar borrowings. The carrying value of floating rate borrowed money is presented as fair value. This is because it reflects the market interest rate in the short-term period, and also the creditworthiness of the consolidated subsidiaries has not significantly changed since the borrowed money was originated and accordingly fair value approximates the carrying value. The carrying value of borrowed money with short contractual terms (one year or less) is presented as fair value since the fair value approximates the carrying value. Fair value for which the impact of unobservable inputs is significant is classified as Level 3, and that for which the impact of unobservable inputs is not significant is classified as Level 2.
Derivative transactions:
The fair value of derivative transactions for which unadjusted quoted market prices in active markets can be used is classified as Level 1. These transactions mainly include bond futures and interest rate futures transactions. However, since most derivatives transactions are over-the- counter transactions and there are no published quoted market prices, fair value is determined using such valuation methods as discounted present value or the Black-Scholes model, depending on the type of transaction and the maturity length. The main inputs used in those valuation methods include interest rates, exchange rates, and volatility. If unobservable inputs are not used or their impact is not significant, the fair value is classified as Level 2. Such transactions include plain vanilla interest rate swap transactions and foreign exchange forward contracts. If significant unobservable inputs are used, the fair value is classified as Level 3. Such transactions include stock options transactions. (Note 2) Information on the fair value of Level 3 for financial instruments recorded in the consolidated balance sheets at fair value (1) Quantitative information on significant unobservable inputs
(2) Reconciliation of the beginning balance to the end balance and valuation gain or loss recognized in profit or loss for the year
(*1) Included in "Other ordinary income" and "Other ordinary expenses" in the consolidated statements of income. (*2) Included in *Net unrealized gain (loss) on available-for-sale securities" under "Other comprehensive income" in the consolidated statements of comprehensive income.
(3) A description of valuation processes used for fair value
measurements
At consolidated subsidiaries, the risk control department establishes policies and procedures for measuring fair value, and the back office measures fair value accordingly. The middle office verifies whether the fair value obtained is measured by using valid valuation methods and inputs as well as whether they are classified into an appropriate level of the fair value hierarchy in order to ensure that the policies and procedures for measuring fair value are appropriate. In measuring fair value, the Company uses a valuation model that most appropriately reflects the nature, characteristics and risks of each asset. In addition, when using quoted prices obtained from third parties, the Company verifies whether the prices are valid by using appropriate methods, such as confirming the valuation methods and inputs used and comparing them with the fair value of similar financial instruments.
(4) A description of the effect on the fair value of changes in
significant unobservable inputs
Significant unobservable inputs used in measuring the fair value of private placement bonds are credit spreads and expected loss ratios. Credit spread is the difference between the weighted average interest rate of the newly executed rate for each credit rating and the market interest rate, and it is an estimated value calculated based on the results within six months from the settlement date. Significant increases (decreases) in this input would result in a significantly lower (higher) fair value measurement. Expected loss ratio is the ratio of the loss expected to occur in the event of bankruptcy to the amount of bonds or loans minus the amount expected to be recoverable through the valuation of collateral and guarantees. Significant increases (decreases) in this input would result in a significantly lower (higher) fair value measurement.
33. Derivatives
1. Derivative transactions to which hedge accounting is
not applied
With respect to derivatives to which hedge accounting is not applied, contract amount or notional principal, fair value and related valuation gain or loss are as follows. Note that contract amounts do not represent the market risk exposure of derivative transactions. (1) Currency related derivatives at March 31, 2022

Note:
Transactions in the table above are stated at the fair value and the related valuation gain (loss) is reported in the consolidated statement of operations.
2. Derivative transactions to which hedge accounting is
applied
With respect to derivatives to which hedge accounting is applied, contract amount or notional principal and fair value at the balance sheet date by transaction type and hedge accounting method are as follows. Note that contract amount or notional principal does not represent the market risk exposure of derivative transactions Derivatives in the table above are mainly accounted for hedge accounting (deferral hedge accounting) in accordance with JICPA Industry Committee Practical Guidelines No.25 "Accounting and Auditing Treatment Relating to the Adoption of the Accounting Standard for Foreign Currency Transactions for Banks."
34. Amounts per Share

Amounts per share at March 31, 2022 and 2021 and for the years then ended were summarized as follows: Net assets per share as of March 31, 2022 and 2021 were
Content of treasury stock retirement
Senshu  Ikeda  Holdings,  Inc. Independent Auditor's Report The Board of Directors Senshu Ikeda Holdings, Inc.
Opinion
We have audited the accompanying consolidated financial statements of Senshu Ikeda Holdings, Inc. and its consolidated subsidiaries (the Group), which comprise the consolidated balance sheets as at March 31, 2022, and the consolidated statements of operations, comprehensive income, changes in net assets, and cash flows for the year then ended, and notes to consolidated financial statements. 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 its consolidated financial performance and its consolidated cash flows for the year then ended in accordance 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 Group in 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 these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
As described in Note 35 Significant Subsequent Events, 2. Acquisition and retirement of treasury stock to the consolidated financial statements, the Company resolved at a meeting of the Board of Directors held on June 28,2022 to acquire and retirethe first series of the seventh- class preferred stocks and the Company acquired and retired all of those preferred stocks on July 15,2022. Our opinion is not qualified in respect of this matter.
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 the context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters.
The reserve for possible loan losses is recognized in accordance with the predetermined policies for asset self-assessment, write-offs and allowances. The calculation process includes determination the the borrower of classification, which is assessed according to the relevant borrower's ability to repay loans. In addition to the repayment status, the financial position, business performance, future prospects thereof, and the like are important factors in determining the borrower classification of business loans. The reasonableness and feasibility of these factors are particularly important in determining the borrower classification of business loan borrowers whose repayment status, financial OL business    performance 1S position, deteriorating and who are preparing business improvement plans that include assumptions about the outlook for future performance of business loan borrowers. In estimating the reserve for possible loan losses, an additional consideration has been given to the impact of COVID-19.  Although the Group assumes that economic activities affected by COVID-19 will gradually recover going forward, of the borrowers for which a reserve for possible loan losses was recognized in the fiscal year ended March 31, 2021 based on the " deemed borrower classification", the Group continued to recognize a reserve for possible loan losses based on the "deemed borrower classification" for borrowers for which the Group continued . to determine that there is the possibility of a future downward shift in the borrower classification, in view of the uncertainty resulting from COVID-19. In making this determination, the Group assumes that there is the possibility of a future downward shift in the borrower classification without a recovery in business performance if certain conditions are met for financial position or business performance for the fiscal year ended March 31, 2022. Given that the key assumptions involved are by changes in the affected business environment surrounding    business loan borrowers, including the impact of COVID- 19, and the success or failure of the borrowers' business strategies, such assumptions involve significant estimation uncertainty and rely greatly on management's judgment. -We inspected evidence related to self– assessment. -We conducted trend analysis of major profit and loss items. -We made inquiries of the Loan Division and inspected business logs and requests for approval as necessary. For business loan borrowers whose repayment status, financial position, or business performance is deteriorating and who are preparing business improvement following plans, we performed the procedures to consider the reasonableness and feasibility of their business improvement plans: -For the key components of business improvement plans, we analyzed trends in historical business performance and plans as well as the degree of achievement of objectives of business improvement plans in previous years. -We compared business improvement plans with relevant available external information such as market trends in the industry to which business loan borrowers belong as necessary and made inquiries of the executive in charge of the Loan DiViSion. (2) Determination of the "deemed borrower classification" in consideration of the impact of COVID-19 We made inquiries of the executive in charge of the Loan Division regarding the impact of COVID-19 on business loan borrowers of The Senshu Ikeda Bank, Ltd. and compared the related assumptions to available external data. We confirmed that all business loan borrowers for which a reserve for possible loan losses was recognized in the fiscal year ended March 31, 2021 based on the "deemed borrower classification" were subject to determination of "deemed borrower classification" for the fiscal year ended March 31, 2022. We confirmed that the possibility of recovery in the business performance of business loan borrowers was not taken into consideration as part of the criteria for determination of “deemed borrower classification" for the fiscal year ended March 31, 2022.

Other Information
The other information comprises the information included in the Annual Report that contains audited consolidated financial statements but does not include the consolidated financial statements and our auditor's report thereon. Management is responsible for preparation and disclosure of the other information. The Audit & Supervisory Board Member and the Audit & Supervisory Board is responsible for overseeing the Group's reporting process of the other information. 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 the other 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 this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management, the Audit & Supervisory Board Member and the Audit & Supervisory Board for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these 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 required by accounting principles generally accepted in Japan, matters related to going concern. The Audit & Supervisory Board Member and the Audit & Supervisory Board are responsible for overseeing 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's report that includes our opinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: . 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, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectiveness of the Group's internal control. . Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude 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 or conditions 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's report 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 to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation in accordance with accounting principles generally accepted in Japan. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business 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 solely responsible for our audit opinion. We communicate with the Audit & Supervisory Board Member and the Audit & Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit & Supervisory Board Member and the Audit & Supervisory Board with a statement that we have complied with the ethical requirements regarding independence that are relevant to our audit of the consolidated financial statements in Japan, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit & Supervisory Board Member and the Audit & Supervisory Board, we determine those matters that 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 of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners 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.
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 Japanese 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. Ernst & Young ShinNihon LLC Tokyo, Japan September 14, 2022南波哉秀/s/Hideya Nanba Designated Engagement Partner Certified Public Accountant刀　踊哲/s/Tetsuro Tone Designated Engagement Partner Certified Public Accountant
Non-consolidated  Balance  Sheets  (Unaudited)

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.

SENSHU IKEDA HOLDINGS,INC. 18-14,Chayamachi,Kita-ku,Osaka 530-0013,Japan Phone:81-(0)6-4802-0181 https://www.senshuikeda-hd.co.jp/ THE SENSHU IKEDA BANK,LTD. 18-14,Chayamachi,Kita-ku,Osaka 530-0013,Japan Phone:81-(0)6-6375-1005 https://www.sihd-bk.jp/ SENSHU IKEDA TOKAI TOKYO SECURITIES CO.,LTD. 18-14,Chayamachi,Kita-ku,Osaka 530-0013,Japan Phone:81-(0)6-6485-0031 https://www.sittsec.co.jp/