Internal Control System

Framework for ensuring that the performance of the directors complies with laws and regulations and the Articles of Association
1. The Board of Directors positions compliance with laws and regulations as one of the highest priorities of management. The Compliance Manual defines a basic stance regarding the compliance of activities of all executives and employees with laws and regulations and generally accepted guidelines. The manual also has a code of conduct and other items. In addition, there is a framework for fulfilling the Ehime Bank Group’s social obligations and accomplish its mission as a financial services organization that provides a vital public service.
2. The Board of Directors has established the management philosophy of serving as “a bank that supports progress in its home region” and is overseeing a medium-term plan with three basic policies: "The "Finance Plus One” strategy", "Efficient operations", and "A strong foundation". Furthermore, as a member of this region, we are dedicated to contributing to society, such as by supporting primary industries through conversion into “sixth-level industries” (combining primary, secondary and tertiary industries) and by helping small and midsize companies start operations in other countries.
3. The Board of Directors refuses to have any involvement with anti-social forces that pose the threat of disrupting social order and safety.
4. The Board of Directors has established measures to prevent money laundering and any involvement with money associated with terrorism. This stance is based on the recognition of the risk of a financial institution becoming involved with transactions for money obtained through criminal activities and with the provision of funds to terrorists or associated entities.
5. The Risk Management Department is responsible for overseeing compliance and the director who supervises this department is the Chief Compliance Officer. As the department that handles risk for the Ehime Bank Group, including all subsidiaries, the Risk Management Department performs the comprehensive oversight of compliance activities.
6. The Board of Directors establishes an annual plan for compliance activities and receives periodic progress reports from the Risk Management Department. In addition, the Compliance Committee, which is chaired by the president of the bank, discusses matters concerning compliance.
7. To ensure that business operations are conducted properly, the Board of Directors establishes a framework for compliance with laws and regulations, the Articles of Association, and other guidelines, a risk management system for preventing significant losses, and other systems. The corporate auditors supervise and check these systems and, as needed, submit advice or orders for improvements.
8. There is a Corporate Ethics Hotline that can be used to submit reports to the Risk Management Department, Audit & Supervisory Board Members and an external law office for the purposes of preventing or quickly discovering illegal or improper behavior by executives and employees and taking corrective actions.
9. The Audit Department performs audits concerning compliance with laws, regulations and other guidelines and reports the results of these audits to the Board of Directors.
Storage and management of information concerning the performance of directors
1. Information concerning the performance of the directors is stored and in accordance with laws and regulations, rules for the management of documents, and other guidelines.
2. Directors and corporate auditors have access to these documents at any time.
Rules and other frameworks for managing the risk of incurring losses
1. Business operations are exposed to credit risk, management risk, market risk, liquidity risk, operational risk, cybersecurity risk, climate change risk, and other categories of risk. We monitor these risk factors in a quantitative manner. In addition, based on the stance of making risk management one of our highest priorities, we have a Basic Rules for Risk Management and risk management policies and rules for each category of risk.
2. The Risk Management Department oversees all operations concerning risk management. A department or other unit is designated to be responsible for each risk category and roles and responsibilities are clearly defined. In addition, there is a Risk Management Committee for monitoring overall risk and maintaining the soundness of management. The Asset Liability Management Committee performs analysis and studies concerning market risk.
3. To ensure the effectiveness of risk management, departments responsible for risk management submit a report about their risk management status and other subjects every six months and at other times as necessary to the Board of Directors. In the event of a major problem concerning risk management, the Risk Management Committee holds a meeting and the conclusions of that meeting are reported to the Board of Directors for subsequent action.
4. A manual and other documents have been prepared in accordance with basic emergency response guidelines in order to clearly define the standards for activities and the countermeasures that are to be used in the event of a major disaster or other emergency that has a significant impact on business operations.
5. The Audit Department performs audits of risk management operations and reports the results of these audits to the Board of Directors.
Measures for ensuring that directors perform their duties efficiently
1. The Board of Directors reach decisions about items prescribed by laws and regulations, fundamental management policies, fundamental policies for corporate governance, and other significant matters involving management and supervise the performance of the directors.
2. Ehime Bank has an Executive Committee consisting of directors for the purpose of conducting business operations with speed and efficiency in accordance to the fundamental management policies established by the Board of Directors.
3. Directors submit reports about the business operations they oversee at least once every three months to the Board of Directors.
4. Standards for delegating authority, rules for the division of responsibility for business operations and other rules and guidelines have been established to enable directors and employees to reach decisions and conduct business operations in a rational and efficient manner. As a result, the authority and responsibilities for directors and for each job and management category at the head office and branch offices are clearly defined.
5. Medium-term plans and annual budgets are formulated and targets for overall business operations are established. These items take into consideration the future business climate and the efficient allocation of the Ehime Bank’s resources. The head office and branch offices create and execute plans for accomplishing these targets.
Measures for ensuring that employees perform their duties in compliance with laws and regulations and the Articles of Association
1. All executives and employees understand that compliance with laws and regulations is one of the highest priorities of management. Employees are dedicated to properly fulfilling the social obligations and mission of the Ehime Bank Group, which provides a vital public service, in accordance with the fundamental stance and code of conduct for compliance with laws and regulations, generally accepted guidelines, and other guidelines as prescribed in the Ehime Bank Compliance Manual.
2. The Risk Management Department is responsible for the overall supervision of compliance and the executive in charge of this department is the Chief Compliance Officer. This department gives overall instructions about compliance to the entire Ehime Bank Group, including subsidiaries.
3. The Board of Directors establishes an annual plan for compliance activities and all executives and employees execute this plan. The Risk Management Department submits periodic progress reports to the Board of Directors.
  In addition, the Compliance Committee, which is chaired by the president of the bank, discusses matters concerning compliance.
4. Corporate Ethics Hotlines for the purposes of preventing or quickly discovering illegal or improper behavior by executives and employees and taking corrective actions have been established in the bank’s Risk Management Department, Audit & Supervisory Board Members and an external law office.
5. The Audit Department performs audits concerning compliance with laws, regulations and other guidelines and reports the results of these audits to the Board of Directors.
Measures to ensure proper business operations at the Ehime Bank Group
1. Ehime Bank has a Board of Directors and corporate auditors to ensure that management policies and business operations at subsidiaries are proper and sends directors and other executives from Ehime Bank to subsidiaries to oversee business operations.
2. The Ehime Bank Business Administration Department, in accordance with the subsidiary management rules, receives reports about the status of business operations at subsidiaries. This reporting system creates a framework for the suitable management of the Ehime Bank Group.
3. Each subsidiary has its own Basic Policy for the Construction of an Internal Control System and Compliance Manual, which are consistent with the policy and manual of Ehime Bank, in order to maintain a framework for ensuring that business operations are conducted properly.
4. For preventing or quickly discovering illegal or improper behavior by executives and employees at the Ehime Bank Group and taking corrective actions, the Ehime Bank Audit Department audits subsidiaries and executives and employees of subsidiaries can use the Corporate Ethics Hotline to report problems directly.
Employees appointed as assistants when requested by a corporate auditor
When a corporate auditor asks for one or more employees to serve as an assistant, the bank president will appoint the number of people required after discussing the request with the corporate auditor.
Assurance of independence from directors of corporate auditor assistants and effectiveness of instructions to these assistants
To ensure the independence from directors and other managers of employees appointed to assist a corporate auditor, prior approval of the Board of Corporate Auditors is required for reassignments, evaluations, punishment and other actions involving these employees. Employees appointed to assist a corporate auditor will perform their duties in accordance with instructions from the corporate auditor.
Framework for reports to corporate auditors by directors and employees of Ehime Bank and its subsidiaries and for other reports to corporate auditors
1. Directors must notify the corporate auditors promptly of a situation that may create significant damage or losses for the Ehime Bank Group or of a fraudulent or illegal activity involving the directors’ performance of their duties.
2. Information reported internally or externally using the Corporate Ethics Hotline must be reported promptly to the corporate auditors.
3. There can be no negative consequences, such as punishment, an unfavorable performance evaluation or other action, for an individual due to the submission of a report using the Corporate Ethics Hotline.
Other systems to ensure the effectiveness of audits by corporate auditors
1. To monitor the process for making important decisions and how business operations are conducted, corporate auditors attend meetings of the Board of Directors, Executive Committee, Compliance Committee and other important committees and conferences. In addition, corporate auditors examine documents and ask directors and employees to provide explanations.
2. Based on their independence and authority stipulated in the Board of Corporate Auditors rules and the rules for audits by corporate auditors, the corporate auditors perform effective audits and work closely with the independent auditor and the Auditing Department.
3. Ehime Bank and its subsidiaries will promptly make payments as requested by corporate auditors to cover expenses incurred for the performance of the duties of the corporate auditors.

Basic stance and measures for exclusion of anti-social forces

1.Basic stance for exclusion of anti-social forces

Ehime Bank is dedicated to preventing any transactions with anti-social forces in accordance with the following provision in the Code of Conduct: Ehime Bank will resolutely oppose anti-social forces that threaten the safety and order of civil society and business activities.

2.Measures for exclusion of anti-social forces

Measures for the exclusion of anti-social forces are overseen by the Risk Management Department. The head office and branch offices have information management officers and anti-social force exclusion officers and there are frameworks for cooperation with external organizations as needed. There are also rules for the exclusion of anti-social forces, seminars and classes, and other activities to give everyone at the Ehime Bank Group a thorough understanding of this subject.