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Looking back on FY2022

Toward the realization ofa sustainable society, weIt has been two years since the management plan
“Vision 2030” was developed and launched in April
2021. In “Vision 2030” we defined “our target form” toaim for over the long term to be a “leading company
creating a path to the future” and promoted andreinforced various initiatives. In our financial results for
FY2022, we attained a record high for two consecutive

terms, and so we feel that we are steadily approaching“our target form.”
We identified the “77 Bank Group’s important
issues (materiality)” in April 2023, and would like tocontinue to resolve these important issues andreinforce our initiatives to achieve a sustainable
society through “Vision 2030.”

will continue to fulfill our
mission as a regional
financial institution.

President

Hidefumi Kobayashi

8

Spread of “Vision 2030”“Vision 2030” serves as the guiding principles for all
officers and employees of the 77 Bank Group to cometogether and work toward “our target form.” For each
employee to understand and practice “Vision 2030,” wefocused on having them get a better grasp of it andhaving it take root. Responsible Directors provided
briefings at branches, and I also visited every branchand directly explained it to employees. Recently, we
started receiving customers’ positive comments suchas “The 77 Bank has changed. It started actively
tackling new challenges.” It made me realize that
employees’ understanding has been deepening andstarted showing in their behavior.

Main achievements in FY2022
I would like now to explain the main achievements in
FY2022.
The first achievement is that consulting services
have been put into practice through cooperation among
branches, headquarters and group companies, whichstarted resulting in the increase in loans and bills
discounted as well as fees and commissions.
The second achievement is the effect of branches
within branches, which is becoming evident in various
areas such as reduced expenses, efficient sales withcentralized information and human resources
development. The third achievement is the initiatives
for “digital transformation.”
To support the digitalization of local companies, wedecided to establish an IT consulting company, 77
Digital Solutions Co., Ltd. In addition, we carried out
internal measures such as reinforcing structures bysetting up the Data Analysis Team and developing
digital technology human resources.
The fourth achievement is the initiatives for “newbusinesses and sectors.” “Vision 2030” sets KPI toestablish 10 projects in new businesses or sectors withthe potential to become viable businesses in the future

by FY2023. In FY2022, we decided to launch fiveprojects including a new company. The number of suchprojects since April 2021 amounts to six.
The fifth achievement is return to our shareholders.
In January 2022, the Bank announced the policy ofreturn of profits to shareholders, which states that “Thebasic policy of the Bank in this regard is to continue to
distribute steady dividends while taking factors such as
its public character as a bank business and thepreservation of the soundness of its management intoconsideration. Additionally, based on the premise ofstrengthening its financial foundation, the Bank willproceed to gradually elevate its divided ratio relative tonet income attributable to owners of the parent with atarget of 30% by FY2023 as it aims to improveshareholder returns and capital efficiency.” As forFY2022, we increased the term-end dividends per
share to ¥50, up ¥10 from the forecast. As a result, thedividend payout ratio for FY2022 including interim
dividends was 26.5%. As for FY2023, we disclosed ourdividend forecast of achieving a 30% dividend payout
ratio.

THE 77 BANK INTEGRATED REPORT9Top Message

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Measures Aimed at Enhancing Corporate ValueCorporate GovernanceTop Message

Initiatives to realize “Vision 2030”
As the basic strategies to achieve “our target form,”“Vision 2030” defines four strategies of “top customer
satisfaction strategy,” “double productivity strategy,”“regional growth strategy” and “corporate culture
reform strategy.”
Top customer satisfaction strategy
I believe that “Finance × Consulting” is a very
compatible business model for banks, where a lot of
information and companies’ challenges come together.
Providing financial and various other solutions to ourcustomers’ challenges leads to a higher corporate
value for customers and boosts the profitability of the77 Bank Group as well. We are aware that local
companies face the challenge of a lack of humanresources, equity, digital utilization, and know-how, andestablished four companies to respond to them. The 77
Bank Group as a whole would like to expand the rangeof consulting and provide the best solutions.
Moreover, we established the Aomori Branch in
September 2022 and Utsunomiya Corporate Sales
Of fice in August 2023. Having tr anspor tation
infrastructure including the Tohoku Shinkansen andTohoku Expressway as its backdrop, Sendai and
Utsunomiya are mutually willing to expand to eachother’s areas and have high matching needs.
Therefore, we would like to play the role of a bridge
between the Tohoku and North Kanto economic zones.
As for retail sales, with one of our group companies,
77 Securities, we set out the goal of “We will continue
to be the best partner to realize the ‘target form’ ofindividual customers” as the Retail Sales Policy. We
will ensure we conduct customer-centric business
operations taking an approach based on customers’
dreams, purposes and goals and providing proposals
from a medium- to long-term viewpoint. In April 2023,
the Bank itself entered trust services and established
the Customers’ Asset Formation Promotion Committee
to strengthen the structure. As our customers’ best
partner, we will serve better their needs for asset
formation and management, and inheritance, etc.
As for one of the key factors of “Vision 2030,” “newbusinesses and sectors,” in addition to strengthening
Group governance and having coordination with theBank and promoting human interactions, we shall also
start working on a review of the long-term strategies ofGroup companies and set forth a new future for the 77
Bank Group.

10Double productivity strategy
In Japan, a country with an aging society, low birthrate
and falling population, improving productivity is achallenge for any company, and the Bank
acknowledges as the highest priority. While
headquarters and branches work together to promote
paperwork-free operations and accelerate initiatives
such as utilizing digital tools, we will shift management
resources including human resources and capital tostrategical areas to improve productivity. For example,we have introduced the “77 Business Portal,” the firstbusiness portal website from a regional bank in theTohoku, which is a one-stop service enabling corporate
and sole proprietorship customers to carry out varioustransactions online, such as confirming deposits andwithdrawals. We also renewed the top screen of the 77
Bank App and extended the period for which deposits
and withdrawals records can be viewed. In September
2023, we plan to introduce “branch tablets” that enable
users to complete many transactions through“paperless,” “seal-less” method, to all branches.
Through our DX initiatives that release our members
from paperwork, we would like to keep trying to convert
our branches into a place that can concentrate on
consulting services.
As for the optimization of our branch network, weare shifting management resources through branches
within branches. This is resulting in not only expense
reductions but also efficient sales and humanresources development due to centralization. By June
2023, we made branches within branches at 30
branches. We will keep reviewing the network to makeit the most appropriate one considering matters suchas the characteristics of markets and actual situation atlocal communities.

(“Vision 2030” briefing held by President Kobayashi)

Regional growth strategy
Regional banks support the local economy and exist
based on an economic foundation. Therefore, we needto think about and implement what we can do to create
attractive communities. Since 2016 for regional
revitalization, the 77 Bank Group has been working onfour key items of implementation: Support for founding
and new businesses; support and development ofregional core companies; promotion of urbandevelopment; and support for promotion of tourism,etc.
The Bank is acting as the secretariat of the “Miyagi
Wide-area PPP Platform” (nickname: MAPP), which
was established in January 2020. Through MAPP,
under a comprehensive cooperation agreement, etc.
with parties including all regional public bodies,government-affiliated financial institutions and local
universities in Miyagi Prefecture, we have beenconsolidating the expertise of each domain ofspecialization in liaison with private companies in thearea of real estate, construction, trading company,
leases, IT services, consulting, communication, media,etc. to implement various revitalization projects toimprove sustainability in local communities.

In FY2022, we held a matching event for regional
revitalization aiming to promote the utilization ofcorporate Furusato Nozei (Hometown Tax Donation).
People including 13 heads of regional public bodies inMiyagi Prefecture gave a presentation on theattractiveness of the region to about 130 privatecompanies and successfully sealed more than 10
corporate Furusato Nozei contracts. Moreover, we held
the “IPO Management Human Resource Development
Program TOHOKU – 77 Bank × Tohoku University ×
JPX –” based on a three-party partnership agreement
signed by the Bank, Tohoku University, National
University Corporation, and Tokyo Stock Exchange,
Inc. for the development of human resources that areserving as the management of companies aiming to belisted. We will continue to help create an attractive
region by working on regional revitalization through
MAPP, etc.

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Measures Aimed at Enhancing Corporate Value

Corporate GovernanceTop Message

Corporate culture reform strategy“Culture eats strategy for breakfast” is a famous quote.
Even if we develop good strategies, unless ourcorporate culture changes, it will be difficult to realize
the strategies. We believe that the workplace culturechanges as each person grows and encourages andcompetes with others to improve. As for the corporate
culture reform strategy, we endeavor to promote
diversity and create a virtuous cycle where all officers
and employees take on new challenges, leading toconfidence and cheerfulness.
As a part of the initiative, we implemented
personnel system reform in April 2023. It has been 57
years since we conducted drastic review of salarysystem last time. Moreover, from the viewpoint ofimproving employees’ awareness of the need toparticipate in management and strengthen theirmorale, we provided a special incentive through theEmployee Stock Ownership Association in March
2023. As the Stock Ownership Association participation
ratio increased to 97%, we believe that our employees’
awareness of their need to participate in management
is improving.
The financial business is part of the service
industry, and the source of corporate value is humanresources. Therefore, the importance of human capitalmanagement is high compared to other businesses. As
measures for human capital management, in addition
to the personnel system reform, we developed the
Human Resources Development Policy and theInternal Environment Development Policy for the 77
Bank Group in April 2023. By implementing a humanresources strategy that is linked to the management
strategy, we would like to practice human capitalmanagement and improve our corporate value.

Measures aimed at enhancing corporate value
On March 31, 2023, Tokyo Stock Exchange, Inc. senta request to listed companies to take “action toimplement management that is conscious of the cost ofcapital and stock price.” I would like to explain the 77
Bank Group’s idea and future direction.
To improve corporate value, we believe that it isimportant to try to enhance profitability while
maintaining soundness and share the growth of the 77

Bank Group with our shareholders who are ourstakeholders by providing a return. Based on thegrowth strategy stated in “Vision 2030” we will aim toraise the income level and increase corporate value by
improving management efficiency.
In due course, we would like to present specificgoals based on further consideration and thediscussion at the Board of Directors.

Progress of sustainability management
Since we acknowledge that it is the role of regional
financial institutions to spread the idea of sustainability
among local communities, we are trying to raiseawareness by holding workshops and seminars forcustomers and providing sustainable finance. In April
2023, we concluded the Cooperation Agreement for
the Promotion of Carbon Neutrality with Tohoku
Electric Power Co., Inc. In May 2023, with Tohoku
Energy Service Co., Inc., which is a 100% subsidiary ofTohoku Electric Power Co., Inc., we concluded anagreement regarding an off-site corporate PPA [selfconsignment system] service as the first regional bankto do so. This agreement allows us to supply

12renewable energy generated with the solar power plantinstalled on the Bank’s unused land to the Bank’s head
office building, etc. It is estimated it will cut our CO2
emissions by about 1,237 t-CO2, which is equivalent to
13% of the annual volume emitted by the entire Bank.
Furthermore, we upgraded the KPI regarding the77 Bank Group’s CO2 emissions in FY2030 from a 46%
reduction (compared with FY2013) to the realization ofcarbon neutrality by FY2030. We will definitely continue
our efforts to achieve carbon neutrality andcontinuously support our customers’ decarbonization
initiatives for the long term.

In closing
The spread of COVID-19, which began in 2020,
drastically changed people’s lifestyles and how
corporate activities should be and resulted in a
downturn in economic activities. Moreover, disruptionof the world has been accelerating due to themanifestation of geopolitical risk such as the situationin Ukraine. Raw material and energy prices are rising,and the environment surrounding the regional economy
remains severe.
Under such harsh conditions, we are expected tosupport the local economy as a regional financialinstitution. We would like to steadily implement “Vision2030” and fulfill the missions of the 77 Bank Group.
We ask for your continued support and patronage.

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