Financial Statements

2023

THE TOWA BANK, LTD.

A Message from the President
with customers to create annual cash flow charts andhelps them resolve not only financial but also nonfinancial issues that are identified in the process.
Gunma Prefecture, which serves as the Bank’sbase of operation, has a thriving manufacturingindustry centered on transportation equipment. It
has established its position as a “manufacturing prefecture,” ranking seventh in Japan in terms of thevalue of manufactured goods shipped. At the sametime, Gunma is also blessed with plentiful tourism
resources, such as beautiful nature and a great
number of hot springs, and is visited by many vacationers from all over Japan.
Saitama Prefecture, like Gunma Prefecture, is one
of Japan’s prime inland industrial prefectures. Its population is highly concentrated due to its location in
the suburbs of Tokyo, and commercial business, especially retail, is well developed. The prefecture isfamous for having the fifth-largest gross prefectural
product in Japan.
The COVID-19 pandemic has finally begun tosettle down after three years, and both corporate
production activities and personal consumption arecontinuing to recover in both prefectures. We mustensure that the business sentiment, which is finally
improving, will lead to further regional revitalization. First of all, it is of utmost importance to energize companies and not reduce their numbers.
We will visit our customers as much as possible
and always keep an eye out to see if there is anything we can do to help. When we identify a problem for our customer, we will do our best to help
them solve it. By promoting these activities, we willcontribute to the development of our customers andthe revitalization of regional economies.

Under the catchphrase “An Interactive Bank,” Towa
Bank, Ltd. (“the Bank”) has been promoting TOWA
Customer Support Activities based on the concept of“Relationship Banking” since 2012. At that time, inorder to improve the business environments andregional economies of our customers, which had
deteriorated due to the Great East Japan Earthquake
and prolonged yen appreciation, we started making
proposals to solve the various problems our customers were facing.
“Relationship Banking” is a business model inwhich we build close relationships with our customers to gain a deep understanding of their businesses
and management conditions and then propose andprovide optimal solutions, including those in nonfinancial areas. Although it is now a widespreadpractice, at the time, it was a pioneering initiativefor Japan.
Our activities are based on the pillars of support
for customers’ core business operations, management improvement and business rehabilitation, andasset formation. At present, we have started to offer
essential cash flow support as well, to help our customers with long-term cash management.
Essential cash flow support creates an environment in which customers can commit themselves tocore business operations without worrying aboutcash flow in a business environment undergoing
dramatic upheavals such as the COVID-19 pandemic
and soaring raw material prices. Our staff cooperates

November 2023

Hiroshi Ebara
Representative Director,
President & Chief Executive Officer

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Profile
Bases of Operation
Since the Bank’s foundation in 1917, we have progressed as a regional bank alongside the development of local
communities. Gunma Prefecture and Saitama Prefecture, which serve as the Bank’s bases of operation, are successfully developing as bedroom towns of the Tokyo metropolitan area, and as industrial and tourist areas thanks
to good public transport infrastructure.
Gunma Prefecture lies roughly in the middle of the Japanese islands, and is a popular “manufacturing prefecture” with an industry centered on transportation equipment. Gunma also has plentiful tourism resources suchas beautiful nature and a great number of hot springs, and is visited by many vacationers and tourists throughout the year.
In Saitama Prefecture, commercial business is growing, backed by the fifth largest population in Japan. In
industry, it is one of Japan’s prime inland industrial prefectures, as the shipments of manufactured goods in thethree industries of transportation equipment, food ingredients, and chemical engineering exceed ¥1 trillion.
We will continue to support active economic communications in the regional communities of each prefecture
while building trust by helping to create affluent lives.

Service Network:
TohokuShinkansen
JoetsuShinkansen

Gunma
Prefecture:
37 branches

Tochigi
Prefecture:
3 branches

Head Office:

Maebashi
Hokuriku
Shinkansen

12-6, Honmachi 2-chome, Maebashi, Gunma
371-8560, Japan
Phone: +81-27-234-1111
URL:
https://www.towabank.co.jp

Takasaki

Omiya

Tokyo:
8 branches

Corporate Data
Established:
Head Office:Phone:
URL:
Capital:
Total assets:
Deposits:
Loans:

SaitamaPrefecture:
41 branches

International Department:
12-6, Honmachi 2-chome, Maebashi, Gunma
371-8560, Japan
Phone: +81-27-234-1959
Fax:+81-27-230-1735
SWIFT: TOWA JPJTTokyo(As of March 31, 2023)

June 11, 1917
12-6, Honmachi 2-chome, Maebashi, Gunma 371-8560, Japan+81-27-234-1111
https://www.towabank.co.jp¥38.6 billion
Number of branches: 91¥2,381.5 billion
Standalone ATMs:
86¥2,145.5 billion
Number of employees: 1,267¥1,564.8 billion

3

Business Model
The Towa Bank’s entire administration and employees work in unity with a business model of “shared value creation,”
which involves enhancing the corporate value of our customers, revitalizing regional economies, and strengthening
the Bank’s earning capabilities by practicing the TOWA Customer Support Activities which work to create an environment in which customers can commit themselves to core business operations without worrying about cash flow, andsupporting customers’ core business operations, management improvement and business rehabilitation, and asset
formation with the following three mottos in mind: Supporting our customers when and where needed by “meetingwith them to collect information,” “accurately ascertaining their situation,” and “never forgetting our modest origins.” Beginning in October 2020, to create an environment in which customers can commit themselves to corebusiness operations without worrying about cash flow during the COVID-19 pandemic, we started essential cash
flow support as accompanying support in which we create an annual cash flow chart in cooperation with ourcustomers, and offer cash flow support on an annual basis. We also support core business operations to resolve
problems or address needs that are picked out during that process.
This support consists of business feasibility assessments through the creation of annual cash flow charts incooperation with our customers, assessing cash flow and business contents, and sharing management problems
and needs with customers. This helps to solve customers’ problems from the aspects of finance and core business. With this support, we aim to increase the sustainability of the customer’s business, and tie this to improvements in corporate value, while strengthening the Bank’s earning capabilities and consequently allowing us toreduce credit costs. We also work to ensure that main and next-tier customers do not discontinue the businesseson which they work so earnestly.

The Towa Bank’s Mottos— Practicing and Reinforcing Relationship Banking —We visit our customers
thoroughly so that we canunderstand their business andfinancial needs exactly.

Essential
Cash Flow Support* Creating an environment in which ourcustomers can commit themselves to corebusiness without worrying about cash flow

We support our customers
suffering from financial
difficulties on a best effort basis.

We aim to be the best bankwith a modest attitude andsupport our customers.

“TOWA Customer Support Activities“
Support ofcustomers’ corebusiness activities

Support ofcustomers’ management improvement

Support ofcustomers’ financial
asset formation

Shared Value Creation

Promotion of Sustainable Development Goals (SDGs) for Customers and the Towa Bank
Increase customers’ sales
and form customers’
financial assets

Revitalize regional
economies

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Strengthen the Bank’s
earning capabilities

“TOWA Customer Support Activities”
The Bank will make every effort to support customers’ core business operations, which will lead to increased
sales and the resolution of management problems, as well as support management improvement, business rehabilitation, and asset formation, and by working to enhance customers’ corporate value and revitalize regional
economies, we aim to strengthen our earning power. These initiatives will be accomplished through proposal
activities such as business matching, digitalization and DX support, subsidy application support, support forjoint research development with regional universities, and support for overseas expansion, in order to expand
customers’ sales channels.

Customer problems
and needs

Business matching

Expanding sales
channels
SDGs support

Achieving SDGs· Matching between the Bank’s business partners· Matching listed companies and major buyers· Business Communication Meetings throughcollaboration with three banks in the northern Kanto
region (Japan), etc.
· Online Business Communication Meetings, etc.
· Towa SDGs Private Placement Bonds· Sustainable finance· Towa SDGs Initiatives Support Services, etc.

Improvingproductivity

Digitalization andDX support· TOWA ICT Consulting Services· Utilization of Towa Big Advance, etc.

Subsidy application
support· Manufacturing subsidies· Subsidies for business restructuring, etc.

Digitalization/DX

Professional humanresources support· Holding Management Mentor Exchange Meetings, etc.
· Collaboration with businesses promoting strategic
staffing services

Technologicaldevelopment

Business succession and
M&A support· Continuation of activities to gain insight into businesssuccession· Focused support by entering into consulting contracts· Gunma Knot, Saitama Knot, etc.

Personnel shortages

Fee-based career
introduction business· Leading staff matching business· Highly skilled staffing support, etc.

Overseas advanceSupport for joint researchdevelopment with regional
universities· Collaboration with Gunma University· Collaboration with Maebashi Institute of Technology

New businesses

Support for overseas
expansion· Support in connection with our International
Department’s Overseas Expansion Support Team· Collaboration with partnered overseas banks and public
institutions

Business succession
Management
improvement

Support for businesslaunches
Support for new businesses· Operating a business launch school· Collaboration with Japan Finance Corporation, etc.
· Utilization of various funds

Support for management
improvement and businessrehabilitation· Support in connection with our Credit Management
Department’s Corporate Support Office· Support to formulate management improvement plans incollaboration with external specialized agencies· Drastic business rehabilitation involving DDS and debt
forgiveness, etc.

Support for asset formation· Promoting savings trusts based on the themes of “longterm,” “diversified,” and “accumulation”· Support for mid- to long-term financial asset formation
for customers· Towa Bank SBI Money Plaza, etc.

Handling inheritancePreparing for long
lifespans

Assess and accumulate customer problems and needs
through our daily activities

5■ Business Matching■ Business matching between the Bank’s business partners
As part of our efforts to support customers’ core business operations to increase their sales, we conduct business matching
between the Bank’s business partners to connect their needs andthe value they provide. In FY2022, the Bank conducted 5,790 business negotiations and concluded 490 contracts (closing rate:8.4%). In the period since the launch of the “TOWA Customer
Support Activities” (April 2012 to March 2023), the Bank conducted 44,262 business negotiations and concluded 4,430 contracts (closing rate: 10.0%).

Business matching■ Professional Human Resources Support■ Management Mentor Exchange Meetings
We have been holding a Management Mentor Exchange Meeting
every year since July 2014 in collaboration with the Kanto Bureau
of Economy, Trade and Industry, intermediating between retired
employees of major corporations who have specialist knowledge(management mentors) or expertise and customers who are struggling with shortages of specialist human resources. The July 2022
exchange meeting was attended by 20 companies and 77 management mentors.

■ SDGs Support

Management Mentor Exchange Meeting

Towa SDGs Initiatives Support Services■ Towa SDGs Initiatives Support Services
Under this initiative, which started in May 2022, we provide support for understanding non-financial information and identifying
and resolving issues toward achieving the SDGs by educating customers about them and establishing SDGs declarations. In providing support, we have partnered with E-DASH Co. Ltd. andZeroboard Inc. to create systems that allow us to provide professional support for customers to visualize and reduce their CO2
emissions.
In February 2023, we began offering the “Towa SDGs Loan,”which provides preferential interest rates based on the progress of
the achievement of SDGs targets set under this initiative, contributing to further support.

SDGs
declaration
application

Monitoring

Identificationofproblems

Framework

Publicannouncementof SDGs
declaration

Determinationof SDGs action
policies■ Support for Startups and New Businesses■ Business Launch School
To support new businesses, we have held the 6th Business Launch
School five times since December 2022. The school provides anopportunity to learn about how to prepare for starting a business,create a business plan, and receive support from government
agencies for business startup efforts. In addition, the school is cosponsored with local universities and government agencies thatare actually involved in supporting business startups to help participants improve their entrepreneurial knowledge in a more practical manner.

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Presentations by graduates of the Business Launch School

Sustainability Initiatives
Initiatives for SDGs/ESG
The Bank’s business model is based on shared value creation and efforts to strengthen our earning capabilities byworking to enhance the corporate value of our customers through TOWA Customer Support Activities, which
include business expansion and regional job creation. We believe these efforts themselves represent the SDGs
from the perspective of promoting the sustainable development of regional economies and communities.
In April 2019, the Bank formulated the Towa Bank SDGs Declaration, which laid out our approach to the
SDGs and the segments in which we will work proactively. Based on this Declaration, we will continue to implement a variety of measures aimed at achieving the SDGs.
Diagram of scheme for sustainable development

Regional businesses

Enhancement of corporate value andsustainable development

Sustainable development ofregional economies andcommunities
Shared value creation
ES enhancement
Initiatives through
TOWA Customer Support
Activities

Towa Bank
Towa Bank SDGs Declaration
Sustainability Committee

Climate Change Response Committee

Towa Bank’s own
initiatives

Regional Revitalization Contribution Committee

Board of Directors
Human Capital Improvement Committee

Alliance partners
Public institutions such as local governments, local universities and credit guarantee associations; outside specialist agencies such as the Regional
Economy Vitalization Corporation of Japan and the Council for the Revitalization of Small and Medium Enterprises; other business alliance partners
such as SBI Group; and Tochigi Bank and Tsukuba Bank through collaboration with three banks in the northern Kanto region (Japan).

Segments in which the Towa Bank works proactively
1. Promotion of TOWA
Customer Support Activities

2. C ontributions toRegional Communities

Initiatives through
TOWA Customer Support Activities

3. Expansion of Fields for
Employees to Play Active Roles

Towa Bank’s own initiatives● Response to climate change● Holding lectures at local universities (Gunma University, Takasaki City
University of Economics, etc.)● Acquisition of Platinum Kurumin certification● Acquisition of Eruboshi Certification● Acquisition of certification as a Health and Productivity Management
Outstanding Organization● Oze Environmental Beautification Campaign● TOWA Prefectural Citizens’ Culture Lectures● Towa Yoiko Theater   ● Gunma Marathon volunteers● Financial education initiatives   ● Achievement of net zero CO2 emissions● Business expansion, job creation, management rationalization, etc.,
through support for core business operations● Support for core business operations regarding ESG(renewable energy, hiring of people with disabilities, etc.)● Support for establishment of SDGs declarations● ESG regional financial promotion project● SDGs Private Placement Bonds● Business continuation through business succession
and M&A● Investments and loans related to sustainability

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Initiatives through TOWA Customer Support Activities
The Towa Bank supports its customers’ core business operations by focusing on ESG factors in their businesses and products, holds seminars to promote understanding and practice of SDGs/ESG, and supports
schools, local governments, and nature conservation organizations, etc., through an SDGs Private Placement Bonds program that allows companies to select either a donation or endowment.

■ Towa SDGs Private Placement Bonds
We handle Towa SDGs Private Placement Bonds as a means of smooth financing to companies that aid the sustainable development of regional economies
and society. With these bonds, the companies can select either a donation or
endowment equivalent to 0.2% of the issued amount to bodies such as
schools, child welfare facilities, or environmental organizations. As of March
31, 2023, 75 bonds have been issued for a total of ¥9,090 million.

■ Utilization of the Towa Regional Vitalization FundIn October 2021, the Towa Regional Vitalization Fund made an investment in
SANU Ouryo-chi Inc., its third investment deal. Sanu Inc., which is the parent
company of SANU Ouryo-chi Inc., is a provider of a subscription service ofwood cabins that it built in areas of abundant nature in the suburbs of central
Tokyo and rents to registered members. Through this funding, the businesswill operate its service at “Forest of Ouryouji” in the Kita-Karuizawa region, aleading tourist resort area in Gunma Prefecture. This investment will not only
contribute to improving the environment for accommodations in the KitaKaruizawa area and the promotion of local attractions, but will also revitalize
the region through collaboration with local food and beverage and activities
businesses and the creation of employment opportunities. Through the Fund,the Bank is committed to providing growth capital that can aid in regional
revitalization.

Initiatives for Regional Customers
The Bank aims to create shared value that enhances customers’ corporate value and the Bank’s earning
capabilities. This will be achieved by conducting “TOWA Customer Support Activities” to enhance thecorporate value of its customers and by working to expand their businesses and create jobs in the region.
We believe these efforts themselves represent the SDGs from the perspective of promoting the sustainable
development of regional economies and communities.

■ TOWA Decarbonization Consortium
In February 2022, we played a central role in establishing the “TOWA Decarbonization Consortium” with the aim ofsupporting customers wishing to engage in decarbonization efforts. In December 2022, we added the realization of acircular economy through the 3Rs (reduce, reuse, and recycle) and efforts to improve member companies’ knowledgeof decarbonization, and held two study sessions in February and May 2023. At the study sessions, the Director of the
Carbon Neutrality Promotion Division, Natural Resources, Energy and Environment Department, Kanto Bureau of
Economy, Trade and Industry, Ministry of Economy, Trade and Industry was invited to give a lecture (“National Trends
and Support Measures to Achieve Carbon Neutrality”) and share examples of member companies’ efforts toward
carbon neutrality.
Realization of a Recycling-Oriented Society
Financial institutions

National,
prefectural andmunicipal
governments• Investments and loans• Support for SDGs
• Support forcustomers’ corebusiness operations

University• Business reform
utilizing
emerging research
initiatives

Electric powercompanies
Realization of circular economy (3Rs)
3Rs: Reduce, Reuse, Recycle

8• Retail ofrenewable energy
electricity• Introduction of
PPA, etc.

Green energy
generation andprocurement
Solar power,
micro-hydroelectric
power generation,
biomass,
geothermal

Sustainability Approach and Initiatives
Initiatives to Address Climate Change and TCFD (Task Force on Climate-related Financial Disclosures) Recommendations
In recent years, climate change-related response has become an important issue as extreme weather conditions
worldwide and damage from large-scale natural disasters are becoming increasingly severe. This response to climatechange is becoming a factor that will have a significant impact on the business environment and management
itself. In October 2021, the Bank expressed its support for the TCFD (Task Force on Climate-related Financial Disclosures) recommendations as part of its efforts to strengthen its response to climate change and environmental issues.

GovernanceIn addition to promoting disclosure in line with the TCFD recommendations, the Bank has adopted a structure under which
deliberations related to climate change response and important matters are conducted in the Sustainability Committee andthe content of these discussions is reported to the Board of Directors.
The Sustainability Committee is chaired by the President, with the director in charge of the Integrated Planning Department as deputy chair, and its members consist of directors attending Board of Managing Directors’ meetings.
As a subcommittee of the Sustainability Committee, the Climate Change Response Committee discusses environmental
issues including climate change, the Regional Revitalization Contribution Committee discusses regional economic and social
issues including the promotion of regional industries, and the Human Capital Improvement Committee discusses humancapital and diversity issues, including the strengthening of human resource capabilities. The Sustainability Committee convenes every six months in principle and whenever else necessary to deepen their discussions on sustainability-related mattersthrough deliberation of issues and planning of measures.
Sustainability Committee(Basic Policy on Sustainability)
Environment(Climate Change Response Committee)

Regional economies and societies(Regional Revitalization Contribution Committee)

ReportBoard of Directors
AdviseHuman capital and diversity(Human Capital Improvement Committee)

Strategy
The Bank is working under the Towa Bank SDGs Declaration and the Basic Policy on Sustainability (see page 10) to increase
our customers’ corporate value and revitalize regional economies, and to achieve shared value creation aiming to strengthen
the Bank’s earning capabilities.
Looking ahead, we will continue to position environmental preservation, including response to climate change, as animportant management theme in order to realize a sustainable society, and promote initiatives from the perspectives of both
opportunity and risk.
Carbon-Related Assets
The Bank’s electric power and energy-sector exposures (*excluding water services business and renewableenergy power generation business) accounted for 0.26% of its carbon-related assets as a percentage of its
total credit balance as of March 31, 2023.

Ratio of
Carbon-Related
Assets0.26 %

Opportunities and Risks
Classification
Opportunities
Physical risks
Transition risks

Envisaged impact
Timeline
By engaging in initiatives such as green finance for renewable energy projects and so forth, as well as transiShort term to long termtion finance for shifting to decarbonization or low carbon business models, we will support local communities(5-30 years)
and our customers.
The occurrence of natural disasters and so forth due to climate change is expected to increase credit risks for
Medium term to long term
our customers whose assets or business activities are affected, and to create operational risks for the Bank’s(10-30 years)
branches affected by disasters.
With climate-related regulatory tightening and the advance of technological innovation for decarbonization,
Short term to long term
our customers whose business activities are affected are expected to present an increased credit risk.
(5-30 years)

Scenario Analysis
For physical risks, we have conducted scenario analysis up to 2050 based on representative climate change scenarios, with reference to thescenarios published by the Intergovernmental Panel on Climate Change (IPCC). Since the results of the analysis are estimates based on certain
assumptions, we will continue to work on improving and refining scenario analysis and related methods. In addition, we will consider how to
implement transition risks, such as by referring to scenarios published by the International Energy Agency (IEA) and other organizations.

9Results for Analysis of Physical Risks
Risks
Scenario
Subjects of analysis
Analysis details
Analysis period
Risk indicators
Analysis results

Damage to collateral real estate
Financial impact of business suspension
IPCC (Intergovernmental Panel on Climate Change) RCP2.6 scenario (2℃ scenario), RCP8.5 scenario (4℃ scenario)
Real estate collateral collection location
Business regions of the bank,(buildings for business loans, excluding home loans, etc.)
mainly in Gunma and Saitama prefectures
Analysis of increase in credit-related costs due toAnalysis of the increase in credit-related costs due todamage to collateral real estate (building) resulting
damage to production and business-related facilities andfrom water-related disasters
business suspensions as a result of water-related disasters
Calculation of expected cumulative damage amount due to a flood of a scale that occurs once in a century by 2050
Credit costs due to deterioration ofCredit costs due to collateral damage
debtor classification as a result of declining sales
4℃ scenario: Maximum increase of ¥1.6 billion
4℃ scenario: Maximum increase of ¥1.4 billion*1: Based on the Ministry of Land, Infrastructure, Transport and Tourism Hazard Map “Manual for Economic Survey of Flood Control Investment,” the depth ofinundation of the property in question was measured, and the amount of damage was calculated according to the depth.
*2: IPCC is an organization established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) for the
purpose of conducting comprehensive assessments of anthropogenic climate change, impacts, adaptation, and mitigation measures from scientific, technical,
and socioeconomic perspectives.
*3: RCP stands for Representative Concentration Pathway scenario and is outlined below.

Scenario Name
RCP2.6
RCP8.5

Scenario summary
Lowest emissions scenario developed with the goal of limiting future temperature increase to below 2℃
Scenario corresponding to maximum GHG (greenhouse gas) emissions in 2100

Risk Management
The Bank recognizes climate change-related risks as important risks that have an impact on its business and financial position. We strive to build a system to manage them based on our Basic Policy on Risk Management.
The Bank has formulated the Basic Policy on Sustainability Conscious Investments and Loans (see page 11) for investments and loans that have the potential to impact the environment and society from a perspective of climate change countermeasures and realizing a sustainable society.

Metrics and Targets
The Bank is strengthening its initiatives to reduce greenhouse gas emissions by promoting local production of green energy
for local consumption through the “TOWA Decarbonization Consortium.” We have adopted a CO2 emissions reduction
target of net-zero CO2 emissions by FY2030.
Targets for Investments and Loans Related to Climate
CO2 Emissions Reduction Target and Results
Change and Other Sustainability Issues
CO2 emissions
reduction vs FY2013

TargetMarch 31, 2023

Cumulative
Execution Amount

TargetMarch 31, 2023

FY2030(March 31, 2031)

Net zero

3,893 t-CO2(35.90% reduction)

FY2030(March 31, 2031)¥200.0 billion¥33.6 billion* Scope 1 (direct emissions) and Scope 2 (indirect emissions) standards aggregated in accordance with the periodic reporting standard of the Act on the
Rational Use of Energy FY2013 results (base year): 6,074 t-CO2 ➾ March 31,
2023: 3,893 t-CO2.

Basic Policy on Sustainability
The Towa Bank Group will work to resolve various social issues, such as environmental issues including climate change,
through the TOWA Customer Support Activities, which the Bank undertakes to increase customers’ corporate value and revitalize regional economies and local communities. We will contribute to the realization of a sustainable society by creating
shared value that aims both to develop regional economies, including the Bank, and increase environmental and social value.

10Basic Policy on Sustainability Conscious Investments and Loans
The Towa Bank will implement TOWA Customer Support Activities, in which it works to increase corporate value andrevitalize regional economies and local communities. Through these, we will proactively engage in investments and loans
to help realize a sustainable environment and society by solving customer issues. Moreover, for investment and loans tobusinesses and other entities that are highly likely to have a significant impact on the environment and society, we will
strive to mitigate and avoid negative impacts.
1. Development of regional economies	Our motto is “meeting with our customers to collect information,” and supporting them when and where needed.
By carrying out both TOWA Customer Support Activities and Essential Cash Flow Support we provide investment
and loans that are truly for the sake of the customer.
2. Realizing a decarbonized society	We will accurately respond to the physical risks associated with climate change acceleration, such as natural disasters, and to customers’ business risks associated with the transition to a decarbonized society. At the same time, wewill utilize green energy produced locally for local consumption by the Gunma Decarbonization Consortium, andmake investments and loans to actively encourage customers’ initiatives towards decarbonization.
3. Response to coal-fired thermal power plant businesses
	Coal-fired thermal power has a high potential for much greater GHG emissions than other methods for generating
power. Therefore, the Bank does not provide investment or loans where funds will be used to build new coal-fired
thermal power plants, or extend existing plants.
4. Protection of biodiversity and ecosystems
	Through communication with customers, the Bank conducts investment and loans with sufficient care to ensurethat the recipient is making efforts in their business activities to protect biodiversity and ecosystems. In particular, as
deforestation can have a negative impact on climate change and ecosystems, the Bank does not provide investment
and loans for deforestation of high conservation value forests (HCVFs*1), such as natural forests. We also makeinvestment and loan decisions giving consideration first to the prevention of illegal deforestation, the status ofacquisition of international certification (FSC*2, PEFC*3), and effective use of domestic lumber. In palm oil development, since there are concerns regarding ecosystem destruction, infringement of aboriginal people’s rights, andhuman rights issues such as child labor in the deforestation of natural forests and development of peat bogs, we give
careful consideration to the status of acquisition of international certification (RSPO*4) and trouble with local communities before making investment or loans.
5. Respect for human rights
	Based on the UN Guiding Principles on Business and Human Rights,*5 we will actively support “human rights due
diligence”*6, including in customers’ supply chains, and conduct investments and loans that are sufficiently considerate of respect for human rights.
6. Elimination of development and manufacture of inhumane weapons
	Regardless of the intended use of funds, the Bank will not provide investment and loans to companies engaged in
the development and manufacture of inhuman weapons, such as nuclear weapons, biological, or chemical weapons,anti-personnel mines, and cluster munitions.
*1 High Conservation Value Forests: Forests whose protection is regarded as highly necessary from various perspectives, regardless ofnational or regional laws.
*2 Forest Stewardship Council: An international non-profit organization established for the purpose of spreading appropriate andresponsible forest management globally with a view to environmental conservation.
*3 Programme for the Endorsement of Forest Certification Schemes: A non-profit organization for certifying that the individual forest
certification systems formulated by each country are compatible internationally.
*4 Roundtable on Sustainable Palm Oil: An organization that aims to formulate globally trusted certification standards for promoting
the production and use of sustainable palm oil.
*5 Under the UN’s 2008 “Protect, Respect and Remedy Framework” for human rights (Ruggie Report), the importance of human rights
due diligence has been proposed, and in 2011 the “Guiding Principles on Business and Human Rights,” was established as anaction guideline that companies worldwide should follow.
*6 This refers to companies apprehending the human rights risks associated with business activities and taking measures for prevention and mitigation, including forced labor and child labor in the supply chain.

11

Human Resource Development and Expansion of Fields for Employees to Play Active Roles
Towa’s Human Resource Strategy
The Towa Bank views its employees as human capital that serves as a source of value creation, and works on making
this human capital more sophisticated. At the same time, we aim to achieve sustainable development of regional communities as the selected financial institution in those communities. In the midst of changes of the market and surrounding environment, it is important for each employee to adapt their mindset and behavior to quickly resolve issues
faced by customers and provide valuable services to them.
Based on this belief, we completely revised our personnel system in April 2023 to create a highly productive organization in which all executives and employees can think and act on their own initiative and maximize their individual
capabilities. These revisions were aimed at improving employee performance and job satisfaction by abolishing generalist positions, converting all employees to career-track positions, reducing seniority-based elements, and introducing
a wage structure that emphasizes roles and duties.

■O verview of the Human Resource Strategy
We are working to promote diversity by expanding the range of positions for female employees and promoting diverse work
styles, as well as “improving employee engagement” through strengthening reskilling and human resource development, as
well as dialogue between executives and employees. By steadily advancing these initiatives and implementing a humanresource strategy that is linked to our management strategy (business model), we will achieve sustainable enhancement ofcorporate value.
Initiatives to Improve Human Capital: Human Capital Model

Realization of the management philosophy

Revitalization ofregional economies

Enhancement ofcustomers’ corporate value

Shared value creation

Enhancement of
the Bank’s corporate value

Improvement of employee fulfillment andjob satisfaction
Improvement of engagement

Improvement of employee performance
Optimization of human capitalStrengthening of
human resource development

Promotion of diverse work styles
Promotion of diversity & inclusion
Enhancement of work-life balance

Support for development of abilities
Secondment to external specialized agencies, etc.

Personnel system reform

Securing human resources

Introduction of behavioral evaluation
Reduction of seniority-based elements

Strengthen year-round recruitment and mid-career hiring
Promoting active participation of senior human resources

12

Dialogue between executives
and employees
Shared management philosophy and vision for the futureBasic Policy on Human Resource Development
In order to become a bank that provides optimal solutions and contributes to the development of regional economies through support forcustomers’ core business operations, management improvement, and asset formation by accurately grasping the issues and needs of customers, all executives and employees of the Bank will focus on developing human resources that will serve as a source of value creation andstrive to build a corporate culture where people can thrive.

■S trengthening of Human Resource Development■ Strengthening of Human Resource Capabilities
As the issues and needs of our customers grow increasingly complex and diverse, we are working to strengthen our humanresource capabilities. In order to develop human resources with the necessary consulting skills to meet customers’ expectations, and in order to enhance the sustainability of our business model “TOWA Customer Support Activities,” we encourage
our employees to acquire high-level qualifications, offer them e-learning programs to deepen their knowledge in specialized
areas, implement a trainee system in which branch employees are dispatched to the Head Office for a certain period of time,and send employees to external specialized agencies on dispatch or secondment assignments.

■ Career Support
While continuing our traditional Bank-led OJT and human resource development programs based on section-based practicaltraining and rank-based training, we also promote independent learning through Saturday study sessions in which employees participate of their own volition, self-development, and web seminars. We combine traditional training with self-led
career development to foster independent human resources who can think and act on their own initiative.

■ Rapid Development of Human Resources
In order to quickly resolve customer issues and provide valuable services, we are committed to the rapid development of ouremployees through extensive training programs for each rank based on our human resource development program.

New Employees

Young Employees

Mid-Level Employees● New employee training● Customer relations training● Training specific to year of entry● New employee follow-up training● Asset management skills
development training● Time management training● Customer relations startup training● Customer relations development training● Lending skills development training● Asset management services training● Career development training● Women’s career development
seminar● Consultation skills developmenttraining● Customer relations leadershiptraining■ Acquisition of Main Challenging Qualifications
In order to propose optimal solutions to customers’ requests andissues, it is important to develop highly specialized humanresources. We encourage our employees to acquire challenging
qualifications and strive to secure highly skilled human resources.

Holders of challenging qualifications

FY2022

Targets for
FY202540

60 or more

* Challenging qualifications: Small and Medium sized Enterprise Consultants, Laborand Social Security Attorneys, Certified Public Tax Accountant, 1st grade Certified
Skilled Workers of Financial Planning

13

Small and Medium sizedEnterprise Consultants

Labor andSocial Security Attorneys

98

1st grade Certified
Skilled Workers ofFinancial Planning

Certified Public Tax
Accountant

22

1

■P
 ersonnel System Reform
In April 2023, the Towa Bank revised its personnel system for the first time in 12 years. The new system abolished generalist
positions, which had been chosen by over 30% of regular full-time employees, and all employees will be converted to careertrack positions. The Bank has prepared skill development training programs in areas such as lending, asset management, andcorporate client transactions, so that employees in generalist positions, who were mainly engaged in internal operations, canimprove their skills over time. We will encourage employees to reimagine their career paths as career-track employees andchallenge themselves in more value-added operations to strive for self-realization and skill development.

Main Revisions to the Personnel System● Expansion of fields for employees to play active roles
through the abolition of generalist positions● Introduction of role-based pay based on duties andresponsibilities● Early promotion of young employees through the settingof new qualification grades● Revision of branch staff positions to enable employees toaim for higher positions in specific fields● Abolition of age-based pay and reduction ofseniority-based elements● Introduction of an evaluation system and other measures
to encourage employees to play more active roles

Increased individual employee productivity
Advanced human capital

Increased employee engagement

Basic Policy on Environmental Improvement
In order for each employee to reach his or her full potential, it is necessary to recognize diverse ways of thinking and create a workplace
where employees can continue to work with peace of mind. We are committed to creating a workplace environment where employees canwork with enthusiasm and a sense of job satisfaction, based on the pillars of “promotion of active roles for women” and “promotion ofdiverse work styles and enhancement of job satisfaction.”■S ecuring Human Resources – Promotion of Active Roles for Women
The ratio of women in management positions increased from 11.8% (63 employees) in FY2009 to 19.8% (102 employees) in
FY2022, demonstrating significant strides in the advancement of women over the past 10 years. Under the revised personnel
system, all female employees are now career-track employees and are able to take on the challenge of higher-level positions
and expanding their fields of participation more than ever before, and we are actively committed to the career developmentof female employees.
We have set the following targets as metrics of women’s active participation.

■ Metrics of Women’s Activate Participation (Targets and Results)
FY2020

FY2021

FY2022

Targets for
FY2025

12.6 years

12.9 years

13.2 years

13.5 years

Percentage of female executives

24.2%

24.5%

25.5%

26.0%

Percentage of female employees

38.6%

40.1%

39.8%

45.0%

Average years of service for women

Obtained Stage Three of Eruboshi■ In the Event of Pregnancy of Female Employees Engaged in Customer Relations Certification
We assign women with ambition to core business operations at the Head Office such as credit and corporate planning departments, while actively promoting them to the Customer Relations Division. In April 2022, we introduced a system that allows
female employees engaged in customer relations to switch to less physically demanding work if they become pregnant, whileremaining in the Customer Relations Division.

14

■P romotion of Diverse Work Styles – Enhanced Job Satisfaction■ Realization of Work-life Balance
As a means to support balancing work and childcare, we work on creating an environment in which it is easy to use various
systems such as childcare leave (a maximum period of seven days starting from the first day of childcare leave given as paid
leave), and hold childcare exchange meetings. In addition, we are working to improve the utilization rate of paid leave andreduce overtime hours by conducting efficient business operations, and received Gunma Prefecture’s Iki Iki G Company
Excellence Award (in the category of Promotion of Work Style Reform) in FY2022. We will continue to actively work toward
the realization of work-life balance.

■ Health and Productivity Management Initiatives
Recognizing the importance of maintaining and improving the health of our employees in order to provide optimal solutions to our customers, we have established a system headed by the President to promote health and productivity management. In addition, with regard to mental health measures, we have formulated a “Mental Health Promotion Plan” thatoutlines a counseling system and support for returning to work, and we aim to promote the well-being of each and every
employee by working to improve their physical and mental health.
Metrics of Health and Productivity Management

FY2020

FY2021

FY2022

Percentage of employees who received a regular health checkup

100.0%

100.0%

100.0%

Percentage of employees who received follow-up or specialized
health checkups

69.0%

70.8%

84.0%

Percentage of employees who received a stress check

93.0%

94.9%

93.2%

■ Percentage of Male Employees Taking Childcare Leave
We have traditionally promoted awareness of the parental leave system among department heads and the employees themselves when employees’ children are born, encouraging utilization of the system and confirming planned leave dates. As aresult of these efforts, the percentage of male employees taking childcare leave in FY2022 was 111.1%, and we will continue
our efforts to promote the utilization of childcare leave.
* Percentage of male employees taking childcare leave: the number of male employees who took childcare leave in FY2022 divided by the number of spouses who
gave birth in FY2022.

■ Area Option System
We are creating an environment where diverse human resources can thrive by giving them the option to choose an assignment area that does not require relocation so that they can pursue career advancement while working in a way that suits
their family situation and perspective on work.

■ Efforts to Introduce Business Casual DressWe respect the diversity of our employees, and have been experimenting with a newstyle of work attire from June 2023 to September 2023 to promote creative thinking
that is not bound by conventional values and embody a free and open corporate
culture in the way we dress. Male employees are allowed to wear business suits (noneckties required throughout the year), and female employees may choose from
uniforms, business suits, or business casual.

■D ialogue between Executives and Employees
We are committed to dialogue between frontline employees and executives, and holdthe annual Dialogue Session between the President and Employees for each rank of
employees, from young employees to branch managers. The exchange of opinions atthese Dialogue Sessions allows us to incorporate real voices from the front lines into
our management, which in turn leads to improvements in the workplace environment and various measures.

15

Consolidated Balance Sheets
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
2023

March 31,

Assets:Cash and due from banks ���������������������������������������������������������������������������������� ¥  188,346
Call loans and bills purchased ���������������������������������������������������������������������������
1,108
Trading account securities ���������������������������������������������������������������������������������
0
Money held in trust �������������������������������������������������������������������������������������������
3,998
Securities ������������������������������������������������������������������������������������������������������������
568,660
Loans and bills discounted �������������������������������������������������������������������������������� 1,562,298
Foreign exchange �����������������������������������������������������������������������������������������������
663
Other assets���������������������������������������������������������������������������������������������������������
37,302
Tangible fixed assets ������������������������������������������������������������������������������������������
21,892
Buildings ��������������������������������������������������������������������������������������������������������
4,487
Land ���������������������������������������������������������������������������������������������������������������
15,922
Lease assets (tangible) ������������������������������������������������������������������������������������
56
Construction in progress �������������������������������������������������������������������������������
43
Other tangible assets �������������������������������������������������������������������������������������
1,383
Intangible fixed assets ����������������������������������������������������������������������������������������
3,228
Software ���������������������������������������������������������������������������������������������������������
2,625
Other intangible assets ����������������������������������������������������������������������������������
602
Retirement benefit asset �������������������������������������������������������������������������������������
1,807
Deferred tax assets ���������������������������������������������������������������������������������������������
4,635
Customers’ liabilities for acceptances and guarantees ��������������������������������������
3,447
Reserve for possible loan losses ��������������������������������������������������������������������������
(6,995)
Total assets ������������������������������������������������������������������������������������������������ ¥2,390,395

Thousands of
U.S. dollars (Note 2)

2022

2023

¥  376,579
0
0
9,985
595,291
1,525,600
832
31,70821,952
4,248
15,792
50
70
1,790
3,250
3,016
234
1,544
4,913
3,598
(8,469)¥2,566,787$ 1,410,517
8,300
329,944
4,258,668
11,699,983
4,965
279,360
163,953
33,605
119,239426
323
10,357
24,177
19,6644,512
13,53834,71625,817(52,388)$17,901,557

Notes: 1. Y
 en figures have been rounded omitting numbers below the million mark, in accordance with the Financial Instruments and Exchange Act ofJapan and generally accepted accounting principles and practices in Japan.
2. T he United States dollar amounts represent conversions of Japanese yen, for convenience only, at the exchange rate of ¥133.53 to US$1.00, the rate
prevailing on March 31, 2023.

16

Millions of yen (Note 1)
2023

March 31,

Liabilities:
Deposits �������������������������������������������������������������������������������������������������������������� ¥2,144,412
Call money and bills sold ...................................................................................
0
Borrowed money .................................................................................................
115,890
Foreign exchange ................................................................................................
161
Other liabilities ...................................................................................................
5,736
Accrued employee bonuses .................................................................................
446
Net defined benefit liability ................................................................................
48
Reserve for director retirement benefits .............................................................
0Reserve for reimbursement of dormant deposits ...............................................
124
Reserve for contingent loss .................................................................................
432
Deferred tax liabilities .........................................................................................
9
Deferred tax liability for land revaluation ..........................................................
1,997
Acceptances and guarantees ...............................................................................
3,447
Total liabilities ............................................................................................ 2,272,706
Net assets:
Shareholders’ equity:
Capital stock .......................................................................................................
38,653
Capital surplus ....................................................................................................
17,500Retained earnings ................................................................................................
70,116
Treasury stock, at cost .........................................................................................
(202)
Total shareholders’ equity ..........................................................................
126,068
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities ..........................................
(12,243)
Land revaluation account ...................................................................................
2,147
Remeasurements of defined benefit plans ..........................................................
935
Total accumulated other comprehensive income .....................................
(9,160)Stock acquisition rights ......................................................................................
250
Non-controlling interests ...................................................................................
531
Total net assets ...........................................................................................
117,688
Total liabilities and net assets .................................................................... ¥2,390,395

17

Thousands of
U.S. dollars (Note 2)

2022

2023

¥2,135,975
0
292,990
84
5,776
447
43
1
216
372
7
2,063
3,598
2,441,577$16,059,403
0867,894
1,207
42,958
3,342
362
0
934
3,241
69
14,95825,817
17,020,191

38,653
17,50066,990(217)
122,927

289,476
131,056
525,102(1,517)944,118(2,341)
2,298
1,584
1,541
219
520
125,209¥2,566,787(91,692)
16,080
7,006(68,605)
1,873
3,979
881,366$17,901,557

Consolidated Statements of Income
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)

Thousands of
U.S. dollars (Note 2)

2023

2022

2023

Income:Interest on loans and discounts ..........................................................................
Interest and dividends on securities ...................................................................
Other interest income .........................................................................................
Fees and commissions .........................................................................................
Other operating income .....................................................................................
Other income ......................................................................................................
Total income ..............................................................................................

¥18,599
3,568
140
6,227
173
5,843
34,552¥18,647
4,213
237
6,081
1,399
6,391
36,970$139,290
26,723
1,054
46,6381,296
43,758258,761

Expenses:
Interest on deposits .............................................................................................
Interest on call money and bills sold .................................................................
Interest on payables under securities lending transactions ...............................
Interest on borrowings and rediscounts
Other interest expenses ......................................................................................
Fees and commissions .........................................................................................
Other operating expenses ...................................................................................
General and administrative expenses .................................................................
Other expenses ....................................................................................................
Total expenses ............................................................................................
Income before income taxes ...............................................................................

122
(0)
0
34
0
3,364
306
19,603
6,128
29,559
4,993

169
(1)
0
34
0
3,461
219
19,751
9,912
33,548
3,422

919
(0)
0
259
0
25,196
2,296
146,80745,892
221,367
37,394

Income taxes:
Current ...........................................................................................................
Deferred ..........................................................................................................
Total income taxes .....................................................................................
Profit ....................................................................................................................
Profit attributable to non-controlling interests ..................................................
Profit attributable to owners of parent ......................................................

333
556
889
4,103
8
¥ 4,094

1,495
133
1,628
1,793
47
¥ 1,745

2,496
4,166
6,662
30,73165$ 30,666

Profit attributable to owners of parent per share (in yen and U.S. dollars):
Basic ................................................................................................................
Diluted ............................................................................................................

¥105.58
62.71¥ 42.01
27.22$   0.79
0.46

For the years ended March 31,

18

Consolidated Statements of Comprehensive Income
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
For the years ended March 31,

Profit �������������������������������������������������������������������������������������������������������������������
Other comprehensive income (loss):
Valuation difference on available-for-sale securities ......................................
Remeasurements of defined benefit plans .....................................................
Total other comprehensive income (loss) .................................................
Comprehensive income (loss) ....................................................................
Comprehensive income (loss) attributable to:
Owners of parent ............................................................................................
Non-controlling interests ...............................................................................

19

Thousands of
U.S. dollars (Note 2)

2023

2022

2023

¥     4,103¥     1,793$   30,731(9,900)(648)(10,549)¥ (6,445)(10,380)(27)(10,407)¥ (8,614)(74,141)(4,861)(79,002)$(48,270)¥ (6,455)10¥ (8,657)
42$(48,349)79Consolidated Statements of Changes in Net Assets
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
Shareholders’ equity
Capitalstock

Balance at April 1, 2022 ������������������������������ ¥38,653
Changes in items during the period:
Profit attributable to owners of parent ......
Dividends from surplus ..............................
Purchase of treasury stock ..........................
Disposal of treasury stock ...........................
Increase/Decrease for other reasons ...........
Changes in items other than shareholders’equity during the period (net amount) ���Total changes in items during the period �����
0Balance at March 31, 2023 �������������������������� ¥38,653

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity¥17,500¥66,990¥(217)¥122,927

4,094(1,118)

4,094(1,118)
(1)
14
151

(1)
16

(2)
1

149

(0)
¥17,500

3,126¥70,11615¥(202)

3,140¥126,068

Millions of yen (Note 1)
Accumulated other comprehensive income (loss)
Valuationdifference on
available-for-salesecurities

Balance at April 1, 2022 ������������������������������ ¥ (2,341)
Changes in items during the period:
Profit attributable to owners of parent ......
Dividends from surplus ..............................
Purchase of treasury stock ..........................
Disposal of treasury stock ...........................
Increase/Decrease for other reasons ...........
Changes in items other than shareholders’equity during the period (net amount) ���(9,901)
Total changes in items during the period �����
(9,901)
Balance at March 31, 2023 �������������������������� ¥(12,243)

Landrevaluationaccount¥2,298

Total
accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincome (loss)¥1,584¥     1,541

Stockacquisitionrights

Noncontrollinginterests

Total
net assets

¥219

¥520

¥125,209
4,094(1,118)
(1)
14
151

(151)
(151)
¥2,147

20

(648)
(648)
¥  935(10,702)(10,702)¥ (9,160)

30
30
¥250

10
10
¥531

(10,661)(7,520)¥117,688

Thousands of U.S. dollars (Note 2)
Shareholders’ equity
Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

Balance at April 1, 2022 ������������������������������� $289,476 $131,062 $501,689 $(1,631)
Changes in items during the period:
Profit attributable to owners of parent ......
30,666
Dividends from surplus ..............................
(8,378)Purchase of treasury stock ..........................
(8)
Disposal of treasury stock ...........................
(16)
121
Increase/Decrease for other reasons ...........
10
1,123
Changes in items other than shareholders’equity during the period (net amount) ���Total changes in items during the period �����
0(6) 23,412
113
Balance at March 31, 2023 �������������������������� $289,476 $131,056 $525,102 $(1,517)

Total
shareholders’equity$920,598
30,666(8,378)
(8)
105
1,133

23,520$944,118

Thousands of U.S. dollars (Note 2)
Accumulated other comprehensive income (loss)
Valuationdifference on
available-for-salesecurities

Land
revaluationaccount

Total
accumulated
Remeasurements
otherof definedcomprehensive
benefit plansincome (loss)

Balance at April 1, 2022 ������������������������������� $(17,538) $17,214 $11,866
Changes in items during the period:
Profit attributable to owners of parent ......
Dividends from surplus ..............................
Purchase of treasury stock ..........................
Disposal of treasury stock ...........................
Increase/Decrease for other reasons ...........
Changes in items other than shareholders’equity during the period (net amount) ��� (74,155)(1,134) (4,861)
Total changes in items during the period ����� (74,155)(1,134) (4,861)
Balance at March 31, 2023 �������������������������� $(91,692) $16,080 $ 7,006

21$   11,543

Stockacquisitionrights

Noncontrollinginterests

Total
net assets$1,646$3,900$937,688
30,666(8,378)
(8)
105
1,133

(80,148)226(80,148)226$   68,605 $1,873

79
79$3,979(79,843)(56,323)$881,366

Consolidated Statements of Cash Flows
The Towa Bank, Ltd. and Consolidated Subsidiaries

Millions of yen (Note 1)
2023

For the years ended March 31,

Cash flows from operating activities:
Income before income taxes ������������������������������������������������������������������������������ ¥      4,993
Depreciation and amortization �������������������������������������������������������������������������
1,562
Loss on impairment of fixed assets ��������������������������������������������������������������������
7
Increase (decrease) in reserve for possible loan losses ���������������������������������������
(1,474)
Increase (decrease) in reserve for employee bonuses ����������������������������������������
(1)
Increase (decrease) in reserve for reimbursement of dormant deposits ������������
(91)
Increase (decrease) in reserve for contingent loss ���������������������������������������������
60
Increase (decrease) in net defined benefit liabilities �����������������������������������������
(1,192)
Increase (decrease) in provision for directors’ retirement benefits �������������������
(1)
Interest income ��������������������������������������������������������������������������������������������������
(22,308)
Interest expenses ������������������������������������������������������������������������������������������������
156
Loss (gain) on disposal of tangible fixed assets �������������������������������������������������
25(Increase) decrease in trading account securities ����������������������������������������������
0
Loss (gain) on securities — net ��������������������������������������������������������������������������
226
Loss (gain) on money held in trust �������������������������������������������������������������������
(0)
Foreign exchange loss (gain) — net �������������������������������������������������������������������
(650)
Net (increase) decrease in loans �������������������������������������������������������������������������
(36,698)
Net increase (decrease) in deposits ��������������������������������������������������������������������
8,436
Net increase (decrease) in borrowings excluding subordinated debt ���������������� (177,100)
Net (increase) decrease in due from banks other than the Bank of Japan ��������
114
Net (increase) decrease in call loans and others ������������������������������������������������
(1,108)Net increase (decrease) in call money and others ���������������������������������������������
0
Net (increase) decrease in foreign exchange — assets ���������������������������������������
169
Net increase (decrease) in foreign exchange — liabilities ���������������������������������
76
Interest received �������������������������������������������������������������������������������������������������
22,641
Interest paid �������������������������������������������������������������������������������������������������������
(197)
Other ������������������������������������������������������������������������������������������������������������������
(5,151)
Subtotal ����������������������������������������������������������������������������������������������������� (208,543)
Income taxes paid ����������������������������������������������������������������������������������������������
(844)
Net cash provided by (used in) operating activities ��������������������������������� (209,387)
Cash flows from investing activities:
Purchases of tangible fixed assets ����������������������������������������������������������������������
(1,080)Purchases of securities ����������������������������������������������������������������������������������������
(69,180)
Proceeds from sale of tangible fixed assets ��������������������������������������������������������
1,414
Proceeds from sale of securities �������������������������������������������������������������������������
7,858
Purchases of intangible fixed assets �������������������������������������������������������������������
(758)
Proceeds from redemption of securities ������������������������������������������������������������
78,158
Payments for asset retirement obligations ��������������������������������������������������������
(11)
Proceeds from decrease of money held in trust ������������������������������������������������
5,987
Net cash provided by (used in) investing activities ����������������������������������
22,388Cash flows from financing activities:
Proceeds from exercise of stock options ������������������������������������������������������������
0
Purchases of treasury stock ��������������������������������������������������������������������������������
(1)
Dividends paid ���������������������������������������������������������������������������������������������������
(1,118)Net cash provided by (used in) financing activities ���������������������������������
(1,119)Net increase (decrease) in cash and cash equivalents ���������������������������������� (188,118)
Cash and cash equivalents at beginning of year ������������������������������������������
375,672
Cash and cash equivalents at end of year ����������������������������������������������������� ¥   187,554

22

Thousands of
U.S. dollars (Note 2)

2022

2023

¥      3,422
1,427
319
(238)
14
(71)
8
(1,233)(0)(23,098)203(29)
0(2,576)2(609)(22,779)
31,129(5,725)
(129)
3,708
0
1,096
51
24,311(243)(2,528)6,432(1,433)
4,998$       37,394
11,69756(11,041)
(10)
(688)
452
(8,928)(11)(167,069)
1,173
187
0
1,699
(2)
(4,872)(274,833)
63,181(1,326,294)
854(8,300)0
1,268
573
169,562(1,476)(38,579)(1,561,773)(6,323)(1,568,095)(598)(150,418)
339
55,252(899)
85,409(3)
1(10,915)(8,089)(518,091)
10,59558,852(5,683)585,327(86)
44,839167,6680(0)(1,298)(1,299)(7,215)
382,887¥   375,672

0(8)(8,378)(8,385)(1,408,812)
2,813,397$   1,404,585

Supplementary Information
Consolidated Capital Ratio (Domestic Standard[Basel III]
Millions of yen (Note 1)

Thousands of
U.S. dollars (Note 2)

2023

2023

Core capital: instruments and reserves �������������������������������������������������������������������
Core capital: adjustment amount of instruments and reserves ..............................
Total qualifying capital ............................................................................................

¥  129,517
4,492¥  125,024$  969,953
33,647$  936,305

Risk-adjusted assets:
On-balance-sheet assets .......................................................................................
Off-balance-sheet assets .......................................................................................
Credit value adjustment amount ........................................................................
Risk-weighted credit equivalent amount ............................................................
Amount related to operational risk-equivalent ...................................................
Total ................................................................................................................
Capital ratio .............................................................................................................

¥1,134,382
13,0352,765
1,150,183
47,845¥1,198,028
10.43%$8,495,336
97,62520,706
8,613,669
358,312$8,971,981
10.43%March 31,23

Business Organization Chart(As of June 29, 2023)

Integrated Planning Department

In charge of business management
In charge of planning
In charge of public relations
In charge of relevant business
SDGs Promotion Office
Towa Bank Economic Research Center

Integrated Risk Management Department
Relationship Banking Promotion Department

In charge of overall relationship banking promotion
In charge of relationship banking support
In charge of asset support
Customer Support Office
Regional Vitalization Promotion Office

General Shareholders’Meeting
Audit & Supervisory
Board Members

Relationship Banking Strategy Department

Audit & Supervisory Board
Board of Directors

In charge of business operation strategy
In charge of deposit and loan product strategy
In charge of finance planning and financing facilitation
In charge of customers’ asset formation
Information Systems Office

Audit & Supervisory Board
Members’ OfficeConsulting Department
Credit Administration Department

Board of Executive Officers
Credit Management Department
Board ofManaging Executive Officers

Securities Investment Department

In charge of credit administration
Real Estate Research Center
Business Rehabilitation Office
In charge of credit administration
In charge of credit assessment evaluation
In charge of credit management
In charge of fund management operations
In charge of foreign exchange operations

Finance and Accounting Department
Business Administration and Systems Department

In charge of planning
In charge of systems development
In charge of administrative advice

Operations Department

Head Office Administrative Center
Direct Service CenterTokyo Administrative Center
Loan Administrative Center

Human Resources Department

General Affairs Department
Compliance Management Department

Internal Audit Department

THE TOWA CARD CO. LTD

In charge of planning
In charge of personnel
In charge of welfare programs
Employee Training Center
Office to Promote Social Equality
Secretarial Office
Tokyo Branch Offices
In charge of general affairs
In charge of property management
In charge of compliance
Customer Call Center
Office to Monitor Business Transactions with Antisocial Forces
Secretariat of External Evaluation Committee
In charge of head office auditing
In charge of sales branch auditing

THE TOWAGIN LEASE CO. LTD

Directors, Executive Officers, and Audit & Supervisory Board Members(As of June 29,2023)

Representative Director
President & Chief Executive Officer
Hiroshi Ebara
Representative Director
Vice President & Executive Officer
Hiroyuki Sakurai
Director
Senior Managing Executive Officer
Isao Kitazume

Directors (Outside)
Takeshi Mizuguchi
Rikako Onishi
Hideto TagoManaging Executive Officers
Kazuyoshi Shiraishi
Takahisa Wasada
Susumu Okabe

Director
Managing Executive Officer
Shinichiro Suzuki

Executive Officers
Tatsuya Ishizeki
Hiroshi Iijima
Masahiko Hijikata
Takashi Sato
Masaharu Matsumoto
Audit & Supervisory Board Members
Kiyomi Osawa*
Masami Hashimoto*Shinichi Kato**
Junko Saito*** Full-Time Audit & Supervisory Board Member** Outside Audit & Supervisory Board Member

24