Main Questions and Answers
Part 1: Small meeting with the CEO (speaker: Representative Director, President and CEO Hisashi Shibata)

Q1

A1

Q2

A2

What are your thoughts on the factors behind your low share valuationcompared to other firms?
Also, what kind of information do you plan to communicate to increase themarket’s valuation of your shares?
We see the two main factors that put an impact on the recent performance of our shares.
First, our profit plans appear more conservative than those of other firms.
As we noted in the briefing on financial results, our estimates are rather conservativein terms of matters like interest-rate sensitivity and cost forecasts in the face of arising yen interest rate. Fist of all, we have been suggested as that the level of thebottom line may be a bit too low in light of current business conditions. Our goal is to
overcome any negative sentiment by steadily generating better than planned resultsin quarterly and half-year settlements of accounts.
Secondly, we believe this valuation resulted from the market’s low expectations
toward our purchases of treasury stock in the first half of the year. A look at past
results for the Shizuoka Financial Group shows we tend to announce purchases oftreasury stock in the second half of the year, once we have confirmed our outlook forthe mid-term and the end of the fiscal year.
However, our current policy calls for considering purchasing treasury stock without
regard to the timing of the settlement of accounts. We will continue declaring that we
make these purchases dynamically based on factors like share price.
Taking these two main factors into consideration, we are trying to strengthen ourshare prices by communicating our pursuit of steady profit growth, centered on the
top line.

How will you appeal your stock in comparison with other stocks at a time ofrising yen interest rates?
As we noted in the briefing on financial results in May, yen net interest income thisfiscal year is projected to be up by 6.9 billion yen from last year. Of this, factors related
to rising yen interest rates account for an increase of 3.1 billion yen. We project thefigure in the final year of the medium-term business plan to be 15.8 billion yen higher
than initially planned. However, interest rate levels are trending higher than our
scenario that was used when we revised the medium-term business plan. For
example, the recent yield on 10-year JGBs has climbed to around 1%. Establishing
new estimates based on current levels would add another three billion yen or so to
yen net interest income in the final year of the medium-term business plan.
We expect more upside depending on the BoJ’s monetary policies announced in Julyand beyond. For example, reduction in purchases of JGBs by the BoJ is one factor
for a steeper yield curve, which has a positive effect on the banking businessgenerating revenue through short-term fundraising and long-term lending. The future
figures we show are minimums. We plan to achieve further profit growth while
regarding interest rate conditions as a positive factor.
For better or worse, one of our distinguished features is our high levels of equity
capital. For investment, this results in the strength of having the ability to build up
securities even when interest rates are rising. Even if the losses on yen bonds were
somewhat to grow, we should be able to adequately control it based on our equity
capital and unrealized gains on shareholdings. An increase in carry income would
enhance returns to shareholders based on a high payout ratio. We consider this anadvantage over other firms.

Main Questions and Answers
Q3

Can you tell us about the meaning of holding shares converted to pureinvestments and your future policies regarding these holdings?

A3

We do not consider the shares transferred to pure investments as the ones that weare unwilling to sell. These are the shares we choose to hold because their yields asfinancial instruments are favorable at the moment. We could sell them at any time
we deem appropriate. We have not transferred them to pure investments with theidea of keeping holding them.

Q4

What are your thoughts on the low anticipated growth rates, which is the
structural issue in the regional banking industry as you strive to increase P/B?

A4

We can break down P/B into ROE (current profitability) × P/E (future expected
profits). If we compare ROE and P/E among banks, our P/E is relatively high. Our
P/B is less than one (1) mainly due to our low ROE.
We can expect ROE growth with increase in the upside of future interest rate. But wealso recognize the need to control our equity capital.
Regarding the P/E ratio, we believe that continued profit growth will lead to the future
expected revenues. We will strive to meet expectations by balancing social value
creation and stronger corporate value by expanding our lines of business under theholding company structure to deliver solutions to the community challenges. We
believe our success in breaking free of the traditional banking-business model
centered on deposits and loans, which is also an issue industrywide, will impact P/E
growth.

Q5What structure(s) do you maintain regarding investment discipline forshareholdings such as compliance with the Stewardship Code?

A5

Regarding shareholdings, we recognize the need to fulfill our responsibilities as an
asset owner. We are making progress in developing the related systems. Alongsidereevaluating the reasons for holding each issue, we have adopted a policy ofmaintaining disciplined systems for the exercise of voting rights, using thechecksheets formulated with reference to asset management company guidelines.
We handle the issues transferred to pure investments in the same way.

Main Questions and Answers
Q6

Do you see any issues with regard to acquiring deposits? What strategies doyou have for the future?

A6

We see numbers of issues with regard to securing yen deposits. Of these, while we
expect to be able to maintain the steady growth in corporate deposits from ourcorporate clients, the growth in private deposits has clearly slowed recently, to anannual growth rate of about 1.0%. We see this as an issue that we need to focus onin the time that the consumer behavior shifts to online banking.
For example, while we provide “Shizugin App,” which is a remote channel aiming at
more convenient consumer behavior, but it involves a number of issues, such as thelong boot time and lack of attractiveness. We are considering to add the features of
the App that makes more attractive to the community residents, including reward
points and distributing coupons in partnership with local firms.
We also recognize issues in inheritance processes. The process currently centers on
administrative procedures. In case that the heirs live in the Tokyo area, inherited
deposits moves to outside of the prefecture. If the procedural missteps occur it islikely to happen that the deposits are moved to other banks.
We are also considering focusing more on new NISA initiatives and enhancing funds
transfer transactions to encourage customers to grow the deposits larger. Current
measures include getting younger customers to open deposits in accordance with
their life cycles and promotional interest rate campaigns for college-age children. But
we plan to continue considering various efforts to secure consumer deposits,
including work-related transactions.

Q7

Do you think you might achieve the targeted dividend payout ratio of 50% or
higher before FY2027?

A7

Our dividend policy focuses on continually increasing dividends. Conditions in whichstable earnings can be projected are vital to this policy. Currently, we face various
risk factors, including not just those within Shizuoka Prefecture, but BoJ monetary
policies and, globally, the US elections and geopolitical risks in the Middle East. We
believe that there are enough chances to achieve the target ahead of schedule if wedetermine that prospects are favorable for achieving the goals of the medium-termbusiness plan in light of future changes in these conditions.

Main Questions and Answers
Q8

Is there any possibility you will revise the necessary level of buffer capital to
improve financial leverage as the earning environment improves due to rising
yen interest rates and other factors?

A8

With regard to financial leverage, we continue to maintain buffer capital forunanticipated risks like those associated with large-scale disasters and climatechange, as described earlier. While we feel that RORA and ROA management havepermeated the Company and usage of allocated capital has increased, personally I
believe unallocated capital may be a little high. I would like to promote internal
discussion concerning matters like courses of action for allocating this capital tobusiness sections and building up assets to increase earnings or use of capital for
M&A initiatives.

Q9

How much room is there for outperforming the revised medium-term businessplan with regard to the earnings contributions of new business and otherfields?

A9

The revenue scenario envisioned when transitioning to the holding company
structure called for target consolidated ordinary profit of 100 billion yen, of which 6570 billion would come from the Bank and the remaining 30-35 billion would comefrom other Group companies, new businesses, and other sources. We believe weare making steady progress on the latter, including revenues expected from thealliances with Yamanashi Chuo Bank and the Bank of Nagoya.
It is hard to generate revenues from new businesses right away. We are going to try
to make progress on activities like establishing new companies as soon as possible
during the period of the medium-term business plan, then grow the businesssignificantly in the latter half of the plan period.
Of the existing Group companies, we plan, for example, to grow the ordinary profit of
Shizugin TM Securities from current levels of about two billion yen to five billion yen
during the period of the medium-term business plan. We are seeking out paths toachieve further growth for Shizugin Lease by considering measures like MandA
activities targeting the same line of business. We continue to see significant growthpotential.

Q10

What are your policies going forward regarding the partnership with the Monex
Group?

A10

Regarding our partnership and alliance with the Monex Group, the Board of Directors
continually discusses their progress and future prospects, with consideration for thereasons for shareholdings. There are not any changes in shareholding policy or othermatters worth reporting externally right now, but we plan to continue communicating
anything relevant to our shareholders and investors through IR activities and in otherways.

Main Questions and Answers
Q11

What are the specific risks, not the ones like those associated withearthquakes or geopolitical risks, that you envision under the current favorable
conditions?
Also, while it is hard to differentiate through non-interest revenue while interest
rates are rising, how will you differentiate yourself from the competitors?

A11

We think our greatest management risk exists in human resources. Although we plan
to advance aggressively with new initiatives, a permanent workforce within the Groupis lacking. We need to increase new hires including midcareer hires. Regionalbanking is characterized by long-term structural underperformance, and the hiring
environment remains challenging. Even so, we have increased our hiring of new
graduates by about 80 persons Groupwide. Meanwhile, it is simply a fact that about
30% of employees will leave within three years. We need to develop an environment
in which fluctuating human resources can thrive and experience the attractiveness ofregional banking. Given these conditions, enhancing human resources in both
qualitative and quantitative terms will be an important topic going forward.
I can identify two areas in which we differentiate ourselves from other regional banks.
The first is the difference in volumes of deposits and lending. This leads to an
overwhelming difference in revenues in an era of positive interest rates. Our lending
and deposits are growing steadily, reaching 10 trillion and 12 trillion yen, respectively.
We believe we can differentiate ourselves from other regional banks by building amore profitable balance sheet.
The second is the regional growth. In the same way regions like Kyushu andHokkaido can expect economic growth from booming capital investment due tofactories locating there, we need to contribute not just to our own growth, but to amore sustainable community. Inside the Company, we often talk about how the futureof a region depends on its financial institutions. We believe making our region better,
centered on Shizuoka Prefecture, will make a major difference.

Q12

A12

How will you use transactions like interest rate swaps amid expectations forrising yen interest rates over both the short and long term?
One approach over the short term would be to hedge interest rate risks whenpurchasing government bonds. But assuming conditions of rising interest rates, it isimportant to think more about interest rate risks on the balance sheet and consider
how to use interest rate swaps.
We have identified six interest rate scenarios for IRRBB. While institutions likemegabanks might see risks when interest rates increase based on a steeper curve,in our case, if we enhance interest rate resilience by adopting a new core depositinternal model, we may face a rather higher risk due to falling interest rates. Putting
it in another way, the choice of strategic options would broaden regarding matterslike how to build up yen bonds, and with what maturities, as our ability to take a fixed
investment position grows compared to other firms.
In the home mortgage field, some online banks are lending at variable rates of about
0.5%. Home mortgage customers are important to us, but if this level of interest
remains on the balance sheet, they would be inefficient investment assets. Applying
long-term interest rate swaps to these assets, however, can make them better
investment assets at higher fixed interest rates.
Adopting a new core deposit internal model would increase our ability to hold fixed
assets, which would allow us to increase the profitability of existing assets by using
swaps.

Main Questions and Answers
Q13

A13

Q14

A14

How are you strengthening your efforts to address external labor markets inyour human-capital management?
Recently, the number of new graduates hired has increased by about 80 persons on
a Groupwide basis. But we simply cannot secure these hiring numbers without
increasing the common pool from which the new hires are screened. We need tofocus on efforts to improve our evaluation in external labor markets, for both new
graduates and midcareer hires.
In addition to steady efforts like approaching younger workers through social media
and YouTube and increasing opportunities for work experience, we are a leader
among regional banks in hiring with a view to diversity, through activities includingSports and Art Hiring, which enables employees to continue their athletic careers
while working, Global Hiring of international human resources, and midcareer hiringof about 50 people per year Groupwide.
In addition, we employ the My Career Design System to enable officers andemployees to build their dream careers through concurrent posts, side jobs,
secondment of personnel to posts outside the organization, and other opportunities.
Each year, around 200 people apply for this program. In this and other ways, we aremaking the organization more attractive to both insiders and outsiders, as a placethat offers diverse work styles.
How do you plan to change the Shizuoka Financial Group’s corporate culture?
I have focused on reforming the internal culture since my appointment as Presidentof the Bank. We have made significant reforms by shifting from our traditional
conservative thinking to a corporate culture that encourages taking on challenges.
But I believe we still have some way to go.
The townhall meetings that we launched last year have started to seek active
exchange of opinions, chiefly among younger employees. We need to transform ourthinking overall, including in middle management and upper management, to ensurethat such comments reach management and come to fruition.
We want to build an environment where officers and employees can work withmotivation and young people in particular can express their opinions frankly.

Q15

How do you envision the scale of Group officers and employees in the future,
in light of plans to expand your lines of business?

A15

We expect to increase the total Group workforce as we expand our lines of business,
including establishing new companies. Since we hire in the region, we believe we
can increase hiring of new graduates from the current level of about 330 persons toabout 400 persons at most. Assuming we are able to hire the employees we need,
we expect the total workforce to increase from about 4,000 employees at present toabout 5,000 in the future.

Q16

What is your thinking on merging with another regional bank?

A16

While we would consider merging with another financial institution or reorganization
if we thought it would satisfy all stakeholders, these opportunities are scarce at the
moment. Within Shizuoka Prefecture, we are going to try to utilize the Group’sfunctions in order fully to provide the support we can offer, through means like partial
alliances in noncompeting fields.

Main Questions and Answers
Part 2: Small meeting with Outside Directors (speakers: Director Kumi Fujisawa, Director
Kazuto Tsubouchi)

Q1

What do you see as the Shizuoka Financial Group’s strengths and futurechallenges?

A1(Director Fujisawa)I think the Shizuoka Financial Group’s strength is in its strategic steadiness.
The Group appears to envision strategies for the next decade, with an eye toward
being a group able to provide comprehensive financial services, and steadily
developing the foundations for realizing them. There is room for further progress on
details like DX strategy, but I think they are making progress on infrastructuredevelopment and will make steady progress, led by CEO Shibata, on fostering
innovations based on the foundations established.
It faces issues in terms of human resources, particularly on the point of how to foster
flexibility and broad perspectives among the management of the future, to create
innovative businesses and services.

Q2

Are there any issues that have been identified for a long time but have not yet
been implemented?

A2(Director Fujisawa)
One area where it has not made enough progress is “diversity”. I have pointed thisout repeatedly since my appointment as Outside Director, but the number of women
officers has not increased at all. While I have received detailed explanations of why
the number has not increased and what kinds of human resources are present in the
Company, I am suggesting that if it lacks sufficient human resources internally thenit should consider recruiting human resources from outside the organization. It seems
to me that it needs to make further efforts on this point.

Main Questions and Answers
Q3

A3

What resources do you need to perform your roles as Outside Directors?
How do you demonstrate your roles externally?
(Director Tsubouchi)
Outside Directors are expected to play a supervisory role. But we are still seeking
out ways to demonstrate this role effectively, since we possess far less information
about the business and people in the organization than do internal Directors.
Since it is impossible for Outside Directors to have frequent contact with those in thefield, I think that it is more realistic to play an indirect governance role by influencing
those responsible for actual work in the field, specifically the CxOs and subsidiarymanagers.
In particular, as an Audit and Supervisory Committee Member I need to observe theorganization half a step away from the executive sections, and to adopt a proactive
standby posture to see what can be done in an emergency. I try to envision astructure for responding urgently to any incidents while monitoring activities at the
sub CxO level.
(Director Fujisawa)
Since I am not on Audit and Supervisory Committee—I am more on a position tomonitor the proactive side of the organization—I think my important role is to broaden
the perspectives of the management team leading the Company and make it to lookat things it may not have considered. While the Audit and Supervisory Committee
supervises risks in the Group in detail, the role of Outside Directors who are not Audit
and Supervisory Committee Members is to introduce perspectives from outside theorganization and to encourage management to broaden their view.
While it is easier for outsiders to assess how we fulfill our roles if the corporate value
increases and share price is rising, I think dialogue through communication
opportunities like this meeting are another effective way to do this.

Q4

Are you considering incorporating sustainability indicators into the officer
remuneration system?
How would you assess the current officer remuneration system?
(Director Fujisawa)
We have long recognized the need to incorporate sustainability perspectives into
officer compensation. Since we have incorporated sustainability indicators into the
KPIs of the first medium-term business plan, we have been discussing recently if now
is the time to reflect them into officer remuneration. I believe we might see a
movement toward their adoption after confirmation of the functionality of these KPIs.

A4(Director Tsubouchi)
The current officer remuneration system includes in the share-based remuneration
program not just directors, but executive officers and other lower-level officers.
Numerous efforts are made to increase their participation in management. We areconsidering how to incorporate perspectives like external environmental conditions
and sustainability, including how to assess them quantitatively. Since thesustainability indicators in the first medium-term business plan have made it easier
to map initiatives inside the Group, I believe they will be adopted in stages whileobserving the efficacy of the KPIs.

Main Questions and Answers
Q5

How do you monitor assessment by members of the community in yoursupervisory activities?

A5(Director Fujisawa)
Since even before preparing the medium-term business plan, we have discussed
how to think about evaluation by the community with officers inside the Company.
When we consider our reason for being, ultimately it is to grow the local economy
and benefit members of the community. Based on such discussions, we established
the KPIs of the medium-term business plan and decided to observe how thecommunity responds. As an outside officer, I personally ask people encountered at
restaurants and other places I visit while in Shizuoka Prefecture what they think about
Shizuoka Bank, trying to be conscious of any gaps between internal reports andactual perspectives in the real world.

Q6

How would you assess the progress of internal cultural reforms?
(Director Fujisawa)
Internal culture reforms are proceeded at a steady pace. For example, a look at social
media accounts of young members of the Shizuoka Financial Group shows that they
are expressing opinions freely, like influencers, in ways that would have been
inconceivable at the old Shizuoka Bank. Content like videos by hiring personnel
reflect outside-the-box thinking that one generally would not expect from a regional
financial institution.
From factors like this, it seems to me that management is delegating responsibilities
to employees with a sense of trust, as part of cultural reforms, and this message has
begun to reach younger employees.
But not a few at the management level persist in carrying the burdens of the past.
This raises certain barriers. Still, since the younger generation has begun to be
entrusted with responsible roles, I believe significant changes will emerge as thatgeneration rises through the organization.

A6(Director Tsubouchi)
I am optimistic about cultural reforms. The younger generation has begun to take on
its work with brand new ways of thinking. While middle management remains ossified
in some areas, the culture is bound to change as the power of young people rises up
gradually through the organization. I actually witnessed such a change from an
ossified organization while I was with the NTT Group.
While at present the Bank accounts for more than 90% of the organization, the shareof non-banking sections will grow gradually, and exchange among human resources
will increase as well. As the young generation builds up a cycle of success throughnew endeavors at Group companies, non-banking business shares of sales, profit,and other financial results will grow as well in a few years, and this will accelerate
cultural reforms.
I think the finishing touch on cultural reforms will be in place once the Shizuoka
Financial Group logo changes. This will be a change that arises organically fromwithin the organization, rather than one imposed from top to down. Once that has
occurred, I think the Group will impress many more outsiders as well. While it may
take a decade or longer to reach that point, I am looking forward to it.

Main Questions and Answers
Q7

A7

How do you assess the current CxO system, and what are your expectations
for its future?
(Director Tsubouchi)
In assessing how the CxO system functions, one must keep in mind that rather thanmerely overseeing work in a segment a CxO needs to incorporate a management
perspective as well. In this sense, I believe there remains room for further progress.
There are multiple CxOs in the Company, and while their levels vary, I expect that intime each will take the leadership and fulfill his or her roles from a management
perspective. I think they have already this potentiality.
(Director Fujisawa)
The CxO system just got off the ground. I agree with Director Tsubouchi’s insight on
the assessment. While a CxO needs to have a Groupwide perspective at the samelevel as CEO Shibata, that level has not yet been achieved. Right now we are at thestage of considering how to achieve such a level in the future.

Q8

Are there any points on which the Shizuoka Financial Group should change in
response to the trend toward entries into the banking business from the otherindustries?

A8(Director Fujisawa)
While the entry of firms from other industries into the banking business is a cause forconcern, we do have an infrastructure that has been built up over many years. As
new entrants concentrate on front-office functions, we should be able to demonstrate
our strengths in the back office. Although the risk-averse banking culture persists, inthinking about future business development we will need to develop flexibility and amore accommodating culture able to cooperate with various retail businesses.

Main Questions and Answers
Q9A9It seems that the stock market’s valuation of the Shizuoka Financial Group has
not kept up with the Group’s actual capabilities. How would you assess its
communication of information to the stock market?
(Director Fujisawa)I think how we communicate information clearly has changed since adopting thecurrent structure.
Under President Nakanishi, before he handed the post over to President Shibata, theCompany was laying the foundations for the structures, systems, and culture needed
for the next step. At the time, it was enough for IR activities simply to communicate
our steadfastness.
But since President Shibata took office, it has advanced to the stage of expanding
into new business on the foundations already laid. So, IR activities have shifted
toward fostering expectations for growth potential and share price.
IR and how we communicate information are growing more important. In Board
meetings, we as outside officers often ask CEO what information the IR activities
impart. My motive for participating in today’s meeting was to learn what informationneeds to be communicated to better convey the appeal of the Shizuoka Financial
Group. I plan to continue raising this topic, referencing the opinions I have heard frommarket participants.
(Director Tsubouchi)
IR activities have recently become quite forward-looking. I am impressed how things
are expressed and the components of the materials have changed. At the same time,
if the market does not properly grasp our capabilities, that means room for
improvement remains. For example, on dividends, I think it might be a good idea toemphasize more strongly the message of not disappointing the market andcontinuing to steadily increase dividends.
While the market sees certain numerical figures as less than ideal, I think the effortsof the Group overall are making a significant impression. I hope our stakeholders will
understand this point.

Q10

What would you like to see the Shizuoka Financial Group do to prepare the
Audit and Supervisory Committee for potential incidents?

A10(Director Tsubouchi)
To take a proactive approach to incidence response, we check constantly to makesure everyday management and organizational operations proceed trouble-free. The
Shizuoka Financial Group Audit and Supervisory Committee has four members:
three are Outside Directors, one is the standing auditor. It is essential to work inconcert with the standing auditor, who is the inside Director, to confirm auditing within
the Group is going as it should.
One key role of the Audit and Supervisory Committee is like the function of the white
stakes on a golf course: to indicate to the Board of Directors what is in bounds or outof bounds. We try to share our visions through various discussions. I believe we alsoneed to have our own contingency plans for potential incidents.