Bank Creed

The Bank’s mission is to absorb funds and create credit by exercising its own creativity
based on the principle of self-responsibility, in a spirit of maintaining orderly credit
conditions and protecting depositors, and thereby contribute to the growth of the national
economy.
In light of such public mission, the Bank shall contribute to the local community while
seeking a harmonious balance between self-interest and public interest as a regional bank.
Based on the aforementioned principles, the code of conduct to be observed by any
and all persons employed by the Bank is set forth as follows.

“Vi si on 2030” set s f or t h our i deal i mage f or t hef ut ur e of t he 77 Bank Gr oup and pr ovi des1. Elevate the Spirit of Voluntary Service
Acknowledge that the Bank’s progress goes hand in hand with prosperity inthe local community, and seek to elevate the spirit of voluntary service at all
times.
2. Improve Creditworthiness
Bear in mind that credit is the Bank’s lifeblood, and endeavor to improvecredit at all times.
3. Nurture the Spirit of Harmony
Recognize that the spirit of harmony is fundamental to the execution ofduties, and strive to nurture such spirit at all times.

guiding principles for all officers and employeesof t he Gr oup t o come t oget her and wor k t oward,
as we l ook t o achi eve t he management
phi l osophy ( Mi ssi on) st at ed i n t he Bank Cr eed.

Integrated Report 2022 CONTENTSINTRODUCTION

02 Our Path of Continuous Growth
04 The Economy and Potential of Miyagi

Corporate
Governance

56 To Our Shareholders
58 Governance Structure

Value Creation
Story

06 Value Creation Processes
08 “Vision 2030”

Bank Data

Top Message

12 Message from the President

64 Financial and Non-financial Highlights
66 Profile
67 Service Network

Financial Section

68 Consolidated Five-Year Summary
69 Consolidated Balance Sheet
70 Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
71 Consolidated Statement of Changes in Equity
72 Consolidated Statement of Cash Flows
73 Notes to Consolidated Financial Statements
96 Independent Auditors’ Report
100 Capital Adequacy Ratios
101 Non-Consolidated Balance Sheet (Parent Company)
102 Non-Consolidated Statement of Income (Parent Company)
103 Loan Portfolio

Special Feature

22 Tripartite Conversation among Outside Directors

Sustainability
Promotion

26
28
29
32
34

Business Strategy

36
37
44
48
52

Sustainability Promotion
Revitalization of the Regional Economy
Responding to Global Warming and Climate Change
Encouraging and Supporting the Activities of Our Employees
Advancing Corporate Governance
Basic Strategies to Achieve “Our Target Form”
Top Customer Satisfaction Strategy
Double Productivity Strategy
Regional Growth Strategy
Corporate Culture Reform Strategy

MissionBank Creed

VisionVision 2030

Value

77 Bank Group SDG Declaration(Ultimate goal)(Values sharedacross the Group)

Strategy(Tactics)

Editorial Policy(10-year period)~More than ever, and forever, with our region~

Note regarding forward-looking statements

In editing this report, we have referred to the “International Integrated Reporting Framework” proposed by theInternational Integrated Reporting Council (IIRC) and the “Guidance for Collaborative Value Creation” issued by the
Ministry of Economy, Trade and Industry (METI) to provide an integrated explanation of the Bank’s business modeland sustainable value creation mechanism.
For detailed financial data and other information, please refer to DISCLOSURE 2022 (available on the Bank’s
website at https://www.77bank.co.jp).

This document contains forward-looking statements that are based on the

Guidance forCollaborative
Value Creation

VisionValue

Short-term Management Plan

The 77 Bank has prepared “THE 77 BANK INTEGRATED REPORT 2022” to help investors and other stakeholders
understand the Bank’s efforts for sustainable value creation.

MissionStrategy

information available at the time of disclosure, along with certain assumptions
believed to be reasonable by The 77 Bank. However, The 77 Bank makes noguarantee that these forecasts will be achieved. Actual results may differ
significantly from forecasts, due to a variety of factors.

THE 77 BANK INTEGRATED REPORT

1Our Path of Continuous Growth
Since its founding in 1878, The 77 Bank has overcome many difficulties and grown steadily while devoting itself tosound management under the management philosophy of “desiring communal prosperity and serving local
communities.” Aiming to be a leading company creating a path to the future, we will continue to move forward together~More than ever, and forever, with our region.~with our region.

2021.12
Established 77 Partners Co., Ltd.

1882.71972.10Opened theShares listed (Second Section of the Tokyo Stock

Tokyo Branch

Exchange and the Sapporo Securities Exchange)

1997.122005.72017.4

Established 77 Credit

Opened theStarted business of 77

Services Co., Ltd.

Shanghai

Securities Co., Ltd.

Representative

2017.6

OfficeShare listing changed to the Firs Sectionof the Tokyo Stock Exchange

1893.5
Established Miyagi Savings Bank

Opened the New York
Representative Office

Established 77 Lease Co., Ltd.

（Renamed Gojo Bank in 1921）

1978.10
Established 77 Shin-Yo

1898.3

Hosyo Co., Ltd.

Name changed to The 77 Bank, Ltd.

audit & supervisory committee

2020

1998.4

1988.41974.11

Transition to a company with an

Building housing
the Shanghai
Representative Office

1973.8

Tokyo Branch
Shibusawa warehouse during the Meiji
era, where the first Tokyo Branch of
The 77th National Bank was locatedEstablished 77
Business Support

2010

Foundation

1988.10
Increased capital to ¥22.2 billion

2000

Increased capital toEstablished the Aomori Corporate

The current The 77 Bank, Ltd. was established1999.3through the merger of The 77 Bank, Tohoku

1980

Jitsugyo Bank, and Gojo Bank

1970
1960
1977.9Abolished the New York Branch and London
Representative Office

1983.2

1990.11

EstablishedThe 77 Card
Co., Ltd.

Upgrade the New
York Representative
Office to the New
York Branch

Head Office relocated to a new1880

1961.5

Sales Office

1990¥12.0 billion

2021.4
Started “Vision 2030”

2016.1
2006.11anniversary of our founding.

1932.1

Established 77 Research andStarted operation of the common use system（MEJAR）

Celebrated the 100th

Established Tohoku Jitsugyo Bank, Ltd.

2018.7
Consulting Co., Ltd.

1978.121910.6

Leading company creating a path to the futurebuilding at Sendai Chuo 3-chome

The Bank Creed

1985.10

1878.12established as theOpened the London

Started operations

basic principle ofRepresentative Officeas The 77th

management

1999.8Merged The 77 Card Co., Ltd. and 77 Credit
Services Co., Ltd., with The 77th Card Co.,
Ltd. as the surviving company

2022.82016.5

Established 77

Opened the Singapore Representative Office

Human Design
Co., Ltd.

2016.7
Established 77 Capital Co., Ltd.

2016.7
Established 77 Securities Preparatory

Singapore Representative
Office EstablishedEstablishment Co., Ltd.（trading namewas changed to 77 Securities Co., Ltd. in January 2017）2016.9Established the Hachinohe Corporate Sales Office2016.11
Converted 77 Lease Co., Ltd., 77 Shin-Yo Hosyo Co., Ltd., andThe 77 Card Co., Ltd. into wholly-owned subsidiaries

National Bank
Head Office at the time of our foundationin 1878 (former Hinoya site)

Current Head Office

Responses related to the Great East Japan Earthquake

A deep connection with Eiichi Shibusawa

Eiichi Shibusawa, a businessman who was known as “the father of Japanese capitalism,”
had a strong interest in the Tohoku region through Munenari Date, who provided him with theopportunity to enter the Ministry of Finance. At the time, there was no bank based in Miyagi
Prefecture and partially for this reason, prior to the opening of The 77th National Bank,
Shibusawa provided advice on various matters, such as the nature of the banking businessand basic management concepts, and guided the establishment of the Bank. Subsequently,
he continued to provide investment as a shareholder, and seconded exceptional talent,
including Keishi Endo (the second and fourth President) and Seikei Ono (the fifth President)
from The Dai-Ichi Bank Limited. Furthermore, Shibusawa provided both mental and practicalsupport to the Bank over many years, including his transfer of The Dai-Ichi Bank Limited’sbanking business in Miyagi Prefecture to The 77th National Bank and his appointment as
Advisor in 1909.
Eiichi Shibusawa’s spirit of “harmony of morality and the economy” lives on today in theline from the Bank Creed, which describes the Bank’s management philosophy, that states“the Bank’s progress goes hand in hand with prosperity in the local community.”

2

EiichiShibusawa1840 - 1931
Born in Chiaraijima
Village,Hanzawa-gun,Musashino Province (present day Fukaya City,
Saitama). He exerted all his efforts toward
establishing modern companies and createdJapanese capitalism with the power of the private
sector.
photograph: Fukaya CityOn March 11, 2011, the Great East Japan Earthquake, the largest recorded natural disaster in Japan’s history, caused
unprecedented damage mainly in coastal areas of eastern Japan, including Miyagi, Iwate, and Fukushima.
Immediately after the earthquake, The Bank worked to provide financial infrastructure and fulfill financial intermediaryfunctions, and has since provided financial support for the reconstruction efforts of the region and customers.
■ Earthquake-related loan performance (cumulative total as of March 31, 2022)
27,563 cases / ¥778.1 billion■ Use of public funds (repaid in June 2015)
In the wake of enormous damage to the region and our clients and other circumstances due to the earthquake, theBank received ¥20.0 billion in public funds in December 2011 to compensate for the capital impaired by theearthquake and to provide maximum support for regional reconstruction.
■ Petty cash payment
From the day after the earthquake, we provided petty cash payments of up to ¥100,000 per person per day atcounters without a bankbook, seal, or personal identification.
THE 77 BANK INTEGRATED REPORT

3

The Economy and Potential of Miyagi
The potential of Miyagi Prefecture, in numbers
Miyagi Prefecture, which is our main business base,is located in the southeast area of the Tohoku

7,282 k㎡

Total area

region, and is a key transport hub connecting theGreater Tokyo Area with the Tohoku region.

2,282,106 Persons

Population

Additionally, the prefectural capital, Sendai City,
which became the 11th city designated bygovernment ordinance in Japan in 1989, is home tothe branches of many major companies from acrossJapan, and functions as a core city in the Tohoku
region.

Manufactured goods
shipment amount

Number ofhouseholds

1,016,612

Number of new
housing starts

16,271¥

4,533.6 billion
Agricultural output

Although Miyagi Prefecture experienced
significant damage due to the Great East Japan
Earthquake, particularly in coastal areas, it has¥

Gross Prefectural Product(nominal)

made steady progress thanks to joint efforts by the
public and private sectors. In addition, with the¥

expansion of major automotive and electronics
companies, the manufacturing industry is expected
to become a driver for economic growth while

9,512.3 billion

Fisheries and aquaculture
production amount

Ranking among prefectures in terms of Gross Prefectural Product (nominal)

Second highest growth rateeconomic concentration is advancing owing to¥(21.0%) during the period FY2010, immediately after
the financial crisis of 2007-2008, through FY2018

construction investment related to redevelopment
projects and the installation of a next-generation

193.2 billion
83.4 billion

synchrotron radiation facility in Sendai City.
Publicly assessed land prices (change in ■Commercial ■Residential (%)
district
districtpercentage) in Miyagi Prefecture
Commercial district: Increasing Residential district: Increasing
for nine consecutive years
for ten consecutive years

8.0
6.0

4.7

4.0
2.5

2.0
0.0

1.4

1.7

3.5

3.2
2.3 2.3

1.9

Third in
Japan

6.2

5.9
4.8

Third in
Japan

3.5

2.7

2.4

2.2

2.8

1.2 1.0

0.0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Publicly assessed
land prices in Miyagi
Prefecture (change inpercentage)

Commercial
district

2.2％

First
Fukuoka Prefecture
Second Hokkaido Prefecture
Third Miyagi Prefecture

Residential
district

First
First
Third

2.8％

Hokkaido Prefecture
Fukuoka Prefecture
Miyagi Prefecture

Source: “2022 Shape of Miyagi (Miyagi Prefectural Handbook”)
Source: Overview of the 2022 Land Market Value Publication by the
Ministry of Land, Infrastructure, Transport and Tourism

Regional Development Project (1)Regional Development Project (2)Sendai Urban Restructuring Project

Next-generation Synchrotron Radiation Facility Maintenance Project◆Reconstruction of obsolete buildings and promotion of corporate relocation into the city

◆Economic ripple effects (estimated by Tohoku Economic Federation)·Establishment of “Subsidy System for Promoting Building Reconstruction in Sendai City Center”·JPY 1,901.7 billion over the first 10 years of operation(project launched by Sendai City in October 2019, to continue through FY2031)·Relaxation of floor-area ratio with a view toward “developing highly functional office”·Enhancement of business attraction framework and subsidy systems, etc.

4

(Scheduled to begin operation in FY2025)

Image of Urban Restructuring·Local ripple effects within Miyagi Prefecture is JPY 277.7 billion

Project (Sendai Station area)·‌The project is believed to contribute particularly in the areas such as fuelProvided by: Sendai Citycell, gene drugs and nanocarbon materials

Next-generation synchrotron
radiation facility (image)
Provided by: Photon Science
Innovation CenterTHE 77 BANK INTEGRATED REPORT

5

Value Creation Processes

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

The 77 Bank Group aims to be a leading company that works to achieve prosperity in the local community, bycontinuing to offer the optimal solutions, which inspire and build trust, and at the same time working with our
stakeholders to tap new areas of opportunity in Miyagi and Tohoku.

Social issues
Market contraction
Aging society with low birthrate
Falling population
Concentration in Tokyo
Lack of corporate successors

Social diversification
Lifestyle changes
Digital transformation
Ongoing financial easing
More regulatory easing

Response to disasters, etc.
Disasters, COVID-19
Climate change

Source of value creation

Business activities ~The 77 Bank Group direction~

Value created together with stakeholders
Localcommunities

Financial capital◆Capital adequacy ratio (domestic standards, consolidated): 10.27%◆Ratings: JCR: AA, R&I: A, Moody’s: A3 (as of July 31, 2022)◆Deposits and certificates of deposits: ¥8.8 trillion (ninth among regional banks)

Create abundantlocal communities…See p28,29,48

Leading company creating a path to the futureIntellectual capital◆Group companies: 7 companies(77 Lease, 77 Shin-Yo Hosyo, 77 Card, 77 Securities, 77 Researchand Consulting, 77 Partners, 77 Capital)◆MEJAR system(Shared with Bank of Yokohama, Hokuriku Bank, Hokkaido Bank,and Higashi-Nippon Bank)◆Consulting system◆Know-how gained through reconstruction from the Great East
Japan Earthquake‥‥‥See p8
Four basic strategies

01

Corporations
Enhance
corporate value…See p28,37

Top customer satisfaction strategy
Inspire through consulting and digital technologies!

Individuals

Human capital◆Number of employees (consolidated): 2,754◆Number of employees with qualifications: 177 1st grade Certified Financial
Planner, CFP, 32 Small and Medium enterprise Management Consultants, 2
In-house attorneys, 1 In-house certified public accountant

02

Double productivity strategy

Enhancehappiness…See p28,37

Reform channels and release from the burden of administrative work!

Social capital◆Regional customer baseLoans and bills discounted share in Miyagi Prefecture: 44.1%
Deposit share in Miyagi Prefecture: 57.9%◆Number of comprehensive cooperation agreements signed with
regional public bodies for regional revitalization: 38(Miyagi Prefecture and 35 municipalities in the prefecture, as well as 2 municipalities in Fukushima Prefecture)◆Management Philosophy that inherits the spirit of Eiichi Shibusawa’s“harmony of morality and the economy”◆Regional and overseas networks
Number of branches: 143; Representative office in preparation for opening: 1;
Corporate sales offices: 1; Overseas representative offices: 2 (as of July 31,
2022)

03

Regional growth strategy

04

Corporate culture reform strategy

Achieve sustainable growth in the local community!

Virtuous circle of ambition, confidence, and cheerfulness!

* As of March 31, 2022, for those without a date

Shareholders
Offer growth andreturns together
with the 77 Bank
Group

…See p44,56

Employees
Offer work styles
based on diverse
values…See p32,52

Corporate governanceStrong corporate governance structure‥‥‥See p34,58

6

THE 77 BANK INTEGRATED REPORT

7

“Vision 2030”

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section■ Our target form

■ 77 Bank Group direction

A future based on the premise of maintaining the status quo will fall into a “contracting equilibrium.” The new

We will become the 77 Bank Group that is different from a mere extension of the status quo by focusing on “our target

management plan was guided by the question: What is our vision for the 77 Bank Group to continue to fulfill its

form,” enhancing our strengths, improving our weaknesses, and revitalizing our organization.

mission?

New management plan

Leading company creating a path to the future

The 77 Bank Group aims to be a leading company thatworks to achieve prosperity in the local community, bycontinuing to offer the optimal solutions, which inspireand build trust, and at the same time working with our
stakeholders to tap new areas of opportunity in Miyagi
and Tohoku.

“Our target form”
to aim forover the long term

77 Bank Group strengths

77 Bank Group weaknesses

Revitalization points◦Customer base

◦Profitability (low-profitability structure)◦Appetite for new challenges◦Consulting system◦Cost consciousness (high-cost structure)◦Speed and flexibility◦‌Trust from customers and local community◦Competitiveness with other companies◦Cross-organization (vertical, horizontal, diagonal)

Enhance!

Improve!

Establish!

Stimulate demand amongcustomers and local communities
Expand the scope of operations

Dramatic improvements in
productivity

Establish an ambitious
corporate culture

Key factors in “Vision 2030”
Key factors◆ ‌Create the highest level of financial functions and consulting, while also expanding thescope of our businesses in the non-financial sector

Financial

Consulting

Non-financial

Optimal solutions

An engine (key factors) will be necessary to go beyond
our existing trajectory, and unlock a new future.

networks that combine the potential of Miyagi and the Sendai area with influential◆ Create‌
customers in the Tohoku region as a whole and elsewhere

Miyagi and Sendai area

Whole Tohoku region, etc.

Expand scope of operations

Digitaltransformation

New businesses
and sectors

Human
resources

Financialfoundations

capabilities as a leading company (a collection of people with the same aspiration,◆ Deepen‌and a group of companies that act as leaders for local communities)

Leading bank8

Vision 2030

Leading company

THE 77 BANK INTEGRATED REPORT

9

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section■ Basic strategies to achieve “our target form”“Vision 2030” shows the directions to pursue for the sustainable growth of local communities and the 77 Bank Group, based on the purposes of our SDG Declaration such as the revitalization of the regional economy and the promotion of active participation of all
people.

01

Top customer satisfaction strategy Inspire through consulting and digital technologies!
■ KPI Let's Try!

The 77 Bank
Group direction
Stimulate demand amongcustomers and local communities
Expand the scope of operations

02

Establish an ambitious
corporate culture

10

Increase the number of corporate
lending clients outside Miyagi
Prefecture by 1.5 times

Establish 10 projects in new businesses or sectors
with promise for future commercialization (byFY2024)Raise proportion of households“holding assets” in Miyagi Prefecture
above the national average

To double the net income of Group companies byentering new businesses and sectors and expanding
existing businesses

Double productivity strategy Reform channels and release from the burden of administrative work!
Double labor productivity in core
operations

Triple rate to usage of non-face-to-face channels

Cut amount of administrative work atbank branches by 50%

03

Regional growth strategy Achieve sustainable growth in the local community!
■ KPI Let's Try!

■ Strengthen financial foundations (key factor)
FY2022

Our target form
for FY2031

JPY 22.2 bn

JPY 28.0 bn

Capital adequacy ratio (consolidated)

10.27%

Over 10%

Core OHR

58.22%

50-60%Net income (consolidated)

Ensure that 20% of the population of Miyagi
Prefecture (aged 20 to 74) use loans from the Bank

■ KPI Let's Try!

Madeconcrete inour strategies

Dramatic improvements in
productivity

Increase the proportion of companies
in Miyagi Prefecture for whom we are
their main bank by 10%04

To support increased economic
growth rate in Miyagi Prefecture

Aim for 100% participation in regional development projects
in Miyagi Prefecture, such as “Sendai Urban Restructuring
Project” and “Next-generation synchrotron radiation facility.

To triple the number of growth
support cases for business founders

To cut 77 Bank Group CO2 emissions by 46%
compared with FY2014 and support cuts togreenhouse gas emissions in Miyagi Prefecture

Corporate culture reform strategy Virtuous circle of ambition, confidence, and cheerfulness!
■ KPI Let's Try!
To implement various initiatives to‘foster an ambitious spirit’

Increase the number of ‘specialist personnel’ thatserve a purpose for customers and local communities

To increase the proportion of womenin management positions to 30% or
more

THE 77 BANK INTEGRATED REPORT

11

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Looking back on FY2022

Permeation of consulting services aligned with customer issues and needs

Top Message
President

Hidefumi Kobayashi
We will present a new future forthe region and make continuous
efforts for a sustainable society.

The outbreak of COVID-19 has finally entered its third year,

successors for SMEs, a shortage of human resources, andcausing a major impact on social and economic activities.

sustainment of local industries and employment.

With the complete containment of COVID-19 still out ofUnder these circumstances, to continue to fulfill oursight, due to soaring prices of crude oil and other resources,

mission as a regional financial institution into the future, we

raw materials, and grains, as well as difficulties inlaunched in April 2021 “Vision 2030: ~Leading Company

procurement, caused by the normalization of life with

Creating a Path to the Future~,” our management plan

COVID-19 and Russia’s invasion of Ukraine, among others,

covering a period of 10 years until FY2031. Based on this,prices have risen along with the deterioration of businesswith aims to offer our customers the optimal solutions byconfidence, raising concerns worldwide about theenhancing our financial services and expanding the scope

acceleration of inflation.

of our businesses in the non-financial sector, and to deepen

In the financial markets, the yen has depreciatedour capabilities as a corporate group leading the region bysignificantly, and both interest rates and stock prices havecreating networks centered on the Miyagi and Sendai areas

become unstable.

and expanding the scope of our operations, we have

It is difficult to predict the future, and there is a growing

stepped up our response to various measures, including

sense of uncertainty about the outlook of politics, thedigital transformation (DX) and initiatives for new

economy, and society. Even after the containment ofbusinesses.

COVID-19 and other circumstances, its effects and scars

As a result, due to the permeation of consulting services

will be so great that I believe we will not return to the

aimed at solving customer issues and other factors, for theprevious world.

fiscal year ended March 31, 2022, we secured consolidated

In addition, some of our branches were severely

net income after-tax of ¥22.2 billion, reaching a record high,damaged by a large magnitude 7.4 earthquake with its

and “income from customer services (Note)” amounted toepicenter off the coast of Fukushima Prefecture on March¥3.4 billion, returning to the black for the first time in nine

16. We need to continue to pay close attention to natural

years. My view is that we made a good step towarddisasters and other emergencies.

strengthening profitability, which is the Bank’s top priority.

In addition, the Tohoku region, including Miyagi

We are deeply grateful that this was thanks to thePrefecture, is facing a mountain of social issues such assupport of our stakeholders, including customers, local

aging society with low birthrate, falling population, a lack ofcommunities, employees, and shareholders.

■Net income (consolidated) (Billions of yen)

■Income from customer services (Billions of yen)
3.4
22.2

18.2

16.5
(0.6)

(3.3)
FY2020

FY2021

FY2022

FY2020

FY2021

FY2022(Note) Income from customer services = (Average balance of loans and bills
discounted× Loan to deposit spread) + Fees and commissions - Expenses(including retirement benefit costs)

12

THE 77 BANK INTEGRATED REPORT

13

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Main achievements in FY2022 and challenges

First step toward realizing “Vision 2030”

Achievements
I would like now to discuss the achievements of FY2022,

I feel that it is very important to show our major direction

the first year of “Vision 2030.” The first achievement is thatboth inside and outside the Bank, and although it was a big“Vision 2030” got off to a good start.

challenge, I am glad that we formulated the 10-year

The management plan “Vision 2030,” which commenced

management plan.

in April 2021, is the first 10-year plan for the Bank created

As briefings on “Vision 2030” by the Bank’s officers wereby backcasting from “our target form (what we want toheld at all branches, the interest of employees is highbecome)” and “what we want to achieve” in 10 years. Even

compared to the previous medium-term management plans.

if we plan and implement goals and measures that are likely

Judging by their reaction and level of understanding, I

to be achieved in about three years by extending the statusbelieve that “Vision 2030” provided an opportunity forquo, we will not be able to keep up with the speed of

employees to think about not only the immediate future butchanges in the world and will become content with small

also actions each of them should take. I feel that it was achanges. In other words, maintaining the status quo will be

year in which the understanding and permeation of big

the best we can do in the rapidly changing financial industry.

goals, in addition to the long-term management direction

It is necessary to make a leap forward if we want to grow. I

and thinking, deepened.

believe that we need to show the direction of management,

The second achievement is that consulting services

set big goals, think hard to achieve them, and act boldly andhave been put into practice and started to generate results

carefully.

for both corporate and individual customers. In the previous

medium-term management plan, we had developed ademonstrate their creativity unrestricted by conventional

structure for consulting services as a top priority, and “Visionideas, to develop new attractive businesses and sectors,

2030” put forward “Financial × Consulting” as a businessand to foster a challenger spirit, so that the 77 Bank Groupmodel. Therefore, I feel that the awareness of consulting

will go beyond its existing trajectory and become a “leading

services is spreading reasonably within the Group.

company creating a path to the future.” Many employees

As a result of this, fees and commissions from corporate

took on the challenge to participate in the “businessclients grew from ¥600 million in FY2018 to ¥2.7 billion incontest,” with young employees who had been with the

FY2022, as we gradually increased the number ofBank for five years or less accounting for about 20% of theemployees in the Consulting Promotion Division, which wasapplicants. There were also many unique ideas. I feel that

established in 2018, and stationed headquarters staff at

all branches, headquarters, and Group companies

each location in Miyagi Prefecture to discover customer

deepened their understanding of the efforts to reform ourneeds and provide solutions in cooperation with branches.

corporate culture and are starting to change positively.

Furthermore, group-wide fees and commissions fromassets in custody amounted to ¥4.0 billion in FY2022, as wehave been carrying out initiatives in collaboration with 77
Securities, which was established in July 2016, and createdthe “Wealth Management Office” within the Business
Promotion Division in June 2021 to implement measures in
response to customer needs.
In addition, our involvement in structured finance as a

■Balance of corporate loans (term-end) (Billions of yen)
3,027.2

3,151.9

FY2020

FY2021

3,359.9

new means of lending moved forward.
Following the establishment of the “Structured Finance
Section” within the Consulting Promotion Division in June
2021, we have improved our structure to strengthen our
measures targeting regional redevelopment and renewableenergy facilities, among others. The loan balance is
expected to increase by about 20% each fiscal year

MissionMissionBank Creed

VisionVision 2030

(Ultimate goal)(10-year period)

VisionLeading company creating a path to the future

Value
Strategy

Value(Values sharedacross the Group)

Strategy(Tactics)

1. Top customer satisfaction strategy
2. Double productivity strategy
3. Regional growth strategy
4. Corporate culture reform strategy

77 Bank Group SDG Declaration~More than ever, and forever, with our region~■Fees and commissions from corporate clients (Millions of yen)
2,766

(FY2022: ¥166.3 billion).
The third achievement is that, in light of trends such as asignificant decline in the number of customers visiting our

FY2022

2,055
1,556

branches over the medium- to long-term as well aschanging customer flow lines, we revamped our branch
network through branches within branches, etc. As a result,

FY2020

FY2021

FY2022

non-personnel and personnel expenses were significantly
reduced, and core OHR improved to 58.22%. In addition,■Fees and commissions from assets in custody (Group total) (Millions of yen)

the personnel generated by the revamp of our branch
network was allocated to boost the number of liaison
personnel from headquarters and to increase training

4,096
2,638

3,294

opportunities such as external trainees. At branches that
became branches within branches, internal job rotation was

Short-term Management Plan

enhanced due to the increased number of personnel. All of

FY2020

FY2021

FY2022these contributed greatly to human resources development.
The fourth achievement is that, as part of efforts toreform our corporate culture, we held a “business contest”
and an “essay contest” to solicit new business ideas not■Core OHR (core gross operating income expense ratio) (%)
71.35

62.27

58.22

FY2021

FY2022

only from within the Bank but also from our Group
companies. These contests were held to encourage theofficers and employees of the 77 Bank Group to
FY202014

THE 77 BANK INTEGRATED REPORT

15

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Priority initiatives for FY2023

Challenges“Vision 2030” sets forth key factors to unlock a new future. I

The third challenge is “sustainability” efforts. Various

believe that we must respond to the changing environment,

countries and companies are accelerating their efforts forfocusing on the key factors.

climate change issues and carbon neutrality, and a wide

Enhancing our strengths, improving our weaknesses, and revitalizing our organization

As for “next challenges,” the first challenge is efforts forrange of initiatives is being called for. Regional financial“digital transformation.” We are still implementing various

institutions are expected to play the role of leading their

Top customer satisfaction strategy

initiatives related to the digital field, and there are areas that

regions toward the realization of a sustainable society, as

we need to further strengthen as a “leading company” that

The core concept of the “top customer satisfaction strategy”

becoming commoditized these days, I believe that there will

well as addressing their own issues related to ESG and theleads the region, such as initiatives for new things,

is “Financial × Consulting + Non-financial.” It means toeventually be a limit to our business if we just stick to

SDGs.

expand our business areas in the non-financial field andfinancial operations. Therefore, we aim to improve customer

provide the best solutions to our customers, while pursuingexperience and become number one in customer

the highest-level of financial functions and consulting.

satisfaction by expanding our business domains andresponses to customer needs, cyber security, andstreamlining of administrative processing.

We also need to further enhance our “disclosure of nonfinancial information” related to sustainability going forward.

The second challenge is initiatives for “new businesses

The fourth challenge is initiatives for “corporate culture

and sectors.” In “Vision 2030,” we aim to establish 10

I believe that “consulting services” are a very compatiblereform.” “Culture eats strategy for breakfast” is a famous

projects in new businesses or sectors by FY2024 with thebusiness model for banks. Banks collect a lot of information

quote. To change corporate culture, each individual must

potential to become viable businesses in the future.

because they deal with many customers. Furthermore, if

We have four goals on initiatives for new businesses

take on the challenge of self-transformation.

trusting relationships with customers deepen, we can expect

and sectors. The first goal is to expand the range ofproviding services in new non-financial businesses andsectors.

Considering the extent to which customer needs have been

Corporate culture does not change quickly in a short

met and contributions to earnings have been made in

to receive many various inquiries. By strengthening oursolutions we provide to our customers; the second goal is toperiod of time. As I mentioned earlier, things are changing

collaboration with Group companies or in fields other than“consulting services,” we will be able to support our

diversify the 77 Bank Group’s businesses and revenue

for the better, but we need to aim for further growth and takebanking, we need to further level up our efforts for new

customers in solving their issues.

sources; the third goal is to improve our consulting

on challenges.

businesses and sectors.

Key factors in “Vision 2030”

In addition, our major difference from general consulting

capabilities by taking the same perspective as customers;

firms is that we can engage in financial operations such as

and the fourth goal is to make our corporate culture

lending. As dealings with customers will continue over achallenging.

long period of time, regardless of whether they are

In “Vision 2030,” we aim to establish 10 projects in newcorporate or individual customers, we hope to be of service

businesses and sectors by FY2024 with the potential toto our customers by leveraging our unique strengths andbecome viable businesses in the future. I believe that it isenhancing our support for resolving customer issues. There

necessary to break away from the overly cautious corporate

are still issues to be addressed such as the handling of

culture of the past and address various challenges,

highly specialized fields, but I believe that if we raise theincluding risk taking, at the same speed as changes in thelevel of our responses to these issues, we will be able toworld.

create a strong business model.
However, as traditional deposit-taking and lending

Key factors

services and services related to assets in custody are

An engine (key factors) will be necessary to go beyond
our existing trajectory, and unlock a new future.

Digitaltransformation

New businesses
and sectors■ KPIs related to the top customer satisfaction strategy
Resultin FY2022
Proportion of companies in Miyagi Prefecture for whom weare their main bank (main bank trends surveys)*
Number of corporate lending clients outside Miyagi Prefecture
Proportion of households in Miyagi Prefecture holding assets

Human
resources

Financialfoundations

Proportion of individuals in Miyagi Prefecture using loans
from the 77 Bank
Group net income
Other items

Vs. FY2021

Targetin FY2023

Interim target
for FY2026

ー

ー

[56%]

ー

1.07x

Vs. FY2021

1.08x

Vs. FY2021

+5%

Our target form
for FY2031
Vs. FY2021

[59%]
Vs. FY2021

1.2x

+10%
[62%]

Vs. FY2021

1.5x

ー

ー

17%

Over 21%

12.7%

ー

17.0%

20.0%

JPY 2.2 bn

JPY 1.8 bn

JPY 2.0 bn

JPY 3.0 bn

Establish 10 projects in new businesses or sectors (by FY2024)*TEIKOKU DATABANK, Ltd. research16

THE 77 BANK INTEGRATED REPORT

17

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Interim target
for FY2026

Our target form
for FY2031■ KPIs related to the regional growth strategy

Double productivity strategy
Improving productivity is a major issue for Japanese

Additionally, we will introduce branch tablets, a support

companies and is also the highest priority for us. Without

system for sales and lending, and a data linkage platform,

productivity improvement, we cannot grow as a company.

while promoting the use of AI in each operation and carryingout other measures.

In the external environment related to future digital

Resultin FY2022
Cases of growth support for founders

Targetin FY2023

1,490 cases

1,550 cases

2,000 cases

3,000 cases

10,331

10,20010,0009,069

CO2 emissions (t-CO2)

utilization, in addition to Pay-easy and PayB for digital

Meanwhile, large-scale cyber-attacks are on the rise

payments of taxes and public utilities bills, a unified QR

worldwide, and frauds and other activities that exploit online

code system for local tax payments is scheduled to bebanking and other systems are expected to further increaselaunched in 2023. The government, the Japanese Bankers

in the future. Therefore, it is necessary to strengthen our

Association and other parties aim to abolish the use of bills

response to cyber security and to achieve both convenience

Corporate culture reform strategy

and checks by the end of FY2027 and shift to online

and safety. As our operations become digital and DX

banking transfers and “Densai.” As such, the Bank also

advances, the Bank’s employees need to become more

To reform corporate culture, it is important that each officer

Despite such circumstances, I hope that officers andneeds to go digital.

digitally literate, and it is also essential to develop andand employee thinks for themselves and transforms

employees will recognize again that “bank work is fun andthemselves. I hope to establish among officers andvaluable” under “Vision 2030.”

In addition, the Bank of Japan is conducting research

secure human resources with expertise. Therefore, due toand demonstration on a central bank digital currency

the need to put more efforts into improving IT literacy, we(CBDC), and efforts toward cashless payments are thought

announced in April 2022 our approach to developing andto progress further.

strengthening “digital technology human resources.” We will

For individual transactions, the Bank will also aim tostep up our efforts with the goal of increasing the number ofbuild a system that allows all transactions, including identity“digital technology human resources” who are required toverification, to be carried out using smartphones. For

acquire the IT Passport, a national qualification, and meet

corporate transactions, the Bank will introduce a portal siteother requirements, so that the number will reach 1,310 orand promote online banking.

more, equivalent to more than 50% of all bank employees,by March 31, 2025.

We will also analyze and utilize data obtained throughdigitalization for both individual and corporate transactions.

■ KPIs related to the double productivity strategy
Resultin FY2022
Labor productivity in core operations*
Administrative work at bank branches
Usage of non-face-to-face channels

Targetin FY2023

JPY 11 mn
Vs. FY2020

(15%)(Corporate)13%(Retail)15%

JPY 11 mn
Vs. FY2020

(25%)(Corporate)15%(Retail)17%

Interim target
for FY2026
JPY 13 mn
Vs. FY2020

(50%)(Corporate)20%(Retail)20%

Our target form
for FY2031
JPY 16 mn
Vs. FY2020

(50%)(Corporate)30%(Retail)30%* (Interest on loans and bills discounted + fees and commissions - interest on deposits, etc. - expenses + personnel expenses + depreciation) / number of
employees (part-time employees counted as 0.4)

Regional growth strategy
I believe that it is important to support the growth andleveraging the strength of the Bank’s branch network anddevelopment of local companies and industries as part ofextensive overseas network; support for fostering start-up

efforts for regional revitalization. The increases ofcompanies; building relationships with companies

companies and jobs will create a virtuous cycle in which

expanding into Miyagi Prefecture; and involvement in

employment will be generated, more people will settle, andregional development projects, including the Sendai area.

towns will be formed in local communities. The Bank hopes

In addition, the Bank will support customers’ initiatives

to firmly respond to various issues such as: growing

for carbon neutrality and the SDGs, which they will be urged

customer needs related to human resources such as

to address in their respective supply chains and society. By

specialized talents; addressing business succession

doing so, we hope to create businesses that are useful for

problems, which are said to be faced by about one-third of

local communities and customers.

Other items

Support increased economic growth rate in Miyagi Prefecture
Aim for 100% participation in regional development projects in Miyagi Prefecture

employees a common understanding that one’s attitude andWe support our customers, guide them at times, andactions to try to change will have an impact on those aroundeven act together with them, helping them realize their

them and that the accumulation of such changes will lead tovarious “dreams.” Moreover, finance is an integral part ofmajor changes as a synergistic effect for the entire

business, and a banking job can be a rewarding career.

organization.

Although the business environment is difficult, I believe

In FY2022, officers at the managing director level andthere is a lot of room for development because many new

above visited each branch and provided detailed“non-financial” businesses that are different fromexplanations, such as the concept of “Vision 2030” and theconventional banking will be born due to the progress ofaims of each key measure, as well as answers to questions

deregulation.

from employees. I myself am still in the process of sharing

The Bank’s officers and employees can enjoy their work

my thoughts and having dialogue with employees at alleven more by taking on challenges positively andbranches.

contributing more broadly and deeply to local communities.

This is the first stage of our corporate culture reform, but

If, to that end, each individual thinks about their own growth,

based on my observation of officers and employees, I haveacts, and absorbs various knowledge to make proposals toa good feeling that there is a growing understanding that an

customers and delight them, it will result in the growth of theorganization can change significantly if each individual

Bank. I will endeavor to foster this awareness.

thinks and acts for themselves.

I hope to give our officers and employees many

There is no doubt that the business environment foropportunities such as presentations of new services andregional financial institutions is difficult. While the situation

various contests, constantly stimulate our organization sowhere the conventional deposit-taking and lending businessthat each individual will think and take the next step foralone is no longer viable will further deepen, local

themselves while taking action, and lead management while

communities face major problems of falling population andenhancing the diversity and challenger spirit of our officers

aging society with low birthrate.

and employees.

■ KPIs related to the corporate culture reform strategy
Resultin FY2022
Proportion of female managers

Other items

14.2%

Targetin FY2023
15.0%Interim target
for FY2026
18.0%

Our target form
for FY2031
30.0%

Implement various initiatives to “foster an ambitious spirit”
Increase the number of “specialist personnel” that serve a purpose for customers andlocal communities

SMEs; support for the development of sales channels

18

THE 77 BANK INTEGRATED REPORT

19

Value Creation Story

Sustainability Promotion

Business Strategy

Corporate Governance

Sustainability initiatives

Capital policy and shareholder returns

Development of local communities

Delivering appropriate returns to shareholders

Bank Data

Financial Section

The philosophy of our Bank Creed is “desiring communal

business feasibility evaluation that incorporates the external

Based on “Vision 2030,” from the perspectives of building

endeavor for appropriate shareholder returns while taking

prosperity and serving local communities” and has been in

environment. In particular, solutions cannot be provided bystrong financial foundations by improving customer

into consideration changes in the business environment andour DNA since our founding. I believe that the spirit of

the 77 Bank Group alone due to the breadth of solutions

satisfaction and productivity as well as realizing our mission

other factors.

constantly contributing to the development of local

required. Therefore, it is important to build a network withto our shareholders, “Offer growth and returns together withIn terms of capital, we will pursue efficient utilization, bycommunities as a company that coexists with them iscompanies inside and outside the region with technicalthe 77 Bank Group,” we announced the “Policy of Return ofcontinuing to make investments that will enhance corporate

deeply rooted in each of our officers and employees.

capabilities and know-how, regional public bodies, and otherProfits to Shareholders” on January 28, 2022.

value, including not only investments in new businesses but

With aims to create a future for local communities andparties. Through the expansion of solutions, we will build aSpecifically, on the premise of strengthening ouralso investments for business expansion in existing sectors,

realize a sustainable society, the Bank formulated the “77support system to solve problems faced by local customers.

financial foundations, we will gradually increase the dividend

while considering a balance with the enhancement of capital

Bank Group SDG Declaration” in July 2020. In the

In addition, as climate-related environmental issues arepayout ratio to net income attributable to owners of thenecessary for risk-taking in the local economy.

management plan “Vision 2030,” the “SDG Declaration” isbeing recognized as risks and attracting public attention, weparent to 30% by FY2024, aiming to improve shareholder

also regarded as a shared organizational value, and theare aware that social demands on financial institutions are

returns and capital efficiency.

SDGs are incorporated as part of the management strategy.

also increasing.

We will realize sustainable growth and enhancement ofcorporate value by continuing to engage with ourWhile the dividend payout ratio for FY2022 will be

stakeholders in a high-quality and constructive manner andWe have, as needed, strengthened governance through the

The Bank announced its support for the

22.4%, the same level as FY2021, we plan to increase theproactively disclosing financial and non-financial

establishment of the “Sustainability Committee” and otherrecommendations of the Task Force on Climate-related

dividend payout ratio to 26.8% based on the earnings

information.

measures and enhanced support for customers by

Financial Disclosures (TCFD) in July 2021. In response toforecast for FY2023. In accordance with this policy, we will

launching “77 SDGs Support Services and Loans” and otherthe four recommended areas of disclosure in the TCFD

services.

recommendations (governance, strategy, risk management,

However, to solve a customer’s challenges in promoting

and metrics and targets), we need, and thus will continue tothe SDGs such as climate change, the customer itself must

make active efforts, to further expand disclosure content byrecognize its specific current issues and requires solutions

developing and strengthening the disclosure system.

■Dividend trends(Yen)

Annual dividends

and financial support for solving the issues clarified byMission18.2%

VisionMissionBank Creed

VisionVision 2030

Value

77 Bank Group SDG Declaration(Values sharedacross the Group)(10-year period)~More than ever, and forever, with our region~

Value
Strategy

19.9%

20.2%

30.0%

26.8%

Dividend payout ratio (consolidated)

22.4%

22.4%
80
67.5

(Ultimate goal)

The 77 Bank Group supports
sustainable development goals (SDGs).

Strategy(Tactics)

20

Top Message

1. Revitalization of the Regional Economy
2. ‌Responding to Global Warming
and Climate Change
3. ‌Encouraging and Supporting the
Activities of Our Employees
4. Advancing Corporate Governance

*45

47.5

50

50

FY2018FY2019FY2020

FY2021

FY2022

FY2023 (Forecast)

FY2024 (Target)* The Bank conducted a 1-for-5 consolidation of shares on October 1, 2017. If calculated based on the number of shares after the consolidation,
the interim dividend for FY2018 is ¥22.50 per share and therefore the annual dividend equals ¥45 per share.

In closing
The environment surrounding regional financial institutions

I myself will take the lead for all officers and employees oflike the Bank is extremely harsh at present. However, I

the 77 Bank Group to make every effort for the development

believe that if we steadily implement the Bank’sof the regional economy. We will meet the expectations ofmanagement plan, “Vision 2030,” we will be able to open up

the 77 Bank Group’s stakeholders, including our customers,a bright future together with our local communities andlocal communities, employees, and shareholders. We ask

customers.

for your continued support and patronage.

Short-term Management Plan

THE 77 BANK INTEGRATED REPORT

21

Tripartite Conversation
among Outside Directors

Impressions as The 77 Bank Outside Directors
SuzukiI have served as an outside officer of the

Bank for eight years, including as an Audit &YamauraI feel that our desire to “contribute to

local communities,” as stated in the Bank Creed, isSupervisory Board Member. During that time, thebeing reflected in the work of bank employees. As theatmosphere of the Bank has softened considerably

COVID-19 pandemic continues, I appreciate the factfrom my initial impression of a long-established andthat the Bank has been able to thoroughly assess therigid leading regional bank to one where it is easier toextent to which people at local businesses have been

speak openly even at board meetings. The needs ofimpacted and has responded swiftly. I hear that theour customers are changing just as the world isBank also had a similar response when the Great Eastchanging these days, and I feel that our employees are

Japan Earthquake occurred. I believe that the Bank’s

becoming more aware of our desire to value contact

strength lies in the fact that its spirit of taking onwith our customers more than ever before. The symbol

challenges has taken root in addition to the Bank’sof our commitment is “Vision 2030,” which openly

sound culture.

expresses our desire to fulfill our role and meet the
expectations of our customers in Miyagi and the rest of
the Tohoku region.

Okuyama

I am extremely thankful for the careful

way in which employees conduct their work. Trust isparamount in this business since employees deal withmoney, and the level of attention to avoiding errors isvery high. Additionally, actions that the Board of
Directors take are also changing in response to thechanging times. I feel that the board has a very goodunderstanding of our intentions as Outside Directors;
for example, structuring the materials to allow for more

Emiko Okuyama

Toshio Suzuki

Masai Yamaura

time for discussion. Also, as Outside Director Yamaura

Outside Director

Outside Director, Audit & Supervisory
Committee Member

Outside Director, Audit & Supervisory
Committee Member

due to the experience of the Great East Japan

mentioned, I believe The 77 Bank changed significantly
Earthquake. I recognize the significance of “Vision2030” as a long-term vision with Miyagi and the Tohoku
region at the forefront, which was announced based on
the experience of the past 10 years of efforts for

The 77 Bank as seen by
Outside Directors

regional reconstruction.

Improving the effectiveness of the Board of Directors
Okuyama

We interviewed three of our Outside Directors about four topics.

For matters to be deliberated at thethe Board of Directors meetings such as setting time

Board of Directors, they are discussed by the Executive

aside to hear explanations from divisions in charge in

Committee, which is in charge of execution, and due toadvance.

the input of Outside Director Yamaura, the structure of
the materials now allows us to know the content ofthese discussions.

Yamaura22

SuzukiSince the questions and concerns we, theOutside Directors, ask reflect the voices of all
stakeholders, I feel that the management of the board

In addition to restructuring the materials,

is very well organized, with Chairman Ujiie, who chairsmeasures have been taken to invigorate discussions at

the board meetings, encouraging opinions to be voiced

THE 77 BANK INTEGRATED REPORT23

Tripartite Conversation
among Outside Directors

in order to have lively discussions. Some of the Bank’s

OkuyamaWhen I was first appointed four years

Suzuki“Vision 2030” and its wording were born

visited bank branches to give explanations and engage

out of an exchange of ideas which took place at a veryin dialogue. I have opportunities to hear what branchNow, since Outside Director Ushio has been appointed,

early stage. The Vision was launched from April 2021,

employees have to say when I visit branches for audits,

pandemic and board meetings were held online, theI feel it has become easier to voice my opinions. We

but it is not a matter of simply creating a vision; theand on many occasions I have felt this enthusiasm atmeetings were still managed in the same way as if they

have also published a skills matrix showing how roles

process of discussing what the Bank will strive tothese frontline offices as well.

were being held in the usual conference room.

are divided, with Outside Director Ushio’s role asachieve is important. I thought we should convey that

“corporate management” and my role as “regional

enthusiasm to the Bank’s employees as well. Members

revitalization.” Promoting the appointment of femaleof senior management including the President, theDirectors with such different skill sets is an excellent

Senior Managing Director, and Managing Directors

Directors live in Tokyo, and even when they wereago, I was the only woman on the Board of Directors.

unable to come to Sendai due to the COVID-19

initiative amidst the growing importance of diversity.

SuzukiCompared to before, the number and ratioof Outside Directors have increased, and I have theimpression that the Board of Directors itself has
become more active in its discussions. When I was first
appointed as an Audit & Supervisory Board Member,there were four Outside Directors, which was a ratio of

The SDGs are a very large topic for

the SDGs, strengthening governance is also an

municipalities as well, and I believe they began

important topic. As an Outside Director, I feel it is

the ratio of Outside Directors in order to improve thediscussing them around 1989. While we have alreadynecessary to provide my opinions and other feedback

effectiveness of the Board of Directors, based on thestated our directionality and commitment in the “77to the Board of Directors, and at the same time, I feel it

voices of institutional investors and various other

Bank Group SDG Declaration,” “SDGs Action Plan,”is necessary to explain my thoughts on misconduct tostakeholders, has brought about changes in the Boardand “Sustainability Promotion and Management Policy,”

frontline offices as well when I visit them to conductof Directors.

I believe that by thoroughly considering what we can do

audits or for other matters.

as a banking business within a larger framework we

In FY2022, the first year of “Vision 2030,” we held

can respond quickly to initiatives aimed at achieving thean essay contest. The active participation of female

SDGs by working with our customers and local

employees in this contest, as well as how applicants

governments. In the future, I believe that by talking

thoroughly considered matters from long-term

about the SDGs, we can become a kind of ribbon

perspectives, gave me the impression that their passion

connecting hearts and minds, even of those who do not

and capabilities will continue to form the foundation thatborrow money from the Bank.

supports the Bank in the future.

The Bank’s previous medium-term

for section which emphasizes the Bank’s role as amanagement plans only considered things in three-year

leading company rather than a leading bank, as I

increments, and as someone appointed from outside

believe that while The 77 Bank is a core financial

the Bank, I was concerned that matters that need to beinstitution in the Tohoku region, it must also consider“SDGs Action Plan,” and I believe advancing the SDGs

addressed over the long term might be forgotten. In thisnew forms of banking, including new businessthrough finance, as described in our sustainable

context, the fact that the Bank has now presented its

development, in response to deregulation and otherfinance goals, is our most important role as an entity inlong-term vision to the world is not only a sign of afactors going forward.

the financial industry. The aim of the SDGs is tohealthy sense of crisis that it cannot continue as it is,but something that gives an impression of optimistic
possibilities as the Bank steps in and makes decisions
to change itself.

YamauraOkuyama

YamauraWe have developed a comprehensive

revitalize the region and create a good future for the
When I first saw the original draft forpeople living in this region and children of the future, so

the Vision, I thought it was too bank-like to be

I would like to thoroughly explain my opinion on thisinteresting or to make people feel that the Bank had

matter.

changed. In that context, Outside Director Suzuki

Suzuki

In formulating “Vision 2030,” we thetalked about the need to use general terms rather than

Outside Directors had the opportunity to exchangebanking lingo, and the next document I saw had the

manufacturing industry, we do not have a wide breadth

opinions with President Kobayashi. On that occasion,

word “inspiration.” It is true that I can say this because Iof options for initiatives to reduce direct CO2 emissions,

we listened to President Kobayashi’s thoughts andhave an outside perspective, but I thought it was

but I feel that we are doing a thorough job by theexpressed our own opinions. For my part, I talked

superb that this suggestion was adopted.

introduction of digital transformation, such as ourabout how I hoped the President would strongly push24

Okuyamaabout 19%. I believe that taking the initiative to increase

Changing The 77 Bank through “Vision 2030”
Okuyama

SDGs and The 77 Bank

In the case of the Bank, unlike theinitiatives to go paperless. In addition, when discussing

THE 77 BANK INTEGRATED REPORT

25

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Sustainability Promotion
Initiatives for promoting sustainability

In October 2021, the Bank formulated the “SDGs Action Plan” from the perspective of the proper and sufficient promotion ofsustainability.
We are strengthening the promotion of sustainability by recognizing the four items of the “77 Bank Group SDG
Declaration” as key topics and working toward the realization of the SDGs.

The Bank has formulated the “77 Bank Group SDG Declaration,”
which parallels the philosophy of the Bank Creed, and from theperspective of further strengthening sustainability initiatives, in
FY2022, we formulated the “SDGs Action Plan” and established

77 Bank Group SDG Declaration (formulated in July 2020)

the “Sustainability Promotion Office.” Since our response to~More than ever, and forever, with our region.~sustainability is long-term and wide-ranging, we will continue to

The 77 Bank Group, in keeping with the philosophy of the Bank Creed of “desiring communal prosperity and serving local
communities,” which has been in our DNA since our founding, aims to contribute to the future of the region and the realization of asustainable society by working toward the achievement of the Sustainable Development Goals (SDGs) on a Group-wide basis.

implement the PDCA cycle for our “SDGs Action Plan” and work
to enhance the social value of local communities and thecorporate value of the Bank.

2. Responding to Global Warming

1. Revitalization of the Regional

Economy3. Encouraging and Supporting the
Activities of Our Employees

and Climate Change
4. Advancing Corporate GovernanceConnections with local communities
In order to expand sustainability as a regional financial
institution, I believe we need to support financing initiatives
and conduct other activities to raise awareness among

Realization of initiatives

customers in local communities. In addition, taking advantage

FY2023 “SDGs Action Plan” (the content of the SDGs Action Plan is discussed each fiscal year)of the comprehensive partnership agreements we have signed

1 Revitalization of the Regional Economy

with all regional public bodies in Miyagi Prefecture for regional(1) Support implementation of SDGs for clients(2) Support new companies and growth of startup companies(3) Build regional economic ecosystems(4) Develop new businesses and sectors(5) Contribute to society through interaction with the local community(6) Make financial services more convenient through non-face-to-face channels, etc.
(7) Expand opportunities to access financial services

2 Responding to Global

Warming and Climate Change(1) Initiatives for environmental protection and climate change(2) Respond to business operators that require environmental
and social considerations(3) Support clients’ disaster countermeasures(4) Expand investment and lending to environmental andsocial sectors

3 Encouraging and Supporting

4 Advancing Corporate Governance(1) Revise personnel systems with the aim of establishing
an ambitious corporate culture(2) Revitalize the organization and enhance productivity
through effective utilization of personnel(3) Introduce flexible work styles tailored to increasingly diverse values(4) Educate and spread awareness of diversity and inclusion(5) Invest in human capital and intellectual property(1) Build internal systems that comply with the TCFD recommendations(2) Enhance awareness of initiatives targeting the SDGs
within the Bank
(3) Active participation of the Board of Directors in the
response to issues surrounding sustainability(4) Strengthen systems for complying with laws and regulations, etc.
(5) Strengthen our stance to respond to antisocial forces(6) Strengthen our stance to prevent money laundering, etc.
(7) Strengthen our stance to manage cyber risks

Status of achievement of KPIs

Target (FY2031)

the Activities of Our Employees

Cases of growth support for founders
Projects launched for new businesses or sectors
Support for increasing the economic growth rate of Miyagi Prefecture
People receiving financial education
Seminars held in related to SDGs/participants
Total cumulative sustainable finance executed (*)
CO2 emissions (vs. FY2014)
Proportion of female managers

Result (FY2022)

Promotingsustainability
Deputy General Manager, General Planning & Coordination
Division and Manager, Sustainability Promotion Office

Takuro Suzuki

revitalization, the Bank would like to provide opportunities forcustomers who do not yet bank with us to learn about oursustainability initiatives by holding various seminars incooperation with regional public bodies and other entities. We
hope to further strengthen our connections with local
communities through various sustainability-related measuresand other efforts.

The Bank’s target form
As stated in the “77 Bank Group SDG Declaration,” we believethat the philosophy of the Bank Creed of “desiring communal
prosperity and serving local communities,” which has been in our
DNA since our founding, is the form of sustainability that the Bankis striving for. The Bank aims to create the future and realize asustainable society, not by ourselves, but together with local
communities.

Major sustainability-related initiatives

3,000 cases

1,490 cases

10 cases (cumulative total until FY2024)

1 case2012

Established the “Environmental Policy”

Japan growth rate +0.1 pt―

70,000 people (cumulative total)

8,364 people

2016

Newly established the “Diversity Promotion Office” and implemented the “IkuBoss Declaration”

100 seminars / 5,000 people (cumulative total)

5 seminars / 484 people

2018

Established the “Diversity Promotion Policy” and formulated the “77 Bank Health Management Declaration”¥1.2 trillion¥274.0 billion

2020

Formulated the “77 Bank Group SDG Declaration” and established “Lending Policies for Specific Businesses”

46.0% reduction

38.5% reduction

30.0%

14.2%

2021

Formulated “Vision 2030” and agreement with “TCFD Recommendations”* Total cumulative investment and lending executed which contributes to the stimulation of local communities and the realization of a sustainable society(investment and lending that supports and promotes SDGs initiatives in the fields of the environment, medicine, new companies, business succession, etc.)

Formulated the “SDGs Action Plan” and newly established the “Sustainability Promotion Office”
2022 Established the “Sustainability Promotion and Management Policy” and formulated the “Dementia Barrier-Free Declaration”
Established the “Sustainability Committee”

26

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27

Value Creation Story

1 Revitalization of the Regional Economy

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

2 Responding to Global Warming and Climate Change

The Bank aims to contribute to the realization of a sustainable society through consulting with, and building

Through our responses to climate change, we will contribute to the protection of Earth from destruction andpartnerships with, regional public bodies and corporate and individual customers.

contribute to urban development that is more in harmony with nature.

■ Promotion of partnerships for regional revitalization<Cooperation agreement with Nippon Telegraph andTelephone East Corporation> (June 2021)<Cooperation agreement with Meiji Yasuda Life
Insurance Company> (March 2022)

Specific cooperation ideas

Specific cooperation ideas

Ideas related to enhancement and co-creation of regional
value with the use of regional resources and assets
・Asset sharing■J ointly promote various community support
activities by utilizing various assets such as realestate, technology, and human resources

・Support for tourism promotion■M ake joint proposals for workation and regional
brand creation, such as support for commercializationand development of the tourism industry

Ideas related to addressing of regional challenges andvitalization of regions in cooperation with regional public bodies
・Smart cities■Promote innovation in areas such as regional safetyand disaster prevention, administrative services,and transportation utilizing cutting-edge ICT・DX support for local industries■Enhance the productivity of local industries andpromote an increase in resident population throughDX such as next-generation agriculture utilizing ICT

Ideas related to sustainable urban development in regions
・Support for urban development■Promote urban development that integrates ICT
to create local brands and facilitate the passing
down of culture and skills, etc.

・Regional development projects■Jointly promote regional development projects andsupport the creation of local brands and businesses

Ideas related to promotion of industry and tourism
・Support the creation of business opportunities for the Bank’s clients throughexchanges between different industries hosted by Meiji Yasuda Life
Insurance Company
・Promote the products and services of the Bank’s clients utilizing the internal
intranet of Meiji Yasuda Life Insurance Company■ Forest conservation activities
To restore the coastal disaster prevention forest that was lost in the Great East Japan Earthquake, based on the“Citizens’ Reforestation Activities to Restore the Miyagi Coastal Forests” agreement concluded with Miyagi
Prefecture and Sendai City, we carry out forest conservation activities in the “77 Forest for the Future” where weplanted black pine trees in the Arahama District of Sendai City.
We will continue to care the black pine trees so that they will grow big and become a disaster prevention forestthat protects the region from disasters.

・Promote local products by offering Miyagi’s local cuisine and menus using
ingredients from Miyagi Prefecture at employee cafeterias of Meiji Yasuda
Life Insurance Company’s main locations

Ideas related to promotion of total health and support for the elderly・Jointly hold seminars and other events on health management, etc.
・Make joint proposals to the Bank’s clients on support services for healthmaintenance such as “health analysis reports”
・J ointly hold seminars for the elderly (nursing care/dementia, healthmaintenance, end-of-life planning, life planning, etc.)

Ideas related to the promotion of regional revitalization
・S ponsor and participate in activities aimed at contributing to regional
revitalization undertaken by the Bank and Meiji Yasuda Life Insurance
Company

Ideas related to support for the growth of local companies and industries
・Starting new companies or businesses ■P rovide corporate support and incubation
services for ventures and start-ups as well as thecreation of new businesses
・Support for regional core companies■Jointly support the growth of local companies andindustries by taking advantage of the businessmatching agreement between the two companies

・Development of local talents■Jointly develop talents who will lead the region for regional
revitalization and the stimulation of local communities■ Promotion of initiatives to reduce environmental impact
We switched the lighting of business rooms, lobbies, etc. to LED at all branches and cash service corners inprinciple and installed solar power generation systems at new branches.

■ Various seminars and initiatives for financial education

CO2 emissions（t-CO₂）

As a regional financial institution, we hold various seminars and other events related to the SDGs in order tospread awareness of the SDGs among local residents. We are also stepping up our efforts in financial education toenhance financial literacy.

16,00016,79546% reduction

14,00012,00010,331

10,000

Image of a branch with a solar power generation systeminstalled

compared with
FY2014

12,197
10,20010,000

9,069

8,000
FY2014FY2021

FY2022

FY2023(Target)FY2026
FY2031(Interim target) (Our target form)■ Promotion of ESG investment in management of securities
Held <77> SDGs seminars for promoting carbon neutrality

Visited a local junior high school to give lectures on thethemes of “money for working adults” and “work at banks”
after receiving an inquiry from the school at the planning stage■ Initiatives to support clients’ efforts for the SDGs
・Launch of 77 SDGs-related services

In October 2021, we launched “77 SDGs Support Services” and“77 SDGs Support Loans” aimed at spreading the SDGs to andsupporting efforts of SMEs, etc.

28

・Launch of “77 SDGs Privately Placed Corporate Bonds”

In December 2021, we renewed the existing “77 ESG Privately
Placed Corporate Bonds,” etc. and launched “77 SDGs
Privately Placed Corporate Bonds” from the perspective of
accelerating support for companies’ initiatives for the SDGs.

The Bank actively invests in ESG-related areas, including the environment sector, not only in lending to customers
but also in management of securities.

54 cases / ¥42.5 billion ■Sustainability bonds  23 cases / ¥12.3 billion■Social bonds  34 cases / ¥23.8 billion ■Sustainability-linked bonds  7 cases / ¥5.4 billion■Green bonds * Total from April 2018 to March 2022

THE 77 BANK INTEGRATED REPORT

29

Value Creation Story■ Response to TCFD recommendations
Taking into consideration the fact that climate change has become an issue shared by the whole global
community, including unusual global weather phenomena and increasing damage from natural disasters, the Bank
announced its support for the recommendations of the TCFD* in July 2021. In order to contribute to the protectionof Earth from destruction and contribute to urban development that is more in harmony with nature, the Bank will
actively implement initiatives that target issues such as climate change.
Our responses to four items proposed in the TCFD recommendations are described below.
*TCFD (Task Force on Climate-related Financial Disclosures)
A taskforce established in December 2015 by the Financial Stability Board (FSB) and led by private-sector companies with the aim of promoting thedisclosure of climate-related financial information by companies

Governance
The Bank has established a basic policy for sustainability promotion management, and in addition toformulating the “Sustainability Promotion and Management Policy” in January 2022 to ensure this is managed
properly and sufficiently, we set up the “Sustainability Committee,” chaired by the President, in July 2022.
Through regularly discussing and reporting the relevant important matters, including climate change, we ensure
the results of these efforts are reflected in management strategies and risk management.
Since October 2021, in line with the “SDGs Action Plan,” which is formulated each fiscal year, we have been
regularly reporting the status of initiatives for the SDGs such as climate change to the Board of Directors andhave constructed a system where the Board of Directors supervises the status thereof.
Moreover, for the purpose of promoting initiatives for solving environmental and social problems such as
climate change on a Group-wide basis, we have set up the “Sustainability Promotion Office” inside the General
Planning & Coordination Division and while putting in place a system for appropriate management, we are
ensuring that measures are promoted effectively.

Strategy
Based on the understanding that responding to sustainability issues, including climate change, is a key
management issue, we have positioned the “77 Bank Group SDG Declaration” as values shared across theGroup within our new management plan “Vision 2030.”
In addition to the “77 Bank Group SDG Declaration,” which focuses on “responding to global warming andclimate change” as a priority issue, we will also actively support businesses, etc. that contribute to solving
environmental and social issues, determine “Lending Policies for Specific Businesses” based around notfinancing businesses that pose a risk of negative impact to the environment and society, and actively engage ininitiatives related to financing for renewable energy, etc.
■ Opportunities
Treating responses to climate change as a business opportunity, we actively provide various related services
and products and develop products to support our clients’ transition to decarbonization and initiatives for the
SDGs. By understanding the issues and needs of our clients from a medium- to long-term perspective andsupporting them in responding to climate change and transitioning to a decarbonized society, we are trying tocreate and expand business opportunities such as the provision of investment and lending and other solutions.
(As of March 31, 2022)

79 cases●Renewable energy-related funding  406 cases / ¥194.4 billion●Number of applications for “77 SDGs Support Services” Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section■ Risks and scenario analyses
In terms of climate change risks, we are aware of both physical and transitional risks.
●In terms of physical risks, we estimate credit risk caused by climate change affecting the business activities
and changing the businesses circumstances of the Bank’s clients, etc., as well as operational risks
associated with the exacerbation of earthquake and tsunami damage, etc. and damage, etc. to bankbranches due to natural disasters.
●In terms of transitional risks, we estimate risks such as increased credit risk related to borrowers that are
affected by the transition to a low-carbon society, such as those that must respond to stronger climaterelated regulation, etc.
<Scenario analyses>
The results of scenario analyses on physical and transitional risks based on the TCFD recommendations are
as follows.
Physicalrisks・Based on the 4°C scenario presented by the Intergovernmental Panel on Climate Change (IPCC), we
analyzed the impact on the collateral value, targeting real estate collateral in the Abukuma Riverbasin, in the event of storm and flood damage equivalent to that of Typhoon No. 19 in 2019.
・As a result of the analysis that takes into account the temperature rise up to 2050, the collateral value
is expected to decrease by about ¥7.0 billion.

Transitional
risks

・Based on the below 2°C scenario presented by the Network for Greening the Financial System(NGFS), we analyzed the impact on credit expenses for borrowers in the power and utilities sector asa result of deterioration of financial conditions due to tax burden caused by the introduction of carbon
taxes and existing facilities turning into stranded assets.
・As a result of the analysis covering the period up to 2050, credit expenses are expected to increaseby a maximum of about ¥8.2 billion.

<Carbon-related assets>
The Bank’s exposure to the energy and utilities sector accounts for 3.8% of its loans and bills discounted(however, water utilities, independent electric power, and renewable power businesses are excluded).

Risk management●We recognize that physical and transitional risks caused by climate change may have a significant financial
impact in the future.
●To conduct regular analysis and verification of the impact of climate change on capital health and financials
through implementation of regular scenario analyses and stress tests, we have arranged a system byrevising the regulations related to risk management and carrying out other measures.

Indicators and targets●Based on the “Environmental Policy” that we established in 2012, we are promoting activities aimed atconserving the environment, and we have set a target in our new management plant, “Vision 2030,” ofreducing CO2 emissions across the 77 Bank Group by 46% by FY2031 compared with FY2014. Furthermore,
in FY2022, we succeeded in reducing CO2 emissions by 38.5% compared with FY2014.
（t-CO₂）Items measured

FY2014FY2020

FY2021

FY2022

Scope 1 (kerosene, heavy oil
A, etc.; however, gasoline is
excluded)

1,894

1,638

1,600

1,483

Scope 2 (electricity, local hot
water)

14,901

10,68910,5978,848

The Bank’s total (Scope 1 + 2)

16,795

12,327

12,197

10,331*F or Scope 3 (indirect emissions
other than Scope 1 and 2), we will
evaluate calculation methods, etc.

●Furthermore, in the “SDGs Action Plan” formulated in October 2021, we set a ¥1.2 trillion cumulative target
by 2030 for sustainable finance, which is investment and lending contributing to the stimulation of local
communities and the realization of a sustainable society. The result for FY2022 was ¥274.0 billion.

30

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Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

3 Encouraging and Supporting the Activities of Our Employees
We are creating an organization where each and every employee and officer can engage in a diverse range of activities.

Through the following four initiatives, our Bank is striving to improve employee productivity as well as the services we provide to customers in local communities, with the aim of becoming the “bank chosen by customers.”

1. Realizing work-life balance

2. E‌ stablishing an environment where diverse humanresources can demonstrate their full potential

From “work-work” to “work-life”~Rewarding working environments~(1) Strengthen efforts aimed at reducing total working hours

3. Developing promising human capital

4. Promoting health and productivity management(1) Fostering an organizational culture of self-education(1) ‌Formulation of the “Health and Productivity Management
Declaration”~People make companies~~A healthy body is capital~(2) ‌Supporting employees to balance work and childcare/nursing, etc.

(1) ‌Strengthening initiatives to promote the active
participation of women(2) ‌Enhancement of consulting capabilities through humanresources development programs, etc.

(2) Strengthening health management measures(3) Utilization of the Select Staggered Shift System(2) Utilizing seniors, part-timers, etc.

(3) Initiatives aimed at career development support(3) Improving the work environment(3) Revision of personnel evaluation systems(4) ‌Initiatives aimed at improving abundant personalcapabilities(4) Raising employee awareness of health management

Rate of taking paternity leave(people)
100
80

100
72

No. of people

100

100

81

79

Rate

(%)
100

60
50
40
20
0

0
2019

2020

2021

♦Implementation of “Bank-wide Refresh Day” (started in FY2019)
The second Wednesday of each month has been designatedas “Bank-wide Refresh Day” to encourage employees to leave
work on time.
♦Recommended interval between work shifts (started in FY2020)
From the perspective of health management, as a general rule,
employees should have at least 11 hours from the end of theprevious day’s work until the start of their next shift.
♦‌Newly established the Select Staggered Shift System (started
in FY2022)
In addition to the normal work schedule, employees can choose
from six staggered work patterns.

♦Formulation of the Action Plan for General Businesses (Third)
From the perspective of creating a working environment thatenables women to heighten their awareness of advancing intheir career and tackle their work with a positive attitude,
while also maximizing the abilities of each individual andenabling them to play an active role at work, the Bank
formulated the “Action Plan for General Businesses (Third),”based on the “Act on Promotion of Women’s Participation
and Advancement in the Workplace.”[Evaluation period]
April 1, 2021 - March 31, 2026 (five years)[Objectives](1) ‌Increase the proportion of women in management
positions to 18% or more (FY2022: 14.2%)♦Training-related investment for human resource development

FY2022
Invested amountJPY 304 mn♦‌Appointment of in-house career advisors (started in
FY2019)Consultations with career advisors (Personnel Division
staff) are held with employees at headquarters andbranches to support the career design of each bank
employee and foster an environment in which diverse
human resources can play an active role.
♦Holding same-industry networking sessions‌Formulation of the “Health and Productivity Management♦
Declaration” (December 2018)
We clearly stated our policy as a company on conserving
and promoting the health of employees.
‌Certified as a “Health and Productivity Management♦
Organization 2022”(March 2022)
The Bank is implementing initiatives aimed at conserving andpromoting the health of employees. On March 9, 2022, the Bank
was certified as a “Health and Productivity Management
Organization 2022” under the “Health and Productivity Management
Organization Certification System” implemented by the Ministry of
Economy, Trade and Industry and the Nippon Kenko Kaigi.

(2) ‌Reduce the average number of hours worked on days
off to less than 10 hours per person per month (FY2022:
12 hours 18 min)(3) ‌Maintain an annual rate of taking paid time off of 70%(FY2022: 73.4%)♦‌Introduced the 77 Career Bridge System (started in
FY2021)
From the perspective of promoting diverse work styles
for retirees, we introduced a system to support theirreemployment.

Toward the increased value of human capital32

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33

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

4 Advancing Corporate Governance
We will collaborate appropriately with our stakeholders to strengthen and enhance corporate governance.

■ Basic approach●In accordance with the “Bank Creed,” which is our basic principle of management, we will operate businesses that give constant consideration to the public mission of a regional bank — “contributing to the development of the regional economy and society” — through banking operations.
●We will improve the transparency of management and the appropriateness of processes and work together appropriately with stakeholders including the regional society, clients, and shareholders for the Bank’s sustained growth and enhancement in corporate value over the medium- to long-term.

■ Steps to enhance and strengthen governance2014
Introduced
Executive Officer
system2015●Established “Corporate Governance Policy”●Established “Corporate Governance Committee”

2017●Transitioned to a company with an audit & supervisory committee●‌Revised officer compensation plan (introduced performancelinked compensation plan)■ Establishing a highly effective corporate governance structure
The Bank transitioned in June 2017 from a company with the Board of Corporate
Auditors to a “company with an Audit & Supervisory Committee” to improve
corporate value through further enhancement of corporate governance, which
was followed by initiatives for developing further effective corporate governancestructure through appointing Outside Directors and female Directors.
Director…Jun-17

Audit &
Supervisory
Committee
Member…
Jun-18

Audit &
Supervisory
Committee
Member…
Jun-19Audit &
Supervisory
Committee
Member…
Jun-20

Audit &
Supervisory
Committee
Member…
FromJun-22

Audit &
Supervisory
Committee
MemberOutside Director
12
persons2
persons2
persons3
persons8
persons3
persons2
persons3
persons8
persons3
persons2
persons4
persons7
persons4
persons2
persons4
persons6
persons4
persons2
persons4
persons

Total number
of Directors

Director

2019
Increased numberof Outside Directors(female)2020
Increased number of
Outside Directors

2021
Creation of “Operating
Officers Committee”■ Established the Sustainability Promotion and Management Policy

OutsideDirectorFemaleDirector

Ratio of Outside Directors Ratio of female Directors

19
persons

2018●‌Revised Executive Officer
system●Elected female officer

In January 2022, we established the “Sustainability Promotion and Management Policy” with the objective ofconducting proper and sufficient management of sustainability promotion.
(Basic Policy on Promotion and Management of Sustainability)(1) Formulation of action plan pertaining to sustainability(2) Declaration of engagement posture pertaining to sustainability(3) Creation of supervisory division for promotion and management of sustainability■ Established the Sustainability Committee

26.3%
5/19
persons16
persons37.5%
6/16
persons

6.2%
1/16
persons17
persons41.1%
7/17
persons

11.7%
2/17
persons

In July 2022, from the perspective of creating and strengthening a management system on sustainability
promotion, we established the “Sustainability Committee” with the President as chairperson.

Constituent members
Chairperson : President
Vice chairman : Senior Managing Director
Members : ‌Managing Director, General Manager (GM) of General Planning & Coordination Division,
17
persons

47.0%
8/17
persons

11.7%
2/17
persons

GM of Risk Management Division, GM of Business Promotion Division,
GM of Regional Development Promotion Division, GM of Personnel Division,
GM of General Affairs Division16
persons

50.0%
8/16
persons

12.5%
2/16
persons

Major discussion items(1) Matters pertaining to the planning of sustainability-related policy(2) Matters pertaining to the planning of sustainability-related implementation plans■ Strengthening actions pertaining to sustainability(3) Important matters among initiatives that contribute to the management of sustainability promotion

In December 2021, from the perspective of strengthening our sustainability-related planning and planningsystems, etc., we newly established the “Sustainability Promotion Office” within the General Planning &Coordination Division with the aim of realizing sustainable growth for the region and the 77 Bank Group.

34

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35

Value Creation Story

01

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Top customer satisfaction strategy
Inspire through consulting and digital technologies!

The 77 Bank Group aims to be the leadingbank for customer satisfaction by offering
an amazing customer experience(inspiration) that competitors cannot match.
■ Providing services unique to a regional financial institution,
via face-to-face consulting and digital channels■ ‌Utilizing our strengths, including our networks outside ofJapan and information networks in the region■ ‌Surprising and inspiring customers with performance thatexceeds their expectations

Group
Group companies

Branches

Headquarters

Providing Finance & Consulting

Utilize regionaland overseas
networks

DigitalNew businesses /transformation
new sectors

Basic Strategies to Achieve “Our Target Form”

01
02
03
04
36

Top customer satisfaction strategy
Double productivity strategy
Regional growth strategy

Surprising and inspiring our customers
Improving customer satisfaction (increasing the profits of the 77 Bank Group)
Enhance corporate value

Enhance happinessCorporate culture reform strategy

THE 77 BANK INTEGRATED REPORT37

Top customer satisfaction strategy

01

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Initiatives for business evaluations 

Initiatives for strengthening consulting sales 

In order to help customers achieve further growth, a business evaluation specialist from the Consulting Promotion Division
visits together with branch staff to understand and share management issues and provide various solutions to resolve them.
The Bank also supports the skill development of employees, such as by having external experts stationed in the Credit
Supervision Division conduct on-the-job training and other training sessions.

In order to strengthen consulting sales, we are bolstering our branch support system and assigning specialist
personnel in specialized fields within the Consulting Promotion Division.

Number of clients evaluated (cumulative) (clients)
9,000

Loan balance to clients evaluated (cumulative) (billions of yen)

6,949
6,000

977.7

1,000

8,274

800

769.3

847.2

600

0

FY202212 persons

Healthcare Team

5 persons

24,302 cases■ No. of business succession clients supported
731 clients■ No. of clients with which M&A advisory contracts were entered into
36 clients■ No. of 77 Medical/Welfare Loans executed
115 cases■ No. of solutions proposed by liaison officers from headquarters

200

FY202148 persons

Business Succession and M&A Team

(FY2022 results)

400
3,000

FY2020Regional Support Team**‌Liaison officers from headquarters are assigned to branches, etc. inside and outside Miyagi Prefecture in order tocarry out high-added-value consulting sales

5,835

0

External Sales Department, Consulting Promotion Division

FY2020

FY2021

FY2022

IT & digitalization support initiatives Consulting Sales Awards

Based on the agreement on collaboration for regional revitalization signed in June 2021 between the Bank and
NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION (“NTT East”), employees of NTT East are
stationed at the “IT Support Desk (a customer hotline for various consultations related to IT and digitalization)” aswell as the “Regional Revitalization Promotion Desk (a one-stop hotline for internal and external inquiries onregional revitalization)” from February 2022 to strengthen efforts to provide IT and digitalization support to local
businesses, etc.

With the aim of strengthening consulting-based sales capabilities, the Bank has held the “Consulting sales
awards” since FY2020 to recognize medium- to long-term efforts in consulting sales by branches.
Some Awards Received in FY2022

Supported listing on the Tokyo PRO Market
To support the listing of our client, Grantomato Co., Ltd., on the Tokyo PRO Market, we conducted a visit
accompanied by Tokyo Stock Exchange, Inc. representatives, provided various types of information, andprovided growth support to enhance the client’s corporate value through services such as financing andbusiness matching.

Regional Revitalization
Promotion Desk

IT Support Desk

(Regional Development
Promotion Division)(Digital Strategy Division)➡Support forcustomer IT anddigitalization➡Promote andsupport government
digitalization(Stationed)

Cooperation

SupportCoordination➡IT and digitalization knowledge and know-how➡Extensive track record of building IT infrastructure

In addition to interviewing customers, we hold events
such as seminars.
(Photo from a <77> Bank IT and digitalization promotion
seminar)Grantomato Co., Ltd. Head office
Provided by: Grantomato Co., Ltd.

Tokyo Stock Exchange, Inc. “The Bell”
Provided by: Tokyo Stock Exchange, Inc.

Current initiatives

38

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Top customer satisfaction strategy

01

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Our support options for each stage of life 
We offer various products and services to meet the needs of a broad range of customers.

Under 20
Life eventsNeeds

20s and 30s

Employment
  Schooling
Purchasing a car

Begin(financialtransactions)

40s and 50s

Marriage & Childbirth
Purchasing a home

Primary products & services(protection)

Increase

Give

Time deposits

Salary receipt

Receipt of retirement bonus and pension
77 Direct Service, 77 Bank App, 77 Card (credit card / debit card)

77
Educational
Loan
77
Educational
Card Loan

77 Loan (for automobiles, home renovations, etc.), housing loans, 77 Card Loan

Installment
investment
trust(JuniorNISA)

Installment investment trust (NISA), iDeCo

77 Elderly loan, 77 Reverse Mortgage, leaseback
Apartment loans

Investment trust, stocks, foreign currency deposits, public bonds, structured bonds, foreign bonds

Cancer insurance
Medical insurance

Individual annuity insurance, whole life insurance, income security insurance, cancer insurance, medical insurance

Educational
endowment
insurance

Nursing insurance

Trust

Testamentary trust, estate liquidation services, calendar year gift trust, testamentary substitute trust(inheritance)■ Strengthening bank-securities business■ Newly established a “77 Insurance Plaza”

Through coordination between The 77 Bank and 77 Securities, we support customers’ asset formation asa united group in order to respond to a broad range of needs.

In October 2021, we opened the “77 Ishinomaki Insurance Plaza,” our third location dedicated to insurance services,
following the “77 Izumichuo Insurance Plaza” and “77 Nagamachi-minami Insurance Plaza.”77 BANK

Coordination
Introduce customers
Link information
Exchange human resources

Began operating in April 2017

77 Securities(as of March 31, 2022)
No. of accounts opened: 18,768(cumulative)(Of which, 6,916 are referral accounts)■ We will being offering a fund wrap service (scheduled for January 2023)

40

Inheritance preparation
Nursing care

Pass down

Use (while protecting)Multi-purpose accounts, savings deposits, time deposits

Bank

Insurance

Over 80s

Retirement
Life after retirement
Grandchildren’s marriage
Birth of grandchildren
Schooling of grandchildren

Borrow(payments,
loans, etc.)(management)

Nursing care of parents
Child’s marriage

Save

Multi-purpose
accounts, savings
deposits

Securities

Child’s schooling and employment
Home renovations

60s and 70s

In August 2022, we entered into a basic agreement with Resona Bank, Limited, pertaining to fund wrap
services as a part of our joint research related to our products supporting long-term, stable asset
formation with Resona Holdings, Inc.

■ Expansion of 100% Web-based Loans
Applicable products: ‌77 Card Loan, 77 Smart Next, 77 Car Loan, 77 Wide
Loan, 77 Educational Loan, 77 multi-purpose Loan
<77> Initiatives for Operations that Put Customers FirstThe Bank and 77 Securities Co., Ltd. have established the 77 Basic Policy on Operations that Put Customer
First in order to promote the provision of quality financial products and service to customers. This policy iscomplied with executives and employees, and the status of initiatives is announced regularly.

The 77 Bank

The 77 Basic Policy on Operations that Put Customers First can be viewed here.

* Japanese Language only

77 Securities

THE 77 BANK INTEGRATED REPORT

41

Top customer satisfaction strategy

01

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate Governance

Financial Section

Building a network to connect influential customers Expanding our business domain 

The establishment of Aomori BranchWith the aim of resolving issues faced by customers and the region as we work to realize our “target form” asdescribed in “Vision 2030,” since April 2021 we have launched three new projects.
We will create profitable businesses from the process of solving regional issues while focusing on the key
points of “does it utilize the strengths of the 77 Bank Group?” and “can we leverage synergies with our existing
operations?”

Our Bank has two corporate sales offices in Aomori Prefecture, having opened the Aomori Corporate Sales Officein Aomori City in November 2006 and the Hachinohe Corporate Sales Office in Hachinohe City in September
2016.
The number of loan borrowers and the balance of loans and bills discounted in Aomori Prefecture is steadily
increasing, and based on the growing demand from existing clients and new clients in good standing for financing,business matching, and consulting services such as business succession and M&A, in September 2022 we
promoted the Aomori Corporate Sales Office to branch status, thus establishing Aomori Branch.
We hope to continue contributing to the development of the region by building a customer network spanning
the whole Tohoku region, etc.

China

MexicoShanghai
India

Hong
Kong
Myanmar

Korea
Taiwan3Singapore

Indonesia
Bank employee dispatch locations

Established 77 Partners Co., Ltd. (December 2021)
In order to solve the increasingly diversified issues faced by local companies, the 77
Bank Group established this subsidiary specializing in majority investments accompaniedby the acquisition of control over management and hands-on management execution
support. We will utilize its consulting functions to a greater level than before and build aplatform to support sustainable regional development with “regional people, things, andmoney.”

77 Partners
Mascot,Shichipato-kun

Established 77 Human Design Co., Ltd. (August 2022)
In September 2020, the Bank began offering a human resources placement service, and since then, we
have been strengthening our efforts to introduce management personnel and specialists. In order tosolve increasingly complex and diverse regional issues and support sustainable growth, we haveestablished this subsidiary which provides not only human resources placement services but alsosophisticated and specialized solutions for “people.” We plan to begin operations in January 2023 on theprerequisite of obtaining approval from the relevant authorities to conduct fee-charging employment
placement services, etc.

Philippines

VietnamThailand

1
2

Overseas network

Major partner institutions, etc.

Expansion of the fields inwhich the 77 Bank Groupis active

Considerations for entering the trust services field ~ Expanding and strengthening
our support options in an era when average lifespans approach 100 years ~With the aim of “protecting,” “growing,” and “passing on customers’ assets to the next generation,” wehave begun discussing the banking entity’s entry into the field of trust services in order to expand ourrange of attractive financial products and services. Thus far, the Bank has acted as an agent offering
trust services, but our aim is to establish a system in which the Bank can offer one-stop service frombeginning to end, subject to obtaining approval from the relevant authorities.

VOICE

Developing new businesses and new
sectors which are rooted in the region

In order to continue to discover attractive new businesses and human resources withthe ability to vigorously take on new challenges, we will hold an in-house business
contest again in FY2023, as we did in FY2022.
Last year’s in-house business contest attracted approximately 170 entries, withapplicants ranging from new employees to branch managers, and has fostered an
ambitious spirit within the 77 Bank Group.
We feel that employee-initiated discussions and explorations of ideas on launching
new businesses is symbolic of the “establishment of an ambitious corporate culture” asset forth in “Vision 2030.” We would like to expand new business areas by examining
them from many angles, such as what issues customers in local communities arefacing and what kind of connections can be made with the Bank’s business.

42

Bank Data

Group Business Strategy Section,
General Planning & Coordination Division

Takayuki Oka

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43

Value Creation Story

02

Double productivity strategy

Reform channels and release from the burden of administrative work!

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Digital transformation initiatives 
In order to become a company that customers choose, we will strive for “digital reform of the banking business,”which is our existing business domain, and develop digital technology human resources who will lead the entire
organization by planning and advancing digital transformation.

The 77 Bank Group will double productivity by releasingbank branches from the burden of administrative work,
strengthening our consulting systems, and enhancing
the abilities of each individual.
■ Labor savings through improvement of administrative
processes (reduction, consolidation, etc.) and promotion of
expansion and use of non-face-to-face transactions

Non-face-to-facechannel reform

Bank branch reform

Change customer
contact points

Change face-to-face
sales

▼

■ Optimization of sales channels based on customer needs

Release branches from administrative work
Data utilization
reformReduceadministrative
work at branches

Expandnon-face-to-facechannels▼

Digital reforms in thebanking business▼▼

Utilize data

Digital reforms
for employees

Paperwork-freereformMaximize the capabilitiesof our workforce▼

Creation of management assets

Reduce physicaltransactions andpaperwork

Certification as a “DX-certified operator”

Effectively utilize and redistribute workforce
in order to strengthen consulting capabilities

44

In May 2022, the Bank was designated as a “DX-certified operator”
based on the Ministry of Economy, Trade and Industry’s Digital
Transformation (DX) Certification system.
Based on the “Act on Facilitation of Information Processing,” “DX
certification system” is a system through which the Ministry of
Economy, Trade and Industry certifies business operators who haveformulated a corporate vision for promoting DX, have developed
systems for achieving a DX strategy, and are ready to promote DX.

THE 77 BANK INTEGRATED REPORT

45

02

Double productivity strategy

Value Creation Story

Initiatives for non-face-to-face channels Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Initiatives to reduce administrative work at branches 

A first for a regional bank in Tohoku! Implemented the “77 Business Portal”

Paperwork-free Promotion Committee

In October 2022, we will introduce the “77 Business Portal,” the first business portal website from a financial
institution in the Tohoku region, for various types of transactions with corporations and sole proprietorshipcustomers. This is a one-stop service enabling various procedures to be carried out online, such as confirming
deposits and withdrawals.
●Content of service: ‌Displaying account information, various corporate internet banking functions, notifications,service linkage

In March 2020, we established the Paper-work-free Promotion Committee chaired by the President, and we arepromoting “paperwork-free” initiatives to release bank branches from the burden of administrative work, such as theconcentration of bank branch administrative work at headquarters and revisions to inefficient administrative work.

Improving the convenience of the 77 Bank App and other services
We are working to enhance customer convenience by expanding service
functions while improving the UI and UX of the Bank App and other services.

Results of FY2022 initiatives▪Reduction and simplification of administrative processes▪Reduction of number of visiting customers and in branch administration

Expansion of services subject to HQ centralization

Promotion of non-face-to-face-channel usage

・Expansion in number of branches using support office・Expansion of 100% Web based loan targets(35 branches as of the end of FY2022)

Reduction and simplification of counter administration
・Revision of inheritance administration

Initiatives for data utilization 

Reduction of inefficient administration specific toindividual companies
・Promoted the adoption of electronic banking

Enhancement of financing administration efficiency(through reduction/simplification/centralization)

Full-scale implementation of “AMATERAS RAY,” a service to bring AI in-house
In May 2022, we began full-scale introduction of “AMATERAS RAY,” provided by aiforce solutions Inc.* to enablein-house capability of data analysis through the use of AI. With this tool, AI models can be built in as little as a few
days, and data analysis can be performed using AI without the need for specialized knowledge. By building AI
models and analyzing data on their own in a short period of time, bank employees will be able to apply AI to awider range of operations with greater flexibility than ever before. We will work to enhance the sophistication ofbanking operations by proposing optimal services based on analysis of customer needs and improving theefficiency of management work, etc.
*‌On May 2, 2022, aiforce solutions Inc. sold all of its shares to AI inside Inc. and merged its management. However, “AMATERAS RAY” continues tobe provided as a service.

Initiatives for developing digital technology human resources Strengthening the development of digital technology human resources
In order to meet customers’ needs and challenges related to IT and digitalization, and to accelerate digitaltransformation (DX) initiatives within the Bank, we will strengthen the development of “digital technology humanresources” who have knowledge of both business and digitalization and who will be responsible for DX.

・‌Partial centralization of credit rating and retail loanadministration at HQ

Main initiatives in FY2023
In FY2023, in addition to expanding the number of branches using a support office and promoting non-faceto-face-channel usage, we will work to reduce administrative work by implementing new systems.

Introduction of “branch tablets”
We will introduce “branch tablets” from January 2023.
Procedures for transactions can be completed by entering information on
the screen, shortening processing time through this “paperless,” “seal-less”
method.
‌Applicable procedures (as planned): Opening ordinary deposit accounts,●
opening or closing time deposit and savings deposit accounts,
making changes to registered information, switching to a WEB Passbook,reissuing an ATM card or passbook, etc.

(Target for March 31, 2025)

Specialist
human resources

From among core human resources, develop human resources thathave specialist knowledge and skills pertaining to data analysis, AI, andother subjects, and who are capable of taking the lead in DX.

・Dispatch to external companies, etc., coordination with external companies (e.g., AI-related)・‌Develop the Bank’s in-house human resources by assigning permanently stationed employees, anddevelop by enabling in-house capability of data analysis

Core humanresources

Develop human resources who have both business skills and digitalknow-how, and who can formulate and implement digital strategies andmeasures・‌Implement the “Digital Core Human Resources Development Program” (an in-house training newly
established in FY2023)

Base humanresources

Develop human resources who are interested in the digital sector andbegin learning on their own, who form the foundation for digitaltechnology human resources.

・‌Educate employees on the necessity of digital literacy in conducting banking business, proactively
propose the Bank’s non-face-to-face services, and encourage employees to acquire the IT Passportqualification.

46

10 people
or more100 people
or more1,200 people
or more

VOICE

Towards the expansion of
our digital technology

The business environment is shifting due to the rapid advancements in digitalization,and “digital transformation” is set forth as a key factor in “Vision 2030,” our vision forpaving the way to a new future.
In addition to reforming our existing banking business to improve labor productivity
and reduce the volume of administrative work, we are also strengthening thedevelopment of digital technology human resources to meet the digital needs andchallenges of our customers. As an additional effort, from April 2022, we havedispatched employees to Tohoku University in order to develop “specialist humanresources” in fields such as data science, which are difficult to develop within the Bank.
We intend to enhance the Bank’s brand strength by leveraging digital technology toprovide new value and experiences to our customers.

Manager, Digital Strategy Section,
Digital Strategy Division

Yasushi Shibata

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47

Value Creation Story

03

Regional growth strategy

Achieve sustainable growth in the local community!
The 77 Bank Group will work to achieve sustainablegrowth together with the local community by making
the region attractive and supporting the growth of
inspirational local companies.

3・‌Support for founding and secondary
founding・‌Assistance with funding throughventure funds, etc.
・‌Cooperation for various events and
77 New Business Subsidies

Promotion of urban
development
・‌Participation in regional
development projects
・‌Promotion of public-private
partnership projects
・‌Support in coordination withexternal institutions (MAPP)

Business Strategy

Establishment of the “<77> Startup Support Desk”
In addition to support for procuring financing, the Desk
responds to a wide range of consultations for customers to
expand their businesses and resolve management issues.
(FY2022)■ No. of consultations

134 cases[Primary types of support]“Founding Support Package”■ Strengthening and utilizing partnerships with external

Public support systems

Business matching

Crowdfunding

Joint financing with Japan Finance Corporation

2

Bank Data

Financial Section[Support desk overview]
Customers in the founding stage
Consultations
Consultations
via website oremail

The 77 Bank head office and branches
Conveyance<77> Startup Support Desk
(Regional Development Promotion Section,
Regional Development Promotion Division)

Coordination and support

Public support institutions

The Bank partners

Expansion of “<77> Founding Support Package”
We have expanded our products and services to provide even more
support for the growth of customers in the founding stage.

Support and developmentof regional core companies(Applicable customers)
Corporate customers who have a deposit account with the Bank and who arewithin five years of establishment

・Support for growth of local enterprises
・Business matching and sales channel cultivation
・Support for industry-academia cooperation
・IPO assistance(1) No contract fee for corporate internet banking(2) No 77 Card annual membership fee for the first year(3) ‌No usage fee for Money Forward Cloud (Back office SaaS) for 2 months(4) Free preparation of a subsidy assessment form(5) ‌One free distribution each month with our Press Release Distribution
Service (until after two years from establishment)(6) ‌No initial setup fees for our subscription-type website creation service(7) ‌No basic monthly charges for 3 months from applying for 77 Big Advance・Assistance with utilization of subsidies, etc.
・Human resources placement

4

Corporate GovernanceInitiatives for the support for founding and new businesses 

Financing<Regional Revitalization Mission>: four key items of implementation

1

Sustainability Promotion■ Building true partnerships to realize a future envisioned
together with regional public bodies
partner institutions and private-sector companies, etc. whohave consulting functions

Support for founding
and new businesses

Top Message

創業応援
パッケージ

～♬
シカ
する
応援

ップ
「77スタートア
として、メンバーズ ※ 」
等の補助 金・セミナー
します!
案内
時ご
情報を随

創業期のお客さまをさまざまなメニューで応援いたします。
お申込みいただけるお客さま

当行に預金口座をお持ちの設立後5年以内の法人のお客さま

注1.以下のお客さまは本パッケージのお申込み対象外です。
合併等により設立された法人、
その他（個人事業主の方、
公益法人、
監査法人、
宗教法人、
独立行政法人）注2.設立年数によっては、一部特典をご利用いただけない場合があります。

お申込み手続き最終ページの申込書をお近くの
七十七銀行の窓口に持参

七十七銀行にて確認

七十七銀行から「創業応援
パッケージ加入証」
を交付

手続き完了

お申込みいただくと、7つの特典 を受けることができます。
くわしくは中をご覧ください。
お申込みは七十七銀行の本支店で承ります。

〈七十七〉スタートアップ・サポートデスクへのSupport for promotionof tourism, etc.
・‌Support for feasibility and growth of
tourism-related industries・‌Assistance with promotion of
inbound travel・‌Assistance with preparation of
tourist intake framework

ご相談等を希望する場合は、右記の2次元バーコード、
URL、Eメール等からお気軽にお問い合わせください。

https://www.77bank.co.jp/77bank/chihousousei/
startup_support/index.html
Eメールアドレス

77-sougyo＠77bank.co.jp※創業応援パッケージをお申込みいただくと「77スタートアップメンバーズ」
として登録されます。
2022年8月1日現在

Holding of “<77> Open Innovation Pitches”
In April 2022, we held an event for startups to make pitches
to local companies in order to revitalize the regional
economy by creating new innovation through collaboration
between startups and local companies. By creating
opportunities for both startups and local companies to solve
their respective challenges, we aim to achieve sustainablegrowth for both companies.

Revitalizing regional industry, economy and living48

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49

03

Regional growth strategy

Value Creation Story

Initiatives for the support and development of regional core companies 
IPO assistanceHolding of business matching events

We are driving various support initiatives with the aimof producing listed companies from the Tohoku region.

We support the development and expansion of sales
channels through business matching by utilizing
specialists from within and outside the Bank. In
organizing more than 50 business meetings, we
provide full support for exhibitions and individual
business meetings.

Partnership with Tohoku University and Tokyo
Stock Exchange[Main types of support]
Tokyo Stock

Exchange●Plan formulation support‌Promoting stock exchange●
listing
Tohoku●Dissemination of
The 77 Bank
University
information●Holding seminars, etc.

Partnership with
Sendai City
We utilize the above tri-party
partnership to support thelisting of “Sendai Future Generating Companies”
designated by the city of Sendai.

Appointment of IPO Promotion Officers
Employees who gained practical IPO experience asTokyo Stock Exchange trainees have been assigned
as IPO promotion officers.

We held a matching event aimed at resolving
the various regional issues faced by regional
public bodies, and a discussion forum where
members of private-sector businesses gave
presentations to share regional issues.

Sustainability Promotion

Business Strategy[Support examples]

We supported the expansion of sales channels forprefectural products and established a match between
IBEX Airlines Co., Ltd. and Sasakei Co., Ltd.

Bank Data

Financial Section

As a part of our efforts based on the “Agreements on Comprehensive cooperation for Regional Revitalization”
with regional public bodies and other agreements, we have formed the “Miyagi Wide-area PPP Platform(nickname “MAPP”)” as a space for continual information sharing and encouraging dialogue between the
public and private sectors for the utilization of private-sector funds and know-how.

Miyagi Wide-area PPP Platform［Core members］
77 Research andConsulting, etc.

[Major business meetings we hold]・‌D elicious Yamagata and Food Kingdom Miyagi
Business Meeting・Regional Bank Food Selection, etc.

Corporate Governance

Formation of the “Miyagi Wide-Area PPP Platform (nickname “MAPP”)”(Established in January 2020)

The 77 Bank

●Dissemination and ●Human resource
awareness-raisingdevelopment function
function●Execution support ●Exchange function
function［Support members］

Regional public bodies(In Miyagi Pref. agreements such as“Agreements on Comprehensive cooperation for
Regional Revitalization” have been signed with
Miyagi Pref. and all 35 of its municipalities)●Public-private ●Information
dialogue function dissemination
function

Photo from IBEX Airlines official
online shop

Development Bank of Japan(Regional research department, Tohoku branch)
Think tankTohoku University, Miyagi University,
Tohoku Institute of Technology, etc.
Tohoku PPP/PFI Association, etc.
Individual market soundings
for each project

Private companies
Real estate, construction, trading, lease, IT services,
consulting, communications, media, etc.

Promotion of urban development 
Activities through MAPPTop Message

Support for promotion of tourism, etc. 
Donation of funds to
Photon Science Innovation Center
In January 2022, we presented a donation to the
Photon Science Innovation Center, which is thebusiness entity of the Next-generation synchrotron
radiation facility (nicknamed “NanoTerasu”), for the
purpose of further contributing to regional
revitalization.

Support for promotion of tourism utilizing government crowdfunding
As a new initiative to attract tourists, we are providing
support together with our business matching partners
for crowdfunding efforts launched by regional publicbodies, etc.
As the Bank’s first case of government crowdfunding
support, we supported a crowdfunding-based
fundraising project by the town of Ogawara in Miyagi
Prefecture.

The 77 Bank
Business
partnership

Project support
Advertising support

Ogawara Town
Provide platform

Utilization of
crowdfunding

Donations ⇔Gifts provided
in returnSupporters

Crowdfunding businessInitiatives of the Financial Network of+
TOHOKU Tourism (“FINE Tohoku”)*

Support for the regional revitalization
telework promotion planAs part of the “FINE Tohoku” initiative, we are holding an
Instagram photo contest in collaboration with General
Incorporated Association Tohoku Tourism Promotion
Organization.

We signed an agreement with the town of Kami
and three private companies to promote telework
through a public-private partnership, the firstinitiative of its kind for our Bank. We provide
information and finance support to promote theutilization of our satellite offices, etc.

+

50

Left: ‌Chief Director Takata of the
Photon Science Innovation Center
Right: President Kobayashi of The 77 Bank*‌A network formed in 2017 when six Tohoku region banks—Aomori Bank, Akita
Bank, the Bank of Iwate, Yamagata Bank, Toho Bank, and 77 Bank—enteredinto the “Cooperative Business Agreement on Support for Tourism Promotion
Projects” with the Development Bank of Japan.

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51

Value Creation Story

04

Corporate culture reform strategy
Virtuous circle of ambition, confidence, and cheerfulness!

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Initiatives to foster an ambitious spirit Holding of “Business Contest”
As part of our efforts to develop new businesses and sectors, we held a “Business Contest” in which all officers
and employees came up with new business plans and submitted them. We plan to hold the Business Contest

The 77 Bank Group will endeavor to promote
diversity, and create a virtuous circle where all
officers and employees take on new challenges,
leading to confidence and cheerfulness.

again in FY2023 and will call for applications on the topic of the SDGs.
(FY2022)■ ‌Total no. of

Foster an ambitious spirit

Promote diversity

170 cases

Business Contest applications■ Accommodate a diverse range of values and fundamentally overhaulingpersonnel and organizational systems to increase motivation■ Create an environment that permits trial and error andvalues the act of taking on new challenges.
■ Boost in level of organizational capability through improved
specialization and vitalization of communication■ ‌Forming of complete internal control environment tosupport reforms(The no. of applicants was 331)

■ No. of Business Contest prizes won

7 cases

Implementing the “Job Entry” system and “Headquarters Operations Trials”
In addition to the “Job Entry” system, which aims to improve the morale of employees and the organization as awhole by enabling people to take on challenges in their desired area of work, the “Headquarters Operations
Trials” are conducted as an initiative to increase employee motivation through career development support.
(FY2022)Develop human resources■ No. of trial participants

76 persons

Enhancement of communication in the workplace to disseminate “Vision 2030”

Confidence

The President and other officers are holding individual briefings at all branches to promote understanding of“Vision 2030,” which was launched in April 2021, within the Bank, and to transform the mindsets of employees.
In addition, in FY2023, we held the “77 President’s School” for employees at the headquarters who are at or
below the rank of deputy section/office manager, as well as the “Management Plan Explanatory Meetings for

Virtuous
circleAmbition

Branch Employees” held by executive officers.
At these explanatory meetings, we provide time for question-and-answer sessions to encourage active

Cheerfulness

communication between officers and branch employees, etc.

Establish an ambitious corporate culture“Vision 2030” briefing held by President Kobayashi

52

77 President’s School

THE 77 BANK INTEGRATED REPORT

53

04

Corporate culture reform strategy

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Developing human resources that serve a purpose for customers and local communities 

Spreading an awareness of diversity and inclusion 

In addition to working for the development of bank employees having high-level consulting knowledge andcapabilities, we are endeavoring to expand their scope of active participation through efforts such as dispatch
outside the Bank.

To accommodate diverse values, we are strengthening our efforts to support women’s careers, as well as
conducting management training and recruiting activities to enable the active participation of a diverse workforce.

Independent
learning[Knowledge & skills]

OJT

Training[Practical training]

Holding of “women’s career advancement program”

Employees’ target form / Career vision

Basic approach to humanresource development[Practical abilities]

Desire for growth / Motivation

In order to further promote diversity through additional support for the active participation of women, we hold the“women’s career advancement program,” a training program for employees in charge of clerical work, with theaim of fostering an awareness of career design focused toward management positions.
(FY2022 results)■ “Women’s career advancement program” participants 

Establishment of the “Women’s College”<Training system chart>
OFF JT 

In FY2023, a new training program was established for women in managerial positions to help them ascertain
the leadership style that leverages their own strengths and acquire the management skills, etc. demanded bymanagerial positions.

External training
Strengthen management abilities

Develop specialists

Proportion of female managers●In Japan●Outside Japan●In Japan●Outside Japan

Branch manager course
Middle manager training course
Mid-level employee development
courseSenior leader training course
Mid-level leader training course
Female manager training course
Female management position step-up
courseManagement improvement seminar
Short-term MBA

Overseas training for branch generalmanagers

MBA in Japan
MBA at International University of Japan
MUFG Bank trainee
Mizuho Bank trainee
Tohoku University Graduate School
Institute for Small Business
Management and Technology
Skill up course for personal banking
transactions
Corporate management consulting course

Trainees outside Japan
・New York・London・Singapore
・Dalian・Shanghai・Thailand
・Vietnam

Level-specific training

30.0

％

30

20

13.4

14.2

FY2021

FY2022And many others

Divided by work duties●Branch-related work

●Securities-related work

Company screening training workshop
Training workshop for employees newly appointed to loan-related work
Consumer loan training workshop
Individual guidance from the Credit Supervision Division
Region-specific training workshops by the Credit Supervision Division

Training workshop for consultations at
branch counters

Treasury Division trainee(as of April 1, 2022)●IT-related■ Registered non-Japanese employees ●Sales-related work
Intro to consulting program
Strengthening corporate consulting capabilities program
Strengthening personal consulting capabilities program
Training workshop to strengthen trust business
Service care attendant training workshop
Training workshop for counter sales of investment trusts
Training workshop for counter sales of life insurance●Internal administrative work

Training workshop to strengthen theutilization of IT & digital■ Registered midcareer hires ●International work

FY2026(Interim target)

FY2031(Target)Promoting the active participation of diverse human resources●Loan-related work

Training workshop on exchange
services

TargetOver 30%0Operations-specific training●Management training

18.0

10

In-house group training

Practical management training
workshopManagement reflection workshop
Newly appointed branch generalmanager training workshop
Newly appointed deputy generalmanager training workshop
77 Business School
Women’s College
Newly appointed deputy head training
workshop
Women’s career advancement
programThird-year employee career design
training workshop
Second-year employee training
workshop
New employee training workshop
Pre-entry training workshop

30 persons

4 persons17 persons

Training workshop on foreignexchange practices
Training workshop to support
international business

VOICE

OJT 
●Orientation education●Workplace training

Job Rotation System
Brother-Sister System
Pre-Mentor System
Credits Approval System
New employee notes

System of Short-term Training at Other
Branches
Various DVDs

●Motivation and opportunities‌
education
Self-development sheet
Short-term Assignment System
Mentor System

Self-development ●Level up●Challenge

Various online courses Various reference materials
e-Learning: “SD Web Support”

Various licensing examinations Various public qualifications

Cultivating attractive human resources“Human resources” are one of the 77 Bank Group’s largest assets. Thus far, the Bank has
been actively engaged in human resource development, and, in FY2023, we plan toincrease the number of participants in level-specific training programs to foster
management skills and career awareness to approx. 1,600 (from approx. 1,100 in
FY2022), in order to “foster an ambitious spirit,” which is required for our corporate culture
reform. In addition, we will work to develop human resources with expertise by expanding
topic-specific training programs to strengthen consulting capabilities, dispatching trainees
outside the Bank, and encouraging the acquisition of qualifications for self-development.
We will continue to strengthen our investments related to human resources, which willcontribute to the development of “human resources that serve a purpose for customers
and local communities” and “human resources that contribute to corporate reform.”

Manager, Training Section,
Personnel Division

Yohei Sato

Incentive pay system for self-development and acquiring qualifications Self-development guide
77 Business College (seminars on holidays and weekday evenings)

54

THE 77 BANK INTEGRATED REPORT55

To Our Shareholders
Our Policy on Constructive Dialogue with Shareholders and Other Stakeholders
The Bank has established the following “Policy on Constructive Dialogue with Shareholders and Other Stakeholders”
as follows, for the purpose of promoting an accurate understanding and evaluation of the Bank’s management
policies, financial standing, and other matters, through the exchange of opinions and communication (hereinafter“dialogue”) with shareholders, investors, etc. (hereinafter “shareholders, etc.”).
1. Realizing constructive dialogue with shareholders and other stakeholders
The officer in charge of the Bank’s corporate communication shall supervise dialogue with shareholders, etc., andshall endeavor to realize constructive dialogue within reasonable limits by, for example, appropriately determining
on a case-by-case basis the staff members to engage in dialogue (hereinafter “interlocutors”) based on theintentions of shareholders, etc. and their main concerns.
2. System for promoting constructive dialogue
In order to promote constructive dialogue with shareholders, etc., the Bank will provide accurate and sufficient
information to interlocutors in cooperation with the General Planning & Coordination Division and otherheadquarters divisions.
3. Enhancing methods of dialogue
The Bank will strive to enhance methods of dialogue by holding individual meetings and teleconferences, etc. inaddition to corporate briefings for institutional investors, individual investors, and clients by region.

The Bank establishes internal rules for appropriate information disclosures and the prevention of insider trading,
and will thoroughly manage insider information when engaging in dialogue with shareholders, etc.

Approach to disclosures
Compliance with laws, regulations, etc.
The Bank conducts disclosures in accordance with the Banking Act, the Financial Instruments and Exchange Act,
other laws and regulations, and the timely disclosure rules stipulated by the Financial Instruments Exchange.
In particular, we recognize that disclosure newsletters under the Banking Act and securities reports under the
Financial Instruments and Exchange Act are important statutory disclosure documents that disclose the status of theBank’s operations and assets to shareholders, investors, and clients.

Bank Data

Financial Section

Method of information disclosure
Explanations at corporate briefings
We hold corporate briefings for institutional investors and individual investors.
■ No. of attendees at corporate briefings for institutional investors: 74 (Dec. 2021)*, 53 (Jun. 2022)*■ No. of attendees at corporate briefings for individual investors: 1,079 (Jan. 2022), 1,197 (Jul. 2022)*‌The corporate briefing for institutional investors in December 2021 was held online, and the corporate briefing for institutional investors
in June 2022 was held in person.

Announcements to news media
We release management information to the media through press conferences and press releases.

Publication of public relations materials, etc.
While not statutorily required, we prepare and release public relations materials, etc.

Website postings
The following materials are available on the Bank
website for anyone to view.
・Disclosure newsletters
・Integrated reports

・Mini disclosure newsletters (sales reports)
・Securities reports / Quarterly reports

七十七銀行 ミニディスクロージャー誌

・‌Brief financial results / Quarterly brief financial
results

R

Proﬁle77Group
しちじゅうしち

名称 ・・・・・・・・・・・・・・・・・・・・・・・・ 株式会社七十七銀行
英文名称 ・・・・・・・・・・・・・・・・・・ The 77Bank, Ltd.
本店 ・・・・・・・・・・・・・・・・・・・・・・・・ 仙台市青葉区中央三丁目3番20号

・Corporate briefing materials
・News releases（明治11年）
12月9日
創業 ・・・・・・・・・・・・・・・・・・・・・・・・ 1878年
資本金 ・・・・・・・・・・・・・・・・・・・・・ 246億円
従業員数 ・・・・・・・・・・・・・・・・・・ 2,673人（本支店137、出張所6）
店舗数 ・・・・・・・・・・・・・・・・・・・・・ 143
・・ 単体10.01％
自己資本比率（国内基準）

連結10.27％
総資産 ・・・・・・・・・・・・・・・・・・・・・ 10兆6,660億円
預金・譲渡性預金 ・・・・・・・・ 8兆8,464億円
貸出金 ・・・・・・・・・・・・・・・・・・・・・ 5兆3,402億円■七十七リース■七十七信用保証■七十七証券■七十七リサーチ＆コンサルティング■七十七パートナーズ■七十七キャピタル

リース業務

金融商品取引業務

ファンド運営業務

信用保証業務

調査研究業務■七十七カード

クレジットカード業務

七 十 七 グルー プ は 、地 域 社 会 の 繁 栄 のため 、

5. Managing insider information

Corporate Governance

最 良 のソリューションで 感 動 と 信 頼 を 積 み 重 ね 、

officer in charge of such dialogue as necessary.

Business Strategy

活 躍 のフィールド を 切 り 拓いていく

business operations by providing appropriate internal feedback, for example by reporting such opinions to the

Sustainability Promotion

リ ー ディングカンパニー を 目 指 し ま すRegarding the opinions, etc. expressed in dialogue with shareholders, etc., the Bank will strive to improve its

Top Message

ステー クホルダ ー と と もに 、宮 城・東 北 か ら

4. Feedback of the opinions of shareholders, etc. to the Bank

Value Creation Story

コンサルティング業務

Contents

ファンド運営業務

01 頭取メッセージ

2022年6月
発行 株式会社七十七銀行 総合企画部 企画課
電話 022-267-1111（代）

02 「 Vision 2030 」～未来を切り拓くリーディングカンパニー～

さらに詳しい内容については、七十七銀行のホームページをご覧ください

03 顧客満足度ナンバーワン戦略
05 生産性倍増戦略
06 地域成長戦略

https://www.77bank.co. jp/

08 企業文化改革戦略
09 2022年度「SDGｓ実践計画」

環境負荷の軽減に努めています

10 SDGｓへの取組み
11 業績ハイライト
見やすいユニバーサルデザイン
フォントを採用しています。

13 株式情報14 七十七の店舗ネットワーク

・Integrated report

Policy of Return of Profits to Shareholders
Based on “Vision 2030,” which was launched in April 2021, from the perspectives of building strong financial
foundations by improving customer satisfaction and productivity as well as the early-stage realization of our mission to
our shareholders, “Offer growth and returns together with the 77 Bank Group,” in January 2022, we formulated apolicy of return of profits to shareholders which sets the continuation of stable dividends and specific goals.

Policy of Return of Profits to Shareholders

In addition, the “timely disclosure” of important corporate information that complements these materials isappropriately conducted in accordance with the rules of the Financial Instruments Exchange in order to provide theThe basic policy of the Bank in this regard is to continue to distribute steady dividends while taking factors such

most up-to-date corporate information in a prompt, accurate, and fair manner.

as its public character as a bank business and the preservation of the soundness of its management into

Furthermore, at the Bank we proactively hold corporate briefings and voluntarily disclose various financial data inorder to provide timely and appropriate information to shareholders and investors.

consideration. Additionally, based on the premise of strengthening its financial foundation, the Bank will proceed
to gradually elevate its divided ratio relative to net income attributable to owners of the parent with a target of
30% by FY2030 as it aims to improve shareholder returns and capital efficiency.

56

THE 77 BANK INTEGRATED REPORT

57

Governance Structure

Value Creation Story

Top Message

Sustainability Promotion

Managing Director

Board of Directors and Audit & Supervisory Committee Members (As of July 31, 2022)

Business Strategy

Yoshikazu Onodera

Apr. 1985 Joined the Bank
Jun. 2014	‌Executive Officer and General
Sep. 2007	‌General Manager, Hachimanmachi
Manager, General Planning &Branch, the Bank
Coordination Div., the Bank
Mar. 2009	‌General Manager, Yoshioka Jun. 2016	‌Director, Executive Officer
Branch, the Bankand General Manager,
Ishinomaki Branch andJun. 2011	‌General Manager, Operations
Minato Branch, the BankManagement Div., the Bank
Jun. 2013	‌General Manager, General Planning Jun. 2018	‌Managing Director, the Bank
& Coordination Div., the Bank
(current position)
Managing Director
Apr. 1988 Joined the Bank
Mar. 2010	‌General Manager, Sendai
Higashiguchi Branch, the Bank
Sep. 2011	‌General Manager, Sapporo Branch, the Bank
Jun. 2013	‌General Manager, Kencho Branch, the Bank
Jun. 2015	‌General Manager, Corporate &Retail Banking Div., the Bank
Apr. 2018	‌General Manager, Consulting
Promotion Div., the Bank
Jun. 2018	‌Executive Officer and General Manager,
Consulting Promotion Div., the Bank

Masanori Muranushi
Jun. 2019	‌Executive Officer and General
Manager, Tokyo Branch, the Bank
Jun. 2020	‌Senior Executive Officer and General
Manager, Tokyo Branch, the Bank
Jun. 2021	‌Senior Executive Officer and General
Manager, Head Office Business Div. andBasho no Tsuji Branch, the Bank
Dec. 2021	‌Senior Executive Officer and General
Manager, Head Office Business Div., Bashono Tsuji Branch, and Minamimachi-doriBranch, the Bank
Jun. 2022	‌Managing Director, the Bank (current position)

58

Senior Managing Director

Hidefumi Kobayashi

Teruhiko Ujiie

Makoto Igarashi

Apr. 1981 Joined the Bank
Jun. 2006 General Manager, Treasury Div., the Bank
Jun. 2008	‌General Manager, General Planning &Coordination Div., the Bank
Jun. 2010	‌Director and General Manager, General
Planning & Coordination Div., the Bank
Jun. 2013	‌Director and General Manager, Head
Office Business Div., the Bank
Jun. 2014	‌Managing Director and General Manager,
Head Office Business Div., the Bank
Jun. 2015 Managing Director, the Bank
May. 2016	‌Managing Director, the Bank, General
Manager, Ishinomaki Branch and Minato
BranchJun. 2016 Managing Director, the Bank
Jun. 2017	‌Representative Director and Deputy
President, the Bank
Jun. 2018	‌Representative Director and President,
the Bank (current position)

Apr. 1969 Joined The Industrial Bank of Japan, Limited
Aug. 1992	‌Associate Director-General, Related Business
Department, The Industrial Bank of Japan, Limited
Jun. 1993	‌Director and General Manager, Business
Development Div., the Bank
Jun. 1995	‌Director and General Manager, Business
Promotion Div., the Bank
Jun. 1997	‌Director and General Manager, Head
Office Business Div., the Bank
Jun. 1998	‌Managing Director and General Manager,
Head Office Business Div., the Bank
Jun. 1999	‌Managing Director and General Manager,
Investigation Div., the Bank
Mar. 2000 Managing Director, the Bank
Jun. 2002 Senior Managing Director, the Bank
Jun. 2005	‌Representative Director and Deputy
President, the Bank
Jun. 2010	‌Representative Director and President,
the Bank
Jun. 2018	‌Representative Director and Chairman,
the Bank (current position)

Apr. 1980 Joined the Bank
Sep. 2000	‌General Manager, Onahama Branch, theBank
Jun. 2002	‌General Manager, Bashonotsuji Branch,
the Bank
Jun. 2004	‌General Manager, Shiroishi Branch, theBank
Jun. 2005	‌General Manager, General Affairs Div.,the Bank
Jun. 2006	‌General Manager, Personnel Div., theBank
Jun. 2009	‌Director and General Manager, Tokyo
Branch, the Bank
Jun. 2012	‌Director and General Manager, Business
Promotion Div., the Bank
Jun. 2013 Managing Director, the Bank
Jun. 2017 Senior Managing Director, the Bank
Jun. 2018	‌Representative Director and Senior Managing
Director, the Bank (current position)

Jun. 2016	‌General Manager, General Planning& Coordination Div., the Bank
Jun. 2017	‌Executive Officer and General
Manager, General Planning &Coordination Div., the Bank
Jun. 2019	‌Senior Executive Officer, General
Manager, Head Office Business Div.
and Basho no Tsuji Branch, the Bank
Jun. 2021	‌Managing Director, the Bank
(current position)

Ken Nakamura

Outside Director
Apr. 1974	‌Registered as Attorney-at-Law(Sendai Bar Association)
Sep. 1977	‌Opened Nakamura Ken Law
Office (current position)
Jun. 1996	‌Audit & Supervisory Board Member,
KOHSOKU CORPORATION
Nov. 2004	‌Auditor, HOKUSHU Co., Ltd.
(current position)

Jun. 2007	‌Audit & Supervisory Board
Member, the Bank
Jun. 2013	‌Director, KOHSOKU CORPORATION
Jun. 2015	‌Director, the Bank
(current position)
Jun. 2016	‌Director (Audit & Supervisory
Committee Member), KOHSOKUCORPORATION (current position)

Seiichi Ohtaki

Outside Director

Jun. 2014	‌Executive Officer andGeneral Manager, Business
Promotion Div., the Bank
Jun. 2015	‌Director, Executive Officer andGeneral Manager, Oroshimachi
Branch, the Bank
Jun. 2018	‌Managing Director, the Bank
Jun. 2021	‌Director, Audit & Supervisory
Committee Member, theBank (current position)

Kazuhito Chida

Director, Audit & Supervisory
Committee Member (Outside Director)

Toshio Suzuki

Apr. 1970 Joined Tohoku Electric Power Co. Inc.
Jun. 2001	‌Deputy Director and General
Manager, Human Resources Division,
Tohoku Electric Power Co. Inc.
Jun. 2005	‌Director and General Manager, Human Resources
Division, Tohoku Electric Power Co. Inc.
Jun. 2006	‌Director and General Manager, Miyagi
Branch, Tohoku Electric Power Co. Inc.
Jun. 2007	‌Senior Executive Officer and General
Manager, Miyagi Branch, Tohoku
Electric Power Co. Inc.
Director, Audit & Supervisory
Committee Member (Outside Director)

Jun. 2009	‌Standing Statutory Auditor, Tohoku
Electric Power Co. Inc.
Jun. 2010 Corporate Auditor, The Daishi Bank, Ltd.
Jun. 2013	‌Audit & Supervisory Board
Member, the Bank
Jun. 2013	‌Chairman and Representative Director, Tohoku
Intelligent Telecommunication Co., Inc.
Jun. 2015	‌Advisor, Tohoku Intelligent
Telecommunication Co., Inc.
Jun. 2017	‌Director, Audit & Supervisory Committee
Member, the Bank (current position)

Masai Yamaura

Koichi Suzuki

Yoko Ushio

May 2001	‌Senior Managing Director
Apr. 2016	‌Auditor, Tohoku University
and General Manager,(current position)
Fujisaki Comfortable Lifestyle Jun. 2019	‌Director, Audit & Supervisory
Research Institute Co., Ltd.
Committee Member, the Bank
(current position)
May 2003	‌Director, Department Store
Aug. 2020	‌Representative Director,
Fujisaki Co., Ltd.
K.K. Shinsei Sogo JimushoJan. 2011	‌Advisory Fellow, Tohoku(current position)
Regional Advancement Center
Apr. 2012	‌Fellow, Tohoku Regional
Advancement Center

Apr. 2017	‌Vice Chairman, Miyagi
University
Apr. 2019	‌Chairman, Miyagi Prefecture
Land Development Corporation
Jun. 2019	‌Representative Director andPresident, Miyagi-ken Kaihatsu K.K.
Jun. 2021	‌Director, Audit & Supervisory
Committee Member, the Bank
(current position)

Senior Executive Officers
General Manager,
Audit & Inspection Division
General Manager, Head Office Business Div., Basho no
Tsuji Branch, and Minamimachi-dori Branch, the Bank
General Manager,
Tokyo Branch
General Manager,
Credit Supervision Division
General Manager,
Personnel Division

Apr. 1988 Joined the Bank
Jun. 2008	‌General Manager, Okino
Branch, the Bank
Jun. 2010	‌General Manager, Sendai
Haranomachi Branch, the Bank
Jun. 2012	‌General Manager, Tokyo
Liaison Office, the Bank
Jun. 2015	‌General Manager,
Treasury Div., the Bank

Apr. 1984 Joined the Bank
Mar. 2005	‌General Manager, Wakuya
Branch, the Bank
Sep. 2007	‌General Manager, Masuda
Branch, the Bank
Jun. 2009	‌General Manager, General
Affairs Div., the Bank
Jun. 2013	‌General Manager, Business
Promotion Div., the Bank

Oct. 1973	‌Joined the Sendai City
Apr. 2014	‌Chairman, Sendai
Government
Council of Social Welfare(current position)
Sep. 2005 Vice Mayor, Sendai City
Apr. 2006	‌Chief Director, Sendai
Jun. 2015	‌Audit & Supervisory
Green Association
Board Member, the Bank
Jun. 2007	‌President and Representative Jun. 2017	‌Director, Audit &Director, Sendai Software
Supervisory Committee
Center Co., Ltd.
Member, the Bank
(current position)
Jun. 2008	‌Auditor, Sendai Meat Wholesale
Market Co., Ltd. (current position)
Director, Audit & Supervisory
Akira InukaiCommittee Member (Outside Director)
Apr. 1979	‌Joined the Miyagi
Prefectural Government
Apr. 2013	‌Director-General, Commerce,
Industry and Tourism Department,
Miyagi Prefectural Government
Apr. 2015	‌Public Corporation Administrator,
Miyagi Prefectural Government
Jun. 2015	‌Director, Miyagi-ken Kaihatsu
K.K.

Atsushi Kobayashi

Apr. 2017	‌Executive vice president,
KEMET Corporation
Jul. 2020	‌Special Advisor for the Board of
Directors, TOKIN Corporation
Jul. 2021	‌President, TOKIN Foundation for
Advancement of Science andTechnology (current position)
Jun. 2022	‌Director, the Bank
(current position)

Director, Audit & Supervisory
Committee Member (Outside Director)

ChairmanManaging Director

Shigenori Oyama

Emiko Okuyama

Apr. 1989 Joined the Bank
Jun. 2020	‌Executive Officer, theBank
Jun. 2014	‌General Manager, Sendai
Shiyakusho Branch, the Bank 	‌General Manager,
Oroshimachi Branch
Jun. 2016	‌General Manager,
Compliance Management Jun. 2022	‌Director, Audit &Supervisory Committee
Div., the Bank
Member, the Bank
Jun. 2019	‌Executive Officer and General(current position)
Manager, ComplianceManagement Div., the Bank

President

Financial Section

Jul. 2014	‌President, The SanaburiFoundation (current position)
Jun. 2016	‌Auditor, Yurtec Corporation
Nov. 2016	‌President, Organization for Creating
LocalGood (current position)
Apr. 2018	‌Vice-President, Shizenkan
University (current position)
Jun. 2020	‌Director, the Bank
(current position)

Apr. 1975	‌Joined the Sendai City
Government
Aug. 2009	‌Mayor, Sendai City
Jun. 2018	‌Director, the Bank
(current position)

Apr. 1982	‌Joined Tohoku Kinzoku Kogyo Co.,
Ltd. (currently TOKIN Corporation)
Apr. 2007	‌Executive Officer and General Manager,
EMC Business Div., TOKIN Corporation
Jun. 2010	‌Director and Executive
Officer, TOKIN Corporation
Jun. 2011	‌Director and Managing Executive
Officer, TOKIN Corporation
Feb. 2012	‌Representative Director andCEO, TOKIN Corporation
Director, Audit & Supervisory
Committee Member

Bank Data

Oct. 1987	‌Assistant Professor, Faculty of
Economics, Tohoku university
Apr. 1992	‌Professor, Faculty of
Economics, Tohoku university
Apr. 1999	‌Professor, Graduate School of
Economics and Management,
Tohoku university
Apr. 2011	‌Dean Graduate School of Economics
and Management / Faculty of
Economics, Tohoku University
Director, Audit & Supervisory
Committee Member

Outside Director

Outside Director

Corporate Governance

Executive Officers

Naoshi Aoyagi
Shuichi Ibuka
Hirokimi Fukushi
Kazutoshi Saito
Takashi Kuroda

Special assignment (DX related)
General Manager, Ishinomaki
Branch and Kokucho Branch
General Manager of General
Planning & Coordination Division
General Manager, Operations
Management Division

Masahide Kato
Kuniaki Endo
Hiroshi Kobayashi
Hiroshi Kitazono

General Manager, Regional
Development Promotion Division
General Manager,
Oroshimachi Branch
General Manager,
Business Promotion Division
General Manager,
Treasury Division

Kentaro Motai
Hideki Endo
Yoshiyuki Odajima
Kazuhiro Aoki

THE 77 BANK INTEGRATED REPORT

59

Value Creation Story

Basic stance toward corporate governanceCorporate Governance Structure

General Meeting ofStockholders

Corporate Governance Committee*2

Board of Directors

4 personsAudit & Supervisory
Committee Members
Audit & Supervisory
Committee

8 persons 8 persons

2 persons

4 persons

Chairman
Executive Committee
Directors and General
Managers Liaison Committee

President
Directors(Excluding Directors Serving as Audit& Supervisory Committee Members)

Deputy President

Sustainability Committee

Senior Managing Director

Compliance Committee

Managing Director
Outside Directors
Directors*1 A Deputy President has not been appointed.
*2 Corporate Governance Committee
The Corporate Governance Committee deliberates the following items and reports to the Board of Directors. The results of deliberations by the
Corporate Governance Committee shall not restrict the right of the Audit & Supervisory Committee to state its opinions regarding the appointment andcompensation, etc. of Directors (excluding Directors who are Audit & Supervisory Committee Members).

a. Matters related to the nomination of Director candidatesb. Matters related to the appointment/dismissal of Representative Directorsc. ‌Matters related to the compensation, etc. for Directors (excluding
Directors who are Audit & Supervisory Committee Members)d. ‌Matters related to the disciplinary actions on Directors and Executive
Officers (including those pertaining to the preceding item)e. ‌Matters related to the analysis and evaluation of the effectivenessof the Board of Directors, etc.
f. Matters related to the commission or dismissal of Advisors
g. Matters related to the compensation, etc. of Advisors
h. Other matters related to enhancing corporate governance

Main members by organization

Business Strategy

Bank Data

Financial Section

Audit & Supervisory
Committee

Sustainability
Committee

Compliance
Committee

Policy on training, etc. for Directors

The Bank encourages Directors to make efforts to acquire, update, and otherwise hone the knowledge necessary to fulfill
their roles, and provides training opportunities and support for the necessary expenses.
(Content of specific initiatives)
Each division of the Bank provides briefings to newly appointed Outside Directors on the operations of their respective
divisions, so that the new Directors can deepen their understanding of the Bank’s overall operations.
In addition, for Outside Directors (including Directors who are Audit & Supervisory Committee Members), voluntary liaison
meetings are held on a regular basis to strengthen cooperation by exchanging information and sharing understanding.
Also, four digital-related seminars were held in FY2022.

Director Skill Matrix

The Board of Directors of the Bank has identified skills and other qualities each of Directors shall possess, which arenecessary for the Bank to pursue sustainable growth and enhancement in corporate value over a medium to long term,
as well as to achieve its “target form” set in “Vision 2030.” With In-house Directors who are well-versed in the banking
operation and several Outside Directors with a wealth of experience and wide-ranging knowledge outside the Bank, theBoard of Directors is in a balanced and diverse composition of knowledge, experience, and abilities as a whole.
Experience-based knowledge of inside Directors

１
２
３
４
５
６
７
８
９

１０

Teruhiko Ujiie
Hidefumi Kobayashi
Makoto Igarashi
Yoshikazu Onodera
Atsushi Kobayashi
Masanori Muranushi
Ken Nakamura

Management
strategy / New
businesses

Compliance /Riskmanagement

○
○

○
○

○
○

Human resource Sales / Regional
development
revitalization

○
○

○

○

○
○

○
○
○
○
○
○

Board of Directors

Executive
Committee

Corporate
Governance Committee(Representative Director)
Chairman

Teruhiko Ujiie○(Chairperson)○○(Representative Director)
Hidefumi Kobayashi
President○○(Chairperson)○○(Chairperson)○(Chairperson)(Representative Director)
Senior Managing Director

Makoto Igarashi

○

○

○

○

○

* The above chart is not an exhaustive representation of each Director’s knowledge, etc.

Policy on Cross-shareholdings

１１
１２
１３
１４
１５
１６

○
○

Koichi Suzuki
Kazuhito Chida
Toshio Suzuki
Masai Yamaura
Yoko Ushio
Akira Inukai

Managing Director

Yoshikazu Onodera

○

○

○

○

Managing Director

Atsushi Kobayashi

○

○

○

○

Managing Director

Masanori Muranushi

○

○

○

○

Director

Ken Nakamura○○(Chairperson)

Director

Emiko Okuyama○○

Director

Seiichi Ohtaki○○

Director
Director, Audit & Supervisory
Committee Member
Director, Audit & Supervisory
Committee Member
Director, Audit & Supervisory
Committee Member
Director, Audit & Supervisory
Committee Member
Director, Audit & Supervisory
Committee Member
Director, Audit & Supervisory
Committee Member

Shigenori Oyama○

Koichi Suzuki

○

△
（*２）

○(Chairperson)

△
（*２）

△
（*２）

Kazuhito Chida

○

△
（*２）

○

△
（*２）

△
（*２）

Toshio Suzuki○○

Masai Yamaura○○

Yoko Ushio○○

600,000

Akira Inukai○○

500,000○

Sectors and knowledge areas expected of Outside Directors

Company
screening

International /Marketinvestment

Digital /Administrative
work

○
○

○
○

○

○
○
○
○

○
○
○

Emiko Okuyama
Seiichi Ohtaki
Shigenori Oyama

Name

General Manager ofGeneral Planning &Coordination
Division

Corporate Governance

The Bank’s “Corporate Governance Policy” stipulates that the effectiveness of the Board of Directors as a whole isanalyzed and evaluated at the end of each fiscal year, and a summary of the results is disclosed.
After deliberation by the Corporate Governance Committee, the Board of Directors conducted an analysis andevaluation of the overall effectiveness of the Board of Directors for FY2022 at its annual meeting on May 13, 2022.
In this context, we have confirmed that the effectiveness of the Board of Directors as a whole has been ensured.
On the other hand, with the aim of further improving the effectiveness of the Board of Directors, the following
matters have been confirmed and shared, and we intend to make improvements in the future.
･To work toward the further diversification of constituent members of the Board of Directors･To review the management of the Board of Directors to further invigorate discussions

Title

Other members

60

Sustainability Promotion

Evaluating the effectiveness of the board of directors･In accordance with the Bank Creed, which is our basic principle of management, we will operate business that give constant consideration to
the public mission of a regional bank — contributing to the development of the regional economy and society — through banking operations.
･We will improve the transparency of management and the appropriateness of processes and work together appropriately with stakeholders
including the regional society, clients, and shareholders for the Bank’s sustained growth and improvements in corporate value over the
medium- to long-term.

3 persons

Top Message○○○

Corporate
management

Finance /EconomyRegional
revitalization

○
○
○
○

○
○

○

○
○

Legal /
Compliance

○
○
○
○

○
○
○

○
○

As a general rule, the Bank’s policy is to reduce cross-shareholdings. As a regional financial institution, the Bank willhold cross-shareholdings only when it is judged that maintaining and strengthening business and cooperative
relationships with the client will contribute to enhanced corporate value of both the client and the Bank.
With regard to cross-shareholdings, the Bank will make regular decisions on whether or not to hold particular sharesby comprehensively examining their profitability based on the Bank’s cost of capital, etc., as well as the medium- tolong-term economic rationale for such holdings, future outlook, the purpose of holding, and other relevant factors.
Change in balance of cross-shareholdings (based on market price) and consolidated net assets
Balance of cross-shareholdings (based on market price)

Consolidated net assets

Percentage compared to consolidated net assets(Millions of yen)

General Manager, General
Planning & Coordination Div.
General Manager, General
General Manager, Risk
Planning & Coordination Div.
Management Div.
General Manager, Compliance
General Manager,
Management Div.
Business Promotion Div.
General Manager, Operations
General Manager, Regional
Management Div.
Development Promotion Div.
General Manager,
General Manager, Personnel Div.
Audit & Inspection Div.
General Manager,
General Affairs Div.

*1 Directors Ken Nakamura, Emiko Okuyama, Seiichi Ohtaki, Shigenori Oyama, Toshio Suzuki, Masai Yamaura, Yoko Ushio, and Akira Inukai are Outside Directors prescribed in Article 2, Item 15 of the Companies Act.
*2 Standing Directors who are Audit & Supervisory Committee Members attend the Executive Committee, Sustainability Committee, and Compliance Committee, and state their opinions as necessary.
*3 The Chairperson of the Audit & Supervisory Committee observes the Corporate Governance Committee.

400,000

17.4%
14.0%
472,029
513,337

300,000
200,000
100,000
0(No. of issues)

82,15331-Mar-15

198 issues

71,71131-Mar-2021

172 issues

13.2%
513,316

67,90331-Mar-2022

167 issues

THE 77 BANK INTEGRATED REPORT

61

Value Creation Story

Strengthening risk management systems

Top Message

each type of risk and comparing and contrasting it with its capital, as well as enhancing risk management methods
such as the development of more sophisticated risk measurement techniques.
The specific framework for comprehensive risk management is “risk capital management.” “Risk capitalmanagement” is a management method in which risk capital budgets, which are allowances for each type of risk, areallocated to divisions (service divisions in Japan, the Treasury Division, etc.), and each division’s risk amount ismonitored to ensure that it is within the amount allocated. In addition, risk capital management is also utilized toComprehensive risk management framework

Administrative Risk Management

Credit Risk Market Risk Liquidity Risk
Management Management Management[

Comprehensive Operational Risk Management

Risk Management Division

Third-party risk
management
Operations
Management
Division

DigitalStrategy
Division

Responding to fluctuations ininterest rates, exchange rates,
stock markets, and other markets[]

MarketRisk Management Policy[ RiskComprehensive
Management Policy ]Responding to financing
Responding to cases in whichmarket transactions cannot be
executed or settlement cannot
be made after a transaction[]

Liquidity
Risk Management Policy[Human Risk Management Policy]

Operational
Risk Management
Responding to losses resulting
from inappropriate businessprocesses or exogenous events[

Operational
Risk Management Policy

Tangible Asset Risk Management

62

GeneralAffairs
Division

Risk
Management
Division

Digital Strategy
Division
General Affairs
Division, Operations
Management Division

ComplianceManagement Division

Audit & Inspection Division
Asset Assessment Audit

Internal Audit

Thorough compliance
The Bank formulated the Compliance Policies in order to clarify its stance on compliance and to ensure theeffectiveness thereof. Further, as part of our endeavor to ensure thorough compliance, the Bank established theCompliance Guidelines (Compliance Standards) to articulate specific guidelines and a code of conduct so that theexecutives and employees place importance on compliance, thereby ensuring the lawful conduct of business.

Responding to damage of tangible assets[Tangible Asset Risk Management Policy]

Compliance structure

Reputational Risk Management

Board ofDirectors(Directors)]

President =Director
responsibleforcompliance[Reputational Risk Management Policy]

Third-party risk management
Responding to third-party administrative
errors, IT system trouble,
fraudulent transactions, etc.
[Third-party Risk Management Policy]

Disaster and Other Contingency
Risk Management
Responding to contingencies such as disasters

Compliance

Personnel
Division[Legal Risk Management Policy]

Responding to unfounded rumors that occur
in the markets or among customers

Liquidity
Risk Management

ComplianceManagement
Division

Head Office, Branches and Group Companies

Legal Risk Management

Responding to, e.g.,
personnel and labor issues

Self-governed risk
management taking an overall
view of risks and comparing
and contrasting them with theBank’s capital

Disaster and Other
Contingency
Risk Management

Responding to the status of compliancewith laws and regulations

Human Risk Management

MarketRisk Management

Compliance

Responding to IT system failures
Preventing fraudulent use]

Comprehensive
Risk Management

Risk Management Division

Tangible
Administrative Information
Legal Risk Human Risk Asset Risk Reputational
Risk
Technology
RiskManagement Risk Management Management Management Management Management

Information Technology Risk Management

Development offinancial technologies

Responding to the deteriorating
financial situation of those
we extend credit to

Director responsible forcompliance (President)

Comprehensive Risk Management[Information Technology Risk Management Policy](Security Policy)

CreditRisk Management

Financial Section

Executive Committee/Directors and General Managers Liaison Committee/
Sustainability Committee/Compliance Committee

Capital management[Administrative Risk Management Policy]

Diversification offinancial services

Bank Data

Directors Responsible for Each Type of Risk

Responding to the regularization ofadministrative work
Prevention of accidents and fraud

Changes inmanagement environment

CreditRisk Management Policy

Corporate Governance

サステナビリティ委員会

Board of Audit & Supervisory
Committee
Directors

Independent Auditors

monitor whether expected returns commensurate with the risk taken are being secured.

Financial administration
reforms

Business Strategy

Risk management structure

In recent years, the business environment surrounding financial institutions has changed significantly, and financial
institutions are now exposed to an unprecedented variety of risks than ever before. In this situation, more than everbefore, financial institutions are required to accurately ascertain and analyze risks and appropriately manage them.
From the viewpoint of enhancing management soundness, the Bank has established a comprehensive risk
management framework for self-governed risk management by taking an overall view of the risks it faces, evaluating

Borderlessfinancial markets

Sustainability Promotion

Subsidiaries(Major Roles)
Compliance-related education, inspection,
monitoring and the like within each company

Compliance management

Compliance Management Division
Audit & Inspection
Division(Complaints, antisocial
influences, money laundering)Compliance Monitor (Senior Auditor)(Dishonest actions, internal audits)

Compliance Committee(Chaired by President)

General Planning &Coordination Division (Risk management, disclosure)Compliance Departments(Chaired by General Manager
of Compliance Management
Division)

Personnel Division

Audit & Supervisory
Committee(Audit & Supervisory
Committee Members)

Compliancesupervisors(Maintenance of discipline
and work discipline)(General meeting ofGeneral Affairs Division stockholders, traffic accidents)

Compliance Manager(General Manager of Compliance Management Division)
Chief Compliance Officer(Manager of Legal Affairs Section)

Headquarters and
BranchesCompliancepromotioncommittees(Chaired by General
Managers)

Divisions and Main Branch:Compliance Officer

Other:
Compliance liaison officers

Operations(Operational accidents)
Management Division* Compliance officers and compliance liaisons maintain their independence in the performance of their duties related to compliance and do not follow the instructions ofhigher-ranking individuals.

[Disaster and Other Contingency
Risk Management Policy]

THE 77 BANK INTEGRATED REPORT

63

Financial and Non-financial Highlights

Value Creation Story

Financial information
Balance of loans and bills discounted (Billions of yen)

■ Retail deposits ■ Corporate deposits ■ Public deposits, etc.

■ Balance of loans to SMEs ■ Balance of loans to retail customers ■ Others

8,846.4

8,551.7

7,888.5

5,734.1

4,500.0

3,000.002,144.6

2,101.6

1,828.5
939.7

955.3

967.7

31-Mar-20

31-Mar-21

31-Mar-22

Balance of assets in custody (the Group) (Billions of yen)
■ 77 Securities (excluding brokerage from the Bank) ■ Investment trusts■ Insurance ■ Structured bonds, etc. (brokerage) ■ Public bonds■ Foreign currency deposits
622.3
600.4
600.0
108.9
81.5
72.0

0

5,097.5

1,915.2

2,009.5

2,173.9

1,176.3

1,211.8

1,249.2

1,803.1

1,876.2

1,917.1

31-Mar-20

31-Mar-21

31-Mar-22

0

320.2

327.2

126.2

4,000.0

2,000.0

23.0

32.0

77.4
14.8

72.6
20.4

77.3
28.3

31-Mar-21

31-Mar-22■ Issue resolution measure agreement by entities

8,274

10,000Bank Data

Financial Section

Number of business matching contracts closed (Cases)

1,674
1,800

5,901
1,058

5,835
4,592

5,000

0

900

3,447

31-Mar-20

31-Mar-21

31-Mar-22

0

Number of M&A support* clients (Clients)

3,131.8
2,913.4

27.5

31-Mar-20

Corporate Governance

0630

FY2020

FY2021

FY2022

Securities balance (Billions of yen)
■ Stock ■ Bonds ■ Others

315.3

Number of clients evaluated/Issue resolution measure agreement by entities (Clients)■ Number of clients evaluated

6,949

666.0

86.9

77.2

4,894.6

116.6
300.0

Business Strategy

Consulting

5,340.2

6,000.0

5,494.8

5,120.3

Sustainability Promotion

Non-financial information

Balance of deposits and certificates of deposit (Billions of yen)

9,000.0

Top Message

2,000

3,116.0

1,737

1,602
151.6

148.4
2,205.9

2,185.2

640.9

761.7

795.0

31-Mar-20

31-Mar-21

31-Mar-22

2,155.936

40

Number of business succession, inheritance,
and asset succession support recipients (Cases)

25

27

1,222

20

0

1,000

FY2020

FY2021

FY20220

FY2020

FY2021

FY2022* Entered into M&A advisory contract

Net income (consolidated) (Billions of yen)

22.2

Core OHR(core gross operating income expense ratio)（％）
80

20.0

16.5

0

FY2021

FY2021

5

10.31
2.5

FY2021*1, *2, *3*1 Cumulative results from April 2018 through March 31, 2022.
*2 ‌Of which, an amount equivalent to ¥1.8 billion was USD-denominated. The Bank’s
middle rate as of March 31, 2022 (USD 1 = JPY 122.39) has been used for yen
conversion.
*3 ‌Including bond repackaged loans backed by sustainability-linked bonds as theunderlying asset.

FY2022Chosen as a constituent of “MSCI Japan Empowering Women Index,” which
recognizes companies with outstanding efforts in promoting the participation
and advancement of women in the workplace (as of June 2022)

Certified “Gold Certified Company” forsuccessfully utilizing the potential of
female talent in Miyagi Prefecture

10.39

10

FY2021

FY20209 cases / ¥7.1 billion

10.27

3.42

FY20200

Sustainability-linked loans

External evaluation

20

3.89

64

FY2022

Capital adequacy ratio(domestic standards/consolidated) （％）

4.33

27.8
20.0

FY2020

FY2022

ROE (consolidated)（％）

0

58.22

60

FY2020

31.7

32.8
62.27

15.0

Renewable energy-related funding (Billions of yen)
40.0

71.35

18.2

Sustainability

FY20220*‌Notes on MSCI indexes and logos, etc. THE INCLUSION OF The 77 Bank, Ltd., IN ANY MSCI INDEX, AND THE
USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE ASPONSORSHIP, ENDORSEMENT OR PROMOTION OF The 77 Bank, Ltd., BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMESAND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

31-Mar-20

31-Mar-21

31-Mar-22

Certified “Platinum Kurumin,” a special
certification pursuant to the Act on
Advancement of Measures to Support Raising
Next-Generation Children

Certified “Eruboshi (Grade 3),” commending
general business proprietors for promoting
female participation, pursuant to the Act
on Promotion of Women’s Participation
and Advancement in the Workplace

THE 77 BANK INTEGRATED REPORT

65

Profile (As of March 31, 2022)

Value Creation Story

Top Message

Sustainability Promotion

Number of Branches

The 77 Bank, Ltd.

Head Office

3-20, Chuo 3-chome, Aobaku,
Sendai, Miyagi 980-8777, JapanFoundedDecember 9, 1878

Paid-in Capital
Number of
Employees¥24.6 billion
2,673

Capital Adequacy Ratio(domestic standards)

143 (Head Office/Branches: 137,
Sub-Branches: 6)
non-consolidated 10.01% /consolidated 10.27%

Total Assets¥10,666.0 billion

Bank Data

Certificates of Deposits
Loans and Bills
Discounted¥8,846.4 billion

1 Branch¥5,340.2 billion

Overseas
Shanghai 1 Representative Office /Singapore 1 Representative Office

Iwate

77 Lease

77 Shin-Yo Hosyo

Supports customers’ capital expenditure via finance leases, etc., for officeequipment, transportation equipment, industrial machinery, medical devices,
engineering and construction machinery, etc.

Provides debt guarantees for customers using housing loans, car loans, andother unsecured loans, as well as credit management and other services.

(Billions of yen)

30.7

27.0

20.0
10.0

868.7

834.0

900.0

Miyagi Prefecture

2 Branches

AomoriHead Office/Branches:
122, Sub-Branches: 6

1 Representative Office in
Preparation for Opening
Corporate Sales
Office 1 Location

Balance of housing loan guarantees

Balance of lease and installment claims(Billions of yen)

Kesennuma

Akita

906.0

Nainowaki

1 BranchIwagasaki

600.0

Yamagata

300.0

1 Branch

Wakayanagi

NarukoTsukidate/Ichihasama
Sanuma/Maiya

Iwadeyama

031-Mar-20

31-Mar-21

031-Mar-22

31-Mar-20

31-Mar-21

Issues JCB, Visa, MasterCard, and other credit cards to retail and corporate
customers, provides support for the introduction of cashless devices, andprovides card loan guarantees.

As the only securities company headquartered in Miyagi Prefecture, provides
quality services and products with a high level of expertise from the customer’s
perspective, based on “bank-securities company cooperation” with the 77 Bank.

100.0

96.1

(Billions of yen)
120.0

108.9

FY2020

FY2021

FY202231-Mar-21

Ogawara2 Branches

Shiroishi

1 Branch

31-Mar-22

77 Capital

Provides services with expertise and a high level of added value, mainly centeredon membership organization management, survey and research, and consulting.

Main business activities include the formation and management of investment
limited partnerships (funds), as well as providing a wide range of funding tailoredto the business characteristics and projects of companies, and engaging incompany development and company support through investment, etc.

Number of consulting and contracted survey cases

Cumulative amount of investment

142

0

4,000

Yamashita

FY2020

FY20210

FY202231-Mar-20

31-Mar-21

Number ofmunicipalities with
Miyagi Prefecture
31-Mar-22*As there were no investment results as of March 31, 2022 for 77 Partners, the information is not shown.

Shichitora-kun

Shichisai-kun

Shichimi-chan

Shichishika-kun

Within Miyagi Prefecture

35

Of which, areas with
the Bank’s location
31

Cities14

14[Of which, Sendai City]

77 Bank Group characters
Shichirisu-kun

Shichiken-kun

Shichisaru-kun

Shichiushi-kun

Shichipato-kun

66

77 Shin-Yo Hosyo Co., Ltd. 77 Card Co., Ltd.

77 Securities Co., Ltd.

77 Research andConsulting Co., Ltd.

77 Capital Co., Ltd.

77 Partners Co., Ltd.

Total number of theBank’s locations

Number of ATMs

128

Of which branches
within branches
21

109

19

598

[62]

[9]

[377]
91

690

Towns

20

17

19

2

Villages

1

─

─

─

1

15

─

27

Outside of Miyagi Prefecture
Within Tokyo

2

─

3

Other prefectures

13*1

─

24

143 locations*2

21 locations

717 ATMs

Total
77 Lease Co., Ltd.

Marumori■Service Network Data

1,743

2,000

Watari

Scan the QR code to read the branches and cash service corners.

2,485

54

Morisekinoshita/Yuriage* Japanese Language only

3,518

94

100
50

(Millions of yen)

Shiogama 3 Branches

Tagajou

Kakuda1 Branch

77 Research and Consulting

150

Geba

Takasago

Osaka(Cases)Shichigahama

Natori-nishi
Iwanumanishi
Iwanuma
MurataFunaoka/Tsukinoki

Zao

Tokyo
31-Mar-20

Rifu

Kawasaki

NagoyaYamoto/(Naruse Sub-Branch)

Akashidai/Koyodai

Sendai
Masuda/Sendai Airport Sub-Branch

40.00

Onagawa
Matsushima

Tomiya60 Branches, 2 Sub-Branches

50.0

0

Ishinomaki 9 Branches, 1 Sub-Branch

Kashimadai and Matsuyama Sub-Branches

6 Branches

81.5

80.0

WakuyaYoshioka

126.2

ShizugawaTomeTajiri

KogotaFukushima

Balance of assets in custody (excluding brokerage from the 77 Bank)

93.5

86.6

Nakaniida/Onoda

Minamifurukawa
Furukawatokamachi

77 Securities

Total purchase transaction volume

Furukawa

31-Mar-22

77 Card(Billions of yen)

Financial Section

Hokkaido

Group companies

25.3

Corporate Governance

Service Network (As of July 31, 2022)

Company Name

30.0

Business Strategy

35 municipalities

31 cities and towns

Other branch locations: Sapporo City, Morioka City, Kitakami City, Akita City, Yamagata City, Fukushima City, Koriyama City, Soma City, Minamisoma City, Iwaki City (2 branches), Nagoya
City, and Osaka City
*2
The total number of branches (143) includes one branch dedicated to money transfers, bringing the total number of branches to 121, taking into account 21 branches within branches.
*1

THE 77 BANK INTEGRATED REPORT

67

Value Creation Story― Consolidated Five-Year Summary ―Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section― Consolidated Balance Sheet ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESAs of March 31

THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2022

Millions of Yen

For the fiscal year
Net interest income¥
Net fees and commissions
Net other operating (loss) income
Net income attributable toowners of the parent

2022

2021

2020

2019

2018

71,611 ¥13,669(3,976)69,877 ¥
11,553(8,117)67,886 ¥11,458(2,186)

65,217 ¥
11,345(3,104)

69,644
10,963(7,869)22,234

16,46818,261

17,67018,314At the fiscal year-end
Total assets¥10,688,166 ¥ 9,839,581 ¥ 8,770,037 ¥ 8,627,510 ¥ 8,718,097
Deposits
8,819,743
8,527,481
7,865,991
7,872,834
7,946,100
Loans and bills discounted
5,329,342
5,088,570
4,886,221
4,718,942
4,621,062
Trading account securities andinvestment securities
3,142,683
3,127,169
2,922,506
2,978,130
3,146,865
Equity513,316
513,337
447,436
489,077
490,737
Common stock
24,65824,65824,65824,65824,658Yen
2022

Per share of common stock
Basic net income
Diluted net income
EquityCash dividends
Capital adequacy ratio (%)
Domestic standard¥

300.812021¥

222.892020¥

246.972019¥237.902018¥

6,944.03
67.50

6,947.19
50.00

6,057.30
50.00

6,582.31
47.50

246.87246.45
6,613.28
45.00

10.27

10.39

10.31

10.38

10.43

Notes: 1. The national consumption tax and the local consumption tax are excluded from transaction amounts.
2. The Bank’s capital adequacy ratio on the domestic standard is accompanied by the revision of Article 14,
Paragraph 2, of the Banking Law of Japan, in line with enforcement of the related law for financial system
reform.
3. On October 1, 2017, the Bank conducted consolidation of shares at a ratio of five shares to one share. Per
share information is computed as if the share consolidation was conducted on April 1, 2016.

ASSETS:Cash and due from banks (Notes 5 and 28)
Debt purchased
Trading account securities (Note 6)
Money held in trust (Notes 7 and 28)
Investment securities(Notes 6, 8, 12, 13, 28, 29 and 30)
Loans and bills discounted(Notes 8, 13, 14, 28, 29 and 30)
Foreign exchange assets (Notes 8 and 9)
Lease receivables and investments in leases(Notes 27 and 30)
Tangible fixed assets (Notes 10, 11 and 18):
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets:
Software
Other intangible fixed assets
Deferred tax assets (Note 25)
Customers’ liabilities for acceptances andguarantees (Notes 8, 12 and 30)
Other assets (Notes 8, 13 and 29)
Reserve for loan losses
TOTAL

2021

Thousands of
U.S. Dollars(Note 1)2022

¥ 1,968,005
2,000
20,361
106,816¥1,371,871
4,000
20,627
108,901$ 16,079,785
16,341
166,361
872,751

3,122,322

3,106,542

25,511,250

5,329,342
7,038

5,088,570
5,865

43,543,933
57,504

20,523

19,637

167,685

7,850
18,835
44
163
4,757

7,880
19,313
50
259
5,782

64,139
153,893359
1,331
38,867

49
263
915

84
262
984

400
2,148
7,476

33,355
108,636(63,114)¥ 10,688,166

43,73596,568(61,356)¥9,839,581

272,530
887,621(515,679)$ 87,328,752¥8,527,481
25,869604,679
155
17,102817
311
804
22,03743,73583,251
9,326,243$ 72,062,611
237,993
10,221
9,544,023
1,470
129,038
7,296
1,944
6,446
122,918
272,530
738,115
83,134,651

24,65820,517374,218

201,470
164,024
3,207,296(6,972)(52,659)

106,557

714,314(375)(5,265)513,337¥9,839,581(1,094)(39,259)
4,194,100$ 87,328,752

2022

Millions of Yen

LIABILITIES:
Deposits (Notes 13, 15 and 28)¥ 8,819,743
Call money and bills sold
29,128
Payables under securities lending transactions (Note 13)
1,251
Borrowed money (Notes 13, 16 and 28)
1,168,093
Foreign exchange liabilities (Note 9)
180
Liability for employees’ retirement benefits (Note 17)
15,793
Reserve for stock-based benefits (Note 19)
893
Reserve for reimbursement of deposits
238
Reserve for contingent losses
789
Deferred tax liabilities (Note 25)
15,044
Acceptances and guarantees (Notes 12 and 30)
33,355
Other liabilities (Notes 18 and 29)
90,338
Total liabilities
10,174,850
EQUITY (Notes 19, 20 and 34):
Common stock—authorized, 268,800,000 shares;
issued, 76,655,746 shares in 2022 and 2021
24,658
Capital surplus
20,075Retained earnings
392,541
Less: treasury stock—at cost, 2,733,838 shares and(6,445)2,764,422 shares in 2022 and 2021, respectively
Accumulated other comprehensive income:Unrealized gains on available-for-sale securities (Note 6)
87,425
Deferred losses on derivatives under hedge accounting(Note 29)(134)
(4,805)
Defined retirement benefit plans (Note 17)
Total equity
513,316
TOTAL¥ 10,688,166
See notes to consolidated financial statements.

68

THE 77 BANK INTEGRATED REPORT

69

Value Creation Story― Consolidated Statement of Income ―2021

Thousands of
U.S. Dollars(Note 1)2022

¥ 42,340¥ 41,616$ 345,943

28,223
1,650
19,162
14,389
8,997
2,803
601
118,169

29,186406
17,977
13,990230,598
13,481
156,565
117,566
73,51022,902
4,910
965,5112022

Millions of Yen

11,836
3,798

1,163
119,976

183
105
315
5,492
18,36554,075
4,147
3,034
85,71832,450

325
272
734
6,424
22,107
55,104
7,126
3,057
95,152
24,823

1,495
857
2,573
44,872150,053
441,825
33,88324,789700,367
265,136

INCOME TAXES (Note 25):
Current
Deferred
Total income taxes

9,890
325
10,215

5,758
2,595
8,354

80,807
2,655
83,462NET INCOME
22,234NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT ¥ 22,234

16,468¥ 16,468

181,665$ 181,665

See notes to consolidated financial statements.

Business Strategy

Corporate GovernanceBank Data

Financial Section

THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2022

EXPENSES:Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses (Note 23)
General and administrative expenses
Provision for reserve for loan losses
Other expenses (Notes 11 and 24)
Total expenses
INCOME BEFORE INCOME TAXESPER SHARE OF COMMON STOCK (Note 33):
Basic net income
Cash dividends applicable to the year

Sustainability Promotion― Consolidated Statement of Changes in Equity ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2022

INCOME:Interest income:Interest on loans and discounts
Interest and dividends on trading account andinvestment securities
Other
Fees and commissions (Notes 30 and 31)
Other operating income (Note 21)
Gains on sales of stocks and other securities
Gains on sales of money held in trust
Other income (Note 22)
Total income

Top Message

Yen¥300.81
67.50

Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

BALANCE, APRIL 1, 2020
Net income attributableto owners of the parent
Cash dividends, ¥50.00
per share
Purchase of treasury stock
Sales of treasury stock
Net change in the year

73,867¥24,658¥20,517¥361,462

BALANCE, MARCH 31, 2021
Net income attributableto owners of the parent
Cash dividends, ¥52.50
per share
Purchase of treasury stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2022

73,891

U.S. Dollars

$2.45
0.55

¥222.89
50.00― Consolidated Statement of Comprehensive Income ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2022

2022

Thousands

Millions of Yen

2021

Thousands of
U.S. Dollars(Note 1)2022

NET INCOME¥ 22,234
OTHER COMPREHENSIVE (LOSS) INCOME (Note 26):
Unrealized (losses) gains on available-for-sale securities (19,131)
Deferred gains on derivatives under hedge accounting
241
Defined retirement benefit plans459(18,431)
Total other comprehensive (loss) income¥ 16,468$ 181,665

COMPREHENSIVE INCOME

¥

3,803

¥ 69,546$

31,072TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO—
Owners of the parent

¥

3,803

¥ 69,546$

31,072(156,311)
1,969
3,750
(150,592)

50,350450
2,276
53,077BALANCE, MARCH 31, 2021
Net income attributableto owners of theparentCash dividends, $0.42
per share
Purchase of treasury
stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2022

Millions of Yen
Accumulated Other Comprehensive Income
Deferred
Unrealized Losses on
Gains on Derivatives Defined
Treasury Available-for- under Hedge Retirement
Stock Sale Securities Accounting Benefit Plans¥(7,040)(3,713)
70

374,218(6,972)(2)
50,350

450

2,276

70
53,077

106,557(375)(5,265)513,337

22,234

22,234(3,911)(3,911)

(448)

(515)
(441)

478
¥24,658

1,042¥(6,445)(19,131)¥ 87,425

241¥(134)

459¥(4,805)¥20,075¥392,541

CommonStockCapitalSurplusThousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Deferred
Unrealized Losses on
Gains on Derivatives Defined
Retained
Treasury Available-for- under Hedge Retirement
Earnings
Stock Sale Securities Accounting Benefit Plans$201,470$167,636 $3,057,586$(56,965)$870,634$(3,063)(515)
601(18,431)¥513,316

Total
Equity$(43,018) $4,194,272

181,665

181,665(31,955)(31,955)(4,207)(3,603)$201,470¥447,436(3,713)25

73,922¥(7,541)

16,468(2)

20,517¥(826)

16,468(1)

24,658¥ 56,207

Total
Equity$164,024 $3,207,296

8,513$(52,659)(4,207)(156,311)$714,314

1,969$(1,094)

4,910(150,592)

3,750$(39,259) $4,194,100

See notes to consolidated financial statements.

See notes to consolidated financial statements.

70

THE 77 BANK INTEGRATED REPORT

71

Value Creation Story― Consolidated Statement of Cash Flows ―Thousands of
U.S. Dollars(Note 1)
2022

Millions of Yen
2021

OPERATING ACTIVITIES:
Income before income taxes¥ 32,450
Adjustments for:(4,517)
Income taxes—paidDepreciation and amortization
3,397
Losses on impairment of fixed assets
547
Net change in reserve for loan losses
1,758
(73)
Net change in reserve for reimbursement of deposits(14)
Net change in reserve for contingent losses
Net change in reserve for stock-based benefits
75(648)
Net change in liability for employees’ retirement benefits(72,214)
Interest income
Interest expense
603
Losses on investment securities—net
1,469(2,803)
Gains on money held in trust—net(10,951)
Foreign exchange gains—net
Losses on sales and disposals of fixed assets—net
182(240,772)
Net change in loans and bills discounted
Net change in deposits
292,262
Net change in borrowed money (except for subordinated loans)
563,414(7,502)
Net change in due from banks (except for the Bank of Japan)
Net change in call loans and bills bought
2,000
Net change in call money and bills sold
29,128(24,618)
Net change in payables under securities lending transactions
Net change in trading account securities
265(1,172)
Net change in foreign exchange assets
Net change in foreign exchange liabilities
25(885)
Net change in lease receivables and investments in leases
Interest received
74,776(675)
Interest paid
(1,527)
Other—net
Total adjustments
601,529
Net cash provided by operating activities—(Forward)¥ 633,980(687,670)
281,670
364,6452,304(2,377)
79
(3)
(119)
(41,470)

FINANCING ACTIVITIES:(515)
Purchases of treasury stock
Proceeds from sales of treasury stock513(3,904)
Dividends paid
(3,906)
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
27
NET INCREASE IN CASH AND CASH EQUIVALENTS
588,630
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
1,366,991
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 5)¥1,955,622
See notes to consolidated financial statements.

Business Strategy

Corporate GovernanceBank Data

Financial Section

THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2022

2022

72

Sustainability Promotion― Notes to Consolidated Financial Statements ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2022

INVESTING ACTIVITIES:
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from maturity of investment securities
Increase in money held in trust
Proceeds from dispositions of money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for execution of asset retirement obligations
Net cash used in investing activities

Top Message¥

24,823$

265,136(9,597)3,300
292(1,864)
(26)
(56)
82
(5,166)(71,209)
1,332
1,989
(3,073)(3,683)71(202,349)
661,489
318,777
4,817
429(8,706)
13,883(1,753)
3,662
38
(376)
74,748(1,714)
4,245
779,584¥ 804,407(36,906)
27,755
4,469
14,363
(596)
(114)
612
(5,294)(590,031)
4,926
12,002(22,902)(89,476)
1,487(1,967,252)
2,387,956
4,603,431(61,295)
16,341
237,993(201,143)
2,165(9,575)204(7,230)610,964(5,515)(12,476)
4,914,854$ 5,179,998(811,155)
149,314
511,793(20,000)
3,510(4,625)41(5,618,677)
2,301,413
2,979,369(171,121)(2)(3,716)(3,718)
16
629,584
737,406¥1,366,991

18,825(19,421)
645
(24)
(972)
(338,834)(4,207)
4,191(31,898)(31,914)220
4,809,461
11,169,139$15,978,609

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS
The accompanying consolidated financial statements
have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments andExchange Act and its related accounting regulations andthe Enforcement Regulation for the Banking Law of Japan(the “Banking Law”), and in accordance with accounting
principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure
requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been
made to the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition,certain reclassifications have been made to the 2021
consolidated financial statements to conform to theclassifications used in 2022.
In accordance with the Japanese Financial Instruments
and Exchange Act and other relevant regulations, allJapanese yen figures in the consolidated financial
statements have been rounded down to the nearest
million yen, except for per share data. Accordingly, thetotal of each account may not be equal to the combined
total of individual items. Also, U.S. dollar amounts havebeen rounded down to the nearest thousand dollars.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which The
77 Bank, Ltd. (the “Bank”) is incorporated and operates.
The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of¥122.39 to U.S.$1, the approximate rate of exchange asof March 31, 2022. Such translations should not be
construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or
any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a. Consolidation—The consolidated financial statements
include the accounts of the Bank and its significant
subsidiaries (collectively, the “Companies”). There weresix (five in 2021) consolidated subsidiaries as of March
31, 2022.
Under the control and influence concepts, thosecompanies in which the Bank, directly or indirectly, is able
to exercise control over operations are fully consolidated.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profits included in assets resulting fromtransactions within the Companies are eliminated inconsolidation.
(1) Scope of consolidation
Consolidated Subsidiaries
77 Partners Co., Ltd. has been included in the scope of
consolidation from the fiscal year ended March 31, 2022,
since it was newly incorporated.

Unconsolidated Subsidiaries
77 Capital Co., Ltd.
77 New Business Investment Limited Partnership
77 Strategic Investment Limited Partnership
77 Capital Investment Limited Partnership 2
77 Strategic Investment Limited Partnership 2
77 Partners Investment Limited Partnership 1
Unconsolidated subsidiaries are excluded from thescope of consolidation because they are not material tothe consolidated financial statements in terms of total
assets, income, net income (corresponding to the Bank’s
share), retained earnings (corresponding to the Bank’s
share) and accumulated other comprehensive income(corresponding to the Bank’s share).
77 Strategic Investment Limited Partnership 2 and 77
Partners Investment Limited Partnership 1 have been
included in unconsolidated subsidiaries from the fiscal
year ended March 31, 2022, since they were newly
incorporated.
(2) Equity method
Unconsolidated Subsidiaries Not Accounted for by
the Equity Method
77 Capital Co., Ltd.
77 New Business Investment Limited Partnership
77 Strategic Investment Limited Partnership
77 Capital Investment Limited Partnership 2
77 Strategic Investment Limited Partnership 2
77 Partners Investment Limited Partnership 1
These companies are excluded from the scope ofequity method accounting because they are not material
to the consolidated financial statements in terms of net
income (corresponding to the Bank’s share), retained
earnings (corresponding to the Bank’s share) andaccumulated other comprehensive income(corresponding to the Bank’s share).
77 Strategic Investment Limited Partnership 2 and 77
Partners Investment Limited Partnership 1 have been
included in unconsolidated subsidiaries not accounted forby the equity method from the fiscal year ended March
31, 2022, since they were newly incorporated.
b. Business Combinations—Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professional fees,
are accounted for as expenses in the periods in which thecosts are incurred. If the initial accounting for a businesscombination is incomplete by the end of the reporting
period in which the business combination occurs, anacquirer shall report in its financial statements provisionalamounts for the items for which the accounting is
incomplete. During the measurement period, which shallnot exceed one year from the acquisition, the acquirer
shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new
information obtained about facts and circumstances thatexisted as of the acquisition date and that would haveaffected the measurement of the amounts recognized asof that date. Such adjustments shall be recognized as if
the accounting for the business combination had been
completed at the acquisition date. A parent’s ownershipinterest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary.

THE 77 BANK INTEGRATED REPORT73

Value Creation Story

The carrying amount of noncontrolling interest is adjusted
to reflect the change in the parent’s ownership interest in
its subsidiary while the parent retains its controllinginterest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and theamount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent
retains control over its subsidiary.
c. Cash and Cash Equivalents—For the purpose of theconsolidated statement of cash flows, cash and cash
equivalents represent cash and amounts due from the
Bank of Japan.
d. Trading Account Securities, Investment Securities
and Money Held in Trust—Securities other thaninvestments in affiliates are classified into three categories,
based principally on the Companies’ intent, as follows: (1)trading account securities, which are held for the purposeof earning capital gains in the near term, are reported atfair value and the related unrealized gains and losses areincluded in earnings; (2) held-to-maturity debt securities,
which are expected to be held to maturity with the positive
intent and ability to hold to maturity, are reported atamortized cost; and (3) available-for-sale securities, which
are not classified as either of the aforementioned
securities, are reported at fair value with unrealized gains
and losses, net of applicable taxes, reported in a separate
component of equity; however, equity securities, etc. which
do not have a market price are reported at cost determinedby the moving-average method.
The cost of trading account securities and available-forsale securities sold is determined based on the movingaverage method.
In addition, investments in unconsolidated subsidiaries
not accounted for by the equity method are reported atcost determined by the moving-average method.
For other-than-temporary declines in fair value,
investment securities are reduced to net realizable value
by a charge to income.
Securities included in money held in trust are alsoclassified and accounted for using the same method as
above.
The components of trust assets are accounted forbased on the standard appropriate for each asset type.
Instruments held in trust for trading purposes arerecorded at fair value and unrealized gains and losses
are recorded in other income/expenses. Instruments heldin trust classified as available-for-sale are recorded at fairvalue with the corresponding unrealized gains/losses
recorded directly in a separate component of equity.
Instruments held in trust classified as held to maturity arecarried at amortized cost.
e. Tangible Fixed Assets—Tangible fixed assets arestated at cost less accumulated depreciation and gains
deferred on the sale and replacement of certain assets.
Depreciation of tangible fixed assets, except for leaseassets, is mainly computed using the declining-balancemethod at rates based on the estimated useful lives of
the assets. The range of useful lives is principally from 5
to 31 years for buildings and from 4 to 20 years forequipment. Lease assets under finance leasetransactions, in which substantial ownership is notdeemed to have been transferred, are depreciated using
the straight-line method over the lease term. The salvage
value is zero or the guaranteed amounts if specified in
the lease contracts (see Note 2.p).

74

f. Intangible Fixed Assets—The amortization of
intangible fixed assets is calculated using the straight-line
method. Capitalized costs of computer softwaredeveloped/obtained for internal use are amortized using
the straight-line method over the estimated useful lives offive years.
g. Long-Lived Assets—The Companies review theirlong-lived assets for impairment whenever events orchanges in circumstances indicate the carrying amount ofan asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying
amount of an asset or asset group exceeds the sum of
the undiscounted future cash flows expected to result
from the continued use and eventual disposition of theasset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of
the asset exceeds its recoverable amount, which is thehigher of the discounted cash flows (“DCFs”) from thecontinued use and eventual disposition of the asset or the
net selling price at disposition.
h. Foreign Currency Items—Assets and liabilities
denominated in foreign currencies held by the Bank at
year-end are translated into Japanese yen at the current
exchange rates in effect at each consolidated balance
sheet date. Exchange gains and losses are recognized in
the fiscal periods in which they occur.
i. Reserve for Loan Losses—The Bank determines theamount of the reserve for loan losses by means ofmanagement’s judgment and assessment of future losses
based on internal rules for write offs and provisions.
For loans to borrowers classified as legally bankrupt or
virtually bankrupt, the Bank fully provides the net amountof loans and estimated collectible amounts by collateralor guarantees. Regarding loans to borrowers classified as
possibly bankrupt, a specific reserve is provided to thenecessary extent for the net amount of loans andestimated collectible amounts by collateral or guarantees.
For large debtors who are possibly bankrupt anddebtors requiring special attention, if the cash flows fromcollection of the principal and interest can be reasonably
estimated, the reserve is provided based on the difference
between the relevant cash flows discounted by the initial
contractual interest rates and the carrying amounts of theloans (the “DCF method”).
The reserve for other loan loss is recorded principallyat the amount of estimated losses over the next two or
three years. Estimated losses are determined by
calculating a loss rate based on the average of actual
loss rate over the past certain period, which is calculatedwith credit loss experience over two or three years.
Adjustments are to be made as necessary in light of
future outlook and other factors.
All the loans are assessed by sales related department
in accordance with the self-assessment standard and theresults are audited by asset audit department
independent from the sales related department.
The Bank’s subsidiaries determine the reserve for loan
losses based on the actual loss rate or estimatedcollectible amounts in accordance with the selfassessment standard.
(Notes)
1. Category of loans by debtor classification is defined as
below in compliance with the classification provided in“Practical Guideline on Self-Assessment of Assets and

Top Message

Sustainability Promotion

Business Strategy

Audit of Bad Debts and Reserve for Loan Losses ofBanks and Other Financial Institutions” (the JapaneseInstitute of Certified Public Accountants (the “JICPA”)
Special Audit Committee Report No. 4 for Banks andOther Financial Institutions issued on April 14, 2022),
that is, “normal debtors,” “debtors requiring caution,”“possibly bankrupt debtors,” “virtually bankrupt debtors”
and “legally bankrupt debtors.”
Category

Criteria

Legallybankrupt

Debtors who are legally or formallybankrupt

Virtuallybankrupt

Debtors who are virtually bankrupt,
experiencing serious financial difficultywith no prospect of a turnaround,although there are no existence of factsof legal or formal bankruptcy

Possiblybankrupt

Debtors who are in financial difficulty
and likely to become bankrupt in the
future, although they are not currently
bankrupt

CautionDebtors who have issues concerning
lending conditions, debtors who haveissues concerning the status offulfilment of obligations or debtors whoare in the red, experiencing sluggish or
unstable performances

Specialattention
NormalOf the debtors classified as caution,
those whose debts, either partially or
wholly, require special attention
Debtors whose performance isfavorable and who are considered tohave no specific issues regarding
financial conditions

2. The loss rate is in principle defined as the average rateof bad debts for the recent five base years, but
comparisons with the average rate of bad debts for the
recent two base years are also taken into account in
the calculation. Also, necessary adjustments are madeby referring to the average rate of bad debts for anumber of base years to appropriately incorporate therisk during the recession period.
j. Reserve for Stock-Based Benefits—Reserve forstock-based benefits is provided for the grants of theBank’s shares to directors, etc. in accordance with thestock grant program based on the estimated stock-based
benefits liabilities as of the fiscal year end.
k. Reserve for Reimbursement of Deposits—Reserve
for reimbursement of deposits, which were derecognized
as liabilities, is provided for the future estimated payments
for reimbursement claims on dormant deposit accounts
based on the historical reimbursement experience.
l. Reserve for Contingent Losses—Reserve forcontingent losses is provided for the future estimatedpayments of burden money to the Credit Guarantee
Corporations based on the historical experience ofsubrogation.
m. Employees’ Retirement and Pension Plans—In
calculation of projected benefit obligations, expected
benefits are attributed to periods on a benefit formulabasis. Treatment of prior service cost and actuarial gains
and losses is as follows:

Corporate GovernanceBank Data

Financial Section

Prior service cost is charged to expenses whenincurred.
Unrecognized actuarial gains and losses are amortizedby the straight-line method from the following fiscal year
after the fiscal year when they were incurred over adefinite period (10 years) with the employees’ averageremaining service period when incurred.
Consolidated subsidiaries apply a shortcut method
whereby the amount of the retirement benefits required tobe paid if all the employees voluntarily retired at the endof the fiscal year is regarded as projected benefit
obligations in determining the liability for employees’
retirement benefits and net periodic retirement benefit
costs.
n. Asset Retirement Obligations—The asset retirement
obligation is recognized as the sum of the DCFs required
for the future asset retirement and is recorded in the
period in which the obligation is incurred if a reasonableestimate can be made. If a reasonable estimate of theasset retirement obligation cannot be made in the period
the asset retirement obligation is incurred, the liability
should be recognized when a reasonable estimate of theasset retirement obligation can be made. Upon initialrecognition of a liability for an asset retirement obligation,
an asset retirement cost is capitalized by increasing thecarrying amount of the related fixed asset by the amountof the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is
accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as anincrease or a decrease in the carrying amount of theliability and the capitalized amount of the related asset
retirement cost.
o. Accounting for Significant Revenue andExpenses—On March 31, 2020, the AccountingStandards Board of Japan (“ASBJ”) issued ASBJ
Statement No. 29, “Accounting Standard for Revenue
Recognition.” The Bank has applied this standard andrecognizes revenue when control of a promised good orservice is transferred to a customer in an amount thatreflects the consideration to which the Bank expects to beentitled in exchange for those goods and services.
p. Leases
As a lessee
Finance lease transactions are capitalized to recognize
lease assets and lease obligations in the consolidatedbalance sheet.
As a lessor
All finance leases that are deemed to transfer ownershipof the leased property to the lessee are recognized aslease receivables, and all finance leases that are deemed
not to transfer ownership of the leased property to thelessee are recognized as investments in leases.
q. Income Taxes—The provision for income taxes iscomputed based on the pretax income included in the
consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of
temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes aremeasured by applying currently enacted tax laws to thetemporary differences.

THE 77 BANK INTEGRATED REPORT

75

Value Creation Storyr. Derivatives and Hedging Activities—It is the Bank’s
policy to use derivative financial instruments(“derivatives”) primarily for the purpose of reducing
market risks associated with its assets and liabilities. The
Bank also utilizes derivatives to meet the needs of its
clients while entering into derivatives as a part of its
trading activities. The Bank enters into interest rate swaps
and interest rate swaptions as a means of hedging its
interest rate risk on certain loans and investment
securities and to meet the needs of its clients. The Bank
also enters into currency swaps, foreign exchange
forward contracts, and currency options to hedge foreign
currency exchange risk associated with its assets andliabilities denominated in foreign currencies and to meetthe needs of its clients.
Derivatives are recognized as either assets or liabilities
and measured at fair value. Gains or losses on derivativetransactions are recognized in the consolidated statementof income. If derivatives qualify for hedge accounting
because of high correlation and effectiveness between
the hedging instruments and the hedged items, the gains
or losses on derivatives are deferred until maturity of thehedged transactions.
The interest rate swaps which qualify for hedge
accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expense or income.
s. Per Share Information—Basic net income per shareis computed by dividing net income attributable tocommon stockholders by the weighted-average numberof common shares outstanding for the period,
retroactively adjusted for stock splits or shareconsolidation.
Cash dividends per share presented in the consolidated
statement of income are dividends applicable to therespective years including dividends to be paid after theend of the year.

3. SIGNIFICANT ACCOUNTING ESTIMATES
Reserve for Loan Losses
Loans and bills discounted and related items constitute a
relatively large portion of the total assets in the
consolidated balance sheet, and recording of reserve forloan losses has a significant impact on the financial
position and results of operations. Therefore, the Bank
considers reserve for loan losses as a significant
accounting estimate.
(1) Amount recorded in the consolidated financial
statements as of March 31, 2022 and 2021
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Reserve for loan losses¥63,114¥61,356$515,679(2) Information about the details of significant accounting
estimates for the identified item
i. Computation method
The method of computing reserve for loan losses isstated in “i. Reserve for Loan Losses” under Note 2,“Summary of Significant Accounting Policies.”
ii. Main assumptions
Main assumptions are the future prospects used in
the assessment of the category of loans by debtor
classification.
Debtor classification is assessed bycomprehensively taking into account profitability

76

projections, reasonableness of management
improvement plans, status of support from financial
institutions, etc., based on the characteristics of theindustry to which the debtor belongs, after verifying
the debtor’s ability to repay the debts based on thefinancial position, cash management, cash flows,
etc. of the debtor and confirming the lending
conditions and the status of its fulfilment.
In addition, although the Bank presumed as at
March 31, 2021, that the economic downturn would
continue for the time being due to the impact of
COVID-19, considering the ongoing resurgence of
COVID-19 within and outside Japan, the Bank has
made an updated assumption as at March 31, 2022,
that the weak economic trend will be prolonged andcontinue for a certain period of time. Based on suchassumption, with respect to debtors of certain
COVID-19-related restructured loans, the loss rateis deemed to be equivalent to that of debtors who
are downgraded in classification in terms of higher
uncertainties about future projection and otherfactors, and a reserve for loan losses is recorded
accordingly.
iii. Impact on the consolidated financial statements forthe following fiscal year
If the assumptions used in the initial estimateschange due to changes in the debtors’
performances, this may have a significant impact onreserve for loan losses in the consolidated financial
statements for the following fiscal year.
Furthermore, changes in assumptions used forthe estimates include a risk of a further downturn inthe economy due to stricter restrictions on economic
activities associated with further expansion of the
COVID-19 pandemic.

4. ACCOUNTING CHANGES
Adoption of Accounting Standard for Revenue
Recognition, Etc.
The Bank has applied the “Accounting Standard for
Revenue Recognition” (ASBJ Statement No. 29, March
31, 2020; hereinafter “Revenue Recognition Standard”)
and other standards from the beginning of the year ended
March 31, 2022. The Bank recognizes revenue whencontrol of a promised good or service is transferred to acustomer in an amount that reflects the consideration towhich the Bank expects to be entitled in exchange forthose goods and services. The impact of this change on
the consolidated financial statements is immaterial.
In accordance with the transitional treatment set forth inparagraph 89-3 of the Revenue Recognition Standard,notes on revenue recognition for the previous fiscal year
are not presented.
Adoption of Accounting Standard for Fair Value
Measurement, Etc.
The Bank has applied the “Accounting Standard for Fair
Value Measurement” (ASBJ Statement No. 30, July 4,
2019; hereinafter “Fair Value Measurement Standard”)
and other standards from the beginning of the year ended
March 31, 2022, and will prospectively apply the new
accounting policies stipulated by the Fair Value
Measurement Standard, etc. in accordance with thetransitional treatment provided in paragraph 19 of the Fair
Value Measurement Standard and paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019).
In addition, the Bank will include notes on financial
instruments categorized by fair value hierarchy in the

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notes on financial instruments. However, in accordancewith the transitional treatment provided in paragraph 7-4of the “Implementation Guidance on Disclosures about
Fair Value of Financial Instruments” (ASBJ Guidance No.
19, July 4, 2019), notes pertaining to the previous fiscal
year are not presented.

5. CASH AND CASH EQUIVALENTS
The reconciliation of cash and cash equivalents at theend of the year and cash and due from banks in the
consolidated balance sheet as of March 31, 2022 and
2021, was as follows:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Cash and due from banks ¥1,968,005 ¥1,371,871 $16,079,785
Due from banks, excluding(4,880)(101,176)
due from the Bank of Japan (12,383)
Cash and cash equivalents¥1,955,622 ¥1,366,991 $15,978,609
at the end of year

Corporate GovernanceBank Data

Financial Section

Millions of Yen

Cost

Securities classified as:
Trading
Available-for-sale:
Equity securities ¥ 61,205
Debt securities 2,196,869
Other securities
732,800
Held to maturity
1,012

2022
Unrealized Unrealized
Gains
Losses¥¥79,295 ¥
4,007
65,191Millions of Yen

2021
Unrealized Unrealized
Gains
Losses

Cost

Securities classified as:
Trading
Available-for-sale:
Equity securities ¥ 59,209
Debt securities 2,201,520
Other securities
693,748
Held to maturity
1,014¥78,064
9,093
77,926

Trading account securities as of March 31, 2022 and
2021, consisted of the following:218
14,142
6,000¥20,361¥ 229
14,396
6,001¥20,627

2022

Thousands of
U.S. Dollars
2022

$

1,781
115,548
49,023$166,361

Investment securities as of March 31, 2022 and 2021,
consisted of the following:
Millions of Yen
2022
2021

20,627¥ 1,155 136,119
4,702 2,205,911
15,484 756,190
1
1,012

Unrealized Unrealized
Gains
Losses

¥

Fair
Value

¥

Thousands of U.S. Dollars

National government bonds
Local government bonds
Other securities
Total

20,361

2,078 138,422
15,658 2,185,218
11,128 786,863
6
1,005

6. TRADING ACCOUNT SECURITIES ANDINVESTMENT SECURITIESMillions of Yen
2022
2021

Fair
Value

Thousands of
U.S. Dollars
2022

National government bonds ¥ 280,274 ¥ 274,404 $ 2,290,007
Local government bonds
965,438 909,175 7,888,209
Corporate bonds
940,517 1,023,345 7,684,590
Equity securities
141,131 137,884 1,153,125
Other securities
794,960 761,732 6,495,301
Total¥3,122,322 ¥3,106,542 $25,511,250
Investment in an unconsolidated subsidiary in theamount of ¥25 million ($204 thousand) and ¥25 million
and investment in interest in partnership in the amount of¥4,533 million ($37,037 thousand) and ¥3,580 million are
included in the above equity securities and othersecurities as of March 31, 2022 and 2021, respectively.
The carrying amounts and aggregate fair values of
securities as of March 31, 2022 and 2021, were as
follows:
Securities below include trading account securities andinvestment securities:

Cost

Securities classified as:
Trading
Available-for-sale:
Equity securities $ 500,081
Debt securities 17,949,742
Other securities 5,987,417
Held to maturity
8,268

Fair
Value

$
$647,887
32,739532,649

166,361$ 16,978 1,130,991
127,935 17,854,546
90,922 6,429,144
49
8,211

Securities, other than trading account securities, withreadily determinable fair value (excluding equity
securities, etc. and investment in partnerships which do
not have a market price), whose fair value significantly
declined compared with the acquisition cost and whose
fair value is not considered likely to recover to theiracquisition cost, are written down to the respective fairvalue. The related losses on revaluation are charged toincome for the fiscal year.
Impairment losses were recognized for available forsale securities in the amount of ¥518 million ($4,232
thousand), consisting of ¥499 million ($4,077 thousand)of equity securities and ¥19 million ($155 thousand) ofother securities, and ¥119 million, consisting of ¥119
million of other securities for the years ended March 31,
2022 and 2021, respectively.
The criteria for determining whether the fair value has“significantly declined” are defined based on the asset
classification of the issuer in the internal standards for
asset quality self-assessment as follows:(a) Normal issuers: Fair value declined by 50% or moreof the acquisition cost or fair value declined between
30% and 50% and average fair value during thepast one month declined by 50% or more (30% ormore for issuers who have credit risk more than acertain level).
(b) Caution issuers: Fair value declined by 30% or moreof the acquisition cost.
(c) Legally bankrupt, virtually bankrupt, and possibly
bankrupt issuers: Fair value is lower than theacquisition cost.

THE 77 BANK INTEGRATED REPORT

77

Value Creation Story

Caution issuers represent debtors who require carefulmanagement going forward and normal issuers represent
debtors other than legally bankrupt, virtually bankrupt,
possibly bankrupt, and caution issuers.
Proceeds from sales of available for sale securities forthe years ended March 31, 2022 and 2021, were¥289,989 million ($2,369,384 thousand) and ¥149,876
million, respectively. Gross realized gains and losses onthese sales, computed on a moving average cost basis,
were ¥9,440 million ($77,130 thousand) and ¥3,198
million ($26,129 thousand), respectively, for the year
ended March 31, 2022, and ¥12,241 million and ¥1,203
million, respectively, for the year ended March 31, 2021.
Unrealized gains on available-for-sale securities as ofMarch 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Valuation differences:
Available-for-sale securities ¥119,383 ¥143,486 $ 975,430
Available-for-sale money
5,329
7,913
43,541
held in trust(37,287) (44,841) (304,657)
Deferred tax liabilities
Unrealized gains on availablefor-sale securities¥ 87,425 ¥106,557 $ 714,314

7. MONEY HELD IN TRUSTThe carrying amounts and aggregate fair values of money
held in trust as of March 31, 2022 and 2021, were as
follows:
Millions of Yen

2022

Money held in trustclassified as:
Trading
Available-for-sale
Total

Unrealized Unrealized
Gains
LossesCost¥21,581¥21,581¥5,329¥5,329Fair
Value¥ 79,905
26,910¥106,816

Millions of Yen

2021

Money held in trustclassified as:
Trading
Available-for-sale
Total

Unrealized Unrealized
Gains
LossesCost¥21,581¥21,581¥7,913¥7,913

Fair
Value¥ 79,406
29,494¥108,901

Thousands of U.S. Dollars

2022
Cost

Money held in trustclassified as:
Trading
Available-for-sale $176,329
Total$176,329

Unrealized Unrealized
Gains
Losses$43,541$43,541

Fair
Value

$652,871
219,870$872,751

Available-for-sale securities held in trust, whose fairvalue significantly declined compared with the acquisition
cost and whose fair value is not considered likely torecover to their acquisition cost, are written down to therespective fair value.
No impairment loss was recognized for money held in
trust for the years ended March 31, 2022 and 2021.

78

8. LOANS AND BILLS DISCOUNTED
Loans and bills discounted as of March 31, 2022 and
2021, consisted of the following:Thousands ofMillions of Yen
U.S. Dollars
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Total

¥

2022

2021

2022

7,359 ¥
6,321 $
60,127
121,235
112,595
990,5624,584,079 4,369,410 37,454,685
616,668
600,242 5,038,548¥5,329,342 ¥5,088,570 $43,543,933

Bills Discounted
Bills discounted are accounted for as financialtransactions in accordance with “Treatment of Accounting
and Auditing of Application of Accounting Standard for
Financial Instruments in the Banking Industry” (JICPA
Industry Committee Practical Guideline No. 24). The
Bank has rights to sell or pledge these bills discounted.
The total of the face value of bills discounted was ¥7,359
million ($60,127 thousand) and ¥6,321 million as ofMarch 31, 2022 and 2021, respectively.
Non-performing Loans
Loans based on the Banking Act and the Act on
Emergency Measures for the Revitalization of the
Financial Functions are as follows:
Loans are comprised of corporate bonds included in“Investment securities” in the consolidated balance sheet(limited to those for which redemption of the principal andpayment of interest is guaranteed in whole or in part andthose issued through private placement of securities (asprovided by paragraph 3 of Article 2 of the Financial
Instruments and Exchange Act)); loans and bills
discounted; foreign exchange assets; accrued interestand suspense payments included in “Other assets,” items
recorded in the accounts of customers’ liabilities for
acceptances and guarantees; and securities used insecurities lending transactions, if such transactions are
performed as described in the accompanying note(limited to those under a loan-for-use or lease contract).
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Loans to bankrupt andquasi-bankrupt borrowers ¥ 12,007 ¥ 14,920 $
98,104
Doubtful loans
66,981
63,031
547,275
Substandard loans
32,33434,509264,188
Delinquent loans past due
three months or more
958
1,032
7,827
Restructured loans
31,37633,476
256,360
Sub-total
111,323
112,461
909,575
Normal loans
5,309,021 5,067,126 43,377,898
Total¥5,420,344 ¥5,179,588 $44,287,474
Loans to bankrupt and quasi-bankrupt borrowers areloans to borrowers who have fallen into bankruptcy due
to initiation of bankruptcy proceedings, reorganization
proceedings, petition for commencement of rehabilitation
proceedings, or other reasons, and similar loans.
Doubtful loans are loans for which the borrower has not
yet entered into bankruptcy, but the financial condition
and business performance of the borrower havedeteriorated and it is highly probable that the principal
cannot be collected and interest cannot be received asagreed, and those that do not fall under loans to bankrupt
and quasi-bankrupt borrowers.

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Delinquent loans past due three months or more areloans with principal or interest unpaid for three months ormore from the day after the agreed-upon payment date,
and those that do not fall under loans to bankrupt andquasi-bankrupt borrowers or doubtful loans.
Restructured loans are loans that provide certain
concessions favorable to the borrowers with the intent offacilitating the borrowers’ restructuring or otherwise
supporting them, such as by reducing or exemptinginterest, postponing principal or interest payments,
releasing credits, or providing other benefits to theborrowers. Restructured loans exclude loans to bankrupt
and quasi-bankrupt borrowers, doubtful loans, anddelinquent loans past due three months or more.
Normal loans are those that do not contain any problem
with the borrowers’ financial conditions or businessperformance, and are not classified in any of the above
categories.
The amounts of above loans are before deducting
reserve for loan losses.
(Change in Presentation Method)
In accordance with the “Cabinet Office Order to Amend
the Ordinance for Enforcement of the Banking Act”
(Cabinet Office Ordinance No. 3, January 24, 2020),
which came into effect on March 31, 2022, theclassification, etc. of risk-monitored loans under the
Banking Act is presented in line with the classification,etc. of disclosed loans under the Act on Emergency
Measures for the Revitalization of the Financial Functions.

9. FOREIGN EXCHANGES
Foreign exchange assets and liabilities as of March 31,
2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

AssetsDue from foreign correspondentaccounts
Total¥7,038¥7,038¥5,865¥5,865$57,504$57,504

Liabilities
Foreign exchange bills sold
Foreign exchange bills payable
Total

¥ 23
156
¥180

¥ 12
142
¥155

$ 187
1,274
$1,470

Corporate GovernanceBank Data

Financial Section

The impairment losses were composed of ¥55 million($449 thousand) on buildings, ¥462 million ($3,774
thousand) on land and ¥29 million ($236 thousand) onother fixed assets for the year ended March 31, 2022,
and ¥107 million on buildings, ¥2 million on land and¥182 million on other fixed assets for the year ended
March 31, 2021.
For the purpose of testing for impairment, the Bank
recognizes each individual branch office as a cashgenerating unit for which it continues to manage andmonitor identifiable cash flows. Branch offices to beclosed and facilities not in operation are individuallyassessed for impairment. Subsidiaries recognize eachcompany as a cash-generating unit. An impairment loss
would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future
cash flows expected to result from the continued use andeventual disposition of the asset or asset group.
The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the DCFs fromthe continued use and eventual disposition of the asset or
the net selling price at disposition. The DCFs were
calculated using discount rates of 9.7% and 6.6% for theyears ended March 31, 2022 and 2021, respectively, andthe net selling price was determined by quotation from athird-party vendor.

12. CUSTOMERS’ LIABILITIES FOR
ACCEPTANCES AND GUARANTEESAll contingent liabilities arising from acceptances andguarantees are reflected in “Acceptances andguarantees.” “Customers’ liabilities for acceptances andguarantees” are shown as assets, representing theBank’s right to receive indemnity from the applicants.
The amount of guarantee obligations for privately
placed corporate bonds included in securities as of March
31, 2022 and 2021, was ¥45,855 million ($374,662
thousand) and ¥37,079 million, respectively.

13. ASSETS PLEDGED
Assets pledged as collateral and their relevant liabilities
as of March 31, 2022 and 2021, were as follows:
Millions of Yen

10. TANGIBLE FIXED ASSETS
The accumulated depreciation of tangible fixed assets asof March 31, 2022 and 2021, amounted to ¥83,050 million($678,568 thousand) and ¥86,972 million, respectively.
As of March 31, 2022 and 2021, deferred gains for tax
purposes of ¥7,550 million ($61,688 thousand) and ¥7,695
million, respectively, on tangible fixed assets sold andreplaced with similar assets have been deducted from thecost of newly acquired tangible fixed assets.

11. LONG-LIVED ASSETS
The Bank recognized impairment losses of ¥547 million($4,469 thousand) and ¥292 million on certain operating
branches, business premises, branches to be closed, andunused facilities for the years ended March 31, 2022 and
2021, respectively.

2022

2021

Thousands of
U.S. Dollars

2022

Assets pledged as collateral:
Investment securities¥1,015,504 ¥977,812 $8,297,279
Loans and bills discounted 535,953
4,379,058
Other assets
144
144
1,176
Relevant liabilities to above assets:
Deposits
52,81351,968431,514
Payables under securities
1,251
25,86910,221
lending transactions
Borrowed money
1,157,847 596,235 9,460,307
In addition to the above, the following assets were
offered as collateral for exchange settlement transactions,or as substitutes for future transaction initial margin andothers:THE 77 BANK INTEGRATED REPORT79

Value Creation Story

Thousands of
U.S. Dollars

Millions of Yen

Investment securities
Other assets
Of which:
Cash collateral paid forfinancial instruments
Guarantee deposits forleased tangible fixed assets

2022

2021

100
50,000$409,347

11,668

9,375

95,334

93

93

759

¥50,100¥

2022

14. LOAN COMMITMENTS
Contracts of overdraft facilities and loan commitments arecontracts with customers to lend up to the prescribed
limits in response to customers’ applications for a loan, as
long as there is no violation of any condition within thecontracts. As of March 31, 2022, the unused amount ofsuch contracts totaled ¥1,700,172 million ($13,891,429
thousand), of which amounts with original agreement
terms of less than one year were ¥1,578,213 million($12,894,950 thousand). As of March 31, 2021, theunused amount of such contracts totaled ¥1,671,011
million, of which amounts with original agreement termsof less than one year were ¥1,551,636 million.
Since many of the commitments expire without being
drawn upon, the unused amount does not necessarily
represent a future cash requirement. Most of thesecontracts have conditions allowing the Companies torefuse customers’ applications for a loan or decrease thecontract limits based on proper reasons (e.g., changes infinancial situation, deterioration in customers’
creditworthiness). At the inception of the contracts, theCompanies obtain collateral real estate, securities, etc., if
considered to be necessary. Subsequently, theCompanies perform a periodic review of the customers’
business results based on internal rules and takenecessary measures to reconsider conditions in contracts
and require additional collateral and guarantees.

16. BORROWED MONEY
As of March 31, 2022 and 2021, the weighted-averageannual interest rates applicable to borrowed money were0.004% and 0.006%, respectively.
Borrowed money consisted of borrowings from the
Bank of Japan and other financial institutions. Annual
maturities of borrowed money as of March 31, 2022, wereas follows:Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen¥ 870,271
154,735
1,486
140,667283
648¥1,168,093

Thousands of
U.S. Dollars

17. LIABILITY FOR EMPLOYEES’ RETIREMENTBENEFITS
The Bank has severance payment plans as defined
benefit plans consisting of corporate pension fund plans
and lump-sum retirement payment plans for employees.
In addition, the Bank has established corporate defined
contribution pension plans as defined contribution plans.
The Bank has also established a retirement benefit trust
under the lump-sum retirement payment plan.
The consolidated subsidiaries have lump-sum
retirement payment plans as defined benefit plans anddefined contribution pension plans as defined contributionplans. For lump-sum retirement payment plans, the Bank
calculates liability for retirement benefit and retirement
benefit costs using a shortcut method.
(1) The changes in projected benefit obligations for theyears ended March 31, 2022 and 2021, were as
follows:
Millions of Yen
2022
2021

15. DEPOSITS
Deposits as of March 31, 2022 and 2021, consisted of thefollowing:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Current deposits¥ 251,572 ¥ 240,917 $ 2,055,494
Ordinary deposits
6,034,989 5,748,476 49,309,494
Deposits at notice
12,644
13,538103,309
Time deposits
2,056,221 2,077,491 16,800,563
212,820
211,460 1,738,867
Negotiable certificates of deposit
Other deposits
251,495 235,597 2,054,865
Total¥8,819,743 ¥8,527,481 $72,062,611$7,110,638
1,264,278
12,141
1,149,334
2,312
5,294
$9,544,023

Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
OthersBalance at end of year

Thousands of
U.S. Dollars
2022¥69,749 ¥69,248 $569,891
1,666
1,658 13,612
445
440
3,635
604
1,989
4,935
(3,418) (3,768) (27,927)
177
180
1,446
¥69,225 ¥69,749 $565,609(2) The changes in plan assets for the years ended March
31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Balance at beginning of year
¥52,647 ¥43,708 $430,157
Expected return on plan assets
1,473
1,383 12,035
(70)
(571)
Actuarial (losses) gains
3,640
Contributions from the em1,234
5,760 10,082
ployer(2,030) (2,026) (16,586)
Benefits paid
Others
177
180
1,446
Balance at end of year
¥53,431 ¥52,647 $436,563

80

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Business Strategy(3) Reconciliation between the liability recorded in the
consolidated balance sheet and the balances ofprojected benefit obligations and plan assets as ofMarch 31, 2022 and 2021, was as follows:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Funded projected benefit obligations ¥ 69,057 ¥ 69,602 $ 564,237(53,431) (52,647) (436,563)
Plan assets
Total
15,625
16,955 127,665
Unfunded projected benefit obligations
168
147
1,372
Net liability arising from projected
benefit obligations¥ 15,793 ¥ 17,102 $ 129,038
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Corporate GovernanceBank Data

Financial Section(7) Plan assets as of March 31, 2022 and 2021
a. Components of plan assets
Plan assets consisted of the following:
2022

2021

Debt investments
42%
Equity investments
28
Cash and cash equivalents
1
Life insurance company accounts (general accounts) 20
Call loans, etc.
9
Others
0
Total
100%

41%
33
1
20
5
0
100%

Note: Total plan assets as of March 31, 2022 and 2021,
include retirement benefit trust established underlump-sum payment plans by 20%.

Liability for employees’ retirement benefits¥15,793 ¥17,102 $129,038
Asset for employees’ retirement
benefits
Net liability arising from projected
benefit obligations¥15,793 ¥17,102 $129,038

b. Method of determining the long-term expected rateof return on plan assets
The expected rate of return on plan assets is determinedconsidering allocation of plan assets that are expectedcurrently and in the future and the long-term rates ofreturn which are expected currently and in the future fromthe various components of the plan assets.

(4) The components of net periodic retirement benefit
costs for the years ended March 31, 2022 and 2021,
were as follows:(8) Assumptions used for the years ended March 31,
2022 and 2021, were set forth as follows:

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Service cost
¥ 1,666 ¥ 1,658 $ 13,612
Interest cost
445
440
3,635
(1,473) (1,383) (12,035)
Expected return on plan assets
Recognized actuarial losses
1,335
1,619 10,907
Net periodic retirement benefit costs ¥ 1,973 ¥ 2,335 $ 16,120
Note: Employees’ contribution to corporate pension funds
is deducted.
(5) Amounts recognized in other comprehensive income(before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31,
2022 and 2021, were as follows:
Millions of Yen
2022
2021

Actuarial gains
Total

¥660
¥660

¥3,270¥3,270Thousands of
U.S. Dollars
2022$5,392$5,392(6) Amounts recognized in accumulated othercomprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March
31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

Unrecognized actuarial losses
Total¥6,904¥6,904

Thousands of
U.S. Dollars
2022

2022

2021

Discount rate
0.6%
Long-term expected rate of return on plan assets 2.8
Expected rate of salary increase
4.5

0.6%
3.2
4.5

(9) Defined contribution
The amount required to be contributed to the defined
contribution plan of the Bank and its consolidated
subsidiaries was ¥266 million ($2,173 thousand) and¥263 million for the years ended March 31, 2022 and
2021, respectively.

18. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations which were recognized on
the consolidated balance sheet as of March 31, 2022 and
2021, were as follows:a. Overview of asset retirement obligations
Asset retirement obligations are recognized for obligationsof restoring leased buildings, such as branch premises, totheir original state, based on the real estate lease
contracts and asbestos removal costs.
b. Calculation of asset retirement obligations
Asset retirement obligations are calculated based on theestimated available periods of 16 to 31 years dependingon the expected useful lives of buildings using discountrates from 0.139% to 2.324%.

¥7,565 $56,409¥7,565 $56,409

THE 77 BANK INTEGRATED REPORT

81

Value Creation Storyc. The changes in asset retirement obligations for theyears ended March 31, 2022 and 2021, were as follows:

Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year
Increase due to acquisitionof tangible assets
Reconciliation associatedwith passage of time
Decrease due to execution ofasset retirement obligations
Other
Balance at end of year

2022

2021

2022

¥667

¥661

$5,449

12
5
(62)
(12)
¥610

98
5

40

¥667

(506)
(98)
$4,984

19. PERFORMANCE-LINKED STOCKCOMPENSATION SYSTEM
The Bank has introduced a performance-linked stockcompensation system (the “System”) based on the Board
Incentive Plan (“BIP”) trust from the perspective ofenhancing motivation to make contributions to improving
the medium- to long-term performance and corporate
value by further clarifying the linkage between
compensation to directors, etc. and stock value of the
Bank.
Under the System, the Bank’s shares are acquired
using the funds contributed by the Bank as compensation
to directors, etc. through the trust and such shares are
granted to directors, etc. through the trust according totheir ranks and achievement of management plans. Saidtransactions are related to the System.
The Bank’s shares remaining in the trust are recorded
as treasury stock under “Equity” and the carrying amountof such treasury stock was ¥1,444 million ($11,798
thousand) and ¥1,019 million and the number of shares
was 786 thousand shares and 371 thousand shares as ofMarch 31, 2022 and 2021, respectively.

20. EQUITY
Japanese banks are subject to the Banking Law and to
the Companies Act of Japan (the “Companies Act”). The
significant provisions in the Companies Act and the
Banking Law that affect financial and accounting matters
are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends
at any time during the fiscal year in addition to the yearend dividend upon resolution at the general meeting ofstockholders. For companies that meet certain criteriasuch as (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory
Board, and (4) the term of service of the directors beingprescribed as one year rather than two years of normal
term by its articles of incorporation, the Board of Directors
may declare dividends (except for dividends-in-kind) at
any time during the fiscal year if the company hasprescribed so in its articles of incorporation. The Bank
meets all the above criteria. The Companies Act permits
companies to distribute dividends-in-kind (noncash
assets) to stockholders subject to certain limitations andadditional requirements. Semiannual interim dividends
may also be paid once a year upon resolution by the
Board of Directors if the articles of incorporation of thecompany so stipulate. The Bank can do so because it82

stipulates this in its articles of incorporation. The
Companies Act provides certain limitations on theamounts available for dividends or the purchase oftreasury stock. The limitation is defined as the amountavailable for distribution to the stockholders, but theamount of net assets after dividends must be maintained
at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common
Stock, Reserve and Surplus
The Banking Law requires that an amount equal to 20%
of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in
capital (a component of capital surplus) depending on theequity account charged upon the payment of such
dividends until the total of the aggregate amount of thelegal reserve and additional paid-in capital equals 100%of stated capital.
Under the Companies Act and the Banking Law, theaggregate amount of additional paid-in capital and thelegal reserve that exceeds 100% of the stated capital may
be made available for dividends by resolution of thestockholders after transferring such excess to retained
earnings in accordance with the Companies Act. Under
the Companies Act, the total amount of additional paid-in
capital and the legal reserve may be reversed without
limitation. The Companies Act also provides that statedcapital, legal reserve, additional paid-in capital, othercapital surplus, and retained earnings can be transferredamong the accounts under certain conditions upon
resolution of the stockholders.
c. Treasury Stock and Treasury Stock Acquisition
RightsThe Companies Act also provides for companies topurchase treasury stock and dispose of such treasury
stock by resolution of the Board of Directors. The amountof treasury stock purchased cannot exceed the amountavailable for distribution to the stockholders which isdetermined by a specific formula. Under the Companies
Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides
that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate componentof equity or deducted directly from stock acquisition rights.

21. OTHER OPERATING INCOME
Other operating income for the years ended March 31,
2022 and 2021, consisted of the following:
Millions of Yen
2022
2021

Gain on sales and redemptionof bonds and other securities
Lease receipts
Other
Total

¥

Thousands of
U.S. Dollars
2022

442 ¥ 404 $ 3,611
7,714
7,363
63,028
6,232
6,222
50,919¥14,389 ¥13,990 $117,566

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22. OTHER INCOME

25. INCOME TAXESOther income for the years ended March 31, 2022 and
2021, consisted of the following:

The Companies are subject to Japanese national andlocal income taxes which, in the aggregate, resulted in anormal effective statutory tax rate of approximately 30.5%
for the years ended March 31, 2022 and 2021.
The tax effects of significant temporary differences
which resulted in deferred tax assets and liabilities as ofMarch 31, 2022 and 2021, were as follows:

Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

¥ 44
556
¥601

Gains on sales of tangible fixed assets
Other
Total

¥

29
1,133
¥1,163$ 359
4,542$4,91023. OTHER OPERATING EXPENSES
Other operating expenses for the years ended March 31,
2022 and 2021, consisted of the following:Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Losses on sales, redemption
and devaluation of bonds and¥ 9,316 ¥13,137 $ 76,117
other securities
Lease costs
7,086
6,754
57,896
Other
1,962
2,216
16,030
Total¥18,365 ¥22,107 $150,053

24. OTHER EXPENSES
Other expenses for the years ended March 31, 2022 and
2021, consisted of the following:Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Bad debt losses
Losses on dispositions of money
held in trust
Losses on sales of loans
Losses on impairments anddisposals of fixed assets
Provision for reserve forreimbursement of deposits
Other
Total

¥

32

¥

58

$

261

112
56

856
249

915
457

775

393

6,332

81
1,976
¥3,034126
1,373¥3,057661
16,145$24,789

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Deferred tax assets:
Reserve for loan losses¥ 15,720 ¥ 15,396 $ 128,441
Liability for employees’
7,817
8,183
63,869retirement benefits
Fixed assets (depreciation)
4,960
5,139
40,526
Losses on devaluation of
investment securities
2,921
3,039
23,866
Other
6,033
5,916
49,293
Less valuation allowance(13,952) (13,571) (113,996)(see Note below)
Total
23,501 24,104
192,017
Deferred tax liabilities:
Unrealized gains on availablefor-sale securities
37,287 44,841
304,657
Fixed assets (deferred gainon sales and replacements)
291
300
2,377
Other
52
15
424
Total
37,631 45,157
307,467
Net deferred tax liabilities¥(14,129) ¥(21,053) $(115,442)
Note: Valuation allowance for the fiscal year ended March
31, 2021, increased by ¥817 million. This increase
was mainly due to an increase of ¥886 million in
valuation allowance on reserve for loan losses at
the Bank and consolidated subsidiaries.
A reconciliation between the normal effective statutory
tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income for theyear ended March 31, 2021, was as follows, whereas areconciliation for the year ended March 31, 2022, is not
required under Japanese accounting standards since thedifference is less than 5% of the normal effective statutory
tax rate.
2021

Normal effective statutory tax rate
30.5%
Expenses not deductible for income tax purposes 0.2(1.1)
Nontaxable dividend income
Inhabitants taxes
0.3
Valuation allowance
3.3
Other—net
0.5
Actual effective tax rate
33.7%

THE 77 BANK INTEGRATED REPORT

83

Value Creation Story

26. OTHER COMPREHENSIVE (LOSS) INCOME
The components of other comprehensive (loss) income forthe years ended March 31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

Unrealized (losses) gains on available-for-sale securities:(Loss) gain arising during the year ¥(26,875) ¥ 72,116 $(219,584)
Reclassification adjustment to(326)
profit or loss
188
1,536
Amount before income tax effect (26,686) 71,790 (218,040)
Income tax effect
7,554 (21,440) 61,720
Total¥(19,131) ¥ 50,350 $(156,311)
Deferred gains on derivatives underhedge accounting:
Gain (loss) arising during the year ¥Reclassification adjustment toprofit or loss
Amount before income tax effect
Income tax effectTotal¥(53) $

400

296
701
346
647
(105)
(196)
241 ¥ 450 $

2,418
2,827
(857)
1,969

49 ¥

Defined retirement benefit plans:(Loss) gain arising during the year ¥ (675) ¥ 1,650 $ (5,515)
Reclassification adjustment toprofit or loss
1,335
1,619
10,907
Amount before income tax effect
660
3,270
5,392
(200)
(994)
(1,634)
Income tax effectTotal¥ 459 ¥ 2,276 $ 3,750
Total other comprehensive (loss)
income¥(18,431) ¥ 53,077 $(150,592)

27. LEASES
Finance Leases
LessorA subsidiary leases certain equipment and other assets
to various customers.
The net investments in leases as of March 31, 2022
and 2021, are summarized as follows:
Millions of Yen
2022
2021

Gross lease receivables
Estimated residual values
Unearned interest income
Investments in leases

Thousands of
U.S. Dollars
2022¥20,124 ¥19,739 $164,425
1,660
1,549
13,563(1,836) (1,856) (15,001)¥19,948 ¥19,433 $162,987

Maturities of lease receivables for finance leases as ofMarch 31, 2022, are as follows:Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

84

Millions of Yen

¥115
101
92
82
74
165
¥632

Thousands of
U.S. Dollars

$ 939
825
751
669
604
1,348
$5,163Maturities of investment in leases for finance leases asof March 31, 2022, are as follows:Year Ending March 31
2023
2024
2025
2026
2027
2028 and thereafter
Total

Millions of Yen¥ 6,360
5,112
3,723
2,499
1,252
1,175
¥20,124

Thousands of
U.S. Dollars$ 51,965
41,76830,41920,418
10,2299,600$164,425

28. FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURESa. Status of Financial Instruments(1) Group policy for financial instruments
The Companies provide financial services such as credit
card business and leasing operations in addition tobanking operations. In the course of these operations, theCompanies raise funds principally through deposit taking
and invest funds in loans, securities, and others. As such,the Bank holds financial assets and liabilities which are
subject to fluctuation in interest rates and conducts
comprehensive Asset and Liability Management (“ALM”)
to avoid unfavorable effects from interest rate fluctuations.
Derivatives are also employed by the Bank as part of ALM.
(2) Nature and extent of risks arising from financial
instruments
Financial assets held by the Companies mainly consist ofloans to domestic corporations, local government
agencies, and individual customers which are exposed tocredit risk that the Companies may suffer from losses
resulting from nonperformance of borrowers and interest
rate risk that the Companies may suffer from losses
resulting from fluctuations in interest rates.
Securities, mainly debt securities, equity securities, andinvestment trusts are held to maturity and for otherpurposes and also certain debt securities are held for the
purpose of selling to customers. These securities are
exposed to credit risk of issuers and market risks offluctuations in interest rates and market prices. In
addition, they are exposed to market liquidity risk that theCompanies may suffer from losses resulting fromdifficulties in executing financial transactions in certain
environments such as market turmoil.
Financial liabilities, mainly consisting of liquid deposits
or time deposits taken from corporate and individual
customers, are exposed to cash flow risk that the Bank
may experience a situation where unexpected cash flows
are incurred in certain environments where the credit
rating of the Bank may be lowered and, accordingly,
necessary funding may become difficult.
Foreign currency denominated assets and liabilities are
exposed to foreign exchange risk that the Bank may
suffer from losses resulting from fluctuations in foreignexchange rates.
Derivatives mainly include interest rate swaps and bondfutures, which are used to manage exposure to market
risks from changes in interest rates of loans andinvestment securities, and foreign exchange forward
contracts, which are used to hedge foreign exchange risk
associated with foreign currency-denominated assets andliabilities. Hedge accounting is applied to certain hedging
activities related to loans and investment securities ashedged items.

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Credit Risk Management
The Bank has established the “Credit Risk Control Policy”
as a basic policy for credit risk management and various
rules concerning credit risk management. Based on thesepolicies and rules, the Companies clarify fundamental
approaches to secure the soundness of assets andcontrol procedures for identifying, monitoring, andcontrolling credit risk. Additionally, the Bank utilizes the“Credit Rating System” from the viewpoint of carrying out
appropriate screening and management based on therisk characteristics of the credit recipient.
In addition, as an organization responsible for credit
risk management, credit risk control functions and review
functions have been established to secure theeffectiveness of credit risk management.
The Risk Management Division, as a credit risk control
function, is engaged in identifying the level of future
possible credit risk and the status of credit concentrationin major borrowers through measurement of the level ofcredit risk and analysis of credit portfolios.
The Credit Supervision Division, as a review control
function, is engaged in reviewing lending operations
based on strict examination standards, systemdevelopment for strengthening the daily control of loan
receivables, and appropriate maintenance of operational
procedures.
Market Risk Management(a) Market risk management system
The Bank has established the “Market Risk Control
Policy” as a basic policy for market risk management andvarious rules concerning market risk management. Basedon these policies and rules, the Bank clarifies
fundamental approaches for appropriate market risk
control operations and control procedures for identifying,monitoring and controlling market risk.
As an organization responsible for market risk
management, a market risk control function (middle
office) has been established and furthermore, theoperating function (front office) and the administration
function (back office) have been separated. Additionally,market risk control function staffs are assigned to theoperating function to secure the effectiveness of market
risk management.
The Risk Management Division, as a market risk
control function, measures the level of market risk of the
Bank as a whole using Value-at-Risk (“VaR”) approachmodels and other models and regularly monitors thestatus of compliance with position limits and loss limits
established according to the type and characteristics oftransactions to control the level of market risk within acertain range.
In addition, an ALM and Income Control Committee
was established for the purpose of analyzing flexible
investment strategies in order to prevent risks resulting
from fluctuations in interest rates and market prices, while
forecasting future interest rates, market prices, and trendsof fund and business conditions. The committee is also
responsible for securing the soundness of management
and also improving profitability at the same time based on
appropriate asset and liability management through theunification of risk management and earnings control.
(b) Quantitative information about market risk
The Bank adopts the variance-covariance method(holding period: 125 business days for strategic equity
securities and 60 business days for others; confidence
interval: 99.0%; observation period: 250 business days)in computing the VaR with respect to money held in trust,

Corporate GovernanceBank Data

Financial Section

securities, Japanese yen deposits and loans, andJapanese yen money market funds. The volume ofmarket risk (estimated losses) that the Bank is exposed
to as of March 31, 2022, amounts to ¥91,521 million($747,781 thousand) (¥107,453 million in 2021) as awhole. However, the risk under certain abnormal market
fluctuations may not be captured since, under the VaR
method, the volume of market risk under a definite
probability of statistically computed incidence is measured
based on historical market fluctuations.
The Bank implements back testing to compare the VaR
computed by the model with actual profit and loss in the
securities and confirms that the measurement model inuse captures the market risk with sufficient precision.
Liquidity Risk Management
The Bank has established the “Liquidity Risk Control
Policy” as a basic policy for liquidity risk management andvarious rules concerning liquidity risk management.
Based on these policies and rules, the Bank clarifies
fundamental approaches for stable funding of operations
and control procedures for identifying, monitoring andcontrolling liquidity risk. In addition, the Bank has
established the “Contingency Plan for Liquidity” to enable
it to make quick and correct responses to unexpected
events.
Furthermore, as an organization responsible for liquidity
risk management, a liquidity risk control function has
been established and a cash management function and asettlement control function have been established tocontrol daily cash management and settlement related to
cash and securities.
The Risk Management Division, as a liquidity risk
control function, manages the liquidity risk of the Bank as
a whole by identifying, monitoring and controlling liquidity
risk.
The Treasury Administration and International Division,
as a cash management control function and settlement
control function, prepares daily or monthly cash flow
projections and conducts cash management by identifying
possible funds and liquidity of assets and verifying theconcentration of settlement of major account funds to acertain date. The Division also controls settlement byidentifying the status of settlement through systems suchas the BOJ-NET and among financial institutions.
Risk Management System of Subsidiaries
The subsidiaries have a risk management system similar
to that of the Bank.
(4) Supplementary explanation about fair values offinancial instruments
Since certain assumptions are used in calculating the fairvalues of financial instruments, the outcome of suchcalculation may vary if different assumptions are used.

THE 77 BANK INTEGRATED REPORT

85

Value Creation Story

b. Fair Values of Financial Instruments

The carrying amount, fair value, and unrealized gain/lossof the financial instruments as of March 31, 2022 and
2021, are disclosed below. Note that equity securities,
etc. and investment in partnerships which do not have amarket price are not included in the following table (seeNote 1 below). Notes on cash and due from banks areomitted because they are settled in a short period of time
and their carrying amounts approximate fair value. Also,
immaterial accounts in terms of the carrying amount areomitted:Carrying
AmountMillions of Yen

Unrealized

Fair Value
March 31, 2022
Gain/Loss(1) Money held in trust¥ 106,816 ¥ 106,816(2) Investment securities 3,111,516 3,111,510
(6)
¥
(6)
Held-to-maturity securities
1,012
1,005
Available-for-sale securities 3,110,504 3,110,504(3) Loans and bills discounted 5,329,342(61,517)
Reserve for loan losses*1
5,267,824 5,294,935
27,110Total assets¥8,486,157 ¥8,513,261¥27,104(1) Deposits¥8,819,743 ¥8,819,836¥
92(2) Borrowed money(30)
1,168,093 1,168,062
Total liabilities¥9,987,836 ¥9,987,898¥
61
Derivatives*2:
To which hedge accounting¥ (9,736) ¥ (9,736)
is not applied
To which hedge accounting
(214)
(214)
is applied*3
Total derivatives¥ (9,951) ¥ (9,951)

March 31, 2021
(1) Money held in trust¥ 108,901 ¥ 108,901(2) Investment securities 3,099,235 3,099,234
Held-to-maturity securities
1,014
1,012
Available-for-sale securities 3,098,221 3,098,221(3) Loans and bills discounted 5,088,570(59,707)
Reserve for loan losses*1
5,028,862 5,052,277
Total assets¥8,236,999 ¥8,260,413(1) Deposits¥8,527,481 ¥8,527,629(2) Borrowed money
604,679
604,670
Total liabilities¥9,132,160 ¥9,132,300
Derivatives*2:
To which hedge accounting¥ (7,016) ¥ (7,016)
is not applied
To which hedge accounting
(623)
(623)
is applied*3
Total derivatives¥ (7,639) ¥ (7,639)

86

¥

(1)
(1)

23,415¥23,413
¥ 148
(8)
¥ 140

Thousands of U.S. Dollars
Carrying
Unrealized

Fair Value
March 31, 2022
AmountGain/Loss(1) Money held in trust$ 872,751 $ 872,751(2) Investment securities 25,422,959 25,422,910
(49)
$
(49)
Held-to-maturity securities
8,268
8,211
Available-for-sale securities 25,414,690 25,414,690(3) Loans and bills discounted 43,543,933(502,630)
Reserve for loan losses*1
43,041,294 43,262,807
221,505
Total assets$69,337,012 $69,558,468$ 221,456(1) Deposits$72,062,611 $72,063,371$
751(2) Borrowed money(245)
9,544,023 9,543,769
Total liabilities$81,606,634 $81,607,141$
498
Derivatives*2:
To which hedge accounting$ (79,548) $ (79,548)
is not applied
To which hedge accounting(1,748)(1,748)is applied*3
Total derivatives$ (81,305) $ (81,305)*1 General and specific reserves for loan loss
corresponding to loans and bills discounted are
deducted.
*2 Derivatives recorded under other assets and liabilities
are presented in a lump sum.
Net receivables and payables arising from derivativetransactions are presented in net amounts andnumbers in parenthesis denote net payables.
*3 These derivatives are interest rate swaps, etc.
designated as hedging instruments to fix the cash
flows of loans, etc., which are hedged items, andprincipally deferral hedges are applied. Furthermore,“Practical Solution on the Treatment of Hedge
Accounting for Financial Instruments that Reference
LIBOR” (Practical Issue Task Force (PITF) No. 40,
March 17, 2022) is applied to these hedging
relationships.
Notes: 1. The carrying amount of equity securities, etc.
and investment in partnerships which do not have amarket price are as follows. These instruments are notincluded in “Available-for-sale securities” in the abovetable regarding the fair value of financial instruments.
Carrying AmountThousands ofMillions of Yen
U.S. Dollars
2022
2021
2022

Category
Unlisted equity securities*1,*2¥2,708¥1,765$22,125

Investments in partnerships*3

8,097

5,541

66,157*1 The fair values of unlisted equity securities are notdisclosed in accordance with paragraph 5 of
“Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” (ASBJ Guidance No.
19, March 31, 2020).
*2 Impairment losses in the amount of ¥14 million ($114
thousand) and ¥1 million were recognized for unlisted
equity securities for the years ended March 31, 2022
and 2021, respectively.
*3 The fair values of investments in partnerships are notdisclosed in accordance with paragraph 27 of“Implementation Guidance on Accounting Standard for
Fair Value Measurement” (ASBJ Guidance No. 31,
July 4, 2019).

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2. Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2022
Millions of Yen

Due from banks
Investment securities
Held-to-maturity securities
National government bonds
Local government bonds
Available-for-sale securities
with contractual maturities
National government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted*
Total

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10
Years¥1,903,304
292,663¥ 644,011¥ 636,220¥346,576
1,000¥ 699,892¥ 188,726

699,892
24,000396,590
192,700
86,601561,990¥1,261,882

188,726
176,500
4,922
7,303
1,327,304¥1,516,030

1,000
292,663
53,00041,741
144,506
53,415
1,145,355¥3,341,324

644,01126,000126,023
294,397
197,590873,641¥1,517,653

636,2205,000
223,423
197,851
209,945807,166¥1,443,386

345,576
170,923
102,871
71,782496,516¥843,093

Thousands of U.S. Dollars

Due from banks
Investment securities
Held-to-maturity securities
National government bonds
Local government bonds
Available-for-sale securities
with contractual maturities
National government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted*
Total

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years

Due after 10Years$15,551,139
2,391,232$ 5,261,957$ 5,198,300$2,831,734
8,170$ 5,718,539$ 1,542,005

5,718,539
196,0943,240,379
1,574,475
707,582
4,591,796$10,310,335

1,542,005
1,442,111
40,21559,6698,170
2,391,232
433,041
341,049
1,180,701
436,432
9,358,240$27,300,629

5,261,957
212,435
1,029,683
2,405,400
1,614,429
7,138,173$12,400,138

5,198,300
40,853
1,825,500
1,616,561
1,715,377
6,595,032$11,793,332

2,823,564
1,396,543
840,518
586,502
4,056,834$6,888,577

10,844,872$12,386,878* Of loans and bills discounted, the portion whose timing of collection is unforeseeable, such as loans to “legally bankrupt” borrowers,
loans to “virtually bankrupt” borrowers, and loans to “possibly bankrupt” borrowers, amounting to ¥78,654 million ($642,650 thousand)is not included in the above table. Loans that do not have a contractual maturity, amounting to ¥38,712 million ($316,300 thousand), are
not included either.
3. Repayment schedule of bonds, borrowed money, and other interest-bearing liabilities subsequent to March 31, 2022
Millions of Yen

Deposits*
Borrowed money
Total

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years¥8,434,917
870,271¥9,305,188¥336,221
156,222¥492,443¥ 48,604
140,951¥189,555

¥122
¥122

¥162
¥162

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years$68,918,351
7,110,638$76,028,989$2,747,128
1,276,427$4,023,555$ 397,123
1,151,654$1,548,778

$996
$996

$1,323$1,323Due after 10
Years

¥363
¥363

Thousands of U.S. Dollars

Deposits*
Borrowed money
Total

Due after 10
Years$2,965$2,965* Demand deposits included in deposits are presented under “Due in 1 year or less.”

THE 77 BANK INTEGRATED REPORT

87

Value Creation Storyc. Financial Instruments Categorized by Fair Value Hierarchy

The fair value of financial instruments is categorized into the following three levels, depending on the observability andsignificance of the inputs used in making fair value measurements:
Level 1: Fair value measured using observable inputs, i.e. quoted prices in active markets for assets or liabilities that are
the subject of the measurement
Level 2: Fair value measured using observable inputs other than Level 1 inputs
Level 3: Fair value measured using unobservable inputs
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized
in its entirety in the level of the lowest level input that is significant to the entire measurement.
(1) Financial instruments measured at fair value
March 31, 2022
Money held in trust
Investment securities:
Available-for-sale securities:
National and local government bonds
Local government bonds
Corporate bonds
Equity securities
Other*1
Total assets
Derivatives*2:
Interest related
Currency related
Total derivatives

Level 1
¥ 29,781

March 31, 2022
Money held in trust
Investment securities:
Available-for-sale securities:
National and local government bonds
Local government bonds
Corporate bonds
Equity securities
Other*1
Total assets
Derivatives*2:
Interest related
Currency related
Total derivatives

Level 1
$ 243,328

Millions of Yen
Level 2
Level 3
¥ 77,034

274,271

6,003
964,426
894,725
2,801
128,685¥2,073,676

135,6211,244¥440,917¥¥

2,240,959

1,108,105
10,164$3,602,557

Total¥ 106,816

280,274
964,426
940,517
138,422
129,929¥2,560,386¥45,792¥45,792

46(9,997)(9,951)¥¥

46(9,997)(9,951)Thousands of U.S. Dollars
Level 2
Level 3
$ 629,414$

49,048
7,879,941
7,310,442
22,885
1,051,433$16,943,181

2,290,007
7,879,941
7,684,590
1,130,991
1,061,598$20,919,895

$
$

375
(81,681)(81,305)$374,148$374,148

$
$

Total
872,751375(81,681)(81,305)*1 Above table does not include investment trusts to which the transitional measures provided for in paragraph 26 of“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4,2019) are applied. The carrying amount of such investment trusts recorded in the consolidated balance sheet is¥656,933 million ($5,367,538 thousand).
*2 Derivatives recorded under other assets and liabilities are presented in a lump sum.
Net receivables and payables arising from derivative transactions are presented in net amounts and numbers inparenthesis denote net payables.

88

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Corporate GovernanceBank Data

Financial Section(2) Financial instruments other than those measured at fair value
March 31, 2022
Investment securities:
Held-to-maturity securities:
Local government bonds
Loans and bills discounted
Total assets
Deposits
Borrowed money
Total liabilities

Level 1March 31, 2022
Investment securities:
Held-to-maturity securities:
Local government bonds
Loans and bills discounted
Total assets
Deposits
Borrowed money
Total liabilities

Level 1Millions of Yen
Level 2
Level 3

¥

1,005

1,005
¥
¥ 8,819,836
1,168,062¥ 9,987,898¥5,294,935¥5,294,935

Total

¥

1,005
5,294,935¥ 5,295,941¥ 8,819,836
1,168,062¥ 9,987,898

Thousands of U.S. Dollars
Level 2
Level 3

$

8,211

8,211
$
$72,063,371
9,543,769$81,607,141$43,262,807$43,262,807

Total

$

8,211
43,262,807$43,271,027$72,063,371
9,543,769$81,607,141

Notes: 1. A description of the valuation techniques and inputs used in the fair value measurements
AssetsMoney held in trust
For securities that are part of trust property in an
independently managed monetary trust with theprimary purpose to manage securities, the fair valuesof equity securities are determined using the quoted
price of the stock exchange and the fair values of debt
securities are determined using the quoted price ofJapan Securities Dealers Association or the pricecalculated by counterparty financial institutions. The
level of fair value is determined based on the level oftrust property and classified as Level 1 or Level 2. See
Note 7, “Money Held in Trust” for information on money
held in trust by holding purpose.
Investment securities
The fair values of equity securities are determinedusing the quoted price of the stock exchange andprincipally classified as Level 1 based on the market
activity. The fair values of debt securities are
determined using quoted price of Japan Securities
Dealers Association or the price calculated bycounterparty financial institutions, and Japanese
government bonds and U.S. treasury bonds are
principally classified as Level 1 fair value while otherdebt securities are classified as Level 2 fair value.
With respect to private placement bonds, the fairvalue is determined using the future cash flows(coupons, redemption amount of principal, guaranteefees) discounted at an interest rate considering themarket interest rates and issuers’ credit risk, and isclassified as Level 3.
Loans and bills discounted
Loans and bills discounted are grouped by the type ofloan, internal ratings, and maturity length, and their fairvalue is determined by discounting the total amount ofprincipal and interest by the market interest rate plus
the standard spread (including expense ratio) for eachcredit rating according to the nature of instruments.

With respect to loans with floating interest rates andloans with short contractual terms (within one year), forwhich the difference between fair value and carrying
amount is within a certain range and considered to beapproximate, the carrying amount is presented as thefair value.
For loans to legally, virtually, or possibly bankrupt
borrowers, the estimated uncollectible amounts arecalculated based on the present value of estimatedfuture cash flows or the estimated amount to becollected through collateral and guarantees. Therefore,
the fair value of such loans approximates the carrying
amount of receivables at the balance sheet date lessthe amount of reserve for loan losses, and suchamount is used as the fair value.
For loans for which the repayment due date is notdefined because of the characteristics that the loan
amount is limited within the pledged assets, thecarrying amount is presented as the fair value since
the carrying amount approximates the fair value
considering the expected repayment schedule andterms of the interest rates.
These loans are classified as Level 3.
Liabilities
Deposits
Regarding demand deposits, the amount payable as of
the balance sheet date (i.e., the carrying amount) is
considered to be the fair value. Time deposits andnegotiable certificates of deposit are grouped bymaturity length, and the fair value is determined using
the present value of the sum of the principal andinterest discounted at the market interest rate. For
deposits with maturities within a short time period(within one year) and whose carrying amountapproximates the fair value, the carrying amount ispresented as the fair value. The fair value of these
deposits is classified as Level 2.

THE 77 BANK INTEGRATED REPORT

89

Value Creation Story

Borrowed money
For each type of borrowed money financed, the fairvalue is determined based on the present value of thesum of the principal and interest discounted at themarket interest rate. The carrying amount is presented
as the fair value if the maturity is within a short time
period (within one year) and the carrying amountapproximates the fair value. The fair value of borrowed
money is classified as Level 2.

Derivatives
Because derivative transactions are over-the-countertransactions and there are no published quoted market
prices, their fair value is measured using valuation
techniques such as present value method and BlackScholes model depending on the type of transaction
and the period to maturity. Main inputs used forvaluation techniques include interest rates, foreignexchange rates, volatilities, etc.
The fair value of derivatives is classified as Level 2
since unobservable inputs are not used, or their impact
is immaterial.

2. Information about Level 3 fair value of financial instruments carried on the consolidated balance sheet at fair value(1) Quantitative information on significant unobservable inputs
Valuation Techniques
Investment securities:
Available-for-sales securities:
Private placement bonds

Present value method(2) A reconciliation from the beginning balances to theending balances and gains or losses on valuation
included in profit or loss for the period
Investment Securities:
Available-for-Sale Securities
Private Placement Bonds
Millions of Thousands ofMarch 31, 2022
Yen
U.S. Dollars$302,018
Beginning balance¥ 36,964
Profit or loss or othercomprehensive income:
(19)
(155)
Recorded in profit or loss*1
Recorded in other
(29)
(236)
comprehensive income*2
Net amount of purchases,
sales, issuances, andsettlements
8,875
72,514$374,148
Ending balance¥ 45,792
Gains or losses on valuationof financial assets andfinancial liabilities held at
the balance sheet dateincluded in profit or loss
for the period*1$ (155)¥ (19)*1 Included in “Other operating expenses” in the
consolidated statement of income.
*2 Included in “Unrealized (losses) gains on available-forsale securities” under “Other comprehensive income”
in the consolidated statement of comprehensive
income.

90Significant
Unobservable Inputs

Scope of
InputsDefault probability
Loss rate at default

0.41%-6.93%
46.11%

Weighted
Average of
Inputs1.07%
46.11%(3) A description of valuation processes used for fair value
measurements
The Bank measures fair value according to the policies
and procedures for fair value measurements establishedby its Risk Management Division. In measuring fair value,
a valuation model that most appropriately reflects thenature, characteristics and risks of each asset is used,
and the Risk Management Division determines the levelof fair value classification.
In addition, when using quoted prices obtained fromthird parties, the Bank verifies whether the prices arevalid using appropriate methods, such as confirming thevaluation techniques and inputs used and comparing
them with the fair value of similar financial instruments.
(4) A description of sensitivity of the fair value
measurement to changes in significant unobservable
inputsSignificant unobservable inputs used in measurement offair value of private placement bonds are default
probability and loss rate at default. In general, asignificant increase (decrease) in the default probability
will result in an increase (decrease) in loss rate at default
and a significant decrease (increase) in fair value.

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29. DERIVATIVES

Corporate GovernanceBank Data

Financial Section

The Bank sets limits on credit risk for those derivatives
by limiting the counterparties to major financial institutions
and securities companies and establishing maximum risk
exposures to the counterparties.
The Bank has established a standard of risk
management including management approaches for eachtype of risk. Derivative transactions entered into by the
Bank have been made in accordance with internal policies
which regulate trading activities and credit risk
management including maximum risk exposures and losscutting rules. Concerning risk management associatedwith derivative transactions, the front and back offices of
the trading divisions are clearly separated and risk
managers are assigned to the trading divisions, while theRisk Management Division synthetically manages the
Bank’s market risks. In this manner, an internal control
system is effectively secured.
The Bank’s positions, gain and loss, risk amount, andother conditions are periodically reported to the executive
committee.

It is the Bank’s policy to use derivatives primarily for the
purpose of reducing market risks associated with its assets
and liabilities. The Bank also utilizes derivatives to meetthe needs of its clients while entering into derivatives as apart of its trading activities.
The Bank enters into interest rate swaps and interest
rate swaptions as a means of hedging its interest rate risk
on certain loans and investment securities while entering
into interest rate swaps and interest rate swaptions tomeet the needs of its clients.
The Bank also enters into currency swaps, foreignexchange forward contracts, and currency options tohedge foreign exchange risk associated with its assets
and liabilities denominated in foreign currencies and tomeet the needs of its clients.
Derivatives are subject to market risk and credit risk.
Market risk is the exposure created by potential
fluctuations of market conditions, including interest or
foreign exchange rates. Credit risk is the possibility that aloss may result from a counterparty’s failure to perform its
obligations under a contract.

The Bank has the following derivatives contracts outstanding as of March 31, 2022 and 2021:
Derivative Transactions to Which Hedge Accounting Is Not AppliedWith respect to derivatives to which hedge accounting is not applied, contract or notional amount, fair value, and unrealized
gains/losses are as shown below. Note that the contract or notional amounts of the derivatives which are shown in the table
do not represent the amounts of the Bank’s exposure to credit or market risk.
Thousands of
U.S. Dollars
2022
Contract or Notional
AmountMillions of Yen
2022
Contract or Notional
AmountTotal

Due after Fair
One Year Value

2021
Contract or Notional
AmountUnrealized
Gains/
LossesInterest rate-related
over-the-counter(“OTC”) transactions:Interest rate swaps:
Fixed rate receipt/¥ 28,625 ¥28,625 ¥ 219 ¥ 219
floating rate payment
Floating rate receipt/
28,737 28,737
41
41
fixed rate payment
Currency-related OTC
transactions:
(57)
(57)
41,043 39,819
Currency swaps
Foreign exchange
forward contracts:
194,223 43,919 (12,020) (12,020)
Selling
Buying55,015 43,919 2,079 2,079
Currency option:
Selling
59,272 51,555
233
379
(233)
Buying59,272 51,555
235

Total

Due after Fair
One Year Value

Unrealized
Gains/
Losses¥ 10,624 ¥10,624 ¥ 343 ¥ 343

Total

Due after Fair
One Year Value

Unrealized
Gains/
Losses$ 233,883 $233,883 $ 1,789 $ 1,789

10,748

10,748

(254)

(254)

234,798 234,798

334

334

36,184

2,214

(189)

(189)

335,346 325,345

(465)

(465)

200,656
46,12740,716
40,716(6,093) (6,093)
(822)
(822)

1,586,918 358,844 (98,210) (98,210)
449,505 358,844 16,986 16,986

29,631
29,631

22,90022,900(168)
168

484,287 421,235
484,287 421,235

344
(26)

1,903
(1,903)

3,096
1,920

Note: The above transactions are stated at fair value and unrealized gains (losses) for the years ended March 31, 2022
and 2021, are recognized in the consolidated statement of income.

THE 77 BANK INTEGRATED REPORT91

Value Creation Story

Derivative Transactions to Which Hedge Accounting Is AppliedWith respect to derivatives to which hedge accounting is applied, contract or notional amount and fair value are as shown
below. Note that the contract or notional amounts of the derivatives which are shown in the table do not represent theamounts of the Bank’s exposure to market risk.
At March 31, 2022
Millions of Yen
Contract or Notional AmountDue after
Hedge Accounting Method
Type of Derivatives
Major Hedged Item
Fair Value
Total
One Year
Normal method
Interest rate swaps—
Loans and
Floating rate receipt/
investment
fixed rate payment
securities¥38,859¥18,131¥(214)
Special matching criteria
Interest rate swaps—
Floating rate receipt/
fixed rate payment
Loans
33,62830,27340
Other—
BuyingLoans
Total¥(174)At March 31, 2021
Hedge Accounting Method
Normal method
Special matching criteria

Total

Type of Derivatives
Interest rate swaps—
Floating rate receipt/
fixed rate payment
Interest rate swaps—
Floating rate receipt/
fixed rate payment
Other–
Buying

At March 31, 2022
Hedge Accounting Method
Normal method
Special matching criteria

Total

Type of Derivatives
Interest rate swaps—
Floating rate receipt/
fixed rate payment
Interest rate swaps—
Floating rate receipt/
fixed rate payment
Other–
BuyingMillions of Yen
Contract or Notional AmountDue after
Major Hedged Item
Fair Value
Total
One Year
Loans andinvestment
securities¥92,361¥40,324¥(623)
Loans

44,872

31,410

Loans

250

250

(310)
¥(933)

Thousands of U.S. Dollars
Contract or Notional AmountDue after
Major Hedged Item
Fair Value
Total
One Year
Loans andinvestment
securities$317,501$148,141$(1,748)
Loans
Loans

274,761

247,348326$(1,421)

Note: These are principally accounted for under the deferral hedge method in accordance with the JICPA Industry
Committee Practical Guideline No. 24, “Treatment of Accounting and Auditing of Application of Accounting Standard
for Financial Instruments in the Banking Industry.”

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Financial Section

30. RELATED-PARTY TRANSACTIONS

Related-party transactions for the years ended March 31, 2022 and 2021, were as follows:a. Transactions between the Bank and Its Related Parties
Transactions for the Year*3
Thousandsof U.S.
Millions of Yen
Dollars
2022
2021
2022

Related Party
Account Classification*2
Department Store Fujisaki Co., Ltd.*1 Loans and bills discounted ¥3,785 ¥4,728
Investment securities
1,206
211
(corporate bonds)

Fuji Styling Co., Ltd.*1
Fujisaki Agency Co., Ltd.*1

Customers’ liabilities for
acceptances andguarantees
360
Loans and bills discounted
213
Customers’ liabilities for
acceptances andguarantees
1,193

Balance at End of Year
Thousandsof U.S.
Millions of Yen
Dollars
2022
2021
2022

$30,925 ¥3,807 ¥3,660$31,105

9,853

1,200

1,300

9,804

349
204

2,941
1,740

368
210

364
217

3,006
1,715

1,069

9,747

1,200

1,190

9,804

Notes:* Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries ofsuch company)* 2 Terms are substantially the same as for similar transactions with third parties.
* 3 Amounts of transactions were reported at the average balance for the period.
1b. Transactions between Consolidated Subsidiaries and Their Related Parties
Transactions for the Year

2022

2021

Thousandsof U.S.
Dollars
2022

¥32

¥29

$261

Millions of Yen
Related Party

Account Classification*2

Department Store Fujisaki Co., Ltd.*1 Fees and commissions
Lease receivables andinvestments in leases

4

Balance at End of Year
Thousandsof U.S.
Millions of Yen
Dollars
2022
2021
2022

¥13

Notes:* Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries ofsuch company)* 2 Terms are substantially the same as for similar transactions with third parties.
1

31. DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERSMarch 31, 2022
IncomeOf which:
Fees and commissions
Of which:
Deposit taking and lending business
Foreign exchanges
Securities related businessAgency business
Custody, safe-deposit box businessMillions of Yen¥118,169

Thousands of
U.S. Dollars$965,511

19,162

156,565

6,306
5,918
1,356
2,198
92

51,52348,353
11,07917,958751

Revenue based on ASBJ Statement No. 10, “Accounting Standard for Financial Instruments” is included in the above.
Useful information in understanding revenue from contracts with customers is omitted since it is immaterial.

92

THE 77 BANK INTEGRATED REPORT

93

Value Creation Story

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Financial Section

32. SEGMENT INFORMATION

34. SUBSEQUENT EVENT

Description of Reportable Segments
The Companies are principally engaged in the banking business and also leasing business and other financial
services. The reportable segments of the Bank are the segments for which separate financial information is available,
and are subject to periodic review by the chief operating decision maker to determine the allocation of management
resources and assess performance.

Cash Dividends
At the Bank’s general meeting of stockholders held on June 29, 2022, the Bank’s stockholders approved the following
appropriations of retained earnings:
Thousands ofMillions of Yen U.S. Dollars
Year-end cash dividends, ¥40.00($0.326) per share¥2,988$24,413

Segment information is omitted because the reportable segments of the Companies consist only of the “Banking”
segment and since the “Other” segment is immaterial.

Note: Above total amount of cash dividends includes dividends for the Bank’s shares held by BIP trust in an amount of¥31 million ($253 thousand).

Related Information for the Years Ended March 31, 2022 and 2021
Information by Service Line
Millions of Yen
2022
Loan

External customers¥42,335

Securities
Investment¥40,467

Lease

Other

Total

¥9,764¥25,602¥118,169

Millions of Yen
2021
Loan

External customers¥41,609

Securities
Investment¥45,225

Lease

Other

Total

¥9,085¥24,055¥119,976

Thousands of U.S. Dollars
2022

External customers

Loan

Securities
Investment

Lease

Other

Total

$345,902$330,639$79,777$209,183$965,511

Information about Geographical Area
Information about geographical areas is omitted because the Companies conduct banking and other related activities
only in Japan and do not have foreign subsidiaries or foreign branches.
Information about Major Customers
Information about major customers is not presented because there are no customers who account for over 10% of
ordinary income.
Information about Asset Impairment Losses
Information about asset impairment losses for the years ended March 31, 2022 and 2021, is omitted because the only
reportable segment is “Banking” and “Other” is immaterial.

33. NET INCOME PER SHARE
Basic net income per share (“EPS”) for the years ended March 31, 2022 and 2021, is as follows:Year Ended March 31, 2022
Basic EPS—Net income attributable
to common stockholders

Millions of Yen
Thousands of Shares
Net Income
Weighted-Average
Attributable to
SharesOwners of the Parent

Yen

U.S. Dollars
EPS¥22,234

73,913¥300.81¥16,468

73,885¥222.89$2.45

Year Ended March 31, 2021
Basic EPS—Net income attributable
to common stockholders

The Bank’s shares held by the directors’ compensation BIP trust that are recorded as treasury stock under “Equity” areincluded in the treasury stock to be deducted when computing the average number of shares during the fiscal year forthe calculation of basic net income per share.
The average number of shares of the treasury stock deducted in computing basic EPS was 616 thousand sharesand 378 thousand shares, for the years ended March 31, 2022 and 2021, respectively.
Diluted EPS for the years ended March 31, 2022 and 2021, is not shown because there were no potential shares.

94

THE 77 BANK INTEGRATED REPORT

95

Value Creation Story

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Financial Section― INDEPENDENT AUDITOR’S REPORT ―96

THE 77 BANK INTEGRATED REPORT

97

Value Creation Story98

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THE 77 BANK INTEGRATED REPORT

99

Value Creation Story

THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2022

Risk-adjusted assets: (B)Thousands of
U.S. Dollars

2022

2021

10.27

10.39

460,068

438,9883,759,032

4,476,164

4,224,922

36,572,955

2022

2021

10.01

10.14

(A)

444,489425,215

3,631,742

Risk-adjusted assets: (B)4,440,338

4,190,814

36,280,235

Capital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)
Capital:

100

2022

Thousands of
U.S. Dollars

Millions of Yen

Non-Consolidated (Domestic standard)

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Corporate GovernanceBank Data

Financial Section

THE 77 BANK, LTD.
March 31, 2022

Millions of Yen

Capital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)(A)
Capital:Sustainability Promotion― Non-Consolidated Balance Sheet (Parent Company) ―― Capital Adequacy Ratios ―Consolidated (Domestic standard)

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2022

Assets:Cash and due from banks
Debt purchased
Trading account securities
Money held in trust
Investment securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Prepaid pension costs
Customers’ liabilities for acceptances and guarantees
Other assets
Reserve for loan losses
Total

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022¥ 1,967,884
2,000
20,361
106,816
3,131,754
5,340,224
7,038¥1,371,811
4,000
20,627
108,901
3,116,003
5,097,480
5,865$16,078,797
16,341
166,361
872,751
25,588,316
43,632,845
57,504

7,832
18,835
23
151
4,526
259
115
33,35583,977(59,159)¥10,665,997

7,862
19,313
46
259
5,474
258

63,992
153,893
187
1,233
36,9802,116
939
272,530
686,142(483,364)$87,147,618

43,73573,142(56,855)¥9,817,924

Liabilities:
Deposits
Call money
Payables under securities lending transaction
Borrowed money
Foreign exchange liabilities
Liability for retirement benefits
Reserve for stock compensation
Reserve for reimbursement of deposits
Reserve for contingent losses
Deferred tax liabilities
Acceptances and guarantees
Other liabilities
Total liabilities¥ 8,846,354
29,1281,251
1,158,797
180
8,836
893
238
789
17,04333,35569,356
10,166,225¥8,551,689
25,869597,205
155
9,389
817
311
804
24,33043,73561,8189,316,127$72,280,039
237,993
10,221
9,468,069
1,470
72,195
7,296
1,944
6,446
139,251
272,530
566,680
83,064,180

Equity:Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Total valuation adjustments
Total equity
Total

24,6588,496
385,490(5,605)413,040
86,866(134)
86,731
499,771¥10,665,997

24,658
8,937
368,623(6,132)
396,087
106,085(375)
105,709501,797¥9,817,924

201,470
69,417
3,149,685(45,796)
3,374,785
709,747(1,094)
708,644
4,083,430$87,147,618

THE 77 BANK INTEGRATED REPORT

101

Value Creation Story― Non-Consolidated Statement of Income (Parent Company) ―Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022¥ 42,308¥ 41,569$345,681

28,954
1,650
18,357968
12,407
104,646

29,834406
17,251
1,194
16,856
107,113236,571
13,481
149,987
7,909
101,372855,020

Expenses:
Interest expense:
Interest on deposits
Interest on call money
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses
Total expenses

183
62
328
6,514
9,317
50,888
7,406
74,702

325
67
916
7,431
13,70952,137
10,13984,727

1,495
506
2,679
53,22376,125415,785
60,511
610,360

Income before income taxes

29,94322,385

244,652

Income taxes:
Current
Deferred
Total income taxes

8,958
207
9,166

4,891
2,559
7,451

73,192
1,691
74,891¥ 20,777¥ 14,934$169,760

Net income

Sustainability Promotion

Business Strategy

Corporate Governance

Financial Section

Loan Portfolio by Industry

Domestic offices (Excluding Japan offshore banking accounts)
Manufacturing¥5,340
421
7
4
3
172
261
21
128
450
406
1,190
377
646
1,249

Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other

Japan’s offshore banking accounts
Financial institutions
Total

—

¥5,088
443
6
4
3
166
215
20
123
408
368
1,105
363
655
1,211

Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other

Reserve for Loan Losses

General reserve for loan losses
Specific reserve for estimated loan losses on certain doubtful loans
Total

—

$43,632

Billions of Yen
2021

Domestic offices (Excluding Japan offshore banking accounts)
Manufacturing

Securities
Commercial claims
Real estate
Subtotal
Guaranteed
Unsecured
Total$43,632
3,445
59
36
24
1,405
2,134
173
1,051
3,683
3,317
9,727
3,081
5,282
10,207¥5,340Loan Portfolio by Industry

Loans by CollateralMillions of
U.S. Dollars
2022

Billions of Yen
2022

Japan’s offshore banking accounts
Financial institutions
Total

102

Bank Data― Loan Portfolio ―THE 77 BANK, LTD.
Year Ended March 31, 2022

Income:Interest income:Interest on loans and discounts
Interest on dividends on trading account andinvestment securities
Other
Fees and commissions
Other operating income
Other income
Total income

Top Message—¥5,097
Billions of Yen
2022
2021

Millions of
U.S. Dollars
2022

Billions of Yen
2022
2021

Millions of
U.S. Dollars
2022

¥

5
16
862
884
1,423
3,032
¥5,340

¥33
25
¥59

¥

5
17
844
867
1,368
2,861
¥5,097

¥30
26
¥56

$

43
137
7,045
7,227
11,63024,775$43,632

$277
206
$483

THE 77 BANK INTEGRATED REPORT

103

The 77 Bank, Ltd
Published August 2022
The 77 Bank, Ltd.
General Planning & Coordination Division
Planning Section
3-20, Chuo 3-chome, Aobaku, Sendai, Miyagi 980-8777, Japan
Phone: +81-22-267-1111

https://www.77bank.co.jp/english/top.htm