These documents are partial translations of the Japanese originals for reference purpose only.
In the event of any discrepancy between these translated documents and the Japanese originals,
the originals shall prevail. The Company assumes no responsibility for these translations or for
direct, indirect or any other forms of damages arising from the translations.
(Securities Code: 8418)
June 7, 2017
Dear shareholders:Takeshi Yoshimura
President
Yamaguchi Financial Group, Inc.
2-36, 4-chome Takezaki-cho,
Shimonoseki, Yamaguchi

NOTICE OF CONVOCATION OF
THE 11th ANNUAL GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 11th Annual General Meeting of Shareholders of Yamaguchi
Financial Group, Inc. (the “Company”), which will be held as described below.
If you are unable to attend the meeting, you can exercise your voting rights in writing orelectromagnetically (via internet, etc.). Please review the Reference Documents for the Annual
Meeting of Shareholders (described hereinafter) and exercise your voting rights by 5:30 p.m., June
26, 2017 Japan time, following the instructions described in the next page.
1. Date and Time: 10:00 a.m., Tuesday, June 27, 2017
(The reception for attendees begins at 9:00 a.m.)
2. Place:

8F hall, Head Office of Yamaguchi Bank,
2-36, 4-chome Takezaki-cho, Shimonoseki, Yamaguchi

3. Agenda:
Matters to be reported:
1. The Business Report, the Consolidated Financial Statements for the 11th Fiscal Year (from
April 1, 2016 to March 31, 2017) , and the Audit Report on the Consolidated Financial
Statements by the Accounting Auditor and the Audit and Supervisory Committee
2. The Non-Consolidated Financial Statements for the 11th Fiscal Year (from April 1, 2016 to
March 31, 2017)
Matters to be resolved:
Proposal 1: Partial Amendments to the Articles of Incorporation
Proposal 2: Election of Seven (7) Directors (Excluding Directors Who Serve as Audit andSupervisory Committee Members)
Proposal 3: Election of Two (2) Directors Who Serve as Audit and Supervisory Committee
Members
Proposal 4: Determination of the Amounts of Performance-linked Bonuses for Directors
Proposal 5: Determination of the Calculation Method and Details of Performance-linked Stock
Compensation for Directors
1

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~● When attending the meeting, please submit the enclosed Voting Rights Exercise Form at thereception on the day of the Meeting. In the case of attendance by proxy, please present, to thereceptionist at the Meeting, a document evidencing authority of the proxy to act as such,
together with the Voting Rights Exercise Form. Please note that such proxy must be one
shareholder of the Company entitled to exercise its own voting rights at the Meeting.
● The following items are posted on the Company website (http://www.ymfg.co.jp) in accordancewith laws and regulations as well as Article 17 of the Articles of Incorporation of the Company.
1) Matters Concerning the Bank’s Stock Acquisition Rights, etc. in the Business Report
2) The Notes to the Consolidated Financial Statements
3) The Notes to the Non-Consolidated Financial Statements● Any revisions to the Reference Documents for the Annual General Meeting of Shareholders, andBusiness Report, Non-Consolidated Financial Statements and Consolidated Financial
Statements will be posted on the Company website (http://www.ymfg.co.jp).

2

GUIDANCE ON EXERCISE OF VOTING RIGHTS
1.

Exercise of Voting Rights by Attending the Meeting
When attending the meeting, please submit the enclosed Voting Rights Exercise Form at thereception on the day of the Meeting.
Date and Time: 10:00 a.m. on Tuesday, June 27, 2017

2.

Exercise of Voting Rights by Mail
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise
Form and return it by 5:30 p.m. on Monday, June 26, 2017 Japan time.
If you do not indicate any approval or disapproval of the proposals on the said enclosed voting
form, the Company shall deem that you have approved these proposals.

3.

Exercise of Voting Rights via Internet, etc.
Please access the website for exercise of voting rights (http://www.evote.jp) and follow theon-screen instructions to indicate your approval or disapproval of the proposals by 5:30 p.m.
on Monday, June 26, 2017.
(1) Please use your log-in ID and provisional password printed on your Voting Rights
Exercise Form in the Voting Web Site (http://www.evote.jp) and indicate your approval ordisapproval of each proposal in accordance with the guidance on the Web Site. (Please benoted that the service is suspended from 2 a.m. to 5 a.m.).
(2) In order to prevent any unauthorized access by a non-shareholder or unauthorizedalteration of your voting, you will be required to change your provisional password. You
will receive a new log-in ID and provisional password at each time of the Notice ofConvocation is delivered.
(3) Shareholders will be responsible for internet connection charges and the communication
charges, etc. arising from accessing to voting web site.
(4) Voting Right Exercised in Plural Times(i) Please be noted in case that a voting right is exercised in both by mail and internet,
only internet voting is treated as effective voting irrespective of the arrival date andhour of voting.
(ii) In case that a voting right is exercised by internet more than one time, last voting istreated as effective voting.
(5) Voting from personal computer or smartphone may not be made depending on yourinternet using environment.
CONTACT ON SYSTEM INFORMATION
Help Desk: Security Agency, Mitsubishi UFJ Trust & Banking Corporation
Tel 0120-173-027 (9:00 – 21:00, toll free) (Japan Time)【 The Electronic Voting Platform for Institutional Investors 】
Shareholders participating in the “Electronic Voting Platform” managed by ICJ, Inc. may place
their votes through this platform.

3

REFERENCE MATERIALS FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References
Proposal 1: Partial Amendments to the Articles of Incorporation
1. Reason for the Proposal
Due to the enforcement of the Act for Partial Amendment of the Banking Act, etc. to Address
Advances in Information and Communication Technology and Other Environmental Changes on
April 1, 2017, there have been some additions to the scope of business in which a bank holding
company is allowed to engage under the Banking Act. Following such additions, the Company
proposes the following amendments to the provisions of the Article 2 (Purpose) of the current
Articles of Incorporation in order to respond flexibly to future revisions of the Act.
2. Details of the Amendments
The Details of the proposed amendments are as follows.
(Underlines indicate changed sections.)
Proposed Amendments(Purpose)
Article 2 The purpose of the Company shall beto engage in the following operations
as a bank holding company:

Current Articles(Purpose)
Article 2 The purpose of the Company shall beto engage in the following operations
as a bank holding company:(1) Administration of management ofbanks or other companies which theCompany may own as its subsidiaries
under the Banking Act;
(2) Any other operations incidental or
relating to the foregoing businesses
mentioned in the preceding item; and(3) In addition to the preceding two
items, any other operations in whicha bank holding company is allowed toengage under the Banking Act.

(1) Administration of management ofbanks or other companies which theCompany may own as its subsidiaries
under the Banking Act; and(2) Any other businesses incidental or
relating to the foregoing businesses
mentioned in the preceding item.

4

Proposal 2: Election of Seven (7) Directors (Excluding Directors Who Serve as Audit andSupervisory Committee Members)
The term of office of all six (6) Directors (here and hereafter with regard to this proposal, excluding
Directors who serve as Audit and Supervisory Committee Members) will expire at the conclusion ofthis Annual General Meeting of Shareholders. Accordingly, to reinforce our management structure,
the Company proposes that the number of Directors be increased by one (1) and that seven (7)Directors be elected.
This proposal was reviewed at the Audit and Supervisory Committee with no objections being
raised.
The candidates for Directors are as follows:
Candidate
No.

Name

1

Takeshi Yoshimura

April 3, 1960

President

Reappointment

2

Hirohide Umemoto

November 14, 1957

Senior Managing Director

Reappointment

3

Ichinari Koda

December 1, 1962

Director

Reappointment

4

Mitsuru Katoh

April 2, 1961

Director

Reappointment

5

Koji Oda

April 13, 1961

President of Momiji Bank, Ltd.

New Appointment

6

Mitsuhiro Fujita

July 31, 1954

President of The Kitakyushu
Bank, Ltd.

New Appointment

7

Hiroaki Tamura

August 24, 1943

Director

Reappointment
OutsideIndependent

Date of birth

Current position in the Company, etc.

Reappointment: Reappointed Director candidate
New Appointment: Newly appointed Director candidate
Outside: Outside Director candidate
Independent: Independent Director registered with the Stock Exchanges

5CandidateNo.
1

Takeshi Yoshimura (Reappointment)(Date of birth: April 3, 1960)

Number of shares of the company
ownedYears as a Director

8 years

12,000 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
June 2015
Managing Director of the said bank
April 1983
Joined The Yamaguchi Bank, Ltd.
June 2016
President of the Company (present
January 2005 Deputy General Manager, Hiroshima
position)
Headquarters of the said bankJune 2016
President of the said bank (present
April 2005
Deputy General Manager, Corporate
position)
Planning Department (Hiroshima) of
the said bank
October 2006 Deputy General Manager, Corporate
In charge of Corporate Planning Department, Regional
Planning Department of the said bank
Development Department, and Customer
Communication Department.
October 2006 General Manager, Corporate Planning
Department of the Company(Status of material concurrent positions)January 2007 General Manager, Corporate Planning
President of The Yamaguchi Bank, Ltd. (Representative
Department of the said bank
Director)
June 2009
Director of the said bankJune 2009
Director of the Company
June 2011
Managing Director and General
Manager, Tokuyama Branch of the saidbankJune 2012Managing Director and General
Manager, Tokyo Headquarters of thesaid bank[Reasons for selection as candidate for Director]
He has served to supervise the overall management of the Group, including banks, as President of the Company
and President of The Yamaguchi Bank, Ltd., possessing knowledge and experience required for sound andappropriate operation of the Group, and as the Company has judged that he will appropriately execute the duties of
Director of the Company, he has been made a candidate for Director.
CandidateNo.
2

Hirohide Umemoto (Reappointment)(Date of birth: November 14, 1957)

Number of shares of the company
ownedYears as a Director

9 years

17,000 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 1980
Joined The Yamaguchi Bank, Ltd.
June 2011
Managing Director of the said bank
April 2005
General Manager, Higashishinkawa
June 2016
Senior Managing Director of the
Branch of the said bankCompany (present position)
April 2006
Senior Deputy General Manager,
June 2016
Senior Managing Director of the said
Corporate Planning Departmentbank (present position)(Hiroshima) of the said bank
October 2006
General Manager, Audit and Inspection In charge of IT Administration Department and
Department of the Company
Corporate Administration Department
February 2008 General Manager, Systems Departmentof the said bank
(Status of material concurrent positions)
Senior Managing Director of The Yamaguchi Bank, Ltd.
June 2008
Director of the said bankJune 2008
Director of the Company[Reasons for selection as candidate for Director]
He has served to supervise the IT Administration Department, Corporate Administration Department, Business
Strategy Planning Department, Risk Administration Department, Corporate Planning Department, andCompliance Administration Department, etc., as Senior Managing Director of the Company and Senior Managing
Director of The Yamaguchi Bank, Ltd., possessing knowledge and experience required for sound and appropriate
operation of the Group, and as the Company has judged that he will appropriately execute the duties of Director of
the Company, he has been made a candidate for Director.

6

CandidateNo.
3

Ichinari Koda
(Reappointment)(Date of birth: December 1, 1962)

Number of shares of the company
ownedYears as a Director

1 year7,000 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
June 2016
Senior Managing Director of theApril 1985
Joined The Yamaguchi Bank, Ltd.
said bank (present position)
October 2006
Deputy General Manager, Corporate
Planning Department (Hiroshima) of the
In charge of Overseas Strategy Planning Department
said bankand Retail Business Strategy Planning Department
April 2007
General Manager, Capital Markets andTreasury Department of the said bank
(Status of material concurrent positions)
December 2010 General Manager, Hiroshima Branch of
Senior Managing Director of Momiji Bank, Ltd.
the said bank
April 2012
Director of Momiji Bank, Ltd.
June 2014
Managing Director of the said bankJune 2016
Director of the Company (present
position)[Reasons for selection as candidate for Director]
He has been in charge of supervising the Overseas Strategy Planning Department, Retail Strategy Planning
Department, Corporate Administration Department, Financial Planning Business Department, and CapitalMarkets and Treasury Department, etc., as a Director of the Company and Senior Managing Director of Momiji
Bank, Ltd., possessing knowledge and experience required for sound and appropriate operation of the Group, andas the Company has judged that he will appropriately execute the duties of Director of the Company, he has been
made a candidate for Director.
CandidateNo.
4

Mitsuru Katoh(Reappointment)(Date of birth: April 2, 1961)

Number of shares of the company
ownedYears as a Director

1 year3,000 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 1984
Joined The Yamaguchi Bank, Ltd.
June 2016
Director of the Company (present
November 2006 Assistant General Manager, Corporate
position)
Administration Department of the saidbank
In charge of Compliance Administration Department,
October 2008
General Manager, Moji Branch of the
Risk Administration Department, Corporate Businesssaid bank
Strategy Planning Department, and Customers
July 2011
Deputy General Manager, Corporate
Business Potentials Evaluation Department
Planning Department of the said bank
October 2011
General Manager, Corporate
Administration Department of The
Kitakyushu Bank, Ltd.
October 2011
Deputy General Manager, Corporate
Administration Department of theCompany[Reasons for selection as candidate for Director]
He has been in charge of supervising the Compliance Administration Department, Risk Administration
Department, Corporate Strategy Planning Department, and Customers Business Potentials Evaluation
Department as a Director of the Company, possessing knowledge and experience required for sound andappropriate operation of the Group, and as the Company has judged that he will appropriately execute the duties of
Director of the Company, he has been made a candidate for Director.

7

CandidateNo.
5

Koji Oda(New Appointment)(Date of birth: April 13, 1961)

Number of shares of the company
ownedYears as a Director-

3,000 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 2012
Director and General Manager, Kaita
April 1984
Joined Hiroshima Sogo Bank, Ltd.
Branch of Momiji Bank, Ltd.
(renamed to Hiroshima-Sogo Bank,Managing Director of the said bankLtd. on February 1989, and to Momiji June 2014
President of the said Bank (present
Bank, Ltd. on May 2004 after business June 2016
position)
integration.)
August 2003
General Manager, Yamaguchi Branch(Status of material concurrent positions)of the said bankPresident of Momiji Bank, Ltd. (Representative
February 2005 Manager, Sales Promotion
Director)
Department of the said bank
July 2008
General Manager, Takehara Branch of
the said bankJune 2010
General Manager, Corporate
Administration Department of thesaid bankJune 2011
General Manager, Corporate
Administration Department andHuman Resource Development Officeof the Company[Reasons for selection as candidate for Director]
He has served to supervise the overall management of a bank as President of Momiji Bank, Ltd., possessing
knowledge and experience required for sound and appropriate operation of the Group, and as the Company has
judged that he will appropriately execute the duties of Director of the Company, he has been made a candidate for
Director.
CandidateNo.
6

Mitsuhiro Fujita(New Appointment)(Date of birth: July 31, 1954)

Number of shares of the company
ownedYears as a Director-

59,700 shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 1977
Joined The Yamaguchi Bank, Ltd.
June 2009
Director and General Manager, Tokyo
June 1998
General Manager, Kokura Minami
Headquarters of the said bankBranch of the said bankJune 2010
Managing Director and General
October 2000
Seconded to Chimakiya Co., Ltd.
Manager, Tokyo Headquarters of theApril 2003
General Manager, Nagasaki Branchsaid bankof the said bankJune 2012
Senior Managing Director, General
June 2004
General Manager, Credit Supervision
Manager, Yamaguchi Branch andDepartment of the said bankKencho-nai Branch of the said bank
October 2004
General Manager, Credit Supervision June 2015
Senior Managing Director,
Department I of the said bank
The Kitakyushu Bank, Ltd.
June 2005
Director of the said Bank
June 2016
President of the said bank (present
November 2008 Director and General Manager, Tokyo
position)
Branch of the said bank
(Status of material concurrent positions)
President of The Kitakyushu Bank, Ltd.
(Representative Director)[Reasons for selection as candidate for Director]
He has served to supervise the overall management of a bank as President of The Kitakyushu Bank, Ltd.,possessing knowledge and experience required for sound and appropriate operation of the Group, and as theCompany has judged that he will appropriately execute the duties of Director of the Company, he has been made acandidate for Director.

8Hiroaki Tamura

CandidateNo.
7(Reappointment)(Outside)(Independent)(Date of birth: August 24, 1943)

Number of shares of the company
ownedYears as a Director

4 years- shares

Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 2010
Chairman of the Board of Directors ofApril 1966
Joined Ube Industries, Ltd.
Ube Industries, Ltd.
June 1997
Director of Ube Industries, Ltd.
June 2013
Director of the Company (present
June 1999
Managing Director of Ube Industries, Ltd.
position)
June 2001
Senior Managing Executive Officer of Ube
June 2014
Senior Advisor of Ube Industries, Ltd.
Industries, Ltd.
October 2002 President of Cement & Construction(present position)
Materials Segment, Ube Industries, Ltd.
June 2003
Director of Ube Industries, Ltd.
(Status of material concurrent positions)(Senior-Managing-Director status), Senior
Senior Advisor of Ube Industries, Ltd.
Managing Executive Officer
Director, Audit and Supervisory Committee Member
April 2005
Special Assistant to the President of Ubeof The Chugoku Electric Power Co., Inc. (Outside
Industries, Ltd.
Director)
June 2005
President & Representative Director,
Executive Officer, and Group CEO of Ube
Industries, Ltd.
[Reasons for selection as candidate for Outside Director]
Based on advanced insights and a wealth of experience as a corporate manager fostered by serving as President &Representative Director of Ube Industries, Ltd., the Company expects that he will strengthen the effectiveness ofthe decision-making functions and supervisory functions of the Board of Directors of the Company by providing
pertinent recommendations toward overall management taking into account local economic conditions, etc., andalso further strengthen corporate governance of the Group, and thus requests his election as a Director.
[Independence of the candidate]With respect to transactional relationships, etc., between Ube Industries, Ltd., where Mr. Hiroaki Tamura served
as a business executor, and the Group, as net sales of said company resulting from transactions with the Group as aproportion of consolidated net sales and income of the Group resulting from transactions with said company as aproportion of consolidated ordinary income are each less than 1%, etc., there is no effect on his independence.

9

(Notes)
1. The Group banks have business transactions including deposits and loans with Ube Industries,
Ltd., where Mr. Hiroaki Tamura serves as Senior Advisor. No special interests exist between the
Company and other candidates.
2. Mr. Takeshi Yoshimura is scheduled to be appointed Director of Momiji Bank, Ltd. as of theconclusion of the Annual General Meeting of Shareholders of the said bank to be held on June
26, 2017.
3. Mr. Takeshi Yoshimura is scheduled to be appointed Director of The Kitakyushu Bank Ltd. as of
the conclusion of the Annual General Meeting of Shareholders of the said bank to be held on
June 26, 2017.
4. Mr. Hirohide Umemoto is scheduled to retire from Senior Managing Director position of The
Yamaguchi Bank, Ltd. as of the conclusion of the Annual General Meeting of Shareholders of
the said bank to be held on June 27, 2017.
5. Mr. Ichinari Koda is scheduled to retire from Senior Managing Director position of Momiji Bank,
Ltd. as of the conclusion of the Annual General Meeting of Shareholders of the said bank to beheld on June 26, 2017.
6. The Company has registered Mr. Hiroaki Tamura as Independent Director as provided for therules of Tokyo Stock Exchange, Inc. If he is elected at this Annual General Meeting of
Shareholders, he is planned to remain in office as Independent Director.
7. With respect to liabilities of Article 423, Paragraph 1 of the Companies Act, as defined in the
Articles of Incorporation, the Company may conclude liability limitation agreements with
Directors (excluding Executive Directors) to limit their liability for damages to the minimum
limit for liability as stipulated in Article 425, Paragraph 1 of the Companies Act, provided that
duties were performed in good faith and without gross negligence. If the election of Mr. Hiroaki
Tamura is approved at this Annual General Meeting of Shareholders, the Company plans toconclude said liability limitation agreement with him.

10

Proposal 3: Election of Two (2) Directors Who Serve as Audit and Supervisory Committee
Members
The term of office of Directors who serve as Audit and Supervisory Committee Members Mr. Kazuo
Tsukuda and Mr. Michiaki Kunimasa will expire at the conclusion of this Annual General Meetingof Shareholders. Accordingly, the Company proposes that two (2) Directors who serve as Audit andSupervisory Committee Members be elected. This proposal has received the approval of the Audit
and Supervisory Committee.
The proposal was reviewed by each Director who serves as the Audit and Supervisory Committeewith no objections being raised.
The candidates for Directors who serve as Audit and Supervisory Committee Members are as
follows:
Candidate
No.

Name

Date of birth

Current position in the Company, etc.

1

Kazuo Tsukuda

September 1, 1943

Director, Audit andSupervisory Committee
MemberReappointment
OutsideIndependent

2

Michiaki Kunimasa

July 12, 1943

Director, Audit andSupervisory Committee
MemberReappointment
OutsideIndependent

11

Candidate
No.

Kazuo Tsukuda (Reappointment)(Outside)(Independent)(Date of birth: September 1, 1943)

Number of shares of the company owned- sharesDirector who serves as Audit and Supervisory Committee:
2 years
Outside Director: 2 years
Brief personal profile, position and principal duty in the Company, and important concurrent positions
March 1968
Joined Mitsubishi Heavy Industries Ltd. June 2015
Director, Audit and Supervisory
June 1999
Director of Mitsubishi Heavy Industries
Committee Member of the Company
Ltd.
(present position)
June 2002
Managing Director of Mitsubishi Heavy
Industries Ltd.
(Status of material concurrent positions)
June 2003
President of Mitsubishi Heavy
Advisor of Mitsubishi Heavy Industries Ltd.
Industries Ltd.
Director of Mitsubishi Research Institute, Inc. (Outside
April 2008
Chairman of the Board of Mitsubishi
Director)
Heavy Industries Ltd.
Director of Keihan Holdings Co., Ltd. (Outside Director)
Member of the Board of Fanuc Corporation (Outside
April 2013
Director and Advisor of Mitsubishi
Director)
Heavy Industries Ltd.
June 2013
Advisor of Mitsubishi Heavy Industries
Ltd.
June 2013
Audit and Supervisory Board Member of
the Company[Reasons for selection as candidate for Outside Director who serves as Audit and Supervisory Committee Member]
He has been conducting corporate management supervision of the Company from a fair and objective standpoint,
as an Outside Director who serves as Audit and Supervisory Committee Member. Based on advanced insights anda wealth of experience as a corporate manager fostered by serving as President of Mitsubishi Heavy Industries
Ltd., the Company expects that he will provide pertinent recommendations toward overall management andfurther strengthen corporate governance of the Company, and thus he has been made a candidate for Director who
serves as Audit and Supervisory Committee Member.
1

Years as a Director[Independence of the candidate]With respect to transactional relationships, etc., between Mitsubishi Heavy Industries Ltd., where Mr. Kazuo
Tsukuda served as a business executive, and the Group, as net sales of said company resulting from transactions
with the Group as a proportion of consolidated net sales and income of the Group resulting from transactions withsaid company as a proportion of consolidated ordinary income are each less than 1%, etc., there is no effect on his
independence.

12

Candidate
No.

Michiaki Kunimasa (Reappointment)(Outside)(Independent)(Date of birth: July 12, 1943)

Number of shares of the company
owned- sharesDirector who serves as Audit and Supervisory Committee:
2 years
Outside Director: 2 years
Brief personal profile, position and principal duty in the Company, and important concurrent positions
April 1972
Registered with Nagoya Bar Association April 1998
President of Chugoku Federation of Bar
March 1974
Registered with Hiroshima Bar
Associations (Retired in March 1999)
Association
President of Hiroshima Bar Association
April 1984
Vice President of Hiroshima Bar(Retired in March 1999)
Association (Retired in March 1985)
June 2014
Audit and Supervisory Board Member ofApril 1998
Governor of Japan Federation of Bar
the Company
Associations (Retired in March 1999)
June 2015
Director, Audit and Supervisory
Committee Member of the Company(present position)[Reasons for selection as candidate for Outside Director who serves as Audit and Supervisory Committee Member]
Although he has not been involved directly in corporate management, he has been conducting corporate
management supervision of the Company from a fair and objective standpoint, as an Outside Director who serves
as Audit and Supervisory Committee Member. Based on a wealth of experience and professional knowledge as alawyer, the Company has judged that he will provide pertinent recommendations and further strengthen corporate
governance of the Company, and thus he has been made a candidate for Director who serves as Audit andSupervisory Committee Member.
2

Years as a Director[Independence of the candidate]
As Mr. Michiaki Kunimasa does not have any contractual relationship as a legal counsel with the Company and hedoes not receive any remuneration other than the remuneration for Directors, there is no risk of conflict of interest
with general shareholders.

(Notes)1. The Group banks have business transactions including deposits and loans with Mitsubishi
Heavy Industries Ltd., where Mr. Kazuo Tsukuda serves as Advisor. Also, the Group banks havebusiness transactions including deposits and loans with Mr. Kazuo Tsukuda.
2. No special interests exist between Mr. Michiaki Kunimasa and the Company.
3. The Company has registered Mr. Kazuo Tsukuda and Mr. Michiaki Kunimasa as Independent
Directors as provided for the rules of Tokyo Stock Exchange, Inc. If they are elected at thisAnnual General Meeting of Shareholders, they are planned to remain in office as Independent
Directors.
4. With respect to liabilities of Article 423, Paragraph 1 of the Companies Act, as defined in the
Articles of Incorporation, the Company may conclude liability limitation agreements with
Directors (excluding Executive Directors) to limit their liability for damages to the minimum
limit for liability as stipulated in Article 425, Paragraph 1 of the Companies Act, provided that
duties were performed in good faith and without gross negligence. If the election of Mr. Kazuo
Tsukuda and Mr. Michiaki Kunimasa is approved at this Annual General Meeting of
Shareholders, the Company plans to conclude said liability limitation agreement with them.

13Proposal 4: Determination of the Amounts of Performance-linked Bonuses for Directors
The remuneration for the current Directors (excluding Directors who serve as Audit andSupervisory Committee Members) have been approved at the 9th Annual General Meeting of
Shareholders on June 26, 2015 to be a total limit of 25 million yen per month (including a total limitof 2.5 million yen per month for Outside Directors but excluding employees’ salaries). In addition tosuch remuneration and the performance-linked stock compensation presented in Proposal 5, for the
purpose of providing the Company Directors (here and hereafter with regard to this proposal,
excluding Directors who serve as Audit and Supervisory Committee Members, Part-time Directors,
and Outside Directors) with incentive to further contribute to the Company’s performance andincrease corporate value, the Company proposes to provide the performance-linked bonuses to theCompany Directors based on the Company’s performance-linked bonus portion within a total limitof 70 million yen per year.
The amounts of performance-linked bonuses for Directors do not include the salaries paid as
employees to Directors who serve concurrently as employees.
Note that currently the Company has five (5) Directors who are eligible for the abovementioned
performance-linked bonuses, but if Proposal 2 is passed as originally proposed, the Company will
have six (6) Directors to whom performance-linked bonuses are provided.

14

Proposal 5: Determination of the Calculation Method and Details of Performance-linked Stock
Compensation for Directors
1. Reasons for the proposal and reasons to consider it appropriate
At the Board of Directors meeting held on May 13, 2016, the Company resolved to introduce a
new stock compensation system referred to as “Board Benefit Trust (BBT)” (hereinafter, “theSystem”) to Directors of the banks within the Group (The Yamaguchi Bank, Ltd., Momiji Bank,
Ltd., and The Kitakyushu Bank, Ltd., hereinafter collectively “the Group banks”), excluding
Directors who serve as Audit and Supervisory Committee Members, Part-time Directors, andOutside Directors of the Group banks (hereinafter “Eligible Directors”). The introduction of the
System is approved at the Annual General Meeting of Shareholders of the Group banks.
This proposal requests approval to introduce the System to Directors of the Company(excluding Directors who serve as Audit and Supervisory Committee Members, Part-time
Directors, and Outside Directors. Hereinafter, the same applies within this proposal unlessotherwise noted.)
The aim of this proposal is to raise awareness of contributing to improvement of performanceand increase of corporate value over the medium- to long-term by clarifying theinterrelationship between the remuneration of Directors of the Company and the Company’s
performance as well as share price, so they share with the shareholders not only the benefit of
the rise in share price but also the risk of falling share price. The Company deems the details of
this proposal to be appropriate for that purpose.
The proposal asks for approval for the calculation method and details of remuneration, in orderto pay new stock compensation to Directors of the Company, separate from the remuneration to
Directors which are approved at the 9th Annual General Meeting of Shareholders held on June
26, 2015 (a total limit of 25 million yen per month including a total limit of 2.5 million yen permonth for Outside Directors but excluding employees’ salaries) and the remuneration of theperformance-linked bonuses which are proposed for approval in Proposal 4. The details of the
System shall be determined by the Board of Directors at its discretion, within the framework
set in Item 2 below.
Note that currently the Company has five (5) Directors who are eligible for the System, but if
Proposal 2 is passed as originally proposed, the Company will have six (6) Directors eligible for
the System.
2. Method and details of calculating the amount of remunerations concerning the System(1) Overview of the System
The System is a performance-linked stock compensation system in which the Company’scommon shares (hereinafter “the Company shares”) are acquired through a trust using themonetary contribution from the Company. According to the Directors’ Stock Benefit
Regulation stipulated by the Company and the Group banks, the Company shares andmonetary benefits equivalent to the amount of the Company shares converted into the cashwith the market price (hereinafter “the Company shares, etc.”) are delivered to Directors of
the Company and the Eligible Directors of the Group banks through the trust in accordancewith the position, the degree of achieved performance, and other factors. In principle,
Directors of the Company and the Eligible Directors of the Group banks receive theCompany shares, etc. at the time of their retirement. The Group banks will pay thesettlement money to the Company after the Company shares, etc. were delivered to the
Eligible Directors.

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(2) The persons eligible to the System
The Directors of the Company and the Eligible Directors of the Group banks(3) Trust period
From August 10, 2016 until the trust is terminated. (No specific closing date will be
stipulated for the trust period of the trust, and the trust will continue as long as the System
continues. The System will be terminated with events such as delisting of Company shares
and abolition of the Directors’ Stock Benefit Regulation.)(4) Trust amount
When the Company introduced the System for the Eligible Directors of the Group banks, theCompany contributed the funds necessary for the trust to acquire in advance for a certain
period of time the number of shares reasonably expected to be needed in delivery of theCompany shares, etc. in accordance with Items (6) and (7) below.
To be specific, for the three business years from the business year ended March 31, 2017 to
the business year ending March 31, 2019 (hereinafter, “the Initial Subject Period”; The
Initial Subject Period for Directors of the Company shall be from the business year ending
March 31, 2018 to March 31, 2019,) the Company has contributed 610.44 million yen to thetrust as a fund to acquire shares for delivery according to the System to the Eligible
Directors of the Group banks. Although now Directors of the Company are newly eligible to
the System, since the shares that have already been acquired with said 610.44 million yen
will be allocated, there is no additional contribution for the delivery of the Company shares,
etc. to Directors of the Company in the Initial Subject Period.
After the Initial Subject Period and until the System ends, the Company will additionallycontribute up to 1,150 million yen in each three business years in principle for thesubsequent three business years (hereinafter, “the Subsequent Subject Period”) to the trust
as a fund to acquire shares for delivery to Directors of the Company and Eligible Directors of
the Group banks according to the System. However, in making such additional contributions,when there are Company shares (excluding the Company shares that are equivalent to thenumber of points granted to Directors of the Company and Eligible Directors of the Groupbanks, and that have not yet been paid to them) and cash remaining in the trust (hereinafter,“the Residual shares, etc.”) on the day immediately before the start of the Subsequent
Subject Period, the Residual shares, etc. will be transferred to the funds for the delivery
based on the System in the subject period thereafter, and the Company will decide theamount of additional contribution taking the Residual shares, etc. into consideration. When
the Company decided to make additional contribution, it will be disclosed in a timely andappropriate manner.
(5) Method of acquiring Company shares and number of the shares to acquire
The trust will acquire Company shares by using the contribution as described in Item (4)above as funds through the markets, or by undertaking the disposition of treasury share of
the Company. New shares will not be issued.
Acquisition of 633,240 shares has been completed for the Initial Subject Period without
delay after setting up the trust.

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(6) Detailed calculation method of the number of Company shares, etc. to be delivered to
Directors of the Company and the Eligible Directors of the Group banks
The number of points determined according to the Directors’ Stock Benefit Regulation byconsidering the position, the degree of achieved performance and other factors in the subject
business year will be granted in each business year to Directors of the Company and the
Eligible Directors of the Group banks.
The total number of points per business year granted to Directors of the Company and the
Eligible Directors of the Group banks is limited to 320,000 points (of which, 80,000 points
are for Directors of the Company). This is determined based on comprehensive consideration
over current level of the Company’s share price and the remuneration to Directors of theCompany and the Eligible Directors of the Group banks, as well as the trend in the numberof members and future prospects. The Company deems it to be appropriate.
The points granted to Directors of the Company and the Eligible Directors of the Groupbanks will be converted to one Company Share per point upon the delivery of the Company
shares, etc. as described in (7) that follows. (However, if events such as share split, allotmentof shares without contribution, reverse share split are carried out with respect to theCompany shares, the conversion ratio will be adjusted reasonably according to such ratio.)
The number of points for Directors of the Company and the Eligible Directors of the Groupbanks, that is the basis for calculating the number of shares to be delivered, is calculated bymultiplying the total number of points granted to Directors of the Company and the Eligible
Directors of the Group banks by predetermined coefficient (not exceeding one (1)) set byreason of retirement (Hereinafter, the points calculated in such manner are referred to as“Confirmed Points”).
(7) Method of delivering Company shares, etc. and method of calculating amount of
remunerations
If Directors of the Company and the Eligible Directors of the Group banks meet thebeneficiary requirements prescribed in the Directors’ Stock Benefit Regulation, they can
execute after their retirement, the prescribed beneficiary determination procedure to receive
benefits from the trust, in respect to the number of Company shares in accordance with the“Confirmed Points” determined pursuant to the description in Item (6) above. However, if
Directors of the Company and the Eligible Directors of the Group banks meet requirements
stipulated separately in the Directors’ Stock Benefit Regulation, with respect to a certain
percentage of the points granted to Directors of the Company and the Eligible Directors of
the Group banks, instead of delivering the Company shares, the Company will pay cash
equivalent to the amount calculated by converting the Company shares at the market price.
It is noted that the Company may sell the Company shares from the trust in order to makecash payment.
The amount of remunerations to be paid to Directors of the Company is based on the total
number of points granted to Directors of the Company multiplied by the book value pershare of the Company shares held by the trust at the time of granting point. However, if
share splits, allotment of shares without contribution, or reverse share splits are executedwith respect to the Company shares, reasonable adjustments will be made according to suchratio. In an exceptional case where cash are granted pursuant to the provisions of the
Directors’ Stock Benefit Regulation and if it is deemed reasonable, the amount shall be
added with such amount.

17(8) Exercising voting rights
Pursuant to the trust caretaker's order, any voting right related to the Company shares inthe trust account shall not be exercised. In this way, the Company intends to ensure
neutrality to the management of the Company, in respect to exercise of voting rights related
to the Company shares in the trust account.
(9) Handling of dividends
Dividends pertaining to the Company shares in the trust account will be received by thetrust and will be used for the purchase of the Company shares and the trust fee for trusteesof the trust. In the event that the trust is terminated, the dividends remaining in the trust
will be paid to Directors of the Company and the Eligible Directors of the Group banks whoare in office as of that time, pursuant to the provisions of the Directors’ Stock Benefit
Regulation.
(10) Handling at the end of trust
The trust will be terminated when the Company shares are delisted, the Directors’ Stock
Benefit Regulation is abolished, or other event occurs.
Of the residual assets of the trust at the end of the trust, the Company plans to cancel all of
the Company shares by resolution of the Board of Directors after acquiring them withoutcompensation. Except for the cash to be paid to Directors of the Company and the Eligible
Directors of the Group banks pursuant to the above (9), cash in the residual assets of thetrust at the end of the trust will be delivered to the Company.
End of document18