Financial Results Presentation
for the Fiscal Year Ended March 31, 2024
(June 5, 2024)

0

Contents
Overview of Financial Results
Overview of Financial Results
Net Interest Income
Deposits and CDs, Loans and Bills Discounted
Securities
Expenses
Loans Based on
the Banking Act and Financial Reconstruction Act
Capital Adequacy Ratio, Dividends and Total Return Ratio
Financial Results Forecast

P.3
P.4
P.5
P.6
P.7
P.8
P.9
P.10

Efforts to Enhance Corporate Value
Analysis of Current Status (1)(Relationship between PBR and ROE)
Efforts to Increase PBR
Analysis of Current Status (2)(Relationship between ROE and RORA)
Improvement of RORA(Strengthening profitability)
Financial Leverage Control (Appropriate capital management)
Efforts to Achieve ROE Targets under
the Medium-term Management Plan
Vision of Improving ROE
Targets for Management Indicators, etc., toward ROE of 6%
Accumulation of Core Net Business Profit
and Improvement of OHR

P.12
P.13
P.14
P.15
P.16
P.17
P.18
P.19
P.20

The 11th Medium-term Management Plan
—Progress status—
The 11th Medium-term Management Plan (Overview)
The 11th Medium-term Management Plan (Result)
Growth Investment and Strategic Personnel Assignment

P.22
P.23
P.24

The 11th Medium-term Management Plan
—Basic strategy initiatives—
Corporate Customer Strategy (1)—Strengthen SME loans—
Corporate Customer Strategy (2)—Expand earnings from solutions—
Corporate Customer Strategy (3)—Enhance business support—
Individual Customer Strategy (1) —Personal loans—
Individual Customer Strategy (2) —Financial services—
DX Strategy (1) —Individual customer—
DX Strategy (2) —Corporate customer—
Downsizing and Consolidation of Branch Offices, andStreamlining of Business Operations
New Business (New Service) Strategy (1)—New business ideas—
New Business (New Service) Strategy (2)—The Graduate School of Project Design—
Human Resource Strategy (1)Human Resource Strategy (2)Initiatives for Sustainability
Initiatives for Diversity, Equity & Inclusion (1)Initiatives for Diversity, Equity & Inclusion (2)Initiatives for Environment —TCFD—
Initiatives with the Regional Communities

P.26
P.27
P.28
P.29
P.30
P.31
P.32
P.33
P.34
P.35
P.36
P.37
P.39
P.40
P.41
P.42

1

Overview of Financial Results

2

Overview of Financial Results(Billion yen)

Non-consolidated

2023/32024/3

Change% Change

27.0

28.4

+1.4

+5.3%

Net interest income

29.0

28.4

(0.6)

(2.2%)

Fees and commissions income

4.4

4.4

+0.0

+1.4%

Other operating income

(6.4)

(4.4)

+2.0

－

Expenses

21.3

21.8

+0.5

+2.0％

Substantial net business profit (Note)

5.6

6.6

+1.0

+17.7%

12.0

11.1

(0.9)

(7.1%)

Gross operating profit

Core net business profit
Core net business profit(excluding gains (losses) fromcancellation of investment trusts)
Provision of general allowance forloan losses (1)

7.9

7.4

(0.5)

(6.3%)

(0.7)

(0.0)

+0.7

－

Net business profit

6.4

6.6

+0.2

+4.3%

(6.3)

(4.5)

+1.8

－

(2.0)

(3.2)

(1.2)

－

3.4

3.6

+0.2

+6.4%

Ordinary profit

4.3

3.4

(0.9)

(20.6%)

Profit

2.2

1.7

(0.5)

(21.0%)

Costs for loans written-off (1) + (2)

2.7

3.6

+0.9

+35.1%

Losses on sale of bonds
Unusual profits and losses
Non-performing loan disposal (2)(Billion yen)

Consolidated

2023/32024/3

Change% Change

Ordinary profit

5.0

4.2

(0.8)

(16.3%)

Profit attributable to owners of parent

2.6

2.1

(0.5)

(20.8%)

Main Points on Non-consolidated Financial Results●Net interest income decreased by 600 million yen year on year. Thiswas mainly due to a decrease in interest and dividends on securities,
which more than offset an increase in interest on loans and discounts.

●Core net business profit (excluding gains (losses) from cancellation of
investment trusts) decreased year on year. This was mainly due to adecrease in interest and dividends on securities and an increase in
expenses, which more than offset increases in interest on loans anddiscounts and in fees and commissions income.
●Profit decreased by 400 million yen year on year. This was mainly due
to an increase in non-performing loan disposal expenses (costs forloans written off) of 900 million yen, reflecting a rise in the historicalloan-loss ratio attributable to the downgrading of major borrower inprevious years and other relevant factors.
●As a result of the above, profit was almost in line with the forecast
figure (1.8 billion yen) announced on May 12, 2023.

Main Point on Consolidated Financial Results●Consolidated ordinary profit and profit attributable to owners of parent
for the fiscal year ended March 31, 2024 decreased year on year,
primarily due to the same reasons as in the non-consolidated financial
results.
3

Overview of Financial Results

Net Interest Income
Reasons for Increases (Decreases) in Net Interest Income

Trends in Yields on Loans and Discounts and on Securities
Loans/Discounts(%)

Securities

(0.4)
290

1.11

(0.6)

0.79

1.16
1.07

1.06

1.05

1.04

1.06

1.01

1.04

0.90
0.73

Yield onsecurities

Average securities
balance

29.0(0.04)＋0.5

Yield onloans/discounts

Average loanbalance(Billion yen)

28.4

2019/32023/32020/32021/32022/32023/32024/32024/3(Billion yen)

Net interest income
Interest on loans and discounts
Interest and dividends on securities
Interest on deposits with banks
Interest on deposits (-)

2023/3

29.0
20.3
7.8
0.8
0.1

2024/3

28.4
20.8
6.7
0.7
0.0

Change

(0.6)
+0.5
(1.1)
(0.1)
(0.1)

% Change(2.2%)+2.3%(14.1%)(8.9%)－

4

Overview of Financial Results

Deposits and CDs, Loans and Bills Discounted
Trends in Balance of Loans and Bills Discounted

Trends in Deposit/CD Balance(Billion yen)

All deposits

2,246.1

Corporate

1,962.9

1,948.7

2,508.5

2,475.4

2,441.0

2,383.1

All loans/bills discounted

3,111.9

3,059.4

3,018.3

2,937.7

2,738.7

Personal(Billion yen)

1,460.6

2020/3(Billion yen)

518.4

2021/32022/32023/32023/32024/3

1,555.5

586.7

604.2

598.5

575.5

553.1

540.6

2,060.5

1,517.1

1,484.6

584.0Home loans

2,031.7

1,955.1

1,507.7

570.7

443.5

SMEs/Personal2024/3

Change2020/3% Change

Deposits and CDs

3,059.4

3,111.9

52.5

+1.7%

Personal

2,475.4

2,508.5

33.1

+1.3%

Corporate

553.1

575.5

22.4

+4.0%

2021/3(Billion yen)2022/32023/32023/32024/32024/3

Change% Change

Loans and bills
discounted

2,031.7

2,060.5

28.8

+1.4%

SMEs

862.2

895.7

33.5

+3.8%

Personal

654.9

659.8

4.9

+0.7%

598.5

604.2

5.7

+0.9%

Home loans

5Overview of Financial Results

Securities
Trends in Securities Balance at the Fiscal Year-end
Government
Other bonds
Local government bonds
Corporate bonds
Corporate bonds

Government bonds
581.2

StocksStocksOther

Valuation Gains (Losses) on Other Securities(Billion yen)

Local government bonds
620.6

606.9

93.5
54.3
108.1
10.3

64.5
115.8
14.4

192.2

167.3
58.4

71.4

116.0

118.1

13.2

14.4

263.8

281.5

251.8

224.4

2020/32021/32022/32023/3

Bonds

Other

609.4

(10.4)(3.0)(15.4)(26.3)

148.2

0.2
(0.7)

1.6
(1.8)
(2.8)

1.2

1.5

530.2

104.8

Stocks

(9.9)

69.7

(5.5)

(11.0)(Billion yen)(33.7)

4.2

Valuation
gain↑↓
Valuationloss(14.1)(11.1)

112.2
14.6(16.8)(23.7)

264.6

2024/32020/32021/32022/32023/32024/3

Note: The numbers in bold show the net valuation gains (losses).

(Billion yen)
Total securities
Public bonds (Government bonds andLocal government bonds)
Corporate bonds
StocksOther2024/32023/3

Change

620.6

609.4

(11.2)% Change(1.8%)

263.6

217.9

(45.7)(17.3%)

118.1
14.4
224.4

112.2
14.6
264.6

(5.9)
+0.2
+40.2

(4.9%)+1.6%+17.9%

6

Overview of Financial Results

ExpensesTrends in Expenses and Overhead Ratio (OHR)
Personnel
expenses
Taxes

Number of Employees and Branch Offices

Non-personnel expenses
expensesNon-personnel
OHR

Taxes
Personnel expenses

Employees(Billion yen)

(%)

40.0

79.5

74.8

30.0

23.7

22.6

22.1

72.8

21.3

74.5

2,400

75

1,800

50

13.3

12.8

12.5

12.1

12.0

10.0

25

8.8
0.0

3,000

21.8

20.0

1.5

2020/38.3
1.4

2021/38.2
1.4

2022/37.8
1.32023/38.2
1.52024/3

Branch locations(After BinB method)(Persons)

100

82.0

Branch offices0(Locations)

88
85

1,565

100

86
81
1,540

86

86

83
80

75
1,478

75
1,402

70

60

1,311

1,200

40

600

20

0

2020/32021/32022/32023/32024/30Note: OHR (%) = Expenses ÷ Gross operating profit (excluding gains (losses) on the sale of bonds and from cancellation of investment trusts)(Billion yen)
Total expenses
Personnel expenses
Non-personnel expenses
Taxes

2023/3
21.3
12.1
7.8
1.3

2024/3

Change
21.8
12.0
8.2
1.5

+0.5
(0.1)
+0.4
+0.2

% Change+2.0%(0.6%)
+4.8%
+8.5%

7

Overview of Financial Results

Loans Based on the Banking Act and
Financial Reconstruction Act
Loans Based on the Banking Act and Financial Reconstruction Act:
Balance at the Fiscal Year-end

Real cost of credit
実質信用コストBankrupt and quasi-bankrupt loans

Doubtful loans

Special attention loans

Non-performing loan ratio(Billion yen)

60.0

48.0

2.28

2.32

44.8

46.0

1.6

1.9

Cost of Credit

5

44.4

1.1

2.50

2.10

2.05

43.3

42.9

1.9

43.3

42.0

40.6

40.1

12.0

1.00

3.6

0.7

0.8

2021/31.3

2022/30.7

2023/3(Billion yen)
Total loans based on the Banking Act and
Financial Reconstruction Act
Bankrupt and quasi-bankrupt loans
Doubtful loans
Special attention loans

0.92024/3

0.08

3.3

3.0

1

0.50

2020/3

0.12

0.09

1.7

2.4

0.04

0

2020/3

0.0

0.16

0.12

3

1.50

42.4

0.16

0.15

2.00

2

24.0

0.20

0.18

4

1.8

36.0

(%)

(Billion yen)
(%)

2.24

Credit cost ratio
信用コスト率0.00

2021/32022/32023/30.00

2024/3Note 1: Real cost of credit = Costs for loans written-off － Recoveries of written off receivables
Note 2: Credit cost ratio = Real cost of credit ÷ Average loan balance

2024/32023/3

Change% Change

43.3

42.9

(0.4)

(0.8%)

1.9
40.6
0.7

1.8
40.1
0.9

(0.1)
(0.5)
+0.2

(5.5%)(1.2%)+35.3%

8

Overview of Financial Results

Capital Adequacy Ratio,
Dividends and Total Return Ratio
Dividends and Total Return Ratio(Billion yen)

Capital Adequacy Ratio(Billion yen)

190

Consolidated equity capital

Down 0.42 pts.

185
180
175

Consolidated capital adequacy ratio

12.06%

11.90%

12.0 yen
Year-end
期末配当11.85%
11.43%

11.17%

dividend

10.0 yen
8.0 yen

25.1%

Total return ratio
総還元性向

30%－35%
30.0%

15.8%
6.0 yen

165
160
167.2

175.1

172.7

174.9

4.0 yen

174.9

2.0 yen150
0.0 yen

145
140

dividend

34.1%

170

155

Interim
中間配当

2.5
yen

3.0
yen

2.5
yen

2.5
yen

3.0
yen

3.0
yen

3.0
yen

3.0
yen

3.5
yen

3.5
yen

2021/32022/32023/32024/32025/32021年3月期
2022年3月期
2023年3月期
2024年3月期
2025年3月期(Plan)（予定）
End of 2020/3 End of 2021/3 End of 2022/3 End of 2023/3 End of 2024/3

Equity capital(consolidated)
Capital adequacy
ratio (consolidated)

Shareholder returns policy

2023/32024/3

Change¥174.9 billion¥174.9 billion¥011.85%

11.43%(0.42%)

We target a total return ratio of 30% to 35%. This ratio indicates
total returns, consisting of dividends and purchase of treasury
shares, as a percentage of profit attributable to owners of parent(announced on May 12, 2022).
9

Financial Results Forecast(Billion yen)

Non-consolidated

2024/32025/3

Change% Change

28.4

26.6

(1.8)

(6.4%)Net interest income

28.4

23.9

(4.5)

(15.7%)

Fees and commissions income

4.4

4.6

+0.2

+3.2%

Other operating income

(4.4)

(1.9)

+2.5

－

Expenses

21.8

22.2

+0.4

+1.9%

Substantial net business profit

6.6

4.3

(2.3)

(34.0%)

Core net business profit

11.1

6.3

(4.8)

(42.7%)

Core net business profit(excluding gains (losses) fromcancellation of investment trusts)

7.4

6.3

(1.1)

(14.2％)

6.6

4.3

(2.3)

(34.3%)

(4.5)

(2.0)

+2.5

－

Ordinary profit

3.4

5.3

+1.9

+53.0%

Profit

1.7

3.3

+1.6

+87.8%

Costs for loans written-off

3.6

1.1

(2.5)

(69.9%)

(1.2)

(2.0)

(0.8)

－

Gross operating profit

Net business profit
Gains (losses) on bonds

Gains (losses) on sale of securities(including gains (losses) from cancellation of
investment trusts)

Consolidated(Billion yen)2024/32025/3

Change% Change

Ordinary profit

4.2

5.8

+1.6

+36.9%

Profit attributable to owners of parent

2.1

3.6

+1.5

+71.3%

Main Points of Non-consolidated Forecast●The decrease in net interest income is mainly because gains fromcancellation of investment trusts, which were recorded for the fiscal
year ended March 31, 2024 as compensation for losses on the sale ofsecurities, are not planned to be taken into account for the fiscal year
ending March 31, 2025.
●We forecast increases in interest on loans and discounts and fees andcommissions income, both of which are income from our main
business.
●We expect an increase in expenses due to investments for growthplanned in the 11th Medium-term Management Plan, including
investments in human resources and DX systems.
●We will reduce securities with valuation losses as well as restructure
the portfolio, which involves recording losses from the sale of thosesecurities.
●We expect a decrease in non-performing loan disposal expenses
despite the strong uncertainty over the economy and the recent
upward trend in the number of bankruptcies, as the historical loan-loss
ratio is likely to decline compared to the fiscal year ended March 31,
2024.

Main Point of Consolidated Forecast●Consolidated financial results reflect the financial results forecast at
the non-consolidated level. We forecast around 3.6 billion yen in profit
attributable to owners of parent at the consolidated level.

10Efforts to Enhance Corporate Value

11

Efforts to Enhance Corporate Value

Analysis of Current Status (1)(Relationship between PBR and ROE)
・ROE is currently below the capital cost, and PBR is showing signs of improvement but remains below 1x.
・Given the high correlation between ROE and PBR, we recognize that an increase in ROE leads to an increase in
PBR.

Trends in ROE by Year

The Bank’s cost of shareholders’ equity isrecognized to be around 6 to 8% (based on
CAPM and equity earnings yield).

Range of shareholders’equity cost

10.00%
8.00%
6.00%
4.00%

ROE (based on shareholder capital)

2.00%
0.00%

ROE (based on equity capital)
2014/3

2015/3

2016/3

Trends in PBR by Year2017/3

2018/3

2019/32020/32021/32022/32023/32024/3

ROE (based on shareholders’ equity) : 1.20%
ROE (based on equity capital): 1.38%

0.50
0.40
0.30

0.25x

0.20
0.10
0.00

2014/3
2015/3
2016/32017/3
2018/3
2019/32020/32021/32022/32023/32024/3
2014/3期 2015/3期
2016/3期
2017/3期
2018/3期
2019/3期
2020/3期
2021/3期
2022/3期
2023/3期
2024/3期

12

Efforts to Enhance Corporate Value

Efforts to Increase PBR
In order to increase our price book-value ratio (PBR), we are implementing initiatives for enhancing
management effectiveness (as measured by ROE: return on equity) and corporate growth expectations for the
Bank (as measured by PER: price earnings ratio).

Enhancementof ROE

Enhancement of profit (by strengthening profitability, implementing cost controls)
Utilizing equity capital (appropriate allocation of management resources→growth andstrategic investment, shareholder returns)

3% or higher by the end of the Medium-term Management Plan, andaim for 6% in the medium- to long-term

Increase PER (price earnings ratio)

Enhancementof PBR＊PBR=ROE×PER

Foster
growthexpectations

Reducecapital cost

Growthstrategy・New businesses, group strategies
・Personnel strategies: strengthen human resource development by training
specialists, utilizing external personnel, etc.
・Foster a “Tochigin mindset” and a new organizational culture/climate
・Develop in-house environment (accelerating diversity, equity & inclusion, etc.)

Intangible
assets・Further strengthen our relationship-building capabilities and network that utilizes ourfriendliness・Bolster ability to make proposals by utilizing the Group’s organizational capabilities
・ Further expand our customer base centered on Tochigi Prefecture built over many years

Information
disclosure

Strengthen engagement with investors and shareholders via IR/SR activities

Enhance disclosures of financial and non-financial information

13

Efforts to Enhance Corporate Value

Analysis of Current Status (2)(Relationship between ROE and RORA)
ROE and RORA are highly correlated. We aim to enhance ROE by improving RORA underappropriate financial leverage control.
Enhance capital efficiency

Enhance ROE

Strengthen profitability
and
implement cost controls

Control risk assets to balance
profitability and soundness

Manage capital appropriately
andenhance shareholder returns

Improve
RORA

×Controlfinancial leverage＝

ProfitShareholders’ equity

ProfitRisk assets

Risk assets
Shareholders’ equity

Trends in ROE and RORA by Year
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%

10.00%
8.00%
RORA（左軸）
RORA (left axis)

6.00%

ROE
(right axis)
ROE（右軸）

4.00%
2.00%
0.00%

(Plan)（予定）(Plan)（予定）

2014/3期
2014/3 2015/3期
2015/3 2016/3期
2016/3 2017/3期
2017/3 2018/3期
2018/3 2019/3期
2019/3 2020/3期
2020/3 2021/3期
2021/3 2022/3期
2022/3 2023/3期
2023/3 2024/3期
2024/3 2025/3期
2025/3 2026/3期
2026/3
2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/32024/3

ROE

6.44%

8.93%

7.57%

4.96%

2.81%

0.88%

1.12%

1.25%

2.13%

1.54%

1.20%

RORA

0.71%

1.03%

0.89%

0.58%

0.33%

0.10%

0.12%

0.14%

0.25%

0.18%

0.14%

14

Efforts to Enhance Corporate Value

Improvement of RORA(Strengthening profitability)
We will expand earnings from solutions by further enhancing SME loans with high RORA to strengthen
profitability (RORA-aware initiatives), as well as by fulfilling our financial intermediary roles for the regional
communities.

RORA by Asset Class (*1)

Enhance SME loans
Corporate customer strategy

ＲＯＡ

1.40%

SMEs

1.20%

(*
)

2

1.00%

Further enhance SME loans asa regional financial institution,
considering interest amounts
and RORA levels

Home loans

0.80%

Moreover,

Structured loans

Expand non-asset earnings fromsolutions

SMEs (syndicated loans)
New home loans (included in above)

0.60%
0.40%

Provide appropriate solutions that caterto the life stage of companies

Large enterprises (syndicated loans)
Large enterprises

Circle size: Interest on loans by sector

Promotion of home loans

0.20%
0.00%
0.00%

Deepen sales focused on solutions to issues,
based on business feasibility assessments
Support development of key industries(Manufacturing, healthcare, agriculture,environment, etc.)

1.00%

2.00%

3.00%

RORA
*1 RORA for return on loans*2 Interest on loans ÷ Amount of loans

4.00%

5.00%

Strengthen promotion of home loans, which have thesecond largest impact after SME loans
・Building closer relationships with homebuilders by
utilizing Loan Plazas
・Promoting re-try for home loans, etc.

15

Efforts to Enhance Corporate Value

Financial Leverage Control (Appropriate capital management)
Capital Allocation (for illustration purpose)[Increase in risk assets]

Accumulated Increase in risk assets
profits （+ of over 100.0 billion yen)
Shareholder
returns

Valuation losses
on securities

Growthinvestment
New business
investment

Increase of over 100 billion yen,mainly in business loans

Securities

Loans to local
governments, etc.
Personal loans

Valuation losses
on securities

Business loans

11.43％

11%
level

Fiscal year achieving ROE of 6%(consolidated)

2024/3(consolidated)
11.43％
8％
level

Capital Adequacy Ratio Control
Valuation losses on securities
Preparation for stress events

Required capital adequacy ratio
Target of 8%

Capital adequacy ratio (consolidated)

Credit cost andcredit risk are
estimated using
default rates at thetime of the Lehman
shock.

2024/3(consolidated)

Fiscal year achieving ROE of 6%(consolidated)

・A certain amount of internal reserves will be
required to build up assets such as business
lending, etc.
・Growth investment (DX, human resources, equity,etc.) and investment in new businesses will also be
required.
・We will strive to reduce valuation losses on
securities and restructuring the portfolio, while atthe same time considering a review to strengthen
our shareholder returns policy, through securing
appropriate capital adequacy.
16

Efforts to Enhance Corporate Value

Efforts to Achieve ROE Targets under
the Medium-term Management Plan
The five management strategies to enhance ROE ((1) Strengthening profitability, (2) Cost control, (3) Risk asset
control, (4) Growth/strategic investment, and (5) Shareholder returns) are reflected in the measures of the 11th
Medium-term Management Plan.
Management
strategyStrengthening
profitability

Improve
RORA

Increasing
net income

Enhance
ROE

Controlfinancialleverage

Utilizing
equitycapitalMeasures in the 11th Medium-term Management Plan
Sales system

Area head office system and strategic personnel assignment (Reassign 150
persons by March 31, 2026)

Loans

Corporate: Deepen sales focused on solutions to issues, based on businessfeasibility assessments
Individual: Sales via a variety of channels

Fees andcommissions

Expand non-asset earnings and increase earnings by strengthening ability topropose solutions

DX

Open internet branches, offer ICT consulting, and utilize/leverage data

Group companies
engaging in new
businesses

Strengthen efforts in non-financial businesses (PPA business, etc.)
Resolve customer issues using solutions from Group companies

EquityInvest in local companies via funds in cooperation with Tochigin C&C

Securities

Enhance securities investment (restructured portfolio, risk controls)[Expenses] Implement BPR (improve operating efficiency), eliminate andconsolidate branch offices, assign personnel strategically, and invest for growth

Cost control

Improvementof OHR

Risk asset
control・Control risk assets to balance profitability and soundness (RORA-conscious
management)・Appropriate capital management
・Enhance ALM

Growth/strategic
investment

Make proactive efforts toward growth investments (8.0 billion yen or more by March 31,
2026: investment in DX/systems, branch offices, Group companies in new businesses, andhuman capital)

Shareholder
returns

Implement shareholder returns while balancing smooth funding for the region with growthinvestments[Credit expenses] Establish risk-taking systems, reconstruct screening systems,
and strengthen risk management framework17Efforts to Enhance Corporate Value

Vision of Improving ROE

ROE

We will work to increase corporate valueby achieving a ROE of 3% or higher inthis Medium-term Management Plan, 6%
by March 31, 2030 and aiming for evenhigher target of 8%.

[Vision] ROE of around 8%(above shareholders’ equity cost)[Long-term vision]
A corporate group that co-creates the future of
regional communities through “relations” and“solutions”

ROE of 6％

ROE of 3% or higher

2026/3(The 11th Medium-termManagement Plan)

2030/3(The 12th &13th Medium-termManagement Plans)* The plan assumes an increase in the policy rate in the future.

Long-term initiatives

Time axis
18Efforts to Enhance Corporate Value

Targets for Management Indicators, etc., toward ROE of 6%
Equation for Decomposition of ROE
ROE

ProfitEquity capital＝

ProfitRisk assets

RORA

×

Financialleverage

Risk assets
Equity capital×

Financialleverage

Risk assets
Equity capital×

Financialleverage

Risk assets
Equity capital

RORA
operating profit RORA]≒ [Gross
Gross operating profit

Profit(excluding gains (losses) on saleof bonds and from cancellationof investment trusts)

×Gross operating profit(excluding gains (losses) on saleof bonds and from cancellationof investment trusts)

Risk assets

RORA

≒

[Gross operating profit RORA]

Expenses

Gross operating profit(excluding gains (losses) on saleof bonds and from cancellationof investment trusts)

×

1 － OHR

Risk assets

Gross operating profit(excluding gains (losses) on saleof bonds and from cancellationof investment trusts)

Targets for Management Indicators, etc. to Achieve ROE of 6%
We will work on eachmeasure based on thetargets for core net
business profit, profit,
RORA, grossoperating profit RORA,
OHR, and financial
leverage, as key
indicators to achieve
ROE of 6%.

2024/3

Targets to achieve ROE of 6%

7.4 billion yen

16.5 billion yen

Profit (consolidated)

2.1 billion yen

10.0 billion yen

RORA

0.14%

Around 0.6%

Gross operating profit RORA

1.9%

Around 2.4%

OHR

74.5%

Item

Core net business profit(excluding gains (losses) from cancellationof investment trusts)

Financial leverage

Around 58%

Maintain the current level of
9 to 10 times

19Accumulation of Core Net Business Profit and Improvement of OHR
Accumulation of Core Net Business Profit(excluding gains (losses) from cancellation of investment trusts)

Trends in Core Net Business Profit

Accumulation of Core Net Business Profit to achieve ROE of 6%(Billion yen)
20

16.5

Interest on
securities

15
10

5.8

7.4

7.9

+3.0 billion
yen

7.4

5
0

Core netbusiness
profit2021/32022/3

Other
Fees and +0.1 billion
commissions
yen
income2023/32024/32030/3* The plan assumes an increase in the policy rate in
the future.

7.4
billion yen
2024/3

Interest on loans
and discounts+10.8 billion yen

Interest on
deposits+1.2 billion
yen(4.8) billion
yen

Expenses(1.2) billion
yenIncluding deposit assets:
around +0.4 billion yen
Including solutions and other:around +0.8 billion yen

Core netbusiness
profit16.5
billion yen

Including business lending:+ of over 5.0 billion yen
including personal loans:+ of over 3.0 billion yen

2030/3

Improvement of OHR(Billion yen)

Expenses plan
74.5%

2024/358% level
OHR(Billion yen)
21.8

2024/3

Personnel
expensesNon-personnel
expenses

Expenses

Difference(Personnel expenses + Non-personnel expenses+ taxes)

21.8

23.0

1.2

(excluding gains (losses) on sale of bonds andfrom cancellation of investment trusts)

29.3

39.7

10.4

74.5%

58% level(16.5%)

Gross operating profit

23.0

2030/3

OHR(Expenses / Gross operating profit)

Increase profits by aggressively investing for growth while reducing unnecessary expenses through BPR

2030/3[Growth investments]
Personnel expenses: starting wages, base-pay increase, investment in human resource development, etc.
20
Non-personnel expenses: investments in DX/system development, branch offices, etc.

The 11th Medium-term Management Plan
—Progress status—

21

The 11th Medium-term Management Plan

The 11th Medium-term Management Plan (Overview)
Theme

Realize the Provision of New Value

Term of the plan: from April 2023 to March 2026

Basic Strategies
Basic strategy 1: Strengthening profitability—Evolution (deepening) of regional financial business andreinforcement of earnings structure—■Delivery of “highly specialized solutions” face to face directly and indirectly■Deeper risk-taking and consulting capabilities starting with businessfeasibility assessments■Total support for life design■Promotion of DX■Creation of demand by resolving regional issues

Basic strategy 2: Strengthening the system—Promotion of structural reforms and reinforcement of managementbase for the future—■Revamp of the sales system/branch system depending on area
characteristics■Enhancement of sustainability promotion system —Creation of new
businesses and services—■Sophistication of risk management■Reinforcement of the Group governance■Enhancement of capital strategy and shareholder returns policy

Basic strategy 3: Strengthening investment in human capital—Foundation of sustainable management—■Improvement of internal environment■Enhancement of human resource development■Cultivation of the “Tochigin mindset”■Cultivation of a new organizational culture/climate

Targets for Management Indicators (in Final Fiscal Year of the Plan)
Core net business profit

ROE(excluding gains (losses) fromcancellation of investment trusts)

Profit attributable toowners of parent(consolidated, based onshareholders’ equity)(based on gross operating profit)

OHR

Capital adequacy ratio¥8.5 billion or more

¥5.5 billion or more

3.0% or higher

72% level

11% level(consolidated)

22

The 11th Medium-term Management Plan

The 11th Medium-term Management Plan (Result)
Basic Strategies: Main Initiatives
Basic strategy 1: Strengthening profitability—Evolution (deepening) of regional financial business and reinforcement of
earnings structure—
Non-face-to-face: Expand app and web service functions, promote cashless, andpromote Toshin Direct
Direct face-to-face: Serve high-net-worth individuals/business owners and expand
corporate employee sales
Indirect face-to-face: Promote sales through direct center and solution sales through the
web by specialized personnel at Head Office

Basic strategy 2: Strengthening the system—Promotion of structural reforms and reinforcement of managementbase for the future—
・Expand downsized branch offices, eliminate and consolidate branch offices
・Create new business ideas
・Reinforce cybersecurity
・Securities investment strategies (market risk management)
・Ensure thorough customer-oriented business operations
・Prevent money laundering

Basic strategy 3: Strengthening investment in human capital—Foundation of sustainable management—

Development of internal environment: Implement health and productivity management, introduce secondary job system、promote advancement of women、enhance engagement, etc.
Development of human resources: Visualize skills, develop specialists, expand training and self-improvement contents, etc.

Progress on Management Targets (March 2024)
First fiscal year
TargetProfitability
indicators
Efficiency
indicators
Soundness
indicator

First fiscal year
ResultAchievement ratio(excluding gains (losses) from cancellation of investment trusts)

Core net business profit¥7.2 billion¥7.4 billion

102%

Profit attributable to owners of parent¥2.0 billion¥2.1 billion

105%

1.15%

1.20%

―

75%

74.52%

100%

11% level

11.43%―ROE (consolidated, based on shareholders’ equity)
OHR (based on gross operating profit (excluding gains (losses) on the sale ofbonds and from cancellation of investment trusts))

Capital adequacy ratio (consolidated)

23

The 11th Medium-term Management Plan

Growth Investment and Strategic Personnel Assignment“Strengthen Sales Force” through Growth Investment and Strategic Personnel Assignment
We will provide highly specialized solutions by deploying our human resources to “operations that only people
can perform (through direct and indirect face-to-face channels),” which is one of our strengths.

Growth Investment

Strategic Personnel Assignment

Invest ¥8.0 billion or more in total (for 3 years)

Reassign 150 personnel in total

Investment results (March 2024) (Million yen)

Reassignment results (March 2024) (Persons)

Item

DX and systems

Branch offices
New Businesses,
Group companies,
and equity
Human capital
Total

Plan

3,000－3,500

3,000－3,500

1,000－1,500

300－500
8,000 or more

TargetResult920

Corporate Business
Division (increase in

20

5Strengthen consulting
support system

External relations ingeneral (reassignment)

30

33

Strengthen sales force

Reconstruction, elimination

Area head officesystem30―Preparing to launch

Customers Centers

40―

Preparing to launch

DX/IT sections,Group companies,
new business fields,
etc.

30

6

Total

150

44

offices

New business: training
program
Equity: C&C Agricultural
Corporation Fund
Human resource development

400 (training cost)Base-pay increase

2,120

Purpose, timing, etc.

Introduction of OA systems
and smartphones
Banking applications,electronic contracting services,
property custody management
systems, RPA, transaction
filtering systems

680 and consolidation of branch

120

ResultAchievement: 26.5％

personnel)

Achievement: 29％

24

The 11th Medium-term Management Plan
—Basic strategy initiatives—

25

Basic strategy 1: Strengthening profitability

Corporate Customer Strategy (1)—Strengthen SME loans—
Deepen sales focused on solutions to issues, based on business feasibility assessments
We will meet the diverse needs and expectations of our customers by deepening our sales activities with afocus on solutions to issues, starting with business feasibility assessments based on the relationship skills andin-depth dialogue we have cultivated over the years.

Initiatives
Strategy planning and execution based on analysis of
the current status for areas and industries
Deepen sales activities focused on solutions to issues(1) Deeper risk-taking
Expand creditworthy customer base and range of acceptable risks(2) Deeper consulting
Offer consulting that goes beyond superficial solutions to issues
Practice (1) and (2) to create a virtuous cycle of consulting-driven
financing and financing-driven consulting
Select and focus on key issues of companies
Support for:(1) Growth toward “development” of regional economies and companies(2) Business succession toward “sustainability” of regional economies andcompanies(3) ESG/SDGs toward “diversity” of regional economies and companies
Strengthen sales activities focused on solutions to issues to solve three
key issues

Trendsin SME loans
ビジネスマッチング
SMEs

900
890

+33.5

880
870
860
850

(Billion yen)
895.7

842.0

+20.2

862.2

840
830
820
810

End of 2022/3

End of 2023/3

End of 2024/3

KPI (The 11th Medium-term Management Plan)
2024/3(Target)2024/3(Result)

Number of cases of consulting

2,620 cases

4,064 cases

155％

Amount of loans originated (*1)¥52.5 billion¥100.3 billion

191％

Increase in the Number of corecustomers

250 customers

203 customers

81％

Achievement*1: Amount of loans originated resulting from consulting services

26

Basic strategy 1: Strengthening profitability

Corporate Customer Strategy (2)—Expand earnings from solutions—
Provide appropriate solutions for each life stage of companies
Founding periodOne-stop support for founding & new businesses

Business Plan Contest

Loans support for founding &new businesses cumulative)

Discover and foster regional corecompanies in the future

2016/3－2024/3
Cases:
Amount:Growing period

3,623 cases
35,709 million yen

Support for growth & core businessBusiness meetings
Support expansion of sales channels

Paid business matching
agreements concluded
2022/3617 agreements

2023/3666 agreements

2024/3685 agreements* 2024/3 includes 57 agreements signed at business meetings.

Maturing period

Support for business succession

Provide business succession consulting services
using V-Compass (corporate valuation report creation system)
Number of M＆A requested
Number of M＆A contracted
2023/388 cases
2024/381 cases(including 56 cases through“Tochigi-no Musubime”)

As part of our efforts to promote sustainablegrowth of our customers, we provide appropriate
financing and consulting services for each life
stage in cooperation with experts and external
partners.

2023/329 contracts
2024/325 contracts(including 18 cases through“Tochigi-no Musubime”)

Trends in Fees for Solutions

Balance between resolving customer issues andincreasing the Bank’s profits(Million yen)

2,309

2,500
2,000
1,500
1,000
500
0

1,631 +180
436
242
268
685
2022/32022年3月期

Other(private placements,
その他(私募債、シ・ローン等）
syndicated loans)

1,811

276
297

+498

295
158
320

303

1,433

1,038
2023/3
2023年3月期
ビジネスマッチング
Business
matching

2024/32024年3月期

Business
succession
事業承継
Ｍ＆Ａ
and M&A

Intermediaryby the証券子会社仲介
securities subsidiary27

Basic strategy 1: Strengthening profitability

Corporate Customer Strategy (3)—Enhance business support—
Strengthen business support through collaboration between branches and Head Office
We will promote support for businesses by not only providing support at the request of branch offices, but also
by exploring and delivering measures to support businesses from the Head Office to identify latent issues fromthe perspective of each division of the Head Office and provide optimal solutions in a timely manner.
Business support managed horizontally(centralized management)

The Business Support Division implements“business support” through centralized managementof customer issues identified by branch offices andmultifaceted discussions with relevant divisions.

Business operators
Consultation
on issues

Branch offices andHead Office collaborate
to support

Identification ofcustomer issues
by Head Office

Discussion

Business Support Division

Discussion

Discussion

Head Office (Relevant divisions)

Branch offices
Branch offices and Head Officecollaborate to support

Business operators

Resolution of business issues
Total of all fields:

Registered
Completed
70 cases
51 cases(Completion of 72.8%)

Growth field support
1
2
3
4

Digitalization (DX)
Sales channel introduction
Environment/healthcare/agriculture
Financing

Discussion

Discussion

Discussion

Business Support
Division

The Head Office implements “business support” byidentifying issues that branch offices do notrecognize and latent issues that business operators
are not even aware of.

Head Office (Relevant divisions)

Branch offices
Centralized
management of
support requests

Business supportdelivered from Head Office

Revitalization field support
1
2
3
4

Utilization of outside consultants
Financial improvement
Preparation of planning documents
Digitalization (DX)

Other supports
1 Utilization of outside consultants
2 Inheritance tax measures

Registered Completed

19
7
6
4
36

14
6
5
2
27

Registered Completed

18
5
3
1
27

12
3
3
0
18

Registered Completed

6
1
7

5
1
28
6

Basic strategy 1: Strengthening profitability

Individual Customer Strategy (1)—Personal loans—
Strengthen sales through a consultation system via a variety of channels
We have established a consultation system for customers via a variety of channels, including direct face-to-faceat our six Loan Plazas, indirect face-to-face at our Direct Centers (call operations), and non-face-to-face on the
web.
Young

Asset builders

Middle-aged

Seniors

Trends in Balance of Personal Loans

Proposal of products catering to each lifecycle needs via each channel

Initiatives (Channel Strategies)
Loan Plaza (Direct face-to-face)
住宅メーカーへの推進強化
Closerrelationships with homebuilders

Provide loan consultation service at Loan Plazas staffed by specialists

Direct Center (Indirect face-to-face)
Proposal of products by telemarketing professionals, using data・Implement telemarketing with calling lists, using AI and data.
(Propose the right products for customers who have needs)
・Operate at two locations in Utsunomiya city and Koshigaya city

WEB (Non-face-to-face)(Billion yen)

610

603.4

605
600
595

+4.9

608.3

+11.7

38

591.7

37.5

590

38.8

+0.7

38.1
+0.7

37.4

37

585
580

(Billion yen)

39
38.5

2022/32023/336.5

2024/32022/32023/32024/3

KPI (The 11th Medium-term Management Plan)

Provide products to be transacted completely on the web for 24 hours
a day and 365 days a year
・Support customers who are unable to visit our branches during bank businesshours with more products to be transacted completely on the web
・Provide loan consolidation consultation through Life Plan Consultation Service

Unsecured Loans

Secured Loans

2024/3(Target)2024/3(Result)

Secured loans originated1,700 cases

1,472 cases

86.5%

Unsecured loans originated5,400 cases

5,233 cases

96.9%

Achievement29Basic strategy 1: Strengthening profitability

Individual Customer Strategy (2)—Financial services—Strengthen consulting capabilities by leveraging digital technology
We are committed to support customers to realize stable medium- to long-term asset building in preparation for
the era of 100 years of life, by working closely with them on their issues and needs. To that end, we will provide
consulting services leveraging our digital tools and sales channels.

Digital Tools for Sales
Power up proposal capabilities through digital consulting
Tochigin Port Navi
(Face-to-face tool)

LifePlan Simulation(Non-face-to-face tool)

Portfolio diagnosis and tailormade proposals

Simulation of life planning design
on our website[Color-coded graph of money] [Trend graph of assets]

Trends in Balance of Deposit Assets
Public bonds
公共債

500.0
5,000
400.0
4,000
300.0
3,000

0.0
0

Services from the Customer Service Centers (indirect face-to-face tools)
Provide financial services over the internet by specialized staff using a web interview system
・NISA Consultation Centers ・Support and follow-up for corporate employee sales, etc.

445.9

+31.5

398.3 +16.1

414.4

23.5

25.6

137.5

146.1

175.2

237.2

242.5

243.4

End of 2022/3

2022年3月末

Future Initiatives

Individual
pensions, etc.
個人年金等

27.2

200.0
2,000
100.0
1,000

Consultation on various matters through the Life Plan Consultation Service (WEB)(Billion yen)

Investment
投資信託trusts

End of 2023/3

2023年3月末

End of 2024/3

2024年3月末

KPI (The 11th Medium-term Management Plan)
2024/3(Target)2024/3(Result)

Balance ofinvestment trusts¥168.4 billion¥175.2 billion

104.0%

Number of investment
trust holders

67,300 cases

71,780 cases

106.6%

Number of
NISA accounts

36,400 cases

35,568 cases

97.7%

Achievement30Basic strategy 1: Strengthening profitability

DX Strategy (1) —Individual customer—
Provide applications that can fulfill customers’ “requests”
By enhancing the functions of the Tochigin App, we will improve customer convenience to increase thenumber of subscribers.

Phase 1 & 2(2024/3)[Balance and statement display
function]○Liquid deposits○Time deposits○Loans ○Investment trusts○Super Point[Funds transfer function]○Deposit transfers○Time deposit account opening,deposit/withdrawal○Card loan borrowing and repayment[Notifications]Phase 3(2025/3 – 2026/3)[Change of registeredinformation]〇Change of address〇Change of phone number〇Automatic marketing
functions〇Easy Passbook App
Transfer of user's
statement data
○Introduction of Corporate
Employee App○Life plan
Consultation service

Phase 4(2027/3)

Raise the number ofregistered users of the App(Users)240,000[Funds transfer function]○Remittance (to other banks)〇Small remittance(“COTRA”)○Tax and utility bill payment[Applications](eKYC function)○Savings accountopening○Investment trust accountopening

140,000

66,0542024/3○Change of address and phone
numberResult2025/3
Plan

2026/3
Plan[App functions]○Trend graph of total assets anddeposits/withdrawals○Account information/transaction
details○Web account switching (reservation)○Notification function (payroll deposit,
etc.)

Opening and operation of an internet branch

In March 2024,
it became possible to change
address and phone number
on the App.
31

Basic strategy 1: Strengthening profitability

DX Strategy (2) —Corporate customer—
Support digitalization of business operators
We support our customers’ digitalization by providing a variety of DX services to meet their increasingly
diverse and sophisticated needs.
Number ofcorporate IB subscriptions

Provide proposals
from a bird's eye viewby grasping current status
and identifying issues
for each company

ProposeConsultation on digitalization concerns(free of charge)
・Compliance with the Electronic Bookkeeping Act/Invoice System
・Installation of digital equipment (hardware)・Digital packages by industry

Grasp the current status
Recognize issues

Steadily
implement

Install・Time and attendance management
tools available
・Adaptation to paperless office・Digitalization of
accounting management division

・Construction of workflow
and RPA・Groupware implementation
・Individual customization
with no-code tools
・System construction
combining multiple tools

Provide a one-stop service from proposal to implementation
by grasping the current status and recognizing issues

Service

12,022
11,2742023/3Result2024/3Result2025/3Plan

To further improve the convenience of ourcorporate IB customers, we distribute useful
information via e-mail.

Mikatano Service
Available for:・Electronic Bookkeeping Act
・Invoice System
・Cash Management(Companies)

12,800Support service forsteady implementation

Ongoing close support

Head Office-driven

Digitalization planning service(fee-based)

Branch-driven

Customers’ progress and willingness
toward digitalization

Tochigin Digitalization Support Service (ICT Consulting)

Build data lake
Digital Package

Improvebusiness efficiency

ManageinvoicesManagemultiple accounts
in one place

Works

Invoice Management

Cash Management

Preparations are underway to build a data lake.
・Explore how to utilize the collected data
* Target areas: Product planning, businessadministration, screening & rating risk
management, consulting
32
・System vendor selection, etc.

Basic strategy 2: Strengthening the system

Downsizing and Consolidation of Branch Offices, and Streamliningof Business Operations
Further transform branch offices from “places of office work” to “place of sales”

Operations

Achieve efficient branch office operations by revamping branch office capabilities andlocations depending on regional characteristics

In this Medium-term Plan, 10 branches
to be eliminated and consolidated
・・・75 branches ⇒ 65 branches
・Result of the first fiscal year of the Plan:eliminated and consolidated ⇒ 5 branches,
downsized ⇒ 2 branches

Middle OfficeEffects

Centralize some back-office operations for deposits at branch offices to the Head Office to reduce
office work at branch offices[Main reduced office work]
Account opening, notifications (address, loss, etc.), applications (IB, debit), tax and utility bill payment

15% reduction of office workload at
branch offices(to be completed in 2025)

Expense Management System

Effects

Build expense management systems at branch offices and the Head Office for administrative efficiency
・Improve administrative efficiency to store large volume of vouchers increasing due to legal reforms.
・Avoid dependance on specific staff regarding paperwork for complicating expense management andconsumption tax calculations.

Work time related to expenses(The Head Office + Branch offices)
Reduction by 6,748 hours

預り物件管理システム
Property CustodyManagement System

Effects

Use tablet terminals for operations to receive passbooks and cash from customers
・Shift from the current paper-based media to electronic media
・Manage all processes from receipt to subsequent procedures, storage and return, in a single system

Seal-less, paperless
Strict management, including due
date control

Strengthen face-to-face sales

Branchoffices

We will “realize the provision of new value” for customers by investing management resources in face-to-facesales, which only people can do, by streamlining (downsizing, eliminating and consolidating) branch offices
and streamlining (reducing) office work at branch offices.
Streamline (downsize, eliminate and consolidate)
Effects
branch offices

33Basic strategy 2: Strengthening the system

New Business (New Service) Strategy (1)—New business ideas—
Create new businesses based on employees’ ideas

Financial institutions, which are the solution providers for regional issues, are expected to be sensitive todiversified issues and work together with regional communities to solve them beyond our conventionalframework of finance. We will create new businesses by soliciting ideas for new businesses and services froma wide range of people within the Bank (the Head Office and branch offices).
Scheme for Creating New Businesses and Services
Call for flexible ideas unbound by conventional thinking or fixed concepts,
widely regardless of age, gender, position, etc.
[Explore and try]
[Select]
Business idea
Business idea

Apply

Select business ideas
to be prioritized forbusiness launchMaterialize

Build business model,
explore and try
business launch

Other Advanced Banking
Service Company

The Bank

Business idea

163 applications[Business Launch]Group companies

For the selected business ideas, project teams havebeen formed to begin working on business launch.

Review Clean Energy Solutions Co., Ltd.
Clean Energy Solutions Co., Ltd., established in March 2023, is acompany in the energy field that was launched into business based on
an idea of our employee. One year has passed since its establishment,
and the company is steadily achieving results, including contracts withexcellent local companies (CAWACHI LIMITED and MANI,INC.).

TargetResultAchievement

Number ofcontracted facilities

47

50

106%

Contracted capacity

10,000kw

10,672.65kw

107%

Number ofoperating facilities

10

8

80%

Operating capacity

2,500kw

2,016.51kw

81%

34

Basic strategy 2: Strengthening the system

New Business (New Service) Strategy (2)—The Graduate School of Project Design—
Open the “New Sustainability Business Project Research” course
for the creation of new businesses and services.

In the 11th Medium-term Management Plan, under the theme of “Realize the provision of new value,” we aim tobecome a corporate group that co-creates a sustainable regional future by taking on the challenge of new
business fields that go beyond our conventional framework of finance. As an effort to realize this goal, we haveopened the “Sustainability New Business Project Research” course.

Project overview
Commit to creating highly feasible businesses that contribute to solving social issues by taking advantage of theabundant resources in the region for business design, including idea development, drafting, marketing, and planning.

Framework and flow diagramof the business design
Communication• Presentation
Stakeholders,inside/outside the Bank, partners• Easy-to-understand explanation• Marketing
Communication

Planning• Confirming management resources• Formulating marketing strategies• Finding customers
Feasibility surveys, assurance

Idea development• Ideas• Inspiration• AwarenessProject Design
Necessity in society
Finding “seeds” in society

Drafting• Sharing wisdom• Listening to cases• Gathering information

Field research• Feeling responses• Listening to opinions

Purpose of opening the course
Develop human resources capable of designing new
businesses by back-casting from the future of the“community” and “customers”
Foster a new organizational climate in which innovationis created throughout the Bank
Provide value to the region by creating new businesses
and services
Instructor : The Graduate School of Project Design, Advanced Academic Agency
Term: November 2023 - October 2024
Participants : 12 bank employees of various ages, genders, and positions

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Basic strategy 3: Strengthening investment in human capital

Human Resource Strategy (1)・Measures are set for each of the four key elements: retention, recruitment, development, and assignment.
(Each measure is linked to each element).
・Along with organizational culture transformation (from a long-term perspective), the strategy is to “develop
the human resources we expect” with engagement improvement as the starting point.
Themes and measures for human resource strategy●Implement health andproductivity management●Promote secondary job
systemRetention●Continue dialogue●Expand new
graduate recruitment(throughout the year)●Expand mid-career
recruitment●Start new initiatives to create new
businesses and services(Call for business ideas)

VisionAchieve our long-term
vision and sustainable
management●Launch a new training program for
project design(The Graduate School of Project Design)

Recruitment●Develop career
support system●Utilize active seniorpersonnel
Assignment Development●Assign specialized
personnel●Equalize skills among
branch offices using skill
maps

Transformation of organizational
culture and climate●Continue the Human Resource
Division caravan●Promote advancementof women●Shorten retention
period for promotion●Develop specialized
and base personnel●Visualize skills for
effective reskilling●Continue the engagement
improvement project●Strengthen sustainability initiatives●Achieve diversity, equity & inclusion

Development of humanresources we expect,
and their success
Human resources for●Relation●Solution

PDCA cycle

Improve Employee Engagement
Survey and improvement measures for employee engagement36Basic strategy 3: Strengthening investment in human capital

Human Resource Strategy (2)“Invest more in human capital” and “develop more human resources”
Based on the human resource development policy, we will develop expected personalities “who can understandand practice various policies” and “who strive actively for their own growth.”

Investment in human capital

Develop specialized human resources
2023/3 (Result)

Raise in wages (including starting wages)
Wage: Average increase of 5%, including regular annual increase
and base-pay increase
Starting wage: Increase for new bank employees by 15,000 yen(For new college graduates, 205 thousand yen⇒220 thousandyen)

Increase in training and development expenses
Total investment increase over 3 years after April 2023:
370 million yen
Annual training expenses per employee:
40,000 yen (2023/3) ⇒ 82,000 yen (2026/3)

2026/3 (Plan)(Final fiscal year of the Medium-term Plan)

95 persons

115 persons[Specialized qualifications KPI]

(Persons)
2023/32024/32026/3

1st-grade Certified Skilled
Professional of Financial Planning

47

46

55

SME management consultants/
management consultants

48

50

60

Total

95

96

115

* To develop base human resources (DX/IT), we are also working to increase the numberof employees holding the IT Passport certification to 500 (2024/3: 90 persons).

Development of internal environment (foundation for human resource development)
Health and Productivity Management

Started on June 12, 2023

Reinstatement system

Lifting the ban on secondary jobs

Revision of appointment system

Started on June 1, 2023

Started on May 1, 2023

Revised on April 1, 2024

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Initiatives for Sustainability

38

Initiatives for Sustainability

Initiatives for Diversity, Equity & Inclusion (1)Develop a workplace where personnel can work energetically and contribute actively
In addition to support for the child-rearing generation, we will further foster an organizational climate that isopen and lively with no difference in treatment between men and women. We will also push forward with efforts
to develop ourselves as an organization that can leverage the diversity of all employees.
Promote advancement of women(to managerial positions)

Initiatives for Health and Productivity Management

Percentage of female personnel in managerial positions(deputy branch general manager, deputy investigator or higher)
Target (2026/3)

Result (2024/3)

16% or higher

14.1%

Eruboshi

Encourage diverse work styles
Percentage ofmale personnel taking childcare leave
Target (2024/3)

Result (2024/3)

80% or higher

125%

We support men to actively participate in childcare by
Platinum Kurumin
implementing weekly no-overtime days andencouraging employees to leave the office by 7:00 p.m.

Percentage of
mid-career recruitment

Percentage of
employees with disabilities

Result as of March 31, 2024: 8.3%

Legally mandated employment rate: 2.30%
Actual employment rate by the Bank: 2.83%“Health and Productivity Management Declaration”(Established in June 2023)
The Tochigi Bank Group will contribute to the creation of a sustainable andprosperous regional communities by continuing to protect smiles andhappiness while transforming problems into “thank you.” To this end, we
believe that the health of each and every officer, employee, and their families
is the source of our vitality, and we will promote initiatives to maintain andimprove their physical and mental health, while striving to create a rewarding
company where everyone can play an active, cheerful, and fulfilling role.

Major initiatives for
Health and Productivity Management
Employee engagement surveys

Stress tests

Smoking cessation
recommendations and support

Simplification of receiving specifichealth guidance

Introduction of mental health training,etc.

Health & Productivity Management
Outstanding Organizations
In March 2024, the Bank was recognized as one of“the 2024 Certified Health & Productivity Management
Outstanding Organizations” selected by the Ministry of
Economy, Trade and Industry (METI) in collaboration
with the Nippon Kenko Kaigi.

39

Initiatives for Sustainability

Initiatives for Diversity, Equity & Inclusion (2)Initiatives to improve “Engagement”
We aim to understand the status of all employees’ workplaces and organizations to improve their relationships(engagement improvement) with the company and workplaces through PDCA cycle of human resource
measures, etc., thereby increasing their productivity and performance.

Sorting out issues: Engagement survey

Specific actions: Launch of project teams

The following items are surveyed among all bank employees to identify
and sort out current issues related to their work and work environment.

Launch project teams (PTs) to resolve issues identified fromthe engagement survey and work on each measure[Project Teams]

Item (three key
indicators)

Description

Sense of belonging

Degree of attachment to the company and workplace, job
satisfaction, etc.

Sense of contribution

Degree of awareness of contribution to the company andworkplace

Immersion/enthusiasm
for work

Degree of satisfaction from work

Item

Description

Well-being

Happiness through life, relationships, and work

PT for active communication
within the Bank
PT for good work environment
for in-office clerical work
PT for horizontal relationshipbetween Head Office and branch offices*Middle-level and younger staff at branch offices are also
selected as members of the project teams to reflect theopinions from the workplace.

Overall psychological safety Free and open-mindedness, positive attitude
Good collaboration in
workplace

Relationship building

Readiness to enjoy diversity Climate that embraces working with a variety of colleagues
Recognition from company

Degree to which the company and supervisors recognize theexistence of employees and treat them as individuals withrespect

Aiming for
Improvement and remediation of priority
improvement items
Transformation of organizational climate

40

Initiatives for Sustainability

Initiatives for Environment —TCFD—
Response to climate change ( initiatives for TCFD recommendations)
The Group will contribute to the sustainable development of the region by promoting the decarbonization of its
customers and the Bank.

Reduction of CO2 emissions
Target for
reduction of CO2 emissions
We aim to reduce CO2 emissions by
70% compared to fiscal 2013 by
fiscal 2030, and become carbon
neutral by fiscal 2050.

■ Scope 1 (direct emissions) • Direct CO2 emissions from the Bank. Vehicle gasoline consumption, gas used, etc.
■ Scope 2 (indirect emissions) • Indirect CO2 emissions from use of electricity, etc. supplied by other companies

Unit: t-CO 2
63.54%
reduction

5,861
913

4,948

3,894
747

3,147

3,647
684

2,963

3,422
664

2,758

2,898

2,137

2,290

515
1,622

608

70%

reduction

274

1,758

Carbonneutrality

1,484

FY2013
FY2019FY2020
FY2021
FY2022
FY2030 target
FY2023・Calculated from periodic reports based on the provisions of the Act on Rationalizing Energy Use (so-called Energy Saving Act)・Calculation of emissions including from six Group companies

FY2050 target

Sustainability financeTarget forsustainability finance¥85.0 billion
or more(by March 31,2026)

Target of the Medium-term Plan

As of March 31, 2024

ESG/SDGs financing
Social sector• Lending to eligible sectors (healthcare, welfare, public health and sanitation, education, and agriculture sectors)• Financing for other evaluations of initiatives by eligible companies (charitable private placement bonds and start-

up support financing)

Environmental • Lending to eligible businesses (renewable energy businesses and introduction of/upgrading to energy-saving
sectorequipment)• Other financing (lending for local decarbonization lending promotion interest subsidy programs, etc.)

Financing to support our customers in their efforts to address SDGs and ESG

Target for FY2023¥30.0 billion

Tochigin Green Loan

Result¥60.8 billion

Tochigin Sustainability-linked Loan

[Result]
6 loans totaling ¥780 million

41

Initiatives for Sustainability

Initiatives with the Regional Communities
Aim for sustainable community development in partnership with local governments
Under on our management philosophy of “contributing to the creation of prosperous regional community,” wewill keep contributing to the realization of sustainable regional communities in partnership with each local
government.
Initiatives based on partnership agreements
Initiatives for Nature Positive
with local governments
Partnership agreementswith 10 local governments

Initiatives

In December 2023, weconcluded a new“Comprehensive Partnership
Agreement” with Nasushiobara
City. This brings the total
number of local governments in
Tochigi Prefecture with which
we have concluded partnershipagreements to 10 (prefecture,
cities and towns).

While leveraging the intellectualand human resources, such as
information and networks
possessed by both parties, wewill work on industrial
development, etc., taking
advantage of the regional
characteristics and resources, torealize sustainable developmentof the regions.

Resolving regional issues
Target for
the Medium-term Plan

Result for the first FY of
the Medium-term Plan

12 issues

10 issues(by March 31, 2026)

・In December 2023, the Bank and Nasushiobara City made a“Joint Declaration for the Realization of a Nature Positive
Economy.”・Nature Positive means “to stop the loss of biodiversity and put
it on the path to reversal and recovery.” We will aim to realize asustainable environmental city and co-create a prosperous
regional community (creation of Regional Circular andEcological Sphere) with Nasushiobara City.
[Details of the joint declaration](1) Raise biodiversity literacy(2) Realize Nature Positive(3) Contribute to the development of regional industries
through the promotion of Nature Positive(4) Create synergies through integrated promotion of Nature
Positive, Carbon Neutrality and Circular Economy(as of March 31, 2024)

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contained in this material is subject to revision or change without notice. This material contains
forward-looking statements that do not guarantee future performance and may differ from actual
figures due to changes in the business environment and other factors.
Contact for inquiries on these materials:
Corporate Planning Division:
Ogiwara, Saito, and Iwamoto
Tel.: +81-28-633-1455
e-mail: keieikikaku@tochigibank.co.jp