Value Creation by the Group’s Human Resources

Stakeholder Voice

Nanto Bank Group’s strategy of creating social
value through the “Yamato Social Impact Fund”
In October 2022, the Group established the “Yamato Social Impact Fund” to address social issues inNara Prefecture and the surrounding region. The following three top executives of the Bank and relatedcompanies met recently to discuss their reasons for establishing the Fund, the first by a regional bank, andthe effects it has had on efforts to solve issues facing the Yamato region: President Takeshi Aoki of Capital
Medica Ventures, Co., Ltd., an investor in the Fund; Nanto Bank Director and Managing Executive Officer
Takeshi Sugiura; and President Atuyuki Sakai of Nanto Capital Partners Co., Ltd.

Nanto Capital Partners Co., Ltd.
President (Representative Director)

Atuyuki Sakai

The Nanto Bank, Ltd.
Director and Managing Executive

Takeshi Sugiura

Capital Medica Ventures, Co., Ltd.
President (Representative Director)

Takeshi Aoki

Group’s commitment to regional business creation
Sugiura:	We introduced our Management Plan in 2020 and set goals for contributing to regional development in accordancewith the Nanto Mission by increasing Nara Prefecture’s GDP by 10% by 2030. We established Nanto CapitalPartners in 2020 and began working to accelerate realization of the Nanto Mission from an investment perspectivein accordance with our commitment to developing the region through investment. Furthermore, in recent years,
as impact investing aimed at addressing social challenges has garnered significant attention, we established the“Yamato Social Impact Fund” in October 2022 with support from Capital Medica Ventures, which has extensive
expertise in impact investment, to pursue further development of the region through investment financing.
Sakai:	The Fund invests in companies that can help solve social issues in the Yamato region, the Group’s main area ofbusiness. This approach is often referred to as “impact investment.” Our aim is not only to pursue financial returns,
but also to support entrepreneurs who are seeking to solve regional issues, and to make the members of the Fundteam, who are expected to work closely with such entrepreneurs, feel more directly engaged in the process ofsolving the targeted regional issue.
Our mission at Nanto Capital Partners is to “add new value to Nara through investment.” An enterprise that applies
an investment strategy to realization of the Nanto Mission, we act as a hub connecting our portfolio companies with34 Nanto Report 2023, the integrated report of Nanto Bank

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

BusinessmodelStrategies
and resources
allocation

various local businesses. To go one step further from investment toworking with entrepreneurs to promote commercialization, moreover,
we have decided to work with Mr. Aoki to solve local issues. The
Fund has been selected for the Regional Impact Fund Establishmentand Operation Support Program designated by the Foundation forSocial Change, which is an asset-distribution institution organizedunder the “Law for Utilization of Dormant Deposits, Etc.,” and whichis certified as the first fund in Japan to put dormant deposits to use.
Aoki:	Impact investment involves investing in potentially profit-making
companies that engage in business contributing to society. We
focus on the following three steps when making an investment:	First, we set a goal to be achieved after clarifying the issues to be solved, an approach referred to as the Theory ofChange (ToC).	
Second, we construct a logic model to organize a logical roadmap (hypothesis) for realization of the ideal results
and establish KPIs by setting small successes (outcomes) to be achieved during the course of ToC as milestones.
We then annually review the target issues and the logic model along with the achieved KPIs to clarify the createdsocial impact.	Third, we announce the status of achievement publicly through an impact report.	The Group’s fund management team follows these key steps as elements of the management system central topromotion of each project.

What effect will it have on the community and what difference will it make?
Sakai:	The Fund’s target areas for investment are specified as health capital, cultural capital, and natural capital.	As concerns health capital, with the birthrate declining and the population aging, the field of nursing and medicalcare has become an important growth industry for Nara prefecture. At the same time, we recognize the need forthese services as the most important issue for local residents to solve.

Overview of the FundProfile of the Fund administrators

NameYamato Social Impact Investment Limited Partnership

Company name

Nanto Capital Partners Co., Ltd.

Unlimited liability partner

Nanto Capital Partners Co., Ltd.; Capital Medica Ventures Co., Ltd.

Establishment

October 2020

Limited liability partners

Nanto Bank, Ltd.

Location

16 Hashimoto-cho, Nara City, Nara Prefecture

Investment commitment

500 million yen or above

CapitalInvestment target

Startup companies that can contribute to solving issues facing the Yamato region

100 million yen (wholly owned subsidiary of NantoBank)

Investment period

10 years (possible investment period 5 years)

President(RepresentativeDirector)

Atuyuki Sakai

Field of business

Investment businessCompany name

Capital Medica Ventures, Co., Ltd.

Establishment

November 2016

Location

3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo
Kasumigaseki Building, 19th Fl.

Capital

100 million yen

President(RepresentativeDirector)

Takeshi Aoki

Field of businessStartup investment and development business, study
sessions, seminar administration, etc.

Investment targets

The targets of the Fund are startup companies that can solve issues facing the Yamato
region. Specifically, the project focuses on the following three areas with the aim ofenriching the Yamato region: (1) “health capital (healthcare)” in the area of health care; (2)“natural capital (nature),” including agriculture, forestry, and fishing; and (3) “cultural capital(culture),” including education, crafts, cultural assets, tourism, and sports.

Healthcapital(healthcare)
CraftsProcessed goods
Sightseeing &entertainment
Education
Sports, etc.

Culturalcapital(culture)

Pursuit of Yamato
regional enrichmentResolving issues
in the Yamato region

Medical care
Nursing care
Health, etc.

Naturalcapital(nature)Forestry
Agriculture
Dairy farming
Fishery, etc.

Nanto Report 2023, the integrated report of Nanto Bank35

Value Creation by the Group’s Human Resources

Stakeholder Voice	When it comes to natural capital, forests cover some 77% of the prefecture's total land area, and we believe thatissues related to forests, agriculture, and undeveloped woodlands near populated areas demand steady resolution.	As for cultural capital, meanwhile, sightseers who come to Nara are primarily interested in visiting Buddhist temples
and Shinto shrines, which is perfectly appropriate to Nara, by the way. If these resources were lost, Nara’s regional
value would be significantly diminished.	In this region, we want to employ the Impact Fund to identify where the issues lie and where to begin ourresponse, and to use our findings to create concrete initiatives.
Aoki:	I find the phrase “business is people” to be deeply meaningful. When planning this project, we first considered theconcept that would best suit it. The concept we chose overlaps with the Bank’s Management Strategy of “fostering
unconventional human resources,” and we have incorporated this concept into the Fund to increase the numberof qualified staff with problem-solving capabilities.
We need to develop human resources who fill the gap between employees
who think of actions and those who actually put such actions into practice. It
is certainly vital that we nurture “unconventional human resources.” Membersof the Fund and Nanto Bank employees accompany and support those whoare seeking solutions to issues, which contributes further to finding practicalsolutions. We are fully aware of the need to increase the number of qualified
staff who can tackle the issues the customers we invest in are struggling
with and help them determine the direction they want to take with a sense ofownership. That is how our value-creation process works.

Fund scheme
Unlimited liability partners (co-GP)

GP commitment

Nanto Capital Partners Co., Ltd.
Capital Medica Ventures, Co., Ltd.
Subsidies for dormant deposits

Management fee
Success fee

Yamato Social Impact Investment
Limited Partnership

Limited liability partner (LP)Startup companies, etc.,dedicated to solving issuesof the Yamato region*

Investment Policy

Focus on seed and early stage companies

SIIF
Partnership

Portfolio
Investment execution

Visualizing impact through IM practices
Investments range from 30 to 200 million yen.

Investment(1) “Health capital” operatingin the healthcare area(2) “Natural capital,” such as
agriculture, forestry
and fisheries(3) “Cultural capital,” such as
the three target areas ofeducation, crafts andcultural assets; tourism;and sports

Investor valueenhancement

Exit strategy: IPO, M&A
Personnel
secondment

Distribution

Several companies operating in Naraand the surrounding region

Features

Regional sourcing network
Acceleration programs
Impact management
Impact reporting

Exit revenue(IPO, M&A)

*Nara prefecture and surrounding region

Profile of SIIF
Organization name Japan Social Innovation and Investment Foundation (SIIF)
Established

September 2018

Location

6F, 1-11-28 Akasaka, Minato-ku, Tokyo

Chairman of theBoard of Directors

Shuichi Ohno

Business content

Projects that contribute to realization of major changes in society (social innovation) by building a socialand economic resources circulation system to solve social issues

The Yamato Social Impact Fund has been selected by SIIF to conduct a project supporting
establishment and operation of a regional impact fund focusing on “social impact evaluationand management” to visualize changes and effects on society and the environment. It has been
allocated a subsidy based on the Dormant Deposits Utilization Act.

36 Nanto Report 2023, the integrated report of Nanto Bank

SIIF comments
The Yamato Social Impact Fund is Japan’s first
funding project to utilize “dormant deposits.” It isa rare initiative in which local financial institutions
are collaborating for the first time in this form ofinvestment. We hope that the pioneering Yamato
Social Impact Fund project will solve issues in Naraand the surrounding region, and that it will provide
a model for regional impact funds nationwide inthe future.

About Nanto Bank

Our Shared Vision

Value Creation by theDeveloping Human
Governance Supporting Our Consolidated Financial
Statements
Resources for Value Creation Group’s Human Resources Proactive Human Resources

BusinessmodelStrategies
and resources
allocation

Sugiura:	Although deposits and loans remain the primary focus of theBank’s business, we feel we can contribute increasingly to localcommunity development by placing new importance on creatingsocial value through investment and taking risks proactively outside
the traditional framework of the banking business. I also believethat the awareness of our Group employees will be elevated to newheights by experiencing the process of investment as a financing
method, and that this will make them better equipped to takepersonal responsibility for addressing regional issues.

Objectives of the Nanto Bank Group and the Fund
Sakai:	This Regional Impact Fund is a model initiative for solving regional issues. We are conducting crowdfundingfor shrines and temples in the region in cooperation with our investment partner READYFOR Corporation, forexample, and we implemented a particularly successful project with Horyuji Temple in June 2022, which attracted
nationwide attention and raised funds far exceeding the target amount. At Nanto Capital Partners, we haveconnected various startups to other local businesses, deepening interest and leading to formation of the Impact
Fund. We consider it our ultimate goal not only to solve problems, but also to create various businesses in theregion. I believe that using the networks we have cultivated to date to collaborate with many people is vital for thesustainable growth of Nanto Bank. It is through such efforts that we hope to establish a framework or scheme tocreate more business projects in the community.
Aoki:	As a matter of fact, I am from Ikaruga Town in Nara Prefecture, and the Horyuji Temple project renewed my pridein my hometown, which drew support from so many people throughout Japan.	The mission of the Yamato Social Impact Fund is not only to nurture qualified staff but also to generate solidreturns. We would be more than happy if we could contribute to increasing Nara’s affluence by pursuing thismission and helping to resolve issues in the Yamato region, even to only a limited degree. I might add that it is theregional banks with the deepest knowledge of the region that will be responsible for revitalizing it through impact
investment, and the region would never be revitalized without them playing an active role.	If Nanto Bank can take the lead in expanding this model horizontally in the future, I am convinced that the resultswill be excellent.
Sugiura:	We intend to continue providing optimal financial services and solutions to realize sustainable management incooperation with our local communities. With the entry of other industries into the banking business, however,and the emergence of new payment services, we need to take a hard look at the ways in which we demonstrate
our value as a Group. I consider the Yamato Social Impact Fund to be one of the unique strengths we retain as aregional financial institution. I also believe that our Group employees will realize solutions to various issues throughdeployment of the Fund and engender a new raison d’etre and new value for the Bank as a regional financial
institution, a process that will ultimately lead to human resources development. I feel certain that the Fund willcontribute to sustainable growth of the Nanto Bank Group by winning acceptance among customers and thecommunity and by supporting the growth of the regional economy.

Nanto Report 2023, the integrated report of Nanto Bank37