Mission

The trees we planted after the earthquake
are gradually growing.

Bank Creed

VisionVision 2030

Value

77 Bank Group SDG Declaration(Ultimate goal)

Vision(Values sharedacross the Group)Value(10-year period)~More than ever, and forever, with our region~

Strategy Short-term Management Plan

Strategy

Ten years have passed since the Great East Japan Earthquake in 2011.

Mission(Tactics)

Integrated Report 2021

Now, the young trees of recovery are sprouting in the Tohoku region.

CONTENTS

Eiichi Shibusawa, who was involved in The 77 Bank’s founding, said “people without dreams have no ideals.*”
Making our region more abundant and comfortable to live in.

MissionThe 77 Bank Group will embark on Vision 2030, in which we have set out our ideal for the future.

02
04
06

* From “Seven Lessons about Dreams” by Eiichi Shibusawa

Our Path of Continuous Growth
Value Creation Processes
The Economy and Potential of Miyagi Prefecture

Vision08

Message from the President (Vision 2030)

Value
18
19
20
22
24

77 Bank Group SDG Declaration(1) Revitalization of the Regional Economy(2) Responding to Global Warming and Climate
Change(3) Encouraging and Supporting the Activities of
Our Employees(4) Advancing Corporate GovernanceSpecial Feature
26

Asking the Next Generation about Their “Target
Form for the Future”

Strategy
30
31
36
40
44

Basic Strategies to Achieve “Our Target Form”(1) Top Customer Satisfaction Strategy(2) Double Productivity Strategy(3) Regional Growth Strategy(4) Corporate Culture Reform Strategy

Bank data
48
52
54
55

Governance Structure
Financial and Non-financial Highlights
Profile / Group Companies
Service Network

Financial Section
56
57
58
59
60
61
80
85
86
87
88

Editorial Policy
The 77 Bank has prepared “THE 77 BANK INTEGRATED REPORT 2021” to help investors and other stakeholders
understand the Bank’s efforts for sustainable value creation.
In editing this report, we have referred to the “International Integrated Reporting Framework” proposed by theInternational Integrated Reporting Council (IIRC) and the “Guidance for Collaborative Value Creation” issued by
the Ministry of Economy, Trade and Industry (METI) to provide an integrated explanation of the Bank’s businessmodel and sustainable value creation mechanism, in the order “Mission,” “Vision,” “Value,” and “Strategy.”
For detailed financial data and other information, please refer to DISCLOSURE 2021 (available on the
Bank’s website at https://www.77bank.co.jp).

Consolidated Five-Year Summary
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report
Capital Adequacy Ratios
Non-Consolidated Balance Sheet (Parent Company)
Non-Consolidated Statement of Income (Parent Company)
Loan Portfolio

Note regarding forward-looking statements

Guidance forCollaborative
Value Creation

In order to recover coastal disaster prevention forests that were lostin the Great East Japan Earthquake, new employees of the Bank
planted black pines in 2018, and we named the area the “77 Forest
for the Future.”

This document contains forward-looking statementsthat are based on the information available at the timeof disclosure, along with certain assumptions believed
to be reasonable by The 77 Bank. However, The 77
Bank makes no guarantee that these forecasts will beachieved. Actual results may differ significantly fromforecasts, due to a variety of factors.

THE 77 BANK INTEGRATED REPORT| 01

Our Path of Continuous Growth

Mission

Passing on the spirit of Eiichi Shibusawa to the next generation
Eiichi Shibusawa
1840 - 1931; born in Chiaraijima
Village, Hanzawa-gun, Musashino
Province (present day FukayaCity, Saitama). He exerted all his
efforts toward establishing modern
companies and created Japanese
capitalism with the power of theprivate sector.
photograph: Fukaya City

1977.91983.2

1990.11

Opened the Tokyo
BranchHead Office relocatedto a new building at
Sendai Chuo 3-chome

Established The 77
Card Co., Ltd.

Upgrade the New
York Representative
Office to the New
York Branch

1985.10
Current Head Office

1960

1970

1980

1990

2017.6
Building housing the Shanghai
Representative Office

1998.4
Established 77 BusinessSupport Foundation

Opened the London
Representative
OfficeName changed to The 77 Bank, Ltd.

1880

Started business of 77
Securities Co., Ltd.

2000

2006.11
Established the Aomori Corporate
Sales Office

2010

2021

Started“Vision 2030”

Transition to a company with anaudit & supervisory committee

2018.7
Established 77
Research andConsulting Co., Ltd.

Strategy1898.3

Tokyo Branch
Shibusawa warehouse during the Meiji
era, where the first Tokyo Branch of The
77th National Bank was located2017.4Opened theShanghai
Representative
OfficeVa l u e1882.72005.7

VisionThe Bank was founded in 1878 as The 77th National Bank. Through thetremendous efforts of Eiichi Shibusawa, the core of our bank was created, and weembarked upon the path we have followed to this day. The theory of corporatesocial responsibility that Shibusawa advocated around the late 19th and early
20th centuries became the focus of renewed attention by the American economist
Peter Drucker, and has since become the global mainstream for present-day
business activities. The Bank will grow in a sustainable manner, while passing on
the spirit of Shibusawa to the next generation in the form of our dedication tobusiness activities that serve the prosperity of the state and local communities.

2020
Leading company creating a path to the future

1978.10The Bank Creed established as thebasic principle of management

Established 77 Shin-Yo Hosyo
Co., Ltd.

1932.1

1978.12The current The 77 Bank, Ltd. was establishedthrough the merger of The 77 Bank, Tohoku
Jitsugyo Bank, and Gojo Bank

Established Tohoku Jitsugyo Bank, Ltd.

1893.5

1988.10
Increased capital to ¥22.2 billion

1974.11
Established 77 Lease Co., Ltd.

1973.8Established Miyagi Savings
Bank（Renamed Gojo Bankin 1921）

Share listing changed to the Firs Sectionof the Tokyo Stock Exchanged

Started operation of the common use system（MEJAR）

2016.51999.3
Abolished the New York
Branch and London
Representative OfficeOpened the Singapore Representative Office
Singapore Representative
Office Established1999.8Merged The 77 Card Co., Ltd. And 77 Credit
Services Co., Ltd., with The 77th Card Co.,
Ltd. as the surviving company

2016.7
Established 77 Capital Co., Ltd.

2016.7
Established 77 Securities Preparatory Establishment Co., Ltd.
（trading name was changed to 77 Securities Co., Ltd. in January 2017）2016.9Established the Hachinohe Corporate Sales Office

1878.121972.10

1997.122016.11

Started operations as The 77th
National Bank

Shares listed (Second Section of the Tokyo Stock
Exchange and the Sapporo Securities Exchange)

Established 77 Credit
Services Co., Ltd.

Converted 77 Lease Co., Ltd., 77 Shin-Yo Hosyo Co., Ltd., andThe 77 Card Co., Ltd. into wholly-owned subsidiaries

Head Office at the time of our foundation in 1878
(former Hinoya site)

Eiichi Shibusawa, who supported The 77 Bank at the time of our establishment

The photograph in the possession of
the Shibusawa Memorial Museum.

02

2016.1Opened the New York
Representative OfficeEiichi Shibusawa, a businessman who was known as “the father of Japanese capitalism,” had a strong
interest in the Tohoku region through Munenari Date, who provided him with the opportunity to enter the
Ministry of Finance. At the time, there was no bank based in Miyagi Prefecture and partially for this reason,prior to the opening of The 77th National Bank, Shibusawa provided advice on various matters, such as thenature of the banking business and basic management concepts, and guided the establishment of the Bank.
Subsequently, he continued to provide investment as a shareholder, and seconded exceptional talent,
including Keishi Endo (the second and fourth President) and Seikei Ono (the fifth President) from The Dai-Ichi
Bank Limited. Furthermore, Shibusawa provided both mental and practical support to the Bank over many
years, including his transfer of The Dai-Ichi Bank Limited’s banking business in Miyagi Prefecture to The 77th
National Bank and his appointment as Advisor in 1909.
Eiichi Shibusawa’s spirit of “harmony of morality and the economy” lives on today in the line from the Bank
Creed, which describes the Bank’s management philosophy, that states “the Bank’s progress goes hand inhand with prosperity in the local community.”

Financial
Section1910.6

Celebrated the 100th anniversaryof our founding. Increased capitalto ¥12.0 billion

1988.4Company
Information

1961.5

Bank Creed
The Bank’s mission is to absorb funds and create credit by exercising its own creativity based on the principle of self-responsibility, in a
spirit of maintaining orderly credit conditions and protecting depositors, and thereby contribute to the growth of the national economy.
In light of such public mission, the Bank shall contribute to the local community while seeking a harmonious balance between
self-interest and public interest as a regional bank.
Based on the aforementioned principles, the code of conduct to be observed by any and all persons employed by the Bank is set forth
as follows.
1. Elevate the Spirit of Voluntary Service
Acknowledge that the Bank’s progress goes hand in hand with prosperity in the local community, and seek to elevate the spirit ofvoluntary service at all times.
2. Improve Creditworthiness
Bear in mind that credit is the Bank’s lifeblood, and endeavor to improve credit at all times.
3. Nurture the Spirit of Harmony
Recognize that the spirit of harmony is fundamental to the execution of duties, and strive to nurture such spirit at all times.

THE 77 BANK INTEGRATED REPORT| 03

The Economy and Potential of Miyagi Prefecture▼▼¥(21.0%) during the period FY2010, immediately after
the financial crisis of 2007-2008, through FY2018
Fisheries and aquaculture
production amount¥billionPublicly assessed land prices
in Miyagi Prefecture (change
in percentage)

since the Great East Japan Earthquake

2●Manufactured good shipment amounts
6.00

Population

4.00

Persons

1,006,676
Number of new housing starts

3.97

4.02

4.47

Third Hokkaido
Prefecture

%

2012

2013

2014

2015

2016

2017

2018

Source: Tohoku Bureau of Economy, Trade and Industry%in Miyagi Prefecture
Commercial district: Increasing for eight consecutive years
8.0
Residential district: Increasing for nine consecutive years

4.0

Agricultural output

193.9

1.4

2.0

billion0.0

Commercial district

4.8

1.7

2.5

2.3 2.3

3.2

2.4

1.9

Residential district
(%)

6.2

5.9

6.0
4.7

¥

1.0

●Publicly assessed land prices (change in percentage)

2.00
0.00

1.2

4.67

SecondMiyagi Prefecture

3.5

3.5

2.7

Secondin Japan

1.2

Third in
Japan

1.0

0.0
2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: 77 R&C Monthly Research Report, April 2021

Wholesale/retail annual product sales¥

11,554.9

Number of private sector offices

102,026

billionFinancial
Section

14,451

3.73(JPY tn)

First

Residential Hokkaido PrefectureFirst Fukuoka Prefecture
district
Third Miyagi
Prefecture

Company
Information

Number of households

3.42

4.11

First
Fukuoka Prefecture

Commercial
districtbillionStrategy

7,282km

78.9

Fourthin Japan

Va l u e

4,665.6

billionSecond highest growth rate

Manufactured goods shipment amount¥

9,463.9

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

Increasing for seven consecutive years

Total area

2,292,385

Gross Prefectural Product (nominal)

VisionThe potential of Miyagi
Prefecture, in numbers

MissionMiyagi Prefecture, which is our main business base, is located in the southeast area of the Tohoku region, and is a key transport hubconnecting the Greater Tokyo Area with the Tohoku region. Additionally, the prefectural capital, Sendai, which became the 11th city
designated by government ordinance in Japan in 1989, is home to the branches of many major companies from across Japan, andfunctions as a core city in the Tohoku region. Miyagi Prefecture generally ranks around 15th among the prefectures in terms of
population and key economic indicators such as the Gross Prefectural Product and total retail sales. It generally accounts for a shareof just under 2% of the national totals of such indicators.
Although Miyagi Prefecture experienced significant damage due to the Great East Japan Earthquake, particularly in coastal areas,
it has made steady progress thanks to joint efforts by the public and private sectors. In addition, with the expansion of major
automotive and electronics companies, the manufacturing industry is expected to become a driver for post-recovery economic growth
while economic concentration is advancing owing to active construction investment related to redevelopment projects in Sendai.

No. 1 in japan interms of thegrowth rate
Offices since
the last survey (2012)

Source: “2021 Shape of Miyagi (Miyagi Prefectural Handbook” *Excluding publicly assessed land prices (change in percentage) in Miyagi Prefecture

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

Next-generation Synchrotron Radiation
Facility Maintenance Project(project launched by Sendai City in October 2019, to continue through FY2031)◆Reconstruction of obsolete buildings andpromotion of corporate relocation into the city

・Establishment of “Subsidy System for Promoting
Building Reconstruction in Sendai City Center”
・Relaxation of floor-area ratio with a view toward“developing highly functional office”
・Enhancement of business attraction framework andsubsidy systems, etc.

06

(Scheduled to begin operation in FY2025)◆Economic ripple effects (estimated by Tohoku
Economic Federation)

Image of Urban Restructuring Project (Sendai Stationarea) Provided by: Sendai City・JPY 1,901.7 billion over the first 10 years of operation
・Local ripple effects within Miyagi Prefecture is JPY
277.7 billion
・The project is believed to contribute particularly in the areas
such as fuel cell, gene drugs and nanocarbon materials

Next-generation synchrotron radiation facility (image)
Provided by: Photon Science Innovation CenterTHE 77 BANK INTEGRATED REPORT| 07

Value Creation Processes

Leading company creating a path to the future

1 satisfaction strategy
Top customer

2

Doubleproductivity
strategy3

Regional growthstrategy4

Corporate culture
reform strategy

2030

Becoming a leading company
creating a path to the future

MissionWith the market expected to shrink as a result of the aging society and low birthrate,falling population, and other factors, the 77 Bank Group will work to ensure the prosperityof local communities by inspiring and accumulating trust with the optimal solutions. At thesame time, we will also aim to become a leading company tapping new areas ofopportunity in Miyagi and Tohoku together with our stakeholders.

VisionCreating value with solutions to social issues
The 77 Bank Group's source of value creation

Market contraction

Financial capital

Aging society withlow birthrate◆Capital adequacy ratio (domestic standards, consolidated): 10.39%◆Ratings: JCR: AA, R&I: A, Moody’s: A3 (as of July 31, 2021)

Manufactured capital◆Number of branches: 143 (128 in Miyagi, as well as Sapporo, Morioka, Kitakami, Akita,
Yamagata, Fukushima, Koriyama, Soma, Haramachi, Taira,Onahama, Nihonbashi, Tokyo, Nagoya, and Osaka)

Financial◆Corporate sales offices: 2 (Aomori and Hachinohe)

Intellectual capital

Nonfinancial◆Group companies: 6 companies◆MEJAR system(Shared with Bank of Yokohama, Hokuriku Bank, Hokkaido Bank, and Higashi-Nippon Bank)

Local communities●Create abundant local communities◆Know-how on business reform and corporate rehabilitation support
through the recovery from the Great East Japan Earthquake

Employees

Human capital
Digital transformation

Ongoing financial easing

More regulatory easing●Offer workstyles based ondiverse values◆Number of employees (consolidated): 2,812◆Number of employees with qualifications: 141 1st grade Certified Financial
Planner, CFP, 32 Small and Medium enterprise Management Consultants,
20 Movables Valuation Advisors, 21 Agricultural Management Advisors, 2
In-house attorneys, 1 In-house certified public accountant

Shareholders

Social capital◆Deposit share in Miyagi Prefecture: 57.3%

Ranked No. 1 in Japan for 24 consecutive years in terms of the shareof deposits in the prefecture (FY3/1997–FY3/2020) (Source: KINYU JOURNAL)

Financia lSectionLifestyle changes

Customers●Improve customer happinessthrough problem solving andenhance corporate value◆Overseas representative offices: 2 (Shanghai and Singapore)(77 Lease, 77 Shin-Yo Hosyo, 77 Card, 77 Securities, 77 Research and Consulting, 77 Capital)

Social diversification

Consulting

Creation value

Company
Information

Lack of corporate successors

Provide the optimal solutions

Strategy◆Deposits and certificates of deposits: ¥8.5 trillion (ninth among regional banks)

Falling population

Concentration in Tokyo

Va l u e

Social issues we aim to solve through our businesses

Expand our fields of activity●Offer growth and returns
together with the 77 Bank Group◆Loans and bills discounted share in Miyagi Prefecture: 43.1%

Response to disasters, etc.

◆Number of comprehensive cooperation agreements signed with
regional public bodies for regional revitalization: 38(Miyagi Prefecture and 35 municipalities in the prefecture, as well as 2 municipalities in Fukushima Prefecture)

Disasters, COVID-19◆Certified “Platinum Kurumin,” “Gold Certified Company,” “Eruboshi (Grade 3),”and “Health and Productivity Management Organization 2021 (White 500)”◆Chosen as a constituent of MSCI Japan Empowering Women Index

Climate change◆Management Philosophy that inherits the spirit of Eiichi Shibusawa’s“harmony of morality and the economy”* As of March 31, 2021, for those without a date

Elevate thespirit ofvoluntaryservice

Improvecreditworthiness

Nurture thespirit ofharmony

Bank creed

Enhance corporate value04

THE 77 BANK INTEGRATED REPORT| 05

Message from the President

MissionWe will look beyond any difficulties toward
hope and set forth a new future for the region,

Visionas we embark on continuous initiatives.
President

Va l u e

Hidefumi Kobayashi

Strategy
Company
Information
Financial
SectionTen years since the Great East Japan Earthquake
The Great East Japan Earthquake occurred at 14:46 on Friday,
March 11, 2011, with a magnitude of 9.0, the highest everrecorded in Japan. As a tsunami struck that far exceeded all
forecasts, Japan suffered unprecedented damage centered oncoastal areas such as Miyagi, Iwate, and Fukushima, and over
18,400 people lost their lives. It is estimated that the total
damage to homes, factories, and other buildings, as well as
roads and other infrastructure, amounted to approximately ¥17
trillion, of which the amount of damage in Miyagi Prefecture
exceeded ¥9 trillion.
Many of the Bank’s branches were affected in the disaster,
and we suffered both physical damage and harm to ourpersonnel. Many of our employees, part-time employees, theirfamilies, and others were affected by the disaster, and it was avery difficult, painful time for us.
Despite those circumstances, however, as a regional
financial institution in the affected area, we came together as anorganization to keep providing financial services and restore ourbranch network, in order to contribute to recovery in our local
area of Miyagi, as well as the Tohoku region as a whole. We also
focused all our efforts on supporting applications for subsidies
and business rehabilitation support as a means of supporting

08

recovery. As a result, as of the end of March 2021, we hadprovided 27,209 loans related to the Great East Japan
Earthquake, worth a total amount of ¥763.2 billion.
During this period, total public investment in Miyagi
Prefecture amounted to over ¥6.5 trillion, and housing
investment created more than 200,000 homes. Almost all social
capital was recovered, including railroads, roads, bridges, andriver and port facilities, while all roads on the Sanriku
Expressway, a reconstruction road, reopened throughout theprefecture. Additionally, new towns gradually opened as centersof life and human activity, with residential areas, commercial
areas, etc.
Nominal Gross Prefectural Product bottomed at ¥7.7 trillion
immediately after the disaster, but mounted a strong recovery,
driven by economic activity related to recovery from the disasterand the redevelopment of Sendai, as well as the start ofoperations at Toyota Motor East Japan, Inc. and Tokyo ElectronLtd. plants, these two companies having decided to enter theregion prior to the disaster. As such, in FY2016, the prefecture
once again recorded its highest ever Nominal Gross Prefectural
Product, at over ¥9 trillion.
Additionally, recovery work focused not just on the “hard”
aspects, but also extended to initiatives targeting the “soft”
aspects, in anticipation of the role of the next generation,

including establishing a new medical school for the first time in
37 years in Japan in order to develop personnel to support thehealthcare system of the region, the first privatization of anationally managed airport, and the “Sendai Framework for
Disaster Risk Reduction,” which was created at the Third United
Nations World Conference on Disaster Risk Reduction.
There remain differences between regions and industries, but
I believe it is fair to say that we have demonstrated strong
resilience in our efforts toward recovery, and are continuing to
make steady progress from the damage suffered by thisearthquake of never-before-seen scale.

Picturing a new tomorrow for the region
While making steady progress toward recovery following theGreat East Japan Earthquake, we were once again faced with
“unprecedented” circumstances. COVID-19, the first major
pandemic faced by the global economy in the post-war era, has
restricted accumulation and movement, two basic premises of
the global economy, and has caused demand for face-to-faceservices such as tourism and entertainment to evaporate.
Additionally, the pandemic has not only struck a major blow toeconomies; it has also highlighted various weaknesses that had
previously been the subject of concern, such as the risk ofconcentration in major urban areas and delays to digitalization in
the public and private sectors.
I believe that we must take a determined stance and tackle
multiple issues from a long-term perspective, including issues
that we have delayed responding to, such as the falling
population, super-aging society, decline of regional industry, andoutflow of young people, as well as the acceleration ofdigitalization, etc., and issues related to the economy after
recovery from the disaster, the nature of society, and new waysof life after COVID-19 recedes.
As we look to solve these issues, we will work to ensure we
continue to fulfill our mission as a regional financial institution,
under our management philosophy of “desiring communal
prosperity and serving local communities.” In order to achieve
this aim, we have formulated the ‘“Vision 2030” ~Leading
Company Creating a Path to the Future~,” our new management
plan covering a period of 10 years, from FY2022 to FY2031.
In “Vision 2030,” we aim to offer our customers the optimal
solutions by enhancing our financial services and expanding thescope of our businesses in the non-financial sector, while at thesame time deepening our capabilities as a “leading company,”
based on being a corporate group leading the region by creating
networks centered on the Miyagi and Sendai areas andexpanding the scope of our operations.

THE 77 BANK INTEGRATED REPORT| 09

― Results and issues of the previous medium-term management plan ―― Objectives and background to the formulation of Vision 2030 ―Mission3,027.2

3,000.0

2,868.50.52,600.0

FY2018FY2019FY2020

FY2021

Status of achievement of key earnings targets(Billions of yen, %)

Item

10

Midterm target

1.3

Mission

1.5

1.0

2,796.02,800.0

FY2021 results

FY2021 MTP targets

Difference

Net income[consolidated]

16.5

19.0

(2.5)

Interest on loans andbills discounted

41.6

45.0

(3.4)

Fees and commissions

9.8

11.5

(1.7)

ROE [consolidated]

3.4

3.7

(0.3)

0

VisionVision 2030
(10-year period)

0.6

FY2018FY2019FY2020FY2018FY2019FY2021(Billions of yen)

FY2020

FY2021(0.6)
Negative for eight
consecutive years(3.6)

Vision
Value

(2.5)

(5.0)

Bank Creed(Ultimate goal)

Income from customer services
0

Mission(Billions of yen)

2.0

2.0
1.5

Midterm target

Vision 2030 Positioning

Financial
Section3,151.9

Company
Information

3,200.0

Fees and commissions from corporate clients

So, we decided to think about our path to achieving futuretargets in terms of a “backcasting approach,” starting from what
we want to achieve and what we want to become in 10 years’
time, under given assumptions and restrictions.
“SDGs” are an example of a “backcasting approach” that iseasy to understand. The “SDGs” attempt to change companies’
actions based on targets, with 17 Goals and 169 Targets having
been established in order to make the economy, society, and theenvironment sustainable, based on the approach that “there canbe no sustainable future without change.”“Vision 2030” sets forth our ideal image for the future of the 77
Bank Group and provides guiding principles and ultimate targets
for all officers and employees of the Group to come together andwork toward, as we look to achieve the management philosophyof the Bank. While fulfilling our mission as a regional financial
institution and meeting the expectations of stakeholders, I intend
for us not to accept a state of contracting equilibrium, but insteadto aim for further advancement and growth, and to fulfill an evengreater mission from a long-term 10-year perspective.

Strategy

Balance of corporate loans (term-end)(Billions of yen)

Given the risk of falling into a contracting equilibrium if we baseour strategy on maintaining the status quo, when we started
formulating our new medium-term management plan, “Vision
2030,” we asked ourselves, “what does the 77 Bank Group want
to become in future?” and “what should we do?” to meetstakeholders’ expectations at the same time as fulfilling our
mission, while never forgetting issues such as the shrinking of
our market as a result of the aging society and low birthrate, as
well as the falling population faced by the region.
“Vision 2030” is the Bank’s first management plan to cover along-term period of “10 years.” First, I would like to explain the
background for this decision.
Previously, the Bank has formulated medium-term management
plans based on a period of “three years.” However, considering theuncertain outlook and rapid changes affecting the current
management environment, a three-year plan would only meansetting “targets and measures that we can probably achieve” byprojecting out along our current trajectory. As such, it would not
result in any significant reforms, and would consist only of
conservatively estimated numerical targets. I felt this would prevent
our growth as a company, result in unsatisfactory businessdevelopment, and mean that we failed to adapt to major changes insociety at large.

Va l u e

I will now review the results and issues of the previous mediumterm management plan.
With regard to our foremost key strategy of the previous
medium-term management plan, “strengthen consulting-based
sales capabilities,” we enhanced awareness of this strategy within
the Bank and focused our efforts on supporting the resolution ofissues faced by customers based on business evaluations as wellas comprehensive transactions with customers. As a result, weachieved our targets both for the balance of corporate loans andfees and commissions from corporate clients.
The various different proposals that we made were often
praised by customers, and we also strengthened cooperation
within the 77 Bank Group, including the establishment of 77
Research and Consulting Co., Ltd. in July 2018. Based on thesefactors, I feel that we made significant progress as a group.
Additionally, in terms of our “initiatives to promote regional
revitalization,” we focused our efforts on supporting recovery
from the Great East Japan Earthquake and typhoon damage,while also making significant progress in terms of cooperation
between the public and private sectors, including witnessing
increased activity related to the “Miyagi wide-area PPP platform,”
started by the conclusion of “Comprehensive Cooperation
Agreements for Regional Revitalization” with all municipalities in
Miyagi Prefecture in March of this year.
In terms of “initiatives to enhance productivity,” an issue facedby the Bank, we launched measures to fundamentally reduce
administrative work at branch offices, including establishing the“Paperwork-free Promotion Committee” in March 2020, andestablishing a support office to concentrate back-officeadministrative work from branch offices at headquarters. As aresult of these measures, we successfully saved labor equivalent
to 107 employees per year. In terms of our initiatives targeting
digitalization, we have moved to paperless meeting materials via
the utilization of tablets, and online meetings have also become
established within the Group.
In addition to the above, I believe the Group has made progress
as a whole toward responding to changes in the times andreforming corporate culture, including utilizing Shichishika-kun andother characters, relaxing rules on employee clothing during
working hours, formulating the “77 Bank Group SDG Declaration,”and strengthening measures to prevent money laundering and thefinancing of terrorism, as well as stimulating debate by increasing
the number of Outside Directors, from a governance perspective.
Although we achieved results such as those described, we
also failed to achieve most of our earnings targets, partly owing
to ongoing negative interest rate policies and changes in theoperating environment as a result of COVID-19. As such, wewere regrettably unable to overcome the issue of our “high costand low profit structure.”
We are still only partway to achieving our goals in relation to
consulting in order to differentiate the 77 Bank Group fromcompetitors, including other financial institutions and companies
in other industries, digitalization as a means of fundamental
transformation, and paperwork-free initiatives, etc.

VisionWe accommodated a wide range of customer
needs, but were unable to overcome our “highcost and low profit structure”(3.3)

Strategy

Leading company creating a path to the future

Value

77 Bank Group SDG Declaration

Strategy

Short-term Management Plan

(Values shared across the Group)(Tactics)~More than ever, and forever, with our region~(4.9)

THE 77 BANK INTEGRATED REPORT| 11

The 77 Bank Group’s “Target Form”
MissionTapping new areas of opportunity in Miyagi and
TohokuCompany
Information
Financial
SectionCapitalizing on the digital transformation

Strategy

In “Vision 2030,” we have set forth three directions and four key
factors for the “77 Bank Group” to pursue in order to achieve ourtarget form for the Group.
The first direction is “stimulate demand among customers
and local communities, and expand the scope of our operations.”
This refers to efforts to further expand our business sectors whilesufficiently utilizing our “customer base,” one of the strengths of
the 77 Bank Group.
The second direction is “dramatically improve productivity.”This refers to efforts to make fundamental improvements to our“high cost and low profit structure,” a major issue for the Bank,
enabling us to prevail over other banks and companies.

Va l u e

Three directions and four key factors~Enhancing our strengths, improving ourweaknesses, and revitalizing our organization~

The first such key factor is the “digital transformation.”As the digital transformation makes dramatic leaps forward in
future, there can be no doubt that the content of services,
systems for working, and peoples’ workstyles will all change.
Amid these conditions, while placing the utmost priority on“safety and peace of mind,” we will also capitalize on theadvancing digital transformation, which accelerated as a result of
COVID-19, and work with companies in other industries to
respond to customers’ increasingly diversified needs, in addition
to promoting fundamental reforms across our banking operations
as a whole.
Specifically, in anticipation of dramatic advances in digitaltechnologies over the next 10 years, we will focus on “creating
new businesses” and promoting digital reforms, in line with“digital reforms in the banking business” as a whole.
In terms of “digital reforms in the banking business,” ourinitiatives will be based around five pillars of reform, namely,“non-face-to-face channel reform” to change our contact points
with customers, “bank branch reform” to change face-to-facesales, “paperwork-free reform” to reduce physical transactions
and paperwork, “data utilization reform” to utilize data, and“digital reforms for employees” to maximize the capabilities of ourworkforce. At the same time, we intend to invest ¥5.0 billion toensure we achieve the “best mix of face-to-face and non-face-toface services.”
Additionally, with regard to “creating new businesses,” we will
establish new businesses to revitalize the regional economy,
including offering new banking services and a new regional
ecosystem centered on the “digital native” generation.

VisionIn “Vision 2030,” we set forth “our target form” for the 77 Bank
Group to aim for over the long-term as, “a leading company thatworks to achieve prosperity in the local community, by continuing
to offer the optimal solutions, which inspire and build trust, and at
the same time working with our stakeholders to tap new areas ofopportunity in Miyagi and Tohoku.”
This is our declaration as the 77 Bank Group that: “we want
to serve a greater purpose for our customers, and increase ourcustomers,” “we want people to feel confident when using the 77
Bank Group,” and “we want to act as a corporate group that
leads business and the economy and thus enriches the region,even as uncertainty lingers regarding the future of the region.”
While further enhancing our “finance and consulting”
services, as we have been for several years, we also intend to
expand the scope of our businesses in the non-financial sector
and offer our customers the optimal solutions. Additionally, evenas the regional market is expected to shrink, we intend to build
networks that combine the potential of the Miyagi and Sendai
area with influential customers in the Tohoku region as a wholeand elsewhere, and thereby tap new areas of opportunity. In
doing so, while expanding the scope of our businesses, we willtake steps to enhance our customer base, starting from “digitaltechnologies and people” rather than bank branches. At thesame time, we intend to deepen our capabilities as a “leading
company,” namely, moving from being a “leading bank” to beinga “corporate group leading groups and local communities withthe same aspirations.”

The third direction is “establish a corporate culture of taking
on new challenges.” This refers to thinking about things from thecustomer’s perspective, even more than we have done
previously, and aiming to become an lively organization filled with
an appetite for new challenges, an appetite for growth, and an
ambitious spirit.
Now, I would like to introduce some specific examples of ourinitiatives to establish a corporate culture of taking on new
challenges.
In order to make “Vision 2030” a reality, it is key that every
employee thinks for themselves and acts proactively. In order tocommunicate this concept from the senior management of the
Bank to the employees, we are holding briefings aimed at therealization of “Vision 2030” where the President, Senior
Managing Director, and Managing Directors visit all bankbranches, as well as lively and open exchanges of views,
including Q&A sessions. In these briefings, we reinforce theconcept that “Vision 2030” lays out the future direction to betaken by the 77 Bank Group and the essence of our long-term
strategy, while also restating the importance of every employee
thinking for themselves and acting proactively, not passively.
Additionally, we also hold an “essay contest” in order to increase
employees’ sense of ownership and promote a shift toward
independent and active behavior, through their thinking about
and expressing “the actions they should take at this time.” Assuch, I feel that this is a good opportunity to reform the mindsetof our employees, as we look to “establish a corporate culture oftaking on new challenges.”

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

“Vision 2030” outline ~77 Bank Group direction“Our target form” to aim forover the long term

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

Create the highest level of financial functions andconsulting, while also expanding the scope of ourbusinesses in the non-financial sector

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

Financial

Consulting

Miyagi and Sendai area

Non-financial

Whole Tohoku region, etc.

Optimal solutions

Expand scope of operations

Stimulate demand among customers
and local communities
Expand the scope of operations

Dramatic improvements in
productivity

Establish an ambitious
corporate culture

Enhance!

Improve!

Establish!

77 Bank Group strengths

77 Bank Group weaknesses

Revitalization points

Customer baseConsulting system
Trust from customers andlocal community

Profitability (low-profitability structure)
Cost consciousness(high-cost structure)
Competitiveness with other companies

Appetite for new challenges
Speed and flexibility
Cross-organization(vertical, horizontal, diagonal)

Key factors
Deepen capabilities as a leading company (a collectionof people with the same aspiration, and a group ofcompanies that act as leaders for local communities)

12

Leading bank

Vision 2030

Leading company

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

Digitaltransformation

New businesses
and sectors

Human
resources

Financialfoundations

THE 77 BANK INTEGRATED REPORT| 13

Mission

The fourth key factor is “strengthen financial foundations.”
As a regional financial institution, we must generate
sustainable earnings and build strong financial foundations inorder to continue to support the future of our customers and local
communities, while also growing as a company and meeting the
expectations of our shareholders.
We will target a “(consolidated) capital adequacy ratio of atover 10%,” as a level that must be firmly maintained for “soundness” to remain a strength of the 77 Bank Group; “(consolidated)
net income of ¥28.0 billion,” as the level necessary to bothmaintain a sound financial position and take adequate risk; and a“core OHR of 50-60%,” as a commitment to bolstering earnings
through improved productivity.

14

Level that should be maintained based on “soundness” as astrength of the 77 Bank GroupNet income (consolidated)

JPY 28.0 bn

Necessary level for maintaining a sound financial position andtaking on riskCore OHR

50-60%

Commitment to strengthening profits through improved productivity

Four basic strategies
Next, I would like to explain our four basic strategies. These
represent a concrete expression of the three directions mentioned
above as strategies.

~Top customer satisfaction strategy~
The first basic strategy is our “top customer satisfaction strategy.”
By offering an amazing customer experience and inspirationthat competitors cannot match, we aim to be the top bank forcustomer satisfaction. We will utilize our strengths, including ouroverseas network centered on Asia and our information networkin Miyagi and the Tohoku region, to offer services that only we
can provide as a regional financial institution, based on the
combination of face-to-face consulting services and digitaltechnologies.
We have set four strategic targets: “increase the proportion ofcompanies in Miyagi Prefecture for whom we are their main bankby 10%,” “increase the number of corporate lending clientsoutside Miyagi Prefecture by 1.5 times,” “increase the proportionof households in Miyagi Prefecture holding assets to 21% orhigher,” and “ensure that 20% of the population of Miyagi
Prefecture use loans from the 77 Bank.”
Additionally, we will also utilize the “strengths” developed by
the 77 Bank Group, in combination with the digital transformation~Corporate culture reform strategy~
The fourth basic strategy is our “corporate culture reform
strategy.”
We will endeavor to promote diversity, and create a virtuous
circle where all officers and employees take on new challenges,
leading to confidence and cheerfulness.
We will move from a “defensive” stance to an “offensive”
stance, through measures such as accommodating a diverse
range of values and fundamentally overhauling personnel andorganizational systems to increase motivation, and creating anenvironment that permits trial and error and values the act oftaking on new challenges. Additionally, we will also endeavor tostrengthen compliance and risk management, and build internal
control systems that provide firm support to reforms.
We have set forth three strategic targets: “to implement various
initiatives to ‘foster an ambitious spirit,’” “to increase the proportionof women in management positions to 30% or more,” and to“increase the number of ‘specialist personnel’ that serve a purpose
for customers and local communities.”

Financial
Section

The third key factor is to “develop human resources.”
Even as the times change and digitalization advances at anaccelerated pace, there will be no change to the fact that people
form the core of any company.
There are many tasks that must be performed by people,
including customer sales, planning, and marketing. As such, thequality and level of our employees differentiates us from ourcompetitors.
The 77 Bank Group aims to develop human resources with thefollowing qualities: “unending ambition,” “filled with ability to takeon new challenges,” “ability to act independently,” “rich humanpotential,” and a “strong sense of ethics.” Going forward, we will
utilize the qualities of each individual to develop “human resourcesthat serve a purpose for customers and local communities” and“human resources that contribute to corporate reform,” while alsoutilizing diversity to transform into a group of professionals thatacts with life and vigor, based on the idea that human resources
are the most important asset of the 77 Bank Group.
Education will be essential for us to achieve this goal. As
such, in order to further strengthen our specialist expertise, wewill actively enhance our opportunities for external training, etc.,
to enable employees to increase their knowledge andexperience, including training seminars to contribute tostrengthen consulting capabilities in both corporate and retail
operations, as well as the dispatching of employees to otherbanks and private companies for training purposes.
Furthermore, the “77 President’s School” is an initiative that weestablished in the previous fiscal year for this purpose. The school
is aimed at fostering an understanding of management among
midlevel employees in their thirties by deepening their understanding of changes in the environment surrounding the Bank, themanagement issues facing the Bank, and other factors.

Over 10%The second basic strategy is our “double productivity strategy.”
In this strategy, we will double productivity by releasing bankbranches from the burden of administrative work andstrengthening our consulting systems, and enhancing theabilities of each individual. Additionally, the reduction ofadministrative work at bank branches through paperwork cuts,
the concentration of administrative work, etc., together with ourefforts to enhance and promote the usage of non-face-to-facetransactions, will enable us to spend more time on consultingwith customers.
We have set three strategic targets: “double labor productivity
in core operations,” “cut amount of administrative work at bankbranches by 50%,” and “triple rate to usage of non-face-to-facechannels.” Through these initiatives, we will rebalance ourmanagement resources in a way tailored to the needs of ourcustomers, including enhancing our non-face-to-face channels
and optimizing our network of contact points, educating andreallocating our workforce to strengthen our consulting capabilities, and reducing the size of our workforce through natural
attrition.

The third basic strategy is our “regional growth strategy.”
In this strategy, we will work to achieve sustainable growth
together with the local community by making the region attractive
and supporting the growth of inspirational local companies. We
aim to achieve sustainable growth and ensure abundant local
communities by promoting public-private cooperation between
regional public bodies, external institutions, private companies,
and universities, while also promoting recovery and regional
revitalization.
We have set four strategic targets: “to support increased
economic growth rate in Miyagi Prefecture,” to triple the numberof growth support cases for business founders,” “to aim for 100%
participation in regional development projects in Miyagi
Prefecture,” and “to cut 77 Bank Group CO2 emissions by 46%
compared with FY2014 and support cuts to greenhouse gas
emissions in Miyagi Prefecture,” as a means of responding toissues related to climate change.

Company
Information

Develop human resources

Capital adequacy ratio (consolidated)~Double productivity strategy~~Regional growth strategy~

Strategy

Our second key factor is to “develop new businesses and sectors.”
Although we will maintain banking operations at our core, wewill utilize our customer base, one of the strengths of the 77 Bank
Group, to enter new business domains with the aim of solving theissues faced by our customers and local communities.
While closely following changes in customer needs andmoves to ease regulations surrounding business operations andbanking, we have also set forth a KPI of utilizing our Group
companies, alliances, etc., to establish 10 projects in new
businesses or sectors by FY2024 with the potential to become
viable businesses in future, as part of our efforts to cover adiverse range of business domains.
We will also hold a business planning contest in order tofoster creative capabilities unbounded by conventional ideas anda spirit of taking on new challenges among the officers andemployees of the Group as we look to establish these projects.
In order to encourage active participation in this contest, thewinners will be appointed members of a project team aimed atturning the ideas into businesses.

and our alliances, to expand the breadth of our solutions andsolve the issues faced by our customers and local communities.
As I mentioned above, we have two strategic targets: “toestablish 10 projects in new businesses or sectors by FY2024,”
and “to double the net income of Group companies by entering
new businesses and sectors and expanding existing businesses.”

Va l u eStrengthen financial foundations

VisionDevelop new businesses and sectors

Four basic strategies

The 77 Bank
Group direction
Stimulate demand amongcustomers and local communities
Expand the scope of operations
Dramatic improvements in
productivity
Establish an ambitious
corporate cultureMadeconcrete inour strategies

01

Top customer
satisfaction
strategy

Inspire throughconsulting and digitaltechnologies!

02

Doubleproductivity
strategy

Reform channels andrelease from the burdenof administrative work!

03

Regional growthstrategy

Achieve sustainablegrowth in the local
community!

04

Corporate
culture reform
strategy

Virtuous circle ofambition, confidence,and cheerfulness!

THE 77 BANK INTEGRATED REPORT| 15

─ Toward Achieving “Our Target Form” ─Mission

77 Bank Group profit increase concept

FY2021

FY2026

FY2031 (Our target form)

Loans and bills
discounted

JPY 5.7 tn

JPY16.5 bn

JPY21.0 bn

JPY28.0 bn

Deposits + NCD

JPY 8.5 tn

Capital adequacy ratio (consolidated)

10.39%

Over 10%

Over 10%

Securities

JPY 3 tn

Core OHR

62.27%

55-60%

50-60%

Group balance ofassets in custody

JPY 1 tn

FY2021

FY2026

FY2031 (Our target form)

Net income (consolidated)

2. KPI

Proportion of companies in Miyagi
Prefecture for whom we are their mainbank [main bank trends surveys*]

–
[56%]

Vs. FY2021 +5%[59%]

Vs. FY2021 +10%
[62%]

Number of corporate lending clients outside
Miyagi Prefecture

–

1.2x

1.5x

14%

17%

Over 21%

Proportion of households in Miyagi
Prefecture holding assets
Proportion of individuals in Miyagi Prefectureusing loans from the 77 Bank

17.0%

20.0%

(FY2020) JPY 1.6 bn

JPY 2.0 bn

JPY 3.0 bn

Labor productivity in core operations(*)(FY2020) JPY 8 mn

JPY 13 mn

JPY 16 mn

Administrative work at bank branches–

Vs. FY2021 (50%)

Vs. FY2021 (50%)

Usage of non-face-to-face channels(Corporate) 11%(Retail) 11%(Corporate) 20%(Retail) 20%(Corporate) 30%(Retail) 30%

CO2 emissions
Proportion of female managers

Profit increase concept

Double productivity strategy
Cut expenses withpaperwork-free policies andincreased efficiency

Reduction in profits fromchanges in businessenvironment

Net income

Interest on yendenominated bonds
and remittances

(5.0)
16.5
Creditexpenses[7.6]

FY2021

16

8.0

(4.5)

Top customer
satisfaction strategy

13.0Interest on loans and bills discounted
Fees and commissions from
corporate clients
Fees and commissions fromassets in custodyGroup companies
New businesses / new sectors

Dramatic increase in net income

Strengthen foundations through regional growth strategies andcorporate culture reform strategies

2,000

3,000

10,000t

9,069t

13.4%

18.0%

30.0%

*TEIKOKU DATABANK, Ltd. research“2014 Nationwide Consumption Trends Survey,” Statistics
Bureau of Japan (proportion of households holding shares or
equity investment trusts)*(Interest on loans and bills discounted + fees and commissions - interest
on deposits, etc. - expenses + personnel expenses + depreciation) /number of employees (part-time employees counted as 0.4)

“Rebalancing of management assets”●Enhance non-face-to-face channels and optimize
branch network in accordance with customers’ needs●Educate, redistribute, and streamline (natural attrition)
workforce in order to strengthen consulting capabilities■Establish 10 projects in new businesses or sectors (by FY2024)■Implement various initiatives to “foster an ambitious spirit”■Support increased rate of economic growth in Miyagi Prefecture■Increase the number of “specialist personnel” that serve a■Aim for 100% participation in regional development projects in Miyagi Prefecture purpose for customers and local communities

Net income(Our target form)

Financial
Section

Other items(Billions of yen)

1,181
(FY2020) 12,327t

Notes
Comprehensive assessment utilizing customer
surveys and various indicators

Company
Information

12.6%

Group companies net income

Cases of growth support for founders

Taxes, etc.

(Reference: Expected portfolio after 10 years)

Strategy

In order to implement fundamental reforms over a medium- tolong-term timeframe, we will set midterm targets to achieve infive years. At the same time, we will also formulate short-term
management plans to clarify the sectors we must focus on

In order to achieve “our target form” for FY2031, it will first be vitalthat we achieve our midterm targets for FY2026. Key points inthis regard will be the strengthening of our profitability throughour top customer satisfaction strategy and management ofprogress toward cost reductions through our double productivity
strategy. We will also bolster our efforts to achieve KPIs related
to the “proportion of companies in Miyagi Prefecture for whom
we are their main bank,” the “number of corporate lending clientsoutside Miyagi Prefecture,” etc., which are linked to financial
targets, by managing progress toward these targets in short-term
management plans.

1. Strengthen financial foundations (key factor)

Va l u e

PDCA cycle based on “our target form”

Midterm targets to achieve “our target form”

Midterm targets to achieve “our target form”
VisionIn terms of the specific figures and our concept of how profit will
increase, we are targeting consolidated net income, which was¥16.5 billion in FY2021, of ¥28.0 billion in FY2031. In this target,
we have factored in a decline in interest on yen-denominatedbonds from Japanese government bonds, etc., and fees andcommissions on remittances, together with increases in profit
from reduced expenses via paperwork-free initiatives, etc., andincreases in interest on loans and bills discounted, fees andcommissions from corporate clients, and other items.
On the other hand, we expect credit-related expenses tocontinue for 10 years at a level of ¥8.0 billion - the level of ourreserves during the COVID-19 pandemic - and this target
therefore also anticipates an increase in bad debts in future andinvestment in digitalization.
Furthermore, our “expected portfolio after 10 years” consistsof ¥5.7 trillion in loans, ¥8.5 trillion in deposits (including
certificates of deposits), ¥3 trillion in securities, and ¥1 trillion inGroup assets in custody.

depending on changes in the management environment and thestatus of progress in our various measures, and ensure that we
make progress each year. In this way, we will steadily progress
toward “our target form.” Additionally, we will commit to thisprogress by disclosing our targets for the relevant fiscal years at
corporate briefings, etc., as well as forecasts for the next fiscal
year.
Through these initiatives, we intend to ensure the flexibility of
specific initiatives while also making progress toward major
targets. In addition, we will also anticipate changes in theenvironment and revise “our 10-year target form” every five
years, as we continuously implement the PDCA cycle.

To Our Stakeholders

28.0
Capitaladequacy
ratio:
Over 10%
Core OHR:
50-60%

Creditexpenses[8.0]

FY2031

Eiichi Shibusawa has recently been the focus of significant
attention, including his image being featured on the new ¥10,000
banknote to be issued in 2024, as well as his story being taken
up in Reach Beyond the Blue Sky, the popular Taiga drama
shown on NHK. In fact, Shibusawa has a strong connection with
The 77 Bank, including providing the Bank with both tangible andintangible support at the time of our founding.
Shibusawa advocated for the “harmony of morality and theeconomy,” in which he cautioned against the monopolization of
profits and promoted the “coexistence of both profits and public
interests” through the return of profits to society. Indeed, thisphilosophy has taken root in the hearts of all the Bank’s officers
and employees, and is reflected in one line of the Bank’s “Creed,”
our management philosophy, which states “the Bank’s progressgoes hand in hand with prosperity in the local community.” It issaid that Shibusawa’s spirit of coexistence should serve as areference for corporate managers, and is also reflected in thephilosophy of the SDGs (Sustainable Development Goals).

Against this background, as part of our objective ofcontributing to the sustainable growth of regional society, we
announced the “77 Bank Group SDG Declaration” in July 2020,
as well as our “Lending Policy” for businesses that pose a risk ofnegative impact to the environment and society.
Additionally, we have positioned our response to climatechange, which poses a significant risk to the sustainability ofsociety, as an important management strategy issue. As such, in
July 2021, we expressed our support for the recommendations of
the “Task Force on Climate-related Financial Disclosures(TCFD)” and have been developing related systems.
The 77 Bank Group aims to ensure the prosperity of local
communities by inspiring and accumulating trust with the optimal
solutions, and becoming a leading company tapping new areasof opportunity in Miyagi and Tohoku. In doing so, we will fulfill the
expectations of our stakeholders, including customers, local
communities, employees, and shareholders, and I therefore
would like to ask for your continued support.

THE 77 BANK INTEGRATED REPORT| 17

VisionVision 2030 (10-year period)

MissionVisionStrategy

Response to the COVID-19 pandemic

Value

77 Bank Group SDG Declaration

Strategy

Short-term Management Plan

(Values shared across the Group)(Tactics)~More than ever, and forever, with our region~~More than ever, and forever, with our region.~
The 77 Bank Group, in keeping with the philosophy of the Bank Creed passed down from ourfounders—“The Bank’s progress goes hand in hand with prosperity in the local community”—aims
to contribute to the future of the region and the realization of a sustainable society by working toward
the achievement of the Sustainable Development Goals (SDGs) on a Group-wide basis.

1. Revitalization of the regional economy

activities of our employees

We are creating an organization where each and every
employee and officer can engage in a diverse range of activities.

2. Responding to global warming and climate

4. Advancing corporate governancechangeThrough our responses to climate change, we will contribute to
the protection of Earth from destruction and contribute to urban
development that is more in harmony with nature.

18

3. Encouraging and supporting the

We aim to contribute to the realization of a sustainable society
through consulting with, and building partnerships with, local
governments and corporate and individual customers.

We will collaborate appropriately with our stakeholders tostrengthen and enhance corporate governance.

Activities of the COVID-19
Emergency Support Team

Financial
Section

77 Bank Group SDG Declaration

In order to respond quickly to management consultations from
customers affected by the spread of COVID-19, in March 2020 weestablished a “COVID-19 Emergency Support Team” consisting of
employees responsible for sales and credit supervision fromheadquarters with expert knowledge, experience, and experience, andhave since been consulted about various different topics.
Going forward, the Bank will continue to provide finely tuned
support aimed at solving the issues faced by regional customers
through the smooth provision of funds and consulting services.

Company
Information

Value(Ultimate goal)

Strategy

Bank Creed

For five days, between January 28 and February 3, 2021, we held thesecond “77 Regional Revitalization Business Matching Event.”
The purpose of this event is to promote collaboration between
regional public bodies and private companies as a means of finding
solutions to the challenges faced by regional public bodies. Thisinitiative has attracted significant attention from around Japan,
including receiving an award from the Minister in charge of Regional
Revitalization in FY2020 as a “unique initiative” by a financial
institution, etc. that contributes to regional revitalization.
Looking ahead, the Bank will continue to cooperate with regional
public bodies as we actively promote initiatives aimed at improving
community value.

Va l u e

MissionSecond “77 Regional Revitalization Business Matching Event”

VisionWe will work to achieve a sustainable society, even as we directly face issues that may affect the regional economy,
including social issues such as the falling population and environmental issues, as well as the spread of COVID-19.
As part of our efforts to achieve this goal, we announced the “77 Bank Group SDG Declaration” in July 2020, basedon our support for the purpose of the “SDGs (Sustainable Development Goals,” as they are in line with thephilosophy of our Bank Creed of “desiring communal prosperity and serving local communities,” which has been in
our DNA since our founding. With the SDG Declaration as “values shared across the Group,” the 77 Bank Group iscommitted to moving forward with our region, growing with our region, and creating the future with our region.

The Bank aims to contribute to the realization of a sustainable society through consulting with, and building partnerships
with, regional public bodies and corporate and individual customers.

Mission

77 Bank Group SDG Declaration| 1 | Revitalization of the Regional Economy●Consulting Promotion Division employees were stationed at core branches in
Miyagi Prefecture and supported clients●Credit Supervision Division employees visited each branch for credit supervision●COVID-19 related loan performance

7,510 cases /JPY 368.8 billion●Status of loans with effectively nil interest rate,

5,137 cases /JPY 104.6 billion(including changes in loan conditions)involving no collateral (in Miyagi Prefecture)●Consultations concerning matters other thanloans related to COVID-19, by the COVID-19
Emergency Support Team8,348 cases

Business matching: 1,515 cases, Business succession and M&A: 1,065 cases, Asset management:
787 cases, Real estate: 502 cases, Subsidies: 378 cases, Privately placed corporate bonds: 164cases, Funds: 75 cases, Various lending consultations, etc.: 2,668 cases, Other: 1,194 cases* The data above is as of March 31, 2021

THE 77 BANK INTEGRATED REPORT| 19

| 2 | Responding to Global Warming and Climate Change
MissionVisionTaking into consideration the fact that climate change has become an issue shared by the whole global community, including
unusual global weather phenomena and increasing damage from natural disasters, the Bank announced its support for therecommendations of the TCFD* in July 2021. In order to contribute to the protection of Earth from destruction and contributeto urban development that is more in harmony with nature, the Bank will actively implement initiatives that target issues suchas climate change.
Our responses to four items proposed in the TCFD recommendations are described below.
*TCFD（Task Force on Climate-related Financial Disclosures）
A taskforce established in December 2015 by the Financial Stability Board (FSB) and led by private-sector companies with the aim of promoting the disclosure of climate-related financial information by companies

Lending policies for specific businesses

Response to TCFD recommendations
Details of response

GovernanceIn future, we will consider measures such as the establishment of a committee to actively deliberate a
response to issues related to climate change, etc.

Indicatorsand targets

Based on the “Environmental Policy” that we established in 2012, we are promoting activities aimed at conserving theenvironment, and we have set a target in our new management plant, “Vision 2030,” of reducing CO2 emissions acrossthe 77 Bank Group by 46% by FY2031 compared with FY2014. Furthermore, in FY2020, we succeeded in reducing CO2
emissions by 26.6% compared with FY2014.

20

As a general rule, we will not finance the construction of new coal-fired power plants. In the case of replacement projects,
we will consider lending only to projects that employ eco-friendly high-efficiency power generation technologies(ultra-supercritical pressure technology or technologies providing equivalent power generation performance), with final
decisions to be made carefully based on comprehensive analysis of the project’s impact on the environment, etc.

1. Prevention of human rights violations
We will not finance business operators involved in human trafficking, child labor, or forced labor, regardless of the
purpose for the loan.

2. Elimination of inhumane weapons
We will not finance business operators involved in the development and manufacturing of inhumane weapons, such as
cluster munitions, regardless of the purpose for the loan.

Environmental Policy
In 2012, the Bank established an “Environmental Policy,” and we are promoting activities aimed at conserving the environment, in orderto create a sustainable society.

Basic Principle
The 77 Bank believes that it has a social responsibility to protect the beautiful and abundant natural environment and to pass it down to the next
generation in an improved state as a good corporate citizen. Based on the mindset to “Elevate the Spirit of Voluntary Service,” which is the first itemin the Bank Creed, our basic principle of management, the Bank aims to be a company that coexists with regional society, and for this reason the Bankis actively and continuously engaged in environmental conservation activities aimed at creation of a sustainable society.

Lending to solar sharing project
In January 2021, the 77 Bank Group provided financing to a large-scale
agricultural power business (solar sharing) operated by Nihommatsu
Agricultural Solar Co., Ltd. in Nihommatsu City, Fukushima, which will
generate solar power while also operating an agricultural business.
This solar sharing business is a large-scale power generation businessthat will utilize approximately 68,000 m2 of farmland in Nihommatsu City,
Fukushima. Sunlight is shared between agricultural production and power
generation, and the business has attracted attention as a model for the
next-generation utilization of farmland.
The Bank will continue to contribute to achieving the SDGs by supporting
the introduction of power generated from renewable energy and othermeans.

2. Transition to a low-carbon society

Financial
SectionWe are aware that physical and transitional risk associated with climate change may have a major financial impact on
the 77 Bank Group in future. As such, in future, we will take steps to build risk management systems related to climatechange, within the context of an integrated risk management framework.

We will not support projects that may have a significant negative impact on the environment, such as illegal
deforestation or the development of palm oil plantations that damage biodiversity.

Company
Information

Risk
management

Societal issues■Risks and scenario analyses
We are aware of both physical and transitional risks related to climate change, and will consider such matters as
methods of scenario analysis related to climate change in future.
●In terms of physical risks, we envision credit risk caused by climate change affecting the business activities andchanging the businesses circumstances of the Bank’s clients, etc., as well as operational risks associated withdamage to bank branches, etc.
●In terms of transitional risks, we envision risks such as increased credit risk related to clients receiving financing thatare affected by the transition to a low-carbon society, such as those that must respond to stronger climate-related
regulation, etc.

1. Environmental protection
Strategy

Strategy■Opportunities
We understand that there are business opportunities in businesses and innovation that contribute to easing or adapting toclimate change, such as renewable energy, and that are necessary for the transition to the “decarbonized society” targetedby the Paris Agreement and the SDGs. Based on this understanding, we are supporting the transition to a low-carbon society
from a financial perspective through project financing related to relevant projects, arranging financing, and other means.
●Renewable energy-related funding: 354 cases / ¥162.7 billion (as of March 31, 2021)

Lending policies for specific businesses
Environmental issues

Based on the understanding that responding to sustainability issues, including climate change, is a key management
issue, we have positioned the “77 Bank Group SDG Declaration” as values shared across the Group within our new
management plan “Vision 2030.” In addition to the “77 Bank Group SDG Declaration,” which focuses on “responding to
global warming and climate change” as a priority issue, we will also actively support businesses, etc. that contribute tosolving environmental and social issues, determine “Lending Policies for Specific Businesses” based around notfinancing businesses that pose a risk of negative impact to the environment and society, and actively engage ininitiatives related to financing for renewable energy, etc.

In order to contribute to achieving a sustainable society, the Bank will actively support businesses, etc. that work to solve
environmental and social issues, and has also set forth the following Lending Policy related to businesses that pose a risk ofnegative impact to the environment and society.

Va l u e

Item

Action Guidelines
1. We will comply with laws and regulations, agreements, and other matters related to the environment to which the Bank has agreed.
2. We will promote energy conservation, resource conservation and recycling activities, and work to reduce our environmental burden.
3. We will support customers involved in environmental conservation through the provision of environmentally-friendly financial products and services.
4. We will conduct awareness raising activities to deepen the awareness of each and every officer and employee regarding the environment andpromote environmental conservation activities in regional society.

CO2 emissions from the Bank’s facilities(t-CO2)FY2014FY2015FY2016FY2017FY2018FY2019FY202016,795

15,903

15,341

13,823

13,28912,476

12,327

Concept image of completed facility (actual facility will be approximately 40 times larger)

THE 77 BANK INTEGRATED REPORT| 21

Mission| 3 | Encouraging and Supporting
the Activities of Our Employees
The Bank is committed to creating a highly productive organization where each and every officer and employee canparticipate in a diverse range of activities in a healthy state of mind and body, and with a sense of “job accomplishment”
and “fulfillment” toward their work.

VisionExternal evaluation of our efforts

Va l u e

Certified as “Health and productivity
Management Organization 2021
(White 500)”

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

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

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

Chosen as a constituent of MSCI Japan Empowering
Women Index, which recognizes companies withoutstanding efforts in promoting the participation andadvancement of women in the workplace*(as of June 2021)

Selected as company to receive “Commendation for a Model
Business Committed to Creating Attractive Workplace” from
Miyagi Prefecture and Miyagi Labour Bureau

Won top award in Miyagi Prefecture FY2021 awards
for “Companies Supporting Active Participation by
Men and Women and Cheerful Child-raising”

Promote health and productivity management ~A healthy body is capital~

Establish an environment where diverse human resources can demonstrate their full potential

1. Formulation of the Health and Productivity
Management Declaration

1. Strengthening initiatives to promote the active
participation of women

3. Improving the work environment
4. Raising employee awareness of healthmanagement~Rewarding working environments~

Certified as “Health and productivity Management
Organization 2021 (White 500)”
The Bank is implementing initiatives aimed at conserving and promoting the health of
employees, such as making all Bank sites completely non-smoking. On March 4,2021, the Bank was certified as a “Health and Productivity Management Organization
2021 (White 500)” for the second consecutive year, under the “Health andProductivity Management Organization Certification System” implemented by the
Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi.

2. Utilizing seniors, part-timers, etc.

3. Revision of personnel evaluation systems
4. Introduction of Business Casual Day

Company
Information

2. Strengthening health management measures

Strategy*Notes on MSCI indexes and logos, etc. THE INCLUSION OF The 77 Bank, Ltd., IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOTCONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF The 77 Bank, Ltd., BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Formulation of action plan

1. Fostering an organizational culture of self-education●Period of plan: April 1, 2021 to March 31, 2026 (five years)

10

(%)
20

18.0

13.4

Financial
Section

Proportion of female managers

Develop promising human capital ~People make companies~

From the perspective of creating a working environment that enables
women to heighten their awareness of advancing in their career andtackle their work with a positive attitude, while also maximizing theabilities of each individual and enabling them to play an active role atwork, the Bank formulated the “Action Plan for General Businesses(Third),” based on the “Act on Promotion of Women’s Participation andAdvancement in the Workplace.”

8.5●Target: (1) Increase the percentage of women in management
positions to 18% or more

2. Enhancement of consulting capabilities through human resources
development programs, etc.

(2) Reduce the average number of hours worked on days off
to less than 10 hours per person per month

3. Initiatives aimed at career development support(3) Maintain an annual rate of taking paid time off of 70% or
more

4. Initiatives aimed at improving abundant personal capabilities

0Mar-11

Mar-21

Mar-26(target)Training of specialist personnel through external secondments
The 77 Bank Group utilizes the qualities of each individual to develop “human resources that serve a purpose for customers and local
communities” and “human resources that contribute to corporate reform,” which will serve as an asset for the Bank into the future.

Realize work-life balance ~From work-work to work-life~

Main organizations accepting secondments

1. Strengthen efforts aimed at
reducing total working hours

Digital technology

Japan Digital Design, Inc., MEJAR Digital Innovation Hub

2 personsInternational businessand markets

Japan External Trade Organization (UK), Bangkok Bank (Thailand), Miyagi Prefecture’s Dalian Office(China), etc.

9 persons

Solutions business field

Mizuho Bank, MUFG Bank, Development Bank of Japan, etc.

11 persons

Regional revitalization
field

Regional public bodies (Miyagi Prefecture and Sendai City) , (General Incorporated Association)Tohoku
Tourism Promotion Organization

3 persons

As of May 31, 2021

22

25 persons

2. Supporting employees tobalance work andchildcare/nursing, etc.

“Diversity Promotion Course” day-off seminar
We held a “Work Work Sukoyaka (Healthy) Club”
seminar online for employees taking time off forchildcare, etc., and a total of 32 employees took part,
including people participating as married couples. On
the day, Sayuri Takeshita, Representative Director of
Fathering Japan TOHOKU, an NPO, spoke aboutbalancing childcare, housework, and work with aview to making a smooth return to the workplace.

THE 77 BANK INTEGRATED REPORT| 23

| 4 | Advancing corporate governance
MissionVisionThe Bank endeavors to strengthen and enhance corporate governance in accordance with the following basic approach,while appropriately cooperating with stakeholders.
・In accordance with the Bank Creed, which is our basic principle of management, we will operate business that give constantconsideration to the public mission of a regional bank — contributing to the development of the regional economy andsociety — through banking operations.
・We will improve the transparency of management and the appropriateness of processes and work together appropriately
with stakeholders including the regional society, clients, and shareholders for the Bank’s sustained growth andimprovements in corporate value over the medium- to long-term.
■ Steps to enhance and strengthen governanceIntroduced
Executive Officer
system2015

2017●Established “Corporate Governance Policy”●Transitioned to a company with an audit & supervisory committee●Established “Corporate Governance Committee”

2018●Revised officer compensation plan (introduced

performance-linked compensation plan)

Audit &
Supervisory
Committee
MemberAudit &
Supervisory
Committee
MemberJun-19Audit &
Supervisory
Committee
MemberFrom
Jun-20

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

Director

OutsideDirectorFemaleDirector

Since the introduction of an Executive Officer system in 2014,
The 77 Bank has taken steps to strengthen and speed up
functions related to the execution of business operations byincreasing the number of Executive Officers and other means. In
order to further strengthen systems related to the execution ofbusiness execution by Executive Officers, The 77 Bank
established an “Operating Officer Committee” in June 2021.

Total number
of Directors

Ratio of Outside Directors

19
persons

26.3%
5/19
persons■ Revitalization of our organization through

37.5%
6/16
persons

In order to strengthen risk management and consider policies
that take changes in the times into consideration, the Bank has
established various cross-organizational committees consistingof officers and persons responsible for our operations.

16
persons

Ratio of female Directors

various committees

6.2%
1/16
persons

Changes in the number of Executive Officers(people)
15
10

9

9

Jun-18Jun-1917
persons17
persons41.1%
7/17
persons

11.7%
2/17
persons

47.0%
8/17
persons

11.7%
2/17
persons

The Bank’s “Corporate Governance Policy” stipulates that the effectiveness of the Board of Directors as a whole is analyzed andevaluated at the end of each fiscal year, and a summary of the results is disclosed.
After deliberation by the Corporate Governance Committee, the Board of Directors conducted an analysis and evaluation of theoverall effectiveness of the Board of Directors for FY2021 at its annual meeting on May 14, 2021.
In this context, we have confirmed that the effectiveness of the Board of Directors as a whole has been ensured.
On the other hand, with the aim of further improving the effectiveness of the Board of Directors, the following matters have been
confirmed and shared, and we intend to make improvements in the future.
・To endeavor to strengthen supervisory functions in anticipation of the advancement of the digital transformation, etc.
・To review the management of the Board of Directors to further invigorate discussions.

■ Enhancement of IR and SR activities

The Bank is actively involved in IR and SR activities including
the holding of corporate briefings for institutional investors andindividual investors (IR), and engaging in dialogue to build
relationships of trust with shareholders (SR), so that stakeholders can understand the management conditions of the Bank.

12

12

Jun-20Jun-21

50

Jun-17●Compliance Committee●Internal Control Committee●Operating Officers

Committee●ALM / Earnings

Management Committee■ Evaluating the effectiveness of the board of directors

24

Creation of “Operating
Officers Committee”●Earthquake Reconstruction and

Financial Facilitation Promotion
Committee●Digital Strategy Investigation
Committee●Paperwork-free Promotion
Committee●Senior Service Support Investigation
Committee

Financial
SectionJun-18

Increased number of
Outside Directors

Company
Information

Jun-172021■ Creation of operating officers committee

The Bank transitioned in June 2017 from a company with the Board of Corporate Auditors to a company
with an Audit & Supervisory Committee to improve corporate value through further enhancement ofcorporate governance, which was followed by initiatives for developing further effective corporate
governance structure through appointing Outside Directors and female Directors.
Director●Elected female officer

2020

Increased numberof Outside Directors(female)Strategy■ Improvements in governance●Revised Executive Officer system

2019

Va l u e

2014

Recent holding of corporate briefings (year and month held / number of participants)
Corporate briefings for
institutional investors(Conference calls)

12 in 2020: 92 participants
6 in 2021: 80 participants

Corporate briefings forindividual investors(Online briefings)

1 in 2021: 848 participants
7 in 2021: 907 participants■ Communication of message to employees

In order to deepen employees’ understanding of changes in theenvironment surrounding the Bank, the management issues
facing the Bank, and other issues, the Bank has been holding the“77 President’s School,” led by the President of the Bank.
Additionally, in order to promote an understanding of “Vision2030” and communicate the concept that it is key that every
employee thinks for themselves and acts proactively as amessage from senior management, we are also holding “Vision
2030 Briefings” at headquarters and bank branches, withspeakers including the President, Senior Managing Director, andManaging Directors. At these briefings, we ensure there is a lively
exchange of opinions, including Q&A sessions, as part of our aim
to “establish a corporate culture of taking on new challenges.”

THE 77 BANK INTEGRATED REPORT| 25

Joined in 2012
Direct Channel Promotion Division
Direct Channel Promotion Section

Joined in 2016
Digital Strategy Division
Digital Strategy Section

Shota Sato

Tomoka Yamauchi

Joined in 2013
Treasury Division
Securities Section

Joined in 2015
Regional Development Promotion Division
Regional Development Promotion Section

Motoki Hosaka

Yuki Kumagai
Joined in 2016
Personnel Division
Diversity Promotion Office

Joined in 2010
Business Promotion Division
Wealth Management Office

Mao Umetsu

Azusa Uchikata

SpecialFeatureAsking the Next Generation about Their“Target Form for the Future”
Toward achieving “Vision 2030” and the future beyond

What are your views on “Vision 2030” in termsof the operations you oversee and your own
growth?
Uchikata: In addition to asset management, we take many
consultations from individual customers on matters related toadministering assets and asset succession, such as civil
trusts and testamentary trust services. I feel that listening to
the issues and thoughts not just of our customers, but also of
every member of their families and watching over the transfer
of assets between generations is an important role that wemust fulfil as a financial institution. With regard to “support
life-planning for individuals” in “Vision 2030,” I think it isimportant that we offer “total support for all generations,”
including customers’ children and grandchildren. As such, I
would like to acquire a broad range of knowledge in areas
such as tax and legal matters related to personal succession,
income, etc., and financial gerontology, which I can then use
to fulfill customers’ expectations, thereby also contributing to
my own growth.
Gunji: As the Bank faces a difficult external environment, we
will be left behind by the market if we focus on maintaining thestatus quo, and we cannot miss any opportunities to26

contribute to the development of our customers and local
communities. Under the strong message made clear in“Vision 2030,” that the Bank will “take on new challenges andleave behind the style of relying on the status quo,” I will
utilize my own experience of having been seconded to amegabank to actively and boldly take on new challenges thatwill lead to expansion in the scope of our businesses and ourcustomer base in the Tohoku region, where there is still
significant room for growth in structured finance andsyndicated loans, enabling the 77 Bank Group to act as aleader in these domains and demonstrate a strong presence.
In order to do so, I intend to take the initiative in acquiring
specialist knowledge in areas such as financial law and new
funding methods, and actively promote related businessactivities.
Umetsu: In my current department, I feel on a daily basis thatpeople lead a vast variety of different lifestyles, and face
many different issues and restrictions as they work. Under
these conditions, we must create an environment that allows
for a wider range of career paths, and implement reforms
from the dual perspective of the workplace environment andour mindset, to enable each and every employee to enjoy along career, with a sense of purpose. Regarding the target of“increase the proportion of women in management positions
to 30% or more” in “Vision 2030,” I hope we can create acompany where a diverse range of people can actively
participate regardless of gender, disabilities, age, nationality,
or other factor, so much so that we cease to use the term
“women’s active participation in the workplace,” in a goodway. As such, I intend to focus on promoting diversity andinclusion.
Sato: The “digital transformation” is one of the key factors in“Vision 2030,” and I am conscious of the fact that strengthening our services in non-face-to-face channels for both retail

Joined in 2013
Consulting Promotion Division
Structured Finance Section

Atsutomo Gunji

As we look to achieve “Vision 2030,” which was formulated based on 10-year
timeframe, through 2030, we spoke to young employees working at theforefront of our businesses about how they view their own relationship to“Vision 2030” and how they intend to make it a reality.
and corporate customers has become a pressing issue given
the acceleration in digitalization brought about by the
COVID-19 pandemic. I work in developing new channels, andI intend to focus on learning new skills on a daily basis toenable me to execute my duties with a sense of speed, amid
the dramatic rise in new entrants from companies in otherindustries and fintech companies. At the same time, I intend
to take steps to shift our points of contact with customers fromtraditional bank branches and ATMs to non-face-to-facechannels such as online banking and apps, while also
strengthening our presence not just in finance, but also in the
non-financial services sector. I will exert every effort to ensurethat I am able to contribute the growth of The 77 Bank.

Yamauchi: In order to achieve the “best mix of face-to-faceand non-face-to-face services” in our business model, as
targeted by the digital shift indicated by the “digital transformation” key factor in “Vision 2030,” I will promote reforms
across banking operations while considering measures torelease employees from the burden of administrative work by
utilizing AI, robotic process automation (RPA), and tablets. In
the digital sector, where reform and evolution move at a rapid
pace, I feel it is particularly necessary that we have flexible
ideas and futuristic ways of thinking unconstrained byconventional culture. In order to achieve the future that we aretargeting in “Vision 2030,” I would like to promote various
reforms based on digital technology, while firmly identifying
the changes and trends in systems and times that havepersisted from the Bank’s past to our present.
Hosaka: In response to the global expansion of ESG
investment and sustainable investment, new products andstrategies are being introduced in the asset management
industry on a daily basis. In relation to “ESG investment,” apriority measure in “Vision 2030,” we are focusing on areas
such as formulating methods for selecting ESG stocks andprojects that will offer a foothold for ESG investment throughinvestment trusts. I intend for “Vision 2030” to serve as myguiding compass as I contribute to the achievement of ourtarget form by acting proactively and demonstrating myplanning abilities.
Kumagai: In the Regional Development Promotion Section,
we promote regional revitalization. As one of our recent
initiatives, we held a “Regional Revitalization Business
Matching Event” where solutions from private-sector companies were offered as solutions to regional issues faced byregional public bodies. Through this initiative, I felt it is essential for the long-term sustainable growth of the Bank that werevitalize Miyagi Prefecture. While there are limits to what one
person can achieve, I am conscious on a day-to-day basis ofdeveloping my ability to analyze past events, my ability toconsider the present from a broad perspective, and my ability
to create the future, enabling me to contribute to customers
and local communities through my work, and thus helping the
Bank move closer to our target form laid out in “Vision 2030.”

THE 77 BANK INTEGRATED REPORT| 27

Round-table talk with the Next Generation
Looking toward 2040, after achieving “Vision 2030”
Theme: Contribution to regional revitalization
Kumagai: In surveys submitted after a business matching
event for regional public bodies held in February 2021, many
respondents answered that for the “next theme,” they would
like “the digital transformation (DX)” and “the stimulation of
tourism to attract nonresidents.” Matching with private-sector
companies will continue to be an important role of banks.
What are your ideas for other initiatives that will contribute toregional revitalization?

Umetsu: Thinking about it in relation to my own work, I think
the Bank must create systems that enable a diverse range ofhuman resources to participate in a flexible manner, in orderto respond to the increasingly diversified needs ofmunicipalities and private-sector companies. This does notjust mean the active participation of women; it will be
important that a diverse range of human resources - including
people with disabilities, non-Japanese, and LGBT people can enjoy a good work-life balance and participate in regional
revitalization while utilizing their strengths.
Yamauchi: That’s right. Plus, in the area where the Bank
operates, there is Sendai, which is a city designated bygovernment ordinance, but there are also many areas where
the population is falling and aging. As such, when we think
about issues related to digital devices, etc., I feel that we must
consider the unique characteristics of each area when
implementing measures to support the DX at municipalities.
On the other hand, as we look toward 2040, I think it will bevital that as employees of the Bank, we utilize the DX tocreate flexible workstyles. At the same time, we must alsoutilize digital technologies to enhance the level of our services
and improve convenience at our branches, to ensure that we
can continue to serve our customers even as the population
falls.
Sato: One feature of digital technologies is that they “are notconfined by place.” I hope that we can create services thatutilize this fact. Surely it will contribute to regional revitalization if we create an environment to ensure that in future, even
if the number of workers and bank branches falls as a resultof population decline, customers in areas where there are no
branches of the Bank nearby can access the services theyneed?
Uchikata: People in their 60s now will be in their 80s in 2040,
so I think there will be a significant increase in non-face-toface transactions using smartphones. On the other hand,28

face-to-face consulting for individual customers will still benecessary, and the value we create with that consulting will
directly contribute to customer satisfaction. For this reason, I
think it is important that we develop our operations at bankbranches to be more specialized for consulting for retailcustomers.
Hosaka: When I think about it in terms of my own work, I think
one idea is for us to carefully select stocks that contribute toregional revitalization with head offices in Sendai and theregion, and add them to our portfolio. Many investors find it
difficult to add regional companies to their portfolios owing todifficulties with visiting the companies for research, etc. On
the flip side, this means there might be some excellent
undiscovered regional companies, with share prices thathave the potential to increase in value many times over.
Surely if we make medium- to long-term investments in suchcompanies, it will contribute to regional revitalization?
Gunji: As you say, Motoki, I think there are many excellent
companies in Miyagi Prefecture. As we move toward the DX
in Miyagi, solutions to issues such as the falling population,etc., there is a possibility of an increase in companies driving
the regional economy. In addition to funding, we must
address these companies’ varied needs, such as workstylereform and asset management, and provide solutions that willcontribute to our customers’ growth.
Sato: In this age, when it is said that average lifespans willapproach 100 years, I also think that it will contribute tostimulating local communities if, as a bank, we play a key rolein building the foundations for the circulation of assets bycreating an environment where children born in Miyagi
Prefecture and the Tohoku region can feel as though theywant to live in the region for the next 100 years.

Kumagai: That’s right. As a regional bank with roots in thelocal community, it will be important that we promote
workstyle reform and the DX in Miyagi Prefecture while
continuing initiatives that contribute to invigorating ourcustomers, in order to ensure that our management remains
sustainable through 2030 and even going on to 2040. We willbe the bank of choice for those around us, and a partner thatpeople want to work with. I think this should be what we wantto achieve.

Theme: DX and ESG
Yamauchi: In the Digital Strategy Division, we are promoting
digital strategy from five perspectives: “non-face-to-facechannel reform,” “bank branch reform,” “paperwork-freereform,” “data utilization reform,” and “digital reforms for
employees.” Looking ahead to 2030 and beyond, however, I
think we must not be constrained by the existing framework ofbanking, and instead create businesses that go one stepfurther toward utilizing both finance and digital technology. As
digital banks appear that are not restricted by the regions inwhich they are located, I think that, as a regional bank with abase in Miyagi, the deepening of knowledge related to digitaltechnologies by employees of the Bank and the enhancementof our digital services, as well as the strengthening of relationships with our customers through face-to-face channels, canall act as a great source of competitive superiority. What are
your thoughts on this matter?

Sato: Personally, I am always considering our services fromthe perspective of strengthening the “non-financial” side ofour business, with the aim of throwing away the idea that “it islike this because we are a bank,” and instead becoming acompany that our customers know they can rely on when they
are unsure about things. For example, I aim to create the kindof service where if a customer is unsure what to have forlunch, they might want to check the Bank’s app for ideas. Oneof the strengths of regional banks is that we possess a richrange of information thanks to our local network ofconnections. I think there may be possibilities for new
businesses based on sharing that information.
Gunji: Certainly, if the tools that banks have for sharing
information become more popular, it might unlock various
possibilities, both in the B2B and the mass-market sectors.
Many of our customers that are SMEs, etc., rely on individuals
for skills related to finance and accounting, etc. I think it would
be good if we could create a system that can support thegrowth of these companies by matching businesses andsolving these issues with DX-related skills, thereby enabling
the companies to use their resources on the operations thatthey should be focusing on as companies.
Hosaka: I think the Bank must take steps that differentiate us
from our competitors in the realm of the DX, as different banks
are rapidly taking a more proactive stance and actively
implementing initiatives in this area. From the perspective of
an investor, the share prices of banks are trending downward
across the industry, and it appears investors are questioning
the banking business model itself. Under such circumstances,
if we can demonstrate competitive superiority centered on the
DX, I think it will become easier for investors to reevaluate theprice of our shares. For example, as the top regional bank in
Miyagi Prefecture, I think one possibility for differentiation fromother banks is for us to utilize the Bank’s information
resources and our customer base to create an integrated
platform, and focus strongly on the information-sharing
aspects. If we can give our customers the peace of mind thatthey “might find a solution by checking with The 77 Bank,” I
think it will enable us to maintain the trust of the local
community right through to 2040.
Umetsu: When promoting the DX, human resources withmore specialist skills will be necessary. In order to address
the increasingly varied needs of our customers, it is essentialthat we become a company with a diverse range of humanresources, including both generalists and specialists. On theother hand, by 2040, I think human resources will be more
fluid and the age of people working for their entire careers for
one company will be over. As such, we must continuously
make efforts to improve our appeal as a company capable ofretaining precious highly specialized human resources.
Kumagai: In the Regional Development Promotion Division,
we are promoting the use of the DX to move to paperlessprocesses, even in our dealings with municipalities, etc. In
doing so, we aim to accelerate the process of making ouroperations more efficient.
Uchikata: In my own actual experience, I found that reducing
administrative work through paperless and seal-less processes, lead to benefits such as less overtime work, as well as
higher efficiency. In the Wealth Management Office, we arestrengthening consulting operations, an area where theutilization of the DX is essential for enabling the assignmentof more manpower and labor hours.
Kumagai: Paperless processes also contribute to sustainable
development as a company by reducing our burden on theenvironment.
Gunji: As society at large shifts toward decarbonization, I
think the Bank must lead the creation of opportunities forenvironmentally friendly businesses in Miyagi Prefecture. In
order to do so, in my work, we must focus more on ESGbased financing. I think that providing funds related to ESG tocompanies in the prefecture will contribute to the spread of
ESG management.
Hosaka: From my perspective, many companies that havereceived praise for their ESG efforts are proactively disclosing
information related to ESG, such as KPI targets and thestatus of progress. People from the Tohoku region tend to bequite reserved, so I think there is an issue related to the active
sharing of information that promotes companies from an ESG
perspective, and this applies to the Bank too. In this regard, I
hope that we can communicate information about the Bank’s
initiatives and our target form through disclosure materials
such as the Integrated Report.

THE 77 BANK INTEGRATED REPORT| 29

Inspire through consulting and digital technologies!

Mission01

Top customer satisfaction strategy

VisionVa l u e

Leading company creating a path to the future
Strategy

The 77 Bank Group aims to be the leading bank for customer
satisfaction by offering an amazing customer experience(inspiration) that competitors cannot match.

Company
Information

Basic Strategies to Achieve“Our Target Form”

30

01

Top customer satisfaction strategy

02

Double productivity strategy

03

Regional growth strategy

04

Corporate culture reform strategy

Our KPIs related to strengthening our relations withcorporate customers are to “increase the proportion ofcompanies in Miyagi for whom we are their main bank by10%” and to “increase the number of corporate lending
clients outside Miyagi by 1.5x.” The background to these
KPIs lies in our desire to eliminate the concern that theregion will lose vitality as the number of business sites
declines in line with the aging society, low birthrate, andfalling population. It is expected that the population willcontinue to fall in the Tohoku region, and more companies
will enter the Sendai economic area. Amid these conditions,
the Bank aims to stimulate the region as a whole byproviding high-quality services and at the same time acting
as a pipe offering a connection to the Tohoku region as awhole and the Sendai economic area.
In order to further strengthen collaboration between bankbranches and headquarters, and promote high value-added
consulting services, in April 2018, we created “regional
support teams” in the Consulting Promotion Division andhave been working to solve the management issues of ourclients. Additionally, in March 2020, we established the“COVID-19 Emergency Support Team” consisting of
employees from the Consulting Promotion Division and theCredit Supervision Division, and enhanced our client support
systems, including dispatching sales representatives toregional sites within Miyagi Prefecture.

By May 31, 2021, the “COVID-19 Emergency Support
Team” had accepted over 14,000 consultations from
customers. Matters related to subsidies, business matching,and other forms of support for core businesses made up the
majority of consultations, at approximately 8,000 consultations, but there were also companies facing the issue ofbusiness continuity, and the number of consultations related
to business succession and M&A is increasing.
In order to promote consulting services rooted in customers’ needs as we look to achieve KPIs in future, we willcontinue to offer cashflow support to clients affected by
COVID-19 and continue to support business improvements
and rehabilitation, while at the same time further strengthening corporate sales systems by increasing the number ofliaison officers from headquarters. Additionally, we will also
strengthen loan management and support from headquarters based on business evaluations, while at the same timeworking to complement and stimulate a diverse range ofneeds among our customers through the introduction of the“77 Big Advance” management support platform that webegan offering in May 2021, including broader marketing
channels, business matching, business succession, M&A,
securing human resources, and the increased use of IT.

THE 77 BANK INTEGRATED REPORT

Financia lSectionStrengthen relations with corporate customers| 31

Top customer satisfaction strategy

Top customer satisfaction strategy

MissionSupport life-planning for individuals
Our KPIs related to supporting life-planning for individual
customers are to “increase the proportion of households in
Miyagi ‘holding assets’ to the national average or higher” and to“ensure that 20% of the population of Miyagi (aged 20-74) use
loans from the 77 Bank.”‒Interview‒

Manager, Structured Finance Section,
Consulting Promotion Division

Reiji Sato

Structured finance refers to loans provided for specificbusinesses and assets, such as project financing and asset
financing, in accordance with an assessment of profitability

32‒Interview‒and business potential based on the cashflows generated
by the business or asset. It is notable for the fact that it
enables fundraising that is separated from the creditworthiness of the company as a whole. For example, in March
2020, the Bank acted as the arranger for project financing
between six regional banks in Tohoku for one of the largest
wind power projects in Miyagi Prefecture, in the Kami
district. In August 2020, the Bank also provided project
financing as the sole lender for a large solar power project in
the Futaba district, Fukushima Prefecture. Large-scalelending is accompanied by some risk, but we are continuously implementing measures to manage risk and enhance
our abilities to supervise projects. Our mission is to contribute to social and economic development in Miyagi Prefecture and the Tohoku region, as well as the resolution ofsocial issues, by strengthening our relations with corporateclients, one of the issues raised in “Vision 2030.” As thesame time, I believe we must also strengthen our earnings
capabilities in order to ensure the sustainable growth of the
Bank.

In the Wealth Management Office, our mission is to be
involved in transactions with individual customers on alifelong basis, through our support for life-planning in theage of 100-year lifespans. We have prepared a wide rangeof services and products for individual customers, including
investment trusts and insurance. In future, we aim to act as
a partner customers in the various life events they face inthe age of 100-year lifespans, across three generations ineach family. I hope the Bank can be a useful partner forcustomers in accordance with their life stage and at thesame time contribute to improving the financial literacy of
our customers, including services to utilize trust schemes
and prepare for the risk of cognitive decline for seniorcitizens, asset formation plans such as Tsumitate (accumulation) NISAs for when family members enter the workforce,and plans to provide funds for education when children andgrandchildren enter school. I also hope that we will develop
good human resources over the 10-year period of “Vision2030” as we support the life-planning of individual customers.

Financia lSection* Financial gerontology refers to academic studies focused on the appropriate administration and management of the assets of elderly people.

Company
Information

To ensure that people lead lives filled with happiness in asuper-aged society, described as “the age of 100-year
lifespans,” the enhancement of financial literacy and long-term
asset formation will be essential. In particular, there is anincreasing need to prepare “funds for old age,” said to be one of
the three great expenses in life. Given the present low-interest
rate environment, however, it cannot be said that managing
such funds with deposits will be sufficient. According to the“National Consumption Trends Survey” by the Ministry ofInternal Affairs and Communications, the proportion of households holding assets in Miyagi Prefecture (the proportion
holding shares or equity investment trusts) is approximately
14%, which is a relatively low level across Japan as a whole.
Accordingly, as a regional financial institution, we intend toincrease that proportion to at least 21%, the national average.
The Bank will interact with customers in a broad variety ofStrategy

Iwasaki Dairy Farm LLC (headquartered in Wakuya, Toda, Miyagi) aims tocreate a “giga-farm” in order to stabilize the supply of raw milk in the region
amid raw milk shortages driven by the increase in people leaving agriculture
as the population ages, etc. The company used a syndicated loan with the
Bank as the lead arranger as funds for major capital expenditure, including
the introduction of robotic milking equipment.

Va l u e~Increasing the proportion of households
holding assets~

ways and support the life-planning of each of our customers bybecoming a partner that works with our customers to findsolutions for the various issues they face, while also supportingthe circulation of assets beyond generations, to customers’
children and grandchildren. Furthermore, in September 2020,
we also established a “Senior Service Support Investigation
Committee” chaired by the President, and we are considering
potential services that support senior citizens from theperspective of “succession,” “nursing care and cognitive
decline,” and “longer lives,” based on surveys and research
focused on “financial gerontology.*”
Based on the above, the Bank has set forth the two corepillars of support for the life-planning of individuals as “enhancing life-planning support to enable lifelong transactions” and“measures to address the increased risk of cognitive decline.”
With regard to “enhancing life-planning support to enable
lifelong transactions,” we intend to build systems for continuingtransactions with customers beyond generations, while at thesame time making various proposals tailored to customers’ life
events.
Additionally, it will be particularly important that we address
the issue of “leaving behind assets,” as we watch over the asset
circulation between generations. At the Bank, we are strengthening our initiatives related to “trusts,” which are considered aneffective method for “leaving behind assets.” In April 2021, weadded “testamentary substitute trusts” and “annual gift trusts” toour trust product line-up. Furthermore, in order to fulfill demand
from customers who “wish to leave assets to parties other than

VisionRegarding lending, we have actively focused on
addressing the needs of business operators, such as
syndicated loans to provide funds for capital expenditure
aimed at business expansion. Looking ahead, however,
we will strengthen our participation in regional development projects with significant economic ripple effects,
such as the “Sendai Urban Restructuring Project” andthe “next-generation synchrotron radiation facility
maintenance project.” As the same time, we will also
identify new funding demand and use this to secure newcorporate clients, including companies entering Miyagi
Prefecture. As part of these efforts, we established the“Structured Finance Section” in June 2021, in order tostrengthen our measures targeting regional redevelopment, renewable energy facilities, etc. In August 2020,
we established a “Structured Finance System Strengthening Project Team,” and have been considering ways tomake credit supervision and risk management systems
more advanced. We will also work together with funds
managed by “77 Capital,” a 77 Bank Group company, toenhance our earnings opportunities on both the lending
and equity sides in areas such as project financing forrenewable energy and PFI projects, asset financing forreal estate, etc., and acquisition financing for M&A.

Wealth Manager, Wealth Management Office,Business Promotion Division

Takayuki Endo

THE 77 BANK INTEGRATED REPORT| 33

Top customer satisfaction strategy

Top customer satisfaction strategy

Missionaddition, we have been holding a course in collaboration with
Tohoku Gakuin University at Tohoku Gakuin, Incorporated
Educational Institution based around the theme of banking
operations since 2011. Starting in 2021, we also intend toincorporate the theme of “financial gerontology.”
In the “age of 100-year lifespans,” the Bank will continue tosupport life-planning for individuals, to ensure that ourcustomers can live lives filled with happiness.

inheritance and trusts, our customers
use original notebooks created by The
77 Bank called the “77 WISH Notebook,”in which they write down what they want
think about their future.

~Increasing the proportion of people using
loans~

34‒Interview‒

Manager, Group Business Strategy Section,
General Planning & Coordination Division<77> Initiatives for Operations that Put Customers First

Junichi Fujino

The Bank and 77 Securities Co., Ltd. have established the 77 Basic Policy on Operations that Put Customer
First in order to promote the provision of quality financial products and service to customers. This policy iscomplied with executives and employees, and the status of initiatives is announced regularly.

In addition to administering the management of Group
companies, we also manage the planning and promotion of new
businesses and sectors. The establishment of projects in new

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

The 77 Bank

77 Securities

Financia lSection*A civil trust is a method that allows an aging trustee to entrust the management of assets (real estate, deposits, etc.) to a trusted family member(trustee) in case the trustee loses the ability to make decisions due to dementia, etc. It is also commonly referred to as a “family trust.”

Company
Information

Given changes in the economic environment and lifestyles, it isexpected that even individual customers will face various
funding needs. At present, however, the number of people using
loans from The 77 Bank remains low, at approximately 13% of
the population of Miyagi Prefecture. As such, over the next 10
years, we intend to increase the proportion of people using
loans to 20% by being a familiar bank that many people use,
including a share of deposits in Miyagi Prefecture of 57.3% as ofMarch 31, 2021, leading them to also use loans from the Bank.
As we look to achieve this KPI, with regard to housing loans,
we will capture demand related to condominium apartments,
which is increasing primarily in Sendai City, by strengthening
our collaboration with housing business operators and offering
finely tuned service for lending opportunities about which we areapproached. Additionally, in relation to unsecured loans, we will
focus on occupation-based sales, cross-selling, various promotional campaigns, etc., while also working to strengthen the
promotion of “100% Web-based Loans” and enhance theirfunctionality, as recently this service has been used for approximately half of the total amount lent of unsecured loans and 80%of the total amount of auto loans lent, partly owing to the impact
of COVID-19.

Strategy

to achieve in their remaining years andWith this KPI, we will respond to the increasingly diversified
needs of our customers and promote regional revitalization andthe stimulation of local communities. In order to do so, we will
utilize the “strengths” we have developed thus far and expand
the scope of our businesses by leveraging the digitaltransformation and alliances, as part of our aim to become aleading company that operates a diverse range of businesses
with the banking business at our core.
We aim to achieve this KPI by FY2024, but when we
consider potential projects, we will focus on the key points of“does it utilize the strengths of the 77 Bank Group?” and “can weleverage synergies with our existing operations?” At the sametime, each and every executive and employee will turn theireyes and ears toward the issues and needs of local
communities and go beyond the framework of finance to think
about how we can contribute to the region. With this as ourstarting point, we will create profitable businesses from theprocess of solving regional issues.
As we try to achieve our target, the key to success will lie in“fostering an ambitious corporate culture,” meaning a corporate
culture where executives and employees’ ideas are sharedwithin the Group, the fact that they had those ideas is praised,and good ideas are incorporated into our businesses. In April
2021, we called for participation in a “business planning content”
for all executives and employees. This contest marked thesuccessful launch of our efforts to establish an ambitious
corporate culture, with a total of 170 applications, covering a
range of employees from new employees to branch managers.
By having all executives and employees actively take on
new challenges, and allowing trial and error, we will establish an
ambitious corporate culture while also creating new businesses
that are truly needed by our customers.
In relation to this KPI, we have also set a KPI to “double net
income of Group companies by entering new businesses andnew sectors and expanding existing businesses.”
There are six companies in the 77 Bank Group: 77 Lease, 77
Shin-Yo Hosyo, 77 Card, 77 Securities, 77 Research andConsulting and 77 Capital. We took steps to expand the scope ofour businesses by establishing 77 Securities and 77 Researchand Consulting in July 2016 and July 2018, respectively, andalso strengthened collaboration within the Group by making
Group companies wholly owned subsidiaries in November 2016.
We intend to double the net income of Group companies as awhole by creating stronger sales systems integrated across theGroup through the exchange of human resources within theGroup and other means, while also leveraging synergies withprojects in new businesses and sectors.

Va l u e

When accepting consultations related to

Establish 10 projects in new businesses or
sectors, with the potential to become viablebusinesses in future

Visiontheir family,” we entered into “collaborative agreements related
to bequests” with Tohoku University, National University Corporation and the Miyagi Branch of the Japanese Red Cross
Society in April 2021, as well as Tohoku Gakuin, Incorporated
Educational Institution in June 2021.
With regard to “measures to address the increased risk ofcognitive decline,” it is important that we prepare for cognitive
risk in advance, through the utilization of “civil trusts” and othermeasures. In October 2018, the Bank began offering “deposit
accounts based on civil trust agreements,” followed by“apartment loans based on civil trust agreements” in March
2019. For civil trust agreements, we provide support fortrouble-free asset administration through the efforts of the 77
Bank Group as a whole to address the risk of cognitive decline,
such as support by “77 Research and Consulting,” a 77 Bank
Group company.
We are focusing on “developing human resources” and“strengthening our systems” as concrete measures to achieve
the twin aims of “enhancing life-planning support to enable
lifelong transactions” and “measures to address the increased
risk of cognitive decline.”
In terms of developing human resources, we have beenproactively implementing multiple initiatives, including our“program to strengthen individual consulting capabilities” as aform of in-house training that provides practical experience of
the whole process from identifying customer needs, to creatinga shared understanding of issues among related parties, andoffering a solution to the issue, as well as the “77 Money School”
for FP Level 1 and persons with a CFP qualification to enable
them to acquire the skills to make high-quality proposals, and“bank-brokerage workshops” in collaboration with “77 Securities,” a 77 Bank Group company, based on the “77 Basic Policy
on Operations that Put Customer First.”
Regarding the second measure, strengthening systems, weestablished the “Wealth Management Office” in June 2021, andwe have been assigning employees with specialist knowledge
to this office and developing a system for accepting various
different consultations, in order to provide a one-stop service foraddressing a wide range of needs, such as asset succession,
not just managing the assets of our customers.
Furthermore, we also believe it is important that we enhance
the financial literacy of our customers and the region. At the“Currency and Banking Museum,” which is adjacent to the
Bank’s Head Office, we distribute information about finance. In
addition, we also sponsored and have opened a branch in“Student City,” a hands-on educational program for elementary
school students that Sendai City government is promoting. In

businesses and sectors is an important theme in “Vision 2030,”
and since this spring, we have increased the number of
employees on our team as we look to achieve “our target form.”
Recently, we have been considering opportunities to strengthen
and enhance our operations in the non-financial sector, such as
businesses for senior citizens and staffing services, in addition
to the financial sector, including trusts and the regional issue ofbusiness succession. The creation of new businesses willcontribute to revitalizing the regional economy through thecreation of employment, etc. Additionally, the development of
the regional economy in Miyagi Prefecture and the wider
Tohoku region will contribute not just to the Bank’s interests, butalso to the interests of all the stakeholders surrounding theBank. Uncertainty and risk are always present when “starting
something new,” but in order to make the “corporate culture oftaking on new challenges” laid out in “Vision 2030” a reality, we
will actively promote the creation of businesses from projects innew businesses and sectors, based on a forward-facing stanceand reliable judgments. In doing so, we will create a new kind of
corporate group, that while remaining a bank, is also a kind ofbank that has never existed before.

* Japanese Language only

THE 77 BANK INTEGRATED REPORT| 35

Double productivity strategy

Reform channels and release from the burden of administrative work!

As customer needs become increasingly diversified in line withthe advancement of digitalization, etc., it will be important that
we reduce administrative work at bank branches, mainly that
related to face-to-face services and the processing of cash, as
we look to achieve our target for “labor productivity in core
operations.” In March 2020, the Bank established the “Paperwork-free Promotion Committee” chaired by the President, andwe are promoting “paperwork-free” initiatives to release bankbranches from the burden of administrative work, such as theconcentration of bank branch administrative work at headquarters and revisions to inefficient administrative work.
In FY2021, while focusing primarily on “reducing andsimplifying administrative processes” and “guiding customers to
non-face-to-face channels,” we significantly reduced administrative work across our Operations Group by enhancing thefunctions of our non-face-to-face channels and promoting theirusage, including establishing a support office to concentrate
back-office administrative work from bank branches at
headquarters, in addition to making online banking for individu-

Financia lSection‒Interview‒

Cut amount of administrative work at bankbranches by 50%

Manager, Digital Strategy Section, Digital Strategy Division

Hiraku Nakatsugawa
We plan and formulate strategies and measures that utilize
digital technologies. The business environment is changing at a blistering pace as a result of the rapid advance ofCompany
Information* AWS is an abbreviation for “Amazon Web Services,” referring to cloud services provided by Amazon.

Strategy

The Bank will take steps to enhance “labor productivity in core
operations,” aiming to double productivity over a 10-year period,
based on indicator that shows the value added by each
employee. In this regard, the Bank has created a unique
indicator by replacing “operating income” in the general formula
for labor productivity with “interest on loans and bills discounted+ fees and commissions - interest on deposits.”“Labor productivity in core operations” refers to the value
added through each employee’s promotion of consulting, basedon interest on loans and bills discounted and fees andcommissions. However, the Bank will employ three main
methods of increasing productivity: “top-line growth” byincreasing interest on loans and bills discounted and revenue
from fees and commissions, “limiting expenses” through cutting
inefficient administrative work, etc., and a “natural attrition in theworkforce” by promoting non-face-to-face channels andpaperwork-free processes.
Recently, the advancement of digitalization has meant thatcounter services are shifting from the face-to-face channel tothe non-face-to-face channel, including online banking, banking
apps, and 100% Web-based Loans. At the same time, thenumber of customers coming to counters has declined
significantly, partly owing to COVID-19. On the other hand, there
is an increasing “need for highly specialist consulting services”
in relation to issues such as business succession and M&A,

driven in part by the falling birthrate and aging society, as well asa lack of corporate successors. Accordingly, we will increase
labor productivity by releasing bank branches from the burdenof administrative work and ensuring that they focus on
consulting.

together to make proposals to customers aimed at overhaulinginefficient administrative work, and guide customers toward
non-face-to-face processes for tax payments, investment trusts,
and loan transactions.
In addition to the above, as a medium- to long-term initiative,in May 2021, we began development of a “next-generation SFA
and CRM/credit supervision system” together with the banks
participating in the “MEJAR” common use system, in order toenhance our ability to make proposals in liaison operations andenhance operational efficiency. We aim to begin operating thissystem in 2024. This system will eliminate issues related tocustomer information being entered multiple times and a lack of
coordination. It will be a “single input, multi output” system,
whereby when information is entered one time, it is automatically reflected in various types of data and forms. Additionally,
multiple separate systems had previously been established for“supporting sales,” “managing customers,” and “credit supervision,” but now this system will combine all these elements into asingle platform-type system on AWS.* This will thus enable theintegration of customer information, including both retail andcorporate customers, and make it easy to create links with otherservices on AWS, which we expect will make liaison operations
more efficient and sophisticated in future.
By halving the volume of administrative work at bankbranches with the above initiatives, the Bank will rebalance its
use of management resources and limit expenses, while also
allocating the working hours created to consulting services.

Va l u e

Double “labor productivity in core
operations”

als only available through online registration. In addition, we
also overhauled the administrative work of the Loan Group,
including concentrating administrative work related to lending at
headquarters and expanding the range of products eligible for“100% Web-based Loans,” where the entire process fromapplication to the execution of the loan is completed online. As
a result, in FY2021, we saved a total of approximately 200,000
manhours through the reduction of administrative work acrossall bank branches, equivalent to 107 employees.
From FY2022 onward, we will continue to further accelerate
our move toward paperwork-free processes. Specifically, we will
reduce administrative work in our Operations Group throughsuch measures as increasing the number of branches whose
administrative work is consolidated in the support office,concentrating administration work related to succession, etc., at
headquarters, making it such that customers do not need to visit
branches for transfers, various forms, procedures in the event ofan accident, etc., by enhancing the functions of our non-face-toface channels and promoting their use, and moving to electronic
methods for consulting operations and accepting tax payments.
Regarding administrative work in the Loan Group and the Sales
Group, we have expanded the range of operations concentrated
at headquarters to cover administrative work related to credit
ratings and international remittances, and we also “moved
payment collection operations to electronic processes” inAugust 2021, as we received many requests for improvements
to these operations from bank branches. Furthermore,
headquarters and bank branches will also continue to work

VisionThe 77 Bank Group will double productivity by releasing bank branchesfrom the burden of administrative work, strengthening our consulting
systems, and enhancing the abilities of each individual.

36

Mission02

Double productivity strategy

digitalization, including GAFA, fintech companies, andother companies in different industries becoming competitors of the Bank. In this environment, the Bank has
specified the “digital transformation” as one of the key
factors of “Vision 2030.” Amid these conditions, we haveformulated a digital strategy based on the two core pillarsof “digital reforms in the banking business” and “creating
new businesses,” and are promoting digitalization from thecustomer’s perspective, based on our strong sense of our
mission to utilize digital technologies to fundamentally
overhaul banking operations as a whole. Specifically, we
will focus on measures such as utilizing big data formarketing, as well as robotic process automation and AI for
operations, in order to enhance labor productivity andreduce administrative work. Through these digitalization
initiatives, we will create employees and time for offering
consulting services to customers, thereby enhancing ourpresence and brand power as The 77 Bank, the bank thatis very attentive to its customers.

THE 77 BANK INTEGRATED REPORT| 37

Double productivity strategy

Double productivity strategy

MissionTriple rate of usage of non-face-to-facechannels[Omnichannel strategy]

Customers
ATM
Online banking
Smartphoneapp

Va l u e

Omnichannel
systemSMS

Branch[77 Bank App main screen]

Contact Center
SMS

Strategy
Company
Information
Financia lSection38

ed in each channel.
Additionally, another important non-face-to-face channel
is our ATMs. With cashless payment systems expected toincrease further in popularity in future, the 77 Bank Group isproviding its customers with cashless payment services that
customers can use conveniently and with peace of mind,
including 77 JCB Debit cards, 77 Cards, and the linking ofcustomers’ bank accounts with various smartphone
payment services. As such, while ATMs formerly played an
important role as “mini-branches,” the number of ATM
transactions is falling. However, there will still be a demandfor cash, so we will focus on creating the optimal ATM
network through measures including the joint operation ofATMs in convenience stores, while keeping in mind thenecessity of ATMs for customer convenience and as places
to withdraw cash.

VisionIn order to become a bank that customers can use at any
time, in any place, and quickly connect with the 77 Bank, we
set a KPI to “triple the rate of usage of non-face-to-facechannels.”
In recent years, changes in customer behavior and theirincreasingly diversified values have led to transformations
in society, but this trend has become even more apparent asa result of the spread of COVID-19.Demand among retailcustomers for the ability to complete all banking
transactions “easily,” “at any time,” “anywhere,” is increasing
as a result of the spread of smartphones.Additionally,
employee workstyles are also changing significantly as aresult of teleworking, workations, and other trends, andmany business operators are being forced to reexamine
their businesses as a result of the COVID-19 pandemic.
Under these circumstances, the 77 Bank Group will pursue
the best mix of face-to-face and non-face-to-face channels
by shifting services either from face-to-face to non-faceto-face channels, or the opposite, in order to address theneeds and issues of our customers in a timely, appropriatemanner.
We have added various functions to our existing
non-face-to-face channels, based on the twin concepts ofmaking them “more convenient for customers” and “moreefficient for the Bank.” As a result, we have succeeded inmoving most transactions at bank branches to ATMs andonline banking.
Looking ahead, we will build infrastructure for providing
77 Bank Group services to customers in a one-stop manner,
centered around three core pillars for non-face-to-facechannels - “Banking,” “Information,” and “Communication” and combined with non-financial services. For retailcustomers, this will be the “77 Bank App,” a smartphone app
equipped with online banking functions, while for corporate
customers, it will be the “Corporate Portal Site,” which weplan to create online.
On May 24, 2021, we launched “77 Big Advance,” as afoundational component of the “Corporate Portal Site.” Theservice was extremely well received, with approximately
300 clients signing up within the first month of its release.
The Bank will identify or stimulate needs and issues amongcustomers through non-face-to-face channels, then collaborate in a timely and appropriate manner with bank branches,loan centers, and insurance plazas, which are all face-toface channels, to provide consulting related to these issues,

based on close relationships with our customers.
The “Contact Center,” which we have established in the
Direct Channel Promotion Division, will fulfil a significant
role in achieving the best mix of face-to-face and non-faceto-face channels. The Contact Center’s main duties arereceiving phone calls (inquiries) from customers andmaking phone calls (information on products and services)
to customers, its importance has been increasing as the
only staffed channel among our non-face-to-face channels,
following a rapid increase in the use of non-face-to-facechannels. Additionally, while utilizing a variety of marketing
methods, AI-based data analysis, and more tools, we areproviding information on a One To One basis via an
omnichannel system that links all our face-to-face and nonface-to-face systems, and the “Contact Center” is increasing contact with customers based on the information provid-‒Interview‒
In the Direct Channel Promotion Division, we focus on
product development and promotion planning for non-faceto-face channels, while also working with face-to-facechannels, the Contact Center, etc. As customer behavior
and values change, and the channels they want to use
become increasingly diversified, we are taking steps toincrease the sophistication of our “Banking,” “Information,”and “Communication,” based on the concept of “easyaccess to all banking transactions, at any time, fromanywhere.” In all types of transaction, we are taking steps
to differentiate ourselves from other banks throughsystems that enable customers to complete transactions
without coming to branches, and personalizing theprovision of information to customers, while also further
enhancing our smartphone, PC, and other non-face-toface channels as a form of channel infrastructure forcontact points with customers. Through these measures,
we aim to achieve our “Vision 2030” KPI of “tripling the rateof usage of non-face-to-face channels.” As such, we willachieve the best mix of face-to-face and non-face-to-facechannels, tailored to the needs and situation of eachcustomer. At times, we will also look for alliance opportuni-Manager, Direct Channel Promotion Section,
Direct Channel Promotion Division

Ken Yoshidaties with other banks and companies in other industries, as
we provide consulting services based on close relationships with our customers.

THE 77 BANK INTEGRATED REPORT| 39

Regional growth strategy

Mission03

Regional growth strategy
Achieve sustainable growth in the local community!
[Miyagi wide-area PPP platform]

40

Triple number of growth support cases
for business founders
According to the “Annual Report on Employment Insurance
Services” from the Ministry of Health, Labour and Welfare, thebusiness entry rate in Miyagi Prefecture in FY2020 was 3.6%,
but the government has set a target of 10%, roughly on par with
Europe and America. In order to achieve the government target,
the business entry rate in Miyagi Prefecture will need to betripled. As such, the 77 Bank Group aims to increase thebusiness entry rate in Miyagi Prefecture to the government’s
target by further focusing on support for customers whosebusinesses are growing and tripling the number of growth
support cases that we handle.

Think tankExecution support
function

Tohoku PPP/PFI
Association
38 Regional publicbodiesTohoku University and
Miyagi University

In order to support the development of local SMEs and newcompanies or businesses, the Bank has prepared a uniquesystematic loan program called “77 New Business Support
Funds.” Additionally, in order to address the need for more
efficient operations in relation to finance, accounting, etc., whencustomers are starting new companies, in April 2019, we beganoffering a “Founders Support Package,” consisting of a range ofservices for supporting new companies offered by the 77 Bank
Group and our business partners. Furthermore, in April 1998,
we established the “THE 77 Business Support Foundation,
Public Interest Incorporated Foundation,” with the objective ofcontributing to stimulating industry in Miyagi Prefecture andeconomic development. This foundation awards “The 77 New
Business Subsidy” to companies actively developing theirbusinesses with novel and original technologies, and company
founders aiming to launch new businesses.
Additionally, in order to support the creation of viablebusinesses around excellent technology based on the results ofresearch at Tohoku University, we are supporting new compa-

Information
dissemination function
Public-private
dialogue function

Trading

Construction

Lease etc.

nies or businesses through the investment of ¥0.7 billion, thelargest amount for a private-sector company, in the “THVP1
Investment Limited Partnership” in August 2015, followed by afurther ¥0.3 billion in “THVP2 Investment Limited Partnership” inApril 2021, in collaboration with companies including “TOHOKU
University Venture Partners Co., Ltd.,” which was established as
a company wholly owned by Tohoku University.
In addition to the above initiatives, we will also take steps tofurther strengthen growth support for company founders withactive support in areas such as preparing to found the company,
securing human resources, solving technical issues, expanding
sales channels, and improving operational efficiency, throughpromotion of the use of subsidies and other public support
systems, collaboration with external support institutions, andbusiness matching.

Financia lSectionWith this KPI, we aim to enhance the economic growth rate in
Miyagi in the same way as the targets set in Miyagi Prefecture’s“Plan for Putting the Future Vision of a New Miyagi into
Practice,” in order to achieve regional revitalization together with
Miyagi Prefecture.
We must further strengthen our initiatives toward regional
revitalization in order to achieve our KPIs, and as such, theBank has established four prioritized areas, “support for startingnew companies or businesses,” “support and development ofregional core companies,” “promotion of urban development,”
and “support for promotion of tourism, etc.” In March 2015, weestablished a “Regional Revitalization Desk” within the Regional
Development Promotion Division, and we have also madebranch managers with transactions with regional public bodies
into “Regional Revitalization Managers,” while we focus onareas such as solving regional issues based on collaboration
between headquarters and bank branches. Additionally, fromthe perspective of ensuring close cooperation with regional
public bodies, we have also entered into “Agreements on
Comprehensive cooperation for Regional Revitalization with 38
regional public bodies, including Miyagi Prefecture and 35
municipalities within the prefecture. These cooperationagreements are aimed at cooperation and contribution tocreating “towns, people, and work” in regional areas, while
effectively utilizing the resources of both parties.

Specifically, we are implementing various measures,
including holding “regional revitalization seminars” for employees of regional public bodies and the branch managers of bankbranches with which they have transactions to research
examples of pioneering initiatives from other regions andexchange views, etc., as well as a “Regional Revitalization
Business Matching Event” where solutions from private-sector
companies were offered solutions to regional issues faced byregional public bodies, as part of the “Miyagi wide-area PPP
platform (MAPP)” established in January 2020.
Looking ahead, we intend to continue to strengthen our
cooperation with regional public bodies and thus support ahigher economic growth rate in Miyagi Prefecture.

77 Research andConsulting ,etc

Exchange function

Company
Information

Support increased economic growthrate in Miyagi

Development Bank of Japan
Regional Planning Department,
Tohoku Branch

Real estate

Strategy

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

The 77 Bank
Secretariat: Regional
Development Promotion
Division

Human resource
development function

Va l u e

Left: Governor Murai of Miyagi Prefecture
Right: President Kobayashi of The 77 Bank
As of March 31, 2021, The 77 Bank hadentered into Agreements on Comprehensive
cooperation for Regional Revitalization with
38 regional public bodies

Financial institutions that havesigned cooperation agreements
And universities, etc.

[Private companies]

VisionCore member

Dissemination andawareness-raising function

Individual market soundings for each project

Support Members[Cases of growth support for founders](Cases)
3,000

3,000

2,000

2,000

1,181
1,000

FY2021

FY2026

Our target form

THE 77 BANK INTEGRATED REPORT| 41

Regional growth strategy

Regional growth strategy

MissionAim for 100% participation in regional
development projects in Miyagi

42

THE 77 BANK INTEGRATED REPORT

Financia lSectionIn the Regional Development Promotion Division, which oversees
all aspects of regional revitalization, we have entered into
Agreements on Comprehensive cooperation for Regional Revital-

greenhouse gas emissions in Miyagi Prefecture, throughmeasures such as strengthening our support for initiatives
targeting the SDGs at customers whose businesses wehave evaluated, and activities to conserve the environment
in regional communities.

Company
Information

Tomiaki Ara

In order to actively respond to issues related to climatechange and ensure sustainable growth together with local
communities, we have set a KPI to “cut 77 Bank Group CO2
emissions by 46% compared with FY2014 by FY2031, andsupport cuts to greenhouse gas emissions in Miyagi.”
In recent years, climate change has become a global
issue, including unusual weather phenomena around theworld and increasing amounts of damage from major
natural disasters. In 2012, the Bank formulated an “Environ-changing to energy-saving air conditioning units at all
branches, excluding those that we plan to remodel.
Additionally, the Bank also actively promotes activities toconserve the environment within regional communities. In
September 2018, new employees of the Bank planted 1,000
black pine saplings in the Arahama district of Sendai City.
We are currently continuing our effects to develop disasterprevention forests to protect local communities fromdisasters, in collaboration with related institutions. As such,in March 2021, we joined the “Miyagi Coaster Disaster
Prevention Forest Creation Council,” established primarily
by Miyagi Prefecture.
Looking ahead, we will continue actively working not justto cut the 77 Bank Group’s CO2 emissions, but also to cut

StrategyManager, Regional Development Promotion Section,
Regional Development Promotion Divisionization with 38 municipalities, including all municipalities in Miyagi
Prefecture, and are focused on resolving regional issues andstimulating the regional economy based on prioritized areas, suchas “support for starting new companies or businesses” and the“promotion of urban development.” As the population falls acrossthe Tohoku region as a whole, Sendai City, the central city of the
Tohoku economy, is experiencing a net outflow of people to theGreater Tokyo Area, despite an influx of people from the six
prefectures in the Tohoku region. An important mission for us as abank is to support business founders as they take on the challengeof creating businesses and new work that will be attractive to young
people in the region. As such, we aim to “triple the number ofgrowth support cases for business founders.” As we aim for “100%participation in regional development projects in Miyagi,” we arealso participating in various projects in the prefecture, sometimes
openly and sometimes behind the scenes, including the next-generation synchrotron radiation facility, where researchers canvisualize things at the “nano” level. I understand that regional
revitalization is an area where the expectations upon us arehighest as a financial institution with roots in the region, and where
our raison d'être is questioned. I will focus on my duties to ensurethat The 77 Bank can demonstrate a strong presence in Miyagi and
the Tohoku region as a whole, and contribute to the creation of an
attractive region.

The 77 Bank Group will cut CO2 emissions
and support cuts to greenhouse gas
emissions in Miyagi

mental Policy,” in July 2020, we announced the “77 Bank
Group SDG Declaration,” and in July 2021, we announced
our support for the “TCFD recommendations.” We intend tosupport the sustainable growth of local communities and ourcustomers by taking the initiative in responding to climatechange as a leading bank in the region.
Based on our Environmental Policy, etc., the Bank has
been offering environmentally friendly financial products
and services, and implementing measures such as
controlling room temperatures. With regard to our branches,in FY2020, we built and opened new branches, the Kesennuma Branch and the Minato and Watanoha Branches, as“eco-friendly branches,” with LED lighting and energy-saving air conditioning units. Furthermore, we are graduallyswitching lighting for low counters, etc., to LED lighting, andVa l u e‒Interview‒

This facility is expected to be used in a wide range ofindustrial fields, and according to estimates from the Tohoku
Economic Federation, is expected to create annual
economic ripple effects of approximately ¥1.9 trillion overthe 10 years after it begins operating.This project is a major
project that is expected have significant ripple effects for
Miyagi Prefecture, including the entry of related companies
and the creation of employment opportunities. Accordingly,
while collaborating with our regional partners, the “Phototon
Science Innovation Center,” “Tohoku Economic Federation,”“Miyagi Prefecture, “Sendai City,” and “Tohoku University,”
which are the executive organizations overseeing the
project, the Bank intends to support the accumulation of
new businesses and industries and promote regional
revitalization through the creation and attraction of thisresearch and development facility, etc.
Additionally, multiple regional development projects thatare expected to create economic ripple effects are plannedin Miyagi Prefecture, including a privatization project for a
public business and an industrial park relocation andmaintenance project. The Bank will continue actively
participating in such projects.

VisionFor this KPI, the Bank will offer various kinds of participationin and support for regional development projects that many
stakeholders, both public and private, are participating inand that are expected to have a suitable impact on theregional economy. At present, we participate in many
regional development projects, but as we look to maximize
the presence of the 77 Bank Group, we will aim for a 100%
participation rate.
Below, we introduce two representative regional development projects that are currently underway in Miyagi Prefecture and that the Bank is actively participating in.
The first is the “Sendai Urban Restructuring Project.”
Under this project, in order to rebuild the central area of
Sendai City, which plays a central role in the flow of
economic activity, with the aim of achieving the next stage ofrecovery from the Great East Japan Earthquake of 2011, old
buildings will be rebuilt and the development of highly
functional office buildings will be promoted, etc., through theyear FY2031. Since Sendai City announced the launch ofthis project in July 2019, the Bank has collaborated with
Sendai City to hold seminars for building owners and others
in September 2019 and worked to spread awareness of
newly established subsidy systems, etc., while also entering
into discussions with customers concerning proposed

projects, etc.
In October 2020, further measures to strengthen subsidy
systems, etc., were announced, and progress has been
made in enhancing measures to support the redevelopment
and reinforcement of the functions of the central area of
Sendai City. This is a large project with economic ripple
effects, in which the Bank’s customers are also expected to
fully participate. For this reason, we will continue our active
participation to ensure that we can contribute to urban
development in Sendai City.
The second project is the “Next-generation Synchrotron
Radiation Facility Maintenance Project.”
The “Synchrotron Radiation Facility” is a state-of-the-art
research facility that uses an enormous microscope withpowerful light to enable researchers to see the structure of
substances, etc. at the atomic level. It is said to be an
extremely effective national strategic research foundationfor enhancing the international competitiveness of the
manufacturing industry in Japan.
The Bank has been participating in promotion committee
meetings related to the attraction of the facility since before
it was decided that it would be developed on the New
Aobayama Campus of Tohoku University in 2024. Additionally, the Bank has also participated in the “Phototon Science
Innovation Center,” which is the main executive organization overseeing the construction and operation of the facility,
as “Auditor.”| 43

Corporate culture reform strategy

Mission04

Corporate culture reform strategy
Virtuous circle of ambition, confidence, and cheerfulness!
Increase the proportion of women in
management positions to 30% or more

Strategy
Company
Information

Seven weeks
prior to birthFinancia lSectionChildbirthChildcare

Eight weeks
after birth
Three
years

Childbirth

Grade 1

Shortened working hours

Time off before
and after birthChildcare leave* Until child reaches the age of three

Exemption from working outside of working hours and on days off
Limits on working outside of working hours and on days off

Business planning contest

Male employees
Support for returning to work

44

Workstyle seminar with participation by Yoko Ushio, Outside Director[Systems to support the combination of work and childbirth/childcare]

Female employees

We are truly facing a “time of great change” with financial
institutions losing the interests already gained in existing
business domains, owing partly to changes in the makeup
of society, such as the low birthrate, aging society, andfalling population, as well as the advancement of digitalization in the financial industry and the development of
payment services by companies in other industries, mainly
the IT industry.
In order to execute the three basic strategies describedabove, we must work to transform our corporate culture
based on changes in the times. As such, we will endeavor topromote the advancement of diversity and create a virtuous
circle where all officers and employees take on new
challenges, etc., leading to confidence and cheerfulness.
In order to encourage employees to proactively take on
new challenges, we are actively rolling out training sessions
that employees can apply to participate in, such as “Headquarters Operations Trials” to enable employees to learn
about operations at headquarters and Group companies,
and “Local Company Trainees,” to enable employee’s tosharpen their ability to assess companies, while also
holding a “business planning contest” to develop new

businesses and sectors. In addition to these initiatives, wewill also consider opportunities to revise our personnel
systems with the aim of addressing a broad range of values
held among employees and enhancing their motivation.

Va l u e

Implement various initiatives to“foster an ambitious spirit”

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

The Bank has approximately 4,000 employees, including parttime employees, of which more than half are women. Based on
the idea that “the Bank will not develop without the active
participation of women,” we aim to increase the proportion of
women in management positions to 30%, the government
target, by FY2031.
The Bank is actively focusing on areas such as supporting
women’s career development and the enhancement of systems
to support the combination of work and childbirth/childcare. As
such, in June 2016, the Bank obtained “Grade 3” certification,
the highest level, under the Ministry of Health, Labour andWelfare’s “Eruboshi” system for commending excellent companies promoting female participation, and has increased thenumber of female managers from 99 to 147 over the past 10
years, equivalent to an increase from 8.5% to 13.4% as aproportion of the total. However, the Bank still has some way to
go to achieve the 30% target. For this reason, under our “Action
Plan as a General Business Proprietor Pursuant to the Act on
Promotion of Women’s Participation and Advancement in the
Workplace,” formulated in March 2021, we aim to achieve a
ratio of 18% by FY2026 through “reducing the average numberof hours worked outside of working hours and on days off (toless than 10 hours per person per month)” and “enhancing theannual rate of taking paid time off (to 70% or more).”In FY2021, in order to foster an awareness of career
enhancement among female employees, we held a workstyleseminar, in which Yoko Ushio, an Outside Director of the Bank,
participated, as well as day-off seminars aimed at supportingthe career development and skill development of female

employees, and round-table discussions, etc., partly aimed ateliminating concerns surrounding returning to work among
persons taking childcare leave and others. Additionally, in orderto promote diversity, including the active participation of women,in November 2020, we revised rules surrounding clothing during
working hours and introduced a “Business Casual Day.”
Looking ahead, we will continue providing training to contribute to designing career paths for women and strengthening theirskills, and supporting the return to work by persons taking
childcare leave, with the aim of ensuring women’s continued
employment at the Bank. Additionally, as we look to achieve adiverse range of workstyles, we will encourage the use of the“Select Staggered Shift System,” which we introduced in April
2021, and make broad efforts to enhance the awareness ofmale employees and employees in management positions
toward the activities of women, as part of aim to enhance theproportion of women in management positions.

Three days leave forspouses of persons
giving birth

Exemption from working late at nightChildcare leave* Three days’ paid time off within eight weeks of birth

Provision of information related to a smooth return to the workplace (e-learning)
Holding of “Work Work Sukoyaka (Healthy) Club,” around-table discussion for persons taking childcare leave, etc.

Leave for nursing care

Consultations with in-house career advisors
Partnership with corporate-led preschools

Welfare services (maternity congratulation system, childbirth congratulation system, childcare support, etc.)

THE 77 BANK INTEGRATED REPORT| 45

Corporate culture reform strategy

Corporate culture reform strategy

MissionTraining

Women’s career advancement program

Financia lSection“OJT” provides an “opportunity” for employees to acquire
the necessary knowledge and skills, and forms the starting
point for human resource development. In addition torotations at bank branches, the Bank offers opportunities for
short-term learning breaks at bank branches, headquarters,
and Group companies where advanced initiatives areunderway, as well as accompanying employees from theConsulting Promotion Division and Credit Supervision
Division on visits, and other measures.

acquire MBAs, and dispatching trainees oversees to Shanghai,
Singapore, etc. As part of our aim to develop “human resourcesthat serve a purpose for customers and local communities” and“human resources that contribute to corporate reform,” webegan further enhancing external training opportunities fromFY2022, including dispatching trainees to fintech companies,
consulting companies, and others, and holding “programs totrain human resources who will contribute to regional development” in collaboration with employees of Miyagi Prefecture.
Additionally, we are also enhancing the content of in-housetraining, including establishing the “women’s career advancement program,” “training to strengthen the trust business,” andthe “77 Money School” for FP Level 1 and persons with CFP
qualification.

Company
Information

Human Resource Development

Programs to train human resources who will contribute toregional development
Strategy

Selfdevelopment

OJT

For “self-development” to ensure that employees acquire
knowledge, skills, and qualifications, the Bank fosters anappetite for self-development among employees throughmeasures such as “weekday evening seminars” to enhance
employees’ consulting abilities, etc., the distribution of various
types of educational content through e-learning, etc., mediation
for tests and correspondence learning, and the payment of
incentives for the acquisition of public qualifications. In ourprevious medium-term management plan, we set a KPI of“achieving 700 persons with qualifications as either a 1st Grade
Certified Financial Planner, CFP, or Small and Medium
enterprise Management Consultant,” in order to strengthen ourconsulting capabilities. We did not achieve this target, partly asa result of the difficulty of the qualifications and the impact of
COVID-19, but the initiative contributed to developing anappetite for self-development, including a growing number of
employees taking on the challenge of acquiring such qualifications. Going forward, we will continue to encourage the acquisition of qualifications and actively provide mediation for testing
and corresponding learning related to fields such as inheritanceand the succession of assets, in order to strengthen our
initiatives targeting asset succession consulting and otherbusinesses aimed at senior citizens.
Regarding “training,” we are implementing “training perlevel” for employees at every level from branch manager to new
employee, “training by theme” to enhance consulting abilities,
etc., and other forms of in-house training, while also actively
engaging in external training, including participating in training
seminars held by regional and national banking associations,dispatching employees to graduate schools in Japan for them to

Va l u e

Based on our understanding that one of the greatest assetsof the 77 Bank Group is our “human resources,” and that thedevelopment of “human resources that serve a purpose forcustomers and local communities” and “human resourcesthat contribute to corporate reform” will be major factors forachieving “Vision 2030,” we have selected “human resource
development” as a key factor.
Previously, employees engaged in administrative work
comprised a significant portion of the Bank’s employees, but
as we shift the roles of employees from administrative work
to consulting, we will train our employees to have specialist
areas and expertise matched to their unique characteristics,
and develop human resource with interpersonal charm,
capable of frank communication with customers and local
regions. Additionally, we also intend to transform the 77
Bank Group as a whole by developing human resources
with creativity unrestricted by conventional ideas.

In the explanation of human resource development that
follows, first, we explain our basic approach to humanresource development.
At the Bank, “on-the-job training (OJT)” forms the core of
our human resource development, and employees acquire
the knowledge skills they require and want to learn through“self-development.” In addition, we use “training” to complement “OJT” and “self-development,” and give employees anopportunity to enhance their skills, while also learning more
specialist knowledge and skills. We endeavor to develop ourhuman resources through the continuous repetition of“OJT,” “self-development,” and “training.”

VisionIncrease the number of “specialist
personnel” that serve a purpose forcustomers and local communities‒Interview‒
can actively participate, while maintaining a sense offulfillment in their work. The development of humanresources with a diverse range of capabilities will contribute to fostering an “ambitious spirit,” considered necessary
for reforming our corporate culture, and will also serve as
the foundation for the basic strategies listed in “Vision

Develop human resources

2030.” Since 2013, we have worked to make systematic
improvements and enhance employee awareness by◆The 77 Bank Group will utilize the qualities of each individual to develop “human resources that serve a purpose

promoting the active participation of women and otherfor our customers and local communities” and “human resources that contribute to corporate reform,” which willserve as an asset for the Bank into the future.

Type of human resources that
77 Bank Group develops
Human resources that serve a
purpose for customers andlocal communities
Human resources that
contribute to corporate reform46

Unending
ambition

Filled withability to takeon newchallenges

Ability to act
independently

Rich
human
potential

forms of diversity. Accordingly, the proportion of women in
management positions is gradually increasing, and the rate

Strongsense ofethicsof male employees taking childcare leave has been 100%
every year since 2014. We have a long, difficult road ahead

Expertise in consulting and other areas, as well as
human potential capable of frank communication withcustomers and local regions

Manager, Diversity Promotion Office,
Personnel Division

Creativity unrestricted by conventional ideas,
and unique, irreplaceable personnelof us to achieve our target of “increasing the percentage ofwomen in management positions to 30% or more,” but in

Naomi Hasegawa

order to foster a corporate culture that enables all employ-“People” are the one true source of corporate growth. In

extent, I would also like to enhance diversity from perspec-

the Diversity Promotion Office, we promote the creation oftives other than gender.

ees to leverage their abilities to the greatest possible

a workplace where a diverse range of human resources

THE 77 BANK INTEGRATED REPORT| 47

Governance Structure
Board of Directors and Audit & Supervisory Committee Members(As of July 31, 2021)

Atsushi Shitoh

Managing Director

Jun. 2016 Director, Executive
Officer and General
Manager, Head OfficeBusiness Div., the Bank
Jun. 2018 Managing Director andGeneral Manager, Head
Office Business Div., theBank
Jun. 2019 Managing Director, theBank (current position)

Takuji Tabata

Managing Director

Jun. 2016 Executive Officer andGeneral Manager,
Credit Supervision Div.,the Bank
Jun. 2018 Senior Executive Officer
and General Manager,
Credit Supervision Div.,the Bank
Jun. 2019 Managing Director, theBank (current position)

Jun. 2006 Director, Horiba, Ltd.
Jun. 2007 Audit & Supervisory
Board Member, the Bank
Oct. 2009 Audit & Supervisory
Board Member, Banyu
Pharmaceutical Co., Ltd.
(currently MSD K.K.)
Jun. 2013 Director, the Bank
(current position)

Emiko Okuyama

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

President

Chairman

Senior Managing Director

Hidefumi Kobayashi

Teruhiko Ujiie

Makoto Igarashi

Apr. 1981
Jun. 2006
Jun. 2008
Jun. 2010
Jun. 2013
Jun. 2014
Jun. 2015
May. 2016

Jun. 2016
Jun. 2017
Jun. 2018

Joined the Bank
General Manager, Treasury Div., the Bank
General Manager, General Planning& Coordination Div., the Bank
Director and General Manager, General
Planning & Coordination Div., the Bank
Director and General Manager, Head
Office Business Div., the BankManaging Director and General Manager,
Head Office Business Div., the BankManaging Director, the BankManaging Director, the Bank, General
Manager, Ishinomaki Branch and Minato
BranchManaging Director, the Bank
Representative Director and Deputy
President, the Bank
Representative Director and President,
the Bank (current position)

Apr. 1969
Aug. 1992

Jun. 1993
Jun. 1995
Jun. 1997
Jun. 1998
Jun. 1999
Mar. 2000
Jun. 2002
Jun. 2005
Jun. 2010
Jun. 2018

48

Joined The Industrial Bank of Japan,
LimitedAssociate Director-General, Related
Business Department, The Industrial Bankof Japan, Limited
Director and General Manager, Business
Development Div., the Bank
Director and General Manager, Business
Promotion Div., the Bank
Director and General Manager, Head
Office Business Div., the BankManaging Director and General Manager,
Head Office Business Div., the BankManaging Director and General Manager,
Investigation Div., the BankManaging Director, the Bank
Senior Managing Director, the Bank
Representative Director and Deputy
President, the Bank
Representative Director and President,
the Bank
Representative Director and Chairman,
the Bank (current position)

Apr. 1980
Sep. 2000
Jun. 2002
Jun. 2004
Jun. 2005
Jun. 2006
Jun. 2009
Jun. 2012
Jun. 2013
Jun. 2017
Jun. 2018

Joined the Bank
General Manager, Onahama Branch, theBank
General Manager, Bashonotsuji Branch,
the Bank
General Manager, Shiroishi Branch, theBank
General Manager, General Affairs Div.,the Bank
General Manager, Personnel Div., theBank
Director and General Manager, Tokyo
Branch, the Bank
Director and General Manager, Business
Promotion Div., the BankManaging Director, the Bank
Senior Managing Director, the Bank
Representative Director and Senior
Managing Director, the Bank (current
position)

Koichi Suzuki

Ken Nakamura

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

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

Seiichi Ohtaki

Outside Director
Oct. 1987 Assistant Professor,
Faculty of Economics,
Tohoku university
Apr. 1992 Professor, Faculty of
Economics, Tohoku university
Apr. 1999 Professor, Graduate School of
Economics and Management,
Tohoku university
Apr. 2011 Dean Graduate School of
Economics and Management/ Faculty of Economics,
Tohoku University

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

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

Jul. 2014

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

Director, Audit & Supervisory Committee Member Mitsuo Chubachi
Apr. 1985 Joined the Bank
Mar. 2011 General Manager,
Nihonbashi Branch, theBank
Jun. 2013 General Manager, Risk
Management Div., theBank
Jun. 2015 Audit & Supervisory
Board Member, MIYAGISYOJI Co., ltd.

Jul. 2016

Director and General
Manager, Administration
Div., 77 Securities Co., Ltd.
Jun. 2019 Director, Audit &Supervisory Committee
Member, the Bank
(current position)

Director, Audit & Supervisory
Committee Member (Outside Director) Toshio Suzuki

Director, Audit & Supervisory
Committee Member (Outside Director) Masai Yamaura

Apr. 1970 Joined Tohoku Electric Power Co. Inc.
Jun. 2001 Deputy Director and General
Manager, Human Resources Division,
Tohoku Electric Power Co. Inc.
Jun. 2005 Director and General Manager,
Human Resources Division, Tohoku
Electric Power Co. Inc.
Jun. 2006 Director and General Manager, Miyagi
Branch, Tohoku Electric Power Co. Inc.
Jun. 2007 Senior Executive Officer and General
Manager, Miyagi Branch, Tohoku
Electric Power Co. Inc.

Oct. 1973 Joined the Sendai City
Government
Sep. 2005 Vice Mayor, Sendai City
Apr. 2006 Chief Director, Sendai
Green Association
Jun. 2007 President and Representative
Director, Sendai Software
Center Co., Ltd.
Jun. 2008 Auditor, Sendai Meat
Wholesale Market Co.,
Ltd. (current position)

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

Director, Audit & Supervisory
Committee Member (Outside Director)

May 2001 Senior Managing Director
and General Manager,
Fujisaki Comfortable
Lifestyle ResearchInstitute Co., Ltd.
May 2003 Director, Department
Store Fujisaki Co., Ltd.
Jan. 2011 Advisory Fellow, Tohoku
Regional Advancement
CenterApr. 2012 Fellow, Tohoku Regional
Advancement Center

Yoko Ushio

Apr. 2016 Auditor, Tohoku
University (current
position)
Jun. 2019 Director, Audit &Supervisory Committee
Member, the Bank
(current position)
Aug. 2020 Representative Director,
K.K. Shinsei Sogo
Jimusho (current
position)

Senior Executive Officers

Apr. 2014 Chairman, Sendai
Council of Social
Welfare (current
position)
Jun. 2015 Audit & Supervisory
Board Member, theBank
Jun. 2017 Director, Audit &Supervisory Committee
Member, the Bank
(current position)

Director, Audit & Supervisory
Committee Member (Outside Director)
Apr. 1979 Joined the Miyagi
Prefectural Government
Apr. 2013 Director-General,
Commerce, Industry
and Tourism
Department, Miyagi
Prefectural Government
Apr. 2015 Public Corporation
Administrator, Miyagi
Prefectural Government
Jun. 2015 Director, Miyagi-ken
Kaihatsu K.K.

Akira Inukai

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

Executive Officers

Masanori Muranushi

General Manager, Oroshimachi
BranchKazuhito Chida

General Manager, Personnel
DivisionTakashi Kuroda

General Manager, Business
Promotion Division

Yoshihiro Endo

General Manager, Tokyo
BranchHirokimi Fukushi

General Manager, ComplianceManagement Division

Kuniaki Endo

General Manager, Audit &Inspection Division

Naoshi Aoyagi

General Manager, Credit
Supervision Division

Kazutoshi Saito

General Manager of General
Planning & Coordination Division

Hiroshi Kobayashi

General Manager, Ishinomaki
Branch and Kokucho Branch

Shuichi Ibuka

General Manager, Digital
Strategy Division

Masahide Kato

General Manager, Operations
Management Division

Hiroshi Kitazono

General Manager, Head Office Business
Division, and Basho no Tsuji Branch

Financia lSection

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

Atsushi Kobayashi

Company
Information

Director, Audit & Supervisory
Committee Member

Apr. 1988 Joined the Bank
Jun. 2008 General Manager, Okino
Branch, the Bank
Jun. 2010 General Manager,
Sendai Haranomachi
Branch, the Bank
Jun. 2012 General Manager, Tokyo
Liaison Office, the Bank
Jun. 2015 General Manager,
Treasury Div., the Bank
Jun. 2016 General Manager, General
Planning & Coordination
Div., the Bank

Jun. 2014 Executive Officer andGeneral Manager, General
Planning & Coordination
Div., the Bank
Jun. 2016 Director, Executive Officer
and General Manager,
Ishinomaki Branch andMinato Branch, the Bank
Jun. 2018 Managing Director, theBank (current position)

Strategy

Apr. 1967 Joined the Bank of Japan
May. 1996 General Manager,
International Dept., theBank of Japan
Jun. 1998 Director, Research Instituteof Overseas Investment, theExport-Import Bank of Japan
Sep. 1999 Auditor, the Bank of Japan
Dec. 2003 Standing Audit &Supervisory Board Member,
Banyu Pharmaceutical Co.,
Ltd. (currently MSD K.K.)

Managing Director

Yoshikazu Onodera

Va l u e

Masahiro Sugita

Outside Director

Apr. 1985 Joined the Bank
Sep. 2007 General Manager,
Hachimanmachi Branch,
the Bank
Mar. 2009 General Manager,
Yoshioka Branch, the Bank
Jun. 2011 General Manager,
Operations Management
Div., the Bank
Jun. 2013 General Manager, General
Planning & Coordination
Div., the Bank

VisionApr. 1986 Joined the Bank
Sep. 2007 General Manager,
Koriyama Branch, theBank
Jun. 2009 General Manager, Tokyo
Liaison Office, the Bank
Jun. 2012 General Manager,
Treasury Div., the Bank
Jun. 2015 General Manager,
Credit Supervision Div.,the Bank

Managing Director

Mission

Apr. 1985 Joined the Bank
Jun. 2005 Chief Secretary, the Bank
Jun. 2008 General Manager,
Fukushima Branch, the Bank
Jun. 2010 General Manager, Izumi
Branch, the Bank
Jun. 2012 General Manager,
Treasury Administration &International Div., the Bank
Jun. 2014 Executive Officer andGeneral Manager, Tokyo
Branch, the BankTHE 77 BANK INTEGRATED REPORT| 49

Governance Structure
Basic stance toward corporate governanceThorough complianceCorporate Governance Committee

Audit & Supervisory
Committee Members
Audit & Supervisory
Committee

Board of Directors

2 persons 4 persons

9 persons 8 persons

4 personsPresident

Executive Committee

Deputy President

Directors and General
Managers Liaison Committee

Senior Managing Director

Compliance Committee

Managing Director

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

Personnel Division

Headquarters and
BranchesCompliancepromotioncommittees(Chaired by General
Managers)(Maintenance of discipline
and work discipline)(General meeting ofGeneral Affairs Division stockholders, traffic accidents)

Audit & Supervisory
Committee(Audit & Supervisory
Committee Members)

Divisions and Main Branch:Compliance Officer

Other:
Compliance liaison officers

Operations(Operational accidents)
Management Division

Outside Directors

Strengthening risk management systems
In accordance basic policies on risk management determined by the Board of Directors, the Bank has determined controlling
divisions and managing divisions for each type and category of risk requiring management, and the Audit & Inspection Divisionalso audits the appropriateness of the execution and management of the operations of each department as an internal audit
department.

Risk management structure

Title

Name

Board of Directors

Executive Committee

Corporate
Governance Committee（Representative Director）
Chairman

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

Makoto Igarashi

○

○

○

○

Managing Director

Atsushi Shitoh

○

○

○

Managing Director

Yoshikazu Onodera

○

○

○

Managing Director

Takuji Tabata

○

○

○

Managing Director

Atsushi Kobayashi

○

○

○

Director

Masahiro Sugita○○ (Chairperson)

Director

Ken Nakamura○○

Director

Emiko Okuyama○○

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

Seiichi Ohtaki○○

Koichi Suzuki○△ (*3)○ (Chairperson)△ (*3)

Mitsuo Chubachi○△ (*3)○△ (*3)

Toshio Suzuki○○

Masai Yamaura○○

Yoko Ushio○○

Akira Inukai○○

Board of Directors

Audit & Supervisory
Committee

Executive Committee/Directors and General Managers Liaison Committee/
Compliance Committee
Director responsible forcompliance (President)

Directors Responsible for Each Type of Risk

Audit & Supervisory
Compliance Committee
Committee

Capital management

Risk Management Division

Comprehensive Risk Management
Credit Risk
Management

Market Risk
Management

Liquidity Risk
Management

Comprehensive Operational Risk Management
Administrative
Risk
Management

Risk Management Division

Compliance

Information
Technology
Risk Management

Legal Risk
Management

Human Risk
Management

Tangible
Asset Risk
Management

Reputational
Risk
Management

Disaster and Other
Contingency
Risk Management

ComplianceManagement
Division

Personnel
Division

General Affairs
Division

Risk
Management
Division

Digital Strategy
Division
General Affairs
Division Operations
Management Division

Third-party risk
management
Operations
Management
Division

Digital Strategy
Division

Financia lSection50

Compliance Committee(Chaired by President)

Independent Auditors

General Manager ofGeneral Planning &Coordination
Division

Compliance Monitor (Senior Auditor)(Dishonest actions, internal audits)

Company
Information

Directors

Main members by organization

Other members

Audit & Inspection
Division

Compliance Manager(General Manager of Compliance Management Division)
Chief Compliance Officer(Manager of Legal Affairs Section)(Complaints, antisocial
influences, money laundering)

Strategy

Directors

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

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

Compliance management

President =Director
responsibleforcompliance

Va l u e

3 personsGeneral Meeting ofStockholders

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

Compliancesupervisors

Subsidiaries

VisionCorporate Governance Structure

Compliance structure

MissionWe will work to strengthen and enhance corporate governance in accordance with the following basic stance.
・In accordance with the Bank Creed, which is our basic principle of management, we will operate business that give constantconsideration to the public mission of a regional bank — contributing to the development of the regional economy and society —through banking operations.
・We will improve the transparency of management and the appropriateness of processes and work together appropriately withstakeholders including the regional society, clients, and shareholders for the Bank’s sustained growth and improvements incorporate value over the medium- to long-term.

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

ComplianceManagement Division

Head Office, Branches and Group Companies
Audit & Inspection Division

General Manager of General
Planning & Coordination Division,
General Manager of ComplianceManagement Division,
General Manager of Audit &Inspection Division*1 A Deputy President has not been appointed.
*2 Directors Masahiro Sugita, Ken Nakamura, Emiko Okuyama, Toshio Suzuki, Masai Yamaura, Yoko Ushio, and Akira Inukai are Outside Directors prescribed in Article 2,
Item 15 of the Companies Act.
*3 Standing Directors who are Audit & Supervisory Committee Members attend the Executive Committee and Compliance Committee, and state their opinions as necessary.
*4 The Chairperson of the Audit & Supervisory Committee observes the Corporate Governance Committee.

Asset Assessment Audit

Internal Audit

Third-party risk management“Third-party risk” refers to the risk of losses arising as a result of administrative errors, system faults, fraudulent transactions, andother issues at third parties that are companies or organizations that the Bank has an operational partnership or relationship with.
The Bank appropriately manages this risk, having established the “Policies on Third-Party Risk Management” as a basic policy
for managing risk.
In particular, in event that third parties work with services linked to customers’ accounts or personal data, such as in the cashof fund transfer business operators, the Bank implements stricter risk management, based on the “Personal Data Management
Standards,” etc., and manages risk on an ongoing basis during the period of the agreement, through such methods as regularmonitoring of the safety, reliability, etc., of third parties.
The Bank takes every possible precaution to ensure that in the event of administrative issues, system faults, or other issues,
the impact on our customers and the operations of the Bank is minimized, including securing alternative methods and formulating
measures to respond in the event of emergency.
THE 77 BANK INTEGRATED REPORT| 51

Financial and Non-financial Highlights■Non-financial information■ Financial information■ Retail deposits ■ Corporate deposits■ Public deposits, etc.

(Billions of yen)

9,000.0

4,500.0
1,803.8

5,494.8

1,106.0

1,825.4

939.7

4,894.6

5,097.5

1,915.2

2,009.5

Number of clients evaluated

4,978

1,176.3

1,211.8

1,765.4

1,803.1

1,876.2955.3

031-Mar-21

31-Mar-19

31-Mar-20

31-Mar-21

600.0

600.4

90.8

300.0

324.4

81.5

24.9
107.6
13.4

0
31-Mar-19

31-Mar-21

FY2020

Number of business succession, inheritance,
and asset succession support recipients

25

27

2,000

148.4

116.6
2,155.9

657.6

640.9

31-Mar-19

31-Mar-20

FY2021

1,602 cases
1,602

3,116.0

2,913.4

2,169.5

FY2019* Start-up plan formulation support, financing clients in the start-up stage, introduction of
government-affiliated financial institutions and start-up support organizations, subsidies,financing, and investment in venture companies(Cases)

15

904

1,000

1,222

2,205.90031-Mar-21

27 clients

Number of M&A support* clients

23
137.8

23.0
72.6
20.4

31-Mar-20

30
2,964.9

877

2,000

4,000.0

2,000.0

320.2
27.5
77.4
14.8

31-Mar-20

108.9
77.2

72.0

327.2

31-Mar-19

622.3

3,447

(Clients)(Billions of yen)

864
800

FY2019761.7

FY2020

FY20210

FY2019FY2020

FY2021Company
Information

0

58.2

■ Stocks ■ Bonds ■ Others

984

Strategy

619.3

1,000
4,592

2,713

¥3,116.0 billion

Securities balance(Cases)Va l u e622.3 billion

984 cases

Number of start-up support projects (*)

5,835

4,000

■ 77 Securities (excluding brokerage from the Bank) ■ Investment trusts■ Insurance ■ Structured bonds, etc. (brokerage) ■ Public bonds■ Foreign currency deposits(Billions of yen)

■ Number of clients evaluated■ Issue resolution measure agreement by entities

6,949

0

Balance of assets in custody (the Group) ¥6,949 clients
4,592 clients

Issue resolution measure agreement by entities(Clients)

1,134.2

2,101.6

31-Mar-20■ Others

Consulting

6,000

3,000.0

1,828.5

31-Mar-19■ Balance of loans to SMEs
■ Balance of loans to retail customers(Billions of yen)

4,725.0

5,120.3¥5,097.5 billion

Vision4,982.0

Balance of loans and bills
discounted
6,000.0

8,551.7

7,888.5

7,891.8

0¥8,551.7 billion

MissionBalance of deposits and certificatesof deposit* Entered into M&A advisory contract

31-Mar-21

ESG(Billions of yen)

62.27 %

(%)

20.0

80
17.6

18.2

73.28

354 cases / ¥162.7 billion

Green bonds

40.0
32.8

62.27

15.0

SG-based investment and lending
Privately placed corporate bonds *1,2,3,(Billions of yen)

71.35

16.5

Renewable energyrelated funding

26.0

60

27.8
Sustainability bonds

20.00Social bonds
FY2019FY2020

FY2021FY2019FY2020

FY20210

FY2019FY2020

FY2021

3.42 %(%)

Capital adequacy ratio(domestic standards/consolidated)

10.39 %

(%)

5

(%)

20
3.60

3.89

20

3.42
10.38

2.5

13.4 %

Proportion of female managers

10.31

10.39

13.2

10

13.4

13.4

10

0

52

FY2019FY2020

FY2021031-Mar-19

31-Mar-20

31-Mar-21

031-Mar-19

31-Mar-20

31-Mar-21*4

7 cases / ¥3.7 billion
12 cases / ¥9.5 billion

Sustainability-linked bonds

2 cases / ¥0.4 billion

Sustainability-linked loans

2 cases / ¥1.7 billion* Cumulative results from after the Great East Japan Earthquake of 2011 through March 31, 2021

ROE (consolidated)

23 cases / ¥30.2 billion

77 Privately Placed
Corporate Bonds for Social
Contribution (Donation-Type)77 ESG Privately Placed
Corporate Bonds

Financial
Section¥16.5 billion

Net income (consolidated)Core OHR(core gross operating income expense ratio)*5378 cases / ¥30.5 billion
47 cases / ¥6.2 billion*1 Green bonds and other bonds refer only to investments with newly issued bonds.
*2 Purchases of green bonds and other bonds, as well as sustainability-linked loans: Cumulative
results from April 2018 through March 31, 2021.
*3 Privately placed corporate bonds: Cumulative results from product launch through March 31,
2021*4 Of which, ¥1.1 billion is denominated in US dollars.
The Bank’s middle rate as of March 31, 2021 (USD 1 = JPY 110.71) has been used for yen
conversion.
*5 Denominated in US dollars. The Bank’s middle rate as of March 31, 2021 (USD 1 = JPY
110.71) has been used for yen conversion.

THE 77 BANK INTEGRATED REPORT| 53

Profile (As of March 31, 2021)

Service Network (As of July 31, 2021)

Company Name

The 77 Bank, Ltd.

Head Office

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

Paid-in Capital¥24.6 billion

Number of
Employees

2,742

Number of Branches

143 (Head Office/Branches: 137,
Sub-Branches: 6)

Capital Adequacy Ratio(domestic standards)

non-consolidated 10.14% / consolidated 10.39%

Total Assets¥9,817.9 billion

Certificates of Deposits¥8,551.7 billion

Loans and Bills
Discounted¥5,097.5 billion

Hokkaido
1 Branch

Overseas

Group companies

Shanghai 1 Representative Office /Singapore 1 Representative Office

77 Lease

77 Shin-Yo Hosyo

Supports customers’ capital expenditure via finance leases, etc., for office equipment, transportation equipment, industrial machinery, medical devices, engineeringand construction machinery, etc.

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

(Billions of yen)

Balance of lease and installment claims

30.0

23.0

900.0

20.0

600.0

10.0

300.0

0

0

31-Mar-19

31-Mar-20

31-Mar-21

Miyagi Prefecture
Head Office/Branches:
122, Sub-Branches: 6

Corporate Sales
Offices 2 Locations

868.7

834.0

793.8

2 Branches

Aomori

Balance of housing loan guarantees(Billions of yen)

27.0

25.3

Iwate

Kesennuma●

Akita
1 Branch●Iwagasaki

Yamagata
31-Mar-19

31-Mar-20

Wakayanagi ●● Naruko

1 Branch

31-Mar-21

Nainowaki ●● Tsukidate/Ichihasama● Sanuma/Maiya● Iwadeyama

77 Card

77 Securities

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

Total purchase transaction volume(Billions of yen)

100.0

89.2

●
●
Onoda
Nakaniida

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

Minamifurukawa ●Furukawatokamachi ●

96.1

50.0

61 Branches, 2 Sub-Branches
Masuda ●40.0
0FY2019FY202031-Mar-19

31-Mar-20

31-Mar-21

77 Research and Consulting

77 Capital

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

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

(Cases)Number of consulting and contracted survey cases
94100(Millions of yen)

2 Branches

Nagoya500

FY2019● Kakuda●
YamashitaOsaka
1 Branch● Marumori

2,485

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

FY20200

FY2021* Japanese Language only

510

31-Mar-19■Service Network Data
31-Mar-20

77 Lease Co., Ltd.

Shichitora-kun

77 Shin-Yo Hosyo Co., Ltd.

Shichisai-kun

77 Card Co., Ltd.

Shichimi-chan

Shichishika-kun

Shichiken-kun

77 Securities Co., Ltd.

Shichisaru-kun

77 Research andConsulting Co., Ltd.

Number ofmunicipalities
with Miyagi Prefecture

31-Mar-21

77 Bank Group characters
Shichirisu-kun● Tagajou

1,500

23
0

Shichi● gahama Shiogama 3 Branches● Geba● Ogawara
Watari ●● Shiroishi

1 Branch

1,743
50● (Naruse Sub-Branch)●
Rifu

Cumulative amount of investment

2,500

54

Onagawa ●● Morisekinoshita/Yuriage
Natori-nishi ●● (Sendai Airport Sub-Branch)
Iwanuma- ●●nishi● Iwanuma
Murata● Funaoka/Tsukinoki

● Zao

Tokyo

Yamoto●● Takasago● Kawasaki

0

FY2021

Akashidai ●Sendai58.2

Matsushima●

Tomiya ●6 Branches

81.5

80.0

Ishinomaki 9 Branches, 1 Sub-Branch● Kashimadai and Matsuyama Sub-Branches

Fukushima

108.9

120.0

86.6

● Furu ● Tajiri
kawa●●
WakuyaKogota● Yoshioka

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

● Shizugawa●
TomeShichiushi-kun

77 Capital Co., Ltd.

Within Miyagi Prefecture

35

Of which, areas with
the Bank’s location
31

Cities14

14[Of which, Sendai City]

Total number of theBank’s locations

Number of ATMs

128

Of which branches
within branches
13

109

12

618

[63]

[5]

[393]
91

710

Towns

20

17

19

1

Villages

1

—

—

—

1

Outside of Miyagi Prefecture

15

—

28

Within Tokyo

2

—

3

Other prefectures

13

Total

35 municipalities

31 cities and towns*1

143 locations*2—

25

13 locations

738 ATMs*1 Other branch locations: Sapporo City, Morioka City, Kitakami City, Akita City, Yamagata City, Fukushima City, Koriyama City, Soma City, Minamisoma City, Iwaki City (2 branches), Nagoya City, andOsaka City
*2 The total number of 143 locations includes one branch that only offers transfers, and the number of locations is 135, taking into account seven branches within branches.

54

THE 77 BANK INTEGRATED REPORT| 55

― Consolidated Five-Year Summary ―― Consolidated Balance Sheet ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2021

MissionTHE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESAs of March 31

Millions of Yen
2020

2019

2018

2017

69,877 ¥
11,553(8,117)67,886 ¥11,458(2,186)

65,217 ¥
11,345(3,104)

69,644 ¥10,963(7,869)67,678
10,973(5,213)

16,46818,261

17,67018,314

16,114¥9,839,581 ¥8,770,037 ¥8,627,510 ¥8,718,097 ¥8,649,396
8,527,481 7,865,991 7,872,834 7,946,100 7,805,860
5,088,570 4,886,221 4,718,942 4,621,062 4,443,883
2,922,506
447,436
24,6582,978,130
489,077
24,6583,146,865
490,737
24,6583,262,638
468,195
24,658

Yen
2019

2018

2017

¥ 222.89¥ 246.97¥ 237.90

6,947.19
50.00

6,057.30
50.00

6,582.31
47.50¥ 246.87
246.45
6,613.28
45.00¥ 215.73
214.74
6,306.73
45.00

10.39

10.31

10.38

10.43

10.73

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

LIABILITIES:
Deposits (Notes 11, 13 and 26)¥8,527,481
Call money and bills sold
25,869
Payables under securities lending transactions (Note 11)
Borrowed money (Notes 11, 14 and 26)
604,679
Foreign exchange liabilities (Note 7)
155
Liability for employees’ retirement benefits (Note 15)
17,102
Reserve for stock-based benefits (Note 17)
817
Reserve for reimbursement of deposits
311
Reserve for contingent losses
804
Deferred tax liabilities (Note 23)
22,037
Acceptances and guarantees (Notes 10 and 28)
43,735
Other liabilities (Notes 16 and 27)
83,251
Total liabilities
9,326,243
EQUITY (Notes 17, 18 and 31):
Common stock—authorized, 268,800,000 shares;
issued, 76,655,746 shares in 2021 and 2020
24,658
Capital surplus
20,517Retained earnings
374,218
Less: treasury stock—at cost, 2,764,422 shares and(6,972)
2,788,464 shares in 2021 and 2020, respectively
Accumulated other comprehensive income:Unrealized gains on available-for-sale securities (Note 4) 106,557
Deferred losses on derivatives under hedge accounting(Note 27)
(375)
(5,265)
Defined retirement benefit plans (Note 15)
Total equity
513,337
TOTAL¥9,839,581

2020¥ 747,105
429
4,000
18,87382,3442,903,632
4,886,221
9,528$ 12,391,572

19,261

177,373

8,208
19,315
56
282
4,388

71,176
174,446451
2,339
52,226

120
264
4,173

758
2,366
8,888

45,25879,792(63,220)¥8,770,037

395,041
872,260(554,204)$ 88,877,075¥7,865,991
8,706
11,986285,901116
25,539735
337
860$ 77,025,390

36,130186,315
983,660
28,060,175
45,963,056
52,97645,25877,167
8,322,600

233,664
5,461,828
1,400
154,475
7,379
2,809
7,262
199,051
395,041
751,973
84,240,294

24,65820,517
361,462

222,726
185,3223,380,164(7,040)(62,975)

56,207

962,487(826)(7,541)
447,436¥8,770,037(3,387)(47,556)
4,636,771$ 88,877,075

Financial
Section2020

ASSETS:Cash and due from banks (Notes 3 and 26)¥1,371,871
Call loans and bills bought
Debt purchased
4,000
Trading account securities (Note 4)
20,627
Money held in trust (Notes 5 and 26)
108,901
Investment securities (Notes 4, 10, 11, 26, 27 and 28) 3,106,542
Loans and bills discounted (Notes 6, 12, 26, 27 and 28) 5,088,570
Foreign exchange assets (Note 7)
5,865
Lease receivables and investments in leases(Notes 25 and 28)
19,637
Tangible fixed assets (Notes 8, 9 and 16):
Buildings
7,880
Land
19,313
Lease assets
50
Construction in progress
259
Other tangible fixed assets
5,782
Intangible fixed assets:
Software84
Other intangible fixed assets
262
Deferred tax assets (Note 23)984
Customers’ liabilities for acceptances andguarantees (Notes 10 and 28)
43,735
Other assets (Notes 11 and 27)
96,568(61,356)
Reserve for loan losses
TOTAL¥9,839,581

Company
Information

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

2021

Millions of Yen

Strategy

3,127,169
513,337
24,6582021

Thousands of
U.S. Dollars(Note 1)2021

Va l u e

At the fiscal year-end
Total assets
Deposits
Loans and bills discounted
Trading account securities andinvestment securities
EquityCommon stock

2021

VisionFor the fiscal year
Net interest income¥
Net fees and commissions
Net other operating (loss) income
Net income attributable to owners of
the parent

See notes to consolidated financial statements.

56

THE 77 BANK INTEGRATED REPORT57

― Consolidated Statement of Income ―― Consolidated Statement of Changes in Equity ―¥ 41,616¥ 41,956$ 375,901

29,186406
17,977
13,99011,836
3,798
1,163
119,976

28,031242
17,801
12,025

263,625
3,667
162,379
126,366
106,90934,305
10,504
1,083,696

2021

Millions of Yen

4,967
10,392

1,510
116,926

2,935
2,456
6,629
58,025
199,683
497,732
64,366
27,612859,470
224,216

INCOME TAXES (Note 23):
Current
Deferred
Total income taxes

5,758
2,595
8,354

8,047
(133)
7,913

52,00923,43975,458NET INCOME
16,468NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT ¥ 16,468

18,261¥ 18,261

148,748$ 148,748

PER SHARE OF COMMON STOCK (Note 30):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

Yen¥222.89
50.00

Retained
Earnings

BALANCE, APRIL 1, 2019
Net income attributableto owners of the parent
Cash dividends, ¥50.00
per share
Purchase of treasury stock
Sales of treasury stock
Net change in the year

74,302¥24,658¥20,517¥346,926

BALANCE, MARCH 31, 2020
Net income attributableto owners of the parent
Cash dividends, ¥50.00
per share
Purchase of treasury stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2021

73,867

U.S. Dollars¥246.97
50.00

$2.01
0.45

― Consolidated Statement of Comprehensive Income ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2021

2021

CapitalSurplusMillions of Yen

2020

Thousands of
U.S. Dollars(Note 1)2021

NET INCOME¥ 16,468
OTHER COMPREHENSIVE INCOME (LOSS) (Note 24):
50,350
Unrealized gains (losses) on available-for-sale securities
Deferred gains on derivatives under hedge accounting
450
Defined retirement benefit plans
2,276
Total other comprehensive income (loss)
53,077¥ 18,261$ 148,748(54,901)624(1,251)(55,528)454,791
4,064
20,558479,423COMPREHENSIVE INCOME (LOSS)¥ 69,546¥(37,267)$ 628,181

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO―
Owners of the parent¥ 69,546¥(37,267)$ 628,181

BALANCE, MARCH 31, 2020
Net income attributableto owners of theparentCash dividends, $0.45
per share
Purchase of treasury
stock
Sales of treasury stock
Net change in the year
BALANCE, MARCH 31, 2021¥(6,290)(3,725)

361,462(7,040)(54,901)624(1,251)(802)
153(55,528)

56,207(826)(7,541)

447,436

16,46816,468(3,713)(3,713)

(1)

(2)
70

25
¥24,658¥(6,972)

50,350¥106,557450¥ (375)2,276¥(5,265)¥20,517¥374,218

CommonStockCapitalSurplusThousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Deferred
Unrealized Losses on
Gains on Derivatives Defined
Retained
Treasury Available-for- under Hedge Retirement
Earnings
Stock Sale Securities Accounting Benefit Plans$222,726$185,322 $3,264,944$222,726¥489,077(3,725)56

20,517¥(1,451)

18,261(802)
153

24,658¥111,108

18,261(490)

73,891¥(6,391)

Total
Equity$(63,589)$507,695$(7,460)(2)
70
53,077¥513,337

Total
Equity$(68,114) $4,041,513

148,748

148,748(33,538)(33,538)$185,322 $3,380,164

(18)

(18)

632

632
20,558479,423$(47,556) $4,636,771$(62,975)

454,791$962,487

4,064$(3,387)

Financial
Section

762
399
1,182
6,343
14,211
58,141
6,644
3,066
90,751
26,175

CommonStock

Company
Information

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

Number of
Shares ofCommonStock
Outstanding

Millions of Yen
Accumulated Other Comprehensive Income
Deferred
Unrealized Losses on
Gains on Derivatives Defined
Treasury Available-for- under Hedge Retirement
Stock Sale Securities Accounting Benefit Plans

Strategy

EXPENSES:Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other
Fees and commissions
Other operating expenses (Note 21)
General and administrative expenses
Provision for reserve for loan losses
Other expenses (Notes 9 and 22)
Total expenses
INCOME BEFORE INCOME TAXES

Thousands

Va l u e

2020

Thousands of
U.S. Dollars(Note 1)
2021

VisionINCOME:Interest income:Interest on loans and discounts
Interest and dividends on trading account andinvestment securities
Other
Fees and commissions (Note 28)
Other operating income (Note 19)
Gains on sales of stocks and other securities
Gains on sales of money held in trust
Other income (Note 20)
Total income

THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2021

MissionTHE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2021

See notes to consolidated financial statements.

See notes to consolidated financial statements.

58

THE 77 BANK INTEGRATED REPORT59

― Consolidated Statement of Cash Flows ―― Notes to Consolidated Financial Statements ―THE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2021

Millions of Yen
2020

224,216(645,953)
37,056
601,904(7,326,844)
1,348,694
4,622,825(180,652)
31,704(41,775)
370(171,121)(1,545,668)

FINANCING ACTIVITIES:(2)
Purchases of treasury stock(3,716)
Dividends paid
(3,718)Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
16
NET INCREASE IN CASH AND CASH EQUIVALENTS
629,584
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
737,406
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 3)¥ 1,366,991(802)(3,718)(4,521)(12)
32,423704,983¥ 737,406(18)(33,565)(33,583)144
5,686,785
6,660,699$12,347,493

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a. Consolidation—The consolidated financial statements
include the accounts of the Bank and its significant
subsidiaries (collectively, the “Companies”). There were
five consolidated subsidiaries as of March 31, 2021 and2020.
Under the control and influence concepts, thosecompanies in which the Bank, directly or indirectly, is able
to exercise control over operations are fully consolidated.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profits included in assets resulting fromtransactions within the Companies are eliminated inconsolidation.
(1) Scope of consolidation
Consolidated Subsidiaries
There was no change in the scope of consolidation
during the fiscal year ended March 31, 2021.

(2) Equity method
Unconsolidated Subsidiaries Not Accounted for by
the Equity Method
77 Capital Co., Ltd.
77 New Business Investment Limited Partnership
77 Strategic Investment Limited Partnership
77 Capital Investment Limited Partnership 2
These companies are excluded from the scope ofequity method accounting because they are not material
to the consolidated financial statements in terms of net
income (corresponding to the Bank’s share), retained
earnings (corresponding to the Bank’s share) andaccumulated other comprehensive income(corresponding to the Bank’s share).
77 Capital Investment Limited Partnership 2 has been
included in unconsolidated subsidiaries not accounted forby the equity method from the fiscal year ended March
31, 2021, since it was newly incorporated.
b. Business Combinations—Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professional fees,
are accounted for as expenses in the periods in which thecosts are incurred. If the initial accounting for a businesscombination is incomplete by the end of the reporting
period in which the business combination occurs, anacquirer shall report in its financial statements provisionalamounts for the items for which the accounting is
incomplete. During the measurement period, which shallnot exceed one year from the acquisition, the acquirer
shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new
information obtained about facts and circumstances thatexisted as of the acquisition date and that would haveaffected the measurement of the amounts recognized asof that date. Such adjustments shall be recognized as if
the accounting for the business combination had been
completed at the acquisition date. A parent’s ownershipinterest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary.
The carrying amount of noncontrolling interest is adjusted
to reflect the change in the parent’s ownership interest in
its subsidiary while the parent retains its controllinginterest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and theamount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent
retains control over its subsidiary.

THE 77 BANK INTEGRATED REPORT

Financial
Section(86,685)
29,807
2,637(16,836)
(234)
(505)
740
(46,662)(643,202)
12,031
17,965(27,757)(33,267)641(1,827,739)
5,974,970
2,879,387
43,5103,874(78,637)
125,399(15,834)
33,077343(3,396)675,169(15,481)
38,343
7,041,676$ 7,265,892

Company
Information(7,075)
3,227
126
2,351
(127)
79
(15)
(161)
(70,229)
2,343(2,191)(8,967)3,022
49(167,278)(6,843)
169,257(3,656)152(7,398)(5,428)974(4,793)(222)(1,638)75,035(2,425)22,326(9,507)¥ 16,667

30,508(3,144)
32
(96)
(19)
20,289See notes to consolidated financial statements.
60(811,155)
149,314
511,793(20,000)
3,510(4,625)41$

Strategy

INVESTING ACTIVITIES:
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from maturity of investment securities
Increase in money held in trust
Proceeds from dispositions of money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Payment for execution of asset retirement obligations
Net cash (used in) provided by investing activities¥ 26,175

The accompanying consolidated financial statements
have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments andExchange Act and its related accounting regulations andthe Enforcement Regulation for the Banking Law of Japan(the “Banking Law”), and in accordance with accounting
principles generally accepted in Japan, which are different
in certain respects as to the application and disclosure
requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been
made to the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition,certain reclassifications have been made to the 2020
consolidated financial statements to conform to theclassifications used in 2021.
In accordance with the Japanese Financial Instruments
and Exchange Act and other relevant regulations, allJapanese yen figures in the consolidated financial
statements have been rounded down to the nearest
million yen, except for per share data. Accordingly, thetotal of each account may not be equal to the combined
total of individual items. Also, U.S. dollar amounts havebeen rounded down to the nearest thousand dollars.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which The
77 Bank, Ltd. (the “Bank”) is incorporated and operates.
The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of¥110.71 to U.S.$1, the approximate rate of exchange asof March 31, 2021. Such translations should not be
construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or
any other rate.

Unconsolidated Subsidiaries
77 Capital Co., Ltd.
77 New Business Investment Limited Partnership
77 Strategic Investment Limited Partnership
77 Capital Investment Limited Partnership 2
Unconsolidated subsidiaries are excluded from thescope of consolidation because they are not material tothe consolidated financial statements in terms of total
assets, income, net income (corresponding to the Bank’s
share), retained earnings (corresponding to the Bank’s
share) and accumulated other comprehensive income(corresponding to the Bank’s share).
77 Capital Investment Limited Partnership 2 has been
included in unconsolidated subsidiaries from the fiscal
year ended March 31, 2021, since it was newly
incorporated.

Va l u e

OPERATING ACTIVITIES:
Income before income taxes¥ 24,823
Adjustments for:(9,597)
Income taxes—paidDepreciation and amortization
3,300
Losses on impairment of fixed assets
292(1,864)
Net change in reserve for loan losses(26)
Net change in reserve for reimbursement of deposits(56)
Net change in reserve for contingent losses
Net change in reserve for stock-based benefits
82(5,166)
Net change in liability for employees’ retirement benefits(71,209)
Interest income
Interest expense
1,332
Losses (gains) on investment securities—net
1,989(3,073)
Gains on money held in trust—net(3,683)Foreign exchange (gains) losses —net
Losses on sales and disposals of fixed assets—net
71(202,349)
Net change in loans and bills discounted
Net change in deposits
661,489
318,777
Net change in borrowed money (except for subordinated loans)
4,817
Net change in due from banks (except for the Bank of Japan)
Net change in call loans and bills bought
429(8,706)
Net change in call money and bills soldNet change in payables under securities lending transactions
13,883(1,753)
Net change in trading account securities
Net change in foreign exchange assets
3,662
Net change in foreign exchange liabilities
38(376)
Net change in lease receivables and investments in leases
Interest received
74,748(1,714)
Interest paid
Other—net
4,245
Total adjustments
779,584
Net cash provided by operating activities—(Forward)¥ 804,407

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS

Vision2021

Thousands of
U.S. Dollars(Note 1)
2021

MissionTHE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIES
Year Ended March 31, 2021

61

Debtors who are legally or formallybankrupt

Virtuallybankrupt

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

Possiblybankrupt

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

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

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

2. The loss rate is in principle defined as the average rateof bad debts for the recent five base years, but
comparisons with the average rate of bad debts for the
recent two base years are also taken into account in
the calculation. Also, necessary adjustments are madeby referring to the average rate of bad debts for anumber of base years to appropriately incorporate therisk during the recession period.

k. Reserve for Reimbursement of Deposits—Reserve
for reimbursement of deposits which were derecognized
as liabilities is provided for the future estimated payments
for reimbursement claims on dormant deposit accounts
based on the historical reimbursement experience.
l. Reserve for Contingent Losses—Reserve forcontingent losses is provided for the future estimatedpayments of burden money to the Credit Guarantee
Corporations based on the historical experience ofsubrogation.
m. Employees’ Retirement and Pension Plans—In
calculation of projected benefit obligations, expected
benefits are attributed to periods on a benefit formulabasis. Treatment of prior service cost and actuarial gains
and losses is as follows:
Prior service cost is charged to expenses whenincurred.
Unrecognized actuarial gains and losses are amortizedby the straight-line method from the following fiscal year
after the fiscal year when they were incurred over adefinite period (10 years) with the employees’ averageremaining service period when incurred.

o. Leases
As a lessee
Finance lease transactions are capitalized to recognize
lease assets and lease obligations in the consolidatedbalance sheet.
As a lessor
All finance leases that are deemed to transfer ownershipof the leased property to the lessee are recognized aslease receivables, and all finance leases that are deemed
not to transfer ownership of the leased property to thelessee are recognized as investments in leases.
p. Income Taxes—The provision for income taxes iscomputed based on the pretax income included in the
consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of
temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes aremeasured by applying currently enacted tax laws to thetemporary differences.

Financial
Sectionj. Reserve for Stock-Based Benefits—Reserve forstock-based benefits is provided for the grants of theBank’s shares to directors, etc. in accordance with thestock grant program based on the estimated stock-based
benefits liabilities as of the fiscal year end.

n. Asset Retirement Obligations—The asset retirement
obligation is recognized as the sum of the DCFs required
for the future asset retirement and is recorded in the
period in which the obligation is incurred if a reasonableestimate can be made. If a reasonable estimate of theasset retirement obligation cannot be made in the period
the asset retirement obligation is incurred, the liability
should be recognized when a reasonable estimate of theasset retirement obligation can be made. Upon initialrecognition of a liability for an asset retirement obligation,
an asset retirement cost is capitalized by increasing thecarrying amount of the related fixed asset by the amountof the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is
accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as anincrease or a decrease in the carrying amount of theliability and the capitalized amount of the related asset
retirement cost.

Company
Information

62(Notes)
1. Category of loans by debtor classification is defined as
below in compliance with the classification provided in“Practical Guideline on Self-Assessment of Assets andAudit of Bad Debts and Reserve for Loan Losses ofBanks and Other Financial Institutions” (the JapaneseInstitute of Certified Public Accountants (the “JICPA”)
Special Audit Committee Report No. 4 for Banks andOther Financial Institutions issued on October 8, 2020),
that is, “normal debtors,” “debtors requiring caution,”“possibly bankrupt debtors,” “virtually bankrupt debtors”
and “legally bankrupt debtors.”

Legallybankrupt

Consolidated subsidiaries apply a shortcut method
whereby the amount of the retirement benefits required tobe paid if all the employees voluntarily retired at the endof the fiscal year is regarded as projected benefit
obligations in determining the liability for employees’
retirement benefits and net periodic retirement benefit
costs.

Strategyf. Intangible Fixed Assets—The amortization of
intangible fixed assets is calculated using the straight-line
method. Capitalized costs of computer softwaredeveloped/obtained for internal use are amortized using
the straight-line method over the estimated useful lives offive years.

i. Reserve for Loan Losses—The Bank determines theamount of the reserve for loan losses by means ofmanagement’s judgment and assessment of future losses
based on internal rules for write offs and provisions.
For loans to borrowers classified as legally bankrupt or
virtually bankrupt, the Bank fully provides the net amountof loans and estimated collectible amounts by collateralor guarantees. Regarding loans to borrowers classified as
possibly bankrupt, a specific reserve is provided to thenecessary extent for the net amount of loans andestimated collectible amounts by collateral or guarantees.
For large debtors who are possibly bankrupt anddebtors requiring special attention, if the cash flows fromcollection of the principal and interest can be reasonably
estimated, the reserve is provided based on the difference
between the relevant cash flows discounted by the initial
contractual interest rates and the carrying amounts of theloans (the “DCF method”).
The reserve for other loan loss is recorded principallyat the amount of estimated losses over the next two or
three years. Estimated losses are determined by
calculating a loss rate based on the average of actual
loss ratio over the past certain period, which is calculatedwith credit loss experience over two or three years.
Adjustments are to be made as necessary in light of
future outlook and other factors.
All the loans are assessed by sales related department
in accordance with the self-assessment standard and theresults are audited by asset audit department
independent from the sales related department.
The Bank’s subsidiaries determine the reserve for loan
losses based on the actual loss ratio or estimatedcollectible amounts in accordance with the selfassessment standard.

Criteria

Va l u ee. Tangible Fixed Assets—Tangible fixed assets arestated at cost less accumulated depreciation and gains
deferred on the sale and replacement of certain assets.
Depreciation of tangible fixed assets, except for leaseassets, is mainly computed using the declining-balancemethod at rates based on the estimated useful lives of
the assets. The range of useful lives is principally from 5
to 31 years for buildings and from 4 to 20 years forequipment. Lease assets under finance leasetransactions, in which substantial ownership is notdeemed to have been transferred, are depreciated using
the straight-line method over the lease term. The salvage
value is zero or the guaranteed amounts if specified in
the lease contracts (see Note 2.o).

h. Foreign Currency Items—Assets and liabilities
denominated in foreign currencies held by the Bank at
year-end are translated into Japanese yen at the current
exchange rates in effect at each consolidated balance
sheet date. Exchange gains and losses are recognized in
the fiscal periods in which they occur.

Category

Visiond. Trading Account Securities, Investment Securities
and Money Held in Trust—Securities other thaninvestments in affiliates are classified into three
categories, based principally on the Companies’ intent, as
follows: (1) trading account securities, which are held forthe purpose of earning capital gains in the near term, arereported at fair value and the related unrealized gains
and losses are included in earnings; (2) held-to-maturity
debt securities, which are expected to be held to maturity
with the positive intent and ability to hold to maturity, arereported at amortized cost; and (3) available-for-salesecurities, which are not classified as either of theaforementioned securities, are reported at fair value withunrealized gains and losses, net of applicable taxes,
reported in a separate component of equity.
The cost of trading account securities and available-forsale securities sold is determined based on the movingaverage method.
In addition, investments in unconsolidated subsidiaries
not accounted for by the equity method are reported atcost determined by the moving-average method.
Available-for-sale securities for which fair value isextremely difficult to determine are reported at cost
determined by the moving-average method.
For other-than-temporary declines in fair value,
investment securities are reduced to net realizable value
by a charge to income.
Securities included in money held in trust are alsoclassified and accounted for using the same method as
above.
The components of trust assets are accounted forbased on the standard appropriate for each asset type.
Instruments held in trust for trading purposes arerecorded at fair value and unrealized gains and losses
are recorded in other income/expenses. Instruments heldin trust classified as available-for-sale are recorded at fairvalue with the corresponding unrealized gains/losses
recorded directly in a separate component of equity.
Instruments held in trust classified as held to maturity arecarried at amortized cost.

g. Long-Lived Assets—The Companies review theirlong-lived assets for impairment whenever events orchanges in circumstances indicate the carrying amount ofan asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying
amount of an asset or asset group exceeds the sum of
the undiscounted future cash flows expected to result
from the continued use and eventual disposition of theasset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of
the asset exceeds its recoverable amount, which is thehigher of the discounted cash flows (“DCFs”) from thecontinued use and eventual disposition of the asset or the
net selling price at disposition.

Missionc. Cash and Cash Equivalents—For the purposeof the consolidated statement of cash flows, cash
and cash equivalents represent cash and amounts
due from the Bank of Japan.

q. Derivatives and Hedging Activities—It is the Bank’s
policy to use derivative financial instruments(“derivatives”) primarily for the purpose of reducing
market risks associated with its assets and liabilities. The
Bank also utilizes derivatives to meet the needs of its
clients while entering into derivatives as a part of its
trading activities. The Bank enters into interest rate swaps
and interest rate swaptions as a means of hedging its
interest rate risk on certain loans and investment
securities and to meet the needs of its clients. The Bank
also enters into currency swaps, foreign exchange
forward contracts, and currency options to hedge foreign
currency exchange risk associated with its assets andliabilities denominated in foreign currencies and to meetthe needs of its clients.
Derivatives are recognized as either assets or liabilities
and measured at fair value. Gains or losses on derivativetransactions are recognized in the consolidated statement

THE 77 BANK INTEGRATED REPORT63

Cash and due from banks ¥1,371,871 ¥747,105 $12,391,572
Due from banks, excluding(4,880)(9,698)(44,079)
due from the Bank of Japan
Cash and cash equivalents¥1,366,991 ¥737,406 $12,347,493
at the end of year

Securities classified as:
Trading
Available-for-sale:
Equity securities* ¥ 59,209
Debt securities 2,201,520
Other securities* 693,748
1,014
Held to maturity

Fair
Value

¥
¥78,064
9,093
77,926

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

Millions of Yen

2020
Unrealized Unrealized
Gains
Losses

Cost

Securities classified as:
Trading
Available-for-sale:
Equity securities* ¥ 52,054
Debt securities 2,146,298
Other securities* 617,863
Held to maturity
1,000

Fair
Value

¥
¥54,647
13,036
42,63518,873¥ 2,724 103,977
3,471 2,155,864
25,176 635,321
1,000

Thousands of U.S. Dollars

2021

4. TRADING ACCOUNT SECURITIES ANDINVESTMENT SECURITIES

Cost

Trading account securities as of March 31, 2021 and2020, consisted of the following:

National government bonds
Local government bonds
Other securities
Total

Millions of Yen
2021
2020

¥ 229
14,396
6,001¥20,627¥649
12,222
6,000¥18,873

Thousands of
U.S. Dollars
2021

$

2,068
130,033
54,204$186,315

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

National government bonds ¥ 274,404 ¥ 453,343 $ 2,478,583
909,175 744,437 8,212,221
Local government bonds
1,023,345 959,084 9,243,473
Corporate bonds
137,884 105,845 1,245,452
Equity securities
761,732 640,922 6,880,426
Other securities¥3,106,542 ¥2,903,632 $28,060,175
Total
Investment in an unconsolidated subsidiary in theamount of ¥25 million ($225 thousand) and ¥25 million
and investment in interest in partnership in the amount of¥3,580 million ($32,336 thousand) and ¥2,771 million are
included in the above equity securities and othersecurities as of March 31, 2021 and 2020, respectively.
The carrying amounts and aggregate fair values of
securities as of March 31, 2021 and 2020, were as
follows:
Securities below include trading account securities andinvestment securities:$$705,121
82,133703,874

Valuation differences:
Available-for-sale securities ¥143,486 ¥78,690 $1,296,052
Available-for-sale money
7,913
919
71,475held in trust(44,841) (23,401) (405,031)
Deferred tax liabilities
Unrealized gains on availablefor-sale securities¥106,557 ¥56,207 $ 962,487

5. MONEY HELD IN TRUSTThe carrying amounts and aggregate fair values of money
held in trust as of March 31, 2021 and 2020, were as
follows:
Millions of Yen

2021

186,315$ 10,432 1,229,509
42,471 19,925,128
139,860 6,830,367
9
9,140

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

Unrealized Unrealized
Gains
LossesCost¥21,581¥21,581* Unlisted equity securities for which the fair value isextremely difficult to determine are not included.
Securities, other than trading account securities, withreadily determinable fair value, whose fair value
significantly declined compared with the acquisition cost
and whose fair value is not considered likely to recover totheir acquisition cost, are written down to the respective
fair value. The related losses on revaluation are charged
to income for the fiscal year.
Impairment losses were recognized for available-forsale securities in the amount of ¥119 million ($1,074
thousand), consisting of ¥119 million ($1,074 thousand)of other securities, and ¥201 million, consisting of ¥201
million of equity securities for the years ended March 31,
2021 and 2020, respectively.
The criteria for determining whether the fair value has“significantly declined” are defined based on the asset
classification of the issuer in the internal standards for
asset quality self-assessment as follows:(a) Normal issuer: Fair value declined by 50% or moreof the acquisition cost or fair value declined between
30% and 50% and average fair value during thepast one month declined by 50% or more (30% ormore for issuers who have credit risk more than acertain level).
(b) Caution issuers: Fair value declined by 30% or moreof the acquisition cost.
(c) Legally bankrupt, virtually bankrupt, and possibly
bankrupt issuers: Fair value is lower than theacquisition cost.
Proceeds from sales of available-for-sale securities for

Thousands of
U.S. Dollars
2021¥7,913¥7,913

Fair
Value¥ 79,406
29,494¥108,901

Millions of Yen

2020

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

Unrealized Unrealized
Gains
LossesCost¥21,581¥21,581

¥919
¥919

Fair
Value

Financial
SectionInvestment securities as of March 31, 2021 and 2020,
consisted of the following:

Securities classified as:
Trading
Available-for-sale:
Equity securities* $ 534,811
Debt securities 19,885,466
Other securities* 6,266,353
9,159
Held to maturity

Fair
Value

Unrealized Unrealized
Gains
LossesMillions of Yen
2021
2020

Company
Information

64

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Unrealized Unrealized
Gains
LossesCost

the years ended March 31, 2021 and 2020, were¥149,876 million ($1,353,771 thousand) and ¥37,056
million, respectively. Gross realized gains and losses onthese sales, computed on a moving average cost basis,
were ¥12,241 million ($110,568 thousand) and ¥1,203
million ($10,866 thousand), respectively, for the year
ended March 31, 2021, and ¥5,077 million and ¥136
million, respectively, for the year ended March 31, 2020.
Unrealized gains on available-for-sale securities as ofMarch 31, 2021 and 2020, consisted of the following:

Strategyt. Changes in Presentation—On March 31, 2020, the
Accounting Standards Board of Japan (“ASBJ”) issued
ASBJ Statement No. 31, “Accounting Standard forDisclosure of Accounting Estimates.”

The reconciliation of cash and cash equivalents at theend of the year and cash and due from banks in the
consolidated balance sheet as of March 31, 2021 and2020, was as follows:

2021

Va l u es. Significant Accounting Estimates
Reserve for loan losses(1) Amount recorded in the consolidated financial
statements as of March 31, 2021
¥61,356 million ($554,204 thousand)(2) Information about the details of significant accounting
estimates for the identified item
i. Computation method
The method of computing reserve for loan losses isstated in “i. Reserve for loan losses” under Note 2,“Summary of Significant Accounting Policies.”
ii. Main assumptions
Main assumptions are the future prospects used in
the assessment of the category of loans by debtor
classification.
Debtor classification is assessed bycomprehensively taking into account profitability
projections, reasonableness of management
improvement plans, status of support from financial
institutions, etc., based on the characteristics of theindustry to which the debtor belongs, after verifying
the debtor’s ability to repay the debts based on thefinancial position, cash management, cash flows,
etc. of the debtor and confirming the lending
conditions and the status of its fulfilment.
Regarding the domestic economy, it is assumed
that the economic downturn will continue for thetime being due to the impact of COVID-19. There
was no significant change in the assumptions on
COVID-19 from the previous fiscal year.
iii. Impact on the consolidated financial statements forthe following fiscal year
If the assumptions used in the initial estimateschange due to changes in the debtors’
performances, this may have a significant impact onreserve for loan losses in the consolidated financial
statements for the following fiscal year.
Furthermore, changes in assumptions used forthe estimates include a risk of a further downturn inthe economy due to the delay of supply of
COVID-19 vaccines and prolonged restrictions of
economic activity following the spread of the highly
contagious variants of COVID-19.

3. CASH AND CASH EQUIVALENTS

Millions of Yen

Visionr. Per Share Information—Basic net income per share iscomputed by dividing net income attributable to common
stockholders by the weighted-average number ofcommon shares outstanding for the period, retroactively
adjusted for stock splits or share consolidation.
Cash dividends per share presented in the consolidated
statement of income are dividends applicable to therespective years including dividends to be paid after theend of the year.

The Bank has applied this standard to the consolidated
financial statements for the year ended March 31, 2021,
and provided a note concerning significant accounting
estimates in the consolidated financial statements.
However, such note does not state the contents
concerning the previous fiscal year pursuant to thetransitional treatment prescribed in the proviso ofparagraph 11 of the above standard.

Missionof income. If derivatives qualify for hedge
accounting because of high correlation andeffectiveness between the hedging instruments andthe hedged items, the gains or losses on derivatives aredeferred until maturity of the hedged transactions.
The interest rate swaps which qualify for hedge
accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expense or income.

¥59,843
22,500¥82,344

Thousands of U.S. Dollars

2021
Cost

Money held in trustclassified as:
Trading
Available-for-sale $194,932$194,932
Total

Unrealized Unrealized
Gains
Losses$71,475$71,475

Fair
Value

$717,243
266,407$983,660

Available-for-sale securities held in trust, whose fairvalue significantly declined compared with the acquisition
cost and whose fair value is not considered likely torecover to their acquisition cost, are written down to therespective fair value.
No impairment loss was recognized for money held in
trust for the years ended March 31, 2021 and 2020.

THE 77 BANK INTEGRATED REPORT

65

7. FOREIGN EXCHANGESLoans and bills discounted as of March 31, 2021
and 2020, consisted of the following:Thousands ofMillions of Yen
U.S. Dollars

Foreign exchange assets and liabilities as of March 31,
2021 and 2020, consisted of the following:

¥

2020

2021

6,321 ¥
8,417 $
57,095112,595
134,989 1,017,026
4,369,410 4,126,107 39,467,166
600,242616,705 5,421,750¥5,088,570 ¥4,886,221 $45,963,056

Thousands of
U.S. Dollars
2021

66

¥ 38
78
¥116

$ 108
1,282
$1,400

The accumulated depreciation of tangible fixed assets asof March 31, 2021, and 2020, amounted to ¥86,972 million($785,583 thousand) and ¥85,053 million, respectively.
As of March 31, 2021 and 2020, deferred gains for tax
purposes of ¥7,695 million ($69,505 thousand) and¥7,695 million, respectively, on tangible fixed assets sold
and replaced with similar assets have been deductedfrom the cost of newly acquired tangible fixed assets.

9. LONG-LIVED ASSETS
The Bank recognized impairment losses of ¥292 million($2,637 thousand) and ¥126 million on certain operating
branches, business premises, branches to be closed, andunused facilities for the years ended March 31, 2021 and2020, respectively.
The impairment losses were composed of ¥107 million($966 thousand) on buildings, ¥2 million ($18 thousand)on land and ¥182 million ($1,643 thousand) on other fixed
assets for the year ended March 31, 2021, and ¥67
million on buildings and ¥59 million on other fixed assets
for the year ended March 31, 2020.
For the purpose of testing for impairment, the Bank
recognizes each individual branch office as a cashgenerating unit for which it continues to manage andmonitor identifiable cash flows. Branch offices to beclosed and facilities not in operation are individuallyassessed for impairment. Subsidiaries recognize eachcompany as a cash-generating unit. An impairment loss
would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future
cash flows expected to result from the continued use andeventual disposition of the asset or asset group.
The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the DCFs fromthe continued use and eventual disposition of the asset or
the net selling price at disposition. The DCFs were
calculated using discount rates of 6.6% and 5.7% for theyears ended March 31, 2021 and 2020, respectively, andthe net selling price was determined by quotation from athird-party vendor.

Millions of Yen
2021
2020

11. ASSETS PLEDGED
Assets pledged as collateral and their relevant liabilities
as of March 31, 2021 and 2020, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

8. TANGIBLE FIXED ASSETS

2021

2021

2020

Assets pledged as collateral:
Investment securities¥977,812 ¥628,124 $8,832,192
Other assets
144
144
1,300
Relevant liabilities to above assets:
Deposits
51,96850,630469,406
Payables under securities
lending transactions
25,869233,664
11,986
Borrowed money
596,235 279,189 5,385,556
In addition to the above, the following assets were
offered as collateral for exchange settlement transactions,or as substitutes for future transaction initial margin andothers:Thousands of
U.S. Dollars

Millions of Yen

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

Deposits as of March 31, 2021 and 2020, consisted of thefollowing:

2021

¥

100
50,000

2020

¥

100
50,000

2021

$

903
451,630

9,375

4,033

84,680

93

93

840

12. LOAN COMMITMENTS
Contracts of overdraft facilities and loan commitments arecontracts with customers to lend up to the prescribed
limits in response to customers’ applications for a loan, as
long as there is no violation of any condition within thecontracts. As of March 31, 2021, the unused amount ofsuch contracts totaled ¥1,671,011 million ($15,093,586
thousand), of which amounts with original agreement
terms of less than one year were ¥1,551,636 million($14,015,319 thousand). As of March 31, 2020, theunused amount of such contracts totaled ¥1,617,531
million, of which amounts with original agreement termsof less than one year were ¥1,512,502 million.
Since many of the commitments expire without being
drawn upon, the unused amount does not necessarily
represent a future cash requirement. Most of thesecontracts have conditions allowing the Companies torefuse customers’ applications for a loan or decrease thecontract limits based on proper reasons (e.g., changes infinancial situation, deterioration in customers’
creditworthiness). At the inception of the contracts, theCompanies obtain collateral real estate, securities, etc., if

Thousands of
U.S. Dollars
2021

Current deposits¥ 240,917 ¥ 203,474 $ 2,176,108
Ordinary deposits
5,748,476 5,041,623 51,923,728
122,283
Deposits at notice
13,53814,922Time deposits
2,077,491 2,097,525 18,765,161
211,460 289,000 1,910,035
Negotiable certificates of deposit
Other deposits
235,597 219,445 2,128,055
Total¥8,527,481 ¥7,865,991 $77,025,390

14. BORROWED MONEY
As of March 31, 2021 and 2020, the weighted-averageannual interest rates applicable to borrowed money were0.006% and 0.056%, respectively.
Borrowed money consisted of borrowings from the
Bank of Japan and other financial institutions. Annual
maturities of borrowed money as of March 31, 2021, wereas follows:Year Ending March 31
2022
2023
2024
2025
2026
2027 and thereafter
Total

Millions of Yen¥446,865
1,707
154,119870
403
712¥604,679

Thousands of
U.S. Dollars$4,036,356
15,4181,392,096
7,858
3,640
6,431
$5,461,828

Financial
SectionLoans to borrowers in bankruptcy represent nonaccrualloans to debtors who are legally bankrupt, as defined in
the Enforcement Ordinance for the Corporation Tax Law.
Past due loans are nonaccrual loans which include
loans classified as possibly bankrupt and virtuallybankrupt.
Nonaccrual loans are defined as loans for which the
Bank has discontinued accruing interest income due tosubstantial doubt existing about the ultimate collection ofprincipal and/or interest. Such loans are classified either
as possibly bankrupt or virtually bankrupt under the
Bank’s self-assessment guidelines.
In addition to past due loans, certain other loansclassified as caution under the Bank’s self-assessment
guidelines include past due loans (three months or more)which consist of loans for which the principal and/orinterest is three months or more past due, but exclude
loans to borrowers in bankruptcy and past due loans.
Restructured loans are loans where the Bank and its
subsidiaries relax lending conditions by reducing theoriginal interest rate or by forbearing interest payments or
principal repayments to support the borrower’s
reorganization. Restructured loans exclude loans toborrowers in bankruptcy, past due loans or past due loans(three months or more).

¥ 12
142
¥155

$52,976$52,976

Company
Information

Loans to borrowers inbankruptcy¥ 3,291 ¥ 9,976 $ 29,726
Past due loans
74,18865,808670,111
Past due loans (three months
or more)
1,032
867
9,321
Restructured loans
33,47628,536302,375
Total¥111,989 ¥105,188 $ 1,011,552

Liabilities
Foreign exchange bills sold
Foreign exchange bills payable
Total¥9,528¥9,528Strategy

Millions of Yen
2021
2020

¥5,865¥5,865

13. DEPOSITS

Va l u eBills discounted are accounted for as financialtransactions in accordance with “Treatment of Accounting
and Auditing of Application of Accounting Standard for
Financial Instruments in the Banking Industry” (JICPA
Industry Committee Practical Guideline No. 24). The
Bank has rights to sell or pledge these bills discounted.
The total of the face value of bills discounted was ¥6,321
million ($57,095 thousand) and ¥8,417 million as ofMarch 31, 2021 and 2020, respectively.
Loans and bills discounted as of March 31, 2021 and2020, included the following loans:

AssetsDue from foreign correspondentaccounts
Total

Millions of Yen
2021
2020

All contingent liabilities arising from acceptances andguarantees are reflected in “Acceptances andguarantees.” “Customers’ liabilities for acceptances andguarantees” are shown as assets, representing theBank’s right to receive indemnity from the applicants.
The amount of guarantee obligations for privately
placed corporate bonds included in securities as of March
31, 2021 and 2020, was ¥37,079 million ($334,920
thousand) and ¥25,859 million, respectively.

considered to be necessary. Subsequently, theCompanies perform a periodic review of the customers’
business results based on internal rules and takenecessary measures to reconsider conditions in contracts
and require additional collateral and guarantees.

VisionBills discounted
Loans on bills
Loans on deeds
Overdrafts
Total

2021

Thousands of
U.S. Dollars
2021

10. CUSTOMERS’ LIABILITIES FOR
ACCEPTANCES AND GUARANTEES

Mission

6. LOANS AND BILLS DISCOUNTED

15. LIABILITY FOR EMPLOYEES’ RETIREMENTBENEFITS
The Bank has severance payment plans as defined
benefit plans consisting of corporate pension fund plans
and lump-sum retirement payment plans for employees.
In addition, the Bank has established corporate defined
contribution pension plans as defined contribution plans.
The Bank has also established a retirement benefit trust
under the lump-sum retirement payment plan.
The consolidated subsidiaries have lump-sum
retirement payment plans and calculate liability for
retirement benefit and retirement benefit costs using ashortcut method.

THE 77 BANK INTEGRATED REPORT67

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021(4) The components of net periodic retirement benefit
costs for the years ended March 31, 2021 and 2020,
were as follows:
Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021(2) The changes in plan assets for the years ended March
31, 2021 and 2020, were as follows:(5) Amounts recognized in other comprehensive income(before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31,
2021 and 2020, were as follows:

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Liability for employees’ retirement benefits¥17,102 ¥25,539 $154,475
Asset for employees’ retirement
benefits
Net liability arising from projected¥17,102 ¥25,539 $154,475
benefit obligations¥3,270 ¥(1,798) $29,536¥3,270 ¥(1,798) $29,536(6) Amounts recognized in accumulated othercomprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March
31, 2021 and 2020, were as follows:

Unrecognized actuarial losses
Total

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021¥7,565 ¥10,836 $68,331¥7,565 ¥10,836 $68,331(7) Plan assets as of March 31, 2021 and 2020a. Components of plan assets
Plan assets consisted of the following:
2021

Debt investments
41%
Equity investments
33
Cash and cash equivalents
1
Life insurance company accounts (general accounts) 20
Call loans, etc.
5
Others
0
Total
100%

2020

23%
23
11
24
19
0
100%

Note: Total plan assets as of March 31, 2021 and 2020,
include retirement benefit trust established underlump-sum payment plans by 20% and 22%,
respectively.
b. Method of determining the long-term expected rateof return on plan assets
The expected rate of return on plan assets is determinedconsidering allocation of plan assets which are expectedcurrently and in the future and the long-term rates ofreturn which are expected currently and in the future fromthe various components of the plan assets.

68

16. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations which were recognized on
the consolidated balance sheet as of March 31, 2021 and2020, were as follows:a. Overview of asset retirement obligations
Asset retirement obligations are recognized for obligationsof restoring leased buildings, such as branch premises, totheir original state, based on the real estate lease
contracts and asbestos removal costs.
b. Calculation of asset retirement obligations
Asset retirement obligations are calculated based on theestimated available periods of 16 to 31 years dependingon the expected useful lives of buildings using discountrates from 0.139% to 2.324%.
c. The changes in asset retirement obligations for theyears ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

2021

2020

¥661

¥662

2021

$5,970

17
5

5

45

¥667

(15)
(9)
¥661

$6,024

17. PERFORMANCE-LINKED STOCKCOMPENSATION SYSTEM
The Bank has introduced a performance-linked stockcompensation system (the “System”) based on the Board
Incentive Plan (“BIP”) trust from the perspective ofenhancing motivation to make contributions to improving
the medium- to long-term performance and corporate
value by further clarifying the linkage between
compensation to directors, etc. and stock value of the
Bank.
Under the System, the Bank’s shares are acquired
using the funds contributed by the Bank as compensation
to directors, etc. through the trust and such shares are
granted to directors, etc. through the trust according totheir ranks and achievement of management plans. Saidtransactions are related to the System.
The Bank’s shares remaining in the trust are recorded
as treasury stock under “Equity” and the carrying amountof such treasury stock was ¥1,019 million ($9,204
thousand) and ¥1,089 million and the number of shares
was 371 thousand shares and 396 thousand shares as ofMarch 31, 2021 and 2020, respectively.

THE 77 BANK INTEGRATED REPORT

Financial
SectionFunded projected benefit obligations ¥ 69,602 ¥ 69,110 $ 628,687(52,647) (43,708) (475,539)
Plan assets
16,95525,401 153,147
Total
147
137
1,327
Unfunded projected benefit obligations
Net liability arising from projected¥ 17,102 ¥ 25,539 $ 154,475
benefit obligations

Thousands of
U.S. Dollars
2021(9) Defined contribution
The amount required to be contributed to the defined
contribution plan of the Bank was ¥263 million ($2,375
thousand) and ¥268 million for the fiscal years ended
March 31, 2021 and 2020, respectively.

Company
Information(3) Reconciliation between the liability recorded in the
consolidated balance sheet and the balances ofprojected benefit obligations and plan assets as ofMarch 31, 2021 and 2020, was as follows:

Actuarial gains (losses)
Total

Millions of Yen
2021
2020

0.6%
3.2
4.5

Japanese banks are subject to the Banking Law and to
the Companies Act of Japan (the “Companies Act”). The
significant provisions in the Companies Act and the
Banking Law that affect financial and accounting matters
are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends
at any time during the fiscal year in addition to the yearend dividend upon resolution at the general meeting ofstockholders. For companies that meet certain criteriasuch as (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory
Board, and (4) the term of service of the directors beingprescribed as one year rather than two years of normal
term by its articles of incorporation, the Board of Directors
may declare dividends (except for dividends-in-kind) at
any time during the fiscal year if the company hasprescribed so in its articles of incorporation. The Bank
meets all the above criteria. The Companies Act permits
companies to distribute dividends-in-kind (noncash
assets) to stockholders subject to certain limitations andadditional requirements. Semiannual interim dividends
may also be paid once a year upon resolution by the
Board of Directors if the articles of incorporation of thecompany so stipulate. The Bank can do so because it
stipulates this in its articles of incorporation. The
Companies Act provides certain limitations on theamounts available for dividends or the purchase oftreasury stock. The limitation is defined as the amountavailable for distribution to the stockholders, but theamount of net assets after dividends must be maintained
at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common
Stock, Reserve and Surplus
The Banking Law requires that an amount equal to 20%
of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in
capital (a component of capital surplus) depending on theequity account charged upon the payment of such
dividends until the total of the aggregate amount of thelegal reserve and additional paid-in capital equals 100%of stated capital.
Under the Companies Act and the Banking Law, theaggregate amount of additional paid-in capital and thelegal reserve that exceeds 100% of the stated capital
may be made available for dividends by resolution of thestockholders after transferring such excess to retained
earnings in accordance with the Companies Act. Under
the Companies Act, the total amount of additional paid-in
capital and the legal reserve may be reversed without
limitation. The Companies Act also provides that statedcapital, legal reserve, additional paid-in capital, othercapital surplus, and retained earnings can be transferredamong the accounts under certain conditions upon
resolution of the stockholders.
c. Treasury Stock and Treasury Stock Acquisition
RightsThe Companies Act also provides for companies topurchase treasury stock and dispose of such treasury
stock by resolution of the Board of Directors. The amountof treasury stock purchased cannot exceed the amountavailable for distribution to the stockholders which isdetermined by a specific formula. Under the Companies
Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides
that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate componentof equity or deducted directly from stock acquisition rights.

Strategy

Balance at beginning of year
¥43,708 ¥45,879 $394,797
1,383
1,455 12,492
Expected return on plan assets
3,640(2,539) 32,878
Actuarial gains (losses)
Contributions from theemployer
5,760
761 52,027(2,026) (2,028) (18,300)
Benefits paid
Others
180
180
1,625
Balance at end of year
¥52,647 ¥43,708 $475,539

Note: Employees’ contribution to corporate pension funds
is deducted.

Discount rate
0.6%
Long-term expected rate of return on plan assets 3.2
Expected rate of salary increase
4.5

2020

Va l u eService cost
¥ 1,658 ¥ 1,677 $ 14,976
Interest cost
440
443
3,974
(1,383) (1,455) (12,492)
Expected return on plan assets
Recognized actuarial losses
1,619
1,196 14,623
Net periodic retirement benefit costs ¥ 2,335 ¥ 1,861 $ 21,091

2021

18. EQUITY

Vision¥69,248 ¥69,781 $625,490
1,658
1,677 14,976
440
443
3,974
1,989
455 17,965(3,768) (3,289) (34,034)
180
180
1,625
¥69,749 ¥69,248 $630,015

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

(8) Assumptions used for the years ended March 31,
2021 and 2020, were set forth as follows:

Mission(1) The changes in projected benefit obligations forthe years ended March 31, 2021 and 2020,
were as follows:6919. OTHER OPERATING INCOME¥

404 ¥ 110 $ 3,649
7,363
7,341
66,507
6,222
4,573
56,200¥13,990 ¥12,025 $126,366

20. OTHER INCOME

¥

29
1,133
¥1,163¥12
1,497¥1,510Thousands of
U.S. Dollars
2021

$ 261
10,233$10,504

21. OTHER OPERATING EXPENSES
Other operating expenses for the years ended March 31,
2021 and 2020, consisted of the following:

22. OTHER EXPENSES
Other expenses for the years ended March 31, 2021 and2020, consisted of the following:

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

70

Millions of Yen
2021
2020

¥

58

¥

60

Thousands of
U.S. Dollars
2021

$

523

856
249

1,546
452

7,731
2,249

393

188

3,549

126
1,373
¥3,057118
701¥3,066

1,138
12,401$27,612

Note: Valuation allowance for the fiscal year ended
March 31, 2021, increased by ¥817 million ($7,379
thousand). This increase was mainly due to anincrease of ¥886 million ($8,002 thousand) invaluation allowance on reserve for loan losses at
the Bank and consolidated subsidiaries.
A reconciliation between the normal effective statutory
tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income for theyear ended March 31, 2021, was as follows, whereas areconciliation for the year ended March 31, 2020, is not
required under Japanese accounting standards, since thedifference is less than 5% of the normal effective statutory
tax rate.
2021

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

Deferred gains on derivatives underhedge accounting:(Loss) gain arising during the year ¥Reclassification adjustment toprofit or loss
Amount before income tax effect
Income tax effect¥Total(53) ¥

25 $

(478)

701

871

6,331

647
897
5,844
(196)
(272)
(1,770)450 ¥ 624 $ 4,064

Defined retirement benefit plans:
Gain (loss) arising during the year ¥1,650 ¥ (2,994) $ 14,903
Reclassification adjustment to
1,619
1,196
14,623
profit or loss
3,270 (1,798) 29,536
Amount before income tax effect(994)(8,978)546
Income tax effect¥ 2,276 ¥ (1,251) $ 20,558
Total
Total other comprehensive income(loss)¥ 53,077 ¥(55,528) $ 479,423

25. LEASES
Finance Leases
LessorA subsidiary leases certain equipment and other assets
to various customers.
The net investments in leases as of March 31, 2021
and 2020, are summarized as follows:

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

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021¥19,739 ¥19,744 $178,294
1,549
1,310
13,991(1,856) (1,901) (16,764)¥19,433 ¥19,153 $175,530

Maturities of lease receivables for finance leases as ofMarch 31, 2021, are as follows:Year Ending March 31
2022
2023
2024
2025
2026
2027 and thereafter
Total

Millions of Yen

¥ 51
44
30
28
22
44
¥223

Thousands of
U.S. Dollars

$ 460
397
270
252
198
397
$2,014¥ 6,096
4,956
3,777
2,466
1,288
1,154
¥19,739

Thousands of
U.S. Dollars$ 55,062
44,765
34,11622,274
11,633
10,423$178,294

26. FINANCIAL INSTRUMENTS AND RELATEDDISCLOSURES(1) Group Policy for Financial Instruments
The Companies provide financial services such as credit
card business and leasing operations in addition tobanking operations. In the course of these operations, theCompanies raise funds principally through deposit taking
and invest funds in loans, securities, and others. As such,the Bank holds financial assets and liabilities which are
subject to fluctuation in interest rates and conducts
comprehensive Asset and Liability Management (“ALM”)
to avoid unfavorable effects from interest rate fluctuations.
Derivatives are also employed by the Bank as part of ALM.
(2) Nature and Extent of Risks Arising from Financial
Instruments
Financial assets held by the Companies mainly consist ofloans to domestic corporations, local government
agencies, and individual customers which are exposed tocredit risk that the Companies may suffer from losses
resulting from nonperformance of borrowers and interest
rate risk that the Companies may suffer from losses
resulting from fluctuations in interest rates.
Securities, mainly debt securities, equity securities, andinvestment trusts are held to maturity and for otherpurposes and also certain debt securities are held for the
purpose of selling to customers. These securities are
exposed to credit risk of issuers and market risks offluctuations in interest rates and market prices. In
addition, they are exposed to market liquidity risk that theCompanies may suffer from losses resulting fromdifficulties in executing financial transactions in certain
environments such as market turmoil.
Financial liabilities, mainly consisting of liquid deposits
or time deposits taken from corporate and individual
customers, are exposed to cash flow risk that the Bank
may experience a situation where unexpected cash flows
are incurred in certain environments where the credit
rating of the Bank may be lowered and, accordingly,
necessary funding may become difficult.
Foreign currency denominated assets and liabilities are
exposed to foreign exchange risk that the Bank may
suffer from losses resulting from fluctuations in foreignexchange rates.
Derivatives mainly include interest rate swaps and bondfutures, which are used to manage exposure to market
risks from changes in interest rates of loans andinvestment securities, and foreign exchange forward
contracts, which are used to hedge foreign exchange risk
associated with foreign currency-denominated assets andliabilities. Hedge accounting is applied to certain hedging
activities related to loans and investment securities ashedged items.
(3) Risk Management for Financial Instruments
Credit risk management
The Bank has established the “Credit Risk Control Policy”
as a basic policy for credit risk management and various
THE 77 BANK INTEGRATED REPORT

Financial
SectionLosses on sales, redemption
and devaluation of bonds and ¥13,137 ¥ 2,595 $118,661
other securities
Lease costs
6,754
6,746
61,006
Other
2,216
4,869
20,016
Total¥22,107 ¥14,211 $199,683

Deferred tax assets:¥ 15,396 ¥14,388 $ 139,066
Reserve for loan losses
Liability for employees’
8,183 10,746
73,913
retirement benefits
5,139
5,850
46,418Fixed assets (depreciation)
Losses on devaluation of
3,039
3,264
27,450stocks and other securities
5,916
6,406
53,436Other
Less valuation allowance(13,571) (12,754) (122,581)(see Note below)
24,104 27,903
217,721
Total
Deferred tax liabilities:
Unrealized gains on available44,841 23,401
405,031
for-sale securities
Fixed assets (deferred gain
300
309
2,709
on sales and replacements)
15
17
135
Other
45,157 23,729
407,885
Total
Net deferred tax (liabilities)¥(21,053) ¥ 4,173 $ (190,163)
assets

Unrealized gains (losses) on available-for-sale securities:
Gain (loss) arising during the year ¥ 72,116 ¥(65,730) $ 651,395
Reclassification adjustment to(326) (12,263)(2,944)
profit or loss
Amount before income tax effect 71,790 (77,994) 648,450(21,440) 23,092 (193,659)
Income tax effect¥ 50,350 ¥(54,901) $ 454,791
Total

2022
2023
2024
2025
2026
2027 and thereafter
Total

Millions of Yen

Company
Information

Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Thousands of
U.S. Dollars
2021

Year Ending March 31

Strategy

Gains on sales of tangible fixed assets
Other
Total

Millions of Yen
2021
2020

Millions of Yen
2021
2020

Millions of Yen
2021
2020

Maturities of investment in leases for finance leases asof March 31, 2021, are as follows:

Va l u e

Other income for the years ended March 31, 2021 and2020, consisted of the following:

The Companies are subject to Japanese national andlocal income taxes which, in the aggregate, resulted in anormal effective statutory tax rate of approximately 30.5%
for the years ended March 31, 2021 and 2020.
The tax effects of significant temporary differences
which resulted in deferred tax assets and liabilities as ofMarch 31, 2021 and 2020, were as follows:

The components of other comprehensive income (loss) for
the years ended March 31, 2021 and 2020, were as follows:

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

Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020

24. OTHER COMPREHENSIVE INCOME (LOSS)

Mission

Other operating income for the years ended March
31, 2021 and 2020, consisted of the following:

23. INCOME TAXES

71

(1)
(1)

$

(9)
(9)

211,498$211,480$ 1,336(72)$ 1,264*General and specific reserves for loan loss
corresponding to loans and bills discounted are deducted.
Notes:
1. Calculation method for the fair value of financial instruments
Assets(1) Cash and due from banks
For due from banks, the carrying amount is presented
as the fair value since the carrying amountapproximates the fair value.
(2) Money held in trust
For securities that are part of trust property in an
independently managed monetary trust with theprimary purpose to manage securities, the fair valuesof equity securities and debt securities are determinedusing the quoted price of the stock exchange, Japan
Securities Dealers Association, or the price calculated
by financial institutions. The fair value of investment
trust is determined using the published standard
quotation or the standard quotation offered by the
securities investment advisors.
See Note 5, “Money Held in Trust” for information
on money held in trust by holding purpose.
(3) Investment securities
The fair values of equity securities and debt securities
are determined using the quoted price of the stock
exchange, Japan Securities Dealers Association, or
the price calculated by financial institutions. The fairvalue of investment trust is determined using the
published standard quotation or the standard
quotation offered by the securities investment

Liabilities(1) Deposits
Regarding demand deposits, the amount payable asof the balance sheet date (i.e., the carrying amount) is
considered to be the fair value. Time deposits andnegotiable certificates of deposit are grouped bymaturity length, and the fair value is determined using
the present value of the aggregate amounts ofprincipal and interest discounted at an interest ratethat would be applied to newly accepted deposits. For
deposits with maturities within a short time period (lessthan one year) and whose carrying amountapproximates the fair value, the carrying amount ispresented as the fair value.
(2) Borrowed money
For each type of borrowed money financed, the fairvalue is determined based on the present value of theaggregated amounts of principal and interest
discounted at a rate which is the rate assumed if a
new financing was made. The carrying amount ispresented as the fair value if the maturity is within ashort time period (less than one year) and the carrying
amount approximates the fair value.

Financial
Section¥March 31, 2021
(1) Cash and due from banks $12,391,572 $12,391,572(2) Money held in trust
983,660
983,660(3) Investment securities 27,994,173 27,994,164
9,159
9,140
Held-to-maturity securities
Available-for-sale securities 27,985,014 27,985,014(4) Loans and bills discounted 45,963,056
Reserve for loan
(539,309)
losses*45,423,737 45,635,236$86,793,162 $87,004,651
Total assets(1) Deposits$77,025,390 $77,026,727(2) Borrowed money
5,461,828 5,461,746$82,487,218 $82,488,483
Total liabilities

Company
Information

Unrealized
Gain/Loss

Thousands of U.S. Dollars
Carrying
Unrealized
Fair Value
AmountGain/Loss

Strategy

Millions of Yen¥35,720¥35,721
¥ 171
1
¥ 173

advisors. With respect to privately placed guaranteedbonds, the fair value is determined using the future
cash flows (coupons, redemption of principal,
guarantee fees) discounted at an interest rateconsidering the market interest rates and issuers’
credit risk.
(4) Loans and bills discounted
With respect to loans with floating interest rates, thecarrying amount is presented as the fair value since
the carrying amount approximates the fair value as
they reflect the market interest rates over a shortperiod, unless the creditworthiness of the borrower
has changed significantly since the loan origination.
With respect to loans with fixed interest rates, foreach category of loan based on the type of loan,internal ratings, and maturity length, the fair value isdetermined based on the present value of expectedcash flows of aggregated amounts of principal andinterest discounted at a rate which is the rate
assumed if a new loan was made, or market interest
rate, which is adjusted by the standard spread(including overhead ratio) by credit rating. The
carrying amount is presented as the fair value if thematurity is within a short time period (less than oneyear) and the carrying amount approximates the fairvalue.
For receivables from “legally bankrupt,” “virtuallybankrupt,” and “possibly bankrupt” borrowers, loan
loss is estimated based on the DCF method or factors
such as the expected amounts to be collected fromcollateral and guarantees. Since the carrying amountapproximates the fair value, net of the currently
expected loan losses, such carrying amount ispresented as the fair value.
For loans for which the repayment due date is notdefined because of the characteristics that the loan
amount is limited within the pledged assets, thecarrying amount is presented as the fair value since
the carrying amount approximates the fair value
considering the expected repayment schedule andterms of the interest rates.

Va l u e

Carrying

Fair Value
March 31, 2021
Amount(1) Cash and due from banks ¥1,371,871 ¥1,371,871(2) Money held in trust
108,901
108,901(3) Investment securities 3,099,235 3,099,234
1,014
1,012
Held-to-maturity securities
Available-for-sale securities 3,098,221 3,098,221(4) Loans and bills discounted 5,088,570
Reserve for loan
(59,707)
losses*5,028,862 5,052,277
Total assets¥9,608,871 ¥9,632,285(1) Deposits¥8,527,481 ¥8,527,629(2) Borrowed money
604,679
604,670
Total liabilities¥9,132,160 ¥9,132,300

March 31, 2020
(1) Cash and due from banks ¥ 747,105 ¥ 747,105(3) Investment securities 2,896,163 2,896,164
Held-to-maturity securities
1,000
1,000
Available-for-sale securities 2,895,163 2,895,163(4) Loans and bills discounted 4,886,221
Reserve for loan
(61,450)
losses*4,824,770 4,860,491
Total assets¥8,468,039 ¥8,503,760(1) Deposits¥7,865,991 ¥7,866,162(2) Borrowed money
285,901
285,903
Total liabilities¥8,151,893 ¥8,152,066

Vision72

fluctuations may not be captured since, under the VaR
method, the volume of market risk under a definite
probability of statistically computed incidence is measured
based on historical market fluctuations.
The Bank implements back testing to compare the VaR
computed by the model with actual profit and loss in the
securities and confirms that the measurement model inuse captures the market risk with sufficient precision.
Liquidity risk management
The Bank has established the “Liquidity Risk Control
Policy” as a basic policy for liquidity risk management andvarious rules concerning liquidity risk management. Basedon these policies and rules, the Bank clarifies fundamental
approaches for stable funding of operations and control
procedures for identifying, monitoring and controlling
liquidity risk. In addition, the Bank has established the“Contingency Plan for Liquidity” to enable it to make quick
and correct responses to unexpected events.
Furthermore, as an organization responsible for liquidity
risk management, a liquidity risk control function has
been established and a cash management function and asettlement control function have been established tocontrol daily cash management and settlement related to
cash and securities.
The Risk Management Division, as a liquidity risk control
function, manages the liquidity risk of the Bank as a wholeby identifying, monitoring and controlling liquidity risk.
The Treasury Administration and International Division,
as a cash management control function and settlement
control function, prepares daily or monthly cash flow
projections and conducts cash management by identifying
possible funds and liquidity of assets and verifying theconcentration of settlement of major account funds to acertain date. The Division also controls settlement byidentifying the status of settlement through systems suchas the BOJ-NET and among financial institutions.
Risk management system of subsidiaries
The subsidiaries have a risk management system similar
to that of the Bank.
(4) Supplementary Explanation about Fair Values ofFinancial Instruments
The fair values of financial instruments include, in addition
to the value determined based on market prices,valuations calculated on a reasonable basis if no market
prices are available. Since certain assumptions are usedin calculating the value, the outcome of such calculation
may vary if different assumptions are used.
(5) Fair Values of Financial Instruments
The carrying amount, fair value, and unrealized gain/lossof the financial instruments as of March 31, 2021 and2020, are disclosed below. Note that unlisted equity
securities for which fair value is extremely difficult todetermine are not included in the following table (seeNote 2 below) and insignificant accounts in terms of thecarrying amount are omitted:

Missionrules concerning credit risk management. Based onthese policies and rules, the Companies clarify
fundamental approaches to secure the soundnessof assets and control procedures for identifying,monitoring, and controlling credit risk. Additionally, theBank utilizes the “Credit Rating System” applied tocounterparties granted with credit from the viewpoint ofidentifying credit risk objectively and enhancing credit risk
control.
In addition, as an organization responsible for credit
risk management, credit risk control functions and review
functions have been established to secure theeffectiveness of credit risk management.
The Risk Management Division, as a credit risk control
function, is engaged in identifying the level of future
possible credit risk and the status of credit concentrationin major borrowers through measurement of the level ofcredit risk and analysis of credit portfolios.
The Credit Supervision Division, as a review control
function, is engaged in reviewing lending operations
based on strict examination standards, systemdevelopment for strengthening the daily control of loan
receivables, and appropriate maintenance of operational
procedures.
Market risk management
a. Market Risk Management System
The Bank has established the “Market Risk Control
Policy” as a basic policy for market risk management andvarious rules concerning market risk management. Basedon these policies and rules, the Bank clarifies
fundamental approaches for appropriate market risk
control operations and control procedures for identifying,monitoring and controlling market risk.
As an organization responsible for market risk
management, a market risk control function (middle
office) has been established and furthermore, theoperating function (front office) and the administration
function (back office) have been separated. Additionally,market risk control function staffs are assigned to theoperating function to secure the effectiveness of market
risk management.
The Risk Management Division, as a market risk
control function, measures the level of market risk of the
Bank as a whole using Value-at-Risk (“VaR”) approachmodels and other models and regularly monitors thestatus of compliance with position limits and loss limits
established according to the type and characteristics oftransactions to control the level of market risk within acertain range.
In addition, an ALM and Income Control Committee
was established for the purpose of analyzing flexible
investment strategies in order to prevent risks resulting
from fluctuations in interest rates and market prices, while
forecasting future interest rates, market prices, and trendsof fund and business conditions. The committee is also
responsible for securing the soundness of management
and also improving profitability at the same time based on
appropriate asset and liability management through theunification of risk management and earnings control.
b. Quantitative Information about Market Risk
The Bank adopts the variance-covariance method(holding period: 125 business days for strategic equity
securities and 60 business days for others; confidence
interval: 99.0%; observation period: 250 business days)in computing the VaR with respect to money held in trust,securities, Japanese yen deposits and loans, andJapanese yen money market funds. The volume ofmarket risk (estimated losses) that the Bank is exposed
to as of March 31, 2021, amounts to ¥107,453 million($970,580 thousand) (¥146,420 million in 2020) as awhole. However, the risk under certain abnormal market

23,415¥23,413
¥ 148
(8)
¥ 140
THE 77 BANK INTEGRATED REPORT73

¥1,765¥1,868$15,942

5,541¥7,306

5,600¥7,46950,049$65,992

4. Repayment schedule of bonds, borrowed money, and other interest-bearing liabilities subsequent to March 31, 2021
Millions of Yen

Deposits*
Borrowed money
Total

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years¥8,144,814
446,865¥8,591,679¥334,683
155,827¥490,511¥47,983
1,273¥49,257

¥123
¥123

¥172
¥172

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years$73,568,909
4,036,356$77,605,266$3,023,060
1,407,524$4,430,593$433,411
11,498$444,919$1,111$1,111$1,553$1,553Due after 10
Years

¥416
¥416

Thousands of U.S. Dollars

Deposits*
Borrowed money
Total

Due after 10
Years$3,757$3,757
Va l u e* Demand deposits included in deposits are presented under “Due in 1 year or less.”

3. Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2021

VisionCategory
Unlisted equity securities*1,*2
Capital subscription in investment
business partnerships*3
Total

Carrying AmountThousands ofMillions of Yen
U.S. Dollars
2021
2020
2021

*1 Unlisted equity securities are not treated as instruments
whose fair value is required to be disclosed since there
is no market price and it is extremely difficult todetermine the fair value.
*2 Impairment losses in the amount of ¥1 million ($9thousand) and ¥57 million were recognized for unlisted
equity securities for the years ended March 31, 2021
and 2020, respectively.
*3 Capital subscription in investment business partnerships,
whose assets (i.e., unlisted equity securities) consist of
those whose fair values are extremely difficult todetermine, is not treated as instruments whose fair value
is required to be disclosed.

Mission

2. The financial instruments whose fair value isextremely difficult to determine are as follows.
These items are not included in (3) “Availablefor-sale securities” under “Assets” in the abovetable of fair value information of financial
instruments.

Millions of Yen
Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years¥1,315,243
331,265¥ 634,312¥ 706,128¥316,223
500¥ 733,240
500

500

500

315,723

732,740
9,000
425,648
178,100
119,991
528,587¥1,261,828

1,251,888¥1,304,688

Due after 10Years331,265
103,700
10,000159,216
58,349
1,095,656¥2,742,165

634,31296,00081,500318,160
138,652
823,645¥1,457,958

706,128
12,000224,100
249,889
220,139
768,329¥1,474,458

159,700
111,523
44,500504,267¥820,491

Due after 10
Years

¥

52,80052,80051,500300
1,000

Thousands of U.S. Dollars

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

Due in 1 Year or
Less

Due after 1 Yearthrough 3 Years

Due after 3 Years
through 5 Years

Due after 5 Years
through 7 Years

Due after 7 Years
through 10 Years$11,880,074
2,992,186$ 5,729,491$ 6,378,177$2,856,318
4,516$ 6,623,069
4,516

4,516

4,516

2,851,802

6,618,552
81,293
3,844,711
1,608,707
1,083,831
4,774,519$11,397,597

2,992,186
936,681
90,326
1,438,135
527,043
9,896,630$24,768,900

5,729,491
867,130
736,157
2,873,814
1,252,389
7,439,662$13,169,162

6,378,177
108,391
2,024,207
2,257,149
1,988,429
6,940,014$13,318,200

1,442,507
1,007,343
401,951
4,554,845$7,411,173$

476,921

27. DERIVATIVES
It is the Bank’s policy to use derivatives primarily for the
purpose of reducing market risks associated with its assets
and liabilities. The Bank also utilizes derivatives to meetthe needs of its clients while entering into derivatives as apart of its trading activities.
The Bank enters into interest rate swaps and interest
rate swaptions as a means of hedging its interest rate risk
on certain loans and investment securities while entering
into interest rate swaps and interest rate swaptions tomeet the needs of its clients.
The Bank also enters into currency swaps, foreignexchange forward contracts, and currency options tohedge foreign exchange risk associated with its assets
and liabilities denominated in foreign currencies and tomeet the needs of its clients.
Derivatives are subject to market risk and credit risk.
Market risk is the exposure created by potential
fluctuations of market conditions, including interest or
foreign exchange rates. Credit risk is the possibility that aloss may result from a counterparty’s failure to perform its
obligations under a contract.

The Bank sets limits on credit risk for those derivatives
by limiting the counterparties to major financial institutions
and securities companies and establishing maximum risk
exposures to the counterparties.
The Bank has established a standard of risk
management including management approaches for eachtype of risk. Derivative transactions entered into by the
Bank have been made in accordance with internal policies
which regulate trading activities and credit risk
management including maximum risk exposures and losscutting rules. Concerning risk management associatedwith derivative transactions, the front and back offices of
the trading divisions are clearly separated and risk
managers are assigned to the trading divisions, while theRisk Management Division synthetically manages the
Bank’s market risks. In this manner, an internal control
system is effectively secured.
The Bank’s positions, gain and loss, risk amount, andother conditions are periodically reported to the executive
committee.

Financial
SectionDue after 3 Years
through 5 Years

Company
Information

Due after 1 Yearthrough 3 Years

Strategy

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

Due in 1 Year orLess

476,921465,179
2,709
9,032
11,307,813$11,784,734* Of loans and bills discounted, the portion whose timing of collection is unforeseeable, such as loans to “legally bankrupt” borrowers,
loans to “virtually bankrupt” borrowers, and loans to “possibly bankrupt” borrowers, amounting to ¥77,480 million ($699,846 thousand)is not included in the above table. Loans that do not have a contractual maturity, amounting to ¥38,713 million ($349,679 thousand), are
not included either.

74

THE 77 BANK INTEGRATED REPORT

75

The Bank has the following derivatives contracts outstanding as of March 31, 2021 and 2020:

At March 31, 2020

Millions of Yen

Total

Due after Fair
One Year Value

Total

Due after Fair
One Year Value

Unrealized
Gains/
LossesTotal

Due after Fair
One Year Value

Special matching criteria
Unrealized
Gains/
LossesTotal
At March 31, 2021
¥ 343

¥ 10,431 ¥10,431

¥ 375

¥ 375

(254)

(254)

10,638

10,636

(284)

(284)

97,082

97,082(2,294) (2,294)

Normal method

(189)

(189)

46,908

10,295104

104

326,835

19,998(1,707) (1,707)

Special matching criteria(6,093) (6,093)
(822)
(822)

101,751
2,170

14
(16)

14
(16)

1,812,446 367,771 (55,035) (55,035)
416,647 367,771 (7,424) (7,424)

(168)
168

19,73819,738

(271)
271

365
(148)

267,645 206,846
267,645 206,846

344
(26)

15,147
15,147$ 95,962 $ 95,962 $ 3,098 $ 3,098(1,517)
1,517

3,107
(234)

Notes:
1. These are principally accounted for under the deferral hedge method in accordance with the JICPA Industry Committee
Practical Guideline No. 24, “Treatment of Accounting and Auditing of Application of Accounting Standard for Financial
Instruments in the Banking Industry.”
2. Fair value is determined using the discounted present value, option-pricing models, etc.

28. RELATED-PARTY TRANSACTIONS

Related-party transactions for the years ended March 31, 2021 and 2020, were as follows:a. Transactions between the Bank and Its Related Parties

Related Party

Account Classification*2¥4,728 ¥4,731
Investment securities(corporate bonds)
211
Customers’ liabilities for
acceptances and349
437
guarantees
204
151
Loans and bills discounted
Customers’ liabilities for
acceptances and1,069 1,000
guarantees
Loans and bills discounted
538

Department Store Fujisaki Co., Ltd.*1 Loans and bills discounted

Fuji Styling Co., Ltd.*1
Fujisaki Agency Co., Ltd.*1
Mr. Minokichi Akaizawa*4

Transactions for the Year*3
Thousandsof U.S.
Millions of Yen
Dollars
2021
2020
2021

Balance at End of Year
Thousandsof U.S.
Millions of Yen
Dollars
2021
2020
2021

$42,706 ¥3,660 ¥4,827

Financial
SectionDerivative Transactions to Which Hedge Accounting Is AppliedWith respect to derivatives to which hedge accounting is applied, contract or notional amount, fair value, and the calculation
method of fair value are as shown below. Note that the contract or notional amounts of the derivatives which are shown in
the table do not represent the amounts of the Bank’s exposure to market risk.
At March 31, 2021
Millions of Yen
Contract or Notional AmountDue after One Fair Value
Hedge Accounting Method
Type of Derivatives
Major Hedged Item
Total
Year
Normal method
Interest rate swaps— Loans andFloating rate receipt/ investment
fixed rate payment
securities¥92,361¥40,324¥(623)
Special matching criteria
Interest rate swaps—
Floating rate receipt/(310)
fixed rate payment Loans
44,872
31,410
Other–
Buying
Loans
250
250
Total
¥(933)

Total

Company
Information

Notes:
1. The above transactions are stated at fair value and unrealized gains (losses) for the years ended March 31, 2021 and2020, are recognized in the consolidated statement of income.
2. The fair value of interest rate-related OTC transactions is determined using the discounted present value or optionpricing models, and the fair value of currency-related OTC transactions is determined using the discounted present
value.

Hedge Accounting Method

Strategy¥ 343

Thousands of U.S. Dollars
Contract or Notional AmountDue after One Fair Value
Type of Derivatives
Major Hedged Item
Total
Year
Interest rate swaps— Loans andFloating rate receipt/ investment(5,627)
fixed rate payment
securities$834,260
364,230
Interest rate swaps—
Floating rate receipt/(2,800)fixed rate payment Loans
405,311283,714
Other–
Buying
Loans
2,258
2,258
$(8,427)

Va l u eInterest rate-related
over-the-counter(“OTC”) transactions:Interest rate swaps:
Fixed rate receipt/¥ 10,624 ¥10,624
floating rate payment
Floating rate receipt/
10,748 10,748
fixed rate payment
Currency-related OTC
transactions:
36,184 2,214
Currency swaps
Foreign exchange
forward contracts:
200,656 40,716
Selling
46,127 40,716
BuyingCurrency option:
Selling
29,631 22,900
29,631 22,900
BuyingUnrealized
Gains/
Losses2020
Contract or Notional
AmountNormal method

Vision2021
Contract or Notional
AmountThousands of
U.S. Dollars
2021
Contract or Notional
AmountHedge Accounting Method

MissionDerivative Transactions to Which Hedge Accounting Is Not AppliedWith respect to derivatives to which hedge accounting is not applied, contract or notional amount, fair value, and unrealized
gains/losses, and the calculation method of fair value are as shown below. Note that the contract or notional amounts of thederivatives which are shown in the table do not represent the amounts of the Bank’s exposure to credit or market risk.

Millions of Yen
Contract or Notional AmountDue after One Fair Value
Type of Derivatives
Major Hedged Item
Total
Year
Interest rate swaps— Loans andFloating rate receipt/ investment
fixed rate payment
securities¥224,744¥94,777¥(1,341)
Interest rate swaps—
Floating rate receipt/(636)
fixed rate payment Loans
54,965
48,135
Other–(1)
Buying
Loans
416
416
¥(1,979)$33,059

1,905

1,300

11,742

3,152
1,842

364
217

437
143

3,287
1,960

9,655

1,190

1,000
538

10,748Notes:* 1 Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries ofsuch company)* 2 Terms are substantially the same as for similar transactions with third parties.
* 3 Amounts of transactions were reported at the average balance for the period.
* 4 Mr. Minokichi Akaizawa, a close relative of a director, passed away on November 14, 2018. Since theinheritance procedures are underway, the transaction in the above table is shown in the name of the deceased.

76

THE 77 BANK INTEGRATED REPORT77

30. NET INCOME PER SHARE

b. Transactions between Consolidated Subsidiaries and Their Related Parties

2020

¥29

¥30

$261

4

2

36

Millions of Yen
Related Party

Account Classification*2

Department Store Fujisaki Co., Ltd.*1 Fees and commissions
Lease receivables andinvestments in leases

¥13

$117

¥15

Notes:* 1 Company whose voting rights are majority owned by a director or his close relatives (including subsidiaries ofsuch company)* 2 Terms are substantially the same as for similar transactions with third parties.

29. SEGMENT INFORMATION

Related Information for the Years Ended March 31, 2021 and 2020
Information by Service Line
Millions of Yen
2021¥41,609¥45,225

Lease

Other

¥9,085¥24,055

Total¥119,976

Millions of Yen
2020
Loan

¥41,944¥43,501

Lease

Other

¥8,706¥22,773

Total¥116,926

Thousands of U.S. Dollars
2021

External customers

Loan

Securities
Investment

Lease

Other

$375,837$408,499$82,061$217,279

Total$1,083,696

Information about Geographical Area
Information about geographical areas is omitted because the Companies conduct banking and other related activities
only in Japan and do not have foreign subsidiaries or foreign branches.
Information about Major Customers
Information about major customers is not presented because there are no customers who account for over 10% of
ordinary income.
Information about Asset Impairment Losses
Information about asset impairment losses for the years ended March 31, 2021 and 2020, is omitted because the only
reportable segment is “Banking” and “Other” is immaterial.

EPS¥16,468

73,885¥222.89¥18,261

73,941¥246.97$2.01

Year Ended March 31, 2020
Basic EPS—Net income attributable
to common stockholders

The Bank’s shares held by the directors’ compensation BIP trust that are recorded as treasury stock under “Equity” areincluded in the treasury stock to be deducted when computing the average number of shares during the fiscal year forthe calculation of basic net income per share.
The average number of shares of the treasury stock deducted in computing basic EPS was 378 thousand sharesand 412 thousand shares, for the years ended March 31, 2021 and 2020, respectively.
Diluted EPS for the years ended March 31, 2021 and 2020, is not shown because there were no potential shares.

31. SUBSEQUENT EVENTS
Cash Dividends
At the Bank’s general meeting of stockholders held on June 29, 2021, the Bank’s stockholders approved the following
appropriations of retained earnings:
Thousands ofMillions of Yen U.S. Dollars
Year-end cash dividends, ¥25.00($0.225) per share¥1,856$16,764
Note: Above total amount of cash dividends includes dividends for the Bank’s shares held by BIP trust in an amount of ¥9million ($81 thousand).
Disposal of Treasury Stock through a Third-Party Allotment
The Bank resolved at its Board of Directors’ meeting held on July 30, 2021, to dispose of its treasury stock through athird-party allotment (the “disposal of treasury stock”), as follows:a. Overview of the disposal of treasury stock(1) Disposal dateAugust 25, 2021
(2) Type and number of shares
446,900 shares of common stock
to be disposed of(3) Disposal amount¥1,149 ($10.37) per share(4) Total disposal amount¥513,488,100 ($4,638 thousand)(5) Planned subscriber
The Master Trust Bank of Japan, Ltd.
(BIP trust account: 76097 account)
The Master Trust Bank of Japan, Ltd.
(BIP trust account: 76137 account)(6) Other
The disposal of treasury stock is subject to the effectuation of the notification pursuant to the
Financial Instruments and Exchange Act.

Financial
SectionExternal customers

Securities
Investment

U.S. Dollars

Company
Information

Loan

External customers

Securities
Investment

Basic EPS—Net income attributable
to common stockholders

Yen

Strategy

Since the reportable segments of the Companies consist only of the “Banking” segment and since the “Other”
segment is immaterial, segment information is omitted.

Year Ended March 31, 2021

Millions of Yen
Thousands of Shares
Net Income
Weighted-Average
Attributable to
SharesOwners of the Parent

Va l u e

Description of Reportable Segments
The Companies are principally engaged in the banking business and also leasing business and other financial
services. The reportable segments of the Bank are the segments for which separate financial information is available,
and are subject to periodic review by the chief operating decision maker to determine the allocation of management
resources and assess performance.

Basic net income per share (“EPS”) for the years ended March 31, 2021 and 2020, is as follows:

Vision2021

Thousandsof U.S.
Dollars
2021

Balance at End of Year
Thousandsof U.S.
Millions of Yen
Dollars
2021
2020
2021

MissionTransactions for the Yearb. Purpose and reason of disposal
The Bank has resolved at its Board of Directors’ meeting held on May 14, 2021, to continue and make additional
contributions to the performance-linked stock compensation system (the “System”), which was introduced for the
Bank’s executive directors and executive officers (“directors, etc.”) for the purpose of enhancing motivation to makecontributions to improving the medium- to long-term performance and corporate value by further clarifying the linkage
between compensation to directors, etc. and stock value of the Bank.
In line with the continuation of the System, the disposal of treasury stock will be conducted by way of allotment to
The Master Trust Bank of Japan, Ltd., which is a co-trustee of the two BIP trust agreements concluded between the
Bank and Mitsubishi UFJ Trust and Banking Corporation.

78

THE 77 BANK INTEGRATED REPORT79

― Independent Auditors’ Report ―MissionVisionVa l u eStrategy
Company
Information
Financial
Section80

THE 77 BANK INTEGRATED REPORT

81

Mission

VisionVa l u eStrategy

Company
Information

Financial
Section83
THE 77 BANK INTEGRATED REPORT

82

― Capital Adequacy Ratios ―MissionTHE 77 BANK, LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2021
Thousands of
U.S. Dollars

Millions of Yen

Consolidated (Domestic standard)

Risk-adjusted assets: (B)

2020

10.39

10.31

438,988422,268

3,965,206

4,224,922

4,095,358

38,162,063

Capital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)(A)
Capital:Risk-adjusted assets: (B)

2021

2020

2021

10.14

10.14

425,215412,272

3,840,800

4,190,814

4,062,387

37,853,978

Va l u e

Thousands of
U.S. Dollars

Millions of Yen

Non-Consolidated (Domestic standard)

2021
VisionCapital adequacy ratio (Domestic standard) = (A)/(B) x 100 (%)(A)
Capital:2021

Strategy
Company
Information
Financial
Section84

THE 77 BANK INTEGRATED REPORT85

― Non-Consolidated Balance Sheet (Parent Company) ―― Non-Consolidated Statement of Income (Parent Company) ―7,862
19,313
46
259
5,474
258
43,73573,142(56,855)¥9,817,924

8,187
19,315
73
282
4,053
259
45,25862,405(58,226)¥8,751,857

71,014
174,446
415
2,339
49,4442,330
395,041
660,662(513,548)$88,681,456¥8,551,689

36,130186,315
983,660
28,145,632
46,043,537
52,976

24,658
8,937
368,623(6,132)
396,087
106,085(375)
105,709501,797¥9,817,924

24,658
8,937
357,402(6,200)384,798
55,917(826)
55,091
439,889¥8,751,857

222,726
80,724
3,329,626(55,387)
3,577,698
958,224(3,387)
954,827
4,532,535$88,681,456

233,664
5,394,318
1,400
84,807
7,379
2,809
7,262
219,763
395,041
558,377
84,148,920¥ 41,569¥ 41,881$375,476

29,834406
17,251
1,194
16,856
107,113

28,732242
16,968113
16,935
104,873

269,478
3,667
155,821
10,784
152,253
967,509

Expenses:
Interest expense:
Interest on deposits
Interest on call money
Other
Fees and commissions
Other operating expenses
General and administrative expenses
Other expenses
Total expenses

325
67
916
7,431
13,70952,137
10,13984,727

764
277
1,284
7,279
6,181
55,016
9,532
80,335

2,935
605
8,273
67,121
123,828
470,933
91,581
765,305

Income before income taxes

22,38524,538202,194

Income taxes:
Current
Deferred
Total income taxes

4,891
2,559
7,451

7,408
(188)
7,220

44,178
23,11467,301¥ 14,934¥ 17,317$134,892

Net income

THE 77 BANK INTEGRATED REPORT

Financial
Section$77,244,052

25,869597,205
155
9,389
817
311
804
24,33043,73561,8189,316,127¥7,888,480
8,706
11,986280,257
116
14,565
735
337
860
229
45,25860,434
8,311,967

Income:Interest income:Interest on loans and discounts
Interest on dividends on trading account andinvestment securities
Other
Fees and commissions
Other operating income
Other income
Total income

Thousands of
U.S. Dollars
2021

Company
Information

86$12,391,030

4,000
20,627
108,901
3,116,003
5,097,480
5,865¥ 747,051
429
4,000
18,87382,3442,913,386
4,894,634
9,528

Millions of Yen
2021
2020

Strategy

Equity:Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Unrealized gains on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Total valuation adjustments
Total equity
Total¥1,371,811

Thousands of
U.S. Dollars
2021

Va l u e

Liabilities:
Deposits
Call money
Payables under securities lending transaction
Borrowed money
Foreign exchange liabilities
Liability for retirement benefits
Reserve for stock compensation
Reserve for reimbursement of deposits
Reserve for contingent losses
Deferred tax liabilities
Acceptances and guarantees
Other liabilities
Total liabilities

Millions of Yen
2021
2020

VisionAssets:Cash and due from banks
Call loans and bills bought
Debt purchased
Trading account securities
Money held in trust
Investment securities
Loans and bills discounted
Foreign exchange assets
Tangible fixed assets:
Buildings
Land
Lease assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Customers’ liabilities for acceptances and guarantees
Other assets
Reserve for possible loan losses
Total

THE 77 BANK, LTD.
Year Ended March 31, 2021

MissionTHE 77 BANK, LTD.
March 31, 2021

87

― Loan Portfolio ―Mission

Loan Portfolio by Industry

Japan’s offshore banking accounts
Financial institutions
Total

—

Domestic offices (Excluding Japan offshore banking accounts)
Manufacturing

General reserve for loan losses
Specific reserve for estimated loan losses on certain doubtful loans
Total

88

Financial
SectionJapan’s offshore banking accounts
Financial institutions
Total

Company
Information¥4,894
445
6
5
3
146
203
21
121
398
360
1,041
340
623
1,176

Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other

Reserve for Loan Losses$46,043

Billions of Yen
2020

Loan Portfolio by Industry

Securities
Commercial claims
Real estate
Subtotal
Guaranteed
Unsecured
Total—¥5,097

Strategy

Agriculture and forestry
Fisheries
Mining and quarrying of stone and gravel
Construction
Electricity, gas, heat supply and water
Information and communications
Transport and postal activities
Wholesale and retail trade
Finance and insurance
Real estate and goods rental and leasing
Services, N.E.C.
Government, except elsewhere classified
Other$46,043
4,007
61
37
27
1,503
1,946
187
1,115
3,687
3,327
9,988
3,285
5,922
10,945

Va l u e¥5,088
443
6
4
3
166
215
20
123
408
368
1,105
363
655
1,211

VisionDomestic offices (Excluding Japan offshore banking accounts)
Manufacturing

Loans by CollateralMillions of
U.S. Dollars
2021

Billions of Yen
2021—¥4,894
Billions of Yen
2021
2020

Millions of
U.S. Dollars
2021

Billions of Yen
2021
2020

Millions of
U.S. Dollars
2021

¥

5
17
844
867
1,368
2,861
¥5,097

¥30
26
¥56

¥

5
19
826
851
1,283
2,759
¥4,894

¥28
29
¥58

$

46
158
7,629
7,834
12,36425,844$46,043

$274
239
$513

The 77 Bank, Ltd
Published August 2021
The 77 Bank, Ltd.
General Planning & Coordination Division
Planning Section
3-20, Chuo 3-chome, Aobaku, Sendai, Miyagi 980-8777, Japan
Phone: +81-22-267-1111

https://www.77bank.co.jp/english/top.htm