Leading company creating a path to the future

May 14, 2021

Contents
１．“Vision 2030” Outline

P1

２．Key Factors to Achieve “Our Target Form”

P5

３．Basic Strategies to Achieve “Our Target Form”

P8

４．Long-term Strategies Related to Management of Investment Securities

P14

５．Proﬁt Increase Concept of Vision 2030

P15

６．PDCA Cycle of Vision 2030

P16

７．Midterm Targets to Achieve “Our Target Form”

P17(Reference 1) Results and Issues of Previous Medium-term Management Plan

P19

(Reference 2) Management Environment

P21

１

“Vision 2030” Outline ~“Vision 2030” Positioning~“Vision 2030” sets forth a vision for the future of the 77 Bank Group as we look to achieve themanagement philosophy (mission) expressed in the Bank Creed, with all Group officers andemployees coming together to provide direction for the Bank’s progress

MissionVisionMissionBank Creed

VisionVision 2030 (10-year period)

Va l u e

77 Bank Group SDG Declaration(Ultimate goal)( Va l u e s s h a r e dacross the Group)

1.Revitalization of the regional economy
2.Responding to global warming andclimate change
3.Encouraging and supporting theactivities of our employees
4.Advancing corporate governance

Value
Strategy
Strategy(Tactics)

1~More than ever, and forever, with our region~

Short-term Management Plan

１“Vision 2030” Outline ~Objectives and Background to Formulation~

A future based on maintaining the status quo will result in “contracting equilibrium.”
For the 77 Bank Group to continue fulfilling its mission…

Future based on
current circumstances

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

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

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

2

77 Bank Group mission

What is our vision?

?
How do we get there?

Create abundantlocal communities
Increase
corporate
value

Local
communities

Companies

Shareholders

Offer growth andreturns together withthe 77 Bank Group

Increasehappiness

Individuals

Employees

Offer workstyles
based on diverse
values１“Vision 2030” Outline ~Our Target Form~

What is our vision for the 77 Bank Group? We set forth our ideas in a new management planNewmanagement plan
Leading company creating a path to the future“Our target form”
to aim for overthe long-term

The 77 Bank Group aims to be a leading company that works 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 of opportunity in Miyagi and Tohoku.

◆ Create the highest level of financial functions and consulting, while also expanding the scope of our businesses in the non-financial sector

Financial

Consulting

Non-financial

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

Miyagi and Sendai area

Whole Tohoku region, etc.

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

Leading bank3

Vision 2030

Leading company

１“Vision 2030” Outline ~77 Bank Group Direction~

The 77 Bank Group will take steps to move beyond our existing trajectory, by establishing a “Ourtarget form,” enhancing our strengths, improving our weaknesses, and revitalizing our organization
Stimulate demand amongcustomers and local communities
Expand the scope of operations

Dramatic improvements
in productivity

Establish an ambitious
corporate culture

Enhance!

Improve!

Establish!

77 Bank Group strengths

Customer baseConsulting system
Trust from customers andlocal community

77 Bank Group weaknesses

Revitalization points

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)

Ke y fa c to rs
An engine (key factors) will benecessary to go beyond our existing
trajectory, and unlock a new future

4

DigitaltransformationNewbusinesses
and sectors

Human
resources

Financialfoundations

２

Key Factors to Achieve “Our Target Form”

Digital transformation◆While placing the utmost priority on “peace of mind and safety,” the 77 Bank Group will capitalize on the digitaltransformation, which accelerated as a result of COVID-19, and take actions including responding to theincreasingly diversified needs of our customers, coordinating with services in different industries, andfundamental reforms across the Group’s banking operations as a whole.

Target business model amid the digital shift

Best mix of face-to-face andnon-face-to-face services
Non-faceto-faceFace-to-face5

Challenger bank / neobank
Regional ecosystem / platform

Enhance customer
satisfaction

Consulting

New businesses that combine
regional finance and digital technologies

Cashless businesses
Convenience

Data businesses

Utilize alliances

２

Key Factors to Achieve “Our Target Form”

Develop new businesses and sectors◆The 77 Bank Group aims to enter new business domains in order to solve the issues of our customers and local
communities, and become a leading company that operates a diverse range of businesses with the banking
business at our core.
Corporate (B2B):
Enhance corporate value

Regional (B2G):
Create abundant local communities

Retail (B2C): Enhance happinessBusinesses related to regional revitalizationand stimulation of local communities
Personnel businesses
Financial businesses
Client support businesses

Bank

Real estate businesses

Group companies
Businesses related to senior citizens
Retail life support businesses

Digital businesses

6

Alliances

2

Key Factors to Achieve “Our Target Form”

Develop human resources◆The 77 Bank Group will utilize the qualities of each individual to develop “human resources that serve a purpose
for 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 resourcesthat 77 Bank Group develops
Human resources thatserve a purpose for customers
and local communities
Human resources that
contribute to corporate
reformUnending
ambition

Filled with ability
to take on new
challenges

Ability to act
independently

Rich humanpotential

Strong senseof ethics

Expertise in consulting and other areas, as well as human potential
capable of frank communication with customers and local regions
Creativity unrestricted by conventional ideas, and unique,irreplaceable personnel

Strengthen financial foundations◆The 77 Bank Group will continue to support the future of the region, while also building firm financial
foundations able to meet the expectations of shareholders and other stakeholders

7

Capital adequacy ratio(consolidated)

Over 10%

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

JPY 28.0 bn

Necessary level for maintaining a sound financial position
and taking on riskCore OHR

50-60%

Commitment to strengthening profits through improved
productivity

3

Basic Strategies to Achieve “Our Target Form”

In “Vision 2030,” we set forth the direction the 77 Bank Group should take to grow sustainably together
with local communities, based on our SDG Declaration, i.e., stimulating the regional economy andpromoting active participation by a diverse range of personnel

Leading company creating a path to the future

77 Bank Group direction

Stimulate demand amongcustomers and local communities
Expand the scope of operations
Dramatic improvements
in productivity
Establish an ambitious
corporate culture

801

Top customer
satisfaction strategy

Inspire throughconsulting and digitaltechnologies!

02

Double productivity
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!

Made concretein our strategies

3

Basic Strategies to Achieve “Our Target Form”

01

Top customer
satisfaction
strategy

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

Combine consulting (face-to-face) and digital technologies to offer a level of service that only regional financial
institutions can provide
Utilize our strengths, including our overseas network and regional information network
Amaze and inspire our customers with performance that exceeds
expectations

Increase
corporate value

Increase customer satisfaction(Increase 77 Bank Group profits)

Strengthen relations with corporate customers
Le t’s Tr y!

Support life-planning for individuals
Le t’s Tr y!

Increase proportion of companies in
Miyagi for whom we are their mainbank by 10%
Le t’s Tr y!

Increase proportion of households in Miyagi“holding assets” to the national average or higher
Le t’s Tr y!

Increase number of corporate lending
clients outside Miyagi by 1.5x9Increasehappiness

Ensure that 20% of the population of Miyagi(aged 20-74) use loans from the 77 Bank

3

Basic Strategies to Achieve “Our Target Form”

01

Top customer
satisfaction
strategy

The 77 Bank Group will utilize the “strengths” we have developed
to date to take advantage of the digital transformation and ouralliances, thereby enabling us to expand the scope of ouroperations

Solutions to issues faced by customers and the local community

Le t’s Tr y!

Establish 10 projects in new businesses or sectors, with the potential to become viablebusinesses in future(to be completed by FY2024)
Le t’s Tr y!

Double net income of Group companies by entering new businesses and new sectors
and expanding existing businesses

103

Basic Strategies to Achieve “Our Target Form”
Doubleproductivity
strategy02

The 77 Bank Group will double productivity by releasing bankbranches from the burden of administrative work,
strengthening our consulting systems, and enhancing theabilities of each individual

Improve administrative processes (reduce, consolidate, etc.) and promote theenhancement and increased use of non-face-to-face transactions as a means of saving labor
Optimize sales channels based on customer needs

Becoming a lean corporate group able to continually
meet the expectations of customers and local communities
Le t’s Tr y!

Double “labor productivity in core
operations”
Le t’s Tr y!

Cut amount of administrative work atbank branches by 50%
Le t’s Tr y!

Triple rate of usage of non-face-to-facechannels
11“Rebalancing of management assets”●Enhance non-face-to-face channels andoptimize branch network in accordance withcustomers’ needs●Educate, redistribute, and streamline (natural
attrition) workforce in order to strengthen
consulting capabilities

3

Basic Strategies to Achieve “Our Target Form”
Regional
growthstrategy

03

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

Build true partnerships aimed at achieving the vision for the future that we have created inpartnership with local public bodies
Strengthen and utilize alliances with external partner institutions and private companies, etc.
that offer consulting services

Sustainable growth of the 77 Bank Group
together with the local community
Le t’s Tr y!

Le t’s Tr y!

Aim for 100% participation in regional development
projects in Miyagi such as the “Sendai Urban
Restructuring Project” and the “Next-generationsynchrotron radiation facility”

Support increased economic growthrate in Miyagi
Le t’s Tr y!

Le t’s Tr y!

Triple number of growth support
cases for business founders
12

Creating abundant local communities(achieving regional revitalization)

Cut 77 Bank Group CO2 emissions by 46% comparedwith FY2014, and support cuts to greenhouse gas
emissions in Miyagi

3

Basic Strategies to Achieve “Our Target Form”

04

Corporate culture
reform strategy

The 77 Bank Group will endeavor to promote diversity, andcreate a virtuous circle where all officers and employees takeon new challenges, leading to confidence and cheerfulness

Accommodate a diverse range of values and fundamentally overhaul personnel andorganizational systems to increase motivation
Create an environment that permits trial and error and values the act of taking on new challenges
Enhance capabilities as an organization by increasing specialism, and stimulate communication
Build complete internal management systems to support reform

Stimulate innovation by moving from a “defensive” to an “offensive” stance
Le t’s Tr y!

Le t’s Tr y!

Implement various initiatives to“foster an ambitious spirit”
Le t’s Tr y!

Increase the proportion of women in
management positions to 30% or more
13

Increase the number of “specialist
personnel” that serve a purpose forcustomers and local communities

4Long-term Strategies related to Management of Investment Securities
Aim to secure sustainable profits while responding flexibly to various changes in the environment
Increase profit opportunities anddiversify risk through diversified
investment◆ Enhance diversified investment◆ Strengthen in-house asset management◆ Strengthen risk identification and analysis

Strengthen initiatives targetinginvestment areas where growthis expected◆ Strengthen initiatives targeting growthoverseas
Increase
profits from real estate (REITs)◆◆ Promote initiatives targeting domestic
growth sectors

Promote initiatives aimed
at achieving SDGs through ESG
investment, etc.
◆ Promote investment in growth areas
focused on global and social initiatives, etc.

10-year portfolio concept
F Y2 0 2 1 a ctu a l

FY2031 estim ate
REITs: 2%

Equity assets:
10%

REITs: 5%
Equity assets:
19%

Proportionby assetclass

Proportionby asset
class

Debt assets:
75%

Debt assets:
85%

Overseas:
12%

Overseas:22%

Proportion
by region

Domestic:
85%

14◆ Securities portfolio: JPY 3 tn
◆ Total yield across all securities*: 1.00%◆ Portfolio weightings of equities and
REITs, as well as overseas assets:
Approx. 2x vs. FY2021

Proportion
by region

Securing sustainable profits
Domestic:
77%* Income-based yield calculated by aggregating interest anddividends, gains on cancellation of investment trusts, gains
on government and other bonds, gains related to equity securities,
etc., and monetary gains from management of investment trusts.

5

Proﬁt Increase Concept of Vision 2030
(JPY bn)

Taxes, etc.
Double productivity
strategy
Cut expenses withpaperwork-free policies
and increased efficiency

Net income

16.5
Creditexpenses[7.6]
FY202115(5.0)

Net income(Vision)

8.0

28.0

Reduction in profits
from changes inbusiness environment
Interest on
yen-denominatedbonds and remittances(4.5)

Top customer
satisfaction strategy

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

Dramatic increase in net income
Strengthen foundations through regional growthstrategies and corporate culture reform strategies

Capitaladequacy
ratio:
over 10%
Core OHR:
50-60%

Creditexpenses[8.0]
FY2031

6

PDCA Cycle of Vision 2030

◆PDCA cycle based on our “vision”

Three-year midterm plans formulated from a bottom-up perspective incorporate such perspectives as: [1] setting targets based on existing
growth trajectories, [2] formulation of all-encompassing measures, and [3] deferment of shifts in direction until the next midterm plan, even if
the management environment changes significantly during the period of the midterm plan. For that reason, we will first formulate a 10-year
management plan, then focus on fundamental reform over a mid- to long-term timeframe, while also making steady progress toward our“vision” based on (short-term) management plans that take the current management environment into consideration
Clarify focus areas and formulate short-term
management plans in accordance with changes
in the management environment andthe progress of initiatives

F Y2 0 3 1“Vi si o n ”
FY2026Midterm targets

FY202X
Short-term plan
Disclose short-term targets for operating
results at company briefings, etc. and commit
to progress

FY2022
Short-term plan

(Fiscal year targets + next year forecasts)◆Regular revisions concept

FY2036“Vision”

FY2031“Vision”

FY2036Midterm targets
FY2031
Midterm targets

FY2026Midterm targets

FY2022 –FY202616

FY2041“Vision”

FY2032 –FY2036FY2027 –FY2031

Revise 10-year “vision” every five years (or whenevermanagement environment changes significantly), andcontinuously implement PDCA cycle

7Midterm Targets to Achieve “Our Target Form”
Strengthen financial foundations (key factors)

FY2021Results
Net income(consolidated)

FY2026Midterm targets

FY2031
VisionJPY 16.5 bn

JPY 21.0 bn

JPY 28.0 bn

Capital adequacy
ratio (consolidated)

10.39%

Over 10%

Over 10%

Core OHR

62.27%

55-60%

50-60%(Reference: Expected portfolio after 10 years)

Loans and bills
discounted
Securities

17

JPY 5.7 tn

Deposits + NCD

JPY 8.5 tn

JPY 3 tn

Group balanceof assets in custody

JPY 1 tn

7

Midterm Targets to Achieve “Our Target Form”
KPIs (Letʼs Try!)FY2021

Proportion of companies in Miyagi forwhom we are their main bank
[Main bank trend surveys*]

Vs. FY2021[56%]

Number of corporate lending clientsoutside Miyagi
Proportion of households in Miyagi
holding assets
Proportion of individuals in Miyagi using
loans from the 77 Bank

+5%
[59%]

VisionVs. FY2021

+10%
[62%]

1.2x

1.5x

14%

17%

Over 21%

12.6%

17.0%

20.0%

-

Group companies net income(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

Usage of non-face-to-face channels

Proportion of female managers

Other items(50%)

Vs. FY2021(50%)(Corporate) 11%(Corporate) 20%(Corporate) 30%(Retail) 11%(Retail) 20%(Retail) 30%

1,181

2,000

3,000

12,327t

10,000t

9,069t

13.4%

18.0%

30.0%

Cases of growth support for founders
CO2 emissions

Vs. FY2021-

Administrative work at bank branches

18

FY2026(FY2020)

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

“Rebalancing of management assets”● Enhance non-face-to-face channels andoptimize branch network in accordance withcustomers’ needs●Educate, redistribute, and streamline (natural
attrition) workforce in order to strengthen
consulting capabilities

Establish 10 projects in new businesses or sectors (by FY2024)
Support increased rate of economic growth in Miyagi
Aim for 100% participation in regional development projects in Miyagi
Implement various initiatives to “foster an ambitious spirit”
Increase the number of “specialist personnel” that serve a purpose for customers andlocal communities

(Reference 1) Results and Issues of Previous Medium-term Management Plan
◆Results of the “‘For The Customer & For The Future’–Best Consulting Bank Project–” medium-term management plan (April 1, 2018 – March 31, 2021)

We became able to accommodate a wide range of customer needs,
and disseminated awareness of consulting-based sales
Growthstrategies

Regional
economyvitalization
strategy◆Strengthened consulting-based sales systems(established liaison officer system with 80 employees
from headquarters, formed regional support teams,
established 77 Securities and 77 R&C, etc.)◆Strengthened digital and non-face-to-face channels(organizational reforms)◆Supported recovery from Great East Japan
Earthquake and typhoon damage◆Entered into comprehensive alliance partnershipwith 38 local public bodies◆Established “Miyagi wide-area PPP platform”

Balance of corporate loans (term-end, JPY bn)
3,200.0

3,151.9

Governancestrategy

2.0

2.0Midterm target
1.5

1.5
1.3

Midterm target
2,868.5

2,800.0

Productivity
enhancement
strategy

Fees and commissions from corporate clients (JPY bn)

3,027.2
3,000.0◆Created sales personnel through operational
reform and cuts to administrative work
◆Revised branch network (promoted move toward
branches within branches)◆Utilized digital functions (RPA, electronic
operations, etc.)◆Increased diversity of Board of Directors◆Enhanced shareholder returns (increased dividend,
share buybacks)◆Strengthened risk management systems(measures to counter money laundering, etc.)

1.0

2,796.00.6
0.5

2,600.00FY201819FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021

(Reference 1) Results and Issues of Previous Medium-term Management Plan
◆Issues that were not solved

We were unable to overcome the most significant issue for the 77 Bank,
our “high cost and low profit structure”
Continuation of negative interest rate policies and spread ofExternalfactors

COVID-19
Incomplete initiatives in areas such as enhancing consulting
capabilities to differentiate the 77 Bank Group from competitors
and the digital transformation as a means of contributing tofundamental reforms

Internalfactors

Status of achievement of key earnings targets

Income from customer services(JPY bn, %)FY2021
results

FY2021
MTP target

Difference

16.5

19.0

(2.5)

41.6

45.0

(3.4)

Fees andcommissions

9.8

11.5

(1.7)

ROE [consolidated]

3.4

3.7

(0.3)

Item

Net income[consolidated]
Interest on loans
and bills discounted

20

FY2018FY2019(JPY bn)

FY2020

FY2021

0(0.6)
Negative for eight
consecutive years
(2.5)

(3.6)
(5.0)

(4.9)

(3.3)

(Reference 2) Management Environment
Looking ahead to 2030, Miyagi Prefecture aims to achieve sustainable growth even as the population falls and society ages,
while also ensuring that high-quality employment opportunities exist, that young people stay in the prefecture, and that theincome of residents of the prefecture increases. It plans to do so by promoting a shift to an industrial structure suited to a new
vision of society, creating added value with new products, services, etc., and enhancing productivity.
At the 77 Bank Group, we believe that the expectations placed upon us will grow in future, as we actively participate in thesestructural changes and the creation of new value, and appropriately fulfill the needs of a falling population and aging society.
Miyagi gross product (real)

Miyagi population and number of households▶Population has been declining since peak in 2003
▶In future, elderly population is expected to increase,
while people of working age and younger decline
Young population (15 and younger),bottom
Old population (65+), top

Working age population(15-64), middle

208
18
142

60

218
22

27

148

154

64

70

233

237

236

235

34

41

47

52

160

78

160

83

156

87

151

90

9.1

Total population

Households
225▶Highest ever gross product recorded in 2018 at JPY 9.256 tn

233

60

145

230

(ten thousand people/ten
thousand households)
223

7.8

205

70

71

9.2

9.2

2016

2017

9.3

8.8

8.3

8.1

193

67

136

214

8.6

(JPY tn)

7.6

7.8

7.7

72
73

128

121

112

94

101
96

96

94

92

2007

2008

2009

2010

2011

2012

2013

2014

2015

2018

Source: FY2018 Miyagi Residents Annual Economic Statistics
88

Main regional development projects expected to result in economic ripple effects
48

48

44

39

35

33

31

29

27

25

23

21

19

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Actual21

Source: RESAS, National Institute of Population and Social Security Research

Projected●Next-generation synchrotron radiation
facility maintenance project●Sendai Urban Restructuring Project●Sendai industrial park relocationand maintenance project●Sendai City east coastal area disasterprevention collective relocation siteutilization project●Miyagi integrated water public-private
operation project●Sendai City gas business privatization

This is a Japanese-English translation of the presentation material for yourconvenience. In the case that there is any discrepancy between the Japaneseand English versions, the Japanese version is assumed to be correct. Please
note that the projections described in this document do not guarantee future
performance. Future performance projections may differ from actual results
due to uncertainty caused by factors such as changes in the businessenvironment.

22