#1TOCH GN TOCHIGI BANK Financial Results Presentation Materials for the Fiscal Year Ended March 31, 2022#2Contents 1. Overview of Financial Results 2. Overview of the 10th TOCH GIN TOCHIGI BANK P. 2 Medium-term Management Plan ...P. 15 3. Progress on the 10th Medium-term Management Plan P. 18 4. Initiatives in Sustainability P. 24 1#3Overview of Financial Results 2#4Overview of Financial Results (Billion yen) [Non-consolidated] 2021/3 2022/3 Change % Change Gross operating profit 29.1 26.9 (2.2) Net interest income 26.0 25.4 (0.6) Fees and commissions income 3.8 4.2 (7.6%) (2.2%) +0.4 +11.9% Other operating income (0.7) (2.8) (2.1) (277.2%) Expenses 22.6 22.1 (0.5) Substantial net business profit (Note) 6.4 4.7 (1.7) (2.1%) (26.7%) Core net business profit 7.1 7.5 +0.4 Core net business profit (excluding gains (losses) from 5.8 7.4 +1.6 +5.4% +28.1% cancellation of investment trusts) Provision of general allowance for 1.3 0.6 (0.7) (54.4%) loan losses (1) Net business profit 5.0 4.1 (0.9) (19.5%) Losses on sale of bonds (0.7) (2.8) (2.1) (281.0%) Unusual profits and losses (1.6) 0.3 +1.9 +118.3% Gain on sale of equity securities 0.1 1.3 +1.2 +660.2% Non-performing loan disposal (2) 2.0 1.4 (0.6) (28.3%) Ordinary profit 3.3 4.4 +1.1 +29.9% Profit 1.6 3.0 +1.4 +90.7% Costs for loans written off (1) + (2) 3.3 2.0 (1.3) (38.4%) [Consolidated] 2021/3 2022/3 Ordinary profit 4.5 5.5 Change +1.0 Profit attributable to owners of parent 2.0 3.6 +1.6 % Change +23.2% +74.3% TOCH GN TOCHIGI BANK [Main Points on Non-consolidated Financial Results] Non-consolidated core net business profit in the fiscal year ended March 31, 2022 increased 5% YoY. The growth resulted from an increase in fees and commissions that more than covered the decrease in net interest income. Continued efforts to reduce expenses also contributed to growth. Profit reached 3 billion yen, outperforming the previous fiscal year. The increase resulted from an increase in gains on the sale of equity securities and a decrease in non-performing loan disposal expenses, which more than covered the increase in losses on the sale of bonds. (Note) Substantial net business profit = Net business profit (before provision to general allowance for loan losses) [Main Point on Consolidated Financial Results] Consolidated ordinary profit and profit attributable to owners of parent for the fiscal year ended March 31, 2022 increased compared to the previous fiscal year, owing to strong financial performance on a non-consolidated basis and for Tochigin Tokai Tokyo Securities Co., Ltd. (a securities subsidiary). 3#52021/3 Net Interest Income (Billion yen) 2021/3 2022/3 Change % Change Net interest income 26.0 25.4 (0.6) Interest on loans and 20.9 20.4 (0.5) discounts Interest and dividends on 5.0 4.3 (0.7) (2.2%) (2.2%) (14.4%) securities Interest on deposits with 0.4 0.8 +0.4 +113.4% banks Interest on deposits (-) 0.3 0.2 (0.1) (43.5%) Reasons for Increases (Decreases) in Net interest Income Average loan balance loans/discounts Yield on Average securities balance 26.0 (0.2) (0.2) +0.2 Yield on securities (0.9) +0.4 Interest on deposits with banks Interest on deposits +0.1 25.4 (Billion yen) TOCH GN TOCHIGI BANK Interest on loans and discounts decreased 500 million yen from the previous fiscal year, owing to the decline in the average balance and in interest rates. This reflects the somewhat lower demand for funds in comparison with the previous fiscal year, which saw an increase in substantially interest-free loans that did not require collateral amid the COVID-19 pandemic. Interest and dividends on securities decreased by 700 million yen compared to the previous fiscal year. The decline resulted from lower yields, despite the increase in the average balance. The decrease in overall net interest income was limited to 600 million yen due to the increase in interest on deposits with banks and decrease in interest on deposits. Trend in Yields on Loans and Discounts and on Securities 1.37 Loans/Discounts Securities 1.16 1.11 1.07 1.06 1.04 1.06 0.90 0.79 0.73 2022/3 2018/3 2019/3 2020/3 2021/3 2022/3 4 (%)#6Core Net Business Profit TOCH GN TOCHIGI BANK Change % Change (Note 1) Substantial net business profit = Net business profit (before provision to general allowance for loan losses) (Note 2) Core net business profit = Substantial net business profit - Gains (losses) on bonds (Billion yen) 2021/3 2022/3 Substantial net business profit (Note 1) 6.4 4.7 (1.7) (26.7%) Core net business profit (Note 2) 7.1 7.5 +0.4 +5.4% Core net business profit (excluding gains (losses) from cancellation of investment trusts) 5.8 7.4 +1.6 +28.1% Trend in Core Net Business Profit (Billion yen) ■Core net business profit ■Core net business profit 8.0 (excluding gains (losses) from cancellation of investment trusts) 7.5 7.4 6.0 4.0 2.0 5.6 3.7 4.8 3.8 7.1 5.9 5.8 5.1 0.0 2018/3 2019/3 2020/3 2021/3 2022/3 Substantial net business profit decreased from the previous fiscal year owing to the decrease in other operating income (increase in losses on bonds. However, core net business profit has continued to increased steadily since the fiscal year ended March 31, 2019. Core net business profit excluding gains (losses) from cancellation of investment trusts is increasing, and the bank is accumulating income without relying on gains from cancellation of investment trusts. LO#7Deposits and CDs (Billion yen) 2021/3 Deposits and CDs Personal Corporate 2,679.7 2,186.5 2022/3 Change % Change 2,937.7 3,018.3 +80.6 +2.7% 2,383.1 2,441.0 +57.9 +2.4% 518.4 540.6 +22.2 +4.2% Trends in Deposit/CD Balance ■ All deposits ■ Personal ■ Corporate 2,704.5 2,208.1 2,937.7 3,018.3 TOCH GN TOCHIGI BANK Tochigi Bank deposits show an increase mainly in personal deposits from the locally rooted business base. Corporate deposits have been increasing, due in part to efforts to boost liquidity as a defensive measure against the impact from the COVID-19 pandemic. Deposit Balance by Prefecture (2022/3) (Billion yen) (Billion yen) Gunma Ibaraki Tokyo 34.4 1.1% 24.4 0.8% 23.9 0.8% 2,738.7 2,383.1 2,441.0 2,246.1 Increase mainly in personal deposits 518.4 540.6 430.2 435.4 443.5 2018/3 2019/3 2020/3 2021/3 2022/3 Saitama 495.3 16.4% Tochigi 2,440.1 80.9% 6#8Loans and Bills Discounted (Billion yen) 2021/3 2022/3 Change Loans and bills discounted 1,962.9 1,955.1 (7.8) SMEs 864.7 842.0 (22.7) % Change (0.3%) (2.6%) Personal 643.0 642.5 (0.5) (0.0%) Home loans 584.0 586.7 +2.7 +0.4% Trend in Balance of Loans and Bills Discounted ■All loans/bills discounted ■SMEs/Personal TOCH GN TOCHIGI BANK The balance of loans and bills discounted decreased by 7.8 billion yen in the fiscal year ended March 31, 2022. This was partially due to lower demand for funds compared to the previous fiscal year, when there was an increase in substantially interest-free loans that did not require collateral amid the COVID-19 pandemic. Tochigi Bank loans and bills discounted consist mainly of SME and person loans. Business operators are facing many business challenges, such as the COVID-19 pandemic and an increase in material prices caused by weakening yen. The Bank is providing a range of solution services and is also firmly supporting the demand for funds. Balance of Loans and Bills Discounted by Prefecture (2022/3) (Billion yen) Of which, home loans Gunma Ibaraki 41.6 24.1 2.1% 1.2% 1,955.1 1,888.2 1,925.8 1,948.7 1,962.9 1,397.6 1,438.8 1,460.6 1,507.7 1,484.6 Mainly SME loans and personal loans Tokyo 282.3 Saitama 304.2 14.5% 541.1 554.9 570.7 584.0 586.7 15.6% Tochigi 2018/3 2019/3 2020/3 2021/3 2022/3 1,302.7 66.6% (Billion yen) 7#9Deposit Assets (Billion yen) 2021/3 2022/3 Change Deposit assets 374.7 398.3 +23.6 Public bonds 25.6 23.5 (2.1) Investment trusts 111.6 137.5 +25.9 Individual pensions, etc. 237.5 237.2 (0.3) % Change +6.2% (8.2%) +23.2% (0.1%) Balance of Deposit Assets TOCH GN TOCHIGI BANK The balance of deposit assets is increasing mainly in investment trusts due to our efforts to support asset formation over the medium and long term to prepare for the centenarian era and instill the practice of deriving investment benefits from long-term, diversified accumulation. Automatic savings agreements are increasing, both in terms of amount and the number of customers with agreements. In the fiscal year ended March 31, 2022, the balance of deposit assets increased by 23.6 billion yen. Trend in Investment Trust Deposit Balance and Number of Customers (Billion yen) (Billion yen) ■Public bonds Investment trusts Individual pensions, etc. Deposit balance No. of customers (No. of customers) 36,314 200 40,000 31,693 33,112 398.3 28,862 29,206 385.7 371.8 369.3 374.7 150 30,000 100 20,000 137.5 50 94.6 98.2 111.6 89.0 10,000 0 0 237.2 2018/3 2019/3 2020/3 2021/3 2022/3 229.4 248.1 237.5 251.6 Automatic Savings Agreements (Million yen) Agreements No. of customers with agreements (No. of customers) 19,001 1,000 16,880 20,000 13,938 94.6 98.2 137.5 750 89.0 111.6 15,000 8,830 9,692 500 10,000 861 757 47.8 39.3 28.6 25.6 23.5 250 514 5,000 180 2018/3 2019/3 2020/3 2021/3 2022/3 0 2018/3 189 2019/3 0 2020/3 2021/3 2022/3 8#10Securities (Billion yen) 2021/3 2022/3 Change % Change Total securities 581.2 606.9 +25.7 +4.4% Public bonds (Government bonds and 169.3 225.8 Local government bonds) Corporate bonds 115.8 116.0 Stocks 14.4 13.2 Other 281.5 251.8 (29.7) +56.5 +33.3% +0.2 +0.1% (1.2) (8.5%) (10.5%) Trend in Securities Balance at the Fiscal Year-end ■Government bonds Corporate bonds ■ Other ■Local government bonds ■Stocks (Billion yen) TOCH GN TOCHIGI BANK Valuation losses on other securities are expanding due to continued high volatility stemming from forecast fiscal policies in Europe and the U.S. and the unstable political climate. The expansion in valuation losses occurred despite reducing positions in foreign bond investment trusts (other securities) due to rising interest rates overseas. While the Bank's portfolio does not pose excessive credit risk from stocks, corporate bonds, and other securities, the portfolio is highly weighted in bond investment and reducing interest rate risk in Japan and overseas is a challenge. Valuation Gains (Losses) on Other Securities ■Stocks ■ Bonds ■ Other (Billion yen) 606.9 581.2 530.8 530.2 478.1 1.8 251.8 0.3 5.1 3.8 1.2 281.5 1.4 263.8 1.1 247 (10.4) (3.0) (15.4) Valuation gain 0.2 1.6 1.2 307.9 (0.7) 248.3 (1.8) 13.2 (3.6) (2.8) (5.5) Valuation loss 14.4 116.0 10.3 (9.9) 39.5 115.8 15.5 108.1 58.4 55.9 92.1 64.5 (11.1) 70.7 54.3 167.3 86.0 80.6 93.5 104.8 2018/3 2019/3 2020/3 2021/3 2022/3 2018/3 2019/3 2020/3 2021/3 2022/3 Note: The numbers in bold show the net valuation gains (losses). 9#11Expenses (Billion yen) 2021/3 2022/3 Change % Change Total expenses 22.6 22.1 (0.5) Personnel expenses 12.8 12.5 (0.3) Non-personnel expenses 8.3 8.2 Taxes 1.4 1.4 (2.1%) (2.4%) (0.1) (1.2%) (0.0) (4.5%) TOCH GN TOCHIGI BANK Expenses are declining due to improved operating efficiency in branch offices, concentration of administrative work at the Head Office, and office network restructuring. Expenses in the fiscal year ended March 31, 2022 fell to 22.1 billion yen, mainly due to a decrease in personnel expenses. The number of branch locations in the fiscal year ended March 31, 2022 was 75, under the Branch-in-Branch (BinB) method. Trend in Expenses and Overhead Ratio (OHR) Taxes Personnel expenses Non-personnel expenses ⚫OHR Number of Employees and Branch Offices No. of employees No. of branch locations No. of branch offices 30.0 (Billion yen) 40.0 87.1 86.2 82.0 79.5 74.8 2,400 75 (%) 100 (Employees) 3,000 (Locations) 100 92 91 88 86 86 91 85 80 81 75 25.1 24.2 23.7 22.6 22.1 1,800 1,630 60 1,601 1,565 1,540 1,478 20.0 50 13.9 13.3 13.7 12.8 12.5 1,200 40 40 10.0 9.4 8.9 8.8 8.3 8.2 1.5 1.6 1.5 1.4 1.4 0.0 2018/3 2019/3 2020/3 2021/3 2022/3 Note: 25 25 600 20 20 0 0 2018/3 2019/3 2020/3 2021/3 2022/3 = Expenses ÷ Gross operating profit (excluding gains (losses) on the sale of bonds and from cancellation of investment trusts) OHR (%) 10#12Status of Loans Based on the Banking Act and Financial Reconstruction Act TOCH GN TOCHIGI BANK (Billion yen) 2021/3 2022/3 46.0 44.4 (1.6) Change % Change (3.3%) Bankrupt and quasi-bankrupt loans 1.9 1.1 Doubtful loans 43.3 42.0 Special attention loans 0.8 1.3 (0.8) (41.2%) (1.3) (2.9%) +0.5 +64.4% Loans Based on the Banking Act and Financial Reconstruction Act: Balance at the Fiscal & Year-end Loans based on the Banking Act and Financial Reconstruction Act are generally trending flat. Loans based on the Banking Act and Financial Reconstruction Act declined YoY in the fiscal year ended March 31, 2022. The non- performing loan ratio also fell. The cost of credit for the fiscal year ended March 31, 2022 was 1.7 billion yen. The cost of credit has been declining recently and the credit cost ratio is also at a low level. Cost of Credit Bankrupt and quasi-bankrupt loans Special attention loans Doubtful loans Real cost of credit Non-performing loan ratio (Billion yen) (%) (Billion yen) 5.0 60.0 2.40 2.50 2.23 2.28 2.32 2.24 0.16 48.0 45.6 46.0 4.0 2.00 44.8 43.1 44.4 0.14 2.6 1.9 1.6 1.1 2.2 36.0 1.50 3.0 Credit cost ratio (%) 0.20 0.18 0.15 0.16 0.12 0.09 0.08 24.0 1.00 2.0 41.5 39.7 42.4 43.3 42.0 3.6 3.0 3.0 2.8 12.0 0.50 1.0 0.04 1.7 0.0 1.4 1.1 0.7 2018/3 2019/3 2020/3 0.8 2021/3 1.3 0.00 0 2022/3 2018/3 Note 1: Note 2: 2019/3 2020/3 2021/3 0.00 2022/3 Real cost of credit = Costs for loans written-off - Recoveries of written off receivables Credit cost ratio = Real cost of credit ÷ Average loan balance 11#13Shareholder Returns Policy TOCH GIN TOCHIGI BANK Shareholder Returns Policy (formulated in May 2022) The Bank's basic policy is to continue to pay shareholders consistent dividends while working to maintain sound management and enhance internal reserves to earn the trust of our customers and everyone in the local community, based on the Bank's public nature. We have explicitly stated our view on shareholder returns while maintaining this basic policy. We target a total return ratio of 30% to 35%. This ratio indicates total returns, consisting of dividends and purchase of treasury shares, as a percentage of profit attributable to owners of parent. Dividend Per Share and Total Consolidated Return Ratio (Yen) 12.5 Dividend per share 51.2 10.0 28.6 7.5 25.1 7.0 5.0 2.5 Total consolidated return ratio (%) 50.0 Target of 30 to 35% 40.0 7 30.0 6.0 5.5 20.0 5.0 5.0 15.8 10.0 0.0 0.0 2019/3 2020/3 2021/3 2022/3 2023/3 (Plan) In light of the strong performance in the fiscal year ended March 31, 2022, we have decided to increase the Bank's year- end dividend by 0.5 yen, compared to the previous forecast, to 3 yen per share (this will be proposed at the annual general shareholders' meeting in June 2022). Combined with the interim dividend of 2.5 yen per share, this brings the annual dividend to 5.5 yen per share. In the fiscal year ending March 31, 2023, we are planning to increase the interim dividend from the previous fiscal year by 0.5 yen to 3 yen per share and declare a year-end dividend of 3 yen per share, for an annual dividend of 6 yen per share. We have purchased a total of 275 million yen in treasury shares since May 2022. As stated in our shareholder returns policy, we are targeting a total return ratio of 30% to 35% in the fiscal year ending March 31, 2023. 12#14Capital Adequacy Ratio and ROE (Billion yen, %) 2021/3 2022/3 Change Consolidated capital adequacy ratio Equity capital 11.90 12.06 +0.16 172.7 175.1 +2.4 Risk assets Consolidated ROE 1,451.0 1,451.9 1.29 2.21 +0.9 +0.92 Consolidated Capital Adequacy Ratio Equity capital -Capital adequacy ratio TOCH GN TOCHIGI BANK The consolidated capital adequacy ratio for the fiscal year ended March 31, 2022 improved from the previous fiscal year. This improvement resulted mainly from an increase in equity capital due to the accumulation of earnings. Consolidated ROE for the fiscal year ended March 31, 2022 was 2.21% (an increase of 0.92 point from last fiscal year). We will strive to improve ROE by improving operating efficiency and strengthening the Group strategy while focusing on utilizing equity capital to take risks, mainly in providing loans to SMEs and personal loans. We will manage the Bank with an awareness of ROE, based on our shareholder returns policy. Consolidated ROE (Billion yen) (%) (%) 12.04 11.90 12.06 250.0 11.37 12.5 3.0 2.80 11.17 200.0 10.0 2.0 172.7 175.1 150.0 166.9 167.0 167.2 7.5 100.0 50.0 1.29 1.14 5.0 0.87 1.0 2.5 2.21 0.0 0.0 0.0 2018/3 2019/3 2020/3 2021/3 2022/3 2018/3 2019/3 2020/3 2021/3 2022/3 13#15Financial Results Forecast (Billion yen) [Non-consolidated] 2022/3 2023/3 Change % Change Gross operating profit 26.9 27.5 +0.6 +2.5% Net interest income 25.4 24.5 (0.9) (3.3%) Fees and commissions income 4.2 4.1 (0.1) (3.3%) Other operating income (2.8) (1.1) +1.7 Expenses 22.1 21.4 (0.7) +59.2% (3.6%) Substantial net business profit 4.7 6.1 +1.4 +31.4% Core net business profit 7.5 7.3 (0.2) (3.0%) Net business profit 4.1 6.1 +2.0 +50.8% Gains (losses) on bonds (2.8) (1.1) +1.7 +59.7% Ordinary profit 4.4 4.3 (0.1) (2.4%) Profit 3.0 2.6 (0.4) (15.3%) Costs for loans written-off 2.0 2.5 +0.5 +21.3% (Billion yen) [Consolidated] 2022/3 2023/3 Change % Change Ordinary profit 5.5 5.0 (0.5) Profit attributable to owners of parent 3.6 3.0 (0.6) (10.3%) (17.3%) TOCH GN TOCHIGI BANK [Main Points of Non-consolidated Forecast] The Bank expects interest on loans and discounts to be on par with the previous fiscal year. However, we expect a decrease in interest and dividends on securities to result in a decline in net interest income. While we project an increase in costs for loans written-off, we plan to continue efforts to improve operating efficiency and reduce expenses in the fiscal year ending March 31, 2023. We therefore forecast around 2.6 billion yen in profit. Note: Substantial net business profit = Net business profit (before provision to general allowance for loan losses) [Main Point of Consolidated Forecast] Consolidated financial results reflect the financial results forecast at the non-consolidated level. We forecast around 3 billion yen in profit attributable to owners of parent at the consolidated level. 14#16Overview of the 10th Medium-term Management Plan 15#17Overall Image of the Medium-term Management Plan TOCH GN TOCHIGI BANK Management Philosophy The 10th Medium-term Management Plan We will contribute to the creation of a prosperous regional community and aim to be a reliable bank. We will develop as a financially sound bank that can flexibly cope with a new era. We will create workplace that can provide job satisfaction. (The fiscal year ended March 31, 2021 to the fiscal year ending March 31, 2023) Evolution into a "bank that excels in the resolution of issues" To contribute to the development and growth of regional communities by establishing face-to-face relationships with as many customers as possible and resolving their issues and problems, working in concert with them. To contribute to stable asset formation by customers and maintenance and improvement of sustainable business value of companies, with a focus on consulting sales. To aim to be a supportive bank that is consulted first about anything, seriously thinks through and works hard to resolve the issues and problems of customers, and is indispensable to the regional community. Basic Policy Establishment of a customer support system Companies Support for main businesses Value Offered Support for establishment Support for growth of business Support for maintenance/ improvement of business value and for continuation Resolution of issues/ problems Individuals Support for asset formation to prepare for the centenarian era Asset formation Preparation for life after retirement Inheritance/ asset succession Themes Key Measures Enhancement of value offered to customers by making the most of our consulting function Pursuit of support based on co-creation, with focus on consulting ■Reinforcement of the sales system that can cope with the diversity of customers Development of customer-oriented human resources ■ Enhancement of branch management ■Development of business specialists ■Building of an appropriate evaluation/pay system Establishment of a sustainable management base that supports customers Promotion of reduction, streamlining, and concentration of clerical processes/business operations Establishment of effective branch operation corresponding to regional characteristics Reinforcement of governance structure 16#18Medium-term Management Plan Numerical Targets Profitability indicators TOCH GIN TOCHIGI BANK Item Target in Final Fiscal Year (ending March 31, 2023) Fiscal Year Ended March 31, 2022 Results (for Reference) Results of Previous Medium-term Management Plan (Fiscal year ended Mar. 31, 2020) Profit ¥2.5 billion ¥3.6 billion ¥1.8 billion or more (Consolidated) Core net business profit (excluding gains (losses) on cancellation of investment trusts) ¥6.0 billion ¥7.4 billion ¥5.1 billion or more Soundness indicator Capital adequacy ratio (Consolidated) 10% level 12.06% 11.17% Definition of indicators Profit (Consolidated): Profit attributable to owners of the parent Core net business profit (excluding gains (losses) on cancellation of investment trusts): Net business profit + Provision to general allowance for loan losses - Gains (Losses) on sale of bonds Capital adequacy ratio (Consolidated): Capital adequacy ratio (Consolidated) = Equity capital (Consolidated) / Risk assets (Consolidated) 17#19Progress on the 10th Medium-term Management Plan 18#20➤➤➤[Theme 1] Enhancement of value offered to customers by making the most of our consulting function 1-1. Evolution Into a "Bank That Excels in the Resolution of Issues" TOCH GN TOCHIGI BANK We aim to evolve into a “bank that excels in the resolution of issues." We are producing results aimed at establishing a customer support system that enables the Bank to provide one-stop solutions to the problems of customers. Number of Business Succession and M&A Agreements Concluded Business successions indicate the number of consulting agreements concluded 32 22 Number of Business Matching Agreements Concluded (Agreements) 617 (Agreements) 37 498 489 Breakdown of Solution Fees (Million yen) 1,631 242 1,347 Business succession and M&A 1,207 114 268 Business matching 134 164 133 328 436 166 Securities company brokerage 2020/3 2021/3 2022/3 2020/3 2021/3 2022/3 Other 774 741 685 ⚫ Private placement bonds ⚫ Syndicated loans, etc. 2020/3 2021/3 2022/3 Began providing SDG management support services to local companies in March 2022 We are providing three SDG management support services to provide business operators who support the local economy with valuable opportunities to improve business continuity (Tochigi Bank SDGs Declaration Support Service, Tochigi Bank Loans for First-time Corporate SDG Initiatives, and Leases for SDG Initiatives by Tochigin Leasing Co., Ltd.). 19#21►►►[Theme 1] Enhancement of value offered to customers by making the most of our consulting function 1-2. Asset Management Support for Individuals TOCH GN TOCHIGI BANK We are strengthening the system for supporting asset formation to prepare for the centenarian era. ▶Future-oriented stable asset formation ► Preparation for life after retirement ►Inheritance/asset succession that realizes dreams 20s 30s 40s 50s 60s Generation & Work Marriage Child-rearing Retirement life stage 70s & up Life after retirement Pension Long-term care Life plan car Purchase Purchase Educational home expenses Renovation Investment trust Loan needs Inheritance/ gifting Post-retirement needs Asset builders Middle-aged Seniors Customer group Young Life-long support for a wide range of financial plans for all ages, from the young people to seniors Investment Trust Balance (Million yen) 137,538 111,607 89,070 Savings Investment Trust Agreements (Monthly amount) 514 (Million yen) 861 757 Cumulative Number of Living Trusts and Annual Endowment Trusts 461 (Trusts) 214 Living trusts 256 132 Introduced trust products on April 1, 2020 Annual endowment 247 trusts 124 2020/3 2021/3 2022/3 2020/3 2021/3 2022/3 2020/3 2021/3 2022/3 20#22➤➤➤[Theme 2] Development of customer-oriented human resources 2-1. Initiatives Aimed at Promoting the Advancement of Women We are pursuing initiatives aimed at promoting the advancement of women, mainly through the Council for Promoting the Advancement of Women (established in January 2015). [Purpose of the Council for Promoting the Advancement of Women] To have women discuss the challenges they face in the workplace, and propose solutions to challenges and measures to create a better working environment to the relevant divisions. [Policy on Main Challenges] Aim to build a workplace environment that enables women to work energetically and contribute actively ... Challenges women face in balancing housework, child care, and nursing care Ways for women to target further career advancement etc. TOCH GN TOCHIGI BANK Council for Promoting the Advancement of Women (consists of 10 women at the Head Office) *as of March 31, 2021 [Other members] Progress on KPIs related to the advancement of women Subcommittee on Promoting the Advancement of Women (consists of branch personnel) ΚΡΙ ● Women's subcommittee: 9 members ● Men's subcommittee: 6 members * Plus 10 male survey respondents Target March 31, 2022 16% or higher 12.3% 80% or higher 64% Percentage of female workers in managerial positions (deputy investigator) or higher Percentage of male bank employees who take childcare leave Initiatives in career advancement of women (conceptual diagram) Create candidates System Career advancement Building 3 challenge seekers ▼ Main proposals (partial list) Establish new career training Build a system for follow-up Provide training for tasks the person has no experience in Based on these proposals, we revised the personnel system and other systems ●Eliminate uniforms for women in stages Eliminate the distinction between Build the base (build the pool of working women) Motivation to continue working 2 Job satisfaction Systems, work environment, etc. 1 Easy to work Job rotations Hold information exchange meetings Feature women who are contributing actively in the internal bank magazine Provide more solutions for shortening work hours Expand the childcare/nursing care systems management track and general clerical positions Establish a career track limited to the local region etc. 21#23➤➤➤[Theme 2] Development of customer-oriented human resources 2-2. Initiatives Aimed at Successful Management of Human Capital TOCH GN TOCHIGI BANK We aim to evolve into a "bank that excels in the resolution of issues" and are working to develop specialists who are highly knowledgeable in each field to achieve customer orientation. Internal development of specialists (as of March 31, 2022) Record in sending personnel to external specialized institutions and agencies Number holding specialized qualifications (as of March 31, 2022) Solution supporters (Mainly solve the challenges of corporate customers) 65 people Financial plan supporters (Mainly solve the challenges of individual customers) 74 people Ministry of the Environment Regional Economy Vitalization Corporation of Japan (REVIC) Japan External Trade Organization (JETRO) Japan Finance Corporation Shinsei Bank, Limited Nihon M&A Center Inc. Japan Economic Research Institute Inc. Hitachi, Ltd. Organization for Small & Medium Enterprises and Regional Innovation Japan Productivity Center SME Management Consultants 10 people Management Consultants 35 people 1st-grade Certified Skilled Professional of Financial Planning (CSPFP) 42 people IT Passport/ Grade 3 Financial DX Advisors 190 people Other (SAAJ CMAs, Real Estate Notaries) 83 people etc. 22#24➤➤➤[Theme 3] Establishment of a sustainable management base that supports customers 3. Improving Efficiency of Branch Office Operations and Branch Network Improving Efficiency of Branch Office Operations From April 2020 to November 2021 ATM outsourcing Concentration of administrative work at the Head Office Lending implementation Payment of Koshigaya city tax and tax on deposit interest - Seizure operations Introduction of multiple document scanner and establishment of middle office etc. By Fiscal Year 2023 ● Promotion of e-contract transactions ●Revision of lending administrative process ●Introduction of paperless management system for customer cash, checks, etc. Successfully reduced administrative work by roughly 18,500 hours/month (based on Nov. 2021 administrative volume survey) Plan to reduce administrative work by roughly 6,700 hours/month TOCH GN TOCHIGI BANK Improving Efficiency of Branch Network We are working to improve efficiency of the branch network through the BinB (Branch-in-Branch) format and streamlining branches (converting to personal bank branches). Trend in Number of Branch Locations 92 77 23 13 92 12 91 85 81 75 72 71 64 63 7 13 8 12 12 11 9 7 62 62 Full banks CON Mar. 31, 2017 Mar. 31, 2018 Mar. 31, 2019 Mar. 31, 2020 Mar. 31, 2021 Mar. 31, 2022 Personal bank branches Satellite locations Managed to assemble and reallocate around 130 personnel by November 2021 * Plan to assemble nearly 50 personnel by fiscal 2023 Implement further improvements in productivity and strengthen earning power Pursue Shared ATMs with Ashikaga Bank, With Which We Share the Same Sales Area Secure and improve convenience for local customers and reduce ATM operating costs at the same time. [Phase 1] [Phase 2] (Aug. 2021 onward) Convert to shared ATMs at satellite locations along Orion Dori. Expense reduction results during 10th Medium-term Management Plan (compared to the fiscal year ended Mar. 31, 2020) Approx. 1.6 billion (Jul. 2022 through plan) Use the ATMs of E-net Co., Ltd. to share part of the ATMs outside of branches (from 10 locations initially to considering expansion in stages). 23#25Initiatives in Sustainability 24#26Initiatives in Sustainability (1) Tochigi Bank Declaration on SDGs TOCH GN TOCHIGI BANK We announced the Tochigi Bank Declaration on SDGs and concrete initiatives in August 2019. We want to create a sphere of harmonious co-existence that generates a virtuous cycle locally by adopting a proactive approach to environmental and local community issues. By taking such an approach, we will achieve sustainable development of the environment, local community, all stakeholders, and Tochigi Bank, and realize local SDGs. That is our view of sustainability. Tochigi Bank Declaration on SDGs Based on our management philosophy, "We will contribute to the creation of a prosperous regional community." Tochigi Bank continues to contribute to the sustainable development of local communities and to the resolution of challenges through our business activities, to achieve the sustainable development goals (SDGs) established by the United Nation. Local economy Environmental protection Shop Vision of the Tochigi Bank Group Achieving Local SDGs TOCH GN Tochigi Bank TOCHIGI BANK Positive impact Company City Hall Local community Company Respect for human rights 25#27Initiatives in Sustainability (2) Sustainability Policy, etc. Formulated the Sustainability Policy in December 2021 Sustainability Policy The Tochigi Bank Group considers environmental and social issues and pursues a virtuous cycle for local economies through our business activities, based on our management philosophy. We will contribute to sustained development of local communities and all stakeholders and achieve sustained enhancement of the corporate value of the Group. TOCH GN TOCHIGI BANK Formulated the Three Basic Policies, Based on the Sustainability Policy Environmental Policy Basic View The Tochigi Bank Group aims to contribute to the creation of abundant local communities and sustained enhancement of corporate value. We continue to pursue initiatives that target solutions to climate change and other environmental issues to achieve these goals. Human Rights Policy Basic View The Tochigi Bank Group aims to contribute to the creation of abundant local communities and be a trusted corporate group. We therefore respect the Universal Declaration of Human Rights and other international standards and respect the basic human rights of our customers, employees, and all other stakeholders. Established the Sustainability Promotion Committee Board of Directors Reports Supervises Sustainability Promotion Committee Specifies significant issues related to sustainability Plans, formulates, and sets targets for concrete measures related to sustainability Ascertains progress, verifies benefits, and guides initiatives involving measures related to sustainability Handles other matters deemed necessary from the perspective of sustainability Investment & Lending Policy aimed at creating a sustainable society Basic Policy The Tochigi Bank Group supports improvement and sustained growth in the medium and long-term corporate value of our customers. We accomplish this by actively supporting initiatives that target solutions to environmental and social issues through our investment and lending services. We also exercise prudent judgment concerning investment in and lending to business operators that have a substantial impact on the environment and society, and endeavor to mitigate and avoid such impacts through prudent decisions. 26#28Initiatives in Sustainability (3) Response to Climate Change Risks TOCH GN TOCHIGI BANK The Bank endorsed the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations in December 2021. We work to enhance disclosure of information concerning climate change. Based on the TCFD recommendations, we aim to reduce CO2 emissions by 70% by fiscal 2030 and go carbon neutral in fiscal 2050. Trend in CO2 Emissions (t-CO2) 6,000 5,861 Scope 1 5,000 37.8% reduction 70% reduction i 4,000 3,647 3,000 Scope 2 2,000 1,758 1,000 0 FY2013 FY2016 FY2019 FY2020 Scope 1: Direct CO2 emissions from the Bank. Vehicle gasoline consumption, gas used, etc. Scope 2: Indirect CO2 emissions from use of electricity, heat, and steam supplied by other companies FY2030 Target Carbon neutral FY2050 Target ESG financing targets (FY2022 to FY2030) ¥250 billion ⚫ Lending to businesses eligible for financing of renewable energy businesses and introduction of/upgrading to energy-saving equipment ⚫ Lending to healthcare, welfare, public health and sanitation, education, agriculture, and fishery sectors • Environmental rating evaluation loans, charitable private placement bonds, start-up support financing, and financing for other evaluations of initiatives by eligible companies Lending for local ESG interest subsidy programs, etc. ● Lending for response to climate change (solar, wind, hydroelectric, and biomass power generation, energy-saving equipment, etc. Percentage of Bank assets that are carbon-related (as of March 31, 2021) 1.46% (Exposure to electric power and energy sector) 27#29(Example) TOCH Promoting Sustainable Local Development Using Local Resources GN - Growing Oya Summer Strawberries TOCHIGI BANK Local resources were used to create a commercial energy-saving greenhouse in the Oya area. Local resources of the Oya area Water reservoir in an old stone quarry that remains at a certain cool temperature year-round Oya stone no longer used as building construction material Created the ultimate energy-saving commercial greenhouse through reuse Alliance between local government and business operator → Platform TOCH GN TOCHIGI BANK Combination of local resources in an important industry (growing strawberries) and the old stone quarry and utilization of tourism resources in the prefecture Also contributes to resolution of the problem posed by an abandoned property FY2020 Cabinet Office Minister of State (for Regional Revitalization) Award for distinguished initiatives, etc. in financing (Secretariat of the Headquarters for Revitalization of Towns, People, and Work, Cabinet Secretariat) Utsunomiya City Use the local resources surrounding the old Oya stone quarry to promote tourism Local Stakeholders Build a community that uses local produced/locally consumed thermal energy Turn Oya summer strawberries into a local industry Increase the number of energy-saving greenhouses built in the Oya area Enhance the infrastructure established for supplying power for cooling and heating to energy-efficient greenhouses To increase the brand value of the Oya area 28#30Status of Other Initiatives in Promoting Sustainability ESG/SDGs financing Lending target & result (Total for FY2019 to FY2021) Target ¥75 billion/ Results ¥98.4 billion Tochigi Bank SDGs private placement bonds (Total for FY2019 to FY2021) 136 placements/¥8,270 million Tochigin Capital & Consulting KK activity results Number of companies invested in 20 companies (Local revitalization funds: 13 companies/ Agricultural corporation funds: 7 companies) TOCH GN TOCHIGI BANK Record of lending to start-ups and new businesses (Total for FY2015 to FY2021) 2,929 loans/¥28,609 million Number of business matching agreements (Total for FY2018 to FY2021) 1,886 agreements CO2 emissions reduction initiatives FY2020 results [vs. FY2013] - 37.8% 29#31TOCH GIN TOCHIGI BANK Contact for inquiries on these materials: Corporate Planning Division: Nakada, Saito, and Iwamoto Tel.: +81-28-633-1455 e-mail: [email protected]