Investor Presentaiton

2 Message from Management Management philosophy To prosper together with the region To satisfy all of our customers To provide our staff with stability and opportunities What Yamagata Bank is aiming for I am grateful for the continuous patronage of our customers towards Yamagata Bank from the bottom of my heart. The economy of Japan during the fiscal year ended March 2014 generally recovered due to Abenomics, which focuses on monetary and fiscal policy and improved the economy and, in the latter half of the year, rush demand before the increase in the consumption tax rate, which significantly facilitated efforts to pull out of deflation. Public investment increased in general due to recon- struction projects and the economic measures, and housing investment rose because of reasons such as construction of houses earlier than planned to beat the upcoming increase in the consumption tax rate. Personal consumption stopped falling and remained stable because of moderate improvements in employ- ment and income conditions, and of last-minute purchases made before the increase in the consumption tax rate. These circumstances stimulated corporate production activities and investment in plant and equip- ment made a modest recovery against the background of improvement of corporate performance. Improve- ments in export conditions due to the depreciation of the yen helped exports to rise, but later in the year, instability in the emerging economies and other factors tended to slow this increase somewhat. Considering the economy of Yamagata Prefecture, in which our business is based, corporate production activities were depressed in the first half of the fiscal year. But it gradually recovered. The corporate production activities such as production in the electronics-related business, which is the major industry in the prefecture, remained low to the extent that some companies laid off staff in the first half of the fiscal year. But in the latter half of the fiscal year, the production improved with the recovery in the domestic economy. Personal consumption was strong, as the after-effects of the particularly high consumption following the Great East Japan Earthquake disaster ended and because of hurried buying before the rise in the consumption tax rate. Also, housing investment increased in general, and the public investment was much larger than that of the previous year due to an increase in orders for construction work from national and local government. Under these circumstances, the business confidence of companies improved and invest- ment in plant and equipment recovered at a low level. During the year, employment picture saw a strong improvement as a result of the continuous work offers in a diverse range of businesses. Under the circumstances as stated above, Yamagata Bank carry out our 17th long-term management plan, called the "Yamagin Innovation Plan II" (fiscal 2012- 2014). In accordance with this management plan and with the understanding that Yamagata Bank will not have any growth without the vitalization of the regional economy, we are endeavoring to further enhance our region-oriented banking. Based on the plan, we will make our best efforts to assist in raising regional vitality by supporting customers in creating added value and by making contributions to materialize a sustainable regional economy and society. We would be most grateful if you could continue to extend your support and lasting patronage. Aiming to be a bank that is absolutely necessary for Yamagata with an overwhelming presence and trustworthiness. The management philosophy of Yamagata Bank, which has been maintained throughout the long history of the Bank, is based on three aspects, namely the region, our customers and our employees, and has the common ideal as that of the corporate social responsibility of the modern management. Therefore, we have set the management philosophy as our corporate social respon- sibility charter, and we consider that meeting our corporate social responsibility is the management of the Bank. The 17th long-term management plan, "Yamagin Innova- tion Plan II", which began in April 2012, is aimed at raising our corporate value through further enhancement of region-oriented banking, by considering our corporate social responsibility as a regional bank based on the three aspects. The major target of the plan is structural reform to become a bank that is absolutely necessary for Yamagata with an overwhelming presence and trustworthi- ness, in other words an enterprise that materializes vitalization in the region. All of the managers and staff of Yamagata Bank will unite and strive to meet the targets in the plan. CSR charters The management philosophy of Yamagata Bank, which the bank has respected throughout its long history, also applies to CSR management in the current times. Under the 17th long-term management plan, various business problems will be solved by regarding the management philosophy as CSR charters. To prosper together with the region From the aspect of the economy and social contribu- tions (the meaning of our existence) Regional banks share a common destiny with their home region. They bear a responsibility to contribute to the growth of the economy of their region, which is permanent, regardless of the flow of the times. Today, the roles of regional banks are expanding, not only in financial aspects, but also in social aspects. To satisfy all of our customers From the aspect of our customers (customer satisfaction) The lifestyles of our customers are diversifying, which means that the requirements of each customer differ. We endeavor to raise our ability each and every day to solve customers' problems so that they will use our services for a long time. To provide our staff with stability and opportunities - From the aspect of our employees (employee satisfaction) The satisfaction of our employees who serve our customers is vital to deliver good services to customers. Yamagata Bank is managed in a way whereby the employees are proud of working at the bank, are eager to complete their tasks and feel enthusiastic. Basic concept of the 17th long-term manage- ment plan 1.To swiftly meet targets to raise adaptability to the changes in conditions considering the next decade. 2.To contribute to sustainable growth and the devel- opment of the region and our customers on the understanding that the region and Yamagata Bank share a common destiny; and to further enhance region-oriented banking in order to maintain and expand the foundations of our earnings and to raise our corporate value. Basic policies in three years (fiscal 2012-2014) 1.We make the utmost efforts to solve the problems of our customers actively and swiftly by using the advantage of our comprehensive finical informa- tion service. 2.We provide financial products and services of high added-value to satisfy every customers, so that they will keep using our bank continually and permanently. 3.As the core of innovation of Yamagata Prefec- ture, we contribute to the regional sustainable development. Six reconstruction in progress 1.Procurement and investment 2.Operation 3.Profit making structure 4.Human resource development 5.Services reform 6.Consciousness and conduct Outline of major targets 1.To raise earnings capacity (1)To strengthen the foundations of our earnings by building business relationships that are sustainable and materialize development (reform of the profit-making framework) We aim to have business with customers that is sustainable and materializes development; in other words, life-long business for personal customers and permanent business for corporate customers. We will respond to the diverse requirements of customers by offering solutions, and contribute to the growth and development of the region and of our customers by working together to find solutions. (2)To improve both the quality and quantity of earnings by changing business models (reform of procurement and investment, and a profit- making framework) We will change the way that we operate our financing, and lend funds to foster companies and markets, by taking risks proactively. 2.To strengthen business foundations Reform of human resource development, way of thinking, deed, services and operations We will realize sustainable growth by strengthening business management and staff training, which are the foundations of business. 3.To generate the value of the region The Bank will make our best efforts to assist in raising regional vitality by supporting customers in creating added value and by making contribu- tions to materialize a sustainable regional economy and society. K. He Kichishige Hasegawa President 3