Hachijuni Bank : Annual Report 2025

The Hachijuni Bank, LTD.

By consistently observing sound management principles and comprehensively consulting with the community, we remain leaders in realizing a sustainable society.

Hachijuni Bank has grown alongside the Nagano community as a financial institution supporting its rich nature, culture, and diversity. To revitalize the local economy and community and drive qualitative prosperity, we aim to keep growing together as we tackle various challenges facing the region, such as population decline, the aging of society, and climate change.

Myojinike, Matsumoto, Nagano Prefecture

Contents

Hachijuni Bank's vision

01 Management philosophy

03 History

05 Message from the President

13 Message from the Chief Financial Officer

Value creation story

19 Overview of value creation story

21 ESG materiality

23 Hachijuni Bank's Value Creation Process

27 Capital support for value creation

31 Enhancing corporate value: Improving PBR and ROE

35 Roundtable with outside directors: The Future of the Hachijuni Group

Value creation initiatives

43 Medium-term Management Vision 2021

45 Medium-term Management Vision: Theme 1

47 Medium-term Management Vision: Theme 2

49 Medium-term Management Vision: Theme 3

51 Medium-term Management Vision: Theme 4

53 Medium-term Management Vision: Theme 5

55 The birth of Hachijuni Nagano Bank

61 Cooperation with other financial institutions

Fundamental management support for value creation

Value

Co-Creation

Guidance

Editorial policy

The Hachijuni Bank presents this integrated report to clearly communicate to stakeholders our efforts to enhance its sustainability. Content presented herein includes our management philosophy and policies, financial data, and nonfinancial information on such matters as ESG and the UN Sustainable Development Goals.

In preparing this report, we referenced the International Integrated Reporting Framework of the IFRS Foundation and the publication Guidance for Collaborative Value Creation from the Ministry of Economy, Trade and Industry.

This integrated report is a disclosure document as defined under Article 21 of the Banking Act. Statements presented herein regarding future performance do not guarantee future performance and may differ from actual results due to changes in the business environment or other factors.

63 Message from the Human Resources Department Manager : Human Capital Management

65 Human capital management

73 Environmental initiatives

81 Respect for human rights

83 Stakeholder engagement

87 Corporate governance

95 Risk management system

99 Executive organization

101 External Evaluations and Participation in Initiatives

Corporate data

103 Data summary

Hachijuni Bank's vision

History

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Hachijuni Bank's vision

In 1931, amid the chronic economic malaise that followed World War I leading up to the Great Depression, the Nagano Prefecture economy struggled. To ensure access to financial functions needed to sustain the economy and stabilize the local community, The Hachijuni Bank was established.

In keeping with its founding, Hachijuni Bank has consistently held that it cannot fulfill its mission of supporting the local community unless the Bank itself rests upon a sound and stable management foundation. This remains fundamental policy to this day.

2000

Yamabiko Services Co., Ltd., established

1997

Singapore Representative Office established

1991

Hong Kong Branch established as an integrated system for the collection, recycling, and reuse of waste paper (first in the banking industry)

1986

Hong Kong Representative Office and Hachijuni Staff Service Co., Ltd., established

1984

Nagano Economic Research Institute and Hachijuni Capital Co., Ltd., established

1982

Hachijuni DC Card Co., Ltd., established (currently Hachijuni Card Co., Ltd.)

1974

Hachijuni Lease Co., Ltd., established

1971

Launched comprehensive online services, listed on the Second Section of the Tokyo Stock Exchange

1878

One of Hachijuni Bank's predecessors, the 63rd National Bank, established

1992 1998

Recycled paper introduced for CD/ATM Named Gold Sponsor & Official journaling (first in the financial industry) Bank of the Nagano Olympic

Winter Games

1989

Next-generation Total Online System launched

1985

Hachijuni Culture Foundation established

1983

Hachijuni Credit Guarantee Co., Ltd., and Hachijuni System Development Co., Ltd., established

1981

Hachijuni Business Services Co., Ltd., established

1972

Listing transferred to the First Section of the Tokyo Stock Exchange

Pre-1931

The Bank continues to build trust by providing individually tailored financial services, enhancing competitiveness by focusing on meeting diverse needs, and helping to develop local communities and economies.

1971

In the 1870s, the National Banking Act was enacted to fund industrial development and consolidate large volumes of government bonds and irredeemable (fiat) banknotes. Several national banks were established in Nagano Prefecture, including the 14th National Bank (Matsumoto), the 19th National Bank (Ueda), the 24th National Bank (Iiyama), the 63rd National Bank

(Matsushiro), and the 117th National Bank (Iida). Head office of the 19th National Bank Head office of the 63rd National Bank (Became Hachijuni Bank's head office in 1931)

In November 1965, amid expanding foreign exchange business, the Bank launched the first online foreign exchange service in the regional banking sector.

In April 1971, the Total Online System commenced services at its initial pilot locations, the Nagano and Omachi branches.

Omachi Branch staff cheer the Total Online System's launch

1877

The 19th National Bank, a Hachijuni predecessor bank, established

August 1, 1931

The 19th National Bank and the 63rd National Bank merged to form The Hachijuni Bank

2001

In April 2001, the Bank commenced development of a joint system based on its proprietary platform that incorporated the common needs of regional banks. This accelerated business operations while standardizing product and service offerings and streamlining administrative procedures, with the aim of reducing system costs and improving efficiency through collaboration. The name Judankai derives from the idea of "comrades spanning the Japanese archipelago," representing the alliance's seven banks: Yamagata Bank, Tsukuba Bank, Musashino Bank, Awa Bank, Miyazaki Bank, Bank of the Ryukyus, and Hachijuni.

2023

With the goal of upgrading services and convenience, in June 2023 Hachijuni Bank and Nagano Bank implemented an equity tie-up through an exchange of stock, with Hachijuni Bank becoming the parent company and Nagano Bank a wholly owned subsidiary. Subject to obtaining the necessary approvals from relevant authorities, the two banks are scheduled to fully merge on January 1, 2026.

2004

Became one of the first banks to introduce environmental accounting

2007

Bangkok Representative Office established

2017

Received an award from the Cabinet Office contributing to regional revitalization (first private financial institution to receive this award)

2020

Endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

2022

Hachijuni Link Nagano Co., Ltd., established

2024

Participated in the TNFD Forum launch of the TSUBASA/ Judankai Joint Study Group

2026

Planned establishment of Hachijuni Nagano Bank

Hachijuni Bank's vision

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Message from the President

President and Representative Director Executive President

With the development leadership of the Nagano prefectural government, we are applying our value creation process to further the state of qualitative prosperity.

Masaki Matsushita

In January 2025, the Bank of Japan raised its policy rate to 0.5% as it continued backing away from its negative interest rate stance. This marked a major shift for the Japanese economy from a prolonged "interest free" environment to one with positive interest rates.

The Bank has operated in an extremely challenging earnings environment but, thanks to enhancements to its management foundation under Medium-Term Management Vision 2021 ("Vision 21" hereinafter), it has structured itself such that it can respond flexibly to changing business conditions. Currently, as interest rates normalize, the Bank has achieved steady improvement in profitability and entered a new stage toward sustainable growth.

Regarding fiscal 2025 (ending March 31, 2026) earnings forecasts, we are budgeted for approximately ¥10 billion in nonrecurring expenses associated with the Nagano Bank merger, but we

nevertheless expect to achieve record profits for the second year running. This is strong evidence that our business innovation initiatives are producing results and that our efforts at building up our management platform are bearing fruit. In addition, based on the current progress of our business, we are confident that we can raise the 2027 target 5% return on equity (ROE) set out in Vision 21. We will continue to manage the Bank in a way that balances sustainable profitability advances with capital efficiency optimization.

Amid this changing economic environment, we announced our formal Value Creation Process in May 2024. The Process clarifies our mission as a Nagano-based regional bank and defines our target outcome: revitalization of local economies and communities and promotion of qualitative prosperity while addressing the challenges of a declining and aging population. The Process conceptualizes the value

Mt. Fuji-Alps Alliance

• Expansion of business domains across regions

• Wide-area support for local companies

• Record-high profits

• Four consecutive years of dividend increases

• Early achievement of medium-term management target for greenhouse gas (CO2) reduction

• Solid management foundation for creating new value with a view to exceeding the 5% ROE target for fiscal 2027

Management integration and merger with Nagano Bank

• Strengthening management platform

• Talent enhancement

Result

• Complete overhaul of business software •Restructuring of multitrack personnel system

• Introduction of smart devices and communication tools •Expansion of training programs

• Utilization of AI and data warehouses •Establishment of a Diversity Promotion Group and workplace environment reforms

• Complete online conversion of sales operations and •Strengthening of human capital through management integration with The Nagano introduction of electronic payment systems Bank

• Strengthening of structured finance

• Business promotion from a medium-to-long-term perspective •Comprehensive support in nonfinancial areas

Growth and motivation through personnel reform

Operational and organizational DX

Comprehensive financial services and capabilities

• Enhancement of consulting offerings

• Expanded functionality via group companies

• Operation of solar power plants

Sustainability-driven management

• GX-related initiatives

• Climate change response in line with TCFD recommendations

Deepening the Life Support Business

• Expanding trust services for seniors

• Providing end-of-life support services

• Introducing the Wallet+ asset management app

• Building a comprehensive support system tailored to each stage of life

Strengthening our management platform - five themes

Background Prolonged low interest rates and negative-interest-rate policy Extremely uncertain business environment

• Medium-term Management Vision 2021 - initiatives and results

  • COVID-19 pandemic

5 Annual Report 2025 Annual Report 2025 6

Hachijuni Bank's vision

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Message from the President

that our business provides the community and clarifies our contribution to a sustainable society. We strive to be a financial institution that grows together

technology from the evacuate companies, which resulted in the region becoming a major manufacturing center for precision parts for such

Medium-Term Management Vision 2021 background

with the community by balancing the resolution of local issues and the creation of economic value.

Our Value Creation Process stipulates revitalization of local communities as an objective vital to our growth as a regional bank. It also emphasizes the goal of qualitative prosperity as a goal, a concept that extends beyond economic growth to include improving the quality of life and cultural and social richness of the people in the region. I can proudly say that Nagano Prefecture is a region that offers a high level of adaptability and flexibility in responding to change and the ability to attract people with a strong desire to improve themselves.

Despite its limited arable land, the region was able to supplement its economy through sericulture. The abundance of water and skilled laborers led to the development of silk production, which grew into one of Japan's leading export industries. Although the advent of synthetic fibers prompted the silk industry to decline, the existing facilities and workforce served as a base for companies that evacuated from urban centers during the war, and the region became a manufacturing hub for aircraft parts.

After the war, these businesses inherited the

applications as watches and cameras. In response to the demands of the times, the industrial base shifted toward electronic components and automotive products and has since expanded its scope to include semiconductors. The presence of many such companies in Nagano Prefecture has made it an important industrial base that continues to support the regional economy.

Nagano Prefecture has thus demonstrated unique characteristics that set it apart from other regions have allowed it to develop by flexibly changing its industrial structure in response to the needs of the moment. We believe that it is our important mission as a regional bank to strengthen and sustainably develop the local economy by recognizing and maximally leveraging the prefecture's competitive advantages. Starting January 1, 2026, the new Hachijuni Nagano Bank will fully deploy the management resources it has amassed under the ongoing Medium-term Management Vision 2021 ("Vision 21") plan to further revitalize the local community and regional economy and to promote qualitative prosperity.

This fiscal year marks my fifth year as President, and

Vision 21, which the Bank formulated around the time I took office, is entering its final year.

At the moment of my appointment, we were faced with the unprecedented COVID-19 pandemic and, at the same time, we were operating in an extremely uncertain business environment due to prolonged low interest rates and negative interest rate policies. As we put together our business plan amid these circumstances, we were highly concerned that the traditional financial model centered on deposits and loans alone would impede our sustainable growth.

Business innovation - five supporting themes

In advancing Vision 21, we have identified five themes that define the overarching direction for the Bank's business activities and have worked to implement them.

Sustainability-driven management

Among the five themes articulated in Vision 21, sustainability serves as the cornerstone of our management effort. We have always positioned sustainability centrally to our business, not only via our traditionally solid green transformation (GX) initiatives that include environmental conservation and CO2 reduction, but also through a broader concept of sustainability that supports the ongoing development of local communities. Based on this approach, we promote sustainability in all of our businesses on a medium-to-long-term timeline rather than through piecemeal solutions. For example, to combat climate change, we are applying certain recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We have already exceeded our initial targets, which included the use of solar power generation within the Hachijuni Group. These initiatives have instilled a high level of sustainability awareness within the

We recognized the importance of becoming more

deeply involved in the development of local communities and economies and collaboratively creating value and, accordingly, launched Vision 21 with the tag line "Combining finance, nonfinance, and relationships to support customers and communities." Unlike our previous management plans, which ran for periods of three years, Vision 21 follows a medium-to-long-term schedule of five years to focus on business innovation. Here, I would like to recap our efforts and achievements to date.

bank, and this mindset is becoming deeply ingrained in our management and business activities.

Deepening the lifecycle support business

Traditional personal financial services have focused on developing and proposing customized services that meet customer needs, such as expanding mortgage and investment trust products. However, we recognized that it was challenging to differentiate our services from those of other banks and to maximize our unique strengths. Therefore, we have been building a "lifecycle support business" that consistently serves our customers from their youth and into their golden years and fosters relationships that can last throughout their lives. In particular, in Nagano Prefecture, where the population is aging and birth rates are declining, we have identified this as both a chance to benefit society and a business opportunity. We have expanded senior-oriented trust options and end-of-life support services within the Bank. For younger customers, we have introduced an information app, Wallet+, that provides financial services covering such areas as asset formation, mortgages, and mutual funds, as well as information services tailored to life events, including retirement

Hachijuni Bank's vision

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Message from the President

and end-of-life planning. Through these efforts, the foundation for our lifecycle support business is steadily being fortified, and we expect further evolution and growth.

Comprehensive financial services and capabilities One initiative we have taken to support customers and communities through finance, nonfinance, and relationships as set forth in our Medium-term Management Vision 2021 ("Vision 21") is the provision of comprehensive financial services and related functions. Via this strategy we aim to innovate in the corporate banking domain by enhancing our consulting functions in such areas as business succession, M&A, business restructuring, and subsidy

Operational and organizational DX

The promulgation of Vision 21 will require advanced execution that far exceeds the quality and operational scale expected of a traditional bank and is expected to entail enormous costs. The essence of the Medium-term Management Vision 2021 is to achieve the seemingly conflicting goals of raising profitability while spending heavily. To achieve this, it is essential that we ensure the efficient operational and organizational digital transformation (DX). We are, therefore, completely revamping our business software to centralize information and, on the frontlines level, introducing smartphones for chat and video conferencing to support operational

and Inclusion, we promote workstyle reforms are seeing steady results, with the percentage of positive responses in employee engagement surveys exceeding 75%.

The management integration with Nagano Bank announced in June 2023 was an extremely important executive decision from the perspective of addressing the challenge of labor shortages. As the two banks, which had been rivals, become one, it is important not simply to increase the number of employees, but to create an environment where employees could work together as a unified entity. We have, therefore,

prioritized mutual respect and encouraged relationships that promote mutual learning regardless of each partner's scale. We believe this attitude has gradually harmonized our merging organizations and strengthened our talent pool. In January 2026, the final year of Vision 21, the two banks will merge to form Hachijuni Nagano Bank. We are confident that the merger will broaden the employment base and promote diversity within the organization, further enhancing our human capital stock and building a solid foundation for the sustainable growth of Hachijuni Nagano Bank.

application support while remaining active in traditional financial intermediation functions like

efficiency and flexible work styles. In addition, we are promoting information transmission and sharing

Hachijuni Nagano Bank and the Mt. Fuji-Alps Alliance

deposits and loans. Thus, we can offer solutions to customers' management challenges and help sustain their growth. Moreover, to maximize synergies across the entire Hachijuni Group, we have established a new company, Hachijuni Investment Co., Ltd., that, along with traditional lending, offers investment services such as capital funding and growth-oriented investment. Furthermore, Hachijuni Link Nagano Co., Ltd., provides services that leverage the Group's business network in such areas as overseas business support (matching with local partners and sales channel development) and electric power (regional power supply utilizing renewable sources). These companies are already open for business activities and are supporting the growth of local companies in various ways. The Bank itself is also building out its structured finance capabilities and establishing a framework to provide flexible and sophisticated financial solutions to meet an expanding range of increasingly complex business requirements.

Furthermore, in the nonfinancial domain, we provide comprehensive support to local companies in dealing with management issues of by combining solutions such as human resource development and referral services, support for local sourcing, and IT consulting (guidance on operational efficiency and digital transformation).

using AI to operate more efficiently as we expand the scope and size of our business processes.

As a leading bank in Nagano Prefecture, we have accumulated a long history of customer, industry, and macroeconomic information in a data warehouse. By processing this using AI, we are able to perform advanced insights into such areas as prospect extraction, forecasting of customers' business conditions, and credit assessment. In addition, we are promoting the introduction of electronic contracts and electronic payments with customers in our sales operations and are working to revolutionize operational efficiency through the use of enhanced business promotion tools throughout the Bank.

Growth and motivation through personnel reform

In the course of implementing the measures outlined in Vision 21, we were challenged by a structural labor shortage. To address this, we redesigned our personnel system in July 2022 to create a multitrack system that offers varied career paths suited to the characteristics and aspirations of each employee. At the same time, we have been expanding our training program to help employees enhance their expertise and develop their careers independently.

Moreover, we established a Diversity Promotion Group in July 2021 to promote the Bank as a workplace where diverse staff can actively contribute. Based on our Basic Policy on Diversity

As the business integration with Nagano Bank progresses, it is necessary to clarify the direction of future business operations in order to formulate a new management plan for the fiscal years ahead.

While we have to some degree strengthened our operational foundation in Nagano Prefecture by following the guidance of Vision 21, the merger process has clarified the differences in corporate culture between the two banks and the distinct strengths of each: Hachijuni Bank excels in systematic business promotion, while Nagano Bank is strong in the speed and flexibility of its staff at the front lines. Alongside cost management, overcoming differences in corporate culture and employee attitudes through business consolidation has been a top-priority objective of the management integration. By recognizing differences early on and clearly demonstrating mutual respect, we have been able to raise awareness of integration issues within the organization and are beginning to see tangible results.

In March 2025, we announced the Mt. Fuji-Alps Alliance, a wide-area alliance that extends beyond Nagano Prefecture. It is a key business strategy for the future of Hachijuni Nagano Bank and is intended to provide more extensive support for our customers' growth-oriented activities-including business succession and M&A-through the expansion of our business territory beyond regional boundaries. Given

a declining birthrate and aging population, it is essential to strengthen the competitiveness of local companies in order to sustainably grow the regional economy. Therefore, we believe that it is an important mission for regional banks to promote efficiency by facilitating business alliances and mergers among companies. Against this backdrop, we believe it is extremely meaningful for local financial institutions that support local customer to collaborate with each other, and we consider expanding the number of participating companies an effective strategy.

Furthermore, Nagano Prefecture is known as a potential destination for people moving away from the Tokyo metropolitan area, and regional banks'

The Hachijuni Nagano Bank

• Strengthening our management foundation

• Integration of corporate cultures

Mt. Fuji-Alps Alliance

• Extension of business domains beyond regional boundaries

• Wide-area support for regional companies

• Strengthening our management foundation through mergers Expanding our business domain beyond Nagano Prefecture through wide-area collaboration

  Hachijuni Bank's vision

  Hachijuni Bank's vision

  Value creation story

  Value creation initiatives

  Fundamental management support for value creation

  Corporate data

  Message from the President

  wide-area cooperation and alliance strategies are the best means of achieving population growth. We believe that the Mt. Fuji-Alps Alliance, a collaboration among the three banks, is a concrete initiative toward revitalizing the regional economy and community and contributing to qualitative prosperity as set forth in our Value Creation Process document. Although we are a regional bank, we value our global perspective and look beyond the domestic market. As a bank that meets international standards, we maintain multiple overseas bases and place management priority on discovering ways to expose the Nagano Prefecture region to overseas economic growth. We are also focusing on overseas strategies in our next business plan. As a regional bank connected to the world, we will further strengthen our management support

  functions by working closely with customers who are connected to the outside world and supporting their specific needs.

  We currently devoting management resources to this endeavor on a five-to-ten-year timeline and are steadily advancing initiatives for future growth, such as the three-bank Mt. Fuji-Alps Alliance, qualitative and geographical expansion of our business areas, and development of a foundation for overseas business. While not all initiatives may proceed as planned due to regulatory approval status and other factors, we are steadily making strategic preparations for sustainable growth, with the establishment of Hachijuni Nagano Bank scheduled for January 2026 as a major milestone.

  investment are daunting challenges, but the Bank has established a unique competitive advantage through its promotion of a digital transformation agenda that combine AI and a dedicated data warehouse.

  Message to our stakeholders

  Under our sound governance system and through active discussions at meetings of the Board of Directors, we manage the Bank with a focus on sustainable growth. I always ask myself whether my thinking is correct and place great importance on listening to diverse opinions. We have five outside directors who contribute significantly to improving our governance framework. In addition to participating in discussions at Board meetings, the outside directors also participate in the Nominating

  We will continue to promote management precepts dedicated to sustainable growth and further strengthen communication with our employees with a focus on expanding the value of our talent pool and updating the mindset of our people.

  Business innovation hinges on talent management and DX

  and Compensation Committee and actively participate in important business promotion activities such as

  For a long-established regional bank to innovate, it is essential to fundamentally reform its conservative culture. Among the five themes that support business innovation, we will aim to expand our business domains and raise profitability by enhancing human capital and promoting digitalization.

  To promote change led from the front lines, I visit each branch and repeatedly ask the local staff to consider whether their traditional work styles and values are hindering customer satisfaction. While management sets the direction, it is the frontline staff who are responsible for implementation. If they resist change, the organization will fail to grow or deliver customer satisfaction. Enhancement of human capital is also critical to promoting digitalization, and we have positioned talent management, including inspiring a fresh mindset among our employees, as a key plank in our management platform.

  In fact, the benefits of effective human resource management are steadily emerging, and with regard to our Medium-term Management Plan Vision 2021, we have completed all planned initiatives ahead of schedule by concentrating the implementation of measures originally slated for the first five years into the first three. For example, we have developed new career paths that enable employees to aim for

  management and executive positions regardless of current role and have prioritized staff development and management structure optimization.

  We are currently further deepening these initiatives and embedding throughout the organization. Going forward, we will verify our results and formulate our next business plan to leap forward into the next era of growth.

  Digital transformation, including the use of generative AI, is a key element of human capital management amid a declining population, as it contributes to the efficiency of management decisions and business processes. Human resource development and capital

• Business innovation through human capital management and digital transformation

Human capital management

Digital transformation

Corporate culture reform

Business innovation

AI and data utilization

Dialogue with frontline employees and enhanced awareness

Early implementation of digital solutions

meetings of branch managers and branch managers. This enhances management transparency and objectivity, enabling more effective decision-making. As President, I am ultimately responsible for the management of the Bank, but I feel that I am able to make high-quality decisions with the support of talented people both inside and the Bank and out.

In addition, our long-term HR policy goals of building strengths, adopting a pioneering spirit, and thinking and acting independently guide our employees as they grow autonomously and create value-even in this age of rapid change. Even as AI and other technological innovations advance, I want our employees to reaffirm our philosophy, hone their strengths, and actively accept new challenges. We hope that our policies help employees clarify what they can do through obtaining qualifications and other means and strive for self-improvement.

With the launch of Hachijuni Nagano Bank approaching, we are steadily building on our management foundation and looking forward to record profits for a second consecutive year. In connection with this, we are actively returning profits to our stakeholders through such measures as dividend increases (fourth consecutive period) and revising employee salaries.

In addition, we are expanding our already broad range of social contribution activities in areas such as the natural environment, human rights, child support, and poverty alleviation for our stakeholders, customers, employees, and-given that we are a bank and also member of the regional community-our important stakeholders in the neighborhood.

The active participation of all our employees is essential for the Bank to achieve sustainable growth together with our customers, shareholders, and the local community, and we will continue to make further brisk progress as we walk hand in hand with them.

We sincerely ask for your continued support in the future.

Hachijuni Bank's vision

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Nonconsolidated (¥ billion)

FY2023

FY2023

YoY

Message from the Chief Finance Officer

As Hachijuni Nagano Bank, we will continue to add value for the community and raise our corporate value.

Director and Senior Managing Executive Officer

Nakamura Makoto

Currently, the Hachijuni Group, as a leading Nagano Prefecture corporation, is contributing to the sustainability of the local community to enable it to adapt to change. This effort is steered by our Medium-term Management Vision 2021 ("Vision 21") with the mission of supporting customers and the community through finance, nonfinance, and relationships. (Details on page 43.)

Against the backdrop of social and economic uncertainty caused by the COVID-19 pandemic, Vision 21 was compiled in June 2021 in recognition that we must respond flexibly to achieve our goals and that we must

evolve in line with changes related to our customers and the times. We are promoting a shared vision that is not based on specific figures or implementation plans and are responding flexibly with plans designed and executed during each fiscal year.

Currently, we are assembling a business plan for the merger with Nagano Bank and intend to announce it during the current fiscal year. Therefore, Vision 21 will remain in effect through fiscal 2025. In the new plan, we hope to introduce specific initiatives related to the value creation process, as well as measures to improve ROE, shareholder returns, and capital management.

Review of fiscal 2024

As fiscal year 2024, ended March 31, 2025, began amid concerns of an economic slowdown in Europe, the US, and China as well as caution regarding the upcoming US presidential election, the Bank of Japan, having ended its negative interest rate policy, faced the difficult decision of whether to raise rates further. However, overseas economies were more resilient than expected, and the BoJ ultimately raised its policy rate to 0.5%, marking a

Against the backdrop of rising interest rates, consolidated gross income rose ¥12.7 year-on-year, to ¥113.2 billion, driven by net interest income.

Ordinary profit advanced up ¥28.6 billion, to ¥63.8 billion, in reflection of the topline increase and expanded gains on the sale of investment securities.

Net core business income (excluding gains on redemption of investment trusts), a profitability indicator for our core business, increased ¥7.2 billion, to ¥48.1 billion. Net operating profit improved by ¥1.5 billion, to ¥34.8 billion, despite losses of ¥11.9 billion on holdings of JGBs and other bonds. We actively worked to improve our bond

return to a world of interest rates.

Given these circumstances, we actively worked to improve the earnings and ROE of the entire Hachijuni Group, an effort that included the early realization of synergies with Nagano Bank, with which we are scheduled to merge. As a result, consolidated net income reached a record high of ¥47.9 billion, while ROE climbed to 4.6%, nearing our current fiscal 2026 target of 5%.

Net income attributable to owners of parent rose ¥10.9 billion year on year to, ¥47.9 billion, due to the absence of

¥17.3 billion in negative goodwill recorded last year in connection with the management integration with Nagano Bank.

portfolio in response to rising interest rates.

Ordinary profit increased ¥23.6 billion, to ¥59.9 billion, mainly due to expanded dissolution of cross-shareholdings, and net income rose ¥18.8 billion, to ¥45.9 billion.

We have set a policy statement for fiscal 2025 of, "Dedicated to our customers, as always, and giving our utmost for the merger and the future beyond." Although this requires that various issues be addressed, we have set this policy in this historic year when Hachijuni Bank and Nagano Bank will finally merge.

We understand that the economic outlook for fiscal 2025 remains highly unclear and that even more advanced and resilient management will be required. In particular, we must closely monitor the impact of US tariff policies. The current market is highly volatile, and we are carefully assessing the impact on our finances from the perspectives of market risk and ALM. We are also thoroughly preparing for the possibility of expanded credit risk in the future.

Amid these circumstances, for fiscal 2025 we have budgeted ordinary profit of ¥75 billion (up ¥11.2 billion year-on-year) and net income attributable to owners of

parent of ¥50 billion (up ¥2.1 billion).

Keeping economic uncertainty in mind, we have not factored any additional interest rate hikes by the BoJ into our base scenario. If credit risk and market risk remain stable and additional interest rate hikes are implemented, consolidated net income could expand by up to around

¥10 billion, depending on the timing, but even under our base scenario, we believe it is possible to mark a second straight year of record profits.

As for initiatives, we will prioritize the successful merger with Nagano Bank as the top priority for the entire group. At the same time, we will ensure that the effects of various measures implemented under the Medium-term Management Vision 2021 are fully realized to further enhance corporate value.

Annual Report 2025 14

13 Annual Report 2025

Hachijuni Bank's vision

Message from the Chief Finance Officer

Since its founding in 1931, the Bank has adapted to social and economic changes and focused on the development of Nagano Prefecture's economy and its own staff. As elucidated in our Value Creation Process, we believe our efforts to leverage the financial and nonfinancial capital we have cultivated over the years via various business activities are responsible for the valuable outcomes we create, namely the revitalization of the regional economy and society and the realization of qualitative prosperity. This ultimately leads to the actualization of our management philosophy, which calls us to uphold sound management principles and contribute to the development of the regional community.

As of March 2025, the Bank's PBR stood at approximately

0.5 x-an improvement from the recent low of approximately 0.3x. However, it has remained below 1x for an extended period, creating a negative equity spread situation. While PBR is related to both ROE and PER, we recognize that the key to achieving a PBR of 1x is to break out of the current low ROE range. We are striving to enhance shareholder value with ROE as the main driver so we are able to meet the market's expectations. To escape from low ROE, we are working to strengthen our profitability with the initial target of achieving a

benchmark of 5% by fiscal 2027. In fiscal 2024, we raised ROE to 4.6%, bringing us within reach of our near-term target. Although net assets are subject to stock market volatility, we believe that our ROE target of 5% for fiscal 2025 is reasonably achievable in the context of our ¥50 billion net income target for fiscal 2025.

Based on this, we are adding numerous policy upgrades to the business plan currently being developed for the new merged bank, with the aim of improving ROE to 8% and bringing PBR within the target range of around 1x.

Early achievement by 2025

Consolidated net income (¥ billion)

ROE (%)

8.0

4.6

5.0

During next management plan

3.6

50.0

37.0

47.9

FY2023

FY2024

FY2025F

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

support, and corporate revitalization, as well as structured finance covering LBOs, MBOs, and other transactions. For individual customers, we will strengthen our comprehensive consulting functions in areas such as asset management, insurance, inheritance, and trust.

Among remote functions, we push for stable and balanced growth by promoting online lending and make it more convenient by employing AI analysis and utilizing digital channels for consumer loans. In addition, a remote sales organization (customer contact team) established within the head office is tasked with providing support to sales branches where the proportion of face-to-face sales is increasing and reduce their workloads via the use of digital channels and the telephone, thereby supplementing our revenue by better serving our customers.

We will build a medium-to-long-term portfolio for our market operations effort by working with our subsidiary Hachijuni Asset Management and leveraging unrealized gains on securities, while also bolstering the stability and flexibility of our operations through diversified investments that include alternative investments and derivatives. We will also redouble our efforts in nondomestic loans and structured finance at our Singapore branch.

With regard to sustainability, we will more intensively support our clients' decarbonization and sustainable finance efforts. Through the Sustainability Fund No. 1, a

¥30 billion fund established in collaboration with our subsidiary, Hachijuni Investment, we will strengthen financing focused on regional companies.

Expanding margins amid rising interest rates

Having returned to a world of rising interest rates, earnings from traditional banking operations (deposits and loans) have begun to improve. For fiscal 2024, consolidated net interest income increased by ¥16.5 billion from the previous year, with loan interest income rising ¥8.0 billion quarter-on-quarter, to ¥72.7 billion and deposit interest income climbing ¥4.9 billion, to ¥9.5 billion, resulting in an improvement of ¥3.1 billion in the net loan balance. Additionally, interest income from marketable securities and deposits with the Bank of Japan increased significantly, further improving overall results. Approximately 80% of yen-denominated loans are subject to interest rate adjustments or maturity dates within three years, so we expect to be able to improve rates on our loan portfolio in response to interest rate fluctuations.

By focusing on the three key themes described below, we aim to enhance profitability and improve ROE and PBR.

Strengthening profitability through post-merger talent reallocation

The Bank's dividend policy sets the minimum dividend per share ¥5 and mandates the pursuit of stable dividends and active shareholder returns through share buybacks. This policy represents the minimum level we commit to under any circumstances. Currently, based on

consolidated dividend payout ratio of 40% at the commencement of Medium-Term Management Vision 2021 but, to alleviate concerns about a temporary earnings decline due to extra costs associated with the management integration with Nagano Bank, we set the

Also, in line with our Basic Service Maintenance Plan, we

Early realization of merger synergies expect that progress with branch rationalization and

our medium-term management target of an annual dividend of ¥20 or more by fiscal 2025, we have set the

minimum target level with the record high annual dividend per share distributed in fiscal 2022.

▶Details on the merger are provided on page 55 We aim to realize the top-line and cost synergies outlined in the Basic Service Maintenance Plan (May 2023) ahead of schedule, targeting total synergistic effects amounting to ¥7.4 billion by fiscal 2028. Employees of the two banks are already collaborating to help clients with their business challenges, and we will continue to provide the combined expertise and consulting capabilities of both banks. Regarding cost synergy, we aim to streamline operations and optimize staff allocation through system integration and branch consolidation. The merger will impose significant costs, which will be a major expense until around fiscal 2026. However, we expect combined synergies to improve our financial position thereafter. We are assessing all facets of the business, including sales, human resources, administration, and systems, and working to ensure that these synergies are realized as soon as possible.

operational efficiency gains will enable us to redeploy

approximately 200 employees to consulting and strategy assignments. We are promoting measures as part of our staffing and human capital strategy that relate to specific job placements, areas of focus, and expected earnings. As of April 2025, a total of 33 employees have been reassigned, and we plan to gradually accelerate this process as the merger progresses.

We have selected four main areas for reallocation: (1) face-to-face sales requiring advanced specialized knowledge and meticulous customer service, (2) remote sales via digital channels, (3) market operations, which we consider one of our strengths, and (4) sustainability, which attends to social missions such as regional sustainable development and the global environment. We will implement training and external secondments for the 200 employees allocated to these functions and will work to gradually increase profits.

Face-to-face sales targeted for enhancement include consulting sales for corporate customers in such areas as business succession, M&A, overseas expansion

annual dividend for fiscal 2024 at ¥42-an increase of ¥18 from a year earlier. In addition, we plan to distribute a dividend of ¥50 (including a commemorative dividend of

¥5) in fiscal 2025 as we steadily strengthen our dividend payout.

To supplement this target, we originally set a

Shareholder returns

Total dividends

Acquisition of treasury stock (¥ billion)

83

19.520.5

Total return ratio (%) Dividend payout ratio (%)

23.0

6

58

11.610.0

31

.4

.1

10.0

.4

41

6

46

FY2023 FY2024 FY2025E

(Includes commemorative dividend for fiscal 2025)

We have been steadily repurchasing treasury stock at a rate of about ¥10 billion per year since fiscal 2022 and bought back a total of ¥20.5 billion in treasury stock in fiscal year 2024. We will continue to return profits to shareholders through a combination of dividends and flexible stock buybacks.

Dividend per share

50

(¥)

42

24

20

FY2022

FY2023

FY2024

FY2025E

(Including commemorative dividend for fiscal 2025)

Annual Report 2025 16

15 Annual Report 2025

Hachijuni Bank's vision

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Message from the Chief Finance Officer

・In accordance with the Bank's Corporate Governance Code, we have established a policy on strategic shareholdings and are working toward numerical targets for their reduction.

・We achieved our target by end-March 2025 but will continue to pursue further reductions.

The Bank aims to maintain a consolidated CET1 ratio of at least 15%. It has historically maintained a relatively high level of equity and recognizes this as a key strength. To

events.

The consolidated CET1 ratio for the fiscal 2024 (ended March 2025) was 16.29%, which was lower than in the

• Progress toward strategic shareholding reduction targets

  Target: Less than 20% of net assets by March 2030

  (Fair value basis; listed and unlisted stocks, including deemed holdings)

• Book value of listed strategic shareholdings

  (¥ billion)

  ensure sustainability in accordance with its core management precepts, the Bank emphasizes the need to

  previous year. We analyze two major factors to understand why. The first is a decrease in gains and

  (¥ billion)

  1,200

  1,000

  800

  600

  400

  200

  0

  55 50 53 62

  （％）

  Target achievement

  18

  84.0 78.8 77.6

  72.1

  38.7

  preserve this strength by maintaining the high level of capital required to provide stability to the financial system, the business activities and livelihoods of its customers, and the community. In addition to managing interest rate risk in the face of market convulsions akin to

  the global financial crisis and amid interest rate volatility,

  losses on the valuation of securities, and the second is the phased implementation of Basel III standards. Gains and losses on valuation of securities mainly reflect fluctuations in equity valuations, but we plan to gradually reduce exposure to share price risk by systematically

  selling off holdings. In response to the finalization of

  Mar 2021 Mar 2022 Mar 2023 Mar 2024

  Mar 2025

  Mar 2021 Mar 2022 Mar 2023 Mar 2024 Mar 2025

  Consolidated net assets Strategic shareholdings

  Strategic shareholding policy

  ・The Bank's core policy is to reduce strategic shareholdings after sufficient dialogue with the issuers.

  However, we may hold shares on a limited basis in cases where we determine that doing so is reasonable from a business strategy perspective, such as when it is needed to cement our relationship with an investee company through policy-driven investment that contributes to the resolution of the target company's management issues and enhances its corporate value. This, in turn, fuels local economic growth.

  ・For all stocks held as of a particular reference date, the Bank reviews the logic of holding each stock from the perspective of whether the risks of holding the shares and the benefits obtained from the investee are commensurate with indicators that take into account capital costs and other factors.

  ・The Board of Directors annually reviews the reasonableness of holding each individual stock and appropriately discloses the details of the review.

• Approach to reduction

  ・When reducing strategic shareholdings, in cases where we are able to reach an agreement with the issuer that each party is free to sell the other party's shares it holds at its sole discretion, we will change the purpose of those holdings to pure investment and change the department responsible for managing those holdings to the department responsible solely for investment.

  ・After changing the purpose to pure investment, we will aim for returns (gains on sales and dividends) that exceed the capital costs for the relevant portfolio.

  Operational Guidelines Following a Change in Purpose

  ・In the event of a change in purpose to pure investment, we will conduct operations in accordance with the guidelines.

• Points for consideration regarding holdings and transactions

  Trading discretion	Operate on the principle that transactions can be conducted freely, unconstrained by such restrictions on trading or timing are imposed by the issuer. Unless there is an agreement with the issuer regarding discretionary sales, no change of investment purpose will occur.
  Independence from the pure investment function	When making investment decisions, the Bank will ensure the independence of its pure investing function and establish the organization necessary for reaching appropriate conclusions.
  Operational discipline and reporting to management	The Bank will establish plans and policies, including revenue targets, and report them to management, and regularly evaluate progress and results, reporting them to management, as well.
  Appropriate exercise of voting rights	When exercising voting rights, the Bank will do so wisel and from a pure investment perspective to enhance the corporate value of investee companies.

• Voting standards for pure investment stocks (excerpt)

Purpose:The Bank has established standards for exercising voting rights attached to shares held as pure investments, with the aim of exercising such voting rights appropriately from the perspective of the asset owner. Voting rights are exercised with a view to how each vote will contribute to the medium-to-long-term corporate value of the investee companies.

・Note: In addition to the above items, the Bank has established voting criteria regarding matters such as remuneration for outside directors and auditors, amendments to the articles of incorporation, takeover defense measures, appointment of accounting auditors, and shareholder proposals.

the Bank has set a minimum required buffer of 15% to prepare for natural disasters and other unforeseen

Ongoing evaluation of new businesses and domains

New business areas

Asset accumulation targeted at operational efficiency

A s s e t a c c u m u la t i o n i n priority business domains

Risk assets

Stable dividends Opportunistic share buybacks

Shareholder returns

Mar 2023 Mar 2024 Mar 2025

Actual value

15.0％

16.3％

New business domains

18.4％

Increase in risk assets

20.7％

In addition to its lower dividend payout limit of 10.5%, the Bank's has set a minimum threshold that accounts for potential market disruptions like the global financial crisis as well as natural disaster risks.

Share buybacks

Dividends

Net income

Consolidated CET1 ratio

Effective capital utilization and risk asset control

We actively seek opportunities for dialogue with shareholders and overseas institutional investors. We place great importance on providing relevant information directly to our stakeholders while explaining our initiatives and vision and will continue to strengthen our

Basel III, we will keep managing risk assets with a focus on operational efficiency.

financial and nonfinancial disclosure practices. The opinions and suggestions of our stakeholders are invaluable in enhancing our corporate and shareholder value. We look forward to ongoing in-depth exchanges via our IR and SR channels.

After the change in purpose to pure investment, the Financial Markets Department, which is a specialized department, manages the portfolio to achieve sustainable stable returns (dividends and gains on sales) that exceed

the cost of capital. In fiscal year 2024, the total amount of shares sold, including shares for policy purposes and shares for pure investment, was approximately 32.3 billion yen.

17 Annual Report 2025 Annual Report 2025 18

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

The Bank has continuously worked to resolve regional issues while leveraging various external and internal capital with the aim of revitalizing regional economies and communities and realizing qualitative affluence.

The business activities that form the foundation of our management, including our management philosophy and medium-term management vision, are linked to the enhancement of corporate value and the realization of the outcomes of our value creation process.

Value Creation Process … P23〜

External and internal capital sources

(Capital targeted at value creation)…P27〜

Local socioeconomic revitalization & qualitative prosperity Contending with an aging and shrinking population

Natural capital

Communities & customers

Shareholders

Employees

Human capital

Financial capital

Intellectual capital

Physical capital

• Revitalizing local economies

• Driving growth in per capita GDP, assets for Nagano Prefecture residents

• Growing core local companies and nurturing of new businesses

• Decarbonization

  • Leading prefecture in green energy from the region's natural environment

• Biodiversity

• Preserving the natural environment for future

  generations

  • Developing local cultural and tourism resources for future generations

  • Further growing corporate value

    • Improving ROE & PB

    • Efficiently utilizing ample equity assets

    •Utilizing in growth areas•Maintaining equity for the ongoing support of the local economy

  • Enhancing shareholder returns via stable dividends, etc.

  • Enhancing job satisfaction with diverse opportunities for engagement and growth

  • Ensuring compensation is commensurate corporate value growth

    ESG materiality…P21〜

    E

    • Climate change countermeasures

      Medium-term Management Vision 2021…P43〜

      Supporting customers and communities via alliances and mergers based on our "finance, nonfinance, and

      Further accelerating the enhancement of corporate value

      Effects of alliances and mergers

    • Decarbonization

    • Conservation of environmental resources

    • Founding new industries

    • Promoting core industries

      S

    • Responding to declining birthrates, aging population, and depopulation

    • Digitalization

    • Diversity and inclusion

      Theme

      ➊

      ❷

      Theme

      ❸

      Theme

      relationships" catchphrase.

      Sustainability as the foundation of management Deepening the Lifestyle Support Business Comprehensive financial services and functions

      March 2025

      Improvement of management

      efficiency

      Strategic

      allocation of human

      resources

      January 2026

      Strengthening of earning power

    • Human resource development

    • Strengthening data security

      G

    • Enhancing information disclosure

    • Ensuring thorough

compliance

Theme

➍

❺

Theme

Operational & organizational DX

Human resources reform to support growth and fulfillment

Mt. Fuji-Alps Alliance

… P62

Merger with Nagano Bank (scheduled)

… P55〜

External environment

Declining birthrate & aging population

Aging business owners

Climate change

Persistently low interest rates

ROE 2.9％

FY2021

ROE 4.6％

FY2024

ROE ５％

Aiming for 8% ROE or better. Fiscal year

FY2028

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Materiality strategy Medium-term Management Vision 2021

Vision Main Initiatives for fiscal 2024 Long-term KPIs

Theme 1

E

Sustainability as a foundation of management

• Support for sustainable development of local communities

  • Establishment and updating of environmental goals (medium-term management targets)

  • Agreement with Nagano Prefecture on achieving net-zero carbon emissions by 2050

  • Launch of the "Hachijuni private placement bonds supporting regional revitalization and SDGs (decarbonization type)"

    Greenhouse gas (CO₂) emissions (Scope 1, 2)

    Hachijuni Group

    Net zero

    FY2025

    • Climate change

    • Dialogue with 500 Nagano- and Niigata-based customers on decarbonization

    • Decarbonization

    • Environmental conservation

      S

    • Creation of new industries

    • Promotion of core industries

    • Addressing demographic changes

    • Advancing digitalization

    • Promoting diversity and inclusion

    • Staff development

      G ● Fortifying data security

    • Enhancing information disclosure

    • Deepening compliance

Theme 3

Providing comprehensive financial services and capabilities

Theme 1

Sustainability as a foundation of management

Theme 2

Strengthening the Lifestyle Support Business

Theme 3

Providing comprehensive financial services and capabilities

Theme 4

Operational and organizational DX

Theme 5

Human Resources Reform to Support Growth and Job Satisfaction

Theme 1

Sustainability as a foundation of management

• Customer solution-driven support for the sustainable growth of companies and local communities

• Support for the sustainable development of local communities

• Consulting services to ensure a prosperous life for people of all ages

• Customer solution-driven support for the sustainable growth of companies and local communities

• Sustainable development of local communities through the effective use of digitalization and data

• Enhancement of organizational strength through the growth and fulfillment of diverse employees

• Support for the sustainable development of local communities

  • Dedicated solar generation facilities (offsite PPA)

  • "A" rating (highest) in CDP 2024 (Climate Change) for a second year running (a first among domestic banks)

  • Response measure enhancement based on TCFD recommendations

  • Initiated analysis based on the TNFD recommendations (interfaces with nature, dependencies, impact, risk, and opportunity, etc.)

  • Launch of the "Mt. Fuji-Alps Alliance" (comprehensive business partnership with Shizuoka Bank and Yamanashi Chuo Bank)

  • Providing information to customers based on our house view (GMAP)

  • Expanding product, service, and distribution functions targeted at individual customers

  • Implementation of the "Shinshu New Business Creation Program 2024 "

  • Collaboration agreement with the Nagano Medical Association on medical practice succession

  • Enhancing productivity through the use of generative AI

  • Talent development program for digital transformation within the company and support for customers' DX

  • Launch of new program to develop the next generation of female leaders

  • Job skills training upgrade to develop and retain highly specialized talent

  • Introduction of "Alumni Community"

  • Establishment of the "Hachijuni Group AI Policy"

  • Conducting company information sessions

  • Calculation of financed emissions and improvement of data quality scores

FY2030

80% reduction versus FY2019

Promotion of greenhouse gas emissions calculation by borrowers

450

FY2025

Companies for which the

Bank possesses emissions data:

* The bank has data for 450 companies, which is equivalent to 40% of the Scope 3, Category 15 (as of March 31, 2024)

Renewable energy

FY2024 through FY2030

Sustainable financing (cumulative) for commercial-use renewable energy generation ¥90 billion

Number of mortgage and renovation loans executed (cumulative) with ZEH-level and solar power generation facilities

10,000

Sustainable finance executed (value)

FY2021 to FY2030 ¥1.5 trillion

(of which ¥1 trillion slated for environmental activities)

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Management Philosophy

Contribute to the development of local communities by maintaining sound management.

*Hachijuni Bank's principles of sound management target three objectives: (1) financial stability, (2) profitability based on appropriate risk management, and (3) sustainability through ESG management practices.

ESG Materiality (Key issues)

Climate change countermeasures,

E decarbonization, and environmental conservation

Prolonged low interest rates

Climate change

Aging of business operators

Declining birthrate, aging population

Creation of new industries, promotion of key sectors, response to declining

S birthrates, aging population, and depopulation, promotion of DX, diversity and inclusion, and talent development

Tightening data security, enhancing

G information disclosure, and ensuring compliance

Outcome

Value creation at Hachijuni Bank

Local economic and community revitalization and qualitative

Business activities

prosperity

Inputs

Business resources

Specific solutions (output)

Services and internal initiatives derived from business operations

Challenges for a society with a declining birthrate and aging population

DX-driven transformation of traditional businesses

External capital resources

Social

• Nagano Prefecture's rich social and economic capital

  • Inherited manufacturing technology

  • Abundant cultural and tourism resources

    Region

Business domain expansion

• High healthy life expectancy and elderly employment rate

  Natural

  • Nagano Prefecture's rich natural environment

• Numerous natural parks, etc.

  Corpo-rates

Internal capital resources

Facilities

• Branch network covering all of Nagano Prefecture

• Well-established business locations outside the region (Tokyo, Osaka, Nagoya, Singapore, etc.)

  Talent

• Staff with knowledge and experience that help local communities address challenges

  Individuals

• Securities management team boasting broad know-how

• Digital technology experts (AI, etc.) who can effectively leverage big data

• Staff at non-financial subsidiaries

  Markets

Intellectual property

• In-house system development capability and digital expertise

• Proactive approach to environmental issues, expertise in green energy

• Securities investing expertise

  Financial

• Stable financing

  • Deposit balance of ¥8,693.8 billion

• High risk tolerance

  • Equity ratio of 16.29%

• High creditworthiness

  • S&P: A −, R&I: A+, JCR: AA

• Staff development aimed at value creation (Secondment to consultancies, operating companies, financial firms, etc.; collaboration with external experts)

  Organizational and human resource reform

• Dual-track personnel system

• Expanding opportunity for women and young employees to actively contribute and grow

  Organization, people, and governance

• Increase in specialists and managers who contribute to solving local issues

• Improvement of organizational strength through diversity and inclusion

• Digitalization and improved efficiency of business operations

• Digital product development and enhanced

convenience

• Enhancing job satisfaction by providing varied opportunities for growth and development

• Matching compensation with

contribution to corporate value

Market investing business

• Realization of long-term returns based on shareholdings

• Diversified investment strategies including alternative investments and derivatives and marketable loans

• Effective application of unrealized gains

• Diversification of investment targets

• AI-driven credit and loan management, etc.

• Enrichment of solutions and digital channels

• Active investment in livable cities and the promotion of culture and tourism along with support for businesses

• Expansion of environment-related

businesses

Businesses helpful to regional revitalization

• Expansion of investment, financing, and business services in growing regions and broad-based revitalization support

• Bolstering sustainable finance, green power businesses, etc.

• Effective utilization of the largest sustainability fund among regional bank groups

• Strengthening corporate solutions

• Widening of service area

Corporate business

• Expansion of investment targets for sustainability funds (venture capital, business succession support, business revitalization support, etc.)

• Strengthening of structured finance

• Expansion of fee-based business via enhanced consulting services

  (Business succession, M&A, business matching, overseas expansion support, etc.)

• Further leveraging the group's overall strengths

• Service for a broad variety of financial needs

• Deepened customer loyalty

Individual business

• Building out consulting services in asset management, insurance, inheritance, and trust services

• Expansion of lifestyle support services for the elderly

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Value Creation Process: How we got here

―――― We discussed initiatives to expand our business domains based on the following framework.

1. Discussions at management strategy meetings

   • Establishment of a Management Strategy Committee comprising the management teams of both banks, led by the presidents of Nagano Bank and Hachijuni Bank

     (held 17 times between July 2023 and May 2024)

   • Wide-ranging discussions on management issues based on the Bank's philosophy and position on ESG materiality, taking into consideration conditions in Japan, overseas, and in local communities, as well as other topics including business strategies, capital measures, and initiatives to improve PBR

     Hachijuni Bank and Nagano Bank

     Discussions began at a meeting of the management teams of both banks established to discuss the management strategy of the new bank

     Individual members were interviewed about their values, perceived future challenges, and goals.

2. Discussions at Management Committee and Board of Directors meetings

   • Based on discussions held over approximately one year at the Management Strategy Committee, discussions were further deepened at multiple Management Committee and Board of Directors meetings

   • Diverse opinions from outside directors and outside members of the Auditor & Supervisory Board were also reflected

     Hachijuni Bank

     Several discussions among the Bank's Management Committee and Board of Directors yielded easy-to-understand explanatory materials, such as storyboards.

     Opinions from outside directors were concurrently incorporated, and new agenda items were included.

3. Formulation of a "value creation process" leading to the new bank's management plan

   • The management team's thinking was gathered and presented at a Board of Directors meeting as a compass for the Bank's direction.

     Hachijuni Bank and Nagano Bank

     The outcome of these discussions framed the management teams' vision for social value that the Bank should strive to create.

     This marks the first time that the leadership teams of both banks have had the opportunity to articulate their philosophy from a management perspective.

4. Disclosure

   • Disclosure at an information meeting held in May 2024, followed by sharing with stakeholders on various occasions

   • Multiple video messages from management to all employees, dissemination within the Bank through meetings of branch managers in the banks' service areas, etc.

     Hachijuni Bank and Nagano Bank

     In May 2024, the formal Value Creation Process was disclosed.

   • Management is currently formulating a business plan for the new bank, using the Value Creation Process as our compass.

Value Creation Process Expanding business

domain

Scheme for expanding the business domain

Solutions: market domain

• Long-term returns based on shareholdings

• Diversified investment strategies including alternative investments, derivatives, and marketable loans

―――― Leadership discussed how to expand the Bank's business domain based on the framework below

Sustainable growth of businesses

Increased employment Better incomes

Invigorating regional economies and societies and achieving qualitative prosperity

Solutions: regional domain

• Expanding investment, financing, and business support in growing regions; comprehensive revitalization support

• Strengthening sustainable finance and green power businesses

Fighting poverty and championing human rights Improving childcare and welfare

Invigorating regional economies and societies

Creating livable communities/Development and preservation of abundant natural and tourism resources

Qualitatively enriched lifestyle

Solutions: individual domain

• Building comprehensive consulting operations covering asset management, insurance, succession, and trust services

• Expansion of lifestyle support services for the elderly

Solutions: corporate domain

• Expanding investment targets for sustainability funds

• Enhancing structured finance

• Building out the consulting business

• Further leveraging the Group's comprehensive strengths

Increase in local resident populations

25 Annual Report 2025 Annual Report 2025 26

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Knowledge and expertise that serve regional needs

Firm business foundation

In addition to leveraging-as we have done for some time-the combination of data warehouse and predictive AI for targeting, the Bank is actively incorporating generative AI tools to improve the efficiency and sophistication of banking operations

What kind of management issues does this customer have?

It can be inferred that they care about high costs prompted by brisk infiation

Customer

i

nformation

Business materials

ESG

assessment

As the leading bank in Nagano Prefecture, the Bank operates 152 branches, primarily in Nagano

Moreover, through three overseas locations (Singapore Branch, Shanghai and Bangkok representative offices) and the posting of staff to Hong Kong, Vietnam, India, and other countries, the Bank proactively supports the development of overseas business for customers, ranking among the top regional banks in terms of export trade volume

Number of stores

Domestic head office

(including 132 in Nagano Prefecture)

Overseas branches: 1

(Singapore)

Representative offices: 2

(Shanghai, Bangkok)

Number of branches

and branches: 152

*Hong Kong branch was closed on March 31, 2024.

India

ICICI Bank

State Bank of India AKMGlobal★

China

Industrial and Commercial Bank of China Bank of China

Shanghai Representative Office

Hong Kong & South China Desk

Mizuno Consultancy HD★ Taiwan

Vietnam (Hanoi)

Vietcombank

Bangkok Representative

Office

Thailand Kasikornbank★

China Trust Commercial Bank

Hong K

ong

Malaysia

CIMB Bank

The Bank of East Asia

Philippines BDO Bank

Vietnam (Ho Chi Minh City)

S-Networks★

Singapore Branch

Other Partner Banks

• Banque pour le Commerce Exterieur Lao Public (Laos)

• Canadia Bank (Cambodia)

• APAC

Indonesia

CIMB Niaga

Domestic sales offices

Australia and New Zealand Banking Group

★Employees of Hachijuni Bank are seconded to these banks.

Niigata Prefecture

4

Nagano Prefecture

Head office and branches: 122Field

offices: 10

Gifu Prefecture

1

Osaka Prefecture

1

Gunma Prefecture

2

Saitama Prefecture

5

Aichi Prefecture

1

Tokyo

2

Achieving net-zero greenhouse gas emissions and reduction targets (Scope 1 and 2)

• Hachijuni Bank has achieved, ahead of schedule, its targets of net zero by fiscal 2023 and a 60% reduction from fiscal 2013 levels by fiscal 2030. Having met these targets, the Bank has expanded the scope of its targets to encompass the entire Group in fiscal 2024, setting even more stringent targets of net zero by fiscal 2025 and an 80% reduction from fiscal 2019 levels by fiscal 2030.

• The Bank has commenced operations at dedicated solar power generation facilities (off-site PPA) at three locations in Nagano Prefecture. Estimated renewable energy output is 1,589,000 kWh/year, which is equivalent to approximately 750 tons of CO2 emissions per year, or the consumption of approximately 250 households.

Sustainable finance support

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Capital support for value creation

Specialized staff who perform general consulting functions

Stable management foundation

We are promoting human resource development initiatives for value creation based on business activities in the Value Creation Process, namely organizational and HR reforms.

In particular, we focus on employing highly specialized staff who can transform existing businesses through the use of DX and expand the Bank's business domains by supporting the development of existing employees' expertise and recruiting experienced professionals.

Number staff with professional certifications (as of March 31, 2025)

52

Securities analysts

152

FP Level 1/CFP

128

diagnostic consultants

58

Small and medium enterprise

G Certification

68

IT Coordinator

128

Examination certification holders

Information Technology Engineers

Nagano Prefecture's potential

Nagano Prefecture, where the Bank's business is centered, is blessed with abundant natural resources, including clean air and clear water. Additionally, it is strategically located in central Japan, within a 200-kilometer radius of Tokyo and Nagoya, and serves as a transportation hub with easy access to major cities via a well-developed highway network. The economy has developed primarily around manufacturing and assembly industries. Furthermore, the region boasts a wealth of natural resources and diverse tourist attractions, including agricultural products that leverage its abundant natural environment and proximity to consumer markets.

Sound capital structure

The Bank maintains one of the highest equity ratios among Japanese banks, ensuring solid financial strength as a financial institution. By contributing to the development of regional economies, we have earned the trust of local communities and stabilized our customer base.

Number of Japan's 100 most famous mountains:

*According to the Mountain and Highland Tourism Division *Primeval and artificial forest coverage by prefecture in

1

st in Japan Forest area: 3rd in Japan

of the Nagano Prefecture Tourism Department 2022 (Forestry Agency)

Nature

hot spring resorts: 2nd in Japan

Number of

Number of ski resorts: 82

*Hot spring usage in 2022 (Ministry of the Environment)

*According to the Mountain and Highland Tourism Division, Nagano Prefecture Tourism and Sports Department

Crystal oscillators st in Japan by

(excluding those for watches)

1shipment value 3in Japan devices, and electronic circuits

:

rd place for shipments of electronic components,

* 2023 Basic Survey of Japanese Business Structure and * 2023 Basic Survey of Japanese Business Structure and

Activities Activities

Topin Japan

wine grape producer

Second number of wineries

in Japan for

* 2022 Regional Fruit Production Trends Survey (Ministry of * Nagano Prefecture Department of Industry and Labor, Agriculture, Forestry and Fisheries) Sake and Wine Promotion Office

Economic scale and balanced industrial structure

Other

26.3%

Information and communications

16.3%

FY2022

Transportation

6.0%

Electricity

Manufacturing equipment

15.2%

6.1% General-

purpose machinery Food

7.9% 8.6%

Electronics

13.6%

Population (as of June 1, 2025)

1,975,000

Prefectural gross production (nominal) (FY2021)

¥8,624.3 billion

Shipments of manufactured goods (2022)

¥7,139.1 billion

Tenryu River

Iida

Central Alps

Ueda

Sai River

Matsumoto

Azusa River Narai River

Suwa

Kiso River Lake Suwa

Southern Alps

Nagano

Northern Alps

Chikuma River

Hime River

Rich natural resources

Dimensions (north-south)

Approximately212 kilometers

Dimensions (east-west)

Approximately120 kilometers

Area (4th largest in Japan)

13,561.56square kilometers

Ranked1st in Japan

(both women and men)

* 2022 Average period of independence, by prefecture (All-Japan Federation of National Health Insurance Organizations statistics)

Shipments of manufactured goods (2022)

¥7,139.1 billion

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

The Bank's share price at end-March 2025 stood at ¥1,056- approximately 2.7 times the ¥391 mark recorded five years earlier at end-March 2020. (Figure 1).

While our shares outperformed TOPIX, they underperformed the Banking Sector Index, which reflects the stock prices in the banking sector as defined by Tokyo Stock Exchange's 33-industry taxonomy (Figure 2).

In addition, the Bank's PBR is 0.5x, which is far from 1x and also lower than the average for regional banks with large market capitalization.

The Bank recognizes that improving ROE is a key driver for escaping low PBR (Figure 3).

• Figure 1: Share price trends

  Key initiatives
  
  

  Improvement of equity spread

  Generally, when comparing ROE and capital costs, it is considered desirable for ROE to be higher.

  The Bank's ROE was 4.6% at end-March 2025 and has improved to the point where 5% is within reach for fiscal 2025. However, we recognize that we are still in a negative equity spread where we are unable to cover our capital costs based on the cost of shareholders' equity.

  We recognize that ROE is the remedy for correcting the negative equity spread and that it must rise to 7%-8%. We recognize that only at this level will we finally be within striking distance of 1x PBR.

  We also believe that creating equity spread at the Bank is closely related to the realization of the outcomes of the value creation process (page 23) and, ultimately, our management philosophy.

  We will balance and control both profitability enhancement and capital efficiency, and implement initiatives that take into account capital costs and stock prices (Figures 5 and 6).

  1,200

  1,000

  800

  600

  400

  200

  0

  3/31/

  2020

  3/31/

  2021

  3/31/

  2022

  3/31/

  2023

  3/31/

  2024

  3/31/2025

  • Figure 4: ROE trend ［ Consolidated net income (¥ billion)

  ROE（％）］

  8.0

  3.7

  4.3

  4.7

  4.4

  4.5

  3.8

  5.0

  3.5

  4.6

  3.0

  2.9

  2.7

  2.9

  2.6

  3.6

  17.3

  the cost of equity capital.

22.3

22.0

22.4

22.1

24.1

26.6

25.8

26.3

27.1

26.5

30.1

37.0

47.9

50.0

￥1,056

3/31/2020

￥391

3/31/

2025

• Figure 2: Hachijuni Bank vs indices (March 31, 2020 = 100)

  Hachijuni Bank TOPIX

  Tokyo Stock Exchange Banking Index

  
  
  

  400

  300

  200

  100

  2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E

• Figure 5: Trends in risk assets and RORA ［ ■ Risk assets (¥ billion)

  RORA（％）］
  
  

  During the next medium-term plan period

  0

  3/31/

  2020

  3/31/

  2021

  3/31/

  2022

  3/31/

  2023

  3/31/

  2024

  3/31/

  RORA (return on risk-weighted assets)

  = net income / risk assets

  0.95

  0.76

  0.55 0.62

  0.55

  4

  4

  4

  4

  5

  ,411.0

  ,305.2

  ,872.3

  ,073.8

  RORA

  increase

  ,076.0

  
  
  

  2025

• Figure 3: Hachijuni Bank's positioning: PBR and ROE vs peers (March 31, 2025, top-20 regional banks by market capitalization)

  PBR

  3/31/2021

  3/31/2022

  3/31/2023

  3/31/2024

  3/31/2025

  
  
  

  1.2

  1.0

  0.8

  0.6

  0.4

  • Figure 6: Changes in equity ratio and equity capital ［ ■ Equity capital (¥ billion)

    Equity ratio (%) ］
    
    

10

0.2 3 4 5 6 7 8 9 ROE

20.69

19.06

18.36

20.74

16.29

Capital controls

1,010.9

826.8

810.2

820.8

843.5

3/31/2021

3/31/2022

3/31/2023

3/31/2024

3/31/2025

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Enhancing Corporate Value: Improving PBR and ROE

traditional businesses

transformation of

DX-driven

Business domain

expansion

Business activities

Specific solutions (output)

Services generated through business activities and internal initiatives

• Digitalization and efficiency improvement ● Credit and loan management using AI of operations ● Enhancement of solutions and digital

• Product development and enhanced channels convenience via digital technology

The Bank shares its capital market valuations, such as PBR and stock price, at meetings of the Board of Directors, and strives to enhance corporate value through business activities based on the value creation process.

In order to achieve a well-balanced enhancement of both financial and non-financial aspects, we are working to further improve ROE, which is expected to improve autonomously, with a focus on strengthening profitability.

We will strengthen communication with the capital markets so that we can convey our vision and initiatives to a wide range of investors and reflect their opinions in our business activities.

Improvement of ROE Net income / equity

Key initiatives

Improvement of RORA Net income / risk-weighted assets

Strengthening profitability

1. Strengthening regional revitalization-focused lending, marketable loans, and our fund business

2. Enhancing investment yields through accurate pricing

3. Stable, low-cost funding backed by a solid customer base

4. Strengthening consulting sales

5. Improving cost efficiency through DX

6. Improved asset quality through support for the operational reform and revitalization of borrowers

Effective capital utilization

Optimization of financial

leverage

Risk-weighted assets / equity

Risk asset controls

1. Risk/return-driven capital management

2. Initiatives to reduce strategically held shareholdings

3. Gradual reduction of equity risk associated with CET1

4. Enhanced shareholder returns

(stable dividends and flexible share buybacks)

Enhancement of corporate value (PBR, share price)

Organizational and

human resource

reforms

• Human resource development for value creation

  PER improvement 1 / (capital cost − projected growth rate)

  Reduction in capital cost

  Bolstering of nonfinancial capital

  Enhancement of disclosure

  Improvement of projected growth rate

  Resolution of ESG materiality issues

  (Secondment to consulting firms, operating companies, other financial institutions, etc., and collaboration with external experts)

• Establishment of a dual-track personnel system

• Expansion of opportunities for women and young employees to play active roles and grow

• Organization, People, and Governance

•Increasing specialized and managerial talent

contributing to solving regional community issues

•Enhancing organizational strength through the realization of diversity and inclusion

E

Climate change mitigation, decarbonization, and environmental resource conservation

S

G

society, and depopulation

Creation of new industries, promotion of core industries, and addressing declining birthrates, the aging of Advancing digitalization, promoting diversity & inclusion, and human resource development

Fortifying data security, enhancing information disclosure, and ensuring compliance

Value creation story

Roundtable with outside directors

Outside Director

Takayuki Kanai

Outside Director

Kayo Tashita

Outside Director

Miyako Hamano

Outside Director

Eiji Kanzawa

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

1. Management strategy and future outlook

   First, we would like to hear about management strategy. Please share your thoughts on the strengths of the current direction and your vision for the future.

   Kanzawa: I strongly feel that we are properly implementing our current management strategy from the perspective of sustainable growth and corporate value enhancement. The Medium-term Management Vision, with its focus on supporting customers and the community through finance, nonfinance, and relationships, aligns well with the regional characteristics of Nagano Prefecture, and I am confident that each KPI is steadily proceeding toward achievement. What is particularly impressive is the strong degree of employee engagement. I find it highly commendable that the growth and motivation of each employee tightly parallel the progress of our management strategy. The entire organization's cohesion in its pursuit of goals is one of the Bank's greatest strengths.

   Hamano: I concur. I believe that strategies are being implemented appropriately and on schedule, covering such objectives as the achievement of sustainability, the expansion of financial and nonfinancial functions via lifestyle support services, the improvement of consulting, DX, and personnel reform.

   When I attend meetings of the Board of Directors, branch managers, and study groups, I feel everyone's passionate desire to serve the community and grow together as one of the region's leading businesses.

   This desire motivates our employees and is one thing that sets us apart from the megabanks. A major challenge we face is how to draw in outside energy as the local population declines. I greatly appreciate the Bank's comprehensive business alliance with Shizuoka Bank and Yamanashi Chuo Bank, which addresses such issues as attracting talent and capital, supporting venture companies, and expanding overseas operations.

   Tashita: I feel that it is increasingly important for the management team to approach the rapidly changing business environment with a sense of crisis. We are living in an era of great uncertainty and unpredictability due to external factors such as population decline, climate change, changes in the international situation, and technological advances. The Bank has tremendous potential, based on our solid financial foundation, the trust and credibility we have built in the community over many years, and our wealth of information and talented staff. These are strengths that are unique to our Bank and cannot be found at our rivals. Very high expectations are placed on us by the citizens of Nagano Prefecture, and we recognize that fulfilling these expectations through the merger with Nagano Bank is an important mission as we grow along with the community and create new value. Implementing the strategies necessary to achieve this is of utmost importance.

   Roundtable: The Future of the Hachijuni Group

2. Regional value creation and competitive advantage

   The Bank's outside directors met to discuss a broad range of topics, including management strategy, value creation, human capital, and business integration and mergers. They shared their vision for and commitment to sustainable growth, centering on collaborative value creation with local communities, bold future-facing reforms, and the power of human resources.

   What do you consider critically important in terms of community relations and competitive advantage?

   Kanai: The Bank sits atop a solid financial footing, which we believe puts us in a very advantageous position among the regional banks. This firm foundation enables us to respond flexibly and calmly to major management challenges that may arise,

   such as unexpected economic volatility and the imposition of new regulations. This is one of the Bank's distinctive strengths. Moreover, Nagano Prefecture's rich natural environment is contributing significantly to the expansion of tourism, and we believe that the diversity of local industries, including not only tourism but also agriculture, precision

   Value creation story

   Hachijuni Bank's vision

   Value creation story

   Value creation initiatives

   Fundamental management support for value creation

   Corporate data

   Roundtable with outside directors

   machinery, and IT, provides critical support for the Bank's competitiveness. We recognize these management resources as valuable assets that should be built upon further through sustainable growth and contributions to the local community. A deep understanding of the region's characteristics and the maximal use of their potential are the keys to enhancing our competitive advantage.

   Kanzawa: The Bank's longstanding commitment to environmental management is something we are truly proud of, and I believe it gives us a clear advantage over rivals. By expanding on this track record, I believe we can cover the entire range of sustainability activities. We should continue develop this aspect of our value creation capability as a way to differentiate ourselves from other banks. For example, I believe that the Bank can uniquely contribute through investments and loans related to renewable energy and support for environmentally

   friendly local businesses.

   
   
   

   Furthermore, if local industrial growth stagnates, the broader regional economy could lose its vitality. Therefore, we believe that it is necessary to provide businesses with not only financial backing, but also more comprehensive support, including assistance with digitization and labor-saving measures to improve productivity, along with job placement services and management consulting. For individual customers, we will need to provide flexible services rooted in the community that counter such social factors as the declining birthrate and aging population and the digital divide. Examples include reconfiguring mobile financial services in mountainous and rural areas and expanding asset formation options for multiple generations from young to elderly. I feel that the development of highly specialized staff is essential to meet these objectives.

   
   
   

3. Business integration and merger: significance and outlook

through the consolidation of branches and standardization of products and services, strategic personnel allocation, and the promotion of co-creation projects that respond to the needs of local customers are progressing steadily. My impression is that this is progressing very smoothly. Furthermore, the development of non-financial comprehensive services that provide solutions to regional issues is a concrete implementation of the sustainability management advocated by President Matsushita and is one of the Bank's important strategies. For example, while the use of AI is essential for non-face-to-face services, I believe that the nature of face-to-face services for elderly customers must also be considered an important issue in sustainability management. I think it will be important to strike a balance between digitalization and analog attention to detail.

Kanai: I view the business integration and merger as symbolic initiatives that embody the Bank's proactive stance.

Although the merger will involve many challenges,

to actively consider how to achieve growth as our new chapter opens after the merger. It is important to clearly define our vision for how we can maximize synergy and create new value rather than simply scale up. We believe we need to consider expanding outside the prefecture and even Japan in order to capture greater growth opportunities. On the systems front, we feel we will have to balance the efficiency of external resources, such as cloud computing, with the stability of our on-premises systems. Ensuring stable operation while flexibly incorporating the latest technologies will be a key driver of our future competitiveness.

Tashita: For the merged bank, I feel it is critical to gain a deep understanding of the local situation in order to address regional issues. In order to promote this sort of community-based business, I believe executives and employees must visit the community, engage in dialogue with residents, and frequently be onsite so they may develop effective strategies. Even the highlands, which used to be cool in summer, are now experiencing rising temperatures, and the alpine

What are your specific thoughts on the current status and future prospects of the business integration and merger with Nagano Bank?

Kanzawa: In the process leading up to the merger in 2026, following the business integration in 2023, I believe that efforts such as streamlining operations

the path toward the January 2026 merger has been clearly laid out.

I believe we are entering a phase now where we need

environment is being degraded . By experiencing this situation firsthand, we can reaffirm the importance of climate change countermeasures and sustainable

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Roundtable with outside directors

regional development.

We believe that theoretical discussions alone are insufficient and that practical experience and ongoing

opportunities for transformation. We can pool diverse talent and reassign staff to strategic areas. At the same time, we are progressing with the consolidation

5. Human capital management and HR strategy

interaction are essential for devising effective solutions.

Hamano: President Matsushita has declared that this will be the most successful business integration in Japan. While some customers in the region may feel uneasy, we must ensure that, after the merger, Hachijuni Nagano Bank will be an even more indispensable presence in the region as it continues to deliver results that advance collaborative value creation with local communities. While merging two disparate banks is a major undertaking, it also opens

4. Facing the future with bold reforms

Please tell us about your strategies and reforms for the future, and how you plan to respond to the changes ahead.

Kanai: I feel that discussions regarding our current business strategy are progressing smoothly, with a focus on themes that extend our traditional banking business. The Board of Directors is also engaged in substantive discussions within the existing framework, which I believe is contributing to the stable growth of the Bank. On the other hand, considering the rapid changes ahead for the operating environment, such as the evolution of technologies like AI and blockchain, I believe that it will become even more important to maintain a forward-looking posture and to incorporate into our discussions fresh ideas that are not bound by conventional frameworks. In ten years, the banking industry itself may undergo significant changes, and it is conceivable that technological advances will render payment functions obsolete. In order to prepare for such a future, we believe that it will be necessary to construct new business models that do more than extend existing ones, to take bold initiatives, and to invest in progress that transcends organizational boundaries. I believe that forward-looking, flexible, and innovative initiatives are essential to sustain the Bank's growth.

of branches, review of systems and operations, and advancement of digital transformation-all of which will help us operate more efficiently. It is true that the changes facing us are swift, but isn't this merger also an opportunity?

We look forward to visiting our customers once again to understand their needs and determine how the combined strengths of both banks enhance our consulting capabilities and what initiatives to take to improve profitability.

Kanzawa: Yes, I feel that the very framework of the financial services industry may be redefined in the future. In the IT solutions industry, a system of so-called information banks is gaining attention. This system involves appropriately managing and leveraging personal and corporate information, with the consent of the data owners, and providing that information to third parties to create new value. This approach to data use is likely to birth new business models for financial institutions, propelling a shift from such traditional financial functions as payment services and lending to other modes of value delivery centered on information and people. In particular, when considering a business model for regional banks, it is essential to strengthen their function as a hub connecting regional information and users' needs. Banks may be uniquely positioned to help discover latent value that lies dormant in local regions and making it available to companies and individuals whom it can benefit. In addition to enhancing consulting functions, we believe the development of schemes to visualize and apply of regional labor resources is strategically important for sustainably develop regional societies and help companies grow.

What kind of initiatives do you think are important for

optimizing human capital and HR strategy?

Kanzawa: There are natural limitations to staff development over the short term, so we believe it is important to hire people who can contribute immediately and to promote the exchange of workers within the Group and outside it. To maximize the value of human capital, I believe it is essential to respect the diversity of our employees and to create a system that helps them with their individual challenges. The Bank's ongoing promotion of diversity and inclusion (D&I) and career development create significant growth opportunities for employees, by such means as executive training and encouraging the development of highly qualified specialists. We believe that enhancing the value of our entire team through groupwide HR initiatives will sustainably reinforce our organizational capabilities. In recent years, I have felt strongly that tolerance for failure has decreased both within enterprises and outside of them. Society is demonstrating a generally low tolerance for failure at just the time when we need corporate culture to encourage company

employees to take on challenges. Even where certain

behaviors are tolerated within a company, it nevertheless remains distinctly possible that external criticisms or reactions could lead to litigation risk.

If we can create new value or otherwise produce results after some initial failures, this should be evaluated as a successful effort. However, in order to popularize this way of thinking, I believe it is necessary to modify an organization's attitude by, among other things, reviewing compliance guidelines and thoroughly enforcing governance rules. I recognize that striking a balance between social responsibility and a culture that supports risk-taking will be an important topic for human capital management in the future.

In addition, value creation process resonates strongly with the younger generation as something that leads to regional prosperity, and many employees want to contribute to the community.

We believe it is essential to respect the thoughts and aspirations of individuals while accessing the best talent by maintaining an appropriate balance among factors such as salary, treatment, working

Value creation story

Hachijuni Bank's vision

Value creation story

Value creation initiatives

Fundamental management support for value creation

Corporate data

Roundtable with outside directors

goals, direction, and values throughout the organization and reflecting them in our daily work and decision-making processes is critical to realizing the Bank's vision.

Kanai: In order to remain an attractive company, it is essential to secure consistently stable profits.

Without profits, it will be difficult to craft the strategies we need or to pursue sustainable growth. In this sense, we believe that numerical indicators related to profits are extremely important for

managing human capital.

In order to continue investing in in our people, it is essential to stabilize our business foundation and shore up profitability. We believe that achieving both financial soundness and effective human capital policy will increase our attractiveness as a company and engender the trust of local communities and stakeholders.

6. Sustainable growth and shareholder returns

environment, and work-life balance. To this end, it is important to actively automate tasks that can be performed by AI and other systems and to create an environment where employees can concentrate on more creative and high-value-added work. The use of technology and the integration of human capital are required to contribute to local communities and drive the sustainable growth of the organization.

Hamano: Through the branch consolidation and operational streamlining that accompanies business integration, we expect to earmark approximately 200 personnel for reassignment to consulting and strategy work. In addition to reallocating these people, it will be essential to promote midcareer recruitment and personnel exchanges with other banks and nonbank companies to drive profitability and ensure medium-to-long-term growth. It will, therefore, be important to create an environment that motivates employees and encourages them to take on new challenges, and to develop our staff.

zbe able to provide various forms of support to local communities, such as advice on environmental management for local companies, based on the

assignments without fear of failure.

In line with this philosophy, the Bank is rapidly promoting the appointment of women to management positions. I recently participated in the final session of the Bank's new program to develop the next generation of female leaders, and I was impressed by how each participant, under a mentor's guidance, presented their plans to contribute to the community by performing specific tasks at the Bank. We plan to collaborate with the Chamber of Commerce and Industry to develop initiatives that involve the entire community. I believe an organization where people feel they have colleagues who understand them and an environment that encourages the acceptance of challenges can stimulate employees' initiative and creativity, leading to greater vitality for the entire organization.

Tashita: I believe that sharing the benefits of experience and forming a common understanding of issues are important to fostering a sense of unity within an organization. The Bank has accumulated a wealth of intellectual know-how over many years, and bequeathing this to the next generation is one of

Finally, please tell us about sustainable growth and returns to stakeholders.

Kanai: The Bank posted record profits in fiscal 2024 and expects to earn approximately ¥50 billion in fiscal 2025. Against this backdrop of strong performance, we are actively pursuing forward-looking initiatives, such as reassigning approximately 200 employees to strategic areas. In addition, we consider returning profits to our internal and external stakeholders to be an extremely important theme.

Along with investing in human capital, we aim to achieve sustainable growth and build trust by returning value to local communities, our business partners, and above all, our employees who support us on a daily basis. The perspective of returning profits to society as a whole will continue to be important in the future.

Kanzawa: The Bank is steadily increasing its dividend and believes that the current dividend level is appropriate. We believe that a high dividend payout ratio is not necessarily a good thing, and that decisions on dividends must be made based on a balance between sustainable growth and financial

soundness. We believe that stable and appropriate profit distribution will maintain the trust of our shareholders and other stakeholders while securing investment resources for the future, which will serve as the foundation for sound management. Growth investments cover a wide range of areas, including human resources, business models, corporate alliances, and systems. It is important to clarify the priorities for each investment target and allocate limited management resources efficiently. Through such strategic investment decisions, we will be able to return profits to our stakeholders more effectively, which will lead to the sustainable enhancement of corporate value.

Hamano: I think the balance between growth investment and shareholder returns is good. We are actively engaged in shareholder returns and communication, and we will strive to enhance our corporate value over the medium to long term through diversified strategic investments, such as investing in human resources, building new business models, and introducing the latest systems, in order to meet the expectations of all our stakeholders.

expertise we have cultivated at the Bank. In addition, in a society where pressure to conform is growing, it is important to foster an organizational culture where diverse team members can actively contribute and where people are encouraged to approach challenging

the main challenges we face. I believe that passing on our accumulated experience, sharing a common awareness of issues among employees, and engaging in lively dialog based on a common understanding will improve productivity. We believe that sharing

This roundtable discussion featured a multifaceted discussion on the Hachijuni Group's response to the changing environment, the reforms accompanying the merger with The Nagano Bank, regional contributions through the value creation process, and strategic initiatives for the future centered on human capital.

Based on the opinions expressed, all of our employees will work together to fulfill the expectations of the local community.

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

The company's Medium-term Management Vision 2021 ("Vision 21" hereinafter), which kicked off in fiscal 2021, has reached its final year fiscal 2025. In light of the plan's mission to support customers and communities through finance, nonfinance, and relationships, we look back on the achievements and challenges of the past four years, during which we have collaborated with local communities on five priority themes. We also present our vision and fundamental strategy for the final year. In these times of change, the Bank aims to be an indispensable presence in the community by leveraging its flexibility and relationships.

Medium-term Management Vision 2021

Supporting our customers and communities through finance, nonfinance, and relationships

― Medium-term Management Vision 2021: background and purpose

Amid major structural changes affecting society and the economy, including prolonged low interest rates, the falling birthrate and aging population, the COVID-19 pandemic, and the ongoing transition to a digital and decarbonized society, the Bank must continuously transform itself. This is the environment in which we have formulated Vision 21, which lays out flexible responses centered on the three pillars of our business: finance, nonfinance, and relationships. We pursue initiatives based on five key themes with the aim of becoming truly indispensable to our customers and the communities we serve.

― Medium-term Management Vision 2021: five priority themes

Medium-term management targets

We achieved our greenhouse gas emissions target of net zero in fiscal 2023 during fiscal 2022 and our target of a 60% reduction from fiscal 2013 levels by fiscal 2030 in fiscal 2023. Having done this, we revised our medium-term management targets in October 2024 to further promote decarbonization, which is one of the Bank's ESG materiality priorities.

Reference indicators

Summary of progress toward medium-term management targets and reference indicators

• Scope 1

  Continued net zero in fiscal 2023

  11,629

  Achieve net zero in fiscal 2022

  83.7%

  reduction vs fiscal 2013

  3,004

  6,326

  2,484

  5,861

  2,379

  Offsets, etc.

  2,372

  Offsets

  
  
  

• Scope 2

（t-CO2）

15,000

Pre-revision: Hachijuni Bank, nonconsolidated greenhouse gas (CO2) emissions

60

47.9

4.6

50.05.0

37.0

2.9

26.6

3.6

2.6

24.1

50

16

20

24

42

50

40

30

20

10

0

6

5

4

3

2

1

0

12,000

9,000

6,000

3,000

0

-3,000

-6,000

-9,000

• Scope 1

• Scope 2

（t-CO2）

66.0%

reduction vs fiscal 2019

1,112

FY2019

FY2024

FY2030

2,646

9,334

15,000

12,000

9,000

6,000

3,000

0

FY2013 FY2021 FY2022 FY2023

Post-revision: Hachijuni Group greenhouse gas (CO2) emissions

FY2021

FY2022

FY2023 FY2024 FY2025

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

Medium-Term Management Vision 2021

Sustainability as a foundation of management

Supporting the sustainable development of local communities

Current awareness and issues

Message

To support resilient local communities and enhance sustainable corporate value, each employee and officer of the Bank must consider what is needed by the community and our customers, act with sturdy conviction, and create solutions by expanding environment-related businesses and effectively applying sustainable funds throughout the value creation process.

In fiscal 2024, we set new targets for cutting customers' greenhouse gas emissions and worked to increase the level of dialogue. We also made steady progress in focusing on promoting sustainability funds to address customers' diverse challenges in such areas as new business support and business succession.

These efforts contribute to the outcomes outlined in our Value Creation Process, such as making Nagano a leading prefecture in green energy that leverages the region's natural environment and growing core companies in the region and developing new entrants.

The Bank's most critical objective is to be useful and needed by our customers in the region by executing on these initiative. We continually identify with a high degree of accuracy the changing social and regional issues. Thus, we achieve consistent corporate value by ensuring the sustainability of local communities and our customers by addressing ESG materiality issues.

Executive Officer, Planning and Coordination Department Manager

Takehiko Kimura

As with other rural areas, Nagano Prefecture harbors a sense of crisis amid its declining birthrate and aging population. However, we recognize the Prefecture's potential to solve these problems thanks to the geographical advantage of proximity to a major metropolitan area and its natural and social capital, such as its rich and inviting natural environment, tourist attractions, and living environment. It is the role of the Hachijuni Bank Group to add vitality to the region by encouraging all our employees to think about ways to link these assets to the sustainable development of the local community and to take action.

Main initiatives

New environmental goals (medium-term management targets) define the challenge of decarbonizing the region

Fundamental strategy for achieving our vision

• Actively support customers' initiatives to solve environmental and social issues through sustainable finance

• Support customers through the provision of capital funds and consulting services by our investment subsidiary

• Promote the spread of green electricity by utilizing the rich natural environment

  Strengths of the Bank Group in this field

• Having the leading share and scale in Nagano Prefecture, the Bank enjoys the advantage of extensive

  The Bank was early achieving its greenhouse gas (CO2) reduction targets (medium-term management targets) set in fiscal 2021 (Scope 1 and 2) of net zero in fiscal 2023 and a 60% reduction from fiscal 2013 levels in fiscal 2030. Because of this, in October 2024, we revised our targets upward by expanding the scope to include our entire Group and added two new targets: promotion of greenhouse gas emissions tracking by borrowers (Scope 3, Category 15)" and production of renewable energy.

  These newly established targets will help our customers reduce emissions and demonstrate our Group's commitment to leading in the decarbonization of local communities.

  Based on these targets, we are working to achieve sustainability with our customers and local communities through dialog designed to demonstrate the need for decarbonization and present the opportunities that can be gained by taking action.

  Example 2

Creating a sustainable future for our customers and communities Strengthening sustainable finance

knowledge of the characteristics of the region and an ability to propose a wide range of solutions based on

Sustainable finance contributes to the realization of a sustainable Hachijuni Sustainability Fund No. 1

longstanding relationships with customers. Following our long-standing spirit of initiative, we will contribute to

society.

¥ billion) Ending balance

Investment amount

(number of days in advance)

the sustainability efforts of local communities and our customers by leveraging the human and intellectual capital we have accumulated through our proactive attention environmental issues and other challenges.

Fiscal 2024 accomplishments

One example is the Hachijuni Sustainability Fund No. 1, which provides financial support for business succession, the creation of new businesses and technologies, and regional revitalization projects.

Since the fund's inception, we have expanded its scale while remaining attentive to the diverse needs of our customers, helping to ensure sustainability for many of them.

In fiscal 2024, the investment balance more than doubled year-on-year, demonstrating that our steady efforts are bearing fruit. We will continue to work with our customers and strengthen our efforts to secure a sustainable future for local communities.

16 42 45

0.1

13.3

23

4.6

6

5.8

14 40

12 35

10 30

8 25

20

6 15

4 10

2 5

0 0

FY2021 FY2022 FY2023 FY2024

Fiscal 2021-2024: 2,250 (cumulative)

Fiscal 2021-2024: 2,000 (cumulative)

Sustainability-related statistics Employees who have obtained qualifications or taken correspondence courses

Fiscal 2024: 66.0% reduction vs fiscal 2019

Fiscal 2030: 80%reduction vs fiscal 2019

Hachijuni Group greenhouse gas (CO2) emissions (Scopes 1 and 2)

Results for fiscal 2021-2024: ¥962.1billion

¥1.5trillion (of which ¥1 trillion is slated for

environmental measures)

Sustainable finance

Total execution target for fiscal 2021-2030:

Progress

Roadmap to 2026 (fiscal 2025 objectives)

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

Medium-Term Management Vision 2021

Deepening the Lifestyle Support Business

Realizing a prosperous life for people of all ages through enhanced consulting services

Current awareness and issues

Message

As the birthrate declines and the population ages To expand customer touchpoints, we are and shrinks, the Bank strives to enhance strengthening the Customer Contact Team, a customer loyalty by servicing a wide range of head office-based remote sales organization, and financial needs, including stable asset formation, implementing data-driven approaches via face-asset management, testamentary services, and to-face, remote, and hybrid channels. We are also insurance. We also help customers with working to offer personalized information, concerns related to housing and lifestyle. products, and services.

All of the Bank's employees work together as We consistently contribute to the sustainable one to ensure our customer-facing operations development of local communities by improving are dedicated to the best interests of our clients our customers' financial well-being.

and to achieving the unique objectives of each and every individual.

Executive Officer, General Manager, Sales Planning Department

Tatsuya Akaba

Given the aging population and declining birthrate, asset formation requirements and lifestyle concerns are intensifying. The transition to a plan to double asset-driven income and a world of nonzero interest rates should encourage customers to improve their financial literacy while necessitating that the Bank thoroughly implement customer-oriented business initiatives and shift toward a recurring-revenue-based businesses model. In addition, amid tightening competition for deposits, we recognize that we must improve convenience and offer personalized services through digital channels and the leveraging of data.

Key initiatives

Basic strategy for achieving our vision

• Expanding face-to-face, remote, and hybrid points of contact and adopting a data-driven approach

• Providing personalized solutions through activities to understand customers using life design co-creation sheets and technology, and hypothesis-based sales

• Recurring-revenue-based business centered on new NISA specifications and long-term, diversified asset building

• Strengthening testamentary consulting

• Expanding nonfinancial services and offering in combination with financial services

  As we perform our fiduciary duty to our customers, we will pursue the optimal outcomes (goals) for them and help grow their assets.

  (2)-2

  (2)-4

  Understanding Facing shared conditions customers together and proposing

  circumstances of the most suitable

  products and services

  (1)

  Understanding fiduciary duty at the

  Hachijuni Group

  (2)-3

  Developing hypotheses

  based on amassed information

  (2)-5

  Providing care to respond

  to change

  Hypothesis-based selling

  (3)

  Helping achieve objectives

  (2)-1

  Always conducting our business in the

  best interest of customers

  
  
  

  Example 1

We provide appropriate information and engage in hypothesis-based selling in order to realize the best interests of our customers and contribute to the growth of their assets as we fulfill our fiduciary duty. We have introduced a house view (GMAP) to support the appropriate portfolios creation and long-term asset formation and have begun delivering information services. Furthermore, we gain a vision of our customers' situations and issues using tools such as life design co-creation sheets and life plan simulations. We then consider the necessary measures and make the most appropriate suggestions.

In order to put this strategy into practice, we offer training to convey the significance of hypothesis-based selling and to research the use of various tools. We will continue bolstering our sales capabilities in order

Strengths of the Bank Group in this field

to deliver on our customers' best interests and ensure the growth of

their assets.

Stages of fiduciary duty practice for staff

• Providing products and services tailored to the life stage of each customer based on household information, etc., under main-bank model that prevails in Nagano Prefecture

  Example 2

• Collaboration with Hachijuni Securities and Hachijuni Card to offer a wide range of products and services

  By broadening product, service, and channel functions to address a wide range of needs, we help customers achieve qualitative prosperity.

• Diverse approach channels including customer contact teams, Hachijuni Insurance Plaza, Hachijuni Inheritance Consultation Plaza, and Hachijuni Bank Loan Plaza

  We are expanding our products and services to meet the diverse needs Number of seminars held, number of participants

  of our customers. To address asset formation needs associated with

• Personalized offerings leveraging data assets and technologies such as AI

  Fiscal 2024 accomplishments

  the launch of the new NISA specifications, we are providing information not only on products but also on investment mechanisms and methods through seminars co-hosted by Hachijuni Bank, Nagano Bank, and Hachijuni Securities, as well as through webinars. Additionally, in response to societal aging, we have started offering end-of-life support services to address concerns about inheritance for those living alone or without close relatives. Furthermore, we have begun introducing elderly care facilities and customized travel options for high-net-worth individuals, and we are striving to provide our many customers with

  (Sessions)

  180

  150

  120

  90

  60

  30

  • Other

  • Workplace-based

  • Succession planning

  • Asset management

  • Asset formation Number of participants

  399

  244

  760

  1,616

  18

  57

11

46

(Participants)

1,800

1,500

1,200

900

600

300

Number of contracts in FY2024: 27

Opened in April 2024

End-of-life support service results

Balance at end-FY2024: ¥253.8 billion

End-FY2024 balance: ¥249.5 billion

(Target)

Balance of investment trusts

At end-FY2024: 9,557

At end-FY2023: 6,250

Number of life design co-creation sheets created

Progress

diverse nonfinancial services that meet varied needs.

Roadmap to 2026 (fiscal 2025 objectives)

0 0

FY2021 FY2022 FY2023 FY2024

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

Medium-Term Management Vision 2021

Comprehensive financial services and capabilities

Supporting the sustainable growth of companies and communities by helping customers

Message

Amid a declining birthrate, aging society, and shrinking population, the Bank supports the management challenges and sustainable growth of its customers from both financial and nonfinancial angles so as to contribute to the sustainable development of local economies.

We contribute enhancing our corporate customers' value through highly specialized consulting services, mainly delivered by our staff in relevant departments, and optimal solutions geared toward an increasingly complex range of management issues, such as M&A, business succession, overseas expansion, and adoption of IT solutions.

and support local businesses in expanding their sales channels.

Furthermore, through the regional initiative, Shinshu New Business Creation Program 2024, we have supported regional companies in developing new businesses and nurturing talent. In the environmental field, following the signing of the 2050 Zero Carbon Agreement with Nagano Prefecture in November 2024, we have expanded our range of financial products and solutions to support decarbonization.

As a unified banking group, we will keep vigorously supporting our customers' sustainable growth and contributing to the revitalization of the

Director of Sales and External Affairs

Akinari Ito

Current awareness and issues

Sustaining and revitalizing markets within the prefecture is an important issue in a difficult environment where the population and number of businesses are in decline. To satisfy diversifying customer needs, it is essential to combine the expertise of headquarters staff, external sources of knowledge, and nonfinancial solutions to solve customers' problems. Another challenge is the declining number of employees at the Bank. We will contribute to the development of the local economy by strengthening face-to-face and remote collaboration, allocating appropriate resources to sales offices and headquarters, accurately identifying customer needs, and providing optimized solutions.

Main initiatives

Providing appropriate solutions for customers, thereby revitalizing local economies and communities

In addition, we are launching an advertising business to meet customers' nonfinancial needs

regional economy.

Due to the aging of business owners and a shortage of successors, there is a growing need for M&A and business succession advice. The medical industry is no exception, with an increasing number of clinics closing due

M&A and business succession: number of clients by fiscal year

(Clients)

Basic strategy for achieving our vision

• Deepening relationships with customers by responding to their increasingly diverse and sophisticated needs and providing end-to-end support

• Improving the analytical and consulting capabilities of our sales team's project execution in collaboration with head office staff and external experts

• Securing steady contact with customers through coordination between face-to-face and remote sales channels

  to a lack of successors, while many new doctors seeking to minimize initial investment are consulting us about purchasing existing practices. In response to this situation, we signed a Collaboration Agreement on Medical Practice Succession with the Nagano Prefectural Medical Association in October 2024. This agreement will promote the smooth succession of medical institutions within the prefecture and contribute to a sustainable regional medical system.

  In addition, as part of our efforts to meet a wide range of non-financial needs, we have launched an advertising business. We distribute advertisements for customers via digital signage installed in our branches, apps, and internet banking. Leveraging the trust and customer

  700

  600

  500

  400

  300

  200

  100

  0

  FY2021

  FY2022

  FY2023

  614

  324

  363

  416

  FY2024

  Strengths of the Bank Group in this field

• Extensive problem-solving capabilities that can involve Group companies and external business partners that can respond to a wide range of financial and nonfinancial business requirements

• Strong consulting capabilities of head office staff who can respond to specialized and diverse challenges

• Hybrid sales structure with face-to-face and remote sales channels

  Fiscal 2024 accomplishments

  base we have cultivated over many years, we will continue to support our customers in expanding their sales channels and revitalizing local economies.

  Example 2

Supporting our customers' businesses and promoting sustainable corporate growth

We launched the Shinshu New Business Creation Program 2024 to support our customers' sustainable growth. With the aim of creating new businesses through open innovation, we worked with an external consulting firm to support the development of new businesses at four companies in the prefecture over a nine-month period. We will continue to build out our support system so we can better contribute to the growth of our customers' businesses and the revitalization of the regional economy.

Second half of FY2024 results: 2,833

Second half of FY2024: 2,500

Number of new users for SDGs support services

Results for fiscal 2021-2024: 1,717

Fiscal 2024 actual: 495 (*)

* The remaining five companies are not included due to acquisitions.

Fiscal 2024: 500

Number of interviews on decarbonization initiatives

ー

Number of M&A and business succession transactions

Actual

Additionally, in response to the global need to reduce greenhouse gas (GHG) emissions as part of efforts to address climate change, we signed an agreement with Nagano Prefecture in November 2024 on achieving zero carbon by 2050. To support our customers' decarbonization initiatives, we are expanding our range of financial

products and services and contributing to the realization of a

sustainable, decarbonized society.

Roadmap to 2026 (fiscal 2025 objectives)

Shinshu New Business Creation Program

• Increase the number of headquarters staff and strengthen consulting capabilities to respond to diversifying regional and customer needs

• Expand external partnerships and enhance consulting services to solve customer issues

• Deepen support from both financial and nonfinancial perspectives to support the sustainable growth of companies

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

Medium-Term Management Vision 2021

Operational and organizational DX

Contribute to the sustainable development of local communities through the application of digital data and digitalization

Message

As part of its Value Creation Process, the Bank is promoting the digital transformation of its operations and organization via activities that update existing businesses through digital transformation.

In fiscal 2024, we will complete 71 of 77 measures introduced in support of the digitalization of customer services, administrative procedures, and internal operations, while promoting the use and popularization of the new services. This is targeted at improving customer convenience, boosting local economic activity,

and raising job satisfaction among our employees. Thus, we can help revitalize local economies and communities and deliver qualitative prosperity.

In fiscal 2025 and beyond, we will continue to expand the base of customers who use the services we have introduced and experience new value, while making continuous investments in AI and data utilization and promoting company-wide digital transformation to continue creating value that exceeds the expectations of our customers and the communities in which we operate.

General Manager, Digital Transformation Department (currently General Manager, Komoro Branch)

Ichiro Yagisawa

Current awareness and issues

As digital technology advances, players from other industries are entering the financial sector, and payment methods are diversifying. In response, we must continue to transform to remain the financial services provider of choice by providing attentive, face-to-face services and convenient remote options. We will also assess the risks and opportunities presented by evolving generative AI technology, respond to population decline, and strive to raise the quality and speed of our support for solving problems local communities and customers.

Key initiatives

Initiatives to improve productivity with generative AI

In 2023, we introduced our AI-powered "82Copilot," a GenAI application that can be used by all employees in a secure internal environment. Through regularly scheduled training and demonstrations, we are working to raise productivity through workstyle reform by sharing examples of prompts not only for general use cases, such as writing and

Fundamental strategy for achieving our vision

• Continuous investment in digital technology as well as the use of AI and leveraging of data to maintain and build our competitive advantage

• Initiatives to raise productivity through the digitization of customer-facing financial services and also including administrative procedures and workstyle reform for employees through digitization of paper-based internal operations

• Human resource development aimed at enabling all employees to use digital technology, AI, and data

• Open innovation through collaborative value creation with local communities and external partners

  Strengths of the Bank Group in this field

• Robust data accumulation based on the trust and confidence built up with local customers over many years

• In-house development capabilities for systems and AI models that leverage internal data assets and external big data sources

• High-quality and timely problem-solving support that maximizes use of these data and system and AI model development capabilities

  Fiscal 2024 accomplishments

  summarizing, but also for tasks specific to each specialization and position.

  Internal training produced 98 new ideas, of which three were selected for trial implementation across the Bank. Additionally, we combined and refining seven similar ideas into one, which was subsequently implemented. Furthermore, we achieved solutions for four problems through prompting and otherwise made significant progress with AI adoption. Going forward, under the motto "No AI, No Work," we will accelerate our firmwide efforts to develop, pilot, and integrate AI agents into individual business processes to enhance productivity and create new value with generative AI.

  Example 2

Human resource development program for digital transformation within the Bank and support for customer DX

Human resource development program for digital transformation within the Bank and support for customer DX

To enable each and every employee of the Bank to use digital technology, data, and AI to achieve digital transformation within the organization and support customer DX, we continuously implement literacy training to ensure a basic understanding of these technologies, as well as initiatives to develop advanced specialized knowledge and skills appropriate to each job.

Following on from IT and data literacy training held in fiscal 2023, all Bank employees will complete AI literacy training in fiscal 2024. Following the completion of the training, volunteer employees participated in a data analysis competition sponsored by the Financial Data Utilizing Association , and the Bank has produced winners in the regional financial institution category for three consecutive years. We will continue to update our literacy levels by challenging ourselves to obtain various qualifications and certifications.

Additionally, we will advance the acquisition of more advanced specialized knowledge and skills tailored to specific business needs, such as

+70.6% year-on-year

3,713

(89.9% of full- and part-time staff)

Cumulative users - October 2023 through fiscal 2024

Use of internally developed GenAI "82Copilot"

+11.2% year-on-year

• Web-based personal loan card

  Hachinino Kantakun Card (balance at end-FY2024)

• AI-screened business loans

Hachinino Business Net Loan (balance in fiscal year 2024)

Sales results through the use of data science and AI

(92.2% progress)

71measures completed

Plans laid out in Medium-term Management Vision 2021 (77 measures)

Introduction of digital tools and services and current status

Results and impact

planning training utilizing data and AI for head office staff

leading digital transformation,

and IT consulting proposal enhancement training for corporate account managers at branch offices.

IT Passport 302 553 703 ＋150

IT Coordinator 35 63 68 ＋5

Information Security Management 32 60 84 ＋24

JDLA Deep Learning For GENERAL 19 43 58 ＋15

Roadmap to 2026 (fiscal 2025 objectives)

• Enhancing customer experience value through improved convenience enabled by digital technology, and contributing to regional

• Company-wide digital and AI reform targeting all traditional business operations, including deposit and foreign exchange

revitalization and qualitative enrichment

• Continuous investment in the development of a data accumulation infrastructure optimized for AI utilization and the

services, lending operations, and sales activities

• Continuous enhancement of AI risk governance in alignment with the expansion of AI utilization opportunities

establishment of an environment supporting multiple large language models (LLMs)

Value creation initiatives

Hachijuni Bank's vision

Value creation story

Fundamental management support for value creation

Corporate data

Value creation initiatives

Medium-Term Management Vision 2021

Improve organizational strength by fostering growth and job satisfaction among our diverse workforce.

Message

As a part of our Value Creation Process, the Bank promotes human resource development to create value based on organizational and personnel reform.

In fiscal 2024, we launched a new program to develop the next generation of female leaders. The active participation of women, who account for half of the Bank's workforce, is a top-priority issue for improving organizational strength through diversity and inclusion. We aim to add value and improve organizational robustness by ensuring that women participate in decision-

making at all levels as a matter of course.

In fiscal 2025, the merger with Nagano Bank will further diversify our organization. By accelerating the creation of a workplace environment where employees with diverse knowledge and experience can play an active role at various stages, we will enhance the growth and motivation of our employees and lead to new ideas and values that will solve the diverse issues faced by local communities and our customers.

Human Resources Department Manager

Hiroyasu Iwabuchi

Current awareness and issues

As regional issues and customer needs become increasingly sophisticated and diverse, it is necessary to strengthen our ability to solve problems by improving the expertise of our employees and realizing diversity and inclusion that connects diverse values and ideas to new value. We will continue to support the autonomous career development and improvement of expertise of our employees and build a workplace environment where diverse employees can maximize their abilities.

Main initiatives

Launch of program to develop the next generation of female leaders

Basic strategy for realizing our vision

• Acquisition of multifaceted capabilities that leverage individual values and strengths

• Development of problem-solving capabilities by understanding the customer

• Improvement of psychological security to foster a flexible and outward-looking organizational culture

  The Bank active participation by women with an eye to creating new value and improving organizational strength by ensuring that women participate in decision-making at all levels as a matter of course.

  
  
  

  In fiscal 2024, we launched a new program to develop the next generation of female leaders to bring along female management personnel and prepare the next generation of women in management. To create opportunities for qualified personnel to gain experience and build networks that are often

  underdeveloped owing to traditional unconscious gender role expectations, we are enrolling them in external training programs and offering mentoring by executives and department leaders. In this way, we will encourage women to pursue higher-level positions and support their elevation to managerial and executive roles. This, we believe, will enhance the strength of our organizational through concrete diversity and inclusion solutions described in the Value Creation Process.

  Strengths of the Bank Group in this field

• Encouragement of diverse views within the organization through the merger with Nagano Bank

• Establishment of an organizational culture that fosters growth through mutual support and friendly competition among peers

• Development of systems and mechanisms for employees to independently model their careers and develop

Training program event: roundtable discussion with the deputy president

Enhancing skills training to cultivate and retain highly specialized talent

their abilities

Fiscal 2024 accomplishments

To increase our number of specialized staff who contribute to solving local community issues-a specific objective of the Value Creation Process-we enhanced our job skills training effort in fiscal 2024 by offering selective training focused on specialized skills.

As part of our selective corporate trainee program, participants analyzed the value of actual business partners based on specialized knowledge gained via the training and proposed initiatives to improve corporate value based on their studies. The practical training content is explicitly designed to strengthen our ability to solve problems by understanding our customers and supports the development of our employees' expertise.

Outline of corporate training

26.4 hours

FY2023: 3.88 ▶ FY2024 results: 3.92

FY2024: 3.88

Total engagement score

FY2021: 18.0 hours ▶ Fiscal year 2024 results:

ー

Average training hours per employee

FY2021: 11.5% ▶ FY2024 results: 14.5%

FY2026: 18%

Proportion of women in management positions

Progress

Roadmap to 2026 (fiscal 2025 objectives)

6,000

5,800

4,000

Value creation story

2024

2025

2026

Value creation initiatives

Hachijuni Bank's vision

Corporate data

-700

8,000

2,000

0

2,000

4,000

6,000

10,000

Fundamental management support

Countdown to merger

1,400

Business integration plan

▶ Prior to the merger, negative synergies will impose costs due to factors such as increased expenses for system integration. However, after the merger in fiscal 2026, we expect to enjoy positive synergies at the top-line and in terms of costs, and we expect our combined resources to yield greater profits.

▶ Over the six years following the business integration, we are set to respond to a significant natural decline in personnel through branch consolidation and operational efficiency improvements and the reassignment of staff to strategic areas like consulting and digital.

Projected overall synergy impact (¥ million)

-3,300

The birth of Hachijuni Nagano Bank

Value creation initiatives

-400

7,400

for value creation

Hachijuni Bank and Nagano Bank integrated their businesses in June 2023 and are scheduled to merge on January 1, 2026.

We are thoroughly preparing for a new start as Hachijuni Nagano Bank with the goal of executing the most successful business integration and merger of regional financial institutions in Japan.

Meaning and circumstances of the business integration

Nagano Prefecture is surrounded by 3,000-meter-high mountains and crisscrossed by clear streams, and its economy is propelled by precision machinery manufacturing. Nagano offers abundant tourist resources and a distinct regional culture and leads Japan in healthy longevity. Both banks,

-

-

-

-8,000

FY2023 FY2024 FY2025 FY2026 FY2027 FY2028

headquartered in this stunning prefecture, have shared their journeys with the local community.

In the wake of the COVID-19 pandemic and amid advancements in digital technology and climate change initiatives, the regional community has entered an era of profound transformation. Meanwhile, the two banks, operating in a challenging low-interest-rate business environment, understand the growing role

they are expected to play and have decided that the best way to meet the expectations of our stakeholders is to join hands to build a more solid management foundation, strengthen financial intermediary functions, and ensure a sustainable business model. To achieve these goals, the banks integrated their businesses on June 1, 2023.

Top-line synergies Costs (positive synergies)

Costs (negative synergies)

Three integration objectives

➊ Improving management efficiency

❷ Strategic staff allocation

❸ Strengthen profitability

▶ Integration of systems and administrative procedures

▶ Consolidation of branches

▶ Reassignment of personnel to strategic areas

▶ Knowledge transfer between the banks

• Promotes management efficiency, frees up human resources, and reduces costs

Early realization of synergies from integration and expansion of business domain through human capital optimization

New business development Business portfolio diversification

Comprehensive financial services Deepening of lifestyle support business

Fundamental service offerings

• Strengthens profitability and achieves medium-to-long-term growth by allocating talent to strategic areas

• Adapts to the needs of local customers

• Reinforces growth areas (consulting, digital, etc.)

  ▶ Through the business integration and merger of the two banks, we are improving management efficiency, freeing up human resources, and reducing costs through such measures as standardizing administrative and IT systems and consolidating geographically overlapping branches.

  ▶ We are strengthening our profitability and optimizing our human capital base over the medium-to-long term by reassigning staff freed up by management efficiency improvement to training programs and external partners to ensure the development of strategic areas and new businesses.

  Value creation initiatives

  Hachijuni Bank's vision

  Value creation story

  Value creation initiatives

  Fundamental management support

  for value creation

  Corporate data

  Establishment of Hachijuni Nagano Bank

  (1) Operational efficiency

  ▶ Consolidation of mortgage loan counters

  November 2023 Transfer Nagano Bank's mortgage loan staff to Hachijuni Bank's Loan Plaza outlets and integrate the banks' formats

  ▶ Start of joint branch operations

  February 2024 Opened a joint branch combining Hachijuni Bank's Tokyo Sales Department and Nagano Bank's Tokyo Branch

  May 2024 Opened a joint branch combining Hachijuni Bank's Shinshu University Mae Branch and Nagano Bank's Matsumoto North Branch

  ▶ Launched agent bank services and expanded staff secondments

  September 2024 To provide customers with an early glimpse of the post-merger structure and help them feel reassured and excited about the merger synergies, both banks will launch agent bank services and expand secondments in support of the consolidation of sales windows and service offerings.

  ▶ Loan Plaza relocation

  October 2024 Relocated from Hachijuni Bank Toyoshina Branch to Nagano Bank Toyoshina Branch April 2025 Relocated from Hachijuni Bank Minami-Matsumoto Branch to Nagano Bank Takamiya

  Branch

  Progress of Synergy Initiatives

  (3) Strengthening profitability

  Starting in June 2023, we launched the Co-Creation Project, which features the two banks' mutual consulting service delivery as a means to enhance customer support. We have formed a Sales Co-Creation Team to support business succession services, M&A, and financing solutions, and a Loan Co-Creation Team to drive management advances and the introduction of external experts, thereby strengthening customer support by combining the strengths of both banks.

  Hachijuni Bank Consulting Menu and Know-how

  Nagano Bank Consulting Menu and Know-how

  • Sales Co-Creation Team

    • Business succession and M&A

    • Solution finance, etc.

      Co-Creation Project

  • Loan Co-creation Team

    • Management advancement

    • Introduction of external experts, etc.

Nagano Bank

Customers

Hachijuni Bank

Customers

Consulting upgrades 100

▶ As we address significant natural attrition, we will reassign 200 employees to strategic areas such as consulting and digital strategy through branch consolidation and operational efficiency gains.

▶ As of March 31, 2025, we had reallocated five employees to consulting-related roles, four to digital-related roles, and 11 to new businesses, leveraging the effects of branch consolidation and other measures

March 2029

June 2023

Operational efficiency gains

-600

3,800

3,600

3,900

New business expansion 50

Digital transformation 50

4,000

Reassignment of 200 employees to strategic areas

Branch network optimization

-600

4,800

4,600

4,400

4,200

4,900

(persons)

5,000

(2) Strategic staff reallocation

▶ Sales Co-creation Team: fiscal 2024 initiatives

The merger is progressing from the harmonization stage to the cooperation phase, and we are promoting the practical integration Nagano Bank's Solution Sales Division and Hachijuni Bank's Business Promotion Department. Under head office leadership, we strengthened relationships with clients where Nagano Bank serves as the main bank and expanded cross-assignment assignments.

〈Key initiatives〉

▶ Loan Co-Creation Team: fiscal 2024 initiatives

We are cooperating on implementing measures to support large borrowers and provide management improvement and business revitalization services to our customers. We have devised a policy for streamlining headquarters functions and operations and are promoting activities to achieve this.

〈Key initiatives〉