Ultimate objective	• Securing a stable earnings foundation
Key goals	• To concentrate managerial resources in selected areas • To extensively reconstruct the Bank’s business processes
Target brand image	• Bank of the Ryukyus — the “loan experts”

The Bank has formulated a new medium-term management plan, entitled Speed 2001, covering the period from April 2001 to March 2003. The plan is designed to help the Bank survive and prosper amid turbulent changes in the financial services industry. The plan calls for us to fulfill our responsibilities as the leading bank in Okinawa Prefecture. This means quickly and steadily implementing a number of strategies to help the Bank respond appropriately to the financial needs of the local community and thus secure a stable earnings foundation.

The main objective of the plan is to secure a stable earnings foundation. In pursuit of this objective, we will focus on repaying public funds at the earliest possible time while reinforcing our core banking businesses, with particular emphasis on lending operations. In the process, we will establish loan operations as the Bank’s specialty field and promote the Bank’s image as an expert in the field of lending.

Through our “speed” and “new market” strategies, we will expand the volume of small-lot lending and thus reinforce our earnings foundation. Specifically, the “speed” strategy entails rigorously reassessing our business processes and quickly building efficient systems, especially those related to lending operations. The “new market” strategy calls for development of loan products for customers whom we have not targeted in the past, as well as commencing Internet banking and reinforcing our direct banking services.

Through our strategies to improve advice, costs, and pricing, we will select areas in which to allocate managerial resources and improve the quality of our lending services in an effort to secure a solid earnings foundation. We will also take steps to prevent an outflow of deposits in the run-up to the termination of unlimited guarantees on bank deposits in April 2002, when the new system will cap the insurance coverage of deposits at ¥10 million. In addition, we will analyze the credit risk profiles of existing loan customers and control the volume of loans and the interest rates accordingly.

We will utilize our support strategy to prevent the occurrence of bad debt and improve our asset portfolio. By conducting close monitoring of debtors, we will seek to pinpoint deterioration in claims at an early stage and help to improve customers’ business results while at the same time remaining abreast of the needs of those of our customers who have sound financial position.

We plan to create an organization that permits smooth enforcement of marketing reforms. Specifically, we will rebuild processes aimed at raising the efficiency of loan administration procedures while promoting outsourcing of various business processes. In these ways, we will create a flexible, highly responsive sales system. Our risk management strategy involves pinpointing credit risk, which is growing in importance as we promote increased lending. We will also change our internal inspection system, shifting the emphasis from checks of results to checks of processes.

Through our “skills improvement” strategy, we will work to enhance our lending-related expertise. Specifically, we will simplify loan administrative processes and actively encourage employees to undertake business studies. In these ways, we hope to raise awareness of all staff of our lending business. At the same time, we will work to quickly train newly employed temporary personnel. Meanwhile, we will use our “awareness improvement” strategy to implement a performance-linked compensation system and consider adopting a performance-linked profit sharing system. We are also studying a stock option plan. Through these new mechanisms, we will further raise the motivation of all employees.