Since our founding as Japan’s 18th national bank in 1877, we have grown in tandem with regional society, driven by a commitment to maintaining sound business operations. Throughout our history, we have overcome numerous challenges to establish a firm foundation as the core bank in our region, and we extend our thanks to everyone for their warm and long-lasting support.
  Japan’s socioeconomic structure has undergone rapid change in recent years, further raising the severity of conditions in the financial services sector and prompting customers to be more selective about the institutions they choose. There are strong and growing pressures to improve the stability and credibility of the financial system as a means of restoring the domestic economy to a path of steady progress. In addition to ensuring sound operations, regional financial institutions are expected to contribute to the economies of the regions in which they operate.
  To meet such expectations, in April 2004 the Eighteenth Bank embarked on Stage 2 of its medium-term management plan, entitled, “21^st Century Marketing Strategy—Stage 2.” Under the plan, the Bank is working to realize a high earnings structure and enhance the soundness of its financial position, while implementing measures to boost support to corporate customers. In this way, we will contribute to the revitalization of the local economy.

Progress Report on Medium-Term Management Plan
In the two-year period from April 2002 to March 2004, we implemented Stage 1 of the Eighteenth Bank’s medium-term management plan “21^st Century Marketing Strategy—Stage 1.” In Stage 1, our aim was to become the leading bank in Nagasaki Prefecture, in terms of both profits and the quality of services. To this end, we expanded our marketing capabilities, and improved the efficiency of our operations. As a result, income from our core businesses, the basic indicator of a bank’s earnings capability, and the overhead ratio, which is the basic indicator for the efficiency of management, exceeded the initial targets. During the term under review, as a means of raising the efficiency of our operations, we closed nine branches situated within Nagasaki City, and opened two new branches, to serve as marketing bases, in the northern part of the prefecture. In addition to slimming our management structure, we reduced the number of directors by 6, and cut annual remuneration to directors by more than 10% on an averaged basis. As a means of strengthening our marketing power, we created a bloc-based marketing structure, and set up an Enterprise Support Division. In this way, we implemented measures to strengthen support for companies operating within the region.