PressRelease
January 25, 2024
FIDEA Holdings Co. Ltd.

Reorganization of The Shonai Bank, Ltd. and The Hokuto Bank, Ltd.,
wholly owned subsidiaries of FIDEA Holdings Co. Ltd.

FIDEA Holdings Co. Ltd. (hereinafter, “FIDEA”), and its wholly owned subsidiaries, The Shonai Bank,
Ltd. and The Hokuto Bank, Ltd. resolved at their respective board of directors’ meetings held today toproceed with detailed discussions regarding the merger of the two banks, subject to the approval, etc. of therelevant authorities.

1.

Background leading to discussions of the Group reorganization
Since the implementation of the management integration in 2009, FIDEA and its subsidiaries(hereinafter, the “Group”) have promoted the sharing of sales know-how, the efficiency of headquartersfunctions by utilizing the platform functions of the holding company, the integration of core systems,
the integration of affiliated companies, etc., with the aim of enhancing corporate value by realizing theeffects of the management integration. In addition, since the introduction of the negative interest rate
policy in 2016, we have worked to further improve management efficiency in order to rebuild thecustomer services section, which had fallen into the red due to the reduced interest margins on deposits
and loans. Specifically, we proceeded with the reform of the sales structure, the consolidation of theheadquarters functions across the holding company and both banks, and the integration of operations
by function in sections where there are a lot of clerical work. As a result, in February 2023, we fully
repaid the public funds provided to us to strengthen the financial intermediary function.
On the other hand, Yamagata and Akita Prefectures, our operating base, have structural problems,such as a decline in the working-age population due to the aging of the population and a decrease in
the number of business establishments.
Under these circumstances, in order to continue to contribute to realizing sustainable local
communities, it is necessary to enhance the comprehensive strength of the Group, further streamline
our management resources, and achieve a higher level of integration synergies. Accordingly, we havedecided to proceed with discussions toward the merger of the two banks as the final step in themanagement integration.

2.

Purpose and aim of the mergerThe Shonai Bank, Ltd. and The Hokuto Bank, Ltd. have worked to revitalize local economies bydeveloping sales activities for both individual and corporate customers to meet their needs, leveraging
their strengths in community-based operations. At the same time, they have been actively involved in1

PressReleaserenewable energy projects that lead to regional revitalization, settlement and migration promotion
projects, and community development projects that utilize tourist attractions, in cooperation with localgovernments.
Going forward, they will extract the synergies of the merger, such as enhanced fund supply
capacity due to the expanded scale and sales capabilities and resources resulting from more efficient
headquarters operations, to further strengthen the relationships with local customers that the two banks
have built over the years. Furthermore, they will make effective use of human resources with advanced
expertise and collectively utilize their skills. Specific initiatives include providing support for businesssuccession and M&A through the utilization of specialized talent, assisting our customers in reducing
CO2 emissions towards achieving a decarbonized society, participating in offshore wind power
generation projects, and offering problem-solving support in the DX field for local companies. In thisway, they aim to become a bank that proactively contribute to the creation of the region’s industrial
base, excel in consulting in the GX and DX fields, excel in regional development projects centered ontourism, and is indispensable to the region, while fostering mutual development with the region.
In order to realize the Group Management Philosophy “We will make the Tohoku region a centerfor producing happiness and hope through the passion, wisdom, and challenging spirit of allemployees,” by integrating the features and strengths of the two banks, the FIDEA will further
strengthen its support for business operators and business management improvement, and establish
more efficient organizational operations and a stronger management foundation to continue
contributing to realizing sustainable local communities.
3.

Date of merger
During FY2026 (planned)(We plan to proceed with the merger, subject to obtaining necessary approvals and permits fromrelevant authorities. In addition, we intend to conclude the merger agreement at an appropriate time,taking into account the progress of future merger discussions and other relevant factors.)

4.

Establishment of Merger Preparatory Committee
We will consider establishing a Merger Preparatory Committee to determine the details of thenew bank.

5.

Outlook for future performanceThis matter has no effect on the FIDEA’s previously announced full-year forecast of financial
results for the fiscal year ending March 31, 2024. The Group synergies resulting from thereorganization and the impact of the reorganization on financial results for the fiscal year ending
March 2025 and beyond will be calculated and announced as we proceed with detailed discussions.

2PressRelease6.

Overview of the companies involved(1) Company overview (as of the end of September 2023)
The Shonai Bank, Ltd.

The Hokuto Bank, Ltd.

1-9-7 Honmachi, Tsuruoka City, Yamagata

3-1-41 Nakadori, Akita City, Akita

Prefecture

Prefecture

Masahiko Matsuta, President andArata Ito, President and Representative

Representative Director

Director

Banking

Banking(v) Capital¥8.5 billion¥12.5 billion(vi) Date of establishment

December 1, 1878

May 3, 1895(vii) Number of issued121,321 thousand shares

282,339 thousand shares(viii)Fiscal year-endMarchMarch(ix) Number of employees

542540(x) Major shareholders

FIDEA Holdings Co. Ltd. 100%FIDEA Holdings Co. Ltd. 100%(i)Name(ii) Location(iii) Representative(iv) Description ofbusinesssharesand shareholding ratio(2) Financial position and operating results for the immediately preceding fiscal year (ended March 31,2023) (non-consolidated)
The Shonai Bank, Ltd.

The Hokuto Bank, Ltd.

Net assets¥58.5 billion¥37.8 billion(ii) Total assets¥1,490.0 billion¥1,536.3 billion¥1,353.7 billion¥1,378.3 billion¥948.2 billion¥959.9 billion(v) Ordinary income¥24,376 million¥22,436 million(vi) Ordinary profit¥2,390 million¥2,615 million(vii) Net income¥1,630 million¥1,563 million(i)(iii) Balance of deposits,etc.
(iv) Balance of loans andbills discounted###3<Reference> Aim of the Group Reorganization
The Group’s Strategy From theManagement Integration in 2009
Until Now✓✓✓✓✓✓✓✓The two banks will utilize the platformfunctions of the holding company to both
improve efficiency and concentrate
management resources on local operations
Integrating the bank accounting system andsub-systems
Consolidating headquarters functions acrossthe holding company and both banks
Standardizing administration at branch offices
and integrating sections with highconcentrations of administrative work
Consolidating human resource systems
Consolidating sales strategies (reformingsales structures, introducing area andsegment strategies, establishing consulting
departments across both banks)
Consolidating securities investment strategies
Reorganizing affiliated companies withoverlapping functionsBecoming Tohoku’s First CrossPrefectural, Region-Wide Bank✓

Realize the image of a regional bank that
continuously contributes to the regional
community by putting into practice the GroupManagement Philosophy: “We will make theTohoku region a center for producing
happiness and hope through the passion,
wisdom, and challenging spirit of all
employees”✓Contribute to regional development proactivelyand in more of a leading role than before bymaking effective use of the outstanding humanresources and top talent of the two banks in an
integrated manner✓

Establish the new business model of a regionwide bank that grows with regions, for regions

Business environment✓✓✓

Declining and aging population
Decline in the number of offices
Awareness of shrinking market✓✓

Changes in interest rate ✓environment✓
Drastic changes in✓investment environments

FIDEA HOLDINGS CO. LTD.

✓
Advancing inflation✓
High resource prices
Heightened geopolitical risk ✓Diversified customer needs
Accelerating speed of change
Intensified competition due toentry from other industries4<Reference> Our Vision of the New BankThe FIDEA Group’s
Management Philosophy

We will make the Tohoku region a center for producing happiness and hopethrough the passion, wisdom, and challenging spirit of all employees.

Establish the new business model of a region-wide bank that grows with regions, for regions
1. Playing the role of a producer in the regional economy• Proactively involved in more of a leading role in regional
revitalization projects• Proactively involved in regional development projects centeredon tourism• Robustly supporting supply chain construction• Reinforcing business matching that binds Yamagata and Akita
together

2. Supporting problem-solving in the GX and DX fields• Supporting the decarbonization management of businesspartners• Proactively involved in renewable energy projects• Strengthening sustainable finance• Enhancing DX consulting for business partners

3. Further promoting business revitalization support• Enhancing support for management improvement and business
revitalization• Offering timely, appropriate solutions to companies facing
management issues• Utilizing equity finance

4. A one-stop shop for consulting proposals• Sharing the knowledge and experience of specialized talent, as well as
enhancing the training of professionals at the headquarters with a focuson specialized talent• Sharing know-how on business succession and M&As
• Further strengthening consolidated sales activities for individual andcorporate customers

5. Enhancing profitability in the investment section• Revamping the group’s investment portfolio• Improving the efficiency and enhancing the profitability of section
operations• Sharing operational know-how and enhancing the training of thespecialized talent responsible for investment

6. Governance structure with high standards, etc.
• Maintaining the organization of the financial holding company as acompany with a nomination committee, etc.
• Speedy sales planning and sales promotion from working in unison withfront line operations• Moving toward a single license for the bank accounting system and subsystems, and consolidating administrative processing

Integrating the strengths of the two banks and maximizing Group synergy

Headquarters
Yamagata

Branch office
Akita

Systems and administration

Improving efficiency throughoptimal branch placement
Improving organizational efficiency andshifting personnel in the headquarters,
including in non-planning sections
Creating sales capabilities and resources

FIDEA HOLDINGS CO. LTD.

Complete standardization of systems
and administrative procedures

Enhancing investment capacity5<Reference> (Proposed) Schedule
Fifth Medium-term Management Plan

FY2023

FY2024FY2025

Sixth Medium-termManagement Plan

FY2026

Deliberations in the Merger Preparatory Committee, etc.
(The name of the new bank, etc. to be announced when decided)
Regional IR(Tsuruokaand Akita)(to be continued in the second
halves of each fiscal year)
Basic
agreement

Mergeragreement
Resolutions at general
meetings of shareholders
at both banks

Launch of thenew bankDuring FY2026(planned)

Applications forapproval at relevant
authorities

FIDEA HOLDINGS CO. LTD.

6