The transactions pursuant to the joint share transfer described in this press release involve securities of a Japanesecompany. The joint share transfer is subject to disclosure requirements of Japan that are different from those of theUnited States. Financial information included in this document, if any, was excerpted from financial statements
prepared in accordance with foreign accounting standards that may not be comparable to the financial statements ofUnited States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal
securities laws, since the issuer is located in Japan and some or all of its officers and directors reside outside of theUnited States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject
themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities otherwise thanunder the joint share transfer, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese-language original for reference purposes only. In the event of
any conflict or discrepancy between this document and the Japanese-language original, the Japanese-language
original shall prevail in all respects.

May 14, 2021
To Whom It May Concern:
Company name:
Representative name:
Stock code:
Contact:

Company name:
Representative name:
Stock code:
Contact:

The Aomori Bank, Ltd.
Susumu Narita, President and Director
8342 (First section of the Tokyo Stock
Exchange)
Shin Kidachi, Executive Officer andGeneral Manager of General Planning
Division(TEL +81(0)17－777－1111)
The Michinoku Bank, Ltd.
Takayuki Fujisawa, President and Director
8350 (First section of the Tokyo StockExchange)
Koichi Komura, Executive Officer andGeneral Manager of Management PlanningDivision(TEL +81(0)17－774－1111)
1

Notice Regarding Basic Agreement on Business Integration between
The Aomori Bank, Ltd. and The Michinoku Bank, Ltd.

The Aomori Bank, Ltd. (President: Susumu Narita; “Aomori Bank”) and The Michinoku
Bank, Ltd. (President: Takayuki Fujisawa; “Michinoku Bank”; Aomori Bank and Michinoku
Bank collectively, the “Banks”) give notice as follows of the resolution at their respectiveboard of directors meetings held today regarding a basic agreement on proceeding withdiscussions and consideration of the business integration by establishing a holding company(the “Business Integration”) in accordance with the Act Concerning Special Measures of theAct on Prohibition of Private Monopolization and Maintenance of Fair Trade for theMaintenance of Basic Services Associated with the Banking Business and General Passenger
Vehicle Transportation Business Operators in Local Areas (the “Special Measures Act”).

1.

Background to Consideration of the Business Integration
Aomori Bank and Michinoku Bank are both regional banks with their head offices
located in Aomori Prefecture. They each use keywords such as “local” and “customers” in its
corporate vision, and with their mission to create a vibrant regional community and happinessand development for customers, they make efforts to demonstrate a financial intermediation
function. Also, by maintaining and providing a stable financial system, the Banks havecontributed to the regional community and customers.
On the other hand, while the reduction in profit margins between lending and deposits
and the decrease in earnings from securities management over a long period due to the lowinterest-rate environment continue, there are concerns that the decrease in population,
declining birthrate, and aging population is certain to progress in Aomori Prefecture, with theimpact on regional economies to increase. The business environment encompassing the Banks
is therefore expected to become increasingly severe.
The Banks recognize that the role of the Banks will become increasingly important inorder for regional communities to experience sustained development, such as throughmeasures for uninterrupted financial support to regional business operators who have been
impacted by the spread of the novel coronavirus and for transforming the social structureduring and after the coronavirus era. Further, the Banks recognize the need to deal withdiverse customer needs and enhance services by taking on challenges in new fields that
surpass the boundaries of existing financial services, against a backdrop of developing digitaltechnology and deregulation.
On October 28, 2019, the Banks released the “Notice on Commencement ofConsideration of Comprehensive Partnership” and pursued collaborations in a variety of fields,such as a tie up on mutual free-of-charge ATM usage. While the Banks proceeded with thediscussion on such collaborations, the Banks considered the possibility of a businessintegration utilizing the Special Measures Act as one of the options of the business strategy.
2

As the Banks continued to consider such option, the Banks decided that the best option toachieve their mission of creating a vibrant regional community and happiness anddevelopment for customers is to create a sound business foundation that can continue toprovide the region with high quality, stable financial services in the harsh businessenvironment and reinforce their financial intermediation function and financial services thatexploit their respective strengths, and to discover and exploit new value in the region.
Consequently, they resolved today to proceed with discussions and consideration of theBusiness Integration based on a mutual trust and an equal footing.
2.

Fundamental Principle and Purpose of the Business Integration(1) Fundamental principle
To create a new group that can contribute to regional and customer growth anddevelopment, exploiting the Banks’ group strengths without being bound by financialframeworks.
(2) Purpose
By expanding business fields that exploit an enhanced financial intermediation function
and regional advantages through the combination of know-how, information, andnetworks of the Banks’ group, common value will be created for the region andcustomers, and attempts will be made to create a sound business foundation throughrationalization and improved efficiency of operations. With that, the Banks will achievesustained growth with the region by maintaining and improving the stability offinancial systems and the provision of financial services, further developing local
industry, and improving the livelihood of local residents.

3.
Expected Synergy from Business Integration
The Banks are considering specific measures based on the following synergies in order topromptly achieve the purpose of the Business Integration.
(1)

Reinforcement of financial intermediation function and financial services(i)Corporate banking
The Banks will make efforts to reinforce support for business operators,
including support based on their life stages and provision of advanced solutions,and to cultivate local industries that can overcome the coronavirus crisis, bycombining the Bank’s know-how, information, and networks that they own andexploiting each other’s group companies. The Banks will also utilize capacity forrisk-taking created by the Business Integration to actively provide funds.
(ii) Retail banking
The Banks will improve the convenience of settlement transactions, asset
management and loan utilization through the joint development of products andservices and the expansion of digital channels and services. Further, they will
improve their consulting expertise by combining each other’s know-how and3

human resources and provide services that exceed customer expectations that
conform with the customer’s life plan.
(iii) Promotion of regional development
The Banks will exploit the strong relations with local governments andknow-how cultivated by the Banks and their group companies, make efforts toprovide various solutions to the public sector and resolve local issues such as thehealth campaign for longer lives by promoting health management, andcontribute even more to the creation of a vibrant regional community.
(2) Rationalization and efficiency of business
By taking steps to advance rationalization and efficiency of business, such as common
use of systems and administration, streamlining of head office organizations andoptimization of channel networks and subsidiaries, the Banks will create a soundbusiness foundation that can continue to provide financial services and contribute toregional communities into the future.
(3) Expansion of business fields
The Banks are taking on challenges in new business fields by utilizing their diverse
human resources and investment capabilities created by the Business Integration. The
Banks will contribute to further developing local industries and improving the qualityof life for local residents by gaining an understanding of the region and moving into
new business fields that will exploit the advantages and potential of the region andresolve local issues, such as bringing together human resources, information, andknow-how held by both groups with local resources, and making efforts to expand local
trading company functions.
4.

Transaction Structure of Business Integration(1) Transaction structure
The Banks will proceed with discussions and consideration of the establishment of aholding company through a joint share transfer (i.e., effecting a joint share transfer)targeted for April 1, 2022, conditioned on the Banks reaching final agreement on
conducting the Business Integration, obtaining approval of the Banks’ shareholders andobtaining the necessary authorization, etc. from the relevant authorities for carrying out
the Business Integration. The transaction structure of the Business Integration may
change in the process of continued discussions and consideration by the Banks in thefuture due to circumstances involving the progress of procedures or other grounds.
With the purpose of optimizing the effects of the integration, the Banks are also
proceeding with discussions and consideration of the basic policy that the Banks merge
two years after the effective date of the Business Integration.
(2) Intention behind establishment of a holding company
The Banks have decided to prioritize the demonstration of synergies by exploiting theirrespective strengths and aim for the Business Integration through the establishment of a4

holding company. The plan behind the holding company is to increase its function andthe aim is to increase corporate value, considering various points of view.
Further, the holding company to be established is expected to have its shares ofcommon stock listed on the first section of the Tokyo Stock Exchange. The Banks will
also become a wholly owned subsidiary of the holding company through the sharetransfer, and it is therefore expected that their shares will be delisted from the Tokyo
Stock Exchange before the effective date of the share transfer.
5.

Outline of Holding Company(1) Location of main branch and function of head office
The location of the main branch will be Katta, Aomori-shi, Aomori Prefecture (thecurrent head office of Michinoku Bank), and the function of head office will be inHashimoto, Aomori-shi, Aomori Prefecture (the current head office of Aomori Bank).
(2)

Organization, etc.
(i)
Organization
The holding company will be a company with an audit and supervisorycommittee.
(ii) President and representative director, etc.
Aomori Bank’s president and director is expected to be appointed as president
and representative director, and Michinoku Bank’s president and director isexpected to be appointed as vice president and representative director. Other
matters such as the trade name of the holding company and the officer structure
will be decided by the Banks at a later date before the execution of the definitiveagreement.

Note: The above matters are the plan at this point in time, but may change following future
discussions between the Banks.
6.
Share Transfer Ratio
The share transfer ratio in the Business Integration will be set out in the definitive agreement,
taking into account the results of future due diligence, and the results of the share transferratio calculation by Daiwa Securities Co. Ltd., which is Aomori Bank’s third-party calculation
agent, and Mizuho Securities Co., Ltd., which is Michinoku Bank’s third-party calculation
agent.
7.
Establishment of Integration Planning Committee
The Banks will establish an “Integration Planning Committee”, focused on discussions
regarding the Business Integration.

58.

ScheduleMay 14, 2021 (today)

Execution of basic agreement regarding the Business
Integration
October to November 2021
Resolution at board of directors meetings of the(scheduled)
Banks regarding definitive agreement regarding theBusiness Integration (including share transfer plan)and execution of such agreement
December 2021 to January 2022
Extraordinary shareholders meetings of the Banks(scheduled)(resolution for approval of share transfer plan)
April 1, 2022 (scheduled)
Establishment of holding company (effective date)and listing date of the holding company
Note: The above matters are scheduled at this point in time but are subject to change
following future discussions between the Banks. Authorization under the Banking Act
and the Special Measures Act must be obtained to perform the Business Integration. If
the schedule of the Business Integration is delayed in relation to those various
procedures, the Banks will promptly announce that delay.

EndContact Information
The Aomori Bank, Ltd.

GeneralPlanning
Division

Public Relations
Office

TEL: +81(0)17-777-1111

The Michinoku Bank,Ltd.

Management
Planning
Division

Public Relations
Office

TEL: +81(0)17-774-1274

6

Reference(1)Company outline (as of March 31, 2021)
Trade name
The Aomori Bank, Ltd.
Date of establishment
October 1, 1943
Address of head office 9-30 Hashimoto 1-chome,
Aomori-shi, Aomori
Representative
Susumu Narita, President andDirector
Capital19.5 billion yen
Total number of issued Common stock
shares
20,512 thousand shares

Total assets(consolidated)
Net assets(consolidated)
Capital adequacy ratio(consolidated)
Balance of deposits(non-consolidated)
Outstanding balance ofloans(non-consolidated)
Fiscal year end
No. of employees(non-consolidated)
Number of branches(including agencies)
Major shareholders
and shareholdingratios(excluding treasurystock)(2)

3,681.4 billion yen

The Michinoku Bank, Ltd.
October 27, 1921
3-1 Katta 1-chome, Aomori-shi,Aomori
Takayuki Fujisawa, President andDirector
36.9 billion yen
Common stock
18,135 thousand sharesClass A preferred stock
4,000 thousand shares
2,360.4 billion yen

118.9 billion yen

88.7 billion yen

9.77%

7.93%

2,893.5 billion yen

2,146.4 billion yen

1,856.3 billion yen

1,721.2 billion yen

March 31
1,196

March 31
1,2999094

The Master Trust Bank ofJapan, Ltd. (TrustAccount)
Custody Bank of Japan,
Ltd. (Trust Account 4)

4.29%

The Resolution andCollection Corporation

18.18%

4.25%

Custody Bank of Japan,
Ltd. (Trust Account 4)

5.61%

Custody Bank of Japan,
Ltd. (Trust Account)

3.90%

Custody Bank of Japan,
Ltd. (Trust Account)

3.91%

Nippon Life Insurance
Company

2.34%

The Master Trust Bank ofJapan, Ltd. (Trust Account)

3.73%

Meiji Yasuda Life
Insurance Company

2.33%

The Michinoku Bank
Employee Shareholding
Association

1.87%

Outline of performance for most recent three years (units: million yen)
The Aomori Bank, Ltd.
The Michinoku Bank, Ltd.
MarchMarchMarchMarchMarchMarchFiscal year end
2019
2020
2021
2019
2020
2021
Ordinary income
42,98443,00341,35042,11137,646
41,8777

(consolidated)
Ordinary profit
4,959
2,324
3,665
1,523
(3,209)(consolidated)
Net profit
attributable toparent
3,218
1,470
2,251
670
(4,596)company(consolidated)(Reference)
Gross operating
profit27,17225,45025,38823,404
19,952(non-consolidated)
Net operating profit
4,093
3,338
3,086
1,190
(1,803)(non-consolidated)
Note:
Auditing procedures have not been completed for the fiscal year ended March 2021.

82,2171,942

22,7592,809