The transactions pursuant to the joint share transfer described in this press release involve securities of aJapanese company. The joint share transfer is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted
from financial statements prepared in accordance with foreign accounting standards that may not becomparable to the financial statements of United 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 the United States. You may not be able to sue a Japanese company or its officers ordirectors in a Japanese court for violations of the U.S. securities laws. It may be difficult to compel aJapanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be awarethat the issuer may purchase securities otherwise than under 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 theevent of any conflict or discrepancy between this document and the Japanese-language original, theJapanese-language original shall prevail in all respects.

November 12, 2021
To Whom It May Concern:
Company name:
Representative name:
Stock code:
Contact:

Company name:
Representative name:
Stock code:
Contact:

1

The Aomori Bank, Ltd.
Susumu Narita, President andDirector
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 andDirector
8350 (First section of the Tokyo
Stock Exchange)
Koichi Komura, Executive Officer
and General Manager ofManagement Planning Division(TEL +81(0)17－774－1111)

Notice Regarding Execution of Definitive Agreement on Establishment of a Joint Holding Company(Share Transfer) 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 resolutions at their respective board of directors meetings held today
regarding the formation of Procrea Holdings, Inc. (the “Joint Holding Company”) that will become thewholly-owning parent company of the Banks by means of a share transfer (the “Share Transfer”) taking
effect as of April 1, 2022 (the “Effective Date”) pursuant to the basic agreement on consideration of thebusiness integration (the “Basic Agreement”) executed between the Banks on May 14, 2021, as well as an
overview of the Joint Holding Company and the terms and conditions, etc. of the Share Transfer on theassumption that the Banks are able to obtain the approval at their general meetings of shareholders andapprovals, etc. of the relevant authorities including approval in accordance with the Banking Act and the Act
Concerning Special Measures of the Act on Prohibition of Private Monopolization and Maintenance of Fair
Trade for the Maintenance of Basic Services Associated with the Banking Business and General Passenger
Vehicle Transportation Business Operators in Local Areas (the “Special Measures Act”), and as of today the
Banks have executed a business integration agreement (the “Business Integration Agreement”) pursuant tosuch resolutions. The share transfer plan for the Share Transfer (the “Share Transfer Plan”) will be preparedin November 2021 (Please refer to “2.(1) Schedule of the Share Transfer” for details).

1.

Overview of Business Integration through the Share Transfer(1)

Background to 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 happiness anddevelopment 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 thedecrease in earnings from securities management over a long period due to the low interest-rateenvironment continue, there are concerns that the decrease in population, declining birthrate,
and aging population is certain to progress in Aomori Prefecture, with the impact 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 in order forregional communities to experience sustained development, such as through measures foruninterrupted financial support to regional business operators who have been impacted by the
spread of the novel coronavirus and for transforming the social structure during and after thecoronavirus era. Further, the Banks recognize the need to deal with diverse customer needs and2enhance services by taking on challenges in new fields that surpass the boundaries of existing
financial services, against a backdrop of developing digital technology and deregulation.
On October 28, 2019, the Banks released the “Notice on Commencement of Consideration ofComprehensive Partnership” and pursued collaborations in a variety of fields, such as a tie-up of
mutual free-of-charge ATM usage. While the Banks proceeded with the discussion on suchcollaborations, in light of a harsh business environment, they decided that the best option toachieve their mission as a regional financial institutions are to create a sound businessfoundation that can continue to provide the region with high quality, stable financial services
and reinforce their financial intermediation function and financial services that exploit theirrespective strengths, and to discover and exploit new value in the region. As notified in the press
release “Notice Regarding Basic Agreement on Business Integration between The Aomori Bank,
Ltd. and The Michinoku Bank, Ltd.” issued on May 14, 2021, pursuant to the Basic Agreement,
the Banks have proceeded with discussions and consideration of business integration withestablishment of the Joint Holding Company through the Share Transfer targeted for April 1,
2022 and merger of the Banks under the Joint Holding Company targeted for two years after the
Effective date as the basic policy, and today the Banks reached a final agreement on conducting
the business integration based on mutual trust and an equal footing.
The Banks plan to newly list the shares of the newly established Joint Holding Company on theTokyo Stock Exchange (the “TSE”). The shares are planned to be listed on the First Section of
the TSE on April 1, 2022, but will aim to be changed to the Prime Market when the TSE
switches to new market categorization on April 4, 2022. The Banks will also become wholly
owned subsidiaries of the Joint Holding Company through the Share Transfer, and it is therefore
expected that their shares will respectively be delisted from the First Section of the TSE on
March 30, 2022, prior to the Effective Date of the Share Transfer. The final decision on thelisting of the Joint Holding Company and the delisting of the Banks will be made in accordancewith the rules of the TSE.
(2)

Purpose and business principles of the new group(i)

PurposeBy 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 of financial
systems and the provision of financial services, further developing local industry, andimproving the livelihood of local residents.

(ii)

Business principles
The following have been set as the business principles of the new group centering on the
Joint Holding Company.
3

<Business principles>
Creating the Future of the Region
Continuing to Walk Side by Side with Customers
Giving Shape to the Ideas of Each and Every Person<Commitments embedded in the principles>
We will create a bright and enriching future by ensuring that we maintain our
soundness as a company, and actively taking on the challenge of tackling regional
issues and bringing out the region’s potential.
We will live up to customers’ trust in us and continue to walk side by side withthem to achieve growth and development, by improving our expertise and pursuingservices that exceed expectations.
We will build an organization full of confidence and pride where the work is
worthwhile, and give shape to each and every person’s ideas, by valuing autonomy
and transforming diverse individuality into our strength.

(3)

Expected synergies from business integration
The Banks are considering specific measures to realize the following synergies in order topromptly achieve the purpose of the business integration.
(i)Reinforcement of financial intermediation function and financial services
The Banks will develop support consulting that takes into consideration and resolves
customer needs and issues, and provide advanced expert solutions suitable for customers’
life stage, by combining the information and networks of the Banks and utilizing groupcompanies.

(ii)

Expansion of business fields
The Banks will leverage regional advantages and potential, such as combining their
human resources, information, and know-how with regional resources and undertaking
initiatives to develop their local trading company function, and endeavor to expand into
new business fields that solve regional issues.

(iii)

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 sound businessfoundation that can continue to provide financial services and contribute to regional
communities and will invest and redistribute the business resources they have created into
growth fields.
After the merger, the Banks will use the “Regional Bank Integrated Service Center”(service provider: NTT DATA Corporation) that is used by the Aomori Bank for their4accounting systems, and will move forward with putting in place the systems to facilitate
stable system migration and maximizing synergies.

Please refer to the attachment “Definitive Agreement on Business Integration” together with thispress release.
2.

Outline of the Share Transfer(1)

Schedule of the Share Transfer
Friday, November 12, 2021 Resolutions of the boards of directors regarding the(today)execution of the Business Integration Agreement, and theexecution of the Business Integration Agreement (both of
the Banks).
Friday, November 12, 2021 Announcement date of the record date for the(today)extraordinary general meeting of shareholders (Aomori
Bank).
Announcement date of the record date for the
extraordinary general meeting of shareholders as well as
the general meeting of class shareholders by commonshareholders and the general meeting of classshareholders by class A preferred shareholders(Michinoku Bank).
Monday, November 29, 2021
Record date for the extraordinary general meeting ofshareholders (Aomori Bank).
Record date for the extraordinary general meeting ofshareholders as well as the general meeting of classshareholders by common shareholders and the general
meeting of class shareholders by class A preferredshareholders (Michinoku Bank).
November 2021 (scheduled)
Resolutions of the boards of directors regarding the Share
Transfer Plan and the preparation of the Share Transfer
Plan (both of the Banks) (Note 1)
Wednesday, January 26, 2022
Extraordinary general meeting of shareholders for(scheduled)approval of the share transfer plan (Aomori Bank).
Extraordinary general meeting of shareholders as well as
the general meeting of class shareholders by commonshareholders and the general meeting of classshareholders by class A preferred shareholders forapproval of the share transfer plan (Michinoku Bank).
Wednesday, March 30, 2022 TSE delisting date (both of the Banks)(scheduled)
Friday, April 1, 2022 (scheduled)
Establishment registration date for the Joint Holding
Company (the Effective Date) and listing date for the
Joint Holding Company.
(Note 1)The Share Transfer Plan is scheduled to be prepared in November 2021 for theconsideration of the directors at the time of the establishment of the Joint Holding
Company. The names of directors at the time of the establishment of the Joint
Holding Company other than the representative directors will be decided when the
Share Transfer Plan is prepared, but there are no planned changes to the terms of
the Share Transfer Plan from the contents stated in this press release. Please refer to“5.(6) Planned representatives and officers” below for the representative directors
5and other directors at the time of the establishment of the Joint Holding Company.
(Note 2)

However, the schedule may change pursuant to discussions between the Banks
when necessary for procedures for the Share Transfer or necessary for otherreasons in the course of procedures going forward.

(2)

Method of the Share Transfer
The Banks will become wholly owned subsidiary companies resulting from a share transfer andthe newly established Joint Holding Company will become the wholly owning parent company
resulting from a share transfer.

(3)

Details of allotment in the Share Transfer (share transfer ratio)
Company nameShare transfer ratio(Common stock)
Share transfer ratio(Class A stock)

Aomori Bank

Michinoku Bank

1

0.46

―

0.46

(Note 1) Share allotment ratio
One share of common stock of the Joint Holding Company will be allotted and delivered foreach share of common stock of Aomori Bank and 0.46 shares of common stock of the Joint
Holding Company will be allotted and delivered for each share of common stock of Michinoku
Bank. 0.46 shares of class 1 preferred stock of the Joint Holding Company will also be allottedand delivered for each share of class A preferred stock of Michinoku Bank. The number ofshares constituting one unit of shares of the Joint Holding Company is planned to be 100 shares.
If as a result of the Share Transfer the number of shares of common stock to be delivered to theshareholders of the Banks is less than one whole share, such shareholder will be paid an amountcorresponding to such fraction of a whole share, in accordance with the provisions of Article
234 of the Companies Act and other related laws and regulations.
The above share transfer ratio may be amended upon discussion by the Banks if there is an
event that has a material adverse effect on the finances or management of Aomori Bank or
Michinoku Bank, or the existence of such a fact is discovered, etc. during the period after theBusiness Integration Agreement is executed until the Effective Date of the Share Transfer.
(Note 2) Number of new shares delivered by the Joint Holding Company
Shares of common stock: 28,659,974
The above number was calculated based on the total number of issued shares of Aomori Bank as
of September 30, 2021 (20,512,161 shares) and the total number of issued shares of Michinoku
Bank as of September 30, 2021 (18,135,395 shares); provided, however, that because thetreasury shares respectively held by Aomori Bank and Michinoku Bank (however, excluding thetreasury shares held as trust assets in the respective trust accounts of the Aomori Bank Board
6

Benefit Trust and Michinoku Bank Board Incentive Plan; same hereinafter) are all scheduled tobe cancelled no later than the time immediately preceding the time when the Joint Holding
Company acquires all of the issued shares of the Banks (the “Record Time”), the treasury sharesof Aomori Bank as of September 30, 2021 (129,472 shares) and the treasury shares ofMichinoku Bank as of September 30, 2021 (141,297 shares) will not be subject to the deliveryof new shares. If a shareholder of Aomori Bank or Michinoku Bank exercises its right to request
purchase of shares, etc., there will be a change in the number of new shares delivered by the
Joint Holding Company if there has been a change in the number of treasury shares of the Banks
as of September 30, 2021 by the Record Time.
Shares of class 1 preferred stock: 1,840,000 shares
The above number was calculated based on the total number of issued shares of class A
Preferred stock of Michinoku Bank as of September 30, 2021 (4,000,000 shares).
(Note 3) Handling of shares less than one unit
Shareholders of the Banks who receive allotment of common stock of the Joint Holding
Company constituting less than one unit (100 shares of stock) (“Shares Less than One Unit”)
will not be able to sell the Shares Less than One Unit that they hold on the TSE or otherfinancial instruments exchanges. Shareholders who come to hold such Shares Less than One
Unit can request the Joint Holding Company to purchase Shares Less than One Unit that theyhold, pursuant to Article 192(1) of the Companies Act. Pursuant to Article 194(1) of theCompanies Act and the provisions of the articles of incorporation of the Joint Holding
Company, they can also request the Joint Holding Company to sell them shares in a number as
to constitute one unit when combined with the Shares Less than One Unit that they hold.
(4)

Handling of share options and bonds with share options in connection with the Share Transfer
The Banks have not issued share options or bonds with share options.

3.

Basis of Calculation, etc. of the Details of the Allotment Regarding the Share Transfer(1)

Basis and reasons for details of allotment
As stated above in “1. Overview of Business Integration by the Share Transfer,” pursuant to the
Basic Agreement on consideration of the business integration agreed between the Banks as of
May 14, 2021, the Banks established an Integration Planning Committee and moved forwardwith discussion and examination in order to establish the Joint Holding Company by means of a
joint share transfer and carry out business integration targeted for April 1, 2022.
As stated below in “(4) Measures to ensure fairness,” in order to ensure the fairness ofconsideration for the Share Transfer and fairness of other terms of the Share Transfer, Aomori
Bank respectively appointed Daiwa Securities Co., Ltd. (“Daiwa Securities”) as it’s third-party
calculation agent and Nagashima Ohno & Tsunematsu as its legal advisor and began
examination of the Share Transfer. As a result of careful discussion and consideration, referring
7

to the share transfer ratio valuation report received from its third-party calculation agent, Daiwa
Securities, on November 11, 2021 and advice from its legal advisor Nagashima Ohno &Tsunematsu, and based on the results of due diligence on Michinoku Bank conducted by
Aomori Bank, etc., Aomori Bank concluded that it is reasonable to carry out the Share Transfer
using the share transfer ratio stated above in “2.(3) Details of allotment in the Share Transfer(share transfer ratio).”
On the other hand, as stated below in “(4) Measures to ensure fairness,” in order to ensure thefairness of consideration for the Share Transfer and fairness of other terms of the Share Transfer,
Michinoku Bank respectively appointed Mizuho Securities Co., Ltd. (“Mizuho Securities”) as
it’s third-party calculation agent and Mori Hamada & Matsumoto as its legal advisor and began
examination of the Share Transfer. As a result of careful discussion and consideration, referringto the share transfer ratio valuation report received from its third-party calculation agent,Mizuho Securities, on November 11, 2021 and advice from Mori Hamada & Matsumoto, andbased on the results of due diligence on Aomori Bank conducted by Michinoku Bank, etc.,
Michinoku Bank concluded that it is reasonable to carry out the Share Transfer using the sharetransfer ratio stated above in “2.(3) Details of allotment in the Share Transfer (share transfer
ratio).” With respect to class A preferred stock issued by Michinoku Bank, because there is nomarket value like for Michinoku Bank’s common stock, taking into consideration the sharetransfer ratio for common stock, the Banks decided that 0.46 shares of class 1 preferred stock of
the Joint Holding Company will be allotted and delivered for each share of class A preferredstock, and on that basis, determines that the details of the class 1 preferred stock newly issued,
allotted, and delivered by the Joint Holding Company would be such that the economic value of
one share of class A preferred stock, and the economic value of 0.46 shares of preferred stock
newly issued by the Joint Holding Company would be substantially equal, in accordance withthe provisions of the class A preferred stock issuing guidelines.
As a result of repeated careful negotiations and discussions between the Banks regarding theshare transfer ratio referring to the results of calculations and analysis by the third-party
calculation agents and advice from their legal advisors, based on the results of due diligence,
etc., which the Banks respectively conducted on the other party, comprehensively taking into
account factors including the Banks’ finances, assets, and future prospects, the Banks ultimately
came to the conclusion that the share transfer ratio stated above in “2.(3) Details of allotment in
the Share Transfer (share transfer ratio)” is reasonable, and set the share transfer ratio in the
Share Transfer at the meetings of the board of directors of the Banks held today and reached anagreement.
(2)

Matters regarding calculation(i)Names of calculation agents and their relationship with the Banks
Aomori Bank’s financial advisor (third-party calculation agent), Daiwa Securities, is acalculation agent that is independent from Aomori Bank and Michinoku Bank, does not
fall under the definition of an affiliated party of Aomori Bank or Michinoku Bank, and8does not have a material interest regarding the Share Transfer that must be stated.
Michinoku Bank’s financial advisor (third-party calculation agent), Mizuho Securities, isalso a calculation agent independent from Aomori Bank and Michinoku Bank, does not
fall under the definition of an affiliated party of Aomori Bank or Michinoku Bank, andalthough Mizuho Bank, Ltd. (“Mizuho Bank”), which is a Mizuho Group company, is ashareholder of Aomori Bank and Michinoku Bank, it does not have a material interest interms of a conflict of interest with Aomori Bank or Michinoku Bank in relation to the
Share Transfer. As confirmed by Michinoku Bank, according to Mizuho Securities,
Mizuho Securities and Mizuho Bank have established and implemented appropriate
ethical walls between them in accordance with the applicable laws and regulations,
Article 36(2) of the Financial Instruments and Exchange Act (Act No. 25 of 1948, as
amended) and Article 70-4 of the Cabinet Office Order on Financial Instruments
Business, and Mizuho Securities has conducted calculation of the share transfer ratio to be
used in the Share Transfer from a position independent from Mizuho Bank’s status as ashareholder. Based on facts such as that appropriate preventive measures against adverse
effects have been put in place between Mizuho Securities and Mizuho Bank, theindependence of Mizuho Securities as a third-party calculation agent has been ensured
because Michinoku Bank and Mizuho Securities conduct transactions with similartransaction terms and conditions as general business partners, and Mizuho Securities has a
track record as a third-party calculation agent in similar deals in the past, Michinoku Bank
appointed Mizuho Securities as a third-party calculation agent independent from Aomori
Bank and Michinoku Bank.
(ii)

Overview of calculations
In order to achieve fairness in the calculation of the share transfer ratio to be used for the
Share Transfer, Aomori Bank appointed Daiwa Securities as third-party calculation agent,and Michinoku Bank appointed Mizuho Securities as third-party calculation agent, tocalculate and analyze the share transfer ratio.
Daiwa Securities calculated the share transfer ratio using a market value analysis because
the Banks are listed on the First Section of the TSE and there is a market share value andusing a dividend discount model analysis (“DDM Analysis”) which is widely used in
valuations of financial institutions utilizing a share value analysis conducted bydiscounting the current value with the profits attributable to shareholders after taking into
account necessary internal reserves, etc. necessary to maintain a certain capital structure
as the cost of capital in order to reflect the valuation of future business activities. The
results of calculations using each methodology are as stated below. The calculation rangesof the following share transfer ratios state the number of shares of common stock of the
Joint Holding Company allotted for each share of common stock of Michinoku Bank in
the event that one share of common stock of the Joint Holding Company is allotted for9each share of common stock of Aomori Bank.
Analysis
12

Market value analysis
DDM Analysis

Share Transfer Ratio
Calculation Range
0.42～0.45
0.45～0.59

The market value analysis used November 11, 2021 when the share transfer ratio
valuation report was prepared (the “Record Date”) as its basis, and calculations werecarried out based on the closing share price on the record date and the average closing
share prices for the one week period, one month period, three month period, and six
month period until the record date.
When calculating the share transfer ratio, Daiwa Securities in principle used materials andinformation provided by the Banks and information, etc. generally disclosed to the public
as-is, assumed that all materials and information, etc. used for analysis and examination
are all accurate and complete, and did not independently verify the accuracy andcompleteness thereof, nor does it bear an obligation to do so. Daiwa Securities has notindependently evaluated, appraised, or assessed all of the assets or liabilities (including,
without limitation, financial derivative products, off-the-book assets and liabilities, andany other contingent liabilities) of the Banks and their related companies (meaning“related company” as defined in Article 8(8) of the Ordinance on Terminology, Forms,
and Preparation Methods of Financial Statements; same hereinafter), including analysis
and evaluation of individual assets and liabilities, nor has it retained a third-party agent to
conduct evaluation, appraisal, or assessment. Daiwa Securities has assumed that therespective business reports, financial forecasts and other forward-looking information
provided by the Banks were prepared by the respective management of the Banks inaccordance with reasonable and appropriate procedures based on the best forecasts andjudgment available at the time, and with the consent of Aomori Bank has relied on thebusiness plans, financial forecasts and other forward looking information of Aomori Bankand Michinoku Bank without independently verifying the accuracy, reasonableness, or
feasibility thereof. The future financial projections of the Banks that form the basis of
calculations do not anticipate a major increase or decrease in revenue. Daiwa Securities’
calculations assume the financial, economic, market, and other conditions as of November
11, 2021.
Mizuho Securities calculated the share transfer ratio using a market value analysis
because the Banks are listed on the First Section of the TSE and there is a market sharevalue, using a comparable company analysis because there are multiple similar listedcompanies comparable to both of the Banks making it possible to infer the share value bycomparing similar companies, and using a dividend discount model analysis (“DDM
Analysis”) which is widely used in valuations of financial institutions utilizing a sharevalue analysis conducted by discounting the current value with the cash flows attributable10to shareholders after taking into account necessary internal reserves, etc. necessary tomaintain a certain capital structure as the cost of capital in order to reflect the valuation of
future business activities. The results of calculations using each methodology are as statedbelow. The calculation ranges of the following share transfer ratios state the number ofshares of common stock of the Joint Holding Company allotted for each share of common
stock of Michinoku Bank in the event that one share of common stock of the Joint
Holding Company is allotted for each share of common stock of Aomori Bank.

Analysis
1
23Market value analysis
Comparable company analysis
DDM Analysis

Share Transfer Ratio
Calculation Range
0.42～0.45
0.44～1.02
0.34～0.97

The market value analysis used November 11, 2021 as the record date when the sharetransfer ratio valuation report was prepared as its basis, and calculations were carried out
based on the closing share price on the record date and the average closing share prices
for the one month period, three month period, and the six month period until the record
date.
When calculating the share transfer ratio, Mizuho Securities used information provided by
the Banks and publicly disclosed information, assumed that such materials andinformation, etc. are all accurate and complete, and did not independently verify theaccuracy and completeness thereof. Mizuho Securities has not independently evaluated,
appraised, or assessed the assets or liabilities (including contingent liabilities) of the
Banks or their related companies, including analysis and evaluation of individual assets
and liabilities, and has not retained a third-party agent to do so. Mizuho Securities’
calculation of the share transfer ratio reflects information and economic conditions until
November 11, 2021, and the financial forecasts (including profit plans and otherinformation) of the Banks are assumed to have been reasonably prepared by the
management of the Banks based on the best forecasts and judgment available at the time.
The future profit plans of the Banks which were used by Mizuho Securities as the basis of
its calculations in the DDM Analysis do not foresee any large increase or decrease inrevenue.

(3)

Handling regarding listing application for the Joint Holding Company
The Banks plan to apply for the newly established Joint Holding Company to be newly listed on
the TSE. Listing on the First Section of the TSE is planned for April 1, 2022, but when thescheduled change of the TSE’s market classification takes place on April 4, 2022, we will aim tochange the market listing to the Prime Market.
Because the Banks will become wholly owned subsidiaries of the Joint Holding Company due
11to the Share Transfer, we plan to delist them from the TSE on March 30, 2022, prior to thelisting of the Joint Holding Company.
The listing date of the Joint Holding Company and the delisting date of the Banks will be
determined in accordance with the TSE’s rules.
(4)

Measures to ensure fairness
Aomori Bank has taken the following measures to ensure the fairness of the Share Transfer.
(i)

Acquisition of a share transfer ratio valuation report, etc. from an independent third-party
calculation agent
As stated above in “3.(1) Basis and reasons for details of allotment, in order to ensure thefairness of the Share Transfer,” Aomori Bank appointed Daiwa Securities as a third-party
calculation agent, and obtained a share transfer ratio valuation report to form the basis ofagreement on the share transfer ratio used in the Share Transfer. Aomori Bank carried out
negotiations and discussions with Michinoku Bank while referring to the analysis andadvice of Daiwa Securities, its third-party calculation agent, and resolved at its meeting of
the board of directors held today to carry out the Share Transfer using the share transfer
ratio stated above in “2.(3) Details of allotment in the Share Transfer (share transfer
ratio).”
Aomori Bank also obtained from Daiwa Securities a written opinion (a fairness opinion)
dated November 11, 2021 to the effect that the share transfer ratio in the Share Transfer isreasonable for Aomori Bank’s shareholders, from a financial perspective. Please see
Exhibit 1 with respect to the important assumptions etc. regarding Daiwa Securities’
fairness opinion.

(ii)

Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision making of the board of
directors, Aomori Bank received legal advice from Nagashima Ohno & Tsunematsu, alegal advisor independent from the Banks, regarding Aomori Bank’s decision-making
methods, process, and other procedures for the Share Transfer.

On the other hand, Michinoku Bank has taken the following measures to ensure the fairness of
the Share Transfer.
(i)

Acquisition of a share transfer ratio valuation report, etc. from an independent third-party
calculation agent
As stated above in “3.(1) Basis and reasons for details of allotment, in order to ensure thefairness of the Share Transfer,” Michinoku Bank appointed Mizuho Securities as a thirdparty calculation agent, and Mizuho Securities carried out financial analysis andcalculation of the share transfer ratio in the Share Transfer to be used in negotiation and12discussion of the share transfer ratio. Michinoku Bank carried out negotiations anddiscussions with Aomori Bank while referring to the analysis and advice of Mizuho
Securities, its third-party calculation agent, and resolved at its meeting of the board of
directors held today to carry out the Share Transfer using the share transfer ratio statedabove in “2.(3) Details of allotment in the Share Transfer (share transfer ratio).”
Michinoku Bank also obtained from Mizuho Securities a written opinion (a fairness
opinion) dated November 11, 2021 to the effect that the share transfer ratio in the Share
Transfer is reasonable for Michinoku Bank’s shareholders, from a financial perspective.
Please see Exhibit 2 with respect to the assumptions and disclaimers regarding Mizuho
Securities’ analysis of the share transfer ratio and written opinion.
(ii)

Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision-making of the board of
directors, Michinoku Bank received legal advice from Mori Hamada & Matsumoto, alegal advisor independent from the Banks, regarding Michinoku Bank’s decision-making
methods, process, and other procedures for the Share Transfer.

(5)

Measures to avoid conflicts of interest
No special measures have been put in place because there is no particular conflict of interest
between Aomori Bank and Michinoku Bank in the Share Transfer.

4.

Overview of the Companies Party to the Share Transfer(1) Overview of companies (as of September 30, 2021)
Name
The Aomori Bank, Ltd.
Location
9-30 Hashimoto 1-chome,
Aomori-shi, Aomori
Representative
Susumu Narita, President and Director
Business
CapitalEstablished
Number of issued
sharesFiscal year
Number of employees
Branches (including
branch offices)
Major shareholders andshareholding ratios(As of September 31,
2021)(Excluding treasury
shares)Banking¥19.5 billion
October 1, 1943
Common stock: 20,512,161 sharesYear ending March 31
1,230
88

The Michinoku Bank, Ltd.
3-1 Katta 1-chome,
Aomori-shi, Aomori
Takayuki Fujisawa, President andDirector
Banking¥36.9 billion
October 27, 1921
Common stock: 18,135,395 sharesClass A preferred stock: 4,000,000 share s
Year ending March 31
1,299
94

Master Trust Bank ofJapan, Ltd. (Trust
Account)

8.40%

The
Resolution
andCollection Corporation

18.18%

Custody Bank ofJapan, Ltd. (Trust
Account 4)

4.27%

The Master Trust Bank ofJapan (Trust Account)

6.94%

13

Relationship Between
the Parties
Capitalrelationship
Personnel
relationshipTransactional
relationship

Affiliated party
statusCustody Bank ofJapan, Ltd. (Trust
Account)

4.03%

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

5.61%

Nippon Life
Insurance Company

2.34%

Custody Bank of Japan,
Ltd. (Trust Account)

4.35%

Meiji Yasuda Life
Insurance Company

Michinoku Bank
2.33% Employee Stock
Ownership Plan

1.93%

Aomori Bank holds 600 shares of common stock of Michinoku Bank.
Michinoku Bank’s subsidiary, Michinoku Lease, Ltd., also holds 400 shares ofcommon stock of Aomori Bank.
Not applicable.
In addition to ordinary inter-bank transactions, the banks also collaborate withother banks to streamline services, such as by improving customer conveniencethrough reciprocal ATM fee abolishment and joint operation of courier deliveries,
as well as examining comprehensive collaborations to further improve customer
services, contribute to the region, and increase business productivity.
Not applicable.

14

(2)

Financial results and financial position for the last three years

Fiscal year
Consolidated net
assetsConsolidated total
assetsConsolidated net
assets per share (yen)Ordinary income
Ordinary profit
Profit attributable toowners of parent
Earnings per share(yen)
Dividends per share(yen)

The Aomori Bank, Ltd.
Year ended Year ended Year ended
March 31,
March 31,
March 31,
2019
2020
2021
120,125
109,088
118,932(Unit: millions of yen)
The Michinoku Bank, Ltd.
Year ended Year ended Year ended
March 31,
March 31,
March 31,
2019
2020
2021
89,17181,60688,717

3,043,392

3,185,755

3,681,441

2,115,746

2,169,533

2,360,494

5,927.63

5,376.71

5,861.28

3,896.49

3,459.62

3,853.72

42,984
4,959

43,0032,324

41,3503,665

42,111
1,523

37,646(3,209)41,877
2,217

3,218

1,470

2,251

670

(4,596)

1,942

158.5372.48

110.9825.79(273.36)

97.67

Commonstock
50.00

Commonstock
40.00
Class Apreferred
stock
54.30

Commonstock
20.00
Class Apreferred
stock
54.30

Commonstock
20.00
Class Apreferred
stock
54.80

Commonstock
60.00

Common
stock
55.00

15

5.
(1)

(2)

(3)
(4)
(5)

(6)

(7)
(8)
(9)
(10)
(11)
(12)
(13)

6.

Overview of Company to be Newly Established by the Share Transfer (Joint Holding Company)
Procrea Holdings, Inc.
Trade nameBusiness

Location of head
officeLocation of mainhead office functions
Corporate organs
structure

Plannedrepresentatives andofficers

CapitalFiscal year
Net assets(consolidated)
Total assets(consolidated)
Listing stock
exchange
Financial auditor
Administrator ofshareholder register

The purpose of the Joint Holding Company will be to engage in thefollowing businesses as a bank holding company:(1) Operation and management of banks and companies that can be
subsidiaries under the Banking Act;
(2) Any and all business ancillary to or associated with the businessstated in Item (1); and(3) In addition to the businesses stated in Items (1) and (2), businesses
that bank holding companies may engage in pursuant to the Banking
Act.
3-1 Katta 1-chome, Aomori-shi, Aomori
9-30 Hashimoto 1-chome, Aomori-shi, Aomori
Company with audit and supervisory committee
With respect to directors at the time of the establishment of the Joint
Holding Company, it has been agreed that (i) the total number of directors
at the time of the establishment (excluding audit & supervisory board
members) will be ten, with Aomori Bank designating six directors(including one outside director) and Michinoku Bank designating four
directors (including one outside director), and (ii) the total number of audit& supervisory board members on establishment will be four, with Aomori
Bank designating three (including two outside directors) and Michinoku
Bank designating one (including one outside director) respectively.
It has been agreed that, with respect to the directors at the time ofestablishment that each bank is to designate pursuant to the agreement
above in (i), one of the Aomori Bank designees will be its president anddirector Susumu Narita, and one of the Michinoku Bank designees will be
its president and director Takayuki Fujisawa and that Mr. Narita will serve
as president and representative director, and Mr. Fujisawa will serve as
vice-president and representative director. The names of the other directors
at the time of the establishment will be decided at the Share Transfer Plan
preparation stage as set out above.
¥20 billion
Year ending March 31
TBD
TBD
Tokyo Stock Exchange
Ernst & Young ShinNihon LLC
Mitsubishi UFJ Trust and Banking Corporation

Overview of Accounting Treatment in Association with the Share Transfer
Accounting treatment in association with the Share Transfer falls under acquisition in accounting
standards for business combination and we plan to apply the purchase method. The amount of16

goodwill (or negative goodwill) generated by the Share Transfer is yet to be determined.
7.

Future Prospects
The financial projections, etc. for the Joint Holding Company are currently being prepared, and notice
will be given once they have been finalized.

8.

Other
The Share Transfer assumes that approval of the Share Transfer Plan and the necessary matters for the
Share Transfer can be obtained at Aomori Bank’s extraordinary general meeting of shareholders, thatapproval of the Share Transfer Plan and the necessary matters for the Share Transfer can be obtained atMichinoku Bank’s extraordinary general meeting of shareholders, general meeting of classshareholders by common shareholders, and general meeting of class shareholders by class A preferredshareholders, that the necessary approval, etc. of the relevant authorities (including approval under the
Banking Act and the Special Measure Act) can be obtained, and that the Share Transfer is notsuspended pursuant to the provisions of the Share Transfer Plan.
End

17

(Reference) Aomori Bank’s forecast of consolidated financial results for the current fiscal year (announced
October 7, 2021) and the consolidated financial results for the previous year
(Unit: millions of yen)
Aomori Bank

Ordinary Profit

Forecast of financial results for thecurrent fiscal year
(Year ending March 31, 2022)
Results for the previous fiscal year
(Year ended March 31, 2021)

Profit Attributable to
Owners of Parent

Earnings per Share
(yen)

4,900

3,400

167.56

3,665

2,251

110.98(Reference) Michinoku Bank’s forecast of consolidated financial results for the current fiscal year
(announced October 21, 2021) and the consolidated financial results for the previous year
(Unit: millions of yen)
Michinoku Bank
Forecast of financial results for thecurrent fiscal year
(Year ending March 31, 2022)
Results for the previous fiscal year
(Year ended March 31, 2021)

Contact Information
The Aomori Bank,Ltd.
The Michinoku
Bank. Ltd.

Profit Attributable to
Owners of Parent

Earnings per Share
(yen)

2,900

2,500

129.08

2,217

1,942

97.67

Ordinary Profit

General Planning Division Public Relations Office

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

Management Planning
Division

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

Public Relations Office18

Exhibit 1:

Assumptions, etc. of Daiwa Securities’ Fairness Opinion

When submitting a written opinion to the effect that the share transfer ratio (the “Share Transfer Ratio”) isfair for common shareholders of Aomori Bank from a financial perspective (the “Fairness Opinion”), Daiwa
Securities conducted analysis and examination of the Share Transfer Ratio, but in principle used materials
and information provided by Aomori Bank and Michinoku Bank, and information generally disclosed to the
public, as is in such analysis and examination, assumed that all materials and information used for analysis
and examination were accurate and complete, did not independently verify the accuracy or completeness ofsuch materials and information, and does not bear an obligation to do so. Daiwa Securities has assumed thatthe management of Aomori Bank is not in any way aware of facts which would cause the information
provided to Daiwa Securities by each bank or financial or other information that Daiwa Securities discussedwith Aomori Bank to be incomplete or misleading. Daiwa Securities has not independently evaluated,
appraised, or assessed all of the assets or liabilities (including, without limitation, financial derivative
products, off-the-book assets and liabilities, and any other contingent liabilities) of Aomori Bank, Michinoku
Bank, and their related companies, including analysis and evaluation of individual assets and liabilities, nor
has it retained a third-party agent to conduct evaluation, appraisal, or assessment. With respect to facts
regarding Aomori Bank, Michinoku Bank, and their related companies that may have an effect on theopinion stated in the Fairness Opinion (including contingent liabilities and litigation, etc.), Daiwa Securities
has assumed that there are no facts that have not been disclosed to it, now or in the future. Daiwa Securities
has not conducted any assessment whatsoever regarding the payment capacity or credit standing of Aomori
Bank, Michinoku Bank, or their related companies under any applicable laws or regulations regarding
bankruptcy, inability to pay debts, or similar matters. Daiwa Securities has not conducted an on-site
inspection of any property or facility of Aomori Bank, Michinoku Bank, or their related companies, and does
not bear an obligation to do so. Aomori Bank’s legal, accounting, and tax advisors have respectively
conducted due diligence on Michinoku Bank regarding the matters, and in the scope, agreed in advance with
Aomori Bank, and Daiwa Securities has not independently verified the subject matter or scope of such due
diligence, nor does it bear an obligation to do so.
When providing the opinion stated in the Fairness Opinion, Daiwa Securities assumed that the businessplans, financial forecasts, and other forward-looking information of Aomori Bank and Michinoku Bank was
prepared by the respective management of Aomori Bank and Michinoku Bank based on the best forecasts
and judgment at the time, using reasonable and appropriate procedures, and with the consent of Aomori
Bank, Daiwa Securities has relied on such information without independently verifying it. Daiwa Securities
has assumed that all of the assumptions in the preparation of such business reports and financial forecasts,
including Michinoku Bank’s class A preferred stock repayment plan, are accurate and feasible, has notindependently verified the accuracy and feasibility thereof, and does not bear an obligation to do so.
Daiwa Securities has assumed that the Share Transfer Plan without any changes from the draft sharetransfer plan pertaining to the Share Transfer examined by Daiwa Securities (the “Draft Share Transfer
Plan”) that may affect the Share Transfer Ratio will be legally and effectively approved by the general
meetings of shareholders of Aomori Bank and Michinoku Bank and that the Business Integration Agreementwith substantially the same content as the draft business integration agreement pertaining to the Share
Transfer examined by Daiwa Securities (the “Draft Business Integration Agreement”) will be legally and19effectively executed between Aomori Bank and Michinoku Bank, that the Share Transfer will be
implemented legally and effectively in accordance with the terms and conditions stated in the Share Transfer
Plan and the Business Integration Agreement, and that the Share Transfer will be completed in accordancewith the terms and conditions of the Share Transfer Plan and the Business Integration Agreement without
waiver, revision, or amendment of the material terms and conditions or agreed matters stated in the Share
Transfer Plan and the Business Integration Agreement. Daiwa Securities has assumed that the Share Transfer
will be executed legally and effectively, that the tax effect of the Share Transfer is achieved without any
deviation from the anticipated effect presented by the Banks, that all government, regulatory authority, andother consents or approvals necessary to implement the Share Transfer will be acquired without any
prejudice whatsoever to the expected benefits of the Share Transfer, and Daiwa Securities bears no obligation
to independently investigate these matters. Aomori Bank has not requested Daiwa Securities to examine thedecision making relating to implementation of the Share Transfer or to a carry out a comparative assessmentof the Share Transfer and other strategic options, and Daiwa Securities has not conducted such an
examination. Daiwa Securities is not a legal, accounting, or tax expert, has not conducted independent
analysis or examination of the legality and validity, or the reasonableness of accounting or tax treatment, of
any matter relating to the Share Transfer, and bears no obligation to do so.
In addition to fees that have already been received, Daiwa Securities plans to receive fees, including fees
conditioned on success of the Share Transfer, from Aomori Bank as consideration for advisory services inrelation to this matter. Aomori Bank has agreed to indemnify Daiwa Securities for certain liabilities that
Daiwa Securities may incur in connection with the advisory services relating to this matter. Daiwa Securities
has been partially involved in the preparation of the Draft Share Transfer Plan and the Draft Business
Integration Agreement and other negotiations regarding the Share Transfer, and provided advice, but was not
involved in the decision-making process for the Draft Share Transfer Plan and the Draft Business Integration
Agreement.
The Daiwa Securities Group that is structured around Daiwa Securities’ parent company, Daiwa Securities
Group Inc., conducts investment and financial services business with a focus on securities-related business as
its core businesses, and may in the past, currently, or in the future, have provided or provide investment andfinancial services including securities-related services to Aomori Bank, Michinoku Bank, or their relatedcompanies for consideration and may provide the same in the future. Aomori Bank understands that Daiwa
Securities or its related companies currently provide or may in the future provide services to Michinoku
Bank or its related companies for which fees are paid, in matters other than this transaction, and approves
such provision of services in advance without objection. Daiwa Securities and its related companies may
trade or hold, on its own account or on customer accounts, financial products, including securities andfinancial derivative products, of Aomori Bank, Michinoku Bank, or their related companies.
Daiwa Securities prepared the Fairness Opinion solely for the purpose of provision to the board of
directors of Aomori Bank as reference material in order for Aomori Bank to examine the Share Transfer
Ratio, at the request of Aomori Bank (the “Fairness Opinion Purpose”). Therefore, Daiwa Securities shallbear no liability whatsoever for any damage that may be incurred due to or in connection with the use of theFairness Opinion for a purpose other than the Fairness Opinion Purpose. Aomori Bank may not disclose theFairness Opinion, transmit it to a third party, allow a third party to refer to it, or allow it to be used for a third20

party (collectively, “Disclosure”), without the prior written consent of Daiwa Securities. Even if Aomori
Bank makes Disclosure with the prior consent of Daiwa Securities, Aomori Bank shall bear sole liability, andtherefore Daiwa Securities shall bear no liability. Daiwa Securities shall not bear any liability whatsoever toany third party other than Aomori Bank due or in relation to the content of the Fairness Opinion or the Share
Transfer. Daiwa Securities’ opinion stated in the Fairness Opinion makes no recommendation to or
solicitation of Aomori Bank’s common shareholders whatsoever with respect to the exercise of shareholder
rights such as voting rights in relation to the Share Transfer (including dissenting shareholders’ right todemand purchase), sale or purchase of Aomori Bank stock, or any other related matter.
In the Fairness Opinion, Daiwa Securities only states an opinion as to whether the Share Transfer Ratio isfair for Aomori Bank’s shareholders from a financial perspective, and Daiwa Securities was not requested foran opinion, and has not stated an opinion, on whether it is fair for third parties other than Aomori Bank’s
shareholders or other matters. In the Fairness Opinion, Daiwa Securities states no opinion with respect to thefacts or assumptions that are the basis of the determination of the Share Transfer Ratio, or on Aomori Bank’s
decision-making in relation to the Share Transfer. Furthermore, in the Fairness Opinion, Daiwa Securities
states no opinion whatsoever regarding the value of the common stock and preferred stock of Aomori Bank,
Michinoku Bank, or their related companies traded on or after the date of the Fairness Opinion. Daiwa
Securities does not state an opinion with respect to whether the amount or nature of remuneration planned tobe received by any officer, director, employee, or similar party associated with the Share Transfer is fair in
relation to the Share Transfer Ratio.
Daiwa Securities’ opinion stated in the Fairness Opinion assumes the financial, economic, market, andother conditions as of the date of the Fairness Opinion and relies on information that could be obtained by
Daiwa Securities by such date, but because there are restrictions on the materials and information that can beobtained, the materials and information used to examine the Share Transfer Ratio include materials andinformation from a time other than such date. Daiwa Securities’ opinion stated in the Fairness Opinion may
be affected by changes in conditions going forward, but Daiwa Securities bears no obligation whatsoever torevise, amend, renew, supplement, or reconfirm such opinion.

21

Exhibit 2:

Assumptions, etc. of Mizuho Securities’ Fairness Opinion

On November 11, 2021, Mizuho Securities submitted a written opinion to the effect that the Share
Transfer Ratio agreed between Aomori Bank and Michinoku Bank is reasonable for Michinoku Bank’s
shareholders from a financial perspective (the “Opinion”). The Opinion is based on the following
assumptions.
When expressing its opinion in the Opinion, Mizuho Securities relied on the fact, and assumed, that all
publicly disclosed information that was examined by Mizuho Securities and all information provided toMizuho Securities by each bank, or financial and other information that Mizuho Securities discussed witheach bank, that was substantially the basis for the analysis in the Opinion (the “Information”) is accurate
and complete. Mizuho Securities has not independently verified the accuracy or completeness of theInformation, nor does it bear an obligation for independently verifying it. Therefore, the conclusions
expressed in the Opinion may differ in the event that there is a material error in the Information, if there
are undisclosed facts or circumstances at the time that the Opinion was delivered, or facts or circumstancesarise after the Opinion is delivered (including latent facts at the time that the Opinion was delivered that
became apparent thereafter). Mizuho Securities has assumed that the management of Michinoku Bank is
not in any way aware of facts which would cause the information provided to Mizuho Securities by eachbank or financial or other information that Mizuho Securities discussed with Michinoku Bank to beincomplete or misleading.
The financial forecasts and other forward-looking information (including expected future revenue andexpenses, cost reduction outlooks, and the business plans of both banks) received by Mizuho Securities are
assumed to have been reasonably prepared and created by the management of each bank based on the best
forecasts and judgment currently obtainable regarding the operating results and financial condition of eachbank and each bank’s related companies. Mizuho Securities has relied on such financial forecasts andbusiness plans without independently verifying the feasibility thereof and expresses no opinion whatsoever
regarding any analysis or forecast referred to in the Opinion, or any assumption based thereon. With
respect to the synergies for the Banks from the Share Transfer, Mizuho Securities is not aware of any
matter that can be quantitively assessed that may have a material effect on the opinions expressed at thetime that the Opinion was submitted, and they are not incorporated in the examination in the Opinion.
When preparing the Opinion, with the consent of Michinoku Bank, Mizuho Securities has usedassumptions it believes to be reasonable and appropriate with respect to information requested by Mizuho
Securities that was not provided or disclosed by each bank, that was provided or disclosed, but has an
undetermined effect on the share value of each bank, or was not able to be used as a basis for assessment
by Mizuho Securities even by some other method. The results of assessment may differ if it becomesapparent that such assumptions by Mizuho Securities differ from the facts in a material respect.
Mizuho Securities has assumed that the Share Transfer is a non-taxable transaction for the Banks underJapan’s Corporation Tax Act and that other tax-related matters in relation to the Share Transfer do notaffect the Share Transfer Ratio. Without conducting independent verification, Mizuho Securities has
assumed that the Share Transfer will be completed in a timely manner, that all material government or
regulatory or other authority consents and approvals (irrespective of whether pursuant to laws, regulations,or agreements) necessary to complete the Share Transfer can be obtained without having any adverse
22effect whatsoever on the Banks or the benefits expected from the Share Transfer, that the content of suchconsents and approvals has no effect on the Share Transfer Ratio, and that, other than those disclosed byeach bank, if either bank has an order, measure, or other disposition issued or imposed by a regulatory orother authority, it currently has no effect, or will have no effect in the future, on each bank’s future results.
Mizuho Securities is not a legal, regulatory, or tax expert, and has relied on the assessments conducted by
the Banks’ outside experts with respect to such matters.
Mizuho Securities has not independently assessed or appraised the assets and liabilities (including
derivatives transactions, off-the-book assets and liabilities, and other contingent liabilities) or allowancesof each bank or their related companies, has not conducted analysis of the reasonableness of theaccounting or tax evaluation amount or the appropriateness of accounting treatment or tax treatment, andhas not independently had a third party, or requested a third party, to provide any assessment, appraisal, or
analysis whatsoever. Mizuho Securities bears no obligation to inspect the property or facilities of each of
the banks or their related companies, and has not carried out assessment of the shareholder capital or
payment capacity of each bank or their related companies based on laws regarding insolvency, bankruptcy,
etc.
Mizuho Securities has assumed that neither bank, nor their related companies, have in the past enteredinto or will not in the future enter into, any contract, agreement, or other instrument whatsoever that would
have a material effect on the Share Transfer Ratio, that they have not made or will not in the future made, adecision to do so, and that that implementing the Share Transfer will not in future constitute a breach ofsuch a material agreement binding upon either bank or their related companies as parties and will not giverise to a right to cancel such material agreement or right to declare default or seek remedy under suchagreement. Other than disclosures in the Information, Mizuho Securities has assumed that there are no
contingent liabilities relating to litigation, dispute, or the like, or off-the-book liabilities relating to tax or
intellectual property rights, etc., all of which involve each bank or their related companies, and that theamount of insurance coverage is sufficient for the business operations relating to the business of eachbank.
The Opinion assumes financial, economic, market, and other circumstances that exist and can beassessed as of the date of the Opinion, and relies on information that Mizuho Securities has obtained as ofthe date of the Opinion. With respect to information that Mizuho Securities has obtained as of the date of
the Opinion and facts potentially included in such information, information and facts for which the effecton the share value of each bank is not necessarily apparent as of the date of the Opinion have been
excluded from the scope of examination. Mizuho Securities has also assumed that there are no technicalinnovations or other phenomena that may have a significant effect on the business or financial, etc.
outlook currently anticipated by each bank. Therefore, if there is a change in or effect on the facts that arebasis of the assumptions of the examination in the Opinion on or after the date of the Opinion, or it
becomes apparent that there is an effect on the share value due to the discovery of a potential fact as
discussed above, etc., it may have an effect on Mizuho Securities’ opinion. However, Mizuho Securities
will bear no responsibility whatsoever to amend, renew, supplement, or reconfirm the Opinion.
Mizuho Securities plans to receive a fee (including a success fee conditioned on completion of the Share
Transfer) as consideration for services as Michinoku Bank’s financial advisor in relation to the Share23

Transfer. Mizuho Securities and its related companies have in the past received fees from the Banks andtheir related companies as consideration for the provision of services relating to financial advice andfinancing, etc. Michinoku Bank agrees to indemnify Mizuho Securities for certain obligations incurred by
Mizuho Securities due to its involvement, including those in relation to the submission of the Opinion. In
the course of ordinary business or in connection with the Share Transfer, Mizuho Securities and the banks
in the Mizuho Financial Group of which Mizuho Securities is a member may underwrite, hold, or sell on
their own account or customer accounts all types of financial products, including certain shares, bonds,
and other financial instruments issued by either of the Banks or their related companies, and may fromtime-to-time hold positions in such financial instruments and may carry out derivatives transactions
regarding either of the Banks, their related companies, or all types of financial instruments issued by suchcompanies. Mizuho Securities and the banks in the Mizuho Financial Group of which Mizuho Securities isa member may have a loan or other business relationship with either of the Banks or their relatedcompanies in the ordinary course of business or in connection with the Share Transfer, and may receive
consideration for such acts.
Mizuho Securities, as a Michinoku Bank’s third-party calculation agent, is a calculation agent that is
independent from the Banks, and does not fall under the definition of an affiliated party of the Banks.
While Mizuho Bank which is a group company of Mizuho Securities is a shareholder of the Banks,
Mizuho Securities and Mizuho Bank have established and implemented appropriate compliance systems
for controlling conflict of interests such as fire-walls between them in accordance with the applicable laws
and regulations under Article 36(2) of the Financial Instruments and Exchange Act (Act No. 25 of 1948, as
amended) and Article 70-4 of the Cabinet Office Order on Financial Instruments Business, and Mizuho
Securities has conducted calculation of the Share Transfer Ratio from a position independent from Mizuho
Bank’s status as a shareholder.
Mizuho Securities was not requested to submit an opinion regarding Michinoku Bank’s management
decision-making on which proceeding with, or implementing, the Share Transfer are based, and Mizuho
Securities’ opinion does not address such matters in any respect whatsoever. The Share Transfer Ratio wasdetermined through negotiations between the Banks and approved by Michinoku Bank’s board of
directors, and Mizuho Securities’ opinion was just one of many factors considered when Michinoku Bank
examined the Share Transfer. Therefore, it cannot be viewed as a deciding factor for the board of directorsof Michinoku Bank with respect to the Share Transfer and the Share Transfer Ratio. Mizuho Securities was
not requested to submit nor express, an opinion regarding transactions other than the Share Transfer or the
relative merits of the Share Transfer and other transactions. Mizuho Securities does not bear an obligation
to Michinoku Bank or Michinoku Bank’s board of directors to solicit the interest of third parties regarding
the Share Transfer, and has not conducted such solicitation.
Mizuho Securities’ opinion is limited to whether the Share Transfer Ratio is reasonable for the commonshareholders of Michinoku Bank from a financial perspective as of the date of the Opinion, and does not
express an opinion regarding the reasonableness of the Share Transfer Ratio for other classes of security
holders, creditors, or other related parties of Michinoku Bank. The Opinion does not express an opinion
regarding how common shareholders of Michinoku Bank should exercise their voting rights or otherwise
act in relation to the Share Transfer either. Mizuho Securities has not expressed an opinion regarding the24various terms and conditions of the Share Transfer (excluding the Share Transfer Ratio), including theform or structure, etc. of the Share Transfer, and has not expressed an opinion regarding the amount or
nature of remuneration, or reasonableness of such remuneration, to any director, executive officer,
employee, or party equivalent thereto of the Banks, in connection with the Share Transfer.

25

Definitive Agreement on Business Integration

November 12, 2021

The transactions pursuant to the joint share transfer described in this document involve securities of a Japanese company. The
joint share transfer is subject to disclosure requirements of Japan that are different from those of the United 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 of United 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 the United States. You may not
be able to sue a Japanese company or its officers or directors in a Japanese court for violations 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 than under 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 conflictor discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all
respects.

1. Background and Objective of the Business Integration
Background of businessintegration
Reduction in profit margins between
lending and deposits and decrease inearnings from securities management
due to continued low interest-rateenvironment

Changes in the businessenvironment such as declining
birthrate, aging population, andshrinking workforce

Addressing changes in the social
structure due to COVID-19

Diversification of customer needs
due to advancement of digitaltechnology

Fundamental principle of business integration
To create a new group that can contribute to regional and customer
growth and development, exploiting the group strengths of both banks
without being bound by financial frameworks

Purpose of business integration
To achieve sustained growth and contribute to the further developmentof local industry and improvement of the livelihood of local residents bymaintaining and improving the stability of financial systems and theprovision of financial services
Reinforce the financial intermediation function and financial services bycombining the know-how, information, and networks of both groups
Expand business fields by leveraging regional advantages
Create a sound business foundation through rationalizing and improving
efficiency of business12. Overview of Business Integration
Method of share transfer• The Banks will become wholly owned subsidiary companies resulting from a share transfer, and the newly established joint holding
company will become the wholly owning parent company resulting from a share transfer.
• The basic policy is for the Banks to merge aiming for two years after the effective date of the business integration.

Share transfer ratio
Aomori Bank

Michinoku Bank

Common shares

1

0.46

Class A preferredshares-0.46

Form of business integration

Business integration schedule

Procrea Holdings, Inc.
100%

100%

November 12, 2021
November 2021 (scheduled)
January 26, 2022 (scheduled)
April 1, 2022 (scheduled)
FY 2024 (tentative)

Execution of business integration agreement
Preparation of share transfer plan
Extraordinary shareholders' meeting of bothbanks (resolution for approval of share transfer plan)
Establishment of the holding company (effectivedate) and listing date of the holding company
Establishment of a new bank pursuant to theintegration of the banks23. Overview of Group after Business Integration
Overview of holding company
Procrea Holdings, Inc.

Location of
Head
Office3-1 Katta 1-chome, Aomori-shi,
Aomori

Location of
Main
Head Office
Function

9-30 Hashimoto 1-chome, Aomori-shi,
Aomori

Corporate
OrgansCompany with Audit and Supervisory
Committee

Representative
Directors

Representative Director and President:
Susumu Narita (President and Directorof Aomori Bank)
Representative Director and Vice
President: Takayuki Fujisawa (President
and Director of Michinoku Bank)

General Meeting of
Shareholders

Holding company

Trade NameGroup organizational chart

Nomination andRemuneration
Committee

XXX
Group
Executive
Committee

Scheduled
Date of
Establishment

Risk

Administration

Division

Regional
Co-creation
DivisionHR
Planning
Division

System&Operations

Administration

Division

Integration
Promotion
Division

Auditing
Division

April 1, 2022
First Section of the Tokyo Stock
Exchange(Scheduled to change to Tokyo Stock
Exchange Prime Market on April 4,
2022)

Subsidiarybanks

Listing Stock
Exchange

Planning
Division

20 billion yen

Audit andSupervisory
Committee Office

Other Committees

Management

CapitalBoard of Directors
Audit andSupervisory
Committee

34. Company Name and Business Principles
Company Name

Procrea Holdings, Inc.
Challenge and Creation

The name “Procrea” is a combination of the Latin words provocatio (meaning “challenge”) and creare(meaning “create”). It expresses our mission to take on the challenge of bringing out the potential of theregion and to create the future of the region, and our stance to move forward with our customers as
professionals.

Business principles“Creating the Future of the Region”“Continuing to Walk Side by Side with Customers”“Giving Shape to the Ideas of Each and Every Person”
Commitments embedded in the principles:• We will create a bright and enriching future by ensuring that we maintain our soundness as a company, and actively taking on the challenge of tackling
regional issues and bringing out the region’s potential.
• We will live up to customers’ trust in us and continue to walk side by side with them to achieve growth and development, by improving our expertise andpursuing services that exceed expectations.
• We will build an organization full of confidence and pride where the work is worthwhile, and give shape to each and every person’s ideas, by valuing
autonomy and transforming diverse individuality into our strength.

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5. Base of Operations of the New Group
Main locations

Number of locations*

We will have a strong base of operations, stretching from Aomori
Prefecture to the Donan region (southern Hokkaido).

Prefecture

Chunan region: 27
Aomori Bank: 15
Michinoku Bank: 12

Sanpachi region: 29
Aomori Bank: 16
Michinoku Bank: 13

Kamikita region: 18
Aomori Bank: 11
Michinoku Bank: 7

Total of
Both Banks

74

62

136

Tosei region

21

19

40

Chunan region

15

12

27

Sanpachi region

16

13

29

Seihoku region

8

9

17

Kamikita region

11

7

18

Shimokita region

3

2

5

Hokkaido Prefecture

3

7

10

Iwate Prefecture

1

2

3

Miyagi Prefecture

1

1

2

Akita Prefecture

2

2

4

Tokyo Prefecture

1

1

2

Total

82

75

157

Shimokita region: 5
Aomori Bank: 3
Michinoku Bank: 2

Seihoku region: 17
Aomori Bank: 8
Michinoku Bank: 9Michinoku
Bank

Aomori Prefecture
Donan region: 8
Aomori Bank: 2
Michinoku Bank: 6

Tosei region: 40
Aomori Bank: 21
Michinoku Bank: 19

AomoriBank*As of September 30, 2021
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6. Basic Strategy and Synergies of the New GroupWe will work to reinforce the financial intermediation function and financial services, expand business fields, andcontribute to the development of the regional economy by creating business resources through rationalizing andimproving efficiency of business by combining our know-how and networks.
AA

Reinforcement of financial intermediation
function and financial services• Build a supporting system in line withcustomers’ business strategies and life
stages, and nurture strong businesses thatwill support the region

B

Expansionof business fields
B

Synergies (targets)• Evolve business models and contribute to
the further development of the region andimprovement of the quality of life of local
residents

Synergy
total:¥5.0

C and efficiency of business
C Rationalization

billion
Synergy
total:• Streamline head officeorganizations• Optimize branch networks• Digitalize operations• Standardize systems

Creation ofbusiness resources

Leverage synergies ofintegration
Combine the strengths (know-how and networks) of both Banks
PeopleKnowhowInfoApprox.

¥2.0

billion
FY 2026

FY 2029

Synergy total =+) Top-line synergies+) Cost synergies–) One-time expenses
6

7. A Reinforcement of Financial Intermediation Function and Financial Services

We will provide support consulting that takes into consideration and resolves customers’ real needs andissues. We will also provide advanced expert solutions suitable for customers’ life stages, and strive toprovide support that is both wide and in-depth. Furthermore, we will actively work to digitalize services
and be a group that is always by the side of the customer.
Upgraded services

Digitalization

Support consulting
Individual customers

Support consulting

Utilization of digitalchannels

Advancement of expertisein many fields

Expansion oftouchpoints withremote channels andservices
Cashless payment

Joint development of
products and services

Increased sophistication ofbusiness matchingsupport by combining andexpanding networks

×Job

Marriage

Utilization of newgroup’s data inmarketing
Area data
Product data

Education Inheritance

Improvement of conveniencethrough digitalization

Corporate customers
Foundation,
Growth period

Utilization of data

Childrearing

Foundation andgrowth support

Stable period,
Slump period

Recovery periodBusiness
Business
continuity support improvement support

Contribution to customers
Touchpoints:

With the methods andfrequency customers desire

Understanding/dialogue:

Wider and deeper than before

Problem-solving:

Provide optimal consulting
7

8. B Expansion of Business Fields

Leveraging the know-how and networks of the new group, we will work to create
new added value with businesses and players that take on the challenge of bringing
out the potential of the region by expanding business fields.
Co-creation with businesses and players leveraging the potential of the region

Local industry and players
Producers

Planning

Expansion of business fields
SDGs

Finance

Distributers

Serviceproviders

Ministry of Agriculture, Forestry
and Fisheries
Local industry

Procrea HD’s
strengths of know-how
and networks

Co-creation with local
industry

Branding

Manufacturers

Manufacturing
Tourism
Environment and energy
Medical, health, and welfare

Creation of new added value inthe region

Marketing

8

9. C

Rationalization and Efficiency of Business

By rationalizing and improving efficiency of business through the businessintegration, we will create a sound business foundation and redistribute the businessresources we have created into growth fields.
Streamliningoforganizational
structure• Consolidate duplicate head office andsubsidiary functions• Optimize duplicate administrative
operations

AomoriBank

Michinoku
BankConsolidate and optimize duplicate
functions and operations
Standardize systems
Improvementof efficiency• Standardize systemsofInfrastructure, • Optimize branch networks
etc.

Optimize branch networks

Aomori Michinoku
Bank
Bank

Common system
Centralize enterprise system andsubsystems

Digitalizationofoperations• Improve productivity throughdigitalization⁃ Improve efficiency of operations(reduce admin work hours)

Improve productivity throughdigitalization
Admin work hours
Head office• DX

Head office
BranchBranchCreate business resources and redistribute them into growth fields

Streamline head officeorganizations

910. Contribution to the Sustained Growth of the Region

The new group will contribute to regional revitalization and activation as a member of theregional community to address the issues faced by the community.
Provide reliable and trustworthy services

Michi-bank App• We will continue to provide universal services that are safe andsecure• We will provide services that meet customers’ diversifying needs

Innovation not bound by financial frameworks• We will take on challenges to bring about innovation for the region
and customers that is not bound by financial frameworks.

Efforts to boost the attractiveness of theregion and achieve mutual growth• We will contribute to improve the attractiveness of the region bybringing out its potential and growing with the region over the
long-term.

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Contact Information
The Aomori Bank, Ltd. General Planning Division, Public Relations Office: 017-777-1111
The Michinoku Bank, Ltd. Management Planning Division, Public Relations Office: 017-774-1274