The transactions pursuant to the joint share transfer described in this document involve securities of a Japanese company. The joint sharetransfer is subject to disclosure requirements of Japan that are differentfrom those of the United States. Financial information included inthis 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 theissuer 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 aJapanese company or its officers or directors 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 aware that the issuer may purchasesecurities 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 conflict or
discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all respects.

Reference Documents for Extraordinary General
Meeting of Shareholders and General Meeting ofClass Shareholders by Common Stock Holders —Supplementary Volume
Agenda Item 1 Approval of the Share Transfer Plan with The Aomori Bank, Ltd.
Content of Financial Statements, etc. for
the Most Recent Business Year (ended March 2021)
for The Aomori Bank .................................................................... 1(5. Matters Regarding The Aomori Bank on p. 71 of theConvocation Notice)

Securities code: 8350

―1―

Content of Financial Statements, etc. of the Aomori Bank for the Most Recent Business Year
(Year ended March 2021)

113th Term
1.

(April 1, 2020 through March 31, 2021) Business Report

Matters Related to the Bank's Current Situation(1) Progress and results of the corporate group’s business, etc.
Description of principal business
The Group comprises the Bank and five subsidiaries, and mainly engages in banking businesswhile also carrying on business regarding financial services, such as its leasing business. The fivesubsidiaries are all members of the consolidated group.
a.

Banking Business Department
The Bank engages in deposit business, lending business, securities trading business, securities
investment business, domestic exchange business, foreign exchange business, corporate bondentrustment and registration business, and ancillary business at its head office, as well as its 84
branches and 5 sub-branches, and is positioned as the Group’s central department. One subsidiaryalso carries out the real estate management and leasing business, and is mainly responsible forbusiness peripheral to the banking business.

b.

Leasing Business Department
One subsidiary engages in leasing business, etc.

c.

Other Business Departments
Three subsidiaries engages in credit card business, housing loan guarantee business, consulting
business, etc.

―2―

Flow chart of the Group’s businessBanking Business
Department

Banking Business

The Aomori Bank Group

Peripheral
Business
Leasing Business
Department

One subsidiary: Aogin Kota Co., Ltd.

Leasing Business
Credit Card
Business

Other Business
Department

Head office, 84 branches, and 5 sub-branches

One subsidiary: Aogin Lease, Inc.
One subsidiary: Aogin Card Services Co., Ltd.

Credit Guarantee
Business
Consulting Business―3―

One subsidiary: Aogin Confidence Guarantee Co.,Ltd.
One subsidiary: Aomori Creation Partners Co., Ltd.

Financial and economic environment
In FY 2020, the Japanese economy felt the impact of consumers staying indoors and events being suspended as aresult of the declaration of a state emergency in April 2020 due to the COVID-19 pandemic. In addition to a
sharp drop in consumer spending, inbound demand evaporated, and exports drastically decreased as the global
economy contracted. After the state of emergency was revoked, economic activity resumed, and there was anevident trend toward recovery centered around consumer spending and exports, due in part to various politicalmeasures and improvements in the overseas economy.
However, in January 2021, a state emergency was again declared in 11 prefectures, including Tokyo, due tofurther spread of infection. This resulted in weak consumer spending and further trends toward labor adjustments.
The future continues to be unpredictable, with issues such as slowing growth in exports (which had been
increasing) due to the further spread of COVID-19 overseas and other factors.
Aomori Prefecture’s economy weakened as a whole during this period, in line with the domestic economy. In
terms of individual demand, consumer spending remains tight in various service-related industries, particularly
the food service industry, and although local governments’ economic measures had an evident effect of buoying
up tourism demand, the year to year decline in the number of guests staying in hotels continued, partly due to thesuspension of the Go To Travel campaign. Meanwhile, supermarkets and drug stores experienced increased sales,
mainly in groceries, daily necessities, and hygiene products, and sales of consumer electronics, etc. slowly
increased due to factors such as extended periods at home. In terms of manufacturing, not only was there an
increase centered around electrical machinery for personal computers, but there was also an overall rally with anincrease in electrical components and devices for smart phones. At the same time, employment tended to be
weak, as with the rest of Japan, with the number of new recruits in various industries decreasing, and the ratio of
job openings to job applicants shifting to less than one.

Progress and results of businessWithin this financial and economic environment, officers and employees have come together, making efforts to
expand and reinforce the management foundation with the support of shareholders and various partners. As aresult, in this business year the Group has posted consolidated ordinary income of ¥41.350 billion, consolidated
ordinary profit of ¥3.665 billion, and current net income attributable to owners of the parent of ¥2.251 billion.
The results of the various business segments are as follows.
a.

Banking Business Department
FY 2020 was the second year of the 16th Medium-Term Business Plan Change the Future (April
2019 to March 2022), and the Bank forged ahead with initiatives to transform into acomprehensive consulting bank, with the aim of realizing the vision to “Be the Only One
Consulting Bank that creates a prosperous and happy future together with the community and ourcustomers.”
With the extended impact of COVID-19, the Bank intensified initiatives to stimulate the local
economy with business activities such as practicing “customer-focused business,” understanding
the genuine issues for the region and customers more precisely, and contributing to the solution, in―4―order to assist with the continuous growth of the local economy. The main initiatives are as
follows.
○ Initiatives for corporate and business customers
The Bank established a consulting service during non-work hours in order to respond quickly toinquiries from customers who had been impacted by COVID-19. The Bank has also
continuously carried out survey activities with customers to flesh out its response to fundingneeds, such as urgent financing to deal with COVID-19.
In addition, the Bank has utilized the group subsidiary Aomori Creation Partners Co., Ltd. torespond to the needs of personnel, as well as expanding its business alliances with external
expert businesspeople to optimize services and support needs arising from business succession
and M&A, and proactively engaging in consulting to resolve customer issues.
○ Initiatives for individual customers
The Bank has also been flexible with its response to individual customers who have been
impacted by COVID-19 with efforts such as consultations on revising repayment conditions.
The Bank has also made efforts to expand products and services to respond to customer needs,
such as starting to offer the Aomori Bank Visa Debit (aomo Debit) debit card that can be usedby customers 15 years and older (excluding junior high school students) with the goal of
expanding cashless payments.
○ Initiatives for improving convenience
The Bank has overhauled its website design to support a variety of devices, including PCs,
smart phones, and tablets. By improving functionality and expanding online content, the Bank
aimed to increase interaction with customers. The Bank has also made efforts to improve
convenience for customers by expanding alliances to allow free access to other banks’ ATMs
and starting to process cash deposits at ATMs located in-branch. In addition, tablets have been
installed in branches to open ordinary deposit accounts and as a contact point for applying forloans, such as My Car Loan, with the aim of reducing the documentation required of customers
and the waiting time.
○ Initiatives for activating regional communities
The Bank has utilized various platforms for crowd funding and supported financing andinformation transmission for initiatives aimed at providing new products and services andimproving regional brands using local resources. In FY 2020, events such as the Aomori Nebuta
Matsuri and the National High School Baseball Championship were suspended due to theimpact of COVID-19. However, the Bank offered support for various events, such as a projectto support Nebutashi and another project to aid high school baseball in Aomori Prefecture.
The Bank also made efforts to stimulate the local economy in support of food and beveragebusinesses through the #AOGINYELLMESHI project, which promotes and shares information
about takeout services.
○ Initiatives for realizing a sustainable society―5―In addition to the existing AOGIN ‘Creating the Future’ SDGs Private Placement Bond, theBank has started administering the AOGIN 'Supporting Healthcare Workers' SDGs Private
Placement Bond, which is imbued with the Bank’s respect and gratitude, and feelings of support,
for the front-line health care workers who treat COVID-19 patients. As well as supporting
fundraising by customers, the Bank has contributed to realizing a sustainable society.
Furthermore, the Bank has distributed explanatory videos regarding SDGs on subjects related to
Aomori Prefecture through the Bank’s official YouTube channel and other media, in order toimprove understanding, adoption, and awareness of SDGs within Aomori Prefecture.
○ Initiatives for creating an energetic workplace
In April 2020, the Bank established its new slogan, For a ‘thank you’ from the future, a heartfelt
prayer for a vibrant future that will serve as a guiding principle for every employee, and also
expressed its corporate vision of contributing to growth in the local economy.
The Bank also introduced a flextime system as part of work-style reform, with the aim of
improving productivity and enhancing work life balance. In addition, by promoting diverse
attire during work hours and aiming for an open-minded, welcoming workplace, as well as
respecting individual autonomy, the Bank has advanced its initiatives to create a dynamic
organizational environment and promote diversity.
In this way, FY 2020 has been a year for making efforts to proactively expand businessfocusing on customer needs and intensifying initiatives in support of the region in accordancewith the 16th Medium-Term Business Plan, and has resulted in the following achievements for
the Bank.
Individual and corporate deposits have done well, with the balance at the end of the term up¥238.2 billion to ¥2,714.0 billion. Total deposits including negotiable certificates of deposit
increased ¥241.2 billion to ¥2,893.5 billion.
Corporate and individual loans and bills discounted increased, resulting in the balance at theend of the term increasing ¥50.9 billion to ¥1,856.3 billion.
Securities decreased ¥25.4 billion centered around domestic securities, with the balance at theend of the term falling to ¥839.4 billion, as a result of efforts toward making appropriate
investments while carefully observing market trends with the aim of optimizing investment
assets.
In terms of profit and loss, while the Bank's ordinary income increased from fees andcommissions, it decreased by ¥1.827 billion on the previous term to ¥31.359 billion due toreduced interest and dividends on securities and gains on the sale of equity. Ordinary expenses
also decreased ¥3.010 billion on the previous term to ¥28.43 billion due to factors such as
securities related losses and a decrease in general and administrative expenses. As a result,ordinary profit increased ¥1.184 billion on the previous term to ¥2.956 billion, and the current
net income is also up ¥916 million on the previous term to ¥2.166 billion.
b.

Leasing Business Department―6―

In the leasing business, ordinary income increased by ¥133 million on the previous term to ¥5.335
billion. The segment margin also increased by ¥41 million on the previous term to ¥479 million.
c.

Other Business Departments
In other business, ordinary income increased by ¥261 million on the previous term to ¥6.027
billion. The segment margin also increased by ¥229 million on the previous term to ¥691 million.

Challenges to be addressed
The Bank’s business environment is expected to become increasingly challenging going forward. The prolonged
low-interest environment has reduced the spread between deposit and lending rates, and profits on securities
management are likewise in decline. Additionally, Aomori Prefecture is experiencing population decline as well
as falling birthrates and aging demographics, all of which are expected to have an increasing impact on the local
economy.
At the same time, the COVID-19 pandemic is showing no sign of abating, with serious effects on businessperformance, employment, and consumer spending. Regional financial institutions are being called upon to
support their local economies in their role as financial intermediators, and the Bank is aware that it is paramountthat businesses are provided cash-flow support, as well as stronger initiatives to improve management andsupport corporate rehabilitation with a view to the post-pandemic era.
In addition, the Bank recognizes that its role in the sustained development of regional communities will become
increasingly important, such as through measures for transforming the social structure during and after the
pandemic. Further, the Bank recognizes the impact of digital technology, deregulation, and other trends, and theneed to respond to a wider range of customer requirements and offer an enhanced range of services by entering
into new fields that go beyond the traditional purview of financial services.
In such a challenging environment, the Bank entered into a basic agreement on business integration with The
Michinoku Bank, Ltd. on May 14, 2021, and is proceeding with preparations for the establishment of a holding
company in April next year.
Both banks are creating a sound business foundation that can continue to provide the region with high quality,
stable financial services and reinforcing their financial intermediation function and financial services that exploit
their respective strengths. In addition, the Bank is striving towards steadily furthering its transformation to a
consulting bank as detailed in the 16th Medium-Term Business Plan and achieving its mission to create a vibrantregional community and contribute to the happiness and prosperity of its customers. We ask for the continued
support of all shareholders as we proceed with these efforts.

(2)a.

Assets, income, and expenditure of the corporate group and the Bank
Assets, income, and expenditure of the corporate group
FY 2017

Ordinary income(units: ¥ million)

FY 2018

44,580―7―42,984

FY 2019
43,003

FY 2020
41,350Ordinary profit
Current net income attributable toowners of parent
Comprehensive income
Net assets amount
Total assets
Note:

6,080

4,959

2,324

3,665

4,292

3,218

1,470

2,251

3,859

1,124

(9,897)

10,854

120,758

120,125

109,088

118,932

2,910,791

3,043,392

3,185,755

3,681,441

All amounts shown are rounded down to the nearest million yen.

―8―

b.

Assets, income, and expenditure of the Bank

(units: ¥ million)

FY 2017
Deposits

FY 2018

FY 2019

FY 2020

2,389,528

2,433,689

2,475,840

2,714,057

914,000

878,430

861,086

849,130

Other

1,475,527

1,555,259

1,614,754

1,864,926

Loans and bills discounted

1,744,538

1,762,405

1,805,392

1,856,349

397,828

434,402465,350

496,114503,083

510,838

519,148556,936

843,627

817,165

820,894803,299

200

―

―

―

797,901

820,912864,907

839,458

National government bonds

314,894

275,473

231,012

182,385

Other

483,007545,439

633,894

657,073

Total assets

2,899,123

3,031,536

3,172,791

3,666,419

Domestic exchange transaction volume

15,876,694

15,588,837

15,814,333

16,464,539

US$250 million

US$378 million

US$253 million

US$258 million

Ordinary profit

5,686

4,751

1,772

2,956

Current net income

4,223

3,266

1,250

2,166

¥207.27¥160.89¥61.63¥106.76

Term deposits

For individuals
For small and medium-sizedenterprises
Other
Trading account securities
Securities

Foreign exchange transaction volume

Current net income per share

Note 1. All amounts shown are rounded down to the nearest unit value.
2. The current net income per share is calculated by dividing the current net income by the average number of shares issued during
the term (i.e., the number of shares less treasury shares).
3. The shares were consolidated from ten shares to one share on October 1, 2017, but the current net income per share wascalculated in anticipation of that consolidation at the start of FY 2017.

―9―

(3)

Details of the corporate group’s employeesa.

Number of employees in the corporate group
End of this business year
Banking business

Number of employees

Banking peripheral

Leasing businessbusiness

1,216

16

Other business
16

Note:

The number of employees does not include temporary workers or part-time workers. They are included in the number of staff.

b.

Details of the Bank’s employees

26

End of this business year
Number of employees

1,216

Average age

40 years, 11 months

Average number of years of continuous service

17 years, 9 months

Average monthly salary¥383,000

Note1. The average age, average number of years of continuous service, and average monthly salary shown are rounded down to thenearest whole units.
2. The number of employees does not include temporary workers or part-time workers. They are included in the number of staff.
3. The average monthly salary is the average monthly salary during March, including overtime allowances, etc. but excluding
bonuses.

Details of the corporate group’s principal place of business(4)a.

Banking business(i) Number of places of businessEnd of this business year
Locations

Aomori Prefecture

Sub-branches

82 (

5 )

Akita Prefecture

2 (

― )

Hokkaido

3 (

― )

Tokyo

1 (

― )

Miyagi Prefecture

1 (

― )

Iwate Prefecture

1(

―)

Total

90(

5)

Note:

There were 146 external ATMs at the end of this business year in addition to the locations above.

―10―

There were also 64 external ATMs through a collaboration with E-net Co., Ltd. at the end of this business year.

(ii)

New places of business established this business year
There were no new places of business established this business year.
The following branches were consolidated or closed.
Closed branches

Consolidated branches

・Fukiage branch

・Ruike branch

November 16, 2020

Date of closure of consolidation

・Tsutsui branch・Matsubara Doori branch

January 25, 2021

・Misakishirogane sub-branch・Same branch

January 25, 2021

・Toyama sub-branch・Hamadate branch

March 22, 2021

・Kamenoko-machi branch・Tsugaruwatoku branch

March 22, 2021

The following external ATMs were newly installed this business year.
○ External ATMs (three locations)
・MaxValu, Kitazono store (Towada-shi)
・Maeda, Okubo store (Hachinohe-shi)
・Happy Drug, Aomori Toyama store (Aomori-shi)b.

Banking peripheral business, leasing business, and other businessEnd of this business year

Banking peripheral business

Aomori Prefecture 1

Aogin Koda Co., Ltd.

Aomori Prefecture 1

Leasing business

Aomori Prefecture 5

Aogin Lease, Inc.

Location

Locations

Aomori Prefecture 5

Other business

Aomori Prefecture 3

Aogin Card Services Co., Ltd.

Aomori Prefecture 1

Aogin Confidence Guarantee Co., Ltd.

Aomori Prefecture 1

Aomori Creation Partners Co., Ltd.

Aomori Prefecture 1―11―

Locations(5)a.

Status of capital expenditure for corporate group
Total capital expenditure(units: ¥ million)

Business segment

AmountBanking business

2,472

Leasing business

15

Other business

9

Total

2,497

Note:

All amounts shown are rounded down to the nearest million yen.

b.

New material assets, etc.

(units: ¥ million)

Business segment

Description

Banking business

Newly established and renovated branches

848

Office equipment, ATMs, etc.

609

Software

913

Total
Note:

Amount2,370

All amounts shown are rounded down to the nearest million yen.

(6)

Status of material parent and subsidiary companies, etc.

a.

Status of parent company
The Bank has no parent company.

―12―

b.

Status of subsidiary companies, etc.

Name of company

Address

Description of principal
business

Aogin Koda Co., Ltd.

1-16-16 Furukawa,
Aomori-shi

Real estate leasing
business

Aogin Card Services Co.,Ltd.

1-16-16 Furukawa,
Aomori-shi

Credit card business

Aogin Lease, Inc.

1-16-16 Furukawa,
Aomori-shi

Aogin Confidence Guarantee 1-16-16 Furukawa,Co., Ltd.
Aomori-shi
Aomori Creation Partners
Co., Ltd.

2-2-7 Shinmachi,
Aomori-shi

Lease of various types ofmachinery andequipment
Credit guarantee businessfor housing loans
Consulting business

Percentage ofvoting rights
Statedof subsidiary
capitalheld by theBank¥ million%
10
100.00

Other

―

56

59.52

―

60

65.00

―

30

100.00―50

100.00―Note 1. The five companies above are all members of the consolidated group.
2. The percentage of voting rights is rounded down to two decimal places.
3. The current consolidated ordinary income is ¥41,350 million, and the current net income attributable to the owners of the parent
is ¥2,251 million.

Status of material business alliances
1.
2.

3.

4.
5.

6.

Automated system for cash withdrawals (ACS) allowing ATMs to be used interchangeably through analliance between 62 regional banks
Automated system for cash withdrawals, etc. (MICS) allowing ATMs to be used interchangeably throughan alliance between 62 regional banks and city banks, trust banks, member banks of the Second
Association of Regional Banks, credit unions, credit cooperatives, agricultural cooperatives and marine
banks (including Norinchukin Bank and federations of agricultural cooperatives), and workers' credit unionbanks
Service for communicating remittances, transfers, transaction history, and other data between partnercompanies by data transmission through Chigin Network Service Co., Ltd. (CNS), a joint venture by 62
regional banks
Automated system for cash withdrawals and cash deposits allowing ATMs to be used interchangeably
through an alliance with Japan Post Bank Co., Ltd.
Automated system for cash withdrawals and cash deposits, etc. allowing ATMs in convenience stores andother in-store locations to be used through an alliance with Seven Bank, Ltd., E-Net Co., Ltd., Lawson
Bank, Inc., and AEON Bank, Ltd.
Automated system for free cash withdrawals, etc. through ATMs installed at JR East stations through an
―13―

7.

alliance with Viewcard Co., Ltd.
Automated system for free cash withdrawals, etc. (AAI Net) allowing ATMs to be used interchangeably
through an alliance with The Akita Bank, Ltd. and The Bank of Iwate, Ltd.

―14―

8.
9.

(7)

Automated system for free cash deposits allowing ATMs to be used interchangeably through an alliancewith Aomoriken Shinyo Kumiai
Automated system for free cash withdrawals, etc. allowing ATMs to be used interchangeably through analliance with The Michinoku Bank, Ltd.

Status of business transfers
Not applicable.

(8)

Other material matters related to the corporate group’s current status
At the meeting of the Board of Directors held on May 14, 2021, the Bank resolved to form a basic
agreement with The Michinoku Bank, Ltd. on advancing discussions and consideration of the businessintegration by establishing a holding company in accordance with the Act Concerning Special Measuresof the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade for the Maintenanceof Basic Services Associated with the Banking Business and General Passenger Vehicle Transportation
Business Operators in Local Areas, and entered into the basic agreement.

―15―

2.
(1)

Matters Related to Officers (Directors)
Status of corporate officers(as of the end of the business year)

Name
Susumu Narita

Akihiro Kawamura

Tomohiko Sasaki

Keitaro Ishikawa

Naotake Atsumi
Akira Nakagawa

Norihisa Ishida

Position and responsibilities at the Bank
Director/President(Representative
Director)
Director
Senior Managing
Executive Officer(Representative
Director)

Other

Auditing Division(Tokyo Branch Manager)
General Planning
Division, Tokyo Office

Credit Supervision
Division, Treasury &International Division,
General Affairs Division
Operations
Director
Administration Division,
Managing Executive Business Promotion
Officer
Division, Business
Partnering Division
Director(Outside Director)
Director
Audit & Supervisory
Committee Member
Director
Senior Managing
Executive Officer

Representative, ANS Consulting

Board Chairman, Incorporated
Educational Institution Aomori
Tanaka Educational Academy
Representative Director andChairman, Aomori Shinseikatsu
Gojokai Co., Ltd.
Representative Director andPresident, Kanesyou Co., Inc.
Board Chairman, Aomori
Prefecture Jozo Shokuhin Kogyo
Kyodokumiai

Director
Audit & Supervisory
Committee Member(Outside Director)

Director
Audit & Supervisory
Toshisada Kushibiki
Committee Member(Outside Director)

Mie Ishida

Significant concurrent positions
outside the Bank

Director
Audit & Supervisory
Committee Member(Outside Director)

Attorney-at-law

Note 1. Director Naotake Atsumi, Director and Audit & Supervisory Committee Members Norihisa Ishida, Toshisada Kushibiki, and Mie
Ishida are outside Directors defined in Article 2, item (15) of the Companies Act and the Tokyo Stock Exchange has been―16―

notified that they are independent officers.
2. Director and Audit & Supervisory Committee Member Akira Nakagawa is a full-time Audit & Supervisory Committee Member.
The reason for appointing a full-time Audit & Supervisory Committee Member is to enhance the effectiveness of auditing andsupervision by the Audit & Supervisory Committee through attendance at important meetings by someone who is familiar withthe circumstances within the Bank and by sharing with all Audit & Supervisory Committee Members information obtained bycarefully working toward an alliance with the Financial Auditor and the Internal Control Department.
3. Changes in the positions and responsibilities of the Directors during the current business year are as follows.
Name

New position
Former position
Date of change
Director, Senior Managing Director, Senior
Executive Officer
Managing Executive December 1, 2020
Tokyo Branch Manager
Officer

Akihiro Kawamura

4. The Directors who resigned during the current business year are as follows.
Name

Position and responsibilities at the Bank at thetime of resignation

Katsuhiro Ogasawara

Director and Audit & Supervisory Committee
June 25, 2020
MemberDate of resignation

Reference: The Bank has introduced an executive officer system. The names, positions and responsibilities ofthe executive officers (excluding executive officers who serve concurrently as Directors) are as
follows.
(as of the end of the business year)

Name

Position and responsibilities at the Bank

Tsuyoshi Tamura

Managing Executive Officer of the Risk Administration Division, Personnel
Division, System Development Division, Operations Administration Division

Tsutomu ShikanaiManaging Executive Officer (Hirosaki District Sales General Manager)

Yo MoriManaging Executive Officer (Aomori District Sales General Manager)

Takahiro Kudo

Managing Executive Officer (Hachinohe District Sales General Manager)

Daisuke Yatsu

Executive Officer (Operations Administration Division General Manager)

Shunsuke Kasai

Executive Officer (Business Promotion Division General Manager)

Motomi Shiratori

Executive Officer (Head Office Sales Division General Manager)

Yoshiaki Matsuhashi

Executive Officer (Credit Supervision General Manager)

Shin Kidachi

Executive Officer (General Planning Division General Manager)

Kunihiko Yamanaka

Executive Officer (Hirosaki Branch Manager and Dotemachi Branch Manager)

Hayato Takahashi

Executive Officer (Hachinohe Branch Manager and Mikkamachi BranchManager)
―17―

―18―

(2) Matters related to remuneration to officers
Total amount of Director remuneration, etc.
(units: ¥ million)

Director type
Director(excluding Audit & Supervisory
Committee Members)
Director(Audit & Supervisory Committee
Member)
Total

Total amount of remuneration by typeNon-monetary
Base
Bonusesremuneration,
remunerationetc.

Number ofrecipients

Remuneration,
etc.

5

123

93

14

15

5

29

29

―

―

10

153

123

14

15

Note 1. All amounts shown are rounded down to the nearest million yen.
2. The above table includes one Director (Audit & Supervisory Committee Member) who resigned at the close of the 112th
Ordinary General Meeting of Shareholders held on June 25, 2020.
3. The bonuses column includes ¥14 million in the provision for reserve for officer bonuses calculated this business year. Nonmonetary remuneration etc. also includes ¥15 million in the amount of performance-linked stock-based compensation (i.e., theamount reported as expenses for points granted this business year).
4. The maximum amount of remuneration, etc. established by resolution at a General Meeting of Shareholders is as follows.
The maximum amount of remuneration, etc. established by resolution at the 108th Ordinary General Meeting of Shareholders
held on June 23, 2016 (excluding employee salaries for Directors who are also employees) was ¥216 million p.a. for Directors(excluding Audit & Supervisory Committee Members), and ¥55 million p.a. for Directors who are Audit & Supervisory
Committee Members. There were eight Directors (excluding Audit & Supervisory Committee Members) and four Directors who
are Audit & Supervisory Committee Members at the time of the resolution.
In addition to the maximum amount of remuneration, etc. for Directors (excluding Audit & Supervisory Committee Members)
above, a performance-linked stock-based compensation system was introduced in accordance with a resolution at the 110th
Ordinary General Meeting of Shareholders held on June 26, 2018. There were four Directors (excluding Audit & Supervisory
Committee Members) and nine Executive Officers who did not concurrently serve as Directors at the time of the resolution who
were subject to the performance-linked stock-based compensation system.
5. The remuneration, etc. for Directors (excluding Audit & Supervisory Committee Members) above is determined by resolution of
the Board of Directors after deliberation by the Nomination and Remuneration Committee regarding the base remuneration andbonuses up to the maximum amount settled on by resolution at the General Meeting of Shareholders. The Audit & Supervisory
Committee verifies the validity of the remuneration, etc. and expresses its decision that the remuneration is valid. Performancelinked stock-based compensation is decided in accordance with the Share Delivery Regulations set out beforehand.
6. The details of the policy for determining the details of remuneration, etc. for individual Directors is as follows.
The basic policy is for remuneration to be at an appropriate level to improve medium- to long-term performance in addition toshort-term performance, and to maximize the corporate value, taking into consideration the Director’s position and achievementof performance targets.
The policy for the share of pay of performance-linked compensation and remuneration, etc. other than performance-linked
compensation is to increase the proportion of performance-linked compensation the higher the Director’s position, and to increase
incentives for improved performance.
The policy is for decisions to be made by resolution of the Board of Directors after deliberation by the Nomination andRemuneration Committee.
7. The details of the performance-linked stock-based compensation system (the “System”) is as follows.

―19―

Outline of the system
The System was introduced in order to clarify the link between the compensation of the Directors, etc. and the Bank’s
performance and share price, and to increase the awareness of Directors, etc. to improve medium- to long-term performance andmaximize corporate value.
The System adopts a structure called the Board Incentive Plan trust (the “BIP Trust”). The BIP Trust is an incentive plan to target
the same officers as the Performance Share and Restricted Stock systems in Europe and the US. The System allows the delivery
or payment of the Bank’s shares or cash amounts equivalent to the amount of the Bank’s shares converted into cash to the
Directors, etc. in line with factors such as their position and level of achievement of performance targets.
Under the System, shares of the Bank are acquired by a fund using money provided by the Bank, and “Fixed Points” are granted
to Directors, etc. based on their position as Director, etc. and variable “Performance-linked Points” are granted to Directors, etc.
based on the level of performance in relation to target achievement during each business year at the Bank at the time prescribed
after the end of each business year during the trust period. Directors, etc. who satisfy the beneficiary requirements receive
delivery or payment of the Bank’s shares or cash amounts equivalent to the amount of the Bank’s shares converted into cash
based on the points held at the time they resign from the position of Director, etc.
The performance-linked points each business year are decided based on the current net income attributable to owners of theparent and the level of achievement of core business net income targets (non-consolidated). The current net income attributable toowners of the parent has been introduced as an index to increase the desire to achieve the Medium-Term Business Plan and thecore business net income (non-consolidated) to increase awareness of improvements in the business’s earning capacity.
Formula for points granted
Fixed points＝

Base remuneration amount for each position ÷ Average acquisition price for the Bank’s sharesin the trust × 80%

Performance-linked
points＝Base remuneration amount for each position ÷ Average acquisition price for the Bank’s sharesin the trust × 20% × Performance-linked coefficient

Performance-linked coefficient
Performance＝linked coefficient

Performance-linked coefficient for current net income attributable to owners of parent × 50% +Performance-linked coefficient for core business net income (non-consolidated) × 50%

Current net income attributable to owners of parent
Degree of achievement of targets

Performance-linked
coefficientCore business net income (non-consolidated)
Degree of achievement of targets

Performance-linked
coefficient

170% or more

1.5

150% or more

1.5

160% or more, less than 170%

1.4

140% or more, less than 150%

1.4

150% or more, less than 160%

1.3

130% or more, less than 140%

1.3

140% or more, less than 150%

1.2

120% or more, less than 130%

1.2

120% or more, less than 140%

1.1

110% or more, less than 120%

1.1

100% or more, less than 120%

1.0

100% or more, less than 110%1.0

90% or more, less than 100%0.9

90% or more, less than 100%0.9

80% or more, less than 90%

0.8

80% or more, less than 90%

0.8

less than 80%

0.0

less than 80%

0.0

―20―

FY 2020 performance based on performance-linked coefficient
Item linked to performance targets

Target value (¥ million)

Achieved value(¥ million)

Degree of achievement

Current net income attributable to owners of parent

3,240

2,251

69%

Core business net income (non-consolidated)

3,000

4,040

134%

―21―

(3)

Limited liability agreements
The Bank has set out in its Articles of Incorporation that it may enter into agreements with Directors(except for executive directors, etc.) in accordance with Article 427, paragraph (1) of the Companies Act
to limit their liability for damages as provided in Article 423, paragraph (1) of the Companies Act.
The Bank has entered into an agreement with Directors Naotake Atsumi, Norihisa Ishida, Toshisada
Kushibiki, and Mie Ishida in accordance with the Articles of Incorporation stating the total amount set out
in each item of Article 425, paragraph (1) of the Companies Act as the maximum liability for damages.

(4)

Matters regarding Directors and Officers Liability Insurance Contracts
The Bank has entered into Directors and Officers Liability Insurance (D&O Insurance) Contracts as set
forth in Article 430-3, paragraph (1) of the Companies Act with the Directors, Auditors, and Executive
Officers as the insured parties.
All premiums to be borne by the Bank.
The insurance policy covers damages resulting from liability with respect to the execution of duties by the
insured parties as officers, etc. or any claim received in the investigation of such liability. However, there
are some waiver events. For example, there is no coverage of damages resulting from actions that theinsured committed knowing they were violations of laws and regulations.

3.
(1)

Matters Related to Outside Officers
Concurrent positions and other status of outside officers
Name

Concurrent positions and other status

Naotake Atsumi

ANS Consulting representative

Norihisa Ishida

Board Chairman, Incorporated Educational Institution Aomori Tanaka Educational Academy
Representative Director and Chairman, Aomori Shinseikatsu Gojokai Co., Ltd.

Toshisada Kushibiki

Representative Director and President, Kanesyou Co., Inc.
Board Chairman, Aomori Prefecture Jozo Shokuhin Kogyo Kyodokumiai

Mie Ishida

Attorney-at-law

Note:

Norihisa Ishida and Toshisada Kushibiki are involved in ordinary banking transactions between the corporations, etc. they
concurrently serve as executive directors or otherwise of and the Bank.

―22―

(2)

Status of principal activities of outside officers
Name

Tenure as
director

Naotake Atsumi

2 years 10
monthsNorihisa Ishida

5 years 10
monthsToshisada Kushibiki

4 years 10
monthsMie Ishida

2 years 10
monthsAttendance at meetings of theBoard of Directors and the Audit& Supervisory Committee

Comments and other activities at meetings ofthe Board of Directors and the Audit &Supervisory Committee
For the most part, necessary comments madeas appropriate in discussions regarding agenda
items from the standpoint of management
Attended all 14 meetings of theconsultant.
Board of Directors this term
Playing a major role in the decision-making
process as committee chairman for the
Nomination and Remuneration Committee.
For the most part, necessary comments madeas appropriate in discussions regarding agenda
Attended all 14 meetings of theitems from the standpoint of private school
Board of Directors and 13 of the manager.
14 meetings of the Audit &Regularly exchanges opinions with theSupervisory Committee held this Representative Director on management issues
termand other topics as Audit & Supervisory
Committee Member, and exchanges opinions
and information with the Financial Auditor.
For the most part, necessary comments madeas appropriate in discussions regarding agenda
Attended all 14 meetings of theitems from the standpoint of company
Board of Directors and 13 of the manager.
14 meetings of the Audit &Regularly exchanges opinions with theSupervisory Committee held this Representative Director on management issues
termand other topics as Audit & Supervisory
Committee Member, and exchanges opinions
and information with the Financial Auditor.
For the most part, comments made from theprofessional viewpoint of an attorney-at-law.
Attended all 14 meetings of theRegularly exchanges opinions with theBoard of Directors and all 14
Representative Director on management issues
meetings of the Audit &and other topics as Audit & Supervisory
Supervisory Committee
Committee Member, and exchanges opinions
and information with the Financial Auditor.

―23―

(3)

Matters related to remuneration of outside officers, etc.
(units: ¥ million)

Number ofrecipients
Total amount of remuneration, etc.
Note:

(4)

Remuneration, etc. from the
Bank
4

20

Remuneration, etc. from the Bank's
parent company―

All amounts shown are rounded down to the nearest million yen. Remuneration, etc. from the Bank only includes the baseremuneration.

Opinion of outside officers
The outside officers have not presented any opinion regarding the details in (1) through (3) above.

―24―

4.
(1)

Matters Related to the Bank's Shares
Number of shares
Total number of authorized shares
Total number of issued shares(2)

Number of shareholders at the end of this business year

(3)

Major shareholders

29,400,000 shares
20,512,000 shares

19,686Equity in the Bank
Number of shares,
Shareholding ratio
etc. held
thousand shares
%
876
4.29
867
4.25

Name of shareholder
The Master Trust Bank of Japan, Ltd. (trust account)
Custody Bank of Japan, Ltd. (trust account 4)
Custody Bank of Japan, Ltd. (trust account)

796

3.90

Nippon Life Insurance Company

477

2.34

Meiji Yasuda Life Insurance Company

476

2.33

The Aomori Bank Employee Stock Ownership Plan

376

1.84

DFA INTL SMALL CAP VALUE PORTFOLIO

325

1.59

Tanaka Construction Co., Ltd.

257

1.26

Sumitomo Life Insurance Company

246

1.20

MUFG Bank, Ltd.

241

1.18

Note 1. The number of shares, etc. held is rounded down to the nearest 1,000 shares.
2. The shareholding ratio is rounded down to two decimal places.
3. The shareholding ratio is calculated by dividing the number of shares held by the total number of issued shares (excluding
treasury shares).

5.

Matters Related to the Bank's Stock Acquisition Rights
Not applicable.

―25―

6.
(1)

Matters Related to the Financial Auditor
Status of the Financial Auditor(units: ¥ million)

Name

Remuneration, etc. in thisbusiness year

Other

Ernst & Young ShinNihon LLC
Designated Limited Liability Partner
Hirokazu Tanaka
Designated Limited Liability Partner Yasuo
Iwasaki

61

Assistance for introducing standards forcalculating market value8

Note 1. All amounts shown are rounded down to the nearest million yen.
2. There is no classification under the audit agreement between the Bank and the Financial Auditor of the amount of audit
remuneration for audits in accordance with the Companies Act and audits in accordance with the Financial Instruments andExchange Act. Therefore, the amount of remuneration, etc. above is the total of those amounts.
3. The money payable by the Bank’s subsidiaries and the total amount of other economic benefits is ¥77 million.
4. Grounds for consent from the Audit & Supervisory Committee for remuneration, etc. for the Financial Auditor
The Audit & Supervisory Committee has determined that the content of the audit plan for this business year explained by the
Financial Auditor, the verification and valuation of the previous year’s audit results, the execution of the audit, and the results of
the investigation into the grounds for calculating the estimation that was the premise to the remuneration are appropriate, andconsents to the amount of remuneration, etc. for the Financial Auditor as detailed in Article 399, paragraph (1) of the Companies
Act.

(2)

Limited liability agreements
Not applicable.

(3)

Indemnification agreement
Not applicable.

(4)

Other matters related to the Financial Auditor
Policy for decision to dismiss or not reappoint Financial Auditor
The Audit & Supervisory Committee will formulate the standards to appropriately evaluate the Financial
Auditor, comprehensively consider its execution of its duties, the audit system, audit quality, andindependence, and decide on the details of agenda items regarding the dismissal of or not reappointing the
Financial Auditor to be submitted to the General Meeting of Shareholders.
Furthermore, if the Audit & Supervisory Committee determines that the Financial Auditor falls under any
item under Article 340, paragraph (1) of the Companies Act, the Financial Auditor will be dismissed withthe consent of all Audit & Supervisory Committee Members.

(5)

Matters regarding any disposition for suspension of business received by the Financial Auditor
in the past two years―26―Not applicable.

7.

Basic Policy for Circumstances Related to Persons Controlling the Determination of the
Financial and Business Policy
Not applicable.

8.
(1)

System to Ensure Suitability of Business and Operating Status of that System
Basic policy regarding development of internal control system
The Board of Directors resolved to make the following nine matters its basic policy regarding thedevelopment of a system to ensure that the execution of duties by the Directors complies with laws,
regulations, and the Articles of Incorporation, and other systems set out in the Ministry of Justice Order asnecessary to ensure the suitability of the business of a stock company (kabushiki kaisha) in accordancewith Article 399-13, paragraph (1), item (i)(b) and (c).
a.
System for ensuring that the execution of duties by Directors, Executive Officers, directors (riji),
employees, etc. (the “Officers and Employees”) complies with laws, regulations and the Articles
of Incorporation(i)
The Board of Directors recognizes the importance of Officers and Employees complying
with laws, regulations, etc., and established the Aomori Bank Behavior Charter and decided
on a basic policy and standards for compliance with laws, regulations, etc. and a researchplan, to be shared with the Officers and Employees, in order to execute their duties incompliance with social norms, including cutting ties with antisocial forces.
(ii)
The Compliance Committee is established under the Executive Committee to deliberate on
matters of compliance with laws, regulations, etc. by all businesses and manage theoperation of all compliance with laws, regulations, etc. to ensure strict business
management in accordance with laws, regulations, etc.
(iii) The Executive Committee carries out uniform management across the entire bank forcompliance with laws, regulations, etc., and deliberates, decides, and instructs on thenecessary matters for compliance with laws, regulations, etc. The Executive Committee
also reports to the Board of Directors on matters such as deliberation of laws, regulations,
etc.
(iv) In addition to the establishment the Legal & Compliance Office under the Risk
Administration Division as the supervising department of compliance with laws,
regulations, etc., compliance officers have been installed at each branch with the aim ofdeveloping and maintaining a system for compliance with laws, regulations, etc. Eachdepartment responsible formulates and researches rules and guidelines as necessary.
(v)
If a material fact is discovered that is in breach of laws, regulations, or the Articles ofIncorporation, the Directors promptly report to the Audit & Supervisory Committee.
(vi) Executive Officers, directors (riji), employees, etc. promptly report to the compliance report
―27―

b.

c.

d.

e.

counter if any systematic or individual act in breach of laws and regulations is discovered.
(vii) The Auditing Division, which is the internal auditing division, carries out audits oncompliance with laws, regulations, etc. at each branch and reports the results of those audits
to the Board of Directors and the Audit & Supervisory Committee.
System for storing and managing information regarding the execution of the Directors’ duties
Regulations, etc. regarding document management for information regarding the execution of the
Directors’ duties have been established, and such information is stored and managed in accordancewith those regulations.
Regulations and other systems related to the management of the risk of loss(i)
The Bank manages risks regarding the execution of the Bank’s business under thefollowing categories:
A. Credit risk B. Market risk C. Liquidity risk D. Operational risk(ii)
The Board of Directors manages risk by stipulating the Risk Management Rules, deciding
on the risk management policy, and establishing the Risk Administration Division as thesupervising department of all risk. The department in charge of each risk set out in the
management regulations, etc. for each risk also manages risk.
(iii) The Auditing Division carries out audits on the validity of the risk management system andreports the results of those audits to the Board of Directors and the Audit & Supervisory
Committee.
(iv) The Emergency Measures Committee is established to deliberate and decide on appropriate
and prompt countermeasures and prevent the escalation of damage if an unexpected
situation arises.
System for ensuring that the duties of Directors are executed efficiently(i)
The Board of Directors establishes the Medium-Term Business Plan as the basis for the
execution of business by the Officers and Employees, and formulates a business plan eachbusiness year.
(ii)
The Board of Directors establishes regulations, etc. regarding the organizational structure,
duties, division of duties, and authority for the efficient execution of business.
(iii) The Directors report to the Board of Directors on the execution of business.
System for ensuring the suitability of business in the corporate group made up of the Bank and thegroup companies(i)
The General Planning Division, which is the supervising department of the groupcompanies, establishes an outline of group company operations and appoints thedepartment that manages business to create an internal control system to develop a systemfor compliance with laws, regulations, etc. and a risk management system, and develops asystem for consulting with and reporting to the Bank, and monitoring, etc.
(ii)
The Bank develops a system for reporting on the execution of business with regard to thebusiness plan formulated by the group companies each business year, and ensures a system
―28―

f.

g.

h.

to manage and direct the development of the necessary regulations, etc. and carry out
business efficiently.
(iii) If the group companies’ Officers and Employees discover a material fact in relation to abreach of laws, regulations, etc., they report to the Risk Administration Division. The Risk
Administration Division then promptly reports to the Directors and the Audit &Supervisory Committee.
(iv) The Auditing Division carries out audits on the execution of business by the groupcompanies and reports the results of those audits to the Board of Directors and the Audit &Supervisory Committee.
Matters regarding employees that support the duties of the Audit & Supervisory Committee
requested by the Audit & Supervisory Committee and matters regarding the independence ofprescribed employees from Directors other than Audit & Supervisory Committee Members(i)Effective audits by the Audit & Supervisory Committee are ensured with the installation of
the Audit & Supervisory Committee Office and stationing of employees who support theduties of the Audit & Supervisory Committee.
(ii)
The employees who support the Audit & Supervisory Committee do not serve concurrently
in managerial positions regarding the execution of business and execute their duties underthe Audit & Supervisory Committee’s direction. The Audit & Supervisory Committee’s
consent is obtained beforehand on changes in or evaluations of personnel for employees
who support the Audit & Supervisory Committee in order to ensure the independence andeffectiveness of instructions from the employees who support the Audit & Supervisory
Committee.
System for Officers and Employees to report to the Audit & Supervisory Committee and othersystems regarding reports to the Audit & Supervisory Committee(i)
Officers and Employees of the Bank and group companies provide necessary reports andinformation to the Audit & Supervisory Committee if they discover any material fact inbreach of laws, regulations, etc. or any fact that is likely to cause significant harm to the
Bank.
(ii)
The Bank and group companies prohibit Officers and Employees who provide reports andinformation to the Audit & Supervisory Committee from being subject to unfavorable
treatment due to such reports, etc.
(iii) Audit & Supervisory Committee Members may attend important meetings such as Board of
Director meetings and Executive Committee meetings to understand the process for making
important decisions and the execution of business, and request that the Officers andEmployees give a report as necessary.
Matters regarding the procedures relating to the advancement and indemnification of expenses thatarise during the execution of the Audit & Supervisory Committee’s duties and policies related tosettlement of other expenses and liabilities that arise during the execution of these duties
If an Audit & Supervisory Committee Member requests from the Bank advancement of expenses
―29―

i.

necessary to execute his or her duties in accordance with Article 399-2, paragraph (4) of theCompanies Act, those expenses or liabilities will be settled promptly, unless it is found that therequested expenses or liabilities were not necessary for the execution of his or her duties.
Other systems to ensure that the Audit & Supervisory Committee’s audits are performed
effectively(i)
The Audit & Supervisory Committee regularly exchanges opinions with the Representative
Director on management issues, and important topics, etc. based on the audit.
(ii)
The Audit & Supervisory Committee regularly exchanges opinions and information with
the Financial Auditor on the details of the financial audit, and ensures the effectiveness of
the audit.

―30―

(2)

Outline of operation status of system to ensure suitability of business
Following is an outline of the operation status of the internal control system within the Group thisbusiness year in accordance with the above policy.
a.
Ensuring compliance and efficiency of the execution of duties by the Officers and Employees withlaws and regulations and the Articles of Incorporation
Ordinary meetings of the Board of Directors were held 12 times, and extraordinary meetings of theBoard of Directors were held 2 times this business year. The Executive Committee established as
the decision-making body for matters delegated by the Board of Directors also held 53 meetings
this business year.
b.
System for compliance with laws, regulations, etc.
The compliance program was established at a meeting of the Board of Directors, and the progress
and accomplishments of the program were reported at four meetings of the Executive Committee
and four meetings of the Board of Directors. In addition, the Executive Committee deliberated on
the occurrence of compliance breaches and ceasing business with antisocial forces and reported
those details to the Board of Directors.
c.
Risk management system
Various risk management situations were monitored by the Credit Risk Management Committee,
the ALM Revenue Management Committee, and the Operational Risk Management Committee,
and the risk management status was reported to the Board of Directors four times.
d.
Ensuring the suitability of business in the GroupThe performance of group companies was reported four times to the Executive Committee. The
Group Company Representative Liaison Committee held meetings and discussed theunderstanding of and policy for management issues within the Group.
e.
Ensuring that the Audit & Supervisory Committee’s audits are performed effectively
The Audit & Supervisory Committee Members carry out audits in accordance with the audit planset out by the Audit & Supervisory Committee, and have exchanged opinions with the Bank’s
Representative Director, the Auditing Division, and the Financial Auditor and attempted tocollaborate on the exchange of information.

―31―

9.

Matters Related to Specified Wholly-Owned Subsidiaries
Not applicable.

10.

Matters Related to Transactions with Parent Company, etc.
Not applicable.

11.

Matters Related to Accounting Advisor
Not applicable.

12.

Other
Not applicable.

―32―

113th Term

Balance Sheet(as at March 31, 2021)(units: ¥ million)
Item
AssetsCash and due from banks
Cash
Due from banks
Call loans
Monetary claims bought
Money held in trusts
Securities
National government bonds
Local government bonds
Bonds payable
SharesOther securities
Loans and bills discounted
Bills discounted
Loans on notes
Loans on deeds
Overdrafts
Foreign exchanges
Foreign deposits paid
Other assets
Prepaid expenses
Accrued income
Financial derivatives
Cash collateral paid for financial instruments
Other assets
Tangible fixed assets
Buildings
Land
Leasing assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
SoftwareLeasing assets
Other intangible fixed assets
Prepaid pension expenses
Customers' liabilities for acceptances andguarantees
Reserve for possible loan losses

AmountItem
Liabilities

878,144 Deposits
37,440Current account deposits
840,703
Ordinary deposits
20,000
Savings deposits
2,483
Call deposits
5,000Term deposits
839,458
Other deposits
182,385 Negotiable certificates of deposit
346,407 Call money
Guarantee deposit received under securities lending

96,333 transactions
17,242 Borrowed money
197,089
Borrowings
1,856,349 Foreign exchanges
1,802
Foreign exchanges payable
32,349 Other liabilities
1,673,218
Income taxes payable
148,979
Accrued expenses
1,575
Unearned revenue
1,575
Financial derivatives
30,361
Lease obligations
11
Other liabilities
2,504 Reserve for bonuses
0 Reserve for officer bonuses
2,659 Reserve for benefit trust
25,186 Reserve for reimbursement of deposits
20,686 Deferred tax liabilities
7,190 Deferred tax liabilities for land revaluation
10,001 Acceptances and guarantees
702 Total liabilities
71
2,719
Net assets
1,914 Stated capital
1,617 Capital surplus
26
Capital reserve
270 Retained earnings
3,618
Legal retained earnings
14,224

Other retained earnings(7,398) General reserve
Retained earnings brought forward
Treasury shares
Total shareholders' equity
Net unrealized gains on available-for-salesecurities
Net deferred losses on hedging instruments―33―

Amount
2,714,057
87,853
1,668,160
40,000
7,077
849,130
61,834
179,483
1,107
103,423
522,500
522,500
3
3
17,616
505
247
705
2,268
733
13,157
523
14
153
333
1,690
1,481
14,224
3,556,612

19,562
12,916
12,916
65,1186,646
58,47255,5002,972(783)
96,813
12,132(1,525)

Total assets

Land revaluation surplus
Total valuation and translation adjustments
Total net assets
3,666,419 Total liabilities and net assets

―34―

2,385
12,993
109,8073,666,419

113th Term (April 1, 2020 through March 31, 2021) Statement of Income(units: ¥ million)
Item
Ordinary income
Interest income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans
Interest on deposits paid
Other interest income
Fees and commissions
Fund transfer fees received
Other fees and commissions
Other operating income
Foreign exchange trading income
Securities trading income
Gain on sale of national government bonds
Gain on reimbursement of national government bonds
Other ordinary income
Gain on loan losses recovered
Gain on sale of equity
Gain on investments in money held in trust
Other ordinary income
Ordinary expenses
Interest expenses
Interest on deposits received
Interest on negotiable certificates of deposit
Interest on call money
Interest on securities lending transactions
Interest on interest rate swaps
Other interest expenses
Fees and commissions
Fund transfer fees paid
Other fees and commissions
Other operating expenses
Loss on sale of national government bonds
Loss on reimbursement of national government bonds
General and administrative expenses
Other ordinary expenses
Provision for reserve for possible loan losses
Loss on sale of equity
Amortization of equity
Other ordinary expenses
Ordinary profit

Amount31,35923,03016,352
6,595
10
72
0
6,580
1,269
5,311
576
71
1
403
99
1,172
1
1,002
3
165
28,403
605
187
28
(29)
9
408
1
3,036
289
2,746
1,157
1,093
64
22,238
1,365
754
25
459
126
2,956

―35―

(units: ¥ million)
Item
Extraordinary profit
Gain on disposal of fixed assets
Gain on extinguishment of tie-in shares
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss
Current net income before income taxes
Income taxes - current
Income taxes - deferred
Income taxes - total
Current net income

Amount
316
95
220
400
155
244
2,872
850
(143)
706
2,166

―36―

113th Term

Consolidated Balance Sheet(as at March 31, 2021)(units: ¥ million)
Item
AssetsCash and due from banks
Call loans and bills bought
Monetary claims bought
Money held in trusts
Securities
Loans and bills discounted
Foreign exchanges
Lease receivables and investment assets
Other assets
Tangible fixed assets
Buildings
Land
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Software
Other intangible fixed assets
Assets for retirement benefits
Deferred tax assets
Customers' liabilities for acceptances andguarantees
Reserve for possible loan losses

AmountItem

AmountLiabilities
878,246
20,0002,483
5,000
837,247
1,842,002
1,575
15,78045,264
21,3907,440
10,224
71
3,653
1,927
1,651
275
4,673
393

Deposits
Negotiable certificates of deposit
Call money and bills sold
Guarantee
depositreceived
undersecurities lending transactions
Borrowed money
Foreign exchanges
Other liabilities
Reserve for bonuses
Reserve for officer bonuses
Reserve for retirement benefits
Reserve for directors' retirement benefits
Reserve for benefit trust
Reserve for reimbursement of deposits
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities

2,711,876
171,783
1,107
103,423
530,586
3
24,836
543
25
109
8
153
333
2,013
1,481
14,2243,562,509

Net assets

14,224

Stated capital

19,562(8,768)

Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Net unrealized gains on available-for-salesecurities
Net deferred losses on hedging
instruments
Land revaluation surplus
Remeasurements of defined benefit plans
Total cumulative other comprehensive
incomeTotal net assets

12,91673,489(783)
105,184―37―

12,153(1,525)
2,385
734
13,747
118,932

Total assets

3,681,441

Total liabilities and net assets―38―

3,681,441

113th Term (April 1, 2020 through March 31, 2021) Consolidated Statement of Income(units: ¥ million)
Item
Ordinary income
Interest income
Interest on loans and discounts
Interest and dividends on securities
Interest on call loans and bills boughtInterest on deposits paid
Other interest income
Fees and commissions
Other operating income
Other ordinary income
Gain on loan losses recovered
Other ordinary income
Ordinary expenses
Interest expenses
Interest on deposits received
Interest on negotiable certificates of deposit
Interest on call money and bills soldInterest on securities lending transactions
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other ordinary expenses
Provision for reserve for possible loan losses
Other ordinary expenses
Ordinary profit
Extraordinary profit
Gain on disposal of fixed assets
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss
Current net income before income tax adjustment
Income taxes - current
Income taxes - deferred
Income taxes - total
Current net income
Current net income attributable to owners of parent

Amount41,35022,561
16,307
6,171
10
72
0
6,556
576
11,6571
11,656
37,685
638
187
27
(29)
9
32
410
2,599
1,157
21,711
11,579661
10,918
3,665
95
95
428
184
244
3,332
1,162
(81)
1,081
2,251
2,251

―39―

Certified copy of audit report by Financial Auditor
Audit Report by Independent Auditor
May 13, 2021
The Aomori Bank, Ltd.
To Board of Directors
Ernst & Young ShinNihon LLC
Tokyo Office
Designated Limited Liability Partner
Engagement Partner

Certified Public
Accountant

Hirokazu Tanaka [seal]

Designated Limited Liability Partner
Engagement Partner

Certified Public
Accountant

Yasuo Iwasaki[seal]

Audit Opinion
We have audited the financial statements of The Aomori Bank, Ltd. for the 113th Term (April 1, 2020 throughMarch 31, 2021), which comprise the balance sheet, the statements of income, statement of changes in equity andnon-consolidated explanatory notes, and annexed detailed statements to the financial statements (the "Financial
Statements"), pursuant to the provisions of Article 436, paragraph (2), item (i) of the Companies Act of Japan.
In our opinion, the Financial Statements present fairly, in all material respects, the assets, income, and expenditureof the company for the relevant period in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are described in the Auditor's Responsibilities for the Audit of Financial Statements section
below. We are independent of the company in accordance with the professional ethics requirements in Japan, andwe have fulfilled our other ethical responsibilities as an auditor. We have determined that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of the Management and the Audit & Supervisory Committee for the Financial Statements
The management is responsible for the preparation and fair presentation of the Financial Statements in accordancewith accounting principles generally accepted in Japan, and for implementing and operating internal control as the
management determines is necessary to enable the preparation of Financial Statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Financial Statements, the management is responsible for assessing the company's ability tocontinue as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to a going concern.
The Audit & Supervisory Committee is responsible for overseeing the performance of duties by directors inconnection with the implementation and operation of the financial reporting process.
Auditor's Responsibilities for the Audit of Financial Statements
Our responsibility as auditor is to obtain reasonable assurance through the audit about whether the Financial
Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
independent auditor's report that includes our opinion on the Financial Statements. Misstatements can arise from―40―

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the decisions of users taken on the basis of the Financial Statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit.
・Identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error,
and design and perform audit procedures responsive to those risks. The selection and application of the audit procedures are
decided by the auditor. We then obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances forour risk assessments, while the purpose of the audit of the Financial Statements is not to express an opinion on theeffectiveness of the company's internal control.
・Evaluate the appropriateness of accounting policies used by the management and their application, and the reasonableness ofaccounting estimates and related disclosures made by the management.
・Come to a conclusion on the appropriateness of the management's use of the going concern basis of accounting to prepare the
Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Financial
Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on audit evidence obtained
up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as agoing concern.
・Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the
Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation in accordancewith accounting principles generally accepted in Japan.
We report to the Audit & Supervisory Committee regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with the professional ethics
requirements regarding independence in Japan, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards to remove or reduce obstructions.
Disclosure of Interests
We and our engagement partners do not have any interest in the company that is required to be disclosed pursuant to theprovisions of the Certified Public Accountants Act of Japan.
End of document―41―

Certified copy of audit report of consolidated financial statements by Financial Auditor
Audit Report by Independent Auditor
May 13, 2021
The Aomori Bank, Ltd.
To Board of Directors
Ernst & Young ShinNihon LLC
Tokyo Office
Certified
Designated Limited Liability Partner
PublicEngagement Partner
Accountant
Certified
Designated Limited Liability Partner
PublicEngagement Partner
Accountant

Hirokazu Tanaka[seal]

Yasuo Iwasaki[seal]

Audit Opinion
We have audited the consolidated financial statements of The Aomori Bank, Ltd. for the consolidated financial
year from April 1, 2020 through March 31, 2021, which comprise the consolidated balance sheet, consolidated
statements of income, consolidated statement of changes in equity, and consolidated explanatory notes, pursuant to
the provisions of Article 444, paragraph (4) of the Companies Act of Japan.
In our opinion, the consolidated financial statements present fairly, in all material respects, the assets, income, andexpenditure of the corporate group comprising The Aomori Bank, Ltd. and its consolidated subsidiaries for the
relevant period in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are described in the Auditor's Responsibilities for the Audit of Consolidated Financial
Statements section below. We are independent of the company and its subsidiaries in accordance with theprofessional ethics requirements in Japan, and we have fulfilled our other ethical responsibilities as an auditor. We
have determined that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Responsibilities of the Management and the Audit & Supervisory Committee for the Consolidated Financial
Statements
The management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for implementing and operating internal
control as the management determines is necessary to enable the preparation of consolidated financial statementsthat are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the management is responsible for assessing the company's
ability to continue as a going concern and disclosing, as required by accounting principles generally accepted in―42―

Japan, matters related to a going concern.
The Audit & Supervisory Committee is responsible for overseeing the performance of duties by directors inconnection with the implementation and operation of the financial reporting process.
Auditor's Responsibilities for the Audit of Consolidated Financial Statements
Our responsibility as auditor is to obtain reasonable assurance through the audit about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
independent auditor's report that includes our opinion on the consolidated financial statements. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the decisions of users taken on the basis of the consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit.
・Identify and assess the risks of material misstatement in the consolidated financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. The selection and applicationof the audit procedures are decided by the auditor. We then obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is
not to express an opinion on the effectiveness of the company's internal control.
・Evaluate the appropriateness of accounting policies used by the management and their application, and thereasonableness of accounting estimates and related disclosures made by the management.
・Come to a conclusion on the appropriateness of the management's use of the going concern basis of accounting
to prepare the consolidated financial statements and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the company to cease to continue as a going
concern.
・Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation in accordance with accounting principles generally accepted in Japan.
・Obtain sufficient, appropriate audit evidence regarding the financial information of the company and its
subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision, and performance of the audit of the consolidated financial statements. We remain solely responsible
for our audit opinion.
We report to the Audit & Supervisory Committee regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with the professional
ethics requirements regarding independence in Japan, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards to―43―

remove or reduce obstructions.
Disclosure of Interests
We and our designated engagement partners do not have any interest in the company or its consolidated subsidiarycompanies that is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
End of document―44―

Certified copy of audit report by the Audit and Supervisory Committee
Audit Report
The following is a report on the methods and results of the Audit & Supervisory Committee's audit of theperformance of duties by Directors in the 113th Term (April 1, 2020 through March 31, 2021).
1.

Method and details of audit
The Audit & Supervisory Committee received periodic reports from Directors, employees, etc. regarding thecontent of the Board of Directors resolution related to Article 399-13, paragraph (1), item (i)(b) and (c) of theCompanies Act and the structure and operation of the system established pursuant to that resolution (theinternal control system), requested explanations as necessary, expressed opinions, and conducted its audit by
the following method.
(1) Attended material meetings including meetings of the Board of Directors, management meetings,
compliance committee meetings, etc., received reports from Directors and employees, etc. regarding
matters with respect to their performance of duties, requested explanations as necessary, viewed theminutes and approval documents of material meetings, and investigated the status of the business andassets of the head office and major sales offices based on the Audit & Supervisory Committee standards
established by the Audit & Supervisory Committee and pursuant to the audit policy and division ofduties, in collaboration with the company’s Audit Department and Internal Control Department. With
respect to subsidiaries, came to a mutual understanding and exchanged information with Directors,
auditors, etc. of subsidiaries, requested reports on business from subsidiaries as necessary, andinvestigated the status of their business and assets.
(2) Supervised and monitored whether the financial auditor remains independent and is conducting its audit
fairly, received reports from the financial auditor regarding its performance of duties and requested
explanations as necessary through means such as the telephone and internet. Received a notice from thefinancial auditor to the effect that "systems for ensuring that the performance of the duties of financial
auditors is being carried out correctly" (matters specified in each item of Article 131 of the Rules ofCorporate Accounting) are established in accordance with the "standards for audit quality control"(Business Accounting Council of October 28, 2005), and requested explanations as necessary.
Based on the above method, the Audit and Supervisory Committee examined the business report andannexed detailed statement, financial statements (i.e., the balance sheet, statement of income, statementof changes in equity, and non-consolidated explanatory notes) and annexed detailed statement, and theconsolidated financial statements (i.e., the consolidated balance sheet, consolidated statement of income,consolidated statement of changes in equity, and consolidated explanatory notes) for this business year.

―45―

2.

Results of audit(1) Results of audit of the business report, etc.
a. In our opinion, the business report and the annexed detailed statement comply with laws and ordinances
and the articles of incorporation and accurately reflect the situation of the company.
b. In our opinion, there has been no material misconduct or breach of laws and regulations or the articles ofincorporation by a Director in the course of performing duties.
c. In our opinion, the content of the resolutions of the Board of Directors related to the internal control
system is appropriate, and there are no matters requiring comment with respect to the statements in thebusiness report and the Directors' performance of duties related to the internal control system.
(2) Results of auditing the financial statements and annexed detailed statement
In our opinion, the method and results of the audit conducted by Ernst & Young ShinNihon LLC are
appropriate.
(3) Results of audit of consolidated financial statements
In our opinion, the method and results of the audit conducted by Ernst & Young ShinNihon LLC are
appropriate.

3.

Subsequent events
At the meeting of the Board of Directors held on May 14, 2021, the Bank resolved to form a basic agreementwith The Michinoku Bank, Ltd. on advancing discussions and consideration of the business integration by
establishing a holding company in accordance with 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.
May 14, 2021
The Aomori Bank, Ltd. Audit & Supervisory Board
Full-time Audit & Supervisory Committee Member

Akira Nakagawa[seal]

Audit & Supervisory Committee Member

Norihisa Ishida[seal]

Audit & Supervisory Committee Member

Toshisada Kushibiki[seal]

Audit & Supervisory Committee Member

Mie Ishida[seal]

Note: Audit & Supervisory Committee Members Norihisa Ishida, Toshisada Kushibiki, and Mie Ishida areoutside Directors defined in Article 2, item (xv) and Article 331, paragraph (6) of the Companies Act.

―46―