Press
ReleaseJune 30, 2020
Translation
FIDEA Holdings Co. Ltd.

Announcement of Fourth Medium-term Management PlanFIDEA Holdings Co. Ltd. (President & CEO: Yuichi Tao; hereinafter, “FIDEA”) hereby
announces that we have formulated the Fourth Medium-term Management Plan for three years
from FY2020 to FY2022.
In FY2017, FIDEA started the preceding plan, the Third Medium-term Management Plan.
With “Consulting & Innovation” as a slogan, we strengthened our consulting capabilities toprovide solutions to our customers, reformed the cost structure and clerical works at branches,and promoted the integration of our two banks, thereby establishing a leaner and meaner
management structure and contributing further to regional revitalization.
Yamagata and Akita Prefectures, our operating base, have structural problems including
declining and aging populations. Furthermore, the aftermath of the COVID-19 pandemic is likely
to drag the regional economy and the surrounding business environment is becoming harsher.
Under these adverse circumstances, in the Fourth Medium-term Management Plan, we aim to
be a reliable bank with a fountain of wisdom that will provide services to satisfy the needs andchallenges of our customers.

1. Name: Fourth Medium-term Management Plan

2. Plan period: FY2020 to FY2022（Three years）

3. Vision:❏

Continuously contribute to regional development as a community-based region-wide
financial group❏

Ensure and maintain financial soundness to act as financial mediators in the region❏

Create a corporate culture that motivates, encourages and nurtures employees as wellas enhancing the ES (employee satisfaction)

4. Slogan: Your reliable consulting bank with a fountain of wisdom

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PressRelease5. Basic Policy(1) Strengthen the top-line profit:❏

Expand intra-prefectural business loan bases and enhance service related profitability
as a result of this expanded bases❏

Revamp group’s investment portfolio(2) Reform cost structure❏

Review area-based strategy constantly by concentrating regional competence, andoptimize the staff allocation of the branches❏

Take drastic cost reduction without sanctuary through complete integration of the twobanks including headquarters functions(3) Create an ideal working environment❏

Create an ideal working environment to maximize each employee’s potential(4) SDGs/ESG Initiatives❏

Take actions on the FIDEA Group SDGs Declaration

6. Target Indicators❏

Targets for FY2022, the final year of the plan
Net income (Profit attributable to owners of parent): 3 billion yen or more
-Precondition: Back to net operating “profit” of customer services section (*)※ Consolidated capital adequacy ratio: In the 9% range-Long-term perspective-After repayment of public funds basis(*) Net operating profit of customer services: “Gross profit in the customer service section”
minus “Related expenses”###

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FIDEA Group Fourth Medium-term Management Plan「Your reliable consulting bank with a fountain of wisdom」

June, 2020

Outline of Fourth Medium-term Management Plan
Vision Continuously contribute to regional development as a community-based region-wide financial group
 Ensure and maintain financial soundness to act as financial mediators in the region Create a corporate culture that motivates, encourages and nurtures employees as well as enhancing theES (employee satisfaction)

SloganYour reliable consulting bank with a fountain of wisdomPlan Period

FY2020 to FY2022（Three years）(1) Strengthen the top-line earning power Expand intra-prefectural business loan bases and enhance service related profitability as a result of this expandedbases
 Revamp group’s investment portfolio(2) Reform the cost structure

Basic Policy

 Review area-based strategy constantly by concentrating regional competence, and optimize the staff allocation of
the branches Take drastic cost reduction without sanctuary through complete integration of the two banks including headquartersfunctions(3) Create an ideal working environment

 Create an ideal working environment to maximize each employee’s potential(4) SDGs / ESG Initiatives

 Take actions on the FIDEA Group SDGs Declaration

TargetIndicators

 Targets for FY2022, the final year of the plan
Net income (Profit attributable to owners of parent): 3 billion yen or more
-Precondition: Back to net operating “profit” of customer services section (*)※ Consolidated capital adequacy ratio: In the 9% range(*) Net operating profit of customer services:-Long-term perspective“Gross profit in the customer service section”-After repayment of public funds basis
minus “Related expenses”
1Review of Third Medium-term Management Plan: (1) Target Indicators❏ In FY2019, the final year of the third medium-term management plan, the Group fell short of the targets of the net income (profit attributable to owners of parent) and the ratio offees and commissions. It was mainly due to our strategic action to reduce the risk assets to maintain financial soundness under the unstable financial market affected by the
COVID-19 pandemic, resulting in a 3.8 billion yen loss on securities sold by the investment section in March 2020, and also the decrease of fee income as the sales ofinvestment trusts and life insurances decreased.
❏ We maintained the capital adequacy ratio in the 9% range by strict control of the risk assets despite the premature redemption of subordinated debt (total 10 billion yen).

Third Medium-Term Management Plan
Target Indicators (consolidated)
Profitability
Management
strategy
Financialsoundness

Final Year
(FY2019) Targets

Net income (Profit attributable toowners of parent)¥3 billion or more
19% or more

(Profit attributable to owners of parent)

4.6

5

1.3

1
0

FY2016

14.4%

34.0

13.3%

Ratio

33.5
14.8%

FY2018FY2019(consolidated, under Japanese domestic standard)

Net fees and commissions income

36.8

FY2017

Capital adequacy ratio(consolidated)

35.9

3.7

3

Ratio of Fees and Commissions
Core business gross profit

4.2

2

In the 9% range

Capital adequacy ratio

Net income

4

Ratio of fees and commissions(Ratio against core businessgross profit)*Units: billion yen

10.00%

13.6%

5.1

4.9

5.0

4.5

FY2016FY2017FY2018FY2019Subordinated debt:(5) billion yen

11.00%

9.48%

9.21%

Subordinated loan:(5) billion yen

9.50%

9.00%

8.00%

7.00%

8.39%

FY2016 End

8.67%

9.01%

9.26%
9.22%

(Post-Basel III reform basis)
FY2017 End

FY2018 End

FY2019 End
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Review of Third Medium-term Management Plan: (2) Main Indicators❏ Net operating profit/loss of customer services (*) remained approximately the same year on year, not returning to profitability❏ Achieved more-than-initially-planned cost reduction (¥1.5 billion vs. ¥1.82 billion); however, loan-to-deposit spread contracted due to prolonged negativeinterest rates. Furthermore, the net fees and commissions income decreased due to the sales decrease during the COVID-19 pandemic and the fee
reduction of life insurance sales(*) Net operating profit of customer services: “Gross profit in the customer service section” minus “Related expenses”* Units: billion yen

Net operating profit/loss ofcustomer services (*) (2 banks)

Expenses(consolidated)

0.00

30

△ 0.50

29.47

29.68

FY2016FY2017

28.62

27.65

△ 1.00△ 1.50△ 2.00△ 2.50△ 1.35△ 1.4725△ 1.40△ 2.03
FY2016FY2017FY201820FY2019“Loan-to-deposit spread” + “Net fees and commissions
income” (consolidated)
25.96
25

25.39

25.27

24.12

20
15
10

FY2016FY2017FY2018FY2019FY2018FY2019

Breakdown of fees and commissions income(2 banks)

8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00

7.99
1.03
0.43
0.67
1.25

7.88
1.03
0.53
0.67
1.17

8.05
0.89
0.52
0.67
1.21

7.71
0.97
0.56
0.68
1.18

Fund transfer

1.70

Remittance
Investment trusts
and Life insurances

OthersSyndicated Loans, M&A, etc.

Loans, ATM, and cards

1.71

1.70

1.74

2.89

2.76

2.98

2.59

FY2016 End

FY2017 End

FY2018 End

FY2019 End
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Direction of Fourth Medium-term Management Plan
❏ Strive to make the customer service section profitable under the Fifth Medium-term Management Plan by expanding the intra-prefectural customer bases, especially businessloans, with comprehensive solutions for both corporate and individual customers and consulting sales tailored to each customer segment. Strengthen the top-line earning powerfrom sales commission of investment trust and life insurance, and fees from corporate businesses through the above-mentioned operations. In addition, make drastic cost
reduction❏ Establish a lean operating management structure that enables steady accumulation of retained earnings in pursuit of repaying public funds by the end of FY2024

FY2017FY2018FY2019

Third Medium-term Management Plan
Consulting & Innovation







Strengthen consulting sales capabilities
Establish a sales structure to provide
comprehensive solutions for both corporate
and individual customers
Restructure clerical work at branches
Reform the cost structure
Integrate corporate planning functions

FY2020

FY2021

FY2022

Fourth Medium-term Management Plan“Your reliable consulting bankwith a fountain of wisdom”






Strengthen the top-line earning power byconsulting sales
Optimize the staff allocation and strengthen
our consulting sales capabilities
Review area-based strategies constantly
Integrate headquarters and other corporate
functions further
Revamp group’s investment portfolio

FY2023

FY2024FY2025

Fifth Medium-termManagement Plan Restore profitability of the customer
service section by enhancing earning
power and reducing costs
 Take strict control of the risk assets inpursuit of repaying public funds

Become profitable ofthe “profit” of customer services”(**)

Customer service section

Become profitable ofthe “net operating profit”
of customer services(*)(*) Net operating profit of customer services:“Gross profit in the customer service
section” minus “Related expenses”(**) Profit of customer services: “Net operating
profit of customer services” minus “Creditrelated expenses”

4Practical Approaches
Business Policy under Fourth and Fifth Medium-term Management PlansCustomer service section: Become profitable by improving earning power steadily through accelerating consulting sales, maintaining loan interest
rates and increasing noninterest earnings.
Investment section: Reconstruct group’s investment portfolio to realize stable revenue while paying attention to liquidity, interest rate and pricefluctuation risks.
Cost structure: Reform cost structure, in response to narrowing interest margin, by integrating operations of the headquarters and business bases,
shifting to paperless operations with ICT and streamlining clerical works at branches, thereby continuing to improve efficiency.
Capital adequacy ratio: Continue controlling the risk assets to pave the way for repaying public funds before the conversion of the preferredshares into common shares (March 2025); the target level of the capital adequacy ratio after full repayment will be 9% or above.

Fourth Medium-term Management Plan: Practical Approaches under Basic Policy(1) Strengthen the top-line
earning power(customer services
section)(Strengthen consulting sales capabilities)
 Promote sales activities with the business structure to provide comprehensive solutions for both corporate and individual customers
based on customers’ needs, and expand the intra-prefectural business loan customer bases and noninterest income
 Create OJT-based educational programs to improve sales skills for both corporate and individual customers
 Develop advanced personnel education to nurture professionals with higher consulting skills
 Review area-based and channel strategies constantly to optimize the branch network and staff allocation(Expand non-face-to-face channel services) Expand non-face-to-face channel services to streamline branch operations and reallocate branch staff as sales specialists who handle
both individual and corporate customers
 Utilize non-face-to-face tools such as smartphone apps
 Enhance the contact center operations to expand non-face-to-face transactions (online, phone, and chatbot)
 Increase efficiency of branch operations by shifting to paperless, increasing self-service transactions and reducing clerical work(2) Reform the cost
structure Unify business locations as well as headquarter operations of the group companies, and promote staff efficiency of headquarters
 Consolidate subsystems to complete integration of operations at both branches and the headquarters
 Constant and flexible review of the capital investment plans by the cross-Group investment committee(3) Create an ideal
working environment Through extensive modification, establish human resource systems, reform working-style and provide employees’ benefits; intending toencourage staff to achieve each one’s dream Enhance ES (employee satisfaction) so as to enhance CS (customer satisfaction)(4) Implement the SDGs
Declaration

 Under the FIDEA Group SDGs Declaration, all employees and executives will take proactive actions on “FIDEA’s Key Initiatives”.
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FIDEA Group SDGs Declaration
 The FIDEA Group supports the SDGs (Sustainable Development Goals) adopted at
the United Nations Summit and will pursue sustainable development of the community
by tackling regional issues.
 All employees and executives of the FIDEA Group will take proactive actions on the
SDGs to provide benefit to our community and the next generation.

FIDEA’s Key Initiatives
1. Pursue sustainable growth of the regional economy
We will be closely involved with the community and customers, and work
together to achieve their sustainable growth by fulfilling the needs anddemands.
2. Achieve environmental sustainability of the region
We will promote environmental sustainability through environmentconscious management against global warming and climate change.
3. Create an ideal working environment to maximize each employee’s
potential
We will create a positive working environment that allows all employees tomaximize their full potential and enhance their satisfaction as well as
motivation.
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SDGs/ESG Major Sustainability Achievements
Offer financial assistance through the Shonai Bank Furusato Fund and the Kumeta-ugo
Scholarship Foundation
Support agribusiness with Akita Shokusai Produce and Akita Vegeful Support

E S G

E S G

Run the office of the Advanced Medical Care International Exchange Council of Facultyof Medicine, Yamagata University, and support to launch the East Japan Heavy Ion
Center in 2021 with a world-leading technology

E S G

Cooperate with the local governments to revitalize region by supporting the Akita CCRC
(Continuing Care Retirement Community) project, and offer training facilities for the
Tokyo Olympic Games international teams

E S GSupport and encourage regional sports, cultural and artistic activities by operating a
badminton junior club by our badminton team as supervisors, and by promoting regional
culture and art

E S GSupport women’s empowerment by creating working environment that promote employee
retention such as the onsite childcare centers and the reemployment systems
Support to develop renewable energy with the Akita Wind Power Consortium that aims
to contribute to local society by utilizing the rich wind energy resources, and support togenerate solar and biomass power

E S G

E S G

Launch and operate the Shonai Bank Kaneyama KIZUNA Forestation Project
E S G
7Reaching out to the community and stepping
into the next generation. Trust FIDEA.

 Copying, duplicating or distributing this material to third parties without prior permission from FIDEA Holdings Co. Ltd. shall be prohibited.
 This material shall be prepared for informational purposes only and shall not be intended to solicit trading of specific securities.
 All or part of the matters stated in this material shall be subject to modification or change without notice.
 Future performance described in this material shall not be guaranteed and may be different from actual figures due to changes in the business environment and other conditions.

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