The Yamanashi Chuo Bank,Ltd.

Risk that non-performing loans and credit-related expenses increase due to deteriorating economic conditions or worsening financial condition of counterparties. Additional provisions for bad debt or support measures such as debt forgiveness may adversely affect business performance. The Group seeks to avoid concentration of credit exposure through credit limit setting by rating and industry and portfolio management, and measures risk volume quarterly for reporting to the ALM Committee.

Risk that fluctuations in interest rates, amid mismatches in interest rates or maturities between assets and liabilities, cause a decline in earnings or losses. As a regional bank with high dependence on the deposit-loan interest margin, changes in the interest rate environment directly affect business performance. Investment limit frameworks are formulated and reviewed in principle every half year, with risk conditions managed by the ALM Committee.

Risk that fluctuations in the market prices of held securities result in impairment or valuation losses. Declines in the prices of stocks, bonds, and other securities directly affect capital and earnings. The Group conducts regular fair value assessments and risk volume measurement, and works to control risk by reporting to the ALM Committee.

Risk that computer system outages or malfunctions, unauthorized access, data tampering, information leaks, computer virus infections, and the like adversely affect credibility and business performance. Business interruption due to cyber attacks is recognized as a material risk affecting customer trust and confidence in the financial system. A dedicated cybersecurity organization has been established within the Group to collect and disseminate threat information and to investigate and respond when attacks are detected.

The consolidated capital adequacy ratio for FY2026 (ending March 2026) is 9.84%, above the domestic standard of 4%, but if it falls below this standard, the bank may receive various orders from the Financial Services Agency, including the suspension of all or part of its operations. A scenario in which deteriorating business performance or asset impairment pressures capital is anticipated. The Group has set the maintenance of sound management as a management principle and works to manage its capital levels.

Risk that abnormal weather and natural disasters associated with climate change, as well as policy, regulatory, and market changes accompanying the transition to a decarbonized society, lead to increased credit costs through the impairment of collateral asset value and the deterioration of counterparties' business performance. Both physical risk and transition risk may adversely affect business performance. This is explicitly recognized as a risk in the securities report, though details of countermeasures are not described.

There is a risk that deteriorating economic conditions in Yamanashi Prefecture and the Tokyo area, which constitute the Group's operational base, or intensifying competition with other financial institutions, may prevent the strategies set out in the medium-term management plan from achieving the expected results. Due to its regionally focused business model, the Group is structurally susceptible to the direct impact of local economic contraction and population decline. The Group addresses this through various initiatives under its management principle of "community focus and sound management."

Risk that deteriorating financial condition adversely affects cash flow, or that funding costs for short-term borrowings and the like increase. In times of market turmoil, the Group may be forced to raise funds at higher interest rates than usual. The Group maintains a certain level of liquid assets and conducts appropriate cash flow management, reporting cash flow projections to the Risk Management Committee.

Large-scale disasters such as a Tokai earthquake or a pandemic of a new strain of influenza or other infectious disease could damage the Bank Group's facilities or cause a contraction in operations, and could also adversely affect business performance through an increase in credit risk resulting from the deterioration of counterparties' business performance. This also includes the risk of business contraction due to an increase in absenteeism among officers and employees. The Group has responded through the development of a Business Continuity Plan (BCP), among other measures, but the description of specific countermeasures in the securities report is limited.

The materialization of geopolitical risk arising from heightened political, military, or social tensions in specific regions may cause a slowdown in global economic activity, leading to deteriorating business performance among counterparties and increased credit risk. Changes in the global economic environment are recognized as a risk that also spreads to the counterparties of regional banks. This is explicitly listed as a risk in the securities report, but no specific countermeasures are described.