TOMATO BANK, LTD.

The Company records allowances for doubtful accounts based on self-assessment standards and rating criteria (¥4.9 billion as of the end of March 2026); however, actual loan defaults may exceed the allowances due to deterioration in economic conditions, natural disasters, regional economic downturns, and other factors. In addition, if the value of collateral such as real estate or securities declines, additional provisioning may be required, which could increase credit-related expenses. The Company allocates and manages risk capital using Value at Risk and other methods, but unforeseen events may be difficult to address.

The balance of investments in yen-denominated and foreign currency-denominated bonds, investment trusts, and other instruments amounted to ¥145.3 billion as of the end of March 2026, exposing the Company to domestic and international interest rate fluctuation risk. If interest rates rise beyond expectations due to changes in monetary policy or the emergence of sovereign risk, valuation losses may occur, while a further decline in market interest rates would reduce reinvestment yields and thereby decrease net interest income. Fluctuations in either direction could adversely affect business performance and financial condition.

As a domestic standard bank, the Company is required to maintain a capital adequacy ratio of 4% or higher; its non-consolidated capital adequacy ratio was 9.04% as of the end of March 2026. The capital adequacy ratio could decline due to an increase in risk assets, an increase in credit-related expenses, impairment of securities, reversal of deferred tax assets, regulatory changes, and other factors. If the ratio falls below the required level, the Company may be subject to various orders from the Commissioner of the Financial Services Agency, including a business suspension order.

The Company's net interest income is generated by investing funds raised through deposits into loans and securities; however, there are differences between funding and investment in terms of maturities, interest rate reset timing, and interest rate movement patterns. Depending on future interest rate trends, there is a risk that net interest income may decrease, directly affecting business performance. This risk is interrelated with interest rate fluctuation risk and is more likely to materialize during prolonged low-interest-rate environments or periods of sharp interest rate changes.

Against the backdrop of increasingly diverse and sophisticated financial crimes, the importance of anti-money laundering measures continues to grow, and the Company has established a "Money Laundering Countermeasures Committee" to strengthen its systems. Failure to comply with laws and regulations may result in fines, administrative penalties, business improvement orders, business suspension orders, and other sanctions. Furthermore, the materialization of reputational risk and the resulting loss of trust from customers and the market could adversely affect business performance and financial condition.

Both physical damage from natural disasters and abnormal weather associated with climate change, as well as transition risk arising from stricter decarbonization regulations, may affect the business and financial condition of business partners, thereby adversely affecting the management of the credit portfolio. The Company has established a "Sustainability Committee" to incorporate climate change responses into its management strategy, but if its efforts are deemed insufficient, this could also adversely affect business performance and financial condition. Management is required from the perspectives of both physical risk and transition risk.

The Company's computer systems are highly public in nature, deeply involved in the region's economic activity and social life, while also facing a wide range of threats including natural disasters, system failures, and unauthorized access. The Company has established system risk management regulations and implements stable operation and safety measures; however, if a major threat materializes, business suspension or resulting losses could adversely affect business performance and financial condition. System failures at outsourcing partners pose a similar risk.

Due to the nature of banking operations, the Company holds a large amount of customer and management information, and strives for strict management through its Personal Information Protection Declaration and various information management regulations. Should information leakage, loss, or unauthorized use occur, this could damage the Company's social credibility and result in liability for damages, adversely affecting business performance and financial condition. Information leakage at outsourcing partners also poses a risk in terms of the Company's supervisory responsibility.

The Company manages liquidity risk by stably holding highly liquid assets, among other measures, and its liquidity coverage ratio stood at 173.61% as of the end of March 2026, significantly exceeding the regulatory requirement. However, if business performance or financial condition deteriorates or if credit ratings are downgraded, this could lead to increased funding costs or difficulty securing necessary funds. This risk is linked to the risk of credit rating downgrades and is more likely to materialize during sudden changes in market conditions.

The Company held marketable stocks and investment trusts totaling ¥15.2 billion as of the end of March 2026, and there is a risk of impairment or valuation losses if stock prices decline. In addition, the Company held foreign currency-denominated assets and liabilities, such as those denominated in US dollars, totaling ¥7.1 billion, and fluctuations in exchange rates may cause changes in the yen-equivalent value, resulting in valuation losses or realized losses. The Company implements hedging as necessary, but may find it difficult to respond to fluctuations that exceed expectations.