Contract analysis

I. Executive Summary The purpose of this memorandum is to provide the Audit Committee of the Board of Directors of Belmont Ridge Bank National Association ("BRB" or the "Bank") with a comprehensive interim update on the status of the investigation being conducted by the Division of Enforcement (the "Staff") of the U.S. Securities and Exchange Commission (the "SEC" or the "Commission") into BRB's public disclosures re

II. Background and Procedural History A. Origin of the Investigation The Investigation originated from the SEC Staff's review of BRB's periodic filings with the Commission, specifically the following public reports: • BRB's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Commission on February 28, 2023 (the "FY 2022 10-K"); • BRB's Quarterly Report on Form 10-Q for the quarterly

III. Document Production — Status and Summary A. Completion of Rolling Productions Pursuant to the document production protocol agreed with the SEC Staff on October 20, 2023, BRB has been producing responsive documents on a rolling basis. The production schedule, as negotiated with the Staff, contemplated six rolling productions to be delivered between November 1, 2023 and March 1, 2024. Five of the six rolling produ

IV. Witness Testimony — Summary and Key Takeaways This section provides a summary of the three witness testimonies that have been conducted to date, together with Calderwood & Harkness's assessment of the significance of each testimony for the overall trajectory of the Investigation. The summaries below are based on the witnesses' testimony as reflected in the official court reporter's transcript (certified copies of

V. SEC Staff's Apparent Theories and Potential Charges A. Statutory Framework Based on the scope of the subpoenas, the topics addressed during testimony, and the provisions cited in the Staff's process, we believe the Staff is evaluating potential charges under the following provisions of the federal securities laws:

Section 13(a) of the Exchange Act (15 U.S.C. § 78m(a)): Section 13(a) requires issuers of registered securities to file periodic reports with the Commission in accordance with such rules and regulations as the Commission may prescribe. Violations of Section 13(a) are typically charged in conjunction with violations of the specific rules requiring the filing of annual reports (Rule 13a-1) and quarterly reports (Rule 1

Section 13(b)(2)(A) of the Exchange Act (15 U.S.C. § 78m(b)(2)(A)): Section 13(b)(2)(A), commonly referred to as the "books-and-records" provision, requires every issuer to make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer. This provision is a strict-liability provision — no showing of scienter or even neg

VI. Assessment of Likelihood of Wells Notice A. Factors Suggesting a Wells Notice Is Likely Calderwood & Harkness has evaluated the trajectory of the Investigation and the available evidence in order to assess the likelihood that the Staff will issue a Wells notice — the pre-enforcement notification that provides the respondent with an opportunity to submit a written response (a "Wells Submission") before the Staff m

VII. D&O Insurance Coverage Update BRB tendered the SEC Investigation as a Claim under its directors' and officers' liability insurance program on October 5, 2023. The relevant policies are as follows: Primary Layer: Northcastle Mutual Assurance Company, Policy No. NMA-DO-2023-11847. This policy provides a $15 million limit of liability for D&O claims, with an entity retention (self-insured retention) of $2.5 million