Contract analysis

I. Executive Summary On May 30, 2024, Calderwood & Harkness LLP ("C&H" or the "Firm") received a letter from the Staff of the Securities and Exchange Commission's Division of Enforcement (the "Staff"), signed by Branch Chief Renata Moss, advising that the Staff has completed its investigation in the matter captioned In the Matter of Belmont Ridge Bank National Association, File No. HO-14287 (Formal Order of Investiga

II. Attachment A — SEC Staff Termination Letter (Full Text Reproduction) A. Reproduction of the Letter The following is a verbatim reproduction of the Staff's termination letter received on May 30, 2024. The original letter is maintained in the matter file and has been uploaded to the Firm's document management system under Matter No. SC-MAT-2023-4172. UNITED STATES SECURITIES AND EXCHANGE COMMISSION DIVISION OF ENFO

III. Legal Effect of the Termination A. Nature of a Staff Closing Letter The letter reproduced in Section II constitutes a statement of the Staff's current enforcement posture with respect to BRB. It reflects the Staff's determination, based on the information gathered during the investigation, that it will not recommend that the Commission bring an enforcement action against the Bank at this time. Several important

IV. Statute of Limitations Analysis A. Applicable Statute The general statute of limitations for SEC civil enforcement actions seeking penalties is set forth in 28 U.S.C. § 2462, which provides: "Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five year

V. Related Proceedings and Regulatory Considerations A. OCC Supervisory Status BRB's primary federal banking regulator is the Office of the Comptroller of the Currency, which supervises BRB under OCC Charter No. 24891. Throughout the period covered by the SEC investigation, the OCC conducted its own concurrent supervisory examination of BRB's ACL methodology and BridgeFin credit-quality reporting. The results of that

VI. D&O Insurance Implications A. Claims Status Update The SEC investigation was timely tendered as a Claim under BRB's directors' and officers' liability insurance program. The tender was made on October 5, 2023 — promptly following the issuance of the Formal Order of Investigation on October 12, 2023, and within the policy's notice-of-claim reporting window — to the following carriers: • Primary Layer: Northcastle

1. Notify Northcastle Mutual Assurance Company (through Thornfield & Rowe LLP, Brenda Alvaro) and Ridgeline Governance Advisors LLC (Melinda Tran) of the SEC's termination of the investigation. The notification should include a copy of the Staff's termination letter (Attachment A) and a brief cover letter confirming that the matter has been resolved without any enforcement action, settlement, or payment obligation.

2. Submit final invoices for reimbursement of defense costs in excess of the $2,500,000 entity retention. As noted above, the total amount to be reimbursed by Northcastle Mutual is $1,966,022. We understand that interim payments of approximately $1,200,000 have been received from Northcastle Mutual to date, leaving an estimated remaining balance of approximately $766,022 to be billed and collected.

3. Confirm with Ridgeline Governance Advisors that no additional notification to Cascade Omnivrel Insurance Group is required beyond the initial notice of claim, given that the excess layer was not penetrated. The D&O policy period of July 1, 2023 through July 1, 2024 remains in effect, and the termination of the investigation occurring within the policy period should simplify any remaining coverage issues. No late-n

VII. Disclosure Considerations A. Form 8-K BRB should evaluate whether a Current Report on Form 8-K is appropriate to disclose the termination of the SEC investigation. This evaluation involves balancing several considerations. The SEC investigation was previously disclosed in BRB's periodic filings, including as a risk factor in Part I, Item 1A of the FY 2023 Form 10-K (filed February 27, 2024) and as a legal procee

VIII. Document Retention and Matter Administration A. Document Retention All documents in the matter file should be retained for a minimum period of seven years from the date of the Staff's termination letter — that is, through at least May 30, 2031. This retention period encompasses and exceeds the full remaining statute of limitations period for all three periodic filings at issue (the latest of which expires on Au

IX. Recommended Next Steps Based on the analysis set forth in this memorandum, we recommend the following action items:

1. Distribute this Memorandum. This memorandum should be distributed to Victoria Chambers and Howard Quinn for review and approval. Upon approval, the memorandum should be finalized and filed in the matter file under Matter No. SC-MAT-2023-4172.

2. Prepare Client Notification Letter. C&H should prepare a formal letter to Derek Sung (General Counsel) and Marcus R. Ellingham (Chief Executive Officer) advising of the Staff's termination of the investigation and providing guidance on disclosure obligations and next steps. The letter should attach a copy of the Staff's termination letter and summarize the key conclusions of this memorandum. Target date: June 3, 2

3. Prepare Audit Committee Final Report. C&H should prepare a comprehensive final report for Gwendolyn Prescott, Chair of the BRB Audit Committee, summarizing the full arc of the investigation from opening through termination. The report should address: (a) the factual background and subject matter of the investigation; (b) the document-production and testimony process; (c) the Wells notification and the Wells Submis

4. Submit Final D&O Insurance Invoices. C&H (or BRB's in-house team with our assistance) should submit final invoices to Northcastle Mutual Assurance Company for reimbursement of defense costs in excess of the $2,500,000 entity retention. The estimated remaining reimbursable amount is approximately $766,022 (of the total $1,966,022 reimbursable, net of approximately $1,200,000 in interim payments received). Target da

5. Coordinate with Securities Reporting Counsel. C&H should coordinate with Caldwell Pratt & Stein LLP (Martin Caldwell) regarding: (a) the advisability and timing of a voluntary Form 8-K filing under Item 8.01 and/or an accompanying press release; (b) the preparation of updated legal-proceedings and risk-factor disclosure language for inclusion in BRB's next periodic filing; and (c) compliance with Nasdaq Listing Ru

6. Coordinate Release of Litigation Hold. C&H should coordinate with Derek Sung to confirm that no other pending matter requires continued preservation and, upon confirmation, issue a formal litigation-hold release memorandum to all affected custodians and BRB's IT department. Target date: June 14, 2024.

7. Prepare Matter Close-Out Memorandum. C&H should prepare a Matter Close-Out Memorandum addressing administrative closure, final billing reconciliation, conflicts-clearance updates, and file disposition. Target date: June 12, 2024.

8. Ongoing Monitoring. Although the prospect of future enforcement activity is assessed as remote, C&H should continue to monitor for any unusual developments that could indicate renewed regulatory interest, including: (a) Congressional inquiries or requests for information regarding BRB or the BridgeFin portfolio; (b) PCAOB communications or inspection reports involving Whitfield Keane LLP; (c) private securities li

X. Conclusion The termination of SEC Investigation File No. HO-14287 without an enforcement recommendation represents a favorable and definitive resolution for Belmont Ridge Bank National Association. The investigation, which spanned approximately eight months from its opening on September 18, 2023 to the Staff's termination letter dated May 30, 2024, was among the more significant regulatory matters in BRB's recent