Contract analysis

I. PURPOSE AND SCOPE OF THIS MEMORANDUM Calderwood & Harkness LLP ("C&H") has been engaged by Belmont Ridge Bank National Association ("BRB" or the "Bank") as of September 20, 2023, to represent BRB in connection with an investigation initiated by the United States Securities and Exchange Commission ("SEC"), Division of Enforcement, which was opened by voluntary request letter dated September 18, 2023, and assigned F

II. LITIGATION HOLD — DOCUMENT PRESERVATION OBLIGATIONS A. Scope of the Litigation Hold Effective immediately upon distribution of this memorandum, BRB must preserve all documents, communications, and electronically stored information ("ESI") that are or may be relevant to the SEC investigation identified above. This obligation extends to materials in any form or medium, including paper documents, electronic files, e

1. BRB's methodology for calculating and reporting its ACL under the Current Expected Credit Losses ("CECL") framework, which BRB adopted effective January 1, 2020, in accordance with Accounting Standards Codification ("ASC") Topic 326, Financial Instruments — Credit Losses;

2. BridgeFin digital lending division loan origination, underwriting, modification, re-aging, and servicing practices, including all policies, procedures, guidelines, and manuals governing these functions;

3. ACL estimation, including vintage cohort analysis, qualitative factor overlays, quantitative model outputs, scenario analysis, management judgment adjustments, and quarterly true-up procedures;

4. Communications regarding the preparation, review, approval, and filing of BRB's periodic SEC filings, including the FY 2022 Form 10-K and the Q1 2023 and Q2 2023 Forms 10-Q;

5. Credit-quality metrics maintained or reported by BRB or the BridgeFin division, including charge-off rates, delinquency rates (30-day, 60-day, 90-day, and 90+ day), loss-rate modeling inputs and outputs, probability-of-default calculations, loss-given-default estimates, and exposure-at-default calculations;

6. Internal communications among senior management, the Board of Directors, the Audit Committee, and BRB's independent auditor, Whitfield Keane LLP, relating to credit quality, ACL estimation, financial statement disclosures, and the BridgeFin portfolio;

7. All documents and communications relating to BridgeFin division operations since its launch in Q3 2020, including but not limited to the division's AI-driven underwriting platform, marketing materials, borrower demographic analyses, and performance reports; and

8. Any other documents or communications that may be relevant to the SEC's investigation of BRB's public disclosures concerning expected credit losses. B. Custodians Subject to Hold The following individuals are hereby designated as named custodians subject to the litigation hold. Each named custodian must preserve all relevant documents and ESI in his or her possession, custody, or control: Additional custodians may

III. PRIVILEGE IDENTIFICATION AND PROTECTION A. Categories of Privilege Three distinct privilege doctrines are relevant to this investigation. Understanding the scope and requirements of each is essential to ensuring that BRB's privileged materials are properly identified and protected.

1. Attorney-Client Privilege The attorney-client privilege protects confidential communications between BRB and its attorneys — including both outside counsel (C&H and, as applicable, Caldwell Pratt & Stein LLP) and in-house counsel (Derek Sung and the members of BRB's in-house legal department) — made for the purpose of obtaining or providing legal advice. The privilege covers communications in both directions: comm

2. Attorney Work-Product Doctrine The attorney work-product doctrine, established by the United States Supreme Court in Hickman v. Taylor, 329 U.S. 495 (1947), and codified in Federal Rule of Civil Procedure 26(b)(3), protects documents and tangible things prepared by or for BRB's attorneys in anticipation of litigation or in preparation for the investigation. The work-product doctrine is broader than the attorney-cl

3. Bank-Examination Privilege The bank-examination privilege protects confidential communications between BRB and its prudential regulators, particularly the OCC. This privilege serves the important public policy of encouraging full and frank communication between regulated financial institutions and their supervisory agencies, thereby facilitating effective bank supervision. BRB's CAMELS composite rating of 2 (Satis

IV. PRIVILEGE LOGGING STANDARDS A. General Requirements All documents withheld from production to the SEC on privilege grounds must be entered on a privilege log. The privilege log is a critical document in any enforcement investigation; it must be prepared with care, specificity, and accuracy. An inadequate privilege log may result in the SEC Staff challenging BRB's privilege claims, potentially leading to compelled

V. PROTOCOLS FOR COMMUNICATIONS WITH THIRD PARTIES TO PRESERVE PRIVILEGE Maintaining the attorney-client privilege and work-product protection in an enforcement investigation requires careful management of communications with third parties. The involvement of multiple outside parties — including BRB's independent auditor, forensic accounting consultant, D&O insurers, and prior outside counsel — creates numerous oppor

VI. FRE 502(d) CLAWBACK PROTECTIONS A. Background Federal Rule of Evidence 502(d) provides a powerful mechanism for protecting against the inadvertent waiver of privilege in the context of large-scale document productions. Rule 502(d) permits a federal court to order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court, and provides that such an order is

1. Prompt Notification. C&H will promptly notify the SEC Staff in writing, identifying the inadvertently produced document by Bates number (in the format BRB-SEC-XXXXXX) and asserting the applicable privilege (attorney-client privilege, work-product doctrine, or bank-examination privilege, as applicable).

2. Request for Return or Destruction. C&H will request that the SEC Staff return or destroy the inadvertently produced document and all copies thereof, including any copies stored in electronic databases, document review platforms, or physical files maintained by the SEC Staff.

3. Non-Use and Non-Waiver Confirmation. C&H will request that the SEC Staff confirm in writing that it will not use the inadvertently produced document or its contents in any way and will not assert that the attorney-client privilege or work-product protection has been waived as a result of the inadvertent production. BRB personnel who discover, or have reason to believe, that a privileged document may have been incl

VII. HANDLING OF BANK-EXAMINATION PRIVILEGED MATERIALS BRB's examination reports, supervisory correspondence, matters requiring attention ("MRAs"), matters requiring immediate attention ("MRIAs"), and related materials from the OCC are protected by the bank-examination privilege. This privilege serves the vital supervisory purpose of encouraging candid and complete communication between regulated financial institutio

VIII. EMPLOYEE COMMUNICATION GUIDELINES A. Internal Communications BRB employees should continue to communicate about ordinary business matters in the normal course. The existence of the SEC investigation and the implementation of the litigation hold do not require employees to cease normal business operations or to refrain from ordinary business communications. However, when communicating about the SEC investigation

IX. DOCUMENT COLLECTION AND PROCESSING Derek Sung's office, in coordination with BRB's Information Technology department, will oversee the collection of documents and ESI from the custodians identified in Section II.B of this memorandum. The collection process should be designed to be forensically defensible and to withstand scrutiny from the SEC Staff or any court. Forensically Defensible Collection. Document collec