Contract analysis

I. Executive Summary Patricia "Trish" Navarrete, Chief Financial Officer of Belmont Ridge Bank National Association ("BRB" or the "Bank"), provided investigative testimony on January 18, 2024, before Staff of the Division of Enforcement of the U.S. Securities and Exchange Commission ("SEC" or "Commission"). The testimony was conducted in the offices of Calderwood & Harkness LLP, located at 425 Lexington Avenue, 30th

II. Testimony Format and Ground Rules The testimony was conducted as a standard SEC investigative testimony under oath, pursuant to the authority of the Formal Order of Investigation. Ms. Navarrete was sworn in by the court reporter at approximately 9:30 a.m. after a brief off-the-record introduction by Ms. Felton, during which she confirmed that the testimony was being taken in connection with SEC Investigation File

III. Summary of Key Questioning Areas and Witness Responses A. Background and Role The testimony commenced with standard background questions regarding Ms. Navarrete's educational background, professional experience, tenure as CFO of Belmont Ridge Bank, reporting structure, and areas of responsibility. Ms. Felton led this portion of the questioning, which lasted approximately twenty-five minutes. Ms. Navarrete testif

IV. Demeanor and Credibility Assessment Ms. Navarrete was professional, measured, and credible throughout the approximately five hours and forty minutes of testimony. Her demeanor was calm and composed, even during the more adversarial segments of the examination regarding the re-aging treatment and the materiality of the potential understatement. She maintained appropriate eye contact with the examining attorneys, s

V. Staff's Apparent Theory and Areas of Emphasis Based on the testimony and the line of questioning employed by the Staff, the following observations can be made about the Staff's apparent enforcement theory and areas of emphasis. Core Theory. The Staff's core theory, as evidenced by the testimony, is that BRB's treatment of the 12,847 re-aged or modified BridgeFin loans artificially lowered the ACL for the BridgeFin

VI. Implications for Defense Strategy A. Strengths Identified The Navarrete testimony yielded several affirmative points that strengthen BRB's defense position. These should be incorporated into our ongoing strategy development and, when the time comes, into any Wells submission or settlement negotiation posture. First, Ms. Navarrete's testimony was internally consistent, well-reasoned, and substantively strong. Her

VII. Documents of Note from Testimony During the course of the testimony, the Staff introduced approximately eighteen (18) exhibits that were marked on the record and shown to Ms. Navarrete. The following is a summary of the exhibits, based on the Bates number ranges from BRB's document production to the SEC (the "BRB-SEC" production):

1. Excerpts from BRB's FY 2022 Form 10-K (filed February 28, 2023), including the ACL footnote (Note 6 — Allowance for Credit Losses) and the MD&A credit-quality discussion.

2. Excerpts from BRB's Q1 2023 Form 10-Q (filed May 10, 2023), including updated ACL disclosures and MD&A discussion.

3. Excerpts from BRB's Q2 2023 Form 10-Q (filed August 9, 2023), including updated ACL disclosures and MD&A discussion.

4. ACL committee meeting minutes for Q3 2022 (meeting date: October 19, 2022).

5. ACL committee meeting minutes for Q4 2022 (meeting date: January 18, 2023).

6. ACL committee meeting minutes for Q1 2023 (meeting date: April 20, 2023).

7. ACL committee meeting minutes for Q2 2023 (meeting date: July 19, 2023).

8. BridgeFin credit-quality dashboard reports — monthly reports covering the period from July 2022 through June 2023 (multiple exhibits grouped together by the Staff).

9. Internal email chain regarding BridgeFin vintage performance for post-Q2 2021 cohorts, including discussion of rising delinquency trends.

10. BRB loan modification policy document (the "Loan Modification and Re-Aging Policy"), including amendments and updates applicable during the relevant period.

11. SOX Section 302 certifications signed by Ms. Navarrete for the FY 2022 Form 10-K and the Q1 2023 and Q2 2023 Forms 10-Q. Additional exhibits were marked during the testimony that included selected pages from BRB's credit-risk management framework documentation and supplemental schedules to the ACL committee presentations. The precise Bates numbers for all exhibits should be confirmed upon receipt of the transcrip

VIII. Next Steps Based on the testimony and the analysis set forth above, the following next steps are recommended:

1. Transcript Review. Order and review the transcript of Ms. Navarrete's testimony promptly upon availability. Estimated delivery is within ten to fourteen business days. Upon receipt, the transcript should be circulated to Victoria Chambers, Howard Quinn, and Liam Donahue for review. The transcript should be c