CALDERWOOD & HARKNESS LLP One Liberty Plaza, 52nd Floor New York, NY 10006
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
Matter No.: 1045-00001
Date: February 20, 2026
To:
Vivienne St. Claire, Esq. (Responsible Partner, Capital Markets) Robert Adeyemi, Esq. (Billing Partner, Capital Markets) Claire Dempsey, Esq. (Working Associate, Capital Markets) Leonard Cross, Esq. (Specialist Partner, Tax)
From: Eric Johannsen, Esq. (Lead Associate, Capital Markets)
Re: Transaction Summary — Belmont Ridge Bank, National Association — $350,000,000 6.750% Fixed-to-Floating Rate Subordinated Notes due 2036 — Rule 144A Offering
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I. Executive Summary
This memorandum provides a comprehensive summary of the transaction involving Belmont Ridge Bank, National Association ("BRB"), a nationally chartered commercial bank (OCC Charter No. 18742), and its issuance of $350,000,000 aggregate principal amount of 6.750% Fixed-to-Floating Rate Subordinated Notes due 2036 (the "Notes"). The Notes are being offered in a Rule 144A private placement exclusively to qualified institutional buyers ("QIBs") under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 144A promulgated thereunder. The offering does not include a Regulation S tranche; accordingly, this is a domestic-only offering and no sales will be made to non-U.S. persons in reliance on Regulation S.
The Notes were priced on February 19, 2026 (the "Pricing Date"), at which time the Purchase Agreement was signed by all parties thereto, including BRB as issuer and Wainwright Zanthor & Co., LLC, as Representative of the Initial Purchasers. The expected closing date is February 24, 2026, representing a T+3 settlement cycle from the Pricing Date. On the Closing Date, the Indenture, Registration Rights Agreement, and all other closing documents will be executed and delivered, the Global Note will be authenticated and deposited with The Depository Trust Company ("DTC"), and net proceeds will be wired to BRB in accordance with the Closing Funds Flow Memorandum.
The Notes are intended to qualify as Tier 2 regulatory capital of BRB under 12 C.F.R. Part 3, the Office of the Comptroller of the Currency's ("OCC") capital rules implementing the Basel III framework. BRB received a non-objection letter from the OCC on February 12, 2026 (OCC File No. 2026-SUB-0031), which was a critical prerequisite to pricing. The structural features of the Notes — including minimum original maturity in excess of five years, limited events of default, subordination to depositors and general creditors, and the requirement of OCC approval for any redemption prior to the stated maturity date — have been designed to satisfy the applicable Tier 2 capital eligibility criteria set forth in 12 C.F.R. § 3.20.
Proceeds from the offering will be used by BRB for general corporate purposes, including the support and expansion of BRB's digital banking platform, BRB Digital, which has been a strategic priority of BRB's management team. In addition, BRB management has indicated that a portion of the net proceeds may be used to fund a potential future redemption of BRB's existing 5.250% Subordinated Notes due 2027, of which $200,000,000 aggregate principal amount is currently outstanding and which have been callable since November 15, 2022. As of the date of this memorandum, no formal redemption notice has been issued with respect to the 2027 notes.
The Notes have been assigned a rating of BBB with a stable outlook by Meridian Ratings Group, Inc. and a rating of Baa2 with a stable outlook by Archer Bond Analytics LLC. Both rating agencies are registered as nationally recognized statistical rating organizations ("NRSROs") with the Securities and Exchange Commission ("SEC").
Calderwood & Harkness LLP ("C&H") serves as issuer's counsel in this transaction. Pennfield & Associates LLP serves as counsel to the Initial Purchasers. This memorandum is intended to provide the C&H engagement team with a centralized reference document summarizing all material aspects of the transaction, including the parties, economic terms, fees, timeline, documentation, regulatory considerations, and key legal issues. Separate memoranda addressing specific legal issues — including the Regulatory Capital Memorandum, the Tax Analysis Memorandum, the Securities Law Analysis Memorandum, and the Registration Rights Obligations Summary — have been or are being prepared by members of the engagement team and should be read in conjunction with this summary.
II. Parties to the Transaction
A. Issuer — Belmont Ridge Bank, National Association
The issuer of the Notes is Belmont Ridge Bank, National Association, a national banking association organized and existing under the National Bank Act, as amended (12 U.S.C. § 21 et seq.). BRB's full legal name is "Belmont Ridge Bank, National Association," and it is chartered by the OCC under Charter No. 18742. BRB's RSSD ID is 2847391, its FDIC Certificate Number is 28463, and its Employer Identification Number ("EIN") is 13-4827156.
BRB maintains its headquarters and principal executive offices at 600 Lexington Avenue, 38th Floor, New York, NY 10022. BRB is among the top twenty-five U.S. commercial banks by total assets, and its principal lines of business include commercial lending, consumer banking, wealth management, and a growing financial technology platform branded as "BRB Digital." BRB Digital represents one of the bank's most significant strategic investments in recent years and includes a suite of digital-first banking products, mobile payment solutions, and small business lending platforms.
As of December 31, 2025, BRB's key financial data is summarized as follows:
BRB is well-capitalized under the OCC's prompt corrective action framework, with Tier 1 and Total Risk-Based Capital Ratios comfortably exceeding the applicable well-capitalized thresholds. The issuance of the Notes, once reflected in BRB's regulatory capital calculations, is expected to further strengthen BRB's Total Risk-Based Capital Ratio.
The following individuals serve as key officers of BRB in connection with this transaction:
• Chief Executive Officer: Marcus D. Harrington
• Chief Financial Officer: Priya Narasimhan
• General Counsel & Corporate Secretary: Diane K. Wexler
• Treasurer: Jonathan R. Talbott
B. Parent Holding Company — Belmont Ridge Financial Group, Inc.
Belmont Ridge Financial Group, Inc. ("BRFG") is a Delaware corporation and the sole shareholder of BRB. BRFG's EIN is 13-4827099. BRFG maintains its headquarters and principal executive offices at 600 Lexington Avenue, 38th Floor, New York, NY 10022, the same location as BRB. BRFG is a publicly traded company, with its common stock listed on the New York Stock Exchange under the ticker symbol "BRBK." Marcus D. Harrington serves as Chief Executive Officer of both BRB and BRFG.
It is important to note that BRFG is NOT an obligor on the Notes. BRFG does not guarantee the Notes and has no direct payment obligation with respect thereto. However, the relationship between BRB and BRFG is relevant to the transaction in several respects. Certain representations and covenants contained in the Purchase Agreement reference the consolidated group of which BRFG is the parent, including representations relating to the accuracy and completeness of financial statements prepared on a consolidated basis and the absence of material adverse changes with respect to the consolidated entity. Additionally, the Board of Directors of BRFG is expected to adopt resolutions acknowledging and consenting to BRB's issuance of the Notes. BRFG, as a bank holding company subject to Federal Reserve oversight, will be required to file applicable FR Y-9C reports reflecting the new Tier 2 capital at the BRB level in the consolidated regulatory capital calculations for the holding company group.
C. Initial Purchasers
Three Initial Purchasers are participating in the offering, as follows:
1. Wainwright Zanthor & Co., LLC — Lead Initial Purchaser and Lead Bookrunner
Wainwright Zanthor & Co., LLC ("Wainwright Zanthor") is serving as the Lead Initial Purchaser and Lead Bookrunner for the offering. Wainwright Zanthor is a Delaware limited liability company, an SEC-registered broker-dealer, and a member of the Financial Industry Regulatory Authority ("FINRA"). Its principal office is located at 383 Madison Avenue, New York, NY 10179. The key contacts at Wainwright Zanthor for this transaction are Douglas P. Moreno, Head of Debt Capital Markets, Bank Capital, and Samantha Chen-Whitfield, Managing Director and lead coverage banker for the BRB relationship. Wainwright Zanthor has been allocated 60% of the total Initial Purchasers' discount, equaling $1,365,000.
2. Redstone Capital Markets LLC — Co-Manager / Initial Purchaser
Redstone Capital Markets LLC ("Redstone") is serving as a Co-Manager and Initial Purchaser. Redstone is a Delaware limited liability company and an SEC-registered broker-dealer. Its principal office is located at 200 Park Avenue, Suite 4500, New York, NY 10166. Redstone has been allocated 25% of the total Initial Purchasers' discount, equaling $568,750.
3. Kensington Hale Securities Inc. — Co-Manager / Initial Purchaser
Kensington Hale Securities Inc. ("Kensington Hale") is serving as a Co-Manager and Initial Purchaser. Kensington Hale is a New York corporation and an SEC-registered broker-dealer. Its principal office is located at One World Financial Center, Suite 2700, New York, NY 10281. Kensington Hale has been allocated 15% of the total Initial Purchasers' discount, equaling $341,250.
D. Trustee — Brindoval Trust Company, National Association
Brindoval Trust Company, National Association ("Brindoval Trust") is serving as Trustee, Paying Agent, Registrar, and Transfer Agent under the Indenture. Brindoval Trust is a national banking association organized as a trust company. Its Corporate Trust Office is located at 100 Federal Street, Suite 800, Boston, MA 02110. Brindoval Trust's DTC Participant Number is 0447. The designated Corporate Trust Officer for this transaction is Helen M. Briggs. Brindoval Trust also serves as trustee under the separate indenture governing BRB's existing 5.250% Subordinated Notes due 2027, which provides continuity and institutional familiarity with BRB's subordinated debt program.
E. Counsel
1. Issuer's Counsel — Calderwood & Harkness LLP
Calderwood & Harkness LLP is serving as counsel to BRB, the issuer, in connection with this offering. Our offices are located at One Liberty Plaza, 52nd Floor, New York, NY 10006. The engagement team is as follows:
• Vivienne St. Claire — Responsible Partner
• Robert Adeyemi — Billing Partner
• Eric Johannsen — Lead Associate
• Claire Dempsey — Working Associate
• Leonard Cross — Specialist Partner, Tax
This engagement has been assigned Matter No. 1045-00001.
2. Initial Purchasers' Counsel — Pennfield & Associates LLP
Pennfield & Associates LLP ("Pennfield") is serving as counsel to the Initial Purchasers. Pennfield's offices are located at 1585 Broadway, 30th Floor, New York, NY 10036. The lead partner on this matter is Thomas R. Kessler, and the lead associate is Nadia Volkov. Pennfield is responsible for delivering the Initial Purchasers' counsel opinion at closing, and its fees and disbursements are being reimbursed by BRB pursuant to the terms of the Purchase Agreement.
F. Independent Auditors — Whitmore & Lathrop, P.C.
Whitmore & Lathrop, P.C. ("Whitmore & Lathrop") serves as BRB's independent registered public accounting firm. Whitmore & Lathrop's principal office is located at 30 Rockefeller Plaza, 25th Floor, New York, NY 10112. The lead audit partner is Gregory D. Fontaine. Whitmore & Lathrop will deliver a comfort letter at closing in accordance with SAS 72 / AU-C Section 920 procedures, covering certain financial data and information included in the Final Confidential Offering Memorandum.
G. Rating Agencies
Two nationally recognized statistical rating organizations have assigned ratings to the Notes:
1. Meridian Ratings Group, Inc.
Meridian Ratings Group, Inc. ("Meridian") is a Delaware corporation and an SEC-registered NRSRO. Its offices are located at 55 Water Street, New York, NY 10041. The lead analyst assigned to BRB is Kenji Okamura. Meridian has assigned a rating of BBB with a stable outlook to the Notes.
2. Archer Bond Analytics LLC
Archer Bond Analytics LLC ("Archer") is a Delaware limited liability company and an SEC-registered NRSRO. Its offices are located at 111 South Wacker Drive, Suite 3200, Chicago, IL 60606. The lead analyst assigned to BRB is Rebecca Lin-Torres. Archer has assigned a rating of Baa2 with a stable outlook to the Notes.
Both ratings were received on January 22, 2026, following formal rating agency presentations made by BRB management on January 8, 2026. The assigned ratings are investment-grade and are consistent with BRB's existing subordinated debt ratings. The stable outlooks reflect the rating agencies' positive assessment of BRB's capitalization levels, asset quality, and earnings trajectory.
H. Financial Printer — Donnegan Financial Press Inc.
Donnegan Financial Press Inc. ("Donnegan") served as the financial printer for the Preliminary and Final Confidential Offering Memoranda and the Pricing Term Sheet. Donnegan's offices are located at 40 West 23rd Street, 10th Floor, New York, NY 10010. Donnegan completed printing of the Final Offering Memorandum on February 14, 2026.
III. Key Economic Terms of the Notes
A. Description of the Notes
The Notes are formally designated as the "6.750% Fixed-to-Floating Rate Subordinated Notes due 2036" of Belmont Ridge Bank, National Association. The aggregate principal amount of the Notes being issued is $350,000,000. The Notes have been assigned CUSIP No. 082651 AB7 and ISIN No. US082651AB73.
The Notes will be issued in the form of one or more global notes, in fully registered, book-entry only form, and will be deposited with DTC, with Cede & Co. acting as nominee of DTC. No physical certificates will be issued to individual holders except in the limited circumstances described in the Indenture. Beneficial interests in the Global Note will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants.
The minimum denomination for the Notes is $150,000, and integral multiples of $1,000 in excess thereof. This minimum denomination is consistent with the institutional character of the offering and the Rule 144A placement to QIBs.
B. Interest / Coupon
The Notes bear interest at a fixed rate during the first five years and transition to a floating rate for the remainder of the term. The interest rate structure is as follows:
Fixed Rate Period: From and including February 24, 2026, to but excluding March 1, 2031 (the "Fixed Rate Period"), the Notes will bear interest at a rate of 6.750% per annum. During the Fixed Rate Period, interest will be payable semi-annually in arrears on March 1 and September 1 of each year, with the first interest payment date being September 1, 2026. Interest during the Fixed Rate Period will be computed on the basis of a 360-day year consisting of twelve 30-day months (30/360 day count convention).
Floating Rate Period: From and including March 1, 2031, to but excluding the Maturity Date (the "Floating Rate Period"), the Notes will bear interest at a rate per annum equal to Compounded SOFR plus 275 basis points. "Compounded SOFR" refers to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator), compounded in arrears for the applicable interest period, calculated in accordance with the detailed provisions set forth in the Officers' Certificate Establishing the Notes. During the Floating Rate Period, interest will be payable quarterly in arrears on March 1, June 1, September 1, and December 1, commencing March 1, 2031.
Fixed-to-Floating Rate Reset Date: The transition from the fixed rate to the floating rate occurs on March 1, 2031 (the "Reset Date"). This date also corresponds to the first date on which BRB may optionally redeem the Notes at par (subject to OCC approval), as described further below.
C. Maturity
The stated maturity date of the Notes is March 1, 2036 (the "Maturity Date"). The Notes have an original maturity of approximately ten years from the date of issuance, which exceeds the minimum five-year original maturity required for Tier 2 capital instruments under 12 C.F.R. Part 3. Under the applicable regulatory capital rules, the Notes will begin to be amortized (for purposes of inclusion in Tier 2 capital) on a straight-line basis during the final five years prior to maturity, beginning on approximately March 1, 2031.
D. Issue Price and Proceeds
The Notes were priced on February 19, 2026, at an issue price of 99.750% of par. The resulting gross proceeds, initial purchasers' discount, and net proceeds calculations are as follows:
The 0.25% discount from par is within the de minimis original issue discount ("OID") threshold for federal income tax purposes, as discussed further in Section IX.B below.
E. Optional Redemption
The Notes are callable at par beginning on March 1, 2031 — the Reset Date — and on any interest payment date thereafter, in each case subject to the prior written approval of the OCC. The alignment of the optional call date with the Reset Date is customary for fixed-to-floating rate bank capital instruments, as it allows the issuer to elect to redeem the Notes rather than transition to the floating rate, depending on prevailing market conditions at that time.
In addition to the standard optional redemption beginning on the Reset Date, the Notes are redeemable at any time, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to but excluding the redemption date, upon the occurrence of either of the following events, in each case subject to OCC approval:
(i) A "Tax Event," meaning a change in law or regulation (or interpretation thereof) that results in BRB being unable to deduct interest payments on the Notes for U.S. federal income tax purposes; or
(ii) A "Regulatory Capital Treatment Event," meaning a change in law, regulation, or official guidance that results in the Notes ceasing to qualify, in whole or in part, as Tier 2 capital of BRB.
Any redemption of the Notes prior to the stated Maturity Date requires the prior written approval of the OCC, consistent with the requirements for Tier 2 capital instruments under 12 C.F.R. Part 3.
F. Ranking / Subordination
The Notes constitute subordinated unsecured obligations of BRB. The ranking of the Notes within BRB's capital structure is as follows:
• The Notes rank junior to all existing and future senior indebtedness and deposits of BRB, including obligations to depositors, general creditors, and holders of senior debt of the bank.
• The Notes rank pari passu with BRB's existing 5.250% Subordinated Notes due 2027, of which $200,000,000 aggregate principal amount is outstanding, and with any future pari passu subordinated debt that BRB may issue from time to time.
• The Notes rank senior to any existing or future junior subordinated debt of BRB and to all classes of BRB's equity, including preferred and common stock.
The subordination provisions are integral to the Notes' qualification as Tier 2 regulatory capital. The Indenture includes customary provisions ensuring that in any insolvency, receivership, or liquidation of BRB, holders of the Notes would be entitled to receive payment only after all senior indebtedness and deposit obligations have been satisfied in full. Holders of the Notes have no right of set-off against BRB.
G. Tier 2 Capital
The Notes are intended to qualify as Tier 2 capital of BRB under 12 C.F.R. Part 3, which implements the Basel III capital framework for national banks. The key structural features that support Tier 2 capital qualification include: (i) an original maturity in excess of five years (approximately ten years); (ii) subordination to depositors and general creditors; (iii) limited events of default, restricted to payment defaults and bankruptcy/receivership events (consistent with Tier 2 requirements, which prohibit acceleration upon events of default other than payment defaults or insolvency events); (iv) no holder put right; and (v) the requirement of OCC approval for any optional redemption prior to maturity. A detailed analysis of the Notes' compliance with the Tier 2 capital eligibility criteria is set forth in the separate Regulatory Capital Memorandum prepared by the engagement team.
IV. Existing Subordinated Debt
BRB has one series of subordinated notes currently outstanding:
5.250% Subordinated Notes due 2027
The existing 2027 notes are currently callable at par, as the first call date of November 15, 2022 has passed. Under the terms of the Notes being issued in this transaction, the new Notes will rank pari passu with the existing 2027 notes for so long as both series remain outstanding.
BRB management has communicated that a portion of the net proceeds from the current offering may be used to fund a future redemption of all or a portion of the 2027 notes. Such a redemption would need to comply with the terms of the 2017 indenture, including applicable notice periods, and would require the prior approval of the OCC. As of the date of this memorandum, no formal redemption notice has been given with respect to the 2027 notes. The potential future redemption is disclosed in the Final Confidential Offering Memorandum as a potential use of proceeds.
If and when the 2027 notes are redeemed in full, the Notes issued in this transaction would become the sole outstanding series of subordinated debt at the BRB level, and BRB's Tier 2 capital would be adjusted accordingly to reflect the net impact of the new issuance and the retirement of the existing series. The timing and ultimate decision regarding redemption of the 2027 notes will depend on BRB's ongoing assessment of its capital management strategy and prevailing market conditions.
V. Fees and Expenses
A. Initial Purchasers' discount
The aggregate Initial Purchasers' discount for this offering is $2,275,000, representing 0.650% of the aggregate principal amount of $350,000,000. The discount is allocated among the Initial Purchasers as follows:
The discount is payable to the Initial Purchasers at closing from the gross proceeds of the offering. The discount will be deducted from the aggregate purchase price payable by the Initial Purchasers to BRB, such that BRB will receive net proceeds of $346,850,000 (before deduction of other offering expenses).
B. Estimated Offering Expenses (Excluding discount)
In addition to the Initial Purchasers' discount, BRB will bear certain offering expenses estimated at a total of $1,150,000. These expenses are detailed in the table below:
These estimated amounts are based on current fee arrangements and may be subject to adjustment upon final reconciliation. The C&H fee estimate of $425,000 is inclusive of anticipated disbursements for filing fees, courier charges, and similar out-of-pocket costs. The Pennfield fee estimate of $275,000 is payable by BRB as a reimbursement obligation pursuant to the terms of the Purchase Agreement, which requires BRB to reimburse the reasonable fees and disbursements of the Initial Purchasers' counsel.
C. Net Proceeds Summary
The net proceeds to BRB from the offering, after giving effect to the Initial Purchasers' discount and estimated offering expenses, are summarized as follows:
VI. Transaction Timeline
The following table sets forth the key dates and events in the transaction timeline, from engagement through maturity:
The engagement team should note that the closing timeline is compressed, with only three business days between pricing and settlement. All closing deliverables — including legal opinions, officer and secretary certificates, comfort letters, and funds flow memoranda — must be finalized and in execution-ready form prior to or on the morning of the Closing Date. Any delays in the delivery of required closing conditions could jeopardize timely settlement.
VII. Transaction Documents
A. Core Transaction Documents
The following constitutes a summary of the core transaction documents being prepared, negotiated, and delivered in connection with this offering:
1. Indenture. The Indenture will be dated as of February 24, 2026, between Belmont Ridge Bank, National Association, as Issuer, and Brindoval Trust Company, National Association, as Trustee. The Indenture is the primary governing agreement for the Notes and sets forth all terms and conditions relating to the Notes, including the interest rate, maturity, redemption provisions, subordination mechanics, events of default, remedies, and the rights and duties of the Trustee. The Indenture is governed by the laws of the State of New York, with certain provisions (including subordination and regulatory capital provisions) being subject to and interpreted in accordance with applicable federal banking law. The Indenture has been structured to contain only limited events of default — specifically, payment defaults (failure to pay interest within 30 days or principal at maturity) and bankruptcy/receivership events — consistent with the requirements for Tier 2 capital instruments. The Indenture does not include cross-default or cross-acceleration provisions, covenant defaults, or other events that could give rise to acceleration of the Notes, as such provisions would be inconsistent with Tier 2 capital treatment.
2. Officers' Certificate Establishing the Notes. Pursuant to the terms of the Indenture, an Officers' Certificate will be delivered establishing the specific terms, form, and conditions of the Notes, including the principal amount, interest rates, interest payment dates, maturity date, CUSIP and ISIN numbers, denominations, optional redemption terms, and the form of the Global Note. The Officers' Certificate will be signed by authorized officers of BRB and delivered to the Trustee on or prior to the Closing Date.
3. Form of Rule 144A Global Note. The Global Note will represent $350,000,000 aggregate principal amount of Notes. The form of the Global Note is attached as an exhibit to the Indenture and includes the transfer restriction legend required for securities sold in reliance on Rule 144A under the Securities Act. The legend restricts resale of the Notes to QIBs or in other transactions exempt from the registration requirements of the Securities Act. The Global Note will be deposited with DTC and registered in the name of Cede & Co., DTC's nominee, for holding through DTC's book-entry system.
4. Purchase Agreement. The Purchase Agreement was dated and signed on February 19, 2026, among Belmont Ridge Bank, National Association, as Issuer, Wainwright Zanthor & Co., LLC, as Representative of the Initial Purchasers, Redstone Capital Markets LLC, and Kensington Hale Securities Inc. The Purchase Agreement sets forth the obligation of the Initial Purchasers to purchase the Notes at the agreed purchase price (99.750% of par less the initial purchasers' discount) and BRB's obligation to sell the Notes, subject to the satisfaction of customary closing conditions. The Purchase Agreement contains extensive representations and warranties by BRB (including certain representations relating to the BRFG consolidated group), covenants of BRB, conditions to closing, indemnification provisions, and termination rights. The Purchase Agreement is governed by New York law.
5. Registration Rights Agreement. The Registration Rights Agreement will be dated February 24, 2026, among Belmont Ridge Bank, National Association, and the Initial Purchasers. This agreement provides for BRB's obligation to either (a) file a shelf registration statement with the SEC or (b) conduct a registered exchange offer, in either case within specified time periods following the Closing Date. The agreement includes liquidated damages provisions requiring BRB to pay additional interest on the Notes in the event that applicable registration deadlines are not met. The Registration Rights Agreement is governed by New York law. A separate Registration Rights Obligations Summary has been prepared to track the critical dates and milestones under this agreement.
6. Final Confidential Offering Memorandum. The Final Confidential Offering Memorandum is dated February 19, 2026 (the Pricing Date) and is the principal disclosure document for the offering. It contains a detailed description of BRB and BRFG, including their financial condition, results of operations, business, risk factors, regulatory environment, and the terms of the Notes. The Offering Memorandum was prepared by C&H in coordination with BRB management and reviewed by Pennfield.
7. Preliminary Confidential Offering Memorandum. The Preliminary Confidential Offering Memorandum is dated February 14, 2026 and was used during the investor roadshow and marketing period prior to pricing. The Preliminary Offering Memorandum was substantially similar to the Final Offering Memorandum but did not include pricing-specific information (e.g., issue price, coupon, spread, aggregate principal amount).
8. Pricing Term Sheet. The Pricing Term Sheet is dated February 19, 2026 and was distributed to prospective investors at the time of pricing. It sets forth the final pricing terms of the Notes, including the aggregate principal amount, coupon, issue price, spread, maturity date, CUSIP, and settlement date. The Pricing Term Sheet supplements and should be read in conjunction with the Preliminary Confidential Offering Memorandum.
B. Legal Opinions
The following legal opinions will be delivered at closing:
1. Issuer's Counsel Corporate/Securities Opinion (Calderwood & Harkness LLP). C&H will deliver a corporate and securities law opinion addressed to the Initial Purchasers covering, among other things: (a) due organization and valid existence of BRB as a national banking association; (b) corporate authorization of the offering and execution of all transaction documents; (c) valid issuance and enforceability of the Notes; (d) the availability of the exemption from registration under Section 4(a)(2) of the Securities Act and Rule 144A thereunder; (e) the exemption of the Indenture from qualification under the Trust Indenture Act of 1939, as amended; (f) the absence of conflicts with BRB's charter, bylaws, or material agreements; and (g) the absence of additional governmental approvals required in connection with the issuance (other than the OCC non-objection already received). This opinion is in substantially final form and is expected to be executed on the Closing Date.
2. Issuer's Counsel Tax Opinion (Calderwood & Harkness LLP). C&H will deliver a tax opinion addressed to BRB, opining that, for U.S. federal income tax purposes, the Notes will be treated as indebtedness and not as equity. This opinion is being prepared under the supervision of Leonard Cross and is supported by the separate Tax Analysis Memorandum currently in preparation. The opinion will address relevant factors, including the fixed maturity date, the unconditional obligation to pay a sum certain, the subordination provisions, and the absence of equity conversion features.
3. Negative Assurance Letter (10b-5) (Calderwood & Harkness LLP). C&H will deliver a customary negative assurance letter (also known as a "10b-5 letter") addressed to the Initial Purchasers. The letter will state that, based on C&H's participation in the preparation of the Offering Memorandum and without independent investigation, nothing has come to C&H's attention that causes C&H to believe that the Final Confidential Offering Memorandum, as of its date and as of the Closing Date, contained or contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The negative assurance letter will contain customary limitations and qualifications.
4. Trustee's Counsel Opinion. Counsel to Brindoval Trust Company, N.A. will deliver an opinion covering the due organization and authority of the Trustee, the valid execution and delivery of the Indenture by the Trustee, and the enforceability of the Indenture against the Trustee. A form of this opinion has been prepared by C&H and transmitted to Brindoval Trust's counsel for review and comment.
5. Initial Purchasers' Counsel Opinion. Pennfield & Associates LLP will deliver its own opinion addressed to the Initial Purchasers, which is expected to cover matters similar to those addressed in C&H's corporate/securities opinion, including Securities Act exemption, enforceability, and related matters. The scope of Pennfield's opinion is subject to ongoing discussions between the firms.
6. Reliance Letter. C&H will deliver a reliance letter permitting the Initial Purchasers and Pennfield & Associates LLP to rely on C&H's corporate/securities opinion and negative assurance letter as if such documents were addressed directly to them.
C. Closing Deliverables
The following closing deliverables are required to be delivered at or prior to closing on February 24, 2026:
1. Officer's Certificate (Bring-Down of Representations). An officer's certificate will be signed by Marcus D. Harrington, CEO, and Priya Narasimhan, CFO, of BRB, confirming that the representations and warranties of BRB set forth in the Purchase Agreement are true and correct as of the Closing Date as though made on and as of such date, and that BRB has complied in all material respects with the agreements and covenants required to be performed or satisfied by BRB under the Purchase Agreement on or prior to the Closing Date.
2. Secretary's Certificate. A secretary's certificate will be signed by Diane K. Wexler, General Counsel and Corporate Secretary of BRB, and will attach certified copies of BRB's charter (OCC Charter No. 18742), bylaws, board resolutions authorizing the transaction, and incumbency certificates with specimen signatures of officers authorized to execute the transaction documents.
3. Board Resolutions (BRB). The Board of Directors of BRB has adopted resolutions authorizing the issuance of the Notes, the execution and delivery of the Indenture, Purchase Agreement, Registration Rights Agreement, and all other transaction documents, and the performance by BRB of its obligations thereunder. Certified copies of these resolutions will be attached to the Secretary's Certificate.
4. Board Resolutions (BRFG). The Board of Directors of Belmont Ridge Financial Group, Inc. has adopted resolutions acknowledging and consenting to BRB's issuance of the Notes. Although BRFG is not an obligor on the Notes, these resolutions reflect the holding company's awareness and approval of the subsidiary bank's capital-raising activity, which is customary in bank subordinated debt offerings where the bank is a wholly-owned subsidiary of a publicly traded holding company. Certified copies of these resolutions will be delivered at closing.
5. Good Standing Certificate (OCC). A certificate of good standing (or equivalent confirmation) will be obtained from the OCC confirming that BRB is in good standing as a national banking association under its charter (OCC Charter No. 18742).
6. Good Standing Certificate (Delaware Secretary of State). A certificate of good standing will be obtained from the Delaware Secretary of State confirming that BRFG is in good standing as a Delaware corporation.
7. DTC Eligibility Letter. A letter from DTC (or from Brindoval Trust as DTC participant) confirming that the Notes bearing CUSIP No. 082651 AB7 are eligible for deposit into and transfer through the DTC book-entry system. The letter will reference Brindoval Trust's DTC Participant No. 0447.
8. Closing Funds Flow Memorandum. A detailed memorandum will be prepared and distributed to all parties prior to closing, setting forth the wire transfer instructions for settlement on February 24, 2026, including the source and destination of all funds, the amounts to be transferred, and the account details for BRB, the Initial Purchasers, and the Trustee.
9. Cross-Receipt. A cross-receipt will be executed and exchanged among BRB, the Initial Purchasers, and the Trustee, evidencing the delivery of the Global Note by BRB (through the Trustee) against payment of the aggregate purchase price by the Initial Purchasers.
10. Comfort Letter. Whitmore & Lathrop, P.C. will deliver a comfort letter in accordance with the professional standards set forth in Statement on Auditing Standards No. 72 and AU-C Section 920. The comfort letter will cover specified financial data included in the Final Confidential Offering Memorandum and will include procedures relating to changes in certain financial statement line items during the "change period" between the date of the most recent financial statements and a date close to the Closing Date.
D. Regulatory Filings
1. OCC Subordinated Debt Notice. BRB filed a notice with the OCC under 12 C.F.R. § 5.47 regarding the proposed issuance of subordinated debt. The notice included a description of the proposed terms of the Notes, the purpose of the issuance, the anticipated use of proceeds, and supporting financial information. The OCC issued a non-objection letter on February 12, 2026, under OCC File No. 2026-SUB-0031, confirming that the OCC does not object to BRB's issuance of the Notes on the terms described in the notice.
2. OCC Post-Issuance Notification. Following the Closing Date, BRB is required to file a post-issuance notification with the OCC within the applicable period specified by regulation. The post-issuance notification will include the final terms of the Notes, copies of the executed Indenture and Officers' Certificate, and such other information as may be required by the OCC. C&H will assist BRB in preparing and filing this notification.
VIII. Regulatory Matters
A. OCC Non-Objection
As noted above, BRB filed a notice with the OCC pursuant to 12 C.F.R. § 5.47 regarding its proposed issuance of subordinated debt. Section 5.47 requires a national bank to file written notice with the OCC prior to issuing subordinated debt that the bank intends to include in its regulatory capital. The OCC reviews the notice to confirm that the terms of the proposed issuance are consistent with the regulatory capital requirements, that the bank is in satisfactory financial condition, and that the issuance does not raise safety and soundness concerns.
BRB's notice was filed in early 2026 and included a term sheet, draft offering memorandum, draft indenture provisions, and supporting financial data. The OCC issued its non-objection letter on February 12, 2026, under OCC File No. 2026-SUB-0031. The non-objection letter confirmed that the OCC does not object to BRB's issuance of the Notes on the terms described in the notice, subject to BRB's compliance with applicable law and regulation and the filing of a post-issuance notification.
Receipt of the OCC non-objection letter was a condition to proceeding with pricing and was referenced as such in the Purchase Agreement. A copy of the non-objection letter has been included in the closing files.
Following the Closing Date, BRB will be required to file a post-issuance notification with the OCC within the applicable regulatory timeframe, providing the final terms and copies of the executed transaction documents.
B. Federal Reserve
No separate approval from the Board of Governors of the Federal Reserve System is required for BRB's issuance of the Notes. However, BRFG, as a bank holding company, is subject to the Federal Reserve's consolidated supervisory framework. BRFG will file applicable FR Y-9C Consolidated Financial Statements reflecting the new Tier 2 capital at the BRB level in the consolidated regulatory capital calculations for the holding company group. The Notes will be included in BRFG's consolidated Tier 2 capital, subject to any applicable limitations under the Federal Reserve's capital rules (12 C.F.R. Part 217).
C. FDIC
No separate approval from the Federal Deposit Insurance Corporation is required for BRB's issuance of the Notes. BRB is an FDIC-insured institution under FDIC Certificate No. 28463 and is classified as a well-capitalized institution under the FDIC's regulatory framework. The FDIC's deposit insurance does not extend to the Notes, which are subordinated unsecured obligations of the bank. The Offering Memorandum includes appropriate disclosure that the Notes are not insured deposits and are not obligations of or guaranteed by the FDIC.
D. Securities Act Exemption
The Notes are being offered and sold in a private placement transaction exempt from the registration requirements of the Securities Act under Section 4(a)(2) thereof and Rule 144A promulgated thereunder. The offering is limited to QIBs, and no sales are being made to non-QIBs or non-U.S. persons. There is no Regulation S tranche and no public offering of the Notes.
The Purchase Agreement contains representations from BRB to the effect that neither BRB nor any person acting on its behalf has engaged in any form of general solicitation or general advertising in connection with the offer and sale of the Notes, and that BRB has not offered or sold the Notes except to QIBs through the Initial Purchasers. Each Initial Purchaser has agreed in the Purchase Agreement to offer and resell the Notes only to QIBs in accordance with Rule 144A.
A detailed analysis of the Section 4(a)(2)/Rule 144A exemption is set forth in the separate Securities Law Analysis Memorandum.
E. Blue Sky
The Notes are "covered securities" within the meaning of Section 18 of the Securities Act (as added by the National Securities Markets Improvement Act of 1996), as they are offered and sold in transactions exempt from registration under Section 4(a)(2) and Rule 144A to QIBs. Accordingly, the Notes are exempt from state "blue sky" registration and qualification requirements. No state securities filings are required in connection with the offering, although BRB may make voluntary notice filings in certain jurisdictions.
F. Trust Indenture Act
The Indenture is exempt from the qualification requirements of the Trust Indenture Act of 1939, as amended (the "TIA"), pursuant to Section 304(a)(4)(A) of the TIA. Section 304(a)(4)(A) exempts from the TIA's qualification requirements any security issued by a corporation authorized to do business under the National Bank Act. Because BRB is a national banking association, the securities it issues are exempt from TIA qualification. Accordingly, the Indenture does not need to be qualified with the SEC under the TIA, and Brindoval Trust is not required to meet the eligibility and qualification requirements otherwise applicable to trustees under qualified indentures. Notwithstanding this exemption, the Indenture includes provisions that are substantially consistent with many of the protective provisions of the TIA, as is customary in the bank subordinated debt market.
IX. Key Legal Issues Identified
The following summarizes the key legal issues that have been identified in connection with this transaction and the status of the analysis of each such issue by the C&H engagement team:
A. Tier 2 Capital Qualification
A central objective of this offering is to issue Notes that qualify as Tier 2 regulatory capital of BRB under 12 C.F.R. Part 3. The applicable requirements for Tier 2 capital instruments issued by national banks include, among other things:
(i) The instrument must have a minimum original maturity of at least five years. The Notes have an original maturity of approximately ten years (issuance on February 24, 2026; maturity on March 1, 2036), well in excess of the five-year minimum.
(ii) The instrument must be subordinated to depositors and general creditors of the bank. The Indenture includes comprehensive subordination provisions ranking the Notes junior to all senior indebtedness and deposits of BRB.
(iii) The instrument must not include provisions that permit acceleration of the obligation except in the case of payment defaults or the receivership, insolvency, or liquidation of the bank. The Indenture limits events of default to payment defaults (failure to pay interest within 30 days or principal at maturity) and bankruptcy/receivership events. There are no cross-default, cross-acceleration, or covenant-based events of default.
(iv) The OCC must approve any redemption prior to the stated maturity date. The Indenture requires OCC approval for any optional redemption, whether on the Reset Date, on any subsequent interest payment date, or upon a Tax Event or Regulatory Capital Treatment Event.
(v) The instrument must not include any provisions that could be interpreted as a holder put right or that would otherwise create an obligation on the part of the bank to accelerate repayment prior to maturity.
A separate Regulatory Capital Memorandum has been prepared by the engagement team analyzing the Notes' compliance with each of the applicable Tier 2 capital eligibility criteria in detail. That memorandum should be reviewed in conjunction with this summary.
B. Debt vs. Equity Tax Characterization
The characterization of the Notes as indebtedness (rather than equity) for U.S. federal income tax purposes is essential to BRB's ability to deduct interest payments on the Notes and to the treatment of interest income by holders. Several aspects of the Notes require specific analysis:
De Minimis Original Issue discount (OID). The Notes were issued at 99.750% of par, resulting in an issue discount of 0.25% (or $875,000 on the aggregate principal amount). Under the de minimis OID rules of Section 1273(a)(3) of the Internal Revenue Code, OID is considered de minimis if it is less than 0.25% of the stated redemption price at maturity multiplied by the number of complete years to maturity. For the Notes, the de minimis threshold is 0.25% × 10 years = 2.50% (or $8,750,000). Because the actual discount of 0.25% is well within this threshold, the Notes should not be treated as having been issued with OID for federal income tax purposes.
AHYDO Analysis. The "applicable high yield discount obligation" (AHYDO) provisions of Sections 163(e)(5) and 163(i) of the Internal Revenue Code apply to obligations with a maturity greater than five years, a yield to maturity exceeding the applicable federal rate ("AFR") plus five percentage points, and "significant original issue discount." The 6.750% fixed coupon on the Notes is expected to be well within the AFR-plus-five-percentage-point threshold, and the Notes do not include any deferral provisions that would give rise to significant OID. Accordingly, the Notes should not be treated as AHYDOs. The analysis is being finalized by Leonard Cross and will be set forth in the Tax Analysis Memorandum.
Leonard Cross is preparing a separate Tax Analysis Memorandum supporting the C&H tax opinion that the Notes will be treated as indebtedness for U.S. federal income tax purposes. The tax opinion will be delivered at closing, addressed to BRB.
C. Rule 144A Compliance
Compliance with Rule 144A under the Securities Act is essential to the validity of the offering exemption. The key elements of Rule 144A compliance are as follows:
• All purchasers of the Notes must be QIBs as defined in Rule 144A(a)(1). The Purchase Agreement contains representations by each Initial Purchaser that it will offer and resell the Notes only to QIBs, and investor letters or certifications will be obtained from each purchaser confirming QIB status.
• The Global Note includes a transfer restriction legend restricting resales to QIBs or in other transactions exempt from registration. The Notes have been assigned a restricted CUSIP (082651 AB7) consistent with their restricted status.
• DTC's book-entry mechanics for restricted securities will apply. Transfers within DTC will be subject to the applicable Rule 144A procedures, including appropriate certifications.
• Neither BRB nor any person acting on BRB's behalf has engaged in any form of general solicitation or general advertising in connection with the offering. The investor roadshow was conducted on a non-public basis and limited to potential QIB investors.
A separate Securities Law Analysis Memorandum has been prepared addressing these matters in detail.
D. Registration Rights Obligations
The Registration Rights Agreement imposes on BRB the obligation to either file a shelf registration statement with the SEC covering the resale of the Notes or conduct a registered exchange offer within specified time periods following the Closing Date. If BRB fails to meet the applicable deadlines, it will be required to pay liquidated damages in the form of additional interest on the Notes.
A separate Registration Rights Obligations Summary has been prepared tracking the critical dates and deadlines under the Registration Rights Agreement. The engagement team will need to monitor these deadlines carefully in the post-closing period to ensure timely compliance. Claire Dempsey has been designated as the team member responsible for tracking registration rights deadlines.
E. Subordination Provisions
The subordination provisions in the Indenture are critical both to the regulatory capital treatment of the Notes and to the relative rights of holders of the Notes in the event of BRB's insolvency. The key features of the subordination language include:
• The Notes rank junior to all existing and future senior indebtedness and deposits of BRB, ensuring that holders of the Notes are subordinated to depositors and general creditors consistent with Tier 2 capital requirements.
• The Notes rank pari passu with BRB's existing 5.250% Subordinated Notes due 2027 ($200,000,000 outstanding) and any future pari passu subordinated debt that BRB may issue.
• The Indenture provides that holders of the Notes have no right of set-off against BRB.
• Events of default are limited to payment defaults and bankruptcy/receivership events. There are no provisions permitting acceleration based on covenant defaults, cross-defaults, or other customary events of default that would be inconsistent with Tier 2 capital treatment.
The subordination provisions have been reviewed against the requirements of 12 C.F.R. Part 3 and comparable provisions in other recent bank subordinated debt offerings. The provisions are consistent with market practice for Tier 2 capital instruments issued by national banks.
F. BRFG Considerations
Although Belmont Ridge Financial Group, Inc. is not an obligor on the Notes and does not guarantee the Notes, several aspects of the transaction implicate BRFG:
• Certain representations and warranties in the Purchase Agreement are made with respect to the consolidated group, including representations relating to the accuracy and completeness of consolidated financial statements, the absence of material adverse changes with respect to the consolidated entity, and related matters.
• The Board of Directors of BRFG has adopted resolutions acknowledging and consenting to BRB's issuance of the Notes. While these resolutions do not create any obligation on the part of BRFG, they reflect the holding company's awareness and formal consent to the subsidiary bank's capital-raising activity.
• BRFG, as a bank holding company subject to Federal Reserve oversight, will be required to update its FR Y-9C filings to reflect the new Tier 2 capital at the BRB level in the consolidated regulatory capital calculations for the holding company group.
• The Offering Memorandum includes disclosure regarding BRFG's relationship to BRB, including a description of the holding company structure and the fact that BRFG is not an obligor on the Notes.