Priority: High
Brendan, Natasha —
Thank you both for the excellent work during the pitch and engagement-letter finalization process. I know the turnaround was tight, and I appreciate the effort.
I'm pleased to confirm that the engagement letter with **Belmont Ridge Bank NA** was executed yesterday, July 1, 2025. We are now live on this matter.
Before I get into assignments and timeline, let me lay out the full picture so we're all working from the same foundation.
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**1. CLIENT AND ENGAGEMENT OVERVIEW**
**Client:** Belmont Ridge Bank NA, a nationally chartered commercial bank (OCC Charter No. 24-0738), headquartered at 600 Lexington Avenue, 34th Floor, New York, NY 10022. The parent entity is Belmont Ridge Financial Group, Inc., a Delaware bank holding company. Both trade on Nasdaq under the ticker BRBK. Approximately $38.7 billion in total assets.
**Matter Number:** 1045-00003
**Primary In-House Contact:** James W. Prescott, General Counsel & Corporate Secretary
**Scope:** Board-governance advisory engagement focused on regulatory-driven governance remediation in response to:
- OCC Matters Requiring Attention letter (Ref. SA-2024-0315, dated November 15, 2024), issued to Belmont Ridge Bank NA; and - Federal Reserve supervisory letter (Ref. SR-BHC-2024-1107, dated December 3, 2024), issued to Belmont Ridge Financial Group, Inc.
**Hard regulatory deadline: The OCC remediation deadline is December 31, 2025. We cannot slip on this.**
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**2. BACKGROUND SUMMARY**
The OCC MRA identified four discrete findings:
1. The Risk Committee lacks a formalized escalation protocol for enterprise risk matters. 2. The Audit Committee has over-relied on management-prepared materials without independent verification. 3. There is insufficient board-level information flow regarding compliance and BSA/AML matters. 4. The Governance & Nominating Committee charter does not address director skill-matrix requirements or succession planning for committee chairs.
The Federal Reserve supervisory letter raised parallel governance concerns at the holding-company level.
BRB submitted an initial remediation plan to the OCC on February 28, 2025. The OCC acknowledged the plan with comments on April 4, 2025.
BRB retained **Ashford Pike Advisory LLC** (regulatory consultant) in January 2025 to handle operational remediation; we handle the governance-specific elements. More on coordination below.
**Shareholder and proxy context:** BRB's 2025 Annual Meeting was held on May 14, 2025. Proxy advisory firms Gramercy Proxy Services and Northgate Governance Advisors recommended in favor of all director nominees but flagged governance concerns. Key shareholder **Graycliff Institutional Partners** (approximately 5.1% holder) withheld votes from two director nominees at the 2024 annual meeting. **Thornfield Capital Management, LP** (approximately 7.3% holder) sent a letter to the board on March 12, 2025 urging enhanced risk-committee reporting and independent board evaluation. This is a live shareholder dynamic we need to be attentive to.
**Board composition:** 13 directors — 10 independent, 3 non-independent (CEO Richard Montague, COO Franklin Reeves, EVP Alma Brashear). Board Chair is Margaret R. Ellsworth (independent). Lead Independent Director is David K. Sorrento.
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**3. KEY GOVERNANCE DOCUMENTS UNDER REVIEW**
The existing governance documents are dated and need substantial updating. Here is the current inventory with last-amended dates:
- Corporate Governance Guidelines — last amended March 2022 - Risk Committee Charter — last amended January 2021 (over 4 years old) - Audit Committee Charter — last amended February 2023 - Governance & Nominating Committee Charter — last amended March 2022 - Compensation & Human Capital Committee Charter — last amended June 2022 - Technology & Innovation Committee Charter — adopted September 2021, never amended - Board Code of Conduct — last amended January 2020 - Director Independence Standards — last amended March 2022
We will need to review and revise most of these, with priority on the charters and policies directly implicated by the MRA findings.
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**4. DELIVERABLES AND ASSIGNMENTS**
I've broken this out by team member. Please review carefully and flag any concerns on the kickoff call (see Section 9 below).
**Brendan Walsh — Primary Drafter:**
- **Revised Risk Committee Charter** (redline against January 2021 version) — Must address Finding 1: formalized escalation protocol for enterprise risk matters, escalation triggers, timelines for full-board reporting, and independent risk-assessment resources. Risk Committee Chair: Priya Venkataraman. Committee meets at least 8 times per year.
- **Revised Audit Committee Charter** (redline against February 2023 version) — Must address Finding 2: requirements for independent verification of management-prepared materials, enhanced direct engagement with independent auditor (Ridgewell & Haines LLP; engagement partner Lydia M. Chow), and whistleblower-complaint oversight. Audit Committee Chair: Thomas J. Callahan. Committee meets at least 8 times per year. Must reference Nasdaq listing standards and OCC heightened standards for audit committee independence.
- **Revised Governance & Nominating Committee Charter** (redline against March 2022 version) — Must address Finding 4: director skill-matrix requirements, formalized committee-chair succession planning process, and annual review of director qualifications and board composition. Committee Chair: Margaret R. Ellsworth. Incorporate OCC and Federal Reserve expectations for bank boards with assets exceeding $10 billion.
- **Board Information Flow Policy** (new policy document) — Must address Finding 3: requirements for regular and ad hoc reporting to the full board and relevant committees on compliance risk, BSA/AML program status, regulatory examination findings, and enforcement actions. Define reporting cadences, materiality thresholds for immediate escalation, and the roles of the Chief Compliance Officer and BSA Officer.
- **Amended and Restated Corporate Governance Guidelines** — Comprehensive update incorporating regulatory-driven changes, enhanced director qualification and independence standards, mandatory board and committee self-evaluation, director tenure and retirement policies, and executive sessions of independent directors. Address the overlapping board composition between BRB and BRFG (11 of 13 directors serve on both boards).
**Natasha Forbes — Research and Analysis:**
- **Director Independence Assessment Memorandum** — Analyze independence of all 13 directors under Nasdaq listing standards, OCC heightened standards (12 C.F.R. Part 7 and OCC guidance), and BRB's Director Independence Standards. Confirm the 10/3 independent/non-independent split. Flag specific relationships requiring analysis: (a) David K. Sorrento's prior consulting relationship (retired managing partner of Clearpoint Consulting Group), and (b) Priya Venkataraman's former employment at Lakemont Financial Corporation. Recommend updates to the Director Independence Standards as warranted.
- **Peer-Institution Benchmarking Research** — Comparably sized national banks with $25–$50 billion in total assets. This feeds directly into the Board Governance Gap Analysis Memorandum (see below).
- **Shareholder Governance Engagement Memorandum** — Advise on responding to Thornfield Capital's March 12, 2025 letter. Develop engagement strategy with Thornfield (7.3%), Graycliff Institutional Partners (5.1%), and Osprey Point Pension Fund (3.8%). Analyze proxy advisory firm feedback from Gramercy and Northgate. Recommend proactive off-season engagement strategy and disclosure enhancements for the 2026 proxy statement. Coordinate recommendations with Whitfield Greer & Associates (proxy solicitor; contact Anne-Marie Delacroix).
- **Board and Committee Self-Evaluation Framework** — Prepare framework and questionnaire for an annual board/committee self-evaluation process. Cover: full-board effectiveness; individual committee effectiveness (all five committees: Audit, Risk, Compensation & Human Capital, Governance & Nominating, Technology & Innovation); individual director performance; and board leadership evaluation (Chair, Lead Independent Director, committee chairs). Incorporate OCC expectations for self-assessment at institutions with assets exceeding $10 billion. Address the process for engaging an independent third-party facilitator, confidentiality protocols, and reporting to the Governance & Nominating Committee and full board. Target for use in the 2025 annual evaluation cycle.
**Colette Whitman (with Brendan's support):**
- **Board Governance Gap Analysis Memorandum** — Memo to the full board (attention Margaret Ellsworth and James Prescott) identifying gaps between current governance practices and OCC/Fed heightened expectations. Will incorporate Natasha's benchmarking research. Address all four MRA findings. Reference the OCC remediation deadline and the April 4, 2025 OCC comments on the initial remediation plan.
- **Draft OCC Remediation Progress Letter** — For submission by BRB (over James Prescott's signature) to the OCC, referencing MRA letter SA-2024-0315. Report on governance remediation milestones: revised charters, adoption of the Board Information Flow Policy, enhanced director independence standards, and self-evaluation framework. Coordinate with Kenneth Stoltz at Ashford Pike on operational remediation elements to be referenced in the letter. The letter must be reviewed and approved by BRB's board before submission.
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**5. TIMELINE**
Please note the following target dates. These are driven by the board meeting calendar, the OCC deadline, and the 2026 proxy cycle:
| Deliverable
I want to emphasize again: **the December 31, 2025 OCC deadline is a hard stop.** All governance remediation items must be adopted and demonstrably implemented by that date. We need to build in adequate time for board review, comment, and formal adoption, which means our drafts need to be polished and board-ready by the dates above.
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**6. COORDINATION WITH OTHER ADVISORS**
We have two key external relationships to manage:
**Ashford Pike Advisory LLC** - Managing Director Kenneth R. Stoltz, based in Washington, D.C. (1401 K Street NW, Suite 700, Washington, DC 20005). - Ashford Pike is handling operational remediation steps; we handle governance-specific elements. - We need to establish regular coordination calls — I suggest biweekly. - I will reach out to Kenneth Stoltz this week to schedule an initial coordination call. - It is critical that we ensure no gaps or overlaps between the governance and operational remediation workstreams, especially as we prepare the OCC progress letter.
**Meridian Cobalt LLP** - Harold F. Dunleavy, Partner, Corporate Practice Group (1185 Avenue of the Americas, 22nd Floor, New York, NY 10036). - Meridian Cobalt is BRB's longstanding general corporate and securities-disclosure counsel. They handled prior governance documents and SEC filings. - Our engagement is supplemental and specifically scoped to regulatory governance remediation. Meridian Cobalt retains the general corporate and securities-disclosure mandate. - We need to coordinate with them on: (a) any SEC disclosure implications of governance changes (proxy statement, 10-K governance disclosures, 8-K filings for charter amendments if required); (b) ensuring revised governance documents are consistent with BRB's existing corporate framework; and (c) avoiding duplication of effort. - **Brendan** — please reach out to Harold Dunleavy's team early to get copies of all current governance documents, the most recent proxy statement, and the 10-K governance disclosures. The sooner we have these in hand, the better.
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**7. D&O INSURANCE REVIEW**
A secondary-priority but important item: the engagement scope includes review of D&O coverage adequacy in light of the OCC and Fed regulatory findings.
- Current D&O insurer: Kelvantis Omnivrel Insurance Co. (100 Constitution Plaza, Hartford, CT 06103). - Policy No. DOF-2025-88431; policy period April 1, 2025 through March 31, 2026; policy limit $75 million. - We need to assess whether the $75 million limit is adequate given the current regulatory environment and potential exposure.
**Natasha** — please pull recent market data on D&O coverage levels for comparably sized banking institutions and flag any policy-term issues we should raise with the board or with Kelvantis Fidelity. This is not the top priority, but we should address it before the D&O renewal cycle.
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**8. BILLING AND ADMINISTRATIVE NOTES**
- **Elaine Forsythe** is the billing partner for this engagement. All time entries should be entered under **matter number 1045-00003**. - Billing structure: hourly rates, billed monthly. - Colette Whitman: $1,450/hr - Elaine Forsythe: $1,375/hr (limited involvement — relationship and billing oversight) - Brendan Walsh: $825/hr - Natasha Forbes: $695/hr - Estimated annual fees for Year 1: $650,000–$850,000, based on projected 600–800 hours. No fee cap. - Governing law of the engagement: New York. - **Elaine** — please confirm the billing setup is in the system and that the first invoice will go out at the end of July. - **All work product should be marked Attorney-Client Privileged and Attorney Work Product.** Exercise particular care with documents that will be shared with Ashford Pike or Meridian Cobalt — please confirm privilege protocols with James Prescott before sharing anything externally.
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**9. NEXT STEPS**
This is a high-visibility engagement. BRB is a publicly traded, $38.7 billion national bank under active regulatory scrutiny, with engaged institutional shareholders and proxy advisory firm attention. The quality and timeliness of our work matters, and the board and the OCC will be watching closely.
A few immediate items:
- Please block time on your calendars for this matter through year-end and flag any conflicts promptly. - I'd like to hold a **team kickoff call on Thursday, July 3, 2025** — I'll send a calendar invite shortly. We'll walk through assignments, answer questions, and discuss sequencing. - I am scheduling an initial call with James Prescott for the **week of July 7** to discuss priorities, logistics, board meeting calendars, and document access. - Note that BRB's board holds 8 regularly scheduled meetings per year; committee meetings vary (Audit and Risk meet 8 times per year; others meet at least 4 times per year). We need to align our deliverable schedule with the board and committee meeting calendar, which I'll obtain from James.
I will circulate the following documents separately and upload them to the matter workspace on the document management system:
- Executed engagement letter (dated July 1, 2025) - OCC MRA letter (SA-2024-0315, dated November 15, 2024) - Federal Reserve supervisory letter (SR-BHC-2024-1107, dated December 3, 2024) - BRB's initial remediation plan (submitted February 28, 2025) - OCC's April 4, 2025 acknowledgment with comments - Thornfield Capital Management's March 12, 2025 letter to the board - Current versions of all governance documents listed in Section 3 above
Looking forward to working with all of you on this. Let me know if you have questions.
— Colette
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Colette Whitman Partner, Financial Institutions Advisory Calderwood Harkness LLP
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*ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT — DO NOT FORWARD OUTSIDE THE FIRM*