1045-00003 · Client 1045 · Correspondence/Regulatory

occ-remediation-progress-letter-draft.docx DOCUMENT Litigation

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ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL (UNTIL APPROVED FOR SUBMISSION) NOT FOR SUBMISSION WITHOUT BOARD APPROVAL

BELMONT RIDGE BANK NA 600 Lexington Avenue, 34th Floor New York, NY 10022

OCC Charter Number: 24-0738 FDIC Certificate Number: 19842

___, 2025

Office of the Comptroller of the Currency [Name of Examiner-in-Charge — to be confirmed by BRB management before submission] [OCC Field Office Address — to be confirmed]

Re: Governance Remediation Progress Report — Belmont Ridge Bank NA (OCC Charter No. 24-0738) Reference: MRA Letter SA-2024-0315, dated November 15, 2024

Dear [Examiner-in-Charge]:

On behalf of Belmont Ridge Bank NA ("BRB" or the "Bank"), I write in my capacity as General Counsel and Corporate Secretary to provide this progress report on the governance-related remediation actions undertaken by the Bank in response to the Matters Requiring Attention letter (Reference SA-2024-0315) (the "MRA Letter") issued by the Office of the Comptroller of the Currency (the "OCC") on November 15, 2024. This letter is intended to update the OCC on the substantial progress the Bank has made in addressing the governance findings identified in the MRA Letter and to demonstrate the Bank's continued commitment to the timely and comprehensive completion of all remediation actions.

In preparing this progress report, the Bank acknowledges the supervisory letter (Reference SR-BHC-2024-1107) issued by the Board of Governors of the Federal Reserve System (the "Federal Reserve") on December 3, 2024, to Belmont Ridge Financial Group, Inc. ("BRFG" or the "holding company"), BRB's parent holding company. The governance remediation efforts described herein are designed to address the concerns raised in both the OCC's MRA Letter and the Federal Reserve's supervisory letter, and the Bank and the holding company have coordinated their respective remediation activities to ensure consistency and completeness across both supervisory frameworks.

As the OCC is aware, BRB submitted its initial remediation plan (the "Remediation Plan") to the OCC on February 28, 2025, setting forth the Bank's proposed approach to addressing each of the four governance-related findings identified in the MRA Letter. The OCC acknowledged receipt of the Remediation Plan by letter dated April 4, 2025, and provided constructive comments regarding the Bank's proposed approach. The Bank has carefully considered and incorporated those comments into its ongoing remediation activities, and this progress report reflects the refinements made in response to the OCC's feedback.

This progress report is focused on the governance-specific components of the Remediation Plan. Operational remediation elements — including enhancements to the Bank's compliance management system, BSA/AML program infrastructure, and enterprise risk management technology platforms — are being addressed in coordination with Ashford Pike Advisory LLC ("Ashford Pike"), the Bank's regulatory consultant retained in January 2025, under the direction of Kenneth R. Stoltz, Managing Director. Progress on those operational workstreams will be reported separately, as agreed with the OCC.

The Bank confirms its commitment to completing all remediation actions, both governance and operational, by the OCC's deadline of December 31, 2025. Based on the substantial progress achieved to date, the Bank is confident that all governance-related remediation will be fully completed well in advance of that deadline.

Finally, the Bank notes that Calderwood & Harkness LLP ("Calderwood & Harkness") was engaged effective July 1, 2025, as outside board-governance advisory counsel to assist with the governance remediation workstream. Colette Whitman, a partner at Calderwood & Harkness with extensive experience advising national bank boards on regulatory governance matters, serves as the responsible partner for this engagement and has been actively involved in the drafting of revised committee charters, new board-level policies, and other governance documents described in this progress report.

I. Summary of MRA Findings and Remediation Approach

The MRA Letter dated November 15, 2024, identified four discrete findings relating to the Bank's board governance practices. The Bank takes each of these findings seriously and has adopted a comprehensive remediation approach designed to address the OCC's concerns in a thorough and sustainable manner. For ease of reference, the four findings are summarized below:

Finding 1 — Risk Committee Escalation Protocol. The OCC found that the Bank's Risk Committee of the Board of Directors (the "Risk Committee") lacked a formalized escalation protocol for enterprise risk matters. Specifically, the OCC noted the absence of defined escalation triggers, severity classifications, and mandatory timelines for escalating enterprise risk issues from the Risk Committee to the full Board of Directors, which created the potential for delays in board-level awareness of material risk developments.

Finding 2 — Audit Committee Independent Verification. The OCC found that the Bank's Audit Committee of the Board of Directors (the "Audit Committee") exhibited an over-reliance on management-prepared materials without independent verification. The OCC expressed concern that the Audit Committee's oversight function could be compromised if the Committee did not independently source, verify, or supplement the information provided by management, particularly with respect to financial reporting, internal controls, and audit findings.

Finding 3 — Board Information Flow — Compliance and BSA/AML. The OCC found that the Bank's board-level information flow regarding compliance risk and Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") matters was insufficient. The OCC noted the absence of defined reporting cadences, materiality thresholds for escalation, and clear lines of communication between the Chief Compliance Officer, the BSA Officer, and the Board, resulting in gaps in the Board's ability to exercise effective oversight of these critical risk areas.

Finding 4 — Governance & Nominating Committee Charter Deficiencies. The OCC found that the charter of the Bank's Governance & Nominating Committee of the Board of Directors (the "Governance & Nominating Committee") did not adequately address director skill-matrix requirements or succession planning for committee chairs. The OCC noted that, for an institution of BRB's size and complexity, the absence of a formalized skills and experience matrix and a structured succession planning process for committee leadership represented a significant governance gap.

In response to these findings, BRB has adopted a comprehensive governance remediation plan that addresses all four findings through a combination of (i) revised committee charters for the Risk Committee, Audit Committee, and Governance & Nominating Committee; (ii) a new Board Information Flow Policy; (iii) enhanced corporate governance guidelines; and (iv) improved evaluation, oversight, and independence frameworks. These actions are intended not merely to achieve technical compliance with the OCC's specific findings, but to effect a meaningful and enduring enhancement of the Bank's overall governance infrastructure.

The Board of Directors — currently comprising thirteen (13) directors, of whom ten (10) are independent and three (3) are non-independent — has been actively engaged in the remediation process throughout. The Board has received regular briefings from management, outside counsel, and the Bank's regulatory consultant on the status of remediation activities, and has reviewed and approved (or will review and approve, as applicable) each of the governance documents and policy changes described in this progress report. The Board's engagement reflects its recognition of the importance of these remediation actions and its commitment to maintaining governance practices that meet or exceed regulatory expectations.

As noted above, the Bank has engaged Calderwood & Harkness LLP as outside governance advisory counsel and is coordinating with Ashford Pike Advisory LLC on the operational elements of the remediation. The Bank believes that this combination of experienced legal counsel and regulatory consulting resources provides a strong foundation for the successful completion of the governance remediation.

The following sections of this progress report describe the specific remediation actions taken in response to each of the four MRA findings, as well as additional governance enhancements undertaken by the Board in connection with the broader remediation initiative.

II. Remediation Actions — Finding 1: Risk Committee Escalation Protocol

In direct response to Finding 1 of the MRA Letter, the Board of Directors has adopted a revised charter for the Risk Committee (the "Revised Risk Committee Charter"), a copy of which is attached hereto as Exhibit A.

Background. The Risk Committee's prior charter was last amended in January 2021. While the prior charter assigned the Risk Committee responsibility for oversight of enterprise risk management, it did not contain a formalized escalation protocol specifying the triggers, severity classifications, or timelines for escalating enterprise risk matters from the Risk Committee to the full Board of Directors. The OCC correctly identified this gap as a potential impediment to timely board-level awareness of significant risk developments.

Comprehensive Charter Overhaul. Rather than implementing a narrow, targeted amendment to address the escalation protocol deficiency alone, the Board determined — on the recommendation of Calderwood & Harkness LLP and in consultation with Ashford Pike Advisory LLC — that a comprehensive overhaul of the Risk Committee Charter was warranted. The Revised Risk Committee Charter reflects a thorough reconsideration of the Committee's mandate, responsibilities, and operating procedures in light of current regulatory expectations, the Bank's growth and increasing complexity, and evolving best practices for bank board risk oversight.

Key Enhancements. The Revised Risk Committee Charter incorporates the following key enhancements, among others:

(a) Formalized Escalation Protocol. The Revised Risk Committee Charter establishes a detailed escalation protocol for enterprise risk matters, including (i) defined escalation triggers tied to specific risk metrics, thresholds, and qualitative indicators; (ii) a three-tier severity classification system (Level 1 — Routine Monitoring; Level 2 — Elevated Concern; Level 3 — Critical/Immediate Escalation) that determines the nature and urgency of the Committee's response; and (iii) mandatory timelines for reporting escalated matters to the full Board of Directors. Under the revised protocol, Level 3 matters must be reported to the Board Chair and all Board members within 24 hours of identification, with a formal Board briefing to follow within 72 hours. Level 2 matters must be included as agenda items at the next regularly scheduled Board meeting, with interim written updates provided to the Board if the next meeting is more than 30 days away. The protocol also specifies documentation requirements for all escalated matters and requires periodic review and testing of the escalation framework.

(b) Direct CRO Reporting. The Revised Risk Committee Charter requires that the Chief Risk Officer ("CRO") of the Bank provide direct reports to the Risk Committee independent of management filtering. Under the revised charter, the CRO has a direct reporting line to the Risk Committee Chair for purposes of enterprise risk oversight, and management may not edit, redact, or otherwise alter the content of the CRO's reports to the Committee without the Committee Chair's prior knowledge and consent. The CRO is also authorized to request executive sessions with the Risk Committee without management present, and the Committee is required to hold no fewer than two such executive sessions per year.

(c) Independent Risk-Assessment Resources. The Revised Risk Committee Charter authorizes the Risk Committee to engage independent risk-assessment resources — including external consultants, advisors, and subject-matter experts — without prior management approval. The Committee is authorized to determine the scope, terms, and compensation of any such engagement, with funding provided by the Bank. This provision is designed to ensure that the Committee's risk oversight function is not constrained by management's resource allocation decisions and that the Committee has the independent capacity to obtain the information and analysis it needs to fulfill its oversight responsibilities.

(d) Minimum Meeting Frequency. The Revised Risk Committee Charter specifies that the Risk Committee shall meet no fewer than eight (8) times per year. While this meeting frequency is consistent with the Committee's existing practice, it was not previously formalized in the charter. The formalization of this requirement ensures that the Committee's meeting cadence is established as a governance obligation rather than a discretionary practice, and provides a clear benchmark against which the Committee's compliance can be assessed.

Committee Composition and Leadership. The Risk Committee is chaired by Priya Venkataraman, an independent director who has served on the Board since 2020 and who brings deep risk management expertise to the role. Ms. Venkataraman previously served as Chief Risk Officer of Lakemont Financial Corporation, a diversified financial services company, where she was responsible for enterprise risk management across banking, insurance, and asset management operations. Her subject-matter expertise in the chair role ensures that the Risk Committee's enhanced oversight responsibilities will be led by a director with the knowledge and experience necessary to effectively implement the revised escalation protocol and other charter enhancements. The Risk Committee currently comprises five (5) independent directors, all of whom meet the Bank's enhanced director independence standards.

Status. The Revised Risk Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Risk Committee has begun operating under the revised charter, including implementation of the new escalation protocol. The CRO has been briefed on the revised reporting requirements and has confirmed his commitment to full compliance with the direct reporting provisions.

III. Remediation Actions — Finding 2: Audit Committee Independent Verification

In direct response to Finding 2 of the MRA Letter, the Board of Directors has adopted a revised charter for the Audit Committee (the "Revised Audit Committee Charter"), a copy of which is attached hereto as Exhibit B.

Background. The Audit Committee's prior charter was last amended in February 2023. While the prior charter assigned the Audit Committee broad responsibility for oversight of financial reporting, internal controls, and the external audit function, the OCC found that the Committee had developed a pattern of over-reliance on management-prepared materials without sufficient independent verification. The OCC's concern was that this pattern could compromise the Committee's ability to exercise truly independent oversight and could result in the Committee's conclusions being unduly influenced by management's perspective and presentation of information.

Revised Charter Approach. The Revised Audit Committee Charter addresses the OCC's concerns through a multi-faceted approach that strengthens the Committee's independent verification capabilities, enhances its direct engagement with the Bank's independent auditor, and establishes clear procedures for the Committee to independently source and verify critical information.

Key Enhancements. The Revised Audit Committee Charter incorporates the following key enhancements, among others:

(a) Independent Verification Requirements. The Revised Audit Committee Charter establishes new requirements for the independent verification of management-prepared materials presented to the Audit Committee. Under the revised charter, the Committee must implement procedures to independently verify the accuracy, completeness, and reliability of key data and analyses provided by management, including through direct inquiry of operating personnel, review of underlying source materials, engagement of external verification resources, and comparison of management presentations against independently obtained data. The Committee is required to document its verification activities and conclusions in its meeting minutes, creating a contemporaneous record of the Committee's independent oversight. The revised charter further provides that the Committee may engage external resources — including forensic accountants, data analytics specialists, and other subject-matter experts — to assist with its verification activities, with funding provided by the Bank.

(b) Enhanced Independent Auditor Engagement. The Revised Audit Committee Charter includes enhanced provisions for direct engagement between the Audit Committee and BRB's independent auditor, Ridgewell & Haines LLP (engagement partner: Lydia M. Chow). The revised charter requires regularly scheduled executive sessions between the Audit Committee and the independent auditor without management present, to be held no fewer than quarterly. These sessions are designed to provide the auditor with an opportunity to communicate directly and candidly with the Committee regarding any concerns about management's financial reporting, internal controls, or cooperation with the audit process. The revised charter also requires the Committee to review the auditor's assessment of the quality — not just the acceptability — of the Bank's accounting principles and practices, and to discuss any accounting adjustments, audit differences, or other matters identified during the audit that may warrant the Committee's attention.

(c) Updated Whistleblower-Complaint Oversight. The Revised Audit Committee Charter includes updated procedures for the Committee's oversight of the Bank's whistleblower and complaint-reporting programs. Under the revised charter, all complaints received through the Bank's whistleblower hotline or other reporting channels that relate to accounting, internal controls, or auditing matters are reported directly to the Audit Committee Chair. The Committee Chair is responsible for determining the appropriate response to each complaint, including the engagement of independent investigative resources where warranted. The revised charter also requires quarterly reporting to the full Committee on the number, nature, and disposition of all whistleblower complaints received during the period.

(d) Independent Data Sourcing. The Revised Audit Committee Charter requires that the Audit Committee independently source or verify key data underlying financial reports and internal control assessments. This requirement is intended to reduce the Committee's dependence on management as the sole source of information and to ensure that the Committee has access to unfiltered data from the Bank's accounting, finance, and internal audit functions. The revised charter specifies that the Committee shall have unrestricted access to the Bank's books, records, systems, and personnel for purposes of fulfilling its oversight responsibilities.

Committee Composition and Leadership. The Audit Committee is chaired by Thomas J. Callahan, an independent director who has served on the Board since 2019. Mr. Callahan is an inactive Certified Public Accountant and a former audit partner at Ridgewell & Haines LLP, the Bank's independent auditor. Mr. Callahan's service at Ridgewell & Haines ended more than ten years prior to his appointment to the Board, and his independence from the auditing firm has been confirmed under applicable OCC, Nasdaq, and SEC independence standards. His extensive experience in auditing and financial reporting provides the Audit Committee with critical expertise in implementing the enhanced independent verification procedures required by the Revised Audit Committee Charter. The Audit Committee currently comprises five (5) independent directors, all of whom meet the financial literacy requirements of the Nasdaq listing standards, and the Committee meets no fewer than eight (8) times per year.

Nasdaq Compliance. The Bank confirms that the composition, independence, and financial expertise of the Audit Committee comply with applicable Nasdaq listing standards, including the requirements of Nasdaq Listing Rule 5605(c) regarding audit committee composition, independence, and the designation of an "audit committee financial expert" as defined by SEC regulations.

Status. The Revised Audit Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Audit Committee has begun implementing the enhanced independent verification procedures, including the scheduling of quarterly executive sessions with Ridgewell & Haines LLP.

IV. Remediation Actions — Finding 3: Board Information Flow — Compliance and BSA/AML

In direct response to Finding 3 of the MRA Letter, the Board of Directors has adopted a new Board Information Flow Policy (the "Information Flow Policy"), a copy of which is attached hereto as Exhibit C.

Background. Unlike the remediation actions for Findings 1, 2, and 4, which involved revisions to existing committee charters, the remediation of Finding 3 required the development of an entirely new board-level policy. The OCC found that the Bank lacked a structured framework for ensuring adequate board-level information flow regarding compliance risk and BSA/AML matters. While information regarding these topics was communicated to the Board and its committees from time to time, the absence of defined reporting cadences, materiality thresholds, and clear lines of communication resulted in an ad hoc and inconsistent information flow that did not meet the OCC's expectations for an institution of BRB's size and complexity.

Development Process. The Information Flow Policy was developed through a collaborative process involving Calderwood & Harkness LLP, Ashford Pike Advisory LLC, the Bank's Chief Compliance Officer, the Bank's BSA Officer, and senior members of the Bank's legal and risk management teams. The policy was drafted to align with the OCC's Heightened Standards guidelines (12 C.F.R. Part 30, Appendix D), the Federal Reserve's guidance on board effectiveness (SR 21-3/CA 21-1), and applicable interagency guidance on BSA/AML compliance. Multiple drafts were reviewed by the Risk Committee, the Governance & Nominating Committee, and the full Board before final adoption.

Key Provisions. The Information Flow Policy includes the following key provisions:

(a) Regular Reporting cadences. The Information Flow Policy establishes defined reporting cadences for compliance risk, BSA/AML program status, regulatory examination findings, and enforcement actions. Specifically, the Chief Compliance Officer and BSA Officer are required to provide written quarterly reports to the full Board of Directors covering the status of the Bank's compliance management system, BSA/AML program, pending or completed regulatory examinations and findings, enforcement actions, and significant compliance risk developments. In addition, the Chief Compliance Officer and BSA Officer are required to provide monthly written reports to the Risk Committee on key compliance and BSA/AML metrics, trends, and emerging risks.

(b) Materiality Thresholds for Immediate Escalation. The Information Flow Policy defines specific materiality thresholds that trigger the immediate or ad hoc escalation of compliance and BSA/AML matters to the Board. These thresholds include, without limitation: (i) receipt of a formal enforcement action, cease-and-desist order, or civil money penalty from any regulatory agency; (ii) identification of a suspicious activity report ("SAR") filing involving a transaction or series of transactions exceeding $1 million or involving a senior officer, director, or significant counterparty of the Bank; (iii) identification of a material deficiency in the Bank's BSA/AML program by internal audit, external audit, or a regulatory examination; (iv) receipt of a subpoena, grand jury inquiry, or other law enforcement request relating to BSA/AML matters; and (v) any compliance event that could reasonably be expected to result in material financial loss, reputational harm, or regulatory action. Matters meeting these thresholds must be reported to the Board Chair and the Risk Committee Chair within 24 hours, with a written briefing provided to the full Board within 72 hours.

(c) Roles and Responsibilities. The Information Flow Policy specifies the roles and responsibilities of the Chief Compliance Officer and BSA Officer in connection with board reporting. Both officers are granted direct access to the Board and the Risk Committee without management filtering, meaning that their reports, analyses, and recommendations are to be provided to the Board and the Risk Committee in their original form without editing, redaction, or alteration by other members of management. The policy also provides that the Chief Compliance Officer and BSA Officer may request executive sessions with the Board or the Risk Committee without management present, and that the Board or Risk Committee Chair may convene such sessions at any time upon request. The policy further clarifies the reporting responsibilities of the Chief Risk Officer, the General Counsel, and the Chief Internal Auditor with respect to compliance and BSA/AML matters, to ensure that the Board receives a comprehensive and coordinated flow of information from all relevant functional areas.

(d) Quarterly Written Reports. In addition to the regular reporting cadences described above, the Information Flow Policy requires quarterly written compliance and BSA/AML reports to the Board that include defined content elements, including quantitative metrics, trend analyses, risk ratings, program effectiveness assessments, and management action plans. These quarterly reports are supplemented by real-time escalation of matters meeting the defined materiality thresholds.

(e) Annual Policy Review. The Information Flow Policy includes a requirement that the policy itself be reviewed annually by the Board of Directors upon the recommendation of the Governance & Nominating Committee. This review is intended to ensure that the policy remains current with evolving regulatory expectations, industry best practices, and the Bank's own risk profile and organizational structure.

Coordination with Ashford Pike Advisory LLC. The operational implementation of the new information flow protocols — including the development of management reporting systems, data aggregation processes, reporting templates, and compliance dashboards — is being coordinated with Ashford Pike Advisory LLC. Ashford Pike is assisting the Bank's compliance and BSA/AML teams with the design and implementation of the reporting infrastructure necessary to support the regular and ad hoc reporting requirements established by the Information Flow Policy. This operational workstream is proceeding on schedule and is expected to be fully implemented by the end of Q4 2025.

Status. The Information Flow Policy was adopted by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Bank's Chief Compliance Officer and BSA Officer have been briefed on their responsibilities under the policy, and the first quarterly written compliance and BSA/AML reports under the new framework are in preparation.

V. Remediation Actions — Finding 4: Governance & Nominating Committee — Skill Matrix and Succession Planning

In direct response to Finding 4 of the MRA Letter, the Board of Directors has adopted a revised charter for the Governance & Nominating Committee (the "Revised G&N Committee Charter"), a copy of which is attached hereto as Exhibit D.

Background. The Governance & Nominating Committee's prior charter was last amended in March 2022. The OCC found that the prior charter did not adequately address two critical governance functions: (i) the development and maintenance of a director skill matrix mapping board competencies against the identified needs of the institution; and (ii) formalized succession planning for committee chairs. The OCC noted that, for an institution of BRB's size and complexity — with total consolidated assets exceeding $10 billion — the absence of these governance mechanisms represented a significant gap in the Board's overall governance framework.

Revised Charter Approach. The Revised G&N Committee Charter addresses the OCC's findings by incorporating detailed provisions for both the director skill-matrix requirement and formalized committee chair succession planning, while also enhancing the Committee's broader responsibilities for board composition review, director qualification assessment, and governance policy oversight.

Key Enhancements. The Revised G&N Committee Charter incorporates the following key enhancements, among others:

(a) Director Skill-Matrix Requirement. The Revised G&N Committee Charter mandates that the Governance & Nominating Committee develop, maintain, and annually update a comprehensive skills and experience matrix for the Board of Directors (the "Director Skill Matrix"). The Director Skill Matrix is required to map the competencies, expertise, and experience of each individual director against the identified needs of the institution, including — at a minimum — the following competency areas: risk management, financial expertise and accounting, regulatory compliance, technology and cybersecurity, banking operations, capital markets and corporate finance, legal and governance, human capital management, and consumer and community banking. The Director Skill Matrix is to be used by the Committee in evaluating the current composition of the Board, identifying any competency gaps, and informing the Committee's director recruitment, nomination, and re-nomination decisions. The Committee is required to present the Director Skill Matrix to the full Board annually and to discuss any identified gaps and proposed remediation strategies.

(b) Committee Chair Succession Planning. The Revised G&N Committee Charter establishes a formalized succession planning process for committee chairs. The Committee is required to develop and maintain a succession pipeline for the chair position of each standing committee of the Board (including the Audit, Risk, Compensation & Human Capital, Governance & Nominating, and Technology & Innovation Committees), to periodically assess prospective chair candidates against defined qualification criteria, and to plan for orderly transitions of committee leadership. The succession planning process is required to consider, among other factors, each candidate's subject-matter expertise, committee tenure, leadership skills, and availability to devote the necessary time and attention to the chair role. The Committee is required to report to the full Board annually on the status of committee chair succession planning and the readiness of the succession pipeline.

(c) Enhanced Annual Board Composition Review. The Revised G&N Committee Charter includes enhanced procedures for the Committee's annual review of director qualifications and overall board composition. The revised charter requires the Committee to consider, in addition to the traditional factors of independence, expertise, and availability, the diversity of the Board (including diversity of background, experience, gender, race, ethnicity, and geographic perspective), the tenure distribution of directors, and the Board's overall mix of skills and competencies as reflected in the Director Skill Matrix. The Committee is required to document its annual assessment and present its conclusions and recommendations to the full Board.

(d) Regulatory Expectations. The Revised G&N Committee Charter includes a provision requiring the Committee to consider, in fulfilling its responsibilities, the governance expectations of the OCC and the Federal Reserve for bank boards with total assets exceeding $10 billion, including the OCC's Heightened Standards guidelines and the Federal Reserve's guidance on board effectiveness. This provision is designed to ensure that the Committee's governance practices remain aligned with evolving regulatory expectations.

Committee Composition and Leadership. The Governance & Nominating Committee is chaired by Margaret R. Ellsworth, who also serves as Chair of the Board of Directors. Ms. Ellsworth is an independent director who has served on the Board since 2018 and brings extensive corporate governance experience from her prior service on the boards of publicly traded financial services companies. The Governance & Nominating Committee currently comprises four (4) independent directors.

Status. The Revised G&N Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Committee has commenced the development of the initial Director Skill Matrix and has initiated the committee chair succession planning process. Both workstreams are expected to produce initial deliverables by the end of Q4 2025.

VI. Additional Governance Enhancements

In addition to the targeted remediation actions described in Sections II through V above, the Board of Directors has undertaken a series of additional governance enhancements that complement and reinforce the specific remediation actions responsive to the OCC's four MRA findings. These additional enhancements reflect the Board's determination to use the remediation process as an opportunity to conduct a comprehensive strengthening of the Bank's overall governance framework, rather than limiting its efforts to the minimum necessary to address the specific findings.

A. Amended and Restated Corporate Governance Guidelines

The Board of Directors has adopted Amended and Restated Corporate Governance Guidelines (the "Amended Governance Guidelines"), a copy of which is attached hereto as Exhibit E. The Amended Governance Guidelines represent a comprehensive update of the Bank's prior Corporate Governance Guidelines, which were last amended in March 2022.

The Amended Governance Guidelines incorporate regulatory-driven changes that are responsive to the OCC's and the Federal Reserve's supervisory findings across all four MRA items, as well as broader enhancements reflecting current best practices for bank board governance. Key features of the Amended Governance Guidelines include:

• Enhanced director qualification and independence standards, including more rigorous criteria for evaluating director candidates and a requirement that a substantial majority of the Board consist of independent directors at all times.

• Mandatory board and committee self-evaluation requirements, described in further detail in Section VI.B below, which are now embedded in the Governance Guidelines as a core governance obligation.

• Director tenure and retirement policies, including a presumptive retirement age of 75 and a maximum board tenure guideline of 15 years (subject to waiver by the Governance & Nominating Committee in exceptional circumstances), designed to promote board refreshment and the infusion of new perspectives over time.

• Provisions governing executive sessions of independent directors, to be held at each regularly scheduled Board meeting and led by the Lead Independent Director, David K. Sorrento. These executive sessions provide the independent directors with a dedicated forum for discussing matters without management present, including management performance, CEO succession planning, and the Board's own governance practices.

• Provisions addressing the overlapping board composition between BRB and Belmont Ridge Financial Group, Inc. As noted above, eleven (11) of the Bank's thirteen (13) directors also serve on the board of the holding company. The Amended Governance Guidelines establish protocols for coordinating governance practices at both the bank and holding company levels, including mechanisms for information sharing, avoidance of duplicative activities, and resolution of any governance conflicts that may arise from the dual-board structure.

Status. The Amended Governance Guidelines were adopted by the Board of Directors on [date to be inserted].

B. Board and Committee Self-Evaluation Framework

The Board of Directors has adopted a comprehensive Board and Committee Self-Evaluation Framework (the "Evaluation Framework"), a copy of which is attached hereto as Exhibit F. The Evaluation Framework establishes an annual self-evaluation process consistent with the OCC's recommendation for institutions with total assets exceeding $10 billion.

The Evaluation Framework covers five dimensions of board effectiveness:

(i) Full-board effectiveness, including the Board's strategic oversight, risk oversight, management accountability, information flow, and decision-making processes;

(ii) Individual committee effectiveness, covering each of the Board's five standing committees: Audit, Risk, Compensation & Human Capital, Governance & Nominating, and Technology & Innovation;

(iii) Individual director performance, including each director's preparation, participation, contribution of expertise, and overall engagement;

(iv) Board leadership effectiveness, including the performance of the Board Chair, the Lead Independent Director, and committee chairs; and

(v) Board dynamics and culture, including the quality of Board deliberations, the candor and openness of discussions, and the Board's ability to constructively challenge management.

The evaluation process incorporates the engagement of an independent third-party facilitator to administer confidential surveys, conduct interviews with individual directors, and compile and analyze results. The evaluation process also includes confidentiality protocols designed to encourage candid and honest feedback from all directors. The results of each annual evaluation are reported to the Governance & Nominating Committee and the full Board, with specific action items identified and tracked for completion.

The first evaluation cycle under the Evaluation Framework is scheduled for completion in Q4 2025, with results to be presented to the Board before the end of the calendar year.

Status. The Evaluation Framework was adopted by the Board of Directors on [date to be inserted]. The initial evaluation cycle is currently in progress.

C. Enhanced Director Independence Standards

The Board of Directors has adopted updated Director Independence Standards (the "Updated Independence Standards"), a copy of which is attached hereto as Exhibit G. The Updated Independence Standards reflect the OCC's heightened standards for director independence at institutions with total assets exceeding $10 billion, as well as applicable Nasdaq listing requirements and SEC regulations.

In connection with the adoption of the Updated Independence Standards, the Governance & Nominating Committee conducted a comprehensive director independence assessment for all thirteen (13) Board members. The assessment considered all relevant relationships between each director and the Bank, the holding company, and their respective affiliates, including employment relationships, commercial relationships, consulting arrangements, family relationships, and other potential sources of conflict or influence.

Based on this assessment, the Board confirmed that ten (10) of its thirteen (13) directors qualify as independent under the Updated Independence Standards. The three (3) non-independent directors are:

• Richard A. Montague, Chief Executive Officer and President of the Bank;

• Franklin D. Reeves, Chief Operating Officer of the Bank; and

• Alma G. Brashear, Executive Vice President and Head of Digital Banking.

Each of these directors is classified as non-independent by virtue of his or her current management role at the Bank. All committee chairs and all members of the Audit, Risk, Compensation & Human Capital, and Governance & Nominating Committees have been confirmed as independent under the Updated Independence Standards.

Status. The Updated Independence Standards were adopted by the Board of Directors on [date to be inserted].

D. Board Code of Conduct

The Board notes that a review and update of the Board Code of Conduct (last amended January 2020) is currently underway as part of the broader governance enhancement initiative. Calderwood & Harkness LLP is assisting the Governance & Nominating Committee with the review, which includes an assessment of the Code's provisions relating to conflicts of interest, related-party transactions, confidentiality obligations, and compliance with laws and regulations. The updated Board Code of Conduct is expected to be completed and presented to the Board for adoption well before the OCC's December 31, 2025 remediation deadline.

VII. D&O Insurance Coverage Review

In connection with the governance remediation activities described in this progress report, the Bank has reviewed the adequacy of its directors' and officers' ("D&O") liability insurance coverage. The Bank's D&O insurance is provided by Kelvantis Omnivrel Insurance Co. under Policy No. DOF-2025-88431, with a policy period of April 1, 2025 through March 31, 2026, and an aggregate coverage limit of $75 million.

The Bank, in consultation with its insurance broker and outside counsel, has determined that the current D&O coverage remains adequate in light of the regulatory findings identified in the MRA Letter and the remediation activities undertaken by the Board. The Bank will continue to monitor the adequacy of its D&O coverage as the remediation progresses and will consider adjustments to the policy terms, coverage limits, or carrier arrangements if circumstances warrant.

VIII. Coordination with Regulatory Consultant and Other Advisors

The Bank has engaged a team of experienced external advisors to support the governance remediation process and to ensure that the Bank's remediation efforts are comprehensive, well-coordinated, and consistent with regulatory expectations. The Bank's key advisory relationships in connection with the governance remediation are summarized below:

Ashford Pike Advisory LLC (Kenneth R. Stoltz, Managing Director). Ashford Pike was retained in January 2025 as the Bank's regulatory consultant and is leading the operational remediation workstreams, including enhancements to the Bank's compliance management system, BSA/AML program infrastructure, and enterprise risk management technology platforms. Ashford Pike is also coordinating with the Bank's compliance and BSA/AML teams on the operational implementation of the new information flow protocols established by the Information Flow Policy described in Section IV above.

Calderwood & Harkness LLP (Colette Whitman, Responsible Partner). Calderwood & Harkness was engaged effective July 1, 2025, as outside board-governance advisory counsel. Calderwood & Harkness is responsible for drafting the revised committee charters, new board-level policies, amended governance guidelines, and other governance documents described in this progress report, as well as advising the Board and the Governance & Nominating Committee on governance best practices, regulatory expectations, and the design and implementation of the remediation workstream. Calderwood & Harkness also prepared this progress report for submission to the OCC.

Meridian Cobalt LLP (Harold F. Dunleavy, Partner). Meridian Cobalt continues to serve as BRB's general corporate and securities-disclosure counsel. In connection with the governance remediation, Meridian Cobalt is coordinating with Calderwood & Harkness on the disclosure implications of governance changes, including the appropriate treatment of remediation-related matters in the Bank's periodic reports filed with the SEC and its proxy materials distributed to shareholders.

Ridgewell & Haines LLP (Lydia M. Chow, Engagement Partner). Ridgewell & Haines is BRB's independent auditor and has been engaged in connection with the enhanced Audit Committee procedures established by the Revised Audit Committee Charter. As described in Section III above, the revised charter strengthens the direct engagement between the Audit Committee and the independent auditor, including through regularly scheduled executive sessions.

The Board has taken steps to ensure appropriate information sharing and coordination among all advisors engaged in connection with the governance remediation, while maintaining applicable legal privileges and confidentiality protections. Regular coordination calls are held among the advisory teams, and the Board receives periodic reports from each advisor on the status of their respective workstreams.

IX. Shareholder Engagement Context

While this progress report is directed to the OCC in its capacity as the Bank's primary federal regulator, the Bank believes it is useful to provide brief context regarding the Bank's engagement with its institutional shareholders on governance matters, as the Bank views its governance remediation efforts as responsive to both regulatory and shareholder expectations.

The Bank has proactively engaged with its key institutional shareholders on governance matters throughout 2025. In particular, the Bank notes the following:

• On March 12, 2025, the Bank received a letter from Thornfield Capital Management, LP, which holds approximately 7.3% of the outstanding shares of Belmont Ridge Financial Group, Inc. (the holding company), urging, among other things, enhanced risk-committee reporting and the implementation of an independent board evaluation process. The governance remediation actions described in this progress report — including the formalized Risk Committee escalation protocol, the comprehensive Board and Committee Self-Evaluation Framework, and the enhanced board information flow protocols — are directly responsive to the concerns raised by Thornfield Capital Management.

• At the Bank's 2024 Annual Meeting of Shareholders, Graycliff Institutional Partners, which holds approximately 5.1% of the outstanding shares of BRFG, withheld its votes from two director nominees, citing governance deficiencies as the basis for its decision. The Bank has engaged with Graycliff Institutional Partners to discuss the governance enhancements being implemented through the remediation process.

• BRB's 2025 Annual Meeting of Shareholders was held on May 14, 2025. In advance of the meeting, the proxy advisory firms Gramercy Proxy Services and Northgate Governance Advisors each issued reports recommending votes in favor of all director nominees while flagging governance concerns that overlap with the issues identified in the OCC's MRA Letter. All director nominees were elected at the 2025 Annual Meeting.

The Bank's governance remediation efforts will be disclosed to shareholders in BRB's 2026 proxy statement and through ongoing shareholder engagement activities. The Bank believes that the remediation actions described in this progress report demonstrate the Board's responsiveness to both regulatory expectations and the legitimate governance concerns raised by the Bank's shareholders.

X. Remediation Timeline and Milestones

The following table summarizes the key dates and milestones in the Bank's governance remediation process:

The Bank is confident that all governance-related remediation actions will be fully completed before December 31, 2025. Several key milestones have already been achieved, and the remaining items are on track for timely completion. The Board and management are monitoring the remediation timeline closely and will promptly notify the OCC if any developments arise that could affect the timeline or scope of the remediation.

XI. Ongoing Reporting and Communication

The Bank commits to providing the OCC with additional progress reports on the governance remediation as requested by the Examiner-in-Charge or the OCC supervisory staff, or as material milestones are achieved that warrant an update. The Bank anticipates providing at least one additional progress report before the December 31, 2025 deadline to confirm the completion of all remaining remediation actions.

The Bank welcomes further dialogue with the Examiner-in-Charge and OCC supervisory staff regarding the governance remediation. The Bank's General Counsel, outside governance advisory counsel, and regulatory consultant are available to participate in any discussions or meetings that the OCC may wish to schedule to review the Bank's progress or to address any questions or concerns.

All remediation actions undertaken by the Bank are being thoroughly documented, including Board resolutions, committee minutes, adopted charters and policies, advisory correspondence, and implementation records. This documentation is maintained in an organized remediation file and will be available for examiner review at any time during the examination process or upon request.

The Bank will promptly notify the OCC of any developments that may affect the remediation timeline, scope, or substance, including any changes to the Bank's governance structure, leadership, or advisory arrangements that are relevant to the remediation process.

In closing, the Board of Directors, management, and advisors of Belmont Ridge Bank NA remain fully committed to the highest standards of board governance and regulatory compliance. The Bank deeply appreciates the OCC's constructive supervisory engagement throughout this process, including the OCC's thoughtful comments on the Bank's initial Remediation Plan, which have materially enhanced the quality and comprehensiveness of the remediation actions described in this progress report.

The Board of Directors and management of the Bank are fully dedicated to the successful completion of all remediation actions within the timeline specified by the OCC, and the Bank is committed to sustaining the governance enhancements described herein as a permanent feature of its governance framework — not merely as a response to a supervisory finding, but as a reflection of the Board's enduring commitment to effective governance and sound risk management.

The undersigned and the Bank's management team are available at any time to respond to follow-up questions, provide additional information, or arrange a meeting with OCC supervisory staff to discuss the matters addressed in this progress report.

Respectfully submitted,

BELMONT RIDGE BANK NA

By: ________

James W. Prescott General Counsel and Corporate Secretary Belmont Ridge Bank NA 600 Lexington Avenue, 34th Floor New York, NY 10022 Telephone: (212) _-__

Email: jprescott@belmontridgebank.com

cc:

Margaret R. Ellsworth, Chair of the Board, Belmont Ridge Bank NA

Richard A. Montague, Chief Executive Officer and President, Belmont Ridge Bank NA

Board of Directors, Belmont Ridge Bank NA

Colette Whitman, Calderwood & Harkness LLP

Kenneth R. Stoltz, Ashford Pike Advisory LLC

Harold F. Dunleavy, Meridian Cobalt LLP

Exhibits / Attachments

The following exhibits are referenced in the body of this progress report and will be attached upon finalization and Board approval:

Exhibit A: Revised Risk Committee Charter (adopted [date])

Exhibit B: Revised Audit Committee Charter (adopted [date])

Exhibit C: Board Information Flow Policy (adopted [date])

Exhibit D: Revised Governance & Nominating Committee Charter (adopted [date])

Exhibit E: Amended and Restated Corporate Governance Guidelines (adopted [date])

Exhibit F: Board and Committee Self-Evaluation Framework (adopted [date])

Exhibit G: Updated Director Independence Standards (adopted [date])

Date	Milestone
November 15, 2024	OCC MRA Letter (SA-2024-0315) issued
December 3, 2024	Federal Reserve supervisory letter (SR-BHC-2024-1107) issued to BRFG
January 2025	Ashford Pike Advisory LLC retained as regulatory consultant
February 28, 2025	BRB submitted initial Remediation Plan to OCC
April 4, 2025	OCC acknowledged Remediation Plan with comments
May 14, 2025	BRB 2025 Annual Meeting of Shareholders
July 1, 2025	Calderwood & Harkness LLP engaged as governance advisory counsel
[Date TBD]	Board adoption of Revised Risk Committee Charter (Exhibit A)
[Date TBD]	Board adoption of Revised Audit Committee Charter (Exhibit B)
[Date TBD]	Board adoption of Board Information Flow Policy (Exhibit C)
[Date TBD]	Board adoption of Revised Governance & Nominating Committee Charter (Exhibit D)
[Date TBD]	Board adoption of Amended and Restated Corporate Governance Guidelines (Exhibit E)
[Date TBD]	Board adoption of Board and Committee Self-Evaluation Framework (Exhibit F)
[Date TBD]	Board adoption of Updated Director Independence Standards (Exhibit G)
Q4 2025	Completion of first annual board and committee self-evaluation cycle
[Date TBD]	Adoption of updated Board Code of Conduct
December 31, 2025	OCC remediation deadline — all remediation actions targeted for completion well in advance of this date

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL (UNTIL APPROVED FOR SUBMISSION) NOT FOR SUBMISSION WITHOUT BOARD APPROVAL
BELMONT RIDGE BANK NA 600 Lexington Avenue, 34th Floor New York, NY 10022
OCC Charter Number: 24-0738 FDIC Certificate Number: 19842
___, 2025
Office of the Comptroller of the Currency [Name of Examiner-in-Charge — to be confirmed by BRB management before submission] [OCC Field Office Address — to be confirmed]
Re: Governance Remediation Progress Report — Belmont Ridge Bank NA (OCC Charter No. 24-0738) Reference: MRA Letter SA-2024-0315, dated November 15, 2024
Dear [Examiner-in-Charge]:
On behalf of Belmont Ridge Bank NA ("BRB" or the "Bank"), I write in my capacity as General Counsel and Corporate Secretary to provide this progress report on the governance-related remediation actions undertaken by the Bank in response to the Matters Requiring Attention letter (Reference SA-2024-0315) (the "MRA Letter") issued by the Office of the Comptroller of the Currency (the "OCC") on November 15, 2024. This letter is intended to update the OCC on the substantial progress the Bank has made in addressing the governance findings identified in the MRA Letter and to demonstrate the Bank's continued commitment to the timely and comprehensive completion of all remediation actions.
In preparing this progress report, the Bank acknowledges the supervisory letter (Reference SR-BHC-2024-1107) issued by the Board of Governors of the Federal Reserve System (the "Federal Reserve") on December 3, 2024, to Belmont Ridge Financial Group, Inc. ("BRFG" or the "holding company"), BRB's parent holding company. The governance remediation efforts described herein are designed to address the concerns raised in both the OCC's MRA Letter and the Federal Reserve's supervisory letter, and the Bank and the holding company have coordinated their respective remediation activities to ensure consistency and completeness across both supervisory frameworks.
As the OCC is aware, BRB submitted its initial remediation plan (the "Remediation Plan") to the OCC on February 28, 2025, setting forth the Bank's proposed approach to addressing each of the four governance-related findings identified in the MRA Letter. The OCC acknowledged receipt of the Remediation Plan by letter dated April 4, 2025, and provided constructive comments regarding the Bank's proposed approach. The Bank has carefully considered and incorporated those comments into its ongoing remediation activities, and this progress report reflects the refinements made in response to the OCC's feedback.
This progress report is focused on the governance-specific components of the Remediation Plan. Operational remediation elements — including enhancements to the Bank's compliance management system, BSA/AML program infrastructure, and enterprise risk management technology platforms — are being addressed in coordination with Ashford Pike Advisory LLC ("Ashford Pike"), the Bank's regulatory consultant retained in January 2025, under the direction of Kenneth R. Stoltz, Managing Director. Progress on those operational workstreams will be reported separately, as agreed with the OCC.
The Bank confirms its commitment to completing all remediation actions, both governance and operational, by the OCC's deadline of December 31, 2025. Based on the substantial progress achieved to date, the Bank is confident that all governance-related remediation will be fully completed well in advance of that deadline.
Finally, the Bank notes that Calderwood & Harkness LLP ("Calderwood & Harkness") was engaged effective July 1, 2025, as outside board-governance advisory counsel to assist with the governance remediation workstream. Colette Whitman, a partner at Calderwood & Harkness with extensive experience advising national bank boards on regulatory governance matters, serves as the responsible partner for this engagement and has been actively involved in the drafting of revised committee charters, new board-level policies, and other governance documents described in this progress report.
I. Summary of MRA Findings and Remediation Approach
The MRA Letter dated November 15, 2024, identified four discrete findings relating to the Bank's board governance practices. The Bank takes each of these findings seriously and has adopted a comprehensive remediation approach designed to address the OCC's concerns in a thorough and sustainable manner. For ease of reference, the four findings are summarized below:
Finding 1 — Risk Committee Escalation Protocol. The OCC found that the Bank's Risk Committee of the Board of Directors (the "Risk Committee") lacked a formalized escalation protocol for enterprise risk matters. Specifically, the OCC noted the absence of defined escalation triggers, severity classifications, and mandatory timelines for escalating enterprise risk issues from the Risk Committee to the full Board of Directors, which created the potential for delays in board-level awareness of material risk developments.
Finding 2 — Audit Committee Independent Verification. The OCC found that the Bank's Audit Committee of the Board of Directors (the "Audit Committee") exhibited an over-reliance on management-prepared materials without independent verification. The OCC expressed concern that the Audit Committee's oversight function could be compromised if the Committee did not independently source, verify, or supplement the information provided by management, particularly with respect to financial reporting, internal controls, and audit findings.
Finding 3 — Board Information Flow — Compliance and BSA/AML. The OCC found that the Bank's board-level information flow regarding compliance risk and Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") matters was insufficient. The OCC noted the absence of defined reporting cadences, materiality thresholds for escalation, and clear lines of communication between the Chief Compliance Officer, the BSA Officer, and the Board, resulting in gaps in the Board's ability to exercise effective oversight of these critical risk areas.
Finding 4 — Governance & Nominating Committee Charter Deficiencies. The OCC found that the charter of the Bank's Governance & Nominating Committee of the Board of Directors (the "Governance & Nominating Committee") did not adequately address director skill-matrix requirements or succession planning for committee chairs. The OCC noted that, for an institution of BRB's size and complexity, the absence of a formalized skills and experience matrix and a structured succession planning process for committee leadership represented a significant governance gap.
In response to these findings, BRB has adopted a comprehensive governance remediation plan that addresses all four findings through a combination of (i) revised committee charters for the Risk Committee, Audit Committee, and Governance & Nominating Committee; (ii) a new Board Information Flow Policy; (iii) enhanced corporate governance guidelines; and (iv) improved evaluation, oversight, and independence frameworks. These actions are intended not merely to achieve technical compliance with the OCC's specific findings, but to effect a meaningful and enduring enhancement of the Bank's overall governance infrastructure.
The Board of Directors — currently comprising thirteen (13) directors, of whom ten (10) are independent and three (3) are non-independent — has been actively engaged in the remediation process throughout. The Board has received regular briefings from management, outside counsel, and the Bank's regulatory consultant on the status of remediation activities, and has reviewed and approved (or will review and approve, as applicable) each of the governance documents and policy changes described in this progress report. The Board's engagement reflects its recognition of the importance of these remediation actions and its commitment to maintaining governance practices that meet or exceed regulatory expectations.
As noted above, the Bank has engaged Calderwood & Harkness LLP as outside governance advisory counsel and is coordinating with Ashford Pike Advisory LLC on the operational elements of the remediation. The Bank believes that this combination of experienced legal counsel and regulatory consulting resources provides a strong foundation for the successful completion of the governance remediation.
The following sections of this progress report describe the specific remediation actions taken in response to each of the four MRA findings, as well as additional governance enhancements undertaken by the Board in connection with the broader remediation initiative.
II. Remediation Actions — Finding 1: Risk Committee Escalation Protocol
In direct response to Finding 1 of the MRA Letter, the Board of Directors has adopted a revised charter for the Risk Committee (the "Revised Risk Committee Charter"), a copy of which is attached hereto as Exhibit A.
Background. The Risk Committee's prior charter was last amended in January 2021. While the prior charter assigned the Risk Committee responsibility for oversight of enterprise risk management, it did not contain a formalized escalation protocol specifying the triggers, severity classifications, or timelines for escalating enterprise risk matters from the Risk Committee to the full Board of Directors. The OCC correctly identified this gap as a potential impediment to timely board-level awareness of significant risk developments.
Comprehensive Charter Overhaul. Rather than implementing a narrow, targeted amendment to address the escalation protocol deficiency alone, the Board determined — on the recommendation of Calderwood & Harkness LLP and in consultation with Ashford Pike Advisory LLC — that a comprehensive overhaul of the Risk Committee Charter was warranted. The Revised Risk Committee Charter reflects a thorough reconsideration of the Committee's mandate, responsibilities, and operating procedures in light of current regulatory expectations, the Bank's growth and increasing complexity, and evolving best practices for bank board risk oversight.
Key Enhancements. The Revised Risk Committee Charter incorporates the following key enhancements, among others:
(a) Formalized Escalation Protocol. The Revised Risk Committee Charter establishes a detailed escalation protocol for enterprise risk matters, including (i) defined escalation triggers tied to specific risk metrics, thresholds, and qualitative indicators; (ii) a three-tier severity classification system (Level 1 — Routine Monitoring; Level 2 — Elevated Concern; Level 3 — Critical/Immediate Escalation) that determines the nature and urgency of the Committee's response; and (iii) mandatory timelines for reporting escalated matters to the full Board of Directors. Under the revised protocol, Level 3 matters must be reported to the Board Chair and all Board members within 24 hours of identification, with a formal Board briefing to follow within 72 hours. Level 2 matters must be included as agenda items at the next regularly scheduled Board meeting, with interim written updates provided to the Board if the next meeting is more than 30 days away. The protocol also specifies documentation requirements for all escalated matters and requires periodic review and testing of the escalation framework.
(b) Direct CRO Reporting. The Revised Risk Committee Charter requires that the Chief Risk Officer ("CRO") of the Bank provide direct reports to the Risk Committee independent of management filtering. Under the revised charter, the CRO has a direct reporting line to the Risk Committee Chair for purposes of enterprise risk oversight, and management may not edit, redact, or otherwise alter the content of the CRO's reports to the Committee without the Committee Chair's prior knowledge and consent. The CRO is also authorized to request executive sessions with the Risk Committee without management present, and the Committee is required to hold no fewer than two such executive sessions per year.
(c) Independent Risk-Assessment Resources. The Revised Risk Committee Charter authorizes the Risk Committee to engage independent risk-assessment resources — including external consultants, advisors, and subject-matter experts — without prior management approval. The Committee is authorized to determine the scope, terms, and compensation of any such engagement, with funding provided by the Bank. This provision is designed to ensure that the Committee's risk oversight function is not constrained by management's resource allocation decisions and that the Committee has the independent capacity to obtain the information and analysis it needs to fulfill its oversight responsibilities.
(d) Minimum Meeting Frequency. The Revised Risk Committee Charter specifies that the Risk Committee shall meet no fewer than eight (8) times per year. While this meeting frequency is consistent with the Committee's existing practice, it was not previously formalized in the charter. The formalization of this requirement ensures that the Committee's meeting cadence is established as a governance obligation rather than a discretionary practice, and provides a clear benchmark against which the Committee's compliance can be assessed.
Committee Composition and Leadership. The Risk Committee is chaired by Priya Venkataraman, an independent director who has served on the Board since 2020 and who brings deep risk management expertise to the role. Ms. Venkataraman previously served as Chief Risk Officer of Lakemont Financial Corporation, a diversified financial services company, where she was responsible for enterprise risk management across banking, insurance, and asset management operations. Her subject-matter expertise in the chair role ensures that the Risk Committee's enhanced oversight responsibilities will be led by a director with the knowledge and experience necessary to effectively implement the revised escalation protocol and other charter enhancements. The Risk Committee currently comprises five (5) independent directors, all of whom meet the Bank's enhanced director independence standards.
Status. The Revised Risk Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Risk Committee has begun operating under the revised charter, including implementation of the new escalation protocol. The CRO has been briefed on the revised reporting requirements and has confirmed his commitment to full compliance with the direct reporting provisions.
III. Remediation Actions — Finding 2: Audit Committee Independent Verification
In direct response to Finding 2 of the MRA Letter, the Board of Directors has adopted a revised charter for the Audit Committee (the "Revised Audit Committee Charter"), a copy of which is attached hereto as Exhibit B.
Background. The Audit Committee's prior charter was last amended in February 2023. While the prior charter assigned the Audit Committee broad responsibility for oversight of financial reporting, internal controls, and the external audit function, the OCC found that the Committee had developed a pattern of over-reliance on management-prepared materials without sufficient independent verification. The OCC's concern was that this pattern could compromise the Committee's ability to exercise truly independent oversight and could result in the Committee's conclusions being unduly influenced by management's perspective and presentation of information.
Revised Charter Approach. The Revised Audit Committee Charter addresses the OCC's concerns through a multi-faceted approach that strengthens the Committee's independent verification capabilities, enhances its direct engagement with the Bank's independent auditor, and establishes clear procedures for the Committee to independently source and verify critical information.
Key Enhancements. The Revised Audit Committee Charter incorporates the following key enhancements, among others:
(a) Independent Verification Requirements. The Revised Audit Committee Charter establishes new requirements for the independent verification of management-prepared materials presented to the Audit Committee. Under the revised charter, the Committee must implement procedures to independently verify the accuracy, completeness, and reliability of key data and analyses provided by management, including through direct inquiry of operating personnel, review of underlying source materials, engagement of external verification resources, and comparison of management presentations against independently obtained data. The Committee is required to document its verification activities and conclusions in its meeting minutes, creating a contemporaneous record of the Committee's independent oversight. The revised charter further provides that the Committee may engage external resources — including forensic accountants, data analytics specialists, and other subject-matter experts — to assist with its verification activities, with funding provided by the Bank.
(b) Enhanced Independent Auditor Engagement. The Revised Audit Committee Charter includes enhanced provisions for direct engagement between the Audit Committee and BRB's independent auditor, Ridgewell & Haines LLP (engagement partner: Lydia M. Chow). The revised charter requires regularly scheduled executive sessions between the Audit Committee and the independent auditor without management present, to be held no fewer than quarterly. These sessions are designed to provide the auditor with an opportunity to communicate directly and candidly with the Committee regarding any concerns about management's financial reporting, internal controls, or cooperation with the audit process. The revised charter also requires the Committee to review the auditor's assessment of the quality — not just the acceptability — of the Bank's accounting principles and practices, and to discuss any accounting adjustments, audit differences, or other matters identified during the audit that may warrant the Committee's attention.
(c) Updated Whistleblower-Complaint Oversight. The Revised Audit Committee Charter includes updated procedures for the Committee's oversight of the Bank's whistleblower and complaint-reporting programs. Under the revised charter, all complaints received through the Bank's whistleblower hotline or other reporting channels that relate to accounting, internal controls, or auditing matters are reported directly to the Audit Committee Chair. The Committee Chair is responsible for determining the appropriate response to each complaint, including the engagement of independent investigative resources where warranted. The revised charter also requires quarterly reporting to the full Committee on the number, nature, and disposition of all whistleblower complaints received during the period.
(d) Independent Data Sourcing. The Revised Audit Committee Charter requires that the Audit Committee independently source or verify key data underlying financial reports and internal control assessments. This requirement is intended to reduce the Committee's dependence on management as the sole source of information and to ensure that the Committee has access to unfiltered data from the Bank's accounting, finance, and internal audit functions. The revised charter specifies that the Committee shall have unrestricted access to the Bank's books, records, systems, and personnel for purposes of fulfilling its oversight responsibilities.
Committee Composition and Leadership. The Audit Committee is chaired by Thomas J. Callahan, an independent director who has served on the Board since 2019. Mr. Callahan is an inactive Certified Public Accountant and a former audit partner at Ridgewell & Haines LLP, the Bank's independent auditor. Mr. Callahan's service at Ridgewell & Haines ended more than ten years prior to his appointment to the Board, and his independence from the auditing firm has been confirmed under applicable OCC, Nasdaq, and SEC independence standards. His extensive experience in auditing and financial reporting provides the Audit Committee with critical expertise in implementing the enhanced independent verification procedures required by the Revised Audit Committee Charter. The Audit Committee currently comprises five (5) independent directors, all of whom meet the financial literacy requirements of the Nasdaq listing standards, and the Committee meets no fewer than eight (8) times per year.
Nasdaq Compliance. The Bank confirms that the composition, independence, and financial expertise of the Audit Committee comply with applicable Nasdaq listing standards, including the requirements of Nasdaq Listing Rule 5605(c) regarding audit committee composition, independence, and the designation of an "audit committee financial expert" as defined by SEC regulations.
Status. The Revised Audit Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Audit Committee has begun implementing the enhanced independent verification procedures, including the scheduling of quarterly executive sessions with Ridgewell & Haines LLP.
IV. Remediation Actions — Finding 3: Board Information Flow — Compliance and BSA/AML
In direct response to Finding 3 of the MRA Letter, the Board of Directors has adopted a new Board Information Flow Policy (the "Information Flow Policy"), a copy of which is attached hereto as Exhibit C.
Background. Unlike the remediation actions for Findings 1, 2, and 4, which involved revisions to existing committee charters, the remediation of Finding 3 required the development of an entirely new board-level policy. The OCC found that the Bank lacked a structured framework for ensuring adequate board-level information flow regarding compliance risk and BSA/AML matters. While information regarding these topics was communicated to the Board and its committees from time to time, the absence of defined reporting cadences, materiality thresholds, and clear lines of communication resulted in an ad hoc and inconsistent information flow that did not meet the OCC's expectations for an institution of BRB's size and complexity.
Development Process. The Information Flow Policy was developed through a collaborative process involving Calderwood & Harkness LLP, Ashford Pike Advisory LLC, the Bank's Chief Compliance Officer, the Bank's BSA Officer, and senior members of the Bank's legal and risk management teams. The policy was drafted to align with the OCC's Heightened Standards guidelines (12 C.F.R. Part 30, Appendix D), the Federal Reserve's guidance on board effectiveness (SR 21-3/CA 21-1), and applicable interagency guidance on BSA/AML compliance. Multiple drafts were reviewed by the Risk Committee, the Governance & Nominating Committee, and the full Board before final adoption.
Key Provisions. The Information Flow Policy includes the following key provisions:
(a) Regular Reporting cadences. The Information Flow Policy establishes defined reporting cadences for compliance risk, BSA/AML program status, regulatory examination findings, and enforcement actions. Specifically, the Chief Compliance Officer and BSA Officer are required to provide written quarterly reports to the full Board of Directors covering the status of the Bank's compliance management system, BSA/AML program, pending or completed regulatory examinations and findings, enforcement actions, and significant compliance risk developments. In addition, the Chief Compliance Officer and BSA Officer are required to provide monthly written reports to the Risk Committee on key compliance and BSA/AML metrics, trends, and emerging risks.
(b) Materiality Thresholds for Immediate Escalation. The Information Flow Policy defines specific materiality thresholds that trigger the immediate or ad hoc escalation of compliance and BSA/AML matters to the Board. These thresholds include, without limitation: (i) receipt of a formal enforcement action, cease-and-desist order, or civil money penalty from any regulatory agency; (ii) identification of a suspicious activity report ("SAR") filing involving a transaction or series of transactions exceeding $1 million or involving a senior officer, director, or significant counterparty of the Bank; (iii) identification of a material deficiency in the Bank's BSA/AML program by internal audit, external audit, or a regulatory examination; (iv) receipt of a subpoena, grand jury inquiry, or other law enforcement request relating to BSA/AML matters; and (v) any compliance event that could reasonably be expected to result in material financial loss, reputational harm, or regulatory action. Matters meeting these thresholds must be reported to the Board Chair and the Risk Committee Chair within 24 hours, with a written briefing provided to the full Board within 72 hours.
(c) Roles and Responsibilities. The Information Flow Policy specifies the roles and responsibilities of the Chief Compliance Officer and BSA Officer in connection with board reporting. Both officers are granted direct access to the Board and the Risk Committee without management filtering, meaning that their reports, analyses, and recommendations are to be provided to the Board and the Risk Committee in their original form without editing, redaction, or alteration by other members of management. The policy also provides that the Chief Compliance Officer and BSA Officer may request executive sessions with the Board or the Risk Committee without management present, and that the Board or Risk Committee Chair may convene such sessions at any time upon request. The policy further clarifies the reporting responsibilities of the Chief Risk Officer, the General Counsel, and the Chief Internal Auditor with respect to compliance and BSA/AML matters, to ensure that the Board receives a comprehensive and coordinated flow of information from all relevant functional areas.
(d) Quarterly Written Reports. In addition to the regular reporting cadences described above, the Information Flow Policy requires quarterly written compliance and BSA/AML reports to the Board that include defined content elements, including quantitative metrics, trend analyses, risk ratings, program effectiveness assessments, and management action plans. These quarterly reports are supplemented by real-time escalation of matters meeting the defined materiality thresholds.
(e) Annual Policy Review. The Information Flow Policy includes a requirement that the policy itself be reviewed annually by the Board of Directors upon the recommendation of the Governance & Nominating Committee. This review is intended to ensure that the policy remains current with evolving regulatory expectations, industry best practices, and the Bank's own risk profile and organizational structure.
Coordination with Ashford Pike Advisory LLC. The operational implementation of the new information flow protocols — including the development of management reporting systems, data aggregation processes, reporting templates, and compliance dashboards — is being coordinated with Ashford Pike Advisory LLC. Ashford Pike is assisting the Bank's compliance and BSA/AML teams with the design and implementation of the reporting infrastructure necessary to support the regular and ad hoc reporting requirements established by the Information Flow Policy. This operational workstream is proceeding on schedule and is expected to be fully implemented by the end of Q4 2025.
Status. The Information Flow Policy was adopted by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Bank's Chief Compliance Officer and BSA Officer have been briefed on their responsibilities under the policy, and the first quarterly written compliance and BSA/AML reports under the new framework are in preparation.
V. Remediation Actions — Finding 4: Governance & Nominating Committee — Skill Matrix and Succession Planning
In direct response to Finding 4 of the MRA Letter, the Board of Directors has adopted a revised charter for the Governance & Nominating Committee (the "Revised G&N Committee Charter"), a copy of which is attached hereto as Exhibit D.
Background. The Governance & Nominating Committee's prior charter was last amended in March 2022. The OCC found that the prior charter did not adequately address two critical governance functions: (i) the development and maintenance of a director skill matrix mapping board competencies against the identified needs of the institution; and (ii) formalized succession planning for committee chairs. The OCC noted that, for an institution of BRB's size and complexity — with total consolidated assets exceeding $10 billion — the absence of these governance mechanisms represented a significant gap in the Board's overall governance framework.
Revised Charter Approach. The Revised G&N Committee Charter addresses the OCC's findings by incorporating detailed provisions for both the director skill-matrix requirement and formalized committee chair succession planning, while also enhancing the Committee's broader responsibilities for board composition review, director qualification assessment, and governance policy oversight.
Key Enhancements. The Revised G&N Committee Charter incorporates the following key enhancements, among others:
(a) Director Skill-Matrix Requirement. The Revised G&N Committee Charter mandates that the Governance & Nominating Committee develop, maintain, and annually update a comprehensive skills and experience matrix for the Board of Directors (the "Director Skill Matrix"). The Director Skill Matrix is required to map the competencies, expertise, and experience of each individual director against the identified needs of the institution, including — at a minimum — the following competency areas: risk management, financial expertise and accounting, regulatory compliance, technology and cybersecurity, banking operations, capital markets and corporate finance, legal and governance, human capital management, and consumer and community banking. The Director Skill Matrix is to be used by the Committee in evaluating the current composition of the Board, identifying any competency gaps, and informing the Committee's director recruitment, nomination, and re-nomination decisions. The Committee is required to present the Director Skill Matrix to the full Board annually and to discuss any identified gaps and proposed remediation strategies.
(b) Committee Chair Succession Planning. The Revised G&N Committee Charter establishes a formalized succession planning process for committee chairs. The Committee is required to develop and maintain a succession pipeline for the chair position of each standing committee of the Board (including the Audit, Risk, Compensation & Human Capital, Governance & Nominating, and Technology & Innovation Committees), to periodically assess prospective chair candidates against defined qualification criteria, and to plan for orderly transitions of committee leadership. The succession planning process is required to consider, among other factors, each candidate's subject-matter expertise, committee tenure, leadership skills, and availability to devote the necessary time and attention to the chair role. The Committee is required to report to the full Board annually on the status of committee chair succession planning and the readiness of the succession pipeline.
(c) Enhanced Annual Board Composition Review. The Revised G&N Committee Charter includes enhanced procedures for the Committee's annual review of director qualifications and overall board composition. The revised charter requires the Committee to consider, in addition to the traditional factors of independence, expertise, and availability, the diversity of the Board (including diversity of background, experience, gender, race, ethnicity, and geographic perspective), the tenure distribution of directors, and the Board's overall mix of skills and competencies as reflected in the Director Skill Matrix. The Committee is required to document its annual assessment and present its conclusions and recommendations to the full Board.
(d) Regulatory Expectations. The Revised G&N Committee Charter includes a provision requiring the Committee to consider, in fulfilling its responsibilities, the governance expectations of the OCC and the Federal Reserve for bank boards with total assets exceeding $10 billion, including the OCC's Heightened Standards guidelines and the Federal Reserve's guidance on board effectiveness. This provision is designed to ensure that the Committee's governance practices remain aligned with evolving regulatory expectations.
Committee Composition and Leadership. The Governance & Nominating Committee is chaired by Margaret R. Ellsworth, who also serves as Chair of the Board of Directors. Ms. Ellsworth is an independent director who has served on the Board since 2018 and brings extensive corporate governance experience from her prior service on the boards of publicly traded financial services companies. The Governance & Nominating Committee currently comprises four (4) independent directors.
Status. The Revised G&N Committee Charter was approved by the Board of Directors on [date to be inserted] and became effective immediately upon adoption. The Committee has commenced the development of the initial Director Skill Matrix and has initiated the committee chair succession planning process. Both workstreams are expected to produce initial deliverables by the end of Q4 2025.
VI. Additional Governance Enhancements
In addition to the targeted remediation actions described in Sections II through V above, the Board of Directors has undertaken a series of additional governance enhancements that complement and reinforce the specific remediation actions responsive to the OCC's four MRA findings. These additional enhancements reflect the Board's determination to use the remediation process as an opportunity to conduct a comprehensive strengthening of the Bank's overall governance framework, rather than limiting its efforts to the minimum necessary to address the specific findings.
A. Amended and Restated Corporate Governance Guidelines
The Board of Directors has adopted Amended and Restated Corporate Governance Guidelines (the "Amended Governance Guidelines"), a copy of which is attached hereto as Exhibit E. The Amended Governance Guidelines represent a comprehensive update of the Bank's prior Corporate Governance Guidelines, which were last amended in March 2022.
The Amended Governance Guidelines incorporate regulatory-driven changes that are responsive to the OCC's and the Federal Reserve's supervisory findings across all four MRA items, as well as broader enhancements reflecting current best practices for bank board governance. Key features of the Amended Governance Guidelines include:
• Enhanced director qualification and independence standards, including more rigorous criteria for evaluating director candidates and a requirement that a substantial majority of the Board consist of independent directors at all times.
• Mandatory board and committee self-evaluation requirements, described in further detail in Section VI.B below, which are now embedded in the Governance Guidelines as a core governance obligation.
• Director tenure and retirement policies, including a presumptive retirement age of 75 and a maximum board tenure guideline of 15 years (subject to waiver by the Governance & Nominating Committee in exceptional circumstances), designed to promote board refreshment and the infusion of new perspectives over time.
• Provisions governing executive sessions of independent directors, to be held at each regularly scheduled Board meeting and led by the Lead Independent Director, David K. Sorrento. These executive sessions provide the independent directors with a dedicated forum for discussing matters without management present, including management performance, CEO succession planning, and the Board's own governance practices.
• Provisions addressing the overlapping board composition between BRB and Belmont Ridge Financial Group, Inc. As noted above, eleven (11) of the Bank's thirteen (13) directors also serve on the board of the holding company. The Amended Governance Guidelines establish protocols for coordinating governance practices at both the bank and holding company levels, including mechanisms for information sharing, avoidance of duplicative activities, and resolution of any governance conflicts that may arise from the dual-board structure.
Status. The Amended Governance Guidelines were adopted by the Board of Directors on [date to be inserted].
B. Board and Committee Self-Evaluation Framework
The Board of Directors has adopted a comprehensive Board and Committee Self-Evaluation Framework (the "Evaluation Framework"), a copy of which is attached hereto as Exhibit F. The Evaluation Framework establishes an annual self-evaluation process consistent with the OCC's recommendation for institutions with total assets exceeding $10 billion.
The Evaluation Framework covers five dimensions of board effectiveness:
(i) Full-board effectiveness, including the Board's strategic oversight, risk oversight, management accountability, information flow, and decision-making processes;
(ii) Individual committee effectiveness, covering each of the Board's five standing committees: Audit, Risk, Compensation & Human Capital, Governance & Nominating, and Technology & Innovation;
(iii) Individual director performance, including each director's preparation, participation, contribution of expertise, and overall engagement;
(iv) Board leadership effectiveness, including the performance of the Board Chair, the Lead Independent Director, and committee chairs; and
(v) Board dynamics and culture, including the quality of Board deliberations, the candor and openness of discussions, and the Board's ability to constructively challenge management.
The evaluation process incorporates the engagement of an independent third-party facilitator to administer confidential surveys, conduct interviews with individual directors, and compile and analyze results. The evaluation process also includes confidentiality protocols designed to encourage candid and honest feedback from all directors. The results of each annual evaluation are reported to the Governance & Nominating Committee and the full Board, with specific action items identified and tracked for completion.
The first evaluation cycle under the Evaluation Framework is scheduled for completion in Q4 2025, with results to be presented to the Board before the end of the calendar year.
Status. The Evaluation Framework was adopted by the Board of Directors on [date to be inserted]. The initial evaluation cycle is currently in progress.
C. Enhanced Director Independence Standards
The Board of Directors has adopted updated Director Independence Standards (the "Updated Independence Standards"), a copy of which is attached hereto as Exhibit G. The Updated Independence Standards reflect the OCC's heightened standards for director independence at institutions with total assets exceeding $10 billion, as well as applicable Nasdaq listing requirements and SEC regulations.
In connection with the adoption of the Updated Independence Standards, the Governance & Nominating Committee conducted a comprehensive director independence assessment for all thirteen (13) Board members. The assessment considered all relevant relationships between each director and the Bank, the holding company, and their respective affiliates, including employment relationships, commercial relationships, consulting arrangements, family relationships, and other potential sources of conflict or influence.
Based on this assessment, the Board confirmed that ten (10) of its thirteen (13) directors qualify as independent under the Updated Independence Standards. The three (3) non-independent directors are:
• Richard A. Montague, Chief Executive Officer and President of the Bank;
• Franklin D. Reeves, Chief Operating Officer of the Bank; and
• Alma G. Brashear, Executive Vice President and Head of Digital Banking.
Each of these directors is classified as non-independent by virtue of his or her current management role at the Bank. All committee chairs and all members of the Audit, Risk, Compensation & Human Capital, and Governance & Nominating Committees have been confirmed as independent under the Updated Independence Standards.
Status. The Updated Independence Standards were adopted by the Board of Directors on [date to be inserted].
D. Board Code of Conduct
The Board notes that a review and update of the Board Code of Conduct (last amended January 2020) is currently underway as part of the broader governance enhancement initiative. Calderwood & Harkness LLP is assisting the Governance & Nominating Committee with the review, which includes an assessment of the Code's provisions relating to conflicts of interest, related-party transactions, confidentiality obligations, and compliance with laws and regulations. The updated Board Code of Conduct is expected to be completed and presented to the Board for adoption well before the OCC's December 31, 2025 remediation deadline.
VII. D&O Insurance Coverage Review
In connection with the governance remediation activities described in this progress report, the Bank has reviewed the adequacy of its directors' and officers' ("D&O") liability insurance coverage. The Bank's D&O insurance is provided by Kelvantis Omnivrel Insurance Co. under Policy No. DOF-2025-88431, with a policy period of April 1, 2025 through March 31, 2026, and an aggregate coverage limit of $75 million.
The Bank, in consultation with its insurance broker and outside counsel, has determined that the current D&O coverage remains adequate in light of the regulatory findings identified in the MRA Letter and the remediation activities undertaken by the Board. The Bank will continue to monitor the adequacy of its D&O coverage as the remediation progresses and will consider adjustments to the policy terms, coverage limits, or carrier arrangements if circumstances warrant.
VIII. Coordination with Regulatory Consultant and Other Advisors
The Bank has engaged a team of experienced external advisors to support the governance remediation process and to ensure that the Bank's remediation efforts are comprehensive, well-coordinated, and consistent with regulatory expectations. The Bank's key advisory relationships in connection with the governance remediation are summarized below:
Ashford Pike Advisory LLC (Kenneth R. Stoltz, Managing Director). Ashford Pike was retained in January 2025 as the Bank's regulatory consultant and is leading the operational remediation workstreams, including enhancements to the Bank's compliance management system, BSA/AML program infrastructure, and enterprise risk management technology platforms. Ashford Pike is also coordinating with the Bank's compliance and BSA/AML teams on the operational implementation of the new information flow protocols established by the Information Flow Policy described in Section IV above.
Calderwood & Harkness LLP (Colette Whitman, Responsible Partner). Calderwood & Harkness was engaged effective July 1, 2025, as outside board-governance advisory counsel. Calderwood & Harkness is responsible for drafting the revised committee charters, new board-level policies, amended governance guidelines, and other governance documents described in this progress report, as well as advising the Board and the Governance & Nominating Committee on governance best practices, regulatory expectations, and the design and implementation of the remediation workstream. Calderwood & Harkness also prepared this progress report for submission to the OCC.
Meridian Cobalt LLP (Harold F. Dunleavy, Partner). Meridian Cobalt continues to serve as BRB's general corporate and securities-disclosure counsel. In connection with the governance remediation, Meridian Cobalt is coordinating with Calderwood & Harkness on the disclosure implications of governance changes, including the appropriate treatment of remediation-related matters in the Bank's periodic reports filed with the SEC and its proxy materials distributed to shareholders.
Ridgewell & Haines LLP (Lydia M. Chow, Engagement Partner). Ridgewell & Haines is BRB's independent auditor and has been engaged in connection with the enhanced Audit Committee procedures established by the Revised Audit Committee Charter. As described in Section III above, the revised charter strengthens the direct engagement between the Audit Committee and the independent auditor, including through regularly scheduled executive sessions.
The Board has taken steps to ensure appropriate information sharing and coordination among all advisors engaged in connection with the governance remediation, while maintaining applicable legal privileges and confidentiality protections. Regular coordination calls are held among the advisory teams, and the Board receives periodic reports from each advisor on the status of their respective workstreams.
IX. Shareholder Engagement Context
While this progress report is directed to the OCC in its capacity as the Bank's primary federal regulator, the Bank believes it is useful to provide brief context regarding the Bank's engagement with its institutional shareholders on governance matters, as the Bank views its governance remediation efforts as responsive to both regulatory and shareholder expectations.
The Bank has proactively engaged with its key institutional shareholders on governance matters throughout 2025. In particular, the Bank notes the following:
• On March 12, 2025, the Bank received a letter from Thornfield Capital Management, LP, which holds approximately 7.3% of the outstanding shares of Belmont Ridge Financial Group, Inc. (the holding company), urging, among other things, enhanced risk-committee reporting and the implementation of an independent board evaluation process. The governance remediation actions described in this progress report — including the formalized Risk Committee escalation protocol, the comprehensive Board and Committee Self-Evaluation Framework, and the enhanced board information flow protocols — are directly responsive to the concerns raised by Thornfield Capital Management.
• At the Bank's 2024 Annual Meeting of Shareholders, Graycliff Institutional Partners, which holds approximately 5.1% of the outstanding shares of BRFG, withheld its votes from two director nominees, citing governance deficiencies as the basis for its decision. The Bank has engaged with Graycliff Institutional Partners to discuss the governance enhancements being implemented through the remediation process.
• BRB's 2025 Annual Meeting of Shareholders was held on May 14, 2025. In advance of the meeting, the proxy advisory firms Gramercy Proxy Services and Northgate Governance Advisors each issued reports recommending votes in favor of all director nominees while flagging governance concerns that overlap with the issues identified in the OCC's MRA Letter. All director nominees were elected at the 2025 Annual Meeting.
The Bank's governance remediation efforts will be disclosed to shareholders in BRB's 2026 proxy statement and through ongoing shareholder engagement activities. The Bank believes that the remediation actions described in this progress report demonstrate the Board's responsiveness to both regulatory expectations and the legitimate governance concerns raised by the Bank's shareholders.
X. Remediation Timeline and Milestones
The following table summarizes the key dates and milestones in the Bank's governance remediation process:
The Bank is confident that all governance-related remediation actions will be fully completed before December 31, 2025. Several key milestones have already been achieved, and the remaining items are on track for timely completion. The Board and management are monitoring the remediation timeline closely and will promptly notify the OCC if any developments arise that could affect the timeline or scope of the remediation.
XI. Ongoing Reporting and Communication
The Bank commits to providing the OCC with additional progress reports on the governance remediation as requested by the Examiner-in-Charge or the OCC supervisory staff, or as material milestones are achieved that warrant an update. The Bank anticipates providing at least one additional progress report before the December 31, 2025 deadline to confirm the completion of all remaining remediation actions.
The Bank welcomes further dialogue with the Examiner-in-Charge and OCC supervisory staff regarding the governance remediation. The Bank's General Counsel, outside governance advisory counsel, and regulatory consultant are available to participate in any discussions or meetings that the OCC may wish to schedule to review the Bank's progress or to address any questions or concerns.
All remediation actions undertaken by the Bank are being thoroughly documented, including Board resolutions, committee minutes, adopted charters and policies, advisory correspondence, and implementation records. This documentation is maintained in an organized remediation file and will be available for examiner review at any time during the examination process or upon request.
The Bank will promptly notify the OCC of any developments that may affect the remediation timeline, scope, or substance, including any changes to the Bank's governance structure, leadership, or advisory arrangements that are relevant to the remediation process.
In closing, the Board of Directors, management, and advisors of Belmont Ridge Bank NA remain fully committed to the highest standards of board governance and regulatory compliance. The Bank deeply appreciates the OCC's constructive supervisory engagement throughout this process, including the OCC's thoughtful comments on the Bank's initial Remediation Plan, which have materially enhanced the quality and comprehensiveness of the remediation actions described in this progress report.
The Board of Directors and management of the Bank are fully dedicated to the successful completion of all remediation actions within the timeline specified by the OCC, and the Bank is committed to sustaining the governance enhancements described herein as a permanent feature of its governance framework — not merely as a response to a supervisory finding, but as a reflection of the Board's enduring commitment to effective governance and sound risk management.
The undersigned and the Bank's management team are available at any time to respond to follow-up questions, provide additional information, or arrange a meeting with OCC supervisory staff to discuss the matters addressed in this progress report.
Respectfully submitted,
BELMONT RIDGE BANK NA
By: ________
James W. Prescott General Counsel and Corporate Secretary Belmont Ridge Bank NA 600 Lexington Avenue, 34th Floor New York, NY 10022 Telephone: (212) _-__
Email: jprescott@belmontridgebank.com
cc:
Margaret R. Ellsworth, Chair of the Board, Belmont Ridge Bank NA
Richard A. Montague, Chief Executive Officer and President, Belmont Ridge Bank NA
Board of Directors, Belmont Ridge Bank NA
Colette Whitman, Calderwood & Harkness LLP
Kenneth R. Stoltz, Ashford Pike Advisory LLC
Harold F. Dunleavy, Meridian Cobalt LLP
Exhibits / Attachments
The following exhibits are referenced in the body of this progress report and will be attached upon finalization and Board approval:
Exhibit A: Revised Risk Committee Charter (adopted [date])
Exhibit B: Revised Audit Committee Charter (adopted [date])
Exhibit C: Board Information Flow Policy (adopted [date])
Exhibit D: Revised Governance & Nominating Committee Charter (adopted [date])
Exhibit E: Amended and Restated Corporate Governance Guidelines (adopted [date])
Exhibit F: Board and Committee Self-Evaluation Framework (adopted [date])
Exhibit G: Updated Director Independence Standards (adopted [date])
Date | Milestone
November 15, 2024 | OCC MRA Letter (SA-2024-0315) issued
December 3, 2024 | Federal Reserve supervisory letter (SR-BHC-2024-1107) issued to BRFG
January 2025 | Ashford Pike Advisory LLC retained as regulatory consultant
February 28, 2025 | BRB submitted initial Remediation Plan to OCC
April 4, 2025 | OCC acknowledged Remediation Plan with comments
May 14, 2025 | BRB 2025 Annual Meeting of Shareholders
July 1, 2025 | Calderwood & Harkness LLP engaged as governance advisory counsel
[Date TBD] | Board adoption of Revised Risk Committee Charter (Exhibit A)
[Date TBD] | Board adoption of Revised Audit Committee Charter (Exhibit B)
[Date TBD] | Board adoption of Board Information Flow Policy (Exhibit C)
[Date TBD] | Board adoption of Revised Governance & Nominating Committee Charter (Exhibit D)
[Date TBD] | Board adoption of Amended and Restated Corporate Governance Guidelines (Exhibit E)
[Date TBD] | Board adoption of Board and Committee Self-Evaluation Framework (Exhibit F)
[Date TBD] | Board adoption of Updated Director Independence Standards (Exhibit G)
Q4 2025 | Completion of first annual board and committee self-evaluation cycle
[Date TBD] | Adoption of updated Board Code of Conduct
December 31, 2025 | OCC remediation deadline — all remediation actions targeted for completion well in advance of this date

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BELMONT RIDGE BANK NA

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