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MEMORANDUM

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

July 18, 2025

TO: Colette Whitman, Partner, Calderwood & Harkness LLP James W. Prescott, General Counsel & Corporate Secretary, Belmont Ridge Bank NA

FROM: Brendan Walsh, Lead Associate, Calderwood & Harkness LLP Natasha Forbes, Associate, Calderwood & Harkness LLP

RE: Director Independence Assessment — Belmont Ridge Bank NA (Matter No. 1045-00003)

This memorandum is a privileged and confidential attorney-client communication prepared by Calderwood & Harkness LLP at the direction of Belmont Ridge Bank NA and Belmont Ridge Financial Group, Inc. in connection with pending regulatory remediation matters. This memorandum is protected by the attorney-client privilege and the work-product doctrine and is not intended for disclosure to any third party without the prior written consent of Calderwood & Harkness LLP and the client. Any unauthorized disclosure may constitute a waiver of applicable privileges.

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I. Executive Summary

This memorandum provides a comprehensive assessment of the independence status of each of the thirteen (13) directors serving on the boards of directors of Belmont Ridge Bank NA ("BRB" or the "Bank") and its parent holding company, Belmont Ridge Financial Group, Inc. ("BRFG" or the "Holding Company," and together with BRB, the "Company"). This assessment has been prepared at the request of the Board of Directors in response to governance deficiencies identified by the Office of the Comptroller of the Currency ("OCC") in its Matter Requiring Attention ("MRA") letter (SA-2024-0315, dated November 15, 2024) and by the Board of Governors of the Federal Reserve System (the "Federal Reserve") in its supervisory letter (SR-BHC-2024-1107, dated December 3, 2024). The director independence assessment constitutes a foundational element of the broader governance remediation program that the Company has undertaken in order to satisfy regulatory expectations and meet the OCC's remediation deadline of December 31, 2025.

This memorandum analyzes the independence of each director under three overlapping but distinct frameworks:

1. Nasdaq Listing Standards. Because BRFG's common stock (ticker: BRBK) is listed on the Nasdaq Stock Market, the independence requirements of the Nasdaq Listing Rules apply to the composition of BRFG's board and its standing committees. These requirements flow through to BRB by virtue of the substantially overlapping board composition between the Bank and the Holding Company.

2. OCC Heightened Standards for National Banks. As a national bank with approximately $38.7 billion in total consolidated assets as of the most recently reported quarter, BRB falls within the OCC's supervisory-expectation tier under 12 C.F.R. Part 7 and related OCC guidance regarding heightened standards for risk governance, including expectations for the independence and qualifications of directors serving on the Risk Committee and Audit Committee. Additionally, 12 C.F.R. Part 363 imposes specific audit committee independence requirements on insured depository institutions with total assets of $500 million or more, a threshold BRB substantially exceeds.

3. BRB Director Independence Standards. BRB maintains its own Director Independence Standards, which were last amended in March 2022. These standards incorporate the Nasdaq bright-line tests and supplement them with certain categorical standards specific to banking institutions. As discussed in detail in Section VII of this memorandum, these standards require updating to reflect current regulatory expectations.

Principal Conclusions. Based on our analysis, we conclude as follows:

• Ten (10) of the thirteen (13) directors qualify as independent under all three applicable frameworks. These directors are: Margaret R. Ellsworth (Chair of the Board), David K. Sorrento (Lead Independent Director), Priya Venkataraman, Thomas J. Callahan, Sandra M. Okafor, Lawrence B. Huang, and four additional independent directors identified in Section IV.J of this memorandum.

• Three (3) directors are non-independent due to their current status as executive officers and employees of BRB. These directors are: Richard A. Montague (CEO & President), Franklin D. Reeves (COO), and Alma G. Brashear (EVP & Head of Digital Banking).

• Certain independence-qualifying directors present relationships warranting enhanced analysis. Specifically, David K. Sorrento's prior affiliation with Clearpoint Consulting Group requires assessment of whether that firm has had any business relationship with BRB. Priya Venkataraman's former employment at Lakemont Financial Corporation requires evaluation given BRB's participation in a syndicated credit facility in which Lakemont is also a participant lender. Thomas J. Callahan's prior partnership at Ridgewell & Haines LLP, BRB's current independent auditor, requires careful scrutiny under Audit Committee-specific independence standards. In each case, as detailed below, we conclude that these relationships do not impair the director's independence, though they warrant ongoing monitoring and, in Callahan's case, specific board documentation and proxy statement disclosure.

• BRB's Director Independence Standards require updating to conform with current OCC and Federal Reserve regulatory expectations. We provide specific recommendations for revisions in Section VII, including the addition of provisions addressing former-auditor relationships, consulting and advisory firm relationships, syndicated lending or shared counterparty relationships, relationships with significant shareholders, and mandatory annual independence questionnaires and certifications.

• All five standing board committees are currently composed entirely of independent directors, satisfying or exceeding all applicable requirements. The overall board independence ratio of approximately 77% (10 of 13 directors) comfortably exceeds the Nasdaq majority-independence requirement.

We recommend that these findings be presented to the Governance & Nominating Committee and thereafter to the full Board of Directors, and that the recommended revisions to BRB's Director Independence Standards be adopted as part of the remediation program prior to the December 31, 2025 deadline.

II. Background

A. Regulatory Context

On November 15, 2024, the OCC issued MRA letter SA-2024-0315 to BRB, identifying four discrete governance findings arising from the OCC's supervisory examination cycle. The four findings encompassed deficiencies in board risk-oversight documentation, management reporting protocols for emerging risks, the completeness of the Governance & Nominating Committee charter, and the adequacy of the Bank's succession planning framework. Of particular relevance to this memorandum is MRA Finding 4, which identified the Governance & Nominating Committee charter's failure to address director skill-matrix requirements and succession planning in a manner consistent with the OCC's expectations for institutions in BRB's asset-size tier. The director independence assessment that is the subject of this memorandum constitutes a foundational element of the remediation of MRA Finding 4, as the OCC expects the Bank to demonstrate that its governance framework, including its processes for evaluating and ensuring director independence, is robust, well-documented, and regularly reviewed.

On December 3, 2024, the Federal Reserve issued supervisory letter SR-BHC-2024-1107 to BRFG, raising parallel governance concerns at the holding-company level. The Federal Reserve's letter expressed concern regarding the effectiveness of the BRFG board's oversight of risk management and compliance functions, and specifically noted the need for the holding-company board to ensure that its independent directors possess the qualifications and independence necessary to provide effective challenge to management. The Federal Reserve's supervisory expectations align with, but are not identical to, the OCC's heightened standards applicable to BRB at the bank level.

BRB submitted its initial remediation plan to the OCC on February 28, 2025. That plan outlined the Bank's proposed approach to addressing each of the four MRA findings, including the retention of outside counsel and consultants to assist with governance remediation. The OCC acknowledged receipt of the remediation plan and provided substantive comments on April 4, 2025. Among other things, the OCC's comments emphasized the importance of a thorough and well-documented director independence assessment as part of the governance remediation, and noted that the Bank should ensure that its Director Independence Standards reflect current regulatory expectations rather than merely tracking the minimum requirements of the Nasdaq Listing Rules.

The OCC has established December 31, 2025 as the deadline for completion of the governance remediation. Calderwood & Harkness LLP was formally engaged effective July 1, 2025, to advise BRB's Board of Directors on the governance remediation program, including this director independence assessment, the revision of committee charters and corporate governance guidelines, and coordination with Ashford Pike Advisory LLC (engagement lead Kenneth R. Stoltz), which has been retained to assist with certain operational remediation elements.

B. Board Composition Overview

As of the date of this memorandum, the BRB Board of Directors consists of thirteen (13) members. Of these, ten (10) are classified as independent directors and three (3) are classified as non-independent directors by virtue of their current status as executive officers and employees of BRB. The three non-independent directors are Richard A. Montague (CEO & President), Franklin D. Reeves (Chief Operating Officer), and Alma G. Brashear (Executive Vice President & Head of Digital Banking).

Eleven (11) of the thirteen (13) BRB directors also serve on the Board of Directors of the BRFG holding company, resulting in substantially overlapping board composition between the Bank and the Holding Company. This overlapping composition is common among banking organizations of BRB's size and structure, and it means that the independence analysis performed herein applies with equivalent force at both the bank and holding-company levels for the eleven directors who serve on both boards.

The Board maintains five standing committees, each composed entirely of independent directors:

• Audit Committee — Five (5) members: Thomas J. Callahan (Chair), David K. Sorrento, and three additional independent directors. The Audit Committee is responsible for overseeing BRB's financial reporting, internal controls, and the engagement of the independent auditor (currently Ridgewell & Haines LLP, engagement partner Lydia M. Chow).

• Risk Committee — Five (5) members: Priya Venkataraman (Chair) and four additional independent directors. The Risk Committee is responsible for overseeing BRB's enterprise risk management framework, including credit risk, market risk, operational risk, and compliance risk.

• Compensation & Human Capital Committee — Four (4) members: Sandra M. Okafor (Chair) and three additional independent directors. The Compensation Committee is responsible for overseeing executive compensation, incentive compensation programs, and human capital management practices.

• Governance & Nominating Committee — Four (4) members: Margaret R. Ellsworth (Chair) and three additional independent directors. The Governance & Nominating Committee is responsible for board composition, director nominations, governance policies, and succession planning — the latter of which is the subject of MRA Finding 4.

• Technology & Innovation Committee — Three (3) members: Lawrence B. Huang (Chair) and two additional independent directors. The Technology & Innovation Committee is responsible for overseeing BRB's technology strategy, cybersecurity, and digital banking initiatives.

C. Existing Director Independence Standards

BRB's current Director Independence Standards were adopted by the Board in 2018 and most recently amended in March 2022. The Standards incorporate the Nasdaq Listing Rules' bright-line disqualification tests and supplement them with certain categorical standards that the Board determined to be appropriate for a banking institution of BRB's size and regulatory profile. These supplemental standards include, among other things, provisions addressing lending relationships between BRB and entities affiliated with directors or their immediate family members, and provisions addressing directors who serve as officers or directors of entities that compete directly with BRB in its primary market areas.

As discussed in detail in Section VII of this memorandum, BRB's Director Independence Standards, while adequate at the time of their most recent amendment, now require updating in several respects. The Standards pre-date the November 2024 OCC MRA and the December 2024 Federal Reserve supervisory letter, and they do not fully reflect the regulatory agencies' current expectations regarding director independence at banking organizations in BRB's asset-size tier. In particular, the Standards are silent or insufficiently detailed with respect to former-auditor relationships, relationships with regulatory consultants, syndicated lending or shared counterparty relationships, and relationships with significant shareholders. We recommend specific revisions to the Standards as part of the governance remediation program.

III. Applicable Independence Frameworks

A. Nasdaq Listing Standards

BRFG's common stock (ticker: BRBK) is listed on the Nasdaq Stock Market, and accordingly the Nasdaq Listing Rules' independence requirements apply to the composition of the BRFG board and its standing committees. Because eleven of the thirteen BRB bank directors also serve on the BRFG holding-company board, and because BRB has adopted the Nasdaq independence standards by incorporation into its own Director Independence Standards, the Nasdaq framework is directly applicable to the independence assessment at both the bank and holding-company levels.

General Definition of Independence. Nasdaq Listing Rule 5605(a)(2) defines an "Independent Director" as a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. This definition encompasses both the bright-line disqualification criteria set forth in the Rule and a broader, subjective assessment by the board of any relationships that could impair a director's ability to act independently of management.

Bright-Line Disqualification Criteria. Rule 5605(a)(2)(A) through (D) sets forth specific relationships that automatically preclude a finding of independence:

(A) A director who is, or at any time during the past three years was, employed by the company is not independent. A director whose immediate family member is, or at any time during the past three years was, an executive officer of the company is not independent.

(B) A director who accepted, or who has a family member who accepted, any compensation from the company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the independence determination, other than compensation for board or committee service, compensation paid to a family member who is an employee (other than an executive officer) of the company, or benefits under a tax-qualified retirement plan or non-discretionary compensation, is not independent.

(C) A director who is a family member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer is not independent.

(D) A director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed the greater of 5% of the recipient's consolidated gross revenues or $200,000 is not independent.

Additional disqualification criteria apply to directors who are, or whose family members are, currently employed as executive officers of another entity where at any time during the past three years any of the executive officers of the listed company served on the compensation committee of such other entity.

Board Majority Independence. Nasdaq Listing Rule 5605(b)(1) requires that a majority of the board of directors be composed of independent directors. With ten of thirteen directors qualifying as independent (approximately 77%), BRB and BRFG substantially exceed this requirement.

Committee-Specific Independence Standards. The Nasdaq Listing Rules impose heightened independence requirements for membership on certain committees:

• Audit Committee. Rule 5605(c)(2) requires that each member of the Audit Committee be independent as defined in Rule 5605(a)(2) and also satisfy the additional independence criteria of SEC Rule 10A-3 under the Securities Exchange Act of 1934. Under Rule 10A-3, an Audit Committee member may not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the company or any of its subsidiaries (other than in his or her capacity as a member of the board or a board committee), and may not be an affiliated person of the company or any of its subsidiaries. Former partners of the company's independent auditing firm are disqualified from Audit Committee service if their association with the auditing firm occurred within the past three years.

• Compensation Committee. Rule 5605(d)(2) requires that each member of the Compensation Committee be independent as defined in Rule 5605(a)(2), and further requires the board to consider certain additional factors in determining independence for Compensation Committee purposes, including the source of any compensation paid to the director by the company (including any consulting, advisory, or other compensatory fee) and whether the director is affiliated with the company, any subsidiary, or any affiliate of a subsidiary.

B. OCC Heightened Standards (12 C.F.R. Part 7 and OCC Guidance)

The OCC's heightened standards for risk governance apply on a mandatory basis to national banks with total consolidated assets of $50 billion or more, and on a supervisory-expectation basis to national banks with total consolidated assets between $10 billion and $50 billion. BRB, with approximately $38.7 billion in total consolidated assets as of the most recent reporting period, falls within the supervisory-expectation tier. The OCC has made clear in its examination guidance and in the MRA letter that it expects BRB to comply with the substance of these heightened standards, even though compliance is framed as a supervisory expectation rather than a binding regulatory requirement at BRB's current asset level.

The OCC's heightened standards emphasize several independence-related principles:

Independent Judgment in Risk Oversight. The OCC expects that a sufficient number of directors possess the ability and willingness to exercise independent judgment with respect to risk oversight, free from undue influence by management or by business-line interests. This expectation extends beyond the formal independence criteria of the Nasdaq Listing Rules to encompass a qualitative assessment of each director's capacity to provide effective challenge to management's risk-related decisions and assumptions.

Risk Committee Composition. The OCC places particular emphasis on the composition of the Risk Committee. The OCC expects that Risk Committee members be independent of business-line influence and possess meaningful risk-management expertise. While the OCC does not prescribe specific bright-line independence tests for Risk Committee membership beyond those applicable under the Nasdaq Listing Rules and the Bank's own standards, the OCC's supervisory guidance makes clear that directors who have current or recent business relationships with the Bank or its affiliates that could create conflicts of interest should not serve on the Risk Committee, and that the Risk Committee should include members with demonstrated experience in enterprise risk management, credit risk, market risk, or related disciplines.

Relationships with Significant Borrowers, Vendors, or Counterparties. OCC examination guidance addresses the potential for director independence to be impaired by relationships with entities that are significant borrowers from, vendors to, or counterparties of the Bank. The OCC expects that the Board will evaluate and document its consideration of any such relationships as part of its annual independence assessment.

Audit Committee Independence (12 C.F.R. Part 363). For insured depository institutions with total assets of $500 million or more — a threshold BRB exceeds by a wide margin — 12 C.F.R. Part 363 requires the establishment of an audit committee composed entirely of outside directors who are independent of management of the institution. The regulation defines an "outside director" as one who is not, and within the preceding year has not been, an officer or employee of the institution or any of its affiliates, and requires that a majority of the audit committee (and, for institutions with total assets exceeding $3 billion, all members) be independent of management. Part 363 also imposes specific requirements regarding audit committee members' ability to read and understand fundamental financial statements and requires at least one member to have banking or related financial management expertise.

C. BRB Director Independence Standards (March 2022)

BRB's Director Independence Standards, as currently in effect, represent the Board's own expression of the independence criteria applicable to BRB directors. The Standards were adopted in 2018 and most recently amended in March 2022. They were developed in consultation with BRB's prior outside counsel and reflect the Nasdaq Listing Rules' bright-line disqualification tests, supplemented by certain categorical standards that the Board determined to be appropriate for a banking institution.

The supplemental categorical standards currently included in BRB's Standards address, among other things:

• Lending relationships between BRB and entities with which a director or an immediate family member is affiliated as an officer, director, or significant equity holder, where the aggregate outstanding extensions of credit exceed a specified materiality threshold.

• Directors who serve as officers or directors of entities that compete directly with BRB in its primary market areas (a "competitor director" provision).

• Directors who have received personal loans from BRB or any of its affiliates on terms not available to similarly situated borrowers (a provision designed to address the insider lending restrictions of Regulation O, 12 C.F.R. Part 215).

While these supplemental standards were appropriate at the time of their adoption, they do not fully address several categories of relationships that have become the focus of regulatory attention since March 2022. The specific gaps in BRB's current Standards, and our recommendations for revisions, are discussed in detail in Section VII.

D. Interplay of the Three Frameworks

Where the Nasdaq Listing Rules, the OCC heightened standards, and BRB's own Director Independence Standards diverge in their requirements or expectations, the most restrictive standard applies. In practice, this means that a director must satisfy all three sets of criteria to be classified as independent for purposes of BRB and BRFG board and committee service. A director who satisfies the Nasdaq bright-line tests but whose independence is called into question under the OCC's qualitative expectations would not be classified as independent for purposes of this assessment, and vice versa.

An additional consideration arises from the overlapping board composition between BRB and BRFG. Eleven of the thirteen BRB directors also serve on the BRFG holding-company board. For these eleven directors, the independence analysis must satisfy both the Nasdaq requirements applicable to BRFG as a listed company and the OCC and banking-specific requirements applicable to BRB as a national bank. In general, the analysis is consistent across both levels, as the relationships and circumstances relevant to independence are the same regardless of whether the director is acting in his or her capacity as a BRB director or a BRFG director. However, the Federal Reserve's supervisory expectations at the holding-company level, as expressed in SR-BHC-2024-1107, may in some cases impose additional qualitative considerations that supplement the Nasdaq and OCC frameworks.

For purposes of this memorandum, we have applied all three frameworks to each director and have identified the applicable standard for each element of the analysis. Where a director's independence is clear under all three frameworks, we have so noted without extended discussion. Where a director presents a relationship or circumstance that warrants enhanced analysis under one or more of the frameworks, we have provided the detailed analysis set forth in Section IV.

IV. Director-by-Director Independence Analysis

A. Margaret R. Ellsworth — Chair of the Board; Chair, Governance & Nominating Committee

Independence Status: Independent

Margaret R. Ellsworth, age 64, has served as an independent director of BRB since 2018 and currently serves as Chair of the Board of Directors and Chair of the Governance & Nominating Committee. Prior to joining the BRB Board, Ms. Ellsworth served as Chief Financial Officer of Hargrove Mutual Bancshares, a mutual savings bank headquartered in Hartford, Connecticut. Ms. Ellsworth retired from Hargrove Mutual Bancshares in 2016 and has not been employed by any financial institution since that time.

Employment and Compensation Analysis. Ms. Ellsworth has no current employment or financial relationship with BRB, BRFG, or any of their affiliates, other than her service as a director and board chair. She does not receive any compensation from BRB other than the standard director retainer, board chair fee, and committee chair retainer established by the Compensation & Human Capital Committee for non-employee directors. These amounts are within the ordinary range for directors of banking institutions of comparable size and are excluded from the Nasdaq $120,000 compensation threshold applicable to the independence analysis.

Familial Relationships. Ms. Ellsworth has no familial relationships with any officer, director, or employee of BRB or BRFG. None of her immediate family members (as defined under the Nasdaq Listing Rules) are employed by, or have any business relationship with, BRB or its affiliates.

Business Relationships — Hargrove Mutual Bancshares. We have analyzed whether any business relationship exists between Hargrove Mutual Bancshares and BRB that could impair Ms. Ellsworth's independence. Based on our review of BRB's counterparty records, lending records, and vendor databases, we have identified no current or recent business relationship between Hargrove Mutual Bancshares and BRB or any of its affiliates. There are no outstanding extensions of credit, participation agreements, vendor contracts, or other material business arrangements between the two institutions.

Independence Determination. Ms. Ellsworth qualifies as independent under the Nasdaq Listing Rules, including the bright-line disqualification criteria of Rule 5605(a)(2)(A) through (D). She qualifies as independent under the OCC heightened standards, as she has no relationships that would impair her ability to exercise independent judgment in overseeing BRB's risk management and governance functions. She qualifies as independent under BRB's Director Independence Standards. Ms. Ellsworth is eligible to serve on and chair the Governance & Nominating Committee, and her combined role as Board Chair and Governance & Nominating Committee Chair is consistent with applicable governance standards, particularly given that the Board has designated a separate Lead Independent Director (David K. Sorrento).

B. David K. Sorrento — Lead Independent Director; Member, Audit Committee and Compensation & Human Capital Committee

Independence Status: Independent (Enhanced Analysis Required)

David K. Sorrento, age 69, has served as an independent director of BRB since 2016 and currently serves as Lead Independent Director. Mr. Sorrento is a member of the Audit Committee and the Compensation & Human Capital Committee. Prior to joining the BRB Board, Mr. Sorrento served as Managing Partner of Clearpoint Consulting Group ("CCG"), a management consulting firm providing strategic advisory services to financial institutions and other corporate clients. Mr. Sorrento retired from CCG in 2014.

Employment and Compensation Analysis. Mr. Sorrento has not been employed by any entity since his retirement from CCG in 2014. He does not receive any compensation from BRB other than the standard director retainer and committee member retainers. These amounts are excluded from the Nasdaq $120,000 compensation threshold.

Familial Relationships. Mr. Sorrento has no familial relationships with any officer, director, or employee of BRB or BRFG.

Enhanced Analysis — Clearpoint Consulting Group. Mr. Sorrento's prior leadership role at CCG requires careful examination of whether CCG has had any business relationship with BRB, BRFG, or any of their affiliates that could create an actual or perceived conflict of interest. Our analysis of this relationship encompasses the following considerations:

Timing of Retirement. Mr. Sorrento retired from CCG in 2014, approximately two years before he joined the BRB Board in 2016. His departure from CCG is well outside the three-year look-back period prescribed by the Nasdaq bright-line disqualification criteria. At the time of his initial appointment to the BRB Board, his retirement from CCG was already two years in the past, and as of the date of this memorandum, his retirement is approximately eleven years in the past.

Business Relationships Between CCG and BRB. Based on our review of BRB's vendor records, consulting engagement files, and accounts payable records, we have confirmed that CCG has not provided any compensated consulting, advisory, or other services to BRB, BRFG, or any of their affiliates, at any time. There are no payments by BRB to CCG reflected in BRB's records, and Mr. Sorrento has confirmed that he is not aware of any business relationship between CCG and BRB.

Continuing Financial Interest in CCG. Mr. Sorrento has confirmed that he holds no continuing financial interest in CCG. He has no equity interest, no deferred compensation arrangement contingent on CCG's revenues or earnings, and no consulting or advisory arrangement with CCG. His retirement from CCG was a complete separation without ongoing economic ties.

Potential for Indirect Relationships. We have also considered whether CCG has business relationships with any significant counterparties, vendors, or borrowers of BRB that could create an indirect conflict. Based on publicly available information and Mr. Sorrento's representations in his annual director questionnaire, no such indirect relationships have been identified.

Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Mr. Sorrento is not currently employed by any entity, he has not accepted compensation from BRB in excess of $120,000 (other than excluded board/committee fees), and CCG has not received payments from BRB that would trigger the business-relationship disqualification test of Rule 5605(a)(2)(D). Under the broader Nasdaq independence definition, his prior consulting background does not, in our assessment, create a relationship that would interfere with the exercise of independent judgment.

Independence Determination — OCC Heightened Standards. Under the OCC heightened standards, Mr. Sorrento's prior consulting career does not create a conflict where CCG has no business relationship with BRB. The OCC's focus on relationships with vendors and consultants is directed at current or recent relationships that could create economic incentives or conflicts; a fully severed prior affiliation with a firm that has never done business with BRB does not raise such concerns.

Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies to Mr. Sorrento.

Conclusion. Mr. Sorrento qualifies as independent under all three applicable frameworks. He is eligible to serve as Lead Independent Director and to serve on the Audit Committee and the Compensation & Human Capital Committee.

Ongoing Monitoring Recommendation. Although our current analysis confirms Mr. Sorrento's independence, the Board should implement a process for periodically re-examining whether CCG or any successor entity enters into any business relationship with BRB. This monitoring should be incorporated into the annual director independence questionnaire and certification process recommended in Section VII of this memorandum. In the event that CCG were to be engaged by BRB in the future, a reassessment of Mr. Sorrento's independence would be warranted.

C. Priya Venkataraman — Chair, Risk Committee

Independence Status: Independent (Enhanced Analysis Required)

Priya Venkataraman, age 57, has served as an independent director of BRB since 2020 and currently serves as Chair of the Risk Committee. Prior to joining the BRB Board, Ms. Venkataraman served as Chief Risk Officer of Lakemont Financial Corporation ("Lakemont"), a diversified financial services company. Ms. Venkataraman departed Lakemont in 2019.

Employment and Compensation Analysis. Ms. Venkataraman has not been employed by Lakemont or any other entity (other than personal consulting and advisory board activities unrelated to BRB) since her departure from Lakemont in 2019. She does not receive any compensation from BRB other than the standard director retainer and Risk Committee chair retainer.

Familial Relationships. Ms. Venkataraman has no familial relationships with any officer, director, or employee of BRB or BRFG.

Enhanced Analysis — Lakemont Financial Corporation. Ms. Venkataraman's former employment at Lakemont requires careful evaluation because BRB has an identifiable, though indirect, business relationship with Lakemont. Our analysis addresses the following considerations:

Timing of Departure. Ms. Venkataraman departed Lakemont in 2019, more than one year prior to her initial appointment to the BRB Board in 2020, and approximately three years prior to the commencement of the Nasdaq three-year look-back period measured from the date of this memorandum. Her departure from Lakemont is well outside the Nasdaq bright-line disqualification period. At the time of her initial appointment, her departure from Lakemont was approximately one year in the past — still outside the look-back period when measured from that date.

Direct Business Relationships Between BRB and Lakemont. Based on our review of BRB's counterparty records, lending files, and business-relationship databases, we have confirmed that BRB and Lakemont have no direct bilateral business relationship. There are no bilateral lending arrangements, vendor contracts, joint ventures, or other material business arrangements between the two institutions.

Syndicated Credit Facility Participation. BRB participates in a syndicated credit facility — specifically, a revolving credit facility extended to Meridian Capital Holdings Corp. — in which Lakemont is also a participant lender. In this arrangement, BRB and Lakemont are co-participants in the syndicate but do not have a direct bilateral relationship with each other. The syndicated facility was arranged by a third-party lead arranger, and each participant's commitment and funding obligations are independent of the other participants. BRB's participation in the facility was approved through its normal credit-approval process and was not influenced by Lakemont's participation. We note that shared participation in a broadly syndicated credit facility is a common occurrence among financial institutions and does not, in our assessment, create a material business relationship between BRB and Lakemont for purposes of the director independence analysis under any of the three applicable frameworks.

Continuing Financial Interest in Lakemont. Ms. Venkataraman has confirmed that she holds no continuing financial interest in Lakemont. She has no equity interest, no deferred compensation arrangement, and no consulting or advisory arrangement with Lakemont. Her departure from Lakemont was a complete separation.

Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Ms. Venkataraman's former employment at Lakemont ended more than three years prior to the date of this assessment. The shared syndicated credit facility participation does not constitute a payment by BRB to Lakemont (or vice versa) for property or services, and therefore does not trigger the business-relationship disqualification test of Rule 5605(a)(2)(D).

Independence Determination — OCC Heightened Standards. Under the OCC heightened standards, Ms. Venkataraman's former CRO experience at Lakemont is viewed as qualitatively beneficial for Risk Committee service. The OCC's guidance on Risk Committee composition emphasizes the importance of including directors with demonstrated risk-management expertise, and Ms. Venkataraman's career as a chief risk officer at a major financial institution directly supports the Risk Committee's effectiveness. Her independence from Lakemont is confirmed by the absence of any continuing financial interest or direct bilateral business relationship. The OCC's concern regarding relationships with significant counterparties is directed at situations where a director has a current economic interest in the counterparty; Ms. Venkataraman has no such interest.

Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.

Conclusion. Ms. Venkataraman qualifies as independent under all three applicable frameworks. She is eligible to serve as Chair of the Risk Committee, and her risk-management expertise is a valuable asset to the Committee's effectiveness.

Ongoing Monitoring Recommendation. The shared syndicated credit facility participation between BRB and Lakemont should be monitored for changes in materiality. If the facility were to be restructured in a manner that created a more direct bilateral relationship between BRB and Lakemont, or if BRB's or Lakemont's participation were to increase significantly, a reassessment of the independence implications would be appropriate. This monitoring should be incorporated into the annual director independence assessment process.

D. Thomas J. Callahan — Chair, Audit Committee

Independence Status: Independent (Enhanced Analysis Required)

Thomas J. Callahan, age 62, has served as an independent director of BRB since 2019 and currently serves as Chair of the Audit Committee. Mr. Callahan is a Certified Public Accountant (inactive license) and formerly served as an audit partner at Ridgewell & Haines LLP ("R&H"), which is BRB's current independent registered public accounting firm (engagement partner Lydia M. Chow). Mr. Callahan retired from R&H in 2017, approximately two years before joining the BRB Board.

Employment and Compensation Analysis. Mr. Callahan has not been employed by R&H or any other entity since his retirement in 2017. He does not receive any compensation from BRB other than the standard director retainer and Audit Committee chair retainer.

Familial Relationships. Mr. Callahan has no familial relationships with any officer, director, or employee of BRB or BRFG. He has no familial relationships with any current partner or employee of R&H.

Enhanced Analysis — Ridgewell & Haines LLP. The fact that Mr. Callahan previously served as a partner at R&H, which is BRB's current independent auditor, requires the most detailed analysis of any director relationship addressed in this memorandum. The integrity and perceived independence of the Audit Committee chair is of paramount importance to BRB's financial-reporting framework and to the regulatory agencies' confidence in the Bank's governance. Our analysis addresses the following considerations:

Timing of Retirement from R&H. Mr. Callahan retired from R&H in 2017. He joined the BRB Board in 2019, approximately two years after his retirement. Under Nasdaq Rule 5605(c)(2)(A), a former partner of the company's independent auditing firm is disqualified from Audit Committee service only if the association with the auditing firm occurred within the past three years. Mr. Callahan's departure from R&H in 2017 predates his Board service (which commenced in 2019) by two years, and predates the date of this memorandum by approximately eight years. He is therefore outside the Nasdaq three-year cooling-off period as measured from either his initial Board appointment or the current date.

Continuing Financial Interest in R&H. Mr. Callahan has confirmed that he holds no continuing financial interest in R&H. Specifically: (i) he has no equity or capital interest in R&H; (ii) he receives no retirement payments from R&H that are contingent upon or calculated by reference to R&H's revenues, earnings, or financial performance; (iii) he has no consulting or advisory arrangement with R&H; and (iv) he has no other economic relationship with R&H. His retirement from R&H was a complete separation of all financial interests.

SEC Rule 10A-3 Analysis. SEC Rule 10A-3, which imposes additional independence requirements for Audit Committee members of listed companies, prohibits Audit Committee members from accepting, directly or indirectly, any consulting, advisory, or other compensatory fee from the company or its subsidiaries (other than in their capacity as a board or committee member), and from being an affiliated person of the company. Mr. Callahan does not receive any compensatory fees from BRB other than his director and committee retainers, and he is not an affiliated person of BRB. The Rule 10A-3 requirements are satisfied.

12 C.F.R. Part 363 Analysis. For insured depository institutions with total assets exceeding $3 billion, 12 C.F.R. Part 363 requires that the audit committee consist entirely of outside directors who are independent of management. Mr. Callahan satisfies the Part 363 requirements: he is not, and has not within the preceding year been, an officer or employee of BRB or any of its affiliates, and he is independent of management.

Qualitative Assessment. Although Mr. Callahan satisfies the formal bright-line independence tests applicable to Audit Committee membership, we note that the relationship between a former partner of the Bank's independent auditor and the auditing firm itself is inherently one of professional familiarity and collegial connection. Mr. Callahan has professional relationships with current R&H partners that date from his tenure at the firm, and he may be perceived by external observers as having a degree of sympathy or deference toward R&H that other Audit Committee members might not share. While we do not believe this professional background impairs Mr. Callahan's independence — indeed, his deep understanding of audit methodology and professional standards is a significant asset to the Audit Committee — we recommend that the Board take specific steps to document its assessment and to ensure transparency in its proxy disclosures.

Independence Determination — Nasdaq. Mr. Callahan qualifies as independent under the Nasdaq bright-line tests, including the Audit Committee-specific requirements of Rule 5605(c)(2). His departure from R&H in 2017 is outside the three-year cooling-off period, and he has no continuing financial interest in R&H.

Independence Determination — OCC Heightened Standards. Under the OCC heightened standards and 12 C.F.R. Part 363, Mr. Callahan meets the independence requirements for audit committee membership at insured depository institutions. His CPA background and former audit partnership are viewed as qualifications that enhance the Audit Committee's effectiveness, consistent with the Part 363 requirement that at least one audit committee member have banking or related financial management expertise.

Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.

Conclusion. Mr. Callahan qualifies as independent under all three applicable frameworks and is eligible to serve as Chair of the Audit Committee. He qualifies as an "audit committee financial expert" under SEC regulations by virtue of his CPA certification and former audit partnership.

Recommendations Specific to Callahan's R&H Relationship.

1. The Board should make and document a specific affirmative finding, by resolution, that Mr. Callahan's prior R&H relationship does not impair his independence or his ability to serve as Audit Committee Chair with objectivity and independent judgment.

2. This finding should be disclosed in BRB's proxy statement, with appropriate detail regarding the nature and timing of Mr. Callahan's R&H relationship and the Board's basis for its independence determination.

3. As discussed in Section VII, the Board should consider whether BRB's updated Director Independence Standards should include an explicit provision addressing former partners and employees of BRB's independent auditor, including an enhanced cooling-off period for Audit Committee chair eligibility that exceeds the Nasdaq minimum.

E. Sandra M. Okafor — Chair, Compensation & Human Capital Committee

Independence Status: Independent

Sandra M. Okafor, age 55, has served as an independent director of BRB since 2021 and currently serves as Chair of the Compensation & Human Capital Committee. Prior to joining the BRB Board, Ms. Okafor served as Chief Human Resources Officer of Marlowe Asset Management Atlantic Industries, Inc., a diversified industrial conglomerate. Ms. Okafor departed Marlowe Asset Management Atlantic Industries in 2020.

Employment and Compensation Analysis. Ms. Okafor has not been employed by Marlowe Asset Management Atlantic Industries or any other entity since 2020. She does not receive any compensation from BRB other than the standard director retainer and Compensation Committee chair retainer. She has not accepted any consulting, advisory, or other compensatory fee from BRB other than her board and committee retainers.

Familial Relationships. Ms. Okafor has no familial relationships with any officer, director, or employee of BRB or BRFG.

Business Relationships. We have analyzed whether any business relationship exists between Marlowe Asset Management Atlantic Industries and BRB. Based on our review of BRB's counterparty records, lending files, and vendor databases, we have identified no current or recent material business relationship between Marlowe Asset Management Atlantic Industries and BRB or any of its affiliates. BRB provides no lending, treasury management, or other banking services to Marlowe Asset Management Atlantic Industries, and Marlowe Asset Management Atlantic Industries provides no products or services to BRB.

Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Under the enhanced independence standards applicable to Compensation Committee members under Nasdaq Rule 5605(d)(2), no factors have been identified that would impair Ms. Okafor's ability to act independently in her role as Compensation Committee Chair. She does not receive any consulting, advisory, or other compensatory fee from BRB beyond her board and committee retainers, and she is not an affiliate of BRB or any of its subsidiaries.

Independence Determination — OCC Heightened Standards. Ms. Okafor qualifies as independent under the OCC heightened standards. Her former CHRO experience is relevant to the Compensation Committee's oversight of executive compensation and human capital management practices.

Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.

Conclusion. Ms. Okafor qualifies as independent under all three applicable frameworks. She is eligible to serve as Chair of the Compensation & Human Capital Committee.

F. Lawrence B. Huang — Chair, Technology & Innovation Committee

Independence Status: Independent

Lawrence B. Huang, age 60, has served as an independent director of BRB since 2021 and currently serves as Chair of the Technology & Innovation Committee. Mr. Huang is a technology executive with extensive experience in financial technology and digital transformation. He has held senior leadership positions at several technology companies, most recently serving as Executive Vice President of Enterprise Solutions at Nextera Digital, Inc. Mr. Huang departed Nextera Digital in 2020.

Employment and Compensation Analysis. Mr. Huang does not have any current employment relationship with BRB, BRFG, or any of their affiliates. He does not receive any compensation from BRB other than the standard director retainer and Technology & Innovation Committee chair retainer.

Familial Relationships. Mr. Huang has no familial relationships with any officer, director, or employee of BRB or BRFG.

Business Relationships. We have reviewed BRB's vendor records and counterparty databases and have identified no current or recent business relationship between Mr. Huang's former employers and BRB. Nextera Digital does not provide technology products or services to BRB, and BRB does not provide banking services to Nextera Digital.

Independence Determination. Mr. Huang qualifies as independent under the Nasdaq Listing Rules, the OCC heightened standards, and BRB's Director Independence Standards. No disqualifying relationship or circumstance has been identified under any of the three frameworks. His technology expertise is a significant asset to the Technology & Innovation Committee's oversight of BRB's digital banking strategy and cybersecurity program.

Conclusion. Mr. Huang qualifies as independent under all three applicable frameworks. He is eligible to serve as Chair of the Technology & Innovation Committee.

G. Richard A. Montague — CEO & President; Director

Independence Status: Non-Independent

Richard A. Montague, age 58, has served as a director of BRB since 2017 and has served as Chief Executive Officer and President of BRB since January 2020. As a current executive officer and employee of BRB, Mr. Montague is categorically non-independent under all three applicable frameworks.

Under Nasdaq Rule 5605(a)(2)(A), a director who is currently employed by the company is not independent. Under the OCC heightened standards, executive officers are inherently non-independent for purposes of board and committee composition requirements. Under BRB's Director Independence Standards, current executive officers are expressly excluded from the definition of independent directors.

Mr. Montague's non-independent status renders him ineligible to serve on the Audit Committee, the Compensation & Human Capital Committee, the Governance & Nominating Committee, or the Risk Committee (under OCC expectations for independence of Risk Committee members). He does not currently serve on any of these committees. Mr. Montague participates in board meetings and has the right to attend committee meetings by invitation, but he does not serve as a voting member of any committee that requires independent membership.

Conclusion. Mr. Montague is appropriately classified as non-independent. No further analysis is required.

H. Franklin D. Reeves — COO; Director

Independence Status: Non-Independent

Franklin D. Reeves, age 54, serves as a director of BRB and as its Chief Operating Officer. As a current executive officer and employee of BRB, Mr. Reeves is categorically non-independent under all three applicable frameworks.

Under Nasdaq Rule 5605(a)(2)(A), Mr. Reeves' current employment by BRB precludes a finding of independence. Under the OCC heightened standards and BRB's Director Independence Standards, the same conclusion applies. Mr. Reeves is ineligible to serve on any committee requiring independent membership.

Conclusion. Mr. Reeves is appropriately classified as non-independent. No further analysis is required.

I. Alma G. Brashear — EVP & Head of Digital Banking; Director

Independence Status: Non-Independent

Alma G. Brashear, age 47, has served as a director of BRB since 2023 and serves as Executive Vice President & Head of Digital Banking. As a current executive officer and employee of BRB, Ms. Brashear is categorically non-independent under all three applicable frameworks.

Ms. Brashear joined the BRB Board relatively recently, in 2023, and her non-independent status was properly disclosed in BRB's most recent proxy statement filed with the Securities and Exchange Commission. Her appointment to the Board was made in recognition of the strategic importance of BRB's digital banking initiative and the Board's desire to ensure that the Head of Digital Banking has a direct line of communication with the Board. The rationale for her board appointment does not alter the independence analysis, however, and she remains categorically non-independent by virtue of her executive officer status.

Ms. Brashear is ineligible to serve on any committee requiring independent membership, including the Audit Committee, Risk Committee, Compensation & Human Capital Committee, and Governance & Nominating Committee. She does not currently serve on any of these committees.

Conclusion. Ms. Brashear is appropriately classified as non-independent. No further analysis is required.

J. Directors 10, 11, 12, and 13 — Remaining Independent Directors

The remaining four independent directors of BRB — Helen C. Darrow, Robert F. Nakamura, Evelyn T. Chambers, and Marcus W. Delgado — complete the roster of ten independent directors. For each of these directors, our analysis confirms the following:

Helen C. Darrow (age 61, director since 2017): Retired executive in the insurance and financial-services industry. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Risk Committee and the Governance & Nominating Committee. Qualifies as independent under all three frameworks.

Robert F. Nakamura (age 66, director since 2018): Retired banking executive and community leader. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Audit Committee and the Technology & Innovation Committee. Qualifies as independent under all three frameworks.

Evelyn T. Chambers (age 53, director since 2020): Former General Counsel of a publicly traded financial-services company. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Compensation & Human Capital Committee and the Risk Committee. Qualifies as independent under all three frameworks.

Marcus W. Delgado (age 59, director since 2019): Seasoned executive in corporate finance and capital markets. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Audit Committee, the Risk Committee, and the Governance & Nominating Committee. Qualifies as independent under all three frameworks.

For each of these four directors, we have reviewed the director's annual questionnaire responses, BRB's counterparty and vendor records, and publicly available information regarding the director's business affiliations and relationships. In no case have we identified a relationship or circumstance that would warrant enhanced analysis or that would call into question the director's independence under any of the three applicable frameworks. Each director's committee assignments have been reviewed for compliance with applicable independence requirements, and no issues have been identified.

V. Committee Composition Independence Analysis

A. Audit Committee

The Audit Committee consists of five (5) members, all of whom are independent directors: Thomas J. Callahan (Chair), David K. Sorrento, Robert F. Nakamura, Marcus W. Delgado, and one additional independent director. Each member has been analyzed for compliance with the heightened independence requirements applicable to Audit Committee members under three sets of standards: Nasdaq Rule 5605(c)(2), SEC Rule 10A-3 under the Securities Exchange Act of 1934, and 12 C.F.R. Part 363 for insured depository institutions with total assets exceeding $500 million.

Nasdaq Rule 5605(c)(2) and SEC Rule 10A-3. Each Audit Committee member satisfies the independence requirements of Nasdaq Rule 5605(c)(2), which incorporates the independence criteria of SEC Rule 10A-3. Specifically, no Audit Committee member accepts, directly or indirectly, any consulting, advisory, or other compensatory fee from BRB or any of its subsidiaries, other than in his or her capacity as a member of the Board or a Board committee. No Audit Committee member is an affiliated person of BRB or any of its subsidiaries, as that term is defined in SEC Rule 10A-3. No Audit Committee member has been associated with BRB's independent auditor (Ridgewell & Haines LLP) within the past three years, with the exception of Thomas J. Callahan, whose R&H association ended in 2017, more than three years prior to his Board appointment and more than seven years prior to the date of this memorandum.

12 C.F.R. Part 363 Requirements. Each Audit Committee member satisfies the requirements of 12 C.F.R. Part 363 for audit committee membership at insured depository institutions with total assets exceeding $3 billion. Each member is an outside director who is independent of management and who has not, within the preceding year, been an officer or employee of BRB or any of its affiliates.

Audit Committee Financial Expert. At least one member of the Audit Committee must qualify as an "audit committee financial expert" under SEC regulations (Item 407(d)(5) of Regulation S-K). Thomas J. Callahan qualifies by virtue of his CPA certification and his extensive career as an audit partner at R&H, during which he gained experience in accounting principles, financial statement auditing, internal controls, and audit committee oversight. The Board has designated Mr. Callahan as the Audit Committee's financial expert in BRB's proxy statement disclosures.

Callahan's Former R&H Relationship. As discussed in detail in Section IV.D, Mr. Callahan's former partnership at R&H warrants specific attention in the Audit Committee independence context. While his departure from R&H in 2017 satisfies the formal bright-line cooling-off requirements, the Board should make an affirmative determination, documented by resolution,

MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
July 18, 2025
TO: Colette Whitman, Partner, Calderwood & Harkness LLP James W. Prescott, General Counsel & Corporate Secretary, Belmont Ridge Bank NA
FROM: Brendan Walsh, Lead Associate, Calderwood & Harkness LLP Natasha Forbes, Associate, Calderwood & Harkness LLP
RE: Director Independence Assessment — Belmont Ridge Bank NA (Matter No. 1045-00003)
This memorandum is a privileged and confidential attorney-client communication prepared by Calderwood & Harkness LLP at the direction of Belmont Ridge Bank NA and Belmont Ridge Financial Group, Inc. in connection with pending regulatory remediation matters. This memorandum is protected by the attorney-client privilege and the work-product doctrine and is not intended for disclosure to any third party without the prior written consent of Calderwood & Harkness LLP and the client. Any unauthorized disclosure may constitute a waiver of applicable privileges.
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I. Executive Summary
This memorandum provides a comprehensive assessment of the independence status of each of the thirteen (13) directors serving on the boards of directors of Belmont Ridge Bank NA ("BRB" or the "Bank") and its parent holding company, Belmont Ridge Financial Group, Inc. ("BRFG" or the "Holding Company," and together with BRB, the "Company"). This assessment has been prepared at the request of the Board of Directors in response to governance deficiencies identified by the Office of the Comptroller of the Currency ("OCC") in its Matter Requiring Attention ("MRA") letter (SA-2024-0315, dated November 15, 2024) and by the Board of Governors of the Federal Reserve System (the "Federal Reserve") in its supervisory letter (SR-BHC-2024-1107, dated December 3, 2024). The director independence assessment constitutes a foundational element of the broader governance remediation program that the Company has undertaken in order to satisfy regulatory expectations and meet the OCC's remediation deadline of December 31, 2025.
This memorandum analyzes the independence of each director under three overlapping but distinct frameworks:
1. Nasdaq Listing Standards. Because BRFG's common stock (ticker: BRBK) is listed on the Nasdaq Stock Market, the independence requirements of the Nasdaq Listing Rules apply to the composition of BRFG's board and its standing committees. These requirements flow through to BRB by virtue of the substantially overlapping board composition between the Bank and the Holding Company.
2. OCC Heightened Standards for National Banks. As a national bank with approximately $38.7 billion in total consolidated assets as of the most recently reported quarter, BRB falls within the OCC's supervisory-expectation tier under 12 C.F.R. Part 7 and related OCC guidance regarding heightened standards for risk governance, including expectations for the independence and qualifications of directors serving on the Risk Committee and Audit Committee. Additionally, 12 C.F.R. Part 363 imposes specific audit committee independence requirements on insured depository institutions with total assets of $500 million or more, a threshold BRB substantially exceeds.
3. BRB Director Independence Standards. BRB maintains its own Director Independence Standards, which were last amended in March 2022. These standards incorporate the Nasdaq bright-line tests and supplement them with certain categorical standards specific to banking institutions. As discussed in detail in Section VII of this memorandum, these standards require updating to reflect current regulatory expectations.
Principal Conclusions. Based on our analysis, we conclude as follows:
• Ten (10) of the thirteen (13) directors qualify as independent under all three applicable frameworks. These directors are: Margaret R. Ellsworth (Chair of the Board), David K. Sorrento (Lead Independent Director), Priya Venkataraman, Thomas J. Callahan, Sandra M. Okafor, Lawrence B. Huang, and four additional independent directors identified in Section IV.J of this memorandum.
• Three (3) directors are non-independent due to their current status as executive officers and employees of BRB. These directors are: Richard A. Montague (CEO & President), Franklin D. Reeves (COO), and Alma G. Brashear (EVP & Head of Digital Banking).
• Certain independence-qualifying directors present relationships warranting enhanced analysis. Specifically, David K. Sorrento's prior affiliation with Clearpoint Consulting Group requires assessment of whether that firm has had any business relationship with BRB. Priya Venkataraman's former employment at Lakemont Financial Corporation requires evaluation given BRB's participation in a syndicated credit facility in which Lakemont is also a participant lender. Thomas J. Callahan's prior partnership at Ridgewell & Haines LLP, BRB's current independent auditor, requires careful scrutiny under Audit Committee-specific independence standards. In each case, as detailed below, we conclude that these relationships do not impair the director's independence, though they warrant ongoing monitoring and, in Callahan's case, specific board documentation and proxy statement disclosure.
• BRB's Director Independence Standards require updating to conform with current OCC and Federal Reserve regulatory expectations. We provide specific recommendations for revisions in Section VII, including the addition of provisions addressing former-auditor relationships, consulting and advisory firm relationships, syndicated lending or shared counterparty relationships, relationships with significant shareholders, and mandatory annual independence questionnaires and certifications.
• All five standing board committees are currently composed entirely of independent directors, satisfying or exceeding all applicable requirements. The overall board independence ratio of approximately 77% (10 of 13 directors) comfortably exceeds the Nasdaq majority-independence requirement.
We recommend that these findings be presented to the Governance & Nominating Committee and thereafter to the full Board of Directors, and that the recommended revisions to BRB's Director Independence Standards be adopted as part of the remediation program prior to the December 31, 2025 deadline.
II. Background
A. Regulatory Context
On November 15, 2024, the OCC issued MRA letter SA-2024-0315 to BRB, identifying four discrete governance findings arising from the OCC's supervisory examination cycle. The four findings encompassed deficiencies in board risk-oversight documentation, management reporting protocols for emerging risks, the completeness of the Governance & Nominating Committee charter, and the adequacy of the Bank's succession planning framework. Of particular relevance to this memorandum is MRA Finding 4, which identified the Governance & Nominating Committee charter's failure to address director skill-matrix requirements and succession planning in a manner consistent with the OCC's expectations for institutions in BRB's asset-size tier. The director independence assessment that is the subject of this memorandum constitutes a foundational element of the remediation of MRA Finding 4, as the OCC expects the Bank to demonstrate that its governance framework, including its processes for evaluating and ensuring director independence, is robust, well-documented, and regularly reviewed.
On December 3, 2024, the Federal Reserve issued supervisory letter SR-BHC-2024-1107 to BRFG, raising parallel governance concerns at the holding-company level. The Federal Reserve's letter expressed concern regarding the effectiveness of the BRFG board's oversight of risk management and compliance functions, and specifically noted the need for the holding-company board to ensure that its independent directors possess the qualifications and independence necessary to provide effective challenge to management. The Federal Reserve's supervisory expectations align with, but are not identical to, the OCC's heightened standards applicable to BRB at the bank level.
BRB submitted its initial remediation plan to the OCC on February 28, 2025. That plan outlined the Bank's proposed approach to addressing each of the four MRA findings, including the retention of outside counsel and consultants to assist with governance remediation. The OCC acknowledged receipt of the remediation plan and provided substantive comments on April 4, 2025. Among other things, the OCC's comments emphasized the importance of a thorough and well-documented director independence assessment as part of the governance remediation, and noted that the Bank should ensure that its Director Independence Standards reflect current regulatory expectations rather than merely tracking the minimum requirements of the Nasdaq Listing Rules.
The OCC has established December 31, 2025 as the deadline for completion of the governance remediation. Calderwood & Harkness LLP was formally engaged effective July 1, 2025, to advise BRB's Board of Directors on the governance remediation program, including this director independence assessment, the revision of committee charters and corporate governance guidelines, and coordination with Ashford Pike Advisory LLC (engagement lead Kenneth R. Stoltz), which has been retained to assist with certain operational remediation elements.
B. Board Composition Overview
As of the date of this memorandum, the BRB Board of Directors consists of thirteen (13) members. Of these, ten (10) are classified as independent directors and three (3) are classified as non-independent directors by virtue of their current status as executive officers and employees of BRB. The three non-independent directors are Richard A. Montague (CEO & President), Franklin D. Reeves (Chief Operating Officer), and Alma G. Brashear (Executive Vice President & Head of Digital Banking).
Eleven (11) of the thirteen (13) BRB directors also serve on the Board of Directors of the BRFG holding company, resulting in substantially overlapping board composition between the Bank and the Holding Company. This overlapping composition is common among banking organizations of BRB's size and structure, and it means that the independence analysis performed herein applies with equivalent force at both the bank and holding-company levels for the eleven directors who serve on both boards.
The Board maintains five standing committees, each composed entirely of independent directors:
• Audit Committee — Five (5) members: Thomas J. Callahan (Chair), David K. Sorrento, and three additional independent directors. The Audit Committee is responsible for overseeing BRB's financial reporting, internal controls, and the engagement of the independent auditor (currently Ridgewell & Haines LLP, engagement partner Lydia M. Chow).
• Risk Committee — Five (5) members: Priya Venkataraman (Chair) and four additional independent directors. The Risk Committee is responsible for overseeing BRB's enterprise risk management framework, including credit risk, market risk, operational risk, and compliance risk.
• Compensation & Human Capital Committee — Four (4) members: Sandra M. Okafor (Chair) and three additional independent directors. The Compensation Committee is responsible for overseeing executive compensation, incentive compensation programs, and human capital management practices.
• Governance & Nominating Committee — Four (4) members: Margaret R. Ellsworth (Chair) and three additional independent directors. The Governance & Nominating Committee is responsible for board composition, director nominations, governance policies, and succession planning — the latter of which is the subject of MRA Finding 4.
• Technology & Innovation Committee — Three (3) members: Lawrence B. Huang (Chair) and two additional independent directors. The Technology & Innovation Committee is responsible for overseeing BRB's technology strategy, cybersecurity, and digital banking initiatives.
C. Existing Director Independence Standards
BRB's current Director Independence Standards were adopted by the Board in 2018 and most recently amended in March 2022. The Standards incorporate the Nasdaq Listing Rules' bright-line disqualification tests and supplement them with certain categorical standards that the Board determined to be appropriate for a banking institution of BRB's size and regulatory profile. These supplemental standards include, among other things, provisions addressing lending relationships between BRB and entities affiliated with directors or their immediate family members, and provisions addressing directors who serve as officers or directors of entities that compete directly with BRB in its primary market areas.
As discussed in detail in Section VII of this memorandum, BRB's Director Independence Standards, while adequate at the time of their most recent amendment, now require updating in several respects. The Standards pre-date the November 2024 OCC MRA and the December 2024 Federal Reserve supervisory letter, and they do not fully reflect the regulatory agencies' current expectations regarding director independence at banking organizations in BRB's asset-size tier. In particular, the Standards are silent or insufficiently detailed with respect to former-auditor relationships, relationships with regulatory consultants, syndicated lending or shared counterparty relationships, and relationships with significant shareholders. We recommend specific revisions to the Standards as part of the governance remediation program.
III. Applicable Independence Frameworks
A. Nasdaq Listing Standards
BRFG's common stock (ticker: BRBK) is listed on the Nasdaq Stock Market, and accordingly the Nasdaq Listing Rules' independence requirements apply to the composition of the BRFG board and its standing committees. Because eleven of the thirteen BRB bank directors also serve on the BRFG holding-company board, and because BRB has adopted the Nasdaq independence standards by incorporation into its own Director Independence Standards, the Nasdaq framework is directly applicable to the independence assessment at both the bank and holding-company levels.
General Definition of Independence. Nasdaq Listing Rule 5605(a)(2) defines an "Independent Director" as a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. This definition encompasses both the bright-line disqualification criteria set forth in the Rule and a broader, subjective assessment by the board of any relationships that could impair a director's ability to act independently of management.
Bright-Line Disqualification Criteria. Rule 5605(a)(2)(A) through (D) sets forth specific relationships that automatically preclude a finding of independence:
(A) A director who is, or at any time during the past three years was, employed by the company is not independent. A director whose immediate family member is, or at any time during the past three years was, an executive officer of the company is not independent.
(B) A director who accepted, or who has a family member who accepted, any compensation from the company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the independence determination, other than compensation for board or committee service, compensation paid to a family member who is an employee (other than an executive officer) of the company, or benefits under a tax-qualified retirement plan or non-discretionary compensation, is not independent.
(C) A director who is a family member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer is not independent.
(D) A director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed the greater of 5% of the recipient's consolidated gross revenues or $200,000 is not independent.
Additional disqualification criteria apply to directors who are, or whose family members are, currently employed as executive officers of another entity where at any time during the past three years any of the executive officers of the listed company served on the compensation committee of such other entity.
Board Majority Independence. Nasdaq Listing Rule 5605(b)(1) requires that a majority of the board of directors be composed of independent directors. With ten of thirteen directors qualifying as independent (approximately 77%), BRB and BRFG substantially exceed this requirement.
Committee-Specific Independence Standards. The Nasdaq Listing Rules impose heightened independence requirements for membership on certain committees:
• Audit Committee. Rule 5605(c)(2) requires that each member of the Audit Committee be independent as defined in Rule 5605(a)(2) and also satisfy the additional independence criteria of SEC Rule 10A-3 under the Securities Exchange Act of 1934. Under Rule 10A-3, an Audit Committee member may not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the company or any of its subsidiaries (other than in his or her capacity as a member of the board or a board committee), and may not be an affiliated person of the company or any of its subsidiaries. Former partners of the company's independent auditing firm are disqualified from Audit Committee service if their association with the auditing firm occurred within the past three years.
• Compensation Committee. Rule 5605(d)(2) requires that each member of the Compensation Committee be independent as defined in Rule 5605(a)(2), and further requires the board to consider certain additional factors in determining independence for Compensation Committee purposes, including the source of any compensation paid to the director by the company (including any consulting, advisory, or other compensatory fee) and whether the director is affiliated with the company, any subsidiary, or any affiliate of a subsidiary.
B. OCC Heightened Standards (12 C.F.R. Part 7 and OCC Guidance)
The OCC's heightened standards for risk governance apply on a mandatory basis to national banks with total consolidated assets of $50 billion or more, and on a supervisory-expectation basis to national banks with total consolidated assets between $10 billion and $50 billion. BRB, with approximately $38.7 billion in total consolidated assets as of the most recent reporting period, falls within the supervisory-expectation tier. The OCC has made clear in its examination guidance and in the MRA letter that it expects BRB to comply with the substance of these heightened standards, even though compliance is framed as a supervisory expectation rather than a binding regulatory requirement at BRB's current asset level.
The OCC's heightened standards emphasize several independence-related principles:
Independent Judgment in Risk Oversight. The OCC expects that a sufficient number of directors possess the ability and willingness to exercise independent judgment with respect to risk oversight, free from undue influence by management or by business-line interests. This expectation extends beyond the formal independence criteria of the Nasdaq Listing Rules to encompass a qualitative assessment of each director's capacity to provide effective challenge to management's risk-related decisions and assumptions.
Risk Committee Composition. The OCC places particular emphasis on the composition of the Risk Committee. The OCC expects that Risk Committee members be independent of business-line influence and possess meaningful risk-management expertise. While the OCC does not prescribe specific bright-line independence tests for Risk Committee membership beyond those applicable under the Nasdaq Listing Rules and the Bank's own standards, the OCC's supervisory guidance makes clear that directors who have current or recent business relationships with the Bank or its affiliates that could create conflicts of interest should not serve on the Risk Committee, and that the Risk Committee should include members with demonstrated experience in enterprise risk management, credit risk, market risk, or related disciplines.
Relationships with Significant Borrowers, Vendors, or Counterparties. OCC examination guidance addresses the potential for director independence to be impaired by relationships with entities that are significant borrowers from, vendors to, or counterparties of the Bank. The OCC expects that the Board will evaluate and document its consideration of any such relationships as part of its annual independence assessment.
Audit Committee Independence (12 C.F.R. Part 363). For insured depository institutions with total assets of $500 million or more — a threshold BRB exceeds by a wide margin — 12 C.F.R. Part 363 requires the establishment of an audit committee composed entirely of outside directors who are independent of management of the institution. The regulation defines an "outside director" as one who is not, and within the preceding year has not been, an officer or employee of the institution or any of its affiliates, and requires that a majority of the audit committee (and, for institutions with total assets exceeding $3 billion, all members) be independent of management. Part 363 also imposes specific requirements regarding audit committee members' ability to read and understand fundamental financial statements and requires at least one member to have banking or related financial management expertise.
C. BRB Director Independence Standards (March 2022)
BRB's Director Independence Standards, as currently in effect, represent the Board's own expression of the independence criteria applicable to BRB directors. The Standards were adopted in 2018 and most recently amended in March 2022. They were developed in consultation with BRB's prior outside counsel and reflect the Nasdaq Listing Rules' bright-line disqualification tests, supplemented by certain categorical standards that the Board determined to be appropriate for a banking institution.
The supplemental categorical standards currently included in BRB's Standards address, among other things:
• Lending relationships between BRB and entities with which a director or an immediate family member is affiliated as an officer, director, or significant equity holder, where the aggregate outstanding extensions of credit exceed a specified materiality threshold.
• Directors who serve as officers or directors of entities that compete directly with BRB in its primary market areas (a "competitor director" provision).
• Directors who have received personal loans from BRB or any of its affiliates on terms not available to similarly situated borrowers (a provision designed to address the insider lending restrictions of Regulation O, 12 C.F.R. Part 215).
While these supplemental standards were appropriate at the time of their adoption, they do not fully address several categories of relationships that have become the focus of regulatory attention since March 2022. The specific gaps in BRB's current Standards, and our recommendations for revisions, are discussed in detail in Section VII.
D. Interplay of the Three Frameworks
Where the Nasdaq Listing Rules, the OCC heightened standards, and BRB's own Director Independence Standards diverge in their requirements or expectations, the most restrictive standard applies. In practice, this means that a director must satisfy all three sets of criteria to be classified as independent for purposes of BRB and BRFG board and committee service. A director who satisfies the Nasdaq bright-line tests but whose independence is called into question under the OCC's qualitative expectations would not be classified as independent for purposes of this assessment, and vice versa.
An additional consideration arises from the overlapping board composition between BRB and BRFG. Eleven of the thirteen BRB directors also serve on the BRFG holding-company board. For these eleven directors, the independence analysis must satisfy both the Nasdaq requirements applicable to BRFG as a listed company and the OCC and banking-specific requirements applicable to BRB as a national bank. In general, the analysis is consistent across both levels, as the relationships and circumstances relevant to independence are the same regardless of whether the director is acting in his or her capacity as a BRB director or a BRFG director. However, the Federal Reserve's supervisory expectations at the holding-company level, as expressed in SR-BHC-2024-1107, may in some cases impose additional qualitative considerations that supplement the Nasdaq and OCC frameworks.
For purposes of this memorandum, we have applied all three frameworks to each director and have identified the applicable standard for each element of the analysis. Where a director's independence is clear under all three frameworks, we have so noted without extended discussion. Where a director presents a relationship or circumstance that warrants enhanced analysis under one or more of the frameworks, we have provided the detailed analysis set forth in Section IV.
IV. Director-by-Director Independence Analysis
A. Margaret R. Ellsworth — Chair of the Board; Chair, Governance & Nominating Committee
Independence Status: Independent
Margaret R. Ellsworth, age 64, has served as an independent director of BRB since 2018 and currently serves as Chair of the Board of Directors and Chair of the Governance & Nominating Committee. Prior to joining the BRB Board, Ms. Ellsworth served as Chief Financial Officer of Hargrove Mutual Bancshares, a mutual savings bank headquartered in Hartford, Connecticut. Ms. Ellsworth retired from Hargrove Mutual Bancshares in 2016 and has not been employed by any financial institution since that time.
Employment and Compensation Analysis. Ms. Ellsworth has no current employment or financial relationship with BRB, BRFG, or any of their affiliates, other than her service as a director and board chair. She does not receive any compensation from BRB other than the standard director retainer, board chair fee, and committee chair retainer established by the Compensation & Human Capital Committee for non-employee directors. These amounts are within the ordinary range for directors of banking institutions of comparable size and are excluded from the Nasdaq $120,000 compensation threshold applicable to the independence analysis.
Familial Relationships. Ms. Ellsworth has no familial relationships with any officer, director, or employee of BRB or BRFG. None of her immediate family members (as defined under the Nasdaq Listing Rules) are employed by, or have any business relationship with, BRB or its affiliates.
Business Relationships — Hargrove Mutual Bancshares. We have analyzed whether any business relationship exists between Hargrove Mutual Bancshares and BRB that could impair Ms. Ellsworth's independence. Based on our review of BRB's counterparty records, lending records, and vendor databases, we have identified no current or recent business relationship between Hargrove Mutual Bancshares and BRB or any of its affiliates. There are no outstanding extensions of credit, participation agreements, vendor contracts, or other material business arrangements between the two institutions.
Independence Determination. Ms. Ellsworth qualifies as independent under the Nasdaq Listing Rules, including the bright-line disqualification criteria of Rule 5605(a)(2)(A) through (D). She qualifies as independent under the OCC heightened standards, as she has no relationships that would impair her ability to exercise independent judgment in overseeing BRB's risk management and governance functions. She qualifies as independent under BRB's Director Independence Standards. Ms. Ellsworth is eligible to serve on and chair the Governance & Nominating Committee, and her combined role as Board Chair and Governance & Nominating Committee Chair is consistent with applicable governance standards, particularly given that the Board has designated a separate Lead Independent Director (David K. Sorrento).
B. David K. Sorrento — Lead Independent Director; Member, Audit Committee and Compensation & Human Capital Committee
Independence Status: Independent (Enhanced Analysis Required)
David K. Sorrento, age 69, has served as an independent director of BRB since 2016 and currently serves as Lead Independent Director. Mr. Sorrento is a member of the Audit Committee and the Compensation & Human Capital Committee. Prior to joining the BRB Board, Mr. Sorrento served as Managing Partner of Clearpoint Consulting Group ("CCG"), a management consulting firm providing strategic advisory services to financial institutions and other corporate clients. Mr. Sorrento retired from CCG in 2014.
Employment and Compensation Analysis. Mr. Sorrento has not been employed by any entity since his retirement from CCG in 2014. He does not receive any compensation from BRB other than the standard director retainer and committee member retainers. These amounts are excluded from the Nasdaq $120,000 compensation threshold.
Familial Relationships. Mr. Sorrento has no familial relationships with any officer, director, or employee of BRB or BRFG.
Enhanced Analysis — Clearpoint Consulting Group. Mr. Sorrento's prior leadership role at CCG requires careful examination of whether CCG has had any business relationship with BRB, BRFG, or any of their affiliates that could create an actual or perceived conflict of interest. Our analysis of this relationship encompasses the following considerations:
Timing of Retirement. Mr. Sorrento retired from CCG in 2014, approximately two years before he joined the BRB Board in 2016. His departure from CCG is well outside the three-year look-back period prescribed by the Nasdaq bright-line disqualification criteria. At the time of his initial appointment to the BRB Board, his retirement from CCG was already two years in the past, and as of the date of this memorandum, his retirement is approximately eleven years in the past.
Business Relationships Between CCG and BRB. Based on our review of BRB's vendor records, consulting engagement files, and accounts payable records, we have confirmed that CCG has not provided any compensated consulting, advisory, or other services to BRB, BRFG, or any of their affiliates, at any time. There are no payments by BRB to CCG reflected in BRB's records, and Mr. Sorrento has confirmed that he is not aware of any business relationship between CCG and BRB.
Continuing Financial Interest in CCG. Mr. Sorrento has confirmed that he holds no continuing financial interest in CCG. He has no equity interest, no deferred compensation arrangement contingent on CCG's revenues or earnings, and no consulting or advisory arrangement with CCG. His retirement from CCG was a complete separation without ongoing economic ties.
Potential for Indirect Relationships. We have also considered whether CCG has business relationships with any significant counterparties, vendors, or borrowers of BRB that could create an indirect conflict. Based on publicly available information and Mr. Sorrento's representations in his annual director questionnaire, no such indirect relationships have been identified.
Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Mr. Sorrento is not currently employed by any entity, he has not accepted compensation from BRB in excess of $120,000 (other than excluded board/committee fees), and CCG has not received payments from BRB that would trigger the business-relationship disqualification test of Rule 5605(a)(2)(D). Under the broader Nasdaq independence definition, his prior consulting background does not, in our assessment, create a relationship that would interfere with the exercise of independent judgment.
Independence Determination — OCC Heightened Standards. Under the OCC heightened standards, Mr. Sorrento's prior consulting career does not create a conflict where CCG has no business relationship with BRB. The OCC's focus on relationships with vendors and consultants is directed at current or recent relationships that could create economic incentives or conflicts; a fully severed prior affiliation with a firm that has never done business with BRB does not raise such concerns.
Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies to Mr. Sorrento.
Conclusion. Mr. Sorrento qualifies as independent under all three applicable frameworks. He is eligible to serve as Lead Independent Director and to serve on the Audit Committee and the Compensation & Human Capital Committee.
Ongoing Monitoring Recommendation. Although our current analysis confirms Mr. Sorrento's independence, the Board should implement a process for periodically re-examining whether CCG or any successor entity enters into any business relationship with BRB. This monitoring should be incorporated into the annual director independence questionnaire and certification process recommended in Section VII of this memorandum. In the event that CCG were to be engaged by BRB in the future, a reassessment of Mr. Sorrento's independence would be warranted.
C. Priya Venkataraman — Chair, Risk Committee
Independence Status: Independent (Enhanced Analysis Required)
Priya Venkataraman, age 57, has served as an independent director of BRB since 2020 and currently serves as Chair of the Risk Committee. Prior to joining the BRB Board, Ms. Venkataraman served as Chief Risk Officer of Lakemont Financial Corporation ("Lakemont"), a diversified financial services company. Ms. Venkataraman departed Lakemont in 2019.
Employment and Compensation Analysis. Ms. Venkataraman has not been employed by Lakemont or any other entity (other than personal consulting and advisory board activities unrelated to BRB) since her departure from Lakemont in 2019. She does not receive any compensation from BRB other than the standard director retainer and Risk Committee chair retainer.
Familial Relationships. Ms. Venkataraman has no familial relationships with any officer, director, or employee of BRB or BRFG.
Enhanced Analysis — Lakemont Financial Corporation. Ms. Venkataraman's former employment at Lakemont requires careful evaluation because BRB has an identifiable, though indirect, business relationship with Lakemont. Our analysis addresses the following considerations:
Timing of Departure. Ms. Venkataraman departed Lakemont in 2019, more than one year prior to her initial appointment to the BRB Board in 2020, and approximately three years prior to the commencement of the Nasdaq three-year look-back period measured from the date of this memorandum. Her departure from Lakemont is well outside the Nasdaq bright-line disqualification period. At the time of her initial appointment, her departure from Lakemont was approximately one year in the past — still outside the look-back period when measured from that date.
Direct Business Relationships Between BRB and Lakemont. Based on our review of BRB's counterparty records, lending files, and business-relationship databases, we have confirmed that BRB and Lakemont have no direct bilateral business relationship. There are no bilateral lending arrangements, vendor contracts, joint ventures, or other material business arrangements between the two institutions.
Syndicated Credit Facility Participation. BRB participates in a syndicated credit facility — specifically, a revolving credit facility extended to Meridian Capital Holdings Corp. — in which Lakemont is also a participant lender. In this arrangement, BRB and Lakemont are co-participants in the syndicate but do not have a direct bilateral relationship with each other. The syndicated facility was arranged by a third-party lead arranger, and each participant's commitment and funding obligations are independent of the other participants. BRB's participation in the facility was approved through its normal credit-approval process and was not influenced by Lakemont's participation. We note that shared participation in a broadly syndicated credit facility is a common occurrence among financial institutions and does not, in our assessment, create a material business relationship between BRB and Lakemont for purposes of the director independence analysis under any of the three applicable frameworks.
Continuing Financial Interest in Lakemont. Ms. Venkataraman has confirmed that she holds no continuing financial interest in Lakemont. She has no equity interest, no deferred compensation arrangement, and no consulting or advisory arrangement with Lakemont. Her departure from Lakemont was a complete separation.
Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Ms. Venkataraman's former employment at Lakemont ended more than three years prior to the date of this assessment. The shared syndicated credit facility participation does not constitute a payment by BRB to Lakemont (or vice versa) for property or services, and therefore does not trigger the business-relationship disqualification test of Rule 5605(a)(2)(D).
Independence Determination — OCC Heightened Standards. Under the OCC heightened standards, Ms. Venkataraman's former CRO experience at Lakemont is viewed as qualitatively beneficial for Risk Committee service. The OCC's guidance on Risk Committee composition emphasizes the importance of including directors with demonstrated risk-management expertise, and Ms. Venkataraman's career as a chief risk officer at a major financial institution directly supports the Risk Committee's effectiveness. Her independence from Lakemont is confirmed by the absence of any continuing financial interest or direct bilateral business relationship. The OCC's concern regarding relationships with significant counterparties is directed at situations where a director has a current economic interest in the counterparty; Ms. Venkataraman has no such interest.
Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.
Conclusion. Ms. Venkataraman qualifies as independent under all three applicable frameworks. She is eligible to serve as Chair of the Risk Committee, and her risk-management expertise is a valuable asset to the Committee's effectiveness.
Ongoing Monitoring Recommendation. The shared syndicated credit facility participation between BRB and Lakemont should be monitored for changes in materiality. If the facility were to be restructured in a manner that created a more direct bilateral relationship between BRB and Lakemont, or if BRB's or Lakemont's participation were to increase significantly, a reassessment of the independence implications would be appropriate. This monitoring should be incorporated into the annual director independence assessment process.
D. Thomas J. Callahan — Chair, Audit Committee
Independence Status: Independent (Enhanced Analysis Required)
Thomas J. Callahan, age 62, has served as an independent director of BRB since 2019 and currently serves as Chair of the Audit Committee. Mr. Callahan is a Certified Public Accountant (inactive license) and formerly served as an audit partner at Ridgewell & Haines LLP ("R&H"), which is BRB's current independent registered public accounting firm (engagement partner Lydia M. Chow). Mr. Callahan retired from R&H in 2017, approximately two years before joining the BRB Board.
Employment and Compensation Analysis. Mr. Callahan has not been employed by R&H or any other entity since his retirement in 2017. He does not receive any compensation from BRB other than the standard director retainer and Audit Committee chair retainer.
Familial Relationships. Mr. Callahan has no familial relationships with any officer, director, or employee of BRB or BRFG. He has no familial relationships with any current partner or employee of R&H.
Enhanced Analysis — Ridgewell & Haines LLP. The fact that Mr. Callahan previously served as a partner at R&H, which is BRB's current independent auditor, requires the most detailed analysis of any director relationship addressed in this memorandum. The integrity and perceived independence of the Audit Committee chair is of paramount importance to BRB's financial-reporting framework and to the regulatory agencies' confidence in the Bank's governance. Our analysis addresses the following considerations:
Timing of Retirement from R&H. Mr. Callahan retired from R&H in 2017. He joined the BRB Board in 2019, approximately two years after his retirement. Under Nasdaq Rule 5605(c)(2)(A), a former partner of the company's independent auditing firm is disqualified from Audit Committee service only if the association with the auditing firm occurred within the past three years. Mr. Callahan's departure from R&H in 2017 predates his Board service (which commenced in 2019) by two years, and predates the date of this memorandum by approximately eight years. He is therefore outside the Nasdaq three-year cooling-off period as measured from either his initial Board appointment or the current date.
Continuing Financial Interest in R&H. Mr. Callahan has confirmed that he holds no continuing financial interest in R&H. Specifically: (i) he has no equity or capital interest in R&H; (ii) he receives no retirement payments from R&H that are contingent upon or calculated by reference to R&H's revenues, earnings, or financial performance; (iii) he has no consulting or advisory arrangement with R&H; and (iv) he has no other economic relationship with R&H. His retirement from R&H was a complete separation of all financial interests.
SEC Rule 10A-3 Analysis. SEC Rule 10A-3, which imposes additional independence requirements for Audit Committee members of listed companies, prohibits Audit Committee members from accepting, directly or indirectly, any consulting, advisory, or other compensatory fee from the company or its subsidiaries (other than in their capacity as a board or committee member), and from being an affiliated person of the company. Mr. Callahan does not receive any compensatory fees from BRB other than his director and committee retainers, and he is not an affiliated person of BRB. The Rule 10A-3 requirements are satisfied.
12 C.F.R. Part 363 Analysis. For insured depository institutions with total assets exceeding $3 billion, 12 C.F.R. Part 363 requires that the audit committee consist entirely of outside directors who are independent of management. Mr. Callahan satisfies the Part 363 requirements: he is not, and has not within the preceding year been, an officer or employee of BRB or any of its affiliates, and he is independent of management.
Qualitative Assessment. Although Mr. Callahan satisfies the formal bright-line independence tests applicable to Audit Committee membership, we note that the relationship between a former partner of the Bank's independent auditor and the auditing firm itself is inherently one of professional familiarity and collegial connection. Mr. Callahan has professional relationships with current R&H partners that date from his tenure at the firm, and he may be perceived by external observers as having a degree of sympathy or deference toward R&H that other Audit Committee members might not share. While we do not believe this professional background impairs Mr. Callahan's independence — indeed, his deep understanding of audit methodology and professional standards is a significant asset to the Audit Committee — we recommend that the Board take specific steps to document its assessment and to ensure transparency in its proxy disclosures.
Independence Determination — Nasdaq. Mr. Callahan qualifies as independent under the Nasdaq bright-line tests, including the Audit Committee-specific requirements of Rule 5605(c)(2). His departure from R&H in 2017 is outside the three-year cooling-off period, and he has no continuing financial interest in R&H.
Independence Determination — OCC Heightened Standards. Under the OCC heightened standards and 12 C.F.R. Part 363, Mr. Callahan meets the independence requirements for audit committee membership at insured depository institutions. His CPA background and former audit partnership are viewed as qualifications that enhance the Audit Committee's effectiveness, consistent with the Part 363 requirement that at least one audit committee member have banking or related financial management expertise.
Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.
Conclusion. Mr. Callahan qualifies as independent under all three applicable frameworks and is eligible to serve as Chair of the Audit Committee. He qualifies as an "audit committee financial expert" under SEC regulations by virtue of his CPA certification and former audit partnership.
Recommendations Specific to Callahan's R&H Relationship.
1. The Board should make and document a specific affirmative finding, by resolution, that Mr. Callahan's prior R&H relationship does not impair his independence or his ability to serve as Audit Committee Chair with objectivity and independent judgment.
2. This finding should be disclosed in BRB's proxy statement, with appropriate detail regarding the nature and timing of Mr. Callahan's R&H relationship and the Board's basis for its independence determination.
3. As discussed in Section VII, the Board should consider whether BRB's updated Director Independence Standards should include an explicit provision addressing former partners and employees of BRB's independent auditor, including an enhanced cooling-off period for Audit Committee chair eligibility that exceeds the Nasdaq minimum.
E. Sandra M. Okafor — Chair, Compensation & Human Capital Committee
Independence Status: Independent
Sandra M. Okafor, age 55, has served as an independent director of BRB since 2021 and currently serves as Chair of the Compensation & Human Capital Committee. Prior to joining the BRB Board, Ms. Okafor served as Chief Human Resources Officer of Marlowe Asset Management Atlantic Industries, Inc., a diversified industrial conglomerate. Ms. Okafor departed Marlowe Asset Management Atlantic Industries in 2020.
Employment and Compensation Analysis. Ms. Okafor has not been employed by Marlowe Asset Management Atlantic Industries or any other entity since 2020. She does not receive any compensation from BRB other than the standard director retainer and Compensation Committee chair retainer. She has not accepted any consulting, advisory, or other compensatory fee from BRB other than her board and committee retainers.
Familial Relationships. Ms. Okafor has no familial relationships with any officer, director, or employee of BRB or BRFG.
Business Relationships. We have analyzed whether any business relationship exists between Marlowe Asset Management Atlantic Industries and BRB. Based on our review of BRB's counterparty records, lending files, and vendor databases, we have identified no current or recent material business relationship between Marlowe Asset Management Atlantic Industries and BRB or any of its affiliates. BRB provides no lending, treasury management, or other banking services to Marlowe Asset Management Atlantic Industries, and Marlowe Asset Management Atlantic Industries provides no products or services to BRB.
Independence Determination — Nasdaq. Under the Nasdaq bright-line disqualification criteria, no disqualifying relationship exists. Under the enhanced independence standards applicable to Compensation Committee members under Nasdaq Rule 5605(d)(2), no factors have been identified that would impair Ms. Okafor's ability to act independently in her role as Compensation Committee Chair. She does not receive any consulting, advisory, or other compensatory fee from BRB beyond her board and committee retainers, and she is not an affiliate of BRB or any of its subsidiaries.
Independence Determination — OCC Heightened Standards. Ms. Okafor qualifies as independent under the OCC heightened standards. Her former CHRO experience is relevant to the Compensation Committee's oversight of executive compensation and human capital management practices.
Independence Determination — BRB Director Independence Standards. Under BRB's current Director Independence Standards, no categorical disqualification applies.
Conclusion. Ms. Okafor qualifies as independent under all three applicable frameworks. She is eligible to serve as Chair of the Compensation & Human Capital Committee.
F. Lawrence B. Huang — Chair, Technology & Innovation Committee
Independence Status: Independent
Lawrence B. Huang, age 60, has served as an independent director of BRB since 2021 and currently serves as Chair of the Technology & Innovation Committee. Mr. Huang is a technology executive with extensive experience in financial technology and digital transformation. He has held senior leadership positions at several technology companies, most recently serving as Executive Vice President of Enterprise Solutions at Nextera Digital, Inc. Mr. Huang departed Nextera Digital in 2020.
Employment and Compensation Analysis. Mr. Huang does not have any current employment relationship with BRB, BRFG, or any of their affiliates. He does not receive any compensation from BRB other than the standard director retainer and Technology & Innovation Committee chair retainer.
Familial Relationships. Mr. Huang has no familial relationships with any officer, director, or employee of BRB or BRFG.
Business Relationships. We have reviewed BRB's vendor records and counterparty databases and have identified no current or recent business relationship between Mr. Huang's former employers and BRB. Nextera Digital does not provide technology products or services to BRB, and BRB does not provide banking services to Nextera Digital.
Independence Determination. Mr. Huang qualifies as independent under the Nasdaq Listing Rules, the OCC heightened standards, and BRB's Director Independence Standards. No disqualifying relationship or circumstance has been identified under any of the three frameworks. His technology expertise is a significant asset to the Technology & Innovation Committee's oversight of BRB's digital banking strategy and cybersecurity program.
Conclusion. Mr. Huang qualifies as independent under all three applicable frameworks. He is eligible to serve as Chair of the Technology & Innovation Committee.
G. Richard A. Montague — CEO & President; Director
Independence Status: Non-Independent
Richard A. Montague, age 58, has served as a director of BRB since 2017 and has served as Chief Executive Officer and President of BRB since January 2020. As a current executive officer and employee of BRB, Mr. Montague is categorically non-independent under all three applicable frameworks.
Under Nasdaq Rule 5605(a)(2)(A), a director who is currently employed by the company is not independent. Under the OCC heightened standards, executive officers are inherently non-independent for purposes of board and committee composition requirements. Under BRB's Director Independence Standards, current executive officers are expressly excluded from the definition of independent directors.
Mr. Montague's non-independent status renders him ineligible to serve on the Audit Committee, the Compensation & Human Capital Committee, the Governance & Nominating Committee, or the Risk Committee (under OCC expectations for independence of Risk Committee members). He does not currently serve on any of these committees. Mr. Montague participates in board meetings and has the right to attend committee meetings by invitation, but he does not serve as a voting member of any committee that requires independent membership.
Conclusion. Mr. Montague is appropriately classified as non-independent. No further analysis is required.
H. Franklin D. Reeves — COO; Director
Independence Status: Non-Independent
Franklin D. Reeves, age 54, serves as a director of BRB and as its Chief Operating Officer. As a current executive officer and employee of BRB, Mr. Reeves is categorically non-independent under all three applicable frameworks.
Under Nasdaq Rule 5605(a)(2)(A), Mr. Reeves' current employment by BRB precludes a finding of independence. Under the OCC heightened standards and BRB's Director Independence Standards, the same conclusion applies. Mr. Reeves is ineligible to serve on any committee requiring independent membership.
Conclusion. Mr. Reeves is appropriately classified as non-independent. No further analysis is required.
I. Alma G. Brashear — EVP & Head of Digital Banking; Director
Independence Status: Non-Independent
Alma G. Brashear, age 47, has served as a director of BRB since 2023 and serves as Executive Vice President & Head of Digital Banking. As a current executive officer and employee of BRB, Ms. Brashear is categorically non-independent under all three applicable frameworks.
Ms. Brashear joined the BRB Board relatively recently, in 2023, and her non-independent status was properly disclosed in BRB's most recent proxy statement filed with the Securities and Exchange Commission. Her appointment to the Board was made in recognition of the strategic importance of BRB's digital banking initiative and the Board's desire to ensure that the Head of Digital Banking has a direct line of communication with the Board. The rationale for her board appointment does not alter the independence analysis, however, and she remains categorically non-independent by virtue of her executive officer status.
Ms. Brashear is ineligible to serve on any committee requiring independent membership, including the Audit Committee, Risk Committee, Compensation & Human Capital Committee, and Governance & Nominating Committee. She does not currently serve on any of these committees.
Conclusion. Ms. Brashear is appropriately classified as non-independent. No further analysis is required.
J. Directors 10, 11, 12, and 13 — Remaining Independent Directors
The remaining four independent directors of BRB — Helen C. Darrow, Robert F. Nakamura, Evelyn T. Chambers, and Marcus W. Delgado — complete the roster of ten independent directors. For each of these directors, our analysis confirms the following:
Helen C. Darrow (age 61, director since 2017): Retired executive in the insurance and financial-services industry. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Risk Committee and the Governance & Nominating Committee. Qualifies as independent under all three frameworks.
Robert F. Nakamura (age 66, director since 2018): Retired banking executive and community leader. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Audit Committee and the Technology & Innovation Committee. Qualifies as independent under all three frameworks.
Evelyn T. Chambers (age 53, director since 2020): Former General Counsel of a publicly traded financial-services company. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Compensation & Human Capital Committee and the Risk Committee. Qualifies as independent under all three frameworks.
Marcus W. Delgado (age 59, director since 2019): Seasoned executive in corporate finance and capital markets. No current or recent employment with BRB, BRFG, or any affiliate. No disqualifying compensation. No familial relationships with BRB officers or directors. No material business relationships identified. Serves on the Audit Committee, the Risk Committee, and the Governance & Nominating Committee. Qualifies as independent under all three frameworks.
For each of these four directors, we have reviewed the director's annual questionnaire responses, BRB's counterparty and vendor records, and publicly available information regarding the director's business affiliations and relationships. In no case have we identified a relationship or circumstance that would warrant enhanced analysis or that would call into question the director's independence under any of the three applicable frameworks. Each director's committee assignments have been reviewed for compliance with applicable independence requirements, and no issues have been identified.
V. Committee Composition Independence Analysis
A. Audit Committee
The Audit Committee consists of five (5) members, all of whom are independent directors: Thomas J. Callahan (Chair), David K. Sorrento, Robert F. Nakamura, Marcus W. Delgado, and one additional independent director. Each member has been analyzed for compliance with the heightened independence requirements applicable to Audit Committee members under three sets of standards: Nasdaq Rule 5605(c)(2), SEC Rule 10A-3 under the Securities Exchange Act of 1934, and 12 C.F.R. Part 363 for insured depository institutions with total assets exceeding $500 million.
Nasdaq Rule 5605(c)(2) and SEC Rule 10A-3. Each Audit Committee member satisfies the independence requirements of Nasdaq Rule 5605(c)(2), which incorporates the independence criteria of SEC Rule 10A-3. Specifically, no Audit Committee member accepts, directly or indirectly, any consulting, advisory, or other compensatory fee from BRB or any of its subsidiaries, other than in his or her capacity as a member of the Board or a Board committee. No Audit Committee member is an affiliated person of BRB or any of its subsidiaries, as that term is defined in SEC Rule 10A-3. No Audit Committee member has been associated with BRB's independent auditor (Ridgewell & Haines LLP) within the past three years, with the exception of Thomas J. Callahan, whose R&H association ended in 2017, more than three years prior to his Board appointment and more than seven years prior to the date of this memorandum.
12 C.F.R. Part 363 Requirements. Each Audit Committee member satisfies the requirements of 12 C.F.R. Part 363 for audit committee membership at insured depository institutions with total assets exceeding $3 billion. Each member is an outside director who is independent of management and who has not, within the preceding year, been an officer or employee of BRB or any of its affiliates.
Audit Committee Financial Expert. At least one member of the Audit Committee must qualify as an "audit committee financial expert" under SEC regulations (Item 407(d)(5) of Regulation S-K). Thomas J. Callahan qualifies by virtue of his CPA certification and his extensive career as an audit partner at R&H, during which he gained experience in accounting principles, financial statement auditing, internal controls, and audit committee oversight. The Board has designated Mr. Callahan as the Audit Committee's financial expert in BRB's proxy statement disclosures.
Callahan's Former R&H Relationship. As discussed in detail in Section IV.D, Mr. Callahan's former partnership at R&H warrants specific attention in the Audit Committee independence context. While his departure from R&H in 2017 satisfies the formal bright-line cooling-off requirements, the Board should make an affirmative determination, documented by resolution,

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