CALDERWOOD & HARKNESS LLP 425 Park Avenue, 28th Floor New York, New York 10065
BOARD AND COMMITTEE SELF-EVALUATION FRAMEWORK AND QUESTIONNAIRE
Prepared for the Board of Directors of Belmont Ridge Bank NA
July 2025
Colette Whitman, Responsible Partner Brendan Walsh, Lead Associate Natasha Forbes, Working Associate
Matter Number: 1045-00003
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — PREPARED AT THE DIRECTION OF COUNSEL. This document and all attachments hereto are protected by the attorney-client privilege and the work-product doctrine. This document was prepared by Calderwood & Harkness LLP at the direction of the Board of Directors of Belmont Ridge Bank NA and is intended solely for the use of the Board of Directors and authorized recipients. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this document in error, please notify Calderwood & Harkness LLP immediately at (212) 554-7200 and destroy all copies.
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I. EXECUTIVE SUMMARY AND PURPOSE
This Board and Committee Self-Evaluation Framework and Questionnaire (this "Framework") has been prepared by Calderwood & Harkness LLP ("C&H") at the request of the Board of Directors (the "Board") of Belmont Ridge Bank NA ("BRB" or the "Bank"), a nationally chartered commercial bank (OCC Charter No. 24-0738) headquartered at 600 Lexington Avenue, 34th Floor, New York, New York 10022. As of the first quarter of 2025, BRB had approximately $38.7 billion in total consolidated assets and operated a network of 147 branches across eight states in the northeastern and mid-Atlantic regions of the United States.
BRB is a wholly owned subsidiary of Belmont Ridge Financial Group, Inc. ("BRFG"), a Delaware corporation and registered bank holding company supervised by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). Both BRB and BRFG trade on the Nasdaq Stock Market under the ticker symbol "BRBK."
Purpose. The purpose of this Framework is to establish a structured, repeatable, and well-documented annual self-evaluation process for: (a) the full Board; (b) each of the five standing committees of the Board; (c) each individual director; and (d) each director holding a board leadership position, including the Chair of the Board, the Lead Independent Director, and each committee chair. The Framework is designed to promote continuous improvement in governance effectiveness, to identify and address skill gaps and governance deficiencies, to satisfy regulatory expectations, and to enhance the Board's credibility with shareholders, proxy advisory firms, and other stakeholders.
Regulatory Context. The development of this Framework is directly responsive to, and should be understood in the context of, significant supervisory actions taken by both the Office of the Comptroller of the Currency (the "OCC") and the Federal Reserve. On November 15, 2024, the OCC issued Matters Requiring Attention ("MRA") letter SA-2024-0315 to BRB, identifying four discrete governance deficiencies that require remediation (collectively, the "MRA Findings"). On December 3, 2024, the Federal Reserve issued parallel supervisory letter SR-BHC-2024-1107 to BRFG, raising governance concerns at the holding company level that substantially overlap with the OCC's findings.
The four MRA Findings identified by the OCC are as follows:
• MRA Finding 1: Deficiencies in the Risk Committee's escalation protocol for enterprise risk matters, including the absence of a formalized mechanism for the Chief Risk Officer to escalate matters directly to the Board without management filtering.
• MRA Finding 2: The Audit Committee's over-reliance on management-prepared materials and presentations, without adequate independent verification or supplementation by the committee itself or by the internal audit function.
• MRA Finding 3: Insufficient board-level information flow regarding compliance matters and Bank Secrecy Act / Anti-Money Laundering ("BSA/AML") program effectiveness, resulting in the Board lacking timely and comprehensive awareness of compliance risks.
• MRA Finding 4: Deficiencies in the Governance & Nominating Committee charter regarding the maintenance and utilization of a director skill matrix and the absence of a formalized succession planning process for committee chairs and board leadership positions.
In response to the MRA letter, BRB submitted its initial remediation plan to the OCC on February 28, 2025. The OCC acknowledged receipt of the plan and provided comments on April 4, 2025. The OCC has established a full remediation deadline of December 31, 2025, by which date BRB must demonstrate that all identified governance deficiencies have been addressed through the adoption and implementation of remedial measures.
This Framework directly supports the remediation of multiple MRA Findings by institutionalizing a rigorous board-level review process that assesses governance effectiveness, information flow, committee operations, director qualifications, and board leadership. The self-evaluation process is specifically designed to serve as a mechanism through which the Board can identify governance gaps, monitor the effectiveness of newly adopted remedial policies and procedures, and demonstrate to the OCC and the Federal Reserve that the Board is actively engaged in governance improvement.
Coordination with Other Advisors. In developing this Framework, C&H has coordinated with Ashford Pike Advisory LLC ("Ashford Pike"), a regulatory consulting firm retained by BRB in January 2025 to assist with operational aspects of MRA remediation. Kenneth R. Stoltz, Managing Director at Ashford Pike, has primary responsibility for the Ashford Pike engagement and has been consulted regarding the alignment of this Framework with operational remediation milestones. C&H has also coordinated with Meridian Cobalt LLP ("Meridian Cobalt"), BRB's general corporate counsel, regarding the SEC disclosure implications of the evaluation process and its results. Harold F. Dunleavy, Partner at Meridian Cobalt, has provided input on proxy statement disclosure considerations discussed in this Framework.
Intended Use and Recurrence. This Framework is designed for initial use in the annual evaluation cycle beginning in the third quarter of 2025, with the first complete evaluation expected to be finalized by December 2025. The Framework is intended to be used on a recurring annual basis thereafter, with periodic revisions to reflect changes in regulatory expectations, best practices, board composition, and lessons learned from prior evaluation cycles.
II. REGULATORY AND LEGAL FRAMEWORK FOR BOARD SELF-EVALUATION
A robust and well-documented board self-evaluation process is not merely a matter of good governance practice — it is an expectation of BRB's primary regulators, a requirement of the Nasdaq listing standards applicable to BRFG, and an increasingly important element of institutional shareholder and proxy advisory firm assessments of governance quality. This Section provides an overview of the regulatory and legal framework within which BRB's self-evaluation process will operate.
A. OCC Expectations for Large National Banks
The OCC's expectations regarding board self-evaluation for national banks are informed by several sources of regulatory guidance.
OCC Heightened Standards. The OCC's Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches, codified at 12 C.F.R. Part 30, Appendix D (the "Heightened Standards"), formally apply to insured national banks with average total consolidated assets of $50 billion or more. BRB, with approximately $38.7 billion in total consolidated assets as of Q1 2025, falls below the formal asset threshold for mandatory application of the Heightened Standards. However, the OCC has broad supervisory authority to apply heightened-standards-equivalent expectations to individual institutions on a case-by-case basis, and the MRA letter SA-2024-0315 has effectively done so with respect to BRB's governance practices. The MRA letter explicitly references the principles underlying the Heightened Standards as benchmarks against which BRB's governance practices will be assessed.
The Heightened Standards establish, among other things, expectations that the board of a covered institution: (i) establish and adhere to a formal, written governance framework; (ii) provide active oversight of the institution's risk-taking activities; (iii) exercise independent judgment; (iv) require the institution's management to establish and implement an effective risk governance framework; and (v) evaluate the adequacy of the institution's risk governance framework at least annually. Although BRB is not a covered institution under the formal asset threshold, the OCC's supervisory posture as reflected in the MRA letter makes clear that BRB will be held to substantially similar expectations.
OCC Guidance on Board Effectiveness Self-Assessment. The OCC has issued guidance, including through examination handbooks and supervisory communications, establishing the expectation that boards of insured national banks with total consolidated assets exceeding $10 billion conduct robust, documented annual evaluations of board and committee performance. The OCC views board self-evaluation as a critical governance discipline that enables boards to identify weaknesses, improve decision-making processes, and enhance overall governance effectiveness. The OCC expects that such evaluations assess, at a minimum, the adequacy of the board's composition, the quality of information provided to the board, the board's oversight of risk and compliance matters, and the effectiveness of the board's committee structure.
Application to Specific MRA Findings. The self-evaluation process established by this Framework is specifically designed to address the following MRA Findings:
MRA Finding 4 (Governance & Nominating Committee Charter Deficiencies). MRA Finding 4 identified deficiencies in the Governance & Nominating Committee's charter regarding the maintenance and utilization of a formal director skill matrix and the absence of a formalized succession planning process for committee chairs and board leadership positions. The self-evaluation process serves as a primary mechanism through which the Board can identify skill gaps, assess the adequacy of its current composition relative to BRB's strategic priorities and risk profile, and inform the development and ongoing maintenance of a robust director skill matrix. The evaluation results will also provide critical input for the committee chair succession planning process that the revised Governance & Nominating Committee charter will require.
MRA Finding 1 (Risk Committee Escalation Protocol). MRA Finding 1 identified the absence of a formalized escalation protocol within the Risk Committee's charter for enterprise risk matters. The self-evaluation process should include specific assessment criteria designed to evaluate whether the newly adopted escalation protocols are functioning as intended, whether the Chief Risk Officer is able to escalate matters directly to the Board without management filtering, and whether directors perceive the escalation mechanism as effective and utilized appropriately.
MRA Finding 2 (Audit Committee Over-Reliance on Management Materials). MRA Finding 2 identified the Audit Committee's over-reliance on management-prepared materials and presentations. The self-evaluation process should include assessment criteria designed to evaluate whether the Audit Committee has implemented independent verification practices, whether committee members are receiving information from sources beyond management, and whether the committee's oversight of financial reporting and internal controls has been strengthened.
MRA Finding 3 (Insufficient Board-Level Information Flow). MRA Finding 3 identified insufficient board-level information flow regarding compliance and BSA/AML matters. The self-evaluation process should include assessment criteria designed to evaluate the adequacy of information flow under the new Board Information Flow Policy adopted as part of the remediation plan, whether directors are receiving timely and comprehensive reporting on compliance risks, and whether the Board's awareness of BSA/AML program effectiveness has improved.
B. Federal Reserve Supervisory Expectations
The Federal Reserve exercises consolidated supervisory authority over BRFG as a registered bank holding company. On December 3, 2024, the Federal Reserve issued supervisory letter SR-BHC-2024-1107 to BRFG, raising governance concerns at the holding company level that substantially parallel the OCC's MRA Findings at the bank level. The Federal Reserve's supervisory concerns are relevant to this Framework because 11 of the 13 BRB bank directors also serve on the BRFG holding company board, creating significant overlap between the two governance structures.
This Framework is designed to be conducted at the bank-board level, consistent with the OCC's supervisory jurisdiction over BRB as a national bank. However, the evaluation results should inform governance practices at the holding company level as well, and the Governance & Nominating Committee should consider whether separate or supplemental evaluation processes are warranted for the BRFG holding company board.
The Federal Reserve's guidance on board effectiveness for large financial institutions is articulated in, among other sources, supervisory letter SR 21-3 and related guidance documents. SR 21-3 sets forth the Federal Reserve's expectations regarding the role and responsibilities of boards of directors of large financial institutions, emphasizing the board's role in setting strategic direction, overseeing management, and ensuring the institution operates in a safe and sound manner and in compliance with applicable laws and regulations. The guidance underscores the importance of board self-assessment as a tool for ensuring that boards are fulfilling their responsibilities effectively. While SR 21-3 is directed primarily at the largest and most complex financial institutions, its principles are relevant to institutions of BRB's size and complexity, particularly in light of the Federal Reserve's specific supervisory actions directed at BRFG.
C. Nasdaq Listing Standards
BRFG's common stock is listed on the Nasdaq Stock Market, subjecting BRFG and, by extension, BRB to the corporate governance requirements of the Nasdaq Listing Rules. Nasdaq Rule 5605(e) requires each listed company to adopt and comply with corporate governance guidelines. Nasdaq's rules further require that the corporate governance guidelines address the board's self-evaluation process. Specifically, Nasdaq expects that listed companies include in their corporate governance guidelines a discussion of how the board and its committees evaluate their performance, including whether the evaluation is conducted annually and the general scope of the evaluation.
BRFG's Corporate Governance Guidelines, which were last amended in March 2022, include a provision addressing the board self-evaluation process. As discussed elsewhere in this Framework, the Corporate Governance Guidelines are currently under revision to reflect the enhanced evaluation process described herein and to address the governance deficiencies identified in the MRA Findings. The revised Corporate Governance Guidelines should describe the self-evaluation process in sufficient detail to satisfy Nasdaq's requirements and to demonstrate to shareholders and proxy advisory firms that the Board has adopted a rigorous and comprehensive evaluation methodology.
In addition, Nasdaq's rules require that BRB's proxy statement disclosures address the board's self-evaluation process. The proxy statement should describe the general structure and scope of the evaluation, the frequency with which it is conducted, and whether an independent third-party facilitator is engaged. The proxy statement disclosure should be drafted in coordination with Meridian Cobalt LLP, which retains the SEC disclosure mandate for BRFG, and should be responsive to the concerns raised by proxy advisory firms and institutional shareholders as described in Section II.D below.
D. Proxy Advisory Firm and Shareholder Expectations
BRB's governance practices are subject to scrutiny by proxy advisory firms and institutional shareholders, and the Board's commitment to a rigorous self-evaluation process is an important component of its governance credibility with these stakeholders.
Proxy Advisory Firms. Both Gramercy Proxy Services and Northgate Governance Advisors, two of the leading proxy advisory firms, recommended in favor of all BRB director nominees at the 2025 Annual Meeting of Shareholders (held May 14, 2025). However, both firms flagged governance concerns in their reports, noting the OCC's MRA Findings and the need for the Board to demonstrate meaningful governance improvement. The adoption of a robust, independently facilitated self-evaluation process is directly responsive to these concerns and will be an important element of the Board's governance narrative in future proxy seasons.
Institutional Shareholder Engagement. Several of BRB's significant institutional shareholders have taken active positions on governance matters:
Thornfield Capital Management, LP. Thornfield Capital Management, LP ("Thornfield"), which holds approximately 7.3% of BRFG's outstanding common stock as of the most recent Schedule 13D filing, sent a letter to the Board on March 12, 2025, specifically urging the Board to engage an independent evaluator and to implement a comprehensive board evaluation process. Thornfield's letter characterized the Board's existing evaluation practices as "cursory and perfunctory" and stated that a meaningful evaluation process is "essential to restoring investor confidence in the Board's governance capabilities." The development of this Framework is directly responsive to Thornfield's concerns.
Graycliff Institutional Partners. Graycliff Institutional Partners ("Graycliff"), which holds approximately 5.1% of BRFG's outstanding common stock, withheld votes from two director nominees at the 2024 Annual Meeting of Shareholders, citing governance deficiencies including the absence of a robust board evaluation process and concerns about board refreshment and skill diversity. Graycliff's voting actions signaled a willingness to use the proxy ballot to express governance dissatisfaction, and a robust self-evaluation process will be an important element of the Board's engagement with Graycliff going forward.
Osprey Point Pension Fund. Osprey Point Pension Fund ("Osprey Point"), which holds approximately 3.8% of BRFG's outstanding common stock, is an active participant in proxy-season governance engagement and has communicated to BRB's investor relations team its interest in the Board's governance remediation efforts. Osprey Point has not taken adversarial action to date but has indicated that it will closely monitor the Board's progress.
A robust self-evaluation framework is a critical component of the Board's shareholder-facing governance credibility. The Framework described herein is designed to withstand scrutiny from proxy advisory firms and institutional shareholders and to demonstrate that the Board is committed to continuous governance improvement.
III. SCOPE OF THE EVALUATION PROCESS
A. Components of the Annual Evaluation
The annual evaluation process established by this Framework comprises four distinct but interrelated components:
1. Full Board Evaluation. An assessment of the overall effectiveness of the Board as a governing body, including its composition, culture, governance practices, strategic oversight, risk oversight, information flow, meeting effectiveness, and relationship with management and regulators. The Full Board Evaluation is described in detail in Section VII of this Framework, and the corresponding questionnaire is set forth in Appendix A.
2. Individual Committee Evaluations. Separate evaluations of each of the five standing committees of the Board. Each committee evaluation assesses the committee's fulfillment of its charter responsibilities, the quality of its deliberations, the adequacy of the information it receives, the effectiveness of its chair's leadership, and committee-specific performance criteria tailored to the committee's mandate. The five standing committees subject to evaluation are:
(a) Audit Committee. Chair: Thomas J. Callahan. Five members, all independent directors. Meets at least eight times per year, with additional special meetings as needed. The Audit Committee is responsible for oversight of financial reporting integrity, internal controls, the independent audit function, the internal audit function, and whistleblower-complaint procedures.
(b) Risk Committee. Chair: Priya Venkataraman. Five members, all independent directors. Meets at least eight times per year, with additional special meetings as needed. The Risk Committee is responsible for oversight of the enterprise risk management framework, risk appetite, and the Bank's management of credit, market, operational, liquidity, compliance, and cyber risk.
(c) Compensation & Human Capital Committee. Chair: Sandra M. Okafor. Four members, all independent directors. Meets at least four times per year. The Compensation & Human Capital Committee is responsible for oversight of executive compensation, compensation-related risk, and human capital management, including talent pipeline, succession planning, organizational culture, and diversity, equity, and inclusion initiatives.
(d) Governance & Nominating Committee. Chair: Margaret R. Ellsworth. Four members, all independent directors. Meets at least four times per year. The Governance & Nominating Committee is responsible for oversight of corporate governance practices, director nominations, director independence assessments, the board self-evaluation process, and the Corporate Governance Guidelines.
(e) Technology & Innovation Committee. Chair: Lawrence B. Huang. Three members, all independent directors. Meets at least four times per year. The Technology & Innovation Committee is responsible for oversight of the Bank's technology strategy, digital banking initiatives, cybersecurity and information security, and emerging technology risks and opportunities.
The Individual Committee Evaluations are described in detail in Section VIII of this Framework, and the corresponding questionnaires are set forth in Appendix B.
3. Individual Director Performance Assessment. A peer evaluation and self-assessment process for each of the 13 directors. The Individual Director Performance Assessment evaluates each director's preparedness, attendance, quality of contributions, understanding of the Bank's business and risk profile, independence of judgment, continuing education, and compliance with governance policies. The Individual Director Performance Assessment is described in detail in Section IX of this Framework, and the corresponding questionnaires are set forth in Appendix C.
4. Board Leadership Assessment. An evaluation of the effectiveness of each director holding a board leadership position. The Board Leadership Assessment covers:
(a) The Chair of the Board (Margaret R. Ellsworth);
(b) The Lead Independent Director (David K. Sorrento); and
(c) Each committee chair (Thomas J. Callahan, Audit Committee; Priya Venkataraman, Risk Committee; Sandra M. Okafor, Compensation & Human Capital Committee; Margaret R. Ellsworth, Governance & Nominating Committee; Lawrence B. Huang, Technology & Innovation Committee).
The Board Leadership Assessment is described in detail in Section X of this Framework, and the corresponding questionnaires are set forth in Appendix D.
B. Participants
Directors. All 13 members of the Board of Directors will participate in the evaluation process. This includes ten independent directors and three non-independent directors:
Non-Independent Directors:
• Richard A. Montague, Chief Executive Officer and President
• Franklin D. Reeves, Chief Operating Officer
• Alma G. Brashear, Executive Vice President and Head of Digital Banking
Each director will complete the Full Board Evaluation questionnaire, the questionnaires for each committee on which the director serves, the Individual Director Peer Assessment questionnaire (evaluating each other director), the Individual Director Self-Assessment questionnaire, and the Board Leadership Assessment questionnaire(s) for the leadership positions being evaluated.
Management Input. In addition to the participation of the three management directors, certain senior management officers who regularly interact with Board committees may be solicited for input on committee effectiveness, at the discretion of the Governance & Nominating Committee. Management officers who may be asked to provide input include, but are not limited to:
• Catherine L. Ng, Chief Financial Officer (key management liaison to the Audit Committee)
• James W. Prescott, General Counsel and Corporate Secretary
• Other members of the senior management team as determined by the Governance & Nominating Committee
Management input, where solicited, will be limited to observations regarding the effectiveness of committee-level interactions with management and will not include access to individual director evaluations or peer assessments. Management input will be treated with the same confidentiality protections applicable to director responses, as described in Section VI.
C. Frequency and Timing
The evaluation process will be conducted on an annual cycle. The first full evaluation under this Framework is targeted for completion in the fourth quarter of 2025. The proposed timeline for the 2025 annual evaluation cycle is set forth in detail in Appendix F and is summarized as follows:
• September–October 2025: Questionnaires finalized, reviewed by the Governance & Nominating Committee, and distributed to all directors. Third-party facilitator engaged (if not already under contract).
• October–November 2025: Questionnaire responses collected. Confidential one-on-one interviews conducted by the third-party facilitator (if engaged) with each director.
• November–December 2025: Facilitator compiles and synthesizes results. Draft evaluation report prepared and reviewed for accuracy.
• Late November–Early December 2025: Facilitator presents findings to the Governance & Nominating Committee in executive session.
• December 2025: Governance & Nominating Committee reports summary findings and recommendations to the full Board. Action items adopted. Evaluation process completed prior to the OCC remediation deadline of December 31, 2025.
The timing of the annual evaluation cycle is designed to permit the incorporation of evaluation findings into: (a) the following year's proxy statement, consistent with Nasdaq disclosure requirements and best practices; and (b) the Governance & Nominating Committee's director nomination and committee-assignment process for the next annual meeting of shareholders. The proposed timeline also ensures that the first evaluation will be completed prior to the OCC's December 31, 2025 remediation deadline, enabling BRB to demonstrate a functioning self-evaluation process as a component of its remediation plan.
IV. EVALUATION METHODOLOGY
The evaluation process established by this Framework employs a multi-faceted methodology designed to elicit comprehensive, candid, and actionable feedback from all participants. The methodology comprises four principal components: written questionnaires, confidential third-party-facilitated interviews, peer assessment, and benchmarking.
A. Written Questionnaires
Written questionnaires are the foundational element of the evaluation process. This Framework includes standardized questionnaires for each evaluation component — the Full Board Evaluation, each of the five Individual Committee Evaluations, the Individual Director Performance Assessment (both peer and self-assessment), and the Board Leadership Assessment. The complete questionnaires are set forth in Appendices A through D.
Each questionnaire employs a combination of quantitative and qualitative response formats:
Quantitative (Likert-Scale) Ratings. Each questionnaire includes a series of statements that respondents rate on a five-point Likert scale:
1 = Strongly Disagree 2 = Disagree 3 = Neither Agree nor Disagree 4 = Agree 5 = Strongly Agree
The Likert-scale format facilitates aggregation, comparison, and year-over-year tracking of quantitative results. For each statement, respondents are also given the option to select "N/A — Not applicable or insufficient basis to evaluate."
Qualitative (Open-Ended Narrative) Responses. Each questionnaire also includes open-ended narrative prompts designed to elicit detailed, contextual feedback that cannot be captured through quantitative ratings alone. Respondents are encouraged to provide specific examples and constructive suggestions in their narrative responses.
Questionnaires are tailored to the specific mandate and charter of each committee, ensuring that the evaluation criteria are relevant and meaningful for each evaluation component. The questionnaire design incorporates the specific areas of regulatory concern identified in MRA letter SA-2024-0315 and Federal Reserve letter SR-BHC-2024-1107, so that the evaluation process directly addresses the governance deficiencies that are the subject of the ongoing remediation effort.
Questionnaires may be distributed in paper or electronic format, at the direction of the Governance & Nominating Committee. If electronic format is used, responses should be submitted through a secure platform administered by the third-party facilitator, with appropriate safeguards for confidentiality and data security.
B. Confidential Interviews (Third-Party Facilitated)
C&H recommends that an independent third-party facilitator conduct confidential one-on-one interviews with each director on at least a biennial basis under ordinary circumstances, and annually during the remediation period (through at least the completion of the 2026 evaluation cycle). Confidential interviews supplement the written questionnaire and permit deeper exploration of board dynamics, interpersonal relationships, cultural issues, and leadership effectiveness — topics that are difficult to address adequately through a written questionnaire format.
The third-party facilitator should have no existing business relationship with BRB, BRFG, or any director, officer, or significant shareholder of either entity. The role and qualifications of the third-party facilitator are described in detail in Section V, and model engagement terms are set forth in Appendix E.
Each confidential interview should typically last between 45 and 90 minutes and should cover, at a minimum: (a) the director's overall assessment of board and committee effectiveness; (b) the quality of board dynamics and the willingness of directors to engage in constructive debate; (c) the effectiveness of board leadership (including the Board Chair, Lead Independent Director, and committee chairs); (d) the adequacy of information flow from management; (e) the director's assessment of the board's relationship with regulators; and (f) the director's perspective on governance areas requiring improvement.
Interview responses are treated as strictly confidential and are subject to the same confidentiality protocols applicable to written questionnaire responses, as described in Section VI.
C. Peer Assessment
The peer assessment component of the evaluation process requires each director to provide confidential assessments of the preparedness, engagement, and contributions of each of their fellow directors, using the criteria described in Section IX. Peer assessments are a critical element of the evaluation process because they provide a perspective on individual director performance that cannot be obtained through self-assessment alone.
All peer assessment responses are compiled and anonymized by the third-party facilitator before being shared with the director being evaluated. This anonymization is essential to encouraging candid and honest feedback. No director will be informed of the identity of any individual respondent who provided peer feedback regarding that director's performance.
The aggregated results of the peer assessment are shared with the individual director by the Board Chair or the Lead Independent Director in a private session, as described in Section IX.B. The purpose of this feedback session is constructive — to help each director understand how their contributions are perceived by their peers and to identify areas for personal development and improvement.
D. Benchmarking
To provide context for the evaluation results, C&H recommends that the evaluation process include a benchmarking component. Evaluation results should be compared on a year-over-year basis beginning in the second evaluation cycle, enabling the Board to track trends and assess whether identified governance improvements are being implemented effectively.
In addition, where practicable, evaluation results should be benchmarked against peer-institution practices for comparably sized national banks. For purposes of this Framework, the relevant peer group consists of nationally chartered commercial banks with total consolidated assets between $25 billion and $50 billion. C&H or the third-party facilitator may provide peer-benchmarking context based on publicly available information, industry surveys, and proprietary data regarding board evaluation practices at peer institutions.
Benchmarking is not intended to establish rigid performance targets, but rather to provide directional context that helps the Board understand how its governance practices compare to those of similarly situated institutions and to identify areas where the Board's practices may be lagging industry norms.
V. ENGAGING AN INDEPENDENT THIRD-PARTY FACILITATOR
A. Role and Qualifications
The independent third-party facilitator (the "Facilitator") plays a central role in ensuring the objectivity, credibility, and effectiveness of the board evaluation process. The Facilitator's responsibilities include:
(a) Working with the Governance & Nominating Committee and C&H to finalize the evaluation questionnaires and interview protocols;
(b) Administering the distribution and collection of written questionnaires through a secure and confidential process;
(c) Conducting confidential one-on-one interviews with each director;
(d) Compiling, synthesizing, and analyzing all questionnaire responses and interview results;
(e) Preparing an aggregated, anonymized evaluation report, including quantitative score summaries (averages and distributions), thematic analysis of qualitative responses, and actionable recommendations;
(f) Presenting the evaluation report and findings to the Governance & Nominating Committee in executive session;
(g) Participating, at the request of the Governance & Nominating Committee, in the presentation of summary findings and recommendations to the full Board; and
(h) Providing peer-benchmarking context, where applicable.
The Facilitator should possess the following qualifications:
(a) Demonstrated expertise in bank board governance, including familiarity with the governance expectations and examination processes of the OCC and the Federal Reserve;
(b) Experience conducting board and committee evaluations for financial institutions of comparable size and complexity to BRB;
(c) No conflicts of interest with BRB, BRFG, or any director, officer, or significant shareholder of either entity;
(d) A professional reputation for independence, objectivity, and confidentiality; and
(e) The ability to provide candid, constructive feedback to the Board, including on sensitive topics such as board dynamics, leadership effectiveness, and individual director performance.
The Facilitator may be a governance consulting firm, an advisory firm with board-evaluation expertise, or another qualified professional. To preserve the independence of the evaluation process, the Facilitator should not be the same firm serving as BRB's regulatory consultant (i.e., not Ashford Pike Advisory LLC) or as BRB's outside counsel (i.e., not Calderwood & Harkness LLP or Meridian Cobalt LLP). The Facilitator should also not be a firm that provides other material professional services to BRB, BRFG, or any affiliate, to avoid any perception of compromised independence.
B. Selection and Retention Process
The Governance & Nominating Committee (Chair: Margaret R. Ellsworth) is responsible for identifying, evaluating, and recommending the Facilitator to the full Board for approval. The selection process should include:
(a) Identification of two to three qualified candidate firms, based on reputation, qualifications, and relevant experience;
(b) Review of each candidate firm's qualifications, references, and proposed approach to the engagement;
(c) Assessment of each candidate firm's independence, including a review of any existing or prior relationships with BRB, BRFG, any director or officer, or any significant shareholder;
(d) Evaluation of the candidate firm's proposed fees and engagement terms; and
(e) Recommendation of the selected firm to the full Board for approval.
The engagement of the Facilitator should be documented in a written engagement letter executed by the Governance & Nominating Committee Chair on behalf of the Board. The engagement letter should address, at a minimum: (a) the scope of the engagement; (b) the specific services to be provided; (c) the fees and payment terms; (d) confidentiality obligations; (e) data-handling and information security requirements; (f) independence representations; and (g) the term of the engagement. Model engagement letter provisions are set forth in Appendix E.
To preserve the independence and objectivity of the evaluation process, the Facilitator should be retained for a term of no more than three consecutive years. After serving for three consecutive years, the Facilitator should be rotated, and a new Facilitator should be engaged. The former Facilitator is eligible for re-engagement after a rotation period of at least one year. This rotation requirement is designed to prevent the Facilitator from developing overly familiar relationships with directors that could compromise the objectivity of the evaluation process.
C. Independence Requirements
The independence of the Facilitator is essential to the credibility and effectiveness of the evaluation process. The following independence requirements apply:
(a) The Facilitator must not provide other material professional services to BRB, BRFG, or any affiliate during the term of the engagement or for a period of one year prior to the commencement of the engagement.
(b) The Facilitator must disclose to the Governance & Nominating Committee any existing or prior relationships with any BRB or BRFG director, officer, or significant shareholder, including but not limited to Thornfield Capital Management, LP, Graycliff Institutional Partners, and Osprey Point Pension Fund.
(c) The Facilitator must not accept any compensation from BRB, BRFG, or any affiliate other than the fees specified in the engagement letter for the evaluation engagement.
(d) The Governance & Nominating Committee is responsible for assessing the Facilitator's independence on an annual basis and must determine, prior to the commencement of each annual evaluation cycle, that the Facilitator continues to meet the independence requirements set forth herein.
VI. CONFIDENTIALITY PROTOCOLS
The effectiveness of the self-evaluation process depends critically on the candor and honesty of directors' responses. Directors must be confident that their individual responses — both written and oral — will be treated as strictly confidential. This Section establishes the confidentiality protocols applicable to the evaluation process.
A. Treatment of Responses
All individual questionnaire responses and interview notes generated during the evaluation process are confidential. Individual responses shall be accessible only to the Facilitator (if engaged). In the absence of a Facilitator, individual responses shall be accessible only to the Chair of the Governance & Nominating Committee (currently Margaret R. Ellsworth) and the Lead Independent Director (currently David K. Sorrento), who will jointly assume responsibility for compiling and synthesizing the results.
Individual responses are aggregated and anonymized before presentation to any committee or the full Board. No individual director's responses will be identified or attributable in any report or presentation to the Governance & Nominating Committee or the full Board.
Raw individual responses are not shared with management, including the Chief Executive Officer (Richard A. Montague), the Chief Financial Officer (Catherine L. Ng), or the General Counsel and Corporate Secretary (James W. Prescott), unless a specific director provides written consent to the disclosure of their individual responses. This restriction applies to management directors' own responses as well — while management directors participate in the evaluation process as directors, their individual responses are subject to the same confidentiality protections as the responses of independent directors.
B. Retention and Destruction
Aggregated evaluation reports, including quantitative score summaries and thematic analyses, shall be retained in the corporate secretary's files for a minimum of five years following the date of the report, consistent with OCC record-retention expectations for governance-related documents and the Bank's general document retention policy.
Raw individual responses — including completed questionnaires, interview notes, and any working papers containing identifiable individual responses — shall be destroyed no later than 90 days after the aggregated evaluation report is finalized and accepted by the Governance & Nominating Committee. Destruction shall be conducted by the Facilitator (with respect to materials in the Facilitator's possession) or by the Governance & Nominating Committee Chair (with respect to materials in the Bank's possession) in a manner consistent with the Bank's information destruction policies.
Notwithstanding the foregoing, raw individual responses shall not be destroyed if they are subject to a legal hold, litigation preservation obligation, regulatory inquiry or investigation, or other legal or regulatory requirement that mandates retention. The retention policy shall be coordinated with James W. Prescott, General Counsel and Corporate Secretary, to ensure compliance with any applicable legal hold or preservation obligations.
C. Privilege Considerations
Evaluation results prepared at the direction of counsel (C&H or the Governance & Nominating Committee, acting in its governance oversight capacity) may be subject to the attorney-client privilege and/or the work-product doctrine. The preservation of these protections is important to the integrity of the evaluation process and to the protection of the Board's deliberative processes.
The following considerations apply:
(a) Consultation Before Disclosure. Privilege considerations should be discussed with C&H (Colette Whitman, Responsible Partner) before any disclosure of evaluation results — whether aggregated or individual, summary or detailed — to regulators, shareholders, proxy advisory firms, or any other external party.
(b) Voluntary Regulatory Submissions. Any voluntary submission of evaluation summaries or other evaluation-related materials to the OCC or the Federal Reserve should be carefully managed to avoid inadvertent waiver of privilege over underlying materials. The Board may determine that it is appropriate to share summary-level evaluation results with regulators as part of the remediation process; however, any such disclosure should be structured to preserve privilege over the underlying individual responses, working papers, and attorney-client communications.
(c) Common-Interest Considerations. To the extent that evaluation results are shared between BRB and BRFG (given the overlapping board membership), consideration should be given to documenting a common-interest arrangement to preserve privilege protections.
(d) Proxy Statement Disclosure. Disclosure of the evaluation process in BRB's proxy statement, as required by Nasdaq listing standards, should be limited to a description of the process and general findings and should not include specific evaluation results that could be characterized as waiving privilege over the underlying materials. Proxy statement disclosures should be reviewed by C&H and Meridian Cobalt LLP prior to filing.
VII. FULL BOARD EVALUATION — CRITERIA AND QUESTIONNAIRE
The Full Board Evaluation assesses the effectiveness of the Board as a whole across eight key categories. The evaluation criteria for each category are described below, and the corresponding questionnaire is set forth in Appendix A.
A. Board Composition and Structure
The evaluation should assess:
• Whether the current board size of 13 directors is appropriate for an institution of BRB's size, complexity, and regulatory profile.
• Whether the balance of independent directors (10) and non-independent directors (3) is appropriate and consistent with regulatory expectations and best practices for boards of nationally chartered commercial banks.
• Whether the Board's composition reflects an appropriate diversity of skills, professional experience, educational and personal backgrounds, and perspectives. This assessment should consider both the current composition and whether the Board's skill mix is aligned with BRB's strategic priorities, risk profile, and regulatory environment.
• Whether the director skill matrix maintained by the Governance & Nominating Committee (or, if not yet developed, whether the skill matrix currently under development) is adequate to identify existing strengths and gaps in the Board's collective expertise. This criterion is directly linked to MRA Finding 4 and the revised Governance & Nominating Committee Charter.
• Whether the Board's composition reflects the needs of an institution with a $38.7 billion asset base, a 147-branch network across eight states, and a growing digital banking platform. The evaluation should consider whether the Board has adequate expertise in areas including banking and financial services, risk management, technology and cybersecurity, regulatory compliance, accounting and financial reporting, strategic planning, consumer lending, commercial banking, capital markets, human capital management, and digital transformation.
• The implications of the significant overlap between the BRB bank board and the BRFG holding company board (11 of 13 directors serve on both boards), including whether this overlap creates governance efficiencies or raises concerns about the independence of bank-level governance.
B. Board Culture and Dynamics
The evaluation should assess:
• The quality of boardroom deliberation and debate, including whether discussions are substantive, informed, and sufficiently probing.
• The willingness of directors to challenge management assumptions, proposals, and recommendations, and whether the boardroom culture supports and encourages such challenges without creating adversarial dynamics.
• The tone at the top set by the Board Chair (Margaret R. Ellsworth) and the CEO (Richard A. Montague), including whether both leaders foster an environment of transparency, accountability, and constructive engagement.
• The effectiveness of executive sessions of independent directors, which are led by the Lead Independent Director (David K. Sorrento), including whether executive sessions are conducted regularly, whether they address substantive governance and oversight matters, and whether the outcomes of executive sessions are communicated appropriately to management.
• The degree to which directors engage with one another and with management outside of formal board and committee meetings, and whether such engagement enhances governance effectiveness.
C. Strategy and Oversight
The evaluation should assess:
• The Board's role in setting and overseeing the strategic direction of the Bank, including whether the Board is actively engaged in the strategic planning process or merely rubber-stamping management proposals.
• The quality of strategic planning presentations and materials provided by management, including whether the materials are sufficiently detailed, forward-looking, and balanced (presenting both opportunities and risks).
• The Board's engagement with risk and capital management, including the Board's understanding of BRB's current capital position (Tier 1 capital ratio of 10.8%; Common Equity Tier 1 ratio of 10.2%; total risk-based capital ratio of 12.9%) and the relationship between capital adequacy and strategic risk-taking.
• The Board's oversight of the Bank's digital banking strategy, which is a key strategic priority and is operationally overseen by Executive Vice President and Head of Digital Banking Alma G. Brashear. This criterion is particularly relevant to the Technology & Innovation Committee's work, but the full Board should also assess its own level of engagement with digital strategy given its significance to the Bank's long-term competitiveness and risk profile.
D. Information Flow and Meeting Effectiveness
The evaluation should assess:
• The timeliness with which pre-meeting materials (board books) are distributed to directors prior to Board and committee meetings. Best practice is distribution at least five business days before the meeting; directors should assess whether this standard is being met and whether the timing permits adequate review and preparation.
• The quality and sufficiency of pre-meeting materials, including whether the materials are clear, concise, well-organized, and focused on the key issues requiring Board attention.
• Whether board materials enable informed decision-making without over-reliance on management-curated presentations. This criterion is directly responsive to MRA Findings 2 and 3. The evaluation should assess whether directors are receiving information from independent sources (such as the internal audit function, the Chief Risk Officer, outside advisors, and independent analyses) in addition to management-prepared materials.
• The adequacy of reporting on compliance, BSA/AML, and regulatory matters, including whether the Board receives timely and comprehensive information regarding compliance risks, BSA/AML program effectiveness, and the status of regulatory examinations and supervisory actions. This criterion is directly linked to MRA Finding 3 and the new Board Information Flow Policy.
• Whether escalation protocols are functioning effectively, including whether the Chief Risk Officer, the Chief Compliance Officer, and other key risk and control functions have unimpeded access to the Board and its committees for purposes of escalating material risk and compliance matters. This criterion is directly linked to MRA Finding 1 and the revised Risk Committee Charter.
• The effectiveness of Board meetings themselves, including the allocation of time between presentations and discussion, the quality of dialogue during meetings, and whether meetings are structured to facilitate active engagement by all directors.
E. Risk Oversight
The evaluation should assess:
• The Board's overall understanding of the enterprise-wide risks facing BRB, including credit risk, market risk, operational risk, liquidity risk, compliance risk, strategic risk, reputational risk, and cyber/technology risk.
• The effectiveness of the Board's relationship with the Chief Risk Officer, including whether the CRO has unimpeded access to the Board, whether the CRO's reports to the Board are candid and comprehensive, and whether the Board appropriately challenges and engages with the CRO's risk assessments.
• The adequacy of the risk-appetite framework, including whether the Board has established a clear and measurable risk-appetite statement and whether management's risk-taking activities are aligned with the approved risk appetite.
• The quality and frequency of risk reporting to the Board, including whether risk reports are timely, actionable, and presented in a format that enables effective Board-level oversight.
• The Board's oversight of emerging and evolving risks, including cybersecurity threats, technological disruption, geopolitical risks, climate-related financial risks, and macroeconomic conditions.
F. Governance Practices