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INTERNAL DEAL MEMORANDUM

CONFIDENTIAL — ATTORNEY WORK PRODUCT / PRIVILEGED

This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared for internal use only and should not be disclosed to any third party without the prior approval of the Responsible Partner.

PRIVILEGE NOTICE: This memorandum is protected by the attorney-client privilege and the work product doctrine. It has been prepared by Calderwood & Harkness LLP solely for internal use in connection with the representation of Belmont Ridge Bank, National Association. This memorandum contains mental impressions, conclusions, opinions, and legal theories of attorneys. It should not be disclosed, distributed, or made available to any third party — including the client, co-counsel, underwriter's counsel, or any transaction counterparty — without the prior written approval of Francesca Morano, Responsible Partner. Any inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.

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I. EXECUTIVE SUMMARY

Calderwood & Harkness LLP ("C&H" or the "Firm") has been engaged by Belmont Ridge Bank, National Association ("BRB" or the "Bank"), to advise on a proposed $48,000,000 tap issuance of additional Class A-2 Notes (the "Tap Notes") under the existing Belmont Ridge Equipment Trust 2024-A (the "Trust") shelf securitization program. The engagement was opened on February 13, 2024, following preliminary discussions between Francesca Morano and Derek Ashworth, Treasurer & Head of Capital Markets at BRB.

BRB is a New York-headquartered national banking association, chartered by the Office of the Comptroller of the Currency under OCC Charter No. 91-4428, with common shares listed on the New York Stock Exchange under the ticker symbol "BRBK." As of December 31, 2023, BRB reported total consolidated assets of approximately $14.7 billion. The Bank maintains an equipment lease portfolio of approximately $3.2 billion, primarily composed of small-ticket commercial leases secured by copiers, IT and networking equipment, medical devices, and light industrial equipment.

The Trust is a Delaware statutory trust formed on January 8, 2024, with Capitol Trust Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801, serving as registered agent. Keyline Trust Company, National Association serves as Owner Trustee. The shelf program is registered with the Securities and Exchange Commission under Registration Statement No. 333-276891, with the base prospectus filed on January 15, 2024.

The original Series 2024-A issuance closed on January 29, 2024, with a total issuance amount of $350,000,000, structured across two classes of notes:

• Class A-1 Notes: $130,000,000, floating rate, rated A-1+ by Pinnacle Ratings Group Inc. ("Pinnacle") and P-1 by Crestline Ratings International LLC ("Crestline"); and

• Class A-2 Notes: $220,000,000, fixed rate (5.78% coupon), rated AAA(sf) by Pinnacle and Aaa(sf) by Crestline.

The proposed tap issuance will add $48,000,000 of Class A-2 Notes bearing the same CUSIP (07839LAB3) and ISIN (US07839LAB36) as the original Class A-2 tranche. Upon settlement, the Tap Notes will be fully fungible with the outstanding Class A-2 Notes. Following the tap, total Class A-2 Notes outstanding will increase to $268,000,000, and total Series 2024-A outstanding will increase to $398,000,000.

The Tap Notes will be issued pursuant to Supplemental Indenture No. 2 to the Indenture dated January 29, 2024, among the Trust, BRB as Servicer, and Meridian Fiduciary Services, Inc. ("Meridian") as Indenture Trustee. Net proceeds of approximately $47,916,000 will be used by the Trust to acquire additional eligible equipment-lease receivables from BRB under the existing Sale and Servicing Agreement, as amended by Amendment No. 1.

The following key role assignments have been made within the C&H deal team:

• Francesca Morano — Responsible Partner

• Samuel Eklund — Billing Partner

• Carlos Espinoza — Lead Associate

• Hannah Brinkley — Working Associate

Estimated legal fees for C&H's engagement are capped at $185,000 on an hourly basis, consistent with the fee arrangement confirmed in the engagement letter dated February 15, 2024. All transaction documents are expected to be governed by the laws of the State of New York.

This memorandum sets forth the transaction structure, parties, collateral analysis, credit enhancement mechanics, key risks, timeline, scope of work, open issues, and our recommendation for proceeding.

II. PARTIES AND KEY CONTACTS

A. Issuer / Originator / Servicer — Belmont Ridge Bank, National Association

Full Legal Name: Belmont Ridge Bank, National Association

Entity Type: National banking association, chartered and supervised by the Office of the Comptroller of the Currency (OCC Charter No. 91-4428)

Headquarters: 600 Lexington Avenue, 32nd Floor, New York, NY 10022

NYSE Ticker: BRBK

Total Consolidated Assets (FY 2023): Approximately $14.7 billion, as reported in BRB's Annual Report on Form 10-K filed with the SEC on February 28, 2024.

Equipment Lease Portfolio (December 31, 2023): Approximately $3.2 billion. The portfolio is predominantly composed of small-ticket commercial lease receivables, including leases secured by copiers, IT and networking equipment, medical devices, and light industrial equipment. BRB has been active in the equipment leasing market for over fifteen years and has established a consistent origination and servicing track record.

Key Contacts:

Role in the Transaction: BRB serves in multiple capacities: (i) as the originator of the lease receivables being transferred to the Trust; (ii) as the sponsor and depositor of the securitization program; and (iii) as the servicer of the lease receivables under the Sale and Servicing Agreement dated January 29, 2024 (as to be amended by Amendment No. 1 in connection with the tap issuance). BRB's ongoing servicing obligations include billing, collections, administration of delinquent and defaulted leases, and reporting to the Indenture Trustee. BRB retains the residual interest in the Trust through its ownership of the trust certificate.

B. Issuing Entity — Belmont Ridge Equipment Trust 2024-A

Entity Type: Delaware statutory trust, formed under the Delaware Statutory Trust Act, 12 Del. C. §§ 3801 et seq.

Date of Formation: January 8, 2024

Trust Agreement: Executed January 22, 2024, between BRB (as Depositor) and Keyline Trust Company, National Association (as Owner Trustee)

Trust EIN: 88-4231957

Registered Agent: Capitol Trust Services LLC, 1209 Orange Street, Wilmington, DE 19801

Owner Trustee: Keyline Trust Company, National Association, 2100 Market Street, Suite 800, Philadelphia, PA 19103

The Trust was formed as a special-purpose, bankruptcy-remote entity for the sole purpose of acquiring, holding, and financing equipment-lease receivables originated by BRB. The Trust has no employees, no independent operations, and no assets other than the lease receivables, the related security interests, and funds on deposit in the trust accounts. The Trust Agreement contains customary limitations on the Trust's activities, including prohibitions on incurring additional indebtedness (other than as contemplated by the Indenture and any supplemental indentures), merging or consolidating with any other entity, or engaging in any business other than the securitization of lease receivables.

C. Indenture Trustee / Paying Agent / Calculation Agent / Note Registrar

Entity: Meridian Fiduciary Services, Inc.

Entity Type: Delaware corporation

Address: 101 Barclay Street, 12th Floor, New York, NY 10007

Key Contact: Andrea Castellano, Vice President, Structured Finance Trust Administration; (212) 555-7290; andrea.castellano@meridianfiduciary.com

Role: Meridian serves as Indenture Trustee, Paying Agent, Calculation Agent, and Note Registrar under the Indenture dated January 29, 2024. In connection with the tap issuance, Meridian will execute Supplemental Indenture No. 2, which authorizes the issuance of the $48,000,000 Tap Notes. Meridian also serves as the securities intermediary maintaining the Trust collection account and the reserve account. Meridian has confirmed its willingness to execute the Supplemental Indenture, subject to receipt and review of final documentation and customary conditions.

D. Lead Underwriter / Bookrunner

Entity: Ashford Capital Markets LLC

Entity Type: Delaware limited liability company; SEC-registered broker-dealer (CRD No. 284756)

Address: 383 Madison Avenue, 22nd Floor, New York, NY 10179

Key Contact: Julian Voss, Managing Director, ABS Syndicate; (212) 555-9144; julian.voss@ashfordcm.com

Role: Ashford Capital Markets LLC ("Ashford") will serve as sole bookrunner and lead underwriter for the tap issuance. Ashford also served as lead bookrunner on the original Series 2024-A issuance. Ashford has indicated preliminary investor demand from three institutional accounts (Northvale Asset Management LP, Summit Creek Capital Advisors LLC, and Iron Gate Insurance Company) with anticipated aggregate allocations of $48,000,000, matching the full tap amount. Ashford's underwriting discount is 30 basis points on par, totaling $144,000.

E. Rating Agencies

1. Pinnacle Ratings Group Inc.

Entity Type: Delaware corporation; registered as a Nationally Recognized Statistical Rating Organization (NRSRO) with the SEC

Address: 7 World Trade Center, 38th Floor, New York, NY 10006

Key Contact: Lisa Okoro, Senior Director, Structured Finance; (212) 555-3388; lisa.okoro@pinnacleratings.com

Assigned Rating: AAA(sf) on the Class A-2 Notes (original issuance and tap)

Pinnacle has been engaged to confirm the AAA(sf) rating on the Class A-2 Notes following the tap issuance. Preliminary discussions with Lisa Okoro indicate that Pinnacle expects to complete its review within approximately two weeks of receiving the final pool data tape and draft Supplemental Indenture. Pinnacle's fee for the tap review and ongoing surveillance is included in the combined rating agency fee of $75,000.

2. Crestline Ratings International LLC

Entity Type: Delaware limited liability company; registered as an NRSRO with the SEC

Address: 55 Water Street, Suite 3100, New York, NY 10041

Key Contact: Thomas Pratt, Vice President, ABS Ratings; (212) 555-6521; thomas.pratt@crestlineratings.com

Assigned Rating: Aaa(sf) on the Class A-2 Notes (original issuance and tap)

Crestline has similarly been engaged to confirm the Aaa(sf) rating on the Class A-2 Notes. Thomas Pratt has indicated that Crestline will require the updated pool data tape, the draft Supplemental Indenture, and the draft Amendment No. 1 to the Sale and Servicing Agreement for its review. Crestline's portion of the combined rating agency fee is included in the $75,000 estimate.

F. Counsel

1. Issuer's Counsel — Calderwood & Harkness LLP

Address: 250 Park Avenue, 40th Floor, New York, NY 10177

Team:

C&H serves as primary outside counsel to BRB and the Trust in connection with the tap issuance. C&H previously advised BRB on the original Series 2024-A issuance, and accordingly the deal team has substantial familiarity with the existing transaction documents, the collateral pool, and the relevant regulatory considerations. C&H's estimated fees for the tap issuance are capped at $185,000 on an hourly basis, as set forth in the engagement letter dated February 15, 2024.

2. Issuer's Delaware Counsel — Whitfield & Donahue LLP

Address: 1000 North King Street, Suite 500, Wilmington, DE 19801

Key Contact: Robert Whitfield, Partner; (302) 555-8800; rwhitfield@whitfielddonahue.com

Role: Whitfield & Donahue LLP will deliver Delaware-law opinion letters in connection with the tap issuance, including opinions as to (i) the true-sale characterization of the transfer of lease receivables from BRB to the Trust, (ii) the enforceability of the Trust Agreement and related trust documents, and (iii) the non-consolidation of the Trust's assets with BRB's estate in the event of BRB's insolvency. Whitfield & Donahue's fee is a flat $25,000 for the tap issuance opinion work.

3. Underwriter's Counsel — Hargrove, Sato & Chen LLP

Address: 1585 Broadway, 28th Floor, New York, NY 10036

Key Contact: Nina Hargrove, Partner, Structured Finance; (212) 555-4400; nhargrove@hargrovesatochen.com

Role: Hargrove, Sato & Chen LLP ("HSC") serves as counsel to Ashford Capital Markets LLC in connection with the tap issuance. HSC will conduct a due diligence review of the transaction documents, negotiate the Underwriting Agreement and the Prospectus Supplement, and deliver customary underwriter's counsel opinions at closing. HSC's estimated fees are approximately $95,000 on an hourly basis.

G. Independent Accountants

Entity: Velthorn Accounting Group LLP

Address: 345 Hudson Street, 14th Floor, New York, NY 10014

Key Contact: Angela Ferris, Audit Partner; (212) 555-7700; aferris@greylockaccounting.com

Role: Velthorn will provide (i) an agreed-upon procedures letter ("AUP") in respect of pool-level data, including verification of the aggregate discounted receivable balance, weighted-average terms, and equipment-type stratification disclosed in the Prospectus Supplement; and (ii) a comfort letter to Ashford with respect to BRB's financial information included or incorporated by reference in the Prospectus Supplement. Velthorn's fee for the tap issuance is a flat $40,000.

H. Back-Up Servicer

Entity: Redwood Servicing Solutions LLC

Address: 500 West Monroe Street, Suite 3600, Chicago, IL 60661

Key Contact: Patricia Hahn, SVP, Backup Servicing; (312) 555-2900; phahn@redwoodservicing.com

Role: Redwood serves as Back-Up Servicer under the Back-Up Servicing Agreement dated January 29, 2024. Redwood receives monthly data tapes from BRB reflecting the composition and performance of the lease pool and maintains the systems capability to assume primary servicing functions upon the occurrence of a servicer termination event under the Sale and Servicing Agreement. Redwood's fee is $7,500 per month ($90,000 per year), payable as an operating expense of the Trust.

I. Anticipated Investors (Initial Purchasers of Tap Notes)

Based on preliminary indications of interest received by Ashford, the anticipated initial purchasers and their expected allocations are as follows:

These allocations are preliminary and subject to final confirmation by Ashford following the marketing period and pricing. All three investors are believed to be qualified institutional buyers ("QIBs") within the meaning of Rule 144A under the Securities Act, though the Tap Notes will be offered pursuant to the effective shelf registration and sold in a registered public offering. Final investor suitability determinations are the responsibility of Ashford.

III. TRANSACTION STRUCTURE

A. Overview of Tap Mechanism

The proposed tap issuance is structured as an additional issuance of Class A-2 Notes under the existing Series 2024-A indenture framework. The tap mechanism is expressly contemplated by Section 2.13 of the Indenture dated January 29, 2024 (the "Original Indenture"), which permits the Trust to issue additional notes of any existing class, subject to specified conditions including: (i) execution of a supplemental indenture; (ii) receipt of rating agency confirmations from each rating agency then rating the affected class; (iii) satisfaction of collateral coverage and credit enhancement requirements; and (iv) delivery of officer's certificates and legal opinions.

The Tap Notes will be authorized and issued pursuant to Supplemental Indenture No. 2, to be entered into among the Trust, BRB as Servicer, and Meridian as Indenture Trustee. Supplemental Indenture No. 1 was previously executed on January 29, 2024, in connection with the original Series 2024-A issuance and is not implicated by the current tap.

Upon issuance, the Tap Notes will bear the same CUSIP (07839LAB3) and ISIN (US07839LAB36) as the original Class A-2 Notes and will be fully fungible with the original tranche. From a clearing and settlement perspective, the Tap Notes will be consolidated with the existing Class A-2 Notes held through The Depository Trust Company ("DTC") and will participate pari passu in all payments of interest and principal on the Class A-2 Notes. There will be no distinction between original Class A-2 Notes and Tap Notes for purposes of the payment waterfall, voting, or any other rights under the Indenture.

The Tap Notes represent an incremental $48,000,000 added to the original $220,000,000 Class A-2 tranche, bringing total Class A-2 Notes outstanding to $268,000,000. Combined with the $130,000,000 Class A-1 Notes (which remain outstanding and unaffected by the tap), total Series 2024-A notes outstanding will increase from $350,000,000 to $398,000,000.

The tap mechanism is a well-established technique in equipment-lease ABS and other asset-backed securitizations, offering significant execution efficiency relative to a de novo issuance. By utilizing the existing trust structure, indenture framework, shelf registration, and rating agency relationships, the tap avoids the time and expense associated with forming a new trust, obtaining new ratings, drafting a full prospectus, and conducting an extended marketing process.

B. Key Economic Terms

The following table summarizes the key economic terms of the Tap Notes:

The issue price of 100.125% reflects secondary market tightening in equipment-lease ABS spreads since the original pricing in late January 2024. The original Class A-2 Notes were priced at par (100.000%) on January 29, 2024. The 12.5-basis-point premium on the Tap Notes results in a modest yield give-up relative to the stated coupon of 5.78%, producing an effective yield to weighted-average life of approximately 5.74%. This pricing is consistent with the current secondary trading levels of the outstanding Class A-2 Notes and reflects constructive demand from the anticipated investor base.

The 210-basis-point spread over the interpolated three-year SOFR swap rate is competitive with recent comparable equipment-lease ABS issuances in the AAA(sf)/Aaa(sf) space. Derek Ashworth has indicated that BRB views this pricing as attractive in the current rate environment and supports execution at these levels.

C. Use of Proceeds

Net proceeds from the Tap Notes, totaling $47,916,000, will be used by the Trust to purchase additional eligible equipment-lease receivables from BRB under the existing Sale and Servicing Agreement, as amended by Amendment No. 1. The additional lease pool (the "Tap Pool") has an aggregate discounted receivable balance of $49,344,000. The purchase price for the Tap Pool receivables will equal the net proceeds available to the Trust following payment of the underwriting discount.

The excess of the Tap Pool's aggregate discounted receivable balance over the Tap Notes' par amount provides initial overcollateralization of $1,344,000, representing approximately 2.72% of the tap tranche par amount. This initial OC, combined with excess spread generated by the Tap Pool receivables and the existing OC and reserve account balances attributable to the original issuance, will contribute to the combined credit enhancement structure described in Section V below.

BRB has represented to us that the Tap Pool receivables have been identified, segregated, and are currently held on BRB's balance sheet pending closing of the tap issuance. The receivables are subject to the same eligibility criteria established in the original Sale and Servicing Agreement, and BRB will deliver a schedule of the Tap Pool receivables, together with a representation and warranty certificate, at or prior to closing.

D. Key Transaction Documents

The following principal transaction documents will be prepared, negotiated, and/or executed in connection with the tap issuance:

1. Supplemental Indenture No. 2. This instrument supplements the Indenture dated January 29, 2024, and authorizes the issuance of the $48,000,000 Tap Notes. The parties to the Supplemental Indenture are the Trust (as Issuer), BRB (as Servicer), and Meridian (as Indenture Trustee). The Supplemental Indenture will, among other things, (i) specify the terms of the Tap Notes (par amount, issue price, CUSIP, first payment date, and related settlement mechanics), (ii) confirm the fungibility of the Tap Notes with the original Class A-2 Notes, (iii) adjust the credit enhancement calculations (OC and reserve triggers) to reflect the increased aggregate note balance, and (iv) include representations and conditions precedent to issuance, including receipt of rating agency confirmations and officer's certificates.

2. Amendment No. 1 to the Sale and Servicing Agreement. This amendment to the Sale and Servicing Agreement dated January 29, 2024, among BRB (as Originator and Servicer), the Trust, and Meridian (as Indenture Trustee), will (i) add the Tap Pool receivables to the portfolio of lease receivables owned by the Trust, (ii) adjust the overcollateralization and reserve account triggers and target levels to reflect the post-tap aggregate note balance, and (iii) include updated representations, warranties, and covenants of BRB with respect to the Tap Pool receivables.

3. Underwriting Agreement. This agreement between the Trust, BRB (as Servicer), and Ashford Capital Markets LLC will govern the terms of the offering and sale of the Tap Notes, including the underwriting discount, representations and warranties of the Trust and BRB, conditions to closing, indemnification provisions, and termination rights of the underwriter. C&H will prepare the initial draft and negotiate with HSC, counsel to Ashford.

4. Prospectus Supplement. The Prospectus Supplement will be prepared as a supplement to the base prospectus filed on January 15, 2024, under Registration Statement No. 333-276891. The supplement will describe the Tap Notes, the Tap Pool, the amended credit enhancement structure, and risk factors specific to the tap issuance. The Prospectus Supplement will be filed with the SEC under Rule 424(b)(5) within two business days after pricing. C&H will coordinate the drafting process with BRB, Ashford, and Velthorn.

In addition to the foregoing, certain ancillary documents will be required at closing, including officer's and secretary's certificates, good standing certificates, opinion letters, rating agency confirmations, the comfort letter and AUP from Velthorn, and bring-down certifications. These items are addressed in greater detail in Section IX below.

IV. COLLATERAL POOL ANALYSIS (TAP ADDITION)

A. Pool Statistics

The Tap Pool consists of 1,247 individual equipment-lease contracts originated by BRB. Based on the preliminary pool data tape provided by Priya Ranganathan on February 28, 2024, the key characteristics of the Tap Pool are as follows:

The average discounted balance per lease of approximately $39,570 is consistent with BRB's small-ticket commercial leasing platform and is in line with the original Series 2024-A collateral pool, which had an average discounted balance of approximately $41,200 per lease at the time of the original closing. The granularity of the pool — with 1,247 contracts and no single obligor representing more than approximately 0.43% of the total pool balance — provides meaningful diversification and limits the impact of any single obligor default on overall pool performance.

B. Equipment Type Stratification

The Tap Pool receivables are secured by the following categories of equipment:

The equipment-type distribution is broadly consistent with BRB's overall $3.2 billion equipment lease portfolio and with the original Series 2024-A collateral pool. IT and networking equipment represents the largest single category at 34.2% of the pool. As discussed in Section VI.C below, IT and networking equipment is subject to relatively rapid technological obsolescence, which can affect residual values and recovery rates in the event of default and repossession. Medical devices, the second-largest category at 22.7%, generally exhibit more stable residual value characteristics due to longer useful lives and regulatory barriers to entry that support aftermarket demand.

C. Geographic Concentration

The Tap Pool receivables are geographically diversified across the United States, with the following top-five state concentrations by discounted receivable balance:

No single state accounts for more than 14.8% of the pool, and the top five states collectively account for approximately 49.7% of the total pool balance. The geographic distribution is broadly reflective of BRB's nationwide origination footprint and is consistent with the distribution of commercial activity across the United States. The concentration in New York is somewhat elevated relative to the national average but is expected given BRB's New York headquarters and established commercial relationships in the tri-state area.

D. Observations on Pool Quality

Based on our preliminary review of the pool data tape and the summary statistics set forth above, we offer the following observations regarding the quality and risk profile of the Tap Pool:

Diversification. The Tap Pool is well-diversified by obligor, equipment type, and geography. With 1,247 lease contracts and no single obligor exceeding approximately 0.43% of the pool balance, the pool exhibits the granular, homogeneous characteristics typical of small-ticket commercial lease portfolios. The top ten obligors collectively represent only 4.3% of the total pool balance, providing substantial protection against concentrated credit exposure.

Seasoning. The weighted-average seasoning of the Tap Pool is 5.8 months, indicating that the receivables are relatively recently originated. While this modest seasoning means that the leases have a limited payment history, it also means that the receivables have a longer remaining term over which to generate cash flows. However, as noted in Section VI.C below, the early period of a lease's life is typically the period of highest default risk, and the limited seasoning requires that we monitor early-period performance closely. BRB has provided historical performance data on its broader equipment lease portfolio, which indicates that the majority of lease defaults occur within the first 12 months of origination, with default rates declining materially after the initial seasoning period.

Excess Spread. The weighted-average implicit lease rate of 7.14% provides meaningful excess spread above the Class A-2 Note coupon of 5.78% and the servicing fee of 0.50%, resulting in annualized excess spread of approximately 0.86%. This excess spread serves as the first line of credit enhancement and is the primary mechanism for building the overcollateralization cushion to the 4.50% target level.

Consistency with Broader Portfolio. The equipment-type mix, geographic distribution, and obligor concentration characteristics of the Tap Pool are broadly consistent with BRB's overall $3.2 billion equipment lease portfolio and with the original Series 2024-A collateral pool. This consistency provides comfort that BRB has not engaged in adverse selection in assembling the Tap Pool.

V. CREDIT ENHANCEMENT STRUCTURE (POST-TAP)

The credit enhancement structure for the Series 2024-A Notes, as adjusted for the tap issuance, consists of three primary components: overcollateralization, the reserve account, and excess spread. Each is described in detail below.

A. Overcollateralization

The Indenture establishes an overcollateralization target of 4.50% of the aggregate outstanding note balance. Following the tap issuance, the aggregate note balance will increase from $350,000,000 to $398,000,000, and the OC target amount will increase accordingly:

• OC Target Rate: 4.50% of aggregate note balance

• Post-Tap Aggregate Note Balance: $398,000,000

• Post-Tap OC Target Amount: $398,000,000 × 4.50% = $17,910,000

The initial overcollateralization from the Tap Pool alone is $1,344,000, calculated as the difference between the aggregate discounted receivable balance of the Tap Pool ($49,344,000) and the par amount of the Tap Notes ($48,000,000). This represents approximately 2.72% of the Tap Notes' par amount. The initial OC from the Tap Pool, when combined with the existing OC attributable to the original issuance, must be sufficient to meet the post-tap OC target of $17,910,000. To the extent that the combined OC is below the target level following the tap closing, the payment waterfall will trap excess spread and redirect it to build OC until the target is achieved.

The overcollateralization mechanism operates through the monthly payment waterfall. After payment of senior fees, the servicing fee, note interest, and scheduled note principal, any remaining collections are applied to build OC to the target level before any residual distributions are released to BRB as holder of the trust certificate. If cumulative net losses on the collateral pool exceed available excess spread, the OC cushion will absorb losses; if OC falls below a specified floor (typically set at a level below the target), the waterfall redirects additional cash to rebuild OC, and distributions to BRB are suspended until the floor is restored.

B. Reserve Account

The Series 2024-A structure includes a cash reserve account maintained by Meridian as Indenture Trustee. The reserve account is sized at 1.00% of the aggregate outstanding note balance:

• Reserve Rate: 1.00% of aggregate note balance

• Post-Tap Reserve Amount: $398,000,000 × 1.00% = $3,980,000

The reserve account was initially funded at closing of the original issuance in the amount of $3,500,000 (1.00% × $350,000,000). In connection with the tap issuance, the reserve account will need to be topped up by $480,000 ($3,980,000 − $3,500,000) to reach the required post-tap level. The source of the top-up will need to be confirmed with BRB and reflected in the Supplemental Indenture and Amendment No. 1 — it may be funded from trust cash flows, from a deposit by BRB, or from the tap closing proceeds. This is identified as an open item in Section X below.

The reserve account provides liquidity support to cover shortfalls in interest payments on the notes in the event of temporary cash flow disruptions, such as collection delays or servicer transition events. The reserve account is drawn upon only after available collections have been applied in the waterfall and are insufficient to cover required payments. If drawn, the reserve account is replenished from excess spread through the waterfall before residual distributions are released to BRB.

C. Excess Spread

Excess spread is the difference between the yield generated by the collateral pool and the costs of the transaction, including the note coupon and the servicing fee. For the Tap Pool, the estimated annualized excess spread is calculated as follows:

• WA Implicit Lease Rate: 7.14%

• Class A-2 Note Coupon: 5.78%

• Servicing Fee: 0.50%

• Annualized Excess Spread: 7.14% − 5.78% − 0.50% = 0.86%

This calculation does not account for the Class A-1 Notes (which are floating-rate and are not directly affected by the tap), trust administration expenses, or the back-up servicer fee, all of which are paid senior in the waterfall. On a blended basis across the entire Series 2024-A collateral pool, the excess spread will depend on the weighted-average yield of the combined pool and the blended cost of funds across both classes of notes.

Excess spread serves as the first-loss credit enhancement for the transaction. In each monthly period, excess spread is applied in the waterfall to build OC to the target level and to replenish the reserve account. Only after OC and the reserve account are at their required levels is excess spread released to BRB as residual. In periods when net losses on the collateral pool exceed the available excess spread, the excess spread is entirely absorbed, and losses begin to erode the OC cushion.

The 0.86% annualized excess spread on the Tap Pool, while adequate for the current credit enhancement structure, is relatively modest by historical standards for small-ticket equipment-lease ABS. Any deterioration in pool performance — whether due to elevated defaults, increased prepayments that reduce the weighted-average implicit lease rate, or rising servicing costs — could reduce the available excess spread and slow the pace of OC build-up. We recommend that the deal team monitor the monthly servicer reports for trends in excess spread levels following the tap closing.

D. Structural Features

The Series 2024-A credit enhancement structure incorporates the following additional structural features:

Single-A-Class Structure. The Class A Notes (both A-1 and A-2) do not benefit from subordination — there are no junior or mezzanine classes of notes in the Series 2024-A structure. Credit support for the Class A Notes is provided solely by the combination of overcollateralization, the reserve account, and excess spread. This single-A-class structure is common in small-ticket equipment-lease ABS transactions where the granularity of the collateral pool provides natural diversification and limits tail risk.

Sequential Amortization. Principal payments on the Class A Notes are made sequentially, with the Class A-1 Notes receiving all scheduled and unscheduled principal until paid in full, followed by the Class A-2 Notes. This sequential structure provides de facto time-tranching between the two classes, with the Class A-1 Notes (shorter-duration, floating-rate) paying down first and the Class A-2 Notes (longer-duration, fixed-rate) paying down thereafter.

Monthly Payment Waterfall. Collections on the collateral pool are distributed monthly on each payment date (the 15th of each month) in accordance with the following priority:

(i) Trustee fees and expenses (Meridian);

(ii) Servicing fee (0.50% per annum, payable to BRB as Servicer);

(iii) Back-up servicer fee ($7,500/month, payable to Redwood);

(iv) Interest on the Class A-1 Notes (pro rata);

(v) Interest on the Class A-2 Notes (pro rata);

(vi) Principal on the Class A-1 Notes (until paid in full);

(vii) Principal on the Class A-2 Notes (until paid in full);

(viii) Overcollateralization build-up (to 4.50% target);

(ix) Reserve account replenishment (to 1.00% target);

(x) Residual distributions to BRB (as holder of the trust certificate).

Trigger Events. The Indenture establishes certain performance triggers that alter the waterfall in the event of collateral pool deterioration. If the cumulative net loss rate exceeds specified thresholds, or if OC falls below its required floor, the waterfall redirects excess spread to accelerate OC build-up and suspends residual distributions to BRB. The specific trigger levels are set forth in the Indenture and will be confirmed in Supplemental Indenture No. 2 for the post-tap aggregate note balance.

VI. KEY RISK ANALYSIS

This section identifies and analyzes the principal legal and structural risks associated with the tap issuance. The risks discussed below are not exhaustive but represent the areas that the C&H deal team has identified as most relevant to our advisory role and to the overall credit quality of the transaction.

A. Commingling Risk

BRB, in its capacity as Servicer, collects lease payments from obligors into its own operating accounts prior to remittance to the Trust collection account maintained by Meridian. This collection and remittance process creates commingling risk — the risk that, in the event of BRB's insolvency or receivership, lease collections attributable to the Trust could become commingled with BRB's general assets and subject to the claims of BRB's creditors or the receiver.

The Sale and Servicing Agreement addresses commingling risk through a two-business-day remittance requirement, pursuant to which BRB is obligated to transfer collected lease payments to the Trust collection account at Meridian within two business days of receipt. The Trust collection account is an eligible deposit account maintained at Meridian Fiduciary Services, Inc., and is subject to the control of the Indenture Trustee for the benefit of the noteholders.

The two-business-day remittance period limits the maximum exposure to commingling risk at any given time to approximately two days' worth of collections. Based on the post-tap aggregate discounted receivable balance and the weighted-average implicit lease rate, the estimated daily collection amount is relatively modest, and the potential commingling exposure is within the parameters assumed by the rating agencies in their credit enhancement analysis.

Action Item: We must confirm that Amendment No. 1 to the Sale and Servicing Agreement does not modify the two-business-day remittance period. Any extension of the remittance period could increase commingling exposure and may require additional credit enhancement or rating agency review. Hannah Brinkley will review the draft Amendment No. 1 against the original Sale and Servicing Agreement to confirm this point.

B. Servicer Default Risk

BRB serves as both originator and servicer of the lease receivables, creating concentration risk in a single entity. The performance of the transaction depends critically on BRB's ongoing ability to service the collateral pool — billing obligors, collecting payments, administering delinquent accounts, pursuing recoveries on defaulted leases, and providing accurate and timely reporting to the Indenture Trustee and noteholders.

The Sale and Servicing Agreement establishes a set of servicer default triggers, the occurrence of which would entitle the Indenture Trustee (acting at the direction of the requisite noteholders) to terminate BRB as Servicer and appoint a successor. These triggers include:

(a) Failure by BRB to remit collected funds to the Trust collection account within the required remittance period;

(b) The commencement of a bankruptcy, insolvency, receivership, or conservatorship proceeding with respect to BRB;

(c) A material breach by BRB of its servicing obligations that remains uncured after the applicable notice and cure period; and

(d) A material adverse change in BRB's financial condition that, in the reasonable judgment of the Indenture Trustee, impairs BRB's ability to perform its servicing obligations.

To mitigate the risk of a servicer disruption, the Trust has engaged Redwood Servicing Solutions LLC as Back-Up Servicer. Redwood receives monthly data tapes from BRB reflecting the composition and performance of the lease pool, maintains systems capable of processing lease payments and generating obligor communications, and can assume primary servicing functions upon the occurrence of a servicer termination event. Redwood's fee of $7,500 per month ($90,000 per year) is payable as an operating expense of the Trust, senior in the waterfall to note interest and principal.

Risk Assessment: BRB's status as an OCC-chartered national bank with approximately $14.7 billion in total assets provides a measure of institutional stability and regulatory oversight. National banks are subject to comprehensive supervision by the OCC, including regular safety-and-soundness examinations and capital adequacy requirements. The likelihood of a sudden servicing disruption is lower for a regulated national bank than for a non-bank originator or servicer. However, reliance on a single entity for both origination and servicing remains a rating-sensitive factor. The rating agencies have evaluated this concentration in their credit analysis and have factored the availability of the Back-Up Servicer into their rating determinations.

We should confirm with Redwood the specific transition period within which Redwood is contractually obligated to assume full servicing responsibilities following a servicer termination event. The Back-Up Servicing Agreement specifies this period, and any delay in transition could result in temporary disruptions to collections and reporting.

C. Overcollateralization Erosion Scenarios

The OC target of 4.50% of the aggregate note balance ($17,910,000 post-tap) must be maintained on an ongoing basis to support the AAA(sf)/Aaa(sf) ratings on the Class A-2 Notes. Overcollateralization is built through the trapping of excess spread in the waterfall and is eroded when cumulative net losses on the collateral pool exceed available excess spread.

Several scenarios could lead to OC erosion and potential stress on the credit enhancement structure:

Elevated Defaults on Newly Originated Leases. As noted in Section IV.D above, the Tap Pool has a weighted-average seasoning of only 5.8 months. Historical data from BRB's equipment lease portfolio indicates that default rates are highest during the first 12 months of a lease's term. To the extent that the Tap Pool experiences elevated early-period defaults, the available excess spread may be insufficient to absorb losses while simultaneously building OC to the target level.

Residual Value Risk. While the Series 2024-A collateral pool consists of lease receivables (i.e., the contractual payment streams) rather than residual values, early terminations of leases — whether through voluntary prepayment, default, or obligor bankruptcy — can affect the Trust's recovery on the underlying equipment. Recovery rates on repossessed equipment depend on the equipment's condition, age, and market demand. Rapid depreciation or obsolescence of the underlying equipment reduces recoverable amounts and increases net loss severity.

Equipment Obsolescence Risk (IT/Networking). IT and networking equipment, which represents 34.2% of the Tap Pool, is particularly susceptible to technological obsolescence. Product cycles in the IT sector are typically shorter than for medical devices or light industrial equipment, and aftermarket values for IT equipment can decline rapidly as new generations of technology are introduced. This obsolescence risk is a key consideration in the rating agencies' recovery rate assumptions and loss severity models.

Trigger Events and Cash Trapping. The Indenture establishes performance triggers that alter the waterfall priority in the event of OC erosion. If OC falls below a specified floor level (typically set at a level below the target, such as 3.00% of the aggregate note balance), the waterfall redirects all available excess spread to rebuild OC before releasing any residual distributions to BRB. These trigger mechanisms are designed to preserve credit enhancement during periods of stress. However, in a severe stress scenario, even full cash trapping may be insufficient to prevent further OC erosion if net losses persistently exceed excess spread.

D. True-Sale Recharacterization Risk

The fundamental structural premise of the securitization is that the transfer of lease receivables from BRB to the Trust constitutes a "true sale" — i.e., a sale of assets that removes the receivables from BRB's estate in the event of BRB's insolvency or receivership. If a court or the OCC (acting as receiver) were to recharacterize the transfer as a secured loan rather than a true sale, the receivables would remain assets of BRB's estate, and the Trust's claim to the receivables would be subordinated to the claims of BRB's secured and unsecured creditors.

The true-sale analysis depends on a number of factors under applicable law, including:

(a) Whether the transfer was made for arm's-length consideration (i.e., reasonably equivalent value);

(b) Whether the transferor retains any meaningful recourse to the transferred assets (the absence of recourse supports true-sale treatment);

(d) Whether the transferor retains control over the transferred assets (the degree of ongoing servicer discretion);

(e) The economic substance of the transaction, viewed as a whole; and

INTERNAL DEAL MEMORANDUM
CONFIDENTIAL — ATTORNEY WORK PRODUCT / PRIVILEGED
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared for internal use only and should not be disclosed to any third party without the prior approval of the Responsible Partner.
PRIVILEGE NOTICE: This memorandum is protected by the attorney-client privilege and the work product doctrine. It has been prepared by Calderwood & Harkness LLP solely for internal use in connection with the representation of Belmont Ridge Bank, National Association. This memorandum contains mental impressions, conclusions, opinions, and legal theories of attorneys. It should not be disclosed, distributed, or made available to any third party — including the client, co-counsel, underwriter's counsel, or any transaction counterparty — without the prior written approval of Francesca Morano, Responsible Partner. Any inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.
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I. EXECUTIVE SUMMARY
Calderwood & Harkness LLP ("C&H" or the "Firm") has been engaged by Belmont Ridge Bank, National Association ("BRB" or the "Bank"), to advise on a proposed $48,000,000 tap issuance of additional Class A-2 Notes (the "Tap Notes") under the existing Belmont Ridge Equipment Trust 2024-A (the "Trust") shelf securitization program. The engagement was opened on February 13, 2024, following preliminary discussions between Francesca Morano and Derek Ashworth, Treasurer & Head of Capital Markets at BRB.
BRB is a New York-headquartered national banking association, chartered by the Office of the Comptroller of the Currency under OCC Charter No. 91-4428, with common shares listed on the New York Stock Exchange under the ticker symbol "BRBK." As of December 31, 2023, BRB reported total consolidated assets of approximately $14.7 billion. The Bank maintains an equipment lease portfolio of approximately $3.2 billion, primarily composed of small-ticket commercial leases secured by copiers, IT and networking equipment, medical devices, and light industrial equipment.
The Trust is a Delaware statutory trust formed on January 8, 2024, with Capitol Trust Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801, serving as registered agent. Keyline Trust Company, National Association serves as Owner Trustee. The shelf program is registered with the Securities and Exchange Commission under Registration Statement No. 333-276891, with the base prospectus filed on January 15, 2024.
The original Series 2024-A issuance closed on January 29, 2024, with a total issuance amount of $350,000,000, structured across two classes of notes:
• Class A-1 Notes: $130,000,000, floating rate, rated A-1+ by Pinnacle Ratings Group Inc. ("Pinnacle") and P-1 by Crestline Ratings International LLC ("Crestline"); and
• Class A-2 Notes: $220,000,000, fixed rate (5.78% coupon), rated AAA(sf) by Pinnacle and Aaa(sf) by Crestline.
The proposed tap issuance will add $48,000,000 of Class A-2 Notes bearing the same CUSIP (07839LAB3) and ISIN (US07839LAB36) as the original Class A-2 tranche. Upon settlement, the Tap Notes will be fully fungible with the outstanding Class A-2 Notes. Following the tap, total Class A-2 Notes outstanding will increase to $268,000,000, and total Series 2024-A outstanding will increase to $398,000,000.
The Tap Notes will be issued pursuant to Supplemental Indenture No. 2 to the Indenture dated January 29, 2024, among the Trust, BRB as Servicer, and Meridian Fiduciary Services, Inc. ("Meridian") as Indenture Trustee. Net proceeds of approximately $47,916,000 will be used by the Trust to acquire additional eligible equipment-lease receivables from BRB under the existing Sale and Servicing Agreement, as amended by Amendment No. 1.
The following key role assignments have been made within the C&H deal team:
• Francesca Morano — Responsible Partner
• Samuel Eklund — Billing Partner
• Carlos Espinoza — Lead Associate
• Hannah Brinkley — Working Associate
Estimated legal fees for C&H's engagement are capped at $185,000 on an hourly basis, consistent with the fee arrangement confirmed in the engagement letter dated February 15, 2024. All transaction documents are expected to be governed by the laws of the State of New York.
This memorandum sets forth the transaction structure, parties, collateral analysis, credit enhancement mechanics, key risks, timeline, scope of work, open issues, and our recommendation for proceeding.
II. PARTIES AND KEY CONTACTS
A. Issuer / Originator / Servicer — Belmont Ridge Bank, National Association
Full Legal Name: Belmont Ridge Bank, National Association
Entity Type: National banking association, chartered and supervised by the Office of the Comptroller of the Currency (OCC Charter No. 91-4428)
Headquarters: 600 Lexington Avenue, 32nd Floor, New York, NY 10022
NYSE Ticker: BRBK
Total Consolidated Assets (FY 2023): Approximately $14.7 billion, as reported in BRB's Annual Report on Form 10-K filed with the SEC on February 28, 2024.
Equipment Lease Portfolio (December 31, 2023): Approximately $3.2 billion. The portfolio is predominantly composed of small-ticket commercial lease receivables, including leases secured by copiers, IT and networking equipment, medical devices, and light industrial equipment. BRB has been active in the equipment leasing market for over fifteen years and has established a consistent origination and servicing track record.
Key Contacts:
Role in the Transaction: BRB serves in multiple capacities: (i) as the originator of the lease receivables being transferred to the Trust; (ii) as the sponsor and depositor of the securitization program; and (iii) as the servicer of the lease receivables under the Sale and Servicing Agreement dated January 29, 2024 (as to be amended by Amendment No. 1 in connection with the tap issuance). BRB's ongoing servicing obligations include billing, collections, administration of delinquent and defaulted leases, and reporting to the Indenture Trustee. BRB retains the residual interest in the Trust through its ownership of the trust certificate.
B. Issuing Entity — Belmont Ridge Equipment Trust 2024-A
Entity Type: Delaware statutory trust, formed under the Delaware Statutory Trust Act, 12 Del. C. §§ 3801 et seq.
Date of Formation: January 8, 2024
Trust Agreement: Executed January 22, 2024, between BRB (as Depositor) and Keyline Trust Company, National Association (as Owner Trustee)
Trust EIN: 88-4231957
Registered Agent: Capitol Trust Services LLC, 1209 Orange Street, Wilmington, DE 19801
Owner Trustee: Keyline Trust Company, National Association, 2100 Market Street, Suite 800, Philadelphia, PA 19103
The Trust was formed as a special-purpose, bankruptcy-remote entity for the sole purpose of acquiring, holding, and financing equipment-lease receivables originated by BRB. The Trust has no employees, no independent operations, and no assets other than the lease receivables, the related security interests, and funds on deposit in the trust accounts. The Trust Agreement contains customary limitations on the Trust's activities, including prohibitions on incurring additional indebtedness (other than as contemplated by the Indenture and any supplemental indentures), merging or consolidating with any other entity, or engaging in any business other than the securitization of lease receivables.
C. Indenture Trustee / Paying Agent / Calculation Agent / Note Registrar
Entity: Meridian Fiduciary Services, Inc.
Entity Type: Delaware corporation
Address: 101 Barclay Street, 12th Floor, New York, NY 10007
Key Contact: Andrea Castellano, Vice President, Structured Finance Trust Administration; (212) 555-7290; andrea.castellano@meridianfiduciary.com
Role: Meridian serves as Indenture Trustee, Paying Agent, Calculation Agent, and Note Registrar under the Indenture dated January 29, 2024. In connection with the tap issuance, Meridian will execute Supplemental Indenture No. 2, which authorizes the issuance of the $48,000,000 Tap Notes. Meridian also serves as the securities intermediary maintaining the Trust collection account and the reserve account. Meridian has confirmed its willingness to execute the Supplemental Indenture, subject to receipt and review of final documentation and customary conditions.
D. Lead Underwriter / Bookrunner
Entity: Ashford Capital Markets LLC
Entity Type: Delaware limited liability company; SEC-registered broker-dealer (CRD No. 284756)
Address: 383 Madison Avenue, 22nd Floor, New York, NY 10179
Key Contact: Julian Voss, Managing Director, ABS Syndicate; (212) 555-9144; julian.voss@ashfordcm.com
Role: Ashford Capital Markets LLC ("Ashford") will serve as sole bookrunner and lead underwriter for the tap issuance. Ashford also served as lead bookrunner on the original Series 2024-A issuance. Ashford has indicated preliminary investor demand from three institutional accounts (Northvale Asset Management LP, Summit Creek Capital Advisors LLC, and Iron Gate Insurance Company) with anticipated aggregate allocations of $48,000,000, matching the full tap amount. Ashford's underwriting discount is 30 basis points on par, totaling $144,000.
E. Rating Agencies
1. Pinnacle Ratings Group Inc.
Entity Type: Delaware corporation; registered as a Nationally Recognized Statistical Rating Organization (NRSRO) with the SEC
Address: 7 World Trade Center, 38th Floor, New York, NY 10006
Key Contact: Lisa Okoro, Senior Director, Structured Finance; (212) 555-3388; lisa.okoro@pinnacleratings.com
Assigned Rating: AAA(sf) on the Class A-2 Notes (original issuance and tap)
Pinnacle has been engaged to confirm the AAA(sf) rating on the Class A-2 Notes following the tap issuance. Preliminary discussions with Lisa Okoro indicate that Pinnacle expects to complete its review within approximately two weeks of receiving the final pool data tape and draft Supplemental Indenture. Pinnacle's fee for the tap review and ongoing surveillance is included in the combined rating agency fee of $75,000.
2. Crestline Ratings International LLC
Entity Type: Delaware limited liability company; registered as an NRSRO with the SEC
Address: 55 Water Street, Suite 3100, New York, NY 10041
Key Contact: Thomas Pratt, Vice President, ABS Ratings; (212) 555-6521; thomas.pratt@crestlineratings.com
Assigned Rating: Aaa(sf) on the Class A-2 Notes (original issuance and tap)
Crestline has similarly been engaged to confirm the Aaa(sf) rating on the Class A-2 Notes. Thomas Pratt has indicated that Crestline will require the updated pool data tape, the draft Supplemental Indenture, and the draft Amendment No. 1 to the Sale and Servicing Agreement for its review. Crestline's portion of the combined rating agency fee is included in the $75,000 estimate.
F. Counsel
1. Issuer's Counsel — Calderwood & Harkness LLP
Address: 250 Park Avenue, 40th Floor, New York, NY 10177
Team:
C&H serves as primary outside counsel to BRB and the Trust in connection with the tap issuance. C&H previously advised BRB on the original Series 2024-A issuance, and accordingly the deal team has substantial familiarity with the existing transaction documents, the collateral pool, and the relevant regulatory considerations. C&H's estimated fees for the tap issuance are capped at $185,000 on an hourly basis, as set forth in the engagement letter dated February 15, 2024.
2. Issuer's Delaware Counsel — Whitfield & Donahue LLP
Address: 1000 North King Street, Suite 500, Wilmington, DE 19801
Key Contact: Robert Whitfield, Partner; (302) 555-8800; rwhitfield@whitfielddonahue.com
Role: Whitfield & Donahue LLP will deliver Delaware-law opinion letters in connection with the tap issuance, including opinions as to (i) the true-sale characterization of the transfer of lease receivables from BRB to the Trust, (ii) the enforceability of the Trust Agreement and related trust documents, and (iii) the non-consolidation of the Trust's assets with BRB's estate in the event of BRB's insolvency. Whitfield & Donahue's fee is a flat $25,000 for the tap issuance opinion work.
3. Underwriter's Counsel — Hargrove, Sato & Chen LLP
Address: 1585 Broadway, 28th Floor, New York, NY 10036
Key Contact: Nina Hargrove, Partner, Structured Finance; (212) 555-4400; nhargrove@hargrovesatochen.com
Role: Hargrove, Sato & Chen LLP ("HSC") serves as counsel to Ashford Capital Markets LLC in connection with the tap issuance. HSC will conduct a due diligence review of the transaction documents, negotiate the Underwriting Agreement and the Prospectus Supplement, and deliver customary underwriter's counsel opinions at closing. HSC's estimated fees are approximately $95,000 on an hourly basis.
G. Independent Accountants
Entity: Velthorn Accounting Group LLP
Address: 345 Hudson Street, 14th Floor, New York, NY 10014
Key Contact: Angela Ferris, Audit Partner; (212) 555-7700; aferris@greylockaccounting.com
Role: Velthorn will provide (i) an agreed-upon procedures letter ("AUP") in respect of pool-level data, including verification of the aggregate discounted receivable balance, weighted-average terms, and equipment-type stratification disclosed in the Prospectus Supplement; and (ii) a comfort letter to Ashford with respect to BRB's financial information included or incorporated by reference in the Prospectus Supplement. Velthorn's fee for the tap issuance is a flat $40,000.
H. Back-Up Servicer
Entity: Redwood Servicing Solutions LLC
Address: 500 West Monroe Street, Suite 3600, Chicago, IL 60661
Key Contact: Patricia Hahn, SVP, Backup Servicing; (312) 555-2900; phahn@redwoodservicing.com
Role: Redwood serves as Back-Up Servicer under the Back-Up Servicing Agreement dated January 29, 2024. Redwood receives monthly data tapes from BRB reflecting the composition and performance of the lease pool and maintains the systems capability to assume primary servicing functions upon the occurrence of a servicer termination event under the Sale and Servicing Agreement. Redwood's fee is $7,500 per month ($90,000 per year), payable as an operating expense of the Trust.
I. Anticipated Investors (Initial Purchasers of Tap Notes)
Based on preliminary indications of interest received by Ashford, the anticipated initial purchasers and their expected allocations are as follows:
These allocations are preliminary and subject to final confirmation by Ashford following the marketing period and pricing. All three investors are believed to be qualified institutional buyers ("QIBs") within the meaning of Rule 144A under the Securities Act, though the Tap Notes will be offered pursuant to the effective shelf registration and sold in a registered public offering. Final investor suitability determinations are the responsibility of Ashford.
III. TRANSACTION STRUCTURE
A. Overview of Tap Mechanism
The proposed tap issuance is structured as an additional issuance of Class A-2 Notes under the existing Series 2024-A indenture framework. The tap mechanism is expressly contemplated by Section 2.13 of the Indenture dated January 29, 2024 (the "Original Indenture"), which permits the Trust to issue additional notes of any existing class, subject to specified conditions including: (i) execution of a supplemental indenture; (ii) receipt of rating agency confirmations from each rating agency then rating the affected class; (iii) satisfaction of collateral coverage and credit enhancement requirements; and (iv) delivery of officer's certificates and legal opinions.
The Tap Notes will be authorized and issued pursuant to Supplemental Indenture No. 2, to be entered into among the Trust, BRB as Servicer, and Meridian as Indenture Trustee. Supplemental Indenture No. 1 was previously executed on January 29, 2024, in connection with the original Series 2024-A issuance and is not implicated by the current tap.
Upon issuance, the Tap Notes will bear the same CUSIP (07839LAB3) and ISIN (US07839LAB36) as the original Class A-2 Notes and will be fully fungible with the original tranche. From a clearing and settlement perspective, the Tap Notes will be consolidated with the existing Class A-2 Notes held through The Depository Trust Company ("DTC") and will participate pari passu in all payments of interest and principal on the Class A-2 Notes. There will be no distinction between original Class A-2 Notes and Tap Notes for purposes of the payment waterfall, voting, or any other rights under the Indenture.
The Tap Notes represent an incremental $48,000,000 added to the original $220,000,000 Class A-2 tranche, bringing total Class A-2 Notes outstanding to $268,000,000. Combined with the $130,000,000 Class A-1 Notes (which remain outstanding and unaffected by the tap), total Series 2024-A notes outstanding will increase from $350,000,000 to $398,000,000.
The tap mechanism is a well-established technique in equipment-lease ABS and other asset-backed securitizations, offering significant execution efficiency relative to a de novo issuance. By utilizing the existing trust structure, indenture framework, shelf registration, and rating agency relationships, the tap avoids the time and expense associated with forming a new trust, obtaining new ratings, drafting a full prospectus, and conducting an extended marketing process.
B. Key Economic Terms
The following table summarizes the key economic terms of the Tap Notes:
The issue price of 100.125% reflects secondary market tightening in equipment-lease ABS spreads since the original pricing in late January 2024. The original Class A-2 Notes were priced at par (100.000%) on January 29, 2024. The 12.5-basis-point premium on the Tap Notes results in a modest yield give-up relative to the stated coupon of 5.78%, producing an effective yield to weighted-average life of approximately 5.74%. This pricing is consistent with the current secondary trading levels of the outstanding Class A-2 Notes and reflects constructive demand from the anticipated investor base.
The 210-basis-point spread over the interpolated three-year SOFR swap rate is competitive with recent comparable equipment-lease ABS issuances in the AAA(sf)/Aaa(sf) space. Derek Ashworth has indicated that BRB views this pricing as attractive in the current rate environment and supports execution at these levels.
C. Use of Proceeds
Net proceeds from the Tap Notes, totaling $47,916,000, will be used by the Trust to purchase additional eligible equipment-lease receivables from BRB under the existing Sale and Servicing Agreement, as amended by Amendment No. 1. The additional lease pool (the "Tap Pool") has an aggregate discounted receivable balance of $49,344,000. The purchase price for the Tap Pool receivables will equal the net proceeds available to the Trust following payment of the underwriting discount.
The excess of the Tap Pool's aggregate discounted receivable balance over the Tap Notes' par amount provides initial overcollateralization of $1,344,000, representing approximately 2.72% of the tap tranche par amount. This initial OC, combined with excess spread generated by the Tap Pool receivables and the existing OC and reserve account balances attributable to the original issuance, will contribute to the combined credit enhancement structure described in Section V below.
BRB has represented to us that the Tap Pool receivables have been identified, segregated, and are currently held on BRB's balance sheet pending closing of the tap issuance. The receivables are subject to the same eligibility criteria established in the original Sale and Servicing Agreement, and BRB will deliver a schedule of the Tap Pool receivables, together with a representation and warranty certificate, at or prior to closing.
D. Key Transaction Documents
The following principal transaction documents will be prepared, negotiated, and/or executed in connection with the tap issuance:
1. Supplemental Indenture No. 2. This instrument supplements the Indenture dated January 29, 2024, and authorizes the issuance of the $48,000,000 Tap Notes. The parties to the Supplemental Indenture are the Trust (as Issuer), BRB (as Servicer), and Meridian (as Indenture Trustee). The Supplemental Indenture will, among other things, (i) specify the terms of the Tap Notes (par amount, issue price, CUSIP, first payment date, and related settlement mechanics), (ii) confirm the fungibility of the Tap Notes with the original Class A-2 Notes, (iii) adjust the credit enhancement calculations (OC and reserve triggers) to reflect the increased aggregate note balance, and (iv) include representations and conditions precedent to issuance, including receipt of rating agency confirmations and officer's certificates.
2. Amendment No. 1 to the Sale and Servicing Agreement. This amendment to the Sale and Servicing Agreement dated January 29, 2024, among BRB (as Originator and Servicer), the Trust, and Meridian (as Indenture Trustee), will (i) add the Tap Pool receivables to the portfolio of lease receivables owned by the Trust, (ii) adjust the overcollateralization and reserve account triggers and target levels to reflect the post-tap aggregate note balance, and (iii) include updated representations, warranties, and covenants of BRB with respect to the Tap Pool receivables.
3. Underwriting Agreement. This agreement between the Trust, BRB (as Servicer), and Ashford Capital Markets LLC will govern the terms of the offering and sale of the Tap Notes, including the underwriting discount, representations and warranties of the Trust and BRB, conditions to closing, indemnification provisions, and termination rights of the underwriter. C&H will prepare the initial draft and negotiate with HSC, counsel to Ashford.
4. Prospectus Supplement. The Prospectus Supplement will be prepared as a supplement to the base prospectus filed on January 15, 2024, under Registration Statement No. 333-276891. The supplement will describe the Tap Notes, the Tap Pool, the amended credit enhancement structure, and risk factors specific to the tap issuance. The Prospectus Supplement will be filed with the SEC under Rule 424(b)(5) within two business days after pricing. C&H will coordinate the drafting process with BRB, Ashford, and Velthorn.
In addition to the foregoing, certain ancillary documents will be required at closing, including officer's and secretary's certificates, good standing certificates, opinion letters, rating agency confirmations, the comfort letter and AUP from Velthorn, and bring-down certifications. These items are addressed in greater detail in Section IX below.
IV. COLLATERAL POOL ANALYSIS (TAP ADDITION)
A. Pool Statistics
The Tap Pool consists of 1,247 individual equipment-lease contracts originated by BRB. Based on the preliminary pool data tape provided by Priya Ranganathan on February 28, 2024, the key characteristics of the Tap Pool are as follows:
The average discounted balance per lease of approximately $39,570 is consistent with BRB's small-ticket commercial leasing platform and is in line with the original Series 2024-A collateral pool, which had an average discounted balance of approximately $41,200 per lease at the time of the original closing. The granularity of the pool — with 1,247 contracts and no single obligor representing more than approximately 0.43% of the total pool balance — provides meaningful diversification and limits the impact of any single obligor default on overall pool performance.
B. Equipment Type Stratification
The Tap Pool receivables are secured by the following categories of equipment:
The equipment-type distribution is broadly consistent with BRB's overall $3.2 billion equipment lease portfolio and with the original Series 2024-A collateral pool. IT and networking equipment represents the largest single category at 34.2% of the pool. As discussed in Section VI.C below, IT and networking equipment is subject to relatively rapid technological obsolescence, which can affect residual values and recovery rates in the event of default and repossession. Medical devices, the second-largest category at 22.7%, generally exhibit more stable residual value characteristics due to longer useful lives and regulatory barriers to entry that support aftermarket demand.
C. Geographic Concentration
The Tap Pool receivables are geographically diversified across the United States, with the following top-five state concentrations by discounted receivable balance:
No single state accounts for more than 14.8% of the pool, and the top five states collectively account for approximately 49.7% of the total pool balance. The geographic distribution is broadly reflective of BRB's nationwide origination footprint and is consistent with the distribution of commercial activity across the United States. The concentration in New York is somewhat elevated relative to the national average but is expected given BRB's New York headquarters and established commercial relationships in the tri-state area.
D. Observations on Pool Quality
Based on our preliminary review of the pool data tape and the summary statistics set forth above, we offer the following observations regarding the quality and risk profile of the Tap Pool:
Diversification. The Tap Pool is well-diversified by obligor, equipment type, and geography. With 1,247 lease contracts and no single obligor exceeding approximately 0.43% of the pool balance, the pool exhibits the granular, homogeneous characteristics typical of small-ticket commercial lease portfolios. The top ten obligors collectively represent only 4.3% of the total pool balance, providing substantial protection against concentrated credit exposure.
Seasoning. The weighted-average seasoning of the Tap Pool is 5.8 months, indicating that the receivables are relatively recently originated. While this modest seasoning means that the leases have a limited payment history, it also means that the receivables have a longer remaining term over which to generate cash flows. However, as noted in Section VI.C below, the early period of a lease's life is typically the period of highest default risk, and the limited seasoning requires that we monitor early-period performance closely. BRB has provided historical performance data on its broader equipment lease portfolio, which indicates that the majority of lease defaults occur within the first 12 months of origination, with default rates declining materially after the initial seasoning period.
Excess Spread. The weighted-average implicit lease rate of 7.14% provides meaningful excess spread above the Class A-2 Note coupon of 5.78% and the servicing fee of 0.50%, resulting in annualized excess spread of approximately 0.86%. This excess spread serves as the first line of credit enhancement and is the primary mechanism for building the overcollateralization cushion to the 4.50% target level.
Consistency with Broader Portfolio. The equipment-type mix, geographic distribution, and obligor concentration characteristics of the Tap Pool are broadly consistent with BRB's overall $3.2 billion equipment lease portfolio and with the original Series 2024-A collateral pool. This consistency provides comfort that BRB has not engaged in adverse selection in assembling the Tap Pool.
V. CREDIT ENHANCEMENT STRUCTURE (POST-TAP)
The credit enhancement structure for the Series 2024-A Notes, as adjusted for the tap issuance, consists of three primary components: overcollateralization, the reserve account, and excess spread. Each is described in detail below.
A. Overcollateralization
The Indenture establishes an overcollateralization target of 4.50% of the aggregate outstanding note balance. Following the tap issuance, the aggregate note balance will increase from $350,000,000 to $398,000,000, and the OC target amount will increase accordingly:
• OC Target Rate: 4.50% of aggregate note balance
• Post-Tap Aggregate Note Balance: $398,000,000
• Post-Tap OC Target Amount: $398,000,000 × 4.50% = $17,910,000
The initial overcollateralization from the Tap Pool alone is $1,344,000, calculated as the difference between the aggregate discounted receivable balance of the Tap Pool ($49,344,000) and the par amount of the Tap Notes ($48,000,000). This represents approximately 2.72% of the Tap Notes' par amount. The initial OC from the Tap Pool, when combined with the existing OC attributable to the original issuance, must be sufficient to meet the post-tap OC target of $17,910,000. To the extent that the combined OC is below the target level following the tap closing, the payment waterfall will trap excess spread and redirect it to build OC until the target is achieved.
The overcollateralization mechanism operates through the monthly payment waterfall. After payment of senior fees, the servicing fee, note interest, and scheduled note principal, any remaining collections are applied to build OC to the target level before any residual distributions are released to BRB as holder of the trust certificate. If cumulative net losses on the collateral pool exceed available excess spread, the OC cushion will absorb losses; if OC falls below a specified floor (typically set at a level below the target), the waterfall redirects additional cash to rebuild OC, and distributions to BRB are suspended until the floor is restored.
B. Reserve Account
The Series 2024-A structure includes a cash reserve account maintained by Meridian as Indenture Trustee. The reserve account is sized at 1.00% of the aggregate outstanding note balance:
• Reserve Rate: 1.00% of aggregate note balance
• Post-Tap Reserve Amount: $398,000,000 × 1.00% = $3,980,000
The reserve account was initially funded at closing of the original issuance in the amount of $3,500,000 (1.00% × $350,000,000). In connection with the tap issuance, the reserve account will need to be topped up by $480,000 ($3,980,000 − $3,500,000) to reach the required post-tap level. The source of the top-up will need to be confirmed with BRB and reflected in the Supplemental Indenture and Amendment No. 1 — it may be funded from trust cash flows, from a deposit by BRB, or from the tap closing proceeds. This is identified as an open item in Section X below.
The reserve account provides liquidity support to cover shortfalls in interest payments on the notes in the event of temporary cash flow disruptions, such as collection delays or servicer transition events. The reserve account is drawn upon only after available collections have been applied in the waterfall and are insufficient to cover required payments. If drawn, the reserve account is replenished from excess spread through the waterfall before residual distributions are released to BRB.
C. Excess Spread
Excess spread is the difference between the yield generated by the collateral pool and the costs of the transaction, including the note coupon and the servicing fee. For the Tap Pool, the estimated annualized excess spread is calculated as follows:
• WA Implicit Lease Rate: 7.14%
• Class A-2 Note Coupon: 5.78%
• Servicing Fee: 0.50%
• Annualized Excess Spread: 7.14% − 5.78% − 0.50% = 0.86%
This calculation does not account for the Class A-1 Notes (which are floating-rate and are not directly affected by the tap), trust administration expenses, or the back-up servicer fee, all of which are paid senior in the waterfall. On a blended basis across the entire Series 2024-A collateral pool, the excess spread will depend on the weighted-average yield of the combined pool and the blended cost of funds across both classes of notes.
Excess spread serves as the first-loss credit enhancement for the transaction. In each monthly period, excess spread is applied in the waterfall to build OC to the target level and to replenish the reserve account. Only after OC and the reserve account are at their required levels is excess spread released to BRB as residual. In periods when net losses on the collateral pool exceed the available excess spread, the excess spread is entirely absorbed, and losses begin to erode the OC cushion.
The 0.86% annualized excess spread on the Tap Pool, while adequate for the current credit enhancement structure, is relatively modest by historical standards for small-ticket equipment-lease ABS. Any deterioration in pool performance — whether due to elevated defaults, increased prepayments that reduce the weighted-average implicit lease rate, or rising servicing costs — could reduce the available excess spread and slow the pace of OC build-up. We recommend that the deal team monitor the monthly servicer reports for trends in excess spread levels following the tap closing.
D. Structural Features
The Series 2024-A credit enhancement structure incorporates the following additional structural features:
Single-A-Class Structure. The Class A Notes (both A-1 and A-2) do not benefit from subordination — there are no junior or mezzanine classes of notes in the Series 2024-A structure. Credit support for the Class A Notes is provided solely by the combination of overcollateralization, the reserve account, and excess spread. This single-A-class structure is common in small-ticket equipment-lease ABS transactions where the granularity of the collateral pool provides natural diversification and limits tail risk.
Sequential Amortization. Principal payments on the Class A Notes are made sequentially, with the Class A-1 Notes receiving all scheduled and unscheduled principal until paid in full, followed by the Class A-2 Notes. This sequential structure provides de facto time-tranching between the two classes, with the Class A-1 Notes (shorter-duration, floating-rate) paying down first and the Class A-2 Notes (longer-duration, fixed-rate) paying down thereafter.
Monthly Payment Waterfall. Collections on the collateral pool are distributed monthly on each payment date (the 15th of each month) in accordance with the following priority:
(i) Trustee fees and expenses (Meridian);
(ii) Servicing fee (0.50% per annum, payable to BRB as Servicer);
(iii) Back-up servicer fee ($7,500/month, payable to Redwood);
(iv) Interest on the Class A-1 Notes (pro rata);
(v) Interest on the Class A-2 Notes (pro rata);
(vi) Principal on the Class A-1 Notes (until paid in full);
(vii) Principal on the Class A-2 Notes (until paid in full);
(viii) Overcollateralization build-up (to 4.50% target);
(ix) Reserve account replenishment (to 1.00% target);
(x) Residual distributions to BRB (as holder of the trust certificate).
Trigger Events. The Indenture establishes certain performance triggers that alter the waterfall in the event of collateral pool deterioration. If the cumulative net loss rate exceeds specified thresholds, or if OC falls below its required floor, the waterfall redirects excess spread to accelerate OC build-up and suspends residual distributions to BRB. The specific trigger levels are set forth in the Indenture and will be confirmed in Supplemental Indenture No. 2 for the post-tap aggregate note balance.
VI. KEY RISK ANALYSIS
This section identifies and analyzes the principal legal and structural risks associated with the tap issuance. The risks discussed below are not exhaustive but represent the areas that the C&H deal team has identified as most relevant to our advisory role and to the overall credit quality of the transaction.
A. Commingling Risk
BRB, in its capacity as Servicer, collects lease payments from obligors into its own operating accounts prior to remittance to the Trust collection account maintained by Meridian. This collection and remittance process creates commingling risk — the risk that, in the event of BRB's insolvency or receivership, lease collections attributable to the Trust could become commingled with BRB's general assets and subject to the claims of BRB's creditors or the receiver.
The Sale and Servicing Agreement addresses commingling risk through a two-business-day remittance requirement, pursuant to which BRB is obligated to transfer collected lease payments to the Trust collection account at Meridian within two business days of receipt. The Trust collection account is an eligible deposit account maintained at Meridian Fiduciary Services, Inc., and is subject to the control of the Indenture Trustee for the benefit of the noteholders.
The two-business-day remittance period limits the maximum exposure to commingling risk at any given time to approximately two days' worth of collections. Based on the post-tap aggregate discounted receivable balance and the weighted-average implicit lease rate, the estimated daily collection amount is relatively modest, and the potential commingling exposure is within the parameters assumed by the rating agencies in their credit enhancement analysis.
Action Item: We must confirm that Amendment No. 1 to the Sale and Servicing Agreement does not modify the two-business-day remittance period. Any extension of the remittance period could increase commingling exposure and may require additional credit enhancement or rating agency review. Hannah Brinkley will review the draft Amendment No. 1 against the original Sale and Servicing Agreement to confirm this point.
B. Servicer Default Risk
BRB serves as both originator and servicer of the lease receivables, creating concentration risk in a single entity. The performance of the transaction depends critically on BRB's ongoing ability to service the collateral pool — billing obligors, collecting payments, administering delinquent accounts, pursuing recoveries on defaulted leases, and providing accurate and timely reporting to the Indenture Trustee and noteholders.
The Sale and Servicing Agreement establishes a set of servicer default triggers, the occurrence of which would entitle the Indenture Trustee (acting at the direction of the requisite noteholders) to terminate BRB as Servicer and appoint a successor. These triggers include:
(a) Failure by BRB to remit collected funds to the Trust collection account within the required remittance period;
(b) The commencement of a bankruptcy, insolvency, receivership, or conservatorship proceeding with respect to BRB;
(c) A material breach by BRB of its servicing obligations that remains uncured after the applicable notice and cure period; and
(d) A material adverse change in BRB's financial condition that, in the reasonable judgment of the Indenture Trustee, impairs BRB's ability to perform its servicing obligations.
To mitigate the risk of a servicer disruption, the Trust has engaged Redwood Servicing Solutions LLC as Back-Up Servicer. Redwood receives monthly data tapes from BRB reflecting the composition and performance of the lease pool, maintains systems capable of processing lease payments and generating obligor communications, and can assume primary servicing functions upon the occurrence of a servicer termination event. Redwood's fee of $7,500 per month ($90,000 per year) is payable as an operating expense of the Trust, senior in the waterfall to note interest and principal.
Risk Assessment: BRB's status as an OCC-chartered national bank with approximately $14.7 billion in total assets provides a measure of institutional stability and regulatory oversight. National banks are subject to comprehensive supervision by the OCC, including regular safety-and-soundness examinations and capital adequacy requirements. The likelihood of a sudden servicing disruption is lower for a regulated national bank than for a non-bank originator or servicer. However, reliance on a single entity for both origination and servicing remains a rating-sensitive factor. The rating agencies have evaluated this concentration in their credit analysis and have factored the availability of the Back-Up Servicer into their rating determinations.
We should confirm with Redwood the specific transition period within which Redwood is contractually obligated to assume full servicing responsibilities following a servicer termination event. The Back-Up Servicing Agreement specifies this period, and any delay in transition could result in temporary disruptions to collections and reporting.
C. Overcollateralization Erosion Scenarios
The OC target of 4.50% of the aggregate note balance ($17,910,000 post-tap) must be maintained on an ongoing basis to support the AAA(sf)/Aaa(sf) ratings on the Class A-2 Notes. Overcollateralization is built through the trapping of excess spread in the waterfall and is eroded when cumulative net losses on the collateral pool exceed available excess spread.
Several scenarios could lead to OC erosion and potential stress on the credit enhancement structure:
Elevated Defaults on Newly Originated Leases. As noted in Section IV.D above, the Tap Pool has a weighted-average seasoning of only 5.8 months. Historical data from BRB's equipment lease portfolio indicates that default rates are highest during the first 12 months of a lease's term. To the extent that the Tap Pool experiences elevated early-period defaults, the available excess spread may be insufficient to absorb losses while simultaneously building OC to the target level.
Residual Value Risk. While the Series 2024-A collateral pool consists of lease receivables (i.e., the contractual payment streams) rather than residual values, early terminations of leases — whether through voluntary prepayment, default, or obligor bankruptcy — can affect the Trust's recovery on the underlying equipment. Recovery rates on repossessed equipment depend on the equipment's condition, age, and market demand. Rapid depreciation or obsolescence of the underlying equipment reduces recoverable amounts and increases net loss severity.
Equipment Obsolescence Risk (IT/Networking). IT and networking equipment, which represents 34.2% of the Tap Pool, is particularly susceptible to technological obsolescence. Product cycles in the IT sector are typically shorter than for medical devices or light industrial equipment, and aftermarket values for IT equipment can decline rapidly as new generations of technology are introduced. This obsolescence risk is a key consideration in the rating agencies' recovery rate assumptions and loss severity models.
Trigger Events and Cash Trapping. The Indenture establishes performance triggers that alter the waterfall priority in the event of OC erosion. If OC falls below a specified floor level (typically set at a level below the target, such as 3.00% of the aggregate note balance), the waterfall redirects all available excess spread to rebuild OC before releasing any residual distributions to BRB. These trigger mechanisms are designed to preserve credit enhancement during periods of stress. However, in a severe stress scenario, even full cash trapping may be insufficient to prevent further OC erosion if net losses persistently exceed excess spread.
D. True-Sale Recharacterization Risk
The fundamental structural premise of the securitization is that the transfer of lease receivables from BRB to the Trust constitutes a "true sale" — i.e., a sale of assets that removes the receivables from BRB's estate in the event of BRB's insolvency or receivership. If a court or the OCC (acting as receiver) were to recharacterize the transfer as a secured loan rather than a true sale, the receivables would remain assets of BRB's estate, and the Trust's claim to the receivables would be subordinated to the claims of BRB's secured and unsecured creditors.
The true-sale analysis depends on a number of factors under applicable law, including:
(a) Whether the transfer was made for arm's-length consideration (i.e., reasonably equivalent value);
(b) Whether the transferor retains any meaningful recourse to the transferred assets (the absence of recourse supports true-sale treatment);
(c) The stated intention of the parties as reflected in the transaction documents;
(d) Whether the transferor retains control over the transferred assets (the degree of ongoing servicer discretion);
(e) The economic substance of the transaction, viewed as a whole; and
(f) Whether the transfer is reflected as a sale on the transferor's books and records and in its financial statements.
Whitfield & Donahue LLP will deliver a true-sale opinion under Delaware law in connection with the tap issuance, opining that the transfer of the Tap Pool receivables from BRB to the Trust would be respected as a sale and not recharacterized as a loan in the event of BRB's insolvency or receivership. Robert Whitfield, the partner responsible for the opinion, also delivered the true-sale opinion in connection with the original Series 2024-A closing. Whitfield & Donahue's flat fee for the tap issuance opinion work is $25,000.
C&H Action Item: Calderwood & Harkness will review the sale mechanics set forth in Amendment No. 1 to the Sale and Servicing Agreement to confirm that the transfer of the Tap Pool receivables is structured consistently with the original sale and that no new features have been introduced that could undermine the true-sale analysis. In particular, we will confirm that BRB does not retain any repurchase option, recourse obligation, or other interest in the transferred receivables that is inconsistent with sale treatment, other than the customary representations-and-warranties repurchase obligation.
E. Regulatory Considerations
BRB, as a national banking association regulated by the OCC (Charter No. 91-4428), is subject to a comprehensive regulatory framework that affects its ability to engage in securitization transactions and determines the capital treatment of the transferred assets.
Capital Treatment. The securitization must comply with the OCC's risk-based capital rules, which determine whether the transfer of lease receivables to the Trust achieves off-balance-sheet treatment for regulatory capital purposes. If the transfer is treated as a true sale for accounting and regulatory purposes, BRB removes the transferred receivables from its risk-weighted assets and is no longer required to hold capital against them. However, BRB retains capital exposure to the extent of its retained interest in the Trust (the trust certificate representing the residual interest). BRB must confirm with its internal capital-planning group that the tap issuance achieves the intended capital relief and that the retained interest is appropriately risk-weighted.
OCC Non-Objection. Depending on the OCC's supervisory policies and any prior commitments or conditions imposed in connection with the original Series 2024-A issuance, the OCC may require prior notification or non-objection before BRB proceeds with the tap issuance. This is particularly the case if the tap is deemed a "material expansion" of BRB's securitization program. BRB's regulatory team should confirm whether an OCC filing or notification is required and, if so, the applicable timeline. This is identified as an open item in Section X below.
SEC Registration and Disclosure. The Tap Notes will be issued under the existing shelf registration (Registration Statement No. 333-276891), with a Prospectus Supplement to be filed under Rule 424(b)(5) within two business days after pricing. The Prospectus Supplement must comply with the SEC's disclosure requirements for asset-backed securities, including the requirements of Regulation AB II (17 C.F.R. §§ 229.1100–229.1125).
Regulation AB II — Asset-Level Disclosure. Under Regulation AB II, BRB is required to file asset-level data on Form ABS-EE with the SEC in connection with the tap issuance. Form ABS-EE requires detailed loan-level (or lease-level) data for each receivable in the collateral pool, including obligor information (anonymized), lease terms, payment history, and equipment characteristics. The filing must be made within 15 calendar days after the initial bona fide offer of the securities. BRB's structured finance team (Priya Ranganathan) should be coordinating with Velthorn and C&H to prepare the Form ABS-EE filing.
F. Fungibility and Market Risk
The Tap Notes will be issued at 100.125% of par, reflecting a 12.5-basis-point premium relative to the original Class A-2 Notes, which were priced at par on January 29, 2024. The premium issue price reflects secondary market tightening in equipment-lease ABS spreads since the original pricing and is designed to produce a yield on the Tap Notes that is consistent with the current secondary market trading level of the original Class A-2 Notes.
The original coupon of 5.78% per annum will be maintained on the Tap Notes. Investors purchasing the Tap Notes at the premium price of 100.125% will receive a slightly lower effective yield of approximately 5.74% to the weighted-average life, reflecting the amortization of the premium over the expected life of the notes.
Fungibility of the Tap Notes with the original Class A-2 tranche is confirmed by the assignment of the same CUSIP (07839LAB3) and ISIN (US07839LAB36). Upon settlement, the Tap Notes will be consolidated with the existing Class A-2 Notes in DTC and will trade and settle as a single class. There will be no distinction between original notes and Tap Notes in the secondary market, and all Class A-2 Notes will be entitled to the same payments and exercise the same rights under the Indenture.
Market Risk Observation: In the event of a material widening of ABS spreads between the pricing date and the settlement date, the Tap Notes could trade below the issue price in the secondary market. This spread risk is borne by the initial purchasers (Northvale, Summit Creek, and Iron Gate) and by Ashford as underwriter to the extent of any unsold allocation. However, the relatively short settlement period (approximately three to four weeks after pricing) and the pre-placed nature of the allocation (all $48,000,000 committed to identified investors) significantly mitigate this risk.
VII. DEAL TIMELINE
The following table sets forth the key dates and milestones for the tap issuance, including both completed events and anticipated target dates:
Note: The original target closing date is May 10, 2024. The actual closing date may shift depending on several factors, including: (i) the timing of rating agency confirmations from Pinnacle and Crestline, which may require additional diligence or analysis beyond the standard two-week review period; (ii) the completion of investor allocation and documentation with Northvale, Summit Creek, and Iron Gate; (iii) the finalization of transaction document negotiations with Meridian (as to the Supplemental Indenture) and HSC (as to the Underwriting Agreement and Prospectus Supplement); and (iv) any OCC notification or non-objection requirements, the timeline for which is not yet confirmed. We will maintain close coordination with Derek Ashworth and Priya Ranganathan at BRB and with Julian Voss at Ashford to monitor progress against the target timeline and to escalate any potential delays promptly.
VIII. FEE SUMMARY AND DEAL ECONOMICS
A. Transaction Costs
The estimated transaction costs for the tap issuance are summarized in the following table:
These cost estimates are based on preliminary discussions with transaction counterparties and on C&H's experience with comparable tap issuances. Actual costs may vary, particularly with respect to the hourly-based legal fees for C&H and HSC, which will depend on the complexity of document negotiations and the extent of any issues that arise during the closing process. C&H's fees are subject to the $185,000 cap established in the engagement letter.
B. Cost Efficiency Observations
Total estimated deal costs of $594,500 represent approximately 1.24% of the $48,000,000 par issuance amount. While not insignificant in absolute terms, this cost level represents a substantial saving relative to the estimated costs of a de novo securitization. A new-issue equipment-lease ABS transaction of comparable size would typically involve materially higher costs, including:
• Formation of a new Delaware statutory trust, including drafting of a new trust agreement and related organizational documents;
• Preparation and SEC filing of a new shelf registration statement and base prospectus;
• Engagement of rating agencies for a full initial rating analysis (rather than a tap review and confirmation);
• Drafting of a complete indenture, sale and servicing agreement, and back-up servicing agreement from scratch;
• Extended investor marketing and road show; and
• Additional regulatory filings and diligence costs.
By utilizing the existing trust structure, indenture framework, shelf registration, and established rating agency and investor relationships, the tap mechanism avoids the majority of these costs and significantly compresses the execution timeline. The tap approach is a cost-effective capital markets execution for BRB and represents an efficient use of the Series 2024-A platform.
Ongoing Servicing Costs. In addition to the one-time transaction costs summarized above, the Trust incurs ongoing costs associated with the administration of the collateral pool, including:
• BRB Servicing Fee: 0.50% per annum on the outstanding pool balance, payable monthly as a senior expense in the waterfall.
• Back-Up Servicer Fee: $7,500 per month ($90,000 per year), payable to Redwood Servicing Solutions LLC, also senior in the waterfall.
• Trustee Fees: Annual trustee fees payable to Meridian (incremental fee of $12,500 per year for the tap, in addition to the base fee established under the original Indenture).
These ongoing costs reduce the excess spread available to build credit enhancement and must be factored into the analysis of the transaction's long-term economic performance.
IX. CALDERWOOD & HARKNESS SCOPE OF WORK AND DELIVERABLES
This section outlines C&H's scope of work in connection with the tap issuance, including the principal transaction documents to be drafted or negotiated, opinion letters to be delivered, certificates and closing deliverables to be prepared, and closing administration responsibilities.
A. Transaction Documents to Be Drafted / Negotiated
C&H will be responsible for drafting, negotiating, and finalizing the following principal transaction documents:
1. Supplemental Indenture No. 2. C&H will prepare the initial draft of the Supplemental Indenture, which will supplement the Indenture dated January 29, 2024, and authorize the issuance of the Tap Notes. The Supplemental Indenture will be negotiated with Meridian (as Indenture Trustee) and HSC (on behalf of Ashford as underwriter). Key provisions to be addressed include the terms of the Tap Notes, conditions precedent to issuance, adjustments to credit enhancement targets and triggers, representations and warranties, and the mechanics of fungibility and DTC settlement.
2. Amendment No. 1 to the Sale and Servicing Agreement. C&H will prepare the initial draft of Amendment No. 1, which will amend the Sale and Servicing Agreement dated January 29, 2024, to add the Tap Pool receivables to the Trust's collateral portfolio. The amendment will include updated schedules of eligible receivables, adjusted OC and reserve account targets, and any necessary conforming changes to the servicing provisions and reporting requirements.
3. Underwriting Agreement. C&H will prepare the initial draft of the Underwriting Agreement between the Trust, BRB (as Servicer), and Ashford Capital Markets LLC. The agreement will set forth the terms and conditions of the underwriting, including the underwriting discount, representations and warranties of the Trust and BRB, conditions to closing, indemnification and contribution provisions, and the underwriter's termination rights (market-out, force majeure, and material adverse change). The Underwriting Agreement will be negotiated with HSC on behalf of Ashford.
4. Prospectus Supplement. C&H will prepare the initial draft of the Prospectus Supplement, which will supplement the base prospectus filed on January 15, 2024, under Registration Statement No. 333-276891. The Prospectus Supplement will describe the Tap Notes, the Tap Pool (including the collateral characteristics set forth in Section IV above), the amended credit enhancement structure, risk factors specific to the tap issuance, and the use of proceeds. C&H will coordinate the drafting process with BRB (for the pool data and financial information), Ashford (for the marketing and distribution sections), and Velthorn (for the financial data verification). The Prospectus Supplement will be filed with the SEC under Rule 424(b)(5) within two business days after pricing.
B. Opinion Letters
C&H will prepare and deliver the following opinion letters at closing:
1. Issuer's Counsel Opinion. C&H will deliver a closing opinion letter addressed to the Trust, BRB, Ashford, and Meridian, providing (i) a 10b-5 negative assurance letter to the effect that, based on our participation in the preparation of the Prospectus Supplement, nothing has come to our attention that causes us to believe that the Prospectus Supplement contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) an enforceability opinion with respect to the Supplemental Indenture, the Amendment to the Sale and Servicing Agreement, and the Underwriting Agreement, in each case as to New York law.
2. Delaware Counsel Opinions. C&H will coordinate with Whitfield & Donahue LLP for the delivery of Delaware-law opinion letters at closing, including opinions as to (i) the true-sale characterization of the transfer of the Tap Pool receivables from BRB to the Trust under Delaware law, (ii) the enforceability of the Trust Agreement and the Supplemental Indenture under Delaware law, and (iii) the non-consolidation of the Trust's assets with BRB's estate in the event of BRB's insolvency or receivership. C&H will review drafts of the Whitfield & Donahue opinions to confirm coverage, assumptions, and qualifications.
C. Certificates and Closing Deliverables
C&H will prepare or coordinate the following certificates and closing deliverables:
1. Officer's Certificate of BRB. To be executed by Derek Ashworth, Treasurer & Head of Capital Markets, certifying the accuracy of BRB's representations and warranties in the transaction documents as of the closing date, confirming the absence of any event of default under the Indenture or Sale and Servicing Agreement, and certifying the satisfaction of conditions precedent to the issuance of the Tap Notes.
2. Secretary's Certificate of BRB. To be executed by BRB's corporate secretary, certifying (i) the board of directors' (or authorized committee's) resolutions authorizing the tap issuance and the execution and delivery of the transaction documents, (ii) the incumbency and signature authority of BRB's officers signing the transaction documents and closing certificates, and (iii) the certificate of incorporation and bylaws of BRB (or certifying that no amendments have been made since the versions delivered at the original closing).
3. Good Standing Certificates. C&H will obtain (i) a certificate of good standing (or equivalent) for BRB from the OCC, and (ii) a certificate of good standing for the Trust from the Delaware Secretary of State.
4. Rating Agency Confirmation Request Letters. C&H will prepare and transmit formal requests to Pinnacle and Crestline for confirmation of the AAA(sf) and Aaa(sf) ratings, respectively, on the Class A-2 Notes following the tap issuance. The request letters will be accompanied by drafts of the Supplemental Indenture, the Amendment to the Sale and Servicing Agreement, and the updated pool data tape.
5. Bring-Down Comfort Letter Request. C&H will coordinate with Ashford and BRB to prepare a request to Velthorn for a bring-down comfort letter as of the closing date, confirming the accuracy of financial information included or incorporated by reference in the Prospectus Supplement, with changes limited to changes arising in the ordinary course of business.
D. Closing Administration
C&H will be responsible for the following closing

INTERNAL DEAL MEMORANDUM

I. EXECUTIVE SUMMARY

II. PARTIES AND KEY CONTACTS

III. TRANSACTION STRUCTURE

IV. COLLATERAL POOL ANALYSIS (TAP ADDITION)

V. CREDIT ENHANCEMENT STRUCTURE (POST-TAP)

VI. KEY RISK ANALYSIS

Record

Parties

Dates

Amounts