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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law 425 Lexington Avenue, 30th Floor New York, New York 10017

Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com

October 5, 2023

VIA Sundial Data Systems AND ELECTRONIC MAIL

Northcastle Mutual Assurance Company 175 Asylum Street Hartford, Connecticut 06103

Attention: Claims Department

VIA COURTESY COPY:

Ridgeline Governance Advisors LLC 100 Federal Street, Suite 3600 Boston, Massachusetts 02110

Attention: Melinda Tran, Senior Vice President

Re: Formal Tender of Claim Under Directors & Officers Liability Insurance Policy No. NMA-DO-2023-11847

Insured: Belmont Ridge Bank National Association and its Directors and Officers

Policy Period: July 1, 2023 – July 1, 2024

Nature of Claim: SEC Division of Enforcement Investigation, File No. HO-14287

Dear Claims Department:

1. Introduction and Purpose of Letter

This firm serves as outside defense counsel to Belmont Ridge Bank National Association ("BRB" or the "Insured"), a national banking association chartered under Office of the Comptroller of the Currency Charter No. 24891. BRB is publicly traded on the Nasdaq Stock Market under the ticker symbol "BRDG" and maintains its principal executive offices at 200 Park Avenue South, 38th Floor, New York, New York 10003. As of its most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, BRB is a mid-cap commercial banking institution engaged in a broad range of retail, commercial, and digital consumer lending activities.

Calderwood & Harkness LLP ("C&H" or "this firm") was engaged by BRB on September 20, 2023, under Engagement No. SC-MAT-2023-4172, to represent BRB and, as appropriate, its directors and officers in connection with a formal investigation initiated by the United States Securities and Exchange Commission ("SEC"), Division of Enforcement. The circumstances giving rise to this engagement are described in detail in Section 3 of this letter.

The purpose of this letter is to formally tender the SEC investigation described herein as a "Claim" (as that term is defined in the Policy) under Directors & Officers Liability Insurance Policy No. NMA-DO-2023-11847 (the "Policy"), issued by Northcastle Mutual Assurance Company ("Northcastle" or the "Insurer"). In addition to tendering this Claim, we respectfully request that Northcastle: (i) acknowledge receipt of this tender; (ii) provide written confirmation that the SEC investigation constitutes a covered Claim under the Policy; (iii) approve Calderwood & Harkness LLP as defense counsel and Brindoval Analytic Partners LLC as a forensic accounting consultant, with their respective fees qualifying as covered Defense Costs under the Policy; and (iv) designate a claims handler and confirm applicable billing guidelines, reporting protocols, and coverage terms.

This letter is being transmitted simultaneously to Ridgeline Governance Advisors LLC ("Ridgeline"), BRB's insurance broker of record, for the attention of Melinda Tran, Senior Vice President, for coordination purposes. We understand that Ridgeline has served as BRB's placement broker with respect to the D&O insurance tower at issue and is prepared to facilitate communication between BRB, Northcastle, and any excess carriers as may become necessary.

We ask that Northcastle treat the contents of this letter, and all materials enclosed herewith, as strictly confidential, consistent with the confidentiality provisions of the Policy and the sensitive nature of a pending SEC enforcement investigation involving a publicly traded financial institution.

2. Description of the Policy

For ease of reference, we set forth below the material terms of the Policy under which this Claim is being tendered:

We note for informational purposes that BRB's D&O insurance program includes a first excess layer issued by Cascade Omnivrel Insurance Group under Policy No. CFIG-XS1-2023-5598, providing $10,000,000 in excess coverage above the $15,000,000 primary limit provided by the Policy, for total available limits of $25,000,000. A separate tender letter to Cascade Omnivrel Insurance Group will follow if warranted by the development of the investigation and the magnitude of Defense Costs and potential exposure. References herein to the first excess layer are for informational purposes only and should not be construed as a tender of this Claim to Cascade Fidelity at this time.

The Claim described herein falls within the Policy Period. As set forth more fully in Section 3 below, BRB received the initial voluntary request letter from the SEC Division of Enforcement on September 18, 2023, and the SEC subsequently issued a Formal Order of Investigation on October 12, 2023 — both dates falling squarely within the July 1, 2023 to July 1, 2024 Policy Period. Accordingly, there is no question that the Claim was first made during the operative coverage period.

3. Description of the Underlying SEC Investigation

3.1 Background on Belmont Ridge Bank National Association

BRB is a mid-cap national bank that serves individual, small-business, and commercial clients through a network of 127 retail branches across the northeastern United States and an expanding digital banking platform. As of December 31, 2022, BRB reported the following key financial metrics in its Annual Report on Form 10-K:

• Total assets: $38.2 billion

• Total deposits: $29.6 billion

• Total shareholders' equity: $4.03 billion

• Pre-tax income (FY 2022): $612 million

• Net income (FY 2022): $471.2 million

As of September 2023, BRB's market capitalization was approximately $4.7 billion based on its Nasdaq-listed common stock.

Of particular relevance to the SEC investigation is BRB's digital-first consumer lending platform branded "BridgeFin." BridgeFin was launched in the third quarter of 2020 as a proprietary fintech initiative designed to originate unsecured personal loans and small-business microloans through an AI-driven underwriting model. BridgeFin has grown rapidly since its inception. As of December 31, 2022, the BridgeFin portfolio consisted of approximately $4.1 billion in outstanding loans, with total originations for fiscal year 2022 of approximately $2.87 billion. BridgeFin has been a significant driver of BRB's recent revenue growth and has been prominently featured in BRB's public disclosures, investor presentations, and earnings calls.

BRB adopted the Current Expected Credit Losses standard ("CECL"), codified at ASC 326 (Financial Instruments — Credit Losses), effective January 1, 2020, in accordance with applicable regulatory and accounting guidance. The CECL standard requires BRB to estimate and record an allowance for credit losses ("ACL") reflecting expected lifetime credit losses at the time of loan origination, and to update that estimate at each reporting date to reflect changes in credit conditions, portfolio composition, and macroeconomic forecasts. The application of CECL to the BridgeFin portfolio is at the center of the SEC's inquiry.

3.2 Initiation of the SEC Investigation

On September 18, 2023, BRB received a voluntary request letter from the SEC, Division of Enforcement, Home Office, Washington, D.C. The letter was addressed to Derek Sung, General Counsel and Chief Legal Officer of BRB, and opened an inquiry under SEC File No. HO-14287. The voluntary request letter sought the voluntary production of documents and information relating to BRB's financial reporting for the BridgeFin consumer loan portfolio, with particular focus on the methodology and inputs used by BRB in estimating its allowance for credit losses under CECL.

The SEC Staff assigned to the investigation, as identified in correspondence to date, includes the following individuals:

• Andrea Felton, Senior Staff Attorney, Division of Enforcement

• Christopher Yuen, Staff Attorney, Division of Enforcement

• Diane Milosevic, Staff Accountant, Division of Enforcement

• Gregory Bonham, Assistant Director, Financial Fraud Unit, Division of Enforcement

• Renata Moss, Branch Chief, Division of Enforcement

On October 12, 2023, the SEC issued a Formal Order of Investigation, bearing Order No. EN-2023-0947. The Formal Order authorized the use of compulsory process, including the issuance of subpoenas for documents and testimony, in connection with the investigation. The issuance of the Formal Order reflects an escalation of the investigation from an informal, voluntary inquiry to a formal proceeding carrying the full investigative authority of the Commission.

On October 15, 2023, pursuant to the Formal Order, the SEC issued a document subpoena bearing Subpoena No. HO-14287-001. The subpoena directed BRB to produce a broad range of documents, including internal memoranda, board and committee materials, communications among senior management, loan-level data files, CECL model documentation, independent price verification records, and communications with BRB's independent auditor. The subpoena specified a return date of November 20, 2023, subject to any negotiated modifications of the production schedule.

Copies of the voluntary request letter, the Formal Order of Investigation, and the document subpoena are enclosed herewith as Enclosures 1 through 3.

3.3 Subject Matter of the Investigation

Based on the SEC's voluntary request letter, the Formal Order of Investigation, the document subpoena, and communications between C&H and the SEC Staff to date, the investigation focuses on whether BRB's public disclosures materially understated expected credit losses in the BridgeFin consumer fintech loan portfolio. Specifically, the SEC Staff is examining the following public filings:

• BRB's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023;

• BRB's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023; and

• BRB's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 9, 2023.

The core issue under investigation is the adequacy of BRB's reported allowance for credit losses as applied to the BridgeFin portfolio. In its Form 10-K for FY 2022, BRB reported an ACL for the BridgeFin portfolio of approximately $143.5 million, representing 3.50% of BridgeFin outstanding loans. The SEC Staff's preliminary analysis suggests that this ACL was materially understated by approximately $37.3 million — that is, the Staff's view is that the ACL should have been approximately $180.8 million, or 4.41% of BridgeFin outstanding loans.

The alleged understatement centers on the treatment of 12,847 re-aged and modified BridgeFin loans with an aggregate outstanding balance of $236.4 million. The SEC Staff has questioned whether BRB's CECL model adequately accounted for the elevated credit risk associated with these re-aged and modified exposures, including whether BRB appropriately incorporated deteriorating credit quality metrics — such as increased delinquency migration rates, elevated loss severity assumptions, and adverse macroeconomic scenario weightings — into its loss-rate modeling for this segment of the portfolio.

BRB's internal materiality threshold, consistent with Staff Accounting Bulletin No. 99, is 5% of pre-tax income. For FY 2022, this threshold equals $30.6 million ($612 million × 5%). The SEC Staff's estimated understatement of $37.3 million exceeds this materiality threshold by $6.7 million, which, in the Staff's preliminary view, renders the alleged misstatement quantitatively material. BRB's management and this firm are engaged in a thorough analysis of this position, including qualitative materiality considerations, and intend to vigorously address the Staff's conclusions through the investigative process.

The potential statutory provisions at issue include:

• Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(a)), requiring the filing of periodic reports in conformity with applicable accounting standards and SEC rules;

• Section 13(b)(2)(A) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(b)(2)(A)), requiring the maintenance of books and records that accurately and fairly reflect transactions and dispositions of assets;

• Rule 13a-1 (17 C.F.R. § 240.13a-1), requiring the filing of annual reports on Form 10-K; and

• Rule 12b-20 (17 C.F.R. § 240.12b-20), requiring that, in addition to the information expressly required in any filing, such further material information as may be necessary to make the required statements not misleading must be included.

3.4 Individuals Potentially Implicated

Although the SEC has not, as of the date of this letter, formally identified any individual as a target or subject of the investigation, the nature of the inquiry — concerning the adequacy of financial reporting and internal accounting controls — inherently involves the conduct, decisions, and certifications of BRB's senior management and board-level leadership. The following directors and officers of BRB may be implicated in the investigation:

• Marcus R. Ellingham, Chief Executive Officer

• Patricia ("Trish") Navarrete, Chief Financial Officer

• Derek Sung, General Counsel and Chief Legal Officer

• Annette Kowalski, Chief Risk Officer

• Raymond Hu, Chief Accounting Officer

• Gwendolyn Prescott, Audit Committee Chair (Independent Director)

• Naveen Chakravarti, Senior Vice President and Division Head, BridgeFin

As CEO and CFO, Mr. Ellingham and Ms. Navarrete are the certifying officers under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 with respect to the accuracy of BRB's periodic filings. Ms. Kowalski oversees BRB's enterprise risk management framework, including credit risk governance for the BridgeFin portfolio. Mr. Hu is responsible for the application of accounting standards, including CECL, and the preparation of BRB's financial statements. Ms. Prescott, as Chair of the Audit Committee of BRB's Board of Directors, exercises oversight over financial reporting and internal controls. Mr. Chakravarti leads the BridgeFin business unit and is directly involved in portfolio management, loan modification decisions, and credit quality reporting.

It is anticipated that the SEC may seek testimony from certain of these individuals through investigative testimony subpoenas. As of the date of this letter, no testimony subpoenas have been issued; however, based on customary SEC practice and communications with the Staff, we believe that such subpoenas are likely to be forthcoming. To the extent that individual directors or officers are compelled to provide testimony or are otherwise drawn into the investigation in their individual capacities, BRB reserves the right to assert coverage under Side A and Side B of the Policy for their individual defense costs.

4. Basis for Tender and Coverage Analysis

Based on the facts set forth above, BRB hereby tenders the SEC investigation described in this letter as a "Claim" under the Policy. We set forth below the principal bases on which coverage is asserted.

The SEC Investigation Constitutes a "Claim." The Policy defines "Claim" broadly to include, among other things, any formal or informal investigation of an Insured by the SEC or other governmental or regulatory body, once such investigation has been commenced by the filing, issuance, or receipt of a notice of charges, formal order of investigation, subpoena, target letter, or similar document. BRB received the SEC's voluntary request letter on September 18, 2023, and the SEC subsequently issued a Formal Order of Investigation (Order No. EN-2023-0947) on October 12, 2023, and a document subpoena (Subpoena No. HO-14287-001) on October 15, 2023. Each of these events independently satisfies the definition of "Claim" under the Policy, and collectively they leave no doubt that a covered Claim has been made against the Insured.

The Claim Was First Made During the Policy Period. The earliest triggering event — BRB's receipt of the SEC voluntary request letter — occurred on September 18, 2023. The Formal Order and document subpoena followed on October 12 and October 15, 2023, respectively. All of these dates fall within the Policy Period of July 1, 2023 to July 1, 2024. Accordingly, the temporal requirements for coverage under the Policy are satisfied.

The Investigation Involves the Insured Entity and Its Directors and Officers. The SEC investigation is directed at BRB's public filings and financial reporting practices with respect to the BridgeFin portfolio. As described in Section 3.4 above, the investigation inherently implicates the conduct and decisions of BRB's directors and officers, including its CEO, CFO, General Counsel, Chief Risk Officer, Chief Accounting Officer, Audit Committee Chair, and BridgeFin Division Head. The investigation thus falls squarely within the insuring agreements of the Policy, which provide coverage for Claims made against the Insured entity and its directors and officers arising out of their management of the affairs of the entity.

Defense Costs Are Covered Under the Policy. Defense costs incurred by BRB and its directors and officers in responding to the SEC investigation — including the legal fees and expenses of defense counsel (Calderwood & Harkness LLP) and the fees of forensic accounting consultants retained at the direction of defense counsel (Brindoval Analytic Partners LLC) — are expected to qualify as covered "Defense Costs" or "Loss" under the terms of the Policy. We note that the Policy provides for the advancement of Defense Costs as incurred, subject to BRB's compliance with the applicable cooperation, notice, and billing requirements.

Applicable Retention. BRB acknowledges that the Policy provides for an entity retention (self-insured retention) of $2,500,000 applicable to Claims brought against the entity, as distinguished from Claims brought solely against individual directors and officers under Side A coverage. BRB intends to satisfy its retention obligations in accordance with the terms of the Policy and requests confirmation from Northcastle as to the manner in which Defense Costs will be applied against the retention.

Reservation of Rights Under Excess Coverage. BRB expressly reserves all rights under the first excess layer of its D&O insurance program, specifically Policy No. CFIG-XS1-2023-5598 issued by Cascade Omnivrel Insurance Group, providing $10,000,000 in excess coverage above the $15,000,000 primary limit. BRB will separately tender the Claim to Cascade Fidelity if and when it becomes apparent that Defense Costs and potential exposure may approach or exceed the primary limit.

5. Identification of Defense Counsel and Consultants — Request for Approval

5.1 Defense Counsel

As noted in Section 1 of this letter, BRB has engaged Calderwood & Harkness LLP as its outside defense counsel in connection with the SEC investigation. The engagement became effective on September 20, 2023, under Engagement No. SC-MAT-2023-4172. A copy of the engagement letter is enclosed herewith as Enclosure 4.

The principal members of the C&H engagement team, together with their billing rates, are as follows:

The firm's address is 425 Lexington Avenue, 30th Floor, New York, New York 10017. All billing inquiries should be directed to Howard Quinn at (212) 554-7244 or hquinn@calderwoodharkness.com.

The fee arrangement between C&H and BRB provides for hourly billing subject to an annual fee cap of $4,500,000. Based on the anticipated scope of work and the blended rates of the engagement team, the annual cap represents an effective reduction of approximately 19.3% from gross fees at standard hourly rates. This arrangement was negotiated at arm's length and reflects both the complexity of the matter and the parties' mutual expectation of efficient and cost-effective case management.

We respectfully request that Northcastle approve Calderwood & Harkness LLP as approved defense counsel under the Policy. C&H has extensive experience in SEC enforcement matters, internal investigations, and directors' and officers' liability defense, and is well-positioned to provide BRB with effective representation in this matter. We are prepared to provide any additional information that Northcastle may require in connection with this approval request, including attorney biographies, representative engagements, and client references.

5.2 Forensic Accounting Consultant

At the direction of defense counsel, BRB has retained Brindoval Analytic Partners LLC ("Brindoval") to provide forensic accounting analysis and expert advisory services in connection with the SEC investigation. Brindoval's engagement focuses on the independent evaluation of BRB's CECL methodology as applied to the BridgeFin portfolio, including loss-rate modeling, re-aging and modification treatment, macroeconomic scenario weighting, and qualitative adjustment practices. Brindoval's analysis will be conducted under the Kovel doctrine and the attorney work-product privilege, at the direction and under the supervision of C&H, for the purpose of assisting defense counsel in rendering legal advice to BRB.

Brindoval's engagement is led by Dr. Franklin Osei, CPA, CFF, a Certified Public Accountant and Certified in Financial Forensics who has extensive experience in financial institution accounting, credit loss estimation, and SEC enforcement matters. Brindoval's principal office is located at 350 South Grand Avenue, Suite 2100, Los Angeles, California 90071. The consulting engagement letter was executed on October 10, 2023, and a copy is enclosed herewith as Enclosure 5.

We respectfully request that Northcastle approve Brindoval Analytic Partners LLC as an approved consultant under the Policy, with its fees and expenses qualifying as covered Defense Costs. The retention of a forensic accounting consultant is essential to the defense of this matter, given the highly technical nature of the SEC Staff's challenge to BRB's CECL methodology and the need for independent quantitative analysis to evaluate and respond to the Staff's preliminary findings.

6. Notice and Cooperation Obligations

BRB acknowledges and fully intends to comply with all notice, cooperation, and reporting obligations set forth in the Policy. Specifically:

Periodic Reporting. BRB, through defense counsel, will provide periodic updates to Northcastle regarding the status of the SEC investigation, including material developments such as the issuance of additional subpoenas, the scheduling and completion of investigative testimony, the exchange of substantive correspondence with the SEC Staff, and any preliminary or final disposition of the matter.

Defense Cost Invoices. BRB will submit invoices for Defense Costs on a regular basis, consistent with Northcastle's billing guidelines and any applicable litigation management protocols. We understand that Northcastle's designated claims counsel for this matter is Thornfield & Rowe LLP, and that billing inquiries and invoice submissions should be directed to:

Brenda Alvaro Thornfield & Rowe LLP 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606

BRB is prepared to coordinate with Ms. Alvaro and her colleagues regarding billing format requirements, task-based coding (UTBMS/LEDES), block billing restrictions, rate approvals, and any other billing guidelines that Northcastle may impose. We request that Northcastle provide a copy of its current outside counsel billing guidelines at its earliest convenience so that we may ensure compliance from the outset.

No Settlement Without Consent. BRB will not enter into any settlement, consent order, or other dispositive agreement with the SEC without the prior written consent of Northcastle, as required by the terms of the Policy. BRB understands that the Policy's consent-to-settle provision is a material condition of coverage and intends to honor this obligation fully.

Ongoing Cooperation. BRB will cooperate with Northcastle and its claims counsel in all reasonable respects, including by providing access to documents and information reasonably requested in connection with Northcastle's coverage evaluation, subject to applicable privileges and the confidentiality obligations arising from the pending SEC investigation.

7. Prior Counsel and Auditor Information

For completeness, we provide the following information regarding other counsel and professional advisors involved in matters related to the SEC investigation:

Prior Outside Securities Reporting Counsel. Prior to the engagement of Calderwood & Harkness LLP, BRB's regular outside securities reporting counsel, Caldwell Pratt & Stein LLP ("CPS"), initially received the SEC voluntary request letter on behalf of BRB and provided preliminary legal advice regarding BRB's obligations and response options. The lead partner at CPS for BRB's securities reporting matters is Martin Caldwell, whose office is located at 51 West 52nd Street, 24th Floor, New York, New York 10019.

BRB is not tendering any fees incurred by CPS prior to C&H's engagement at this time. However, BRB expressly reserves the right to submit such costs for reimbursement under the Policy if they are determined to qualify as covered Defense Costs. CPS's preliminary work included an initial assessment of the SEC voluntary request letter, a review of BRB's document preservation obligations, and consultations with BRB's General Counsel regarding the appropriate scope and structure of the response to the SEC's inquiry.

Independent Auditor. BRB's independent registered public accounting firm is Whitfield Keane LLP ("WK"), which is registered with the Public Company Accounting Oversight Board under PCAOB Registration No. 2847. The audit engagement partner for BRB at WK is Lorraine Dupont. WK audited BRB's consolidated financial statements for the fiscal year ended December 31, 2022, and issued an unqualified audit opinion in connection with BRB's Form 10-K filing.

We note for informational purposes that WK has separately retained its own counsel, Hargrove & Millstein LLP (lead partner: Samuel Hargrove), in connection with the SEC investigation. WK's counsel fees are not being submitted under BRB's D&O policy, as WK is not an Insured under the Policy. To the extent that the SEC Staff seeks information or testimony from WK or its personnel, WK's response will be handled independently through its own counsel.

8. Requested Actions

In light of the foregoing, BRB respectfully requests that Northcastle take the following actions at its earliest convenience:

1. Acknowledgment of Receipt. Provide formal written acknowledgment of receipt of this tender letter and the enclosed materials, confirming that the Claim has been recorded and assigned within Northcastle's claims department.

2. Confirmation of Coverage. Provide written confirmation that the SEC investigation described herein constitutes a covered Claim under Policy No. NMA-DO-2023-11847, subject to the terms, conditions, and exclusions of the Policy.

3. Approval of Defense Counsel and Consultants. Approve Calderwood & Harkness LLP as defense counsel and Brindoval Analytic Partners LLC as an approved forensic accounting consultant, with their respective fees and expenses qualifying as covered Defense Costs under the Policy.

4. Designation of Claims Handler. Designate a specific claims handler or claims examiner within Northcastle's claims department to serve as the primary point of contact for this matter, and confirm the identity and contact information of such individual.

5. Confirmation of Billing and Reporting Protocols. Provide a copy of Northcastle's current billing guidelines and confirm the applicable reporting requirements and communication protocols for this Claim, including the role of Thornfield & Rowe LLP as claims counsel.

6. Confirmation of Retention and Coverage Terms. Confirm that the applicable retention for this Claim is the $2,500,000 entity retention set forth in the Policy, and confirm any other material coverage terms or conditions that BRB should be aware of in connection with this Claim.

BRB requests that Northcastle respond to this tender letter within fifteen (15) business days of receipt, or as soon as practicable. Time is of the essence given the active status of the SEC investigation, the document production deadlines imposed by the SEC subpoena, and the ongoing accumulation of Defense Costs.

9. Reservation of Rights

BRB tenders this Claim without waiver of any rights, defenses, or coverage positions under the Policy, the first excess policy issued by Cascade Omnivrel Insurance Group (Policy No. CFIG-XS1-2023-5598), or any other applicable insurance coverage. Nothing in this letter shall be construed as an admission by BRB, its directors, or its officers regarding the merits of the SEC's investigation or the matters under inquiry. BRB's description of the SEC's preliminary positions is provided solely for the purpose of facilitating Northcastle's coverage evaluation and does not reflect BRB's agreement with or concession to any such positions.

BRB expressly reserves the right to:

• Tender additional Claims, or supplement this tender, as the SEC investigation develops, including but not limited to the tender of Claims arising from the issuance of a Wells notice, the commencement of a formal enforcement action, or the initiation of related litigation;

• Assert coverage under any and all applicable insuring agreements of the Policy, including Side A, Side B, and Side C coverage;

• Seek reimbursement of Defense Costs incurred prior to the date of this tender, to the extent permitted by the Policy; and

• Pursue all available remedies in the event that Northcastle denies coverage, reserves rights, or otherwise disputes the applicability of the Policy to this Claim.

BRB requests that any reservation of rights by Northcastle be communicated in writing to this firm and to BRB's General Counsel promptly upon determination. BRB further requests that any such reservation of rights identify with specificity the policy provisions, exclusions, or conditions upon which Northcastle relies, so that BRB may evaluate and respond to Northcastle's coverage position in a timely manner.

10. Confidentiality

BRB respectfully requests that Northcastle treat all information provided in connection with this tender — including this letter, all enclosed materials, and any subsequent communications related to this Claim — as strictly confidential. Northcastle should not disclose any such information to third parties except as necessary for the administration of this Claim (including communications with Northcastle's claims counsel, Thornfield & Rowe LLP, and BRB's broker, Ridgeline Governance Advisors LLC), or as otherwise required by applicable law.

This request for confidential treatment is made in light of the highly sensitive nature of the pending SEC enforcement investigation and the publicly traded status of BRB (Nasdaq: BRDG). Premature or unauthorized disclosure of the existence or details of the SEC investigation, or of the insurance coverage analysis associated therewith, could cause significant harm to BRB, its shareholders, and its directors and officers. We trust that Northcastle will exercise the utmost care in safeguarding the confidentiality of this information, consistent with the confidentiality provisions of the Policy and Northcastle's obligations under applicable law.

Closing

BRB is committed to full cooperation with Northcastle throughout the pendency of this Claim and will endeavor to provide timely and transparent communication regarding all material developments in the SEC investigation. We believe that early and constructive engagement between BRB, its defense counsel, and Northcastle's claims team will serve the mutual interests of all parties in the efficient and effective resolution of this matter.

We request that Northcastle designate a point of contact for ongoing claims coordination and direct all correspondence relating to this Claim to the undersigned at the address, telephone number, and email address set forth below.

Thank you for your prompt attention to this matter. We look forward to Northcastle's timely response.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Victoria Chambers, Partner

425 Lexington Avenue, 30th Floor New York, New York 10017 Direct Telephone: (212) 554-7218

Email: vchambers@calderwoodharkness.com

Enclosures:

1. Copy of SEC Voluntary Request Letter dated September 18, 2023 (File No. HO-14287)

2. Copy of SEC Formal Order of Investigation No. EN-2023-0947 dated October 12, 2023

3. Copy of SEC Document Subpoena No. HO-14287-001 dated October 15, 2023

4. Calderwood & Harkness LLP Engagement Letter dated September 20, 2023 (Engagement No. SC-MAT-2023-4172)

5. Brindoval Analytic Partners LLC Consulting Engagement Letter dated October 10, 2023

6. Declarations Page of D&O Liability Insurance Policy No. NMA-DO-2023-11847

cc:

Derek Sung, General Counsel / Chief Legal Officer Belmont Ridge Bank National Association 200 Park Avenue South, 38th Floor New York, New York 10003

Melinda Tran, Senior Vice President Ridgeline Governance Advisors LLC 100 Federal Street, Suite 3600 Boston, Massachusetts 02110

Brenda Alvaro Thornfield & Rowe LLP (Northcastle Claims Counsel) 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606

Policy Term	Detail
Policy Number	NMA-DO-2023-11847
Insurer	Northcastle Mutual Assurance Company (domiciled in the State of Connecticut)
Named Insured	Belmont Ridge Bank National Association and its Directors and Officers
Policy Period	July 1, 2023 – July 1, 2024
Primary Limit of Liability	$15,000,000 per Policy Period
Entity Retention (Self-Insured Retention)	$2,500,000
Coverage Structure	Side A (Individual D&O — non-indemnifiable loss), Side B (Corporate Reimbursement), Side C (Entity Securities)
Attorney	Role	Hourly Rate
Victoria Chambers	Partner (Responsible Partner)	$1,475
Howard Quinn	Partner (Billing Partner)	$1,350
Jasmine Thornton	Lead Associate	$895
Liam Donahue	Working Associate	$695

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law 425 Lexington Avenue, 30th Floor New York, New York 10017
Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com
October 5, 2023
VIA Sundial Data Systems AND ELECTRONIC MAIL
Northcastle Mutual Assurance Company 175 Asylum Street Hartford, Connecticut 06103
Attention: Claims Department
VIA COURTESY COPY:
Ridgeline Governance Advisors LLC 100 Federal Street, Suite 3600 Boston, Massachusetts 02110
Attention: Melinda Tran, Senior Vice President
Re: Formal Tender of Claim Under Directors & Officers Liability Insurance Policy No. NMA-DO-2023-11847
Insured: Belmont Ridge Bank National Association and its Directors and Officers
Policy Period: July 1, 2023 – July 1, 2024
Nature of Claim: SEC Division of Enforcement Investigation, File No. HO-14287
Dear Claims Department:
1. Introduction and Purpose of Letter
This firm serves as outside defense counsel to Belmont Ridge Bank National Association ("BRB" or the "Insured"), a national banking association chartered under Office of the Comptroller of the Currency Charter No. 24891. BRB is publicly traded on the Nasdaq Stock Market under the ticker symbol "BRDG" and maintains its principal executive offices at 200 Park Avenue South, 38th Floor, New York, New York 10003. As of its most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, BRB is a mid-cap commercial banking institution engaged in a broad range of retail, commercial, and digital consumer lending activities.
Calderwood & Harkness LLP ("C&H" or "this firm") was engaged by BRB on September 20, 2023, under Engagement No. SC-MAT-2023-4172, to represent BRB and, as appropriate, its directors and officers in connection with a formal investigation initiated by the United States Securities and Exchange Commission ("SEC"), Division of Enforcement. The circumstances giving rise to this engagement are described in detail in Section 3 of this letter.
The purpose of this letter is to formally tender the SEC investigation described herein as a "Claim" (as that term is defined in the Policy) under Directors & Officers Liability Insurance Policy No. NMA-DO-2023-11847 (the "Policy"), issued by Northcastle Mutual Assurance Company ("Northcastle" or the "Insurer"). In addition to tendering this Claim, we respectfully request that Northcastle: (i) acknowledge receipt of this tender; (ii) provide written confirmation that the SEC investigation constitutes a covered Claim under the Policy; (iii) approve Calderwood & Harkness LLP as defense counsel and Brindoval Analytic Partners LLC as a forensic accounting consultant, with their respective fees qualifying as covered Defense Costs under the Policy; and (iv) designate a claims handler and confirm applicable billing guidelines, reporting protocols, and coverage terms.
This letter is being transmitted simultaneously to Ridgeline Governance Advisors LLC ("Ridgeline"), BRB's insurance broker of record, for the attention of Melinda Tran, Senior Vice President, for coordination purposes. We understand that Ridgeline has served as BRB's placement broker with respect to the D&O insurance tower at issue and is prepared to facilitate communication between BRB, Northcastle, and any excess carriers as may become necessary.
We ask that Northcastle treat the contents of this letter, and all materials enclosed herewith, as strictly confidential, consistent with the confidentiality provisions of the Policy and the sensitive nature of a pending SEC enforcement investigation involving a publicly traded financial institution.
2. Description of the Policy
For ease of reference, we set forth below the material terms of the Policy under which this Claim is being tendered:
We note for informational purposes that BRB's D&O insurance program includes a first excess layer issued by Cascade Omnivrel Insurance Group under Policy No. CFIG-XS1-2023-5598, providing $10,000,000 in excess coverage above the $15,000,000 primary limit provided by the Policy, for total available limits of $25,000,000. A separate tender letter to Cascade Omnivrel Insurance Group will follow if warranted by the development of the investigation and the magnitude of Defense Costs and potential exposure. References herein to the first excess layer are for informational purposes only and should not be construed as a tender of this Claim to Cascade Fidelity at this time.
The Claim described herein falls within the Policy Period. As set forth more fully in Section 3 below, BRB received the initial voluntary request letter from the SEC Division of Enforcement on September 18, 2023, and the SEC subsequently issued a Formal Order of Investigation on October 12, 2023 — both dates falling squarely within the July 1, 2023 to July 1, 2024 Policy Period. Accordingly, there is no question that the Claim was first made during the operative coverage period.
3. Description of the Underlying SEC Investigation
3.1 Background on Belmont Ridge Bank National Association
BRB is a mid-cap national bank that serves individual, small-business, and commercial clients through a network of 127 retail branches across the northeastern United States and an expanding digital banking platform. As of December 31, 2022, BRB reported the following key financial metrics in its Annual Report on Form 10-K:
• Total assets: $38.2 billion
• Total deposits: $29.6 billion
• Total shareholders' equity: $4.03 billion
• Pre-tax income (FY 2022): $612 million
• Net income (FY 2022): $471.2 million
As of September 2023, BRB's market capitalization was approximately $4.7 billion based on its Nasdaq-listed common stock.
Of particular relevance to the SEC investigation is BRB's digital-first consumer lending platform branded "BridgeFin." BridgeFin was launched in the third quarter of 2020 as a proprietary fintech initiative designed to originate unsecured personal loans and small-business microloans through an AI-driven underwriting model. BridgeFin has grown rapidly since its inception. As of December 31, 2022, the BridgeFin portfolio consisted of approximately $4.1 billion in outstanding loans, with total originations for fiscal year 2022 of approximately $2.87 billion. BridgeFin has been a significant driver of BRB's recent revenue growth and has been prominently featured in BRB's public disclosures, investor presentations, and earnings calls.
BRB adopted the Current Expected Credit Losses standard ("CECL"), codified at ASC 326 (Financial Instruments — Credit Losses), effective January 1, 2020, in accordance with applicable regulatory and accounting guidance. The CECL standard requires BRB to estimate and record an allowance for credit losses ("ACL") reflecting expected lifetime credit losses at the time of loan origination, and to update that estimate at each reporting date to reflect changes in credit conditions, portfolio composition, and macroeconomic forecasts. The application of CECL to the BridgeFin portfolio is at the center of the SEC's inquiry.
3.2 Initiation of the SEC Investigation
On September 18, 2023, BRB received a voluntary request letter from the SEC, Division of Enforcement, Home Office, Washington, D.C. The letter was addressed to Derek Sung, General Counsel and Chief Legal Officer of BRB, and opened an inquiry under SEC File No. HO-14287. The voluntary request letter sought the voluntary production of documents and information relating to BRB's financial reporting for the BridgeFin consumer loan portfolio, with particular focus on the methodology and inputs used by BRB in estimating its allowance for credit losses under CECL.
The SEC Staff assigned to the investigation, as identified in correspondence to date, includes the following individuals:
• Andrea Felton, Senior Staff Attorney, Division of Enforcement
• Christopher Yuen, Staff Attorney, Division of Enforcement
• Diane Milosevic, Staff Accountant, Division of Enforcement
• Gregory Bonham, Assistant Director, Financial Fraud Unit, Division of Enforcement
• Renata Moss, Branch Chief, Division of Enforcement
On October 12, 2023, the SEC issued a Formal Order of Investigation, bearing Order No. EN-2023-0947. The Formal Order authorized the use of compulsory process, including the issuance of subpoenas for documents and testimony, in connection with the investigation. The issuance of the Formal Order reflects an escalation of the investigation from an informal, voluntary inquiry to a formal proceeding carrying the full investigative authority of the Commission.
On October 15, 2023, pursuant to the Formal Order, the SEC issued a document subpoena bearing Subpoena No. HO-14287-001. The subpoena directed BRB to produce a broad range of documents, including internal memoranda, board and committee materials, communications among senior management, loan-level data files, CECL model documentation, independent price verification records, and communications with BRB's independent auditor. The subpoena specified a return date of November 20, 2023, subject to any negotiated modifications of the production schedule.
Copies of the voluntary request letter, the Formal Order of Investigation, and the document subpoena are enclosed herewith as Enclosures 1 through 3.
3.3 Subject Matter of the Investigation
Based on the SEC's voluntary request letter, the Formal Order of Investigation, the document subpoena, and communications between C&H and the SEC Staff to date, the investigation focuses on whether BRB's public disclosures materially understated expected credit losses in the BridgeFin consumer fintech loan portfolio. Specifically, the SEC Staff is examining the following public filings:
• BRB's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023;
• BRB's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023; and
• BRB's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 9, 2023.
The core issue under investigation is the adequacy of BRB's reported allowance for credit losses as applied to the BridgeFin portfolio. In its Form 10-K for FY 2022, BRB reported an ACL for the BridgeFin portfolio of approximately $143.5 million, representing 3.50% of BridgeFin outstanding loans. The SEC Staff's preliminary analysis suggests that this ACL was materially understated by approximately $37.3 million — that is, the Staff's view is that the ACL should have been approximately $180.8 million, or 4.41% of BridgeFin outstanding loans.
The alleged understatement centers on the treatment of 12,847 re-aged and modified BridgeFin loans with an aggregate outstanding balance of $236.4 million. The SEC Staff has questioned whether BRB's CECL model adequately accounted for the elevated credit risk associated with these re-aged and modified exposures, including whether BRB appropriately incorporated deteriorating credit quality metrics — such as increased delinquency migration rates, elevated loss severity assumptions, and adverse macroeconomic scenario weightings — into its loss-rate modeling for this segment of the portfolio.
BRB's internal materiality threshold, consistent with Staff Accounting Bulletin No. 99, is 5% of pre-tax income. For FY 2022, this threshold equals $30.6 million ($612 million × 5%). The SEC Staff's estimated understatement of $37.3 million exceeds this materiality threshold by $6.7 million, which, in the Staff's preliminary view, renders the alleged misstatement quantitatively material. BRB's management and this firm are engaged in a thorough analysis of this position, including qualitative materiality considerations, and intend to vigorously address the Staff's conclusions through the investigative process.
The potential statutory provisions at issue include:
• Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(a)), requiring the filing of periodic reports in conformity with applicable accounting standards and SEC rules;
• Section 13(b)(2)(A) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m(b)(2)(A)), requiring the maintenance of books and records that accurately and fairly reflect transactions and dispositions of assets;
• Rule 13a-1 (17 C.F.R. § 240.13a-1), requiring the filing of annual reports on Form 10-K; and
• Rule 12b-20 (17 C.F.R. § 240.12b-20), requiring that, in addition to the information expressly required in any filing, such further material information as may be necessary to make the required statements not misleading must be included.
3.4 Individuals Potentially Implicated
Although the SEC has not, as of the date of this letter, formally identified any individual as a target or subject of the investigation, the nature of the inquiry — concerning the adequacy of financial reporting and internal accounting controls — inherently involves the conduct, decisions, and certifications of BRB's senior management and board-level leadership. The following directors and officers of BRB may be implicated in the investigation:
• Marcus R. Ellingham, Chief Executive Officer
• Patricia ("Trish") Navarrete, Chief Financial Officer
• Derek Sung, General Counsel and Chief Legal Officer
• Annette Kowalski, Chief Risk Officer
• Raymond Hu, Chief Accounting Officer
• Gwendolyn Prescott, Audit Committee Chair (Independent Director)
• Naveen Chakravarti, Senior Vice President and Division Head, BridgeFin
As CEO and CFO, Mr. Ellingham and Ms. Navarrete are the certifying officers under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 with respect to the accuracy of BRB's periodic filings. Ms. Kowalski oversees BRB's enterprise risk management framework, including credit risk governance for the BridgeFin portfolio. Mr. Hu is responsible for the application of accounting standards, including CECL, and the preparation of BRB's financial statements. Ms. Prescott, as Chair of the Audit Committee of BRB's Board of Directors, exercises oversight over financial reporting and internal controls. Mr. Chakravarti leads the BridgeFin business unit and is directly involved in portfolio management, loan modification decisions, and credit quality reporting.
It is anticipated that the SEC may seek testimony from certain of these individuals through investigative testimony subpoenas. As of the date of this letter, no testimony subpoenas have been issued; however, based on customary SEC practice and communications with the Staff, we believe that such subpoenas are likely to be forthcoming. To the extent that individual directors or officers are compelled to provide testimony or are otherwise drawn into the investigation in their individual capacities, BRB reserves the right to assert coverage under Side A and Side B of the Policy for their individual defense costs.
4. Basis for Tender and Coverage Analysis
Based on the facts set forth above, BRB hereby tenders the SEC investigation described in this letter as a "Claim" under the Policy. We set forth below the principal bases on which coverage is asserted.
The SEC Investigation Constitutes a "Claim." The Policy defines "Claim" broadly to include, among other things, any formal or informal investigation of an Insured by the SEC or other governmental or regulatory body, once such investigation has been commenced by the filing, issuance, or receipt of a notice of charges, formal order of investigation, subpoena, target letter, or similar document. BRB received the SEC's voluntary request letter on September 18, 2023, and the SEC subsequently issued a Formal Order of Investigation (Order No. EN-2023-0947) on October 12, 2023, and a document subpoena (Subpoena No. HO-14287-001) on October 15, 2023. Each of these events independently satisfies the definition of "Claim" under the Policy, and collectively they leave no doubt that a covered Claim has been made against the Insured.
The Claim Was First Made During the Policy Period. The earliest triggering event — BRB's receipt of the SEC voluntary request letter — occurred on September 18, 2023. The Formal Order and document subpoena followed on October 12 and October 15, 2023, respectively. All of these dates fall within the Policy Period of July 1, 2023 to July 1, 2024. Accordingly, the temporal requirements for coverage under the Policy are satisfied.
The Investigation Involves the Insured Entity and Its Directors and Officers. The SEC investigation is directed at BRB's public filings and financial reporting practices with respect to the BridgeFin portfolio. As described in Section 3.4 above, the investigation inherently implicates the conduct and decisions of BRB's directors and officers, including its CEO, CFO, General Counsel, Chief Risk Officer, Chief Accounting Officer, Audit Committee Chair, and BridgeFin Division Head. The investigation thus falls squarely within the insuring agreements of the Policy, which provide coverage for Claims made against the Insured entity and its directors and officers arising out of their management of the affairs of the entity.
Defense Costs Are Covered Under the Policy. Defense costs incurred by BRB and its directors and officers in responding to the SEC investigation — including the legal fees and expenses of defense counsel (Calderwood & Harkness LLP) and the fees of forensic accounting consultants retained at the direction of defense counsel (Brindoval Analytic Partners LLC) — are expected to qualify as covered "Defense Costs" or "Loss" under the terms of the Policy. We note that the Policy provides for the advancement of Defense Costs as incurred, subject to BRB's compliance with the applicable cooperation, notice, and billing requirements.
Applicable Retention. BRB acknowledges that the Policy provides for an entity retention (self-insured retention) of $2,500,000 applicable to Claims brought against the entity, as distinguished from Claims brought solely against individual directors and officers under Side A coverage. BRB intends to satisfy its retention obligations in accordance with the terms of the Policy and requests confirmation from Northcastle as to the manner in which Defense Costs will be applied against the retention.
Reservation of Rights Under Excess Coverage. BRB expressly reserves all rights under the first excess layer of its D&O insurance program, specifically Policy No. CFIG-XS1-2023-5598 issued by Cascade Omnivrel Insurance Group, providing $10,000,000 in excess coverage above the $15,000,000 primary limit. BRB will separately tender the Claim to Cascade Fidelity if and when it becomes apparent that Defense Costs and potential exposure may approach or exceed the primary limit.
5. Identification of Defense Counsel and Consultants — Request for Approval
5.1 Defense Counsel
As noted in Section 1 of this letter, BRB has engaged Calderwood & Harkness LLP as its outside defense counsel in connection with the SEC investigation. The engagement became effective on September 20, 2023, under Engagement No. SC-MAT-2023-4172. A copy of the engagement letter is enclosed herewith as Enclosure 4.
The principal members of the C&H engagement team, together with their billing rates, are as follows:
The firm's address is 425 Lexington Avenue, 30th Floor, New York, New York 10017. All billing inquiries should be directed to Howard Quinn at (212) 554-7244 or hquinn@calderwoodharkness.com.
The fee arrangement between C&H and BRB provides for hourly billing subject to an annual fee cap of $4,500,000. Based on the anticipated scope of work and the blended rates of the engagement team, the annual cap represents an effective reduction of approximately 19.3% from gross fees at standard hourly rates. This arrangement was negotiated at arm's length and reflects both the complexity of the matter and the parties' mutual expectation of efficient and cost-effective case management.
We respectfully request that Northcastle approve Calderwood & Harkness LLP as approved defense counsel under the Policy. C&H has extensive experience in SEC enforcement matters, internal investigations, and directors' and officers' liability defense, and is well-positioned to provide BRB with effective representation in this matter. We are prepared to provide any additional information that Northcastle may require in connection with this approval request, including attorney biographies, representative engagements, and client references.
5.2 Forensic Accounting Consultant
At the direction of defense counsel, BRB has retained Brindoval Analytic Partners LLC ("Brindoval") to provide forensic accounting analysis and expert advisory services in connection with the SEC investigation. Brindoval's engagement focuses on the independent evaluation of BRB's CECL methodology as applied to the BridgeFin portfolio, including loss-rate modeling, re-aging and modification treatment, macroeconomic scenario weighting, and qualitative adjustment practices. Brindoval's analysis will be conducted under the Kovel doctrine and the attorney work-product privilege, at the direction and under the supervision of C&H, for the purpose of assisting defense counsel in rendering legal advice to BRB.
Brindoval's engagement is led by Dr. Franklin Osei, CPA, CFF, a Certified Public Accountant and Certified in Financial Forensics who has extensive experience in financial institution accounting, credit loss estimation, and SEC enforcement matters. Brindoval's principal office is located at 350 South Grand Avenue, Suite 2100, Los Angeles, California 90071. The consulting engagement letter was executed on October 10, 2023, and a copy is enclosed herewith as Enclosure 5.
We respectfully request that Northcastle approve Brindoval Analytic Partners LLC as an approved consultant under the Policy, with its fees and expenses qualifying as covered Defense Costs. The retention of a forensic accounting consultant is essential to the defense of this matter, given the highly technical nature of the SEC Staff's challenge to BRB's CECL methodology and the need for independent quantitative analysis to evaluate and respond to the Staff's preliminary findings.
6. Notice and Cooperation Obligations
BRB acknowledges and fully intends to comply with all notice, cooperation, and reporting obligations set forth in the Policy. Specifically:
Periodic Reporting. BRB, through defense counsel, will provide periodic updates to Northcastle regarding the status of the SEC investigation, including material developments such as the issuance of additional subpoenas, the scheduling and completion of investigative testimony, the exchange of substantive correspondence with the SEC Staff, and any preliminary or final disposition of the matter.
Defense Cost Invoices. BRB will submit invoices for Defense Costs on a regular basis, consistent with Northcastle's billing guidelines and any applicable litigation management protocols. We understand that Northcastle's designated claims counsel for this matter is Thornfield & Rowe LLP, and that billing inquiries and invoice submissions should be directed to:
Brenda Alvaro Thornfield & Rowe LLP 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606
BRB is prepared to coordinate with Ms. Alvaro and her colleagues regarding billing format requirements, task-based coding (UTBMS/LEDES), block billing restrictions, rate approvals, and any other billing guidelines that Northcastle may impose. We request that Northcastle provide a copy of its current outside counsel billing guidelines at its earliest convenience so that we may ensure compliance from the outset.
No Settlement Without Consent. BRB will not enter into any settlement, consent order, or other dispositive agreement with the SEC without the prior written consent of Northcastle, as required by the terms of the Policy. BRB understands that the Policy's consent-to-settle provision is a material condition of coverage and intends to honor this obligation fully.
Ongoing Cooperation. BRB will cooperate with Northcastle and its claims counsel in all reasonable respects, including by providing access to documents and information reasonably requested in connection with Northcastle's coverage evaluation, subject to applicable privileges and the confidentiality obligations arising from the pending SEC investigation.
7. Prior Counsel and Auditor Information
For completeness, we provide the following information regarding other counsel and professional advisors involved in matters related to the SEC investigation:
Prior Outside Securities Reporting Counsel. Prior to the engagement of Calderwood & Harkness LLP, BRB's regular outside securities reporting counsel, Caldwell Pratt & Stein LLP ("CPS"), initially received the SEC voluntary request letter on behalf of BRB and provided preliminary legal advice regarding BRB's obligations and response options. The lead partner at CPS for BRB's securities reporting matters is Martin Caldwell, whose office is located at 51 West 52nd Street, 24th Floor, New York, New York 10019.
BRB is not tendering any fees incurred by CPS prior to C&H's engagement at this time. However, BRB expressly reserves the right to submit such costs for reimbursement under the Policy if they are determined to qualify as covered Defense Costs. CPS's preliminary work included an initial assessment of the SEC voluntary request letter, a review of BRB's document preservation obligations, and consultations with BRB's General Counsel regarding the appropriate scope and structure of the response to the SEC's inquiry.
Independent Auditor. BRB's independent registered public accounting firm is Whitfield Keane LLP ("WK"), which is registered with the Public Company Accounting Oversight Board under PCAOB Registration No. 2847. The audit engagement partner for BRB at WK is Lorraine Dupont. WK audited BRB's consolidated financial statements for the fiscal year ended December 31, 2022, and issued an unqualified audit opinion in connection with BRB's Form 10-K filing.
We note for informational purposes that WK has separately retained its own counsel, Hargrove & Millstein LLP (lead partner: Samuel Hargrove), in connection with the SEC investigation. WK's counsel fees are not being submitted under BRB's D&O policy, as WK is not an Insured under the Policy. To the extent that the SEC Staff seeks information or testimony from WK or its personnel, WK's response will be handled independently through its own counsel.
8. Requested Actions
In light of the foregoing, BRB respectfully requests that Northcastle take the following actions at its earliest convenience:
1. Acknowledgment of Receipt. Provide formal written acknowledgment of receipt of this tender letter and the enclosed materials, confirming that the Claim has been recorded and assigned within Northcastle's claims department.
2. Confirmation of Coverage. Provide written confirmation that the SEC investigation described herein constitutes a covered Claim under Policy No. NMA-DO-2023-11847, subject to the terms, conditions, and exclusions of the Policy.
3. Approval of Defense Counsel and Consultants. Approve Calderwood & Harkness LLP as defense counsel and Brindoval Analytic Partners LLC as an approved forensic accounting consultant, with their respective fees and expenses qualifying as covered Defense Costs under the Policy.
4. Designation of Claims Handler. Designate a specific claims handler or claims examiner within Northcastle's claims department to serve as the primary point of contact for this matter, and confirm the identity and contact information of such individual.
5. Confirmation of Billing and Reporting Protocols. Provide a copy of Northcastle's current billing guidelines and confirm the applicable reporting requirements and communication protocols for this Claim, including the role of Thornfield & Rowe LLP as claims counsel.
6. Confirmation of Retention and Coverage Terms. Confirm that the applicable retention for this Claim is the $2,500,000 entity retention set forth in the Policy, and confirm any other material coverage terms or conditions that BRB should be aware of in connection with this Claim.
BRB requests that Northcastle respond to this tender letter within fifteen (15) business days of receipt, or as soon as practicable. Time is of the essence given the active status of the SEC investigation, the document production deadlines imposed by the SEC subpoena, and the ongoing accumulation of Defense Costs.
9. Reservation of Rights
BRB tenders this Claim without waiver of any rights, defenses, or coverage positions under the Policy, the first excess policy issued by Cascade Omnivrel Insurance Group (Policy No. CFIG-XS1-2023-5598), or any other applicable insurance coverage. Nothing in this letter shall be construed as an admission by BRB, its directors, or its officers regarding the merits of the SEC's investigation or the matters under inquiry. BRB's description of the SEC's preliminary positions is provided solely for the purpose of facilitating Northcastle's coverage evaluation and does not reflect BRB's agreement with or concession to any such positions.
BRB expressly reserves the right to:
• Tender additional Claims, or supplement this tender, as the SEC investigation develops, including but not limited to the tender of Claims arising from the issuance of a Wells notice, the commencement of a formal enforcement action, or the initiation of related litigation;
• Assert coverage under any and all applicable insuring agreements of the Policy, including Side A, Side B, and Side C coverage;
• Seek reimbursement of Defense Costs incurred prior to the date of this tender, to the extent permitted by the Policy; and
• Pursue all available remedies in the event that Northcastle denies coverage, reserves rights, or otherwise disputes the applicability of the Policy to this Claim.
BRB requests that any reservation of rights by Northcastle be communicated in writing to this firm and to BRB's General Counsel promptly upon determination. BRB further requests that any such reservation of rights identify with specificity the policy provisions, exclusions, or conditions upon which Northcastle relies, so that BRB may evaluate and respond to Northcastle's coverage position in a timely manner.
10. Confidentiality
BRB respectfully requests that Northcastle treat all information provided in connection with this tender — including this letter, all enclosed materials, and any subsequent communications related to this Claim — as strictly confidential. Northcastle should not disclose any such information to third parties except as necessary for the administration of this Claim (including communications with Northcastle's claims counsel, Thornfield & Rowe LLP, and BRB's broker, Ridgeline Governance Advisors LLC), or as otherwise required by applicable law.
This request for confidential treatment is made in light of the highly sensitive nature of the pending SEC enforcement investigation and the publicly traded status of BRB (Nasdaq: BRDG). Premature or unauthorized disclosure of the existence or details of the SEC investigation, or of the insurance coverage analysis associated therewith, could cause significant harm to BRB, its shareholders, and its directors and officers. We trust that Northcastle will exercise the utmost care in safeguarding the confidentiality of this information, consistent with the confidentiality provisions of the Policy and Northcastle's obligations under applicable law.
Closing
BRB is committed to full cooperation with Northcastle throughout the pendency of this Claim and will endeavor to provide timely and transparent communication regarding all material developments in the SEC investigation. We believe that early and constructive engagement between BRB, its defense counsel, and Northcastle's claims team will serve the mutual interests of all parties in the efficient and effective resolution of this matter.
We request that Northcastle designate a point of contact for ongoing claims coordination and direct all correspondence relating to this Claim to the undersigned at the address, telephone number, and email address set forth below.
Thank you for your prompt attention to this matter. We look forward to Northcastle's timely response.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Victoria Chambers, Partner
425 Lexington Avenue, 30th Floor New York, New York 10017 Direct Telephone: (212) 554-7218
Email: vchambers@calderwoodharkness.com
Enclosures:
1. Copy of SEC Voluntary Request Letter dated September 18, 2023 (File No. HO-14287)
2. Copy of SEC Formal Order of Investigation No. EN-2023-0947 dated October 12, 2023
3. Copy of SEC Document Subpoena No. HO-14287-001 dated October 15, 2023
4. Calderwood & Harkness LLP Engagement Letter dated September 20, 2023 (Engagement No. SC-MAT-2023-4172)
5. Brindoval Analytic Partners LLC Consulting Engagement Letter dated October 10, 2023
6. Declarations Page of D&O Liability Insurance Policy No. NMA-DO-2023-11847
cc:
Derek Sung, General Counsel / Chief Legal Officer Belmont Ridge Bank National Association 200 Park Avenue South, 38th Floor New York, New York 10003
Melinda Tran, Senior Vice President Ridgeline Governance Advisors LLC 100 Federal Street, Suite 3600 Boston, Massachusetts 02110
Brenda Alvaro Thornfield & Rowe LLP (Northcastle Claims Counsel) 227 West Monroe Street, Suite 4400 Chicago, Illinois 60606
Policy Term | Detail
Policy Number | NMA-DO-2023-11847
Insurer | Northcastle Mutual Assurance Company (domiciled in the State of Connecticut)
Named Insured | Belmont Ridge Bank National Association and its Directors and Officers
Policy Period | July 1, 2023 – July 1, 2024
Primary Limit of Liability | $15,000,000 per Policy Period
Entity Retention (Self-Insured Retention) | $2,500,000
Coverage Structure | Side A (Individual D&O — non-indemnifiable loss), Side B (Corporate Reimbursement), Side C (Entity Securities)
Attorney | Role | Hourly Rate
Victoria Chambers | Partner (Responsible Partner) | $1,475
Howard Quinn | Partner (Billing Partner) | $1,350
Jasmine Thornton | Lead Associate | $895
Liam Donahue | Working Associate | $695

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