MNSBP

• Net interest margin expansion: Quarterly net interest margin is 3.75%, core net interest margin expanded, cost of funds contracted by 20 basis points to 3.29%. - Loan portfolio: Diversified loan portfolio, commercial real estate concentration managed within board limits, positive trends in workout credits, government contracting portfolio with 29 asset-based lines of credit, loan portfolio positioned for stable or falling rates. - Deposits: Business banking team attracting and growing noninterest and low-cost deposits, reducing reliance on noncore deposits by 19%. - Expenses: Intentional management of operating expenses, revised estimations for the second half including regulatory and talent retention challenges.

• Loan growth: Low single-digit loan growth guidance, focusing on right opportunities, not just growth for growth's sake. - Funding and margin: Expectations to reprice $152 million in CDs in the second half, leveraging deposit growth from business bankers to improve funding mix and margin. - Profitability: Trending towards 1% ROA, aiming for double-digit ROE.

Financial performance over the last 5 quarters showed earnings per share increased to $0.53, return on average assets to 0.86%, return on average tangible common equity to 8.84%, and net interest margin to 3.75%. The total loan outstanding is $1.8 billion, distributed as 30% nonowner-occupied commercial real estate, 21% owner-occupied commercial real estate, 18% construction, 14% multifamily, 11% residential real estate, and 6% commercial and industrial. Core deposits remained consistent, while noninterest-bearing and low-cost deposits grew by $6 million during the quarter, and reliance on noncore deposits was reduced by 19%.

• Regulatory impact: Actions by federal and D.C. government affecting business strategy. - Credit quality: Monitoring real estate asset prices, residential real estate days on market, and government contracting market dynamics. - Deposit challenges: Difficulty in low-cost deposit acquisition.

Q: About loan pipelines and sustainable pace of loan growth A: Tom Floyd mentioned low single-digit loan growth guidance, focusing on right opportunities Q: Funding mix and margin relief A: Richard Vari discussed opportunities to reprice CDs and grow deposits Q: Asset quality trends A: Tom Floyd noted positive credit quality trends, monitoring real estate assets Q: Government contracting stability A: Tom Floyd said it's stabilizing but still need to monitor Q: Costs associated with closing Avenu A: Jeff Dick said bulk costs incurred, now in maintenance mode Q: Share repurchases in Q2 A: Richard Vari said no block trades in Q2 except Russell 2000 reconstitution Q: Regulatory limits on CRE and growth A: Tom Floyd said they operate within board limits and have diverse pipeline Q: Profitability goals for 2026 A: Richard Vari said trending towards 1% ROA Q: Justifying bank independence A: Jeff Dick said 1% or more ROA is key