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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 24, 2025
Esquire Financial Holdings, Inc.
(Exact name of the registrant as specified in its charter)
Maryland |
001-38131 |
27-5107901 |
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
100 Jericho Quadrangle, Suite 100 |
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Jericho, New York |
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11753 |
(Address of principal executive offices) |
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(Zip Code) |
(516) 535-2002
(Registrant’s telephone number)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.01 par value |
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ESQ |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02Results of Operations and Financial Condition.
On April 24, 2025, Esquire Financial Holdings, Inc. (the “Company”), the holding company for Esquire Bank, National Association (“Esquire Bank”), issued a press release announcing its earnings for the quarter ended March 31, 2025. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.
The information contained in this Item 2.02 and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 7.01Regulation FD Disclosure.
Esquire Financial Holdings, Inc. (the “Company”) intends to distribute and make available to investors, and to post on its website, the written presentation attached hereto as Exhibit 99.2. The presentation is furnished in this Current Report on Form 8-K, pursuant to this Item 7.01, as Exhibit 99.2, and is incorporated herein by reference.
The information contained in this Item 7.01 and Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
|
Description |
99.1 |
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|
99.2 |
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Written presentation to be distributed and made available to investors and posted |
104 |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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ESQUIRE FINANCIAL HOLDINGS, INC. |
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Dated: April 24, 2025 |
By:/s/ Andrew C. Sagliocca |
|
Andrew C. Sagliocca |
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Vice Chairman, Chief Executive Officer and President |
Exhibit 99.1
ESQUIRE FINANCIAL HOLDINGS, INC.
REPORTS FIRST QUARTER 2025 RESULTS
Net Interest Margin Expansion Fueled by Commercial Growth Drives Industry Leading Earnings and Performance
Jericho, NY – April 24, 2025 – Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the “Company”), the financial holding company for Esquire Bank, National Association (“Esquire Bank” or the “Bank”), (collectively “Esquire”) today announced its operating results for the first quarter of 2025. Significant achievements and key performance metrics during the current quarter include:
| ● | Net income increased 13% to $11.4 million, or $1.33 per diluted share, as compared to $10.1 million, or $1.20 per diluted share, for the comparable quarter in 2024 despite a $500 thousand increase in the provision for credit losses and a $2.2 million increase in total noninterest expense. |
| ● | On a linked quarter basis, net income was relatively flat at $11.4 million despite a $1.1 million increase in noninterest expense driven by increases in compensation and benefits and our continued investment in future growth. |
| ● | Industry leading and consistent returns on average assets and equity of 2.39% and 19.13%, respectively. |
| ● | Net interest margin expansion to 5.96%, a 9 basis points increase on a linked quarter basis, primarily due to the successful deployment of excess average cash balances (funded with core low-cost deposits) into commercial law firm loans during the latter part of the fourth quarter 2024. Total revenue increased $4.5 million, or 15%, to $33.8 million in the current quarter as compared to the first quarter of 2024. |
| ● | Loan growth on a linked quarter basis was $18.8 million, or 5% annualized, totaling $1.42 billion, despite growth being tempered in the current quarter by anticipated paydowns of elevated commercial loan draws from the prior linked quarter. Significant average loan growth of $79.2 million, or 24% annualized on a linked quarter basis fueled by growth in higher yielding variable rate commercial loans from our national litigation platform. These commercial lending relationships have and will continue to create additional opportunities for future loan draws and core deposit growth (noninterest bearing operating or demand deposits and escrow or IOLTA accounts nationally) through our full service commercial relationship banking and tech-enabled commercial cash management platform. |
| ● | Solid credit metrics, asset quality, and reserve coverage ratios with an allowance for credit losses to loans ratio of 1.37% and a nonperforming loan to total assets ratio of 0.41%. The one nonaccrual multifamily loan totaled $8.0 million, net of a $2.9 million charge-off in the current quarter that was based on a proposed restructuring with the borrower in mid-April 2025. We anticipate that this restructuring will be completed in the second quarter of 2025 and the nonaccrual loan should return to accrual status, based on future sustained performance metrics, in the latter part of 2025. We have no exposure to commercial office space, no construction loans, and only $14.5 million in performing loans to the hospitality industry. |
| ● | Continued strong core deposit growth totaling $45.9 million, or 11% annualized, on a linked quarter basis to $1.69 billion, comprised of low-cost commercial relationship deposits with a cost-of-funds of 0.94% (including demand deposits). Deposits grew $254.1 million, or 18%, when comparing the current quarter to the comparable quarter in 2024 while average total deposits grew $331.9 million, or 25%, for the same period. Off-balance sheet sweep funds totaled $468.8 million, with approximately 95% available for additional on-balance sheet liquidity, while the associated administrative service payments (“ASP”) fee income totaled $880 thousand for the current quarter. Additional available liquidity totaled approximately $923 million, excluding cash and unsecured borrowing capacity. |
| ● | Stable and consistent fee income in the current quarter totaling $6.2 million, or 18% of total revenue, led by our payment processing platform with 90,000 small business clients nationally. Our tech-enabled payments platform allowed us to perform commercial treasury clearing services for $9.3 billion in credit and debit card payment volume across 140.4 million transactions for our small business clients in the current quarter. |
| ● | Strong efficiency ratio of 49.6% for the current quarter, notwithstanding our investments in resources to support future growth, risk management and excellence in client service. |
1
| ● | Our consistent industry leading performance and growth has led to an increase in our regular quarterly cash dividends by 17% to $0.175 per share of common stock, or 13% of current earnings per diluted share, marking our fourth consecutive increase for Esquire’s stockholders since initiating dividends in 2022. |
| ● | Announced a sourcing joint venture agreement through which funds managed by affiliates of Fortress Investment Group (“Fortress”) will provide capital to expand lending solutions and banking services to contingency fee law firms, enhancing borrowing options to law firms and offering access to customized credit facilities with industry leading terms, rates and flexibility. |
| ● | Strong capital foundation with common equity tier 1 (“CET1”) and tangible common equity to tangible asset(1) (“TCE/TA”) ratios of 15.24% and 12.83%, respectively. Including the after-tax unrealized losses on both the available-for-sale and held-to-maturity securities portfolios of $11.7 million and $4.7 million, respectively, the adjusted(1) CET1 and adjusted(1) TCE/TA ratios were 14.16% and 12.59%, respectively. Esquire Bank remains well above the bank regulatory “Well Capitalized” standards. |
| ● | Recognized as a “Best-Performing U.S. Small Community Bank of 2024” by S&P Global Market Intelligence based on the Bank’s key financial metrics including returns, growth and funding, while placing a premium on balance sheet strength and risk profile. The rankings provide insight into banks that have demonstrated resilience and strong performance in a dynamic financial environment. |
“It is an honor to be recognized as a best-performing community bank by S&P Global Market Intelligence,” stated Tony Coelho, Chairman of the Board. “This recognition further validates our strategic vision in creating a client-centric and customized tech-enabled Company that is disruptive to our complex, fragmented, and significantly underserved national markets while generating consistent best-in-class performance and financial metrics for all stakeholders.”
“When coupling our 2022 investment in senior regional business development officers (as well as our continuous investment in technology and customer experience) with the recent Fortress sourcing agreement and the anticipated opening of our Los Angeles private banking branch, we believe Esquire is well positioned for sustained growth in 2025 and beyond commensurate with prior years,” stated Andrew C. Sagliocca, Vice Chairman, CEO, and President. “While short-term growth and performance metrics are valuable, it’s our long-term vision that will position Esquire for continued and sustained success in the future.”
| (1) | See non-GAAP reconciliation provided at the end of this news release. |
2
First Quarter Earnings
Net income for the quarter ended March 31, 2025 was $11.4 million, or $1.33 per diluted share, compared to $10.1 million, or $1.20 per diluted share for the same period in 2024. Returns on average assets and equity for the current quarter were 2.39% and 19.13%, respectively, compared to 2.59% and 20.14% for the same period of 2024.
Net interest income for the first quarter of 2025 increased $4.7 million, or 20.8%, to $27.6 million, due to growth in average interest earning assets totaling $361.9 million, or 23.9%, to $1.88 billion when compared to the first quarter of 2024. Our net interest margin of 5.96% decreased 10 basis points, driven by the change in composition of our average interest earning assets (primarily securities and interest earning cash balances) funded with low-cost core deposits as well as decreases in short-term market interest rates. Average loan yields increased 2 basis points to 7.80% while average loans increased $186.2 million, or 15.4%, to $1.39 billion, due to growth of $187.5 million, or 25.5%, in our higher yielding national commercial lending platform, led by litigation related lending facilities. Loan interest income increased $3.4 million, or 14.6%, to $26.8 million with $3.4 million related to growth in average loan volumes (primarily commercial) and a $33 thousand increase in average loan rates (primarily commercial). Throughout 2024, management tempered multifamily and commercial real estate loan growth in response to the economic environment. Average securities increased $101.7 million, or 45%, to $327.8 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields. This decision further enhanced our liquidity ratios while improving our securities to asset ratio to approximately 16% in the current quarter from 13% in the comparable quarter in 2024. This decision also increased securities yields by 91 basis points to 3.76%, while total securities income increased by $1.4 million with $843 thousand attributable to average volume increases and $594 thousand attributable to increases in average rate. Average interest earning cash balances, our lowest yielding asset category, remained elevated at $155.8 million, negatively impacting our net interest margin, despite deploying excess cash into higher yielding commercial loans and securities on a linked quarter basis. Average deposits significantly increased $331.9 million, or 24.6%, to $1.68 billion, led by increases in escrow or IOTLA, noninterest bearing demand, and money market (both commercial and personal) deposits totaling $259.6 million, $58.2 million, and $17.9 million, respectively, when comparing the current quarter to the comparable quarter in 2024. Our cost of deposits, including noninterest bearing demand deposits, decreased 2 basis points to 0.94%. Our loan-to-deposit ratio was 84% for the current quarter.
The provision for credit losses was $1.5 million for the first quarter of 2025, a $500 thousand increase from the first quarter 2024 provision. As of March 31, 2025, our allowance to loans ratio was 1.37% as compared to 1.43% as of March 31, 2024. The decrease in the allowance as a percentage of loans was a result of management’s revaluation of credit risk in our multifamily portfolio subsequent to a $2.9 million charge-off recognized, which was partially offset by an increase in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment including, but not limited to, its potential impact on the New York metro multifamily and commercial real estate market.
Noninterest income totaled $6.2 million for the first quarter of 2025 as compared to $6.4 million in the same period for 2024. Payment processing income was $4.9 million for the first quarter of 2025, a $384 thousand decrease from the same period in 2024, primarily due to anticipated ISO and merchant turnover and changes in our overall merchant risk profile and composition. Payment processing volumes for the credit and debit card processing platform increased $673.3 million, or 7.8%, to $9.3 billion and transactions decreased 10.1 million, or 6.7%, to 140.4 million for the current quarter, as compared to the same period in 2024. We continue to focus on the expansion of sales channels through ISOs, prudently managing risk while focusing on new merchant originations, increasing overall volumes as well as risk profiles, and expanding our technology and other resources in the payment vertical. The Company utilizes proprietary and industry leading/customized technology to ensure card brand and regulatory compliance, supports multiple processing platforms, manages daily risk across 90,000 small business merchants in all 50 states, and performs commercial treasury clearing services for $9.3 billion in volume across 140.4 million in transactions in the current quarter. ASP fee income increased $134 thousand to $880 thousand for the first quarter of 2025. ASP fee income is directly impacted by the average balances of off-balance sheet sweep funds as well as current short-term market interest rates.
Noninterest expense increased $2.2 million, or 15.0%, to $16.7 million for the first quarter of 2025, as compared to the same period in 2024. This increase was primarily due to increases in employee compensation and benefits, data processing, professional and consulting services, occupancy and equipment, and other general business operating costs. Employee compensation and benefits costs increased $904 thousand, or 9.9%, primarily due increases in sales commissions, bonuses, year-end stock grants and related stock-based compensation, and, to a lesser extent, the impact of year end salary increases. The increase in sales related commissions is directly related to our regional business development officer (“BDO”) strategy and their success in the litigation market, attracting full-service commercial banking clients nationally and directly impacting commercial lending and core-deposit growth. Data processing costs increased $409 thousand due to increases in core banking processing volumes and the continued implementation/improvement of technology supporting client relationships and lead acquisition initiatives (CRM platform, digital marketing, business development, and lending) as well as overall risk management across all platforms. Professional and consulting services costs increased $313 thousand due to continuously evaluating business development opportunities in our national verticals, increased insurance and accounting costs, and costs related to staffing needs for our Los Angeles private banking branch (scheduled to open in the summer of 2025). Occupancy and equipment costs increased $205 thousand due to amortization of internally developed software to support our digital marketing and risk management platforms and rent commencement related to our Los Angeles private banking branch. Other operating costs increased $294 thousand due to increases in regulatory expenses and other client development costs.
3
The Company’s efficiency ratio was 49.6% for the three months ended March 31, 2025, as compared to 49.8% in 2024, notwithstanding our continuous investment in resources (both technology and people) to support future growth, lead acquisition initiatives, excellence in client service, and enhanced risk management.
The effective tax rate was 26.5% for the first quarter of 2025, consistent with the comparable prior year.
Asset Quality
At March 31, 2025, we had one nonperforming multifamily loan totaling $8.0 million, no exposure to commercial office space no construction loans, and $14.5 million in performing loans to the hospitality industry. The allowance for credit losses was $19.5 million, or 1.37% of total loans, as compared to $17.5 million, or 1.43% of total loans at March 31, 2024. Effective March 31, 2025, a $2.9 million charge-off on the one nonperforming multifamily loan was recognized based on our proposed restructuring of this credit with the borrower in April 2025. We anticipate that this restructuring will be completed in the second quarter of 2025 with the goal of returning this nonperforming credit facility to performing status, based on future sustained performance metrics, in the latter part of 2025. The ratio of nonperforming loans to total loans and total assets was 0.57% and 0.41%, respectively. The decrease in the allowance as a percentage of loans was a result of management’s revaluation of credit risk in our multifamily portfolio subsequent to a $2.9 million charge-off recognized, which was partially offset by an increase in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment including, but not limited to, its potential impact on the New York metro multifamily and commercial real estate market.
The following is a brief summary of our risk management results for our multifamily and CRE portfolios as of March 31, 2025:
| ● | The multifamily portfolio, excluding one nonperforming loan, totaling $356.9 million, has a current weighted average DSCR and an original LTV (defined as unpaid principal balance as of March 31, 2025 divided by appraised value at origination) of approximately 1.62 and 55%, respectively, and the CRE portfolio, totaling $86.8 million, has a current weighted average DSCR and an original LTV of approximately 1.52 and 58%, respectively. |
| ● | Multifamily loans maturing in less than one year totaled $61.6 million and had a current weighted average DSCR and an original LTV of approximately 1.32 and 58%, respectively. CRE loans maturing in less than one year totaled $2.2 million and had a current weighted average DSCR and an original LTV of approximately 1.53 and 60%, respectively. |
| ● | Multifamily loans maturing in one to two years totaled $54.1 million and had a current weighted average DSCR and an original LTV of approximately 1.38 and 68%, respectively. CRE loans maturing in one to two years totaled $9.6 million and had a current weighted average DSCR and an original LTV of approximately 1.59 and 60%, respectively. |
Balance Sheet
At March 31, 2025, total assets were $1.95 billion, reflecting a $300.2 million, or 18.1% increase from March 31, 2024. This increase was primarily attributable to growth in loans totaling $187.6 million, or 15.3%, to $1.42 billion. Our higher yielding variable rate commercial loans increased $179.9 million, or 23.8%, to $934.1 million with commercial litigation related loans increasing $201.0 million, or 31.7%, to $835.4 million. Our commercial relationship banking sales pipeline remained robust, anchored by our regional BDOs (supported by commercial lending, risk, and operations) located in key markets throughout the U.S. These BDOs are supported by our best-in-class technology stack including, but not limited to: our proprietary CRM system, digital marketing cloud and lending based technology built on Salesforce, supporting client relationships and lead acquisition initiatives; account-based digital marketing (or “ABM”) with significant thought leadership content; and artificial intelligence (or “AI”) for advance data analytics across our platform and to power personalized and real-time ABM content to both current clients and perspective clients. Our available-for-sale securities portfolio increased $94.8 million to $236.9 million as compared to March 31, 2024. Our held-to-maturity securities portfolio totaled $66.7 million, a decrease of $8.5 million, or 11.3%, due to portfolio amortization. As previously stated, the securities portfolio increased as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields. Our total securities to assets ratio was 16% at March 31, 2025 as compared to 13% in the comparable prior year, enhancing our liquidity position, asset composition, and flexibility in the future.
4
The following table provides information regarding the composition of our loan portfolio for the periods presented:
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March 31, |
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December 31, |
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March 31, |
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|||||||||
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2025 |
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2024 |
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2024 |
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(Dollars in thousands) |
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Real estate: |
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Multifamily |
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$ |
364,877 |
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25.8 |
% |
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$ |
355,165 |
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25.4 |
% |
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$ |
348,666 |
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28.4 |
% |
Commercial real estate |
|
|
86,797 |
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6.1 |
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|
|
87,038 |
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6.2 |
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|
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89,016 |
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7.2 |
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1 – 4 family |
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10,974 |
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0.8 |
|
|
|
14,665 |
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1.1 |
|
|
|
17,797 |
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1.5 |
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Total real estate |
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462,648 |
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32.7 |
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|
|
456,868 |
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32.7 |
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455,479 |
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37.1 |
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Commercial: |
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Litigation related |
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835,415 |
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59.0 |
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835,839 |
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59.8 |
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|
|
634,430 |
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51.6 |
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Other |
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98,726 |
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7.0 |
|
|
|
84,728 |
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6.1 |
|
|
|
119,860 |
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9.8 |
|
Total commercial |
|
|
934,141 |
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66.0 |
|
|
|
920,567 |
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65.9 |
|
|
|
754,290 |
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61.4 |
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Consumer |
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|
18,705 |
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1.3 |
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|
|
19,339 |
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1.4 |
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|
|
18,953 |
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1.5 |
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Total loans held for investment |
|
$ |
1,415,494 |
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100.0 |
% |
|
$ |
1,396,774 |
|
100.0 |
% |
|
$ |
1,228,722 |
|
100.0 |
% |
Deferred loan fees and unearned premiums, net |
|
|
364 |
|
|
|
|
|
247 |
|
|
|
|
|
(480) |
|
|
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Loans, held for investment |
|
$ |
1,415,858 |
|
|
|
|
$ |
1,397,021 |
|
|
|
|
$ |
1,228,242 |
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|
|
Total deposits were $1.69 billion as of March 31, 2025, a $254.1 million, or 17.7%, increase from March 31, 2024. This was primarily due to a $211.7 million, or 22.4%, increase in Savings, NOW and Money Market deposits, primarily driven by our IOLTA and other escrow deposits as well as a $50.8 million, or 10.8%, increase in noninterest bearing demand deposits. Our deposit strategy primarily focuses on developing full service commercial banking relationships nationally with our clients through commercial lending facilities, payment processing, and other unique commercial cash management services in our two national verticals, rather than competing with other institutions on rate. Our longer duration IOLTA, escrow and settlement deposits represent $961.4 million, or 57.0%, of total deposits. As of March 31, 2025, uninsured deposits were $525.6 million, or 31%, of our total deposits of $1.69 billion, excluding $11.3 million of affiliate deposits held at the Bank. Approximately 80% of our uninsured deposits represent clients with full commercial relationship banking with us (i.e.-commercial loans, payment processing, and other commercial service-oriented relationships) including, but not limited to, law firm operating accounts, law firm IOLTA/escrow accounts, merchant reserves, ISO reserves, ACH processing, and custodial accounts.
Due to the nature of our larger mass tort and class action settlements related to the litigation vertical, we participate in FDIC insured sweep programs as well as treasury secured money market funds. As of March 31, 2025, off-balance sheet sweep funds totaled approximately $468.8 million, of which approximately $442.8 million, or 94.5%, was available to be swept on balance sheet as reciprocal client relationship deposits. Our core low-cost deposit growth and off-balance sheet client funds continue to clearly demonstrate our highly efficient, full service commercial relationships and tech-enabled cash management platform.
At March 31, 2025, we had the ability to borrow, on a secured basis, up to $429.6 million from the FHLB of New York and $50.8 million from the FRB of New York discount window. No borrowing amounts were outstanding during the first quarter of 2025. Historically, we have not leveraged our balance sheet to generate earnings and have always utilized core client deposits to fund our asset growth and related earnings.
Stockholders’ equity increased $43.6 million to $250.7 million as of March 31, 2025, when compared to March 31, 2024, primarily driven by net increases in retained earnings (net income less dividends paid to shareholders), and to a lesser extent, other comprehensive income (unrealized net gain on securities available-for-sale, net of taxes) of $2.7 million.
Esquire Bank remains well above bank regulatory “Well Capitalized” standards.
About Esquire Financial Holdings, Inc.
Esquire Financial Holdings, Inc. is a financial holding company headquartered in Jericho, New York, with one branch office in Jericho, New York and an administrative office in Boca Raton, Florida. Its wholly-owned subsidiary, Esquire Bank, National Association, is a full-service commercial bank dedicated to serving the financial needs of the litigation industry and small businesses nationally, as well as commercial and retail clients in the New York metropolitan area. The Bank offers tailored financial and payment processing solutions to the litigation community and their clients as well as dynamic and flexible payment processing solutions to small business owners. For more information, visit www.esquirebank.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 relating to future results of the Company.
5
Forward-looking statements are subject to many risks and uncertainties, including, but not limited to: changes in business plans as circumstances warrant; changes in general economic, business and political conditions, including changes in the financial markets; and other risks detailed in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “attribute,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “aim,” “would,” “annualized” and “outlook,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as may be required by law.
Contact Information:
Eric S. Bader
Executive Vice President and Chief Operating Officer
Esquire Financial Holdings, Inc.
(516) 535-2002
eric.bader@esqbank.com
6
ESQUIRE FINANCIAL HOLDINGS, INC.
Consolidated Statement of Condition (unaudited)
(dollars in thousands except per share data)
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March 31, |
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December 31, |
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March 31, |
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|||
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2025 |
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2024 |
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2024 |
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ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
173,041 |
|
$ |
126,329 |
|
$ |
158,243 |
|
Securities available-for-sale, at fair value |
|
|
236,919 |
|
|
241,746 |
|
|
142,159 |
|
Securities held-to-maturity, at cost |
|
|
66,736 |
|
|
68,660 |
|
|
75,242 |
|
Securities, restricted at cost |
|
|
3,034 |
|
|
3,034 |
|
|
2,928 |
|
Loans, held for investment |
|
|
1,415,858 |
|
|
1,397,021 |
|
|
1,228,242 |
|
Less: allowance for credit losses |
|
|
(19,461) |
|
|
(20,979) |
|
|
(17,523) |
|
Loans, net of allowance |
|
|
1,396,397 |
|
|
1,376,042 |
|
|
1,210,719 |
|
Premises and equipment, net |
|
|
3,328 |
|
|
2,436 |
|
|
2,661 |
|
Other assets |
|
|
74,982 |
|
|
74,256 |
|
|
62,329 |
|
Total Assets |
|
$ |
1,954,437 |
|
$ |
1,892,503 |
|
$ |
1,654,281 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
$ |
523,441 |
|
$ |
497,958 |
|
$ |
472,616 |
|
Savings, NOW and money market deposits |
|
|
1,158,748 |
|
|
1,130,174 |
|
|
947,055 |
|
Certificates of deposit |
|
|
5,931 |
|
|
14,104 |
|
|
14,378 |
|
Total deposits |
|
|
1,688,120 |
|
|
1,642,236 |
|
|
1,434,049 |
|
Other liabilities |
|
|
15,593 |
|
|
13,173 |
|
|
13,154 |
|
Total liabilities |
|
|
1,703,713 |
|
|
1,655,409 |
|
|
1,447,203 |
|
Total stockholders' equity |
|
|
250,724 |
|
|
237,094 |
|
|
207,078 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
1,954,437 |
|
$ |
1,892,503 |
|
$ |
1,654,281 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data |
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
8,431,774 |
|
|
8,354,753 |
|
|
8,292,789 |
|
Book value per share |
|
$ |
29.74 |
|
$ |
28.38 |
|
$ |
24.97 |
|
Equity to assets |
|
|
12.83 |
% |
|
12.53 |
% |
|
12.52 |
% |
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios (1) |
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage ratio |
|
|
12.01 |
% |
|
11.70 |
% |
|
12.42 |
% |
Common equity tier 1 capital ratio |
|
|
15.24 |
|
|
14.67 |
|
|
14.41 |
|
Tier 1 capital ratio |
|
|
15.24 |
|
|
14.67 |
|
|
14.41 |
|
Total capital ratio |
|
|
16.49 |
|
|
15.92 |
|
|
15.66 |
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
|
|
Nonperforming loans |
|
$ |
8,000 |
|
$ |
10,940 |
|
$ |
10,941 |
|
Allowance for credit losses to total loans |
|
|
1.37 |
% |
|
1.50 |
% |
|
1.43 |
% |
Nonperforming loans to total loans |
|
|
0.57 |
|
|
0.78 |
|
|
0.89 |
|
Nonperforming assets to total assets |
|
|
0.41 |
|
|
0.58 |
|
|
0.66 |
|
Allowance to nonperforming loans |
|
|
243 |
|
|
192 |
|
|
160 |
|
| (1) | Regulatory capital ratios presented on bank-only basis. The Bank has no recorded intangible assets on the Statement of Financial Condition, and accordingly, tangible common equity is equal to common equity. |
7
ESQUIRE FINANCIAL HOLDINGS, INC.
Consolidated Income Statement (unaudited)
(dollars in thousands except per share data)
|
|
Three Months Ended |
|
|||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|||
|
|
2025 |
|
2024 |
|
2024 |
|
|||
Interest income |
|
$ |
31,513 |
|
$ |
30,784 |
|
$ |
26,073 |
|
Interest expense |
|
|
3,904 |
|
|
3,898 |
|
|
3,210 |
|
Net interest income |
|
|
27,609 |
|
|
26,886 |
|
|
22,863 |
|
Provision for credit losses |
|
|
1,500 |
|
|
1,700 |
|
|
1,000 |
|
Net interest income after provision for credit losses |
|
|
26,109 |
|
|
25,186 |
|
|
21,863 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
Payment processing fees |
|
|
4,912 |
|
|
5,088 |
|
|
5,296 |
|
Other noninterest income |
|
|
1,239 |
|
|
1,081 |
|
|
1,093 |
|
Total noninterest income |
|
|
6,151 |
|
|
6,169 |
|
|
6,389 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
10,065 |
|
|
9,634 |
|
|
9,161 |
|
Other expenses |
|
|
6,683 |
|
|
6,051 |
|
|
5,407 |
|
Total noninterest expense |
|
|
16,748 |
|
|
15,685 |
|
|
14,568 |
|
Income before income taxes |
|
|
15,512 |
|
|
15,670 |
|
|
13,684 |
|
Income taxes |
|
|
4,105 |
|
|
3,917 |
|
|
3,626 |
|
Net income |
|
$ |
11,407 |
|
$ |
11,753 |
|
$ |
10,058 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.43 |
|
$ |
1.49 |
|
$ |
1.29 |
|
Diluted |
|
|
1.33 |
|
|
1.37 |
|
|
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data |
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
2.39 |
% |
|
2.49 |
% |
|
2.59 |
% |
Return on average equity |
|
|
19.13 |
|
|
19.99 |
|
|
20.14 |
|
Net interest margin |
|
|
5.96 |
|
|
5.87 |
|
|
6.06 |
|
Efficiency ratio |
|
|
49.6 |
|
|
47.5 |
|
|
49.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common share |
|
$ |
0.175 |
|
$ |
0.150 |
|
$ |
0.150 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares |
|
|
7,988,999 |
|
|
7,869,435 |
|
|
7,786,887 |
|
Weighted average diluted shares |
|
|
8,601,607 |
|
|
8,588,925 |
|
|
8,401,752 |
|
8
ESQUIRE FINANCIAL HOLDINGS, INC.
Consolidated Average Balance Sheets and Average Yield/Cost (unaudited)
(dollars in thousands)
|
|
Three Months Ended |
|
||||||||||||||||||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
|
||||||||||||||||||
|
|
2025 |
|
2024 |
|
2024 |
|
||||||||||||||||||
|
|
Average |
|
|
|
|
Average |
|
Average |
|
|
|
|
Average |
|
Average |
|
|
|
|
Average |
|
|||
|
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
|
Balance |
|
Interest |
|
Yield/Cost |
|
||||||
INTEREST EARNING ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, held for investment |
|
$ |
1,394,602 |
|
$ |
26,810 |
|
7.80 |
% |
$ |
1,315,392 |
|
$ |
25,731 |
|
7.78 |
% |
$ |
1,208,429 |
|
$ |
23,389 |
|
7.78 |
% |
Securities, includes restricted stock |
|
|
327,838 |
|
|
3,042 |
|
3.76 |
% |
|
303,017 |
|
|
2,619 |
|
3.44 |
% |
|
226,175 |
|
|
1,605 |
|
2.85 |
% |
Interest earning cash and other |
|
|
155,768 |
|
|
1,661 |
|
4.32 |
% |
|
205,281 |
|
|
2,434 |
|
4.72 |
% |
|
81,740 |
|
|
1,079 |
|
5.31 |
% |
Total interest earning assets |
|
|
1,878,208 |
|
|
31,513 |
|
6.80 |
% |
|
1,823,690 |
|
|
30,784 |
|
6.72 |
% |
|
1,516,344 |
|
|
26,073 |
|
6.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EARNING ASSETS |
|
|
60,877 |
|
|
|
|
|
|
|
57,283 |
|
|
|
|
|
|
|
48,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL AVERAGE ASSETS |
|
$ |
1,939,085 |
|
|
|
|
|
|
$ |
1,880,973 |
|
|
|
|
|
|
$ |
1,564,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST BEARING LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, Money Market deposits |
|
$ |
1,134,099 |
|
$ |
3,784 |
|
1.35 |
% |
$ |
1,081,662 |
|
$ |
3,730 |
|
1.37 |
% |
$ |
860,159 |
|
$ |
3,098 |
|
1.45 |
% |
Time deposits |
|
|
10,806 |
|
|
119 |
|
4.47 |
% |
|
14,111 |
|
|
167 |
|
4.71 |
% |
|
11,041 |
|
|
111 |
|
4.04 |
% |
Total interest bearing deposits |
|
|
1,144,905 |
|
|
3,903 |
|
1.38 |
% |
|
1,095,773 |
|
|
3,897 |
|
1.41 |
% |
|
871,200 |
|
|
3,209 |
|
1.48 |
% |
Borrowings |
|
|
43 |
|
|
1 |
|
9.43 |
% |
|
44 |
|
|
1 |
|
9.04 |
% |
|
45 |
|
|
1 |
|
8.94 |
% |
Total interest bearing liabilities |
|
|
1,144,948 |
|
|
3,904 |
|
1.38 |
% |
|
1,095,817 |
|
|
3,898 |
|
1.42 |
% |
|
871,245 |
|
|
3,210 |
|
1.48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST BEARING LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
535,182 |
|
|
|
|
|
|
|
534,747 |
|
|
|
|
|
|
|
477,020 |
|
|
|
|
|
|
Other liabilities |
|
|
17,142 |
|
|
|
|
|
|
|
16,555 |
|
|
|
|
|
|
|
15,787 |
|
|
|
|
|
|
Total noninterest bearing liabilities |
|
|
552,324 |
|
|
|
|
|
|
|
551,302 |
|
|
|
|
|
|
|
492,807 |
|
|
|
|
|
|
Stockholders' equity |
|
|
241,813 |
|
|
|
|
|
|
|
233,854 |
|
|
|
|
|
|
|
200,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL AVG. LIABILITIES AND EQUITY |
|
$ |
1,939,085 |
|
|
|
|
|
|
$ |
1,880,973 |
|
|
|
|
|
|
$ |
1,564,946 |
|
|
|
|
|
|
Net interest income |
|
|
|
|
$ |
27,609 |
|
|
|
|
|
|
$ |
26,886 |
|
|
|
|
|
|
$ |
22,863 |
|
|
|
Net interest spread |
|
|
|
|
|
|
|
5.42 |
% |
|
|
|
|
|
|
5.30 |
% |
|
|
|
|
|
|
5.44 |
% |
Net interest margin |
|
|
|
|
|
|
|
5.96 |
% |
|
|
|
|
|
|
5.87 |
% |
|
|
|
|
|
|
6.06 |
% |
Deposits (including noninterest bearing demand deposits) |
|
$ |
1,680,087 |
|
$ |
3,903 |
|
0.94 |
% |
$ |
1,630,520 |
|
$ |
3,897 |
|
0.95 |
% |
$ |
1,348,220 |
|
$ |
3,209 |
|
0.96 |
% |
9
ESQUIRE FINANCIAL HOLDINGS, INC.
Consolidated Non-GAAP Financial Measure Reconciliation (unaudited)
(dollars in thousands)
We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures by other companies.
The following table presents the adjusted tangible common equity to tangible assets calculation (non-GAAP):
|
March 31, |
|
|
|
2025 |
|
|
Total assets - GAAP |
$ |
1,954,437 |
|
Less: intangible assets |
|
— |
|
Tangible assets ("TA") - non-GAAP |
|
1,954,437 |
|
|
|
|
|
Total stockholders' equity - GAAP |
$ |
250,724 |
|
Less: intangible assets |
|
— |
|
Less: preferred stock |
|
— |
|
Tangible common equity ("TCE") - non-GAAP |
|
250,724 |
|
Add: unrecognized losses on securities held-to-maturity, net of tax |
|
(4,727) |
|
Adjusted TCE - non-GAAP |
$ |
245,997 |
|
|
|
|
|
Stockholders' equity to assets - GAAP |
|
12.83 |
% |
TCE to TA - non-GAAP |
|
12.83 |
% |
Adjusted TCE to TA - non-GAAP |
|
12.59 |
% |
The following table presents the common equity tier 1 capital ratio and the adjusted common equity tier 1 capital ratio:
|
March 31, |
|
|
|
2025 |
|
|
Common equity tier 1 ("CET1") capital - Bank |
$ |
230,860 |
|
Add: unrealized losses on securities available-for-sale , net of tax |
|
(11,683) |
|
Add: unrecognized losses on securities held-to-maturity, net of tax |
|
(4,727) |
|
Adjusted CET1 capital - Bank |
$ |
214,450 |
|
|
|
|
|
Total risk-weighted assets - Bank |
$ |
1,514,433 |
|
|
|
|
|
CET1 capital ratio(1) |
|
15.24 |
% |
Adjusted CET1 capital ratio(1) |
|
14.16 |
% |
| (1) | Regulatory capital ratios presented on bank-only basis. The Bank has no recorded intangible assets on the Statement of Financial Condition, and accordingly, tangible common equity is equal to common equity. |
10
|
Ensuring our Clients and Our Institution Succeed Boldly Listed as ESQ Esquire Financial Holdings, Inc. (Financial Holding Company for Esquire Bank, N.A.) 1Q 2025 Investor Presentation Exhibit 99.2 |
|
Forward Looking Disclosure This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not historical fact and express management’s current expectations, forecasts of future events or long-term goals and, by their nature, are subject to assumptions, risks and uncertainties, many of which are beyond the control of the Company. These statements are may be identified through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “attribute,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements speak only as of the date they are made and are inherently subject to uncertainties and changes in circumstances, including those described under the heading “Risk Factors” in the Company’s 10-K and 10-Q, filed with the Securities and Exchange Commission (“SEC”). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Actual results could differ materially from those indicated. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. The forward-looking statements speak as of the date of this presentation. The delivery of this presentation shall not, under any circumstances, create any implication there has been no change in the affairs of the Company after the date hereof. This presentation includes industry and market data that we obtained from periodic industry publications, third-party studies and surveys. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe the industry and market data to be reliable as of the date of this presentation, this information could prove to be inaccurate. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein. This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures by other companies. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in the Appendix to this presentation. 2 |
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Decades of expertise in the national litigation market which is complex, fragmented, underserved and poised for disruption Asset sensitive model anchored by law firm loans yielding approx. 9.45% Branchless and tech enabled core deposit platform funded at 0.94% Driving loan and deposit growth with a 5 Year CAGR of approximately 20% since 2020 Decades of expertise in sales, risk, and compliance management Independent Sales Organization (“ISO”) model with 90,000 merchants nationally Total fee income represents 18% of total revenue Strong growth and stable fee income with a 5 Year CAGR of 14% since 2020 ROA and ROTCE of 2.39% and 19.13%, respectively Industry leading NIM of 5.96% Diversified revenue stream with strong NIM and stable fee income Strong efficiency ratio of 49.6% while investing in resources (employees, technology, and digital marketing) for future growth A digital-first disruptor bank with best-in-class technology fueling future growth and industry leading client retention rates Account-based digital marketing (“ABM”) from our CRM to power prospective client engagements nationally Leveraged artificial intelligence (“AI”), advanced data analytics, and personalization features to deliver real-time thought leadership content Nationwide Branchless Tech Enabled Litigation & Payment Processing Verticals Generating Industry Leading Growth, Returns, & Performance Metrics Litigation Vertical Commercial Banking Nationally Industry Leading Returns Fueled by Branchless and Tech Enabled National Verticals Payment Processing Vertical (Merchant Services) Small Business Banking Nationally Technology – the Future A Catalyst for Strong Growth 3 How Our Clients Succeed Boldly |
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Strong Growth Driven by Unique National Verticals How Esquire Succeeds Boldly Key Highlights Strong growth in higher yielding variable rate commercial loans nationally Stable low-cost branchless and tech enabled deposit model Equity to Assets of 12.83% (Adjusted(1) 12.59%) Common Equity Tier 1 of 15.24% (Adjusted(1) 14.16%) 4 at March 31, 2025 (1) See non-GAAP reconciliation provided in the appendix. |
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Stable low-cost branchless funding model with a strong commercial deposit franchise nationally DDA and escrow-based NOW/IOLTA accounts represent 31% and 57% of total deposits at March 31, 2025, respectively Higher yielding variable rate commercial loans anchored by our national litigation portfolio Asset sensitive balance sheet with approximately 90% of our variable rate commercial loans having one-year interest rate floors at their origination or renewal dates How Esquire Succeeds Boldly 5 Industry Leading Net Interest Margin |
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Strong Revenue Growth ($ in thousands) at March 31, 2025 How Esquire Succeeds Boldly 6 Key Highlights Strong net interest margin Stable payment processing fee income Growing ASP fee income derived from off-balance sheet funds management |
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Financial Highlights How Esquire Succeeds Boldly Key Highlights Industry leading returns Named to Fortune’s Annual 100 Fastest-Growing Companies List in 2024 Named to the KBW 2024 Bank Honor Roll Named to the Piper Sandler 2023 Bank & Thrift Small Market-All Stars Raymond James’ Top Performing Community Bank (2018-2023) Recognized as a Best Performing Small Community Bank of 2024 by S&P Global Book value per share and equity to assets are $29.74 and 12.83% at March 31, 2025, respectively 7 at March 31, 2025 (1) The adjusted results exclude a nonrecurring pretax $4.0 million net gain on equity investments. See non-GAAP reconciliation provided in the appendix. |
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Loan Portfolio Diversification with Focused Growth Focused growth in higher yielding variable rate commercial loans with strong credit metrics on a national basis Selective multifamily loan growth with strong historical performance, DSCRs, and LTVs in the NY metro market How Esquire Succeeds Boldly 8 at March 31, 2025 |
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Substantially all of our $934 million in commercial loans are variable rate and tied to prime comprising approximately 66% of our loan portfolio Approximately 90% of our variable rate commercial loan portfolio was originated (or renewed annually) with interest rate floors in place Asset sensitive – estimated sensitivity of projected annualized net interest income (“NII”) down 100 and 200 basis point rate scenarios decreases projected NII by 3.7% and 8.0%, respectively at December 31, 2024 Loan Portfolio Diversification with Focused Growth How Esquire Succeeds Boldly 9 |
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Commercial Litigation (Law Firm) Loans Full annual underwriting including, but not limited to: 3 years financials and tax returns (business and personal) Full contingent case inventory valuation process & collateral assignment or UCC-1 Personal guarantees for the majority of loans, including personal background checks Diversity across law firm inventories and collateral Average loan-to-collateral fee value or LTV of less than 13% Strong average DSCR (on average > 3.0x) Average draws against committed and uncommitted line-of-credit (“LOC”) and case disbursement loans of approximately 50% Weighted average interest rate of approximately 9.45% Funded with low-cost contingent law firm litigation deposits Litigation deposits to litigation loan facilities drawn is approximately 150% How Esquire Succeeds Boldly 10 |
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Esquire’s Bold Opportunities New York Metro Area Real Estate A Reliable Asset Class & Liquidity Source Selective in our property and borrower selection process Strong generational owners/operators with high quality net worth Minimal historical losses No office nor construction loan exposure Average current DSCR exceeding 1.6x Average original LTV of approximately 55% Rent regulated, free market, and mixed (both rent regulated and free market) represent approximately one-third each of the $365 million multifamily loan portfolio CRE exposure is 180% of Esquire Bank’s regulatory Tier 1 capital plus the allowance for credit losses (“ACL”). CRE exposure is 160% of consolidated EFHI regulatory Tier 1 capital plus the ACL Pledged Multifamily and Residential loan portfolio provides liquidity totaling $202.5 million through the Federal Home Loan Bank of NY (“FHLB”) program as of March 31, 2025 11 |
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Multifamily & CRE Maturities at March 31, 2025 Multifamily loans totaling $115.7 million mature over the next two years with $26.3 million, or 23%, having an LTV in excess of 70% Other CRE loans totaling $11.7 million mature over the next two years with no loans in excess of 70% LTV How Esquire Succeeds Boldly 12 Note – Loan to Value (“LTV”) is defined as unpaid principal balance as of March 31, 2025 divided by appraised value at origination. |
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Solid Credit Metrics, Asset Quality and ACL Coverage How Esquire Succeeds Boldly at March 31, 2025 Note – All asset quality metrics are based on our loans held for investment portfolio (1) NFL consumer loan portfolio - $9.0 million charge-off. 13 |
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Deposit Composition and Growth Our tech enabled deposit platform utilizes our corporate cash management suite of services, creating a highly efficient branchless platform Our overall liquidity position (cash, borrowing capacity, and available reciprocal client sweep balances) totaled $1.1 billion, or 66% of total deposits, creating a highly liquid and unlevered balance sheet How Esquire Succeeds Boldly 14 ($ in millions) at March 31, 2025 |
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*Note: Excludes sweeps totaling $469 million Deposit Composition Details DDA and NOW (escrow funds) deposits total 88% of total deposits, representing stable funding sources in various interest rate scenarios Litigation and payment processing deposits represent 74% and 10% of total deposits at March 31, 2025, respectively Uninsured deposits (excluding $11.3 million of affiliate deposits) totaled $526 million, or 31%, of total deposits with approximately 80% representing clients with full relationship banking including, but not limited to, law firm operating accounts, certain balances of escrow accounts, merchant reserves, ISO reserves, ACH processing, and custodial accounts Off-balance sheet sweep funds totaled $469 million at March 31, 2025, with $443 million, or 95%, available for additional on-balance sheet liquidity How Esquire Succeeds Boldly 15 |
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Currently servicing 90,000 merchants across 50 states in our payment processing (merchant acquiring) vertical Fee income, primarily payment processing fees, represents 18% of total revenue for the quarter ended March 31, 2025 How Esquire Succeeds Boldly Strong Growth in Stable Noninterest Income at March 31, 2025 16 |
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How Esquire Succeeds Boldly Key Highlights Strong and stable DDA reserves Protecting capital from merchant chargebacks and returns 17 Protecting Our Company with Strong Payment Processing Reserves at March 31, 2025 |
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Significant national markets primed for disruption: $443 billion & 100,000+ firms in the litigation vertical and $11.4 trillion and 10+ million merchants in the payment processing vertical Key Takeaways Why Esquire is Set to Succeed Boldly Tremendous untapped potential: Esquire’s current market share is a fraction of both national verticals that are complex, fragmented, underserved and poised for disruption by our client-centric & tech-focused institution We are thought leaders in the litigation vertical and provide C-suite access for ISO flexibility in the payment processing vertical Differentiated and positioned for growth: With industry leading tailored products and state-of-the-art technology geared towards effective client acquisition 18 |
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Technology Driving Bold Success Client Centric Technology A Key Driver for Future Growth Website Artificial Intelligence* Marketing Sales Underwriting Onboarding Marketing Cloud AI to facilitate precision marketing and exponential customer acquisition across all verticals Website analytics, data enrichment and thought leadership content marketing Precision marketing – right offer right time Sales enablement, pipeline management and forecasting Underwriting efficiency & risk management / cash management and mobile banking / online applications Customer onboarding / core banking Partnering with best-in-class software vendors and solutions, with custom development to service all verticals at the bank Proprietary CRM built on Salesforce platform housing all client data touch points from prospect to boarding with a single client view, enabling high volume client acquisition strategies and excellence in client service * Deployment of AI technologies applicable only to sales and marketing processes and not used as a decisioning tool for loan underwriting processes. 19 Online Banking |
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Succeeding Boldly Listed as ESQ Contact Information: Eric S. Bader Executive Vice President & Chief Operating Officer 516-535-2002 eric.bader@esqbank.com |
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Appendix & Supplemental Disclosure National Markets – Litigation & Payment Processing Verticals & Non-GAAP Reconciliation |
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The Esquire Competitive Advantage Esquire’s Bold Opportunities U.S. Litigation Market A Significant Growth Opportunity U.S. Tort actions are estimated to consume 2.1% of U.S. GDP* annually or $443 billion* Esquire does not compete with non-bank finance companies Significant barriers to entry – management expertise, brand awareness, regulatory/compliance, and decades of experience Decades of Industry Track Record Extensive Litigation Experience In-House Deep Relationships with Respected Firms Nationally Daily Resources and Research Cash Flow Lending Coupled with Borrowing Base or Asset Based Approach Tailoring unique products other banks do not offer Typically advancing more than traditional banks, on traditional banking terms 22 Key Highlights $443 billion* Total Addressable Market (“TAM”) in litigation vertical Esquire is a tailored, differentiated brand and thought leader in the litigation market *US Chamber of Commerce Institute for Legal Reform – “Tort Costs in America – An Empirical Analysis of Costs and Compensation of U.S. Tort System”. Published in November 2022. |
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23 Digitally Transforming The Business of Law Aligning Law Firm Case Inventory Lifecycle to Customer Retention Client Incident Receive Intake Case Management Settlement/ Verdict Disbursement $ 1-3 Years (+) Products Case Cost Loans Working Capital Loans Firm and Partner Acquisition Loans Term Loans to Finance Case Acquisition & Growth Escrow Banking and QSF Settlement Services Plaintiff Banking including Exclusive Prepaid Card Offering Technology Esquire Insight – Case Management Technology Commercial Cash Management Case Cost Management Online Applications Thought Leadership - Digital Platform and Content 23 |
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Payment Processing – Current ISO Model How Esquire Succeeds Boldly What is an ISO? ISO Responsibilities They Do Merchant Vertical and Technology Focus Sales Agent Model Performs Initial Underwriting Boards Merchant to Payment Processing Platform Installation of Merchant Equipment Manage Call Center for Merchant Clients Merchant Risk and PCI Compliance Bank Responsibilities We Do Robust Policies Tech Enabled Card Brand and Regulatory Compliance Support Multiple Processing Systems Assess ISO Verticals Re-underwrite Merchant Applications Utilize Industry Leading Risk Management Technology Daily and Month End Risk and Compliance Management Commercial Treasury Function for Merchant Clearing and ISO Cash Management Maintaining and Monitor ISO and Merchant Reserves (DDA) 24 |
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The payments industry CAGR was 11% from 2020 to 2024 to an estimated total payment volume of $11.6 trillion Esquire’s Bold Opportunities Payment Volume Trends – A Significant Growth Opportunity Sources: CompanyFinancial Records, Note: PayPalfigures represent PayPal’sestimated U.S.percent share of “Total Payment Volume” (TPV).PayPalvolume includes volume from a bank account, a PayPal account balance, a PayPalCredit account, a credit or debit card or other stored value products suchascoupons and gift cards. Assuch, some of this volume may be included in other networks as well. PayPal’sclassification in the payments industry ecosystem is varied/debated as it performs functions attributed to a payment network, an issuer, acquirer, etc., and its financial reporting doesnot directly align with other payment network reporting structures and methods. Discover volume includes Discover Network and PulseNetwork transactions. 25 at December 31, 2024 ($ in billions) |
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Appendix (all dollars in thousands) 26 Non-GAAP Financial Measure Reconciliation The following table presents the adjusted tangible common equity to tangible assets calculation (non-GAAP): March 31, 2025 Total assets - GAAP $ 1,954,437 Less: intangible assets — Tangible assets ("TA") - non-GAAP 1,954,437 Total stockholders' equity - GAAP $ 250,724 Less: intangible assets — Less: preferred stock — Tangible common equity ("TCE") - non-GAAP 250,724 Add: unrecognized losses on securities held-to-maturity, net of tax (4,727) Adjusted TCE - non-GAAP $ 245,997 Stockholders' equity to assets - GAAP 12.83 % TCE to TA - non-GAAP 12.83 % Adjusted TCE to TA - non-GAAP 12.59 % |
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Appendix (all dollars in thousands) 27 Non-GAAP Financial Measure Reconciliation (Cont’d) The following table presents the common equity tier 1 capital ratio and the adjusted common equity tier 1 capital ratio: (1) Regulatory capital ratios presented on bank-only basis. The Bank has no recorded intangible assets on the Statement of Financial Condition, and accordingly, tangible common equity is equal to common equity. March 31, 2025 Common equity tier 1 ("CET1") capital - Bank $ 230,860 Add: unrealized losses on securities available-for-sale , net of tax (11,683) Add: unrecognized losses on securities held-to-maturity, net of tax (4,727) Adjusted CET1 capital - Bank $ 214,450 Total risk-weighted assets - Bank $ 1,514,433 CET1 capital ratio(1) 15.24 % Adjusted CET1 capital ratio(1) 14.16 % |
