Core Insights - Esquire Financial Holdings, Inc. reported quarterly earnings of $1.47 per share, exceeding the Zacks Consensus Estimate of $1.46 per share, and up from $1.34 per share a year ago, representing an earnings surprise of +0.68% [1] - The company posted revenues of $37.57 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.60%, compared to $31.92 million in the same quarter last year [2] - Esquire Financial shares have increased approximately 27.8% year-to-date, outperforming the S&P 500's gain of 13.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.46 on revenues of $36.73 million, and for the current fiscal year, it is $5.61 on revenues of $142.37 million [7] - The estimate revisions trend for Esquire Financial was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Zacks Industry Rank for Banks - Northeast, to which Esquire Financial belongs, is currently in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, MainStreet Bank, is expected to report quarterly earnings of $0.51 per share, reflecting a year-over-year change of +1375%, with revenues projected at $18.9 million, up 16.5% from the previous year [9]

Financial Performance - Net income for Q3 2025 increased by $2.7 million or 23.7% to $14.1 million, with diluted earnings per share at $1.62, compared to $11.4 million or $1.34 per diluted share in Q3 2024[1]. - Year-to-date revenue for 2025 rose by $15.4 million or 16.8% to $107.2 million compared to 2024[1]. - Net income for the nine months ended September 30, 2025, reached $37,354 thousand, a 16.5% increase from $31,905 thousand for the same period in 2024[38]. - Adjusted net income for Q3 2025 was $12,747 thousand, with a GAAP net income of $14,057 thousand, indicating a decrease of 9.3% when accounting for tax benefits[43]. Asset and Deposit Growth - Total assets increased by $401.8 million, or 22.5%, to $2.18 billion, driven by a $249.5 million, or 19.2%, growth in loans to $1.55 billion[27]. - Total deposits reached $1.88 billion, a $343.0 million, or 22.3%, increase, with litigation-related escrow deposits rising by $189.9 million, or 22.9%[28]. - Average deposits increased by $364.2 million or 24.5% to $1.85 billion, driven by increases in litigation-related escrow and commercial money market deposits[8]. - Total deposits increased to $1,879,440 thousand as of September 30, 2025, compared to $1,642,236 thousand at December 31, 2024, marking a growth of 14.5%[36]. Loan and Credit Quality - Loan growth on a linked quarter basis was $52.4 million or 14% annualized, totaling $1.55 billion, with year-over-year growth of $249.5 million or 19.2%[1]. - The provision for credit losses was $1.8 million for Q3 2025, a $750 thousand increase from Q3 2024, with an allowance to loans ratio of 1.37%[9]. - The provision for credit losses increased by $3.8 million to $6.8 million for the nine months ended September 30, 2025, with charge-offs of $6.2 million, including $3.3 million from a small business loan and $2.9 million from a multifamily loan[18]. - Nonperforming loans decreased to $8,646 thousand, down from $10,940 thousand at June 30, 2025, indicating improved asset quality[36]. Income and Expense Management - Noninterest income for Q3 2025 was stable at $6.2 million, with payment processing income at $5.1 million, reflecting a 9.5% increase in processing volumes to $10.1 billion[10]. - Noninterest income rose by $235 thousand, or 1.3%, to $19.0 million, while payment processing income decreased by $699 thousand to $15.1 million, despite an 8.9% increase in payment processing volumes to $29.5 billion[19]. - Noninterest expense increased by $7.0 million, or 15.5%, to $52.2 million, primarily due to a $2.9 million increase in employee compensation and benefits, reflecting a 10.4% rise[20]. - The efficiency ratio for Q3 2025 was 48.9%, compared to 48.1% in the prior year, despite ongoing investments in resources[14]. Capital and Regulatory Compliance - Stockholders' equity increased by $46.7 million to $279.2 million, primarily due to net increases in retained earnings[31]. - The bank remains well above regulatory "Well Capitalized" standards, ensuring a strong capital position[32]. - The Tier 1 capital ratio remained strong at 15.27% as of September 30, 2025, consistent with the previous quarter[36]. Tax and Effective Rates - The effective tax rate for Q3 2025 was 19.5%, down from 27.0% in the prior year, due to discrete tax benefits related to stock options[15]. - The effective tax rate decreased to 22.5% for the nine months ended September 30, 2025, down from 26.8% in the prior year, due to discrete tax benefits related to share-based compensation[24]. Interest and Yield Metrics - Net interest margin for Q3 2025 was 6.04%, supported by growth in average interest-earning assets totaling $389.0 million or 23.3% to $2.06 billion[8]. - Net interest income for the three months ended September 30, 2025, was $31,339 thousand, an increase of 6.7% compared to $29,254 thousand for the previous quarter[38]. - Net interest income for the nine months ended September 30, 2025, was $88,202 thousand, compared to $73,043 thousand in the same period of 2024, reflecting an increase of 20.8%[40]. - The average yield on interest-earning assets was 6.89% in 2025, slightly down from 6.94% in 2024[40].

Core Insights - Esquire Financial Holdings, Inc. reported strong financial performance in Q3 2025, with net income increasing to $14.1 million, or $1.62 per diluted share, compared to $11.4 million, or $1.34 per diluted share in Q3 2024, reflecting a 23.7% year-over-year growth [4][8] - The company achieved a net interest income of $31.3 million, a 21.2% increase from the previous year, driven by a 23.3% growth in average interest-earning assets [5][16] - The net interest margin was reported at 6.04%, slightly down from 6.16% in the previous year, impacted by elevated cash balances [5][8] Financial Performance - For the nine months ended September 30, 2025, net income was $37.4 million, or $4.32 per diluted share, compared to $31.9 million, or $3.78 per diluted share for the same period in 2024 [15] - Year-to-date revenue increased by $15.4 million, or 16.8%, to $107.2 million compared to the previous year [8] - The provision for credit losses was $1.8 million for Q3 2025, an increase from the previous year, with an allowance to loans ratio of 1.37% [6][17] Loan and Deposit Growth - Average loans increased by $262.0 million, or 20.6%, to $1.53 billion, primarily due to a 29.9% growth in commercial loans [5][25] - Average deposits rose by $364.2 million, or 24.5%, to $1.85 billion, with significant contributions from litigation-related escrow accounts and commercial money market deposits [5][25] - The loan-to-deposit ratio stood at 82% as of September 30, 2025 [5][25] Noninterest Income and Expenses - Noninterest income totaled $6.2 million for Q3 2025, slightly up from $6.1 million in the same period last year, with payment processing income remaining stable [7][18] - Noninterest expenses increased by $3.0 million, or 19.5%, to $18.4 million, primarily due to higher employee compensation and benefits [10][19] Asset Quality and Capital Position - The company maintained solid asset quality with nonperforming loans totaling $8.6 million, representing 0.40% of total assets [22][23] - Stockholders' equity increased to $279.2 million as of September 30, 2025, driven by retained earnings and additional paid-in capital [29] - The common equity tier 1 capital ratio was reported at 15.27%, well above regulatory standards [29]

Financial Performance & Metrics - The company's adjusted Return on Average Assets (ROA) was 2.37%[12,32] - The adjusted Return on Tangible Common Equity (ROTCE) reached 18.89%[12,32] - The company boasts an industry-leading Net Interest Margin (NIM) of 6.04%[15] - The efficiency ratio is strong at 48.9%[15] Loan & Deposit Portfolio - Approximately 90% of the company's variable rate commercial loan portfolio has interest rate floors in place[26,41] - Commercial loans, substantially all variable rate, total $1.05 billion, representing approximately 68% of the loan portfolio[41] - DDA and escrow-based NOW/IOLTA accounts represent 32% and 55% of total deposits, respectively[26] - Litigation and payment processing deposits account for 76% and 8% of total deposits, respectively[59] Revenue & Fee Income - Fee income, primarily from payment processing, constitutes 17% of total revenue[16,63] - The company's payment processing vertical services 93,000 merchants nationally[16,63] Market Opportunity - The litigation vertical represents a $529 billion total addressable market[67,78] - The payment processing vertical represents a $11.7 trillion market[67,83]

Core Insights - Esquire Financial Holdings, Inc. has been recognized in S&P Global Market Intelligence's annual U.S. Community Bank Deposit Rankings for the second consecutive year, highlighting its strong deposit franchise among banks with less than $3 billion in assets [1][2]. Company Performance - The ranking is based on a weighted average of eight key metrics, emphasizing stable funding and efficient operations, which include noninterest-bearing deposit concentration, cost of interest-bearing deposits, deposit betas, deposit efficiency, and overall growth [2]. - The company has established a low-cost core deposit base and an industry-leading net interest margin, contributing to its sustainable growth and leadership in the industry [2]. Leadership and Strategy - Andrew C. Sagliocca, the Vice Chairman, CEO, and President, shared insights on the strategies driving Esquire Bank's success during a featured speaking engagement at the 2025 Deposit Conference [3]. - The company focuses on understanding and serving key national verticals and local markets, which has been pivotal in establishing a strong foundation for growth [2][3]. Company Overview - Esquire Financial Holdings, Inc. is headquartered in Jericho, New York, with additional locations in Los Angeles, California, and Boca Raton, Florida [4]. - The company operates Esquire Bank, which provides tailored financial solutions to the litigation industry and small businesses, as well as commercial and retail customers in the New York metropolitan area [4]. - Esquire Bank was named to Fortune's 2024 Fastest-Growing Companies list, indicating its rapid growth and market presence [4].

Core Insights - Crude Value Insights provides an investment service and community focused on the oil and natural gas sectors, emphasizing cash flow generation and growth potential [1] - Subscribers benefit from a model account featuring over 50 stocks, detailed cash flow analyses of exploration and production (E&P) firms, and live discussions about the sector [1] Subscription Offer - A two-week free trial is available for new subscribers, allowing them to explore the oil and gas investment opportunities [2]

Company Overview - Esquire Financial Holdings, Inc. is a financial holding company headquartered in Jericho, New York, with a branch office in Jericho and an administrative office in Boca Raton, Florida [4] - The company's wholly owned subsidiary, Esquire Bank, is a full-service commercial bank focused on serving the financial needs of the litigation industry and small businesses nationally, as well as commercial and retail customers in the New York metropolitan area [4] - Esquire Bank offers tailored financial and payment processing solutions to the litigation community and small business owners [4] - The company was recognized in Fortune's 2024 Fastest-Growing Companies list [4] Expansion Plans - Esquire Financial Holdings is set to open its first full-service banking location in Los Angeles, California, on August 18, 2025 [1] - This new location is part of Esquire's national growth strategy and aims to serve the complex and underserved national litigation market [2] - The Los Angeles office is located at 1925 Century Park East, Suite A, in Century City, enhancing the bank's white-glove service in a top-performing regional market [2] Leadership Statements - Tony Coelho, Chairman of the Board, expressed excitement about bringing a personalized banking experience to Southern California's legal community [3] - Andrew C. Sagliocca, Vice Chairman, CEO, and President, highlighted California as a significant market for Esquire's national litigation platform and emphasized the demand for tailored financial solutions [3] - The opening of the Los Angeles location follows the hiring of senior business development leaders in the region, indicating a strategic focus on growth [3]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited interim consolidated financial statements, including core financial statements and their detailed explanatory notes [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity Consolidated Statements of Financial Condition (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $2,059,977 | $1,892,503 | $167,474 | 8.8% | | Loans, net of allowance | $1,475,192 | $1,376,042 | $99,150 | 7.2% | | Total deposits | $1,782,328 | $1,642,236 | $140,092 | 8.5% | | Total stockholders' equity | $263,556 | $237,094 | $26,462 | 11.1% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section reports the company's financial performance over specific periods, detailing revenues, expenses, and net income Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net interest income | $29,254 | $24,322 | $56,863 | $47,185 | | Provision for credit losses | $3,525 | $1,000 | $5,025 | $2,000 | | Total noninterest income | $6,577 | $6,275 | $12,728 | $12,664 | | Total noninterest expense | $17,062 | $15,232 | $33,810 | $29,800 | | Net income | $11,890 | $10,487 | $23,297 | $20,545 | | Basic earnings per share | $1.48 | $1.34 | $2.91 | $2.64 | | Diluted earnings per share | $1.38 | $1.25 | $2.70 | $2.45 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents net income and other comprehensive income items, reflecting the total change in equity from non-owner sources Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income | $11,890 | $10,487 | $23,297 | $20,545 | | Total other comprehensive income (loss) | $764 | $128 | $3,368 | $(1,006) | | Total comprehensive income | $12,654 | $10,615 | $26,665 | $19,539 | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details the changes in each component of stockholders' equity over specific periods, including net income, other comprehensive income, and dividends Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric | Balance at April 1, 2025 (in thousands) | Balance at June 30, 2025 (in thousands) | Balance at January 1, 2025 (in thousands) | | :------------------------------------ | :------------------------------------ | :---------------------------------- | :------------------------------------ | | Total stockholders' equity | $250,724 | $263,556 | $237,094 | | Net income (Q2 2025) | $11,890 | | | | Other comprehensive income (Q2 2025) | $764 | | | | Cash dividends declared (Q2 2025) | $(1,484) | | | | Net income (YTD Q2 2025) | | | $23,297 | | Other comprehensive income (YTD Q2 2025) | | | $3,368 | | Cash dividends declared (YTD Q2 2025) | | | $(2,963) | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $26,297 | $19,995 | | Net cash used in investing activities | $(127,420) | $(109,585) | | Net cash provided by financing activities | $137,767 | $77,114 | | Increase (decrease) in cash and cash equivalents | $36,644 | $(12,476) | | Cash and cash equivalents at end of period | $162,973 | $152,733 | [Notes to Interim Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the interim consolidated financial statements [NOTE 1 — Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%201%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for the interim consolidated financial statements, significant accounting policies, and the impact of recent accounting pronouncements - The Company's investment in a VIE for its legacy NFL consumer post-settlement loan portfolio had a carrying amount of **$9.0 million** as of June 30, 2025, down from **$9.4 million** at December 31, 2024. No equity method gain or loss was recognized for the three and six months ended June 30, 2025, compared to a **$500 thousand loss** in the prior year period[23](index=23&type=chunk) - The investment in United Payment Systems, LLC (Payzli) had a carrying amount of **$4.8 million** as of June 30, 2025, up from **$4.1 million** at December 31, 2024. The Company funded **$700 thousand** for the six months ended June 30, 2025, compared to **$3.5 million** in the prior year period[24](index=24&type=chunk) - ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' will enhance transparency of income tax disclosures, effective for the Company's annual reporting period ended December 31, 2025[27](index=27&type=chunk) [NOTE 2 — Debt Securities](index=13&type=section&id=NOTE%202%20%E2%80%94%20Debt%20Securities) This note details the Company's debt securities portfolio, including available-for-sale and held-to-maturity categories, fair values, unrealized gains/losses, and pledged securities Securities Portfolio Summary (in thousands) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | June 30, 2025 Gross Unrealized Losses | December 31, 2024 Gross Unrealized Losses | | :-------------------------- | :----------------------- | :------------------------- | :------------------------------------ | :------------------------------------ | | Securities available-for-sale | $257,375 | $241,746 | $(15,888) | $(19,976) | | Securities held-to-maturity | $58,503 | $60,931 | $(5,983) | $(7,729) | - At June 30, 2025, securities with a fair value of **$264.3 million** were pledged to the FHLB, and **$51.5 million** to the FRB, for borrowing capacity. No FHLB or FRB advances were outstanding[30](index=30&type=chunk)[31](index=31&type=chunk) - Management does not consider available-for-sale securities to be impaired as the decline in fair value is attributable to changes in interest rates, not credit quality, and the Company does not intend to sell them before anticipated recovery[32](index=32&type=chunk)[33](index=33&type=chunk) [NOTE 3 — Loans](index=16&type=section&id=NOTE%203%20%E2%80%94%20Loans) This note provides a detailed breakdown of the loan portfolio by class, activity in the allowance for credit losses, aging of past due loans, and credit risk profile Loan Composition (in thousands) | Loan Class | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Multifamily | $366,439 | $355,165 | | Commercial real estate | $91,166 | $87,038 | | 1 – 4 family | $10,093 | $14,665 | | Commercial | $1,007,827 | $920,567 | | Consumer | $18,584 | $19,339 | | Total loans held for investment | $1,494,109 | $1,396,774 | | Allowance for credit losses | $(19,407) | $(20,979) | Allowance for Credit Losses Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Beginning balance | $20,979 | $16,631 | | Provision for credit losses | $5,025 | $2,000 | | Recoveries | $25 | $24 | | Loans charged-off | $(6,622) | $(134) | | Total ending allowance balance | $19,407 | $18,521 | - As of June 30, 2025, total past due and nonaccrual loans were **$8.86 million**, including one collateral-dependent multifamily loan of **$8.0 million** and one commercial loan of **$736 thousand**, with no specific reserves[37](index=37&type=chunk)[99](index=99&type=chunk) - During the six months ended June 30, 2025, one **$10.9 million** multifamily loan was restructured into two notes (**$8.0 million** and **$2.9 million**), with the **$2.9 million** note charged off and the **$8.0 million** note at market terms[47](index=47&type=chunk) [NOTE 4 — Noninterest Income](index=23&type=section&id=NOTE%204%20%E2%80%94%20Noninterest%20Income) This note details the components of noninterest income, primarily payment processing and administrative service fees, along with revenue recognition policies and equity investment gains Noninterest Income (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Payment processing fees | $5,107 | $5,322 | $10,019 | $10,618 | | Administrative service income | $643 | $620 | $1,523 | $1,366 | | Gain on equity investment | $432 | $0 | $432 | $0 | | Other | $395 | $333 | $754 | $680 | | Total noninterest income | $6,577 | $6,275 | $12,728 | $12,664 | - Payment processing income is derived from clearing and settling credit and debit transactions for merchants, with fees based on transaction volume. ACH income is also volume-based[53](index=53&type=chunk) - Administrative service income primarily comes from managing Qualified Settlement Funds (QSFs), where fees are earned monthly for investing funds into safe vehicles[53](index=53&type=chunk)[54](index=54&type=chunk) [NOTE 5 — Share-Based Payment Plans](index=25&type=section&id=NOTE%205%20%E2%80%94%20Share-Based%20Payment%20Plans) This note describes the Company's equity incentive plans, including stock options, restricted stock, and PSUs, detailing grant terms, vesting, and compensation expense Share-Based Compensation Expense (in thousands) | Award Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Options | $184 | $188 | $369 | $368 | | Restricted Stock | $869 | $774 | $1,700 | $1,600 | | PSUs | $138 | $0 | $218 | $0 | | Total | $1,191 | $962 | $2,287 | $1,968 | - As of June 30, 2025, unrecognized compensation cost for nonvested options was **$1.1 million** (expected over **1.92 years**), for restricted stock was **$12.3 million** (expected over **3.72 years**), and for PSUs was **$1.4 million** (expected over **2.61 years**)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) [NOTE 6 — Earnings per Share](index=28&type=section&id=NOTE%206%20%E2%80%94%20Earnings%20per%20Share) This note presents the calculation of basic and diluted earnings per share (EPS) for the three and six months ended June 30, 2025 and 2024, detailing the net income and weighted average shares outstanding used in the computations Earnings Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Basic EPS | $1.48 | $1.34 | $2.91 | $2.64 | | Diluted EPS | $1.38 | $1.25 | $2.70 | $2.45 | | Net income (in thousands) | $11,890 | $10,487 | $23,297 | $20,545 | | Weighted average shares outstanding (basic) | 8,029,541 | 7,798,441 | 8,009,382 | 7,792,664 | | Weighted average shares outstanding (diluted) | 8,639,038 | 8,402,750 | 8,620,501 | 8,402,119 | [NOTE 7 — Leases](index=28&type=section&id=NOTE%207%20%E2%80%94%20Leases) This note outlines the Company's accounting for operating leases, including right-of-use assets, lease liabilities, lease terms, discount rates, and total lease costs Lease Information (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | ROU lease assets | $2,800 | $3,200 | | Related lease liabilities | $3,100 | $3,500 | | Weighted-average remaining lease term | 6.62 years | 2.42 years | | Weighted-average discount rate | 4.29% | 3.29% | Total Lease Cost (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total lease cost | $252 | $183 | $491 | $374 | [NOTE 8 — Fair Value Measurements](index=31&type=section&id=NOTE%208%20%E2%80%94%20Fair%20Value%20Measurements) This note explains the fair value hierarchy for assets and liabilities, summarizing fair value measurements for recurring items and financial instruments not carried at fair value - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant observable inputs), and Level 3 (significant unobservable inputs)[71](index=71&type=chunk)[72](index=72&type=chunk) Fair Value of Securities Available-for-Sale (in thousands) | Category | June 30, 2025 (Level 2) | December 31, 2024 (Level 2) | | :-------------------------- | :---------------------- | :------------------------ | | Mortgage-backed securities – agency | $86,720 | $85,952 | | CMOs – agency | $170,655 | $155,794 | | Total available-for-sale | $257,375 | $241,746 | Fair Value of Financial Instruments Not Carried at Fair Value (in thousands) | Instrument | June 30, 2025 Carrying Value | June 30, 2025 Fair Value (Level 2/3) | December 31, 2024 Carrying Value | December 31, 2024 Fair Value (Level 2/3) | | :----------------------------- | :----------------------------- | :----------------------------------- | :------------------------------- | :----------------------------------- | | Securities, held-to-maturity | $64,470 | $58,503 | $68,660 | $60,931 | | Loans held for investment, net | $1,475,192 | $1,442,939 | $1,376,042 | $1,351,736 | [NOTE 9 — Accumulated Other Comprehensive Loss](index=33&type=section&id=NOTE%209%20%E2%80%94%20Accumulated%20Other%20Comprehensive%20Loss) This note details the changes in accumulated other comprehensive loss (AOCI), net of tax, primarily driven by unrealized gains and losses on securities available-for-sale for the three and six months ended June 30, 2025 and 2024 Accumulated Other Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Beginning balance | $(11,683) | $(14,369) | $(14,287) | $(13,235) | | Other comprehensive income (loss), net of tax | $764 | $128 | $3,368 | $(1,006) | | Ending balance | $(10,919) | $(14,241) | $(10,919) | $(14,241) | [NOTE 10 — Subsequent Event](index=33&type=section&id=NOTE%2010%20%E2%80%94%20Subsequent%20Event) This note discloses a significant subsequent event: the Company executed a lease agreement for a new 50,000 square-foot headquarters in Jericho, New York, with a 12.5-year term and annual contractual lease payments of approximately $1.7 million, anticipated to commence in Q4 2026 - The Company signed a new **12.5-year lease** for a **50,000 sq ft** headquarters in Jericho, NY, with annual payments of **$1.7 million**, starting Q4 2026[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operating results, including an overview of the business, critical accounting estimates, balance sheet and income statement analysis, market risk, liquidity, capital resources, and inflation effects [General](index=34&type=section&id=General) This subsection introduces the MD&A, emphasizing its context with financial statements and providing cautionary notes on forward-looking statements and associated uncertainties - The report contains forward-looking statements identified by words like 'may,' 'might,' 'should,' 'could,' 'believe,' 'expect,' 'anticipate,' 'estimate,' 'intend,' 'plan,' 'projection,' 'goal,' 'target,' 'aim,' 'would,' 'annualized,' and 'outlook'[81](index=81&type=chunk) - Key factors that could cause actual results to differ include economic conditions, financial industry changes, real estate market risks, concentration in legal and 'litigation' markets, interest rate fluctuations, credit losses, competition, technological changes, and regulatory actions[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[90](index=90&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) This section focuses on the Allowance for Credit Losses (ACL) as a critical accounting policy, explaining the CECL Standard's application for estimating lifetime expected credit losses - The Allowance for Credit Losses on loans held for investment is a critical accounting policy due to the subjectivity and uncertainty in estimating credit losses and its material effect on operations[89](index=89&type=chunk) - The Company applies the CECL Standard, estimating lifetime expected credit losses using a static pool methodology, incorporating past events, current conditions, and reasonable and supportable forecasts, with qualitative adjustments[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Management assesses the sensitivity of key assumptions by stressing quantitative inputs in economic forecasts, and future changes to ACL may be necessary based on evolving economic, market, or other conditions[94](index=94&type=chunk)[101](index=101&type=chunk) [Overview of Business and Strategy](index=42&type=section&id=Overview%20of%20Business%20and%20Strategy) The Company serves legal and small business communities nationally, leveraging technology and AI to drive growth in litigation and payment processing, with strong Q2 2025 performance metrics - Esquire Financial Holdings, Inc. is a financial holding company serving the legal and small business communities nationally through its wholly-owned subsidiary, Esquire Bank, N.A[102](index=102&type=chunk) - The Company's strategy involves developing and embracing cutting-edge technology, including AI, to leverage its national litigation and payment processing verticals for industry-leading growth and returns[104](index=104&type=chunk)[109](index=109&type=chunk) Key Performance Metrics (Q2 2025) | Metric | Value | | :---------------------- | :------ | | Average Return on Assets | 2.37% | | Average Return on Equity | 18.74% | | Net Interest Margin | 6.03% | | Efficiency Ratio | 47.6% | | Fee income as % of total revenue | 17% | - The litigation market represents a significant growth opportunity with a total addressable market (TAM) of **$529 billion** for 2022, where the Company offers unique products and services to law firms, resulting in a blended **9.5% variable rate asset yield** on commercial loans[105](index=105&type=chunk)[107](index=107&type=chunk) - The payment processing market is also a growth opportunity with a TAM of **$11.6 trillion**, where the Company processes approximately **$10 billion** in credit and debit card volume across **153 million** transactions in Q2 2025[108](index=108&type=chunk) [Recent Developments](index=44&type=section&id=Recent%20Developments) This section highlights the recent enactment of H.R. 1, the 'One Big Beautiful Bill Act,' on July 4, 2025. This legislation introduces favorable changes to federal tax law for businesses, including the restoration of immediate expensing for R&D and 100% bonus depreciation, effective for tax years beginning in 2025. The Company is currently evaluating the impact of these changes on future periods - H.R. 1, the 'One Big Beautiful Bill Act,' signed into law on July 4, 2025, includes favorable changes to federal tax law for businesses, such as immediate expensing of R&D and **100% bonus depreciation**, effective for tax years beginning in 2025[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - These tax law changes were not reflected in the income tax provision for the three and six months ended June 30, 2025, as enactment occurred after the balance sheet date[113](index=113&type=chunk) [Comparison of Financial Condition at June 30, 2025 and December 31, 2024](index=46&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030,%202025%20and%20December%2031,%202024) Total assets increased by 8.8% to $2.06 billion, driven by loan and deposit growth, while stockholders' equity rose, and asset quality remained strong with nonperforming assets at $8.7 million Key Financial Condition Changes (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :------- | :------- | | Total assets | $2,059,977 | $1,892,503 | $167,474 | 8.8% | | Loans held for investment, net | $1,475,192 | $1,376,042 | $99,150 | 7.2% | | Total deposits | $1,782,328 | $1,642,236 | $140,092 | 8.5% | | Total stockholders' equity | $263,556 | $237,094 | $26,462 | 11.1% | Loan Portfolio Growth (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | Change | % Change | | :---------------------- | :------------ | :---------------- | :------- | :------- | | Commercial loans | $1,007,827 | $920,567 | $87,260 | 9.5% | | Multifamily loans | $366,439 | $355,165 | $11,274 | 3.2% | | Litigation-Related Loans | $921,383 | $838,555 | $82,828 | 9.9% | - Total deposits increased by **$140.1 million**, or **8.5%**, to **$1.78 billion**, primarily due to client acquisition and growth in the national litigation platform. Core deposits represented **99.7%** of total deposits[121](index=121&type=chunk) - Nonperforming assets totaled **$8.7 million** (**0.58%** of total loans) at June 30, 2025, down from **$10.9 million** (**0.78%** of total loans) at December 31, 2024. The allowance for credit losses was **$19.4 million**, or **1.30%** of total loans[127](index=127&type=chunk)[128](index=128&type=chunk) [Average Balance Sheets and Rate/Volume Analysis](index=51&type=section&id=Average%20Balance%20Sheets%20and%20Rate/Volume%20Analysis) This section analyzes average balance sheet components, interest income, and expense, quantifying changes attributable to both volume and rate fluctuations Average Balance Sheet and Yield/Cost (Three Months Ended June 30, in thousands) | Metric | 2025 Average Balance | 2025 Average Yield/Cost | 2024 Average Balance | 2024 Average Yield/Cost | | :-------------------------------- | :------------------- | :---------------------- | :------------------- | :---------------------- | | Loans, held for investment | $1,462,401 | 7.89% | $1,240,599 | 7.85% | | Total interest earning assets | $1,947,281 | 6.91% | $1,580,952 | 6.97% | | Savings, NOW, Money Market deposits | $1,178,058 | 1.44% | $899,419 | 1.31% | | Total interest bearing liabilities | $1,184,137 | 1.45% | $911,165 | 1.35% | | Net interest spread | | 5.46% | | 5.62% | | Net interest margin | | 6.03% | | 6.19% | Change in Net Interest Income (Three Months Ended June 30, 2025 vs. 2024, in thousands) | Component | Change due to Volume | Change due to Rate | Total Change | | :-------------------------- | :------------------- | :----------------- | :----------- | | Interest earned on loans | $4,424 | $122 | $4,546 | | Total interest income | $5,880 | $271 | $6,151 | | Interest paid on total deposits | $935 | $284 | $1,219 | | Total interest expense | $935 | $284 | $1,219 | | Change in net interest income | $4,945 | $(13) | $4,932 | [Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024](index=54&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Net income increased by 13.4% to $11.9 million, driven by net interest income growth, partially offset by higher credit loss provision and noninterest expense, with net interest margin decreasing to 6.03% Operating Results (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :----- | :----- | :----- | :------- | | Net income | $11,890 | $10,487 | $1,403 | 13.4% | | Net interest income | $29,254 | $24,322 | $4,932 | 20.3% | | Provision for credit losses | $3,525 | $1,000 | $2,525 | 252.5% | | Total noninterest income | $6,577 | $6,275 | $302 | 4.8% | | Total noninterest expense | $17,062 | $15,232 | $1,830 | 12.0% | - Net interest margin decreased **16 basis points** to **6.03%**, primarily due to increased average interest earning cash balances and decreases in short-term market interest rates on these balances[139](index=139&type=chunk) - Loan interest income increased **$4.5 million** (**18.8%**) due to a **$221.8 million** (**17.9%**) increase in average loan balance, driven by higher-yielding national litigation-related loans[142](index=142&type=chunk) - Payment processing fees decreased by **$215 thousand** (**4.0%**) to **$5.1 million**, while a **$432 thousand** deferred gain on a fintech investment was recognized[148](index=148&type=chunk)[149](index=149&type=chunk) - Employee compensation and benefits increased by **$691 thousand** (**7.3%**), and professional and consulting services increased by **$434 thousand** (**50.6%**)[150](index=150&type=chunk)[151](index=151&type=chunk) [Comparison of Operating Results for the Six Months Ended June 30, 2025 and 2024](index=59&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Net income increased by 13.4% to $23.3 million, driven by net interest income growth, partially offset by higher noninterest expense and credit loss provision, with net interest margin decreasing to 5.99% Operating Results (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :----- | :----- | :----- | :------- | | Net income | $23,297 | $20,545 | $2,752 | 13.4% | | Net interest income | $56,863 | $47,185 | $9,678 | 20.5% | | Provision for credit losses | $5,025 | $2,000 | $3,025 | 151.3% | | Total noninterest income | $12,728 | $12,664 | $64 | 0.5% | | Total noninterest expense | $33,810 | $29,800 | $4,010 | 13.5% | - Net interest margin decreased **14 basis points** to **5.99%**, primarily due to a **$69.4 million** increase in average interest earning cash balances and decreases in short-term market interest rates[155](index=155&type=chunk) - Loan interest income increased **$8.0 million** (**16.7%**) due to a **$204.2 million** (**16.7%**) increase in average loan balance, driven by higher-yielding national litigation-related loans[157](index=157&type=chunk) - Payment processing fees decreased by **$599 thousand** (**5.6%**) to **$10.0 million**, while administrative service income increased by **$157 thousand** (**11.5%**). A **$432 thousand** deferred gain on a fintech investment was recognized[163](index=163&type=chunk)[164](index=164&type=chunk) - Employee compensation and benefits increased by **$1.6 million** (**8.5%**), professional and consulting services increased by **$747 thousand** (**41.3%**), and data processing costs increased by **$747 thousand** (**23.1%**)[165](index=165&type=chunk) [Management of Market Risk](index=63&type=section&id=Management%20of%20Market%20Risk) The Company's primary market risk is interest rate volatility, which is managed by structuring the balance sheet and using interest rate risk simulation models (Net Interest Income and Economic Value of Equity). These models assess the impact of instantaneous parallel rate shifts on net interest income and economic value, with results indicating sensitivity to rate changes - The primary component of market risk is interest rate volatility, which impacts income, expense, and fair value of assets and liabilities[170](index=170&type=chunk) - The Company uses Net Interest Income (NII) and Economic Value of Equity (EVE) simulation models to test interest rate sensitivity, modeling instantaneous parallel rate shifts[172](index=172&type=chunk)[175](index=175&type=chunk) Estimated Changes in 12-Months Net Interest Income (June 30, 2025, in thousands) | Changes in Interest Rates (Basis Points) | Estimated 12-Months Net Interest Income | Change | | :--------------------------------------- | :-------------------------------------- | :----- | | 300 | $162,718 | $27,143 | | 0 | $135,575 | — | | -300 | $112,695 | $(22,880) | Estimated Changes in Economic Value of Equity (June 30, 2025, in thousands) | Changes in Interest Rates (Basis Points) | Economic Value of Equity | Change | | :--------------------------------------- | :----------------------- | :------- | | 300 | $475,792 | $67,058 | | 0 | $408,734 | — | | -300 | $288,864 | $(119,870) | [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains strong liquidity through deposit inflows and borrowing capacity, with total liquidity at $1.04 billion, and Esquire Bank remains well-capitalized, exceeding all regulatory capital requirements - At June 30, 2025, cash and cash equivalents totaled **$163.0 million**[182](index=182&type=chunk) - The Company had **$456.1 million** in borrowing capacity from the FHLB, **$49.8 million** from the FRB, and **$17.5 million** in unsecured lines of credit, with no outstanding borrowings[183](index=183&type=chunk)[124](index=124&type=chunk) - Off-balance sheet sweep funds totaled **$373.1 million**, with **$349.7 million** available to be swept onto the balance sheet. Total liquidity was **$1.04 billion**, or **58%** of total deposits[184](index=184&type=chunk) Esquire Bank Capital Ratios (June 30, 2025) | Capital Ratio | Minimum Capital with Conservation Buffer | Actual | | :-------------------------- | :--------------------------------------- | :------- | | Total Risk-based Capital Ratio | 10.50% | 16.11% | | Tier 1 Risk-based Capital Ratio | 8.50% | 14.89% | | Common Equity Tier 1 Capital Ratio | 7.00% | 14.89% | | Tier 1 Leverage Ratio | 4.00% | 12.06% | [Effects of Inflation](index=68&type=section&id=Effects%20of%20Inflation) This section explains that inflation's impact on banks differs from non-financial institutions, as bank assets are primarily monetary and tend to move with inflation. The Company manages its rate sensitivity gap to mitigate inflation's effects, structuring assets and liabilities to protect against substantial interest rate changes - Banks' assets are primarily monetary and tend to move with inflation, allowing them to reduce inflation's impact through proper management of their rate sensitivity gap[191](index=191&type=chunk) - The Company structures its assets and liabilities and manages its gap to protect against substantial changes in interest rate scenarios, minimizing potential inflation effects[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to the 'Management of Market Risk' section within Item 2 for all required quantitative and qualitative disclosures about market risk - Information regarding quantitative and qualitative disclosures about market risk is included in Item 2 under 'Management of Market Risk'[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025. No material changes to internal controls over financial reporting occurred during the quarter - The Company's disclosure controls and procedures were effective as of June 30, 2025[192](index=192&type=chunk) - No material changes to the Company's internal controls over financial reporting occurred during the quarter ended June 30, 2025[193](index=193&type=chunk) [PART II. OTHER INFORMATION](index=69&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The Company is periodically involved in claims and lawsuits arising in the ordinary course of business. As of June 30, 2025, management does not believe there are any pending legal proceedings that would have a material adverse effect on the Company's financial condition, results of operations, or cash flows - As of June 30, 2025, there are no pending legal proceedings believed to have a material adverse effect on the Company's financial condition, results of operations, or cash flows[196](index=196&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the Company's risk factors have occurred since the Annual Report on Form 10-K for December 31, 2024[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the Company's common stock repurchase program, which authorized the purchase of up to 300,000 shares. No shares were purchased under this program during the three months ended June 30, 2025. Shares may also be withheld or net settled for tax purposes related to stock-based incentive plans - The Company has an authorized share repurchase program for up to **300,000 shares**, with **257,694 shares** remaining available as of June 30, 2025[199](index=199&type=chunk) - No shares were purchased under the publicly announced repurchase program during the three months ended June 30, 2025[199](index=199&type=chunk) [Item 3. Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[201](index=201&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, none of the Company's directors or officers adopted or terminated any Rule 10b5-1(c) trading arrangements or 'non-Rule 10b5-1 trading arrangements' - No directors or officers adopted or terminated any Rule 10b5-1(c) trading arrangements or 'non-Rule 10b5-1 trading arrangements' during Q2 2025[202](index=202&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including Articles of Incorporation, Bylaws, certifications from the CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906), and the iXBRL formatted financial statements - Exhibits include Articles of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and iXBRL formatted financial statements[203](index=203&type=chunk) [SIGNATURES](index=72&type=section&id=SIGNATURES) This section contains the required signatures of the Registrant's authorized officers, specifically the Vice Chairman, Chief Executive Officer and President, Andrew C. Sagliocca, and the Senior Vice President and Chief Financial Officer, Michael Lacapria, dated August 8, 2025 - The report is signed by Andrew C. Sagliocca, Vice Chairman, Chief Executive Officer and President, and Michael Lacapria, Senior Vice President and Chief Financial Officer, on August 8, 2025[209](index=209&type=chunk)

Core Viewpoint - Esquire Financial Holdings, Inc. has signed a new lease for a larger headquarters to support its growth and enhance employee experience [1][2][3] Group 1: New Headquarters Lease - The new headquarters lease is located at 300 Jericho Quadrangle, Jericho, New York, and covers 50,000 square feet across two floors [1] - The new space includes a private entrance, 16,000 square feet of outdoor space, and is designed to improve communication and collaboration among employees [2] Group 2: Growth and Employee Focus - The new lease nearly doubles the current office footprint, reflecting the company's commitment to employee investment and future growth [2] - The transition to the new location is expected to occur in late 2026, with a 12-year lease term [2] Group 3: Leadership Statements - The Chairman of the Board emphasized that the expansion supports the company's client-centric and tech-focused approach to growth [3] - The CEO highlighted that the new headquarters will help attract top talent and provide a state-of-the-art environment for exceptional client service [4] Group 4: Company Overview - Esquire Financial Holdings, Inc. is a financial holding company with a focus on serving the litigation industry and small businesses [5] - The company has been recognized on Fortune's 2024 Fastest-Growing Companies list, indicating strong performance and growth [5]

Core Insights - Esquire Financial Holdings, Inc. reported a revenue of $35.83 million for the quarter ended June 2025, reflecting a year-over-year increase of 17.1% and surpassing the Zacks Consensus Estimate by 3.69% [1] - The company's EPS for the quarter was $1.38, consistent with the consensus estimate, showing no EPS surprise [1] Financial Performance Metrics - The efficiency ratio was reported at 47.6%, better than the average estimate of 48.9% from two analysts [4] - The net interest margin stood at 6%, matching the average estimate from two analysts [4] - Total interest-earning assets reached $1.95 billion, exceeding the average estimate of $1.9 billion [4] - Payment processing fees amounted to $5.11 million, higher than the average estimate of $4.95 million [4] - Total non-interest income was reported at $6.58 million, surpassing the average estimate of $6.12 million [4] - Net interest income was $29.25 million, compared to the average estimate of $28.45 million [4] Stock Performance - Esquire Financial's shares have returned +14.1% over the past month, outperforming the Zacks S&P 500 composite's +5.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]