Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Esquire Financial Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Maryland 27-5107901 (State or Other Jurisdiction of Incorpor ...

Core Viewpoint - Esquire Financial Holdings, Inc. (ESQ) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4]. Earnings Estimates and Stock Price Impact - The Zacks rating system focuses on a company's changing earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, making the Zacks rating system valuable for investors [3][5]. - For Esquire Financial, the upgrade reflects an improvement in the company's underlying business, which is expected to drive the stock price higher [6]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Esquire Financial is projected to earn $5.56 per share, representing an 8.2% increase from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for Esquire Financial has increased by 0.7%, indicating a positive trend in earnings estimates [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [8]. - The upgrade to Zacks Rank 2 places Esquire Financial in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [11].

Core Insights - Esquire Financial Holdings, Inc. reported $33.76 million in revenue for Q1 2025, a year-over-year increase of 15.4% [1] - The company's EPS for the same period was $1.33, up from $1.20 a year ago, exceeding the consensus estimate of $1.30 [1] - The revenue surpassed the Zacks Consensus Estimate of $32.88 million, resulting in a surprise of +2.68% [1] Financial Performance Metrics - Efficiency ratio stood at 49.6%, matching the average estimate based on two analysts [4] - Net Interest Margin was reported at 6%, compared to the average estimate of 5.9% [4] - Total Interest Earning Assets reached $1.88 billion, exceeding the average estimate of $1.85 billion [4] - Payment processing fees were $4.91 million, slightly below the average estimate of $5.06 million [4] - Total Non-Interest Income was $6.15 million, slightly above the average estimate of $6.12 million [4] - Net Interest Income amounted to $27.61 million, surpassing the average estimate of $26.76 million [4] Stock Performance - Esquire Financial's shares returned +9.5% over the past month, outperforming the Zacks S&P 500 composite, which declined by -5.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Esquire Financial Holdings, Inc. reported quarterly earnings of $1.33 per share, exceeding the Zacks Consensus Estimate of $1.30 per share, and up from $1.20 per share a year ago, representing an earnings surprise of 2.31% [1] - The company posted revenues of $33.76 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.68%, compared to year-ago revenues of $29.25 million [2] - Over the last four quarters, Esquire Financial has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Esquire Financial shares have increased approximately 4.5% since the beginning of the year, contrasting with the S&P 500's decline of 8.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $1.36 on revenues of $33.89 million, and for the current fiscal year, it is $5.52 on revenues of $137.54 million [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Banks - Northeast industry is currently in the top 22% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Esquire Financial is currently mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Performance - Net income for Q1 2025 increased 13% to $11.4 million, or $1.33 per diluted share, compared to $10.1 million, or $1.20 per diluted share in Q1 2024[1] - For the three months ended March 31, 2025, net income was $11,407,000, a decrease of 2.94% from $11,753,000 in the previous quarter and an increase of 13.43% from $10,058,000 in the same quarter last year[29] - Net interest income after provision for credit losses was $26,109,000, up 3.66% from $25,186,000 in the previous quarter and up 19.93% from $21,863,000 year-over-year[29] - Total noninterest income was $6,151,000, slightly down from $6,169,000 in the previous quarter and down from $6,389,000 year-over-year[29] - The return on average assets was 2.39%, down from 2.49% in the previous quarter and 2.59% year-over-year[29] - The return on average equity was 19.13%, down from 19.99% in the previous quarter and 20.14% year-over-year[29] Revenue and Growth - Net interest margin expanded to 5.96%, a 9 basis points increase on a linked quarter basis, contributing to a total revenue increase of $4.5 million, or 15%, to $33.8 million[1] - Loan growth on a linked quarter basis was $18.8 million, or 5% annualized, totaling $1.42 billion, with significant average loan growth of $79.2 million, or 24% annualized[1] - Core deposit growth totaled $45.9 million, or 11% annualized, reaching $1.69 billion, with total deposits increasing by $254.1 million, or 18% year-over-year[1] - Total assets increased by $300.2 million, or 18.1%, to $1.95 billion as of March 31, 2025, compared to the previous year[15] - Loans totaled $1.42 billion, reflecting a growth of $187.6 million, or 15.3%, with variable rate commercial loans increasing by $179.9 million, or 23.8%[15] - Total deposits reached $1.69 billion, a $254.1 million, or 17.7%, increase from March 31, 2024, driven by a $211.7 million, or 22.4%, rise in Savings, NOW, and Money Market deposits[17] Expenses and Efficiency - Noninterest expense increased by $2.2 million, or 15%, to $16.7 million, primarily due to increases in employee compensation and benefits[10] - The efficiency ratio was 49.6% for Q1 2025, slightly improved from 49.8% in the prior year, despite ongoing investments in growth and risk management[12] - The efficiency ratio improved to 49.6% from 47.5% in the previous quarter, indicating better cost management[29] Capital and Equity - Stockholders' equity rose by $43.6 million to $250.7 million as of March 31, 2025, primarily due to net increases in retained earnings[20] - The company maintains a Tier 1 capital ratio of 15.24% and remains well above regulatory "Well Capitalized" standards[21] - The common equity tier 1 capital ratio was 15.24%, reflecting a strong capital position[33] - Adjusted tangible common equity to tangible assets ratio was 12.59%, indicating solid asset management[33] Credit Quality - The provision for credit losses was $1.5 million, a $500 thousand increase from Q1 2024, with an allowance for credit losses to loans ratio of 1.37%[8] - Nonperforming loans decreased to $8.0 million, down from $10.9 million a year earlier, resulting in a nonperforming loans to total loans ratio of 0.57%[27] Dividends and Shareholder Returns - The company announced a 17% increase in quarterly cash dividends to $0.175 per share, marking the fourth consecutive increase since initiating dividends in 2022[5] - Cash dividends paid per common share increased to $0.175 from $0.150 in the previous quarter and the same quarter last year[29] Strategic Initiatives - A sourcing joint venture agreement with Fortress Investment Group was announced to expand lending solutions for contingency fee law firms, enhancing borrowing options[5] Liquidity and Securities - The available-for-sale securities portfolio increased by $94.8 million to $236.9 million compared to March 31, 2024[15] - The total securities to assets ratio improved to 16% as of March 31, 2025, compared to 13% in the prior year, enhancing liquidity[15] - Uninsured deposits accounted for $525.6 million, or 31%, of total deposits, with approximately 80% representing clients with full commercial banking relationships[17] Multifamily Portfolio - The multifamily portfolio had a weighted average Debt Service Coverage Ratio (DSCR) of approximately 1.62 and an original Loan-to-Value (LTV) of 55%[16]

Core Insights - Esquire Financial Holdings, Inc. reported a net income of $11.4 million for Q1 2025, representing a 13% increase from $10.1 million in Q1 2024, with earnings per diluted share rising to $1.33 from $1.20 [4][6] - The company achieved a net interest income of $27.6 million, a 20.8% increase year-over-year, driven by a 23.9% growth in average interest-earning assets [5][6] - Esquire Bank was recognized as a "Best-Performing U.S. Small Community Bank of 2024" by S&P Global Market Intelligence, highlighting its strong financial metrics and strategic vision [2][6] Financial Performance - Total revenue for Q1 2025 increased by $4.5 million, or 15%, to $33.8 million compared to Q1 2024 [6] - The net interest margin was reported at 5.96%, a slight decrease of 10 basis points from the previous year, attributed to changes in the composition of interest-earning assets [5][6] - The efficiency ratio improved to 49.6% from 49.8% in the previous year, reflecting effective cost management despite increased investments in growth [11][25] Asset Quality and Loan Portfolio - As of March 31, 2025, the allowance for credit losses was $19.5 million, or 1.37% of total loans, down from 1.43% a year earlier [12][19] - The company reported one nonperforming multifamily loan totaling $8.0 million, with a nonperforming loan ratio of 0.57% [12][19] - Total loans held for investment increased to $1.42 billion, with significant growth in higher-yielding variable rate commercial loans [13][16] Deposit Growth and Funding - Total deposits reached $1.69 billion, a 17.7% increase from the previous year, driven by growth in savings and noninterest-bearing demand deposits [16][19] - Core deposit growth was strong, totaling $45.9 million, or 11% annualized, on a linked quarter basis [6][17] - The cost of deposits decreased to 0.94%, reflecting effective management of funding costs [7][25] Strategic Initiatives - The company announced a sourcing joint venture with Fortress Investment Group to enhance lending solutions for contingency fee law firms [6][19] - Continued investment in technology and customer experience is expected to support sustained growth in 2025 and beyond [2][6] - The anticipated opening of a private banking branch in Los Angeles is part of the company's strategy to expand its market presence [2][6]

Group 1 - Esquire Financial Holdings, Inc. announced that Esquire Bank was included in S&P Global Market Intelligence's annual rankings of best-performing community banks in the U.S. for 2024, ranking in the top quartile among banks with assets less than $3 billion [1][2] - The recognition follows record operating results in 2024, highlighting the company's focus on long-term stakeholder value and consistent industry-leading performance and growth [2] - S&P Global Market Intelligence evaluates banks based on key financial metrics, emphasizing balance sheet strength and risk profile, which reflects the resilience and strong performance of the banks in a dynamic financial environment [2] Group 2 - Esquire Financial Holdings, Inc. is headquartered in Jericho, New York, with a branch office in Jericho and an administrative office in Boca Raton, Florida [4] - The company operates Esquire Bank, a full-service commercial bank that serves 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 flexible payment processing solutions to small business owners [4] - The company was also named to Fortune's 2024 Fastest-Growing Companies list [4]

Core Viewpoint - Esquire Financial Holdings, Inc. has entered into a joint venture agreement with Fortress Investment Group to enhance banking and lending services for US contingency fee law firms, aiming to provide tailored credit facilities and expand borrowing options for these firms [1][2]. Group 1: Joint Venture Details - The agreement combines Esquire Bank's commercial lending capabilities with Fortress's Legal Assets Group's origination and underwriting expertise, increasing access to capital for contingency fee law firms [2]. - The collaboration will enable law firms to secure larger and more customized financing solutions, supporting growth, technology investments, acquisitions, and operational needs [2][3]. Group 2: Company Profiles - Esquire Financial Holdings, Inc. is headquartered in Jericho, New York, and operates Esquire Bank, which focuses on serving the financial needs of the litigation industry and small businesses, offering tailored financial solutions [4]. - Fortress Investment Group LLC, founded in 1998, manages $49 billion in assets as of December 31, 2024, serving approximately 2,000 institutional clients and private investors globally across various investment strategies [5].

Group 1 - Esquire Financial Holdings, Inc. is a small financial institution that was close to being downgraded in early December of the previous year [1] - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and companies that generate it [1] - The service aims to identify value and growth prospects with real potential in the oil and gas sector [1] Group 2 - Subscribers of Crude Value Insights have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live chat discussions about the sector [2] - The service offers a two-week free trial for new subscribers, promoting engagement in the oil and gas market [3]

Financial Performance - Total assets increased to $1,892,503 thousand as of December 31, 2024, up from $1,616,876 thousand in 2023, representing a growth of approximately 17%[356]. - Loans held for investment rose to $1,397,021 thousand in 2024, compared to $1,207,413 thousand in 2023, indicating an increase of about 15.7%[356]. - Total deposits grew to $1,642,236 thousand in 2024, up from $1,407,299 thousand in 2023, marking an increase of around 16.7%[356]. - Stockholders' equity reached $237,094 thousand in 2024, compared to $198,555 thousand in 2023, which is an increase of about 19.4%[356]. - Net income for 2024 was $43,658 thousand, up 6.5% from $41,011 thousand in 2023[359]. - Total interest income for 2024 reached $113,373 thousand, a 23.2% increase from $91,888 thousand in 2023[358]. - Net interest income after provision for credit losses increased to $95,229 thousand in 2024, compared to $79,248 thousand in 2023, reflecting a 20.2% growth[358]. - Total noninterest income decreased to $24,895 thousand in 2024, down 16.5% from $29,751 thousand in 2023[358]. - Total noninterest expense rose to $60,843 thousand in 2024, an increase of 14.6% from $53,117 thousand in 2023[358]. - Earnings per share (EPS) for 2024 was $5.58, compared to $5.31 in 2023, representing a 5.1% increase[358]. - The company declared cash dividends of $0.60 per share for 2024, up from $0.475 per share in 2023[361]. Credit Quality and Risk Management - The allowance for credit losses increased to $20,979 thousand in 2024 from $16,631 thousand in 2023, reflecting a rise of approximately 26.5%[356]. - Provision for credit losses was $4,700 thousand in 2024, compared to $4,525 thousand in 2023, indicating a 3.9% increase[358]. - The total past due loans amounted to $10,942 million as of December 31, 2024, compared to $11,074 million in 2023, showing a decrease of approximately 1.2%[424]. - The company continues to monitor credit quality indicators and categorize loans based on borrowers' ability to service their debt, ensuring proactive management of credit risk[425]. - The company evaluates its loan pooling methodology at least annually, focusing on segments such as Commercial, Consumer, Multifamily, and Commercial Real Estate[386][387][388][389]. Loan Portfolio Composition - The commercial real estate loan portfolio comprises $355.2 million, or 25.4%, and the commercial real estate (CRE) loan portfolio totals $87.0 million, or 6.2% of total loans as of December 31, 2024[74]. - The multifamily portfolio has a current weighted average debt service coverage ratio (DSCR) of approximately 1.64 and an original loan-to-value (LTV) ratio of 54%[79]. - Multifamily loans maturing in 2025 total $59.5 million with a current weighted average DSCR of approximately 1.34 and an original LTV of 57%[79]. - The commercial loan segment saw a significant increase, with total commercial loans reaching $920,567 million in 2024, up from $737,914 million in 2023, marking an increase of about 24.7%[423]. - The consumer loan segment also grew, with total consumer loans increasing to $19,339 million in 2024 from $14,491 million in 2023, reflecting a growth of approximately 33.5%[423]. - The multifamily loan category remained stable, with a slight increase to $355,165 million in 2024 from $348,241 million in 2023, representing a growth of about 2.6%[423]. - The commercial real estate loans decreased slightly to $87,038 million in 2024 from $89,498 million in 2023, indicating a decline of approximately 2.8%[423]. Regulatory Compliance and Governance - The company is subject to extensive regulation and supervision by the OCC and the FRB, ensuring compliance with federal laws and regulations[86]. - Esquire Bank is subject to federal anti-money laundering and anti-terrorist financing laws, including the Bank Secrecy Act and the USA PATRIOT Act[114]. - The SEC requires registrants to report material cybersecurity incidents on Form 8-K and disclose cybersecurity policies in Forms 10-K and 10-Q[120]. - The Company is required to obtain prior approval from the FRB to acquire more than 5% of a class of voting securities of any additional bank or bank holding company[127]. - The Company has not elected to utilize the community bank leverage ratio alternative framework as of December 31, 2024[99]. Employee and Community Engagement - The company employed 138 full-time equivalent individuals, with approximately 60% being minorities or women[81]. - The company encourages employee development through on-the-job training and internal promotions[82]. - The company’s benefits package includes health care coverage, retirement benefits, and paid time off[83]. - The company supports community-based organizations through a comprehensive grant and lending program as part of its Community Reinvestment Act obligations[84]. - Esquire Bank was rated "outstanding" in its Community Reinvestment Act compliance during its most recent OCC evaluation[112]. Capital Management - The company maintains a capital conservation buffer of 2.5% of common equity Tier 1 capital to risk-weighted assets above the minimum requirements[98]. - The company was well capitalized under the prompt corrective action requirements at December 31, 2024, with a common equity Tier 1 risk-based capital ratio of 6.5%[103]. - The company has the ability to borrow a total of $431,700 million from the FHLB of New York as of December 31, 2024, compared to $284,247 million in 2023, representing a significant increase of 51.9%[439]. - The Inflation Reduction Act introduced a 1% excise tax on stock repurchases, effective January 1, 2023, which may affect the company's capital management strategies[135]. Accounting and Financial Reporting - The company adopted a new credit loss accounting standard effective January 1, 2023, impacting the methodology for estimating credit losses[344]. - The company maintained effective internal control over financial reporting as of December 31, 2024, according to the independent auditor's opinion[343]. - The Company adopted ASU 2023-07 in 2024, enhancing segment reporting disclosures without material effect on consolidated financial statements[414]. - The Company is evaluating the impact of ASU 2023-09 on income tax disclosures, effective for fiscal years beginning after December 15, 2024[415]. Investment and Securities - The investment portfolio had a fair value of $302.7 million, consisting of U.S. Government Agency collateralized mortgage obligations and mortgage-backed securities[76]. - As of December 31, 2024, total available-for-sale securities amounted to $241,746 million, with unrealized losses of $19,976 million[416]. - The total held-to-maturity securities value was $60,931 million as of December 31, 2024, with unrealized losses of $7,729 million[416]. - The Company reported no allowance for credit losses on available-for-sale securities as of December 31, 2024, due to high credit quality[420]. - The Company had no outstanding FHLB advances as of December 31, 2024[417].