Financial Performance - Total assets increased to $1,616,876 thousand as of December 31, 2023, compared to $1,395,639 thousand in 2022, representing a growth of approximately 15.8%[344]. - Net income for the year ended December 31, 2023, was $41,011 thousand, up from $28,518 thousand in 2022, reflecting a year-over-year increase of about 43.8%[346]. - Interest income from loans held for investment rose to $81,188 thousand in 2023, a significant increase of 50.5% compared to $54,007 thousand in 2022[346]. - Noninterest income totaled $29,751 thousand in 2023, compared to $24,925 thousand in 2022, marking an increase of about 19.1%[346]. - Basic earnings per share increased to $5.31 in 2023 from $3.73 in 2022, representing a growth of approximately 42.3%[346]. - Total comprehensive income for 2023 was $42,893,000, compared to $14,251,000 in 2022, reflecting a significant improvement[347]. - Net cash provided by operating activities rose to $42,401,000 in 2023, up from $38,797,000 in 2022[351]. Loan Portfolio - The commercial real estate (CRE) loan portfolio comprises $89.5 million, representing 7.4% of total loans, while the multifamily loan portfolio totals $348.2 million, or 28.8% of total loans[74]. - The overall multifamily portfolio's weighted average debt service coverage ratio (DSCR) is 1.66, with a loan-to-value (LTV) ratio of 54%[79]. - Multifamily loans maturing in 2024 total $29.1 million, with a weighted average DSCR of approximately 1.46 and a weighted average LTV of 57%[79]. - The company has no exposure to office and construction loans, with minimal exposure to hospitality at $15.5 million as of December 31, 2023[74]. - The recorded investment in loans as of December 31, 2022, was $948,553,000, with no impaired loans reported[419]. - As of December 31, 2023, total loans held for investment amounted to $1,208,081 thousand, an increase from $948,553 thousand in 2022, representing a growth of approximately 27.4%[416]. - The total real estate loans increased to $455,676 thousand in 2023 from $379,891 thousand in 2022, reflecting a growth of about 19.9%[416]. Credit Losses and Risk Management - The allowance for credit losses increased to $16,631 thousand in 2023 from $12,223 thousand in 2022, indicating a rise of approximately 36.5%[344]. - The provision for credit losses was $4,525 thousand in 2023, compared to $3,490 thousand in 2022, reflecting an increase of about 29.7%[346]. - The company evaluates the adequacy of the allowance for credit losses on a quarterly basis, incorporating reasonable and supportable forecasts[368]. - The allowance for credit losses on loans was reported as $12,506 thousand under the CECL Standard, reflecting an increase of $283 thousand from pre-CECL adoption[402]. - The company categorizes loans into risk categories based on borrowers' ability to service their debt, with special mention loans indicating potential weaknesses[422]. - The company uses a defined process for analyzing loans individually, ensuring close attention to credit risk management[426]. Capital and Liquidity - The company maintained a common equity Tier 1 capital ratio of at least 4.5%, meeting federal minimum capital standards as of December 31, 2023[97]. - The company was classified as "well capitalized" under prompt corrective action requirements, indicating strong financial health[105]. - As of December 31, 2023, the company had $284.2 million of available borrowing capacity with the FHLB and $58.0 million with the FRB discount window, totaling $359.7 million in borrowing capacity[80]. - The company maintains a strong capital position, which is essential for compliance with banking regulations and supports dividend payments[356]. - The company had no outstanding FHLB or FRB borrowings as of December 31, 2023, maintaining a strong liquidity position[410][411]. Regulatory Compliance - The company is subject to extensive regulation and supervision by the OCC and the FRB, which could materially impact its operations and stockholders[88]. - The OCC has extensive enforcement authority over national banks, including the ability to issue cease and desist orders and assess civil money penalties[111]. - The company is not currently subject to consolidated holding company capital requirements due to its asset size being below the specified threshold[127]. - The company has elected to be a "financial holding company," allowing it to engage in a broader array of financial activities[128]. - The USA PATRIOT Act imposes obligations on financial institutions to establish anti-money laundering compliance programs[119]. Community Engagement and Diversity - The company supports community-based organizations through a comprehensive grant and lending program as part of its Community Reinvestment Act obligations[84]. - The company employed 140 full-time equivalent individuals, with approximately 60% being minorities or women, reflecting a commitment to diversity[81]. - The company emphasizes employee retention through competitive compensation and benefits packages, alongside a collaborative environment for training and development[82]. Tax and Deferred Tax Assets - Total current tax expense for 2023 was $17,422,000, an increase of 50.5% from $11,616,000 in 2022[442]. - The effective tax rate for 2023 was $14,871,000, compared to $10,283,000 in 2022, reflecting a 44.7% increase[442]. - Deferred tax assets totaled $13,045,000 in 2023, up from $11,260,000 in 2022, indicating a growth of 15.8%[443]. - The Company has determined that it is more likely than not that the deferred tax asset will be realized as of December 31, 2023[443]. Investments and Software - The company reported a total of $2.9 million in internal-use software assets as of December 31, 2023, down from $3.4 million in 2022, with related software amortization totaling $1.3 million for the year ended December 31, 2023[381]. - The company’s internal-use software costs are amortized over 3-5 years, reflecting a strategic investment in technology[381]. - The Company recognized a gain of $5,313 from its investment in Litify, Inc. after the reorganization and sale transaction in 2023[385]. - The Company has recorded a note receivable of $1.8 million as of December 31, 2023, related to its investment in Litify[385].
Esquire Financial (ESQ) - 2023 Q4 - Annual Report