ESQUIRE FINANCIAL HOLDINGS, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2025 RESULTS

Core Insights - Esquire Financial Holdings, Inc. reported significant growth in commercial loans and deposits, positioning the company for continued success in 2026 [1] - The company maintains a strong capital foundation, with CET1 and TCE/TA ratios of 14.18% and 12.24%, respectively, well above regulatory standards [2][28] - Esquire Bank focuses on serving the litigation and payments markets with tailored tech-enabled financial solutions [2][3] Financial Performance - For Q4 2025, net income was $13.5 million, or $1.55 per diluted share, up from $11.8 million, or $1.37 per diluted share in Q4 2024, representing a 14.6% increase [4][6] - Net interest income increased by $6.4 million, or 23.8%, to $33.3 million, driven by a 19.7% growth in average interest-earning assets [5][14] - The full year 2025 net income rose 16.4% to $50.8 million, despite increases in provisions for credit losses and noninterest expenses [6][13] Loan and Deposit Growth - Average loans increased by $340.0 million, or 25.8%, to $1.66 billion, with litigation-related loan growth accounting for $320.3 million, or 42.1% [5][14] - Total deposits reached $2.06 billion, a $420.8 million, or 25.6% increase from 2024, driven by litigation-related escrow deposits and commercial demand deposits [23][24] - Core deposits grew by $428.7 million, or 26.3%, compared to 2024, reflecting the company's focus on full-service commercial banking relationships [6][24] Noninterest Income and Expenses - Noninterest income for Q4 2025 was stable at $6.1 million, with payment processing income consistent with the prior year [9][16] - Noninterest expenses increased by $3.4 million, or 21.5%, to $19.1 million, primarily due to higher employee compensation and benefits, data processing, and occupancy costs [10][17] - The efficiency ratio for Q4 2025 was 48.4%, slightly higher than 47.5% in 2024, reflecting ongoing investments in growth and client service [11][19] Asset Quality and Credit Metrics - The allowance for credit losses was $24.0 million, or 1.37% of total loans, with nonperforming loans totaling $8.6 million, representing 0.36% of total assets [21][23] - The provision for credit losses for the year was $9.7 million, a $5.0 million increase from 2024, driven by significant loan growth [15][21] - The company believes its allowance for credit losses is adequate based on current credit risk evaluations [8][15] Market Position and Strategy - Esquire Bank has been recognized as a top-performing small-cap bank, being named to the Piper Sandler 2025 Bank & Thrift Sm-All Stars [6][29] - The company continues to invest in technology and client experience to enhance its service offerings and support future growth [3][10] - Esquire's strategy focuses on developing full-service commercial banking relationships rather than competing on interest rates [24][25]