Business Address100 JERICHO QUADRANGLESUITE 100JERICHO NY 11753(800) 996-0213
Mailing Address100 JERICHO QUADRANGLESUITE 100JERICHO NY 11753
SECURITIES AND EXCHANGE COMMISSION
FORM 8-KCurrent report filing
Filing Date: 2022-01-26 | Period of Report: 2022-01-25SEC Accession No. 0001558370-22-000432
(HTML Version on secdatabase.com)
FILEREsquire Financial Holdings, Inc.CIK:1531031| IRS No.: 000000000 | State of Incorp.:MD | Fiscal Year End: 1231Type: 8-K | Act: 34 | File No.: 001-38131 | Film No.: 22554964SIC: 6029 Commercial banks, nec
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 25, 2022
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 100Jericho, New York 11753
(Address of principal executive offices) (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 filingobligation 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 classTrading
Symbol(s) Name of each exchange on which registeredCommon Stock, $0.01 par value ESQ The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 ofthe Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17CFR §240.12b-2).
-
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Emerging growth company ☒If an emerging growth company, indicate by check mark if the registrant has elected not to use theextended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section 13(a) of the Exchange Act. ☒
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Item 2.02 Results of Operations and Financial Condition.
On January 25, 2022, Esquire Financial Holdings, Inc. (the “Company”), the holding company forEsquire Bank, National Association (“Esquire Bank”), issued a press release announcing its earningsfor the quarter and year ended December 31, 2021. A copy of the press release is attached as Exhibit99.1 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” forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to theliability of that section, and shall not be incorporated by reference into any filings made by theCompany under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, asamended, except as expressly set forth by specific reference in such filing.
Item 7.01. Regulation 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 presentationis furnished in this Current Report on Form 8-K, pursuant to this Item 7.01, as Exhibit 99.2, and isincorporated herein by reference.
The information contained in this Item 7.01 and Exhibit 99.2 shall not be deemed to be “filed” forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to theliability of that section, and shall not be incorporated by reference into any filings made by theCompany under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, asamended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release dated January 25, 2022.
99.2 Written presentation to be distributed and made available toinvestors and postedon the Company’s website.
104 Cover Page Interactive Data File (formatted as inline XBRL andcontained in Exhibit 101).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
ESQUIRE FINANCIAL HOLDINGS, INC.
Dated: January 25, 2022 By: /s/ Andrew C. SaglioccaAndrew C. SaglioccaPresident and Chief Executive Officer
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Exhibit 99.1
ESQUIRE FINANCIAL HOLDINGS, INC.REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS
Loan and Revenue Growth Continues to Drive Record Earnings and Returns
Jericho, NY – January 25, 2022 – Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the “Company”), the financialholding company for Esquire Bank, National Association (“Esquire Bank”), today announced its operating results for thefourth quarter and full year of 2021. Significant achievements during the quarter include:
● Net income of $6.7 million, or $0.83 per diluted share, as compared to $2.5 million, or $0.32 per diluted shareon a linked quarter basis.
● Returns on average assets and common equity of 2.44% and 19.19%, respectively, as compared to 0.97% and7.32% on a linked quarter basis.
● Current quarter includes a tax benefit of approximately $1.2 million, or $0.14 per diluted share, related to theexercise of certain stock options. Excluding this tax benefit, adjusted (1) net income, diluted earnings per share,return on average assets, and return on average common equity would have been $5.6 million, $0.69, 2.02%,and 15.85%, respectively.
● Industry leading net interest margin of 4.48% despite the sustained low interest rate environment and itsnegative effects on industry-wide median net interest margins.
● Loans held for investment increased $40.4 million, or 22% annualized, to $784.5 million on a linked quarterbasis. Excluding repayments on Paycheck Protection Program (“PPP”) loans totaling $7.4 million, loans heldfor investment increased 26% annualized on a linked quarter basis as the Company continues to deploy excessliquidity from core deposits into higher yielding loans.
● Deposits increased $51.4 million on a linked quarter basis, or 21% annualized, to $1.0 billion, primarily drivenby commercial deposits, with a cost of funds of 0.10% (including demand deposits). Demand deposits, totaling$409.4 million, represent 40% of total deposits while off-balance sheet sweep funds totaled $537.5 million atquarter end, clearly highlighting our excess liquidity and the continued strength of our branchless businessmodel.
● Total assets increased $55.5 million on a linked quarter basis, or 20% annualized, to $1.2 billion and $242.1million from year end 2020, or 26%.
● Noninterest income totaled $5.2 million or 31% of total revenues, stabilizing in the current quarter andincreasing $479 thousand from the fourth quarter of 2020.
● Continued solid asset quality metrics with a reserve for loan losses to total loans of 1.16%.
● Esquire Bank remains well above the bank regulatory “Well Capitalized” standards.
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(1) Adjusted to exclude the fourth quarter 2021 discrete income tax benefit on share-based compensation totaling approximately $1.2 million.See non-GAAP reconciliation provided elsewhere herein.
“The investments in our brand, digital platform, and sales strategy across our national litigation and payment processingplatforms have and will continue to yield strong growth and returns, making Esquire a top performing financial institutionin the industry driven by our technology platforms,” stated Tony Coelho, Chairman of the Board.
“Our timing and investment in digital marketing and related technology has been transformational for our Company,”stated Andrew C. Sagliocca, President and Chief Executive Officer. “Our digital marketing platform has contributed tomore than half of the commercial loan originations, accelerating our growth on a national basis while most financialinstitutions stagnated in 2021. We believe that our
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digital platforms are key to the Company’s future success and will play a significant role in 2022. Our sales pipelineremains robust, driven by our current and future digital marketing and technology development plans as well asemployees that will support our future growth plans.”
Fourth Quarter Earnings
Net income for the quarter ended December 31, 2021 was $6.7 million, or $0.83 per diluted share, compared to $3.9million, or $0.51 per diluted share for the same period in 2020. Returns on average assets and common equity for thecurrent quarter were 2.44% and 19.19%, respectively, compared to 1.70% and 12.54% for the same period of 2020.
Net interest income for the fourth quarter of 2021 increased $1.8 million, or 18.4%, to $11.7 million, due to growth inaverage interest earning assets totaling $161.4 million, or 18.4%, to $1.0 billion when compared to the same period in2020. Our net interest margin remained consistent at 4.48% for the fourth quarter of 2021 compared to 4.49% for the sameperiod in 2020, supported by the origination of higher yielding commercial litigation loans during the period. Averageloans in the quarter increased $94.6 million, or 14.4%, to $753.5 million when compared to the fourth quarter of 2020fueled by growth in our litigation and multifamily loan portfolios. Our loan-to-deposit ratio was 76.3% as our low costdeposit base increased $224.4 million, or 27.9%, as compared to December 31, 2020.
The provision for loan losses was $555 thousand for the fourth quarter of 2021, a $1.0 million decrease from the sameperiod in 2020. The decrease in the provision relates to a reduced pandemic related uncertainty and the reclassificationof the NFL loan portfolio to loans held for sale in the third quarter 2021. As of December 31, 2021, Esquire hadnonperforming loans held for investment of $6 thousand and an allowance to loans ratio of 1.16%.
Noninterest income increased $479 thousand, or 10.2%, to $5.2 million for the fourth quarter of 2021, as compared tothe fourth quarter of 2020, driven by our payment processing platform. Payment processing volumes for the platformincreased $1.9 billion, or 42.1%, to $6.3 billion for the quarter ended December 31, 2021, as compared to the same periodin 2020, driven by expansion of our sales channels through ISOs, increased number of merchants, volume increases,and the reopening of the economy as pandemic restrictions continued to ease nationally. During the current quarter, ourpayment processing fee income began to stabilize as higher margin e-commerce volumes decreased, primarily due to thereopening of the economy as pandemic restrictions continued to ease and stabilize nationally.
Noninterest expense increased $1.0 million, or 13.1%, to $8.7 million for the fourth quarter of 2021, as compared tothe same period in 2020. This increase was primarily driven by increases in employee compensation and benefits, dataprocessing and travel and business relations, offset by a decrease in professional and consulting services. Employeecompensation and benefits costs increased $1.1 million, or 25.5%, due to increases in staff and officer level employeesto support our growth, investment in digital platforms and related sales/marketing divisions, and the impact of salary,bonus and stock-based compensation increases. Professional and consulting service costs decreased $277 thousand, or32.7%, partially offsetting the increase in employee compensation and benefits as previously contracted consultants werehired, primarily in our technology development and digital marketing departments. Data processing costs increased $89thousand, or 10.5%, due to increased processing volume, primarily driven by our core banking platform, and additionalcosts related to our technology implementations. Travel and business relations costs increased $77 thousand, as we re-engaged in our traditional high touch marketing and sales efforts to complement our digital marketing efforts.
The Company’s efficiency ratio was 51.9% for the three months ended December 31, 2021, as compared to 53.1% in2020. This decrease is a result of growth in our total revenue with a focus on our national platforms. These nationalplatforms have benefited from our investments in technology, digital marketing, employees, and infrastructure.
The effective tax rate was 11.0% for the fourth quarter of 2021, as compared to 26.5% for the same period in 2020, dueto certain discrete tax benefits totaling approximately $1.2 million related to share-based compensation recognized inthe fourth quarter of 2021, specifically, voluntary stock option exercises.
Full Year Earnings
Net income for the year ended December 31, 2021 was $17.9 million, or $2.26 per diluted share, compared to $12.6million, or $1.65 per diluted share for the same period in 2020. Returns on average assets and common equity for the yearended December 31, 2021 were 1.77% and 13.42%, respectively, compared to 1.45% and 10.69% for the same period of2020.
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Net interest income for the year ended 2021 increased $6.3 million, or 16.7%, to $43.7 million, due to growth in averageinterest earning assets totaling $134.9 million, or 16.1%, to $972.8 million when compared to the same period in 2020.Our net interest margin increased 2 basis points to 4.49% for the year ended 2021 compared to 4.47% for the same periodin 2020, despite the sustained low interest rate environment. Average loans for the year increased $112.4 million, or18.6%, to $717.7 million when compared to the same period in 2020 with growth in our higher yielding litigation loansand the multifamily portfolio.
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The provision for loan losses was $7.0 million for the year ended 2021, a $705 thousand increase from the same periodin 2020. In the third quarter of 2021, the Company reclassified its legacy NFL consumer post settlement loan portfoliototaling $23.6 million from held for investment to held for sale, which reduced our exposure and extended the portfolio’sduration. This change in accounting model to the lower of cost or market resulted in a $9.0 million charge-off, of which$3.0 million was recognized as a component of the third quarter provision for loan losses. The remaining 2021 provisionrelates to an increase in the general reserve attributable to loan growth in the current environment with a reduced level ofpandemic related uncertainty.
Noninterest income increased $6.4 million, or 43.5%, to $21.0 million for the year ended 2021, as compared to the sameperiod in 2020, driven by our payment processing platform. Payment processing volumes for this platform increased $8.8billion, or 59.4%, to $23.7 billion for the year ended December 31, 2021, as compared to the same period in 2020, drivenby expansion of our sales channels through ISOs, increased number of merchants, volume increases, and the fact thatpandemic restrictions continued to ease and stabilize nationally throughout 2021.
Noninterest expense increased $6.4 million, or 22.3%, to $35.1 million for the year ended 2021, as compared to the sameperiod in 2020. This increase was primarily driven by increases in employee compensation and benefits, advertising andmarketing, data processing and occupancy and equipment costs. Employee compensation and benefits costs increased$4.9 million, or 28.9%, due to increases in staff and officer level employees to primarily support our growth, investmentin digital platforms and related sales/marketing divisions, and the impact of salary, bonus and stock-based compensationincreases. Advertising and marketing costs increased $590 thousand, as we purposefully enhanced our brand and saleschannels through our new digital marketing efforts and thought leadership in our national verticals. We also re-engagedin our traditional high touch marketing and sales efforts to complement our digital marketing efforts. Data processingcosts increased $551 thousand, or 17.7%, due to increased processing volume, primarily driven by our core bankingplatform, and additional costs related to our technology implementations. Occupancy and equipment costs increased $386thousand, or 15.9%, primarily due to amortization of our investments in internally developed software to support ournew digital platforms, precautionary office cleaning costs related to COVID-19 and additional office space to support ourcontinued growth.
The Company’s efficiency ratio was 54.2% for the year ended December 31, 2021, as compared to 55.0% for the sameperiod in 2020.
The effective tax rate decreased to 21.1% for the year ended 2021, as compared to 26.5% for the same period in 2020,due to certain discrete tax benefits totaling approximately $1.2 million related to share-based compensation recognizedin the fourth quarter of 2021 as previously discussed.
Asset Quality
Nonperforming loans held for investment, totaling $6 thousand, consisted of several nonaccrual consumer loans. As ofDecember 31, 2021, the allowance for loan losses was $9.1 million, or 1.16% of total loans, as compared to $11.4million, or 1.70% of total loans at December 31, 2020. The decrease in the allowance as a percent of loans wasprimarily due to the charge-off of $9.0 million upon reclassification of the legacy NFL consumer post settlement loanportfolio from held for investment to held for sale during the third quarter of 2021. As a result, reserve for loan lossesto total loans returned to approximately pre-pandemic levels.
In 2020, management implemented a customer payment deferral program (principal and interest) under the CARES Actto assist business borrowers and certain consumers that may have been experiencing financial hardship due toCOVID-19 related challenges. As of December 31, 2021, there were no participants in our payment deferral program.
We are participating in the PPP administered by the SBA and have originated $45.5 million PPP loans to date. As ofDecember 31, 2021, our outstanding PPP loan balance was $4.2 million as $41.3 million has been fully repaid by theSBA.
Balance Sheet
At December 31, 2021, total assets were $1.2 billion, reflecting a $242.1 million, or 25.8% increase from December31, 2020. This increase is attributable to increases in loans held for investment totaling $112.1 million, or 16.7%, to$784.5 million, driven by litigation and multifamily loans, funded with low-cost deposits. In the third quarter of 2021,the Company reclassified its legacy consumer NFL loan portfolio totaling $23.6 million to loans held for sale, incurring apretax charge totaling $3.4 million ($2.5 million net of tax), or $0.31 per diluted share. As of December 31, 2021, the fair
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value of these loans held for sale was approximately $14.1 million based on an independent third-party valuation. Thisaccounting reclassification to held for sale is reflective of management’s intent to sell these assets to a fund in the nearterm. These loans held for sale totaling $14.1 million have been included in the other assets financial statement captionon the statement of financial condition. Excluding the effects of the NFL reclassification and net payoffs of our PPPloans totaling $25.9 million and $17.7 million in 2021, respectively, our loan growth would have been $155.7 million or24.9% when comparing the year ended 2021 to 2020. Our available for sale securities portfolio increased $30.7 million,or 26.1%, to $148.4 million as compared to December 31, 2020.
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The following table provides information regarding the composition of our loan portfolio for the periodspresented:
At December 31, At December 31,2021 2020
(Dollars in thousands)Real estate:
1 – 4 family $ 40,753 5.19 % $ 48,433 7.20 %Multifamily 254,852 32.46 169,817 25.24Commercial real estate 48,589 6.19 54,717 8.13Construction — — — —
Total real estate 344,194 43.84 272,967 40.57Commercial 432,108 55.05 358,410 53.28Consumer 8,681 1.11 41,362 6.15
Total loans held for investment 784,983 100.00 % 672,739 100.00 %Deferred loan fees and unearned premiums,net (466) (318)Allowance for loan losses (9,076) (11,402)Loans held for investment, net $ 775,441 $ 661,019
Loans held for sale, net (included in Otherassets) $ 14,100 $ —
Total deposits were $1.0 billion as of December 31, 2021, a $224.4 million, or 27.9%, increase from December 31,2020. This was primarily due to a $158.6 million, or 35.9%, increase in Savings, NOW and Money Market deposits to$599.7 million, a $57.7 million, or 16.4%, increase in noninterest bearing demand deposits to $409.4 million, and an $8.1million, or 72.4%, increase in time deposits to $19.3 million. The increase in deposits was primarily driven by commercialand escrow low-cost deposits from our litigation and small business platforms. Off-balance sheet sweep funds totaled$537.5 million at quarter end. Our deposit growth and our off-balance sheet funds continue to demonstrate our strongliquidity position and the strength of our unique branchless and low-cost funding model.
Stockholders’ equity increased $17.7 million to $143.7 million as of December 31, 2021, compared to December 31,2020. Esquire Bank remains well above bank regulatory “Well Capitalized” standards.
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About Esquire Financial Holdings, Inc.
Esquire Financial Holdings, Inc. is a financial holding company headquartered in Jericho, New York, with one branchoffice in Jericho, New York and an administrative office in Boca Raton, Florida. Its wholly-owned subsidiary, EsquireBank, National Association, is a full-service commercial bank dedicated to serving the financial needs of the litigationindustry and small businesses nationally, as well as commercial and retail customers in the New York metropolitanarea. The bank offers tailored financial and payment processing solutions to the litigation community and their clientsas well as dynamic and flexible payment processing solutions to small business owners. For more information, visitwww.esquirebank.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” relating to future results of the Company. Forward-lookingstatements are subject to many risks and uncertainties, including, but not limited to: changes in business plans ascircumstances warrant; changes in general economic, business and political conditions, including changes in the financialmarkets; 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 filedwith the Securities and Exchange Commission. The forward-looking statements included in this press release arenot a guarantee of future events, and that actual events may differ materially from those made in or suggestedby 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,” “outlook,” “aim,”“would,” “annualized” and “outlook,” or similar terminology. Further, given its ongoing and dynamic nature, it is difficultto predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on futuredevelopments, which are highly uncertain, including when the coronavirus can be controlled and abated and when andhow the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and nationaleconomic consequences, we could be subject to any of the following risks, any of which could have a material, adverseeffect on our business, financial condition, liquidity, and results of operations: the demand for our products and servicesmay decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets,and foreclosures may increase; collateral for loans, especially real estate, may decline in value; our allowance for loanlosses may increase if borrowers experience financial difficulties; the net worth and liquidity of loan guarantors maydecline, impairing their ability to honor commitments to us; and our cyber security risks are increased as the result of anincrease in the number of employees working remotely. Any forward-looking statements presented herein are made onlyas 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 maybe required by law.
Contact Information:
Eric S. BaderExecutive Vice President and Chief Operating OfficerEsquire Financial Holdings, Inc.(516) [email protected]
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ESQUIRE FINANCIAL HOLDINGS, INC.Condensed Consolidated Statement of Condition (unaudited)(dollars in thousands except per share data)
December 31, December 31,2021 2020
ASSETSCash and cash equivalents $ 149,156 $ 65,185Securities purchased under agreements to resell, at cost 50,271 51,726Securities available for sale, at fair value 148,384 117,655Securities, restricted at cost 2,680 2,694Loans, held for investment 784,517 672,421Less: allowance for loan losses (9,076) (11,402)
Loans, net of allowance 775,441 661,019Premises and equipment, net 3,334 3,017Other assets 49,504 35,418Total Assets $ 1,178,770 $ 936,714
LIABILITIES AND STOCKHOLDERS' EQUITYDemand deposits $ 409,350 $ 351,692Savings, NOW and money market deposits 599,747 441,160Certificates of deposit 19,312 11,202
Total deposits 1,028,409 804,054Other liabilities 6,626 6,584
Total liabilities 1,035,035 810,638Total stockholders' equity 143,735 126,076Total Liabilities and Stockholders' Equity $ 1,178,770 $ 936,714
Selected Financial DataCommon shares outstanding 8,088,846 7,793,482Book value per share $ 17.77 $ 16.18Equity to assets 12.19 % 13.46 %
Capital Ratios (1)
Tier 1 leverage ratio 11.46 % 12.51 %Common equity tier 1 capital ratio 14.79 % 15.44 %Tier 1 capital ratio 14.79 % 15.44 %Total capital ratio 15.89 % 16.69 %
Asset Quality - loans held for investmentLoans 90 days past due and still accruing $ — $ —Nonaccrual loans 6 2,303Nonperforming loans $ 6 $ 2,303
Allowance for loan losses to total loans 1.16 % 1.70 %Nonperforming loans to total loans 0.00 % 0.34 %Nonperforming assets to total assets 0.00 % 0.25 %Allowance to nonperforming loans 157,180 % 495 %
(1) Regulatory capital ratios presented on bank-only basis.
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ESQUIRE FINANCIAL HOLDINGS, INC.Condensed Consolidated Income Statement (unaudited)(dollars in thousands except per share data)
Three months ended Year endedDecember 31, December 31,
2021 2020 2021 2020
Interest income $11,930 $10,094 $44,531 $38,630Interest expense 231 213 828 1,190
Net interest income 11,699 9,881 43,703 37,440Provision for loan losses 555 1,550 6,955 6,250
Net interest income after provision for loan losses 11,144 8,331 36,748 31,190
Noninterest income:
Payment processing fees 4,908 4,572 20,856 14,099Other noninterest income 259 116 168 548
Total noninterest income 5,167 4,688 21,024 14,647
Noninterest expense:
Employee compensation and benefits 5,552 4,424 21,741 16,873
Other expenses 3,197 3,314 13,323 11,797
Total noninterest expense 8,749 7,738 35,064 28,670
Income before income taxes 7,562 5,281 22,708 17,167Income taxes 832 1,399 4,783 4,549
Net income $ 6,730 $ 3,882 $17,925 $12,618
Earnings Per ShareBasic $ 0.89 $ 0.52 $ 2.40 $ 1.70Diluted $ 0.83 $ 0.51 $ 2.26 $ 1.65Basic - adjusted (1) $ 0.74 $ 0.52 $ 2.24 $ 1.70Diluted - adjusted (1) $ 0.69 $ 0.51 $ 2.11 $ 1.65
Selected Financial DataReturn on average assets 2.44 % 1.70 % 1.77 % 1.45 %Return on average equity 19.19 % 12.54 % 13.42 % 10.69 %Adjusted return on average assets (1) 2.02 % 1.70 % 1.66 % 1.45 %Adjusted return on average common equity (1) 15.85 % 12.54 % 12.54 % 10.69 %Net interest margin 4.48 % 4.49 % 4.49 % 4.47 %Efficiency ratio (2) 51.9 % 53.1 % 54.2 % 55.0 %
(2) Adjusted to exclude a discrete income tax benefit of $1.2 million related to share-based compensation recognized in the fourth quarter2021. See non-GAAP reconciliation provided elsewhere herein.
(3) Efficiency ratio represents noninterest expenses divided by the sum of net interest income plus noninterest income.
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ESQUIRE FINANCIAL HOLDINGS, INC.Condensed Consolidated Average Balance Sheets and Average Yield/Cost (unaudited)(dollars in thousands)
For the Three Months Ended December 31,2021 2020
(Dollars in thousands)Average Average Average AverageBalance Interest Yield/Cost Balance Interest Yield/Cost
INTEREST EARNING ASSETS
Loans, held for investment $ 753,500 $ 11,137 5.86 % $658,855 $ 9,533 5.76 %
Securities, includes restricted stock 142,677 585 1.63 % 115,370 423 1.46 %Securities purchased under agreements toresell 50,482 148 1.16 % 29,447 94 1.27 %Interest earning cash and other 90,244 60 0.26 % 71,789 44 0.24 %
Total interest earning assets 1,036,903 11,930 4.56 % 875,461 10,094 4.59 %
NONINTEREST EARNING ASSETS 55,414 30,724
TOTAL AVERAGE ASSETS $1,092,317 $906,185
INTEREST BEARING LIABILITIES
Savings, NOW, Money Market deposits $ 484,972 $ 210 0.17 % $407,186 $ 191 0.19 %Time deposits 11,314 20 0.70 % 10,185 21 0.82 %
Total interest bearing deposits 496,286 230 0.18 % 417,371 212 0.20 %Borrowings 103 1 3.85 % 137 1 2.90 %
Total interest bearing liabilities 496,389 231 0.18 % 417,508 213 0.20 %
NONINTEREST BEARING LIABILITIES
Demand deposits 446,032 353,531Other liabilities 10,778 11,985
Total noninterest bearing liabilities 456,810 365,516
Stockholders' equity 139,118 123,161
TOTAL AVG. LIABILITIES AND EQUITY $1,092,317 $906,185
Net interest income $ 11,699 $ 9,881Net interest spread 4.38 % 4.39 %Net interest margin 4.48 % 4.49 %
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ESQUIRE FINANCIAL HOLDINGS, INC.Condensed Consolidated Average Balance Sheets and Average Yield/Cost (unaudited)(dollars in thousands)
For the Year Ended December 31,2021 2020
(Dollars in thousands)Average Average Average AverageBalance Interest Yield/Cost Balance Interest Yield/Cost
INTEREST EARNING ASSETS
Loans, held for investment $ 717,680 $ 41,545 5.79 % $605,273 $ 35,588 5.88 %
Securities, includes restricted stock 133,958 2,174 1.62 % 126,166 2,556 2.03 %Securities purchased underagreements to resell 51,008 619 1.21 % 7,402 94 1.27 %Interest earning cash and other 70,132 193 0.28 % 99,069 392 0.40 %
Total interest earning assets 972,778 44,531 4.58 % 837,910 38,630 4.61 %
NONINTEREST EARNINGASSETS 37,941 30,028
TOTAL AVERAGE ASSETS $1,010,719 $867,938
INTEREST BEARINGLIABILITIESSavings, NOW, Money Marketdeposits $ 439,718 $ 746 0.17 % $421,530 $ 888 0.21 %Time deposits 11,152 79 0.71 % 16,785 297 1.77 %
Total interest bearing deposits 450,870 825 0.18 % 438,315 1,185 0.27 %Borrowings 78 3 3.85 % 113 5 4.42 %
Total interest bearing liabilities 450,948 828 0.18 % 438,428 1,190 0.27 %
NONINTEREST BEARINGLIABILITIES
Demand deposits 415,662 301,359Other liabilities 10,491 10,066
Total noninterest bearing liabilities 426,153 311,425
Stockholders' equity 133,618 118,085
TOTAL AVG. LIABILITIES ANDEQUITY $1,010,719 $867,938
Net interest income $ 43,703 $ 37,440Net interest spread 4.40 % 4.34 %Net interest margin 4.49 % 4.47 %
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10
ESQUIRE FINANCIAL HOLDINGS, INC.Condensed Consolidated Non-GAAP Financial Measure Reconciliation (unaudited)(all dollars in thousands except per share data)
Adjusted net income, which is used to compute adjusted return on average assets, adjusted return on average commonequity and adjusted earnings per common share, excludes a discrete income tax benefit related to share-basedcompensation, specifically, voluntary stock option exercises.
We believe that these non-GAAP financial measures provide information that is important to investors and that is usefulin understanding our financial position, results and ratios. However, these non-GAAP financial measures aresupplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use differentcalculations for this measure, this presentation may not be comparable to other similarly titled measures by othercompanies.
Three months ended Year endedDecember 31, December 31,
2021 2020 2021 2020Net income - GAAP $ 6,730 $ 3,882 $ 17,925 $ 12,618Less: tax benefit on share-based compensation 1,172 — 1,172 —Adjusted net income $ 5,558 $ 3,882 $ 16,753 $ 12,618Return on average assets – GAAP 2.44 % 1.70 % 1.77 % 1.45 %Adjusted return on average assets 2.02 % 1.70 % 1.66 % 1.45 %Return on average common equity – GAAP 19.19 % 12.54 % 13.42 % 10.69 %Adjusted return on average common equity 15.85 % 12.54 % 12.54 % 10.69 %Basic earnings per share – GAAP $ 0.89 $ 0.52 $ 2.40 $ 1.70Adjusted basic earnings per share $ 0.74 $ 0.52 $ 2.24 $ 1.70Diluted earnings per share – GAAP $ 0.83 $ 0.51 $ 2.26 $ 1.65Adjusted diluted earnings per share $ 0.69 $ 0.51 $ 2.11 $ 1.65
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Exhibit 99.2
Ensuring
our Clients
and Our
Institution
Succeed
Boldly
Listed as
ESQ
Esquire
Financial
Holdings,
Inc.
(Financial
Holding
Company
for Esquire
Bank, N.A.)
4Q 2021
Investor
Presentation
Exhibit 99.2
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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,” “outlook,”
“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
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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,
whetheras 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
anycircumstances,
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
datacould 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 limitson the
availability and
reliability of raw
data, the voluntary
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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. 2
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Ensuring
that our
Company
and clients
succeed
boldly with
innovative
products
and
technology,
driving client
success
through
relationship
banking Our
Mission
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Decades
of expertise
in the
national
litigation
market
Asset
Sensitive
model
anchored by
law firm
loans
yielding
approx.
7.0%
Branchless
stable core
DDA and
escrow
deposits
funded at
0.10%
Driving loan
and deposit
growth with
a CAGR of
23% since
2015
Expertise in
sales, risk,
and
compliance
management
for 25+ years
Independent
Sales
Organization
(“ISO”)
model with
65,000+
merchants
nationally
Fee income
represents
33% of total
revenue
Strong
growth and
stable
payment
processing
fee income
with a CAGR
of 58% since
2017
AverageROA
and ROTCE
of 1.77%
and 13.42%,
respectively
Industry
leading NIM
of 4.49%
Diversified
revenue
stream with
strong NIM
and stable
fee income
Strong
efficiency
ratio of
54.2% while
investing in
unique
technology &
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future growth
A digital-
first bank
with best-in-
class
technology
fueling
futuregrowth
and industry
leading client
retention
rates
Customized
and fully
integrated
Customer
Relationship
Management
(“CRM”) for
excellence in
client service
and
operational
efficiency
Investments
made in
artificial
intelligence
(“AI”) to
facilitate
precision
marketing
and client
acquisition
across our
national
verticals
Nationwide
Branchless
Litigation &
Payment
Processing
Verticals
Generating
Industry
Leading
Returns
Litigation
Vertical
Commercial
Banking
Nationally
Industry
Leading
Returns
Fueled by
Our Unique
Branchless
National
Verticals
Payment
Processing
Vertical
(Merchant
Services)
Small
Business
Banking
Nationally
Technology
–the Future
A Catalyst
for Strong
Growth 4
How Our
Clients
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Succeed
Boldly
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Strong
Growth
Driven by
Unique
National
Verticals
How
Esquire
Succeeds
Boldly Key
Highlights
Strong
growth in
higher
yielding
loans
Stable low-
cost deposit
model
Equity to
Assets of
12.19% 5 at
December
31, 2021
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Stable
low-cost
deposit
model
Strong
commercial
deposits
franchise
DDA and
escrow-
based NOW
accounts
represent
40% and
38% of total
deposits at
December
31, 2021,
respectively
Higher
yielding
variable rate
commercial
loans
anchored by
our litigation
(attorney
related)
portfolio
How
Esquire
Succeeds
Boldly 6
Industry
Leading Net
Interest
Margin
*Included
noninterest
bearing
demand
deposits
(“DDA”)
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Strong
Revenue
Growth How
Esquire
Succeeds
Boldly 7 Key
Highlights
Strong net
interest
margin
Stable
payment
processing
fee income
Net interest
incomeOther
noninterest
income
Payment
processing
income
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Financial
Highlights
How
Esquire
Succeeds
Boldly Key
Highlights
Industry
leading
returns from
our unique
national
business
models
Stable
payment
processing
fee income
–noninterest
income
totaled 33%
of revenue
for the year
ended
December
31, 2021
Branchless
low-cost
deposits
with a cost
of funds of
0.10% at
December
31, 2021 *
Book value
per share
and equity
to assets
are $17.77
and 12.19%
at
December
31, 2021,
respectively
Raymond
James’ #1
Top
Performing
Community
Bank (2020,
2019)
Piper
Sandler &
Co.’s “2021
FSG Top
Ideas” 8 at
December
31, 2021
*Included
noninterest
bearing
demand
deposits
(“DDA”)
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Financial
Highlights,
cont’d How
Esquire
Succeeds
Boldly 9 at
December
31, 2021
*EPS
–Diluted
Earnings
Per Share
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Loan Portfolio
Diversification
with Focused
Growth
Focused
growth in
higher
yielding
commercial
loans with
strong credit
metrics
Selective
multifamily
loan growth
with strong
historical
performance
in the NY
metro market
How Esquire
Succeeds
Boldly 10 at
December
31, 2021
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Approximately
55% of our
loan portfolio
is variable
rate of which
92% have
interest rate
floor
protection at
December 31,
2021 Asset
sensitive
–estimated
sensitivity of
projected
annualized
net interest
income (“NII”)
up 100 and
200 basis
point rate
scenarios
increases
projected NII
by 9.6% and
19.5%,
respectively
at September
30, 2021
Loan Portfolio
Diversification
with Focused
Growth How
Esquire
Succeeds
Boldly 11
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Solid Credit
Metrics,
Asset
Quality and
ALLL
Coverage
How
Esquire
Succeeds
Boldly 12 at
December
31, 2021
*ALLL
–Allowance
for loan and
lease losses
Note –All
asset quality
metrics are
based on
our loans
held for
investment
portfolio (1)
Reclassified
the legacy
NFL
consumer
loan
portfolio
from held for
investment
to held for
sale which
is accounted
for at the
lower of cost
or market
driving a
$9.0 million
charge off.
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*Note:
Excludes
sweeps
totaling $538
million
Deposit
Composition
and Growth
DDA and
NOW
(escrow
funds)
deposits
total 78% of
total
deposits,
representing
stable
funding
sources in
various
interest rate
scenarios
Litigation
and payment
processing
deposits
represent
69% and
14% of total
deposits at
December
31, 2021,
respectively
Off-
balance
sheet
commercial
litigation
funds
(“sweeps”)
total $538
million at
December
31, 2021,
representing
an additional
source of
funding
Commercial
customers
utilize our
corporate
cash
management
suite,
including
remote
deposit
capture
(“RDC”)
while
leveraging
our mobile
banking
application
for personal
banking,
creating a
highly
efficient
branchless
platform
How Esquire
Succeeds
Boldly 13
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Large
national
markets
primed for
disruption:
$429 billion
& 100,000+
firms in the
litigation
vertical and
$7.6 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 We
are thought
leaders in
the litigation
vertical and
provide C-
suite access
for ISO
flexibility in
payment
processing
vertical
Differentiated
and
positioned
for growth:
With industry
leading
tailored
products and
state-of-the-
art
technology
geared
towards
effective
client
acquisition
14
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National
Markets
Litigation &
Payment
Processing
Verticals
Supported
by
Investment
in
Technology
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Commercial
Litigation
(Law Firm)
Loans Full
annual
underwriting:
3 years
financials and
tax returns
(business
and personal)
Full
contingent
case
inventory
valuation
process &
collateral
assignment
Diversity
across law
firm
inventories
and collateral
Personal
guarantees
Average LTV
of less than
20%
Average
DSCR is
typically
greater than
1.70x
Average
draws against
committed
and
uncommitted
line-of-credit
(“LOC”) and
case
disbursement
loans of
approximately
50%
Weighted
average
interest rate
approximately
7.0%
Funded with
low-cost
litigation
deposits
Litigation
deposits to
litigation
loans drawn
is
approximately
186% How
Esquire
Succeeds
Boldly 16
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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
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
Treasury
Function for
Merchant
Clearing
Maintaining
and Monitor
ISO and
Merchant
Reserves
(DDA) 17
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Currently
servicing
65,000+
merchants
across 50
states
Noninterest
income,
primarily
payment
processing
fees,
represents
33% of total
revenue, at
December
31, 2021
How
Esquire
Succeeds
Boldly
*Payment
processing
CAGR is
58% 18
Strong
Growth in
Stable
Noninterest
Income at
December
31, 2021
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How Esquire
Succeeds
Boldly Key
Highlights
Strong and
stable DDA
reserves
Protection
from
merchant
chargebacks
and returns
19
Protecting
Our
Company
with Strong
Payment
Processing
Reserves at
December
31, 2021
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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
Copyright © 2022 www.secdatabase.com. All Rights Reserved.Please Consider the Environment Before Printing This Document
prospect to
boarding
with a single
client view,
enabling
high volume
client
acquisition
strategies
and
excellence in
client service
SIGNATURE
*
Deployment
of AI
technologies
applicable
only to sales
and
marketing
processes
and not used
as a
decisioning
tool for loan
underwriting
processes.
20
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Succeeding Boldly Listed
as ESQ Contact
Information: Eric S.
Bader Executive Vice
President & Chief
Operating Officer
516-535-2002
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Commercial
Real Estate
Loans, U.S.
Litigation &
Payment
Markets
Appendix
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Esquire’s Bold
Opportunities New
York City
properties total
$1.3 trillion in
Market Value.* A
Significant Growth
Opportunity
Thoughtfulin our
property and
borrower selection
process Minimal
historical losses
Average debt-
service
coverage(“DSCR”)
ofapproximately
1.5x Average
loan-to-
value(“LTV”) of
approximately
55% Strong
owner and
operators with
high quality net
worth CRE
exposure is less
than 225% of total
capital plus the
allowance for loan
losses (“ALLL”) 23
*NYC Department
of Finance
publishes fiscal
year 2022
tentative property
tax assessment
roll issued on
January 15, 2021
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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 1.5-2.0%
of U.S. GDP*
annually or $429
billion** Esquire
does not compete
with non-bank
finance companies
Significant
barriers to
entry–management
expertise, brand
awareness,
regulatory/
compliance, and
decades of
experience
15-Year 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 24 Key
Highlights $429
billion** Total
Addressable
Market (“TAM”) in
litigation vertical
Esquire is a
tailored,
differentiated brand
and thought leader
in the litigation
market *US Tort
actions are
estimated to
consume 1.5-2.0%
of U.S. GDP
annually. –Towers
Watson US Tort
Trends **$429
billion estimated
annual US tort
costs by US
Chamber of
Commerce –US
Chamber of
Commerce IRL
Costs and
Compensation of
US Tort System
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25 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 and
Term Loans
Qualified
Settlement
Loans
(“QSF”)
Escrow
Banking
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 Assets
and Content
25
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The payments industry grew nearly 3% from 2019 to 2020 to an estimated total payment volume of
$7.6 trillion Esquire’s Bold Opportunities Payment Volume Trends – A Significant Growth
Opportunity Sources:CompanyFinancialRecords,Note: PayPalfiguresrepresent PayPal’sestimated
U.S.percent
shareof“TotalPaymentVolume”(TPV).PayPalvolumeincludesvolumefromabankaccount,aPayPal
accountbalance,aPayPalCredit account,acreditordebit cardorotherstored
valueproductssuchascouponsandgiftcards.Assuch,someofthisvolumemaybeincludedinothernetworks
aswell. PayPal’sclassificationinthepaymentsindustryecosystemisvaried/debatedasitperforms
functionsattributedtoapaymentnetwork,anissuer,acquirer,etc.,and its
financialreportingdoesnotdirectly alignwithotherpaymentnetworkreportingstructures
andmethods.DiscovervolumeincludesDiscoverNetworkandPulseNetworktransactions. 2018-2019:
+10.3% CAGR2019-2020: +2.9% CAGR 26 at December 31, 2020 ($ in billions)
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Document and EntityInformation Jan. 25, 2022
Document and Entity Information [Abstract]Document Type 8-KDocument Period End Date Jan. 25, 2022Entity File Number 001-38131Entity Registrant Name Esquire Financial Holdings, Inc.Entity Incorporation, State or Country Code MDEntity Tax Identification Number 27-5107901Entity Address, Address Line One 100 Jericho QuadrangleEntity Address, Adress Line Two Suite 100Entity Address, City or Town JerichoEntity Address, State or Province NYEntity Address, Postal Zip Code 11753City Area Code 516Local Phone Number 535-2002Written Communications falseSoliciting Material falsePre-commencement Tender Offer falsePre-commencement Issuer Tender Offer falseTitle of 12(b) Security Common Stock, $0.01 par valueTrading Symbol ESQSecurity Exchange Name NASDAQEntity Emerging Growth Company trueEntity Ex Transition Period trueEntity Central Index Key 0001531031Amendment Flag false
Copyright © 2022 www.secdatabase.com. All Rights Reserved.Please Consider the Environment Before Printing This Document
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