Business
Esquire Financial Holdings, Inc. Transfer of Legacy NFL Consumer Loan Portfolio to Loans Held for Sale
JERICHO, N.Y., Oct. 22, 2021 /PRNewswire/ -- Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the "Company"), the financial holding company for Esquire Bank,
About this update from Esquire Financial Holdings, Inc.
[{"type":"text","content":"JERICHO, N.Y., Oct. 22, 2021 /PRNewswire/ -- Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the \"Company\"), the financial holding company for Esquire Bank, National Association (\"Esquire Bank\"), today announced that, effective September 29, 2021, it has reclassified its legacy consumer NFL loan portfolio (\"loans\" or \"assets\") totaling $23.6 million to loans held for sale, incurring a pretax charge totaling $3.4 million ($2.5 million net of tax), or $0.31 per diluted share. As of September 30, 2021, the fair value of these loans held for sale was approximately $14.2 million based on an independent third-party valuation. This accounting reclassification to held for sale is reflective of management's intent to sell these assets to a Fund in the near term.\nSubsequent to September 30, 2021, the Company has entered into a term sheet, subject to agreement on final legal documents, to sell the loans to a third party sponsored entity or Fund while retaining approximately 90% of a noncontrolling economic interest in the Fund. The Company intends to pay the independent sponsor of the Fund or its designated manager a fee for the management of the Fund. It is anticipated that the Fund's existence will terminate within 7 years. \nExcluding the impact of the aforementioned fair value charge, the Company expects its third quarter 2021 earnings release and related performance metrics to be in line with consensus estimates, reflecting positive quarter-over-quarter trends. This charge has minimal impact on the Company's capital and related capital ratios. We also anticipate that our reserve for loan losses to total loan levels to return to pre-pandemic levels.\n\"The NFL loan portfolio's duration has extended over the years as a result of revisions to various claims administration protocols, the ongoing effects of the pandemic, revisions to qualifying physician requirements and now the recent controversial use of race-based norms on former NFL players' concussion claims,\" stated Andrew C. Sagliocca, President and Chief Executive Officer. \"Due to the effects of these recent race-norming claims on the duration of these loans, we have opted to sell our NFL assets while retaining a noncontrolling economic interest in an attempt to match the extended duration of our NFL borrowers' concussion claims with that of their loans.\"\nAs reported i...