Esquire Financial Holdings, Inc. · NASDAQ:ESQ
Esquire Financial — Q4 2023 Earnings Presentation
30 slides from Esquire Financial's earnings presentation, 2024
Slide 1: Ensuring our Clients and Our Institution
Ensuring our Clients and Our Institution Esquire Financial Holdings, Inc. (Financial Holding Company for Esquire Bank, N.A.) 4Q & Full Year 2023 Investor Presentation Listed as ESQ
Slide 2: Forward Looking Disclosure
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, ar
Slide 3: Nationwide Branchless Tech Enabled Litigation & Payment Processing Verticals
How Our Clients Nationwide Branchless Tech Enabled Litigation & Payment Processing Verticals Litigation Vertical Payment Processing Vertical Commercial Banking Nationally (Merchant Services) Decades of expertise in the national litigation market Small Business Banking Nationally Asset sensitive mode
Slide 4: Strong Growth Driven by Unique National Verticals
How Esquire Strong Growth Driven by Unique National Verticals at December 31, 2023 Key Highlights Strong growth in higher yielding variable rate commercial loans nationally Stable low-cost branchless and tech enabled deposit model Equity to Assets of 12.28% (Adjusted(1) 11.93%) Common Equity Tier 1
Slide 5: Industry Leading Net Interest Margin
How Esquire Industry Leading Net Interest Margin Stable low-cost branchless deposit model Strong commercial deposits franchise nationally DDA and escrow-based NOW accounts represent 33% and 49% of total deposits at December 31, 2023, respectively Higher yielding variable rate commercial loans anchor
Slide 6: Strong Revenue Growth
How Esquire Strong Revenue Growth ($ in thousands) at December 31, 2023 Key Highlights Strong asset sensitive net interest margin Stable payment processing fee income Growing ASP fee income derived from off-balance sheet funds management 6
Slide 7: Financial Highlights
How Esquire Financial Highlights at December 31, 2023 Key Highlights Industry leading returns Stable payment processing fee income Branchless low-cost deposits Book value per share and equity to assets are $23.96 and 12.28% at December 31, 2023, respectively Named to the Piper Sandler 2023 Bank & Th
Slide 8: Financial Highlights, cont’d
How Esquire Financial Highlights, cont’d at December 31, 2023 (1) The adjusted results exclude a nonrecurring pretax $4.0 million net gain on equity investments. See non-GAAP reconciliation provided in the appendix. 8 *EPS – Earnings Per Share
Slide 9: Loan Portfolio Diversification with Focused Growth
How Esquire Loan Portfolio Diversification with Focused Growth at December 31, 2023 Focused growth in higher yielding variable rate commercial loans with strong credit metrics on a national basis Selective multifamily loan growth with strong historical performance in the NY metro market 9
Slide 10: Loan Portfolio Diversification with Focused Growth
How Esquire Loan Portfolio Diversification with Focused Growth Substantially all of our $738 million in commercial loans are variable rate and tied to prime, comprising approximately 60% of our loan portfolio Approximately 82% of our commercial loan portfolio was originated with interest rate floors
Slide 11: Commercial Litigation (Law Firm) Loans
How Esquire 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 les
Slide 12: Esquire’s New York Metro Area Real Estate
Esquire’s New York Metro Area Real Estate A Reliable Asset Class & Liquidity Source Selective in our property and borrower selection process Strong owner and operators with high quality net worth Strong asset values supportive of continued strength in LTV and loan renewal upon maturity Minimal histo
Slide 13: Multifamily & CRE Maturities Through 2025
How Esquire Multifamily & CRE Maturities Through 2025 Multifamily loans totaling $80.7 million mature in 2024 & 2025 with only $4.4 million, or 5%, having a LTV in excess of 70% Other CRE loans totaling $7.4 million mature in 2024 & 2025 with no loans in excess of 70% LTV 13
Slide 14: Solid Credit Metrics, Asset Quality and ACL Coverage
How Esquire Solid Credit Metrics, Asset Quality and ACL Coverage at December 31, 2023 14 Note – All asset quality metrics are based on our loans held for investment portfolio (1) NFL consumer loan portfolio - $9.0 million charge-off.
Slide 15: Deposit Composition and Growth
How Esquire Deposit Composition and Growth Our tech enabled deposit platform utilizes our corporate cash management suite of services, creating a highly efficient branchless platform Our overall liquidity position (cash, reverse repos, borrowing capacity, and available reciprocal client sweep balanc
Slide 16: Deposit Composition Details
How Esquire Deposit Composition Details DDA and NOW (escrow funds) deposits total 82% of total deposits, representing stable funding sources in various interest rate scenarios Litigation and payment processing deposits represent 76% and 10% of total deposits at December 31, 2023, respectively Uninsu
Slide 17: Strong Growth in Stable Noninterest Income
How Esquire Strong Growth in Stable Noninterest Income at December 31, 2023 Currently servicing approximately 84,000 merchants across 50 states in our payment processing (merchant acquiring) vertical Fee income, primarily payment processing fees, represents 23% of total revenue for the year ended De
Slide 18: Protecting Our Company with Strong Payment Processing Reserves
How Esquire Protecting Our Company with Strong Payment Processing Reserves at December 31, 2023 Key Highlights Strong and stable DDA reserves Protecting capital from merchant chargebacks and returns 18
Slide 19: Why Esquire is Set to Grow: Key Takeaways
Key Takeaways Why Esquire is Set to Significant national markets primed Tremendous untapped potential: for disruption: $443 billion & Esquire’s current market share is a 100,000+ firms in the litigation fraction of both national verticals that vertical and $9.5 trillion and are primed for disruption
Slide 20: Client Centric Technology A Key Driver for Future Growth
Technology Driving Client Centric Technology A Key Driver for Future Growth AI to facilitate precision marketing and exponential customer acquisition across Artificial Intelligence* all verticals Website analytics, data enrichment and Website thought leadership content marketing Marketing Marketing
Slide 21: Listed as ESQ
Contact Information: Eric S. Bader Executive Vice President & Chief Operating Officer 516-535-2002 eric.bader@esqbank.com Listed as ESQ
Slide 22: Appendix & Supplemental Disclosure
Appendix & Supplemental Disclosure National Markets – Litigation & Payment Processing Verticals & Non-GAAP Reconciliation
Slide 23: U.S. Litigation Market A Significant Growth Opportunity
Esquire’s U.S. Litigation Market Key Highlights A Significant Growth Opportunity $443 billion* Total Addressable Market U.S. Tort actions are estimated to consume 1.85-2.13% of U.S. GDP* annually or $443 billion* (“TAM”) in litigation vertical Esquire does not compete with non-bank finance companies
Slide 24: Aligning Law Firm Case Inventory Lifecycle to Customer Retention
Digitally Transforming The Business of Law Aligning Law Firm Case Inventory Lifecycle to Customer Retention Client Receive Case Settlement/ Disbursement Incident Intake Management Verdict $ 1-3 Years (+) Products Technology Case Cost Loans Esquire Insight – Case Management Technology Working Capital
Slide 25: Payment Processing – Current ISO Model
How Esquire Payment Processing – Current ISO Model What is an ISO? ISO Responsibilities Bank Responsibilities Merchant Vertical and Technology Robust Policies Focus Tech Enabled Card Brand and Sales Agent Model Regulatory Compliance Performs Initial Underwriting Support Multiple Processing Systems B
Slide 26: Payment Volume Trends – A Significant Growth Opportunity
Esquire’s Payment Volume Trends – A Significant Growth Opportunity at December 31, 2021 ($ in billions) The payments industry grew nearly 25% from 2020 to 2021 to an estimated total payment volume of $9.5 trillion 2019-2021: +9.7% CAGR Sources: Company Financial Records, Note: PayPal figures represe
Slide 27: Non-GAAP Financial Measure Reconciliation
Appendix Non-GAAP Financial Measure Reconciliation (all dollars in thousands except per share data) We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. However, these non-
Slide 28: Non-GAAP Financial Measure Reconciliation (Cont’d)
Appendix Non-GAAP Financial Measure Reconciliation (Cont’d) (all dollars in thousands) The following table presents a reconciliation of efficiency ratio (non-GAAP) and adjusted efficiency ratio (non-GAAP). Three Months Ended Year Ended December 31, September 30, December 31, December 31, 2023 2023 2
Slide 29: Non-GAAP Financial Measure Reconciliation (Cont’d)
Appendix Non-GAAP Financial Measure Reconciliation (Cont’d) (all dollars in thousands) The following table presents the adjusted tangible common equity to tangible assets calculation (non-GAAP): December 31, 2023 Total assets - GAAP $ 1,616,876 Less: intangible assets — Tangible assets ("TA") - non-
Slide 30: Non-GAAP Financial Measure Reconciliation (Cont’d)
Appendix Non-GAAP Financial Measure Reconciliation (Cont’d) (all dollars in thousands) The following table presents the common equity tier 1 capital ratio and the adjusted common equity tier 1 capital ratio: December 31, 2023 Common equity tier 1 ("CET1") capital - Bank $ 181,162 Less: unrealized lo
Esquire Financial Holdings — Q4 2023 Earnings Presentation on 6ix