Esquire Financial Holdings, Inc. · NASDAQ:ESQ
Esquire Financial — Q2 2022 Earnings Presentation
26 slides from Esquire Financial's earnings presentation, Jul 25, 2022
Slide 1: 2Q 2022 Investor Presentation
Ensuring our Clients and Our Institution Succeed BoldlyListed as ESQ Esquire Financial Holdings, Inc. (Financial Holding Company for Esquire Bank, N.A.)2Q 2022 Investor Presentation Exhibit 99.2
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: Our Mission
Ensuring that our Company and clients succeed boldlywith innovative products and technology, driving client success through relationship banking Our Mission
Slide 4: Decades of expertise in the national litigation market
Decades of expertise in the national litigation marketAsset sensitive model anchored by law firm loans yielding approx. 7.6%Branchless and tech enabled core deposit platform funded at 0.10%Driving loan and deposit growth with a CAGR of 23% since 2015Expertise in sales, risk, and compliance mana
Slide 5: Strong Growth Driven by Unique National Verticals
Strong Growth Driven by Unique National Verticals How Esquire Succeeds Boldly Key HighlightsStrong growth in higher yielding variable rate loansStable low-cost branchless and tech enabled deposit modelEquity to Assets of 11.11% 5at June 30, 2022
Slide 6: Stable low-cost branchless deposit model
Stable low-cost branchless deposit modelStrong commercial deposits franchise nationallyDDA and escrow-based NOW accounts represent 44% and 39% of total deposits at June 30, 2022, respectivelyHigher yielding variable rate commercial loans anchored by our national litigation portfolioAsset sensit
Slide 7: Strong Revenue Growth
Strong Revenue Growth How Esquire Succeeds Boldly 7 Key HighlightsStrong asset sensitive net interest marginStable payment processing fee income as short-term interest rates increase
Slide 8: Financial Highlights
Financial Highlights How Esquire Succeeds Boldly Key HighlightsIndustry leading returns from our unique and tech enabled national business modelsStable payment processing fee income –noninterest income totaled 31% of revenue for the quarter ended June 30, 2022Branchless low-cost deposits with a c
Slide 9: Financial Highlights, cont'd
Financial Highlights, cont’d How Esquire Succeeds Boldly 9at June 30, 2022*EPS –Diluted Earnings Per Share
Slide 10: Loan Portfolio Diversification with Focused Growth
Loan Portfolio Diversification with Focused GrowthFocused growth in higher yielding variable rate commercial loans with strong credit metricsSelective multifamily loan growth with strong historical performance in the NY metro market How Esquire Succeeds Boldly 10at June 30, 2022
Slide 11: Loan Portfolio Diversification with Focused Growth
Approximately 59% of our loan portfolio is variable rate of which 48% are at their floors and primarily tied to Prime as of June 30, 2022Asset sensitive –estimated sensitivity of projected annualized net interest income (“NII”) up 100 and 200 basis point rate scenarios increases projected NII by 8
Slide 12: Solid Credit Metrics, Asset Quality and ALLL Coverage
Solid Credit Metrics, Asset Quality and ALLL Coverage How Esquire Succeeds Boldly 12at June 30, 2022*ALLL –Allowance for loan and lease lossesNote –All asset quality metrics are based on our loans held for investment portfolio(1) Reclassified the legacy NFL consumer loan portfolio from held for inve
Slide 13: Deposit Composition and Growth
*Note: Excludes sweeps totaling $497 millionDeposit Composition and GrowthDDA and NOW (escrow funds) deposits total 83% of total deposits, representing stable funding sources in various interest rate scenariosLitigation and payment processing deposits represent 64% and 15% of total deposits at Jun
Slide 14: Significant national markets primed for disruption
Significant 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 verticalKey TakeawaysWhy Esquire is Set to Succeed Boldly Tremendous untapped potential: Esquire’s current market share i
Slide 15: National Markets
National MarketsLitigation & Payment Processing Verticals Supported by Investment in Technology
Slide 16: Commercial Litigation (Law Firm) Loans
Commercial Litigation (Law Firm) LoansFull annual underwriting:3 years financials and tax returns (business and personal) Full contingent case inventory valuation process & collateral assignmentDiversity across law firm inventories and collateralPersonal guaranteesAverage LTV of less than 20%A
Slide 17: Payment Processing – Current ISO Model
Payment Processing –Current ISO Model How Esquire Succeeds BoldlyWhat is an ISO? ISO Responsibilities They DoMerchant Vertical and Technology FocusSales Agent ModelPerforms Initial UnderwritingBoards Merchant to Payment Processing PlatformInstallation of Merchant EquipmentManage Call Center fo
Slide 18: Strong Growth in Stable Noninterest Income
Currently servicing approximately 72,000 merchants across 50 statesNoninterest income, primarily payment processing fees, represents 31% of total revenue, at June 30, 2022 How Esquire Succeeds Boldly *Payment processing CAGR is 58%18 Strong Growth in Stable Noninterest Incomeat June 30, 2022
Slide 19: Protecting Our Company with Strong Payment Processing Reserves
How Esquire Succeeds Boldly Key HighlightsStrong and stable DDA reservesProtecting capital from merchant chargebacks and returns 19Protecting Our Company with Strong Payment Processing Reservesat June 30, 2022
Slide 20: Technology Driving Bold Success
Technology Driving Bold SuccessClient Centric TechnologyA Key Driver for Future Growth WebsiteArtificial Intelligence*MarketingSalesUnderwritingOnboarding MarketingCloud AI to facilitate precision marketing and exponential customer acquisition across all verticalsWebsite analytics, data enrichment a
Slide 21: Succeeding Boldly – Contact Information
SucceedingBoldly Listed as ESQ Contact Information:Eric S. Bader Executive Vice President & Chief Operating Officer 516-535-2002eric.bader@esqbank.com
Slide 22: Commercial Real Estate Loans, U.S. Litigation & Payment Markets Appendix
Commercial Real Estate Loans, U.S. Litigation & Payment Markets Appendix
Slide 23: Esquire's Bold Opportunities
Esquire’s Bold OpportunitiesNew York City properties total $1.3 trillion in Market Value.* A Significant Growth OpportunityThoughtfulin our property and borrower selection processMinimal historical lossesAverage debt-service coverage(“DSCR”) ofapproximately 1.5xAverage loan-to-value(“LTV”) of ap
Slide 24: The Esquire Competitive Advantage
The Esquire Competitive AdvantageEsquire’s Bold OpportunitiesU.S. Litigation Market A Significant Growth OpportunityU.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–ma
Slide 25: Digitally Transforming The Business of Law
25Digitally Transforming The Business of LawAligning Law Firm Case Inventory Lifecycle to Customer Retention Client IncidentReceive IntakeCase ManagementSettlement/VerdictDisbursement $ 1-3 Years (+) ProductsCase Cost LoansWorking Capital LoansFirm and Partner Acquisition LoansTerm Loans to Fina
Slide 26: Payment Volume Trends – A Significant Growth Opportunity
The payments industry grew nearly 25% from 2020 to 2021 to an estimated total payment volume of$9.5 trillion Esquire’s Bold OpportunitiesPayment Volume Trends –A Significant Growth Opportunity Sources:CompanyFinancialRecords,Note: PayPalfiguresrepresent PayPal’sestimated U.S.percent shareof“TotalPay
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