Esquire Financial Holdings, Inc. · NASDAQ:ESQ
Esquire Financial — Q2 2024 Earnings Presentation
28 slides from Esquire Financial's earnings presentation, Jul 25, 2024
Slide 1: 2Q 2024 Investor Presentation
Ensuring our Clients and Our Institution Succeed Boldly Listed as ESQ Esquire Financial Holdings, Inc. (Financial Holding Company for Esquire Bank, N.A.) 2Q 2024 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: How Our Clients Succeed Boldly
Decades of expertise in the national litigation market Asset sensitive model anchored by law firm loans yielding approx. 10% Branchless and tech enabled core deposit platform funded at 0.87% Driving loan and deposit growth with a 5 Year CAGR in excess of 20% since 2019 Decades of expertise
Slide 4: Strong Growth Driven by Unique National Verticals
Strong Growth Driven by Unique National Verticals How Esquire Succeeds Boldly 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 12.67% (Adjusted(1) 12.32%) Common Equity Tier
Slide 5: Industry Leading Net Interest Margin
Stable low-cost branchless funding model with a strong commercial deposit franchise nationally DDA and escrow-based NOW accounts represent 33% and 55% of total deposits at June 30, 2024, respectively Higher yielding variable rate commercial loans anchored by our national litigation portfolio
Slide 6: Strong Revenue Growth
Strong Revenue Growth ($ in thousands) at June 30, 2024 How Esquire Succeeds Boldly 6 Key Highlights Strong asset sensitive net interest margin Stable payment processing fee income Growing ASP fee income derived from off-balance sheet funds management
Slide 7: Financial Highlights
Financial Highlights How Esquire Succeeds Boldly Key Highlights Industry leading returns Named to the KBW 2024 Bank Honor Roll Named to the Piper Sandler 2023 Bank & Thrift Small Market-All Stars Raymond James’ Top Performing Community Bank (2018-2023) Book value per share and equity to as
Slide 8: Loan Portfolio Diversification with Focused Growth
Loan Portfolio Diversification with Focused Growth 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, DSCRs, and LTVs in the NY metro market How Esquire Succeeds Bol
Slide 9: Loan Portfolio Diversification with Focused Growth
Substantially all of our $787 million in commercial loans are variable rate and tied to prime comprising approximately 62% of our loan portfolio Approximately 90% of our commercial loan portfolio was originated (or renewed annually) with interest rate floors in place Asset sensitive – estimate
Slide 10: Commercial Litigation (Law Firm) Loans
Commercial Litigation (Law Firm) Loans Full annual underwriting including, but not limited to: 3 years financials and tax returns (business and personal) Full contingent case inventory valuation process & collateral assignment or UCC-1 Personal guarantees for the majority of loans, including
Slide 11: New York Metro Area Real Estate: A Reliable Asset Class & Liquidity Source
Esquire’s Bold Opportunities New York Metro Area Real Estate A Reliable Asset Class & Liquidity Source Selective in our property and borrower selection process Strong generational owners/operators with high quality net worth Minimal historical losses No office nor construction loan exposure
Slide 12: Multifamily & CRE Maturities
Multifamily & CRE Maturities at June 30, 2024 Multifamily loans totaling $97.4 million mature over the next two years with $19.3 million, or 20%, having an LTV in excess of 70% Other CRE loans totaling $4.4 million mature over the next two years with no loans in excess of 70% LTV How Esquire Suc
Slide 13: Solid Credit Metrics, Asset Quality and ACL Coverage
Solid Credit Metrics, Asset Quality and ACL Coverage How Esquire Succeeds Boldly at June 30, 2024 Note – All asset quality metrics are based on our loans held for investment portfolio (1) NFL consumer loan portfolio - $9.0 million charge-off. 13
Slide 14: Deposit Composition and Growth
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, borrowing capacity, and available reciprocal client sweep balances) totaled $823 millio
Slide 15: Deposit Composition Details
*Note: Excludes sweeps totaling $408 million Deposit Composition Details DDA and NOW (escrow funds) deposits total 88% 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 J
Slide 16: Strong Growth in Stable Noninterest Income
Currently servicing approximately 83,000 merchants across 50 states in our payment processing (merchant acquiring) vertical Fee income, primarily payment processing fees, represents 21% of total revenue for the year ended June 30, 2024 How Esquire Succeeds Boldly Strong Growth in Stable Noninter
Slide 17: Protecting Our Company with Strong Payment Processing Reserves
How Esquire Succeeds Boldly Key Highlights Strong and stable DDA reserves Protecting capital from merchant chargebacks and returns 17 Protecting Our Company with Strong Payment Processing Reserves at June 30, 2024
Slide 18: Why Esquire is Set to Succeed Boldly
Significant national markets primed for disruption: $443 billion & 100,000+ firms in the litigation vertical and $10.3 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 shar
Slide 19: Technology Driving Bold Success
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 enr
Slide 20: Succeeding Boldly - Contact Information
Succeeding Boldly Listed as ESQ Contact Information: Eric S. Bader Executive Vice President & Chief Operating Officer 516-535-2002 eric.bader@esqbank.com
Slide 21: Appendix & Supplemental Disclosure
Appendix & Supplemental Disclosure National Markets – Litigation & Payment Processing Verticals & Non-GAAP Reconciliation
Slide 22: U.S. Litigation Market: A Significant Growth Opportunity
The Esquire Competitive Advantage Esquire’s Bold Opportunities U.S. Litigation Market A Significant Growth Opportunity U.S. Tort actions are estimated to consume 1.85-2.13% of U.S. GDP* annually or $443 billion* Esquire does not compete with non-bank finance companies Significant barriers to e
Slide 23: Digitally Transforming The Business of Law
23 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 Loans Firm and Partner Acquisition Loans Ter
Slide 24: Payment Processing – Current ISO Model
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
Slide 25: Payment Volume Trends – A Significant Growth Opportunity
The payments industry CAGR was 12% from 2019 to 2022 to an estimated total payment volume of $10.3 trillion Esquire’s Bold Opportunities Payment Volume Trends – A Significant Growth Opportunity Sources: Company Financial Records, Note: PayPal figures represent PayPal’s estimated U.S.percent share of
Slide 26: Non-GAAP Financial Measure Reconciliation
Appendix (all dollars in thousands except per share data) 26 Non-GAAP Financial Measure Reconciliation 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 n
Slide 27: Non-GAAP Financial Measure Reconciliation (Cont'd)
Appendix (all dollars in thousands) 27 Non-GAAP Financial Measure Reconciliation (Cont’d) The following table presents the adjusted tangible common equity to tangible assets calculation (non-GAAP): June 30, 2024 Total assets - GAAP $ 1,715,714 Less: intangible assets — Tangible assets ("TA") - non-G
Slide 28: Non-GAAP Financial Measure Reconciliation (Cont'd)
Appendix (all dollars in thousands) 28 Non-GAAP Financial Measure Reconciliation (Cont’d) The following table presents the common equity tier 1 capital ratio and the adjusted common equity tier 1 capital ratio: (1) Regulatory capital ratios presented on bank-only basis. The Bank has no recorded inta
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