Esquire Financial Holdings, Inc. · NASDAQ:ESQ
Esquire Financial — Q4 2024 Earnings Presentation
28 slides from Esquire Financial's earnings presentation, January 2025
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 2024 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 -term goals and, by their nature, are subject to assumptions, risks and uncertainties, many of which are beyond t
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, 2024 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 12.53% (Adjusted(1) 12.23%) Common Equity Tier 1
Slide 5: Industry Leading Net Interest Margin
How Esquire Industry Leading Net Interest Margin Stable low-cost branchless funding model with a strong commercial deposit franchise nationally DDA and escrow-based NOW/IOLTA accounts represent 30% and 60% of total deposits at December 31, 2024, respectively Higher yielding variable rate commercial
Slide 6: Strong Revenue Growth
How Esquire Strong Revenue Growth ($ in thousands) at December 31, 2024 Key Highlights Strong 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, 2024 Key Highlights Industry leading returns -Growing Companies List in 2024 Named to the KBW 2024 Bank Honor Roll Named to the Piper Sandler 2023 Bank & Thrift Small Market-All Stars -2023) Book value per share and equity to assets are $28.38 and 12.
Slide 8: Loan Portfolio Diversification with Focused Growth
How Esquire Loan Portfolio Diversification with Focused Growth at December 31, 2024 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 ma
Slide 9: Loan Portfolio Diversification with Focused Growth
How Esquire Loan Portfolio Diversification with Focused Growth Substantially all of our $921 million in commercial loans are variable rate and tied to prime comprising approximately 66% of our loan portfolio Approximately 90% of our variable rate commercial loan portfolio was originated (or renewed
Slide 10: Commercial Litigation (Law Firm) Loans
How Esquire 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, inclu
Slide 11: New York Metro Area Real Estate
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 Average current DSCR exceeding 1.6x A
Slide 12: Multifamily & CRE Maturities
How Esquire Multifamily & CRE Maturities at December 31, 2024 Multifamily loans totaling $107.9 million mature over the next two years with $21.8 million, or 20%, having an LTV in excess of 70% Other CRE loans totaling $5.5 million mature over the next two years with no loans in excess of 70% LTV 12
Slide 13: Solid Credit Metrics, Asset Quality and ACL Coverage
How Esquire Solid Credit Metrics, Asset Quality and ACL Coverage at December 31, 2024 13 Note All asset quality metrics are based on our loans held for investment portfolio (1) NFL consumer loan portfolio - $9.0 million charge-off.
Slide 14: Deposit Composition and Growth
How Esquire Deposit Composition and Growth ($ in millions) at December 31, 2024 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 reciproc
Slide 15: Deposit Composition Details
How Esquire Deposit Composition Details DDA and NOW (escrow funds) deposits total 90% of total deposits, representing stable funding sources in various interest rate scenarios Litigation and payment processing deposits represent 74% and 10% of total deposits at December 31, 2024, respectively Uninsu
Slide 16: Strong Growth in Stable Noninterest Income
How Esquire Strong Growth in Stable Noninterest Income at December 31, 2024 Currently servicing 88,000 merchants across 50 states in our payment processing (merchant acquiring) vertical Fee income, primarily payment processing fees, represents 20% of total revenue for the year ended December 31, 202
Slide 17: Protecting Our Company with Strong Payment Processing Reserves
How Esquire Protecting Our Company with Strong Payment Processing Reserves at December 31, 2024 Key Highlights Strong and stable DDA reserves Protecting capital from merchant chargebacks and returns 17
Slide 18: Why Esquire is Set to Grow
Key Takeaways Why Esquire is Set to Significant national markets primed Tremendous untapped potential: for disruption: $443 billion & a 100,000+ firms in the litigation fraction of both national verticals that vertical and $10.9 trillion and are primed for disruption by our client- 10+ million merch
Slide 19: 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 20: 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 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
U.S. Litigation Market Key Highlights A Significant Growth Opportunity $443 billion* Total Addressable Market U.S. Tort actions are estimated to consume 2.1% of U.S. GDP* annually or $443 billion* Esquire does not compete with non-bank finance companies Esquire is a tailored, differentiated brand an
Slide 23: 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 L
Slide 24: Payment Processing Current ISO Model
How Esquire Payment Processing Current ISO Model What is an ISO? ISO Responsibilities Bank Responsibilities They Do We Do Merchant Vertical and Technology Robust Policies Focus Tech Enabled Card Brand and Sales Agent Model Regulatory Compliance Performs Initial Underwriting Support Multiple Processi
Slide 25: Payment Volume Trends A Significant Growth Opportunity
Payment Volume Trends A Significant Growth Opportunity at December 31, 2023 ($ in billions) The payments industry CAGR was 10% from 2019 to 2023 to an estimated total payment volume of $10.9 trillion Sources: Company Financial Records, Note: PayPal figures represent estimated U.S. percent share of P
Slide 26: 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 27: Non-GAAP Financial Measure Reconciliation
Appendix Non-GAAP Financial Measure Reconciliation (all dollars in thousands) The following table presents the adjusted tangible common equity to tangible assets calculation (non-GAAP): December 31, 2024 Total assets - GAAP $ 1,892,503 Less: intangible assets Tangible assets ("TA") - non-GAAP 1,892,
Slide 28: Non-GAAP Financial Measure Reconciliation
Appendix Non-GAAP Financial Measure Reconciliation (all dollars in thousands) 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 intangible asset
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