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What changed in Esquire Financial Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Esquire Financial Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+327 added−307 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-29)

Top changes in Esquire Financial Holdings, Inc.'s 2024 10-K

327 paragraphs added · 307 removed · 272 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

119 edited+10 added−14 removed182 unchanged
Biggest changeIf an undercapitalized bank fails to file an acceptable capital restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent of the undercapitalized bank from paying dividends or making any other capital distribution.
Biggest changeIf an undercapitalized bank fails to file an acceptable capital restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent of the undercapitalized bank from paying dividends or making any other capital distribution. 23 Table of Contents As a bank holding company, the Company is required to obtain the prior approval of the FRB to acquire more than 5% of a class of voting securities of any additional bank or bank holding company or to acquire all or substantially all, the assets of any additional bank or bank holding company.
We offer tailored products and solutions to the legal community and their clients as well as dynamic and flexible payment processing solutions to small business owners, both on a national basis. We also offer traditional banking products for businesses and consumers in our local market area (a subset of the New York metropolitan market).
We offer tailored banking products and solutions to the legal community and their clients as well as dynamic and flexible payment processing solutions to small business owners, both on a national basis. We also offer traditional banking products for businesses and consumers in our local market area (a subset of the New York metropolitan market).
These law firm escrow accounts as well as other fiduciary deposit accounts are for the benefit of the law firm’s customers (or claimants) and are titled in a manner to ensure that the maximum amount of FDIC insurance coverage passes through the account to the beneficial owner of the funds held in the account.
These law firm escrow accounts as well as other fiduciary deposit accounts are for the benefit of the law firm’s customers (or claimants) and are titled in a manner to ensure that the maximum amount of FDIC insurance coverage passes through the account to the beneficial owner of the funds held in the account.
Other Regulations Esquire Bank’s operations are also subject to federal laws applicable to credit transactions, such as: ● The Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for 1 – 4 family real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; ● The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; 22 Table of Contents ● The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; ● Unfair or Deceptive Acts or Practices laws and regulations; ● The Coronavirus Aid, Relief and Economic Security Act; ● The Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; and ● The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
Other Regulations Esquire Bank’s operations are also subject to federal laws applicable to credit transactions, such as: ● The Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for 1 – 4 family real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; ● The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; ● The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; 22 Table of Contents ● Unfair or Deceptive Acts or Practices laws and regulations; ● The Coronavirus Aid, Relief and Economic Security Act; ● The Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; and ● The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
In March 2020, due to a change in its approach to monetary policy due to the COVID-19 pandemic, the FRB implemented a final rule to amend Regulation D requirements and reduce reserve requirement ratios to zero. The FRB has indicated that it has no plans to re-impose reserve requirements, but may do so in the future if conditions warrant.
In March 2020, due to a change in its approach to monetary policy from the COVID-19 pandemic, the FRB implemented a final rule to amend Regulation D requirements and reduce reserve requirement ratios to zero. The FRB has indicated that it has no plans to re-impose reserve requirements, but may do so in the future if conditions warrant.
Our Merchant Acquiring and Risk Policy establishes authorities and guidelines for the Bank to acquire payment processing 10 Table of Contents arrangements with ISOs, agent banks, payment facilitators, direct merchants and through merchant portfolio acquisitions. Such guidelines include initial and ongoing due diligence requirements and approval authorities.
Our 10 Table of Contents Merchant Acquiring and Risk Policy establishes authorities and guidelines for the Bank to acquire payment processing arrangements with ISOs, payment facilitators, merchants and agent banks through merchant portfolio acquisitions. Such guidelines include initial and ongoing due diligence requirements and approval authorities.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: ● our ability to manage our operations under the current economic conditions nationally and in our market area; ● adverse changes in the financial industry, securities, credit and national local real estate markets (including real estate values); ● risks related to a high concentration of loans secured by real estate located in our market area; ● risks related to a high concentration of loans and deposits dependent upon the legal and “litigation” market; ● the impact of any potential strategic transactions; ● unexpected outflows of uninsured deposits could require us to sell investment securities at a loss; ● our ability to enter new markets successfully and capitalize on growth opportunities; ● significant increases in our credit losses, including as a result of our inability to resolve classified and nonperforming assets or reduce risks associated with our loans, and management’s assumptions in determining the adequacy of the allowance for credit losses; ● interest rate fluctuations, which could have an adverse effect on our profitability; ● external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (“FRB”), inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; ● continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; 2 Table of Contents ● credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for credit losses and provision for credit losses; ● our success in increasing our legal and “litigation” market lending; ● our ability to attract and maintain deposits and our success in introducing new financial products; ● losses suffered by merchants or Independent Sales Organizations (“ISOs”) with whom we do business; ● our ability to effectively manage risks related to our payment processing business; ● changes in interest rates generally, including changes in the relative differences between short-term and long-term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources; ● fluctuations in the demand for loans; ● technological changes that may be more difficult or expensive than expected; ● changes in consumer spending, borrowing and savings habits; ● declines in our payment processing income as a result of reduced demand, competition and changes in laws or government regulations or policies affecting financial institutions, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements, regulatory fees and compliance costs; ● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission or the Public Company Accounting Oversight Board; ● loan delinquencies and changes in the underlying cash flows of our borrowers; ● the impairment of our investment securities; ● our ability to control costs and expenses; ● the failure or security breaches of computer systems on which we depend; ● acts of war, terrorism, natural disasters, global market disruptions, including global pandemics or political instability; ● the effects of any federal government shutdown; ● competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers, including retail businesses and technology companies; ● changes in our organization and management and our ability to retain or expand our management team and our board of directors, as necessary; ● the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings, regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations and reviews; 3 Table of Contents ● the ability of key third-party service providers to perform their obligations to us; and ● other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services described elsewhere in this Annual Report on Form 10-K.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: ● our ability to manage our operations under the current economic conditions nationally and in our market area; ● adverse changes in the financial industry, securities, credit and national local real estate markets (including real estate values); ● risks related to a high concentration of loans secured by real estate located in our market area; ● risks related to a high concentration of loans and deposits dependent upon the legal and “litigation” market; ● the impact of any potential strategic transactions; ● unexpected outflows of uninsured deposits could require us to sell investment securities at a loss; ● our ability to enter new markets successfully and capitalize on growth opportunities; ● significant increases in our credit losses, including as a result of our inability to resolve classified and nonperforming assets or reduce risks associated with our loans, and management’s assumptions in determining the adequacy of the allowance for credit losses; ● interest rate fluctuations, which could have an adverse effect on our profitability; ● The imposition of tariffs or other domestic or international governmental policies impacting the value of the products of our borrowers; ● external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (“FRB”), inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; 2 Table of Contents ● continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; ● credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for credit losses and provision for credit losses; ● our success in increasing our legal and “litigation” market lending; ● our ability to attract and maintain deposits and our success in introducing new financial products; ● losses suffered by merchants or Independent Sales Organizations (“ISOs”) with whom we do business; ● our ability to effectively manage risks related to our payment processing business; ● changes in interest rates generally, including changes in the relative differences between short-term and long-term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources; ● fluctuations in the demand for loans; ● technological changes that may be more difficult or expensive than expected; ● changes in consumer spending, borrowing and savings habits; ● declines in our payment processing income as a result of reduced demand, competition and changes in laws or government regulations or policies affecting financial institutions, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements, regulatory fees and compliance costs; ● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission or the Public Company Accounting Oversight Board; ● loan delinquencies and changes in the underlying cash flows of our borrowers; ● the impairment of our investment securities; ● our ability to control costs and expenses; ● the failure or security breaches of computer systems on which we depend; ● acts of war, terrorism, natural disasters, global market disruptions, including global pandemics or political instability; ● the effects of any federal government shutdown or reduction in force; ● competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers, including retail businesses and technology companies; ● changes in our organization and management and our ability to retain or expand our management team and our board of directors, as necessary; 3 Table of Contents ● the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings, regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations and reviews; ● the ability of key third-party service providers to perform their obligations to us; and ● other economic, competitive, governmental, legal, regulatory and operational factors affecting our operations, pricing, products and services described elsewhere in this Annual Report on Form 10-K.
The following enhancements were made to our credit risk management monitoring processes to address the current environment and reviewed with our Board of Directors: 14 Table of Contents ● Management stratified the multifamily and CRE portfolios, respectively, by LTV (i.e. less than 50% LTV, 50%-60% LTV, 60%-70% LTV, etc.) and evaluated several sub-portfolio characteristics, including, but not limited to, the original loan balance, current loan balance, loan count, maturity, LTV, and DSCR.
The following enhancements were made to our credit risk management monitoring processes to address the current environment and reviewed with our Board of Directors: 14 Table of Contents ● Management stratified the multifamily and CRE portfolios, respectively, by LTV (i.e., less than 50% LTV, 50%-60% LTV, 60%-70% LTV, etc.) and evaluated several sub-portfolio characteristics, including, but not limited to, the original loan balance, current loan balance, loan count, maturity, original LTV, and current weighted average DSCR.
The ISO performs an underwriting and risk management review, although Esquire Bank itself also reviews and underwrites applications and performs separate risk monitoring and management to ensure compliance with Esquire Bank’s internal underwriting policies.
The ISO performs an underwriting and risk management review, although Esquire Bank also reviews and underwrites applications and performs separate risk monitoring and management to ensure compliance with Esquire Bank’s internal underwriting policies.
The Bank was well capitalized under the prompt corrective action requirements at December 31, 2023. Dividends Under federal law and applicable regulations, a national bank may generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for cash dividend.
The Bank was well capitalized under the prompt corrective action requirements at December 31, 2024. Dividends Under federal law and applicable regulations, a national bank may generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for cash dividend.
The majority of residential mortgages are originated internally, although we do purchase residential mortgages from time to time. Purchased loans are subject to all the asset quality and documentary precautions normally used when originating a loan. Construction Loans. Construction loans are originated on an opportunistic basis. At December 31, 2023, there were no construction loans.
The majority of residential mortgages are originated internally, although we do purchase residential mortgages from time to time. Purchased loans are subject to all the asset quality and documentary precautions normally used when originating a loan. Construction Loans. Construction loans are originated on an opportunistic basis. At December 31, 2024, there were no construction loans.
Additionally, we are required to maintain an investment in Federal Reserve Bank (“FRB”) of New York stock equal to six percent of our capital and surplus. While we have the authority under applicable law to invest in derivative instruments, we had no investments in derivative instruments at December 31, 2023.
Additionally, we are required to maintain an investment in Federal Reserve Bank (“FRB”) of New York stock equal to six percent of our capital and surplus. While we have the authority under applicable law to invest in derivative instruments, we had no investments in derivative instruments at December 31, 2024.
Our real estate portfolio is managed as a stable and reliable asset class and is conservatively underwritten. We anticipate continuing to focus on the commercial and personal credit needs of businesses and individuals in these markets. The following is a discussion of our major types of lending activity: Commercial Loans and Lines of Credit (“Commercial”).
Our real estate portfolio is managed as a stable and reliable asset class and is conservatively underwritten. We anticipate continuing to focus on the commercial credit needs of businesses in these markets. The following is a discussion of our major types of lending activity: Commercial Loans and Lines of Credit (“Commercial”).
As of December 31, 2023, we had contractual arrangements with three payment processors or clearing agents, TSYS, Repay and Fiserv, which are utilized by Esquire Bank and our ISOs to authorize, clear and settle card transactions.
As of December 31, 2024, we had contractual arrangements with three payment processors or clearing agents, TSYS, Repay and Fiserv, which are utilized by Esquire Bank and our ISOs to authorize, clear and settle card transactions.
We believe our unique and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets we operate as demonstrated by comparing our performance metrics for the years ended 2023 and 2022.
We believe our unique and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets we operate as demonstrated by comparing our performance metrics for the years ended 2024 and 2023.
We are required to maintain an investment in FHLB stock, which is based on our level of mortgage related assets (“MRA”) and adjusted for any FHLB borrowings, for which we had none at December 31, 2023.
We are required to maintain an investment in FHLB stock, which is based on our level of mortgage related assets (“MRA”) and adjusted for any FHLB borrowings, for which we had none at December 31, 2024.
Construction lending involves additional risks when compared with permanent 1 – 4 family lending because funds are advanced upon the security of the project, which is of uncertain value prior to its completion. This type of lending also typically involves higher loan principal amounts and is often concentrated with a small number of builders.
Construction lending involves additional risks when compared with permanent 1 – 4 family lending because funds are advanced upon the security of the project, which is of uncertain value prior to its completion. This type of lending also typically involves higher loan principal amounts and is often concentrated with a small number 13 Table of Contents of builders.
We do not compete directly with non-bank finance companies, the primary funders in this market, and believe there are various and significant barriers to entry including, but not limited to, our clear industry track record for 17 years, extensive in-house experience, deep relationships with respected firms nationally, and unique products tailored to commercial law firms’ needs and wants. 5 Table of Contents We currently have clients in 29 states and our larger markets include the New York metro area, Texas, California, Florida, Pennsylvania, South Carolina, New Jersey and Michigan.
We do not compete directly with non-bank finance companies, the primary funders in this market, and believe there are various and significant barriers to entry including, but not limited to, our clear industry track record for decades, extensive in-house experience, deep relationships with respected firms nationally, and unique products tailored to commercial law firms’ needs and wants. 5 Table of Contents We currently have clients in 31 states and our larger markets include California, the New York metro area, Texas, Florida, Pennsylvania, South Carolina, New Jersey and Michigan.
Litigation Market Commercial Banking. The litigation market has been and will continue to be a significant growth opportunity for our Company as we offer focused and tailored products and services to law firms nationally. U.S. tort actions alone are estimated to consume 1.85%-2.13% of U.S. GDP annually according to the U.S.
Litigation Market Commercial Banking. The litigation market has been and will continue to be a significant growth opportunity for our Company as we offer focused and tailored products and services to law firms nationally. U.S. tort actions alone are estimated to consume approximately 2.1% of U.S. GDP annually according to the U.S.
Holding Company Regulation The Company, as a bank holding company controlling Esquire Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically examined by and is required to submit reports to the FRB and is required to comply with the FRB’s rules and regulations.
Holding Company Regulation The Company, as a bank holding company controlling Esquire Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically inspected by and is required to submit reports to the FRB and is required to comply with the FRB’s rules and regulations.
Federal Deposit Insurance Deposit accounts at Esquire Bank are insured by the FDIC’s Deposit Insurance Fund (“DIF”). The FDIC adopted a final rule in 2022, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023.
Federal Deposit Insurance Deposit accounts at Esquire Bank are insured by the FDIC’s DIF. The FDIC adopted a final rule in 2022, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023.
At December 31, 2023, we had no such loans. Consumer Loans. Consumer loans are primarily personal loans and, to a lesser extent, post-settlement consumer loans made to plaintiffs and claimants as described below.
At December 31, 2024, we had no such loans. Consumer Loans. Consumer loans are primarily personal loans and, to a lesser extent, post-settlement consumer loans made to plaintiffs and claimants as described below.
As of December 31, 2023, New York County’s $2.7 trillion deposit market was much larger than the $113 billion deposit market in Nassau County, according to data sourced from S&P Global Market Intelligence. We have established an extensive market for our payment processing business as an acquiring bank throughout the United States and its territories.
As of December 31, 2024, New York County’s $2.7 trillion deposit market was much larger than the $96 billion deposit market in Nassau County, according to data sourced from S&P Global Market Intelligence. We have established an extensive market for our payment processing business as an acquiring bank throughout the United States and its territories.
We believe we have a stable core deposit base due primarily to the litigation market strategy as we strongly encourage and are successful in having law firm borrowers maintain their operating and escrow banking relationship with us. Our low cost of funds is due to our deposit composition consisting of approximately 99.4% in core deposit accounts at December 31, 2023.
We believe we have a stable core deposit base due primarily to the litigation market strategy as we strongly encourage and are successful in having law firm borrowers maintain their operating and escrow banking relationship with us. Our low cost of funds is due to our deposit composition consisting of approximately 99.1% in core deposit accounts at December 31, 2024.
These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the 13 Table of Contents borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.
These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.
Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the FHLB assessment of the institution’s creditworthiness.
Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are 15 Table of Contents based either on a fixed percentage of an institution’s net worth or on the FHLB assessment of the institution’s creditworthiness.
We have a senior product management team that has developed in excess of 27 active ISO relationships servicing approximately 84,000 merchants. The ISO model insulates the bank’s capital from merchant losses through merchant reserves, ISO reserves, ISO monthly residuals and ISO portfolio values.
We have a senior product management team that has developed in excess of 27 active ISO relationships servicing 88,000 merchants. The ISO model insulates the bank’s capital from merchant losses through merchant reserves, ISO reserves, ISO monthly residuals and ISO portfolio values.
The Dodd-Frank Act codified the source of strength policy. 23 Table of Contents Under the prompt corrective action provisions of federal law, a bank holding company parent of an undercapitalized subsidiary bank is required to guarantee, within specified limits, the capital restoration plan that is required of an undercapitalized bank.
The Dodd-Frank Act codified the source of strength policy. Under the prompt corrective action provisions of federal law, a bank holding company parent of an undercapitalized subsidiary bank is required to guarantee, within specified limits, the capital restoration plan that is required of an undercapitalized bank.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy 24 Table of Contents and reliability of corporate disclosures pursuant to the securities laws.
A unique aspect of our underwriting involves advances of loan proceeds against a “borrowing base”, which typically consists of the total inventory of litigation cases for the firm. We complement this with traditional commercial underwriting (See “— Credit Risk Management” below).
A unique aspect of our underwriting involves advances of loan proceeds against a “borrowing base”, which typically consists of the total inventory of litigation cases for the firm. We complement this with traditional commercial underwriting (See “Credit Risk Management” below).
The guidance outlines the agencies’ views on sound risk management principles related to third party relationships, including as related to the performance of adequate due diligence on the third party, appropriate documentation of the relationship, and performance of adequate oversight and auditing in order to limit the risks to the bank.
The guidance outlines the agencies’ views on sound risk management principles related to third party relationships, 18 Table of Contents including as related to the performance of adequate due diligence on the third party, appropriate documentation of the relationship, and performance of adequate oversight and auditing in order to limit the risks to the bank.
As of the date of its most recent OCC evaluation, Esquire Bank was rated “outstanding” with respect to its CRA compliance. On October 24, 2023, the FDIC, the FRB, and the OCC issued a final rule to strengthen and modernize the CRA regulations.
As of the date of its most recent OCC evaluation, Esquire Bank was rated “outstanding” with respect to its CRA compliance. 20 Table of Contents On October 24, 2023, the FDIC, the FRB, and the OCC issued a final rule to strengthen and modernize the CRA regulations.
A bank’s loans to its and its affiliates’, executive officers, directors, any owner of more than 10% of its stock (each, an “insider”) and certain entities controlled by any such person (an insider’s “related interest”) are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and the FRB’s Regulation O.
A bank’s loans to its executive officers, directors, any owner of more than 10% of its stock (each, an “insider”) and certain entities controlled by any such person (an insider’s “related interest”) are subject to the conditions and limitations 19 Table of Contents imposed by Section 22(h) of the Federal Reserve Act and the FRB’s Regulation O.
For example, 20 Table of Contents the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
In addition, Section 23B requires that any covered transaction (and specified other transactions) between a bank and an affiliate must be on terms and conditions that 19 Table of Contents are substantially the same, or at least as favorable, to the bank, as those prevailing at the time for comparable transactions with or involving a non-affiliate.
In addition, Section 23B requires that any covered transaction (and specified other transactions) between a bank and an affiliate must be on terms and conditions that are substantially the same, or at least as favorable, to the bank, as those prevailing at the time for comparable transactions with or involving a non-affiliate.
No amounts were outstanding on any of the aforementioned lines as of December 31, 2023. Human Capital Resources ​ At December 31, 2023, we employed 140 full time equivalent individuals, of which approximately 60% are either minorities or women. None of our employees are represented by a collective bargaining agreement.
No amounts were outstanding on any of the aforementioned lines as of December 31, 2024. Human Capital Resources ​ At December 31, 2024, we employed 138 full time equivalent individuals, of which approximately 60% are either minorities or women. None of our employees are represented by a collective bargaining agreement.
The regulatory 16 Table of Contents structure gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate credit loss reserves for regulatory purposes.
The regulatory structure gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate credit loss reserves for regulatory purposes.
We are one of less than 100 U.S. acquiring banks and face competition from many larger institutions, including large commercial banks and third party processors, that operate in the payment processing business.
We are one of approximately 100 U.S. acquiring banks and face competition from many larger institutions, including large commercial banks and third party processors, that operate in the payment processing business.
Maximum LTV ratios are 80% of appraised value and we generally require that the properties securing these real estate loans have minimum debt service ratios (the ratio of net operating income to debt service) of 115%.
Maximum LTV ratios are 80% of appraised value and we generally require that the properties securing these real estate loans have minimum debt service ratios (the ratio of net operating income to debt service) of 1.15x.
We do not use a traditional “brick and mortar” branch network to support our deposit growth and have only one branch, located in Jericho, New York and one planned branch in Los Angeles, California.
We do not use a traditional “brick and mortar” branch network to support our deposit growth and have one branch, located in Jericho, New York and one branch in Los Angeles, California planned to open in 2025.
The final rule also requires bank service providers to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours.
The regulations also require bank service providers to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours.
More importantly, since our commercial banking platform is focused on full service relationship banking, for every $1.00 we advance on these loans we receive on average $1.75 of low-cost (our cost of funds for the year ended December 31, 2023 is 66 basis points) core operating and escrow deposits from these law firms through our branchless platform, fueling and funding additional growth in our other asset classes.
More importantly, since our commercial banking platform is focused on full service relationship banking, for every $1.00 we advance on these loans we receive on average $1.44 of low-cost (our cost of funds for the year ended December 31, 2024 is 91 basis points) core operating and escrow deposits from these law firms through our branchless platform, fueling and funding additional growth in our other asset classes.
In addition to our lending activities, we have continued to expand our payment processing platform with dollar volume increasing 18% compared to 2022 while maintaining a stable fee-based revenue stream. We provide dynamic and flexible payment processing solutions to small business owners.
In addition to our lending activities, we have continued to expand our payment processing platform with dollar volume increasing 10% compared to 2023 while maintaining a stable fee-based revenue stream. We provide dynamic and flexible payment processing solutions to small business owners.
We believe there are various and significant barriers to entry to this market including, but not limited to, our clear industry track record for 10 years, extensive in-house experience, deep relationships with non-bank acquirers, and our unique approach to servicing these small business merchants and their respective verticals.
We believe there are various and significant barriers to entry to this market including, but not limited to, our clear industry track record for over a decade, extensive in-house experience, deep relationships with non-bank acquirers, and our unique approach to servicing these small business merchants and their respective verticals.
For the year ended December 31, 2023, we received a blended rate of approximately seven basis points for payment processing, compared to direct payment processing providers that may receive two to three times that rate for a portfolio with similar risk characteristics.
For the year ended December 31, 2024, we received a blended rate of approximately six basis points for payment processing, compared to direct payment processing providers that may receive two to three times that rate for a portfolio with similar risk characteristics.
All of our debt securities are classified as available-for-sale or held-to-maturity and can be used to collateralize Federal Home Loan Bank of New York (“FHLB”) borrowings, FRB borrowings, or other borrowings. At December 31, 2023, our securities had a fair value of $191.2 million, and consisted of U.S. Government Agency collateralized mortgage obligations and mortgage-backed securities.
All of our debt securities are classified as available-for-sale or held-to-maturity and can be used to collateralize Federal Home Loan Bank of New York (“FHLB”) borrowings, FRB borrowings, or other borrowings. At December 31, 2024, our securities had a fair value of $302.7 million, and consisted of U.S. Government Agency collateralized mortgage obligations and mortgage-backed securities.
As of December 31, 2023, our consumer Litigation-Related Loans, which consist of held for investment post-settlement consumer loans and structured settlement loans (“Consumer Litigation-Related Loans”), totaled $2.4 million, or 0.4% of our total Litigation-Related Loan portfolio and 0.2% of our loan portfolio. With respect to our Litigation-Related Loan portfolio, we seek out customers on a nationwide basis.
As of December 31, 2024, our consumer Litigation-Related Loans, which consist of held for investment post-settlement consumer loans and structured settlement loans (“Consumer Litigation-Related Loans”), totaled $2.7 million, or 0.3% of our total Litigation-Related Loan portfolio and 0.2% of our loan portfolio. With respect to our Litigation-Related Loan portfolio, we seek out customers on a nationwide basis.
We have no office exposure in our CRE portfolio as of December 31, 2023. Owner-occupied loans represented 6.3% of the CRE portfolio at December 31, 2023. We both originate and, on a limited basis, participate in CRE loans. All loans are independently underwritten by us utilizing the same underwriting criteria per our Board established credit policy. 1 – 4 Family.
We have no office exposure in our CRE portfolio as of December 31, 2024. Owner-occupied loans represented 7.9% of the CRE portfolio at December 31, 2024. We both originate and, on a limited basis, participate in CRE loans. All loans are independently underwritten by us utilizing the same underwriting criteria per our Board established credit policy. 1 – 4 Family.
To qualify for this additional 10% the bank must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the 15% general limit. At December 31, 2023, our regulatory limit on loans-to-one borrower was $29.6 million.
To qualify for this additional 10%, the Bank must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the 15% general limit. At December 31, 2024, our regulatory limit on loans-to-one borrower was $35.9 million.
In November 2021, the federal bank regulatory agencies issued a final rule requiring banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that rises to the level of a “notification incident,” as those terms are defined in the final rule, has occurred.
Regulation of the federal bank regulatory agencies require banking organizations to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that rises to the level of a “notification incident,” as those terms are defined in the final rule, has occurred.
Our deposit strategy primarily focuses on developing lending and other service orientated relationships with customers rather than competing with other institutions on rate. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $684.2 million, or 49%, of total deposits.
Our deposit strategy primarily focuses on developing lending and other service orientated relationships with customers rather than competing with other institutions on rate. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $979.0 million, or 60%, of total deposits.
In addition, we have established informal affiliations or relationships with key industry organizations such as National Trial Lawyer Association, American Association of Justice, New York State Trial Lawyers Association, Consumer Attorneys of California, and a number of other state and national trial attorney associations.
In addition, we have established informal affiliations or relationships with key industry organizations, such as, The American Association of Justice, The National Trial Lawyers Association, The New York State Trial Lawyers Association, The Pennsylvania Association for Justice, The Consumer Attorneys of California, and a number of other national, state and local trial attorney associations.
We are currently a branchless digital first company, with best-in-class technology to fuel future growth with industry leading client retention rates.
We are a digital first company utilizing best-in-class technology to fuel future growth with industry leading client retention rates.
Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 60% of our loans being variable rate, tied to prime, interest rate floors in place on 80% of our variable rate loan portfolio, solid credit metrics with one nonperforming asset, a stable low cost deposit base, and strong available liquidity of $657.8 million with no outstanding borrowings, positions our Company for future growth and success. 6 Table of Contents Market Area We define the market area for our legal community products and services as law firms practicing within the United States, United States territories and United States commonwealths, and we serve the litigation market on a nationwide basis.
Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 66% of our loans being variable rate and tied to prime, with interest rate floors in place on 90% of our variable rate loan portfolio, solid credit metrics, a stable low cost deposit base, and strong available liquidity of $1.05 billion with no outstanding borrowings, positions our Company for future growth and success. 6 Table of Contents Market Area We define the market area for our legal community products and services as law firms practicing within the United States, United States territories and United States commonwealths, and we serve the litigation market on a nationwide basis.
Our extremely low historic delinquency rates and low charge-off rates clearly demonstrate our strong underwriting process and expertise in this vertical. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $684.2 million, or 49%, of total deposits.
Our extremely low historic delinquency rates and low charge-off rates clearly demonstrate our strong underwriting process and expertise in this vertical. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $979.0 million, or 60%, of total deposits.
Our low cost core deposits (total deposits, excluding time deposits), representing our primary funding source for loan growth, totaled $1.4 billion at December 31, 2023, a key driver of our total cost of deposits of 0.66%. These stable low cost funds are driven by our litigation related operating and escrow commercial deposits.
Our low cost core deposits (total deposits, excluding time deposits), representing our primary funding source for loan growth, totaled $1.63 billion at December 31, 2024, a key driver of our total cost of deposits of 0.91%. These stable low cost funds are driven by our litigation related operating and escrow commercial deposits.
Term loans to law firms totaled $87.0 million at December 31, 2023 (or 14.1% of total Litigation-Related Loans). ● Post-Settlement Commercial and Other Commercial Litigation-Related Loans. Post-settlement commercial loans are bridge loans secured by proceeds from non-appealable, settled cases. Other commercial litigation-related loans consist of both secured and unsecured loans to law firms and attorneys.
Term loans to law firms totaled $119.1 million at December 31, 2024 (or 14.2% of total Litigation-Related Loans). ● Post-Settlement Commercial and Other Commercial Litigation-Related Loans. Post-settlement commercial loans are bridge loans secured by proceeds from non-appealable, settled cases. Other commercial litigation-related loans consist of both secured and unsecured loans to law firms and attorneys.
Our payment processing platform has grown to approximately 84,000 small businesses at December 31, 2023, generating 20% of our revenue for the year ended December 31, 2023. We believe that both our litigation and payment processing platforms represent a significant opportunity for future growth in lending, fee income, core deposits and enhanced lending opportunities.
Our payment processing platform has grown to 88,000 small businesses at December 31, 2024, generating 17% of our revenue for the year ended December 31, 2024. We believe that both our litigation and payment processing platforms represent a significant opportunity for future growth in lending, fee income, core deposits and enhanced lending opportunities.
Our investment objectives are primarily to provide and maintain liquidity, establish an acceptable level of interest rate risk, to provide a use of funds when demand for loans is weak and to generate a favorable return. Our board of directors has the overall responsibility for the investment portfolio, including approval of our investment policy.
Our investment objectives are primarily to provide and maintain liquidity, establish an acceptable level of interest rate risk, to provide a use of excess funds and to generate a favorable return. Our board of directors has the overall responsibility for the investment portfolio, including approval of our investment policy.
We use proprietary and industry leading technology to ensure card brand and regulatory compliance, support multiple processing platforms, manage daily risk across approximately 84,000 small business merchants in all 50 states, and perform commercial treasury clearing services for approximately $33 billion in processing volume across 613 million transactions for the year ended December 31, 2023. Proprietary Technology.
We use proprietary and industry leading technology to ensure card brand and regulatory compliance, support multiple processing platforms, manage daily risk across 88,000 small business merchants in all 50 states, and perform commercial treasury clearing services for approximately $36 billion in processing volume across 604 million transactions for the year ended December 31, 2024. Proprietary Technology.
The success of our national litigation and payment processing verticals coupled with our focus on the New York metro market and branchless technology has led to industry leading performance.
The success of our national litigation and payment processing verticals coupled with our focus on branchless technology has led to industry leading performance.
Case Cost Lines of Credit (“Case Cost LOC”) are unsecured business lines of credit that are tied to the costs of contingency cases and totaled $152.2 million at December 31, 2023 (or 24.8% of total Litigation-Related Loans). Contingency case costs include court filing fees, investigative costs, expert witness fees, deposition costs, medical record costs, and other costs.
Case Cost Lines of Credit (“Case Cost LOC”) are unsecured business lines of credit that are tied to the costs of contingency cases and totaled $185.2 million at December 31, 2024 (or 22.1% of total Litigation-Related Loans). Contingency case costs include court filing fees, investigative costs, expert witness fees, deposition costs, medical record costs, and other costs.
Mortgage loans are primarily secured by 1 – 4 family cash flowing investment properties ($17.9 million, or 1.5% of total loans, as of December 31, 2023) in our market area. The residential mortgage loan portfolio includes 1 – 4 family income producing investment properties, primary and secondary owner occupied residences, investor coops and condos.
Mortgage loans are primarily secured by 1 – 4 family cash flowing investment properties ($14.7 million, or 1.0% of total loans, as of December 31, 2024) in our market area. The residential mortgage loan portfolio includes 1 – 4 family income producing investment properties, primary and secondary owner occupied residences, investor coops and condos.
At December 31, 2023, approximately 23.6%, 19.4%, and 18.5% of the Commercial Litigation-Related Loans outstanding had been extended to customers in New York, Texas and California, respectively. There were two other states with loan balance concentrations of at least 5.0% each of total Commercial Litigation-Related Loans.
At December 31, 2024, approximately 20.7%, 19.5%, and 14.6% of the Commercial Litigation-Related Loans outstanding had been extended to customers in California, New York and Texas, respectively. There were two other states with loan balance concentrations of at least 5.0% each of total Commercial Litigation-Related Loans.
Personal loans are purchased or originated for debt consolidation, medical expenses, living expenses, payment of outstanding bills, or other consumer needs on both a secured and unsecured basis. At December 31, 2023, total consumer loans held for investment (excluding Consumer Litigation-Related Loans of $2.4 million) totaled $12.1 million (or 1.0% of total loans).
Personal loans are purchased or originated for debt consolidation, medical expenses, living expenses, payment of outstanding bills, or other consumer needs on both a secured and unsecured basis. At December 31, 2024, total consumer loans held for investment (excluding Consumer Litigation-Related Loans of $2.7 million) totaled $16.6 million (or 1.2% of total loans).
As of December 31, 2023, our total real estate loans, which consist of multifamily loans, commercial real estate loans and 1 – 4 family loans, totaled $455.7 million (or 37.7% of our loan portfolio). The majority of our real estate secured loans are in the areas surrounding the New York metropolitan area.
As of December 31, 2024, our total real estate loans, which consist of multifamily loans, commercial real estate loans and 1 – 4 family loans, totaled $456.9 million (or 32.7% of our loan portfolio). The majority of our real estate secured loans are in the areas surrounding the New York metropolitan area.
Each category represented approximately 33% of the overall multifamily portfolio totaling $348.2 million at December 31, 2023. Investments We manage our investments primarily for liquidity purposes, with a secondary focus on returns.
Each category represented approximately a third of the overall multifamily portfolio totaling $355.2 million at December 31, 2024. Investments We manage our investments primarily for liquidity purposes, with a secondary focus on returns.
We entered into the payment processing business as an acquiring bank in 2012 in an effort to increase our noninterest income revenue and to provide cross selling opportunities for other business banking products and services. For the year ended December 31, 2023, payment processing revenues were approximately $22.3 million, which was 20.0% of our total revenue.
We entered into the payment processing business as an acquiring bank in 2012 in an effort to increase our noninterest income and to provide cross selling opportunities for other business banking products and services. For the year ended December 31, 2024, payment processing revenues were $20.9 million, which was 16.7% of our total revenue.
We have no exposure to office and construction loans, minimal exposure to hospitality ($15.5 million as of December 31, 2023), and a regulatory CRE concentration exposure at both the consolidated and Bank level that is less than 225% of total capital plus the allowance for credit losses.
We have no exposure to office and construction loans, minimal exposure to hospitality ($14.7 million as of December 31, 2024), and a regulatory CRE concentration exposure at both the consolidated and Bank level that is less than 200% of total capital plus the allowance for credit losses.
Even with this recourse, Esquire Bank is ultimately liable for losses from actions of merchants and those of ISOs. To date, Esquire Bank has not incurred any losses from its payment processing activities.
Even with this recourse, Esquire Bank is ultimately liable for losses from actions of merchants and those of ISOs. Since inception in 2012, Esquire Bank has not incurred any losses from its payment processing activities.
WC LOCs are unsecured business lines of credit offered to law firms for general corporate purposes, including meeting cash flow needs, advertising, financing the purchase of fixed assets, or other reasons. The balance of such loans was $373.3 million at December 31, 2023 (or 60.7% of total Litigation-Related Loans). ● Case Cost Lines of Credit.
WC LOCs are unsecured business lines of credit offered to law firms for general corporate purposes, including meeting cash flow needs, advertising, financing the purchase of fixed assets, or other reasons. The balance of such loans was $531.6 million at December 31, 2024 (or 63.4% of total Litigation-Related Loans). ● Case Cost Lines of Credit.
The balance of held for investment post-settlement consumer loans to individuals was $2.4 million at December 31, 2023. Real Estate Loans. The majority of our real estate secured loans are in the New York metropolitan area. Multifamily.
The balance of held for investment post-settlement consumer loans to individuals was $2.7 million at December 31, 2024. Real Estate Loans. The majority of our real estate secured loans are in the New York metropolitan area. 9 Table of Contents Multifamily.
Under the ISO model, Esquire Bank and the ISO determine the appropriate amount of merchant reserves, which is generally based on the nature of the merchant’s business, product delivery timeframe, its chargeback and refund history, processing volumes and the merchant’s financial health.
Under the ISO model, the ISO determines (with the Bank’s oversight) the appropriate amount of merchant reserves, which is generally based on the nature of the merchant’s business, product delivery timeframe, its chargeback and refund history, processing volumes and the merchant’s financial health.
Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. Coupling these types of commercial relationships with our off-balance sheet commercial litigation funds of $278.0 million at December 31, 2023, makes this litigation vertical a highly desirable core low-cost funding platform fueling growth in other lending areas. Payment Processing.
Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. Coupling these types of commercial relationships with our off-balance sheet commercial litigation funds of $554.4 million at December 31, 2024, makes this litigation vertical a highly desirable core low-cost funding platform fueling bank-wide growth. Payment Processing.
Consequently, Esquire Financial Holdings, Inc. is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Securities Exchange Act of 1934.
Federal Securities Laws Esquire Financial Holdings, Inc.’s common stock is registered with the SEC. Consequently, Esquire Financial Holdings, Inc. is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Securities Exchange Act of 1934.
Multifamily loans are the largest component of the real estate loan portfolio and totaled $348.2 million (or 28.8% of total loans) as of December 31, 2023. The multifamily loan portfolio primarily consists of nonrecourse loans 9 Table of Contents secured by nonowner occupied apartment buildings in the New York Metropolitan area (i.e. Brooklyn, the Bronx, Manhattan.).
Multifamily loans are the largest component of the real estate loan portfolio and totaled $355.2 million (or 25.4% of total loans) as of December 31, 2024. The multifamily loan portfolio primarily consists of nonrecourse loans secured by nonowner occupied apartment buildings in the New York Metropolitan area (i.e., Brooklyn, the Bronx, Manhattan.).
For the year ended December 31, 2023: ● Our net income was $41.0 million or $4.91 per diluted share while our return on average assets and equity were 2.89% and 23.20%, respectively. ● We had a net interest margin of 6.09%, primarily driven by growth in higher yielding variable rate commercial loans and a low cost of funds of 0.66% on our deposits (including demand deposits). ● Our loans held for investment increased 27.5%, or $260.1 million, to $1.2 billion, primarily driven by growth in higher yielding variable rate commercial loans. 4 Table of Contents ● Our noninterest income increased to $29.8 million, which represented 26.2% of our total revenue (net interest income plus noninterest income) at December 31, 2023, driven by our payment processing platform and administrative service payment (“ASP”) fee income. ● As of December 31, 2023, our total assets, loans, deposits and stockholders’ equity totaled $1.6 billion, $1.2 billion, $1.4 billion and $198.6 million, respectively.
For the year ended December 31, 2024: ● Our net income was $43.7 million or $5.14 per diluted share while our return on average assets and equity were 2.57% and 20.14%, respectively. ● We had a net interest margin of 6.06%, primarily driven by growth in higher yielding variable rate commercial loans and a low cost of funds of 0.91% on our deposits (including demand deposits). 4 Table of Contents ● Our loans held for investment increased 16%, or $189.6 million, to $1.40 billion, primarily driven by growth in higher yielding commercial loans. ● Our noninterest income totaled $24.9 million, which represented 20% of our total revenue (net interest income plus noninterest income) at December 31, 2024, driven by our payment processing platform and administrative service payment (“ASP”) fee income. ● As of December 31, 2024, our total assets, loans, deposits and stockholders’ equity totaled $1.89 billion, $1.40 billion, $1.64 billion and $237.1 million, respectively.
As of December 31, 2023, our commercial Litigation-Related Loans, which consist of working capital lines of credit, case cost lines of credit, term loans and other commercial Litigation-Related Loans (“Commercial Litigation-Related Loans”), totaled $612.5 million, or 99.6% of our total Litigation-Related Loan portfolio and 50.7% of our loan portfolio.
As of December 31, 2024, our commercial Litigation-Related Loans, which consist of working capital lines of credit, case cost lines of credit, term loans and other commercial Litigation-Related Loans (“Commercial Litigation-Related Loans”), totaled $835.8 million, or 99.7% of our total Litigation-Related Loan portfolio and 59.8% of our loan portfolio.
Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the Change in Bank Control Act regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934. 24 Table of Contents Federal Securities Laws Esquire Financial Holdings, Inc.’s common stock is registered with the SEC.
Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the Change in Bank Control Act regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.
As of December 31, 2023, we had $284.2 million of available borrowing capacity with the FHLB. We also had a borrowing capacity with the FRB of New York discount window of $58.0 million. The other borrowing lines are maintained primarily for contingency funding sources and totaled $17.5 million.
As of December 31, 2024, we had $431.7 million of available borrowing capacity with the FHLB. We also had a borrowing capacity with the FRB of New York discount window of $51.4 million. The other borrowing lines are maintained primarily for contingency funding sources and totaled $17.5 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA failure to effectively measure and limit the credit risk associated with our loan portfolio could have an adverse effect on our business, financial condition, and results of operations. 27 Table of Contents Risks Related to our Business We have recently experienced significant growth, which makes it difficult to forecast our revenue and evaluate our business and future prospects.
Biggest changeAdditional 27 Table of Contents factors related to the credit quality of commercial real estate loans include tenant vacancy rates and the quality of management of the property. A failure to effectively measure and limit the credit risk associated with our loan portfolio could have an adverse effect on our business, financial condition, and results of operations.
The factors that could cause the Company’s stock price to decrease include, but are not limited to: (i) our past and future dividend practice; (ii) our financial condition, performance, creditworthiness and prospects; (iii) variations in our operating results or the quality of our assets; (iv) operating results that vary from the expectations of management, securities analysts and investors; (v) changes in expectations as to our future financial performance; (vi) changes in financial markets related to market valuations of financial industry companies; (vii) current or future financial institutional illiquidity and/or seizures by federal regulators; (viii) the operating and securities price performance of other companies that investors believe are comparable to us; (ix) future sales of our equity or equity-related securities; (x) the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and (xi) changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, inflation, recessionary conditions, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events.
The factors that could cause the Company’s stock price to decrease include, but are not limited to: (i) our past and future dividend practice; (ii) our financial condition, performance, creditworthiness and prospects; (iii) variations in our operating results or the quality of our assets; (iv) operating results that vary from the expectations of management, securities analysts and investors; (v) changes in expectations as to our future financial performance; (vi) changes in financial markets related to market valuations of financial industry companies; (vii) current or future financial institutional illiquidity and/or seizures by federal regulators; (viii) the operating and securities price performance of other companies that investors believe are comparable to us; (ix) future sales of our equity or equity-related securities; (x) the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and (xi) changes in global financial markets and global economies and general market conditions, such as 39 Table of Contents interest or foreign exchange rates, inflation, recessionary conditions, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events.
Anti-takeover provisions could negatively impact our shareholders. Certain provisions in the Company’s Articles of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Maryland law, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be beneficial to the Company’s stockholders.
Anti-takeover provisions could negatively impact our shareholders. Certain provisions in the Company’s Articles of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Maryland law, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be beneficial to the Company’s stockholders. ITEM 1B.
These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship.
These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be 37 Table of Contents corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship.
As a result, a material decrease in the volume of those deposits by a relatively small number of our depositors could reduce our liquidity, in which event it could became necessary for us to replace those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore, our results of operations.
As a result, a material decrease in the volume of those deposits by a relatively small number of our depositors could reduce our liquidity, in which event it could become necessary for us to replace those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore, our results of operations.
If assumptions prove to be incorrect, the allowance for credit losses may not cover probable incurred losses in the loan portfolio at the date of the financial statements. Significant additions to the allowance would materially decrease net income. We had one nonperforming multifamily loan totaling $10.9 million at December 31, 2023.
If assumptions prove to be incorrect, the allowance for credit losses may not cover probable incurred losses in the loan portfolio at the date of the financial statements. Significant additions to the allowance would materially decrease net income. We had one nonperforming multifamily loan totaling $10.9 million at December 31, 2024.
If the processing of claims for the Fund’s loan portfolio continues to extend beyond our maturity for these loans due to the aforementioned fraud, revisions to qualifying physician requirements, revised protocols due to “race-norming” claims, or the additional administrative processes, portfolio delinquencies, credit downgrades and further losses as the result of possible charge-offs of these loans could occur or increase in the future, which would negatively impact our investment.
If the processing of claims for the Fund’s loan portfolio continues to extend beyond our maturity for these loans due to the aforementioned fraud, revisions to qualifying physician requirements, revised protocols due to “race-norming” claims, or the additional 30 Table of Contents administrative processes, portfolio delinquencies, credit downgrades and further losses as the result of possible charge-offs of these loans could occur or increase in the future, which would negatively impact our investment.
We expect to increase our purchases or originations of consumer loans, and such loans generally carry greater risk than loans secured by owner-occupied, 1 – 4 family real estate, and these risks will increase as we continue to increase originations of these types of loans.
We may increase our purchases or originations of consumer loans, and such loans generally carry greater risk than loans secured by owner-occupied, 1 – 4 family real estate, and these risks will increase as we continue to increase originations of these types of loans.
If the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal fiscal policymaking process, the medium and 30 Table of Contents long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States.
If the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States.
From 2016 through 2023, we experienced significant growth following our initial public offering, a capital raise and the conversion from a savings and loan holding company with a savings bank subsidiary to a bank holding company with a national bank subsidiary.
From 2016 through 2024, we experienced significant growth following our initial public offering, a capital raise and the conversion from a savings and loan holding company with a savings bank subsidiary to a bank holding company with a national bank subsidiary.
In particular, negative public perceptions regarding our reputation, including negative perceptions regarding our ability to maintain the security of our technology systems and protect customer data or our compliance programs, could lead to decreases in the levels of deposits that customers and potential customers choose to maintain with us or significantly increase the costs of attracting and retaining customers.
In particular, negative public perceptions regarding our reputation, including negative perceptions regarding our ability to maintain the security of our technology systems and protect customer data or our compliance programs, could 29 Table of Contents lead to decreases in the levels of deposits that customers and potential customers choose to maintain with us or significantly increase the costs of attracting and retaining customers.
Once 29 Table of Contents information has spread through social media, it can be difficult to address it effectively, either by correcting inaccuracies or communicating remedial steps taken to address actual issues. We may incur losses related to our exposure to NFL consumer post-settlement loans through our equity method investment in a third party sponsored variable interest entity.
Once information has spread through social media, it can be difficult to address it effectively, either by correcting inaccuracies or communicating remedial steps taken to address actual issues. We may incur losses related to our exposure to NFL consumer post-settlement loans through our equity method investment in a third party sponsored variable interest entity.
This could adversely affect our ability to process these transactions or provide these services. There could be a sudden change in customer transaction volume, electrical, telecommunications or other major physical infrastructure outages, natural disasters, events arising from local or larger scale political or social matters, including terrorist acts, pandemics, and cyber- attacks.
This could adversely affect our ability to process these transactions or provide these services. There could be a sudden change in 32 Table of Contents customer transaction volume, electrical, telecommunications or other major physical infrastructure outages, natural disasters, events arising from local or larger scale political or social matters, including terrorist acts, pandemics, and cyber- attacks.
It is possible, however, that a default on such 35 Table of Contents obligations by one or more of our ISOs or merchants, could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations. Fraud by merchants or others could have a material adverse effect on our business and financial condition.
It is possible, however, that a default on such obligations by one or more of our ISOs or merchants, could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations. Fraud by merchants or others could have a material adverse effect on our business and financial condition.
Part 330 of the FDIC's regulations generally states that the titling of the deposit account (together with the underlying records) must indicate the existence of the fiduciary relationship in order for insurance coverage to be available on a "pass-through" basis. Fiduciary relationships include, but are not limited to, relationships involving a trustee, agent, nominee, guardian, executor, or custodian.
The FDIC's regulations generally state that the titling of the deposit account (together with the underlying records) must indicate the existence of the fiduciary relationship in order for insurance coverage to be available on a "pass-through" basis. Fiduciary relationships include, but are not limited to, relationships involving a trustee, agent, nominee, guardian, executor, or custodian.
At December 31, 2023, the weighted average age of our loan portfolio was 3.06 years, however, the average customer relationship is of a longer term. We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, which could adversely affect our profitability.
At December 31, 2024, the weighted average age of our loan portfolio was 3.62 years, however, the average customer relationship is of a longer term. We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, which could adversely affect our profitability.
Due to the breadth of our client base and our geographical reach, developing and maintaining our operational systems and infrastructure is challenging, particularly as 33 Table of Contents a result of rapidly evolving legal and regulatory requirements and technological shifts.
Due to the breadth of our client base and our geographical reach, developing and maintaining our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.
The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect us and our customers against fraud and security breaches and to maintain our clients’ confidence.
The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect 34 Table of Contents us and our customers against fraud and security breaches and to maintain our clients’ confidence.
Various assumptions and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of many loans.
Various assumptions and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value of the real estate and other assets serving as 26 Table of Contents collateral for the repayment of many loans.
In addition, we are heavily dependent on the strength and capability of our technology systems which we use both to interface with our customers and to manage our internal financial and other systems.
In addition, we are heavily dependent on the 33 Table of Contents strength and capability of our technology systems which we use both to interface with our customers and to manage our internal financial and other systems.
The determination of the 26 Table of Contents appropriate level of allowance is subject to judgment and requires us to make significant estimates of current credit risks and trends, all of which are subject to material changes.
The determination of the appropriate level of allowance is subject to judgment and requires us to make significant estimates of current credit risks and trends, all of which are subject to material changes.
In determining the amount of the allowance for credit losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions. At December 31, 2023, our allowance for credit losses as a percentage of total loans, net of unearned income, was 1.38%.
In determining the amount of the allowance for credit losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions. At December 31, 2024, our allowance for credit losses as a percentage of total loans, net of unearned income, was 1.50%.
Further, increased competition among financial services companies due to the recent consolidation of certain competing financial institutions may adversely affect our ability to market our products and services.
Further, increased competition among financial 35 Table of Contents services companies due to the recent consolidation of certain competing financial institutions may adversely affect our ability to market our products and services.
As of December 31, 2023, the Company had approximately $684.2 million of law firm escrow (or trust) deposits that were evaluated by management to identify an appropriate estimate of FDIC insurance coverage that passes through each deposit account to the beneficial owner of the funds held in the account.
As of December 31, 2024, the Company had approximately $979.0 million of law firm escrow (or trust) deposits that were evaluated by management to identify an appropriate estimate of FDIC insurance coverage that passes through each deposit account to the beneficial owner of the funds held in the account.
In addition, the card networks require certain capital requirements. An increase in the required capital level would further limit our use of capital for other purposes. Risks Related to Laws and Regulation and Their Enforcement As a bank holding company, the sources of funds available to us are limited.
An increase in the required capital level would further limit our use of capital for other purposes. Risks Related to Laws and Regulation and Their Enforcement As a bank holding company, the sources of funds available to us are limited.
In the event that we are unable to perform all these tasks and meet these challenges effectively, including continuing to attract core deposits, our operations, and consequently our earnings, could be adversely impacted. Our ten largest deposit clients account for 26.2% of our total deposits.
In the event that we are unable to perform all these tasks and meet these challenges effectively, including continuing to attract core deposits, our operations, and consequently our earnings, could be adversely impacted. 31 Table of Contents Our ten largest deposit clients account for 25.9% of our total deposits.
Because we plan to continue to increase our originations of these loans, commercial loans generally have a larger average size as compared with other loans such as commercial real estate loans, and the collateral for commercial loans is generally less readily-marketable, losses incurred on a small number of commercial loans could have a disproportionate and material adverse impact on our financial condition and results of operations. 25 Table of Contents A substantial portion of our loan portfolio consists of multifamily real estate loans and commercial real estate loans, which have a higher degree of risk than other types of loans.
Because we plan to continue to increase our originations of these loans, commercial loans generally have a larger average size as compared with other loans such as commercial real estate loans, and the collateral for commercial loans is generally less 25 Table of Contents readily-marketable, losses incurred on a small number of commercial loans could have a disproportionate and material adverse impact on our financial condition and results of operations.
Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often impose additional compliance costs. 36 Table of Contents Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could adversely affect our results of operations, capital base and the price of our securities.
Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could adversely affect our results of operations, capital base and the price of our securities.
Additional factors related to the credit quality of consumer loans, particularly consumer post-settlement loans, include the quality of the post-settlement claim and unforeseen court rulings or administrative legal anomalies which could impact the final settlement amount. Additional factors related to the credit quality of commercial real estate loans include tenant vacancy rates and the quality of management of the property.
Additional factors related to the credit quality of consumer loans, particularly consumer post-settlement loans, include the quality of the post-settlement claim and unforeseen court rulings or administrative legal anomalies which could impact the final settlement amount.
As of December 31, 2023, 35.5% of our loan portfolio was in New York and our loan portfolio had concentrations of 26.0% in New York City. If the local economy, and particularly the real estate market, declines, the rates of delinquencies, defaults, foreclosures, bankruptcies and losses in our loan portfolio would likely increase.
As of December 31, 2024, 44.8% of our loan portfolio was in New York and our loan portfolio had concentrations of 34.2% in New York City. If the local economy, and particularly the real estate market, declines, the rates of delinquencies, defaults, foreclosures, bankruptcies and losses in our loan portfolio would likely increase.
As of December 31, 2023, the carrying amount of our investment in the Fund and our total exposure is $10.6 million. As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
As of December 31, 2024, the carrying amount of our investment in the Fund and our total exposure is $9.4 million, with a remaining life of 4.3 years. As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
Multifamily and commercial real estate loans are often larger and involve greater risks than other types of lending because payments on such loans are often dependent on the successful operation or development of the property or business involved.
Multifamily and commercial real estate loans represented 31.7% of our total loan portfolio at December 31, 2024. Multifamily and commercial real estate loans are often larger and involve greater risks than other types of lending because payments on such loans are often dependent on the successful operation or development of the property or business involved.
We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud.
Employee errors could also subject us to financial claims for negligence. We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud.
Inflation could also negatively impact us through rising costs and interest rates. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. We may not be able to grow, and if we do we may have difficulty managing that growth.
Inflation could also negatively impact us through rising costs and interest rates. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects.
At December 31, 2023, our consumer held for investment loans totaled $14.5 million, or 1.2% of our total loan portfolio, of which $2.4 million, or 16.6%, were post-settlement consumer loans.
At December 31, 2024, our consumer loans held for investment totaled $19.3 million, or 1.4% of our total loan portfolio, of which $2.7 million, or 14.0%, were post-settlement consumer loans.
As of December 31, 2023, our ten largest bank depositors accounted for, in the aggregate, 26.2% of our total deposits.
As of December 31, 2024, our ten largest bank depositors accounted for, in the aggregate, 25.9% of our total deposits.
Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations. ​ 28 Table of Contents The loss of our deposit clients or substantial reduction of our deposit balances could force us to fund our business with more expensive and less stable funding sources.
Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations.
At December 31, 2023, the weighted average age of our loans was 6.62 years, 2.64 years, 2.33 years, 3.30 years and 1.07 years for our 1 – 4 family loans, multifamily loans, commercial real estate loans, commercial loans and consumer loans, respectively.
At December 31, 2024, the weighted average age of our loans was 7.64 years, 3.27 years, 3.16 years, 3.76 years and 2.50 years for our 1 – 4 family loans, multifamily loans, commercial real estate loans, commercial loans and consumer loans, respectively.
From time to time, the card networks increase the fees that they charge to acquirers and we charge to our merchants. It is possible that competitive pressures will result in us absorbing a portion of such increases in the future, which would increase our costs, reduce our profit margin and adversely affect our business and financial condition.
It is possible that competitive pressures will result in us absorbing a portion of such increases in the future, which would increase our costs, reduce our profit 36 Table of Contents margin and adversely affect our business and financial condition. In addition, the card networks require certain capital requirements.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the money supply and credit conditions.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the money supply and credit environment. Among the instruments used by the FRB to implement these objectives are open market purchases and sales of U.S.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly increase the allowance for credit losses or 38 Table of Contents sustain credit losses that are significantly higher than the reserve provided.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly increase the allowance for credit losses or sustain credit losses that are significantly higher than the reserve provided. These could have a material adverse effect on our business, financial condition or results of operations.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, which could have an adverse effect on our business, financial condition and results of operations. 32 Table of Contents We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, which could have an adverse effect on our business, financial condition and results of operations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect on our results of operations.
These could have a material adverse effect on our business, financial condition or results of operations. Risks Related to Our Common Stock The Company’s stock price can be volatile. The Company’s stock price can fluctuate in response to a variety of factors, some of which are not under our control.
Risks Related to Our Common Stock The Company’s stock price can be volatile. The Company’s stock price can fluctuate in response to a variety of factors, some of which are not under our control.
However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified.
However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. If our risk management framework proves ineffective, we could suffer unexpected losses and our business and results of operations could be materially adversely affected.
We could be adversely affected by the soundness of other financial institutions and other third parties we rely on. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
Any of these results could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 38 Table of Contents We could be adversely affected by the soundness of other financial institutions and other third parties we rely on. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. 31 Table of Contents Risks Related to Operations Inflation can have an adverse impact on our business and on our customers. ​ Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets.
As a result, the value of the collateral located in New York State securing the Company’s multifamily loans or the future net operating income of such properties could potentially become impaired which, in turn, could have a material adverse effect on our financial condition and results of operations. ​ ITEM 1B. Unresolved Staff Comments None. 39 Table of Contents
As a result, the value of the collateral located in New York State securing the Company’s multifamily loans or the future net operating income of such properties could potentially become impaired which, in turn, could have a material adverse effect on our financial condition and results of operations. ​ Risks Related to our Business We have experienced significant growth, which makes it difficult to forecast our revenue and evaluate our business and future prospects.
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB of New York and/or FRB discount window, and unsecured borrowings.
Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB of New York and/or FRB discount window, and unsecured borrowings. The Company also may borrow funds from third-party lenders, such as other financial institutions.
Among the instruments used by the FRB to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.
Government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. 37 Table of Contents We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk and prevent fraud would increase our chargeback liability or other liability.
It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk and prevent fraud, including compliance with VAMP, would increase our chargeback liability or other liability including, but not limited to, potential VAMP fines.
At December 31, 2023, our commercial loans totaled $737.9 million, or 61.1% of our total loans, including $612.5 million of Commercial Litigation-Related Loans, which represented 83.0% of our commercial loans.
At December 31, 2024, our commercial loans totaled $920.6 million, or 65.9% of our total loans, including $835.8 million of Commercial Litigation-Related Loans, which represented 90.8% of our commercial loans.
It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.
Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.
Consumer and commercial banking as well as payment processing are highly competitive industries. Our market area contains not only a large number of community and regional banks, but also a significant presence of the country’s largest commercial banks.
Our market area contains not only a large number of community and regional banks, but also a significant presence of the country’s largest commercial banks. We compete with other state and national financial institutions, as well as savings and loan associations, savings banks, and credit unions, for deposits and loans.
If our 34 Table of Contents risk management framework proves ineffective, we could suffer unexpected losses and our business and results of operations could be materially adversely affected. Risks Related to Competitive Matters We operate in a highly competitive industry and face significant competition from other financial institutions and financial services providers, which may decrease our growth or profits.
Risks Related to Competitive Matters We operate in a highly competitive industry and face significant competition from other financial institutions and financial services providers, which may decrease our growth or profits. Consumer and commercial banking as well as payment processing are highly competitive industries.
As of December 31, 2023, approximately $381.6 million, or 27.1%, of our total Bank deposits of $1.4 billion, were not FDIC insured. This excludes $5.5 million of the Company’s deposits held by the Bank. We have traditionally obtained funds through deposits for use in lending and investment activities.
This excludes $12.4 million of the Company’s deposits held by the Bank. We have traditionally obtained funds through deposits for use in lending and investment activities. The interest rates stated for borrowings typically exceed the interest rates paid on deposits.
Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future.
The monetary policies and regulations of the FRB have had a significant effect on the overall economy and the operating results of financial institutions in the past and are expected to continue to do so in the future. Additionally, Congress and the administration through executive orders controls fiscal policy through decisions on taxation and expenditures.
At December 31, 2023, we had $348.2 million of multifamily loans and $89.5 million of commercial real estate loans. Multifamily and commercial real estate loans represented 36.2% of our total loan portfolio at December 31, 2023.
A substantial portion of our loan portfolio consists of multifamily real estate loans and commercial real estate loans, which have a higher degree of risk than other types of loans. At December 31, 2024, we had $355.2 million of multifamily loans and $87.0 million of commercial real estate loans.
Employee errors and employee and customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information.
We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors. Employee errors and employee and customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation.
Removed
The Company also may borrow funds from third-party lenders, such as other financial institutions.
Added
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and 28 Table of Contents liquidity.
Removed
The interest rates stated for borrowings typically exceed the interest rates paid on deposits.
Added
The loss of our deposit clients or substantial reduction of our deposit balances could force us to fund our business with more expensive and less stable funding sources. As of December 31, 2024, approximately $463.9 million, or 28%, of our total Bank deposits of $1.64 billion, were not FDIC insured.
Removed
Over the past year, in response to a pronounced rise in inflation, the FRB has raised certain benchmark interest rates to combat inflation.
Added
Interruption of our customers’ supply chains and federal funding could negatively impact their business and operations and impact their ability to repay their loans.
Removed
We compete with other state and national financial institutions, as well as savings and loan associations, savings banks, and credit unions, for deposits and loans.
Added
Any material interruption in our customers’ supply chains, such as a material interruption of the resources required to conduct their business, such as those resulting from interruptions in service by third-party providers, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, reductions in federal subsidies or grants, social or labor unrest, natural disasters, epidemics or pandemics or political disputes and military conflicts, that cause a material disruption in our customers’ supply chains, could have a negative impact on their business and ability to repay their borrowings with us.
Removed
The limited liquidity of our common stock may limit your ability to trade our shares and may impact the value of our common stock. While the Company’s common stock is traded on the NASDAQ Capital Market, the trading volume has historically been less than that of larger financial services companies.
Added
In the event of disruptions in our customers’ supply chains, the labor and materials they rely on in the ordinary course of business may not be available at reasonable rates or at all.
Removed
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time.
Added
Additionally, changes in distribution of federal funds or freezing of federal funds, including reductions in federal workforce causing unemployment, could have an adverse effect on the ability of consumers and businesses to pay debts and/or affect the demand for loans and deposits. We may not be able to grow, and if we do we may have difficulty managing that growth.
Removed
Given the relatively low trading volume of our common stock, significant sales of our common stock in the public market, or the perception that those sales may occur, could cause the trading price of our common stock to decline or to be lower than it otherwise might be in the absence of those sales or perceptions.
Added
Risks Related to Operations Inflation can have an adverse impact on our business and on our customers. ​ Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
Added
Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud.
Added
Effective April 1, 2025, Visa will consolidate its Visa Dispute Monitoring Program and Visa Fraud Monitoring Program into a new program called Visa Acquiring Monitoring Program (“VAMP”) with the goal of ensuring the integrity of the Visa payment system by monitoring transaction activities to detect and prevent fraudulent behavior.
Added
From time to time, the card networks increase the fees that they charge to acquirers and we charge to our merchants.
Added
Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often impose additional compliance costs.
Added
The FRB’s policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect our net interest margin. Its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAccordingly, the Company has implemented a third-party risk management program, which includes a detailed onboarding process and periodic reviews of vendors with access to sensitive company data. ​ As indicated above, supporting the operations are incident response, business continuity, and disaster recovery programs. These programs identify and assess threats and evaluate risk.
Biggest changeAccordingly, the Company utilizes a 40 Table of Contents third-party risk management program, which includes a detailed onboarding process and periodic reviews of vendors with access to sensitive company data. ​ As indicated above, supporting the operations are incident response, business continuity, and disaster recovery programs. These programs identify and assess threats and evaluate risk.
As such, the Company engages third-party consultants and independent auditors to conduct penetration tests, cybersecurity risk assessments, external audits, and program development and enhancement where applicable. ​ ​ 40 Table of Contents Cybersecurity Governance ​ Management Oversight.
As such, the Company engages third-party consultants and independent auditors to conduct penetration tests, cybersecurity risk assessments, external audits, and program development and enhancement where applicable. ​ Cybersecurity Governance ​ Management Oversight.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties At December 31, 2023, we conducted business through our corporate headquarters and full service branch in Jericho, New York (Nassau County) and one administrative office in Boca Raton, Florida. All the current locations are leased properties. At December 31, 2023, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $2.6 million.
Biggest changeAll the current locations are leased properties. At December 31, 2024, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $2.4 million.
Added
ITEM 2. Properties At December 31, 2024, we conducted business through our corporate headquarters and full service branch in Jericho, New York (Nassau County) and one administrative office in Boca Raton, Florida. In 2024, our lease commenced on our Los Angeles, California location which we intend to operate as a full service branch planned to open in 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt December 31, 2023, we are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. Mine Safety Disclosures Not applicable. ​ 41 Table of Contents PART II
Biggest changeAt December 31, 2024, we are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. Mine Safety Disclosures Not applicable. ​ 41 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 41 ​ ​ ​ PART II ​ 42 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 ITEM 6. [Reserved] 43 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 65 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 41 ​ ​ ​ PART II ​ 42 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 ITEM 6. [Reserved] 43 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 66 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShares repurchased pursuant to these plans during the three months ended December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ ​ Average price paid per share October 1, 2023 through October 31, 2023 ​ — ​ $ — November 1, 2023 through November 30, 2023 ​ — ​ ​ — December 1, 2023 through December 31, 2023 ​ 18,923 ​ ​ 48.77 ​ ​
Biggest changeShares repurchased pursuant to these plans during the three months ended December 31, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ ​ Average price paid per share October 1, 2024 through October 31, 2024 ​ — ​ $ — November 1, 2024 through November 30, 2024 ​ — ​ ​ — December 1, 2024 through December 31, 2024 ​ 39,502 ​ ​ 79.01 ​ Participants in the Company’s stock-based incentive plans may also net settle shares in order to facilitate the exercise of stock options which is considered a cashless option exercise resulting in a net issuance of shares to the participant with no change in treasury stock. ​ ​ ​ ​
The following table summarizes information as of December 31, 2023 relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock awards or other rights to acquire shares may be granted from time to time. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ Number of securities ​ ​ ​ ​ remaining available for ​ ​ to be issued upon ​ Weighted-average ​ future issuance under ​ ​ exercise of ​ exercise price of ​ equity compensation ​ ​ outstanding options, ​ outstanding options, ​ plans (excluding securities ​ ​ warrants and rights ​ warrants and rights ​ reflected in column (a)) Plan Category (a) (b) (c) Equity Compensation Plans Approved by Security Holders 639,519 ​ $ 20.76 24,744 Equity Compensation Plans Not Approved by Security Holders — ​ — — Total Equity Compensation Plans 639,519 ​ $ 20.76 24,744 ​ ​ 42 Table of Contents The following table presents information regarding purchase of our common stock during the quarter ended December 31, 2023 and the stock repurchase program approved by our Board of Directors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plans or programs ​ Maximum number of shares that may yet be purchased under the plans or programs (1) October 1, 2023 through October 31, 2023 ​ — ​ $ — ​ — ​ 257,694 November 1, 2023 through November 30, 2023 ​ — ​ ​ — ​ — ​ 257,694 December 1, 2023 through December 31, 2023 ​ — ​ ​ — ​ — ​ 257,694 ​ (1) On January 9, 2019, the Company announced a share repurchase program, which authorized the purchase of up to 300,000 shares of common stock.
The following table summarizes information as of December 31, 2024 relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock awards or other rights to acquire shares may be granted from time to time. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ Number of securities ​ ​ ​ ​ remaining available for ​ ​ to be issued upon ​ Weighted-average ​ future issuance under ​ ​ exercise of ​ exercise price of ​ equity compensation ​ ​ outstanding options, ​ outstanding options, ​ plans (excluding securities ​ ​ warrants and rights ​ warrants and rights ​ reflected in column (a)) Plan Category (a) (b) (c) Equity Compensation Plans Approved by Security Holders 559,308 ​ $ 24.72 476,571 Equity Compensation Plans Not Approved by Security Holders — ​ — — Total Equity Compensation Plans 559,308 ​ $ 24.72 476,571 ​ ​ 42 Table of Contents The following table presents information regarding purchase of our common stock during the quarter ended December 31, 2024 and the stock repurchase program approved by our Board of Directors. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plans or programs ​ Maximum number of shares that may yet be purchased under the plans or programs (1) October 1, 2024 through October 31, 2024 ​ — ​ $ — ​ — ​ 257,694 November 1, 2024 through November 30, 2024 ​ — ​ ​ — ​ — ​ 257,694 December 1, 2024 through December 31, 2024 ​ — ​ ​ — ​ — ​ 257,694 ​ (1) On January 9, 2019, the Company announced a share repurchase program, which authorized the purchase of up to 300,000 shares of common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our shares of common stock are traded on the NASDAQ Capital Market under the symbol “ESQ”. The approximate number of holders of record of Esquire Financial Holding, Inc.’s common stock as of March 1, 2024 was 4,670.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our shares of common stock are traded on the NASDAQ Capital Market under the symbol “ESQ”. The approximate number of holders of record of Esquire Financial Holding, Inc.’s common stock as of March 1, 2025 was 5,470.
There is no expiration date for the stock repurchase program. Participants in the Company’s stock-based incentive plans may have shares withheld to cover income taxes upon the vesting of restricted stock awards and may use a stock swap to exercise stock options.
There is no expiration date for the stock repurchase program. Participants in the Company’s stock-based incentive plans may have shares withheld to cover income taxes upon the vesting of restricted stock awards pursuant to the terms of the applicable plan and not under the Company’s share repurchase program.
Removed
Shares withheld to cover income taxes upon the vesting of restricted stock awards and stock swaps to exercise stock options are repurchased pursuant to the terms of the applicable plan and not under the Company’s share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+30 added−13 removed80 unchanged
Biggest changeSelected Financial Data The following information is derived in part from the consolidated financial statements of Esquire Financial Holdings, Inc. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, ​ ​ 2023 2022 2021 2020 2019 ​ ​ ​ (Dollars in thousands, except share and per share data) ​ Balance Sheet Data: ​ ​ ​ ​ ​ Total assets ​ $ 1,616,876 ​ $ 1,395,639 ​ $ 1,178,770 ​ $ 936,714 ​ $ 798,008 ​ Cash and cash equivalents ​ 165,209 ​ 164,122 ​ 149,156 ​ 65,185 ​ 61,806 ​ Securities available-for-sale, at fair value ​ 122,107 ​ 109,269 ​ 148,384 ​ 117,655 ​ 146,419 ​ Securities held-to-maturity, at cost ​ 77,001 ​ 78,377 ​ — ​ — ​ — ​ Loans, held for investment ​ 1,207,413 ​ 947,295 ​ 784,517 ​ 672,421 ​ 565,369 ​ Total deposits ​ 1,407,299 ​ 1,228,236 ​ 1,028,409 ​ 804,054 ​ 680,620 ​ Total stockholders’ equity ​ 198,555 ​ 158,158 ​ 143,735 ​ 126,076 ​ 111,062 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Statement Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 91,888 ​ $ 60,993 ​ $ 44,531 ​ $ 38,630 ​ $ 36,659 ​ Interest expense ​ 8,115 ​ 1,647 ​ 828 ​ 1,190 ​ 2,548 ​ Net interest income ​ 83,773 ​ 59,346 ​ 43,703 ​ 37,440 ​ 34,111 ​ Provision for credit losses ​ 4,525 ​ 3,490 ​ 6,955 ​ 6,250 ​ 1,850 ​ Net interest income after provision for credit losses ​ 79,248 ​ 55,856 ​ 36,748 ​ 31,190 ​ 32,261 ​ Payment processing income ​ ​ 22,316 ​ ​ 21,944 ​ ​ 20,856 ​ ​ 14,099 ​ ​ 10,976 ​ Other noninterest income ​ ​ 7,435 ​ ​ 2,981 ​ ​ 168 ​ ​ 548 ​ ​ 835 ​ Total noninterest income ​ 29,751 ​ 24,925 ​ 21,024 ​ 14,647 ​ 11,811 ​ Employee compensation and benefits ​ ​ 32,481 ​ ​ 25,774 ​ ​ 21,741 ​ ​ 16,873 ​ ​ 14,677 ​ Other expenses ​ ​ 20,636 ​ ​ 16,206 ​ ​ 13,323 ​ ​ 11,797 ​ ​ 10,257 ​ Total noninterest expense ​ 53,117 ​ 41,980 ​ 35,064 ​ 28,670 ​ 24,934 ​ Net income before income taxes ​ 55,882 ​ 38,801 ​ 22,708 ​ 17,167 ​ 19,138 ​ Income tax expense ​ 14,871 ​ 10,283 ​ 4,783 ​ 4,549 ​ 4,995 ​ Net income ​ $ 41,011 ​ $ 28,518 ​ $ 17,925 ​ $ 12,618 ​ $ 14,143 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Share Data: ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 5.31 ​ $ 3.73 ​ $ 2.40 ​ $ 1.70 ​ $ 1.91 ​ Diluted ​ ​ 4.91 ​ ​ 3.47 ​ ​ 2.26 ​ ​ 1.65 ​ ​ 1.82 ​ Book value per share (1) ​ ​ 23.96 ​ ​ 19.30 ​ ​ 17.77 ​ ​ 16.18 ​ ​ 14.51 ​ Tangible book value per share (2) ​ ​ 23.96 ​ ​ 19.30 ​ ​ 17.77 ​ ​ 16.18 ​ ​ 14.51 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios: ​ ​ ​ ​ ​ ​ Return on average assets ​ 2.89 % 2.31 % 1.77 % 1.45 % 1.93 % Return on average equity ​ 23.20 ​ 19.44 ​ 13.42 ​ 10.69 ​ 13.95 ​ Interest rate spread ​ 5.57 ​ 4.85 ​ 4.40 ​ 4.34 ​ 4.56 ​ Net interest margin ​ 6.09 ​ 4.99 ​ 4.49 ​ 4.47 ​ 4.86 ​ Efficiency ratio (3) ​ 46.79 ​ 49.82 ​ 54.17 ​ 55.04 ​ 54.30 ​ Loan to deposit ratio ​ ​ 85.80 ​ ​ 77.13 ​ ​ 76.28 ​ ​ 83.63 ​ ​ 83.07 ​ Average interest earning assets to average interest bearing liabilities ​ 188.86 ​ 201.47 ​ 215.72 ​ 191.12 ​ 181.71 ​ Average equity to average assets ​ 12.44 ​ 11.89 ​ 13.22 ​ 13.61 ​ 13.83 ​ ​ 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, ​ 2023 2022 2021 2020 2019 Asset Quality Ratios (Loans Held for Investment): ​ ​ Allowance for credit losses to total loans 1.38 % 1.29 % 1.16 % 1.70 % 1.24 % Allowance for credit losses to nonperforming loans (4) 152 % NM ​ NM ​ 495 % 474 % Net charge-offs (recoveries) to average outstanding loans 0.04 % 0.04 % 1.29 % 0.30 % 0.10 % Nonperforming loans to total loans (4) 0.91 % 0.00 % 0.00 % 0.34 % 0.26 % Nonperforming loans to total assets (4) 0.68 % 0.00 % 0.00 % 0.25 % 0.18 % Nonperforming assets to total assets (5) 0.68 % 0.00 % 0.00 % 0.25 % 0.18 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Esquire Bank): Total capital to risk weighted assets 15.38 % 15.44 % 15.89 % 16.69 % 17.83 % Tier 1 capital to risk weighted assets 14.13 % 14.21 % 14.79 % 15.44 % 16.68 % Tier 1 common equity to risk weighted assets 14.13 % 14.21 % 14.79 % 15.44 % 16.68 % Tier 1 leverage capital ratio 12.07 % 10.98 % 11.46 % 12.51 % 13.50 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other: Number of offices 3 3 3 3 3 Number of full-time equivalent employees 140 115 110 99 86 (1) For purposes of computing book value per share, book value equals total common stockholders’ equity divided by total number of shares of common stock outstanding.
Biggest changeSelected Financial Data The following information is derived in part from the consolidated financial statements of Esquire Financial Holdings, Inc. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, ​ ​ 2024 2023 2022 2021 2020 ​ ​ ​ (Dollars in thousands, except share and per share data) ​ Balance Sheet Data: ​ ​ ​ ​ ​ Total assets ​ $ 1,892,503 ​ $ 1,616,876 ​ $ 1,395,639 ​ $ 1,178,770 ​ $ 936,714 ​ Cash and cash equivalents ​ 126,329 ​ 165,209 ​ 164,122 ​ 149,156 ​ 65,185 ​ Securities available-for-sale, at fair value ​ 241,746 ​ 122,107 ​ 109,269 ​ 148,384 ​ 117,655 ​ Securities held-to-maturity, at cost ​ 68,660 ​ 77,001 ​ 78,377 ​ — ​ — ​ Loans, held for investment ​ 1,397,021 ​ 1,207,413 ​ 947,295 ​ 784,517 ​ 672,421 ​ Total deposits ​ 1,642,236 ​ 1,407,299 ​ 1,228,236 ​ 1,028,409 ​ 804,054 ​ Total stockholders’ equity ​ 237,094 ​ 198,555 ​ 158,158 ​ 143,735 ​ 126,076 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Statement Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 113,373 ​ $ 91,888 ​ $ 60,993 ​ $ 44,531 ​ $ 38,630 ​ Interest expense ​ 13,444 ​ 8,115 ​ 1,647 ​ 828 ​ 1,190 ​ Net interest income ​ 99,929 ​ 83,773 ​ 59,346 ​ 43,703 ​ 37,440 ​ Provision for credit losses ​ 4,700 ​ 4,525 ​ 3,490 ​ 6,955 ​ 6,250 ​ Net interest income after provision for credit losses ​ 95,229 ​ 79,248 ​ 55,856 ​ 36,748 ​ 31,190 ​ Payment processing income ​ ​ 20,875 ​ ​ 22,316 ​ ​ 21,944 ​ ​ 20,856 ​ ​ 14,099 ​ Other noninterest income ​ ​ 4,020 ​ ​ 7,435 ​ ​ 2,981 ​ ​ 168 ​ ​ 548 ​ Total noninterest income ​ 24,895 ​ 29,751 ​ 24,925 ​ 21,024 ​ 14,647 ​ Employee compensation and benefits ​ ​ 37,845 ​ ​ 32,481 ​ ​ 25,774 ​ ​ 21,741 ​ ​ 16,873 ​ Other expenses ​ ​ 22,998 ​ ​ 20,636 ​ ​ 16,206 ​ ​ 13,323 ​ ​ 11,797 ​ Total noninterest expense ​ 60,843 ​ 53,117 ​ 41,980 ​ 35,064 ​ 28,670 ​ Net income before income taxes ​ 59,281 ​ 55,882 ​ 38,801 ​ 22,708 ​ 17,167 ​ Income tax expense ​ 15,623 ​ 14,871 ​ 10,283 ​ 4,783 ​ 4,549 ​ Net income ​ $ 43,658 ​ $ 41,011 ​ $ 28,518 ​ $ 17,925 ​ $ 12,618 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Share Data: ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 5.58 ​ $ 5.31 ​ $ 3.73 ​ $ 2.40 ​ $ 1.70 ​ Diluted ​ ​ 5.14 ​ ​ 4.91 ​ ​ 3.47 ​ ​ 2.26 ​ ​ 1.65 ​ Book value per share (1) ​ ​ 28.38 ​ ​ 23.96 ​ ​ 19.30 ​ ​ 17.77 ​ ​ 16.18 ​ Tangible book value per share (2) ​ ​ 28.38 ​ ​ 23.96 ​ ​ 19.30 ​ ​ 17.77 ​ ​ 16.18 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios: ​ ​ ​ ​ ​ ​ Return on average assets ​ 2.57 % 2.89 % 2.31 % 1.77 % 1.45 % Return on average equity ​ 20.14 ​ 23.20 ​ 19.44 ​ 13.42 ​ 10.69 ​ Interest rate spread ​ 5.48 ​ 5.57 ​ 4.85 ​ 4.40 ​ 4.34 ​ Net interest margin ​ 6.06 ​ 6.09 ​ 4.99 ​ 4.49 ​ 4.47 ​ Efficiency ratio (3) ​ 48.74 ​ 46.79 ​ 49.82 ​ 54.17 ​ 55.04 ​ Loan to deposit ratio ​ ​ 85.07 ​ ​ 85.80 ​ ​ 77.13 ​ ​ 76.28 ​ ​ 83.63 ​ Average interest earning assets to average interest bearing liabilities ​ 172.03 ​ 188.86 ​ 201.47 ​ 215.72 ​ 191.12 ​ Average equity to average assets ​ 12.75 ​ 12.44 ​ 11.89 ​ 13.22 ​ 13.61 ​ ​ 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, ​ 2024 2023 2022 2021 2020 Asset Quality Ratios (Loans Held for Investment): ​ ​ Allowance for credit losses to total loans 1.50 % 1.38 % 1.29 % 1.16 % 1.70 % Allowance for credit losses to nonperforming loans (4) 192 % 152 % NM ​ NM ​ 495 % Net charge-offs (recoveries) to average outstanding loans 0.03 % 0.04 % 0.04 % 1.29 % 0.30 % Nonperforming loans to total loans (4) 0.78 % 0.91 % 0.00 % 0.00 % 0.34 % Nonperforming loans to total assets (4) 0.58 % 0.68 % 0.00 % 0.00 % 0.25 % Nonperforming assets to total assets (5) 0.58 % 0.68 % 0.00 % 0.00 % 0.25 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Esquire Bank): Total capital to risk weighted assets 15.92 % 15.38 % 15.44 % 15.89 % 16.69 % Tier 1 capital to risk weighted assets 14.67 % 14.13 % 14.21 % 14.79 % 15.44 % Tier 1 common equity to risk weighted assets 14.67 % 14.13 % 14.21 % 14.79 % 15.44 % Tier 1 leverage capital ratio 11.70 % 12.07 % 10.98 % 11.46 % 12.51 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other: Number of offices 3 3 3 3 3 Number of full-time equivalent employees 138 140 115 110 99 (1) For purposes of computing book value per share, book value equals total common stockholders’ equity divided by total number of shares of common stock outstanding.
When property is acquired, it is initially recorded at the fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Holding costs and declines in fair value after acquisition of the property result in charges against income. At December 31, 2023 and 2022, we did not have any foreclosed assets.
When property is acquired, it is initially recorded at the fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Holding costs and declines in fair value after acquisition of the property result in charges against income. At December 31, 2024 and 2023, we did not have any foreclosed assets.
This increase was general reserve driven considering 58 Table of Contents loan growth and qualitative factors associated with the current uncertain economic environment including, but not limited to, its potential impact on the New York metro commercial real estate market. Noninterest Income.
This increase was general reserve driven considering loan growth and qualitative factors associated with the current uncertain economic environment including, but not limited to, its potential impact on the New York metro commercial real estate market. 61 Table of Contents Noninterest Income.
The following table sets forth certain information at December 31, 2023 regarding the contractual maturity of our held for investment loan portfolio. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
The following table sets forth certain information at December 31, 2024 regarding the contractual maturity of our held for investment loan portfolio. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
Debt Securities Portfolio At December 31, 2023 and 2022, all debt securities available-for-sale were carried at fair value and we had no investments in a single company or entity, other than government and government agency securities, which had an aggregate book value in excess of 10% of our equity.
Debt Securities Portfolio At December 31, 2024 and 2023, all debt securities available-for-sale were carried at fair value and we had no investments in a single company or entity, other than government and government agency securities, which had an aggregate book value in excess of 10% of our equity.
Due to the decline in fair value being attributable to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider the securities to be impaired at December 31, 2023.
Due to the decline in fair value being attributable to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider the securities to be impaired at December 31, 2024.
Additionally, there was no allowance for credit losses on securities held-to-maturity due to the high credit quality composition consisting of issuances from government sponsored agencies. No impairment charges were recorded for the years ended December 31, 2023, 2022 and 2021. Portfolio Maturities and Yields.
Additionally, there was no allowance for credit losses on securities held-to-maturity due to the high credit quality composition consisting of issuances from government sponsored agencies. No impairment charges were recorded for the years ended December 31, 2024, 2023 and 2022. Portfolio Maturities and Yields.
Esquire Bank is subject to various regulatory capital requirements administered by Office of the Comptroller of the Currency (the “OCC”), and the Federal Deposit Insurance Corporation. At December 31, 2023 and 2022, Esquire Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines.
Esquire Bank is subject to various regulatory capital requirements administered by Office of the Comptroller of the Currency (the “OCC”), and the Federal Deposit Insurance Corporation. At December 31, 2024 and 2023, Esquire Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines.
The composition and maturities of the investment securities portfolio at December 31, 2023, are summarized in the following table. Maturities are based on the final contractual payment dates and do not reflect the impact of prepayments or early redemptions that may occur.
The composition and maturities of the investment securities portfolio at December 31, 2024, are summarized in the following table. Maturities are based on the final contractual payment dates and do not reflect the impact of prepayments or early redemptions that may occur.
As of December 31, 2023 and December 31, 2022, none of the Company’s available-for-sale securities were in an unrealized loss position due to credit, and therefore no allowance for credit losses on available-for-sale securities was required.
As of December 31, 2024 and December 31, 2023, none of the Company’s available-for-sale securities were in an unrealized loss position due to credit, and therefore no allowance for credit losses on available-for-sale securities was required.
In a static pool approach, statistical information about a pool of loans originated during a specified period is tracked over its life (including losses, delinquencies, and prepayments). In general, this methodology operates by calculating a rate representing the current 44 Table of Contents balance expected to not be collected for each pool.
In a static pool approach, statistical information about a pool of loans originated during a specified period is tracked over its life (including losses, delinquencies, and prepayments). In general, this methodology operates by calculating a rate representing the current balance expected to not be collected for each pool.
Professional services costs increased with $1.0 million representing 59 Table of Contents costs associated with the retention of a global executive search firm to expand our regional national sales capabilities (senior Business Development Officers (“BDOs”)), senior commercial underwriting, and senior payment processing risk management.
Professional services costs increased with $1.0 million representing costs associated with the retention of a global executive search firm to expand our regional national sales capabilities (senior Business Development Officers (“BDOs”)), senior commercial underwriting, and senior payment processing risk management.
Management considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the inherent subjectivity and uncertainty in estimating the levels of the allowance required to cover credit losses in the portfolio and the material effect that such judgments can have on the results of operations .
Management considers the accounting policy relating to the allowance for credit losses on loans held for investment to be a critical accounting policy given the inherent subjectivity and uncertainty in estimating the levels of the allowance required to cover credit losses in the portfolio and the material effect that such judgments can have on the results of operations .
The estimation process in determining an appropriate level for the allowance for credit losses requires consideration of past events, current conditions, and reasonable and supportable forecasts, and involves a significant degree of management judgment.
The estimation process in determining an appropriate level for the allowance for credit losses requires consideration of past events, current conditions, and reasonable and supportable forecasts, and involves a significant degree 44 Table of Contents of management judgment.
Growth was partially funded by a $128.5 million, or 27.6%, increase in average law firm escrow deposits to $593.6 million for the year ended December 31, 2023 from $465.0 million for the year ended December 31, 2022. Interest Income.
Growth was partially funded by a $128.5 million, or 27.6%, increase in average law firm escrow deposits to $593.6 million for the year ended December 31, 2023 from $465.0 million for the year ended December 31, 2022. 60 Table of Contents Interest Income.
The remaining increase in professional services costs was primarily due to incremental increases in insurance, legal, accounting, risk management, and compliance costs. Data processing costs increased due to increased processing volume, primarily driven by our core banking platform, and additional costs related to our technology implementations.
The remaining increase in professional services costs was primarily due to incremental increases in 62 Table of Contents insurance, legal, accounting, risk management, and compliance costs. Data processing costs increased due to increased processing volume, primarily driven by our core banking platform, and additional costs related to our technology implementations.
See Note 1 “Business and Summary of Significant Accounting Policies” for discussion of our allowance for credit losses policy. On January 1, 2023, we adopted the CECL Standard.
See Note 1 “Business and Summary of Significant Accounting Policies” for discussion of our allowance for credit losses on loans held for investment policy. On January 1, 2023, we adopted the CECL Standard.
We continue to focus on the acquisition and expansion of core deposit relationships, which we define as all deposits except for certificates of deposit. Core deposits totaled $1.4 billion at December 31, 2023, or 99.4% of total deposits at that date.
We continue to focus on the acquisition and expansion of core deposit relationships, which we define as all deposits except for certificates of deposit. Core deposits totaled $1.63 billion at December 31, 2024, or 99.1% of total deposits at that date.
Additionally, 80.2% of our commercial loans have interest rate floor protection as of December 31, 2023. Nonperforming Assets Nonperforming assets include loans that are 90 or more days past due or on nonaccrual status, including real estate and other loan collateral acquired through foreclosure and repossession.
Additionally, approximately 90% of our commercial loans have interest rate floor protection as of December 31, 2024. Nonperforming Assets Nonperforming assets include loans that are 90 or more days past due or on nonaccrual status, including real estate and other loan collateral acquired through foreclosure and repossession.
Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. The FDIC insured and uninsured deposited balances reflect management’s determination of settlement claims deposited as of period end. In addition, as of December 31, 2023, the aggregate amount of our uninsured certificates of deposit was $122 thousand.
Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. The FDIC insured and uninsured deposited balances reflect management’s determination of settlement claims deposited as of period end. In addition, as of December 31, 2024, the aggregate amount of our uninsured certificates of deposit was $6.8 million.
Management believes that the most critical accounting policies, which involve the most complex or subjective decisions or assessments, are as follows: Allowance for Credit Losses.
Management believes that the most critical accounting policies, which involve the most complex or subjective decisions or assessments, are as follows: Allowance for Credit Losses on Loans Held for Investment.
As other companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures by other companies. ​ 47 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ (Dollars in thousands) ​ Efficiency Ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income $ 83,773 ​ $ 59,346 ​ $ 43,703 ​ $ 37,440 ​ $ 34,111 ​ Noninterest income ​ 29,751 ​ ​ 24,925 ​ ​ 21,024 ​ ​ 14,647 ​ ​ 11,811 ​ Less net gain on equity investments ​ (4,013) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Recurring revenue $ 109,511 ​ $ 84,271 ​ $ 64,727 ​ $ 52,087 ​ $ 45,922 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest expense $ 53,117 ​ $ 41,980 ​ $ 35,064 ​ $ 28,670 ​ $ 24,934 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio ​ 48.5 % ​ 49.8 % ​ 54.2 % ​ 55.0 % ​ 54.3 % ​ Discussion and Analysis of Financial Condition for the Years Ended December 31, 2023 and 2022 Assets .
As other companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures by other companies. ​ 47 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ ​ (Dollars in thousands) ​ Efficiency Ratio: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income $ 99,929 ​ $ 83,773 ​ $ 59,346 ​ $ 43,703 ​ $ 37,440 ​ Noninterest income ​ 24,895 ​ ​ 29,751 ​ ​ 24,925 ​ ​ 21,024 ​ ​ 14,647 ​ Less: net gain on equity investments ​ — ​ ​ (4,013) ​ ​ — ​ ​ — ​ ​ — ​ Recurring revenue $ 124,824 ​ $ 109,511 ​ $ 84,271 ​ $ 64,727 ​ $ 52,087 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest expense $ 60,843 ​ $ 53,117 ​ $ 41,980 ​ $ 35,064 ​ $ 28,670 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio ​ 48.7 % ​ 48.5 % ​ 49.8 % ​ 54.2 % ​ 55.0 % ​ Discussion and Analysis of Financial Condition for the Years Ended December 31, 2024 and 2023 Assets .
At December 31, 2023, Esquire Bank was classified as well-capitalized. 64 Table of Contents The following table presents our capital ratios as of the indicated dates for Esquire Bank. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ ​ ​ ​ ​ Purposes ​ ​ ​ ​ ​ ​ Minimum Capital with ​ Actual ​ ​ “Well Capitalized” ​ Conservation Buffer ​ At December 31, 2023 Total Risk-based Capital Ratio ​ Bank 10.00 % 10.50 % 15.38 % ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Risk-based Capital Ratio ​ Bank 8.00 % 8.50 % 14.13 % ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital Ratio ​ Bank 6.50 % 7.00 % 14.13 % ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ Bank 5.00 % 4.00 % 12.07 % ​ ​ Effective January 1, 2020, the federal banking agencies adopted a rule to establish for institutions with assets of less than $10 billion that meet other specified criteria a “community bank leverage ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) of 9% that such institutions may elect to utilize in lieu of the generally applicable leverage and risk-based capital requirements noted above.
The following table presents our capital ratios as of the indicated dates for Esquire Bank. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ ​ ​ ​ ​ Purposes ​ ​ ​ ​ ​ ​ Minimum Capital with ​ Actual ​ ​ “Well Capitalized” ​ Conservation Buffer ​ At December 31, 2024 Total Risk-based Capital Ratio ​ Bank 10.00 % 10.50 % 15.92 % ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Risk-based Capital Ratio ​ Bank 8.00 % 8.50 % 14.67 % ​ ​ ​ ​ ​ ​ ​ ​ Common Equity Tier 1 Capital Ratio ​ Bank 6.50 % 7.00 % 14.67 % ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ Bank 5.00 % 4.00 % 11.70 % ​ ​ Effective January 1, 2020, the federal banking agencies adopted a rule to establish for institutions with assets of less than $10 billion that meet other specified criteria a “community bank leverage ratio” (the ratio of a bank’s tangible equity 65 Table of Contents capital to average total consolidated assets) of 9% that such institutions may elect to utilize in lieu of the generally applicable leverage and risk-based capital requirements noted above.
Income Tax Expense. We recorded income tax expense of $14.9 million for the year ended December 31, 2023, reflecting an effective tax rate of 26.6%, compared to $10.3 million, or an effective tax rate of 26.5%, for the year ended December 31, 2022. Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 General.
We recorded income tax expense of $15.6 million for the year ended December 31, 2024, reflecting an effective tax rate of 26.4%, compared to $14.9 million, or an effective tax rate of 26.6%, for the year ended December 31, 2023. Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 General.
The allowance for credit losses as a percentage of loans was 1.38% and 1.29% as of December 31, 2023 and 2022, respectively.
The allowance for credit losses as a percentage of loans was 1.50% and 1.38% as of December 31, 2024 and 2023, respectively.
As of December 31, 2023, the Company had approximately $684.2 million of law firm escrow (or trust) deposits with the majority of these law firms also having a commercial lending relationship with the Bank.
As of December 31, 2024, the Company had approximately $979.0 million of law firm escrow (or trust) deposits with the majority of these law firms also having a commercial lending relationship with the Bank.
Our overall liquidity position (cash, borrowing capacity, and available reciprocal client sweep balances) totaled $657.8 million at December 31, 2023, or 47% of total deposits, creating a highly liquid and unlevered balance sheet We have no material commitments or demands that are likely to affect our liquidity other than set forth below.
Our overall liquidity position (cash, borrowing capacity, and available reciprocal client sweep balances) totaled $1.05 billion at December 31, 2024, or 64.0% of total deposits, creating a highly liquid and unlevered balance sheet We have no material commitments or demands that are likely to affect our liquidity other than set forth below.
Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions.
Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions.
The allowance for credit losses is based on management’s assessment of various factors affecting the loan portfolio, including portfolio composition, delinquent and nonaccrual loans, national and local business conditions and loss experience and an overall evaluation of the quality of the underlying collateral. 51 Table of Contents The following table sets forth activity in our allowance for credit losses for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 ​ 2022 ​ 2021 ​ ​ (In thousands) Allowance at beginning of year ​ $ 12,223 ​ $ 9,076 ​ $ 11,402 Impact of CECL adoption ​ 283 ​ — ​ — Provision for credit losses ​ 4,525 ​ 3,490 ​ 6,955 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs: ​ ​ ​ Multifamily ​ — ​ 178 ​ — Commercial real estate ​ — ​ — ​ — 1 – 4 family ​ — ​ — ​ — Commercial ​ 5 ​ 64 ​ 111 Consumer ​ 439 ​ 150 ​ 9,170 Total charge-offs ​ 444 ​ 392 ​ 9,281 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ Multifamily ​ — ​ 17 ​ — Commercial real estate ​ — ​ — ​ — 1 – 4 family ​ — ​ — ​ — Commercial ​ — ​ 32 ​ — Consumer ​ 44 ​ — ​ — Total recoveries ​ 44 ​ 49 ​ — Allowance at end of year ​ $ 16,631 ​ $ 12,223 ​ $ 9,076 ​ The following table presents average loans and credit loss experience for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 ​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs ​ ​ ​ ​ Average ​ ​ ​ Net ​ ​ ​ to Average ​ ​ ​ ​ ​ Average ​ ​ ​ Net ​ ​ ​ to Average ​ ​ ​ ​ Loans (1) ​ ​ ​ Charge-offs ​ ​ ​ Loans ​ ​ ​ ​ ​ Loans (1) ​ ​ ​ Charge-offs ​ ​ ​ Loans ​ ​ ​ (Dollars in thousands) ​ Multifamily ​ $ 304,848 ​ ​ $ — ​ ​ ​ — % ​ ​ ​ $ 260,291 ​ ​ $ 161 ​ ​ ​ 0.06 % Commercial real estate ​ 90,735 ​ ​ — ​ ​ ​ — ​ ​ ​ ​ 71,055 ​ ​ — ​ ​ ​ — ​ 1 – 4 family ​ ​ 22,109 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ​ ​ 32,532 ​ ​ ​ — ​ ​ ​ — ​ Commercial ​ 621,730 ​ ​ 5 ​ ​ ​ 0.00 ​ ​ ​ ​ 470,373 ​ ​ 32 ​ ​ ​ 0.01 ​ Consumer ​ 13,477 ​ ​ 395 ​ ​ ​ 2.93 ​ ​ ​ ​ 10,851 ​ ​ 150 ​ ​ ​ 1.38 ​ Total ​ $ 1,052,899 ​ ​ $ 400 ​ ​ ​ 0.04 % ​ ​ ​ $ 845,102 ​ ​ $ 343 ​ ​ ​ 0.04 % ​ (1) Excludes net deferred loan fees and unearned premiums.
The allowance for credit losses is based on management’s assessment of various factors affecting the loan portfolio, including portfolio composition, delinquent and nonaccrual loans, national and local business conditions and loss experience and an overall evaluation of the quality of the underlying collateral. 51 Table of Contents The following table sets forth activity in our allowance for credit losses for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 ​ 2023 ​ 2022 ​ ​ (In thousands) Allowance at beginning of year ​ $ 16,631 ​ $ 12,223 ​ $ 9,076 Impact of CECL adoption ​ — ​ 283 ​ — Provision for credit losses ​ 4,700 ​ 4,525 ​ 3,490 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs: ​ ​ ​ Multifamily ​ — ​ — ​ 178 Commercial real estate ​ — ​ — ​ — 1 – 4 family ​ — ​ — ​ — Commercial ​ — ​ 5 ​ 64 Consumer ​ 390 ​ 439 ​ 150 Total charge-offs ​ 390 ​ 444 ​ 392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ Multifamily ​ — ​ — ​ 17 Commercial real estate ​ — ​ — ​ — 1 – 4 family ​ — ​ — ​ — Commercial ​ — ​ — ​ 32 Consumer ​ 38 ​ 44 ​ — Total recoveries ​ 38 ​ 44 ​ 49 Allowance at end of year ​ $ 20,979 ​ $ 16,631 ​ $ 12,223 ​ The following table presents average loans and credit loss experience for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 ​ ​ ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs ​ ​ ​ ​ Average ​ ​ ​ Net ​ ​ ​ to Average ​ ​ ​ ​ ​ Average ​ ​ ​ Net ​ ​ ​ to Average ​ ​ ​ ​ Loans (1) ​ ​ ​ Charge-offs ​ ​ ​ Loans ​ ​ ​ ​ ​ Loans (1) ​ ​ ​ Charge-offs ​ ​ ​ Loans ​ ​ ​ (Dollars in thousands) ​ Multifamily ​ $ 349,360 ​ ​ $ — ​ ​ ​ — % ​ ​ ​ $ 304,848 ​ ​ $ — ​ ​ ​ — % Commercial real estate ​ 88,272 ​ ​ — ​ ​ ​ — ​ ​ ​ ​ 90,735 ​ ​ — ​ ​ ​ — ​ 1 – 4 family ​ ​ 15,898 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ​ ​ 22,109 ​ ​ ​ — ​ ​ ​ — ​ Commercial ​ 786,534 ​ ​ — ​ ​ ​ — ​ ​ ​ ​ 621,730 ​ ​ 5 ​ ​ ​ 0.00 ​ Consumer ​ 18,698 ​ ​ 352 ​ ​ ​ 1.88 ​ ​ ​ ​ 13,477 ​ ​ 395 ​ ​ ​ 2.93 ​ Total ​ $ 1,258,762 ​ ​ $ 352 ​ ​ ​ 0.03 % ​ ​ ​ $ 1,052,899 ​ ​ $ 400 ​ ​ ​ 0.04 % ​ (1) Excludes net deferred loan fees and unearned premiums.
LIABILITIES AND EQUITY ​ $ 1,420,978 ​ ​ $ 1,234,377 ​ ​ ​ $ 1,010,719 ​ ​ Net interest income ​ ​ $ 83,773 ​ ​ ​ $ 59,346 ​ ​ ​ ​ $ 43,703 ​ ​ Net interest spread ​ ​ ​ ​ ​ ​ ​ 5.57 % ​ ​ ​ ​ ​ ​ 4.85 % ​ ​ ​ ​ ​ ​ ​ 4.40 % Net interest margin ​ ​ 6.09 % ​ 4.99 % ​ ​ ​ 4.49 % Deposits (including nonint. demand deposits) ​ $ 1,225,958 ​ $ 8,111 ​ 0.66 % $ 1,075,550 ​ $ 1,643 ​ 0.15 % ​ $ 866,532 ​ $ 825 ​ 0.10 % ​ ​ 56 Table of Contents The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest bearing liabilities for the periods indicated.
LIABILITIES AND EQUITY ​ $ 1,700,590 ​ ​ $ 1,420,978 ​ ​ ​ $ 1,234,377 ​ ​ Net interest income ​ ​ $ 99,929 ​ ​ ​ $ 83,773 ​ ​ ​ ​ $ 59,346 ​ ​ Net interest spread ​ ​ ​ ​ ​ ​ ​ 5.48 % ​ ​ ​ ​ ​ ​ 5.57 % ​ ​ ​ ​ ​ ​ ​ 4.85 % Net interest margin ​ ​ 6.06 % ​ 6.09 % ​ ​ ​ 4.99 % Deposits (including nonint. demand deposits) ​ $ 1,469,048 ​ $ 13,440 ​ 0.91 % $ 1,225,958 ​ $ 8,111 ​ 0.66 % ​ $ 1,075,550 ​ $ 1,643 ​ 0.15 % ​ ​ 56 Table of Contents The following table presents the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest bearing liabilities for the periods indicated.
At December 31, 2023, we had one multifamily loan classified as substandard and placed on nonaccrual totaling $10.9 million, primarily due to the property owners decisions resulting in excessive vacancy in an area where the average vacancy is minimal. Management recently had these properties appraised and noted that no specific reserve was necessary.
At December 31, 2024 and 2023, we had one multifamily loan classified as substandard and placed on nonaccrual totaling $10.9 million, primarily due to the property owners decisions resulting in excessive vacancy in an area where the average vacancy is minimal.
Future changes to the allowance for credit losses may be necessary based on changes in economic, market, or other conditions. Changes to estimates could result in a material change in the allowance for credit losses and charges to 45 Table of Contents provision for credit losses would materially decrease the Company’s net income.
Management expects there to be differences between actual and estimated results. Future changes to the allowance for credit losses may be necessary based on changes in economic, market, or other conditions. Changes to estimates could result in a material change in the allowance for credit losses and charges to provision for credit losses would materially decrease the Company’s net income.
The following table sets forth the maturity of the uninsured certificates of deposit as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ (In thousands) Maturing period: ​ ​ Three months or less ​ $ — Over three months through six months ​ — Over six months through twelve months ​ 16 Over twelve months ​ 106 Total ​ $ 122 ​ Borrowings At December 31, 2023, we had the ability to borrow a total of $284.2 million from the FHLB of New York.
The following table sets forth the maturity of the uninsured certificates of deposit as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ (In thousands) Maturing period: ​ ​ Three months or less ​ $ 6,132 Over three months through six months ​ 614 Over six months through twelve months ​ 78 Over twelve months ​ — Total ​ $ 6,824 ​ Borrowings At December 31, 2024, we had the ability to borrow a total of $431.7 million from the FHLB of New York.
Our total assets were $1.6 billion at December 31, 2023, an increase of $221.2 million from $1.4 billion at December 31, 2022. The increase was primarily due to growth in our loan portfolio and securities available-for-sale, offset by decreases in reverse repurchase agreements. Loan Portfolio Analysis.
Our total assets were $1.89 billion at December 31, 2024, an increase of $275.6 million from $1.62 billion at December 31, 2023. The increase was primarily due to growth in our loan portfolio and securities available-for-sale, offset by decreases in cash and cash equivalents. Loan Portfolio Analysis.
Securities available-for-sale totaled $122.1 million at December 31, 2023, as compared to $109.3 million at December 31, 2022. Securities held-to-maturity totaled $77.0 million at December 31, 2023, as compared to $78.4 million at December 31, 2022. 53 Table of Contents Management evaluates securities available-for-sale in unrealized loss positions to determine whether the impairment is due to credit-related factors.
Securities held-to-maturity totaled $68.7 million at December 31, 2024, as compared to $77.0 million at December 31, 2023, due to paydowns and portfolio amortization. 53 Table of Contents Management evaluates securities available-for-sale in unrealized loss positions to determine whether the impairment is due to credit-related factors.
There were no loans on nonaccrual at December 31, 2022. 50 Table of Contents The following table sets forth information regarding our nonperforming assets at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ (Dollars in thousands) Nonaccrual loans: ​ ​ Multifamily ​ $ 10,940 ​ $ — ​ Commercial real estate ​ — ​ — ​ 1 – 4 family ​ ​ — ​ ​ — ​ Commercial ​ — ​ — ​ Consumer ​ — ​ 4 ​ Total nonaccrual loans ​ ​ 10,940 ​ ​ 4 ​ Other real estate owned ​ — ​ — ​ Loans past due 90 days and still accruing ​ 69 ​ — ​ Total nonperforming assets ​ $ 11,009 ​ $ 4 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans held for investment (1) ​ $ 1,207,413 ​ $ 947,295 ​ Total assets ​ $ 1,616,876 ​ $ 1,395,639 ​ Allowance for credit losses ​ $ 16,631 ​ $ 12,223 ​ Total nonaccrual loans to total loans ​ 0.91 % 0.00 % Total nonperforming assets to total assets ​ 0.68 % 0.00 % Allowance for credit losses to nonaccrual loans ​ 152 % NM ​ Allowance for credit losses to nonperforming loans ​ 152 % NM ​ Allowance for credit losses to total loans at end of the period (1) ​ 1.38 % 1.29 % (1) Loans are presented before the allowance for credit losses and include net deferred loan fees and unearned premiums.
Management recently had these properties appraised and noted that no specific reserve was necessary. 50 Table of Contents The following table sets forth information regarding our nonperforming assets at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ (Dollars in thousands) Nonaccrual loans: ​ ​ Multifamily ​ $ 10,940 ​ $ 10,940 ​ Commercial real estate ​ — ​ — ​ 1 – 4 family ​ ​ — ​ ​ — ​ Commercial ​ — ​ — ​ Consumer ​ — ​ — ​ Total nonaccrual loans ​ ​ 10,940 ​ ​ 10,940 ​ Other real estate owned ​ — ​ — ​ Loans past due 90 days and still accruing ​ — ​ 69 ​ Total nonperforming assets ​ $ 10,940 ​ $ 11,009 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans held for investment (1) ​ $ 1,397,021 ​ $ 1,207,413 ​ Total assets ​ $ 1,892,503 ​ $ 1,616,876 ​ Allowance for credit losses ​ $ 20,979 ​ $ 16,631 ​ Total nonaccrual loans to total loans ​ 0.78 % 0.91 % Total nonperforming assets to total assets ​ 0.58 % 0.68 % Allowance for credit losses to nonaccrual loans ​ 192 % 152 % Allowance for credit losses to nonperforming loans ​ 192 % 152 % Allowance for credit losses to total loans at end of the period (1) ​ 1.50 % 1.38 % (1) Loans are presented before the allowance for credit losses and include net deferred loan fees and unearned premiums.
The 52 Table of Contents allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ Percent of Percent of ​ ​ Percent of Percent of ​ ​ ​ ​ ​ Allowance ​ Loans in ​ ​ ​ ​ Allowance ​ Loans in ​ ​ ​ ​ ​ ​ for Credit ​ Each ​ ​ ​ ​ for Credit ​ Each ​ ​ ​ Allowance ​ Losses to ​ Category ​ Allowance ​ Losses to ​ Category ​ ​ ​ for Credit ​ Total ​ to Total ​ for Credit ​ Total ​ to Total ​ ​ ​ Losses ​ Allowance ​ Loans ​ Losses ​ Allowance ​ Loans ​ ​ ​ (Dollars in thousands) Multifamily ​ $ 3,236 19.5 % 28.8 % $ 2,017 16.5 % 27.7 % Commercial real estate ​ 823 4.9 7.4 ​ 1,022 8.4 9.7 ​ 1 – 4 family ​ ​ 58 0.3 ​ 1.5 ​ ​ 192 1.6 ​ 2.7 ​ Commercial ​ ​ 12,056 72.5 ​ 61.1 ​ ​ 8,645 70.7 ​ 58.2 ​ Consumer ​ 458 2.8 1.2 ​ 347 2.8 1.7 ​ Total allocated allowance ​ $ 16,631 100.0 % 100.0 % $ 12,223 100.0 % 100.0 % ​ ​ Loans rated special mention decreased $9.7 million to $4.0 million as of December 31, 2023 from $13.7 million as of December 31, 2022, due primarily to performance improvements and repayments of commercial loans.
The 52 Table of Contents allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ Percent of Percent of ​ ​ Percent of Percent of ​ ​ ​ ​ ​ Allowance ​ Loans in ​ ​ ​ ​ Allowance ​ Loans in ​ ​ ​ ​ ​ ​ for Credit ​ Each ​ ​ ​ ​ for Credit ​ Each ​ ​ ​ Allowance ​ Losses to ​ Category ​ Allowance ​ Losses to ​ Category ​ ​ ​ for Credit ​ Total ​ to Total ​ for Credit ​ Total ​ to Total ​ ​ ​ Losses ​ Allowance ​ Loans ​ Losses ​ Allowance ​ Loans ​ ​ ​ (Dollars in thousands) Multifamily ​ $ 5,116 24.4 % 25.4 % $ 3,236 19.5 % 28.8 % Commercial real estate ​ 691 3.3 6.2 ​ 823 4.9 7.4 ​ 1 – 4 family ​ ​ 52 0.2 ​ 1.1 ​ ​ 58 0.3 ​ 1.5 ​ Commercial ​ ​ 14,283 68.1 ​ 65.9 ​ ​ 12,056 72.5 ​ 61.1 ​ Consumer ​ 837 4.0 1.4 ​ 458 2.8 1.2 ​ Total allocated allowance ​ $ 20,979 100.0 % 100.0 % $ 16,631 100.0 % 100.0 % ​ ​ Loans rated special mention totaled $4.0 million as of December 31, 2024, comparable to the same period in 2023.
We manage our capital to comply with our internal planning targets and regulatory capital standards administered by the OCC and review capital levels on a monthly basis.
We manage our capital to comply with our internal planning targets and regulatory capital standards administered by the OCC and review capital levels on a monthly basis. At December 31, 2024, Esquire Bank was classified as well-capitalized.
We also had a borrowing capacity with the FRB of New York discount window of $58.0 million. At December 31, 2023, we also had $17.5 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No amounts were outstanding on any of the aforementioned lines as of December 31, 2023.
We also had a borrowing capacity with the FRB of New York discount window of $51.4 million. At December 31, 2024, we also had $17.5 million in aggregate unsecured lines of credit with unaffiliated correspondent banks.
No tax-equivalent adjustments have been made as we have no tax exempt investments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ Average ​ ​ Average Average ​ ​ Average Average ​ ​ Average ​ ​ Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ ​ ​ (Dollars in thousands) ​ INTEREST EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ Loans held for investment ​ $ 1,051,903 ​ $ 81,188 7.72 % $ 844,393 ​ $ 54,007 6.40 % ​ $ 717,680 ​ $ 41,545 5.79 % Securities, includes restricted stock ​ 210,776 ​ 5,020 2.38 % 204,501 ​ 4,161 2.03 % ​ 133,958 ​ 2,174 1.62 % Securities purchased under agreements to resell ​ 27,142 ​ 1,526 5.62 % 49,273 ​ 1,251 2.54 % ​ 51,008 ​ 619 1.21 % Interest earning cash and other ​ 85,454 ​ 4,154 4.86 % 91,206 ​ 1,574 1.73 % ​ 70,132 ​ 193 0.28 % Total interest earning assets ​ 1,375,275 ​ 91,888 6.68 % 1,189,373 ​ 60,993 5.13 % ​ 972,778 ​ 44,531 4.58 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST EARNING ASSETS ​ 45,703 ​ ​ 45,004 ​ ​ ​ 37,941 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL AVERAGE ASSETS ​ $ 1,420,978 ​ ​ ​ ​ ​ $ 1,234,377 ​ ​ ​ ​ ​ ​ $ 1,010,719 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW, money market deposits ​ $ 715,004 ​ $ 7,635 1.07 % $ 572,498 ​ $ 1,488 0.26 % ​ $ 439,718 ​ $ 746 0.17 % Time deposits ​ 13,159 ​ 476 3.62 % 17,775 ​ 155 0.87 % ​ 11,152 ​ 79 0.71 % Total deposits ​ 728,163 ​ 8,111 1.11 % 590,273 ​ 1,643 0.28 % ​ 450,870 ​ 825 0.18 % Borrowings ​ 46 ​ 4 8.70 % 75 ​ 4 5.33 % ​ 78 ​ 3 3.85 % Total interest bearing liabilities ​ 728,209 ​ 8,115 1.11 % ​ 590,348 ​ 1,647 0.28 % ​ 450,948 ​ 828 0.18 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 497,795 ​ ​ 485,277 ​ ​ ​ 415,662 ​ ​ Other liabilities ​ 18,210 ​ ​ 12,043 ​ ​ ​ 10,491 ​ ​ Total noninterest bearing liabilities ​ 516,005 ​ ​ 497,320 ​ ​ ​ 426,153 ​ ​ Stockholders' equity ​ 176,764 ​ ​ 146,709 ​ ​ ​ 133,618 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL AVG.
No tax-equivalent adjustments have been made as we have no tax exempt investments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ Average ​ ​ Average Average ​ ​ Average Average ​ ​ Average ​ ​ Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ ​ ​ (Dollars in thousands) ​ INTEREST EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ Loans held for investment ​ $ 1,258,914 ​ $ 98,458 7.82 % $ 1,051,903 ​ $ 81,188 7.72 % ​ $ 844,393 ​ $ 54,007 6.40 % Securities, includes restricted stock ​ 265,714 ​ 8,636 3.25 % 210,776 ​ 5,020 2.38 % ​ 204,501 ​ 4,161 2.03 % Securities purchased under agreements to resell ​ — ​ — — ​ 27,142 ​ 1,526 5.62 % ​ 49,273 ​ 1,251 2.54 % Interest earning cash and other ​ 123,805 ​ 6,279 5.07 % 85,454 ​ 4,154 4.86 % ​ 91,206 ​ 1,574 1.73 % Total interest earning assets ​ 1,648,433 ​ 113,373 6.88 % 1,375,275 ​ 91,888 6.68 % ​ 1,189,373 ​ 60,993 5.13 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST EARNING ASSETS ​ 52,157 ​ ​ 45,703 ​ ​ ​ 45,004 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL AVERAGE ASSETS ​ $ 1,700,590 ​ ​ ​ ​ ​ $ 1,420,978 ​ ​ ​ ​ ​ ​ $ 1,234,377 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW, money market deposits ​ $ 945,899 ​ $ 12,889 1.36 % $ 715,004 ​ $ 7,635 1.07 % ​ $ 572,498 ​ $ 1,488 0.26 % Time deposits ​ 12,281 ​ 551 4.49 % 13,159 ​ 476 3.62 % ​ 17,775 ​ 155 0.87 % Total deposits ​ 958,180 ​ 13,440 1.40 % 728,163 ​ 8,111 1.11 % ​ 590,273 ​ 1,643 0.28 % Borrowings ​ 44 ​ 4 9.09 % 46 ​ 4 8.70 % ​ 75 ​ 4 5.33 % Total interest bearing liabilities ​ 958,224 ​ 13,444 1.40 % ​ 728,209 ​ 8,115 1.11 % ​ 590,348 ​ 1,647 0.28 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NONINTEREST BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 510,868 ​ ​ 497,795 ​ ​ ​ 485,277 ​ ​ Other liabilities ​ 14,755 ​ ​ 18,210 ​ ​ ​ 12,043 ​ ​ Total noninterest bearing liabilities ​ 525,623 ​ ​ 516,005 ​ ​ ​ 497,320 ​ ​ Stockholders' equity ​ 216,743 ​ ​ 176,764 ​ ​ ​ 146,709 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL AVG.
We recorded income tax expense of $10.3 million for the year ended December 31, 2022, reflecting an effective tax rate of 26.5%, compared to $4.8 million, or an effective tax rate of 21.1%, for the year ended December 31, 2021.
Income Tax Expense. We recorded income tax expense of $14.9 million for the year ended December 31, 2023, reflecting an effective tax rate of 26.6%, compared to $10.3 million, or an effective tax rate of 26.5%, for the year ended December 31, 2022. Management of Market Risk General.
We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $69.3 million and $416.8 million, respectively, at December 31, 2023. Litigation-Related post-settlement consumer loans held for investment decreased $280 thousand to $2.4 million as of December 31, 2023, from $2.7 million as of December 31, 2022. Loan Maturity.
We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $85.0 million and $580.3 million, respectively, at December 31, 2024. Litigation-Related post-settlement consumer loans increased $310 thousand to $2.7 million as of December 31, 2024, from $2.4 million as of December 31, 2023. 49 Table of Contents Loan Maturity.
Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2023 and 2022, cash and cash equivalents totaled $165.2 million and $164.1 million, respectively.
Excess liquid assets are invested generally in interest earning deposits and short-and intermediate-term securities. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2024 and 2023, cash and cash equivalents totaled $126.3 million and $165.2 million, respectively.
We use an interest rate risk simulation model to test the interest rate sensitivity of net interest income and the balance sheet. Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin.
Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin.
Changes attributable to both volume and rate are allocated ratably between the volume and rate categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ December 31, ​ 2023 vs. 2022 ​ Increase Total ​ (Decrease) due to ​ Increase ​ Volume Rate (Decrease) ​ (In thousands) Interest earned on: ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment ​ $ 16,455 ​ $ 10,726 ​ $ 27,181 Securities, includes restricted stock ​ 131 ​ 728 ​ 859 Securities purchased under agreements to resell ​ (746) ​ 1,021 ​ 275 Interest earning cash and other ​ (105) ​ 2,685 ​ 2,580 Total interest income ​ 15,735 ​ 15,160 ​ 30,895 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid on: ​ ​ ​ Savings, NOW, money market deposits ​ 591 ​ 5,556 ​ 6,147 Time deposits ​ (50) ​ 371 ​ 321 Total deposits ​ 541 ​ 5,927 ​ 6,468 Borrowings ​ (2) ​ 2 ​ — Total interest expense ​ 539 ​ 5,929 ​ 6,468 Change in net interest income ​ $ 15,196 ​ $ 9,231 ​ $ 24,427 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ ​ 2022 vs. 2021 ​ ​ Increase ​ ​ Total ​ ​ (Decrease) due to ​ ​ Increase ​ Volume Rate ​ (Decrease) ​ ​ (In thousands) Interest earned on: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment ​ $ 7,818 ​ $ 4,644 $ 12,462 Securities, includes restricted stock ​ 1,341 ​ ​ 646 ​ 1,987 Securities purchased under agreements to resell ​ (22) ​ ​ 654 ​ 632 Interest earning cash and other ​ 74 ​ ​ 1,307 ​ 1,381 Total interest income ​ 9,211 ​ ​ 7,251 ​ 16,462 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid on: ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW, money market deposits ​ 269 ​ ​ 473 ​ 742 Time deposits ​ 55 ​ ​ 21 ​ 76 Total deposits ​ 324 ​ ​ 494 ​ 818 Borrowings ​ — ​ ​ 1 ​ 1 Total interest expense ​ 324 ​ 495 819 Change in net interest income ​ $ 8,887 ​ $ 6,756 $ 15,643 ​ ​ 57 Table of Contents Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 General.
Changes attributable to both volume and rate are allocated ratably between the volume and rate categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ December 31, ​ 2024 vs. 2023 ​ Increase Total ​ (Decrease) due to ​ Increase ​ Volume Rate (Decrease) ​ (In thousands) Interest earned on: ​ ​ ​ ​ ​ ​ ​ Loans held for investment $ 16,682 ​ $ 588 ​ $ 17,270 Securities, includes restricted stock 1,507 ​ 2,109 ​ 3,616 Securities purchased under agreements to resell (1,526) ​ — ​ (1,526) Interest earning cash and other 1,938 ​ 187 ​ 2,125 Total interest income 18,601 ​ 2,884 ​ 21,485 ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid on: ​ ​ Savings, NOW, money market deposits 2,002 ​ 3,252 ​ 5,254 Time deposits (33) ​ 108 ​ 75 Total deposits 1,969 ​ 3,360 ​ 5,329 Borrowings — ​ — ​ — Total interest expense 1,969 ​ 3,360 ​ 5,329 Change in net interest income $ 16,632 ​ $ (476) ​ $ 16,156 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ ​ 2023 vs. 2022 ​ ​ Increase ​ ​ Total ​ ​ (Decrease) due to ​ ​ Increase ​ Volume Rate ​ (Decrease) ​ ​ (In thousands) Interest earned on: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans held for investment ​ $ 16,455 ​ $ 10,726 $ 27,181 Securities, includes restricted stock ​ 131 ​ ​ 728 ​ 859 Securities purchased under agreements to resell ​ (746) ​ ​ 1,021 ​ 275 Interest earning cash and other ​ (105) ​ ​ 2,685 ​ 2,580 Total interest income ​ 15,735 ​ ​ 15,160 ​ 30,895 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid on: ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW, money market deposits ​ 591 ​ ​ 5,556 ​ 6,147 Time deposits ​ (50) ​ ​ 371 ​ 321 Total deposits ​ 541 ​ ​ 5,927 ​ 6,468 Borrowings ​ (2) ​ ​ 2 ​ — Total interest expense ​ 539 ​ 5,929 6,468 Change in net interest income ​ $ 15,196 ​ $ 9,231 $ 24,427 ​ ​ 57 Table of Contents Comparison of Operating Results for the Years Ended December 31, 2024 and 2023 General.
Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies, the litigation market and actions of regulatory authorities. Critical Accounting Estimates A summary of our accounting policies is described in Note 1 to the Consolidated Financial Statements included in this annual report.
Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies, the litigation market and actions of regulatory authorities.
Loans rated substandard increased $10.2 million to $10.9 million as of December 31, 2023, from $721 thousand at December 31, 2022, driven by one nonaccrual multifamily loan. Our special mention and substandard loans as a percentage of loans was 0.3% and 0.9% as of December 31, 2023, respectively, and 1.4% and 0.1% as of December 31, 2022, respectively.
Loans rated substandard totaled $10.9 million as of December 31, 2024, comparable to the same period in 2023, driven by one nonaccrual multifamily loan. Our special mention and substandard loans as a percentage of loans was 0.3% and 0.8% as of December 31, 2024, respectively, and 0.3% and 0.9% as of December 31, 2023, respectively.
The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ Amount Percent Amount Percent ​ ​ (Dollars in thousands) Real estate: ​ ​ Multifamily ​ $ 348,241 28.8 % $ 262,489 27.7 % Commercial real estate ​ 89,498 7.4 ​ 91,837 9.7 ​ 1 – 4 family ​ ​ 17,937 1.5 ​ ​ 25,565 2.7 ​ Total real estate ​ 455,676 37.7 ​ 379,891 40.1 ​ Commercial ​ 737,914 61.1 ​ 552,082 58.2 ​ Consumer ​ 14,491 1.2 ​ 16,580 1.7 ​ Total loans held for investment ​ $ 1,208,081 100.0 % $ 948,553 100.0 % Deferred loan fees and unearned premiums, net ​ (668) ​ (1,258) ​ Allowance for credit losses ​ (16,631) ​ (12,223) ​ Loans held for investment, net ​ $ 1,190,782 ​ $ 935,072 ​ ​ ​ 48 Table of Contents The following table sets forth the composition of our held for investment Litigation-Related Loan portfolio by type of loan at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 ​ ​ 2022 ​ ​ Amount Percent Amount Percent ​ ​ (Dollars in thousands) Litigation-Related Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Litigation-Related: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Working capital lines of credit ​ $ 373,338 ​ 60.7 % ​ $ 254,960 ​ 54.5 % Case cost lines of credit ​ ​ 152,165 ​ 24.8 ​ ​ ​ 130,290 ​ 27.9 ​ Term loans ​ ​ 86,954 ​ 14.1 ​ ​ ​ 79,425 ​ 17.0 ​ Total Commercial Litigation-Related ​ ​ 612,457 ​ 99.6 ​ ​ ​ 464,675 ​ 99.4 ​ Consumer Litigation-Related: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post-settlement consumer loans ​ ​ 2,406 ​ 0.4 ​ ​ ​ 2,653 ​ 0.6 ​ Structured settlement loans ​ ​ 16 ​ — ​ ​ ​ 49 ​ — ​ Total Consumer Litigation-Related ​ ​ 2,422 ​ 0.4 ​ ​ ​ 2,702 ​ 0.6 ​ Total Litigation-Related Loans ​ $ 614,879 ​ 100.0 % ​ $ 467,377 ​ 100.0 % ​ At December 31, 2023, our Litigation-Related Loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $614.9 million, or 50.9% of our total loan portfolio, compared to $467.4 million at December 31, 2022.
The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ Amount Percent Amount Percent ​ ​ (Dollars in thousands) Real estate: ​ ​ Multifamily ​ $ 355,165 25.4 % $ 348,241 28.8 % Commercial real estate ​ 87,038 6.2 ​ 89,498 7.4 ​ 1 – 4 family ​ ​ 14,665 1.1 ​ ​ 17,937 1.5 ​ Total real estate ​ 456,868 32.7 ​ 455,676 37.7 ​ Commercial ​ 920,567 65.9 ​ 737,914 61.1 ​ Consumer ​ 19,339 1.4 ​ 14,491 1.2 ​ Total loans held for investment ​ $ 1,396,774 100.0 % $ 1,208,081 100.0 % Deferred loan fees and unearned premiums, net ​ 247 ​ (668) ​ Allowance for credit losses ​ (20,979) ​ (16,631) ​ Loans held for investment, net ​ $ 1,376,042 ​ $ 1,190,782 ​ ​ The following table sets forth the composition of our held for investment Litigation-Related Loan portfolio by type of loan at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ ​ 2023 ​ ​ Amount Percent Amount Percent ​ ​ (Dollars in thousands) Litigation-Related Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Litigation-Related: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Working capital lines of credit ​ $ 531,574 ​ 63.4 % ​ $ 373,338 ​ 60.7 % Case cost lines of credit ​ ​ 185,204 ​ 22.1 ​ ​ ​ 152,165 ​ 24.8 ​ Term loans ​ ​ 119,061 ​ 14.2 ​ ​ ​ 86,954 ​ 14.1 ​ Total Commercial Litigation-Related ​ ​ 835,839 ​ 99.7 ​ ​ ​ 612,457 ​ 99.6 ​ Consumer Litigation-Related: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post-settlement consumer loans ​ ​ 2,716 ​ 0.3 ​ ​ ​ 2,406 ​ 0.4 ​ Structured settlement loans ​ ​ — ​ — ​ ​ ​ 16 ​ — ​ Total Consumer Litigation-Related ​ ​ 2,716 ​ 0.3 ​ ​ ​ 2,422 ​ 0.4 ​ Total Litigation-Related Loans ​ $ 838,555 ​ 100.0 % ​ $ 614,879 ​ 100.0 % ​ At December 31, 2024, our Litigation-Related Loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $838.6 million, or 60.0% of our total loan portfolio, compared to $614.9 million at December 31, 2023.
Data processing costs increased due to increased processing volume, primarily driven by our core banking platform, and additional costs related to our technology implementations. Occupancy and equipment costs increased primarily due to amortization of our investments in internally developed software to support our new digital platform and additional office space to support our continued growth.
Data processing costs increased due to increases in core banking processing volumes and additional costs related to enhanced risk management systems and other technology implementations. Occupancy and equipment costs increased due to amortization of internally developed software to support our digital marketing and risk management platforms and additional office space to support growth.
Net income increased $10.6 million or 59.1%, to $28.5 million for the year ended December 31, 2022 from $17.9 million for the year ended December 31, 2021. The increase resulted from a $15.6 million increase in net interest income and a $3.9 million increase in noninterest income, partially offset by an increase in noninterest expense of $6.9 million.
Net income increased $2.6 million, or 6.5%, to $43.7 million for the year ended December 31, 2024 from $41.0 million for the year ended December 31, 2023. The increase resulted from a $16.2 million increase in net interest income, partially offset by an increase in noninterest expense of $7.7 million and a decrease in noninterest income of $4.9 million.
Interest income increased $16.5 million, or 37.0%, to $61.0 million for the year ended December 31, 2022 from $44.5 million for the year ended December 31, 2021 and was attributable to an increase in loan, securities, interest earning cash and other and reverse repurchase interest income.
Interest income increased $21.5 million, or 23.4%, to $113.4 million for the year ended December 31, 2024 from $91.9 million for the year ended December 31, 2023 and was attributable to an increase in loan, securities, interest earning cash and other.
Net Interest Income. Net interest income increased $15.6 million, or 35.8%, to $59.3 million for the year ended December 31, 2022 from $43.7 million for the year ended December 31, 2021, due to a $16.5 million increase in interest income, partially offset by a $819 thousand increase in interest expense.
Net Interest Income. Net interest income increased $16.2 million, or 19.3%, to $99.9 million for the year ended December 31, 2024 from $83.8 million for the year ended December 31, 2023, due to a $21.5 million increase in interest income, partially offset by a $5.3 million increase in interest expense.
We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest earning deposits and short-and intermediate-term securities.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. 64 Table of Contents We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program.
We do not typically enter into derivative contracts for the purpose of managing interest rate risk, but we may do so in the future. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets. Net Interest Income Simulation.
Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets. Net Interest Income Simulation. We use an interest rate risk simulation model to test the interest rate sensitivity of net interest income and the balance sheet.
When applying this critical accounting estimate, management’s inputs and estimates of the timing and amounts of future losses are subject to significant judgment as these projected cash flows rely upon factors that depend on current or expected future conditions. Management expects there to be differences between actual and estimated results.
As of December 31, 2024, there was one multifamily loan totaling $10.9 million that was individually analyzed and collateral dependent on the Consolidated Statements of Financial Condition. 45 Table of Contents When applying this critical accounting estimate, management’s inputs and estimates of the timing and amounts of future losses are subject to significant judgment as these projected cash flows rely upon factors that depend on current or expected future conditions.
At December 31, 2023, through pledging of our securities and certain loans, we had the ability to borrow a total of $284.2 million from the FHLB of New York and had a borrowing capacity with the FRB of New York discount window of $58.0 million.
At December 31, 2024, through pledging of our securities and certain loans, we had the ability to borrow a total of $431.7 million from the FHLB of New York and $54.9 million from the FRB of New York discount window. At December 31, 2024, we also had $17.5 million in aggregated unsecured lines of credit with unaffiliated correspondent banks.
The average balances are daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments.
Interest income on loans includes the effects of net premium amortization and net deferred loan origination fees accounted for as yield adjustments.
This increase was attributable to a 145 basis point increase in yields driven by the movement in short-term interest rates. 60 Table of Contents Securities purchased under agreements to resell interest income increased $632 thousand to $1.3 million for the year ended December 31, 2022 from $619 thousand for the year ended December 31, 2021.
Interest earning cash and other interest income increased $2.1 million, to $6.3 million for the year ended December 31, 2024 from $4.2 million for the year ended December 31, 2023. This increase was attributable to a 21 basis point increase in yields driven by the movement in short-term interest rates.
As of December 31, 2022, the aggregate amount of uninsured deposits was $310.4 million, or 25.3%, of our total Bank deposits of $1.2 billion, excluding $10.5 million of the Company’s deposits held by the Bank.
As of December 31, 2024, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000) was $463.9 million, or 28.2%, of our total Bank deposits of $1.64 billion, excluding $12.4 million of the Company’s deposits held by the Bank.
No tax-equivalent yield adjustments have been made as we have no tax free interest earning assets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ More Than One Year ​ More Than Five Years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One Year or Less ​ through Five Years ​ Through Ten Years ​ More Than Ten Years ​ Total ​ ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ ​ (Dollars in thousands) Securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage backed securities-agency ​ $ — — % $ 4,591 3.07 % $ 3,137 2.04 % $ 99,668 1.84 % $ 107,396 1.90 % Collateralized mortgage obligations-agency ​ — — ​ — — ​ 1,964 2.41 ​ 31,002 4.14 ​ 32,966 4.04 ​ Total securities available-for-sale ​ $ — — % $ 4,591 3.07 % $ 5,101 2.18 % $ 130,670 2.39 % $ 140,362 2.40 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateralized mortgage obligations-agency ​ $ — — % $ — — % $ — — % $ 77,001 3.07 % $ 77,001 3.07 % Total securities held-to-maturity ​ $ — — % $ — — % $ — — % $ 77,001 3.07 % $ 77,001 3.07 % ​ Deposits Total deposits increased $179.1 million, or 14.6%, to $1.4 billion at December 31, 2023 from $1.2 billion at December 31, 2022.
No tax-equivalent yield adjustments have been made as we have no tax free interest earning assets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ ​ ​ ​ More Than One Year ​ More Than Five Years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ One Year or Less ​ through Five Years ​ Through Ten Years ​ More Than Ten Years ​ Total ​ ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Weighted ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ Cost ​ Yield ​ ​ (Dollars in thousands) Securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage backed securities-agency ​ $ — — % $ 4,403 3.23 % $ 5,675 3.57 % $ 92,931 1.89 % $ 103,009 2.04 % Collateralized mortgage obligations-agency ​ — — ​ — — ​ 1,286 2.43 ​ 157,156 5.04 ​ 158,442 5.01 ​ Total securities available-for-sale ​ $ — — % $ 4,403 3.23 % $ 6,961 3.36 % $ 250,087 3.87 % $ 261,451 3.84 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateralized mortgage obligations-agency ​ $ — — % $ — — % $ — — % $ 68,660 3.00 % $ 68,660 3.00 % Total securities held-to-maturity ​ $ — — % $ — — % $ — — % $ 68,660 3.00 % $ 68,660 3.00 % ​ Deposits Total deposits increased $234.9 million, or 16.7%, to $1.64 billion at December 31, 2024 from $1.41 billion at December 31, 2023.
These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values.
These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.
Growth was partially funded by a $69.6 million, or 16.7%, increase in average noninterest bearing demand deposits to $485.3 million for the year ended December 31, 2022 from $415.7 million for the year ended December 31, 2021. Interest Income.
Interest earning asset growth was primarily funded by a $200.1 million, or 33.7%, increase in average IOLTA deposits to $793.7 million for the year ended December 31, 2024 from $593.6 million for the year ended December 31, 2023. Interest Income.
Loan interest income increased $12.5 million, or 30.0%, to $54.0 million for the year ended December 31, 2022 from $41.5 million for the year ended December 31, 2021.
Loan interest income increased $17.3 million, or 21.3%, to $98.5 million for the year ended December 31, 2024 from $81.2 million for the year ended December 31, 2023.
At December 31, 2023, we also had $17.5 million in aggregated unsecured lines of credit with unaffiliated correspondent banks. No amounts were outstanding on any of the aforementioned lines as of December 31, 2023. At December 31, 2023, our off-balance sheet sweeps funds totaled $278.0 million, of which, $132.9 million was able to be swept back onto our balance sheet.
No amounts were outstanding on any of the aforementioned lines as of December 31, 2024. At December 31, 2024, our off-balance sheet sweeps funds totaled $554.4 million, of which $424.2 million, or 76.5%, was able to be swept on balance sheet as reciprocal client relationship deposits.
Consumer loans decreased $2.1 million or 12.6%, to $14.5 million at December 31, 2023 from $16.6 million at December 31, 2022. 1 – 4 family loans decreased $7.6 million, or 29.8%, to $17.9 million at December 31, 2023 from $25.6 million at December 31, 2022. Loan Portfolio Composition.
Commercial real estate loans decreased $2.5 million, or 2.7%, to $87.0 million at December 31, 2024 from $89.5 million at December 31, 2023. 1 – 4 family loans decreased $3.3 million, or 18.2%, to $14.7 million at December 31, 2024 from $17.9 million at December 31, 2023.
At December 31, 2023, loans were $1.2 billion, or 74.7% of total assets, compared to $947.3 million, or 67.9% of total assets, at December 31, 2022. Commercial loans increased $185.8 million, or 33.7%, to $737.9 million at December 31, 2023 from $552.1 million at December 31, 2022.
At December 31, 2024, loans were $1.40 billion, or 73.8% of total assets, compared to $1.21 billion, or 74.7% of total assets, at December 31, 2023.
The increase for the year ended December 31, 2023 was primarily due to net income of $41.0 million, amortization of share-based compensation of $3.2 million, and other comprehensive income of $1.9 million, partially offset by dividends declared to common stockholders of $3.9 million. ​ 55 Table of Contents Average Balance Sheets and Related Yields and Rates The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the years ended December 31, 2023, 2022 and 2021.
The increase for the year ended December 31, 2024 was primarily due to net income of $43.7 million and amortization of share-based compensation of $3.8 million, partially offset by dividends declared to common stockholders of $5.0 million, shares received related to tax withholding of $3.4 million, and other comprehensive loss of $1.1 million.
The increase in net interest margin was due to a 55 basis point increase in interest earning asset yields, offset by an increase in the cost of interest bearing liabilities of 10 basis points, primarily due to growth in higher yielding variable rate commercial loans and increases in short-term interest rates.
Interest earning asset yields increased 20 basis points, primarily due to growth in higher yielding variable rate commercials loans and the cost of interest bearing liabilities increased 29 basis points, due to increases in short-term interest rates as well as management proactively increasing rates on IOLTA accounts in certain states where we operate.
The following table presents the estimated changes in EVE of Esquire Bank, National Association, calculated on a bank-only basis, that would result from changes in market interest rates as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 Changes in ​ Economic ​ ​ ​ Interest Rates ​ Value of ​ ​ ​ (Basis Points) Equity ​ Change ​ ​ (Dollars in thousands) 300 ​ $ 336,844 ​ $ 39,064 200 ​ ​ 325,955 ​ ​ 28,175 100 ​ ​ 313,415 ​ ​ 15,635 0 ​ ​ 297,780 ​ ​ — -100 ​ ​ 279,279 ​ ​ (18,501) -200 ​ ​ 258,384 ​ ​ (39,396) -300 ​ ​ 233,221 ​ ​ (64,559) ​ 63 Table of Contents Many assumptions are used to calculate the impact of interest rate fluctuations.
The following table presents the estimated changes in EVE of Esquire Bank, National Association, calculated on a bank-only basis, that would result from changes in market interest rates as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 Changes in ​ Economic ​ ​ ​ Interest Rates ​ Value of ​ ​ ​ (Basis Points) Equity ​ Change ​ ​ (Dollars in thousands) 300 ​ $ 447,969 ​ $ 47,121 200 ​ ​ 434,630 ​ ​ 33,782 100 ​ ​ 418,066 ​ ​ 17,218 0 ​ ​ 400,848 ​ ​ — -100 ​ ​ 376,828 ​ ​ (24,020) -200 ​ ​ 345,119 ​ ​ (55,729) -300 ​ ​ 307,948 ​ ​ (92,900) ​ Many assumptions are used to calculate the impact of interest rate fluctuations.
Securities interest income increased $2.0 million, or 91.4%, to $4.2 million for the year ended December 31, 2022 from $2.2 million for the year ended December 31, 2021.
Securities purchased under agreements to resell interest income decreased $1.5 million, or 100.0%, to $0 for the year ended December 31, 2024 from $1.5 million for the year ended December 31, 2023.
Certificates of deposit totaled $7.8 million at December 31, 2023, or 0.6% of total deposits at that date. 54 Table of Contents The following tables set forth the distribution of average deposits by account type at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ Average ​ ​ ​ Average ​ Average ​ Average ​ Balance Percent Cost ​ Balance ​ Percent ​ Cost ​ ​ ​ (Dollars in thousands) ​ Demand (noninterest bearing) ​ $ 497,795 40.61 % 0.00 % ​ $ 485,277 45.12 % 0.00 % Savings, NOW and Money Market ​ 715,004 58.32 ​ 1.07 ​ ​ 572,498 53.23 ​ 0.26 ​ Time ​ 13,159 1.07 ​ 3.62 ​ ​ 17,775 1.65 ​ 0.87 ​ Total deposits ​ $ 1,225,958 100.00 % 0.66 % ​ $ 1,075,550 100.00 % 0.15 % ​ As of December 31, 2023, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000) was $381.6 million, or 27.1%, of our total Bank deposits of $1.4 billion, excluding $5.5 million of the Company’s deposits held by the Bank.
Certificates of deposit totaled $14.1 million at December 31, 2024, or 0.9% of total deposits at that date. 54 Table of Contents The following tables set forth the distribution of average deposits by account type at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ Average ​ ​ ​ Average ​ Average ​ Average ​ Balance Percent Cost ​ Balance ​ Percent ​ Cost ​ ​ ​ (Dollars in thousands) ​ Demand (noninterest bearing) ​ $ 510,868 34.78 % 0.00 % ​ $ 497,795 40.61 % 0.00 % Savings, NOW and Money Market ​ 945,899 64.39 ​ 1.36 ​ ​ 715,004 58.32 ​ 1.07 ​ Time ​ 12,281 0.84 ​ 4.49 ​ ​ 13,159 1.07 ​ 3.62 ​ Total deposits ​ $ 1,469,048 100.00 % 0.91 % ​ $ 1,225,958 100.00 % 0.66 % ​ Our deposit strategy primarily focuses on developing full service branchless commercial banking relationships nationally with our clients through commercial lending facilities, payment processing, and other unique commercial cash management services in our two national verticals, rather than competing with other institutions on rate.
Advertising and marketing costs increased as we continued to grow our digital marketing platform and expand our thought leadership in our national verticals. Hiring related costs increased as we continue to invest in our future.
Advertising and marketing costs increased as we continued to advance our digital marketing platform across our commercial litigation platform nationally, expand our thought leadership in this national vertical, and directly support our regional BDOs with targeted ABM campaigns.
Commercial real estate loans decreased $2.3 million, or 2.5%, to $89.5 million at December 31, 2023 from $91.8 million at December 31, 2022. Multifamily loans increased $85.8 million, or 32.7%, to $348.2 million at December 31, 2023 from $262.5 million at December 31, 2022.
Multifamily loans increased $6.9 million, or 2.0%, to $355.2 million at December 31, 2024 from $348.2 million at December 31, 2023. Consumer loans increased $4.8 million or 33.5%, to $19.3 million at December 31, 2024 from $14.5 million at December 31, 2023.
The 2022 provision was general reserve driven considering loan growth and qualitative factors associated with the current uncertain economic environment. Noninterest Income.
This increase was general reserve driven considering loan growth and qualitative factors associated with the current short-term interest rate environment as well as the current uncertain economic environment including, but not limited to, its potential impact on the New York metro multifamily commercial real estate market. Noninterest Income.
Our provision for loan losses was $3.5 million for the year ended December 31, 2022 compared to $7.0 million for the year ended December 31, 2021. This decrease was due to the charge recognized in 2021 on our legacy NFL consumer post settlement loan portfolio.
Our provision for credit losses was $4.7 million for the year ended December 31, 2024 compared to $4.5 million for the year ended December 31, 2023.
Noninterest expense information is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2022 2021 Amount Percent ​ ​ (Dollars in thousands) Noninterest expense: ​ ​ ​ ​ Employee compensation and benefits ​ $ 25,774 ​ $ 21,741 ​ $ 4,033 ​ 18.6 % Occupancy and equipment ​ 3,236 ​ ​ 2,808 ​ 428 ​ 15.2 ​ Professional and consulting services ​ 3,376 ​ ​ 2,922 ​ 454 ​ 15.5 ​ FDIC and regulatory assessments ​ 558 ​ ​ 447 ​ 111 ​ 24.8 ​ Advertising and marketing ​ 1,462 ​ ​ 1,174 ​ 288 ​ 24.5 ​ Travel and business relations ​ 566 ​ ​ 327 ​ 239 ​ 73.1 ​ Data processing ​ 4,222 ​ ​ 3,671 ​ 551 ​ 15.0 ​ Other operating expenses ​ 2,786 ​ ​ 1,974 ​ 812 ​ 41.1 ​ Total noninterest expense ​ $ 41,980 ​ $ 35,064 ​ $ 6,916 ​ 19.7 % ​ Employee compensation and benefits costs increased due to increases in staff and officer level employees to support growth, continued investment in digital platforms and related sales/marketing divisions, and the impact of salary, bonus and stock-based compensation increases.
Noninterest expense information is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2024 2023 Amount Percent ​ ​ (Dollars in thousands) ​ Noninterest expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee compensation and benefits ​ $ 37,845 ​ $ 32,481 ​ $ 5,364 ​ 16.5 % Occupancy and equipment ​ ​ 4,093 ​ ​ 3,363 ​ ​ 730 ​ 21.7 ​ Professional and consulting services ​ ​ 3,824 ​ ​ 5,447 ​ ​ (1,623) ​ (29.8) ​ FDIC and regulatory assessments ​ ​ 943 ​ ​ 793 ​ ​ 150 ​ 18.9 ​ Advertising and marketing ​ ​ 3,514 ​ ​ 1,823 ​ ​ 1,691 ​ 92.8 ​ Travel and business relations ​ ​ 966 ​ ​ 985 ​ ​ (19) ​ (1.9) ​ Data processing ​ ​ 6,660 ​ ​ 5,165 ​ ​ 1,495 ​ 28.9 ​ Other operating expenses ​ ​ 2,998 ​ ​ 3,060 ​ ​ (62) ​ (2.0) ​ Total noninterest expense ​ $ 60,843 ​ $ 53,117 ​ $ 7,726 ​ 14.5 % ​ Employee compensation and benefits costs increased due to the full year’s impact of key hires (throughout 2023) to support future growth and excellence in client service as well as the impact of year end salary increases, bonuses, incentive pay to BDOs, and stock-based compensation increases.
Stockholders’ Equity Total stockholders’ equity increased $40.4 million, or 25.5%, to $198.6 million at December 31, 2023, from $158.2 million at December 31, 2022.
No amounts were outstanding on any of the aforementioned lines as of December 31, 2024 and December 31, 2023. 55 Table of Contents Stockholders’ Equity Total stockholders’ equity increased $38.5 million, or 19.4%, to $237.1 million at December 31, 2024, from $198.6 million at December 31, 2023.
This increase was attributable to a 41 basis point increase in yields, driven by opportunistic investment of excess liquidity into the securities portfolio, as well as a $70.5 million, or 52.7%, increase in average securities balances at a higher rate.
This increase was attributable to an 87 basis point increase in yields, driven by our investing strategy of deploying excess cash flow into short duration agency mortgage-backed securities while tempering our real estate lending, as well as a $54.9 million, or 26.1%, increase in average securities balances.
The table does not include any estimate of prepayments that could significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 Multifamily Real Estate 1 – 4 Family Commercial Consumer Total ​ ​ (In thousands) Amounts due in: ​ ​ ​ ​ ​ ​ One year or less ​ $ 40,025 ​ $ 5,641 ​ $ 8,131 ​ $ 534,180 ​ $ 2,264 ​ $ 590,241 More than one to five years ​ 240,796 ​ 52,478 ​ 8,573 ​ 177,842 ​ 9,033 ​ 488,722 More than five to fifteen years ​ 67,420 ​ 31,379 ​ 835 ​ 25,892 ​ 3,194 ​ 128,720 More than fifteen years ​ — ​ — ​ 398 ​ — ​ — ​ 398 Total ​ $ 348,241 ​ $ 89,498 ​ $ 17,937 ​ $ 737,914 ​ $ 14,491 ​ $ 1,208,081 ​ 49 Table of Contents The following table sets forth fixed and adjustable-rate held for investment loans at December 31, 2023 that are contractually due after December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due After December 31, 2024 ​ Fixed Adjustable Total ​ ​ (In thousands) Real estate: ​ ​ ​ Multifamily ​ $ 285,389 ​ $ 22,827 ​ $ 308,216 Commercial real estate ​ 70,916 ​ 12,941 ​ 83,857 1 – 4 family ​ ​ 9,770 ​ ​ 36 ​ ​ 9,806 Commercial ​ 14,342 ​ 189,392 ​ 203,734 Consumer ​ 6,933 ​ 5,294 ​ 12,227 Total ​ $ 387,350 ​ $ 230,490 ​ $ 617,840 ​ At December 31, 2023, substantially all of our $737.9 million commercial loans are variable rate and tied to prime, comprising approximately 61% of our loan portfolio.
The table does not include any estimate of prepayments that could significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 Multifamily Real Estate 1 – 4 Family Commercial Consumer Total ​ ​ (In thousands) Amounts due in: ​ ​ ​ ​ ​ ​ One year or less ​ $ 70,456 ​ $ 1,714 ​ $ 5,927 ​ $ 609,524 ​ $ 6,286 ​ $ 693,907 More than one to five years ​ 212,637 ​ 84,942 ​ 7,595 ​ 277,383 ​ 13,053 ​ 595,610 More than five to fifteen years ​ 72,072 ​ 382 ​ 755 ​ 33,660 ​ — ​ 106,869 More than fifteen years ​ — ​ — ​ 388 ​ — ​ — ​ 388 Total ​ $ 355,165 ​ $ 87,038 ​ $ 14,665 ​ $ 920,567 ​ $ 19,339 ​ $ 1,396,774 ​ The following table sets forth fixed and adjustable-rate held for investment loans at December 31, 2024 that are contractually due after December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due After December 31, 2025 ​ Fixed Adjustable Total ​ ​ (In thousands) Real estate: ​ ​ ​ Multifamily ​ $ 262,987 ​ $ 21,722 ​ $ 284,709 Commercial real estate ​ 77,817 ​ 7,507 ​ 85,324 1 – 4 family ​ ​ 8,711 ​ ​ 27 ​ ​ 8,738 Commercial ​ 53,986 ​ 257,057 ​ 311,043 Consumer ​ 5,041 ​ 8,012 ​ 13,053 Total ​ $ 408,542 ​ $ 294,325 ​ $ 702,867 ​ At December 31, 2024, substantially all of our $920.6 million commercial loans are variable rate and tied to prime, comprising approximately 66% of our loan portfolio.
The following table presents the estimated changes in net interest income of Esquire Bank, National Association, calculated on a bank-only basis, which would result from changes in market interest rates over twelve-month periods beginning December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ ​ Estimated ​ ​ ​ Changes in ​ 12-Months ​ ​ ​ Interest Rates ​ Net Interest ​ ​ ​ (Basis Points) Income ​ Change ​ ​ (Dollars in thousands) 300 ​ $ 106,784 ​ $ 13,221 200 ​ ​ 102,464 ​ ​ 8,901 100 ​ ​ 98,144 ​ ​ 4,581 0 ​ ​ 93,563 ​ ​ — -100 ​ ​ 89,218 ​ ​ (4,345) -200 ​ ​ 84,918 ​ ​ (8,645) -300 ​ ​ 80,776 ​ ​ (12,787) ​ Economic Value of Equity Simulation.
These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows. 63 Table of Contents The following table presents the estimated changes in net interest income of Esquire Bank, National Association, calculated on a bank-only basis, which would result from changes in market interest rates over twelve-month periods beginning December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 ​ ​ Estimated ​ ​ ​ Changes in ​ 12-Months ​ ​ ​ Interest Rates ​ Net Interest ​ ​ ​ (Basis Points) Income ​ Change ​ ​ (Dollars in thousands) 300 ​ $ 138,337 ​ $ 17,833 200 ​ ​ 131,932 ​ ​ 11,428 100 ​ ​ 125,290 ​ ​ 4,786 0 ​ ​ 120,504 ​ ​ — -100 ​ ​ 115,994 ​ ​ (4,510) -200 ​ ​ 110,919 ​ ​ (9,585) -300 ​ ​ 105,406 ​ ​ (15,098) ​ Economic Value of Equity Simulation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk The quantitative and qualitative disclosures about market risk are included under the section of this Annual Report entitled “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Management of Market Risk.” ​ ​ 65 Table of Contents
Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk The quantitative and qualitative disclosures about market risk are included under the section of this Annual Report entitled “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Management of Market Risk.” ​ ​ 66 Table of Contents

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