8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): January 25, 2023

Esquire Financial Holdings, Inc.

(Exact name of the registrant as specified in its charter)

-
Maryland	001-38131	27-5107901
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

100 Jericho Quadrangle, Suite 100
Jericho, New York	11753
(Address of principal executive offices)	(Zip Code)

(516) 535-2002

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ESQ	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02Results of Operations and Financial Condition.

On January 25, 2023, Esquire Financial Holdings, Inc. (the “Company”), the holding company for Esquire Bank, National Association (“Esquire Bank”), issued a press release announcing its earnings for the quarter and year ended December 31, 2022. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

The information contained in this Item 2.02 and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

Item 7.01Regulation FD Disclosure.

Esquire Financial Holdings, Inc. (the “Company”) intends to distribute and make available to investors, and to post on its website, the written presentation attached hereto as Exhibit 99.2. The presentation is furnished in this Current Report on Form 8-K, pursuant to this Item 7.01, as Exhibit 99.2, and is incorporated herein by reference.

The information contained in this Item 7.01 and Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release dated January 25, 2023.
99.2	Written presentation to be distributed and made available to investors and posted on the Company’s website.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	ESQUIRE FINANCIAL HOLDINGS, INC.
Dated:  January 25, 2023	By:/s/ Andrew C. Sagliocca
	Andrew C. Sagliocca
	President and Chief Executive Officer

EX-99

Exhibit 99.1

ESQUIRE FINANCIAL HOLDINGS, INC.

REPORTS FOURTH QUARTER AND FULL YEAR 2022 RESULTS

Record Earnings and Returns Led by Strong Commercial Loan Growth and Industry Leading Net Interest Margin

Jericho, NY – January 25, 2023 – Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the “Company”), the financial holding company for Esquire Bank, National Association (“Esquire Bank”), today announced its operating results for the fourth quarter and full year of 2022. Significant achievements during the quarter and year include:

● On a linked quarter basis, net income increased 18% to $9.1 million, or $1.10 per diluted share, as compared to $7.7 million, or $0.94 per diluted share. For the year ended 2022, net income increased $10.6 million, or 59%, to $28.5 million, or $3.47 per diluted share, when compared to the year ended 2021.  

● Industry leading returns on average assets and equity of 2.80% and 23.89%, respectively, as compared to 2.48% and 20.60% on a linked quarter basis. For the year ended 2022, returns on average assets and equity were 2.31% and 19.44%, respectively, as compared to 1.77% and 13.42% for the year ended 2021.

● Continued expansion of our net interest margin to 5.81% (from 5.18% on a linked quarter basis), primarily driven by a 74 basis point increase in loan yields resulting from variable rate commercial loan growth coupled with increases in short-term interest rates.  

● Our loan portfolio increased $72.2 million on a linked quarter basis, or 33% annualized, to $947.3 million while our loan pipeline remains robust. Our growth was fueled by our national commercial lending platform.

● Continued solid credit metrics, asset quality and reserve coverage ratios with a reserve for loan losses to total loans of 1.29% and nonperforming loans to total loans of 0.00%.

● Deposits increased $40.8 million on a linked quarter basis, or 14% annualized, to $1.2 billion with a cost-of-funds of 0.25% (including demand deposits), as a direct result of our highly efficient branchless and technology enabled deposit platforms. Demand deposits and escrow-based NOW accounts represented 36% and 46% of total deposits, respectively.

● Off-balance sheet sweep funds totaled $432.1 million at quarter end while the associated administrative service payments (“ASP”) fees increased $136 thousand on a linked quarter basis, or 15%, to $1.0 million.

● Strong and consistent payment processing fee income with continued increases in small business clients nationally totaling $5.7 million and 76,000, respectively. Our technology enabled payments platform facilitated the processing of $7.3 billion in credit and debit card payment volume across 140.0 million transactions for our clients. Total fee income represents 27% of total revenue.

● Esquire Bank remains well above the bank regulatory “Well Capitalized” standards.

“We believe that our industry leading performance metrics coupled with proven historical growth trends will continue to create value for our stakeholders beyond our financial sector peers,” stated Tony Coelho, Chairman of the Board of Directors.

“We will continue to build a client centric and tech-focused Company that is disruptive and valuable to the national and local markets we serve while generating best-in-class performance and returns,” stated Andrew C. Sagliocca, Chief Executive Officer and President. “We have a robust pipeline of growth opportunities in our national commercial lending and fee-based payment processing verticals as we continue to expand our branchless technology platforms, product-based solutions, and client service teams in 2023 and beyond.”

Fourth Quarter Earnings

Net income for the quarter ended December 31, 2022 was $9.1 million, or $1.10 per diluted share, compared to $6.7 million, or $0.83 per diluted share for the same period in 2021. Returns on average assets and equity for the current quarter were 2.80% and 23.89%, respectively, compared to 2.44% and 19.19% for the same period of 2021.

Net interest income for the fourth quarter of 2022 increased $6.6 million, or 56.8%, to $18.3 million, due to growth in average interest earning assets totaling $216.3 million, or 20.9%, to $1.3 billion and increases in average yields on interest earning assets when compared to the same period in 2021. Our net interest margin increased to 5.81% in the current quarter as the margin was positively impacted by growth in higher yielding variable rate commercial loans and increases in short-term interest rates. The average yield on loans increased 141 basis points to 7.27%, driven by higher yielding variable rate commercial loan growth (approximately 58% of our portfolio is tied to the prime rate index). Average loans in the quarter increased $146.8 million, or 19.5%, to $900.4 million when compared to the fourth quarter of 2021, primarily attributable to our national commercial lending platform. Our loan-to-deposit ratio was 77.1% as our low-cost deposit base increased $199.8 million, or 19.4%, fueled by demand and escrow deposits. Average securities in the quarter increased $70.7 million to $213.4 million as management opportunistically invested excess liquidity in the securities portfolios, driving average yields up 57 basis points to 2.20% and increasing interest income $601 thousand to $1.2 million in the current quarter. The movement in short-term interest rates increased yields and interest income on our reverse repurchase agreements and interest earning cash balances.

The provision for loan losses was $1.4 million for the fourth quarter of 2022, a $795 thousand increase from the fourth quarter 2021 provision. As of December 31, 2022, our allowance to loans ratio was 1.29% as compared to 1.24% in the trailing quarter ended September 30, 2022. The increase in the allowance as a percentage of loans was general reserve driven considering loan growth and qualitative factors associated with the current uncertain economic environment.

Noninterest income was $6.8 million for the fourth quarter of 2022, a $1.6 million increase from the same period in 2021, driven by increases in payment processing and ASP fees. Payment processing income was $5.7 million for the fourth quarter of 2022, a $749 thousand increase from the same period in 2021. Payment processing volumes and transactions for the credit and debit card processing platform increased $1.0 billion, or 15.9%, to $7.3 billion and 31.1 million, or 28.9%, to 140.0 million transactions, respectively, for the quarter ended December 31, 2022, as compared to the same period in 2021. These increases were due to expansion of sales channels through ISOs, increased number of merchants, volume increases, the reopening of the economy post pandemic and were facilitated by our focus on technology and other resources in the payments vertical. The Company utilizes proprietary and industry leading technology to ensure card brand and regulatory compliance, support multiple processing platforms, manage daily risk across 76,000 small business merchants in all 50 states, and perform commercial treasury clearing services. ASP fee income totaled $1.0 million for the fourth quarter of 2022, which is directly impacted by the average balance of those funds and short-term interest rates.

Noninterest expense increased $2.6 million, or 30.0%, to $11.4 million for the fourth quarter of 2022, as compared to the same period in 2021. This increase was primarily due to increases in employee compensation and benefits, professional services costs, occupancy and equipment, hiring related costs, data processing, and advertising and marketing. Employee compensation and benefits costs increased $1.3 million, or 22.9%, 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. Due to the effects of inflation on the overall economy and consumer prices, we proactively increased our employees’ base salary at year-end in excess of industry and national averages to support employee retention. Professional services costs increased $427 thousand due to continued business development and administration primarily related to our CECL implementation. Occupancy and equipment costs increased $272 thousand due to amortization of our investments in internally developed software to support our digital platform and additional office space to support our growth. Hiring related costs increased $136 thousand as we continue to invest in our future. Data processing costs increased $119 thousand, or 12.7%, due to increased processing volume, primarily driven by our core banking platform, and additional costs related to our technology implementations. Advertising and marketing costs increased $113 thousand, or 47.3%, as we continued to grow our digital marketing platform and expand our thought leadership in our national verticals.

The Company’s efficiency ratio was 45.3% for the three months ended December 31, 2022, as compared to 51.9% in 2021. This significant improvement is a result of industry leading revenue growth driven by our core national platforms. These national platforms have benefited from our investments in technology, digital marketing, employees, and other branchless infrastructure that support our industry leading returns.

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The effective tax rate was 26.5% for the fourth quarter of 2022, as compared to 11.0% for the same period in 2021, due to certain discrete tax benefits related to share-based compensation recognized in the fourth quarter of 2021, specifically, voluntary stock option exercises.

Full Year Earnings

Net income for the year ended December 31, 2022 was $28.5 million, or $3.47 per diluted share, compared to $17.9 million, or $2.26 per diluted share for the same period in 2021. Returns on average assets and equity for the year ended December 31, 2022 were 2.31% and 19.44%, respectively, compared to 1.77% and 13.42% for the same period of 2021.

Net interest income for the year ended December 31, 2022 increased $15.6 million, or 35.8%, to $59.3 million, due to growth in average interest earning assets totaling $216.6 million, or 22.3%, to $1.2 billion and increases in average yields on interest earning assets when compared to the same period in 2021. Our net interest margin increased to 4.99% in the current period as the margin was positively impacted by growth in higher yielding variable rate commercial loans and increases in short-term interest rates. The average yield on loans increased 61 basis points to 6.40% when comparing 2022 to the prior year. Average loans increased $126.7 million, or 17.7%, to $844.4 million when compared to the prior year, driven primarily by growth in the commercial loan portfolio. Average securities increased $70.5 million to $204.5 million as management opportunistically invested excess liquidity in the securities portfolios driving average yields up 41 basis points to 2.03% and increasing interest income $2.0 million to $4.2 million in the current year. The movement in short-term interest rates increased yields and interest income on our reverse repurchase agreements and interest earning cash balances.

The provision for loan losses was $3.5 million for the year ended December 31, 2022, which was a $3.5 million decrease from the 2021 provision of $7.0 million due to the charge recognized in 2021 on our legacy NFL consumer post settlement loan portfolio.

Noninterest income was $24.9 million for the year ended December 31, 2022, a $3.9 million increase from the same period in 2021, driven by increases in payment processing and ASP fees in the current year and offset by net valuation losses of $384 thousand on the NFL portfolio in 2021. Payment processing income increased $1.1 million as compared to the prior year period despite $500 thousand in early termination fees in 2021. Payment processing volumes and transactions for the credit and debit card processing platform increased $4.3 billion, or 18.1%, to $28.0 billion and 103.0 million, or 23.8%, to 536.0 million transactions, respectively, for the year ended December 31, 2022, as compared to the same period in 2021. These increases were driven by expansion of our sales channels through ISOs, increased number of merchants, volume increases and the reopening of the economy post pandemic. ASP fee income increased from $29 thousand in 2021 to $2.5 million in 2022 and is directly impacted by the average balance of those funds and short-term interest rates.

Noninterest expense increased $6.9 million, or 19.7%, to $42.0 million for the year ended 2022, as compared to the same period in 2021. This increase was primarily driven by increases in employee compensation and benefits, professional services costs, data processing, occupancy and equipment, advertising and marketing, hiring related costs and travel and business relations. Employee compensation and benefits costs increased $4.0 million, or 18.6%, 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. Consulting service costs decreased $216 thousand, or 20.6%, partially offsetting the increase in employee compensation and benefits as previously contracted consultants were hired, primarily in our technology development and digital marketing departments. Professional services costs increased $676 thousand due to continued business development and administration primarily related to our CECL implementation and the NFL consumer loan transaction. Data processing costs increased $551 thousand, or 15.0%, 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 $428 thousand, or 15.2%, 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. Advertising and marketing costs increased $288 thousand, or 24.5%, as we continued to grow our digital marketing platform and expand our thought leadership in our national verticals. Hiring related costs increased $272 thousand as we continue to invest in our future. Travel and business relations costs increased $239 thousand as we continued to re-engage in our traditional high touch marketing and sales efforts on a national basis to complement our digital marketing efforts.

The Company’s efficiency ratio was 49.8% for the year ended December 31, 2022, as compared to 54.2% in 2021. This significant improvement is a result of industry leading revenue growth driven by our core national platforms. These national platforms have benefited from our investments in technology, digital marketing, employees, and other branchless infrastructure that support our industry leading returns.

The effective tax rate was 26.5% for the year ended 2022, as compared to 21.1% for the same period in 2021, due to certain discrete tax benefits related to share-based compensation recognized in the fourth quarter of 2021, specifically, voluntary stock option exercises.

Asset Quality

At December 31, 2022, nonperforming loan balances totaled $4 thousand and consisted of one nonaccrual consumer loan which has subsequently been paid off. Our two commercial nonaccrual loans totaling $5.8 million at September 30, 2022 were paid-off in full,

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including all past due interest, clearly demonstrating our strong underwriting criteria and credit metrics. As of December 31, 2022, the allowance for loan losses was $12.2 million, or 1.29% of total loans, as compared to $9.1 million, or 1.16% of total loans at December 31, 2021. The increase in the allowance as a percentage of loans was general reserve driven considering loan growth and the qualitative factors associated with the current uncertain economic environment.

Balance Sheet

At December 31, 2022, total assets were $1.4 billion, reflecting a $216.9 million, or 18.4% increase from December 31, 2021. This increase was primarily attributable to growth in loans held for investment totaling $162.8 million, or 20.7%, to $947.3 million. Our higher yielding variable rate commercial loans increased $120.0 million, or 27.8%, during this same period. Our sales pipeline remains robust, anchored by our current and future digital marketing plans, proprietary CRM platform and our employees that support current and future growth. Commencing in the first quarter of 2022, we invested a portion of our excess liquidity in held-to-maturity securities, totaling $78.4 million at December 31, 2022. Our available-for-sale securities portfolio decreased $39.1 million, or 26.4%, to $109.3 million as compared to December 31, 2021 driven by paydowns and unrealized losses associated with the current interest rate environment.

The following table provides information regarding the composition of our loan portfolio for the periods presented:

	At December 31,				At December 31,
	2022				2021
	(Dollars in thousands)
Real estate:
Multifamily	$	262,489	27.7	%	$	254,852	32.5	%
Commercial real estate		91,837	9.7			48,589	6.1
1 – 4 family		25,565	2.7			40,753	5.2
Total real estate		379,891	40.1			344,194	43.8
Commercial		552,082	58.2			427,859	54.6
PPP		—	—			4,249	0.5
Consumer		16,580	1.7			8,681	1.1
Total loans held for investment	$	948,553	100.0	%	$	784,983	100.0	%
Deferred loan fees and unearned premiums, net		(1,258)				(466)
Loans, held for investment	$	947,295			$	784,517
Loans held for sale, net (included in Other assets)	$	—			$	14,100

Total deposits were $1.2 billion as of December 31, 2022, a $199.8 million, or 19.4%, increase from December 31, 2021. This was primarily due to a $164.7 million, or 27.4%, increase in Savings, NOW and Money Market deposits to $764.4 million, and a $35.0 million, or 8.5%, increase in noninterest bearing demand deposits to $444.3 million. The increase in deposits was primarily driven by commercial and escrow low-cost and noninterest bearing deposits from our litigation and small business platforms. Off-balance sheet sweep funds totaled $432.1 million at quarter end, representing additional sources of liquidity for future growth. Our deposit growth and off-balance sheet funds continue to demonstrate our highly efficient branchless and technology enabled deposit platforms.

Stockholders’ equity increased $14.4 million to $158.2 million as of December 31, 2022, compared to December 31, 2021, primarily due to net income and amortization of share-based compensation, partially offset by other comprehensive losses of $14.3 million and dividends paid to common stockholders. The other comprehensive loss reflects the current unrealized losses on our available-for-sale agency MBS portfolio, net of tax, that have been negatively impacted by recent increases in short-term market interest rates. Esquire Bank remains well above bank regulatory “Well Capitalized” standards.

About Esquire Financial Holdings, Inc.

Esquire Financial Holdings, Inc. is a financial holding company headquartered in Jericho, New York, with one branch office in Jericho, New York and an administrative office in Boca Raton, Florida. Its wholly-owned subsidiary, Esquire Bank, National Association, is a full-service commercial bank dedicated to serving the financial needs of the litigation industry and small businesses nationally, as well as commercial and retail customers in the New York metropolitan area. The bank offers tailored financial and payment processing solutions to the litigation community and their clients as well as dynamic and flexible payment processing solutions to small business owners. For more information, visit www.esquirebank.com.

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Cautionary Note Regarding Forward-Looking Statements

This press release includes “forward-looking statements” relating to future results of the Company. Forward-looking statements are subject to many risks and uncertainties, including, but not limited to: changes in business plans as circumstances warrant; changes in general economic, business and political conditions, including changes in the financial markets; the continuing impact of the COVID-19 pandemic on our business and results of operation; and other risks detailed in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “attribute,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as may be required by law.

Contact Information:

Eric S. Bader

Executive Vice President and Chief Operating Officer

Esquire Financial Holdings, Inc.

(516) 535-2002

eric.bader@esqbank.com

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ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statement of Condition (unaudited)

(dollars in thousands except per share data)

	December 31,			December 31,
	2022			2021
ASSETS
Cash and cash equivalents	$	164,122		$	149,156
Securities purchased under agreements to resell, at cost		49,567			50,271
Securities available-for-sale, at fair value		109,269			148,384
Securities held-to-maturity, at cost		78,377			—
Securities, restricted at cost		2,810			2,680
Loans, held for investment		947,295			784,517
Less: allowance for loan losses		(12,223)			(9,076)
Loans, net of allowance		935,072			775,441
Premises and equipment, net		2,704			3,334
Other assets		53,718			49,504
Total Assets	$	1,395,639		$	1,178,770
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits	$	444,324		$	409,350
Savings, NOW and money market deposits		764,354			599,747
Certificates of deposit		19,558			19,312
Total deposits		1,228,236			1,028,409
Other liabilities		9,245			6,626
Total liabilities		1,237,481			1,035,035
Total stockholders' equity		158,158			143,735
Total Liabilities and Stockholders' Equity	$	1,395,639		$	1,178,770
Selected Financial Data
Common shares outstanding		8,195,333			8,088,846
Book value per share	$	19.30		$	17.77
Equity to assets		11.33	%		12.19	%
Capital Ratios (1)
Tier 1 leverage ratio		10.98	%		11.46	%
Common equity tier 1 capital ratio		14.21	%		14.79	%
Tier 1 capital ratio		14.21	%		14.79	%
Total capital ratio		15.44	%		15.89	%
Asset Quality - Loans Held for Investment
Nonperforming loans	$	4		$	6
Allowance for loan losses to total loans		1.29	%		1.16	%
Nonperforming loans to total loans		0.00	%		0.00	%
Nonperforming assets to total assets		0.00	%		0.00	%
Allowance to nonperforming loans		NM			NM

(1) Regulatory capital ratios presented on bank-only basis.

NM – Not meaningful

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ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Income Statement (unaudited)

(dollars in thousands except per share data)

	Three months ended						Year ended
	December 31,						December 31,
	2022			2021			2022			2021
Interest income	$	19,053		$	11,930		$	60,993		$	44,531
Interest expense		714			231			1,647			828
Net interest income		18,339			11,699			59,346			43,703
Provision for loan losses		1,350			555			3,490			6,955
Net interest income after provision for loan losses		16,989			11,144			55,856			36,748
Noninterest income:
Payment processing fees		5,657			4,908			21,944			20,856
Other noninterest income		1,126			171			2,893			463
Gain (loss) on loans held for sale		—			88			88			(295)
Total noninterest income		6,783			5,167			24,925			21,024
Noninterest expense:
Employee compensation and benefits		6,822			5,552			25,774			21,741
Other expenses		4,549			3,197			16,206			13,323
Total noninterest expense		11,371			8,749			41,980			35,064
Income before income taxes		12,401			7,562			38,801			22,708
Income taxes		3,286			832			10,283			4,783
Net income	$	9,115		$	6,730		$	28,518		$	17,925
Earnings Per Share
Basic	$	1.19		$	0.89		$	3.73		$	2.40
Diluted	$	1.10		$	0.83		$	3.47		$	2.26
Selected Financial Data
Return on average assets		2.80	%		2.44	%		2.31	%		1.77	%
Return on average equity		23.89	%		19.19	%		19.44	%		13.42	%
Net interest margin		5.81	%		4.48	%		4.99	%		4.49	%
Efficiency ratio (1)		45.3	%		51.9	%		49.8	%		54.2	%
Cash dividends paid per common share	$	0.10		$	—		$	0.28		$	—
Weighted average basic shares		7,666,674			7,542,341			7,638,423			7,469,907
Weighted average diluted shares		8,296,176			8,106,422			8,213,694			7,946,984

(1) Efficiency ratio represents noninterest expenses divided by the sum of net interest income plus noninterest income.

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ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Average Balance Sheets and Average Yield/Cost (unaudited)

(dollars in thousands)

	For the Three Months Ended December 31,
	2022						2021
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
INTEREST EARNING ASSETS
Loans, held for investment	$	900,407	$	16,508	7.27	%	$	753,500	$	11,137	5.86	%
Securities, includes restricted stock		213,400		1,186	2.20	%		142,677		585	1.63	%
Securities purchased under agreements to resell		49,172		552	4.45	%		50,482		148	1.16	%
Interest earning cash and other		90,329		807	3.54	%		90,244		60	0.26	%
Total interest earning assets		1,253,308		19,053	6.03	%		1,036,903		11,930	4.56	%
NONINTEREST EARNING ASSETS		40,335						55,414
TOTAL AVERAGE ASSETS	$	1,293,643					$	1,092,317
INTEREST BEARING LIABILITIES
Savings, NOW, Money Market deposits	$	617,549	$	648	0.42	%	$	484,972	$	210	0.17	%
Time deposits		13,588		65	1.90	%		11,314		20	0.70	%
Total interest bearing deposits		631,137		713	0.45	%		496,286		230	0.18	%
Borrowings		101		1	3.93	%		103		1	3.85	%
Total interest bearing liabilities		631,238		714	0.45	%		496,389		231	0.18	%
NONINTEREST BEARING LIABILITIES
Demand deposits		495,337						446,032
Other liabilities		15,680						10,778
Total noninterest bearing liabilities		511,017						456,810
Stockholders' equity		151,388						139,118
TOTAL AVG. LIABILITIES AND EQUITY	$	1,293,643					$	1,092,317
Net interest income			$	18,339					$	11,699
Net interest spread					5.58	%					4.38	%
Net interest margin					5.81	%					4.48	%

8

ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Average Balance Sheets and Average Yield/Cost (unaudited)

(dollars in thousands)

	For the Year Ended December 31,
	2022						2021
	Average				Average		Average				Average
	Balance		Interest		Yield/Cost		Balance		Interest		Yield/Cost
INTEREST EARNING ASSETS
Loans, held for investment	$	844,393	$	54,007	6.40	%	$	717,680	$	41,545	5.79	%
Securities, includes restricted stock		204,501		4,161	2.03	%		133,958		2,174	1.62	%
Securities purchased under agreements to resell		49,273		1,251	2.54	%		51,008		619	1.21	%
Interest earning cash and other		91,206		1,574	1.73	%		70,132		193	0.28	%
Total interest earning assets		1,189,373		60,993	5.13	%		972,778		44,531	4.58	%
NONINTEREST EARNING ASSETS		45,004						37,941
TOTAL AVERAGE ASSETS	$	1,234,377					$	1,010,719
INTEREST BEARING LIABILITIES
Savings, NOW, Money Market deposits	$	572,498	$	1,488	0.26	%	$	439,718	$	746	0.17	%
Time deposits		17,775		155	0.87	%		11,152		79	0.71	%
Total interest bearing deposits		590,273		1,643	0.28	%		450,870		825	0.18	%
Borrowings		75		4	5.33	%		78		3	3.85	%
Total interest bearing liabilities		590,348		1,647	0.28	%		450,948		828	0.18	%
NONINTEREST BEARING LIABILITIES
Demand deposits		485,277						415,662
Other liabilities		12,043						10,491
Total noninterest bearing liabilities		497,320						426,153
Stockholders' equity		146,709						133,618
TOTAL AVG. LIABILITIES AND EQUITY	$	1,234,377					$	1,010,719
Net interest income			$	59,346					$	43,703
Net interest spread					4.85	%					4.40	%
Net interest margin					4.99	%					4.49	%

9

EX-99.2

Exhibit 99.2

Ensuring our Clients and Our Institution Succeed BoldlyListed as ESQ Esquire Financial Holdings, Inc. (Financial Holding Company for Esquire Bank, N.A.)4Q 2022 Investor Presentation Exhibit 99.2

Forward Looking Disclosure This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not historical fact and express management’s current expectations, forecasts of future events or long-term goals and, by their nature, are subject to assumptions, risks and uncertainties, many of which are beyond the control of the Company. These statements are may be identified through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “attribute,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements speak only as of the date they are made and are inherently subject to uncertainties and changes in circumstances, including those described under the heading “Risk Factors” in the Company’s 10-K and 10-Q, filed with the Securities and Exchange Commission (“SEC”).Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Actual results could differ materially from those indicated. The Company undertakes no obligation to update forward-looking statements, whetheras a result of new information, future events or otherwise, except as may be required by law. The forward-looking statements speak as of the date of this presentation.The delivery of this presentation shall not, under anycircumstances, create any implication there has been no change in the affairs of the Company after the date hereof.This presentation includes industry and market data that we obtained from periodic industry publications, third-party studies and surveys. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable.Although we believe the industry and market data to be reliable as of the date of this presentation, this information could prove to be inaccurate.Industry and market datacould be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limitson the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties.In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein.2

Ensuring that our Company and clients succeed boldlywith innovative solution-based products and technology, driving client success through relationship banking Our Mission

Decades of expertise in the national litigation marketAsset sensitive model anchored by law firm loans yielding approx. 9%Branchless and tech enabled core deposit platform funded at 0.15% (0.25% in 4Q ‘22)Driving loan and deposit growth with a CAGR in excess of 20% since 2015Expertise in sales, risk, and compliance management for 25+ yearsIndependent Sales Organization (“ISO”) model with approximately 76,000 merchants nationallyFee income represents 30% (27% in 4Q ‘22) of total revenueStrong growth and stable payment processing fee income with a CAGR of 46% since 2017Average ROA and ROTCE of 2.31% and 19.44%, respectively (2.80% and 23.89% in 4Q ‘22)Industry leading NIM of 4.99% (5.81% in 4Q ‘22)Diversified revenue stream with strong NIM and stable fee incomeStrong efficiency ratio of 49.8% (45.3% in 4Q ‘22) while investing in vertical specific technology & future growthA digital-first bank with best-in-class technology fueling futuregrowth and industry leading client retention ratesCustomized and fully integrated Customer Relationship Management (“CRM”) for excellence in client service and operational efficiencyInvestments made in artificial intelligence (“AI”) to facilitate precision marketing and client acquisition across our national verticalsNationwide Branchless Tech Enabled Litigation & Payment Processing Verticals Generating Industry Leading Returns Litigation VerticalCommercial Banking NationallyIndustry Leading ReturnsFueled by Branchless and Tech Enabled National VerticalsPayment Processing Vertical(Merchant Services)Small Business Banking NationallyTechnology –the FutureA Catalyst for Strong Growth 4 How Our Clients Succeed Boldly

Strong Growth Driven by Unique National Verticals How Esquire Succeeds Boldly Key HighlightsStrong growth in higher yielding variable rate commercial loans on a national basisStable low-cost branchless and tech enabled deposit modelEquity to Assets of 11.33% 5at December 31, 2022

Stable low-cost branchless deposit modelStrong commercial deposits franchise nationallyDDA and escrow-based NOW accounts represent 36% and 46% of total deposits at December 31, 2022, respectivelyHigher yielding variable rate commercial loans anchored by our national litigation portfolioAsset sensitive balance sheet benefiting from increases in short-term interest rates How Esquire Succeeds Boldly 6Industry Leading Net Interest Margin

Strong Revenue Growth($ in thousands) at December 31, 2022 How Esquire Succeeds Boldly 7 Key HighlightsStrong asset sensitive net interest marginStable payment processing fee income as short-term interest rates increaseGrowing ASP fee income derived from off-balance sheet funds management

Financial Highlights How Esquire Succeeds Boldly Key HighlightsIndustry leading returns from our unique and tech enabled national business modelsStable payment processing fee income –noninterest income totaled 30% of revenue for the year ended December 31, 2022Branchless low-cost deposits with a cost of funds of 0.15% for the year ended December 31, 2022 *Book value per share and equity to assets are $19.30 and 11.33% at December 31, 2022, respectivelyRaymond James’ Top Performing Community Bank (2018-2021)Piper Sandler & Co.’s “2021 FSG Top Ideas” Added to the Russell 3000 Index as part of the 2022 index reconstitution 8at December 31, 2022*Included noninterest bearing demand deposits (“DDA”)

Financial Highlights, cont’d How Esquire Succeeds Boldly 9at December 31, 2022*EPS –Diluted Earnings Per Share

Loan Portfolio Diversification with Focused GrowthFocused growth in higher yielding variable rate commercial loans with strong credit metrics on a national basisSelective multifamily loan growth with strong historical performance in the NY metro market How Esquire Succeeds Boldly 10at December 31, 2022

Substantially all of our $552 million commercial loans are variable rate and tied to prime, comprising approximately 58% of our loan portfolioAsset sensitive –estimated sensitivity of projected annualized net interest income (“NII”) up 100 and 200 basis point rate scenarios increases projected NII by 7.7% and 15.4%, respectively at September 30, 2022Loan Portfolio Diversification with Focused Growth How Esquire Succeeds Boldly 11

Solid Credit Metrics, Asset Quality and ALLL Coverage How Esquire Succeeds Boldly 12at December 31, 2022*ALLL –Allowance for loan and lease lossesNote –All asset quality metrics are based on our loans held for investment portfolio(1) NFL consumer loan portfolio -$9.0 million charge-off.

*Note: Excludes sweeps totaling $432 millionDeposit Composition and GrowthDDA and NOW (escrow funds) deposits total 82% of total deposits, representing stable funding sources in various interest rate scenariosLitigation and payment processing deposits represent 71% and 12% of total deposits at December 31, 2022, respectivelyOff-balance sheet commercial litigation funds (“sweeps”) total $432 million at December 31, 2022, representing an additional source of fundingOur tech enabled deposit platform allows our commercial customers to utilize our corporate cash management suite, including remote deposit capture (“RDC”) while also leveraging our mobile banking application, creating a highly efficient branchless platform How Esquire Succeeds Boldly 13

Significant national markets primed for disruption: $429 billion & 100,000+ firms in the litigation vertical and $9.5 trillion and 10+ million merchants in the payment processing verticalKey TakeawaysWhy Esquire is Set to Succeed Boldly Tremendous untapped potential: Esquire’s current market share is a fraction of both national verticals that are primed for disruption by our client- centric & tech-focused institutionWe are thought leaders in the litigation vertical and provide C-suite access for ISO flexibility in the payment processing verticalDifferentiated and positioned for growth: With industry leading tailored products and state-of-the-art technology geared towards effective client acquisition 14

National MarketsLitigation & Payment Processing Verticals Supported by Investment in Technology

Commercial Litigation (Law Firm) LoansFull annual underwriting:3 years financials and tax returns (business and personal) Full contingent case inventory valuation process & collateral assignmentDiversity across law firm inventories and collateralPersonal guarantees Average LTV of less than 20%Average DSCR is typically greater than 1.70xAverage draws against committed and uncommitted line-of-credit (“LOC”) and case disbursement loans of approximately 50%Weighted average interest rate approximately 9%Funded with low-cost litigation depositsLitigation deposits to litigation loans drawn is approximately 185% How Esquire Succeeds Boldly 16

Payment Processing –Current ISO Model How Esquire Succeeds BoldlyWhat is an ISO? ISO Responsibilities They DoMerchant Vertical and Technology FocusSales Agent ModelPerforms Initial UnderwritingBoards Merchant to Payment Processing PlatformInstallation of Merchant EquipmentManage Call Center for Merchant ClientsMerchant Risk and PCI Compliance Bank Responsibilities We DoRobust PoliciesTech Enabled Card Brand and Regulatory ComplianceSupport Multiple Processing SystemsAssess ISO VerticalsRe-underwrite Merchant ApplicationsUtilize Industry Leading Risk Management TechnologyDaily and Month End Risk and Compliance ManagementCommercial Treasury Function for Merchant Clearing and ISO Cash ManagementMaintaining and Monitor ISO and Merchant Reserves (DDA) 17

Currently servicing approximately 76,000 merchants across 50 statesNoninterest income, primarily payment processing fees, represents 30% of total revenue, for the year ended December 31, 2022 How Esquire Succeeds Boldly *Payment processing CAGR is 46%18 Strong Growth in Stable Noninterest Incomeat December 31, 2022

How Esquire Succeeds Boldly Key HighlightsStrong and stable DDA reservesProtecting capital from merchant chargebacks and returns 19Protecting Our Company with Strong Payment Processing Reservesat December 31, 2022

Technology Driving Bold SuccessClient Centric TechnologyA Key Driver for Future Growth WebsiteArtificial Intelligence*MarketingSalesUnderwritingOnboarding MarketingCloud AI to facilitate precision marketing and exponential customer acquisition across all verticalsWebsite analytics, data enrichment and thought leadership content marketingPrecision marketing –right offer right timeSales enablement, pipeline management and forecastingUnderwriting efficiency & risk management / cash management and mobile banking / online applicationsCustomer onboarding / core banking Partnering with best-in-class software vendors and solutions, with custom development to service all verticals at the bankProprietary CRM built on Salesforce platform housing all client data touch points from prospect to boarding with a single client view, enabling high volume client acquisition strategies and excellence in client service * Deployment of AI technologies applicable only to sales and marketing processes and not used as a decisioning tool for loan underwriting processes. 20 Online Banking

SucceedingBoldly Listed as ESQ Contact Information:Eric S. Bader Executive Vice President & Chief Operating Officer 516-535-2002eric.bader@esqbank.com

Commercial Real Estate Loans, U.S. Litigation & Payment Markets Appendix

Esquire’s Bold OpportunitiesNew York City properties total $1.3 trillion in Market Value.* A Significant Growth OpportunityThoughtfulin our property and borrower selection processMinimal historical lossesAverage debt-service coverage(“DSCR”) ofapproximately 1.5xAverage loan-to-value(“LTV”) of approximately 55%Strong owner and operators with high quality net worthCRE exposure is less than 225% of total capital plus the allowance for loan losses (“ALLL”) 23*NYC Department of Finance publishes fiscal year 2022 tentative property tax assessment roll issued on January 15, 2021

The Esquire Competitive AdvantageEsquire’s Bold OpportunitiesU.S. Litigation Market A Significant Growth OpportunityU.S. Tort actions are estimated to consume 1.5-2.0% of U.S. GDP* annually or $429 billion** Esquire does not compete with non-bank finance companies Significant barriers to entry–management expertise, brand awareness, regulatory/compliance, and decades of experience 15-Year Industry Track RecordExtensive Litigation Experience In-HouseDeep Relationships with Respected Firms NationallyDaily Resources and Research Cash Flow Lending Coupled with Borrowing Base or Asset Based ApproachTailoring unique products other banks do not offer Typically advancing more than traditional banks, on traditional banking terms 24 Key Highlights$429 billion** Total Addressable Market (“TAM”) in litigation verticalEsquire is a tailored, differentiated brand and thought leader in the litigation market*US Tort actions are estimated to consume 1.5-2.0% of U.S. GDP annually. –Towers Watson US Tort Trends**$429 billion estimated annual US tort costs by US Chamber of Commerce –US Chamber of Commerce IRL Costs and Compensation of US Tort System

25Digitally Transforming The Business of LawAligning Law Firm Case Inventory Lifecycle to Customer Retention Client IncidentReceive IntakeCase ManagementSettlement/VerdictDisbursement $ 1-3 Years (+) ProductsCase Cost LoansWorking Capital LoansFirm and Partner Acquisition LoansTerm Loans to Finance Case Acquisition & GrowthEscrow Banking and QSF Settlement ServicesPlaintiff Banking including Exclusive Prepaid Card Offering TechnologyEsquire Insight –Case Management TechnologyCommercial Cash ManagementCase Cost ManagementOnline ApplicationsThought Leadership -Digital Platform and Content 25

The payments industry grew nearly 25% from 2020 to 2021 to an estimated total payment volume of$9.5 trillion Esquire’s Bold OpportunitiesPayment Volume Trends –A Significant Growth Opportunity Sources:CompanyFinancialRecords,Note: PayPalfiguresrepresent PayPal’sestimated U.S.percent shareof“TotalPaymentVolume”(TPV).PayPalvolumeincludesvolumefromabankaccount,aPayPalaccountbalance,aPayPalCredit account,acreditordebit cardorotherstored valueproductssuchascouponsandgiftcards.Assuch,someofthisvolumemaybeincludedinothernetworks aswell.PayPal’sclassificationinthepaymentsindustryecosystemisvaried/debatedasitperforms functionsattributedtoapaymentnetwork,anissuer,acquirer,etc.,and its financialreportingdoesnotdirectly align with other payment network reporting structures and methods. Discover volume includes Discover Network and Pulse Network transactions. 2019-2021: +9.7% CAGR 26atDecember 31, 2021 ($ in billions)

XML

Document and Entity Information	Jan. 25, 2023
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Jan. 25, 2023
Securities Act File Number	001-38131
Entity Registrant Name	Esquire Financial Holdings, Inc.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	27-5107901
Entity Address, Address Line One	100 Jericho Quadrangle
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Jericho
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11753
City Area Code	516
Local Phone Number	535-2002
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	ESQ
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001531031
Amendment Flag	false

XML

N-2	Jan. 25, 2023
Cover [Abstract]
Entity Central Index Key	0001531031
Amendment Flag	false
Securities Act File Number	001-38131
Document Type	8-K
Entity Registrant Name	Esquire Financial Holdings, Inc.
Entity Address, Address Line One	100 Jericho Quadrangle
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Jericho
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11753
City Area Code	516
Local Phone Number	535-2002
Entity Emerging Growth Company	false