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Section 1: 8-K (8-K)

8-K Q4 2019

 

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  24, 2020

 

Esquire Financial Holdings, Inc.

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

 

 

 

 

Maryland

001-38131

27-5107901

(State or other jurisdiction of

(Commission File Number)

(IRS Employer

incorporation or organization)

 

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)

 

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. 

 

 

 

 

 

 

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

 

Item 2.02     Results of Operations and Financial Condition.

On January  24, 2020, Esquire Financial Holdings, Inc. (the "Company"), the holding company for Esquire Bank, National Association, issued a press release announcing its earnings for the quarter ended December  31, 2019.  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, including the related information set forth in the press release, is being "furnished" and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934.

Item 9.01     Financial Statements and Exhibits.

(d)     Exhibits.

 

 

 

Exhibit No.

    

Description

99.1

 

Press Release dated January  24, 2020.

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  24, 2020

    

By:

/s/ Andrew C. Sagliocca

 

 

 

Andrew C. Sagliocca

 

 

 

President and Chief Executive Officer

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

esq_Ex99_1

Exhibit 99.1

ESQUIRE FINANCIAL HOLDINGS, INC.

REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Fourth Quarter Loan and Deposit Growth Concludes Overall Record Year

Jericho, NY – January 24, 2020 – Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the “Company”), the holding company for Esquire Bank, National Association (“Esquire Bank”), today announced its operating results for the fourth quarter and year end for 2019. Significant achievements during the quarter and year include:

·

Net income increased 35% to $3.9 million, or $0.50 per diluted share, for the current quarter compared to net income of  $2.9 million, or $0.37 per diluted share, for the quarter ended December  31, 2018.

 

·

Returns on average assets and common equity were 2.01% and 14.19%, respectively, and 1.93% and 13.95%, respectively for the quarter and year ended December 31, 2019.

 

·

Supported by a strong net interest margin of 4.79%, net interest income for the fourth quarter increased $1.1 million, or 15%, to $8.9 million compared to the same period in 2018.

·

Total assets increased  $134.1 million, or 20%, to $798.0 million when compared to December 31, 2018.

·

Loans increased $97.3 million, or 21%, to $565.4 million at December 31, 2019 from $468.1 million at December 31, 2018, primarily driven by our commercial attorney and commercial real estate loan portfolios. On a linked quarter basis, our loans increased $31.4 million, or 23% annualized.

·

Continued solid asset quality metrics with 0.26% in nonperforming loans to total loans and an allowance for loan losses to total loans of 1.24% at December  31, 2019.

·

Merchant services fees increased 109% to $3.0 million compared to the quarter ended December  31, 2018. Total fee income represented 26.3% of total revenue for the quarter.

·

Efficiency ratio improved to 52.8% for the fourth quarter of 2019 compared to 55.6% for the fourth quarter of 2018.

·

Deposits totaled $680.6 million, a $112.2 million, or 20% increase from December 31, 2018 with a year to date cost of funds of 0.41% (including demand deposits). This growth was primarily driven by our litigation market customers.

·

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

“Our industry leading performance metrics continue to demonstrate the strength of our business platforms as well as the strength and depth of our management team,” stated Tony Coelho, Chairman of the Board. “We will continue to invest in technology and people as we build out our platforms and brand in 2020.”

“We have experienced continued strong growth in both the legal and merchant verticals despite competitive pressures in both markets in 2019,” stated Andrew C. Sagliocca, President and Chief Executive Officer. “Through our talented management team, we will continue to execute in both key markets and outperform industry norms as we invest in the future of our Company.”

Fourth Quarter Earnings

Net income for the quarter ended December  31, 2019 was $3.9 million, or $0.50 per diluted share, compared to $2.9 million, or $0.37 per diluted share for the same period in 2018. Returns on average assets and common equity for the current quarter were 2.01% and 14.19% compared to 1.74% and 12.74% for the same period of 2018.

Net interest income for the fourth quarter of 2019 increased $1.1 million, or 14.6%, to $8.9 million, primarily due to growth in average interest earning assets totaling $98.2 million, or 15.5%, to $733.4 million when compared to the same period in 2018. Our net interest margin decreased slightly to 4.79% for the fourth quarter of 2019 compared to 4.83% in 2018 due to reductions in short-term interest rates in 2019. Average loans in the quarter increased $81.8 million, or 18.1%, to $532.9 million when compared to the fourth quarter of 2018. Loan growth was primarily driven by commercial attorney and commercial real estate loans representing organic growth funded with core deposits (total deposits excluding certificates of deposit). Core deposits represent 97.1% of total deposits at December  31, 2019 while our loan-to-deposit ratio was 83.1%.

The provision for loan losses was $600 thousand for the fourth quarter of 2019,  a  $200 thousand increase from the comparable period in 2018.  The higher provision for the three months ended December 31, 2019 is primarily due to a chargeoff of a NFL consumer post settlement loan in the fourth quarter of 2019.  As of December  31, 2019, Esquire had nonperforming loans to total loans of 0.26%.  

Noninterest income increased $1.2  million, or 58.2%, to $3.2 million for the fourth quarter of 2019 as compared to the fourth quarter 2018. Our merchant services platform experienced strong growth in 2019, offset by decreased margins on administrative service payment (“ASP”) fees on off-balance sheet funds. Merchant processing income increased $1.6 million or 108.7% compared to the fourth quarter of 2018. This increase was due to the expansion of our sales channels through independent sales organizations (“ISOs”), merchants and additional fee allocation arrangements as we continue to focus on prudently growing this source of stable fee income. On a linked quarter basis, merchant revenues decreased $301 thousand, or 9.2%, due to increased competitive pressure on certain fee allocation arrangements with certain ISOs. Other noninterest income, consisting primarily of ASP fee income, declined by $390 thousand compared to the quarter ended December  31, 2018. Our ASP fee income is impacted by the volume and duration of off-balance sheet funds as well as short-term interest rates.

Noninterest expense increased $936 thousand, or 17.3%, to  $6.3 million for the fourth quarter of 2019 as compared to the fourth quarter of 2018. This increase was primarily driven by increases in employee compensation and benefits and data processing costs. Employee compensation and benefits costs increased due to an increase in the number of employees as well as the impact of salary and bonus increases in 2019. Data processing costs increased as processing volumes increased as well as additional costs related to certain system implementations. The Company’s efficiency ratio continued to improve to 52.8% for the three months ended December  31, 2019 as compared to 55.6% for the same period ended 2018.

The effective tax rate for the fourth quarter of 2019 was approximately 24% as compared to approximately 27% for the fourth quarter of 2018.  This decrease was primarily a result of tax credits from our investment in proprietary technology and the continued expansion of our national litigation and merchant platforms.

Full Year Earnings

Net income for the year ended December  31, 2019 was $14.1 million, or $1.82 per diluted share, compared to $8.7 million, or $1.13 per diluted share for 2018. Returns on average assets and common equity for the year ended December  31, 2019 were 1.93% and 13.95% compared to 1.45% and 10.12% for 2018.

For the year ended December 31, 2019, net interest income increased $6.4 million, or 23.0%, to $34.1 million, primarily due to growth in average interest earning assets totaling $116.2 million, or 19.8%, to $702.3 million when compared to the year ended 2018. Our net interest margin increased to 4.86% for the year ended 2019 compared to 4.73%  for the same period in 2018. Average loans for the year ended 2019 increased $108.9 million, or 27.3%, to $507.5 million. Loan growth was primarily driven by commercial attorney and commercial real estate loans which represents organic growth funded with core deposits.

The provision for loan losses was $1.9 million for the year ended December  31, 2019, $475 thousand higher than the year ended 2018. The higher provision is reflective of growth, composition of the loan portfolio, and a year-end chargeoff of a NFL consumer post settlement loan.

Noninterest income increased $4.0 million, or 50.4%, to $11.8 million for the year ended 2019. Our merchant services platform experienced strong growth in 2019, offset by decreased ASP fees. Merchant processing income increased $6.0 million or 121.2% compared to the year ended 2018. This increase was due to the expansion of our sales channels through ISOs, merchants and additional fee allocation arrangements. Other noninterest income, consisting primarily of ASP fee income, declined by $2.1 million or 71.1%  

2

 

compared to the year ended December  31, 2018. Our ASP fee income is impacted by the volume and duration of off-balance sheet funds as well as short-term interest rates.

Noninterest expense increased $2.6 million, or 11.8%, to $24.9 million for the year ended 2019 as compared to the year ended 2018 driven by an increase in compensation and benefits, data processing and professional and consulting services costs.  Employee compensation and benefits costs increased due to an increase in the number of employees as well as increases in salary and bonuses in 2019. Data processing costs increased as processing volumes increased as well as additional costs related to certain system implementations. Professional and consulting costs increased due to our IT enterprise-wide architecture assessments and our investment in certain proprietary technology. The Company’s efficiency ratio continued to improve to 54.3% for the year ended December  31, 2019 as compared to 59.3% for the year ended 2018.

The effective tax rate for the year ended 2019 was approximately 26% as compared to approximately 27% for the year ended 2018.

Asset Quality

Nonperforming assets, consisting of several nonaccrual consumer loans, totaled $1.5 million as of December  31, 2019. Nonperforming assets as a percentage of total assets was 0.18%. There were no nonperforming assets as of December  31, 2018. The allowance for loan losses was $7.0 million, or 1.24% of total loans, as compared to $5.6 million, or 1.20% of total loans at December  31, 2018. The increase in the allowance as a percentage of loans was primarily related to loan growth in the commercial, commercial real estate and consumer loan categories.

Balance Sheet

At December  31, 2019, total assets were $798.0 million, reflecting a $134.1 million, or 20.2% increase from December  31, 2018. This increase is attributable to increases in loans totaling $97.3 million, or 20.8%, to $565.4 million, primarily driven by commercial attorney related, commercial real estate and consumer loans, funded with core low-cost deposits.

Total deposits were $680.6 million as of December  31, 2019, a $112.2 million, or 19.7% increase from December  31, 2018. This was primarily due to a  $123.8 million, or 36.9% increase in Savings, NOW and Money Market deposits to $459.0 million, offset by a $10.9 million, or 5.1%  decrease in noninterest bearing demand deposits to $201.8 million and a decrease in time deposits of $671 thousand, or 3.3%, to $19.7 million. The increase was primarily driven by commercial and escrow low-cost deposits from our litigation customers.

Stockholders’ equity increased $18.3 million to $111.1 million at December  31, 2019 compared to December  31, 2018. Esquire Bank remains well above bank regulatory “Well Capitalized” standards.

3

 

About Esquire Financial Holdings, Inc.

Esquire Financial Holdings, Inc. is a bank 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 legal industry and small businesses nationally, as well as commercial and retail customers in the New York metropolitan area. The bank offers tailored products and solutions to the legal community and their clients as well as dynamic and flexible merchant services solutions to small business owners. For more information, visit www.esquirebank.com.

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; and other risks detailed in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and other sections of the Company’s 10-K 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

[email protected]

 

4

 

ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Statement of Condition (unaudited)

(dollars in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

December 31, 

 

December 31, 

 

 

    

2019

    

2018

    

ASSETS

 

 

  

 

 

  

 

Cash and cash equivalents

 

$

61,806

 

$

30,562

 

Securities available for sale, at fair value

 

 

146,419

 

 

145,698

 

Securities, restricted at cost

 

 

2,665

 

 

2,583

 

Loans

 

 

565,369

 

 

468,101

 

Less: allowance for loan losses

 

 

(6,989)

 

 

(5,629)

 

Loans, net of allowance

 

 

558,380

 

 

462,472

 

Premises and equipment, net

 

 

2,835

 

 

2,694

 

Other assets

 

 

25,903

 

 

19,890

 

Total Assets

 

$

798,008

 

$

663,899

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

  

 

 

  

 

Demand deposits

 

$

201,837

 

$

212,721

 

Savings, NOW and money market deposits

 

 

459,037

 

 

335,283

 

Certificates of deposit

 

 

19,746

 

 

20,417

 

Total deposits

 

 

680,620

 

 

568,421

 

Other liabilities

 

 

6,326

 

 

2,704

 

Total liabilities

 

 

686,946

 

 

571,125

 

Total stockholders' equity

 

 

111,062

 

 

92,774

 

Total Liabilities and Stockholders' Equity

 

$

798,008

 

$

663,899

 

 

 

 

 

 

 

 

 

Selected Financial Data

 

 

  

 

 

  

 

Common shares outstanding

 

 

7,652,170

 

 

7,532,723

 

Book value per share

 

$

14.51

 

$

12.32

 

Equity to assets

 

 

13.92

%  

 

13.97

%  

 

 

 

 

 

 

 

 

Capital Ratios (1)

 

 

  

 

 

  

 

Tier 1 leverage ratio

 

 

13.50

%  

 

13.26

%  

Common equity tier 1 capital ratio

 

 

16.77

%  

 

17.54

%  

Tier 1 capital ratio

 

 

16.77

%  

 

17.54

%  

Total capital ratio

 

 

17.94

%  

 

18.70

%  

 

 

 

 

 

 

 

 

Asset Quality

 

 

  

 

 

  

 

Nonperforming loans 

 

$

1,476

 

$

 —

 

Allowance for loan losses to total loans

 

 

1.24

%  

 

1.20

%  

Nonperforming loans to total loans

 

 

0.26

%  

 

 —

%  

Nonperforming assets to total assets

 

 

0.18

%  

 

 —

%  

Allowance/nonperforming loans

 

 

473.51

%  

 

 —

%  


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

 

5

 

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, 

 

 

    

2019

    

2018

    

2019

    

2018

 

Interest income

 

$

9,356

 

$

8,198

 

$

36,659

 

$

28,951

 

Interest expense

 

 

504

 

 

471

 

 

2,548

 

 

1,212

 

Net interest income

 

 

8,852

 

 

7,727

 

 

34,111

 

 

27,739

 

Provision for loan losses

 

 

600

 

 

400

 

 

1,850

 

 

1,375

 

Net interest income after provision for loan losses

 

 

8,252

 

 

7,327

 

 

32,261

 

 

26,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

  

 

 

  

 

 

  

 

 

  

 

Merchant processing income

 

 

2,983

 

 

1,429

 

 

10,976

 

 

4,961

 

Other noninterest income

 

 

181

 

 

571

 

 

835

 

 

2,894

 

Total noninterest income

 

 

3,164

 

 

2,000

 

 

11,811

 

 

7,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

  

 

 

  

 

 

  

 

 

  

 

Employee compensation and benefits

 

 

3,836

 

 

2,810

 

 

14,677

 

 

13,039

 

Other expenses

 

 

2,505

 

 

2,595

 

 

10,257

 

 

9,256

 

Total noninterest expense

 

 

6,341

 

 

5,405

 

 

24,934

 

 

22,295

 

Income before income taxes

 

 

5,075

 

 

3,922

 

 

19,138

 

 

11,924

 

Income taxes

 

 

1,202

 

 

1,049

 

 

4,995

 

 

3,190

 

Net income

 

$

3,873

 

$

2,873

 

$

14,143

 

$

8,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

$

0.52

 

$

0.39

 

$

1.91

 

$

1.18

 

Diluted

 

$

0.50

 

$

0.37

 

$

1.82

 

$

1.13

 

Basic - adjusted (1)

 

$

0.52

 

$

0.39

 

$

1.91

 

$

1.30

 

Diluted - adjusted (1)

 

$

0.50

 

$

0.37

 

$

1.82

 

$

1.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Financial Data

 

 

  

 

 

  

 

 

  

 

 

  

 

Return on average assets

 

 

2.01

%  

 

1.74

%  

 

1.93

%  

 

1.45

%

Return on average common equity

 

 

14.19

%  

 

12.74

%  

 

13.95

%  

 

10.12

%

Adjusted return on average assets (1)

 

 

2.01

%  

 

1.74

%  

 

1.93

%  

 

1.60

%

Adjusted return on average common equity (1)

 

 

14.19

%  

 

12.74

%  

 

13.95

%  

 

11.12

%

Net interest margin

 

 

4.79

%  

 

4.83

%  

 

4.86

%  

 

4.73

%

Efficiency ratio(2)

 

 

52.8

%  

 

55.6

%  

 

54.3

%  

 

59.3

%


(1) Figures have been adjusted to exclude a $1.2 million one-time charge (pretax) related to the passing of the Company’s Executive Chairman in 2018. See non-GAAP reconciliation provided elsewhere herein.

 

(2) Efficiency ratio represents noninterest expenses divided by the sum of net interest income plus noninterest income. See non-GAAP reconciliation provided elsewhere herein addressing non-recurring charges.

 

6

 

ESQUIRE FINANCIAL HOLDINGS, INC.

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

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 

 

 

 

2019

 

2018

 

 

 

Average

 

    

 

 

Average

 

Average

 

    

 

 

Average

 

 

    

Balance

    

Interest

    

Yield/Cost

    

Balance

    

Interest

    

Yield/Cost

 

INTEREST EARNING ASSETS

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Loans

 

$

532,938

 

$

8,266

 

6.15

%  

$

451,122

 

$

6,997

 

6.15

%

Securities, includes restricted stock

 

 

136,401

 

 

836

 

2.43

%  

 

153,969

 

 

1,039

 

2.68

%

Interest earning cash

 

 

64,073

 

 

254

 

1.57

%  

 

30,111

 

 

162

 

2.13

%

Total interest earning assets

 

 

733,412

 

 

9,356

 

5.06

%  

 

635,202

 

 

8,198

 

5.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EARNING ASSETS

 

 

31,939

 

 

  

 

  

 

 

19,018

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE ASSETS

 

$

765,351

 

 

 

 

 

 

$

654,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings, NOW, Money Markets

 

$

394,969

 

$

405

 

0.41

%  

$

330,043

 

$

329

 

0.40

%

Time deposits

 

 

19,909

 

 

98

 

1.95

%  

 

26,679

 

 

135

 

2.01

%

Total interest bearing deposits

 

 

414,878

 

 

503

 

0.48

%  

 

356,722

 

 

464

 

0.52

%

Short-term borrowings

 

 

 1

 

 

 —

 

 —

%  

 

763

 

 

 4

 

2.08

%

Secured borrowings

 

 

87

 

 

 1

 

4.56

%  

 

159

 

 

 3

 

7.49

%

Total interest bearing liabilities

 

 

414,966

 

 

504

 

0.48

%  

 

357,644

 

 

471

 

0.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST BEARING LIABILITIES

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Demand deposits

 

 

232,267

 

 

  

 

  

 

 

202,349

 

 

  

 

  

 

Other liabilities

 

 

9,817

 

 

  

 

  

 

 

4,781

 

 

  

 

  

 

Total noninterest bearing liabilities

 

 

242,084

 

 

  

 

  

 

 

207,130

 

 

  

 

  

 

Stockholders' equity

 

 

108,301

 

 

  

 

  

 

 

89,446

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL AVG. LIABILITIES AND EQUITY

 

$

765,351

 

 

  

 

  

 

$

654,220

 

 

  

 

  

 

Net interest income

 

 

  

 

$

8,852

 

 

 

 

  

 

$

7,727

 

 

 

Net interest spread

 

 

 

 

 

 

 

4.58

%  

 

 

 

 

 

 

4.60

%

Net interest margin

 

 

  

 

 

  

 

4.79

%  

 

  

 

 

  

 

4.83

%

 

7

 

ESQUIRE FINANCIAL HOLDINGS, INC.

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

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 

 

 

 

2019

 

2018

 

 

 

Average

 

    

 

 

Average

 

Average

 

    

 

 

Average

 

 

    

Balance

    

Interest

    

Yield/Cost

    

Balance

    

Interest

    

Yield/Cost

 

INTEREST EARNING ASSETS

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Loans

 

$

507,546

 

$

31,790

 

6.26

%  

$

398,614

 

$

24,375

 

6.11

%

Securities, includes restricted stock

 

 

147,737

 

 

3,909

 

2.65

%  

 

150,668

 

 

3,945

 

2.62

%

Interest earning cash

 

 

47,059

 

 

960

 

2.04

%  

 

36,898

 

 

631

 

1.71

%

Total interest earning assets

 

 

702,342

 

 

36,659

 

5.22

%  

 

586,180

 

 

28,951

 

4.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EARNING ASSETS

 

 

30,700

 

 

  

 

  

 

 

14,233

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL AVERAGE ASSETS

 

$

733,042

 

 

 

 

 

 

$

600,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings, NOW, Money Markets

 

$

366,430

 

$

2,070

 

0.56

%  

$

293,936

 

$

908

 

0.31

%

Time deposits

 

 

20,002

 

 

473

 

2.36

%  

 

27,014

 

 

275

 

1.02

%

Total interest bearing deposits

 

 

386,432

 

 

2,543

 

0.66

%  

 

320,950

 

 

1,183

 

0.37

%

Short-term borrowings

 

 

 1

 

 

 —

 

 —

%  

 

478

 

 

12

 

2.51

%

Secured borrowings

 

 

88

 

 

 5

 

5.68

%  

 

246

 

 

17

 

6.91

%

Total interest bearing liabilities

 

 

386,521

 

 

2,548

 

0.66

%  

 

321,674

 

 

1,212

 

0.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST BEARING LIABILITIES

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Demand deposits

 

 

236,918

 

 

  

 

  

 

 

188,911

 

 

  

 

  

 

Other liabilities

 

 

8,216

 

 

  

 

  

 

 

3,536

 

 

  

 

  

 

Total noninterest bearing liabilities

 

 

245,134

 

 

  

 

  

 

 

192,447

 

 

  

 

  

 

Stockholders' equity

 

 

101,387

 

 

  

 

  

 

 

86,292

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL AVG. LIABILITIES AND EQUITY

 

$

733,042

 

 

  

 

  

 

$

600,413

 

 

  

 

  

 

Net interest income

 

 

  

 

$

34,111

 

 

 

 

  

 

$

27,739

 

 

 

Net interest spread

 

 

 

 

 

 

 

4.56

%  

 

 

 

 

 

 

4.56

%

Net interest margin

 

 

  

 

 

  

 

4.86

%  

 

  

 

 

  

 

4.73

%

 

 

 

8

 

ESQUIRE FINANCIAL HOLDINGS, INC.

Condensed Consolidated Non-GAAP Financial Measure Reconciliation (unaudited)

(dollars in thousands except per share data)

 

Adjusted net income, which is used to compute adjusted return on average assets, adjusted return on average common equity and adjusted earnings per common share, excludes the impact of a one-time charge relating to compensation expense as a result of the passing of our Executive Chairman in 2018.

 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures by other companies.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue. We calculate the efficiency ratio by dividing total noninterest expenses excluding non-recurring items by the sum of total net interest income and total noninterest income, each as determined under GAAP, but excluding net gains(losses) on securities and other non-recurring income sources, if applicable, from this calculation, which we refer to as recurring revenue. We believe that this provides one reasonable measure of recurring expenses relative to recurring revenue.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Year ended

 

 

 

December 31, 

 

 

December 31, 

 

 

2019

 

2018

 

2019

 

2018

 

Net income

$

3,873

 

$

2,873

 

$

14,143

 

$

8,734

 

Add: compensation charge

 

 -

 

 

 -

 

 

 -

 

 

1,173

 

Less: tax impact

 

 -

 

 

 -

 

 

 -

 

 

314

 

Compensation charge, net

 

 -

 

 

 -

 

 

 -

 

 

859

 

Adjusted net income

$

3,873

 

$

2,873

 

$

14,143

 

$

9,593

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets-GAAP

 

2.01

%

 

1.74

%

 

1.93

%

 

1.45

%

Add: compensation charge

 

0.00

%

 

0.00

%

 

0.00

%

 

0.15

%

Adjusted return on average assets

 

2.01

%

 

1.74

%

 

1.93

%

 

1.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity-GAAP

 

14.19

%

 

12.74

%

 

13.95

%

 

10.12

%

Add: compensation charge

 

0.00

%

 

0.00

%

 

0.00

%

 

1.00

%

Adjusted return on average common equity

 

14.19

%

 

12.74

%

 

13.95

%

 

11.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share-GAAP

$

0.50

 

$

0.37

 

$

1.82

 

$

1.13

 

Add: compensation charge

 

0.00

 

 

0.00

 

 

0.00

 

 

0.11

 

Adjusted diluted earnings per share

$

0.50

 

$

0.37

 

$

1.82

 

$

1.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

8,852

 

$

7,727

 

$

34,111

 

$

27,739

 

Noninterest income

 

3,164

 

 

2,000

 

 

11,811

 

 

7,855

 

Recurring revenue

$

12,016

 

$

9,727

 

$

45,922

 

$

35,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

$

6,341

 

$

5,405

 

$

24,934

 

$

22,295

 

Less: compensation charge

 

 -

 

 

 -

 

 

 -

 

 

1,173

 

Recurring noninterest expense

$

6,341

 

$

5,405

 

$

24,934

 

$

21,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio

 

52.8

%

 

55.6

%

 

54.3

%

 

59.3

%

 

9

 

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