Press Release

Esquire Financial Holdings, Inc. Reports Second Quarter 2018 Results

Growth in Loans and Core Deposits, Fee Income and Record Net Income

Company Release - 7/25/2018 8:30 AM ET

JERICHO, N.Y., July 25, 2018 /PRNewswire/ -- 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 three and six months ended June 30, 2018. Significant achievements during the quarter include:

  • Net income increased 116% to $2.2 million, or $0.29 per diluted common share, compared to $1.0 million, or $0.20 per diluted common share, for the comparable period in 2017.
  • Returns on average assets and common equity were 1.51% and 10.47%, respectively compared to 0.95% and 7.64% for the second quarter of 2017.
  • Supported by a strong net interest margin of 4.63%, net interest income for the second quarter increased $2.0 million or 44%, to $6.6 million compared to 2017.
  • Total assets increased $131.4 million or 29% to $587.2 million when compared to June 30, 2017.
  • Loans increased $42.7 million or 25% annualized to $391.7 million from $349.0 million at December 31, 2017, primarily driven by our commercial and commercial real estate loan categories.
  • Continued solid asset quality metrics and reserve coverage with no non-performing assets and an allowance for loan losses to total loans of 1.22% at June 30, 2018.
  • Non-interest income increased 46% to $2.0 million compared to 2017 and represented 23% of total revenue.
  • Deposits totaled $497.1 million, a $120.8 million or 32% increase from the second quarter of 2017 with a cost of funds of 0.17% (including demand deposits). Off-balance sheet funds totaled $251.2 million at June 30, 2018.
  • Esquire Bank remains well above the bank regulatory "Well Capitalized" standards.

"Since our IPO in June of 2017, the Company continues to deliver on its high performance goals," stated Dennis Shields, Executive Chairman. "These goals include a strong net interest margin coupled with industry leading growth, a diverse mix of revenue and a national distribution network anchored by technology."

"Our loan and merchant fee income platforms continue to drive revenue growth on a linked quarter basis," stated Andrew C. Sagliocca, President and Chief Executive Officer. "Coupled with our branchless distribution network, our revenue growth should continue to drive down our efficiency ratio below industry averages and increase our returns."

Net Earnings and Returns

Net income for the quarter ended June 30, 2018 was $2.2 million or $0.29 per diluted common share, compared to $1.0 million or $0.20 per diluted common share for 2017. Returns on average assets and common equity for the current quarter were 1.51% and 10.47% compared to 0.95% and 7.64% in 2017, respectively. Net income for the six months ended June 30, 2018 was $4.2 million or $0.54 per diluted common share, compared to $1.8 million or $0.36 per diluted common share for 2017. Returns on average assets and common equity for the six months ended June 30, 2018 were 1.50% and 10.00% compared to 0.87% and 7.02% in 2017, respectively.  

Net interest income for the second quarter of 2018 increased $2.0 million, or 43.7%, to $6.6 million, primarily due to growth in average interest earning assets totaling $147.5 million, or 34.5%, to $574.9 million when compared to 2017. Our net interest margin increased to 4.63% for the second quarter of 2018 compared to 4.34% in 2017. Average loans in the quarter increased $80.4 million or 27.7%, to $371.0 million and average securities increased $50.5 million, or 48.7%, to $154.2 million when compared to the second quarter of 2017. For the six months ended June 30, 2018, net interest income increased $3.8 million, or 42.9%, to $12.7 million, primarily due to growth in average interest earning assets totaling $132.6 million, or 31.6%, to $552.1 million when compared to the six months ended 2017. The Company's net interest margin increased to 4.65% for the six months ended 2018 compared to 4.29% in 2017. Average loans for the six months ended 2018 increased $78.7 million, or 27.7%, to $363.1 million and average securities increased $43.9 million, or 43.2%, to $145.5 million when compared to the six months ended 2017. Increases in loans and securities for the quarter and six months ended June 30, 2018 represent organic growth funded with low cost core deposits.

The provision for loan losses was $300 thousand for the second quarter of 2018, unchanged from the comparable period in 2017 and $75 thousand higher for the six months ended June 30, 2018. The higher provision for the six months ended June 30, 2018 is reflective of loan growth experienced in the Company's higher yielding commercial and consumer loan categories. As of June 30, 2018, Esquire had no delinquent loans and no non-performing assets. Additionally, the Company had no charge-offs for the six months ended June 30, 2018.

Non-interest income increased $621 thousand, or 45.7%, to $2.0 million for the second quarter of 2018, and increased $1.5 million, or 58.2%, to $4.1 million for the six months ended 2018, primarily due to the increases in merchant processing income and customer related fees and service charges. The increases in merchant processing income were a result of growth in our monthly processing volumes attributable to growth in the number of Independent Sales Organizations ("ISOs") as well as growth in the number of merchants we service.  The growth in customer related fees and service charges primarily consisted of off-balance sheet administrative service payments, which was positively impacted by higher volumes and increases in short-term rates.

Non-interest expense increased $1.1 million to $5.3 million in the second quarter of 2018 and increased $2.4 million to $10.6 million for the six months ended June 30, 2018. These increases were primarily driven by increases in employee compensation and benefits costs, professional and consulting services and other operating expenses. The increase in compensation and benefits costs was due to the Company's hiring efforts, including several senior managers, to support our future growth and technology efforts as well as salary and incentive increases. The increase in professional and consulting services as well as other expenses was due primarily to additional costs related to being a public company and costs related to certain strategic projects. The Company's efficiency ratio decreased to 61.4% and 62.9% for the three and six months ended June 30, 2018.

The effective tax rate on a year to date basis and for the second quarter of 2018 was 26.8%.

Balance Sheet

At June 30, 2018, total assets were $587.2 million, reflecting a $131.4 million, or 28.8% increase from June 30, 2017. This increase is primarily attributable to increases in loans totaling $84.3 million, or 27.4%, to $391.7 million and increases in securities totaling $50.5 million, or 51.9%, to $147.8 million at June 30, 2018. This growth was primarily funded with low cost core deposits. The allowance for loan losses was $4.8 million, or 1.22% of total loans, as compared to $3.8 million, or 1.24% of total loans, at June 30, 2017.

Total deposits were $497.1 million at June 30, 2018, a $120.8 million, or 32.1% increase from June 30, 2017. This was primarily due to a $92.9 million, or 42.8% increase in Savings, NOW and Money Market deposits to $310.0 million and a $39.1 million, or 29.7% increase in non-interest bearing demand deposits to $170.7 million. The Company continued to prudently manage its balance sheet through its mass tort deposit sweep programs, maintaining off-balance sheet funds totaling $251.2 million at June 30, 2018. These funds are a current source of administrative service income.

Stockholders' equity increased $9.5 million to $86.5 million at June 30, 2018 compared to June 30, 2017, primarily due to net income and the sale of 354,580 additional shares of common stock at the public offering price of $14.00 per share pursuant to the underwriter's overallotment option in connection with our initial public offering. Esquire Bank remains well above bank regulatory "Well Capitalized" standards.

With excess capital as a foundation, the Company anticipates continued earnings growth in 2018 driven by its robust lending pipelines, as well as its merchant services and other fee income opportunities. 


About Esquire Financial Holdings, Inc.

Esquire Financial Holdings, Inc. is a bank holding company headquartered in Jericho, New York, with one branch office in Garden City, New York and an administrative office in Palm Beach Gardens, 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 Bader
Executive Vice President and Chief Financial Officer
Esquire Financial Holdings, Inc.
(516) 535-2002
eric.bader@esqbank.com

 

ESQUIRE FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statement of Condition (unaudited)
(all dollars in thousands except per share data)








June 30,


December 31,


June 30,


2018


2017


2017

ASSETS






Cash and cash equivalents

$        27,504


$        43,077


$        39,860

Securities available for sale, at fair value

147,768


128,758


97,302

Securities, restricted at cost

2,343


2,183


1,849

Loans

391,673


348,978


307,418

Less: allowance for loan losses

(4,789)


(4,264)


(3,823)

Loans, net of allowance

386,884


344,714


303,595

Premises and equipment, net

2,493


2,546


2,720

Other assets

20,195


12,279


10,475

Total Assets

$     587,187


$     533,557


$     455,801







LIABILITIES AND STOCKHOLDERS' EQUITY






Demand deposits

$     170,712


$     190,847


$     131,642

Savings, NOW and money market deposits

309,954


230,715


217,081

Certificates of deposit

16,449


26,932


27,640

Total deposits

497,115


448,494


376,363

Other liabilities

3,576


1,680


2,464

Total liabilities

500,691


450,174


378,827

Total stockholders' equity

86,496


83,383


76,974

Total Liabilities and Stockholders' Equity

$     587,187


$     533,557


$     455,801







Selected Financial Data






Common shares outstanding

7,445,723


7,326,536


6,870,285

Book value per common share

$          11.62


$          11.38


$          11.10

Equity to assets

14.73%


15.63%


16.89%







Capital Ratios (1)






Tier 1 leverage ratio

12.87%


12.82%


11.94%

Common equity tier 1 capital ratio

17.53%


17.32%


15.63%

Tier 1 capital ratio

17.53%


17.32%


15.63%

Total capital ratio

18.67%


18.47%


16.79%







Asset Quality Ratios






Allowance for loan losses to total loans

1.22%


1.22%


1.24%

Non-performing loans to total loans

0.00%


0.00%


0.00%

Non-performing assets to total assets

0.00%


0.00%


0.00%







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





 

ESQUIRE FINANCIAL HOLDINGS, INC.
Condensed Consolidated Income Statement (unaudited)
(all dollars in thousands except per share data)










Three months ended


Six months ended




June 30,


June 30,




2018


2017


2018


2017

Interest income


$          6,864


$          4,756


$          13,133


$          9,188

Interest expense


223


136


397


273

Net interest income


6,641


4,620


12,736


8,915

Provision for loan losses


300


300


525


450

Net interest income after provision for 
     loan losses


6,341


4,320


12,211


8,465










Non-interest income:









Merchant processing income


1,211


831


2,232


1,670

Other non-interest income


769


528


1,823


894

Total non-interest income


1,980


1,359


4,055


2,564










Non-interest expense:









Employee compensation and benefits


3,008


2,369


6,069


4,714

Other expenses


2,281


1,800


4,492


3,479

Total non-interest expense


5,289


4,169


10,561


8,193

Income before income taxes


3,032


1,510


5,705


2,836

Income taxes


811


483


1,526


994

Net income


$          2,221


$          1,027


$          4,179


$          1,842










Earnings per Common Share









Basic


$            0.30


$            0.20


$            0.57


$            0.36

Diluted


$            0.29


$            0.20


$            0.54


$            0.36










Selected Financial Data









Return on average assets


1.51%


0.95%


1.50%


0.87%

Return on average common equity


10.47%


7.64%


10.00%


7.02%

Net interest margin


4.63%


4.34%


4.65%


4.29%

Efficiency ratio


61.35%


69.72%


62.89%


71.38%













 

ESQUIRE FINANCIAL HOLDINGS, INC.
Condensed Consolidated Average Balance Sheets and Average Yields/Cost (unaudited)
(all dollars in thousands)




For the Three Months Ended June 30,


2018


2017


Average




Average


Average




Average

EARNING ASSETS

Balance


Interest


Yields/Cost


Balance


Interest


Yields/Cost

Loans

$          370,981


$   5,657


6.12%


$          290,576


$   4,062


5.61%

Securities, includes restricted stock

154,224


1,006


2.62%


103,702


628


2.43%

Interest earning cash

49,686


201


1.62%


33,156


66


0.80%

  Total interest earning assets

574,891


6,864


4.79%


427,434


4,756


4.46%













NON-INTEREST EARNING ASSETS












Cash and due from banks

642






572





Other assets

12,892






7,942

















  TOTAL AVERAGE ASSETS

$          588,425






$          435,948

















INTEREST-BEARING LIABILITIES












Savings, NOW, Money Markets

$          272,929


$       167


0.25%


$          218,466


$       106


0.19%

Time deposits

33,780


51


0.61%


25,565


25


0.39%

  Total deposits

306,709


218


0.29%


244,031


131


0.22%

Secured borrowings

276


5


7.27%


285


5


7.04%

    Total interest-bearing liabilities

306,985


223


0.29%


244,316


136


0.22%













NON-INTEREST BEARING LIABILITIES












Demand deposits

193,555






135,401





Other liabilities

2,848






1,571





Total non-interest bearing liabilities

196,403






136,972





Stockholders' equity

85,037






54,660

















TOTAL AVG. LIABILITIES AND EQUITY

$          588,425






$          435,948





Net interest spread



$   6,641


4.50%




$   4,620


4.24%













Net interest margin





4.63%






4.34%

 

ESQUIRE FINANCIAL HOLDINGS, INC.
Condensed Consolidated Average Balance Sheets and Average Yields/Cost (unaudited)
(all dollars in thousands)




For the Six Months Ended June 30,


2018


2017


Average




Average


Average




Average

EARNING ASSETS

Balance


Interest


Yields/Cost


Balance


Interest


Yields/Cost

Loans

$          363,085


$   10,946


6.08%


$          284,417


$   7,889


5.59%

Securities, includes restricted stock

145,450


1,870


2.59%


101,567


1,178


2.34%

Interest earning cash

43,539


317


1.47%


33,520


121


0.73%

  Total interest earning assets

552,074


13,133


4.80%


419,504


9,188


4.42%













NON-INTEREST EARNING ASSETS












Cash and due from banks

622






548





Other assets

9,284






7,609

















  TOTAL AVERAGE ASSETS

$          561,980






$          427,661

















INTEREST-BEARING LIABILITIES












Savings, NOW, Money Markets

$          258,499


$         289


0.23%


$          220,351


$       215


0.20%

Time deposits

31,991


98


0.62%


21,184


47


0.45%

  Total deposits

290,490


387


0.27%


241,535


262


0.22%

Secured borrowings

278


10


7.25%


314


11


7.06%

    Total interest-bearing liabilities

290,768


397


0.28%


241,849


273


0.23%













NON-INTEREST BEARING LIABILITIES












Demand deposits

184,645






130,693





Other liabilities

2,308






1,495





Total non-interest bearing liabilities

186,953






132,188





Stockholders' equity

84,259






53,624

















TOTAL AVG. LIABILITIES AND EQUITY

$          561,980






$          427,661





Net interest spread



$   12,736


4.52%




$   8,915


4.19%













Net interest margin





4.65%






4.29%














 

Cision View original content:http://www.prnewswire.com/news-releases/esquire-financial-holdings-inc-reports-second-quarter-2018-results-300686032.html

SOURCE Esquire Bank