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Mar 31, 2020
Esquire Financial Q1 2020 Earnings Report
Net income decreased due to additional provision for credit losses based on qualitative factors reflective of the rapid decline in economic conditions due to the COVID-19 pandemic.
Key Takeaways
Esquire Financial Holdings reported a decrease in net income to $2.6 million, or $0.33 per diluted share, for the first quarter of 2020, compared to $3.0 million, or $0.39 per diluted share, for the same period in 2019. The results were impacted by an additional provision for credit losses totaling $1.5 million due to the COVID-19 pandemic.
Net income decreased 13% to $2.6 million, or $0.33 per diluted share, compared to the same period last year.
Net interest income increased 16% to $9.2 million, supported by a net interest margin of 4.71%.
Total assets increased 12% on an annualized basis to $821.5 million compared to December 31, 2019.
Merchant services fees increased 63% to $3.0 million compared to the quarter ended March 31, 2019.
Esquire Financial
Esquire Financial
Forward Guidance
The COVID-19 pandemic is expected to impact financial results and demand for products and services during the second quarter of 2020 and potentially beyond, affecting revenues, earnings, allowance for credit losses, capital reserves, and liquidity.
Positive Outlook
- Company implemented various strategies and protocols to protect its employees and their families.
- Company provided uninterrupted services for our customers while maintaining continuity of our core operating systems
- Company mitigated financial risks posed by changing market conditions.
- Company canceled all business travel (both into and out of our offices).
- Company implemented quarantine and work from home protocols.
Challenges Ahead
- The demand for our products and services may decline, making it difficult to grow assets and income.
- Loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income.
- Collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase.
- The allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income.
- Cyber security risks are increased as the result of an increase in the number of employees working remotely.