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Jun 30, 2023
Esquire Financial Q2 2023 Earnings Report
Reported record commercial loan growth and resilient net interest margin, driving continued outperformance.
Key Takeaways
Esquire Financial Holdings, Inc. reported a strong second quarter in 2023, with net income increasing by 43% to $9.1 million, or $1.10 per diluted share. The company's performance was driven by record commercial loan growth and a resilient net interest margin of 6.02%.
Net income increased 43% to $9.1 million, or $1.10 per diluted share.
Industry leading returns on average assets and equity of 2.65% and 21.03%, respectively.
Net interest margin of 6.02%.
Significant loan growth totaling $90.2 million, or 37% annualized, to $1.1 billion.
Esquire Financial
Esquire Financial
Forward Guidance
The company anticipates continued increases in its cost-of-funds in 2023 commensurate to prior quarters in response to the current interest rate environment, which may negatively impact our net interest margin.
Positive Outlook
- Continued expansion of our total revenue base fueled by an industry leading net interest margin of 6.02% and strong fee-based income totaling $6.7 million in the current quarter, led by our payment processing platform.
- Fee income represented 25% of total revenue.
- Significant loan growth totaling $90.2 million, or 37% annualized, to $1.1 billion on a linked quarter basis, focused primarily in higher yielding variable rate commercial loans.
- Stable low-cost core commercial relationship deposit model totaling $1.3 billion and a cost-of-funds of 0.66% (including demand deposits).
- Strong and consistent payment processing fee income of $5.8 million with continued increases in small business clients nationally totaling 80,000.
Challenges Ahead
- We anticipate continued increases in our cost-of-funds in 2023 commensurate to prior quarters in response to the current interest rate environment, which may negatively impact our net interest margin.
- The provision for credit losses was $1.3 million for the second quarter of 2023, a $475 thousand increase from the second quarter 2022 provision.
- Noninterest expense increased $2.6 million, or 24.9%, to $13.0 million for the second quarter of 2023, as compared to the same period in 2022.
- Our available-for-sale securities portfolio decreased $19.0 million, or 15.5%, to $103.7 million as compared to June 30, 2022 driven by paydowns and unrealized losses associated with the current interest rate environment.
- 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.