Esquire Financial Holdings, Inc.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
ESQ$129.15+1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001104659-26-058451
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001104659-26-093295
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 109 current paragraphs.
44 unchanged; 41 reworded; 13 added; 5 removed; 5 previous and 11 current paragraphs rearranged.
Tables are not compared: 49 previous and 53 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Subsequent Events - Signature Merger
Current report
Effective on August 1, 2026, the Company completed its previously announced merger with Signature Bancorporation, Inc., an Illinois corporation, pursuant to the Merger Agreement by and among the Company, Merger Sub and Signature. See Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Interim Consolidated Financial Statements for additional information regarding the Merger.
Current report
Our net interest margin of 5.96% decreased 7 basis points from the comparable period in 2025, primarily due to a $53.1 million increase in average interest earning cash balances to $205.0 million in the current quarter coupled with decreases in short-term market interest rates over the same period. Average loan yields decreased 11 basis points to 7.78%, primarily due to our litigation related loan yields, while average loans increased $414.5 million, or 28.3%, to $1.88 billion, with average litigation related loan growth totaling $405.7 million, or 46.1%. Average securities decreased $10.2 million, or 3.1%, to $322.8 million with yields remaining relatively flat at 3.79%. Average deposits increased $412.7 million, or 23.6%, to $2.16 billion, led by increases in litigation related escrow or IOLTA, commercial money market, and noninterest bearing commercial demand deposits totaling $297.5 million, $90.0 million, and $19.1 million, respectively. Our cost of deposits, including noninterest bearing demand deposits, increased 5 basis points to 1.03% due to changes in deposit composition.
Current report
thousand, or 58.2%, to $165 thousand due to decreases in loan and other banking fees. During the second quarter 2025, we recognized a $432 thousand gain on the sale of a fintech investment.
Current report
General. Net income increased $1.9 million, or 8.1%, to $25.2 million for the six months ended June 30, 2026 from $23.3 million for the six months ended June 30, 2025. The increase resulted from a $12.9 million increase in net interest income, partially offset by a $8.0 million increase in noninterest expense, and a $2.6 million increase in income tax expense.
Current report
Net Interest Income. Net interest income increased $12.9 million, or 22.7%, to $69.8 million for the six months ended June 30, 2026 from $56.9 million for the six months ended June 30, 2025, due to a $15.3 million increase in interest income, partially offset by a $2.4 million increase in interest expense.
Current report
Interest Income. Interest income increased $15.3 million, or 23.5%, to $80.3 million for the six months ended June 30, 2026 from $65.0 million for the six months ended June 30, 2025 and was primarily attributable to increases in income on loans.
Current report
Securities interest income increased $55 thousand, or 0.9%, to $6.2 million for the six months ended June 30, 2026, with an $88 thousand increase attributable to average rate increases, offset by a decrease of $33 thousand attributable to decreases in average balances. Average securities decreased $1.8 million, or 0.6%, to $328.7 million with a securities to assets ratio of 12% at June 30, 2026.
Current report
Income on interest earning cash increased $87 thousand to $3.4 million for the six months ended June 30, 2026 with a $714 thousand increase attributable to average volume increases (funded with core deposits), offset by a $627 thousand decrease due to decreases in short-term rates. Average interest earning cash balances increased $36.9 million, or 24.0%, to $190.7 million.
Current report
Interest Expense. Interest expense increased $2.4 million, or 29.3%, to $10.6 million for the six months ended June 30, 2026 from $8.2 million for the six months ended June 30, 2025, with $2.5 million attributable to increases in average deposit balances (primarily commercial money market and litigation related escrow or IOLTA), offset by a decrease of $66 thousand attributable to decreases in rate (primarily money market). Average deposits increased $388.6 million, or 22.7%, to $2.10 billion, led by increases in litigation related escrow or IOLTA, commercial money market, and noninterest bearing demand deposits totaling $256.9 million, $92.8 million, and $30.5 million, respectively.
Current report
Provision for Credit Losses. Our provision for credit losses was $5.6 million for the six months ended June 30, 2026, an increase of $575 thousand from the $5.0 million provision for the six months ended June 30, 2025, primarily due to management’s revaluation of credit risk in our loan portfolio subsequent to certain charge-offs and related credit downgrades in both periods, offset by provisioning for primarily commercial loan growth. In 2026, there were $4.7 million
Current report
in charge-offs related to two multifamily loans to the same sponsor. As of June 30, 2026, our allowance to loans ratio was 1.30%. Based on management’s evaluation of current credit risk in our commercial real estate and commercial portfolios, management believes the allowance for credit losses is adequate at June 30, 2026.
Current report
Income Tax Expense. We recorded income tax expense of $10.0 million for the six months ended June 30, 2026, reflecting an effective tax rate of 28.5%, compared to $7.5 million, or 24.3%, for the six months ended June 30, 2025. The increase was primarily due to certain discrete tax benefits related to share-based compensation in the prior year period.
Removed paragraphs (5)
Previous report
Recent Events - Proposed Signature Merger
Previous report
On March 11, 2026, the Company, Esquire Merger Sub, Inc., a direct, wholly owned subsidiary of the Company (“Merger Sub”), and Signature entered into an Agreement and Plan of Merger (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to which Esquire and Signature have agreed to combine their respective businesses.
Previous report
Under the merger agreement, Merger Sub will merge with and into Signature, with Signature as the surviving entity (the “merger”), and immediately following the merger, Signature will merge with and into the Company, with the Company as the surviving entity (the “second step merger”). Immediately following the second step merger, Signature Bank, an Illinois-chartered non-member bank and a wholly owned subsidiary of Signature (“Signature Bank”), will merge
Previous report
with and into Esquire Bank, with Esquire Bank as the surviving bank (the “bank merger” and, together with the merger and the second step merger, the “mergers”).
Previous report
Under the terms of the merger agreement, shareholders of Signature will receive a fixed exchange ratio of 2.63 shares of Esquire common stock for each share of Signature common stock, subject to adjustment. Under the terms of the merger agreement, the exchange ratio is subject to an adjustment based on the disposition value of four Signature Bank loans with a total par value of approximately $70 million (“Schedule A Loans”). The merger agreement provides that if any Schedule A Loans are sold prior to closing, then the exchange ratio will be adjusted based on the aggregate loan sales proceeds relative to the aggregate outstanding principal amount of such loans with a maximum exchange ratio of 2.80, based on the sale of all Schedule A Loans and on a one hundred percent recovery of the Aggregate Schedule A Loan Balance, and a minimum exchange ratio of 2.50, based on a ten percent or less aggregate recovery from the sale of the Schedule A Loans (or no sales of Schedule A Loans) prior to closing. As of May 4, 2026, two of the Schedule A Loans, having an aggregate principal balance of $30.3 million, have been sold, with aggregate sales proceeds totaling $12.6 million, for an aggregate recovery rate of 42%. Assuming that the remaining two Schedule A Loans, totaling $40 million, are sold prior to closing and that 100% of the principal balance of these unsold Schedule A Loans is recovered, the exchange ratio would be 2.715. If no further Schedule A Loans are sold prior to closing, or if the recovery rate on the sale of the remaining Schedule A Loans is 10% or less, the exchange ratio would be 2.544. The transaction remains subject to regulatory approval, approval by each of the Company’s stockholders and Signature’s shareholders of certain matters relating to the merger at each company’s respective special meeting, and other customary closing conditions.
Reworded paragraphs (41)
Previous wording
Management’s discussion and analysis of financial condition at March 31, 2026 and December 31, 2025 and results of operations for the three months ended March 31, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of Esquire Financial Holdings, Inc. The information contained in this section should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
Management’s discussion and analysis of financial condition at June 30, 2026 and December 31, 2025 and results of operations for the three and six months ended June 30, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of Esquire Financial Holdings, Inc. The information contained in this section should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Previous wording
contractual term of a loan for expected extensions, renewals, and modifications, unless there is a borrower-held extension or renewal option that is not unconditionally cancelable. In developing the estimate of expected credit losses, the Company must reflect information about past events, current conditions, and reasonable and supportable forecasts. This information should include what is reasonably available without undue cost and effort and may include information sourced internally, externally, or a combination of both.
Current wording
In accordance with the CECL Standard, the Company must estimate expected credit losses over the contractual term of a loan, adjusted for expected prepayments. In estimating the life of a loan, the Company cannot extend the contractual term of a loan for expected extensions, renewals, and modifications, unless there is a borrower-held extension or renewal option that is not unconditionally cancelable. In developing the estimate of expected credit losses, the Company must reflect information about past events, current conditions, and reasonable and supportable forecasts. This information should include what is reasonably available without undue cost and effort and may include information sourced internally, externally, or a combination of both.
Previous wording
The estimation of expected credit losses requires the use of forward-looking information that is both reasonable and supportable, including information that relates to economic forecasts and how those forecasts are expected to impact expected future losses. The Company incorporates reasonable and supportable forecasts as qualitative adjustments applied to the historical loss rates over the reasonable and supportable forecast period. The CECL Standard does not require a specific method for developing economic forecasts, nor does it require a specific timeframe over which a reasonable and supportable forecast should be employed in the Company’s CECL model. While the Company is not precluded from utilizing economic forecasts over the entire contractual term of a loan, the Company utilizes forecasts it believes are reasonable and supportable. The Company considers its methodologies to determine reasonable and supportable forecasts and reversion techniques to be accounting estimates rather than accounting policies or principles. For periods beyond which the Company is unable to determine a reasonable and supportable forecast, it will revert to unadjusted historical loss information in accordance with the CECL Standard. Management assesses the sensitivity of key assumptions by stressing the quantitative inputs utilized in its economic forecasts. This sensitivity analysis provides management with a hypothetical result to assess the sensitivity of our allowance for credit losses to a change in a key quantitative input.
Current wording
The estimation of expected credit losses requires the use of forward-looking information that is both reasonable and supportable, including information that relates to economic forecasts and how those forecasts are expected to impact expected future losses. The Company incorporates reasonable and supportable forecasts as qualitative adjustments applied to the historical loss rates over the reasonable and supportable forecast period. The CECL Standard does not require a specific method for developing economic forecasts, nor does it require a specific timeframe over which a reasonable and supportable forecast should be employed in the Company’s CECL model. While the Company is not precluded from utilizing economic forecasts over the entire contractual term of a loan, the Company utilizes forecasts it believes are reasonable and supportable. The Company considers its methodologies to determine reasonable and supportable forecasts and reversion techniques to be accounting estimates rather than accounting policies or principles. For periods beyond which the Company is unable to determine a reasonable and supportable forecast, it will revert to unadjusted historical loss information in accordance with the CECL Standard. Management assesses the sensitivity of key assumptions by
Previous wording
The Company measures the allowance for credit losses on a collective basis by pooling loans according to similar risk characteristics. When a loan is deemed to no longer share risk characteristics similar to others in the portfolio, the Company evaluates such loans on an individual basis. Management may consider changes to a borrower’s circumstances impacting cash collections, delinquency and non-accrual status, probability of default, industry, or other facts and circumstances when determining whether a loan shares risk characteristics with other loans in a pool. For a loan that does not share risk characteristics with other loans in a pool and is not collateral dependent, expected credit loss is measured based on the discounted value of the expected future cash flows and the amortized cost of the loan. If an entity determines that foreclosure of the collateral is probable, the CECL Standard requires the entity to measure expected credit losses of collateral dependent loans based on the difference between the current fair value of the collateral and the amortized cost basis of the financial asset. As of March 31, 2026, there was one collateral dependent commercial loan secured by business assets totaling $736 thousand that was individually analyzed, with no associated specific reserve on the Consolidated Statements of Financial Condition.
Current wording
The Company measures the allowance for credit losses on a collective basis by pooling loans according to similar risk characteristics. When a loan is deemed to no longer share risk characteristics similar to others in the portfolio, the Company evaluates such loans on an individual basis. Management may consider changes to a borrower’s circumstances impacting cash collections, delinquency and non-accrual status, probability of default, industry, or other facts and circumstances when determining whether a loan shares risk characteristics with other loans in a pool. For a loan that does not share risk characteristics with other loans in a pool and is not collateral dependent, expected credit loss is measured based on the discounted value of the expected future cash flows and the amortized cost of the loan. If an entity determines that foreclosure of the collateral is probable, the CECL Standard requires the entity to measure expected credit losses of collateral dependent loans based on the difference between the current fair value of the collateral and the amortized cost basis of the financial asset. As of June 30, 2026, there was one collateral dependent multifamily loan secured by real estate totaling $4.4 million and one collateral dependent commercial loan secured by business assets totaling $736 thousand that was individually analyzed, with no associated specific reserve on the Consolidated Statements of Financial Condition.
Previous wording
Future changes to the allowance for credit losses may be necessary based on changes in economic, market, or other conditions. Changes to estimates could result in a material change in the allowance for credit losses and charges to
Current wording
Future changes to the allowance for credit losses may be necessary based on changes in economic, market, or other conditions. Changes to estimates could result in a material change in the allowance for credit losses and charges to provision for credit losses would materially decrease the Company’s net income. The Company’s loan portfolio may experience significant credit losses, which could have a material adverse effect on our operating results.
Previous wording
We currently have lending clients in 33 states and our larger markets include California, New York and Texas. Our success is tied to our unique ability to couple traditional commercial underwriting with non-traditional asset-based underwriting. Our team understands law firms’ contingent case inventory valuation process (as well as traditional hourly billing firms). Typically, these inventories of claims for injured consumers or claimants have a duration of 2 to 3 years, significantly longer than traditional accounts receivables or inventories of goods that can have a duration of 30 to 60 days or 120 days, respectively. These factors (the unique industry, contingent collateral, longer durations of the law firms’ inventories, atypical revenue streams of the law firms and more) coupled with the TAM create a unique and valuable opportunity for the Company with minimal incumbent competition. This unique risk profile translates approximately into a blended 9% variable rate asset yield on these commercial loans for the quarter ended March 31, 2026. More importantly, since our commercial banking platform is focused on full service relationship banking, for every $1.00 we advance on these loans we receive on average $1.32 of low-cost core operating and escrow deposits from these law firms through our branchless platform, fueling and funding additional growth in our other asset classes. Our extremely low historic delinquency rates and low charge-off rates clearly demonstrate our strong underwriting process and expertise in the litigation vertical. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $1.17 billion, or 56%, of total deposits at March 31, 2026. These
Current wording
We currently have lending clients in 33 states and our larger markets include California, New York and Texas. Our success is tied to our unique ability to couple traditional commercial underwriting with non-traditional asset-based underwriting. Our team understands law firms’ contingent case inventory valuation process (as well as traditional hourly billing firms). Typically, these inventories of claims for injured consumers or claimants have a duration of 2 to 3 years, significantly longer than traditional accounts receivables or inventories of goods that can have a duration of 30 to 60 days or 120 days, respectively. These factors (the unique industry, contingent collateral, longer durations of the law firms’ inventories, atypical revenue streams of the law firms and more) coupled with the TAM create a unique and valuable opportunity for the Company with minimal incumbent competition. This unique risk profile translates into a blended 8.80% variable rate asset yield on these commercial loans for the quarter ended June 30, 2026. More importantly, since our commercial banking platform is focused on full service relationship banking, for every $1.00 we advance on these loans we receive on average $1.33 of low-cost core operating and escrow deposits from these law firms through our branchless platform, fueling and funding additional growth in our other asset classes. Our extremely low historic delinquency rates and low charge-off rates clearly demonstrate our strong underwriting process and expertise in the litigation vertical. Our longer duration escrow or claimant trust settlement deposits represent accounts where the law firm is trustee for the claimant settlement funds and represent $1.31 billion, or 60%, of total deposits at June 30, 2026. These law firm escrow accounts as well as other fiduciary deposit accounts are for the benefit of the law firm’s customers (or claimants) and are titled in a manner to ensure that the maximum amount of FDIC insurance coverage passes through the account to the beneficial owner of the funds held in the account. Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. Coupling these types of commercial relationships with our off-balance sheet (“OBS”) commercial litigation funds of $1.0 billion at June 30, 2026, makes this litigation vertical a highly desirable core low-cost funding platform fueling bank-wide growth.
Previous wording
Payment Processing. The payment processing (merchant acquiring) market will continue to be a growth opportunity for our company, as we offer focused and tailored products and services to small businesses nationally. The payment industry grew approximately 8% on a compound annual growth rate from 2021 to 2025 with payment volumes or TAM of $12.2 trillion according to company records on U.S. payment industry trends. Couple this with the fact that there are less than 100 acquiring financial institutions in the U.S., this vertical represents a growth opportunity for our Company. We believe there are various and significant barriers to entry to this market including, but not limited to, our industry track record, extensive in-house experience, strong relationships with non-bank acquirers, and our unique approach to servicing these small business merchants and their respective verticals. We use proprietary and industry leading/customized technology to ensure card brand and regulatory compliance, to support multiple processing platforms, to manage daily risk across approximately 93,000 small business merchants in all 50 states, and to perform commercial treasury clearing services for approximately $10 billion in volume across 137 million in transactions in the quarter ended March 31, 2026.
Current wording
Payment Processing. The payment processing (merchant acquiring) market will continue to be a growth opportunity for our company, as we offer focused and tailored products and services to small businesses nationally. The payment industry grew approximately 8% on a compound annual growth rate from 2021 to 2025 with payment volumes or TAM of $12.2 trillion according to company records on U.S. payment industry trends. Couple this with the fact that there are less than 100 acquiring financial institutions in the U.S., this vertical represents a growth opportunity for our Company. We believe there are various and significant barriers to entry to this market including, but not limited to, our industry track record, extensive in-house experience, strong relationships with non-bank acquirers, and our unique approach to servicing these small business merchants and their respective verticals. We use proprietary and industry leading/customized technology to ensure card brand and regulatory compliance, to support multiple processing platforms, to manage daily risk across approximately 93,000 small business merchants in all 50 states, and to perform commercial treasury clearing services for approximately $11 billion in volume across 153 million in transactions in the quarter ended June 30, 2026.
Previous wording
Proprietary Technology. We are a digital-first organization utilizing highly specialized, proprietary technology to drive growth and maintain industry-leading client retention. Built upon a foundation of safety and soundness, our core banking platforms are uniquely customized to align with our clients in the legal industry. This specialized focus ensures our clients have access to tailored banking solutions that foster relationship building and long-term brand loyalty. Furthermore, our continued investment in an integrated CRM and loan platforms - built on Salesforce and nCino - enables superior client service and precision marketing on a national scale.
Current wording
Proprietary Technology. We are a digital-first organization utilizing highly specialized, proprietary technology to drive growth and maintain industry-leading client retention. Built upon a foundation of safety and soundness, our core banking platforms are uniquely customized to align with our clients in the legal industry. This specialized focus ensures
Previous wording
The success of our national litigation and payment processing verticals coupled with our focus on financial technology (“fin-tech”) has led to industry leading performance. For the quarter ended March 31, 2026, we have produced industry leading returns including, but not limited to, an average return on assets and equity of 2.10% and 16.82%, respectively; industry leading net interest margin of 6.04%; strong efficiency ratio of 51.1%; and diversified revenue streams as demonstrated by a strong net interest margin and stable fee income representing 16% of total revenue. Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 70% of our loans being variable rate and tied to prime (with interest rate floors in place on 90% of our variable rate loan portfolio), solid credit metrics, a stable low cost deposit base, and strong available liquidity of $1.10 billion with no outstanding borrowings, positions our Company for future growth and success.
Current wording
The success of our national litigation and payment processing verticals coupled with our focus on financial technology (“fin-tech”) has led to industry leading performance. For the quarter ended June 30, 2026, we have produced industry leading returns including, but not limited to, an average return on assets and equity of 2.09% and 17.06%, respectively; industry leading net interest margin of 5.96%; strong efficiency ratio of 50.1%; and diversified revenue streams as demonstrated by a strong net interest margin and stable fee income representing 15% of total revenue. Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 70% of our loans being variable rate and tied to prime (with interest rate floors in place on 90% of our variable rate loan portfolio), solid credit metrics, a stable low cost deposit base, and strong available liquidity of $1.19 billion with no outstanding borrowings, positions our Company for future growth and success.
Previous wording
Assets. Our total assets were $2.42 billion at March 31, 2026, an increase of $55.5 million, or 2.3%, from $2.37 billion at December 31, 2025, due to growth in loans held for investment of $56.7 million, or 3.2%, and increases in securities available-for-sale of $11.5 million, or 4.7%, offset by decreases in cash and cash equivalents of $13.7 million, or 5.8%.
Current wording
Assets. Our total assets were $2.51 billion at June 30, 2026, an increase of $145.4 million, or 6.1%, from $2.37 billion at December 31, 2025, due to growth in loans held for investment of $143.8 million, or 8.2%, and increases in cash and cash equivalents of $6.3 million, or 2.7%, offset by decreases in securities available-for-sale of $6.4 million, or 2.6% and decreases in securities held-to-maturity of $4.1 million, or 6.8%.
Previous wording
Loan Portfolio Analysis. At March 31, 2026, loans, net of deferred fees and unearned premiums, were $1.82 billion, or 86.3% of total deposits, compared to $1.76 billion, or 85.2% of total deposits, at December 31, 2025. The growth in loans was primarily driven by net production in commercial loans and to a lesser extent, multifamily and commercial real estate loans. Commercial loans increased $30.0 million, or 2.4%, to $1.28 billion at March 31, 2026 from $1.25 billion at December 31, 2025. Multifamily loans increased $16.2 million, or 4.3%, to $389.0 million at March 31, 2026 from $372.8 million at December 31, 2025. Commercial real estate loans increased $7.1 million, or 6.6%, to $114.4 million at March 31, 2026 from $107.3 million at December 31, 2025.
Current wording
Loan Portfolio Analysis. At June 30, 2026, loans, net of deferred fees and unearned premiums, were $1.90 billion, or 87.3% of total deposits, compared to $1.76 billion, or 85.2% of total deposits, at December 31, 2025. The growth in loans was primarily driven by net production in commercial loans and to a lesser extent, multifamily and commercial real estate loans. Commercial loans increased $91.6 million, or 7.4%, to $1.34 billion at June 30, 2026 from $1.25 billion at December 31, 2025. Commercial real estate loans increased $25.8 million, or 24.0%, to $133.1 million at June 30, 2026 from $107.3 million at December 31, 2025. Multifamily loans increased $23.1 million, or 6.2%, to $395.9 million at June 30, 2026 from $372.8 million at December 31, 2025.
Previous wording
At March 31, 2026, our Litigation-Related loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $1.23 billion, or 67.5% of our total loan portfolio, compared to $1.18 billion, or 67.2% of our total loan portfolio at December 31, 2025. We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $136.8 million and $812.9 million, respectively, at March 31, 2026.
Current wording
At June 30, 2026, our Litigation-Related loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $1.30 billion, or 68.2% of our total loan portfolio, compared to $1.18 billion, or 67.2% of our total loan portfolio at December 31, 2025. We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $113.2 million and $924.0 million, respectively, at June 30, 2026.
Previous wording
Litigation-Related post-settlement consumer loans decreased $77 thousand to $3.1 million as of March 31, 2026, from $3.1 million as of December 31, 2025.
Current wording
Litigation-Related post-settlement consumer loans decreased $271 thousand to $2.9 million as of June 30, 2026, from $3.1 million as of December 31, 2025.
Previous wording
Debt Securities Portfolio. Securities available-for-sale increased $11.5 million, or 4.7%, to $258.0 million at March 31, 2026 from $246.5 million at December 31, 2025, due to securities purchases of $29.7 million, offset by portfolio amortization of $17.2 million and increases in unrealized losses of $1.0 million. Securities held-to-maturity decreased $1.9 million, or 3.1%, to $58.3 million at March 31, 2026 from $60.2 million at December 31, 2025, driven by portfolio amortization.
Current wording
Debt Securities Portfolio. Securities available-for-sale decreased $6.4 million, or 2.6%, to $240.1 million at June 30, 2026 from $246.5 million at December 31, 2025, due to portfolio amortization of $34.4 million and increases in unrealized losses of $1.5 million, offset by securities purchases of $29.7 million. Securities held-to-maturity decreased $4.1 million, or 6.8%, to $56.1 million at June 30, 2026 from $60.2 million at December 31, 2025, driven by portfolio amortization.
Previous wording
management services in our two national verticals. Core deposits, which we define as total deposits excluding time deposits, totaled $2.09 billion at March 31, 2026, or 99.3% of total deposits, compared to $2.06 billion or 99.7% of total deposits at December 31, 2025. Litigation and payment processing deposits represent $1.77 billion, or 84.2%, of total deposits at March 31, 2026. Savings, NOW and money market deposits increased $61.9 million, or 4.2%, to $1.54 billion while noninterest bearing demand deposits decreased $30.6 million, or 5.3%, to $545.9 million at March 31, 2026.
Current wording
Funding**.** Total deposits increased $116.7 million, or 5.7% to $2.18 billion at June 30, 2026 from $2.06 billion at December 31, 2025, primarily due to our focus on developing full service commercial banking relationships nationally with our clients through commercial lending facilities, payment processing, and other unique commercial cash management services in our two national verticals. Core deposits, which we define as total deposits excluding time deposits, totaled $2.17 billion at June 30, 2026, or 99.7% of total deposits, compared to $2.06 billion or 99.7% of total deposits at December 31, 2025. Litigation and payment processing deposits represent $1.86 billion, or 85.3%, of total deposits at June 30, 2026. Savings, NOW and money market deposits increased $141.4 million, or 9.6%, to $1.62 billion while noninterest bearing demand deposits decreased $24.3 million, or 4.2%, to $552.1 million at June 30, 2026.
Previous wording
Core commercial relationship banking clients in our two national verticals represent approximately 75% of our $2.10 billion deposit base at March 31, 2026. These relationship banking clients are derived from coupling lending facilities, payment processing, and other unique custodial banking needs with commercial cash management depository services. Our deposit strategy primarily focuses on developing full service commercial banking relationships with our clients through commercial lending facilities, payment processing, and other unique commercial cash management services in our two national verticals, rather than competing with other institutions on rate. Our longer duration interest on lawyer trust accounts (“IOLTA”), escrow and settlement deposits represent $1.17 billion, or 55.8%, of total deposits. As of March 31, 2026, uninsured deposits were $623.0 million, or 30%, of our total deposits, excluding $17.9 million of the Company’s deposits held at the Bank. Approximately 70% of our uninsured deposits represent clients with full commercial relationship banking with us (commercial loans, payment processing, and other commercial service-oriented relationships) including, but not limited to, law firm operating accounts, law firm IOLTA/escrow accounts, merchant reserves, ISO reserves, ACH processing, and custodial accounts.
Current wording
Core commercial relationship banking clients in our two national verticals represent approximately 75% of our $2.18 billion deposit base at June 30, 2026. These relationship banking clients are derived from coupling lending facilities, payment processing, and other unique custodial banking needs with commercial cash management depository services. Our deposit strategy primarily focuses on developing full service commercial banking relationships with our clients through commercial lending facilities, payment processing, and other unique commercial cash management services in our two national verticals, rather than competing with other institutions on rate. Our longer duration interest on lawyer trust accounts (“IOLTA”), escrow and settlement deposits represent $1.31 billion, or 59.9%, of total deposits. As of June 30, 2026, uninsured deposits were $722.4 million, or 33%, of our total deposits, excluding $18.9 million of the Company’s deposits held at the Bank. Approximately 65% of our uninsured deposits represent clients with full commercial relationship banking with us (commercial loans, payment processing, and other commercial service-oriented relationships) including,
Previous wording
Due to the nature of our larger mass tort and class action settlements related to the litigation vertical, we participate in FDIC insured sweep programs as well as treasury secured money market funds. As of March 31, 2026, off-balance sheet sweep funds totaled approximately $1.00 billion, of which approximately $330.4 million, or 33.0%, was available to be swept onto our balance sheet as reciprocal client relationship deposits. Our core low-cost deposit growth and off-balance sheet client funds continue to clearly demonstrate our highly efficient, full service commercial relationship and tech-enabled cash management platform.
Current wording
Due to the nature of our larger mass tort and class action settlements related to the litigation vertical, we participate in FDIC insured sweep programs as well as treasury secured money market funds. As of June 30, 2026, OBS sweep funds totaled approximately $1.03 billion, of which approximately $392.5 million, or 38.0%, was available to be swept onto our balance sheet as reciprocal client relationship deposits. Our core low-cost deposit growth and OBS client funds continue to clearly demonstrate our highly efficient, full service commercial relationship and tech-enabled cash management platform.
Previous wording
At March 31, 2026, we had the ability to borrow, on a secured basis, up to $475.1 million from the Federal Home Loan Bank of New York and $46.5 million from the Federal Reserve Bank of New York discount window. At March 31, 2026, we also had $29.0 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No borrowing amounts were outstanding during the first quarter of 2026. Historically, we have not leveraged our balance sheet to generate earnings and have always utilized core client deposits to fund our asset growth and related earnings.
Current wording
At June 30, 2026, we had the ability to borrow, on a secured basis, up to $477.6 million from the Federal Home Loan Bank of New York and $45.0 million from the Federal Reserve Bank of New York discount window. At June 30, 2026, we also had $29.0 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No borrowing amounts were outstanding during the second quarter of 2026. Historically, we have not leveraged our balance sheet to generate earnings and have always utilized core client deposits to fund our asset growth and related earnings.
Previous wording
Stockholders’ Equity. Total stockholders’ equity increased $11.7 million to $301.3 million at March 31, 2026, from $289.6 million at December 31, 2025, primarily due to net income of $12.2 million, and amortization of share-based compensation of $2.0 million, partially offset by dividends declared to common stockholders of $1.7 million and other comprehensive loss of $960 thousand, as unrealized losses on our securities available-for-sale increased due to fluctuations in short-term market interest rates.
Current wording
Stockholders’ Equity. Total stockholders’ equity increased $24.3 million to $313.9 million at June 30, 2026, from $289.6 million at December 31, 2025, primarily due to net income of $25.2 million, and amortization of share-based compensation of $3.7 million, partially offset by dividends declared to common stockholders of $3.5 million and other comprehensive loss of $1.3 million, as unrealized losses on our securities available-for-sale increased due to fluctuations in short-term market interest rates.
Previous wording
Asset Quality. Nonperforming assets totaled $736 thousand as of March 31, 2026, and consisted of one commercial loan (a small business merchant uncorrelated to our primary commercial litigation lending platform and other commercial loans) totaling $736 thousand. Nonperforming assets totaled $8.6 million as of December 31, 2025. During the quarter, we foreclosed on the property securing the one nonaccrual multifamily loan (totaling $7.8 million), recorded it as OREO, recorded a charge-off totaling $3.2 million (consisting of principal and certain costs to perfect its lien), and sold the OREO to an unrelated third party. We had no exposure to commercial office space, no construction loans, and $13.9 million in performing loans to the hospitality industry. The allowance for credit losses was $23.5 million, or 1.30% of total loans, as of March 31, 2026, as compared to $24.0 million, or 1.37% of total loans at December 31, 2025. Based on management’s evaluation of current credit risk in our commercial real estate and commercial portfolios as well as increases in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment, management believes the allowance for credit losses is adequate at March 31, 2026.
Current wording
Asset Quality. Nonperforming assets totaled $5.1 million as of June 30, 2026, and consisted of one multifamily loan totaling $4.4 million and of one commercial loan (a small business merchant uncorrelated to our primary commercial litigation lending platform and other commercial loans) totaling $736 thousand. Nonperforming assets totaled $8.6 million as of December 31, 2025. During the current quarter, we placed a multifamily loan on nonaccrual totaling $4.4 million, net of a $1.6 million charge-off. In the prior quarter, we foreclosed on the property securing a nonaccrual multifamily loan (totaling $7.8 million), recorded it as OREO, recorded a charge-off totaling $3.2 million (consisting of principal and certain costs to perfect its lien), and sold the OREO to an unrelated third party. We had no exposure to commercial office space, no construction loans, and $13.7 million in performing loans to the hospitality industry. The allowance for credit losses was $24.7 million, or 1.30% of total loans, as of June 30, 2026, as compared to $24.0 million, or 1.37% of total loans at December 31, 2025. Based on management’s evaluation of current credit risk in our commercial real estate and commercial portfolios, management believes the allowance for credit losses is adequate at June 30, 2026.
Previous wording
At March 31, 2026, special mention and substandard loans totaled $12.3 million and $736 thousand, respectively, compared to $12.3 million and $8.6 million, respectively, as of December 31, 2025. The $7.8 million decrease in substandard balances relates to the above mentioned OREO foreclosure and sale. The ratio of nonperforming loans to total loans and total assets was 0.04% and 0.03%, respectively, as of March 31, 2026, as compared to 0.49% and 0.36%,
Current wording
At June 30, 2026, there were no special mention loans and $5.1 million in substandard loans, compared to $12.3 million and $8.6 million, special mention and substandard loans, respectively, as of December 31, 2025. The $12.3 million decrease in special mention balances relates to the above mentioned multifamily loan that was placed on nonaccrual and classified as substandard during the current quarter as well as a commercial loan that paid off. The ratio of nonperforming loans to total loans and total assets was 0.27% and 0.20%, respectively, as of June 30, 2026, as compared to 0.49% and 0.36%, respectively, as of December 31, 2025. The allowance for credit losses to nonperforming loans was 481% as of June 30, 2026, as compared to 280% as of December 31, 2025.
Previous wording
From a credit risk management perspective, the combined multifamily and CRE portfolio, totaled $503.4 million and has a current weighted average debt service coverage ratio (“DSCR”) and an original loan-to value (“LTV”) (defined as unpaid principal balance as of March 31, 2026 divided by appraised value at origination) of approximately 1.61 and 56%, respectively. When further evaluating this population, loans with below current market rates maturing in (1) less than one year totaled $66.8 million and had a current weighted average DSCR and an original LTV of approximately 1.38 and 66%, respectively; and (2) one to two years totaled $29.2 million and had a current weighted average DSCR and an original LTV of approximately 1.29 and 69%, respectively.
Current wording
From a credit risk management perspective, the combined multifamily and CRE portfolio, excluding one multifamily nonaccrual loan, totaled $524.6 million and has a current weighted average debt service coverage ratio (“DSCR”) and an original loan-to value (“LTV”) (defined as unpaid principal balance as of June 30, 2026 divided by appraised value at origination) of approximately 1.67 and 54%, respectively.
Previous wording
General. Net income increased $804 thousand, or 7.0%, to $12.2 million for the three months ended March 31, 2026 from $11.4 million for the three months ended March 31, 2025. The increase resulted from a $6.4 million increase in net interest income, partially offset by a $3.9 million increase in noninterest expense, and a $1.2 million increase to the provision for credit losses.
Current wording
General. Net income increased $1.1 million, or 9.2%, to $13.0 million for the three months ended June 30, 2026 from $11.9 million for the three months ended June 30, 2025. The increase resulted from a $6.5 million increase in net interest income, partially offset by a $4.0 million increase in noninterest expense, and a $1.8 million increase in income tax expense.
Previous wording
Net Interest Income. Net interest income increased $6.4 million, or 23.2%, to $34.0 million for the three months ended March 31, 2026 from $27.6 million for the three months ended March 31, 2025, due to a $7.5 million increase in interest income, partially offset by a $1.1 million increase in interest expense.
Current wording
Net Interest Income. Net interest income increased $6.5 million, or 22.2%, to $35.7 million for the three months ended June 30, 2026 from $29.3 million for the three months ended June 30, 2025, due to a $7.8 million increase in interest income, partially offset by a $1.3 million increase in interest expense.
Previous wording
Interest Income. Interest income increased $7.5 million, or 23.9%, to $39.0 million for the three months ended March 31, 2026 from $31.5 million for the three months ended March 31, 2025 and was attributable to increases in income on loans and securities, offset slightly by a decrease in interest earning cash income.
Current wording
Interest Income. Interest income increased $7.8 million, or 23.2%, to $41.3 million for the three months ended June 30, 2026 from $33.5 million for the three months ended June 30, 2025 and was attributable to increases in income on loans and interest earning cash, offset slightly by a decrease in securities income.
Previous wording
Loan interest income increased $7.5 million, or 27.9%, to $34.3 million for the three months ended March 31, 2026 from $26.8 million for the three months ended March 31, 2025. This increase was attributable to a $376.4 million, or 27.0%, increase in the average loan balance primarily due to commercial loan growth focused in our higher yielding law firm commercial loans that grew $354.6 million, or 42.7%, increasing total loan yields by 5 basis points to 7.85%. The increase in loan interest income was driven by an increase of $7.3 million related to growth in average loan volumes, led by litigation related commercial growth, and $200 thousand due to an increase in average loan rates. Overall, the commercial loan portfolio average balance increased $323.6 million to $1.25 billion, driving average commercial loan yields to approximately 9% for the three months ended March 31, 2026.
Current wording
Loan interest income increased $7.7 million, or 26.6%, to $36.4 million for the three months ended June 30, 2026 from $28.8 million for the three months ended June 30, 2025. This increase was attributable to a $414.5 million, or 28.3%, increase in the average loan balance primarily due to commercial loan growth focused in our higher yielding law firm commercial loans that grew $405.7 million, or 46.1%, supporting total loan yields of 7.78%. The increase in loan interest income was driven by an increase of $8.0 million related to growth in average loan volumes, led by litigation related commercial growth, offset by $392 thousand due to a decrease in average loan rates. Overall, the commercial loan portfolio average balance increased $354.5 million to $1.33 billion, driving average commercial loan yields to 8.77% for the three months ended June 30, 2026.
Previous wording
Securities interest income increased $136 thousand, or 4.5%, to $3.2 million in the current quarter with $62 thousand attributable to average volume increases and $74 thousand attributable to increases in average rate. Average securities increased $6.6 million, or 2.0%, to $334.5 million with a securities to assets ratio of 13% at March 31, 2026.
Current wording
Securities interest income decreased $81 thousand, or 2.6%, to $3.0 million in the current quarter with a $95 thousand decrease attributable to average volume decreases, offset by an increase of $14 thousand attributable to increases in average rate. Average securities decreased $10.2 million, or 3.1%, to $322.8 million with a securities to assets ratio of 12% at June 30, 2026.
Previous wording
Income on interest earning cash decreased $104 thousand to $1.6 million for the three months ended March 31, 2026 with $306 thousand due to decreases in short-term rates, offset by a $202 thousand increase attributable to average volume increases (funded with core deposits). Average interest earning cash balances increased $20.5 million, or 13.2%, to $176.3 million.
Current wording
Income on interest earning cash increased $191 thousand to $1.8 million for the three months ended June 30, 2026 with a $512 thousand increase attributable to average volume increases (funded with core deposits), offset by a $321 thousand decrease due to decreases in short-term rates. Average interest earning cash balances increased $53.1 million, or 35.0%, to $205.0 million.
Previous wording
Interest Expense. Interest expense increased $1.1 million, or 28.8%, to $5.0 million for the three months ended March 31, 2026 from $3.9 million for the three months ended March 31, 2025, with $1.1 million attributable to increases in average deposit balances (primarily commercial money market and litigation related escrow or IOLTA), and $44 thousand attributable to increases in rate as a result of changes in deposit composition (primarily money market). Average deposits increased $364.2 million, or 21.7%, to $2.0 billion, led by increases in litigation related escrow or IOLTA, commercial money market, and noninterest bearing demand deposits totaling $215.8 million, $96.9 million, and $42.0 million, respectively.
Current wording
Interest Expense. Interest expense increased $1.3 million, or 29.7%, to $5.6 million for the three months ended June 30, 2026 from $4.3 million for the three months ended June 30, 2025, with $1.4 million attributable to increases in average deposit balances (primarily commercial money market and litigation related escrow or IOLTA), offset by a decrease of $109 thousand attributable to decreases in rate (primarily money market). Average deposits increased $412.7 million, or 23.6%, to $2.16 billion, led by increases in litigation related escrow or IOLTA, commercial money market, and noninterest bearing demand deposits totaling $297.5 million, $90.0 million, and $19.1 million, respectively.
Previous wording
Provision for Credit Losses. Our provision for credit losses was $2.7 million for the three months ended March 31, 2026, an increase of $1.2 million from the $1.5 million provision for the three months ended March 31, 2025, primarily due to a $3.2 million charge-off as we foreclosed on the property securing our one nonaccrual multifamily loan (totaling $7.8 million), recorded it as OREO, and sold the OREO to an unrelated third party. As of March 31, 2026, our allowance to loans ratio was 1.30% as compared to 1.37% as of March 31, 2025. The decrease in the allowance as a percentage of loans was a result of management’s evaluation of credit risk in our multifamily portfolio subsequent to the above-mentioned transaction, which was partially offset by an increase in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment. Based on management’s evaluation of current credit risk in our commercial real estate and commercial portfolios, management believes the allowance for credit losses is adequate at March 31, 2026.
Current wording
Provision for Credit Losses. Our provision for credit losses was $2.9 million for the three months ended June 30, 2026, a decrease of $625 thousand from the $3.5 million provision for the three months ended June 30, 2025, primarily due to management’s revaluation of credit risk in our loan portfolio subsequent to certain charge-offs and related credit downgrades in both quarters, offset by provisioning for primarily commercial loan growth. During the current quarter, a $4.4 million multifamily loan, net of a $1.6 million charge-off, that was reported as criticized in prior periods was placed on nonaccrual. As of June 30, 2026, our allowance to loans ratio was 1.30%, consistent with the prior year quarter. Based on management’s evaluation of current credit risk in our commercial real estate and commercial portfolios, management believes the allowance for credit losses is adequate at June 30, 2026.
Previous wording
Payment processing income was $5.1 million for the quarter ended March 31, 2026, a $231 thousand increase from the same period in 2025. Growth in payment processing income has been muted, primarily due to changes in our overall merchant risk profile and merchant composition. Payment processing volumes for the credit and debit card processing platform increased $421.7 million, or 4.6%, to $9.7 billion while transactions volume totaled 137.3 million for the quarter ended March 31, 2026. We continue to focus on the expansion of merchant sales channels through our current and future ISOs, new merchant originations, active management of our merchant risk profiles, and by expanding our technology and other resources in the payment vertical. The Company utilizes proprietary and industry leading/customized technology to ensure card brand and regulatory compliance, to support multiple processing platforms, to manage daily risk across 93,000 small business merchants in all 50 states, and to perform commercial treasury clearing services for $9.7 billion in volume across 137.3 million transactions in the current quarter. ASP fee income increased $257 thousand, or 29.2%, to $1.1 million for the quarter ended March 31, 2026, and is directly impacted by the average balances of off-balance sheet sweep funds as well as current short-term market interest rates. Off-balance sheet sweep funds totaled $1.0 billion at March 31, 2026, demonstrating our highly efficient, full service commercial relationships and tech-enabled cash management platform. Other income decreased $184 thousand, or 51.3%, to $175 thousand due to decreases in loan and other banking fees.
Current wording
Payment processing income was $5.1 million for the quarter ended June 30, 2026, consistent with the same period in 2025. Growth in payment processing income has been muted, primarily due to changes in our overall merchant risk profile and merchant composition. Payment processing volumes for the credit and debit card processing platform increased $432.6 million, or 4.3%, to $10.6 billion while transactions volume totaled 152.6 million for the quarter ended June 30, 2026. We continue to focus on the expansion of merchant sales channels through our current and future ISOs, new merchant originations, active management of our merchant risk profiles, and by expanding our technology and other resources in the payment vertical. The Company utilizes proprietary and industry leading/customized technology to ensure card brand and regulatory compliance, to support multiple processing platforms, to manage daily risk across 93,000 small business merchants in all 50 states, and to perform commercial treasury clearing services for $10.6 billion in volume across 152.6 million transactions in the current quarter. ASP fees increased $449 thousand, or 69.8%, to $1.1 million for the quarter ended June 30, 2026, and are directly impacted by the average balances of OBS sweep funds as well as current short-term market interest rates. OBS sweep funds totaled $1.03 billion at June 30, 2026, demonstrating our highly efficient, full service commercial relationships and tech-enabled cash management platform. Other income decreased $230
Previous wording
Employee compensation and benefits costs increased primarily due to increases in year-end salaries, employee benefit costs, stock grants and related stock-based compensation, staffing, regional business development officer (“BDO”) incentive pay or sales commissions, and year-end bonuses. The increase in BDO incentive pay is directly correlated to our litigation related/commercial loan and related core commercial deposit growth, attracting full-service commercial banking clients nationally. Due to the departure of two board members for personal reasons, we incurred one time compensation charges related to accelerated stock grant amortization totaling $398 thousand. In connection with the announced merger with Signature, we incurred merger related costs (advisory, legal, accounting, valuation, and other professional or consulting fees, and general administrative costs) of $1.3 million in the first quarter of 2026. Data processing costs increased due to increases in core banking processing volumes and the continued implementation/improvement of technology supporting client relationships and lead acquisition initiatives (CRM platform, digital marketing, business development, and lending) as well as overall risk management across all platforms. Advertising and marketing costs increased as we continued to grow our brand, targeting digital marketing platform, and expand our thought leadership in our national verticals. Occupancy and equipment costs increased due to costs associated with the operation of our Los Angeles branch which opened in late 2025.
Current wording
Employee compensation and benefits costs increased $2.4 million, or 23.4%, primarily due to increases in year-end salaries, staffing, stock grants and related stock-based compensation, regional business development officer (“BDO”) incentive pay (sales commissions) and year-end bonus accruals. The increase in BDO incentive pay is directly correlated to our litigation related/commercial loan and related core commercial deposit growth, attracting full-service commercial banking clients nationally. In connection with the announced merger with Signature, we incurred merger related costs (advisory, legal, accounting, valuation, and other professional or consulting fees, and general administrative costs) of $1.1 million in the second quarter of 2026. Data processing costs increased $343 thousand due to increases in core banking processing volumes and the continued implementation/improvement of technology supporting client relationships and lead acquisition initiatives (CRM platform, digital marketing, business development, and lending) as well as overall risk management across all platforms. Advertising and marketing costs increased $193 thousand, as we continued to grow our brand, targeting digital marketing platform, and expand our thought leadership in our national verticals. Occupancy and equipment costs increased $176 thousand due to costs associated with the operation of our Los Angeles branch which opened in late 2025.
Previous wording
Income Tax Expense. We recorded income tax expense of $4.9 million for the three months ended March 31, 2026, reflecting an effective tax rate of 28.6%, compared to $4.1 million, or 26.5%, for the three months ended March 31, 2025. The increase in the effective tax rate was primarily due to the impact of non-deductible merger related costs.
Current wording
Income Tax Expense. We recorded income tax expense of $5.1 million for the three months ended June 30, 2026, reflecting an effective tax rate of 28.4%, compared to $3.4 million, or 22.0%, for the three months ended June 30, 2025. The increase was primarily due to certain discrete tax benefits related to share-based compensation in the prior year quarter.
Previous wording
Our net interest margin of 6.04% increased 8 basis points from the comparable period in 2025, led by growth in higher yielding commercial loan production nationally. Average loan yields increased 5 basis points to 7.85% while average loans increased $376.4 million, or 27.0%, to $1.77 billion, with litigation related loan growth totaling $354.6 million, or 42.7%. Average securities increased $6.6 million, or 2.0%, to $334.5 million with a securities to assets ratio of 13% at March 31, 2026. Average deposits increased $364.2 million, or 21.7%, to $2.04 billion, led by increases in litigation related escrow or IOLTA, commercial money market and noninterest bearing commercial demand deposits totaling $215.8 million, $96.9 million, and $42.0 million, respectively. Our cost of deposits, including noninterest bearing demand deposits, increased 6 basis points to 1.00% due to changes in deposit composition.
Current wording
Our net interest margin of 6.00% increased 1 basis point from the comparable period in 2025, primarily due to growth in higher yielding commercial loan production nationally. Average loan yields decreased 2 basis points to 7.82%, while average loans increased $395.6 million, or 27.7%, to $1.82 billion, with average litigation related loan growth totaling $380.3 million, or 44.5%. Average securities decreased $1.8 million to $328.6 million with yields increasing 5 basis points to 3.82%. Average deposits increased $388.6 million, or 22.7%, to $2.10 billion, led by increases in litigation related escrow or IOLTA, commercial money market, and noninterest bearing commercial demand deposits totaling $256.9 million, $92.8 million, and $30.5 million, respectively. Our cost of deposits, including noninterest bearing demand deposits, increased 5 basis points to 1.01% due to changes in deposit composition.
Previous wording
Economic Value of Equity Simulation. We also analyze our sensitivity to changes in interest rates through an economic value of equity (“EVE”) model. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet contracts. EVE attempts to quantify our economic value using a discounted cash flow methodology. We estimate what our EVE would be as of a specific date. We then calculate what EVE would be as of the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve.
Current wording
Economic Value of Equity Simulation. We also analyze our sensitivity to changes in interest rates through an economic value of equity (“EVE”) model. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of OBS contracts. EVE attempts to quantify our economic value using a discounted cash flow methodology. We estimate what our EVE would be as of a specific date. We then calculate what EVE would be as of the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve.
Previous wording
Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At March 31, 2026, cash and cash equivalents totaled $222.2 million.
Current wording
Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At June 30, 2026, cash and cash equivalents totaled $242.2 million.
Previous wording
At March 31, 2026, through pledging of our securities and certain loans, we had the ability to borrow, on a secured basis, up to $475.1 million from the FHLB of New York and $46.5 million from the FRB of New York discount window. At March 31, 2026, we also had $29.0 million in aggregated unsecured lines of credit with unaffiliated correspondent banks. No amounts were outstanding on any of the aforementioned lines as of March 31, 2026.
Current wording
At June 30, 2026, through pledging of our securities and certain loans, we had the ability to borrow, on a secured basis, up to $477.6 million from the FHLB of New York and $45.0 million from the FRB of New York discount window. At June 30, 2026, we also had $29.0 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No amounts were outstanding on any of the aforementioned lines as of June 30, 2026.
Previous wording
At March 31, 2026, our off-balance sheet sweeps funds totaled $1.00 billion, of which $330.4 million, or 33.0%, was available to be swept on balance sheet as reciprocal client deposits.
Current wording
At June 30, 2026, our OBS sweep funds totaled $1.03 billion, of which $392.5 million, or 38.0%, was available to be swept on balance sheet as reciprocal client deposits.
Previous wording
Our overall liquidity position (cash, borrowing capacity, and available reciprocal client sweep balances) totaled $1.10 billion at March 31, 2026, or 53% of total deposits, creating a highly liquid and unlevered balance sheet.
Current wording
Our overall liquidity position (cash, borrowing capacity, and available reciprocal client sweep balances) totaled $1.19 billion at June 30, 2026, or 54% of total deposits, creating a highly liquid and unlevered balance sheet.
Previous wording
We have no material commitments or demands that are likely to affect our liquidity other than set forth below. In the event loan demand were to increase faster than expected, or any unforeseen demand or commitment were to occur, we could access our borrowing capacity with the FHLB, FRB, correspondent bank lines or through reciprocal deposits.
Current wording
We have no material commitments or demands that are likely to affect our liquidity other then as follows. In the event loan demand were to increase faster than expected, or any unforeseen demand or commitment were to occur, we could access our borrowing capacity with the FHLB, FRB, correspondent bank lines or through reciprocal deposits.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
stressing the quantitative inputs utilized in its economic forecasts. This sensitivity analysis provides management with a hypothetical result to assess the sensitivity of our allowance for credit losses to a change in a key quantitative input.
Current report — wording carried from elsewhere
our clients have access to tailored banking solutions that foster relationship building and long-term brand loyalty. Furthermore, our continued investment in an integrated CRM and loan platforms - built on Salesforce and nCino - enables superior client service and precision marketing on a national scale.
Current report — wording carried from elsewhere
but not limited to, law firm operating accounts, law firm IOLTA/escrow accounts, merchant reserves, ISO reserves, ACH processing, and custodial accounts.
Current report — wording carried from elsewhere
Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
Loan interest income increased $15.1 million, or 27.2%, to $70.7 million for the six months ended June 30, 2026 from $55.6 million for the six months ended June 30, 2025. This increase was attributable to a $395.6 million, or 27.7%, increase in the average loan balance primarily due to commercial loan growth focused in our higher yielding law firm commercial loans that grew $380.3 million, or 44.5%, supporting total loan yields of 7.82%. The increase in loan interest income was driven by an increase of $15.3 million related to growth in average loan volumes, led by litigation related commercial growth, offset by $192 thousand due to a decrease in average loan rates. Overall, the commercial loan portfolio average balance increased $339.1 million to $1.29 billion, driving average commercial loan yields to 8.85% for the six months ended June 30, 2026.
Current report — wording carried from elsewhere
Noninterest Income. Noninterest income information is as follows:
Current report — wording carried from elsewhere
Payment processing income was $10.3 million for the six months ended June 30, 2026, an increase of $250 thousand from the same period in 2025. Growth in payment processing income has been muted, primarily due to changes in our overall merchant risk profile and merchant composition. Payment processing volumes for the credit and debit card processing platform increased $854.3 million, or 4.4%, to $20.2 billion while transactions volume totaled 289.9 million for the six months ended June 30, 2026. ASP fees increased $706 thousand, or 46.4%, to $2.2 million for the six months ended June 30, 2026, and are directly impacted by the average balances of OBS sweep funds as well as current short-term market interest rates. During the second quarter 2025, we recognized a $432 thousand gain on the sale of a fintech investment.
Current report — wording carried from elsewhere
Noninterest Expense. Noninterest expense information is as follows:
Current report — wording carried from elsewhere
Employee compensation and benefits costs increased $4.5 million, or 22.4%, primarily due to increases in year-end salaries, stock grants and related stock-based compensation, staffing, regional BDO incentive pay (sales commissions), and year-end bonus accruals. The increase in BDO incentive pay is directly correlated to our litigation related/commercial loan and related core commercial deposit growth, attracting full-service commercial banking clients nationally. Due to the departure of two board members for personal reasons in the first quarter of 2026, we incurred compensation charges related to accelerated stock grant expense totaling $398 thousand. In connection with the Signature merger, we incurred merger
Current report — wording carried from elsewhere
related costs (advisory, legal, accounting, valuation, and other professional or consulting fees, as well as general administrative costs) of $2.3 million for the six months ended June 30, 2026. Data processing costs increased $792 thousand due to increases in core banking processing volumes and the continued implementation/improvement of technology supporting client relationships and lead acquisition initiatives (CRM platform, digital marketing, business development, and lending) as well as overall risk management across all platforms. Advertising and marketing costs increased $340 thousand, as we continued to grow our brand, targeting digital marketing platform, and expand our thought leadership in our national verticals. Occupancy and equipment costs increased $300 thousand primarily due to costs associated with the operation of our Los Angeles branch which opened in late 2025.
Current report — wording carried from elsewhere
exceeding 9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the requirement to be “well capitalized”. For the current period, Esquire Bank has elected to continue to utilize the generally applicable leverage and risk based requirements and not apply the community bank leverage ratio.
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Previous report — wording carried elsewhere
In accordance with the CECL Standard, the Company must estimate expected credit losses over the contractual term of a loan, adjusted for expected prepayments. In estimating the life of a loan, the Company cannot extend the
Previous report — wording carried elsewhere
provision for credit losses would materially decrease the Company’s net income. The Company’s loan portfolio may experience significant credit losses, which could have a material adverse effect on our operating results.
Previous report — wording carried elsewhere
law firm escrow accounts as well as other fiduciary deposit accounts are for the benefit of the law firm’s customers (or claimants) and are titled in a manner to ensure that the maximum amount of FDIC insurance coverage passes through the account to the beneficial owner of the funds held in the account. Therefore, these law firm escrow accounts carry FDIC insurance at the claimant settlement level, not at the deposit account level. Coupling these types of commercial relationships with our off-balance sheet commercial litigation funds of $1.0 billion at March 31, 2026, makes this litigation vertical a highly desirable core low-cost funding platform fueling bank-wide growth.
Previous report — wording carried elsewhere
Funding**.** Total deposits increased $39.6 million, or 1.9% to $2.10 billion at March 31, 2026 from $2.06 billion at December 31, 2025, primarily due to our focus on developing full service commercial banking relationships nationally with our clients through commercial lending facilities, payment processing, and other unique commercial cash
Previous report — wording carried elsewhere
respectively, as of December 31, 2025. The allowance for credit losses to nonperforming loans was 3,198% as of March 31, 2026, as compared to 280% as of December 31, 2025.