Esquire Financial Holdings, Inc.

NOTE 1 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Interim Consolidated Financial Statements including the accounts of Esquire Financial Holdings, Inc. and its wholly owned subsidiary, Esquire Bank, N.A., are collectively referred to as “the Company.” All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited Interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial information. In the opinion of management, the Interim Consolidated Financial Statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are recurring in nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the years ended December 31, 2025 and 2024. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any other period.

Subsequent Events

Effective on August 1, 2026, the Company completed its previously announced merger with Signature Bancorporation, Inc., an Illinois corporation (“Signature”), pursuant to the Agreement and Plan of Merger, dated as of March 11, 2026 (the “Merger Agreement”), by and among the Company, Esquire Merger Sub, Inc., a Maryland corporation and a direct, wholly owned subsidiary of Esquire (“Merger Sub”), and Signature. At the closing, (i) Merger Sub merged with and into Signature, with Signature as the surviving entity (the “Merger”), and (ii) immediately thereafter, Signature merged with and into Esquire, with Esquire as the surviving entity (the “Second Step Merger”). Following the Second Step Merger, Signature Bank, an Illinois state-chartered bank and a wholly owned subsidiary of Signature, merged with and into Esquire Bank, National Association (“Esquire Bank”), a national banking association and a wholly owned subsidiary of Esquire, with Esquire Bank as the surviving bank.

Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”) each share of common stock, par value $1.00 per share, of Signature (“Signature Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Signature or the Company, was converted into the right to receive 2.671 shares (the “Exchange Ratio”) of common stock, par value $0.01 per share, of the Company (“Company Common Stock”). The total purchase price consideration in the Merger, consisting of shares of the Company’s Common Stock, stock options, and cash in lieu of fractional shares was approximately $466 million. Based on financial information as of June 30, 2026, the combined company has approximately $4.8 billion in total assets, $3.3 billion in loans, and $4.0 billion in total deposits. The initial purchase accounting for the Merger in accordance with GAAP is not finalized, therefore the Company is not yet able to disclose the preliminary fair value of the assets acquired and the liabilities assumed and any corresponding goodwill recorded in the transaction.

During the three and six months ended June 30, 2026, the Company incurred merger related expenses of $1.1 million and $2.3 million, respectively, related to the pending merger, which are included as a separate component of noninterest expense in the Consolidated Statements of Income. There wereno merger related expenses for the three and six months ended June 30, 2025. These expenses primarily consist of legal, advisory, professional, and other transaction-related costs and are not expected to recur in the normal course of business.

Investment in Variable Interest Entities

During 2022, the Company sold its legacy National Football League (“NFL”) consumer post-settlement loan portfolio to a variable interest entity (“VIE”) in exchange for a nonvoting interest valued at $13.5 million where the Company remained as servicer of the loan portfolio at the discretion of the VIE manager. As of June 30, 2026 and December 31, 2025, the investment’s carrying amount was $9.0 million and had a remaining life of 2.8 years as of June 30, 2026.

During 2024 and 2025, the Company invested cash in United Payment Systems, LLC (doing business as Payzli) in exchange for a 24.99% ownership interest. Payzli is an end-to-end payment technology company that acts as a single source for payment services, business management software, web enablement and mobile solutions. The investment carrying amount was $4.8 million as of June 30, 2026 and December 31, 2025, respectively and there areno remaining unfunded commitments as of June 30, 2026. There wereno Payzli fundings for the three and six months ended June 30, 2026. The Company funded $250 thousand and $700 thousand in Payzli for the three and six months ended June 30, 2025, respectively.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the Consolidated Financial Statements.

Summary of Significant Accounting Policies

Please see "Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" for a discussion of areas in the accompanying unaudited Consolidated Financial Statements utilizing significant estimates.

Standards Adopted in 2026

In November 2025 the FASB issued Accounting Standards Update (“ASU”) 2025-08, “Financials Instruments - Credit Losses (Topic 326): Purchased Loans”. The ASU expands the use of the gross-up approach to include purchased seasoned loans, defined as loans (excluding credit cards) acquired without significant credit deterioration and deemed to be seasoned; seasoned loans are those obtained either through a business combination or purchase at least ninety days after origination, provided the acquirer was not involved in the origination. The change is intended to reduce complexity and subjectivity in loan purchase transactions, and to reduce the risk of double counting expected credit losses that are already reflected in fair value determinations made at the time of acquisition. ASU 2025-08 is effective for reporting periods beginning after December 15, 2026; early adoption is permitted. The Company adopted ASU 2025-08 as of January 1, 2026 and it did not have an effect on the Company’s Consolidated Financial Statements in the current period.

NOTE 2 — Debt Securities

The following tables summarize the major categories of securities as of the dates indicated:

Mortgage-backed securities included all pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMOs are backed by government agency pass-through certificates. CMOs, by virtue of the underlying residential collateral or structure, are fixed rate current pay sequentials. As actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations, these securities are not considered to have a single maturity date.

There wereno sales or calls of securities for the three and six months ended June 30, 2026 and 2025.

At June 30, 2026, securities having a fair value of $244.8 million were pledged to the Federal Home Loan Bank of New York (“FHLB”) for borrowing capacity totaling $228.1 million. At December 31, 2025, securities having a fair value of $252.4 million were pledged to the FHLB for borrowing capacity totaling $235.7 million. At June 30, 2026 and December 31, 2025, the Company hadno outstanding FHLB advances.

At June 30, 2026, securities having a fair value of $46.5 million were pledged to the Federal Reserve Bank of New York (“FRB”) for borrowing capacity totaling $45.0 million. At December 31, 2025, securities having a fair value of $49.6 million were pledged to the FRB for borrowing capacity totaling $48.1 million. At June 30, 2026 and December 31, 2025, the Company hadno outstanding FRB borrowings.

The following table provides the gross unrealized and unrecognized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized or unrecognized loss position:

Management evaluates securities available-for-sale in unrealized loss positions to determine whether the impairment is due to credit-related factors. Due to the decline in fair value being attributable to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider the securities to be impaired at June 30, 2026.

As of June 30, 2026 and December 31, 2025, none of the Company’s available-for-sale securities were in an unrealized loss position due to credit, and thereforeno allowance for credit losses on available-for-sale securities was required. Additionally, there wasno allowance for credit losses on securities held-to-maturity due to the high credit quality composition consisting of issuances from government sponsored agencies as of June 30, 2026 and December 31, 2025.

Accrued interest receivable on securities totaling $1.0 million at June 30, 2026 and $1.1 million at December 31, 2025, was included in Accrued interest receivable in the Consolidated Statements of Financial Condition and excluded from amortized cost and estimated fair value in the tables above.

NOTE 3 — Loans

The composition of loans by class is summarized as follows:

Commercial loans include commercial Litigation-Related loans of $1.3 billion and other commercial loans of $42.2 million at June 30, 2026. Commercial loans include commercial Litigation-Related loans of $1.2 billion and other commercial loans of $67.2 million at December 31, 2025.

The following tables present the activity in the allowance for credit losses by class for the three months ending June 30, 2026 and June 30, 2025:

The following tables present the activity in the allowance for credit losses by class for the six months ending June 30, 2026 and June 30, 2025:

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, with no associated specific reserve on the Consolidated Statements of Financial Condition. As of December 31, 2025, there was one collateral dependent multifamily loan secured by real estate totaling $7.8 million and one collateral dependent commercial loan secured by business assets totaling $736 thousand, with no associated specific reserve for either loan on the Consolidated Statements of Financial Condition.

The following tables present the aging of the past due loans measured at amortized cost, excluding deferred fees and unearned premiums, net, due to immateriality, by class of loans as of June 30, 2026 and December 31, 2025:

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans.

The Company uses the following definitions for risk ratings:

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

The following is a summary of the credit risk profile of loans, measured at amortized cost, by internally assigned grade as of the periods indicated, the years represent the year of originations for non-revolving loans:

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For smaller dollar commercial and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

Loan Modifications to Borrowers Experiencing Financial Difficulty

During the three and six months ended June 30, 2026 the Company did not modify the terms of any loans or commitments to lend to borrowers experiencing financial difficulty in the form of an interest rate reduction, term extension, principal forgiveness, or other-than-insignificant payment delay.

During the three and six months ended June 30, 2025 the Company modified the terms of one $10.9 million multifamily loan which was restructured into two notes for $8.0 million and $2.9 million, respectively, with an extension resulting in an 18 month remaining term where the $2.9 million note was charged off and the $8.0 million note was at market terms.

The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company modifiedone multifamily loan in the second quarter of 2025 for a borrower experiencing financial difficulty. During the six months ended June 30, 2026, the Company foreclosed on the property securing this nonaccrual multifamily loan (totaling $7.8 million), and was accounted for as a new loan, recorded it as other real estate owned (“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.

Pledged Loans

At June 30, 2026, loans totaling $346.2 million were pledged to the FHLB for borrowing capacity totaling $249.5 million. At December 31, 2025, loans totaling $319.4 million were pledged to the FHLB for borrowing capacity totaling $219.8 million.

NOTE 4 — Noninterest Income

The majority of the Company’s revenue-generating transactions are not subject to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities. Descriptions of revenue-generating activities that are within the scope of ASC 606, and are presented in the Consolidated Statements of Income as components of noninterest income, are as follows:

The Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from the above-described contracts with customers.

NOTE 5 — Share-Based Payment Plans

The Company issues incentive and non-statutory stock options, restricted stock awards (“RSAs”), and performance restricted stock units (“PSUs”) to certain employees and directors pursuant to its equity incentive plans, which have been approved by the stockholders. Share-based awards are granted by the Compensation Committee of the Board of Directors.

Under the plans, options are granted with an exercise price equal to the fair value of the Company’s stock at the date of the grant. Options granted vest over three tofive years and haveten-year contractual terms. All options provide for accelerated vesting upon a change in control (as defined in the plans).

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses assumptions for expected stock price volatility, expected terms of options granted, and risk-free interest rate. Expected volatilities are based on peer volatility. The Company uses peer data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on peer data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

Restricted shares are granted at the fair value on the date of grant and vest over three tosix years with athird vesting at each of the last three anniversary dates. Restricted shares have the same voting rights as common stock and nonvested restricted shareholders do not have rights to the accrued dividends until vested.

Share payouts of PSUs will be earned based on the Company’s performance with respect totwo equally weighted metrics, return on average assets and diluted EPS growth. Performance is measured against pre-established financial targets over atwo-year performance period and will cliff vest on thethree-year anniversary from the date of grant. Compensation expense on PSUs is based upon the fair value of the shares on the date of the grant for the expected aggregate share payout.

The following table presents a summary of the activity related to options for the six months ended June 30, 2026:

The Company recognized compensation expense related to options of $208 thousand and $184 thousand for the three months ended June 30, 2026 and 2025, respectively. The Company recognized compensation expense related to options of $413 thousand and $369 thousand for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, unrecognized compensation cost related to nonvested options was approximately $1.2 million and is expected to be recognized over a weighted average period of 1.94 years. The intrinsic value for outstanding options, net of expected forfeitures was $22.3 million at June 30, 2026. The intrinsic value for exercisable options was $20.1 million at June 30, 2026.

Information related to stock option exercises during each period is as follows:

The following table presents a summary of the activity related to restricted stock for the six months ended June 30, 2026:

The Company recognized compensation expense related to restricted stock of $1.2 million and $869 thousand for the three months ended June 30, 2026 and 2025, respectively. The Company recognized compensation expense related to restricted stock of $2.8 million and $1.7 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was $11.6 million of total unrecognized compensation cost related to nonvested shares granted under the plan. The cost is expected to be recognized over a weighted-average period of 3.27 years.

The following table presents a summary of the activity related to PSUs for the six months ended June 30, 2026:

The Company recognized compensation expense related to PSUs of $301 thousand and $138 thousand for the three months ended June 30, 2026 and 2025, respectively. The Company recognized compensation expense related to PSUs of $548 thousand and $218 thousand for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was $2.6 million of total unrecognized compensation cost related to nonvested PSUs based on the expected aggregate share payout to be recognized over a weighted-average period of 2.25 years.

NOTE 6 — Earnings per Share

The factors used in the earnings per share computation follow:

Share-based awards totaling 22,737 and 43,852 shares of common stock were not considered in computing diluted earnings per common share for the three months ended June 30, 2026 and 2025, respectively, because they were anti-dilutive. Share-based awards totaling 22,737 and 63,326 shares of common stock were not considered in computing diluted earnings per common share for the six months ended June 30, 2026 and 2025, respectively, because they were anti-dilutive.

NOTE 7 — Leases

The Company recognizes the present value of its operating lease payments related to its office facilities and retail branches as operating lease assets and corresponding lease liabilities on the Consolidated Statements of Financial Condition. These operating lease assets represent the Company’s right to use an underlying asset for the lease term, and the lease liability represents the Company’s obligation to make lease payments over the lease term. As these leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at the lease commencement date in order to determine present value.

Short-term lease payments, those leases with original terms of 12 months or less, are recognized in the Consolidated Statements of Income, on a straight-line basis over the lease term. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. The Company does not sublease any of its leased properties. The Company does not lease properties from any related parties.

As of June 30, 2026, right of use (“ROU”) lease assets and related lease liabilities were $1.7 million and $2.2 million, respectively. As of December 31, 2025, ROU lease assets and related lease liabilities were $2.1 million and $2.6 million, respectively. ROU assets are included within Other assets and related lease liabilities are included within Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

As of June 30, 2026, the Company was obligated under several non-cancelable leases for certain premises and equipment. The minimum annual rental commitments, exclusive of taxes and other charges, under non-cancelable lease agreements for premises at June 30, 2026, are summarized as follows:

In addition to the table above, as of June 30, 2026, the Company had an additional operating lease commitment for its future corporate headquarters of approximately $24.4 million that has been executed but not yet commenced. This operating lease is expected to commence no earlier than the end of the second quarter of 2027 with a lease term of 12.25 years.

The components of total lease cost are as follows:

NOTE 8 — Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values.

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

For available-for-sale securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

Assets and liabilities measured at fair value on a recurring basis are summarized below:

There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2026 and 2025.

The following tables present the carrying amounts and fair values (represents exit price) of financial instruments not carried at fair value at June 30, 2026 and December 31, 2025:

NOTE 9 — Accumulated Other Comprehensive Loss

The following presents changes in accumulated other comprehensive loss by component, net of tax, for the three and six months ended June 30, 2026 and 2025:

There wereno reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2026 and 2025.